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Registered number: 00453161 THE BOOK SERVICE LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
THE BOOK SERVICE LIMITED COMPANY INFORMATION
Directors | Mark Gardiner
| Thomas Weldon
Company secretary | Sinead Martin
Registered number | 00453161
Registered office | 20 Vauxhall Bridge Road
| London
| SW1V 2SA
Independent auditor | Grant Thornton UK LLP
| Victoria House
| 199 Avebury Boulevard
| Milton Keynes
| MK9 1AU
THE BOOK SERVICE LIMITED CONTENTS
| Page
Strategic report | 1 - 9
Directors' report | 10 - 12
Directors' responsibilities statement | 13
Independent auditor's report | 14 - 18
Statement of comprehensive income | 19
Balance sheet | 20 - 21
Statement of changes in equity | 22
Notes to the financial statements | 23 - 42
THE BOOK SERVICE LIMITED STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2024
Introduction
The directors present their Strategic Report for The Book Service Limited (“the Company” or “TBS”) for the year ended 31 December 2024.
Principal activities
The Company is a subsidiary of The Random House Group Limited, a Company registered in the United Kingdom. The Company is domiciled and registered in the United Kingdom. The principal activity of the Company continues to be book warehousing and distribution.
Business review
The results and financial position of the Company are set out in the attached financial statements. The Company made a profit for the financial year of £3,119,893 (2023: loss of £1,007,938). Turnover has decreased by 8.3% in comparison to the previous year, from £46,468,918 to £42,610,130 in 2024 compared with a 0.6% increase in 2023. The year on year reduction is due to the loss of revenue from third party clients who have left during 2024. This follows the announced exit from our third-party distribution business which will be concluded in 2025. The impact of client exits has also driven a reduction in gross profit margin. This decreased by 0.7% in the year, reducing to 51.3% in 2024 from 52.0% in 2023. Total costs have decreased in 2024 from £52,935,739 to £46,361,446 as a result of the reduction in third-party distribution activity in 2024. In addition to the reduction in third-party distribution operating costs, the 2023 total costs included the one-off cost of redundancy associated with the closure of the third-party business amounting to £3,304,024. Changes to our Frating facility made in the second quarter of 2023 (expansion and consolidation of stock on a single site) have continued to enable process improvements to be realised which impact positively on stock availability for customers and a reduction in internal shortages. In the second half of 2023 we saw a 30% improvement in internal shortages and in the same period in 2024 we have seen a further 6% improvement. Operational productivity is influenced by a combination of customer demand, order profile and process improvements. In 2024 we have seen a 6% improvement in productivity at the Frating site compared with 2023.
Key performance indicators ('KPIs')
The Company monitors progress and performance during the year and historical trend data is set out in the following KPI’s: - Turnover was £42,610,130 (2023: £46,468,918) - Gross profit margin for the year was 51.3% (2023: 52.0%) The KPIs are in line with forecast expectations. Detailed explanations for the year on year movements are included in the business review section. Page 1
THE BOOK SERVICE LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024
Principal risks and uncertainties
The Company's operations expose it to a variety of commercial and financial risks. The Company is subject to risk management procedures and an annual risk assessment implemented by the ultimate parent company, Bertelsmann SE & Co KGaA. The Company has procedures in place to make the directors aware of the various risks to the Company’s business. The risks are monitored and reported to management. Commercial risk The changing book market and particularly the transition to digital is creating both challenges and opportunities for the Company, notably regarding the latter in terms of new sales channels. The Company is facing increased pressure on margins. Other risks arise from the entry of non-traditional publishers into the market, the decline in retail space in high street bookshops and economic uncertainty. In recent years the publishing industry has seen a large increase in sales of digitalised products, at the expense of a decrease in physical sales. This has plateaued more recently, with physical sales remaining strong. This remains to be an area of focus to ensure the Company is proactive to market changes. The continuing uncertainty in the global economy and high level of inflation in the UK presents ongoing pressure on costs and margins. The Company actively monitors market trends and these are incorporated into the detailed commercial plans of the business. Price risk The Company is exposed to commodity price risk as a result of its operations. The directors regularly review the appropriateness of commodity purchasing policies, particularly in the event of changes to the size or nature of the Company's operations in an attempt to mitigate the risk. Credit risk The Company may offer credit terms to its customers which allow payment of the debt after delivery of the goods. The Company is at risk to the extent that a customer may be unable to pay the debt on the specified due date. The Company has mitigated this risk of payment default by implementing policies which ensure that appropriate checks on potential customers are performed before credit terms are granted. Where a customer or group of customers is assessed to have a higher risk profile, these are included within the Company's credit insurance programme. Liquidity and cash flow risk The objective of the Company in managing liquidity risk is to ensure that it can meet its financial obligations as and when they fall due. The Company expects to meet its financial obligations through operating cash flows. The Company’s results, including cash flows, are reviewed by the Board on a monthly basis. Risks are further mitigated by the cash pooling arrangements in place across the Bertelsmann group, which ensures funds are available to the Company to meet all liabilities as and when they fall due.
Directors' section 172 statement
The Directors of the Company must act in accordance with a set of general duties, as detailed in section 172 of the UK Companies Act 2006, summarised as follows: A director of a Company must act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its shareholders as a whole and, in doing so have regard (amongst other matters) to: •the likely consequences of any decisions in the long-term; •the interest of the Company’s employees; •the need to foster the Company’s business relationships with suppliers, customers and others; •the impact of the Company’s operations on the community and environment; •the desirability of the Company maintaining a reputation for high standards of business conduct; and •the need to act fairly as between the shareholders Examples of how the directors have oversight of these stakeholder matters are included throughout the Strategic and Director’s report as well as set out specifically below. Page 2
THE BOOK SERVICE LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024
Long-term decision making
The Board operates a structured governance model which supports the Group in ensuring that decisions are considered, documented and reported upon, and in alignment with our strategic plans. Detailed budgets and re-forecasts are prepared which enable the Board to track performance and ensure that it is as expected, or that mitigation steps are taken to deliver performance in line with, or close to, expectations. The Board and senior management personnel operate within this structure, with the aim of promoting the success of the company and delivering long-term shareholder value. The Board is presented with regular board packs and other information that it needs to fulfill its responsibilities. During the period at Board meetings the Board have discussed and made decisions on a number of specific issues including business priorities and strategy, capital investment, the continued planned closure of the Grantham site and the ongoing management of the current economic situation.
The interest of the Company's employees
The Board recognises that employees are central to the long-term success of the Company. The Company systematically provides employees with information on matters of concern to them, consulting them or their representatives regularly, and providing forums and communication routes so that their views can be taken into account when making decisions that are likely to affect their interests. Employee involvement in the Company is encouraged, as achieving a common awareness on the part of all employees of the financial and economic factors affecting the Company, plays a major role in maintaining its prosperity. The Company encourages the involvement of employees by means of regular meetings with staff and staff representatives to keep them informed of the Company’s progress. The Company is committed to employment policies, which follow best practice, based on equal opportunities for all employees, irrespective of sex, race, colour, disability or sexual orientation. The Company is committed to employment policies, which follow best practice, based on equal opportunities for all employees, irrespective of sex, race, colour, disability or sexual orientation as well as providing various employee networks to support the diverse and inclusive culture of the Company. All staff receive regular performance reviews as well as opportunity for learning to support the development of all employees’ careers. This includes training programs and secondment opportunities for staff.
Engagement with suppliers, customers and other stakeholders
The directors appreciate the importance of fostering business relationships with key stakeholders, such as customers and suppliers, and focus on the maintenance and growth of these relationships in their decision- making and strategic planning. The Company employs dedicated relationship managers to foster these relationships which also ensures the board has a high degree of visibility to take stakeholder considerations into account. Page 3
THE BOOK SERVICE LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024
Community impact and customer relations
The Board ensures significant consideration is given to the impact of the Company’s operations on the community and their Customers in their decision-making. The Company’s approach is to use its position of strength to ensure it is an asset to the communities and people with which it interacts. The Company aims to provide everyone equal access to books, working with a range of organisations to allow the most equal opportunities as possible to read books. As part of this, the Company actively invest in young people, partnering with schools and local community projects to nurture and create readers for the future. The Company continues to make and distribute books for everyone ensuring the creators of books, including authors and illustrators, represent the society we live in. In the year, we have continued our ‘WriteNow’ programme which seeks and nurtures writers from under-represented communities as well as providing books in formats to support visually impaired readers. The Company continually strives to print and produce diverse, relevant and accessible content for all customers.
Environmental sustainability
The Company’s leadership team ensure environmental issues are managed effectively and considered in the strategic decisions of the Company. The Company strives to create positive change in reducing the environmental impact of its businesses whilst maintaining effective and continuing business practices. The Company is key in the collaboration of the publishing industry in tackling climate action as part of their role within ‘Publishing Declares’. The Company consider sustainability, ethical and environmental issues when sourcing core material for use in the printing of their books using the books created to provide a positive leverage for behaviour change of our consumers. As part of the environmental strategy, the Company aims to be climate neutral by 2030. Over the last few years the distribution facilities have introduced several measures to reduce plastic and improve other packaging solutions for more sustainable options: - Replacement of plastic void fill inside cartons with shredded cardboard. The card shredded is the excess packaging the books arrive in. - Investment in re-usable hard plastic totes for dispatch to wholesale customers and distributors. - Investment in hard plastic lids and straps for pallets. These remove the requirement to shrink-wrap a pallet for distribution in the UK. This saves 41 meters of machine shrink-wrap per pallet. - Investment in new pallet wrap machines and a change to the pallet wrap used reducing the amount of shrink-wrap required on each pallet further. - Switching to paper tape instead of plastic based tape for hand packed cartons at both distribution sites. The above has resulted in a significant reduction in single use plastic from 2018 to 2024. In July 2021, the business commenced the installation of solar panels at the Frating site, installing solar PV panels onto our Low Bay Order Processing warehouse roof. These provide a capacity of 429 KiloWatts Peak of renewable solar power. All lights that come to end of their life cycle are replaced by LED. The Frating site has 100% LED Lights throughout. The Grantham site has 60% LED and 40% t5 energy saving lamps.
High standards of business conduct
The Company has a Code of Conduct setting out the behaviours and values expected of all of our employees, which is communicated to all colleagues. Company processes ensure the Board and management are continually updated on the operation of the code and an independent whistleblowing service enables employees and third parties to anonymously raise concerns. Through its oversight and monitoring role, the Board requires all of our people to work to the highest standards of business conduct. Page 4
THE BOOK SERVICE LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024
Shareholders
The Board recognises the importance of regular and open dialogue with the shareholders and the need to ensure the strategy and goals of the Company are effectively communicated to them. Feedback on these plans and objectives is welcomed by the directors and major business decisions are made closely and with the approval of the shareholders.
Streamlined Energy and Carbon Reporting Disclosure 2024
Due to the nature of activities carried out across the Group it is impracticable to calculate energy usage on an individual company by company basis. The Book Service (TBS) employees are based within the Penguin Random House (PRH) offices at Embassy Gardens, and stock is stored and distributed from the main PRH distribution centre at Colchester. As a result of this, the report is calculated based on apportioned Group streamlined energy and carbon reporting numbers based on employee headcount for inclusion in the financial statements. UK Greenhouse gas emissions and energy use data for the period 1st January 2024 to 31st December 2024. The previous year ended 2023 figures have been included to demonstrate The Company’s commitment to reducing their energy use and greenhouse gas emissions. As a subsidiary of the ultimate parent Bertelsmann SE & Co KGaA, the UK entities have aligned internal reporting measures to comply with European Sustainability Reporting Standards (ESRS). As a result and for consistency, the emissions reporting format has been revised to focus on Scope 3 categories rather than 'Employee', 'Site', and 'Product-related' data. The overall data included remains unchanged and we have followed the UK BEIS (Department Business, Energy & Industrial Strategy) 2019 guidance to ensure compliance with UK environmental reporting guidelines. Energy Consumption - Green Electricity – the Company made the decision to purchase electricity from Renewable Resources from October 2018 onwards. To comply with the new internal indicators, the categories for energy consumption have been adjusted. For the Company, 'Renewable Energy Consumption' now includes electricity generated from the solar panels at Frating, while 'Fossil Energy Consumption' pertains to total heat consumption. Page 5
THE BOOK SERVICE LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024 In 2024 ∙The Solar PV installation at the Colchester Distribution Centre produced 382,171 kWh of electricity for the site, ~17% of the total requirement in 2024. ∙PRH UK maintained ISO14001 accreditation for their Environmental Management System across the four major sites within the UK. ∙There were noticeable increases in emissions from employee business travel and employee commuting as work returns to normal after the Covid 19 pandemic. ∙In 2024, Embassy Gardens initiated projects to reduce site energy usage by consulting experts to optimise the Building Management System. Improvements included turning off heating in summer and reducing chiller use in winter. ∙The Grantham site experienced overall reductions in all scopes due to a ~40% workforce decrease and lower customer engagement, in anticipation of the US takeover in Summer 2025. ∙In 2024, gas consumption at the Frating site decreased by ~40%. This reduction followed a 2023 increase due to the new warehouse extension with three additional gas-fired Air Handling Units (AHUs). Operational issues with some AHUs in 2024 further reduced usage. Energy-saving initiatives included lowering AHU temperatures from 18°C to 17°C during warmer months and adjusting operating hours by closing earlier on Fridays and opening later Sundays. Additionally, the warehouse operated fewer weekends (1 or 2) during the peak period (Sep-Dec) compared to every weekend in previous years, as demand was manageable during weekdays. ∙In late 2023, PRH UK acquired Quadrille and included their additional 1495 m² warehouse space at Macmillan Distribution Ltd in the Grantham site’s questionnaire. Bertelsmann then estimated the total emissions for this rented space using their methodology. ∙In 2024 Bertelsmann revised the way to calculate the scope 1, 2, and 3 emissions of a paper mill to provide a more complete and sound emission factor. The change in methodology meant moving away from outdated proxy figures and using data from third party industry datasets. The result was a substantial increase in carbon emissions associated with print materials and printer suppliers. ∙In 2024 we diversified our modes of delivering stock from Europe, increasing our use of rail freight and trucks powered by post-consumer vegetable oil in addition to our use of diesel truck. This has helped reduce the carbon emissions associated with inbound freight. Targets The Company is committed to managing environmental issues effectively across our entire value chain. We have set three key targets for the future. The details of these are outlined in the Sustainability Policy: https://wp.penguin.co .uk/wp-content/uploads /2022/06/Penguin_Sustainability_Policy_Spring_22 -3.pdf ∙Zero by 30: reduce our carbon footprint to become climate neutral in our direct operations by 2021, and in our wider supply chain by 2030 ∙Sustainable sourcing: ensure 100% of our paper and other core materials continue to be ethically and sustainably sourced. ∙Content: use the power of our brand, books, and authors to amplify the climate emergency and encourage positive behaviour change. Page 6
THE BOOK SERVICE LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024 Page 7
THE BOOK SERVICE LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024 2023 represents the recalculated 2023 data by Bertelsmann, adjusted for the new spend-based categories to enable a more accurate year-to-year comparison. Reporting Methodology We have followed the UK BEIS (Department Business, Energy & Industrial Strategy) 2019 guidance. The energy and emission figures provided are taken from Bertelsmann’s “Green Screen”, this a Bertelsmann owned internal recording application used by all companies within the Bertelsmann Group including the Company. All conversions are completed using government guidance ratios and the scopes 1, 2 and 3 are as outlined by BEIS guidance pages 50 and 51. As a subsidiary of the ultimate parent Bertelsmann SE & Co KGaA, the UK entities have aligned internal reporting measures to comply with European Sustainability Reporting Standards (ESRS). As a result and for consistency, the emissions reporting format has been revised to focus on Scope 3 categories rather than 'Employee', 'Site', and 'Product-related' data. The overall data included remains unchanged and we have followed the UK BEIS (Department Business, Energy & Industrial Strategy) 2019 guidance to ensure compliance with UK environmental reporting guidelines. In 2024, Bertelsmann updated the calculation method for Scope 1, 2, and 3 emissions of a paper mill to ensure a more accurate emission factor, using data from third-party industry datasets instead of outdated proxies. This report also includes a recalculation of 2023 data, as provided by Bertelsmann, to reflect the new spending categories for a more accurate comparison In addition to the above, the Company have begun to offset site related emissions as of 2021. The offset credits are sourced from a reduction project in the peatlands of Borneo, Indonesia. This project, managed by Pachama, focuses on carbon sequestration and significantly contributes to biodiversity preservation. Its goal is to prevent deforestation, degradation, and drainage of one of Indonesia’s largest swamps. By collaborating with local communities, the project has successfully protected and restored one of the world’s largest carbon sinks. You can find the project link here: https://app.pachama.com /projects/borneo -peatlands/overview #overview Page 8
THE BOOK SERVICE LIMITED STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024 Intensity Ratio The intensity ratio for the Company is calculated by dividing the total annual tCO2e by the actual yearly sales (£ Million).
General
The Company is presenting the financial statements in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). This report was approved by the Board and signed on its behalf.
Mark Gardiner Director
Date: 31 March 2025
Page 9
THE BOOK SERVICE LIMITED DIRECTORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2024 The directors present their report and the financial statements for the year ended 31 December 2024.
Results and dividends
The profit for the year, after taxation, amounted to £3,119,893 (2023: loss £1,007,938). No interim dividend (2023: £nil) was paid in the 2024 financial year and no final dividend is proposed (2023: £nil).
Directors
The directors who served during the year and up to the date of signing the financial statements were:
Mark Gardiner
Thomas Weldon
Employees
The Company systematically provides employees with information on matters of concern to them, consulting them or their representatives regularly, so that their views can be taken into account when making decisions that are likely to affect their interests. Employee involvement in the Company is encouraged, as achieving a common awareness on the part of all employees of the financial and economic factors affecting the Company plays a major role in maintaining its prosperity. The Company encourages the involvement of employees by means of regular meetings with staff and staff representatives to keep them informed of the Company’s progress. The Company operates a defined contribution pension scheme for which all employees are eligible. The Company is committed to employment policies, which follow best practice, based on equal opportunities for all employees, irrespective of sex, race, colour, disability or sexual orientation. The Company gives full and fair consideration to applications for employment from disabled persons, having regard to their particular aptitudes and abilities. Appropriate arrangements are made for the continued employment and training, career development and promotion of disabled persons employed by the Company. If members of staff become disabled the Company continues employment, either in the same or an alternative position, with appropriate retraining being given if necessary.
Future developments
The Company will continue to seek new opportunities for cost efficiencies. The directors do not anticipate any significant changes in the activities of the Company in relation to the operation at its Frating facility. Following a strategic review, in January 2023 the Company announced a proposal to withdraw from the provision of distribution services to third party clients from its Grantham site in the second half of 2025 along with the closure of the Grantham site. Further to the required consultation period the decision to proceed with this proposal was confirmed on 4 May 2023. Services provided to third party clients will continue as usual until the end of their agreements. Page 10
THE BOOK SERVICE LIMITED DIRECTORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024
Going concern
In preparing these financial statements, the directors have assessed the ability of the Company to continue to operate for a period of at least twelve months from the date of signing the financial statements. The Company has undertaken a risk assessment and forecasting exercise to assess the Company’s liquidity position. The forecast for the going concern period has been prepared using the three year plan approved by the Board and takes account of prior trends and expected titles to be published in the future and key cost drivers such as commodity prices and inflation. For the purposes of the Company’s going concern assessment, the directors have performed sensitivity analysis on cashflows based on unforeseen changes in demand and the potential impact of increased inflationary pressures. In addition, reverse stress testing has been performed to establish the levels of performance where cash availability would be breached. The results of the analysis demonstrated that there was sufficient cash availability within the current intra group cash pooling facility to deal with all of the identified plausible scenarios. Based on the Company’s current trading performance, the sensitivity and reverse stress testing scenarios performed, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, being a period of no less than twelve months from the date of approval of these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
Matters covered in the strategic report
Details on energy and carbon reporting, engagement with customers, suppliers and other stakeholders and financial risk management policy sections are not included in the Directors' report as they are considered to be of strategic importance to the Company and, as permitted under the Companies Act 2006 s.414C(11), they have instead been included in the Strategic report.
Disclosure of information to auditor
Each of the persons who are directors at the time when this Directors' report is approved has confirmed that: ∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware; and ∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information. Page 11
THE BOOK SERVICE LIMITED DIRECTORS' REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2024
Auditor
The auditor, Grant Thornton UK LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006. This report was approved by the board on 31 March 2025 and signed on its behalf.
Mark Gardiner Director
Page 12
THE BOOK SERVICE LIMITED DIRECTORS' RESPONSIBILITIES STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2024 The directors are responsible for preparing the Strategic report, the Directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the directors are required to: ∙select suitable accounting policies and then apply them consistently; ∙make judgements and accounting estimates that are reasonable and prudent; ∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; ∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Page 13
THE BOOK SERVICE LIMITED INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE BOOK SERVICE LIMITED
Opinion
We have audited the financial statements of The Book Service Limited (the 'Company') for the year ended 31 December 2024, which comprise the Statement of comprehensive income, the Balance sheet, the Statement of changes in equity and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice). In our opinion: ∙the financial statements give a true and fair view of the state of the Company's affairs as at 31 December 2024 and of its profit for the year then ended; ∙the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and ∙the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 'Auditor's responsibilities for the audit of the financial statements' section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Company to cease to continue as a going concern. In our evaluation of the directors’ conclusions, we considered the inherent risks associated with the Company's business model including effects arising from macro-economic uncertainties such as the cost of living crisis and the impact of the war in Ukraine, we assessed and challenged the reasonableness of estimates made by the directors and the related disclosures and analysed how those risks might affect the Company's financial resources or ability to continue operations over the going concern period. Page 14
THE BOOK SERVICE LIMITED INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE BOOK SERVICE LIMITED (CONTINUED)
Conclusions relating to going concern (continued)
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the Annual report and financial statements, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the Annual report and financial statements. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit: ∙the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ∙the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements. Matter on which we are required to report under the Companies Act 2006 In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: ∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or ∙the financial statements are not in agreement with the accounting records and returns; or ∙certain disclosures of directors' remuneration specified by law are not made; or ∙we have not received all the information and explanations we require for our audit. Page 15
THE BOOK SERVICE LIMITED INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE BOOK SERVICE LIMITED (CONTINUED)
Responsibilities of directors
As explained more fully in the Directors' responsibilities statement set out on page 13, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: ∙We obtained an understanding of the legal and regulatory frameworks applicable to the Company and industry in which it operates through our general commercial and sector experience, discussions with management and review of board minutes. We determined that the following laws and regulations were most significant: United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (United Kingdom Generally Accepted Accounting Practice), the Companies Act 2006 and the relevant tax compliance regulations in the UK. In addition, we concluded that there are certain laws and regulations that may have an effect on the determination of the amounts and disclosures in the financial statements such as health and safety and employee matters. Page 16
THE BOOK SERVICE LIMITED INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE BOOK SERVICE LIMITED (CONTINUED)
Auditor's responsibilities for the audit of the financial statements (continued)
∙We enquired of management concerning the Company’s policies and procedures relating to: ∙the identification, evaluation and compliance with laws and regulations; ∙the detection and response to the risks of fraud; and ∙the establishment of internal controls to mitigate risks related to fraud or non-compliance with laws and regulations. ∙We enquired of management and those charged with governance, whether they were aware of any instances of non-compliance with laws and regulations or whether they had any knowledge of actual, suspected or alleged fraud. ∙We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur and the risk of management override of controls. Audit procedures are performed by the engagement team included: ∙identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud; ∙challenging assumptions and judgements made by management in its significant accounting estimates; ∙identifying and testing journal entries, in particular journal entries posted with unusual account combinations that increased revenues or that reduced costs in the Statement of comprehensive income; and ∙assessing the extent of compliance with the relevant laws and regulations as part of our procedures on the related financial statement item. ∙In addition, we completed audit procedures to conclude on the compliance of disclosures in the Annual report and financial statements with applicable financial reporting requirements. ∙These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we would become aware of it; ∙The assessment of the appropriateness of the collective competence and capabilities of the engagement team including consideration of the engagement team’s: ∙understanding of, and practical experience with audit engagements of a similar nature and complexity through appropriate training and participation; ∙knowledge of the industry in which the client operates; and ∙understanding of the legal and regulatory requirements specific to the entity including, the provisions of the applicable legislation and the applicable statutory provision. ∙We communicated relevant laws and regulations and potential fraud risks to all engagement team members. We remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Page 17
THE BOOK SERVICE LIMITED INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE BOOK SERVICE LIMITED (CONTINUED) Auditor's responsibilities for the audit of the financial statements (continued) A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed. Tim Broadway Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Milton Keynes 31 March 2025 Page 18
THE BOOK SERVICE LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2024
| 2024 | 2023
Note | £ | £
Turnover | 4 | 42,610,130 | 46,468,918
Cost of sales |  | (20,755,298) | (22,297,651)
Gross profit |  | 21,854,832 | 24,171,267
Administrative expenses |  | (25,606,148) | (30,638,088)
Operating loss | 5 | (3,751,316) | (6,466,821)
Interest receivable and similar income | 8 | 7,920,774 | 5,294,655
Interest payable and similar expenses | 9 | (9,727) | (3,296)
Profit/(loss) before tax |  | 4,159,731 | (1,175,462)
Tax on profit/(loss) | 10 | (1,039,838) | 167,524
Profit/(loss) for the financial year |  | 3,119,893 | (1,007,938)
Other comprehensive income |  | - | -
Total comprehensive income/(expense) for the year |  | 3,119,893 | (1,007,938)
All activities derive from continuing operations. There were no recognised gains and losses for 2024 or 2023 other than those included in the statement of comprehensive income.
The notes on pages 23 to 42 form part of these financial statements.
Page 19
THE BOOK SERVICE LIMITED REGISTERED NUMBER: 00453161 BALANCE SHEET AS AT 31 DECEMBER 2024
|  | 2024 |  | 2023
Note |  | £ |  | £
Fixed assets |  |  |  |  |
Tangible assets | 11 |  | 9,108,226 |  | 8,028,198
Right-of-use assets | 12 |  | 288,257 |  | 149,264
Investments | 13 |  | - |  | 100
|  |  | 9,396,483 |  | 8,177,562
Current assets |  |  |  |  |
Debtors: amounts falling due within one year | 15 | 411,128,462 |  | 400,056,874 |
Cash at bank and in hand |  | 745,060 |  | 6,635,440 |
|  | 411,873,522 |  | 406,692,314 |
Creditors: amounts falling due within one year | 16 | (439,514,935) |  | (436,889,492) |
Net current liabilities |  |  | (27,641,413) |  | (30,197,178)
Total assets less current liabilities |  |  | (18,244,930) |  | (22,019,616)
Creditors: amounts falling due after more than one year | 17 |  | (176,521) |  | (52,750)
|  |  | (18,421,451) |  | (22,072,366)
Provisions for liabilities |  |  |  |  |
Deferred taxation | 14 | (910,193) |  | (379,171) |
|  |  | (910,193) |  | (379,171)
Net liabilities |  |  | (19,331,644) |  | (22,451,537)
Capital and reserves |  |  |  |  |
Called up share capital | 18 |  | 200,000 |  | 200,000
Profit and loss account | 20 |  | (19,531,644) |  | (22,651,537)
|  |  | (19,331,644) |  | (22,451,537)
Page 20
THE BOOK SERVICE LIMITED REGISTERED NUMBER: 00453161 BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2024 The notes on pages 23 to 42 form part of these financial statements. The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
Mark Gardiner
Director
Date: 31 March 2025
Page 21
THE BOOK SERVICE LIMITED REGISTERED NUMBER: 00453161 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2024
| Called up share capital | Profit and loss account | Total equity
| £ | £ | £
At 1 January 2023 | 200,000 | (21,643,599) | (21,443,599)
Comprehensive expense for the year |  |  |
Loss for the year | - | (1,007,938) | (1,007,938)
Total comprehensive expense for the year | - | (1,007,938) | (1,007,938)
At 1 January 2024 | 200,000 | (22,651,537) | (22,451,537)
Comprehensive income for the year |  |  |
Profit for the year | - | 3,119,893 | 3,119,893
Total comprehensive income for the year | - | 3,119,893 | 3,119,893
At 31 December 2024 | 200,000 | (19,531,644) | (19,331,644)
| The notes on pages 23 to 42 form part of these financial statements.
Page 22
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
1. | General information
The Company is a private company limited by shares and a subsidiary of The Random House Group Limited, a company registered in the United Kingdom. The Company is domiciled and registered in the United Kingdom. The address of its registered office is 20 Vauxhall Bridge Road, London, SW1V 2SA. The principal activity of the Company continued to be that of book warehousing and distribution. The Company warehouses and distributes its books entirely in the UK. 2.Accounting policies
| 2.1 | Basis of preparation of financial statements
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 101 'Reduced Disclosure Framework' (FRS 101) and the Companies Act 2006. In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of UK-adopted international accounting standards (“UK-adopted IFRS”), but makes amendments where necessary in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken. The preparation of financial statements in compliance with FRS 101 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3. The following principal accounting policies have been applied:
| 2.2 | Financial Reporting Standard 101 - reduced disclosure exemptions
The Company has taken advantage of the following disclosure exemptions under FRS 101: ∙the requirements of IFRS 7 Financial Instruments: Disclosures ∙the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement ∙the requirement in paragraph 38 of IAS 1 'Presentation of Financial Statements' to present comparative information in respect of: - paragraph 79(a)(iv) of IAS 1; - paragraph 73(e) of IAS 16 Property, Plant and Equipment; - paragraph 118(e) of IAS 38 Intangible Assets; ∙the requirements of the following paragraphs of IAS 1, 'Presentation of financial statements': - 10(d) statement of cash flows; - 10(f) statement of financial position as at the beginning of the preceding period when retrospective restatement or reclassifications apply; - 16 statement of compliance with all IFRS; - 38A requirement for minimum of two primary financial statements, including cash flow statements; - 38B, 38C, 38D additional comparative information; - 40A, 40B, 40C, 40D requirements to provide additional statements in respect of retrospective restatements and reclassifications; - 111 statement of cash flows information; and - 134 - 136 capital management disclosures. Page 23
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.2 | Financial Reporting Standard 101 - reduced disclosure exemptions (continued)
∙the requirements of IAS 7 Statement of Cash Flows ∙the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors ∙the requirements of paragraph 17 and 18A of IAS 24 Related Party Disclosures ∙the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member This information is included in the consolidated financial statements of Bertelsmann SE & Co KGaA as at 31 December 2024 and these financial statements may be obtained from Bertelsmann SE & Co KGaA, Corporate Communications, Carl Bertelsmann Strasse 270, Postfach 111, D-33311 Gütersloh, Germany.
| 2.3 | Exemption from preparing consolidated financial statements
The Company is a parent company that is also a subsidiary included in the consolidated financial statements of a larger group by a parent undertaking established under the law of a state other than the United Kingdom and is therefore exempt from the requirement to prepare consolidated financial statements under section 401 of the Companies Act 2006. The consolidated financial statements of the Company's ultimate parent company, Bertelsmann SE & Co KGaA, are available from: Bertelsmann SE & Co KGaA, Carl Bertelsmann Strasse 270, Postfach 111, D-33311 Gütersloh, Germany.
| 2.4 | New standards, amendments and IFRIC interpretations
There are no amendments to accounting standards, or IFRIC interpretations that are effective for the year ended 31 December 2024 that have had a material impact on the Company’s financial statements.
| 2.5 | Going concern
In preparing these financial statements, the directors have assessed the ability of the Company to continue to operate for a period of at least twelve months from the date of signing the financial statements. The Company has undertaken a risk assessment and forecasting exercise to assess the Company’s liquidity position. The forecast for the going concern period has been prepared using the three year plan approved by the Board and takes account of prior trends and expected titles to be published in the future and key cost drivers such as commodity prices and inflation. For the purposes of the Company’s going concern assessment, the directors have performed sensitivity analysis on cashflows based on unforeseen changes in demand and the potential impact of increased inflationary pressures. In addition, reverse stress testing has been performed to establish the levels of performance where cash availability would be breached. The results of the analysis demonstrated that there was sufficient cash availability within the current intra group cash pooling facility to deal with all of the identified plausible scenarios. Page 24
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.5 | Going concern (continued)
Based on the Company’s current trading performance, the sensitivity and reverse stress testing scenarios performed, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future, being a period of no less than twelve months from the date of approval of these financial statements. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
| 2.6 | Foreign currency translation
Functional and presentation currency The Company's functional and presentational currency is GBP. Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates. The financial statements are presented in pound sterling, which is also the functional currency of the Company. Transactions and balances Transactions in a currency other than the functional currency (“foreign currency”) are translated into the functional currency using the spot exchange rates at the dates of the transactions. At each period end foreign currency monetary items are translated using the closing rate. Management assess the underlying asset and liability in the transaction to determine the nature of the foreign exchange gains and losses. As this results from operating activities gains and losses resulting from the settlement of transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in the Statement of comprehensive income within ‘Administrative expenses’. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined. Foreign exchange differences arising on translation are recognised in the Statement of comprehensive income under administrative expenses.
| 2.7 | Revenue
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. The Company recognises revenue when performance obligations have been satisfied and for the Company this is when the services have been provided to the customer. The Company’s activities are described in detail below. Book warehousing and distribution fees The Company recognises revenue when performance obligations have been satisfied and for the Company this is when the services have transferred to the customer. Revenue from providing the services is recognised in the accounting period in which the services are rendered. Page 25
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.8 | Current and deferred taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the Statement of comprehensive income except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity is also recognised in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combinations, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
| 2.9 | Pensions
Defined contribution pension plan The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations. The contributions are recognised as an expense in the Statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the Balance sheet. The assets of the plan are held separately from the Company in independently administered funds.
| 2.10 | Tangible fixed assets
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount. Page 26
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.10 | Tangible fixed assets (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method. Depreciation is provided on the following basis:
|  |  |  | Long-term leasehold property | - | Over the term of the lease
|  |  |  | Plant and machinery | - | Over a period of between 5 and 15 years
|  |  |  | Motor vehicles | - | Over 4 years
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss. Assets under construction are not depreciated. External borrowing costs attributable to assets under construction are accounted for under IAS 23 and added to the asset value if material to the company and can be directly attributed to the asset under construction. All other borrowing costs, including those arising through intercompany borrowing are recognised as an expense when incurred.
| 2.11 | Leases
The Company as a lessee The Company assesses whether a contract is or contains a lease, at inception of a contract. The Company recognises a right-of-use asset and a corresponding lease liability with respect to all lease agreements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Company uses its incremental borrowing rate, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Lease payments included in the measurement of the lease liability comprise: ∙fixed lease payments (including in-substance fixed payments), less any lease incentives; The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. Page 27
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.11 | Leases (continued)
Whenever the Company incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and measured under IAS 37. The costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Company expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease. The Company applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in note 2.10. As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has used this practical expedient.
| 2.12 | Investments
Investments in subsidiaries are measured at cost less accumulated impairment. At each balance sheet date, management review the investments in order to determine whether there is any objective evidence present that in accordance with IAS 36 would lead to an impairment being charged. Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversals at each reporting date, where a favourable event or change in circumstance has materialised that would indicate the impairment loss no longer exists or has decreased in size.
| 2.13 | Impairment of non-financial assets
Non-financial assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets are reviewed for possible reversal at each reporting date, if there have been favourable events or changes in circumstances, since the impairment loss was recognised that would indicate that the impairment loss no longer exists or might have decreased. Page 28
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.14 | Financial assets
The Company classifies it's financial assets in the following categories: - Amortised cost - Fair value through profit or loss (FVTPL) - Fair value through other comprehensive income (FVOCI) The classification depends on the purpose for which the financial assets were acquired i.e. the entity's business model for management the financial assets and/or the contractual cash flow characteristics of the financial asset. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model whose objective is achieved by both collection contractual cash flows and selling financial assets; and • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Subsequent to initial recognition these are measured at amortised cost using the effective interest method. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other (expenses)/income together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the profit or loss under ‘net impairment losses on financial and contract assets. On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment- by- investment basis. All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets.The company does not have any assets classified at FVOCI nor FVTPL.
| 2.15 | Trade debtors and amounts owed by group undertakings
Trade debtors and amounts owed by group undertakings are stated at amortised cost after provision for bad and doubtful debts. The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade debtors. To measure the expected credit losses, trade debtors are grouped based on shared credit risk characteristics and the days past due.
| 2.16 | Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short- term highly liquid investments with original maturities of three months or less, and bank overdrafts. In the balance sheet, bank overdrafts are shown within borrowings in creditors: amounts falling due within one year. Page 29
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 2.Accounting policies (continued)
| 2.17 | Creditors including amounts owed to group undertakings
Trade creditors and amounts owed to group undertakings are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
| 2.18 | Provisions for liabilities
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation. Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance sheet.
3. | Judgements in applying accounting policies and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates, underlying assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable and relevant under the circumstances, however there are no significant accounting judgements in this entity. Key accounting estimates and assumptions Impairment of trade debtors The Company makes an estimate of the recoverable value of trade and other receivables. When assessing impairment of trade and other receivables, management considers factors including the credit rating of the debtor, the ageing profile of receivables and historical experience. The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade debtors are grouped based on shared credit risk characteristics and the days past due. See note 15 for the net carrying amount of the receivables and associated impairment provision.
4. | Revenue
The whole of the revenue is attributable to the Company's principal activity of book warehousing and distribution and arises entirely within the United Kingdom. Page 30
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
5. | Operating loss
| The operating loss is stated after charging:
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Depreciation of tangible fixed assets | 1,289,276 | 1,088,983
| Defined contribution pension cost | 1,132,215 | 1,178,229
|  | - | -
| Auditors remuneration in the year amounted to £77,250 (2023: £75,000) and this all related to audit services. There were no non-audit services provided (2023: none). Redundancy costs relate to the closure of the Grantham site.
6. | Employees
| Staff costs were as follows:
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Wages and salaries | 15,490,064 | 15,300,871
| Social security costs | 1,512,749 | 1,408,656
| Staff pension costs | 1,132,215 | 1,178,229
|  | 18,135,028 | 17,887,756
| Employees of the company are legally contracted with and paid by the parent company, The Random House Group Limited. The amounts shown above represent recharges from the parent company for employment services performed wholly relating to the principal activities of The Book Service Limited. The average monthly number of employees legally contracted with the parent company whose staff costs were recharged to the Company during the year was 502 (2023: 525).
7. | Directors' remuneration
| The emoluments of the directors are paid by the parent company, The Random House Group Limited, and Penguin Books Limited. Director’s services to the Company and to a number of fellow subsidiaries, and their emoluments, are deemed to be incidental to the services provided to other group companies. Accordingly, there are no emoluments in respect of the directors (2023: £nil).
Page 31
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
8. | Interest receivable and similar income
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Interest on cash pooling | 7,920,774 | 5,294,655
|  | 7,920,774 | 5,294,655
| Further details regarding cash pooling arrangements are included in note 15.
9. | Interest payable and similar expenses
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Interest on lease liabilities | 9,727 | 3,296
|  | 9,727 | 3,296
Page 32
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
10. | Tax on profit/(loss)
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Corporation tax |  |
| UK corporation tax on losses for the period | 525,361 | (247,952)
| Adjustments in respect of prior years | (16,545) | (291,738)
|  | 508,816 | (539,690)
| Foreign tax |  |
| Foreign tax on income for the year | - | (88)
|  | - | (88)
| Total current tax | 508,816 | (539,778)
| Deferred tax |  |
| Origination and reversal of timing differences | 511,822 | (30,087)
| Adjustments in respect of prior years | 19,200 | 402,341
| Total deferred tax | 531,022 | 372,254
| Tax on profit/(loss) | 1,039,838 | (167,524)
Page 33
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 10.Tax on profit/(loss) (continued)
| Factors affecting tax charge for the year
| The tax assessed for the year is lower than (2023 - higher than) the standard rate of corporation tax in the UK of 25% (2023 - 23.5%). The differences are explained below:
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Profit/(loss) before tax | 4,159,731 | (1,175,462)
| Profit/(loss) multiplied by standard rate of corporation tax in the UK of 25% (2023 - 23.5%) | 1,039,933 | (276,234)
| Effects of: |  |
| Expenses not deductible | 2,500 | -
| Income not taxable | (5,250) | -
| Adjustments in respect of prior years - current tax | (16,545) | (291,738)
| Adjustments in respect of prior years - deferred tax | 19,200 | 402,341
| Withholding tax not creditable | - | (88)
| Deferred tax rate differences | - | (1,805)
| Total tax charge for the year | 1,039,838 | (167,524)
| Factors that may affect future tax charges
An increase in the UK corporation tax rate from 19% to 25% (effective 1 April 2023) was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet dated have been measured using this enacted rate. Page 34
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
11. | Tangible fixed assets
|  | Freehold property | Long-term leasehold property | Plant and machinery | Motor vehicles | Assets under construction | Total
|  | £ | £ | £ | £ | £ | £
| Cost |  |  |  |  |  |
| At 1 January 2024 | 39,600 | 253,179 | 16,206,802 | 30,000 | 120,382 | 16,649,963
| Additions | - | - | - | - | 2,432,266 | 2,432,266
| Disposals | - | (35,040) | (2,790,096) | (4,195) | - | (2,829,331)
| Transfers | - | - | 423,081 | - | (423,081) | -
| At 31 December 2024 | 39,600 | 218,139 | 13,839,787 | 25,805 | 2,129,567 | 16,252,898
| Depreciation |  |  |  |  |  |
| At 1 January 2024 | 1,212 | 238,697 | 8,358,308 | 23,548 | - | 8,621,765
| Charge for the year | 808 | 232 | 1,282,322 | 5,914 | - | 1,289,276
| Disposals | - | (20,790) | (2,741,384) | (4,195) | - | (2,766,369)
| At 31 December 2024 | 2,020 | 218,139 | 6,899,246 | 25,267 | - | 7,144,672
| Net book value |  |  |  |  |  |
| At 31 December 2024 | 37,580 | - | 6,940,541 | 538 | 2,129,567 | 9,108,226
| At 31 December 2023 | 38,388 | 14,482 | 7,848,494 | 6,452 | 120,382 | 8,028,198
Page 35
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
12. | Leases
The company has lease contracts for vehicles used in the operations of the business. The amounts recognised in the financial statements in relation to the leases are as follows: Right-of-use assets
|  | 2024 | 2023
|  | £ | £
| Plant & machinery | 288,257 | 149,264
|  | 288,257 | 149,264
Additions to the right-of-use assets during the financial year were £324,459 (2023: £43,624).
| Lease liabilities
|  | 2024 | 2023
|  | £ | £
| Current | 142,076 | 105,668
| Non-current | 176,521 | 52,750
|  | 318,597 | 158,418
Contractual undiscounted cash flows are due as follows:
|  | 2024 | 2023
|  | £ | £
| Less than one year | 141,665 | 106,946
| Between one and two years | 190,738 | 23,937
| Between two and three years | 5,199 | 23,224
| Between three and four years | 4,478 | -
| Total gross payments | 342,080 | 154,107
| Impact of finance expenses | (16,942) | (1,689)
| Carrying amount of liability | 325,138 | 152,418
Page 36
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
12. | Leases (continued)
The following amounts in respect of leases, where the Company is a lessee, have been recognised in the Statement of comprehensive income:
|  | 2024 | 2023
|  | £ | £
| Interest expense on plant & machinery lease liabilities | 9,727 | 3,296
| Depreciation - plant & machinery | 184,322 | 175,654
|  | 194,049 | 178,950
Page 37
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
13. | Investments
|  | Investments in subsidiary companies | Unlisted investments | Total
|  | £ | £ | £
| Cost |  |  |
| At 1 January 2024 | 100 | 150,000 | 150,100
| Disposals | (100) | - | (100)
| At 31 December 2024 | - | 150,000 | 150,000
| Impairment |  |  |
| At 1 January 2024 | - | 150,000 | 150,000
| At 31 December 2024 | - | 150,000 | 150,000
| Net book value |  |  |
| At 31 December 2024 | - | - | -
| At 31 December 2023 | 100 | - | 100
| On 19 December 2024 the Company sold their investment in PRH International Services Limited (formerly Grantham Book Services Limited) for £100. At the balance sheet date the Company had no subsidiary undertakings. The unlisted equity investment comprises 30% of the ordinary shares of Bounce! Sales & Marketing Limited. The directors do not consider this investment to be a participating investment as they do not exercise a significant influence over the affairs of this Company. The registered office of Bounce! Sales & Marketing Limited is Hathaway House, Popes Drive, London, N3 1QF and its principal activity is book sales and marketing. An impairment assessment was carried out in accordance with International Accounting Standard 36. The carrying amount and the recoverable amount of the investment was compared to ascertain if impairment is necessary. The recoverable amount is the higher of an assets fair value less costs of disposal and value in use. No impairment was considered necessary.
Page 38
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
14. | Deferred tax assets and (liabilities)
| Movement in recognised deferred tax asset/(liability) during the year: | 1 January 2024 | Income statement movement | 31 December 2024
|  | £ | £ | £
| Property plant and equipment | (1,387,474) | (239,414) | (1,626,888)
| Other temporary differences | 1,008,303 | (291,608) | 716,695
|  | (379,171) | (531,022) | (910,193)
| Movement in recognised deferred tax during the previous year: | 1 January 2023 | Income statement movement | 31 December 2023
|  | £ | £ | £
| Property plant and equipment | (290,226) | (1,097,248) | (1,387,474)
| Other temporary differences | 283,309 | 724,994 | 1,008,303
|  | (6,917) | (372,254) | (379,171)
Deferred tax liabilities recognised on property, plant and equipment timing differences are substantially due in more than 12 months. Deferred tax assets recognised on other temporary differences relate to timing differences on provisions due within 12 months.
15. | Debtors: amounts falling due within one year
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Trade debtors | 125,420,356 | 148,862,691
| Amounts owed by group undertakings | 282,532,118 | 249,715,263
| Other debtors | 1,528,337 | 254,788
| Prepayments and accrued income | 1,647,651 | 976,181
| Tax recoverable | - | 247,951
|  | 411,128,462 | 400,056,874
Page 39
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024 15.Debtors: amounts falling due within one year (continued)
| Amounts owed by group undertakings (excluding amounts owed to Bertelsmann UK Limited) are unsecured and repayable on demand. Included within this is £242,424,270 (2023 - £211,711,144) in respect of a cash pooling facility of £10m with Bertelsmann UK Limited which is unsecured and has no fixed date of repayment but can be terminated by either party giving three days notice. This amount incurs interest on a monthly basis; the average interest rate received on any cash pooling receivables during the year was 4.880% (2023 - 4.436%). Trade debtors principally represent amounts to be collected by the Company on behalf of group and third party publishers which the Company distributes goods for. Trade debtors are stated after provision for impairment of £7,026,315 (2023 - £5,126,647).
16. | Creditors: amounts falling due within one year
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Amounts owed to group publishers | 397,448,298 | 366,225,496
| Amounts owed to third party publishers | 36,615,212 | 65,037,031
| Trade creditors | 2,106,155 | 917,773
| Corporation tax | 525,360 | -
| Lease liabilities | 142,076 | 105,668
| Accruals | 2,677,834 | 4,603,524
|  | 439,514,935 | 436,889,492
| Amounts owed to group companies and group publishers are unsecured, repayable on demand and interest free. Included in amounts owed to group publishers are amounts owed by the Company for trade receivables collected on their behalf under the terms of agreement of the distribution services provided by the Company.
17. | Creditors: amounts falling due after more than one year
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
| Lease liabilities | 176,521 | 52,750
|  | 176,521 | 52,750
Page 40
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
18. | Called up share capital
|  |  |  |  | 2024 | 2023
|  |  |  |  | £ | £
|  | Allotted, called up and fully paid |  |
|  | 200,000 (2023 - 200,000) Ordinary shares of £1.00 each | 200,000 | 200,000
| There is a single class of ordinary shares. There are no restrictions on dividends and the repayment of capital.
19. | Pension fund
The Company is a member of the Penguin Random House Pension Scheme. This scheme is of the defined benefit type. The assets of the scheme are for the scheme as a whole and are not allocated to the employees, or ex-employees, of a particular Company. Employees can move freely between the sponsoring companies and so it is not considered practicable to attempt to split the liabilities between the companies. Because the Company is unable to identify its share of the scheme assets and liabilities on a consistent and reasonable basis as permitted by IAS 19 “Employee benefits” the scheme has been accounted for in these financial statements as if the scheme was a defined contribution scheme. The assets of the scheme are invested by the trustees acting on the advice of independent investment advisors. The pension costs have been assessed in accordance with the advice of a qualified actuary. The Random House Group Limited ("TRHGL") is the principal employer to the Scheme, and retains responsibility for liabilities arising from obligations of the Scheme. TRHGL would therefore retain responsibility for any surplus or deficit which would arise on the wind up of the plan, or an employer exiting the plan. As detailed in note 6 and from the perspective of the Scheme, the employees of The Book Service Limited are legally contracted with THRGL. Contributions to the scheme are based on pension costs across the group as a whole. The scheme was closed to new members from 30 June 2002. Particulars of the actuarial valuation of the scheme are contained in the financial statements of The Random House Group Limited. For new employees, from 1 July 2002, the Company, together with its parent, The Random House Group Limited, operates a defined contribution pension scheme. With effect from January 2024, the Company contribution towards deficit funding was agreed to be reduced to £nil, given the funding position of the Scheme around the time at which the Schedule of contributions was certified. The Schedule of contributions was certified by the Scheme Actuary on 22 December 2023. Defined contribution scheme Following the closure of the defined benefit scheme to new entrants, the Company provided a defined contribution scheme for its employees, administered by Capita. The defined contribution scheme was replaced in March 2016 by a money purchase scheme administered by Aviva. The amount recognised as an expense for the defined contribution scheme was:
|  | 2024 | 2023
|  | £ | £
| Money purchase scheme | 1,132,215 | 1,178,229
Page 41
THE BOOK SERVICE LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
20. | Reserves
Profit and loss account The profit and loss account includes all current and prior period retained profits and losses. All reserves in respect of profit and loss are distributable reserves.
21. | Related party transactions
| The Company has taken advantage of the exemption, under the terms of International Accounting Standard 24 'Related party disclosures', not to disclose related party transactions with companies that are wholly owned within the Bertelsmann Group. During the year the Company entered into the following transactions with related parties not wholly owned within the Bertelsmann Group. The following entities are all subsidiaries within the Bertelsmann Group.
|  | 2024 | 2023
|  | £ | £
| Sales fees charged to: |  |
| Woodlands Books Limited | 406,023 | 473,153
| Children's Character Books Limited | 167,565 | 210,163
| Debtors: |  |
| Woodlands Books Limited | - | 81,384
| Children's Character Books Limited | 14,475 | 15,454
| Creditors: |  |
| Woodlands Books Limited | 4,315,189 | 5,968,967
| Children's Character Books Limited | - | 519,516
Creditor balances are unsecured and no guarantees have been received. Creditor balances will be settled in cash.
22. | Controlling parties
The Company's immediate parent company is The Random House Group Limited (“RHG”). RHG is a wholly owned subsidiary of Penguin Random House Limited (“PRHL”). The Company’s ultimate parent company is Bertelsmann SE & Co KGaA, which is incorporated in Germany. Copies of Bertelsmann SE & Co KGaA’s consolidated financial statements (the smallest and largest financial statements in which the Company is consolidated) can be obtained from: Bertelsmann SE & Co KGaA Corporate Communications Carl Bertelsmann Strasse 270 33311 Gütersloh Germany
Page 42