Registered number: 00861590
FOR THE YEAR ENDED 31 DECEMBER 2024
PENGUIN BOOKS LIMITED
COMPANY INFORMATION
PENGUIN BOOKS LIMITED
CONTENTS
PENGUIN BOOKS LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their Strategic Report for Penguin Books Limited (‘the Company’ or ‘PBL’) for the year ended 31 December 2024.
The Company is a subsidiary of Penguin Random House Limited (“PRHL”), a company registered in the United Kingdom. The Company is UK domiciled and registered in the United Kingdom. The principal activity of the Company continues to be book publishing.
The Company’s turnover for the year was £247,168,000, which was 7.0% higher compared to the prior year (2023 - £ 230,928,000). The gross profit margin was 55.9% (2023 - 52.8%). Operating profit for the year increased by £9,871,000 to £ 39,002,000, which was a 33.9% increase on prior year (2023 - £ 29,131,000). The Company made a profit for the financial year of £ 45,757,000 (2023 - £ 43,332,000). The results and financial position of the Company are set out in the attached financial statements.
The higher turnover was in part driven by certain brand author sales outperforming compared with last year, as well as the strong performance of new titles such as Richard Osman's "We Solve Murders" and Jamie Oliver's "Simply Jamie". The increase in revenue, resulted in an increase in operating profit compared to previous year.
Earnings before interest, tax, depreciation, amortisation and impairment of non-financial assets (EBITDA) has increased in the financial year by 8.0% to £54,821,000 (2023 - £50,762,000). The increase is mainly attributable to the strong revenue performance in the year and higher margins, partially offset by the reduced income from shares in group undertakings which reduced from £19,000,000 in 2023 to £13,997,000 in 2024.
At the balance sheet date, the Company had net assets of £138,519,000, a decrease of 3.2% on the prior year (2023: £143,062,000). The Company paid a dividend of £50,000,000 in the year (2023 - £40,000,000). The decrease in net asset value compared to the prior year, was mainly driven by the increase in dividend paid in the year and small decrease in surplus on the Company's defined benefit pension scheme. The scheme surplus had decreased in value by 0.5% to £22,852,000 (2023 - £22,972,000).
The higher turnover was in part driven by certain brand author sales outperforming compared with last year, as well as the strong performance of new titles such as Richard Osman's "We Solve Murders" and Jamie Oliver's "Simply Jamie". The increase in revenue, resulted in an increase in operating profit compared to previous year.
Earnings before interest, tax, depreciation, amortisation and impairment of non-financial assets (EBITDA) has increased in the financial year by 8.0% to £54,821,000 (2023 - £50,762,000). The increase is mainly attributable to the strong revenue performance in the year and higher margins, partially offset by the reduced income from shares in group undertakings which reduced from £19,000,000 in 2023 to £13,997,000 in 2024.
At the balance sheet date, the Company had net assets of £138,519,000, a decrease of 3.2% on the prior year (2023: £143,062,000). The Company paid a dividend of £50,000,000 in the year (2023 - £40,000,000). The decrease in net asset value compared to the prior year, was mainly driven by the increase in dividend paid in the year and small decrease in surplus on the Company's defined benefit pension scheme. The scheme surplus had decreased in value by 0.5% to £22,852,000 (2023 - £22,972,000).
The Company monitors progress and performance during the year and historical trend data which is set out in the following KPIs:
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PENGUIN BOOKS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
The KPIs are in line with forecast expectations. Detailed explanations of the movements year on year have been included within the business review above.
Management makes use of certain alternative performance measures (APMs) that are non-UK GAAP measures. The Board uses these to assess performance of the Company and considers them to provide useful supplementary information to the statutory results. The Board does not consider APMs to be more relevant or reliable than UK GAAP measures and notes that their definition and basis of calculation may differ from other companies. The Company’s APMs are defined and a reconciliation to the most directly comparable UK GAAP measure is shown below.
EBITDA is operating profit as measured using UK GAAP principles adjusted for the effects of depreciation, amortisation and impairment of non-financial assets. EBITDA is reported to the Board as management considers that it provides a useful proxy for the Company’s operating profit excluding non-cash items. It can be reconciled to the operating profit measure reported in the Profit and Loss Account as shown below:
Management makes use of certain alternative performance measures (APMs) that are non-UK GAAP measures. The Board uses these to assess performance of the Company and considers them to provide useful supplementary information to the statutory results. The Board does not consider APMs to be more relevant or reliable than UK GAAP measures and notes that their definition and basis of calculation may differ from other companies. The Company’s APMs are defined and a reconciliation to the most directly comparable UK GAAP measure is shown below.
EBITDA is operating profit as measured using UK GAAP principles adjusted for the effects of depreciation, amortisation and impairment of non-financial assets. EBITDA is reported to the Board as management considers that it provides a useful proxy for the Company’s operating profit excluding non-cash items. It can be reconciled to the operating profit measure reported in the Profit and Loss Account as shown below:
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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 markets and 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. 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.
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PENGUIN BOOKS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
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.
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;
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 of the Company.
Examples of how the Directors have oversight of these stakeholder matters are included throughout the Strategic and Director’s reports as well as set out specifically below.
The Board operates a structured governance model which supports the Company in ensuring that decisions are considered, documented and reported upon, and in alignment with its 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 and the ongoing management of the current economic situation.
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 and the ongoing management of the current economic situation.
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PENGUIN BOOKS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
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 also regularly informs staff and staff representatives of Company updates and activity to keep them informed of the Company’s progress and performance.
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.
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.
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.
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 opportunity to read books possible. As part of this, the Company actively invests in young people, partnering with schools and local community projects to nurture and create readers for the future.
The Company continues to make 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.
The Company continues to make 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 considers 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.
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PENGUIN BOOKS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
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.
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.
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. Penguin Books Limited (PBL) 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.
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.
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PENGUIN BOOKS 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 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 its entire value chain. The Board has set three key targets for the future. The details of these are outlined in the Company’s 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.
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PENGUIN BOOKS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
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PENGUIN BOOKS 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
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PENGUIN BOOKS 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).
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.
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PENGUIN BOOKS 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.
The profit for the year, after taxation, amounted to £45,757,000 (2023 - £43,332,000).
Dividends of £50,000,000 were paid during the financial year (2023 - £40,000,000).
The directors who served during the year and up to the date of signing the financial statements were:
The Company will continue to seek suitable publishing opportunities to ensure growth. The directors do not
anticipate any significant changes in the activities of the Company.
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.
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PENGUIN BOOKS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
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 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.
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 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.
Details on energy and carbon reporting, engagement with customers, suppliers and other stakeholders, and financial risk management policy sections are not included within 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.
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 and signed on its behalf.
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PENGUIN BOOKS 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 and 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.
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PENGUIN BOOKS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PENGUIN BOOKS LIMITED
We have audited the financial statements of Penguin Books Limited (the 'Company') for the year ended 31 December 2024, which comprise the Profit and loss account, 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).
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.
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PENGUIN BOOKS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PENGUIN BOOKS LIMITED (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.
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 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.
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 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic report and Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic report and Directors' report have been prepared in accordance with applicable legal requirements.
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PENGUIN BOOKS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PENGUIN BOOKS LIMITED (CONTINUED)
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.
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.
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PENGUIN BOOKS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PENGUIN BOOKS LIMITED (CONTINUED)
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.
∙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 of 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 Profit and loss account; 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;
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PENGUIN BOOKS LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PENGUIN BOOKS LIMITED (CONTINUED)
Auditor's responsibilities for the audit of the financial statements (continued)
∙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.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
Senior statutory auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Milton Keynes
Milton Keynes
31 March 2025
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PENGUIN BOOKS LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 18
PENGUIN BOOKS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 19
PENGUIN BOOKS LIMITED
REGISTERED NUMBER: 00861590
BALANCE SHEET
AS AT 31 DECEMBER 2024
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PENGUIN BOOKS LIMITED
REGISTERED NUMBER: 00861590
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2024
The notes on pages 23 to 60 form part of these financial statements.
The financial statements were approved and authorised for issue by the board and were signed on its behalf on31 March 2025 .
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
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PENGUIN BOOKS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 22
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Penguin Books Limited is a book publisher. The Company sells its books globally. The Company is a private company limited by shares and is incorporated in the United Kingdom. The address of its registered office is One Embassy Gardens, 8 Viaduct Gardens, London, SW11 7BW.
2.Accounting policies
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:
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:
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.
- 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.
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PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (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.
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.
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PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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 goods (books) have transferred to the customer and the customer has control of these. The Company’s activities are described in detail below. The Company bases its estimate of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Sale of Books
Revenue from the sale of books is recognised at the point in time when title passes. This is generally at the point of delivery when title passes to the customer and a present right to payment occurs.
A liability for anticipated returns is made based primarily on historical return rates. If these estimates do not reflect actual returns in future periods, then revenue could be understated or overstated for a particular period. This estimate of anticipated returns is recognised in creditors in the balance sheet.
Digital Sales
Revenue from the sale of Ebooks and audio sales are recognised at a point in time when the content is delivered. This is commonly when the customer has access to the download and a present right to payment occurs.
Income from subrights
Revenue from licensing and subrights, including film, overseas and electronic, is recognised when the performance obligation under the agreement has been satisfied. This is at the point in time when the associated material is transferred.
An assessment is made on each contract as to the relevant performance obligations to assess whether the customer receives a right to access or use the Company’s intellectual property. Where the performance obligation is deemed over time, an appropriate recognition framework is created based on the consumption and provision of the goods or service in question.
For related sales-based royalties of license of Company’s intellectual property, the income is recognised as the subsequent sale occurs. Where the third party sales information is not readily available at the reporting date, an estimation is made based on the information available to hand. An adjusting post balance sheet adjustment is made where subsequent information is recevied post year end but before the date of approval of the financial statements.
Principal v Agent considerations
The Company may enter contracts with another party in addition to the customer in the arrangement. An assessment is made for each such contract as to who understands the related good or service prior to the transfer to the end customer to determine if revenue should be recognised on a gross or net basis. Where the Company acts as agent, revenue represents any commissions and fees receivable for such services rendered. Any third-party costs incurred on behalf of the principal that are rechargeable under the contractual arrangement are included in revenue with a corresponding expense recognised in administrative expenses in the income statement.
Sale of Books
Revenue from the sale of books is recognised at the point in time when title passes. This is generally at the point of delivery when title passes to the customer and a present right to payment occurs.
A liability for anticipated returns is made based primarily on historical return rates. If these estimates do not reflect actual returns in future periods, then revenue could be understated or overstated for a particular period. This estimate of anticipated returns is recognised in creditors in the balance sheet.
Digital Sales
Revenue from the sale of Ebooks and audio sales are recognised at a point in time when the content is delivered. This is commonly when the customer has access to the download and a present right to payment occurs.
Income from subrights
Revenue from licensing and subrights, including film, overseas and electronic, is recognised when the performance obligation under the agreement has been satisfied. This is at the point in time when the associated material is transferred.
An assessment is made on each contract as to the relevant performance obligations to assess whether the customer receives a right to access or use the Company’s intellectual property. Where the performance obligation is deemed over time, an appropriate recognition framework is created based on the consumption and provision of the goods or service in question.
For related sales-based royalties of license of Company’s intellectual property, the income is recognised as the subsequent sale occurs. Where the third party sales information is not readily available at the reporting date, an estimation is made based on the information available to hand. An adjusting post balance sheet adjustment is made where subsequent information is recevied post year end but before the date of approval of the financial statements.
Principal v Agent considerations
The Company may enter contracts with another party in addition to the customer in the arrangement. An assessment is made for each such contract as to who understands the related good or service prior to the transfer to the end customer to determine if revenue should be recognised on a gross or net basis. Where the Company acts as agent, revenue represents any commissions and fees receivable for such services rendered. Any third-party costs incurred on behalf of the principal that are rechargeable under the contractual arrangement are included in revenue with a corresponding expense recognised in administrative expenses in the income statement.
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PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Advances of royalties paid to authors are included within trade and other receivables and are recognised once a signature advance has been paid or manuscript has been accepted or marked as future accepted on the title. Advances of royalties paid to authors under licensing agreements are recognised based on the related performance obligation identified in the contract. Where the advance is not linked to any further obligations by the proprietor, the advance is recognised upon signing of the contract or a specific date identified in the contract.
Advances are presented at their net realisable value, being the advance less any write down or valuation allowance. Management apply judgement in their bi-annual assessment to unpublished books as to whether the book will sustain economic loss based on the future projections of revenues and associated costs. For published titles, a quarterly assessment determines whether the unearned royalty advances of a particular title is recoverable based on the projected future sales of the title and the related royalty income.
Once the author advance is earned out, future author payments are expensed at the contracted or effective royalty rate as the related turnover is earned.
Advances are presented at their net realisable value, being the advance less any write down or valuation allowance. Management apply judgement in their bi-annual assessment to unpublished books as to whether the book will sustain economic loss based on the future projections of revenues and associated costs. For published titles, a quarterly assessment determines whether the unearned royalty advances of a particular title is recoverable based on the projected future sales of the title and the related royalty income.
Once the author advance is earned out, future author payments are expensed at the contracted or effective royalty rate as the related turnover is earned.
Dividend income is recognised when the right to receive payment is established.
Other operating income consists of income not directly related to the Company's principal activity in relation to the publication of books.
It mainly comprises of the management recharge of administrative, distribution and other operating expenses incurred by the Company on behalf of other group undertakings. It is recognised at a point in time that the services are provided in accordance with the relevant performance obligation. The management charge is a combination of certain fixed costs and the allocation of expenses calculated using agreed specific percentages within a recharge model.
It mainly comprises of the management recharge of administrative, distribution and other operating expenses incurred by the Company on behalf of other group undertakings. It is recognised at a point in time that the services are provided in accordance with the relevant performance obligation. The management charge is a combination of certain fixed costs and the allocation of expenses calculated using agreed specific percentages within a recharge model.
Page 26
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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 profit and loss account 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 profit and loss account under administrative expenses.
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 profit and loss account 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 profit and loss account under administrative expenses.
Page 27
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
The Company operates various post-employment schemes, including both defined benefit and defined contribution pension plans and post-employment medical plans.
Defined benefit pension plan
The Company operates a defined benefit plan for certain employees. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including but not limited to age, length of service and remuneration. A defined benefit plan is a pension plan that is not a defined contribution plan.
The asset or liability recognised in the Balance Sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets at the balance sheet date (if any) out of which the obligations are to be settled.
Any asset arising on the defined benefit plan at the balance sheet date is considered to be fully recoverable by the Company. Whilst the trustees of the scheme have a unilateral power to trigger a wind up of the plan without employer consent, and before all benefits have been provided to members in full, it is considered highly unlikely. The only circumstances in which the objectives for which the scheme was established would no longer exist would be when all of the benefits owed to every last beneficiary had either been paid, or secured with an insurance company on a buy-out, or otherwise transferred in full to another arrangement. Therefore, the trustees would not use this power to wind up an ongoing scheme before the death of the last beneficiary.
The defined benefit obligation is calculated using the projected unit credit method. Annually the Company engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating to the estimated period of the future payments ('discount rate').
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
The amount charged or credited to finance costs is a net interest amount calculated by applying the liability discount rate to the net defined benefit liability or asset.
Past service costs are recognised immediately in the income statement.
Defined benefit pension plan
The Company operates a defined benefit plan for certain employees. A defined benefit plan defines the pension benefit that the employee will receive on retirement, usually dependent upon several factors including but not limited to age, length of service and remuneration. A defined benefit plan is a pension plan that is not a defined contribution plan.
The asset or liability recognised in the Balance Sheet in respect of the defined benefit plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets at the balance sheet date (if any) out of which the obligations are to be settled.
Any asset arising on the defined benefit plan at the balance sheet date is considered to be fully recoverable by the Company. Whilst the trustees of the scheme have a unilateral power to trigger a wind up of the plan without employer consent, and before all benefits have been provided to members in full, it is considered highly unlikely. The only circumstances in which the objectives for which the scheme was established would no longer exist would be when all of the benefits owed to every last beneficiary had either been paid, or secured with an insurance company on a buy-out, or otherwise transferred in full to another arrangement. Therefore, the trustees would not use this power to wind up an ongoing scheme before the death of the last beneficiary.
The defined benefit obligation is calculated using the projected unit credit method. Annually the Company engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating to the estimated period of the future payments ('discount rate').
Re-measurement gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.
The amount charged or credited to finance costs is a net interest amount calculated by applying the liability discount rate to the net defined benefit liability or asset.
Past service costs are recognised immediately in the income statement.
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PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Defined contribution pension plan
The Company operates a defined contribution plan for certain employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
The Company pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
The Company operates a defined contribution plan for certain employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
The Company pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Company has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account 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 or 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 combination, 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 difference can be utilised.
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 combination, 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 difference can be utilised.
The Company leases various offices, equipment and vehicles. Rental contracts are typically made for fixed periods of 6 months to 10 years but may extend beyond the term where extension options are present.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company.
Page 29
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Where another group company holds the guarantor and lease of the related property, but is not the sole occupier, the Company occupying the leased building holds the right of use asset with the lease liability being shows as a corresponding intercompany payable. The intercompany payable in relation to the lease is calculated using the same methodology as the lease liability above.
Page 30
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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.
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 in accordance with IAS 36.
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.
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 31
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
Computer software
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Company are recognised as intangible assets when the following criteria are met:
- It is technically feasible to complete the software product so that it will be available for use;
- It is technically feasible to complete the software product so that it will be available for use;
- Management intends to complete the software product and use it or sell it;
- There is an ability to use or sell the software product;
- It can be demonstrated how the software product will generate probable future economic benefits;
- Adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and
- The expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Page 32
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (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:
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. Management applies judgement in determining both the residual value and economic life of the asset.
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.
Stocks mainly comprise raw materials and consumables, finished goods and work in progress in respect of books and are stated at the lower of cost and net realisable value. Cost is determined using FIFO method.
Cost includes the direct costs of paper, printing and binding incurred on a title-by-title basis. Plant costs, which do not vary with the number of copies printed (for example typesetting, origination and illustration), are charged to the income statement in full on publication.
A provision is made for excess, obsolete and slow-moving stocks by considering the future expected sales and comparing to the current quantity held. Any provision for obsolete stock is charged to the profit and loss and included in the value of Inventory as shown in note 17.
Net realisable value is calculated as the estimated selling price in the ordinary course of business less applicable variable selling expenses.
Cost includes the direct costs of paper, printing and binding incurred on a title-by-title basis. Plant costs, which do not vary with the number of copies printed (for example typesetting, origination and illustration), are charged to the income statement in full on publication.
A provision is made for excess, obsolete and slow-moving stocks by considering the future expected sales and comparing to the current quantity held. Any provision for obsolete stock is charged to the profit and loss and included in the value of Inventory as shown in note 17.
Net realisable value is calculated as the estimated selling price in the ordinary course of business less applicable variable selling expenses.
Page 33
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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 managing 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 collecting 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 de-recognition 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 a 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.
The Company assesses at the end of each reporting period whether there is objective evidence that one or more event has occurred which has impacted on the estimated cash flows of the financial asset.
Financial assets are impaired and impairment losses are incurred only if such objective evidence of impairment can be reliably measured.
Page 34
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
2.Accounting policies (continued)
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 insignificant trade debtors and a risk score on an individual basis for significant trade debtors. To measure the expected credit losses, trade debtors are grouped based on shared credit risk characteristics and the balance of uninsured debt across the Company.
The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for insignificant trade debtors and a risk score on an individual basis for significant trade debtors. To measure the expected credit losses, trade debtors are grouped based on shared credit risk characteristics and the balance of uninsured debt across the Company.
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.
Page 35
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 36
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
(ii)Returns liabilities
The Company has agreements in place to allow customers to return books. As a result the Company makes an estimate of future returns based on historic data, the ageing of sales and business experience. This liability is included within accruals and the value at the year end was £10,425,190 (2023: £10,539,926).
(iii)Defined benefit scheme
The Company has an obligation to pay pension benefits to certain employees. The cost of these benefits and the present value of the obligation depend on a number of factors including life expectancy, salary increases, asset valuations and the discount rate on corporate bonds. Management estimates these factors in determining the net pension obligation in the balance sheet. The assumptions reflect historical experience and current trends.
Management consider it highly unlikely, and contrary to the objects of why the scheme was established, that the trustees would wind up the plan without employer consent before all benefits had been paid in full to the members. As a result, management consider any surplus arising on the defined benefit plan at the balance sheet date to be fully recoverable.
See note 19 for the disclosures of the defined benefit pension scheme.
(iv)Impairment of investments
Investments in subsidiary companies are held at cost less accumulated impairment losses. The Company assesses annually whether investments have suffered any impairment, with the carrying amount being written down for any impairment highlighted. The Company uses budgeted profits, projected cash flows and weighted average cost of capital in order to determine whether any impairment is required. See note 16 for the carrying amount of investments and associated provision.
Page 37
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Analysis of revenue by geographical location:
Page 38
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 39
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Retirement benefits are accruing to 2 directors (2023: 2) under defined benefit pension schemes and to 1 director (2023: 1) under a money purchase scheme.
Page 40
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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A percentage of total directors’ costs are recharged from the Company to other Penguin Random House group entities. The above directors’ remuneration amounts represent the amount allocated to the Company for services undertaken by the directors of the Company.
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Page 41
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 42
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
11.Tax on profit (continued)
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 date have been measured using this enacted rate.
Page 43
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Page 44
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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The Company held various lease contracts for office floors at Embassy Gardens, London ("EG"), used in the operations of the business. In August 2024, the Company exited the lease agreement and disposed of the right-of-use asset.
In accordance with the provisions of ‘IFRS 16: Leases’, the Company recognised a right-of use asset in the prior year, for EG which it occupied under licence by another group company. The Company recognised a lease liability for the net present value of future rent payments due under the licence agreement, discounted using the interest rate implicit in the lease. The Company had no risk as the sublease terms were the same as the head lease terms.
The amounts recognised in the financial statements in relation to the leases are as follows:
In accordance with the provisions of ‘IFRS 16: Leases’, the Company recognised a right-of use asset in the prior year, for EG which it occupied under licence by another group company. The Company recognised a lease liability for the net present value of future rent payments due under the licence agreement, discounted using the interest rate implicit in the lease. The Company had no risk as the sublease terms were the same as the head lease terms.
The amounts recognised in the financial statements in relation to the leases are as follows:
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Additions to the right-of-use assets during the financial year were £Nil (2023 - £Nil).
Page 45
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Future minimum lease payments as at 31 December are as follows:
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The total cash outflow for leases during 2024 was £1,181,000 (2023: £2,362,000).
Amounts charged to the profit and loss account in respect of leases:
Amounts charged to the profit and loss account in respect of leases:
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Page 46
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Page 47
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 48
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Page 49
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Penguin Pension Plan
The Penguin Pension Plan is a funded pension plan, with assets held in a separate trustee administered fund. It provides final salary benefits through the Final Pay and Penguin sections, and money purchase benefits with a defined benefit underpin through the Money Purchase Section. Plan assets held in the fund are governed by local regulations and practice in the United Kingdom. Responsibility for the governance of the plan including investment decisions and contribution schedules lies jointly with the Company and the Board of trustees of the fund.
The Penguin Pension Plan was established in July 2013 for the Company employees who had previously earned benefits in the Pearson Group Pension Plan. The first full actuarial valuation of the Penguin Pension Plan at 30 June 2015 was completed on 30 September 2016.
The expected contributions by the employer for the next financial year under the Schedule of Contributions are £2,090,000. The following information shows the maturity analysis of the expected benefit payments:
Less than 1 year £2,090,000
The Penguin Pension Plan was established in July 2013 for the Company employees who had previously earned benefits in the Pearson Group Pension Plan. The first full actuarial valuation of the Penguin Pension Plan at 30 June 2015 was completed on 30 September 2016.
The expected contributions by the employer for the next financial year under the Schedule of Contributions are £2,090,000. The following information shows the maturity analysis of the expected benefit payments:
Less than 1 year £2,090,000
Less than 2 years £942,000
Less than 3 years £2,396,000
Less than 4 years £2,575,000
Less than 5 years £2,425,000
Less than 10 years £22,695,000
The risks of the scheme are as follows:
(a) Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield, this will create a deficit. The plan holds a significant proportion of equities, which are expected to outperform corporate bonds in the long-term while providing volatility and risk in the short-term.
As the plans mature, the Company intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The first stage of this process was completed in 2015 with the sale of a number of equity holdings and purchase of a mixture of government and corporate bonds. The government bonds represent investments in UK government securities only. The corporate bonds are securities with an emphasis on the UK.
However, the Company believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity investment is an appropriate element of the Company’s long-term strategy to manage the plans efficiently.
(b) Changes in bond yields
As the plans mature, the Company intends to reduce the level of investment risk by investing more in assets that better match the liabilities. The first stage of this process was completed in 2015 with the sale of a number of equity holdings and purchase of a mixture of government and corporate bonds. The government bonds represent investments in UK government securities only. The corporate bonds are securities with an emphasis on the UK.
However, the Company believes that due to the long-term nature of the plan liabilities and the strength of the supporting group, a level of continuing equity investment is an appropriate element of the Company’s long-term strategy to manage the plans efficiently.
(b) Changes in bond yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.
(c) Longevity risk
(c) Longevity risk
The liabilities are very sensitive to unexpected changes in future mortality. If longevity increases at a faster pace than assumed then the liabilities will increase at future calculations. The longevity risk can be mitigated by securing benefits for members with insurance companies. There is also a growing market in longevity solutions which may enable this risk to be managed to some degree in the future.
Page 50
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
19. Post employment benefits (continued)
(d) Investment/interest rate risk
The Schemes’ invested assets are allocated heavily to equities, while IAS19 stipulates a discount rate related to corporate bond yields. Therefore the liabilities and assets may react differently to changes in market conditions.
e) Inflation risk
e) Inflation risk
The pension obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect the plans against extreme inflation). The majority of the plan assets are either unaffected by (fixed interest bonds) or loosely correlated with (equities) inflation, meaning that an increase in inflation will also increase the deficit.
A comprehensive actuarial valuation of the Penguin Pension Plan, using the projected unit basis, was carried out at 30 June 2020 by Lane Clark & Peacock LLP, independent consulting actuaries.
Adjustments to the valuation at that date have been made based on the following assumptions:
A comprehensive actuarial valuation of the Penguin Pension Plan, using the projected unit basis, was carried out at 30 June 2020 by Lane Clark & Peacock LLP, independent consulting actuaries.
Adjustments to the valuation at that date have been made based on the following assumptions:
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Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in the UK. These assumptions translate into an average life expectancy as follows:
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Page 51
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Reconciliation of the schemes assets and liabilities during the year:
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The net defined benefit asset of £22,852,000 is expected to be recovered in more than 12 months.
Page 52
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Page 53
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The sensitivity of the defined benefit obligation to changes in the weighted principal assumption is:
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The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised within the statement of financial position.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous year.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous year.
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The current service cost has been presented in administrative expenses and interest income in interest receivable and similar income.
The fair value of plan assets was:
The fair value of plan assets was:
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Page 54
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The return on plan assets was:
|
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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 & money purchase schemes was:
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 & money purchase schemes was:
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Page 55
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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Deferred tax assets are recognised within debtors (note 18), the deferred tax liabilities are recognised within provisions (note 23).
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There are no unused tax losses or unused tax credits.
Page 56
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
The provision for deferred tax consists of the following deferred tax assets/(liabilities):
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Page 57
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
|
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Discount provision
The Company has agreements in place to offer discounts on goods offered to customers, usually as a reward for repeated business. The provision is expected to be utilised within 12 months from the balance sheet date.
Deferred tax provision
The amounts of income taxes payable in future periods in respect of taxable temporary differences. See note 22 for further detail on the Company’s deferred tax assets and liabilities at the balance sheet date.
Onerous contracts
Where a provision is greater than the advance paid on manuscripts which have not yet been delivered, the Company recognises the excess as an onerous contract rather than disclosing in the total unpublished provision included in debtors. These are utilised on various timescales based on manuscript delivery.
Dilapidation provision
The Company had previously provided for the estimated costs on Embassy Gardens("EG") to restore the building to its original condition as specified in the underlying lease agreement. During the year the Company exited the lease arrangement at EG and as a result released the provision it was holding.
The Company has agreements in place to offer discounts on goods offered to customers, usually as a reward for repeated business. The provision is expected to be utilised within 12 months from the balance sheet date.
Deferred tax provision
The amounts of income taxes payable in future periods in respect of taxable temporary differences. See note 22 for further detail on the Company’s deferred tax assets and liabilities at the balance sheet date.
Onerous contracts
Where a provision is greater than the advance paid on manuscripts which have not yet been delivered, the Company recognises the excess as an onerous contract rather than disclosing in the total unpublished provision included in debtors. These are utilised on various timescales based on manuscript delivery.
Dilapidation provision
The Company had previously provided for the estimated costs on Embassy Gardens("EG") to restore the building to its original condition as specified in the underlying lease agreement. During the year the Company exited the lease arrangement at EG and as a result released the provision it was holding.
Page 58
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
Share premium account
Profit and loss account
26.Commitments
There are commitments to authors for the payment of royalty advances amounting to £73,361,715 (2023: £71,566,015) at 31 December 2024. Together with the advances already paid these will be charged against sales of future accounting periods as the books are published.
Page 59
PENGUIN BOOKS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2024
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The Company’s immediate parent company is Penguin Random House Limited. At the balance sheet date PRHL was owned by Bertelsmann UK Limited 100%.
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:
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 60