Notes to the consolidated financial statements for the period ended 31 March 2020

 

During the period, the principal activity of DCD Media Plc and subsidiaries (the Group) was the worldwide distribution of programmes for television and other media. The Group also distributes programmes on behalf of third-party producers and broadcasters as well as DCD Media formats and productions.

 

DCD Media Plc is the Group's ultimate parent company and it is incorporated and registered in England and Wales. The address of DCD Media Plc's registered office is 9th Floor, Winchester House, 259 - 269 Old Marylebone Road, London, NW1 5RA, and its principal place of business is London. DCD Media Plc's shares are listed on the Alternative Investment Market of the London Stock Exchange.

 

DCD Media Plc's consolidated financial statements are presented in Pounds Sterling (£), which is also the functional currency of the parent company. Amounts are presented in rounded thousands. The accounts have been drawn up to the date of 31 March 2020.

 

1       Principal accounting policies

 

The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. The Group financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by European Union ("Adopted IFRSs"), and with those parts of the Companies Act 2006 applicable to companies preparing their financial statements under Adopted IFRSs.

 

Basis of preparation - going concern

 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Executive Chairman's Review and the Strategic Report. The financial position of the Group, its cash position and borrowings are set out in the performance section of the Strategic Report. In addition, note 18 sets out the Group's objectives, policies and processes for managing its financial instruments and risk.

 

The Group's day-to-day operations are funded from cash generated from trading and the use of an overdraft facility of £0.15m (£0.15m at 31 December 2018) with other activities funded from a combination of equity and short and medium term debt instruments. As mentioned in the Strategic Report the overdraft facility is currently in the process of being replaced with a revolving credit facility with a gross value of £500k which we expect to be in place at the start of September 2020. At the date of signing, however, the Group's overdraft facility remains available but is repayable on demand.

 

In considering the going concern basis of preparation of the Group's financial statements, the Board have prepared profit and cash flow projections which incorporate reasonably foreseeable impacts of the ongoing challenging market environment.

 

The Directors' forecasts and projections, which make allowance for reasonably possible changes in its trading performance, show that, with the ongoing support of its lenders and its bank, the Group can continue to generate cash to meet its obligations as they fall due.

 

The Directors, after making enquiries, have a reasonable expectation that the Company and the Group will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.

 

The financial statements do not include the adjustments that would result if the Group or Company were unable to continue as a going concern.

 

Changes in accounting policies

 

A number of amendments to standards issued by IASB become effective from 1 January 2020.  These have been reviewed and no adjustments deemed necessary.  Those becoming effective from 1 January 2020 have not been adopted early by the Group. Management have reviewed these standards and believe none are expected to have a material effect on the Group's future financial statements.

 

 

 

1       Principal accounting policies (continued)

 

IFRS 16

In the period the company has adopted IFRS 16 Leases, requiring companies to recognise assets and liabilities of leases on the balance sheet accordingly. The group has applied IFRS16 using the modified retrospective approach, under which the cumulative effect of initial application is recognised in retained earnings at 1 January 2019.

 

On transition to IFRS16 the group elected to apply the following practical expedients:

For leases previously classified as operating leases under IAS17:

-       the company has applied a single discount rate to a portfolio of leases with similar characteristics

-       the group has excluded initial direct costs from measuring the right of use asset at the date of initial application.

 

On transition to IFRS16, the group recognised an additional £323,877 right of use asset and £323,877 of lease liabilities.

 

When measuring these lease liabilities, the company discounted lease payments using its incremental borrowing rate at 1 January 2019. The borrowing rate applied is 3.5%.

 

Application of new and revised International Financial Reporting Standards (IFRSs)

 

New and revised IFRSs in issue but not yet effective

 

The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

 

Standard	Description	Issued date	Effective date
IAS 1 Presentation of Financial Statements	Amendments regarding the classification of liabilities	Jan-20	Jan-22
IAS 1 Presentation of Financial Statements	Amendment to defer the effective date of the January 2020 amendments	Jul-20	Jan-23
IAS 16 Property, Plant and Equipment	Amendments prohibiting a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use	May-20	Jan-22
IAS 37 Provisions, Contingent Liabilities and Contingent Assets	Amendments regarding the costs to include when assessing whether a contract is onerous	May-20	Jan-22
IAS 41 Agriculture	Amendments resulting from Annual Improvements to IFRS Standards 2018-2020 (taxation in fair value measurements)	May-20	Jan-22
IFRS 1 First-time Adoption of International Financial Reporting Standards	Amendments resulting from Annual Improvements to IFRS Standards 2018-2020 (subsidiary as a first-time adopter)	May-20	Jan-22
IFRS 3 Business Combinations	Amendments updating a reference to the Conceptual Framework	May-20	Jan-22
IFRS 4	Amendments regarding the expiry date of the deferral approach	Jun-20	Jan-23
IFRS 7	Amendments regarding pre-replacement issues in the context of the IBOR reform	Sep-19	Jan-20
IFRS 9 Financial Instruments	Amendments regarding pre-replacement issues in the context of the IBOR reform	Sep-19	Jan-20
IFRS 9 Financial Instruments	Amendments resulting from Annual Improvements to IFRS Standards 2018-2020 (fees in the '10 per cent' test for derecognition of financial liabilities)	May-20	Jan-22
IFRS 16 Leases	Amendment to provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification	May-20	Jan-22
IFRS 17 Business Combinations	Amendments to address concerns and implementation challenges that were identified after IFRS 17 was published (includes a deferral of the effective date to annual periods beginning on or after 1 January 2023)	Jun-20	Jan-23

No early adoption has been taken up where permitted on any of the above revisions, amendments and original issue IFRSs.

 

 

 

1              Principal accounting policies (continued)

 

Revenue and attributable profit

 

Production revenue represents amounts receivable from producing programme/production content and is recognised over the period of the production in accordance with the milestones within the underlying signed contract. Profit attributable to the period is calculated by capitalising all appropriate costs up to the stage of production completion, and amortising production costs in the proportion that the revenue recognised in the year bears to estimated total revenue from the programme. The carrying value of programme costs in the statement of financial position is subject to an annual impairment review.

 

Where productions are in progress at the year end and where billing is in advance of the completed work per the contract, the excess is classified as deferred income and is shown within trade and other payables.

 

Distribution revenue arises from the licensing of programme rights which have been obtained under distribution agreements with either external parties or Group companies. Distribution revenue is recognised in the statement of comprehensive income on signature of the licence agreement and represents amounts receivable from such contracts.

 

Determining the transaction price

Most of the Group's revenue is derived from fixed price contracts and therefore the amount of revenue to be earned from each contract is determined by reference to those fixed prices.

 

Allocating amounts to performance obligations

There is generally limited judgment involved in allocating amounts to performance obligations as there is one activity driven by each contract. The tasks required to complete that activity are individually valued to prepare the pricing structure.

 

Practical exemptions

The Group has taken advantage of the practical exemptions:

 

·      not to account for significant financing components where the time difference between receiving consideration and transferring control of goods (or services) to its customer is one year or less; and

·      to expense the incremental costs of obtaining a contract when the amortisation period of the asset otherwise recognised would have been one year or less.

 

All revenue excludes value added tax.

 

Basis of consolidation

 

The Group financial statements consolidate those of the Company and of its subsidiary undertakings drawn up to 31 March 2020. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as to obtain benefits from its activities. The Group obtains and exercises control through voting rights.

 

Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

 

Non-controlling interests

 

For business combinations completed prior to 1 July 2009, the Group initially recognised any non-controlling interest in the acquiree at the non-controlling interest's proportionate share of the acquiree's net assets. For business combinations completed on or after 1 July 2009 the Group has the choice, on a transaction by transaction basis, to initially recognise any non-controlling interest in the acquiree which is a present ownership interest and entitles its holders to a proportionate share of the entity's net assets in the event of liquidation at either acquisition date fair value or, at the present ownership instruments' proportionate share in the recognised amounts of the acquiree's identifiable net assets. Other components of non-controlling interest such as outstanding share options are generally measured at fair value. The Group has not elected to take the option to use fair value in acquisitions completed to date.

 

From 1 July 2009, the total comprehensive income of non-wholly owned subsidiaries is attributed to owners of the parent and to the non-controlling interests in proportion to their relative ownership interests. Before this date, unfunded losses in such subsidiaries were attributed entirely to the Group. In accordance with the transitional requirements of IAS 27 (2008), the carrying value of non-controlling interests at the effective date of the amendment has not been restated.

 

 

 

 

1       Principal accounting policies (continued)

 

Goodwill

 

Goodwill represents the excess of the cost of a business combination over, in the case of business combinations completed prior to 1 January 2010, the Group's interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired and, in the case of business combinations completed on or after 1 July 2009, the total acquisition date fair value of the identifiable assets, liabilities and contingent liabilities acquired. For business combinations completed prior to 1 July 2009, cost comprises the fair value of assets given, liabilities assumed and equity instruments issued, plus any direct costs of acquisition. Changes in the estimated value of contingent consideration arising on business combinations completed by this date are treated as an adjustment to cost and, in consequence, result in a change in the carrying value of goodwill.

 

For business combinations completed on or after 1 July 2009, cost comprised the fair value of assets given, liabilities assumed and equity instruments issued, plus the amount of any non-controlling interests in the acquiree plus, if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree. Contingent consideration is included in cost at its acquisition date fair value and, in the case of contingent consideration classified as a financial liability, re-measured subsequently through profit or loss. For business combinations completed on or after 1 January 2010, direct costs of acquisition are recognised immediately as an expense.

 

Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the consolidated statement of comprehensive income. Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the consolidated statement of comprehensive income on the acquisition date.

 

Property, plant and equipment

 

Property, plant and equipment are stated at cost net of depreciation and any provision for impairment. Depreciation is calculated to write down the cost less estimated residual value by equal annual instalments over their expected useful lives. The rates generally applicable are:

 

Motor vehicles                                                                    25% on cost

Office and technical equipment                                          25%-33% on cost

 

The assets' residual values and useful lives are reviewed at each statement of financial position date and adjusted if appropriate.

 

Other intangible assets

 

Trade names

Trade names acquired through business combinations are stated at their fair value at the date of acquisition. They are amortised through the statement of comprehensive income, following a periodic impairment review, on a straight-line basis over their useful economic lives, such periods not to exceed 10 years.

 

Programme rights

Internally developed programme rights are stated at the lower of cost, less accumulated amortisation, or recoverable amount. Cost comprises the cost of all productions and all other directly attributable costs incurred up to completion of the programme and all programme development costs. Where programme development is not expected to proceed, the related costs are written off to the statement of comprehensive income. Amortisation of programme costs is charged in the ratio that actual revenue recognised in the current year bears to estimated ultimate revenue. At each statement of financial position date, the Directors review the carrying value of programme rights and consider whether a provision is required to reduce the carrying value of the investment in programmes to the recoverable amount. The expected life of these assets is not expected to exceed 7 years.

 

Purchased programme rights are stated at the lower of cost, less accumulated amortisation, or recoverable amount. Purchased programme rights are amortised over a period in-line with expected useful life, not exceeding 7 years.

 

Amortisation and any charge in respect of writing down to recoverable amount during the year are included in the statement of comprehensive income within cost of sales.

 

 

 

1       Principal accounting policies (continued)

 

Leased assets

 

The Group has applied IFRS 16 to each of the periods reported in the consolidated historical financial information.

 

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

 

·      Leases of low value assets; and

·      Leases with a duration of twelve months or less.

 

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group's incremental borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term. Other variable lease payments are expensed in the period to which they relate.

 

On initial recognition, the carrying value of the lease liability also includes:

 

·      Amounts expected to be payable under any residual value guarantee;

·      The exercise price of any purchase option granted in favour of the Group if it is reasonably certain to exercise that option; and

·      Any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.

 

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

 

·      Lease payments made at or before commencement of the lease; and

·      Initial direct costs incurred.

 

Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

 

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that was applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term.

 

Nature of leasing activities (in the capacity as lessee)

The Group leases properties in the UK, being the jurisdiction from which it operates. The lease agreements are signed for a fixed amount for the life of the lease after which the lease is reviewed and terms renegotiated.

 

Programme distribution advances

 

Advances paid in order to secure distribution rights on third party catalogues or programmes are included within current assets. Distribution rights entitle the Company to license the programmes to broadcasters and DVD labels for a sales commission, whilst the underlying rights continue to be held by the programme owner. The advances are stated at the lower of the amounts advanced to the rights' owners less actual amounts due to rights owners based on sales to date.

 

 

1       Principal accounting policies (continued)

 

Impairment of non-current assets

 

For the purposes of assessing impairment, assets are grouped into separately identifiable cash-generating units. Goodwill is allocated to those cash-generating units that have arisen from business combinations.

 

At each statement of financial position date, the Group reviews the carrying amounts of its non-current assets, to determine whether there is any indication those assets have suffered an impairment loss. If any such indication exists the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Goodwill is tested for impairment annually. Goodwill impairment charges are not reversed.

 

An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value and value in use based on an internal discounted cash flow evaluation.

 

Cash and cash equivalents

 

Cash and cash equivalents comprise cash in hand and demand deposits. Bank overdrafts that are repayable on demand are included as a component of cash and cash equivalents. Bank overdrafts are shown in current liabilities on the statement of financial position. Overdrafts are included in cash and cash equivalents for the purpose of the cash flow statement. At the period end there was no overdraft balance in use.

 

Discontinued operations

 

The results of operations disposed during the year are included in the consolidated statement of comprehensive income up to the date of disposal.

 

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographical area of operations or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or that meets the criteria to be classified as held for sale.

 

Discontinued operations are presented in the consolidated statement of comprehensive income as a single line which comprises the post-tax profit or loss of the discontinued operation along with the post-tax gain or loss recognised on the re-measurement to fair value less costs to sell or on disposal of the assets or disposal groups constituting discontinued operations.

 

Equity

 

Equity comprises the following:

 

·      Share capital represents the nominal value of issued Ordinary shares and Deferred shares;

·      Share premium represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue;

·      Equity element of convertible loan represents the part of the loan classified as equity rather than liability;

·      Translation reserve represents the exchange rate differences on the translation of subsidiaries from a functional currency to Sterling at the period end;

·      Own shares held represents shares in employee benefit trust;

·      Retained earnings represents retained profits and losses; and

·      Non-controlling interest represents net assets owed to non-controlling interests.

 

Foreign currency

 

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the statement of financial position date. Exchange differences arising on the settlement and retranslation of monetary items are taken to the statement of comprehensive income.

 

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at the exchange rate ruling at the statement of financial position date. Income and expense items are translated at the average exchange rates for the year. Exchange differences arising are classified as equity and transferred to the Group's retained earnings reserve.

 

 

1       Principal accounting policies (continued)

 

Deferred taxation

 

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs from its tax base, except for differences arising on:

 

·      the initial recognition of goodwill;

·      the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

·      investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

                                                                                                                                                                                                            

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

 

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

 

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

 

·      the same taxable Group company; or

·      different Group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

 

Financial instruments

 

The Group has applied IFRS 9 across all reporting periods in its consolidated financial statements.

 

Financial assets

The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:

 

Fair value through profit or loss

The Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.

 

Amortised cost

These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

 

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectible, the gross carrying value of the asset is written off against the associated provision.

 

Impairment provisions for receivables from related parties and loans to related parties are recognised based on a forward looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses are recognised. For those that are determined to be credit impaired, lifetime expected credit losses on a net basis are recognised.

 

The Group's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

 

 

 

1       Principal accounting policies (continued)

 

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The accounting policy for each category is as follows:

 

Fair value through profit or loss

The Group does not have any liabilities held for trading nor has it designated any financial liabilities as being at fair value through profit or loss.

 

Other financial liabilities

Other financial liabilities include the following items:

 

Convertible loan notes are regarded as compound instruments, consisting of a liability component and an equity component. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan note and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity. Issue costs are apportioned between the liability and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity. The interest expense of the liability component is calculated by applying the effective interest rate to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.

 

Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the year to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. Finance charges are accounted for on an effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the year in which they arise.

 

Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

 

Equity instruments issued by the Group are recorded as the proceeds received, net of direct costs.

 

Retirement benefits

 

The Group contributes to the personal pension plans for the benefit of a number of its employees. Contributions are charged against profits as they accrue.

 

2       Critical accounting judgements and key sources of estimation uncertainty

 

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the financial statements.  If in the future such estimates and assumptions which are based on management's best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change. Where necessary, the comparatives have been reclassified or extended from the previously reported results to take into account presentational changes.

 

Critical judgements in applying the Group's accounting policies

In the process of applying the Group's accounting policies, which are described in note 1, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).

 

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

 

 

2       Critical accounting judgements and key sources of estimation uncertainty (continued)

 

Revenue recognition

Production revenue represents amounts receivable from producing programme/production content and is recognised over the period of the production in accordance with the milestones within the underlying signed contract.

 

Recoverability of programmes in the course of production

During the year, management reviewed the recoverability of its programmes in the course of production which are included in its statement of financial position. The projects continue to progress satisfactorily, and management continue to believe that the anticipated revenues will enable the carrying amount to be recovered in full.

 

Carrying value of goodwill and trade names

Determining whether goodwill and trade names are impaired requires an estimation of the value in use of the cash-generating unit to which the goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of goodwill and trade names at the statement of financial position date was £1.0m. Details relating to the allocation of goodwill to cash-generating units and potential impairment calculations are given in note 11.

 

Carrying value of programme rights

Determining whether programme rights are impaired requires an estimation of the value in use of the cash-generating unit to which the rights have been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. The carrying amount of programme rights at the statement of financial position date was £Nil. Details of the impairment review calculations are given in note 11.

 

Adequacy of accruals and provisions

Determining whether accruals and provisions are adequate requires an estimate to be made of the likelihood of a liability crystallising and the potential amount.  Management has reviewed each provision and, where considered necessary, has taken external advice to ensure adequacy. 

 

Determining the discount factor for right-of-use asset and lease liabilities

The discount rate used in the calculation of the lease liability involves estimation. Discount rates are calculated on a lease by lease basis. For the property leases that make up substantially all of the Group's lease portfolio this results in 2 approaches. For the majority of the Group's property leases, the implicit rate in the lease can be calculated and is therefore adopted.  Otherwise, for other leases the rate used is based on estimates of incremental borrowing costs.  These will depend on the territory of the relevant lease and hence the currency used, the date of lease inception, and the lease term.

 

IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a lease, if the lessee were reasonably certain to exercise that option. Where a lease includes the option for the Group to extend the lease term, the Group makes a judgement as to whether it is reasonably certain that the option will be taken. This will take into account the length of time remaining before the option is exercisable; current trading; future trading forecasts as to the ongoing profitability of the attraction; and the level and type of planned future capital investment. At this point it is not reasonably certain the Group's leases will be renewed, taking into account the factors noted above. This judgement is reassessed at each reporting period. A reassessment of the remaining life of the lease could result in a recalculation of the lease liability and a material adjustment to the associated balances.

 

 

3       Segment information

 

Under IFRS 8 the accounting policy for identifying segments is based on the internal management reporting information that is regularly reviewed by the senior management team.

 

The Group has two main reportable segments:

 

·      Rights and Licensing - This is the primary division and is involved with the sale of distribution rights, DVDs, music and publishing deals through DCD Rights.

·      Production - This smaller division is involved in the production of television content.

 

The Group's reportable segments are strategic business divisions that offer different products to different markets, while its Other division is its head office function which manages activities that cannot be reported within the other reportable segments. They are managed separately because each business requires different management and marketing strategies.

 

Uniform accounting policies are applied across the entire Group. These are described in note 1 of the financial statements.

 

The Group evaluates performance of the basis of profit or loss from operations but excluding exceptional items such as goodwill impairments. The Board considers the most important KPIs within its business segments to be revenue, segmental adjusted EBITDA and adjusted profit before tax.

 

Inter-segmental trading occurs between the Rights and Licensing division and the Production divisions where sales are made of distribution rights. Royalties and commissions paid are governed by an umbrella agreement covering the Group that applies an appropriate rate that is acceptable to the local tax authorities.

 

Segment assets include all trading assets held and used by the segments for their day to day operations. Goodwill and trade-names are allocated to their respective segments. Segment liabilities include all trading liabilities incurred by the segments. Loans and borrowings incurred by the Group are not allocated to segments. Details of these balances are provided in the reconciliations below:

 

2020 Segmental analysis - income statement

	Production	Rights and Licensing	Other	Total 2020
	£'000	£'000	£'000	£'000
Total revenue	362	10,731	43	11,136
Inter-segmental revenue	(160)	-	(42)	(202)
Total revenue from external customers	202	10,731	1	10,934
Group's revenue per consolidated statement of comprehensive income	202	10,731	1	10,934
Operating profit/(loss) before tax - continuing operations	309	(501)	46	(146)
Operating profit/(loss) before interest and tax	309	(501)	46	(267)
Depreciation	-	208	-	208
Segmental EBITDA	309	(293)	46	62
Continuing adjusted EBITDA	340	20	46	406
Discontinued adjusted EBITDA	(31)	(313)	-	(344)
Net finance (expense)/income	-	(10)	-	(10)
Depreciation		(208)		(208)
Segmental adjusted profit/(loss) before tax	309	(511)	46	(156)
Continuing segmental adjusted profit/(loss) before tax	340	(198)	46	188
Discontinuing segmental adjusted loss before tax	(31)	(313)	-	(344)

 

 

 

2020 Segmental analysis - financial position

 

	Production	Rights and Licensing	Other	Total 2020
	£'000	£'000	£'000	£'000
Non-current assets	-	542	-	542
Reportable segment assets	117	11,179	118	11,414
Goodwill	393	624	-	1,017
Total Group assets	510	11,803	118	12,431
Reportable segment liabilities	(45)	(9,615)	(68)	(9,728)
Total Group liabilities	(45)	(9,615)	(68)	(9,728)

 

 

2018 Segmental analysis - income statement

 

	Production	Rights and Licensing	Post Production	Other	Total 2018
	£'000	£'000	£'000	£'000	£'000
Total revenue	534	6,716	-	49	7,299
Inter-segmental revenue	(200)	-	-	(48)	(248)
Total revenue from external customers	334	6,716	-	1	7,051
Group's revenue per consolidated statement of comprehensive income	334	6,716	-	1	7,051
Operating profit/(loss) before tax - continuing operations	440	(572)	-	58	(74)
Operating profit before tax - discontinued operations			35	-	35
Operating profit/(loss) before interest and tax	440	(572)	35	58	(39)
Impairment of programme rights	19	-	-	-	19
Depreciation	-	29	-	-	29
Segmental EBITDA	459	(543)	35	58	9
Continuing adjusted EBITDA	459	(543)	-	58	(26)
Discontinued adjusted EBITDA	-	-	35	-	35
Net finance (expense)/income	(1)	-	-	18	17
Depreciation	-	(29)	-	-	(29)
Segmental adjusted profit/(loss) before tax	458	(572)	35	76	(3)
Continuing segmental adjusted profit/(loss) before tax	458	(572)	-	76	(38)
Discontinuing segmental adjusted profit before tax	-	-	35	-	35

 

 

 

 

2018 Segmental analysis - financial position

	Production	Rights and Licensing	Post Production	Other	Total 2018
	£'000	£'000	£'000	£'000	£'000
Non-current assets	-	27	-	-	27
Reportable segment assets	82	11,425	-	146	11,653
Goodwill	393	624	-	-	1,017
Total Group assets	475	12,049	-	146	12,670
Reportable segment liabilities	(48)	(9,197)	-	(566)	(9,811)
Total Group liabilities	(48)	(9,197)	-	(566)	(9,811)

 

 

4      Revenue from contracts with customers

 

The Group's headquarters is based in the United Kingdom. Outside the United Kingdom, sales are generally denominated in US dollars.

 

Revenue, which excludes value added tax and transactions between Group companies, represents the sale of television production services, commissions on television and film distribution rights and the sale of television and film distribution rights on behalf of third-party producers.

 

Disaggregation of revenue

The Group has disaggregated revenue into various categories in the following table which is intended to:

 

·      depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic date; and

·      enable users to understand the relationship with revenue segment information provided in note 3.

 

The following table provides an analysis of the Group's revenue from continuing operations by geographical market, irrespective of the origin of the goods or services:

 

	15 months to 31 March 2020	Year ended 31 December 2018
	£'000	£'000
United Kingdom	1,529	568
Rest of Europe	2,234	1,348
North and South America, including Canada	3,452	2,774
Rest of the World	3,719	2,361
	10,934	7,051

 

Due to the significant change in the way in which television programming can be viewed, more towards VOD platforms, deals are becoming increasingly multi-territory ones. This has resulted in many sales being classed as "Rest of the World" where previously they would have been more easily assessed under one of the other categories.

 

 

 

4      Revenue from contracts with customers (continued)

 

Contract balances

The following table provides information about contract assets (included as accrued income) and contract liabilities (included as deferred income) from contracts with customers:

 

 

	31 March 2020	31 December 2018
	£'000	£'000
Contract assets (accrued income)	1,421	2,309
Contract liabilities (deferred income)	-	-
	1,421	2,309

 

The movement in the contract assets and liabilities during the year is set out below:

 

		Contract assets
		£'000
At 1 January 2019		2,309
Transfers in the period from contract assets to trade receivables		(2,309)
Excess of revenue recognised over cash (or rights to cash)		1,421
At 31 March 2020		1,421

 

 

		Contract liabilities
		£'000
At 1 January 2019		-
Amounts included in contract liabilities recognised as revenue in the period		-
Cash received in advance of performance and not recognised as revenue during the period		-
At 31 March 2020		-

 

Contract assets (accrued income) and contract liabilities (deferred income) are included within trade and other receivables and trade and other payables respectively on the face of the statement of financial position. They arise from the Group's revenue contracts where work has been performed in advance of invoicing customers and where revenue is received in advance of work performed. Cumulatively, payments received from customers at each balance sheet date do not necessarily equate to the amount of revenue recognised on the contracts.

 

5        Expenses by nature

	15 months to 31 March 2020	Year ended 31 December 2018
	£'000	£'000
Auditor's remuneration:
Fees payable to the Company's auditor:
For the audit of the Company's annual accounts	30	25
For the audit of other Group companies	19	25
Operating lease rentals:
Other	-		173
Gain on foreign exchange fluctuations	37		-
Depreciation, amortisation and impairment:
Intangible assets - programme impairment in cost of sales (note 11)	-		19
Property, plant and equipment (note 12)	28		29
Right-of-use assets (note 13)	180		-
Staff costs (note 6)	1,379		1,032

6       Directors and employees

 

Staff costs during the year, including Directors, were as follows:

                                                                                                                                           

	15 months to 31 March 2020	Year ended 31 December 2018
	£'000	£'000
Wages and salaries	1,192	905
Social security costs	143	113
Other pension costs (note 22)	28	14
Redundancy costs	16	-
	1,379	1,032

 

 

The average number of employees of the Group during the year were as follows:

 

	15 months to 31 March 2020	Year ended 31 December 2018
	No.	No.
Sales and distribution	9	12
Directors and administration	8	6
	17	18

 

Remuneration in respect of the Directors, who are the key management personnel of the Group was as follows for the period:

 

	Emoluments	Pension Contributions	Money value of non-cash benefits received	15 months to 31 March 2020 Total
	£'000	£'000	£'000	£'000
D Craven	125	-	-	125
N Davies Williams	200	6	20	226
N McMyn	13	-	-	13
A Lindley	4	-	-	4
	342	6	20	368

 

	Emoluments	Pension Contributions	Money value of non-cash benefits received	2018 Total
	£'000	£'000	£'000	£'000
D Craven	100	-	-	100
N Davies Williams	159	3	15	177
N McMyn	25	-	-	25
A Lindley	-	-	-	-
	284	3	15	302

 

Employee Benefit Trust

 

In 2012, 7,218,750 shares, that had been held by the directors of Done and Dusted Ltd, were transferred into an employee benefit trust. After the share consolidation in 2013, the number of shares reduced to 7,218 and following a transfer of 4,000 to an ex-director in 2013, the number of shares at 31 March 2020 was 3,218 (31 December 2018: 3,218).

 

 

 

7       Finance costs

	15 months to 31 March 2020	12 months to 31 December 2018
	£'000	£'000
Convertible loan interest charge	-	(18)
Interest charged on operating leases	13	-
Other interest charges	(3)	1
	10	(17)

 

8       Taxation on ordinary activities

        

Recognised in the statement of comprehensive income:

	15 months to 31 March 2020	Year ended 31 December 2018
	£'000	£'000
Current tax expense:
Continuing operations
UK corporation tax	-	(13)
Total tax charge in statement of comprehensive income	-	(13)

        

	15 months to 31 March 2020	12 months to 31 December 2018
Tax charge/(credit) represents:	£'000	£'000
Loss on ordinary activities - continuing operations	(156)	(58)
Profit on ordinary activities - discontinued operations	-	35
	(156)	(23)
Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 19.00% (2018: 19.00%)	(29)	(4)
Effects of:
Expenses not deductible for tax purposes (amortisation and impairment of intangibles)	36	9
Depreciation in excess of capital allowances	25	(15)
Brought forward losses utilised	(32)	10
Adjustment for prior years	-	13
Total tax charge/(credit)	-	13

 

A deferred tax asset of approximately £2.2m (2018: £2.3m) arising principally from losses in the Group has not been recognised. The Directors believe that it is prudent not to recognise the deferred tax asset within the financial statements.

The asset has been calculated based upon the 2020 tax rate of 19% (2018: 19%).

 

 

 

9       Discontinued operations

 

In November 2017, the Board made the decision to cease trading within Sequence Post Ltd. The business had been loss making and following a notification to increase rental charges the business was no longer viable. The staff were made redundant in November 2017. The business did not trade in the period ending 31 March 2020 or during the prior period end, with only a small number of accounting adjustments occurring.

 

	15 months to 31 March 2020	Year ended 31 December 2018
Result of discontinued operations	£'000	£'000
Profit from discontinued operations before tax	-	35
Tax expense	-	-
Profit from discontinued operations after tax	-	35
Basic earnings per share (pence)	-	1p

 

 

10    Earnings per share

 

The calculation of the basic profit per share is based on the profit attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The calculation of diluted profit per share is based on the basic profit per share, adjusted to allow for the issue of shares and the post-tax effect of dividends and interest, on the assumed conversion of all other dilutive options and other potential ordinary shares.

 

	Loss £'000	Weighted average number of shares	2020 Per share amount pence	Loss £'000	Weighted average number of shares		2018 Per share amount pence
Basic and diluted loss per share
Loss attributable to ordinary shareholders	(156)	2,541,419	(6)	(36)		2,541,419	(1)

 

 

 

11    Goodwill and intangible assets

 

	Goodwill	Trade Names	Programme Rights	Total
	£'000	£'000	£'000	£'000
Cost
At 1 January 2018	17,388	8,036	36,946	62,370
At 31 December 2018	17,388	8,036	36,946	62,370
At 1 January 2019	17,388	8,036	36,946	62,370
At 31 March 2020	17,388	8,036	36,946	62,370
Amortisation and impairment
At 1 January 2018	16,371	8,036	36,927	61,334
Impairment provided in year in cost of sales	-	-	19	19
At 31 December 2018	16,371	8,036	36,946	61,353
At 31 March 2020	16,371	8,036	36,946	61,353
Net book value
At 31 March 2020	1,017	-	-	1,017
At 31 December 2018	1,017	-	-	1,017

 

                                                                                                                                                                                       

Goodwill and trade names

 

Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that business combination.  

 

Details of goodwill allocated to cash generating units for which the amount of goodwill so allocated is as follows:                                                                                                             

		Goodwill carrying amount
	Segment (note 3)	31 March 2020	31 December 2018
		£'000	£'000
Cash generating units (CGU):
DCD Rights Ltd	Rights and Licensing	624	624
September Films Ltd	Production	393	393
		1,017	1,017

 

 

 

11    Goodwill and intangible assets (continued)

 

Goodwill and trade names (continued)

 

Goodwill and trade names are allocated to CGUs for the purpose of the impairment review. The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates and expected profitability of the CGUs over the future seven years.  Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks inherent in the CGUs.

 

The Board performs an annual impairment review of all intangible assets, including goodwill and trade names.  The recoverable amounts of all the above CGUs have been determined from value in use calculations. Detailed budgets and forecasts cover a two-year period to March 2022. The forecasts are then extrapolated for a further five years using models that estimate the distribution income profile of the GGU's library. The Board uses this seven-year period of projection as it believes it is reasonably aligned with the expected lifespan of a TV production. There has been no impairment arising from this value in use calculation for the current period or the year to December 2018.

                                                                        

The key assumption used for value in use calculations is the discount factor applied to the forecasts.

 

The rate used to discount the forecast cash flows is 5.0% for all CGUs. If the discount rates used were increased by 3% to 8.0%, the carrying value of goodwill would still not be impaired. 

 

 

			Discount factor
			31 March 2020	31 December 2018
			%	%
Cash generating units (CGU):
DCD Rights Ltd			5.0	4.1
September Films Ltd			5.0	4.1

 

Programme rights

 

Any programme rights held were fully impaired as at the end of 31 December 2018 and nothing has been added in the period to 31 March 2020, so no impairment charge has been recognised in this period.

 

 

12    Property, plant and equipment

				Office and technical equipment
				£'000
Cost
At 1 January 2018				106
Additions				21
At 31 December 2018				127
At 1 January 2019				127
Additions				20
At 31 March 2020				147
Depreciation
At 1 January 2018				71
Provided in year				29
At 31 December 2018				100
At 1 January 2019				100
Provided in period				28
At 31 March 2020				128
Net book value
At 31 March 2020				19
At 31 December 2018				27

 

13    Right-of-use assets

 

On 1 January 2019, the Group adopted IFRS 16 Leases. The breakdown of changes in right-of-use assets for the period ended 31 March 2020 is as follows:

 

		Leasehold property
		£'000
Cost
At 31 December 2018		-
First application IFRS 16		324
At 1 January 2019 and 31 March 2020		324
Depreciation
At 31 December 2018		-
Provided in period		180
At 31 March 2020		180
Net book value
At 31 March 2020		144
At 31 December 2018		-

 

As noted previously, the Group adopted IFRS 16 in the period. As such the Group has recognised assets that are right-of-use and held under finance leases in the period totalling £324k in cost and £180k in depreciation. As part of this adoption no prior period restatement is required, nothing was recognised in the 2018 year for this change in accounting policy as it was not adopted early.

 

The total amount above relates to buildings. The Group's normal lease duration is 5 years. The liabilities recognised as a consequence of the IFRS 16 first application as of 1 January 2019 are included in the heading "Lease liabilities" within note 15 and a breakdown of changes in lease liabilities for the period to 31 March 2020 is also detailed at note 16.

 

13    Right-of-use assets and lease liabilities (continued)

 

The total amount above relates to buildings. The Group's normal lease duration is 5 years and the current lease is due to end on 31 March 2021.

 

14    Trade and other receivables

 

Due after one year

 

	31 March 2020	31 December 2018
	£'000	£'000
Trade receivables	361	233
Other receivables	19	46
Total trade and other receivables due after one year	379	279

 

Due within one year

	31 March 2020	31 December 2018
	£'000	£'000
Trade receivables	5,501	5,313
Less: expected credit loss	-	-
Trade receivables - net	5,501	5,313
Taxation and social security	274	250
Other receivables	640	662
Contract assets	1,421	2,309
Prepayments	301	537
Total trade and other receivables due within one year	8,137	9,071
Total financial assets other than cash and cash equivalents classified as loans and receivables	8,137	9,071

                                                                                                                                                                                               

The average credit period taken on sales of goods is 245 days (2018: 287 days). No interest is charged on receivables within the agreed credit terms. Thereafter, interest may be charged.

 

An allowance for impairment is made in accordance with expected credit loss method. The Group considers historic, current and forward looking information including macroeconomic conditions, in order to assess an appropriate provision. The Group provides, in full, for any debts it believes have become non-recoverable. The directors have reviewed their customer portfolio and marketplace and do not consider the risk of bad debt to be material to the business.

 

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable set out above.

 

The ageing of trade receivables that have not been provided for are:

 

	31 March 2020	31 December 2018
	£'000	£'000
Not due yet
0-29 days	3,071	3,193
Overdue
30-59 days	116	152
60-89 days	356	538
90-119 days	622	105
120+ days	1,697	1,558
	5,862	5,546
Trade debtors in current assets	5,501	5,313
Trade debtors in non-current assets	361	233
	5,862	5,546

 

 

 

 

15    Trade and other payables

	31 March 2020	31 December 2018
	£'000	£'000
Trade payables	310	140
Other payables	219	365
Accruals	8,889	7,925
Taxation and social security	36	42
Amount owed to related parties (note 21)	128	1,339
Lease liabilities (note 16)	146	-
Total trade and other payables	9,728	9,811
Total financial liabilities, excluding loans and borrowings, classified as financial liability measured at amortised cost	9,692	9,769

 

16 Lease liabilities

 

The liabilities recognised as a consequence of the IFRS 16 first application as of 1 January 2019 are included in the heading "Lease liabilities" within trade and other payables in relation to the Group's head office. The breakdown of changes in lease liabilities for the period to 31 March 2020 is as follows.

		Lease liabilities
		£'000
Balance at 31 December 2018		-
First application IFRS 16		324
At 1 January 2019		324
Interest expense		13
Lease payments		(191)
At 31 March 2020		146

 

The Group maintains property, plant and equipment on operating leases. The total future value of minimum lease payments are due as follows:

	31 March 2020	31 December 2018
	£'000	£'000
Not later than one year	152	144
Later than one year and not later than five years	-	170
	152	314

 

On 13 April 2016, the group entered into a property lease obligation for a five-year period to 31 March 2021 and with annual rent of £132,000 plus shared service costs for the building.

 

 

 

17    Interest bearing loans and borrowings

 

Due within one year

	31 March 2020	31 December 2018
	£'000	£'000
Bank overdraft (secured)	-	-

 

The principal terms and the debt repayment schedule for the Group's loans and borrowings are as follows as at 31 March 2020:

	Currency	Nominal rate %	Year of maturity
Bank overdraft (secured)	Sterling	3.5 over Base Rate	2019

 

Bank borrowings

 

The bank overdraft is currently operating on a rolling basis, as it was due for renewal in November 2019, and is repayable on demand. As mentioned previously the Group and Coutts have been working to replace the overdraft with a revolving facility with a gross value of £500k and the Directors expect this to be in place following countersignature at the start of September 2020. As such, the Directors expect the Group to have access, if required, to sufficient funds for the foreseeable future. Bank overdrafts are secured by a fixed charge over the Group's intangible programme rights and a floating charge over the remaining assets of the Group. The new facility will be secured against a floating charge over the assets of the Group and will replace the current charge held by the overdraft.

 

18    Financial risk management

 

Financial risk factors

 

The Group's financial assets and liabilities comprise cash, including short term deposits, trade and other receivables and trade and other payables that arise directly from its operations, overdrafts, bank loans and convertible debt. The main risks arising from the Group's financial assets and liabilities are interest rate risk, liquidity risk, credit risk and currency risk. The Board has reviewed and agreed policies for managing each of these risks and they are summarised below. The Group has no financial assets other than trade receivables and cash at bank. The values in the Consolidated Statement of Financial Position for the financial assets and liabilities are not materially different from their fair values.

 

Interest rate risk

 

The Group finances its operations at present through equity, bank overdraft, convertible debt and working capital. The Group manages its exposure to interest rate fluctuations by mixing the duration of its deposits and borrowings to reduce the impact of interest rate fluctuations.

 

Liquidity risk

 

The Group seeks to manage financial risk to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Some liquidity risk arises from the nature of production income, which does not always arise in an even manner, and the Group's policy is to ensure there are sufficient cash reserves to meet liabilities during such periods.

 

Liquidity risk also arises from the interest charges and repayment terms of convertible debt, which the Group seeks to manage by means of periodic charges for central administration services and support to each Group entity. These are incorporated into rolling twelve-month Group cash flow forecasts, which are reviewed by the Board monthly, and the cash flows are monitored at Group level by weekly cash reports from each operating entity. Short term flexibility is provided through the availability of a bank overdraft facility, and shortly through a revolving credit facility that replaces the overdraft.

 

Credit risk

 

The Group's principal financial assets are bank balances, cash and trade and other receivables. The Group's credit risk is primarily attributable to its trade receivables. The Group operates to ensure that the payment terms of customers are matched to the Group's own contractual obligations in terms of delivery of programmes and rights. The principal source of Group income is commissioning broadcasters, who are not considered to be a significant credit risk because of their size and financial resources. Other Group income is derived from distribution sales worldwide, and credit risk is assessed in relation to knowledge of the customer or by credit references. To minimise credit risk contractual terms may require that payment is made before delivery of materials.

 

 

 

18    Financial risk management (continued)

 

Currency risk

 

The Group operates in overseas markets and is subject to exposures on transactions undertaken during the year. The Group's exposure to exchange rate fluctuations is small based on its revenue and cost base and its policy is not to hedge against foreign currency transactions.

 

The sterling equivalent of the Group's assets and liabilities denominated in foreign currencies at 31 March 2020 and 31 December 2018 was as follows:

	Assets		Liabilities
	31 March 2020	31 December 2018	31 March 2020	31 December 2018
	£'000	£'000	£'000	£'000
US dollar	3,691	4,339	(8)	(8)
Euros	887	435	(20)	(24)
Other	978	578	-	-
Total assets/(liabilities)	5,556	5,352	(28)	(32)

 

The main foreign currency that the Group is exposed to is US dollar. Assets include monies due on contracts while above liabilities exclude the commissions payable, these currently sit as accruals and deferred income than trade and other payables. Taking the net balance of these two any movement in the exchange rate is not material, while on a stand-alone basis on either assets or liabilities it would appear to be.

 

Interest rate and liquidity risk

 

Interest rate sensitivity

The sensitivity analysis has been based on the average exposure to floating rate debt during the year.  It has been assumed that floating interest rates were 200 basis points higher than those actually incurred. The effect of such a change would not be material to profit before tax for the year, as was the case in 2018.

 

Capital risk management

The capital structure of the Group consists of convertible loan note loan financing, bank loan financing and the shareholders' equity comprising issued share capital and reserves. 

 

The capital structure of the Group is reviewed on an ongoing basis with reference to the costs applicable to each element of capital, future requirements of the Group, flexibility of capital to be drawn down and availability of further capital should it be required.  Management prepare cash flow projections to plan for repayment of loan facilities used. These projections are reviewed on a regular basis to check that the Group will be able to settle liabilities as they fall due.

 

The Group's objectives when maintaining capital are:

 

·      to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

·      to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

 

Liquidity and interest risk tables

 

The following table details the Group's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted contractual maturities of the financial liabilities.

 

 

18    Financial risk management (continued)

 

31 March 2020			Weighted average effective interest rate	Less than 1 month or on demand	1-3 months	3-12 months	1-5 years	More than 5 years	Total
			%	£'000	£'000	£'000	£'000	£'000	£'000
Fixed rate
Trade payables			n/a	250	-	-	-	-	250
Floating rate
Bank overdrafts			3.5%	-	-	-	-	-	-
31 December 2018	Weighted average effective interest rate			Less than 1 month or on demand	1-3 months	3-12 months	1-5 years	More than 5 years	Total
	%			£'000	£'000	£'000	£'000	£'000	£'000
Fixed rate
Trade payables		n/a		140	-	-	-	-	140
Floating rate
Bank overdrafts		3.5%		-	-	-	-	-	-

 

19    Share capital

 

	31 March 2020	31 December 2018
	£'000	£'000
Share capital	12,272	12,272
Share premium	51,215	51,215
	63,487	63,487

 

Issued capital comprises:

	31 March 2020	31 December 2018
	£'000	£'000
Allotted, called up and fully paid
2,541,419 ordinary shares of £1 each	2,541	2,541
9,730,514 deferred shares of £1 each	9,731	9,731
	12,272	12,272

 

Fully paid ordinary shares:

 

Ordinary shares have full voting, dividend and capital distribution rights attached to them.

 

	Number of shares	Share capital	Share premium
		£'000	£'000
Balance at 1 January 2019 and 31 March 2020	12,271,933	12,272	51,215

 

Pursuant to a resolution passed on 24 July 2012 and in accordance with the provisions of the Companies Act 2006 the Company ceased to have authorised share capital.

 

The deferred shares are not entitled to receive a dividend or other distribution, to attend or vote at any General Meeting and on return of capital on a winding up, shall only be entitled to receive the amount paid up on the shares after holders of the ordinary shares have received £100,000 for each ordinary share.

 

 

 

20    Capital commitments

 

There were no capital commitments at 31 March 2020 or 31 December 2018.

 

21    Transactions with directors and other related parties

 

Loans to Directors

 

At 31 March 2020 and 31 December 2018 there were no loans due to Directors.  

 

Other transactions

 

During the period the following amounts were charged by companies in which the Directors have an interest or share directorships:

 

		Amount charged
Company	Director	15 months to March 2020 £'000	2018 £'000	Description
Timeweave Ltd	D Craven	-	108	Provision of director, finance and management services
Ultimate Finance Group Ltd	N McMyn	31	17	Provision of director, finance and management services

 

 

The balances outstanding at the year-end were as follows:

 

		Amount payable
Company	Director	15 months to March 2020 £'000	2018 £'000	Description
Timeweave Ltd	D Craven	-	504	Provision of director, finance and management services
Ultimate Finance Group Ltd	N McMyn	8	(20)	Provision of director, finance and management services

 

Other related party transactions

 

In 2012, DCD Rights Ltd secured a deal with Timeweave Ltd, a shareholder of DCD Media plc, to create a new fund for the acquisition of third-party distribution rights.  At 31 March 2020, DCD Rights Ltd was owed £Nil to Timeweave Ltd (31 December 2018: £835,046).

 

 

Compensation of key management personnel of the Group

	15 months to 31 March 2020	31 December 2018
	£'000	£'000
Short-term employee benefits	516	435
Pension benefits	10	6
	526	441

 

Only directors and employees who attend the monthly executive meetings are deemed to be key management personnel.   

 

The principal operating subsidiary companies are listed below:

 

Subsidiary                             Country of incorporation    % owned                         Nature of business

DCD Rights Ltd

England & Wales

100%

Distribution of programme rights

September Films Ltd

England & Wales

100%

Production of programmes for television

Rize Television Ltd

England & Wales

100%

Production of programmes for television

 

 

 

22    Retirement benefit schemes

 

The Group contributed to the personal pension plans of 18 employees in the period (year to 31 December 2018: 18).  Contributions in the year amounted to £28,084 (2018: £14,555).

 

23    Notes supporting the cash flow statement

 

Cash and cash equivalents for the purposes of the cash flow statement comprises:

 

	31 March 2020	31 December 2018
	£'000	£'000
Cash available on demand	2,735	2,276
	2,735	2,276

 

24     Ultimate parent company and ultimate controlling party

 

The immediate parent company is Timeweave Ltd, registered in England and Wales. The smallest and largest group that consolidates the results of the Company is Mayfair Capital Investments UK Ltd, registered in Scotland.  The results of Mayfair Capital Investments UK Ltd can be obtained from Companies House website at www.companieshouse.gov.uk .

 

The Directors consider the family interests of Mr Joe Lewis to have ultimate control by virtue of their indirect beneficial ownership of the issued share capital of Mayfair Capital Investments Ltd, a company incorporated in the Bahamas. The Directors consider Mayfair Capital Investments Ltd to be the ultimate parent company.