W._CHUMP_&_SONS_LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2019.

The company's profit for the financial period was £412,339 (2018: £2,788,324). The profit was driven by television programming produced during the period ended 31 December 2019.

The directors are keen to continue focusing on producing quality programming whilst ensuring that the company’s overheads are kept stable.

The directors are satisfied with the results for the year and the financial position at the year end and will continue to pursue business opportunities as they arise in the future.

The company operates in an increasingly competitive environment and the directors regularly review and assess the uncertainties in the market.

Management aims to minimise risk by retaining key staff and producing quality, entertaining programmes.

Clear risk assessment and strong financial and operational management is essential to control and manage the company's existing business.

The directors consider its key performance indicators to be:

• gross profit margin

• operating profit

At the period end shareholders' funds were £4,214,589 (2018: £3,802,250).

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2019.

The principal activity of the company was that of television programme production.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The results for the year are set out on page 6.

No ordinary dividends were paid (2018: £2,000,000). The directors do not recommend payment of a final dividend.

We refer your attention to accounting policy note 1.2 ‘Going Concern’ and note 16 ‘Events after the reporting period’ within these financial statements.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The directors are responsible for preparing the annual 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and 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.

We have audited the financial statements of W. Chump & Sons Limited (the 'company') for the year ended 31 December 2019 which comprise the profit and loss account, the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and 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 FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its profit for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information. 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.

In connection with our audit of the financial statements, 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 or a material misstatement of the other information. 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

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 and the directors' report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•     adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

•     the financial statements are not in agreement with the accounting records and returns; or

•     certain disclosures of directors' remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

W. Chump & Sons Limited is a private company limited by shares incorporated in England and Wales. The registered office is 27 Mortimer Street, London, W1T 3BL.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

The accounting period relates to the year to 31 December 2019, the comparative accounting period was for the year to 31 December 2018.

The directors have considered the effect of the Covid-19 outbreak. Due to the travel restrictions put in place which has halted the television programme production, the outbreak has caused significant disruption to the company’s business to date. The directors consider that a prolonged outbreak is likely to cause further disruption. Due to there being no related cost of production unless there is production revenue, along with minimal overheads, the directors have a reasonable expectation that the company has adequate resources to continue in operation for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.true

Turnover represents amounts received and receivable for the production and development of television programmes exclusive of value-added-tax. Turnover and related costs from television production are recognised when programmes are delivered to the commissioning bodies.

Amounts received under agreements for which contractual obligations have not been fulfilled and which have not been credited to the profit and loss are included on the balance sheet.

Interests in unlisted shares are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

Cash at bank and in hand are basic financial assets and include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Other debtors and fixed asset investment

At 31 December 2018 the company was owed £2,558,518 following a loan made to Digital Tribe Holdings Limited, a company in which the directors and shareholders own minority shareholdings, plus accumulated interest. At 31 December 2018, the company had made a provision of £1,000,000 against this debt due to uncertainty over the recoverability of the loan based on the financial position of Digital Tribe Holdings Limited. The net balance of £1,558,518 was included in other debtors at 31 December 2018.

At 31 December 2019, the directors have reviewed the estimates made in respect of the loan balance and have adopted the following accounting treatment.

At 10 May 2019, the total balance owed to the company was £2,675,170. Between 1 January 2019 and 10 May 2019, the company recognised a further provision against this debt of £1,130,226 in the profit and loss account. The total provision at 10 May 2019 was £2,130,226 with a net balance of £544,944 included within other debtors on the balance sheet.

On 10 May 2019, the loan balance was converted into shares. The other debtor balance of £544,944 was transferred to fixed asset investments.

The directors have reviewed the carrying value of the investment and have recognised impairment against the investment of £350,322 in the profit and loss account for the period from 10 May 2019 to 31 December 2019. The Directors have based the assessment on shares acquired by a third party in the company in which the investment is held. The carried forward net book value for the investment of £194,622 is not considered to be impaired further at 31 December 2019.

Revenue recognition

Revenue from television production is recognised when programmes are delivered to the commissioning bodies. The Directors estimate the revenue from each minute of television produced to be equal. The Directors estimate the cost to produce each minute of television to be equal. When programmes are not delivered at the balance sheet date, the directors estimate the deferred and accrued income and deferred and accrued costs on a per minute basis.

An analysis of the company's turnover is as follows:

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

Investment income includes the following:

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

The directors have considered the effect of the Covid-19 outbreak, that spread throughout the world during 2020, on the company’s activities.

This outbreak has caused a significant disruption to the company’s business prior to the date of approval of these financial statements. This is due to the travel restrictions which have been put in place which have halted the television programme production. Although this has resulted in little revenue being recognised post year end, there has also been no related cost of production. Therefore there has been minimal financial impact on the company. Due to the prolonged outbreak, the directors anticipate the disruption to continue until travel restrictions are lifted. The extent and financial effect of any continuing disruption still remains uncertain.

Transactions with related parties

During the year the company entered into the following transactions with related parties:

Included in other debtors is £Nil (2018: £17,527,550) due from Chump Holdings Limited, a company controlled by the directors. This balance included the transfer of funds between the entities required to finance their trading activities.

Included in trade debtors is £157,469 (2018: £157,469) due from Digital Tribe Holdings Limited, a company in which the directors and shareholders own minority shareholdings, relating to recharged costs.

Included in others debtors is £nil (2018: £1,558,518) due from Digital Tribe Holdings Limited. This balance relates to a loan made under commercial terms and accrued interest. The original loan amount was £2,000,000, £1,000,000 of this loan was provided against in the 2016 financial statements. The loan was converted into shares in May 2019.

Included in other creditors is £Nil (2018: £26,286,728) owed to Chump Productions Limited, a company controlled by the directors. This balance included intercompany costs of £Nil (2018: £26,601,432) incurred under the terms of a commissioning agreement plus the transfer of funds between the entities required to finance their trading activities.

Included in other creditors is £Nil (2018: £Nil) owed to Nigel & Sons Limited, a company controlled by the directors. During the period, the company incurred costs of £235,063 (2018: £464,937) relating to intercompany costs incurred under a royalty agreement.