ACCOUNTS - Final Accounts preparation
ACCOUNTS - Final Accounts preparation
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Registered number:
FOR THE YEAR ENDED 28 FEBRUARY 2022
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MACFARLANE MEDIA LIMITED
CONTENTS
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MACFARLANE MEDIA LIMITED
COMPANY INFORMATION
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MACFARLANE MEDIA LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2022
This disclosure on behalf of the directors of MacFarlane Media Ltd t/a The Media Image and herein referred to as TMI, is for the financial reporting period ending February 2022 and has been prepared on a consolidated basis.
The principal activity of the company continues to be that of a global performance media agency.
FY22 represented the start of trading in year two of the global COVID-19 pandemic almost to the day and as defined by the closing of the US border on the 16th March 2020.
TMI continued its growth into the start of the new fiscal year with increased client acquisition and same store growth. The organization also saw headcount growth from 87 to 95 FTE’s alongside increases in revenue, GP and EBITDA. Although the latter half of the fiscal year saw increased capital investments into areas such workflow management, finance and human resources, the organizations trading margin remained healthy with cost of sales being judiciously managed in the face of global economic uncertainty. Despite unprecedented economic turbulence (particularly in the UK) and significant geo-political considerations affecting the macro economic climate, TMI continues to hold a robust trading position. With limited income exposure to the UK, the business is benefitting from US client growth and expansion. Sentiment driven decisions re efficiency, in all markets, see TMI benefit from consolidation of service. On going prudent fiscal management and significant cash reserves see TMI well positioned going into 2023 with on focus on it's lean and agile operating approach.
The below represent key business risks and uncertainties that became apparent throughout the course of FY22.
COVID Impact and Economic Headwinds: On going impact of COVID pandemic and more specifically fiscal and monetary climate risks pose threat to global economic stability. Economic instability and particularly inflationary pressures in key developed markets such as the UK/US may result in decreased client investment over time and or diminishing yields on their behalf. The threats also pose degrees of opportunity. Talent Acquisition and Retention: On going labour challenges remain prevalent particularly in markets such as the UK whereby EU population attrition has decreased skilled worker segments in cities such as London. Furthermore, with increasing numbers of workers opting for remote work opportunities and or temporarily leaving employment there is a decline in available talent. Retention focus continues to lead to higher staff costs resulting in margin depreciation. Customer Concentration: Geographic and sector concentration remains an ongoing risk to the organization. Foreign currency exchange: Changes in foreign currency exchange movements are a risk to any global business. TMI manages the risk of foreign exchange losses by frequent foreign cash balance reviews and monthly revaluations.
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MACFARLANE MEDIA LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
The below table represents key financial performance indicators as defined by the directors. Group Company 2022 2021 Growth % 2022 2021 Growth % Revenue 10,958,206 7,983,979 37% 10,953,683 7,983,979 37% Gross Profit 9,830,343 7,474,567 32% 9,116,361 6,963,855 31% EBITDA 6,294,998 4,612,071 36% 6,210,215 4,523,873 37% Revenue per person 136,978 124,750 10% 202,846 215,783 -6% EBITDA per person 78,687 72,064 9% 115,004 122,267 -6% For the purpose of the Directors KPI's, EBITDA is calculated in the usual way but excludes exceptional income and expenses. The growth and performance of the business is reflected in the revenue and EBITDA results, with almost identical growth seen in each area. A key reason for this growth has been new territory expansion for existing clients, as well as positive customer churn resulting in an overall increase in average revenue per client. Along with the positive financial growth seen, TMI also looked at the operational foundation of the business as an area for growth as well, through investing in multiple “back-office” staff and functions. This included investing in both HR and Finance infrastructure on which a foundation can be built in the years to come.
The below table represent key non-financial performance indicators as defined by the directors.
Group Company 2022 2021 Growth % 2022 2021 Growth % Staff numbers 80 64 25% 54 37 46%
Headcount increased by 25% throughout FY22 under The Media Image Group, and the global footprint of TMI extended to Indonesia, the Netherlands, Mauritius and Greece. The increase in headcount was a result of winning a number of new clients throughout the year, as well as further support for existing clients.
This report was approved by the board and signed on its behalf.
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MACFARLANE MEDIA LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 28 FEBRUARY 2022
The directors present their report and the financial statements for the year ended 28 February 2022.
The profit for the year, after taxation, amounted to £5,184,604 (2021 - £3,965,783).
Dividends totalling £217,614 (2021: £192,120) were declared and paid during the year.
The directors who served during the year were:
As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information,
required to be in the directors' report by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.
This report was approved by the board and signed on its behalf.
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MACFARLANE MEDIA LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 28 FEBRUARY 2022
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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 the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group 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 the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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MACFARLANE MEDIA LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MACFARLANE MEDIA LIMITED
FOR THE YEAR ENDED 28 FEBRUARY 2022
We have audited the financial statements of MacFarlane Media Limited (the 'parent company') and its subsidiaries (the 'Group') for the year ended 28 February 2022, which comprise the Group Profit and loss account, the Group and company Balance sheets, the Group Statement of cash flows, the Group and company Statement of changes in equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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MACFARLANE MEDIA LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MACFARLANE MEDIA LIMITED (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
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 contained within the Annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group 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 Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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MACFARLANE MEDIA LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MACFARLANE MEDIA LIMITED (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the marketing sector;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and data protection, anti-bribery, employment, and health and safety legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested a sample of journal entries to identify unusual transactions;
∙assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures
which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;and
∙enquiring of management as to actual and potential litigation and claims;
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
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MACFARLANE MEDIA LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MACFARLANE MEDIA LIMITED (CONTINUED)
FOR THE YEAR ENDED 28 FEBRUARY 2022
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
The comparative figures for the year ended 28 February 2021, are unaudited.
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.
for and on behalf of
Chartered Accountants
Statutory Auditor
16 Great Queen Street
Covent Garden
WC2B 5AH
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MACFARLANE MEDIA LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 28 FEBRUARY 2022
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MACFARLANE MEDIA LIMITED
CONSOLIDATED BALANCE SHEET
AS AT 28 FEBRUARY 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 31 form part of these financial statements.
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MACFARLANE MEDIA LIMITED
COMPANY BALANCE SHEET
AS AT 28 FEBRUARY 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 18 to 31 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2022
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2021
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2022
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 28 FEBRUARY 2021
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MACFARLANE MEDIA LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 28 FEBRUARY 2022
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
MacFarlane Media Limited is a private company limited by shares incorporated in England and Wales. The address of its registered office and principal place of buisness is Vauxhall Sky Gardens, 153 Wandsworth Road, London, SW8 2GB.
The financial statements are prepared in Sterling (£).
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and loss account in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated profit and loss account from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 March 2020.
The MacFarlane Media Group continues to be profit making, with a profit after tax of £5,184,604 (2021: £3,965,783), and has sufficient cash reserves of £11,974,663 (2021: £8,861,559). It is the opinion of the directors that the company will continue to experience growth in the medium term.
As a result, and after making enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date these financial statements were approved. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
2.Accounting policies (continued)
The Group has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the Group becomes party to the contractual provisions of the instrument.
Financial liabilities 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 Group after deducting all of its liabilities.
The Group’s policies for its major classes of financial assets and financial liabilities are set out below.
Financial assets
Basic financial assets, including trade and other debtors, cash and bank balances, intercompany working capital balances, and intercompany financing are initially recognised at transaction price, 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment.
Financial liabilities
Basic financial liabilities, including trade and other creditors, bank loans and loans from fellow group companies are initially recognised at transaction price. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Impairment of financial assets
Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date.
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
2.Accounting policies (continued)
For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
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.
Derecognition of financial assets and financial liabilities
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Offsetting of financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an 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. 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.
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
Analysis of turnover by country of destination:
- 23 -
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 24 -
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 25 -
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
10.Taxation (continued)
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. From this date companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
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12.Tangible fixed assets (continued)
- 28-
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 29 -
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
Capital redemption reserve
company's own shares.
Profit and loss account
The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund.
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MACFARLANE MEDIA LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2022
- 31 -
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