AVC Live Limited - Limited company accounts 22.3

REGISTERED NUMBER: 01921674 (England and Wales)

STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

FOR

AVC LIVE LIMITED

Page

Company Information

1

Strategic Report

2

to

4

Report of the Directors

5

to

6

Report of the Independent Auditors

7

to

10

Statement of Comprehensive Income

11

Statement of Financial Position

12

Statement of Changes in Equity

13

Statement of Cash Flows

14

Notes to the Statement of Cash Flows

15

Notes to the Financial Statements

16

to

26

DIRECTORS:

Mr W Markowitz

Mr N O Rudge

Mr B E Erwin

REGISTERED OFFICE:

Union Business Park

Florence Way

Uxbridge

Middlesex

UB8 2LS

REGISTERED NUMBER:

01921674 (England and Wales)

AUDITORS:

Seymour Taylor Limited, Statutory Auditor

57 London Road

High Wycombe

Buckinghamshire

HP11 1BS

The directors present their strategic report for the year ended 31 December 2021.

REVIEW OF BUSINESS

The company's key financial and performance indicators during the year were as follows:

2021

2020

Variance

£'000

£'000

%

Turnover

4,232

3,398

25

Profit/(loss) before tax

(3,408

)

(7,732

)

44

Shareholders' funds

30,691

33,523

During the year the company continued to provide the hire of audio visual equipment and services to customers in a number of different business sectors as well as overseas. 2021 was a year of two distinct trading experiences with the first half being, disappointingly, a continuation of trading in 2020 after UK government restrictions continued to discourage meetings and gatherings. The autumn saw a significant increase in trading as restrictions lifted and customers regained confidence to hold events.

2021 was the first year of trading under the global Encore brand. In a world changed by this pandemic, the Encore brand and new icon signal a forward focus to operate under a brand that conveys the true breadth and depth of creative, production and technology services far beyond that of an audio-visual services provider.

The company is proud of its response during the year. All team members responded with enthusiasm to returning to work and helping customers deliver great events, usually at short notice, especially in the autumn. We also continued developing and improving virtual and hybrid options for customers. We won work from new clients and strengthened relationships with existing clients through adaption to their needs.

Business support teams in IT, finance & HR worked constantly through the year to enable our client service teams, manage cash and process claims for government support schemes. Additional investment has been made through implementing new IT systems to improve efficiency which is expected to benefit the company in future years.

The business ended 2021 with confidence and a plan for benefits to be realised as the business (re)starts from investments made in team members and work undertaken in 2021 to integrate our businesses.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the company are as follows:

Competitor risks

The company has recognised competitive risks from alternative suppliers. The company seeks to differentiate itself from competitors, providing a premium service in addition to the supply of high quality equipment. The company constantly monitors its competitive offering and adjusts as challenges present themselves.

PRINCIPAL RISKS AND UNCERTAINTIES

Foreign currency

Intercompany balances held in foreign currency, especially US dollars and Euros, affect the company's performance. The company will closely monitor these risks and take action where required.

General Economic Uncertainty

As the global economy recovers from COVID related shutdowns, inflationary pressures and supply chain difficulties are a risk to the company's operations as the availability of people (both salaried and freelance) and equipment is constrained. As part of a global organisation, the company is working with other group companies to obtain and share resources and exploring other solutions to these risks.

COVID-19

Following the outbreak of COVID-19 and the increasing economic impact of this worldwide pandemic, the directors have given consideration to the company's operations, including its going concern status.

The directors have concluded that there was a significant impact on the company's revenue in 2021 however the company continues to be a going concern due to expected future trading levels and the funding support achieved by the ultimate parent company for its subsidiaries, which has confirmed its continuing support.

Emissions and energy consumption

Disclosure in respect of greenhouse gas emissions, energy consumption and energy efficiency has not been included within this report as the company does not exceed the thresholds to disclose.

SECTION 172(1) STATEMENT

Section 172(1) disclosures

The following disclosure describes how the directors have had regard to the matters set out in section 172(1)(a) to (f) and forms the directors' statement required under section 414CZA of The Companies Act 2006.

The directors consider that customers, investors, suppliers and workforce are key stakeholders and are considered in key decisions.

Customers

Our corporate culture of Purpose, Mission and Values are focussed on delivering value for our Customers. We consider delivering for our customer requirements as key to continued success.

Investors

We create value for our investors by generating strong and sustainable results. We set out KPIs in our Strategic Report. We discuss key decisions in regular meetings with management. Our investors have considered the funding requirements of the business for capital expenditure when determining that no dividend be paid from the 2021 results.

Suppliers

Our suppliers are important to our business success and each supplier has a named relationship contact person within the business for communication when required. We maintain good relationships with a range of suppliers to ensure the availability and flexibility that our customers require.

Workforce

Our workforce deliver great results for our stakeholders and are considered in all key decisions. We are committed to training and workforce welfare and monitor both training hours and employee engagement regularly. We communicate regularly with our workforce including in Town Halls where all staff have the opportunity to ask questions to management and Directors.

Community

We consider the wider needs of the communities in which we operate through a commitment to minimising our impact on the environment, upholding excellent standards of business conduct and, where possible, supporting local communities in which we operate.

Key Decisions

During the year under review, these stakeholders and factors were included the decision to maintain, and increase, the size of the workforce despite furlough ending and lack of revenue visibility due to the the short notice bookings the company was receiving. This action was considered in the best long-term interests of our stakeholders.

In December 2021, a bonus of $1000 was paid to every active team member, in addition to any other benefits received, as a mark of appreciation for the work performed in autumn 2021. This action was considered in the best long-term interests of our stakeholders.

ON BEHALF OF THE BOARD:

Mr N O Rudge - Director

13 February 2023

The directors of AVC Live Limited (the company) present their report and financial statements for the year ended 31 December 2021.

RESULTS

The company's net loss for the year after taxation amounted to £2,832,000 (2020: £7,078,486).

COVID-19

Following the outbreak of COVID-19 and the increasing economic impact of this worldwide pandemic, the directors have given consideration to the company's operations, including its going concern status.

The directors have concluded that although there was a significant impact on the company's revenue in 2021 the company continues to be a going concern due to expected future trading levels and the funding support achieved by the ultimate parent company for its subsidiaries, which has confirmed its continuing support.

Emissions and energy consumption

Disclosure in respect of greenhouse gas emissions, energy consumption and energy efficiency has not been included within this report as the company does not exceed the thresholds to disclose.

DIVIDENDS

No dividends will be distributed for the year ended 31 December 2021.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report.

Mr W Markowitz

Mr N O Rudge

Mr B E Erwin

FINANCIAL INSTRUMENTS

Details in relation to the financial risk management objectives and policies are disclosed within the strategic report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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;

-	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.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Seymour Taylor Limited, will be re-appointed in accordance with section 487(2) of the Companies Act 2006.

ON BEHALF OF THE BOARD:

Mr N O Rudge - Director

13 February 2023

Opinion

We have audited the financial statements of AVC Live Limited (the 'company') for the year ended 31 December 2021 which comprise the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and Notes to the Statement of Cash Flows, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 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 2021 and of its loss 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 Auditors' 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

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

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 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.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

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.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page five, 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 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.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors 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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

- the nature of the industry and sector, control environment and business performance;

- results of our enquiries of management about their own identification and assessment of the risks of irregularities;

- any matters we identified in respect of the Company's documentation of their policies and procedures relating to:

- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of noncompliance;

- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

- the matters discussed among the audit engagement team and involving relevant internal specialists, including tax regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in relation to revenue deferrals. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory frameworks that the Company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and local tax legislation.

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Company's ability to operate or to avoid a material penalty. These included compliance with Financial Conduct Authority regulation for the UK operating segment and compliance with local legislation for the overseas operating segments.

Audit response to risks identified

As a result of performing the above, we identified revenue deferrals as a key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response to that key audit matter. Our procedures to respond to risks identified included the following:

- reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

- enquiring of management concerning actual and potential litigation and claims;

- performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

- obtained an understanding of provisions and held discussions with management to understand the basis of recognition or non-recognition of tax provisions; and

- in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and significant component audit teams, and remained alert to any indications of fraud or noncompliance with laws and regulations throughout the audit.

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

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 a Report of the Auditors 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.

Elizabeth Horton ACA FCCA (Senior Statutory Auditor)

for and on behalf of Seymour Taylor Limited, Statutory Auditor

57 London Road

High Wycombe

Buckinghamshire

HP11 1BS

13 February 2023

TURNOVER

3

4,232

3,398

Cost of sales

4,999

5,935

GROSS LOSS

(767

)

(2,537

)

Administrative expenses

1,228

3,124

(1,995

)

(5,661

)

Other operating income

544

1,635

OPERATING LOSS

6

(1,451

)

(4,026

)

Income from participating interests

653

645

(798

)

(3,381

)

Amounts written off investments

7

2,610

4,351

LOSS BEFORE TAXATION

(3,408

)

(7,732

)

Tax on loss

8

(576

)

(653

)

LOSS FOR THE FINANCIAL YEAR

(2,832

)

(7,079

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

(2,832

)

(7,079

)

FIXED ASSETS

Tangible assets

9

2,240

3,120

Investments

10

19,702

22,312

21,942

25,432

CURRENT ASSETS

Stocks

11

56

56

Debtors: amounts falling due within one year

12

6,012

4,578

Debtors: amounts falling due after more than one year

12

21,019

18,099

Cash at bank

301

150

27,388

22,883

CREDITORS

Amounts falling due within one year

13

18,639

14,792

NET CURRENT ASSETS

8,749

8,091

TOTAL ASSETS LESS CURRENT LIABILITIES

30,691

33,523

CAPITAL AND RESERVES

Called up share capital

16

10

10

Share premium

17

35,043

35,043

Capital redemption reserve

17

10

10

Retained earnings

17

(4,372

)

(1,540

)

SHAREHOLDERS' FUNDS

30,691

33,523

The financial statements were approved by the Board of Directors and authorised for issue on 13 February 2023 and were signed on its behalf by:

Mr N O Rudge - Director

Called up

Capital

share

Retained

Share

redemption

Total

capital

earnings

premium

reserve

equity

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2020

10

5,539

35,043

10

40,602

Changes in equity

Total comprehensive income

-

(7,079

)

-

-

(7,079

)

Balance at 31 December 2020

10

(1,540

)

35,043

10

33,523

Changes in equity

Total comprehensive income

-

(2,832

)

-

-

(2,832

)

Balance at 31 December 2021

10

(4,372

)

35,043

10

30,691

Cash flows from operating activities

Cash generated from operations

1

(678

)

(1,413

)

Taxation refund

195

-

Net cash from operating activities

(483

)

(1,413

)

Cash flows from investing activities

Purchase of tangible fixed assets

(19

)

(218

)

Sale of tangible fixed assets

-

10

Interest received

653

645

Net cash from investing activities

634

437

Increase/(decrease) in cash and cash equivalents

151

(976

)

Cash and cash equivalents at beginning of year

2

150

1,126

Cash and cash equivalents at end of year

2

301

150

1.	RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

31.12.21

31.12.20

£'000

£'000

Loss before taxation

(3,408

)

(7,732

)

Depreciation charges

899

1,019

Loss on disposal of fixed assets

-

3

Impairment of investment

2,610

4,351

Finance income

(653

)

(645

)

(552

)

(3,004

)

Increase in stocks

-

(1

)

(Increase)/decrease in trade and other debtors

(3,973

)

735

Increase in trade and other creditors

3,847

857

Cash generated from operations

(678

)

(1,413

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts:

Year ended 31 December 2021

31.12.21

1.1.21

£'000

£'000

Cash and cash equivalents

301

150

Year ended 31 December 2020

31.12.20

1.1.20

£'000

£'000

Cash and cash equivalents

150

1,126

3.	ANALYSIS OF CHANGES IN NET FUNDS

At 1.1.21

Cash flow

At 31.12.21

£'000

£'000

£'000

Net cash

Cash at bank

150

151

301

150

151

301

Total

150

151

301

1.	STATUTORY INFORMATION

AVC Live Limited is a private company, limited by shares, registered in England and Wales. The company's registered office and principal place of business is Union Business Park, Florence Way, Uxbridge, Middlesex, UB8 2LS. The registered number is 01921674.

The principal activity of the company during the year was that of event management and hire of audio visual equipment and services.

The financial statements are presented in the currency of the primary economic environment in which the entity operates (its functional currency), as such, the results and statement of financial position are presented in Sterling (£   ). Monetary amounts in these financial statements are rounded to the nearest thousand unless otherwise stated.

The significant accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102'), and with the Companies Act 2006. The financial statements have been prepared on the historical cost basis.

Going concern

Since early 2020 the consequences of the COVID-19 outspread have materially and adversely affected the supply and demand for the company's primary products. Therefore, its operating results have been negatively impacted.

The company has returned to profitability and seen a good level of trading during 2022. The Directors have carried out 'stress testing' of forecasts throughout 2022 and into 2023 and believe that worst period of the pandemic has passed. The company continues to trade profitably.

Although the company has net current liabilities of £12,270,000 (excluding the deferred tax assets of £1,144,000, other debtors of £804,000 and Intercompany debt of £19,071,000 which is due after more than one year), the Company is supported by other Group companies. This is reflected in the balance owed to Group companies of £15,652,000 at 31 December 2021. This is supported by its parent company who has addressed its financing requirements through debt and equity financing, asset sales and rights offerings to existing shareholders.

The Directors believe that, with continued agreed funding support achieved by the ultimate parent company for its subsidiaries, which it has confirmed is ongoing, the company continues to be a going concern and the financial statements are prepared on this basis.

Preparation of consolidated financial statements

The financial statements contain information about AVC Live Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its parent, AVSC Europe Limited, Union Business Park, Florence Way, Uxbridge, Middlesex, UB8 2LS.

Turnover

Revenue is recognised to the extent that the company obtains right to consideration in exchange for its performance. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT and other sales tax or duty. Revenue is recognised as follows:

Rendering of services

Customers hire equipment for a specific period of time. Orders are taken at the beginning of the hire period with income being recognised at the end of the hire period or on a monthly basis for hire periods longer than a month.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

Short leasehold

-

over the lease term

Plant and machinery

-

straight line - 50% and straight line - 25%

Motor vehicles

-

straight line - 25%

Government grants

The company received government grants in respect of the Coronavirus Job Retention Scheme.

These grants are recognised at the fair value of the asset received or receivable when there is a reasonable assurance that the company will comply with conditions attaching to them and the grants will be received, using the accrual model.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. Differences between accumulated depreciation and tax allowances for the cost of a fixed asset, if and when all conditions for retaining the tax allowances have been met, are not provided for. Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non-taxable or are disallowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.

Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax balances are not discounted.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Operating lease commitments

Rentals applicable to operating leases, where substantially all of the benefits and risks of ownership remain with the lessor, are charged against profits on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Operating lease incentives

The company from time to time receives incentives to enter into new lease agreements. These incentives may take the form of an up-front cash payment ("reverse premium") or the initial period of the lease may be rent free or at a reduced rent.

In accordance with the standard accounting treatment for operating lease incentives, the benefits receivable by the company are deducted from the rental costs and are allocated on a straight line basis over the full lease term.

Financial instruments

The company has applied the provision of Section 11 'Basic Financial Instruments' and Section 12 'Other Financial Instrument Issues' of FRS 102 to all of its financial instruments.

Financial instruments are classified and accounted for, according to the substance of the contractual arrangement, as either financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Where the contractual obligations of financial instruments (including share capital) are equivalent to a similar debt instrument, those financial instruments are classed as financial liabilities. Financial liabilities are presented as such in the balance sheet. Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account. Finance costs are calculated so as to produce a constant rate of return on the outstanding liability.

Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.

Impairment of financial assets

At each period end date, the company reviews the carrying amounts of its financial assets to determine whether there is any indication that 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).

If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount, with the impairment recognised immediately in the statement of income and retained earnings.

Investments

Investments that are not publicly traded, and whose fair value cannot otherwise be measured reliably, are held as fixed assets and stated at cost less any provision for impairment in value.

The carrying values of investments are reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable.

Critical accounting estimates and judgements

In the application of the company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered 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, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The areas for which estimation has been applied are considered to be in calculating impairments. Although these areas are subject to judgement, they are not considered to be subject to significant estimation.

3.

TURNOVER

The turnover and loss before taxation are attributable to the one principal activity of the company.

An analysis of turnover by geographical market is given below:

2021

2020

£'000

£'000

United Kingdom

4,231

3,399

Rest of world

1

-

4,232

3,399

4.	EMPLOYEES AND DIRECTORS

31.12.21

31.12.20

£'000

£'000

Wages and salaries

2,123

3,860

Social security costs

229

345

Other pension costs

53

97

2,405

4,302

The average number of employees during the year was as follows:

31.12.21

31.12.20

Administration

2

7

Production

69

115

71

122