Company Registration No. 05801088 (England and Wales)
Creative Artists Agency UK Limited
Annual report and financial statements
For the year ended 30 September 2020
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
COMPANY INFORMATION
Directors
R Light
M Rubel
J Freedman
J Burtson
Secretary
M Rubel
Company number
05801088
Registered office
12 Hammersmith Grove
Hammersmith
London
United Kingdom
W6 7AP
Auditor
MGR Weston Kay LLP
55 Loudoun Road
St John's Wood
London
NW8 0DL
Bankers
Barclays Bank Plc
Business Services
Level 27
1 Churchill Place
London
E14 5HP
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 23
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
STRATEGIC REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 1 -
The directors present the strategic report for the year ended 30 September 2020.
Fair review of the business
The company
made
a pre-tax
loss
of £
6,882,369
(201
9
:
pre-tax profit of
£
5
,
408
,
037
) for the year. The
principal activity
of the company
continues to be that of
booking agents
for artists within the live music industry.
Risks to the business and the wider industry
The principal risks and uncertainties facing the Company are primarily those inherent in the Media and Entertainment industry. As well as underlying economic factors, the Company’s income is dependent on the continued popularity of the live music scene. Prior to COVID-19 this was a well-established market which has historically continued to expand globally.
COVID-19 Pandemic risk
On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 to be a public health emergency of international concern. The COVID-19 pandemic has severely restricted the level of economic activity around the world. In response to the COVID-19 pandemic, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forego their time outside of their homes. COVID-19 has also resulted in the postponement and cancellation of live events.
In response to this, the Company closed its offices and implemented business continuity plans for staff to work from home, which, due to the nature of the business, has caused minimal disruption and has in fact led to cost savings.
The directors have assessed the impact of COVID-19 on the Company, including a review of revenue, cost base and working capital requirements. A significant reduction in revenue has been observed since live events were cancelled or postponed, although the Company has been able to pivot and adapt where possible to virtual or socially distanced gigs and complementary revenue opportunities for our clients. The Company has the financial support of its intermediate parent Company, CAA Holdings, LLC which has sufficient cash and liquidity to fund the Company's operations if necessary.
The Company has prioritised managing its costs and financial position during this time, which has included taking advantage of UK Government schemes such as the temporary deferral of VAT & PAYE payments, and the Coronavirus Job Retention Scheme.
The Company has reviewed and updated its forecasts, gaining greater visibility into the COVID-19 challenges of fiscal year 2021. Although the vaccine rollout appears to be successful, the entertainment industry continues to be braced for world-wide uncertainty caused by the COVID-19 pandemic. As a result the Company made the difficult decision to implement workforce reductions during FY20 in addition to the ongoing cost-saving measures.
In the absence of live events since March 2020, the Company and wider CAA Group have prioritized managing its financial position to ensure sufficient liquidity is available to navigate an extended period of uncertainty. The Company shares an industry-wide expectation that live music will begin to return in the third quarter of the calendar year 2021 with corresponding revenues starting to increase in the late summer period. Given the uncertainty around the world-wide rollout of the vaccine and the continued spread of COVID-19, the directors will continue to monitor the situation closely.
Despite the difficulties that COVID-19 has placed on the industry and the wider economy, CAA Holdings, LLC and its subsidiaries are well placed market leaders given both the diversified portfolio of divisions spanning the Media and Entertainment industry and the Company's presence across multiple geographical locations. The directors are confident that the Company and the wider CAA Holdings, LLC group are well placed to perform in the future.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 2 -
Key performance indicators
The directors monitor the performance of the business using various Key Performance Indicators ("KPIs"). The main KPIs were:
-
Turnover
de
creased by
77
% (201
9
:
in
creased by
2
%) compared to the previous year
.
-
Operating profit decreased by 235% to an operating loss of £6,986,199 (2019: operating profit decreased by 16% to £5,160,449) compared to the previous year.
Turnover in any year is susceptible to the activities of its clients, and there will be occasions where this can lead to significant fluctuations over the company's accounting years. The underlying client base is increasing and the company is able to withstand these movements.
J Freedman
Director
8 July 2021
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 3 -
The directors present their annual report and financial statements for the year ended 30 September 2020.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
R Light
M Rubel
J Freedman
J Burtson
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Financial instruments
The company has a normal level of exposure to price, credit and cash flow risk arising from trading activities which are conducted in Sterling. The company does not enter into any lending transactions.
Liquidity risk
The directors monitor the monetary requirements of the company to ensure that sufficient funds are available to enable the company to meet its obligations as they fall due.
Future developments
The directors are continually exploring ways of exploiting the trends within the industry for the benefit of the company including increasing its portfolio of artists within the entertainment industry.
Going concern
As noted in the strategic report, the COVID-19 pandemic has had an adverse impact on the company’s revenues as a result of the cancellation of live music events, and there is continued uncertainty as to when and the extent to which the live music industry will return to pre-pandemic levels of activity. The company has revised and updated its financial forecasts in light of the impact seen and the future uncertainty. The directors have concluded that the commitment of the wider CAA group to provide financial support is required in order to provide the assurance needed over the company’s ability to continue as a going concern. The directors have received a letter from CAA Holdings, LLC, the company’s intermediate parent undertaking, indicating that it will provide the company with such financial support as is necessary in order to allow the company to meet its obligations as they fall due, for a period of at least 12 months from the date of this report.
CAA Holdings, LLC has updated its consolidated financial forecasts in light of the pandemic. These forecasts show that the CAA Holdings LLC group will continue to generate profits and positive cash inflows for a period of at least 12 months from the date of this report, including in stress-test scenarios with plausible reductions in revenue.
Taking into account the position of the intermediate parent CAA Holdings, LLC and their assessment of the impact on the Company summarised in the COVID-19 Pandemic risk section of the Strategic report, the directors have a reasonable expectation that the Company has adequate resources and support to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 4 -
Auditor
MGR Weston Kay LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.
Statement of directors' responsibilities
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;
-
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 of disclosure to auditor
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.
On behalf of the board
J Freedman
Director
8 July 2021
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF CREATIVE ARTISTS AGENCY UK LIMITED
- 5 -
Opinion
We have audited the financial statements of Creative Artists Agency UK Limited for the year ended 30 September 2020 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Statement of Cash Flows and the related notes 1 to
2
2, 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:
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 below. 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.
Emphasis of matter - Impact of COVID-19
We draw attention to Note
1.2
to the financial statements which describes
the impact the COVID-19 pandemic has had on live music events and therefore the revenues of the Company
. Our opinion is not modified in respect of this matter.
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.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CREATIVE ARTISTS AGENCY UK LIMITED
- 6 -
The other information comprises the information included in the Annual report and financial statements, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information
.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this 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 the 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 directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
-
the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.
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 directors’ report.
We have nothing to report in respect of the following matters in relation to which 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 directors’ responsibilities statement set out on page 4, 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.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF CREATIVE ARTISTS AGENCY UK LIMITED
- 7 -
Auditor's 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 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.
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.
Nicholas Muir BA (Econ) FCA (Senior Statutory Auditor)
for and on behalf of MGR Weston Kay LLP
Chartered Accountants
Statutory Auditor
55 Loudoun Road
St John's Wood
London
NW8 0DL
9 July 2021
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 8 -
2020
2019
Notes
£
£
Turnover
3
5,377,878
23,949,798
Administrative expenses
(12,689,675)
(18,789,349)
Other operating income
325,598
Operating (loss)/profit
4
(6,986,199)
5,160,449
Interest receivable and similar income
6
103,830
248,570
Interest payable and similar expenses
7
(982)
(Loss)/profit before taxation
(6,882,369)
5,408,037
Taxation
8
1,261,258
(1,056,098)
(Loss)/profit for the financial year
(5,621,111)
4,351,939
Other comprehensive income
-
-
Total comprehensive income for the year
(5,621,111)
4,351,939
The statement of comprehensive income has been prepared on the basis that all operations are continuing operations.
There are no recognised gains and losses other than those passing through the statement of comprehensive income.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
BALANCE SHEET
AS AT
30 SEPTEMBER 2020
30 September 2020
- 9 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
9
2,416,010
2,854,020
Current assets
Debtors
10
4,063,482
3,363,732
Cash at bank and in hand
2,141,232
14,502,556
Cash held on behalf of clients
12,155,818
11,577,618
18,360,532
29,443,906
Creditors: amounts falling due within one year
11
(16,530,657)
(22,432,536)
Net current assets
1,829,875
7,011,370
Total assets less current liabilities
4,245,885
9,865,390
Creditors: amounts falling due after more than one year
12
(21,121)
(8,255)
Provisions for liabilities
14
(143,331)
(154,591)
Net assets
4,081,433
9,702,544
Capital and reserves
Called up share capital
17
1
1
Retained earnings
4,081,432
9,702,543
Total equity
4,081,433
9,702,544
The financial statements were approved by the board of directors and authorised for issue on 8 July 2021 and are signed on its behalf by:
J Freedman
Director
Company Registration No. 05801088
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 10 -
Share capital
Retained earnings
Total
Notes
£
£
£
Balance at 1 October 2018
1
5,350,604
5,350,605
Year ended 30 September 2019:
Profit and total comprehensive income for the year
-
4,351,939
4,351,939
Balance at 30 September 2019
1
9,702,543
9,702,544
Year ended 30 September 2020:
Loss and total comprehensive loss for the year
-
(5,621,111)
(5,621,111)
Balance at 30 September 2020
1
4,081,432
4,081,433
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 11 -
2020
2019
Notes
£
£
£
£
Cash flows from operating activities
Cash (absorbed by)/generated from operations
22
(11,096,617)
3,088,992
Interest paid
(982)
Income taxes paid
(593,810)
(1,659,358)
Net cash (outflow)/inflow from operating activities
(11,690,427)
1,428,652
Investing activities
Purchase of tangible fixed assets
(97,464)
(94,486)
Interest received
103,830
248,570
Net cash generated from investing activities
6,366
154,084
Financing activities
Payment of finance leases obligations
(99,063)
(99,063)
Net cash used in financing activities
(99,063)
(99,063)
Net (decrease)/increase in cash and cash equivalents
(11,783,124)
1,483,673
Cash and cash equivalents at beginning of year
26,080,174
24,596,501
Cash and cash equivalents at end of year
14,297,050
26,080,174
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 12 -
1
Accounting policies
Company information
Creative Artists Agency UK Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
12 Hammersmith Grove, Hammersmith, London, United Kingdom, W6 7AP.
1.1
Accounting convention
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 a
mounts
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.
1.2
Going concern (Impact of COVID-19)
As noted in the strategic report, the COVID-19 pandemic has had an adverse impact on the company's revenues as a result of the cancellation of live music events, and there is continued uncertainty as to when and the extent to which the live music industry will return to pre-pandemic levels of activity. The company has revised and updated its financial forecasts in light of the impact seen and the future uncertainty. The directors have concluded that the commitment of the wider CAA group to provide financial support is required in order to provide the assurance needed over the company's ability to continue as a going concern. The directors have received a letter from CAA Holdings, LLC, the company's intermediate parent undertaking, indicating that it will provide the company with such financial support as is necessary in order to allow the company to meet its obligations as they fall due, for a period of at least 12 months from the date of this report.
true
CAA Holdings, LLC has updated its consolidated financial forecasts in light of the pandemic. These forecasts show that the CAA Holdings LLC group will continue to generate profits and positive cash inflows for a period of at least 12 months from the date of this report, including in stress-test scenarios with plausible reductions in revenue.
Taking into account the position of the intermediate parent CAA Holdings, LLC and their assessment of the impact on the Company summarised in the COVID-19 Pandemic risk section of the Strategic report, the directors have a reasonable expectation that the Company has adequate resources and support to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover
represents amounts receivable for services net of Value Added Tax
.
Turnover is recognised once a show has been performed. The following criteria must also be met before revenue is recognised.
Turnover from the supply of services is recognised on delivery of those services. When turnover represents the value of the services provided under contracts it is phased equally over the contract at the value of the consideration due.
When a contract has only been partially completed at the balance sheet date, turnover represents the value of the service provided to date based on a proportion of the total contract value. When payments are received from customers in advance of services provided, the amounts are recorded as Deferred Income and included as part of Creditors due within one year or after more than one year.
1.4
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
1
Accounting policies
(Continued)
- 13 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Land and buildings leasehold
Over the life of the lease
Fixtures and fittings
20% straight line
Office equipment
25% straight line
Construction in progress and not in use is not depreciated until the assets are placed in service and are in a condition to be used.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible and intangible 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).
Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
1.6
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.7
Financial instruments
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 are classified into specified categories. The classification depends on the nature and purpose of the
financial asset and is determined at the time of recognition.
Financial assets are initially measured at fair value plus transaction costs, other than those classified as fair value
through profit and loss, which are measured at fair value.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
1
Accounting policies
(Continued)
- 14 -
Basic financial assets
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.
Loans and receivables
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Impairment of financial assets
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
of the investment
have been affected.
Financial liabilities
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transactions costs. They are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the net carrying amount on initial recognition.
Derecognition of financial liabilities
Financial liabilities are derecognised when
, and only when,
the company’s contractual obligations
expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current 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.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
1
Accounting policies
(Continued)
- 15 -
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.10
Employee benefits
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.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.12
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair
value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
1
Accounting policies
(Continued)
- 16 -
1.13
Government grants
Government grants are recognised at the fair value of the asset receive
d
or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met
. Where a
grant does not specify performance conditions
it
is recognised in income when the proceeds are received or receivable
. A grant received before the recognition criteria are satisfied is recognised as a liability.
1.14
Foreign exchange
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 are included in the profit and loss account for the period.
2
Judgements and key sources of estimation uncertainty
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.
The key area involving significant estimation is depreciation of tangible fixed assets which is based on the useful life of the asset. Further details on this are covered in note 1.4 of these financial statements.
3
Turnover and other revenue
2020
2019
£
£
Turnover analysed by class of business
Commissions
5,377,878
23,949,798
2020
2019
£
£
Other significant revenue
Interest income
103,830
248,570
Grants received
325,598
The total turnover of the company for the year has been derived from its principal activity wholly undertaken in the United Kingdom.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 17 -
4
Operating (loss)/profit
2020
2019
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange losses
134,539
140,541
Government grants
(325,598)
Fees payable to the company's auditor for the audit of the company's financial statements
23,300
27,500
Depreciation of owned tangible fixed assets
535,474
531,918
Operating lease charges
653,447
640,528
Exchange differences recognised in profit or loss during the year, except for those arising on financial instruments measured at fair value through profit or loss, amounted to £134,539 (2019 - £140,541).
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2020
2019
Number
Number
Total staff
93
87
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
8,640,684
13,984,317
Social security costs
1,133,551
1,913,075
Pension costs
87,290
67,870
9,843,697
15,960,652
The directors are not remunerated by the company and they provide negligible qualifying services
.
6
Interest receivable and similar income
2020
2019
£
£
Interest income
Interest on bank deposits
103,830
248,570
Total interest income for financial assets that are not held at fair value through profit or loss is £103,830 (2019: £248,570).
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 18 -
7
Interest payable and similar expenses
2020
2019
£
£
Other finance costs:
Interest payable
982
982
8
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
(1,252,258)
1,064,344
Adjustments in respect of prior periods
2,260
7,242
Total current tax
(1,249,998)
1,071,586
Deferred tax
Origination and reversal of timing differences
(11,260)
(15,488)
Total tax (credit)/charge
(1,261,258)
1,056,098
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2020
2019
£
£
(Loss)/profit before taxation
(6,882,369)
5,408,037
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
(1,307,650)
1,027,527
Tax effect of expenses that are not deductible in determining taxable profit
127,685
21,329
Adjustments in respect of prior years
2,260
7,242
Capital allowances
(72,293)
Deferred tax timing differences
(11,260)
Taxation (credit)/charge for the year
(1,261,258)
1,056,098
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
8
Taxation
(Continued)
- 19 -
Factors that may affect future tax charges
The standard rate of UK corporation tax reduced from 20% to 19% on 1 April 2017. As per the budget announced on 11 March 2020, it was decided to maintain the UK corporation tax rate at 19%.
Deferred tax has been calculated at the tax rate of 19%, since this was the substantially enacted rate at the balance sheet date expected to be in place when the deferred tax asset/liability reverses.
Following the year end, a proposed change in the standard rate of UK corporation tax received Royal Assent on 14 June 2021 to increase the rate from 19% to 25% with effect from 1 April 2023. There has been no re-measurement and there is no material effect following the increase.
9
Tangible fixed assets
Land and buildings leasehold
Fixtures and fittings
Office equipment
Total
£
£
£
£
Cost
At 1 October 2019
2,828,393
565,889
811,915
4,206,197
Additions
7,669
89,795
97,464
At 30 September 2020
2,828,393
573,558
901,710
4,303,661
Depreciation and impairment
At 1 October 2019
549,362
372,391
430,424
1,352,177
Depreciation charged in the year
290,092
65,562
179,820
535,474
At 30 September 2020
839,454
437,953
610,244
1,887,651
Carrying amount
At 30 September 2020
1,988,939
135,605
291,466
2,416,010
At 30 September 2019
2,279,031
193,498
381,491
2,854,020
10
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
15,363
122,519
Corporation tax recoverable
1,252,257
Amounts due from fellow group undertakings
2,462,466
2,379,529
Other debtors
131,989
49,380
Prepayments and accrued income
201,407
812,304
4,063,482
3,363,732
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
10
Debtors
(Continued)
- 20 -
Trade debtors disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
Amounts due from group undertakings are interest free and are repayable on demand.
11
Creditors: amounts falling due within one year
2020
2019
Notes
£
£
Obligations under finance leases
13
8,255
99,063
Trade creditors
489,622
122,660
Amounts owed to group undertakings
258,345
417,396
Corporation tax
591,551
Other taxation and social security
1,745,132
951,440
Other creditors
12,246,136
11,601,276
Accruals and deferred income
1,783,167
8,649,150
16,530,657
22,432,536
Included in bank balances are £12,155,81
8
(2019
:
£11
,
5
7
7,618) of funds held in client fund bank accounts. The balances which are included in other creditors shown above in relation to the client funds are £
1
2,155,818 (2019: £
1
1,577,618).
Amounts owed to group undertakings are interest free and are repayable on demand.
12
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Obligations under finance leases
13
8,255
Taxation and social security
21,121
21,121
8,255
13
Finance lease obligations
2020
2019
Future minimum lease payments due under finance leases:
£
£
Within one year
8,255
99,063
In two to five years
8,255
8,255
107,318
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
13
Finance lease obligations
(Continued)
- 21 -
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.
14
Provisions for liabilities
2020
2019
Notes
£
£
Deferred tax liabilities
15
143,331
154,591
15
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
2020
2019
Balances:
£
£
Accelerated capital allowances
143,331
154,591
An estimated amount of approximately £56,168 of the deferred tax liability as at 30 September 2020 is expected to reverse within 12 months and relates to accelerated capital allowances that are expected to mature within the same period.
16
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
87,290
67,870
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 22 -
17
Share capital
2020
2019
£
£
Ordinary share capital
Issued, authorised, allotted and fully paid
1 Ordinary share of £1 each
-
1
100 Ordinary shares of 1p each
1
-
1
1
Following a resolution dated 11 December 2019, the company's issued share capital was sub-divided from 1 Ordinary £1 share into 100 Ordinary £0.01 shares. There was no change to the entitlement or voting rights of the shares as a result of the sub-division.
18
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2020
2019
£
£
Within one year
1,231,785
1,231,785
Between two and five years
4,927,138
4,927,138
In over five years
2,211,914
3,443,699
8,370,837
9,602,622
19
Post balance sheet events
Post year end there continues to be issues around the COVID-19 Pandemic. Please refer to the strategic report on page 1 for an evaluation of its impact on the business since the year end.
20
Related party transactions
The company has taken advantage of the exemption available in FRS 102 Section 33 'Related party disclosures' not to disclose transactions entered into between two or more members of a group where a subsidiary which is a party to the transaction is wholly owned by such a member.
21
Ultimate controlling party
The immediate parent undertaking is CAIC, LLC, whose address is 2000 Avenue of the Stars, Los Angeles, CA90067, United States of America.
The ultimate parent company is TPG VI Constellation, L.P., a Delaware Limited Partnership (LP), whose address is 301 Commerce Street, Suite 3300, Fort Worth, TX 76102, United States of America.
CREATIVE ARTISTS AGENCY UK LIMITED
Creative Artists Agency UK Limited
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 SEPTEMBER 2020
- 23 -
22
Cash generated from operations
2020
2019
£
£
(Loss)/profit for the year after tax
(5,621,111)
4,351,939
Adjustments for:
Taxation (credited)/charged
(1,261,258)
1,056,098
Finance costs
982
Investment income
(103,830)
(248,570)
Depreciation and impairment of tangible fixed assets
535,474
531,918
Movements in working capital:
Decrease/(increase) in debtors
552,507
(1,995,339)
(Decrease) in creditors
(5,198,399)
(608,036)
Cash (absorbed by)/generated from operations
(11,096,617)
3,088,992
2020-09-30
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CCH Software
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