The directors present the strategic report and financial statements for the year ended 30 June 2020.
The directors, in preparing this strategic report, have complied with s414C of the Companies Act 2006.
Principal activity
The company and group are wholly-owned by The Lord Lloyd Webber.
The company's principal activity is that of a holding company. The group's principal activities include the development and exploitation of the copyrights and other rights which it owns in musical and dramatic works. It markets these rights internationally through productions, recordings, music publishing, merchandising, television, video and films.
The loss for the year, including exceptional costs and after taxation, amounted to £173,249 (2019: Profit of £5,743,225).
The consolidated balance sheet shows net assets of £19,851,223 (2019: £19,779,792).
During 2020, the Coronavirus (COVID-19) pandemic has impacted countries across the globe. In many countries theatres have been completely closed with theatrical performances suspended whilst, in others, actions to minimise the spread of the virus have included social distancing measures and reductions in theatre audience capacity. This has had a significant impact on the trading results of the group as the royalty entitlement the group receives from these productions is much reduced.
The rapid development of COVID-19 vaccines, and the progress being made around the world in rolling these out to the general population, is an encouraging indicator that the spread of the pandemic can be brought under control with a return in many markets to more normalised trading.
The group suffered an exceptional loss in the prior year, as described in Note 4 to the Financial Statements.
As shown in the consolidated profit and loss account set out on page 8 group turnover has decreased by 21.9% (2019: increased by 22.7 %) on the prior period.
The group holds various copyrights and other rights to musical and dramatic works. There is a risk that the popularity of these copyrights and other rights may diminish over time and that the group may not be able to exploit them in the same manner as previous years. This risk is considered when the group is planning the performance timings of various productions and the locations around the world in which the productions will play. The group's experience of staging productions is used to ensure that rights are exploited across territories in the best way so as to introduce new audiences to productions and to ensure longevity of the rights held. As well as this, the group is active in acquiring new rights to various productions which it can exploit in the future.
The Really Useful Group Limited took out a bank loan in the financial year ended 30 June 2018 to enable the purchase of an office building. The company and wider group has managed exposure to interest rate fluctuations via an interest rate cap linked to the loan.
The group's activities expose it to a number of financial risks including credit risk, cash flow risk and liquidity risk. The principal risks and uncertainties that the group faces are discussed below.
Cash flow risk
The group operates in a number of countries around the world and is therefore exposed to movements in currency exchange rates. The directors consider that the level of trading in overseas currencies does not warrant taking out hedges to manage any fluctuations in exchange rates. However, the group's treasury function manages the risk by disposing of foreign currency balances on a regular basis.
Liquidity risk
In order to maintain liquidity to ensure that sufficient funds are available for ongoing operations and future developments, the main group operating company, The Really Useful Group Limited, has in place an overdraft facility in order to meet day-to-day working capital requirements.
The Really Useful Group Investments Limited group took out a bank loan in the financial year ended 30 June 2018 to enable the purchase of a new office building. The group has managed exposure to interest rate fluctuations via an interest rate cap linked to the loan. Subsequent to the year end t he loan facility has been renegotiated to defer capital repayments until September 2022. The management team have prepared a detailed cashflow forecast s and are confident that the group has sufficient resources to remain financially viable for a period of at least 12 months from the date of signing of these financial statements. On that basis the Directors continue to adopt the going concern basis in preparing its financial statements.
At the present time there is increased uncertainty around the group's planning resulting from the Coronavirus pandemic, the timing of reopening of theatres and the speed with which audiences will return. The position varies significantly between different countries with theatres open or due to open in some territories and with varying degrees of social distancing in place. However the UK Government has recently announced plans for the staged exit of the UK from lockdown and a number of the group's key territories appear likely to follow suit.
While the results for the 2020/21 year will be poor due to the widespread closure of productions the Directors are confident that audiences will again seek out high quality theatrical entertainment as soon as they are able to. The directors look forward with optimism towards a return to profitability in 2022/23 and in particular to the opening of Cinderella, a new production by The Lord Lloyd Webber, in summer 2021.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 June 2020.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The results for the year are set out on page 8.
No ordinary dividends were paid (2019: £-). The directors do not recommend payment of a final dividend.
In accordance with the company's articles, a resolution proposing that Moore Kingston Smith LLP be reappointed as auditor of the group will be put at a General Meeting.
We have audited the financial statements of Really Useful Group Investments Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 30 June 2020 which comprise the Group Statement of Comprehensive Income, the Group Balance Sheet, the Company Balance Sheet, the Group Statement of Changes in Equity, the Company Statement of Changes in Equity, the Group Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard , and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue .
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report 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 there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit :
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identifie d material misstatements in the Strategic Report and the Directors' Report .
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the Directors' Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s or the parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group or the parent company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The Profit and Loss Account has been prepared on the basis that all operations are continuing operations.
As permitted by s408 Companies Act 2006, the
Company has not presented its own profit and loss account and related notes. The Company’s result for the year was £
Really Useful Group Investments Limited (“the company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is 6 Catherine Street, London, WC2B 5JY.
The group consists of Really Useful Group Investments Limited and all of its subsidiaries.
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.
The consolidated financial statements incorporate those of Really Useful Group Investments Limited and all of its subsidiaries (ie entities that the g roup controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using the purchase method. Their results are incorporated from the date that control passes.
All financial statements are made up to 30 June 2020 . Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the g roup.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Entities other than subsidiary undertakings or joint ventures, in which the group has a participating interest and over whose operating and financial policies the group exercises a significant influence, are treated as associates. In the group financial statements, associates are accounted for using the equity method.
Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures. In the group financial statements, joint ventures are accounted for using the equity method.
The Directors have assessed whether the use of the going concern basis is appropriate and have considered possible events and conditions that might cast significant doubt on the group’s ability to continue as a going concern.
During 2020, the spread of Coronavirus (COVID-19) has impacted countries across the globe. In many countries, theatrical performances are either suspended with theatres closed, or operating with much-reduced audience capacity to allow for social distancing, following government advice to minimise the spread of the virus. This has had a significant impact on the trading results of the group as the royalty entitlement the group receives from these productions is much reduced.
The existing loan facility with Handelsbanken has been renegotiated to defer capital repayments until September 2022. The management team have prepared a detailed cashflow forecast and are confident that the group has sufficient resources to remain financially viable for a period of at least 12 months from the date of signing of these financial statements. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
Turnover comprises the amounts receivable, exclusive of Value Added Tax, for goods and services and for royalties from theatre, video and film productions, records, publishing, stock and amateur licensing and merchandising.
Certain royalty revenues from record, music publishing, stock and amateur and merchandising licences and film are recognised once they can be reliably determined, usually once a royalty statement has been received from a third party. This is consistent with industry practice.
All other revenues are recognised on a right to consideration basis.
Co-productions
The group is involved in a number of co-production arrangements with third parties. Where the group's consent is required to affect control over significant decisions these arrangements have been accounted for as joint ventures.
The operating profit earned as a result of the co-production arrangement has been presented on the face of the profit and loss account as a share of the result of the joint venture. The distributions received from co-productions during the year are shown as distributions from joint ventures. If the investment in the co-production is unrecouped at the year end, the group's share of profits is offset against the investment, with no operating profit recognised in the profit and loss account.
Copyrights
Expenditure incurred in relation to the establishment or acquisition of copyrights is recorded at cost less amortisation. The copyrights are being amortised over 10 years.
Capitalised pre-production costs
The group capitalises pre-production development costs incurred subsequent to the green-lighting of a new production to the extent that the directors have a reasonable belief that the production will recoup. Costs capitalised exclude marketing and promotional expenditure incurred in relation to the production. All relevant development expenditure is capitalised within intangible assets as pre-production costs and the group does not distinguish between the cost of physical assets, such as the set, and the development of broader aspects of the show, as the distinction is not useful and the expenditure is considered as a whole.
The amortisation period commences from the date of opening of the production. The estimated life of the production is under continual re-assessment, with the impact of any changes to the estimated life on the amortisation period being accounted for prospectively.
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 recognised in the profit and loss account.
Equity in vest ments are measured at fair value through profit or loss , except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably , which are recognised at cost less impairment until a reliable measure of fair value becomes available.
I n the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long-term interest and where the company has significant influence. The group considers that it has significant influence where it has the power to participate in the financial and operating decisions of the associate.
Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently adjusted to reflect the g roup’s share of the profit or loss, other comprehensive income and equity of the associate using the equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of the investment in associates.
Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company has incurred legal or constructive obligations or has made payments on behalf of the associate.
In the parent c ompany financial statements, investments in associates are accounted for at cost less impairment.
Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as jointly controlled entities .
Investment in theatrical productions consist of non-recourse loans advanced to a production which are repayable out of the profit of the production. These investments are initially measured at fair value which is normally the transaction price. In general fair values subsequent to initial investment cannot be measured reliably so investments in theatrical productions are subsequently measured at cost less impairment.
At each reporting period end date, the group 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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
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 (or cash-generating unit) 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 (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
The group 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 group's balance sheet when the group becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest m ethod 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.
Financial assets, other than those held at fair value through profit and loss , are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the group transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future paymen ts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.
Derivatives, including interest rate caps, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or income as appropriate. The company does not currently apply hedge accounting for interest rate derivatives.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
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 if, and only if, there is 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.
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.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to income 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 asset are consumed.
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.
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.
In the application of the group’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 following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The group is involved in a number of co-production arrangements and these have been recognised as such when the group is able to affect control over significant decisions. In these cases the productions are accounted for as joint ventures. When considering the level of control the group review the financial, operational and creative control it exerts.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Certain royalties revenues from record, music publishing, stock and amateur and merchandising licenses along with profits from productions and investments are recognised once they can be reliably determined, usually once a royalty statement has been received from a third party. There is often a delay in receiving the royalty income statement, at the year-end management therefore need to estimate the royalty income based on current and historical experience.
An analysis of the group's turnover is as follows:
Angel of Music Limited, a 100% subsidiary of the Group, suffered exceptional costs of £2,795,450 in the prior year due to non-payment of invoices following the collapse of the tour promoter group Lunchbox Theatricals in Asia. Angel of Music Limited licensed Lunchbox Theatricals to present the three tour locations (Manila, Singapore and Kuala Lumpur) visited in these financial statements. The co-producers remain liable for the losses in the period in the proportions of 60% to The Really Useful Group Limited and 40% to Troika Entertainment LLC.
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 £123,003 (2019 - £37,810).
The average monthly number of persons (including directors) employed by the group and company during the year was:
Their aggregate remuneration comprised:
The Directors are considered to be the Key Management Personnel for the purposes of the statutory disclosure requirements for both the current and the prior year.
The actual charge for the year can be reconciled to the expected charge based on the profit or loss and the standard rate of tax as follows:
Intercompany balances are interest free and repayable on demand.
During the year ended 30 June 2018 , Handelsbanken granted a facility for a 6 year L ibor term loan drawn down to £12,400,000. The loan was repayable from June 2019 and the rate of interest is Libor + 1.95%.
The loan is secured via a charge over freehold land and buildings with a net book value of £20,597,339 (2019: £21,091,080) and a group composite guarantee over the assets of the group.
Deferred tax assets and liabilities are offset where the group or 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:
The deferred tax assets set out above are expected to reverse within 12 - 120 months and relate to decelerated capital allowances, the utilisation of tax losses against future expected profits of the same period, and other short-term timing differences.
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.
At the year end pension contributions of £27,452 (2019: £39,071) remained outstanding and have been included within "Other Creditors".
The Lord Lloyd Webber advances
The Lord Lloyd Webber is the ultimate controlling shareholder of the company. During the year the group incurred royalty costs of £12,651,000 (2019: £13,829,962) due to The Lord Lloyd Webber. At the year end £69,884 (2019: £7,481) was due to The Lord Lloyd Webber in respect of these royalties. The directors consider these transactions have been entered into at arm's length on normal commercial terms.
Payments to third parties
During the year the group made purchases of £142,504 (2019: £257,076) from LW Theatres Group Ltd, a related party by virtue of common control. At the year end, the group owed £1,735 to (2019: was owed £59,890 by) LW Theatres Group Ltd. Furthermore the group's London production of School of Rock rented the Gillian Lynne Theatre from LW Theatre Group on normal commercial terms until the production's closure on 1 March 2020.
During the year the group made sales of £534,077 (2019: £20,286) to LW Theatres Ltd, a related party by virtue of common control. At the year end, the group was owed £127,179 (2019: £11,264) by LW Theatres Ltd.
During the year the group made sales of £28,592 (2019: £nil) to, and purchases of £60,135 (2019: £7,267) from Escaway, a business controlled by The Lord Lloyd Webber. At the year end, the group was owed £4,000 by (2019: owed £13,204 to) Escaway.
At the year end, the group was owed £2,359 (2019: £nil) by Entertainment Theatres Ltd, a related party by virtue of common control.
During the year the company made available the services of an employee in exchange for the issue of shares representing 8.5% of the issued share capital of The Other Songs Ltd, a company with which the group shares certain directors.
During the year, rent outgoings on a property lease totalling £95,099 (2019: £92,494) were paid to The Lady Lloyd Webber, a director of the company.
At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The ultimate controlling party is The Lord Lloyd Webber by virtue of his ownership of 100% of the ordinary share capital of the company.
The Musical Company Limited, a company in which the group has a 37.5% indirect interest, was dissolved on 6 October 2020.
Details of the company's subsidiaries at 30 June 2020 are as follows:
Jacob & Sons Limited has claimed exemption from audit under section 479A of the Companies Act 2006.
Details of joint ventures at 30 June 2020 are as follows:
The registered address for Phantom London is Number One Bedford Square, London, WC1B 3RB.
The registered address for The Phantom Company Ltd Partnership is 1650 Broadway, Suite 800, New York, NY 10019.
The registered address for Phantom Touring LLC is 7135 Minstrel Way, Suite 105, Columbia, MD 21045.
The registered address for SOR Broadway Ltd Partnership is 230 West 41st Street, Suite 1703, New York, NY 10036.
The registered address for The Musical Company Limited is 6 Catherine Street, London, WC2B 5JY.
The registered address for Box Five Productions Limited is 1-2 Bedford Square, London, United Kingdom, WC1B 3RB.
The company's joint ventures The Musical Company, LP and TMC GP, LLC were closed on 10 September 2019.