Project Bridgerton Bidco Limited Group accounts (Group and Company)

PROJECT BRIDGERTON BIDCO LIMITED - Company Information

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COMPANY REGISTRATION NUMBER: 13487732

Project Bridgerton Bidco Limited

Financial Statements

For the period ended

31 December 2021

Project Bridgerton Bidco Limited

Financial Statements

Period from 1 July 2021 to 31 December 2021

Contents	Page

Officers and professional advisers	1

Strategic report	2

Directors' report	4

Independent auditor's report to the members	6

Consolidated income statement	10

Consolidated statement of financial position	11

Company statement of financial position	12

Consolidated statement of changes in equity	13

Company statement of changes in equity	14

Consolidated statement of cash flows	15

Notes to the financial statements	16

Project Bridgerton Bidco Limited

Officers and Professional Advisers

The board of directors	P Gardner (Appointed 23 September 2021)
	C Mereuta (Appointed 23 September 2021)
	D Alderson (Appointed 23 September 2021)
	A Graham (Appointed 23 September 2021)
	M Willis (Appointed 1 July 2021)
	J Leone (Appointed 23 September 2021)

Registered office	33 Charlotte Street
	London
	England
	W1T 1 RR

Auditor	Streets Audit LLP
	Chartered accountants & statutory auditor
	Building 15, Gateway 1000
	Arlington Business Park
	Stevenage
	Hertfordshire
	SG1 2FP

Project Bridgerton Bidco Limited

Strategic Report

Period from 1 July 2021 to 31 December 2021

We aim to present a balanced and comprehensive review of the development and performance of the business during the year and its position at the period end. Our review is consistent with the size and non-complex nature of the business and is written in the context of the risks and uncertainties we face. The group is proud to deliver high quality social experiences with games that connect people wherever they are. We consider our key performance indicators are those that communicate the financial performance of the group as a whole being turnover, gross profit and EBITDA. The company was incorporated on 1 July 2021 and on 23 September 2021 it acquired the entire share capital of Marmalade Game Studio Limited ("Marmalade"). The results of its subsidiaries acquired during the period are included from the date that control passes. During this period the group reported turnover of £2.4m, gross profit of £1.8m and EBITDA of £409k. Marmalade generated turnover for the year of £10.4m compared to £12.5m in 2020, and the gross profit percentage was 79.4% compared to 79.7% in 2020. The operating profit for the year was £2.9m compared to £4.8m in 2020. The EBITDA for the year was £2.93m (2020 £4.88m). At the year end the group had net liabilities of £622k. Future Developments The group is focused on expanding the portfolio of games with new titles, new platforms and new technologies aimed at serving the increasing number of users who engage with the games. For 2022, the group's efforts will focus on new releases and platform expansion. Principal Risks and Uncertainties The key business risks affecting the group continue to come from staff retention and challenges around hiring at a rate that successfully keeps up with the business demands. The current economic conditions put a strain on the headcount, but the group is mitigating this by investing in people retention and appointing a People Manager. Financial Risk Management Objectives and Policies The group's activities expose it to a number of financial risks including currency risk and liquidly risk. Currency risk The group minimises its risk to foreign currency fluctuations by invoicing and purchasing in sterling where possible and where not by balancing as far as possible sales and purchases in matching foreign currency. Liquidity risk The group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs. Short-term flexibility is achieved by borrowings via loans from banks and our shareholders. This will give the company the necessary financial backing to carry out its intended plans and properly finance the ongoing operations of the business. Financial key performance indicators The board approves an annual budget for the following year and monitors performance on a monthly basis, both against that budget and a comparison to the prior year. Consolidated management accounts are prepared on a monthly basis and these include a detailed profit and loss accounts, balance sheet and appropriate key performance indicators as disclosed above.

This report was approved by the board of directors on 25 April 2022 and signed on behalf of the board by:

M Willis

Director

Registered office:

33 Charlotte Street

London

England

W1T 1 RR

Project Bridgerton Bidco Limited

Directors' Report

Period from 1 July 2021 to 31 December 2021

The directors present their report and the financial statements of the group for the period ended 31 December 2021 .

Incorporation

The company was incorporated on 1 July 2021 and commenced trade on 23 September 2021.

Directors

The directors who served the company during the period were as follows:

P Gardner	(Appointed 23 September 2021)
C Mereuta	(Appointed 23 September 2021)
D Alderson	(Appointed 23 September 2021)
A Graham	(Appointed 23 September 2021)
M Willis	(Appointed 1 July 2021)
J Leone	(Appointed 23 September 2021)

Dividends

The directors do not recommend the payment of a dividend.

Disclosure of information in the strategic report

The company has chosen to set out in the strategic report information about the future developments of the company and the financial instruments.

Directors' responsibilities statement

The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial period. 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 group and the company and the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: - select suitable accounting policies and then apply them consistently; - make judgments and accounting estimates that are reasonable and prudent; - prepare the financial statements on the going concern basis unless it is inappropriate to presume that the 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. Auditor

Each of the persons who is a director at the date of approval of this report confirms that:

- so far as they are aware, there is no relevant audit information of which the group and the company's auditor is unaware; and - they have taken all steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the group and the company's auditor is aware of that information.

This report was approved by the board of directors on 25 April 2022 and signed on behalf of the board by:

M Willis

Director

Registered office:

33 Charlotte Street

London

England

W1T 1 RR

Project Bridgerton Bidco Limited

Independent Auditor's Report to the Members of Project Bridgerton Bidco Limited

Period from 1 July 2021 to 31 December 2021

Opinion

We have audited the financial statements of Project Bridgerton Bidco Limited (the 'parent company') and its subsidiaries (the 'group') for the period ended 31 December 2021 which comprise the consolidated income statement, consolidated statement of financial position, company statement of financial position, consolidated statement of changes in equity, company statement of changes in equity, consolidated statement of cash flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). In our opinion the financial statements: - give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2021 and of the group's loss for the period then ended; - have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; - have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group 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 group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

- the information given in the strategic report and the directors' report for the financial period 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.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the 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 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.

Responsibilities of directors

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.

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. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows: - the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations; - we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the company and sector in which it operates; - we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental and health and safety legislation; - we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and - identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit. We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: - making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and - considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations. To address the risk of fraud through management bias and override of controls, we: - performed analytical procedures to identify any unusual or unexpected relationships; - tested journal entries to identify unusual transactions; - assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 1 were indicative of potential bias; and - investigated the rationale behind significant or unusual transactions. In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: - agreeing financial statement disclosures to underlying supporting documentation; - enquiring of management as to actual and potential litigation and claims; and - reviewing correspondence with HMRC, relevant regulators and the company's legal advisors. There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report

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

Jonathan Day

(Senior Statutory Auditor)

For and on behalf of

Streets Audit LLP

Chartered accountants & statutory auditor

Building 15, Gateway 1000

Arlington Business Park

Stevenage

Hertfordshire

SG1 2FP

25 April 2022

Project Bridgerton Bidco Limited

Consolidated Income Statement

Period from 1 July 2021 to 31 December 2021

		Period from
		1 Jul 21 to
		31 Dec 21
Note		£
Turnover	4	2,426,672

Cost of sales	( 578,111)
	------------
Gross profit	1,848,561

Administrative expenses		( 2,131,397)
		------------
Operating loss	5	( 282,836)

Interest payable and similar expenses	8	( 741,036)
		------------
Loss before taxation		( 1,023,872)

Tax on loss	9	63,069
		------------
Loss for the financial period		( 960,803)
		------------

All the activities of the group are from continuing operations.

The group has no other recognised items of income and expenses other than the results for the period as set out above.

Project Bridgerton Bidco Limited

Consolidated Statement of Financial Position

31 December 2021

		31 Dec 21
Note		£

Fixed assets

Intangible assets	10	26,768,711
Tangible assets	11	60,642
		-------------
		26,829,353

Current assets

Debtors	13	2,282,127
Cash at bank and in hand		1,426,224
		------------
		3,708,351

Creditors: amounts falling due within one year	14	2,440,062
		------------
Net current assets			1,268,289
			-------------
Total assets less current liabilities			28,097,642

Creditors: amounts falling due after more than one year	15	28,719,240
		-------------
Net liabilities		( 621,598)
		-------------

Capital and reserves

Called up share capital	17	29,277
Share premium account	18	309,928
Profit and loss account	18	( 960,803)
		---------
Shareholders deficit		( 621,598)
		---------

These financial statements were approved by the board of directors and authorised for issue on 25 April 2022 , and are signed on behalf of the board by:

M Willis

Director

Company registration number: 13487732

Project Bridgerton Bidco Limited

Company Statement of Financial Position

31 December 2021

		31 Dec 21
Note		£

Fixed assets

Investments	12		28,929,921

Current assets

Debtors	13	110,820
Cash at bank and in hand		376,660
		---------
		487,480

Creditors: amounts falling due within one year	14	2,118,798
		------------
Net current liabilities			1,631,318
			-------------
Total assets less current liabilities			27,298,603

Creditors: amounts falling due after more than one year	15	27,719,240
		-------------
Net liabilities		( 420,637)
		-------------

Capital and reserves

Called up share capital	17	29,277
Share premium account	18	309,928
Profit and loss account	18	( 759,842)
		---------
Shareholders deficit		( 420,637)
		---------

The loss for the financial period of the parent company was £ 759,842 .

These financial statements were approved by the board of directors and authorised for issue on 25 April 2022 , and are signed on behalf of the board by:

M Willis

Director

Company registration number: 13487732

Project Bridgerton Bidco Limited

Consolidated Statement of Changes in Equity

Period from 1 July 2021 to 31 December 2021

	Called up share capital	Share premium account	Profit and loss account	Total
	£	£	£	£
At 1 July 2021	–	–	–	–

Loss for the period			( 960,803)	( 960,803)
	----	----	---------	---------
Total comprehensive income for the period	–	–	( 960,803)	( 960,803)

Issue of shares	29,402	311,257	–	340,659
Redemption of shares	( 125)	( 1,329)	–	( 1,454)
	--------	---------	----	---------
Total investments by and distributions to owners	29,277	309,928	–	339,205

	--------	---------	---------	---------
At 31 December 2021	29,277	309,928	( 960,803)	( 621,598)
	--------	---------	---------	---------

Project Bridgerton Bidco Limited

Company Statement of Changes in Equity

Period from 1 July 2021 to 31 December 2021

	Called up share capital	Share premium account	Profit and loss account	Total
	£	£	£	£
At 1 July 2021	–	–	–	–

Loss for the period			( 759,842)	( 759,842)
	----	----	---------	---------
Total comprehensive income for the period	–	–	( 759,842)	( 759,842)

Issue of shares	29,402	311,257	–	340,659
Redemption of shares	( 125)	( 1,329)	–	( 1,454)
	--------	---------	----	---------
Total investments by and distributions to owners	29,277	309,928	–	339,205

	--------	---------	---------	---------
At 31 December 2021	29,277	309,928	( 759,842)	( 420,637)
	--------	---------	---------	---------

Project Bridgerton Bidco Limited

Consolidated Statement of Cash Flows

Period from 1 July 2021 to 31 December 2021

	31 Dec 21
	£

Cash flows from operating activities

Loss for the financial period	( 960,803)

Adjustments for:
Depreciation of tangible assets	5,831
Amortisation of intangible assets	686,377
Interest payable and similar expenses	741,036
Tax on loss	( 63,069)

Changes in:
Trade and other debtors	( 2,282,127)
Trade and other creditors	858,810
	------------
Cash generated from operations	( 1,013,945)

Interest paid	( 741,036)
Tax received	63,069
	------------
Net cash used in operating activities	( 1,691,912)
	------------

Cash flows from investing activities

Purchase of tangible assets	( 12,193)
Acquisition of subsidiaries	( 2,270,765)
	------------
Net cash used in investing activities	( 2,282,958)
	------------

Cash flows from financing activities

Proceeds from issue of ordinary shares	340,659
Purchase of own shares	( 1,454)
Proceeds from borrowings	5,061,889
	------------
Net cash from financing activities	5,401,094
	------------

Net increase in cash and cash equivalents	1,426,224
Cash and cash equivalents at beginning of period	–
	------------
Cash and cash equivalents at end of period	1,426,224
	------------

Project Bridgerton Bidco Limited

Notes to the Financial Statements

Period from 1 July 2021 to 31 December 2021

1. General information

The company is a private company limited by shares, incorporated in the United Kingdom, registered in England and Wales. The address of the registered office is 33 Charlotte Street, London, W1T 1RR, England. The principal activity of the company during the year was that of a holding company. The principal activity of the group during the period was that of interactive leisure and entertainment software development . The company was incorporated on 1 July 2021. The results of subsidiaries acquired or disposed of during the period are included from or to the date that control passes.

2. Statement of compliance

These financial statements have been prepared in compliance with FRS 102, 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.

3. Accounting policies

Basis of preparation

The financial statements have been prepared on the historical cost basis. The financial statements are prepared in sterling, which is the functional currency of the entity.

Going concern

The group has a deficit of shareholder funds at the period end due to the interest and amortisation charges arising in the period outstriping the revenues and profitability. Both charges are non cash items and therefore do not impact on the day to day cash requirements of the business. For these reasons the directors have concluded it is appropriate to prepare the financial statements on a going concern basis. During the year the COVID-19 pandemic continued in the UK resulting in national and local lockdowns, however this has not had a negative impact on the business.

Disclosure exemptions

No exemptions are available under FRS102.

Consolidation

The financial statements consolidate the financial statements of Project Bridgerton Bidco Limited and all of its subsidiary undertakings.

The results of subsidiaries acquired or disposed of during the period are included from or to the date that control passes.

The parent company has applied the exemption contained in section 408 of the Companies Act 2006 and has not presented its individual profit and loss account.

Judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Significant judgements The judgements (apart from those involving estimations) that management has made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in the financial statements are detailed in revenue recognition policy note, investment, employee share option and creditors due after one year notes to the financial statements and are as follows: Principal vs agent assessment Management assess the contractual agreements with its distributors and customers to establish whether the agreement constitutes a principal or an agency arrangement. This is a material judgement as the disclosure of revenue is significantly different. The company considers that online retailers are its customers as the company has no direct contact with the end users and once a product is provided to an online retailer (upon release) the company has satisfied all performance obligations associated with the agreements with these parties. Where the company has acted as agent, income is recognised as net commissions received. Key sources of estimation uncertainty Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: 1) Deprecation and amortisation charges The annual depreciation and amortisation charge for each class of tangible and intangible asset is based on an estimate of the useful economic life of the respective assets. This is reviewed periodically by the directors to ensure that they reflect both the external and internal factors. The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Revenue recognition

Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding Value Added Tax. Royalties are accounted for in the period in which they are earned. Product development income is recognised as contract activity progresses to reflect milestones achieved during the year. Amounts received in advance are carried forward until recognised as turnover. Licence sales are recognised over the course of the licensing agreement.

Income tax

The taxation expense represents the aggregate amount of current and deferred tax recognised in the reporting period. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively. Current tax is recognised on taxable profit for the current and past periods. Current tax is measured at the amounts of tax expected to pay or recover using the tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in respect of all material timing differences at the reporting date. Unrelieved tax losses and other 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. Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the reporting date that are expected to apply to the reversal of the timing difference.

Foreign currencies

Foreign currency transactions are initially recorded in the functional currency, by applying the spot exchange rate as at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate ruling at the reporting date, with any gains or losses being taken to the profit and loss account.

Operating leases

Lease payments are recognised as an expense over the lease term on a straight-line basis. The aggregate benefit of lease incentives is recognised as a reduction to expense over the lease term, on a straight-line basis.

Intangible assets

Intangible assets are initially recorded at cost, and are subsequently stated at cost less any accumulated amortisation and impairment losses.

Amortisation

Amortisation is calculated so as to write off the cost of an asset, less its estimated residual value, over the useful life of that asset as follows:

	Goodwill	-	10% straight line

If there is an indication that there has been a significant change in amortisation rate, useful life or residual value of an intangible asset, the amortisation is revised prospectively to reflect the new estimates.

Tangible assets

Tangible assets are initially recorded at cost, and subsequently stated at cost less any accumulated depreciation and impairment losses.

Depreciation

Depreciation is calculated so as to write off the cost or valuation of an asset, less its residual value, over the useful economic life of that asset as follows:

	Plant and machinery	-	25 - 33% Straight line

Financial instruments

The company holds basic financial instruments as defined in FRS102. The financial assets and financial liabilities of the company and their measurement basis are as follows: Financial assets - trade and other debtors are basic financial instruments and are debt instruments measured at amortised cost. Prepayments are not financial instruments. Cash at bank is classified as a basic financial instrument and is measured at amortised cost. Financial liabilities - trade creditors, accruals and other creditors are financial instruments, and are measured at amortised cost. Taxation and social security are not included in the financial instruments disclosure definition.

Defined contribution plans

Contributions to defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund.

Business combinations

Business combinations are accounted for using the purchase method. The cost of a business combination is measured as the aggregate of the fair values, at the acquisition date, of assets given, liabilities incurred or assumed, and equity instruments issued plus any costs directly attributable to the business combination.

4. Turnover

Turnover arises from:

	Period from
	1 Jul 21 to
	31 Dec 21
	£
Sale of goods	2,426,672
	------------

The whole of the turnover is attributable to the principal activity of the group wholly undertaken in the United Kingdom.

5. Operating profit

Operating profit or loss is stated after charging:

	Period from
	1 Jul 21 to
	31 Dec 21
	£
Amortisation of intangible assets	686,377
Depreciation of tangible assets	5,831
Foreign exchange differences	26,031
Fees payable for the audit of the financial statements	7,000
	---------

6. Staff costs

The average number of persons employed by the group during the period, including the directors, amounted to:

	31 Dec 21
	No.
Administrative staff	56
Management staff	4
	----
	60
	----

The aggregate payroll costs incurred during the period, relating to the above, were:

	Period from
	1 Jul 21 to
	31 Dec 21
	£
Wages and salaries	550,257
Social security costs	104,302
Other pension costs	29,137
	---------
	683,696
	---------

7. Directors' remuneration

The directors' aggregate remuneration in respect of qualifying services was:

	Period from
	1 Jul 21 to
	31 Dec 21
	£
Remuneration	153,201
Company contributions to defined contribution pension plans	7,475
	---------
	160,676
	---------

The number of directors who accrued benefits under company pension plans was as follows:

	31 Dec 21
	No.
Defined contribution plans	4
	----

8. Interest payable and similar expenses

	Period from
	1 Jul 21 to
	31 Dec 21
	£
Other interest payable and similar charges	741,036
	---------

9. Tax on loss

Major components of tax income

	Period from
	1 Jul 21 to
	31 Dec 21
	£

Current tax:

UK current tax income	( 71,062)
Foreign current tax income	7,993
	--------
Total current tax	( 63,069)
	--------
Tax on loss	( 63,069)
	--------

Reconciliation of tax income

The tax assessed on the loss on ordinary activities for the period is higher than the standard rate of corporation tax in the UK of 19 %.

	Period from
	1 Jul 21 to
	31 Dec 21
	£
Loss on ordinary activities before taxation	( 1,023,872)
	------------
Loss on ordinary activities by rate of tax	( 194,536)
Effect of expenses not deductible for tax purposes	90,516
Effect of capital allowances and depreciation	( 1,002)
Tax losses to carry forward	63,172
Foreign tax charge	7,993
Pre acquisition adjustment	90,359
Research and develpoment tax credits	( 896)
Video game tax credits	( 118,675)
	------------
Tax on loss	( 63,069)
	------------

Factors that may affect future tax income

The group has estimated tax losses of £23m (2020 £23m) available to carry forward against future trading profits. No provision has been made for a deferred tax asset in respect of the carried forward losses as it is uncertain as to when these may be utilised.

10. Intangible assets

Group	Goodwill	Development costs	Total
	£	£	£
Cost
At 1 July 2021	–	–	–
Acquisitions through business combinations	27,455,087	1	27,455,088
	-------------	----	-------------
At 31 December 2021	27,455,087	1	27,455,088
	-------------	----	-------------
Amortisation
At 1 July 2021	–	–	–
Charge for the period	686,377	–	686,377
	-------------	----	-------------
At 31 December 2021	686,377	–	686,377
	-------------	----	-------------
Carrying amount
At 31 December 2021	26,768,710	1	26,768,711
	-------------	----	-------------

The company has no intangible assets.

11. Tangible assets

Group	Plant and machinery	Total
	£	£
Cost
At 1 July 2021	–	–
Additions	12,193	12,193
Acquisitions through business combinations	54,280	54,280
	--------	--------
At 31 December 2021	66,473	66,473
	--------	--------
Depreciation
At 1 July 2021	–	–
Charge for the period	5,831	5,831
	--------	--------
At 31 December 2021	5,831	5,831
	--------	--------
Carrying amount
At 31 December 2021	60,642	60,642
	--------	--------

The company has no tangible assets.

12. Investments

The group has no investments.

Company	Shares in group undertakings
	£
Cost
At 1 July 2021	–
Additions	28,929,921
	-------------
At 31 December 2021	28,929,921
	-------------
Impairment
At 1 July 2021 and 31 December 2021	–
	-------------

Carrying amount
At 31 December 2021	28,929,921
	-------------

Subsidiaries, associates and other investments

Details of the investments in which the parent company has an interest of 20% or more are as follows:

	Registered office	Class of share	Percentage of shares held
Subsidiary undertakings
Marmalade Game Studio Limited	33 Charlotte Street, London, England W1T 1RR	Ordinary	100
MGS 2019 Limited	33 Charlotte Street, London, England W1T 1RR	Ordinary	100

MGS 2019 Limited is a dormant company.

13. Debtors

	Group	Company
	31 Dec 21	31 Dec 21
	£	£
Trade debtors	202	–
Prepayments and accrued income	1,684,742	–
Corporation tax repayable	288,213	–
Other debtors	308,970	110,820
	------------	---------
	2,282,127	110,820
	------------	---------

14. Creditors: amounts falling due within one year

	Group	Company
	31 Dec 21	31 Dec 21
	£	£
Bank loans and overdrafts	1,147,586	1,147,586
Trade creditors	93,397	–
Amounts owed to group undertakings	–	562,546
Accruals and deferred income	643,897	–
Social security and other taxes	94,972	–
Shareholder loan notes and interest payable	408,666	408,666
Other loans due to shareholders	25,000	–
Other creditors	26,544	–
	------------	------------
	2,440,062	2,118,798
	------------	------------

The bank loans are secured against the assets of the group. The other loans to shareholders are unsecured.

15. Creditors: amounts falling due after more than one year

	Group	Company
	31 Dec 21	31 Dec 21
	£	£
Bank loans and overdrafts	3,914,303	3,914,303
Shareholder loan notes	23,804,937	23,804,937
Other loans due to shareholders	1,000,000	–
	-------------	-------------
	28,719,240	27,719,240
	-------------	-------------

Half of the shareholder loan notes are secured by fixed and floating charges. The remaining half are unsecured.

The bank loans are secured against the assets of the group.

The other loans due to shareholders are unsecured.

The shareholder loan notes are repayable after 6 years, interest is charged at 10% per annum and is repayable each quarter.

16. Employee benefits

Defined contribution plans

The amount recognised in profit or loss as an expense in relation to defined contribution plans was £ 29,137 .

17. Called up share capital

Issued, called up and fully paid

		31 Dec 21
	No.	£
Ordinary Class A shares of £ 0.01 each	677,670	6,777
Ordinary Class B shares of £ 0.05 each	66,566	3,328
Ordinary Class C shares of £ 0.05 each	220,964	11,048
Ordinary Class D shares of £ 0.20 each	50,000	10,000
	------------	--------
	1,015,200	31,153
	------------	--------

All shares rank pari passu.

18. Reserves

Share premium account - This reserve records the amount above the nominal value received for shares sold, less transaction costs. Profit and loss account - This reserve records retained earnings and accumulated losses.

19. Analysis of changes in net debt

	At 1 Jul 2021	Cash flows	Acquisition and disposal of subsidairies	At 31 Dec 2021
	£	£	£	£
Cash at bank and in hand	–	1,426,224		1,426,224
Debt due within one year	–	–	(1,581,252)	(1,581,252)
Debt due after one year	–	(1,370,495)	(27,348,745)	(28,719,240)
	----	------------	-------------	-------------
	–	55,729	( 28,929,997)	( 28,874,268)
	----	------------	-------------	-------------

20. Business combinations

Acquisition of Marmalade Game Studio Limited

On 23 September 2021 the company acquired the entire share capital of Marmalade Game Studio Limited . Marmalade Game Studio Limited is the parent company of MGS 2019 Limited.

Project Bridgerton Bidco Limited

Notes to the Financial Statements (continued)

Period from 1 July 2021 to 31 December 2021

20. Business combinations (continued)

The fair value of consideration paid in relation to the acquisition of Marmalade Game Studio Limited is as follows:

	£
Debt instruments	26,252,392
Consideration paid - capitalised fees	2,677,605
	-------------
	28,929,997
	-------------

The fair value of amounts recognised at the acquisition date in relation to Marmalade Game Studio Limited are as follows:

	Fair value
	£
Tangible assets acquired	51,220
Intangible assets acquired	1
Trade debtors acquired	872
Other debtors acquired	2,512,098
Cash and cash equivalents acquired	1,004,411
Trade creditors assumed	( 84,354)
Other creditors assumed	( 2,009,338)
	------------
	1,474,910

Goodwill on acquisition	27,455,087
	-------------
	28,929,997
	-------------

The consolidated income statement for the financial period includes turnover of £ 2,426,672 and profit of £ 455,790 in respect of Marmalade Game Studio Limited since the acquisition date.

21. Operating leases

The total future minimum lease payments under non-cancellable operating leases are as follows:

	Group	Company
	31 Dec 21	31 Dec 21
	£	£
Not later than 1 year	362,608	–
Later than 1 year and not later than 5 years	14,755	–
	---------	----
	377,363	–
	---------	----

22. Charges on assets

The assets of the company are subject to charges in favour of Silicon Valley Bank and to LDC (Managers Limited).

23. Contingencies

The purchase of Marmalade Game Studio Limited included earn out consideration of £8,842,528, payable only if future performance meets prescribed limits.

24. Related party transactions

Group

The directors have shareholder loan notes with the company which remained in credit throughout the period. Interest is charged at 10% per annum and the loans are repayable over a 6 year period. The Key Management Personnel are deemed to be the directors, the remuneration is disclosed in note 7. The company has taken advantage from the exemption available under FRS102 from reporting transactions with wholly owned members of the same group.

25. Controlling party

The Directors consider do not consider there to be an individual ultimate controlling party.