ACCOUNTS - Final Accounts
ACCOUNTS - Final Accounts
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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2022
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TGM UK BIDCO LIMITED
CONTENTS
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TGM UK BIDCO LIMITED
COMPANY INFORMATION
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TGM UK BIDCO LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
Introduction
The principal activity of the company was that of a holding company. The principal activity of the group was that of book publishers.
The directors consider the overall financial performance and state of affairs of the group to be a strong result.
The company is a holding company and sole shareholder in Walker Books Limited, acquiring the remaining 1.9% held by non-controlling interests during the prior year. The group has net current liabilities of £95,131,000 (2021 - £98,412,000) principally as a result of short term payables due to the parent entity and deferred consideration associated with the transaction. The parent entity has confirmed that it will not recall amounts due to it for a period of at least twelve months from the date of signing these financial statements and will continue to fund payments associated with the above acquisition.
The group's borrowings, foreign exchange exposure and banking relationships are managed at group level. The following policies have been applied to manage the financial risk faced by the group:
∙Liquidity risk: Significant short term liabilities are due to as a result of remaining amounts payable on acquisition of the shares in Walker Books Limited and due to the parent company. The parent company has confirmed that they will continue to make available the necessary funds to settle acquisition related liabilities and will not recall short term funding made available to the group for the foreseeable future.
∙Currency rate exposure: At the group level US dollar receipts are matched with US dollar payments to printers in China. The group is exposed to the risks of exchange rate fluctuations due to significant proportions of its operations being conducted in other parts of the world.
∙Credit risk: The company manages its credit risk by establishing credit limits for customers. Candlewick Press Inc., Walker Books Limited and Walker Books Australia PTY Limited use local distributors who are responsible for performing invoicing and debt collection.
Competitors
The group acquires exclusive World or English language rights whenever possible in order for the group to maximise the potential in all relevant markets. The group position is based on product quality, brand image and competitive pricing. There is regional competition from other publishers' products in all markets. Environment The directors have provided details in respect of their environmental policies in the narrative in the S172 statement, as shown on page 3. Future developments The intention of the directors is to continue the development of the group's product offering using existing strategies and to expand Walker's market reach while continuing to respond with efficacy to future regulation and suggested best practices, including, for example, adhering to UK government trade sanctions in support of maintaining international peace and security. Legal proceedings The group has, to its knowledge, no undeclared legal proceedings against it.
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TGM UK BIDCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Risk assessment
The group has a wide diversification of customers and sales channels. The group has built up strong relationships with its customers but is not over reliant on any single customer.
The board of directors of TGM UK Bidco Limited have considered, both collectively and individually, that they have acted in a way they consider that, in good faith, would be most likely to promote the success of the company for its member and its stakeholders as a whole. The directors have considered the requirements of Section 172 (1)(a) to (f) as follows:
a) The likely consequences of any decision in the long term The directors consider the medium and long term impact of decisions when formulating plans and strategic direction for the company. The directors set long term plans in agreement with the company's members, with annual forecasts and reforecasts in the event of material changes in circumstances being prepared. b) The interests of the company's employees The directors consider our people to be our greatest asset and the interests of our employees are always taken into consideration in the decisions that are made. An "open" environment is encouraged and the company aims to be a responsible employer in its approach to employee matters including pay and benefits, diversity and inclusion, training, development and career opportunities. The group has continued its policy regarding the employment of disabled persons. Full and fair consideration is given to applicants for employment made by disabled persons having regard to their particular aptitude and abilities. c) The need to foster the company's business relationships with suppliers, customers and others Management work closely with their clients and with their suppliers to build long term relationships and common goals. The aim is to work with suppliers in an environment that reflects the values and behaviours Management would expect from their own employees and themselves, including ensuring adherence to strict anti bribery and corruption policies. d) The impact of the company's operations on the community and environment The directors are mindful of the business impact on the general community and the society we operate within. The directors regularly consider our environmental impact, and seek to reduce wherever possible our environmental footprint. The company operates an ethical and environmental policy to reduce any adverse impact that may be caused by its activities. The group is a (founding) member of PREPS, an initiative to share information on the source of paper supplies, and to promote the use of sustainable forestry products within the supply chain. The company complies with safety testing regulations on its products and promotes recycling and other initiatives in the office environment. e) The desirability of the company maintaining a reputation for high standards of business conduct The directors believe it is crucial that the company is trusted by all stakeholders to maintain the highest standards in business and corporate governance. The intention is to behave responsibly and ensure that management operate the business in an accountable manner and, in doing so, will contribute to the continued success of the company.
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TGM UK BIDCO LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Statement by the directors on performance of their statutory duties in accordance with S172 (1) Companies Act 2006 (continued)
f) The need to act fairly as between members of the company The directors consider the declaration of a dividend on an annual basis after taking into account the interests of the members, the results of the company and the financial position of the company.
This report was approved by the board and signed on its behalf.
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TGM UK BIDCO LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the year ended 31 December 2022.
The profit for the year, after taxation, amounted to £5,531,000 (2021 - £7,238,000).
The directors do not recommend a dividend.
The directors who served during the year were:
In line with the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 the company's energy use and greenhouse gas (GHG) emissions are set out below.
The company is an holding vehicle. The data below is extracted from the annual report of Walker Books Limited, which is the parent company of the UK trading group. The data reported covers the period from 1 January 2022 to 31 December 2022. 
Primary energy efficiency measures implemented
The directors are mindful of environmental issues and takes all reasonable steps to ensure that the emissions from the company's business space are minimised.
Methodology
We have followed the 2020 HM Government Environmental Reporting Guidelines and used the 2020 UK Government's Conversation Factors for Company Reporting. Energy data is obtained from invoices and estimates if necessary. We measure our annual emissions in relation to total turnover (our 'intensity ratio'). As a revenue-based business, total turnover is a quantifiable factor associated with our activities. The revenue used to calculate the intensity ratio is not that of the group, only the UK revenue has been included.
As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information, required to be in the directors' report by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.
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TGM UK BIDCO LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
This report was approved by the board and signed on its behalf.
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TGM UK BIDCO LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
The directors are responsible for preparing the group strategic report, the directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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TGM UK BIDCO LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TGM UK BIDCO LIMITED
FOR THE YEAR ENDED 31 DECEMBER 2022
We have audited the financial statements of TGM UK Bidco Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2022, which comprise the consolidated profit and loss account, the consolidated statement of comprehensive income, the consolidated balance sheet, the company balance sheet, the consolidated statement of cash flows, the consolidated statement of changes in equity, the company statement of changes in equity and the notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's or the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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TGM UK BIDCO LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TGM UK BIDCO LIMITED (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
The other information comprises the information included in the Annual Report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the group strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the group strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the group strategic report or the directors' report.
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TGM UK BIDCO LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TGM UK BIDCO LIMITED (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the book publishing sector;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and employment;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested a sample of journal entries to identify unusual transactions;
∙assessed whether judgements and assumptions made in determining the accounting estimates set out in note 3 were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
Our risk assessment findings for both non-compliance with laws and regulations and the susceptibility of the group’s financial statements to material misstatement arising from fraud were communicated with component auditors so that they could include them within their own risk assessment procedures and include, where appropriate audit procedures in response to such risks in their work. We reviewed the responses from component auditors to the instructions provided by us and reviewed working papers where it was considered appropriate to reach our conclusions.
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TGM UK BIDCO LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TGM UK BIDCO LIMITED (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
Auditor's responsibilities for the audit of the financial statements (continued)
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;
∙reading the minutes of meetings of those charged with governance;
∙enquiring of management as to actual and potential litigation and claims; and
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.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditor
16 Great Queen Street
Covent Garden
WC2B 5AH
Date:
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TGM UK BIDCO LIMITED
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2022
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TGM UK BIDCO LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
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TGM UK BIDCO LIMITED
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 20 to 39 form part of these financial statements.
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TGM UK BIDCO LIMITED
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2022
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own profit or loss account in these financial statements. The loss after tax of the parent company for the period was £9,000 (2021 - £1,000).
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 20 to 39 form part of these financial statements.
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TGM UK BIDCO LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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TGM UK BIDCO LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
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TGM UK BIDCO LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
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TGM UK BIDCO LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The principal activity of the company is that of a holding company. The principal activity of the group is that of a book publisher.
TGM UK Bidco Limited is a private company limited by shares and incorporated in England. The address of its registered office is 5th Floor, 10 Finsbury Square, London, EC2A 1AF, and the principal place of business of the group is 87 Vauxhall Walk, London, SE11 5HJ. The financial statements consolidate the accounts of TGM UK Bidco Limited and its subsidiary undertakings: Walker Books Limited, Walker Books (Editorial) Limited, Walker Books Trustee Limited, Walker Productions Limited, Candlewick Press Inc., Walker Books Australia PTY Limited and Walker Books New Zealand Limited. The financial statements are presented in Sterling (£) and rounded to the nearest thousand (£'000).
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires group management to exercise judgement in applying the group's accounting policies (see note 3).
The company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit and loss of the group. The company has therefore taken advantage of the exemptions from the following disclosure requirements for parent company information presented within the consolidated financial statements:
∙Section 7 'Statement of Cash Flows' - Presentation of a statement of cash flow and related notes
and disclosures;
∙Section 33 'Related Party disclosures' - Compensation for key management personnel;
∙Under section 408 of the Companies Act 2006 the company has not presented its own profit or loss account in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements incorporate the financial statements of the company and all group undertakings. These are adjusted, where appropriate, to conform to group accounting policies. The results of companies acquired or disposed of are included in the group profit and loss account after or up to the date that control passes respectively.
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The group has net current liabilities of £95,131,000 (2021 - £98,412,000) at the reporting date. This has arisen due to intercompany financing received to fund the acquisition of Walker Books Limited of £145,144,000 (2021 - £142,373,000). The parent entity, Trustbridge Global Media Holdings Co. Limited has confirmed that it will not recall the amounts due to it for a period of twelve months from the date of signing these financial statements. Deferred consideration is held in Escrow and is therefore effectively pre-funded by the parent entity.
The directors have reviewed cash flow projections for the acquired group and are satisfied that the group will be sufficiently cash generative to address working capital requirements and required payments on third party facilities. Accordingly, the directors are satisfied that the group has sufficient resources to continue to settle liabilities as the fall due and has prepared the financial statements under the going concern basis.
Functional and presentation currency
Transactions and balances
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Grants of a revenue nature are recognised in the consolidated profit and loss account in the same period as the related expenditure. Forgivable government loans are recognised as income when the criteria to earn the forgiveness of the loan have been met.
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The tax expense for the year comprises current and deferred tax. Tax is recognised in the profit and loss account.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income. Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Goodwill
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Other intangible assets
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
The group adds to the carrying amount of an item of fixed assets the cost of replacing part of such an item when that cost is incurred, if the replacement part is expected to provide incremental future benefits to the group. The carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the period in which they are incurred.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Page 24
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The group has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the group becomes party to the contractual provisions of the instrument. Financial liabilities 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. The group’s policies for its major classes of financial assets and financial liabilities are set out below. Financial assets Basic financial assets, including trade and other debtors, cash and bank balances, intercompany working capital balances, and intercompany financing are initially recognised at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment.
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Financial liabilities
Basic financial liabilities, including trade and other creditors, bank loans, 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 payments discounted at a market rate of interest for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate. Debt instruments are subsequently carried at amortised cost, using the effective interest rate method. Derivative contracts Derivatives contracts, including interest rate swaps and foreign exchange forward contracts, are not basic financial instruments. Derivatives contracts are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in interest payable and similar expenses or interest receivable and similar income as appropriate. Impairment of financial assets Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account. For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the group would receive for the asset if it were to be sold at the reporting date. For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss. Derecognition of financial assets and financial liabilities Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions. Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Page 26
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Offsetting of financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Royalty advances are recorded as an asset when paid and carried forward where it is considered sufficient future royalties will earn out the advance.
Ordinary shares are classified as equity.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical judgmental and estimations that the directors have made in the process of applying the group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements: Valuation of assets acquired on business combination On acquisition of a subsidiary, management review the assets acquired including unrecognised intangible assets. Their fair value is assessed and this is deducted from goodwill. Management received expert advice to support their evaluation of the fair value of the group's freehold property, brand, and intellectual property. In arriving at the fair value management consider the historical experience, current market conditions, and future expectations for the business. Future cash flows are discounted to their present value. There is judgement in the assumptions made when predicting the future cash flows of the entity, as well as the appropriate rate at which to discount those cash flows. Management review the carrying value of intangible assets at each reporting date. An assessment is made as to whether an indication of impairment exists. The recoverable amount is the present value of the future cash flows expected to be recovered from the cash generating unit. Estimates are used in determining the future profitability and cash-generating ability of the cash generating unit and consideration to underlying value of the assets in the undertakings. Actual outcomes could be different from the estimates.
Page 27
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
3.Judgements in applying accounting policies (continued)
Management review such balances on an annual basis. In determining whether there is a need for a provision, management determine their best estimate of the future expected cash flows. In arriving at this estimate, management consider historical experience and current trends. Stock provisioning The carrying value of stock, at the lower of cost and net realisable value, is dependent on key judgments and estimates that are made by management. The judgments relating to stock include an estimation of future expected average sales prices and disposal costs. Actual outcomes could be different to the assumptions used in determining the estimates. Returns provision It is the company’s policy to sell goods to customers with a right of return. Accumulated experience is used to estimate and provide for returns at the time of sale.
Analysis of turnover by country of destination:
Page 28
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 29
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 30
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
9.Taxation (continued)
In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over £250,000. A small profits rate will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. From this date companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
The company's US subsidiary Candlewick Press Inc, which is dual resident in the US and the UK for corporation tax purposes, has a potential deferred tax asset in respect of unrealised provisions disallowed for US tax purposes amounting to £1,880,000 (2021: £1,853,000) and unrelieved foreign tax credits for UK tax purposes of £1,034,000 (2021: £1,034,000). This has not been recognised in the accounts as its recoverability is uncertain. The company's Australian subsidiary Walker Books Australia PTY Limited, which is dual resident in Australia and the UK for corporation tax purposes, has a potential deferred tax asset in respect of unrealised provisions disallowed for Australian tax purposes amounting to £574,000 (2021: £574,000) and unrelieved foreign tax credits for UK tax purposes of £369,000 (2021: £368,000). This has not been recognised in the accounts as its recoverability is uncertain.
Page 31
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 32
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 33
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 34
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Page 35
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Other creditors relate to loan notes held by the Trustees of the Walker Books Employee Trust and the Trustees of the Walker Books Limited Employee Share Ownership Plan 2001. These are unsecured and interest-free.
Page 36
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
Profit and loss account
Page 37
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the group in an independently administered fund. The pension cost charge represents contributions payable by the group to the fund and amounted to £1,084,000 (2021 - £1,043,000) . Contributions totalling £266,000 (2021 - £273,000) were payable to the fund at the balance sheet date and are included in creditors.
24.Other financial commitments
The group had outstanding foreign currency contracts of £359,691 as at 31 December 2022 (2021 - £nil). The foreign currency contracts have been taken out against normal trading transactions.
Page 38
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TGM UK BIDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
The immediate parent undertaking is
The ultimate parent company is In the opinion of the directors there is no ultimate controlling party.
Page 39
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