EFTA01201545.pdf

JMWT Acquisition LLP Report and Financial Statements Period Ended 30 June 2013 Registered No: OC378972 Registered in England EFTA01201545  JMWT Acquisition LLP Report and financial statements for the period ended 30 June 2013 Contents Page: 1 Report of the members 3 Independent auditors report 6 Consolidated profit and loss account 7 Consolidated statement of total recognised gains and losses 8 Consolidated balance sheet 9 LLP balance sheet 10 Consolidated cash flow statement 11 Notes forming part of the financial statements Members Phaidon Global LLC Phaidon LLC Registered office 10 Norwich Street, Fleet Street, London, EC4A 1BD. Auditors BDO LLP, 55 Baker Street, London, W1U 7EU EFTA01201546  JMWT Acquisition LLP Report of the members for the period ended 30 June 2013 The members present their report together with the audited financial statements for the period ended 30 June 2013. Principal activity, significant changes and future developments JMWT Acquisition LLP (the "LLP") was incorporated as a limited liability partnership on 3rd October 2012.These financial statements cover the first period since incorporation to 30 June 2013. The principal activity of the group headed by the LLP is the publishing and sale of books and digital products on the visual arts, lifestyle and culture. The consolidated financial statements comprise the financial statements of the LLP together with its subsidiary undertakings (the "Group"). The principal subsidiary undertakings of the LLP are set out in note 9 to the financial statements. There have been no other events since the balance sheet date which would materially affect the position of the Group. Results The Group's consolidated profit and loss account for the year ending 30 June 2013 is set out on page 6. Going concern The members have reviewed the Group's cash flow forecasts for the next 12 months and beyond. JMWT Acquisition LLP has sufficient funds in place to finance the business. Phaidon Global LLC, the holding company of JMWT Acquisition LLP, has indicated that it will support the company for the foreseeable future. As a result the members consider the business to have adequate access to finance, and consider the business to be a going concern. Designated members The following were designated members at the end of the financial period and served for the entire period: Phaidon Global LLC (appointed 3 October 2012) JMWT Manager LLC (appointed 3 October 2012) Post year-end, JMWT Manager LLC was renamed re-named Phaidon LLC on 24th June 2014. Allocation of profits Any profits are shared among the members as governed by the Limited Liability Partnership Agreement (Partnership Agreement") dated 3rd October 2012. Members are remunerated solely out of the profits of the partnership and final allocation of profits to members is made in accordance with the Partnership Agreement. 1 EFTA01201547  JMWT Acquisition LLP Report of the members for the period ended 30 June 2013 Capital The members may only contribute to the partnership's capital in accordance with the Partnership Agreement. No member is entitled to interest on their capital. Policy for drawings, subscriptions and repayment of members' capital The Partnership Agreement governs policies for members' drawings, subscriptions and repayment of members' capital. No drawings or other payments can be made to or on behalf of any members, other than by distribution of profits, without the consent of the members. The firm will reserve, out of profits before distribution, sufficient funds to provide for the working capital requirements of the business. Statement of disclosure of information to auditor So far as the designated members are aware, there is no relevant audit information of which the LLP's auditors is unaware and the designated members have taken all steps that they ought to have taken as designated members in order to make themselves aware of any relevant audit information and to establish that the LLP's auditors is aware of that information Independent Auditor BDO LLP were appointed first auditor on 18 December 2013. A resolution to re-appoint BDO LLP as auditor will be proposed at the next annual general meeting. Members' responsibilities The members are responsible for preparing the members' report and financial statements in accordance with applicable law and regulation. The Limited Liability Partnerships (Accounts and Audit) (Application of the Companies Act 2006) Regulations 2008 require the members to prepare financial statements for each financial year. Under these regulations the members have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under these regulations the members 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 Limited Liability Partnership and of the profit or loss of the Limited Liability Partnership for that period. In preparing these financial statements, the members are required to: • select suitable accounting policies and then apply them consistently; • make judgments and 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 Limited Liability Partnership will continue in business. 2 EFTA01201548  JMWT Acquisition LLP Report of the members for the period ended 30 June 2013 The members are responsible for keeping adequate accounting records that are sufficient to show and explain the Limited Liability Partnership's transactions, disclose with reasonable accuracy at any time the financial position of the Limited Liability Partnership, and enable them to ensure that the financial statements comply with the Limited Liability Partnerships (Accounts and Audit) (Application of the Companies Act 2006) Regulations 2008. They are also responsible for safeguarding the assets of the Limited Liability Partnership and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Approved by the members of the Limited Liability Partnership on 18th December 2014. Designated member 3 EFTA01201549  JMWT Acquisition LLP Independent auditor's report INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF JMWT ACQUISITION LLP We have audited the financial statements of JMWT Acquisition LLP for the period ended 30 June 2013 which comprise the consolidated profit and loss account, the consolidated and partnership balance sheet, the consolidated cash flow statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the limited liability partnership's members, as a body, in accordance with the Limited Liability Partnerships (Accounts and Audit) (Application of the Companies Act 2006) Regulations 2008. Our audit work has been undertaken so that we might state to the limited liability partnership'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 limited liability partnership and the limited liability partnership's members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of members and auditors As explained more fully in the statement of members' responsibilities, the members are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council's (FRC's) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.ora.uk/auditscopeukorivate. Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the group's and the limited liability partnership's affairs as at 30 June 2013 and of the group's loss for the period then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of the Companies Act 2006 as applied to limited liability partnerships by the Limited Liability Partnerships (Accounts and Audit) (Application of the Companies Act 2006) Regulations 2008. Opinion on other matters In our opinion the information given in the members' report for the financial year [period] for which the financial statements are prepared is consistent with the financial statements. 4 EFTA01201550  JMWT Acquisition LLP Independent auditors report (continued) Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 as applied to limited liability partnerships requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the limited liability partnership, or returns adequate for our audit have not been received from branches not visited by us; or • the limited liability partnership financial statements are not in agreement with the accounting records and returns; • we have not received all the information and explanations we require for our audit; or Scott McNaughton, (senior statutory auditor) For and on behalf of BOO LLP, statutory auditor London United Kingdom BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 5 EFTA01201551  JMWT Acquisition LLP Consolidated profit and loss account for the period ended 30 June 2013 Note £'000 Turnover 2 14,793 Cost of sales (8,709) Gross profit 6,084 Distribution costs (4,969) Administrative expenses (7,926) Loss on ordinary activities before interest 3 (6,811) Interest payable 4 (101) Loss on ordinary activities before taxation (6,912) Taxation on profit on ordinary activities in corporate subsidiaries 48 Loss for the financial period before members' remuneration and profit shares (6,864) Members' profit share charged as an expense Loss for the period (6,864) The notes on pages 11 to 24 form part of these financial statements. 6 EFTA01201552  JMWT Acquisition LLP Consolidated statement of total recognised gains and losses for the year ended 30 June 2013 Note £'000 Loss for the financial year (6,864) Currency translation differences on retranslation of net assets of subsidiary undertakings 259 Total recognised gains and losses relating to the year (6,605) The notes on pages 11 to 24 form part of these financial statements. 7 EFTA01201553  JMWT Acquisition LLP Consolidated balance sheet at 30 June 2013 Registered number OC378972 Note £'000 £'000 Fixed assets Intangible Assets 7 28,026 Tangible assets 8 640 28,666 Current assets Stock 12 11,320 Debtors 13 5,300 Amounts due from members Cash at bank and in hand 129 16,749 Creditors: amounts falling due within one year 14 (8,842) Net current assets 7,907 Total assets less current liabilities 36,573 Creditors: amounts falling due after more than one year 15 (1,973) Provisions for liabilities Net assets attributable to members 34,600 Represented by: Loans and other debts due to members Members capital classified as debt under FRS 25 16 41,205 Other amounts 16 (6,605) Total members' interest 34,600 The consolidated financial statements were approved and authorised for issue on 18th December 2014 and signed on behalf of the members of JMWT Acquisition LLP by : Designated member The notes on pages 11 to 24 form part of these financial statements. 8 EFTA01201554  JMWT Acquisition LLP LLP balance sheet at 30 June 2013 Registered number OC378972 Note £'000 £'000 Fixed assets Investments 9 42,424 Net assets attributable to members 42,424 Represented by: Loans and other debts due to members within one year Members capital classified as debt under FRS 25 16 41,205 Other amounts 16 1,219 Total members' interest 42,424 The consolidated financial statements were approved and authorised for issue on 18th December 2014 and signed on behalf of the members of JMWT Acquisition LLP by: Designated member The notes on pages 11 to 24 form part of these financial statements. 9 EFTA01201555  JMWT Acquisition LLP Consolidated cash flow statement for the period ended 30 June 2013 Note £'000 £'000 Net cash inflow from operating activities 18 3,707 Returns on investments and servicing of finance Interest payable 4 (101) Net cash outflow from returns on investments and servicing of 3,606 finance Taxation Taxation on profit on ordinary activities in corporate subsidiaries 11 200 Capital expenditure and financial investment Purchase of tangible fixed assets 8 (162) Net cash outflow from capital expenditure and financial 3,644 investment Acquisitions and disposals Acquisition of subsidiary 10 (41,205) Cash acquired with subsidiary 10 250 Overdraft acquired with subsidiary 10 (2,969) (43,924) Net cash outflow before financing activities (40,280) Transactions with members Members' capital introduced 41,205 Decrease in cash 19 925 The notes on pages 11 to 24 form part of these financial statements. 10 EFTA01201556  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 1 Accounting policies Accounting convention The financial statements have been prepared under the historical cost convention and in accordance with applicable accounting standards and the Statement of Recommended Practice on Accounting by Limited Liability Partnerships. These are the first financial statements and relate to the period from incorporation to 30 June 2013. The following principal accounting policies have been applied: Basis of consolidation The consolidated financial statements incorporate the results of JMWT Acquisition LLP and its subsidiary undertakings as at 30 June 2013 using the acquisition method of accounting. The results of subsidiary undertakings are included from the date of acquisition. Depreciation Depreciation is provided on all tangible fixed assets to write off the cost or valuation, less estimated residual values, evenly over their estimated useful lives. It is calculated at the following annual rates on a straight- line basis: Warehouse fixtures and equipment - 5 to 10 years Leasehold improvements - Over the period of the lease Office and store fixtures and equipment - 5 to 50 years Motor vehicles - 5 years Website - 3 to 5 years Valuation of investments Investments held as fixed assets are stated at cost or valuation less any provision for impairment in value. Goodwill Goodwill arises on acquisitions and represents the excess of the fair value of the consideration given and associated costs over the fair value of the identifiable assets and liabilities acquired. Goodwill is capitalised and written off on a straight line basis over its expected useful economic life of five years and provision is made for any impairment in value. Foreign currency Foreign currency transactions of individual companies are translated at the rates ruling when they occurred. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet dates. Any differences are taken to the profit and loss account. The results of overseas operations are translated at the average rates of exchange during the period and their balance sheets translated into sterling at the rates of exchange ruling on the balance sheet date. Exchange differences which arise from translation of the opening net assets and results of foreign subsidiary undertakings and from translating the profit and loss account at an average rate are taken to reserves. 11 EFTA01201557  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 1 Accounting policies (continued) Stock and Work in progress Stock is valued at the lower of cost and net realisable value. For the purpose of determining unit costs of published books all costs associated with the preparation of each individual print run are allocated evenly across books produced in that printing. Work in progress comprises third party expenditure on title development, for titles not yet printed and is valued at cost. Royalties Royalty costs are matched to sales of the title to which they relate. Royalty advances paid but not yet covered by royalties earned are recorded as an asset unless they are considered irrecoverable. Deferred taxation 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 the company anticipates to make sufficient taxable profits in the future to absorb the reversal of the underlying timing differences. Deferred tax balances are not discounted. Pension costs Contributions are made to either employees' personal pension schemes or the Company Personal Pension scheme, dependent on the employee's choice. The Company Personal Pension Scheme is a defined contribution scheme. Leases Rentals payable under operating leases are charged to the profit and loss account as incurred over the lease term. Allocation of profits and drawings Each member of the LLP has a capital account. All amounts contributed by a member are credited to its capital account and all amounts withdrawn by such member from the capital will be debited to its capital account. Profits will be allocated among the members for each financial year in accordance with each members capital account. The final allocation of profits and distribution between members is made once the annual consolidated financial statements are approved. All payments are made subject to the cash requirements of the business. Tax retentions where taken are paid to the relevant tax authorities on behalf of members with any excess being released to members as appropriate. Excess profit is included in the balance sheet under "Loans and other debts due to members" Any losses for the financial year will be recorded in a separate loss reserve. 12 EFTA01201558  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 2 Turnover The group's entire business is the publishing and sale of books, stationary and related applications, along with associated income. It is the opinion of the directors that the disclosure of turnover by geographical market would be prejudicial to the interests of the company. 3 Operating profit Group £'000 This has been arrived at after charging: Depreciation 120 Amortisation of goodwill 4,946 Auditors' remuneration - audit - audit of subsidiaries 55 - tax services 26 Foreign exchange loss 443 Operating lease costs (land and buildings) 431 4 Interest payable and similar charges £'000 Interest payable on bank loans and overdrafts 101 101 5 Members' share of profits Profits and losses are shared by the members at the end of the period in accordance with agreed profit and loss sharing arrangements governed by the Partnership Agreement. Members are required to make their own provision for pensions and other benefits from their profit shares. Number Average number of members 2 £'000 Average loss per member 3,432 13 EFTA01201559  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 6 Employees Group £'000 Staff costs consist of: Wages and salaries 3,326 Social security costs 376 Other pension costs 120 3,822 Group 2013 The following numbers were employed at the year ends Book production 40 Sales and distribution 54 Administration 25 119 The average number of employees during the period was 115. 7 Intangible assets Goodwill on Consolidation LLP £'000 Cost or valuation Additions 32,972 At 30 June 2013 32,972 Amortisation Provided for the year 4,946 At 30 June 2013 4,496 Net book value at 30 June 2013 28,026 14 EFTA01201560  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 8 Tangible assets Office/Store Warehouse Website Motor Leasehold fixtures and fixtures and and digital vehicles improvements equipment equipment software Total Group £'000 £'000 £'000 £'000 £'000 £'000 Cost At 2 Oct 2012 196 214 3,229 442 211 4,292 Exchange movements 7 16 46 69 Additions 43 119 162 Disposals (191) (191) At 30 June 2013 12 230 3,318 442 330 4,332 Depreciation At 2 Oct 2012 (187) (98) (2,980) (442) (3,707) Exchange movements (6) (8) (42) (56) Depreciation charge for period (3) (20) (94) (3) (120) Disposals 191 191 At 30 June 2013 (5) (126) (3,116) (442) (3) (3,692) Net book value At 30 June 2013 7 104 202 327 640 At 2 Oct 2012 9 116 249 211 585 15 EFTA01201561  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 9 Fixed asset investments LLP £'000 Shares in Group undertakings: Additions 27,470 At 30 June 2013 27,470 Loans to Group undertakings: Additions 14,954 At 30 June 2013 14,954 Fixed asset investment at 30 June 2013 42,424 The LLP invested £27,470,001 in 100% of the share capital of JMWT Topco Limited, The principal undertakings in which the LLP's interest at the period end is 20% or more are as follows Subsidiary Country of Percentage Name incorporation of ownership Principal activity JMWT Topco Ltd UK 100% Holding company JMWT Midco Ltd UK 100% Holding company JMWT Ltd UK 100% Holding company Phaidon Press Ltd UK 100% Book Publishing Phaidon Sari France 100% Sale of Books Phaidon Verlag GmbH Germany 100% Sale of Books Phaidon Press Inc US 100% Sale of Books Phaidon KK Japan 100% Sale of Books Phaidon Srl Italy 100% Sale of Books Phaidon Pty Australia 100% Sale of Books PH Art AG Switzerland 100% Design Services Marylebone Retail Ltd UK 100% Retail 16 EFTA01201562  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 10 Acquisitions Acquisition of Phaidon Press Limited On 2nd October 2012 the group acquired Phaidon Press Limited for £41,000,000 paid by cash. In calculating the goodwill arising on acquisition, the fair value of the net assets of Phaidon Press Limited have been assessed and no adjustments from book value have been necessary. The book value of the net assets acquired are summarised in the following table: Book value £'000 Fixed assets Tangible assets 585 Current assets Stock 12,701 Debtors 7,139 Cash at bank and in hand 250 Total assets 20,675 Creditors Due within one year (10,590) Due after more than one year (1,852) (12,443) Net assets 8,233 £'000 Cash consideration (including expenses £205,000) 41,205 Net assets acquired 8,233 Goodwill arising on acquisition (see note 7) 32,972 17 EFTA01201563  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 10 Acquisitions (continued) The results of Phaidon Press Limited prior to its acquisition were as follows: Profit and loss account Current Year ended period up to 30 June acquisition 2012 £'000 £'000 Turnover 5,593 23,771 Operating profit 17 1,071 Net interest (132) Profit on ordinary activities before taxation 17 939 Taxation on profit from ordinary activities (10) 165 Profit for the year 7 1,104 Statement of total recognised gains and losses £'000 Profit for the year 1,104 Currency translation differences on retranslation of net assets of subsidiary undertakings (34) Total recognised gains and losses for the year 1,070 Cash Flows The net outflow of cash arising from the acquisition of Phaidon Press Limited was as follows: £'000 Cash consideration, as above 41,205 Cash acquired (250) Overdraft acquired 2,969 Net outflow of cash 43,924 18 EFTA01201564  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 11 Taxation The consolidated financial statements do not include any charge or liability for taxation on the results of the LLP, as the relevant income tax is the responsibility of the individual members. Corporate tax arises in the corporate subsidiaries as follows: 2013 £'000 Current taxation UK corporation tax at 23.8% On profit for the year Overprovision in prior periods (3) Overseas taxation: On profit for the year 33 Overprovision in prior periods 5 Current tax charge for the year 35 Deferred taxation Charge for the year (83) Total taxation for the year 48 The tax assessed for the year differs from that resulting from applying the standard rate of corporation tax in the UK of 23.8% The differences are explained below: 2013 £'000 Profit on ordinary activities before tax (6,912) Tax charge at 23.8% thereon (1,645) Effects of: Non deductible goodwill amortisation 1,175 Expenses not allowable for tax purposes 134 Capital allowances less than depreciation 17 UK tax losses carried forward to future periods 224 Overseas tax losses carried forward 132 Foreign tax not expensed 25 Utilisation of tax losses brought forward (3) Utilisation of overseas tax losses (3) Other differences (21) Current tax charge for year 35 19 EFTA01201565  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 12 Stock Group LLP £'000 £'000 Work in progress 1,197 Finished goods and goods for resale 10,123 11,320 There is no material difference between the replacement cost of stocks and the amounts stated above. 13 Debtors Group LLP £'000 £'000 Trade debtors 3,691 Unearned royalty advances 549 Other debtors 263 Corporation tax 59 Deferred tax (note 11) 261 Prepayments and accrued income 477 5,300 Other than deferred tax, all amounts shown under debtors fall due for payment within one year. 14 Creditors: amounts falling due within one year Group LLP £'000 £'000 Bank overdraft 1,923 Trade creditors 2,850 Royalties payable 326 Other creditors 187 Taxation and social security 157 Deferred Income 649 Accruals 639 Amounts due to related party (note 21) 2,111 8,842 20 EFTA01201566  JMWT Acquisition LLP Notes forming part of the financial statements for the period ended 30 June 2013 (continued) 15 Creditors: amounts falling due after more than one year Group LLP 2013 2013 Other creditors 1,973 1,973 16 Members' interest Members' capital classified as Loss debt reserve Total Group £'000 £'000 £'000 Capital introduced 41,205 41,205 Loss for the financial year (6,605) (6,605) Members' inter