EX-99.4 9 ex99_4.htm EXHIBIT 99.4

Exhibit 99.4

AGATHA CHRISTIE LIMITED

FINANCIALS

For the year ended 31 December 2013 and for the
period from 29 February 2012 to 31 December 2012

Report of Independent Registered Public Accounting Firm
 
To the Directors
Agatha Christie Limited
United Kingdom

To the Directors
RLJ Entertainment, Inc.
USA

We have audited the accompanying balance sheet of Agatha Christie Limited (the “Company”) as of 31 December 2013 and 2012, and the related statements of income and comprehensive income, changes in shareholders’ equity and cash flows for the year ended 31 December 2013 and for the period from 29 February 2012 to 31 December 2012. These financial statements are the responsibility of the Company's management and RLJ Entertainment Inc.’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of its internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Agatha Christie Limited as of 31 December 2013 and 2012 and the results of its operations and its cash flows for the year ended 31 December 2013 and for the period from 29 February 2012 to 31 December 2012, in conformity with accounting principles generally accepted in the United States of America.
 
 
BDO LLP
Gatwick, United Kingdom
March 18, 2014

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

AGATHA CHRISTIE LIMITED

BALANCE SHEETS

As of 31 December 2013 and 2012

 
 
 
31 December
 
 
 
2013
   
2012
 
Assets
 
   
 
Cash
 
£
2,222,000
   
£
4,806,000
 
Accounts receivable, net
   
93,000
     
172,000
 
Unbilled receivables
   
2,602,000
     
1,801,000
 
Film costs, net
   
5,934,000
     
9,952,000
 
Furniture, fixtures and equipment, net
   
1,000
     
15,000
 
Intangible assets, net
   
1,593,000
     
1,629,000
 
Deferred tax asset
   
473,000
     
33,000
 
Other assets
   
243,000
     
 
Total Assets
 
£
13,161,000
   
£
18,408,000
 
 
               
Liabilities and Shareholders' Equity
               
Liabilities:
               
Accounts payable and accrued liabilities
 
£
563,000
   
£
384,000
 
Accrued corporate tax payable
   
884,000
     
472,000
 
Production obligations
   
-
     
4,931,000
 
Deferred revenues
   
5,367,000
     
6,119,000
 
Total Liabilities
   
6,814,000
     
11,906,000
 
 
               
Commitments and Contingencies - see Note 9
               
 
               
Shareholders' Equity
               
Series A ordinary stock, 4,900 shares authorized and outstanding
   
4,900
     
4,900
 
Series B ordinary stock, 5,100 shares authorized and outstanding
   
5,100
     
5,100
 
Retained earnings
   
6,337,000
     
6,492,000
 
Total Shareholders' Equity
   
6,347,000
     
6,502,000
 
 
               
Total Liabilities and Shareholders' Equity
 
£
13,161,000
   
£
18,408,000
 
 
See accompanying notes to financial statements.

AGATHA CHRISTIE LIMITED

STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Year Ended 31 December 2013 and for the
Period From 29 February 2012 to 31 December 2012

 
 
 
Year Ended
31 December
2013
   
Period from
29 February to
31 December
2012
 
Revenues:
 
   
 
Publishing revenues
 
£
3,532,000
   
£
3,200,000
 
Film and television licensing revenues
   
20,224,000
     
2,218,000
 
Total Revenues
   
23,756,000
     
5,418,000
 
 
               
Expenses:
               
Amortization of film costs
   
16,420,000
     
1,301,000
 
Publishing
   
245,000
     
247,000
 
General and administrative
   
1,783,000
     
1,098,000
 
Depreciation and amortization
   
97,000
     
94,000
 
Total Expenses
   
18,545,000
     
2,740,000
 
Operating Income
   
5,211,000
     
2,678,000
 
 
               
Other Income:
               
Interest income (expense)
   
(176,000
)
   
22,000
 
 
               
Income before Income Taxes Provision
   
5,035,000
     
2,700,000
 
Income Tax Provision
   
(1,190,000
)
   
(659,000
)
Net Income
   
3,845,000
     
2,041,000
 
Other Comprehensive Income
   
     
 
Comprehensive Income
 
£
3,845,000
   
£
2,041,000
 
 
See accompanying notes to financial statements.

AGATHA CHRISTIE LIMITED

STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Year Ended 31 December 2013 and for the
Period From 29 February 2012 to 31 December 2012

 
 
 
Series A
Ordinary Shares
   
Series B
Ordinary Shares
   
Retained
Earnings
   
Accumulated
Other
Comprehensive
Income
   
Total
Shareholders'
Equity
 
 
 
Shares
   
Amount
   
Shares
   
Amount
             
Balance at 29 February 2012
   
4,900
   
£
4,900
     
5,100
   
£
5,100
   
£
7,122,000
   
£
   
£
7,132,000
 
Distributions to Shareholders
   
     
     
     
     
(2,671,000
)
   
     
(2,671,000
)
Net Income
   
     
     
     
     
2,041,000
     
     
2,041,000
 
Balance at 31 December 2012
   
4,900
     
4,900
     
5,100
     
5,100
     
6,492,000
     
     
6,502,000
 
Distributions to Shareholders
   
     
     
     
     
(4,000,000
)
   
     
(4,000,000
)
Net Income
   
     
     
     
     
3,845,000
     
     
3,845,000
 
Balance at 31 December 2013
   
4,900
   
£
4,900
     
5,100
   
£
5,100
   
£
6,337,000
   
£
-
   
£
6,347,000
 
 
See accompanying notes to financial statements.

AGATHA CHRISTIE LIMITED

STATEMENTS OF CASH FLOWS

For the Year Ended 31 December 2013 and for the
Period From 29 February 2012 to 31 December 2012

 
 
 
Year Ended
31 December 2013
   
Period form
29 February to
31 December 2012
 
Operating Activities
 
   
 
Net income
 
£
3,845,000
   
£
2,041,000
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
97,000
     
86,000
 
Amortization of film costs
   
16,420,000
     
1,301,000
 
Deferred tax provision
   
(440,000
)
   
(29,000
)
Provision for bad debts
   
28,000
     
18,000
 
Changes in operating assets and liabilities:
               
Accounts receivable, net
   
51,000
     
1,034,000
 
Unbilled receivables
   
(801,000
)
   
846,000
 
Film costs, net
   
(12,402,000
)
   
(4,931,000
)
Other assets
   
(243,000
)
   
 
Accounts payable and accrued expenses
   
(4,340,000
)
   
4,941,000
 
Deferred revenues
   
(752,000
)
   
(971,000
)
Net cash provided by operating activities
   
1,463,000
     
4,336,000
 
Investing Activities
               
Capital expenditures
   
(47,000
)
   
(50,000
)
Financing Activities
               
Dividend payments
   
(4,000,000
)
   
(2,671,000
)
 
               
Net change in cash and cash equivalents
   
(2,584,000
)
   
1,615,000
 
Cash, beginning of period
   
4,806,000
     
3,191,000
 
Cash, end of period
 
£
2,222,000
   
£
4,806,000
 
 
               
Supplemental Disclosure of Cash Flow Information
               
Cash paid during the year for:
               
Income taxes
 
£
748,000
   
£
1,002,000
 
Interest expense
 
£
534,000
   
£
-
 
 
See accompanying notes to financial statements.

Note 1.     Accounting Policies.

Statement of Directors’ Responsibilities. These financial statements have been prepared by and are the responsibility of the directors of Agatha Christie Limited and RLJ Entertainment, Inc.

Basis of Presentation.  The principal activity of Agatha Christie Limited (the Company) is the exploitation of the literary works of the late Agatha Christie, whose published works have been adopted for film, television, stage and games and are available in more than 50 languages.  The Company was established under laws of England and Wales and its principal executive offices are located in London, England.  The financial statements and related notes were prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and reflect the results of operations from 29 February 2012, which is the date Acorn Productions Limited (APL), a wholly-owned subsidiary of Acorn Media Group, Inc., acquired a 64 percent ownership interest in Agatha Christie Limited.

As permitted by the Accounting Standards Codification (or ASC) 926, Entertainment – Films, the Company has presented an unclassified balance sheet.

Certain prior period balances have been reclassified to conform to the current year presentation. These reclassifications had no effect on reported income, comprehensive income, cash flows, total assets or shareholders’ equity as previously reported.

Foreign currencies.  Transactions in foreign currencies are recorded using the rate of exchange ruling for the month of the transaction. Assets and liabilities due in foreign currencies at the balance sheet date are remeasured into sterling at the rates of exchange ruling at the balance sheet date. Unrealized and realized exchange losses were recorded in general and administrative expenses in the accompanying income statement and totaled approximately £13,000 and £5,000 for the periods ended 31 December 2013 and 2012, respectively.

Income taxes.  The Company accounts for income taxes pursuant to the provisions of ASC 740-“ Under this method, deferred income tax assets and liabilities are determined based on the differences between the financial accounting and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company records a valuation allowance for certain temporary differences to reduce its deferred tax assets to the amount that is more likely than not to be realized.

ASC 740-10, Income Taxes–Tax positions, provides guidance for recognising and measuring uncertain tax positions, it prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognised in the financial statements. It also provides accounting guidance on derecognising, classification and disclosure of these uncertain tax positions.  A tax benefit will be recognised if the weight of available evidence indicates that the tax position is more likely than not to be sustained upon examination by the relevant tax authorities.  The recognition and measurement of benefits related to our tax positions requires significant judgment as uncertainties often exist with respect to new laws, new interpretations of existing laws, and rulings by taxing authorities.  Differences between actual results and our assumptions, or changes in our assumptions in future periods, are recorded in the period they become known.  For tax liabilities, the Company recognises accrued interest related to uncertain tax positions as a component of income tax expense, and penalties, if incurred, are recognised as a component of operating expenses.

Revenue.  Revenue represents royalties, licensing and other income earned during the period and excludes value added taxes (or VAT).  Revenue is recognised upon meeting the recognition revenue criteria of ASC 927, “Entertainment –Films” and ASC 605, “Revenue Recognition

(a)
Publishing Revenues

Contracted revenue from royalty contracts is recognised by spreading income straight line over the term of the contract on a monthly basis starting with the month that the contract commences.

Royalty income in excess of the minimum contractual revenue is recognised in the period in which additional publishing revenues are due to the Company as reported by the publisher or otherwise determinable.


Note 1.     Accounting Policies (continued)

(b)
Film and Television Licensing Revenues

Film and television licensing revenues are recognised when the programme is delivered to the licensee subject to the following criteria being met:

 
(i)
Contract signed by both parties;
 
(ii)
Content is available for exploitation by the licensee;
 
(iii)
The licensing fee is either fixed or determinable; and
 
(iv)
Collection of license fee is reasonably assured.

Customer payments received prior to all revenue recognition criteria being met are recorded as deferred revenue.  To the extent titles are cross-collateralized, non-refundable licensing advances received are deferred and recognized as revenues as the customer exploits the titles.

Cash.  Cash and cash equivalents include unrestricted cash accounts, money market investments and highly liquid investment instruments with original maturity of three months or less at the date of purchase.

Accounts receivable and allowance for doubtful accounts.  Accounts receivable are evaluated to determine if they will ultimately be collected using significant judgments and estimates, including an analysis of specific risks on a customer-by-customer basis for our larger customers and an analysis of the length of time receivables have been past due.  Based on this information, the Company reserves an amount that we believe to be doubtful of collection.  If the financial condition of our customers were to deteriorate or if economic conditions were to worsen, additional allowances might be required in the future.  As of 31 December 2013, the Company established a bad debt reserve of approximately £46,000 and during the year then ended recognised bad debt expense of approximately £28,000 as a component of general and administrative expenses.  As of 31 December 2012, the Company established a bad debt reserve of approximately £18,000 and during the period then ended recognised bad debt expense of approximately £18,000 as a component of general and administrative expenses.

Furniture, fixtures and equipment and depreciation.  Property and equipment are stated at cost, less depreciation. Depreciation is calculated on a straight line basis over the assets’ estimated useful lives of 2-5 years.

Intangible assets.  Trademarks are carried at cost and are amortized on a straight-line basis over their estimated useful life of 10 years.

Costs of acquiring copyrights are carried at cost and are written off evenly over the expected useful lives of the copyrights.  The costs incurred on the acquisition of the reversionary rights and copyrights acquired subsequent to the acquisition of the reversionary rights are being written off on a straight-line basis over the remaining period of copyright, to 2046.  The Company considers the remaining copyright period to be an appropriate estimate for the useful economic life of copyrights.

Film Costs.  Investment in films and television programmes includes the unamortized costs of completed films and television programmes which have been produced by the Company and films and television programmes in progress and in development.  For films and television programmes produced by the Company, capitalized costs include all direct production and financing costs and production overhead.  Costs of producing films and television programmes are amortized using the individual-film-forecast method, whereby these costs are amortized in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognised from the exploitation, exhibition or sale of the films or television programmes.  Ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release or from the date of delivery of the first episode for episodic television series.  Films and television programmes in progress include the accumulated costs of productions which have not yet been completed.  Films and television programmes in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and, upon commencement of production, are transferred to production costs. Projects in development are written off at the earlier of the date they are determined not to be recoverable or when abandoned, or three years from the date of the initial investment.


Note 1.     Accounting Policies (continued)

Impairment of Long-Lived Assets.  We review the impairment of long-lived and specific, finite-lived, identifiable intangible assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.  An impairment loss would be recognised when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount.  The amount of impairment loss that would be recognised equals the amount by which the carrying value of the asset being assessed exceeds the asset’s fair value.  We have no intangible assets with indefinite useful lives.  During the periods ended 31 December 2013 and 2012, there was no impairment to our long-lived assets.

Use of estimates.  The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of its financial statements and the reported amounts of revenue and expense during the reporting period.  The most significant estimate made by management in the preparation of the financial statements relate to ultimate revenues, which impact film cost amortization.  Actual results could differ from those estimates.

Fair Value Measurements.  The carrying amount of our financial instruments, which principally include cash, billed and unbilled receivables, accounts payable, accrued expenses and production obligations, approximates fair value due to the relatively short maturity of such instruments.

Financial Accounting Standards Board (or FASB) Accounting Standards Codification (or ASC) 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Fair value measurements made by the Company are generally limited to valuing the film and television programmes when assessing impairments, as needed.  These measurements are Level 3 measurements.

Recent Accounting Pronouncements.

No new accounting pronouncements were adopted during 2013.  There are no new accounting pronouncements issued that affect the company’s accounting that have not been adopted.


Note 2.     Revenues.

An analysis of revenues by geographical market is given below:
 
 
Year ended
31 Dec 2013
Period ended
31 Dec 2012
 
 
£ 000
   
£ 000
 
 
               
United Kingdom
   
19,671
     
2,795
 
Other European Community
   
1,548
     
1,145
 
Americas
   
1,896
     
590
 
Rest of World
   
641
     
888
 
 
   
23,756
     
5,418
 
 
Note 3.     Taxation.

Income tax expense for the periods ended 31 December 2013 and 2012 is summarized as follows:

 
 
Year ended
31 Dec 2013
   
Period ended
31 Dec 2012
 
 
 
£ 000
   
£ 000
 
Current UK Corporation Tax
               
Tax on profits for the period
   
1,630
     
689
 
Adjustment in respect of prior periods
   
     
(1
)
 
   
1,630
     
688
 
Deferred UK Corporation Tax
               
Origination of timing differences
   
(448
)
   
(38
)
Change in valuation allowance
   
10
     
(12
)
Effect of decreased tax rate on opening deferred tax position
   
(2
)
   
21
 
 
   
(440
)
   
(29
)
 
               
Total Tax Expense
   
1,190
     
659
 

The tax effects of temporary differences that give rise to a significant portion of the net deferred tax assets at 31 December 2013 and 2012 are presented below:

 
 
Year ended
31 Dec 2013
   
Period ended
31 Dec 2012
 
 
 
£ 000
   
£ 000
 
Deferred tax asset:
               
Deferred revenues
   
69
     
 
Amortization in respect of copyright acquired prior to 2002
476
466
Amortization in respect of film costs
   
404
     
33
 
 
   
949
     
499
 
Less valuation allowance
   
(476
)
   
(466
)
Total deferred tax asset
   
473
     
33
 

The Company has placed a full valuation allowance on its deferred tax asset related to amortization of copyrights acquired prior to 2002.  A valuation reserve is warranted because realization of this deferred tax asset would only be achieved if the asset was sold or otherwise disposed of.  The Company’s current plans are to continue to hold and exploit the copyright asset through its remaining useful life.
 

Note 3.     Taxation (continued)

Expected income tax expense based on statutory rates for the periods ended 31 December 2013 and 2012 differed from actual income tax expense as follows:

 
Year Ended
31 Dec 2013
   
Period ended
31 Dec 2012
 
 
£ 000
   
£ 000
 
Expected income tax expense at statutory rates
   
1,175
     
648
 
Non-deductible expenses
   
6
     
3
 
Adjustment to tax charges in respect of previous periods
   
     
(1
)
Decrease in valuation allowance
   
10
     
(12
)
Change in tax rate
   
(1
)
   
21
 
Effective income tax expense
   
1,190
     
659
 

Note 4.     Intangible Assets.

Intangible assets activity and balances as of and for the year ended 31 December 2013 were as follows:

  Copyrights Trademarks Total
 
 
£ 000
   
£ 000
   
£ 000
 
Cost
                       
At beginning of period
   
3,516
     
377
     
3,893
 
Additions
   
     
47
     
47
 
Disposals
   
     
(105
)
   
(105
)
At end of period
   
3,516
     
319
     
3,835
 
Amortisation
                       
At beginning of period
   
2,055
     
209
     
2,264
 
Charged in period
   
47
     
36
     
83
 
Disposals
   
     
(105
)
   
(105
)
At end of period
   
2,102
     
140
     
2,242
 
Net book value
                       
At 31 Dec 2013
   
1,414
     
179
     
1,593
 
 
Intangible assets activity and balances as of and for the period ended 31 December 2012 were as follows:

  Copyrights Trademarks Total
 
 
£ 000
   
£ 000
   
£ 000
 
Cost
                       
At beginning of period
   
3,466
     
477
     
3,943
 
Additions
   
50
     
     
50
 
Disposals
   
     
(100
)
   
(100
)
At end of period
   
3,516
     
377
     
3,893
 
Amortisation
                       
At beginning of period
   
2,017
     
278
     
2,295
 
Charged in period
   
38
     
31
     
69
 
Disposals
   
     
(100
)
   
(100
)
At end of period
   
2,055
     
209
     
2,264
 
Net book value
                       
At 31 Dec 2012
   
1,461
     
168
     
1,629
 

During the periods ended 31 December 2013 and 2012, the intangible asset amortization expense was £83,000 and £69,000, respectively.


Note 4.      Intangible Assets (continued)

As of 31 December 2013, future amortization of other intangible assets is approximately as follows:

Fiscal Year Ended 31 December
 
Amount
 
 
 
£ 000
 
2014
   
86
 
2015
   
86
 
2016
   
86
 
2017
   
86
 
2018
   
86
 

Note 5.     Tangible Assets.

Fixtures, fittings and office equipment activity and balances as of and for the periods ended 31 December 2013 and 2012 were as follows:

 
Year ended
31 Dec 2013
Period ended
31 Dec 2012
 
 
£ 000
   
£ 000
 
Cost
               
At beginning of period
   
310
     
438
 
Additions
   
     
 
Disposals
   
(86
)
   
(128
)
At end of period
   
224
     
310
 
Depreciation
               
At beginning of period
   
295
     
406
 
Charged in period
   
14
     
17
 
Disposals
   
(86
)
   
(128
)
At end of period
   
223
     
295
 
Net book value
               
At end of period
   
1
     
15
 

Depreciation and amortization expense for the periods ended 31 December 2013 and 2012 was £14,000 and £17,000, respectively.

Note 6.     Film and Television Costs.
 
Unamortized costs as of 31 December 2013 and 2012 were as follows:

 
 
31 Dec 2013
   
31 Dec 2012
 
 
 
£ 000
   
£ 000
 
Unamortized Costs
               
Released, net of accumulated amortization
   
5,806
     
4,890
 
In production
   
     
4,931
 
Other
   
128
     
131
 
At 31 Dec
   
5,934
     
9,952
 

The Company expects approximately 27% of completed films and television programmes, net of accumulated amortization, will be amortized during the one-year period ending 31 December 2014.  Additionally, the Company expects approximately 62% of completed and released films and television programmes, net of accumulated amortization, will be amortized during the three-year period ending 31 December 2016.  Finally, the Company expects approximately 89% of completed and released films and television programmes, net of accumulated amortization, will be amortized during the five-year period ending 31 December 2018.


Note 7.     Share Capital.

 
 
31 Dec 2013
   
31 Dec 2012
 
 
 
£
   
£
 
Authorised
               
4900 ‘A’ ordinary shares of £1 each
   
4,900
     
4,900
 
5100 ‘B’ ordinary shares of £1 each
   
5,100
     
5,100
 
 
   
10,000
     
10,000
 
Allotted, called up and fully paid
               
4900 ‘A’ ordinary shares of £1 each
   
4,900
     
4,900
 
5100 ‘B’ ordinary shares of £1 each
   
5,100
     
5,100
 
 
   
10,000
     
10,000
 

The Company has two types of issued share capital, ‘A’ shares and ‘B’ shares. ‘A’ and ‘B’ shareholders have the same rights other than holders of ‘A’ shares appoint the Chairman of the Board, who has the casting vote in the event of a tie.

Note 8.     Related Party Transactions.

During the periods the following related party transactions occurred: during 2013 and 2012 total costs of £420,000 and £551,000, respectively, were recharged to the Company by a fellow subsidiary undertaking APL.  These amounts were included in general and administrative expenses. At 31 December 2013, the balance owed by ACL was nil.  The balance owed as of 31 Dec 2012 was inconsequential (less than £2,000).

The aggregate amount of dividends paid for the periods ended 31 December 2013 and 2012 comprises £4,000,000 and £2,671,000, respectively.

All staff are employed by a fellow subsidiary undertaking. Staff costs for the periods ended 31 Dec 2013 and 2012 of £919,000 and £380,000, respectively, were recharged by APL. The totals includes Directors’ emoluments of £175,000 and £142,000 for the periods ended 31 Dec 2013 and 2012, respectively.

Note 9.     Contingencies.

At 31 December 2013 and 2012, the Company did not have any material contingent liabilities.

At 31 December 2012 the Company had capital commitments of £12,214,990 in respect of production for film and television programmes for which no provision has been made.  Production was completed during 2013 and this commitment was paid.

Note 10.  Concentration of Risk.

During the periods ended 31 December 2013 and 2012, the Company recognised publishing revenues of £627,000 (or 18 percent) and £514,000 (or 9 percent), respectively, from one publisher.  The main contract with this publisher expires during June 2020.  As of 31 December 2013 and 2012, deferred revenues of £3,842,000 and £4,307,000, respectively, represent amounts received from this publisher, which will be recognised as revenues ratably over the remaining contract term.  During the periods ended 31 December 2013 and 2012, the Company recognised film and television licensing revenues of £19,251,000 (or 95 percent) and £1,915,000 (or 35 percent), respectively, from one broadcaster.  The license period for significant territories licensed by this broadcaster expires December 2026.  As this broadcaster exploits the licensed content through additional airings (reruns) and through other exploitation of various markets, the Company is contractually entitled to additional licensing fees.  As of 31 December 2013 and 2012, deferred revenues related to this broadcaster were £627,000 and £707,000, respectively, which will be recognised as revenues as broadcaster exploits the licensed content.  For the period ended 31 December 2013, there are no other customers that represent 10 percent or more of the Company’s total revenues.


Note 10.  Concentration of Risk (continued)

As of 31 December 2013 and 2012, two licensees and one licensee, respectively, that account for 10 percent or more of the Company’s billed and unbilled receivables.  These customers account for 80 percent and 62 percent of the unbilled receivables and none of the billed receivables as of 31 December 2013 and 2012, respectively.

Cash and cash equivalents were invested in high credit-quality financial institutions.  Amounts on deposit are generally not insured. The Company has not experienced any losses in such accounts and management believes the Company is not exposed to any significant risk on these accounts.

The Company’s largest licensee of film and television programmes in terms of revenues recognised during 2013 and 2012 has not commission any further Agatha Christie Poirot or Marple stories and has indicated that it is not currently its intention to do so.  The Company has, however, entered into a relationship with a new UK broadcaster and is working on broadening its relationship with other broadcasters, studios and networks around the world.  The new broadcaster has been commissioned for two new television projects, one being a potential franchise and one a mini-series.  The Company continues to develop new content.  It  is currently developing an US series and a feature film.

Note 11.  Subsequent Events.

In January 2014 a dividend was declared and paid of £1,000,000.

The Company evaluated all events or transactions that occurred after 31 December 2013 up through, 18 March 2014, the date the Company issued these financial statements.