Company registration number 13722564 (England and Wales)
DOWNTOWN MUSIC CAPITAL UK LTD
FINANCIAL STATEMENTS
FOR THE PERIOD 03 NOVEMBER 2021 TO 31 DECEMBER 2022
PAGES FOR FILING WITH REGISTRAR
DOWNTOWN MUSIC CAPITAL UK LTD
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 5
DOWNTOWN MUSIC CAPITAL UK LTD
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 1 -
2022
Notes
£
£
Current assets
Debtors
4
3,090,837
Cash at bank and in hand
37,273
3,128,110
Creditors: amounts falling due within one year
5
(3,743,392)
Net current liabilities
(615,282)
Capital and reserves
Called up share capital
6
100
Profit and loss reserves
(615,382)
Total equity
(615,282)
The directors of the company have elected not to include a copy of the profit and loss account within the financial statements.true
These financial statements have been prepared and delivered in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 12 April 2024 and are signed on its behalf by:
Mr A Bergman
Director
Company registration number 13722564 (England and Wales)
DOWNTOWN MUSIC CAPITAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 2 -
1
Accounting policies
Company information
Downtown Music Capital UK Ltd is a private company limited by shares incorporated in England and Wales. The registered office is 7 Bell Yard, London, WC2A 2JR.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
These accounts have been prepared on the going concern basis, the validity of which is dependent upon the continuing financial support of the parent company, Downtown Music Capital LLC, to ensure adequate facilities are available for the company to discharge its liabilities as they fall due. This was the first year of trading for the Company and funding was provided by the parent company which will not seek repayment until such time as the Company is in a financial position to do so. Based on this, the directors believe that it is appropriate to prepare the financial statements on the going concern basis.true
DOWNTOWN MUSIC CAPITAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 3 -
1.3
Turnover
Turnover represents amounts receivable for royalties net of VAT.
The Company has prepared the financial statements in accordance with ASC 606 and all related amendments. In applying ASC 606, the Company has followed a five-step approach for evaluating its contracts with customers for digital distribution and publishing revenues. For each, the Company identified the type of customer contracts, identified its performance obligations under contracts, determined a transaction price, allocated the transaction price over the life of the contracts, and established revenue recognition policies for recognising revenue as its performance obligations are satisfied.
Digital distribution revenues are generated from royalties earned from streaming through third-party digital service providers (“DSP”) platforms. Digital distribution revenues are variable based on actual usage or consumption of the distributed content. Revenue is recognized based on usage reports provided by the DSP that confirm the applicable client’s usage for a given period, and the Company has rendered the agreed upon services with respect to such royalties.
Publishing revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions. The receipt of royalties principally relates to amounts earned from the public performance of musical compositions, the mechanical reproduction of musical compositions on recorded media including digital formats and the use of musical compositions in synchronization with visual images. Publishing royalties, except for synchronization royalties, generally are recognized when the sale or usage occurs. The most common form of consideration for publishing contracts is sales and usage-based royalties. The collecting societies and DSPs submit usage reports, typically with payment for royalties due, often on a quarterly or bi-annual reporting period, in arrears.
Royalty revenues are recognized when it is confirmed the applicable client's sale or usage occurs for a given period, and when the Company has rendered the agreed upon services to the client with respect to such royalties.
Royalty expense represents the portion of royalties collected from DSPs and other channels that are owed to the artists.
1.4
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.5
Financial instruments
The company has only basic financial instruments.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction.
1.6
Foreign exchange
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.
DOWNTOWN MUSIC CAPITAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 4 -
1.7
The company regularly commits to and pays publishing advances to its clients in respect of future anticipated royalties. Unrecouped royalties at the end of the accounting period are included within Debtors on the company’s balance sheet. Publishing advances are recoupable from royalties arising in accordance with the terms specified in individual contracts and licence agreements. Un-recouped publishing advances will be reviewed on a regular basis to assess their recoverability. Where the directors anticipate that royalties from future revenue will be insufficient to fully recoup a publishing advance, provision will be made to write down the carrying value of the advance to its estimated net recoupable amount.
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
3
Employees
The average monthly number of persons (including directors) employed by the company during the Period was:
2022
Number
Total
2
4
Debtors
2022
Amounts falling due within one year:
£
Amounts owed by group undertakings
2,391,894
Other debtors
698,943
3,090,837
5
Creditors: amounts falling due within one year
2022
£
Bank loans
526,919
Amounts owed to group undertakings
3,214,186
Other creditors
2,287
3,743,392
DOWNTOWN MUSIC CAPITAL UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
- 5 -
6
Called up share capital
2022
Ordinary share capital
£
Issued and fully paid
Ordinary shares of £1 each
100
7
Audit report information
As the income statement has been omitted from the filing copy of the financial statements, the following information in relation to the audit report on the statutory financial statements is provided in accordance with s444(5B) of the Companies Act 2006:
The auditor's report was unqualified.
Senior Statutory Auditor:
Shaun Philpott FCA
Statutory Auditor:
Copia Wealth & Tax Limited