Company registration number 07452621 (England and Wales)
DOWNTOWN MUSIC UK LTD
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
PAGES FOR FILING WITH REGISTRAR
DOWNTOWN MUSIC UK LTD
CONTENTS
Page
Balance sheet
1
Notes to the financial statements
2 - 6
DOWNTOWN MUSIC UK LTD
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 1 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
4
7,566
11,816
Current assets
Debtors
5
24,479,870
9,286,556
Cash at bank and in hand
1,423,470
8,966,566
25,903,340
18,253,122
Creditors: amounts falling due within one year
6
(32,351,431)
(22,639,964)
Net current liabilities
(6,448,091)
(4,386,842)
Net liabilities
(6,440,525)
(4,375,026)
Capital and reserves
Called up share capital
8
514
514
Share premium account
894,148
894,148
Profit and loss reserves
(7,335,187)
(5,269,688)
Total equity
(6,440,525)
(4,375,026)
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 23 November 2024 and are signed on its behalf by:
Mr A Bergman
Director
Company registration number 07452621 (England and Wales)
DOWNTOWN MUSIC UK LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
1
Accounting policies
Company information
Downtown Music 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
The financial statements have been prepared on a going concern basis. Downtown Music Publishing LLC have confirmed they won’t be recalling their loan for the foreseeable future and will continue to provide ongoing support both financial and other, in order for the company to continue trading. Having regard to this intention, the director believes it is appropriate to prepare these financial statements on a going concern basis.true
1.3
Turnover
Turnover represents amounts derived from mechanicals, synchronisations and performances, 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.
DOWNTOWN MUSIC UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 3 -
1.4
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Copyrights
Over 15 years - straight line
1.5
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Fixtures, fittings & equipment
25% straight line
Computer equipment
25% straight line
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.6
Cash
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.
1.7
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.
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans and loans from fellow group are initially recognised at transaction price unless the arrangement constitutes a financing transaction.
1.8
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
DOWNTOWN MUSIC UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 4 -
1.9
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.10
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.11
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.
1.12
The acquisition costs of audio and visual copyrights and catalogues which are owned in perpetuity are capitalised as intangible fixed assets and amortised by equal instalments over their estimated useful economic life, not exceeding 15 years.
When, in the view of the directors, the revenue profile profile of an acquisition is not spread evenly over the asset's life the amortisation may be increased accordingly in the first few years to match the revenue recognised.
Revenue forecasts are prepared and reviewed annually in order to assess the carrying value of intangible fixed assets. Provisions are made where the review indicates that the carrying value may not be recoverable from future revenues.
1.13
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
Employees
The average monthly number of persons (including directors) employed by the company during the year was 18 (2021 - 18).
2022
2021
Number
Number
Total
18
18
DOWNTOWN MUSIC UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 5 -
3
Intangible fixed assets
Other
£
Cost
At 1 January 2022 and 31 December 2022
294,639
Amortisation and impairment
At 1 January 2022 and 31 December 2022
294,639
Carrying amount
At 31 December 2022
At 31 December 2021
4
Tangible fixed assets
Plant and machinery etc
£
Cost
At 1 January 2022
140,539
Additions
2,570
At 31 December 2022
143,109
Depreciation and impairment
At 1 January 2022
128,723
Depreciation charged in the year
6,820
At 31 December 2022
135,543
Carrying amount
At 31 December 2022
7,566
At 31 December 2021
11,816
5
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
2,867
Amounts owed by group undertakings
19,573,988
7,232,791
Other debtors
4,905,882
2,050,898
24,479,870
9,286,556
DOWNTOWN MUSIC UK LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 6 -
6
Creditors: amounts falling due within one year
2022
2021
£
£
Trade creditors
38,917
Amounts owed to group undertakings
28,125,795
15,449,234
Taxation and social security
10,766
1,446,385
Other creditors
4,175,953
5,744,345
32,351,431
22,639,964
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 FCCA
Statutory Auditor:
TAG Assurance Services Ltd
8
Called up share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
ordinary shares of 0.1p each
462,878
462,878
463
463
ordinary B shares of 0.1p each
51,431
51,431
51
51
514,309
514,309
514
514
9
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, as follows:
2022
2021
£
£
30,000