Registered number: 03625243
PIAS RECORDINGS UK LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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PIAS RECORDINGS UK LIMITED
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COMPANY INFORMATION
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CLA Evelyn Partners Limited
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Chartered Accountants & Statutory Auditor
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4th Floor Cumberland House
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PIAS RECORDINGS UK LIMITED
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CONTENTS
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Directors' Responsibilities Statement
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Independent Auditor's Report
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Statement of Comprehensive Income
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Statement of Changes in Equity
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Notes to the Financial Statements
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PIAS RECORDINGS UK LIMITED
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STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their Strategic Report for PIAS Recordings UK Limited for the year ended 31 December 2023.
The principal activity of the Company during the year was that of a record label engaged in the production and exploitation of sound recordings.
Total turnover increased by 89% to £45.4m (2022 - £24.0m). The growth was driven by new artist signings and the repertoire licensed from Universal Music as part of the strategic alliance. Within this, digital revenues grew significantly (up 143% on 2022).
Rest of the World revenues, particularly in the US, grew strongly and now represent 38% of sales. UK revenues remain strong and accounted for 28% of total revenues and revenues from Europe remain a significant part of the Company’s turnover accounting for 34% of total revenues.
The Company’s Operating Result was a profit of £0.7 million compared to a loss of £0.4 million in 2022.
The Company is facing continuing challenges with regards to its physical sales with the rise of costs impacting on the overall costs of warehousing & distribution together with manufacturing costs remaining high.
Principal risks and uncertainties
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The Company continues to seek and sign new artists and retain its existing artist roster, The Company’s performance is dependent on the success of its new signings and the continued growth of our large catalogue. Overall, the Company’s turnover will be affected by the decline in physical sales and the growth in digital streaming revenues. As an international business, we will benefit from the ongoing growth of streaming in Europe and, in particular, in other emerging markets.
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PIAS RECORDINGS UK LIMITED
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
Financial key performance indicators
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The Company uses a number of performance indicators to monitor and manage the business effectively. The Company’s financial and non-financial key performance indicators for the year ended 31 December 2023, together with comparatives for the year ended 31 December 2022, are set out below:
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Total Operating profit/(loss) before exceptional and foreign exchange gains or losses
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Average number of employees
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This report was approved by the board and signed on its behalf by.
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PIAS RECORDINGS UK LIMITED
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DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors present their report and the financial statements for the year ended 31 December 2023.
The profit for the year, after taxation, amounted to £1,137,407 (2022 - loss £883,973).
No dividends were paid or proposed in the current or prior years.
The directors who served during the year were:
Financial risk management
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The Company's operations expose it to a variety of financial risks that include the effects of changes in price, risk, liquidity risk and interest rate risk.
Price risk
The Company is exposed to price risk due to normal inflationary increases in the purchase price of goods and services. The Company has no exposure to equity securities price risk as it holds no listed or other equity investments.
Liquidity risk
Liquidity risk is managed through forecasting the Company's future cash flow requirements and maintaining sufficient cash reserves at group level.
Interest rate risk
The Company has both interest bearing assets and interest-bearing liabilities. Interest-bearing assets include only cash balances which earn interest at variable rates.
The Company will continue with the same business activities going forwards, whilst looking for new artists to add to the existing portfolio.
Disclosure of information to auditor
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Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the director is aware, there is no relevant audit information of which the Company's auditor is unaware, and
∙the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditor is aware of that information.
The auditor, CLA Evelyn Partners Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
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PIAS RECORDINGS UK LIMITED
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DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
This report was approved by the board and signed on its behalf.
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PIAS RECORDINGS UK LIMITED
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DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
The directors are responsible for preparing the Strategic Report, the Directors' Report and the 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 of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PIAS RECORDINGS UK LIMITED
Opinion
We have audited the financial statements of PIAS Recordings UK Limited (the 'Company') for the year ended 31 December 2023 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity and the notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙give a true and fair view of the state of the Company's affairs as at 31 December 2023 and of its profit for the year 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.
Basis for opinion
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 Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’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.
Conclusions relating to going concern
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 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.
Emphasis of matter – reliance on parent company support
We draw attention to note 2.2 of the financial statements, which describes the Company’s reliance on its arrangements with the ultimate parent company to provide financial support. Our opinion is not modified in respect of this matter.
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PIAS RECORDINGS UK LIMITED
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PIAS RECORDINGS UK LIMITED
Other information
The other information comprises the information included in the Annual Report and financial statements, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the Annual Report and financial statements. 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.
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Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the 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 Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
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Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
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We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors’ remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
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PIAS RECORDINGS UK LIMITED
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PIAS RECORDINGS UK LIMITED
Auditor’s responsibilities for the audit of the financial statements
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 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:
We obtained a general understanding of the Company's legal and regulatory framework through enquiry of management concerning their understanding of relevant laws and regulations, the entity's policies and procedures regarding compliance, and how they identify, evaluate and account for litigation claims. We also drew on our existing understanding of the Company's industry and regulation.
We understand that the Company complies with the framework through:
∙Outsourcing payroll, accounts preparation and tax compliance to external experts.
∙Subscribing to relevant updates from external experts, and making changes to internal procedures and controls as necessary.
∙The directors being closely involved in the day to day running of the business, meaning that any litigation or claims would come to their attention directly.
∙Maintaining in-house legal expertise to manage any contractual matters.
In the context of the audit, we considered those laws and regulations which determine the form and content of the financial statements, which are central to the Company's ability to conduct its business, and/or where there is a risk that failure to comply could result in material penalties. We identified the following laws and regulations as being of significant in the context of the Company:
∙The Companies Act 2006 and FRS102 in respect of the preparation and presentation of the financial statements.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility of the entity’s financial statements to material misstatement, including how fraud might occur.
The areas identified in this discussion were:
∙Manipulation of the financial statements, especially revenue, via fraudulent journal entries
∙The accounting treatment of gifted assets and managements estimate for the Useful Economic Life of the assets transferred.
These areas were communicated to the other members of the engagement team not present at the discussion.
The procedures we carried out to gain evidence in the above areas included:
∙Challenging management regarding the assumptions used in the estimates made.
∙Substantive work on material areas affecting profits.
∙Testing journals entries, focusing on postings to unexpected or unusual accounts.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
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PIAS RECORDINGS UK LIMITED
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF PIAS RECORDINGS UK LIMITED
Use of our 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.
Andrew Edmonds (Senior Statutory Auditor)
for and on behalf of
CLA Evelyn Partners Limited
Chartered Accountants
Statutory Auditor
4th Floor Cumberland House
15-17 Cumberland Place
Southampton
Hampshire
SO15 2BG
26 February 2025
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PIAS RECORDINGS UK LIMITED
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STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
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Foreign exchange (loss)/gain
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Income from fixed assets investments
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Interest receivable and similar income
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Interest payable and expenses
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Profit/(loss) for the financial year
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The notes on pages 13 to 28 form part of these financial statements.
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PIAS RECORDINGS UK LIMITED
REGISTERED NUMBER:03625243
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BALANCE SHEET
AS AT 31 DECEMBER 2023
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Provisions for liabilities
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Shareholders' funds/ (deficit)
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 13 to 28 form part of these financial statements.
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PIAS RECORDINGS UK LIMITED
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
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Capital contribution reserve
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Comprehensive income for the year
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Comprehensive income for the year
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Capital contribution (note 19)
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Release of capital contribution
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PIAS Recordings UK Limited is a private company, limited by shares, domiciled and incorporated in England and Wales (registered number: 03625243). The registered office address is 1 Bevington Path, London, SE1 3PW.
2.Accounting policies
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Basis of preparation of financial statements
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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 management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company made a profit after tax for the period of £1,137,407 (2022 - loss £883,973) and had net current liabilities of £1,512,433 (2022 - £4,590,915) at 31 December 2023.
The directors have made an assessment in preparing these financial statements as to whether the Company remains a going concern. In their assessment, the directors have considered the facilities available from the group’s bankers, post year end performance and the impact the global economic environment has had and is likely to have on the business. In addition, the group’s ultimate parent has confirmed its intention to continue to provide financial support for at least twelve months to the UK group, specifically that they will not require reimbursement of outstanding intercompany balances if this would cause financial hardship for the UK group.
On the basis of the above, the directors have produced formal cash flow forecasts for the UK group to the end of 2023 and considered the cash flows required during 2024, which demonstrate that there are sufficient cash resources available to the Company to ensure they can meet their financial obligations as they fall due for the foreseeable future, this being the period covering at least twelve months from the date of approval of these financial statements. For these reasons, they continue to adopt the going concern basis of accounting in preparing the financial statements.
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit or loss within 'finance income or costs'. All other foreign exchange gains and losses are presented in the profit or loss within 'administrative expenses'.
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the Company and the turnover can be reliably measured. Turnover is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before turnover is recognised:
Sale of goods
Turnover from the sale of goods is recognised when all of the following conditions are satisfied:
∙the Company has transferred the significant risks and rewards of ownership to the buyer;
∙the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
∙the amount of turnover can be measured reliably;
∙it is probable that the Company will receive the consideration due under the transaction; and
∙the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Rendering of services
Turnover from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of turnover can be measured reliably;
∙it is probable that the Company will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Recoupable advances are capitalised when paid and are valued at face value less a provision for the risk of non-recoverability. Even if the advance is refundable, the risk that the advance will not be refunded is assessed and adequate provision made. The provision on Artists' advances is calculated by deducting current year earnings are extrapolated for the next 10 years (or less if term expires sooner) from the closing net book value. Any residual value is fully provided unless there is a valid business reason not to do this e.g. material future revenues are expected on current artists based on the release of a forthcoming album or where the album has only just been released and future earnings are expected to cover the closing net book value (especially in profit share deals where the upfront costs impact the initial recoupment level).
Royalties payable are recognised in the same period as the income to which they relate.
Record catalogue
The record catalogue is initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. The record catalogue is amortised on a straight-line basis to the profit or loss over its useful economic life.
The estimated useful lives range as follows:
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Impairment of fixed assets and goodwill
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Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value and are shown net of provisions for slow moving and obsolete stocks. Costs include materials, costs of assembly, freight and duty costs. Net realisable value is based on estimated selling price less further costs expected to be incurred to completion or disposal.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
Where stock risk is borne (across all group companies), the obsolescence reserve policy for each stock item is based on raising a provision for the difference between the closing stock value and the value of stock sold within the previous 12 months. The level of reserve may be adjusted where items are prestocked prior to release or where there is insufficient sales history (less than 12 months) for recently released products.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Balance Sheet. The assets of the plan are held separately from the Company in independently administered funds.
Financial assets and financial liabilities are recognised in the Balance Sheet when the Company becomes a party to the contractual provisions of the instrument.
Trade and other debtors and creditors are classified as basic financial instruments and measured at the initial recognition at transaction price. Debtors and creditors are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Company will not be able to collect all amounts due.
Cash and cash equivalents are classified as basic financial instruments and comprise cash in hand and at bank, short term bank deposits with original maturity of three months or less and bank overdrafts which are an integral part of the Company's cash management.
Financial liabilities and equity instruments issued by the Company are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Interest bearing bank loans, overdrafts and other loans which meet the criteria to be classified as basic financial instruments are initially recorded at the present value of cash payable to the bank, which is ordinarily equal to the proceeds received net of direct issue costs. These liabilities are
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
2.Accounting policies (continued)
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Financial instruments (continued)
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subsequently measured at amortised cost, using the effective interest rate method.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
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.
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Judgements in applying accounting policies and key sources of estimation uncertainty
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Estimates and judgements are evaluated at each reporting date and are based on historical experience as adjusted for current market conditions and other factors. Management makes estimates and assumptions concerning the future in preparing the financial statements and the actual results will not always reflect the accounting estimates made. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities of the Company are outlined below.
Bad debt provision
The trade debtors balance recorded in the Company's Balance Sheet is reviewed for bad debts by management on a regular basis. Any bad debts discovered are provided for via a specific provision. Whilst every attempt is made to ensure that the bad debt provisions are as accurate as possible, there remains a risk that the provisions do not match the level of debts which ultimately prove to be uncollectable. The total provision is £52,511 (2022 - £223,914).
Group balances
Directors make an assessment at each period end as to the recoverability of intercompany debts. This judgement is made based upon objective evidence as to whether the debtor is able to repay the debt. This year the provision in relation to intercompany debtors is £456,441 (2022 - £456,441).
Stock provision
The stock balance recorded in the Company's Balance Sheet is reviewed for any slow moving or obsolete items by management on a regular basis. To identify these items, management consider sales levels for the prior year and the likelihood and dates of any future releases by this artist. Whilst every effort is made to ensure this provision is as accurate as possible, there remains a risk that the provision does not include all stock which is obsolete. This year the total stock provision is £2,180,115 (2022 - £1,889,527).
Intangible fixed assets
Intangible fixed assets consist of Goodwill and Record Catalogues. Key estimate and judgements are applied in establishing the useful lives of intangible assets, especially on behalf of the Record Catalogues. It was concluded that Record Catalogues have a useful life of 20 years, based upon previous experience and market level data.
Analysis of turnover by country of destination:
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements
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The Company has taken advantage of the exemption not to disclose amounts paid for non-audit services as these are disclosed in the group accounts of the ultimate parent company.
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Staff costs were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees, including the directors, during the year was as follows:
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All staff costs are recognised and paid through PIAS UK Limited. The expenses are then recharged to the applicable entity.
The directors are remunerated through other group entities.
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Impairment of investment (note 13)
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Intercompany interest receivable
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Interest payable and similar expenses
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Loans from group undertakings
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Current tax on profits for the year
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Adjustments in respect of previous periods
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Foreign tax on income for the year
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Foreign tax in respect of prior periods
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Origination and reversal of timing differences
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Taxation on profit on ordinary activities
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
10.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is higher than (2022 - higher than) the standard rate of corporation tax in the UK of 23.5% (2022 -19%). The differences are explained below:
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Profit/(loss) on ordinary activities before tax
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Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 23.5% (2022 - 19%)
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Expenses not deductible for tax purposes
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Income not taxable for tax purposes
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Other permenant differences
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Other tax adjustments, reliefs and transfers
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Adjustments to tax charge in respect of previous periods
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Remeasurement of deferred tax for changes in tax rate
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Movement in deferred tax not recognised
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Total tax charge for the year
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
10.Taxation (continued)
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Factors that may affect future tax charges
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Tax losses carried forward at 31 December 2023 are approximately £2,154,000 (2022 - £4,597,000).
Finance Act 2021 includes legislation to increase the main rate of corporation tax from 19% to 25% from 1 April 2023. The effects of these changes is reflected in the above deferred tax balances.
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Foreign exchange (gain)/loss
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Investments in subsidiary companies
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Impairment arising from group reconstruction
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Goodwill recognised on hive
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Finished goods and goods for resale
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The difference between purchase price or production cost of stocks and their replacement cost is not material.
Inventories are stated after provision for impairment of £2,180,115 (2022 - £1,889,527).
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Amounts owed by group undertakings
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Prepayments and accrued income
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Accruals and deferred income
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Amounts owed to group undertakings are unsecured and incur interest at a market rate subject to an agreement which allows balances owed within national jurisdictions to be offset. The group balances have no fixed date of repayment and are repayable on demand.
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
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Credited to profit or loss
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Recognised against capital contribution for gifted assets (note 19)
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The deferred taxation balance is made up as follows:
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Fixed asset timing differences
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Short term timing differences
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Losses and other deductions
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Authorised, allotted, called up and fully paid
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143 Ordinary shares of £1.00 each
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The ordinary shares have attached to them full voting, dividend and capital distribution rights.
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Retained earnings
This reserve relates to the cumulative retained earnings less amounts distributed to shareholders.
Capital contribution reserve
The capital contribution reserve relates to the gift of assets received from a company with significant influence during the year. The assets transferred are presented as intangible assets (note 12) and are presented as a capital contribution net of the deferred tax liability also recognised on the assets transferred.
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PIAS Recordings UK Limited has entered into a composite guarantee with PIAS Digital Limited, PIAS UK Limited, PIAS Cooperative Limited and PIAS Holding (UK) Limited with Universal International Music B.V. which contains a fixed and floating charge over all property or undertaking of the companies.
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £40,368 (2022 - £44,684). No contributions (2022 - £Nil) were due to the fund at the balance sheet date.
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Related party transactions
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The Company has taken advantage of the exemption in FRS 102 Section 33.1A to not disclose transactions with wholly owned group entities.
Group companies that do not fall under the exemption that have balances owed from / (owed to) other members of the group are as follows;
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Fellow UK group companies
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Commonly controlled companies
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Fellow UK group companies
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Commonly controlled companies
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During the year, the Company received management fee income of £Nil (2022 - £103,141) from Mike Recordings UK Limited, a company under common control of the directors. At the year end, the balance owed to the Company from Mike Recordings UK Limited was £Nil (2022 - £781,672).
During the year the company received a transfer of assets from a company with significant influence over the group for a value of £78,207,202. No consideration was paid for the transferred assets, the assets have been recognised as intangible assets (note 12) and a capital contribution (note 19).
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PIAS RECORDINGS UK LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
The immediate parent undertaking is PIAS Holdings (UK) Limited, a company registered in England and Wales.
During the year, the ultimate parent undertaking was Gala Holding SRL, a company registered in Belgium. Copies of the group financial statements are available from Rue St Laurent 36-38, 1000 Bruxelles, Belgium.
During the year, the directors did not consider there to be an ultimate controlling party. Since the year end the Group have become a fully owned subsidiary of Universal Music Group.
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