Company registration number 02807811 (England and Wales)
PROPER MUSIC DISTRIBUTION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
PROPER MUSIC DISTRIBUTION LIMITED
COMPANY INFORMATION
Director
Mr A S Hill
Company number
02807811
Registered office
1-5 Applegarth Drive
Questor
Dartford
Kent
DA1 1JD
Auditor
Sumer Audit
5 Peveril Court
6-8 London Road
Crawley
West Sussex
RH10 8JE
Business address
1-5 Applegarth Drive
Questor
Dartford
Kent
DA1 1JD
PROPER MUSIC DISTRIBUTION LIMITED
CONTENTS
Page
Strategic report
1 - 2
Director's report
3
Director's responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 24
PROPER MUSIC DISTRIBUTION LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 1 -
The director presents the strategic report for the year ended 31 December 2023.
Fair review of the business
Results and performance:
The board is pleased with record revenue of £45.8m in the year compared with £30.1m for the 9 month period to December 2022 and £42.0m for the year to March 2022.
A programme of service fee increases helped reduce 2023 losses to £(1.2m) from £(1.7m) in the 9 month period to December 2022, as forecast, and the group’s new parent has committed to providing such financial support as may be necessary.
A continued cost reduction and efficiency program will return the company towards profitability during 2024.
Principal risks and uncertainties
Market risk
Whilst the overall recorded music market continues to grow, the shift towards digital music consumption away from physical formats continues. This risk is minimised by expanding our service offering and client base.
Treasury operations and financial instruments
The group’s parent operates a centralised treasury function which is responsible for managing the liquidity, interest and foreign currency risks associated with the group's activities.
The group's principal financial instruments include financial assets and liabilities such as trade debtors, trade creditors and finance leases arising directly from its operations.
Liquidity risk
The group’s parent manages the group’s cash and borrowing requirements centrally in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Interest rate risk
The group’s exposure to interest rate risk has been minimised through replacement of a bank overdraft facility with parent funding of the group’s operating cashflow requirements.
Foreign currency risk
The group's principal foreign currency exposures arise from trading with overseas companies and branches. The group's policy permits but does not demand that these exposures may be hedged in order to fix the costs in sterling.
Credit risk
Trade debtors are monitored on an ongoing basis with credit insurance maintained and provision made for doubtful debts where necessary.
Technology risk
The group is subject to risks relating to its ability to implement and maintain effective systems to process a high volume of transactions with customers. A failure to manage technology infrastructure and systems would adversely affect company performance. The group’s disaster recovery and business continuity plans both help to mitigate technology risks.
PROPER MUSIC DISTRIBUTION LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 2 -
Key performance indicators
The board monitors progress across a range of financial targets. The main key performance indicators are Turnover, EBITDA and Net Profit after tax.
12 months to 9 months to
31 December 31 December
2023 2022
Turnover £45,796,265 £30,064,564
EBITDA £(515,899) £(1,365,302)
Net loss after tax £(1,233,443) £(1,732,093)
Apart from those measures identified above and in the business review, the directors are of the opinion that no further inclusion of financial and non-financial key performance indicators is necessary for an understanding of the development, performance or position of the company’s business.
Future developments
In the period following the balance sheet date, the company’s then ultimate parent company, Utopia Music AG (Switzerland), experienced financial difficulties and was ultimately put into a provisional bankruptcy in September 2024. This has been a challenging period for Proper Music Distribution Limited and the management wishes to express its gratitude for the passion and dedication of its staff, as well as the continued support of both its suppliers and customers, that enabled the business to maintain its position as an integral part of the UK and global physical music supply chain. The director is delighted to confirm that following a competitive process, which saw multiple interested parties, the assets of Proper Music Group Limited, including 100% of the shares of Proper Music Distribution Limited, were sold to the Artone Group on the 28th of February 2025. As part of the sale process all previous intercompany balances with the former parent have been cleared and there no longer exists any affiliation between any of the Proper Music trading companies and Utopia Music AG (Switzerland) or any associated companies. The director and the management team of Proper Music Distribution Limited are very pleased with the outcome of the sale and look forward to working with Artone, and its other subsidiaries, on the exciting opportunities ahead.
Whilst 2023 trading showed a significant improvement on 2022, 2024 has been relatively static by comparison. The operating premises, in house IT systems and infrastructure continue to enable us to accept new business while remaining flexible enough to diversify into other entertainment industry related services and products in the future. A new multi-year lease extension on the Dartford warehouse will enable the business to continue to operate from its existing facilities for the foreseeable future and, as part of the extension, the company will receive a significant cash payment.
Proper Music Distribution Limited, continues to have numerous opportunities for sustained expansion as the overall entertainment distribution market in the UK and Worldwide continues to consolidate. The Direct to Consumer business model is now a key part of the company’s growth plans, along with the Drop Shipping model for key customers serving consumers online.
Digital revenues continue to grow for the industry at large as well as for Proper Music Disitribution Limited, but physical products and associated services remain the core income streams for the foreseeable future. The director continues to be optimistic about prospects for the medium to long term, especially with new ownership in place.
Mr A S Hill
Director
1 April 2025
PROPER MUSIC DISTRIBUTION LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 3 -
The director presents his annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activities of the company encompassed providing a range of sales, marketing and distribution services for CD, digital, vinyl and DVD products, tailored according to individual terms and service levels agreed with record label clients and retail partners. Incorporating UK physical distribution, a worldwide digital service, a label services division and a comprehensive international network, Proper Music Distribution Limited delivers all music formats to the widest possible market.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Mr A S Hill
Mr B L A Vidal
(Appointed 30 March 2023 and resigned 19 April 2023)
Auditor
The auditor, Sumer Audit, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Strategic report
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of financial instruments and the associated risks.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Medium-sized companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.
On behalf of the board
Mr A S Hill
Director
1 April 2025
PROPER MUSIC DISTRIBUTION LIMITED
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2023
- 4 -
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is 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 director is required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is 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 enable them to ensure that the financial statements comply with the Companies Act 2006. He is 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.
PROPER MUSIC DISTRIBUTION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PROPER MUSIC DISTRIBUTION LIMITED
- 5 -
Opinion
We have audited the financial statements of Proper Music Distribution Limited (the 'company') for the year ended 31 December 2023 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity, the statement of cash flows and 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 Financial Reporting Standard 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 loss 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.
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.
We draw attention to note 1.2 which explains that the company relies on, and will continue to rely on, financial support from the group to continue to operate. The directors have been assured that any additional future funding needs of the company will be provided should it be required. Our audit opinion is not modified in respect of this matter.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's 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 director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The director is responsible for the other information contained within the annual report. 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.
PROPER MUSIC DISTRIBUTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PROPER MUSIC DISTRIBUTION LIMITED
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
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 director's report.
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 remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of director
As explained more fully in the director's responsibilities statement, the director is 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 director determines 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 director is 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 director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
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.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:
Obtaining an understanding of the legal and regulatory framework that the company operates in, focusing on those laws and regulations that had a direct effect on the financial statements and operations;
Obtaining an understanding of the company’s policies and procedures on fraud risks, including knowledge of any actual, suspected or alleged fraud; and
Discussing among the engagement team how and where fraud might occur in the financial statements and any potential indicators of fraud through our knowledge and understanding of the company and our sector-specific experience.
As a result of these procedures, we considered the opportunities and incentives that may exist within the company for fraud. We are also required to perform specific procedures to respond to the risk of management override. As a result of performing the above, we identified the following areas as those most likely to have an impact on the financial statements: health & safety, employment law and compliance with the UK Companies Act.
PROPER MUSIC DISTRIBUTION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PROPER MUSIC DISTRIBUTION LIMITED
- 7 -
In addition to the above, our procedures to respond to risks identified included the following:
Making enquiries of management about any known or suspected instances of non-compliance with laws and regulations and fraud;
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to stock valuations; and
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness.
Due to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's 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.
Tony Summers BA FCA (Senior Statutory Auditor)
For and on behalf of Sumer Audit
1 April 2025
Chartered Accountants
Statutory Auditor
Crawley
Sumer Audit is the trading name of Sumer Auditco Limited
PROPER MUSIC DISTRIBUTION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
- 8 -
Year
Period
ended
ended
31 December
31 December
2023
2022
Notes
£
£
Revenue
3
45,796,265
30,064,564
Cost of sales
(41,313,688)
(28,064,296)
Gross profit
4,482,577
2,000,268
Administrative expenses
(5,866,939)
(3,918,564)
Other operating income
284,148
193,500
Operating loss
4
(1,100,214)
(1,724,796)
Investment income
331
Finance costs
7
(116,029)
(5,758)
Loss before taxation
(1,216,243)
(1,730,223)
Tax on loss
8
(17,200)
(1,870)
Loss for the financial year
(1,233,443)
(1,732,093)
The income statement has been prepared on the basis that all operations are continuing operations.
PROPER MUSIC DISTRIBUTION LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2023
31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Non-current assets
Intangible assets
9
860,732
638,410
Property, plant and equipment
10
981,357
1,139,676
Investments
11
2
2
1,842,091
1,778,088
Current assets
Inventories
13
1,020,310
993,131
Trade and other receivables
14
10,857,632
8,939,834
Cash and cash equivalents
2,968,326
1,810,496
14,846,268
11,743,461
Current liabilities
15
(17,255,562)
(12,924,474)
Net current liabilities
(2,409,294)
(1,181,013)
Total assets less current liabilities
(567,203)
597,075
Non-current liabilities
16
(53,889)
(1,924)
Provisions for liabilities
Deferred tax liability
18
62,400
45,200
(62,400)
(45,200)
Net (liabilities)/assets
(683,492)
549,951
Equity
Called up share capital
20
1,140
1,140
Retained earnings
(684,632)
548,811
Total equity
(683,492)
549,951
These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.
The financial statements were approved by the board of directors and authorised for issue on 1 April 2025 and are signed on its behalf by:
Mr A S Hill
Director
Company registration number 02807811 (England and Wales)
PROPER MUSIC DISTRIBUTION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
- 10 -
Share capital
Retained earnings
Total
£
£
£
Balance at 1 April 2022
1,140
296,990
298,130
Period ended 31 December 2022:
Loss and total comprehensive income
-
(1,732,093)
(1,732,093)
Capital contribution from Utopia Music AG
-
1,983,914
1,983,914
Balance at 31 December 2022
1,140
548,811
549,951
Year ended 31 December 2023:
Loss and total comprehensive income
-
(1,233,443)
(1,233,443)
Balance at 31 December 2023
1,140
(684,632)
(683,492)
PROPER MUSIC DISTRIBUTION LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from/(absorbed by) operations
25
1,857,788
(572,616)
Interest paid
(116,029)
(5,758)
Income taxes refunded
78,534
Net cash inflow/(outflow) from operating activities
1,741,759
(499,840)
Investing activities
Purchase of intangible assets
(530,791)
(352,732)
Purchase of property, plant and equipment
(32,439)
(109,495)
Interest received
331
Net cash used in investing activities
(563,230)
(461,896)
Financing activities
Capital contribution
1,983,914
Payment of finance leases obligations
(20,699)
(102,953)
Net cash (used in)/generated from financing activities
(20,699)
1,880,961
Net increase in cash and cash equivalents
1,157,830
919,225
Cash and cash equivalents at beginning of year
1,810,496
891,271
Cash and cash equivalents at end of year
2,968,326
1,810,496
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
- 12 -
1
Accounting policies
Company information
Proper Music Distribution Limited is a private company limited by shares incorporated in England and Wales. The registered office is 1-5 Applegarth Drive, Questor, Dartford, Kent, DA1 1JD.
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.
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 £1.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
The company has taken advantage of the exemption under section 405 of the Companies Act 2006 not to prepare consolidated accounts on the grounds of immateriality as both its subsidiaries were dormant in the current and previous year, and therefore their inclusion (individually or collectively) is not material for the purposes of giving a true and fair view. The financial statements present information about the company as an individual entity and not about its group.
1.2
Going concern
The financial statements have been prepared on a going concern basis. The directors have considered relevant information, including cash flows and forecasts, the available resources available, and the impact of any subsequent events in making their assessment.
The company continues to rely on financial support from its ultimate parent company. The directors have been assured that any additional funding needs of the company will be provided by its ultimate parent company should it be required to ensure the business remains a going concern for a period of at least 12 months from the date of approval of the financial statements. Based on these assessments and having regard to the resources available to the company, the directors have concluded it is appropriate to continue to adopt the going concern basis in preparing the financial statements.
1.3
Reporting period
The period end date in the prior year was changed to 31 December 2022 to bring it in line with the ultimate parent company. Therefore the previous period was 9 months and may not be directly comparable with the current year.
1.4
Revenue
Revenue is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Digital downloads
Revenue from digital downloads is recognised when a download has been made. Digital sales data is reported to the company by its digital aggregator several months in arrears. The company's policy is to accrue for the amounts notified to it in the two months following the year end as substantially all of this income relates to the preceding financial year.
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 13 -
1.5
Research and development expenditure
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated.
1.6
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.
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:
Computer software
25% straight line
1.7
Property, plant and equipment
Property, plant and equipment 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:
Leasehold land and buildings
15 years straight line (over the lease term)
Leasehold improvements
15 years straight line (over the lease term)
Plant and machinery
15% and 25% straight line
Fixtures and fittings
15% and 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.
1.8
Non-current investments
Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.9
Impairment of non-current assets
At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
1.10
Inventories
Inventories are stated at the lower of cost and estimated selling price less costs to complete and sell.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of inventories over its estimated selling price less costs to sell is recognised as an impairment loss in profit or loss.
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 14 -
1.11
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks.
1.12
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Basic financial assets
Basic financial assets, which include trade and other receivables and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Basic financial liabilities
Basic financial liabilities, including trade and other payables and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
1.13
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.14
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year.
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
1
Accounting policies
(Continued)
- 15 -
1.15
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 non-current 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.
1.16
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.17
Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.18
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.
1.19
Royalties payable / recoupable expenditure
Royalty income is included on a receivable and/or due basis calculated on sales of records arising during each accounting period as reported by licensees. Royalties payable are expensed on an accruals basis. Royalty advances payable and recoupable payments are expensed on a paid basis except that they are carried forward and recognised as an asset where such expenditure relates to current unreleased products and where it is estimated that sufficient future royalties / earnings will be recouped against these products.
Advances received in respect of the licence royalties are carried forward and recognised as income as sales are earned over the life of the licence.
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 16 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the director is 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.
Critical judgements
Inventory valuation
Inventories are valued at the lower of cost and estimated selling price less costs to complete and sell. Lower of cost and estimated selling price less costs to complete and sell includes, where necessary, provisions for slow moving and obsolete stock. Calculation of these provisions requires judgements to be made, which include forecast consumer demand, and economic environment.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows:
Digital downloads
As detailed more in Note 1.4 to the accounts, the company's policy is to accrue for the amounts notified to it in the two months following the year end as substantially all of this income relates to the preceding financial year.
3
Revenue
2023
2022
£
£
Revenue analysed by class of business
Sale of goods
43,589,636
28,585,193
Downloads and streaming
2,206,629
1,479,371
45,796,265
30,064,564
2023
2022
£
£
Revenue analysed by geographical market
United Kingdom
38,211,827
24,393,071
Europe
5,329,937
3,885,025
North America
764,145
839,799
Other
1,490,356
946,669
45,796,265
30,064,564
2023
2022
£
£
Other revenue
Interest income
-
331
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 17 -
4
Operating loss
2023
2022
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
27,989
(1,127)
Fees payable to the company's auditor for the audit of the company's financial statements
39,925
Depreciation of owned property, plant and equipment
259,845
193,024
Depreciation of property, plant and equipment held under finance leases
16,001
6,192
Amortisation of intangible assets
308,469
160,279
Operating lease charges
683,769
549,521
The company's audit fee for the comparative year was borne by the former parent company, Proper Music Group Limited, and details of auditor remuneration are disclosed within the consolidated financial statements for the prior year.
5
Employees
The average monthly number of persons (excluding directors) employed by the company during the year was:
2023
2022
Number
Number
Sales and administration
69
72
Warehouse
73
58
Total
142
130
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
4,892,907
3,299,779
Social security costs
537,618
294,586
Pension costs
9,847
64,007
5,440,372
3,658,372
6
Director's remuneration
2023
2022
£
£
Remuneration for qualifying services
194,500
126,105
Company pension contributions to defined contribution schemes
1,316
987
195,816
127,092
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
6
Director's remuneration
(Continued)
- 18 -
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 1 (2022 - 1).
7
Finance costs
2023
2022
£
£
Interest on bank overdrafts and loans
111,264
1,378
Interest on finance leases and hire purchase contracts
4,765
4,380
116,029
5,758
8
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
1,870
Deferred tax
Origination and reversal of timing differences
17,200
Total tax charge
17,200
1,870
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Loss before taxation
(1,216,243)
(1,730,223)
Expected tax credit based on the standard rate of corporation tax in the UK of 23.52% (2022: 19.00%)
(286,060)
(328,742)
Tax effect of expenses that are not deductible in determining taxable profit
74,586
Change in unrecognised deferred tax assets
184,347
398,000
Adjustments in respect of prior years
1,870
Depreciation on assets not qualifying for tax allowances
43,309
26,267
Difference between current and deferred tax rates
1,018
(95,525)
Taxation charge for the year
17,200
1,870
As at 31 December 2023 the company had £3,521,425 (2022: £2,751,675) of unutilised tax losses.
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 19 -
9
Intangible fixed assets
Computer software
£
Cost
At 1 January 2023
1,497,272
Additions
530,791
At 31 December 2023
2,028,063
Amortisation and impairment
At 1 January 2023
858,862
Amortisation charged for the year
308,469
At 31 December 2023
1,167,331
Carrying amount
At 31 December 2023
860,732
At 31 December 2022
638,410
10
Property, plant and equipment
Leasehold land and buildings
Leasehold improvements
Plant and machinery
Fixtures and fittings
Total
£
£
£
£
£
Cost
At 1 January 2023
102,481
50,617
1,949,397
597,759
2,700,254
Additions
117,527
117,527
At 31 December 2023
102,481
50,617
1,949,397
715,286
2,817,781
Depreciation and impairment
At 1 January 2023
36,871
18,241
1,050,764
454,702
1,560,578
Depreciation charged in the year
10,206
199,122
66,518
275,846
At 31 December 2023
47,077
18,241
1,249,886
521,220
1,836,424
Carrying amount
At 31 December 2023
55,404
32,376
699,511
194,066
981,357
At 31 December 2022
65,610
32,376
898,633
143,057
1,139,676
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
10
Property, plant and equipment
(Continued)
- 20 -
The net carrying value of tangible fixed assets includes the following in respect of assets held under finance leases or hire purchase contracts.
2023
2022
£
£
Plant and machinery
14,031
17,332
Fixtures and fittings
74,452
2,064
88,482
19,396
11
Fixed asset investments
2023
2022
Notes
£
£
Investments in subsidiaries
12
2
2
12
Subsidiaries
Details of the company's subsidiaries at 31 December 2023 are as follows:
Name of undertaking
Address
Nature of business
Class of
% Held
shares held
Direct
Navigator Records Limited
*
Dormant
Ordinary
100.00
Proper Note Limited
*
Dormant
Ordinary
100.00
Registered office addresses (all UK unless otherwise indicated):
*
1-5 Applegarth Drive, Questor, Dartford, Kent, DA1 1JD
The aggregate capital and reserves and the result for the year of the subsidiaries noted above was as follows:
Name of undertaking
Capital and Reserves
Profit/(Loss)
£
£
Navigator Records Limited
(127,176)
Proper Note Limited
18,827
13
Inventories
2023
2022
£
£
Finished goods and goods for resale
1,020,310
993,131
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 21 -
14
Trade and other receivables
2023
2022
Amounts falling due within one year:
£
£
Trade receivables
7,688,238
6,577,868
Amounts owed by group undertakings
2,363,770
1,493,353
Other receivables
418,709
448,357
Prepayments and accrued income
386,915
420,256
10,857,632
8,939,834
15
Current liabilities
2023
2022
Notes
£
£
Obligations under finance leases
17
18,941
6,517
Trade payables
10,749,303
10,250,080
Amounts owed to group undertakings
3,350,334
265,483
Taxation and social security
585,975
393,579
Other payables
1,008,733
797,209
Accruals and deferred income
1,542,276
1,211,606
17,255,562
12,924,474
16
Non-current liabilities
2023
2022
Notes
£
£
Obligations under finance leases
17
53,889
1,924
17
Finance lease obligations
2023
2022
Future minimum lease payments due under finance leases:
£
£
Within one year
18,941
6,517
In two to five years
53,889
1,924
72,830
8,441
Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 4 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The finance leases are secured against the assets which they relate.
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 22 -
18
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
2023
2022
Balances:
£
£
Accelerated capital allowances
67,400
49,000
Retirement benefit obligations
(5,000)
(3,800)
62,400
45,200
2023
Movements in the year:
£
Liability at 1 January 2023
45,200
Charge to profit or loss
17,200
Liability at 31 December 2023
62,400
19
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
9,847
64,007
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
1,140
1,140
1,140
1,140
Each share is entitled to one vote in any circumstances and each share is also entitled pari passu to dividend payments or any other distribution, including a distribution arising from a winding up of the company.
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
- 23 -
21
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
624,771
633,104
Between two and five years
2,499,084
2,499,084
In over five years
2,290,827
2,915,598
5,414,682
6,047,786
22
Events after the reporting date
On 28th February 2025, the assets of Proper Music Group Limited, including 100% of the shares of Proper Music Distribution Limited, were sold to Artone Holdings II Ltd, a subsidiary of Artone Holding B.V., a company registered in the Netherlands. As part of the sale process, all previous intercompany balances with the former parent, Proper Music Group Limited and other group companies, have been cleared and there no longer exists any affiliation or financial relationship between any of the Proper Music trading companies and the former parent.
In addition, during the period after the balance sheet date, the company has entered into a new multi-year lease of its current Dartford site. This new lease will enable the business to continue to operate from its existing facilities for the foreseeable future and, as part of the renegotiation and extension of the lease, the company will receive a payment of £1.2m.
23
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
Sales
Purchases
Purchases
2023
2022
2023
2022
£
£
£
£
Other related parties
410,867
22,746
1,101,617
1,233,992
2023
2022
Amounts due to related parties
£
£
Other related parties
306,000
195,467
PROPER MUSIC DISTRIBUTION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2023
23
Related party transactions
(Continued)
- 24 -
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
Other related parties
1,250,358
763,637
24
Ultimate controlling party
Subsequent to the year-end, the ultimate parent company changed from Utopia Music AG (Switzerland) to Artone Holding B.V. by virtue of their 100% shareholding in Artone Holdings II Ltd. The registered office address is 59 Akeleibaan, Capelle Aan Den Ijssel, Netherlands, 2908 KA.
25
Cash generated from/(absorbed by) operations
2023
2022
£
£
Loss for the year after tax
(1,233,443)
(1,732,093)
Adjustments for:
Taxation charged
17,200
1,870
Finance costs
116,029
5,758
Investment income
(331)
Amortisation and impairment of intangible assets
308,469
160,279
Depreciation and impairment of property, plant and equipment
275,846
199,215
Movements in working capital:
(Increase)/decrease in inventories
(27,179)
39,171
Increase in trade and other receivables
(1,917,798)
(660,999)
Increase in trade and other payables
4,318,664
1,414,514
Cash generated from/(absorbed by) operations
1,857,788
(572,616)
26
Analysis of changes in net funds
1 January 2023
Cash flows
New finance leases
31 December 2023
£
£
£
£
Cash at bank and in hand
1,810,496
1,157,830
-
2,968,326
Obligations under finance leases
(8,441)
20,699
(85,088)
(72,830)
1,802,055
1,178,529
(85,088)
2,895,496
2023-12-312023-01-01falseCCH SoftwareCCH Accounts Production 2024.200Mr A S HillMr B L A Vidalfalsefalse028078112023-01-012023-12-3102807811bus:Director12023-01-012023-12-3102807811bus:Director22023-01-012023-12-3102807811bus:RegisteredOffice2023-01-012023-12-31028078112023-12-31028078112022-04-012022-12-3102807811core:RetainedEarningsAccumulatedLosses2022-04-012022-12-3102807811core:RetainedEarningsAccumulatedLosses2023-01-012023-12-3102807811core:OtherResidualIntangibleAssets2023-12-3102807811core:OtherResidualIntangibleAssets2022-12-3102807811core:ComputerSoftware2023-12-3102807811core:ComputerSoftware2022-12-31028078112022-12-3102807811core:LandBuildingscore:LeasedAssetsHeldAsLessee2023-12-3102807811core:LeaseholdImprovements2023-12-3102807811core:PlantMachinery2023-12-3102807811core:FurnitureFittings2023-12-3102807811core:LandBuildingscore:LeasedAssetsHeldAsLessee2022-12-3102807811core:LeaseholdImprovements2022-12-3102807811core:PlantMachinery2022-12-3102807811core:FurnitureFittings2022-12-3102807811core:CurrentFinancialInstrumentscore:WithinOneYear2023-12-3102807811core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3102807811core:Non-currentFinancialInstrumentscore:AfterOneYear2023-12-3102807811core:Non-currentFinancialInstrumentscore:AfterOneYear2022-12-3102807811core:CurrentFinancialInstruments2023-12-3102807811core:CurrentFinancialInstruments2022-12-3102807811core:ShareCapital2023-12-3102807811core:ShareCapital2022-12-3102807811core:RetainedEarningsAccumulatedLosses2023-12-3102807811core:RetainedEarningsAccumulatedLosses2022-12-3102807811core:ShareCapital2022-03-3102807811core:RetainedEarningsAccumulatedLosses2022-03-310280781112023-01-012023-12-31028078112022-12-31028078112022-03-3102807811core:IntangibleAssetsOtherThanGoodwill2023-01-012023-12-3102807811core:ComputerSoftware2023-01-012023-12-3102807811core:LandBuildingscore:LongLeaseholdAssets2023-01-012023-12-3102807811core:LeaseholdImprovements2023-01-012023-12-3102807811core:PlantMachinery2023-01-012023-12-3102807811core:FurnitureFittings2023-01-012023-12-3102807811dpl:Item12023-01-012023-12-3102807811dpl:Item12022-04-012022-12-3102807811dpl:Item22023-01-012023-12-3102807811dpl:Item22022-04-012022-12-3102807811core:UKTax2023-01-012023-12-3102807811core:UKTax2022-04-012022-12-310280781112022-04-012022-12-310280781122023-01-012023-12-310280781122022-04-012022-12-3102807811core:ComputerSoftware2022-12-3102807811core:ComputerSoftwarecore:ExternallyAcquiredIntangibleAssets2023-01-012023-12-3102807811core:LandBuildingscore:LeasedAssetsHeldAsLessee2022-12-3102807811core:LeaseholdImprovements2022-12-3102807811core:PlantMachinery2022-12-3102807811core:FurnitureFittings2022-12-3102807811core:LandBuildingscore:LeasedAssetsHeldAsLessee2023-01-012023-12-3102807811core:Non-currentFinancialInstruments2023-12-3102807811core:Non-currentFinancialInstruments2022-12-3102807811core:Subsidiary12023-01-012023-12-3102807811core:Subsidiary22023-01-012023-12-3102807811core:Subsidiary112023-01-012023-12-3102807811core:Subsidiary212023-01-012023-12-3102807811core:Subsidiary12023-12-3102807811core:Subsidiary22023-12-3102807811core:WithinOneYear2023-12-3102807811core:WithinOneYear2022-12-3102807811core:BetweenTwoFiveYears2023-12-3102807811core:BetweenTwoFiveYears2022-12-3102807811core:MoreThanFiveYears2023-12-3102807811core:MoreThanFiveYears2022-12-3102807811core:OtherRelatedPartiescore:SaleOrPurchaseGoods2023-01-012023-12-3102807811core:OtherRelatedPartiescore:SaleOrPurchaseGoods2022-04-012022-12-3102807811bus:PrivateLimitedCompanyLtd2023-01-012023-12-3102807811bus:FRS1022023-01-012023-12-3102807811bus:Audited2023-01-012023-12-3102807811bus:FullAccounts2023-01-012023-12-31xbrli:purexbrli:sharesiso4217:GBP