Company registration number 13542729 (England and Wales)
MUSIC HOLDINGS LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2024
MUSIC HOLDINGS LIMITED
COMPANY INFORMATION
Directors
T R Hegarty
A J Smith
(Appointed 28 March 2024)
T Finegan
(Appointed 28 March 2024)
F N H Moross
(Appointed 28 March 2024)
Secretary
A J Smith
Company number
13542729
Registered office
Unit 9, First Floor
Westworks
195 Wood Lane
London
W12 7FQ
Auditor
BKL Audit LLP
Chartered Accountants
5 Fleet Place
London
EC4M 7RD
MUSIC HOLDINGS LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3 - 4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 21
MUSIC HOLDINGS LIMITED
STRATEGIC REPORT
FOR THE PERIOD ENDED 30 JUNE 2024
- 1 -

The directors present the strategic report for the period ended 30 June 2024.

Principal activities

The principal activity of the company is that of a holding company.

Review of the business

The results for the period are set out on page 8 of the financial statements.

 

Music Holdings Limited is a holding company that oversees a portfolio of subsidiary business across the film and TV music rights sector. The primary role of the company is to provide strategic guidance, financial oversight, and resource allocation to its subsidiaries.

 

On 2 April 2024, Music Holdings Limited acquired 100% of the share capital of Cutting Edge Music Publishing Limited. Cutting Edge Music Publishing Limited has a number of subsidiaries who operate in the ownership and servicing of media music publishing rights, soundtrack distribution rights and wellness music rights.

 

During the period, the Company successfully repaid an existing loan facility, replacing it with a new financing arrangement. This financial restructuring has enhanced the Company and Group's financial stability, providing more flexible funding for future growth opportunities.

 

The Company's objectives are centred around maximising the value of its portfolio companies by:

 

 

Future developments

The Group continues to acquire, manage, and licence music rights across various platforms, including film, television, advertising, and digital streaming services. By holding a robust catalogue, maintaining strong relationships with partners, and investing in talent, the Group is committed to maximising the value of its music rights portfolio and delivering long-term growth.

Principal risks and uncertainties

The Group is exposed to a number of business and financial risks from its operating activities. The board of directors is responsible for ensuring that the business risks are actively managed. The business does not trade financial instruments nor does it currently use financial derivatives. The key financial risks are identified below:-

 

Currency risk - Due to the global nature of the business, with sales and operations in multiple countries, the business is exposed to fluctuations of sterling, against our other trading currencies, namely the Euro and the US Dollar. Currency exposure is managed by matching, as far as possible, income and expenditure in these currencies.

 

Credit risk - The board manages its credit risk by ensuring that it only engages with counterparties that have high credit ratings. The Company sets and actively monitors credit limits for its counterparties based on reference checks and payment history.

 

Liquidity (cash flow) risk - The business manages its cash flow to ensure it can meet its obligations and requirements.

 

Interest rate risk - One of the key financial risks facing the Company is exposure to fluctuations in interest rates on its loan facilities. The Company has a significant portion of its debt financed through variable-rate loans. Increases in interest rates could lead to higher borrowing costs, which may negatively impact cash flow, profitability, and the ability to invest in growth opportunities.

 

To mitigate this risk, the Company closely monitors movements in interest rates and engages in proactive financial management. In light of current economic conditions and ongoing central bank policies aimed at managing inflation, the Company continues to evaluate the structure of its loan portfolio to ensure it remains aligned with its long-term financial strategy while maintaining sufficient liquidity to meet its obligations.

MUSIC HOLDINGS LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 2 -
Key performance indicators

As Music Holdings Limited is primarily a holding company, it measures performance through the following Group KPIs:

 

30 June
31 December
2024
2023
Consolidated KPIs are shown below:
$000's
$000's
Income for the period
15,515
14,064
Operating profit before amortisation and exceptional items
10,047
13,239
Borrowings
217,691
122,113
Cash and cash equivalents
1,277
15,101
Value of intangible assets held
305,700
169,600
The above KPIs are reflective of the Music Holdings Limited group. The results of subsidiaries have been reflected for the period that they were part of the group.

On behalf of the board

A J Smith
Director
30 October 2024
MUSIC HOLDINGS LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 30 JUNE 2024
- 3 -

The directors present their annual report and financial statements for the period ended 30 June 2024.

Results and dividends

The results for the period are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

No preference dividends were paid.

Directors

The directors who held office during the period and up to the date of signature of the financial statements were as follows:

T R Hegarty
T Lorenco
(Resigned 28 March 2024)
A J Smith
(Appointed 28 March 2024)
T Finegan
(Appointed 28 March 2024)
F N H Moross
(Appointed 28 March 2024)
Auditor

In accordance with the company's articles, a resolution proposing that BKL Audit LLP be reappointed as auditor of the company will be put at a General Meeting.

Statement of directors' responsibilities

The directors are responsible for preparing the annual 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). 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:

 

 

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 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.

Strategic report

The strategic report contains details of the principal activity of the Company and includes a business review which provides information on the development of the Company's business during the period, together with details of the risks and uncertainties that affect the Company's business.

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.

MUSIC HOLDINGS LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 4 -
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
A J Smith
Director
30 October 2024
MUSIC HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MUSIC HOLDINGS LIMITED
- 5 -
Opinion

We have audited the financial statements of Music Holdings Limited (the 'company') for the period ended 30 June 2024 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity 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:

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.

Other information

The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are 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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of our audit:

MUSIC HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MUSIC HOLDINGS LIMITED (CONTINUED)
- 6 -
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.

 

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:

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, 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.

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.

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to the failure to comply with tax regulations, anti-bribery and anti-corruption laws, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006. We evaluated management's incentives and opportunities for fraud manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries and management bias in accounting estimates. Audit procedures performed by the auditors included:

There are inherent limitations in the audit procedures described above, and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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.

MUSIC HOLDINGS LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MUSIC HOLDINGS LIMITED (CONTINUED)
- 7 -

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.

Warren Baker FCA
Senior Statutory Auditor
For and on behalf of BKL Audit LLP
30 October 2024
Chartered Accountants and Statutory Auditor
5 Fleet Place
London
EC4M 7RD
MUSIC HOLDINGS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2024
- 8 -
Period
Year
ended
ended
30 June
31 December
2024
2023
Notes
$
$
Revenue
3
544,025
-
Administrative expenses
(1,137,302)
(319,823)
Operating loss
4
(593,277)
(319,823)
Investment income
6
2,281,080
-
0
Finance costs
7
(8,213,973)
(6,304,524)
Loss before taxation
(6,526,170)
(6,624,347)
Tax on loss
8
-
0
-
0
Loss for the financial period
(6,526,170)
(6,624,347)

The income statement has been prepared on the basis that all operations are continuing operations.

MUSIC HOLDINGS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
30 June 2024
- 9 -
30 June 2024
31 December 2023
Notes
$
$
$
$
Non-current assets
Investments
9
158,985,776
55,480,705
Current assets
Trade and other receivables
11
109,167,316
5,344,843
Cash and cash equivalents
4,370
-
0
109,171,686
5,344,843
Current liabilities
12
(2,648,363)
(1,032,071)
Net current assets
106,523,323
4,312,772
Total assets less current liabilities
265,509,099
59,793,477
Non-current liabilities
13
(221,177,930)
(62,712,821)
Net assets/(liabilities)
44,331,169
(2,919,344)
Equity
Called up share capital
16
8,914,765
77,387
Share premium account
51,308,335
6,369,030
Retained earnings
(15,891,931)
(9,365,761)
Total equity
44,331,169
(2,919,344)

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 30 October 2024 and are signed on its behalf by:
A J Smith
Director
Company registration number 13542729 (England and Wales)
MUSIC HOLDINGS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2024
- 10 -
Share capital
Share premium account
Retained earnings
Total
Notes
$
$
$
$
Balance at 1 January 2023
77,209
6,339,176
(2,741,414)
3,674,971
Year ended 31 December 2023:
Loss and total comprehensive loss
-
-
(6,624,347)
(6,624,347)
Issue of share capital
16
178
29,854
-
30,032
Balance at 31 December 2023
77,387
6,369,030
(9,365,761)
(2,919,344)
Period ended 30 June 2024:
Loss and total comprehensive loss
-
-
(6,526,170)
(6,526,170)
Issue of share capital
16
8,837,378
44,939,305
-
53,776,683
Balance at 30 June 2024
8,914,765
51,308,335
(15,891,931)
44,331,169
MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2024
- 11 -
1
Accounting policies
Company information

Music Holdings Limited is a private company limited by shares incorporated in England and Wales. The registered office is Unit 9, First Floor, Westworks, 195 Wood Lane, London, W12 7FQ.

1.1
Reporting period

The current period figures are presented for the six-month period ended 30 June 2024. The prior year figures are presented for the twelve-month period from 1 January 2023 to 31 December 2023 and therefore are not entirely comparable. The decision to shorten the accounting period was made to bring the company's year end in line with the rest of its group.

1.2
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 US dollars, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest $.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

 

 

The financial statements of the company are consolidated in the financial statements of Cutting Edge Group Limited. These consolidated financial statements are available from its registered office, Unit 9, First Floor, Westworks, 195 Wood Lane, London, W12 7FQ.

The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 12 -
1.3
Going concern

During the period the company made a loss of $6,526,170, however it has net assets of $44,331,169. On 2 April 2024 the company was acquired by Cutting Edge Group Limited and on the same date, Music Holdings Limited purchased 100% of the share capital of Cutting Edge Music Publishing Limited. Cutting Edge Music Publishing Limited has several subsidiary undertakings which generate significant revenue. As such Music Holdings Limited is now in effect supported by both its subsidiary undertakings and the ultimate parent company.true

 

The company has access to loan facilities in order to enable the group to continue its expansion through the acquisition of music catalogues. These facilities provide the available resources to continue in operational existence for the foreseeable future. Thus, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.4
Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.

 

The company has entered into an administration agreement with a related party, Cutting Edge Group Limited. Under the terms of the administration agreement, Cutting Edge Group Limited will provide management services and transaction support services to the company.

 

The company recovers these fees from its subsidiary, CEG Media Music Limited, and recognises them as revenue. Transaction support service fees only arise where an opportunity results in a concluded transaction. Therefore, the revenue for such fees is recognised at the point when the transaction is concluded. Management fees are charged as a percentage of income and recognised as the income is earned.

 

The company considers that it is acting as an agent in this transaction as Cutting Edge Group Limited has the primary responsibility for providing the services to CEG Media Music Limited. Therefore, revenue is presented as net against the management fee and transaction support service expense recognised within administrative expenses on the Income statement.

1.5
Non-current investments

Interests in subsidiaries, associates and jointly controlled entities 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 the income statement.

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.

1.6
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 13 -
1.7
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.

 

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

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 using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through the statement of income, 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 the statement of income.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in the statement of income.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
1
Accounting policies
(Continued)
- 14 -
Basic financial liabilities

Basic financial liabilities, including trade and other payables, bank loans 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.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.8
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.

1.9
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. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

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.

 

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

1.10
Foreign exchange

Transactions in currencies other than US dollars 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.

MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 15 -
2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

Impairment of investment in subsidiaries

In preparing the financial statements, the company has exercised judgement in determining whether there are indicators of impairment in relation to its investment in subsidiaries. The company has obtained an external valuation of the music rights owned by CEG Media Music Limited, a wholly owned subsidiary of Music Midco Limited, which is a wholly owned subsidiary of Music Holdings Limited, and the music rights owned by Cutting Edge Music Publishing Limited, a wholly owned subsidiary of Music Holdings Limited, and its subsidiaries.

 

These valuations involve assumptions such as film, television and song growth rates and a discount rate based on the company's weighted average cost of capital. The company has reviewed the results of these valuations and has concluded that the value of the music rights is higher than the carrying amount of the investment in subsidiaries recognised in the Statement of Financial Position. Therefore, the company has determined that there are no indicators of impairment as at the reporting date.

3
Revenue
30 June
31 December
2024
2023
$
$
Revenue analysed by class of business
Management fees receivable
544,025
-
30 June
31 December
2024
2023
$
$
Revenue analysed by geographical market
United States
544,025
-
30 June
31 December
2024
2023
$
$
Other revenue
Interest income
2,281,080
-
MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 16 -
4
Operating loss
30 June
31 December
2024
2023
Operating loss for the period is stated after charging:
$
$
Exchange losses
11,409
14
Fees payable to the company's auditor for the audit of the company's financial statements
47,310
-
0
5
Employees

The average monthly number of persons (including directors) employed by the company during the period was:

30 June
31 December
2024
2023
Number
Number
Total
-
0
-
0
6
Investment income
30 June
31 December
2024
2023
$
$
Interest income
Interest receivable from group companies
2,281,080
-
0
7
Finance costs
30 June
31 December
2024
2023
$
$
Interest on bank overdrafts and loans
7,172,815
5,092,188
Other interest on financial liabilities
335,636
1,185,338
Arrangement fees
705,522
26,998
8,213,973
6,304,524
MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 17 -
8
Taxation

The actual charge for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:

30 June
31 December
2024
2023
$
$
Loss before taxation
(6,526,170)
(6,624,347)
Expected tax credit based on the standard rate of corporation tax in the UK of 25.00% (2023: 23.50%)
(1,631,543)
(1,556,722)
Tax effect of expenses that are not deductible in determining taxable profit
221,083
7,256
Unutilised tax losses carried forward
1,410,460
1,549,466
Taxation charge for the period
-
-
9
Fixed asset investments
30 June
31 December
2024
2023
Notes
$
$
Investments in subsidiaries
10
158,985,776
55,480,705
Movements in non-current investments
Shares in subsidiaries
$
Cost or valuation
At 1 January 2024
55,480,705
Additions
103,505,071
At 30 June 2024
158,985,776
Carrying amount
At 30 June 2024
158,985,776
At 31 December 2023
55,480,705
MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 18 -
10
Subsidiaries

Details of the company's subsidiaries at 30 June 2024 are as follows:

Name of undertaking
Address
Class of
% Held
shares held
Direct
Indirect
Music Midco Limited
UK
Ordinary
100.00
-
CEG Media Music Limited
UK
Ordinary
0
100.00
Cutting Edge Music Publishing Limited
UK
Ordinary
100.00
-
White Stork Music Ltd
UK
A Ordinary
0
75.00
Cutting Edge Media Music Limited
UK
Ordinary
0
100.00
Soundtrack Records Inc
US
Ordinary
0
100.00
Broadway Records Inc
US
Ordinary
0
100.00
Broadway Records LLC
US
Ordinary
0
100.00
Real Music Acquisitions Inc
US
Ordinary
0
100.00
Earthsea Management Inc
US
Ordinary
0
100.00
Music.Films Recordings Inc
US
Ordinary
0
100.00

Registered office addresses (all UK unless otherwise indicated):

UK
The UK subsidiaries have the same registered office as the parent company.
US
The registered office of the US subsidiaries is 9100 Wilshire Boulevard, 455E, Beverley Hills, California, 90212, USA.
11
Trade and other receivables
30 June
31 December
2024
2023
Amounts falling due within one year:
$
$
Trade receivables
80,000
80,000
Amounts owed by group undertakings
108,745,344
5,037,430
Other receivables
341,972
121,077
Prepayments and accrued income
-
0
106,336
109,167,316
5,344,843
12
Current liabilities
30 June
31 December
2024
2023
Notes
$
$
Bank loans (secured) and overdrafts
14
387,648
190
Trade payables
39,501
622,572
Amounts owed to group undertakings
770,535
-
0
Amounts owed to related parties
-
0
278,530
Accruals and deferred income
1,450,679
130,779
2,648,363
1,032,071
MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 19 -
13
Non-current liabilities
30 June
31 December
2024
2023
Notes
$
$
Bank loans (secured)
14
217,302,930
55,069,651
Other payables
3,875,000
7,643,170
221,177,930
62,712,821
Amounts included above which fall due after five years are as follows:
Payable other than by instalments
74,012,500
-
14
Borrowings
30 June
31 December
2024
2023
$
$
Bank loans (secured)
217,690,430
55,069,651
Bank overdrafts
148
190
217,690,578
55,069,841
Payable within one year
387,648
190
Payable after one year
217,302,930
55,069,651

At the balance sheet date Music Holdings Limited had 2 bank loans, 1 with Fifth Third Bank and 1 with Northleaf Capital Partners (Canada) Ltd. The Fifth Third Bank loan of $148,637,683 is repayable on 2 April 2029 and carries an interest rate of SOFR + 2.85%. The Northleaf Capital Partners (Canada) Ltd loan of $77,500,000 is repayable over the period until 31 July 2029 and carries an interest rate of SOFR + 8.10%

 

There is a cross party guarantee in respect of the bank loans which has been provided by the subsidiaries of Music Holdings Limited.

15
Deferred income
30 June
31 December
2024
2023
$
$
Other deferred income
-
100,000
MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 20 -
16
Share capital
30 June
31 December
30 June
31 December
2024
2023
2024
2023
Ordinary share capital
Number
Number
$
$
Issued and fully paid
A Ordinary shares of £1 each
127,416
28,898
164,717
38,196
B Ordinary shares of £1 each
-
28,898
-
39,012
C Ordinary shares of £1 each
-
1
-
1
D Ordinary shares of £1 each
-
145
-
178
Deferred shares of £1 each
39
-
48
-
127,455
57,942
164,765
77,387
30 June
31 December
30 June
31 December
2024
2023
2024
2023
Preference share capital
Number
Number
$
$
Issued and fully paid
Preference shares of £1 each
8,750
-
8,750,000
-
Preference shares classified as equity
8,750,000
-
Total equity share capital
8,914,765
77,387

A Ordinary shares have attached to them full voting rights. They have attached to them full dividend rights once the preference shares have been redeemed in full. They have attached to them full capital distribution (including on winding up) rights.

 

Deferred shares have attached to them no voting rights nor dividend rights, and have reduced capital distribution rights.

 

Preference shares have attached to them no voting rights, are interest bearing and are the senior ranking class of shares in the company. They have attached to them full dividend rights until redeemed and full capital distribution (including on winding up) rights.

On 2 April 2024 the following transactions occurred:

 

28,898 B Ordinary shares of £1 each were re-designated as 28,898 A Ordinary shares of £1 each.

 

1 C Ordinary share of £1 was re-designated as 1 A Ordinary share of £1.

 

106 D Ordinary shares of £1 each were re-designated as 106 A Ordinary shares of £1 each.

 

39 D Ordinary shares of £1 each were re-designated as 39 Deferred shares of £1 each.

 

10,031 A Ordinary shares of £1 each were issued at par ($1.28).

 

59,482 A Ordinary shares of £1 each were issued at a premium of $755.70 per share.

 

8,750 Preference shares of £1 each were issued at a premium of $998.72 per share.

 

 

MUSIC HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE PERIOD ENDED 30 JUNE 2024
- 21 -
17
Related party transactions

The company has taken advantage of the exemption available in accordance with Section 33.1A of Financial Reporting Standard 102 whereby it has not disclosed transactions entered into between two or more members of a group, as the company is a wholly owned subsidiary undertaking of the group to which it is party to the transactions.

 

The company paid a total of $200,000 (2023 - $600,000) to its parent company in respect of legal and professional fees.

 

At 30 June 2024 the company owed $250,000 (2023 - $nil) to non-wholly owned subsidiaries.

 

At 30 June 2024 the company owed $262,074 (2023 - $nil) to its parent company.

18
Ultimate controlling party

The company's parent company is Cutting Edge Group Limited, a company incorporated in England and Wales with registered office of Unit 9, First Floor, Westworks, 195 Wood Lane, London, England, W12 7FQ.

 

The smallest and largest group for which consolidated financial statements have been prepared is that headed by Cutting Edge Group Limited. Copies of the consolidated financial statements are available from Unit 9, First Floor, Westworks, 195 Wood Lane, London, England, W12 7FQ.

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