wk-2024-12-31-ixbrl

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AVL EUROPE LIMITED

STRATEGIC REPORT

FOR THE YEAR ENDED 31 DECEMBER 2024

The directors present the strategic report for the year ended 31 December 2024.

Information about the business

AVL Europe Limited is the holding company of all shares of the companies primarily comprising the FUGA Group, as well as Simbals

SAS., CD Baby LATAM SAS. and Curve Royalty Systems Limited.

FUGA is the industry-leading technology and services company for international music rights holders. Headquartered in Amsterdam,

FUGA has offices in London, New York, and Milan and representations in Rome, Paris, Berlin, Stockholm, Los Angeles, Tokyo, Seoul,

Sao Paolo, Manilla, and Australia.

At the company’s core is the FUGA platform, offering best-of-breed digital supply chain integration alongside dynamic promotion and

marketing. The flexible platform enables FUGA’s clients to vary services across different Digital Service Providers (DSPs) so that they

can develop their catalog management, distribution, marketing, licensing and royalty accounting activity as their needs evolve.

Connected to over 200 DSPs worldwide, FUGA’s Platform manages more than 56 million unique tracks, generating over 60 billion

streams, delivering 26 million unique tracks during 2024. At present, more than 1.300 different businesses, such as labels, artist

platforms, distributors and other rights holders around the world rely on FUGA’s technology and services to support their operations.

FUGA is listed on the highest distributor tier for Spotify and Apple: a Preferred Plus distributor and encoding house for Apple and

preferred platinum partner and recommended delivery platform for Spotify. An active member of the DDEX consortium, FUGA also

partnered with Verifi Media as part of a coalition to spearhead development of a global blockchain ecosystem.

In 2024, we continued our track of technical development, adding new and enhanced features to the FUGA Platform. The FUGA

Platform provides clients the technology to facilitate content delivery and the requisite licenses to distribute content to DSPs. The

Platform is flexible and modular, not one-size-fits-all. Some of our clients may have existing, direct commercial arrangements with

DSPs, and those clients can leverage “platform” and services only, or leverage both platform and aggregation services in a combined

supply chain.

FUGA's technology platform extends across the entire value chain for music, with the opportunity to expand upstream into digital

rights management.

• Manage Content I Workflow: Ingesting and managing content in FUGA platform(s) drives stickiness;

• Distribute Content: Distribution as a technology service creates barriers to entry; including launching comprehensive spatial

audio support and automated delivery to Apple Music - the first B2B distributor to do so.

• Promote Releases: Promotional services drive enhanced client monetization;

• Collect Royalties: Collect all revenue streams (including Neighbouring Rights), completing the monetization picture for clients;

• Sales data analysis: Offer the ability for FUGA and clients to use and query sales data to improve A&R and distribution

strategies, through Trends & Analytics module;

• Synchronization service: facilitates the use of copyrighted music to any other type of content and/or in other mediums (mainly

visual content, for example, film, tv, games etc, although certain types of audio-usage require sync licenses as well). These

'Sync' services are offered in cooperation with Downtown Music and are underpinned by using the Songspace platform.

• Physical distribution: offers distribution of music on vinyl and CD's. This is based on numerous requests from clients looking for

a one-stop shop alongside digital distribution.

The opportunities which have led us to the growth path the company has been on during the last years are continuing:

The Macro Trends in the music industry are positive: FUGA is well positioned to capitalize on macro tailwinds for independent music

creation and digital distribution.

Within the Industry FUGA has developed itself as the Platform of Choice: The only truly global independent technology platform

powering digital distribution for businesses across the entire value chain; where even "competitors" can be customers; and where

FUGA is a preferred 'Plus' and 'Platinum' partner at Apple and Spotify respectively.

Especially during the last few years, FUGA has developed an attractive financial profile: Strong growth, recurring revenues, improving

margins, an evergreen royalty base, cash generative and increasing profitability.

The growth opportunities for FUGA are identified in the following areas:

• Growing existing business in current and new geographies such as the US, UK, Benelux, Asia, LatAm, Italy, Germany and

France;

• Investing in and developing new revenue segments such as royalty accounting and payments, API, white label, trends &

analytics, admin deals and artist services, Sync and Physical;

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AVL EUROPE LIMITED

STRATEGIC REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

• Expand into adjacent rights categories such as publishing and neighbouring rights building synergies with sister companies

in the wider Downtown Group;

• Catering towards upper tiers of the market, with larger and more outstanding labels and representing larger, more

international and more popular catalogs of digital music;

• Adding new DSPs, and more clients.

• Providing Advances to existing and new clients.

AVL Europe Limited and its subsidiaries form part of the Downtown Music Holdings' portfolio of Music Distribution, Artist & Label

Service Businesses.

Downtown is a global company that owns, manages, and develops businesses with a vision for a more equitable and innovative

music ecosystem. With operations across North America, Europe, Asia, Australia, and Latin America, they are the world's leading

provider of end-to-end services to artists, songwriters, labels, music publishers, and other rights holders. Through their portfolio of

companies - Downtown Music Publishing, Songtrust®, AVL Digital Group, and Downtown Music Studios - it manages millions of music

copyrights, with a catalog that spans nearly 100 years of popular music, including music for film and television, and the single largest

independent sound recording catalog in the industry. The integrated platforms help democratize global music rights management and

simplify the distribution, monetization, and promotion of creative works.

This acquisition by Downtown has provided FUGA the backing to achieve Downtown's global ambitions in this space so it can

continue serving the independent music community, developing its service offering and improving its technology. FUGA shares a

common business approach and philosophy with Downtown, one rooted in providing control and flexibility for creators and rights

holders.

The acquisition by Downtown has also given FUGA access to additional funding to support business growth. In recent years, client

royalty advances in music creation and distribution, as well as broader shifts in how music is discovered and consumed, have proven

to be an advantage for the industry, particularly independents. In 2024, the balance of outstanding advances funded by FUGA grew

from €8.1m in December 2023, to €9.5m in December 2024. Downtown Music Holdings has a credit facility with Bank of America,

designed to facilitate advance deployment to clients in the Downtown Music enterprise established a fund to support independent

artists and entrepreneurial business owners. This financing from Bank of America enables us to expand our music services business

by giving creators and business owners the ability to finance projects and grow their business.

Following the acquisition by Downtown in 2020, in the course of 2021 FUGA acquired all outstanding Neighbouring rights assets

which were being held within the Downtown Group. These assets are now managed as part of the dedicated entity within the FUGA

group, Ivory Plus Records BV.

On December 16, 2024, the Parent entered into a definitive agreement with Virgin Music Group whereby it would acquire Downtown

Music Holdings LLC for cash consideration of USD $775,000,000. However, the acquisition is subject to regulatory approvals and has

not officially closed as of the date of these financial statements. If the transaction does eventually close, it would result in a change of

control of the Company.

Development and performance

Furthermore, FUGA has become the delivery pipeline of two other Downtown and AVL Group entities, for their supply of music assets

towards DSPs. This step has been taken lo create further economies of scale in the group and to avoid further dependency on the

supply of external services by third parties.

During 2022, Downtown Music Holdings created a new business vertical to manage various B2B divisions across the business. In

September 2022 it was announced that Downtown Music would be formed, combining all of Downtown's global business and

professional services including distribution, label and artist services, publishing administration, video and user-generated rights

monetization, neighbouring rights, royalty accounting solutions, sync licensing and creative support services. FUGA is one of the

largest operating companies within the Downtown Music vertical, and former FUGA CEO Pieter van Rijn has been appointed to lead

Downtown Music as President.

On 15 December 2020, Space Shower Networks Inc and FUGA announced the establishment of a joint venture company in Japan,

SPACE SHOWER FUGA. The joint venture combined FUGA's end-lo-end music technology with Space Shower's local distribution

expertise to offer a full suite of 828 digital music services for the world's second largest music market. Having launched September

2021, the joint venture sees Space Shower's digital distribution clients benefit from FUGA's range of technology services and provides

FUGA with a platform to develop its existing business and services its large international client base in Japan. The joint venture also

helps lo deliver and market Space Shower's music catalogues to a worldwide audience via FUGA's global distribution and marketing

division. FUGA holds 49% of the share capital, and Space Shower Networks owns 51%.

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AVL EUROPE LIMITED

STRATEGIC REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

Review Of Business Performance

In 2024, the consolidated net loss after taxation for the period was £4.18 million compared to £81k last year. The decrease in net profit

was mainly due to the impact of increased interest paid on intercompany loans. In addition, the total tax paid increased by £724k

which is attributable to the non-deductibility of the bad debt in relation to Songspace LLC for Dutch tax purposes in 2024.

In 2024 the Group realized total gross revenues of £189.5 million. This is an increase of £22.5m, or 13.4%, compared to the 2023

gross revenue of £167.0 million. The increase in gross revenues can mainly be attributed to the growth in Distribution revenues with

additional contributions from Neighbouring Rights and Other revenues. Gross distribution revenues in 2024 recorded a growth of

17.1%. The total gross margin increased from a level of £26.8 million in 2023 to a level of £28.4 million in 2023, an increase of 6%.

In 2024 the Group achieved an EBITDA of £8.59 million compared to £8.4 million in 2023. Our operating expenses were well

controlled and stayed below the planned budgets. Al the same lime the volume and profitability of The Group increased, which

allowed us to leverage on the optimal usage of our fixed cost base.

On our Balance Sheet, net assets are £17.4 million, compared to £21.6 million at the end of 2023.

To ensure FUGA stays closely involved with the development of Blockchain technology in the Music industry, FUGA invested in 2018

in DotBlockchain - renamed Verifi Media in 2019 - a company that develops Blockchain Technology. Throughout the years several

investment rounds took place by the owners of the company. The company has not been successful in securing a financial future

from its investors, therefore the Company’s Board and Shareholders have come to a difficult decision to close the operations of Verifi

Media. This was announced by the company in January 2025. The Company and the investors have successfully executed the share

purchase agreement, meaning the Company’s shares have been purchased back by the founder.

In 2024, the gross revenues of our top 10 customers represent 25.4% of total group gross revenues while this is 12.0% on a gross

margin basis. The revenues of our top 20 customers represent 39.7% of total group gross revenues while this is 29.4% on a gross

margin basis.

Future Developments

The expectations for 2025 continue to show further growth in Distribution and Platform. Based on the run rate of our business as per

the end of 2024, and the performance in the early months of 2025, we expect to see continued growth. This growth is fuelled by the

double-digit growth of the music market and consumption, further digitalization of music content, the growth of the volume of content

represented by our clients as distributors and content providers and as a result of FUGA adding on a further significant number of

Digital Service Providers to our network. Expanding our global presence continues to be a priority, and synergies as part of the

Downtown group, and specifically within the Downtown Music division, are expected to provide further opportunities for growth.

Given the way we have expanded our group over recent years and that we have deeply invested in our Platform to guarantee

efficiency and flexibility; we also forecast to be able to continue to leverage our permanent cost base to such an extent that the growth

of our margins will more than cover the growth of the operating expense to run the business. Therefore, we forecast to be able to

register further growth in Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA). On a net profit basis, we will

continue to see increased depreciation of our intangibles, following the deep investments in our platform, and is expected to lead to

another positive net result for 2025.

On this basis we expect to be able to increase the level of our planned investments both in the quality and capacity of our Platform

and strategically by broadening our access to the markets in which we are active. We feel supported by the financial strength the

company is showing and the backing of our shareholders, which will also lead to further access to financing, either from shareholders

or external financiers.

Early in 2025 our shareholders have approved the 2025 budget. This plan reflects a steady growth path going forward, with increasing

revenues, EBITDA and net results. Margin levels continue to be healthy, and we continue to see a strong focus on cost and staffing

management, allowing leveraging our margin growth from a slower increasing cost base.

Personnel

In September 2023 former FUGA CEO Pieter van Rijn was appointed to lead Downtown Music as President. As his successor,

Christiaan Kroner - former COO of FUGA - has been promoted to President of FUGA. Kroner joined FUGA in 2012, where he led

FUGA's Operations and Services department. In 2020, Kroner was promoted to COO and has since overseen all operational activities

of FUGA, being instrumental in building and developing both its marketing services and its licensing and royalty accounting

departments. Kroner also played an integral role in the setup of Japanese music and media company Space Shower Networks' JV,

Space Shower FUGA.

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AVL EUROPE LIMITED

STRATEGIC REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

In April 2023, Tamryn Radford was appointed SVP of Finance Operations at Downtown Music and was succeeded at FUGA by Anouk

van der Linde who started as Executive Vice President of Finance at FUGA on 1 April 2023. Anouk led FUGA’s finance function until

April 2025, when she left the company and was succeeded by Bas Rol, who took over as Vice President of Finance. The Group has

grown from a headcount of 223 (employees + contractors) in 2023 to 248 in 2024.

On 17 October 2024 Johannes Petrus Christoffel Kerstens (Jan Peter) was appointed to the managing Board of Independent IP B.V.,

joining Christiaan Kröner and Pieter van Rijn who were appointed prior to 2024. Jan Peter is the CFO of Downtown Music Holdings,

the ultimate parent of the FUGA group.

Litigation And Legal Cases

One of the characterizations of the music industry is the tendency towards frequent claims of infringement of copy and distribution

rights and other intellectual property. The Group maintains strict procedures and guidelines to avoid being confronted with claims and

litigation and to perform our role in the industry in a legally and operationally correct way. The Group was, during the past four years,

not involved in any litigation, prosecution, arbitration, tribunal, alternative dispute resolution or governmental proceedings as plaintiff or

as defendant with any significant liability or cost for The Group.

Principal Risks

The Group is aware of the principal risks affecting the Group. These include price and market risks, credit risks, cash flow risks and

liquidity risks, including those from royalty advances. Looking at the current liquidity position, cash flows, the 2025 forecast and

budget and business plans for the coming years, management believes that the cash generated will be adequate to secure the

continuity of the Group's operations. The Group also has strong policies and procedures in place regarding collecting receivables from

debtors. This all gives management comfort that the assessed risks are managed appropriately.

Credit Risk

Credit risk is the risk of financial loss to the Group if a customer fails to meet its contractual obligations and arises from the Group's

receivables from customers and other parties, with the carrying amount of the financial assets representing the maximum credit

exposure. The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, the

Group also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and

the areas where the customers operate. The Group aims to trade only with recognized, financially healthy and creditworthy third

parties. Receivable balances are monitored on an ongoing basis with the result that the Groups' exposure to bad debts is not

significant.

In relation to the long overdue invoices, these have been partially or completely paid within the first months of the financial year 2025

or otherwise provided against as bad debt and if not recovered, will be written off in 2025.

With respect to credit risk arising from the other financial assets of the Group, i.e. cash and cash equivalents, the Group's exposure to

credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Liquidity Risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are

settled by delivering cash or another financial asset. The Group monitors its risk to a shortage of funds using a recurring liquidity

planning tool. This tool considers the maturity of both its financial liabilities and financial assets (e.g. accounts receivables, royalty

advances receivable, other financial assets) and projected cash flows from operations. This projected cash flow helps the Group

manage and ensure it has sufficient liquidity to meet its liabilities when they are due under both normal and stressed conditions

without incurring unacceptable losses or risking damage to the Group's reputation.

At the AVL Group level the company has access to external funding, and the FUGA Group of companies has the ability to fund

potential cash needs through intercompany funding from AVL.

Market Risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices that will affect

the Group's income or value of its holdings of financial instruments. The objective of market risk management is to manage and

control market risk exposures within acceptable parameters, while optimizing the return.

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AVL EUROPE LIMITED

STRATEGIC REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

Currency Risk

The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures, primarily with respect to

the USD Dollar (USD) and to a lesser extent the Euro (EUR) and Japanese Yen (JPY). Foreign exchange risk arises from future

commercial transactions, recognized assets and liabilities and net investments in foreign operations.

The largest foreign exchange exposures of the FUGA group are closely managed. This is a pure transactional exposure given that

The Group collects a large part of its Aggregation income in USO, and to a lesser extent GBP and JPY from Merlin, Amazon and other

smaller DSP's, from which the royalty share is paid out to the content providers in Euros. This transactional exposure occurs every

month and is hedged with almost 100% effectivity on a monthly basis.

In respect of the Group's foreign operating entities, considering the local nature of our business and the fact that the Group has

entities in the United States of America, the United Kingdom and in South Korea, exposures within The Group are identified to be

limited, as such exposure arises from local expense and purchases by operating entities in the unit's functional currency only.

Considering the limited risk, the transactional currency exposures are not hedged, or only in those cases that the transactional

exposure is material and separately identifiable.

With respect to (monetary) assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to

an acceptable level by buying or selling foreign currencies at spot rates or forward rates when necessary to address (short-term)

imbalances.

The main foreign currency translation exposures are in USD. A change of 10% in the USD foreign exchange rate will impact the net

result by approximately less than 1 (one)%.

Interest Rate Risk

As part of the AVL Group of companies, The Group is a Loan Party to the AVL Holdings and AVL Europe Facility Agreement in place

with City National Bank. The Agreement was amended on December 6, 2022, and provides the AVL Group up to $30,000,000 in

Revolving Loans, a $60,000,000 Term Loan, and access to an additional Delayed Draw Term Loan of $35m subject to certain

conditions with maturity on December 6, 2027. The interest rate on the loans is Term SOFR, plus a 0.1% credit spread adjustment,

plus an additional margin at rates from 2.50% to 3.00% depending on the Senior Debt to EBITDA ratio. Additionally, interest is

charged on the unused portion of the revolving loans at rates from 0.25% to 0.50%.

In case of temporary cash needs within the overall AVL Group, FUGA has lent and will continue to lend excess cash to other operating

companies within the AVL Group. These loans are short term in nature and are being repaid in line with agreements in place.

Technology & Data Risks

Given our place in the technology sector, on a daily basis we process very substantial amounts of data and information. This data is

protected by state-of-the-art security measures and is handled with the utmost care and in accordance with applicable governmental

and industry guidelines. However, in view of the global developments in respect of cyber criminality and the potential damages which

may occur, The Group constantly reviews, implements and monitors strict measures to protect the valuable data and information in its

possession.

Capital Management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future

development of the business.

Financial Instruments

The Group makes limited use of financial instruments. As part of its process to manage its foreign exchange exposure, on a monthly

basis it takes out hedges to assure there is a full matching of currency values between foreign currency flows received from DSPs and

the royalties subsequently being paid out to the various clients.

Law, Legislation And Regulations

Across The Group, but more especially in the EU, USA and UK, we are continuously being informed about any changes in laws,

regulations and legislation which may be applicable to our organization. Whenever these are deemed to be relevant, the appropriate

measures and new guidelines are taken and are expected to be complied with.

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AVL EUROPE LIMITED

STRATEGIC REPORT (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

During the reporting year there have not been any material changes in the rules and regulations applicable to our organization, which

may have a material impact in how we conduct our business. However, there is always the opportunity that such change may have an

impact in the future. Given our long-standing experience in the business and industry we do expect to be able to find the appropriate

measures in case such material change would occur.

In relation to Privacy, The Group is closely monitoring the relevant changes in data protection laws worldwide, including GDPR and

CCPA. As The Group is an agile organization, it swiftly adapts and adopts new regulations and guidelines in this area.

Risk Appetite

As far as risks can be covered by improving internal processes, internal systems or effective and financially efficient instruments or

tools, The Group will always consider implementing such measures. In order to be successful, The Group will need to be able to

execute sound entrepreneurship and find the proper balance between taking risks to possibly be able to realize ambitions and, on the

other hand, risk the costs of a potential failure. Given our experience in the industry and our proven track record, we deem ourselves

well equipped to handle such balancing between risk, ambitions and rewards.

We look back at a very rewarding 2024. The Group has shown significant growth, has continued to prove its strong reputation and has

further built its position as a key industry player. Our distribution platform and content services, offered in a highly modular way, are

consistently proving value for a growing customer base.

We would like to thank especially our staff which have shown unlimited energy, dedication and passion, collectively as a team, to

make The Group the industry-leading technology and services company for international music rightsholders.

Diversity

Within the remit of The Group of companies being part of the Downtown / AVL Group of companies, we continue with our Diversity

Equity and Inclusion (DE&I) work. These include among others the following key initiatives and below reflects our collective progress.

The hiring and recruitment process and policies are continuously reviewed to ensure fair and equitable processes for all applicants.

By streamlining the process, the goal is to help managers focus solely on the skills needed and interview without bias.

The Downtown Group have launched Employee Resource Groups in October 2020 with Black Power in Music (BPM), and in 2022

Womxn+, with a focus on providing support and mentorship to people socialized as, perceived as, and/or who identify as womxn as

well as those with variant gender identities and in 2023 Shesaid.so, a community of women, gender nonconforming people, and allies

in the music industry.

In addition, the company continuously participates in specific awareness programs like Health Awareness month, Earth Day,

Volunteering, and various other initiatives.

War Between Russia And Ukraine

We have not identified any significant impact on our financial statements, or going concern, as a result of the war between Russia

and Ukraine. The combined financial impact of these has not been significant to date and is not expected to have a significant impact

moving forward. The main impacts on The Group are summarized as follows:

• We do not have operations, offices or employed staff based locally in Russia or Ukraine.

• We have a small number of Contractors (via DataArt) who are based in Ukraine in our Technology Department.

• We have two Ukrainian and three Russian content providers, whose Net revenue impact is not significant.

• We made the decision to suspend the feed to Russian DSPs Yandex, VKontakte (delivered via UMA), and Zvooq/Sberzvuk for

our aggregation license clients. In 2024 no revenue was recorded for these DSPs.

Post-Balance Sheet Date Events

On 16 December 2024, it was announced that Virgin Music Group, the global independent music division of Universal Music Group,

had entered into a definitive agreement to acquire Downtown Music Holdings LLC. The deal is subject to regulatory approvals and is

expected to complete in the second half of 2025.

On behalf of the board

E Northeast

Director

Date: ....................

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AVL EUROPE LIMITED

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 DECEMBER 2024

The directors present their annual report and financial statements for the year ended 31 December 2024.

Principal activities

The principal activity of the company and group continued to be that of a music distributor.

Results and dividends

The results for the year are set out on page 10.

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

Directors

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


E Northeast
A Bergman

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 group and company, and of the profit or loss of the group

for that period. In preparing these financial statements, the directors are 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 group and

company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group's

and company's transactions and disclose with reasonable accuracy at any time the financial position of the group and

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 group and company and hence for taking reasonable steps for the prevention

and detection of fraud and other irregularities.

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 auditor of the company 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 auditor of the company is aware of that information.

On behalf of the board

E Northeast

Director

Date: 3 December 2025

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AVL EUROPE LIMITED

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF AVL EUROPE LIMITED

Opinion

We have audited the financial statements of AVL Europe, Limited (the 'parent company') and its subsidiaries (the 'group') for

the year ended 31 December 2024 which comprise the group statement of comprehensive income, the group balance sheet,

the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the

group 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 slate of the group's and the parent company's affairs as at 31 December 2024 and of the

group's 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.

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 group and parent 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 lo 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 group's and parent company's ability lo 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 lo 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 lo the extent otherwise explicitly stated

in our report, we do not express any form of assurance conclusion thereon. Our responsibility is lo 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 lo 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 lo report that fact.

We have nothing lo 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:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are

prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their 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:

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AVL EUROPE LIMITED

INDEPENDENT AUDITOR'S REPORT (CONTINUED)

TO THE MEMBERS OF AVL EUROPE LIMITED

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been

received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

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

• We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and

perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis

for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.

• We review financial statement disclosures and undertake testing to supporting documentation to assess compliance with

applicable laws and regulations.

• We perform audit work over the risk of management override of controls, including testing of journal entries and other

adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of

business.

• We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related

disclosures made by management.

• We enquire of management around actual and potential litigation and claims.

• We conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit

evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the

union's ability to continue as a going concern.

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.

Shaun Philpott FCA

Senior Statutory Auditor

For and on behalf of TAG Assurance Services LtdDate: 3 December 2025

Statutory AuditorUnit 8 Pendeford Place

Pendeford Business Park

Wolverhampton

WV9 5HD

- 10 -

AVL EUROPE LIMITED

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2024


		2024	2023
	Notes	£'000	£'000

Revenue	3	189,528	167,049
Cost of sales		(161,116)	(140,276)


Gross profit		28,411	26,773

Administrative expenses		(30,261)	(28,178)

Operating loss	4	(1,849)	(1,405)

Interest on balances with group undertakings	6	(1,629)	1,593
Amounts written off investments	7	568	276
Fair value gains and losses on foreign exchange
contracts

Profit (loss) before taxation		(2,911)	464

Tax on profit/loss	8	(1,269)	(545)

Loss for the financial year		(4,180)	(81)

Loss for the financial year is all attributable to the owners of the parent company.

Total comprehensive income for the year is all attributable to the owners of the parent company.

The notes pages 16 to 30 form part of these financial statements.

- 11 -

AVL EUROPE LIMITED

GROUP BALANCE SHEET

AS AT 31 DECEMBER 2024


		2024		2023
	Notes	£'000	£'000	£'000	£'000
Fixed assets
Goodwill	9		28,637		34,067
Other intangible assets	9		9,083		9,485

Total intangible assets			37,720		43,552
Tangible assets	10		325		674
Investments	11		226		100
			38,271		44,326


Current assets
Debtors	13	47,945		40,801
Cash at bank and in hand		23,110		18,969
		71,055		59,770

Creditors - amounts falling due within one year	14	(91,911)		(82,502)

Net current liabilities			(20,856)		(22,732)

			17,415		21,594

Capital and reserves
Called up share capital	17		29,298		29,297
Profit and loss reserves			(11,883)		(7,703)
			17,415		21,594

The notes on pages 16 to 30 form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on December 1, 2025 and are signed

on its behalf by:

E Northeast

Director

- 12 -

AVL EUROPE LIMITED

COMPANY BALANCE SHEET

AS AT 31 DECEMBER 2024


		2024		2023
	Notes	£'000	£'000	£'000	£'000
Fixed assets
Investments	11		45,908		45,892

Current assets
Debtors	13	—		30

Creditors - amounts falling due within one year	14	(18,222)		(16,544)

Net current liabilities			(18,222)		(16,514)

			27,686		29,378

Capital and reserves
Called up share capital	17		29,298		29,298
Profit and loss reserves			(1,612)		80
			27,686		29,378

The notes on pages 16 to 30 form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on December 1, 2025 and are signed

on its behalf by:

E Northeast

Director

- 13 -

AVL EUROPE LIMITED

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2024


	Share capital	Profit and loss reserves	Total
	£'000	£'000	£'000
Balance at 1 January 2023	29,297	(7,622)	21,675
Year ended 31 December 2023:
Loss and total comprehensive income		(81)	(81)
Balance at 31 December 2023	29,297	(7,703)	21,594
Year ended 31 December 2024:
Loss and total comprehensive income		(4,180)	(4,180)
Balance at 31 December 2024	29,297	(11,883)	17,414

- 14 -

AVL EUROPE LIMITED

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2024


	Share capital	Profit and loss reserves	Total
	£'000	£'000	£'000

Balance at 1 January 2023	29,298	(231)	29,067
Year ended 31 December 2023:
Loss and total comprehensive income		311	311
Balance at 31 December 2023	29,298	80	29,378
Year ended 31 December 2024:
Loss and total comprehensive income		(1,691)	(1,691)
Balance at 31 December 2024	29,298	(1,611)	27,687

- 15 -

AVL EUROPE LIMITED

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2024


		2024		2023
	Notes	£'000	£'000	£'000	£'000

Cash flows from operating activities
Cash generated from operations	20		10,718		11,306
Income taxes paid			(400)		(1,124)
Net cash inflow from operating activities			10,318		10,182
Investing activities
Purchase of intangible assets		(4,263)		(4,188)
Purchase of tangible fixed assets		(168)		(209)
Disposal of tangible fixed assets		7
Interest		(1,629)		1,593
Share of profits from joint ventures		(125)		(92)
Net cash used in investing activities			(6,178)		(2,896)
Net increase in cash and cash equivalents			4,140		7,286
Cash and cash equivalents at beginning of year			18,969		11,683
Cash and cash equivalents at end of year			23,109		18,969

- 16 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2024

1 Accounting policies

Company Information

AVL Europe, Limited ("the company") is a private limited company domiciled and incorporated in England and Wales. The registered

office is 7 Bell Yard, London, WC2A 2JR.

The group consists of AVL Europe, Limited and all of its subsidiaries.

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 £'000.

The financial statements have been prepared under the historical cost convention, [modified to include the revaluation of

freehold properties and to include investment properties and certain financial instruments at fair value]. The principal

accounting policies adopted are set out below

1.2 Business combinations

In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the

assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business

combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and

contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of

contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration

after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted

retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint

ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a

business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax,

considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The

deferred tax recognised is adjusted against goodwill or negative goodwill.

1.3 Basis of consolidation

The consolidated group financial statements consist of the financial statements of the parent company AVL Europe, Limited

together with all entities controlled by the parent company (its subsidiaries) and the group's share of its interests in joint

ventures and associates.

All financial statements are made up to 31 December 2024. Where necessary, adjustments are made to the financial

statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on

consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset

transferred.

Subsidiaries are consolidated in the group's financial statements from the date that control commences until the date that

control ceases.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers

under a contractual arrangement are treated as joint ventures. Entities other than subsidiary undertakings or joint ventures, in

which the group has a participating interest and over whose operating and financial policies the group exercises a significant

influence, are treated as associates.

- 17 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

Investments in joint ventures and associates are carried in the group balance sheet al cost plus post acquisition changes in

the group's share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint

ventures and associates include acquired goodwill.

If the group's share of losses in a joint venture or associate equals or exceeds its investment in the joint venture or associate,

the group does not recognise further losses unless ii has incurred obligations to do so or has made payments on behalf of the

joint venture or associate.

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group's

interest in the entity.

1.4 Going Concern

Al the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate

resources, including support by its US parent company, 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.

1.5 Turnover

Turnover represents amounts receivable for royalties net of VAT.

The Company has prepared the financial statements in accordance with ASC 606 and all related amendments. In applying ASC 606,

the Company has followed a five-step approach for evaluating its contracts with customers for digital distribution and publishing

revenues. For each, the Company identified the type of customer contracts, identified its performance obligations under contracts,

determined a transaction price, allocated the transaction price over the life of the contracts, and established revenue recognition

policies for recognising revenue as its performance obligations are satisfied.

Digital distribution revenues are generated from royalties earned from streaming through third-party digital service providers (“DSP”)

platforms. Digital distribution revenues are variable based on actual usage or consumption of the distributed content. Revenue is

recognized based on usage reports provided by the DSP that confirm the applicable client’s usage for a given period, and the Company

has rendered the agreed upon services with respect to such royalties.

Publishing revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions. The receipt of

royalties principally relates to amounts earned from the public performance of musical compositions, the mechanical reproduction of

musical compositions on recorded media including digital formats and the use of musical compositions in synchronization with visual

images. Publishing royalties, except for synchronization royalties, generally are recognized when the sale or usage occurs. The most

common form of consideration for publishing contracts is sales and usage-based royalties. The collecting societies and DSPs submit

usage reports, typically with payment for royalties due, often on a quarterly or bi-annual reporting period, in arrears.

Royalty revenues are recognized when it is confirmed the applicable client's sale or usage occurs for a given period, and when the

Company has rendered the agreed upon services to the client with respect to such royalties. Royalty expense represents the portion of

royalties collected from DSPs and other channels that are owed to the artists.

1.6 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.

- 18 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

1.7 Intangible fixed assets - goodwill

Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially

recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated

impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected

life, which is 10 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the

acquisition. Cash-generating units lo which goodwill has been allocated are tested for impairment at least annually, or more

frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is

less than the carrying amount of the unit, the impairment loss is allocated first lo reduce the carrying amount of any goodwill

allocated to the unit and then lo the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the

unit.

1.8 Intangible fixed assets other than goodwill

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less

accumulated amortisation and accumulated impairment losses.

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition dale where it is

probable that the expected future economic benefits that are attributable lo the asset will flow lo the entity and the fair value of

the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is

separable from the entity.

Amortisation is recognised so as lo write off the cost or valuation of assets less their residual values over their useful lives on

the following bases:

Patents & licences 20% straight line

Development costs20% straight line

1.9 Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any

impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the

following bases:


Plant and equipment	20% straight line
Computers	20% straight line

1.10 Fixed asset investments

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly

traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a

reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries, associates and jointly controlled entities are initially

measured at cost and subsequently measured al cost less any accumulated impairment losses.

A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity

so as to obtain benefits from its activities.

An associate is an entity, being neither a subsidiary nor a joint venture, in which the company holds a long term interest and

where the company has significant influence. The group considers that it has significant influence where it has the power to

participate in the financial and operating decisions of the associate.

- 19 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

Investments in associates are initially recognised at the transaction price (including transaction costs) and are subsequently

adjusted to reflect the group's share of the profit or loss, other comprehensive income and equity of the associate using the

equity method. Any difference between the cost of acquisition and the share of the fair value of the net identifiable assets of

the associate on acquisition is recognised as goodwill. Any unamortised balance of goodwill is included in the carrying value of

the investment in associates.

Losses in excess of the carrying amount of an investment in an associate are recorded as a provision only when the company

has incurred legal or constructive obligations or has made payments on behalf of the associate.

In the parent company financial statements, investments in associates are accounted for at cost less impairment.

Entities in which the group has a long term interest and shares control under a contractual arrangement are classified as

jointly controlled entities.

1.11 Impairment of fixed assets

At each reporting period end date, the group 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). Where it is not

possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the

cash-generating unit to which the asset belongs.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any

goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated

future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments

of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been

adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying

amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised

immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is

treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where

an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the

revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount

that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior

years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a

revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.12 Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-

term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within

borrowings in current liabilities.

1.13 Financial instruments

The group 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 group's balance sheet when the group becomes party to the contractual provisions of the

instrument.

Financial assets and liabilities are offset and 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.

- 20 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including

transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes

a financing transaction, 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 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.

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 profit or loss.

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

group 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 group after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified

as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, 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 creditors 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 creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective

interest method.

Other financial liabilities

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are

initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value.

Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge

accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or

loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting

mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented

risk management or investment strategy.

Derecognition of financial liabilities

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

- 21 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

1.14 Equity instrument

Equity instruments issued by the group 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 group.

1.15 Taxation

The tax expense represents the sum of the tax currently payable.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss

account 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 group's liability for current tax is calculated using tax rates that have been enacted or substantively

enacted by the reporting end date.

1.16 Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be

recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the

employment of an employee or to provide termination benefits.

1.17 Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.18 Leases

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 leased asset are consumed.

2 Judgements and key sources of estimation uncertainty

In the application of the group'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.

- 22 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

3 Turnover and other revenue


	2024	2023
Turnover analysed by geographical market	£'000	£'000
Americas	82,548	73,946
Europe	92,913	81,572
Asia Pacific	14,067	11,532
	189,528	167,049

	2024	2023
	£'000	£'000
Other revenue
Interest	(1,629)	1,593

4 Operating loss


	2024	2023
	£'000	£'000
Operating loss for the year is stated after charging:
Exchange losses	(758)	379
Research and development costs	126	469
Depreciation of owned tangible fixed assets	321	467
Amortisation of intangible assets	10,070	9,092
Operating lease charges	668	702
Auditor's remuneration for company and group accounts	26	24
Auditor's remuneration for other services	124	118

- 23 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

5 Employees


	Group		Company
	2024	2023	2024	2023
	Number	Number	Number	Number
	209	208	3	3

Their aggregate remuneration comprised
	Group		Company
	2024	2023	2024	2023
	£'000	£'000	£'000	£'000
Wages and salaries	11,399	9,481	85	125
Social security costs	1,950	1,935	6	15
Pension costs	436	430	1	2
	13,785	11,846	92	142

6 Interest receivable and similar income


	2024	2023
	£'000	£'000

Interest income
Interest on group company balances	(1,629)	1,593
Disclosed on the profit and loss account as follows:
Interest on group company balances	(1,629)	1,593

7 Amounts written off investments


	2024	2023
	£'000	£'000
Fair value gains/(losses) on financial instruments
Exchange gain/(loss) on financial assets held at fair value through profit or loss	568	276

8 Taxation


	2024	2023
	£'000	£'000
Current tax
UK corporation tax on profits for the current period	1,269	537
Adjustments in respect of prior periods		8
Total current tax	1,269	545

- 24 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

The actual charge for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the

standard rate of tax as follows:


	2024	2023
	£'000	£'000

Profit/(loss) before taxation	(2,911)	464
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 25.0% (2023: 23.5%)	(728)	109
Adjustments in respect of prior years	38	8
Effect of overseas tax rates		84
Permanently disallowed expenses	1,989	1376
Utilisation of tax losses	(20)	(867)
R&D tax credit claim	(12)	(165)
Taxation charge	1,268	545

9 Intangible fixed assets


Group	Goodwill	Patents & licences	Development Costs	Total
	£'000	£'000	£'000	£'000
Cost
At 01 January 2024	55,004	2,431	19,848	77,283
Additions - internally developed		330	3,933	4,263
Exchange adjustments	24	(110)	(649)	(735)
Other movements				0
At 31 December 2024	55,028	2,651	23,132	80,811
Amortisation and impairment
At 01 January 2024	20,937	1,845	10,948	33,730
Amortisation charged for the year	5,430	343	4,297	10,070
Exchange adjustments	24	(333)	(400)	(709)
At 31 December 2024	28,637	796	8,287	37,720
Carrying amount
At 31 December 2024	28,637	796	8,287	37,720
At 31 December 2023	34,067	585	8,900	43,552

The company had no intangible fixed assets at 31 December 2024 or 31 December 2023

- 25 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

10 Tangible fixed assets


Group	Plant and equipment	Computers	Total
	£'000	£'000	£'000
Cost
At 01 January 2024	761	1,208	1,969
Additions	43	125	168
Disposals		(7)	(7)
Exchange adjustments	(49)	(175)	(224)
At 31 December 2024	755	1,151	1,906
Depreciation and impairment
At 01 January 2024	656	639	1,295
Depreciation charged in the year	145	176	321
Exchange adjustments	(19)	(17)	(36)
At 31 December 2024	782	799	1,581
Carrying amount
At 31 December 2024	(27)	352	325
At 31 December 2023	105	569	674

The company had no tangible fixed assets at 31 December 2024 or 31 December 2023.

- 26 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

11 Fixed asset investments


		Group		Company
		2024	2023	2024	2023
		£'000	£'000	£'000	£'000
Investments in subsidiaries	12			45,892	45,884
Investments in joint ventures		226	100
		226	100	45,892	45,884

Movements in fixed asset investments
Group					Shares in joint ventures
					£'000
Cost or valuation
At 01 January 2024					100
Valuation changes					126
Issue of Convertible Loan
At 31 December 2024					226
Carrying amount
At 31 December 2024					226
At 31 December 2023					100
Movements in fixed asset investments
Company					Shares in subsidiaries
					£'000
Cost or valuation
At 01 January 2024					45,892
Valuation changes					16
At 31 December 2024					45,892
Carrying amount
At 31 December 2024					45,908
At 31 December 2023					45,892

- 27 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

12 Subsidiaries

Details of the company's subsidiaries at 31 December 2024 are as follows:


Name of undertaking	Registered office	Class of	% Held
		shares held	Direct
Ivory Plus Records B.V.	Netherlands	Ordinary	100.00
IIP-DDS B.V.	Netherlands	Ordinary	100.00
FUGA IP B.V.	Netherlands	Ordinary	100.00
FUGA North America LLC	USA	Ordinary	100.00
FUGA Music UK Limited	UK	Ordinary	100.00
FUGA Italy S.R.L.	Italy	Ordinary	100.00
Songspace Acquisition LLC	USA	Ordinary	100.00
FUGA Asia Pacific Ltd	South Korea	Ordinary	100.00
AVL IIP Holdings B.V.	Netherlands	Ordinary	100.00
Simbals SAS.	France	Ordinary	100.00
CD Baby LATAM SAS.	Colombia	Ordinary	100.00
Independent IP B.V.	Netherlands	Ordinary	100.00
Curve Royalty Systems Limited	UK	Ordinary	100.00

13 Debtors


	Group		Company
	2024	2023	2024	2023
	£'000	£'000	£'000	£'000
Amounts falling due within one year:
Trade debtors	13,254	19,155
Corporation tax recoverable		1,355
Other debtors	2,519	1,621
Prepayments and accrued income	32,172	18,670
	47,945	40,801

In the current period, management identified a misclassification in the prior year balance sheet, where certain items were presented in

both assets and liabilities but should have been netted against each other. These items have been presented correctly in 2024, and the

comparative 2023 figures have been adjusted accordingly. This correction results in a reduction in both total assets and total liabilities,

with no impact on net assets, the income statement, or the statement of cash flows for the prior period.

The impact of the correction on the 2023 balance sheet is summarized as follows:

As previously

reported 2023 Adjustment Restated 2023

Current assets

Trade receivables 21,107 ( 1,952) 19,155

Prepayments and accrued income 27,576 ( 8,906) 18,670

Current liabilities, accruals and deferred income

Deferred royalty revenue 14,205 (10,858) 3,347

- 28 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

14 Creditors: amounts falling due within one year


	Group		Company
	2024	2023	2024	2023
	£'000	£'000	£'000	£'000
Trade creditors	1,473	1,042
Amounts owed to group undertakings	10,331	18,402	18,222	15,545
Other taxation and social security	417	903
Deferred income	11,347	3,347
Other creditors	315	1,274		1,000
Accruals	68,028	57,534
	91,911	82,502	18,222	16,545

- 29 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

15 Retirement benefits schemes


	2024	2023
Defined contribution schemes	£'000	£'000
Charge to profit of loss in respect of defined contribution schemes	428	37

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from

those of the group in an independently administered fund.

16 Share capital


Group and company	2024	2023	2024	2023
Ordinary share capital	Number	Number	£'000	£'000
Issued and fully paid Ordinary shares of £1 each	29,297,682	29,297,682	29,298	29,298

17 Operating lease commitments

Lessee

At the reporting end date the group had outstanding commitments for future minimum lease payments under non-cancellable operating

leases, which fall due as follows:


	Group		Company
	2024	2023	2024	2023
	£'000	£'000	£'000	£'000
Within one year	576	565
Between two and five years	1,301	1,790
	1,877	2,355

18 Audit exemption for subsidiary and parent company guarantee

For the year ended 31 December 2024, the following subsidiary undertaking of the Company was entitled to an exemption from audit

under section 479A of the Companies Act 2006 relating to subsidiary companies.

In order to qualify for this exemption, AVL Europe Limited, the parent undertaking, has guaranteed all outstanding liabilities to which the

subsidiary company is subject at 31 December 2024 until they are satisfied in full.

Name Company number

Curve Royalty Systems Limited10121597

FUGA Music UK Limited 11172211

- 30 -

AVL EUROPE LIMITED

NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2024

19 Limitation of liability

The company has entered into a limited liability agreement with its auditors wherein the maximum aggregate amount of the auditor’s

liability shall not exceed £5 million. Agreement to these principal terms was confirmed by the company and its members in a resolution

dated 25 November 2025.

20 Subsequent events

On December 16, 2024, the Parent entered into a definitive agreement with Virgin Music Group whereby it would acquire Downtown

Music Holdings LLC for cash consideration of USD $775,000,000. However, the acquisition is subject to regulatory approvals and has

not officially closed as of the date of these financial statements. If the transaction does eventually close, it would result in a change of

control of the Company.

21 Cash generated from group operations


	2024	2023
	£'000	£'000
Loss for the year after tax	(4,180)	(81)
Adjustments for: Taxation charged	1,269	545
Investment income	1,629	(1,593)
Amortisation and impairment of intangible assets	10,002	9,092
Depreciation and impairment of tangible fixed assets	321	467
Other gains and losses	283	(225)
Movements in working capital: Increase in debtors	2,357	(18,840)
Increase in creditors	1,895	13,204
Increase in deferred income	(2,858)	8,737
Cash generated from operations	10,718	11,306

22 Analysis of changes in debt - group


	2024
	£'000
Opening net funds
Cash and cash equivalents	18,969
Changes in net debt arising from:
Cash flows of the entity	4,140
Closing net funds as analysed below	23,109
Closing net funds
Cash and cash equivalents	23,109


	Page
Strategic report	1 - 6

Directors' report	7

Independent auditor's report	8 - 9

Group statement of comprehensive income	10

Group balance sheet	11

Company balance sheet	12

Group statement of changes in equity	13

Company statement of changes in equity	14

Group statement of cash flows	15

Notes to the financial statements	16 - 30