Registered number:
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
COMPANY INFORMATION
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SENTRIC MUSIC GROUP LIMITED
CONTENTS
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SENTRIC MUSIC GROUP LIMITED
GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2022
The directors present their strategic report for the year ended 31 December 2022.
The business performed above expectations in 2022, overachieving our Budget by 32% on Turnover, 14% on Gross Profit, and 27% on EBITDA. Year on year growth was equally impressive, with Turnover 40% higher than 2021, Gross Profit 29% higher, and EBITDA 9% higher. Significant investment in operating overheads, notably staff costs, were made in the year meaning EBITDA growth was lower than Turnover and Gross Profit.
Divisional results within the business all exceeded expectations. Publishing Revenues were up 41% year on year, mostly as a result of revenue from streaming and other online use. Synchronisation income was up 44%, driven by an increase in the size of the team and a push into new markets globally. Neighbouring Rights income was up 35% year on year, continuing the recovery from this area’s impact from COVID. Overhead spend grew by 43% against 2021, mostly in personnel costs (34% increase), but also in Sales and Marketing (126%) and Travel (316%) which grew significantly as we were able to travel again after COVID restrictions in 2021, and were able to deploy our marketing strategy for the same reason. Office costs grew by 71% against the prior year after investing in a London office which was previously closed throughout the pandemic. Internal operations continued to become more efficient using our in-house developed Rights Management software, as well as implementing key strategic off-the-shelf tools to improve our ability to operate our business model at such scale.
As with the previous year’s reports, the risk of a similar global pandemic event will not be forgotten and the way in which our business adapted during that time has been retained. As such, we consider ourselves mitigated against a similar event occurring in the future.
The group will always be at risk from the unfulfillment of contractual obligations, whether internal or external. This is mitigated by effective leadership and management teams, strong internal processes and the implementation of innovative technological solutions. The company’s direct international collection network presents risk from currency fluctuations. This is mitigated by natural hedging and a fair policy of royalty distribution using spot rates at the time of royalty receipt. Currency conversion is undertaken at times throughout the year when exchange rates are favourable. Currency hedging via institutions is an option for managing this further should the risk become more significant. The macroeconomic environment in 2022 posed a significant risk to hyper growth, low profitability companies. Sentric Music are profitable and growing at a high but reasonable pace and can afford the investments decisions made. As such, we do not rely on continuous external funding to achieve our objectives and consider this risk to our business to be significantly mitigated.
Sentric Music Group continues to use traditional KPIs to analyse the performance of the business.
Management accounts show year on year growth in group revenue of 39.5%. Gross profit margin contracted slightly to 15.5% vs. 16.8% in 2021, with gross profit itself growing 29%. EBITDA margin contracted slightly from 7.1% in 2021 to 5.5% in 2022, and EBITDA grew 9.2% against 2021.
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SENTRIC MUSIC GROUP LIMITED
GROUP STRATEGIC REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
Sentric Music Group was acquired by Utopia Music AG in early 2022. Sentric’s Board and Directors were excited about the prospect of enhanced future growth and improvement of processes in Music Publishing that we stood to benefit from. However, due to many external factors beyond the control of Sentric directors, Utopia Music AG made the decision to divest Sentric Music Group in December 2022.
In March 2023, the Sentric group was purchased by Believe. Paris based Believe have purchased Sentric to underpin their strategy in rolling out a global and comprehensive music publishing business in a transaction that values Sentric at €47m. The directors of Sentric are excited about the opportunity to grow the business within the Believe Group, allowing us to strengthen publishing for Tunecore’s self-releasing artists and expand it to new geographies, as well as offer publishing services to all clients within the Believe Group.
This report was approved by the board on 21 April 2023 and signed on its behalf.
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SENTRIC MUSIC GROUP LIMITED
DIRECTORS' REPORT
FOR THE PERIOD ENDED 31 DECEMBER 2022
The directors present their report and the financial statements for the period ended 31 December 2022.
The directors are responsible for preparing the Group strategic report, the Directors' report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group 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 for the Group's financial statements and then apply them consistently;
∙make judgments 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 will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the period, after taxation, amounted to £92,885 (2021 - profit £879,747).
The directors recommend a dividend of £100,000 for the year.
The directors who served during the period were:
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SENTRIC MUSIC GROUP LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
The business review, principal risks and uncertainties, key performance indicators and future developments are disclosed in the strategic report.
On 29 March 2023, the new ultimate parent company became Believe SA, a company incorporated in France.
Under section 487(2) of the Companies Act 2006, Langtons Professional Services Limited will be deemed to have been reappointed as auditor 28 days after these financial statements were sent to members or 28 days after the latest date prescribed for filing the accounts with the registrar, whichever is earlier.
This report was approved by the board on
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SENTRIC MUSIC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SENTRIC MUSIC GROUP LIMITED
We have audited the financial statements of Sentric Music Group Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 31 December 2022, which comprise the Group Profit and loss account, the Group Statement of comprehensive income, the Group and Company Statements of financial position, the Group Statement of cash flows, the Group and Company Statement of changes in equity and the related notes, including a summary of 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).
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 in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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.
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 or the parent 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.
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SENTRIC MUSIC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SENTRIC MUSIC GROUP LIMITED (CONTINUED)
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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Directors' report.
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SENTRIC MUSIC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SENTRIC MUSIC GROUP LIMITED (CONTINUED)
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SENTRIC MUSIC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SENTRIC MUSIC GROUP LIMITED (CONTINUED)
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 Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
The objectives of our audit, in respect to fraud, are: • to identify and assess the risks of material misstatement of the financial statements due to fraud; • to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and • to respond appropriately to fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. Our approach was as follows: We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant are those that relate to the reporting framework (FRS 102 and the Companies Act 2006), the relevant tax compliance regulations in the UK and the EU General Data Protection Regulation (GDPR). We understood how the Company is complying with those frameworks by making enquiries of management. Through consideration of the results of our audit procedures we were able to either corroborate or provide contrary evidence which was then followed up. Based on our understanding we designed our audit procedures to identify non-compliance with laws and regulations. Our procedures involved: enquiries of management; and journal entry testing, with a focus on manual consolidation journals and journals indicating large or unusual transactions based on our understanding of the business. We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur by meeting with management to understand where it considered there was susceptibility to fraud. We also considered performance targets and their propensity to influence efforts made by management to manage revenue and earnings. Where the risk was considered to be higher, including areas impacting key performance indicators or management remuneration, we performed audit procedures to address each identified fraud risk or other risk of material misstatement. These procedures included those on revenue recognition detailed above, the assessment of items identified by management as non-recurring and testing manual journals and were designed to provide reasonable assurance that the financial statements were free from material fraud or error.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor's report.
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SENTRIC MUSIC GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF SENTRIC MUSIC GROUP LIMITED (CONTINUED)
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.
for and on behalf of
Chartered Accountants
Statutory Auditor
11th Floor, The Plaza
100 Old Hall Street
L3 9QJ
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SENTRIC MUSIC GROUP LIMITED
REGISTERED NUMBER: 12566815
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 19 to 40 form part of these financial statements.
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SENTRIC MUSIC GROUP LIMITED
REGISTERED NUMBER: 12566815
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
REGISTERED NUMBER: 12566815
COMPANY STATEMENT OF FINANCIAL POSITION (CONTINUED)
AS AT 31 DECEMBER 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf on
The notes on pages 19 to 40 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2022
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2021
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SENTRIC MUSIC GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
CONSOLIDATED ANALYSIS OF NET DEBT
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
The entity is a private limited liability company, limited by shares registered in England and Wales within
the United Kingdom. The registered office is 1st Floor, 29 Parliament Street, Liverpool, L8 5RN and the company number is 12566815. The financial statements present consolidated group information as well as individual company information.
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Profit and loss account in these financial statements.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated profit and loss account from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 21 April 2020.
As this set of consolidated financial statements is prepared at an intermediate level in the consolidated group structure, intercompany balances may remain as assets and liabilities to other entities further up the corporate tree.
The group depends on its existing bank facilities to meet its day to day working capital requirements. Current forecasts indicate that the group expects to be able to operate within these facilities for whole of the foreseeable future. Accordingly, the directors believe it is appropriate to prepare the financial statements on the going concern basis.
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Artist liabilities represent only the amounts owing to account holders from monies already received by the company at the balance sheet date. Accrued income represents the company's net publisher share of royalty receipts that are due to the company in the future, calculated on the basis of activity undertaken in respect of the period for which the accounts have been prepared. The accrued income included is six months of revenue which has been calculated on a prudent basis. As a result, turnover represents twelve months worth of royalties.
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Group keeping the scheme open or the employee maintaining any contributions required by the scheme). Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Goodwill
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
For those balances still outstanding after 5 years, an appropriate provision is made to cover these amounts.
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
2.Accounting policies (continued)
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
The whole of the turnover is attributable to the principal activity of the business.
Analysis of turnover by country of destination:
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
12.Taxation (continued)
UK losses totalling £11,753,117 are available to offset against future profits.
Foreign losses of £860,583 are available to offset against future trading profits in the jurisdictions concerned.
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
During the period the following shares were issued:
44,939 D Ordinary shares of £0.01 each for £449.39 17,040 G Ordinary shares of £0.01 each for £170.40
Share premium account
Capital redemption reserve
Treasury reserves
Profit and loss account
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
The Group operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Group in an independently administered fund. The pension cost charge represents contributions payable by the Group to the fund. Contributions totalling £16,002 (2021 - £14,294) were payable to the fund at the reporting date and are included in other creditors.
29.Other financial commitments
The group is contracted to pay advances to artists in the normal course of business. At the year end, there are £663,000 (2021 - £161,108) of future committed advances. There are further contractually committed advances but the payment of these is dependent on the fulfillment of certain contractual requirements. Accordingly it is not possible to quantify the future commitments that may crystallise.
The ultimate parent company was Utopia Music AG, a company incorporated in Switzerland.
On 29 March 2023, the new ultimate parent company became Believe SA, a company incorporated in France.
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SENTRIC MUSIC GROUP LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2022
The directors consider that the group is entitled to exemption from the requirement to have an audit of its subsidiary undertakings under the provisions of section 479A of the Companies Act 2006 ("the Act") and members have not required any of the subsidiaries to obtain an audit for the year in question in accordance with section 476 of the Act.
Sentric Music Copyrights Limited (12567869), IQ Music Limited (01863098), Masstrax Music Limited (07403474), Sentric Music Publishing Limited (07763473) and Black Rock Publishing Limited (08499946) have taken advantage of this exemption.
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