Proper Music Group Limited - Limited company accounts 18.2

REGISTERED NUMBER: 03894953 (England and Wales)

GROUP STRATEGIC REPORT,

REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2019

FOR

PROPER MUSIC GROUP LIMITED

Page

Company Information

1

Group Strategic Report

2

Report of the Directors

3

to

4

Report of the Independent Auditors

5

to

6

Consolidated Statement of Comprehensive Income

7

Consolidated Balance Sheet

8

Company Balance Sheet

9

Consolidated Statement of Changes in Equity

10

Company Statement of Changes in Equity

11

Consolidated Cash Flow Statement

12

Notes to the Consolidated Cash Flow Statement

13

Notes to the Consolidated Financial Statements

14

to

29

DIRECTORS:

M S Mills

Mrs M B Mills

SECRETARY:

Mrs M B Mills

REGISTERED OFFICE:

Norman House

8 Burnell Road

Sutton

Surrey

SM1 4BW

REGISTERED NUMBER:

03894953 (England and Wales)

AUDITORS:

Myrus Smith

Chartered Accountants

and Statutory Auditor

Norman House

8 Burnell Road

Sutton

Surrey

SM1 4BW

The directors present their strategic report of the company and the group for the year ended 31 March 2019.

PRINCIPAL ACTIVITIES

The group's principal activities in 2018/19 intentionally remained exclusively in the music industry with the

emphasis on wholesale distribution and record company services. Additionally, the subsidiary companies

encompass music publishing and direct to consumer retail and fulfilment services.

REVIEW OF BUSINESS

The detailed result is reported in the consolidated statement of comprehensive income on page 7.

During the financial year 2018/19, overall levels of business have risen 8% to £25,871,839 with a profit before

tax of £1,086,711.

PRINCIPAL RISKS AND UNCERTAINTIES

The key risk areas for Proper Music Group Limited continue to be:

- The continued volatility of the global music business

- Unexpected changes to technical requirements

- Ongoing uncertainly over the true meaning of Brexit and its effects

These risks are mitigated as much as possible by our plans to expand our service offering and client base.

We moved into larger, more sophisticated premises to facilitate this growth.

FUTURE DEVELOPMENTS

The new operating premises for the companies, with almost five times the cubic capacity of our previous

units, continues to enable us to accept new business while remaining flexible enough to diversify into other

entertainment industry related services and products in the future.

The main subsidiary company, Proper Music Distribution Limited, continues to have numerous opportunities

for sustained expansion as the overall entertainment distribution market in the UK and Worldwide

consolidates. The growth of the Direct to Consumer business model also provides an opportunity for

continued development of Propermusic.com Ltd. Proper Records Limited's constantly evolving talent roster

and ever expanding catalogue, generates good business for all stakeholders.

Digital revenues grow further for the industry at large and the group, but physical products and associated

services remain the core income streams for the foreseeable future. The Directors continue to be optimistic

about prospects for the medium to long term.

ON BEHALF OF THE BOARD:

M S Mills - Director

13 December 2019

The directors present their report with the financial statements of the company and the group for the year

ended 31 March 2019.

PRINCIPAL ACTIVITIES

The principal activities of the group are set out in the Group Strategic Report on page two.

DIVIDENDS

Interim dividends per share were paid as follows:

£189.47

- 5 April 2018

£15.79

- 30 June 2018

£15.79

- 30 September 2018

£15.79

- 31 December 2018

£15.79

- 31 March 2019

£252.63

The directors recommend that no final dividend be paid.

The total distribution of dividends for the year ended 31 March 2019 will be £ 240,000 .

DIRECTORS

The directors shown below have held office during the whole of the period from 1 April 2018 to the date of this

report.

M S Mills

Mrs M B Mills

DISCLOSURE IN THE STRATEGIC REPORT

Disclosures required under Schedule 7 to the Large and Medium-sized Companies and Groups (Accounts

and Reports Regulations) 2008 are set out in the strategic report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Group Strategic Report, the Report of the Directors and the

financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law

the directors have elected to prepare the financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company

law the directors must not approve the financial statements unless they are satisfied that they give a true and

fair view of the state of affairs of the company and 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 and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain

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

position of the company and the group and enable them to ensure that the financial statements comply with

the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the

group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the

Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps

that he or she ought to have taken as a director in order to make himself or herself aware of any relevant

audit information and to establish that the group's auditors are aware of that information.

AUDITORS

The auditors, Myrus Smith, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

M S Mills - Director

13 December 2019

Opinion

We have audited the financial statements of Proper Music Group Limited (the 'parent company') and its

subsidiaries (the 'group') for the year ended 31 March 2019 which comprise the Consolidated Statement of

Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of

Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes

to the Consolidated Cash Flow Statement, Notes to the Financial Statements, 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).

In our opinion the financial statements:

-	give a true and fair view of the state of the group's and of the parent company affairs as at 31 March 2019 and of the group's profit for the year then ended;

-	have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

-	have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the Auditors'

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 UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in

accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to

report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the

Group Strategic Report and the Report of the Directors, but does not include the financial statements and our

Report of the Auditors thereon.

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.

In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such

material inconsistencies or apparent material misstatements, we are required to determine whether there is a

material misstatement in the financial statements or a material misstatement of the other information. If,

based on the work we have performed, we conclude that there is a material misstatement of this other

information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

-	the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Group Strategic Report and the Report of the Directors 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 its environment

obtained in the course of the audit, we have not identified material misstatements in the Group Strategic

Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to

report to you if, in our opinion:

-	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 Statement of Directors' Responsibilities set out on page three, 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 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 group's and 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 group or the

parent company or to cease operations, or have no realistic alternative but to do so.

Auditors' 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 a Report of the Auditors 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.

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

Report of the Auditors.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of

the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's

members those matters we are required to state to them in a Report of the Auditors 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.

Stephen Jones FCA (Senior Statutory Auditor)

for and on behalf of Myrus Smith

Chartered Accountants

and Statutory Auditor

Norman House

8 Burnell Road

Sutton

Surrey

SM1 4BW

13 December 2019

TURNOVER

4

25,871,839

23,874,689

Cost of sales

21,831,088

19,946,162

GROSS PROFIT

4,040,751

3,928,527

Administrative expenses

2,780,481

4,563,236

1,260,270

(634,709

)

Other operating income

744

293

OPERATING PROFIT/(LOSS)

6

1,261,014

(634,416

)

Interest receivable and similar income

83

65

1,261,097

(634,351

)

Interest payable and similar expenses

7

174,386

111,724

PROFIT/(LOSS) BEFORE TAXATION

1,086,711

(746,075

)

Tax on profit/(loss)

8

(57,398

)

11,105

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

1,144,109

(757,180

)

OTHER COMPREHENSIVE INCOME

Transfer from non-controlling interest

-

101,454

Income tax relating to other comprehensive income

-

-

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX

-

101,454

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

1,144,109

(655,726

)

Profit/(loss) attributable to:

Owners of the parent

1,144,109

(678,334

)

Non-controlling interests

-

(78,846

)

1,144,109

(757,180

)

Total comprehensive income attributable to:

Owners of the parent

1,144,109

(467,434

)

Non-controlling interests

-

(188,292

)

1,144,109

(655,726

)

FIXED ASSETS

Intangible assets

12

333,771

179,659

Tangible assets

13

1,732,558

3,428,582

Investments

14

-

-

Investment property

15

-

-

2,066,329

3,608,241

CURRENT ASSETS

Stocks

16

1,672,602

1,669,536

Debtors

17

6,846,648

6,041,214

Cash at bank and in hand

1,530,241

185,175

10,049,491

7,895,925

CREDITORS

Amounts falling due within one year

18

8,567,547

8,406,907

NET CURRENT ASSETS/(LIABILITIES)

1,481,944

(510,982

)

TOTAL ASSETS LESS CURRENT LIABILITIES

3,548,273

3,097,259

CREDITORS

Amounts falling due after more than one year

19

(1,130,172

)

(1,476,446

)

PROVISIONS FOR LIABILITIES

23

(33,103

)

(139,924

)

NET ASSETS

2,384,998

1,480,889

CAPITAL AND RESERVES

Called up share capital

24

950

950

Retained earnings

25

2,384,048

1,479,939

SHAREHOLDERS' FUNDS

2,384,998

1,480,889

The financial statements were approved by the Board of Directors on 13 December 2019 and were signed on

its behalf by:

M S Mills - Director

FIXED ASSETS

Intangible assets

12

-

-

Tangible assets

13

1,147

1,621

Investments

14

46,234

46,234

Investment property

15

-

3,605,000

47,381

3,652,855

CURRENT ASSETS

Debtors

17

1,381,399

1,339

Cash at bank

665,386

154

2,046,785

1,493

CREDITORS

Amounts falling due within one year

18

242,711

1,037,378

NET CURRENT ASSETS/(LIABILITIES)

1,804,074

(1,035,885

)

TOTAL ASSETS LESS CURRENT LIABILITIES

1,851,455

2,616,970

PROVISIONS FOR LIABILITIES

23

-

296,851

NET ASSETS

1,851,455

2,320,119

CAPITAL AND RESERVES

Called up share capital

24

950

950

Other reserves

25

-

1,592,559

Retained earnings

25

1,850,505

726,610

SHAREHOLDERS' FUNDS

1,851,455

2,320,119

Company's (loss)/profit for the financial year

(228,664

)

1,158,734

The financial statements were approved by the Board of Directors on 13 December 2019 and were signed on its behalf by:

M S Mills - Director

Called up

share

Retained

Non-controlling

Total

capital

earnings

Total

interests

equity

£

£

£

£

£

Balance at 1 April 2017

950

2,116,819

2,117,769

188,292

2,306,061

Changes in equity

Dividends

-

(60,000

)

(60,000

)

-

(60,000

)

Total comprehensive income

-

(576,880

)

(576,880

)

(188,292

)

(765,172

)

Balance at 31 March 2018

950

1,479,939

1,480,889

-

1,480,889

Changes in equity

Dividends

-

(240,000

)

(240,000

)

-

(240,000

)

Total comprehensive income

-

1,144,109

1,144,109

-

1,144,109

Balance at 31 March 2019

950

2,384,048

2,384,998

-

2,384,998

Called up

share

Retained

Other

Total

capital

earnings

reserves

equity

£

£

£

£

Balance at 1 April 2017

950

930,774

289,661

1,221,385

Changes in equity

Dividends

-

(60,000

)

-

(60,000

)

Total comprehensive income

-

(144,164

)

1,302,898

1,158,734

Balance at 31 March 2018

950

726,610

1,592,559

2,320,119

Changes in equity

Dividends

-

(240,000

)

-

(240,000

)

Total comprehensive income

-

1,363,895

(1,592,559

)

(228,664

)

Balance at 31 March 2019

950

1,850,505

-

1,851,455

Cash flows from operating activities

Cash generated from operations

1

1,060,404

(1,512,239

)

Interest paid

(26,325

)

(24,849

)

Interest element of hire purchase and finance lease rental payments paid

(148,655

)

(84,570

)

Finance costs paid

(2,401

)

(2,353

)

Tax paid

4,267

(36,583

)

Net cash from operating activities

887,290

(1,660,594

)

Cash flows from investing activities

Purchase of intangible fixed assets

(236,004

)

(205,671

)

Purchase of tangible fixed assets

(57,972

)

(351,814

)

Sale of tangible fixed assets

3,557,520

26,752

Interest received

83

65

Net cash from investing activities

3,263,627

(530,668

)

Cash flows from financing activities

Loan repayments in year

(329,672

)

(120,512

)

Capital repayments in year

(320,622

)

(154,471

)

Amount withdrawn by directors

(820,000

)

-

Equity dividends paid

(240,000

)

(60,000

)

Net cash from financing activities

(1,710,294

)

(334,983

)

Increase/(decrease) in cash and cash equivalents

2,440,623

(2,526,245

)

Cash and cash equivalents at beginning of year

2

(910,382

)

1,615,863

Cash and cash equivalents at end of year

2

1,530,241

(910,382

)

1.	RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

2019

2018

£

£

Profit/(loss) before taxation

1,086,711

(746,075

)

Depreciation charges

362,953

234,443

(Profit)/loss on disposal of fixed assets

(2,084,586

)

268,110

Finance costs

174,386

111,724

Finance income

(83

)

(65

)

(460,619

)

(131,863

)

Increase in stocks

(3,066

)

(13,155

)

Decrease/(increase) in trade and other debtors

5,837

(1,566,869

)

Increase in trade and other creditors

1,518,252

199,648

Cash generated from operations

1,060,404

(1,512,239

)

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in

respect of these Balance Sheet amounts:

Year ended 31 March 2019

31.3.19

1.4.18

£

£

Cash and cash equivalents

1,530,241

185,175

Bank overdrafts

-

(1,095,557

)

1,530,241

(910,382

)

Year ended 31 March 2018

31.3.18

1.4.17

£

£

Cash and cash equivalents

185,175

1,615,863

Bank overdrafts

(1,095,557

)

-

(910,382

)

1,615,863