Sony Music Entertainment UK’s turnover and profits dipped in the year ending March 2016, according to the company’s latest accounts, which revealed the cost of its recent high-profile acquisitions.
The documents, available for public viewing on Companies House, show the firm’s turnover totalled £198.1 million for the period, down 16.8% on the previous year. Gross profit fell 21.9% to £103.2m and the company made an overall profit of £14.1m.
Sony’s Ministry Of Sound deal cost £67m, while other acquisitions included Century Media Records, bought in August 2015 for £12,156,000, and indie label and artist services company Essential Media & Marketing, which it snapped up for £3,661,000. It also emerged that Sony acquired a 50% share in Simon Cowell’s Syco Holdings in July 2015.
“The company considers its key risks and uncertainties to be physical music market decline and piracy, in addition to the strength of the release schedule,” says the report, signed by Sony Music director William Rowe. “The directors are confident that Sony Music Entertainment UK Limited will continue to deliver strong results in a challenging market through a strong release schedule, aligning its business model to the changing market and controlling costs effectively.”
Sony’s 50% share in Syco Holdings - representing an indirect additional 25% investment in Syco Entertainment - was for a total consideration of £86,456,000. Of that figure, £52,405,000 was paid in cash with a further £33,396,000 taking the form of loan notes issued by Syco Holdings Limited.
Elsewhere, it was Ministry Of Sound Group’s accounts that revealed the price of Sony’s acquisition of Ministry Of Sound Recordings. “On August 9, 2016, Ministry Of Sound Group Limited disposed of its entire shareholding in Ministry Of Sound Recordings Limited for a consideration of £67m,” states the publication.
Overall revenue in the Ministry Of Sound recordings business increased 8% to £27.1m in the 12 months to December 31, 2015, but gross profit margin fell from 49% to 45% due to “significantly increased marketing costs” following the switch to a Friday release date in July that year. Ministry Of Sound was responsible for one in seven compilation albums sold in the UK in 2015, notes the report.