C2W Mu­sic paid out more to ac­coun­tants than it made in rev­enues

Jamaica Gleaner - - BUSINESS - Steven Jack­son Se­nior Busi­ness Reporter steven.jack­son@glean­erjm.com

MU­SIC PUB­LISHER C2W Mu­sic Lim­ited paid more money to ac­coun­tants and au­di­tors than it earned in to­tal rev­enues over six-months. It raises is­sues about the sus­tain­abil­ity of the com­pany whose ac­cu­mu­lated deficit con­tin­ues to grow. The com­pany’s au­di­tors have pre­vi­ously noted that from in­cep­tion, C2W has fallen short of its own pro­jec­tions and has not achieved the level of rev­enues re­quired to sus­tain its op­er­a­tions.

Over the six months end­ing June 2016, the mu­sic pub­lisher’s net losses to­talled US$21,000 on rev­enues of US$5,350. Its ad­min­is­tra­tive fees to­talled US$12,700, of which au­dit fees to­talled US$3,787 and ac­count­ing fees US$2,000. To cover the rev­enue short­fall the com­pany sought spon­sor­ship, which it cat­e­gorised as other in­come to­talling some US$11,200 over the pe­riod.

C2W listed as a start-up on the Ja­maica Stock Ex­change in 2012. Amid per­sis­tent strug­gles, it an­nounced plans to shift its busi­ness model from solely pub­lish­ing to one that em­braces all as­pects of mu­sic man­age­ment, which it dubbed its 360 model. How­ever, the com­pany re­mains one of the most con­sis­tent loss-mak­ers on the ju­nior mar­ket of the Ja­maica Stock Ex­change. Its ac­cu­mu­lated deficit stands at some US$1.27 mil­lion.

In­vestors pumped over US$1 mil­lion into the op­er­a­tions back in April 2012 when the com­pany was floated on stock mar­ket. That money how­ever, got ex­pensed, par­tially due to song­writ­ing work­shops held in var­i­ous parts of the Caribbean.

Cur­rently, the com­pany’s great­est as­set re­mains its ad­vances to song­writ­ers at US$251,000 up from US$210,000 a year ear­lier. But the qual­ity of th­ese ad­vances, and whether any are im­paired, re­mains un­cer­tain. The com­pany cur­rently lists none of its ad­vances as cur­rent as­sets (US$23,763 in 2015), which would be re­couped within the next 12 months.

CAP­I­TAL BASE SHRINKS

Share­holder eq­uity in the com­pany has fallen to US$14,700 from US$17,400 a year ear­lier. Own­er­ship of the com­pany is held pri­mar­ily by CEO Ivan Berry with 45 per cent; chair­man Derek Wilke, 20 per cent; and two ac­counts con­trolled by Stocks and Se­cu­ri­ties Lim­ited, 27.9 per cent.

C2W has promised a re­sponse on the cur­rent state of its fi­nances.

For the 2015 fi­nan­cials re­leased in April, au­di­tors Baker Tilly Stra­chan Lafayette, char­tered ac­coun­tants, of­fered a qual­i­fied opin­ion on as­pects of C2W’s rev­enue stream.

The au­di­tors said they were un­able to ob­tain “suf­fi­cient ap­pro­pri­ate au­dit ev­i­dence” of the com­plete­ness of C2W’s roy­alty in­come, which they as­cribed to the in­abil­ity of ex­ter­nal mon­i­tor­ing agen­cies to prop­erly doc­u­ment C2W’s reper­toire of works with their cur­rent tech­no­log­i­cal sys­tems.

Ad­di­tion­ally, due to dif­fi­cul­ties with the sys­tems of per­form­ing rights so­ci­eties in the re­gion and the re­port­ing by them to the com­pany, the au­di­tors were un­able to de­ter­mine the com­plete­ness of C2W’s sub-pub­lish­ing rev­enues.

Fur­ther, the au­di­tors stated that the com­pany “de­rives a por­tion of its in­come from spon­sor­ship which can­not be con­trolled un­til they are recorded in the ac­count­ing records and are, there­fore, not sus­cep­ti­ble to in­de­pen­dent au­dit ver­i­fi­ca­tion”.

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