Sanctuary Group, the troubled record label and management group, today said
that it expected its auditors Baker Tilly to deliver a qualified audit opinion
because of ‘fundamental uncertainty’ surrounding its accounting methodology.
As a result of the accounting problems the group, which has Elton John and
Morrissey in its stable, was forced to restate its 2004 figures as it announced
preliminary results for the year ended September 2005 today.
Turnover for 2004 was restated from £221m to £167m as 2005 revenues feel to
£156m. Pre-tax losses were similarly affected as the group reported a loss for
2005 of £143m, which increased from £26.7m in 2004. The 2004 loss was restated
‘The past 12 months have been the most difficult and challenging period that
Sanctuary has ever had,’ said Sanctuary executive chairman Andy Taylor. ‘The
financial consequences are clear to see in these accounts, in the presentation
of which we have sought to ensure that the most appropriate statement of figures
and accounting policies.’
Sanctuary first warned that it was facing a serious loss of capital in
October 2005 as a result of overly aggressive accounting policies. The record
company has since managed to raise £110m through an equity financing led by
Evolution Securities and has had a £35m debt with Bank of Scotland cancelled.
The group has also secured an additional £3m loan to cover immediate working
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