November 7, 2008
US based reggae/dancehall label, VP Records, acquired its rival Greensleeves for £150,000 ($17.2 million) less than its previous owners, but high administrative expenses may burden the record label going forward.
In February this year, VP acquired its rival for £3.1 million (J$356.5 million), saving some £150,000 (J$17.2 million) on the Zest Group purchase price in 2006, even as the Greensleeves catalogue had grown. A glimpse into Greensleeves accounts give a rare look into one of the most important reggae labels, which accounts for an almost Pac-man-sized view of the market.
Previously undisclosed financials tell that Greensleeves was so unprofitable for the Zest Group that it lost £738,000 (J$84.9 million) in selling to rival VP: of that figure £104,000 (J$11.9 million) was a trading loss over six months and £634,000 (J$72.9 million) was the loss on disposal.
What's worse is that in 2007, during Greensleeves' final full year under Zest's control, it racked up losses of £337,000 (J$38.8 million) on revenues of £2.7 million (J$310.5 million), mainly due to high administrative costs of £1.56 million (J$179.4 million). These costs wiped out the label's healthy gross profit which it used to support new and existing reggae/dancehall talent.
VP inherited a catalogue comprising some of the most notable albums of the genre including Sean Paul
VP did not respond to the questions from Splash up to print. But it can arguably turn a profit on Greensleeves by streamlining overlapping administrative functions, thus cutting costs. It already got some saving when former Marcus Lee finance director and non-executive director of Greensleeves, Grant Gazdig, stepped down with the acquisition. However, financials indiciate that it will need to shave-off about £300,000 (J$34.5 million) all things being equal.
VP paid cash for its rival but still has to make a final payment in the coming months.
"The total consideration for the disposal was £3,100,000 (J$356.5 million) in cash, of which £100,000 (J$115 million) is deferred until 2009," said Richard Griffiths, Zest chairman in his investor report obtained by Splash. "The proceeds from the disposal were used by Zest to repay borrowings of approximately £1.8 million (J$207 million), settle outstanding creditors and provide additional working capital for the Company."
Greensleeves Records Ltd, Greensleeves Publishing Ltd and Greensleeves USA were sold to VP Records in February after VP made an official bid in January.
"Following the sale of Greensleeves the management team has continued to focus on its retained roster of artistes; Tami Chynn, Nasio Fontaine and Tony Fennell," said Griffiths.
With the sale, VP inherited a catalogue comprising some of the most notable albums of the genre, from Elephant Man to Yellowman and hit songs recorded by such acts as Rihanna, Sean Paul and Shaggy.
Greensleeves founders Chris Sedgwick & Chris Cracknell began the label in 1977.
VP Records is home to global superstars such as Beres Hammond, Sean Paul, Morgan Heritage, Elephant Man, and others. VP Records is also the fastest-growing music publisher in the reggae and dancehall music genres.
Source:jamaicaobserver.com
US based reggae/dancehall label, VP Records, acquired its rival Greensleeves for £150,000 ($17.2 million) less than its previous owners, but high administrative expenses may burden the record label going forward.
In February this year, VP acquired its rival for £3.1 million (J$356.5 million), saving some £150,000 (J$17.2 million) on the Zest Group purchase price in 2006, even as the Greensleeves catalogue had grown. A glimpse into Greensleeves accounts give a rare look into one of the most important reggae labels, which accounts for an almost Pac-man-sized view of the market.
Previously undisclosed financials tell that Greensleeves was so unprofitable for the Zest Group that it lost £738,000 (J$84.9 million) in selling to rival VP: of that figure £104,000 (J$11.9 million) was a trading loss over six months and £634,000 (J$72.9 million) was the loss on disposal.
What's worse is that in 2007, during Greensleeves' final full year under Zest's control, it racked up losses of £337,000 (J$38.8 million) on revenues of £2.7 million (J$310.5 million), mainly due to high administrative costs of £1.56 million (J$179.4 million). These costs wiped out the label's healthy gross profit which it used to support new and existing reggae/dancehall talent.
VP inherited a catalogue comprising some of the most notable albums of the genre including Sean Paul
VP did not respond to the questions from Splash up to print. But it can arguably turn a profit on Greensleeves by streamlining overlapping administrative functions, thus cutting costs. It already got some saving when former Marcus Lee finance director and non-executive director of Greensleeves, Grant Gazdig, stepped down with the acquisition. However, financials indiciate that it will need to shave-off about £300,000 (J$34.5 million) all things being equal.
VP paid cash for its rival but still has to make a final payment in the coming months.
"The total consideration for the disposal was £3,100,000 (J$356.5 million) in cash, of which £100,000 (J$115 million) is deferred until 2009," said Richard Griffiths, Zest chairman in his investor report obtained by Splash. "The proceeds from the disposal were used by Zest to repay borrowings of approximately £1.8 million (J$207 million), settle outstanding creditors and provide additional working capital for the Company."
Greensleeves Records Ltd, Greensleeves Publishing Ltd and Greensleeves USA were sold to VP Records in February after VP made an official bid in January.
"Following the sale of Greensleeves the management team has continued to focus on its retained roster of artistes; Tami Chynn, Nasio Fontaine and Tony Fennell," said Griffiths.
With the sale, VP inherited a catalogue comprising some of the most notable albums of the genre, from Elephant Man to Yellowman and hit songs recorded by such acts as Rihanna, Sean Paul and Shaggy.
Greensleeves founders Chris Sedgwick & Chris Cracknell began the label in 1977.
VP Records is home to global superstars such as Beres Hammond, Sean Paul, Morgan Heritage, Elephant Man, and others. VP Records is also the fastest-growing music publisher in the reggae and dancehall music genres.
Source:jamaicaobserver.com
