Sanctuary Group has warned that it is facing an adjustment in its financial results as it initiates a review of its accounting policies.
In a trading update issued Friday (Oct. 28) evening to the London Stock Exchange, the independent music firm said it was likely to make changes to accounting policies which “may give rise to prior year adjustments,” “alter its methods of estimation in certain areas” and give rise to exceptional items in its annual results for the year ending Sept. 30.
It said that, while the impact is still to be determined, the effects of the changes coupled with the difficult trading environment would “alter the balance sheet significantly.” The group will likely report net liabilities in its balance sheet.
An extraordinary general meeting would need to be called if Sanctuary decides to implement the new accounting policy. Sanctuary’s directors are in ongoing talks with its auditors, Baker Tilly, on the impact of the accounting changes.
The London-based independent company confirmed a review of its business in June and has since undertaken a cost reduction program, which has seen roughly 150 staff shed from its operation worldwide.
“Our aim in undertaking the review is to reposition Sanctuary for a return to profitability and sustainable long-term growth in future years,” comments Sanctuary executive chairman Andy Taylor in the statement.
“Whilst this process has been very painful for staff and shareholders,” Taylor adds, “we continue to command gratifying support in the industry amongst artists and trading partners.”
Morrissey’s recent re-signing to the music company has added weight to Taylor’s comments. The former Smiths frontman will follow-up last year’s million-plus selling “You Are the Quarry” with an album release in the spring of 2006, according to Sanctuary. Morrissey is due to complete work on the new album shortly.