UK-based Zest Group is in deeper debt with £4.3 million ($572 million) in accumulated losses following the disposal of reggae label Greensleeves, one financial year ago — but it hopes to boost revenue from Dominican reggae star Nasio Fontaine in 2010.

The group made a trading loss of £283,000 over 12 months ending September 2009, which was added to previous losses totalling £4.05 million up to 2008 when the group disposed of Greensleeves, according to data released Monday, March 29, 2010. Equally troubling is the group’s balance sheet showing that for £1 held in assets £8 in liabilities was owed up to September 2009. Prior to Greensleeves’ disposal in 2008 total assets were 3.5 times its liabilities. The reduction of its net assets in 2009 — to less than half its called up share capital– has invoked a legal requirement to “convene a general meeting for the purposes of considering whether any… steps should be taken to deal with the company’s current financial position”, accompanying notes in the financials stated.

During the year, Stephen Weltman, chief executive officer was paid £100,000 and £650 per month car allowance, £450 per month medical and other benefits allowance and £155 per month salary continuance allowance. The group paid no bonuses in 2009 but it paid £135,000 as bonuses in 2008 following the “successful disposal of Greensleeves”, despite making a loss from the disposal.

During the year, the group continued to seek to “exploit the publishing and recording rights arising from its retained roster of artistes which include Tara Chinn, Nasio Fontaine and Tony Fennell”.

Zest said it was also seeking to conclude a new worldwide distribution deal for Fontaine’s five albums of which it owns 100 per cent of the masters and publishing rights which will commence towards the end of this calendar year.

During 2009 the group actually impaired (write-off) the £473,000 (2008: £533,000) in artiste advances, which is recoupable from income generated from record sales.

“There is no certainty with regard to the level of income, if any, to be generated by these artistes, which could impact on the recoverability of these balances, and as a consequence a provision for impairment has been included within the financial statements of £473,000 (2008: £533,000),” it stated.

On 15 February, 2008, Zest disposed of its entire shareholding in Greensleeves Records Limited, Greensleeves Publishing Limited and Greensleeves USA, its reggae music publishing business, for a £3 million plus deferred consideration of £100,000 (totalling $412 million, at the current exchange rate).

Rival VP Records bought the reggae label to become the largest independent reggae label in the world. Critics stated that it would reduce avenues for reggae artistes to negotiate contracts, especially with the music industry in continued contraction.