Mdundo did not buy a catalogue this year. It changed the price it pays for one. The Nairobi-run, Danish-listed music service varied the commercial terms of the licences under which it carries other people’s recordings, effective January 2026, and in its audited accounts for the year to 30 June 2026 it names that variation as a reason its gross margin jumped from 47.4 per cent to 59.1 per cent. A footnote on the same page removes most of the jump. On the company’s own normalised basis, the improvement is 2.2 percentage points, not 11.6.
The accounts were approved by the board on 28 September 2026 and signed by EY the same day. They are the first document to say who was on the other side of the change: rights holders.
What actually changed hands#
Nothing was assigned. The word “deal” flattens four different legal relationships and this one is the narrowest of them. Mdundo owns no master recordings and no publishing. It is a licensee. Its catalogue is recordings uploaded directly by artists plus recordings licensed in from third parties, and a variation to the terms of an inbound licence changes the split of revenue, not the ownership of the song. No copyright moved. What moved is the share of each subscription and advertising krone the platform keeps before anyone upstream is paid.
The report’s wording is precise: gross margin improved “as a result of updated terms and conditions with rights holders implemented during the year (effective Jan 2026)”. Guidance for the year ahead is a gross margin of about 54 per cent, described as “a full year impact of T&C changes”.
No consideration is disclosed. There is no advance, no minimum guarantee, no lump sum, and no old or new rate. The number of licensors affected is not given. Whether each licensor negotiated the change or it was applied under mechanics already in their contracts is not stated. None of that could be established from any document available.
The arithmetic, and the footnote that undoes it#
The income statement is unambiguous. Group revenue fell to DKK 8,267,324 from DKK 10,965,460, down 24.6 per cent. Cost of sales, the line that carries content cost, fell to DKK 3,383,209 from DKK 5,761,323, down 41.3 per cent. Content cost fell at close to twice the rate of revenue. Revenue minus cost of sales gives the margin the company leads with: 59.08 per cent against 47.46 per cent, an improvement of 11.62 percentage points.
Then the footnote. The presented gross profit “reflects the reversal of prior-year provisions no longer payable. Adjusting for this reversal, gross margin % stands at 48.9% for FY25/26 and 46.7% for FY24/25.”
Normalised, the gain is 2.2 points. That is 18.9 per cent of the headline. Roughly four fifths of the improvement the company puts at the top of its announcement is a reversal of money it had previously booked as owed and has now concluded it does not have to pay. Applying the disclosed normalised percentages to reported revenue implies a reversal of about DKK 841,000 in the year just ended and about DKK 83,000 in the prior year. Those two figures are our arithmetic on the company’s own percentages, not sums Mdundo has published.
Who the reversed provisions were owed to is not stated. They sit inside the same cost line that carries rights holder costs, which is suggestive and is not proof, and the report draws no connection. Over the same twelve months “Other payables” fell from DKK 2,152,807 to DKK 902,388, a reduction of DKK 1,250,419, while trade payables barely moved, at DKK 9,003,491 against DKK 9,168,266. Whether any part of that movement is the reversal could not be established. Worth noting separately: trade payables at the year end equal 108.9 per cent of the year’s entire revenue.
Eight months between the change and the counterparty#
The variation reached the market in pieces. The half-year report of 5 February 2026 said only that “changes in terms and conditions have been executed” and that they were “expected to improve gross margin by 5 percentage points already in H2”. It did not say with whom. Rights holders as the counterparty, and January 2026 as the effective date, appear first in the audited report of 28 September, nearly eight months later.
The 5 points moved too. Measured against the normalised 48.9 per cent, the guided 54 per cent for the year ahead is 5.1 points, landing a full financial year after the half-year report placed it in the second half. The company also told the market on 2 July 2026 to expect year-end cash of DKK 9.0m to 9.5m. The balance sheet reports cash of DKK 8,849,234. The report reconciles to DKK 9.1m by adding a balance held with a local partner, Perform Marketing, which sits in receivables rather than cash.
What the audited report leaves out#
On 24 April 2026, two days into the subscription period of its rights issue, Mdundo disclosed a non-binding letter of intent from an unnamed third party contemplating a directed issue plus purchases from major shareholders that would hand that investor up to approximately 40 per cent, at an indicated DKK 2.50 a share. Shareholders were being asked to pay DKK 1.00 that week.
The audited annual report does not mention it. A full-text search of all 28 pages for “non-binding”, “letter of intent”, “proposal”, “subsequent event”, “change of control”, “40 per” and “2.50” returns no match. That is a verified absence and no conclusion is drawn from it: silence in a filing is not evidence that a proposal died. There is also no shareholder register and no disclosure of any holding above a notification threshold, so who controls Mdundo after the May raise still cannot be established from anything the company has published.
Nor does the report name a single licensor. Warner Music Group, Universal Music Group and Africori each appear exactly once, in a paragraph about those companies’ own African transactions, not about Mdundo’s licences. Mdundo’s inbound licensors have been identified in its earlier announcements, including Universal Music Group from July 2022 and Davido Music Worldwide, which licensed rather than appointed a distributor. Whether any of them is party to the January variation is not disclosed and is not asserted here.
The Kenyan company carried at nothing#
The operating business is Mdundo Limited, Kenya, the group’s only subsidiary, held at 100 per cent. Its equity is negative DKK 1,436,059 and its loss for the year DKK 1,587,624. The Danish parent carries its investment at nil: cost of DKK 13,108,276 written down by value adjustments of DKK 13,108,276. Under security and collateral the report states that “with the intention of maintaining and protecting the investments in Mdundo Limited, a statement of support valid for the affiliated company has been submitted for 12 months from the signing of this annual report”. On its face that support runs to 28 September 2027.
The entity that holds the African relationships, in other words, is balance-sheet insolvent on its own numbers and is kept upright by a letter from Charlottenlund with a twelve-month shelf life.
What this means for artists#
If you are one of the artists in Mdundo’s direct-upload pool, your counterparty is the platform itself, not a label or an aggregator standing between you and it. That is the exposed position. A major label licensor can let a licence lapse and walk. An artist paid through a platform programme cannot, and has no leverage over a change in terms that is announced to a stock exchange rather than negotiated.
Three things in this report are worth acting on. First, the cost line that pays rights holders fell 41.3 per cent while revenue fell 24.6 per cent. Whatever the mechanism, less money left the company per krone earned this year than last. If you hold a licence with Mdundo, the question to put in writing is whether your terms were among those updated in January 2026, and what the rate was before and after.
Second, artist promotion is now a revenue line, at DKK 0.1m, described as an arrangement “under which artists pay the Company to promote their music to its user base”. Payment on that line runs from the artist to the platform. Read any promotional offer from this service as a purchase, not something included in your deal.
Third, model the shift. Revenue guidance for the year ahead is DKK 8.0m to 10.0m against DKK 8.3m delivered, with telco subscription income expected to stay under pressure and management calling the decline at several of its largest telco partners structural. The platform is moving from advertising and telco billing at scale towards a smaller number of higher-paying direct subscribers at USD 1.99 a month. A subscription-led service pays out very differently from an advertising-funded one with tens of millions of users. Anyone treating this platform as volume income should assume the volume is going away.
One disclosure remains open. The contingencies note still records that “the Group is part of a claim from an artist against a Record Label”, adding that the case “has not been at pre-trial yet” and that management sees no relationship between the group and the claim. The artist, the label, the jurisdiction and the amount are all unnamed, a year after the matter first appeared.
The deal record for the January 2026 terms variation carries the full source list, and the record for the May 2026 rights issue covers the capital side. What Kenyan artists are actually charged by the companies around them is set out in our survey of distribution pricing in Kenya.
