spotify (1)Spotify’s UK subsidiary has published its financial results for 2012, revealing that its revenues fell 4.1% year-on-year to £92.6m, due to a 10.6% drop in subscription revenues.

The accounts for Spotify Ltd, published through Companies House in the UK, also reveal that the subsidiary cut its cost of sales from £87.9m in 2011 to £76.2m in 2012. However, Spotify Ltd generated a loss after taxation of £10.1m in 2012, compared to a profit of £21m in 2011.

“Total revenue decreased from £96,544.439 to £92.612,389. This was attributable to an increase in advertising revenue from £8,148,530 to £9,147,372 and sales of subscription that decreased from £72,462,713 to £64,756,426,” explain the accounts.

Subscription revenues down? ABANDON SHIP, MAYDAY MAYDAY. Except Spotify says it has an explanation for the drop: in the first five months of 2011, Spotify’s global premium subscriptions revenue was handled through the UK subsidiary, but since June 2011 that revenue was recognised instead through the company’s other local subsidiaries.

In other words, the £72.5m of subscription revenues for Spotify Ltd in 2011 included five months of revenues from its customers elsewhere in the world, but the £64.8m in 2012 is just for the UK.

Earlier this year, financial results for Spotify as a whole revealed group revenues of €434.7m (£363.7m) in 2012, and a net loss of €58.7m (£49.1m). As part of that, subscriptions rose from €156.9m (£131.3m) in 2011 to €368.8m (£308.6m) in 2012, while ad revenues rose from €30.1m (£25.2m) to €59.6m (£49.9m).

That means Spotify’s UK subsidiary generated 25.5% of the group’s overall revenues in 2012, including just over a fifth (21%) of its subscriptions revenues. Which – and this is the point we get into slightly shonkier maths – might suggest that Spotify had more than 1m paying subscribers in the UK at the end of 2012, when the group was reporting 5m subscribers globally.