Financial Statement 2017 2 Profit and Loss Statement
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FOR THE LOVE OF MUSIC FINANCIAL NOAH KIN COMPOSER, LYRICIST TEOSTO MEMBER SINCE 2011 STATEMENT TABLE OF CONTENTS PROFIT AND LOSS STATEMENT 3 BALANCE 4 NOTES TO THE FINANCIAL STATEMENTS 1 Accounting principles 7 2 Income statement by activity 9 3 Notes to the balance sheet, assets 11 4 Notes to the balance sheet, liabilities 13 5 Securities and contingent liabilities 14 6 Notes on personnel 14 7 Ownership in other companies 14 PROPOSAL FOR DISTRIBUTION TO RIGHTHOLDERS 15 SIGNATURES TO THE ANNUAL REPORT AND FINANCIAL STATEMENTS 15 TEOSTO FINANCIAL STATEMENT 2017 2 PROFIT AND LOSS STATEMENT 1 Jan–31 Dec 2017 1 Jan–31 Dec 2016 DAY-TO-DAY OPERATIONS Income Royalties collected by Teosto 59,778,097.64 60,701,285.83 Other copyright royalties 5,363,457.82 7,889,813.38 Remuneration for public lending 757,714.11 568,687.36 Compensation for private copying 1,760,303.85 1,429,202.02 Other income 2,140.26 32,250.80 67,661,713.68 70,621,239.39 Costs Personnel expenses -6,116,589.51 -6,234,667.77 Depreciation -853,142.54 -800,835.45 Other costs -5,754,320.17 -6,902,444.27 -12,724,052.22 -13,937,947.49 54,937,661.46 56,683,291.90 FUNDRAISING Membership fees 112,400.00 115,702.42 55,050,061.46 56,798,994.32 INVESTMENTS AND FINANCING Income 3,125,849.00 1,707,884.29 Costs -378,595.72 -446,138.57 2,747,253.28 1,261,745.72 57,797,314.74 58,060,740.04 Transfer for distribution to rightholders -54,990,364.18 -57,032,374.47 Changes to the self-financed reserve -2,806,950.56 -1,028,365.57 SURPLUS/DEFICIT FOR THE FINANCIAL YEAR 0.00 0.00 TEOSTO FINANCIAL STATEMENT 2017 3 BALANCE SHEET 31 Dec 2017 31 Dec 2016 ASSETS NON-CURRENT ASSETS Intangible assets Other long-term expenditure 1,708,854.98 1,408,388.91 1,708,854.98 1,408,388.91 Tangible assets Machinery and equipment 542,056.77 783,834.13 542,056.77 783,834.13 Investments Shares and similar rights of ownership 32,101,260.06 22,258,810.36 32,101,260.06 22,258,810.36 TOTAL NON-CURRENT ASSETS 34,352,171.81 24,451,033.40 ASSETS IN THE SELF-FINANCED RESERVE Shares and similar rights of ownership 23,758,443.97 18,270,770.37 Other receivables 89,909.09 0.00 Financial securities 0.00 2,814,823.34 Cash in hand and at bank 3,195,838.01 3,151,646.80 27,044,191.07 24,237,240.51 CURRENT ASSETS Non-current receivables Other receivables 1,250,000.00 1,250,000.00 1,250,000.00 1,250,000.00 Current receivables Trade receivables 8,214,155.98 7,054,959.26 Loan receivables 19,824.34 7,706.00 Prepayments and accrued income 5,099,949.54 4,059,009.43 13,333,929.86 11,121,674.69 Financial securities Shares 12,296,147.81 23,856,511.83 Cash in hand and at bank 1,518,482.22 1,875,055.85 TOTAL CURRENT ASSETS 28,398,559.89 38,103,242.37 TOTAL ASSETS 89,794,922.77 86,791,516.28 TEOSTO FINANCIAL STATEMENT 2017 4 BALANCE SHEET 31 Dec 2017 31 Dec 2016 LIABILITIES EQUITY Self-financed reserve Teosto Fund 27,044,191.07 24,237,240.51 Surplus/deficit for the financial year 0.00 0.00 Total capital and reserves 27,044,191.07 24,237,240.51 DEBTS Trade debts 956,095.72 489,084.98 Other debts 9,891,551.88 8,750,222.76 Accruals and deferred income 1,195,438.91 1,472,427.54 Distribution funds to rightholders 50,707,645.19 51,842,540.49 Total debts 62,750,731.70 62,554,275.77 TOTAL LIABILITIES 89,794,922.77 86,791,516.28 TEOSTO FINANCIAL STATEMENT 2017 5 CASH FLOW STATEMENT 2017 2016 Cash flow from operating activities: Cash received for sales 64,058,248 68,550,319 Extraordinary items Cash received from fundraising 112,400 115,702 Cash paid for operating costs -11,706,190 -12,803,295 Cash flow from operating activities 52,464,458 55,862,727 Cash flow from investment activities: Investments in tangible and intangible assets -911,831 -106,994 Other investments -15,076,904 -5,214,259 Cash flow from investments -15,988,735 -5,321,253 Cash received for investments 2,747,253 1,261,746 Cash flow from operating activities and investments 39,222,977 51,803,220 Cash flow from distributed royalties Royalties distributed by Teosto to Finnish and international rightholders in total -53,543,567 -51,481,515 CHANGE IN CASH -14,320,591 321,705 Cash at the start of the financial year -28,605,295 -28,283,589 Cash at the end of the financial year 14,284,704 28,605,295 -14,320,591 321,705 TEOSTO FINANCIAL STATEMENT 2017 6 NOTES TO THE FINANCIAL STATEMENTS 1 ACCOUNTING PRINCIPLES Entering performing right and mechanical reproduction royalty Valuation and depreciation and intangible and tangible assets revenue as income Non-current assets are stated at cost. Depreciation is calculated The income is not fully comparable with the corresponding figures on a straight-line basis. for the previous year, as the accounting practices for income have been expanded to include all royalties licensed through Teosto, The depreciation principles are as follows: regardless of the collection method. Computer software 5 years Other long-term expenditure 10 years Teosto income statement includes copyright royalties collect- Machinery and equipment ed by Teosto and, from the beginning of 2016, Network of Music Computer hardware, other devices and cars 5 years Partners A/S (NMP) and copyright royalties paid to Teosto and Office machinery and equipment 10 years NMP by other organisations. The royalties collected by Teosto are mainly performing right royalties. Teosto managed the licensing of Valuation of investment assets cross-border online music services, while NMP was responsible for Securities and other investment assets are valued at cost or at their background processes, such as collection. market value on the date of the financial statements, whichever is lower. Teosto has transferred the administration of mechanical repro- duction rights to the Nordisk Copyright Bureau (NCB), a joint Nor- dic agency. For mechanical reproduction rights, Teosto’s income statement includes those NCB payments that are distributed by Teosto to Finnish rightholders. Using reciprocal representation agreements, Teosto has assigned the licensing and collection of foreign performing right royalties to foreign copyright societies. The royalties distributed by them to Teosto’s rightholders are included in Teosto’s income statement. TEOSTO FINANCIAL STATEMENT 2017 7 Income statement by activity Teosto issues licences for the performance of music, collects per- forming right royalties from users of music, and distributes royalties to rightholders in Finland and abroad. Royalty payments to foreign rightholders are distributed through the copyright society in the country in question. Conversely, Teosto distributes royalties re- ceived from foreign organisations to Finnish rightholders. 2017 2016 ROYALTIES COLLECTED BY TEOSTO Operating income 59,778,097.64 60,701,285.83 Operating costs* -10,990,327.37 -11,185,184.80 Fundraising 112,400.00 115,702.42 Investments and financing* 1,525,795.74 803,110.63 Other income 2,140.26 32,250.80 Net income to rightholders 50,428,106.27 50,467,164.88 Percentage of operating income 84.4 % 83.1 % Promotion of Finnish music (national funds transferred to reserves) 2,737,495.16 3,063,095.44 Percentage of performing right royalty income in Finland 6.0 % 6.7 % Transfer for distribution to rightholders 47,690,611.11 47,404,069.44 OTHER COPYRIGHT ROYALTIES Royalties from other organisations 5,363,457.82 7,889,813.38 Remuneration for public lending 757,714.11 568,687.36 Compensation for private copying* 1,670,394.76 1,429,202.02 Costs -491,813.63 -259,397.73 Transfer for distribution to rightholders 7,299,753.06 9,628,305.03 TOTAL TRANSFER FOR DISTRIBUTION TO RIGHTHOLDERS 54,990,364.17 57,032,374.47 *Excluding self-financed reserve TEOSTO FINANCIAL STATEMENT 2017 8 2 NOTES TO THE FINANCIAL STATEMENTS 2017 2016 Royalties collected by Teosto Radio and television* 31,317,748.28 33,505,213.69 Online** 8,173,935.45 7,094,189.68 Events*** 10,891,054.02 10,574,576.39 Background music 9,395,359.89 9,527,306.07 59,778,097.64 60,701,285.83 OTHER COPYRIGHT ROYALTIES Royalties for distribution to Teosto rightholders NCB, Denmark 2,021,132.28 3,835,558.58 GEMA, Germany 489,519.91 750,821.39 STIM, Sweden 448,917.31 551,860.84 PRS, UK 235,709.66 282,189.94 SACEM, France 194,496.83 251,844.35 ASCAP, USA 167,456.99 150,447.14 TONO, Norway 167,227.16 185,853.33 SGAE, Spain 150,560.60 79,131.34 SABAM, Belgium 119,247.69 63,772.35 AKM, Austria 114,090.12 137,539.12 SIAE, Italy 113,639.93 92,092.39 KODA, Denmark 111,840.68 136,619.35 Other 731,125.26 868,973.36 Total 3,043,832.14 3,774,451.04 Royalties for distribution to rightholders of Teosto and other organisations Broadcasting Finnish TV channels abroad, STIM 114,046.06 120,882.66 Mechanical reproduction for use in education, Kopiosto 184,447.34 158,921.10 Total 298,493.40 279,803.76 OTHER COPYRIGHT ROYALTIES TOTAL 5,363,457.82 9,182,491.09 *Includes the free online services of broadcasters and the network personal video recorder services of operators **Includes, among others, video streaming and subscription video services ***Includes licenses for background music to, for example, municipalities, parishes and ships TEOSTO FINANCIAL STATEMENT 2017 9 2017 2016 Lending compensation Remuneration paid by the government to authors for lending of works from public libraries.