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© 2016 Recorded Music New Zealand Limited. This Annual Report contains proprietary information and is provided for informational purposes only. Please do not use any information contained in it unless expressly authorised to do so by Recorded Music New Zealand Limited. ‘Recorded Music NZ’; ‘NZ Music Awards’; the Tui device; ‘The Official NZ Music Charts’; ‘ProMusic’; and ‘NZ Music Hall of Fame’ are registered trademarks. Designed by Mark Roach. Annual Report 2015
RECORDED MUSIC NEW ZEALAND LIMITED Annual Report for the year ended 31 December 2015
CONTENTS
6 Chairman’s Report 8 Chief Executive’s Report 12 2015 Year in Review 13 Revenue Summary 2015 14 The Official NZ Music Charts 40th Anniversary 16 NZ Music Awards 50th Anniversary Financial Statements: 18 Directory 19 Statement of Financial Position 20 Statement of Financial Performance 21 Statement of Funds Movement 22 Notes to the Financial Statements 24 Auditor’s Report
The directors are pleased to present the Annual Report and Financial Statements of Recorded Music New Zealand Limited for the year ended 31 December 2015.
For and on behalf of the Board of Directors
Chris Caddick, Chairman Adam Holt, Director Dated 04.04.16 Dated 04.04.16
4 BROODS The 2015 VNZMAs were dominated by Broods’ haul who received 5 Tuis: Best Album, Best Group, Best Pop Album, Best Album Cover and the Radio Airplay Song for hit single ‘Mother & Father’.
Mick Fleetwood was on hand to present Broods with their Best Album Tui. Georgia Knott would later write, “This is a moment I will never forget for the rest of my life. Mick Fleetwood wiping away happy tears after presenting Caleb and I with album of the year. He told me to never lose my emotion. Possibly the greatest moment of my career so far.”
Photo: Topic Photography
5 CHAIRMAN’S REPORT
2015 was an eventful year. With radio income flat the task of improving on 2014’s record revenues and payout was a tough one. It was most impressive to see the Recorded Music New Zealand team rise to the challenge and deliver another fantastic result.
The news that copyright term has been extended for sound recordings was welcomed. The ill-considered ‘phase-in’ however, highlighted just how poor understanding of the benefits of copyright industries to New Zealand is in Government circles.
Rhetoric related to the term extension also demonstrated that badly informed and vociferous opposition to copyright in general is rife in New Zealand. Clearly the education of Government officials needs to be a crucial element of our strategic plan for 2016.
I would like to thank the Board of Recorded Music New Zealand for its commitment and leadership and Damian Vaughan, Kristin Bowman and their team at Recorded Music New Zealand for their hard work in delivering terrific revenue and payout numbers in 2015. I would also like to extend my thanks to the elected Board members Peter Baker and Jan Hellriegel, who both complete 3 year terms on the first Recorded Music New Zealand Board. These positions are up for election in May.
2016 promises many new challenges, which I have every confidence will be met head on by the Board, the Management and the staff at Recorded Music New Zealand.
Chris Caddick Chairman, Recorded Music NZ
6 SAVAGE Demitrius Savelio aka Savage picked up one of the two International Achievement Tuis presented at the 2016 Vodafone NZ Music Awards, as well as collectng Highest Selling Single. Both awards reflected the success of his massively popular single Freaks which Savage performed at the Vector Arena show. LORDE Another singularly pseudonamed artist - Lorde - took away the night’s other International Achievement Tui for an unprecedented third time. Lorde’s track Yellow Flicker Beat also received the Tui for Single of the Year. THE EXPONENTS Neil Finn inducted the ever- popular Exponents into the NZ Music Hall of Fame. Frontman Jordan Luck also became the first artist to be inducted twice, following his songwriter induction in the Hall’s inaugural year. 7 All photos: Topic Photography 7 CHIEF EXECUTIVE’S REPORT 2015: On the right path
2015 will be noted as the year whereby the significant changes our organisation and industry has weathered in recent times have started to yield positive signs.
2015 was the year in which streaming revenues became the number one source of revenue for record companies and recording artists, and the local industry experienced, revenue growth in nominal terms for the first time in 15 years. Whilst this is positive in itself it does not account for the 15 years of industry contraction that we’ve experienced, let alone make up for that lost revenue to the recording industry over that period.
We are starting on the right path, but there is significant work to be done to continue the momentum into 2016 and beyond.
As Recorded Music New Zealand we have now completed two full years of our three year strategic plan and I am pleased to report that we have delivered positive results across our three strategic focuses: Maximising our collective licensing revenue; delivering world class services to our membership; and protecting and promoting music via our ProMusic activities.
I am also very pleased to report that we have met our collective licensing revenue targets in 2015 and we will again distribute $10m+ in royalties to members this year.
Member Services
• 2015 produced a distributable income to members of $10.7m (for distribution in 2016); this represents an increase of 7% on the previous year.
• The current number of NZ recording artists now registered in the Direct- to-Artist royalty scheme is 2216. This is a 12% increase on membership since December 2014 (234 new registered NZ Recording Artists).
• The 50th annual celebration of the Vodafone New Zealand Music Awards was held on Thursday 19th November 2015 at Auckland’s Vector Arena. o There were performances by Broods, Devilskin, Savage, Janine and the Mixtape, Gin Wigmore, Marlon Williams and a very special tribute performance to The Exponents by Tami Neilson and Dave Dobbyn. o Broods won album of the year for their album ‘Evergreen’; Lorde won single of the year for ‘Yellow Flicker Beat’ and The Exponents received the 2015 NZ Herald Legacy Award and were inducted into the NZ Music Hall of Fame. o Broadcast live for the first time on TV3, the 2015 VNZMA Awards Show was one of our most successful shows ever in terms of coverage and exposure.
• Recipients in 2015 of Recorded Music NZ Music Grants were: The NZ Music Foundation, Lake Wanaka SouNZ, Smokefree Pacifica Beats, Play It Strange Trust, Dunedin Fringe Arts Trust, IMNZ – Going Local/Going Global, MMF – May Music Month Summit, MMF – Back To Basics, Creative Souls Project, Zeal Education Trust, Studiolink Inc. and the Mika Haka Foundation.
88 • We also celebrated the 40th anniversary of the Official NZ Music Charts with a special event in May. We presented special recognition awards to artists that hold chart records over the 1975-2015 period. These included: local artists Tiki Taane, Scribe, Deep Obsession, Shihad, Hayley Westenra and Fat Freddy’s Drop and video/photo acceptances from international artists Adele and New Order. o As a nod to the history of Recorded Music in NZ we also manufactured Broods Evergreen a limited edition 7” with all proceeds from the sales going to the NZ (Universal Music) Album of the Year, Best Pop Album, Best Group, Music Foundation. The 7” featured Tiki Taane’s ‘Always on My Mind’ Best Album Cover, Radio Airplay of the Year the NZ single that spent the most weeks in the charts (55 weeks) and (for Mother & Father) Scribe’s ‘Stand Up’ the NZ single that spent the most weeks at number 1 (12 weeks).
• In 2016 we will introduce improvements to our television and public performance data collection methods that will improve the accuracy of the distribution to members. We will also refocus our efforts on improving our communication and reporting to membership throughout the year.
• We will continue our objective to ensure the charts are the authority on music consumption and popularity introducing streaming into the album charts, revise our heat seeker chart and introduce #1 Awards for kiwi singles and albums.
• We will ensure that celebrating the achievements of our local artists is the most important focus for the Awards and maintain the Tui as the pinnacle achievement for a NZ recording artist.
Revenue We enjoyed meaningful licensing income growth in 2015 achieving $13.7m which represents 6% growth.
When compared to our 2014 performance across our three core revenue streams our radio revenues experienced a 4% decline, but this was offset by7% growth in television and a massive 25% growth in public performance.
• The growth in public performance was driven almost entirely by the work of the OneMusic team. A culmination of the team’s dedication and VNZMA 2015 Media advertising determination to complete a lengthy and complicated relicensing process which has now successfully migrated into new business.
• We also saw meaningful growth in television licensing, despite the challenges and technological changes the television industry has experienced over recent years.
• In contrast; commercial radio experienced a tough year for advertising and consequently our overall revenue from radio declined in 2015. Whilst not unique to NZ, it is clear that music consumption and advertising dollars are spreading and diversifying across various media. It should be noted that commercial radio remains very strong in most western Chart 40th celebrations nations throughout the world with similar copyright legislation and L-R: Mark Williams (Fat Freddy’s Drop), Damian Vaughan, licensing environments. Scribe, Tiki Taane & Joe Lindsey (Fat Freddy’s Drop). Photo: Topic Photography 9 continued overleaf 9 CHIEF EXECUTIVE’S REPORT continued from previous page
2016 In 2016 Recorded Music New Zealand and our local recorded music industry is faced with a environment which presents both challenges and opportunities to enact long term positive change.
We are committed to growing our income despite an expected slowdown of revenue streams in 2016, and have budgeted for growth primarily via public performance and to a lesser extent television. Whilst comparatively smaller, we will experience a drop in our digital income as certain webcasting agreements transfer to direct licensing and our largest collective licensing stream radio is expected to remain flat. Recorded Music New Zealand is committed to a number of long term licences with all of our key radio and television broadcasters and will continue to monitor the local broadcast environment throughout 2016.
Coupled with this minimal revenue growth we will be directly involved in a number of NZ Government reviews and initiatives that present both challenges and opportunities to the music industry in changing/influencing the regulatory and legislative environment not only in the near future but over the next 10-20 years.
The Government initiatives and reviews through 2016 spearheaded by Kristin Bowman (which will flow into the work streams of 2017/18), include: Copyright Term extension from 50 to 70 years and the introduction of Performer Rights; the Convergence Review undertaken by the Ministry for Culture & Heritage in conjunction with the Ministry for Business, Innovation & Employment; the Creative Sector Study which is a work stream of the Convergence Review and lastly, as a result of all the above, a review of the Copyright Act 1994.
While there are no guarantees, Recorded Music New Zealand has an opportunity to try and influence our destiny now and into the next 20 years. We need to provide offensive and defensive evidence to convince our Government that stronger copyright law is warranted and is beneficial to our economy and thence for the recording artists and record companies we represent.
The clear need for a strong focus on Government affairs means we have budgeted a greater allocation of resources towards these initiatives which equates to minimal growth in 2016. These initiatives will undoubtedly present us with many challenges but equally significant opportunities to secure a positive future for recorded music in NZ.
2016 will be a challenging and exciting year.
My thanks to the Recorded Music Board and the various committees, and a special thank you to the Recorded Music staff for their continual dedication and commitment.
Damian Vaughan Chief Executive Officer, Recorded Music NZ
10 Tami Nielson (4-times Tui winner) & Dave Dobbyn (29-times Tui winner & Hall of Fame inductee) perform The Exponents’ classic Why Does Love (Do This To Me)? at the 2015 VNZMA. Photo: Topic Photography.
11 11 2015 YEAR IN REVIEW
2015 will be noted as the year whereby the significant changes our industry has weathered in recent times have started to yield positive signs. Total wholesale revenues to the local industry were $74.4m in 2015 representing 12% growth on 2014, which is the first positive growth in 15 years.
In 2015 streaming revenues became the number one source of revenue for record companies and recording artists in NZ and contributed significantly towards the overall industry growth. Whilst still relatively new in NZ, streaming services have quickly established themselves and are now the preferred method of music consumption by kiwis. Streaming now represents $25.5m of all recorded music wholesale revenues by format which is a 200% increase on 2014.
Whilst both digital downloads and physical product experienced declines (18% and 10% respectively) they remain very important revenue streams to the industry as does the collective licensing revenue generated by Recorded Music NZ via public performance and broadcasting which experienced 6% growth in 2015.
The four key income sources represent the following percentages to the industry: streaming $25.1m (35%), downloads $15.7m (21%) physical product $19.3m (26%), public performance and broadcast $13.7m (18%).
Of special note are vinyl sales which have continued their resurgence in popularity. Whilst a relatively small contributor to the overall numbers vinyl sales have increased again to $1.7m of revenue, representing 9% of all physical.
Whilst it is very encouraging that 2015 was a growth year it does not account for the 15 years of industry contraction that our industry has experienced let alone make up for that lost revenue to the recording industry over that period. It is nonetheless a great first step towards a more positive future for record companies and recording artists in NZ and our industry is looking forward to building on this momentum.
Damian Vaughan, CEO, Recorded Music NZ
2015 TOP SELLING SINGLES 2015 TOP SELLING ALBUMS
ARTIST TITLE LABEL GROUP / DIST. ARTIST TITLE LABEL GROUP / DIST.
1 MARK RONSON FT. BRUNO MARS UPTOWN FUNK SONY SONY 1 ADELE 25 XL RHTHYMETHOD
2 MAJOR LAZER FT. M0 & DJ SNAKE LEAN ON BECAUSE WARNER 2 ED SHEERAN X: WEMBLEY EDITION ASYLUM WARNER
3 WIZ KHALIFA FT. CHARLIE PUTH SEE YOU AGAIN ATLANTIC WARNER 3 SOL3 MIO ON ANOTHER NOTE UNIVERSAL UNIVERSAL
4 HOZIER TAKE ME TO CHURCH RUBYWORKS UNIVERSAL 4 SAM SMITH IN THE LONELY HOUR CAPITOL UNIVERSAL
5 OMI CHEERLEADER ULTRA SONY 5 MICHAEL BUBLE CHRISTMAS WARNER WARNER
6 ED SHEERAN THINKING OUT LOUD ASYLUM WARNER 6 SIX60 SIX60(2) MASSIVE UNIVERSAL
7 MAROON 5 SUGAR INTERSCOPE UNIVERSAL 7 TAYLOR SWIFT 1989 BIG MACHINE UNIVERSAL
8 JUSTIN BIEBER WHAT DO YOU MEAN? DEFJAM UNIVERSAL 8 JUSTIN BIEBER PURPOSE DEFJAM UNIVERSAL
9 ADELE HELLO XL RHTHYMETHOD 9 MEGHAN TRAINOR TITLE EPIC SONY
10 SKRILLREX & DIPLO FT. JUSTIN BIEBER WHERE ARE U NOW? ATLANTIC WARNER 10 CILLA BLACK THE VERY BEST OF PARLOPHONE WARNER
Mark Ronson & Bruno Mars Adele Sol3 Mio Six60 Top selling single Top selling album Top selling NZ album Top selling NZ single
2015 TOP SELLING NEW ZEALAND SINGLES 2015 TOP SELLING NEW ZEALAND ALBUMS
ARTIST TITLE LABEL GROUP / DIST. ARTIST TITLE LABEL GROUP / DIST.
1 SIX60 WHITE LINES MASSIVE UNIVERSAL 1 SOL3 MIO ON ANOTHER NOTE UNIVERSAL UNIVERSAL
2 SAVAGE & TIMMY TRUMPET FREAKS MINISTRY OF SOUND UNIVERSAL 2 SIX60 SIX60(2) MASSIVE UNIVERSAL
3 SIX60 SPECIAL MASSIVE UNIVERSAL 3 SOL3 MIO SOL3 MIO UNIVERSAL UNIVERSAL
4 AVALANCHE CITY INSIDE OUT WEA WARNER 4 DENNIS MARSH LEST WE FORGET SONY SONY
5 SIX60 SO HIGH MASSIVE UNIVERSAL 5 FAT FREDDY’S DROP BAYS THE DROP RHYTHMETHOD
6 DISCLOSURE FT. LORDE MAGNETS ISLAND UNIVERSAL 6 GIN WIGMORE BLOOD TO BONE ISLAND UNIVERSAL
7 SIX60 PURPLE MASSIVE UNIVERSAL 7 SIR HOWARD MORRISON HOW GREAT THOU ART SONY SONY
8 LORDE YELLOW FLICKER BEAT REPUBLIC UNIVERSAL 8 THE QUIN TIKIS THE QUIN TIKIS SONY SONY
9 GINNY BLACKMORE LOVE ME ANYWAY SONY SONY 9 STAN WALKER TRUTH & SOUL SONY SONY
10 BEAU MONGA KING & QUEEN SONY SONY 10 BROODS EVERGREEN DRYDEN ST UNIVERSAL Photos supplied 12 REVENUE SUMMARY 2015
WHOLESALE REVENUES REVENUE BY TYPE
20152015 $80.0 $74.4m
PUBLIC $70.0 $66.7m $66.2m PERFORMANCE PHYSICAL $13.7 18% 26%
$11.6 $60.0 $13.0 DOWNLOADS STREAMING 21% $5.0 35% $50.0 $12.7 $25.7
$40.0 $23.0 2014 2014 $30.0 $19.1 $15.7
PUBLIC $20.0 PERFORMANCE 20% PHYSICAL 32% $27.1 $10.0 $21.4 $19.3 STREAMING 19%
$0.0 DOWNLOADS 2013 2014 2015 29%
PHYSICAL DOWNLOADS STREAMING PUBLIC PERFORMANCE & BROADCAST
PUBLIC PERFORMANCE & COMMUNICATION REVENUES 20132013
PPUUBBLLICIC $13.7m PPEERRFFOORRMMAANNCCEE
$14
s 1177%% n o i l
l SSTTRREEAMINGG i $13.0m $0.9 M 87% PPHHYYSSIICCAALL $0.8 4411%% $12 $11.6m $0.6 $3.8 DDOOWWNNLLOOAADDSS $3.1 3344%%
$10 $2.8
$1.8 $8 $2.0 $1.4 2015 LICENSING REVENUE
$6 BY TYPE
OTHER $4 6% $7.3 $6.7 $7.0 PUBLIC PERFORMANCE $2 28% RADIO 51%
$0 TV 2013 2014 2015 15%
RADIO TV PUBLIC PERFORMANCE OTHER
13 13 THE TOP 40 AT 40
RECOGNISING CHART ACHIEVEMENTS 40 YEARS 1975 - 2015 The ruby anniversary of the Charts was celebrated with a recognition of the local and international artists who have achieved significant chart success over the course of the last 40 years. The function in Auckland saw a bespoke trophy presented to various artists, and garnered maximum media coverage.
CHARITY SINGLE To further mark the anniversary, we produced a limited edition, double A-side single on ruby red vinyl. The record featured the local track to spend the most time at #1 (Scribe ‘Stand Up’; 11 weeks) and the local single to spend the most weeks in the charts (Tiki Taane ‘Always On My Mind’; 55 weeks). All proceeds from the sale of the single went to the NZ Music Foundation.
Photos from the Chart celebrations, Wednesday 27 May 2015, The Tuning Fork, Auckland. Top row: Damian Vaughan & MC Angelina Boyd; Scribe; Adele (by message from London). Middle row: Deep Obsession; New Order (by video from Manchester); Tiki Taane. Bottom row: Shihad, Fat Freddy’s Drop, Hayley Westenra (by video from London). Venue photos: Topic Photography. All other photos © Recorded Music NZ.
14 40 YEARS 1975 - 2015
#1’s SINCE 1975 MOST CHART ENTRIES ALBUMS SINGLES
572 585 SINGLES ALBUMS 64 91 35 14 53 25 DENOTES LOCAL SIR ELTON JOHN SPLIT ENZ MADONNA SHIHAD MUSIC STATISTICS HOMEGROWN #1’s MOST WEEKS IN THE CHARTS
FIRST ALBUM TO DEBUT AT #1 FIRST SINGLE TO DEBUT AT #1 ALBUMS SINGLES
12
APRIL 1982 AUGUST 1981 PINK FLOYD FAT FREDDY’S DROP NEW ORDER TIKI TAANE FIRST ALBUM TO REACH #1 ‘DARK SIDE OF THE MOON’ ‘BASED ON A TRUE STORY’ ‘BLUE MONDAY’ ‘ALWAYS ON MY MIND’ Bill & Boyd ‘Bill & Boyd’ MARCH 1976 FIRST SINGLE TO REACH #1 297 WEEKS 108 WEEKS 74 WEEKS 55 WEEKS Mark Williams ‘Yesterday Was Just The Beginning Of My Life’ JUNE 1975 MOST #1 SINGLES MOST WEEKS AT #1 8 ALBUMS SINGLES
38 WEEKS 19 WEEKS 15 WEEKS 12 WEEKS Adele’s album ‘21’ Hayley Westenra’s Pharrell’s 2014 single Scribe is the only Michael Jackson, Deep Obsession’s spent an incredible 86 2003 debut album ‘Pure’ ‘Happy’ toppled Boney Kiwi artist to top both Katy Perry & U2 trifecta of hits in consecutive weeks in the is still the best selling M’s ‘Rivers of Babylon’ the Singles & Albums tie for the most 1999 also came top 10 and is 2nd for most local album of all time which had held the Charts simultaneously #1 singles 3 consecutively. weeks on the chart (184). at 11-times platinum. record since 1978. (November 2003). MOST #1 ALBUMS
U2 can lay claim to being the NZ’s favourite artist with 13 #1 albums to Hayley Westenra & Shihad share the record for the most local go with their eight #1 singles. Pink Floyd are the only other artist to hit #1 albums. Split Enz & The Feelers are tied for second with four 13 double digits with 10 #1 albums. #1 albums apiece. 5
15 ALL FIGURES STATED ARE ACCURATE TO TO 31 DECEMBER 2014. MUSIC AWARDS GOLDEN ANNIVERSARY
PAINT IT BLACK This year’s Vodafone NZ Music Awards coincided with the retirement of NZ music champion, Brendan Smyth. Brendan has worked tirelessly for 25 years as Music Manager for NZ On Air. To mark both his retirement and our appreciation of the fantastic work Brendan has done, Recorded Music NZ presented Brendan with a one- off black Tui.
PAINT IT GOLD At the VIP entry to the main arena, guests were greeted by the very first NZ Music Award - the 1965 Golden Disc, kindly lent to us by its custodian, Billy Kristian of The Invaders. The pre-awards tradition of VIP drinks was re-christened The Gold Room for the occasion with guests greeted into the function room by a gold disc.
COMPILING THE PAST A giveaway CD has been standard issue at awards shows. Normally this would feature a selection of finalists along with a DVD of their music videos. This year, however, the CD featured a waltz through Single of The Year winners from 1965’s Til We Kissed by Ray Brendan Smyth Columbus & The Invaders to 2014’s Royals by Lorde.
Golden Disc display case Golden Disc The Gold Room disc
Vector Arena pre-show.
16 16 All photos this page by Topic Photography, except Gold Room by Mark Roach. THE NZ MUSIC AWARDS A VISUAL HISTORY
850 TROPHIES PRESENTED SINCE 1965*
*as at October 1 2015
UPDATED! MOST CAREER TROPHIES MOST TROPHIES BY A SOLO ARTIST MOST TROPHIES BY A GROUP DAVE DOBBYN BIC RUNGA SHIHAD 29 20 16
PUB QUIZ FACTOID #1: Jon Toogood has also won a further 3 Tuis for Best Male Vocalist. Ray Columbus & The Invaders won the very first award, presented in 1965 for their song ‘Til We Kissed’. 14 SOLO, 13 WITH DD SMASH & 2 WITH TH’ DUDES
MOST AWARDS MOST AWARDS BEST OF THE LADIES BEST OF THE BLOKES IN A SINGLE YEAR IN A SINGLE CATEGORY
Bic Runga & Margaret Urlich Dave Dobbyn has won the Best Peking Man (1986), Scribe Dave Dobbyn (Male Vocalist) YOU GOTTA KNOW have won the Best Female Male Vocalist category 6 times. (2004), The Naked & Famous and The Parachute Band Supergroove bassist Vocalist category 4 times. Jon Toogood & Che Fu tie with (2011) and Lorde (2014) tie with (Christian/Gospel Album) have Joe Lonie has directed Sharon O’Neill, Fiona McDonald 3 apiece. 8 awards each. Stellar (2000) is won their respective categories more award-winning and Anika Moa have each won close behind with 7 awards. 6 times. videos than anyone else: 3 for Supergroove and 1 3 times. for Goodshirt (‘Sophie’).
TROPHY CABINET HOST CITIES
Year of introduction & number of categories at the time. Trophies not to scale.
1965 1973 1987 1993 1995 AUCKLAND 1 11 21 21 21 74 % PUB QUIZ FACTOID #2: At 3 kilograms, the “Block” was the heaviest trophy ever produced. 2006 - PALMERSTON NORTH PRESENT (YES, REALLY) WELLINGTON 30 2% 20%
CHRISTCHURCH 4% PUB QUIZ FACTOID #3 In 1978 the awards were split between a live broadcast in Wellington and a non-televised ® function in Auckland.
Data includes technical awards associated with named artists. 17 DIRECTORY FOR THE YEAR ENDED 31 DECEMBER 2015
Year of Incorporation 1957 WN 010515
Registered Office Level 1, 2A Hakanoa Street Grey Lynn Auckland
Business Address Level 1, 2A Hakanoa Street Grey Lynn Auckland
Directors C Caddick (Chair) P Baker K Boshier J Hellriegel A Holt P Howling
SHIHAD the critically-acclaimed FVEY album garnered the Tui for Best Rock Album - the band’s 19th music award. Photo supplied.
18 STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 DECEMBER 2015
Note 2015 2014 $ $ ASSETS
Cash Assets 539,296 487,779 Receivables 2,510,755 2,698,613 Prepayments 141,331 284,360 Investments in Short Term Deposits 8,900,851 7,801,480 Investment in Media Sauce 5 147,577 147,577 Fixed Assets 5 58,001 66,142
TOTAL ASSETS 12,297,811 11,485,951
LIABILITIES Payables 633,546 628,954 Funds Available for Distribution 10 11,077,086 10,269,818 Provisions Retained 11 587,179 587,179 TOTAL LIABILITIES 12,297,811 11,485,951
NET ASSETS 0 0
EQUITY Issued Share Capital 200 200 Less Uncalled Capital -200 -200 0 0
The accompanying notes, policies and auditor’s report form part of these financial statements.
19 19 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER 2015
Note 2015 2014 $ $ REVENUE
Radio Broadcast Licence Fees 7,032,490 7,322,188 TV Broadcast Licence Fees 1,954,411 1,820,010 Public Performance Licence Fees 3,816,013 3,054,020 Compiler Licence Fees 521,493 474,146 Other Income 1,514,924 507,282 Interest 5 338,858 297,193 15,178,189 13,474,839 DEDUCT EXPENDITURE
Audit Fee Paid 12,015 12,050 Rental Expenses 9 130,606 130,252 Operational Expenses 12 3,263,631 3,112,229
3,406,252 3,254,531
FUNDS AVAILABLE BEFORE TAXATION 11,771,937 10,220,308
Deduct Professional Expenses 9,105
Deduct Taxation Paid 412 0 Transfer from Provisions Retained (9,105)
FUNDS AVAILABLE FOR DISTRIBUTION 11,771,525 10,220,308
The accompanying notes, policies and auditor’s report form part of these financial statements.
20 STATEMENT OF FUNDS MOVEMENT FOR THE YEAR ENDED 31 DECEMBER 2015
Note 2015 2014 $ $ FUNDS AVAILABLE FOR DISTRIBUTION 11,771,525 10,220,308
Distributed to Companies & Recording Artists (10,964,257) (8,839,158) Transfer to Allocate Professional Expenses (9,105) Funds at Beginning of Year 10,856,997 9,484,952
TOTAL FUNDS AVAILABLE AT END OF YEAR 10 & 11 11,664,265 10,856,997
The accompanying notes, policies and auditor’s report form part of these financial statements.
MARLON WILLIAMS The alt country sensation won Breakthrough Artist of the Year and Best Male Solo Artist at the 2016 VNZMA. Photo supplied.
21
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2015
1. Reporting Entity Recorded Music New Zealand Limited formerly known as PPNZ Music Licensing Limited, ‘The Company’ is registered under the Companies Act 1993 and acts as authorised representative of the major sound recording manufacturing and distributing companies in New Zealand to license, control and promote the public performance and broadcasting of their copyright in sound recordings and music videos, and to collect fees in respect thereof. Distributions are then made to the appropriate copyright holder. The Company is a reporting entity for the purposes of the Financial Reporting Act 1993. The financial statements of The Company have been prepared in accordance with the Financial Reporting Act 1993.
The Company has not traded on its own account during the year; therefore there are no results from operations.
Licensing and Distribution The pro-rata distribution of surplus funds is determined on Radio and Television airtime. The annual surpluses from Broadcasting and Public Performance Licence fees and miscellaneous income received, less the amount retained (to meet liabilities contingent and otherwise), are apportioned to the New Zealand licensees. At balance date, the surplus for the year is retained in Trust pending the receipt and analysis of airtime data received from broadcasters. In the interim, such surplus has been placed on short term investment to attract interest income.
2. Measurement System The financial statements are prepared under the historical cost convention. Income and expenditure is accounted for on an accrual basis. Revenue is recognised when the risks and rewards can be reliably measured.
From 1 April 2014, the new Financial Reporting Act 2013 (“FRA 2013”) has come into force replacing the Financial Reporting Act 1993, this is effective for all for-profit entities with reporting periods beginning on or after 1 April 2014. This is effective for the entity’s 31 December 2015 year end. The change in legislation has no material impact on the company’s obligation to prepare general purpose financial statements.
In addition to the change in legislation the External Reporting Board of New Zealand (“XRB”) has released a new accounting standards framework which established the financial standards to be applied to entities with statutory financial reporting obligations. The company is currently reporting under Old NZ GAAP, being Statements of Standard Accounting Practice (SSAPs) and Financial Reporting Standards (FRSs).
Under the new XRB framework, the company has elected to apply the transitional Tier 4 provisions for the year ended 31 December 2015. Management expects that the company will be reporting under NZ IFRS applying the Reduced Disclosure Regime (NZ IFRS RDR) as applicable for Tier 2 for-profit entities for the year ended 31 December 2016. This reduces the required number of disclosures under NZ IFRS however it does not change the measurement and recognition requirements.
3. Changes in Accounting Policies There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in previous years.
4. Differential Reporting The Company is a qualifying entity for Differential Reporting as defined by the Institute of Chartered Accountants of New Zealand’s Framework for Differential Reporting as the Company is not publicly accountable and the owners and the governing body are one and the same. The Company has taken advantage of all differential reporting exemptions.
5. Statement of Accounting Policies Investments Investments are measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible Assets Intangible assets that have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.
Impairment The carrying amounts of the Company’s assets are reviewed at each balance date to determine whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses directly reduce the carrying amount of assets and are recognised in the Statement of Financial Performance. 22 continued on page 23 Taxation The Company has no trading activity and acts as a nationwide non-profit representative for New Zealand licensees. Surpluses are fully distributed and consequently the Company is only liable to pay taxes on timing differences arising from accruals made. The withholding tax on interest income has been deducted; however, due to an IRD ruling no terminal tax is payable by the Company but will be payable by the members.
Goods and Services Taxation The Financial Statements have been prepared on a GST exclusive basis with the exception of receivables and payables, which include GST.
6. Subsidiary Company Record Publications Limited is a wholly owned subsidiary of Recorded Music New Zealand Limited. It has not been consolidated into these accounts as this would provide limited benefit to the members. Record Publications Limited has not traded since 1965. It has a balance date of 31 December 2015.
7. Contingent Liability There is a contingent liability of $797 in respect of uncalled capital of Record Publications Limited.
8. Capital Commitments The Board has no commitments for future capital expenditure as at 31 December 2015 (nil 2014).
9. Lease Commitments There is a commitment with regard to the lease of the premises at Hakanoa Street.
2015 2014 Due within one year 103,272 94,280 One to five years 111,878 7,857
10. Funds available for distribution 2015 2014 Current Year Profit 11,771,525 10,220,308 Deduct funds already distributed (1,142,600) (275,876) Other Funds 448,161 325,386 Total 11,077,086 10,269,818 11. Provisions Retained / General Funds Balance at 1 January 587,179 596,284 Transfer to Allocate Professional Expenses (9,105) Balance 31 December 587,179 587,179
12. Operational Expenses Included in operational expenses is income of $860,129 which represents sponsorship and other income received in relation to the Music Awards. (2014 $820,374.)
13. Directors’ Remuneration The following remuneration was received by directors during the year: Chris Caddick $36,000 (2014: $36,000) Jan Hellriegel $3,000 (2014: $3,000) Peter Baker $2,500 (2014: $3,000)
14. Subsequent Event There were no subsequent events in relation to the year ended 31 December 2015.
23 23 Independent auditor’s report To the directors of Recorded Music New Zealand Limited We have audited the accompanying financial statements of Recorded Music New Zealand Limited (“the company’’) on pages 18 to 23 . The financial statements comprise the statement of financial position as at 31 December 2015, the statements of financial performance and funds movements for the year then ended, and a summary of significant accounting policies and other explanatory information.
This report is made solely to the directors as a body. Our audit work has been undertaken so that we might state to the company’s directors those matters we are required to state to them in the auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company’s directors as a body, for our audit work, this report or any of the opinions we have formed.
Directors’ responsibility for the company financial statements
The directors are responsible on behalf of the company for the preparation and fair presentation of the financial statements in accordance with generally accepted accounting practice in New Zealand (being Financial Reporting Standards and Statements of Standard Accounting Practice) and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Our firm has also provided other services to the company in relation to preparation of the company’s tax return. Subject to certain restrictions, partners and employees of our firm may also deal with the company on normal terms within the ordinary course of trading activities of the business of the company. These matters have not impaired our independence as auditor of the company. The firm has no other relationship with, or interest in, the company.
24 Opinion In our opinion, the financial statements on pages 18 to 23 comply with generally accepted accounting practice in New Zealand and present fairly, in all material respects, the financial position of Recorded Music New Zealand Limited as at 31 December 2015 and its financial performance for the year then ended in accordance with Financial Reporting Standards and Statements of Standard Accounting Practice.
4 April 2016 KPMG Auckland
25 25 SIDE B
STEREO . d
M e t i A
m D i L E
I d N n a N l a E e W Z
Z w E e A N LA c WE LOVE MUSIC (REMIX) si N u D (R.Music) 3:30 M © ed Re rd co co rde Re d M . P usic ited New Zealand Lim
RECORDEDMUSIC.CO.NZ
Vodafone NZ Music Awards nzmusicawards.co.nz The Official NZ Music Charts nztop40.co.nz The New Zealand Music Hall of Fame musichall.co.nz Public performance licensing by OneMusic onemusicnz.com
Protecting and promoting our music promusic.co.nz Growing our creative sector wecreate.org.nz 26
40 YEARS 1975 - 2015
Freephone 0800 88 77 69 Phone (09) 360 5085 Email [email protected] Online recordedmusic.co.nz Post Private Bag 78850 Grey Lynn Auckland 1245 Street Address Level 1, 2a Hakanoa St, Grey Lynn, Auckland 1021