APRA|AMCOS strong results mask difficult times ahead

APRA|AMCOS have reported a surprisingly strong 2008-2009 financial year against the backdrop of the global financial crisis. However they say the year’s results mask more difficult times ahead.

* * *

[Press Release: APRA|AMCOS]

APRA|AMCOS are pleased to report on a surprisingly strong 2008-2009 financial year. Against the backdrop of the Global Financial Crisis, and its widening impact throughout the domestic economies of Australia and New Zealand during the year, the increases achieved in top-line revenue and royalty pay-outs to members are highly satisfactory.

Both APRA and AMCOS made royalty distributions to members and affiliated societies which were approximately 10% higher than for the preceding year (itself a high-water mark).

In APRA’s case, royalty payments exceeded $144 million, while for AMCOS, they were just short of $46 million. As a percentage of gross revenue for the year, APRA’s distributions exceeded 90% of collections, while AMCOS’s exceeded 92%. These increases reflected growth in total licence fees collected – both domestically and internationally – as well as faster distributions and faster processing of foreign receipts.

Total licence fees collected by APRA grew by almost 6% to $156m. This figure is comprised of $135.9 million in licence fees collected in Australia/NZ (an increase of 4.6% on the preceding year) and $20.5 million received from affiliated collecting societies around the world (an increase of 14%). Virtually all of AMCOS’s revenue was derived from licensees in Australia and NZ.

In relation to APRA, almost every revenue pool increased during the year – most significantly in the areas of public performance of recorded music and subscription television. The principal exception was radio broadcasting, where licensees suffered a downturn in advertising revenue during the year.

In the case of AMCOS, growth was largely driven by the increased revenue from digital downloads, which more than offset the decline in royalties from physical product ie, CDs, DVDs and other physical carriers. However, it should be noted that AMCOS discharges a limited licensing mandate in the physical product area, and there were a number of one-off factors that impacted during the year (for example, the settlement of a long-standing legal dispute with a major mobile ringtone provider).

To some degree, the year’s results mask more difficult times ahead. There is a time-lag in the impact on our licence fees, of adverse trading conditions experienced by some of our clients. In addition, the structural decline in sales of physical product and mobile phone ringtones is expected to accelerate during the current year. The more serious recessions experienced by some of our key trading partners, combined with an unexpectedly strong Australian dollar, will also adversely affect our foreign income.

We expect revenue growth to flatten for APRA and marginally decline for AMCOS during the coming 12 months.