1

Annual Report 2010

HIGHLIGHTS

PPCA revenues, distributions, licences and registered artists and groups continued to increase in 2009-2010, maintaining our unbroken succession of improvements since 1990.

Income up 11.4% to $27,629,004Distribution surplus up 22.5% to $20,642,954Public performance licences up 1.58% to 53,471

The PPCA Trust approved 31 applications for funding:

24 related to further education and research7 to festivals, live music and local artists

Management Report

Performers’ Trust Balance Sheet

CONTENTS

2 Chairman’s Report

5 The Company

6 Board Members

8 Management Report

11 Performers’ Trust Foundation

12 2010 Most Played Recordings and Artists

13 Top 100 Most Played Recordings

14 50 Most Played Artists

15 Most Played Artists 2007–2009

16 Special Purpose Financial Report

44 Performers’ Trust Balance Sheet

45 Tariff Categories

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On behalf of the PPCA Board, it is with great pleasure that I report on yet another successful year for the organisation, and highlight some of this year’s achievements. Most importantly I am happy to record that the year ending June 2010 was PPCA’s 20th consecutive year of growth in both gross revenues and returns to stakeholders.

FinancesIncome for the year ending June 2010 hit a record high of $27.6M – up over 11% on the previous financial year. This increase was principally the result of increased public performance licence revenues, driven by tariff rate reviews and the supporting awareness and enforcement programs. At the end of June, active licences stood at almost 53,500. This represents a net increase (after licence cancellations) of just 1.6% on the prior year, and demonstrates the

challenge for the licensing team in the context of increased direct licensing by stakeholders.

Most pleasingly the upcoming distribution, at almost $21M, represents an increase of $3.8M or 22.5% on the previous year.

Tariff reviewsDuring the period, PPCA finalised what had been a lengthy review and consultation period in respect of the tariff applicable to restaurants and cafes, and rolled out a new scheme in November 2009. The new scheme, which was modified in response to submissions from the sector during consultation, came into effect on December 1 and incorporates a lengthy phase-in to assist our licensees with the transition to the new arrangements.

On May 17, a decision was handed down by the Copyright Tribunal in regard to the long running Fitness Class licence matter. The Tribunal’s decision was that the rate for fitness classes should be substantially increased, and set fees at either $15 per class or $1 per class attendee, at the annual option of the licensee. This represents a marked improvement on the previous rate of 96.8 cents per class.

Fitness Australia has launched an appeal against the Tribunal’s decision, which was heard before the full Federal Court

on November 26. We remain confident that the tariff schemes endorsed by the Tribunal will be upheld but, in any event, remain willing to work closely with the sector to establish a reasonable rate for this featured use of our repertoire.

The final review finalised during the period was that relating to sound recording broadcast by commercial telecasters. Having referred the matter to the Copyright Tribunal in 2007, those proceedings have now been discontinued following a successful mediation in June 2010 during which a new scheme was agreed. The new scheme, which involves a substantial increase in licence fees and a broader grant of rights, commenced on 1 July 2010 and also involved a phase-in arrangement.

Commercial RadioDuring the period, PPCA also initiated a matter in the Federal Court, in order to clarify the scope of the licences currently on foot with the commercial radio sector. The issue hinges on the definition of the term ‘broadcast’, and whether the simultaneous transmission of a radio station’s broadcast service over the internet is also classified as a part of the broadcast and hence covered by PPCA’s broadcast licence.

This matter has serious implications on the scope of licences required by commercial radio for the use of

CHAIRMAN’S REPORT

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recordings and, consequently, the level of licence fees. A two day hearing before Foster J took place in October 2010 and we now await the decision of the court, which is anticipated in early 2011.

1% CapDespite the broad support for repeal from both major parties, the Federal Government has thus far failed to act to repeal this inequitable price cap, denying thousands of Australian recording artists and labels the opportunity to seek fair return for radio’s commercial use of this valuable content.

As a result, in February 2010, PPCA initiated a constitutional challenge in the High Court, seeking to have the relevant provisions declared an acquisition of property on unjust terms and hence a breach of the Commonwealth Constitution.

Whilst we are only at the preliminary hearing stage of this process, we are hopeful that we will have our day in court during the first quarter of 2011.

PPCA remains completely committed to securing repeal of these unjust provisions and achieving equitable payments to sound recording creators.

PPCA GrantsPPCA continues to support various causes through its grant program,

including Support Act Limited, AIR, The Song Room and The Australian Music Prize (AMP). In March 2010 PPCA was delighted to present this year’s worthy AMP winner, Lisa Mitchell, with the prize money of $30,000. This year PPCA also provided support to the Slim Dusty Foundation, specifically contributing towards research and development of the state of the art exhibitions planned for the Slim Dusty Centre currently under construction near Lismore. PPCA was also delighted to be able to assist Sounds Australia with some of its important initiatives assisting Australian artists and labels to take their music to the world.

ConclusionFinally, I would like to extend my thanks and congratulations to both the Board and staff of PPCA for their efforts during the course of yet another very successful year.

In particular I would like to note the significant contribution of Stephen Peach during his nine year term as CEO. In that period revenues and, more importantly, distributions to stakeholders have increased substantially, with both those key measures doubling in the last four years. In addition Stephen leaves us with the commercial television arrangements resolved, and the constitutional challenge to the legislative cap well advanced.

Stephen leaves PPCA with our thanks and best wishes for the future.

George AshPPCA Chairman

November 2010

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SUMMARY

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Gross Revenue (Millions)

Distributions (Millions)

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Public Performance Licences

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

1.61

6

1.80

6

2.20

4

2.62

1

3.18

5

4.11

0

5.46

2

5.96

3

6.33

6

6.61

8

8.41

9

9.89

7

11.1

8311

.934

13.3

6714

.617

16.8

1220

.044

24.7

9327

.629

5000

5200

9900

13,1

00

16,0

50

18,7

26

21,4

21

26,9

65

30,2

85

32,9

61

33,2

90

34,4

51

35,4

96

36,4

6939

,540

42,6

1347

,356

50,9

7452

,640

7.21

5

8.12

7

8.82

710

.016

10.3

2912

.667

14.4

9816

.854

0.48

752

00

1.04

5

1.28

0

1.81

1

2.51

2

3.47

6

4.01

3

4.07

3

4.21

5

5.84

6

0.72

9 20.6

4353

,471

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THE COMPANY

Dan RosenChief Executive Officer

Lynne SmallManager - Finance,

Operations & Administration

Maxine ChisholmLicensing Manager

Linda CourtneyDistribution Manager

Stephen ConwayManager - Business Technologies

Registered Office

Level 4. 19 Harris Street, Pyrmont, NSW 2009A.C.N. 000 680 704 A.B.N. 43 000 680 704

Bankers: Commonwealth Bank of AustraliaSolicitors: Gilbert + TobinAuditors: BDO

Anna KillickCorporate Counsel -

Enforcement / Litigation

Luke Woods Communications

Manager

Rohini Sivakumar Corporate Counsel –

Commercial

Executive Secretariat

George AshBill CullenDenis Handlin, AM Dinah Lee

Lindy MorrisonMark PostonTony HarlowDavid Vodicka

Directors February 2011

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BOARd MEMBERS AS AT FEBRUARY 2011George Ash PPCA CHAIRMAN

George Ash became a member of the PPCA Board in August 2003. George is the Managing Director of Universal Music (UMA), a division of the Universal Music Group. Prior to George’s current position with Universal Music Australia, he held positions as Managing Director at Universal Music NZ, Managing Director at MCA Geffen NZ and held key management roles at BMG NZ. George has also held roles in Polygram Manufacturing and in the retail sector.

George’s passion for the music industry began as a musician and has spanned 25 years including holding a variety of roles in key industry bodies within the NZ Industry before relocating to Australia in his current role in 2001.

Bill Cullen PPCA BOARD MEMBER – MANAGER REPRESENTATIVE

Bill became a member of the PPCA board in 2004, as the Manager Representative.

Bill is the Managing Director of One Louder Entertainment, the management home to Paul Kelly, End Of Fashion, Sarah Blasko, Kate Miller-Heidke and The Drones. He has been involved in the music business since leaving school, and did a long stretch working with Grant Thomas Management, working with acts such as Crowded House and The

Rockmelons. A five year stint in London followed, where he worked with the legendary Pete Jenner (manager of Pink Floyd, The Clash, Billy Bragg etc), before going on to co-manage New Zealand act OMC (How Bizarre) who went on to a number one single and gold album in the US. He returned to Australia in 1999, and established One Louder, and has since had gold plus success with Alex Lloyd, George, Amiel, Sarah Blasko, End Of Fashion, Kate Miller-Heidke and Paul Kelly.

Denis Handlin, AM PPCA BOARD MEMBER

Denis is the Chairman and Chief Executive Officer of Sony Music Entertainment Australia and New Zealand, President of South East Asia and Korea, having previously held a number of senior positions within Sony Music Entertainment Australia since 1970, including the CEO role since 1984.

Denis has a deep involvement in the music industry. He has served on the committees of several industry associations and has held various positions including Chairman of the Phonographic Performance Company of Australia, Chairman of the Australian Recording Industry Association (ARIA) and Chairman of the ARIA Chart & Marketing Committee. Denis has been a PPCA and ARIA board member since

1984, and held the ARIA Chairman position for ten consecutive years from 1999-2008.

In 2005, Denis was named a Member (AM) of the Order of Australia in the General Division for his service to the music industry, particularly through the promotion of Australian musicians and his contribution to professional organisations, and to the community through fundraising for charitable organisations. Denis is a co-founder and a Governor of the Sony Foundation which has raised $12 million in eleven years for charitable causes supporting Australian youth. He is also Patron of the Youth Off The Streets scholarship program.

In June 2009, Denis was awarded the APRA Ted Albert Award for Outstanding Services to the Music Industry.

Tony Harlow PPCA BOARD MEMBER

Managing Director Warner Music of Australia

Dinah Lee PPCA BOARD MEMBER – ARTIST REPRESENTATIVE

Dinah Lee was originally invited to Australia from her home in New Zealand by Johnny O’Keefe. At the time, Lee was already a budding star in her homeland and had a string of number one hits, including “Don’t You Know Yockomo”,

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“Reet Petite” and 15 other top ten hits since the 1960s.

She was one of the headlining performers on the hugely successful ‘Long Way To The Top’ national arena tour in 2002. The accompanying album for the tour went gold, as well as winning an ARIA Award in 2003 and achieving platinum accreditation for the DVD/Video. In 2009, Dinah released an album titled ‘Islands’, while her most recent recording ‘Johnny B Goode Tonight’ was released in January 2011.

Lindy Morrison PPCA BOARD MEMBER – ARTIST REPRESENTATIVE

Lindy Morrison has been a member of the PPCA Board, as a representative of registered Australian recording artists, since 1994. Lindy toured the world as a drummer with Zero, The Go-Betweens and Cleopatra Wong, from 1978 until 1992. She presently plays in The Rainy Season. Since 1992, Lindy has worked around Australia as the musical director or performer in shows, parades and festivals, and has led drum and music workshops with many diverse and varied community groups. She has been the musical director of the Junction House Band a group of musicians with intellectual disabilities since 1993. She also teaches in Music Business courses at both Ultimo and Gymea TAFEs.

Lindy is the National Welfare Coordinator for Support Act Ltd – the benevolent

society for musicians and workers in the music industry.

Mark Poston PPCA BOARD MEMBER

Mark has worked in various frontline roles in music since his University days - from running a record store to roles in sales, promotions and marketing at Sony and BMG. Mark was also one of the founding members of an official ARIA Club & Dance Music chart back in the late nineties. EMI recruited Mark in May 2000 working with many key Australian and International artists and managers. By the time he turned 30 he was Head of Capitol Records working with artists such as Silverchair, Coldplay, Jet, Keith Urban, Paul Mac, Robbie Williams, The Living End, Radiohead, Kasey Chambers, John Williamson, The Finn Brothers and Gorillaz. In 2005, he was promoted to Director, Global Marketing for EMI based in London. In July 2006, Mark went on to be Director of a new EMI UK frontline label working with a raft of Gold and Platinum artist projects as well as working with the Disney/Hollywood Records team and giving Midnight Juggernauts a UK label home. In August 2008, he returned to Australia as Chairman and Senior Vice President of Marketing for EMI Australasia, based in Sydney while also being an active member of the ARIA and PPCA Boards.

David Vodicka PPCA BOARD MEMBER LICENSOR REPRESENTATIVE

David Vodicka is the owner of Rubber Records and the principal of entertainment law firm Media Arts Lawyers and has had extensive experience with over 15 years practice representing musicians, artists, composers, and recording and publishing entities. David has dealt in all facets of law affecting the creative industries, and has had considerable hands on experience in the music recording and publishing fields as director of independent label, Rubber Records, and music publisher, Rubber Music Publishing.

He is a passionate advocate for local music and creative industries and presently is chairman of the board of AIR (the Australian Independent Record labels association), Vice President of WIN (Worldwide Independent Network) and MIFF (Melbourne International Film Festival) and is a past board member of ARIA.

He is also director of Screen Services, a company aimed at providing a conduit for non-music businesses (film, TV, advertising, gaming) to access music content from Screen Services clients (copyright owners and composers).

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Financial Performance – Year ending June 2010Despite the difficult economic climate, during the 2010 financial year PPCA once again posted impressive increases in both revenues and, even more importantly, the overall distributable surplus available for payment to licensors and registered artists.

The revenues were principally driven by growth in the public performance licensing area and, once again, highlight the hard work of our licensing and enforcement teams. During the period public performance licences hit a record high of almost 53,500 – a modest increase of 1.6% on the previous financial year, but achieved despite the increased complexity resulting from alternative products, including those offered through the direct licensing arrangements of our licensors.

DistributionThe Distribution undertaken in December 2010 involved payments of over $A20M to labels and artists. This represented an increase of over 22% on the previous year and, most pleasingly, an increase of 21% in direct payments to registered Australian artists.

The number of PPCA licensors continues to grow and, at our most recent count, the blanket licence schemes offered by PPCA incorporate the repertoire of over 900 copyright owners representing thousands of labels covering all genres of music.

CommunicationsPPCA continued to engage both business and artistic communities in 2010 through a number of channels, as we actively sought to improve brand recognition, reinforce our key messages and extend our education initiatives.

PPCA continued to communicate with business operators on the benefits of playing music, promoting awareness of the appropriate licences and ensuring that information on music licensing was readily available. This was done by liaising with peak industry bodies, advertising in association publications and

trade magazines, securing relevant editorials and supporting industry events; all of which strengthened PPCA’s presence among the business community. These key industry bodies include the Accommodation Association of Australia, state-based branches of Restaurant & Catering and the Australian Hotels Association, the various Club associations and the Australian Retailers Association. PPCA also sought to promote its National Enforcement Program in order to create awareness amongst businesses regarding the financial consequences of copyright infringement.

PPCA also continued to educate established and emerging artists on the role of PPCA, by maintaining and developing relationships with specific music industry bodies and events, sponsoring new and established music initiatives, speaking at industry seminars, participating in education programs and advertising at numerous music industry events and in music-related media.

Examples include: •Returningasaprinciplesponsorforthe5thAustralian

Music Prize. PPCA was delighted to present the winner of the 2010 AMP, Lisa Mitchell, with the major cash prize of $30,000. PPCA has provided the major cash prize to The AMP since its inception in 2005.

•SupportingtheCommunityBroadcastersAssociationof Australia (CBAA), via sponsorship of the Excellence in Music Programming Award at their annual awards ceremony. PPCA congratulates all winners, including FBi for their program ‘New Weird Australia’, winner of Excellence in Music Programming Award.

•PromotingPPCAatahostofmusicindustryeventsthrough banners, flyers and promotional material such as key chains, magnets and guitar picks.

•Inlate2009PPCApartneredwiththeARIAAwardsto

MANAGEMENT REPORT

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promote and support the interests of Australian artists. PPCA branding was highlighted both within the venue and via the Network Ten telecast, bringing PPCA to awide audience and further reinforcing brand recognition

PPCA actively promotes itself to artists to encourage registration for a share of annual distributions. Through participation in music industry conferences such as Big Sound and Amplified, as well as connecting with a variety of music bodies, PPCA was able to extend its artist reach. PPCA also placed advertisements in music-focused publications such as the Australian Music Industry Directory, Tamworth Country Music Festival Guide and Country Music Association of Australia Official Awards Program.

PPCA also communicates directly with both business and artistic communities using periodic newsletters; ‘On The Record’ (for artists and licensors) and ‘In The Loop’ (directed at licensees). PPCA keeps all parties informed by providing up-to-date information on PPCA’s activities.

As always, the website www.ppca.com.au continues to be the cornerstone of PPCA’s communication program. Toward the end of 2010, the website underwent careful review and redesign, aimed to make information and services more accessible for all.

Licence Scheme ReviewsDuring the period PPCA progressed reviews in a number of areas – finalising a lengthy consultation process with the restaurant and cafe sector and a Tribunal matter with Commercial Telecasters; and advancing cases already on foot for both the Fitness Class public performance tariff and Commercial Radio licences.

Restaurants / CafesPPCA initiated consultation with the sector through its peak body, Restaurant & Catering Australia (RCA), in mid 2007. Following a number of discussions with RCA, in May 2009 PPCA put forward a draft new scheme in May 2009 and began comprehensive

consultation on the proposal with the broader restaurant industry. As part of this process PPCA received and considered various submissions from both individuals and representative bodies.

Following the consultation and after careful consideration, PPCA finalised a new scheme comprising two new tariffs (R1 and R2) which came into effect on 1 December 2009. The new rates were substantially lower and the terms modified from the scheme first proposed by PPCA in May 2009. The changes were made to take into account the concerns raised and information provided by restaurant operators and industry groups during the consultation period. The new scheme is being phased in over a six year period in order to ease transition for licensees.

FitnessIn our previous reports we have provided an update on the progress of our Tribunal application in relation to the rate for use of sound recordings in fitness classes. In May 2010 the decision of the Tribunal was handed down, with the new scheme ordered by the Tribunal incorporating a significant increase (i.e. from 96.8 cents to $15 per class). This decision was appealed by the fitness sector, represented by peak body Fitness Australia. In November 2010 the appeal was heard by the full Federal Court, and a decision handed down shortly thereafter upholding the appeal and effectively returning the matter to the Tribunal for further consideration. PPCA has now requested special leave to appeal to the High Court in order to have the original Tribunal decision reinstated. At the time of writing the result of our request for special leave has not been determined. In the interim, PPCA remains willing to work collaboratively with representatives of the fitness industry to resolve this longstanding matter and settle a reasonable rate for this featured use of PPCA repertoire.

Free to Air TelevisionIn our last report we advised of the progress regarding negotiations with Free TV, representing its commercial telecaster members in respect of the broadcast licences required for sound

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MANAGEMENT REPORTrecordings. To avoid further costly litigation, PPCA participated in a formal mediation session and the matter was successfully resolved in June 2010. We are happy to announce that we were able to establish long-term broadcasting arrangements between Free TV’s member stations and PPCA. We’re delighted to have achieved a fair return and substantial increase in fees through the mediation process, allowing the Tribunal matter to be discontinued.

Other developments in licensing schemesFor many years the PPCA annual report has made reference to the issue of the ‘1% cap’.

Since its introduction in 1969, the current Copyright Act has contained an unjustified price cap on the licence fees payable by commercial radio stations for their use of recordings. In short, an individual radio station cannot be ordered to pay more than 1% of its annual revenues as a broadcast licence fee.

Under the 1% price cap, Australian commercial radio operators currently pay just $3.8 million per year for the use of sound recordings. This translates into annual licence payments relating to commercial radio of less than $1,000/annum for over 90% of artists registered with PPCA. This payment compares very unfavorably to the payments made by commercial radio to APRA (in respect of composers) which is in the range of $20 million - $30 million per annum. No price cap applies to the APRA payments.

In a very real sense, the price cap adversely impacts the right and ability of Australian recording artists to earn a fair income.

The removal of the price cap would allow PPCA, on behalf of Australian recording artists and record labels, to put a case to the independent umpire (the Copyright Tribunal) for a fair return without either PPCA or the Tribunal being artificially constrained by the price cap. In other words, we are simply asking for artists and labels to be extended the same rights as all other copyright creators in Australia.

Having been unable to have this inequitable legislation removed through other means, PPCA initiated a constitutional challenge in the High Court in February 2010, with the intention of having the relevant provisions declared an acquisition of property on unjust terms (and therefore a breach of the Commonwealth Constitution). After a number of preliminary hearings we now understand the Court will hear this matter in early May 2011, and we look forward to bringing you further updates on this very important matter.

We are determined to have these unfair provisions, which directly and negatively impact the livelihood of Australian artists and record labels, set aside.

Code of ConductPPCA subscribes to the voluntary Code of Conduct for Collecting Societies, which was developed in conjunction with a number of other collecting societies in 2001. Each year an independent reviewer (currently the Hon. James Burchett, QC) investigates and reports on each society’s compliance with the Code.

Mr Burchett has now completed his report for the year ending June 2010, and we are very pleased to report that, once again, PPCA is noted as having a very high level of compliance. The full report is available to view at www.ppca.com.au

Community SupportIn 2009 PPCA continued to support a range of music community initiatives including:

•Donationof$50,000toTheSongroom,whichin2010developed its first national fundraising campaign ‘PlayAir’ to help disadvantaged children and families with a range of free long-term programs to over 200 schools and communities.

•Donationof$32,000totheSlimDustyFoundation. The donation will be put towards research and

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development of the state of art exhibitions and displays planned for the Slim Dusty Museum.

•Over$15,000donatedtoSoundsAustralia,anationalexport platform established to showcase Australian musical talent on an international scale, at events such as MIDEM (France), The Great Escape (UK) and South by Southwest Festival (US).

•Supportingthe30thAustralianSongwritingAwards.PPCA Board Member Dinah Lee and PPCA Manager of Finance, Administration and Operations Lynne Small presented the PPCA award and cheque for best live performance, which went to solo artist Luke Vassella.

•PPCAstaffcontinuedtoassistSupportActLimited(SAL), the music industry’s benevolent fund, with a range of administrative duties and fund raising initiatives.

The Year AheadThe 2010/11 period will once again be a busy one for PPCA, as we continue to progress a number of important projects initiated to improve the benefits to label and artists by obtaining a fair return for their creative efforts.

We anticipate that the Fitness matter will be resolved and a new tariff scheme implemented, and that the Federal Court will hand down its decision in respect to the litigation on foot regarding the licences required by commercial radio for internet simulcast activity. We also look forward to having the High Court consider our application in respect of the 1% matter.

In order to ensure our stakeholders are up to date on all things PPCA we have recently established a presence on both Facebook and Twitter, and urge all artists and licensors to monitor those channels to stay up to date on all of our activities.

Rest assured that the PPCA team remains fully committed to actively representing stakeholders’ rights, and achieving a fair

return when the creative output of artists and labels is used in a commercial context.

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PPCA PERFORMERS’ TRUSTPPCA TRUST ACTIVITIESSince its inception, PPCA has funded and co-administered with the Musician’s Union and the Media Entertainment and Arts Alliance (formerly Actor’s Equity) the “PPCA Trust”. The Trustees during the period 1 July 2009 – 30 June 2010 were George Ash, Stephen Peach, Patricia Amphlett and Denis Shelverton.

In exercising their powers pursuant to the provisions of the Trust, the Trustees have the power to pay or to apply the Trust Fund to or for the benefit of such beneficiaries as the Trustees in their absolute discretion from time to time determine in respect of one or more of the following purposes:

1. performance at concerts at or for charitable institutions such as hospitals or homes for the aged; or

2. scholarships for the promotion and encouragement of musical and theatrical education; or

3. the promotion and encouragement of the performing arts to the general public; or, in particular,

4. the aid or assistance of any beneficiary who in the opinion of the Trustees is unable to adequately maintain herself/himself by her/his own exertions and other income.

Total funds provided since creating the Trust have been $2,172,593 (up to 30 June 2010).

In the 2009-2010 year, four Trust meetings were held and 70 applications were put to

the Trustees. Of these, 31 were approved totalling $120,246. Of the successful applications 24 related to further education and research; and 7 to festivals, live music and local artists.

The names of the recipients are as follows:Adam MitchellAdam PlayerAPRAAustralian Association of Men’s Barbershop SingersChris WilliamsDebbie ZukermanFlutes of AdelaideGemma FarrellGerard McFaddenGreg EldridgeJack LinJonathan AlleyJonathan HendersonKonrad PaszkudzkiKristine HealyMedia Entertainment & Arts Alliance Michelle AndersonMoon Sun SongMusicians Union of AustraliaNicholas BendallNiki VasilakisOlivia ButlerRosemary TurnerRuben PalmaSimon CawthornTasmanian Bands LeagueVictorian Concert OrchestraVivien Conacher

The Trust Balance Sheet can be found on page 44 of this report.

Feedback from many of the grants recipients has been welcome and useful. Here are some examples.

I would like to thank the Phonographic Performance Company of Australia very much, for your very generous grant towards the first year of my Artists Diploma at the Curtis Institute of Music… The experiences that I have had at the Curtis Institute this year are giving me the kind of training required to compete seriously for orchestral positions. Again I thank you very much for assisting so generously in this training, I truly could not have completed the year without the support of the Phonographic Performance Company of Australia

Yours sincerely, Rosie Turner

Thanks to the money you gave me, which I have put towards my University tuition, I will begin university in September at the Conservatorium van Amsterdam.

I have only been here a few months so far but already I have seen the benefits of being in an artistically rich country and I have no doubt that I have a lot more to look forward to.

Thank you for this opportunity Gemma Farrell

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The PPCA Most Broadcast Lists acknowledge Australian artists that receive extensive airplay according to PPCA’s broadcast logs. We compile these lists to distribute income to licensors, artists and the PPCA Performers’ Trust Foundation.

PPCA is delighted to announce that Australian artists once again featured heavily in PPCA’s annual Most Played Artist and Recording Reports, with our very own Guy Sebastian taking out the Most Played Recording for 2010 with his hit single ‘Like It Like That’.

US artist P!nk’s popularity amongst Australian listeners shows no sign of declining, as the US singer topped the annual Most Played Artist Report for the fourth consecutive year, edging out pop-starlet Lady Gaga who came in at number two, while the Black Eyed Peas returned to the top 50 in 2010 at number three, after missing out in 2009.

Five of the top twelve Most Played artists in 2010 were Australian, with favourite sons Powderfinger leading the charge at number six and rockers Jet at number seven, while Guy Sebastian and Vanessa Amorosi made triumphant returns to the Most Played Artists list for 2010 at number 10 and 11 respectively.

Three Australian acts featured in the top five of the Most Played Recording Report, with Guy Sebastian at number one with his track ‘Like It Like That’, Jet at number four with ‘She’s a Genius’ and Vanessa Amorosi rounding out the top five with her track ‘This Is Who I Am’.

US act Owl City came in at number two on the annual report with their track ‘Fireflies’, while The Black Eyed Peas feel-good hit ‘I Gotta Feeling’ took out third spot on the Top 100 Most Played Recordings.

CEO of PPCA Dan Rosen said it was encouraging to see so many Australian artists featured in the reports for 2010.

“It’s fantastic to see such a large number of new and established Australian acts feature in both the Most Played Artist and Recording Reports. It’s a credit to all of the artist’s hard work and a wonderful showcase of the quality of music currently coming out of the Australian music scene”, said Rosen.

“PPCA was pleased to complete its 2009/10 distribution just prior to Christmas, distributing a record amount of $20 million to its stakeholder artists and labels. We will continue in 2011 to make sure artists are fairly rewarded for their work”, he added.

PPCA Chairman George Ash took the opportunity to congratulate Australian artists on their success in 2010, saying

“PPCA is proud to continue supporting Australian music by working to ensure Australian acts are properly remunerated for the use of their valuable recordings. On behalf of everyone here at PPCA I would like to congratulate all of the Australian artists who feature in the 2010 Most Played Artist and Recording Reports”.

The chart is measured by collating titles that appear in the PPCA radio/TV broadcast logs during the period July to June each year.

2010 MOST PLAYEd ARTISTS ANd RECORdINGS

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TOP 100 MOST PLAYEd RECORdINGS 2010

1 Like It Like That Guy Sebastian 2 Fireflies Owl City 3 I Gotta Feeling The Black Eyed Peas 4 She’s A Genius Jet 5 This Is Who I Am Vanessa Amorosi 6 Evacuate The Dancefloor Cascada 7 I Wanna The All-American Rejects 8 Bad Romance Lady Gaga 9 No Surprise (Album Version) Daughtry10 Meet Me Halfway The Black Eyed Peas11 Before The Worst The Script12 Telephone Lady Gaga13 The Fixer Pearl Jam14 Wheels Foo Fighters15 Funhouse P!nk16 According to You Orianthi17 One Way Road The John Butler Trio18 Memories David Guetta19 Down Jay Sean20 Bulletproof La Roux21 If Today Was Your Last Day (Album Version) Nickelback22 Sexy Bitch David Guetta23 Someday (Album Version) Rob Thomas24 Hey, Soul Sister Train25 Replay Iyaz26 22 Lily Allen27 Undisclosed Desires Muse28 Give Me The Meltdown Rob Thomas29 21 Guns (Album Version) Green Day30 Notion Kings Of Leon31 You Belong With Me Taylor Swift32 In My Head Jason Derulo33 Heavy Cross The Gossip34 Her Diamonds (Album Version) Rob Thomas35 Rude Boy Rihanna36 Whatcha Say Jason Derulo37 Good Girls Go Bad Cobra Starship38 Haven’t Met You Yet Michael Buble39 Up/Down Jessica Mauboy40 I Know You Want Me (Calle Ocho) Pitbull41 Burn Your Name Powderfinger42 Halfway Gone Lifehouse43 Already Gone Kelly Clarkson44 Paparazzi Lady Gaga45 Rain Creed46 Empire State Of Mind Jay-Z47 Foreign Land Eskimo Joe48 New Divide Linkin Park49 Starstrukk 3OH!350 Ave Mary A P!nk

51 TiK ToK Ke$ha52 All Of The Dreamers Powderfinger53 Hazardous Vanessa Amorosi54 Heartbreak Warfare (Album Version) John Mayer55 Art of Love Guy Sebastian56 Second Chance (Album Version) Shinedown57 Alejandro Lady Gaga58 Rock That Body The Black Eyed Peas59 Sweet Dreams Beyonce60 Nothin’ On You B.o.B61 The Last Day On Earth Kate Miller-Heidke62 Whataya Want From Me Adam Lambert63 Breakeven The Script64 Little Lion Man Mumford & Sons65 Battlefield Jordin Sparks66 Mockingbird (Album Version) Rob Thomas67 3 Britney Spears68 Close To You The John Butler Trio69 When Love Takes Over David Guetta70 OMG Usher71 I Don’t Believe You P!nk72 3 Words Cheryl Cole73 Seventeen Jet74 Gives You Hell The All-American Rejects75 Do You Remember Jay Sean76 Not Fair Lily Allen77 Waking Up In Vegas (Album Version) Katy Perry78 Sweet Disposition The Temper Trap79 Just Say So Brian McFadden80 On A Mission Gabriella Cilmi81 Never Gonna Be Alone (Album Version) Nickelback82 Because Jessica Mauboy83 Bodies (Album Version) Robbie Williams84 The Boy Does Nothing Alesha Dixon85 Mr Mysterious Vanessa Amorosi86 Imma Be The Black Eyed Peas87 Sex On Fire Kings Of Leon88 Let Me Be Me Jessica Mauboy89 Use Somebody Kings Of Leon90 Ridin’ Solo (Album Version) Jason Derulo91 Broken Leg Bluejuice92 Bad Influence P!nk93 Release Me (UK Album Edit) Agnes94 Uprising Muse95 Blah Blah Blah Ke$ha96 Black Hearts (On Fire) Jet97 Black Box Stan Walker98 All To Myself Guy Sebastian99 If We Ever Meet Again Timbaland100 Rock & Roll (Album Version) Eric Hutchinson

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1.P!nk 2.Lady Gaga 3.The Black Eyed Peas 4.Rob Thomas 5.david Guetta 6.Powderfinger 7.Jet 8.Kings Of Leon 9.Nickelback 10.Vanessa Amorosi 11.Guy Sebastian 12.Jessica Mauboy 13.Green day 14.Rihanna 15. Kelly Clarkson 16. Jason derulo 17.Lily Allen 18.The John Butler Trio 19.The Script 20.Robbie Williams 21.Muse 22.U2 23.Taylor Swift 24.Foo Fighters 25.Eskimo Joe 26.INXS 27.The All-American Rejects 28.Pearl Jam 29.Ke$ha 30.Beyonce 31.Katy Perry 32.Pitbull USA 33.Jay Sean 34.Cascada 35.Linkin Park 36. Queen 37.The Gossip 38.3OH!3 39.Britney Spears 40.The Temper Trap 41.Jay-Z 42.daughtry 43.Fall Out Boy 44.AC/DC 45.La Roux 46.John Mayer 47.Train 48.Owl City 49.Timbaland 50.Bon Jovi

MOST PLAYEd ARTISTS 2010

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MOST PLAYEd ARTISTS 2007-2009

1. P!nk2. Robbie Williams3. Nickelback4. Eskimo Joe5. U26. Nelly Furtado7. Justin Timberlake8. Red Hot Chili Peppers9. Snow Patrol10. Evermore11. Pussycat Dolls12. The Rogue Traders13. Shannon Noll14. INXS15. Christina Aguilera16. The Fray17. Gwen Stefani18. Beyonce19. Kelly Clarkson20. Pete Murray21. The Veronicas22. Panic! At The Disco23. Coldplay24. Evanescence25. Jet

1. P!nk 2. Maroon 5 3. Matchbox 20 4. Fergie 5. Fall Out Boy 6. The Veronicas 7. Justin Timberlake 8. Good Charlotte 9. Rogue Traders 10. Timbaland 11. U2 12. Powderfinger 13. Linkin Park 14. Avril Lavigne 15. Gwen Stefani 16. Kelly Clarkson 17. Delta Goodrem 18. INXS 19. The John Butler Trio 20. Mika 21. Thirsty Merc 22. Kylie Minogue 23. Santana 24. Sneaky Sound System 25. Britney Spears

2007 2008 2009

1. P!nk 2. Kings Of Leon 3. Katy Perry 4. Lady Gaga 5. Coldplay 6. Fall Out Boy 7. Britney Spears 8. Nickelback 9. The Veronicas10. Jessica Mauboy11. Beyonce 12. U2 13. Rihanna 14. Snow Patrol 15. The Living End 16. The Presets 17. Kelly Clarkson 18. The Pussycat Dolls19. Matchbox 2020. The Fray 21. Maroon 5 22. Natalie Bassingthwaighte 23. Lily Allen 24. Jordin Sparks 25. T.I.

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directors’ report 18

Auditor’s independence declaration 21

Independent auditor’s report 21

directors’ declaration 22

Statement of comprehensive income 23

Statement of financial position 24

Statement of changes in equity 25

Statement of cash flows 25

Notes to the financial statements 26

SPECIAL PURPOSE FINANCIAL REPORT

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The directors of Phonographic Performance Company of Australia Limited submit herewith the annual financial report of the company for the financial year ended 30 June 2010. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

Information about the directors and senior managementThe names and particulars of the directors of the company during or since the end of the financial year are:

George William Ash Managing Director, Record Company

Raani Costelloe (Alternate for Denis Anthony Handlin) General Manager, Legal & Business Affairs, Record Company

David William De Barran Cullen Director, Management Company

Karen Ann Don (Alternate for George William Ash); Director, Legal & Business Affairs, Record Company

Matthew Henry Evans (Alternate for Mark Poston) Vice President Finance, Record Company

Denis Anthony Handlin Chairman and CEO; Australia and New Zealand, President: South East Asia and Korea, Record Company

Dinah Lee Independent Artist

Belinda Morrison Independent Artist

Mark Narborough (Alternate for Edward Erskine St John and Antony Harlow); Director of Finance, Record Company

Mark Andrew Poston Managing Director, Record Company

Ashley Clark Sellers Chief Executive Officer, Record Company

Edward Erskine St John Managing Director, Record Company

David Andrew Vodicka Managing Director, Record Company

Adrian Fitz-Alan (Alternate for Mark Poston) Vice President of Legal and Business Affairs, Australasia, Record Company

Antony Harlow Managing Director, Record Company

The above named directors held office during the whole of the financial year and since the end of the financial year except for:

Mark Narborough Resigned as Alternate 8 September 2010 / Appointed Director 8 September 2010

Resigned as Director 15 October 2010 / Appointed Alternate 15 October 2010

Ashley Clark Sellers Resigned 1 July 2010

Edward Erskine St John Resigned 7 September 2010

David Andrew Vodicka Appointed 5 August 2010

Matthew Henry Evans Resigned as Alternate 16 August 2010

Adrian Fitz-Alan Appointed as Alternate 16 August 2010

Antony Harlow Appointed as Director 15 Oct 2010

dIRECTORS’ REPORT

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Company secretaryMs Lynne Maree Small, Certified Practising Accountant, held the position of company secretary of Phonographic Performance Company of Australia Limited during and since the end of the financial year. She joined Phonographic Performance Company of Australia Limited in 1997 and was appointed company secretary on 16 May 1997.

Principal activitiesThe principal activity of the company in the course of the financial year was acting for the copyright owners in the licensing throughout Australia of the broadcast and public performance of sound recordings and music video clips.

During the financial year there was no significant change in the nature of those activities.

Review of operationsThe company’s results have again shown a substantial increase in the amount to be distributed to Copyright owners as compared with the previous year, in line with the company’s strategy of tariff reviews. The results of the operations of the company during the year were not, in the opinion of the directors substantially, affected by any item, transaction or event of a material and unusual nature.

The company’s distribution to its licensors in relation to the current year was $20,642,954 (2009: $16,854,231).

The company’s results for the financial year ended 30 June 2010 was a profit of $nil (2009: $nil).

Significant changes in state of affairsThere were no significant changes in the state of affairs of the company during the financial year.

Matters subsequent to the end of the financial yearThere has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of the

company, the results of those operations, or the state of affairs of the company in future financial years.

Future developmentsDisclosure of information regarding likely developments in the operations of the company in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the company. Accordingly, this information has not been disclosed in this report.

Environmental regulationsThe company’s operations are not subject to any particular and significant environmental regulations under any State or Federal laws.

DividendThe company distributes the licence fees it collects to the Copyright owners and artists after deducting operating expenses. As a result of this no profit or loss is reported and, for the financial year ended 30 June 2010, the directors do not recommend the payment of dividend for the current year (2009: $nil).

Indemnification of officers and auditorsDuring the financial year, the company paid a premium in respect of a contract insuring the directors of the company (as named above), the company secretary, Lynne Maree Small, and all executive officers of the company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The company has not otherwise, during or since the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the company or of any related body corporate against a liability incurred as such an officer or auditor.

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dIRECTORS’ REPORTDirectors’ meetingsThe following table sets out the number of directors’ meetings held during the financial year and the number of meetings attended by each director (while they were a director). During the financial year, 5 board meetings were held.

Board of Directors

Held Attended

George William Ash 5 5

Raani Costelloe (alternate) 5 5

David William De Barran Cullen 5 5

Karen Ann Don (alternate) - -

Matthew Henry Evans (alternate) 2 -

Denis Anthony Handlin 5 -

Dinah Lee 5 5

Belinda Morrison 5 4

Mark Narborough (alternate) - -

Mark Andrew Poston 5 3

Ashley Clark Sellers 5 4

Edward Erskine St John 5 5

Proceedings of behalf of the CompanyNo person has applied to the Court under section 237 of the Corporation Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the Corporation Act 2001.

Auditor’s independence declarationThe auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21 of the annual report.

This directors’ report is signed in accordance with a resolution of directors made pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the Directors

George William Ash Director Sydney, 12 November 2010

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Declaration of independence by Melissa Alexander to the Directors of Phonographic Performance Company Australia LimitedAs lead auditor of Phonographic Performance Company of Australia Limited for the year ended 30 June 2010, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

•theauditorindependencerequirementsoftheCorporationsAct 2001 in relation to the audit; and

•anyapplicablecodeofprofessionalconductinrelationto the audit.

Melissa Alexander Director

Independent Auditor’s Report to the members of Phonographic Performance Company Australia Limited We have audited the accompanying financial report of Phonographic Performance Company of Australia Limited, which comprises the statement of financial position as at 30 June 2010, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.

Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting

AUdITOR’S INdEPENdENT dECLARATION

 

 BDO Audit (NSW-VIC) Pty Ltd Sydney, 12th November 2010

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dIRECTORS’ dECLARATIONestimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Phonographic Performance Company of Australia Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

Opinion In our opinion:

(a) the financial report of Phonographic Performance Company of Australia Limited is in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the company’s financial position as at 30 June 2010 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and

(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

BDO Audit (NSW-VIC) Pty Ltd

Melissa Alexander Director Sydney, 12th November 2010

The directors of the company declare that:

1. The financial statements comprising the statement of comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001, and

(a) comply with Accounting Standards and the Corporations Regulations 2001; and

(b) give a true and fair view of the company’s financial position as at 30 June 2010 and of its performance for the year ended on that date.

2. The company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards.

3. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:

George William AshDirectorSydney, 12 November 2010

 

 

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Note 2010 2009

$ $

Revenue 3 27,629,004 24,793,093

Subscription fees paid or payable

to the International Federation of Phonographic Industry (316,556) (377,997)

Employee benefits expense (2,623,140) (2,447,100)

Depreciation and amortisation expense (164,983) (158,759)

Occupancy expense (236,882) (208,602)

Distribution to licensors (20,642,954) (16,854,231)

Legal expense (1,679,948) (3,723,769)

Other expenses (1,964,541) (1,022,635)

Profit before tax 4 - -

Income tax expense - -

Profit after income tax - -

Other comprehensive income - -

Total comprehensive income for the year - -

The above statement of comprehensive income should be read in conjunction with the accompanying notes.

INCOME STATEMENTStatement of comprehensive income for the financial year ended 30 June 2010

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FINANCIAL POSITION

Note 2010 2009 $ $Current assets Cash and cash equivalents 12(a) 1,552,118 1,609,588Trade and other receivables 5 5,283,151 4,772,691Other financial assets 6 22,103,900 18,803,900 Total current assets 28,939,169 25,186,179 Non-current assets Property, plant and equipment 7 497,602 531,886 Total non-current assets 497,602 531,886 Total assets 29,436,771 25,718,065 Current liabilities Trade and other payables 8 29,057,821 25,364,039Provisions 9 299,716 226,482 Total current liabilities 29,357,537 25,590,521 Non-current liabilities Provisions 9 79,222 127,532 Total non-current liabilities 79,222 127,532 Total liabilities 29,436,759 25,718,053 Net assets 12 12 Equity Issued capital 10 12 12 Total equity 12 12

Statement of financial position as at 30 June 2010

The above statement of financial position should be read in conjunction with the accompanying notes.

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Share capital Retained earnings Total Balance as at 1 July 2008 12 - 12

Total comprehensive income for the year - - -

Balance as at 30 June 2009 12 - 12

Total comprehensive income for the year - - -

Balance as at 30 June 2010 12 - 12

Statement of changes in equity for the financial year ended 30 June 2010

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Note 2010 2009 $ $ Cash flows from operating activities Receipts from customers 28,934,533 27,674,240Payments to suppliers and employees (9,660,898) (9,481,117)Distributions to licensors (16,854,231) (14,497,874) Net cash provided by operating activities 12(b) 2,419,404 3,695,249 Cash flows from investing activities Interest received 953,825 1,117,265Payments for plant and equipment (130,699) (429,076) Net cash provided by investing activities 823,126 688,189 Net increase in cash and cash equivalents 3,242,530 4,383,438 Cash and cash equivalents at the beginning of the financial year 20,413,488 16,030,050 Cash and cash equivalents at the end of the financial year 12(a) 23,656,018 20,413,488

Statement of cash flows for the financial year ended 30 June 2010

The above statement of cash flows should be read in conjunction with the accompanying notes.

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1. General informationPhonographic Performance Company of Australia Limited (the company) is an unlisted public company limited by shares, incorporated in Australia and operating in Australia. Phonographic Performance Company of Australia Limited’s registered office and its principal place of business is as follows:

Registered office and principal place of business

Level 4 19 Harris Street PYRMONT NSW 2010 Tel. (02) 8569 1100

2. Significant accounting policiesStatement of compliance

The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Australian Accounting Standards include Australian Equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report complies with International Financial Reporting Standards (IFRS).

The financial statements were authorised for issue by the directors on 3rd November 2010.

Basis of preparation

The financial report has been prepared on the basis of historical cost. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars.

Deficiency of working capital

As at 30 June 2010 the company has a working capital

deficiency of $418,368 (2009: $404,342). Included in the company’s current liabilities are aggregate amounts representing the license fees received in advance for $6,295,603 (2009: $6,190,320) and amounts payable to licensors of $20,642,954 (2009: $16,854,231). While the amount payable to the licensors will be settled in December 2010, the license fees received in advance will be used to support the operations of the company in the next financial year with only the surplus forming part of the amount which will be distributed to the licensors in relation to the financial year ending 30 June 2010.

Consequently, the working capital deficiency position at the 30 June 2010 is due to the nature of PPCA’s business and does not highlight an issue relating to the going concern assumption of the company.

Critical accounting judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, management is required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following judgements have been applied:

Software

Included within property, plant and equipment is $308,112 relating to an accounting software package that is currently being modified. This asset has not been amortised as it is

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

27

currently being developed and is not in use. The development commenced in January 2009 and is expected to be completed in 2011. The directors do not believe the asset has been impaired as it will contribute to future period financial benefits through revenue generation and/or cost reduction. Refer to Note 2 (g).

Significant accounting policies

The following significant accounting policies have been adopted in the preparation and presentation of the financial report:

(a) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

i. where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition of an asset or as part of an item of expense; or

ii. for receivables and payables which are recognised inclusive of GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.

Cash flows are included in the statement cash flows on a gross basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

(b) Revenue

Revenue is measured at the fair value of the consideration received or receivable.

Revenue is brought to account over the terms of the licences issued on the following basis:

• Public performance licence fees are normally issued for a period of one year, although shorter periods are accommodated. In all cases licence fees are payable in advance. Income is brought to account on a monthly basis over the life of the contract.

• Broadcast licences are issued for various terms - income is brought to account on a monthly basis over the life of the contract.

• Revenue from the disposal of other assets is recognised when the entity has passed control of the other assets to the buyer.

Interest revenue

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

c) Income tax

The company prepares its income tax returns on the basis that it acts as agent for the copyright holders that it represents. As such, it does not derive income on its own account. Rather, it is entitled under its constituent document to be reimbursed for expenditure incurred in the course of its activities. The basis of assessment has been agreed with the Australian Taxation Office.

The net effect of temporary and permanent differences arising from expenditure incurred by the company is passed on to the recipients of the royalties collected.

(d) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and have a maturity of three months or less at the date of acquisition.

(e) Financial assets

Other financial assets are classified into the following specified categories: ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

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2. Significant accounting policies (continued) (e) Financial assets (continued)

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less impairment.

Interest income is recognised by applying the effective interest rate.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.

The carrying amount of financial assets including uncollectible trade receivables is reduced by the impairment loss through the use of an allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

(f) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition or construction of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined by discounting the amounts payable in the future to their present value as at the date of acquisition.

Depreciation is provided on property, plant and equipment.

Depreciation is calculated on a straight-line basis so as to write off the net cost or other revalued amount of each asset over its expected useful life to its estimated residual value.

Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the shorter, using the straight- line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period, with the effect of any changes recognised on a prospective basis. The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

The following useful lives are used in the calculation of depreciation:

• Office furniture 5 years

• Office equipment 4 years

• Computer equipment 3 years

• Leasehold improvements 5 years

(g) Intangibles

IT development and software

Costs incurred in developing products or systems and costs in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software. Costs capitalised

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

29

included external direct costs of materials and service and direct payroll and payroll rated costs of employees’ time spent on the project. Amortisation is calculated on a straight-line basis from the date the asset is brought into use over periods generally ranging from three to five years.

IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the Company has an intention and ability to use the asset.

IT development and software are included in property, plant and equipment.

(h) Leased assets

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(i) Employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and long service leave when it is probable that settlement will be required and they are capable of being measured reliably.

Liabilities recognised in respect of employee benefits expected to be settled within 12 months, are measured at their nominal values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the company in respect of services provided by employees up to reporting date.

Defined contribution plans

Contributions to defined contribution superannuation plans are expensed when employees have rendered service entitling them to the contributions.

(j) Provisions

Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the present value of those cashflows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

(k) Financial instruments issued by the company

Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments

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NOTES TO THE FINANCIAL STATEMENTS2. Significant accounting policies (continued)

through the expected life of the financial liability, or, where appropriate, a shorter period.

(l) Standards and interpretations issued not yet effective

The following new accounting standards, amendments to standards and interpretations have been issued, but are not mandatory as at 30 June 2010. They may impact the company in the period of initial application. They are available for early adoption, but have not been applied in preparing these financial statements:

• AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (issued December 2009) addresses the classification and measurement of financial assets. The standards are not applicable until 1 January 2013 but are available for early adoption. AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not traded. Fair value gains and losses on available-for-sale debt investments, for example, will therefore have to be recognised directly in statement of comprehensive income. The company has not yet decided when to adopt AASB 9. However, management does not expect this will have a significant impact on the company’s financial statements as the company does not hold any available-for-sale investments.

• AASB 2010-4 Further amendments to Australian Accounting Standards arising from the Annual Improvements Projects (issued June 2010) includes various not urgent but necessary changes to IFRSs as a result of the IASB’s 2009 annual improvements project. These include an amendment to AASB 7 Financial Instruments: Disclosures, which deletes various disclosures relating to credit risk, renegotiated loans and receivables and the fair value of collateral held. There will be no impact on initial adoption to amounts recognised in the financial statements as the amendments result in fewer disclosures only.

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

31

3. Revenue 2010 2009 $ $ Licence fees 26,675,179 23,675,828Interest revenue – other parties 953,825 1,117,265 27,629,004 24,793,093

4. Profit for the yearOther specific disclosuresProfit for the year before income tax includes the following expenses: 2010 2009 $ $Loss on disposal of property, plant and equipment - (69) Post employment benefits - defined contribution plans (205,118) (191,212) Impairment of trade receivables (475,285) (121,447)

5. Trade and other receivables 2010 2009 $ $ Trade receivables (i) 4,840,229 4,186,075Allowance for doubtful debts (500,000) (92,549) 4,340,229 4,093,526 Prepaid expenses 83,396 86,383Other licence receivables 174,574 171,518Other receivables (ii) 684,952 421,264 5,283,151 4,772,691

32

5. Trade and other receivables (continued)(i) The average credit period on the rendering of services is 30 days. No interest is charged on the trade receivables except

possibly in recovery proceedings. An allowance has been made for estimated irrecoverable trade receivable amounts arising from the past sale of goods and rendering of services, determined by reference to past default experience. The company has provided for receivables over 120 days because historical experience is such that receivables that are past due beyond 120 days are generally not likely to be recoverable. Trade receivables over 120 days are provided for based on estimated irrecoverable amounts from the sale of goods and rendering of services, determined by reference to past default experience.

Included in the company’s trade receivable balance are debtors with a carrying amount of $2,621,122 (2009: $2,648,573) which are past due at the reporting date for which the company has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The company does not hold any collateral over these balances. The average age of these receivables is 60 days. (2009: 59 days).

(ii) This account includes $429,721 (2009: $267,488) of intercompany receivables from the related entity Australian Recording Industry Association Limited. This intercompany loan receivable is repayable on demand and no interest is charged on the outstanding balance.

Ageing of past due but not impaired 2010 2009 $ $31- 60 days 841,446 798,521

61 – 90 days 1,058,544 1,614,096

91+ days 721,132 235,956

2,621,122 2,648,573

6.Other financial assets

2010 2009

$ $

Cash on deposit (i) 22,103,900 18,803,900

(i) The company holds term deposits returning a fixed rate of interest. The weighted average interest rate on these term deposits is 6.00% p.a. (2009: 4.05% p.a.). The term deposits have maturity dates ranging between three to eight months from reporting date..

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

33

7. Plant and equipment

$ $ $ $ $ $ Cost Balance at 1 July 2008 61,525 62,255 415,144 231,742 218,929 989,595Additions 2,005 1,933 305,555 119,583 - 429,076Disposals - (2,950) (19,670) (58,800) - (81,420) Balance at 30 June 2009 63,530 61,238 701,029 292,525 218,929 1,337,251Additions - 316 80,146 48,289 1,948 130,699Disposals - (2,855) (16,560) (72,078) - (91,493) Balance at 30 June 2010 63,530 58,699 764,615 268,736 220,877 1,376,457 Accumulated depreciation Balance at 1 July 2008 (59,867) (54,658) (232,109) (175,272) (206,051) (727,957)Depreciation expense (912) (4,363) (83,746) (64,709) (5,029) (158,759)Disposals - 2,950 19,670 58,731 - 81,351 Balance as at 30 June 2009 (60,779) (56,071) (296,185) (181,250) (211,080) (805,365)Depreciation expense (733) (3,790) (91,451) (64,121) (4,888) (164,983)Disposals - 2,855 16,560 72,078 - 91,493 Balance at 30 June 2010 (61,512) (57,006) (371,076) (173,293) (215,968) (878,855) Net book value

As at 30 June 2009 2,751 5,167 404,844 111,275 7,849 531,886 As at 30 June 2010 2,018 1,693 393,539 95,443 4,909 497,602

Office furniture

at cost

Office equipment

at cost

Software

Computer equipment

at cost

Leasehlod improve-

mentsat cost

Total

34

8. Trade and other payables 2010 2009 $ $

Trade payables (i) 1,499,916 1,850,578

Goods and services tax payable 619,348 468,910

Licence fees received in advance 6,295,603 6,190,320

Amounts payable to licensors 20,642,954 16,854,231

29,057,821 25,364,039

(i) The average credit period on general purchases of goods or services from various suppliers is 30 days. No interest is charged on overdue payables. The company has financial risk management policies in place to ensure that all payables are paid within the credit timeframe.

9. Provisions 2010 2009 $ $

Current

Employee benefits (i) 239,716 226,482

Lease make good provision (ii) 60,000 -

299,716 226,482

Non-current

Employee benefits 79,222 67,532

Lease make good provision - 60,000

79,222 127,532

(i) The current provision for employee benefits is expected to be taken within 12 months.

(ii) Phonographic Performance Company of Australia Limited renewed the operating lease agreement for a further three years in the year ended June 2008, commencing 1 April 2008. Consequently, the lease make-good provision is classified as current for the financial ended 30 June 2010 and non-current for the financial tear ended 30 June 2009. The provision for make-good represents the present value of the management’s best estimate of the future outflow of economic benefits that will be required under the requirements of the operating lease for office premises.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

35

10. Issued capital 2010 2009 $ $

12 fully paid ordinary shares (2009: 12) 12 12

2010 2009 No. $ No. $Fully paid ordinary shares Balance at beginning and end of financial year 12 12 12 12

Fully paid ordinary shares carry one vote per share and carry the right to dividends.Changes to the then Corporations Law abolished the authorised capital and par value concept in relation to share capital from 1 July 1998. Therefore, the company does not have a limited amount of authorised capital and issued shares do not have a par value.

11. Commitments for expenditureOperating leases

Leasing arrangements

Phonographic Performance Company of Australia Limited renewed the operating lease agreement for a further three years in the year ended 30 June 2008, commencing 1 April 2008. Operating leases below include property and parking space leases.

Non-cancellable operating lease commitments

2010 2009 $ $

Not longer than 1 year 418,335 413,316Longer than 1 year and not longer than 5 years - 406,935 418,335 820,251

36

12. Notes to the statement of cash flows

(a) Reconciliation of cash and cash equivalents For the purposes of the statement cash flows, cash and cash equivalents includes cash on hand and in banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the financial year as shown in the statement cash flows is reconciled to the related items in the statement of financial position as follows:

2010 2009 $ $

Cash and cash equivalents 1,552,118 1,609,588

Cash on term deposits (refer to note 6) 22,103,900 18,803,900

23,656,018 20,413,488

(b) Reconciliation of profit for the year to net cash flows from operating activities

2010 2009 $ $ Profit for the year - -

Loss on disposal of property, plant and equipment - 69

Depreciation and amortisation 164,983 158,759

Interest income received and receivable (953,825) (1,117,265)

Changes in assets and liabilities

(Increase)/decrease in assets:

Trade and other receivables (510,460) 796,489

Increase in liabilities:

Trade and other payables 3,693,782 3,824,873

Provisions 24,924 32,324

Net cash provided by operating activities 2,419,404 3,695,249

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

37

13. Financial instruments(a) Financial risk management objectives

The Board of Directors manage the financial risks relating to the operations of the company. These risks include market risk, credit risk and liquidity risk.

The company does not enter into or trade financial instruments including derivative instruments for speculative purposes.

The company’s activities expose it primarily to the financial risks of changes in interest rates. The company has managed these risks by only entering into term deposits with fixed interest rates.

(b) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.

(c) Interest rate risk management

The company is exposed to interest rate risk through its financial assets held as term deposits at the bank. The company manage the risk by monitoring and re-evaluating the terms of the deposit every one to eight months when the asset matures. Management will review the interest rates available to achieve the best rate possible in the current market.

The company’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates on the company’s other

financial assets and other financial liabilities. A 50 basis point increase or decrease represents management’s assessment of the possible change in interest rates.

At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant, the company’s profit for the year ended 30 June 2010 would decrease/increase by $118,280 (2009: $81,711). This is attributable to the expected change in the fair value of the term deposit based on a variable interest rate.

The company’s sensitivity to interest rates has remained constant during the current period due to the term of term deposits remaining 3 months to maturity.

38

13. Financial instruments (continued)

(c) Interest rate risk management (continued)

The following tables detail the company’s exposure to interest rate risk as at the reporting date:

% $ $ $ $

2010

Financial assets

Cash and cash equivalents 5.81% 1,552,118 22,103,900 - 23,656,018

Trade and other receivables – amortised cost - - - 5,199,755 5,199,755

1,552,118 22,103,900 5,199,755 28,855,773

Financial liabilities

Amortised cost - - 22,762,218 22,762,218

2009

Financial assets

Cash and cash equivalents 3.88% 1,609,588 18,803,900 - 20,413,488

Trade and other receivables – amortised cost - - - 4,686,308 4,686,308

1,609,588 18,803,900 4,686,308 25,099,796

Financial liabilities

Amortised cost - - 19,173,719 19,173,719

Weighted average effective interest

rate

Variable interest

rate

Fixed maturity

dates Less than

1 year

Non-interest bearing Total

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

39

13. Financial instruments (continued)(d) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. To the extent the company has a receivable from another party there is a credit risk in the event of non-performance by that counterparty. Financial instruments, which potentially subject the company to credit risk principally consist of the bank balance, and receivables. The company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The company measure credit risk on a fair value basis.

The carrying amount of the financial assets recorded in the financial statements, net of any allowances for losses, represents company’s maximum exposure to credit risk, without taking account of the value of any collateral obtained.

The company do not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

(e) Fair value of financial instruments

The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their fair values. The fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow theory.

(f) Currency risk

The company does not undertake any transactions denominated in foreign currencies, hence no exposure to exchange rate fluctuations arises.

(g) Capital risk management

The company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The company’s overall strategy remains unchanged from 2009.

The capital structure of the company consists of cash and cash equivalents and equity attributable to equity holders of the company, comprising issued capital as disclosed in note 9.

(h) Market risk

The company’s activities expose it to the financial risks of changes in interest rates. The company manages its exposure to interest rate risk by entering into term deposits with fixed interest rates to mitigate the risk of a decrease in interest rates.

There has been no change to the company’s exposure to market risks or in the manner in which it manages and measures the risk.

40

13. Financial instruments (continued)

(i) Categories of financial instruments

2010 2009 $ $

Financial assets

Cash and cash equivalents 23,656,018 20,413,488

Trade and other receivables – amortised cost 5,199,755 4,686,308

28,855,773 25,099,796

Financial liabilities

Amortised cost 22,762,218 19,173,719

22,762,218 19,173,719

At the reporting date there are no significant concentrations of credit risk for loans and receivables. The carrying amount reflected above represents the company’s maximum exposure to credit risk for such loans and receivables.

(j) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the company’s short, medium and long-term funding and liquidity management requirements.

The company manage liquidity risk by maintaining adequate reserves and banking facilities and by matching the maturity profiles of financial assets and liabilities.

The following table details the company’s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay.

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

41

13. Financial instruments (continued)

(j) Liquidity risk

Financial liabilities

% $ $ $ $ $ $

2010

Non interest bearing - 1,444,061 675,203 20,642,954 - - 22,762,218

2009

Non interest bearing - 1,388,060 931,428 16,854,231 - - 19,173,719

Weighted average effective interest

rateLess than1 month

1-3 months

3 months to 1 year 1-5 years 5+ years Total

14. Key management personnel compensationThe aggregate compensation made to directors and other members of key management personnel of the company is set out below:

2010 2009 $ $

Short-term employee benefits 1,031,992 501,151Post-employment benefits 92,879 45,104

1,124,871 546,255

42

Details of key management personnel

The directors and other members of key management personnel of the company during the year were:

Directors George William Ash Managing Director, Record Company

Raani Costelloe (Alternate for Denis Anthony Handlin) General Manager, Legal & Business Affairs, Record Company

David William De Barran Cullen Director, Management Company

Karen Ann Don (Alternate for George William Ash); Director, Legal & Business Affairs, Record Company

Matthew Henry Evans (Alternate for Mark Poston) Vice President Finance, Record Company

Denis Anthony Handlin Chairman and CEO; Australia and New Zealand, President: South East Asia and Korea, Record Company

Dinah Lee Independent Artist

Belinda Morrison Independent Artist

Mark Narborough (Alternate for Edward Erskine St John); Director of Finance, Record Company

Mark Andrew Poston Managing Director, Record Company

Ashley Clark Sellers Chief Executive Officer, Record Company

Edward Erskine St John Managing Director, Record Company

David Andrew Vodicka Managing Director, Record Company

Executives Stephen Peach Chief Executive Officer

Lynne Small CPA, Company Secretary

Stephen Conway IT Manager

Anna Killick Legal Counsel

Abigail Shelley Legal Counsel

Maxine Chisholm Licensing Manager

Linda Courtney Distribution Manager

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

43

15. Related party transactions(a) Key management personnel compensation

Details of key management personnel compensation are disclosed in note 14 to the financial statements.

(b) Transactions with other related parties

Other related entities include entities with common control. Related entities include Australian Recording Industry Association Limited, Music Industry Piracy Investigations Pty Limited and PPCA Performers’ Trust Foundation.

Aggregate amounts receivable from other related parties are disclosed in notes 5 to the financial statements. Amounts

receivable from related parties are unsecured, non-interest bearing and is repayable at call.

Rental expense of $150,701 (2009: $160,277) was charged to Australian Recording Industry Association Limited. The rental cost is deemed to be under normal terms and conditions.

Clerical services expense of $537,391(2009: $614,038) was charged to Australian Recording Industry Association Limited.

A grant of $28,510 (2009: $51,303) was paid to PPCA Performers’ Trust Foundation.

16. Remuneration of auditors 2010 2009 $ $

Audit of the financial report – BDO 27,500 -

Audit of the financial report – Deloitte - 39,984

Other non-audit services – preparation of tax return – BDO 4,000 -

Other non-audit services – preparation of tax return – Deloitte - 6,764

31,500 46,748

17. Subsequent eventsThere has not been any matter or circumstance, other than that referred to in the financial statements or notes thereto, that has arisen since the end of the financial year, that has significantly affected, or may significantly affect, the operations of the company, the results of those operations, or the state of affairs of the company in future financial years.

18. Contingent liabilitiesThere are no contingent liabilities at the date of this report.

44

PERFORMERS’ TRUST FOUNdATION BALANCE FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010

Current assets

Cash and cash equivalents 98,895 179,472

Trade and other receivables 12,265 3,706

Term deposits 500,000 500,000 Total current assets 611,160 683,178 Total assets 611,160 683,178

Current liabilities

Trade and other payables 2,500 4,546

Grants allocated and unexpended at the end of the financial year held by trustees for beneficiaries of:

Professional Musician’s Union of Australia 474,028 429,257

Media Entertainment & Arts Alliance 45,916 61,333 Total current liabilities 522,444 495,136 Total liabilities 522,444 495,136 Net assets 88,716 188,042 Funds Funds retained in the Trust 88,716 188,042 Total funds 88,716 188,042

2010 2009

$ $

45

A

B

C

D

DD

E1

E2

E3

F

FW

H

HM

I

J

JO

JW

K

M

PPCA licences are available to cover the use by public performance of protected sound recordings and/or public exhibition of music video in:

General Licences – fetes, garden parties, school, church or dance academy concerts; motivational speakers. (Single event licences are available).

Events and festivals

Cinemas (film exhibitors) and theatres

Dance studios, dance line dance instructors

Live performance groups and dance companies

Nightclubs

Dance and dance parties

Bars foreground music

Mobile DJs and DJ equipment suppliers

Mobile VJs

Halls

Music on hold

Factories, industrial premises and offices.

Audio jukeboxes

Audio jukebox operators

Video jukebox operators

Amusement centres, pool rooms, swimming pools and ten pin bowling centres

Commercial or professional premises – including art galleries, bars, beauty salons / spas, clubs, corridors, elevators, foyers, function rooms, funeral parlours, hairdressers, health/medical offices (e.g. doctors, dentists, chiropractors, massage therapists, osteopaths,

physiotherapists), hotels, libraries, lounges, motels, museums, nail bars, reception areas, retail stores, taverns, zoos, and/or similar establishments. This tariff also covers the use of protected sound recordings for demonstration purposes in electrical, video/DVD rental and hi-fi stores.

Electrical and hi-fi stores

Shopping centres, plazas and concourses

Public vehicles (e.g. aircraft, buses, charter boats, coaches, ferries, hire cars, light rail, monorail, ships, taxis, trains, trams)

Restaurants, cafes and similar establishments

Restaurants, restaurant areas, cafes (hotels and motels)

Sports arenas, race tracks, showgrounds and outdoor amusement parks

Outdoor recreational areas

Skating rinks

Fitness centres, gymnasiums, health clubs and similar establishments

Music videos - general

Music videos - nightclubs

Music videos - public vehicles

Music videos - retail premises

Concerts

Conference rooms

Business copying licence for sound recordings

TARIFF CATEGORIES

MW

N

P

R1

R2

S

SS

U

V

W

WE

WP

WR

X

Y

Z

Licence fees are calculated differently in each category (e.g. fees may be flat fees per annum, fees per person or per machine, or fees determined by size of venue depending on category) – contact PPCA for full details. It is quite possible, depending on your needs, that you may have a licence with any number of Tariffs e.g. a hotel may have a number of bar areas (Tariff M), restaurants (Tariff R1), nightclubs (Tariff E1), gymnasium (Tariff V), and video jukebox (Tariff W).

PHONOGRAPHIC PERFORMANCECOMPANY OF AUSTRALIA LTD

ACN 000 680 704 ABN 43 000 680 704LEVEL 4, 19 HARRIS ST, PYRMONT NSW 2009PO BOX Q20, QUEEN VICTORIA BUILDING NSW 1230T. 02 8569 1100 F. 02 8569 1183ppca.mail@ppca.com.au www.ppca.com.au