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2014 Annual report Copyright Licensing New Zealand CLNZ is jointly owned by the Publishers Association of New Zealand PANZ and the New Zealand Society of Authors NZSA. As a member of the International Federation of Reproduction Rights Organisations IFRRO CLNZ is part of a global network that represents the interests of publishers and authors from around the world. Our tailored licensing solutions allow education facilities businesses and government departments to copy scan and share from copyright protected material including books magazines journals and periodicals beyond what is permitted by the Copyright Act 1994. CLNZ is a non-profit business and all net proceeds from licensing are distributed to copyright owners. 04 CEOs Message PAULAS PREFACE 06 Chairs Message ADRIANS NOTES ON THE TEXT 08 Our Directors CHARACTER LIST 08 New Beginnings THANK YOU TO OUR RETIRING DIRECTORS 09 60 Seconds WITH OUR NEW DIRECTORS 10 Plot Developments SPOTLIGHT ON THE CULTURAL FUND 2014 10 Podcasting NZ Books CONTESTABLE FUNDING HELPS GET BOOKS TALKING 11 Letter from Taipei CONTESTABLE FUNDING HELPS BRING AUTHORS TO TIBE 12 Research Grants GRANT CRUCIAL FOR NEW AUTHORS BIG IDEA 13 Awarding Excellence in Educational Publishing A JUDGES PERSPECTIVE 14 References FINANCIALS AT-A-GLANCE INDEPENDENT AUDITORS REPORT DIRECTORS REPORT FULL FINANCIAL STATEMENTS CEOs Message WARNING Contains Plot Spoilers T he plot of Our Story 2014 is driven by two core objectives to help owners of creative content earn a living from their work and to support the growth and development of the publishing sector. Like many good books ours begins with a strong set of protagonists or in this case our board of directors. In 2014 we said goodbye to two long serving directors Mark Sayes and Stephen Stratford. We pay tribute to Mark and Stephens service on page 8 of this report. We also bolstered our board with two new appointments Andrew McKenzie and Professor Pat Walsh. Pats experience in the tertiary education sector and Andrews commercial focus complement our boards extensive publishing industry experience. Read their biographies and find out more about them in their 60 second interviews on page 9. In financial terms 2014 was a mixed year. Rightsowners benefited from the settlement of the university licence scheme however the costs of achieving this settlement were significant. You can find at-a-glance as well as in- depth financial information from page 14 onwards. In our corporate office setting our small but dedicated team of eight worked hard to end the year on a strong note. In 2014 the number of licensed school students was up by 10000 and our distribution team processed a large volume of survey material in order to distribute monies to rightsowners before year-end. Of course no story is complete without a challenge. The licensing dispute between CLNZ and Universities New Zealand UNZ which resulted in a reference to the Copyright Tribunal continued across much of 2014. As the year drew to a close however we were able to agree a new pilot licensing scheme for the 2015 and 2016 academic years as well as to settle the financial aspects of 2013 and 2014. In addition in April 2015 the Court of Appeal ruled in CLNZs favour on matters arising from this dispute. This decision categorically supports the rights of licensing bodies on behalf of authors and publishers to set licence terms that are appropriate to a group of licensees. This is a turning point in the relationship between CLNZ and UNZ. Over the coming year we look forward to working with each university as it implements new systems. Board Chair Adrian Keane focuses on these developments in more detail in his message on page 7. An important part of Our Story 2014 is our support of authors publishing and the growth and development of the industry through our Cultural Fund. Find out about the latest developments in the Talking Books podcast project and the author programme for the Taipei International Book Exhibition TIBE that were our inaugural recipients of Contestable Funding on pages 10 and 11. Hear from an author of a new book due out in 2015 on what a CLNZ NZSA Research Grant means in practical terms for her project on page 12. And take a look at the CLNZ Education Awards through the eyes of one of our judges on page 13. Of course our story continues As we enter 2015 with a review of the Copyright Act on the political agenda were focused on our strategic goals campaigning to achieve effective copyright legislation strong customer relationships and operational excellence. People are at the heart of our business. In Our Story 2014 Copyright Licensing New Zealands Annual Report rightsowners licence holders authors publishers our team and our directors form our cast of characters. PAULAS PREFACE Paula Browning 5 Chairs Message Its heartening to be able to focus on this new chapter in our relationship with universities A cross the globe reproduction rights organisations like CLNZ have been party to litigation focussed on defining the terms and nature of when and how rightsowners should be paid for use of their works. There was good news on this front for CLNZ in 2014. As the year drew to a close so too did an important aspect of CLNZs ongoing dispute over fair licence fees with Universities New Zealand. We enter 2015 with terms for a 2 year pilot e-reporting licence agreed with all New Zealand universities. While the journey has been a long one its heartening to be able to focus on this new chapter in our relationship with universities. Against this backdrop it is very clear that as a board we need to have the most robust governance structures in place. Over the last two years the CLNZ Board has engaged in an extensive exercise in governance and strategic planning. We have worked closely with leaders in these areas to set CLNZs strategic direction and to enhance our directors skills and board structure. An important part of this piece of work has been to bring two talented new directors from outside the publishing sector onto our board. In 2014 after our shareholders ratified this change we embarked upon a robust external selection process and appointed Andrew McKenzie and Professor Pat Walsh to the CLNZ Board. Andrew is General Manager Finance in the Construction Group at Fletcher Building and former Chief Financial Officer at Auckland Council. Pat is the former Vice Chancellor of Victoria University and former Chair of the Universities New Zealand Vice Chancellors Committee. The fresh perspectives and experience Pat and Andrew bring to our board put us in a great position to work towards our strategic objectives. Copyright reform is on the Governments agenda and now that weve re-entered a licensing relationship with the universities it is also time to focus on our relationships with tertiary providers. Our objectives for the coming years include campaigning for effective legislation as well as developing even stronger relationships with all of our customer groups. Of course developing and maintaining strong customer relationships isnt a one-off exercise. Its something were constantly working on. One of the steps CLNZ took in 2014 to help make our offering more customer-focussed was to partner with Reproduction Rights Organisations for the recording television and film industries Screenrights and APRA to offer pick and mix licensing solutions and one go-to website to make copyright licensing across all three media much easier for our school customers. 2015 is already shaping up to be a busy year and I am confident that our newly configured board working alongside CEO Paula Browning and the CLNZ team will take some important steps towards our strategic objectives. Finally to our departed directors Mark Sayes and Stephen Stratford may I offer my sincere thanks for your wonderful contribution to this board and the copyright community. Youve both consistently demonstrated a professional approach to the business and an outstanding collegiality to your fellow board members. We wish you both well. Fair remuneration for publishers and authors for use of their works is an obvious proposition but over recent years as the landscape has shifted rapidly and digital platforms have brought new and exciting ways of sharing information rightsowners have sometimes been forgotten. ADRIANS NOTES ON THE TEXT Adrian Keane 7 C LNZ pays tribute to retiring directors Mark Sayes and Stephen Stratford. Mark and Stephen stepped down from our board in the final quarter of 2014. During his 15 years on the CLNZ Board ESA Publications Managing Director and Publisher Mark Sayes served as both a board member and as board chair. He says there have been a number of highlights over the years but several stand out. Our success in 2004 in the Waiariki Polytechnic copyright infringement case and the positive national attention this brought CLNZ is one another is The IFRRO AGM in 2006 in Auckland when CLNZ hosted serious event management and all that it was a biggie for us and went off perfectly. Now that he has stepped down from the CLNZ Board Mark says the year ahead will be business as usual with new titles and editions and an increased focus on digital. Though Im not on the CLNZ Board Im still involved with many of the same issues in my new role on the PANZ Council. Author editor and manuscript assessor Stephen Stratford joined our board as a director in 2009. Stephen describes his attendance at the 2011 IFRRO conference in Slovenia as one of the most memorable events of his time with CLNZ. I represented NZSA on a panel discussion on What Authors Want from their RRO and spoke about how EU-centric IFRRO can seem to those of us from non-EU countries. I also spoke at the initial meeting of the International Authors Forum which has become a very useful representative for authors. It was striking how much interest there was at both in hearing a New Zealand view. I hope we can build on this. It was also quite something to see CLNZs CEO Paula Browning in action she is clearly greatly respected by her overseas colleagues as is shown by the string of successful negotiations she has achieved. CLNZ today is in every way a much healthier organisation than the one I joined in 2009. In 2015 Stephen is focussed on returning to full-time book editing and manuscript assessing and says he will follow copyright issues with interest. New Beginnings Thank you to our retiring directors CHARACTER LIST Sam Elworthy Publisher Adrian Keane Publisher Andrew McKenzie Independent Tony Simpson Author Vanda Symon Author Professor Pat Walsh Independent Mark Sayes Stephen Stratford No story is complete without a strong set of characters or in this case our 2014 board of directors. Ourdirectors 8 with our new directors Andrew McKenzie Professor Pat Walsh In 2014 CLNZ welcomed Andrew McKenzie and Professor Pat Walsh to its board of directors. Find out why theyre passionate about our business and what they might achieve if they had half an hour extra each day. Andrew is General Manager Finance in the Construction Group at Fletcher Building and former Chief Financial Officer at Auckland Council. He brings significant commercial experience to the CLNZ Board and is passionate about the next generation being able to make a living from their creativity. As a CLNZ director I aim to Ensure our copyright laws and the application of these enable New Zealanders to keep producing creative and innovative work. My rst ever job was Counting people getting on and off buses Licensing is important for publishing because It enables talented people to use their time to express that talent. The best book Ive ever read is Thats a really difficult question. I try to read a book a fortnight and have done so since I was a child. That adds up to a lot of books and of course over time my interests have changed If I had half an hour extra each day Id Learn to play a musical instrument probably the guitar. If I could be a superhero Id be Superman. The flying part particularly would be brilliant Pat brings his breadth of experience in the tertiary sector to CLNZ. He is the former Vice Chancellor of Victoria University and former Chair of the Universities New Zealand Vice Chancellors Committee. He is currently Chair of Agri One a joint venture between Lincoln and Massey Universities. He also chairs the New Zealand Indonesia Council and the Academic Quality Agency. As a CLNZ director I aim to Protect and advance the interests of writers and publishers and of the creative sector more generally. My rst ever job was As a student working in the freezing works. My first non-student job was as a lecturer in business administration at the University of Canterbury. Licensing is important for publishing because Without it writers and publishers may be deprived of their legitimate return from their creative endeavours. The best book Ive ever read is One Hundred Years of Solitude by Gabriel Garca Mrquez If I had half an hour extra each day Id Read more. If I could be a superhero Id be Charles Xavier Professor X. Could a lifelong academic choose any other 9 10 W ere committed to the growth and development of current and future writers educators and the publishing industry. CLNZ puts aside a small percentage 2 of the domestic licensing fees we collect into a Cultural Fund. We use this money to help fund projects that are in the interests of the authors publishers and educators we represent. CLNZs main funding programmes in 2014 were our Contestable Fund the CLNZNZSA Research Grants the PANZ Training Fund and the CLNZ Educational Publishing Awards. PLOT DEVELOPMENTS Spotlight on the Cultural Fund 2014 2014 contestable funding recipients New Zealand Book Council Talking Books podcast series Author programme management for the Taipei International Book Exhibition Podcasting New Zealand books contestable funding helps get books talking I n a dystopian London the ruling class keeps a tight control on the populace through music The Chimes New Zealand author Anna Smaills exciting new book is just one of the topics on the agenda for discussion in the first of the Book Councils Talking Books podcasts and CLNZ Contestable Funding helped make it possible The CLNZ Contestable Fund launched in 2014 provides support for strategic projects that demonstrate publishing or education sector growth and development. The Book Council was awarded funding in 2014 for their podcast series Talking Books a project which provides a new medium for public discussion around New Zealand books and writing. Talking Books aims to raise the profile of New Zealand writers and books at home and overseas and encourage greater readership of New Zealand works as well as provide professional opportunities for New Zealand writers. Each month a panel of respected writers critics and literary experts discuss a range of book-related topics from new books to Kiwi classics to literary festivals to awards and events. Panellists include Kate De Goldi Guy Somerset Selina Tusitala Marsh Catherine Robertson and many others. Each podcast will be widely and permanently accessible on the Book Council website and will be embedded into the sites Writers Files which collectively receive more than 200000 views across the world every year. Book Council Chief Executive Catriona Ferguson explains Talking Books provides a digital and very accessible platform that we hope will become a go-to place for interesting updates and debate on books and book-related news. Well be facilitating some great discussion and debate around some of the stories that shape our culture and identity as New Zealanders. Take a look at www.bookcouncil.org.nz for the series available to download from May 2015. Highlights for the year ahead include discussion around the exchange between New Zealand and Taiwan- based graphic novelists Paul Cleaves new thriller Five Minutes Alone and New Zealand critics response to Harper Lees much awaited Go Set a Watchman. 11 Letter from Taipei contestable funding helps bring New Zealand Authors to tibe W iti Ihimaera lifted onto the shoulders of an enthusiastic crowd of indigenous Taiwanese author signing queues stretching as far as the eye could see and agreements made over Taiwan and China rights for NZ books these were just some of the highlights of New Zealands participation as the Guest of Honour at the 2015 Taipei International Book Exhibition TIBE. But how did a grant from CLNZs Contestable Fund help make it happen The Contestable Fund provides support for strategic projects that demonstrate publishing or education sector growth and development. The Publishers Association of New Zealand PANZ was awarded funding in 2014 to contribute to administering the author programme for New Zealands presence as Guest of Honour at TIBE. TIBE is one of the largest and most international book fairs in the region attracting over 500000 public visitors and approximately 700 publisher exhibitors from 67 countries. The 2015 festival ran across six days in February and involved a delegation of more than 85 New Zealand authors publishers and government representatives. Over 20 New Zealand books were translated into simplified and traditional Chinese in anticipation of the event. Childrens author Mark Sommerset speaking to PANZ prior to the event said I cant wait to return to Taiwan for New Zealands Guest of Honour year. Our award-winning book Baa Baa Smart Sheep will be published in traditional Chinese by Hsinex International and I am really looking forward to sharing this cheeky and funny little story with the people of Taiwan. By all counts the 2015 event was a success for the New Zealand delegation. Crowds thronged the pavilion there were high turn outs for author events attendees said crime writer Paul Cleaves signing queue stretched out of sight and attending publishers reported that they were able to network meet international publishers and in many instances sell overseas rights to their books. David Ling was one such publisher. At TIBE David sold Taiwan and China rights to two books from his list as well as gaining interest in a number of his Duck Creek Press childrens picture books all in 20 hours. CLNZ CEO Paula Browning says New Zealands presence at TIBE provided great exposure for our authors and publishers. It was an excellent opportunity to put New Zealand authors in front of a new audience and in many instances for publishers to sell rights to NZ works. Our Contestable Fund was set up to help grow and develop the sector and New Zealands presence at TIBE aligns really well with this. ABOVE LEFT Author panel including Witi Ihimaera Judith White and Eleanor Catton ABOVE CENTRE The New Zealand Guest of Honour Pavillion ABOVE RIGHT Publishers display stands HannahAugust research grant crucial for new authors big idea clnz nzsa research grantS Stout Research Centre Grant HANNAH AUGUST No Country for Old Maids Talking Dierently About the New Zealand Man Drought Open Research Grants ADAM DUDDING Biography of Robin Dudding ALISON WONG Pure Brightness MATT VANCE for his book on the Southern Ocean between New Zealand and Antarctica T he 2014 Stout Research Centre Grant recipient Hannah August says the support she gained as a grant recipient was central to the process of writing her forthcoming book No Country for Old Maids Talking Differently About the New Zealand Man Drought. But she very nearly didnt apply Hannah had been keen to write a response to the way media and some academic commentators have portrayed New Zealands male to female ratio for a while. Home on a break from her doctorate work at Kings College London a few years ago she picked up a copy of the Sunday Star Times. As she thumbed the pages her eye caught an article. It gave perspectives from single women living in what media often call a man drought. But it was syndicated from a US publication. Why she wondered arent we writing about this topic in this way from a New Zealand perspective It was the seed of an idea that led her to publisher Bridget Williams Books BWB and to an application form for the CLNZ NZSA Stout Research Centre Grant. I wanted to look at the ways the statistics get talked about in the media and the narratives commentators have given to these and contextualise them. I wanted to talk to a larger and more representative group of single New Zealand women to understand their perspectives on the man drought. Once shed started Hannah realised that what she really needed was time and funding to research and conduct interviews. Tom Rennie publisher at BWB saw Hannahs topic as an interesting addition to the BWB Texts imprint a series of short digital-first works short books on big subjects and called Hannahs attention to the CLNZNZSA Research Grants. On the strength of her application she was awarded the Stout Research Centre Grant a combination of funding and six weeks use of the Stout Research Centre facilities at Victoria University. Having time to focus solely on her project while at the Centre allowed for what Hannah calls a percolating phase as she read more her research and themes took shape. Access to library resources and journal databases that would have otherwise been inaccessible also helped ensure the calibre of her research was high. But it could have been a very different process. Hannah says even after encouragement from BWB she was hesitant to apply. While Im a PhD I didnt really consider myself an author yet. Its great to know that CLNZ and the New Zealand Society of Authors recognise short works and that the judging panel focuses on the merits of the proposal not where youre at in your career. Hannahs book is due out as a BWB Text in mid 2015. 12 13 educationAL Publishing award recipients Best Resource in Primary Education Connected 2013 Level 2 I Spy Level 3 Food For Thought and Level 4 Are You Sure Ministry of Education Best Resource in Secondary Education Conict and Kiwis PearsonEdify Joint Best Resource in Tertiary Education The Spirit of Mori Leadership Huia NZ Kia Rnaki Mori Performing Arts PearsonEdify Best Resource in Te Reo Maori Living by the Moon Te Maramataka o Te Whanau--Apanui Huia NZ JennyRobertson What does excellence in educational publishing look like Dr Jenny Robertson talks about her experience as a judge on the three-member 2014 Educational Publishing Awards judging panel. Hi Jenny tell us about yourself. Im originally a secondary school teacher. Ive got a BSc and a MEd and PhD in education Ive also lectured for Auckland Universitys Faculty of Education. Over the last few years Ive worked on a variety of projects for the Ministry of Education New Zealand Qualifications Authority and Ministry of Health. Ive also experienced the publishing process as an author I write educational texts for ESA. How did you come to be a judge of the 2014 awards I think it was probably the combination of my big picture view of secondary education as well as subject expertise in science and health education that made me a good candidate. I was appointed by the CLNZ Board and PANZ Council. How did the judging panel work together My fellow judges Hone Apanui and Dr Rebecca Jesson and I individually reviewed the submissions in each category. Then we got together to discuss our views and agree finalists. We each had a particular area of expertise mine was secondary education. What stood out for you I was interested in new material and approaches. Its been more than ten years since I taught in a school environment and there are many texts that are similar to those that were around when I was last in front of a class. But these awards are about recognising excellence and so we were focussed on finding finalists that were doing something new and responsive to the current schooling environment. Why are these awards important Teachers are highly dependent on the resources available. Its crucial that publishers are working closely with the education sector and are able to come up with materials that are innovative and address a need in the classroom. So I think its very important to recognise those resources that are original excellent and are helping teachers to teach well. Did you face any challenges I wanted to make sure I was being as objective as possible. But I came to the realisation that having a personal view was unavoidable to some degree. Thats why making sure I had looked at the submission carefully in the context of the awards criteria and was able to make a genuine argument for it on that basis was important. Any funny moments to share Almost every speaker at the ceremony talked about the importance of the digital space for educational publishing. I spoke later in the programme and so listening to the speakers before me I did have a sense of hey that was my line Awarding excellence in Educational Publishing a judges perspective where did overseas revenue for NZ rightsowners come from in 2014 Did you know that school licensing in New Zealand is voluntary Licensing Revenue by Sector in 2014 GROSS REVENUE 2014 6895385 australia 12 united kingdom 41 united states 43 other 4 where did overseas distributions of licensing revenue go in 2014 Australia 59 UK 23 Japan 13 Pte 3 Business other 1 university 59 itp Wananga 19 Schools 17 14 other 3 usa 2 NUMBER OF STUDENTS LICENSED 509405 75PERCENTAGE OF SCHOOLS LICENSED OVERSEAS REVENUE 2014 717404 includes settlement for 2013 ITP institutes of technology and polytechnics PTE private training establishments 16 Independent Auditors Report 17 Directors Report 18 Statement of Financial Performance 18 Statement of Movements in Equity 19 Statement of Financial Position 20 Notes to the Financial Statements 15 We have audited the financial statements of Copyright Licensing Limited on pages 18 to 23 which comprise the Statement of Financial Position as at 31 December 2014 and the Statement of Financial Performance and Statement of Movements in Equity for the year then ended and a summary of significant accounting policies and other explanatory information. Directors Responsibility for the Financial Statements The directors are responsible for the preparation of financial statements in accordance with generally accepted accounting practice in New Zealand and that give a true and fair view of the matters to which they relate and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing New Zealand. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error. In making those risk assessments the auditor considers internal control relevant to the entitys preparation of financial statements that give a true and fair view of the matters to which they relate 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates as well as evaluating the presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Other than in our capacity as auditors we have no relationship with or interests in Copyright Licensing Limited. Opinion In our opinion the financial statements on pages 18 to 23 Comply with generally accepted accounting practice in New Zealand Give a true and fair view of the financial position of Copyright Licensing Limited as at 31 December 2014 and its financial performance for the year ended on that date. Report on Other Legal and Regulatory Requirements In accordance with the Financial Reporting Act 1993 we report that We have obtained all the information and explanations that we have required. In our opinion proper accounting records have been kept by Copyright Licensing Limited as far as appears from an examination of those records. to the shareholders of copyright licensing limited report of the nancial statements INDEPENDENT AUDITORS REPORT 16 RSM Hayes Audit Auckland New Zealand 8 April 2015 Principal Activities Copyright Licensing Ltd CLNZ is part of a global network of copyright collectives that provide centralised licensing services for the reproduction of extracts from published works. CLNZ makes it easier for users of books journals and periodicals to gain clearance to copy from a worldwide repertoire of literary works. Copyright Licensing Ltd is a non-profit organisation. All licensing revenue is returned to rightsholders after deduction of operating costs and a contribution of 2 of domestic licensing revenue to the CLNZ Cultural Fund. The Cultural Fund is used to invest in cultural and social purposes that help to grow the sector. Operating Results Gross revenue for the year was 6895385 2013 6080851 of which 717404 2013 773737 was received from overseas Reproduction Rights Organisations for distribution to New Zealand rightsholders. Domestic licensing revenue was 5818884 2013 4976334 which included a back- payment of 422866 relating to 2013 university licence income nett proceeds of this back- payment will be distributed to rightsowners using the same methodology as annual distributions. Additional revenue was generated from interest on investments and administrative services. After the deduction of operating costs and a contribution of 116378 2013 99527 to the Cultural Fund 4514982 2013 4085686 was allocated for distribution from domestic licensing revenue. Total operating costs represented 23.5 2013 19.2 of gross revenue. Signicant Changes There has been no change in the nature of the business of the company during the financial year. Events Subsequent to Balance Date On 12 February 2015 the Court of Appeal considered an appeal from CLNZ on a High Court decision from May 2014. The issue on appeal was whether the CLNZ agreement with the universities in New Zealand constitutes a licence or a licensing scheme as defined by the Copyright Act 1994. At the date of signing these financial statements the decision of the Court of Appeal has not been received. There are no financial implications to the company from this decision. Directors and Officers Insurance The company has paid a premium of 5800 2013 5785 to insure directors and the Chief Executive Officer against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of director or officer of the company other than conduct involving a wilful breach of duty in relation to the company. Directors Declaration The directors of the company declare that the following financial statements comply with Accounting Standards the Companies Act 1993 and the Financial Reporting Act 1993 and give a true and fair view of the companys financial position as at 31 December 2014 and of its performance for the year ended on that date. The company has taken advantage of the exemptions to exclude certain information required in Section 211 1a ej of the Companies Act. The directors confirm that the company is in a sound financial position. This declaration is made in accordance with a resolution of the board of directors dated 11 May 2015. DIRECTORS REPORT The directors of Copyright Licensing Ltd are pleased to present the companys report for the nancial year ended 31 December 2014. Directors The names of the directors in office at the end of the year are Sam Elworthy Publisher Adrian Keane Publisher Andrew McKenzie Independent Tony Simpson Author Vanda Symon Author Professor Pat Walsh Independent Adrian Keane Director Auckland Vanda Symon Director Auckland 17 Note 2014 2013 Revenue Domestic licensing 5818884 4976334 Overseas Reproduction Rights Organisations 717404 773737 Interest received 328990 301795 Other income 30106 28985 Total revenue 6895385 6080851 Expenditure Audit fee 10250 10000 Copyright Tribunal costs 543748 179041 Depreciation 3 25041 35182 Directors costs 97309 67065 Operations 346643 316287 Partner development 1000 11000 Office lease costs 74819 73402 Salaries and wages 522991 478291 Total expenditure 1621800 1170268 Less tax expense 1vii 0 1185 Less transfers to Cultural Fund 1ix - Domestic revenue 116378 99527 - Unattributable overseas revenue 87638 90021 Net available for distribution to rightsholders 5069569 4719850 Note 2014 2013 Equity brought forward 100 100 Net licensing revenue for the year 1xii 5069569 4719850 Funds transferred for distribution 5069569 4719850 Equity carried forward 100 100 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 DECEMBER 2014 STATEMENT OF MOVEMENTS IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2014 18 The accompanying notes form part of these financial statements Note 2014 2013 current assets Cash and bank balance 1228909 525452 Investments 2 6577301 6561451 Indemnity Fund 1x 210698 353961 South Pacific Development Fund 1xi 12511 12154 Receivables 1vi 832346 77811 Taxation refund 1vii 68883 60102 GST refund 0 120662 Other current assets 12352 0 Prepayments 10714 7995 Total current assets 8953714 7719588 xed assets 3 33031 59240 total assets 8986745 7778828 current liabilities Distributable funds 1xii 7903030 7132909 Cultural Fund 4 425799 330783 Holiday pay accrual 33829 24775 Income in advance 3886 0 Accruals 50451 47961 PAYE due 19333 16641 GST payable 113497 0 NRWT payable 202937 0 Indemnity provision 1x 221018 213177 Provision for development in South Pacific 12864 12482 Total current liabilities 8986645 7778728 total liabilities 8986645 7778728 net assets 100 100 equity Share capital 7 100 100 totAL Equity 100 100 STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 DECEMBER 2014 19 The accompanying notes form part of these financial statements NOTES TO THE FINANCIAL STATEMENTS 20 The accompanying notes form part of these financial statements 1. STATEMENT OF ACCOUNTING POLICIES i Basis of Reporting Copyright Licensing Limited is a private company registered under the Companies Act 1993. The directors consider Copyright Licensing Limited to be a non-profit company. The company is a qualifying entity within the Differential Reporting Framework and has taken advantage of the differential reporting concessions available to it. The company qualifies for differential reporting exemptions as it is not publicly accountable and the company is not large as defined by the External Reporting Board XRB A1 Accounting Standards Framework. The financial statements have been prepared in accordance with the requirements of the Companies Act 1993 and the Financial Reporting Act 1993. These financial statements have been prepared on the basis of historical cost. Copyright Licensing Ltd has chosen to adopt generally accepted accounting practice in New Zealand GAAP as defined by financial reporting standards and statements of standard accounting practice. ii Foreign Currencies Transactions in a foreign currency are converted at the exchange rate at the date the transaction is settled. Foreign currency receivables and payables at balance date are translated at exchange rates current at balance date. Any resulting exchange gains or losses are recognised in the Statement of Financial Performance. iii Fixed Assets and Depreciation Fixed assets costing 1000 or more are recorded at original cost less depreciation. Depreciation using the straight line method is calculated at 15 on furniture and fittings 39 on office equipment and 40 on computer hardware and software. Gains and losses on disposal of fixed assets are taken into account in arriving at the net surplus for the year. iv Leased Assets Assets obtained under an operating lease are expensed over the period of the lease. v Investments Investments are valued at cost. vi Receivables Receivables are valued at anticipated realisable value. A provision is made for doubtful debts based on a review of all outstanding amounts at year end. Bad debts are written off during the period in which they are identified. vii Income Tax The entity qualifies as a non-profit company under the Income Tax Act 2007 section DV 8. The entity does not have the purpose of making a profit for a proprietor member or shareholder. Under the constitution the entity prohibits the distribution of property in any form to a member proprietor or shareholder. After expensing operating costs and the Cultural Fund contribution the net surplus is transferred to the distributable funds account resulting in a zero net surplus. Due to timing differences the entity is subject to non-deductible expenditure which may result in an income tax liability. viii Goods and Services Tax GST The financial statements have been prepared so that all components are stated exclusive of GST except for accounts receivable and accounts payable. ix Contribution to Cultural Fund A contribution of 2 of annual domestic licensing revenue is transferred to the Cultural Fund each year refer to Note 4. This amount is deducted before arriving at the net surplus. x Indemnity Provision Unallocated overseas licensing revenue was historically placed into the Indemnity Fund which is held in a separate bank account and shown as a current asset in the Statement of Financial Position. A corresponding amount is accounted for as a liability at balance date. Funds held to satisfy the indemnity provision are held as term deposits and therefore have not been broken so as to maximise the investment returns to Copyright Licensing Limited. The result at year end is bank accounts identified to cover the indemnity provision exceed the amount of the provision. xi South Pacific Development Fund Unspent money budgeted for the development of copyright licensing in the South Pacific has been set aside for future use. xii Distributable Funds New Zealand licensing revenue is received from a number of different sectors each year and is accounted for by sector by year. After pro rata deductions are made for operating costs and contributions to the Cultural Fund the net surplus is allocated for distribution pending the identification of publishers and authors whose works are copied under licence through annual sampling surveys carried out in each sector. xiii Distribution Revenue from overseas Reproduction Rights Organisations and transactional licensing services is distributed to identified publishers and authors after deduction of an appropriate administrative charge 7.5 for distributions to mandated rightsholders 15 for distribution to non-mandated rightsholders. xiv Changes in Accounting Policies There have been no changes in accounting policies. NOTES TO THE FINANCIAL STATEMENTS 21 The accompanying notes form part of these financial statements 2. investments 2014 2013 ANZ - term deposits 91629 5447667 Westpac term deposit 6485672 1113784 6577301 6561451 3. xed assets Furniture and fittings At cost 23246 13450 Loss on disposal 0 0 Accumulated depreciation 6173 10872 17073 2578 Depreciation expense for year 1517 1170 Furniture and fittings At cost 11562 22875 Loss on disposal 0 0 Accumulated depreciation 10320 21301 1242 1574 Depreciation expense for year 332 463 Computer hardwaresoftware At cost 46002 96990 Loss on disposal 0 0 Accumulated depreciation 31282 78619 14720 18370 Depreciation expense for year 8504 9070 System development At cost 349080 349080 Accumulated depreciation 349080 349080 0 0 Depreciation expense for year 0 0 Website development At cost 68000 68000 Loss on disposal 22032 0 Accumulated depreciation 45968 31280 0 36720 Depreciation expense for year 14688 24480 Opening book value 59240 84489 Plus additions 20864 9933 Less disposals 22032 0 Less depreciation 25041 35182 Closing book value 33031 59240 NOTES TO THE FINANCIAL STATEMENTS 22 The accompanying notes form part of these financial statements 4. cultural fund Annual contributions of up to two percent of domestic licensing revenue are made to this fund which is then invested in cultural and social purposes to benefit the rightsowners the company represents. The sum of 116378 2013 99527 has been transferred from 2014 domestic licensing revenue. The fund has also benefitted from non-title-specific revenue received from overseas RROs. 5. CAPITAL AND LEASING COMMITMENTS Obligations payable after balance date on financial and operating leases are as follows 6. COMPANY VISA CARD A company Visa card used by senior staff has a limit of 10000. 2014 2013 Opening balance 330783 226985 Less awards and grants payments 109000 85750 Unattributable overseas revenue 87638 90021 Contribution from licensing revenue 116378 99527 Closing balance 425799 330783 2014 2013 Premises operating lease expires November 2016 Payable - Not later than one year 57480 57480 - Later than one year but not later than five years 48060 105540 Motor vehicle operating lease expires May 2016 Payable - Not later than one year 7956 7956 - Later than one year but not later than five years 2851 10807 Photocopier operating lease expires November 2015 Payable - Not later than one year 4543 4956 - Later than one year but not later than five years 0 4543 NOTES TO THE FINANCIAL STATEMENTS 23 The accompanying notes form part of these financial statements 7. share capital 2014 2013 Authorised issued and fully paid up capital 100 ordinary shares of 1 100 100 8. RELATED PARTY TRANSACTIONS Shareholders The shareholders in Copyright Licensing Limited are the Publishers Association of New Zealand PANZ 50 shares and New Zealand Society of Authors NZSA 50 shares. None of the above payments have been made as dividends bonuses or payments of profits to these organisations and therefore do not contravene clause 2.6 of the companys constitution. The annual allocation for Professional Development is 20000. In 2013 only 10000 was paid. In 2014 the balance of 2013 was paid in addition to the 2014 allocation. Directors Sam Elworthy was employed by the University of Auckland during the year and did not take part in any discussions regarding the matter before the Copyright Tribunal High Court and the Court of Appeal. 9. going concern The financial statements have been prepared using the going concern assumption. The directors have adopted the going concern assumption based on the future cash flows expected to be received in the year after balance date and the cash reserves that are able to be utilised to fund operating activities. 10. events subsequent to balance date On 12 February 2015 the Court of Appeal considered an appeal from CLNZ on a High Court decision from May 2014. The issue on appeal was whether the CLNZ agreement with the universities in New Zealand constitutes a licence or a licensing scheme as defined by the Copyright Act 1994. At the date of signing these financial statements the decision of the Court of Appeal has not been received. There are no financial implications to the company from this decision. 2014 2013 NZ Society of Authors Research Grant funds paid to grant winners 20000 7000 Administration of Research Grants 1000 1000 Total 21000 8000 Publishers Association of New Zealand Professional Development Training paid to publishers 30000 10000 Total 30000 10000