20172017 ANNUAL REPORT 2017

PublisherAKM Autoren, Komponisten und Musikverleger reg. Gen. m.b.H.

Baumannstraße 10, 1030 WienAddress: Postfach 259, 1031 WienTel: +43 (0) 50717-0Fax: +43 (0) 50717-19199E-Mail: direktion@akm.atInternet: www.akm.at

The cooperative is registered in the commercial register of theCommercial Court of Vienna under registration number FN 95866f. Business yearCalendar year 2017 AuthorizationBy public announcement of the Ministry of Education on 31 August 1946, BGBI 193,consolidated version as per KommAustria’s decision KOA 9.102/08-015 dated 30 June 2008,and the decision of the Copyright Senate, UrhRS 5/08-4 dated 29 October 2008, as well asthe decision of the Supervisory Authority for Collective Management Organisations dated18 October 2016 (AVW 9.110/16-002), AKM was granted permission to administer the copyrightsof composers, authors and music publishers as Collective Management Organisation asdefined by the act on Collective Management Organisations. State supervisionBy law, Collective Management Organisations are subject to regulatory supervision which isexercised by the Supervisory Authority for Collective Management Organisations based in theMinistry of Justice. EditorSusanne Lontzen

Graphic-DesignChristian Modlik

PicturesEva Kelety PhotographyGrünwald

Contents05 Letter from the General Manager

06 Highlights 2017

07 Business Development License Revenues Expenses and Admin Rate Distribution Sum

13 Our Members Beneficiaries Works Registration Distribution

16 Social Benefits

18 About Us

22 Financial Statements Balance Sheet Profit and Loss Statement

26 What We Do Mission Statement

20172017

GernotGraningerGeneral Manager

20172017

04

Dearmembersof AKM,dear readers,

2017 was another successful year for AKM. Among the highlights of our business development is the increaseof revenues by 4.9 % to EUR 113 million and of the distribution sum to EUR 98.3 million. With an admin rate of 9.76 % AKM managed to keep its administrative cost under 10 % for the third consecutive year, maintaining its best in class position in terms of efficiency as Collective Management Organisation. This is both a reason tocelebrate and motivation to keep moving forward, always your best interests in mind.

Although the new Collective Management Organisations Act has been in force since 2016, there were numerous adjustments and changes to be made in the course of the year that have an impact on daily business. Among other things, a transparency report was published and complaints management was introduced.

Our lobbying efforts around Transfer of Value continue. Although an amended text of the regulation was adopted by the European Parliament, which allowed for trialogue talks between the Commission, the EU Parliament and the EU Council, no agreement has yet been reached. We will continue to work actively to promote fair rules and fair pay for creators in the online sector, and seek support from our members as needed, e. g. in another petition.

Within AKM, numerous projects have been started or implemented in order to further improve efficiency.This includes the refurbishment of the building at Baumannstrasse 8 as well as the optimization of our online services enabling automated, works-related licensing and accounting of repertoire usage. Particularly pleasing for you as a beneficiary is the IT-technical implementation of the quarterly ORF radio billing, which enablesan even faster distribution.

Numerous factors are crucial to achieve such a successful result and to drive positive developments. At this point, however, I would like to emphasize the commitment of the employees of AKM, who are working tirelessly in all areas of the company and who, with their specific know – how, contribute significantly to making AKMthe efficient company it is today.

In this spirit, we will continue to work for you, our members, as a service-oriented company, mastering thecurrent and new challenges in the best possible way and strengthening our position in a difficult businessenvironment.

Yours truly,Gernot GraningerGeneral Manager

05

Highlights Revenuesincreased by 4.9 % to EUR 113 million.

2015

2016

2017

100 m €

105.3

107.7 / +2.3 %

113.0 / +4.9 %

At 9.76 %, AKM managed to keep its admin rate

below 10% for the third consecutive

year and maintains its best in class position in terms of efficiency.

20135 %

2014 2015 2016 2017

12.02 %10.96 %

9.92 % 9.75 %

9.76 %

Distribution sum 2017 +4.2 %

Admin rate

In 2017, the amount to be distributed to beneficiaries totals € 98.3 million and is€ 3.9 million (+4.2 %) higher than previous year.

Revenues

06

BusinessDevelopmentBusiness Scope

AKM stands for authors (A), composers (K) and music publishers (M). AKM is a Collective Management Organisa-tion according to the Austrian law on Collective Management Organisations. Based on the authorization granted by the Austrian Supervisory Authority for Collective Management Organisations, AKM administers the perfor-ming rights, broadcasting rights and provision rights in musical works with or without text from composers, authors, their legal successors and music publishers.

AKM grants all users the licenses required for the use of music, collects license fees and distributes the royalties among the entitled authors, their legal successors and music publishers.

AKM administers the exploitation rights of its members not only in Austria but almost all over the world through reciprocal agreements with 78 foreign sister societies. This ensures that the beneficiaries of AKM receive their royalty share for the use of their works abroad. In addition, AKM also provides collection services for other Aust-rian collecting societies in their name and on their behalf.

Besides its main purpose, the licensing and settlement of royalties, AKM fulfils important social and cultural tasks in favour of its beneficiaries.

License Revenues2017 was an economically successful year for AKM. Total revenues increased by 4.9% to EUR 113.228 million. Foreign license revenues contributed disproportionally to this increase with 13.7%. Domestic revenues increased by 3.8%. Revenues in the area of live performances and television broadcasts as well as from the online sector were well above the previous year‘s figures. An overview of the financial performance indicators is shown in the following table.

2017 m € 2016 m € %-Change vs PY

License revenues domestic and foreign 108.366 103.320 4.9

Other revenues 4.624 4,374 5.7

Revenues total 112.991 107.694 4.9

Other income 0.237 0.205 15.7

Total 113.228 107.899 4.9

Expenditure 15.103 14,211 6.3

Financial result 0.203 0.700 –70.9

Distribution sum 98.328 94.387 4.2

07

20172017

GeorgLinhartBusiness Unit Licenses

”Wherever music is played,the AKM staff of the LicensingBusiness Unit are active andensure that the rights of ourmembers are safeguarded.In 2017 we licensed morethan 180,000 events.“

08

6,328Ballroom dances

15,237Fairs33,195

Concerts

5,049Clubbings& Discos

4,221Frühschoppen

3,653Carneval

License revenues total, Split by types of use

Licenses revenues development

LicensesWhen copyrighted music is presented outside the private sphere, it is considered a „public performance“.The event organizer or company needs a license which is issued by AKM.

One time events

2017 m € 2016 m € %-change vs PY

Live performances 20.597 19.961 3.2

Performances from audio carriers 30.131 29.374 2.6

Television 17.436 16.610 5.0

Radio 14.099 13.827 2.0

Cable retransmission 10.988 10.591 3.8

Online 1.924 1.352 42.3

License revenues domestic 95.176 91.714 3.8

License revenues foreign 13.190 11.606 13.7

License revenues total 108.366 103.320 4.9

License revenues domestic (m €) License revenues foreign (m €)

95.360

98.138

100.973

103.320

108.366 +4.9 %90.000

2013

2014

2015

2016

2017

2013 85.9232014 87.5542015 90.2112016 91.7142017 95.176 +3.8 %

80,000

09

Permanent LicenseOur customers with permanent license use the positive effect of music in their outlets. These include:

4,309 Restaurants

7,827Taverns

401Discos/Dance cafes

18,309 Accommodations

8,224Retail outlets

81 Radio programs

Foreign license revenues per country/organisationTraditionally, the highest foreign revenues come from German speaking neighbouringcountries Germany and Switzerland.

ExpensesIn the year under review, expenses totaling EUR 15.103 million were significantly higher than in the previous year (+ 6.3 %). The detailed analysis shows that personnel expenses are EUR 481,000 (+ 5.7 %) higher than in the previous year. In the previous year a change in calculation methods and the elimination of pension obligations resulted in extraordinary income, which led to particularly low expenses in this area and was no longer incurred in the year under review. The 12.2 % increase in depreciation and amortization expense is attributable to the commissioning of the Baumannstrasse 10 office building in the first quarter of 2017, as well as higher depreciati-

Country Organisation 2017 m €

Germany GEMA 6.653

Switzerland SUISA 2.373

France SACEM 0.679

Italy SIAE 0.600

United Kingdom PRS 0.372

Japan JASRAC 0.309

USA ASCAP, BMI 0.260

Netherlands BUMA 0.223

Denmark KODA 0.186

Hungary ARTISJUS 0.166

Payments to foreign CollectiveManagement Organisations / TOP 10

Land Gesellschaft 2017 m €

Germany GEMA 12.346

USA ASCAP, BMI 7.943

United Kingdom PRS 4.653

France SACEM 1.521

Italy SIAE 0.756

Payments from foreign CollectiveManagement Organisations / TOP 5

Music is an integral part of radio and TV programs as well as online services.

155 Movie theaters

117 Webradios107 TV programs

150 Cable networks

10

Admin rateThe central indicator for the cost-effectiveness of a collecting society is the admin rate. For the third year in a row, AKM has managed to keep this rate below 10 %. With an admin rate of 9.76 %, AKM is the most efficient collecting society.

AKM managed to keep its admin rate below 10%for the third consecutive year.

Distribution sumThe most important indicator for the rights holders is the distribution sum of the respective year.

The increase in income from license fees (+4.9 %) and the low admin rate (only 9.76 %) also had a positive effect on the total. The amount to be distributed for 2017 increased by an encouraging 4.2 % to EUR 98.328m (previous year: EUR 94.387m).

More royalties for rights holders. Distribution sum increased by 4.2%.

Development admin rate

on of IT software. The financial result fell by 70.9 % due to the persistently low interest rates and the write-up on financial assets included in the previous year.

Development of distribution sum% increase vs PY

+3.4 %

2013 12.02 %2014 10.96 %2015 9.92 %2016 9.75 %2017 9.76 %

2013 2014 2015 2016 2017

+4.2 %

2012

+0.5 %+3.6 %

+3.2 %+2.7 %

11

20172017

TamaraHerkerMembers Department

”A high level of service forour members is in the focusof all our activities. It‘s notonly about what we do, butmore importantly abouthow we do it.“

12

OurmembersBeneficiaries

More than 23,700 authors and music publishers joined AKM already. In the year under review, a further1,075 composers, text authors and music publishers decided to entrust their exploitation rights to AKMand benefit from our high service level.

Statistics of AKM beneficiaries* 2017(as per 31 Dec 2017)

21,449 Authors1,582 Legal successors

711 Music publishers

23,742 Total

Gender split

* AKM beneficiaries = all of the above who have signed a rights administration agreement with AKM. As of 31. 12. 2017,there are 582 full members of AKM (members of the cooperative) of whom 527 are authors and 55 are publishers.

84.5 %15.5 %

13

Works registrationWithin the last five years, the number of works submitted has increasedby 50 % to more than 1.5 million.

Distributionto beneficiaries

The table shows the split of the distribution sum 2017 to the beneficiaries.95% of all beneficiaries receive up to EUR 5,000 each.

84.3 %up to 1,000 €

11.28 % 1,000–5,000 €

2.15 % 5,000–10,000 €

0.27 % 10,000–50,000 €

0.17 % 100,000 € and more

2017Works registration from AKM beneficiaries

2011

2012

2014

2016

2017

2008

250,000 500,000 750,000 1,000,000 1,250,000 1,500,000

14

20172017Barbara

BastirschBusiness Unit Royalties

”My team and I stand for thequick and correct distribution ofroyalty income to our members.The transition to quarterlyORF radio distribution is anotherimportant milestone.“

15

SocialbenefitsAKM is committed to social and cultural values and plays an important role in these areas in favour of its be-neficiaries. The statute stipulates that up to 10 per cent of the distribution sum can be provided for social and cultural purposes, the corresponding distribution rules are decided in the General Members Meeting.

Promotion of Austrian musicAKM contributes significantly to the promotion of Austrian music and does so on a broad basis. A big part of the promotional activity has always been the promotion of concerts and ensembles with a focus on performances of works by living AKM beneficiaries. Substantial funding is provided for associations that operate in the interest of the beneficiaries of AKM, such as ÖKB (Austrian Composers‘ Union), VOET (Association of Austrian Text Authors) or VÖV (Association of Austrian Folk Music Composers). Major projects include the Austrian Music Fund (ÖMF) and project pop!. The ÖMF is an initiative for the promotion of professional Austrian music productions aiming to spread and increase distribution of domestic repertoires and to strengthen Austria as a creative hub.

Targeted measures are taken to increase the significance of copyright in the public mind, for example the award for Songwriter of the Year at the Amadeus Austrian Music Award.

Cultural support is handled by the AKM subsidiary GFÖM (Society for the Advancement of Austrian Music). The support measures are carried out by GFÖM in accordance with the funds made available by AKM and in compli-ance with the guidelines for cultural institutions adopted by the AKM General Members Meeting. The manage-ment of GFÖM, consisting of nine members of the AKM board, decides on the allocation of funds. In the year under review, AKM provided EUR 797,000 funding to GFÖM and more than 120 applications were approved.

Social benefitsIn the year under review, AKM spent an amount of EUR 5.7 million on social benefits for old-age provision and surviving dependants as well as one-time or ongoing benefits in eligible cases. Applications for social benefits are reviewed in the Social Committee and presented to the Management Board for decision.

16

20172017Folkshilfe

2018 Winner of the Amadeus Austrian Music Award „Songwriter of the Year “From left: Florian Ritt, Gabriel Fröhlich, Paul Slaviczek

”For us, this award is a great tribute to our workof the last 5 years. We are glad to be part of sucha diverse music landscape in Austria and that AKMsupports such a prize.“

17

Management Boardand Supervisory Board Management Board

The Board elected by the General Members Meeting consists of four members each of the authors,composers and music publishers group. In the year under review the Board consisted of the following members::

AuthorsJohann Ecker, Vice PresidentHorst ChmelaVictor PoslusnyAdam Stassler

ComposersRobert Opratko, PresidentPeter Vieweger, Vice PresidentPaul HertelPeter Janda

Music publishersEdith Michaela Krupka-Dornaus, Vice PresidentClemens BruggerChristian KobelAstrid Koblanck The Management Board as a collective body and on its behalf the General Manager runsthe business according to the statute of AKM.

AboutusAKM is organized as a cooperative and belongs to the authors, composers andmusic publishers. The bodies of AKM are composed according to the basic idea ofself-administration of the right holders and consist exclusively of rights holders.The Management Board and Supervisory Board are elected from their midstevery five years by the General Members Meeting.

18

Organisation chart

Supervisory Board

The Board elected by the General Members Meeting consists of two members each of the authors,composers and music publishers group. In the year under review the Board consisted of the following members:

AuthorsHermi Lechner-Fasching, 2nd deputy ChairwomanWerner Marinell

Composers Richard Dünser, ChairmanKurt Brunthaler

Music publishersHelmuth Pany, 1st deputy ChairmanHorst Bichler

Delegates from the works council:Siegfried FlenreiszRomana HerkerMonika Valenta

Commissions

AKM has some statutory commissions, such as the Program Review Commission and the Musical Grading Committee. The members of all commissions are also elected by the General Members Meeting.

Supervisory Board

General Members Meeting

Management Board

General Manager

19

Business unitsand employees

General Manager: Gernot GraningerNumber of employees (31. 12. 2017): 150

The number of employees at the end of 2017 has risen by one to 150 compared to the previous year (of which4 are on parental leave). The average number of employees (converted to full-time employment) is 136, as in the previous year.

There are 95 employees working at the head office in Vienna, 54 in the nine branches (including the Viennaoffice), plus 1 marginal employee. The offices of AKM are located in the state capital of the nine federal states and are part of the Business Unit Licenses.

The Business Unit (BU) Licenses grants licenses to music users and collects license fees. The Business Unit New Media is responsible for the licensing of online usage. The Business Unit Royalties distributes the royalty income to authors, their legal successors and music publishers. The accurate mapping of business transactions and accounting is handled by the Business Unit Finance. The Business Unit Information Technology provides the necessary IT infrastructure. The administrative departments reporting to the General Manager take careof Members, Corporate Communications and Legal matters.

From left: Roman Oslansky, Susanne Lontzen, Paul Fischer, Gernot Graninger, Georg Linhart,Barbara Bastirsch, Franz Grabensteiner (Austro mechana), Ingrid Polak, Arno Obrietan20

20172017

Organisation chart

Gernot GraningerGeneral Manager

Tamara HerkerMembers

Paul FischerLegal

Susanne LontzenCorporate

Communications

Barbara BastirschBU Royalties

Ingrid PolakBU New Media

Georg LinhartBU Licenses

Arno ObrietanBU Finance

Roman OslanskyBU IT

21

Financial Statements

Assets 31/12/17 31/12/16 EUR EUR ‘000A) Fixed Assets I) Intangible Assets 1) Software and Licenses 1,542,249.57 2,2032) Progress Payments 124,721.93 107 1,666,971.50 2,310II) Tangible Assets 1) Land and Buildings 7,638,021.08 4,5072) Other fixed Assets, Tools and Equipment 941,239.50 6153) Assets under construction 947,245.49 2,845 9,526,506.07 7,967III) Financial Assets 1) Investments in Subsidiaries 54,504.42 552) Other Investments 419.00 03) Securities 19,130,037.60 19,078 19,184,961.02 19,133 30,378,438.59 29,410B) Current Assets I) Accounts Receivable and other Assets 1) Receivables from Trade 11,224,731.09 9,564 thereof payable after more than one year 0.00 0

2) Receivables from Members 1,623,097.81 1,626 thereof payable after more than one year 0.00 0 3) Other Receivables and other Assets 372,407.38 506 thereof payable after more than one year 102,835.22 111 13,220,236.28 11,697II) Cash in Hand, Cash at Bank 63,697,352.66 63,565 76,917,588.94 75,262 C) Prepaid Expenses and deferred Charges 1) Other prepayments 123,370.24 75 123,370.24 75 107,419,397.77 104,746

Balance sheet as at December 31, 2017 Figures of previous year in EUR ‘000s

22

Liabilities 31/12/17 31/12/16 EUR EUR ‘000A) Equity I) Stockholders Equity 1) Stockholders remaining 4,225.32 4 thereof paid: € 4,225.32, 2016: 4 2) Stockholders leaving 50.82 0 thereof paid: € 50.82, 2016: 0 4,276.14 4

II) Unappropriated Income 0.00 0 thereof income brought forward € 0,00, 2016: 0 4,276.14 4B) Provisions 1) Provisions for Severance Payments 2,043,000.00 2,0032) Provisions for Pensions 3,825,000.00 3,8303) Other Provisions 908,000.00 839 6,776,000.00 6,672C) Liabilities 1) Accounts Payable from Trade 3,789,955.65 4,812 thereof payable within one year 3,789,955.65 4,812 2) Accounts Payable from Appropriated Royalties 2,756,617.50 2,560 thereof payable within one year 2,756,617.50 2,560 3) Accounts Payable to Affiliated Companies 492,558.64 474 thereof payable within one year 492,558.64 474 4) Other Liabilities 5,657,835.72 5,703 thereof payable within one year 5,546,268.27 5,631 thereof payable after more than one year 111,567.45 72 thereof liabilities from taxes 2,188,084.28 2,369 thereof payable within one year 2,188,084.28 2,369

thereof liabilities from social security 163,920.56 158 thereof payable within one year 163,920.56 158

5) Accounts Payable from Unappropriated Royalties 103,312,154.12 101,950 thereof payable within one year 103,312,154.12 101,950

6) Less Prepayments of Unaproppriated Royalties -15,370,000.00 -17,430 100,639,121.63 98,070 thereof payable within one year 100,527,554.18 97,998 thereof payable after more than one year 111,567.45 72 107,419,397.77 104,746

Balance sheet as at December 31, 2017 Figures of previous year in EUR ‘000s

23

Statement of Income 2017 Figures of previous year in EUR ‘000s 2017 2016 EUR EUR ‘0001) Sales Income a) Domestic Income 95,175,710.77 91,714b) Income from abroad 13,190,419.18 11,606c) Other Income 4,624,418.00 4,374 112,990,547.95 107,6942) Other Operating Income a) Income from the Disposal of Fixed Assets other than Financial Assets 28,899.58 11b) Income from the Reversal of Provisions 12,111.76 56c) Other Operating Income 196,322.28 138 237,333.62 2053) Personnel Expenses a) Salaries -6,257,135.16 -6,104b) Expenses for Social Security ba) Expenses for Severance Payments and Payments for Severance Funds -185,563.69 -313bb) Expenses for Pensions -599,077.70 -124bc) Expenses for Statutory Social Security Contributions and pay-related Levies and Compulsory Contributions -1,685,390.78 -1,670bd) Other -171,267.20 -166 -2,601,299.37 -2,274 -8,858,434.53 -8,3774) Depreciation and Amortisation a) Despreciation and Amortisation on Intangible and Fixed Assets other than Financial Assets -1,627,264.40 -1,450

5) Other Operating Expenses a) Taxes other than Taxes on Income -13,897.41 -9b) Other Operating Expenses -4,603,855.14 -4,375 -4,617,752.55 -4,384

6) Subtotal of lines 1 to 5 (Earnings before Interest and Tax) 98,124,430.09 93,6887) Income from Securities shown under Financial Assets 21,667.96 338) Other Interest and Similar Income 129,830.93 2839) Income from the Write-Up of Financial Assets 59,000.00 38410) Expenses from Financial Assets -6,996.00 011) Interest and Similar Expenses -161.15 012) Subtotal of lines 7 to 10 (financial success) 203,341.74 70013) Net Income = Royalties to be appropriated 98,327,771.83 94,38714) Beneficiaries Claims -98,327,771.83 -94,38715) Annual Surplus = Net Profit 0.00 0.00

Financial Statements

24

20172017Roman

OslanskyBusiness UnitInformation Technology

”We rely on modern technologies to improve efficiency in all areas. Our web services are already used regularly by 30 % of our members, many even monthly, and the trend is rising!“

25

What we doAKM

> is the largest Collective Management Organisation in Austria,

> acts as trustee and assures rights and claims of music authors and publishers,

> is organized as a cooperative and belongs to the text authors, composers and music publishers,

> represents the rights of more than 23,700 members in Austria and via reciprocal representation agreements with international affiliates of millions of copyright holders around the world.

AKM provides services formusic creators and music users

> Music authors and music publishers

receive their royalties through AKM, if their music is publicly performed or broadcast or made available on the Internet/mobile network.

> Music users (event organizers etc.) can acquire the required license for these music uses for almost the entire world repertoire of protected music

centrally at AKM.

AKM passes all revenues to themusic authors and publishers.

> Royalties are settled according to fixed rules.

> Before distributing all revenues, only the operating expenses incurred are deducted. AKM is AKM is not profit oriented.

> As part of its social and cultural tasks and in accordance with its guidelines, AKM provides social benefits to its beneficiaries and promotes Austrian music productions.

26

20172017

Our mission

Our professional expertise ensuresthe quality of our service. Customer relationship is our key objective.

We focus on flexibility and cost awareness.

Our actions are driven by self-confidenceand appreciation of our partners.

We are clear in our communication, open and honest in our actions and consistentin our implementation.

Our international orientation is of great importance to us.

We feel committed to social and cultural values.

27

AUTOREN I KOMPONISTEN I MUSIKVERLEGER