The first half of 2022 was characterised by the lifting of various strict measures taken because of the Covid-19 pandemic. These measures have had a major impact on the members and affiliates of BumaStemra in previous years.
The effects of these relaxations will be visible in the first half of 2022. Realised royalties are € 52.6 million higher than in the first half of 2021. In addition, royalties for 2022 are expected to be higher than budgeted. The budget is still based on the expectation that the royalties from events and festivals in 2022 will be around 70% of the level before the Covid-19 pandemic, which is expected to be exceeded. The budgeted distribution of € 223.1 million is also expected to be realised. The budgeted distribution in 2022 is € 26.9 million higher than the realisation in 2021. For a further explanation of the 2022 budget, we refer to 2022 Budget.
In this semi-annual report, we provide further information on current developments in 2022 and expectations for the coming period.
The collection realised in the first half of 2022 was € 144 million. This is € 12 million higher than budgeted.Subsequent collection final settlements for previous years provide a positive difference of € 6 million compared to the budget. This is especially true for RTV and the international market.
In addition, positive market developments are visible (+ € 7 million). The increase of Vinyl is higher than expected, audiovisual commercials ensure an above-average collection and completed contract negotiations result in extra online growth. The Video on Demand market is also growing faster than expected.
Society is back to live. The festival season has now started and fortunately, live performances are back on again. For now, the public seems hesitant, but hopefully this attitude will change soon. Even lower visitor numbers are experienced in theatres and cinemas and the collection of work spaces is also lower than expected. The negative effects of Covid-19, particularly visible at the beginning of the year due to the lockdown, have largely been made up for. For some market segments, the collection realisation is lower than expected (- € 1 million).
The positive effects of the final settlements and the improved market conditions are expected to lead to a higher collection realisation in 2022 than budgeted.
The total collection realisation is expected to be between € 235 and € 243 million in 2022, depending on further market growth. This would be 15% to 19% higher than the realisation in 2021.
The distribution in the first half of 2022 was € 11.7 million more than budgeted. The main reason concerns the higher distribution of old monies as a result of a reassessed distribution policy and BumaStemra’s continuous efforts to pay out the largest possible part of the collected copyright royalties to its rights owners at the first possible distribution moment.
Expectations for the second half of the year remain positive. Partly due to the extra scheduled distributions for indivisible funds and the additional scheduled distribution of the release of the Stemra provision approved by the GMM in May 2022, it is expected the annual budget will be amply achieved.
Management costs and investment result
The realisation of management costs in the first half of 2022 is € 2.9 million less than budgeted. This is partly explained by the lagging realisation of costs for strategic initiatives. The realisation of these costs is expected to be made up in the second half of 2022. Another cause is the lower internal staffing levels. In the current labour market it is proving difficult to fill vacancies. Over the first half of 2022, the number of FTEs employed was 17.9 less than budgeted.
The underspending of personnel costs will not be made up in the second half of 2022. This is the main reason that management costs in 2022 are expected to be € 1.1 million lower than budgeted, which amounts to € 32.0 million.
The investment result for the first half of 2022 amounts to € 24.3 million negative, well below the budgeted notional return. Negative investment results are absorbed in the provision for temporary differences in cost coverage in accordance with the policy approved by the GMM.
In the context of the To the beat of the drum programme, the services of BumaStemra are being improved, in the course of which four starting points/objectives are decisive:
– Due to the changing trends in society, the services must be ‘fit’, now and in the future;
– Collectivity is promoted;
– The operation and organisation will be strengthened;
– BumaStemra is committed to growth: many composers are not yet affiliated and the foreign market is subject to change.
BumaStemra wants the composers, lyricists, publishers and music users to be happy to do business with the organisation, not because they have to, but because the service is good.
The Pyramid project (replacement of the complete IT backbone with a largely custom-made new environment) is one of the projects that have been started to achieve these objectives. It is a very extensive but necessary project that is being realised in collaboration with a London software company. Here too, Covid-19 caused a delay because of travel restrictions and the impossibility of face-to-face conversations in large groups (crucial in the case of large projects). The target end date of the project is now late 2023 rather than early 2023. In addition to Covid-19, a greater complexity than initially estimated and additional functionalities also caused delays. The delay and necessary strengthening of the project team’s expertise resulted in an increase of the necessary investment by € 3.8 million to € 17.5 million. Parallel to the implementation, we are investigating whether the new software, which is being developed for BumaStemra, offers opportunities for cooperation with other users in order to share the costs for further development.
In addition, we will be working on new Positioning in 2022; the organisation itself is evolving. The world is changing and BumaStemra moves along with these changes when it comes to technology, systems, working methods and the people who shape it. An important benchmark is the question of what behaviour is required to be a reliable partner for the members. We will work this out further in the course of this year.
In 2022, we will carry out a limited restructuring of the organisation, with all changes aimed at improving the service to members. It concerns an improvement in parts and not a major reorganisation. On the one hand, the objective of the reorganisation is to improve the connection with members and, on the other hand, to optimise internal processes.
The fourth company-wide project is Culture; because the world is changing, BumaStemra pays attention to culture. Culture provides people with tools to continue to provide top-level services.
We look positively at the second half of this year in view of the positive developments in the area of royalties and distribution. By realising new strategic initiatives in the coming period, we hope to continue this trend next year.
Hoofddorp, February 2023
Bernard Kobes, CEO
Marleen Kloppers, CFO
* the half-yearly figures have not been audited by an external auditor