Music has value - Stim annual report 2015 by Stim

MUSIC HAS VALUE ANNUAL REPORT 2015 STIM

OPERATING INCOME

NUMBER OF MEMBERS

ONLINE REVENUE

Total operating income in Sweden and abroad: SEK 1.8 billion.

The number of STIM members at year-end was 80,993, of which 3,345 were publishers.

Revenue from online performance has increased by 28% compared to 2014.

25,000:SCHOLARSHIPS

NOTIFIED WORKS

94 YEARS OF STIM

In 2015, SEK 7.9 million was allocated for scholarship programs within STIM, SKAP and FST.

Number of notified works with at least one STIM-affiliated author: 1,439,421.

STIM was founded in 1923. Composer Natanael Berg was the first chair of the board.

Contents Music has value...................................................................................................4 The STIM process.................................................................................................6 SEK 1.5 billion to rightsholders.............................................................................8 Swedish music creators' success behind the value of STIM's ecosystem..................10 Foreign revenue.................................................................................................12 Fastest development in the online category.........................................................14 STIM promotes Swedish music creation...............................................................16 ICE – investing in the future................................................................................17 The STIM sphere................................................................................................18 STIM's committees.............................................................................................19 Organization.....................................................................................................20 Board................................................................................................................21 Group................................................................................................................22 Administration report.........................................................................................24 Sales and performance.......................................................................................26 Accounting and valuation policies.......................................................................31 Notes to the accounts.........................................................................................34 Auditors' report.................................................................................................45 Would you like to know more about STIM............................................................47

ANNUAL REPORT STIM 2015

Music has value

It may seem obvious and unnecessary to point out, but music has value. Regardless, I would like to emphasize this now when STIM has enjoyed yet another year of increased revenue and, consequently, increased royalty payments to authors and music publishers. If we are to safeguard this value and create long-term sustainability for those who create it, then collective management and licensing of music rights is not just an option but a necessity. The idea behind an authors' society is simple – those who make the music to which we listen band together and jointly represent their rights in the market. The strength of the non-profit collective management of music rights stems from the members. STIM is its members. This is important to remember when both the market and legislation are undergoing drastic change. 2015 was yet another successful year for Swedish music creators, helping STIM's revenue reach a new record high of SEK 1.8 billion. We distributed SEK 1.5 billion in royalties, also more than ever before. At the same time, competition is growing. More and more actors want to gain from the value of music and music creation. We believe that STIM has a role to play in this growing competition. We believe in the collective model and the long-term sustainable music economy it represents. Not only does STIM distribute royalties for music used in various contexts, it also invests in the future creation of music. On behalf of our members, we promote regeneration with award and scholarship programs, by promoting Swedish music, and by lobbying for effective and appropriate copyright legislation.

STIM is currently well prepared to face the future. We follow market developments and adapt our operations accordingly. We also take the initiative in the development of the collective management of music rights together with our English and German counterparts, PRS for Music and GEMA. Working together in an international collaboration, we aim to create Europe's first hub for the pan-European licensing of music online – exactly the kind of solution that both the market and the legislation demand. We should be proud that STIM, and thereby the entire STIM collective, comprises a driving force in development that is not only highly contemporary, but also necessary for establishing a position in the digital market. In 2015, STIM defined a strategic focus and refined its organization. Our strategic objective is clear – we shall continue to be the preferred choice of Swedish authors for music rights management and we shall also be an attractive alternative for foreign counterparts. In December 2015, our membership numbers passed 80,000. The fact that 2015 was a year of all-time highs in revenue and distributed royalties, and the fact that the STIM collective now numbers more than ever, give me confidence that we are moving in the right direction. I am pleased that we have been entrusted to safeguard the value of music.

Karsten Dyhrberg Nielsen, CEO

ANNUAL REPORT STIM 2015

Not only does STIM distribute royalties for music used in various contexts, it also invests in the future creation of music.

ANNUAL REPORT STIM 2015

The STIM process Money in

Internet and mobile

Identification and matching

Digital services in Sweden (and even certain services in Europe via so-called direct licensing). Music reports on the number of streams/views.

Royalty payments to authors and music publishers are based on reports on which music has been played, recorded, downloaded, or streamed. The information in the reports is linked to entries in the works register. In those cases where no match is found, we use so-called analogous data, which involves using data from other categories to achieve as fair a distribution as possible.

Reproduction of recordings (Mechanical reproductions for the entire Nordic region, administered by NCB). Issuers of DVDs, CDs, etc. Reports on copies produced and sales figures.

Public performances Operations that use music publicly (radio, TV, stores, restaurants, events, concerts, etc.). Music reports from music users.

International STIM's international counterparts collect royalties, identify STIM-affiliated rightsholders, and send reports and money to STIM. STIM then distributes the money to the right authors and, in applicable cases, the music publishers too without any administrative deductions.

ANNUAL REPORT STIM 2015

Money out

Distribution

Authors and music publishers

The revenue is distributed in accordance with STIM's distribution rules after all deductions for expenses, national funds, scholarships, and subsidies.

By becoming affiliated with STIM, authors and music publishers instruct STIM to manage their economic rights. Authors or publishers notify STIM of musical works. These are entered in the works register with details of current ownership shares. In conjunction with payment, each affiliated member receives a specification of what the payment concerns, which songs are covered by the payment, the concerned music use areas, and the amount.

Payments We disburse four larger payments each year to those who have created the musical works and their music publishers.

International In cases where performed works are written by music creators who belong to a society other than STIM, collected royalties, fees, and reports are forwarded to the concerned counterpart, which in turn distributes the revenue to their affiliated authors and music publishers. Likewise, the rights of STIM affiliates are represented in the same manner by our counterparts when our members'Â works are performed abroad.

ANNUAL REPORT STIM 2015

SEK 1.5 billion to rightsholders STIM provides society with convenient and simple access to a rich and multifaceted music offering, promotes music creation with both breadth and diversity, and ensures that authors and their publishers are paid when others use their work.

STIM's total revenue for 2015 was SEK 1.8 billion (SEK 1.7 billion in 2014). Payments to rightsholders – authors and music publishers – in 2015 totaled SEK 1.5 billion (SEK 1.4 billion in 2014). The biggest increase in revenue and the most prominent trend are both found in the online category. In 2015, online revenue totaled SEK 344.7 million, which corresponds to 20 percent of STIM's total revenue. Revenue increased by 28 percent compared to 2014. Five years ago, this category represented revenue of SEK 64.1 million.

NON-PROFIT SUPPORT FOR SWEDISH MUSIC CREATION STIM is to distribute its revenue to rightsholders and not report a profit. Distribution takes place following deductions for administrative costs, the so-called administrative overhead, which in 2015 amounted to 8 percent (9.4 percent the previous year).

STIM's mandate is clear: collect and distribute remuneration when the works of affiliated music creators and music publishers are used in various contexts. Growing Swedish musical success means increased revenue for STIM – revenue that is returned to our members.

The administrative overhead is used internationally as a measure of the efficiency of copyright organizations and comprises the share of total revenue from performed music that covers the organization's administrative costs. STIM's ambition is to keep its administrative overhead down, and we have reached a level that is low in international comparisons.

CULTURAL REGENERATION PART OF OUR MANDATE

TOTAL REVENUE PER REVENUE CATEGORY

Alongside distributing remuneration for music use, STIM is also tasked by its members to ensure the regeneration of Swedish music creation. Being part of the STIM collective means being part of a long-term sustainable environment for music creators in which the focus is on creating viable music. STIM pursues cultural policy initiatives through its own operations, the subsidiary Svensk Musik, and STIM's Council for the Promotion of Swedish Music, as well as by financing activities conducted by interest organizations for music creators. The latter include FST (Society of Swedish Composers), SKAP (Swedish Society of Songwriters, Composers, and Authors), and Musikförläggarna (Swedish Music Publishers Association). These initiatives involve promoting musical diversity and lobbying that benefits Sweden's authors. STIM's cultural policy initiatives are financed by a deduction of 1.9 percent, or SEK 33.9 million (SEK 30.7 million), from performance revenue in the categories Live, Background, and Media. In addition, STIM's scholarship programs are financed by a deduction of, at most, 3 percent of the royalties distributed to Swedish rightsholders.

1.1% Foreign, distributed by STIM 36.1% Foreign 1.5% Other revenue 0.5% Private copying levy

7.5% Mechanical reproduction 19.4% Radio and TV 4.2% Live music 10.7% Background music 19% Online and new media

PAYMENT OF PERFORMANCE REVENUE 32% STIM affiliates' music

40% Foreign rightsholders

28% STIM-affiliated sub-publishers' share of foreign music

DISTRIBUTION OF REVENUE 2% Cultural policy initiatives 8% Administrative costs

8% STIM'S ADMINISTRATIVE OVERHEAD

90% To rightsholders

ANNUAL REPORT STIM 2015

Distribution per revenue category 2015 (2014)

Remuneration distributed

Remuneration is affected by the character of the performance/work

1. Concerts Subsidized concerts featuring art music

Total based on all music reports for the category (joint minute value)

Grading, categorization large/ small concert

4.0

(4.2)

3.1

(3.3)

(38)

(16)

(46)

2. Church concerts

Total based on all music reports for the category (joint minute value), as well as on sampling reports from CCLI

Grading, sampling

1.9

(2.3)

1.5

(1.8)

(53)

(13)

(34)

4. Dance â&#x20AC;&#x201C; night clubs

Total based on music reports Grading for the category from DeeJay Promotions (joint minute value)

24.3

(27.4)

18.5

(21.5)

(26)

(30)

(44)

5. Other live music, reported Concerts and other live performances

Per music report (income per performance)

Grading

67.7

(59.6)

52.0

(47.3)

(55)

(19)

(26)

6. Other live music, not reported

Reused music reports from the category Other live music, reported

Grading and according to analogous data respectively

13.3

(22.4)

10.2

(17.6)

(59)

(17)

(24)

7. Theater music

Per music report (income per performance)

Grading

1.2

(1.1)

0.9

(0.9)

(31)

(28)

(41)

8. Background music, Per music report (income per reported performance) Mechanically reproduced background music

Grading

19.5

(1.1)

14.9

(0.9)

(15)

(40)

(45)

9. Background music, not reported

Reused music reports from SR, commercial radio, TV, online, and NCB (record sales, downloads)

Grading and according to analogous data respectively

120.7

(147.1)

92.0 (115.5)

(39)

(26)

(35)

10. Swedish Radio (SR)

Total based on all music reports for the category (joint minute value)

Grading

52.7

(51.8)

40.2

(40.7)

(35)

(23)

(42)

11. SVT (Swedish Television)

Per music report (income per channel)

Grading

76.6

(62.6)

58.4

(49.2)

(27)

(25)

(48)

12. Commercial radio

Per music report (income per channel)

Grading

27.7

(25.7)

21.1

(20.2)

(24)

(35)

(41)

13. Commercial TV

Per music report (income per channel)

Grading

192.5

(213.1)

146.7

(171.4)

(17)

(32)

(51)

14. Community radio

Sampling reports from KRN, reports directly from rightsholders, and reused music reports from P4 local radio (SR)

Grading, sampling, and according to analogous data respectively

1.8

(2.6)

1.4

(2.1)

(40)

(25)

(35)

15. Movie theaters

Per music report and film

18.0

(13.9)

13.7

(11.0)

(26)

(31)

(43)

16. Online, reported

Per music report (income per service)

Grading

306.1 (241.5)

(56)

(21)

(23)

19. Online, not reported

Reused music reports from SVT, SR, and commercial radio

Grading and according to analogous data respectively

10.4

(9.5)

8.7

(8.5)

(27)

(31)

(42)

17. Compensation for private copying

Reused music reports from TV, SR, and NCB (record sales, downloads)

According to analogous data

8.4

(11.1)

8.4

(11.1)

(58)

(33)

(9)

18. Library levy

Borrowing statistics from libraries --

2.5

(2.5)

2.1

(2.5)

100

(99)

(1)

(0)

20 & 96 Foreign

Reports from foreign collecting societies

651.8 (537.7)

(48)

(52)

(0)

21. Foreign, for distribution by STIM

Reports from foreign collecting societies and reused music reports from TV

Grading and according to analogous data respectively

(38.4)

(10)

(55)

(35)

22. Mechanical reproduction rights

Reports from NCB regarding record sales and downloads in the Nordics and Baltics

135.6 (161.9)

(43)

(57)

(0)

Distribution category

Note: Grading has no effect on mechanical reproduction rights or in film.

Collected amount, SEKÂ m

334.3 (259.3)

651.8 (537.7) 20.6

(44.9)

135.6 (161.9)

Amount for distribution, SEKÂ m

17.6

% Music with % Foreign STIM-affiliated music with authors and STIM-affiliated music publishers sub-publishers

% Foreign music

ANNUAL REPORT STIM 2015

Swedish music creators' success behind the value of STIM's ecosystem STIM acts on behalf of Sweden's songwriters, composers and music publishers. It is their music rights that STIM manages and represents and that comprise the value of STIM's ecosystem. 77,648 authors and 3,345 music publishers. In total, STIM had 80,993 affiliates at the end of December 2015. Compared to the 77,629 affiliates in 2014, this represents an increase of 4.3 percent. This is the largest number of affiliates ever and reflects a Swedish music industry that is doing well – both in Sweden and abroad. In 2015, 3,324 (3,180 in 2014) authors and 121 (101) music publishers joined STIM and at year-end STIM had 1,192 (1,076) members and music publishers domiciled abroad in 68 (67) countries. Among new members, 25 percent are female. All in all, more than 20 percent of STIM's members are female.

ONE THIRD OF REVENUE FROM ABROAD The Foreign category, that is, revenue from the use of Swedish authors' music rights collected by foreign copyright organizations, represents just over one third, or SEK 651.8 million, of STIM's collected revenue. This is an increase of 21.2 percent compared to 2014 (SEK 537.7 million). One of the reasons is the success enjoyed by Swedish music creators in the USA and the UK, both major markets, as well as in smaller markets throughout the world. In the USA, 2015 was another successful year for Swedish music creators such as Shellback and Max Martin, whose involvement in Taylor Swift's album resulted in number one spots for songs such as Bad Blood and Blank Space. Other STIM-affiliated music creators who did well in the American charts during the year include Tove Lo, Ali Payami, and Peter Svensson. Several STIM-affiliated authors also achieved great success in the UK in 2015. These include Linus Eklöw, Christian Karlsson, Henrik Jonback, and Christian Karlsson, the authors behind Peanut Butter Jelly. Other hits in the UK market featuring Swedish authors include Lush Life by, among others, Linnea Södahl, Iman Hulten, Markus Sepehrmanesh, and Emanuel Abrahamsson, as well as Focus by, among others, Ilya and Peter Svensson. Perhaps less widely known in Sweden is that STIM affiliates have proved successful in other parts of the world, outside the anglosphere. For example, Eric Palmqwist and Mats Hedström reached the number one spot in the Mexican charts with Valiente, performed by the artist

Paty Cantú, while in Japan Ben Smith, Andreas Öberg, and Andreas Öhrn did the same with the song Colorful Eyes performed by Sexy Zone. Even within art music Swedish authors continue to attract international attention. At the beginning of the year, Ansgar Beste won the Sixth International Composition Competition of the Christoph Delz Foundation, one of the world's most prestigious prizes for young composers, for his work In the steppes of Sápmi. The work was subsequently premiered in September by SWR Vokalensemble Stuttgart. Britta Byström and Farangis Nurulla were also among the Swedish composers who received international awards during the year. On Spotify, it became easier to find and follow Swedish composers thanks to the Swedish Composers App, a search tool developed by FST (Society of Swedish Composers) with the support of STIM's Council for the Promotion of Swedish Music.

REMUNERATION FOR 1.6 MILLION WORKS In 2015, STIM distributed royalties for 1,647,435 musical works. This is an increase of 324,422 works, or 24.5 percent, compared to the previous year (1,323,013). Over time, digital developments have entailed a dramatic increase in the number of remunerated works. Streaming services such as Spotify, Apple Music, and TIDAL enable us to listen to hundreds of unique works every day. This was not possible fifteen years ago – and back then we collected royalties for only about 220,000 works.

STIM'S SERVICE FUNCTION FOR AFFILIATED AUTHORS AND MUSIC PUBLISHERS STIM's service mandate includes providing support to affiliates. In 2015, STIM's Customer, Member, and Publisher Services handled about 45,000 telephone and e-mail inquiries. In 2015, STIM developed its public website, stim.se, in order to increase the service level offered to music creators, publishers, and customers. This development will continue in 2016, with improved self-service and the ability to easily track submitted inquiries via My Pages At the beginning of 2016, IDG named the revamped website Sweden's best website for an organization.

ANNUAL REPORT STIM 2015

Performance revenue, Sweden,

Mechanical reproduction revenue,

SEK million

SEK million 200

1,200

1,000 150 800

100

600

400 50 200

2011

2012

2013

2014

2015

Number of notified works with at

2011

2012

2013

2014

2015

Number of STIM affiliates

least one STIM-affiliated author Authors

Publishers

80,993

1,439,421

AFFILIATES

WORKS

1,500,000

80,000 70,000

1,200,000 60,000 900,000

50,000

Increase of

40,000

since 2011!

16 percent

600,000

30,000 20,000

300,000 10,000 0

0 2011

2012

2013

2014

2015

2011

2012

2013

2014

2015

ANNUAL REPORT STIM 2015

Foreign revenue Total foreign revenue

2014

SEK 540,762,520

2015

2013

SEK 653,378,059

SEK 489,759,583

Revenue by region

Foreign revenue previous years Europe 24% North America 8%

2014

Europe 24%

South America 2% Australia 2% Asia 2% Nordics 62%

Nordics 57%

2015 North America 14%

Europe 23%

Asia 2% Australia 2%

2013

North America 12% South America 1% Australia 2%

South America 1%

Asia 2% Nordics 60%

ANNUAL REPORT STIM 2015

Top 20 – foreign revenue SEK 200 m 2015

2014

SEK 150 m

SEK 100 m

SEK 50 m

Songs with the most foreign revenue in 2015 Title

Authors

Artist

Shake It Off

T Swift, Shellback, M Martin

Taylor Swift

Hey Brother

T Bergling, S Al Fakir, V Pontare, V Maggio, A Pournouri

Avicii

Habits

T Lo, J Jerlström, L Söderberg, D Ledinsky

Tove Lo

Wake Me Up

T Bergling, E N Dawkins, M A Einziger

Avicii

Problem

A Grande, S H Kotecha, M Martin, A A Kelly, Ilya

Ariana Grande

Boom Clap

F Berger, P Berger, C E Aitchison, S Gräslund

Charli XCX

Bang Bang

S H Kotecha, R Göransson, M Martin, O T Maraj

Jessie J feat. Ariana Grande & Nicki Minaj

Animals

Shellback, B Levin, A N Levine

Maroon 5

Blank Space

Shellback, M Martin, T Swift

Taylor Swift

10.

Don't You Worry Child

A Hedfors, S Ingrosso, S Angello, M Lindström, M Zitron

Swedish House Mafia

Poland

Brazil

Austria

Belgium

Lithuania

Canada

Switzerland

Spain

Australia

Italy

Netherlands

Latvia

Japan

France

Germany

Norway

USA

Finland

Denmark

ANNUAL REPORT STIM 2015

Fastest development in the online category Market developments make the collective management and licensing of music rights increasingly important. This is especially true in the online category, where the fastest development is seen. In many cases, new digital services and the opportunities offered by the Internet and pursued by other actors to distribute music, film and TV would not be possible without effective collective licensing.

aware of the importance of music to their success. Last year, a survey conducted by HUI Research showed that a store can increase its revenue by as much as 36 percent simply by choosing the right music.

STIM is the link between those who create music and those who in various ways wish to use it in their operations. Today, STIM has about 28,000 active customers who together have almost 46,000 licenses in 71 different music use areas. These encompass everything from stores, gyms, and coffee shops to radio, TV, and streaming services.

The number of music providers is also increasing. Spotify, via its Soundtrack Your Brand service, provides music to, among others, stores, coffee shops, and restaurants, while Swedebeat supplies music solutions to gyms and sports centers. STIM is in discussions with several international music providers who want to establish operations in Sweden and who realize the value of STIM's repertoire.

A NEW MEDIA WORLD Changing media consumption patterns also mean changes for STIM. We find ourselves in the midst of a development where Sweden is to the fore, recognized as a strong IT nation and yet small and dense enough to comprise a test market for new digital services. It was not by chance that Netflix and HBO launched their services early in Sweden, and these companies are now competing with traditional TV broadcasters and their on-demand services. As a consequence, STIM invests a great deal of energy in following and adapting to market development. STIM's revenue from TV and radio in 2015 totaled SEK 351.4 million – which is on a par with the average level for the past five years. Revenue from TV and radio comprises 19.4 percent of STIM's total revenue. In the online and new media category, revenue for 2015 totaled SEK 344.7 million. The trend seen here is clear: in 2014 revenue in this category was SEK 268.8 million, and five years ago revenue in this category was SEK 64.1 million. The transition from physical music sales to increasingly more people listening to music via streaming services such as Spotify, Apple Music, and TIDAL remains strong.

MUSIC EVERYWHERE STIM has issued about 33,000 licenses in the background music category, that is, music played in stores, gyms, coffee shops, and other public places. The number of customers is astounding – as is their music use. Music selections in, for example, stores and restaurants are increasingly conscious decisions as businesses become increasingly

STIM's revenue from the background category in 2015 totaled SEK 193.8 million, a slight drop compared to the previous year (SEK 197.4 million). The background category comprises 10.7 percent of STIM's total revenue.

DEEPER CUSTOMER RELATIONS In efforts to adapt to market developments, STIM intends to deepen its relation with music users and to help them make the most of STIM's repertoire in their operations. This entails reviewing old agreements, renewing them, and adapting them to altered circumstances, as well as developing the service STIM offers its customers. STIM is reviewing its internal processes and developing the customer's journey through the STIM process at every step of the way; from signing an agreement to the improvements being made during the first half of 2016 to the administrative web services at stim.se. STIM is also reviewing its procedures and systems for data processing, an ongoing measure to enable STIM to quickly adapt to the growing amount of data that market developments entail. All in order to offer customers better service.

ANNUAL REPORT STIM 2015

Revenue, stores, shopping malls, etc.,

Revenue, fitness,

SEK m

SEK m 20

30 10 20 5 10

0 2011

2012

2013

2014

2015

Revenue, restaurants, SEK m

2011

2012

2013

2014

2015

Revenue, online and new media, SEK m

350 300

250 20 200 15 150 10 100 20

0 2011

2012

2013

2014

2015

2011

2012

2013

2014

2015

ANNUAL REPORT STIM 2015

STIM promotes Swedish music creation STIM invests in the future on behalf of its members. Each year, a percentage of revenue is used for activities that promote Swedish music creation in various ways.

STIM not only plays the role of ensuring that authors are paid for the work they have done, but also creates opportunities for long-term stability and favorable conditions for Swedish music creators in the future too. STIM's cultural policy initiatives are financed by a deduction of 1.9 percent, or SEK 33.9 million (SEK 30.7 million previous year), from performance revenue in the categories Live, Background, and Media. In addition, STIM's scholarship programs are financed by a deduction of, at most, 3 percent of the royalties distributed to Swedish rightsholders. Only STIM-affiliated authors are eligible to apply for such scholarships, which are awarded once a year. In 2015, 92 recipients (53% male) received scholarships of SEK 50,000 and SEK 25,000 respectively. In total, STIM disbursed SEK 4.2 million in STIM scholarships while SEK 3.4 million was split evenly between the authors' interest organizations FST (Society of Swedish Composers) and SKAP (Swedish Society of Songwriters, Composers, and Authors) to disburse through their scholarship programs.

BROAD CULTURAL SUPPORT THROUGH SVENSK MUSIK In 2015, STIM invested SEK 6.9 million in the subsidiary Svensk Musik Swedmic AB. Svensk Musik manages the digitization of SKAP's archive, sheet music printouts, and travel grants for composers in conjunction with their works being premiered in Sweden and performed abroad. Svensk Musik also generates its own revenue, just over SEK 1 million, and receives a government grant, which in 2015 amounted to SEK 1.6 million. During the year, Svensk Musik administered sheet music printouts for thirty new manuscripts that were performed for the very first time at concert halls and opera houses throughout Sweden and abroad. A total of 438 manuscripts were deposited at Svensk Musik by STIM-affiliated authors during the year. The works are marketed, and can be leased or bought, via Svensk Musik's website. Furthermore, 96 authors were awarded travel grants for 135 performances, 30 of which were premieres in Sweden while the remaining 105 were international performances. Among the authors who received travel grants, 24 percent were female. Svensk Musik also administers the STIM scholarships program on behalf of STIM.

STIM'S COUNCIL FOR THE PROMOTION OF SWEDISH MUSIC In 2015, STIM invested SEK 6.2 million in STIM's Council for the Promotion of Swedish Music. The council, which initiates and supports various projects to create favorable conditions for future music creation, is managed by FST (Society of Swedish Composers), SKAP (Swedish Society of Songwriters, Composers, and Authors) and Musikförläggarna (Swedish Music Publishers Association). Fredrik Wetterqvist chairs the council. In 2015, the Council for the Promotion of Swedish Music decided to support about thirty projects. Some of these projects were conducted last year while others will begin in 2016. Since 2014, STIM's Council for the Promotion of Swedish Music has been working on a major German initiative to promote Swedish music in one of the most important music nations in Europe. The aim is to achieve a greater overall effect by conducting many projects in the same country. In 2016, the council will begin similar efforts in the UK. A few examples of the year's projects include the partnership in Framtidens musikpris (The Future Music Prize), Stockholm Folk FeedBack, and music score subscriptions for high school teachers in Germany.

THE STIM COLLECTIVE'S INTEREST ORGANIZATIONS The authors' interest organizations FST (Society of Swedish Composers) and SKAP (Swedish Society of Songwriters, Composers, and Authors), together with the music publishers' interest organization Musikförläggarna (Swedish Music Publishers Association), receive annual grants from STIM. In 2015, these grants totaled SEK 18 million. Their work includes encouraging diversity in the music creators collective and lobbying that benefits Sweden's authors. These are activities that cannot, or should not, be conducted by STIM directly.

READ MORE: svenskmusik.org stim.se/promotion fst.se skap.se musikforlaggarna.se

ANNUAL REPORT STIM 2015

ICE â&#x20AC;&#x201C; investing in the future Together with the UK's PRS for Music and Germany's GEMA, STIM sets the standard for future European music licensing.

As of 2016, pan-European licensing branded ICE will enable digital services to more easily gain access to the music they need to build their operations. As the initiator of collaboration on a European hub, STIM has marked out the path for future music licensing. The collaboration with PRS for Music began back in 2007 with a joint works database, ICE, and in June 2015 GEMA joined the collaboration as the third partner following a competition review by the EU Commission. The objective now is not only to offer a joint database, but also joint pan-European licensing. The collective repertoire in ICE will be one of the largest in Europe, with severalÂ million works available for download, subscription, and streaming services.

SYNERGIES RESULT IN ONE PROCESS INSTEAD OF MANY The synergies generated by the collaboration include combining licensing, content matching for all reports from all countries, and invoicing into a single process instead of many. During the last quarter of 2015, the collaboration entered the final phase of preparations. Following the positive outcome of the competition review, STIM has worked intensively to plan the license transfers scheduled for 2016.

STRATEGIC CHOICE The digital music market has no physical borders. Despite this, authors' societies are organized nationally. As a consequence, STIM's strategic focus is on strong international collaborations being key to ensuring the best possible management of the rights of authors and music publishers in the long term. Successfully fulfilling the aim to offer the market competitive pan-European licensing demands extensive investments. Since the collaboration was initiated in 2007, STIM has emphasized that this is the right strategic focus. This is not only about STIM's future, but also the future of the collective management of music rights. ICE will enable parties to reach favorable business agreements while retaining the benefits of collective licensing for the authors.

ANNUAL REPORT STIM 2015

The STIM sphere

NCB, NORDISK COPYRIGHT BUREAU

SVENSK MUSIK SWEDMIC AB

NCB, Nordisk Copyright Bureau, is tasked with upholding the rights of authors and music publishers in the recording, copying, and distributing of protected music and lyrics on CD, vinyl, DVD, and similar media. NCB is governed by STIM and its counterparts in Denmark (Koda), Finland (Teosto), Norway (TONO), and Iceland (STEF). NCB also administers the mechanical rights of the Baltic collecting societies, LATGA (Lithuania), EAÜ (Estonia), and AKKA / LAA (Latvia). NCB has agreements with copyright societies abroad that administer mechanical rights in a corresponding manner in their countries.

Svensk Musik Swedmic AB is a wholly-owned subsidiary of STIM since 2008. Its task is to document and provide information about copyright-protected Swedish music. This is achieved by, for example, cataloging and archiving art music and older popular music and producing music scores for, among other things, orchestral works and works for larger jazz ensembles. Svensk Musik also administers travel grants for STIM-affiliated authors.

Board of Directors Anders Lassen ...........................................................CEO, Koda, chair Susi Hyldgaard (until May 15) ......................................... author, Koda Tine Birger Christensen (until May 15) ................music publisher, Koda Guðrún Björk Bjarnadóttir ....................................................CEO, STEF Karsten Dyhrberg Nielsen ................................................... CEO, STIM Alfons Karabuda (until May 15)....................................... author, STIM Lars Karlsson (until May 15) ............................... music publisher, STIM Katri Sipilä .......................................................................CEO, Teosto Kim Kuusi (until May 15) .............................................. author, Teosto Tommi Tuomainen (until May 15) ....................music publisher, Teosto Cato Ström .......................................................................CEO, TONO Bendik Hofseth (until May 15) .......................................author, TONO Steinar Fjeld (until May 15) ..............................music publisher, TONO Observers from the Baltic countries (until May 15) Inese Paklone ........................................................... CEO, AKKA / LAA Kalev Rattus ........................................................................ CEO, EAÜ Jonas Liniauskas ...............................................................CEO, LATGA Jakob Friman Magnusson ....................................................CEO, STEF Anne Louise Holsoe....................................... employee representative

STIMDIREKT AB Stimdirekt AB is the result of a merger between the dormant subsidiary CEE Services AB and Kobalt Stim Aggregated Rights AB, part of a collaboration with Kobalt Music Group that will be wound down in 2016. Karsten Dyhrberg Nielsen .......................................... CEO, STIM, chair Sara Kilander........................................................................ member Helena Woodcock (until October 27).........................................deputy

Board of Directors Dror Feiler .......................................................................... FST, chair Peter Magro ...........................................................Musikförläggarna Elise Einarsdotter ...................................................................... SKAP

ICE Together with the UK's PRS for Music and Germany's GEMA, STIM owns ICE Services AB, ICE Enterprise Services GmbH, and ICE Services Ltd. The aim is to offer joint administration and joint pan-European licensing. Board of ICE Services AB and ICE Enterprise Services GmbH Karsten Dyhrberg Nielsen (interim chair)......................................STIM Charlotte von Sydow ..................................................................STIM Kjell-Åke Hamrén .......................................................................STIM Robert Ashcroft ............................................................ PRS for Music Deborah Stones ............................................................PRS for Music Nigel Elderton ...............................................................PRS for Music Lorenzo Colombini .................................................................... GEMA Rolf Budde ............................................................................... GEMA Enjott Schneider ....................................................................... GEMA Patrik Lindgren (employee representative) .................... ICE Services AB Board of ICE Services Ltd Karsten Dyhrberg Nielsen (interim chair)......................................STIM Charlotte von Sydow...................................................................STIM Kjell-Åke Hamrén........................................................................STIM Robert Ashcroft............................................................. PRS for Music Deborah Stones.............................................................PRS for Music Julian Nott ....................................................................PRS for Music Harald Heker ........................................................................... GEMA Frank Dostal ............................................................................ GEMA Ralf Weigand ........................................................................... GEMA

ANNUAL REPORT STIM 2015

STIM's committees

ASSESSMENT COMMITTEE FOR MUSIC AND COPYRIGHT

COMMITTEE FOR NATIONAL FUNDS Preparatory body for the promotion of Swedish music.

Provides opinions on similarities between musical works in copyright disputes. Helena Woodcock (until October 27) �� STIM, chair Jonas Nordin ��STIM, secretary Peo Nylén .............................................................. Musikförläggarna Douglas Carr ��SKAP Mattias Svensson Sandell �� FST

GRADING COMMITTEE Establishes praxis for grading and deals with grading complaints.

Kjell-Åke Hamrén �� chair Alfons Karabuda ��SKAP Martin Q Larsson �� FST Monica Ekmark �� Musikförläggarna Karsten Dyhrberg Nielsen �� STIM

FEES COMMITTEE Preparatory body for the annual general meeting to propose fees to regular and deputy members of STIM's Board of Directors, committees, and subsidiary boards.

Regular members: Mats Edén ��SKAP Torgny Söderberg ��SKAP Jonas Valfridsson �� FST Ylva Q Arkvik �� FST Kristina Fryklöf �� Musikförläggarna

Sten Melin �� FST Claes Ånstrand ��SKAP Margareta Neld �� Musikförläggarna

Deputy members: Jan Levander ��SKAP Anna Einarsson ��SKAP Kristina Forsman �� FST Johan Ramström �� FST Ingemar Hahne �� Musikförläggarna

Initiates and supports projects that aim to improve the availability and recognition of new Swedish music – both nationally and internationally.

DISTRIBUTION COMMITTEE Preparatory body for the Board in distribution issues. Karsten Dyhrberg Nielsen �� chair Martin Q Larsson �� FST Chrichan Larson �� FST Alfons Karabuda ��SKAP Örjan Strandberg ��SKAP Monica Ekmark �� Musikförläggarna Kettil Skarby �� Musikförläggarna Sara Kilander �� STIM Erik Forsblom �� STIM

STIM'S COUNCIL FOR THE PROMOTION OF SWEDISH MUSIC (SPN)

Fredrik Wetterqvist �� chair, external Alfons Karabuda ��SKAP Mårten Karlsson ��SKAP Dror Feiler �� FST Anne Pajunen �� FST Gunnar Helgesson �� Musikförläggarna Nutta Hultman �� Musikförläggarna

SCHOLARSHIP COMMITTEE Awards STIM's scholarships. Gustav Bergel (until December 1) �� chair Ann-Christin Biel (from December 2) �� chair Stefan Gullberg �� Musikförläggarna Ann-Sofi Söderqvist ��SKAP Jesper Nordin �� FST Anna Svensdotter �� external Josephine Forsman �� external

ANNUAL REPORT STIM 2015

Organization CEO KARSTEN DYHRBERG NIELSEN

STIM's organization as of April 20, 2016.

SECRETARIAT

HR MONA HILL BOGGHED

ROSIE SIVERMAN

(EXTERNAL CONSULTANT)

LEGAL

CORPORATE AFFAIRS

STRATEGY & IT

FINANCE & PROPERTY

REPORTING & COLLECTION

SALES & MARKETING

RIGHTSHOLDERS

KRISTINA WALLES

KJELL HOLMSTRAND

CHARLOTTE VON SYDOW

PETER HUMMERHIELM

NILS DANIELSSON

NICKLAS SIGURDSSON

SARA KILANDER

(EXTERNAL CONSULTANT)

ANNUAL REPORT STIM 2015

Board of Directors

FST (Society of Swedish Composers), SKAP (Swedish Society of Songwriters, Composers, and Authors), and Musikförläggarna (Swedish Music Publishers Association) each appoint two members and one deputy. They jointly appoint the chair of the board and a further two external members. The STIM local of Unionen appoints one member and two deputies. KJELL-ÅKE HAMRÉN – Musician and music researcher. Chair of the board since 2012. Until 2015 also a member of the boards of ICE Operations and ICE Services. DOUGLAS CARR – Composer and music producer. Board member since 2006. Member of the boards of SKAP (Swedish Society of Songwriters, Composers, and Authors) and LaCarr Music. MONICA EKMARK – General Manager at Universal Music. Board member since 2003. Chair of the board of Musikförläggarna. Member of the boards of Musiksverige, Polar Music Prize, and Insamlingsstiftelsen Musikskattens Hus. ERIC HASSELQVIST – Partner in Publishing Company Ten AB. Board member since 2007, with a hiatus in 2013. Deputy chair of the board of Musikförläggarna. Member of the boards of Monza Publishing AB, BD Pop AB, Elementica AB (publ), Bahnhof AB (publ), and Ten Music Group AB. ALFONS KARABUDA – Composer. Board member since 2005. Chair of ECSA (European Composer & Songwriter Alliance), chair of SKAP (Swedish Society of Songwriters, Composers, and Authors), executive vice president of the International Music Council, and member of the boards of the Culture Committee of the Swedish National Commission for UNESCO, the Swedish Performing Arts Agency, and Polar Music Prize. He is also the CEO and owner of Naomi Musikförlag AB.

MARTIN Q LARSSON – Composer and musician. Board member since 2010. Chair of the boards of FST (Society of Swedish Composers) and the Council of Nordic Composers, member of the boards of KLYS and ECSA. Founder of Matandarnas transgalaktiska hiphopkapell, New Music Incubator, and Composer’s Radio. LEIF PAGROTSKY – Sweden's Consul General in New York. Board member since 2007. Chair of the boards of Business Region Göteborg, Business Sweden, AB Avenyfamiljen, and AB Husvärden. Member of the boards of Avanza Pension and the National Theater in Oslo. KRISTINA RENNERSTEDT – Lawyer. Board member since 2010. Chair of the boards of the Royal Swedish Opera, Konstfack, Teateralliansen, and the Swedish Institute for Children's Books. MATTIAS SVENSSON SANDELL – Educational director at the Gotland School of Music Composition. Board member since 2013. Member of the boards of FST (Society of Swedish Composers) and VICC (Visby International Center for Composers). EVA BOTMAR – Administrator, STIM's Member and Publisher Services. Board member since 2012 as an employee representative. Chair of the STIM local of Unionen.

DEPUTY MEMBERS Marie Samuelsson........................................................................ FST Martin Jonsson Tibblin.................................................................. FST Elise Einarsdotter........................................................................ SKAP Anders Wollbeck........................................................................ SKAP

Nutta Hultman........................................................ Musikförläggarna Lars Karlsson........................................................... Musikförläggarna Anders Cangemark............................................................... Unionen Annika Falkenäng................................................................. Unionen

ANNUAL REPORT STIM 2015

Group In 2015, STIM sold one sixth of the holdings in ICE Services AB. Following this change, STIM, PRS, and GEMA each own one third of ICE Services AB. During the year, STIM, PRS, and GEMA founded a new company, ICE Services Ltd, of which each party owns one third. CEE Services AB has been merged with Stimdirekt AB.

NCB NORDISK COPYRIGHT BUREAU JOINTLY MANAGED WITH STIM'S NORDIC COUNTERPARTS

STIM

ICE SERVICES AB 33%

ICE SERVICES LTD 33%

STIMDIREKT AB

STIM FASTIGHETS HOLDING AB

INTERNATIONAL COPYRIGHT ENTERPRISE SERVICES AB JOINTLY OWNED WITH BRITISH PRS FOR MUSIC AND GERMAN GEMA.

ICE INTERNATIONAL COPYRIGHT ENTERPRISE GERMANY GMBH

STIMHUSET KB

SVENSK MUSIK SWEDMIC AB

ANNUAL REPORT STIM 2015

GROUP PERFORMANCE – 3-YEAR SUMMARY SEK THOUSAND 2015

2014

2013

Revenue (within the Group, %)

24,929 (100%)

82,234 (100%)

Operating profit/loss

1,302

1,529

Average number of employees

95,444 (49%)

120,733 (54%)

31,453 (46%)

5,083

4,185

-2,121

4,490 (47%)

2,747 (77%)

4,244 (55%)

-314

-145

1,488

25,783 (43%)

25,800 (42%)

23,958 (45%)

11,925

12,999

12,793

10,118 (68%)

10,554 (64%)

9,699 (64%)

117

125,617 (15%)

119,677 (21.6%)

116,234 (1.64%)

-40,527

-6,835

1,952

125

CEE Services AB*

Stimdirekt AB (name changed from Kobalt STIM Aggregated Rights AB) Revenue (within the Group, %) Operating profit/loss Average number of employees

Stim Fastighets Holding AB Revenue (within the Group, %) Operating profit/loss Average number of employees

Stimhuset KB Revenue (within the Group, %) Operating profit/loss Average number of employees

Svensk Musik Swedmic AB Revenue (within the Group, %) Operating profit/loss Average number of employees

ICE Services AB** Revenue (within the Group, %) Operating profit/loss Average number of employees

ICE Services Ltd** Revenue (within the Group, %) Operating profit/loss Average number of employees

-48,709

* CEE Services AB was merged with Stimdirekt AB on December 29, 2015. ** The figures for ICE Services AB include the subsidiary ICE International Copyright Enterprise Germany GmbH. The figures apply to the companies as a whole, of which STIM owns one third. The figures for ICE Services AB and ICE Services Ltd have not been revised.

ANNUAL REPORT STIM 2015

Administration Report The Board of Directors and the Chief Executive Officer of Svenska Tonsättares Internationella Musikbyrå (STIM) u.p.a., corporate identity number 702002-3524, hereby present the annual report and consolidated financial statements for the 2015 financial year.

DESCRIPTION OF OPERATIONS STIM is a non-profit incorporated society and special-interest copyright organization for music authors and publishers. STIM administers and licenses economic rights to music and lyrics on their behalf. Through its international network, STIM also represents rights to the worldwide repertoire of music. Moreover, STIM promotes the creation and distribution of new Swedish music. At the end of December 2015, STIM had 80,993 affiliated composers, songwriters, arrangers, and music publishers. STIM upholds the economic rights of authors and music publishers under copyright legislation Based on inter-governmental agreements and reciprocal agreements with STIM's counterpart organizations abroad, rights to both domestic and international music in Sweden are protected.

licensing of the owners' online rights and the administration of other rights managers' licensing agreements. The ICE companies are equally owned by STIM, PRS for Music, and GEMA. Together with other Nordic authors' societies, STIM also governs Nordisk Copyright Bureau, which manages the licensing and administration of music when recorded on physical products, such as CDs and DVDs. STIM owns, via the group company Stimhuset KB, the property Stockholm Krukomakaren 17. This property houses, among other things, STIM's office. Organization In May 2015, Erik Peters stepped down from STIM's Board of Directors and was replaced by former deputy Mattias Svensson Sandell.

When a rightsholder joins STIM, they transfer their legal rights to recompense in connection with public performance, recording, and mechanical reproduction to STIM. STIM ensures that anyone who plays music in public or who records, downloads, or streams music has a valid license and pays a fee.

On December 29, 2015, the merger between CEE Services AB and Stimdirekt AB (name changed from Kobalt Stim Aggregated Rights AB) was finalized.

STIM then pays the monies received to the owner or owners of the rights to the music. As such, STIM licenses music from throughout the world to users of music and distributes the revenue collected to the individual rightsholders, both Swedish and international. This means that anyone who wishes to use music in, for example, a radio broadcast, a store, or an entertainment venue can easily obtain access to millions of musical works with a license from STIM. It also means that the owners of the copyright to the music are paid for the use of their music.

HR policy and equal opportunities plan Performance reviews provide a basis for skills development initiatives. Openness and transparency are important cornerstones of the organization.

STIM cooperates with other authors' societies on the licensing of rights and data administration. STIM owns, together with the UK's PRS for Music and Germany's GEMA, the companies International Copyright Enterprise Services AB, along with its wholly owned German subsidiary International Copyright Enterprise Services GmbH, and International Copyright Enterprise Services Ltd. These companies register and administrate the musical works of music creators and music publishers and, as of 2016, will manage the multi-territorial

NON-FINANCIAL PERFORMANCE INDICATORS

Work environment policy Work environment management at STIM aims to create conditions that favor a positive atmosphere and environment at work. A clear policy is used to support STIM's ongoing management of the work environment. Responsibility for the work environment falls to each immediate manager. Equal opportunities plan At STIM, work conditions and development opportunities are to be independent of gender, ethnicity, sexual orientation, functional disability, age, religion, and faith. At STIM, we expect everyone to act to ensure a workplace characterized by equality.

ANNUAL REPORT STIM 2015

Occupational health services In cooperation with health and fitness company Korpen, STIM is a health-certified company, offering health and fitness opportunities to its employees. Measures include workplace massages, exercise on company time, and gym memberships for all employees. The company's health and fitness committee actively works to inspire and motivate employees to improve their health with regular health and fitness activities.

SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL YEAR

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

SIGNIFICANT RISKS AND UNCERTAINTIES

In April 2015, a decision was made to reorganize ICE AB. In conjunction with this, Carsten Drachmann quit as chief executive officer and CraigÂ Nunn, finance director at PRS for Music, stepped in as interim chief executive officer.

Stim Fastighets AB was sold in September 2014. However, the buyer is not in agreement with STIM as regards the exact size of the purchase consideration and has informed STIM that a lesser part of the purchase consideration may be appealed.

In order to protect affiliated members' rights, STIM has filed lawsuits against a number of companies that do not pay STIM license fees, including rental car company Fleetmanager and several restaurant companies. In April 2015, SF Anytime, owned by Bonnier, was sued as STIM claims that the company breaches copyright law by not compensating authors for music included in its film offering.

New Swedish legislation on collective rights management, based on the EU's collective rights management directive, has been proposed. Exactly how the new legislation will be implemented in Swedish law, and therefore operations, has not been fully resolved.

The agreement between Kobalt Music Group and STIM regarding Stimdirekt AB expired in June 2015. The decision to end the collaboration means that Stimdirekt AB will not sign any new licenses, but existing licenses will remain valid during a transition period. Following a competition review, in June 2015 the EU Commission approved Germany's GEMA becoming a joint owner of International Copyright Enterprise Services AB, as well as STIM, GEMA, and PRS for Music establishing a joint licensing company, International Copyright Enterprise Services Ltd, based in London. In July 2015, the formal aspects of the cooperation with GEMA and PRS were established. STIM sold one third of its shares in International Copyright Enterprise Services AB to GEMA and STIM acquired one third of the shares in International Copyright Enterprise Services Ltd. In October 2015, Koda, TONO, and Teosto transitioned to using ICE as their works database. The previous joint Nordic database, Norddoc, is no longer used.

In January 2016, Markus Nees took over as CEO of International Copyright Enterprise Services AB and its subsidiary International Copyright Enterprise Services GmbH, replacing Craig Nunn, finance director at PRS for Music, who had been interim CEO since April 2015.

The markets in which STIM acts, international and national, are changing continually and at an ever increasing rate. For STIM, this means increased uncertainty regarding future revenue and the returns that can be expected from future investments. STIM has, together with the other owners, financed investments in the associated companies ICE AB and ICE Ltd in order to establish effective cooperation with PRS for Music and GEMA. Further investments remain that STIM is contractually obligated to finance. The repayment of this financing is dependent on the operations of the associated companies developing as expected and development projects being conducted as planned. In 2015, the main focus of the ICE companies was on these development projects. Over the period 2015â&#x20AC;&#x201C;2016, International Copyright Enterprise Services AB's operations are being transferred to Berlin, which has disrupted works administration and ongoing projects.

ANNUAL REPORT STIM 2015

Sales and performance

GROUP 2015

2014

2013

2012

2011

Operating income

Consolidated profit (SEK thousand)

1,886,713

2,015,408

1,619,218

1,479,909

1,433,025

Operating costs

-209,078

-219,588

-181,568

-175,602

-159,968

-25,073

-4,495

298

-439

-1,404

-1,461

-1,677,448

-1,542,763

-1,441,004

-1,312,033

-1,288,499

Interest

-976

2,678

1,679

5,783

13,844

Tax

224

-71

-246

-138

-140

-25,633

249,709

-1,621

-2,520

-3,142

Profit/loss from participations in joint venture companies Impairment of non-current receivables from other companies Distribution

Profit/loss for the year

The Group’s revenue during the financial year was SEK 1,886.7 (2,015.4) million. Operating costs totaled SEK 209.1 (219.6) million. The drop in operating income compared to the previous year is attributable to the sale of Stim Fastighets AB in 2014 for the amount of SEK 262.7 million. The result from participations in associated companies amounted to SEK -25.1 (-4.5) million. Distributable income in the Group totaled SEK 1,651.8 (1,792.5) million.

PARENT SOCIETY Parent Society's profit, SEK thousand Operating income Operating costs Impairment of non-current receivables from other companies Operating profit/loss Interest Appropriations and taxes* Distributable income

2015

2014

2013

2012

2011

1,811,008

1,677,956

1,584,064

1,455,816

1,419,234

-187,261

-196,853

-168,717

-159,926

-151,242

-1,461

1,623,751

1,479,642

1,415,347

1,295,890

1,267,992

-203

8,338

11,461

16,551

16,822

19,812

17,026

-273

-408

3,685

1,643,359

1,505,006

1,426,535

1,312,033

1,288,499

The Parent Society STIM's total sales for the financial year totaled SEK 1,811.0 (1,678.0) million, corresponding to an increase of 7.9 (5.9) percent compared to the previous year. Revenue for the performance of music both in Sweden and abroad increased by SEK 153.1 (112.9) million, or 10.3 (8.1) percent, while revenue from mechanical reproduction decreased by SEK -26.2 (-24.9) million, or -16.2 (-13.3) percent. The Parent Society STIM's net distributable income totaled SEK 1,643.4 (1,505.0) million, corresponding to an increase in royalty payments to rightsholders equal to SEK 138.4 (78.5) million, or 9.2 (5.5) percent.

ANNUAL REPORT STIM 2015

FINANCIAL POSITION Group The Group’s accumulated profit at year-end was SEK 225.5 (-24.2) million.

Group contributions During the financial year, the Parent Society received group contributions from subsidiaries totaling SEK 19.6 (17.0) million.

Parent Society STIM's equity at year-end totaled SEK 1.2 (1.2) million, or 0.1 (0.1) percent of the balance sheet total. Liabilities to rightsholders at year-end totaled SEK 1,007.3 (881.8) million.

Proposed appropriation of profit The following amount is available for appropriation by the Annual General Meeting:

Liquidity Cash and cash equivalents totaled SEK 449.4 (380.7) million for the Parent Society and SEK 482.1 (408.1) million for the Group. Surpluses are invested in short-term fixed interest funds in accordance with the current investment policy.

Retained earnings SEK 4,841 Profit for the year SEK 0 Total SEK 4,841 The Board proposes that the available earnings be carried forward

SEK 4,841

INCOME STATEMENT SEK THOUSAND Operating income

GROUP Note

Performance revenue Mechanical reproduction revenue Other revenue Total operating income

1.3

PARENT SOCIETY

2015

2014

2015

2014

1,687,896

1,539,992

1,639,342

1,486,234

135,637

161,874

135,637

161,874

63,180

313,542

36,029

29,848

1,886,713

2,015,408

1,811,008

1,677,956

Operating costs External costs

2, 3, 6

-96,001

-92,837

-87,397

-101,746

Personnel costs

2, 4, 5

-94,913

-104,831

-90,213

-83,079

Depreciation/amortization

2, 9-11

-18,164

-21,920

-9,652

-12,028

-209,078

-219,588

-187,261

-196,853

-25,073

-4,495

-1,461

-1,677,448

-1,542,763

-1,643,359

-1,505,006

-24,882

247,102

-19,608

-25,364

Interest income

1,338

3,137

2,110

8,791

Interest expense

-2,314

-459

-2,313

-453

-25,858

249,780

-19,811

-17,026

Total operating costs

Profit/loss from participations in joint venture/associated companies

Impairment of non-current receivables from other companies Distribution

Operating profit/loss

Profit/loss before tax

Appropriations Profit/loss before tax

Tax on profit for the year

Profit/loss for the year

19,555

17,011

-25,858

249,780

-257

-15

224

-71

257

-25,633

249,709

ANNUAL REPORT STIM 2015

BALANCE SHEET SEKÂ THOUSAND Assets

GROUP

PARENT SOCIETY

Note

12/31/2015

12/31/2014

12/31/2015

12/31/2014

Current investment in new IT systems

5,961

1,730

5,961

1,730

System development costs brought forward

Fixed assets Intangible assets

Total intangible assets

27,633

34,427

25,500

31,420

33,593

36,157

31,461

33,150

378,924

382,888

691

Tangible assets Buildings and land

Construction, extensions, and redevelopment in progress Equipment

Total tangible assets

6,658

6,804

6,198

6,193

385,582

390,383

6,198

6,193

Financial assets Participations in group companies

200

300

Participations in joint venture/associated companies

-3,021

34,826

41,319

54,051

Receivables from group companies Receivables from joint venture/associated companies Other financial assets

Other non-current receivables Total financial assets Deferred tax claims

Total fixed assets

100,387

56,907

26,179

56,907

26,179

4,232

3,706

4,232

3,706

494

58,118

65,205

203,046

185,117

1,157

1,013

1,157

1,013

478,450

492,758

241,861

225,473

187,722

172,600

171,514

151,615

63,840

81,037

Current assets Current receivables Accounts receivable Receivables from group companies Receivables from joint venture/associated companies

10,029

Other receivables

16,124

16,728

14,784

14,075

1,694

1,282

1,159

782

258,853

277,251

236,955

224,677

474,423

467,861

498,281

472,185

Current investments

381,774

313,070

381,774

313,070

Cash and bank balances

100,281

95,101

67,611

67,660

Total current assets

956,478

876,032

947,666

852,915

1,434,928

1,368,790

1,189,527

1,078,389

Tax claims Prepaid expenses and accrued revenue Total current receivables

Total assets

ANNUAL REPORT STIM 2015

BALANCE SHEET CONT. SEKÂ THOUSAND Equity and liabilities

GROUP Note

PARENT SOCIETY

12/31/2015

12/31/2014

12/31/2015

12/31/2014

Other restricted equity

1,226

Total restricted equity

1,232

225,538

-24,171

Equity Restricted equity Contributed capital

Accumulated result/unrestricted equity Accumulated result/unrestricted equity Translation difference

-44

Profit/loss for the year

-25,633

249,709

Total accumulated result/unrestricted equity

199,861

225,538

201,093

226,770

1,237

1,236

Total equity

Provisions Provisions for pensions

2, 20

Total provisions

5,259

4,605

5,259

4,605

5,259

4,605

5,259

4,605

571

Non-current liabilities Non-current liabilities

Total non-current liabilities Current liabilities Accounts payable Distribution liabilities

15,304

8,892

14,397

7,481

1,018,918

907,871

1,007,283

881,753 2,867

Liabilities to group companies

123

Liabilities to joint venture/associated companies

876

444

511

198

19,618

19,372

11,264

6,237

Tax liabilities Other liabilities

173,289

200,266

149,454

174,011

Total current liabilities

Accrued expenses and prepaid revenue

1,228,005

1,136,844

1,183,032

1,072,547

Total equity and liabilities

1,434,928

1,368,790

1,189,527

1,078,389

Pledged assets

Security for provided pension commitments Contingent liabilities

5,259

4,605

5,259

4,605

See note 19

ANNUAL REPORT STIM 2015

CASH FLOW STATEMENT SEKÂ THOUSAND

GROUP Note

PARENT SOCIETY

2015

2014

2015

2014

1,880,382

1,981,317

1,785,013

1,660,978

-1,547,015

-1,434,573

-1,484,979

-1,402,033

-229,442

-412,451

-205,665

-203,288

103,925

134,293

94,369

55,657

Interest received

1,338

3,137

2,110

8,791

Interest paid

-2,314

-459

-2,313

-453

-77

-319

-44

-233

102,872

136,652

94,121

63,762

-11,490

-14,077

-7,967

-4,963

Operating activities Payments from customers Payments to rightsholders

Payments to suppliers and employees Cash flow from operating activities before interest paid and income taxes paid

Income taxes paid Cash flow from operating activities

Investing activities Investments in intangible and tangible assets

8, 10, 11

Investments in tangible assets

10.11

Disposal of tangible assets

10.11

Investments in financial assets Disposal of financial assets Investments in current financial investments Disposal of associated companies

Investments in associated companies

Cash flow from investing activities

272,223

715

-34,593

3,417

-34,594

59,842

4,363

274,179

-68,704

-305,158

-68,704

-305,158

14,054

-1,322

-97,692

-39,232

-94,170

24,615

-22,676

5,180

74,744

-49

65,701

95,101

20,357

67,660

1,959

100,281

95,101

67,611

67,660

Financing activities Loans from credit institutions Cash flow from financing activities

Cash flow for the year

Cash and cash equivalents at beginning of year Cash and cash equivalents at year-end

ANNUAL REPORT STIM 2015

Accounting and valuation policies

ACCOUNTING POLICIES The accounting and valuation policies applied conform to the Swedish Annual Accounts Act and the general recommendations of BFNAR 2012:1 as issued by the Swedish Financial Accounting Standards Council. The applied policies are unchanged compared to the previous year unless otherwise stated below.

CONSOLIDATED ACCOUNTS The consolidated accounts include subsidiaries where the parent company, directly or indirectly, controls more than 50 percent of the votes or otherwise exercises a controlling influence. The consolidated financial statements are prepared in accordance with the acquisition method, whereby the equity of the subsidiaries at acquisition – calculated as the difference between the fair values of assets and liabilities – is eliminated in its entirety As such, consolidated equity includes only that portion of the equity of the subsidiaries that has arisen after acquisition.

ASSOCIATED COMPANY ACCOUNTING Associated companies are those companies in which the Group has a significant but not controlling influence, which in general means holdings encompassing 20 to 50 percent of the votes. Holdings in associated companies are reported in accordance with the equity method. When applying the equity method, the investment is initially valued at acquisition value. The reported value is then increased or decreased by the holding company's share of the associated company's profit or loss. Any dividends that are received reduce the reported value.

JOINT VENTURE COMPANY ACCOUNTING Joint venture companies are those companies in which the Group has a joint controlling influence over operations and a right to the net assets of those operations. Joint venture companies are reported in accordance with the equity method. With the equity method, participations in a company are reported at acquisition value at the acquisition date and are then adjusted to reflect

the Group's share of the change in the joint venture company's net assets. The consolidated income statement includes the Group's participations in the results of joint venture companies. The financial statements for the Parent Society recognize participations in joint venture companies at acquisition value less any impairment losses.

REVENUE RECOGNITION Operating income includes – after the deduction of value added tax – rental revenue throughout the term of the lease and royalties in accordance with the economic implications of the current agreement. Business grants and library levies are requested annually from the Swedish Arts Council and Sweden's Legal, Financial, and Public Procurement Agency respectively. Interest revenue is recognized using the effective return.

DISTRIBUTION The annual revenue from providing rights for public performances is burdened with the society's expenses for this area of operations. The remainder comprises a liability to the society's members and affiliated members who have transferred their rights. Following a decision at the annual general meeting, a maximum of three percent of the remuneration due to the society's members and affiliates may be used for scholarship purposes. Furthermore, following a decision by the annual general meeting and in accordance with special rules, creativity in musical fields that are vulnerable to market forces is supported with special initiatives in such fields. Regarding royalties from foreign organizations that cooperate with the society, such royalty payments are made without the above-mentioned deductions. The amounts to be paid for rights provided via the society are distributed in accordance with the rules established at the annual general meeting held on May 22, 2008 and at the extraordinary general meeting held on June 18, 2008. The Board of Directors determines how these rules are to be applied and continually reviews the system. Regarding changes to the distribution rules, the stipulations of the Articles of Incorporation on changes to said Articles apply.

ANNUAL REPORT STIM 2015

INTANGIBLE AND TANGIBLE ASSETS Intangible assets, such as computer software, are recognized at acquisition cost less deductions for accumulated depreciation according to plan. “Off-the-shelf” software is expensed directly. Costs related to software developed or substantially modified on STIM's behalf is capitalized as an intangible asset if said software is deemed to lead to probable economic benefits that after a year exceed the costs incurred. Development costs brought forward for acquired software are depreciated on a straight-line basis over the estimated service life, although subject to a maximum of 10 years. Depreciation is applied as of the time at which the asset is ready to be placed in service. As such, no depreciation is applied to investments in progress. Tangible assets are reported at acquisition cost less deductions for accumulated depreciation according to plan. Expenditure to improve the performance of assets, above their original level, is added to the carrying value of the asset. Expenses for repairs and maintenance are recognized as costs. Tangible assets are depreciated on a straight-line basis over the estimated service life of the asset. A straight-line method is applied to all categories of tangible and intangible assets.

Financial instruments that can be sold This class includes financial instruments that can be sold and that are not derivatives. Financial instruments in this category are valued at fair value. Loans receivable and accounts receivable Loans receivable and accounts receivable have established payments and are held with no intention of trading. They are included under current assets with the exception of items with a due date more than one year after the balance sheet date, which are classified as non-current assets. Valuation after the acquisition date is at the accumulated acquisition value with the application of the effective interest method, with deductions for any decline in value. Impairment of accounts receivable and loans receivable is reported in the income statement under Other external costs. Loans payable and accounts payable Loans payable and accounts payable are reported after the acquisition date at the accumulated acquisition value with the application of the effective interest method.

The following depreciation periods are applied: Components in buildings Shell, roof, and windows Tenant adaptations Facade Overhead walkways and elevators Passages, locks, and fiber Plumbed facilities and plumbing Building facility

the derivative instrument is part of a hedge transaction. The society has classified endowment insurance linked to pension commitments as financial assets valued at fair value through the income statement.

50 years 5 years 30 years 25 years 15 years 10 years 10 years

Purchases and sales of financial instruments are reported on the transaction date, that is, the date when a binding agreement is entered. All financial instruments that are not valued at fair value are initially valued at acquisition cost, adjusted for transaction costs.

PROVISIONS

In the case of the property Stockholm Krukomakaren 17, 57 percent of the building is held for investment purposes. The property Stettin 7 was sold in 2014.

A provision is reported in the balance sheet when the Group has a present legal or constructive obligation as a result of past events, settlement of the obligation is expected to result in an outflow of resources, and the amount to be settled can be estimated reliably. If the point in time at which settlement is made has a significant effect, the provision is calculated by discounting the expected future cash flow. Discounting is applied at a pre-tax interest rate that reflects current market assessments of the time value of money.

CURRENT ASSETS

CONTINGENT LIABILITIES/GUARANTEE COMMITMENTS

Financial instruments Financial instruments are classified into the following categories: financial assets valued at fair value through the income statement, financial assets that can be sold, loans receivable, and accounts receivable, as well as loans payable and accounts payable. Classification depends on the purpose for which the instrument was acquired.

A contingent liability (guarantee commitment) is reported when there is a possible obligation arising from past events and its presence will be confirmed by one or more uncertain future events or when there is an obligation that has not been reported as a liability or provision due to it not being probable that an outflow of resources will be required.

Other fixed assets System development Plant and machinery Computers

2, 3, 5, and 10 years respectively 5 years 3 years

EMPLOYEE BENEFITS Financial assets valued at fair value through the income statement This class of financial instrument comprises financial assets held for trading. A financial asset is classed in this category if it is acquired with the primary purpose of selling it in the near future. Derivative instruments are always included in this category, except in cases where

The Group's plans for benefits once employment has ended encompass both defined benefit and defined contribution pension plans. With a defined benefit pension plan, the pension is based on final salary and the number of years of membership in the plan. The Group carries

ANNUAL REPORT STIM 2015

the risk of the established benefits being paid. Certain defined benefit pension plans are secured with an insurance plan from Alecta, and this is a defined benefit pension plan encompassing several employers. The company has not had access to such information as necessary to report this plan as a defined benefit pension plan. As such, Swedish ITP pension plans secured with insurance from Alecta are reported as a defined contribution plan. With defined contribution plans, the company pays set premiums to a separate legal entity. Once the premium is paid, the company has no further obligations. The company has pension commitments with values linked to separate endowment insurance policies held by the company. The value of the endowment insurance always covers the obligation to pay pensions, but not the obligation to pay special employer's contributions in conjunction with the pension being disbursed. The company's obligation is limited to the amount for which the endowment insurance was acquired. Benefits to employees such as salary and pension are reported as costs in the period in which the employee conducted the services the benefits cover.

INCOME TAXES Income tax reporting includes current tax and any deferred tax. Deferred tax is calculated in accordance with the balance sheet approach for all significant temporary differences. A temporary difference exists when the book value of an asset or a liability differs from the value for tax purposes. Such a difference can arise, for example, in the event of the appreciation or depreciation of an asset or when applied accounting policies differ between an individual group company's accounts and the consolidated accounts. Deferred tax is calculated using the tax rate that has been decided or announced as of the balance sheet date and that is expected to apply when the deferred tax claim is realized or the deferred tax liability is settled. Deferred tax claims are reported to the extent it is probable that future taxable surpluses will exist against which the temporary differences can be offset.

CASH FLOW STATEMENT The cash flow statement is prepared in accordance with the direct method. The reported cash flow consists only of the transactions that involve incoming or outgoing payments. Cash and cash equivalents comprise cash at bank and cash in hand.

FOREIGN CURRENCY The Group receives a not-inconsiderable part of its revenue in foreign currencies. The amounts are accounted for in Swedish kronor, calculated at the exchange rates prevailing on the date of conversion. Purchases and sales are essentially conducted in the same currency and as such currency exposure is limited. Receivables and liabilities in currencies other than the functional currency are translated using the closing rate on the balance sheet date (unrealized).

LEASING Fixed assets obtained via leasing are classified in accordance with the leasing agreement's economic implications. Items leased via finance leasing are reported as fixed assets and future leasing fees are reported as interest-bearing liabilities. In the case of leased items classified as operating leases, the leasing cost is reported as an operating cost in the income statement. The Group has no significant finance leases. As such, all lease agreements are reported as operating leases, which means that the leasing fees, including additional initial charges but excluding costs for services such as insurance and maintenance, are reported as costs on a straight-line basis throughout the term of the lease.

ANNUAL REPORT STIM 2015

NOTE 1. OPERATING INCOME SEK THOUSAND

GROUP

Performance licenses Performance of Swedish and foreign music in Sweden, including STIM's direct licensing in Europe of which

Online and new media

PARENT SOCIETY

2015

2014

2015

2014

1,687,896

1,539,993

1,639,342

1,486,234

1,015,461

957,418

966,907

903,659

393,297

322,541

344,743

268,782

Radio

29,594

28,298

29,594

28,298

Public service radio

52,693

51,825

52,693

51,825

Public service TV

76,615

62,560

76,615

62,560

Swedish TV

141,987

179,574

141,987

179,574

Foreign TV

17,167

17,090

17,167

17,090

Copyswede – TV

33,368

16,489

33,368

16,489

Movie theaters

17,999

13,869

17,999

13,869

Concerts and festivals

67,414

72,762

67,414

72,762

Stores and sales rooms

43,582

44,003

43,582

44,003

Restaurants

29,758

28,782

29,758

28,782

Night clubs, dance, bar DJs

24,339

27,442

24,339

27,442

Hotels

25,671

25,578

25,671

25,578

Sports and fitness

21,972

22,787

21,972

22,787

Municipal, county council, and care

16,789

18,114

16,789

18,114

9,257

11,756

9,257

11,756

Music at work Theater, variety, and cabaret

4,912

4,579

4,912

4,579

Church concerts and musical church services

4,633

4,294

4,633

4,294

Transport

2,785

3,474

2,785

3,474

Other

1,628

1,601

1,628

1,601

Performance of Swedish music abroad and foreign music sub-published by STIM-affiliated publishers for entire Nordic region

651,816

537,710

651,816

537,710

Performance of Swedish and foreign music abroad distributed by STIM on behalf of others

20,620

44,865

20,620

44,865

Mechanical reproduction licenses

135,637

161,874

135,637

161,874

29,848

Relates to the right to record, reproduce, and sell recordings. See also Note 17. Licensing was administered by NCB, Nordisk Copyright Bureau, of Copenhagen for the Nordic territory. 63,180

313,542

36,029

STIM/Svensk Musik, sheet music hire and recorded media sales

Other revenue

1,476

2,276

STIM/Svensk Musik government grant/subsidy

1,752

1,952

Private copying levy

8,352

11,120

8,352

11,120

Library levy

2,500

2,500 949

Administrative contribution from NCB Rental revenue Profit from sale of buildings and land Other Total operating income

977

949

977

14,586

13,572

262,744

33,537

18,429

24,199

15,280

1,886,713

2,015,409

1,811,008

1,677,956

ANNUAL REPORT STIM 2015

NOTE 2. OPERATING COSTS SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

2014

External costs 86,584

78,996

78,464

86,951

Rental costs

Office and administration

673

853

10,135

8,686

IT operation

5,126

6,736

4,390

8,385

System development and maintenance Development costs brought forward Property costs

3,566

1,739

-5,667

-5,142

-5,592

-4,015

9,285

7,829

96,001

92,837

87,397

101,746

Salaries and other remuneration

64,655

70,854

59,858

55,407

Social security expenses

19,634

21,183

18,118

16,933

Total external costs Personnel costs

9,892

10,586

9,319

8,700

Other personnel costs

Pension costs

732

2,208

2,918

2,039

Total personnel costs

94,913

104,831

90,213

83,079

Of which Board of Directors, CEO, and Deputy CEOs 5,554

10,933

3,714

9,204

Social security expenses

Salaries and other remuneration

907

3,357

329

2,813

Pension costs

967

1,039

925

717

1,335

1,833

1,195

1,693

419

576

375

532

Of which Board of Directors Salaries and other remuneration Social security expenses Salaries and social security expenses totaling SEK 629 (564) thousand for an employee within national funds are presented in Note 7 (Distribution). Depreciation System development costs brought forward

8,230

9,811

7,281

8,713

Equipment

2,556

3,734

2,370

3,315

Buildings Total depreciation/amortization Total operating costs

The drop in payroll overhead for the board, chief executive officer, and deputy chief executives compared to the previous year is attributable to the severance pay disbursed to STIM's chief executive officer who left STIM in 2014 and the operations of the subsidiary CEE Services AB being transferred to STIM. Gross remuneration including vacation pay and benefits to STIM's chief executive officer amounted to SEK 2.5 million in 2015. Defined contribution plans Certain pension plans are secured with an insurance plan from Alecta. This is a defined benefit pension plan encompassing several employers. The company has not had access to such information as necessary to report this plan as a defined benefit pension plan. As such, Swedish ITP pension plans secured with insurance from Alecta are reported as a defined contribution plan.

7,378

8,375

18,164

21,920

9,652

12,028

209,078

219,588

187,261

196,853

Pension commitments secured with endowment insurance The outcome of certain other pension plans is linked to the development of individually signed endowment insurance policies. The value of the endowment insurance always covers the obligation to pay pensions, but not the obligation to pay special employer's contributions in conjunction with the pension being disbursed. A surplus arises when value growth is better than expected and this surplus falls to the policyholder. The value of the surplus fund as per December 31, 2015 was SEK 50 (44) thousand. The endowment insurance has been pledged as security. No part of the year's provision is covered by the Swedish Pension Obligations Vesting Act. The market value of the endowment insurance is established through the annual statement issued by the concerned bank or equivalent. The value of the endowment insurance as per December 31, 2015 was SEK 4,232 (3,706) thousand.

ANNUAL REPORT STIM 2015

NOTE 3. INTRAGROUP TRANSACTIONS Of the Parent Society's total operating income for 2015, 2.8 (4.3) percent is attributable to sales to other group companies. Of the Parent Society's total operating costs for 2015, 9.6 (21.8) percent is attributable to purchases from other group companies.

In addition to the above, transactions with associated companies also took place during the year. Of the Parent Society's total operating income for 2015, 0.02 (0.08) percent is attributable to sales to associated companies. Of the Parent Society's total operating costs for 2015, 11.39 (9.65) percent is attributable to purchases from associated companies.

NOTE 4. AVERAGE NUMBER OF EMPLOYEES Average number of employees

2015

2014

Average number of employees

Of which men

103

50%

Parent Society Subsidiaries Group

Board members and senior executives

Average number of employees Of which men 99

49%

72%

59%

111

52%

128

51%

2015

2014

Number on balance Of which men sheet date

Parent Society Board members, including employee representatives

70%

Deputy board members, including employee representatives

43%

Chief executive and other senior executives

57%

38%

Group Board members, including employee representatives

69%

73%

Deputy board members, including employee representatives

43%

38%

Chief executives, deputy chief executives, and other senior executives

57%

47%

NOTE 5. TERMS OF EMPLOYMENT FOR CHIEF EXECUTIVE OFFICER Parent Society Agreement has been reached with the Chief Executive Officer on severance pay equal to 18 months' salary during the period August 1, 2015 to July 31, 2016 and, thereafter, 12 months' salary if notice is

served by STIM for reasons other than gross negligence on the part of the Chief Executive Officer under Swedish law. The mutual period of notice is six months.

ANNUAL REPORT STIM 2015

NOTE 6. AUDITORS' FEES SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

2014

516

345

369

250

KPMG AB Auditing Tax Other non-auditing services

210

Auditors appointed by STIM Auditing

Total auditors' fees

766

467

619

372

NOTE 7. DISTRIBUTION SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

2014

Performance in Sweden

845,526

780,491

804,494

736,356

Performance abroad

651,816

537,710

651,816

537,710

17,561

38,375

17,561

38,375

1,514,903

1,356,576

1,473,871

1,312,441

Distribution – of mechanical reproduction licenses

135,637

161,874

135,637

161,874

Distribution – of national funds*

26,908

24,313

33,850

30,692

1,677,448

1,542,763

1,643,359

1,505,006

Distribution – performance licenses

Performance abroad distributed by STIM on behalf of others Total performance distribution

Total distribution

* National funds include salary and social security expenses for one employee totaling SEK 629 (596) thousand.

NOTE 8. CURRENT INVESTMENT IN NEW IT SYSTEMS SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

2014

Opening acquisition value

1,730

5,846

1,730

5,758

Acquisitions during the year

5,592

4,156

5,592

3,029

Reclassifications

-1,361

-8,272

-1,361

-7,057

Closing acquisition value

5,961

1,730

5,961

1,730

ANNUAL REPORT STIM 2015

NOTE 9. SYSTEM DEVELOPMENT COSTS BROUGHT FORWARD SEK THOUSAND

Opening acquisition value Acquisitions during the year

GROUP

PARENT SOCIETY

2015

2014

2015

2014

133,407

126,130

129,211

124,318

1,168

1,361

8,272

1,361

7,057

-2,164

Closing accumulated acquisition value

134,843

133,407

130,572

129,211

Opening depreciation/amortization

-98,980

-90,064

-97,791

-89,973

-8,230

-9,811

-7,281

-8,713

896

-107,210

-98,980

-105,072

-97,791

27,633

34,427

25,500

31,420

Reclassification Sales and disposals

Depreciation/amortization during the year Sales and disposals Closing accumulated depreciation/amortization Closing residual value

NOTE 10. BUILDINGS AND LAND SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

2014

279,702

365,116

3,413

6,768

-92,182

Closing accumulated acquisition value

283,115

279,702

Opening depreciation/amortization

-25,959

-77,321

-7,378

-7,900

59,262

Closing accumulated depreciation/amortization

-33,337

-25,959

Closing residual value, buildings

249,779

253,743

129,145

140,446

-11,301

Closing acquisition value, land

129,145

Closing residual value, buildings and land

378,924

382,888

Buildings Opening acquisition value Acquisitions during the year Sales and disposals

Depreciation/amortization during the year Sales and disposals

Land Opening acquisition value Sales and disposals

In the case of the property Stockholm Krukomakaren 17, 60 percent of the building is held for investment purposes. Stim Fastighets AB was sold in 2014.

ANNUAL REPORT STIM 2015

NOTE 11. EQUIPMENT GROUP

SEK THOUSAND

Opening acquisition value Acquisitions during the year

PARENT SOCIETY

2015

2014

2015

2014

25,993

30,093

24,686

24,449

2,615

3,252

2,580

3,202

Sales and disposals

-13,371

-7,352

-13,278

-2,965

Closing accumulated acquisition value

15,237

25,993

13,988

24,686

Opening depreciation/amortization

-19,189

-20,233

-18,492

-17,427

Depreciation/amortization during the year

-2,556

-3,726

-2,370

-3,315

Sales and disposals

13,166

4,770

13,073

2,250

Closing accumulated depreciation/amortization

-8,580

-19,189

-7,790

-18,492

6,658

6,804

6,198

6,193

Closing residual value

NOTE 12. PARTICIPATIONS IN GROUP COMPANIES SEK THOUSAND Subsidiaries

PARENT SOCIETY Corporate identity number

Reg'd office

Share of equity, %

Number of shares, thousands

Carrying value 12/31/2015

Carrying value 12/31/2014

CEE Services AB

556723-5923

Stockholm

100

Svensk Musik Swedmic AB

556754-1338

Stockholm

100

Stimdirekt AB

556884-6371

Stockholm

100

Stim Fastighets Holding AB

556842-4880

Stockholm

100

200

300

Total participations in group companies Subsidiaries, indirectly owned Stimhuset KB, part ownership

969696-4361

Stockholm

As of December 29, 2015, CEE Services AB was merged with Stimdirekt AB.

ANNUAL REPORT STIM 2015

NOTE 13. PARTICIPATIONS IN JOINT VENTURE AND ASSOCIATED COMPANIES SEK THOUSAND

PARENT SOCIETY Corporate identity number

Reg'd office

Share of equity and votes, %

International Copyright Enterprise Services AB

556723-5907

Stockholm

International Copyright Enterprise Services Ltd

08983089

London

Joint venture companies

Number of shares, thousands

Carrying value 12/31/2015

Carrying value 12/31/2014

33,334

39,997

54,050

100,000

1,322

41,319

54,050

Total participations in joint venture and associated companies

In 2015, STIM, together with PRS for Music Ltd (PRS) and Gesellschaft für musikalische aufführungs- und mechanische vervielfältigungsrechte (GEMA), founded a UK-based company, International  Copyright Enterprise Services Ltd.

During the year, STIM sold one third of the holdings in International Copyrights Enterprise Services AB and now owns one third, as do both PRS and GEMA. ICE International Copyright Enterprise Services AB established in 2014 a wholly owned German subsidiary, ICE International Copyright Enterprise Germany GmbH (HRB162426B).

SEK THOUSAND Opening balance Translation difference Acquisition of participations

GROUP Carrying value 12/31/2015

Carrying value 12/31/2014

34,826

39,321

-44

1,322

Disposal of participations

-14,053

Participations in results of joint venture and associated companies

-25,073

-4,495

Closing balance

-3,021

34,826

ANNUAL REPORT STIM 2015

NOTE 14. PREPAID EXPENSES AND ACCRUED REVENUE SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

2014

217,773

242,039

197,144

192,345

Accrued revenue, private copying levy

17,872

18,217

17,872

18,217

Prepaid expenses

6,419

6,859

5,150

5,490

16,789

10,135

16,789

8,626

258,853

277,251

236,955

224,677

Accrued performance revenue

Other Total prepaid expenses and accrued revenue

NOTE 15. CHANGES IN EQUITY SEK THOUSAND

GROUP 2015

PARENT SOCIETY 2014

2015

2014

Restricted equity Contributed capital

Other restricted equity

1,226

Total restricted equity

1,232

225,538

-24,171

-44

Profit/loss for the year

-25,633

249,709

Total unrestricted equity

199,861

225,538

Total equity

201,093

226,770

1,237

1,236

Unrestricted equity Accumulated deficit/unrestricted equity Translation difference

NOTE 16. NON-CURRENT LIABILITIES SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

Deposit, tenants

571

2014 -

Total non-current liabilities

571

ANNUAL REPORT STIM 2015

NOTE 17. DISTRIBUTION LIABILITIES SEK THOUSAND

GROUP 2015

PARENT SOCIETY 2014

2015

2014

Distribution – of performance revenue, Sweden Undistributed revenue from previous years

692,989

634,923

666,872

620,401

Payment to STIM-affiliated rightsholders

-309,484

-249,679

-293,814

-235,157

Payment to foreign collecting societies

-206,323

-132,276

-195,876

-132,276

177,182

252,969

177,182

252,969

Outstanding payments of previous years' revenue Revenue for the year for distribution

870,609

818,865

822,056

774,730

Payment to STIM-affiliated rightsholders

-187,506

-248,947

-165,355

-230,929

Payment to foreign collecting societies

-125,004

-129,898

-110,237

-129,898

Outstanding payments from revenue for the year

558,099

440,020

546,464

413,903

735,281

692,989

723,646

666,872

Outstanding payments at year-end

Distribution of performance revenue, foreign Undistributed revenue from previous years

207,655

181,575

207,655

181,575

Payment to STIM-affiliated rightsholders

-108,823

-80,032

-108,823

-80,032

Outstanding payments of previous years' revenue

98,832

101,543

98,832

101,543

Revenue for the year for distribution

651,816

537,710

651,816

537,710

Payment to STIM-affiliated rightsholders

-466,922

-431,598

-466,922

-431,598

Outstanding payments from revenue for the year

184,894

106,112

184,894

106,112

Outstanding payments at year-end

283,725

207,655

283,725

207,655

Undistributed revenue from previous years

7,227

7,496

7,227

7,496

Payment to STIM-affiliated rightsholders

-7,227

-7,496

-7,227

-7,496

Distribution – of mechanical reproduction revenue

Outstanding payments of previous years' revenue Revenue for the year for distribution

135,637

161,874

135,637

161,874

Payment to STIM-affiliated rightsholders

-135,726

-154,647

-135,726

-154,647

Outstanding payments from revenue for the year

-89

7,227

-89

7,227

Outstanding payments at year-end

-89

7,227

-89

7,227

1,018,918

907,871

1,007,283

881,753

Total distribution liability at year-end

ANNUAL REPORT STIM 2015

NOTE 18. ACCRUED EXPENSES AND PREPAID REVENUE SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

2014

136,220

161,320

136,220

161,320

Prepaid rental revenue

6,872

7,005

Accrued vacation pay liability

4,358

3,557

4,201

3,363 2,570

Prepaid performance revenue

Accrued social security expenses and payroll tax Other accrued expenses Total accrued expenses and prepaid revenue

3,522

3,120

3,041

22,316

25,264

5,992

6,757

173,289

200,266

149,454

174,011

NOTE 19. CONTINGENT LIABILITIES AND PLEDGED ASSETS Contingent liabilities As of May 24, 2010, STIM agreed to stand surety for ICE Services AB's rental agreement with Förvaltningsbolaget Alvikshus HB. In addition, endowment insurance policies held by the parent company have been pledged as security for provided pension commitments. See Note 2. The fair value of the endowment insurance including payroll tax, as per December 31, 2015, amounted to SEK 5,259 (4,605) thousand.

STIM has, together with the other owners, financed investments in the associated companies ICE AB and ICE Ltd in order to establish effective cooperation with PRS for Music and GEMA. Further investments remain that STIM is contractually obligated to finance. This obligation cannot be quantified as the amount has not been established in the agreement.

NOTE 20. TAXES SEK THOUSAND

GROUP

PARENT SOCIETY

2015

2014

2015

2014

Current tax for current year

-76

-245

-44

-233

Current tax attributable to previous years

157

-49

157

Change in deferred tax for the year

144

223

144

223

Total tax as per the income statement

224

-71

257

-25,858

252,527

-257

-15

5,689

-55,556

Tax effect of costs that are not tax deductible

-248

-817

-246

-801

Tax effect of revenue that is not taxable*

290

56,725

290

334

-5,663

-828

453

Tax attributable to previous years

157

-49

157

Reported tax expense

224

-71

257

Tax on profit for the year

The difference between the reported tax expense and the tax expense based on the current tax rate is explained by: Profit/loss before tax Tax based on the current tax rate

Increase in deficit deductions without corresponding activation Deferred tax Tax effect due to deduction of foreign tax

* The subsidiary Stim Fastighets AB was sold in 2014.

Temporary differences Temporary differences arise in those cases where the carrying values and values for tax purposes of assets and liabilities differ.

Pension commitments As per December 31, 2015, the Group's temporary difference with respect to pension commitments amounted to SEK 5,259 (4,605) thousand, corresponding to a deferred tax claim of SEK 1,157 (1,013) thousand.

Deferred income taxes

2015

2014

2015

2014

Other provisions for pensions

1,157

1,013

1,157

1,013

Total deferred tax

1,157

1,013

1,157

1,013

ANNUAL REPORT STIM 2015

The income statements and balance sheets will be presented to the Society's Annual General Meeting to be held on May 25, 2016 for adoption. Stockholm, Sweden, April 20, 2016

KJELL-ÅKE HAMRÉN CHAIR OF THE BOARD

KARSTEN DYHRBERG NIELSEN CHIEF EXECUTIVE OFFICER

ALFONS KARABUDA

MARTIN Q. LARSSON

MONICA EKMARK

LEIF PAGROTSKY

DOUGLAS CARR

MATTIAS SVENSSON SANDELL

ERIC HASSELQVIST

KRISTINA RENNERSTEDT

EVA BOTMAR

Our auditors' report was submitted on April 25, 2016

ANDERS MALMEBY CERTIFIED PUBLIC ACCOUNTANT KPMG AB

KETTIL SKARBY AUDITOR APPOINTED BY THE ANNUAL GENERAL MEETING

ANNUAL REPORT STIM 2015

Auditors' Report

To the Annual General Meeting of Svenska Tonsättares Internationella Musikbyrå (STIM) u.p.a., corporate identity number 702002-3524

REPORT ON THE ANNUAL ACCOUNTS AND CONSOLIDATED ACCOUNTS We have audited the annual accounts and consolidated accounts of Svenska Tonsättares Internationella Musikbyrå (STIM) u.p.a. for the year 2015. The annual accounts and consolidated accounts of the society are included in the printed version of this document on pages 24-44. Responsibilities of the Board of Directors and the Chief Executive Office for the annual accounts and consolidated accounts The Board of Directors and the Chief Executive Officer are responsible for the preparation and fair presentation of these annual accounts and consolidated accounts in accordance with the Swedish Annual Accounts Act, and for such internal control as the Board of Directors and the Chief Executive Officer determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error. Auditor's responsibility Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with generally accepted auditing standards. For a certified public accountant, this entails conducting the audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal

control relevant to the society's preparation and fair presentation of the annual accounts and consolidated accounts 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 society's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the Chief Executive Officer, as well as evaluating the overall presentation of the annual accounts and consolidated accounts. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the annual accounts and consolidated accounts have been prepared in accordance with the Swedish Annual Accounts Act and present fairly, in all material respects, the financial position of the Parent Society and the Group as of Thursday, December 31, 2015 and of their financial performance and cash flows for the year then ended in accordance with the Swedish Annual Accounts Act. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the annual general meeting of the society adopts the income statement and balance sheet for the Parent Society and the Group.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriation of the society's profit or loss and the administration of the Board of Directors and the Chief Executive Officer of Svenska Tonsättares Internationella Musikbyrå (STIM) u.p.a. for the year 2015.

ANNUAL REPORT STIM 2015

Responsibilities of the Board of Directors and the Chief Executive Officer The Board of Directors is responsible for the proposal for appropriation of the society's profit or loss, and the Board of Directors and the ChiefÂ Executive Officer are responsible for administration under the Swedish Economic Associations Act. Auditor's responsibility Our responsibility is to express an opinion with reasonable assurance on the proposed appropriation of the society's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden. As a basis for our opinion on the Board of Directors'Â proposed appropriation of the society's profit or loss, we examined whether the proposal is in accordance with the Swedish Economic Associations Act. As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts,

we examined significant decisions, actions taken, and circumstances of the society in order to determine whether any member of the Board of Directors or the Chief Executive Officer is liable to the society. We also examined whether any member of the Board of Directors or the Chief Executive Officer has, in any other way, acted in contravention of the Swedish Companies Act, the Swedish Annual Accounts Act, or the Articles of Incorporation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions We recommend to the Society's Annual General Meeting that the profit be dealt with in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the Chief Executive Officer be discharged from liability for the financial year.

STOCKHOLM, SWEDEN, APRIL 25, 2016

ANDERS MALMEBY CERTIFIED PUBLIC ACCOUNTANT KPMG AB

KETTIL SKARBY AUDITOR APPOINTED BY THE ANNUAL GENERAL MEETING

Would you like to know more about STIM? STIM – THE YEAR IN RETROSPECT As a complement to the annual report, at stim.se you can read the digital summary STIM – the year in retrospect, featuring key facts and in-depth interviews. www.stim2015.stim.se

STIM.SE At stim.se, you can join STIM or acquire a license for using music. Also on our website you will find web services for members, music publishers, and customers together with more information and news about STIM's operations. www.stim.se

STIM'S NEWSROOM AT MYNEWSDESK If you are a journalist, you can find press releases, images, and facts in STIM's newsroom at Mynewsdesk. You can also subscribe to information from STIM. www.mynewsdesk.com/se/stim

STIM IN SOCIAL MEDIA Follow STIM on Facebook and Twitter: facebook.com/stimsweden twitter.com/stim_sweden

CONTACT STIM Visit us at Stimhuset at Hornsgatan 103 in Stockholm! Mailing address: Box 170 92 SE-104 62 Stockholm SWEDEN E-mail: stim@stim.se Telephone number to reception: +46 8 783 88 00

SVENSKA TONSÄTTARES INTERNATIONELLA MUSIKBYRÅ STIM is a copyright organization with more than 80,000 affiliated music creators and music publishers in Sweden and abroad. We are a non-profit incorporated society and represent songwriters, composers, authors, and music publishers. STIM administers rights to music and lyrics on their behalf. Our mandate is to ensure that the authors receive fair remuneration for their work. We achieve this by linking together those who write music with the companies and organizations that make it available to everyone who listens. Through its international network, STIM also manages rights to the worldwide repertoire of music. Production and layout: STIM Printers: Norra Skånes offset. Compliant with ISO 14001 and Nordic Swan. Photo: Johan Olsson, Adina Forsberg, Musikförläggarna