PPL's Annual General Meeting 2016 took place in London today. Here is CEO Peter Leathem's speech in full:
Good morning everyone. You have been hearing from the various presentations today that PPL continues to go from strength to strength. Our 5% revenue growth in 2015 is the latest in a series of solid performances. As Chris Barton mentioned earlier in his financial presentation, PPL has grown its total revenue by 28% in the last 5 years during what has been a tough time for the UK economy, with the word “austerity” never far from the headlines.
Each year it gets harder to keep improving what we do, both in terms of growing our revenue streams and improving our customer service to members. But that is our key focus. And we are not finished yet!
I have a very experienced and able senior management team who understand PPL’s business extremely well, and who listen carefully to how you, the members, would like us to develop the business further. The company could not have achieved the results that we have to date without such an able team in place, and they will certainly play a crucial role in delivering continued improvement and growth in the future.
In my four and half years as CEO, I have placed a particular emphasis on the PPL team, how it is structured, what is expected of everyone, how people perform, how we develop them and so on. I am very pleased with the results of this work to date, and I would like to thank them for their dedication, their hard work and their support in delivering this set of results. I am very proud of my team and everything they have achieved for you, our members, over the past year.
Turning to 2016, as well as seeking to grow revenue further and maintaining a high level of customer service to our licensees, we intend to continue to develop our service offering to our members. This is what we did to good effect in 2015, as touched on by Christine Geissmar in her presentation and it is something that we will continue throughout 2016 and beyond.
This will be achieved by measures such as further enhancing the quality of the data that we hold about recordings, who owns them and who performed on them, and further enhancing the IT systems we operate in order to make it increasingly easy for you to interact with us. We are mindful of the ways in which our members’ needs are evolving, against the backdrop of how important our collections are for you and we will respond appropriately.
The progress that we are making on customer service for our licensees and members can be seen in the feedback that we receive from licensees and members but also from independent sources. I am very proud of PPL’s Member Services team reaching the finals of both the UK Customer Satisfaction Awards and the UK Customer Experience Awards. For the second year running, PPL was also a finalist in the Employee Engagement Awards, and I was delighted that this time we went on to win our category, for our employee benefits review. In relation to our marketing activities, we also won the award for Best Business-To-Business Campaign at the Drum Search Awards 2015, for our online advertising to promote the need for a music licence. My congratulations to all those staff involved in all of these achievements.
A key theme of this year’s Annual Review, and today’s AGM, is collaboration. We have a very open mind as to how we go forward at PPL. As well as constantly seeking to refine how our staff work on your behalf, we are always considering other ways of working so as to get the right mix of service and cost effectiveness, be that outsourcing to other commercial companies or entering into collaborative projects with other Collective Management Organisations (known as CMOs).
We have, for some time, outsourced various operational functions to a range of companies across the UK where this makes good commercial sense. For example, we have specialist companies assisting us with manual matching of licensee playlists to our recordings database where the recording has not auto-matched for some reason. We also have partners who contact new businesses on our behalf to make sure a public performance licence is in place if required, and contacting businesses that are being “forgetful” about actually paying for their licence! We judge performance of our outsource partners against the performance of our own teams and against other commercial service providers. This has worked very well for PPL and ultimately you as the members.
I am delighted that we are now supplementing PPL’s operations with some important collaborations with other CMOs. Here in the UK, the joint venture that we are planning with PRS for Music (who, as many of you will know, license the use of musical compositions and lyrics) is a really good example of sensible and logical collaboration with another CMO. While PPL has successfully grown its public performance collections by over 60% in the last 5 years, entering into a joint venture with PRS makes absolute sense for the future. We both go to the same business premises across the UK to license them for the same use of music but merely for different rights in that music. This is really going to help to simplify music licensing for many businesses across the UK and provide licensees with efficiencies in only having to deal with one company for all of their public performance music licensing.
As it becomes harder and harder for us to grow the customer base it is pretty clear that seeking to do that together with PRS makes good commercial sense, as well as allowing us to manage an already large set of existing customer on a more cost effective basis. It is going to be a costly and complex project to create the Joint Venture but we believe that over time it will deliver significant benefits to both licensees and Members.
I would like to emphasis that PPL and PRS for Music will continue as separate companies based in London. We are both carving out of our companies the work that we conduct in relation to public performance licensing and putting that work together in a new 50-50 owned Joint Venture that will be located outside of London in a location that has yet to be chosen.
For the public performance licensing team that has produced such outstanding results for you over recent years this is clearly a significant development that generates a lot of uncertainty for them but it is something that we are seeking to manage with the team as best as we can in the circumstances with very clear information each time we make further decisions about the Joint Venture. Deciding upon the location for the Joint Venture will be an important next step for them. In the meantime, the public performance licensing team has continued to produce excellent results on your behalf, which is very much to their credit when there is current uncertainty as to their future, and I would very much like to thank them for that.
We are now well into the process of building and creating the joint venture company and we plan to launch in 2017. Thus far PPL and PRS have worked really well on the project, and I would like to say a particular thank you to Robert Ashcroft, Chief Executive at PRS and especially to Paul Clements, PRS Commercial Director, who has been leading this project for them and who has been a particularly effective person for me to work with on the Joint Venture, together with our respective teams.
In fact the work has gone so well that Robert and I have already been discussing what more PPL and PRS can do together, for the benefit of our respective licensees and members. The public performance joint venture is a considerable undertaking, but we are also conducting other joint projects together. To give just one example we have been jointly conducting some initial trials of audio recognition (or digital fingerprint) technology to evaluate this additional method of identifying the music played in venues such as nightclubs. I am sure that further projects between our two companies will follow.
On the international front we have been working closely with dozens of overseas CMOs to develop the way in which data and money are exchanged. While PPL has already become the market leader for International collections for record companies and performers, members would still benefit significantly from more efficiency and greater accuracy across the global community of CMOs if that can be achieved. That is why it is such a key priority for us - particularly at a time when the global neighbouring rights market continues to grow.
IFPI recently reported a 4.4% growth in that market, to US $2.1bn. With a 17.1% share of international sales, UK record companies and performers continue to punch above their weight on the global stage. It is vital that we support this incredible success by diligently working with CMOs around the world to improve how the international collections market operates.
The largest international project at the moment for PPL is known as VRDB2, which stands for “Virtual Recording Database”. 40 CMOs involved in performer neighbouring rights collections and distributions are participating in this project, which involves building some jointly owned IT systems and a new set of rules for sharing performer and recording data as part of the International collection process that takes place today. The benefits of the new IT systems and processes will most likely be seen from 2018 onwards but will be a significant step forward in the efficiency and accuracy of global exchanges of neighbouring rights revenue. It is for this reason that PPL is playing a lead role in the VRDB2 project.
At the same time PPL will also be exploring other collaboration opportunities with overseas CMOs where it is sensible to do so. Thus far we have been providing back office solutions for a few of them. However, it will also be a question of how much we can do at one time as we are already working away on many fronts.
I would like to conclude by saying how delighted I am that John Smith is now the new PPL Chairman. John has very smoothly taken up his new role and has made a very positive impact. He and I already had an excellent relationship after many years of working together and I very much look forward to developing our partnership in the years ahead. John brings with him a tremendous amount of experience and he is going to be a real asset to PPL.
I would also like to thank the members of the PPL Board, the Performer Board and our various committees for their continued insight, support and governance.
So, in summary: PPL has a strong management team in place and that team is very well positioned to pursue the whole range of exciting ventures that we have touched on today.
The goal is to deliver an even better service to our licensees and members moving forward.
It is an ambitious and challenging agenda but one in which we are confident that we will be successful, thereby continuing to deliver significantly increased value to all our licensees and members.
Thank you for listening.