Hipgnosis Songs Fund - Interim Results

11 December 2019 - Press release

Hipgnosis Songs Fund Limited (“Hipgnosis” or the “Company”)

Interim Results for the six months ended 30 September 2019 ("H1")

The Board of Hipgnosis Songs Fund Limited and its Investment Adviser, The Family (Music) Limited, are pleased to announce the Company's interim results for the six months ended 30 September 2019.

Operational Highlights

• As at 30 September 2019 the Company had invested approximately £319.4 million through the acquisition of 27 Catalogues on a blended acquisition multiple of 12.84x historical annual net income, resulting in interests in 7,475 Songs
• 1,061 Songs have held Number 1 positions in global charts
• 4,027 Songs have help Top 10 positions in global charts
• 15 Songs have won Grammy Awards
• During the period £192.6 million of gross equity capital was raised through secondary placings of Ordinary Shares
• Post period end £231.0 million of gross equity capital was raised through our first issue of C Shares
• In September, the Company transferred its entire issued share capital to the Premium Listing Segment of the Official List of the FCA and to the London Stock Exchange’s Premium Segment of the Main Market
• Since the period end the Company has invested a further £186.1 million through the acquisition of 15 Catalogues taking the total portfolio to 42 Catalogues, comprising 11,225 Songs, with a blended acquisition multiple of 12.99x historical annual net income
• Our Investment Adviser, The Family (Music) Limited, is currently in advanced stage discussions on an investment pipeline of over £1 billion

Financial Highlights

• Operative NAV increased by 5.0% to 108.46p (31 March 2019: 103.27p)
• Fair value of Catalogues, as determined by the independent valuer, increased to £344.6 million representing
• A fair value increase of £16.6 million (5.0%) since 31 March 2019
• A fair value increase of £25.4 million (7.9%) on acquisition cost, of which £15.6 million has been driven by like-for-like valuation increases excluding the impact of changes to USD:GBP exchange rates 
• Net revenue from the portfolio increased to £22.6 million which was ahead of management expectations
• Adjusted¹ EPS increased to 3.55 pence per Ordinary Share and fully covered dividends declared in respect of the period
• At 30 September 2019, total dividends paid since launch on 11 July 2018 is 3.5p per Ordinary share representing a Total NAV Return of 11.96%
• Dividends of 2.5p paid during the period representing a Total NAV Return of 7.45% for the 6 month period
• Hipgnosis remains on track to achieve target dividend² of 5 pence per Ordinary Share for the full financial year
• Since 30 September, a second interim dividend of 1.25 pence per Ordinary Share has been declared and paid

Portfolio Highlights

• Hipgnosis co-own five of the Billboard Magazine’s recently announced "Top 10 Songs of the Decade": 
• Number 1 – ‘Uptown Funk’ by Mark Ronson featuring Bruno Mars which was Number 1 in 19 countries and topped the Billboard Hot 100 for 14 weeks, is certified 11x platinum in the US and has been streamed over 1.1 billion times on Spotify alone.
• Number 3 – ‘Shape of You’ by Ed Sheeran which was the best performing song of 2017 and was announced as the most streamed song of the decade after becoming the first song to reach 2 billion streams. ‘Shape of You’ topped the singles charts in 34 countries including the US where it remained Number 1 for a record equalling 16 consecutive weeks and is certified diamond in 5 countries including in the US.
• Number 4 – ‘Closer’ by The Chainsmokers featuring Halsey which reached Number 1 in over 10 countries and topped the Billboard Hot 100 for 12 consecutive weeks. It also became only the second song in the history of the Billboard Hot 100 to spend 32 weeks in the Top 10.
• Number 5 – ‘Girls Like You’ by Maroon 5 featuring Cardi B which topped the charts in 17 countries including spending 7 consecutive weeks at the top of the Billboard Hot 100.
• Number 9 – ‘Despacito’ by Luis Fonsi and Daddy Yankee featuring Justin Bieber which topped the Billboard Hot 100 for a record equalling 16 consecutive weeks and became the first Latin song to be certified diamond in the US.
• ‘These Days’ co-written by Jamie Scott received the Ivor Novello award for ‘Most Performed Work’.
• At the 2019 Billboard Awards:
• The Chainsmokers took home the “Top Dance/Electronic Album” for their album 'Sick Boy' and “Top Dance/Electronic Artist”.
• Panic! At the Disco were awarded “Top Rock Song” for ‘High Hopes’ and “Top Rock Album” for their album 'Pray for the Wicked', which Sam Hollander wrote nine songs on.
• 'Girls Like You' by Maroon 5 featuring Cardi B, which was co-written by Starrah, won “Top Hot 100 Song”, “Top Selling Song”, “Top Radio Song” and “Top Collaboration”.
• At time of writing, 'High Hopes', co-written by Sam Hollander, has spent 75 weeks in the Billboard Hot Rock Songs Chart, with 41 of those being at Number 1. It is also arguably the most synced song of 2019.
• Nile Rodgers curated ‘Meltdown 2019’ where he performed songs co-written with Bernard Edwards as Chic. David A. Stewart also launched his live show “The Eurythmics Songbook” at Meltdown 2019 to a sold out audience.
• Jason Aldean earned his 23rd career and fourth consecutive radio chart topper with ‘Rearview Town’ off his Number 1 album ‘Rearview Town’ which was produced by Michael Knox. His new album ‘9’, which was included in the Michael Knox deal, is currently the Number 1 album on the Billboard sales chart and Number 2 on the Billboard 200 which combines sales and streaming. In addition to the producer royalties it includes four songs we co-own written by Jaron Boyer.
• In November, Journey and David A. Stewart were announced as nominees for the 2020 Songwriters Hall of Fame.
• Nile Rodgers & Chic had an incredibly successful summer tour of the UK and Europe and now continue to tour the US with Cher performing numerous hits from our Bernard Edwards Catalogue.
• Celine Dion’s new album ‘Courage’ - including our single ‘Lying Down’ by Giorgio Tuinfort - is currently Top 5 all over the world and has just been Number 1 in the US.
• Beyoncé’s ‘Homecoming’ movie (and album) includes more than 14 of our songs and in addition to being a massive success has just been nominated for a 2020 Grammy Award.
• Shawn Mendes continues his world tour - one of the most successful of 2019 globally - performing all of the songs we co-own via several of his co-writers.
• Adele’s album ‘21’, which includes ‘Set Fire To The Rain’ co-written and produced by Fraser T. Smith, has reached 2.5 billion streams on Spotify alone.
• Eurythmics - David A. Stewart and Annie Lennox reunited for the first time in 14 years for Sting’s Rainforest Fund benefit playing 3 Songs from our Portfolio.

⁽¹⁾ Excluding £1.5 million of exceptional expenses relating to the Working Capital Facility and Migration to the Premium Segment of the London Stock Exchange.

⁽²⁾This is a target only and there can be no assurance that the target can or will be met and should not be taken as an indication of the Company's expected or actual future results.  Accordingly, potential investors should not place any reliance on this target in deciding whether or not to invest in the Company or assume that the company will make any distributions at all and should decide for themselves whether or not the target dividend yield is reasonable or achievable.