Separate to its announcement of the new global administration agreements (click here to read more on this), Hipgnosis Songs Fund (SONG) has also announced its final results for the year ended 31 March 2022. The operative NAV has increased by 9.9%, which SONG says was driven by a 9.5% like-for-like value uplift across the Portfolio to US$2.7bn.
Financial highlights
SONG has provided the following key financial highlights from its results:
- Operative NAV increased by 9.9% to US$1.8491 per share (31 March 2021: US$1.6829)
- As at 31 March 2022, the operative NAV presented in sterling would be 140.79p per Share (GBP:USD 1.3134)
- As at 13 July 2022, the operative NAV presented in sterling would be 154.76p per share (GBP:USD 1.1949)
- Including dividends paid, total operative dollar NAV return of 14.2% for the year, taking total NAV return since IPO to 59.1%
- NAV growth driven by a 9.5% like-for-like value uplift across the portfolio to US$2.7bn, as determined by Portfolio Independent Valuer, as a result of:
- Strong like for like streaming growth of 19.4% in the second half of 2021, compared to the first half of 2021, in excess of the valuer’s expectations, resulting in an increase in expected future streaming revenues
- Increase in expected revenues due from emerging technology platforms as material revenues start to be paid into publishers and record companies
- Gross revenue increased by 24.7% to US$200.4m (31 March 2021: US$160.7m) partly due to the catalogue acquisitions during the period
- Pro-forma annual revenue (PFAR), which shows royalty earnings during a 12-month period, irrespective of ownership, grew strongly in H2 2021. Whilst for the full calendar year 2021, PFAR fell 5.3% to US$114.9m (2020: US$121.26m) largely due to the impact of COVID-19 restrictions, there was an 11.6% pro forma revenue increase in the second half, compared to the first half, driven by streaming revenue growth and the re-opening of performance venues
- EBITDA increased by 21.8% to US$129.9m (31 March 2021: US$106.7m)
- Total dividends of 5.25p per ordinary share paid were fully covered (1.01x) by leveraged free cash flow
- Net debt of US$569.9m as at 31 March 2022, reflecting 25.4% of operative NAV
Operational highlights
SONG has provided the following key operational highlights from its results:
- Portfolio now comprises of 146 Catalogues, 65,413 songs, with an aggregate value of US$2.69bn, and includes some of the most successful and culturally important songs of all time
- Acquired 8 Catalogues, including Red Hot Chili Peppers, Christine McVie of Fleetwood Mac, Ann Wilson of Heart, Rhett Akins, and Stefan and Jordan Johnson – The Monsters & Strangerz, using the proceeds of an oversubscribed placing which raised over £156m (US$215m) in July 2021
- Significant investment in investment adviser’s capabilities, particularly in song management, finance, investment teams and data analytic functions
- A 20% increase of formal synch licences approved in the 6 months to 31 March 2022 vs the first half of the financial year
- Post period end, in July 2022, signed a ground-breaking direct administration agreement with Sacem, the French collective management organisation, materially reducing third party administration and collection fees, middlemen and the length of time it takes to collect digital revenues
- SONG’s advocacy for fairness for songwriters has helped to secure Competition and Markets Authority market study into Music and Streaming (Click here to see SONG’s submission to the DCMS Select Comittee)