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

Interim Results for the six months ended 30 September 2020 (“H1”)

The Board of Hipgnosis Songs Fund Limited, the first UK listed investment company offering investors a pure-play exposure to songs and associated intellectual property rights, and its Investment Adviser, The Family (Music) Limited, are pleased to announce the Company's interim results for the six months ended 30 September 2020.

The Investment Adviser will be providing a presentation to investors and analysts at 10am today through the link: 

This presentation will be available afterwards on the Company's website www.hipgnosissongs.com. 

Merck Mercuriadis, Founder of Hipgnosis Songs Fund Limited and The Family (Music) Limited said: 

“2020 has been a year that the world never contemplated, as both society and the economy have been devastated by the pandemic. It is therefore a wonderful feeling to be able to give our investors, who have given us incredible support, and the songwriting community, who have entrusted us with their incomparable work, an excellent set of results that validate their trust and faith in Hipgnosis.  We’ve been one of the FTSE 250’s biggest yielders and have now reached a £1.25 billion market cap. The case for proven songs as the best uncorrelated asset class gets stronger every day. We have an incredible pipeline and are very excited for 2021.”
 

Operational Highlights

• As at 30 September 2020 the Company had invested approximately £1.18 billion through the acquisition of 117 Catalogues on a blended acquisition multiple of 14.76x historical annual net income, resulting in interests in 57,836 Songs
• 2,845 Songs have held Number 1 positions in global charts
• 10,618 Songs have held Top 10 positions in global charts
• 119 Songs have won Grammy Awards
• Approximately 45% of the Company’s Portfolio is represented by Songs that are between 10 and 58 years old
• The Company co-owns ten of Spotify’s Top 30 “Most Played Songs Of All Time”
• During the period, £426.4 million of gross equity capital was raised through secondary placings of C Shares in July 2020 and Ordinary Shares in September 2020
• The C Shares issued pursuant to the July 2020 equity fundraise have today been converted to Ordinary Shares 
• The Company acquired Big Deal Music Group, which rebranded to Hipgnosis Songs Group (“HSG”)
• The Company acquired Kobalt Fund 1, a Portfolio with 42 Catalogues and over 33,000 Songs
• The Company’s 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 7.4% to 125.35p (31 March 2020: 116.73p)
• The fair value of Catalogues, as determined by the independent valuer, increased by £114.2 million (10%) during the period, excluding losses of £23.3 million due to unfavourable movements in FX rates, due to:
• Strong fair value uplifts in the Catalogues acquired during the period; 
• Streaming revenues starting to be recognised and received from emerging digital platforms including TikTok and Peloton; 
• A reduction in the discount rate used by the independent valuer from 9% to 8.5%; and
• The independent valuer taking a prudent approach to their forecast for 2021 due to COVID-19
• Net revenue from the portfolio increased to £44.8 million (30 September 2019: £22.6 million)
• EPS (adjusted for amortisation) decreased to 4.77p per Ordinary Share, due to the one off costs associated with the acquisition of HSG
• At 30 September 2020, total dividends paid since IPO on 11 July 2018 are 8.5p per Ordinary Share, representing a Total NAV Return of 37.9%
• Dividends of 2.5p were paid during the period, representing a Total NAV Return, excluding the FX impact, of 12.0% for the six month period
• Hipgnosis have increased the annual dividend target¹ by 5% to 5.25p per Ordinary Share 
• Since 30 September, a second interim dividend of 1.3125p per Ordinary Share has been declared and paid

Portfolio Highlights

• 63 Catalogues were acquired during the period, including some of the most successful and culturally significant Songs of all time 
• Fleetwod Mac’s “Go Your Own Way”
• Steve Winwood’s “Higher Love”
• Blondie’s “Heart Of Glass”
• Rick James’ “Super Freak” and “You Can’t Touch This”
• 10cc’s “I’m Not In Love”
• Mariah Carey’s “All I Want For Christmas Is You”
• The Spencer Davis Group’s “Gimme Some Lovin”
• Enrique Iglesias’ “Hero”
• The B-52’s “Love Shack”
• 50 Cent’s “In Da Club”
• Blondie’s Song “One Way Or Another” features in this year’s M&S Christmas TV advert
• At the time of writing, Mariah Carey’s “All I Want For Christmas Is You” sits at Number 3 on the Spotify Global Chart, Number 14 on the Official UK Chart and Number 2 on the Midweek Chart
• Hipgnosis co-own four of the Top 5 Billboard “Songs of the Decade” and 27 of the Top 100
• 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

⁽¹⁾ 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.