4th Dec 2020 10:22
(Alliance News) - Hipgnosis Songs Fund Ltd on Friday reported a substantial increase in revenue and net asset value per share in the first half of its financial year, while saying it is considering an equity raise to fund a GBP1 billion pipeline of new acquisitions.
The British Guernsey-registered music royalty investment company's pretax profit for the six months ended September 30 was GBP12.0 million, down from GBP12.6 million a year prior.
Net operating income, which is revenue minus royalty costs, from Hipgnosis portfolio rose to GBP44.8 million, an almost 100% increase compared to GBP23.2 million year-on-year.
The company's operative net asset value per share at September 30 was 125.35 pence, a 7.4% increase from 116.73 pence on March 31.
Hipgnosis said these increases were due to its "continued ability to execute our investment strategy of buying catalogues of the highest quality, and then generating new revenue opportunities through song management."
It also saw streaming revenues start to be recognised and received from digital platforms including video sharing app TikTok and connected running machines Peloton, and a reduction in the discount rate used by the independent valuer to value the company's catalogues to 8.5% from 9.0%, resulting in a 9% increase to the fair value of the company's catalogues.
Hipgnosis said its equity fundraises have been deployed into "high quality and attractive catalogues" of songs, and the C shares from the fundraise in July have now been converted into ordinary shares.
The company noted it is exploring a potential equity raise. Investment advisor The Family (Music) Ltd is in active discussions on an acquisition pipeline worth around GBP1 billion.
Looking ahead, Hipgnosis said it is "exploring the most appropriate way of funding further investments, including a potential equity raise, with a view to delivering further value for its shareholders."
Shares in Hipgnosis Songs Fund were down 1.4% at 121.74 pence in London on Friday.
By Zoe Wickens; [email protected]
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