Round Hill Music - Annual Financial Report
25/04/2023 07:00
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RNS Number : 3519X Round Hill Music Royalty Fund Ltd 25 April 2023
25 April 2023
LEI: 0752UO1CJTV8C39
Round Hill Music Royalty Fund Limited
("Round Hill Music" or the "Company")
Full Year Results for the year to 31 December 2022
STRONG PERFORMANCE DRIVEN BY UNDERLYING CATALOGUE QUALITY, EFFECTIVE SONG
MANAGEMENT AND POSITIVE STRUCTURAL TRENDS IN THE MUSIC INDUSTRY
Round Hill Music (LSE: RHM), which invests in evergreen music catalogues with
proven longevity and revenue streams that have growth potential, announces its
full year results for the year ending 31 December 2022. The Round Hill Music
portfolio of catalogues includes songs by artists including iconic 90s Seattle
band Alice In Chains, British rock band Bush, Celine Dion, country music star
Carrie Underwood, The Supremes, Wilson Pickett and Whitesnake.
To view the Company's annual financial report please follow the link below:
http://www.rns-pdf.londonstockexchange.com/rns/3519X_1-2023-4-25.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3519X_1-2023-4-25.pdf)
To view the Company's annual financial report in full please follow the link
to the Company's website https://www.roundhillmusicroyaltyfund.com/
(https://www.roundhillmusicroyaltyfund.com/)
In accordance with Listing Rule 9.6.1 copies of the documents will be
submitted to the UK Listing Authority and will shortly be available for
inspection from the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
This announcement is made in accordance with DTR 6.3.5R (1A).
FULL YEAR 2022 HIGHLIGHTS
Financial highlights: Strong financial performance and valuation driven by
active music catalogue management
· 13% increase in portfolio fair value to US$602.6m (31 December 2021:
US$531.1m) driven by active rights management and positive structural music
industry tailwinds
· Second independent valuation commissioned from FTI Consulting post
period end affirmed year end valuation report undertaken by Citrin Cooperman,
providing a useful benchmark
· Economic NAV up 13% to US$519.6m, reflecting an Economic NAV per
Ordinary Share of US$1.27
· 32% year-on-year increase in Group Revenue for the period to US$32.4m
(31 December 2021: US$23.7m)
· 15% like-for-like NPS/NLS growth in Initial Investments reflecting
quality of underlying catalogues
· Two income accretive catalogue investments completed in the period,
marking full deployment of US$86.5m of proceeds raised through July 2021 C
Share placement:
o full set of rights (i.e. master and publishing rights) for the Catalogue
of David Coverdale, of Whitesnake and Deep Purple fame; and
o significant majority of the rights to iconic American rock band, Alice In
Chains
· Economic NAV Total Return of 35% delivered since IPO in November 2020
· New banking facility with City National Bank negotiated post period
end on favourable and more flexible lending terms
· Dividend 0.98x covered, with total per Ordinary Share dividend of
US$0.04875 paid in the year, including balance payable for initial dividend
for the first quarter to 31 March 2021 (US$0.00375 per Ordinary Share),
reflecting a 4.5% yield in line with IPO target
Operational & portfolio highlights: Diversified portfolio with significant
value unlocked via Round Hill's experienced management platform
· Portfolio of over 120,000 songs across 51 catalogues, diversified by
income source, genre and vintage
· Income comprises revenues from music publishing rights (69%) and
masters rights (31%)
· Diversification into recorded music provides a new set of royalties,
generating a new revenue stream for the Company and facilitating revenue
growth through active management
· Income from masters rights grew by 13%, comparing favourably to wider
industry where global recorded music revenues grew by 9% 1 (#_ftn1)
· Synchronisation income increased by 33% year-on-year, with multiple
successful placements of 560 songs across high profile films, television
series and brand campaigns, including:
o "All by Myself", by signer songwriter Eric Carmen, in advertisements for
Adobe Photoshop and the popular Mexican snacks company, Sabritas;
o Spacehog's "In the Meantime" in the trailer for Marvel Studios' Guardians
of the Galaxy Volume 3;
o "Best Day of my Life" in a Nutella advertisement through a relationship
with Ferrero; and
o Alice In Chains' "Rooster" in the Netflix series, Super Pumped
· Since the year end, the highest value sync yet has been placed for
the Company, with Lancôme using "What a Wonderful World" in its latest
campaign
· Receipt of higher digital revenues following new licence agreements
with TikTok and Meta on more favourable terms, resulting from strategic focus
on rights data quality and management enhancement
Outlook: Music industry continues to thrive with positive outlook and
increasing opportunities to grow royalties
· Goldman Sachs revised its global music revenue forecasts upwards by
5% to US$94.9 billion for 2023 and 10% to US$153 billion for 2030, primarily
off the back of a stronger 2021 base where revenues exceeded expectations 2
(#_ftn2)
· Underpinned by the sustained success of streaming, which saw a 10.3%
growth in subscription revenue, global revenue from recorded music grew by 9%
in 2022 to US$26.2 billion 3 (#_ftn3) , an eighth consecutive year of growth
· New platforms for content consumption represent opportunities to
drive further growth for the music industry, through social media, the
metaverse and gaming, providing new routes for consumers to discover music and
revenue growth through licensing
Robert Naylor, Chairman of Round Hill Music Royalty Fund Ltd, commented:
"Today's results, including the impressive double digit revenue and valuation
growth, reflect the strength of the Company's portfolio; the inherent value
that Round Hill, the investment manager, has been working to unlock; and the
accelerating momentum behind the music industry. The two independent valuation
reports commissioned by the Board underline this assessment and our view that
Round Hill Music is currently undervalued by the market. We therefore remain
confident that, even in challenging market conditions, Round Hill Music
Royalty Fund is well positioned to continue to deliver sustainable revenue and
value growth."
Josh Gruss, CEO of Round Hill Music LP, the Company's investment manager,
said:
"The positive results that we have delivered on behalf of Round Hill Music
Royalty Fund stem largely from the efforts of our entire 70 plus team, whose
deep expertise in catalogue management and passion for music, when applied to
our catalogues, translates directly into sustainable value and revenue growth.
The 51 catalogues that make up the Company's portfolio reflect our careful
investment approach, which is concentrated on older vintages preceding the
early 2010s that have demonstrated durable, time-tested royalty cash flows
that have withstood various economic cycles.
"The opportunities for music monetisation are expanding and Round Hill is well
placed to take advantage of these and other structural tailwinds. Given the
quality of our catalogues and the positive outlook for the music industry, we
are excited and energised about the future."
WEBCAST / CONFERENCE CALL FOR INVESTORS AND ANALYSTS
A live webcast of the results presentation will be available today from 14:00
BST / 09:00 EST for investors and analysts.
Registration for the webcast is available via https://brrmedia.news/RHM_FY22
(https://brrmedia.news/RHM_FY22)
FOR FURTHER INFORMATION
Round Hill Music LP
Josh Gruss, Founder and CEO Via Fourth Pillar below
Steve Clark, COO
Cenkos
Sales:
Justin Zawoda-Martin +44 20 7397 1923
Daniel Balabanoff +44 20 7397 1909
Andrew Worne +44 20 7397 1912
Corporate:
James King +44 20 7397 1913
Will Talkington +44 20 7397 1910
Fourth Pillar (Financial PR)
Claire Turvey +44 7850 548 198 / claire@thefourthpillar.co.uk
Lynne Best +44 7763 619709 / lynne@thefourthpillar.co.uk
Tomas Nevrkla +44 7963 548865 / tomas@thefourthpillar.co.uk
JTC
Mariana Enevoldsen +44 1481 702 485
About Round Hill Music Royalty Fund Limited
Round Hill Music Royalty Fund invests in high quality, evergreen music
catalogues that have proven longevity and revenue streams, with the aim of
providing investors with an attractive level of regular and growing income and
capital returns, underpinned by the positive structural drivers of the global
music industry.
The portfolio is diversified by income stream and music genre, with value
created through the proactive and careful management and commercialisation of
the repertoire through synchronisation (placement in films, television series
and brand campaigns); licensing; data cleaning; and distribution (including
across platforms such as Amazon Music, Apple Music, Deezer, and Spotify).
Its 51 catalogues, totalling over 120,000 songs, include music performed by
artists such as Alice in Chains, Bonnie Tyler, Bruno Mars, Céline Dion, Lady
A, Louis Armstrong, The Offspring, The Supremes, Whitesnake and Wilson
Pickett.
The portfolio of rights includes copyright interests in a musical composition
or song (which can be the writer's share, publisher's share and/or performance
rights), the rights to the recording of a musical composition or song (the
master recording rights), as well as music rights and assets that meet the
Company's investment strategy and objectives. The Company is a non-cellular
Guernsey company.
A playlist of RHM's top 50 earners can be listened to on Spotify here
(https://open.spotify.com/playlist/4P46C6opRHt0reXwyy7dRt?si=ad5e135307ec4a14&nd=1)
. We recommend it served loud.
About Round Hill Music LP (the Investment Manager)
Founded in 2010, Round Hill Music LP is a fully integrated owner and operator
of music copyright properties. It currently manages 150+ catalogues, totalling
330,000+ songs with a combined value of circa US$1.2 billion.
With over 70 employees located in the major music and entertainment markets of
Nashville, New York, Los Angeles and London, Round Hill Music LP has an
experienced management and investment team with an established reputation and
extensive expertise in the music and finance industries.
1 (#_ftnref1) IFPI 2023 Global Music Report
2 (#_ftnref2) Goldman Sachs, Music In The Air June 2022
3 (#_ftnref3) IFPI 2023 Global Music Report
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