Round Hill Music - Half-year Report
20/09/2023 07:00
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RNS Number : 9789M Round Hill Music Royalty Fund Ltd 20 September 2023
20 September 2023
Round Hill Music Royalty Fund Limited
("Round Hill Music" or the "Company")
Registration number: 68002
Legal Entity Identifier: 213800752UO1CJTV8C39
Interim results for the six months to 30 June 2023
CONTINUED POSITIVE GROWTH TRAJECTORY SUPPORTED BY PORTFOLIO QUALITY, ACTIVE
SONG MANAGEMENT AND MUSIC INDUSTRY OUTLOOK
Round Hill Music (LSE: RHM), which invests in evergreen music catalogues with
proven longevity and revenue streams that have growth potential, announces its
interim results for the six months ending 30 June 2023. The Round Hill Music
portfolio of catalogues includes songs by artists including iconic 90s Seattle
band Alice In Chains, British rock band Bush, Céline Dion, country music star
Carrie Underwood, The Supremes, Wilson Pickett and Whitesnake.
To view the Company's interim financial report please follow the link below:
www.roundhillmusic.com (http://www.roundhillmusic.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).
H1 2023 HIGHLIGHTS
Financial highlights: Continued positive financial performance and valuation
driven by active music catalogue management
· 37.6% increase in Group Revenue to US$17.8m (30 June 2022: US$
12.9m), including a 51.6% adjusted uplift in synchronisation income to US$3.3m
(30 June 2022: US$2.2m).
· 9.3% adjusted like-for-like NPS/NLS growth in Initial Investments
reflecting quality of underlying catalogues.
· Portfolio Fair Market Value and Economic Net Asset Value stable at
US$606.0m (31 December 2022: US$602.6m) and US$519.5m (31 December 2022:
US$519.6m); Economic Net Asset Value per Ordinary Share of US$1.27.
· Economic NAV Total Return of 37.1% delivered since IPO in November
2020.
· Dividend 1.5x covered, with total dividend in the period
of US$0.0225 per Ordinary Share, reflecting the Company's positive
performance and outlook.
· The Company continues to meet IPO targets, including an annualised
dividend yield of 4.5% (based on the IPO price of US$1.00 per Ordinary Share)
and a net total return of 9% to 11% per annum over the medium term.
· The Board and members of the Investment Manager are strongly aligned
with Shareholders through a combined 6.4% stake in the Company.
Operational & portfolio highlights: Focus on maximising portfolio
potential through active management of songs
· Portfolio of over 150,000 songs across 51 catalogues, diversified by
income source, genre and vintage, with 94% of Group Revenue from songs
originating pre-1950s to early 2010s.
· Income comprises revenues from music publishing rights (66%) and
master rights (34%).
· 662 sync placements in the period with international brand partners
across 21 territories including the crisp brand Lay's in its Champions
League campaign featuring Lionel Messi, the French fragrance label Cacharel,
F1 motor racing, Meta and Netflix.
· The highest value sync yet placed for the Company, with Lancôme
using "What a Wonderful World" in its global campaign.
· Post period end acquisition of the remaining share of the catalogue
of music publishing rights of Big Loud Shirt Industries, LLC ("Big Loud
Shirt"), bringing the Company's ownership of the high quality and globally
renowned Country music catalogue to 100%, and 50% of the writer's income
streams of Big Loud Shirt founder, Craig Wiseman, the multi award-winning
Country music songwriter and producer.
Outlook: Music industry continues to outperform with positive outlook for
foreseeable future
· 7.5% year-on-year global recorded music revenue growth to US$28.2
billion in 2023, with music publishing expected to become a near US$15 billion
industry by 2030, according to the Goldman Sachs Music In The Air report. 1
(#_ftn1)
· Continued upward trend in streaming, producing record numbers with
on-demand audio streams on track to reach four trillion streams by the end of
the year. 2 (#_ftn2) On 25 July 2023, in its second quarter 2023 results,
Spotify reported 27% year-on-year growth in monthly active users to 551
million, 17% year-on-year increase in subscriptions to 220 million and 11%
year-on-year uplift in total revenue to €3.2 billion.
Proposed offer:
· On 8 September 2023, on behalf of the Company, the Board announced
that it had reached an agreement with Alchemy Copyrights, LLC, trading as
Concord ("Concord") on the terms of a recommended cash offer pursuant to
which Concord Cadence Limited ("Concord Bidco"), a wholly-owned subsidiary of
Concord, will acquire the entire issued and to be issued share capital of the
Company (the "Acquisition") by way of a scheme (the "Scheme").
· Under the terms of the Acquisition, Shareholders will
receive US$1.15 in cash for each Ordinary Share, representing a premium of
approximately 67.3 per cent to the Closing Price 3 (#_ftn3) of US$0.69 as at
7 September 2023.
· Shareholders will have received the dividend of US$0.01125 per
Ordinary Share in respect of the quarter ended 30 June 2023 (as announced by
the Company on 31 August 2023) and, in addition, the Company intends to
declare a special dividend of US$0.005 per Ordinary Share to be declared and
paid prior to the effective date of the Scheme from income accrued by
reference to the quarter ended 30 September 2023.
· The Board intends to recommend unanimously that Shareholders vote in
favour of the Scheme at the upcoming Court Meeting and that Shareholders vote
in favour of the Shareholder Resolution at the upcoming General Meeting.
Robert Naylor, Chairman of Round Hill Music Royalty Fund Ltd, commented:
"Following a strong performance in 2022 I am pleased that the Company's
positive growth trajectory has continued through the first half of 2023. Our
differentiated and diversified portfolio of high quality music rights, ably
managed by the Investment Manager, has once again delivered strong
like-for-like and Group revenue growth. These results and the ongoing positive
developments have been reflected in the terms of the proposed offer."
Josh Gruss, CEO of Round Hill Music LP, the Company's investment manager,
said:
"This has been another encouraging half year for the Round Hill Music Royalty
Fund, with Group Revenue growing 38% year-on-year, driven by a growing music
market combined with the success of our rights management platform which
proactively works to maximise the value of the music we oversee. Our
effectiveness at generating value from music is reflected in the 52%
year-on-year adjusted increase in sync income, supported by high profile
placements across adverts, Broadway shows, films and television series
including White Lotus and the John Wick 4 trailer. The Investment Manager
possesses the specific skillset, deep music knowledge and strong networks
within the media and entertainment industries to unlock the potential of a
song and, with a portfolio of this quality, alongside the expanding
opportunities to generate income from music, we are confident in prospects for
continued growth in 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_IR23
(https://brrmedia.news/RHM_IR23)
FOR FURTHER INFORMATION
Round Hill Music LP
Josh Gruss, Founder and CEO Via Fourth Pillar below
Steve Clark, COO
Cavendish Securities, plc
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, YouTube and Spotify).
Its 51 catalogues, totalling over 150,000 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
around 200,000 songs with a combined value of circa US$1.2 billion.
With circa 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) Goldman Sachs Music in the Air, June 2023.
2 (#_ftnref2) Luminate Midyear Music Report, July 2023.
3 (#_ftnref3) The closing middle market quotation of an Ordinary Share as
derived from Bloomberg on any particular date.
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