Hipgnosis suspends share issuance as net debt surpasses $ 550 million
UK-based song investment fund Hipgnosis lost $ 260 million on song catalogs from April 1 to September 30 this year, but with net debt exceeding a staggering $ 550 million , the company does not “intend to offer other shares for cash consideration.” before March 30, 2022.
Hipgnosis revealed these and other points in its recently released interim report, which spans 74 pages and covers the entity’s operations between April and September, as mentioned. Beginning with song acquisitions, Hipgnosis purchased the rights to 1,315 other tracks during the period – including the Red Hot Chili Peppers, Kaiser Chiefs and Christine McVie catalogs – “for a total consideration of $ 260 million. Canadian dollars ”.
The purchases took Hipgnosis’s portfolio to 146 catalogs and 65,413 songs, “with a total value of $ 2.55 billion (as determined by the independent portfolio assessor)”, or Massarsky Consulting, Inc. In early 2021, a Stifel analyst said he felt “uncomfortable with the Hipgnosis assessment procedure,” it is worth mentioning about it.
Additionally, the $ 260 million spent on musical intellectual property throughout the period is relatively small, as Hipgnosis fell by over $ 1 billion in its 2021 fiscal year – or roughly $ 250 million. quarterly instead of every six months.
Going back to Hipgnosis’s last interim report, however, net income stood at $ 74.04 million (up from $ 56.69 million in the same six-month period in 2020). Interestingly, the company claims that sync made up about the same percentage of net revenue (16%) as “mechanical / core royalties” during the period, compared to 36% for streaming and 27% for performance, despite COVID-related declines.
Total revenue, for its part, reached $ 85.27 million, with $ 11.23 million in royalties. And that $ 85.27 million in total revenue comes from sources like “Writers Sharing Income” ($ 21.39 million), “Streaming Income” ($ 19.86 million), and Income. synchronization ($ 14.92 million).
However, Hipgnosis’s operating expenses reached $ 92 million during the six-month period, of which (in the “other operating expenses” category) $ 504,000 in “public relations fees” between April 1 and April 1. September 30 – compared to $ 217,000 during the same period in 2020. “Travel and accommodation expenses” ($ 254,000, compared to $ 140,000) and “salaries and staff expenses” (3.34 million $, versus $ 257,000) are also underlined in the financial document.
Of course, those expenses (along with the substantial sums spent on catalogs) contributed to Hipgnosis’s initially disclosed net debt, which stood at $ 550.9 million as of September 30, 2021 – up from $ 464 million. $ 4 million as of March 30, 2021. (The entity actually withdrew all of its $ 600 million revolving credit facility at the end of September, but had $ 49.11 million in cash on deposit.)
And with regard to the slowdown in catalog acquisitions and the pause on corresponding stock issuances – Hipgnosis raised an additional $ 215 million over the summer – the text partly relays: “Before the last increase in capital, a strategic decision has been taken … that the Company does not intend to offer other shares in cash before the publication of the net asset value per share at March 31, 2022 ”, or the end of his fiscal year.
Instead, Hipgnosis is poised to focus “on handling the iconic songs we’ve acquired over the past three and a half years,” the text reveals. The song investment firm’s timing deals rose 20% in July, August and September, compared to April through June, according to the document.
“We have a newly created and dedicated internal sales function, responsible only for maintaining our catalog from a synchronization perspective,” says Hipgnosis analysis. “For the vast majority of our repertoire – it doesn’t matter who administers the song – we’re the only approving party for all sync requests.”
Unlike Round Hill Music, Hipgnosis has not publicly disclosed the value of its major timing chords, but some of the highlighted placements include Eurythmics’ “Sweet Dreams (Are Made of This)” and “Heart Of Glass” Blondie in the trailers Gucci House as well as “Nobody Does It Better” by Carly Simon in a DHL cross-promotion campaign for No time to die.
Finally, relating to other interesting details from the report, earnings per share ended at – $ 1.69 over the six-month period, “due to the high depreciation charged during the period.” The latter reached $ 52.12 million for catalogs, and Hipgnosis says it “amortizes song catalogs with a finite life using the straight-line method of 20 years.”
Hipgnosis also described NFTs as “an important part of the future,” touted the perceived value of song “mashups” on TikTok, and revealed that he has “an interest in 11 of the 30 most viewed videos in the world on YouTube “. In today’s trading hours, Hipgnosis stock (SONG on the London Stock Exchange) fell 1.89%, to around $ 1.67 per share.