Hipgnosis hikes divi target amid mass adoption of streaming


Hipgnosis Songs Fund Ltd (LON:SONG) saw its operative net asset value per share rise by 11.3% to US$1.6829 in the year to the end of March.

Shares in the investment company, which buys up music catalogues, were up 0.7% at 123.2p (about US$1.70) following the release of the fund’s full-year results.

With dividends of 5.125p added to the mix, the operative net asset value (NAV) rose 15.7% from a year earlier. Hipgnosis said the annual dividend target has been increased by 5% to 5.25p per share.

Total revenue in the year rose to US$160.75mln from US$82.2mln the year before.

Operating profit before tax advanced to US$44.54mln from US$41.51mln the previous year.

Net debt at the end of the reporting period stood at US$464.6mln.

“This strong return evidences not only our ability to be able to buy and manage our culturally important and extraordinarily successful songs well but also the highly uncorrelated nature of proven songs,” claimed Merck Mercuriadis, Hipgnosis’s founder and adviser.

“Whilst we would never have wished for a pandemic, it has not only demonstrated the predictable, reliable and uncorrelated nature of the income of proven songs but also accelerated the change in consumer behaviour to consuming music by streaming,” he added.

Income from streaming in the second half of the financial year rose by 18.4% compared to the first half of the year, the company revealed.

“Revenues have been highly resistant during the course of this incredibly challenging year and are well placed for future growth with global streaming adoption beating all expectations – seeing the 30 million paid subscribers when we first started grow to 450 million paid subscribers today to what are forecast to be 2 billion paid subscribers by the end of the decade. This has turned music from being a discretionary or luxury purchase to very much being a utility as a result of the convenience and access afforded by streaming,” Mercuriadis postulated.

“We are entering an era where now, for the first time ever, almost all consumption of music is paid for,” he asserted.

Shares in Hipgnosis were down 0.3% at 122p in late afternoon trading on Monday.

–Adds share price–


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