MERCK'S BIG YEAR

Merck Mercuriadis’ Hipgnosis Songs Fund Ltd. acquired 42 song catalogs for £560m, raised £422.9m in new equity and had a Net Asset Value return of 17.7% in the fiscal year that ended 3/21.

Mercuriadis has released results of the company’s year ahead of the publication of results in July. He said every prediction about publishing and potential revenue he has made in the last two years “has either come to fruition or been exceeded.’

Mercuriadis writes, “A core part of our thesis is that song revenues are uncorrelated as, whether in good times or challenged, music is always being consumed. While we would not have wished for a pandemic to demonstrate this it has indeed done exactly that and that has been reflected in our strong performance. We have become a FTSE 250 company in only 20 months, which I’m told is the fastest of any company ever on the index, and we are now the number 23 biggest yielder on the FTSE 250.”

The company choses to use Operative NAV as the best measure of the fair value of the company's catalogs. NAV per Ordinary Share was 116.7p, an increase of 13% year over year and 14.3% since 1/10.

Including dividends paid, Hipgnosis produced a Total NAV Return of 17.7% in the fiscal year.

For the rest of the year, the company is anticipating reductions in public performance and live income due to the lockdown, noting that live income represents approximately 3% and public performance is 13% of catalog revenues.

The company has not seen a decrease in the demand for song placements and syncs despite advertising budgets being cut and film releases delayed.