TIDMRHM
RNS Number : 4535N
Round Hill Music Royalty Fund Ltd
30 September 2021
30 September 2021
ROUND HILL MUSIC ROYALTY FUND LIMITED
("RHM" or the "Company")
Legal Entity Identifier: 213800752UO1CJTV8C39
INTERIM FINANCIAL REPORT
For the period from incorporation on 5 August 2020 to 30 June
2021
The Board of Round Hill Music Royalty Fund, a London Stock
Exchange listed investment company that aims to provide investors
with an attractive level of regular and growing income and capital
returns from investment primarily in high quality, music
intellectual property, is pleased to announce the Company's first
set of interim financial results for the period ended 30 June
2021.
Operational Highlights
-- As at 30 June 2021, the Company had invested approximately
US$342 million through the acquisition of 38 Catalogues and a 29.1%
investment in RH Carlin Holdings LLC.
-- Acquisitions completed at a blended multiple of 16.2x historic annual net revenues.
-- The portfolio of Copyrights includes:
- >118k compositions;
- >750 master recordings;
- Approximately 75% of the compositions are older than 20 years;
and
- Rich mixture across artists, genres, vintages and income
composition.
Financial Highlights
-- Economic NAV Total Return increased by 10% to US$1.07 since inception.
-- Economic NAV as at the period end of US$352.6million
representing an Economic NAV per Ordinary Share of US$1.07.
-- The value of the Catalogues (including the investment in
Carlin), as determined by the independent valuer, increased by
US$31.6m to US$373.5m.
-- Company had utilised approximately US$32 million of the
revolving credit facility, leaving approximately US$50 million
undrawn.
-- Revenue from the portfolio of US$17.3 million.
- Company declared and paid dividends of US$2.5 million.
Highlights after period end
-- On 16 July 2021, Company successfully raised an additional
US$86.5 million pursuant to the placing of 86,500,000 C Shares at
an issue price of US$1.00 per C Share.
-- On 20 August 2021, the Company announced a second quarterly
dividend of US$0.01125 per Ordinary Share.
-- The Company continues to acquire high quality catalogues including:
- 11 August 2021, music publishing catalogue from Yes guitarist
and prolific film composer, Trevor Rabin;
- 9 September 2021, the master royalty income of Dennis Elliot,
the original
drummer of rock group Foreigner;
- 15 September 2021, the recorded music income and publishing
rights to 30
songs from Tim Palmer covering tracks from the Pearl Jam album
"Ten" and
Ozzy Osbourne's album "Down to Earth"; and
- 28 September 2021, 100% of the master royalty income of 532
original
recordings from the iconic American classic R&B group, The
O'Jays.
Trevor Bowen, Chair of Round Hill Music Royalty Fund,
commented:
"On behalf of the Board, I am pleased to announce the Company's
maiden set of results for the period from incorporation to 30 June
2021. The Company has made excellent progress deploying the
proceeds of the IPO and completing two further successful capital
raises. The Company has generated a 10% Economic NAV Total Return
for shareholders since inception. We would like to thank our
shareholders for their continued support and we look forward to
updating shareholders on the Investment Manager's near term
opportunities of income generating acquisitions backed by the
royalty rights to timeless music."
Josh Gruss, Chairman and CEO of Round Hill, the Company's
investment manager,
commented:
"The Round Hill team is delighted with a highly successful
period since IPO. During that time we have made great progress in
building a world class portfolio including rights to timeless
tracks of exceptional quality that are diversified by geography,
genre and vintage. We are pleased to provide investors with an
opportunity to invest in music they know and love whilst generating
stable, long term income. We look forward to keeping the market up
to date with our latest acquisition opportunities."
Results presentation today
There will be a presentation for sell side analysts at 1.00pm
BST today. Please contact
Buchanan for details on roundhillmusic@buchanan.uk.com.
FOR FURTHER INFORMATION
Round Hill
Josh Gruss, Chairman via Buchanan below
and CEO
Neil Gillis, President
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
Buchanan
Charles Ryland +44 20 7466 5107
Henry Wilson +44 20 7466 5111
Hannah Ratcliff +44 20 7466 5102
Notes:
Unless the context otherwise requires, capitalised terms used in
this announcement have the meanings in the Prospectus.
The Company is a non-cellular Guernsey company. The Company's
Investment Objective is to provide investors with an attractive
level of regular and growing income and capital returns from
investment primarily in high quality, music intellectual property.
In order to achieve its Investment Objective, the Company will
invest in a songwriter's copyright interest in a musical
composition or song (being their writer's share, their publisher's
share and their performance rights) together with the rights in the
recording of the musical composition or song (known as the master
recording rights) together with all such rights and assets
considered by its investment manager, Round Hill Music LP ("Round
Hill"), to be ancillary thereto.
Founded in 2010, Round Hill is a fully integrated owner and
operator of music copyright properties and the sixth largest music
publishing company in the US. Headquartered in New York with
additional offices in Nashville, Los Angeles and London, Round Hill
has an experienced management and investment team with an
established reputation and extensive experience in the music and
finance industries.
COMPANY OVERVIEW
Round Hill Music Royalty Fund Limited ("RHMRFL" or the
"Company") is a Guernsey company incorporated on 5 August 2020. The
Company is domiciled in Guernsey and is tax resident in the United
Kingdom. The Company is also registered with the GFSC as a
closed-ended investment scheme pursuant to the POI Law and the
Registered Collective Investment Scheme Rules 2018.
Pursuant to the Company's Prospectus dated 19 October 2020, as
amended by the Supplementary Prospectus dated 3 November 2020
(together the "Prospectus"), the Company offered its Ordinary
Shares for issue by means of a placing and offer for subscription,
raising US$282 million through the issue of Ordinary Shares at an
issue price of US$1.00 each ("Issue Price"). The Company's Ordinary
Shares were admitted to trading on the SFS of the London Stock
Exchange on 13 November 2020.
On 16 December 2020, the Company announced it had raised a
further US$46.561 million from a placing of 46,100,000 Ordinary
Shares. The Company announced it had issued an additional 2,000,000
Ordinary Shares at an issue price of US$1.00 per Ordinary Share,
pursuant to a placing under the Placing Programme, on 3 June 2021.
These additional Ordinary Shares were admitted to trading on the
SFS on 7 June 2021.
Subsequent to the interim period ended 30 June 2021, the Company
successfully raised gross proceeds of US$86.5 million pursuant to
the placing of 86,500,000 C Shares at an issue price of US$1.00 per
C Share under the Placing Programme. The C Shares were admitted to
trading on the SFS on 20 July 2021.
The Company's total issued share capital currently consists of
330,100,000 Ordinary Shares and 86,500,000 C Shares.
On 22 September 2021, a third subsidiary RHMRF3 Limited, was
incorporated in the United Kingdom to hold certain Company
assets.
Investment Objective and Policy
The Company's Investment Objective is to provide investors with
an attractive level of regular and growing income and capital
returns from investment primarily in high quality, music
intellectual property.
In order to achieve its Investment Objective, the Company
invests in Copyrights, together with all such rights and assets
considered by the Investment Manager to be ancillary thereto.
Although typically the Company anticipates acquiring the
entirety of a Copyright owner's interest in a musical composition
or song, the Company may acquire a lesser or minority interest in a
Copyright or Catalogue and enter into joint venture or other
arrangements in respect of the same.
The Company intends to invest in small to medium sized
Catalogues (typically 100-1000 Copyrights) that are diversified by
artist, genre, decade and royalty type. The Company also will
invest predominantly in classic, older Copyrights with enduring
appeal and which experience consistent usage. Such compositions
have generally reached a steady state of earnings, are stabilised
and not subject to the natural decline in earnings and value that
typically occurs within the initial ten years of a composition's
life.
Typically, the revenue generated by the Copyrights will
comprise:
-- Performance royalties : generated from public performance,
broadcasting and digital streaming. This includes: terrestrial and
satellite radio and television broadcasts, live concerts, music in
bars, hotels, restaurants, shops, sporting events, cinemas, YouTube
and internet performances and theatrical performances.
-- Mechanical royalties : fees the copyright owner receives upon
the sale of any recording for the use of the underlying musical
composition. Every time a digital download or a physical CD is sold
a mechanical royalty is paid to the owner of the Copyright.
-- Synchronisation royalties : collected when the copyright is
used in films, television programming, advertising, ringtones and
video games.
-- Digital interactive royalties : digital royalties from
interactive streaming services are considered a hybrid of
mechanical and performance royalties. In the UK and USA, 50% of the
royalty is paid by the streaming service as a performance royalty
to the relevant Performing Rights Organisations around the world.
The remaining 50% is treated as a mechanical royalty payable to the
owner of the Copyright.
-- Other royalties: for example royalties generated from print
or sheet music, greeting cards, toys and clothing, and theatre
music.
-- Royalties and fees payable in respect of master recordings:
master recordings are the copyright in the master recording of a
musical composition or song. They earn synchronisation royalties
and generate income from sales of both physical and digital records
as well as from the streaming services. Additionally, master
recordings earn significant royalties from digital radio, YouTube
and similar streaming platforms.
The Company will seek to acquire both the publishing and
administration rights (being the right to collect royalties and
revenues and commercially exploit the Copyrights) in Copyrights
thereby allowing it not only to collect all or some portion of the
royalty revenues but also to create value and unlock upside through
diligent and creative Catalogue management.
The majority of the returns derived from the Company's
investments will be derived from the royalty streams. However, the
Company will seek to enhance returns through improved royalty
collection, pro-active licensing activity and increased usage and
song exposure.
The Company may acquire Copyrights for consideration comprising
cash and/or shares in the Company. It may also acquire vehicles (or
interests in such vehicles) that own Catalogues as opposed to the
Catalogues themselves. It may also, subject to the approval of the
Board and Company Shareholder approval, acquire Copyrights and
Catalogues from the Investment Manager, parties related to the
Investment Manager and funds managed by the Investment Manager.
Dividend Policy
The Directors will seek to maintain and grow the dividend over
the long term.
The Company intends to pay dividends on a quarterly basis with
dividends typically declared in respect of the quarterly periods
ending March, June, September and December and paid in June,
September, December and March respectively.
Distributions made by the Company may take either the form of
dividend income, or of "qualifying interest income" which may be
designated as interest distributions for UK tax purposes.
Prospective investors should note that the UK tax treatment of the
Company's distributions may vary for a Shareholder depending on the
classification of such distributions.
The Company targets an annualised dividend yield for Ordinary
Shares of 4.5% by reference to the Issue Price of US$1.00 per
Ordinary Share. The Company is targeting a net total Shareholder
return of 9% to 11% per annum over the medium to long term.
Holders of any class of C Shares are entitled to participate in
any dividends and other distributions of the Company as the
Directors may resolve to pay to holders of that class of C Shares
out of the assets attributable to that class of C Shares. However,
in relation to the 86,500,000 C Shares issued by the Company in
July 2021, the Directors do not envisage paying a dividend. All
income attributable to the C Shares will be accrued and form part
of the C Share net asset value for purposes of the C Share
conversion calculation. For the avoidance of doubt, the targets set
out above shall not apply with respect to any tranche of C Shares
prior to the conversion of the C Shares into Ordinary Shares.
Dividends will always be subject to compliance with the solvency
test prescribed by the Companies Law and, in accordance with
regulation 19 of the UK Investment Trust (Approved Company) (Tax)
Regulations 2011, the Company will not (except to the extent
permitted by those regulations) retain more than 15% of its income
(as calculated for UK tax purposes) in respect of an accounting
period.
The Company's first dividend, which did not include royalty
income from the acquisition of the 29.14% interest in RH Carlin
Holdings LLC, of US$0.0075 per Ordinary Share was announced on 24
May 2021 and fully paid by 10 June 2021. The second dividend of
US$0.01125 per Ordinary Share was announced on 20 August 2021 and
paid by 6 September 2021.
CH A IRMAN'S S T A TE M ENT
This marks Round Hill Music Royalty Fund Limited's first interim
report since being admitted to the SFS, covering the period from
incorporation to 30 June 2021. The music market has grown
considerably in the initial interim period. The adoption of
streaming shows no sign of slowing down, vinyl record sales have
reached levels not seen since the 1980s, and live events have
started to return since COVID-19 shut down most venues.
INVESTMENTS
On 2 February 2021, the Board announced the Company's
acquisition of the identified Pipeline Investments as detailed in
the Prospectus by way of a two-step process. The first step
comprised the acquisition of the assets of Round Hill Music Royalty
Fund LP, excluding its shareholding in RH Carlin Holdings LLC
("Carlin") (the "First Investment") which was completed on 1
February 2021. The total cash consideration paid by the Company in
respect of the First Investment was US$281,860,320 which
represented approximately 86% of the gross proceeds raised in the
Company's IPO and subsequent placing.
On 4 May 2021, the Board announced the completion in April 2021
of the second step and the acquisition of a 29.14% interest in
Carlin from Round Hill Music Royalty Fund LP (the "Second
Investment"). The consideration for both the First Investment and
the Second Investment represented the independent valuation of the
assets as at 30 June 2020. At this point, the Company had
successfully invested the capital raised in the IPO and subsequent
placing.
On 7 June 2021, Josh Gruss acquired a further 2,000,000 Ordinary
Shares at US$1.00 per Ordinary Share, of which 950,000 Ordinary
Shares were donated to the Berklee College of Music in Boston, USA
to support a Round Hill scholarship for students, and 50,000
Ordinary Shares were donated to the National Museum of African
American Music in Nashville, USA.
In July 2021, the Company raised an additional US$86.5 million
in a C Share placing against a minimum target of US$50 million.
Earmarked to assist in the acquisition of near-term pipeline
investments, this additional support will be used to further the
Company's ambition of investing in music royalties with proven
track records. The Company has recently announced the acquisition
of the publishing Catalogue of the prolific film score composer and
Yes guitarist Trevor Rabin, 100% of the master royalty income from
Dennis Elliot, the original drummer of the rock group Foreigner,
and certain rights to publishing and recorded music of Tim Palmer
to give exposure to Pearl Jam and Ozzy Osbourne, and 100% of the
master royalty income in a Catalogue of 532 recordings by the
R&B group, The O'Jays.
The Company's global pipeline remains strong and includes Grammy
nominees, Ivor Novello award winners and inductees of the Rock
& Roll Hall of Fame. With over 250 million album equivalent
sales to date, these Catalogues are expected to be accretive to
portfolio returns.
REVOLVING CREDIT FACILITY
During the period, the Company entered into a new US$82.0
million revolving credit facility (the "RCF"), provided by Truist
Securities, Inc. ("Truist"). The RCF allows the Company to borrow
up to 25% of Economic NAV, calculated at the point of draw down.
The term of the RCF is 5 years and the borrowing margin is 225bps
over the relevant reference rate and a non-utilisation charge of
37.5bps. As at 30 June 2021, the Company had US$9.5 million of cash
on hand and US$50 million of undrawn credit facility.
PERFORMANCE
Since inception, the Company's Ordinary Share price has traded
consistently between US$1.01 and US$1.07. As at 30 June 2021, the
Economic NAV per Ordinary Share was US$1.07 and the IFRS NAV per
Ordinary Share was US$0.97. At the same date, the Ordinary Shares
were trading at US$1.07, which is a 10% premium to the IFRS NAV per
Ordinary Share.
DIVIDS
The Company has declared and paid two dividends so far in 2021,
totalling US$0.01875 per Ordinary Share, paid in quarterly
instalments: US$0.0075 per Ordinary Share in June 2021 and
US$0.01125 per Ordinary Share in September 2021. The Company
anticipates paying the holders of the Ordinary Shares an annualised
dividend of 4.5%, by reference to the IPO Issue Price of US$1.00
per Ordinary Share, for the financial period to 31 December
2021.
OUTLOOK
Around the world, consumers are not only embracing music as a
way of coping with the stress caused by COVID-19, but are also
using it as a medium to look forward. Live events are on the
horizon, bars and nightclubs are slowly opening, studios are back
in production mode and crowds are increasing at sporting events.
Music consumption is at an all-time high around the world; Spotify
reported that premium subscribers totalled 165 million at the end
of H1 2021, a 20% increase on 2020, as well as a 22% increase in
advertising-supported users, which now total 365 million.
Additionally, in early September 2021, YouTube announced that its
platform reached 50 million Music and Premium subscribers, which is
a 20 million increase in subscribers since December 2020. As
Spotify, YouTube and other streaming offers continue to gain
subscribers in the coming years, these new methods of music
consumption are expected to be bolstered by increased consumer
interest and usage in music-centric apps like TikTok.
With such attention on the music industry, the Company has a
significant appetite for growth and has built up a strong
medium-term pipeline of investment opportunities. The Board and the
Investment Manager will continue to work toward ensuring the
implementation and successful execution of the Company's investment
strategy to deliver strong returns for Shareholders. As we look to
the next six months, I would like to thank our Shareholders, my
Co-Directors, our Investment Manager and our many partners.
The music industry continues to be an important part of the
world, with more people listening to music than ever before across
a variety of mediums. The Company is and will continue to be a
beneficiary of this trend.
Thank you,
Trevor Bowen
Chairman
29 September 2021
INVESTMENT MANAGER'S REPORT
INTRODUCTION FROM JOSH GRUSS
It is with great pleasure that we present to you our first
period report for the Company as a publicly traded company with a
successful initial public offering, two additional placings and a C
Share fund raise. This report marks the initial steps towards the
Company's ultimate goal of developing reliable, consistent, growing
cash flow streams from a diversified portfolio of music
royalties.
The Catalogues we acquired and develop for the Company are only
as valuable as our ability to collect the royalties they earn. We
are not passive managers of these assets. The Investment Manager
has 65 devoted staff working to monetise and process royalties
swiftly and accurately. Our divisions include Zync, Round Hill
Records, Round Hill Nashville, Sound Hill and Sienna Studios, and
are all key contributors towards the Board's goal to generate
incremental royalty income and attract songwriters and artists as
future investment opportunities. The Company is much more than a
Catalogue acquisition vehicle, it is a creative partner for the
careers of songwriters and artists.
As the Investment Manager, we are proud to manage the Company's
robust Catalogues of evergreen songs. These are songs that have
consistently stood the test of time, with more than 75% of the
Company's revenue coming from titles released more than 20 years
ago. These are marquee titles, with 33 of Rolling Stone magazine's
500 Greatest Songs of all Time featured in the Company's portfolio.
To add to the significance of the Company's portfolio, over 93% of
the Rolling Stone Magazine's list is comprised of songs which are
over 10 years' old. Although the portfolio is predominantly
Catalogue based, the Company owns a selection of the most important
hits of today, with 9% of revenue coming from titles released in
the late 2010s.
The Company is committed to investment diversification across
artist, genre, decade, and income type. Master recordings and
neighbouring rights are more heavily exposed to streaming growth,
so it is fitting that the Company's investment strategy to date
provides a 25% exposure to masters.
As investment interest in the music space increases, the Company
has no shortage of pipeline opportunities to consider. However, it
is important to exercise discipline around valuation and sensible
growth. With guidance from the Investment Manager, the Company will
not chase opportunities where valuations are either considered too
high or they do meet the rigorous quality criteria.
RHM are committed to transparency in our reporting and will
continue to share the results of investments at a granular level on
the Company's website. Growth and cash flow assumptions can be
viewed in a similar manner. Occasionally the seller of Copyrights
will request financial confidentiality which can restrict some
information the Company and RHM would otherwise like to disclose.
When this occurs, we will seek to consolidate this information with
other transactions to ensure there is transparency on a
consolidated basis.
All of this sits on the backdrop of the COVID-19 pandemic. Music
is emotive and has enjoyed mass consumption as the world retreated
during the pandemic. Industry collections and market research
indicate that the growth in music consumption (and the revenue
generation thereof) is set to continue.
On behalf of the Investment Manager, I would like to thank all
of the Company's investors, the Board for achieving a successful
IPO and three subsequent share issues, and to the songwriters and
artists whose output we represent.
Josh Gruss, Founder, CEO and Chairman - Round Hill Music
L.P.
PORTFOLIO OVERVIEW
With unique assets spanning 39 Catalogues, the Company has, and
continues to display, strength through the diversity of its
portfolio.
The Company's core repertoire focus has always been in
catalogues. With such a large body of repertoire, the Company is a
"must-have" whenever digital service providers (DSPs) want to go to
market with new applications for consumers to listen to or engage
with music.
PORTFOLIO COMPOSITION
At present, the 39 managed Catalogues represent the Copyrights
of >118k compositions, bolstered by recorded music Catalogues
containing >750 master recordings. These Catalogues represent a
rich mixture across artists, genres, vintages and income
composition.
-- With families trapped at home during the pandemic, the
children's music of Adage V saw upticks in both performance and
sync as partners looked deeper into Catalogues for "new" old
content to share.
-- The Andreas Carlsson Catalogue remains a prominent feature
across the "best of" pop songs lists, which is why we see new sync
opportunities arising, for example on the likes of "I Want it that
Way" and "Bye Bye Bye".
-- NPS from the Arthouse Catalogue has doubled in the last two
years thanks to the performance of Bruno Mars compositions around
the world.
-- Given the social and political landscape of the United
States, it's not surprising to think that partners are actively
looking for syncs that call out America, which is why Charlie
Midnight's "Living in America" has continued to drive opportunities
for the Catalogue.
-- A biographical film, The United States vs Billie Holiday has
driven a great deal of excitement around the Billie Holiday
recording catalogue and, in turn, the Gerald Marks Catalogue. With
the compositions "Strange Fruit" and "All of Me" predominantly
featured in the film, the Company stands to benefit not only from
placement fees, but also from the long-term impact of viewers of
the film adding the titles to his or her personal playlists.
-- Commonly associated with the 'Four Horseman' songwriting
supergroup, the Marti Frederiksen Catalogue stands strong on its
own. A common collaborator of Carrie Underwood, the Catalogue saw
consistent uplifts in mechanicals over the last 12 months on the
coattails of her two most recent studio albums released in
September 2020 and March 2021.
-- When it comes to alternative rockers Spacehog, the Company
benefits not only from the publishing rights but also from master
recordings, allowing the ability to secure and administer a wide
variety of opportunities. The ability to track down unclaimed
royalties lying dormant at societies around the world, is revenue
generation that has proved fruitful, when sync revenue dating back
to 2018 was recently identified at The Society of Composers,
Authors and Music Publishers of Canada ("SOCAN"). The 1990s rock
radio "In the Meantime" is a recent placement in the Kelsey Grammar
comedy The Space Between, which earned the catalogue an additional
US$20,000 in licence fees.
-- With 80 chart toppers in the UK and 143 in the US, the Eddie
Holland Catalogue has been a regular top performing Catalogue. In
recent years, the Catalogue's performance has been closely tied to
Broadway; and despite the theatre lights being temporarily dimmed
due to the COVID-19 pandemic, the Catalogue's revenue has remained
steady in 2020, and is expected to show growth in 2021.
-- The Josh Kear Catalogue is home to one of the Company's
biggest hits, "Need You Now", which was popularised by Lady A
(formerly Lady Antebellum) and is currently 9x platinum (by the
Recording Industry Association of America). With the growth in
streaming, however, the title is expected to be certified 10x
platinum by the end of calendar 2021.
-- The Ted Nugent Catalogue contains the classic rock staples
"Strangehold" and "Cat Scratch Fever". An increase in television
reruns during the pandemic, has generated incremental performance
income on "Cat Scratch Fever", used in the trailer for Minions: The
Rise of Gru.
-- Eric Carmen's classic hit "All By Myself" struck close to
home for many during the pandemic. This song has always been a
fixture for sync opportunities but has taken on new meaning when
featured across the likes of an Expedia campaign. Additionally,
mechanicals for the Raspberries, "Go all the Way" have also
increased since the onset of the pandemic, as Marvel fans enjoyed
streaming both the Guardians of the Galaxy film and Awesome Mix Vol
1 soundtrack during confinements.
-- A staple of the alternative rock scene since the 1990s, The
Offspring Catalogue is arguably Round Hill's highest profile artist
deal. Securing the publishing rights and master recordings for an
act that holds the record for the bestselling independent album of
all time is a long-term investment in a band that shows no signs of
slowing down. Since 2020, the band has released multiple singles,
including a cover of "Christmas (Baby Please Come Home)" and a song
tied i nto the Netflix series Tiger King - and most recently, the
#1 selling Billboard Top Alternative Album hit "Let The Bad Times
Roll". With the band resuming its touring schedule at the end of
2021, the Company will see not only an uptick in performance
income, but increased streaming mechanical usage, as fans revisit
the Catalogue in the coming months.
Carlin - 100 Years of Music
Carlin Music is regarded internationally as one of the most
iconic and respected Catalogues in music publishing. Since
acquiring an indirect interest in the Catalogue in April 2021, it
has formed the backbone of the Company's assets. Unlike newer
repertoire in the music space which is typically co-written by many
creators and therefore involves many different rights owners, the
majority of the songs in the Carlin Catalogue are 100% owned and
controlled by RH Carlin Holdings LLC, in which the Company holds
its 29.14% interest. This gives enormous leverage in the licensing
space as licensees do not have to go to many rights owners to
obtain clearances for music usage; the ability to offer a
one-stop-shop for music usage is a commercial positive for future
exploitation and revenue growth.
From Elvis Presley to the Kinks, classics songs like "What a
Wonderful World" and the Muppet's Theme "Mah Na Mah Na" to Jim
Steinman's output "Total Eclipse of the Heart" and Meat Loaf's
biggest songs, the Carlin Catalogue continues to be at the
forefront of many pitching and licensing opportunities, while
carrying significant leverage when negotiating with digital service
providers and participating in settlements.
Also, because of Round Hill's recording artist deals - directly
and via Zync - Carlin classics are being discovered by new
generations for the first time, with new masters being created for
use by the sync teams.
While music consumption is at an historic all-time high, it is
no surprise that Spotify has created its "Billions Club" playlist.
Even though the Company is actively seeking out new Catalogue
opportunities, it is already represented on the playlist, with both
"Meant to Be" as recorded by Bebe Rexha featuring Florida Georgia
Line and "Just the Way You Are" as recorded by Bruno Mars.
Frontline strength isn't just determined by placement on
Spotify; the Company's rich community of Nashville writers are some
of the most recognised chart toppers in Country music. In 2020,
Jimmy Robbins and Craig Wiseman were recognised with ASCAP Awards,
while Brad Warren, Brett Warren and Tyler Hubbard were recognised
with BMI Awards.
FINANCIAL REVIEW
Since inception, the Ordinary Share price has traded
consistently between US$1.01 and US$1.07. As at 30 June 2021, the
Economic NAV per Ordinary Share was US$1.07 and the IFRS NAV per
Ordinary Share was US$0.97. At the same date the Ordinary Shares
were trading at US$1.07, which is a 10% premium to the IFRS NAV per
Ordinary Share.
SETTLEMENTS AND LICENCES
The Company continues to exploit licensing opportunities in
respect of new digital media platforms which have quickly become a
dominant and constantly evolving mode of music consumption. Each
new platform represents a new royalty opportunity.
A number of new platforms have launched prior to seeking out
relevant music licences. In such instances, the approach taken is
to litigate, where necessary, to reach a settlement for past
unauthorised music usages prior to negotiating and putting in place
appropriate multi-year licences for prospective uses. Over the past
year, settlements and licences have been agreed with TikTok and
Triller.
Industry-wide collective administration of digital exploitation
continues to be a challenge due to the ever-increasing volumes of
data exchange. Solutions continue to evolve and develop at both a
national and regional level around the world, with a notable
initiative emerging in the USA in January 2021 called the
Mechanical Licensing Collective ("MLC"), as a result of the passage
of the landmark Music Modernization Act. In February 2021 it was
announced that audio only digital streaming services such as
Spotify, Apple and Amazon had paid US$424.4 million into the MLC in
the form of unmatched royalties correlating to unpaid digital
streams, which have accumulated over time in the USA. Through
metadata management and proper claiming, this sum is expected to be
processed and paid to rights owners in the next year, some of which
will be allocated across Catalogues owned by the Company.
SYNC AND CREATIVE
While some firms in the investment space look at music as a
source of passive income, the Company believes that one element of
maximising returns is to work a catalogue by seeking out
incremental opportunities. The section below provides some
background on the different divisions within the Company's
Investment Manager, to highlight how incremental value is being
added to positive work and appropriately exploit the Company's
assets.
ADVERTISING
On 28 July 2021, The Consumer Conference Board reported that
consumer confidence in July rose to the highest level since
February 2020. Although short-term outlooks did not waver given the
varied response to COVID-19 across markets, the average American
consumer expects that business conditions, job outlook and personal
financial prospects will continue to improve and as long as
consumers are spending, so will advertisers.
Advertisers are helping to expose the Company's classic
repertoire to audiences. A cover of Eric Carmen's "All by Myself"
is currently featured on the latest Expedia advertisements
featuring comedian Rashida Jones for which a fee of US$265,000 was
achieved. The Hollies' "Long Cool Woman in a Black Dress" was used
in this year's Jimmy Johns' advertisement for US$100,000 and
debuted during Super Bowl LV.
The pandemic pushed many to switch from using public transport
to using for their own vehicles, and advertisers have taken notice.
"Aymo" as recorded by Gramatik was originally featured in a Porsche
advertisement that first aired during Super Bowl LIV, but was just
renewed for a second year at US$72,500. The Turtles' "Happy
Together" is being used in a Toyota Hybrid commercial out of the UK
for GBP250,000. The Thiele & Weiss classic "What a Wonderful
World" found itself covered by English chart toppers Honne for a
digital campaign for Hyundai's luxury brand Genesis at a fee of
US$164,000. General Motor's Periscope team has licensed a cover of
the Howie Day hit "Collide" for US$62,500 to help introduce their
new focus on safety and emissions.
Also, although it is somewhat uncommon these days to see Country
music in advertising, we were able to land "Before He Cheats"
(Kear, Tompkins) in a State Farm Radio Advertisement. In this
quirky ad, State Farm changes the lyrics to fit the creative
regarding better rates and bundling policies. While a bit silly for
some, the writers were all in. RHM received >US$44,000 for this
placement, which has also been renewed for another run in 2021.
FILM TRAILERS
Film Trailer consumption has increased during the pandemic.
Valerie Broussard's "Hold On To Me" was featured in a trailer for
the Kevin Hart dramedy Fatherhood for US$75,000. The Weezer
rendition of Gordon & Bonner's classic "Happy Together" can be
found in a trailer for the family-friend animated Ron's Gone Wrong
for US$70,000. A music historian, Roots' drummer Questlove is
actively promoting his documentary Summer of Soul, and hand-picked
Gil Scot Heron's "The Revolution Will Not be Televised" for the
trailer at US$50,000. The Buggles' "Video Killed the Radio Star",
achieving a licence fee of US$40,000, is being used to set the mood
and transport viewers back to the 1980s in the trailer for the Rose
Bryne series Physical on Apple TV.
TELEVISION
As studios are getting production back up and running, sync
licensing opportunities in TV programmes have dramatically
increased since the start of 2021. Eric Carmen's "All By Myself"
was featured in the latest season of Shameless (the USA version)
for US$30,000, while Warrant's "Cherry Pie" was recently used in an
episode of the CBS hit Young Sheldon for US$20,000. Additional
confirmations include classics by Jim Steinman whose "Paradise by
the Dashboard Light" has been licensed for the forthcoming Netflix
series Maid at US$25,000, while
the epic "I'd Do Anything for Love (But I Won't Do That)" as
popularised by Meatloaf will appear in Q-Force episode 107,
achieving a fee of US$20,000.
"Best Day of My Life" by the American Authors continues to see
features on a regular basis, including a US$19,400 promo for the
ABC sitcom Call your Mother. Valerie Broussard's "Shadow Self" as
recorded by LSDREAM was featured in the NFL post-season promo for
US$14,700. Most recently, "Good Lovin'" by Clark & Resnick was
used in a promo for the Hulu original Lisey's Story for
US$37,500.
RECORDED MUSIC
Income from the Company's recorded music category assets
continues to rise due to notable growth in digital music
consumption. Some examples of incremental working of an existing
catalogue in the physical (versus the digital) space are:
-- The Triumph Allied Forces box set was one of Record Store Day
2021's best sellers, quickly selling out completely. With a renewed
interest in the Canadian guitar heroes, a "Great Hits" album is in
production for 2022 and will feature performances from some of
today's biggest names in rock.
-- 1990s rock icon Bush continues to perform and an aggressive
marketing campaign featuring multiple activations focused on
overall audience growth and engagement is in hand, resulting in a
higher streaming baseline. Additionally, a documentary is being
discussed chronicling the band's rise to fame and place in popular
music.
-- Celebrating The Offspring and the 20(th) anniversary of their
platinum selling album, "Conspiracy of One" has been re-released on
vinyl. Given the success across D2C and traditional retail
channels, a new robust offering of additional Offspring vinyl
products is scheduled for 2022.
Separate and aside from investing in sound recordings, the
Company's Investment Manager recently launched the Sound Hill
division, a team dedicated to focusing on Neighbouring Rights.
Based in the USA and UK, this new team has over a decade of
combined experience in Neighbouring Rights and is implementing a
strategy built on identifying new claims and optimising current
catalogues. In turn, this provides new diversification
opportunities to investors by capturing new and previously
unexplored sources of revenue in the space.
OPERATIONS
At the start of 2021, the Investment Manager embarked on an
ambitious roadmap to rework internal systems and databases to
optimise its music publishing administration process, covering
everything from deal management to Copyright registrations and
royalty processing. Beginning with two unique processing systems
and three distinct databases, a legacy system was retired at the
end of July 2021, resulting in a single system with two distinct
databases. Work continues on an aggressive timetable and, by the
Autumn of 2022, a single system will remain with one unified
database. Running parallel to this is a similar process focused on
the recorded music side of Round Hill's business. With continued
investment in recording Catalogues, work is underway to migrate
legacy data and processes from a legacy system to a new platform
capable of processing a multitude of streaming transactions across
the Company's portfolio.
In addition to the system consolidation and data verification,
systematic re-registration across the Company's portfolio is
underway to unlock held royalties at collection societies. This is
one of several revenue generating opportunities in hand for the
coming months.
MARKET CONDITIONS AND OUTLOOK
Despite the disruptions caused by the COVID-19 pandemic, the
overall music business posted growth in 2020 as labels, publishers
and the creative community adjusted to the new market
conditions.
Across markets, governing bodies are still collecting details
for the 2021 midyear reports, but statistics gathered to date are
promising:
-- MRC is the music industry's trusted data source for
understanding how fans interact with music across physical and
digital platforms and services. MRC Data's 1H reports show topline
growth across all sectors of the music industry:
o Global on-demand audio streams grew 27.5% in first half of the
year YoY, although this figure is likely understated as Chinese
streaming giant Tencent does not provide global reporting.
o In the USA, overall consumption grew 13.5% YoY, driven by a
15% uplift in on-demand audio streams as well as an impressive
108.2% lift in vinyl sales. The renewed interested in vinyl, driven
by collectors of all ages, pushed the USA physical market to growth
for the first time in 9 years.
o A similar story has played out in Canada, with overall
consumption up 10.6% YoY. Like the USA, Canadian growth is being
driven by on-demand audio streams (+10.6% YoY) and vinyl sales
(+53% YoY).
-- BPI is the British Phonographic Industry and the central
source of data for the UK's recorded music industry. The BPI's
collections for the UK also show consistent growth, with overall
industry revenues up 13% YoY for 1H:
o Total streams grew 11.8%, with 84% of total streaming growth
attributed to paid subscriptions (+11%). Advertising-supported and
video streams grew 19.8% and 19.2% respectively.
o Similar to the USA, vinyl demand continues to soar in the UK,
with wholesale revenues for the format up 69.3% YoY.
-- PRS is the UK's Performing Rights Society which centrally
licenses broadcasters and retail businesses for music use on behalf
of all music publishers. After posting five consecutive years of
growth, UK-based PRS saw a 19.7% decline in revenue collection, as
the general Performance royalty category dropped 61.2% due to the
absence of people in shops, bars, restaurants and concert halls.
Despite the challenges, distributions to songwriters and publishers
increased 2% YoY.
Looking to 2021 and beyond, societies and publishers are bracing
for additional Performance royalty related declines, but the
continued growth of streaming and the rise of non-traditional
platforms are expected to more than offset these losses.
Billboard's 2020 year in review reminded the industry how social
media apps, from WhatsApp to TikTok, saw significantly increased
downloads and usage, not only from those trapped indoors, but from
marquee songwriters looking to reconnect with fans. Music is a
significant part of short-form social media's appeal (eg TikTok,
Reelz and Snaps) and delivers new opportunities for the Company's
Catalogues to achieve further exploitation.
Round Hill Music LP
Investment Manager
29 September 2021
CONTACT INFORMATION
Josh Gruss JG@roundhillmusic.com
Neil Gillis NG@roundhillmusic.com
Steve Clark SClark@roundhillmusic.com
DIRECTORS
As at 30 June 2021 the Company had three directors, all of whom
were independent and non-executive.
Trevor Bowen - Chairman of the Company
Trevor is an experienced director with over 30 years' experience
spanning a variety of industries. Trevor spent 11 years as a
partner of KPMG and 17 years helping to manage U2 and other
artists. Trevor has acted as a non-executive director on a number
of boards (he is currently a non--executive director of CEIBA
Investments Limited and Kennedy Wilson Investments Inc.) most
notably as a non-executive director of Ulster Bank which included
six years as the chairman of the Bank's audit committee. He is an
Irish national and a qualified Chartered Accountant. Trevor is
resident in Ireland.
Caroline Chan
Caroline is a Guernsey Advocate and has recently retired as a
partner from Mourant Ozannes in Guernsey. Caroline is an
experienced corporate lawyer who has advised on mergers and
acquisitions, stock exchange listings, investment funds, private
equity, financings and regulatory work. After studying law at St
Anne's College, Oxford, Caroline trained and qualified as an
English solicitor with Allen & Overy where she spent nearly
nine years including three years in their Hong Kong office.
Caroline joined Ozannes on her return to Guernsey in 1998, spending
nine years with that firm, followed by eight years at Ogier,
another offshore firm, before re-joining Mourant Ozannes in 2015.
Caroline is resident in Guernsey.
Francis Keeling
Francis is an experienced media and music industry professional
and is currently Executive Vice President of Business Development
at Orfium, a leader in rights management solutions. Francis
previously served as Senior Vice President International for
Discovery, and as Global Head of Licensing at Spotify, responsible
for all music licensing with record labels, publishers and
collecting societies. Francis was previously Global Head of Digital
Business for Universal Music Group for nearly 10 years,
spearheading recorded music licensing for all digital music
services. He has a master's degree in mechanical engineering from
Imperial College London and is resident in the United Kingdom.
I N T ER IM M A N A GEMENT REPORT
A description of important events which have occurred during the
period from incorporation on 5 August 2020 until 30 June 2021 (the
"Period"), and their impact on the performance of the Company and
its subsidiaries (together the "Group"), as shown in the Interim
Financial Report which includes the Chairman's Statement, the
Investment Manager's Report and the Notes to the unaudited Interim
Consolidated Financial Statements.
P ri nc i p al R i sks and U n certa i nti es
The Board regularly reviews the principal risks and
uncertainties affecting the Group together with the mitigating
actions it is in the process of establishing to manage these risks.
These are set out in detail on pages 12 to 24 of the Company's
Prospectus dated 19 October 2020.
The risks considered by the Board as the key risks to the Group
and the mitigations applied are summarised below. The Board
believes that these risks are unchanged in respect of the remaining
six months of the year to 31 December 2021.
High Risks Mitigation
Investment risk - Copyright performance The Board is provided with independent
concerns - there can be no guarantee reviews of the investments with
that the historic performance of reports on the performance of the
a Copyright will continue in the Copyrights. The Board will monitor
future. the underlying portfolio to ensure
performance is met and maintained
and that milestones are met. The
Investment Manager is to predominantly
acquire Copyrights that demonstrate
enduring appeal and longevity and
take into account responses in changes
to popularity of genres, and appreciation
and reputation of particular artists.
--------------------------------------------
Reliance upon intellectual property The Investment Manager is engaged
rights could cause an adverse risk to provide guidance to the Board
on the Group's financial position on how to exploit the intellectual
- ability to implement the Investment property rights represented by Copyrights,
Policy and achieve the Investment ensuring any risks are taken into
Objective is dependent upon the consideration to avoid an impact
Group being able to protect and to the financial position of the
exploit the intellectual property Group.
rights represented by Copyrights.
--------------------------------------------
Targeted annual dividend cannot The Board together with the Investment
be achieved - dividends are based Manager work together to follow
on a number of estimates and assumptions. the Company's Investment Policy,
to acquire investments that will
generate revenue to achieve the
targets set to maintain the payment
of dividends.
--------------------------------------------
Valuation of assets - incorrect External valuations are performed
/ inappropriate pricing methods on the assets by a third party and
used resulting in financial loss. provided to the Administrator, with
oversight and approval of such valuations
provided by the Investment Manager
and approved by the Board.
--------------------------------------------
Ineffective monitoring / oversight Regular reviews of third parties
of outsourced functions not conducted by the Administrator / the Board.
effectively and, in terms of legislative
or regulatory requirements, resulting
in regulatory sanctions / error
/ failure by service provider causing
loss / reputational damage / sanctions
--------------------------------------------
Emerging risks The Board has developed a risk matrix
for the Company which is tabled
at every Board meeting and continually
monitors emerging risk areas relevant
to the performance of the Group
including those which could threaten
its business model, future performance
and liquidity on an ongoing basis.
--------------------------------------------
Related Party Transactions
There were no material related party transactions which took
place in the Period, other than those disclosed at note 12 of the
Notes to the unaudited Interim Consolidated Financial Statements or
in the Prospectus.
G o i n g Concern
The Company's principal activities are set out in the Company
Overview of this report. The financial position of the Company is
set out in the Interim Consolidated Statement of Financial
Position. In addition, note 10 to the Interim Consolidated
Financial Statements includes the Company's objectives, policies
and processes for managing its capital, its financial risk
management objectives and its exposures to credit risk and
liquidity risk.
COVID-19 has affected revenues across the entire music ecosystem
and the Company is not totally insulated from its effect. Global
live music was reportedly down 76% in 2020 compared to 2019 and
that is likely to affect performance royalty flow in calendar year
2021. The Company's portfolio has a heavy concentration in older
repertoire which earns very little from the live sector, so the
effect of COVID-19 on the Company's live performance revenue is
expected to be less significant than that of industry projections.
General performance royalty income globally is predicted to decline
by around 20% in 2021 compared to 2020 (due to shops, restaurants,
bars, cinemas and night clubs' closures), with many Collective
Management Organisations (eg PRS) giving such licensed
establishments payment holidays. However, the increase in digital
music consumption (of which performance royalty income is an
element) is expected to compensate for most of the decline expected
in general performance royalty income.
The Directors have reviewed cash flow projections that detail
revenue and liabilities and will continue to receive cash flow
projections as part of the Company's reporting and monitoring
processes. After reviewing the cash flow projections and receiving
feedback from the Investment Manager, as well as taking into
account the principal risks and uncertainties, the Directors
believe that the Company has adequate financial resources to
continue its operational existence for the foreseeable future and
at least 12 months from the date of approval of this Interim
Financial Report.
Respons i b i l i ty Stateme nt
The Directors confirm that to the best of their knowledge:
- the Interim Consolidated Financial Statements have been
prepared in accordance with IAS 34 Interim Financial Reporting;
- the Interim Financial Report, which includes the Chairman's
Report, the Investment Manager's Report and the Interim Management
Report, includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the interim period of the financial year and their impact on
the interim set of financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first interim period of the current financial year and that
have materially affected the financial position or the performance
of the enterprise during that period.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website, and for the preparation and dissemination of
financial statements. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Si g ne d on beha lf of t he Board of Dire c t ors of t he
Company .
Caroline Chan Francis Keeling
Director Director
29 September 2021
INDEPENT REVIEW REPORT TO ROUND HILL MUSIC ROYALTY FUND
LIMITED
Conclusion
We have been engaged by Round Hill Music Royalty Fund Limited
(the "Company") to review the consolidated financial statements in
the interim financial report for the period from 5 August 2020
(date of incorporation) to 30 June 2021 of the Company and its
subsidiaries (together, the "Group"), which comprises the interim
consolidated statement of financial position, the interim
consolidated statement of comprehensive income, the interim
consolidated statement of changes in equity, the interim
consolidated statement of cash flows and the related explanatory
notes.
Based on our review, nothing has come to our attention that
causes us to believe that the consolidated financial statements in
the interim financial report for the period from 5 August 2020
(date of incorporation) to 30 June 2021 do not give a true and fair
view of the financial position of the Group as at 30 June 2021 and
of its financial performance and its cash flows for the period then
ended, in accordance with IAS 34 Interim Financial Reporting and
the Disclosure and Guidance and Transparency Rules ("the DTR") of
the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity ("ISRE") issued by the Financial Reporting Council for use
in the UK. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. We read the other information contained in the interim
financial report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the consolidated financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Scope of review
section of this report, nothing has come to our attention to
suggest that the directors have inappropriately adopted the going
concern basis of accounting or that the directors have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Directors' responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with the DTR
of the UK FCA.
The consolidated financial statements included in this interim
report have been prepared in accordance with IAS 34 Interim
Financial Reporting.
In preparing the interim financial report, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the consolidated financial statements in the interim financial
report based on our review. Our conclusion, including our
conclusions relating to going concern, are based on procedures that
are less extensive than audit procedures, as described in the scope
of review paragraph of this report.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement letter to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Dermot Dempsey
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants
Guernsey
28 September 2021
Interim Consolidated Statement of Financial Position
As at 30 June 2021 (unaudited)
30 June
2021
Note US$
------- ------------
Assets
Current assets
Cash and cash equivalents 5 9,465,989
Accounts receivable and accrued income 6 14,478,205
Total current assets 23,944,194
------------
Non-current assets
Catalogues 4 273,937,974
Financial assets at fair value through
profit or loss 15 59,379,011
Total non-current assets 333,316,985
------------
Total assets 357,261,179
------------
Liabilities
Current liabilities
Accounts payable and accrued expenses 7 5,765,930
Loans with related parties 499,408
Total current liabilities 6,265,338
------------
Non-current liabilities
Bank loan 18 31,681,326
------------
Total Non-current liabilities 31,681,326
------------
Total liabilities 37,946,664
------------
Equity
Ordinary share capital 8 323,966,979
Retained earnings (4,652,464)
Total equity 319,314,515
Total liabilities and equity 357,261,179
------------
IFRS Net Asset Value per Ordinary
Share (US Dollars) 11 0.97
Economic Net Asset Value per Ordinary
Share (US Dollars) 11 1.07
Approved and authorised for issue by the Board of Directors on
29 September 2021 and signed on their behalf by:
Director Director
The accompanying Notes form an integral part of these Interim
Consolidated Financial Statements.
Interim Consolidated Statement of Comprehensive Income
For the period from incorporation on 5 August 2020 to 30 June
2021 (unaudited)
5 August
2020 to 30
June 2021
Note US$
----- ------------
Income
Royalty income 9 16,288,444
Investment Income 16,9 1,016,013
Royalty expense (4,661,607)
Investment expenses (258,889)
12,383,961
------------
Expenses
Administration fees 13 142,589
Audit and interim review fees 150,700
Amortisation of Catalogues 4 8,824,140
Broker fees 43,033
Director fees 12 271,865
Legal and professional fees 990,146
Performance fees 13 304,232
Investment management fees 13 1,788,531
Portfolio administration fees 13 850,717
Other operating expenses 331,140
Total operating costs (13,697,093)
------------
Operating loss for the period before
finance and tax expenses (1,313,132)
Finance costs 18 (214,389)
Fair value losses on financial assets
at fair value through profit or loss 15 (664,193)
------------
Net loss for the period before tax (2,191,714)
Income tax expense 19 -
------------
Net loss for the period (2,191,714)
------------
Total comprehensive loss for the period (2,191,714)
------------
Basic and diluted loss per Ordinary
Share (US Dollars) 14 (0.01)
All activities derive from continuing operations.
The accompanying Notes form an integral part of these
Interim Consolidated Financial Statements
Interim Consolidated Statement of Cash Flows
For the period from incorporation on 5 August 2020 to 30 June
2021 (unaudited)
30 June 2021
Note US$
------ ----------------------
Operating activities
Net loss for the period (2,191,714)
Items not affecting cash:
Amortisation of Catalogues 4 8,824,140
Fair value (gains)/losses on financial
assets at fair value through profit
or loss 15 664,193
Increase in accounts receivable and
accrued income 6 (14,478,205)
Increase in accounts payable and accrued
expenses 7 5,607,708
Interest payable - Truist Bank 7 158,222
Purchase of financial assets at fair
value through profit or loss 15 (60,043,204)
Purchase of Catalogues 4 (282,762,114)
Net cash flows used in operating activities (344,220,974)
----------------------
Financing activities
Bank loan drawn 18 31,681,326
Proceeds from share issue 8 330,561,000
Share issue costs 8 (6,594,021)
Dividends paid 17 (2,460,750)
Loans with related parties 499,408
Net cash flows from financing activities 353,686,963
----------------------
Change in cash and cash equivalents 9,465,989
Cash and cash equivalents at beginning -
of the period
Cash and cash equivalents at end of
the period 5 9,465,989
----------------------
The accompanying Notes form an integral part of these Interim
Consolidated Financial Statements.
Interim Consolidated Statement of Changes in Equity
For the period from incorporation on 5 August 2020 to 30 June
2021 (unaudited)
Ordinary Retained
Share Capital Earnings Total Equity
Notes US$ US$ US$
As at 5 August 2020 - - -
Shares issued 8 330,561,000 - 330,561,000
Share issue expenses 8 (6,594,021) - (6,594,021)
Net loss for the
period - (2,191,714) (2,191,714)
Dividends declared 17 - (2,460,750) (2,460,750)
Balance at 30 June
2021 323,966,979 (4,652,464) 319,314,515
-------------- ------------- -------------
The accompanying Notes form an integral part of these Interim
Consolidated Financial Statements.
Notes to the Interim Consolidated Financial Statements
For the period 5 August 2020 to 30 June 2021
1. Corporate information
Round Hill Music Royalty Fund Limited ("Company") is a
non-cellular Guernsey incorporated company limited by shares and is
registered with the GFSC as a registered closed-ended collective
investment scheme pursuant to the POI Law and the RCIS Rules. The
Company is a UK resident for taxation purposes, to carry on
business as an investment trust within the meaning of Section 1158
of CTA 2010.
The Company's Investment Objective is to provide investors with
an attractive level of regular and growing income and capital
returns from investment primarily in high quality, music
intellectual property.
The Company has appointed Round Hill Music LP ("Round Hill
Music") as its investment manager (the "Investment Manager") to
manage its assets on a discretionary basis. Round Hill Music, which
is the sixth largest music publisher in the U.S. and is a fully
integrated owner and operator of music copyright properties,
focuses on sourcing iconic Copyrights that it believes have an
established place in culture, a history of stable royalties and
potential for future exploitation. Round Hill Music is also
responsible for the administration of the Company's assets
including the collection of royalties.
On 11 November 2020, the Company completed an initial public
offering and listed its Ordinary Shares on the SFS of the LSE on 13
November 2020, where it trades under the symbol "RHM".
These Interim Consolidated Financial Statements of the Company
and its subsidiaries (the "Group") have been prepared for the
period from incorporation on 5 August 2020 to 30 June 2021. These
Interim Consolidated Financial Statements do not contain all the
information and disclosures that will be contained in annual
financial statements. As the Group has not previously published
annual financial statements, these Interim Consolidated Financial
Statements contain additional information about the accounting
policies applied from incorporation. These Interim Consolidated
Financial Statements are unaudited.
2. Accounting policies
The principal accounting policies applied in the preparation of
these Interim Consolidated Financial Statements are set out
below.
2.1 New and amended standards and interpretations applied in
these Interim Consolidated Financial Statements
On incorporation, the Company adopted all of the IFRS standards
and interpretations that were in effect at that date and are
applicable to the Group.
2.1.1 New and amended standards and interpretations not applied
in these Interim Consolidated Financial Statements (issued but not
yet effective)
Other accounting standards and interpretations have been
published and will be mandatory for the Group's accounting periods
beginning on or after 1 January 2021 or later periods. The impact
of these standards is not expected to be material to the reported
results and financial position of the Group.
2.2 Group Information
As at 30 June 2021, the details of the Group's subsidiaries are
as follows:
Place of incorporation % of voting Consolidation
Name of the subsidiary and operation rights % Interest Method
----------------------- ------------------------- ------------- ---------- ---------------
RHMRF1 Limited United Kingdom 100 100 Full
----------------------- ------------------------- ------------- ---------- ---------------
RHMRF2 Limited United Kingdom 100 100 Full
----------------------- ------------------------- ------------- ---------- ---------------
On 22 September 2021, a third subsidiary was incorporated in
United Kingdom, RHMRF3 Limited. The Company holds 100% of the
interest in this subsidiary.
2.3 Going Concern
The Directors monitor the capital and liquidity requirements of
the Company on a regular basis. They have also reviewed cash flow
forecasts prepared by the Investment Manager which are based in
part on assumptions about the future purchase and returns from
existing Catalogues and the annual operating cost.
Despite the Group making a loss in its first operating period,
the Group has a significant cash balance as well as large positive
net current assets and net assets at the period end.
Based on these sources of information and their own judgement,
the Directors believe it is appropriate to prepare the Consolidated
Interim Financial Statements of the Group on a going concern
basis.
2.4 Basis of preparation
These Interim Consolidated Financial Statements for the
reporting period ended 30 June 2021 have been prepared in
accordance with Accounting Standard IAS 34 Interim Financial
Reporting.
Consolidation
In accordance with section 244 of the Companies Law, the
Directors have elected to prepare interim consolidated financial
statements from incorporation until 30 June 2021 for the Group.
Therefore, there is no requirement to present individual financial
statements for the Company within the Interim Consolidated
Financial Statements.
These I nterim Consolidated Financial Statements incorporate the
financial statements of the Company and entities controlled by the
Company at the reporting date. The Group controls an entity when it
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect these
returns through its power over the entity.
Subsidiaries are consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the date
on which control is transferred out of the Group.
Notes to the Interim Consolidated Financial Statements
For the period 5 August 2020 to 30 June 2021
These Interim Consolidated Financial Statements include the
results of the subsidiaries disclosed in Note 2.2. All intra-group
transactions,
balances, income and expenses are eliminated on consolidation.
The Group does not include any non-controlling interest.
2.5 Segmental reporting
The chief operating decision maker is the Board of Directors.
The Directors are of the opinion that the Group is engaged in a
single segment of business, being the investment of the Group's
capital in its portfolio of Catalogues to provide investors with an
attractive level of regular and growing income, together with the
potential for capital growth.
2.6 Revenue Recognition
Revenue from operations and associated costs
The revenue earned by the Group is recognised in accordance with
IFRS 15 and solely consists of royalty income, which is divided
into three main revenue categories:
-- Mechanical royalties - these are collected by Mechanical
Rights Organisations ("MROs") or Collective Management
Organisations ("CMOs") worldwide which represent songwriters and
other copyright owners, except in territories where labels are
licensed directly. Mechanical royalties are also collected by the
portfolio administrators (e.g. a sub-publisher) with whom the Group
contracts;
-- Performance royalties - these are collected by various
Performance Rights Organisations ("PROs") worldwide which represent
songwriters and other copyright owners; and
-- Synchronisation fees - these are typically paid directly to
the owner of the relevant copyright or its publisher, on the terms
and in the amounts agreed with the relevant film or television
production company, advertising agency or end customer.
These revenue categories are further disaggregated into
individual revenue streams which are disclosed in detail in Note 9.
The Group follows the same accounting policies in respect of all
revenue streams, unless otherwise disclosed.
As royalty income is typically reported by the different royalty
collection agents on an arrears basis via statement (3-6 months for
mechanical royalties and 3-12 months for performance royalties)
and, where statements have not been received at the year end, the
Group accrues for those reporting delays by assessing historic and
forecasted earnings over the equivalent reporting period based on
evidenced historic revenue reporting, seasonality and industry
consumption and growth rates since the last statement date.
The Company enters into licence arrangements in respect of
Catalogues with third party collection agents. Licences granted to
collection agents are deemed to constitute usage based, right of
use licences as per IFRS 15. Revenue arising from licences entered
into with collection agents is therefore recognised in the period.
Payment is made upon reporting of those usages within royalty
statements delivered typically 3-6 months after usage (see above).
The significant payment terms are 60-90 days. This revenue is
disaggregated to be reviewed by usage period, source of income,
work title, reporting period and royalty deductions (i.e.
administration fee retained by the collection agent). The
contractual basis of the licence arrangements are such that the
agents are deemed as 'principals' for tax purposes, therefore, the
Company recognises its revenue net of administration fees. Where
available at the end of each month or earlier interval to which the
revenue relates, revenue is recorded on the basis of royalty
statements received from collection agents.
Non-recourse fixed fee arrangements are recognised at the point
at which control of the licence passes to the collection agents.
Variable consideration is recognised in the period when the usage
of the Catalogues occurs.
2.7 Expenses
Expenses are accounted for on an accruals basis. Expenses are
charged through the Interim Consolidated Statement of Comprehensive
Income. Expenses include royalty costs which are paid to third
parties which include the writers.
2.8 Dividends
Dividends are accounted for in the period in which they are
declared and approved by the Board of Directors .
2.9 Catalogues
Catalogues include music catalogues, artists' contracts and
music publishing rights and are recognised as intangible assets,
when substantially all the risks and rewards of ownership have
transferred to the Group, and are measured initially at the fair
value of the consideration paid. Each Catalogue is subsequently
amortised in expenses over the useful life of the asset and shown
net of any impairment considered necessary. This amortisation is
shown in the Interim Consolidated Statement of Comprehensive Income
as 'amortisation of Catalogues'. Useful life is separately
considered for each Catalogue and is reviewed at the end of each
reporting period. Catalogues are derecognised when the Group has
transferred substantially all the risks and rewards of ownership
and it no longer has control over the asset.
Impairment on Catalogues
Each time events or changes in the respective Catalogues or
economic environment indicate a risk of impairment of intangible
assets, the Group re-examines the value of these assets for
indicators of impairment. When there are indicators of impairment,
the impairment test is performed to compare the recoverable amount
to the carrying value of the asset. The recoverable amount is
determined as the higher of: (i) the value in use; or (ii) the fair
value (less costs to sell) as described hereafter, for each
individual asset.
The value in use of each asset is determined by the Board and /
or the Investment Manager at time of acquisition, which is the
discounted value of future cash flows by using cash flow
projections consistent with the expected portfolio cash flows and
the most recent forecasts as at that time. Applied discount rates
are determined by reference to an appropriate benchmark as
determined by the Board and / or the Investment Manager and reflect
the current assessment by the Group of the time value of money and
risks specific to each asset. Growth rates used for the evaluation
of individual assets are based on industry growth rates sourced
from independent market reports and other third-party sources.
The fair value (less costs to sell) is considered to be equal to
the fair value determined by the portfolio independent valuer,
which is also the discounted value of future cash flows by using
cash flow projections consistent with the expected portfolio cash
flows and the most recent forecasts as at that time
cross-referenced, where appropriate, against market multiples for
recent transactions for similar assets. The portfolio independent
valuer uses their own proprietary analysis to project out income
streams, which is based on independent market reports and
third-party sources. The current discount rate used by the
portfolio independent valuer is 8.5%.
Whilst the Board and the Investment Manager regularly assess
other indicators of impairment (such as a songwriter's or key
performance artist's reputation etc.), the Board and the Investment
Manager typically use the fair value of the assets, being the
Catalogues, as an initial indicator of impairment. For assets that
are currently valued below their fair value, the Board and the
Investment Manager will consider the qualitative and quantitative
aspects of the respective asset in determining its value in use to
determine if the indicator of impairment holds true.
If the recoverable amount is still lower than the carrying value
of an asset or group of assets and the qualitative and quantitative
aspects do not support a recoverable amount higher than the
carrying amount, an impairment loss equal to the difference is
recognised in profit and loss. The impairment losses recognised in
respect of intangible assets may be reversed in a later period if
the recoverable amount becomes greater than the carrying value,
within the limit of impairment losses previously recognised.
2.10 Trade receivables
Trade receivables and other receivables that have fixed or
determinable payments that are not quoted in an active market are
initially measured at fair value plus transaction costs directly
attributable to the acquisition, and subsequently measured at
amortised cost using the effective interest method, less allowance
for Expected Credit Losses (Note 3). Interest income is recognised
by applying the effective interest rate, except for short term
receivables when the recognition of interest would be
immaterial.
2.11 Financial assets
In accordance with IFRS 9, the Group classifies its financial
assets at initial recognition into the categories of financial
assets and financial liabilities discussed below.
The Group classifies its financial assets as subsequently
measured at amortised cost or measured at Fair Value Through Profit
and Loss ("FVTPL") on the basis of both:
-- The entity's business model for managing the financial assets; and
-- The contractual cash flow characteristics of the financial asset.
Financial assets measured at amortised cost
A debt instrument is measured at amortised cost if it is held
within a business model whose objective is to hold financial assets
in order to collect contractual cash flows and its contractual
terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal ("SPPI") amount
outstanding. The Group includes in this category short-term
non-financing trade and other receivables.
Derecognition
A financial asset is derecognised (in whole or in part)
either:
-- When the Group has transferred substantially all the risks and rewards of ownership; or
-- When it has neither transferred nor retained substantially
all the risks and rewards and when it no longer has control over
the asset or a portion of the asset; or
-- When the contractual right to receive cash flow has expired.
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement
date.
Classification
Financial assets classified at FVTPL because the Fair Value
Through Other Comprehensive Income ("FVTOCI") designation has not
been made.
The Group includes in this category:
-- Investment in RH Carlin Holdings LLC (note 15%.
Measurement
Investments made by the Group are measured initially and
subsequently at fair value, with changes in fair value taken to the
Statement of Comprehensive Income. Transaction costs are expensed
in the Statement of Comprehensive Income in the year in which they
arise for those financial instruments classified at FVTPL.
Fair value estimate
The fair value of financial assets at fair value through profit
and loss is based on the NAV of the underlying entity as adjusted
for the fair value of its underlying Catalogues given that they are
held by the underlying entity at cost less accumulated amortisation
and impairment. Changes in the fair value of investment in the
underlying entity are subject to the value of the underlying
Catalogues, as well any changes to the value of any other
underlying assets and liabilities. Therefore, it is deemed
appropriate to use the value of the Catalogues when determining the
fair value.
Further information with regards to the fair value is detailed
in Note 3.
2.12 Financial liabilities
Financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortised
cost using the effective interest method, with interest expense
recognised on an effective yield basis.
This category includes all financial liabilities.
The Company includes in this category:
-- Accounts payable
-- Accrued expenses
-- Bank loans.
(i) Accounts payable and accrued expenses
Accounts payable and accrued expenses are classified as
financial liabilities at amortised cost. Accounts payable and
accrued expenses are not interest-bearing and are stated at their
nominal value.
(ii) Bank loans and interest
Financial liabilities are subsequently measured at amortised
cost using the effective interest method, with interest expense
recognised on an effective yield basis.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
2.13 Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the value ofceeds received, net of direct issue
costs.
Repurchase of the Company's own equity instruments is recognised
and deducted directly in equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or
cancellation of the Company's own equity instruments. Ordinary
Shares are classified as equity in accordance with IAS 32 -
"Financial Instruments: Presentation" as these instruments include
no contractual obligation to deliver cash and the redemption
mechanism is not mandatory.
2.14 Cash and Cash equivalents
Cash at bank and short term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as call
deposits, short term deposits with a term of no more than three
months from the start of the deposit and highly liquid investments
readily convertible to known amounts of cash and subject to
insignificant risk of changes in value. Cash and cash equivalents
consist of cash in hand and short-term deposits in banks with an
original maturity of three months or less.
2.15 Functional and Foreign currency
Items included in the Interim Consolidated Financial Statements
of each of the Group's subsidiaries are measured using the currency
of the primary economic environment in which each entity operates
('the functional currency'). The Interim Consolidated Financial
Statements are presented in United States Dollar, which is the
functional and presentation currency of the Company and each of its
Subsidiaries.
On incorporation, the functional currency of the Company and its
subsidiaries was determined to be US Dollars due to the significant
proportion of transactions in US Dollars, such as the Catalogue
purchases and the associated royalty revenues and expenses.
At each balance sheet date, monetary assets and liabilities that
are denominated in foreign currencies are translated at the rates
prevailing at that date. Non -- monetary items carried at fair
value that are denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was
determined. Non -- monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period
in which they arise. Transactions denominated in foreign currencies
are translated into US Dollars at the rate of exchange ruling at
the date of the transaction.
2.16 Investment income
Dividends, distribution income, and interest income are included
in the Group's investment income and are recognised when the
Group's right to receive the income is established. In the case of
dividends, this is generally when shareholders approve the
dividend.
2.17 Interest expense
Interest expense is recognised within 'finance costs' in profit
or loss using the effective interest method.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating the
interest expense over the relevant year. The effective interest
rate is the rate that exactly discounts estimated future cash
payments or receipts throughout the expected life of the financial
instrument, or a shorter year where appropriate, to the net
carrying amount of the financial liability.
When calculating the effective interest rate, the Group
estimates cash flows considering all contractual terms of the
financial instrument but does not consider future credit losses.
The calculation includes all fees paid or received between parties
to the contract that are an integral part of the effective interest
rate, transaction costs and all other premiums or discounts.
3. Significant accounting judgements, estimates and assumptions
The preparation of the Group's Interim Consolidated Financial
Statements requires the application of estimates and assumptions
which may affect the results reported in the financial statements.
Uncertainty about these estimates and assumptions could result in
outcomes that require a material adjustment to the carrying amount
of the asset or liability affected in future periods. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year, are discussed below. The Group based its
assumptions and made estimates based on the information available
when the Interim Consolidated Financial Statements were prepared.
However, these assumptions and estimates may change based on market
changes or circumstances beyond the control of the Group.
Functional currency
Functional currency is defined as the currency of the primary
economic environment in which the Group operates, and IAS 21
outlines primary and secondary factors an entity should consider
when determining its functional currency. On incorporation, the
functional currency of the Company and its subsidiaries was
determined to be US Dollars due to the significant proportion of
transactions in US Dollars, such as the Catalogue purchases and the
associated royalty revenues and expenses. Accordingly, these
Interim Consolidated Financial Statements are prepared in US
Dollars.
Assessment of useful life of intangible assets
In order to calculate the amortised cost of the intangible
assets it is necessary to assess the useful economic life of the
Copyright interests. This requires forecasts of the expected future
revenue from the Copyright interests, which contains significant
uncertainties as the ongoing popularity of a composition or song
can fluctuate unexpectedly.
Based on the Board's consideration of the international music
market and the sustained growth in streaming revenues, the Board
has separately considered the useful life of each Catalogue. The
Board has assessed the weighted average useful life of each
Catalogue to be 16 years. In making this estimate, the Board has
also considered the period over which revenue is expected to be
reliably generated by each Catalogue. The Board notes this is in
line with useful life estimates of other large music companies.
Critical estimates in applying the Group's accounting policies -
revenue recognition:
Revenues received from CMOs are subject to a significant time
lag in the industry. As such, an income accrual is estimated by the
Investment Manager. In calculating accruals, the Investment Manager
makes judgements around seasonality, over or under performance, and
commercial factors based on historical performance, their knowledge
of each Catalogue and their regular correspondence with the various
administrators, record labels and international societies.
In recommending the estimate of this accrual to the Board of
Directors, the Investment Manager used its analysis of each
Catalogue's revenue history as well its knowledge of the respective
Catalogue performance trends to recommend the estimated accruals.
The income accrual is based on analysis of each Catalogue's revenue
history as well as knowledge of the respective Catalogue's
performance trends.
Included in the income received from CMOs are amounts payable in
relation to a writers share of performance royalties. Consequently
the estimation of the income accrual incorporates the accrued
royalty costs which are payable to writers and is recognised
separately in accounts payable and accrued expenses.
Expected Credit Loss (ECL) in relation to revenue
receivables
Royalty earnings for accruals and receivables recognised in the
interim period ended 30 June 2021 are paid to Round Hill Music as
portfolio administrator by Collective Management Organisations
(e.g. ASCAP, MCPS, PRS), record companies, sub-publishers,
synchronisation licensees and digital services.
Round Hill Music is constantly monitoring the marketplace at a
national level (both directly and through its sub-publishers) to
assess risks which may negatively affect the timely flow of royalty
income. Aside from seasonal variances and general economic events
(e.g. COVID-19), there are no signs of any CMOs or other licensees
in the music industry showing any signs of defaulting on their
payment obligations (with the majority having being established for
up to 100 years, with a robust and stable track record), therefore,
any associated risk in this area is considered to be almost zero.
Direct licensing activity (e.g. the issue of a sync licence) is
invoiced on a transactional basis so it is very easy to contain
music usage and avoid debtors arising.
Assessment of impairment and the Calculation of Economic NAV
As disclosed in Note 2.9, intangible assets are subject to
annual impairment review which relies on assumptions made by the
Catalogues' independent valuer. Assumptions are updated annually,
specifically those relating to future cash flows and discount
rates.
The fair value estimates that are prepared in order to calculate
the Economic NAV and Economic NAV per Ordinary Share are also used
to assess whether there is evidence that the intangible assets may
be impaired.
Valuations of music publishing rights typically adopt the
Discounted Cash Flow ("DCF") valuation approach which measures the
present value of anticipated future revenues from acquiring the
Catalogues, which are discounted at a 'market cost of capital' of
8.5% and a terminal value in 16 years. This method is accepted as
an objective way of measuring future benefits; taking into account
income projections from various music industry sources across
various revenue flows whilst also factoring in the associated cost
of capital.
It is the intention of the Board that the Catalogues will be
valued on an ongoing basis using a consistent DCF valuation
methodology, and that this be used as an initial indicator of
impairment for each Catalogue.
Determining fair value of assets
The fair value of financial assets at fair value through profit
and loss is based on the NAV of the underlying entity, which is in
accordance with US GAAP as reported by the underlying manager, and
as adjusted for the fair value of the underlying Catalogues, given
that they are held by the underlying entity at cost less
accumulated amortisation and impairment. It is deemed appropriate
to use the value of the Catalogues when determining the fair value
of the underlying entity, with no significant differences between
IFRS and US GAAP in this regard.
The fair value of financial assets at fair value through profit
and loss is based on the NAV of the underlying entity, with changes
in the fair value of the investment subject to the changes in the
value of the underlying Catalogues as valued by an external
independent valuer, as well as any changes in the fair value of the
underlying entity's other assets and liabilities. This external
appraisal in respect of the underlying Catalogues' valuation, which
is reviewed by the Directors, uses the methods described in note
4.
Total
US$
-----------
Cost
Opening balance -
Additions 282,762,114
-----------
Closing balance 282,762,114
Amortisation and Impairment
Opening balance -
Amortisation 8,824,140
Impairment -
-----------
Closing balance 8,824,140
Net book value
At 30 June 2021 273,937,974
Fair value as at 30 June
2021 311,298,747
4. Catalogues
The Group amortises each Catalogue with a limited useful life
using the straight-line method of 16 years (other than in
exceptional circumstances for specific Catalogues).
Useful life is separately considered for each Catalogue and is
reviewed at the end of each reporting period. At 30 June 2021
accumulated amortisation for all of the Catalogues is US$ 8,824,140
and the accumulated impairment to date is US$nil.
The Board engaged portfolio independent valuer, Massarsky
Consulting, Inc., to value the Catalogues as at 30 June 2021. Each
income type from individual Catalogues was analysed and forecast to
derive the fair value of the Catalogues by adopting a DCF valuation
methodology using a discount rate of 8.5%. Income was analysed and
forecast at the level of each individual Catalogue and by income
type. Future revenues were also estimated, often at the level of
individual songs, and incorporated into their valuation. Massarsky
Consulting, Inc has also taken into consideration macro factors
including the growth of streaming revenue, the global growth of the
recorded music industry and the short and medium term impact of
COVID-19 in their analysis. The Board has approved and adopted the
valuations prepared by the portfolio independent valuer. The
reconciliation between the IFRS NAV and the Economic NAV is
referred to in note 11.
The sensitivity to the discount rate used to determine the fair
value of the Catalogues owned by the Company on the Economic NAV of
the Company is as follows:
-1% discount rate will grow the fair value of the Company's
investment in Catalogues by 9.8%, increasing the Economic NAV of
the Company by US$30,425,547 which represents an increase of 8.6%%
to the Economic NAV per Ordinary Share of the Company.
+1% discount rate will reduce the fair value of the Company's
investment in Catalogues by 9.2%, reducing the Economic NAV of the
Company by US$28,471,073 which represents a decrease of 8.0% to the
Economic NAV per Ordinary Share of the Company.
5. Cash and cash equivalents
30 June 2021
US$
------------
Bank accounts 9,465,989
9,465,989
------------
6. Accounts receivable and accrued income
30 June 2021
US$
------------
Prepayments 77,291
Capitalised deal expenses 188,910
Pre-paid arrangement fees 1,628,727
Accrued royalty income 5,933,171
Royalty income receivable from the Investment
Manager (see note 12) 5,634,093
Investment income receivable 1,016,013
14,478,205
------------
7. Accounts payable and accrued expenses (amounts falling due within one year)
30 June 2021
US$
------------
Portfolio Administration fees(see note
13) 497,707
Management fee (see note 13) 864,592
Performance fee (see note 13) 304,232
Administration fee (see note 13) 15,164
Sundry accruals 455,490
Interest payable on bank loan (see note
18) 158,222
Amounts owing to songwriters 3,470,523
5,765,930
------------
8. Share capital
Authorised
The Company has the power to issue an unlimited number of
shares. As at 30 June 2021, the issued shares of the Company were
Ordinary Shares of no par value.
Issued
The following table shows the movement of the issued shares in
the Company during the period:
Number of Share capital
Ordinary US$
Shares
----------- -------------
Share capital
Issued and fully paid shares during
the period 330,100,000 323,966,979
Share capital at 30 June 2021 330,100,000 323,966,979
----------- -------------
30 June 2021
US$
Issued and fully paid:
Ordinary Shares issued on 13 November 2020 282,000,000
Ordinary Shares issued on 18 December 2020 46,561,000
Ordinary Shares issued on 7 June 2021 2,000,000
Share issue costs (6,594,021)
------------------------------------------- ------------
Share Capital as at 30 June 2021 323,966,979
------------------------------------------- ------------
9. Royalty Income
30 June 2021
US$
------------
12,495,539
Publishing income 3,792,905
Masters income 16,288,444
Royalty Income
Investment income - Carlin 1,016,013
Total royalty income 17,304,457
------------
There is an inherent time lag with royalties between the time a
composition or song is performed, and the revenue being received by
the Copyright owner. The time lag ranges from 3-6 months on United
States income and 3-12 months on international income. The revenue
accruals booked in the period are disclosed in detail within the
accounts receivable and accrued income.
All revenue streams disclosed in this Note are in scope of IFRS
15.
10. Financial Risk Management
Financial Risk Management Objectives
The Group's activities expose it to various types of financial
risk, principally market risk, credit risk, and liquidity risk. The
Board has overall responsibility for the Group's risk management
and sets policies to manage those risks at an acceptable level.
Fair values
The Investment Manager assessed that the fair values of cash and
cash equivalents, accounts receivables and accrued income and
accounts payable and accrued expenses approximate their carrying
amount largely due to the short-term maturities and high credit
quality of these instruments.
See note 3 and note 15 for details with respect to the fair
value of financial assets at fair value through profit and
loss.
Capital Risk Management
The Company manages its capital to ensure that the Company will
be able to continue as a going concern while maximising the capital
return to Shareholders. The capital structure of the Company
consists of issued share capital and retained earnings, as stated
in the Interim Consolidated Statement of Financial Position.
In order to maintain or adjust the capital structure, the
Company may buy back shares or issue new shares. There are no
external capital requirements imposed on the Company.
The Company's investment policy is set out in the Investment
Objective and Policy section of this Interim Financial Report, on
page 3.
Market Risk
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate as a result of changes in
market prices. The Company is exposed to price risk, currency risk
and interest rate risk.
For price risk, see note 15 for details with respect to the
sensitivity of the value of the financial assets at fair value
through profit and loss to significant changes in the underlying
inputs.
For price risk to the value of the Catalogues in RH Carlin
Holdings LLC, see note 15 for details with respect to the
sensitivity of the value of the Catalogues to significant changes
in the underlying inputs.
Currency risk
Currency risk is the risk that the fair values of future cash
flows will fluctuate because of changes in foreign exchange rates.
The revenue earned from the Catalogues may be subject to foreign
currency fluctuations. Royalties are earned globally and paid in a
number of currencies, therefore, the Company may be impacted by
adverse currency movements. The Company will convert the majority
of overseas currency receipts into US Dollars by agreeing to
currency exchange arrangements with collection agents, or otherwise
itself undertaking foreign exchange conversions.
The Company may engage in full or partial foreign currency
hedging and interest rate hedging. The Company will not enter into
such arrangements for investment purposes.
Credit Risk
Credit risk is the risk of loss due to failure of a counterparty
to fulfil its contractual obligations. The Group is exposed to
credit risk in respect of its contracts with various collection
organisations. This exposure is minimised by dealing with reputable
organisations whose credit risk is deemed to be low given their
respective position in the industry.
As reported in Note 3, there is no impairment of the receivables
balance and credit risk of third parties has been taken into
account when calculating accruals and, as such, expected credit
loss has been deemed nil, or close to nil.
The Group is exposed to credit risk through its balances with
banks which are classified as cash equivalents. The table below
shows the Group's material cash balances and the short-term issuer
credit rating as at the 30 June 2021:
30 June 2021
Location Rating US$
---------------- --------- ------- ------------
Lloyds Bank plc Guernsey A+ 9,465,989
---------------- --------- ------- ------------
*Rated by Standard & Poor's
Interest rate risk
As the Group's interest-bearing assets do not generate
significant amounts of interest, changes in market interest rates
do not have any significant direct effect on the Group's
income.
Trade and other receivables and trade and other payables are
interest free and with a term of less than one year, so it is
assumed that there is no interest rate risk associated with these
financial assets and liabilities.
The Group's interest rate risk principally arises from long-term
borrowings (note 18). Borrowings issued at variable rates exposed
the Group to cash flow interest rate risk.
Liquidity Risk
Liquidity risk is the risk that the Company will be unable to
convert its assets into cash in order to meet its short-term
financial commitments. The Company's liquidity risk is managed on
an ongoing basis by the Investment Manager and the Directors.
Liquidity risk is the risk that the Group may not be able to
meet its financial obligations as they fall due. The Group
maintains a prudent approach to liquidity management by maintaining
sufficient cash reserves to meet foreseeable working capital
requirements. In order to mitigate liquidity risk, the Group aims
to have sufficient cash balances to meet its obligations for a
period of at least twelve months.
The Group prepares a 12 month rolling cash flow forecast, which
is reviewed by the Board and the Investment Manager at least on a
quarterly basis. The cash flow forecast includes a sensitivity
analysis with downside scenarios on income streams impacted
specifically relating to COVID-19. Cash is delivered with royalty
statements, and the majority are delivered quarterly or
semi-annually. A small number of collections are delivered monthly.
Cash is collected and processed throughout calendar quarters or
half years by the administrators and paid out on either 60/90 day
accounting.
At the reporting date, the Group's financial assets and
financial liabilities maturities are:
Less than 1-3 months 3-12 months
Total 1 month Greater
carrying than 12
Note amount months
----------- ---------- ----------- ------------ -----------
Accounts receivable
and accrued income 6 12,772,188 - 10,861,139 1,911,049 -
Cash and cash
equivalents 5 9,465,989 9,465,989 - - -
22,238,177 9,465,989 10,861,139 1,911,049 -
----------- ---------- ----------- ------------ -----------
Accounts payable
and accrued expenses 7 5,765,930 158,222 5,607,708 - -
Bank loan* 18 52,570,443 - 324,769 1,445,250 50,800,424
58,336,373 158,222 5,932,477 1,445,250 50,800,424
----------- ---------- ----------- ------------ -----------
*includes undiscounted future interest
11. IFRS Net Asset Value per Ordinary Share and Economic Net
Asset Value per Ordinary Share
30 June 2021
--------------------------------------------- ---------------------
Number of Ordinary Shares in issue 330,100,000
IFRS NAV per Ordinary Share (US Dollars) 0.97
Economic NAV per Ordinary Share (US Dollars) 1.07
--------------------------------------------- ---------------------
The IFRS NAV per Ordinary Share and the Economic NAV per
Ordinary Share are arrived at by dividing the IFRS NAV and Economic
NAV (respectively) by the number of Ordinary Shares in issue.
Catalogues are classified as intangible assets and measured at
amortised cost or cost less impairment in accordance with IFRS.
The Directors are of the opinion that an Economic NAV provides a
meaningful alternative performance measure and the values of
Catalogues owned directly by the Group are based on fair values
produced by the portfolio independent valuer.
Reconciliation of IFRS NAV to Economic NAV
30 June 2021
US$
------------------------------------------- ------------
IFRS NAV 319,314,515
------------------------------------------- ------------
Adjustments for revaluation of Catalogues
to fair value 28,536,633
Reversal of amortisation 8,824,140
Royalty income accruals (4,025,879)
------------------------------------------- ------------
Economic NAV 352,649,409
------------------------------------------- ------------
12. Related Party Transactions and Directors' remuneration
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the party in making financial or operational
decisions.
The Investment Manager has been identified as a related party as
they earn a management fee, performance fee and a portfolio
administration fee. Please refer to note 13 for the full details of
the fees.
Royalty income receivable from the Investment Manager (see Note
6 for details) is a related party transaction. This balance relates
to cash received by the Investment Manager, as portfolio
administrator, from collection societies (i.e. from the customers)
on behalf of the Company and which has not yet been transferred to
the Company as at 30 June 2021.
Loans with related party relates to expense chargebacks with the
Investment Manager.
Compensation of Directors
Each Director receives a fee of GBP35,000 (US$48,444) per annum
with the Chairman receiving GBP45,000 (US$62,285). The Chair of
each of the Audit Committee and the Management Engagement Committee
receives an additional GBP5,000 (US$6,915) per annum. The Company
Directors' fees for the period amounted to US$271,865 whereby
GBP115,000 (US$159,172) of this related to bonuses paid in July
2021. These bonuses were issued to Directors over and above the
normal fees payable to the Directors, as per the Articles of
Incorporation. The aggregate amount paid and to be paid to
Directors does not exceed the maximum limit of equal to GBP300,000
(US$415,230) per annum as per the Articles of Incorporation. At 30
June 2021, of the US$271,865, US$202,278 was still unpaid.
13. Material Agreements
Investment Management Agreement
The Company has entered into the Investment Management Agreement
with the Investment Manager , pursuant to the terms of which the
Investment Manager is appointed to act as investment manager of the
Company, with responsibility to perform investment management and
risk management functions for the Company (and, where relevant, any
subsidiaries) in accordance with the Company's Investment Policy,
subject to the overall policies, supervision, review and control of
the Board. Under the terms of the Investment Management Agreement
and subject always to the investment guidelines contained in the
Investment Management Agreement, the Investment Manager has
discretion to buy, sell, retain or otherwise deal in the Company's
assets.
The Investment Manager is entitled to receive a management fee
(payable in cash), and a performance fee (usually payable
predominantly in Shares subject to an 18 month lock up
arrangement). The full terms and conditions of the calculation of
the management fee and performance fees are disclosed in the
Company's prospectus. However in summary:
Management Fee
The management fee is calculated at the rate of:
-- 1% per annum of the Average Market Capitalisation up to, but not including, US$400 million;
-- 0.90% per annum of the Average Market Capitalisation that is
between US$400 million and up to and including US$700 million;
and
-- 0.80% per annum of the Average Market Capitalisation in excess of US$700 million.
Management fees for the period were US$1,788,531 with US$864,592
outstanding at 30 June 2021.
Performance fee
On the Performance Fee Calculation Date, the Investment Manager
is entitled to receive a performance fee (the 'Performance Fee')
equal to 10% of the Excess Return multiplied by the time weighted
average number of Ordinary Shares in issue (excluding those held in
treasury) during the relevant performance period relating to that
accounting period, provided that the Performance Fee shall be
capped such that the sum of the management fee and the Performance
Fee paid in respect of that accounting period is no more than 5% of
the lower of: (i) Economic NAV; or (ii) the Performance Period
Average Market Capitalisation for the relevant performance
period.
The Excess Return on the Performance Fee Calculation Date is the
excess (if any) of the Performance Share Price over the higher of:
(a) the Performance Hurdle Price (being the Issue Price compounded
by 10% per annum from Initial Admission subject to appropriate
adjustments in certain situations); and (b) the High Watermark
(being the Performance Share Price on the Performance Fee
Calculation Date where a Performance Fee was payable or the Issue
Price, if a Performance Fee has not yet been paid.
For the purposes of calculating the Performance Fee:
'Performance Share Price' means on the Performance Fee
Calculation Date, the average of the daily closing middle market
prices for the Ordinary Shares for the 20 London Stock Exchange
trading days ending immediately prior to the Performance Fee
Calculation Date and (which shall be adjusted as appropriate: (i)
to include any dividend declared but not paid where the Ordinary
Shares are quoted ex such dividend at any time during the relevant
period; (ii) to exclude any dividend paid in respect of the
Ordinary Shares during that period; and (iii) for the Performance
Adjustments). During the period, the average of the daily closing
middle market prices was US$1.0456; and
' Performance Adjustments' means adjustments to the Performance
Share Price to (i) include the gross amount of any dividends and/or
distributions paid in respect of Ordinary Shares since Initial
Admission; and (ii) make such adjustments to take account of C
Shares as were agreed between the Company and the Investment
Manager, acting reasonably and in good faith, at the time of
issuance of such C Shares.
Performance fees for the period were US$304,232 with the full
amount outstanding at 30 June 2021.
Portfolio Administration Agreement
Under the terms of the Portfolio Administration Agreement, the
Investment Manager has agreed to administer (on behalf of the
Company and its subsidiaries) the Copyrights owned by the Group
and, subject to the overall supervision of the Board, for the
administration and commercial exploitation of the Copyrights. Under
the terms of the Portfolio Administration Agreement, the Company
will pay to Round Hill 10% of all net income it collects on behalf
of the Group.
Portfolio administration fees for the period amounted to US$
850,717 of which US$497,707 was outstanding at 30 June 2021 .
Administration Agreement
Pursuant to the Administration Agreement, JTC Fund Solutions
(Guernsey) Limited has been appointed as Administrator of the
Company. The Administrator is responsible for the day-to-day
administration of the Company and the subsidiaries which accede to
the Administration Agreement including but not limited to and
general secretarial functions required. For the purposes of the
RCIS Rules, the Administrator is the designated manager of the
Company. Investors should note that it is not possible for the
Administrator to provide any investment advice to investors.
Under the terms of the Administration Agreement between the
Administrator and the Company, the Administrator is entitled to an
annual fee of GBP115 000 plus an ad valorem fee of 0.05% calculated
on the Company's assets in excess of GBP300 million (plus fees for
the subsidiaries) for services such as administration, accounting,
corporate secretarial, corporate governance, regulatory compliance
and stock exchange continuing obligations.
Administration fees for the period amounted to US$142,589 of
which US$15,164 was outstanding at 30 June 2021 .
Registrar Agreement
JTC Registrars Limited has been appointed as registrar to the
Company pursuant to the Registrar Agreement. In such capacity, the
Registrar will be responsible for the transfer and settlement of
Shares held in certificated and uncertificated form. The Registrar
is also entitled to reimbursement of all out-of-pocket costs,
expenses and charges properly incurred on behalf of the Company,
under the terms of the Registrar Agreement. The Registrar is
entitled to an annual fee of the higher of GBP6,000 (US$8,305),,
GBP2,500 (US$3,460) per register and GBP 2.00 per Shareholder,
together with a UK transfer agent facility fee of GBP2,000
(US$2,768) per annum.
Registrar fees for the period amounted to US$21,093 of which
US$2,189 was outstanding at 30 June 2021.
14. Basic and diluted earnings (loss) per Ordinary Share
The loss per Ordinary Share has been calculated on an Ordinary
Shares weighted-average basis and is derived by dividing the net
loss for the period attributable to the holders of the Ordinary
Shares by the weighted-average number of Ordinary Shares in
issue.
30 June
2021
US$
-----------
Weighted average of Ordinary Shares in issue 221,754,711
Net loss for the period attributable to the
Shareholders (2,191,714)
Basic and diluted loss per Ordinary Share
(US Dollars) (0.01)
15. Assets measured at fair value
Valuation process
The fair value of financial assets is determined as follows:
Valuation of financial assets at fair value through profit or
loss ("financial assets")
The Company's investment in RH Carlin Holdings LLC is measured
at fair value based on the NAV of the underlying entity, which
itself is calculated in accordance with US GAAP as reported by the
underlying manager, and as adjusted for the fair value of the
underlying Catalogue as permitted under IFRS given that the
Catalogue is held by the underlying entity at cost less accumulated
amortisation and impairment. It is deemed appropriate to use the
value of the underlying catalogue assets when determining the fair
value of the investment, with no significant differences between
IFRS and US GAAP in this regard.
The fair value of investment is based on the NAV of the
underlying entity, with changes in the fair value of the investment
subject to the changes in the value of the underlying catalogue
assets valued by an independent external valuer.
This external appraisal in respect of the underlying catalogue
valuation, which is reviewed by the Directors, uses the methods
described in note
4.
Fair Value Hierarchy
Financial assets designated at fair value through profit or loss
are recorded at fair value and are analysed by using a fair value
hierarchy that reflects the significance of inputs. The fair value
hierarchy has the following levels:
Level 1 inputs are quoted prices (unadjusted) in active markets
for identical assets or liabilities that the entity can access at
the measurement date.
Level 2 inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset or liability,
either directly or indirectly.
Level 3 inputs are unobservable inputs for assets or liabilities
that are not based on observable market data (that is, unobservable
inputs).
As at 30 June 2021 the fair value of financial assets at fair
value through profit and loss is based on the 30 June 2021 NAV of
the underlying entity, as adjusted for the fair value of its
underlying assets.
Reconciliation of recurring fair value measurements categorised
within Level 3 of the fair value hierarchy
The following is a reconciliation of the beginning and ending
balances for recurring fair value measurements of assets and
liabilities that utilise significant unobservable inputs (Level 3)
at the reporting date and the date of acquisition.
Total
US$
----------
Cost
Opening balance -
Acquisition at 30 April
2021 60,043,204
Gains/(losses) at fair
value (664,193)
----------
Closing balance 59,379,011
Significant unobservable inputs and sensitivity analysis
IFRS 13 requires that quantitative information be provided about
significant unobservable inputs used in the fair value measurement
for each class of Level 3 asset and liabilities. The following data
as at 30 June 2021 summarises the valuation methods and information
about fair value measurements and related significant unobservable
inputs (Level 3) where, if changed, could significantly increase or
decrease the valuation of an asset.
The sensitivity to the discount rate used in the valuation of
the Catalogues owned by Carlin has the following impact on the
Economic NAV of the Company as follows:
-1% discount rate in the valuation of the Catalogues owned by
Carlin will grow the fair value of the Company's 29.14% investment
in Carlin by 15%, increasing the Economic NAV of the Company by
US$9,014,537, which represents an increase of 3% to the Economic
NAV per Ordinary Share of the Company.
+1% discount rate in the valuation of the Catalogues owned by
Carlin will reduce the fair value of the Company's 29.14%
investment in Carlin by 13%, reducing the Economic NAV of the
Company by US$7,875,427, which represents a decrease of 2% to the
Economic NAV per Ordinary Share of the Company.
16 . Investment Income
RH Carlin Holdings LLC ("Carlin")
At 30 June 2021, the Company had 29.14% ownership and voting
rights in Carlin. Carlin is a separate legal entity (operating
company) which holds Catalogues and generates royalty income.
The following is a summary of distributions received by the
Company from Carlin and significant balances obtained from Carlin
Financial Statements for the year ended 30 June 2021, and a
reconciliation of the fair value of Carlin, which is included in
the total value of financial assets designated at fair value
through profit or loss:
30 June 2021
US$
Distributions
Investment income 1,016,013
=============
Investment income represents distributions received from
Carlin.
17. Dividends declared
The below dividends were declared and paid to holders of fully
paid Ordinary Shares in issue at the time of declaration, during
the period ended 30 June 2021.
Date of dividend declared
US$ per Ordinary Share Total dividend
US$
21 May 2021 0.0075 2,460,750
Total 2,460,750
----------------
18. Bank loan
30 June 2021
US$
Truist bank loan 31,681,326
Total 31,681,326
------------
The Group has entered into a revolving credit facility (the
"RCF"), provided by Truist Securities, Inc. ("Truist"). The RCF
allows the Company to borrow up to 25 percent of Economic NAV,
calculated at the point of draw down. The interest rate on the
outstanding capital is levied at a fixed rate of 2.25% per annum
plus a margin adjustment based on the applicable London interbank
offered interest rate during the period. In addition, the RCF
levies a commitment fee on the daily unused commitment balance of
facility at a rate of 0.375% per annum. The full repayment of the
loan is due on the 30 April 2026.
Finance costs of US$214,389 have been recognised in the Interim
Consolidated Statement of Comprehensive Income, US$158,222 of this
amount relates to the interest expense, with US$56,167 of the total
amount relating to amortisation of loan arrangement fee. Loan
arrangement fees of US$1,628,726 were paid during the period.
As at 30 June 2021, the fair value of borrowings approximated
their carrying value at the date of the Interim Consolidated
Statement of Financial Position.
19. Taxes
30 June 2021
US$
Period ended
30 June 2021
(a) Tax on profit on ordinary activities $
UK corporation tax on profit for
the period -
---------------------------------
Tax on profit on ordinary activities -
---------------------------------
20. Events after the reporting period
On 16 July 2021 the Company issued 86.5 million C Shares at an
issue price of US$1 per C Share under the Placing Programme. This
resulted in the Company raising proceeds of US$86.5 million.
Immediately following the issue of the C Shares, the total
number of Ordinary Shares in issue was 330,100,000 with voting
rights and the total number of C Shares in issue was 86.5 million
with voting rights.
On 3 August 2021 the Company entered into an agreement to
acquire an interest in a music Catalogue from Yes guitarist and
prolific film score composer, Trevor Rabin. The Catalogue includes
3,528 film scores and song covers. Completion of the deal was
announced on 11 August 2021.
On 3 August 2021, the Company entered into an agreement to
acquire the rights to the Robert Thiele music Catalogue, "What a
Wonderful World" Catalogue.
On 1 August 2021, the Company entered into an agreement to
acquire 100% of the master royalty income from the Catalogue of
Dennis Elliot, a British musician and artist, who was the original
drummer of the rock group Foreigner. The Catalogue comprises 71
original recordings spanning the first seven Foreigner studio
albums. Completion of the deal was announced on 9 September
2021.
On 20 August 2021 the Company announced it had declared a
quarterly dividend of US$0.01125 per Ordinary Share to all the
holders of the Ordinary Shares. The ex-dividend date was Thursday,
26 August 2021.
On 24 August 2021, the Company entered into an agreement to
acquire recorded music income and publishing rights to 30 songs
from Tim Palmer, an English record producer, guitarist and
songwriter of rock and alternative music. Completion of the deal
was announced on 15 September 2021.
On 22 September, RHMRF3 Limited was incorporated in the United
Kingdom, it is a wholly owned subsidiary of the Company.
On 1 April 2021, the Company entered into an agreement to
acquire 100% of the master royalty income of 532 original
recordings from the iconic American R&B group, The O'Jays.
Transfer of rights being effective after payment with completion of
the deal announced on 28 September 2021.
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END
IR DKCBBOBKDCCB
(END) Dow Jones Newswires
September 30, 2021 02:00 ET (06:00 GMT)
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