REG - Hipgnosis Songs Fund - Update on dividend intentions

Hipgnosis Songs FundAnnouncement

06/11/2023 07:15

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RNS Number : 4168S  Hipgnosis Songs Fund Limited  06 November 2023

This announcement contains inside information for the purposes of the UK
Market Abuse Regulation.

 

LEI: 213800XJIPNDVKXMOC11

 

 

Hipgnosis Songs Fund Limited ("Hipgnosis" or the "Company")

 

Update on Dividend Intentions

6 November 2023

 

The Board of Hipgnosis Songs Fund Limited together with its Investment
Adviser, Hipgnosis Song Management Limited, have been undertaking a review of
the Company's financial position as a result of which the Board has determined
that it will not declare dividends before the new financial year.

As a result of this review:

·    It has been determined that the Catalogue bonus provision is expected
to increase by approximately $23 million to $68 million at 30 September 2023
as there are now ten (31 March 2023: six) out of the Company's 146 Catalogues
likely to meet performance hurdles as defined in their acquisition agreements.
The $68 million would be payable over a period of three years from 30
September 2023, with $40 million due within 12 months, $24 million due within
1-2 years and $4 million due within 2-3 years. In addition, there are a
further nineteen Catalogues with active bonus provisions totalling $75
million, that are unlikely to meet performance hurdles; these are not
recognised as provisions but are contingent liabilities and will be disclosed
in the forthcoming interim results with associated sensitivity analysis.

 

·    The Board, advised by the Investment Adviser, is exploring
refinements to the methodology adopted in the Company's revenue accrual
estimation process for the year end results which, based on early assessments,
may result in an accrual adjustment reducing revenue accruals by up to 10%.
Any changes would aim to bring consistency to the description of IFRS revenue
and the Pro Forma Annual Revenue measure through the use of granular data in
the underlying calculations, to support an improved estimation process and
enhanced disclosures.

 

 

In light of this information, the Board has determined that it will not
declare dividends before the new financial year. The operating cash flow of
the Company during this time will therefore be used to ensure that the Company
has sufficient cash resources to fund the payment of the Catalogue bonuses as
required. Additionally, the suspension of dividend payments will provide the
Company with the headroom required to maintain compliance with its revolving
credit facility's Fixed Charge Cover Ratio covenant if the accrual adjustment
is realised in full.

The Board will update the Company's dividend policy as part of proposals which
are due to be made to shareholders by 26 April 2024 following completion of
the Strategic Review.

The person responsible for making this notification is Sylvia Coleman, Senior
Independent Director of Hipgnosis Songs Fund Limited.

 

 

For further information please contact:

 

 Hipgnosis Songs Fund Limited                                                +44 (0) 20 7496 3000

 Sylvia Coleman

 via Singer Capital Markets
 Hipgnosis Song Management                                                   +44 (0) 20 4542 1530

 Merck Mercuriadis                                                           +44 (0) 20 4542 1511

 Ben Katovsky

 Giles Croot (Media)
 Headland Consultancy - Financial PR                                         +44 (0) 20 3805 4822

 Susanna Voyle / Charlie Twigg
 J.P. Morgan Cazenove - Sponsor, Financial Adviser and Corporate Broker      +44 (0) 20 3493 8000

 William Simmonds / Jérémie Birnbaum (Corporate Finance)
 Singer Capital Markets - Corporate Broker                                   +44 (0) 20 7496 3000

 James Moat / Angus Campbell (Corporate Finance)

 Alan Geeves / James Waterlow / Sam Greatrex (Sales)
 RBC Capital Markets - Corporate Broker                                      +44 (0) 20 7635 4000

 Elliot Thomas / Max Avison (Corporate Finance)

 

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