6th Nov 2023 11:00
(Alliance News) - Hipgnosis Songs Fund Ltd on Monday said it does not expect to declare any dividends before the new financial year.
Hipgnosis Songs Fund is a London-based based music intellectual property rights investor, which owns the rights to songs by artists such as Ed Sheeran and Dua Lipa.
This comes after its investment advisor, Hipgnosis Song Management, which has been reviewing the firm's financial position, concluded that it expects catalogue bonus provisions to increase by roughly USD23 million to USD68 million at September 30. It also predicts that 10 out of the firm's 146 catalogues will meet "performance hurdles".
Hipgnosis said: "The USD68 million would be payable over a period of three years from 30 September 2023, with USD40 million due within 12 months, USD24 million due within 1-2 years and USD4 million due within 2-3 years. In addition, there are a further nineteen catalogues with active bonus provisions totalling USD75 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.
"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."
Last month, two key votes on the music intellectual property rights investor's future, including a poll on its continuation, did not go its way after shareholders rejected a USD440 million deal to sell the firm's 29 catalogues and also voted against the firm's current structure, prompting a reorganisation or wind up within six months.
Roughly 83% of votes cast were against the company's continuation, which has prompted a reorganisation or wind up within the next six months.
Shares in Hipgnosis Songs Fund fell 3.0% to 70.30 pence each in London on Monday morning.
By Sabrina Penty, Alliance News reporter
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