21st Dec 2023 10:08
(Alliance News) - Hipgnosis Songs Fund Ltd on Thursday released its interim results, but warned investors that some figures should be digested "with a higher degree of caution and less certainty".
This comes just two days after the music intellectual property investor flagged discrepancies between an independent valuation of its intellectual property assets and its manager's own view. On Tuesday, Hipgnosis delayed he release of the results.
On an IFRS basis, net asset value per share at the end of September fell 7.2% to 110.12 US cents from 118.63 cents at the end of March, or 9.2% to 173.92 cents from 191.53 cents on an operative basis.
However, it warned that investors should use these figures "with a higher degree of caution and less certainty", given ongoing concerns about the accuracy of the valuation of its assets.
The warning is another hit for the embattled firm. The discounted sale of assets to a partnership that includes investment adviser Hipgnosis Song Management, followed in October by a profit warning and decision to skip paying a dividend, triggered a shareholder revolt.
Total revenue over the six months fell to USD63.2 million from USD86.2 million a year before, with net revenue from continuing operations falling to USD54.0 million from USD76.8 million - which was driven by a USD11.9 million reversal of CRB III accrual due to lower anticipated future retroactive payments.
Speaking about operational progress, Hipgnosis said its strategic review is underway, following the rejection of the continuation resolution at its annual general meeting.
As part of this, in November, the company welcomed Richard Naylor as chair.
It also appointed Shot Tower Capital LLC as lead adviser to conduct due diligence on the company's assets.
More negatively, Hipgnosis said it has had to suspend its dividend "for at least the remainder of the year". In financial 2023, the company's total dividend was 5.25 pence, which was unchanged from the year before.
Naylor said: "I am pleased with the progress made on the ongoing strategic review. The board, through its advisers, has begun due diligence on the company's assets with Shot Tower LLC, a specialist music rights practice, acting as lead adviser. This process will help the new board bring forward proposals for delivering value to shareholders.
"Notwithstanding this progress, since I joined the board there has been a regular occurrence of issues raised as a result of ongoing failures in the financial reporting and control process. Whilst we consider substantial progress has been made in identifying and rectifying these issues, we have had to suspend the dividend for at least the remainder of the year in order to ensure compliance with our banking covenants."
Shares in Hipgnosis were down 1.2% to 69.88p each in London on Thursday morning.
By Sophie Rose, Alliance News senior reporter
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