Hipgnosis scraps dividend until new financial year

Hipgnosis’s catalogue bonus provision is expected to increase by £18.5m to £54.8m

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Music royalty trust Hipgnosis Songs has announced it will not declare dividends before its new financial year.

In a regulatory filing (6 November), the embattled trust’s board said it had undertaken a review of its financial position alongside investment adviser Hipgnosis Song Management Limited.

Hipgnosis’s catalogue bonus provision is expected to increase by $23m (£18.5m) to $68m (£54.8m), with 10 of the 146 held likely to meet ‘performance hurdles’ as defined in their acquisition agreements – up from the six reported in March.

See also: Hipgnosis shareholders reject £440m portfolio sale and continuation

Meanwhile, the board is also exploring refinements to methodology used in the revenue accrual estimation process, which it said may result in an adjustment reducing revenue accruals by up to 10%, according to early estimates.

As a result, the Hipgnosis board has said it will not declare dividends before the new financial year. Instead, operating cash flow will be used to fund the payment of the catalogue bonuses and to comply with its revolving credit facility.

The move follows last month’s decision to scrap its dividend after a hit to expected retroactive royalty payments.

Last month, Hipgnosis shareholders overwhelmingly voted against a continuation resolution, the proposed £440m sale of a portion of its portfolio, and the re-election of chair Andrew Sutch.

The vote against continuation does not automatically trigger a winding-up process. Instead, the trust’s board now has until 26 April 2024 to put forward proposals for reconstruction or reorganisation.

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