Hipgnosis Songs Fund reports revenue and asset value decline amid uncertainty over its future
Hipgnosis Songs Fund, the investment company that owns a portfolio of music and song royalty rights, has today published its delayed interim results for the six months to 30 September.
The company was scheduled to publish its figures earlier in the week but delayed the release due to uncertainty around the value of its assets, and a dispute among parties appointed to determine the value of the portfolio.
According to the figures, the company’s operative net asset value (NAV) per share declined 9.2 per cent during the period, from $1.92 (£1.52) as of 31 March to $1.74 (£1.38) as of 30 September.
However, the company went on to warn that due to the dispute between its investment manager, Hipgnosis Song Management (HSM), which is part-owned by the private equity firm Blackstone, over the fair value of assets, the NAV figure should be used with a “higher degree of caution and less certainty than might otherwise be attached to it as an accurate reflection of the fair value of the company’s assets.”
Gross revenue for the period fell to $63.2m (£50m) from $86.4m (£68.4m) while the company ended the period with gross debt of $674m (£533m) or 32 per cent of operative NAV, up from 28 per cent at the end of March 2022.
After 83 per cent of shareholders voted against the company continuing its business as a closed-ended investment company at Hipgnosis Songs Fund’s annual general meeting in October, the company has appointed Shot Tower LLC, a specialist music rights practice, to advise it on the next steps.
Robert Naylor, recently appointed chairman to the company 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.”
He added: “On behalf of the board, I therefore urge the investment adviser to provide the board with their opinion as to the fair value of the company assets, without caveats, such that we can provide greater certainty and transparency to our shareholders.”