Hipgnosis won't declare dividend before new financial year

(Sharecast News) - Music rights owner Hipgnosis said on Monday that it will not declare dividends before the new financial year, having undertaken a review of its financial position. The company said it has now been determined that the catalogue bonus provision is expected to rise by around $23m to $68m at the end of September, as there are 10 of its 146 catalogues likely to meet performance hurdles as defined in their acquisition agreements.

In addition, Hipgnosis said that its board, advised by the investment adviser, is considering refinements to the methodology adopted in its revenue accrual estimation process for the year0end results which, based on early assessments, may result in an accrual adjustment reducing revenue accruals by up to 10%.

"In light of this information, the board has determined that it will not declare dividends before the new financial year," it said.

Hipgnosis said operating cash flow during this time will be used to ensure it has sufficient cash resources to fund the payment of the catalogue bonuses as required. Suspension of dividend payments will also provide the group with the headroom needed to maintain compliance with its revolving credit facility's fixed charge cover ratio covenant if the accrual adjustment is realised in full.

Last month, Hipgnosis shareholders voted against the company's planned $440m sale of a music catalogue to a group backed by private equity firm Blackstone.

Shareholders also voted against a Continuation Resolution - meaning the fund could be wound up - and against the re-election of chairman Andrew Sutch.