Hipgnosis Songs Fund Limited

Interim Report
For the period ended 30 September 2023
CONTE NT S

2 The Chair’s Statement 24 Condensed Consolidated Statement

4 Financial and Operational Highlights of Profit and Loss
6 Investment Adviser’s Report 25 Condensed Consolidated Statement
of Comprehensive Income
6 Portfolio
26 Condensed Consolidated Statement
9 PFAR by Catalogue of Financial Position
10 Financial Review 27 Condensed Consolidated Statement
17 Investment Objective and Policy of Changes in Equity
19 Principal Risks and Uncertainties 28 Condensed Consolidated Statement
23 Directors’ Responsibilities Statement of Cash Flows
29 Notes to the Condensed Consolidated
Financial Statements
52 Alternative Performance Measures
59 Glossary of Capitalised Defined Terms
63 Directors and General Information
64 Advice to Shareholders
Hipgnosis Songs Fund is the only UK investment company offering
investors a pure-play exposure to Songs and associated musical
intellectual property rights. Our focus is building a diversified
Portfolio, acquiring Catalogues that are built around proven hit
Songs of cultural importance by some of the most talented and
important Songwriters globally.

Our shares listed on the Main Market of the London Stock Exchange
in July 2018 and transferred to the Premium Segment of the Main
Market in September 2019. Since March 2020, Hipgnosis Songs Fund
has been a constituent of the FTSE 250 Index.

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 1
The Chair’s Statement

Introduction financial reporting and controls. For example,

This is my first report as the Board were made aware on Friday 15 December
Chairman of Hipgnosis 2023 of a drafting error in a contract, whereby the
Songs Fund, having joined Company received notice of the exercise of a put
the Board with Francis option contained within an acquisition contract,
Keeling on 7 November which increased the estimated liability from $4 million
2023. Christopher Mills to $25 million. The Investment Adviser sought to
subsequently joined the remedy this over the subsequent weekend by way of
Board on 15 December an amendment to the contract and the Board now
Robert Naylor, Chair 2023. These interim results understands, from the Investment Adviser, the potential
are for the half year ended liability to be in the region of $7.5 million to $8.5 million.
30 September 2023.
Portfolio Valuation
Votes against related party transaction and In spite of the positive music market and like-for-
continuation as an investment company like income growth of the Company’s assets, the
At the Company’s Annual General Meeting held on Company’s Operative NAV, which reflects the Fair Value
26 October 2023, Shareholders overwhelmingly voted of its assets as determined by the Independent Portfolio
against the Company continuing its business as a Valuer, has fallen 9.2%. This primarily reflects the material
closed-ended investment company, with 83% voting reduction in expectations of CRBIII and CRBIV income.
against. Shareholders also rejected, with 84% against,
a related party transaction to sell a portfolio of 29 The Board are aware of multiple data points and
music catalogues to Hipgnosis Songs Capital, the transactions within the market which are at material
trading name of Hipgnosis SC IV (Delaware), a limited discounts to the implied Fair Value of the Company’s
partnership which is majority owned by funds managed assets. Given these multiple valuation data points
and/or advised by Blackstone. Hipgnosis Songs Capital and the continued uncertainty in the wider macro-
is advised by the same investment adviser as the economic environment, the Board sought advice from
Company – Hipgnosis Song Management Limited Hipgnosis Song Management Limited, its Investment
(“Hipgnosis Song Management” or “Investment Adviser, which is majority owned by funds managed
Adviser”), which is also majority owned by funds and/or advised by Blackstone on this matter. Hipgnosis
managed and/or advised by Blackstone. Song Management is the Company’s appointed expert
on the marketplace for songs and de facto executive
Dividend function, and the Board expects them to provide an
On 16 October 2023, the Company announced the opinion as to whether the Fair Value is reasonable.
suspension of the interim dividend of 1.3125p per share
and further announced on 6 November 2023 that all Hipgnosis Song Management Limited at first declined
dividends will be suspended for the rest of the financial to give an opinion but, after repeated requests from
year. This decision followed the identification, by the the Board, eventually provided an opinion which was
Investment Adviser of additional liabilities and certain heavily caveated. In the absence of further evidence
over accruals for the prior year revenue. or insight from the Investment Adviser, on which to base
a judgement on the valuation of the Company’s assets,
The Board will act responsibly and only start paying the Board has concerns as to whether the Fair Value is
dividends to shareholders when it believes that we can reasonable.
sustainably meet our banking covenants and working
capital requirements. Consequently, the Board recommends that investors
use the Fair Value and the Operative NAV with a
The Board believes, based on forecasts provided by higher degree of caution and less certainty than might
the Investment Adviser, that the Company should otherwise be attached to it as an accurate reflection of
have sufficient headroom to operate within its banking the fair value of the Company’s assets. The Company
covenants for at least the next 12 months. However, confirms that the uncertainty around the Fair Value and
this is qualified by the continuation of issues around Operative NAV has no impact on its banking covenants.

2 HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023
T H E C H A I R ’ S S TAT E M E N T

Strategic Review Board Appointments

As announced previously, the Board, through its There has been significant change on the Board.
advisers, have begun due diligence on the Company’s Andrew Sutch, Andrew Wilkinson and Paul Burger all
assets. Shot Tower LLC, a specialist music rights practice, resigned as directors either immediately before or as
is acting as lead adviser. a result of the vote at the Annual General Meeting.
I am delighted that Christopher Mills joined the Board
We have requested Hipgnosis Song Management on 15 December 2023.
propose alternative terms for their future investment
advisory arrangements of the Company during this All the Directors on the Board last month bought shares
period of due diligence. Should Hipgnosis Songs in the Company in order show the alignment of the
Management not propose terms which the Board Board’s interests with those of its Shareholders.
believes are in the best interests of the future of the
Company and its shareholders, it will explore bringing Outlook
forward alternative proposals to shareholders. Further to the due diligence underway, we will be able
to better assess the quality of the Company’s assets
I have personally met with Shareholders holding, in and prospects from which to put forward proposals to
aggregate, more than 60% of the Company’s shares. shareholders for the future of the Company.
There was a high degree of alignment between our
diverse Shareholders with two key themes becoming Robert Naylor
apparent from these meetings. Chair

Firstly, the failure of the financial reporting and controls 20 December 2023
at the Investment Adviser. Dan Pounder, who joined
as CFO of the Investment Adviser on 1 September
2023, has begun to improve financial reporting and
disclosure, which has led to short-term negative
impacts on reporting. This is evidenced in the additional
catalogue bonus provisions of $23 million, deductions
in the prior year income accrual of $12 million due to a
reduction in expected CRB III receipts and a proposed
change to the revenue accrual methodology for the
year end which may result in an adjustment reducing
annual revenue by up to 10%. The Board has faith in
Dan and his ability to improve the financial reporting.

Despite this, there is some positive performance in the

underlying assets which shows like-for-like revenue
statement growth of 10%.

Secondly, the perceived mismanagement of the

conflicts of interest, both in the recently failed sale of
assets to Hipgnosis Songs Capital, a fund that is majority
owned by Blackstone, at a material discount to fair
value of those assets and in the terms of the Investment
Advisory Agreement with Hipgnosis Song Management.
This is harder to address, but we will seek to do so in the
coming months.

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 3
Financial and Operational Highlights1
Six months ended 30 September 2023

As at 30 September 2023, the Company had raised a total of over £1.3 billion (gross
equity capital) through its Initial Public Offering on 11 July 2018, and subsequent
placings in April 2019, August 2019, September 2020, February 2021 and July 2021,
as well as C-Share raises in October 2019 (which converted in January 2020) and
July 2020 (which converted in December 2020). Our Revolving Credit Facility stands
at $700 million, of which $604 million is drawn.

As at 30 September 2023, the Company had deployed approximately $2.2 billion in

total since IPO on 146 Catalogues and 65,413 Songs.

IFRS NAV Operative NAV

$1.33 billion $2.10 billion

(31 March 2023: $1.43 billion) (31 March 2023: $2.32 billion)

IFRS NAV per Ordinary Share Operative NAV per Ordinary Share ($)

$1.1012 $1.7392
(31 March 2023: $1.1863) (31 March 2023: $1.9153)

Total Assets Operative NAV per Ordinary Share (p) 2

$2.05 billion 142.49p

(31 March 2023: $2.12 billion) (31 March 2023: 154.91p)

6 Month Total NAV Return Total NAV Return since inception

(8.33%) 56.72%
(30 September 2022: 0.70%) (31 March 2023: 69.01%)

1 A number of Alternative Performance Measures are used within the Report and their calculation can be found on page 52.
2 Based on the Sterling to Dollar exchange rate at 30 September 2023 of 1.22055.

4 HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023
Net Revenue from continuing operations Total dividends paid during the period (p)

$54.0 million 2.625p

(30 September 2022: $76.8 million) (30 September 2022: 1.3125p)

EBITDA from continuing operations EPS from continuing operations (cents)

$39.7 million (5.27)¢

(30 September 2022: $62.3 million) (30 September 2022: (1.72)¢)

Leveraged Free Cash Flow Adjusted EPS from continuing operations (cents)

$30.3 million 1.37¢

(30 September 2022: $28.4 million) (30 September 2022: 3.63¢)

Share Price Discount 3 Ongoing charges figure (%)

43.7% 1.19%
(31 March 2023: 47.7%) (30 September 2022: 1.23%)

3 Calculated using the middle market share price (SONG) of 80.20p on 30 September 2023 (31 March 2023: 81.00p).

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 5
Investment Adviser’s Report
The Company’s Portfolio as at 30 September 2023 comprised
of 146 Catalogues containing 65,413 song rights acquired, as set out below.

Rights purchased
Composition Rights Sound Recording Rights
Number t Publisher Writer’s Neighbouring
Catalogue Name Acquisition Date of Songs Genre Vintage Share Share Masters Producer Rights
10cc 17 Oct 19 29 Rock 10+ X
50 Cent 30 Oct 20 388 R&B 10+ X
Al Jackson Jr 08 May 19 185 Soul 10+ X X X X X
Ammar Malik 05 Dec 19 90 R&B 3-10 X X
Andrew Watt 17 Feb 21 105 Pop 3-10 X X
Andy Marvel 23 Jul 19 740 R&B 10+ X
Andy Wallace 31 Mar 21 1,242 Rock 10+ X X
Ann Wilson 29 Jul 21 152 Rock 10+ X X X X
Ari Levine 31 Mar 19 76 Pop 3-10 X X
Aristrotracks* 30 Oct 20 152 Pop 10+ X
Arthouse 15 Nov 19 44 Pop 3-10 X
B-52’s 30 Oct 20 96 Pop 10+ X
Barry Manilow 16 Jul 20 917 Disco 10+ X X
Benny Blanco 02 Aug 19 93 Pop 3-10 X
Bernard Edwards 28 Nov 18 290 Disco 10+ X X
Blondie 30 Jul 20 197 Rock 10+ X X
Bob Rock 04 Dec 20 43 Rock 10+ X
Bonnie McKee 30 Oct 20 78 Pop 10+ X X
Brendan O’Brien 13 Dec 19 1,855 Rock 10+ X X
Brian Higgins 22 Jan 20 362 Dance 10+ X X
Brian Kennedy 14 Jun 19 101 R&B 10+ X
Brian Kennedy (Writer Share) 23 Dec 20 139 R&B 10+ X
Brill Building* 30 Oct 20 234 Pop 3-10 X
Carole Bayer Sager 17 Mar 21 983 Pop 10+ X X
Caroline Ailin 10 Dec 20 2 Dance 3-10 X X
Chris Cornell 10 Aug 20 241 Rock 10+ X X X X
Chrissie Hynde 10 Sep 20 162 Rock 10+ X X
Christian Karlsson 02 Mar 21 255 Dance 10+ X X
Christina Perri 30 Oct 20 68 Pop 3-10 X X
Christine McVie 21 Jul 21 115 Rock 10+ X X X
Closer (J King & I Slade) 27 Jul 20 2 Dance 3-10 X X
Dave Sitek 31 Mar 21 230 Rock 10+ X X
Dave Stewart 07 May 19 1,068 Dance 10+ X X X X X
Dierks Bentley 30 Oct 20 113 Country 3-10 X
Ed Drewett 09 Dec 19 109 Dance 3-10 X
Editors* 30 Oct 20 64 Rock 10+ X
Eliot Kennedy 16 Jul 20 217 Rock 10+ X X
Elliot Lurie 24 Aug 21 70 Pop 10+ X
Eman 30 Oct 20 97 Pop 3-10 X X
Emile Haynie 13 Dec 19 122 Pop 3-10 X X X X
Enrique Iglesias 30 Oct 20 157 Latin 3-10 X X
Eric Bellinger 12 Jul 19 242 R&B 3-10 X X X
Eric Stewart 02 Dec 20 255 Disco 10+ X X
Espionage 26 Mar 21 151 Pop 10+ X X
Evan Bogart 30 Oct 20 229 Pop 3-10 X
Fraser T Smith 05 Dec 19 298 R&B 3-10 X
George Benson 30 Sep 20 107 Jazz 10+ X
George Thorogood 30 Sep 20 40 Country 10+ X
Giorgio Tuinfort 21 Dec 18 182 Dance 3-10 X X
Good Soldier* 30 Sep 20 760 Pop 3-10 X
Greg Wells 10 Feb 20 11 Pop 3-10 X X
Happy Perez 31 Mar 21 192 R&B 3-10 X X

* Catalogue included in Second Disposal ** Catalogue partially included in Second Disposal t Interest in Songs and/or recording rights. Ownership dependent on terms of acquisition

6 HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023
 I N V E S T M E N T A DV I S E R ’ S R E P O R T

Rights purchased
Composition Rights Sound Recording Rights
Number t Publisher Writer’s Neighbouring
Catalogue Name Acquisition Date of Songs Genre Vintage Share Share Masters Producer Rights
Holy Ghost 30 Sep 20 62 Dance 3-10 X
Ian Kirkpatrick 29 Jul 20 137 Pop 3-10 X X
Itaal Shur 31 Jan 19 209 Latin 10+ X X X
Ivor Raymonde 13 Aug 20 505 Soul 10+ X X
J-Kash 30 Sep 20 90 Pop 3-10 X
Jack Antonoff 05 Dec 19 188 Rock 3-10 X X
Jamie Scott 15 May 19 144 Pop 3-10 X X
Jaron Boyer 05 Nov 19 109 Country 3-10 X X
Jason Ingram 10 Jul 19 462 Christian 3-10 X X
Jeff Bhasker 11 Dec 19 436 Pop 3-10 X X
Jimmy Iovine 24 Dec 20 259 Rock 10+ X
Joel Little 24 Dec 20 178 Rock 3-10 X X
John Newman 05 Nov 19 47 Dance 3-10 X X
John Rich 30 Sep 20 7 Country 3-10 X
Johnny McDaid 11 Dec 19 164 Rock 3-10 X X
Johnta Austin 22 Mar 19 249 R&B 3-10 X X
Jon Bellion 14 Jun 19 180 Pop 10+ X X
Jonathan Cain 28 Feb 20 216 Rock 10+ X X
Jonny Coffer 28 Feb 20 85 Pop 3-10 X X
Jordan Johnson 22 Jul 21 58 Pop 3-10 X X
Journey (Masters) 10 Jan 20 389 Rock 10+ X
Journey (Publishing) 21 Oct 19 103 Rock 10+ X
Julian Bunetta 16 Sep 20 188 Pop 3-10 X
Kaiser Chiefs (Masters) 09 Dec 19 48 Rock 10+ X
Kaiser Chiefs 15 Jul 21 136 Rock 10+ X X
Kevin Godley 23 Sep 20 358 Rock 10+ X X
Kojak 30 Sep 20 148 Pop 3-10 X X
LA Reid 30 Sep 20 162 R&B 10+ X X
Lateral** 30 Sep 20 248 Pop 3-10 X
Lindsey Buckingham 24 Dec 20 161 Rock 10+ X X
Lindsey Buckingham (Kobalt) 30 Sep 20 174 Rock 10+ X
LunchMoney Lewis 30 Sep 20 116 R&B 3-10 X X
Lyric Catalogue 17 Jun 19 571 R&B 10+ X X
Lyrica Anderson 30 Sep 20 96 R&B 3-10 X
Madcon 30 Sep 20 173 R&B 3-10 X X
Mark Batson 30 Sep 20 210 R&B 10+ X
Mark Ronson 14 Apr 20 315 Pop 3-10 X X
Martin Bresso 31 Mar 21 51 Pop 3-10 X X
Michael Knox 28 May 19 110 Country 3-10 X X
Mobens* 30 Sep 20 1,034 Pop 3-10 X
Nate Ruess 30 Sep 20 59 Pop 3-10 X
Neal Schon 20 Jun 19 357 Rock 10+ X X
Neil Young 23 Dec 20 590 Rock 10+ X
Nelly 15 Dec 20 240 R&B 10+ X X
Nelly (Kobalt) 30 Oct 20 145 R&B 10+ X
Nettwerk** 30 Sep 20 25,259 Pop 3-10 X
Nikki Sixx 03 Sep 20 305 Rock 10+ X X
NO I.D. 24 Jul 20 273 R&B 3-10 X X
Paul Barry 18 Mar 21 510 Pop 10+ X X
Poo Bear 21 Nov 18 214 Pop 3-10 X X
PRMD* 30 Sep 20 335 Dance 3-10 X X
Pusha T 24 Jul 20 238 Hip-Hop 3-10 X X X

* Catalogue included in Second Disposal ** Catalogue partially included in Second Disposal t Interest in Songs and/or recording rights. Ownership dependent on terms of acquisition

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 7
 I N V E S T M E N T A DV I S E R ’ S R E P O R T

Rights purchased
Composition Rights Sound Recording Rights
Number t Publisher Writer’s Neighbouring
Catalogue Name Acquisition Date of Songs Genre Vintage Share Share Masters Producer Rights
Rainbow 15 Jan 19 15 Rock 10+ X
Rebel One 10 Jan 20 157 Dance 3-10 X
Red Hot Chili Peppers 14 Jul 21 220 Rock 10+ X X
RedOne 16 Jul 20 334 Pop 10+ X X X X
Rhett Akins 23 Jul 21 564 Country 3-10 X X
Richie Sambora 04 Mar 20 186 Rock 10+ X X
Rick James 18 Sep 20 97 R&B 10+ X X X X X
Rico Love 26 Feb 19 245 R&B 3-10 X
Rob Hatch 30 Sep 20 167 Country 3-10 X X
Robert Diggs “RZA” 12 Aug 20 814 R&B 10+ X X
Rock Mafia 30 Sep 20 393 Pop 10+ X
Rodney Jerkins 16 Jul 20 982 R&B 10+ X X
Sacha Skarbek 20 Nov 20 303 Pop 10+ X X
Sam Hollander 31 Mar 19 499 Pop 3-10 X X
Savan Kotecha 18 Dec 19 49 R&B 3-10 X X
Savan Kotecha (Kobalt) 30 Sep 20 354 R&B 3-10 X X
Scott Cutler 24 Sep 20 111 Pop 10+ X X
Scott Harris 10 Jan 20 129 Dance 3-10 X
Sean Garrett 21 Mar 19 588 R&B 3-10 X X
Shakira 24 Dec 20 145 Latin 3-10 X X
SK Music 30 Sep 20 23 Pop 3-10 X X
Skrillex 30 Sep 20 153 Dance 3-10 X
Starrah 25 Apr 19 73 R&B 3-10 X X
Stefan Johnson 22 Jul 21 58 Pop 3-10 X X
Stereoscope* 30 Sep 20 456 Pop 3-10 X
Steve Robson 17 Sep 20 1,034 Country 3-10 X X X
Steve Winwood 30 Sep 20 215 Pop 10+ X
Teddy Geiger 12 Apr 19 6 Pop 3-10 X
Tequila 30 Sep 20 1 Country 10+ X
The Chainsmokers 22 Aug 19 42 Dance 3-10 X X
The-Dream 13 Jul 18 302 R&B 10+ X X X
Third Day 30 Sep 20 212 Christian 3-10 X
Timbaland 10 Oct 19 108 R&B 10+ X X X
Timeflies* 30 Sep 20 80 Dance 3-10 X
TMS 17 Dec 18 121 Pop 3-10 X
Tom Delonge 23 Dec 19 157 Rock 10+ X X
Tricky Stewart 17 Dec 18 121 R&B 10+ X X
Tricky Stewart (Masters) 27 Nov 20 95 R&B 10+ X X
Walter Afanasieff 30 Sep 20 213 Pop 10+ X
Wayne Wilkins 30 Sep 20 113 Pop 10+ X X
Yaslina 30 Sep 20 73 Pop 10+ X X

* Catalogue included in Second Disposal ** Catalogue partially included in Second Disposal t Interest in Songs and/or recording rights. Ownership dependent on terms of acquisition

8 HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023
I N V E S T M E N T A DV I S E R ’ S R E P O R T

PFAR by Catalogue
The below table shows PFAR by Catalogue for the top 55 Catalogues, this represents
80% of total PFAR for the six months to 30 September 2023.

Six months to Six months to Six months to Six months to Six months to
30 September 31 March 30 September 31 March 30 September
2021 2022 2022 2023 2023
Catalogue Name Genre Vintage $’000 $’000 $’000 $’000 $’000
Red Hot Chili Peppers Rock 10+ 1,867.5 3,261.7 3,237.1 4,781.4 4,693.8
Nettwerk Pop 3-10 2,888.9 3,300.3 2,783.7 4,066.8 4,273.4
RedOne Pop 10+ 1,305.3 1,854.5 1,985.2 2,624.3 2,867.9
Journey (Masters) Rock 10+ 1,758.6 1,877.1 1,634.9 1,832.2 1,654.2
Shakira Latin 10+ 1,387.3 1,130.1 1,407.2 1,349.8 1,639.8
50 Cent R&B 10+ 795.8 889.5 985.9 1,728.4 1,574.6
The Chainsmokers Dance 3-10 1,173.7 1,324.4 1,280.8 1,555.3 1,245.5
Rick James R&B 10+ 558.3 617.7 716.7 838.4 1,222.4
Richie Sambora Rock 10+ 713.0 1,016.0 933.8 1,338.3 1,147.8
Neil Young Rock 10+ 297.6 769.7 1,015.8 1,223.6 1,136.7
Joel Little Rock 3-10 1,290.5 1,320.1 1,308.4 1,477.1 1,124.8
Ari Levine Pop 10+ 755.0 841.5 1,062.9 1,099.9 1,104.5
Dave Stewart Dance 10+ 831.2 1,166.2 935.1 1,022.6 1,100.3
Christine McVie Rock 10+ 550.4 1,055.5 1,100.0 1,002.1 1,082.3
Johnny McDaid Rock 3-10 874.2 883.7 894.3 1,582.0 1,040.7
Rodney Jerkins R&B 10+ 511.8 716.8 822.3 923.9 1,028.0
Chris Cornell Rock 10+ 932.2 1,102.6 1,166.4 796.4 948.2
The-Dream R&B 10+ 729.0 810.6 892.1 920.8 901.1
Lindsey Buckingham Rock 10+ 2,081.6 1,066.3 851.5 994.4 877.1
Mark Ronson Pop 3-10 925.1 1,013.9 765.3 897.1 870.4
Steve Winwood Pop 10+ 560.4 574.7 630.5 839.6 858.2
Andrew Watt Pop 3-10 1,230.2 1,255.1 904.8 915.0 834.5
Bernard Edwards Disco 10+ 514.1 569.4 782.1 608.4 811.5
Savan Kotecha R&B 3-10 805.3 829.6 739.4 961.7 805.6
Jack Antonoff Rock 3-10 748.3 798.7 839.9 936.3 798.0
Enrique Iglesias Latin 3-10 490.6 590.7 636.3 901.0 797.4
Jonathan Cain Rock 10+ 696.1 899.0 888.0 929.4 773.2
Starrah R&B 3-10 436.0 716.0 562.6 542.3 759.9
Tricky Stewart R&B 10+ 554.5 568.4 747.1 667.1 718.0
Brendan O’Brien Rock 10+ 574.4 740.2 638.1 606.0 717.2
Jeff Bhasker Pop 3-10 642.9 624.4 669.2 578.7 649.1
Julian Bunetta Pop 3-10 333.2 413.5 353.7 242.0 639.7
Tom Delonge Rock 10+ 382.6 475.3 518.1 536.2 629.7
B-52’s Pop 10+ 288.6 357.7 377.3 342.0 597.3
Giorgio Tuinfort Dance 10+ 394.7 509.0 623.3 516.2 587.2
Andy Wallace Rock 10+ 416.3 521.8 585.2 440.5 579.7
Benny Blanco Pop 3-10 771.0 755.2 590.1 626.8 567.1
Good Soldier Pop 3-10 410.0 639.6 456.7 555.7 565.9
Emile Haynie Pop 3-10 441.8 782.0 619.5 571.9 564.0
Timbaland R&B 10+ 332.6 437.2 432.6 472.5 526.2
Neal Schon Rock 10+ 411.2 1,061.1 579.0 782.6 479.4
Happy Perez R&B 10+ 325.4 507.5 359.6 352.9 470.2
Nelly R&B 10+ 400.4 406.3 481.1 493.4 468.3
Ammar Malik R&B 3-10 419.1 544.6 504.0 675.1 459.2
Jamie Scott Pop 3-10 597.9 595.7 584.2 590.1 457.8
Christina Perri Pop 10+ 347.6 430.4 375.6 518.0 452.3
Skrillex Dance 10+ 389.9 475.9 402.4 893.4 443.0
Paul Barry Pop 10+ 107.8 0.2 486.5 479.8 439.1
Blondie Rock 10+ 281.7 381.7 409.3 513.4 437.6
Nikki Sixx Rock 10+ 328.5 346.5 370.2 426.1 431.5
Walter Afanasieff Pop 10+ 310.5 324.8 401.5 328.1 430.8
Lateral Pop 3-10 255.3 308.5 326.8 325.6 412.5
Chrissie Hynde Rock 10+ 585.3 478.3 377.1 453.7 398.3
Rock Mafia Pop 10+ 333.7 314.0 327.5 467.7 389.2
Sam Hollander Pop 3-10 514.6 821.3 486.9 619.8 368.5
Other Catalogues 13,920.1 15,396.0 14,186.7 14,995.8 13,061.5
Total PFAR 52,780.0 61,468.5 59,032.5 67,759.4 64,912.2

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 9
I N V E S T M E N T A DV I S E R ’ S R E P O R T

Financial Review $’m

Fair Value of Portfolio at 31 March 2023 2,802.8

NAV
CRB III and CRB IV adjustments (155.0)
The Company reports two net asset values: an IFRS
NAV which is prepared in accordance with IFRS, under Alternative platform licensing adjustment (4.1)
which the Company’s Catalogues of Songs are held FX rate adjustment 1.5
at net book value (cost less accumulated amortisation 35-year rule reversions (47.5)
and accumulated impairment), and an Operative NAV Other 24.3
which adjusts the net book value of the Company’s Fair Value of Portfolio at 30 September 2023 2,622.0
Catalogues to reflect their Fair Value, as determined
by the Portfolio Independent Valuer. The IFRS Net Asset The main drivers of the change in the Fair Value of the
Value (NAV) per share as at 30 September 2023 was Portfolio are:
$1.1012, which is a 7.2% decrease from $1.1863 as at
31 March 2023. • A $155.0 million reduction as a result of the Portfolio
Independent Valuer's lower estimate of CRB III
The Board and the Investment Adviser consider that retroactive payments (2018-2022) and future CRB IV
the most relevant NAV for Shareholders is the Operative (2023-2027) cash flows;
NAV. The Operative NAV per share decreased by
9.2% to $1.7392 at 30 September 2023 (31 March 2023: • A $47.5 million reduction, reflecting potentially
$1.9153), driven primarily by a 6.4% decrease in the Fair reduced future cash flows a result of the US “35-year
Value of the Portfolio. This, together with the dividends, rule”, where artists can request reversion of their US
of 22.94p (29.55¢), takes Total NAV Return ($) to creative copyrights (composition or sound recording)
Shareholders to 56.7% since the IPO on 11 July 2018. 35 years after a contractual grant of rights. This
primarily impacts Catalogues bought as part of the
Operative NAV Bridge Kobalt Fund 1 acquisition;
From 1 April 2023 to 30 September 2023
Per share
• A $4.1 million impact due to reduced cash flow
$’m ($) expectations from alternative platform licensing
Opening Operative NAV 2,316.0 1.9153 (licensing on social media, gaming and other
Loss for the period (63.2) (0.0523) emerging platforms including TikTok); and
Amortisation and impairment during • A $24.3 million increase in value due to changes in
the period 69.1 0.0572 subscription pricing of the DSPs, improved baselines
Dividends paid during the period (39.8) (0.0329) and changes to applied future growth rates.
Decrease in Fair Value of Catalogues (179.1) (0.1481)
Closing Operative NAV 2,103.0 1.7392 The Portfolio Independent Valuer applied an 8.5%
discount rate (31 March 2023: 8.5%), based on a
Based on the Sterling to Dollar exchange rate at weighted average cost of capital using 50% equity:
30 September 2023 of 1.221, the Operative NAV 50% debt capital structure; this models the cost
per share presented in Sterling is 142.49p per share of equity at 9.87%. and the cost of debt at 7.13%.
(31 March 2023: 154.91p based on Sterling to Dollar A sensitivity table is set out in Note 5 of the Financial
exchange rate of 1.236). As at 19 December 2023, the Statements.
Operative NAV per share presented in Sterling would be
136.53p per Share (GBP: USD 1.274).

Fair Value of the Portfolio

The Fair Value is determined by the Portfolio Independent
Valuer, Citrin Cooperman. The Fair Value of the Portfolio
decreased by 6.4% to $2.62 billion (31 March 2023:
$2.80 billion).

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I N V E S T M E N T A DV I S E R ’ S R E P O R T

Citrin Cooperman, the Portfolio Independent Valuer:

• One of the largest valuation providers in the music Applying growth rates: For Catalogues that contain
transactions marketplace; significant new releases CC has developed lifecycle
growth rates per major income stream that are
• Conducts the valuations of many music publishing applied on a per song basis for significant titles and
and recorded music assets on behalf of buyers, are then weighted, based on each song’s earnings
sellers and lenders; contribution within each revenue stream. For
Catalogues without significant new releases, referred
• Conducts the annual valuations of most of the to as “steady state” Catalogues by CC, growth rates
major public and private music funds; from a low, mid or high tier are applied on a per
income type, per catalogue basis that decline from
• Values the Fair Value of Hipgnosis Songs Fund an initial growth rate to a terminal growth rate over
twice a year; the period according to modelled growth curves.
The selection of the growth tier applied to each
Citrin Cooperman’s Valuation Methodology Catalogue for each of its income types is determined
In determining the Fair Market value of the Portfolio, by that Catalogue’s historical earning trends.
Citrin Cooperman (“CC”), adopts an income
approach utilising a Discounted Cash Flow (DCF) Other considerations used by CC in developing
method which determines the value of the Portfolio their model for anticipated future cashflows include
based on converting anticipated future economic expectations from Alternative Platform Licensing
benefits into a present single amount. It considers (APL), such as TikTok, Facebook and Peloton, and
the expected growth and timing of the benefits, the adjustments required to earlier periods related to
risk profile of the benefits stream and the time value settlements, black box payments or other non-
of money. recurring payments.

The key inputs to their DCF methodology include: Discount Rate: The other key assumption used by
CC is the discount rate which it has maintained at
Determining a baseline value: This is the earnings 8.5% (31 March 2023: 8.5%). Citrin Cooperman has
benchmark, applied on a per income type, per consistently taken a long-term view on interest rates.
catalogue basis, against which growth rates are CC determine the discount rate using a modelled
applied. The baseline value, which is taken from weighted average cost of capital (WACC) based on
royalty statements, is typically the prior year’s a 50:50 equity debt capital structure, with a derived
earnings with the exception of synch, where, for cost of equity of 9.87% and a derived cost of debt of
the most part, an average of the prior two years 7.13% utilizing third party data sources to support their
is taken, given the variable earnings of the Synch calculation.
business. Adjustments to these assumptions are
made by the team at Citrin Cooperman dependent The Portfolio Independent Valuer reviews the discount
on Catalogue-specific activity, which may include rate regularly and will adjust the discount rate if
settlements, audits, black box payments and it considers it appropriate. A 0.5% increase in the
changes in administration rates, amongst others. discount rate to 9.0% would result in a decrease to the
Fair Value of the Catalogue of 7.8% ($203.5 million).
The revenue provided does not consider any future Sensitivities relating to the discount rate, applied
ability of the Company’s active management to growth rates and the terminal growth rate are set out
enhance Catalogue revenues. further in Note 5 of the financial statements.

HIPGNOSIS SONGS FUND LIMITED

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I N V E S T M E N T A DV I S E R ’ S R E P O R T

Revenue Excluding these CRB III accruals, the Company saw an

Total revenue from continuing operations decreased increase in IFRS adjusted Net revenue from continuing
to $63.2 million (six month period ended 30 September operations of $8.2 million, 14.2% period-on-period. This
2022: $86.4 million) and Net revenue from continuing increase is due to higher royalty statements received
operations decreased to $54.0 million (six month period in the period which reflects an underlying increase in
ended 30 September 2022: $76.8 million). The main consumption of the Company’s music.
driver for the revenue reduction is the de-recognition
of part of the CRB accruals recognised in the prior year. Accrued Income
Accrued income as at 30 September 2023 was
In the prior period, following the confirmation of the $121.5 million on a gross basis (31 March 2023:
CRB III settlement for the Songwriters’ mechanical $126.2 million). Within this balance is the CRB III
portion of US Streaming income, a retroactive accrual retroactive accrual of $9.9 million (31 March 2023:
for these payments was made totalling $19.2 million. $21.7 million). The Company is exploring refinements
This accrual was increased to $21.7 million as at to the methodology adopted in the revenue accrual
31 March 2023. estimation process for the year end results with an
aim to bring consistency to the description of IFRS
As a result of the Portfolio Independent Valuer materially revenue and the Pro Forma Annual Revenue measure
reducing its previous expectations across the industry, through the use of granular data in the underlying
the Company now expects to receive significantly lower calculations, to support an improved estimation
retroactive payments in relation to CRB III and therefore process and enhanced disclosures.
reduced this retroactive accrual in the reporting period
to $9.9 million, decreasing Net revenue from continuing
operations by $11.8 million.

Net Revenue
The chart below bridges the movements in IFRS Net
Revenue from continuing operations between the
reporting period and the prior period.

Net Revenue Bridge ($m)

30 September 2022 to 30 September 2023
FY22 Net revenue movements FY23 Net revenue movements

$80m

$70m $8.2m
($19.2m)
$60m ($11.8m)
$50m

$40m
$76.8m $57.6m $65.8m $54.0m
$30m

$20m

$10m

0
Net revenue Remove the impact Adjusted Increase Adjusted Remove the impact Net revenue
30 Sep 2022 of CRB III initial Net revenue in Net revenue Net revenue of CRB III initial 30 Sep 2023
accrual recognition 30 Sep 2022 30 Sep 2023 accruall release

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I N V E S T M E N T A DV I S E R ’ S R E P O R T

Hipgnosis Songs Group revenue PFAR split by 1

Six months to Six months to
1,2

30 September 30 September
Hipgnosis Songs Group LLC (HSG) is an operating income type 1 2023 2022 Variance
company within the Fund which carries out both $’m $’m %

administration and frontline publishing business Streaming 26.6 23.2 14.7

activities. As such, a high proportion of its revenue is Synchronisation 9.8 10.0 (2.0)
paid out to artists as royalty costs.
Performance 14.2 12.8 10.9
Mechanical 2.5 2.5 –
We set out Hipgnosis Songs Group LLC’s (HSG)
standalone Statement of Profit and Loss in Note 19; Digital downloads 1.2 1.3 (7.7)
below we provide the revenue split by income stream. Settlement and other 2.1 1.1 90.9
HSG’s Net revenue has declined to $2.8 million Total Publishing Income 56.4 50.9 10.8
(six month period ended 30 September 2022: Masters 3
8.5 8.1 4.9
$3.5 million) reflecting a lower margin revenue mix.
Total PFAR 4 64.9 59.0 10.0
A breakdown of Total revenue and Net revenue is
presented below. 1 This shows the royalty statements received or receivable within the reporting period.
2 Restated to reflect actual statements received or receivable in the prior period.
3 Masters income includes Artist Royalties, Producer Royalties and Neighbouring Rights.
HSG revenue split by Six months to Six months to
30 September 30 September 4 PFAR for the 12 months to 30 September 2023 increased by 10.2% year-on-year to
income stream 2023 2022 Variance $132.6 million (30 September 2022: $120.3 million).
$’m $’m %

Catalogues within the Streaming revenues increased by 14.7% period-on-

Portfolio reverted to
administration at HSG 9.4 7.0 34.3
period, comparing favourably with the +11% growth
in US streaming revenue as reported by the RIAA.
Third party administration
income 6.1 7.0 (12.9)
Synchronisation has seen a small decline in income by
2.0% in part reflective of the challenges created by the
Frontline publishing income 3.9 4.9 (20.4)
writers and actors strike which impacted licensing for
HSG Total revenue 19.4 18.9 2.6 part of this period. Performance income grew strongly
Royalty cost (16.6) (15.4) 7.8 with 10.9% period-on-period growth with mechanical
HSG Net revenue 2.8 3.5 (20.0) income remaining consistent period-on-period. Digital
downloads continued a downward trend as streaming
dominates the user consumption market with a 7.7%
Pro Forma Annual Revenue (PFAR)
decrease period-on-period.
Given the multiple non-recurring elements captured
within IFRS revenue, to provide Shareholders with an
Whilst the majority of our revenue is derived from our
understanding of the like-for-like performance of the
music composition rights, the Company also receives
Company’s revenue, the Company presents the Pro
revenues from Sound Recording Rights, which includes
Forma Annual Revenue (PFAR) performance measure.
both Masters and Producers. These combined revenues
This shows the gross royalty statements received or
increased by 4.9% period-on-period, from $8.1 million to
receivable within the reporting period and does not
$8.5 million.
include any revenue accruals under IFRS. Although not
directly reconcilable with IFRS revenue, the Company
believes this provides a relevant like-for-like full year
income comparison of the Group’s Catalogues of Songs
held as at the period end.

PFAR is set out by income type for the six month period
ended 30 September 2023 against the comparative
period below. PFAR does not include any income
from HSG ($2.8 million in the reporting period) but
does include PFAR relating to the Second Disposal of
$4.4 million (six month period ended 30 September 2022:
$3.1million).

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I N V E S T M E N T A DV I S E R ’ S R E P O R T

Costs and EBITDA performance hurdles, defined in the catalogue

Operating expenses acquisition agreements, are met. The decision of the
Operating expenses from continuing operations Company to recognise a Catalogue bonus provision
increased 25.4% year-on-year to $117.7 million for the is based on the probability that expected future
six month period ended 30 September 2023 (six month performance will achieve the defined performance
period ended 30 September 2022: $93.9 million). hurdles (see Note 10).

The increase is driven by the recognition of a further During the six month period ended 30 September 2023,
Catalogue bonus provision of $26.5 million, discussed the Company has recognised a further $26.5 million
below, and impairment of Catalogues of Songs of Catalogue bonus provision relating to six Catalogues.
$15.2 million as the application of the Company’s asset The Company also released Catalogue bonus
impairment policy identified seven Catalogues that provisions of $3.3 million relating to two Catalogues
required impairment. where the performance hurdles were not achieved.
The Company paid $0.1 million of Catalogue bonus
Exceptional transaction costs of $5.7 million relating to provision during the six months to 30 September 2023.
legal and professional fees in relation to the proposed This brings the total Catalogue bonus provision to
asset sales announced on 14 September 2023 were $68.1 million across 10 Catalogues.
also incurred; these are materially lower than the
$13.9 million anticipated at the time the transaction was The movement in the Catalogue bonus provision
announced since a high proportion of the fees were during the reporting period during the six months to
contingent on shareholders approving the transaction. 30 September 2023 is presented below:

HSG’s operating costs increased to $5.6 million (six month $’m

period ended 30 September 2022: $5.5 million). See Note 19 At 1 April 2023 45.0
for a standalone Statement of Profit and Loss for HSG.
Increase in provision recognised 26.5

Fees related to the payment of an aborted deal Payments during the period (0.1)
totalling $1.0 million were paid in the reporting period Release of provision previously recognised (3.3)
in addition to further minor costs. Whilst the Company At 30 September 2023 68.1
is not attempting any new acquisitions, no further
aborted deal costs will be incurred. In addition to the 10 Catalogues in its Portfolio that
have a Catalogue bonus provision, there are a further
The increase in operating expenses is offset by a 19 Catalogues that have an active Catalogue bonus
$19.7 million fair value gain recognised on the Company’s clause which the Company considers are unlikely to
held for trading derivative financial instruments. meet their performance hurdles. These 19 Catalogues
have theoretical bonus provisions totalling $75.2 million
Adjusted operating costs less interest expense (as defined (31 March 2023: nil) and are considered contingent
in the Alternative Performance Measures on page 53) liabilities; Note 10 provides associated sensitivity analysis.
decreased by 1.9% to $14.3 million (six month period
ended 30 September 2022: $14.5 million). This is primarily EBITDA
a result of the reduction to the Advisory fee of 20.1% EBITDA from continuing operations for the six month
year-on-year to $5.4 million during the period (six month period ended 30 September 2023 decreased by 36.2%
period ended 30 September 2022: $6.8 million), which to $39.7 million (six month period ended 30 September
decreased due to the Company’s lower share price 2022: $62.3 million), primarily reflecting the reduction of
during the period. Ongoing Charges as a percentage of the CRB III retroactive active accrual in net revenue.
the average Operative NAV decreased to 1.19% for the
six month period ended 30 September 2023 (six month Leverage
period ended 30 September 2022: 1.23%). Total debt, as defined within the Alternative Performance
Measures, increased to $674.0 million at 30 September
Catalogue Bonus Provision 2023 (31 March 2023: $648.2 million) as a result of an
Catalogue bonuses are paid to Songwriters when increase in Catalogue bonus provisions of $23.1 million,

14 HIPGNOSIS SONGS FUND LIMITED

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I N V E S T M E N T A DV I S E R ’ S R E P O R T

a drawdown from the RCF facility of $4.0 million in Dividends

July 2023, offset by a reduction in PRO advances of Dividends paid in the period of $39.8 million related to
$1.3 million. the periods ended December 2022 (paid 28 April 2023)
and March 2023 (paid 28 July 2023); this was covered
Under the Investment Policy, total debt of the Company 1.38x by available Distributable Revenues.
should not exceed 30% of the Operative NAV, equivalent
to $630.9 million as at 30 September 2023 (31 March 2023: On 21 September 2023, the Company declared
$694.8 million). During the period the Company exceeds an interim dividend of 1.3125 pence per share for
this threshold, no further drawn downs can be made the period ended 30 June 2023. This dividend was
from the RCF. The current ratio of total debt to Operative subsequently withdrawn on 16 October 2023 to
NAV is 32.0% (31 March 2023: 28.0%). ensure on-going compliance with the RCF’s Fixed
Charge Coverage Ratio. This was due to the Portfolio
In order to mitigate interest rate risk and provide Independent Valuer materially reducing expectations
certainty over interest payments, the Company holds of the CRB III retroactive payments for the period
interest rate swap agreements. Since 3 January 2023, covering 2018-2022 resulting in the Company partially
$340 million has been hedged for the duration of the reversing its CRB III retroactive active accrual to
RCF (until 30 September 2027) at a fixed rate of 5.67% $9.9 million from $21.7 million as at 31 March 2023,
(including debt margin); a further $200 million is hedged thereby materially reducing its EBITDA for the reporting
until 3 January 2026 at a fixed rate of 5.89% (including period. The Board has determined that it will not
debt margin). declare dividends before the new financial year.

Interest rate swap agreements hedged $540 million at EPS

a blended rate of 5.75%, including debt margin, for EPS from continuing operations for the six month period
a weighted average life of 4.26 years, starting from ended 30 September 2023 is (5.27¢) (six month period
3 January 2023. These interest rate hedging contracts ended 30 September 2022: (1.72¢)); the reduction to EPS
are not subject to margin calls in the event of movements is set out in the below table:
in underlying interest rates. The Company received
$2.7 million income on the executed interest rate swaps EPS Bridge Cents per share
which, when netted against our interest payments,
Opening EPS from continuing operations at
results in net interest paid of $18.3 million (six month 1 October 2022 (1.73)
period ended 30 September 2023: $15.0 million). The
Reduction in Net Revenue (1.89)
increase in net interest paid over the period is due to an
Reduction in Operating Expenses (excluding
increase in the effective interest rate. There was a fair
the below) 0.62
value gain recognised on the remaining interest rate
1. Exceptional transaction costs (0.48)
swaps of $21.1 million at 30 September 2023 as a result
of their mark-to-market value at that date. 2. Increase in Catalogue bonus provision (1.62)
3. Increase in Impairment of Catalogues
Foreign Exchange Hedge of Songs (1.09)
The Company holds a series of US Dollar to Sterling 4. Increase in loan interest (0.71)
foreign exchange forward contracts to limit its exposure 5. Fair value gain on held for trading derivative
to foreign exchange rate risk and to provide certainty financial instruments 1.63
on the US Dollar value of future Sterling dividend Closing EPS from continuing operations
payments. This rolling hedging strategy implemented by at 30 September 2023 (5.27)
the Board ensures there are up to £50 million of forward
contracts in place. As set out previously, the reduction in Net Revenue is
primarily due to the reduction in the CRB III accrual held
During the period, the Company realised a gain of at 30 September 2023.
$3.2 million on the executed foreign exchange forward
contracts. As at 30 September 2023, the Held for Adjusted EPS from continuing operations, as defined
Trading derivative financial asset relating to the foreign within the Alternative Performance Measures, which
exchange forward contract is $0.2 million. primarily removes the impact of Catalogue amortisation,

HIPGNOSIS SONGS FUND LIMITED

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I N V E S T M E N T A DV I S E R ’ S R E P O R T

Catalogue bonus provision, impairment and the fair

value gain on held for trading derivative financial
instruments is 1.37 cents (six month period ended
30 September 2022: 3.63 cents).

Sale of non-core assets

On 14 September 2023, the Company announced
the sale of a portfolio of non-core songs, subject to
completion of legal documentation and the consent
of the Company’s lending banks, known as the Second
Disposal. As this sale is not conditional on Shareholder
approval and meets the requirements of IFRS 5, the
Second Disposal is presented as a discontinued operation
in the Condensed Consolidated Profit and Loss account
for the six month period ended 30 September 2023
and a Held for Sale disposal group in the Condensed
Consolidated Balance Sheet as at 30 September 2023.

The large majority of this transaction completed as set out

in the announcement of 11 December 2023.

The profit for the period from discontinued operations is

$0.6 million (six month period ended 30 September 2022:
$0.8 million). See Note 20 for further detail on the
Second Disposal.

Merck Mercuriadis
CEO, Hipgnosis Song Management Ltd.

20 December 2023

16 HIPGNOSIS SONGS FUND LIMITED

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Investment Objective and Policy

Our Investment Objective sales of both physical records and digital downloads as
The Company’s objective is to provide Shareholders well as from DSPs.
with an attractive and growing level of income, together
with the potential for capital growth, from investment The Company focuses on delivering income growth
in Songs and associated musical intellectual property and capital growth by pursuing efficiencies in the
rights, in accordance with its investment policy. collection of payments and active management of the
Songs it owns.
Investment Policy
The Company’s Investment Policy is to diversify The Company may acquire Songs for consideration
risk through investment in a Portfolio of Songs and consisting of cash, Shares or a combination of cash
associated musical intellectual property rights (including, and Shares, and payment of part of the consideration
but not limited to, master recordings, rights over future may be on deferred terms. The Company may acquire
Songs that are acquired by the Group through the Songs or Catalogues directly, or indirectly by acquiring
payment of Advances to such Songwriter and secured the entity through which such Songs or Catalogues
against the future Songs, and producer royalties). The are held.
Company seeks to acquire 100% of a Songwriter’s
copyright interest in each Song, which would comprise Whilst the Company does not intend to sell the Songs
their writer’s share, their publisher’s share and their it owns, it may make disposals of Songs where it
performance rights. In appropriate cases, however, the considers such a disposal to be in the best interests of
Company may not acquire all three elements of the Shareholders.
Songwriter’s interest. The Company acquires interests
in Songs which are sole authored or co-authored. The Investment restrictions
Company may also acquire interests in Songs jointly The Company invests its assets and manages the Songs it
with another purchaser. Each Song is considered by the acquires with the objective of constructing a high quality
Company to be a separate asset. and diversified Portfolio of Songs. The Company acquires
Catalogues from a number of different Songwriters,
The Company, directly or indirectly via portfolio which includes Songs diversified across music genres
administrators, enters into licensing agreements, under and sung by numerous recording artists. The Company is
which the Company receives payments attributable to subject to the following investment restrictions:
the copyright interests in the Songs which it owns. Such
payments may take the form of royalties, licence fees a) the Company holds interests in a minimum of 300
and/or advance payments, including: Songs;
b) the Advances made to Songwriters in connection
• Mechanical Royalties – when a copy of a Song with the acquisition of rights over future Songs will
is made, whether physical (e.g. CDs, DVDs, vinyl) not represent more than 5% of the Company's
or digital (e.g. permanent downloads, Streaming, Gross Assets, calculated at the date of the relevant
webcast); Advance;

• Performance Royalties – when a Song is performed c) the value of any single Song does not, and will not,
live or broadcast on TV or Radio, or when a song is represent more than 10% of the Company's Gross
streamed online; and Assets, calculated at the date of the acquisition
of such Song (and re-calculated in the aggregate
• Synchronisation Fees – when a Song is used in upon the acquisition of any additional interest in a
another form of media or moving picture (e.g. movie, Song). In the event this limit is breached at any point
TV show, video game, advertisement). after the relevant investment has been made or
added to (for example due to a change in valuation
of any Song), there is no requirement to sell any
The Company also receives royalties and fees payable Song, in whole or in part; and
in respect of master recordings. Master recordings
are the copyright in the master recording of a d) the Company does not, and will not, invest in closed-
musical composition or Song. Master recordings earn ended investment companies or other investment
Synchronisation royalties and generate income from funds.

HIPGNOSIS SONGS FUND LIMITED

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I N V E S T M E N T O B J E C T I V E A N D P O L I CY

Cash management
The Company’s uninvested capital may be invested
in cash, cash equivalents, near cash instruments and
money market instruments.

Hedging and derivatives

The Company may utilise derivatives for efficient
portfolio management. In particular, the Directors may
engage in full or partial foreign currency hedging and
interest rate hedging. The Company does not, and
will not, enter into such arrangements for investment
purposes.

Leverage
The Company may incur indebtedness of up to a
maximum of 30% of its Operative Net Asset Value,
calculated at the time of drawdown. For these purposes
all bank borrowings and other forms of indebtedness
incurred by any member of the Group (as defined
below), and any non-equity share capital, will be taken
into account. “Group” means the Company and its
subsidiaries (as defined in section 531 of the Companies
(Guernsey) Law, 2008, as amended).

Amendments to and compliance with the Investment

Objective and Policy
Any material change to the Company’s Investment
Objective and Policy will be made only with the prior
approval of the FCA and the Shareholders by ordinary
resolution.

In the event of a material breach of any of the

investment restrictions applicable to the Company,
Shareholders will be informed of the actions to be taken
by the Company through an announcement made via
an RNS announcement.

18 HIPGNOSIS SONGS FUND LIMITED

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Principal Risks and Uncertainties
The following is a description of the principal risks and uncertainties for the remaining
six months of the financial year, listed in alphabetical order.

Counterparty and Interest Rate Exchange rate

Description Description
The Company is exposed to changes in global interest The Company has issued share capital denominated in
rates in several ways. Predominantly, but not exclusively, Sterling and pays dividends in that currency. However,
the fiscal and monetary decisions of the US Government the Group’s functional currency is Dollars, and most
and its Central Bank will affect the interest rates of of the Group’s revenue is received in Dollars, and
the Company's floating-rate RCF. The interest rate exchange rate fluctuations may significantly affect the
environment is unpredictable and consequently this NAV and the ability to pay targeted Sterling dividends.
could potentially affect the Company’s ability to meet
bank covenants and pay dividends. The risk is that the Mitigation
cost of the Company’s bank debt exceeds the returns The Company considers on a regular basis the benefits
achieved by the assets acquired with the debt. and cost of passive currency hedging. The Company
has engaged in a rolling dollar-hedging strategy to
Fluctuations in interest rates may also impact the ensure certainty to the Sterling dividend. The Company
discount rate, which is used to evaluate the current and will continue to pay any dividends in Sterling and its
forecast value of Catalogues purchased, or already primary listing remains denominated in Pounds.
invested in. A potential increase in the discount rate
would reduce the value of the NAV as determined by
the Independent Valuer at 30 September 2023. Failed Continuation Vote
Description
Mitigation
Following the failure of the Continuation Vote at the
The Company continues to monitor its interest rates
Company’s AGM, held on 26 October 2023, the Board is
exposure and interest swaps have been put in place,
obliged to put forward proposals to Shareholders within
thereby fixing the majority of the debt for a tenor
six months for the reconstruction or reorganisation of the
between circa 3 and 5 years. Sensitivity analysis is
Company. The risk is that the Board’s proposals are not
undertaken to identify the impact any changes in
approved by the requisite majority of Shareholders.
interest rates would have on the NAV and an updated
valuation is undertaken every 6 months to reflect any
Mitigation
material changes.
The Company has entered into a period of strategic
review to consider all options for the future of the
Company, with the aim of maximising value for
Cyber security
shareholders including, among other things, a review of
Description the future management arrangements of the Company
The Company (like all others) is exposed to external and the future of its operating company, HSG. Shot
cyber-security threats which have the possible impact Tower Capital, LLC has been appointed as lead adviser
of sensitive information leakage, cyber fraud and in the to conduct due diligence on the Company’s assets
worst-case scenario, interruption of business operations. as part of this Strategic Review. The Board plans to
continue its extensive engagement with Shareholders.
Mitigation
The Company recognises the increased incidence
of cyber-security threats and continually reviews its
own policies, procedures and defences to mitigate
associated risks, as well as those of the Investment
Adviser, Administrator and key service providers,
engaging market-leading specialists where
appropriate.

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P R I N C I PA L R I S K S A N D U N C E R TA I N T I E S

Financial leverage Market risk

Description Description
The Company uses leverage and may utilise borrowings The Company’s assets consist of music intellectual
for working capital and interest rate hedging purposes. property rights which give rise to royalty income for
In case of default under the relevant financing the Company. The quality of earnings collection and
arrangement, the Company may face adverse action the accuracy of projected future earnings represent
from its lenders leading to operating constraints and a risk to the Company’s investment strategy. For
increased controls which may impact the medium-term example, the Company is heavily reliant on streaming
dividend strategy. (or an equivalent technology) remaining popular with
consumers. Any adverse change in streaming revenues
Mitigation would affect revenues. Performance income and a
On 21 September 2023, the Company declared reduction in streaming subscriptions may be impacted
an interim dividend of 1.3125 pence per share for by a major downturn in the global economies if this
the period ended 30 June 2023. This dividend was led to closure of venues. Conversely, technological
subsequently withdrawn on 16 October 2023 to ensure advances could lead to a growth in royalties as
on-going compliance with the RCF’s Fixed Charge consumers’ access to music continues to improve.
Coverage Ratio. The Board has determined that it will
not declare dividends before the new financial year. Mitigation
The Board will only recommence returning capital to The Company has a well-diversified Portfolio around
shareholders when it believes that it can sustainably vintage, territory, genre and income type and will
meet its banking covenants and working capital be heavily reliant on the continuing presence and
requirements. popularity of DSPs in order to maximise access to
the consumer market. The Company is continuously
reviewing this risk and most recently took note of the
latest report by the RIAA, the trade organization that
monitors US recorded revenues, which showed that total
revenues grew 9.3% year-on-year to an all-time high of
$8.4 billion for H1 2023. Paid subscriptions continued to
be the strongest driver of revenue growth, increasing by
more than $550 million and averaging nearly 96 million
subscriptions during the period. This supports data
from IFPI, the organization that represents the recorded
music industry worldwide which states there were
589 million users of paid subscription at the end of 2022,
an increase of 13% over the year.

20 HIPGNOSIS SONGS FUND LIMITED

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P R I N C I PA L R I S K S A N D U N C E R TA I N T I E S

Operational reliance on service providers Royalty Rates and Distribution Policies

Description Description
As a self-managed investment trust with a non- Should Collection Societies or other entities, including
executive Board, the Company relies primarily on the major music publishers and record companies,
third-party service providers for its core operations alter the way that they collect royalties, or set lower
including oversight of its subsidiaries under the terms royalty rates, or decide to disproportionately favour
of its Investment Advisory Agreement. Although the major music publishers, the Company may receive
ultimate responsibility for the investment strategy significantly reduced revenues compared to the level
lies with the Company, the Investment Adviser is it had forecast at the time of acquiring the relevant
responsible for sourcing potential opportunities Catalogues or Songs.
and advising the Company on acquisitions and
active management of Catalogues. The Company's Mitigation
dependence on service providers amplifies any The Investment Adviser actively monitors the market
transaction risks (such as tax structuring) due to the and provides the Company with any data or
complexities of transactions, and the requirement to intelligence of which it becomes aware. The Investment
co-ordinate multiple service providers. Adviser is working on innovations to improve the way
the market works. This is achieved in collaboration with
The Company also depends heavily on the specialist our Collection partners and is a long-term process. The
administrative and financial services of the Investment financial model, which supports the Board’s assessment
Adviser, the Portfolio Administrators and other collection of Going Concern and the Viability Statement,
agents as well as third-party suppliers with whom the reflects these regulatory and industry risks should they
Company conducts business. In the event that these materialise.
service providers experience business disruption, cyber
security breaches or fail in their responsibilities, the ability
of the Group to collect revenues due may be limited.

Mitigation
Appropriate advice and support is sought as required
and project plans are put in place and implemented.
The Company continually reviews the performance
of its service providers and will raise any concerns
regarding performance or efficiency should the need
arise. Governance and performance of service providers
is monitored through the Management Engagement
Committee of the Board.

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 21
P R I N C I PA L R I S K S A N D U N C E R TA I N T I E S

Emerging Risks
Emerging risks are regularly considered to assess any
potential impact on the Group and to determine
whether any actions are required. These include
regulatory and legislative change, macroeconomic and
geo-political change, climate risks, the impact of AI,
new competitors entering the market as well as the risk of
litigation. These are monitored, mitigated and managed
by the Company through continual review, policy setting
and updating of the Company’s risk matrix at each
quarterly meeting to ensure that procedures are in place
with the intention of minimising the impact of the above-
mentioned risks. We have considered the materiality of
our environmental risks and have concluded that they
are minimal. The Company relies on periodic reports
provided by the Investment Adviser and Administrator
regarding risks that the Group faces. When required,
experts, including tax advisers and legal advisers, will be
employed to gather information and to provide advice.

The principal risks and uncertainties of the Company

were identified in further detail in the Annual Report
and Financial Statements for the year ended 31 March
2023. The Company’s principal risk factors are fully
discussed in the Company’s Prospectus, available on
the Company’s website (www.hipgnosissongs.com) and
should be reviewed by Shareholders.

22 HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023
Directors’ Responsibilities Statement

The Directors are responsible for preparing this Interim The Directors are responsible for keeping proper
Report and Consolidated Financial Statements in accounting records, which disclose with reasonable
accordance with applicable law and regulations. The accuracy at any time the financial position of the
Directors confirm that to the best of their knowledge: Company and enable them to ensure that the Financial
Statements comply with the Companies Law. They
The Condensed Consolidated Financial Statements are also responsible for safeguarding the assets of the
have been prepared in accordance with IAS 34 Interim Company and hence for taking reasonable steps for
Financial Reporting; and the prevention and detection of fraud, error and non-
compliance with law and regulations.
The Chair’s Statement and Investment Adviser’s Report
include a fair review of the information required by: The Directors are responsible for the maintenance and
integrity of the corporate and financial information
i) DTR 4.2.7R of the Disclosure Guidance and included on the website: https://www.hipgnosissongs.
Transparency Rules, being an indication of important com/song-investors/.
events that have occurred during the first period of
the financial year; their impact on the condensed The Company is a member of the Association of
set of consolidated financial statements; and a Investment Companies, complies with the AIC Code
description of the principal risks and uncertainties and is a constituent of the AIC’s “Royalties” Specialist
of the remaining six months of the year; and Investment Trusts sector classification. The Company’s
ii) DTR 4.2.8R of the Disclosure Guidance and page on the AIC’s website is at www.theaic.co.uk/
Transparency Rules, being related party transactions companydata/0P0001BL9D
that have taken place in the first period of the
On behalf of the Board
current financial year and that have materially
affected the financial position or performance of the
Robert Naylor
Company during that period.
Chair

20 December 2023

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 23
Condensed Consolidated Statement
of Profit and Loss
For the six months ended 30 September 2023 (unaudited)

1 April 2023 to 1 April 2022 to

30 September 30 September
2023 2022
Notes $’000 $’000

Income
Total revenue 12 63,200 86,392
Interest income 263 40
Royalty costs (9,485) (9,634)
Net revenue from continuing operations 53,978 76,798

Expenses
Advisory and performance fees 15 (5,398) (6,760)
Administration fees (212) (300)
Legal and professional fees (1,711) (1,728)
Audit fees (571) (189)
Brokers’ fees (115) (94)
Directors’ remuneration 15 (324) (324)
Subscriptions and licences (204) (383)
Other operating expenses 13 (5,949) (6,020)
Exceptional transaction costs 20 (5,747) –

Movement in Catalogue bonus provision (23,257) (3,689)

Movement in ECL provision for HSG advances (42) 375

Amortisation of Catalogues of Songs 5 (53,947) (55,110)
Impairment of Catalogues of Songs 5 (15,194) (2,007)
Amortisation of borrowing expenses 8 (620) (1,001)
Fixed asset depreciation (247) (30)
Loan interest 8 (23,052) (14,473)
Fair value gain on held for trading derivative financial instruments 18 19,652 –
Net loss from joint ventures (446) (48)
Foreign exchange losses (280) (2,083)
Operating expenses (117,664) (93,864)

Operating loss for the period before taxation (63,686) (17,066)

Taxation 4 (78) (3,815)
Loss for the period from continuing operations (63,764) (20,881)

Profit for the period from discontinued operations 20 563 791

Total loss for the period (63,201) (20,090)

From loss for the period from continuing operations

Basic Earnings per Share (cents) 16 (5.27) (1.72)
Diluted Earnings per Share (cents) 16 (5.27) (1.72)

From total loss for the period

Basic Earnings per Share (cents) 16 (5.23) (1.66)
Diluted Earnings per Share (cents) 16 (5.23) (1.66)

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.

24 HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023
Condensed Consolidated Statement
of Comprehensive Income
For the six months ended 30 September 2023 (unaudited)

1 April 2023 to 1 April 2022 to

30 September 30 September
2023 2022
Notes $’000 $’000

Loss for the period (63,201) (20,090)

Other comprehensive income:

Movement in foreign currency translation reserve (3) (307)
(3) (307)

Total comprehensive income for the period (63,204) (20,397)

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 25
Condensed Consolidated Statement
of Financial Position
As at 30 September 2023

30 September 31 March
2023 2023
(Unaudited) (Audited)
Notes $’000 $’000

Assets
Catalogues of Songs 5 1,824,675 1,921,248
Other assets 684 917
Goodwill 272 272
Non-current receivables 6 9,900 13,210
Non-current assets 1,835,531 1,935,647

Trade and other receivables 6 132,430 139,999

Held for trading derivative financial asset 18 15,239 4,914
Assets of disposal group held for sale 20 32,156 –
Cash and cash equivalents 7 34,336 37,965
Current assets 214,161 182,878

Total assets 2,049,692 2,118,525

Liabilities
Loans and borrowings 8 599,048 594,428
Catalogue bonus provision 10 39,604 33,080
Non-current liabilities 638,652 627,508

Held for trading derivative financial liability 18 – 3,395

Catalogue bonus provision 10 28,525 11,962
Liabilities of disposal group held for sale 20 125 –
Other payables and accrued expenses 9 50,861 41,126
Current liabilities 79,511 56,483

Total liabilities 718,163 683,991

Net assets 1,331,529 1,434,534

Equity
Share capital 11 1,692,198 1,692,198
Foreign currency translation reserve (2,244) (2,241)
Treasury share reserve 11 (1,961) (1,961)
Retained earnings (356,464) (253,462)
Total equity attributable to the owners of the Company 1,331,529 1,434,534

Number of Ordinary Shares in issue at period end 1,209,214,286 1,209,214,286

IFRS Net Asset Value per Ordinary Share (cents) 17 110.12 118.63
Operative Net Asset Value per Ordinary Share (cents) 17 173.92 191.53

Approved and authorised for issue by the Board of Directors on 20 December 2023 and signed on their behalf by:

Robert Naylor Chair Cindy Rampersaud Director

The accompanying notes form an integral part of these Consolidated Financial Statements.

26 HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023
Condensed Consolidated Statement
of Changes in Equity
For the six months ended 30 September 2023 (unaudited)

Foreign
currency
Share translation Treasury Retained Total
Number of capital reserve reserve earnings* equity
Notes Ordinary Shares $’000 $’000 $’000 $’000 $’000

As at 1 April 2023 1,209,214,286 1,692,198 (2,241) (1,961) (253,462) 1,434,534

Dividends paid 14 – – – – (39,801) (39,801)
Loss for the year – – – – (63,201) (63,201)
Foreign currency translation
reserve movement – – (3) – – (3)
As at 30 September 2023 1,209,214,286 1,692,198 (2,244) (1,961) (356,464) 1,331,529
* Distributable Revenues (as defined in the Alternative Performance Measures on page 52) arising during the period were $11.4 million which, taken together with the $43.4 million
of Distributable Revenue reserves carried forward from the previous financial year ended 31 March 2023 less dividends paid during the period, result in available Distributable
Revenues of $15.0 million as at 30 September 2023.

For the six months ended 30 September 2022 (unaudited)

Foreign
currency Retained
Share translation Treasury earnings Total
Number of capital reserve reserve (Restated*) equity
Notes Ordinary Shares $’000 $’000 $’000 $’000 $’000

As at 1 April 2022 1,211,214,286 1,692,198 (2,235) – (107,564) 1,582,399

Dividends paid 14 – – – – (19,312) (19,312)
Loss for the year – – – – (20,090) (20,090)
Foreign currency translation
reserve movement – – (307) – – (307)
As at 30 September 2022 1,211,214,286 1,692,198 (2,542) – (146,966) 1,542,690
* Refer to Note 2(e) for further detail on the prior period restatement.

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 27
Condensed Consolidated
Statement of Cash Flows
For the six months ended 30 September 2023 (unaudited)

1 April 2023 to 1 April 2022 to

30 September 30 September
2023 2022
Notes $’000 $’000

Cash flows generated from operating activities

Operating loss for the period from continuing operations before taxation (63,686) (17,066)
Operating profit for the period from discontinuing operations before taxation 20 563 791
Adjustments for:
Movement in trade and other receivables 4,819 (18,368)
Movement in other payables and accrued expenses 8,702 5,219
Movement in Catalogue bonus provision 23,257 –
Movement in ECL provision for HSG advances 42 –
Movement in HSG restructuring provision 504 –
Lease liability interest 158 (378)
Amortisation of Catalogues of Songs – Continued 5 53,947 55,110
Amortisation of Catalogues of Songs – Discontinued 20 872 761
Impairment of Catalogue of Songs 5 15,194 2,007
Amortisation of borrowing expenses 620 1,001
Fixed asset depreciation 247 30
Loan interest 8 23,052 14,473
Fair value gain on held for trading derivative financial instruments 18 (19,652) –
Foreign exchange (gains)/losses 280 2,083
Taxation paid 43 (200)
Net cash generated from operating activities 48,962 45,463

Cash flows used in investing activities

Disposal of Catalogues of Songs 788 –
Purchase of other assets (14) (48)
Writer advances paid (1,742) (1,915)
Catalogue bonuses paid (170) –
Deferred consideration paid – (2,500)
Net cash used in investing activities (1,138) (4,463)

Cash flows generated from financing activities

Dividends paid 14 (39,801) (19,312)
Lease interest paid (349) –
Interest paid (21,030) (14,973)
Gain on executed held for trading derivative financial instruments 18 5,932 –
Borrowing costs – (941)
Bank loan drawn down 8 4,000 1,771
Net cash generated from financing activities (51,248) (33,455)
Net movement in cash and cash equivalents (3,424) 7,545

Cash and cash equivalents at the start of the period 37,965 30,067
Effect of foreign exchange rate changes on cash and cash equivalents (205) (1,219)
Cash and cash equivalents at the end of the period 34,336 36,393

The accompanying notes form an integral part of these Condensed Consolidated Financial Statements.

28 HIPGNOSIS SONGS FUND LIMITED

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Notes to the Condensed Consolidated
Financial Statements
For the six months ended 30 September 2023 (unaudited)

1. General information
Hipgnosis Songs Fund Limited was incorporated and registered in Guernsey on 8 June 2018 with registered number
65158 and is governed in accordance with the provisions of the Companies Law. The registered office address is Floor 2,
Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 4LY.

The Company is registered with the Guernsey Financial Services Commission under the Registered Collective
Investment Scheme Rules 2015, and the Protection of Investors (Bailiwick of Guernsey) Law, 2020. The Company is not
authorised or regulated by the Financial Conduct Authority.

The Company’s Ordinary Shares were admitted to trading on the Specialist Fund Segment of the London Stock
Exchange on 11 July 2018 and migrated to a Premium Listing on the Main Market of the London Stock Exchange on
25 September 2019. The Company was added as a constituent of the FTSE 250 Index effective from after the market
close on 20 March 2020.

The Group is principally engaged in investing in and managing music copyrights and associated musical intellectual
property. The Company makes and manages its investments through its subsidiaries, which are registered in the UK and
US as limited companies. The Condensed Consolidated Financial Statements present the results of the Group for the
period ended 30 September 2023, rounded to the nearest US Dollar.

There has been a presentational change in the comparative period in the Condensed Consolidated Statement
of Profit and Loss, as set out in Note 21.

2. Accounting policies
a) Basis of preparation
The Condensed Consolidated Financial Statements included in this Interim Report have been prepared in accordance
with IAS 34 ’Interim Financial Reporting’ and the Disclosure and Transparency Rules of the FCA.

The Condensed Consolidated Financial Statements do not include all the information and disclosures required
in the Annual Report and should be read in conjunction with the Company’s Annual Report for the year ended
31 March 2023, which are available on the Company’s website (www.hipgnosissongs.com). The Annual Report has
been prepared in accordance with IFRS.

The same accounting policies and methods of computation have been followed for the preparation of these
Condensed Consolidated Financial Statements as in the Annual Report for the year ended 31 March 2023. The principal
accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These
policies have been consistently applied, unless otherwise stated.

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2. Accounting policies (continued)

b) Group information
As at 31 March 2023, the details of the Company’s subsidiaries are as follows:
Place of
incorporation % of voting Consolidation Functional
Name of the subsidiary and operation rights % interest method Currency

Hipgnosis Holdings UK Limited UK 100 100 Full USD

Hipgnosis SFH I Limited UK 100 100 Full USD
Hipgnosis SFH XIII Limited UK 100 100 Full USD
Hipgnosis SFH XIX Limited UK 100 100 Full USD
Hipgnosis SFH XX Limited UK 100 100 Full GBP
RubyRuby (London) Limited 1 UK 100 100 Full GBP
Hipgnosis Songs Group LLC 2 US 100 100 Full USD
Hipgnosis Acquisition Corp 2 US 100 100 Full USD
Kennedy Publishing & Productions Limited 1 UK 100 100 Full GBP
Robot of the Century Music Publishing Company Inc US 100 100 Full USD
Deamon Limited 1 UK 100 100 Full GBP
PB Songs Ltd 1 UK 100 100 Full GBP
1 These companies are subsidiaries of Hipgnosis SFH XX Limited and therefore an indirect subsidiary of Hipgnosis Songs Fund Limited.

2 On 10 September 2020 the Company acquired the entire share capital of Big Deal Music Group (rebranded to Hipgnosis Songs Group) which includes BDM Acquisition Corp
(rebranded to Hipgnosis Acquisition Corp) and Big Deal Music LLC (rebranded to Hipgnosis Songs Group LLC) both incorporated in the US. Big Deal Music LLC is part of a joint
venture with Big Family LLC, a publishing company which was formed in June 2018 and is equity accounted for in the Consolidated Financial Statements.

All subsidiaries undertake the same activities as the Group. In addition, Hipgnosis Songs Group LLC undertakes
publishing administration.

The majority of subsidiaries of the Company are considered tax resident in the UK and are subject to UK corporation
tax. Robot of the Century Music Publishing Inc is registered in New York, Hipgnosis Songs Group LLC and Hipgnosis
Acquisition Corp. are registered in Delaware and all are subject to applicable State and Federal Taxes.

c) Going concern
The Directors monitor the capital and liquidity requirements of the Company on a regular basis. They have also
reviewed cash flow forecasts prepared by the Investment Adviser which are based in part on assumptions about the
future returns from existing Catalogues of Songs and annual operating costs.

Based on these sources of information and their judgement, the Directors believe it is appropriate to prepare the
Condensed Consolidated Financial Statements of the Group on a going concern basis.

As a result of Continuation Resolution not passing the Board will, in accordance with the Company’s Prospectus,
put forward proposals for the reconstruction, reorganisation or winding-up of the Company to Shareholders for their
approval within six months following the AGM held on 26 October 2023. These proposals may or may not involve
winding-up the Company or liquidating all or part of the Company’s existing portfolio of investments. On that basis
there is a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going
concern in its current form and, therefore, that it may be unable to realise its assets and discharge its liabilities in line
with the current normal course of business.

d) Segmental reporting
The chief operating decision maker is the Board of Directors. All of the Company’s income is global but received from
sources within US, Europe and UK. While the Company’s income is derived internationally, the Directors are of the
opinion that the Group is engaged in a single segment of business, being the investment of the Company’s capital
in a Portfolio of Song copyrights, with an attractive and growing level of income, together with the potential for
capital growth.

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2. Accounting policies (continued)

e) Restatement of prior period results
The Interim Report for the six months ended 30 September 2022 was reviewed by the FRC as part of its routine
monitoring of corporate reporting. The review was based on the Interim Report and did not benefit from detailed
knowledge of the business or an understanding of the underlying transactions entered into and therefore provide no
assurance that the Interim Report is correct in all material respects. It was, however, conducted by staff of the FRC who
have an understanding of the relevant legal and accounting framework.

In the Interim Report for the six months ended 30 September 2022 the Company recognised an interim dividend at the
point when the Board declared the dividend. As a result of the FRC’s review, going forward the Company will recognise
interim dividends when paid because no legal binding liability is established prior to payment of the interim dividend.
A prior year restatement is presented in the Condensed Consolidated Statement of Changes in Equity for the six months
ended 30 September 2022 where the accrued dividend declared of $19.3 million has been derecognised. There is no
impact to the comparative period for the Condensed Consolidated Profit and Loss account, Condensed Consolidated
Balance Sheet and the Condensed Consolidated Statement of Cashflows.

f) Assets held for sale and discontinued operations

On 14 September 2023 the Company announced the sale of a portfolio of non-core songs, subject to completion of
legal documentation and the consent of the Company’s lending banks, known as the Second Disposal. In accordance
with IFRS 5, the assets and liabilities of the Second Disposal are reclassified as held for sale and its results for the period
are presented as discontinued operations. Prior period comparatives in the Condensed Consolidated Statement of
Profit and Loss, Condensed Consolidated Statement of Cash Flows have been restated accordingly. These assets and
liabilities are recognised as assets held for sale and liabilities associated with assets held for sale, without offset. The
related assets recorded as assets held for sale are valued at the lower of their fair value and their carrying value (i.e. at
their cost less accumulated depreciation and impairment losses), and they are no longer depreciated. Further details
of this transaction and the implications for the Condensed Consolidated financial statements can be found in Note 20.

3. Significant accounting judgments, estimates and assumptions

The preparation of the Group’s Condensed Consolidated Financial Statements requires the application of estimates
and assumptions which may affect the results reported in the Condensed Consolidated Financial Statements.
Uncertainty about these estimates and assumptions could result in outcomes that require a material adjustment to the
carrying amount of the asset or liability affected in future periods. Estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised
and in any future periods affected.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that
have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next
financial period, are discussed below. The Group based its assumptions and made estimates based on the information
available when the Condensed Consolidated Financial Statements were prepared. However, these assumptions and
estimates may change based on market changes or circumstances beyond the control of the Group.

Critical estimates in applying the Group’s accounting policies – revenue recognition

and royalty costs
Accrued income as at 30 September 2023 was $121.5 million (31 March 2023: $126.2 million), a breakdown of which is
set out below:

• $69.5 million for earnings where, due to the time lag in royalty reporting, statements are not expected to be received
until calendar Q4 2023 onwards. This includes international PRO reporting and HSG (31 March 2023: $62.3 million).

• $9.9 million CRB III accruals (31 March 2023: $21.7 million).

• $42.1 million Usage Accrual, which recognises revenues that have triggered a contractual payment but have not
been paid to, and processed by, collection societies, publishers and administrators. This represents on average three
months of royalty reporting (31 March 2023: $42.2 million).

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3. Significant accounting judgments, estimates and assumptions (continued)

Critical estimates in applying the Group’s accounting policies – revenue recognition and royalty
costs (continued)
In calculating accruals, the Company makes judgments around seasonality, over or under performance, and
commercial factors based on historical performance, and its knowledge of each Catalogue through its regular
correspondence with the various administrators, record labels and international societies. The Company also makes
an estimate of revenue from consumption to reporting.

Estimated royalty revenue receivable is accrued for on the basis of historical earnings for each Catalogue, which
incorporates an element of uncertainty. The estimated revenue accrual may not therefore directly equal the actual
cash received in respect of each accounting period and adjustments may therefore be required throughout the
financial period when the actual revenue received is known, and these adjustments may be material.

Net revenue also includes an accrual for performance income, to account for the writer’s share of Performance
royalties which are subject to a significant time lag in reporting in the industry, but which the Group is entitled to receive
in due course. In recommending the estimate of this accrual to the Board of Directors the Investment Adviser used its
analysis of each Catalogue’s revenue history as well its knowledge of the respective Catalogue performance trends to
recommend the estimated accruals.

Net revenue is subject to a royalty cost accrual applied to gross revenue receipts primarily within the Hipgnosis Songs
Group (“HSG”) subsidiaries. Royalty cost accruals represent contractual royalties due to Songwriters and other rights
holders that are payable on a six-monthly basis for writers under publishing contracts and quarterly for clients under
administration contracts. Royalty rates vary by writer (negotiated by contract) and by revenue stream.

A sensitivity of the significant estimates used in calculating accrued income and the impact of the sensitivities on the
balance is performed below:
Sensitivity Sensitivity
Revenue accrual 30 September 2023 +10% -10%

Accruals due to the time lag in royalty reporting $69.5 million $7.0 million ($7.0) million
CRB III accruals* $9.9 million $1.0 million ($1.0) million

One month increase One month reduction

Usage accrual $42.1 million $14.0 million ($14.0) million

* The CRB III sensitivity represents the variability of the historical US streaming mechanical revenue that the contractual rates are applied to.

Expected Credit Loss (ECL) in relation to revenue receivables

Royalty earnings for accruals and receivables recognised in the year ended 30 September 2023 are distributed
by PROs, Publishers and Record Labels who collect royalties at the source of usage and distribute those earnings
directly to Hipgnosis.

The probability of future default has been deemed close to nil, due to the long-standing history of PROs, Publishers
and Record Labels within the music industry and the existing framework of cash collection amongst the Company’s
stakeholders. Whilst there are smaller/newer organisations that have relatively unproven credit resilience these account
for a small minority of the Group’s receivables.

The Company’s current risk assessment includes analysis of the exposure to commercial risk by PROs, Publishers and
Record Labels, and the likely impact of their credit risk on Hipgnosis’ revenue streams. This impact is considered
immaterial and a sensitivity analysis on this is performed in Note 6.

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3. Significant accounting judgments, estimates and assumptions (continued)

Expected Credit Loss (ECL) in relation to HSG advances

Hipgnosis Songs Group LLC advances royalty payments to Songwriters. Management is required to assess the
recoverability of these advances bi-annually in accordance with IFRS 9 Financial Instruments. Management will
consider market conditions and historic trading patterns affecting the relevant assets.

Management adopts a simplified approach, has analysed their historical loss ratio data and applied this using a risk
based methodology as there are no defined terms of repayment related to advances. The risk categories against
which the historical loss ratios are assessed and expected credit losses are calculated are:

• low risk advances where the advance is expected to be recouped in full under the terms of the writer’s agreement
(because of the writer’s reputation, previous success etc);

• medium risk advances where there is reasonable expectation that a level of the advances will be recouped; and

• high risk advances, where management believes that either because of the writer’s unknown potential or other
factors, a large level of recoverability may not be achieved.

A sensitivity analysis on the expected credit loss provision of the HSG recoupable advances is performed in Note 6.

Assessment of impairment and the calculation of Operative NAV

Intangible assets are subject to a bi-annual review to identify any indicators of impairment. The Fair Value of the
Catalogues as calculated by the Portfolio Independent Valuer is used to identify any indicators of impairment. The
Portfolio Independent Valuer adopts a DCF valuation approach and applies a number of significant assumptions
to the projected future earnings for all Catalogues including:

• Market factors impacting revenues;

• Discount rate, currently 8.5% (31 March 2023: 8.5%); and

• Terminal value at 16 years.

As Value-In-Use is calculated for any Catalogues with a residual risk of impairment. The Value-In-Use is calculated by
using the original projected cash flows used during the Fair Value calculation by the Portfolio Independent Valuer,
with a 0.5% reduction to the discount rate. The reduction in the discount rate reflects the Company’s ability to drive
additional value through active management of a Catalogue and addresses the passive nature of the Company’s
cash flows within the Portfolio Independent Valuer’s fair value analysis.

If the Value-In-Use calculation for the Catalogue is lower than the carrying value of the Catalogue, an impairment loss
equal to the difference is recognised in the Condensed Consolidated Statement of Profit and Loss. The impairment
losses recognised in respect of intangible assets may be reversed in a later period if the recoverable amount becomes
greater than the carrying value, within the limit of impairment losses previously recognised.

Management’s impairment review as at 30 September 2023 concluded that an impairment of $15.2 million (six month
period ended 30 September 2022: $2.0 million) was required to the Group’s Catalogues. A sensitivity analysis on the
Value-In-Use calculation and impact on the impairment charge is performed in Note 5.

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4. Taxation
Whilst the Company is incorporated in Guernsey, the majority of the Company’s subsidiaries are incorporated and tax
resident in the UK and the majority of the Group’s income and expenditure in incurred is these UK entities. Therefore is it
considered most appropriate to use the standard UK tax rate of 25% (31 March 2023: 19%).

The Group currently has no exposure to US Corporation Tax as the US based subsidiaries are currently not making
a taxable profit. Aside from the US, the Group has no other foreign subsidiaries.

The taxation charge of $0.1 million (six months ended 30 September 2022: $3.8 million) is based on adjustments in
respect of the prior period.

Disposals of Catalogues may give rise to potential tax charges depending on the availability of tax attributes (tax losses)
to offset any taxable gains otherwise arising. There were no such disposals of Catalogues during the period and so no
such tax liabilities arose.

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5. Catalogues of Songs
Note $’000

Cost
At 1 April 2023 2,237,284
Disposals (788)
Transfer to Held for Sale Assets 20 (30,446)
At 30 September 2023 2,206,050

Amortisation and impairment

At 1 April 2023 316,036
Amortisation 53,947
Impairment 15,194
Transfer to Held for Sale Assets 20 (3,802)
At 30 September 2023 381,375

Net book value

At 1 April 2023 1,921,248
At 30 September 2023 1,824,675
Fair value as at 30 September 2023 2,622,000

Cost
At 1 April 2022 2,237,284
Additions –
At 31 March 2023 2,237,284

Amortisation and impairment

At 1 April 2022 200,552
Amortisation 111,583
Impairment 3,901
At 31 March 2023 316,036

Net book value

At 1 April 2022 2,036,732
At 31 March 2023 1,921,248
Fair value as at 31 March 2023 2,802,762

The Group amortises Catalogues of Songs with a limited useful life using the straight-line method of 20 years (other
than in exceptional circumstances for specific Catalogues of Songs). An assessment of the useful life of Catalogues
is considered at each reporting period, which is 20 years, in line with what the Board of Directors and the Investment
Adviser deem to be industry standard. At 30 September 2023 accumulated amortisation for Catalogues of Songs is
$365.5 million (31 March 2023: $310.6 million).

As disclosed on page 132 of the Company’s Annual Report for the year ended 31 March 2023, Catalogues of Songs are
subject to a bi-annual review to identify any indicators of impairment. For the six month ended 30 September 2023, the
Company has recognised an impairment charge of $15.2 million on 7 Catalogues of Songs as a result of this review. This
brings accumulated impairment to 30 September 2023 to $20.6 million (31 March 2023: $5.4 million).

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5. Catalogues of Songs (continued)

A Value-In-Use is calculated for any Catalogue with a residual risk of impairment following the impairment review.
The Value-In-Use is calculated by using the original projected cash flows used during the Fair Value calculation by the
Portfolio Independent Valuer, with a 0.5% reduction to the discount rate.

The sensitivity of the discount rate and the Value-In-Use calculation to the impairment charge is as follows:
Sensitivity to the reduction to the discount rate used in the
Value-In-Use calculation
Discount Rate -0.50% Current +0.50%

Impairment of Catalogues of Songs ($’000) 8.50% 6,532 15,194 23,738

9.00% 15,194 23,738 30,942
9.50% 23,738 30,942 37,096

The Board engaged Portfolio Independent Valuer, Citrin Cooperman Advisors LLC, to value the Catalogues as at
30 September 2023. The Board has approved and adopted the valuations prepared by the Portfolio Independent
Valuer which are used as an input into the impairment review process and for the Operative NAV.

The sensitivity of the discount rate to the fair value of the Portfolio is as follows:
Discount Rate 8.50% 9.00% 9.50%

Portfolio Value ($’000) 2,622,000 2,418,533 2,243,899

Variance to Fair Value ($’000) – (203,467) (378,100)
Variance to Fair Value (%) – (7.8%) (14.4%)

The sensitivity of the terminal value growth rate to the fair value of the Portfolio is as follows:
Current Rate Current Rate
Sensitivity to the Terminal Value Growth Rate Current Rate –1.00% 2.00% Rate +1.00%

Portfolio Value ($’000) 2,622,000 2,476,587 2,537,198 2,826,184

Variance to Fair Value ($’000) – (145,413) (84,801) 204,185
Variance to Fair Value (%) – (5.5%) (3.25%) 7.8%

The sensitivity of the applied growth rate to the fair value of the Portfolio is as follows:
Current Rate Current Rate
Sensitivity to the Growth Rate Current Rate -1.00% +1.00%

Portfolio Value ($’000) 2,622,000 2,360,337 2,922,061

Variance to Fair Value ($’000) – (261,663) 300,061
Variance to Fair Value (%) – (10.0%) 11.4%

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6. Trade and other receivables

30 September 31 March
2023 2023
$’000 $’000

Non-current receivables
Accrued income 9,900 13,210
9,900 13,210

Current receivables
Accrued income 105,236 112,943
Royalties receivable 7,680 7,078
Net recoupable advances 16,280 16,436
Prepayments and other debtors 3,132 3,542
Corporation tax 102 –
132,430 139,999

The material reduction to accrued income for the six months ended 30 September 2023 is due to the reduction of the
CRB III retroactive accrual. As at 31 March 2023, $21.7 million was accrued following the confirmation of the CRB III rate
increase to 15.1% for the Songwriters’ mechanical portion of US Streaming income. This accrual estimated the retroactive
payment due to the Company as a result of revenues in previous accounting periods not having been recognised
at the full CRB III rates. The Company’s Portfolio Independent Valuer materially reduced its expectations of these
industry-wide retroactive payments for its valuation of the Company’s portfolio as at 30 September 2023. As a result, the
Company now expects to receive significantly lower retroactive payments in relation to CRB III and therefore reduced
its CRB III retroactive accrual to $9.9 million.

Credit Risk and Provision for Expected Credit Losses (ECL)

As disclosed in Note 3, the probability of future default against revenue receivable balances has been deemed close
to nil. At 30 September 2023, an ECL provision is recognised against the recoupable advances as below:
High Risk Medium Risk Low Risk Total
At 30 September 2023 $’000 $’000 $’000 $’000

Expected loss rates 100.0% 22.7% 0.0% 48.9%

Gross carrying amounts 13,295 10,053 8,506 31,853

Provision for expected credit losses (13,295) (2,278) – (15,573)
Net carrying amounts – 7,775 8,506 16,280

High Risk Medium Risk Low Risk Total

At 31 March 2023 $’000 $’000 $’000 $’000

Expected loss rates 100.0% 24.0% 0.0% 48.6%

Gross carrying amounts 13,000 10,520 8,436 31,956

Provision for expected credit losses (13,000) (2,520) – (15,520)
Net carrying amounts – 8,000 8,436 16,436

Net recoupable advances relating to HSG amount to $16.26 million (31 March 2023: $16.35 million).

If the probability of future default against the royalties receivable balances were to be 5% higher, this would result
in a $0.4 million ECL provision on royalties receivable. If the probability of future default against the medium risk
recoupable advances were to be 10% higher, this would result in a $1.0 million increase to the ECL provision on
recoupable advances.

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7. Cash and cash equivalents

30 September 31 March
2023 2022
$’000 $’000

Cash available on demand 34,336 37,965

34,336 37,965

8. Loans and borrowings

During the period, the Company entered into an amendment relating to the calculation of the fixed charge coverage
covenant. There are no other changes to the terms of the Company’s RCF as disclosed on page 144 of the Company’s
Annual Report for the year ended 31 March 2023.
30 September 31 March
2023 2023
Key financial covenant Description Actual Actual Lender Covenants

i) Total debt to Catalogue value as Represents total debt as 33.0% 31.5% Must not
determined by the lender a percentage of Catalogue exceed 40%
value as determined by
the lender.
ii) Total debt leverage Represents the ratio of pro 6.6:1.0 5.5:1.0 Not greater
forma EBITDA to total debt. than 7:1
iii) Fixed charge coverage Represents the ratio of pro 1.1:1.0 1.3:1.0 Not less
forma EBITDA to trailing than 1:1
tax, interest and dividend
declaration and payments
over the last 12 months.

The Catalogue value as determined by the lender is specifically prepared for the banking syndicate based on a set
of assumptions that reflect an immediate sale of the portfolio in order to provide maximum loan security.

The covenants are reviewed quarterly and are secured by, inter alia, a charge over the shares in all the subsidiaries
of the Company, a charge over all of their assets including all Catalogues of Songs of the Company held through
these subsidiaries and a charge over the bank accounts of the Company and its subsidiaries. The Company has also
provided a parent company guarantee. Under the Investment Policy total debt of the Company should not exceed
30% of the Operative NAV which is $630.9 million (31 March 2023: $694.8 million); any excess to this threshold prevents the
Company from drawing down further amounts from the RCF. The current ratio of total debt to Operative NAV is 32.0%
(31 March 2023: 28.0%). Loans and borrowings are initially measured at Fair Value, net of transaction costs.
30 September 31 March
2023 2023
$’000 $’000

Opening balance 600,000 600,000

Amounts drawn down during the period 4,000 607,000
Amounts repaid during the year – pre-existing RCF – (600,000)
Amounts repaid during the year – new RCF – (7,000)
Total loan drawn down 604,000 600,000

Cumulative borrowing costs (4,952) (5,572)

Closing balance 599,048 594,428

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8. Loans and borrowings (continued)

The interest expense recognised in the Condensed Consolidated Profit and Loss account of $23.0 million is calculated
on an accruals basis (six month period ended 30 September 2022: $14.5 million). As disclosed on page 154 of
the Company’s Annual Report for the year ended 31 March 2023, the Company has entered into interest rate
swap arrangements to mitigate interest rate risk. An analysis of the interest paid and income on the interest swap
arrangements during the period ended 30 September 2023 is detailed below:
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
$’000 $’000

Interest expense paid 21,030 14,973

Income on interest swap arrangements (2,696) –
Total interest paid (net of swap arrangements) 18,334 14,973

9. Liabilities and accrued expenses

30 September 31 March
2023 2023
$’000 $’000

Amounts owed to Songwriters 22,507 18,799

Loan interest payable 11,913 9,891
Trade creditors and accruals 11,682 5,846
PRO advances 1,862 3,178
Corporation tax payable – 67
VAT 1,365 1,789
Lease liability 545 735
Directors fees payable 44 27
Other creditors 943 794
50,861 41,126

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10. Catalogue bonus provision

30 September 31 March
2023 2023
$’000 $’000

Non-current liabilities
Catalogue bonus provision 39,604 33,080
39,604 33,080

Current liabilities
Catalogue bonus provision 28,525 11,962
28,525 11,962

The Group has a number of Catalogue bonuses which are dependent on the individual Catalogues meeting
performance hurdles defined in their respective acquisition agreements. There are 10 Catalogues (31 March 2023:
6 Catalogues) likely to meet the performance hurdles defined in their acquisition agreements triggering the recognition
of Catalogue bonus provisions. The movement in the Catalogue bonus provision during the period is presented below:

Number of
Catalogues $’000

At 1 April 2023 6 45,042

Increase in provision recognised 6 26,537
Payments during the period – (100)
Release of provision recognised (2) (3,350)
At 30 September 2023 10 68,129

Catalogue bonus contingent liabilities

There are a further 19 Catalogues with active bonus clauses totalling $75.2 million (31 March 2023: $Nil) which are
unlikely to meet the performance hurdles defined in their acquisition agreements; the Company has disclosed these as
contingent liabilities. Catalogues forming the remainder of the Portfolio either do not include Catalogue bonus clauses,
or the Catalogue bonus clauses are no longer active as performance hurdles have not been achieved and bonus
obligations no longer exist. The performance hurdles of the 19 Catalogues with active bonus clauses are calculated on
three different bases:

1. NAV basis
There are 3 Catalogues with performance hurdles based on achieving a contractually specified NAV target which
trigger a Catalogue bonus obligation. Detailed below is the total current NAV valuation by the Portfolio Independent
Valuer, alongside the aggregate target NAV required to trigger the Catalogue bonus obligations.

Portfolio Independent Valuer:

Total Catalogue NAV at
bonus contingent 30 September Target NAV to
Latest date required to liability 2023 achieve bonus
Number of Catalogues meet performance hurdles $’000 $’000 $’000

1 May 2024 5,000 53,352 71,600

1 November 2028 2,500 12,136 26,251
1 January 2029 1,000 8,875 11,200
8,500

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10. Catalogue bonus provision (continued)

2. Defined cash income amount basis

There are 4 Catalogues with performance hurdles based on a contractually-specified cash amount received by
the Company at a specified point in time, which triggers a Catalogue bonus obligation. Details of the number
of performance hurdles, the Compound Annual Growth Rate (CAGR) required to achieve the performance hurdles,
CAGR forecast by the Portfolio Independent Valuer and the associated contingent liabilities are detailed below.

CAGR required
to meet Total Catalogue
performance bonus contingent
Latest date required to hurdles liability Portfolio Independent Valuer:
Number of performance hurdles meet performance hurdles % $’000 Forecast range in CAGR %

– – 0-60% – –
2 December 2027 61-100% 4,500 14.5-15.8%
1 December 2025 101-200% 2,000 20.2%
1 September 2024 201-300% 525 6.1%
2 April 2024 > 300% 4,275 (31.2)-39.4%
11,300

3. Cash income growth rate basis

There are 12 Catalogues with performance hurdles based on a calculated growth rate that must be achieved
to trigger a Catalogue bonus. Details of the number of performance hurdles, CAGR required to achieve the
performance hurdles, CAGR forecast by the Portfolio Independent Valuer, and the associated contingent liabilities are
detailed below.

CAGR required
to meet Total Catalogue
performance bonus contingent
Latest date required to hurdles liability Portfolio Independent Valuer:
Number of performance hurdles meet performance hurdles % $’000 Forecast range in CAGR %

– – 0-15% – –
1 March 2025 16-20% 1,400 9.0%
1 December 2024 21-25% 4,175 16.4%
5 December 2025 26-50% 15,075 5.8-20.7%
2 June 2025 51-100% 8,250 1.6-7.9%
3 October 2025 101-150% 9,344 3.0-37.4%
4 October 2024 151-200% 1,286 5.5-27.6%
7 July 2024 > 200% 15,913 2.6-25.7%
55,443

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11. Share capital and capital management

Ordinary Share Capital
The share capital of the Company may consist of an unlimited number of:

(i) Ordinary Shares of no par value which upon issue the Directors may classify as Ordinary Shares;
(ii) C Shares denominated in such currencies as the Directors may determine; and
(iii) Ordinary Shares purchased by the Company through share repurchase and held as Treasury Shares.

As at 30 September 2023 the Company’s authorised and issued share capital consisted of 1,211,214,286 Ordinary Shares,
of which 2,000,000 were held in treasury. Treasury shares hold no voting rights, are not entitled to a dividend and are
excluded from the EPS, IFRS and Operative Net Asset Value per share calculation.

Ordinary Shares of no par value

No. of Units Share Capital Treasury Reserve
outstanding $’000 $’000

Issued and fully paid:

Shares as at 1 April 2023 1,209,214,286 1,692,198 (1,961)
Shares as at 30 September 2023 1,209,214,286 1,692,198 (1,961)

No. of Units Share Capital Treasury Reserve

outstanding $’000 $’000

Issued and fully paid:

Shares as at 1 April 2022 1,211,214,286 1,692,198 –
Repurchase of ordinary shares into treasury (2,000,000) – (1,961)
Shares as at 31 March 2023 1,209,214,286 1,692,198 (1,961)

Under the Company’s Articles of Incorporation, each Shareholder present in person or by proxy has the right to one
vote at general meetings. On a poll, each Shareholder is entitled to one vote for every Ordinary Share held.

Shareholders are entitled to all dividends paid by the Company and, on a winding up, provided the Company has
satisfied all of its liabilities, the Shareholders are entitled to all of the residual assets of the Company.

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12. Revenue
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
$’000 $’000

Mechanical income 3,888 2,641

Performance income 6,343 4,209
Digital downloads income 1,224 2,282
Streaming income 14,170 46,923
Synchronization income 10,565 12,199
Publishing admin income 237 154
Masters income 3,749 1,424
Writer share income 15,622 12,839
Neighbouring rights income 974 663
Other income 1,266 (498)
Producer royalties 5,162 3,556
63,200 86,392

There is an inherent time lag with royalties between the time a song is performed, and the revenue being received
by the copyright owner. The revenue accruals are disclosed in Note 6 Trade and other receivables. There is a material
reduction in streaming income as a result of the reduction in income arising from CRB III accruals (see note 6).

13. Other operating expenses

1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
$’000 $’000

Aborted deal expenses 1,099 332

Debt financing fees 176 53
Public relations fees 181 136
Marketing & events 373 355
Listing fees 32 41
Bank charges 15 26
Record label costs 18 –
Charitable donations 20 28
Directors' and officers' insurance 31 42
Lease liability interest 158 378
HSG staff payroll and expenses 3,029 3,154
HSG office expenses 223 198
HSG restructuring provision 504 925
Travel, accommodation and entertainment expenses – 23
HSG travel, accommodation and entertainment expenses 103 258
Sundry (13) 71
5,949 6,020

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14. Dividends
The Company, being a Guernsey-regulated entity, is able to pay dividends out of capital, subject to the assessment
of solvency in accordance with the Companies Law and subject to a levered free cashflow test as required by the
Revolving Credit Facility.

A summary of the dividends paid are set out below:

Dividend Total
per share Dividend
Pence $’000

1 April 2023 to 30 September 2023

Interim dividend in respect of quarter ended 31 December 2022 1.3125 20,177
Interim dividend in respect of quarter ended 31 March 2023 1.3125 19,624
2.6250 39,801

1 April 2022 to 30 September 2022

Interim dividend in respect of quarter ended 31 March 2022 1.3125 19,312
1.3125 19,312

15. Related party transactions and Directors’ remuneration

Parties are considered to be related if one party has the ability to control the other party or exercise significant
influence over the party in making financial or operational decisions.

Directors
All Directors are non-executive. The Directors’ remuneration, excluding disbursements, for the period ended
30 September 2023 amounted to $0.3 million with no outstanding fees due to the Directors at 30 September 2023
(six month period ended 30 September 2022: $0.3 million, with no outstanding fees). Directors are reimbursed for
out-of-pocket expenses incurred in fulfilling their roles, including costs of travel and accommodation (as required).

Directors’ transactions in or holdings in shares of the Company are not disclosed as related party transactions as they
do not receive shares as part of their remuneration. Any shares held or transacted are acquired or disposed of in their
own right as Shareholders and as result, it is management’s assessment that the Company has not transacted with the
Directors as related parties in this regard.

Investment Adviser
The Company has entered into an Investment Advisory Agreement with the Investment Adviser pursuant to which the
Investment Adviser will source Songs and provide recommendations to the Board on acquisition and disposal strategies,
manage and monitor royalty and/or fee income due to the Company from its copyrights and collection agents, and
develop strategies to maximise the earning potential of the Songs in the portfolio through improved placement and
coverage of Songs.

Investment Adviser fees for the six month period ended 30 September 2023 were $5.4 million (six month period ended
30 September 2022: $6.8 million) with $0.4 million outstanding at 30 September 2023 (31 March 2023: $0.4 million).

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16. Earnings per share

30 September 30 September
2023 2023
Basic Diluted

Loss for the period from continuing operations ($’000) (63,764) (63,764)
Total loss for the period ($’000) (63,201) (63,201)
Weighted average number of Ordinary Shares outstanding 1,209,214,286 1,209,214,286
Earnings per share (cents) from continuing operations (5.27) (5.27)
Earnings per share (cents) from total loss for the period (5.23) (5.23)

30 September 30 September
2022 2022
Basic Diluted

Loss for the period from continuing operations ($’000) (20,881) (20,881)
Total loss for the period ($’000) (20,090) (20,090)
Weighted average number of Ordinary Shares outstanding 1,211,214,286 1,211,214,286
Earnings per share (cents) from continuing operations (1.72) (1.72)
Earnings per share (cents) from total loss for the period (1.66) (1.66)

The earnings per share is based on the loss of the Group from continuing operations for the period, the total loss of
the Group for the period and on the weighted average number of Ordinary Shares outstanding for the period ended
30 September 2023. The Company holds 2 million Treasury Shares as at 30 September 2023; these shares are not
included the EPS calculation.

17. Net Asset Value per share and Operative Net Asset Value per share
30 September 31 March
2023 2023

Number of Ordinary Shares in issue 1,209,214,286 1,209,214,286

IFRS NAV per share (cents) 110.12 118.63
Operative NAV per share (cents) 173.92 191.53

The IFRS NAV per share and the Operative NAV per share are arrived at by dividing the IFRS Net Assets and Operative
Net Assets (respectively) by the number of Ordinary Shares in issue.

Catalogues of Songs are classified as intangible assets and measured at amortised cost or cost less impairment in
accordance with IFRS.

The Directors are of the opinion that an Operative NAV provides a meaningful Alternative Performance Measure and
the values of Catalogues of Songs are based on fair values produced by the Portfolio Independent Valuer.

Reconciliation of IFRS NAV to Operative NAV

30 September 31 March
2023 2023
$’000 $’000

IFRS NAV 1,331,529 1,434,534

Adjustments for revaluations of Catalogues of Songs to fair value 385,504 565,478
Reversal of accumulated amortisation and impairment 386,049 316,036
Operative NAV 2,103,082 2,316,048

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17. Net Asset Value per share and Operative Net Asset Value per share (continued)

Tax considerations
The Company’s Investment Trust Company (ITC) status may allow for the Company to make disposals of shares or
certain other capital assets on a tax-exempt basis for UK corporation tax purposes. However, a disposal of Catalogues,
considered intangible fixed assets for UK corporation tax purposes, would not qualify for exemption in the same way.

A disposal of Catalogues by way of a sale of shares of a Group subsidiary company by the Company, in order to take
advantage of its ITC tax-exempt status, would not necessarily result in greater value for the Group, depending on the
attractiveness of such a transaction structure to the prospective purchaser and their other potential tax considerations
on future sales of the acquired shares.

If the Group were to dispose of all of its Catalogues, an indicative tax calculation (subject to a number of assumptions
in its preparation – see below) estimates that a potential corporation tax charge (or equivalent in the US) could be
incurred by the Group subsidiary companies, of approximately $215.6 million. This has been calculated based on
comparing the Fair Value determined by the Portfolio Independent Valuer (as a representation of indicative sales
proceeds) to the Catalogues’ carrying value as at 30 September 2023.

The calculations assumes a 25% tax rate as: (a) the prevailing rate of UK corporation tax from 1 April 2023 and
(b) a proxy for US Federal and State corporate income tax. This indicative tax calculation does not take into account
attributes such as UK tax losses, which could be used to offset some of the taxable gains, or where the tax treatment of
an element of sale proceeds may be considered to be the sale of a receivable aligned with a Catalogue rather than
part of the disposal value of that Catalogue, which could result in a materially lower tax charge.

As the Company has not disposed of any catalogues to date, no such tax liability currently exists.

18. Held for trading derivative financial instruments

The Company has the following derivative financial instruments:
30 September 31 March
2023 2023
$’000 $’000

Held for trading derivative financial asset

Foreign exchange forward contracts 225 4,914
Interest rate swap arrangements 15,014 –
15,239 4,914

Held for trading derivative financial liability

Interest rate swap arrangements – (3,395)

The carrying value of the held for trading financial instruments represent their fair value at the period end.

The fair value gain on held for trading derivative financial instruments recognised in the Condensed Consolidated
Statement of Profit and Loss relates to the following:
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
$’000 $’000

Foreign exchange forward contracts (1,454) –

Interest rate swap arrangements 21,106 –
19,652 –

46 HIPGNOSIS SONGS FUND LIMITED

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19. Hipgnosis Songs Group LLC

As disclosed in Note 2(d) the Directors are of the opinion that the Group is engaged in a single segment of business,
being the investment of the Company’s capital in a Portfolio of Song copyrights, together with the potential for capital
growth. Hipgnosis Songs Group LLC is a US based subsidiary which undertakes publishing administration on behalf of the
Group as well as third parties and its results are presented within the consolidated results of the Group.

The Statement of Profit and Loss of Hipgnosis Songs Group LLC for the six months ended 30 September 2023 are
presented below, together with its comparative period.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
$’000 $’000

Income
Total revenue 19,318 18,933
Royalty costs (16,552) (15,400)
Net revenue 2,766 3,533

Expenses
Legal and professional fees (506) (507)
Audit fees (128) –
Subscriptions and licences (140) (119)
Travel, accommodation and entertainment expenses (103) (259)
Public relations fees (30) (54)
Marketing & events (35) –
HSG office expenses (223) (198)
HSG Staff payroll and expenses (3,029) (3,154)
Sundry (52) (54)
Bank charges (1) (4)
Lease liability interest (158) (378)
HSG restructuring provision (504) (925)
Movement in ECL provision for HSG advances (42) 375
Amortisation of Catalogues of Songs (5) (143)
Fixed asset depreciation (224) (30)
Net loss from joint ventures (446) (48)
Foreign exchange losses (1) –
Operating expenses (5,627) (5,498)

Operating loss for the period before taxation (2,861) (1,965)

Taxation (231) (8)
Loss for the period (3,092) (1,973)

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N OT E S TO T H E C O N D E N S E D C O N S O L I DAT E D F I N A N C I A L S TAT E M E N T S

20. Assets held for sale

On 14 September 2023, the Company announced the sale of 29 Catalogues, known as the First Disposal. This was
conditional upon the approval of the sale by Shareholders at the EGM and the approval by Shareholders of the
Continuation Resolution at the Company’s 2023 AGM, both held on 26 October 2023. As the sale was not approved
by Shareholders by 30 September 2023, the First Disposal is presented as a continuing operation in the Consolidated
Statement of Profit and Loss for the six months ended 30 September 2023.

Also, on 14 September 2023, the Company announced the sale of a portfolio of non-core songs, subject to completion
of legal documentation and the consent of the Company’s lending banks, known as the Second Disposal. As this sale
is not conditional on Shareholder approval and meets the requirements of IFRS 5, the Second Disposal is presented as
a discontinued operation in the Consolidated Profit and Loss account for the six months ended 30 September 2023 and
a Held for Sale disposal group in the Consolidated Balance Sheet as at 30 September 2023.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
$’000 $’000

Income
Total revenue 5,013 5,286
Royalty costs (3,578) (3,734)
Net revenue 1,435 1,552

Expenses
Amortisation of Catalogues of Songs (872) (761)
Operating expenses (872) (761)
Profit for the period from discontinued operations 563 791

The assets and liabilities of the Second Disposal are below:

30 September 31 March
2023 2023
$’000 $’000

Catalogues of Songs – Cost 30,446 –

Catalogues of Songs – Accumulated amortisation (4,674) –
Accrued income 6,532 –
Net recoupable advances 32 –
Total held for sale assets 32,156 –

30 September 31 March
2023 2023
$’000 $’000

Trade creditors and accruals 125 –

Total held for sale liabilities 125 –
Total held for sale assets and liabilities 32,031 –

The Company has incurred exceptional transaction costs of $5.7 million relating to legal and professional fees incurred
in relation to First Disposal and Second Disposal.

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N OT E S TO T H E C O N D E N S E D C O N S O L I DAT E D F I N A N C I A L S TAT E M E N T S

21. Presentation changes

The Company has made immaterial changes to the presentation of the Condensed Consolidated Statement
of Profit and Loss and accompanying notes during the period. This has resulted in the following changes of the
comparative figures.

Condensed Consolidated Statement of Profit and Loss

As reported in As reported in
30 September 2022 30 September 2023
Interim Report Interim Report
1 April 2022 to Presentation Discontinued 1 April 2022 to
30 September 2022 change operation 30 September 2022
$’000 $’000 $’000 $’000

Income
Total revenue 91,678 – (5,286) 86,392
Interest income 40 – – 40
Royalty costs (13,368) – 3,734 (9,634)
Net revenue 78,350 – (1,552) 76,798

Expenses
Advisory and performance fees (6,760) – – (6,760)
Administration fees (300) – – (300)
Legal and professional fees (1,728) – – (1,728)
Audit fees (189) – – (189)
Brokers’ fees (147) 53 – (94)
Directors’ remuneration (324) – – (324)
Listing fees (41) 41 – –
Subscriptions and licences (383) – – (383)
Public relations fees (326) 326 – –
Other operating expenses (4,847) (1,173) – (6,020)
Exceptional transaction costs – – – –
Catalogue bonus provision (3,689) – – (3,689)
Movement in ECL provision for HSG advances – 375 – 375
Amortisation of Catalogues of Songs (55,871) – 761 (55,110)
Impairment of Catalogues of Songs (2,007) – – (2,007)
Amortisation of borrowing expenses (1,001) – – (1,001)
Fixed asset depreciation (30) – – (30)
Loan interest (14,473) – – (14,473)
Finance charges for deferred consideration (378) 378 – –
Fair value gain on held for trading derivative
financial instruments – – – –
Net loss from joint ventures (48) – – (48)
Foreign exchange losses (2,083) – – (2,083)
Operating expenses (94,625) – 761 (93,864)

Operating loss for the year before taxation (16,275) – (791) (17,066)
Taxation (3,815) – – (3,815)
Loss for the period from continuing operations (20,090) – (791) (20,881)

Profit for the period from discontinued operations 791

Total loss for the period (20,090) – 791 (20,090)

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N OT E S TO T H E C O N D E N S E D C O N S O L I DAT E D F I N A N C I A L S TAT E M E N T S

21. Presentation changes (continued)

Other operating expenses
1 April 2022 to Presentation Discontinued 1 April 2022 to
30 September 2022 change operation 30 September 2022
$’000 $’000 $’000 $’000

Aborted deal expenses 332 – – 332

Debt financing fees – 53 – 53
Public relations fees – 136 – 136
Marketing & events – 355 – 355
Listing fees – 41 – 41
Bank charges 26 – – 26
Charitable donations 28 – – 28
Directors’ and officers’ insurance 160 (118) – 42
Lease liability interest – 378 – 378
HSG staff payroll and expenses 3,154 – – 3,154
HSG office expenses 79 119 – 198
HSG restructuring provision 925 – – 925
Movement in ECL provision for HSG advances (375) 375 – –
Travel, accommodation and entertainment expenses 187 (164) – 23
HSG travel, accommodation and entertainment
expenses 258 – – 258
Sundry 73 (2) – 71
Operating expenses 4,847 1,173 – 6,020

22. Litigations and claims

The Company is a defendant in a case brought against it, Merck Mercuriadis and Hipgnosis Songs Management
Limited, alleging a diversion and unlawful assistance in the diversion of a business opportunity from Hipgnosis Music
Limited to the Hipgnosis Songs Fund Limited. Proceedings are at a preliminary stage, and it is not possible for the
Hipgnosis Songs Fund Limited to determine the likelihood or costs associated with this claim.

Furthermore, in the normal course of its business, the Company is subject to various lawsuits, arbitrations and
governmental, administrative or other proceedings. However, based on the information currently available, it believes
that the outcome from these legal proceedings will not have a material impact on its consolidated results of operations
and financial position.

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N OT E S TO T H E C O N D E N S E D C O N S O L I DAT E D F I N A N C I A L S TAT E M E N T S

23. Subsequent Events

On 13 October 2023, the Portfolio Independent Valuer materially reduced its expectations of the CRB III retroactive
payments for the period covering 2018-2022 and as a result, the Company reduced its CRB III retroactive accrual to
$9.9 million, from $21.7 million as at 31 March 2023. In consequence of this unwinding, on 16 October 2023, the Board
withdrew the proposed interim dividend of 1.3125 pence per share announced on 21 September 2023 with a payment
date of 27 October 2023. As disclosed in Note 8, an amendment to the RCF was agreed to return the Company to
compliance with the Fixed Charge Coverage covenant.

On 19 October 2023, the Board initiated a Strategic Review. The Strategic Review will look at all options to be
considered for the future of the Company with the aim of maximising value for Shareholders including, among other
things, a review of the future management arrangements of the Company.

On 24 October 2023, the result of the Go-Shop period in relation to the First Disposal was announced: no Superior Offer
was received by the Company. At the EGM held on 26 October 2023, Shareholders voted against the First Disposal.

On 25 October 2023, the Company announced that Andrew Wilkinson and Paul Burger resigned as Non-Executive
Directors of the Company.

On 26 October 2023, at the Company’s AGM, Shareholders voted against the Continuation Resolution. The Board
will, in accordance with the Company’s Prospectus, put forward proposals for the reconstruction, reorganisation or
winding-up of the Company to Shareholders for their approval within six months following the date of the AGM.

On 26 October 2023, Andrew Sutch was not re-elected as a Director of the Company and therefore ceased being
a Director and Chair of the Board from the conclusion of the AGM.

On 6 November 2023, as a result of undertaking a review of the Company’s financial position, the Board has
determined that it would not declare dividends before the new financial year.

On 7 November 2023, the Company announced the appointment of Robert Naylor as Chairman of the Board and
Non-Executive Director and Francis Keeling as Non-Executive Director, with immediate effect.

On 11 December 2023, the Company announced the completion of the sale of a portfolio of non-core songs. This
portfolio represents the majority of the Held for Sale disposal group recognised at 30 September 2023.

On 11 December 2023, the Company announced the appointment of Singer Capital Markets as sole corporate broker
and financial adviser and Shot Tower Capital, LLC as lead adviser to conduct due diligence on the Company’s assets
as part of its strategic review.

On 15 December 2023, the Company announced the appointment of Christopher Mills as Non-Executive Director, with
immediate effect.

On 20 December 2023 the Company announced the appointment of KPMG Channel Islands Limited, Guernsey
(KPMG CI) as its auditor with immediate effect for the financial year ended 31 March 2024. KPMG CI succeed
PricewaterhouseCoopers CI LLP, Guernsey (PWC CI), who were the previous auditors. The re-appointment of KPMG
CI as auditor will be subject to approval by the Company’s shareholders at General Meeting of the Company to be
convened in due course.

Post period end the Company will be acquiring the remaining rights to an existing Catalogue within the Company’s
portfolio. This acquisition arises due to an exercisable option in the existing Catalogue acquisition contract.

HIPGNOSIS SONGS FUND LIMITED

INTERIM REPORT 30 SEPTEMBER 2023 51
Alternative Performance Measures
For the six months ended 30 September 2023 (unaudited)

Adjusted EPS from continuing operations

Definition
Loss for the period from continuing operations excluding Total Amortisation, impairment, depreciation, Catalogue
bonus provision, restructuring costs, foreign exchange losses and provision for HSG advances divided by weighted
average number of Ordinary Shares outstanding.

Reason for Use

Adjusted EPS from continuing operations is a strong indicator of Company performance and profitability after
adjusting for non cash and financing items.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022*
Calculation $’000 $’000

Loss after tax from continuing operations (63,764) (20,881)

Total Amortisation 54,567 56,111
Impairment of Catalogues of Songs 15,194 2,007
Fixed asset depreciation 247 30
Lease liability interest 158 378
Exceptional transaction costs 5,747 –
Movement in Catalogue bonus provision 23,257 3,689
HSG restructuring costs 504 925
Foreign exchange losses 280 2,083
Fair value gain on held for trading derivative financial instruments (19,652) –
Movement in ECL provision for HSG advances 42 (375)
Adjusted earnings 16,580 43,967
Weighted Average number of Ordinary Shares outstanding (number) 1,209,214,286 1,211,214,286
Adjusted Earnings per Share (cents) 1.37 3.63

* Definition changed since the prior period, refer to page 170 of the Company’s Annual Report for the year ended 31 March 2023.
† Tax arising on above adjusting items amounts to $18.3 million (six month period ended 30 September 2022: $11.7 million). This figure is the sum of the tax effects of individual
adjusting items other than permanent differences, calculated using the prevailing 25% corporation tax rate for the periods for UK items and 21% rate of US Federal corporate
income tax for US items.

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A LT E R N AT I V E P E R F O R M A N C E M E A S U R E S

Adjusted Operating Costs less Interest Expense

Definition
Operational expenses excluding Total Amortisation, impairment, depreciation, Catalogue bonus provision,
restructuring costs, foreign exchange losses, provision for HSG advances and interest expense.

Reason for Use

An indicator to Shareholders of the Company’s underlying operational expenditure excluding non cash and
financing items.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
Calculation $’000 $’000

Advisory and performance fees 5,398 6,760

Administration fees 212 300
Legal and professional fees 1,711 1,728
Audit fees 571 189
Brokers' fees 115 94
Directors' remuneration 324 324
Subscriptions and licences 204 383
Aborted deal expenses 1,099 332
Debt financing fees 176 53
Public relations fees 181 136
Marketing & events 373 355
Listing fees 32 41
Bank charges 15 26
Record label costs 18 –
Charitable donations 20 28
Directors' and officers' insurance 31 42
HSG staff payroll and expenses 3,029 3,154
HSG office expenses 223 198
Travel, accommodation and entertainment expenses – 23
HSG travel, accommodation and entertainment expenses 103 258
Sundry (13) 71
Net loss from joint ventures 446 48
14,268 14,543

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A LT E R N AT I V E P E R F O R M A N C E M E A S U R E S

Annualised Ongoing Charges

Definition
Adjusted Operating Costs less Interest Expense and non-recurring administrative expenses annualised over
a 12-month period.

Reason for Use

Ongoing Charges are a good indicator to Shareholders of the Company’s continuing operating expenses
excluding the cost of financing. These operating expenses are likely to recur in the foreseeable future.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
Calculation $’000 $’000

Adjusted operating costs less interest expense 14,268 14,543

Non recurring operating expenses (1,153) (854)
Total ongoing charges over a six-month period 13,115 13,689
Annualised ongoing charges over a 12-month period 26,230 27,378

Distributable Revenues
Definition
Distributable Revenue is the total loss for the period excluding Total Amortisation, impairment, depreciation,
Catalogue bonus provision, restructuring costs, foreign exchange losses and provision for HSG advances.

Reason for Use

Distributable Revenues are profits, after adjusting for non-cash and financing items, attributable to the Company’s
revenue activities and are an indicator of the Company’s ongoing ability to pay its dividends.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
Calculation $’000 $’000

Total loss for the period (63,201) (20,090)

Total Amortisation 54,567 56,111
Impairment of Catalogues of Songs 15,194 2,007
Fixed asset depreciation 247 30
Lease liability interest 158 378
Catalogue bonus provision 23,257 3,689
HSG restructuring provision 504 925
Foreign exchange losses 280 2,083
Fair value gain on held for trading derivative financial instruments (19,652) –
Movement in ECL provision for HSG advances 42 (375)
11,396 44,758

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 A LT E R N AT I V E P E R F O R M A N C E M E A S U R E S

Dividend Cover
Definition
Distributable Revenues generated during the period divided by the dividend paid during the period.

Reason for Use

A strong indicator to Shareholders of the Company’s ability to pay a dividend from retained earnings.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
Calculation $’000 $’000

Distributable Revenues 11,396 44,758

Dividend Paid 39,801 19,312
0.29 2.32

EBITDA
Definition
The Operating loss for the period before taxation from continuing operations plus Total Amortisation, impairment,
depreciation, Catalogue bonus provision, restructuring costs, foreign exchange losses, provision for HSG advances
and interest expense.

Reason for Use

A strong indicator to Shareholders of Company performance and profitability after adjusting for non cash and
financing items.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022*
Calculation $’000 $’000

Operating loss for the period before taxation from continuing operations (63,686) (17,066)
Total Amortisation 54,567 56,111
Impairment of Catalogues of Songs 15,194 2,007
Fixed asset depreciation 247 30
Lease liability interest 158 378
Exceptional transaction costs 5,747 –
Catalogue bonus provision 23,257 3,689
HSG restructuring provision 504 925
Foreign exchange losses 280 2,083
Fair value gain on held for trading derivative financial instruments (19,652) –
Movement in ECL provision for HSG advances 42 (375)
Interest expense 23,052 14,473
39,710 62,255

* Definition changed since the prior period, refer to page 170 of the Company’s Annual Report for the year ended 31 March 2023.

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 A LT E R N AT I V E P E R F O R M A N C E M E A S U R E S

Leveraged Free Cash Flow

Definition
Net cash generated from operating activities less interest paid, acquisition related balances and foreign
exchange losses.

Reason for Use

A good indicator to Shareholders of the cash position of the Company and the availability of cash flows to fund
dividend payments.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022*
Calculation $’000 $’000

Net cash generated from operating activities 48,962 45,463

Foreign exchange losses (280) (2,083)
Interest paid (net of swap arrangements) (18,334) (14,973)
30,348 28,407

* Definition changed since the prior period, refer to page 170 of the Company’s Annual Report for the year ended 31 March 2023.

NAV Total Return

Definition
Operative NAV per share plus cumulative dividends paid up to the period end less the Operative NAV per share as
at 11 July 2018, divided by the Operative NAV as at 11 July 2018.

Reason for Use

To show how the assets have performed since IPO to Shareholders.
As at As at
30 September 31 March
2023 2023
Calculation $’000 $’000

Operative NAV per share 1.7392 1.9153

Cumulative dividends paid to year end 0.2955 0.2789
Operative NAV at IPO (1.2983) (1.2983)
0.7364 0.8959
Operative NAV at IPO 1.2983 1.2983
56.72% 69.01%

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Non recurring operating expenses

Definition
Non recurring expenditure included within operating expenses.
Reason for Use
A good indicator to Shareholders of expenses not likely to recur in the foreseeable future.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
Calculation $’000 $’000

Non recurring expenses included within:

Legal and professional fees 39 116
Subscriptions and licences – 8
Listing fees – 4
Aborted deal expenses 1,099 332
Debt financing fees – 53
Marketing and events – 266
Travel, accommodation and entertainment expenses – 23
Charitable donations – 42
Public relations fees 15 10
1,153 854

Ongoing Charges %
Definition
Annualised ongoing charges divided by Average Operative NAV.
Reason for Use
To monitor the expenses, which are likely to recur, relative to the fund size over time.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
Calculation $’000 $’000

Annualised Ongoing Charges 26,230 27,378

Average Operative NAV 2,209,564 2,228,806
1.19% 1.23%

Operative NAV
Definition
The IFRS NAV adjusted for the Fair Value of the Catalogues of Songs.
Reason for Use
The Operative NAV reflects the values of the Catalogues of Songs based on fair values produced by the Portfolio
Independent Valuer.
As at As at
30 September 31 March
2023 2023
Calculation $’000 $’000

IFRS NAV 1,331,529 1,434,534

Adjustments for revaluations of Catalogues of Songs to fair value 385,504 565,478
Reversal of accumulated amortisation and impairment 386,049 316,036
Operative NAV 2,103,082 2,316,048

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Total Amortisation
Definition
Amortisation of Catalogues of Songs plus amortisation of capitalised borrowing costs.

Reason for Use

Total amortisation is the measure of the non-cash items arising from accounting treatment and includes the
amortisation of borrowing costs, and is used to evaluate the performance without any amortisation.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
Calculation $’000 $’000

Amortisation of Catalogues of Songs 53,947 55,110

Amortisation of borrowing expenses 620 1,001
54,567 56,111

Total Debt
Definition
Total gross indebtedness of the Company including the drawdown RCF balance, PRO advances and Catalogue
bonus provision.

Reason for Use

Total debt is used as a measure in the Company’s covenant compliance reporting and in the Company’s
Investment Policy.
As at As at
30 September 31 March
2023 2023
Calculation $’000 $’000

Loans and borrowings 604,000 600,000

PRO advances 1,862 3,178
Catalogue bonus provision 68,129 45,042
673,991 648,220

6 Month NAV Total Return

Definition
Operative NAV per share as at year end plus dividend paid during the six-month to 30 September 2023 less the
Operative NAV per share as at the beginning of the year divided by the Operative NAV per share as at the
beginning of the year.

Reason for Use

To show how the assets have performed over the past six months to Shareholders.
1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
Calculation $’000 $’000

Operative NAV per share at year end 1.7392 1.8312

Dividend paid during the six-month period to 30 September 2023 0.0166 0.0308
1.7558 1.8620
Operative NAV per share at beginning of year 1.9153 1.8491
(8.33%) 0.70%

58 HIPGNOSIS SONGS FUND LIMITED

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Glossary of Capitalised Defined Terms

“35-year rule reversions” means the process, under “C Shares” means a temporary and separate class of
Section 203 of the US Copyright Act, by which an artist shares which are issued at a fixed price determined by
or songwriter can request reversion of their US creative the Company;
copyrights (composition or sound recording) 35 years “Catalogue” means one or more Songs acquired from
after a contractual grant of rights; a single Songwriter, artist or company;
“Administrator” means Ocorian Administration “CBS” means the US commercial broadcast television
(Guernsey) Limited; and radio network;
“Admission” means admission, on 11 July 2018, to “CD” means compact disc;
trading on the SFS of the London Stock Exchange, of the “Citrin Cooperman” means Citrin Cooperman
Ordinary Shares becoming effective in accordance with Advisors LLC;
the Listing Rules and/or the LSE Admission Standards and “Closing Market Capitalisation” means, in relation to
on 25 September 2019 to a Premium Listing on the Main each Accounting Period, “E” multiplied by “F”, where:
Market; “E” is the Performance Share Price; and “F” is the
“AEOI” means Automatic Exchange of Information; weighted average of the number of Ordinary Shares in
“AIC” means the Association of Investment Companies; issue (excluding any Shares held in treasury) at the end
“AIC Code” means the AIC Corporate Governance of each day during the Accounting Period;
Code 2019; “CMO” means Collection Management Organisation.
“Annual General Meeting” or “AGM” means the annual A CMO is appointed by copyright holders to manage
general meeting of the Company; both the mechanical and performance rights in their
“Annual Report” or “Annual Report and Consolidated copyright works;
Financial Statements” means the annual publication of “Companies Law” means the Companies (Guernsey)
the Company provided to the Shareholders to describe Law, 2008;
their operations and financial conditions, together with “Company” means Hipgnosis Songs Fund Limited, an
their Consolidated Financial Statements; investment company limited by shares incorporated
“Apple Music” means the music and video Streaming under the laws of Guernsey with registered number
service developed by Apple Inc.; 65158. References to the Company are also considered
“Articles of Incorporation” or “Articles” means the to be references to the Group, where applicable;
articles of incorporation of the Company; “Company Secretary” means Ocorian Administration
“ASCAP” means the American Society of Composers, (Guernsey) Limited;
Authors and Publishers; “Consolidated Financial Statements” means the
“Average Market Capitalisation” means, in relation audited financial statements of the Company, including
to each month where the advisory fee is payable, (“A” the Statement of Financial Position, the Statement of
multiplied by “B”) plus (“C” multiplied by “D”), where: Comprehensive Income, the Statement of Cash Flows, the
“A” is the average of the middle market quotations of Statement of Changes in Equity and associated notes;
the Ordinary Shares for the five day period ending on the “Continuation Vote” means the ordinary resolution that
last business day of that month (adjusted as appropriate the Company continues its business as a closed-end
to exclude any dividend where the Ordinary Shares are investment company;
quoted ex such dividend at any time during that five day “Continuation Resolution” means one of the ordinary
period); resolutions set out in the notice of 2023 Annual General
“B” is weighted average of the number of Ordinary Meeting, pursuant to which Shareholders were asked to
Shares in issue (excluding any Shares held in treasury) at approve the continuation by the Company of its business
the end of each day during that month; as a closed-ended investment company;
“C” is the average of the middle market quotations of “Conversion” means the conversion of C Shares to
a class of C Shares in issue for the five day period ending Ordinary Shares;
on the last business day of that month (adjusted as “Copyright Royalty Board” or “CRB” means the US
appropriate to exclude any dividend where the C Shares Copyright Royalty Board;
of that class are quoted ex such dividend at any time “Corporate Brokers” means the brokers whose names
during that five day period); and are set out on page 63;
“D” is weighted average of the number of that class of “Covid-19” means the global coronavirus pandemic;
C Shares in issue (excluding any Shares held in treasury) "CRB III” means the mechanical royalty element or
at the end of each day during that month; the amount paid to the publishing copyright owner to
“Board” or “Directors” means the directors of the reproduce and distribute phonorecords in respect of
Company whose names are set out on page 63; on-demand streaming in the US, set by a federal
“BMI” means Broadcast Music, Inc; regulatory body called the Copyright Royalty Board, for
“BPI” means the British Phonographic Institute; the Phonorecord III period, 2018-2022. The headline rates

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of the percentage of service provider revenue agreed “HSG” or “Hipgnosis Songs Group”, means Hipgnosis
by the CRB per royalty year were: 11.4% (2018), 12.3% Songs Group LLC, which was rebranded from Big Deal
(2019), 13.3% (2020), 14.2% (2021) and 15.1% (2022); Music Group (BDM) on acquisition;
“CRB IV” means the mechanical royalty element or “IAS” means international accounting standards as
the amount paid to the publishing copyright owner issued by the Board of the International Accounting
to reproduce and distribute phonorecords in respect Standards Committee;
of on-demand streaming in the US, set by a federal “IFPI” means International Federation of the Phonographic
regulatory body called the Copyright Royalty Board, Industry which measure global recorded market revenues;
for the Phonorecord IV period, 2023-2027. The headline “IFRS” means the International Financial Reporting
rates of the percentage of service provider revenue Standards, being the principles-based accounting
agreed by the CRB per royalty year are: 15.1% (2023), standards, interpretations and the framework by that name
15.2% (2024), 15.25% (2025), 15.3% (2026) and issued by the International Accounting Standards Board;
15.35% (2027); “IFRS NAV” means the value of the Gross Assets of
“DCF” means discounted cash flow; the Company less its liabilities (including accrued but
“Disclosure Guidance and Transparency Rules” or unpaid fees) in accordance with the accounting policies
“DTRs” mean the disclosure guidance published by the adopted by the Directors;
FCA and the transparency rules made by the FCA under “Interim Report” means the Company’s half yearly
section 73A of FSMA; report and unaudited condensed consolidated financial
“Distributable Revenues” means profit after tax statements for the period ended 30 September;
attributable to the Company’s revenue activities; “Investment Adviser” or “HSM” means Hipgnosis Song
“Downloads” means royalties for the permanent digital Management Ltd, formerly The Family (Music) Limited;
mechanical transfer of music; “Investment Advisory Agreement” means the investment
“DSPs” means digital service providers; advisory agreement dated 27 June 2018, between the
“Earnings per Share” or “EPS” means the Earnings per Company, certain subsidiaries of the Company and the
Ordinary Share and is expressed in pounds Sterling; Investment Adviser, as amended from time to time;
“Extraordinary General Meeting” or “EGM” means “Investment Entity” means an entity whose business
a meeting held on 26 October 2023 to vote on the First purpose is to invest funds solely for returns from capital
Disposal; appreciation, investment income or both;
“EU” means European Union; “IPO” means the initial public offering of shares by
“Fair Value” means the fair value as calculated by the a private company to the public;
Portfolio Independent Valuer; “ISAE 3402” means International Standard on Assurance
“FCA” means the UK Financial Conduct Authority (or its Engagements 3402, “Assurance Reports on Controls at
successor bodies); a Service Organisation”;
“First Disposal” means the proposed disposal of the “ISIN” means an International Securities Identification
29 Catalogues to Hipgnosis SC IV (Delaware) L.P., a Number;
Delaware limited partnership with its registered address “ISWC” means International Standard Musical Work
at c/o Intertrust Corporate Services Delaware Ltd, Code. It is a unique, permanent and internationally
200 Bellevue Parkway, Suite 220, Wilmington, Delaware recognised reference number for the identification
19809, United States of America for aggregate cash of musical works;
consideration of $440 million pursuant to the terms of the “Kobalt” means Kobalt Music Copyrights S.à.r.l.;
relevant asset sale agreement; “Kobalt Fund 1” means a portfolio of 42 Catalogues
“FRC” means the UK Financial Reporting Council; acquired in September 2020, from Kobalt Music
“FSMA” means the UK Financial Services and Markets Copyrights S.à.r.l., an investment fund advised by Kobalt
Act 2000; Capital Limited;
“Go-Shop period” means the 40 calendar day period “Letter of Direction” means a document sent by
that ended on 23 October 2023 during which the the current copyright owner or the recipient of music
Company and its advisers could seek alternative offers for royalties to the Publisher, Record company or Collection
the assets parts of the First Disposal (or a subset thereof); Society requesting a re-direction of royalties to be paid.
“GFSC” means the Guernsey Financial Services It is sent from the current owner/recipient who is selling
Commission; the assets, directing that all future payments should go to
“Grammy” means an award presented by the Recording the buyer of the assets;
Academy to recognise achievements in the music industry; “LIBOR” means the London Interbank Offered Rate the
“Group” means Hipgnosis Songs Fund Limited and basic rate of interest used in lending between banks
its subsidiaries and “member of the Group” shall be on the London interbank market and also used as a
construed accordingly; reference for setting the interest rate on other loans;

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“Listing Rules” means the Listing Rules published by the “Portfolio” means the portfolio of Songs (whether
FCA in accordance with section 73A(2) of FSMA; organised into Catalogues or otherwise) held by the
“Live” means publishing revenue derived from the live Company directly or indirectly from time to time;
performance of music copyrights at concerts; “Portfolio Independent Valuer” means Citrin Cooperman
“London Stock Exchange” or “LSE” means London Advisors LLC, formerly Massarsky Consulting, Inc.,
Stock Exchange plc; appointed by the Board to independently value the
“MAR” means EU regulation 596/2014 on market abuse; Company’s Catalogues within the Portfolio;
“Master Recording royalties” aka “Recording “Portfolio Administrator(s)” means portfolio
Royalties” or “Sound Recording Rights” mean royalties administrators appointed by the Company in order to
that are generated on behalf of a sound/master assist with the administration of the Portfolio;
recording. This is the most basic royalty performing “Premium Listing” means a Premium Listing on the
artists and labels earn when their master recording is Main Market of the London Stock Exchange;
downloaded, physically bought, or streamed; “Premium / Discount to Operative NAV” means the
“Mechanical” means royalties for reproducing music, situation where the Ordinary Shares of the Company
for example CD, vinyl, etc. (excluding mechanical are trading at a price higher / lower than the Company’s
downloads and mechanical Streaming); Operative NAV;
“NAV per Share” means the Net Asset Value attributable “Prospectus” means the most recent prospectus issued
to the Ordinary Shares in issue divided by the number by the Company unless the context refers to a version of
of Ordinary Shares in issue (excluding any Shares held in the prospectus published at an earlier date;
treasury) at the relevant time and expressed in Dollars; “Pro Forma Annual Revenue” or “PFAR” – Pro Forma
“Neighbouring Rights Income” is the payment to the Annual Revenue (PFAR) is a non IFRS measure and shows
recording artist or performer for the public performance the royalty statements received or receivable within the
usage related to the Master Recording; reporting period. This is unlike IFRS 15 revenue which is
“Net Asset Value” or “NAV” means the value of the accounted for from acquisition date and PFAR doesn’t
assets of the Company less its liabilities as calculated in include any revenue accruals as these are accounted
accordance with the Company’s valuation policy and for under IFRS;
expressed in Dollars; “Public Performance” means revenue generated
“Net revenue” or “NPS” means Net Publisher Share and from licenses for the right to play music publicly in a
refers to revenue collected by Publishers from PROs, net commercial environment e.g. shops, bars, restaurants
of contractual royalties due to writers i.e. deductions for and shopping malls;
administration and publishing fees; “Publishing Share” means the share of the rights in a
“Operative NAV” means NAV as adjusted for the fair music composition (lyrics and/or music) which generate
value of Catalogues of Songs; Mechanical and Performance royalties. In the UK, “blanket
“Ordinary Shares” means redeemable Ordinary Shares licences” are issued to organisations including radio and TV;
of no par value in the capital of the Company issued “RCF” means the Revolving Credit Facility arranged from
and designated as “Ordinary Shares” and having the City National Bank, as Lead Arranger;
rights, restrictions and entitlements set out in the Articles; “RCIS Rules” means the Registered Collective
“Other income” means any income not covered by the Investment Scheme Rules 2015;
other income types, for example sheet income and lyric “Record Labels” means a company that owns,
exploitation; distributes and promotes musical recordings;
“Performance” means royalties for playing music “Recording Academy” means a US academy of
in public, for example TV/radio broadcasts, live musicians, producers, recording engineers and other
performance, etc. and paid through to the publisher; musical professionals;
“Performance Fee Shares” means Ordinary Shares “Registrar” means Computershare Investor Services
issued to the order of the Investment Adviser in (Guernsey) Limited;
accordance with the performance fee arrangements in “Revenue activities” means all revenues generated
the Investment Advisory Agreement; from the Company's principal activities which is investing
“Performance Rights Organisation” or “PRO” means a in and managing music copyrights and associated
performing rights organisation, such as PRS or BMI, which musical intellectual property;
represents and collects Performance royalties for and on “RIAA” means Recording Industry Association of America,
behalf of each of its members; the trade organization that represents the US recorded
“Performance Share Price” means in relation to each music industry. One of its activities is to collect data on US
accounting period, the average of the middle market recorded revenues;
quotations of the Ordinary Shares for the one month period “Right To Income” or “RTI” means a right to income
ending on the last business day of that accounting period; recognised as part of the Catalogue acquisition, which

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is typically dependent on the timing of the negotiations “UK Code” means The UK Corporate Governance Code
and relates to royalty income paid over to the Company 2019 as published by the Financial Reporting Council;
on closing of the acquisition and the accrued receivables. “UKLA” means UK Listing Authority;
“Sacem” means Société des auteurs, compositeurs et “US” or “United States” means the United States of
éditeurs de musique, the French Collection Society; America, its territories and possessions, any state of the
“Second Disposal” means the portfolio of non-core United States and the District of Columbia;
songs identified for sale on 14 September 2023, subject “Usage Accrual” the Usage Accrual is an element of
to completion of legal documentation and the consent the revenue accrual to recognise the estimated revenue
of the Company’s lending banks under the Credit at the point at which usage is expected to occur;
Agreement. The proposed sale of the Second Disposal “Writer’s Share” means Performance royalties collected
Assets was for an initial aggregate consideration of by a Performance Rights Organisation and paid through
approximately $25 million. The Second Disposal is directly to the Songwriter as opposed to the Publisher
presented as a discontinued operation in Share of performance;
the Consolidated Profit and Loss account for the six “YouTube” means the US video-sharing website;
months ended 30 September 2023 and a Held for Sale “£” or “Pounds Sterling” or “Sterling” or “GBP” means
disposal group in the Consolidated Balance Sheet as British pounds sterling and “p” or “pence” means British
at 30 September 2023. On 11 December 2023, the pence;
Company announced that the disposal of a subset of “$” or “USD” or “Dollar” or “Dollars” means United
these Songs had completed for a gross consideration States dollars and “cents” means United States cents;
of $23.1 million; and
“SFS” means London Stock Exchange’s specialist fund “€” or “EUR” is the currency of the majority of member
segment of the Main Market for listed securities; states of the EU.
“Shareholder” means the holder of one or more
Ordinary Shares;
“SOFR” means the Secured Overnight Financing Rate,
a benchmark interest rate for dollar-denominated
derivatives and loans;
“Song(s)” means a songwriter’s and/or publisher’s
interest in a musical composition (including any literary
works) and/or an artist’s or label’s interest in a sound
recording and including where the context permits
any associated or related rights including so-called
neighbouring rights and/or the right to equitable
remuneration;
“Song Management” Active Management of the
placing of songs in Films, TV Adverts, TV Programs, Video
Games and Streaming playlists also including promoting
the Interpolation of our songs by new Songwriters and
Covers of our songs by new artists;
"Strategic Review” means the process started by the
Company to consider all options for the reconstruction,
reorganisation or winding-up of the Company;
“Streaming” means performance and Mechanical
royalties for digitally playing music in real-time, for
example through Spotify;
“Synchronisation” or “Synch” means royalties for
playing music in connection with visual media (for
example Film, TV, advertisements);
“The MLC” is a collection society designated by the
U.S. Copyright Office, that since January 2021 has begun
administering blanket mechanical licenses to digital
service providers in the United States, and then paying
out the royalties collected;
“TV” means television;
“UK” or “United Kingdom” means the United Kingdom
of Great Britain and Northern Ireland;

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Directors and General Information
Company Registration Number: 65158

Board of Directors Corporate Brokers Legal Advisers to the Company

Robert Naylor 1, Chair Singer Capital Markets Advisory LLP as to Guernsey Law
Sylvia Coleman 2, Senior Independent 1 Bartholomew Lane Ogier (Guernsey) LLP
Director London EC2N 2AX Redwood House
Simon Holden St Julian’s Avenue
Francis Keeling 1 J.P. Morgan Securities plc 1 St Peter Port
Christopher Mills 3 25 Bank Street Guernsey GY1 1WA
Cindy Rampersaud 4, London E14 5JP
Andrew Sutch, Chair 5 Principal Banker
Paul Burger 6, Senior Independent Director RBC Europe Limited 1
Barclays Bank PLC
Andrew Wilkinson 6 100 Bishopsgate
PO Box 41
1 Appointed 7 November 2023 London EC2N 4AA
2 Appointed Senior Independent Director Le Marchant House
1 To 7 December 2023
26 October 2023 St Peter Port
3 Announced 15 December 2023
Guernsey GY1 3BE
4 Appointed 1 August 2023; appointed Chair of the
Audit and Risk Management Committee on
Independent Auditor
26 October 2023
5 To 26 October 2023
PricewaterhouseCoopers Cl LLP 1 Registrar
6 Resigned 24 October 2023 Royal Bank Place
Computershare Investor Services
1 Glategny Esplanade
(Guernsey) Limited
Investment Adviser St Peter Port
1st Floor
Guernsey GY1 4ND
Hipgnosis Song Management Tudor House
1 Resigned 23 November 2023
Merck Mercuriadis, Chief Executive Officer Le Bordage
Ben Katovsky, President & Chief St Peter Port
KPMG Channel Islands Limited 2
Operating Officer Guernsey GY1 1DB
Glategny Court
Dan Pounder, Chief Financial Officer Glategny Esplanade
St Peter Port Identifiers
United House
Guernsey GY1 1WR ISIN: GG00BFYT9H72
9 Pembridge Road
2 Appointed 18 December 2023
Notting Hill Ticker: SONG
London W11 3JY
www.hipgnosissongs.com Music Specialist Legal Counsel SEDOL: BFYT9H7
Bill Leibowitz Website: https://www.hipgnosissongs.
Registered Office 271 Madison Avenue com/song-investors/
20th Floor
PO Box 286 LEI: 213800XJIPNDVKXMOC11
New York
Floor 2
New York 10016 GIIN: 5XGPC8.99999.SL.831
Trafalgar Court
Les Banques
St Peter Port Legal Advisers to the Company Managing your account online
Guernsey GY1 4LY Herbert Smith Freehills LLP The Company’s registrar, Computershare
Exchange House Investor Services (Guernsey) Limited,
Administrator and Primrose Street allows you to manage your shareholding
Company Secretary London EC2A 2EG online. If you are a direct investor you can
view your shareholding, change the way
Ocorian Administration (Guernsey)
the Registrar communicates with you and
Limited
buy and sell shares. If you haven’t used
PO Box 286
this service before, all you need to do
Floor 2
is enter the name of the Company and
Trafalgar Court
register your account at:
Les Banques
St Peter Port www-uk.computershare.com/investor
Guernsey GY1 4LY
You’ll need your Investor code (IVC)
printed on your share certificate in order
to register.

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Advice to Shareholders

In recent years investment related scams have become You can avoid investment scams by:
increasingly sophisticated and difficult to spot. We are
• Rejecting unexpected offers – Scammers usually
therefore warning all our Shareholders to be cautious
cold call but contact can also come by email, post,
so that they can protect themselves and spot the
word of mouth or at a seminar. If you have been
warning signs.
offered an investment out of the blue, chances are it’s
a high-risk investment or a scam.
Fraudsters will often:

• Checking the FCA Warning List – Use the FCA

• contact you out of the blue
Warning List to check the risks of a potential
• apply pressure to invest quickly investment. You can also search to see if the firm
is known to be operating without proper FCA
• downplay the risks to your money authorisation.

• promise tempting returns that sound too good • Getting impartial advice – Before investing get
to be true impartial advice and don’t use an adviser from the
firm that contacted you. If you are suspicious, report it.
• say that they are only making the offer available
to you • You can report the firm or scam to the FCA by
contacting their Consumer Helpline on 0800 111 6768
• ask you to not tell anyone else about it. or using their online reporting form.

• If you have lost money in a scam, contact Action

Fraud on 0300 123 2040 or www.actionfraud.police.uk.

For further helpful information about investment scams

and how to avoid them please visit www.fca.org.uk/
scamsmart.

Cautionary Statement
The Chair’s Statement, the Investment Adviser’s Report and the Report of the Directors have been prepared solely to provide additional information for Shareholders to assess
the Company’s strategies and the potential for those strategies to succeed. These should not be relied on by any other party or for any other purpose.
The Chair’s Statement, Investment Adviser’s Report and the Report of the Directors may include statements that are, or may be deemed to be, “forward-looking statements”.
These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”,
“may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include statements
regarding the intentions, beliefs or current expectations of the Directors and the Investment Adviser, concerning, amongst other things, the investment objectives and
investment policy, financing strategies, investment performance, results of operations, financial condition, liquidity, prospects, and distribution policy of the Company and the
markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the
future. Forward-looking statements are not guarantees of future performance.
The Company’s actual investment performance, results of operations, financial condition, liquidity, distribution policy and the development of its financing strategies may differ
materially from the impression created by the forward-looking statements contained in this document.
Subject to their legal and regulatory obligations, the Directors and the Investment Adviser expressly disclaim any obligations to update or revise any forward-looking statement
contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

Hipgnosis Songs Fund Limited

PO Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 4LY

Further information available online: www.hipgnosissongs.com

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Hipgnosis Songs Fund Limited
Floor 2, Trafalgar Court, Les Banques
St Peter Port, Guernsey GY1 4LY

www.hipgnosissongs.com