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

www.hipgnosissongs.com Hipgnosis Songs Fund Limited Interim Report For the period ended 30 September 2022

Hipgnosis Songs Fund is the first 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.

REVIEW

3 Introduction from Merck Mercuriadis
8 Financial and Operational Highlights
10 Portfolio at a Glance
11 The Chair's Statement
15 Investment Adviser's Report
28 Our Team
38 The Advisory Board
39 Investment Objective and Policy
41 Principal Risks and Uncertainties
43 Board of Directors
44 Directors' Responsibilities
45 Independent Review Report

UNAUDITED FINANCIAL STATEMENTS

46 Condensed Consolidated Statement of Comprehensive Income
48 Condensed Consolidated Statement of Financial Position
49 Condensed Consolidated Statement of Changes in Equity
50 Condensed Consolidated Statement of Cash Flows
51 Notes to the Condensed Consolidated Financial Statements

ADDITIONAL INFORMATION

66 Alternative Performance Measures
68 Glossary of Capitalised Defined Terms
73 Directors and General Information
74 Corporate Summary
75 Advice to Shareholders

Image credit, pages 3 and 15: Jill Furmonvsky

Introduction from Merck Mercuriadis

Image credit, pages 3 and 15: Jill Furmonvsky

In a very challenging environment, I'm proud that in our work to establish Songs as an asset class, everything we have told our investors from IPO has either become reality as stated or been exceeded. That includes the growth of streaming, our ability to establish Song Management as a new paradigm and manage the Songs better to add value, bringing efficiencies to revenue collection, advocating on behalf of songwriters to get a bigger slice of the pie and making Hipgnosis the preferred buyer of the songwriting community, enabling us to acquire well.

This strategy has delivered a Total \$ NAV Return to Shareholders as at 30 September 2022 of 11.8% per year, 60.0% in aggregate since the IPO on 11 July 2018 (including 19.0p per share of dividends).

Our thesis has always been that Songs of extraordinary success and cultural importance produce long term and reliable income streams, making them highly investable assets.

We built Hipgnosis Songs Fund as an asset backed investment vehicle with iconic Songs at its heart to deliver value for our Shareholders off the back of this thesis.

We therefore assembled a Portfolio of Songs that is unrivalled for its extraordinary success and cultural importance and which are in high demand. It is a generally accepted theory that most music companies make their money on 10% of their Songs. I'm confident that our Catalogue would represent the top 10% of any music company's portfolio.

We demonstrate this by co-owning nearly a quarter of the Songs in the "Spotify Billions Club" (Songs streamed over a billion times on Spotify) and over 10% of Rolling Stone's The 500 Greatest Songs Of All Time.

Only last month, the Official Chart Company, on behalf of the BBC, identified the most streamed Songs released in each of the last 70 years. Hipgnosis co-owns rights to nine of these. Songs like Don't Stop Believin' (Journey, 1981); Sweet Dreams (Are Made Of This) (Eurythmics, 1983); Livin' On A Prayer (Bon Jovi, 1986); and Everywhere (Fleetwood Mac, 1988). You are likely humming at least one of those Songs as you read this paragraph.

Some of you will hopefully go onto Spotify, Apple Music or YouTube today to hear these Songs. Others will be prompted to add them to a playlist. Many, many more will have done so when the BBC played them all to celebrate its 100th anniversary. Each time this happens a payment is earned by Hipgnosis Songs Fund.

Importantly, people continue to listen to and pay for music irrespective of the challenges of today's macro-economic conditions. We often say that when people are living their best lives they are doing so to a soundtrack of great Songs. Equally, when they are experiencing life's challenges, they are taking comfort and escaping with great Songs. Either way, our iconic Songs are being consumed and are generating revenue.

Indeed, recently published research from the IFPI, who represent the global record industry, shows that people around the world are engaging with music in 2022 more than ever, with average listening up to 20.1 hours each week – an increase of 1.7 hours since 2021.

According to Luminate, as of 26 November, music audio streams in the United States are now over the one trillion mark for the first time ever in a single year. That's already an increase of 11.9 billion compared to the previous year. It is also seven times higher than in 2015. This report also included the Top 5 most streamed Songs of the year so far; At No.2, Glass Animals' Heat Waves generated 493 million on-demand US audio streams. This is administered by Hipgnosis Song Group (HSG) in the US. That's the second most streamed Song of the year in the world's biggest paying market.

In a high inflation environment, it is arguable that there is no better value than c.£/\$10 per month for a premium music streaming subscription service.

Paid for streaming – and its utility-like revenues – continues to grow with more than 523 million premium paid subscribers globally. In recent months, we have seen Spotify Premium Subscribers reach 195 million, a 13% increase year-on-year despite the macro-economic environment. Looking at the wider music market, the RIAA reported US revenues for recorded music in the first half of 2022 rising 9.1% year-on-year. Apple Music has recently increased prices beyond the 9.99 per month price point in the US, UK and continental Europe. This emphasises the incredible value that music streaming represents and shows that one of the most commercially successful businesses in the world recognises the pricing power that great music gives their platform. We expect other streaming platforms will follow Apple's move. Increased revenue to the Digital Service Providers means increased revenues for Hipgnosis.

We promised investors that we would deliver a new, responsible approach to Song Management, one where we have the resource and bandwidth to manage our great Songs to their full potential – and in doing so add significant value.

All the Small Things performed by Blink-182 reached Number six in the Billboard Hot 100 and Number two in the UK on release in 2000. This Christmas, it's almost impossible for anyone in the UK not to be familiar with a new version which is the soundtrack to the seasonal ritual that is the John Lewis Christmas advert. This is a great example of our approach in action – our Synch team saw the potential of the Song and took it to John Lewis, then did everything they could to make it as efficient as possible for them to choose and use our Song.

Along with the Superbowl, the John Lewis Christmas advert is arguably the most coveted synch in the world. In our early days of meeting potential investors we promised we would procure this and we have delivered as we said we would.

The results we publish today show the strength of our Portfolio.

Gross revenue in the period increased by 7.5% year-on-year to \$91.7 million (six months to 30 September 2021: \$85.3 million), while our Operative Net Asset Value per share remained steady at \$1.8312 (31 March 2022: \$1.8491). When translated into GBP, at a Sterling to Dollar exchange rate of \$1.2223, our Shareholders benefitted from the strong dollar, with an equivalent GBP NAV of 149.82p as at 6 December 2022 (31 March 2022: 140.79p).

Like-for-like pro forma (PFAR) revenues in the first half of the calendar year were \$58.5 million, a 7.8% increase on the comparative period in 2021.

Our PFAR shows that our Streaming performance is strong, up 15.8% to \$23.6 million (H1 2021: \$20.4 million) – while the tireless efforts of the Synch team to get Songs placed into adverts, television shows, films and video games alongside new revenues from emerging platforms such as TikTok, have resulted in Synch revenue growing by some 32.0% year-onyear to \$9.78 million (H1 2021: \$7.41 million) year-on-year.

Our younger Catalogues continue to demonstrate that they are reaching the end of their forecasted decay curves and we have particularly focused on Synch opportunities where the expected life cycle of a Catalogue means that it moves on from "new music" radio stations, but is not yet mature enough for "Gold" stations.

Data from the US, shows that vintage music is an ever increasing proportion of consumed music – now making up three quarters of Songs enjoyed, up from a little over a half in 2017. In part, this is due to the consumer being able to choose what they want to listen to on demand. We are also seeing the positive impact of older demographics adopting paid streaming and Songs boosted through strategic Synch and Playlist placements. This reminds people of great Songs they can now listen to at will. Last year, we had four Songs that were released prior to 2010 in the Spotify Billions Club; this year we have 11!

The Song is the currency of our business; without the Song we simply have no music industry. Yet for too long the songwriter – who delivers the most important component to the success of a record company, digital service provider, music merchandiser or live promoter – is the lowest paid person in the economic equation.

I have always been clear that our motive is to establish Songs as an asset class and to provide a great return for our investors. Concurrently our "ulterior" motive is to use our success to help take the songwriter from the bottom to the top of the economic equation. We advocated for, and welcome the moves by the US Copyright Royalty Board (CRB) and the wider music industry in the US to increase the rates paid to songwriters and publishers. CRB III provided for a 44% increase in the headline rate of DSP revenues paid to songwriters and Publishers, reaching 15.1% in 2022. The joint industry proposals for CRB IV would see that proportion rising incrementally to 15.35% in 2027, while the royalty payable on a physical sale or download would rise from 9.1 cents to 12 cents with additional inflationary increases.

There is still a long way to go before songwriters are fairly remunerated, but these are important steps in the right direction. The joint CRB IV proposals show there is increasing acceptance – as a result of our work – across the music industry that songwriters should be fairly rewarded for their work. Whilst the increase is more modest than the CRB III rises, we support it as it will provide a background of stability at the highest streaming rates ever paid in the context of which we can continue our advocacy efforts. Our ultimate goal is for songwriters' pay to be determined by the free market, not legislation.

When a Catalogue is acquired, our Shareholders sit directly in the shoes of the songwriter so there is complete alignment between the songwriting community and our Shareholders. What is in the best interest of the songwriter is also in the best interest of the Company.

Despite our successes, I share the disappointment of Shareholders that the true value of our iconic Songs is not reflected in today's share price. As Songs are a new asset class, we understand that the market has concerns about both valuation and discount rate, particularly when our NAV is stable in a macroeconomic environment in which the value of many other assets are declining.

It's important to remember that the music industry went through a prolonged period of decline for 15 years, between 2001 and 2016, when technological disruption in the form of illegal downloading almost killed it off. The only good thing to come out of that era is that it left

these great Song assets at attractive prices, just as the technology evolved into streaming, which made it more convenient for consumers to once again listen to and pay for music legally.

We started buying assets in 2018 when paid US music streaming subscribers were less than 10% of the 523 million global subscribers there are today. YouTube had barely paid \$2 billion to rights holders in 2018 compared to the \$6 billion it has paid in 2022. Whereas previously, almost all consumption of music was unpaid for, today, almost all consumption of music is paid for and music has changed from a discretionary purchase to a utility.

These are all positive factors in our NAV.

As a result of our success in establishing Songs as an asset class, we are flattered that many other investors have come into the market.

While Hipgnosis Songs Fund is currently fully invested, Hipgnosis Song Management (HSM) remains active in the market, which gives us access to incredible amounts of transactional data and first-hand knowledge of this growing marketplace. This information is shared with the Hipgnosis Songs Fund Board who, as a result of the robust co-investment policy between Hipgnosis Song Management and its clients, sees everything that HSM sees.

Many Private Equity funds, some of the most successful long-term investors in the world, are today making highprofile Catalogue purchases at multiples that reinforce the Fair Value of our Portfolio and reassure us that we have bought well.

The Fair Value of the Portfolio was calculated by the Portfolio Independent Valuer, Citrin Cooperman, at \$2.67 billion, in line with the prior year. They have a team of leading experts in music valuation who have been involved in many recent high profile music catalogue purchases. For the current NAV, they have continued to use a discount rate of 8.5%. This Fair Value enables us to calculate the Operative NAV which remained stable at \$2.2 billion. To provide investors reassurance, the Board also appointed Kroll Advisory Limited ("Kroll"), an independent valuation firm, to consider and

advise on the reasonableness of certain assumptions commonly employed in the valuation of music Catalogues based on data provided by the Company. The results of the analyses by Kroll provide, in the Board's view, additional support as to the reasonableness of assumptions employed in arriving at the Fair Value of the investments. This gives us, and should give investors, great comfort over the Fair Value of our Songs and therefore the incredible investment opportunity the current share price represents.

An increase in the discount rate from 8.5% to 9.0% would reduce the Operative NAV by \$212 million. Our current share price is trading at a discount to the Operative NAV of over 45%, which implies a discount rate of nearly 12%. There is considerable upside.

We go into the second half of the year positioned strongly. Our re-financed Revolving Credit Facility, interest rate hedges and currency hedges for our Sterling dividend payments, finalised post period end, give increased certainty on costs, while the recent confirmation from CRB that it will enforce the increase in revenues from US streaming, as proposed in its CRB III settlement, is further boosting revenue. Additionally, the return of Performance revenues to pre-COVID-19 levels is yet to be seen in our revenues.

The statistics continually demonstrate the importance of Music in all of our lives as a great and affordable source of comfort, nourishment, sustenance and joy. I'm delighted that it is Songs owned by Hipgnosis that people are listening to and that are amongst the most consumed Songs throughout the world.

You are pioneers in establishing an exciting new asset class and we do not take your belief in the Company lightly. We therefore take our responsibility to you, our Shareholders, very seriously. I therefore hope that the information we are sharing in these results will give you belief in our Fair Value and we are firmly committed to ensuring that the Company's incredible value is recognised in the market.

I would like to pay tribute to the incomparable Christine McVie who passed away last week at the age of 79. She wrote iconic songs that propelled Fleetwood Mac into one of the biggest artists of all time. She was our Songbird and it's one of Hipgnosis' greatest privileges

to forever be the custodians of her special songs. It is clear from the live chart data that millions of people are streaming her hits with Fleetwood Mac's Rumours having already returned to the Top 10.

This week Mariah Carey's All I Want For Christmas Is You is heading for the UK Number One slot and is already Number One on the Billboard Global 200 chart. Meanwhile, Michael Buble's Christmas Album is set to be back in to the Top 10, Hipgnosis Songs Fund has an interest in both and there's another three weeks to go before the big day. The Company has co-owned All I Want For Christmas Is You since 2020, one of the seasonal greats. In our first full year of ownership we saw a 78% increase in revenues compared to the average of previous three years – buying well, proactive Song Management and strong market growth delivering once again. Further to this Fleetwood Mac's Rumours is back in the Top 10 UK album chart and Heat Waves by Glass Animals has just been named Billboard's Number 1 Hot 100 song of the year.

It remains only for me to thank you for your support as well as that of the incredible songwriters that have entrusted us with their iconic work.

Wishing you, and your loved ones, all the best for a Merry Christmas, wonderful holidays and a happy, healthy and prosperous 2023!

Merck Mercuriadis

Founder, Hipgnosis Songs Fund Ltd and Founder/CEO, Hipgnosis Song Management Ltd.

7 December 2022

Spotify's Billions Club

1-800-273-8255

Hipgnosis has 78 out of 324 Songs that have surpassed the Billion Streams mark on Spotify

• Logic • Andrew Taggart 2002 • Anne-Marie • Benny Blanco, Nelly A Thousand Years • Christina Perri • Christina Perri All I Want For Christmas Is You • Mariah Carey • Walter Afanasieff Blueberry Faygo • Lil Mosey • Kenneth Edmonds Californication • Red Hot Chili Peppers • Red Hot Chili Peppers Castle On The Hill • Ed Sheeran • Benny Blanco Classic • MKTO • Evan Bogart, Emanuel Kiriakou Closer (feat. Halsey) *† • The Chainsmokers • The Chainsmokers, Isaac Slade, Joe King Cold Water (feat. Justin Bieber & MØ) • Major Lazer • Benny Blanco, Jamie Scott Deja vu • Olivia Rodrigo • Annie Clark Despacito – Remix † • Luis Fonsi, Daddy Yankee, Justin Bieber • Poo Bear Don't Let Me Down (feat. Daya) † • The Chainsmokers • Andrew Taggart, Scott Harris Don't Stop Believin' • Journey • Jonathan Cain, Neal Schon Eastside (with Halsey & Khalid) • Benny Blanco, Nathan (Happy) Perez Galway Girl • Ed Sheeran • Johnny McDaid Girls Like You (feat. Cardi B) • Maroon 5 • Starrah Halo • Beyoncé • Evan Bogart Happier • Ed Sheeran • Benny Blanco Havana (feat. Young Thug) † • Camila Cabello • Andrew Watt, Starrah Heat Waves *† • Glass Animals • HSG Admin Hey, Soul Sister • Train • Espionage High Hopes • Panic! At The Disco • Sam Hollander Hips Don't Lie (feat. Wyclef Jean)

• Shakira, Wyclef Jean • Shakira

I Don't Wanna Live Forever (50 Shades Darker) • ZAYN, Taylor Swift • Jack Antonoff
I'm The One (feat. Justin Bieber, Quavo,
Chance the Rapper & Lil Wayne) • DJ Khaled • Poo Bear

In the end

• Linkin Park • Andy Wallace In The Name Of Love • Martin Garrix, Bebe Rexha • Ilsey Juber Issues

• Julia Michaels • Benny Blanco

It Ain't Me (feat. Selena Gomez) • Kygo • Andrew Watt
Just The Way You Are

• Bruno Mars • Ari Levine

Lean On (feat. DJ Snake & MØ) † • Major Lazer, MØ, DJ Snake • Martin Bresso
Let It Go
James Bay Paul Barry
Let Me Love You (feat. Justin Bieber) †
DJ Snake Andrew Watt
Livin' On A Prayer • Bon Jovi • Richie Sambora
Locked out of Heaven
Bruno Mars Ari Levine

Love Yourself † • Justin Bieber • Benny Blanco

Maps • Maroon 5 • Ammar Malik

Me, Myself & I

• G-Eazy • TMS

Memories †
Maroon 5 Stefan Johnson, Jordan Johnson, Jon Bellion

Mercy

Shawn Mendes Teddy Geiger, Ilsey Juber Needed Me
Rihanna Starrah
New Rules †
Dua Lipa Caroline Ailin, Ian Kirkpatrick
Nice For What
Drake Robert Diggs
no tears left to cry • Ariana Grande • Savan Kotecha
Numb
Linkin Park Andy Wallace

One Last Time

Ariana Grande Giorgio Tuinfort Paris
The Chainsmokers The Chainsmokers
Payphone
Maroon 5 Ammar Malik

**Photograph *†**

Ed Sheeran Johnny McDaid
Rockabye (feat. Sean Paul & Anne-Marie)
Clean Bandit Ammar Malik

Scared to Be Lonely

Martin Garrix, Dua Lipa
Giorgio Tuinfort, Kyle Shearer

Smells Like Teen Spirit • Nirvana • Andy Wallace Something Just Like This † • The Chainsmokers, Coldplay • Andrew Taggart Sorry † • Justin Bieber • Julia Michaels, Skrillex Stitches • Shawn Mendes • Teddy Geiger Sugar • Maroon 5 • Jacob Kasher Hindlin Sugar (feat. Francesco Yates) • Robin Schulz, Francesco Yates • Happy Perez Symphony (feat. Zara Larsson) • Clean Bandit • Ammar Malik Titanium (feat. Sia) • David Guetta, Sia • Giorgio Tuinfort The Middle • Zedd, Maren Morris, Grey • Stefan Johnson, Jordan K. Johnson There's Nothing Holdin' Me Back † • Shawn Mendes • Teddy Geiger, Scott Harris Treat You Better † • Shawn Mendes • Teddy Geiger, Scott Harris Umbrella • Rihanna, JAY-Z • Tricky Stewart, The-Dream Under The Bridge • Red Hot Chili Peppers • Red Hot Chili Peppers

• Shawn Mendes, Camila Cabello • Andrew Watt

• Lady Gaga, Bradley Cooper • Mark Ronson

Uptown Funk (feat. Bruno Mars) †
Mark Ronson Mark Ronson, Jeff Bhasker What Do You Mean?
Justin Bieber Poo Bear

What Lovers Do (feat. SZA)

Maroon 5 Starrah, Elina Stridh, Victor Rådström
When I was Your Man
Bruno Mars Ari Levine
Without Me †

Señorita *†

Shallow †

Shape Of You **†

• Ed Sheeran • Johnny McDaid Sign Of The Times • Harry Styles • Jeff Bhasker

Halsey Timbaland
Wolves • Selena Gomez, Marshmello • Andrew Watt
Young Dumb & Broke
Khalid Joel Little
Young, Wild & Free (feat. Bruno Mars)
Snoop Dogg, Wiz Khalifa Ari Levine
Youngblood
5SOS Andrew Watt

Financial and Operational Highlights1

Six months ended 30 September 2022

As at 30 September 2022, 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 \$607 million is drawn.

As at 30 September 2022, the Company had deployed approximately \$2.2 billion in total since IPO on 146 Catalogues and 65,413 Songs.

IFRS NAV ² \$1.52 billion (31 March 2022: \$1.58 billion)

IFRS NAV per Ordinary Share \$1.2590 (31 March 2022: \$1.3065)

Operative NAV ³ \$2.22 billion (31 March 2022: \$2.24 billion)

Operative NAV per Ordinary Share (\$) \$1.8312 (31 March 2022: \$1.8491)

Operative NAV per Ordinary Share (p) ⁴ 164.06p (31 March 2022: 140.79p)

Total NAV Return since inception 5 60.05%

Six-Month Total NAV Return 0.70%

(Discount)/Premium to Operative NAV (45.7%) (30 September 2021: (14.2%))

Ongoing charges figure (%) 1.23%

(30 September 2021: 1.77%)

Total dividends declared in respect of the period

2.625p (30 September 2021: 2.625p)

Net Revenue

EBITDA \$63.8 million (30 September 2021: \$54.6 million)

Leveraged Free Cash Flow \$30.5 million

(30 September 2021: \$31.9 million)

EPS (1.66¢) (30 September 2021: (1.69¢))

Adjusted EPS 7

3.76¢ (30 September 2021: 3.85¢)

1. A number of Alternative Performance Measures are used within the Report and details can be found on page 66.
1. Catalogues of Songs are classified as intangible assets and measured at amortised cost or cost less any impairment in accordance with IFRS.
1. 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.
1. Based on the Sterling to Dollar exchange rate at 30 September 2022 of 1.116171
1. Since IPO on 11 July 2018. See page 66 for definition.
1. Calculated using the middle market share price (SONG) of 89.10p on 30 September 2022 (31 March 2022: 120.80p).
1. Adjusted EPS excludes Total Amortisation, depreciation, impairments, FX losses and provision for HSG advances. See page 66 for definition.

Portfolio at a Glance

Catalogues 146

Songs 65,413 Grammys 160

+5.8% year-on-year

Weighted Average Acquisition Multiple

15.93x

The Chair's Statement

Andrew Sutch, Chair

Introduction

The results we report today show the robustness and potential of your Company. Both Gross revenue and pro-forma revenues show healthy growth against the comparative period, operating costs have been reduced and we have refinanced and fixed the interest cost on most of the Company's debt.

The total return on our Operative NAV since our launch in July 2018 to 30 September 2022 has been 60.0% (with dividends added back). Total Shareholder Return, being the change in our share price over the same period, again with dividends added back, has been 8.10%. The Board shares the disappointment of Shareholders at the share price performance during 2022.

As at 6 December 2022, the shares were trading at a discount to NAV of 46%. Whilst there have undoubtedly been macro factors (the war in Ukraine, inflation and increases in interest rates) which have impacted the Company's share price, the Board is continually assessing all options to ensure that the Company delivers superior Shareholder value over the medium term.

Our investment case has always been based on three core pillars:

First, the acquisition of a high-quality Portfolio of culturally important songs with a proven track record of success, which provides the strongest possible foundation for the Company. Our Portfolio is built on quality, with an unrivalled concentration of evergreen Songs released in every decade since the 1960s. The Catalogue now includes:

78 out of 324 Songs (24%) in Spotify's Billions Club, being songs which have been played on the platform over one billion times;
52 of Rolling Stone's The 500 Greatest Songs of All Time; and
13 out of the 30 YouTube's Most Viewed music videos of all time.

Second, our Investment Adviser actively manages the Songs in the Company's Portfolio, with the object of increasing revenues and maximising the Songs' value. Active song management activities include:

Delivering efficient administration of Catalogues by ensuring that all due payments are coming through and the collection system is as efficient and effective as possible;
Creating additional revenues by placing Synchs across traditional and new media outlets; and
Identifying opportunities to promote our Songs, enabling and creating new versions and building partnerships which monetise our Catalogue.

Third, we believe that the music industry will continue to experience significant structural growth as the adoption of paid-for streaming increases, pricing increases lead to more royalties flowing through to rights holders and technology drives new income streams. We continue to see strong evidence for this in the market. Since our Annual Report was published in July:

Spotify's third quarter results showed premium subscribers up 13.3% year on year;
Apple Music announced its intention to increase its pricing for its standard music tier from 9.99 to 10.99 per month (in the relevant currency) in the US, UK and Eurozone; and
The RIAA (Recording Industry Association of America) reported that revenues for recorded music in the first half of 2022 rose 9% compared to the same period in the prior year to \$7.7 billion in the US. Streaming represented 84% of this, an unchanged share, up 10% in revenue terms.

The Board and the Investment Adviser believe that music streaming represents extremely good value for consumers and that the Digital Service Providers (DSPs) have pricing power. Many market commentators expect Spotify to follow Apple's example and move beyond the 9.99 monthly subscription price point (in the relevant currency).

In addition to market growth and pricing rises, a number of regulatory industry developments will further boost the Company's revenue. These include decisions by the US Copyright Royalty Board (CRB) with respect to the CRB III settlement, which is now in the process of being implemented and has been accrued for in these results, and the joint industry proposal for CRB IV, which will see further rises in the share of Streaming revenues paid to Songwriters in the period from 2023-27.

Financial performance

The IFRS NAV per share as at 30 September 2022 was \$1.2590, which is a small decrease from \$1.3065 as at 31 March 2022, largely driven by the amortisation of Catalogues.

The Board considers that the most relevant NAV for Shareholders is the Operative NAV which reflects the fair value of the Company's Catalogues as valued by the Independent Portfolio Valuer and adds back the material accumulated amortisation and impairment charges.

The Operative NAV per Share remained stable at \$1.8312 during the period (31 March 2022: \$1.8491) primarily due to adverse currency movements relating to non-US denominated Catalogues accounting for c.12% of revenue receipts. When including dividends paid to date, the Total \$ NAV Return was 0.7% over the prior six-months' period and 60.0% since IPO on 11 July 2018.

Earnings per share for the six months ended 30 September 2022 were -1.66¢ (broadly unchanged on the EPS for the six months ended 30 September 2021 of -1.69¢). This figure now reflects all Catalogues being amortised for the full six month period. The Group amortises Catalogues of Songs with a limited useful life using a straight-line method over 20 years.

Based on the Sterling to Dollar exchange rate as at 30 September 2022 of 1.116, the Operative NAV presented in Sterling would be 164.06p per share as at that date (compared with 140.79p as at 31 March 2022, based on the then Sterling to Dollar exchange rate of 1.3134).

Adjusted EPS, as defined within the Alternative Performance Measures for the six months ended 30 September 2022, is 3.76¢ (six months ended 30 September 2021: 3.85¢).

The structure of the music industry means that revenues can take some time to flow into Hipgnosis Songs Fund. However, we are encouraged by the numbers reported recently by the Company's administration partners and other organisations at the entry point for music revenues at source, as an indicator of the Company's future income prospects.

Further issuance

The Board does not anticipate raising additional equity until its share price again trades at a sustained premium to its Net Asset Value.

Dividend

In the Annual Report the Board restated its intention to maintain the target dividend at 5.25p per Ordinary Share for the financial year 2022-23 and announced that, in order to better align dividend payments with revenue receipts, dividends would be paid on or around the last working day of January, April, July and October with dividends declared around a month prior to the payment date. The Board currently expects that dividends paid in respect of the current financial year will be covered from Distributable Revenues recognised in the period under review.

Valuation

The Board is ultimately and solely responsible for overseeing the valuation of the Company's investments in music catalogues and has appointed the Portfolio Independent Valuer to perform this specialist work.

The Board also appointed Kroll Advisory Limited ("Kroll"), an independent valuation firm, to consider and advise on the reasonableness of certain assumptions commonly employed in the valuation of music catalogues based on data provided by the Company. The results of the analyses by Kroll provide, in the Board's view, additional support as to the reasonableness of assumptions employed in arriving at the Fair Value of the investments.

As a result of the co-investment policy which the Company enjoys alongside the Investment Adviser's other client, the Board has exceptional visibility into the current market for music rights purchases, providing the Board with additional confidence in the independent valuation.

Revolving Credit Facility

On 30 September 2022, the Company entered into a new Revolving Credit Facility (RCF) with a commitment of \$700 million which runs for five years until 30 September 2027. The facility has been used to refinance, in full, the Company's pre-existing RCF and provide flexibility for additional working capital where necessary. In accordance with the Investment Policy, any borrowings by the Company will not exceed 30% of the value of the net assets of the Company.

In the Annual Report, the Board set out that the purpose of the refinancing was to reduce interest rate risk and control costs. To deliver on these objectives, the Company entered into interest rate swap agreements, as disclosed on 5 October 2022. As a result, until 2 January 2023, interest on all the drawn debt is fixed at 5.71% (including debt margin). From 3 January 2023, \$340 million is hedged for the duration of the RCF (until 30 September 2027) at a fixed rate of 5.67% (including debt margin); a further \$200 million is hedged until 3 January 2026 at a fixed rate of 5.89% (including debt margin). The balance remains unhedged to provide flexibility in the operation of the RCF.

Annual General Meeting

The Annual General Meeting for the Company took place on 21 September 2022. I am pleased to announce that all ordinary and special resolutions were passed by the requisite majority.

Share buy backs

The Board believes that the most effective means of minimising any discount at which the Ordinary Shares may trade is for the Company to deliver strong, consistent, long-term performance from the investment Portfolio. However, wider market conditions and other considerations inevitably affect the rating of the Ordinary Shares from time to time.

Following the period end, the Board announced a share buy-back programme funded out of free cash flow. During the initial period of its operation an aggregate number of 2 million shares have been purchased with an aggregate value of £1.7 million. The Board will continue to repurchase Ordinary Shares when they believe it to be in the interests of Shareholders to do so.

Ordinary Shares held in treasury may only be reissued by the Company at prices representing a premium to the NAV per Ordinary Share as at the date of re-issue.

Outlook

Despite inflationary pressures, interest rate rises and the impact of central banks' actions to control inflation, the leading economic music indicators continue to point to Hipgnosis' investment thesis being valid. We anticipate continued strong growth in the global music market.

In addition, the Company expects to benefit from increasing revenues from social media, gaming and lifestyle channels. This market growth, coupled with the Investment Adviser's Song Management capabilities and our Portfolio of high quality, iconic and culturally important Songs gives the Board confidence that the Company is capable of delivering superior Shareholder returns over the medium term.

Andrew Sutch

Chair

7 December 2022

Hipgnosis has 52 of Rolling Stone's The 500 Greatest Songs of All Time

5 Smells Like Teen Spirit • Nirvana • Andy Wallace
8 Get Ur Freak On • Missy Elliot • Timbaland
25 Runaway • Kanye West feat. Pusha T • Jeff Bhasker, Emile Haynie, Pusha T
30 Royals • Lorde • Joel Little
38 (Sittin' On) The Dock of the Bay • Otis Redding • Al Jackson Jr
56 Work It • Missy Elliot • Timbaland
68 Good Times • Chic • Bernard Edwards, Nile Rodgers
79 Back To Black • Amy Winehouse • Mark Ronson
84 Let's Stay Together • Al Green • Al Jackson Jr
107 C.R.E.A.M. • Wu Tang Clan • RZA
114 Toxic • Britney Spears • Christian Karlsson
127 Waterfalls • TLC • Sleepy Brown
133 Don't Stop Believin' • Journey • Jonathan Cain, Neal Shon
136 Try a Little Tenderness • Otis Redding • Al Jackson Jr
138 Heart Of Glass • Blondie • Debbie Harry, Chris Stein
153 Super Freak • Rick James • Rick James
167 Lose Yourself • Eminem • Jimmy Iovine
217 Edge Of Seventeen • Stevie Nicks • Jimmy Iovine
228 Single Ladies (Put a Ring on It) • Beyoncé • The-Dream, Tricky Stewart
238 Are You That Somebody? • Aaliyah • Timbaland
259 Heart Of Gold • Neil Young • Neil Young
274 Love And Happiness • Al Green • Al Jackson Jr.
281 Grindin' • Clipse • Pusha T
285 Say My Name • Destiny's Child • Rodney Jerkins
290 Yeah! (feat. Lil John & Ludacris) • Usher, Lil Jon, Ludacris • Sean Garrett
300 Rock Lobster • The B-52's • The B-52's
309 Ain't No Sunshine • Bill Withers • Al Jackson Jr
322 After The Gold Rush • Neil Young • Neil Young
328 Under The Bridge • Red Hot Chili Peppers • Red Hot Chili Peppers
332 Umbrella (feat. Jay-Z) • Rihanna • The-Dream, Tricky Stewart
337 Believe • Cher • Paul Barry, Brian Higgins
353 Sweet Dreams (Are Made Of This) • Eurythmics • David A. Stewart
358 Because The Night • Patti Smith • Jimmy Iovine
368 Black Hole Sun • Soundgarden • Chris Cornell
385 I'm Coming Out • Diana Ross • Bernard Edwards, Nile Rodgers
389 Brass In Pocket • Pretenders • Chrissie Hynde
390 Enter Sandman • Metallica • Bob Rock
394 Grace • Jeff Buckley • Andy Wallace
401 Go Your Own Way • Fleetwood Mac • Lindsey Buckingham
414 Dreaming • Blondie • Debbie Harry, Chris Stein
417 Uptown Funk (feat. Bruno Mars)
- Mark Ronson Mark Ronson
418 Green Onions • Booker T and the MGs • Al Jackson Jr
427 Rapper's Delight • The Sugarhill Gang
- Bernard Edwards, Nile Rodgers
428 Sign Of The Times • Harry Styles • Jeff Bhasker
444 In Da Club • 50 Cent • Curtis Jackson
450 Powderfinger • Neil Young • Neil Young
453 The Rain (Supa Dupa Fly) • Missy Elliot • Timbaland
456 Summertime Sadness • Lana Del Ray • Emile Haynie
457 Livin' On A Prayer • Bon Jovi • Richie Sambora
467 Come As You Are • Nirvana • Andy Wallace
482 Bad Romance • Lady Gaga • RedOne
497 Truth Hurts • Lizzo • HSG Admin

Song Title • Artist(s) • Hipgnosis contributor(s) Source: Rolling Stone, Sep 2021

Investment Adviser's Report

Introduction

This year we've seen a positive impact on revenue from our active Song Management of the Company's Portfolio.

During the period the Company's Operative Net Asset Value per share remained stable at \$1.8312. The strong Dollar boosted the Sterling value of the Operative NAV of the Company which, on 6 December 2022, was 149.82p per share, converted using a Sterling to Dollar exchange rate of \$1.2223.

Like-for-like pro forma (PFAR) revenues in the first half of the calendar year were \$58.5 million, a 7.8% increase on the comparative period in 2021.

Pro forma revenues from Synch during the first half of the calendar year have been strong, up 32% to \$9.78 million (H1 2021: \$7.41 million), illustrating the value we deliver for shareholders through our active Song Management. This growth is a result of placing Songs in movies, tv shows and advertisments, video games and from existing and emerging platforms, such as YouTube and TikTok. The quality of our Songs, our strategy of building close relationships with producers and ensuring that working with Hipgnosis is as smooth and efficient as possible are paying dividends.

We also continued to see strong growth in pro forma streaming revenues, up 15.8% year-on-year to \$23.56 million in H1 2022 (H1 2021: \$20.35 million). This reflects the Company's extraordinary concentration of Songs with high streaming consumption, as shows by Hipgnosis's share of Songs in

Spotify's Billions Club which has remained unchanged at 24%, despite the list growing from 190 Songs 12 months ago to 324 today.

The context for Hipgnosis' investments has always been the massive opportunity afforded by the adoption of and exponential/long term growth in streaming. The continued rapid adoption of paid-for streaming not only increases revenues, but also continues to transform income from being driven by consumers' discretionary decisions into a utility. In our view, this will drive a re-rating in the value of our Songs as the perceived risk profile of the income falls.

2022 saw the full and welcome return of live music after the hiatus caused by the COVID-19 lockdowns. With record numbers of people attending concerts, we saw our Songs played at sell-out shows around the world including performances by Red Hot Chili Peppers, Nile Rodgers and CHIC, Journey, Lindsey Buckingham and Blondie.

These performance revenues will be reflected in future reporting periods as a result of the significant time lag in collections by Performing Rights Societies and Administrators. This means that we are still experiencing the impact in earnings caused by retail and entertainment venues being closed by COVID-19 restrictions during 2020 and 2021. We continue to see evidence that performance revenue across the music industry is recovering steeply and we remain confident that, when the time lag in payments to Hipgnosis works through, this will be a further strong pillar for revenue growth.

The Portfolio

The Portfolio as at 30 September 2022 is comprised of 146 Catalogues, 65,413 Songs. The overall Fair Value of the Portfolio of the Catalogues, as determined by the Portfolio Independent Valuer, remains stable at \$2.67 billion (31 March 2022: \$2.69 billion).

This valuation reflects a multiple of 19.93x historical annual net Publisher Share income, compared to the blended acquisition multiple of 15.93x.

Hipgnosis' Portfolio of Songs, we believe, is unrivalled in its concentration of quality. In addition to our standing in Spotify's Billions Club, this is demonstrated by our Songs being:

Over 10% of Rolling Stone's The 500 Greatest Songs of All Time (52/500);
9 out 70 of the BBC's Most Streamed Chart;
20 out of the Top 100 most streamed songs on Spotify; and
Almost half of YouTube's Most Viewed music videos of all time (13/30).

Globally successful and culturally important artists performing our Songs include:

2 Pac, 5 Seconds of Summer, 10cc, 21 Savage, 50 Cent, 10,000 Maniacs, A\$AP Rocky, AC/DC, Adele, Al Green, Alan Jackson, Alicia Keys, Aluna George, Amy Winehouse, Andrea Bocelli, Anitta, Anthony Hamilton, Ariana Grande, Aretha Franklin, AudioSlave, Avicii, B-52s, Baby Bash, Backstreet Boys, Barbra Streisand, Barry Manilow, Bebe Rexha, Benny Blanco, Beyoncé, Biffy Clyro, Big & Rich, Big Freedia, Birdy, Blind Faith, Blink 182, Blondie, Bon Jovi, Booker T & The MG's, Boyz II Men, Britney Spears, Bruce Springsteen, Bruno Mars, Bryan Adams, Camila Cabello, Carly Simon, Celine Dion, Charli XCX, Cher, Chic, Chris Brown, Christina Perri, Christopher Cross, Clipse, Damian Marley, Dave Matthews Band, David Gray, David Guetta, Demi Lovato, Destiny's Child, Diana Ross, Dierks Bentley, Dionne Warwick, Diplo, Dire Straits, DJ Snake, Dua Lipa, Duran Duran, Dusty Springfield, Ed Sheeran, Ellie Goulding, Eminem, Enrique Iglesias, Erica Banks, Eric Prydz, Ernestine Anderson, Eurythmics, Fantasia, FKA Twigs, Fleetwood Mac, Florence And The Machine, Flo-Rida, Florida Georgia Line, fun., Galantis, George Benson, George Thorogood, Gladys Knight, Hailee Steinfeld, Halsey, Harry Styles, Iggy Azalea, Imagine Dragons, James Bay, James Morrison, Jason Aldean, Jason Derulo, Jay Z, Jennifer Hudson, Jeff Buckley, Jennifer Lopez, Jess Glynne, Jimmy Buffett, Jodie Harsh, John Legend, John Newman, Josh Groban, Journey, Juicy J, Justin Bieber, Justin Timberlake, Kaiser Chiefs, Kali Uchis, Kanye West, Katy Perry, Keith Urban, Kelis, Kelly Clarkson, Kelly Rowland, Khalid, Killswitch Engage, Kylie Minogue, Lady Gaga, Lana Del Rey, Lara Fabian, Lauv, LeAnn Rimes, Leo Sayer, Lindsey Buckingham, Linkin Park, Lionel Richie, Little Mix, Lizzo, Lorde, LunchMoney Lewis, M.I.A., Madonna, Marc Anthony, Maren Morris, Mariah Carey, Mark Ronson, Maroon 5, Mary J Blige, Machine Gun Kelly, Massive Attack, Matchbox Twenty, Matt & Kim, MC Hammer, Meatloaf, Meek Mill, Meghan Trainor, Melissa Manchester, Metallica, Metro Boomin', MF Doom, Michael Bolton, Michael Bublé, Michael Jackson, Mick Jagger, Miguel, Miike Snow, Miley Cyrus, Molly Sanden, Moses Sumney, Mötley Crüe, My Marianne, Natalie Merchant, Nelly, Neil Young, New Kids On The Block, Nicki Minaj, Nirvana, No Doubt, Ólafur Arnalds, Olivia Rodrigo, One Direction, P!nk, Paloma Faith, Panic! At The Disco, Papa Roach, Paris Boy, Patti Smith, Paul Anka, Paul McCartney, Pearl Jam, Pell, Perfume Genius, Phoebe Bridgers, Pitbull, Pop Smoke, Post Malone, Puff Daddy, Pusha T, Rage Against The Machine, Rebecca Ferguson, Rejjie Snow, Rick James, Rick Ross, Ricky Martin, Rihanna, Rita Ora, Robbie Williams, Rod Stewart, Rudimental, RZA, Santana, Santigold, Sawyer Brown, Seal, Selena Gomez, Shakira, Shawn Mendes, Sia, Sigala, Sigma, Silk City, Simple Minds, Sinead O'Connor, Sister Sledge, Skrillex, Sky Ferreira, Solange, Soundgarden, Spencer Davis Group, Spice Girls, Steve Aoki, Steve Winwood, Stevie Nicks, Stormzy, Sugarhill Gang, Sum 41, Super Furry Animals, Swedish House Mafia, SZA, T.I., Taio Cruz, Take That, Taylor Swift, Tchami, Teddy Bears, Teenage Fanclub, The Chainsmokers, The Editors, The Outfield, The Pretenders, The Wombats, Third Day, Tiesto, Tim McGraw, Timbaland, Tina Arena, Tinie Tempah, TLC, Toby Keith, Tom Jones, Tom Petty & The Heartbreakers, The Kid Laroi, The Mindbenders, The Vamps, Theophilus London, Tom Walker, Toto, T-Pain, Tracey Chapman, Traffic, Train, Trey Songz, Trivium, Troye Sivan, TV On The Radio, Ty Dolla \$ign, U2, Usher, Waka Flocka Flame, Weezer, Westlife, Whitney Houston, Will Ferrell, Wu-Tang Clan, Young The Giant, Zara Larsson and Zedd.

Portfolio as at 30 September 2022

Acquisition Date	Interest Ownership	Total Songs
		302
		214
		290
		121
		121
21 Dec 2018	100%	182
15 Jan 2019	100%	15
31 Jan 2019	100%	209
26 Feb 2019	100%	245
21 Mar 2019	100%	588
22 Mar 2019	100%	249
31 Mar 2019	100%	499
31 Mar 2019	100%	76
12 Apr 2019	100%	6
25 Apr 2019	100%	73
7 May 2019	100%	1,068
8 May 2019	100%	185
15 May 2019	100%	144
28 May 2019	100%	110
14 Jun 2019	100%	101
14 Jun 2019	100%	180
17 Jun 2019	100%	571
20 Jun 2019	100%	357
10 Jul 2019	100%	462
12 Jul 2019	100%	242
23 Jul 2019	100%	740
2 Aug 2019	100%	93
22 Aug 2019	100%	42
10 Oct 2019	100%	108
17 Oct 2019	100%	29
21 Oct 2019	100%	103
5 Nov 2019	100%	47
5 Nov 2019	100%	109
15 Nov 2019	100%	44
5 Dec 2019	100%	298
5 Dec 2019	99%	188
5 Dec 2019	100%	90
	13 Jul 2018 21 Nov 2018 28 Nov 2018 17 Dec 2018 17 Dec 2018	75% 100% 38% 100% 100%

Catalogue	Acquisition Date	Interest Ownership	Total Songs
Ed Drewett	9 Dec 2019	100%	109
Kaiser Chiefs (Masters)	9 Dec 2019	100%	48
Jeff Bhasker	11 Dec 2019	100%	436
Johnny McDaid	11 Dec 2019	100%	164
Emile Haynie	13 Dec 2019	100%	122
Brendan O'Brien	13 Dec 2019	100%	1,855
Savan Kotecha	18 Dec 2019	100%	49
Tom Delonge	23 Dec 2019	100%	157
Journey (Masters)	10 Jan 2020	65%	389
Rebel One	10 Jan 2020	100%	157
Scott Harris	10 Jan 2020	100%	129
Brian Higgins	22 Jan 2020	100%	362
Gregg Wells	10 Feb 2020	100%	11
Jonathan Cain	28 Feb 2020	100%	216
Jonny Coffer	28 Feb 2020	100%	85
Mark Ronson	28 Feb 2020	100%	315
Richie Sambora	4 Mar 2020	100%	186
Rodney Jerkins	16 Jul 2020	100%	982
Barry Manilow	16 Jul 2020	100%	917
RedOne	16 Jul 2020	100%	334
Eliot Kennedy	16 Jul 2020	100%	217
Closer (J King & I Slade)	27 Jul 2020	100%	2
NO I.D.	24 Jul 2020	100%	273
Pusha T	24 Jul 2020	100%	238
Ian Kirkpatrick	29 Jul 2020	100%	137
Blondie	30 Jul 2020	100%	197
Chris Cornell	10 Aug 2020	100%	241
Robert Diggs "RZA"	12 Aug 2020	50%	814
Ivor Raymonde	13 Aug 2020	100%	505
Nikki Sixx	3 Sep 2020	100%	305
Big Deal Music "BDM"	10 Sep 2020	100%	4,212
Julian Bunetta	10 Sep 2020	50%	188
Chrissie Hynde	10 Sep 2020	100%	162
Steve Robson	17 Sep 2020	100%	1,034
Rick James	18 Sep 2020	50%	97
Kevin Godley	23 Sep 2020	100%	358
Scott Cutler	24 Sep 2020	100%	111

Catalogue	Acquisition Date	Interest Ownership	Total Songs
Nate Ruess	30 Sep 2020	100%	59
LA Reid	30 Sep 2020	100%	162
50 Cent	30 Sep 2020	100%	388
Aristotracks	30 Sep 2020	100%	152
B-52's	30 Sep 2020	100%	96
Bonnie McKee	30 Sep 2020	100%	78
Brill Building	30 Sep 2020	100%	234
Christina Perri	30 Sep 2020	100%	68
Dierks Bentley	30 Sep 2020	100%	113
Editors	30 Sep 2020	100%	64
Eman	30 Sep 2020	100%	97
Enrique Iglesias	30 Sep 2020	100%	157
Evan Bogart	30 Sep 2020	100%	229
George Benson	30 Sep 2020	100%	107
George Thorogood	30 Sep 2020	100%	40
Good Soldier	30 Sep 2020	100%	760
Holy Ghost	30 Sep 2020	100%	62
J-Kash	30 Sep 2020	100%	90
John Rich	30 Sep 2020	100%	7
Kojak	30 Sep 2020	100%	148
Lateral	30 Sep 2020	100%	248
Lindsey Buckingham (Kobalt)	30 Sep 2020	100%	174
LunchMoney Lewis	30 Sep 2020	100%	116
Lyrica Anderson	30 Sep 2020	100%	96
Madcon	30 Sep 2020	100%	173
Mark Batson	30 Sep 2020	100%	210
Mobens	30 Sep 2020	100%	1,034
Nelly (Kobalt)	30 Sep 2020	100%	145
Nettwerk	30 Sep 2020		100% 25,259
PRMD	30 Sep 2020	100%	335
Rob Hatch	30 Sep 2020	100%	167
Rock Mafia	30 Sep 2020	100%	393
Savan Kotecha (Kobalt)	30 Sep 2020	100%	354
SK Music	30 Sep 2020	100%	23
Skrillex	30 Sep 2020	100%	153
Stereoscope	30 Sep 2020	100%	456
Steve Winwood	30 Sep 2020	100%	215

Acquisition Date	Interest Ownership	Total Songs
		1
30 Sep 2020	100%	212
		80
30 Sep 2020	100%	213
30 Sep 2020	100%	113
30 Sep 2020	100%	73
20 Nov 2020	100%	303
27 Nov 2020	100%	95
2 Dec 2020	100%	255
4 Dec 2020	100%	43
10 Dec 2020	100%	2
15 Dec 2020	100%	240
24 Dec 2020	100%	161
24 Dec 2020	100%	178
24 Dec 2020	100%	259
31 Dec 2020	50%	590
31 Dec 2020	100%	145
31 Dec 2020	100%	139
17 Feb 2021	100%	105
2 Mar 2021	100%	255
17 Mar 2021	100%	983
18 Mar 2021	100%	510
26 Mar 2021	100%	151
31 Mar 2021	100%	51
31 Mar 2021	100%	1,242
31 Mar 2021	100%	230
31 Mar 2021	100%	192
14 Jul 2021	100%	220
15 Jul 2021	100%	136
21 Jul 2021	100%	115
22 Jul 2021	100%	58
22 Jul 2021	100%	58
23 Jul 2021	100%	564
29 Jul 2021	50%	152
24 Aug 2021	100%	70
		65,413
	30 Sep 2020 30 Sep 2020	100% 100%

* Not counted in total song count

More people paying more for music streaming services

Reported data from the music industry continues to show growth despite the wider economic challenges. Furthermore, there are regulatory and commercial developments which will directly result in additional revenues for Hipgnosis. For example:

The market leading global streaming service, Spotify, beat expectations with year-on-year premium subscriber growth of 13% to 195 million and Monthly Active Users up 20% to 456 million, according to their recent Q3 2022 results. Revenues also increased 21% to €3.0 billion.
Apple Music announced that it would be increasing the monthly price of its individual and family subscriptions by \$/£/€1 to \$/£/€10.99 and \$/£/€2 to \$/£/€16.99 respectively in the US, UK and continental Europe.
Spotify and other DSP's have indicated they will also increase prices.
The mid-year revenue statistics disclosed by the RIAA (Recording Industry Association of America) gives us an insight into the recorded music revenues in the US, our largest market. Revenues from streaming music, a broad category including formats such as paid subscription services, ad-supported services, digital and customized radio, grew 10% to \$6.5 billion in the first half of 2022. The share of revenues that came from streaming was virtually flat at 84% and paid subscriptions account for 78% of streaming revenue.

We have long believed that music streaming represents exceptional value for money and, as such, believe that the DSPs have significant pricing power despite the current macro-economic conditions. Consequently, in line with many industry commentators, we expect Spotify will follow Apple's lead and similarly increase its 9.99 individual price point in major markets. Price increases leads to more royalties flowing through to rights holders.

Copyright Royalty Board

During the period there were a number of significant regulatory developments from the Copyright Royalty Board (CRB), which sets royalty rates for the United States, the Company's biggest single market.

After a lengthy appeals process, the CRB rejected the appeal of CRB III brought by some streaming companies. As a result, CRB III, which proposed to incrementally increase mechanical streaming royalty rates for songwriters and publishers was confirmed with the "all in" (mechanical and performance) statutory minimum rates for streaming paid in the US was confirmed with the headline rate rising from 10.5% of streaming revenues prior to 2018 to 15.1% in 2022, an overall 44% increase and paid retroactively. As detailed in the Copyright section, this has led to a \$16.1 million accrual for retroactive revenue due to the Company for the years 2018-2021 and a \$6.2 million accrual to monies expected to be earned in 2022, of which \$3.1 million were taken in this financial period.

The next CRB IV settlement period begins in 2023. A joint proposal from The National Music Publishers' Association (NMPA) and Nashville Songwriters Association International (NSAI) and the Digital Media Association (DiMA) has been submitted to the CRB. Should this be ratified, as is almost certain, this would see the headline royalty rate for mechanical streaming in the US rise further from 15.1% to 15.35%, phased in over the five-year term from 2023-27.

While we believe more significant increases are warranted and will come, this agreement will provide the highest royalty rates ever for songwriters in the streaming economy and five years of stability from which to build from. Additionally, the deal also includes a number of changes to other components of the rate, including increases to the per subscriber minimums and the "Total Content Costs (TCC)" calculations which reflect the rates that services pay to record labels and modernizes the treatment of "bundles" of products or services that include music streaming.

The agreement is supported by DiMA member companies, Amazon, Apple, Google, Pandora and Spotify, as well as NSAI's Board of Directors and the NMPA Board, which is comprised of leading independent and major music publishers.

Separately, we support a 32% uplift in the mechanical rate paid to publishers and songwriters for music purchased as a physical sale from 9.1¢ per track to 12¢ per track from 2023-27 with further annual increases in line with the Consumer Price Index. This is a significant upside for our iconic songwriters and artists such as Red Hot Chili Peppers, Fleetwood Mac,

Soundgarden, Journey and many others that derive significant revenue from the sale of physical product.

The joint proposals for CRB IV are significant as they demonstrate growing acceptance across the industry that artists and songwriters should be fairly remunerated for their work. Hipgnosis will continue to be at the forefront of the campaign to move songwriters (and the owners of songwriting royalties) from the bottom of the economic equation to the top, recognizing their vital role within the music industry. At Hipgnosis, our investors stand in the shoes of Songwriters so there is complete alignment with the best interest of Songwriters and Shareholders.

Return of Performance Revenues

CISAC – the International Confederation of Societies of Authors and Composers – is the leading network of authors' societies with 229 member societies in 119 countries. In their recently published 2022 global collections report, which reports data from 2021, CISAC note global collections returned to growth in 2021, increasing by +5.8% to reach €9.58 billion and reversing the previous year's decline due to the pandemic. Digital collections grew +27.9% to €3.1 billion driven by organic growth in streaming, rising music and video on demand subscriptions (SVOD), and deals with digital platforms. Royalties from live and public performance in 2021 were still 45.8% below 2019 pre-pandemic levels due to lockdown restrictions on concerts, exhibitions and live entertainment, highlighting the long lag in the industry.

This strongly suggests there is considerable opportunity for upside in collections for 2022 and beyond as normal levels of activity resume and the collections agencies distribute revenue to rights holders including Hipgnosis.

This thesis is supported by statements from Live Nation Entertainment, the world's leading live entertainment company, which reported in November 2022 that it had delivered the biggest summer concert season in history, with 44 million attendees across 11,000 concerts in 50 countries. As a result, Live Nation Entertainment has said it now expects to transfer over \$550 million of additional payments to artists this year and has stated that ticket sales for shows in 2023 are "pacing even stronger than they were heading into 2022, up double-digits year-over-year".

Active Song Management

Hipgnosis' Portfolio of iconic and culturally important Songs are naturally in high and constant demand from producers to feature in their movies, TV shows and advertisements, video games and online marketing endeavours. Alongside this, our global in-house '24/7' Synch licensing operation actively manages our Songs with responsibility. The Hipgnosis Song Management team focuses on creating opportunities which add value to both the song and the songwriter's legacy, while also responding to incoming enquiries within a matter of minutes. The success of our approach is demonstrated by the 32% increase in synch PFAR revenue in calendar H1 2022 compared to H1 2021. Overleaf we have identified a selection of our recent Synchs.

We promised investors that we would deliver a new, responsible approach to Song Management, one where we have the resource and bandwidth to manage great Songs to their full potential – and in doing so add significant value. We share some examples here:

Firstly, we begin to better utilise alternative interpretations of our repertoire. All the Small Things was a Song created by Blink-182, co-written by Tom Delonge, whose Catalogue we bought in December 2019. The Song reached Number six in the Billboard Hot 100 and Number two in the UK on release in 2000. Our Synch team saw the potential of a slowed down version of this track by Scott Bradlee Post Modern Jukebox and presented it to John Lewis, who chose it to be their seasonal Christmas advert. By really putting the spotlight on alternative representations of our Songs we deliver new ways to gain exposure for our Songs.

Secondly, we have created new master recordings of selected Songs within the Catalogue. These new interpretations are designed to be attractive for synch opportunities. In addition to our existing ownership in the Song, Hipgnosis owns 100% of these master recordings.

This approach has already proved successful, with a new version of Bon Jovi's Wanted Dead Or Alive. We utilised the musical skill sets of a Channel Island based artist Empara Mi and the team created a whole new rendition of this Song, which we released in May 2022. In this case, Hipgnosis owns 50% of the Publishing copyright and 100% of the master recording. We released the Song on

Synch

Here are some of our recent Synch successes from across the Catalogue:

TV and Streaming

Nile Rodgers & Snoop Dogg have collaborated on a brand-new version of We Are Family (co-written with Bernard Edwards), for the trailer of a forthcoming YouTube Original series, 'Behind The Beat'.
The 2022 re-make of 'The Man Who Fell To Earth' starring Chiewetel Ejiafor features two separate recordings of O.D.B.'s Shimmy Shimmy Ya, which was written by RZA.
Paramount & Showtime TV series 'American Gigolo' also features O.D.B.'s Shimmy Shimmy Ya.
Amazon Prime's latest season of 'The Handmaid's Tale' features Fleetwood Mac's The Chain, (Lindsey Buckingham & Christine McVie) and Al Green's Let's Stay Together (co-written by Al Jackson Jr.).
HBO's 2022 TV Series 'The Time Traveller's Wife' features TV On The Radio's Love Dog, which was written by Hipgnosis' Dave Sitek.
'The Playlist' a Netflix Original series about the creation of Spotify, features Bruno Mars's Locked Out Of Heaven (Ari Levine) and Swedish House Mafia's Don't You Worry Child (Martin John Lindstrom).
HBO's 2022 series 'Winning Time' about the LA Lakers, features multiple songs from the Hipgnosis Catalogue: Fleetwood Mac's Tusk (Lindsey Buckingham), Journey's Any Way You Want It, Sugarhill Gang's Rapper's Delight (co-written by Nile Rodgers and Bernard Edwards), Traffic's Dear Mr Fantasy (Steve Winwood) and Fleetwood Mac's Prove Your Love (Christine McVie).
The 2022 season of Netflix's global top ten show 'Umbrella Academy' features Nelly's Ride With Me, Steve Winwood's Higher Love and Katy Perry's Teenage Dream.
The promo for season two of AppleTV+'s 'Physical' is soundtracked by Eurythmics' Sisters Are Doing It For Themselves (co-written by Dave Stewart).
2022's NFL Sunday Night Football promo featured an on camera rendition of Neil Young's Old Man, performed by Beck. The recording has been nominated for Best Rock Performance at the 2023 Grammy Awards.
Season 3 of Amazon Studios' 'The Boys' featured an on-screen performance of Blondie's song Rapture. The scene went viral immediately after airing, racking up millions of views on TikTok and Twitter, courtesy of Soldier Boy's onscreen rendition.
The final season of Peaky Blinders (BBC/Netflix) featured Sinead O'Connor's In This Heart.
Neil Young's Only Love Can Break Your Heart features in the latest season of NBC's 'This Is Us'. Lorde's Royals (cowritten by Joel Little) was also used in another episode.
Love Island's latest series features Disco Fries' version of We Are Family, which was written by Nile Rodgers & Bernard Edwards.
The promo for season three of AppleTV+'s 'For All Mankind' is soundtracked by Black Hole Sun, performed by Soundgarden and written by Chris Cornell.
The second season of HBO's critically acclaimed series 'Industry', features GZA's Liquid Swords – which was co-written by RZA.

Film

Marvel Studios' 'Wakanda Forever' already one of the biggest movies of 2022, features a significant use of Red Hot Chili Peppers's Can't Stop.
The trailer for Sony Pictures' 'Lyle, Lyle, Crocodile' features Shawn Mendes's There's Nothing Holdin' Me Back, co-written by Teddy Geiger & Scott Harris.
The Netflix Original film 'The Swimmers' uses David Guetta feat. Sia's Titanium, co-written by Hipgnosis' Giorgio Tuinfort, in both the film and the trailer.
Paramount Pictures' 2022 blockbuster 'Sonic The Hedgehog 2' features both Bruno Mars's Uptown Funk (Mark Ronson) and Heart's Barracuda (Ann Wilson).
Britney Spears's Toxic (co-written by Christian Karlsson) enjoys a prominent use in Baz Luhrmann's latest smash hit movie, 'Elvis'.

The hotly anticipated 2022 Whitney Houston biopic 'I Wanna Dance With Somebody' is scheduled for release in December. Hipgnosis co-owns a number of Whitney Houston songs including Queen of the Night (L.A. Reid), I'm Your Baby Tonight (L.A. Reid) and It's Not Right But It's Okay (Rodney Jerkins).
Netflix's brand new 2022 comedy movie 'Me Time' – starring Kevin Hart, Mark Wahlberg & Regina Hall, features Chic's Good Times, which was written by Nile Rodgers & Bernard Edwards.
Amazon Prime's 'After Ever Happy' the brand new instalment in the After series of films, features Sister Sledge's We Are Family which was written by Nile Rodgers & Bernard Edwards.
The trailer for Disney+'s 'Light & Magic' features Don't Stop Believin' by Journey.
Warner Bros' major 2022 feature film 'Black Adam' includes a use of Power by Kanye West, which was co-written by Jeff Bhasker.
StudioCanal have announced a biopic feature film about the life of Amy Winehouse, called 'Back To Black'. The song Back To Black was co-written by Hipgnosis' Mark Ronson.
The film trailer for Focus Features' 'Armageddon Time' features Good Times by Chic, which was co-written by Nile Rodgers & Bernard Edwards.
Disney's 'Hocus Pocus 2' features a use of The B-52's Planet Claire.

Advertising

The much-coveted John Lewis Christmas commercial is this year soundtracked by a new recording of Blink-182's All The Small Things, which was written by Hipgnosis' Tom DeLonge.
Paco Rabane have renewed their global 1Million campaign, featuring Sugarhill Gang's Rapper's Delight, co-written by Nile Rodgers & Bernard Edwards.
Holiday Road by Lindsey Buckingham is soundtracking the current advertising campaign for The United States Postal Service.
William Hill have selected Rudimental's Feel The Love (cowritten by Hipgnosis' John Newman) as the soundtrack to their current advertising campaign.
Chanel have renewed their global advertising campaign using Marion Cotillard's version of Team by Lorde, which was co-written by Hipgnosis' Joel Little.
Fleetwood Mac's Everywhere (written by Christine McVie) is the soundtrack to Chevrolet's brand new 2022 US commercial, advertising their range of electric vehicles.
Vodafone's UK commercial is currently running with Cedric Gervais' remix of Everybody Dance (written by Nile Rodgers & Bernard Edwards).
Hipgnosis songwriter Birdy re-recorded Ivor Raymonde's I Only Want To Be With You (which is also part of the Hipgnosis Catalogue), for a major Deutsche Telekom advertising campaign.
The 2022 FIFA World Cup commercial for Frito-Lay (starring David Beckham and Peyton Manning), features Cedric Gervais' version of Chic's Everybody Dance, which was written by Nile Rodgers & Bernard Edwards.
Renault have chosen Bon Jovi's It's My Life (co-written by Richie Sambora) to soundtrack their major 2022 international advertising campaign.
Hero, co-written by two Hipgnosis songwriters, Enrique Iglesias and Paul Barry, has been selected by Tesco to soundtrack their 2022 advertising campaign.
Arby's have renewed their long-running licence for the use of Burial by Yogi (co-written by Pusha-T), in their North American advertising campaign.

Video Games

The trailer for 'Overwatch 2' features Yeah Yeah Yeahs Spitting Off the Edge of the World, which was co-written by Dave Sitek.
Songs from across the Hipgnosis Catalogue will be featured in a huge array of high-profile video games, including 'Just Dance', 'WWE2k', 'Dead Space', 'Fortnite, Grand Theft Auto', 'The Sims', 'Rock Band', 'FIFA', 'Call of Duty', 'Forza Horizon', 'Madden', 'Let's Sing' and many, many more...

Streaming services to establish a base for the record and it has already achieved over a million streams. However, more importantly, and financially far more successful, we have also secured the placement of the Song with a major gaming studio, earning a six-figure synch fee.

Thirdly, we focus on contemporary artists proving new interpolations of Songs. For example, in 2022 Nicki Minaj has delivered another enormous global hit based on Rick James's hit Super Freak. We have always known the hidden value of Rick's catalogue. This year Nicki's Song Super Freaky Girl went to Number 1 on the Billboard Hot 100 in the US as well as being a top five hit in the UK. The original Song was released in 1981, superbly capturing Rick's raw funk beauty and this has been a seminal track ever since. Almost 10 years later MC Hammer utilized this track for the enormous global Grammy award winning hit U Can't Touch This. Nicki Minaj's new recording helps to again revive the original Catalogue. Rick James saw a 59% increase in people listening to his music on Spotify alone last month and an 26% increase in US consumption of the original Super Freak version. Hipgnosis has 55% of the new work. Hipgnosis also has over 20 major tracks and another 14 features with Nicki Minaj with other writers including Redone, Starrah and Lunchmoney Lewis.

We also continue to work to promote our Songs for use on social media and lifestyle platforms. For example, Hipgnosis' main TikTok channel now has 2.1 million followers, one of the highest performing music company channels on the platform. This allows us at no cost to reach this very active audience with our music, our Songs, and with contemporary uses of the track to help magnify their attractiveness and levels of consumption. We have several additional splinter channels which focus on particular music moods and genres (Rock, Gaming and Country) and these are all at over 100,000 followers. As discussed in detail in the Annual Report, TikTok, as a platform, has demonstrated the capacity to expose Songs, extend their life for new generations to come and to make them hits all over again by introducing them to a new audience.

Grammy

Hipgnosis writers were included in 16 Grammy nominations for 2022, as follows:

Album Of The Year: Beyonce's RENAISSANCE (Travis Garland) and Lizzo's, Special (The Monsters & Strangerz; Phoelix; Thomas Brenneck)
Best Alternative Performance and Best Alternative Album: Yeah Yeah Yeahs (Dave Sitek)
Best Compilation Soundtrack for Visual Media: The soundtrack to 'Stranger Things': Separate Ways (Journey/ Cain/Schon)
Best Dance/Electronic Album: Beyonce's RENAISSANCE (Travis Garland) and Diplo's Diplo, (Phil Scully/David Karbal)
Best Folk Album: Revealer by Madison Cunningham (Dan Wilson)
Best Historical Album: Against the Odds: 1974-1982 by Blondie (Debbie Harry and Chris Stein)
Best Immersive Audio Album: Aguilera by Christina Aguilera (Tobias Wincorn)
Best Latin Pop Album: De Adentro Pa Afuer by Camilo (production by Juan Ariza) and Aguilera by Christina Aguilera (Tobias Wincorn)
Best Music Film: Neil Young & Crazy Horse, Barn (Neil Young)
Best Pop Vocal Album: Lizzo's Special (The Monsters & Strangerz; Phoelix; Thomas Brenneck)
Best Progressive R&B Album: Terrace Martin's, DRONES (Kamasi Washington)
Best Rap Album: Come Home The Kids Miss You by Jack Harlow (Tobias Wincorn)
Best Rock Performance: Beck's Old Man (Neil Young).

Song Administration

Hipgnosis has continued to implement its strategy to reduce administration costs and ensure that payments are received as quickly as possible by reverting (i.e. moving) Catalogues and renegotiating administration rates at the earliest possible opportunity (except where there are compelling reasons to maintain the current administration relationships).

During the period we announced that Hipgnosis had entered into a direct licensing and administration partnership with Sacem, a world-leading Collective Management Organisation (CMO), to collect digital rights for the Writers' Share and Hipgnosis' own Publisher Share, primarily in the UK and the European Union. Initially 36 full-or part Catalogues were transferred to Sacem on 1 July 2022, accounting for c.6.5% of our publisher's share of revenue.

Additionally, Hipgnosis entered into a sub-publishing partnership with peermusic to collect publishing rights and other royalties in the rest of the world, excluding the US. These arrangements are expected to result in relevant revenues being uplifted by over 7% starting in 2023, as underlying rights revert into these partnerships and we will start to receive those statements. Further administration arrangements are due for reversion to Sacem and peermusic in the second half of this financial year.

Hipgnosis will continue to use Hipgnosis Songs Group (HSG) for royalty collection in the United States and will revert Catalogues when possible, for the collection of US income. During the period under review, a further eight administration arrangements have been reverted to HSG.

In addition to administering Songs for the Company, HSG is a third-party administrator. In this capacity, HSG administers Catalogues such as Glass Animals (Beggars), who claimed the longest run in Billboard 100 history with Heat Waves. The Song has gone 5x Platinum and amassed 9.5 billion global streams. It was the second most streamed Song in 2022 in the US, generating 493 million on-demand US audio streams alone, and is ranked among the Top 20 "most streamed Songs of all-time on Spotify". Additionally, the Song took home the honour of "Song of the Year" at the 2022 SESAC Music Awards.

Alongside our HSG, Sacem and peermusic structures, we continue to have significant administration business at Kobalt as well as at Sony Music Publishing, Warner Chappell and Universal Publishing.

Song Copyright Management

The recent focus of Song Copyright team has been on the CRB settlements, described above.

In July 2022, after a lengthy process, the 2018-22 rate increases on the songwriter's and publisher's mechanical portion of US Streaming income, known as CRB III, were finally agreed. This culminated in the "all in" headline (mechanical and performance) statutory minimum rates for Streaming paid in the US to increase by a total of 44%, from 10.5% to 15.1% over the course of the CRB III period.

The headline rates agreed by the CRB were as follows:

2018	2019	2020	2021	2022
11.4%	12.3%	13.3%	14.2%	15.1%

In August 2019, certain DSPs (including Spotify, Google and Amazon) filed their appeal of this ruling in the US Court of Appeal for the DC Circuit, arguing that the US Copyright Royalty Board made numerous legal errors while adopting a rate structure that was not justified by explanation or evidence and that, in any event, the rates should not have been applied retrospectively to 1 January 2018. This appeal was disallowed on 1 July 2022, although the Total Content Cost (TCC) and bundle definitions were returned to the CRBII levels. During much of the time the remand was pending and, from October 2020, the headline rate paid out by the DSPs to the Publishers dropped back to the lower rate of 10.5%.

As a result of the above appeal, a portion of DSP revenue for the CRB III period has not been paid to songwriters and publishers at the newly set rates. As detailed in the financial review, we have accrued income for the retroactive fiscal periods for a total of \$16.1 million. We are also accruing a \$6.2 million annualized accrual for 2022, to account for the higher headline rate of 15.1%, recognising half of this amount in these financial results.

Both the CRB III retroactive and uplift accruals are based off historical earnings paid through to the Company by Publishers. In order to calculate the accrual, the US mechanical portion of those earnings were analysed and uplifted accordingly based on the CRB III rates over the five year period from 2018 to 2022.

Whilst some Publishers had different policies on whether they paid out any higher rates received from DSPs up to when the CRB III ruling was appealed, the Company has taken a blanket approach and has not considered any Publisher specific policies given the lack of clarity from the various payors.

For the period 2018-20 responsibility to adjust payments as necessary to these new rates rests with the DSPs or their historic agents. For the period post January 2021, the responsibility to collect and distribute these uplift adjustments falls to the Mechanical Licensing Collective (MLC).

The transition to the MLC results from the designation by the U.S. Copyright Office for the MLC to begin administering blanket mechanical licenses to digital service providers in the United States and paying out the royalties collected. As a newly formed entity, the MLC has launched several initiatives to ensure that their databases correctly reflect who should receive royalties for each Song. Since the summer, Copyright teams across the industry have focused on working collaboratively to improve the accuracy of this registration data. Ensuring the quality of this data will not only help to ensure that we maximize the collection of CRB III adjustment payments but will also maximize collection of future streaming royalties.

To this end, our Copyright Team has continued its efforts to identify incorrect or missing registrations in the MLC's database and to ensure revenues are correctly linked between original and samples, remixes and cover versions. The team has also trialled a number of external services to support this process to further improve data quality and have now chosen a preferred partner.

The DSPs have been given time to deliver revised data to the MLC for usages post 2021. Assuming there are no delays, the earliest possible payment to publishers of historic adjustments is expected to be end 2023, with settlements due to Hipgnosis following after that.

Separately, the return of live music concerts allowed Hipgnosis to trial the PRS Major Concert Service and PACE Rights Management to collect rights for the Red Hot Chili Peppers and Blondie concert tours respectively. Both trials were successful, with reduced fees and payments being processed more quickly than the traditional solutions. As a result, we are in the process of identifying additional tours to be signed up to these, or similar, services.

Song Creation

Song Creation delivers dynamic Catalogue growth via a stable of active, front-line writers and artists. Building future assets at a relatively low cost, providing contemporary context and synergistic opportunities throughout the industry is the strength and ongoing mission of HSG's Song Creation team.

Highlights from the period include the phenomenal success of Stefan and Jordan Johnson – The Monsters & Strangerz – and the extension of HSG's deals with Sharon Van Etten, Amber Mark and signing Latin Grammy nominated songwriter Albert Hype and artist Bruses. The Song Creation team also has strategically focused on recent signings and further development of its roster in the marketplace including Normani and joint ventures with NO I.D. and other major songwriters and producers.

Highlights from Song Creation

Jordan and Stefan Johnson (of The Monsters & Strangerz): On the heels of Hipgnosis Songs Fund (in 2021) acquiring Jordan and Stefan's Catalogue and concurrently agreeing a new moving forward deal via HSG Jordan and Stefan hit the ground running in 2022. They kicked off the year celebrating their 4th Top 40 Number 1 with Justin Bieber's Ghost and earned 3 Grammy nominations for their work on Bieber's album Justice, including one for the single Anyone.

Further success has been achieved with Selena Gomez's My Mind & Me, Lizzo's Birthday Girl, whose album reached Number 2 on the Billboard 200 and Burna Boy's Wild Dreams which drove his album to Number 2 in the UK and Number 14 in the US.

Albert Hype – has been in the Billboard Top 10 Latin producers' list every month for the past 24 months. He has recently collaborated on various Songs on Bad Bunny's Un Verano Sin Ti, including Tarot, La Corriente and Party. The album was voted the most streamed album of 2022 by both Apple Music and Spotify. He has also collaborated on Shakira's Te Felicito, featuring Rau Alejandro and Monotonia, featuring Ozuna.

Steph Jones: A prolific year of output across multiple genres for Steph which culminated in her making the short list for the inaugural Grammy category 'Songwriter Of The Year – Non Classical'.

Jake Sinclair: co-wrote all the Songs on Panic! At The Disco's Viva Las Vengeance album. The first single, eponymously titled, spent three weeks at Number 1 beginning 30 June 2022 on the US Alternative radio daily chart.

Amber Mark: Has enjoyed a stellar run of placements across the TV landscape. These include 'Euphoria', 'Insecure', 'Empire', 'And Just Like That', 'Grays Anatomy', 'Ballers', 'Bel Air', across a selection of her Songs.

Bruses (Amalia Ramirez) a Latin Grammy-nominated artist/songwriter from Tijuana currently based in Mexico City. Her Song Dueles Tan Bien went viral on TikTok earning her more than 3 million followers. Her debut album Monstruos was recently nominated for Best Album Pop/ Rock at the Latin Grammys 2022.

Sharon Van Etten: Sharon's majestic 5th full-length included new radio high-water mark, Mistake, while further boosting her into a major concert draw and fueling a truly remarkable rise in the film & television communities, both as composer and creator of licensed work spanning her entire Hipgnosis-controlled catalogue.

Songwriter Advocacy

Songwriters deliver the most important component of a Song but continue to be paid inequitably. Through our platform and influence, Hipgnosis continues to campaign for that to change. We aim to take the songwriter from the bottom to the top of the economic equation with our advocacy on this issue. When a Catalogue is acquired, our Shareholders sit directly in the shoes of the songwriter

so there is complete alignment between the songwriting community and our Shareholders. What is in the best interest of the songwriter is also in the best interest of the Company.

In the US our leadership, tone and advocacy on behalf of the songwriting community has resulted in a change of tone and messaging from both the recorded music labels and DSPs. This is best demonstrated in the proposed CRB IV settlement which will provide 5 years of stability between 2023 and 2027 at the highest rates ever paid to Songwriters. This stability will provide the platform to advocate further and take Songwriters to a far more fair and equitable share of the income going forward.

In the UK we were disappointed that, whilst the Competition and Markets Authority (CMA) recognised the market failures, they have, as yet, declined to take the steps which would have addressed these problems, despite the original report from the DCMS Select Committee which ultimately prompted their market study. Nevertheless, we continue to work with the DCMS, regulators and legislators to seek solutions and a fair outcome for songwriters.

The Hipgnosis Song Management Team

Our Team is comprised of HSM, its Advisory Board and HSG across multiple locations, including London, Los Angeles, New York and Nashville. In total we are now 110 strong.

Our Senior Management Team

Merck Mercuriadis Founder & Chief Executive Officer, HSM

Ben Katovsky President & Chief Operating Officer, HSM

Chris Helm Chief Financial Officer, on behalf of SONG

Ted Cockle Chief Music Officer, HSM

Markku Lonnqvist Chief Investment Officer, HSM

Rosa Mercuriadis Chief Creative Officer, HSM

Kenny MacPherson Chief Executive Officer, HSG

Rufina Pavry Director, Investor Relations, on behalf of SONG

Giles Croot Corporate Affairs Director, HSM

Ashley Burns Chief Strategy Officer, HSG

Kathleen Harrop Chief People Officer, HSM

Financial Review

NAV

The Company reports two net asset values: an IFRS NAV which is prepared in accordance with IFRS under which the Company's investments in Catalogues are held at cost less amortisation and impairment, and an Operative NAV which adjusts the IFRS NAV to reflect the fair value of the Company's Catalogues, as determined by the Portfolio Independent Valuer. The Board and the Investment Adviser consider that the most relevant NAV for Shareholders is the Operative NAV.

The Operative NAV per share reduced by 1.0% to \$1.8312 during the six-month period (31 March 2022: \$1.8491). This, together with the dividends, of 19p, takes Total \$ NAV Return to Shareholders to 60.0% since the IPO on 11 July 2018.

Based on the Sterling to Dollar exchange rate at 30 September 2022 of 1.116, the Operative NAV presented in Sterling is 164.06p per share (31 March 2022: 140.79p based on Sterling to Dollar exchange rate of 1.3134). As at 6 December 2022, the Operative NAV presented in Sterling would be 149.82p per Share (GBP: USD 1.2223).

The strength of the Dollar, and in particular the Sterling to Dollar exchange rate, has been beneficial to the Sterling NAV and the dividend.

The fall in the Operative NAV in Dollar terms over the six-month period was driven by a small reduction in the Fair Value of the Portfolio to \$2.67 billion (31 March 2022: \$2.69 billion). This is driven by the strength of the Dollar reducing the value of non-Dollar denominated royalty statements.

The vast majority of the Company's cash receipts are received in Dollars, with c.12% received in other currencies, primarily Sterling and Euros.

The Portfolio Independent Valuer calculated the Catalogue Fair Value as of 30 September 2022 maintaining a discount rate of 8.5% (31 March 2022: 8.5%).

The Portfolio Independent Valuer has consistently taken a long-term view on expected interest rates since Hipgnosis's IPO in July 2018. They therefore reduced the discount rate by just 50bp since the IPO despite the substantial fall in US treasury yields we have experienced until this year.

Operative NAV per Ordinary Share Bridge (\$)

from 1 April 2022 to 30 September 2022

Additionally, the proportion of utility-like revenue from Streaming has increased since Hipgnosis was launched and justifies a substantially lower risk premium applied to music as an asset. These factors provide a cushion within the discount rate against the global interest rates rises over the last 12-months.

The Portfolio Independent Valuer reviews the discount rate regularly and will adjust the discount rate if it considers it appropriate. A 0.5% increase in the discount rate to 9.0% would result in a decline to the Fair Value of the Catalogue of 7.9% (\$212.2 million); conversely a reduction to 8.0% would result in an increase of 9.4% (\$251.5 million).

Revenue

Gross revenue increased by 7.5% year-on-year to \$91.7 million (six months ended 30 September 2021: \$85.3 million).

The Company has reflected accruals of \$19.2 million, as a result of the confirmation of the CRB III rate increases for the Songwriters' mechanical portion of US Streaming income. Of this, \$3.1 million is the impact of the higher 15.1% rate on the revenue earned by the Company during this six-month period and \$16.1 million has been recognised as an estimate of the retroactive payment due as a result of revenues historically not having been recognised at the full CRB III rates.

Furthermore, this gross revenue increase occurred despite no Right To Income (RTI), due to no acquisitions in the period (30 September 2021: \$14.1 million).

Net revenue of \$78.4 million increased by 5.8% year-on-year (six months ended 30 September 2021: \$74.1 million), after

royalty cost deductions of \$13.3 million (six months ended 30 September 2021: \$11.2 million) which relate to contractual royalties due to writers in HSG and Kobalt Fund One.

After stripping out exceptional adjustments including RTI in the prior period, the CRB III retro-active payment and accrual adjustments, the Company has shown strong underlying net revenue growth of 5.8% year-on-year, to \$65.1 million.

Pro-Forma Annual Revenue (PFAR)

To provide its Shareholders with an understanding of the like-for-like performance of the Company's revenues, by removing the impact of new Catalogue acquisitions and the Usage Accrual, the Company presents the Pro-Forma Annual Revenue (PFAR) performance measure. This shows the royalty revenue earned by Catalogues in a calendar year largely based on royalty statements received, irrespective of whether the Songs were owned by the Company over the period analysed. 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.

The table below shows PFAR for Catalogues owned as at 30 September 2022 over time.

The PFAR for the 12 months to December 2021, has been restated from \$114.9 million to \$116.6 million to reflect royalty statements relating to the period that were received after the publication of the Annual Report.

Pro Forma Annual Revenue for Catalogues owned

		12 months to
	Jun 2020 \$m	Dec 2020 \$m	Jun 2021 \$m	Dec 2021* \$m	Jun 2022 \$m
Total PFAR for Catalogues owned as at 30 Sep 2022	131.7	121.3	115.9	116.6	120.8
<10 years	65.9	57.2	51.0	49.9	50.9
>10 years	65.8	64.1	64.9	66.7	69.9

* Restated to reflect actual receipts

Note: Greater or Less than 10 years of a Catalogue is calculated as the average release year of a Catalogue as at January 2022 weighted on earnings at time of acquisition. PFAR does not include NPS revenues from HSG.

PFAR for the 12 months to June 2022 increased by 4.2% yearon-year to \$120.8 million, despite headwinds on income from non-US Dollar denominated sources described below. Indeed, not only has there been continued growth in our >10 year catalogues by 7.7% year-on-year to \$69.9 million, the data also shows that the PFAR of our <10 year catalogues is broadly flat year-on-year at \$50.9 million supporting the statement made in our Annual Report, that overall we are approaching the end of the decay curve in the younger catalogues.

Whilst the majority of our cash receipts are received in Dollars (88%), it is worth noting that the original source of our revenues is in multiple different currencies. Approximately 54% of the Company's income is generated in the US, 14% in the UK and 21% in the EU and there are exchange rate differences at all points along the value chain, which are not directly seen in our receipts.

Notably these results do not include any revenue due to the Company as a result of CRB III, which would have been equal to approximately \$6.2 million in the most recent PFAR, providing a strong tailwind for further PFAR growth.

We have set out below the PFAR by income type for the first half of calendar 2022 compared against the comparative period in 2021.

	54.29	58.54	+7.8
Masters Income	3.75	3.45	-8.1
Producer Royalties	3.76	3.83	+1.9
Other Publishing Income	0.91	1.05	+15.4
Digital Downloads Income	1.83	1.28	-29.9
Mechanical Income	2.55	2.47	-3.2
Performance Income	13.73	13.12	-4.5
Synchronisation Income	7.41	9.78	+32.0
Streaming Income	20.35	23.56	+15.8
Income Type	H1 2021 \$m	H1 2022 \$m	Change %

H1 2022 vs H1 2021 PFAR split by income type

Note: Writer's Share of Performance has been allocated to Streaming and Performance income

Streaming revenues increased by 15.8% year-on-year, comparing favourably with the +10% year-on-year growth in US streaming revenue as reported by the RIAA. This is a testament to the strategy of acquiring Catalogues with high levels of streaming consumption.

Synchronisation has seen the largest increase in growth across all income types, growing 32% year-on-year. This is partly driven by a marked increase in procured direct synchronisation deals. An increasing number of these licenses have been procured via the collaboration between the Synch teams of the Investment Adviser and Hipgnosis Songs Group (HSG) on the Catalogues that have reverted to HSG.

Synch revenues include both fees for the use of Songs on traditional media outlets and digital licences for social media, gaming and fitness platforms. In line with our expectations at the full year, we can now see meaningful revenues from these emerging platforms for the first time.

Performance income declined by 4.5% year-on-year to \$13.1 million. This is largely driven by a decline in US radio airplay in line with the natural ageing of some our younger Catalogues, which resulted in some of those Catalogues no longer qualifying for radio bonus payments. Adverse foreign exchange movements from source revenue would also have had a negative impact.

The Company expected to see partial bounce-back in general performance revenues during the period as a result of the post-COVID-19 recovery, but these were not seen during the period. With continued strong performance income recovery reported by the major publishers, who sit ahead of Hipgnosis in the music payment chain, this provides confidence of a healthy bounce-back in general Performance revenues.

Within Performance income, revenues from Live performance have remained subdued as live concerts were impacted by COVID-19 restrictions with a full resurgence not being seen until Summer 2022. However, a number of our Songwriters have been on tour this summer, including the Red Hot Chili Peppers, Nile Rodgers & CHIC, 50 Cent, Blondie, Journey and Lindsey Buckingham.

Mechanical revenues of \$2.5 million declined less than expected (-3.2% year-on-year) as a result of an improvement in physical revenues driven by the continued resurgence of vinyl.

While the majority of revenue is derived from our Publishing rights, the Company receives revenue from Sound Recording Rights, which includes both Masters and Producers. These combined revenues declined by 3.1% year-on-year, from \$7.5 million to \$7.3 million. This is largely a result of the timing of settlement statements.

Costs

Adjusted operating costs, excluding interest costs, decreased to \$14.5 million (six months ended 30 September 2021: \$18.6 million). This is driven by a reduction in Advisory fees as a function of the Company's lower share price during the six-month period and reduced administration, legal and professional fees as a result of no acquisition activity during the six-month period.

Annualised Ongoing Charges as a percentage of the average Operative NAV decreased to 1.23% for the six months ended 30 September 2022 (six months ended 30 September 2021: 1.77%), reflecting the Board's commitment to reduce operating costs and maximise returns to Shareholders.

As a result of strong performance on certain Catalogues, the Company has recognised an additional contingent bonus provision of \$3.7 million (prior period nil) relating to bonuses to Songwriters, based on certain defined performance hurdles defined in the catalogue acquisition agreement.

Included within Operating expenses during the six-month period is a one-off provision of \$0.9 million relating to a restructuring of HSG's Song Creation division.

EBITDA

EBITDA for the six months ended 30 September 2022 increased by 16.9% to \$63.8 million (six months ended 30 September 2021: \$54.6 million), reflecting the growth in net revenue and reduced operating costs.

Leverage

Loan interest has increased to \$14.5 million (six months ended 30 September 2021: \$10.0 million) due to the rise in interest rates. In order to address the interest rate risk and to control costs, on 30 September 2022 the Company entered into a new Revolving Credit Facility (RCF) with a commitment of \$700 million which runs for five years until 30 September 2027. This RCF materially reduces the margin from 3.25% to an initial margin of 2.00%.

In addition, on 5 October 2022, the Company completed interest rate swap agreements to hedge a total of \$540 million at a blended rate of 5.75%, including debt margin, for a weighted average life of 4.26 years, starting from 3 January 2023.

As at 30 September 2022, gross debt was \$607.0 million (31 March 2022: \$600.0 million) and net debt was \$570.6 million (31 March 2022: \$569.9 million).

Net debt as a percentage of Operative NAV has remained stable at 25.7% as at 30 September 2022 (31 March 2022: 25.4%).

Foreign Exchange Hedge

On 12 October 2022, the Company entered into a series of US Dollar to Sterling foreign exchange forward contracts to limit its exposure to foreign exchange rate risk relating to future Sterling dividend payments until April 2024 as part of a rolling hedge strategy.

Dividends

In line with the Company's target of 5.25p in interim dividends per Ordinary Share in relation to the current financial year, two dividends have been declared in the period totalling 2.625p per Share.

The dividends declared in the financial year to date amount to \$37.1 million, which was covered 1.2x by Distributable Revenues recognised during the period. In addition, the Company had 1.6x the leveraged free cash flow, necessary to meet those dividend payments paid in the period.

EPS

EPS for the six months ended 30 September 2022 is -1.66¢ (six months ended 30 September 2021: -1.69¢); this marginal improvement reflects the growth in net revenue and reduced operating costs, offsetting the increased interest costs.

Adjusted EPS, as defined within the Alternative Performance Measures, primarily removes the impact of Catalogues amortisation and other non-operating costs. The Group amortises Catalogues over a useful life, using a straight-line method of 20 years, which is in line with industry standard. Adjusted EPS for the six months ended 30 September 2022 is 3.76¢ (six months ended 30 September 2021: 3.85¢); the decrease in adjusted EPS is driven primarily by the increased interest expense for the period.

Accruals and Receivables

Royalty receivables at 30 September 2022 were \$5.0 million, representing royalty statements received by September 2022 with payment received subsequent to period end.

Accrued income as at 30 September 2022 was \$125.1 million (on a gross basis), a breakdown of which is set out below:

\$51.9 million for earnings where, due to the time lag in royalty reporting, statements are not expected to be received until calendar Q4 2022 onwards.
\$8.3 million income accrual relating to time-lagged international reporting on PRO earnings. International PRO reporting has a significant time lag due to the additional collection time taken for PROs to distribute income from territories. The lag is due to the nature of processing royalties locally, then distributing them to the domestic PRO, which will in turn process and distribute these royalties to the Group. Six months of international PRO earnings are accrued, although PRO processing delays can typically result in an earnings lag of up to 24 months;
\$16.1 million relating to retro-active payment of the CRB III ruling;
\$3.1 million for the CRB III ruling rate uplift due for the six-month period ending 30 September 2022;
\$37.5 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.;

• \$8.2 million HSG gross revenue accrual, which includes the accrued PRO lag.

Right to Income (RTI)

On acquisition of a Catalogue, the accounting policy of the Company is to allocate the full purchase consideration to the cost of the Catalogues asset. Income is recognised on acquisition via two separate mechanisms as follows:

1. Income derived from cash receipts from the Vendor, representing royalties collected by the Vendor starting from the date determined by the purchase agreement, which precedes the date of acquisition; and
1. Accrued receivables are recognised for any revenues generated by ownership of the IP to the extent that these are not yet collected.

If the income due under these mechanisms is for a period that precedes the start of the financial year that the Catalogue is acquired within, that income is booked within the financial year in which the Catalogue is acquired.

RTI shows both revenue recognised in 'Pre-Financial Year RTI' and 'Within Financial Year RTI.' Within Financial Year RTI is considered as recurring as it relates to a revenue period that will be collected and received by the Company in the following financial year.

There is no combined RTI recognised in the period (30 September 2021: \$17.97 million, of which the Pre-Financial Year RTI was \$14.09 million and the Within Financial Year RTI was \$3.88 million).

		Financial year revenue (\$m)
					Recurring revenue
Financial year (FY)	Description	No. of Catalogues	Prior year (over)/under accrual	Pre-FY (RTI)	Within FY, pre-acq (RTI)	Within FY, post-acq	Total revenue
FY19	New acquisitions in year	13	–	2.52	–	6.88	9.39
			–	27%	–	73%	100%
FY19	Pre-existing Catalogues	0	– –	– –	– –	– –	– –
FY19	Total	13	–	2.52	–	6.88	9.39
			–	27%	–	73%	100%
FY20	New acquisitions in year	41	–	13.40	27.57	23.56	64.53
			–	16%	34%	29%	79%
FY20	Pre-existing Catalogues	13	1.66 2%	– –	– –	15.88 19%	17.55 21%
FY20	Total	54	1.66	13.4	27.57	39.45	82.08
			2%	16%	34%	48%	100%
FY21	New acquisitions in year	84	– –	28.94 21%	37.66 27%	26.16 19%	92.75 67%
FY21	Pre-existing Catalogues	54	(4.90)	–	–	50.54	45.64
			(4%)	–	–	37%	33%
FY21	Total	138	(4.90) (4%)	28.94 21%	37.66 27%	76.70 55%	138.39 100%
FY22	New acquisitions in year	8	–	14.09	3.88	3.34	21.31
			–	19%	5%	5%	29%
FY22	Pre-existing Catalogues	138	(1.53)	–	–	54.26	52.73
			(2%)	–	–	73%	71%
FY22	Total	146	(1.53) (2%)	14.09 19%	3.88 5%	57.60 78%	74.04 100%
FY23 Half Year	New acquisitions in year	0	– –	– –	– –	– –	– –
FY23 Half Year	Pre-existing Catalogues	146	(2.83)	–	–	81.18	78.35
			(4%)	–	–	104%	100%
FY23	Total	146	(2.83) (2%)	– –	– –	81.18 48%	78.35 47%

Recurring Revenue vs. Pre-Financial Year RTI for each financial year to date

Outlook

These results demonstrate our focus on efforts that maximize the value of our portfolio. Our pro forma revenues show strong growth from streaming and Synch, despite currency headwinds from the exceptional strength of the US Dollar. While the lag in collections before we receive performance payments means that the upside following the world reopening from COVID-19 lockdowns is not yet included in our revenues, our refinancing and hedging of interest and exchange rates provides greater certainty on the Company's costs.

All the leading indicators demonstrate Hipgnosis' investment thesis and establishing Songs as an asset class as being valid and strong with further continued revenue growth in the global music market. Nevertheless, I share the disappointment of shareholders that the true value of our iconic songs is not reflected in today's share price

and I am firmly committed to do whatever is necessary to ensure the Company's value is recognised.

With Apple Music moving beyond the 9.99 price point in major markets and the most recently available public data showing strong on-going growth in streaming subscribers; positive regulatory moves in the US to increase payments to holders of Songwriters rights; increasing revenues from social media, gaming and lifestyle channels all coupled to strong market growth, Hipgnosis' Song Management capabilities and a portfolio packed with high quality, iconic and culturally important Songs.

Merck Mercuriadis

Founder, Hipgnosis Songs Fund Ltd and Founder/CEO, Hipgnosis Song Management Ltd.

7 December 2022

Hipgnosis has 13 of the top 30 from YouTube's Most Viewed Music Videos of All Time

2 Shape of You
- Ed Sheeran Johnny McDaid
4 Uptown Funk (feat. Bruno Mars) • Mark Ronson • Mark Ronson, Jeff Bhasker
7 Sugar
- Maroon 5 Jacob Kasher Hindlin
8 Roar • Katy Perry • Bonnie McKee
11 Sorry • Justin Bieber • Skrillex
15 Girls Like You (feat. Cardi B) • Maroon 5 • Starrah
17 Waka Waka (This Time for Africa) (The Official 2010 FIFA World CupTM Song) • Shakira • Shakira
19 Bailando (feat. Descemer Bueno, Gente De Zona) • Enrique Inglesias • Enrique Inglesias
20 Lean On (feat. MØ & DJ Snake) • Major Laser, Mø, DJ Snake • Martin Bresso
22 Mi Gente
- J Balvin, Willy William The-Dream
27 Baby (feat. Ludacris)
- Justin Bieber The-Dream, Tricky Stewart

29 Chantaje (feat. Maluma)

Shakira Shakira
30 New Rules
- Dua Lipa Caroline Ailin

Hipgnosis has 9 out of 70 of BBC Radio 2's Most Streamed Chart

1968 (Sittin' On) the Dock Of The Bay • Otis Redding • Al Jackson Jr.
1976 Go Your Own Way • Fleetwood Mac • Lindsey Buckingham
1981 Don't Stop Believin' • Journey • Jonathan Cain, Neal Schon
1983 Sweet Dreams (Are Made Of This) • Eurythmics • David A. Stewart
1986 Livin' On A Prayer • Bon Jovi • Richie Sambora
1988 Everywhere • Fleetwood Mac • Lindsey Buckingham, Christine McVie
1991 Smells Like Teen Spirit • Nirvana • Andy Wallace
2002 Lose Yourself • Eminem • Jimmy Iovine
2017 Shape Of You • Ed Sheeran • Johnny McDaid

Song Title • Artist(s) • Hipgnosis contributor(s) Source: YouTube, December 2022

Year of Release Song Title • Artist(s) • Hipgnosis contributor(s) Source: BBC, November 2022

The Advisory Board

The Advisory Board assembled by Merck Mercuriadis assists the Investment Adviser.

Giorgio Tuinfort Poo Bear Ian Montone

Nile Rodgers The-Dream David A. Stewart

Bill Leibowitz Starrah Rodney "Darkchild" Jerkins

Investment Objective and Policy

Investment Objective

The Company's objective is to provide Shareholders with an attractive and growing level of income, together with the potential for capital growth, from investment in Songs and associated musical intellectual property rights, in accordance with its investment policy.

Investment Policy

The Company's Investment Policy is to diversify risk through investment in a Portfolio of Songs and associated musical intellectual property rights (including, but not limited to, master recordings, rights over future Songs that are acquired by the Group through the payment of Advances to such Songwriter and secured against the future Songs, and producer royalties). The Company seeks to acquire 100% of a Songwriter's copyright interest in each Song, which would comprise their writer's share, their publisher's share and their performance rights. In appropriate cases, however, the Company may not acquire all three elements of the Songwriter's interest. The Company acquires interests in Songs which are sole authored or co-authored. The Company may also acquire interests in Songs jointly with another purchaser. Each Song is considered by the Company to be a separate asset.

The Company, directly or indirectly via portfolio administrators, enters into licensing agreements, under which the Company receives payments attributable to the copyright interests in the Songs which it owns. Such payments may take the form of royalties, licence fees and/or advance payments, including:

Mechanical royalties when a copy of a Song is made, whether physical (e.g. CDs, DVDs, vinyl) or digital (e.g. permanent downloads, streaming, webcast);
Performance royalties when a Song is performed live or broadcast on TV or Radio, or when a song is streamed online; and
Synchronisation fees when a Song is used in another form of media or moving picture (e.g. movie, TV show, video game, advertisement).

The Company also receives royalties and fees payable in respect of master recordings. Master recordings are the copyright in the master recording of a musical composition or Song. Master recordings earn synchronisation royalties and generate income from sales of both physical records and digital downloads as well as from DSPs.

The Company focuses on delivering income growth and capital growth by pursuing efficiencies in the collection of payments and active management of the Songs it owns.

The Company may acquire Songs for consideration consisting of cash, Shares or a combination of cash and Shares, and payment of part of the consideration may be on deferred terms. The Company may acquire Songs or Catalogues directly, or indirectly by acquiring the entity through which such Songs or Catalogues are held.

Whilst the Company does not intend to sell the Songs it owns, it may make disposals of Songs where it considers such a disposal to be in the best interests of Shareholders.

Investment restrictions

The Company invests its assets and manages the Songs it acquires with the objective of constructing a high quality and diversified Portfolio of Songs. The Company acquires Catalogues from a number of different Songwriters, which includes Songs diversified across music genres and sung by numerous recording artists. The Company is subject to the following investment restrictions:

a) the Company holds interests in a minimum of 300 Songs;

b) the Advances made to Songwriters in connection with the acquisition of rights over future Songs will not represent more than 5% of the Company's Gross Assets, calculated at the date of the relevant Advance;
c) the value of any single Song does not, and will not, represent more than 10% of the Company's Gross Assets, calculated at the date of the acquisition of such Song (and re-calculated in the aggregate upon the acquisition of any additional interest in a Song). In the event this limit is breached at any point 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 Song, in whole or in part; and
d) the Company does not, and will not, invest in closedended investment companies or other investment funds.

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.

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.

Adverse change in policies by Collection Societies and other entities through whom the Company receives royalty payments

Should Collection Societies or other entities, including the major music publishers and record companies, alter the way that they collect royalties, or set lower royalty rates, or decide to disproportionately favour major music publishers, the Company may receive significantly reduced revenues compared to the level it had forecast at the time of acquiring the relevant Catalogues or Songs.

Cyber security

The Company (like all others) is exposed to external cyber-security threats which have the possible impact of sensitive information leakage and cyber fraud and, in a worst case scenario, interruption of royalty payments.

Due diligence

The due diligence process may not reveal all facts that may be relevant in connection with investment opportunities and any mismanagement, fraud, or accounting irregularities on the part of any seller of Catalogues, or their advisers, may materially affect the integrity of the Investment Adviser's due diligence on such investment opportunities.

Exchange rate

The Company has issued share capital denominated in Sterling and aims to pay regular dividends in that currency. However, the Group's functional currency is Dollars, and most of the Group's revenue is received in Dollars, and exchange rate fluctuations may significantly affect the NAV and the ability to pay targeted Sterling dividends.

Financial leverage

The Company uses leverage and may utilise borrowings for working capital and interest rate hedging purposes. In case of default under the relevant financing arrangement the Company may face adverse action from its lenders leading to operating constraints and increased controls. This may affect the Company's ability to pay dividends.

Impact due to the Covid-19 pandemic

The business and economic disruption as a result of the COVID-19 pandemic and associated lockdowns had a material adverse effect on certain income streams, in particular performance revenues, which relate to revenues collected from shops, bars, gyms and live performances. Whilst the impact of COVID-19 on music royalties is diminishing, the occurrence of a new vaccine-resistant variant may lead to a re-introduction of lockdowns.

Interest Rate

The Company is exposed to changes in global interest rates in several ways. Predominantly, but not exclusively, the fiscal and monetary decisions of the US Government and its Central Bank will affect the interest rates of the Company's floating-rate RCF. It may also impact the discount rate, which is used to evaluate the current and forecast value of Catalogues it is purchasing, or has already invested in. Interest rates also have an impact on exchange rates, mentioned above. The interest rate environment is now very unpredictable and consequently this could affect our ability to meet bank covenants and pay dividends.

Key person

The Company depends on the services of the Investment Adviser, in particular on Merck Mercuriadis, Chief Executive of the Investment Adviser.

Market trends

The Company is heavily reliant on streaming (or an equivalent technology) remaining popular with consumers. Any adverse change in this would affect revenues. Performance income and a reduction in streaming subscriptions may be impacted by a major downturn in the global economies if this led to closure of venues. Conversely, technological advances could lead to a growth in royalties as consumers' access to music continues to improve.

Operational reliance on service providers

The Company relies primarily on third-party service providers for its core operations including oversight of its subsidiaries under the terms of its Investment Advisory Agreement.

In particular, although the ultimate responsibility for the investment strategy lies with the Company, the Investment Adviser is responsible for sourcing potential opportunities and advising the Company on acquisitions and active management of Catalogues.

The Company also depends heavily on the specialist administrative and financial services of the Investment Adviser, the Portfolio Administrators and other collection agents as well as third-party suppliers with whom the Company conducts business. In the event that these service providers experience business disruption or cyber security breaches, the ability of the Group to collect revenues due may be limited.

Portfolio returns do not meet expectations

The revenue and NAV returns of the Company fail to grow as expected, despite market growth and Active Song Management.

Shares trade at discount

In some circumstances the Company's share price may trade at a discount to the Company's investments' underlying market value. The discount level may widen significantly, and any discount management policy may become ineffective, eroding shareholder return and restricting the ability of the Company to raise further share capital.

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/legislative change, macroeconomic and geo-political change, climate risks as well as new competitors entering the market. 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 2022. 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.

Board of Directors

The Company is led and controlled by a Board of Directors, which is collectively responsible for the long-term success of the Company. It does so by acting in the interests of the Company, creating and preserving value and has as its foremost principle to act in the interests of Shareholders.

Andrew Sutch Chair, Non-executive Independent Director and Chair of the Management Engagement Committee

Paul Burger Senior Non-executive Independent Director, Chair of the Portfolio Committee and Chair of the Nomination Committee

Sylvia Coleman Non-executive Independent Director

Simon Holden Non-executive Independent Director and Chair of the Remuneration Committee

Vania Schlogel Non-executive Independent Director

Andrew Wilkinson Non-executive Independent Director and Chair of the Audit and Risk Management Committee

Directors' Responsibilities

The Directors are responsible for preparing this Interim Report in accordance with applicable laws and regulations. The Directors confirm that to the best of their knowledge:

The Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting; and
The Chair's Statement and Investment Adviser's Report include a fair review of the information required by:
- i) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first period of the financial year; their impact on the condensed set of consolidated financial statements; and a description of the principal risks and uncertainties of the remaining six months of the year; and
- ii) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first period of the current financial year and that have materially affected the financial position or performance of the Company during that period.

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Law. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law and regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the website (www.hipgnosissongs.com).

On behalf of the Board

Andrew Sutch

Chair

7 December 2022

Independent Review Report to Hipgnosis Songs Fund Limited

Report on the condensed consolidated financial statements

Our conclusion

We have reviewed Hipgnosis Songs Fund Limited's condensed consolidated financial statements (the "interim financial statements") in the Interim Report of Hipgnosis Songs Fund Limited for the 6-month period ended 30 September 2022. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

the condensed consolidated statement of financial position as at 30 September 2022;
the condensed consolidated statement of comprehensive income for the period then ended;
the condensed consolidated statement of cash flows for the period then ended;
the condensed consolidated statement of changes in equity for the period then ended; and
the explanatory notes to the interim financial statements.

The interim financial statements included in the interim report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Interim Report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with International Accounting Standard 34, 'Interim Financial Reporting', and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the Interim Report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the International Auditing and Assurance Standards Board. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers CI LLP

Chartered Accountants Guernsey, Channel Islands

7 December 2022

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2022 (unaudited)

	Notes	1 April 2022 to 30 September 2022 \$'000	1 April 2021 to 30 September 2021 \$'000
Income
Total revenue	11	91,678	85,320
Interest income		40	2
Royalty costs		(13,368)	(11,232)
Net revenue		78,350	74,090
Expenses
Advisory and performance fees	14	(6,760)	(8,173)
Administration fees		(300)	(663)
Legal and professional fees		(1,728)	(2,955)
Audit fees		(189)	(499)
Brokers' fees		(147)	(156)
Directors' remuneration	14	(324)	(268)
Listing fees		(41)	(249)
Subscriptions and licences		(383)	(248)
Public relations fees		(326)	(505)
Contingent bonuses		(3,689)	–
Other operating expenses	12	(4,847)	(5,736)
Amortisation of Catalogues of Songs	5	(55,871)	(52,124)
Impairment of Catalogues of Songs	5	(2,007)	–
Amortisation of borrowing expenses		(1,001)	(1,622)
Fixed asset depreciation		(30)	(331)
Loan interest		(14,473)	(10,002)
Finance charges for deferred consideration		(378)	(672)
Net loss from joint ventures		(48)	(49)
Foreign exchange losses		(2,083)	(7,841)
Operating expenses		(94,625)	(92,093)
Operating loss for the period before taxation		(16,275)	(18,003)
Taxation	4	(3,815)	(1,240)
Loss for the period after tax		(20,090)	(19,243)
Total comprehensive income for the period		(20,090)	(19,243)
Basic Earnings per Share (cents)	15	(1.66)	(1.69)
Diluted Earnings per Share (cents)	15	(1.66)	(1.69)

All activities derive from continuing operations.

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2022 (unaudited)

Total comprehensive income for the year	(20,397)	(19,243)
	(307)	–
Other comprehensive income: Movement in foreign currency translation reserve	(307)	–
Loss for the period after tax	(20,090)	(19,243)
	1 April 2022 to 30 September 2022 Notes \$'000	1 April 2021 to 30 September 2021 \$'000

Condensed Consolidated Statement of Financial Position

For the six months ended 30 September 2022 (unaudited)

	Notes	30 September 2022 (Unaudited) \$'000	31 March 2022 (Audited) \$'000
Assets
Catalogues of Songs	5	1,978,854	2,036,732
Other assets		1,143	568
Goodwill		272	272
Non-current receivables	6	19,197	640
Non-current assets		1,999,466	2,038,212
Trade and other receivables	6	136,384	144,450
Cash and cash equivalents	7	36,392	30,067
Current assets		172,776	174,517
Total assets		2,172,242	2,212,729
Liabilities
Loans and borrowings	8	595,823	593,992
Deferred investment payables	9	100	925
Non-current liabilities		595,923	594,917
Other payables and accrued expenses	9	51,374	35,413
Current liabilities		51,374	35,413
Total liabilities		647,297	630,330
Net assets		1,524,945	1,582,399
Equity
Share capital	10	1,692,198	1,692,198
Foreign currency translation reserve		(2,542)	(2,235)
Retained earnings		(164,711)	(107,564)
Total equity attributable to the owners of the Company		1,524,945	1,582,399
Number of Ordinary Shares in issue at period end		1,211,214,286	1,211,214,286
IFRS Net Asset Value per Ordinary Share (cent)		125.90	130.65
Operative Net Asset Value per Ordinary Share (cent)		183.12	184.91

Approved and authorised for issue by the Board of Directors on 7 December 2022 and signed on their behalf by:

Andrew Sutch Chair Andrew Wilkinson Director

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 September 2022 (unaudited)

As at 30 September 2022		1,211,214,286	1,692,198	–	(2,542)	(164,711)	1,524,945
Foreign currency translation reserve movement		–	–	–	(307)	–	(307)
Loss for the year		–	–	–	–	(20,090)	(20,090)
Dividends declared	9	–	–	–	–	(17,744)	(17,744)
Dividends paid	13	–	–	–	–	(19,313)	(19,313)
As at 1 April 2022		1,211,214,286	1,692,198	–	(2,235)	(107,564)	1,582,399
	Notes	Number of Ordinary Shares	Share capital \$'000	Other reserves \$'000	Foreign currency translation reserve \$'000	Retained earnings* \$'000	Total equity \$'000

* Distributable Revenues arising during the period were \$45.5 million which, taken together with the \$18.7 million of Distributable Revenue Reserves carried forward from the previous financial year ended 31 March 2022, result in available Distributable Revenues of \$64.2 million.

For the six months ended 30 September 2021 (unaudited)

reserve movement		–	–	–	(1,826)	–	(19,243) (1,826)
Foreign currency translation
Loss for the year		–	–	–	–	(19,243)
Dividends paid	13	–	–	–	–	(41,900)	(41,900)
Share issue costs	10	–	(4,102)	–	–	–	(4,102)
Shares issued	10	137,774,018	229,702	(234)	–	–	229,468
As at 1 April 2021		1,073,440,268	1,466,851	234	(419)	(3,821)	1,462,845
	Notes	Number of Ordinary Shares	Share capital \$'000	Other reserves \$'000	Foreign currency translation reserve \$'000	Retained earnings \$'000	Total equity \$'000

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 September 2022 (unaudited)

	Notes	1 April 2022 to 30 September 2022 \$'000	1 April 2021 to 30 September 2021 \$'000
Cash flows generated from operating activities
Operating loss for the period before taxation		(16,275)	(18,003)
Adjustments for non-cash items:
Loan interest		14,473	10,002
Provision for writer advances		–	916
Movement in trade and other receivables		(18,368)	2,608
Movement in other payables and accrued expenses		5,219	(3,387)
Depreciation of fixed assets		30	–
Amortisation of Catalogues of Songs and borrowing costs		56,872	54,749
Impairment of Catalogues of Songs	5	2,007	–
Foreign exchange losses		2,083	443
Lease interest paid		(378)	–
Taxation paid		(200)	(4,798)
Net cash generated from operating activities		45,463	42,530
Cash flows used in investing activities
Purchase of Catalogues of Songs		–	(294,374)
Purchase of other assets		(48)	–
Movement in writer advances		(1,915)	(6,560)
Deferred acquisition payments		(2,500)	–
Net cash used in investing activities		(4,463)	(300,934)
Cash flows generated from financing activities
Proceeds from issue of shares		–	229,468
Issue costs paid		–	(4,102)
Dividends paid	13	(19,313)	(41,900)
Interest paid		(14,973)	(10,660)
Borrowing costs	8	(6,170)	(594)
Bank loan repaid	8	(600,000)	–
Bank loan drawn down	8	607,000	22,708
Net cash (used in)/generated from financing activities		(33,456)	194,920
Net movement in cash and cash equivalents		7,544	(63,484)
Cash and cash equivalents at the start of the period		30,067	112,634
Effect of foreign exchange rate changes on cash and cash equivalents		(1,219)	(42)
Cash and cash equivalents at the end of the period	7	36,392	49,108

Notes to the Consolidated Financial Statements

For the six months ended 30 September 2022 (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'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 Company makes 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 six months ended 30 September 2022 and are unaudited. The Condensed Consolidated Financial Statements are rounded to the nearest US Dollar. The Group is principally engaged in investing in and managing music copyrights and associated musical intellectual property.

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 2022, 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 2022.

2. Accounting policies (continued)

b) Group information

As at 30 September 2022, the details of the Company's subsidiaries are as follows:

Name of the subsidiary	Place of incorporation and operation	% of voting rights	% Interest	Consolidation method	Functional 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	US	100	100	Full	USD
Hipgnosis Acquisition Corp	US	100	100	Full	USD
Kennedy Publishing & Productions Limited 1	UK	100	100	Full	GBP
Robot of the Century Music Publishing Inc	US	100	100	Full	USD
Deamon Limited 1	UK	100	100	Full	GBP
PB Songs Ltd 1	UK	100	100	Full	GBP

1 This is a subsidiary of Hipgnosis SFH XX Limited and therefore an indirect subsidiary of Hipgnosis Songs Fund Limited. 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 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 purchase and returns from existing Catalogues of Songs and the annual operating cost.

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.

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, UK and Guernsey. 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, together with the potential for capital growth.

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 year, 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

In calculating accruals, the Investment Adviser 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.

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 revenues also include 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.

The Group has reflected accruals of \$19.2 million, as a result of the confirmation of the CRB III rate increases for the Songwriters' mechanical portion of US Streaming income. Of this, \$3.1 million is the impact of the higher 15.1% rate on the income earned by the Company during this six-month period and \$16.1 million has been recognised for the retro-active payment due as a result of revenues historically not having been recognised at the full CRB III rates.

In order to provide additional rigour on the calculation, the CRB III retroactive and uplift accrual estimates were compared and benchmarked against the estimates provided by the Portfolio Independent Valuer and the Fair Value appraiser for the CNB-led Revolving Credit Facility. 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 6-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.

Expected Credit Loss (ECL) in relation to revenue receivables

Royalty earnings for accruals and receivables recognised in the period ending 30 September 2022 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 our 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.

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

Expected Credit Loss (ECL) in relation to HSG advances

Hipgnosis Songs Group LLC advance royalty payments to songwriters. Management are 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 have analysed their historical loss ratio data and apply this using the 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 believe that either because of the writer's unknown potential or other factors, a large level of recoverability may not be achieved.

At 30 September 2022 HSG gross recoupable advances are \$30.6 million (31 March 2022: \$31.6 million) with an expected credit loss provision of \$12.6 million (31 March 2022: \$13.0 million) recognised against the advances. The movement in the provision for expected credit losses is included under Other Operating Expense in the Condensed Consolidated Statement of Comprehensive Income.

Assessment of useful life of intangible assets

In order to calculate the amortised cost of the intangible assets it is necessary to assess the useful economic life of the copyright interests in Songs. This requires forecasts of the expected future revenue from the copyright interests, which contains significant uncertainties as the ongoing popularity of a song can fluctuate unexpectedly. An assessment of the useful life of Catalogues is considered at each reporting period, which is 20 years, in line with industry standard.

Assessment of impairment and the calculation of Operative NAV

Intangible assets are subject to a bi-annual impairment review which relies on assumptions made by the Board. Assumptions are updated bi-annually, specifically those relating to future cash flows and discount rates.

The fair value estimates that are prepared in order to calculate the Operative NAV and Operative NAV per Share are also used to assess whether there is evidence that the intangible assets may be impaired. Management's impairment review as at 30 September 2022 concluded that \$2.0 million (31 March 2022: \$1.5 million) impairment was required to the Group's Catalogues.

Valuations of music publishing rights typically adopt the DCF valuation approach which measures the present value of anticipated future revenues from acquiring the Catalogues, which are discounted at a 'market cost of capital' of 8.5% (31 March 2022: 8.5%) and a terminal value in 16 years. This method is accepted as an objective way of measuring future benefits; taking into account income projections from various music industry sources across various revenue flows whilst also factoring in the associated cost of capital.

It is the intention of the Board that Catalogues of Songs will be valued on an ongoing basis using a consistent DCF valuation methodology, and that this be used as an initial indicator of impairment for each Catalogue of Songs.

When considering whether a Catalogue of Songs should be impaired, the Board considers a co-efficient analysis that incorporates various factors, including the time remaining of when the carrying value equals the fair value based on the rate of amortisation, the ability for the Company to renegotiate administration rates and the active management that is undertaken.

Future revenue derived from active song management by the Investment Adviser is not reflected in the fair value of each Catalogue of Songs as determined in accordance with IFRS 13.

4. Taxes

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 is incurred in these UK entities. Therefore, it is considered appropriate to use the standard UK tax rate for the year of 19% (2021: 19%). On 14 October 2022 the UK government confirmed an increase to the main rate of UK corporation tax to 25% from April 2023, however the impact of this proposed change is not included within these Condensed Consolidated Financial Statements.

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 \$3.8 million (six months ended 30 September 2021: \$1.2 million) is based on adjustments in respect of the prior year.

5. Catalogues of Songs

	\$'000
Cost
At 1 April 2022	2,237,284
Additions	–
Impairment	–
At 30 September 2022	2,237,284
Amortisation and impairment
At 1 April 2022	200,552
Amortisation	55,871
Impairment	2,007
At 30 September 2022	258,430
Net book value
At 1 April 2022	2,036,732
At 30 September 2022	1,978,854
Fair value as at 30 September 2022	2,671,881
Cost
At 1 April 2021	1,972,199
Additions	265,085
At 31 March 2022	2,237,284
Amortisation and impairment
At 1 April 2021	93,275
Amortisation	105,787
Impairment	1,490
At 31 March 2022	200,552
Net book value
At 1 April 2021	1,878,924
At 31 March 2022	2,036,732
Fair value as at 31 March 2022	2,693,974

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 industry standard. At 30 September 2022 accumulated amortisation for Catalogues of Songs is \$254.9 million (31 March 2022: \$199.1 million) and the accumulated impairment to date is \$3.5 million (31 March 2022: \$1.5 million).

The Board engaged Portfolio Independent Valuer, Citrin Cooperman Advisors LLC, to value the Catalogues as at 30 September 2022. Each income type from each Catalogue was analysed and forecast to derive the fair value of the Catalogues by adopting a DCF valuation methodology using a discount rate of 8.5% (31 March 2022: 8.5%) that would be categorised under Level 3 within the fair value hierarchy of IFRS 13 "Fair Value Measurement". Income was analysed and forecast at the level of each individual Catalogue and by income type with the exception of Kobalt, which was evaluated as a whole. The Board are comfortable that Kobalt is valued on this basis as the Kobalt Catalogue was purchased as a whole. Future revenues of Catalogues are also estimated and incorporated into their valuation. Citrin Cooperman has also taken into consideration macro factors including the growth of Streaming revenue and the global growth of the recorded music industry in their analysis. 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.

	Foreign Exchange Rate
EUR:USD	1.02	1.12	1.22
GBP:USD	1.18	1.28	1.38
Discount rate
8.0%	2,894,449	2,923,377	2,952,306
Variance to Fair Value	8.3%	9.4%	10.5%
8.50%	2,645,485	2,671,881	2,698,278
Variance to Fair Value	-1.0%	–	1.0%
9.0%	2,435,411	2,459,673	2,483,936
Variance to Fair Value	-8.9%	-7.9%	-7.0%

The sensitivity to the discount rate and foreign exchange rate to the fair value of the Portfolio is as follows:

6. Trade and other receivables

	30 September 2022 \$'000	31 March 2022 \$'000
Non-current receivables
Non-current accrued income	19,197	640
	19,197	640
Current receivables
Accrued income	105,930	104,658
Royalties receivable	4,952	6,605
HSG net recoupable advances	17,985	18,604
Prepayments and other debtors	7,517	7,274
VAT receivable	–	7,309
	136,384	144,450

In the current year, an accrual for \$19.2 million has been recognised as a result of the confirmation of the CRB III rate increases for the Songwriters' mechanical portion of US Streaming income. Of this, \$3.1 million is the impact of the higher 15.1% rate on the income earned by the Company during this six-month period and \$16.1 million has been recognised for the retro-active payment due as a result of revenues historically not having been recognised at the full CRB III rates. This is presented as a non-current receivable and calculated as described in Note 3.

7. Cash and cash equivalents

	36,392	30,067
Cash available on demand	36,392	30,067
	30 September 2022 \$'000	31 March 2022 \$'000

8. Loans and borrowings

On 30 September 2022 the Company entered into a new Revolving Credit Facility (RCF) with a commitment of \$700 million which runs for five years until 30 September 2027. City National Bank is lead arranger and sole bookrunner for the new debt facility with Truist Securities, Inc., MUFG Union Bank, N.A. and Fifth Third Bank as co-leads. On the same day the Company drew down \$607 million to repay in full the Company's pre-existing JP Morgan RCF (\$600 million). \$93 million remains available under the new RCF which provides the Company with flexibility to fund investments and provide additional working capital. During the year \$6.2 million of costs relating to the set-up of the new RCF were capitalised, to be amortised over the five year length of the agreement.

The RCF's key covenants include a total debt to Catalogue value test, a total debt leverage test and a fixed charge coverage test reviewed quarterly and is 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. In accordance with the Investment Policy, any borrowings by the Company will not exceed 30% of the Operative NAV.

Interest on the new facility charged is based on the Secured Overnight Financing Rate (SOFR), published by the New York Federal Reserve, plus a margin of either 2.00% or 2.25% depending on the gross drawn debt. The initial margin will be 2.00%. As disclosed in Note 18, the Company has entered into an interest rate swap agreement post period end to manage its exposure to interest rate risk.

Closing balance	595,823	593,992
Cumulative borrowing costs	(11,177)	(6,008)
Total loan drawn down	607,000	600,000
Amounts repaid during the year	(600,000)	(50,000)
Amounts drawn down during the period	607,000	72,708
Opening balance – loan drawn down	600,000	577,292
	30 September 2022 \$'000	31 March 2022 \$'000

During the period ended 30 September 2022 \$14.5 million (30 September 2021: \$10.0 million) was charged as interest on the amounts drawn down.

9. Liabilities and accrued expenses

	30 September 2022 \$'000	31 March 2022 \$'000
Non-current liabilities
Deferred investment payables	100	925
	100	925
Current liabilities
Dividend declared	17,744	–
Amounts owed to songwriters	15,773	16,957
Deferred investment payables	4,912	11,197
Trade creditors and accruals	5,473	4,106
Corporation tax	6,184	2,570
VAT payable	1,243	–
Directors fees payable	45	83
Loan interest payable	–	500
	51,374	35,413

10. Share capital and capital management

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; and ii) C Shares denominated in such currencies as the Directors may determine.

Ordinary Shares of no par value	No. of Units
Issued and fully paid:
Shares as at 1 April 2022	1,211,214,286
Shares as at 30 September 2022	1,211,214,286
	\$'000
Issued and fully paid:
Shares as at 1 April 2022	1,692,198
Shares as at 30 September 2022	1,692,198
	No. of Units
Issued and fully paid:
Shares as at 1 April 2021	1,073,440,268
Shares issued on 29 April 2021	9,000,000
Shares issued on 9 July 2021	128,774,018
Shares as at 31 March 2022	1,211,214,286
	\$'000
Issued and fully paid:
Shares as at 1 April 2021	1,466,851
Shares issued on 29 April 2021	14,938
Shares issued on 9 July 2021	214,764
Share issue costs	(4,355)
Shares as at 31 March 2022	1,692,198

On 29 April 2021 the Company issued 9,000,000 new Ordinary Shares at a price of 119.5p per Ordinary Share and on 9 July 2021 the Company issued 128,774,018 new Ordinary Shares at a price of 121p per Ordinary Share. These shares rank pari passu with the existing Ordinary Shares in issue. The net proceeds were used to fund an investment in accordance with the Company's Investment Policy.

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.

11. Total revenue

Total revenue	91,678	85,320
Producer royalties	3,556	3,964
Other income	(628)	2,414
Neighbouring rights income	663	0
Writer share income	12,817	21,393
Masters income	2,184	3,939
Publishing admin income	154	108
Synchronization income	12,546	14,921
Streaming income	50,028	19,858
Digital downloads income	2,736	1,999
Performance income	4,729	11,194
Mechanical income	2,893	5,530
	1 April 2022 to 30 September 2022 \$'000	1 April 2021 to 30 September 2021 \$'000

All revenue streams disclosed in this note are in scope of IFRS 15 and include all revenue related accruals, unlike PFAR which provides like-for-like analysis.

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.

12. Other operating expenses

	1 April 2022 to 30 September 2022	1 April 2021 to 30 September 2021
	\$'000	\$'000
Aborted deal expenses	332	367
Bank charges	26	23
Charitable donations	28	20
Directors' and officers' insurance	160	163
Disbursements and sundry	73	629
Postage, stationery and printing	79	28
Movement in ECL provision for HSG advances	(375)	916
HSG staff payroll and expenses	3,154	3,335
HSG restructuring provision	925	–
Travel and accommodation fees	187	110
HSG travel and accommodation fees	258	145
	4,847	5,736

13. Dividends paid

A summary of the dividends paid are set out below:

	Dividend per share Pence	Total Dividend \$'000
1 April 2022 to 30 September 2022
Interim dividend in respect of quarter ended 31 March 2022	1.3125	19,313
	1.313	19,313
1 April 2021 to 30 September 2021
Interim dividend in respect of quarter ended 31 March 2021	1.3125	20,093
Interim dividend in respect of quarter ended 30 June 2021	1.3125	21,807
	2.625	41,900

14. 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

The Company Directors' fees for the period to 30 September 2022 amounted to \$323,763 (30 September 2021: \$314,811). Outstanding fees amounted to \$nil at the reporting date (30 September 2021: \$nil).

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

Merck Mercuriadis is the founder of the 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, maintain financial records and a system of internal controls for the financial reporting for the Company, 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 period to 30 September 2022 amounted to \$6.8 million (30 September 2021: \$8.2 million) of which \$nil was outstanding at the reporting date (31 March 2022: \$nil).

15. Earnings per share

	30 September 2022 Basic	30 September 2022 Diluted
Loss for the period (\$'000)	(20,090)	(20,090)
Weighted average number of Ordinary Shares in issue	1,211,214,286	1,211,214,286
Earnings per share (cents)	(1.66)	(1.66)
	30 September 2021 Basic	30 September 2021 Diluted
Loss for the period (\$'000)	(19,243)	(19,243)
Weighted average number of Ordinary Shares in issue	1,140,172,604	1,140,172,604
Earnings per share (cents)	(1.69)	(1.69)

The earnings per share is based on the loss of the Group for the period year and on the weighted average number of Ordinary Shares for the period ended 30 September 2022.

There are no diluted shares at 30 September 2022.

16. Net Asset Value per share and Operative Net Asset Value per share

	30 September 2022	31 March 2022
Number of Ordinary Shares in issue	1,211,214,286	1,211,214,286
IFRS NAV per share (cents)	125.90	130.65
Operative NAV per share (cents)	183.12	184.91

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 2022 \$'000	31 March 2022 \$'000
IFRS NAV	1,524,945	1,582,399
Adjustments for revaluations of Catalogues of Songs to fair value	434,597	457,441
Reversal of accumulated amortisation and impairment	258,430	199,800
Operative NAV	2,217,972	2,239,640

17. Presentation change

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

Consolidated Statement of Profit and Loss	As reported in 30 September 2021 Interim Report 1 April 2021 to 30 September 2021 \$'000	Presentation change \$'000	As reported in 30 September 2022 Interim Report 1 April 2021 to 30 September 2021 \$'000
Income
Total revenue	85,271	49	85,320
Interest income	2	–	2
Royalty costs	(11,232)	–	(11,232)
Net revenue	74,041	49	74,090
Expenses
Advisory and performance fees	(8,220)	47	(8,173)
Administration fees	(639)	(24)	(663)
Legal and professional fees	(2,955)	–	(2,955)
Audit fees	(499)	–	(499)
Brokers' fees	(1)	(155)	(156)
Directors' remuneration	(315)	47	(268)
Listing fees	–	(249)	(249)
Subscriptions and licences	(249)	1	(248)
Public relations fees	–	(505)	(505)
Charitable donations	(20)	20	-
Other operating expenses	(6,885)	1,149	(5,736)
Amortisation of Catalogues of Songs	(52,124)	–	(52,124)
Amortisation of borrowing expenses	(1,622)	–	(1,622)
Fixed asset depreciation	–	(331)	(331)
Loan interest	(10,002)	–	(10,002)
Finance charges for deferred consideration	(672)	–	(672)
Net loss from joint ventures	–	(49)	(49)
Foreign exchange losses	(7,841)	–	(7,841)
Operating expenses	(92,044)	(49)	(92,093)
Operating loss for the period before taxation	(18,003)	–	(18,003)
Taxation	(1,240)	–	(1,240)
Loss for the period after tax	(19,243)	–	(19,243)

18. Subsequent events

As announced on 5 October 2022, the Company entered into interest rate swap agreements as detailed below:

From 3 October 2022 until 2 January 2023, interest on all the drawn debt is based on a three-month fixed SOFR of 5.71% (including debt margin); and
From 3 January 2023, the company has agreed to enter into interest rate swaps to hedge \$540 million. Of this, \$340 million is hedged for the duration of the RCF (until 30 September 2027) at a fixed rate of 5.67% (including debt margin); a further \$200 million is hedged until 3 January 2026 at a fixed rate of 5.89% (including debt margin). The balance remains unhedged to provide flexibility in the operation of the RCF facility.

The interest rate hedging contracts are not subject to margin calls in the event of movements in underlying interest rates. Accordingly, the Company now has certainty as to the quantum of its fixed interest payment obligations over the term of those contracts.

On 12 October 2022, the Company entered into US Dollar to Sterling foreign exchange forward contracts to manage its exposure to foreign exchange rate risk relating to future Sterling dividend payments.

Both the interest rate swap and the foreign exchange hedge will be designated as Held for Trading Financial Assets.

On 14 October 2022 the Company announced an irrevocable share repurchase programme to buy back Ordinary Shares within certain pre-set parameters. The Share Purchase Programme will run until 8 December 2022. Any shares purchased pursuant to the Share Repurchase Programme will count towards Hipgnosis' general buy back authority of 14.99% of the Company's issued share capital, as approved at the Company's 2022 AGM.

On 28 October 2022 the Company's interim dividend of 1.3125p per Ordinary Share in respect of the period from 1 April to 30 June 2022 was paid.

Alternative Performance Measures

Performance Measure	Definition	Reason for Use
Adjusted EPS	Loss after Tax (\$20,089,656) excluding Total Amortisation (\$57,250,091), Impairment (\$2,006,913), Depreciation (\$30,014), Contingent Bonus Provision (\$3,689,156), Restructuring Costs (\$925,082), Foreign Exchange Losses (2,083,054) and Provision for HSG Advances (\$375,392) divided by weighted average number of Ordinary Shares in issue (1,211,214,286).	The loss after tax adjusted for accounting adjustments aligns with the operative NAV which reflects that the values of Catalogues of Songs are based on fair values produced by the Portfolio Independent Valuer.
Adjusted Operating Costs less Interest Expense	Operational expenses (\$94,624,518) less Total Amortisation (\$57,250,091), Impairment (\$2,006,913), Depreciation (\$30,014), Contingent Bonus Provision (\$3,689,156), Restructuring Costs (\$925,082), Foreign Exchange Losses (\$2,083,054), Provision for HSG Advances (\$375,392) and Interest Expense (\$14,473,487).	An indicator of the Company's operational expenses after removing accounting adjustments and interest expense.
Annualised Ongoing Charges	Adjusted Operating Costs (\$14,542,113) less Non Recurring administrative expenses (\$853,872) annualised over a 12-month period.	Ongoing Charges are a good indicator of expenses likely to recur in the foreseeable future.
Dividend Cover	Distributable Revenue is the Loss after Tax (\$20,089,656) excluding Total Amortisation (\$57,250,091), Impairment (\$2,006,913), Depreciation (\$30,014), Contingent Bonus Provision (\$3,689,156), Restructuring Costs (\$925,082), Foreign Exchange Losses (\$2,083,054) and Provision for HSG Advances (\$375,392) divided by the dividend paid during the period (\$19,312,794) plus the dividend declared not yet paid (\$17,743,980).	A strong indicator of the Company's ability to pay a dividend from retained earnings.

Performance Measure	Definition	Reason for Use
EBITDA	The Operating Loss before Tax (16,274,954) plus Total Amortisation (\$57,250,091), Impairment (\$2,006,913), Depreciation (\$30,014), Contingent Bonus Provision (\$3,689,156), Restructuring Costs (\$925,082), Foreign Exchange Losses (\$2,083,054), Provision for HSG Advances (\$375,392) and Interest Expense (\$14,473,487).	A strong indicator of company performance and profitability removing accounting adjustments.
Leveraged Free Cash Flow	Net Cash from Operating Activities (\$45,462,941) less Interest Paid (\$14,973,487).	A good indicator of the cash position of the Company and the availability of cash flows to fund interest and dividend payments.
Net Debt	Loan facility amount utilised (\$607,000,000) less cash held at bank (\$36,392,368).	Liquidity metric used to determine how well a company can pay all of its debts if they were due immediately.
Non Recurring administrative expenses	Non recurring expenditure included within operating expenses (\$853,872).	Good indicator of expenses not likely to recur in the foreseeable future.
Ongoing Charges %	Annualised ongoing charges (\$27,376,482) divided by Operative NAV (\$2,217,972,355).	To monitor the expenses, which are likely to recur, relative to the fund size over time.
Operative NAV	The IFRS NAV (\$1,524,945,090) adjusted for the fair value of Catalogues of Songs (\$693,026,266).	The Operative NAV reflects the values of Catalogues of Songs based on fair values produced by the Portfolio Independent Valuer.
Total NAV Return	Operative NAV per share (\$1.8312) plus cumulative dividends paid up to the period end (\$0.2467) less the Operative NAV per share as at 11 July 2018 (\$1.2983), divided by the Operative NAV per share as at 11 July 2018 (\$1.2983).	To show how the assets have performed since IPO to Shareholders.
Six Month Total NAV Return	Operative NAV per share as at period end (\$1.8312) plus dividend paid during the six-month period (3.0793 cents) less the Operative NAV per share as at the beginning of the period (\$1.8491) divided by the Operative NAV per share as at the beginning of the period (\$1.8491).	To show how the assets have performed over the past six months to Shareholders.

Glossary of Capital Defined Terms

"Administrator" means Ocorian Administration (Guernsey) Limited;

"Admission" means admission, on 11 July 2018, to trading on the SFS of the London Stock Exchange, of the Ordinary Shares becoming effective in accordance with the Listing Rules and/or the LSE Admission Standards and on 25 September 2019 to a Premium Listing on the Main Market ;

"AEOI" means Automatic Exchange of Information;

"AIC" means the Association of Investment Companies;

"AIC Code" means the AIC Corporate Governance Code 2019;

"Annual General Meeting" or "AGM" means the annual general meeting of the Company;

"Annual Report" or "Annual Report and Consolidated Financial Statements" means the annual publication of the Company provided to the Shareholders to describe their operations and financial conditions, together with their Consolidated Financial Statements;

"Apple Music" means the music and video Streaming service developed by Apple Inc.;

"Articles of Incorporation" or "Articles" means the articles of incorporation of the Company;

"ASCAP" means the American Society of Composers, Authors and Publishers;

"Average Market Capitalisation'' means, in relation to each month where the advisory fee is payable, ('A'' multiplied by "B'') plus ("C'' multiplied by "D''), where:

"A'' is the average of the middle market quotations of the Ordinary Shares for the five day period ending on the last business day of that month (adjusted as appropriate to exclude any dividend where the Ordinary Shares are quoted ex such dividend at any time during that five day period);

"B'' is weighted average of the number of Ordinary Shares in issue (excluding any Shares held in treasury) at the end of each day during that month;

"C'' is the average of the middle market quotations of a class of C Shares in issue for the five day period ending on the last business day of that month (adjusted as appropriate to exclude any dividend where the C Shares of that class are quoted ex such dividend at any time

during that five day period); and ''D'' is weighted average of the number of that class of C Shares in issue (excluding any Shares held in treasury) at the end of each day during that month;

"Board" or "Directors" means the Directors of the Company;

"BMI" means Broadcast Music, Inc;

"BPI" means the British Phonographic Institute;

"C Shares" means a temporary and separate class of shares which are issued at a fixed price determined by the Company;

"Catalogue" means one or more Songs acquired from a single Songwriter, artist or company;

"CBS" means the US commercial broadcast television and radio network;

"CD" means compact disc;

''Closing Market Capitalisation" means, in relation to each Accounting Period, ''E'' multiplied by ''F'', where:

''E'' is the Performance Share Price; and ''F'' is the weighted average of the number of Ordinary Shares in issue (excluding any Shares held in treasury) at the end of each day during the Accounting Period;

"CMO" means Collection Management Organisation.

A CMO is appointed by copyright holders to manage both the mechanical and performance rights in their copyright works.

"Companies Law" means the Companies (Guernsey) Law, 2008;

"Company" means Hipgnosis Songs Fund Limited. References to the Company are also considered to be references to the Group, where applicable;

"Company Secretary" means Ocorian Administration (Guernsey) Limited;

"Consolidated Financial Statements" means the audited financial statements of the Company, including the Statement of Financial Position, the Statement of Comprehensive Income, the Statement of Cash Flows, the Statement of Changes in Equity and associated notes;

"Conversion" means the conversion of C Shares to Ordinary Shares;

"Copyright Royalty Board" or "CRB" means the US Copyright Royalty Board;

"Corporate Brokers" means Singer Capital Markets Advisory LLP, J.P. Morgan Securities plc and RBC Europe Limited;

"COVID-19" means the global coronavirus pandemic;

"DCF" means discounted cash flow;

"DCMS" means The Department for Digital, Culture, Media & Sport, a department of the UK government;

"Disclosure Guidance and Transparency Rules" or "DTRs" mean the disclosure guidance published by the FCA and the transparency rules made by the FCA under section 73A of FSMA;

"Distributable Revenues" means profit after tax attributable to the Company's revenue activities;

"Downloads" means royalties for the permanent digital mechanical transfer of music;

"DSP" means digital service providers;

"Earnings per Share" or "EPS" means the Earnings per Ordinary Share and is expressed in pounds Sterling;

"EU" means European Union;

"FCA" means the UK Financial Conduct Authority (or its successor bodies);

"FRC" means the UK Financial Reporting Council;

"FSMA" means the UK Financial Services and Markets Act 2000;

"GFSC" means the Guernsey Financial Services Commission;

"Grammy" means an award presented by the Recording Academy to recognise achievements in the music industry;

"Group" means Hipgnosis Songs Fund Limited and its subsidiaries;

"HSG" means Hipgnosis Songs Group, which was rebranded from Big Deal Music Group (BDM) on acquisition;

"IAS" means international accounting standards as issued by the Board of the International Accounting Standards Committee;

"IFPI" means International Federation of the Phonographic Industry;

"IFRS" means the International Financial Reporting Standards, being the principles-based accounting standards, interpretations and the framework by that name issued by the International Accounting Standards Board;

"IFRS NAV" means the value of the Gross Assets of the Company less its liabilities (including accrued but unpaid fees) in accordance with the accounting policies adopted by the Directors;

"Interim Report" means the Company's half yearly report and unaudited condensed consolidated financial statements for the period ended 30 September;

"Investment Adviser" means Hipgnosis Song Management Ltd, formerly The Family (Music) Limited;

"Investment Advisory Agreement" means the investment advisory agreement dated 27 June 2018 , as amended, between Hipgnosis Song Management Ltd, formerly known as The Family (Music) Limited, the Company and its subsidiaries;

"Investment Entity" means an entity whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both;

"IPO" means the initial public offering of shares by a private company to the public;

"ISAE 3402" means International Standard on Assurance Engagements 3402, "Assurance Reports on Controls at a Service Organisation";

"ISIN" means an International Securities Identification Number;

"ISWC" means International Standard Musical Work Code. It is a unique, permanent and internationally recognised reference number for the identification of musical works;

"Kobalt" means Kobalt Music Copyrights S.à.r.l.;

"Kobalt Fund 1" means a portfolio of 42 Catalogues acquired in September 2020, from Kobalt Music Copyrights S.à.r.l., an investment fund advised by Kobalt Capital Limited;

"Letter of Direction" means a document sent by the current copyright owner or the recipient of music royalties to the Publisher, Record company or Collection Society requesting a re-direction of royalties to be paid. It is sent from the current owner/recipient who is selling the assets, directing that all future payments should go to the buyer of the assets;

"LIBOR" means the London Interbank Offered Rate the basic rate of interest used in lending between banks on the London interbank market and also used as a reference for setting the interest rate on other loans;

"Listing Rules" means the Listing Rules made by the UK Listing Authority under section 73A FSMA;

"Live" means publishing revenue derived from the live performance of music copyrights at concerts;

"London Stock Exchange" or "LSE" means London Stock Exchange Plc;

"MAR" means EU regulation 596/2014 on market abuse;

"Master Recording royalties" aka "Recording

Royalties" mean royalties that are generated on behalf of a sound/master recording. This is the most basic royalty performing artists and labels earn when their master recording is downloaded, physically bought, or streamed.

"Mechanical" means royalties for reproducing music, for example CD, vinyl, etc. (excluding mechanical downloads and mechanical Streaming);

"NAV per Share" means the Net Asset Value attributable to the Ordinary Shares in issue divided by the number of Ordinary Shares in issue (excluding any Shares held in treasury) at the relevant time and expressed in Dollars;

"Neighbouring Rights Income" is the payment to the recording artist or performer for the public performance usage related to the Master Recording;

"Net Asset Value" or "NAV" means the value of the assets of the Company less its liabilities as calculated in accordance with the Company's valuation policy and expressed in Dollars;

"Net revenue" or "NPS" means Net Publisher Share and refers to revenue collected by Publishers from PROs, net of contractual royalties due to writers i.e. deductions for administration and publishing fees;

"NFT" means Non Fungible Token;

"Operative NAV" means NAV as adjusted for the fair value of Catalogues of Songs;

"Ordinary Shares" means redeemable Ordinary Shares of no par value in the capital of the Company issued and designated as "Ordinary Shares" and having the rights, restrictions and entitlements set out in the Articles;

"Other income" means any income not covered by the other income types, for example sheet income and lyric exploitation;

"Performance" means royalties for playing music in public, for example TV/radio broadcasts, live performance, etc. and paid through to the publisher;

"Performance Fee Shares" means Ordinary Shares issued to the order of the Investment Adviser in accordance with the performance fee arrangements in the Investment Advisory Agreement;

"Performance Rights Organisations" or "PROs" means a performing rights organisation, such as PRS or BMI, which represents and collects Performance royalties for and on behalf of each of its members;

"Performance Share Price" means in relation to each accounting period, the average of the middle market quotations of the Ordinary Shares for the one month period ending on the last business day of that accounting period;

"Portfolio" means the portfolio of Songs (whether organised into Catalogues or otherwise) held by the Company directly or indirectly from time to time;

"Portfolio Committee" means a committee which approves all purchases of Catalogues of Songs;

"Portfolio Independent Valuer" means Citrin Cooperman Advisors LLC, formerly Massarsky Consulting, Inc., appointed by the Board to independently value the Company's Catalogues within the Portfolio;

"Portfolio Administrator(s)" means portfolio administrators appointed by the Company in order to assist with the administration of the Portfolio;

"Premium Listing" means the a Premium Listing on the Main Market of the London Stock Exchange;

"Premium/Discount to Operative NAV" means the situation where the Ordinary Shares of the Company are trading at a price higher/lower than the Company's Operative NAV;

"Prospectus" means the most recent prospectus issued by the Company unless the context refers to a version of the prospectus published at an earlier date;

"Pro-Forma Annual Revenue" or "PFAR" – Pro-forma Annual Revenue (PFAR) means the royalty revenue earned in a 12-month period by the portfolio of songs held by the Company at a specific date, based on royalty statements received, irrespective of whether the songs were owned by the Company over the period analysed.

"Public Performance" means revenue generated from licenses for the right to play music publicly in a commercial environment e.g. shops, bars, restaurants and shopping malls;

"Publishing Share" means the share of the rights in a music composition (lyrics and/or music) which generate Mechanical and Performance royalties. In the UK, "blanket licences" are issued to organisations including radio and TV.

"RCF" means the Revolving Credit Facility arranged from City National Bank, as Lead Arranger.

"RCIS Rules" means the Registered Collective Investment Scheme Rules 2015;

"Record Labels" means a company that owns, distributes and promotes musical recordings;

"Recording Academy" means a US academy of musicians, producers, recording engineers and other musical professionals;

"Registrar" means Computershare Investor Services (Guernsey) Limited;

"Remuneration Committee" means a formal committee of the Board with defined terms of reference;

"RIAA" means Recording Industry Association of America;

"Right To Income" means a right to income recognised as part of the Catalogue acquisition, which is typically dependent on the timing of the negotiations and relates to royalty income paid over to the Company on closing of the acquisition and the accrued receivables. The right to income related to the period before the start of the financial year is now defined as "Pre-FY (RTI)"; the portion of RTI that falls within the Financial Year is now defined as "Within FY, pre-acq (RTI)";

"Sacem" – Société des auteurs, compositeurs et éditeurs de musique, the French Collection Society;

"SFS" means London Stock Exchange's specialist fund segment of the Main Market for listed securities;

"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" means a Songwriter's and/or publisher's share of copyright interest in a song, being a musical composition of words and/or music and the Songwriter's proportion of the publishing rights of a single musical track, and when construction permits, the collection of words and/or music as purchased by consumers;

"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;

"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;

"UK Code" means The UK Corporate Governance Code 2019 as published by the Financial Reporting Council;

"UKLA" means UK Listing Authority;

"US" or "United States" means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;

"Usage Accrual" the Usage Accrual is an element of the revenue accrual to reflect the estimated revenue at the point at which usage is expected to occur;

"VAF" or "Variance Against Forecasts" means the difference between the total of the royalty statements received from each catalogue since acquisition, and the acquisition model forecast over the same period. The VAF is expressed as a percentage point deviation from zero, where a positive number means that the actual performance of the portfolio is tracking ahead of the cumulative forecast. A negative number indicates that the portfolio is falling behind forecast;

"Writer's Share" means Performance royalties collected by a Performance Rights Organisation and paid through directly to the Songwriter as opposed to the Publisher Share of performance;

"YouTube" means the US video-sharing website;

"£" or "Pounds Sterling" or "Sterling" or "GBP" means British pounds sterling and "p" or "pence" means British pence;

"\$" or "USD" or "Dollar" or "Dollars" means United States dollars and "cents" means United States cents; and

"€" or "EUR" is the currency of the majority of member states of the EU.

Directors and General Information

Company Registration Number: 65158

Board of Directors

Andrew Sutch, Chair Paul Burger, Senior Independent Director Andrew Wilkinson Simon Holden Sylvia Coleman Vania Schlogel

Founder

Merck Mercuriadis

Advisory Board

Nile Rodgers The-Dream Giorgio Tuinfort Starrah David A. Stewart Poo Bear Bill Leibowitz Ian Montone Rodney Jerkins

Investment Adviser

Hipgnosis Song Management Merck Mercuriadis, Chief Executive Officer Ben Katovsky, President & Chief Operating Officer Chris Helm, Chief Financial Officer, on behalf of SONG

United House 9 Pembridge Road Notting Hill London W11 3JY www.hipgnosissongs.com

Registered Office

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

Administrator and

Company Secretary Ocorian Administration (Guernsey) Limited PO Box 286 Floor 2 Trafalgar Court Les Banques St Peter Port Guernsey GY1 4LY

Corporate Brokers

Singer Capital Markets Advisory LLP 1 Bartholomew Lane London EC2N 2AX

J.P. Morgan Securities plc

25 Bank Street, Canary Wharf London E14 5JP

RBC Europe Limited

100 Bishopsgate London EC2N 4AA

Independent Auditor

PricewaterhouseCoopers Cl LLP Royal Bank Place 1 Glategny Esplanade St Peter Port Guernsey GY1 4ND

Music Specialist Legal Counsel Bill Leibowitz

271 Madison Avenue 20th Floor New York New York 10016

Legal Advisers to the Company

Herbert Smith Freehills LLP Exchange House Primrose Street London EC2A 2EG

Legal Advisers to the Company as to Guernsey Law

Ogier (Guernsey) LLP Redwood House St Julian's Avenue St Peter Port Guernsey GY1 1WA

Principal Banker

Barclays Bank PLC PO Box 41 Le Marchant House St Peter Port Guernsey GY1 3BE

Registrar

Computershare Investor Services (Guernsey) Limited 1st Floor Tudor House Le Bordage St Peter Port Guernsey GY1 1DB

Identifiers

ISIN: GG00BFYT9H72 Ticker: SONG SEDOL: BFYT9H7 Website: www.hipgnosissongs.com LEI: 213800XJIPNDVKXMOC11 GIIN: 5XGPC8.99999.SL.831

Managing your account online

The Company's registrar, Computershare Investor Services (Guernsey) Limited, allows you to manage your shareholding online. If you are a direct investor you can view your shareholding, change the way the Registrar communicates with you and buy and sell shares. If you haven't used this service before, all you need to do is enter the name of the Company and register your account at:

www-uk.computershare.com/investor

You'll need your Investor code (IVC) printed on your share certificate in order to register.

Corporate Summary

Structure

The Company is an investment company limited by shares, registered and incorporated in Guernsey under the Companies Law on 8 June 2018. 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 makes and manages its investments directly or indirectly through a number of wholly owned subsidiary companies incorporated in England & Wales and the US, together referred to as the Group.

The Company was granted HMRC approval as an investment trust company with effect from 1 April 2021. The Company was therefore treated as being resident in the UK for tax purposes from this date and ceased to be a Guernsey tax exempt vehicle under The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989, as amended.

Investment Process

The Company's Investment Adviser, Hipgnosis Song Management Ltd, was founded by Merck Mercuriadis. Merck is the manager and/or former manager of globally successful recording artists such as Elton John, Guns N' Roses, Morrissey, Iron Maiden, Nile Rodgers and Beyoncé, and hit Songwriters such as Diane Warren, Justin Tranter and The-Dream. Merck is the former CEO of The Sanctuary Group plc.

Hipgnosis Song Management Ltd has been appointed by the Board to source Songs and provide recommendations to the Board on acquisition and disposal strategies.

The Investment Adviser is also responsible for managing and monitoring royalty and/or fee income due to the Company from its copyrights and collection agents, and developing strategies to maximise the earnings potential of the Songs in the portfolio through improved placement and coverage of Songs.

The Investment Adviser continues to assemble an Advisory Board of highly successful music industry experts which include award winning members of the artist, Songwriter, publishing, legal, financial, recorded music and music management communities, all with in-depth knowledge of music publishing and access to a significant network of relationships in the music industry.

The Board has formed a Portfolio Committee which considers the recommendations of the Investment Adviser before granting its approval to purchase the Catalogues of Songs, chaired by Mr Burger.

AIC

The Company is a member of the Association of Investment Companies, complies with the AIC Code and is a constituent of the AIC's "Royalties" Specialist Investment Trusts sector classification. The Company's page on the AIC's website is at www.theaic.co.uk/companydata/0P0001BL9D

Website

The Company's website, which can be found at www.hipgnosissongs.com, includes information on the Company, such as its Prospectus, past reports and accounts, policies, media coverage and regulatory news announcements.

Advice to Shareholders

In recent years investment related scams have become increasingly sophisticated and difficult to spot. We are therefore warning all our Shareholders to be cautious so that they can protect themselves and spot the warning signs.

Fraudsters will often:

contact you out of the blue
apply pressure to invest quickly
downplay the risks to your money
promise tempting returns that sound too good to be true
say that they are only making the offer available to you
ask you to not tell anyone else about it

You can avoid investment scams by:

Rejecting unexpected offers Scammers usually cold call but contact can also come by email, post, word of mouth or at a seminar. If you have been offered an investment out of the blue, chances are it's a high-risk investment or a scam.
Checking the FCA Warning List Use the FCA Warning List to check the risks of a potential investment. You can also search to see if the firm is known to be operating without proper FCA authorisation.
Getting impartial advice Before investing get impartial advice and don't use an adviser from the firm that contacted you. If you are suspicious, report it
You can report the firm or scam to the FCA by contacting their Consumer Helpline on 0800 111 6768 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

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

AI Terminal

Hipgnosis Songs Fund Limited

6274_ir_2022-12-08_32075603-0e2f-4564-b4ed-3ec40e4d33a0.pdf

REVIEW

UNAUDITED FINANCIAL STATEMENTS

ADDITIONAL INFORMATION

Introduction from Merck Mercuriadis

Merck Mercuriadis

Spotify's Billions Club

Hipgnosis has 78 out of 324 Songs that have surpassed the Billion Streams mark on Spotify

In the end

One Last Time

Photograph *†

Scared to Be Lonely

What Lovers Do (feat. SZA)

Financial and Operational Highlights1

Ongoing charges figure (%) 1.23%

Total dividends declared in respect of the period

Net Revenue

EBITDA \$63.8 million (30 September 2021: \$54.6 million)

Adjusted EPS 7

Portfolio at a Glance

The Chair's Statement

Introduction

Financial performance

Further issuance

Dividend

Valuation

Revolving Credit Facility

Annual General Meeting

Share buy backs

Outlook

Andrew Sutch

Hipgnosis has 52 of Rolling Stone's The 500 Greatest Songs of All Time

Investment Adviser's Report

Introduction

The Portfolio

Portfolio as at 30 September 2022

More people paying more for music streaming services

Copyright Royalty Board

Return of Performance Revenues

Active Song Management

Synch

TV and Streaming

Film

Advertising

Video Games

Grammy

Song Administration

Song Copyright Management

Song Creation

Highlights from Song Creation

Songwriter Advocacy

The Hipgnosis Song Management Team

Our Senior Management Team

Financial Review

NAV

Operative NAV per Ordinary Share Bridge (\$)

Revenue

Pro-Forma Annual Revenue (PFAR)

Pro Forma Annual Revenue for Catalogues owned

Costs

EBITDA

Leverage

Foreign Exchange Hedge

Dividends

EPS

Accruals and Receivables

Right to Income (RTI)

Recurring Revenue vs. Pre-Financial Year RTI for each financial year to date

Outlook

Merck Mercuriadis

Hipgnosis has 13 of the top 30 from YouTube's Most Viewed Music Videos of All Time

29 Chantaje (feat. Maluma)

Hipgnosis has 9 out of 70 of BBC Radio 2's Most Streamed Chart

The Advisory Board

Investment Objective and Policy

Investment Objective

Investment Policy

Investment restrictions

**Photograph *†**