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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Hmv Grp | LSE:HMV | London | Ordinary Share | GB0031575722 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.10 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
- the highly seasonal nature of the business, especially the Christmas season which is the most important trading period in terms of profitability and cashflows, is mitigated through detailed forward planning and excellent operational practices to ensure peak trading opportunities are maximised and unexpected events managed;
- the growth of digital entertainment has introduced new products and methods of delivery of traditional products. The Group is addressing this through strategic investment plans to develop a broader retail offering, embracing new technology products, which have been successfully incorporated into stores on a limited basis; the delivery of entertainment content to customers through multiple channels in retail; and the diversification of the Group's business to retail new and an extended range of products and in digital media delivery;
Business and financial review (continued)
- the Group's product offer is sensitive to economic conditions and would be impacted by a prolonged economic downturn. This is minimised by strategic planning that allows for a range of economic scenarios as well as the products being retailed at affordable price points making them more resilient to reductions in discretionary spend than higher value products;
- the Group operates in highly competitive markets where these products are often sold at or below cost. The Group continues to adapt and develop its retail offer to remain competitive; it maximises its direct relationship with its suppliers to ensure the widest ranges of core products; and ensures that its reputation as a specialist retailer is maintained through compelling offers and active customer relationship management;
- potential damage to the reputation or brands of the Group is managed through staff training and regular review of policies and operating procedures;
- the performance of the Group depends on its ability to continue to attract, motivate and retain staff. This is managed through appropriate development and training programmes and reward structures;
- exposure to a major external event, such as terrorism or an outbreak of a pandemic disease, as well as fires, floods or system failures is mitigated through contingency planning and appropriate insurance cover;
- retaining a portfolio of good quality real estate in prime retail areas and at commercially reasonable rates remains critical to the performance of the Group. The store network is regularly reviewed and renegotiated as appropriate to maintain a good quality portfolio with short flexible lease lengths, with rents linked to turnover where possible; and
Material Uncertainty
In determining the appropriate basis of preparation of the financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.
Following the successful negotiation of improved supplier commercial terms during the latter part of last year, the disposal of Hammersmith Apollo and the extension of amended debt facilities at the start of the current period, the Directors, when approving the annual financial statements for the 52 weeks ended 28 April 2012, had a reasonable expectation that the Group would have adequate resources to continue in operational existence for the foreseeable future.
As part of the Group's funding arrangements with its banks it is required to pass quarterly covenant tests in respect of gearing and fixed charge cover. The tests in July and October 2012 have been passed.
The current market conditions and, in particular, the volatility in the Group's core music, visual and games markets driven by the release schedule and the growth of the digital market, create uncertainty as to the level of trading results that will be achieved in the year ahead. The third quarter represents around 46% of the Group's annual revenues and has a significant bearing on the profitability of the Group. This year has seen a very late release schedule as suppliers have tried to avoid release dates for new products during the Olympics and Queen's Jubilee. As a consequence, the third quarter results this year take on an even greater significance.
As noted in the CEO's review good progress has been made on a number of initiatives to mitigate this uncertainty. However, the current level of Christmas trading has not been in line with the level expected and the Directors have concluded that it is probable that the January 2013 and April 2013 covenants will not be complied with.
The Directors recognise that this represents a material uncertainty which may cast doubt upon the Group's ability to continue as a going concern and therefore the Group may be unable to continue to realise assets and discharge liabilities in the normal course of business. Note 2 to the interim statements sets out further information in respect of this matter.
Forward-looking statements
Certain statements in this interim report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, the Group can give no assurance that these expectations will prove to have been correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.
The Group undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
Interim consolidated income statement
26 weeks 26 weeks 26 weeks to to to 27 October 27 October 27 October 2012 2012 2012 Before exceptional Exceptional items items Total Note GBPm GBPm GBPm ------------------------------------ ------ ------------------- ------------ ------------ Continuing operations: Revenue 4 288.6 - 288.6 Cost of sales (297.1) (1.5) (298.6) ------------------------------------ ------ ------------------- ------------ ------------ Gross loss (8.5) (1.5) (10.0) Administrative expenses (15.1) (1.8) (16.9) ------------------------------------ ------ ------------------- ------------ ------------ Trading loss 4 (23.6) (3.3) (26.9) Share of post-tax (losses) profit of investments accounted for using the equity method (0.5) 1.1 0.6 ------------------------------------ ------ ------------------- ------------ ------------ Operating loss (24.1) (2.2) (26.3) Finance revenue 0.2 - 0.2 Finance costs (10.8) (0.4) (11.2) ------------------------------------ ------ ------------------- ------------ ------------ Loss before taxation (34.7) (2.6) (37.3) Taxation 6 0.1 - 0.1 ------------------------------------ ------ ------------------- ------------ ------------ Loss from continuing operations (34.6) (2.6) (37.2) ------------------------------------ ------ ------------------- ------------ ------------ Discontinued operations: Profit after tax from discontinued operations 7 0.5 0.6 1.1 ------------------------------------ ------ ------------------- ------------ ------------ Loss for the period (34.1) (2.0) (36.1) ------------------------------------ ------ ------------------- ------------ ------------ Attributable to: Shareholders of the parent company (34.2) (2.0) (36.2) Non-controlling interests 0.1 - 0.1 ------------------------------------ ------ ------------------- ------------ ------------ (34.1) (2.0) (36.1) ------------------------------------ ------ ------------------- ------------ ------------ Loss per share for the period attributable to shareholders of the parent company: Basic 8 (8.0)p (0.5)p (8.5)p Diluted 8 (7.8)p (0.5)p (8.3)p ------------------------------------ ------ ------------------- ------------ ------------ Loss per share for the period attributable to shareholders of the parent company from continuing operations: Basic 8 (8.1)p (0.7)p (8.8)p Diluted 8 (7.9)p (0.7)p (8.6)p Dividend per share 9 - - - ------------------------------------ ------ ------------------- ------------ ------------
Notes 1 to 18 form an integral part of the interim condensed consolidated financial statements. See note 5 for a description of exceptional items.
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