HMV Group PLC Interim Results -2-
December 13 2012 - 1:00AM
UK Regulatory
These interim results are for the 26 weeks ended 27 October
2012.
Financial highlights 26 weeks ended 26 weeks ended
27 October 2012 29 October 2011
(Restated)
GBPm GBPm
------------------------------------- ----------------- -----------------
Continuing operations:
Sales 288.6 333.7
Like for like sales % (10.2) (11.9)
Operating loss (before exceptional
items) (24.1) (33.2)
Exceptional items (operating
and financing) (2.6) (9.3)
Loss before tax (before exceptional
items) (34.7) (38.8)
Loss before tax (37.3) (48.1)
------------------------------------- ----------------- -----------------
Discontinued operations profit
(loss) after tax
and exceptional items 1.1 (2.2)
------------------------------------- ----------------- -----------------
Adjusted loss per share (continuing
operations) (8.1)p (9.1)p
Basic loss per share (continuing
operations) (8.8)p (11.3)p
Dividend per share - -
------------------------------------- ----------------- -----------------
Underlying net debt 176.1 163.7
Free cash outflow (33.5) (28.4)
------------------------------------- ----------------- -----------------
Adjusted loss per share - continuing operations before
exceptional items
Underlying net debt - cash and short-term deposits less external
borrowings, before unamortised deferred financing fees
Free cash outflow - cash flow from operating activities after
capital expenditure and net interest
The results of the Group are presented on the basis of
continuing and discontinued operations. The continuing operations
consist of HMV Retail (HMV UK & Ireland, HMV Hong Kong and HMV
Singapore) and 7digital. The discontinued operation is HMV Live,
which included the HMV Hammersmith Apollo for the first three
months of the period until it was sold, and the remainder of the
Live business for the whole of the period.
Total sales from continuing operations decreased by 13.5%
compared with the same period last year, including a like for like
decline of 10.2%. Total sales at HMV Live were down by 18.6%.
Continuing operations generated a seasonal operating loss of
GBP24.1m (2011: GBP33.2m), reflecting improved gross margins and
tight cost control offset by a decrease in sales. Net finance costs
increased from GBP5.6m to GBP10.6m, due to higher average debt and
higher interest rates. This resulted in a loss before tax and
exceptional items from continuing operations of GBP34.7m (2011:
GBP38.8m).
In addition, net exceptional charges from continuing operations
of GBP2.2m (2011: GBP4.7m) were incurred in the period. This
comprised charges in respect of restructuring the business, closing
stores and relocating a distribution centre offset by a gain on the
deemed disposal of the Group's holding in 7digital. Exceptional
finance charges of GBP0.4m (2011: GBP4.6m) were incurred in
relation to the amendment of the Group's banking facilities.
Discontinued operations contributed a trading profit after tax
of GBP0.5m (2011: loss of GBP7.8m), exceptional charges in respect
of restructuring of GBP0.6m and a net exceptional profit on
disposal of GBP1.2m (2011: GBP5.6m).
Underlying net borrowings were GBP176.1m, GBP12.4m higher than
last year, due to poor trading results and working capital
outflows, offset by the receipt of proceeds from the sale of
Hammersmith Apollo Limited. Free cash outflow of GBP33.5m (2011:
GBP28.4m) resulted from the trading loss, capital expenditure,
exceptional costs, a working capital outflow and interest
payments.
The segmental results below, for the 26 weeks ended 29 October
2011, have been restated to reflect the reclassification of HMV
Live and aNobii as discontinued operations. Discontinued operations
for the 26 weeks ended 29 October 2011 also include two months of
trading of Waterstone's and HMV Canada.
HMV Retail comprises HMV UK & Ireland, HMV Hong Kong and HMV
Singapore.
Sales 26 weeks 26 weeks Year Constant Like
ended ended on year exchange for
decline(2) like
sales
decline(3)
27 October 29 October decline(1)
2012 2011
(Restated)
GBPm GBPm % % %
------------------------- ------------ ------------ ------------ ------------ ------------
Continuing operations
- HMV Retail 288.6 333.7 (13.5) (13.1) (10.2)
Discontinued operations 25.4 109.6 (76.8) (76.8) -
------------------------- ------------ ------------ ------------ ------------ ------------
Total HMV Group 314.0 443.3 (29.2) (28.9) (10.2)
------------------------- ------------ ------------ ------------ ------------ ------------
Operating profit (loss) 26 weeks 26 weeks 26 weeks 26 weeks
ended ended ended ended
27 October 29 October 27 October 29 October
2012 2011 2012 2011
(Restated) (Restated)
GBPm GBPm % of sales % of sales
------------------------- ------------ ------------ ------------ ------------
Continuing operations
- HMV Retail (23.6) (33.1) (8.2) (9.9)
Share of post-tax loss
of joint ventures (0.5) (0.1) - -
Discontinued operations 0.8 (7.4) - -
Total HMV Group (23.3) (40.6) (8.4) (9.9)
------------------------- ------------ ------------ ------------ ------------
1 Year on year decline over the corresponding period last year
is based on results translated at the actual exchange rates being
the weighted average exchange rates for the 26 weeks ended 27
October 2012 and the 26 weeks ended 29 October 2011
respectively.
2 Constant exchange decline over the corresponding period last
year is based on the weighted average exchange rates for the 26
weeks ended 29 October 2011.
3 Like for like sales decline over the corresponding period last
year is based on the weighted average exchange rates for the 52
weeks ended 28 April 2012.
HMV Retail
HMV Retail total sales fell by 13.5% at statutory exchange
rates, primarily due to a like for like decline of 10.2%. This
reflected the continuing difficult economic conditions in the UK
and a particularly poor release schedule across the summer months
in our traditional product categories, as suppliers avoided the
Diamond Jubilee, Euro 2012, Olympic and Paralympic periods.
All three UK entertainment markets declined in value terms over
the period, with music down by 22%, visual down nearly 16% and
games down by 23%, all reflecting continuing structural decline and
the release schedule being heavily loaded towards the end of the
period. Within all of these markets HMV's share marginally improved
in the year to date. However, HMV Retail's sales performance in
September and October improved significantly, albeit below
expectations, when compared with the first four months of the
period, with like for like sales down 6.7% in the last two months,
compared with 12.2% in the first four months.
Other products, including technology, now make up 17% of the
product mix, up from 14% last year, and the like for like sales
increase over the period was 18%. This growth is expected to slow
down in the second half as we annualise against the period when
technology was introduced across the estate. However, this product
category will continue to benefit from expanding ranges, better
merchandising and an improved service proposition in stores.
The changes made to the nature of HMV UK's relationships with
its key music and visual suppliers have delivered an improvement in
gross margin whilst at the same time maintaining a relevant pricing
strategy for the customer. The business is purchasing increasing
amounts of back catalogue on a consignment basis, which enables it
to provide a much broader offer with a lower impact on working
capital. In addition, the benefits of previous restructuring
activities are now being seen with reductions in central employment
and other costs such as marketing and depreciation, compared with
last year. These improvements partially offset the impact of the
sales decline, resulting in an operating loss of GBP23.2m (2011:
GBP32.9m)
HMV (LSE:HMV)
Historical Stock Chart
From Apr 2024 to May 2024
HMV (LSE:HMV)
Historical Stock Chart
From May 2023 to May 2024