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RNS Number : 7946G

Music Festivals PLC

03 July 2012

3 July 2012

Music Festivals plc

("Music Festivals" or the "Group")

Operational Update and Director's Loan

Music Festivals plc (AIM: MFP), a company which owns, develops and produces music festivals, announces an operational update and details of a loan by a Director of the Group.

During 2012 and ahead of the Group's two main festivals, the management team has sought to manage its production costs efficiently, generate other cost savings through economies of scale and deliver additional sources of revenue through initiatives such as ticketing agent agreements. These initiatives have been given particular focus in recent months in light of the weaker than expected ticket sales at the Hop Farm Music Festival ("Hop Farm") which concluded on 1 July 2012 and Benicassim ("FIB") as referenced within the Group's preliminary results announcement issued on 21 May 2012.

These initiatives are all ongoing, however, the already highly competitive festival market has also been significantly impacted by continued weak economies in the UK and Spain (where the Group generates a significant amount of its income), current unavailability of strong revenue generating actsand adverse UK weather resulting in negative media commentary on recent festivals. These factors have continued to affect tickets sales at the two festivals.

As a result of the current ticket sales the Directors believe that the Group's financial results for the year ending 31 December 2012 will be significantly lower than market expectations. Ticket sales for FIB, which is being held on 12 - 15 July 2012, are ongoing. Notwithstanding the current trading performance in 2012, the Directors believe that the Group owns two highly established festivals that provide festival-goers with an outstanding experience and have the ability to grow and be highly cash generative in the future.

The Group also announces that Vince Power, a Director of the Group, has advanced a GBP750,000 unsecured loan to the Group (the "Loan"). The principal terms of the Loan are;

   --     interest to accrue at a rate of 8 per cent. per annum; 
   --     interest payable on each six month anniversary; and

-- the Loan is repayable on demand, such notice not to be given for at least twelve months for GBP500,000 of the Loan.

The Loan constitutes a Related Party transaction under AIM Rule 13. The Directors of the Group, other than Vince Power, consider, after consultation with the Group's Nominated Adviser, that the terms of the Loan are fair and reasonable in so far as its shareholders are concerned.

The Loan provides the Group with additional working capital during the Group's primary trading period when the two main festivals are held. The Group also announces that it has received the outstanding council monies owed to the Group relating to the 2010 and 2011 FIB festivals which has further improved the Group's working capital position.

For further information please contact:

 
 Music Festivals plc 
 Vince Power (Chief Executive)                  Tel: +44 (0)20 7644 
                                                               1420 
 
 Merchant Securities Limited (Nominated Adviser and Broker) 
 Simon Clements/Virginia Bull/Catherine Miles   Tel: +44 (0)20 7628 
                                                               2200 
 
 Mission Public Relations 
 Andrew Murray-Watson                           Tel: +44 (0)20 7845 
                                                               7800

This information is provided by RNS

The company news service from the London Stock Exchange

END

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