31st Jul 2009 17:31
HMV Group plc
Re: Annual Report and Accounts for the year ended 25 April 2009
In accordance with Listing Rule 9.6.1 two copies of the following documents have been submitted to the UK Listing Authority and will be available for inspection at the UKLA Document Viewing Facility:
Annual Report and Accounts for the year ended 25 April 2009
Notice of Annual General Meeting to be held on 3 September 2009
Form of Proxy
The UKLA Document Viewing Facility is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Copies of the above documents are available from the registered office of HMV Group plc at Shelley House, 2-4 York Road, Maidenhead, Berkshire, SL6 1SR and the Annual Report and Accounts and Notice of Meeting are also available to view on the Company's website at www.hmvgroup.com/investors/annual.jsp
In compliance with DTR 6.3.5, the following information is extracted from the 2009 Annual Report and Accounts and should be read in conjunction with the Company's final results announcement issued on 30 June 2009, both of which can be found at www.hmvgroup.com. Together, these constitute the material required by DTR 6.3.5 to be communicated to the media in full unedited text through a Regulatory Information Service. This material is not a substitute for reading the 2009 Annual Report and Accounts in full and page numbers in the extracted information below refer to page numbers in the 2009 Annual Report and Accounts.
Related Party Transactions (Note 36 on page 91 of the Annual Report)
During the period the Company entered into transactions in the ordinary course of business with related parties. Transactions entered into and balances outstanding at the end of the period are as follows:
|
Dividends received from related parties £m |
Services rendered to related parties £m |
Amounts owed by related parties £m |
Amounts owed to related parties £m |
|
|
With subsidiaries |
||||
|
2009 |
67.1 |
2.5 |
69.0 |
192.6 |
|
2008 |
55.0 |
3.2 |
28.3 |
111.4 |
|
With joint venture |
||||
|
2009 |
- |
- |
5.5 |
- |
|
2008 |
- |
- |
- |
- |
Included within the amounts owed by and to subsidiaries, £6.1m (2008: £4.8m) related to intercompany trading balances and is settled monthly with no interest charge. The remaining net balance of £129.7m (2008: £88.1m) related to intercompany loans, on which interest is charged at the Bank of England base rate prevailing at the date of inception and which are repayable on demand.
During the prior year, the Company entered into a guarantee to secure the obligations of a subsidiary company, HMV Canada Inc, to a supplier, subject to a maximum amount of C$3.5million until 31 July 2009.
At 25 April 2009 the Group had a loan note of £5.5m (2008: £nil) receivable from the joint venture, Mean Fiddler Group Limited (see Note 18).
Remuneration of key management personnel
The remuneration of the Directors and key management personnel of the Group is set out below:
|
Group 2009 £m |
Group 2008 £m |
Company 2009 £m |
Company 2008 £m |
|
|
Short-term employee benefits |
1.9 |
3.5 |
0.9 |
2.1 |
|
Post-employment benefits |
0.3 |
0.2 |
0.2 |
0.2 |
|
Share-based payments |
- |
0.1 |
- |
- |
|
Termination benefits |
0.3 |
1.5 |
- |
- |
|
2.5 |
5.3 |
1.1 |
2.3 |
Statement of Directors' responsibilities (page 44 of the Annual Report)
The following statement, which should be read in conjunction with the Auditors' statement of their responsibilities on page 45, is made with a view to distinguishing for shareholders the respective responsibilities of the Directors and the Auditors in relation to the financial statements.
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable United Kingdom law, the Disclosure and Transparency Rules, the Listing Rules of the UK Listing Authority and those International Financial Reporting Standards as adopted by the European Union.
The Directors are required to prepare financial statements for each financial year which present a true and fair view of the financial position of the Company and of the Group and the financial performance and the cash flows of the Company and of the Group for that period. In preparing those financial statements, the Directors are required to:
|
(i)
|
select suitable accounting policies and then apply them consistently;
|
|
(ii)
|
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
|
|
(iii)
|
provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
|
|
(iv)
|
state that the Company and the Group have complied with IFRS, subject to any material departures disclosed and explained in the financial statements.
|
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time, the financial position of the Company and of the Group and enable them to ensure that the financial statements comply with the Companies Acts 1985 and 2006 as well as Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We confirm that, to the best of our knowledge:
(i) the financial statements, prepared in accordance with International Financial Reporting Standards, present fairly the assets, liabilities, financial position and profit of the Group taken as a whole; and
(ii) the Directors' Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that the Group may face.
Risks and uncertainties (page 40 of the Annual Report)
The Board has a policy of continuous identification and review of key business risks and uncertainties. It oversees the development of processes to ensure that these risks are managed appropriately and operational management are delegated with the tasks of implementing these processes and reporting to the Board on their outcomes. The key risks identified by the Board are as follows:
Competition
The Group operates in highly competitive markets where, for certain of its product ranges at certain times in the product life cycle, the Group must adapt and invest in strategies to remain competitive with supermarket and pure Internet retailers. In addition, such is the competitive nature of its markets that at times in the past, pressure has been brought to bear on the Group's weaker competitors which has led to one-off closing or liquidation activity for a limited period of time. In the past, such competitor actions have adversely impacted the Group's pricing, margins and profitability which in the future, may also have an adverse impact on the Group's business and financial condition.
Growth of digital entertainment
Physical entertainment media is a key driver of footfall to the Group's stores and of online customers to its various Internet sites. Technological advances and changing consumer preferences have given rise to new methods of digital delivery, both legal and illegal, of music, film, electronic games and books, thereby reducing the purchase of physical media formats. The Group has responded to these challenges by the launch of its own websites and continued investment to grow these businesses, however further unforeseen technological developments could have a further adverse impact on the Group's future profitability and cash flows.
Seasonality
The business of the Group is highly seasonal with the Christmas season being the most important trading period in terms of sales, profitability and cash flow. Lower than expected performance in this period may have an adverse impact on results for a full financial year.
External factors
Retail markets are sensitive to economic conditions and if the current economic downturn is prolonged this could further reduce consumer spending on the high street which could affect revenue and profit. Other external factors which could affect the Group include acts of terrorism or war or an outbreak of a pandemic disease, which could reduce the number of customers visiting the Group's stores, causing a decline in revenue and profit.
Credit risk and liquidity
The Group has adequate medium-term financing in place to support its business operations. The Board regularly reviews and stress tests its liquidity and covenant headroom to ensure compliance with its facilities. In view of the global economic and financial conditions, the Board has assessed its exposure to counterparty risk and its treasury policies have been amended to restrict counterparties with which deposits, investments and other transactions may be made.
Failure of supply
The Group has agreements with key suppliers and an interruption or loss of supply of core category products from these suppliers would affect the Group's ability to trade.
Damage to reputation or brands
The HMV and Waterstone's brands are material assets of the Group and maintaining their reputation is key to the success of the Group. Failure to protect these brands, an event that materially damaged the reputation of these brands and/or a failure to sustain their appeal to customers could have an adverse impact on the financial performance of the Group.
Information Technology systems
The Group relies on a number of important IT systems, both for its stores and its Internet sites. Any significant system performance problems could affect the Group's ability to trade as well as its profitability.
Key personnel
The performance of the Group depends on its ability to continue to attract, motivate and retain key head office and store staff. The retail sector is very competitive and the Group's people are frequently targeted by other companies for recruitment.
Retail store network
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. All of the Group's stores are held under operating leases and consequently the Group is exposed to the extent that any stores become unviable as a result of rental inflation. Where a store location becomes surplus to requirements, the Group's policy of occupying prime, highly marketable locations serves to limit such lease exposure.
Strategic initiatives
In March 2007, a new strategic plan was laid out for the transformation of the Group, which included a number of key initiatives for improving the financial performance of the Group over a three-year period. Good progress was made during the year on the transformation programme, which remains on track. However, the failure of one or more of these initiatives could result in an adverse impact on the profitability and cash flows of the Group.
Name of contact and telephone number for queries:
Elaine Marriner, Company Secretary
Tel: 01628 818300
Date of Notification: 31 July 2009
Related Shares:
Hmv Group