18th Jan 2005 07:00
HMV Group PLC18 January 2005 HMV Group plc Announcement of Interim Results and Trading Update 18 January 2005 HMV Group plc, the UK's largest retailer of music, video and books, todayannounces its interim results for the 26 weeks ended 23 October 2004, andprovides an update on the Group's recent trading, including Christmas. Christmas Trading (five weeks ended 8 January 2005) • Group sales growth of 10.9% including 6.4% like for like sales growth. • Total sales growth of 12.0% in HMV UK & Ireland inclusive of 4.3% like for like sales growth. • Total sales growth of 8.7% in Waterstone's inclusive of 7.0% like for like sales growth. • Like for like sales growth of 21.6% in HMV Canada and 2.7% in HMV Asia Pacific. • Good market share performance in all businesses. Interim Highlights (26 weeks ended 23 October 2004) • Group sales up 3.6% to £760.2m (2003: £734.2m), including like for like sales growth of 1.9%. • Profit before tax up 23.3% to £13.3m (2003: £10.7m). Earnings per share up 27.8% to 2.3p (2003: 1.8p). • Ongoing strong cash generation reduced closing net borrowings by £78.5m to £60.0m (2003: £138.5m). • Continued successful store opening programme with 14 new stores in HMV UK and the Waterstone's Oxford Street superstore opened in the first half. • The Board has declared an interim dividend of 1.7p per share (2003: 1.3p per share), an increase of 30.8%. Return of capital • The Group is today announcing its intention to conduct a share buy-back programme. Commenting, Chief Executive Alan Giles said: "Following a good first half of the year, the Group delivered a strongperformance at Christmas. Market share performance in all product areas wasgood, demonstrating the continuing resilience of our specialist formats inhighly competitive conditions. The skill and dedication of our employees, theeffectiveness of our operational systems and the strength of our leading brandsensured that we were able to meet the very late surge in demand in all ourbusinesses. "Waterstone's excellent performance over Christmas illustrates that theapplication of the HMV approach to retailing has converted Waterstone's into areliable, market-leading business which is now embarking on a new phase ofexpansion. "Bestsellers for the Christmas period included CD albums by U2 and ScissorSisters, and on DVD, Little Britain: The Complete First Series and I Robot.Bestselling books included Himalaya by Michael Palin and The Da Vinci Code byDan Brown. "Whilst trading at Christmas was strong, we take a cautious view of the outlookfor the UK consumer economy but expect it to prove sufficiently resilient for usto meet our financial targets for the full year. The Group continues to behighly cash generative and is now in a position to accelerate the return of cashto its shareholders through an increase in the dividend and, as and whenappropriate, a programme of on-market share buy-backs." An interview with Alan Giles, CEO, HMV Group in video/audio and text will beavailable from 07:00 on 18 January 2005 on: http://www.hmvgroup.com and on http://www.cantos.com Enquiries HMV Group Alan Giles Group Chief Executive 01628 818355 * Neil Bright Group Finance Director 01628 818355 * Paul Barker Head of Corporate Communications 01628 818355 *Brunswick Susan Gilchrist / Eilis Murphy 020 7404 5959 * All enquiries on 18 January 2005 should be directed via Brunswick. Operating reviewHMV Group plc is pleased to announce a good financial performance for the 26weeks ended 23 October 2004, reflecting both the continuing attractiveness toconsumers of our specialist retailing formats and the ongoing progress the Groupis making on its strategies to deliver further growth. The first half of thefinancial year typically contributes around 40% of the Group's annual sales andless than 15% of the annual operating profit with the Christmas season, asoutlined in the trading update below, being the crucial period for theGroup. ________________________________________________________________________________ Financial Highlights 26 weeks ended 26 weeks ended % Increase 23 October 2004 25 October 2003 (decrease) £m £m________________________________________________________________________________ Sales 760.2 734.2 3.6%Like for like sales% 1.9% 0.5% -Operating profit 18.4 18.3 0.4%Profit after tax 9.3 7.4 25.1%Basic EPS 2.3p 1.8p 27.8%Dividend per share 1.7p 1.3p 30.8%________________________________________________________________________________ Underlying netborrowings 60.0 138.5 (57)%Operating cashflow 38.8 48.1 (19.3)%Store numbers 571 554 17________________________________________________________________________________ In the first half the Group's total sales increased by 3.6% on last year, or5.2% at constant exchange rates, including like for like sales growth of 1.9%.Operating profit was up £0.1m on last year after £1.6m of pre-opening costs forthe Waterstone's Oxford Street superstore and a £0.3m impact of adverse exchangerate movements. The result benefited from the elimination of £0.8m of operatinglosses in HMV USA through the closure of its remaining stores. After adjustingfor these one-off items, underlying operating profit was up by £1.1m or 6.3%. Underlying net borrowings at 23 October 2004 were £60.0m, £78.5m or 57% lowerthan the position at October 2003. This reduction in net debt, together with thebenefit of a £50m repayment of term debt in July, resulted in finance chargeslower than last year by £2.5m. This is reflected in the increase in earnings pershare of 27.8% to 2.3p. Capital expenditure in the period was £24.9m of which£10.8m was investment in new stores. We are also continuing to improve ourexisting store portfolio and spent £7.8m on refits, resites and expansions. The Board has declared an interim dividend of 1.7p per share, an increase of30.8% on the prior year and ahead of growth in earnings per share, reflectingits progressive dividend policy and its confidence in the prospects of theGroup. Towards the end of the period, it was announced that Waterstone's ManagingDirector David Gilbert had resigned due to ill health and that Brian McLaughlin,the Group's Chief Operating Officer, would not retire but would combine theroles of Group Chief Operating Officer and acting Managing Director ofWaterstone's. -------------- --------- --------- -------- -------- ----------Sales H1 H1 Year on year Constant Like for like growth1 exchange sales growth2 growth3 2004 2003 % % % £m £m -------------- --------- --------- -------- -------- ----------HMVUK & Ireland 383.1 360.9 6.1 6.3 1.2Asia Pacific 124.0 126.8 (2.2) 3.3 (2.2)North America4 61.2 61.5 (0.6) 6.5 13.3-------------- --------- --------- -------- -------- ----------Total HMV 568.3 549.2 3.5 5.6 1.6Waterstone's 191.9 185.0 3.8 4.0 2.9-------------- --------- --------- -------- -------- ----------HMV Group 760.2 734.2 3.6 5.2 1.9-------------- --------- --------- -------- -------- ---------- -------------- --------- --------- -------- -------- -------------Operating profit H1 H1 H1 H1 Year on year growth1 2004 2003 2004 2003 % £m £m % sales % sales-------------- --------- --------- -------- -------- -------------HMVUK & Ireland 15.4 16.6 4.0 4.6 (7.7)Asia Pacific 1.1 0.9 0.9 0.7 20.4North America4 0.5 (1.8) 0.9 (3.0) n/a-------------- --------- --------- -------- -------- -------------Total HMV 17.0 15.7 3.0 2.9 8.2Waterstone's 1.4 2.6 0.7 1.4 (45.9)-------------- --------- --------- -------- -------- -------------HMV Group 18.4 18.3 2.4 2.5 0.4-------------- --------- --------- -------- -------- ------------- 1 Year on year growth over the corresponding period last year is basedon results translated at the actual exchange rates, being the weighted averageexchange rates for the 26 weeks ended 23 October 2004 and the 26 weeks ended 25October 2003 respectively. 2 Constant exchange growth over the corresponding period last year isbased on the weighted average exchange rates for the 26 weeks ended 25 October2003. 3 HMV Group's like for like sales performance measures stores thatwere open at the beginning of the previous financial year (i.e. open at thebeginning of May 2003) and that have not been expanded, closed or resited duringthat time. It includes sales from internet sites in the UK, Japan and Australia.Like for like sales growth is calculated at constant exchange rates. Storesresized (up or down) are excluded from like for like sales performance. Salesare only ever the net amount received. No adjustments are made for campaign orsale stock, and any supplier contribution to marketing promotion is accountedfor within marketing expenditure. 4 HMV North America includes the results of HMV USA, where the laststore closed on 3 November 2004. In 2003 sales were £7.7m with operating lossesof £(0.8)m and in 2004 sales were £3.2m with operating losses of nil. HMV UK & Ireland HMV UK & Ireland produced strong total sales growth of 6.1% in the first half,including like for like sales up 1.2%. Total sales growth was driven by the acceleration of new store openings, with 14new stores opened during the first half and a further eleven new stores openedprior to Christmas, including Perth, Derry, Windsor, Woking, Cardiff (resite)and at Galway in Ireland, where HMV UK & Ireland opened its 200th store.However, with the profit contribution of new stores being significantly weightedto the second half of the financial year, operating profit of £15.4m was 7.7%lower than last year and operating margin decreased to 4.0% from 4.6%. Like for like sales growth of 1.2% reflected another good period of growth forDVD, which represented 40% of total sales, up from 32% in the prior year. Salesin volume terms increased by 37%, driven by a continued focus on deliveringrange authority and a release schedule which included The Day After Tomorrow,Van Helsing and The Star Wars Trilogy, for which HMV UK took record pre-ordersfor a DVD. Market share was marginally diluted reflecting the mainstream bias oftitles released in the period. In a flat music market HMV improved market share through competitive pricing andstrong back catalogue sales. Bestselling CD albums included Keane, The Streetsand Maroon 5. HMV Asia Pacific For the 26 weeks total sales of £124.0m increased by 3.3% at constant exchangerates, with new store expansion offsetting a 2.2% fall in like for like sales.This reflects the fact that although other worldwide music markets are showingencouraging signs of recovery, the Japanese music market is yet to rebound. HMVJapan did, however, increase its market share in both music and DVD in theperiod. Operating profit in HMV Asia Pacific increased from £0.9m to £1.1m due to tightcost control and a small improvement in gross margin. HMV North America Total sales of £61.2m were up 6.5% at constant exchange rates. Excluding theresults of HMV USA, where the final remaining store was closed on 3 November,HMV Canada achieved an excellent 13.3% increase in like for like sales,reflecting the progress made in establishing HMV Canada as the market's mostauthoritative specialist retailer of DVD software. HMV North America's operating profit increased to £0.5m from a loss of £1.8m inthe prior year. Strong sales at HMV Canada resulted in a profit of £0.5mcompared with a £1.0m loss last year and £0.8m of losses made in HMV USA in theprior year were eliminated. Waterstone's Positive sales momentum at Waterstone's continued in the first half, with totalsales up 3.8% to £191.9m, including like for like growth of 2.9%, and animprovement in gross margins against the prior year. The sales performance reflected the continuing improvements in retailingstandards which are being made to this business, including the new inventorymanagement upgrade, which has enhanced stock availability and range. Towards the end of the half year, Waterstone's successfully opened a new 20,000square feet superstore on Oxford Street, London, further increasing its presenceas the leading bookseller in the capital. Four small stores were closed in thefirst half of the year and since then, six new stores have been opened,including Stevenage, Newry and Lisburn. Waterstone's operating profit for the half year was down by £1.2m to £1.4m after£1.6m of pre-opening costs for the Oxford Street superstore, together withincreased investment in training and infrastructure, designed to drive furtherimprovements in the operation of the business. Excluding the pre-opening costs,operating profit would have been £3.0m, an increase of 13.2%. International Financial Reporting Standards ("IFRS") The Group's preparation for the transition to IFRS is continuing in line withthe project timetable and the Group anticipates giving an indication of the fullimpact on the 2004/05 results in the summer of 2005 with full transitiondisclosures at the AGM in October 2005. The Interim Report for the 26 weeks to29 October 2005 will be prepared under IFRS and the 2004 results will berestated accordingly. As disclosed in the April 2004 Annual Report, the key areas of impact have beenassessed as being on the accounting for employee benefits including share basedpayments and defined benefit pension schemes, certain aspects of propertyleases, accounting for derivatives (e.g. interest rate swaps), the tax impact ofall of the above and the overall presentation of the financial statements. Return of capital The Group has continued to generate strong cash flows and to reduce net debt. Asa result of this, and continued strong trading performance, the Board hasdecided to take advantage of the existing authority to repurchase up to 5% ofshare capital through a programme of on-market share buy-backs. The extent ofthe buy-backs and their timing will take into account the ongoing investmentrequirements of the Group and are expected to be conducted over time so as notto disrupt trading in the Company's shares. In line with its progressive dividend policy the Board has also increased theinterim dividend by 30.8%, ahead of the growth in earnings per share. Thecombination of these measures accelerates the return of capital to shareholderswhile providing adequate flexibility to fund the Group's planned programme oforganic growth. TRADING UPDATE Five weeks ended 11 weeks ended 8 January 2005 8 January 2005 Like for like Constant Like for like Constant exchange total exchange total sales growth2 sales growth2 sales growth2 sales growth2 % % % %------------------ ---------- ---------- ---------- ----------HMVUK & Ireland 4.3 12.0 1.1 7.9Asia Pacific 2.7 7.5 (0.8) 3.5Canada3 21.6 13.4 15.6 7.2------------------ ---------- ---------- ---------- ----------Total HMV 6.2 11.6 2.4 7.2Waterstone's 7.0 8.7 2.4 3.6------------------ ---------- ---------- ---------- ----------HMV Group 6.4 10.9 2.4 6.4------------------ ---------- ---------- ---------- ---------- 37 weeks ended 8 January 2005 Like for like Constant Year on year exchange total growth4 sales growth2 sales growth2 % % %------------------ ---------- ---------- ----------HMVUK & Ireland 1.1 7.1 7.1Asia Pacific (1.7) 3.3 (1.0)Canada3 14.4 6.9 4.5------------------ ---------- ---------- ----------Total HMV 2.0 6.4 5.2Waterstone's 2.7 3.8 3.8------------------ ---------- ---------- ----------HMV Group 2.2 5.8 4.9------------------ ---------- ---------- ---------- 1 The five week period ended 8 January 2005 reflects trading over the keyChristmas period, while the 11 weeks ended 8 January 2005 covers trading sincethe half year. 2 Like for like sales growth and constant exchange total sales growth arestated at constant exchange rates. 3 Total sales include the results of HMV USA, where the final store closedon 3 November 2004. 4 Year on year growth over the corresponding period last year is based onresults translated at the actual weighted average exchange rates for the 37 weekperiod. Trading across the Group over the key Christmas period has been very strong,with total sales growth of over 10%, driven by excellent like for like salesperformance. In the five weeks ended 8 January 2005 HMV UK & Ireland achieved total salesgrowth of 12.0% reflecting like for like sales growth of 4.3% and a successfulstore opening programme. Market share was strong in all product areas with grossmargin in line with our expectations, down 10 basis points on the prior year. Waterstone's total sales rose by 8.7% in the same five week period includingexcellent like for like sales growth of 7.0%. This reflected a highly successfulChristmas trading strategy, which together with a higher mix of discountedtitles sold in the market this Christmas, resulted in gross margin 20 basispoints lower than last year. HMV Canada continued to deliver outstanding sales performance, with a like forlike sales increase of 21.6% over the Christmas period. DVD continues to performstrongly in this business. In HMV Asia Pacific a poor November result wasfollowed by much improved performance over Christmas with like for like salesgrowth of 2.7%. As widely reported, the Christmas period was preceded by weak trading conditionsin November and early December. Consequently, sales after 37 weeks are in linewith performance reported for the half year. The Group takes a cautious view ofthe outlook for the UK consumer economy, but expects it to prove sufficientlyresilient, when combined with the year to date sales and margin performance andoperating cost control, for the Group to meet its financial targets for the fullyear. Group profit and loss accountfor the period ended: -------------------- ------ ---------- ---------- ---------- 26 weeks ended 26 weeks ended 52 weeks ended 23 October 2004 25 October 2003 24 April 2004 (Unaudited) (Unaudited) (Audited) Notes £m £m £m-------------------- ------ ---------- ---------- ---------- Turnover 2 760.2 734.2 1,793.5Cost of sales (694.5) (670.4) (1,567.1)-------------------- ------ ---------- ---------- ----------Gross profit 65.7 63.8 226.4Administrativeexpenses (47.3) (45.5) (94.9)-------------------- ------ ---------- ---------- ----------Group operatingprofit 2 18.4 18.3 131.5Finance charges (5.1) (7.6) (13.9)-------------------- ------ ---------- ---------- ---------- Profit on ordinaryactivitiesbefore taxation 13.3 10.7 117.6Taxation onprofit on ordinaryactivities 4 (4.0) (3.3) (35.4)-------------------- ------ ---------- ---------- ----------Profit attributableto shareholders 9.3 7.4 82.2Proposed ordinarydividend 5 (6.8) (5.2) (23.4)-------------------- ------ ---------- ---------- ----------Transfer to profit and loss reserve 2.5 2.2 58.8-------------------- ------ ---------- ---------- ----------Earnings pershare - basic 3 2.3p 1.8p 20.4pEarnings pershare -diluted 3 2.3p 1.8p 20.2p-------------------- ------ ---------- ---------- ----------Dividend perOrdinary Share 5 1.7p 1.3p 5.8p-------------------- ------ ---------- ---------- ---------- 1 All results relate to continuing activities. 2 There is no difference between the results stated above and their historical cost equivalents. Statement of total recognised gains and lossesfor the period ended: -------------------------- ---------- --------- ---------- 26 weeks to 26 weeks to 52 weeks to 24 April 2004 23 October 2004 25 October 2003 (Audited) (Unaudited) (Unaudited) £m £m £m-------------------------- ---------- --------- ---------- Profit for the period 9.3 7.4 82.2Currency retranslation 0.8 1.3 1.8Net exchange gains(losses) on foreigncurrency borrowings(net of tax) 2.2 - (1.2)-------------------------- ---------- --------- ---------- Other recognised gainsand losses 3.0 1.3 0.6-------------------------- ---------- --------- ----------Total recognised gainsand losses since lastannual report 12.3 8.7 82.8-------------------------- ---------- --------- ---------- Reconciliation of movements in shareholders' fundsfor the period ended: ------------------------- ------ ---------- --------- -------- 26 weeks to 26 weeks to 52 weeks to 24 April 2004 23 October 2004 25 October 2003 (Audited) (Unaudited) Restated (Unaudited) Notes £m £m £m------------------------- ------ ---------- --------- -------- Profit for the period 9.3 7.4 82.2Ordinary dividend 5 (6.8) (5.2) (23.4)Other recognisedgains and losses 3.0 1.3 0.6Proceeds of issueof Equity Shares 0.9 0.2 0.2Movement in own shares (1.1) (1.6) (1.6)UITF 17 accrual forshare-based bonus scheme 0.8 0.4 0.9------------------------- ------ ---------- --------- --------Net increase inshareholders' fundsfor the period 6.1 2.5 58.9------------------------- ------ ---------- --------- --------Openingshareholders' funds (73.5) (132.4) (132.4)------------------------- ------ ---------- --------- --------Closingshareholders' funds (67.4) (129.9) (73.5)------------------------- ------ ---------- --------- -------- Group balance sheetsat period end:------------------------- ------ --------- --------- -------- 23 October 2004 25 October 2003 24 April 2004 (Unaudited) Restated (Audited) (Unaudited) Notes £m £m £m------------------------- ------ --------- --------- -------- Fixed assetsIntangible assets 2.0 2.0 2.0Tangible assets 161.0 158.2 156.4------------------------- ------ --------- --------- -------- 163.0 160.2 158.4Current assetsStocks 200.4 198.2 157.5Debtors 71.1 70.3 69.4Investments andshort-term deposits 2.3 2.4 2.0Cash at bank and in hand 104.6 108.2 175.2------------------------- ------ --------- --------- -------- 378.4 379.1 404.1------------------------- ------ --------- --------- --------Creditors: amountsfalling due within oneyearBorrowings (45.2) (37.3) (48.2)Other creditors (437.2) (416.6) (394.6)------------------------- ------ --------- --------- -------- (482.4) (453.9) (442.8)------------------------- ------ --------- --------- --------Net current liabilities (104.0) (74.8) (38.7)------------------------- ------ --------- --------- --------Total assets lesscurrent liabilities 59.0 85.4 119.7------------------------- ------ --------- --------- --------Creditors: amountsfalling due after morethan one yearBorrowings (118.2) (206.4) (182.3)Other creditors (0.1) (0.6) (0.1)------------------------- ------ --------- --------- -------- (118.3) (207.0) (182.4)------------------------- ------ --------- --------- --------Provisions forliabilities andchargesOther provisions (8.1) (8.3) (10.8)------------------------- ------ --------- --------- -------- (67.4) (129.9) (73.5)------------------------- ------ --------- --------- --------Capital and reservesCalled up share capital 6 4.1 4.1 4.0Share premium account 6 309.3 308.4 308.5Profit and loss account(including goodwillpreviously written off) 6 (378.0) (440.7) (384.3)Capital reserve 6 0.2 0.2 0.2Other reserves - own shares 6 (3.0) (1.9) (1.9)------------------------- ------ --------- --------- --------Equity shareholders'funds (67.4) (129.9) (73.5)------------------------- ------ --------- --------- -------- The interim financial statements were approved by the Board of Directors on 17January 2005. Group cash flow statementfor the period ended:--------------------------- ---------- ---------- --------- 26 weeks to 26 weeks to 52 weeks to 23 October 2004 25 October 2003 24 April 2004 (Unaudited) Restated (Audited) (Unaudited) £m £m £m--------------------------- ---------- ---------- --------- Net cash inflow fromoperating activities 63.6 77.2 210.6Returns on investments and servicingof finance:Net interest paid (4.5) (6.4) (12.2)--------------------------- ---------- ---------- --------- Net cash outflow fromreturns on investments andservicing of finance (4.5) (6.4) (12.2)--------------------------- ---------- ---------- --------- Tax paid (18.2) (6.6) (22.8)Net cash outflow fromcapital expenditure (24.7) (29.1) (54.1)Equity dividends paid toshareholders (18.2) (13.7) (19.0)--------------------------- ---------- ---------- --------- Net cash (outflow) inflowbefore management ofliquid resources and financing (2.0) 21.4 102.5--------------------------- ---------- ---------- --------- Management of liquidresources (0.3) (0.4) (0.3)--------------------------- ---------- ---------- --------- Financing:New loans/ Movements inshort-term facilities 0.4 - -Loan repayments (65.0) (10.0) (25.0)Proceeds of issue ofEquity Shares (net of expenses) 0.9 0.2 0.2Purchase of own shares (1.1) (1.6) (1.6)--------------------------- ---------- ---------- ---------Net cash outflow fromfinancing and managementof liquid resources (65.1) (11.8) (26.7)--------------------------- ---------- ---------- ---------(Decrease) increase incash in the period (67.1) 9.6 75.8--------------------------- ---------- ---------- --------- Reconciliation of operating profit to net cash flow from operating activities £m £m £m--------------------------- ---------- ---------- --------- Group operating profit 18.4 18.3 131.5Depreciation charge 19.9 19.5 44.6Loss on disposal of fixed assets - - 0.1Amounts utilised inrespect of provisions (2.4) (3.2) (0.4)UITF 17 accrual forshare-based bonus scheme (non-cash) 0.8 0.4 0.9Decrease in working capital 26.9 42.2 33.9--------------------------- ---------- ---------- ---------Net cash inflow fromoperating activities 63.6 77.2 210.6--------------------------- ---------- ---------- --------- Reconciliation of net cash flow to movement in net debt £m £m £m--------------------------- ---------- ---------- --------(Decrease) increase in cash (67.1) 9.6 75.8Cash outflow from financing (excluding movements 64.6 10.0 25.0in equity)Cash outflow from short-term deposits 0.3 0.4 0.3--------------------------- ---------- ---------- -------- Change in net debt resulting from cash flows (2.2) 20.0 101.1Exchange differences - - (0.3)Amortisation of deferred financing fees (0.9) (0.9) (1.9)--------------------------- ---------- ---------- -------- Decrease in net debt (3.1) 19.1 98.9Opening net debt (53.3) (152.2) (152.2)--------------------------- ---------- ---------- -------- Closing net debt (56.4) (133.1) (53.3)--------------------------- ---------- ---------- -------- Notes to the interim financial statements 1. Basis of preparation The interim financial statements have been prepared under the historical costconvention and on the basis of the accounting policies set out in the Group'sReport and Accounts for the 52 weeks ended 24 April 2004. The financialinformation set out in this report does not constitute statutory accounts withinthe meaning of the Companies Act 1985. Comparative figures for the 52 weeksended 24 April 2004 have been taken from the Group's audited statutory accounts,which have been delivered to the Registrar of Companies and on which the Group'sauditors expressed an unqualified opinion. The results for the 26 weeks to 25 October 2003 are unaudited and have beenrestated for the change in accounting policy on the introduction of UITF 38"Accounting for ESOP Trusts" and UITF 17 (revised) "Employee Share Schemes",which was implemented in the Report and Accounts for the 52 weeks ended 24 April2004. 2. Segmental analysis Turnover Operating Profit 26 weeks to 26 weeks to 52 weeks to 26 weeks to 26 weeks to 52 weeks to 23 October 2004 25 October 24 April 2004 23 October 2004 25 October 2003 24 April 2003 2004 £m £m £m £m £m £m------------ -------- -------- -------- --------- -------- --------By class of business:HMVUK & Ireland 383.1 360.9 930.1 15.4 16.6 95.5Asia Pacific 124.0 126.8 280.9 1.1 0.9 7.6North America 61.2 61.5 153.6 0.5 (1.8) 2.4------------ -------- -------- -------- --------- -------- --------Total HMV 568.3 549.2 1,364.6 17.0 15.7 105.5Waterstone's 191.9 185.0 428.9 1.4 2.6 26.0------------ -------- -------- -------- --------- -------- -------- Total 760.2 734.2 1,793.5 18.4 18.3 131.5------------ -------- -------- -------- --------- -------- --------By origin:United Kingdom 547.1 518.4 1,293.5 14.3 16.4 113.7Rest of Europe 27.9 27.5 65.5 2.5 2.8 7.8Asia Pacific 124.0 126.8 280.9 1.1 0.9 7.6North America 61.2 61.5 153.6 0.5 (1.8) 2.4America ------------ -------- -------- -------- --------- -------- -------- Total 760.2 734.2 1,793.5 18.4 18.3 131.5 ------------ -------- -------- -------- --------- -------- -------- Notes to the interim financial statements (continued) 3. Earnings per share 26 weeks ended 26 weeks ended 52 weeks ended 23 October 2004 25 October 2003 24 April 2004 £m £m £m--------------------------- ---------- --------- ---------Basic and diluted profitattributable to members ofthe holding company 9.3 7.4 82.2--------------------------- ---------- --------- --------- 26 weeks ended 26 weeks ended 52 weeks ended 23 October 2004 25 October 2003 24 April 2004 Number 'm Number 'm Number 'm--------------------------- ---------- --------- --------- Weighted average number of 403.4 403.2 403.1Ordinary Shares - basicDilutive share options 7.7 2.6 3.9--------------------------- ---------- --------- --------- Weighted average number of 411.1 405.8 407.0Ordinary Shares - diluted --------------------------- ---------- --------- --------- Earnings per Ordinary Share is calculated as follows: 26 weeks ended 26 weeks ended 52 weeks ended 23 October 2004 25 October 2003 24 April 2004 Pence Pence Pence-------------------------- ------- ------- -------Basic earningsper Ordinary Share 2.3 1.8 20.4Diluted earnings perOrdinary Share 2.3 1.8 20.2-------------------------- ------- ------- ------- 4. Taxation The tax charge is based on the estimated tax rate for the full year of 30% (2003H1: 31%). This is consistent with the effective rate of 30% for the 52 weeksended 24 April 2004. 5. Dividends The ordinary interim dividend of 1.7p per Ordinary Share (2003: 1.3p per share),amounting to £6.8m (2003: £5.2m), will be paid on 25 February 2005 toshareholders on the Register at close of business on 28 January 2005. Shareswill be quoted ex-dividend from 26 January 2005. 6. Share capital and reserves Share capital Share premium Other reserves Capital reserve Profit and loss account account £m £m £m £m £m-------------------- ------ ---------- -------- -------- --------As at 24 April 2004 4.0 308.5 (1.9) 0.2 (384.3)Retained profit for theperiod - - - - 2.5Shares issuedon exercise of options 0.1 0.8 - - -Currency retranslation - - - - 0.8Net exchange gains onforeign currencyborrowings (net of tax) - - - - 2.2Purchase of own shares - - (1.1) - -UITF 17 accrual forshare-based bonus scheme - - - - 0.8-------------------- ------ ---------- -------- -------- --------As at 23 October 2004 4.1 309.3 (3.0) 0.2 (378.0)-------------------- ------ ---------- -------- -------- -------- INDEPENDENT REVIEW REPORT TO HMV GROUP PLC Introduction We have been instructed by the Company to review the financial information forthe 26 week period ended 23 October 2004 which comprises the consolidated profitand loss account, consolidated statement of total recognised gains and losses,reconciliation of movements in shareholders' funds, consolidated balance sheet,consolidated cash flow statement, and the related notes 1 to 6. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. This report is made solely to the Company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the Company, for our work,for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the Directors. The Directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof HMV Group plc management and applying analytical procedures to the financialinformation and underlying financial data, and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied, unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly we do not express an audit opinion on the financialinformation. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the 26 weeks ended23 October 2004. Ernst & Young LLPRegistered AuditorLondon17 January 2005 Company Information Registered officeShelley House2-4 York RoadMaidenheadBerkshire SL6 1SR Registered number3412290 Corporate websitewww.hmvgroup.com Other websiteswww.hmv.co.ukwww.hmv.co.jpwww.hmv.comwww.hmv.com.auwww.waterstones.co.uk AuditorsErnst & Young LLP1 More London PlaceLondon SE1 2AF Financial advisors and brokersUBS Limited2 Finsbury AvenueLondon EC2M 2PP CitigroupCitigroup Centre33 Canada SquareCanary WharfLondon EI4 5LB Store Portfolio as at 23 October 2004 Store numbers Square footage Store numbers Square footage '000 sq ft 2004 2004 2003 '000 sq ft 2003HMVUK & Ireland 193 1,100 174 1,022Asia Pacific 87 503 81 468North America 102 446 107 487Total HMV 382 2,049 362 1,978Waterstone's 189 1,282 192 1,280HMV Group 571 3,330 554 3,257 Principal bankersThe Royal Bank of Scotland135 BishopsgateLondon EC2M 3UR LawyersSimmons & SimmonsCityPointOne Ropemaker StreetLondon EC2Y 9SS RegistrarsComputershare Investor Services PLCPO Box 82The PavilionsBridgwater RoadBristol BS99 7NH This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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