HMV Group PLC Interim Results -13-
December 13 2012 - 2:00AM
UK Regulatory
The Directors of HMV Group plc are listed in the HMV Group plc
Annual Report for the 52 weeks ended 28 April 2012. A list of
current Directors is maintained on the HMV Group plc website
www.hmvgroup.com.
By order of the Board
Trevor Moore Ian Kenyon
Chief Executive Officer Group Finance Director
12 December 2012 12 December 2012
INDEPENDENT REVIEW REPORT TO HMV GROUP PLC
Introduction
We have been engaged by the company to review the interim
condensed consolidated financial statements in its interim
financial results report for the 26 weeks ended 27 October 2012
which comprises the interim consolidated income statement, interim
consolidated statement of comprehensive income, interim
consolidated balance sheet, interim consolidated statement of
changes in equity, interim consolidated cash flow statement and
related notes 1-18. We have read the other information contained in
the interim financial results report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept 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 financial results report is the responsibility of,
and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The interim condensed consolidated financial
statements included in this interim financial results report has
been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European
Union.
Our Responsibility
Our responsibility is to express to the company a conclusion on
the interim condensed consolidated financial statements in the
interim financial results report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the interim condensed consolidated
financial statements in the interim financial results report for
the 26 weeks ended 27 October 2012 is not prepared, in all material
respects, in accordance with International Accounting Standard 34
as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Services
Authority.
Emphasis of matter - going concern
In forming our review opinion on the interim condensed
consolidated financial statements, which is not modified, we have
considered the adequacy of the disclosure made in Note 2, Basis of
Preparation, concerning the Group's ability to continue as a going
concern. These include the following material uncertainties which
cast significant doubt on the Group's ability to continue as a
going concern:
- 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 ability to trade is dependent on continuity of supply. Any
reduction or withdrawal of supplier support and the inability to
negotiate more favourable commercial terms with suppliers, will
materially adversely affect the Group's margins.
- future trading may not be in line with the assumptions in the
Group's latest forecasts. These are dependent on the current
economic environment, the strength of core physical product markets
in the important gifting season, the strength of the releases
relative to forecast, HMV's market share and the impact of the new
store service initiatives.
These uncertainties may lead to an inability of the Group to
maintain sufficient cash flow in order to operate within the
existing debt facilities, including the requirement to clear down
the GBP50 million working capital facility for a period of 31
consecutive days and repaying the amortisation payment of GBP30
million in January 2013.
The Directors continue to maintain regular and constructive
dialogue with the Group's banks which includes keeping them fully
informed in relation to current trading.
The financial statements do not include the adjustments that
would result if the Group were unable to continue as a going
concern, which would include writing down the carrying value of
assets to their recoverable amount and providing for any further
liabilities that might arise.
Ernst & Young LLP
Birmingham
12 December 2012
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The company news service from the London Stock Exchange
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