For the purpose of the interim consolidated cash flow statement,
cash and cash equivalents comprise the following:
26 weeks 26 weeks 52 weeks
to to to
27 October 29 October 28 April
2012 2011 2012
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
----------------------------- ------------ ------------ ----------
Cash at bank and in hand 27.6 40.2 18.0
Short-term deposits 1.1 1.4 1.1
28.7 41.6 19.1
----------------------------- ------------ ------------ ----------
Cash held in disposal group 1.5 - 9.6
----------------------------- ------------ ------------ ----------
30.2 41.6 28.7
----------------------------- ------------ ------------ ----------
13. Loans and borrowings
On 7 August 2012 the Group amended its existing Bank Facility
with its existing lenders and extended it to 30 September 2014 or,
if certain conditions are satisfied, to 30 September 2015.
The GBP220m bank facility comprises a GBP70m term loan (Facility
A), a GBP90m term loan (Facility B) and a GBP60m revolving credit
facility (Facility C). The facility requires mandatory payment of
GBP30m in January 2013 and a further GBP10m in January 2014.
An arrangement fee of 2% of the maximum facility amount
(GBP4.4m) is payable in January 2013 with an ongoing obligation to
pay commitment fees. Ongoing interest is payable at a margin of
4.0% over LIBOR. An exit fee is also payable on the amount
outstanding under Facility B, which will be payable upon repayment
of Facility B or 30 September 2014. The rate at which the exit fee
accrues started at 5% per annum and increased on 1 April 2012 to
8%. It will increase again on 1 January 2013 to 14% to the extent
that Facility B has not been repaid by that date. Any amounts not
repaid in line with the voluntary repayment schedule incur interest
at a margin of 8% over LIBOR and an exit fee of 10% from five
months after non-repayment. The notional balance of the Facility B
term loan to which the exit fee applies at any time, reduces
following the application of the proceeds of any equity raising by
the Group, which are required to be applied in part against that
term loan balance. In addition, the Group has an obligation to
prepay the facilities with the proceeds of any subordinated debt
issues, certain disposals and from any excess cash flow
generated.
The Amended Facility contains the same prohibitions on the
payment of dividends and restrictions on capital expenditure as the
previous Facility and the lenders maintain the warrants issued to
them previously.
The Amended Facility is subject to financial covenants in
respect of gearing and fixed charge cover (interest and rent).
These are tested quarterly, with thresholds reset to reflect
current trading and long term projections within the following
ranges over the term of the facility:
- Gearing: Ratio of Average Consolidated Total Net Borrowings to
Consolidated EBITDA not to exceed a range of 6.58 to 1.71 to 1.
- Interest and Rent Cover: Ratio of Consolidated EBITDAR (EBITDA
before rent) to Consolidated Interest Plus Rent Payable to be not
less than 1.58 to 1.19 to 1.
There is also a continuing obligation to ensure that the
aggregate gross assets, revenue, and operating profits of the
guarantors are at least 90% of the Group (excluding HMV Live) at
all times. Finally, there is a clean-down requirement of 31
consecutive days per year, during which the Group cannot utilise
GBP50m of the GBP60m Revolving Credit Facility.
At 27 October 2012, GBP207.0m had been drawn down from the
facility (2011: GBP199.0m). Re-financing costs of GBP4.4m were
capitalised at inception of the facility and a further fee of
GBP4.4m (payable in January 2013) has also been capitalised. Both
fees are being amortised over the life of the facility to September
2014. GBP0.4m of exceptional costs have been charged to interest in
the 26 weeks ended 27 October 2012 (2011: GBP4.6m), all of which
relates to the arrangement of the new facility (2011: GBP1.9m). In
2011 a further non-cash charge of GBP2.7m related to the write-off
of financing fees incurred on the previous facility, which had been
capitalised.
The Group's wholly owned subsidiary, Mean Fiddler Group Ltd, had
a five year bank term loan, which was repaid during the period with
the proceeds of the disposal of Hammersmith Apollo Limited.
The Company has also issued warrants to the lenders at closing
representing 5% of the Company's total share capital (on the basis
that all outstanding warrants or options have been exercised). The
warrants are fully detachable and are convertible into Ordinary
Shares at any time from 30 June 2012 until the tenth anniversary of
the issue of the warrants (28 June 2021). The warrants, which are
classified as a financial liability, were recognised at inception
at their fair value of GBP2.2m. 4.4m warrants have been exercised
during the period and the remaining 18.1m warrants have been
revalued at 27 October at fair value of GBP0.3m (2011: GBP0.9m).
The movement in fair value since 29 April 2012 of GBP0.2m has been
recognised as other finance income in the income statement.
14. Provisions
GBPm
----------------------------- ------
As at 30 April 2011 13.7
Charged during the year 1.2
Disposed of with businesses (4.4)
Provisions utilised (3.7)
As at 29 October 2011 6.8
----------------------------- ------
As at 28 April 2012 11.9
Charged during the year 2.7
Provisions utilised (7.6)
As at 27 October 2012 7.0
----------------------------- ------
Analysed as:
Current 5.8
Non-current 1.2
----------------------------- ------
7.0
----------------------------- ------
Provisions consist of amounts in respect of store closures,
restructuring costs and onerous leases. The GBP2.7m provision
created during the period was largely in respect of restructuring
costs and store closures. The utilisation of provisions in the
current period mainly reflects the implementation of previously
announced restructuring initiatives.
15. Share capital
Number of
ordinary Ordinary
shares shares Share premium Total
Thousands GBPm GBPm GBPm
------------------------------------ ---------- --------- -------------- --------
As at 30 April 2011 423,587 4.2 342.9 347.1
Share premium account cancellation - - (342.9) (342.9)
------------------------------------ ---------- --------- -------------- --------
As at 29 October 2011 423,587 4.2 - 4.2
------------------------------------ ---------- --------- -------------- --------
As at 28 April 2012 423,587 4.2 - 4.2
Ordinary shares issued 3,147 0.1 - 0.1
------------------------------------ ---------- --------- -------------- --------
As at 27 October 2012 426,734 4.3 - 4.3
------------------------------------ ---------- --------- -------------- --------
16. Related party transactions
Payments of GBPnil (2011: GBP0.5m) have been made to
non-controlling interests in the current period.
The Group did not acquire any services in the period under
review from 7digital, a joint venture, (2011: GBP0.4m), There were
no balances outstanding at 27 October 2012 (2011: GBP0.1m).
17. Seasonality
Retail sales of entertainment products are subject to seasonal
fluctuations, with peak demand in the Christmas trading period,
which falls in the second half of the financial year. For the 26
weeks ended 27 October 2012, the level of sales from continuing
operations represented 33.0% (2011: 31.8%) of the annual level of
sales in the 52 weeks ended 28 April 2012.
18. Post balance sheet event
On 3 December the Group announced the sale of MAMA Group Limited
and its subsidiaries and its separately held interest in 50% of
Mean Fiddler Group Limited ("MAMA") to Juno Newco Limited, a wholly
owned subsidiary of Lloyds Development Capital Limited. The sale of
MAMA does not include the sale of G-A-Y Group Limited and Heaven
(London) Limited, which will be the subject of a separate
transaction, discussions for which are ongoing.
The net cash consideration for the sale of MAMA is GBP7.3m of
which GBP3.5m will be deferred for 12 months. The proceeds of sale
will be used to reduce the Group's debt.
Statement of Directors' responsibilities
The Directors confirm that this interim condensed set of
financial statements has been prepared in accordance with IAS 34 as
adopted by the European Union, and that the interim management
report herein includes a fair review of the information required by
DTR 4.2.7R and DTR 4.2.8R, namely:
-- The interim management report includes a fair review of the
important events during the first 26 weeks and a description of the
principal risks and uncertainties for the remaining 26 weeks of the
year; and
-- The interim management report includes a fair review of
disclosure of related party transactions and changes therein.
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