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Interim Financial Results for the 26 weeks ended 23 October 2010

09 December 2010

HMV Group plc, the UK’s leading retailer of music, video, games and books, today announces its interim financial results for the 26 weeks ended 23 October 2010.

HMV and Waterstone's Christmas trading to be driven by strong line-up of products, including in music Take That, Cheryl Cole, JLS, Westlife; in video Toy Story 3, Sex and the City 2, Eclipse and Shrek 4; in games Kinect for Xbox360, Call of Duty: Black Ops, Assassin's Creed Brotherhood, GTA V and FIFA 11; and books from Jamie Oliver, Michael McIntyre, Sebastian Faulks, Stephen Fry, Nigella Lawson, Keith Richards and Neil MacGregor

Financial highlights

Total sales £749.5m (2009: £797.0m), down 6.0%. Like for like sales down 11.5% (2009: 2.1%)
HMV UK & Ireland total sales down 15.3%, including like for like sales down 16.1%
Waterstone's total sales down 2.4%. Like for like sales down 3.2%
Seasonal loss before tax of £41.3m (2009: loss of £24.9m)
Loss after tax of £30.5m (2009: loss of £17.8m)
Basic EPS loss of 7.4p (2009: loss of 4.2p)
Dividend policy reviewed. Interim dividend 0.9p per share (2009: 1.8p)
Underlying net debt of £151.6m (2009: £88.1m)
Announced disposal of HMV store at 360 Oxford Street for £13.75m

Operational highlights

Continued progress in the transformation of HMV to a broad-based entertainment brand

new products increased to 12% of sales (2009: 9%)
in Live division, successful opening of HMV Institute, Birmingham, and further new venue, the Ritz in Manchester, to open in the second half

Good progress on turnaround at Waterstone's, including refocusing on range and local offer, and driving sales of related product

Outlook

The outcome of our full financial year will be largely determined by the next four weeks of the key Christmas trading period, which together with the final four months of our financial year, account for 60% of our full year sales. Despite more encouraging trading at the beginning of the second half, the start to the Christmas trading period has been undermined by the severe weather of the last two weeks, which has significantly affected consumer footfall and consequently makes trading patterns hard to determine at this stage.

Commenting, Chief Executive Simon Fox said:

"The increased seasonal loss reflects the tough trading conditions in HMV UK, where good progress in growing new product categories was not sufficient to offset weak entertainment markets. In Waterstone's, the recovery plan is on track, and in all businesses we are very well prepared for the important weeks ahead, with a strong line-up of offers across all product categories and a focus on delivering high quality service both in-store and online."

Enquiries

HMV Group	Simon Fox, Neil Bright, Paul Barker	020 7404 5959 *
Brunswick	Nick Claydon, Laura Cummings, Jennifer Renwick	020 7404 5959

All enquiries on 9 December should be directed via Brunswick. A Christmas trading update will be issued on 13 January 2011.

Slides to accompany this announcement are available for viewing or download at: http://www.hmvgroup.com/en/investors/presentation/financial-presentations/presentations-2010.aspx

Notes for editors

HMV Group is one of the world's leading retailers of music, video and electronic games and the leading retailer of books in the United Kingdom and Ireland in terms of total sales. As of 23 October 2010 it operated 412 HMV and 10 Fopp stores selling music, video and games in five countries and 311 Waterstone's bookstores, principally in the United Kingdom and Ireland. All of the Group's retail operations, both in the United Kingdom and internationally, are wholly owned.

During the previous financial year the Group completed the acquisition of the MAMA Group of companies, which comprise a diverse range of music-related businesses, including the operation of live music and entertainment venues, music festivals and artist management activities.