HMV has reported a 7% rise in full-year sales at its live music arm HMV Live, although operating profit fell from £3m to £1.8m and an impairment charge of £37.1m was incurred following a review of the division.
The struggling music retailer, which this month announced resignations of both its chief executive Simon Fox and finance director David Wolffe, also confirmed that preliminary discussions are underway regarding options for disposing of HMV Live, which includes 13 music venues and a festivals business, following the sale of its Hammersmith Apollo for £32m.
It came as the group reported a pre-tax loss of £38.6m for the year to 28 April, against flat profits in the previous year. Like-for-like sales fell 12.1%, with music downloads in particularly being cited for the decline.
Sales in HMV Live were £50.1m, up from £46.9m, although the previous reporting period was 53 weeks.
“The venues division traded strongly with an increased number of events held this year and higher spend per head. Following the opening of G-A-Y Manchester in April 2011, the expansion of the venue operation continued with the successful opening of the 1,500 capacity Manchester Ritz in September 2011.”
The division incurred costs of £0.3m due to the cancellation of the 2012 Vintage music festival. “The festivals division performed in line with expectations, with operating profit £1m higher than prior year. The new Wilderness festival achieved critical acclaim in its first year while the two key established festivals, Lovebox and Global Gathering, increased ticket sales significantly with improved profitability.”
HMV said: “It is expected that in the period following the disposal of the Hammersmith Apollo, management will continue the strategic review of the remaining Live business and the Company is currently in preliminary discussions regarding potential options for its disposal. During this period the Live business will be managed to maintain its value to potential bidders.
“Options continue to be explored with regard to the remainder of the HMV Live business.”
Sony Music, Oakley Capital, the investment vehicle of Time Out magazine owner Peter Dubens; NEC; AEG, owner of the O2 arena, have all reportedly expressed an interest in acquiring the live music division.
HMV added: “An assessment was made of the carrying value of the assets against fair value, which resulted in an impairment charge of £37.1m. In addition, the results of HMV Live have been classified as a discontinued operation and the comparative period has been restated accordingly.”
Philip Rowley, chairman of HMV, said: “Whilst our financial performance this past year has evidently been disappointing the board is confident that the year ahead will see a significant financial improvement.”
