1 March 2011 – trading update

Another disappointing trading update from HMV has seen the shares plunge to a new record low.  Challenging trading conditions have continued to adversely affect the company with the result that full year profits are expected to be moderately below forecasts.  The major concern remains the high level of debt which is expected to be at least £130m at the year end at the end of April.  The group has entered talks with its lenders to change the terms of its arrangements so that these are suitable for future trading conditions.  Given the high level of uncertainty, the shares are no more than a WEAK HOLD.