25 June 2009

Hollywood Media Services Plc

('HMS' or the 'Group')

Trading Update and Suspension

The Board of Hollywood Media Services Plc announces that the Group has suffered a downturn in trade in May and June 2009 with revenues significantly below those of last year (particularly in June 2009, which so far has seen year on year sales down over 50 per cent.).  As such the Group is expected to show a loss for the six months to 30 June 2009.

As stated in the announcement of 28 April 2009, the combination of short lead times for contracts in this industry and the uncertainties inherent in the general economic situation makes it difficult to forecast. This has been evidenced in the unexpected downturn of the last two months. The Group has also experienced a fall in revenues from the contract for The Bill due to the new production schedule which came into effect in May 2009, although the Group has secured a new contract for The Bill, which will run through to 2010.   With regard to the recent acquisitions, the directors remain of the view that, as previously announced, The Casting Suite and Production Switchboard should break even during 2009.

May is normally the start of the busy season for the Group and as such, the downturn in trade has adversely impacted the Group's available working capital, which was already at its low point after the traditionally lean fourth and first quarters.  

The Group has identified a number of measures to reduce costs by up to £0.5 million (on an annualised basis), the majority of which are expected to comprise salary cuts by staff and directors, whilst maintaining the Group's ability to deliver services.  In addition, the Group is seeking to raise further funding, whether through further asset based finance and/or an issue of equity and/or other means.  Together, the cost reductions and fund raisings should help stabilise the Group's working capital position.

The publication of the annual report and accounts for the year ended 31 December 2008 has been delayed beyond 30 June pending satisfactory progress on the above.  The Company has therefore requested that trading in its shares be suspended until the report and accounts are published   Shareholders will be updated in due course.

For further information please contact: 

www.hmservicesplc.com