RNS Number:7954U
Home Entertainment Corporation PLC
29 November 2005


Home Entertainment Corporation PLC

                            Pre-Close Trading Update

TUESDAY, 29 November 2005 -- So far during Home Entertainment Corporation's
current financial year, the retail industry has experienced very demanding
trading conditions. Whilst the development of the business has continued, with
the group making good progress towards unifying its identity under the ChoicesUK
brand, HEC has not been immune to the difficult retail environment.

HEC has successfully converted 75 of its retail stores to ChoicesUK and plans to
re-brand further stores in the second half. It has also closed and disposed of 8
loss-making stores and not renewed leases on a further two. No new openings are
planned.

Against a background of substantial selling price deflation in DVDs, with piracy
continuing to be a major issue, the sell-thru business has achieved sales volume
and market share growth with games resuming growth despite a shortage of
hardware. However, the rental business has continued to decline, although at a
lower rate than for the market as a whole, along with sales of pre-paid mobile
phones. Overall, sales for the retail division fell during the period.

Following the change of board responsibility for the retail business in August
2005, the product management teams have been restructured and have conducted a
comprehensive re-appraisal of stock resulting in a write down, principally
relating to games, of approximately #2 million.

As a result of the actions taken, the Board believes that the ChoicesUK retail
business will be profitable in the second half when the business should also
benefit from the further re-branding planned.

The ChoicesUK local business has continued to expand profitably its leading
position in the convenience sector, increasing to more than 7,800 the number of
outlets it serves.

HEC's "direct to home" activities (ChoicesUK Direct and ChoicesUK.com) have
achieved real growth and its fulfilment activities with LOVEFiLM, the online
rental company, continue to be profitable.

The new ChoicesUK TV venture has been successfully launched and is operating
within budget. In a first step to utilise its teleshopping expertise in
partnership with third parties, ChoicesUK TV has recently entered into a
collaboration with Playboy TV for operating the Playboy Store on Sky channel 287
between 8pm and 11pm.

At the same time as re-positioning the group, management has focused on
improving operational and financial efficiency. As part of this continuing
process, the company has rationalised central costs to produce annualised
savings of #1 million with further efficiencies planned.
The substantial steps taken to re-position the business have resulted in
non-recurring and exceptional costs, relating to stock write-offs,
rationalisation, and launch of ChoicesUK TV, of approximately #3.0 million for
the first half of the current financial year.

Overall, for the 28 weeks ending 16 December 2005, the Board anticipates that
sales will be approximately #76 million compared to #79.2 million for the same
period last year. Having successfully recouped the operating losses suffered in
the early part of the year, the Board expects to show a loss for the period,
before tax and after exceptional and non-recurring items, of approximately #3.3
million equating to a loss after tax of approximately #2.1 million.

As a result of the actions taken by management to re-position the business and
reduce costs, profitability at the operating level has been restored and sales
growth has resumed. However, the Board does not expect that the financial
performance in the second half will be sufficient to achieve market expectations
for the full year.

Although trading conditions remain challenging, the foundations for the future
development of the business are sound and HEC will continue to take best
advantage of the opportunities presented to the company.

ENDS

Contacts

Simon Bloomfield, Bankside Consultants
Tel: 020 7367 8888; mobile: 07771 758517

Iain Muspratt, Chairman, Home Entertainment Corporation
Tel: 01733 363099; mobile 07771 595595




                      This information is provided by RNS
            The company news service from the London Stock Exchange

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