29 Aug 2013 07:00
29 August 2013
MBL GROUP PLC
Final Results for the year ended 31March 2013
The Board of MBL Group plc ("MBL" or the "Group") announces itsfinal audited results for the year ended 31 March 2013. Comparative figures are for the year ended 31 March 2012 unless otherwise indicated, and are restated for discontinued operations.
Key points:
· Group revenue (including discontinued operations) decreased to £15.8 million (2012: £28.1 million)
· Revenue from continuing operations decreased to £13.0 million (2012: £15.1 million)
· Loss before tax from continuing operations £0.5 million (2012: £0.7 million)
· Group loss before tax (including discontinued operations) £1.5 million (2012: £8.8 million)
· Group loss per share reduced to 8.7p (2012: loss 40.8p)
· Group diversified operations with acquisition of brands within the Garden sector during the year
· The Group remains debt free with cash balance of £3.1 million at year end (2012: £4.0 million) and £3.0 million at 27 August 2013
· No dividend is proposed.
* Reference to 'Group items, includes both continued and discontinued operations.
Commenting on these results, Peter Cowgill, Non-Executive Chairman of MBL, said:
"The Group has completed the wind-down of its unprofitable Home Entertainment activities and made the first steps during the year to redress its dependence on this weak sector, with the entry into the Garden and Leisure market in May 2012. The Group is now in a position to focus fully on its future and on growing its continuing businesses. "
Extracts from the final results appear below and a full version will be available on the Company's website www.mblgroup.co.uk in September 2013.
Enquiries:
MBL Group plc Tel: 0161 767 1620
Peter Cowgill, Non-Executive Chairman
N+1 Singer (Nomad and Broker) Tel: 020 7496 3000
Aubrey Powell
Alex Wright
CHAIRMAN'S STATEMENT
The Group has now completed its rationalisation programme which involved ceasing certain operations. During the period Group revenue, including discontinued operations, reduced by 43.8% to £15.8 million and the Group incurred an operating loss of £1.5 million. The reduction in sales reflects the discontinuation of much of the Group's home entertainment business, in particular Music Box Leisure, Big Retail and Global Media Vault which had either ceased to trade or were disposed of during the last two years.
The operations of Big Retail ceased at the end of March 2013 in line with the termination of the remaining store leases. Windsong International, the Group's only remaining home entertainment business, performed well in a challenging market.
During the year the Group continued to incur costs of winding down discontinued operations and disposing of legacy stock balances. At the year end the stock disposal activity and wind down had neared completion.
The Group purchased Garden Bird Supplies, Garden Centre Online and Listen 2 in May 2012. These businesses were fully integrated into the Group's Leyland operations within the financial year and contributed £2.9 million of sales. Although these businesses have been loss making in the initial period whilst integration and development plans are enacted, they are considered capable of generating profit in the short term.
The Group now operates within the two distinct markets of Home Entertainment and Garden and Leisure. Home Entertainment comprises Windsong International and MBL Direct and is based in Beckenham, Kent; Garden and Leisure comprises Garden Bird Supplies and Garden Centre Online and is based in Leyland, Lancashire. The Home Entertainment division is business-to-business; Garden and Leisure is direct-to-consumer. The operations were rationalised substantially over the year and the Group recognises that critical mass is now required to cover infrastructure costs. The development and growth of the Group's business is therefore vital for the future sustainability of the Group and its ability to deliver shareholder value.
The Group has completed the wind-down of its unprofitable Home Entertainment activities and made the first steps during the year to redress its dependence on this weak sector, with the entry into the Garden and Leisure market in May 2012. The Group is now in a position to focus fully on its future and on growing its continuing businesses.
Peter Cowgill
Non-Executive Chairman
29 August 2013
OPERATING REVIEW
The Group experienced a far more stable year in comparison to the preceding two years. As a consequence, the business was able to focus on consolidating its remaining operations and on integrating the Garden and Leisure businesses acquired in May 2012.
CONTINUING OPERATIONS
Home Entertainment
The Group historically specialised in home entertainment products. The weakness of the home entertainment market during the last few years and the Group's exit from supplying multiple retailers in early 2012 concentrated the Group's activities to specialist supply only.
Windsong International ("WI")
WI is an exporter of CDs and DVDs.
WI experienced a satisfactory year against a difficult global home entertainment market with its external sales reducing from £10.3 million to £8.6 million. Gross margins at WI remained comparable to last year.
MBL Direct ("MBLD")
MBLD is a wholesaler of CDs and DVDs primarily to independent and internet retailers. The independent retail sector in the UK continues to experience very tough trading conditions and as a result external revenue at MBLD decreased to £1.7 million from £4.5 million.
In the period, MBLD continued the disposal activity of surplus Group stock and maintained a core of customers that it services for new release and back catalogue titles. At the year end the stock disposal activity had neared conclusion.
Listen 2, a mail order audio book retailer, was acquired in May 2012 and integrated into the operations of MBLD. In the period the brand generated sales of £0.5 million which are included within MBLD's sales figure.
Garden and Leisure
In May 2012 the Group acquired Garden Bird Supplies and Garden Centre Online, taking the Group into new product areas that are less susceptible to the longevity and commercial challenges facing its traditional market of home entertainment.
Garden Bird Supplies ("GBS")
GBS is a mail order direct-to-consumer brand which supplies garden bird food, accessories and wildlife related products through catalogue and online channels. The brand was acquired in May 2012.
GBS experienced an encouraging eleven months during which it generated sales of £2.2 million for the Group. At acquisition the brand operated from two locations and was fully integrated into the Leyland operations in autumn 2012.
Garden Centre Online ("GCO")
GCO is a mail order direct-to-consumer brand which supplies garden related products through online and catalogue channels. The brand was acquired in May 2012.
GCO experienced a difficult 2012 due to the effect of poor weather conditions which impacted on the gardening sector throughout the UK. In autumn 2012 the brand was integrated into the Group's Leyland operations. Sales for the eleven month period since acquisition were £0.3 million. The product offering has been extended to include plants and a catalogue channel introduced since year end with a new website planned for launch in early autumn 2013.
DISCONTINUED OPERATIONS
In line with the Group's partial exit from the home entertainment market, a number of subsidiaries have been wound down during the financial year in addition to those discontinued or disposed of in the prior financial year.
For the purposes of the Financial Statements these businesses have been classified as discontinued and are described below. As a consequence, only the reported loss after tax of discontinued operations is disclosed within the Financial Statements.
Big Retail
The Group operated four home entertainment retail stores which were branded 'Bee.com'. During the year all of the retail stores either reached or approached their lease termination dates and plans to close the retail stores commenced in early 2013, with all stores closed by April 2013. Sales increased to £2.7 million compared to £2.1 million in 2012, with promotional sales activity driving additional customer interest.
MBL 2010 ("Bee.com")
Bee.com operated as a direct-to-consumer website which predominantly sold home entertainment products. During the prior year it was used as a channel to sell the surplus stock within the Group. At the beginning of the year the website ceased to trade. Sales in the prior year were £0.5 million.
Music Box Leisure
As previously announced, Music Box Leisure ceased trading in February 2011. Sales of £0.1 million relating to stock clearance took place within the year, compared to sales of £9.1 million for the financial year ended 31 March 2012.
Global Media Vault ("GMV") and MBL Guernsey PCC
GMV is a digital distributor of home entertainment titles and was, with another Group subsidiary, MBL Guernsey PCC, sold to Sainsburys Supermarkets plc in October 2011. Sales for the prior year for the two combined companies were £0.9 million.
Trevor Allan
Chief Executive
29 August 2013
FINANCIAL REVIEW
Summary of results
31/03/2013 | 31/03/2012 | |
Continuing operations | Restated | |
£ million | £ million | |
Revenue | 13.0 | 15.1 |
Reported operating loss from continuing operations | (0.5) | (0.7) |
Net interest | - | - |
Reported loss before tax from continuing operations | (0.5) | (0.7) |
Taxation
| - | (0.3) |
Discontinued operations (net of taxation)
| (1.0) | (6.0) |
Loss for the period | (1.5) | (7.0) |
Basic loss per share (pence) | (8.7)p | (40.8)p |
Basic loss per share (pence) continuing operations |
(2.9)p |
(6.1)p |
Key Financial Points
The Financial Statements have been prepared to separately present the financial performance of the Group's continuing operations and discontinued operations. The prior year accounts have been restated to provide a comparable position. The Segmental Analysis in the Notes to the Financial Statements presents the Group's consolidated revenue streams.
The Group experienced a far more stable trading environment than in prior years and was able to focus on building its business for the future. Group sales reduced by 43.8% to £15.8 million (2012: £28.1 million) reflecting the impact of the prior year's discontinued operations. Sales from continuing operations were £13.0 million (2012: £15.1 million), the reduction representing further contraction within the home entertainment market. Operating results were adversely affected by the reduction in sales, property costs at Leyland, the central costs associated to being listed and the management of the final wind down of the home entertainment business. The Group is in the process of reducing the property size of its Leyland operations which is expected to have a positive effect on results in the current financial year.
Sales from the brands within the Garden and Leisure division, which were acquired in May 2012, were £2.5 million (2012: £nil) and these brands were fully integrated into the Group's existing Leyland operations during the year, the costs of which impacted on the operating results.
Trading results
31-Mar | 31-Mar | 31-Mar | 31-Mar | Change | ||
2013 | 2012 | 2013 | 2012 | |||
Sales | Sales | Operating loss | Operating loss | |||
Activity | £ million | £ million | Change | £ million | £ million | |
Home entertainment | 10.3 | 14.9 | (30.9)% | (0.2) | (0.6) | 66.7% |
Garden and leisure | 2.5 | - | - | (0.2) | - | - |
Other | 0.2 | 0.2 | - | (0.1) | (0.1) | - |
Continuing operations | 13.0 | 15.1 | (13.9)% | (0.5) | (0.7) | 28.6% |
Discontinued operations |
2.8 |
13.0 | (78.5)% |
(1.0) |
(8.0) | 87.5% |
Total Group | 15.8 | 28.1 | (43.8)% | (1.5) | (8.7) | 82.8% |
Cash flow, working capital and borrowing facilities
The Group has consumed £0.9 million net in cash over the year (2012: net cash generation of £0.5 million) predominantly due to the £0.7 million acquisition in May 2012. The Group's operating loss was largely offset by cash flows generated from working capital realisation, the sale of assets and a corporation tax repayment.
At 27 August 2013 cash balances were £3.0 million and the Group remained debt free. The Group continues to be challenged by the lack of available supplier credit but is in a position to fund its operations for the foreseeable future.
Taxation
The Group secured the final repayment of corporation tax during the year relating to the March 2012 accounts. The Group's effective tax rate for the year was 5.2% compared to 19.64% in 2012.
Earnings per share
Basic and diluted loss per share for the Group was 8.7p (2012: 40.8p).
Lisa Clarke
Financial Director
29 August 2013
Consolidated Statement of Comprehensive Income
for year ended 31 March 2013
2013 | 2012 | |
Continuing Operations |
Restated | |
£000 | £000 | |
Revenue | 12,973 | 15,052 |
Cost of sales | (9,879) | (12,899) |
________ | ________ | |
Gross profit from continuing operations | 3,094 | 2,153 |
Distribution expenses | (323) | 16 |
Administrative expenses | (3,250) | (2,911) |
________ | ________ | |
Operating loss from continuing operations | (479) | (742) |
Financial income | 7 | - |
Financial expense | (1) | - |
________ | ________ | |
Net financing costs | 6 | - |
________ | ________ | |
Loss before tax from continuing operations | (473) | (742) |
Taxation expense | (23) | (310) |
________ | ________ | |
Loss from continuing operations | (496) | (1,052) |
________ | ________ | |
Discontinued operations |
(1,010) |
(6,013) |
Other comprehensive income | - | - |
________ | ________ | |
Total comprehensive expense for the year |
(1,506) |
(7,065) |
________ | ________ | |
Basic and diluted loss per share |
(8.7)p |
(40.8)p |
Continuing operations basic and diluted loss per share | (2.9)p | (6.1)p |
Consolidated Statement of Financial Position
at 31 March 2013
2013 | 2012 | |
£000 | £000 | |
Non-current assets | ||
Property, plant and equipment | 321 | 321 |
Intangible assets | 450 | - |
Other investments | - | 400 |
_______ | _______ | |
771 | 721 | |
_______ | _______ | |
Current assets | ||
Inventories | 551 | 998 |
Trade and other receivables | 2,547 | 3,420 |
Tax receivable | - | 891 |
Cash and cash equivalents | 3,075 | 4,011 |
_______ | _______ | |
6,173 | 9,320 | |
_______ | _______ | |
Total assets | 6,944 | 10,041 |
____ | _____ | |
Current liabilities | ||
Trade and other payables | 1,393 | 2,902 |
Tax payable | 51 | - |
Provisions | 472 | 600 |
_______ | _______ | |
1,916 | 3,502 | |
_______ | _______ | |
Non-current liabilities | ||
Deferred tax liability | - | 5 |
___ | ___ | |
Total liabilities | 1,916 | 3,507 |
________ | ________ | |
Net assets | 5,028 | 6,534 |
________ | ________ | |
Equity attributable to equity holders of the parent | ||
Share capital | 12,972 | 12,972 |
Share premium | 21,531 | 21,531 |
Reserves | (2,800) | (2,800) |
Retained earnings | (26,675) | (25,169) |
_______ | _______ | |
Total equity | 5,028 | 6,534 |
________ | ________ | |
Total equity and liabilities | 6,944 | 10,041 |
________ | ________ |
Consolidated Statements of Cash Flows
for year ended 31 March 2013
2013 | 2012 | |
£000 | £000 | |
Cash flows from operating activities | ||
Loss for the year | (1,506) | (7,065) |
Adjustments for: | ||
Depreciation | 263 | 691 |
Amortisation of intangible assets | - | 125 |
Impairment of investments | 400 | - |
Financial income | (7) | - |
Financial expense | 2 | 23 |
Loss on sale of property, plant and equipment | 14 | 9 |
Profit on disposal of subsidiary | - | (527) |
Taxation | 76 | (1,727) |
_ | _ | |
(758) | (8,471) | |
Decrease in trade and other receivables | 873 | 12,904 |
Decrease in inventories | 697 | 12,326 |
Decrease in trade and other payables | (1,637) | (17,865) |
_ | _ | |
(825) | (1,106) | |
Tax received | 874 | 1,270 |
_ | _ | |
Net cash inflow from operating activities | 49 | 164 |
_ | _ | |
Cash flows from investing activities | ||
Interest received | 7 | - |
Proceeds from sale of property, plant and equipment | 28 | 121 |
Acquisition of intangible assets | - | (125) |
Acquisition of property, plant and equipment | (298) | (537) |
Proceeds from sale of subsidiary | - | 1,147 |
Payments to acquire trade and assets | (720) | - |
Cash disposed with subsidiary | - | (245) |
_ | _ | |
Net cash (outflow)/inflow from investing activities | (983) | 361 |
_ | _ | |
Cash flows from financing activities | ||
Interest paid | (2) | (23) |
Payment of finance lease liabilities | - | (1) |
_ | _ | |
Net cash outflow from financing activities | (2) | (24) |
_ | _ | |
Net (decrease)/increase in cash and cash equivalents | (936) | 501 |
Cash and cash equivalents at 1 April | 4,011 | 3,510 |
_ | _ | |
Cash and cash equivalents at 31 March | 3,075 | 4,011 |
_ | _ |
Notes to the Financial Statements
for the year ended 31 March 2013
1. Source of Information
The preliminary financial statements for the financial year ended 31 March 2013 were approved by the Board of Directors on 29 August 2013. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2013 or 2012 but is derived from those accounts. Statutory accounts for 2012 have been delivered to the registrar of companies, and those for 2013 will be delivered following the Company's Annual General Meeting.
The auditors, KPMG Audit Plc, have reported on those accounts; their report for 2013 was unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation. The report for 2012 was (i) unqualified and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
2. Operating segments
The segments disclosed below reflect the Group's management and internal reporting structure. During the current and prior financial year, the following subsidiaries were disposed or ceased trading and have been classified as discontinued operations within these Financial Statements:
- Big Retail Limited
- MBL 2010 Limited
- Megafit Limited
- Cash4discs Limited
- Music Box Leisure Limited
- Global Media Vault Limited
- MBL Guernsey PCC Limited
- Outnow Home Entertainment Limited
Consolidated statement of comprehensive income for the year ended 31 March 2013
Home entertainment |
Garden and Leisure |
Other |
Total continuing |
Discontinued |
Group Total | |
£000 | £000 | £000 | £000 | £000 | £000 | |
Gross revenue | 11,285 | 2,505 | 186 | 13,976 | 2,836 | 16,812 |
Intersegment revenue | (998) | (5) | - | (1,003) | (14) | (1,017) |
Revenue | 10,287 | 2,500 | 186 | 12,973 | 2,822 | 15,795 |
Operating (loss)/profit before central costs |
(206) |
(141) |
164 |
(183) |
(957) |
(1,140) |
Central costs | (296) | - | (296) | |||
Operating loss | (479) | (957) | (1,436) | |||
Net financing expense | 6 | - | 6 | |||
Taxation expense | (23) | (53) | (76) | |||
Loss for the period | (496) | (1,010) | (1,506) | |||
Total assets and liabilities | ||||||
Total assets | 2,553 | 732 | 3,133 | 6,418 | 76 | 6,494 |
Goodwill | - | 450 | - | 450 | - | 450 |
Total liabilities | (1,270) | (203) | (151) | (1,624) | (292) | (1,916) |
Total segment net assets/(liabilities) | 1,283 | 979 | 2,982 | 5,244 | (216) | 5,028 |
Capital Expenditure | ||||||
Intangible assets | - | 450 | - | 450 | - | 450 |
Tangible fixed assets | 33 | 239 | 45 | 317 | 1 | 318 |
Depreciation | 122 | 45 | 10 | 177 | 86 | 263 |
Amortisation | - | - | - | - | - | - |
Consolidated statement of comprehensive income for the year ended 31 March 2012 (restated)
Home entertainment |
Garden and Leisure |
Other |
Total continuing |
Discontinued |
Group Total | |
£000 | £000 | £000 | £000 | £000 | £000 | |
Gross revenue | 15,339 | - | 189 | 15,528 | 18,281 | 33,809 |
Intersegment revenue | (476) | - | - | (476) | (5,236) | (5,712) |
Revenue | 14,863 | - | 189 | 15,052 | 13,045 | 28,097 |
Operating (loss)/profit before central costs |
(649) |
- |
411 |
(238) |
(8,027) |
(8,265) |
Central costs | (504) | - | (504) | |||
Operating loss | (742) | (8,027) | (8,769) | |||
Net financing expense | - | (23) | (23) | |||
Taxation income | (310) | 2,037 | 1,727 | |||
Loss for the period | (1,052) | (6,013) | (7,065) | |||
Total assets and liabilities | ||||||
Total assets | 3,313 | - | 3,712 | 7,025 | 2,120 | 9,145 |
Goodwill | - | - | - | - | - | - |
Total liabilities | (703) | - | (139) | (842) | (1,769) | (2,611) |
Total segment net assets | 2,610 | - | 3,573 | 6,183 | 351 | 6,534 |
Capital Expenditure | ||||||
Intangible assets | - | - | - | - | 125 | 125 |
Tangible fixed assets | 23 | - | - | 23 | 515 | 538 |
Depreciation | 57 | - | 2 | 59 | 632 | 691 |
Amortisation | - | - | - | - | 125 | 125 |
3. Loss per Share
The calculation of basic loss per share has been calculated on the loss after tax of £1,506,000 (2012: £7,065,000) and the weighted average number of shares in issue during the year of 17,296,068 shares of 75p each (2011: 17,296,068 shares of 75p each).
The calculation of diluted earnings per share is identical to that used for the basic loss per share.
The adjusted loss per share, as disclosed below, was calculated using the loss after tax for the financial year calculated with reference to the basic and diluted weighted average share in issue during the year.
2013
£000 | 2012 restated £000 | |
Loss after taxation from continuing operations | (496) | (1,052) |
Discontinued operations | (1,010) | (6,013) |
Total comprehensive expense for the year | (1,506) | (7,065) |
Continuing operations Basic and diluted loss per share |
(2.9)p |
(6.1)p |
Discontinuing operations Basic and diluted loss per share |
(5.8)p |
(34.7)p |
Basic and diluted loss per share | (8.7)p | (40.8)p |
4. Discontinued operations
2013 | 2012 restated | ||
£000 | £000 | ||
Results of discontinued operations | |||
Revenue | 2,822 | 13,045 | |
Expenses | (3,779) | (21,095) | |
Results from operating activities | (957) | (8,050) | |
Tax | (53) | 2,037 | |
Loss for the year | (1,010) | (6,013) | |
Basic loss per share - Discontinued | (5.8) pence | (34.7) pence | |
Cash flow (used in)/from discontinued operations | 2013 | 2012 restated | |
£000 | £000 | ||
Net cash (used in)/from operating activities | (900) | 1,562 | |
Net cash used in investing activities | (1) | (321) | |
Net cash flows for the year | (901) | 1,241 |
5. Acquisitions in the year
MBL Group plc acquired certain assets of Garden Bird Supplies, Garden Centre Online and Listen 2 on 1 May 2012 for an initial consideration of £720,000. The assets were acquired by a newly formed company, The Garden and Home Trading Company Limited.
Garden Bird Supplies is a mail order garden bird food, accessories and wildlife products retailer.
Garden Centre Online is an internet retailer of garden hardware products.
Listen 2 is a mail order home entertainment retailer.
All businesses are direct-to-consumer.
The consolidated results include revenue of £2,905,000 and a loss of £141,000 in respect of the acquired assets since the date of incorporation.
The table below shows the provisional goodwill calculation:
2013 | |
£000 | |
Net assets at acquisition date: | |
Tangible fixed assets | 20 |
Inventory | 250 |
Net assets | 270 |
Consideration: cash | 720 |
Goodwill | 450 |
6. Annual report
The Annual Report will be posted to shareholders in early September. Copies of the Annual Report will be available on request from the MBL Group plc, Unit 9 Enterprise Court, Lancashire Enterprise Business Park, Centurion Way, Leyland, PR26 6TZ and will be available to download from the Company's website at www.mblgroup.co.uk.