30 Nov 2011 11:28
30 November 2011
MBL GROUP PLC
("MBL" or "THE GROUP")
Trading Update
The Board of MBL, the UK distributor of home entertainment products, is providing the following trading update.
As reported in the Preliminary Results announcement on 26 August 2011, the Group has continued to review its business plan following the substantial downsizing in operations and the challenges of operating within the home entertainment market which resulted, as previously announced, in the disposal of Global Media Vault and MBL Guernsey PCC Limited, in October 2011.
Music Box Leisure, the subsidiary which provides merchandised supply to retailers, has undergone a significant reduction in its activities since the announcement of the loss of its major customer in April 2011, which accounted for 80% of Group turnover. This company has faced increasing competition and pressure on margins and, in particular, its own suppliers entering the market and opening direct channels with key customers. Management has undertaken a review of its customer base and a number of customers are no longer being supplied, including WHSmith, Best Buy and the Co-operative societies, due to reductions in sales volumes leading to significant falls in the profitability of these trade relationships.
In addition, the operations of Outnow Home Entertainment, the DVD rental business acquired in February 2011, have also been reviewed. Due to the significant working capital requirements to support this company, in particular to purchase new release stock and advertising, a decision has been made to cease trading and commence an insolvency process for this subsidiary. The business was purchased as a low cost entry into DVD rental and generated a loss in the year to date of £152k.
The Board continues to review the investment requirements of all parts of the Group in light of the pressure on working capital, which has been hindered by the loss of credit limits and bank facilities which we reported earlier this year. However, as at today, the Group has cash balances of £0.8m and the Board's immediate aim continues to be to stabilise the Group.
The other remaining key operating divisions of the Group:
·; Windsong International Limited - an export distributor;
·; MBL Direct Limited - a wholesale and online distributor; and
·; Big Retail Limited - a small chain of retail outlets trading as Bee.com with an online presence
continue to focus on the home entertainment market and, in what has been a very challenging trading environment in the year to date, have performed in line with the Board's expectations.
A further update will be made with the Group's Interim results for the six months ended 30 September 2011, that are scheduled to be released on 9 December 2011.
Enquiries:
MBL Group plc Tel: 0161 767 1620
Peter Cowgill, Non-Executive Chairman
Brewin Dolphin Limited Tel: 0845 213 4729
Mark Brady
Sean Wyndham-Quin
Bishopsgate Communications Ltd. Tel: 020 7562 3350
Deepali Schneider
Natalie Quinn
mbl@bishopsgatecommunications.com