Final Results

12 September 2018

The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

MBL GROUP PLC

("MBL" or the "Company" or the "Group")

Final Results for the Year Ended 31 March 2018

MBL Group plc (AIM: MUBL) announces its final audited results for the year ended 31 March 2018. 

Key points:

· Group revenue including discontinued operations decreased by 17.2% to £13.2 million (2017: £16.0 million);

· The Garden and Home division operating profit before exceptional items increased by over 51%, this division is included in discontinued operations

· Home Entertainment division operating loss before exceptional items of £46,000 (2017: £383,000 profit), this division is included in discontinued operations and was treated as 'held for sale' as at 31 March 2018.

· Group loss for the year after taxation was £1,499,000 (2017: £158,000) including exceptional costs of £1,086,000 in the year (2017: £693,000)

· Net cash of £0.4 million (2017: £1.6 million), the Group remains debt free

· Group diluted loss per share of 8.7p (2016: 0.9p)

· No dividend is proposed

· The Garden and Home division was sold in March 2018 for £0.8 million in cash, all consideration received by 31 August 2018.

· The Home Entertainment division entered administration, after the year end, on 15 June 2018

· The Company became a Rule 15 Cash Shell under Rule 15 of the AIM Rules for Companies from 15 June 2018.

· The accounts have been prepared on a non-going concern basis, as the Directors do not expect the Group to continue trading within the next twelve months

Extracts from the final results appear below. The Annual Report & Accounts will be available on the Company's website, www.mblgroup.co.uk, from later on today and will be sent to shareholders shortly thereafter, together with the Notice convening the Annual General Meeting.

For further information please contact:

MBL Group plc Tel: 01454 777 831

Anton Lane, Chairman

SPARK Advisory Partners Limited Tel: 0203 368 3555

Mark Brady

SI Capital Limited Tel: 01483 413500

Nick Emerson

CHAIRMAN'S STATEMENT

The Group's objectives were to pursue the conclusions of the strategic review and dispose of the trading businesses. A sale of Redworth Limited was achieved in March 2018, with the final deferred payment being received post year end on 31 August 2018. However, increased problematic trading conditions for the Group's other trading division resulted in Windsong International Limited being place into administration post year end.

The Group faced a decline in sales during the year. The decline is attributable to several issues, both operationally and within the market.

It is the Chairman's view that the Garden & Home business, whilst remaining relatively stable, was affected by competition within the market and disruption to the operation of the business. In particular, the development of the business was affected by not identifying replacement management following their termination in 2016. Following the sale of Redworth Limited, and its subsidiary The Garden and Home Trading Company Limited, the companies and their underlying businesses are treated as a discontinued operation.

In line with our stated strategy, the Company had been looking to dispose of the Home Entertainment division for some time as part of a plan to realise value for shareholders and return capital to them in the short to medium term. Whilst this strategy was still being implemented, it became clear to the Board that this process would take longer than first envisaged because of market demand. In addition, post period end, a worsening of trading in this division in the weeks leading up to 15 June 2018 meant that the Company would have needed to inject further capital into the Home Entertainment division. Having taken insolvency and legal advice, the Board decided that it was in the best interests of all shareholders to appoint administrators to Windsong in order to preserve the Company's cash reserves and not erode them further. The company and its underlying business has been treated as a discontinued operation and the assets and liabilities at 31 March 2018 have been classified as 'held for sale'.

The Group's subsidiaries have further incurred several exceptional expenses affecting profitability including the settlement of an unfair dismissal claim. The Group has also incurred the costs of undertaking two investigations at the requests of certain shareholders. The second of these investigations remains in progress at the year end.

The Board is seeking to engage with shareholders regarding the commerciality of ongoing investigations and the future of the company with the hope of returning shareholder value. The Board sought direction from the shareholders on 5 September 2018 whether they desired the Company's shares to remain admitted to trading on AIM. Shareholders voted in favour of remaining on AIM and as such the Board intends to seek Shareholder direction to establish the desired future of the Company.

Operational Review

Sales within the home entertainment market declined by 23.6%, in a very challenging market.

Home Entertainment

Our Home Entertainment division experienced a downturn during the year with a decrease in revenue of 23.6% to £7.3 million (2017: £9.5 million). Exports account for 68% of the division's sales (2017: 64%). In the previous year sales had been stimulated with the continued growth of the vinyl market and back catalogue sales in the audio market driven by the death of high profile artists which revived interest in their music. Gross profit margins dropped marginally to 10.7% from 12.9% due mainly to worsening trading conditions and stock management. Profitability declined compared with the prior year at £46,000 loss (2017: £383,000 profit), a 112% reduction.

Exceptional costs of £58,000 were incurred, being a £35,000 loyalty bonus and one-off IT infrastructure costs of £23,000.

The division has been treated as a discontinued operation. 

Garden & Home

The Garden & Home division specialised in the mail order and online sales of garden bird food and associated wildlife products and aquatics supplies. The division is a discontinued operation.

Sales during the year decreased by 7.6% to £5.9 million (2017: £6.4 million). The decline related to increased competition in the market place entwined with the change of senior management. There has also been a continued focus on controlling costs and this has led to an operating profit for the business of £373,000 (2017: £247,000), an increase of over 51%. The UK market for bird food remains highly competitive but the ability to buy competitively helped maintain margins within the division.

Exceptional costs of £316,000 were met by Redworth Limited which related to an employment dispute and the associated legal and professional fees.

The division is a discontinued operation.

STRATEGIC REPORT

Financial Review

The Segmental Analysis in the Notes to the Financial Statements presents the Group's performance and position by division.

The Group loss for the year after taxation was £1,499,000 (2017: £158,000) however it is worth noting that there were £712,000 of exceptional items in the year (2017: £693,000). In addition to this it also includes £467,000 of losses relating to discontinued operations compared to £745,000 of profit in the prior year.

The Group has sold off subsidiaries that contributed to its trading activity with the aim of realising value for shareholders. The decision to proceed with the sale process arose from a recognition that the Group's performance may be unduly affected by differing views and influences of shareholders. The previous boards considered the businesses would better perform after a sale and under new management although the sale process became prolonged. The current board continued the sale process.

The Group's business has significantly reduced and as such we are sensitive to the costs of maintaining an AIM listing. The Board are also conscious of providing shareholders with a return of capital and appreciate this could be affected by a number of issues including ongoing investigations and the cost of remaining on AIM. These factors were considered as part of the strategic review and were relevant in reaching the conclusion that the Group sell its trading businesses.

Cash flow, working capital and borrowing facilities

Despite a number of one-off exceptional costs incurred by the Group along with disposal of subsidiaries, it ended the year with cash balances of £0.4 million (2017: £1.6 million) and £0.8 million receivable following the disposal of subsidiaries. The net cash outflow from operating activities was £1.3 million (2017: £0.2 million). Exceptional items of £712,000 adversely affected the Group cash position, which includes a fine of £75,000 on 13 August 2018 for breaches of AIM regulations during September 2017. The Group remains debt free.

Dividends

The Board is not recommending the payment of a dividend.

Future Strategy

The Company became a Rule 15 Cash Shell under Rule 15 of the AIM Rules for Companies from 15 June 2018. Within six months of becoming an AIM Rule 15 cash shell, the Company must make an acquisition or acquisitions which constitute(s) a reverse takeover under Rule 14 of the AIM Rules for Companies. In the event that the Company does not complete a reverse takeover under AIM Rule 14 within six months of becoming a cash shell, the Exchange will suspend trading in the Company's ordinary shares pursuant to AIM Rule 40 on 17 December 2018.The Board intends to seek to guidance from shareholders on desired future Group activities and the return of capital to shareholders.

The Group currently has no trading activity since an Administrator was appointed to Windsong International Limited on 15 June 2018. As at the time of writing, there is one subsidiary remaining within MBL Group, being Air Music and Media Copyright Limited, generating £30,000 of residual revenue from digital catalogue sales within the year. This is also included in discontinued operations as the directors are currently looking at the best way to dispose of this in the interest of shareholders.

On 5 September 2018 there was a General Meeting for the Shareholders to vote on the cancellation of the Company's admission to trading on AIM. The Shareholders did not vote in favour of this resolution and accordingly the Group will continue to be admitted to trading on AIM and will continue to incur monthly management charges and the costs of maintaining the AIM quotation. In addition, the Group may incur ongoing legal costs associated with the ongoing investigation, any claims and managing shareholder communications.

Since the disposal of trading businesses, and given the decision to remain quoted on AIM, ongoing running costs, potential investigations and claims will erode residual cash balances within the foreseeable future.

The Directors have formed the judgement that the Group is not expected to continue trading within the next 12 months and have therefore rebutted the going concern basis in preparing these financial statements as disclosed in the accounting policies.

Board Changes

The Board has seen significant changes during the year with both T Jackson-Smith and P Palframan leaving the Board and Anton Lane and James Reynolds being appointed.

A D Lane

Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2018

Continuing operations comprise the parent company only. All other activities of the group are included within discontinued operations. In accordance with IFRS 5, the comparative profit and loss account has been restated so that discontinued operations include those activities classified as discontinued in the current year.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2018

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2018

Notes to the Financial Statements for the year ended 31 March 2018

1. Source of Information

The preliminary financial statements for the financial year ended 31 March 2018 have been approved by the Board of Directors. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2018 or 2017 but is derived from those accounts. Statutory accounts for 2017 have been delivered to the registrar of companies, and those for 2018 will be delivered by 30 September 2018. The auditor, MHA Moore and Smalley, has reported on those accounts; their report for 2018 was unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation.

2. Operating segments 

The segments disclosed below reflect the Group's management and internal reporting structure.

Consolidated statement of comprehensive income for year ended 31 March 2018:

Consolidated statement of comprehensive income for year ended 31 March 2017:

3. (Loss)/profit per share

The calculation of basic (loss)/profit per share has been calculated on the (loss)/profit after tax of £1,499,000 (2016: £158,000) and the weighted average number of shares in issue during the year of 17,296,067 shares of 7.5p each (2016: 17,296,067 shares of 7.5p each).

The calculation of diluted (loss)/profit per share is identical to that used for the basic (loss)/profit per share.

The adjusted (loss)/profit per share, as disclosed below, was calculated using the (loss)/profit after tax for the financial year calculated with reference to the basic and diluted weighted average share in issue during the year.

4. Consolidated statement of changes in equity

 5. Annual Report

The Annual Report, together with the Notice of Annual General Meeting, will be posted to shareholders shortly. Copies of the Annual Report will be available on request from the MBL Group plc, Edge House, UB1 Vantage Office Park, Old Gloucester Road, Hambrook, Bristol, BS16 1RS and will also be available to download from the Company's website at www.mblgroup.co.uk.