TIDMMUBL
RNS Number : 5825A
MBL Group PLC
12 September 2018
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 GBP13.2 million (2017: GBP16.0 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 GBP46,000 (2017: GBP383,000 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 GBP1,499,000
(2017: GBP158,000) including exceptional costs of GBP1,086,000 in
the year (2017: GBP693,000)
-- Net cash of GBP0.4 million (2017: GBP1.6 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
GBP0.8 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
2018 GBP'000 2017
GBP'000
--------------------------------- ------------- ---------
Revenue 7,259 9,500
================================= ============= =========
Operating (loss)/ profit before
exceptional costs (46) 383
--------------------------------- ------------- ---------
Our Home Entertainment division experienced a downturn during
the year with a decrease in revenue of 23.6% to GBP7.3 million
(2017: GBP9.5 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 GBP46,000 loss (2017: GBP383,000
profit), a 112% reduction.
Exceptional costs of GBP58,000 were incurred, being a GBP35,000
loyalty bonus and one-off IT infrastructure costs of GBP23,000.
The division has been treated as a discontinued operation.
Garden & Home
2018 2017 GBP'000
GBP'000
------------------------------------- --------- -------------
Revenue 5,925 6,414
===================================== ========= =============
Operating profit before exceptional
costs 373 247
------------------------------------- --------- -------------
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 GBP5.9 million (2017:
GBP6.4 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 GBP373,000
(2017: GBP247,000), 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 GBP316,000 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 GBP1,499,000
(2017: GBP158,000) however it is worth noting that there were
GBP712,000 of exceptional items in the year (2017: GBP693,000). In
addition to this it also includes GBP467,000 of losses relating to
discontinued operations compared to GBP745,000 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 GBP0.4 million (2017: GBP1.6 million) and GBP0.8
million receivable following the disposal of subsidiaries. The net
cash outflow from operating activities was GBP1.3 million (2017:
GBP0.2 million). Exceptional items of GBP712,000 adversely affected
the Group cash position, which includes a fine of GBP75,000 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 GBP30,000 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 YEARED 31 MARCH 2018
2018 2017
GBP'000 GBP'000
Continuing operations (restated)
Administrative expenses - normal (321) (220)
Administrative expenses - exceptional (712) (693)
Operating loss (1,033) (913)
Financial income 1 5
Financial expenses - 5
Net financing income 1 10
Loss before tax (1,032) (903)
Taxation - -
Loss from continued activities (1,032) (903)
(Loss)/profit from discontinued operations (467) 745
Total comprehensive expense for the
year (1,499) (158)
Basic and diluted loss per share in
pence (8.7) (0.9)
Basic and diluted loss per share in
pence (continuing) (6.0) (5.2)
Basic and diluted loss per share in
pence (discontinued) (2.7) 4.3
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
2018 2017
GBP'000 GBP'000
Non-current assets
Property, plant and equipment - 208
Intangible assets - 140
Deferred tax assets - 88
-------- --------
Total non-current assets - 436
Current assets
Inventories - 702
Trade and other receivables 847 1,682
Cash and cash equivalents 360 1,626
-------- --------
1,207 4,010
Assets held for disposal 1,596 -
Total current assets 2,803 4,010
Current liabilities
Trade and other payables (374) (1,261)
Tax payable - -
Provisions (472) (472)
-------- --------
(846) (1,733)
Liabilities held for disposal (743) -
Total current liabilities (1,589) (1,733)
Net current assets 1,214 2,277
Total assets less current liabilities 1,214 2,713
Equity
Share capital 1,297 1,297
Merger reserve - (2,800)
Retained earnings (83) 4,216
-------- --------
Total equity 1,214 2,713
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2018
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Loss for the year (1,499) (158)
Adjustments for:
Depreciation 67 75
Loss on disposal of subsidiary 37 -
Financial income (1) (5)
Financial expense - (5)
Taxation 11 (40)
(1,385) (133)
Decrease/(increase) in inventories 319 (13)
(Increase)/decrease in trade and
other receivables 1,279 23
Increase/(decrease) in trade and
other payables (380) (95)
Increase in assets/liabilities held (853) -
for sale
Net cash outflow from operating activities (1,020) (218)
Cash flows from investing activities
Interest received 1 5
Acquisition of property, plant and
equipment (4) (21)
Cash leaving group on disposal of (243) -
subsidiaries
Net cash outflow from investing activities (246) (16)
Cash flows from financing activities
Interest refunded - 5
Net cash inflow from financing activities - 5
Net decrease in cash and cash equivalents (1,266) (229)
Cash and cash equivalents at 1 April 1,626 1,855
Cash and cash equivalents at 31 March 360 1,626
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:
Home Entertainment Garden Group
and Home Other Total
GBP'000 GBP'000 GBP'000 GBP'000
(discontinued) (discontinued) (discontinued)
Gross revenue 7,259 5,925 30 13,214
Intersegment revenue - - - -
------------------- --------------- --------------- --------
Revenue 7,259 5,925 30 13,214
------------------- --------------- --------------- --------
Operating (loss)/profit before
exceptional and central costs (46) 373 51 378
Exceptional costs allocated
to segments (58) (316) - (374)
------------------- --------------- --------------- --------
(104) 57 51 4
Exceptional costs - Group (712)
Impairment of Home Entertainment (423)
Loss on disposal of Garden
and Home (37)
Central costs (321)
--------
Operating loss (1,489)
Net financing income 1
Taxation expense (discontinued) (11)
--------
Loss for the period (1,499)
--------
Home Entertainment Garden Other,
and Home incl. Group
GBP'000 GBP'000 GBP'000
Total assets and liabilities
Assets held for sale 1,591 - 5 1,596
Liabilities held for sale (743) - - (743)
Total assets (excluding held
for sale) - - 1,207 1,207
Total liabilities (excluding
held for sale) - - (846) (846)
------------------- --------------- --------------- --------
Total segment net assets 848 - 366 1,214
------------------- --------------- --------------- --------
Capital Expenditure
Tangible fixed assets 3 1 - 4
------------------- --------------- --------------- --------
Depreciation 11 11 45 67
------------------- --------------- --------------- --------
Consolidated statement of comprehensive income for year ended 31
March 2017:
Home Entertainment Garden Group
and Home Other Total
GBP'000 GBP'000 GBP'000 GBP'000
(discontinued) (discontinued) (discontinued)
Gross revenue 9,500 6,414 40 15,954
Intersegment revenue - - - -
------------------- --------------- --------------- --------
Revenue 9,500 6,414 40 15,954
------------------- --------------- --------------- --------
Operating profit before
exceptional and central costs 383 247 75 705
Exceptional costs (693)
Central costs (220)
--------
Operating loss (208)
Net financing income 10
Taxation expense 40
--------
Loss for the period (158)
--------
Home Entertainment Garden Other,
and Home incl. Group
GBP'000 GBP'000 GBP'000
Total assets and liabilities
Total assets 1,725 641 1,940 4,306
Goodwill - 140 - 140
Total liabilities (703) (387) (643) (1,733)
------------------- --------------- --------------- --------
Total segment net assets 1,022 394 1,297 2,713
------------------- --------------- --------------- --------
Capital Expenditure
Tangible fixed assets 1 13 7 21
------------------- --------------- --------------- --------
Depreciation 10 18 47 75
------------------- --------------- --------------- --------
3. (Loss)/profit per share
The calculation of basic (loss)/profit per share has been
calculated on the (loss)/profit after tax of GBP1,499,000 (2016:
GBP158,000) 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.
2018 2017
GBP'000 GBP'000
Loss after taxation from continuing
operations (1,032) (903)
(Loss)/profit after taxation from
discontinued operations (467) 745
Total comprehensive expense for
the year (1,499) (158)
Basic and diluted loss per share
in pence (8.7) (0.9)
Basic and diluted loss per share in pence (continuing
operations) (6.0) (5.2)
Basic and diluted (loss)/profit per share in
pence (discontinued operation) (2.7) 4.3
4. Consolidated statement of changes in equity
Share Merger Retained Total
capital reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000
At 1 April 2016 1,297 (2,800) 4,374 2,871
Total comprehensive expense
for the year - - (158) (158)
--------- --------- ---------- --------
At 31 March 2017 1,297 (2,800) 4,216 2,713
Total comprehensive expense
for the year - - (1,499) (1,499)
Transfers - 2,800 (2,800) -
--------- --------- ---------- --------
At 31 March 2018 1,297 - (83) 1,214
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GGUQPBUPRGPP
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