Half Yearly Report

28 December 2012

MBL GROUP PLC

(AIM: MUBL)

("MBL" or "THE GROUP")

Unaudited Interim Financial Statements for the Six Months Ended 30 September 2012

The Board of MBL Group plc announces its interim results for the six months ended 30 September 2012.

Key Points

·; Revenue from continuing operations £7.3m (2011: £8.0m), down 8.8%;

·; Loss before tax from continuing operations of £1.0m (2011: loss £0.7m);

·; Loss per share from continuing operations of 6.2p (2011: loss 4.7p)

·; Group revenue (including discontinued operations) decreased to £7.4m (2011: £15.7m);

·; Group loss before tax (including discontinued operations) reduced to £1.1m (2011: £7.2m);

·; Group loss per share (including discontinued operations) for the period of 6.4p (2011: loss 43.9p);

·; Results impacted by final stages of wind down and implementation of new strategy following loss of major contract in 2011;

·; Group remains debt free with cash balances of £3.0m at 30 September 2012.

Peter Cowgill, Chairman of MBL, commented:

"The Group has experienced a period of significant change within the reported six months whilst it focused on the integration of newly acquired businesses and adapting its existing businesses to the ongoing challenges within the home entertainment industry. The Group has made progress towards completing the wind down of its discontinued operations and is better positioned to focus on its future."

--ENDS-

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 / James White

Chairman's Statement

The Group has experienced a period of significant change within the reported six months whilst it concentrated on the integration of newly acquired businesses and adapting its existing businesses to the ongoing challenges within the home entertainment industry. The Group has made progress towards completing the wind down of its discontinued operations and is better positioned to focus on its future.

Group Performance

A summary of the Group performance is shown in the table below:

CONTINUING OPERATIONS

Windsong

Windsong, an exporter of specialist and rare CDs and DVDs, experienced a fall in sales of £1,682k. The fall is considered to be due to weak market conditions within the home entertainment market as a whole. As a consequence, operating profit fell significantly to £88k (2011: £410k).

MBL Direct

MBL Direct, a wholesaler to independent and internet retailers, also experienced a challenging period. The company continued to focus on the disposal of legacy stock within the Group and was affected by the general poor market sales conditions. The company integrated the Listen2 mail order brand, acquired in May 2012, into its operations which contributed £340k of revenue. The operating loss increased to £774k (2011: loss £671k) impacted by both the market conditions and the costs of integrating Listen2. Activity focused on disposing legacy stock balances will cease in January 2013 and the Board is reviewing the future viability of the wholesale activities.

Retail

The four retail stores, which are branded as Bee.com, experienced their first full six month period of trading, with sales increasing to £1,354k from £451k. The change in retail proposition yielded an improved operating performance with losses reducing to £213k from £404k. The stores continue to be adversely affected by the general poor retail environment. The stores are on short term leases and there are no current plans to open any additional stores in the near future.

Garden

The Garden Bird Supplies and Garden Centre Online brands, which were acquired in May 2012, were integrated into the Leyland operations in the early summer. Whilst Garden Bird Supplies performance was encouraging, the Garden Centre Online experienced a very difficult summer in line with market conditions in this sector. The combined businesses generated sales of £1,098k and an operating loss of £67k, having been impacted by the cost of integration.

Overheads

Overhead costs have continued reduce in line with the wind down of discontinued operations and reduction in Group sales. Service and supply contracts which were appropriate for the former size of the Group have been exited whilst negotiations are ongoing to reduce the footprint of the Leyland property.

DISCONTINUED OPERATIONS

The challenging environment led to a number of the Group's subsidiaries being wound down or disposed during the previous financial year, with Music Box Leisure ceasing to trade and Global Media Vault and MBL Guernsey PCC being disposed. During the period, MBL 2010 which traded as an online home entertainment retailer also ceased to trade. In the period, sales from discontinued operations were £147k (2011: £7,776k) producing an operating loss of £36k (2011: loss of £6,490k).

For the purposes of the Financial Statements these businesses have been classified as discontinued. As a consequence, only the reported loss after tax of discontinued operations is disclosed within the Financial Statements.

Funding position

The working capital of the Group has reduced to a level appropriate to its continuing operations. At 30 September 2012, the Group had positive cash balances of £3.0m and remained without bank loan or overdraft facilities.

The Group continues to face the challenge of a lack of available supplier credit but is in a strong position to fund its existing operations for the foreseeable future.

Group Strategy and Outlook

The Board has continued with its strategy of transitioning the Group towards direct to consumer sales and to reduce the reliance on the home entertainment sector. The performance in the first half of the year has been challenging, particularly in the Group's core home entertainment market, but remained in line with management's expectations.

The businesses core to the Group's future are Windsong International and Garden Bird Supplies. These combined businesses have the potential to deliver sustainable revenue and profit growth.

The Group has achieved stability in the period following the turbulent and uncertain year it had experienced following the loss of its major customer in April 2011. The Board continues to look for opportunities to further strengthen the Group's prospects for the future.

Peter Cowgill

Chairman

28 December 2012 

Condensed Consolidated Statement of Total Comprehensive Income

For the period ended 30 September 2012

Condensed Consolidated Statement of Financial Position

As at 30 September 2012

Unaudited Condensed Consolidated Statement of Changes in Equity

For the period ended 30 September 2012

Consolidated Statement of Cash Flows

For the period ended 30 September 2012

Notes

1. Basis of preparation

MBL Group Plc (the 'Company') is a company incorporated and domiciled in the United Kingdom. The half-year financial report for the 6 month period to 30 September 2012 represents that of the Company and its subsidiaries (together referred to as the 'Group').

This half-year financial report is an interim management report as required by DTR 4.2.3 of the Disclosure and Transparency Rules of the UK's Financial Services Authority and was authorised for issue by the Board of Directors on 28 December 2012.

The half-year financial report is prepared in accordance with the EU endorsed standard IAS 34 'Interim Financial Reporting'. The comparative figures for the year ended 31 March 2012 are not the Group's statutory accounts for that financial year. Those accounts have been reported on by the Group's Auditor and delivered to the Registrar of Companies. The Report of the Auditor was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 of the Companies Act 2006.

The information contained in the half-year financial report for the 6 month period to 30 September 2012 and 30 September 2011 is unaudited.

As required by the Disclosure and Transparency Rules of the UK's Financial Services Authority, the half-year financial report has been prepared by applying the same accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 March 2012.

The Group's policy is to maintain the ability to continue as a going concern, in order to provide returns to the shareholder and benefits to other stakeholders. Accordingly the going concern basis has been adopted in preparing these interim results.

The consolidated financial statements of the Group for the year ended 31 March 2012 are available upon request from the Company's registered office at MBL Group plc, Unit 9 Enterprise Court, Lancashire Enterprise Business Park, Centurion Way, Leyland, Lancashire, PR26 6TZ.

2. Going concern

The financial report has been prepared on a going concern basis, which the Directors believe to be appropriate for the following reasons.

The Directors have prepared cash flow forecasts to 31 March 2014 taking account of reasonable possible changes in trading performance. These forecasts show the Group to be cash positive throughout the next 15 months and make a number of assumptions around revenue and profitability of the remaining business activity.

These forecasts demonstrate the Group has appropriate funds which the directors believe are sufficient for the Group to continue to trade for at least the next 12 month period. In addition the Group continues to reflect an overall net assets position and is debt free.

The Group had a cash balance of £3.0m as at 30 September 2012 and currently does not have a bank overdraft or loan facilities.

The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis in preparing the financial report.

3. Unaudited segmental analysis

The Group comprises the following main business segments:

Windsong The sale of specialist and rare home entertainment products predominantly to the export market.

MBL Direct The sale of home entertainment products to specialist retailers and the sale of audio products to end consumers via mail order.

Garden and Leisure The sale of garden bird and garden leisure related products direct to consumer via mail order and online channels.

Retail The sales of home entertainment products via retail outlets.

Other A combination of revenue streams including the license of film and music rights for manufacture, sale and download.

Discontinued The distribution, merchandising and sale of home entertainment products to general retailers and the sale of home entertainment products to the end consumer via the internet.

Consolidated statement of comprehensive income for period ended 30 September 2012:

Consolidated statement of comprehensive income for period ended 30 September 2011:

Consolidated statement of comprehensive income for the year ended 31 March 2012:

4. Taxation

The income tax charge has been estimated by the Group based on adjustments to tax payable in respect of previous years and the level of losses incurred in the period ending 30 September 2012.

5. Earnings per share

The calculation of the basic earnings per share is based on the loss after taxation divided by the weighted average number of shares in issue, being 17,296,068 (period ended 30 September 2011: 17,296,068; year ended 31 March 2012: 17,296,068).

6. Property, plant and equipment

During the period, the Group acquired assets with a cost of £180k (period ended 30 September 2011: £259k; year ended 31 March 2012: £537k).

Assets with a net book value of £17k were disposed by the Group (period ended 30 September 2011: £75k; year ended 31 March 2012: £130k), resulting in a net profit of £1k (period ended 30 September 2011: loss of £28k; year ended 31 March 2012: loss of £9k).

7. Provisions

8. Acquisitions

During the period, MBL Group plc acquired certain assets certain assets of Listen2 ("L2"), Garden Bird Supplies ("GBS") and Garden Centre Online ("GCO") from Flying Brands plc for a total cash consideration of £690,000, having received the benefit of a working capital adjustment of £30,000. The assets were acquired by a newly incorporated company, The Garden and Home Trading Company Limited.

Listen2is a direct mail order catalogue and telephone-based retail business which specialises in the home entertainment market.

Garden Bird Supplies is an established direct mail order, online and telephone-based retail business which specialises in the sale of garden bird seed and associated products.

Garden Centre Online is an online and telephone-based retail business which specialises in the sale of garden and outdoor leisure equipment.

The consolidated results include revenue of £1,438,000 and a loss of £34,000 in respect of the acquired assets since the date of incorporation.

The table below shows the provisional goodwill calculation at the acquisition date:

9. Discontinued operations

9. Discontinued operations (continued)

10. Director's responsibility statement

We confirm that to the best of our knowledge:

• The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU;

• The interim management report includes a fair review of the information required by:

a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first 6 months of the financial year and their impact on the condensed set of financial statements; and a description of principal risks and uncertainties for the remaining 6 months of the year; and

b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first 6 months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

On behalf of the Board

Lisa Clarke

28 December 2012