Interim Results

8th Dec 2008 07:00



  8 DECEMBER 2008

MBL GROUP PLC

(the "Group")

Unaudited Interim Financial Statements for the Six Months Ended 30 September 2008

The Board of MBL Group plc, formerly Air Music and Media Group plc, the UK distributor of home entertainment products, is pleased to announce its unaudited interim results for the six months ended 30 September 2008.

Key Points

 

Commenting, Peter Cowgill, Chairman of MBL, said: "The results for the first half of the year are positive and have been achieved against the backdrop of an uncertain economic climate. The Group serviced new customers that had been acquired in the second half of the last financial year and, despite the challenging trading conditions, experienced a satisfying 20% growth in sales to £34.9m and a 16% increase in operating profit to £2.2m.

"The Group is currently in the most important trading period of the year. Whilst the Board continues to recognise the challenging market conditions they remain confident that a solid platform has been developed from which to take advantage of market opportunities."

--ENDS--

Enquiries:

MBL GROUP PLC Tel: 0161 767 1620

Peter Cowgill (Chairman) 

BISHOPSGATE COMMUNICATIONS LIMITED  Tel: 020 7562 3350

Maxine Barnes    

SEYMOUR PIERCE LIMITED Tel: 020 7107 8032

Mark Percy  

Chairman's Statement

I am pleased to announce the interim results for the six months to 30 September 2008. During the period, the Group serviced new customers that had been acquired in the second half of the last financial year and, despite the challenging trading conditions, experienced a satisfying 20% growth in sales to £34.9m and a 16% increase in operating profit to £2.2m.

Financials

Sales for the period were £34.9m (2007: £29.0m). Operating profit was £2.2m (2007: £1.9m). Net financing income was £78,000 (2007: expense £66,000). Profit before tax was £2.3m (2007: £1.9m). Earnings per share for the period was 8.9p (2007: 7.4p).  

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

	30 September	30 September		30 September	30 September
	2008	2007		2008	2007
	Sales	Sales		Operating	Operating
				profit	profit
Segment	£ m	£ m	Change	£ m	£ m	Change
Distribution (MBL)	31.9	25.3	26%	2.1	2.0	5%
Wholesale (ESD)	2.8	3.6	-22%	0.1	0.2	-50%
Other	0.2	0.1	100%	0.2	0.0	n/a
Central costs	0.0	0.0	-	-0.2	-0.3	-33%
	34.9	29.0	20%	2.2	1.9	16%

OPERATIONAL UPDATE

Distribution

Sales at Music Box Leisure ("MBL"), the core of the Group, have performed well during the period with sales to customers that it had successfully obtained in the previous financial year totalling £5.9m. MBL strengthened its buying expertise during the period and increased its sales of CDs to 17% (10% in 2007).  Games have also continued to be a growth area and accounted for 13% of sales (10% in 2007) and DVDs represented approximately 68% of sales at MBL (80% in 2007). The remaining sales comprised of home entertainment accessories and accounted for 2% (0% in 2007).

Gross profit margins continued to be under pressure and fell by 1.3% to 15.9% compared to the period to 30 September 2007. MBL has been supplying a limited quantity of chart products to its newer customers which, along with the change in product mix, has been responsible for this pressure on margins. The increase in volumes and customers has led to a related increase in distribution and administrative costs.

 

Wholesale

ESD, which only accounts for 8% of Group sales and 5% of operating profit, has continued to see a decline in sales. ESD sells to independent retailers and those which remain continue to be adversely affected by competition from the supermarkets and the internet. As with retail in general, the sector has been seriously affected by reductions and the removal of cover by credit insurers. The sales mix in ESD has remained similar with CDs comprising 43% and DVDs 56% (prior year 43% and 55% respectively).

Funding position

The Group continued its strong management of cash and at 30 September 2008 had a positive balance of £3.7m (March 2008 £1.7m), reflecting the positive cash flows which continue to be generated by the business. The pessimistic outlook of UK credit insurers has resulted in MBL continuing to pay in advance of terms when necessary to maintain continuity of supply. Despite this, MBL did not have any requirement to renew its sales finance facility during the period. Subsequent to the Balance Sheet date the facility has been renewed in order that the Group is in a position to take advantage of any potential opportunities.

Dividends

The Group is progressing with the restructuring of its reserves and share premium account to create distributable reserves to facilitate a payment of dividends to shareholders. The intention is to have this complete by the end of the current financial year.

Current trading and outlook

The results for the first half of the year are positive and have been achieved against the backdrop of an uncertain economic climate.

The Group is currently in the most important trading period of the year.  Whilst the Board continues to recognise the challenging market conditions they remain confident that a solid platform has been developed from which to take advantage of market opportunities.

I look forward to issuing a trading update on the headline performance through to December at the end of January 2009.

Peter Cowgill

Chairman

8 December 2008

Consolidated Income Statement

for the six months ended 30 September 2008

		Unaudited	Unaudited	Audited
		Six months to 30 September 2008	Six months to 30 September 2007	Year ended 31 March 2008
		£'000	£'000	£'000
Revenue		34,861	28,979	80,853
Cost of sales		(29,294)	(24,005)	(66,188)
Gross profit		5,567	4,974	14,665
Distribution expenses		(674)	(573)	(1,371)
Administrative expenses - normal		(2,686)	(2,470)	(7,405)
Administrative expenses - exceptional		-	-	(12,423)
Operating profit/ (loss)	2	2,207	1,931	(6,534)
Financial income		78	38	86
Financial expenses		-	(104)	(252)
Net financing income/ (costs)		78	(66)	(166)
Profit/(loss) before tax		2,285	1,865	(6,700)
Taxation	3	(754)	(592)	(1,454)
Profit/ (loss) for the period attributable to equity holders of the parent		1,531	1,273	(8,154)
Basic and diluted earnings per share	4	8.9p	7.4p	(47.5)p

Consolidated Balance Sheet

at 30 September 2008

		Unaudited	Unaudited	Audited
		Six months to 30 September 2008	Six months to 30 September 2007	Year ended 31 March 2008
		£'000	£'000	£'000
Non-current assets
Intangible assets		17,000	29,423	17,000
Property, plant and equipment		732	348	502
Deferred tax asset		427	192	435
Total non-current assets		18,159	29,963	17,937
Current assets
Inventories		7,895	6,664	9,319
Trade and other receivables	5	8,222	14,427	5,563
Cash and cash equivalents		3,704	-	1,731
		19,821	21,091	16,613
Total assets		37,980	51,054	34,550
Current liabilities
Bank overdraft		-	-	(12)
Interest-bearing loans and borrowings		-	(8,244)	(1)
Trade and other payables		(10,978)	(8,340)	(9,227)
Current tax payable		(1,556)	(1,038)	(1,392)
Total current liabilities		(12,534)	(17,622)	(10,632)
Non-current liabilities
Interest-bearing loans and borrowings		-	(90)	(3)
Total non-current liabilities		-	(90)	(3)
Total liabilities		(12,534)	(17,712)	(10,635)
Net assets		25,446	33,342	23,915
Equity
Share capital		12,872	12,872	12,872
Share premium		21,454	21,454	21,454
Other reserves		(2,800)	(2,800)	(2,800)
Retained earnings		(6,080)	1,816	(7,611)
Total equity		25,446	33,342	23,915

  Consolidated Cash Flow Statement

for the six months ended 30 September 2008

	Unaudited	Unaudited	Audited
	Six months to 30 September 2008	Six months to 30 September 2007	Year ended 31 March 2008
	£'000	£'000	£'000
Cash flows from operating activities
Profit/ (loss) for the period/ year	1,531	1,273	(8,154)
Adjustments for:
Depreciation	119	77	167
Impairment of goodwill	-	-	12,423
Financial income	(78)	(42)	(88)
Financial expense	-	104	252
Foreign exchange losses/ (income)	1	(27)	(29)
Taxation	754	592	1,454
	2,327	1,977	6,025
(Increase)/ decrease in trade and other receivables	(2,661)	(7,467)	1,399
Decrease/ (increase) in inventories	1,423	(13)	(2,668)
Increase/ (decrease) in trade and other payables	1,748	(349)	(1,075)
	2,837	(5,852)	3,681
Tax paid	(582)	(635)	(1,386)
Net cash inflow/ (outflow) from operating activities	2,255	(6,487)	2,295
Cash flows from investing activities
Interest received	78	42	89
Acquisition of property, plant and equipment	(348)	(95)	(340)
Proceeds from sale of subsidiary	-	72	72
Cash and cash equivalents disposed of with subsidiary	-	(146)	(146)
Net cash outflow from investing activities	(270)	(127)	(325)
Cash flows from financing activities
Interest paid	-	(105)	(252)
Proceeds from new borrowings	-	2,500	-
Repayment of borrowings	-	(1,801)	(2,860)
Capital element of finance lease liabilities	-	(1)	(1)
Net cash inflow/ (outflow) from financing activities	-	593	(3,113)
Net increase/ (decrease) in cash and cash equivalents	1,985	(6,021)	(1,143)
Opening cash and cash equivalents	1,719	2,862	2,862
Closing cash and cash equivalents	3,704	(3,159)	1,719

Consolidated Statement of Recognised Income and Expense

	Unaudited	Unaudited	Audited
	Six months to 30 September 2008	Six months to 30 September 2007	Year ended 31 March 2008
	£'000	£'000	£'000
Foreign exchange adjustments	-	-	(36)
Net expense recognised directly in equity	-	-	(36)
Profit/ (loss) for the period	1,531	1,273	(8,154)
Total recognised income and expense for the period	1,531	1,273	(8,190)

  Notes 

(forming part of the interim financial statements)

Basis of preparation

The consolidated interim financial statements of the Group for the period ended 30 September 2008 are unaudited and do not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985.

Operating profit

Operating profit for continuing operations is stated after charging the following exceptional items:

	Unaudited	Unaudited	Audited
	Six months to 30 September 2008	Six months to 30 September 2007	Year ended 31 March 2008
	£'000	£'000	£'000
Impairment of goodwill	-	-	12,423
	-	-	12,423

Taxation

The taxation charge has been estimated by the Company based on adjustments to tax payable in respect of previous years and the tax rate for the year ending 31 March 2009.

Earnings per share

The calculation of the basic earnings per share is based on the profit after taxation divided by the weighted average number of shares in issue, being 17,162,735 (period ended 30 September 2007: 17,162,735; year ended 31 March 2008: 17,162,735).

The diluted earnings per share takes the weighted average number of ordinary shares in issue during the period and adjusts this for dilutive share options existing at the period end. The diluted weighted average number of shares in the period ended 30 September 2008 was 17,162,735 (period ended 30 September 2007: 17,162,735; year ended 31 March 2008: 17,162,735). 

Adjusted earnings per share, as disclosed below, are calculated using the profit after tax for the period, having added back the goodwill impairment charge over the basic and diluted weighted average number of shares in issue during the six month period.

	Unaudited	Unaudited	Audited
	Six months to 30 September 2008	Six months to 30 September 2007	Year ended 31 March 2008
	£'000	£'000	£'000
Profit/(loss) after taxation	1,531	1,273	(8,154)
Impairment of goodwill	-	-	12,423
Adjusted profit attributable from continuing operations	1,531	1,273	4,269
Basic and diluted earnings/ (loss) per share	8.9p	7.4p	(47.5p)

Basic and diluted adjusted earnings/ (loss)  per share

8.9p

7.4p

24.9p

Trade and other receivables

As a consequence of 30 September 2007 falling on a weekend, cash receipts from customers totalling almost £5.3m that would normally have been received and accounted for at the period end were received and accounted for on 1 October 2007.

  6  Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and rewards that are different from those of other business segments. The primary format is based upon the Group's management and internal reporting structure which reflects the statutory subsidiaries of the Group.

Segment results constitute items directly attributable to the business. Unallocated items comprise mainly central costs and net interest expense

The Group comprises the following main business segments:

Distribution. The full service, merchandising and sale of home entertainment products (primarily pre-recorded films, music and computer and console games) to general retailers for whom these products are not the primary focus of the retailer.

Wholesale. The sale of home entertainment products to specialist independent and internet retailers.

Other. Dormant companies and holding companies.

Segmental Analysis

Profit and Loss Account	Continuing Operations									Total
	Distribution			Wholesale			Other
	6 months ended 30.09.08	6 months ended 30.09.07	Year ended 31.03.08	6 months ended 30.09.08	6 months ended 30.09.07	Year ended 31.03.08	6 months ended 30.09.08	6 months ended 30.09.07	Year ended 31.03.08	6 months ended 30.09.08	6 months ended 30.09.07	Year ended 31.03.08
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Revenue from   external customers	31,925	25,310	72,364	2,818	3,595	8,201	118	74	288	34,861	28,979	80,853
Inter-segment  revenue	2,413	3,181	7,140	-	454	488	370	301	989	2,783	3,936	8,617
Total revenue	34,338	28,491	79,504	2,818	4,049	8,689	488	375	1,277	37,644	32,915	89,470
Segment result	2,121	1,994	5,976	74	178	459	194	33	87	2,389	2,205	6,522
Impairment of  goodwill			(12,423)							-	-	(12,423)
Central costs										(182)	(274)	(633)
Operating profit/   (loss)										2,207	1,931	(6,534)
Net financing costs										78	(66)	(166)
Taxation										(754)	(592)	(1,454)
Profit/ (loss) for the  period										1,531	1,273	(8,154)

ENDIR UUGWGPUPRGMA

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Related Shares:

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