Trading Update

3 AUGUST 2012

MBL Group plc 

TRADING update

The Board of MBL Group plc (the "Group") makes the following update to shareholders.

Performance in the year ended 31 March 2012

As reported in the Group's Interim Results on 9 December 2011, the Group incurred substantial trading losses whilst managing the consequences of the loss of its major customer contract in April 2011. In the six months to 30 September 2011 the loss before tax was £7.2m and, although the ongoing downsizing has, to a large extent, reduced the losses during the second half of the year, it is anticipated that the full year loss will be higher than the interim loss.

Whilst significant costs have been incurred in the management of the wind down of the operations, and asset realisations arising there from, substantial ongoing cost savings have been achieved. Group headcount has been reduced by 74% over the course of the year and the remuneration of the Executive directors has been reduced by 53% in recognition of the challenges faced by the Group.

The downsizing of the Group has largely been completed with a number of subsidiaries either disposed or wound down. The consequent dramatic reduction in volume, combined with the well publicised financial impact, resulted in a significant adverse effect on customer and supplier confidence and Music Box Leisure's trading activities no longer being commercially viable.

The Group's final results will be announced later this month.

Purchase of trade and assets 

Consistent with a revised strategy of focusing on the direct to consumer market, the Group has acquired the trade and assets of the Garden Bird Supplies, Garden Centre Online and Listen2 businesses as announced on 30 March 2012. The Group is in the process of consolidating the distribution of these businesses into its Leyland operations within its subsidiary The Garden and Home Trading Company.

Funding

The Group continues to have sufficient cash funds available to meet working capital needs. The Group remains in the position of being debt free and does not have the requirement for any bank financing. The Group continues to obtain the majority of product supplies through the payment of cash in advance.

Future outlook

The Directors continue to pursue a strategy to develop its business as a direct to consumer retailer and the recent purchase of assets has moved the Group further forward in this regard.

The principal businesses of the Group now comprise Windsong International, MBL Direct wholesale business, Bee.com (retail and online) and The Garden and Home Trading Company.

The Directors continue to closely monitor the performance of the remaining Home Entertainment divisions.

END