REG - MBL Group PLC - Full Year Results for the Year Ended 31 March 2015 <Origin Href="QuoteRef">CSN.L</Origin> <Origin Href="QuoteRef">MUBL.L</Origin>

ChesnaraAnnouncement

28/08/2015 07:01

RNS Number : 3704X
MBL Group PLC
28 August 2015
 
 28 August 2015 
 
MBL GROUP PLC
Full Year Results for the Year Ended 31 March 2015
MBL Group plc ("MBL" or the "Group") announces its final audited results for the year ended 31 March 2015. Comparative figures are for the year ended 31 March 2014, unless otherwise indicated, and are restated for discontinued operations.
Key points:
 Revenue from continuing operations up 10% to 13.0 million (2014: 11.8 million)
 Loss before tax from continuing operations 0.9 million (2014: 0.5 million), including a 0.5 million exceptional impairment to intangible assets (2014: no impairment)
 Group revenue (including discontinued operations) increased 4% to 13.1 million (2014: 12.6 million)
 Group loss before tax (including discontinued operations) 1.0 million (2014: loss 1.2 million)
 Group loss per share improved to 5.7p (2014: loss 7.2p)
 No dividend is proposed.
 A capital reduction process has been announced to shareholders to create distributable reserves.
* Reference to 'Group' items, includes both continued and discontinued operations. 
Commenting on these results, Tony Johnson, Non-Executive Chairman of MBL, said:
"I am pleased to report that during the year the Group achieved a 10% growth in sales, driven by a strong performance in the Garden & Home division. The Group continued to focus on investment in marketing for the Garden & Home division which contributed positively towards sales growth and will result in further financial benefit in subsequent years. This investment, together with the cost of a one off impairment of goodwill, impacted the financial performance and has resulted in a loss for the year."
Extracts from the final results appear below and a full version will be available on the Company's website www.mblgroup.co.uk from 2 September 2015. 
For further information please contact:
MBL Group plc   Tel: 01772 440440
Lisa Clarke, Financial Director
SPARK Advisory Partners Limited Tel: 0203 368 3555
Sean Wyndham-Quin
Mark Brady
SI Capital Limited Tel: 01483 413500
Nick Emerson
Andy Thacker
CHAIRMAN'S STATEMENT
I am pleased to report that during the year the Group achieved a 10% growth in sales, driven by a strong performance in the Garden & Home division. The Group continued to focus on investment in marketing for the Garden & Home division which contributed positively towards sales growth and will result in further financial benefit in subsequent years. This investment, together with the cost of a one off impairment of goodwill, impacted the financial performance and has resulted in a loss for the year.
For the purposes of these statements, the operations of Garden Centre Online Limited have been classified as discontinued and the prior year comparatives have been restated accordingly.
 
Operational Review
Whilst it is encouraging that sales in our newest division have continued to grow, sales challenges have continued to exist within the home entertainment market. 
Home Entertainment
2015 '000
2014 '000
Revenue
8,653
9,503
Operating profit
186
277
Our Home Entertainment division experienced a disappointing reduction in revenue of 9% to 8.7 million (2014: 9.5 million). Exports account for 71% of the division's sales and the strengthening of the pound during the year had a detrimental effect on sales, particularly in the Far East market. Gross profit margins improved marginally to 14.5% from 14%. This improvement did not offset the impact of the reduction in sales and as a consequence profitability fell 35% to 186,000 (2014: 277,000). 
Garden & Home
2015 '000
2014 '000
Revenue
4,251
2,098
Operating loss
(304)
(527)
Impairment of intangibles
(450)
-
Operating loss after impairment
(754)
(527)
Our Garden & Home division specialises in the mail order of garden bird food and associated wildlife products. During the year an aquatics brand, Warehouse Aquatics, was acquired and integrated into the operations. As previously reported the division discontinued its activities under the Garden Centre Online brand during the year due to the level of additional investment considered necessary to improve its trading performance within a very competitive market.
Sales during the year increased by 103% to 4.3 million (2014: 2.1 million) which includes sales of 303,000 from the newly acquired aquatics brand. Underlying sales increased by 88% to 3.9 million driven by the performance of garden bird products. The sales increase was driven largely by the investment in marketing and the introduction of a value proposition. The UK market for bird food remains highly competitive and the success of our value proposition has impacted on gross margins leading to the gross margin mix reducing by 8.5%. The Board continues to look for further mail order and online opportunities to acquire which would complement the brands within this division.
The relocation of the division together with the Group's head office to smaller premises at the end of the last financial year has had a positive effect on costs during the year. Despite the significant increase in sales, the investment in marketing costs has resulted in an operating loss of 304,000, an improvement upon last year's loss of 527,000. The Board believes that this investment will provide a financial benefit to the Group in future years. In addition, the goodwill acquired in 2012 with the Garden Bird Supplies, Garden Centre Online and Listen 2 brands, has been reviewed and impaired in full with a resultant one off charge of 450,000 to the profit and loss account. Taking this exceptional charge into account, the division has posted a loss of 754,000 for the year. 
Financial Review
The Financial Statements have been prepared to separately present the financial performance of the Group's continuing operations and discontinued operations. The prior year figures have been restated to provide a comparable position. The Segmental Analysis in the Notes to the Financial Statements presents the Group's consolidated revenue streams. 
Overall, Group revenue for the year including discontinued operations increased by 4% to 13.1 million (2014: 12.6 million). Revenue from our continuing operations increased 10% to 13.0 million (2014: 11.8 million) reflecting the changes in sales discussed earlier in this report. Group gross margins improved to 25% (2014: 23%) as a result of an improved sales mix within the Home Entertainment division and the exit of Garden Centre Online Limited, which traded in the prior year at a gross margin of 13%. 
The Group loss for the year before taxation was 1.0 million (2014: 1.2 million). Losses within discontinued operations and the impairment of intangibles contributed 0.6 million of this loss. 
The Group is a relatively small business and as such it is possible for investment in future performance or operating challenges to have a disproportionate effect on our short term financial performance. We are also sensitive to the costs of maintaining an AIM listing and that these costs have a sizeable impact on the costs of administering the Group. 
Cash flow, working capital and borrowing facilities
The Group ended the year with cash balances of 1.7 million (2014: 2.7 million). The net cash outflow from operating activities was 0.8 million (2014: 0.1 million) with 0.4 million reflecting working capital movements and an additional 0.2 million invested in capital expenditure and the acquisition of Warehouse Aquatics. The Group remains debt free.
Dividends
The Board is not recommending the payment of a dividend.
Capital Reduction
The Board has today sent out a circular to shareholders setting out the details of a proposed reduction of the issued share capital and proposed cancellation of the share premium account (together the "capital reduction"). 
The Company is prevented from the payment of dividends or the buyback of its shares due to the lack of sufficient distributable reserves within its retained earnings. The capital reduction, if approved by shareholders, will eliminate the deficit on the Company's retained earnings and create distributable reserves to allow future dividend payments to be made, when justified by the profitability of the Company, or to allow the buyback of the Company's shares. 
The capital reduction requires confirmation by the High Court and registration by the Registrar of Companies to take effect. The resolution regarding the capital reduction will be considered in the Company's Annual General Meeting.
Strategy
We have been committed to diversifying the Group's operations to reduce our reliance on the Home Entertainment market, which has been in long term decline. Our strategy is to manage the Home Entertainment division and to grow our developing Garden & Home brands and to establish new brands when opportunities arise to take advantage of the existing infrastructure. We continue to develop the skills within the Group and ensure that the business is not over committed to any single market.
Current Outlook
The year has started satisfactorily and sales in both divisions are in line with management expectations. At the end of the year, Trevor Allan stepped down from the Board due to medical reasons and his responsibilities are being covered by Lisa Clarke. In this temporary period, the senior management team have been provided with more responsibility and no issues have arisen. However, the situation is being closely monitored.
D A Johnson
Non-Executive Chairman 
28 August 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2015
Restated
2015
2014
'000
'000
Revenue from continuing operations
12,973
11,755
Cost of sales
(9,777)
(9,135)
Gross profit from continuing operations
3,196
2,620
Distribution expenses
(783)
(263)
Administrative expenses - normal
(2,846)
(2,864)
 - exceptional
(450)
-
Operating loss from continuing operations
(883)
(507)
Operating loss from continuing operations before exceptional item
(433)
(507)
Exceptional item
(450)
-
Operating loss from continuing operations
(883)
(507)
Financial income
9
12
Financial expenses
-
-
Net financing income 
9
12
Loss before tax from continuing operations
(874)
(495)
Taxation expenses
-
-
Loss from continuing operations
(874)
(495)
Loss from discontinued operations (net of taxation)
(112)
(751)
Total comprehensive expense for the year
(986)
(1,246)
Basic and diluted loss per share
(5.7)p
(7.2)p
Continuing operations basic and diluted loss per share
(5.0)p
(2.9)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
AS AT 31 MARCH 2015
2015
2014
'000
'000
Non-current assets
Property, plant and equipment
265
382
Intangible assets
140
450
Other investments
-
-
405
832
Current assets
Inventories 
624
531
Trade and other receivables
1,675
1,587
Cash and cash equivalents
1,708
2,724
4,007
4,842
Total assets
4,412
5,674
Current liabilities
Trade and other payables
(1,143)
(1,419)
Tax payable
(1)
(1)
Provisions
(472)
(472)
(1,616)
(1,892)
Non-current liabilities
Deferred tax liability
-
-
Total liabilities
(1,616)
(1,892)
Net assets
2,796
3,782
Equity attributable to equity holders of the parent
Share capital
12,972
12,972
Share premium
21,531
21,531
Reserves
(2,800)
(2,800)
Retained earnings
(28,907)
(27,921)
Total equity 
2,796
3,782
Total equity and liabilities
4,412
5,674
CONSOLIDATED STATEMENT OF CASH FLOWS 
FOR THE YEAR ENDED 31 MARCH 2015
2015
2014
'000
'000
Cash flows from operating activities
Loss for the year 
(986)
(1,246)
Adjustments for:
Depreciation
205
169
Impairment of intangibles
450
-
Financial income
(9)
(12)
Financial expense
-
4
Profit on sale of property, plant and equipment
(15)
-
Taxation
-
3
(355)
(1,082)
(Increase)/decrease in trade and other receivables
(88)
960
(Increase)/decrease in inventories
(93)
20
(Decrease)/increase in trade and other payables
(276)
26
(812)
(76)
Tax paid
-
(53)
Net cash outflow from operating activities
(812)
(129)
Cash flows from investing activities
Interest received
9
12
Proceeds from sale of property, plant and equipment
15
16
Acquisition of property, plant and equipment
(88)
(246)
Payments to acquire trade and assets
(140)
-
Net cash outflow from investing activities
(204)
(218)
Cash flows from financing activities
Interest paid
-
(4)
Net cash outflow from financing activities
-
(4)
Net decrease in cash and cash equivalents
(1,016)
(351)
Cash and cash equivalents at 1 April
2,724
3,075
Cash and cash equivalents at 31 March
1,708
2,724
Notes to the Financial Statements 
for the year ended 31 March 2015   
1. Source of Information
The preliminary financial statements for the financial year ended 31 March 2015 were approved by the Board of Directors on 28 August 2015. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 March 2015 or 2014 but is derived from those accounts. Statutory accounts for 2014 have been delivered to the registrar of companies, and those for 2015 will be delivered following the Company's Annual General Meeting. 
The auditor, Moore & Smalley LLP, has reported on those accounts; their report for 2015 was unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006 or equivalent preceding legislation. The report for 2014 was undertaken by KPMG LLP and was (i) unqualified and (ii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. 
2. Operating segments
The segments disclosed below reflect the Group's management and internal reporting structure. During the current and prior financial year, Garden Centre Online Limited ceased trading and has been classified as discontinued operations within these Financial Statements.
Consolidated statement of comprehensive income for year ended 31 March 2015:
Home Entertainment 
Garden and Home 
Other 
Total continuing 
Dis-
continued 
Group 
Total
'000
'000
'000
'000
'000
'000
Gross revenue
8,653
4,252
69
12,974
156
13,130
Intersegment revenue
-
(1)
-
(1)
(3)
(4)
Revenue
8,653
4,251
69
12,973
153
13,126
Operating profit/(loss) before 
exceptionalandcentralcosts
186
(304)
122
4
(112)
(108)
Exceptional costs
-
(450)
-
(450)
-
(450)
Central costs 
-
-
-
(437)
-
(437)
Operating profit/(loss)
186
(754)
122
(883)
(112)
(995)
Net financing expense
9
-
9
Taxation expense
-
-
-
Loss for the period
(874)
(112)
(986)
Total assets and liabilities
Total assets
1,430
608
2,234
4,272
-
4,272
Goodwill
-
140
-
140
-
140
Total liabilities
(565)
(259)
(792)
(1,616)
-
(1,616)
Total segment net 
assets
865
489
1,442
2,796
-
2,796
Capital Expenditure
Intangible assets
 -
 140
 -
 140
 -
 140
Tangible fixed assets
 14
 9
 65
 88
 -
 88
Depreciation
 17
 93
 51
 161
 44
 205
Impairment charges:
Intangibles
 -
 450
 -
 450
 -
 450
Consolidated statement of comprehensive income for year ended 31 March 2014 (restated):
Home Entertainment 
Garden and Home 
Other 
Total continuing 
Dis-
continued 
Group 
Total
'000
'000
'000
'000
'000
'000
Gross revenue
9,508
2,161
154
11,823
994
12,817
Intersegment revenue
(5)
(63)
-
(68)
(163)
(231)
Revenue
9,503
2,098
154
11,755
831
12,586
Operating profit/(loss) before 
central costs
277
(527)
76
(174)
(744)
(918)
Central costs 
-
-
-
(333)
-
(333)
Operating loss
277
(527)
76
(507)
(744)
(1,251)
Net financing expense
12
(4)
8
Taxation expense
-
(3)
(3)
Loss for the period
(495)
(751)
(1,246)
Total assets and liabilities
Total assets
1,458
432
2,759
4,649
576
5,225
Goodwill
-
450
-
450
-
450
Total liabilities
(585)
(131)
(214)
(930)
(963)
(1,893)
Total segment net 
assets/(liabilities)
873
751
2,545
4,169
(387)
3,782
Capital Expenditure
Intangible assets
-
-
-
-
-
-
Tangible fixed assets
4
49
-
53
193
246
Depreciation
23
16
15
54
115
169
3. Loss per Share 
The calculation of basic loss per share has been calculated on the loss after tax of 986,000 (2014: 1,246,000) and the weighted average number of shares in issue during the year of 17,296,067 shares of 75p each (2014: 17,296,067 shares of 75p each). 
The calculation of diluted loss per share is identical to that used for the basic loss per share. 
The adjusted loss per share, as disclosed below, was calculated using the loss after tax for the financial year calculated with reference to the basic and diluted weighted average share in issue during the year.
2015 
2014
'000
'000
Loss after taxation from continuing operations
(874)
(495)
Discontinued operations
(112)
(751)
Total comprehensive expense for the year
(986)
(1,246)
Continuing operations
Basic and diluted loss per share 
(5.0)p
(2.9)p
Discontinuing operations
Basic and diluted loss per share 
(0.7)p
(4.3)p
Basic and diluted loss per share 
(5.7)p
(7.2)p
4. Discontinued operations
2015
2014
'000
'000
Results of discontinued operations
Revenue
153
830
Expenses
(265)
(1,578)
Results from operating activities
(112)
(748)
Tax
-
(3)
Loss for the year
(112)
(751)
Basic loss per share - Discontinued
(0.7)p
(4.3)p
2015
2014
'000
'000
Cash flows used in discontinued operations
Net cash used in operating activities
(116)
(445)
Net cash used in investing activities
-
-
Net cash outflow for the year
(116)
(445)
5.Annualreport  
The Annual Report will be posted to shareholders in early September. Copies of the Annual Report will be available on request from the MBL Group plc, Unit 1 Millennium City Park, Millennium Road, Preston, PR2 5BL and will be available to download from the Company's website at www.mblgroup.co.uk.

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