REG - musicMagpie plc - Full Year Pre-Close Trading Update

MusicmagpieAnnouncement

14/12/2023 07:00

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RNS Number : 6909W  musicMagpie plc  14 December 2023

 

14 December 2023

musicMagpie plc

("musicMagpie" or the "Group")

FULL YEAR PRE-CLOSE TRADING UPDATE

Record Black Friday contributes to 15.4% increase in EBITDA

musicMagpie, a leading re-commerce business in the UK and US specialising in
refurbished consumer technology, is pleased to announce a pre-close trading
update for the full year ended 30 November 2023.

Full year revenue is expected to be £136.6m (2022: £143.3m), with a record
Black Friday period helping to off-set a softer H1.   Consumer technology
revenues for H2 were up 7.5% over the same H2 period in 2022, and for the year
were £95.4m (2022: £96.6m). Overall gross margin was 27.7% (2022: 26.2%) as
the Group continued to focus on margin expansion as opposed to revenue growth.

As a result of the gross margin increase and ongoing tight cost control, as
well as the strong end to the year, EBITDA is expected to be up 15.4% at
£7.5m (2022: £6.5m).

The number of active Rental subscribers grew by 21% in the year reaching
37,100 as at 30 November 2023 (30 November 2022: 30,500).  Total Rental
revenue for the period was £8.3m, up 57% (2022: £5.3m).  The Group
continues to segment the Rental offering to those customers with higher credit
ratings and a greater propensity to renew and intends to maintain this managed
approach to the subscriber base for the foreseeable future.

Net debt as at 30 November 2023 was £13.1m (31 May 2023: £13.6m) and
benefitted from management's focus on cash versus rental growth.  Leverage at
30 November 2023, being EBITDA to net debt, was 1.7x (31 May 2023:  2.0x).
Net debt is mitigated by future contracted rental revenue of £3.6m and Rental
assets on the balance sheet with a net book value of £7.7m. It also continues
to be supported by the £30m committed RCF facility provided by HSBC and
Natwest, due for renewal in July 2026.

 

Whilst the challenging consumer environment and inflationary pressures
continue, the Board is encouraged by musicMagpie's H2 performance and remains
confident in the Group's strategy and in its medium-term prospects.

Steve Oliver, Chief Executive Officer & Co-Founder of musicMagpie, said:
"We are pleased with the performance of the Group in the second half of the
year, and are delighted that our focus on profits and cash has delivered
significant EBITDA growth.  Our strategy of proactively managing the number
of active Rental subscribers has also helped in this regard and will support
our short-term objectives on profits and cash into 2024, bolstered by an
enhanced Buy Now Pay Later offering.  I remain confident in the business and
our ability to navigate the difficult external market conditions, especially
given the outstanding level of trust that consumers continue to have in our
brand, as demonstrated by our excellent 4.4* Trustpilot rating based on over
277,000 reviews."

 

Enquiries

 musicMagpie plc                                        +44 (0) 870 479 2705

 Martin Hellawell, Non-Executive Chairman

 Steve Oliver, Chief Executive Officer and Co-Founder

 Matthew Fowler, Chief Financial Officer

 Shore Capital (Nominated Adviser and Broker)           +44 (0) 207 408 4090

 Mark Percy

 Daniel Bush

 Powerscourt (Financial Public Relations)               +44 (0) 20 7250 1446

 Rob Greening

 Sam Austrums

 

About musicMagpie

 

Operating through two trusted brands - musicMagpie in the UK and decluttr in
the US - musicMagpie's core strategy is simple: to provide consumers with a
smart, sustainable and trusted way to buy, rent and sell refurbished consumer
technology and physical media products with sustainability running to the very
heart of its operations. Founded in 2007, the Group has an established
presence in the UK, with operations in Stockport, Greater Manchester, and in
the US in Atlanta, Georgia.

 

musicMagpie has a strong environmental and social focus, as demonstrated by
its trademarked 'smart for you, smart for the planet' ethos. Nearly 400,000
consumer technology products were resold in FY22. In addition, the Group
re-sells approximately 10m books and disc media each year that could have
ended up as waste. During 2022, musicMagpie's UK consumer tech and disc media
customers, along with its trade partners, helped to save over 43,000 tonnes of
CO2 by buying, selling and renting with the Group - an amount equivalent to
providing heating for over 16,000 homes, or powering more than 50,000 flights
from London to New York.  The Group has been given the London Stock
Exchange's Green Economy Mark in recognition of its contribution to the global
green economy.

 

When selling to musicMagpie, the customer is offered a fixed valuation via the
website, provided with free logistics to ship the products and (subject to it
being 'as described') receives payment for their product on the day of arrival
at the Group's warehouse. The Group also recently partnered with Asda to give
customers the option of using its SMARTDrop Kiosks in store for a fast and
easy way to recycle phones for instant cash. Customers purchasing from
musicMagpie receive branded refurbished product for a fraction of the price of
buying new.

 

The Group has the highest number of seller reviews on both Amazon and eBay and
has consistently achieved extremely positive feedback scores. The Group also
has a 4.4* rating on UK Trustpilot with over 277,000 reviews, and is honoured
to have won Best Refurbished in the Uswitch Telecoms Awards 2023 as well as
Best Online Retailer and Best Secondary Market Provider at the Mobile News
Awards 2023.

 

For further information please visit: www.musicmagpieplc.com
(https://url.avanan.click/v2/___http:/www.musicmagpieplc.com___.YXAxZTpzaG9yZWNhcDphOm86NzZiNTI4NTVmMWNjMGQ5NTdlNzE1ZWFjYzU2YTNmNWE6NjowZmMzOjFjZjFmMTM3MzRhNGM2Nzk4YmRjYjdhNGZkODA2ZWU3NGMzNjM1NzMwZTU4MTVmYjM1MjQ2MGU3YjYxNDlhOTY6cDpU)

 

Forward Looking Statements

This announcement contains certain forward-looking statements with respect to
the financial condition, results or operation and businesses of musicMagpie
plc. Such statements and forecasts by their nature involve risks and
uncertainty because they relate to future events and circumstances. There are
a number of other factors that may cause actual results, performance or
achievements, or industry results, to be materially different from those
projected in the forward- looking statements.

These factors include general economic and business conditions; changes in
technology; timing or delay in signing, commencement, implementation and
performance of programmes, or the delivery of products or services under them;
industry; relationships with customers; competition; and ability to attract
personnel. You are cautioned not to rely on these forward-looking statements,
which speak only as of the date of this announcement. We undertake no
obligation to update or revise any forward-looking statements to reflect any
change in our expectations or any change in events, conditions or
circumstances.

 

 

APPENDIX

MUSICMAGPIE PROFIT ESTIMATE

The following statements set out in musicMagpie's pre-close trading update
constitute an ordinary course profit estimate for the purposes of Note 2 on
Rule 28.1 of the Takeover Code (the "FY23 Guidance Statements"):

"Record Black Friday contributes to 15.4% increase in EBITDA."

"Overall gross margin was 27.7% (2022: 26.2%)."

"As a result of the gross margin increase and ongoing tight cost control, as
well as the strong end to the year, EBITDA is expected to be up 15.4% at
£7.5m (2022: £6.5m)."

"Leverage at 30 November 2023, being EBITDA to net debt, was 1.7x (31 May
2023: 2.0x)."

"We are pleased with the performance of the Group in the second half of the
year, and are delighted that our focus on profits and cash has delivered
significant EBITDA growth."

 

Basis of preparation

The FY23 Guidance Statements are based on the Group's current internal
estimate for the year ended 30 November 2023 ("FY23 Estimate").

The basis of accounting used for the FY23 Guidance Statements is consistent
with the Group's existing accounting policies, which (i) are in accordance
with UK adopted International Accounting Standards, IFRS as adopted by the EU
and IFRS as issued by the International Accounting Standards Board, (ii) were
applied in the preparation of the Group's financial statements for the year
ended 30 November 2022; and (iii) are expected to be applied in the
preparation of the Group's financial statements for the year ended 30 November
2023.

The FY23 Guidance Statements have been prepared on the basis referred to above
and subject to the principal assumptions set out below. The FY23 Guidance
Statements are inherently uncertain and there can be no guarantee that any of
the factors referred to under 'Principal Assumptions' below will not occur
and/or, if they do, their effect on the Group's results of operations,
financial condition or financial performance, may be material. The FY23
Guidance Statements should therefore be read in this context and construed
accordingly.

 

Principal Assumptions

Factors outside the influence or control of the musicMagpie Directors for the
year ended 30 November 2023:

·      no material change to the Group's assumptions in the FY23
Estimate for growth of the Group's business;

·    no change in legislation, taxation or regulatory requirements
relating to the Group or the legislative or regulatory environment within
which the Group operates;

·      no litigation or contractual disputes which are material in the
context of the Group;

·      no material movements in tax rates or foreign exchange rates
compared with the Group's estimates;

·      no change in the Group's existing debt arrangements, or its
ability to access external financing; and

·      no change in the accounting standards or policies which were used
for the FY23 Guidance Statements.

Factors within the influence or control of the musicMagpie Directors for the
year ended 30 November 2023:

·      no material change to the strategy, budget or operation of the
Group's business;

·      no material change to the Group's assumptions in the FY23
Estimate in relation to revenue recognition, debtor provisioning and
inventory; and

·      no material change in the Group's relationship with its key
partner relationships.

Directors' Confirmation

The MusicMagpie Directors confirm that the FY23 Guidance Statements remain
valid and have been properly compiled on the basis of the principal
assumptions stated above and that the basis of accounting used is consistent
with musicMagpie's accounting policies as set out above.

 

 

 

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