Full Year Pre-Close Trading Update

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 Martin Hellawell, Non-Executive Chairman Steve Oliver, Chief Executive Officer and Co-Founder Matthew Fowler, Chief Financial Officer	[phone]
Shore Capital (Nominated Adviser and Broker) Mark Percy Daniel Bush	[phone]
Powerscourt (Financial Public Relations) Rob Greening Sam Austrums	[phone]

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

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.

 

END