MUSICMAGPIE – MMAG – Half-year Report

MUSICMAGPIE – MMAG – Half-year Report

musicMagpie, a leading re-commerce business in the UK and US specialising in refurbished consumer technology, announces its unaudited interim results for the six months ended 31 May 2021.

H1 21

£m

H1 20

£m

Change

Change

(CCY1)

Revenue

72.8

71.1

+2.3%

+3.7%

Gross Profit

23.7

19.1

+24.1%

Gross Margin

32.6%

26.9%

+ 5.7%

Adjusted EBITDA 2

6.2

5.5

+13.5%

+14.8%

Adjusted Profit Before Tax 3

4.0

3.3

+22.8%

Adjusted Earnings per Share 4

3.48p

3.02p

+15.2%

Net Cash/(Debt) at period end

6.4

(9.6)

Notes

1 "CCY" indicates figures reported on a constant currency basis. Constant currency means that US Dollar results in the comparative period have been translated at the same exchange rate applied to current year US Dollar results.

2 Adjusted EBITDA is a non-GAAP measure and has been calculated as earnings before interest, taxation, depreciation, amortisation, equity-settled share-based payments and other non-underlying items.

3 Adjusted Profit Before Tax means profit before tax before equity-settled share-based payments and other non-underlying items, including non-underlying financial expenses.

4 Adjusted Earnings per Share is calculated on Adjusted Profit Before Tax and is given to exclude the effects of equity-settled share-based payments and other non-underlying items, all net of taxation, and is therefore considered to show the underlying performance of the Group

Financial highlights

·      Revenue for the Group up 2.3% to £72.8m (H1 20: £71.1m), up 3.7% on a constant currency basis (H1 20 (CCY1): £70.2m)

o  UK revenue up 6.6% to £58.1m (H1 20: £54.5m) driven by increasing consumer adoption of circular economy models along with a growing consumer trend to buy goods and services from brands with strong ESG credentials.

·      Gross profit up 24.1% to £23.7m (H1 20: £19.1m), driven by a 5.7% increase in gross margin from 26.9% to 32.8% reflecting continued focus on profitable growth.

·      Adjusted EBITDA up 13.5% to £6.2m (H1 20: £5.5m), up 14.8% on a constant currency basis (H1 20 (CCY1): £5.4m).

·      Net cash of £6.4m at period end with transition from net debt to net cash underpinned by £15m primary raise at IPO.

Operational highlights

·      Strong early progress from the Group's innovative new smartphone rental subscription service, launched in October 2020 with over 7,500 subscriptions as at 31 May 2021.   This has led to the Group substituting firm sale revenues totalling £2.3m for the period in return for the £0.3m of subscription revenue earned, a net £2.0m, as customers have opted for rental over outright purchase of phones. As a result, consumer technology revenue growth increased by only 0.8% but there is now the potential to earn higher recurring revenues and EBITDA over the life of a device as opposed to a one-off sale.

·      Launched the new SMARTDrop Kiosk concept in November: over 1,250 smartphones traded as at 31 May 2021, paying out £0.3m instantly to consumers.

o  Following a successful trial, an expanded roll-out is now planned for Asda stores across the country, with a view to ensuring 90% of the population in England will live within a 15 minute drive of a SMARTDrop Kiosk.

·      New Apple products now available on the musicMagpie Store in the UK.

·      US trade-in partnerships in place with Macworld and Red Pocket Mobile: potential combined customer reach of 9 million US citizens as they promote the decluttr trade-in programmes to their extensive membership.

·      Successful IPO in April on the AIM market of the London Stock Exchange raising primary proceeds of £15m.

·      Significant strengthening of Board with appointments of Martin Hellawell as Non-Executive Chairman, Dave Wilson as a Non-Executive Director and Chair of the Audit Committee, and Alison Littley as a Non-Executive Director, Senior Independent Director and Chair of the Remuneration Committee.

Successful continuation of environmental initiatives

·      Received the London Stock Exchange's Green Economy Mark, which recognises companies that derive 50% or more of their total annual revenue from products and services that contribute to the global 'Green Economy'.

·      Created the 'Mount Recyclemore' sculpture at the recent G7 summit to highlight the growing global problem of e-waste;  now relocated for the summer to the plaza at Stockport Exchange outside the Group's head office.

·      The musicMagpie corporate recycling programme fully launched in February 2021, aimed at businesses looking to increase their sustainability efforts.

Current trading and outlook

·      Following the progress made in H1, the Board is pleased with the continued momentum across its core consumer technology business and key strategic initiatives: smartphone rentals, SMARTDrop Kiosks and corporate recycling.

·      Trading continues in line with management's expectations for the full year and the Board remains confident that the business is well positioned for future profit growth and that FY21 Adjusted EBITDA will be in line with expectations.

 

Commenting on the results, Steve Oliver, Chief Executive Officer and Co-Founder of musicMagpie, said:

"This has been a landmark period for musicMagpie, and we are very pleased with the performance of the business as it has adapted quickly to life as a public company.  We are seeing strong and growing demand for our unique circular economy model, as consumers continue to realise the benefits of buying and renting refurbished consumer technology products. In addition, there is a growing awareness of the rising problem of e-waste, as illustrated by the fantastic reaction to our 'Mount Recyclemore' sculpture at the recent G7 summit. We are now seeing more people than ever before looking to recycle their old gadgets whilst freeing up cash and decluttering their lives in the process.  These trends, combined with the launch of our exciting new mobile phone rental subscription service, mean that we continue to have a high degree of confidence in the future prospects of musicMagpie." 

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