Mbl Share Discussion Threads

[encarter] 29/4/2011 20:48

" the possible facts ", hilarious! So what you say may be true or it may be lies.

[timesmoney] 29/4/2011 07:50

Encarter. Sorry that reality hurts. And in the unlikely event that you cannot see the possible facts in my post, you are a bigger idiot than we all thought you were.
There is no good news here 300 people are about to lose their jobs, and shareholders have been screwed I have predicted this for a long time and continue to post in the hope that those responsible are called to account.

[encarter] 29/4/2011 00:30

Timesmoney, blah blah blah, yawn.

"Not only is it quite likely, all most certainly, neither of which is likely then or less likely now, So in all probability, was no doubt, in reality, Given the above"

Why do you bother talking without actually saying anything?
The company has stated that Morrison will take the stock, what do you think they are negotiating? The contract ran until September, MBL wouldn't agree to end it early if it weren't in their interests.

You must try to use constructive argument instead of all that flimflam.

[jeffian] 28/4/2011 16:41

Well I'm certainly not holding out much hope - there are still more questions than answers about recent events - but, as there are no banks involved here, the rules against trading whilst insolvent would suggest that there is still something left in the kitty, however little. Directors who allow the company to continue trading knowing - or having reason to believe in the case that Morrisons are threatening not to pay for stock as suggested above - that their assets do not cover their liabilities, become personally liable to creditors for any subsequent losses. I don't know about TA, but I can't see PC risking that for a second.

[timesmoney] 28/4/2011 16:08

Reality check time.
Not only is it quite likely that Morrisons have no obligation to take the stock held,(why else would the company say that they have terminated with mutual consent, yet the stock position is yet to be resolved) Morrisons allmost certainly have the right of return on stock held in store. If you look back at last years RNS statements you will see that amongst the reasons for dimished sales and profits was Morrisons returns being greater than expected, it was also stated that returns would be either 'returned to the supplier or the customer' which did not make sense at the time and neither of which is likely then or less likely now. So in all probability the result of this is that the recievable figure at the interims can be halved, the stock figure doubled and a fat credit note due to Morrisons. Whilst this stock was no doubt valued at the lower of cost or realisable value, in reality it will be worth a fraction of this value. No one has the capacity to take stock in volume anywhere unless it is at a very distressed price.
Given the above the maths do not look good, add the redundancy costs for 300 poor sods. The administrator is warming up the car!

[miamisteve] 28/4/2011 15:07

There's a glimmer of hope with the quote vowed to give a "return" to shareholders. Can't see a special dividend materialising if cash is too tight to pay suppliers until Morrisons cough up for all the status quo they weren't able to shift, but doesn't seem like last rites either.

Still no idea of what direction they are heading in. Seemed a number of quick ill thought out decisions. Didn't they already try the stand alone shops some years back? Bee.com now selling gadgets? ( Although revenue fell 75% due to the loss of the Morrisons contract, this was partially offset by the sale of 15 scary shower curtains), the digital side still hasn't started delivering. Although Sainsburies is a big name, it's online entertainment volume is modest and certainly not enough to pay for offshore distribution on it's own, still no downloads, the kiosks are still in testing (only 6 out there with imobily).

On the positive side, uexplore being sold, talk of a major new online customer TBA and I think the DVD rental business may also surprise on the upside.

[encarter] 27/4/2011 10:58

It sounds like they are close to a deal.

[deswalker] 27/4/2011 10:40

A new article in the Lancashire Evening Post ...

[encarter] 27/4/2011 08:26

If Morrisons take the stock then MBL have a platform to develop other parts of the business. I can't see any reason why they would agree to end the contract early unless that were part of the deal.

[druinsky] 26/4/2011 19:12

Has tom winnifryth said these are worth buying and has GECR said these are worth 93p? Burp.

[kimboy2] 26/4/2011 18:28

It obviously happened with some sort of advance notification from Morrisons and presumably due to key management changes at MRW. As the interims were to September 2010 the change was probably in the Spring period before. The company insiders will have been well aware of this change and with hindsight one can see why the share price started falling off even though the official company news re contracts and the final year end results was all positive at the time. Mmmmm!!

I am not sure the numbers support this.

The reasons for the fall in profits in H1/11 was primarily because of the increased losses of the new businesses.

There was a fall in turnover overall but this was because of a fall in the turnover of the other distribution trades rather than a fall in MRW trade. This resulted in an increase in concentration to MRW of 82% as against 78% in the 2010 AR.

It could of course be that they weren't making any money from these other customers so it didn't make any difference and the secondary cause of the fall in profits was lower margins at MRW. However I would have thought that less likely.

I think the MRW changes happened fairly late in the day and of course explain why they were so confident about predicting a poor christmas so far in advance.

However if they knew the company was doing so badly why were they touting for an MBO (if that is what it was), and why did they want to retain a contract with MRW that wasn't making any money ?

I think we are missing some pieces to this jigsaw.

[masurenguy] 26/4/2011 14:56

davidosh - 3921: "As the interims were to September 2010 the change was probably in the Spring period before. The company insiders will have been well aware of this change and with hindsight one can see why the share price started falling off even though the official company news re contracts and the final year end results was all positive at the time."

Interesting timeframe assumption ! The year end was March 31st and the results were published in July. One would assume that bonuses would only be agreed and finalised once the results for the year were produced in draft form by the auditors which would probably be around the end of May/early June. The bonuses subsequently awarded for the y/e March 2010 totalled £1.14m (Allan £720K, Cowgill £300K and Clarke £120K).

However the Chairmans Statement in the Results published on July 19th also contained this curious comment:
"The Board recognises the challenging economic and specific market conditions which prevail. It further acknowledges the current concentration of the business on its major customer, which is presently contracted to September 2011."

This was in direct contradiction to the original RNS announcement relating to the Morrisons contract that was issued on 22 June 2009: "RNS Number : 2066U - The Board of MBL Group plc, the UK distributor of home entertainment products, is pleased to announce that it has signed a new 3 year contract with Wm Morrison Supermarkets plc ('Morrisons') for the supply of Morrisons entertainment into 2012. The contract covers the supply of CDs, DVDs/BluRay and all Games formats."

Seems strange that the Board subsequently thought that it was only a 24 month contract as early as July 2010 results announcement and even stranger that the Chairman couldn't remember the 'detail' of the timeframe in the June 2009 RNS relating to the Morrison contract, when asked during a teleconference to discuss the potential consequences of the loss of this contract following the termination announcement in March 2011.

You actually referred to it in a series of posts following the publication of the 2010 results on July 19th.

davidosh - 19 Jul'10 - 2118: The Morrisons contract actually runs until mid 2012 and PC must have got it wrong.

langland - 19 Jul'10 - 2119: David, If there is an error here, maybe it would be a good idea to point that out to the company.

davidosh - 19 Jul'10 - 2120: langland....I have and the Nomad and broker. If it is incorrect or a mistake in the chairmans text today then there should be a replacement IMO

davidosh - 19 Jul'10 - 2126: I have now been advised that it is definitely a three year contract and that there is no reason why it will not be renewed as it has been a very good relationship with Morrisons for over a decade however the contract has a notification date if they do not wish to continue that must be advised in September 2011. So I guess we will know then if Morrisons are finding an alternative supply route from mid 2012.

Shanklin - 19 Jul'10 - 2130: Given the underlying phenomenally good financials, this has to be one of the worst written RNSes I have ever seen. I am all for PC not harming MUBL, by avoiding sharing commercially sensitive information with its competitors, but there is no need to write an RNS sounding like the company has no clue what its up to and that its key contracts could end a year earlier than the actual currently contracted date.

fmcalorum - 19 Jul'10 - 2137: Should the company now issue a RNS clearing up the dates, etc regarding Morrisons contract and set the record straight!

campbed - 19 Jul'10 - 2144: Re my post 2123 on the Morrison contract expiry, the company's advisers gave me confirmation that the contract is for 3 years to 2012 but that it (always) has a break clause in Sept 2011 which, to be conservative and on a worst case basis, is the date used in today's prelims announcement. The relationship with Morrisons is thought to be very good and hence there is no reason to believe they will exercise the break or the contract will not be renewed in 2012. There is no change in expectation!!.

What happened next !

"RNS Number : 6382X - 09 December 2010 - Negotiations underway with Morrisons plc regarding the future commercial relationship following expiry of the existing contractual agreements in September 2011

RNS Number : 3170A: 31 January 2011 - As stated in the interim results announcement on 9 December 2010, the existing contracts to supply Morrisons are due to expire at the beginning of September 2011. As a result of the continuing negotiations with Morrisons, the Company has now been invited to enter into a competitive tender process for the provision of home entertainment product logistics services. The outcome of the tender process should be known by the end of March, at which point the Board will provide a further trading update. Morrisons has confirmed to the Company that it will assume responsibility for the stock held by MBL on its behalf during the remaining period of the existing contracts. This stock commitment represents a significant proportion of the stock held by the Company.

RNS Number : 9476C - 15 March 2011 - The Board of MBL Group plc ("Board") announces that it has received formal notification from its major customer, Wm Morrisons Supermarket plc ("Morrisons"), of the termination of its two existing supply agreements with MBL. The final termination date of the agreements will be 14 September 2011. In the financial year ended 31 March 2010, approximately 78% of MBL turnover related to sales to Morrisons.

RNS Number : 3979E - 06 April 2011 - The Board of MBL Group plc ("Board"), a UK multi-channel distributor of home entertainment products, announces that the trading relationship with its major customer, Morrisons Supermarket plc ("Morrisons") has terminated with immediate effect, by mutual agreement. The Board of MBL is in advanced negotiations with Morrisons in regard to the realisation of the stock position relating to the associated contracts for supply and anticipates an imminent conclusion."

The totally unexpected comments regarding the "concentration of business on its major customer" in the July 19 2010 annual report, the confusion over the contract term being 2 or 3 years, the award of £1.14m in bonuses that was detailed in the same document, the subsequent clarification that it was a 3 year contract but with a 2 year break clause (never previously revealed), the retender announcement in January, the subsequent announcement on 15 March 2011 of a contract termination effective Sept 14 and the final announcement of an immediate termination effective 6 April 2011 is a confusing and inconsistent sequence of events to say the least!

[kimboy2] 26/4/2011 14:55

It certainly is no surprise that they couldn't pay the suppliers till MRW coughed up.

At the interims they had;

Inventories...£20.9m
Receivables...£10.3m
Cash..........£2.5

Payables......£19.3m

Unless their inventories were being turned into cash they wouldn't be able to pay as they became due at some point. I very much doubt they would get any bank finance.

[miamisteve] 26/4/2011 14:18

I'm concerned also that given they were unable to pay suppliers until Morrisons pay, are they able to stock the remaining 25% of their clients?

[jeffian] 26/4/2011 13:44

But why is it taking so long to sort out what should (theoretically!) be a relatively straightforward contractual matter? Nothing at MBL is ever as they say it is; a contract til 2012 is terminated in 2011 without a by-your-leave and assurances that the customer will take on the stock are looking more hollow by the day.

[davidosh] 26/4/2011 13:21

'MBL's major customer implemented a change in the in-store proposition
for home entertainment which increased the concentration of chart titles to the
detriment of space historically available for back catalogue titles. As a
consequence MBL has credited higher than anticipated returns from the customer
which has affected revenue.'


Looking back over the last year this was the key change to the business IMO.

It obviously happened with some sort of advance notification from Morrisons and presumably due to key management changes at MRW. As the interims were to September 2010 the change was probably in the Spring period before. The company insiders will have been well aware of this change and with hindsight one can see why the share price started falling off even though the official company news re contracts and the final year end results was all positive at the time. Mmmmm!! As Morrisons were 75% of the company sales surely this change to the buying mix and therefore volume and margin pressure should have been notified to the shareholders as soon as it was officially known ??

They waited until 7th October and after the Strategic Review announcement before deciding to suggest there was any likely problem whatsoever ??

[rbcrbc] 26/4/2011 11:13

An interesting snippet from the Interims:

Sales at Music Box Leisure ("MBL") were affected during the period by shortfalls
in expected sales to three main accounts. The home entertainment market in the
UK has experienced a decline in year on year sales due to a lack of strength in
key new release titles and the maturity of the current generation of games
hardware. MBL's major customer implemented a change in the in-store proposition
for home entertainment which increased the concentration of chart titles to the
detriment of space historically available for back catalogue titles. As a
consequence MBL has credited higher than anticipated returns from the customer
which has affected revenue. The terms of the contract with this customer
provide limits for returns and it is anticipated that the majority of the stock
returned will revert to either the supplier or customer in due course. Gross
margins fell by 0.4% to 10.1%, compared to the period to 30 September 2009.
Gross margins are not expected to decline any further.

[kimboy2] 26/4/2011 10:33

AISI there are 3 issues;
1. The MRW stock and getting the brass out of them
2. The appalling lease and getting out of it.
3. What the company does next and a plan for the future (if any).

I was half expecting Cinram to come in with an offer for MRW. It might do yet if the legacy issues of the stock and the lease are sorted.

[jeffian] 26/4/2011 09:43

Hmmmm! All gone a bit quiet here.

"The Board of MBL is in advanced negotiations with Morrisons in regard to the realisation of the stock position relating to the associated contracts for supply and anticipates an imminent conclusion."

3 weeks later, one has to wonder about the definition of the words "advanced negotiations" and "imminent conclusion".

[encarter] 22/4/2011 19:49

Also from Interims

"The Group has also been focusing on the direct to consumer market and post year end has commenced a trial with a major retailer to install concessions within its retail estate. The trial is still ongoing and is an extension of a few standalone stores which the Group has opened under the brand 'Big'. "

It would seem that they have more than the share price suggests.

[rbcrbc] 22/4/2011 10:39

It was mentioned, but not named, in the interims:

This investment includes development of a 'white label' eCommerce platform and related operations, investment in an online capability for its wholesale division, the trial of a small number of retail stores and concessions and the continued investment in a digital capability.

[supernumerary] 21/4/2011 21:56

fft - yes. Been mentioned before - see post 2238. Maybe you should ask this guy:

-------------

March 2010 – January 2011 (11 months)

Key Responsibilities

• Launching a new High St Retail proposition from concept, through to design & delivery of the finished offer.

-------------

There does seem to be a certain lack of joinedupness around here.

[kimboy2] 21/4/2011 20:51

I presume tht if they are on the 'cusp of a transformation' they are also on the cusp of getting their brass out of MRW.

Without it they are on the cusp of oblivion.

[charliebrown2000] 21/4/2011 19:15

22nd April?? Isn't it insider trading if you're getting tomorrow's news??

[fft] 21/4/2011 19:14

Have i been asleep ? I dont remember Big Retail being mentioned before. And its not on the MBL website (that i can see).

A search reveals it may exist



At first thought, it seems quite bizarre. Or is it just a way of shifting the morrisons stuff. Or is TA getting desperate ? I hope its not another way of diverting money...