Beleaguered MBL posts £7.2m loss

ENTERTAINMENT distributor MBL Group, which lost its biggest customer representing nearly 80% of its business in April, has declared a half-year loss of £7.2m.

Sales in the six months to the end of September plunged from £71.1m to £15.7m as a result of the loss of the contract with supermarket group Morrisons. At the half year stage last year MBL made a profit of £700,000.

As a result Chorley-based MBL has been forced to downsize, cutting jobs and selling assets.

Chairman Peter Cowgill said: “”The group has experienced a challenging six months in which it has been managing the repercussions of the sudden loss of 79% of its business.”

He said the board would try and stabilise the business after “the damaging events of earlier this year”.

Already in the second half MBL has raised £1m by selling two subsidiaries, Global Media Vault and MBL Guernsey PCC to Sainsbury’s, while another of its businesses, DVD rental specialist, Outnow Home Entertainment, has been closed.

Mr Cowgill said the business had suffered a major loss of supplier confidence, lost the support of its funders and had credit insurance withdrawn after Morrisons gave MBL six months’ notice.

The situation was so grave that MBL was unable to support the contract during the notice period and management negotiated an immediate withdrawal from the notice period in early April.

This had financial consequences as MBL was incurring the “significant payroll and overhead costs” which previously supported the contract.

The group now has several small operating interests – the business to business operations of Windsong International, MBL Direct – which supplies independent retailers, and the direct to consumer operations of Bee.com retail and online.

The group has no debt and at the end of September had a positive cash balance of £1.6m.