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Birmingham Post
Birmingham Post
Business
Jon Robinson

Shares fall by almost 50% as musicMagpie warns of margins squeeze

Shares in musicMagpie fell by almost 50% after the company battled a squeeze on its margins during the first quarter of its financial year and warned the market it could fall short of its target.

The Stockport-headquartered company, which floated on the London Stock Exchange's AIM last year, also posted a pre-tax loss of £14.8m for its 12 months to November 30, 2021, down from a profit of £6.9m in the prior year.

The business said the loss was due to £25.7m of costs associated with equity-settled share-based payments of £17.4m, depreciation on disposal of property, plant and equipment of £1.8m, provision for impairment of rental assets of £400,000, amortisation of intangible assets of £1.5m as well as £4.6m of IPO and other non-underlying items.

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musicMagpie added that of the costs, £22m are non-reoccurring.

On an adjusted basis, the company's pre-tax profits went from £9.2m to £7.9m.

The business has also posted a turnover of £145.5m, a decrease from £153.3m.

In a statement, musicMagpie said the decline in it turnover is "in line with management expectations as a result of business normalisation in FY21 following the first year of the pandemic in FY20".

It did, however, point to its consumer technology turnover rising by 3.1% to £86.1m, with its UK segment increasing by 6.1% to £71.2m.

Chief executive and co-founder Steve Oliver said: "This has been a landmark year in the history of musicMagpie, and I am hugely proud of everything that the business has achieved.

"We have delivered strong operational and strategic progress in our first year as a listed company, and have done so while staying true to our clear environmental and social focus and our long-standing 'smart for you, smart for the planet' ethos.

"During the year, we gave a 'second-life' to over 400,000 technology products, as well as 2,500 tonnes of disc media and books.

"This helped to save over 50,000 tonnes of CO2, which is the equivalent to providing heating for over 18,000 homes.

"In the current uncertain climate for consumers, the benefits of buying and renting refurbished consumer technology products, whilst helping the environment, has never been more compelling.

"We are particularly pleased with the progress being made by our rental subscription service, which provides customers with a more affordable and flexible option than an outright purchase or a pay-monthly contract.

"We are extremely excited about its future growth prospects, and scaling this area of the business further will be a major point of focus for us in the coming year.

"I would like to thank each and every one of our colleagues for their unswerving loyalty, dedication and professionalism.

"It is their hard work, creativity and innovation that drives our business, and it has been humbling to witness their resilience and adaptability in changing their ways of working during the pandemic."

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