Interim Results FY21 The smart, sustainable and trusted way to buy, rent and sell - musicMagpie
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The smart, sustainable and trusted
way to buy, rent and sell
Interim Results FY21
Important Notice
NOT FOR PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE
TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT
JURISDICTION.
This presentation has been prepared by musicMagpie plc (“musicMagpie”). By attending this presentation and/or reviewing
the slides you agree to be bound by the following conditions. The release, presentation, publication or distribution of this
document, in whole or in part, in certain jurisdictions may be restricted by law or regulation and persons into whose
possession this document comes should inform themselves about, and observe, any such restrictions. This presentation has
been prepared solely for the stated purpose and the information contained in it, is strictly confidential. The content of this
presentation has not been approved by an authorised person and no reliance should be placed on the presentation by any
person engaging in any investment activity. It does not constitute or form part of, and should not be construed as, an offer or
invitation to sell or other promotion of any securities. No statement in this presentation is intended to be a profit forecast.
Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation, the AIM Rules,
the Disclosure Guidance and Transparency Rules and the Prospectus Rules), musicMagpie does not undertake any
obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or
otherwise. The presentation may contain other statements containing "forward-looking statements" with respect to certain of
the company's plans and its current goals and expectations relating to its future financial condition, performance, strategic
initiatives, objectives and results. forward-looking statements sometimes use words such as "aim", "anticipate", "target",
"expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By
their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and
circumstances which are beyond the control of the company. As a result, the actual future financial condition, performance
and results of the company may differ materially from the plans, goals and expectations set forth in any forward-looking
statements. Any forward-looking statements made herein speak only as of the date they are made. For the purpose of this
notice, “presentation” means this document, any oral presentation, any question and answer session and any other written or
oral material discussed or distributed during the presentation meeting.
2
Introduction
Presentation team
STEVE OLIVER IAN STOREY
Chief Executive Officer & Co-Founder Chief Operating Officer
Our plc non-executive board members
SMART for you | SMART for the planet
MARTIN HELLAWELL DAVE WILSON ALISON LITTLEY
Non-Executive Chairman Non-Executive Director Non-Executive Director
Audit committee Chair Remuneration Committee Chair
Chairman and formerly CEO of Softcat Plc Formerly CFO and COO NED and Remco Chair of Xaar plc and
of GB Group Plc Norcros plc
3
Who are we?
A leader of recommerce in the UK and US in the circular economy of consumer technology, books and disc media
TP ranking TP ranking
Value Add, Value Led e-Commerce Sustainability at our core
Strong ESG Credentials Proprietary Technology
Corporate Technology Recycling solution
TP ranking Powered by “ALIVETP ranking
WARP”, providing high
Support of charitable initiatives barriers to entry
Innovator and Disruptor Trust
Disrupting the market through new mobile
TP ranking TP ranking
phone rental subscription service and
4.7* UK Trustpilot rating with 190k+ reviews
SMARTDrop Kiosk
Customer Ownership Scale
World’s #1 transactional
TP ranking
Over 80% of UK consumer technology now TP reseller
ranking on ebay & Amazon
sold direct to consumer via musicMagpie store (based on feedback)
7.5 million £280 million+ 2 million+ 4 million+
CUSTOMER REGISTRATIONS PAID OUT TO UNIQUE VISITOR SESSIONS MOBILE APP
WORLDWIDE CUSTOMERS PER MONTH DOWNLOADS
4
Source: Unaudited management accounts
How does it work? * Based on expected courier delivery times 5
H1 2021 Highlights
A period of strong financial, operational and strategic progress;
underpinned by significant margin improvement
Financial Headlines Operational Headlines
Revenue + 2.3% £72.8m
Strong start from smartphone Rental service
Gross Profit +24.1% £23.7m
Adjusted EBITDA + 13.5% £6.2m
Successful trial of SMARTDrop Kiosk
Net Cash £6.4m
Rental units contracted 7,500+
New Apple product now available on mM Store in UK
SMART for you | SMART for the planet
US Trade-In Partnerships signed
Media and Books categories remain robust
Mount Recyclemore at G7 to highlight e-waste
6
Financials Interim Results FY21
H1 2021 Financial Highlights
A period of strong financial, operational and strategic progress;
underpinned by significant margin improvement
Revenue Gross Profit Gross Margin
£72.8m + 2.3%
+ 3.7% CCY
£23.7m + 24.1% 32.6% + 5.7%
(H1 2020: £71.1m) (H1 2020: £19.1m) (H1 2020: 26.9%)
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Adjusted EBITDA 1 Adjusted EPS 3 Net Cash 4
£6.2m + 13.5% 3.43p + 13.6% £6.4m
+ 14.8% CCY
(H1 2020: £5.5m) (H1 2020: 3.02p) (H1 2020: Net Debt £(9.6)m)
1 Adjusted EBITDA is a non GAAP measure calculated as earnings before interest, tax, depreciation, amortisation, equity-settled share-based payments and other non-underlying items
2 “CCY” indicates figures reported on a constant currency basis meaning that US Dollar results in the comparative period have been translated at the same exchange rate applied to
current year US Dollar results
3 Adjusted EPS is calculated on Adjusted PBT and is given to exclude the effects of equity-settled share-based payments and other non-underlying items, all net of taxation, and is 8
therefore considered to show the underlying performance of the Group
4 Net Cash/(Debt) excludes lease liabilities
Group Income Statement
Consolidated Profit and Loss 2021 2020 Change
Revenue up 2.3% (3.7% on a constant currency basis)
6 months to 31 May £m £m £m
with growth across all product categories
Revenue 72.8 71.1 2.3% UK revenue accounted for 80% of Group revenue up
- UK 58.1 54.5 6.6%
6.6% to £58.1m. Substitution of a net £2.0m of sales
- US 14.7 16.6 -11.6%
with success of rental model for current and future
rental income streams (10.2% UK growth after LFL
Gross Profit 23.7 19.1 24.1%
adjustment for this). US down due to fewer purchases
and sales from B2B sources
Gross Margin 32.6% 26.9% 570 bps
Gross margin up 570 bps to 32.6%, delivering absolute
Operating Expenses (17.5) (13.6) 28.4%
gross profit growth of 24.1% to £23.7m with continued
pricing and product optimisation
Adjusted EBITDA 6.2 5.5 13.5%
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Operating expenses up to £17.5m with growth
Depreciation and amortisation (1.5) (1.3) investment across IT Development, Data and Marketing
Financial expense (0.8) (1.0)
Adjusted EBITDA of £6.2m, up 13.5% (14.8% on a
Adjusted PBT 4.0 3.3 22.8% constant currency basis)
Share-based payments (17.4) (0.2)
IPO Costs (3.9) - £21.5m of adjusting P&L items, relating to share-based
Other non-underlying items (0.2) (0.5) payments costs on options which vested on IPO along
Non-underlying finance expense (0.2) - with transaction costs
Reported PBT (17.7) 2.6
Adjusted EPS (pence) 3.48 3.02 15.2% Adjusted EPS of 3.48p, up 15.2% YOY
Reported EPS (pence) (17.27) 2.57
9
Segmental Analysis – Consumer Technology
Revenue
Establishment of rentals combined with strong margin growth
Group (55% of sales mix)
H1 21 £39.7m • Group revenue of £39.7m representing 55% of total revenue
H1 21
H1 20 £39.4m + 0.8% • Top line growth impacted by shift to rental model –
UK adding£2.0m net sales back gives LFL growth of 5.9%
H1 21 £33.1m
• UK revenue up 7.3% (13.8% with rental add back) to £33.1m
H1 20 £30.8m + 7.3%
H1 20 US • US revenue contribution down 22.5% from £8.5m to £6.6m, but
H1 21
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£6.6m £3.1m drop in sales from B2B purchases so underlying sales from
H1 20 consumer purchases up 25.6%
£8.5m - 22.5%
Gross Margin %
H1 21 26.0% • Strong Margin Growth up 450 bps to 26.0%
H1 20 21.5% + 450bps
10Segmental Analysis – Disc Media and Books
Disc Media (38% of sales mix) Books (7% of sales mix)
40.5% 40.8%
33.1% 36.5%
£5.1m
£27.1m £28.0m £4.6m
+ 3.2% + 740bps + 10.4% + 430bps
H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021
SMART for you | SMART for the planet
Revenue Gross Margin Revenue Gross Margin
Categories remain robust – cash cow with strong margins
• Pandemic helped drive LFL sales growth in categories
• Margin growth driven by better product selection, selling fewer new products, optimising pricing and
increasing proportion of sales through mM Store
• The second half is expected to see sales in the categories begin to return to more normalised pre-
11
pandemic levels, further increasing the % of consumer technology sales in the product mixBalance Sheet – Strengthened by IPO
Balance Sheet 2021 2020 Change
As at 31 May £m £m £m
Tangible Assets 4.7 4.3 0.4 Tangible Assets includes £1.3m NBV of Rental Assets
Intangible Assets 8.5 8.1 0.4
Deferred Tax Assets 1.7 - 1.7
Inventories 6.3 6.1 0.2 Stock levels remain consistent in line with revenue
Receivables 3.5 3.0 0.5 Receivables increase due to timing of platform receipts
Net Cash/(Debt) 6.4 (9.4) 15.7 Cash of £6.4m after repayment of all external
borrowings on IPO, with £15.0m primary raise
SMART for you | SMART for the planet
Current liabilites (11.1) (11.6) 0.5
Lease Liability (2.2) (3.0) 0.8
Shares classfied as debt - (1.2) 1.2 Repayment of shareholder preference shares on IPO
Net Assets 17.8 (3.7) 21.5
Capital and Reserves 17.8 (3.7) 21.5
12Cash Flow
Consolidated Cash Flow 2021 2020 Change Adjusted operating cash flow pre-exceptional of
6 months to 31 May £m £m £m £6.0m giving cash conversion of 97.2%
Adjusted EBITDA 6.2 5.5 0.7 £1.0m increase in receivables, due to timing,
Working Capital (0.2) 0.5 (0.7) largely offset by inventory reduction
Adjusted Operating Cash Flow 6.1 6.0 0.1
Exceptional Costs paid (4.1) (0.5) (3.6)
Exceptional costs largely relating to IPO (£3.9m)
Operating Cash Flow 2.0 5.5 (3.5)
Taxation - - -
Finance expense (2.0) (0.5) (1.5) Includes £1.0m of shareholder loan note interest
Capex/Development (2.5) (0.8) (1.7) Capex includes £1.5m of Rental Assets
Lease liability payments (0.4) (0.4) (0.1)
Net share issue proceeds 14.5 - 14.5
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Repayment of borrowings (10.2) - (10.2)
Foreign Exchange (0.2) - (0.2)
Total Increase in Cash 1.2 3.8 (2.6)
Repayment of total borrowings sees business
Net Cash/(Debt)
debt free with £6.4m cash balance at 31 May
Opening Net (Debt) at 1 December 2020 (6.1)
Repayment of borrowings (including shareholder interest) 11.2 Total additional borrowing capacity of £20m,
Increase in Cash 1.2 comprising £10m available immediately and
Closing Net Cash Balance at 31 May 2021 6.4 £10m accordion facility
13Strategic Update Interim Results FY21
Rent a Phone
Consumers • Financial flexibility Key Stats (as at 31 May)
• Cost effective access to • Launched 21st October 2020
more desirable smartphones
• Available on c. 70% of Apple/Samsung models
• Annual opportunity to
upgrade • 7,500+ subscriptions, building at 50+ rentals per day
• Recurring revenue stream • £0.3m of revenues in H1 21 - forward contracted rental stream of £1.2m*
• Greater revenue and margin
£1,400,000
per unit vs outright sale
• Zero acquisition cost at the £1,200,000 Forward contracted rental stream = £1.2m*
end of the rental contract,
musicMagpie
£1,000,000
for guaranteed future sale
inventory £800,000
SMART for you | SMART for the planet
• More regular interaction £600,000
and deeper relationship
£400,000
with the customer
• Automatically involved the £200,000
next time a customer £0
decides to change their Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21
handset *net of VAT
15Kiosks
Kiosks
• Addresses consumer apathy (£16bn and 11 devices per UK household left
in drawers) by making it even quicker and easier to sell to musicMagpie
• Trial scheme went live in 20 retail stores in the North West with an
aggregate footfall in excess of 400,000 customers per week in December
2020
• Over 1,250 devices traded through the Kiosks with a value of over
£300,000 up to the end of May 21
• Average paid value per unit of £236, 41% higher than Magpie’s average
SMART for you | SMART for the planet
mobile transaction (£167)*
• Nearly 40% of customers using SMARTdrop stated they wouldn’t have
sold their old device otherwise
• Expansion roll-out now being planned across Asda estate with a view to
reaching 90% of population within a 15 minute drive – marketing will be
ramped up in line with this increased coverage.
16
* Based on average purchase price of Apple and Samsung devices sold in Q2Apple
Apple New Product
• New Apple Products now available for sale on musicMagpie Store
in the UK
• Phones delivered direct from Apple with 90 days of AppleCare
SMART for you | SMART for the planet
and Apple’s 12 month warranty included
17Corporate Recycling Programme
• February saw the launch of a corporate recycling programme for businesses looking to enhance their
sustainability credentials raising cash in the process.
• The service allows businesses to recycle their unwanted company smartphones, tablets and Apple
computers in a safe, secure and sustainable way
1,000 devices traded initially
25,000 iPhone users on a three year cycle
SMART for you | SMART for the planet
Trade Up to Refurbished or New Corporate Rentals
Other Professional Firms/International Employee Offers
18USA -
Gross Margin US strategic expansion through partnerships
26.3% 21 • Margin expansion delivered, growing 390 bps from 22.4% to 26.3%
22.4% • Turnover reduction from $21.5m to $20.2m attributable to reduced
+ 390bps business/wholesale (B2B) consumer technology purchases in H1 2021,
($4.9m to $0.8m) compared with prior year
• Total consumer purchased sales (C2C) up 10.0% from $17.8m to
$19.6m
H1 20 H1 21
• Opportunities actively sought to deliver more B2B purchased sales in H2.
Revenue Will lower margin % but incremental ‘hero offer’ product to drive
customer sign up and engagement
SMART for you | SMART for the planet
$21.5m
$20.2m • Evolution of trading opportunities with partnership arrangements
B2B
offering sizable new customer reach
$19.6m
$17.8m
C2C
+ 10.0%
C2C
C2C
7m active users 2m registered customers
H1 20 H1 21
Sales from consumer
US C2B purchases (C2C)
US B2B
and business/wholesale purchases (B2B) 19SMART for you | SMART for the planet
Sustainability and ESG
20Looking Ahead
Outlook
• Trading continues in line with management expectations in H2
• Rental momentum continues, with on average over 5o new contracts per day
• Rental success expected to moderate short term top line growth before giving way to acceleration of
EBITDA growth
• First Apple new product launch cycle (Q4) with new product available through mM Store
• Increased SMARTDrop Kiosk roll-out – anticipated capex of c£2.0m over the next 12 months funded from
SMART for you | SMART for the planet
existing cash and borrowing facilities
• Expansion of trade-in partnerships and corporate recycling.
• Gross margin expected to remain ahead of expectations mitigating any potential shortfall from B2B driven
sales in US
• Directors remain confident that full year Adjusted EBITDA will be in line with expectations
21Summary
Clear strategic avenues for future growth
Leading the agenda on the circular economy
Further development of key partnerships
SMART for you | SMART for the planet
Strong management team focused on delivering on strategic opportunities
Rental service provides sizable opportunity for future profit growth
22Q&A Interim Results FY21
Appendices Interim Results FY21
Non-Executives Biographies
MARTIN HELLAWELL DAVE WILSON ALISON LITTLEY
Non-Executive Chairman NED NED
• Chairman and former CEO of Softcat Plc • Formerly CFO and COO at GB Group Plc • NED at Xaar, Norcros and Osborne Group
• Led Softcat’s IPO • Worked in the TMT sector for 40 years • Remuneration committee chair of all
• Also a director of Raspberry Pi and • Previously at Eazyfone, Codemasters, three
Team17 Fujitsu, and Technology plc • Previously at Buying Solutions, an agency
• Previously at Computacenter to HM Treasury; Diageo; and Mars
25Management Team Biographies (1/2)
STEVE OLIVER IAN STOREY
CEO and Co-Founder Chief Operating Officer
• Co-founded musicMagpie in 2007 • Joined musicMagpie in 2013, became CFO in
• Has led the business since, overseeing 2015 and was promoted to COO on IPO
its significant growth over 13 years • Qualified as a Chartered Accountant at
• Previously FD and CEO of Music Zone Deloitte in 2001
and a Managing Director of The • Previously worked at UP Global Sourcing and
Fragrance Shop iSOFT Group plc
ROB CLARKE JON MILLER
Head of Finance Chief Commercial Officer
• Responsible for the P&L of the
• Joined musicMagpie in 2018, and was
Consumer Tech category
promoted to Head of Finance on IPO
• Joined musicMagpie in late 2016 as MD
• ACCA qualified
of Electronics
• Previously Sales Director and
Commercial Director of Brightstar, the
UK’s biggest telecoms distributor
LIAM HOWLEY SAM VESEY
Chief Marketing Officer Chief Sustainability Officer
• Joined musicMagpie in 2011 as Senior • Responsible for Sustainability across
Online Marketing Manager and climbed the Magpie Group
through ranks to become CMO in July • Joined musicMagpie in 2009 and has
2015 performed various senior roles
• Responsible for Group Marketing and within the business
eCommerce functions of business
26Management Team Biographies (2/2)
DAVID HILTON RACHEL COXON
Chief Technology Officer Chief People Officer
• Joined musicMagpie in late 2019 as Group • Joined musicMagpie in mid-2019
CTO • Heads up all ‘People’ strategy and
• Responsible for entire Technology side of ‘Magpie Values’
the business • Previously Head of HR at Roadchef
• Previously spent 12 years at Thomas Cook, • Various senior HR roles across
since 2015 being Director of IT UK & North West of England
Ireland and Group Digital Transformation
JONATHAN BEIRNE
Head of Customer
• Responsible for entire ‘Customer’ function
of business including CS, CX and UX
• Joined the business in 2007 and has
climbed seniority ranks to current Exec
board position
27Operations
UK
• Global Head Office in Stockport, Greater
Manchester
UK - Stockport • c.170,000 sq. feet processing distribution centres
spread over two sites in North West (Hazel Grove
and Macclesfield)
• Employing 650 staff processing 16m items per
annum
USA
• c.60,000 sq. feet processing and distribution
USA – Atlanta, GA
centres in Atlanta, Georgia
• Employing 140 staff processing 4m items per
annum
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