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Friday 16 April, 2021

musicMagpie plc

PLACING AND PROPOSED ADMISSION TO TRADING ON AIM

RNS Number : 6758V
musicMagpie plc
16 April 2021
 

 

NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR AUSTRALIA, HONG KONG OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.  THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THAT ACT OR AN AVAILABLE EXEMPTION FROM IT. THERE WILL BE NO PUBLIC OFFERING OF SECURITIES IN THE UNITED STATES.

 

16 April 2021

musicMagpie plc

("musicMagpie", the "Company" or the "Group")

PLACING AND PROPOSED ADMISSION TO TRADING ON AIM

musicMagpie, a leading re-commerce business in the UK and US specialising in refurbished consumer technology, announces its proposed admission to trading on AIM (the "Admission") and its placing conditional on Admission (the "Placing") of 7,772,020 new ordinary shares (the "New Shares") and 49,415,850 existing ordinary shares (the "Sale Shares") of 1 pence each ("Ordinary Shares"), both at a price of 193 pence per Ordinary Share (the "Placing Price") with institutional and other investors.

The Company shall today publish its Admission Document and has applied for Admission. The full terms and conditions of the Placing and Admission are set out in the Admission Document.

Peel Hunt and Shore Capital are acting as joint bookrunners and joint brokers to the Company in relation to the Placing and Admission. Peel Hunt is also acting as Nominated Adviser to the Company and Deloitte LLP is acting as financial adviser to the Company.

Key highlights of the Placing and proposed Admission

· Based on the Placing Price, the market capitalisation of the Company will be approximately £208 million on Admission;

· The Placing of the New Shares is expected to raise gross proceeds of £15 million for the Company and the Placing of the Sale Shares is expected to raise gross proceeds of £95 million for selling shareholders;

· The Placing attracted strong support from high quality institutional investors and was comfortably over-subscribed;

· On Admission, the Company will have 107,772,020 Ordinary Shares in issue and a free float of approximately 53 per cent;

· On Admission, directors and senior management (together with their connected parties) will own approximately 11.5 per cent. and funds managed or advised by NVM Private Equity LLP   and Mercia Fund Management Limited will together own approximately 16.1 per cent of the issued Ordinary Shares;

· The Directors believe that Admission will be an important step in the Group's development and will assist the growth of the business. The Directors also believe that Admission will further strengthen the Company's brand, visibility and profile in the re-commerce market. In addition to broadening the Group's shareholder base, admission to trading on AIM gives the Company the capacity, if required, to raise capital from the equity market or issue shares as consideration to support its strategic objectives as suitable opportunities arise;

· The net proceeds raised for the Company at the time of Admission will be used to repay existing debt facilities and fund the Group's working capital requirements, in particular the Group's expansion of its smartphone rental proposition;

· Admission and commencement of dealings on AIM are expected to take place at 8.00 am on 22 April 2021 under the ticker MMAG; and 

· The Company's ISIN is GB00BKY4XG48 and its SEDOL is BKY4XG4.

musicMagpie highlights: "Smart for the consumer, smart for the planet"

· musicMagpie is a leader in the re-commerce of consumer technology (including smartphones, tablets, consoles, computers) with sustainability running to the very heart of its operations.

· Founded in 2007, the Group has an established presence in the UK, with operations in Stockport, Greater Manchester, and in the US in Atlanta, Georgia. Operating through its two trusted brands - musicMagpie in the UK and Decluttr in the US - the Group's core business model is simple: to provide consumers with a smart, trusted and sustainable way to buy, rent and sell refurbished consumer technology and physical media products. 

· The market for pre-owned consumer technology and physical media is worth approximately £9 billion in the UK and US - and the former product category is expected to continue to grow at more than 10 per cent. per annum. The market is supported by a number of positive tailwinds, such as increasing consumer acceptance of circular economy models, inflating prices for certain consumer technology products, slower rates of innovation, and decoupling of handsets from carrier contracts. Together, these factors are facilitating rapid growth for businesses such as musicMagpie.

· "Smart for the consumer":

· musicMagpie has received external validation from customers and has won multiple industry awards.  The Group has the highest number of seller reviews on both Amazon and eBay (approximately 10 million globally on each platform as at 31 January 2021) and has consistently achieved extremely positive feedback scores (for example, 99.6 per cent. on its UK eBay account). The Group also has a 4.7* rating on UK Trustpilot, from over 180,000 reviews completed (as at 31 March 2021).

· When selling to musicMagpie, the customer is offered a fixed valuation via the website, provided with free logistics to ship the products and (subject to the product being 'as described') receives payment for their product on the day of arrival at the Group's warehouse. Customers purchasing from musicMagpie receive branded, refurbished product for a fraction of the price of buying new. All consumer technology products sold by the Group are sold with a free 12-month warranty. 

· musicMagpie has over 7.2 million customers registered worldwide and during the year ended 30 November 2020 there were over 2 million unique visitor sessions across the Group's two websites per month. The Group has, to date, paid out over £250 million to selling customers.

· "Smart for the planet" :

· As a pure-play re-commerce business, musicMagpie has strong environmental, social and corporate governance credentials. Over 400,000 consumer technology products were resold to consumers in the year ended 30 November 2020 by the Group. In addition, the Directors estimate that that the Group re-sells approximately 2,500 tonnes of books and disc media each year that could have ended up as waste.

· The Company is also expected to qualify for the London Stock Exchange's Green Economy Mark at Admission, which recognises companies that derive 50 per cent. or more of their total annual revenue from products and services that contribute to the global 'Green Economy'.

· The Group has grown considerably in recent years:

 

· Revenue has increased from approximately £115.5 million in the 12 months ended November 2018 to approximately £153.4 million in the 12 months ended 30 November 2020, a CAGR of approximately 15.2 per cent. 

· EBITDA has increased rapidly, from approximately £2.6 million in the 12 months ended 30 November 2018 to approximately £13.9 million in the 12 months ended 30 November 2020, a CAGR of approximately 132 per cent.

· The Group's revenue is increasingly derived from the re-commerce of consumer technology, which represented approximately 54 per cent. of the Group's revenue in the year ended 30 November 2020 (disc media represented approximately 38 per cent. and books 7 per cent.).

 

· musicMagpie uses its proprietary technology 'ALIVE' and 'WARP', which it developed in-house, to automate the decision-making and pricing processes that drive the business, maximising margin and managing inventory efficiently. 'ALIVE', the algorithm-based buying engine, has collated a database of over 1 million stock items and 10 years' worth of transaction data, on over 2.5 million items, which enables it to make smart purchasing decisions.  'WARP' optimises the sales price for every item and simultaneously lists each item across multiple sales sites, including the musicMagpie and Decluttr websites and applications, as well as Amazon and eBay.  The Group's technology platform is integral to all aspects of the business. It allows musicMagpie to maximise margin and manage inventory and provides both competitive advantage and high barriers to entry. 

· In addition to its growing core business, the Group recently launched three initiatives for which it sees significant potential:

· An innovative smartphone subscription / rental service, providing customers with a more affordable and flexible option than an outright purchase. 

· The SMARTDrop kiosk concept - a fast, easy and free way for sellers to recycle phones for instant cash - with kiosks now being rolled-out in ASDA and Co-op branches.

· Magpie Circular - a new corporate technology recycling service for businesses looking to increase their sustainability efforts whilst also generating income. 

Steve Oliver, Chief Executive Officer and Co-Founder of musicMagpie, said:

"We are thrilled that musicMagpie's circular economy model has resonated so strongly with investors, and are delighted to have received such a high level of demand for the Placing.

"Given the ongoing move to tackle the growing problem of e-waste and the fact that consumer attitudes towards buying refurbished consumer technology products are rapidly changing, we believe that there is significant potential for musicMagpie's future growth prospects. In the UK alone, we estimate that people are sitting on around £16.5 billion worth of technology that they no longer use, and that only a small percentage of consumer technology items are currently recycled.

The listing on AIM of musicMagpie reflects not only the success that we have enjoyed to date but also our confidence in our ability to capitalise on the favourable long-term trends that continue to drive the Company's strong performance."

 

Enquiries

 

Peel Hunt (Nominated Adviser, Joint Bookrunner and Joint Broker)  Tel: +44 (0) 20 7418 8900

Edward Knight

Paul Gillam

Nick Prowting

Tom Ballard

Alastair Rae (syndicate)

 

Shore Capital (Joint Bookrunner and Joint Broker)  Tel: +44 (0) 20 7408 4090

Mark Percy

Daniel Bush

John More

Malachy McEntyre (Corporate Broking)

 

Deloitte LLP (Financial Adviser)   Tel: +44 (0) 20 7936 3000

Chris Nicholls

Andy Westbrook

Aadam Brown 

 

Powerscourt (Financial Public Relations)  Tel: +44 (0) 20 7250 1446

Rob Greening

Elly Williamson

Lisa Kavanagh

 

 

Notes to Editors

musicMagpie is a leader in the re-commerce of consumer technology (including smartphones, tablets, consoles, computers) and disk media (including CDs, DVDs and games) and books, with sustainability running to the very heart of its operations.

 

Founded in 2007, the Group has an established presence in the UK, with operations in Stockport, Greater Manchester, and in the US in Atlanta, Georgia. Operating through its two trusted brands - musicMagpie in the UK and Decluttr in the US, the Group's core business model is simple: to provide consumers with a smart, trusted and sustainable way to buy, rent and sell refurbished consumer technology and physical media products.

 

It has a strong environmental and social focus, as demonstrated by its trademarked 'smart for you, smart for the planet' ethos. Over 400,000 consumer technology products were resold to consumers in the year ended 30 November 2020 by the Group. In addition, the Directors estimate that that the Group re-sells approximately 2,500 tonnes of books and disc media each year that could have ended up as waste.

 

When selling to musicMagpie, the customer is offered a fixed valuation via the website, provided with free logistics to ship the products and (subject to it being 'as described') receives payment for their product on the day of arrival at the Group 's warehouse.

 

Customers purchasing from musicMagpie receive branded refurbished product for a fraction of the price of buying new. All consumer technology products sold by the Group are sold with a free 12-month warranty.

 

The Group has the highest number of seller reviews on both Amazon and eBay (approximately 10 million globally on each platform as at 31 January 2021) and has consistently achieved extremely positive feedback scores. The Group also has a 4.7* rating on UK Trustpilot, from over 180,000 reviews completed (as at 31 March 2021).

 

Further information will shortly be available from: www.musicmagpieplc.com

 

 

IMPORTANT INFORMATION

 

 

This announcement does not constitute, or form part of, any offer or invitation to sell, allot or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with or act as an inducement to enter into, any contract or commitment therefor.

 

Recipients of this announcement who are considering subscribing for or acquiring Ordinary Shares are reminded that any such acquisition or subscription must be made only on the basis of the information contained in the final Admission Document, which may be different from the information contained in this announcement. No reliance may be placed, for any purpose whatsoever, on the information or opinions contained in this announcement or on its accuracy, fairness or completeness. To the fullest extent permitted by applicable law or regulation, no undertaking, representation or warranty, express or implied, is given by or on behalf of the Company, Peel Hunt LLP ("Peel Hunt") or Shore Capital Stockbrokers Limited ("Shore Capital"), or their respective parent or subsidiary undertakings or the subsidiary undertakings of any such parent undertakings or any of their respective directors, officers, partners, employees, agents, affiliates, representatives or advisers or any other person as to the accuracy, sufficiency, completeness or fairness of the information, opinions or beliefs contained in this announcement and, save in the case of fraud, no responsibility or liability is accepted by any of them for any errors, omissions or inaccuracies in such information, opinions or beliefs or for any loss, cost or damage suffered or incurred, howsoever arising, from any use, as a result of the reliance on, or otherwise in connection with, this announcement. Peel Hunt and Shore Capital, which, in each case, are authorised and regulated by the Financial Conduct Authority are acting only for the Company in connection with the proposed Placing and Admission and are not acting for or advising any other person, or treating any other person as their respective client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Peel Hunt or Shore Capital, or advice to any other person in relation to the matters contained herein. Such persons should seek their own independent legal, investment and tax advice as they see fit. Peel Hunt's responsibilities, as the Company's nominated adviser under the AIM Rules for Nominated Advisers and AIM Rules for Companies will be owed solely to the London Stock Exchange and not to the Company, to any of its directors or to any other person in respect of a decision to subscribe for or otherwise acquire Ordinary Shares in reliance on the Admission Document. No representation or warranty, express or implied, is made by Peel Hunt, Shore Capital or the Company or their respective affiliates as to any of its contents.

 

Deloitte is authorised and regulated in the United Kingdom by the Financial Conduct Authority and is acting exclusively for the Company as financial adviser and no-one else in connection with the Placing and Admission, whether or not a recipient of this announcement, and will not be responsible for providing the regulatory protection afforded to clients of Deloitte, or advice to any person other than the Company, in relation to the matters contained herein. Such persons should seek their own independent legal, investment and tax advice as they see fit. No representation or warranty, express or implied, is made by Deloitte or any of its affiliates as to any of the contents of the Admission Document or this announcement.

 

This announcement is only addressed to, and directed at, persons in member states of the European Economic Area who are qualified investors ("Qualified Investors") within the meaning of Article 2 (e) of the Prospectus Regulation (EU) 2017/1129 ("Prospectus Regulation"). In the United Kingdom, this announcement is addressed to and directed only at "qualified investors" within the meaning of Article 2(e) of the Prospectus Regulation, as it forms part of English law by virtue of the European Union (Withdrawal) Act 2018 (as amended) and regulations made under that Act, who are (i) persons having professional experience in matters relating to investments, i.e., investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO"); (ii) high net-worth companies, unincorporated associations and other bodies within the meaning of Article 49 of the FPO; or (iii) persons to whom it is otherwise lawful to communicate it (together, "relevant persons"). Any investment activity in relation to the Placing is available only to and will be engaged in only with (i) in the United Kingdom, relevant persons and (ii) in any member state of the European Economic Area, Qualified Investors. It is not intended that this announcement be distributed or passed on, directly or indirectly, to any other class of person and under no circumstances should persons of any other description rely on or act upon the contents of this announcement.

 

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The Ordinary Shares have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States. No securities commission or similar authority in Canada has in any way passed on the merits of the Ordinary Shares and any representation to the contrary is an offence. No document in relation to the proposed Placing has been, or will be, lodged with, or registered by, the Australian Securities and Investments Commission, and no registration statement has been, or will be, filed with the Japanese Ministry of Finance. Subject to certain exceptions, the Ordinary Shares may not be, directly or indirectly, offered, sold, taken up, delivered or transferred in or into or from any jurisdiction in which the same would be unlawful or offered or sold to a person within such a jurisdiction.

 

Neither this announcement nor any copy of it may be (i) taken or transmitted into or distributed, directly or indirectly, in the United States (within the meaning of regulations made under the US Securities Act of 1933, as amended), or (ii) taken or transmitted into, distributed, published, reproduced or otherwise made available or disclosed in Canada, Australia, Japan, Hong Kong, New Zealand or the Republic of South Africa or to any resident thereof, except in compliance with applicable securities laws. Any failure to comply with these restrictions may constitute a violation of the securities laws or other laws of any such jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and the persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.

 

The date of Admission may be influenced by factors such as market conditions. There is no guarantee that the Placing and Admission will occur, and you should not base your financial decisions on the Company's intentions in relation to the Placing and Admission at this stage. Acquiring securities to which this announcement relates may expose an investor to a significant risk of losing all of the amount invested. The value of shares can decrease as well as increase. This announcement does not constitute a recommendation concerning the Placing. Persons considering an investment in such investments should consult an authorised person specialising in advising on such investments.

 

This announcement contains certain statements that are, or may be, forward looking statements with respect to the financial condition, results of operations, business achievements and/or investment strategy of the Company. Such forward looking statements are based on the Company's expectations of external conditions and events, current business strategy and plans and the other objectives of management for future operations, and estimates and projections of the Company's financial performance. Though the Company believes these expectations to be reasonable at the date of this announcement, they may prove to be erroneous. Forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, achievements or performance of the Group, or the industry in which the Group operates, to be materially different from any future results, achievements or performance expressed or implied by such forward looking statements. Past performance cannot be relied upon as a guide to future performance and should not be taken as a representation that trends or activities underlying past performance will continue in the future.

 

Certain figures in this announcement, including financial information, have been subject to rounding adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in this announcement may not conform exactly to the total figure given.

 

For the avoidance of doubt, the contents of the Company's website is not incorporated by reference

into, and do not form part of, this announcement.

 

Information to Distributors

 

Solely for the purposes of the product governance requirements contained within the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK Product Governance Rules"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the UK Product Governance Rules) may otherwise have with respect thereto, the Ordinary Shares have been subject to a product approval process, which has determined that the Ordinary Shares are: (i) compatible with an end target market of investors who meet the criteria of professional clients and eligible counterparties, each defined in the FCA Handbook Conduct of Business Sourcebook ("COBS"); and (ii) eligible for distribution through all distribution channels as are

permitted by the UK Product Governance Rules (the "UK Target Market Assessment").

 

Solely for the purposes of the product governance requirements contained within: (a) EU Directive

2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of

Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing

measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any

liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the

MIFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary

Shares have been subject to a product approval process, which has determined that the Ordinary

Shares are: (i) compatible with an end target market of investors who meet the criteria of professional

clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all

distribution channels as are permitted by MiFID II (the "EU Target Market Assessment").

 

Notwithstanding the UK Target Mark Assessment and the EU Target Market Assessment, distributors should note that: the price of the Ordinary Shares may decline and investors could lose all or part of their investment; the Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. Each of the UK Target Market Assessment and the EU Target Market Assessment is without prejudice to any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the UK Target Market Assessment and the EU Target Market Assessment, Peel Hunt and Shore Capital will only procure investors who meet the criteria of professional clients and eligible counterparties each as defined under COBS or MiFID II, as applicable.

 

For the avoidance of doubt, each of the UK Target Market Assessment and the EU Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of Chapters 9A or 10A respectively of COBS of MiFID II, as applicable; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Ordinary Shares.

 

Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary Shares and determining appropriate distribution channels.

 

 

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