RNS Number : 5918F
Marks Electrical Group plc
08 November 2022
 

Marks Electrical Group plc

Results for the six months ended 30 September 2022

Continued trading momentum, resilient profit performance and strong market share gains

 

Marks Electrical Group plc ("Marks Electrical" or "The Group"), a fast growing online electrical retailer, today announces its unaudited results for the six months ended 30 September 2022 ("the Period" or "H1-23" or "first half").

 

  • Strong first half revenue growth of 15.1% to £43.1m (H1-22 £37.5m)
  • Resilient profit performance in tough market conditions with Adjusted EBITDA(1) of £2.7m (H1-22 £3.0m), delivering a margin of 6.3% and keeping us on-track to deliver on our full year targets
  • Continued focus on working capital management, improving inventory days and driving a strong operating cash conversion of 189%
  • Free cash flow of £4.5m (H1-22 £5.9m), representing a free cash flow margin of 10%
  • Adjusted EPS of 1.66p (H1-22 2.14p)(3), Statutory EPS of 1.66p (H1-22 1.55p)
  • Robust, debt-free balance sheet with closing net cash position of £7.7m (H1-22 £1.3m), supporting an interim dividend of 0.30p per share



  • Growth in Major Domestic Appliances ("MDA") market share from 1.6% in H1-22 to 2.1% in H1-23, with our share in the online segment of the market growing from 2.6% to 3.9%(4)
  • Growth in Consumer Electronics ("CE") market share from 0.2% in H1-22 to 0.3% in H1-23, with our share in the online segment of the market growing from 0.4% to 0.6%(4)
  • Strong performance driven across all major product categories, with A-rated energy efficient laundry appliances growing at over 35% in the period, versus less efficient models staying broadly flat
  • Investments in on-screen, social media and out-of-home marketing activities drove improved brand awareness from 7% to 10%(7)
  • Expanded our geographic footprint further into Glasgow, Edinburgh, Cornwall and further parts of Wales, where we have seen strong demand for our customer leading proposition
  • Maintained industry leading Trustpilot score of 4.8, demonstrating our commitment to operational delivery and customer satisfaction


Outlook

  • Acceleration of revenue growth in October and strong start to November leave us well positioned to achieve our full year targets




 


 

Key financial highlights:

 


Six months ended

30 September

2022

£000

Six months ended

30 September

2021

£000

Year ended

31 March

2022

£000

Revenue


43,146

37,470

80,478

 


 

 

 

Adjusted EBITDA(1)


2,704

3,031

7,247

Adjusted EBITDA margin


6.3%

8.1%

9.0%

Adjusted EBIT


2,130

2,707

6,386

Adjusted EBIT margin


4.9%

7.2%

7.9%

Adjusted profit after tax


1,741

2,234

5,255

Adjusted earnings per share(3)


1.66p

2.14p

5.01p

Statutory profit after tax


1,738

1,626

3,288

Statutory earnings per share


1.66p

1.55p

3.22p

 





Operating cash flow for conversion(5)


5,117

6,578

8,616

Operating cash conversion


189%

217%

119%

Free cash flow


4,523

5,940

5,746

Free cash flow margin


10%

16%

7%

Net cash(6)


7,692

1,276

3,872

Return on Capital Employed(2)


49%

71%

57%

 

 

Notes

(1)   Adjusted EBITDA is a non-statutory measure defined as earnings before interest, tax, depreciation, and amortisation and adjusted for exceptional items, share-based payment charges and revaluation of investments.

(2)   Return on Capital Employed (ROCE) is defined as Adjusted EBIT / (Total Assets - Current liabilities)

(3)    Adjusted EPS is a non-statutory measure of profit after tax, adjusted for exceptional items, share-based payment charges and revaluation of investments, over the total diluted ordinary number of shares in issue. The number of ordinary shares as at 5 November 2021 through to 31 March 2022 have been used as the basis for the current and prior periods adjusted  earnings per share calculation. The shares in issue since IPO  represents an indication of the future weighted average number of ordinary shares for evaluating the performance of the Group

(4)    Based on the Group's analysis of GfK Market Intelligence sales tracking GB data;

(5)    Operating cash flow for cash conversion is defined as cash generated from operations less outflows for lease payments and exceptional items

(6)    Net cash/(debt) represents cash and cash equivalents less financial liabilities (excluding lease liabilities)

(7)    All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 3,728 adults. Fieldwork was undertaken between 25 October - 2 November 2022. The survey was carried out online. The figures have been weighted and are representative of all England adults (aged 18+).

 

Results presentations

An in-person presentation for sell-side analysts hosted by Mark Smithson, CEO, and Josh Egan, CFO, will take place at 09.30am this morning. Please contact markselectrical@dentonsglobaladvisors.com for further information.

In addition, management will also provide a live online presentation for investors at 12.30pm on 10 November 2022. The online event is open to all existing and potential shareholders and registration is free. Questions can be submitted during the presentation and will be addressed at the end. To register, please go to: link to sign up.

A recording of the presentation will be available shortly after the event at this link: Marks Electrical content page.



 


 

 

Enquiries:

Marks Electrical Group plc                                                                                Via Dentons Global Advisors:

Mark Smithson, CEO                                                                                                                    Tel: +44 (0)20 7664 5095

Josh Egan, CFO                                                                                                                  

Dentons Global Advisors (Financial PR)

Jonathan Brill / James Styles / Fern Duncan                                                                                 Tel: +44 (0)20 7664 5095

markselectrical@dentonsglobaladvisors.com                                                                                                                                                                                                 

Panmure Gordon (NOMAD and Joint Broker)

Oliver Cardigan / Dougie McLeod (Corporate Finance)                                                                Tel: +44 (0) 207 886 2500

Erik Anderson (Corporate Broking)                                                                                   

Berenberg (Joint Broker)

Matthew Armitt / Michelle Wilson / Richard Bootle (UK Investment Banking)                                Tel: +44 (0) 20 3207 7800

About Marks Electrical

Marks Electrical is a fast growing, highly scalable, technology driven e-commerce electricals retailer which sells, delivers, installs and recycles a wide range of household electrical products. The Group was founded in Leicester in 1987 by Mark Smithson and has scaled up into a nationwide online retailer with a compelling growth track record, thanks to its vertically integrated, low-cost, high-quality operating model, supported by the ongoing structural shift of consumers to purchase online. The Group operates within the UK Major Domestic Appliances (MDA) and Consumer Electronics (CE) market, estimated to be worth approximately £8.0 billion.

Primarily through its simple, clear and intuitive website - markselectrical.co.uk - the Group offers over 4,000 products from over 50 leading brands across its main product categories, which include Cooking, Refrigeration, Washers & Dryers, Dishwashers and Audio-Visual. These products are sourced from UK distributors of the brands, with whom the Group maintains strong and direct relationships. Marks Electrical delivers direct to customers in its owned and branded vehicles, operated by the Group's skilled team of delivery drivers, who are also able to offer installation and recycling services.

For further information, visit the Marks Electrical corporate website: https://group.markselectrical.co.uk and its retail website: https://markselectrical.co.uk/.



 


 

Group CEO review

1.     Customer proposition

Our operating model is unique across the Major Domestic Appliances sector in that we consistently offer free next day delivery for in-stock items throughout our wide range of products, across over 90% of the UK population.

Our ability to achieve this unique proposition centres around the vertical integration of our delivery model, with our own fleet, employed drivers and installers, and our centralised single-site distribution centre, maximising efficiency and improving financial returns.

During the period we have made substantial progress in developing our customer proposition, including:

  • Expanding our delivery areas to Cornwall, Glasgow, Edinburgh, and throughout all of Wales;
  • Developing our range of SKUs across MDA and CE, whilst starting the development of our computing category;
  • Adding additional third-party finance offerings to provide new credit solutions and interest free options for customers;
  • Developing our new integrated installation offering with our own employed team of installation engineers; and
  • Maintaining our industry leading Trustpilot score of 4.8.


We are focused on providing a market leading customer service proposition that sets us apart from the competition and allows us to continue to gain profitable market share.

2.     Brand awareness

During the period we updated our brand awareness study which demonstrated that only 10% of the population in England had heard of Marks Electrical. This was an increase of 3 percentage points against the study we carried out at the end of FY22,  demonstrating the growth in brand awareness and the opportunity to continue growing this over time. Our focused brand building activities across on-screen and across social media helped us improve awareness, and this, coupled with our expanded delivery areas will continue to enable us to grow awareness of Marks Electrical across the UK.

We strongly believe that our market-leading service drives strong repeat business and once we have acquired the customer, they will make further purchases from us. This is exemplified in our strong repeat customer rate, which was 26% in H1-23 and we were proud to serve over 4,000 returning customers in the month of September, a first for the business!

Our marketing activities are geared towards developing our brand and we are deploying a range of both digital and non-digital campaigns to strengthen our proposition and capture more attention in the months ahead.

 


 

3.     Operational capacity

During the period we have made further improvements to our warehouse to add additional mezzanine flooring and raise ceiling heights, allowing for a higher level of capacity. In addition, we have improved inventory days allowing us to make better use of our existing space as we increase throughput to achieve higher revenue levels during the peak period.

We have moved our operational warehouse teams to a four on four off shift pattern, allowing us to operate 24/7 and align the shift patterns with our delivery teams. Alongside this we have continued to add roles in our customer services, sales and administrative teams.

As part of our improvements across our operational capacity, we have started to develop our own in-house installation team, by recruiting experienced installation engineers, allowing us to bring in-house, integrated, gas and electrical appliance installation services that were historically outsourced. This service offering is now ramping up rapidly and we are excited about its prospects.

As we prepare for future growth we have ordered 10 new installation vehicles and 12 additional delivery vehicles that will arrive during late 2022 and in 2023. We are confident in our future prospects and are therefore investing in our people, processes and capacity to continue our growth.

4.     Financial performance

We made continued progress on working capital management and delivered an operational cash conversion of 189%, demonstrating the highly cash generative nature of our earnings model and enabling us to finish the period with a net cash position of £7.7m and a Return on Capital Employed of 49%.

 

Mark Smithson

Chief Executive Officer



 


 

Financial review

this put pressure on H1-23 margins, we expect this to ease over H2-23 given reduced competitor discounting in recent months, our tight focus on cost control and improved operating leverage during the peak trading period.

 



Six months ended

30 September

2022

£000

Six months ended

30 September

2021

£000

Year ended

31 March

2022

£000

Revenue


43,146

37,470

80,478

Cost of Sales


(35,338)

(30,270)

(64,583)

Gross profit


7,808

7,200

15,895

Gross margin


18.1%

19.2%

19.8%



 


We anticipate a slightly lower level of investment in advertising & marketing in H2-23 to keep us on track for our 5.0% of sales target and to leverage the investments made in the first half.



Six months ended

30 September

2022

£000

Six months ended

30 September

2021

£000

Year ended

31 March

2022

£000

Revenue


43,146

37,470

80,478

Advertising and marketing costs


2,421

1,900

4,004

Advertising and marketing as % of revenue


5.6%

5.1%

5.0%

 

 

Other operating expenses (excluding depreciation)



Six months ended

30 September

2022

£000

Six months ended

30 September

2021

£000

Year ended

31 March

2022

£000

Revenue


43,146

37,470

80,478

Other operating expenses


2,684

2,271

4,644

Other operating expenses as % of revenue


6.2%

6.1%

5.8%



 


·      110bps reduction in gross margin due to competitor discounting and increased fuel & national insurance costs;

·      50bps increase in advertising & marketing costs as we maintain our focus on expanding brand awareness prior to the peak trading period;

·      50bps in relation to additional costs of operating as a plc; and

·      30bps savings as a result of cost control and operating leverage.



Six months ended

30 September

2022

£000

Six months ended

30 September

2021

£000

Year ended

31 March

2022

£000

Profit after tax


1,738

1,626

3,288

Addback:





Tax


379

443

477

Finance costs


32

30

65

IPO related costs


-

727

2,676

LTIP costs


99

-

75

Less:





Revaluation of investments


(118)

(119)

(195)

Adjusted EBIT


2,130

2,707

6,386

Depreciation and amortisation


619

317

878

(Profit)/Loss on disposal of fixed assets


(45)

7

(17)

Adjusted EBITDA


2,704

3,031

7,247

Adjusted EBITDA margin


6.3%

8.1%

9.0%

 

 

Depreciation

·      Fleet modernisation and growth to accommodate the increase in sales volumes, thereby increasing right of use assets depreciation by £0.1m;

·      On 30 September 2021 the Group's property was disposed of on a sale and leaseback arrangement, leading to an increase in property right of use assets depreciation by £0.2m; and

·      Other property, plant and equipment depreciation charges have remained broadly flat.



Six months ended

30 September

2022

£000

Six months ended

30 September

2021

£000

Year ended

31 March

2022

£000

Right of use assets: vans


228

115

304

Right of use assets: property


283

103

           385

Property, plant and equipment


108

99

189

Total Depreciation


619

317

878

Depreciation as % of revenue


1.4%

0.8%

1.1%



 




Six months ended

30 September

2022

£000

Six months ended

30 September

2021

£000

Year ended

31 March

2022

£000

Profit before tax


2,117

2,069

3,765

Addback:





Finance costs


32

30

65

(Profit)/Loss on disposal of fixed assets


(45)

7

(17)

Depreciation and amortisation


619

317

878

Revaluation of investments


(118)

(119)

(195)

LTIP costs


99

-

75

Release of provision


-

-

(155)






(Increase)/decrease in inventories


60

(112)

(2,957)

(Increase)/decrease in receivables


(542)

917

212

Increase/(decrease) in payables


3,379

2,936

4,926

Cash flow from operating activities


5,601

6,045

6,597

Addback:





Outflows relating to IPO costs


-

727

2,676

Less:





Outflows for lease payments


(484)

(194)

(657)

Operating cash flow for conversion


5,117

6,578

8,616

Operating cash conversion

 

189%

217%

119%






Investing activities


(82)

(447)

(774)

Tax paid


(475)

(171)

(2,042)

Interest paid


(37)

(20)

(54)

Free cash flow


4,523

5,940

5,746

 



 


Consolidated Statement of comprehensive income

Six months ended 30 September 2022

 


Notes

Six months ended

30 September

2022

 

£000

Six months ended

30 September

2021

 

£000

Year ended

31 March

2022

 

£000

Revenue


43,146

37,470

80,478

Cost of Sales


(35,338)

(30,270)

(64,583)

Gross profit


7,808

7,200

15,895

Administrative expenses


(5,678)

(4,493)

(9,509)

Share based payment expenses


(99)

-

(75)

Operating exceptional charges


-

(727)

(2,676)

Total administrative expenses


(5,777)

(5,220)

(12,260)

Operating profit


2,031

1,980

3,635

Fair value gains through the profit and loss


118

119

195

Finance expenses


(32)

(30)

(65)

Profit before income tax


2,117

2,069

3,765

Tax on profit

4

(379)

(443)

(477)

Profit for the financial period


1,738

1,626

3,288

Other comprehensive income


-

-

-

Total comprehensive income for the period


1,738

1,626

3,288




Consolidated Balance sheet

At 30 September 2022

 


Notes

At

30 September

2022

£000

 At

 31 March

2022

£000

Non-current assets




Property, plant and equipment


832

841

Right-of-use asset


1,929

2,328

Investments


1,410

1,293



4,171

4,462

Current assets




Inventories


14,329

14,389

Trade and other receivables


3,168

2,627

Cash and cash equivalents


7,692

3,872



25,189

20,888

Total assets


29,360

25,350

Current liabilities




Trade and other payables


16,434

13,067

Lease liabilities


952

938

Current tax liabilities

4

48

145



17,434

14,150

Non-current liabilities




Lease liabilities


925

1,324

Deferred tax

4

466

466

Total liabilities


18,825

15,940

Net assets


10,535

9,410

Shareholders' equity




Called up share capital


1,049

1,049

Share premium


4,694

4,694

Treasury shares


(4)

(4)

Merger reserve


(100,000)

(100,000)

Retained earnings


104,796

103,671

Total equity shareholders' funds


10,535

9,410

 

The interim financial statements of Marks Electrical Group plc were approved by the Board on 8 November 2022 and signed on its behalf by:

 

 

 

Josh Egan

Chief Financial Officer





Consolidated Statement of changes in equity

Six months ended 30 September 2022

 


Notes

Called up share capital

£000

Share premium

£000

Merger reserve

£000

Treasury shares

£000

Revaluation reserve

£000

Retained earnings

£000

Total shareholders' equity

£000

At 31 March 2021


100,000

-

(99,994)

-

1,235

9,132

10,373

Total comprehensive income for the period


-

-

-

-

-

3,288

3,288

Contributions by and distributions to owners:









-Dividends paid


-

-

-

-

-

(3,884)

(3,884)

-Dividends in specie


-

-

-

-

-

(5,175)

(5,175)

-Issue of shares


49

4,954

-

(4)

-

-

4,999

-Costs of share issue



(260)





(260)

-Capital reduction


(99,000)

-

-

-

-

99,000

-

-Cancellation of E shares


-

-

(6)

-

-

-

(6)

-Share based payment charge


-

-

-

-

-

75

75

Sale of property


-

-

-

-

(1,235)

1,235

-

At 31 March 2022


1,049

4,694

(100,000)

(4)

-

103,671

9,410

Total comprehensive income for the period


-

-

-

-

-

1,738

1,738

Contributions by and distributions to owners:









-Dividends paid


-

-

-

-

-

(703)

(703)

-Share based payment charge


-

-

-

-

-

90

90

At 30 September 2022


1,049

4,694

(100,000)

(4)

-

104,796

10,535

 

All the results arise from continuing operations.





Consolidated Cash flow

Six months ended 30 September 2022

 


Notes

Six months ended

30 September

2022

£000

 Year ended

 31 March

2022

£000

Cash flows from operating activities




Profit for the period


1,738

3,288

Adjustments for non-cash items:




Depreciation of property, plant and equipment


108

189

Depreciation of right-of-use assets


511

689

(Profit)/loss on disposal of property, plant and equipment


(45)

(17)

Fair value gains


(118)

(195)

Share based payment expense


99

75

Interest expense


32

65

Taxation charged


379

477

Release of provisions


-

(155)

Movements in working capital:




(Increase) in inventories


60

(2,957)

Decrease/(increase) in receivables


(542)

212

Increase in payables


3,379

4,927

Cash flow generated from operations


5,601

6,598

Corporation tax paid


(475)

(2,042)

Net cash flow generated from operations


5,126

4,556

Cash flows from investing activities




Purchase of property, plant and equipment


(99)

(583)

Deposits on right-of-use assets


(33)

(304)

Proceeds from sale of property, plant and equipment


45

65

Income from investments


5

48

Net cash used by investing activities


(82)

(774)

Cash flows from financing activities




Interest paid


-

(11)

Issue of ordinary share capital


-

4,740

Repayment of borrowings


-

(1,537)

Interest paid on lease liabilities


(37)

(54)

Principal repayment of lease liabilities


(484)

(657)

Equity dividends paid


(703)

(3,884)

Net cash used by financing activities


(1,224)

(1,403)

Net increase in cash and cash equivalents


3,820

2,379

Cash and cash equivalents at the beginning of the period


3,872

1,493

Cash and cash equivalents at end of the period


7,692

3,872



 


Notes to the unaudited financial statements

Six months ended 30 September 2022

 

1       General Information 

Mark's Electrical Group plc is listed on AIM, a market operated by the London Stock Exchange. The Group is domiciled in the UK and its registered office is 4 Boston Road, Leicester, LE4 1AU.

The principal activity of the Group throughout the period is the supply of domestic electrical appliances and consumer electronics in the United Kingdom.

2       Accounting policies

2.1       Basis of preparation

The financial statements of Marks Electrical Group plc for the six months ended 30 September 2022 were authorised for issue by the Board of Directors on 8 November 2022 and signed on its behalf by Josh Egan.

This consolidated financial information has been prepared in accordance with UK adopted international accounting standards.

There are no new standards, interpretations and amendments which are not yet effective in these financial statements, expected to have a material effect on the Group's future financial statements.

The financial information has been prepared on a going concern basis under the historical cost convention. The financial information and the notes to the financial information are presented in thousands of pounds sterling ('£'000'), the functional and presentation currency of the Group, except where otherwise indicated.

2.2       Going concern

The Group has traded positively during the year, delivering sales growth of 15.1%, whilst maintaining a 4.7% operating margin and net cash flow of £3.8m.

Management have prepared detailed financial projections for a period of 12 months from the date of signing the financial statements ('Review Period'). These projections are based on the Group's detailed annual business plan. Sensitivity analysis has been performed to model the impact of more adverse trends compared to those included in the financial projections in order to estimate the impact of severe but plausible downside risks.

After reviewing the forecasts and risk assessments and making other enquiries, the board has formed the judgement at the time of approving the financial statements that there is a reasonable expectation that Group has adequate resources to continue in operational existence for at least twelve months from the date of approval of these financial statements.

2.3       Consolidation

The Group financial statements include those of the parent company and its subsidiaries, drawn up to 30 September 2022. Subsidiaries are entities over which the Group obtains and exercises control through voting rights. Income, expenditure, unrealised gains and intra-Group balances arising from transactions within the Group are eliminated.

At the time of the IPO, the acquisition of the trading subsidiaries was achieved by way of share for share exchange and the difference between the par value of the shares issued and the fair value of the cost of investment was recorded as an addition to the merger reserve. The parent company statement of financial position shows a merger reserve of £59,999,999 and an investment of £159,999,998.

On a Group basis, an accounting policy was adopted based on the predecessor method as is not a business combination but rather a group re-organisation and thus falls outside the scope of IFRS 3. IFRS does not specifically state how group re-organisations are accounted for. Therefore, in accordance with IAS 8, the Directors have considered the accounting for group re-organisations using merger accounting principles, as set out in FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland. Under this method, the financial statements of the parties to the combination are aggregated and presented as though the combining entities had always been part of the same group. The investment by Marks Electrical Group plc in Marks Electrical Limited was eliminated and the difference between the fair value and nominal value of the shares was adjusted through the merger reserve in the Group statement of financial position.



 


Notes to the unaudited financial statements (continued)

 

2.4       Operating exceptional charges

The Group presents exceptional items on the face of the statement of comprehensive income those material items of income and expense which the Directors consider, because of their size or nature and expected non-recurrence, merit separate presentation to facilitate financial comparison with prior periods and to assess trends in financial performance. Exceptional items are included in Administration expenses in the consolidated statement of comprehensive income but not considered to be part of the underlying trading performance of the business.

2.5       Significant accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

IFRS 13 fair value fixed asset investments

Estimates and assumptions are used to determine the carrying value of unlisted investments at fair value through statement of comprehensive income. The fixed asset investment in CIH ("Euronics") entitles the Group to a share of profit based on purchases made during any given period. The fixed asset investment is made up of an initial buy-in cost plus share of profits accrued since entering Euronics. Due to the timing of Euronics producing their annual results, the Group estimates the current periods profit share, based on a percentage of total purchases from Euronics. The profits from Euronics are seldom distributed; however, if the Group were to leave Euronics, the total accrued profits including the initial buy-in cost would become payable in full.

Long-term equity incentive plans

In calculating the charge in the statement of comprehensive income for the share-based remuneration for employees and Directors, estimates and judgements must be made on various inputs to valuation model to determine a theoretical fair value. A Black-Scholes pricing model is used to measure the fair value of the employee share options using six variables, the volatility, type of option, share price on issue, time, strike price and the risk-free rate. Other conditions which are required to be met in order for an employee to become fully entitled taken into consideration, such as employee attrition rates.



 


Notes to the unaudited financial statements (continued)

 

3.      Earnings per share

 

(a)   Earnings

 



Six months ended

30 September

2022

£000

 

Year ended

31 March

2022

£000

Statutory earnings


1,738

3,288

 

(b)   Number of shares

 


 

Six months ended

30 September

2022

 

Year ended

31 March

2022

Basic weighted average number of shares


104,949,050

101,979,620

 

(c)   Earnings per share

 


 

Six months ended

30 September

2022

 

Year ended

31 March

2022

Statutory earnings




Basic statutory earnings per share*


1.66p

3.22p

 



 


Notes to the unaudited financial statements (continued)

 

3.1    Non-Statutory earning per share

 

(a)   Earnings

 



Six months ended

30 September

2022

£000

Year ended

31 March

2022

£000

Statutory earnings


1,738

3,288

Add:




Exceptional costs1


99

2,125

Less:




Fair value gains net of tax


(96)

(158)

Adjusted earnings


1,741

5,255

 

(b)   Number of shares

 


 

Six months ended

30 September

2022

 

Year ended

31 March

2022

Shares in issue following IPO


104,949,050

104,949,050

 

(c)   Earnings per share

 


 

Six months ended

30 September

2022

 

Year ended

31 March

2022

Adjusted earnings




Basic adjusted earnings per share*


1.66p

5.01p

 

Adjusted earnings per share is a non-statutory measure the Group is using to provide comparability and ease of understanding to the users of the financial statements. This includes adjustments to the earnings and the number of shares.

Adjusted earnings exclude all exceptional costs, plus the add back of the revaluation in the investment of the Group's buying group, as disclosed above.

The number of ordinary shares as at 31 March 2022 through to 30 September 2022 has been used as the basis for the current and prior periods adjusted earnings per share calculation.

1 - Exceptional items include costs relating to the Initial Public Offering (IPO) of Marks Electrical Group plc in period ending 31 March 2022 and long term incentive plans (LTIP) shares in period ending 31 March 2022 and 30 September 2022.

4.      Taxation

 

Income tax expense is recognised based on management's best estimate of the average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period. The income tax expense for the six months ended 30 September 2022 is £379,000 (H1-22: £442,630). The Group's adjusted consolidated effective tax rate for the six months ended 30 September 2022 is 19.0% (H1-22: 19.0%). The deferred tax liability is expected to reverse within 36 months. The finance bill 2021, published March 2021, announced an increase to the corporation tax rate from 19% to 25% from 1 April 2023. Deferred tax has been recognised at 25%.



 


Notes to the unaudited financial statements (continued)

 

5.      Dividends paid

 


Six months ended

30 September

2022

£000

Year ended

31 March

2022

£000

Dividends declared during the period:



Dividends paid during the period

703

3,884

Dividend in specie

-

5,175


703

9,059

 

All prior year dividends paid, were done so by Marks Electrical Limited not Marks Electrical Group plc and were disclosed due to this being the first year reporting under merger accounting. Dividends paid and issued during the period totalled £703,159 (FY22: £9,059,471). The dividend in specie related to a group restructure prior to Admission, the consideration for the dividend in specie was the transfer of 100% of the share capital of Mavrek Properties (previously an indirect subsidiary of the Group).

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