CMO Group Plc
("CMO" or "the Group")
Preliminary results for the year ended 31 December 2022
A year of revenue growth and company development
CMO Group Plc, the UK's largest online-only retailer of building materials, today announces its preliminary results for the year ended 31 December 2022.
CMO's vision is to be the retailer of choice for everyone building or improving a house or home in the UK.
CMO is disrupting a £29 billion, predominantly offline, market with a digital first proposition and market leading product choice, supported by high quality customer service and technical expertise.
Having grown to over 130,000 SKU's and a portfolio of specialist SUPERSTORES, CMO has the leading product range driving organic category authority. This, together with the unique dropship model for delivery, is providing a different experience for its digital native customers.
Financial and Trading Highlights
· In a challenging year for retail, revenue increased by 9% to £83.1m (2021: £76.3m) continuing to validate the model.
· H2 revenue up by 9.3% to £42.3m (2021: £38.7m).
· CMO outperformed the 6.9% increase in the builders merchant market in 2022 by 48%.
· Online superstores LFL sales up 2% despite industry headwinds and Total Tiles LFL contracted by -4% against a difficult comparative.
· Despite inflationary cost rises, gross margin maintained at similar level to 2021, although Total Tiles margins declined due to one off, previously reported, pricing management issue.
· Adjusted EBITDA was £2.1m (2020: £3.7m).*
· Operating profit of £0.6m 2022 (2021: £3.3m operating loss).
· Adjusted earnings per share was 0.83p (2021: 2.28p).
*Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, foreign exchange, exceptional and acquisition costs.
Balance sheet
· Cash on the balance sheet of £6.2m (2021: £9.1m), reflecting £3m deferred consideration paid during the year for Total Tiles.
· The net cash position at the year-end was £1.4m.
· The cash generative nature of our operations, a flexible banking partner, and an undrawn working capital facility of up to £4m, provides the Group with a sound financial position and sufficient headroom for continued Group development.
Non-financial metrics
· Revenue per session grew 34% Y-o-Y with over 46% of orders from repeat customers, highlighting brand loyalty.
· Digital marketing costs are in line with expectations at c.5% of sales.
· Customer acquisition remains balanced between paid and non-paid digital marketing.
· Average order value grew by 18%.
· Marketable database grew by 13% year on year.
· Product catalogue increased to over 130,000 SKUs.
Operational progress
· Plumbingsuperstore.co.uk launched in 2022 to serve c.£1.6bn online plumbing, heating, and bathroom market.
· All SUPERSTORES websites rebranded and redesigned.
· CMO Trade recently rebranded Buildingsuperstore.co.uk and in 2022 grew revenues 33%.
· Good Build Superstore developed in 2022 and launched in H1 2023.
2023 key strategic priorities - Q1 progress
· Margin improvement: 91 basis points (3%) Vs FY 2022
· Carriage cost control: 55% recovery improvement.
· Overhead efficiency: 15% reduction in headcount.
· Modest revenue growth: trading in first quarter of 2023 in line with management expectations. 10% down against strong 2022 comparatives and a declining market, but 41% up on 3-year LFL, and Group growth up 88%. Growth weighted towards H2, set against backdrop of ongoing market volatility.
· Brand consolidation: 5 to 2. Integration of JTM Plumbing, Clickbasin into PLUMBING SUPERSTORE and integration of Total Tiles into TILE SUPERSTORE.
Dean Murray, CEO of CMO Group said:
"Despite the macroeconomic challenges in 2022, CMO continued to grow sales, while also generating more repeat sales and increased average order values, further validating its model and continuing to disrupt the largely traditional builders merchant market.
Our strategy remains unchanged, and we are focused on continuing to drive profitable sales growth through our existing SUPERSTORES and through the creation of new channels. The launch of PLUMBING SUPERSTORES represents a significant addition to our portfolio of SUPERSTORES and allows us this year to capitalise on our previous acquisitions of JTM Plumbing and Clickbasin.
The new financial year has begun in line with our expectations however the economic situation remains challenging and the timing of recovery in consumer confidence uncertain. As we continue to expand our SUPERSTORE portfolio and market leading product offer, the Board is confident that its proven model will deliver value for shareholders in the short, medium, and long term."
12 May 2023
Enquiries: | |
| |
CMO Group PLC | Via Instinctif |
Dean Murray, CEO | |
Jonathan Lamb, CFO | |
| |
Liberum Capital Limited (Nominated Adviser & Broker) | Tel: +44 20 3100 2000 |
Andrew Godber | |
Lauren Kettle | |
| |
Instinctif Partners | |
Justine Warren | Tel: +44 20 7457 2010 |
Matthew Smallwood | Tel: +44 20 7457 2005 |
Joe Quinlan | Tel: +44 20 7866 7856 |
Chairman's statement
2022
Despite the well-publicised challenges for businesses and citizens alike, the CMO team has delivered another year of growth and development. During 2022, the world has been attempting to come to terms with new challenges, including war in Europe, dramatically higher energy costs, surging inflation, higher interest rates and the resultant impacts on consumer spending patterns. As we would expect with our focus on the building trade, we have not been completely immune to the challenges, and profitability for the year was impacted by rising costs, particularly carriage. The closing result, with revenue up 9% to £83.1m and adjusted EBITDA* down from £3.7m to £2.1m, reflects temporary lower margins as we came to terms with the new trading environment and isolated pricing management issue on Total Tiles. This was consistent with the issues many businesses faced of managing rapidly increasing product and logistics costs, although demand remained robust.
The success in growing sales demonstrates that our business model continues to be valid with the broadest product choice supported by dropship direct delivery from suppliers, low digital marketing cost, differentiated shopping experiences, and excellent customer service. These underpin growth and continue to drive disruption of the building materials sector which lags on transitioning to e-commerce.
Strategy
We continue to progress our strategy to provide customers with everything they need to build or maintain their home, or their client's home, available through a seamless and dedicated ecommerce experience. We will, however, approach acquisitions with caution until consumer confidence returns.
The plan for new organic stores remains on track with the mid-year soft launch of Plumbingsuperstore.co.uk to address the very substantial plumbing and bathrooms market, and plans for further stores are in progress.
To promote the Superstore story, we have united all the stores under fresh new branding making sure the customer gets a clear, unified experience. To support this, CMO Trade has now been rebranded BUILDING SUPERSTORE to provide a consolidated shopping experience for our Trade customers. In a similar vein, to support our retail consumers, in Q2 2023 we are launching the first phase of GoodBuilds.co.uk, a brand-new webstore dedicated to helping them confidently manage their home improvement project, and shop in one inspirational place.
Our vision for a better world
The Board takes its governance responsibilities very seriously, our approach to which is set out in the Corporate Governance section of our Annual Report. We recognise that our responsibilities are wide ranging, and as we grow we expect to continuously evolve and improve governance towards the best practices required of a larger business.
The Board, alongside our wider team and other stakeholders, is determined that the Group plays its part in addressing climate change, not only for the intrinsic value in doing so, but also to enjoy the benefits of being part of the solution. We wish to treat the process with integrity and are proud of the action taken to date. The use of science-based targets to reduce our greenhouse gas footprint and to help our customers choose more sustainable products is well underway.
More detail on our approach to these matters can be found in the Environmental, Social and Governance section of our Annual Report. The report also constitutes the Group's first instalment of reporting under the Task Force on Climate-related Disclosures.
Senior management and team
The Board is an experienced group of people and has become increasingly effective the longer we are together. I thank them for their contribution, guidance, and wise counsel.
Once again, I would like to express my sincere thanks to Dean and all at CMO for meeting the challenges of steering a newly floated business through some of the most difficult trading environments most of them will ever have encountered.
Outlook
At the time of writing, war in Ukraine is even more entrenched than 12 months ago, fuel prices and inflation have been at levels not seen for decades and consumer confidence, which saw a slight elevation at the tail end of the year, has returned to all-time lows. Predicting the year ahead is no easier than it was last year, but I remain confident that the CMO team will again use its ingenuity, agility, and clear business model to create a sustainable and profitable, long-term future.
Ken Ford
CEO's statement
Operational update and market overview
2022 was CMO Group's first full year of trading as a public company since its AIM IPO in July 2021. While the demand challenges created by war in Europe and spiralling energy costs, following almost directly on from COVID-19, were obvious to almost all sectors, CMO's model proved its resilience and sales grew by 9% year-on-year to £83.1m. As we continue to disrupt the traditional Builders Merchant market, we have made considerable progress and have grown market share by 64% to 1.15% against pre-pandemic levels and enhanced the digital marketable Database by 13% during 2022.
Our sales growth is even more commendable against a market backdrop of reported decline. Our superstores improved like-for-like sales by 2% and JTM plumbing, our acquisition in October 2021 in the bathroom space, also contributed to revenue growth too in its first full year under our ownership.
Total Tiles, acquired two years ago, experienced a 4% revenue decline year-on-year against a difficult comparative, as bricks and mortar competitors, compromised by lockdown closures throughout 2020 and 2021, were open all year and some consumers chose to return to physical stores. This still represented growth of 8% versus pre-pandemic/pre-acquisition.
Gross margin was maintained at similar levels to 2021. Maturing verticals and acquisitions drove margin improvements across most of the Group, however, Total Tiles saw a margin decline documented throughout H2, triggered by issues in the management of the complex pricing data and compounded by sharply rising fuel costs, both in production and transport. This has now been resolved and structural changes have been made in the management team and processes to ensure there can be no repeat.
EBITDA adjusted for earnings before interest, tax, depreciation, amortisation, foreign exchange, exceptional and acquisition costs, was £2.1m, down 43% on the prior year.
Implementing our strategy
The CMO strategy has been successful in growing the business and remains unchanged: to provide our customers with everything they need to build or maintain their home, or that of their client, through a simple, convenient, and supported shopping experience. We recognise that our customers prefer to shop through specialist stores offering sound advice and our strategy is to continue adding specialist stores, either organically or through acquisition.
As outlined previously, 2022 saw the delivery and soft launch of Plumbingsuperstore.co.uk which will list all products from the acquisitions of JTM Plumbing, Clickbasin and new ranges. Whilst these have historically both been stocked businesses; we will keep the balance of trade heavily skewed towards CMO's successful dropship model and have introduced a broad range of dropship sanitaryware and all peripheral bathroom products into this new store. This gives us full access to UK's c.£800m online bathroom market and the similar sized first fix plumbing market. It also gives CMO's customers a convenient way to shop both.
To support the specialist verticals, we recognise the need for Horizontals to support trade customers and the homeowner. CMO Trade, recently rebranded Buildingsuperstore.co.uk, was launched in 2019 and continued its impressive growth trajectory in 2022, gaining 31% on the prior year. On track for delivery in the first half of 2023 is our specialist Horizontal for the homeowner - Goodbuilds.co.uk, the project-based, inspiration-rich store for the homeowner - is progressing well and we are excited about its prospects to enhance the homeowner experience and service. These horizontals will complete the supported shopping experience promise and maintain CMO's position as a major disruptor in its market.
It's vitally important that CMO's customers know exactly who they're shopping with and can do so with confidence. Hence, we've rebranded all stores with a strongly identifiable theme, uniting them under one brand umbrella and a new SUPERSTORE logo. This fresh start to a unified brand will allow effective use of higher funnel advertising reaching out to the less digitally focused Trade consumer.
CMO continues to pursue an active acquisition pipeline to speed up the achievement of its strategic goal but recognises the need for cautious cash investment until the current economic climate improves.
People and culture
CMO is dependent upon its loyal workforce who have remained dedicated to the growth strategy through a protracted period of economic challenge and change. They remain agile, energetic and have a strong belief in our ability to disrupt the market. This has been essential over the last three years of unpredictable economic climate.
Culture is defined and set by the people in the business through our programme which has seen very strong participation and brand-supporting outcomes.
Providing widespread share ownership in the Group has been an ambition and we are pleased that all employees have the opportunity to become shareholders through our CSOP scheme launched in 2021.
Headwinds
CMO is, of course, not immune to the general decline in consumer confidence caused by war in Ukraine, spiralling inflation and rising interest rates. Inevitably the cost-of-living crisis will continue to provide challenges for all retailers and therefore we remain cautious, yet focused, on continuing to improve choice, drive margins, and leverage our efficient positive working capital model. Technical agility, diversity of product offering, and the dedicated and experienced team of people have enabled us to reach broader customer demographics in different ways which has allowed the business to continue to grow. The growth in the SUPERSTORES during 2022 evidences that CMO does have a tested and proven business model that has disrupted the traditional market.
Looking to the future
We fully recognise that homeowners and tradespeople require differing shopping experiences, hence the decision to launch Goodbuilds.co.uk in H1 2023. As CMO moves into more consumer-focussed products such as tiles and bathrooms, our Good Builds offer will support the user journey through project-based inspiration and purchasing. A stronger social media journey, already gaining momentum and traction, will further support the consumer, as will the limited but strategic recruitment into marketing of visual merchandising skills.
Our plan, which revolves around making sure our customers can easily shop for everything they need in the way they want to shop, remains a clear focus and we remain on track.
Throughout the last three disrupted years, our market share has continued to increase, and we have expanded further the range of available products to over 130,000, by far the largest range in the industry. We remain poised to benefit from the coming generation of tech savvy customers whose time is precious and for whom online purchasing is the norm.
All aspects of our model; broad range supported through dropship supplier agreements, differentiated shopping experiences, low digital marketing spend, agile staff and tech, and great customer service, have supported us in growing market share and further disrupting the traditional bricks and mortar model through very challenging times.
As we enter a new financial year, the board is confident that CMO will deliver continued growth in the years to come.
Dean Murray
Cautionary Statement
Certain statements in this trading update are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements contain risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Consolidated Statement of Total Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
| 31 Dec 2022 |
| 31 Dec 2021 |
|
|
|
| £ |
| £ |
|
|
|
|
|
|
|
Revenue |
| |
| 83,072,635 | | 76,339,771 |
Cost of sales |
| |
| (66,530,988) |
| (60,996,550) |
Gross profit |
| |
| 16,541,647 |
| 15,343,221 |
|
| |
|
|
| |
|
| |
|
|
| |
Administrative expenses |
| |
| (15,913,839) |
| (16,846,212) |
Costs associated with AIM listing |
| |
| - |
| (1,765,053) |
Operating profit/(loss) |
| |
| 627,808 |
| (3,268,044) |
|
| |
| |
| |
Finance income |
| |
| 436 |
| - |
Finance expense |
| |
| (453,217) |
| (1,153,508) |
Profit/(loss) before taxation |
| |
| 175,027 |
| (4,421,552) |
Taxation |
| |
| 191,951 |
| 65,600 |
|
| |
|
|
| |
Profit/(loss) for the year attributable to owners of the parent |
| |
| 366,978 |
| (4,355,952) |
Other comprehensive income for year |
| |
| - |
| - |
Total comprehensive profit/(loss) for the year attributable to owners of the parent |
| |
| 366,978 |
| (4,355,952) |
|
| |
| |
| |
Earnings per share from continuing operations attributable to owners of the parent: |
| |
| Pence |
| Pence |
Basic |
|
|
| 0.51 |
| (7.11) |
Diluted |
| |
| 0.51 |
| (7.11) |
Adjusted basic earnings per share |
| |
| 0.83 |
| 2.28 |
Adjusted diluted earnings per share |
| |
| 0.83 |
| 2.28 |
|
| |
| |
| |
|
|
|
|
|
|
|
Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2022
|
|
|
| 31 Dec 2022 |
| 31 Dec 2021 |
|
|
|
| £ |
| £ |
Assets |
|
|
|
|
|
|
Non-current assets |
|
|
| | | |
Goodwill |
| |
| 20,445,122 | | 19,413,122 |
Other intangible assets |
| |
| 2,967,848 | | 2,691,735 |
Property, plant, and equipment |
| |
| 1,451,461 | | 1,580,744 |
Right-of-use-assets |
| |
| 119,490 | | 337,390 |
Deferred tax assets |
| |
| 324,449 | | 128,860 |
Total non-current assets |
| |
| 25,308,370 | | 24,151,851 |
|
| |
| | | |
Current assets |
| |
| | | |
Inventories | | | | 5,454,126 | | 5,474,054 |
Trade and other receivables |
| |
| 2,731,988 | | 2,942,236 |
Cash and cash equivalents |
| |
| 6,209,910 | | 9,075,944 |
Total current assets |
| |
| 14,396,024 | | 17,492,234 |
|
| |
| | | |
Total assets |
| |
| 39,704,394 | | 41,644,085 |
|
| |
| | | |
Liabilities |
| |
| | | |
Current liabilities |
| |
| | | |
Trade and other payables |
|
|
| (16,325,520) | | (19,895,920) |
Loans and borrowings |
| |
| (859) | | (2,839) |
Lease liabilities |
|
|
| (210,140) | | (311,192) |
Current tax liabilities |
| |
| (253,579) | | (159,735) |
Total current liabilities |
| |
| (16,790,098) | | (20,369,686) |
|
| |
| | | |
Non-current liabilities |
| |
| | | |
Loans and borrowings |
|
|
| (4,787,678) | | (3,088,142) |
Lease liabilities |
| |
| - | | (140,499) |
Total non-current liabilities |
| |
| (4,787,678) | | (3,228,641) |
|
| |
| | | |
Total liabilities |
| |
| (21,577,776) | | (23,598,327) |
|
| |
| | | |
Net assets |
| |
| 18,126,618 | | 18,045,758 |
|
| |
| | | |
Equity |
| |
| | | |
Share capital |
| |
| 719,697 | | 719,697 |
Share premium |
| |
| 25,873,451 | | 25,873,451 |
Merger reserve |
| |
| (513,000) | | (513,000) |
Share option reserve |
| |
| 133,630 | | 419,748 |
Retained deficit |
| |
| (8,087,160) | | (8,454,138) |
Total equity attributable to owners of the parent |
|
|
| 18,126,618 | | 18,045,758 |
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2022
| Notes | Share Capital
| Share Premium
| Merger Reserve | Share Option Reserve | Retained Deficit | Total |
|
| £ | £ | £ | £ | £ | £ |
|
|
| | | | | |
As at 1 January 2021 | | 101 | - | - | - | (5,415,419) | (5,415,318) |
Loss for the year | | - | - | - | - | (4,355,952) | (4,355,952) |
Total comprehensive loss for the year | | - | - | - | - | (4,355,952) | (4,355,952) |
| | | | | | | |
Transactions with owners | | | | | | | |
Issue of shares |
| 719,596 | 25,873,451 | - | - | - | 26,593,047 |
Creation of merger reserve | | - | - | (513,000) | - | - | (513,000) |
Transfer to/ from profit and loss account | | - | - | - | (1,317,233) | 1,317,233 | - |
Transfer to/ from share option reserve | | - | - | - | 1,736,981 | - | 1,736,981 |
Total transactions with owners | | 719,596 | 25,873,451 | (513,000) | 419,748 | 1,317,233 | 27,817,028 |
| | | | | | | |
As at 31 December 2021 | | 719,697 | 25,873,451 | (513,000) | 419,748 | (8,454,138) | 18,045,758 |
| |
|
|
|
|
|
|
As at 1 January 2022 | | 719,697 | 25,873,451 | (513,000) | 419,748 | (8,454,138) | 18,045,758 |
Profit for the year | | - | - | - | - | 366,978 | 366,978 |
Total comprehensive loss for the year | | - | - | - | - | 366,978 | 366,978 |
| | | | | | | |
Transactions with owners | | | | | | | |
Share-based payment adjustments | | - | - | - | (286,118) | - | (286,118) |
| | | | | (286,118) | - | (286,118) |
| | | | | | | |
As at 31 December 2022 | | 719,697 | 25,873,451 | (513,000) | 133,630 | (8,087,160) | 18,126,618 |
Consolidated Statement of Cash Flow
FOR THE YEAR ENDED 31 DECEMBER 2022
|
|
|
| 31 Dec 2022 |
| 31 Dec 2021 |
|
|
|
| £ |
| £ |
|
|
|
|
|
|
|
Cash flows from operating activities |
| |
| 2,443,251 | | (1,857,167) |
|
| |
| | | |
Investing activities |
| |
| | | |
Payments to acquire intangible fixed assets |
| |
| (1,277,763) | | (603,385) |
Payments to acquire tangible fixed assets |
| |
| (68,893) | | (90,871) |
Cash outflow on business combination |
| |
| (4,661,217) | | (2,186,810) |
Net cash used in investing activities |
| |
| (6,007,873) | | (2,881,066) |
|
| |
| | | |
Financing activities |
| |
| | | |
Receipts from issue of shares |
| |
| - | | 26,179,897 |
Receipts from borrowings draw downs |
| |
| 1,699,536 | | 3,088,142 |
Repayment of borrowings |
| |
| - | | (3,230,533) |
Repayment of shareholder loans |
| |
| - | | (17,747,577) |
Repayment of lease liabilities |
| |
| (547,731) | | (340,999) |
Interest paid on lease liabilities |
| |
| (66,062) | | - |
Interest paid |
| |
| (387,155) | | (185,147) |
Net cash generated from financing activities |
| |
| 698,588 | | 7,763,783 |
|
| |
| | | |
Net (decrease)/ increase in cash and cash equivalents |
| |
| (2,866,034) | | 3,025,550 |
|
| |
| | | |
Cash and cash equivalents at beginning of year |
| |
| 9,075,944 | | 6,050,394 |
|
| |
| | | |
Cash and cash equivalents at end of year |
|
|
| 6,209,910 | | 9,075,944 |
|
|
|
| | | |
Notes to the Financial Statements
Year Ended 31 December 2022
1. Summary of significant accounting policies
a. General information and basis of preparation of the financial statements
CMO Group Plc is a public company limited by shares incorporated in the United Kingdom and registered in England and Wales.
CMO Group Plc was incorporated on 11 June 2021 and began trading on 23 June 2021. The period to 31 December 2022 is the second period of accounts for the Company.
The principal activity of the group is the provision of construction materials through the group's websites, with a digital-first proposition and market-leading product choice, supported by high-quality customer service and technical expertise.
The financial statements are presented in pound sterling which is the functional currency of the group. Monetary amounts in the financial statements are rounded to the nearest £1.
b. Basis of preparation
The financial information contained within this preliminary announcement for the years to 31 December 2022 and 31 December 2021 does not comprise statutory financial statements within the meaning of section 435 of the Companies Act 2006. The financial statements for the year ended 31 December 2021 have been delivered to the Registrar of Companies and those for the year ended 31 December 2022 will be delivered following the Company's Annual General Meeting. The auditors have reported on the 2021 and 2022 financial statements; their reports were unqualified, did not included a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
The preliminary announcement has been prepared in accordance with UK-adopted International Financial Reporting Standards ("IFRS") including standards and interpretations issued by the International Accounting Standards Board. Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS.
The consolidated and Company financial statements have been prepared on a going concern basis. The Group generated adjusted EBITDA before exceptional costs of £2.3m for the year compared to £3.7m in 2021 with a profit for the year of £0.4m compared to a loss of £4.4m in 2021. The Group has net current liabilities of £2,644,744 (2021: £2,877,452) at the year end, however this was expected by the directors whilst the Group continues to reinvest in growth. The secured rolling cashflow facility to support future growth plans provides headroom to ensure that there are sufficient cash resources to enable the Group to meet all liabilities as they fall due. The Group has revolving credit facilities with Clydesdale Bank plc totalling £10,000,000 of which £6,000,000 can be used for financing permitted acquisitions and £4,000,000 can be used for working capital. The carrying amount at the year-end is £4,787,678.
The directors are continuing to identify acquisitions as well as focussing on the continuation of the organic growth experienced in recent years. New acquisitions have been brought onto the Group's platforms and significant synergies are expected to be achieved over the coming year from the recent acquisitions. The directors expect continued growth in gross profits and operating profits in 2023.
The directors are confident that the measures they have available will result in sufficient working capital and cash flows to continue in operational existence. Taking these matters in consideration, the Directors continue to adopt the going concern basis of accounting in the preparation of the financial statements.
2. Profit for the year
Profit/(loss) for the year has been arrived at after charging (crediting):
|
|
| 31 Dec 2022 |
| 31 Dec 2021 | |
|
|
| £ |
| £ | |
|
|
|
|
|
| |
Depreciation of owned property, plant and equipment, and other leases |
|
| 206,978 |
| 474,649 | |
Depreciation of leased property, plant, and equipment |
|
| - |
| 8,871 | |
Depreciation expense on right-of-use assets |
|
| 512,080 |
| 245,499 | |
Amortisation of intangible assets |
|
| 1,088,650 |
| 698,161 | |
Acquisition and other costs |
|
| 156,349 |
| 635,741 | |
(Gain)/expense on share-based payment |
|
| (286,118) |
| 419,748 | |
Wages and salaries |
|
| 6,435,439 |
| 5,431,846 | |
Social security |
|
| 640,123 |
| 512,484 | |
Cost of defined contribution scheme |
|
| 132,450 |
| 144,905 | |
Costs associated with AIM listing |
|
| - |
| 1,765,053 | |
Exceptional payroll costs |
|
| 73,586 |
| 2,938,374 | |
|
|
|
|
|
| |
Costs associated with AIM listing include consultancy, legal and professional fees incurred in relation to the listing of CMO Group PLC on 8 July 2021.
3. Cash and Cash equivalents
For the purposes of the statement of cash flows, cash, and cash equivalents include cash on hand and in banks and investments in money market instruments. Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:
| Group | | Company | ||
|
|
| |
|
|
| 31 Dec 2022 £ | 31 Dec 2021 £ | | 31 Dec 2022 £ | 31 Dec 2021 £ |
| | | |
| |
Cash and bank balances | 6,209,910 | 9,075,944 | | 91,308 | 57,192 |
4. Loans Borrowings and Other Payables
| Group | | Company | ||||
| 31 Dec 2022 £ | 31 Dec 2021 £ | | 31 Dec 2022 £ | 31 Dec 2021 £ | ||
Non - current | | | |
| | ||
Bank borrowings | 4,787,678 | 3,088,142 | | 4,787,678 | 3,088,142 | ||
| 4,787,678 | 3,088,142 | | 4,787,678 | 3,088,142 | ||
| Group | | Company | ||||
| 31 Dec 2022 £ | 31 Dec 2021 £ | | 31 Dec 2022 £ | 31 Dec 2021 £ | ||
Current | | | |
| | ||
Hire purchase contracts | 859 | 2,839 | | - | - | ||
| 859 | 2,839 | | - | - | ||
The directors consider the value of all financial liabilities to be equivalent to their fair value. The Group's exposure to liquidity and cash flow risk in respect of loans and borrowings is disclosed in the financial risk management and impairment note.
5. Share Capital
| 31 Dec 2022 | | 31 Dec 2021 | ||
| No. | £ | | No. | £ |
| | | |
| |
Ordinary shares of £0.01 each | 71,969,697 | 719,697 | | 71,969,697 | 719,697 |
There were no share issues in the year ended 31 December 2022. During the year ended 31 December 2021 the following shares were issued:
Date | Class | No | £ |
11 June 2021 | Ordinary shares of £0.01 | 5,000,000 | 50,000 |
01 July 2021 | Ordinary shares of £0.01 | 46,310,056 | 463,101 |
08 July 2021 | Ordinary shares of £0.01 | 20,659,641 | 206,596 |
| | 71,969,697 | 719,697 |
Shares issued on 11 June 2021 and 1 July 2021 were issued as part of a shares for share exchange with the shareholders of CMOStores Group Limited. £1.32 per share was paid for shares issued on 8 July 2021. All other issues were at par value.
6. Earnings Per Share
The calculation of the basic and diluted earnings per share is based on the following:
|
|
|
| 31 Dec 2022 |
| 31 Dec 2021 | |
Earnings |
|
|
| £ |
| £ | |
|
|
|
|
|
|
| |
Net profit/(loss) attributable to equity holders of the parent for the purpose of basic earnings per share calculation |
|
|
| 366,978 |
| (4,355,952) | |
Effect of dilutive potential ordinary shares |
|
|
| - |
| - | |
Earnings for the purposes of diluted earnings per share |
|
|
| 366,978 |
| (4,355,952) | |
|
|
|
|
|
|
| |
Add back: Exceptional payroll and other expenses | | | | 104,117 |
| 2,938,374 | |
Add back: Costs associated with AIM listing | | | | - |
| 1,765,053 | |
Add back: Costs incurred directly related to acquisitions and share option expenses | | | | 125,818 |
| 1,048,550 | |
Adjusted earnings |
|
|
| 596,913 |
| 1,396,025 | |
|
|
|
| 31 Dec 2022 |
| 31 Dec 2021 |
Number of shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares for the purposes of basic earnings per share |
|
|
| 71,969,697 |
| 61,271,965 |
Effect of dilutive potential ordinary shares |
|
|
| 216,970 |
| - |
Weighted average number of ordinary shares for the purposes of diluted earnings per share |
|
|
| 72,186,667 |
| 61,271,965 |
7. Business Combinations
Acquisition completed in current year
On 6 June 2022, the Group acquired 100% of the equity instruments of Whiteholme Limited, a UK based business, thereby obtaining control. For the period to 31 December 2022, Whiteholme Limited, generated revenue of £614,466 and profit after tax of £31,531, these results were accounted for in accordance with FRS102. These results were reviewed under IFRS convergence, and no material differences identified. Had Whiteholme Limited been consolidated from 1 January 2022, the consolidated statement of comprehensive income would have included revenue of £1,205,285 and profit of £66,776.
|
Asset carrying value £ | Fair value adjustment on transition to IFRS £ |
Fair value £ |
Identifiable intangible assets | - | 87,000 | 87,000 |
Property, plant and equipment | 9,632 | - | 9,632 |
Inventories | 43,665 | - | 43,665 |
Trade and other receivables | 1,243,812 | - | 1,243,812 |
Cash and cash equivalents | 223,388 | - | 223,388 |
Trade and other payables | (225,548) | - | (225,548) |
Total fair value | 1,294,949 | 87,000 | 1,381,949 |
Consideration settled in cash | - | - | 2,235,407 |
Fair value of deferred consideration | - | - | 178,542 |
Goodwill | - | - | 1,032,000 |
Consideration transferred
The purchase agreement included a payment on completion and an element of deferred consideration based on both a target net asset value. The agreement includes an adjustment to the deferred consideration calculated based upon the net current assets of Whiteholme Limited at 1 June 2022. The deferred consideration is payable on agreement of the new asset position as set out in the draft accounts for Whiteholme for the period to 1 June 2022.
8. Changes in liabilities arising from financing activities
|
|
| At January 2022 £ | Financing cash flows £ |
Interest £ | New leases £ |
Reclass £ | At December 2022 £ | |||
| | | | | | | | | |||
Long-term borrowings | | | 3,088,142 | 1,312,381 | 387,155 | - | - | 4,787,678 | |||
Short-term borrowings | | | - | - | - | - | - | - | |||
Other lease liabilities | | | 2,839 | (1,980) | - | - | - | 859 | |||
Lease liabilities | | | 451,691 | (613,793) | 66,062 | 306,180 | - | 210,140 | |||
Total liabilities from financing activities | | | 3,542,672 | 696,608 | 453,217 | 306,180 | - | 4,998,677 | |||
|
|
| At January 2021 £ | Financing cash flows £ |
Interest £ | New leases £ |
Reclass £ | At December 2021 £ |
| | | | | | | | |
Long-term borrowings | | | 20,080,008 | (18,075,114) | 1,083,248 | - | - | 3,088,142 |
Short-term borrowings | | | 390,400 | (390,400) | - | - | - | - |
Lease liabilities | | | 4,159 | (1,320) | - | - | - | 2,839 |
Right-of-use asset liabilities | | | 734,591 | (340,999) | 58,099 | - | - | 451,691 |
Total liabilities from financing activities | | | 21,209,158 | (18,807,833) | 1,141,347 | - | - | 3,542,672 |
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