REG - CMO Group PLC - Preliminary Results
12/05/2023 07:00
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RNS Number : 1609Z CMO Group PLC 12 May 2023
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 31 Dec
2022 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 366,978 (4,355,952)
parent
Earnings per share from continuing operations attributable to owners of the Pence Pence
parent:
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 31 Dec
2022 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 Share Premium Merger Reserve Share Option Reserve Retained Deficit Total
Capital
£ £ £ £ £ £
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 31 Dec
2022 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 31 Dec
2022 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 31 Dec 31 Dec 31 Dec
2022 2021 2022 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 31 Dec 31 Dec 31 Dec
2022 2021 2022 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 31 Dec 31 Dec 31 Dec
2022 2021 2022 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 31 Dec
2022 2021
Earnings £ £
Net profit/(loss) attributable to equity holders of the parent for the purpose 366,978 (4,355,952)
of basic earnings per share calculation
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 125,818 1,048,550
expenses
Adjusted earnings 596,913 1,396,025
31 Dec 31 Dec
2022 2021
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings 71,969,697 61,271,965
per share
Effect of dilutive potential ordinary shares 216,970 -
Weighted average number of ordinary shares for the purposes of diluted 72,186,667 61,271,965
earnings per share
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.
Fair value adjustment on transition to IFRS
£
Asset carrying value
£ 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 New leases At December 2022
£ £ Interest £ Reclass £ £
£
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 New leases At December 2021
£ £ Interest £ Reclass £ £
£
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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