REG - Marks Electrical Grp - FY25 Results
Wed 07:02
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RNS Number : 2720O Marks Electrical Group plc 25 June 2025
Marks Electrical Group plc
Annual financial results for the year ended 31 March 2025
FY25 performance in line, continued delivery, strategic and operational
progress, well positioned for year ahead
Marks Electrical Group plc ("Marks Electrical" or "the Group"), the online
electrical retailer, today announces its full year audited results for the 12
months ended 31 March 2025 ("the year" or "FY25").
Financial highlights
· Record full-year revenue of £117.2m (FY24: £114.3m), with 2.6%
year-on-year growth, despite a highly competitive backdrop.
· Adjusted EBITDA((1)) of £4.2m (FY24: £5.0m) as previously
guided. Rapid growth in consumer electronics sales negatively impacted margin
mix, offset by carefully controlled marketing and overhead costs.
· Adjusted EPS of 1.54p((2)) (FY24: 2.45p), statutory loss per
share of 1.38p (FY24: 0.41p).
· Strong closing net cash((3)) position of £8.8m (FY24: £7.8m).
Improvement in working capital and tight control of capital expenditure.
· Proposed final dividend of 0.66p per share, leading to a total
FY25 dividend payout of 0.96p (FY24: 0.96p). The dividend payout reflects the
Group's strong, debt-free balance sheet and confidence in its future growth
prospects.
Operational highlights
· Broadly maintained position in Major Domestic Appliances ("MDA")
market share in FY25 of 2.7% (FY24: 2.8%)((4)).
· Strong growth in Consumer Electronics ("CE") market share to
0.7%((4)) in FY25 (FY24: 0.5%).
· The new enterprise resource planning ("ERP") system Microsoft
Dynamics 365 ("D365") is now fully operational across the business, supporting
the technological advancement in moving to a cloud-based platform. This will
enable the business to drive operational efficiencies.
· Despite the strategic changes made throughout the year which
impacted operations, our dedicated teams remained resilient and maintained an
outstanding Trustpilot rating of 4.8, now based on over 100,000 reviews,
demonstrating the enduring strengths of our differentiated and popular
customer proposition.
Current trading and outlook
· As announced in our pre close in April 2025, we had a strategic
objective of re-focusing on the premium segment to improve unit economics and
profitability. Our decision to move away from entry-priced products led to
lower revenue during Q1-FY26 but this was expected given the strong growth we
experienced in Q1-FY25. As we look ahead to the remainder of FY26, we
anticipate improving revenue growth and higher gross margin than prior year,
enabling us to reiterate our full year guidance.
Following the recent announcement that Josh Egan, the Group's current CFO, is
leaving the business, the Board are pleased to announce that Dipesh Mistry
will be appointed as Interim CFO. Dipesh is a qualified accountant and has a
strong financial background having previously been a senior manager at
Deloitte. He has been with Marks Electrical for the last two years, firstly
leading the system implementation of D365, and more recently as Head of
Operations. Josh will complete a comprehensive handover during the coming
months and as outlined previously, a process to appoint a full time successor
is underway, and an announcement will be made in due course.
Mark Smithson, Chief Executive Officer, commented:
"During a challenging year for the Group and in a market where consumers
continue to remain price conscious, I am proud of the strategic and
operational progress we have made.
Our ERP implementation brought minor disruption to the business during the
cutover period, however, the transition has been successful and our teams have
quickly embraced this transformational change. This has been a significant,
long-term strategic investment for the business, which will allow automation
of process improvements to make our operations more efficient at scale, and
enable us to deliver growth, profitability and value for all our stakeholders.
As outlined previously, we expected our pivot back to a premium focused
operating model to have an impact on the speed of our revenue growth. We
initiated this change in late FY25, and the impact of this shift away from
entry-priced products has led to lower sales in Q1 against a strong
comparative in the prior year, which also impacted operating leverage.
However, as we focus on the right product hierarchy and sales channels, we
expect this to have longer-term benefits on unit economics, and as comparables
ease in later quarters we expect a return to revenue growth during FY26.
Over the past couple of years we have invested in our operations to position
Marks Electrical for long-term success. At the same time, we have continued to
deliver profitable market share growth, strong cash flow generation and
consistent returns in the form of dividends to shareholders thanks to our
ability to allocate capital with discipline. Our relentless approach to
providing exceptional customer service continues to be our core focus and we
remain committed to becoming the UK's leading premium electrical retailer."
( )
(Notes)
((1) Adjusted EBITDA) (is a non-statutory measure defined as earnings before
interest, tax, depreciation, and amortisation and adjusted for non-underlying
items, share-based payment charges and buying group rebates receivable.)
((2) Adjusted EPS is) (a non-statutory measure of profit after tax, adjusted
for non-underlying items (ERP implementation costs), share-based payment
charges and buying group rebates receivable, over the total diluted ordinary
number of shares in issue.)
((3) Net cash represents cash and cash equivalents less financial liabilities
(excluding lease liabilities).)
((4) Based on the Group's analysis of GfK Market Intelligence sales tracking
GB data, Major Domestic Appliances and Consumer Electronics.)
Publication of Annual Report and Accounts
The Annual Report and Accounts for the year ended 31 March 2025, which
includes the Group's FY25 audited financial statements, is now available on
the Marks Electrical corporate website at https://group.markselectrical.co.uk
(https://group.markselectrical.co.uk) .
Notice of 2025 Annual General Meeting
Marks Electrical is also pleased to announce that the notice of its 2025
annual general meeting ("AGM") is available to view on the Marks Electrical
corporate website at https://group.markselectrical.co.uk
(https://group.markselectrical.co.uk) . The AGM will take place at 2:00 pm on
Thursday, 7 August 2025, at the registered office at 4 Boston Road, Leicester,
LE4 1AU.
If you plan to attend the AGM, we would be grateful if you could inform us by
emailing the Secretary no later than closed of business on Tuesday, 5 August
2025, at MRK.cosec@jtcgroup.com (mailto:MRK.cosec@jtcgroup.com) . Shareholders
are encouraged to vote on the resolutions to be put to the AGM by proxy
whether or not they intend to attend and should do so before the deadline of
2:00 pm on Tuesday, 5 August 2025. Details on how to vote at the AGM are set
out in the Notice of AGM.
For those shareholders who have elected to receive hardcopies of the Annual
Report and Accounts and Notice of AGM, these will be posted to you as soon as
practical.
Enquiries:
Marks Electrical Group
plc
Via DGA Group:
Mark Smithson (CEO)
Tel: +44 (0)20 7664 5095
Josh Egan
(CFO)
DGA Group (Financial PR)
Jonathon Brill / James Styles / Nishad Sanzagiri
Tel: +44 (0)20 7664 5095
markselectrical@dentonsglobaladvisors.com
(mailto:markselectrical@dentonsglobaladvisors.com)
Canaccord Genuity (NOMAD and Broker)
Max Hartley / George Grainger
Tel: +44 (0)20 7886 2500
About Marks Electrical
Marks Electrical is a highly scalable, technology driven e-commerce electrical
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 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 £7 billion.
Primarily through its simple, clear and intuitive website -
markselectrical.co.uk - the Group offers over 4,500 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
(https://group.markselectrical.co.uk/) and its retail
website: https://markselectrical.co.uk/ (https://markselectrical.co.uk/) .
Group Chief Executive Officer's review
FY25 was a period of significant strategic change for the business:
• We successfully implemented our new business-wide, Enterprise Resource
Planning ("ERP") system, D365, which replaced our legacy Everest platform; and
• We exited the Euronics buying group as a full member, and established new
trading relationships with over 50 brand partners.
Despite these major structural changes for both the commercial and operational
teams, we continued to drive revenue growth, albeit not at the pace we have
achieved in prior years. For the full year, we achieved £117.2m revenue,
which was up 2.6%. Our cash position improved year-on-year, and we generated
an adjusted EBITDA of £4.2m at 3.6% margin, which was lower than we set out
to achieve, but positive in light of the significant changes made across the
business throughout the year. Whilst we can mark this down as a year of
change, we need to harness the enduring benefits that these milestones will
bring to the business, and improve both revenue growth and profitability in
the years ahead. We anticipate that in the long-term our decision to exit the
Euronics buying group will improve gross margin.
Our objective throughout the year was to maintain stability whilst undertaking
the significant operational changes of leaving the buying group and
implementing the new ERP system, measures that have ensured the business is
better positioned for long-term success.
Over the past two years, consumers have been highly price-conscious, which,
given our premium focus, continues to have an impact on our average order
value, resulting in customer order volumes growing faster than revenue. For
the full year, we saw order unit growth of over 8% versus a revenue growth of
2.6%, demonstrating the ongoing consumer preference for more entry-priced
products. This impact diluted our margin, when taking into account the
relatively fixed cost of delivery.
As we look ahead, our objective will be to pivot back to premium products and
enhance the unit economics of each delivery, in order to start improving
profitability from current levels, ultimately enabling the Group to deliver
long-term value creation and position us as the UK's leading premium
electrical retailer. Delivering premium products alongside exceptional
customer service is what we do best and is where personally we will refocus
our efforts in the year ahead.
Market share - a small share of a big opportunity
We are predominantly focused on the MDA market but have also been rapidly
expanding our footprint in the CE market, primarily in the television
category.
During the year, the MDA market was up by a mere 1.4% in value terms, with the
CE market growing by 1.1%. Both markets saw marked declines in their average
unit prices, with volume growth outstripping value growth. During this period,
we saw minor reductions in our MDA market share from 2.8% to 2.7% and grew our
CE market share from 0.5% to 0.7%.
Whilst our market share growth in MDA has not been as strong as in prior
periods, due to the lower average order values and significant strategic
change we have been undergoing, we continued to acquire customers and grow the
brand awareness of Marks Electrical, a key pillar of our strategy.
Furthermore, the excellent growth we saw in CE added additional customers that
were either returning to, or experiencing Marks Electrical for the first time.
Our tiny share of the £7bn MDA and CE market, with significant scope for
market share gains underpins our strategy for driving brand awareness in the
years ahead.
Our strategy for growth
Our strategic approach is very clear - we put the customer at the heart of
everything we do and have four key elements to our strategy for growth:
Customer proposition
Our operating model continues to be unique across the MDA sector in that we
consistently offer next-day delivery for in-stock items, throughout our wide
range of products, to over 90% of the UK population. In addition, our
installation service offering provides customers with the ability to add
integrated, gas, electric and television installation services to their order,
which can be carried out within a rapid time frame.
This proposition centres around the vertical integration of our delivery
model, with our own fleet, employed drivers and installers, in-house training
academy, and our centralised single-site distribution centre, maximising
efficiency and service quality.
During the period, we made further advancements in developing our customer
proposition, including:
• Further training in our ME Academy, our leading in-house product
installation facility for driver, installer and customer service training;
• Further developed our website to continually improve the customer journey.
Brand awareness
A key to our success is to grow our brand awareness.
Due to our focus on the structural changes of leaving the buying group and
implementing the new ERP system, we carried out fewer brand awareness
initiatives during the period. This in turn will have impacted our slower than
usual revenue growth rate at 2.6%, versus double-digit in the prior years.
The locations in which we carried out smaller scale brand awareness activities
saw elevated order growth in key geographies, demonstrating the efficiency and
impact of our marketing capabilities. Furthermore, we also spent significant
time developing our relationships with our brand partners' marketing teams, in
order to offer them innovative opportunities to advertise with us going
forward.
Whilst we are proud of the progress we have made, we also recognise that there
is significant opportunity for further brand awareness growth, as more people
across the UK come into contact with our brand for the first time and this
will inevitably drive faster revenue growth.
Operational capacity
Across the four pillars of our strategy, operational capacity is one that was
in significant focus in FY24 as we invested materially in our warehouse
capabilities and fleet size. In FY25, this activity has been centred around
technology and the replacement of our legacy ERP system.
Following our significant expenditure of £5.6m on the project, through FY24
and FY25, we successfully went live in September 2024 and whilst we faced a
number of inevitable teething issues, we are proud to report that the move
across to the new system was a success and is powering the Company across our
business operations.
We see significant scope for further technology enhancements, enabling us to
improve our level of automation and sophistication, both improving the
customer journey and operational leverage. Already, in just a few months, we
have implemented new processes that save valuable time and drive efficiency.
We continue to believe that investing across our business in people, processes
and equipment will ensure that we retain talent and provide them with the best
tools to provide customers with a market-leading experience.
Financial performance
Our performance in terms of profitability in FY25 was lower due to two major
factors:
• Significant growth in CE versus MDA creating a negative margin mix effect;
and
• The trade down from consumers, which impacted the business, given the
premium weighting of our product offering. This impact has been market driven
but has been particularly exacerbated in our business and impacts the
distribution cost of delivery.
Despite this, we continued to deliver volume growth in excess of 8%, revenue
growth of 2.6%, remained profitable at 3.6% adjusted EBITDA margin and
retained a healthy net cash position of £8.8m, with £5.7m of underlying free
cash flow.
We maintained our dividend of £1.0m, despite our lower profitability,
cementing the confidence we have in the future direction of the business, and
also bought back £0.3m shares into an employee benefit trust, to prevent the
dilutive impact of future share options.
As we look forward, we aim to pivot the business back towards premium
products, improving the Group's underlying unit economics. This will drive
margin improvements in the years ahead and be a contributing factor in our
strengthening net cash position.
Our Return On Capital Employed("ROCE") remains strong at 16% and we believe
this combination of profitable market share growth, high return on capital and
dividend income, with a disciplined capital allocation policy, provides a
compelling proposition to drive attractive long-term shareholder returns and
despite lower profitability in the current year, we are focused on driving
improvements in FY26 and beyond.
Outlook - focused on delivering profitable market share growth
Whilst FY25 was a year of strategic investment and change, with multiple
significant operational developments impacting performance, we are still
growing volume and revenue, gaining market share, and continue to generate
material cash to support further growth and returns to shareholders. This is
all being achieved whilst providing excellent customer service against a
highly competitive back-drop.
Looking beyond FY25, we will also harness our disciplined approach to cost
control to best manage the significant increases brought about by the more
recently announced rises to employer National Insurance and the National
Minimum Wage, following the UK Government's Autumn Budget. We estimate the
changes to cost the business in the region of £0.75m per annum, and will be
taking action where possible to mitigate this impact.
As momentum continues to develop and our brand awareness increases, our focus
on operational excellence supported by technology and cash flow generation
provides us with a robust platform to generate continued profitable market
share growth and become the UK's leading premium electrical retailer.
Mark Smithson
Chief Executive Officer
Financial review
During the year, the Group made significant strategic progress, with both the
exit from Euronics buying group and the implementation and cut over to D365
being major strategic milestones. Whilst these developments are critical for
the long-term success of the business, the sales growth was impacted by the
focus that the team had to apply to these projects.
Volume growth was strong during the year, with MDA volume growth in excess of
5% and CE volume growth in excess of 50%. With revenue growth of 2.6%, there
was a material decline in average order value of 7.9% with market share in MDA
remaining broadly flat and growing by 20bps in CE.
The growth we experienced in CE impacted the margin mix, as CE typically
trades at a lower gross margin than MDA. This impact has led to a decline in
gross profit margin year on year from 25.4% to 24.4%. With this decline
occurring, we have sought to mitigate the impact where possible by maintaining
a tight control on costs across the business throughout the year, but have
been additionally challenged by the drop in average order value impacting the
efficiency of distribution costs.
Throughout the year, we have also ensured that cash flow is managed very
closely to maximise the cash conversion opportunity, despite lower
profitability. The tight control on working capital, combined with lower capex
has allowed us to drive a strong underlying free cash flow which in-part has
been invested in our system replacement, and has allowed us to increase our
closing net cash position by £1.0m year-on-year, to £8.8m. At the end of the
year, our net asset poistion was £11.3m.
The Group's statutory revenue for the year was £117.2m, up 2.6% from £114.3m
in 2024. Gross profit for the year was £28.6m, down 1.4% from £29.0m in
2024, with a gross margin of 24.4%, down 100 bps from 2024. The key driver of
the fall in gross margin was a mix shift in favour of CE, which typically
trades at a lower margin than MDA.
Statutory operating loss was £1.7m, down from £0.5m operating profit in
2024. The primary reason for the decrease in operating profit was due to the
lower trading profitability as well as the impact of the cost incurred to
replace our legacy enterprise resourcing planning system with D365 and the
associated fees incurred.
Statutory loss before tax was £1.7m driven by the exceptional costs
referenced above, as well as the weaker trading profitability.
Statutory measures Change %/bps
Year ended Year ended
31 March 31 March
2025 2024
£000 £000
Revenue 117,181 114,262 2.6%
Gross profit 28,616 29,032 (1.4)%
Gross profit margin 24.4% 25.4% (100)bps
Operating (loss)/profit (1,741) 488 (456.8)%
Operating (loss)/profit margin (1.5)% 0.4% (190)bps
(Loss)/profit before tax (1,710) 616 (377.6)%
(Loss)/profit before tax margin (1.5)% 0.5% (200)bps
(Loss)/profit after tax (1,444) 427 (438.2)%
(Loss)/profit after tax margin (1.2)% 0.4% (160)bps
Revenue and gross product margin
The Group continued to grow in 2025 reaching a new high of £117.2m
representing a growth rate of 2.6% against 2024 (2024: £114.3m). This result
was achieved against a MDA market which was up a moderate 1.4% during the
period and a CE market that was up by 1.1%.
The continuation of growing brand awareness and increasing order volumes
demonstrates the sustainability of the strategic approach to customer service
being the key differentiator to achieving our growth ambitions.
Growth in the first half of the year (April to September) was strong at 9.3%,
with the third quarter (October to December) being a weak period for the
business, largely impacted by our change to our new ERP, which required us to
reduce the number of delivery days during cut-over, and our strategic bet on
CE growth in the peak trading period not playing out as we had anticipated.
Our fourth quarter (January to March) bounced back to growth of 2.8%, as the
system was more settled and we rotated our stock position back into our core
premium MDA focus areas.
During the year, we saw a decline in our gross product margin to 24.4% (2024:
25.4%) as a result of a higher CE contribution in the gross margin mix, which
typically trades at a lower margin than MDA.
Year ended Year ended
31 March 31 March
2025 2024 Change
£000 £000 %*/BPS
Revenue 117,181 114,262 2.6%
Cost of Sales (88,565) (85,230) 3.9%
Gross product profit 28,616 29,032 (1.4)%
Gross product margin 24.4% 25.4% (100)bps
Distribution costs
During the year we saw a stabilisation in our distribution costs following a
sharp increase in the prior year. Distribution costs for the year were up 3.6%
against a revenue increase of 2.6%. However, despite this 10bps increase in
distribution costs as a percentage of sales, the cost per delivery improved as
delivery volumes were 8.8% higher in the year, leading to a reduction in
delivery cost per unit of 3.5%, which was a marked improvement on the prior
year.
Year ended Year ended
31 March 31 March
2025 2024 Change
£000 £000 %*/BPS
Revenue 117,181 114,262 2.6%
Distribution costs (11,490) (11,089) 3.6%
Distribution costs as % of revenue 9.8% 9.7% 10bps
Advertising and marketing costs
Total advertising costs for the year were £5.8m, in line with the prior year
(2024: £5.8m) and advertising as a percentage of revenue was controlled at
5.0% (2024: 5.0%).
The Group focuses on both online marketing and offline brand building
activities, both with equal importance, to drive brand awareness and
ultimately lead to conversion.
Online marketing spend is dedicated to search engine optimisation,
pay-per-click activities, affiliate programmes and marketplace listing fees.
We made significant strides during the year in optimising our digital spend
whilst also benefiting from improvement in our organic rankings.
Our coverage across radio and television was lower during 2025 as we focused
activities on out-of-home brand building in strategic geographic locations.
This activity was across a range of media outlets including digital display
screens, transportation and fixed locations.
Year ended Year ended
31 March 31 March
2025 2024 Change
£000 £000 %*/BPS
Revenue 117,181 114,262 2.6%
Advertising costs (5,801) (5,754) 0.8%
Advertising costs as % of revenue 5.0% 5.0% 0bps
Other operating expenses
Given the impact of lower product margin and higher distribution costs, it was
imperative that other operating expenses were tightly controlled. Our outturn
in the second half of the year fell short of our expectations and our overhead
base was capable of sustaining higher sales levels. The impact of this was
that overheads increased from 6.0% of sales in the prior year to 6.3% of sales
in 2025.
This modest increase was partly driven by some one-off benefits in the
overhead base in the prior year, however operational efficiency remains a key
priority for us to drive operating leverage as sales growth improves.
Year ended Year ended
31 March 31 March
2025 2024 Change
£000 £000 %*/BPS
Revenue 117,181 114,262 2.6%
Other operating expenses (excluding depreciation) (7,349) (6,827) 7.6%
Other operating expenses as % of revenue 6.3% 6.0% 30bps
Adjusted EBITDA
The Group achieved adjusted EBITDA in the year of £4.2m (2024: £5.0m).
Margin decreased by 80bps to 3.6% (2024:4.4%) primarily due to gross product
margin declining as a result of the higher CE sales mix, which typically
trades at lower margin than MDA.
Year ended Year ended
31 March 31 March
2025 2024 Change
£000 £000 %*/BPS
Statutory (loss)/profit (1,444) 427 (438.2)%
after tax
Add back:
ERP costs net of tax 2,179 2,045 6.6%
Underlying profit after tax 735 2,472 (70.3)%
Add back:
Underlying tax charge 460 871 (47.2)%
Underlying profit before tax 1,195 3,343 (64.3)%
Add back:
Finance costs 186 39 376.9%
Finance income (217) (167) 29.9%
Share based payment 713 362 97.0%
Buying group rebates 249 (357) (169.7)%
Adjusted EBIT 2,126 3,220 (34.0)%
Depreciation and loss on disposal of fixed assets 2,100 1,787 17.5%
Adjusted EBITDA 4,226 5,007 (15.6)%
Adjusted EBITDA margin 3.6% 4.4% (80)bps
Statutory (loss)/profit after tax
During the year, statutory loss after tax was (£1.4)m (2024: profit £0.4m).
The decrease year-on-year was due to the lower trading profitability.
Share-based payments
The Group issued further awards under its long-term incentive plan("LTIP")
during the year to senior and junior management. In addition, as the Initial
Public Offering ("IPO") Market Value Option ("MVO") option were underwater,
the Board decided in its discretion to make a smaller award to key management
team members that had participated in the IPO MVO option and had made a
significant contribution to the strategic growth of the business in the last
three years. This, combined with the LTIP plan charges resulted in a charge of
£0.7m (2024: £0.4m). This charge and related professional fees are removed
from adjusted financial performance measures.
Depreciation and amortisation
Depreciation and amortisation increased by £0.3m to £2.0m during the year
(2024: £1.7m), primarily due to the addition of various warehouse equipment,
vehicles leases, and a renewed property lease.
Taxation
The underlying tax charge for 2025 is £0.5m with an effective underlying tax
rate of 38.5%, 13.5% higher than the statutory corporation tax rate. The two
drivers of this difference relate to timing differences between capital
allowances and depreciation, and LTIP charges that are considered out of the
money and therefore treated as non-deductible for tax purposes.
Earnings per share
Basic statutory earnings per share ("EPS"), which is calculated for both the
current and comparative year based upon the weighted average number of shares
in the year, is a loss of (1.38)p (2024: earnings 0.41p).
Adjusted EPS is 1.54p per share (2024: 2.45p per share), with the material
reduction year-on-year being driven by lower gross product margin. The table
below shows the reconciliation between statutory and adjusted earnings per
share. See Note 3 to the financial statements for further details.
Year ended Year ended
31 March 31 March
2025 2024 Change
£000 £000 %*/BPS
(Loss)/profit for financial (1,444) 427 (438.2)%
year
Statutory EPS (1.38)p 0.41p (436.6)%
Add back:
ERP costs net of tax 2,179 2,045 6.6%
Underlying profit for the year 735 2,472 (70.3)%
Charges relating to share-based payments net of tax 631 365 72.9%
Buying group rebate net of tax 249 (268) (192.9)%
Adjusted profit for earnings per share 1,615 2,569 (37.1)%
Fully diluted number of ordinary shares 104,949 104,949 0.0%
Adjusted EPS 1.54p 2.45p (37.1)%
Cash flow and statement of financial position
During the year, the Group achieved an adjusted cash flow from operating
activities of £6.7m (2024: £4.5m) with an adjusted operating cash flow for
conversion of £5.6m (2024: £3.6m) at 133% (2024: 71%) and underlying free
cash flow of £5.7m (2024: £0.9m), resulting in a closing net cash position
of £8.8m (2024: £7.8m).
The Group invested £0.4m in its warehouse equipment and vehicles, which was
materially lower than the prior year (2024: £1.0m) given the significant
capital investments previously made.
Investments were made into the fleet during the year, with the addition of 12
new vehicles purchased using finance lease agreements, which are recorded in
right of use assets.
A further significant cash outflow during the year was for the development and
implementation of the Group's new ERP software, D365, where £2.9m has been
spent in FY25, in addition to the £2.7m incurred in FY24. The project is now
complete, and no further expenses are expected in FY26.
During the year, the Group saw a working capital inflow of £2.5m (2024:
£(0.5)m outflow), with higher stock levels offset by trade creditors and an
overall reduction in receivables due to restructuring the annual rebate cash
flows with suppliers. The exceptional working capital adjustments relate to
the timing impact of payments to the Group's ERP implementation provider.
The Group finished the year in a net cash position of £8.8m (2024: £7.8m)
and during the year, additionally secured a committed revolving credit
facility and overdraft with Lloyds Banking Group of £5.0m, which was undrawn
at the period end.
Year ended Year ended
31 March 31 March
2025 2024 Change
£000 £000 %*/BPS
Underlying profit 1,195 3,343 (64.3)%
before tax
Add back:
Finance costs 186 39 376.9%
Finance income (217) (167) 29.9%
Loss on disposal of fixed assets 21 71 (70.4)%
Depreciation and amortisation 2,079 1,716 21.2%
Share based payment expense and exceptional emoluments 713 362 97.0%
Buying group rebates 249 (357) (169.7)%
(Increase)/decrease in inventories (3,903) 1,185 (429.4)%
Decrease/(Increase) in receivables 1,518 (3,535) (142.9)%
Increase in payables 5,047 2,101 140.2%
Exceptional WC adjustments (178) (248) (28.2)%
Adjusted cash flow from operating activities 6,710 4,510 48.8%
Less:
Outflows for lease payments (1,104) (948) 16.5%
Operating cash flow for conversion 5,606 3,562 57.4%
Operating cash conversion 133% 71% 6,200bps
Other investing activities (223) (1,925) (88.4)%
Tax received/(paid) 495 (743) (166.6)%
Interest (paid) (191) (42) 354.8%
Underlying free cash flow 5,687 852 567.5%
Events after the reporting period
There have been no material events to report after the end of the reporting
period.
Current trading and outlook
Our strategic objective of re-focusing on the premium segment to improve unit
economics and profitability is underway. This decision to move away from
entry-priced products is expected to lead to lower revenue during Q1-FY26
given the strong growth we experienced in Q1-FY25, however, as we look ahead
to the remainder of FY26, we anticipate improving revenue growth and higher
gross margin than prior year. We continue to remain confident that our
fundamental strategy of profitable market share gains and excellent customer
service will help us in delivering further growth and shareholder value.
Dividend Declaration
We delivered an adjusted EPS of 1.54p during the year and are recommending a
final dividend of 0.66p per share, whilst this represents a higher payout
ratio than our stated 20% objective, we are confident in the future prospects
of the Group and our current net cash position. The final dividend will be
paid (subject to shareholder approval at the AGM) on 7 August 2025 to
shareholders who are on the register at the close of business on 11 July 2025,
and shares will be marked ex-dividend on 10 July 2025. For further information
on dividends, see Note 6.
Josh Egan
Chief Financial Officer
Consolidated Statement of comprehensive income
Year ended 31 March 2025
Notes
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2025 2025 2025 2024
Underlying Non-underlying Statutory Statutory
£000 £000 £000 £000
Revenue 117,181 - 117,181 114,262
Cost of Sales (88,565) - (88,565) (85,230)
Gross profit 28,616 - 28,616 29,032
Distribution costs (11,490) - (11,490) (11,089)
Administrative expenses (15,962) (2,905) (18,867) (17,455)
Operating profit/(loss) 1,164 (2,905) (1,741) 488
Finance income 217 - 217 167
Finance expenses (186) - (186) (39)
Profit/(loss) before income tax 1,195 (2,905) (1,710) 616
Tax on profit/(loss) (460) 726 266 (189)
Profit/(loss) for the financial year 735 (2,179) (1,444) 427
Total comprehensive income/(expense) for the period 735 (2,179) (1,444) 427
Earnings per share 3
Statutory basic and diluted earnings per share (1.38)p 0.41p
All the results arise from continuing operations.
Consolidated Statement of financial position
At 31 March 2025
Notes
Year ended Year ended
31 March 31 March
2025 2024
£000 £000
Assets
Non-current assets
Property, plant and equipment 2,010 2,671
Right-of-use assets 2,416 1,152
Trade and other receivables 204 71
4,630 3,894
Current assets
Inventories 16,918 13,015
Trade and other receivables 7,521 9,172
Current tax assets - 461
Cash and cash equivalents 8,807 7,817
33,246 30,465
Total assets 37,876 34,359
Liabilities
Current liabilities
Trade and other payables 23,407 18,501
Lease liabilities 993 621
Current tax liabilities 336 -
24,736 19,122
Non-current liabilities
Lease liabilities 1,457 534
Deferred tax liabilities 423 991
Total liabilities 26,616 20,647
Net assets 11,260 13,712
Shareholders' equity
Called up share capital 7 1,049 1,049
Share premium 7 4,818 4,815
Treasury shares 7 (296) (3)
Merger reserve 7 (100,000) (100,000)
Retained earnings 7 105,689 107,851
Total equity shareholders' funds 11,260 13,712
Consolidated Statement of changes in equity
Year ended 31 March 2025
Notes Called up share capital Share premium Treasury shares Merger reserve Retained earnings Total shareholders' equity
£000 £000 £000 £000 £000 £000
At 01 April 2023 1,049 4,694 (4) (100,000) 108,085 13,824
Total comprehensive income for the - - - - 427 427
year
Contributions by and distributions to owners:
-Dividends paid 6 - - - - (1,007) (1,007)
-Share options and LTIP charge - - - - 346 346
-Sale of treasury shares - 121 1 - - 122
At 31 March 2024 1,049 4,815 (3) (100,000) 107,851 13,712
Total comprehensive expense for - - - - (1,444) (1,444)
the year
Contributions by and distributions to owners:
-Dividends paid 6 - - - - (1,004) (1,004)
-Share options and LTIP charge - - - - 328 328
-Issue of shares to employees - - 42 - (42) -
-Purchase of treasury shares - - (335) - - (335)
-Sale of treasury shares 7 - 3 - - - 3
At 31 March 2025 1,049 4,818 (296) (100,000) 105,689 11,260
All the results arise from continuing operations.
Consolidated Cash flow
Year ended 31 March 2025
Notes Year ended Year ended
31 March 31 March
2025 2024
£000 £000
Cash flows from operating activities
(Loss)/profit for the year (1,444) 427
Adjustments for non-cash items:
Depreciation of property, plant and equipment 921 758
Depreciation of right-of-use assets 1,158 958
Loss on disposal of property, plant and equipment 21 71
Share-based payment expense 328 362
Interest income (217) (167)
Interest expense 186 39
Taxation (credited)/charged (266) 189
Movements in working capital:
(Increase)/decrease in inventories (3,903) 1,185
Decrease/(increase) in receivables 1,518 (3,535)
Increase in payables 5,047 2,101
Cash flow generated from operations 3,349 2,388
Corporation tax received/(paid) 495 (743)
Net cash flow generated from operations 3,844 1,645
Cash flows from investing activities
Purchase of property, plant and equipment (437) (2,023)
Deposits on right-of-use assets (154) (144)
Proceeds from sale of property, plant and equipment 135 52
Proceeds from sale of right-of-assets 21 33
Interest received 212 157
Net cash used by investing activities (223) (1,925)
Cash flows from financing activities
Interest paid on loan (61)
Sale of shares 7 3 122
Purchase of shares (335)
Repayment of borrowings (10,500)
Drawdown of borrowings 10,500
Interest paid on lease liabilities (130) (42)
Principal repayment of lease liabilities (1,104) (948)
Equity dividends paid 6 (1,004) (1,007)
Net cash used by financing activities (2,631) (1,875)
Net increase/(decrease) in cash and cash equivalents 990 (2,155)
Cash and cash equivalents at the beginning of the year 7,817 9,972
Cash and cash equivalents at the end of the year 8,807 7,817
Notes to the financial statements
Year ended 31 March 2025
1 General Information
The financial statements of Marks Electrical Group plc ("Company") for the
year ended 31 March 2025 ("FY25") were authorised for issue by the Board of
Directors on 24 June 2025 and signed on its behalf by Josh Egan.
The Company is a public limited company, limited by shares, incorporated in
the United Kingdom under the Companies Act 2006 (registration number
13509635). The Company is domiciled in the United Kingdom and its registered
address is 4 Boston Road, Leicester, LE4 1AU, England. The Company's ordinary
shares are listed on the AIM market, of the London Stock Exchange. The
principal activity of the Company and its subsidiaries ("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 annual financial information presented in this preliminary announcement
does not constitute the Company's statutory accounts for the years ended 31
March 2025 or 2024 but is based on, and consistent with, that in the audited
financial statements for the year ended 31 March 2025, and those financial
statements will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
Statutory financial statements for the year ended 31 March 2024 have been
delivered to the Registrar of Companies, the auditors reported on those
financial statements; their report was unmodified and did not contain a
statement under either Section 498(2) or Section 498(3) of the Companies Act
2006.
The preliminary financial report for the year ended 31 March 2025 follows the
same accounting policies as the 2024 Annual Report. This preliminary financial
report does not include all of the notes of the type normally included in an
annual financial report and should therefore be read in conjunction with the
Marks Electrical Group plc 2024 Annual Report.
This consolidated financial information has been prepared in accordance with
UK-adopted International Accounting Standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those standards.
The financial information has been prepared on a going concern basis under the
historical cost convention unless otherwise specified within these accounting
policies. The financial information and the notes to the financial information
are presented in thousands ('£'000') except where otherwise indicated. The
functional and presentation currency of the Group is pound sterling.
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the periods presented, unless otherwise stated.
2.2 Going concern
The Group has traded positively during the year, delivering sales growth of
2.6%, with a net operating cash flow of £3.8m.
Management have prepared detailed financial projections for the period to 30
June 2026. These projections are based on the Company'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.
The key sensitivity assumptions applied include:
· a material slow-down in ecommerce sales; and
· a substantial decline in gross margin.
Mitigating actions available to the Company were applied and the Board
challenged the assumptions used.
The Board of Directors has completed a rigorous going concern assessment and
taken the following actions to test or enhance the robustness of the
Company's liquidity levels for the period to 30 June 2026. As part of its
assessment, the Board has considered:
· The cash flow forecasts and the revenue projections for the
Company;
· Reasonably possible changes in trading performance, including a
severe yet plausible downside scenario;
· The Company's robust policy towards liquidity and cash flow
management;
· The Company's ability to successfully manage the principal risks
outlined in this report;
· The current cost of living crisis.
· Inflation pressures facing the Company and its employees.
Under the severe yet plausible scenario the Company remains with the limits of
its revolving credit facility, with no mitigating actions required.
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 the Company has
adequate resources to continue in operational existence for at least 12 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 31 March 2025.
Subsidiaries are entities over which the Company 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 Company's admission to trading on the AIM market of the
London Stock Exchange ("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. Following impairment, the
parent Company statement of financial position shows a merger reserve of £nil
and an investment of £43,237,000.
On a Group basis, an accounting policy was adopted based on the predecessor
method as this 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.
2.4 Revenue recognition
Product and services revenue
Revenue from contracts with customers is recognised when or as the Group
satisfies a performance obligation by transferring a promised good or service
to a customer. A good or service is transferred when the customer obtains
control of that good or service.
The transfer of electrical appliances and consumer electronics sold by the
Group coincides with the delivery of the item to the customer and the
customer taking physical possession. The Group principally satisfies its
performance obligations at a point in time and recognises revenue on delivery
to the customer. This policy therefore applies to all products delivered to
customers as well as services provided upon the day of delivery such as
delivery fees, waste removal and installation of products.
Revenue is measured at the fair value of the consideration received, excluding
sales taxes or duty. Revenue includes a provision for anticipated returns,
which is based upon historical returns performance, the provision is held
within trade and other receivables.
Amounts received in advance for electrical appliances sales are recorded as
contract liabilities within trade and other payables (net customer advances)
and revenue is recognised as the performance obligations are met.
Commission revenue
Commission revenue is revenue the Group has achieved through acting as an
agent for a third party. The Group currently acts as an agent selling product
protection plans for Domestic and General ("D&G").
The Group introduces the customer to D&G for the product protection plan,
at which point the Group has met its performance obligation. The product
protection plans are rolling agreements whereby the end customer
pays a monthly fee for the plan. The Group receives commission for these
plans annually in advance.
Revenue from commissions on product protection plans is accounted for based on
the fair value of anticipated future commissions receivable throughout the
estimated duration of the plan, plus the initial commission received.
Recognition of revenue occurs upon the Group fulfilling its responsibilities
to the customer at the time of sale. These recognised amounts are determined
by factors such as the plan's duration, historical customer attrition rates as
provided by D&G, and are held as a contract asset on the balance sheet
within trade and other receivables and discounted accordingly.
3. Earnings per share
3.1 Statutory earnings per share
(a) Earnings
Year ended
31 March Year ended
2025 31 March
£000 2024
£000
Statutory earnings (1,444) 427
(b) Number of shares
Year ended
31 March Year ended
2025 31 March
£000 2024
£000
Basic weighted average number of shares 104,949,050 104,949,050
Dilutive effect of share options and awards - -
Diluted weighted average number of shares 104,949,050 104,949,050
(c) Earnings per share
Year ended
31 March Year ended
2025 31 March
2024
Statutory earnings
Basic statutory earnings per share (1.38)p 0.41p
Diluted statutory earnings per share (1.38)p 0.41p
3.2 Non-Statutory earnings per share
(a) Earnings
Year ended
31 March Year ended
2025 31 March
£000 2024
£000
Statutory earnings (1,444) 427
Add:
Non underlying net of tax 2,179 2,045
Share based payments net of tax 631 365
Less:
Buying group rebate 249 (268)
Adjusted earnings 1,615 2,569
(b) Number of shares
Year ended
31 March Year ended
2025 31 March
2024
Basic weighted average number of shares 104,949,050 104,949,050
Dilutive effect of share options and awards - -
Diluted weighted average number of shares 104,949,050 104,949,050
(c) Earnings per share
Year ended
31 March Year ended
2025 31 March
2024
Adjusted earnings
Basic adjusted earnings per share 1.54p 2.45p
Diluted adjusted earnings per share 1.54p 2.45p
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 non-underlying items, expenses relating to
share-based payments, plus the add back of the buying group rebate receivable
and costs related to the on-going implementation of the new Enterprise
Resource Planning ("ERP") system disclosed in Note 5.
The number of ordinary shares during the year ended 31 March 2025 remained
constant. At the year end, there was no dilutive effect on the Group's shares.
4. Operating segments
IFRS 8 'Operating Segments' requires the Group to determine its operating
segments based on information which is provided internally. Based on the
internal reporting information and management structures within the Group, it
has been determined that there is only one operating segment, being the Group,
as the information reported includes operating results at a consolidated Group
level only. There is also considered to be only one reporting segment, which
is the Group, the results of which are shown in the consolidated statement of
comprehensive income.
Management has determined that there is one operating and reporting segment
based on the reports reviewed by senior management which is the chief
operating decision-maker. Senior management is made up of Executive Directors
and heads of department. Senior management is responsible for the strategic
decision-making of the Group.
5. Non-underlying costs
ERP system implementation costs
During the year, the Company completed the implementation of a new ERP system.
The non-underlying costs in relation to the new ERP system in the year
totalled £2,905,000 (2024: £2,727,000) being made up of £2,503,000 (2024:
£2,496,000) implementation consultancy fees, £139,000 (2024: £76,000) in
wages and salaries, £248,000 (2024: £93,000) in technology costs and
£15,000 (2024: £62,000) in other legal and professional fees.
Exceptional emoluments
The Company also incurred exceptional emoluments of £279,000, in relation to
one-off awards payable to employees that participated in the market value
option at the time of listing.
6. Dividends
Year ended Year ended
31 March 2025 31 March 2024
£000 £000
Dividends paid during the year:
Final dividend for 2024: 0.66p (2023: 0.66p) 693 692
Interim dividend for 2025: 0.30p (2024: 0.30p) 311 315
Dividends paid 1,004 1,007
Final dividend for 2025 ((1)) : 0.66p (2024: 0.66p) 689 693
(1) The Board is recommending a final dividend of 0.66p per share (£689,319)
that will be subject to final approval by shareholders at the 2025 AGM.
The 0.66p represents a typical two-third share of the annualised amount. The
dividend has not been accrued into the consolidated statement of
financial position.
7. Share capital and reserves
At 31 At 31 At 31 At 31
March March March March
Allotted, called up and fully paid 2025 2025 2024 2024
£ Number £ Number
Ordinary shares of £0.01 each 104,949,050 1,049,491 104,949,050 1,049,491
104,949,050 1,049,491 104,949,050 1,049,491
Share Capital
Share capital comprises the nominal value of the Company's shares of £0.01
each.
Share premium
The share premium reserve is the premium paid on the Company's £0.01 ordinary
shares. During the year ended 31 March 2022, 4,545,454 shares were issued for
£1.10 each, resulting in a net premium of £4,694,000 consisting of
£4,954,000 premium paid less £260,000 placing costs. During the year, the
Company sold treasury shares at a premium to the purchase price leading to a
£3,000 (2024: £121,000) increase in share premium.
Merger reserve
The merger reserve relates to the merger relief under section 612 of the
Company's Act, on the acquisition of Marks Electrical Limited, a 100% owned
subsidiary of the Group.
On 8 October 2021, Marks Electrical Group plc acquired the 100 ordinary shares
(100% of the share capital) in Marks Electrical Limited, in return for the
issue of 99,999,999 ordinary shares with a nominal value of £1.00 each, at a
price of £1.60 each, bringing the total consideration to £160,000,000. This
transaction falls under section 612 of the Companies Act and merger relief was
applied. On consolidation under the predecessor method a merger reserve of
£100,000,000 was recognised.
Treasury shares
Treasury reserve relates to shares acquired by the Group's employee benefit
trust. At the year end the Group held 681,266 (2024: 259,961) treasury shares.
Retained Earnings
Retained earnings are the accumulated profits and losses of the Group net of
dividends and other adjustments.
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