Marks Electrical announces maiden dividend after revenue record

Online appliance retailer Marks Electrical Group reported record full-year revenue in its results on Wednesday, with growth of 44% to £80.5m.

The AIM-traded firm said it maintained “strong profitability”, with full-year adjusted EBITDA totalling £7.2m for the 12 months ended 31 March at a 9% margin, compared to £7.7m and 13.7% a year earlier, respectively.

Free cash flow grew to £5.7m from £2.3m year-on-year, representing a free cash flow margin of 7.1% and resulting in a closing net cash position of £3.9m.

Adjusted earnings per share were broadly stable at 5.01p, compared to last year’s 5.05p, while statutory earnings per share slid to 3.22p from 5.7p.

The board proposed a maiden final dividend of 0.67p per share, which the directors said reflected the company’s “strong” cash position and their confidence in trading.

It said the distribution, subject to shareholder approval, would be paid on 18 August to shareholders on the register at the close of business on 15 July.

Operationally, Marks said it grew its share of the major domestic appliances (MDA) market to 1.6% from 1.2% year-on-year, with its share in the online segment - its primary addressable market - growing to 2.6% from 1.5%.

It reported a “strong performance” across all categories, but specifically in televisions, cooking appliances and tumble dryers.

The company said it improved its inventory holding and expanded its operating capacity, while also expanding its product range, variety and availability for customers.

Looking ahead, Marks said the positive trading momentum had continued in the first months of the 2023 financial period, with revenue growth exceeding 20% year-on-year.

It said it was maintaining a disciplined approach to margin management, capital allocation and cash conversion, providing it with “solid foundations” to deliver its financial targets and strategic objectives in the year ahead.

“We achieved record revenue in 2022, with growth of 44% against a strong comparative of 78% in the prior year,” said chief executive officer Mark Smithson.

“While we are conscious of the challenges raised by the cost-of-living crisis in the UK and its impact on consumer confidence, our low-cost and execution-focused model leaves us well positioned to manage operationally, and with still only 1.6% market share of the £5.4bn UK MDA market, we see significant scope and opportunity for growth.

“Recognising the current impact on the consumer and thanks to our strong brand partnerships, we have been able to expand our range of products, across price categories, as well as introducing new credit solutions and interest free options with our finance partners.”

Smithson said the company had continued to achieve market share gains and “strong revenue momentum” in the months since the financial year-end, as its “leading customer service” and delivery proposition provided a “compelling and unique” offering that set it apart from the competition.

“We remain well positioned moving forward to execute on our clear strategy of growing brand awareness, delivering exceptional customer service, and expanding our offering to new customers across the UK.”

At 0924 BST, shares in Marks Electrical Group were up 0.55% at 92p.

Reporting by Josh White at Sharecast.com.