Preliminary Results

RNS Number : 5396K

CMO Group PLC

06 May 2022

 

CMO Group Plc

("CMO" or "the Group")

Preliminary Results for the year ended 31 December 2021

Continued strong growth and forecasts met, despite headwinds

CMO Group Plc, the UK's largest online-only retailer of building materials, today announces its Preliminary Results for the year ended 31 December 2021. 

Our mission is to offer our customers everything they need to build and improve a home through the widest range at the right value and right time, with helpful people and effortless, inspirational e-commerce. We continue on our journey to deliver this through our strategy of acquiring or building new specialist websites and expanding current ranges.

With over 100,000 SKU's and 8 specialist websites, CMO has the leading product range which drives organic category authority. This, together with the unique dropship model for delivery is providing a different experience for its customers and revolutionising the shopping experience.

Financial and Trading Highlights

·   Revenue increased by 46% to £76.3m (2020: £52.4m), reflecting strong organic growth, a £16.5m contribution from the acquisition of Total Tiles and the addition of £1.7m from three months of JTM, acquired last September.

·   H2 revenue increased by 33% to £38m despite supply chain and COVID 19 disruption. Opportunity cost of disruption estimated at 5% of sales.

· Online superstores LFL sales of 12% (over two year 30%) and Total Tiles LFL at 10%

· Market share grew by 11% year on year, faster than the wider builders merchant market, which itself grew by 28%.

· Adjusted EBITDA increased to 3.7m (2020: £2.6m) *

· Adjusted earnings per share was 2.28p (2020 loss 0.71p) *

· After exceptional costs of £5.8m relating primarily to IPO costs, fair value and tax charges on the share issue, loss before tax was £4.4m (2020: £0.8m loss) 

· Net cash on the balance sheet of £6m at year end.

Operational Metrics and highlights

· Completion of successful IPO on AIM and continue execution of successful strategy

· Active customers increased to 182,000 from 127,000 in 2020 following higher search demand.

· Over 50% of sales from repeat orders

· Digital marketing costs remain at less than 5% of sales, database grew by 30%

· Average order value grew by 10% to £274

· JTM Plumbing has performed in line with expectations and will be integrated into Plumbingsuperstore.co.uk which launches later this year.

Current Trading

· Current trading for Q1 2022 has remained strong despite well documented difficult conditions.

o  Total sales growth of 13% (incl. JTM)

o  LFL** sales of +3% with superstores at +8% and Total Tiles, against very strong comparatives, -11%

· 2 year LFL group sales growth of 49% and Total Tiles 63%

**   Excludes carriage

Outlook

· CMO's market remains buoyant and the Group, despite macro-economic headwinds, continues to cope well and thrive

· Our market share continues to grow with modern tradespeople and homeowners continuing to seek the convenience of the online experience and our unique dropship model.

· Focussed on driving profitable sales growth and confident of delivering shareholder value in the short, medium, and long term

* Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortisation, share option expense, acquisition costs and exceptional items.

Dean Murray, CEO said:

"CMO's strategic goal is to provide our customers with everything they need to build and maintain their home.

We have enjoyed further success over the last year achieving sales, margin and profit growth whilst expanding our range of products. We have and continue to experience strong demand driven by both the marketplace and our strong proposition to the internet savvy tradespeople and homeowner of today.

We have weathered the supply disruption of 2021  and the difficulties caused by COVID 19, and our flexible model means we are managing well the current macro-economic issues.

We continue to pursue a pipeline of acquisitions in conjunction with organic growth to add specialist verticals as demonstrated with the launch of plumbing superstore in Q3, and the launch of the homeowner project store in Q4.

Trading for the first quarter of 2022 has remained strong and the Board is confident that CMO will deliver continued growth in the year to come."

6 May 2022

Enquiries:

CMO Group PLC	Via Instinctif
Dean Murray, CEO
Jonathan Lamb, CFO
Liberum Capital Limited (Nominated Adviser & Broker)	Tel: [phone]
Andrew Godber
Lauren Kettle
Cara Murphy
Instinctif Partners
Justine Warren	Tel: [phone]
Matthew Smallwood	Tel: [phone]

Chairman's statement

After last July's very successful admission to AIM, the team has risen to the challenge of CMO's new status and, despite some challenging headwinds, has delivered another strong performance.  Full year revenue and adjusted EBITDA* are both in line with expectation, and the well-publicised supply chain and logistics difficulties having been expertly negotiated.  These challenges, coming on top of two unpredictable years of pandemic-related lockdowns, have demonstrated the robustness of the model and the team.   

CMO's strategy to provide customers with a comprehensive range of building materials through specialist, contact centre supported websites, has once again proved to be the right one.  It's clear the retail world focussed even more strongly towards online during the pandemic, but people still like dealing with people.  CMO will always make sure its customers can do just that.  This model continues to work for us with like-for-like sales up in 2021 by 12% and two-year sales by 30%.  

The team is also marching on with the strategy to provide customers with everything needed to build a home.  We've filled the plumbing gap with the purchase of JTM Plumbing Ltd at the end of September 2021 and we've been the proud owners of Total Tiles Ltd for exactly 12 months at the balance date.  These two businesses, which perfectly fit our profile and are continuing to perform well, have led to overall growth for 2021 of 46%.   

Our vision for a better world   

CMO's natural inclination is towards high integrity and anti-bias, but post float it has more formally taken up the mantel on a range of ESG issues.   

In recent years, the business has taken significant steps to eliminate gender bias.  We're proud to have a female Chief Operating Officer, Sue Packer, who constitutes one third of the Group's Executive Board.  This supports a different view of risk and opportunity which has contributed heavily to the agile way the business manages change and challenge.  Importantly, the median gender pay gap is less than 5% in all quartiles and is close to nil in the lower and lower medium quartiles.  

With environmental concerns right at the forefront of CMO's operating model, we've committed to measuring our greenhouse gas emissions and establish targets compatible with the Science-based Target initiative (SBTi). While our scope 1 and 2 emissions for 2021 are now measured and minimal, CMO is ambitiously commencing measurement of its scope 3 emissions. Over the coming year, the business will develop emissions reductions targets compatible with SBTi.   

Senior appointments and team  

As a growing and dynamic business, opportunities are constantly opening up across the team and I'm delighted to welcome Lewis Love into the role of Group Technology Director.  Lewis started in January 2022 and has a key position on the Operating Board of CMO.   

I would like to express my sincere thanks to Dean, his team, and all at CMO for their hard work in making the float possible, and their continued enthusiasm and resilience which has enabled us to deliver some great results in the subsequent months despite the many challenges.   

Looking to the year ahead  

At the time of writing, we have war in Ukraine, sanctions against the Russians, fuel inflation which is unprecedented in recent times, a pandemic which has not been eradicated and clear signs of a decline in consumer confidence.  Predicting a year ahead on this basis is arguably fraught, but I have little doubt the CMO team will again use its ingenuity, agility, and ability to create long-lasting relationships to deliver another year of great results.  We plan to add further new verticals by acquisitions and will find innovative ways to support customers' aspirations for their homes.  

On a personal note, I've thoroughly enjoyed my first year of working with the CMO board and look forward to continued success in the year ahead.   

Ken Ford

CEO's statement

Trading update and market overview

2021 was another good year for CMO.  Revenue growth to £76.3m, with a 46% increase on prior year and includes the first full-year contribution from Total Tiles.  Despite supply chain challenges and increased coronavirus (COVID-19) disruption year-on-year growth continued in the second half with revenue of £38m, an increase of 33% over H2 2020.

CMO's online superstores saw like-for-like growth of 12% over prior year (30% over two years), and we also saw growth of 10% in Total Tiles, acquired in December 2020.  The latter comes after exceptional 2020 growth driven in part by the COVID-19 related closure of bricks and mortar tile stores, demonstrating a permanent shift in consumer behaviour.  JTM Plumbing has performed in line with expectations since acquisition in October 2021 and subsequent integration into the Group.

With strong sales growth, and despite the headwinds mentioned below, full year adjusted EBITDA* was in-line with expectations set at the time of the IPO.

 

Operational performance and round-up against COVID-19 and Brexit

Key to CMO's success is our agility and shortened supply chain, allowing us to respond quickly to changes in our market as well as the macro-economic climate. 

COVID-19 was a testing time for many businesses but CMO's operating model enabled us to adapt and perform without significant impact.  On the positive side, we quickly learned the art of hybrid working without loss of performance and we enjoyed an increase in search demand over the various lockdowns. The general shift to hybrid working has triggered an increase in interest from homeowners wishing to improve their space, which we expect to continue to provide structural tailwinds.  On the downside, the supply side experienced considerable disruption.  Lockdown closures across the supply chain, in all countries, led to well publicised restricted supply at exactly the time demand was increasing from housebound homeowners.  This started in 2020 and increased throughout 2021, now easing, but not over.

Whilst COVID-19, coupled with the impact of Brexit, provided us with considerable challenges in supply and nationwide distribution in 2021, overall, the benefits and challenges had a broadly neutral effect and the Group has seen steady growth over the two years in line with expectations.

A strong focus on demand planning led us to increase warehousing space by approximately 29% and with a database of around 100,000 listed products meant that we were able to flexibly keep on top of demand. The support afforded by good relationships with our providers mitigated the worst of the problems, and our focus on dedicated multi-channel customer support and care, kept the repeat rate stable despite protracted lead times.

It's fair to say that these challenges tested our business, but our operating model has proven to be robust, and any compensating changes have further enhanced its agility.

 

Our strategy and M&A

Put simply, CMO's strategy is 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 therefore to continue to add specialist verticals, either organically or through acquisition. 

At the tail end of 2020 we added Total Tiles to the portfolio and on 30^th September 2021 we added JTM Plumbing which gives us access to the c£800m online Plumbing and Heating market.  Work is in hand to turn these pureplay online businesses into CMO Superstores, thus facilitating shopping between the verticals. This year will see the launch of Plumbingsuperstore.co.uk to build on the acquisition of JTM. We are also developing our Homeowner site, an online store to support homeowners to shop intuitively by project across our vertical.

We continue to pursue an active acquisition pipeline to speed up the achievement of our Strategic goal of providing 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. 

 

People

We would not have grown to this market leading position without the support of our energetic, dedicated, and loyal team of people who through the last year have gone that extra mile to support our customers.

CMO has a culture that supports agile change and swift operational delivery.  It does this through its people who have determinedly succeeded over the challenges that the last two years have thrown at them. We absolutely recognise the part the whole team has played in CMO's success and particularly the recent admission to AIM.  All employees can now become shareholders through a CSOP scheme which has further driven determination to succeed.

As you would expect for a fast-growing business, we continue to make relevant appointments to support our future.  The second half of last year and the beginning of this have seen the recruitment of some talented individuals who will drive through an ever-stronger retail culture, not least the appointment to the operating board of Lewis Love as Group Technology Director.

 

Headwinds

Prevalent during H2 were the widely reported industry headwinds encompassing delays and shortages of product, compounded by increased disruption from Covid in Q4. A continued focus on demand planning and a 29% increase in warehousing capacity to support an increased stock holding mitigated the worst of this disruption and enabled us to pivot some of our lines to margin accretive own-label product. H2 revenue increased by 33% to £38m despite these supply chain and COVID 19 disruption. However, it is estimated that during H2 the opportunity cost to the Group of these issues amounted to an opportunity cost of approximately 5% of sales.

The first half of 2022 is facing additional layers of macro level disruption: Russia's invasion of Ukraine, fuel prices are at an all-time high, household inflation outstripping increases in household income and consumer confidence has been in decline for some months. Whilst not immune to these factors, we do have a tested business with the agility, diversity of product offering, a dedicated and experienced team of people and customer reach in different demographics to cope well and thrive. 

 

Looking to the future

We have a clear plan, which revolves around making sure our customers can easily shop for everything they need, in the way they want to shop, on time, and that they are inspired to deliver their next project with CMO.

Our market share is increasing, and we are poised to benefit from the coming generation of technology and time savvy tradesmen and homeowners who are looking for a different experience from that provided by the bricks and mortar merchants such as the CMO Trade App that we soft launched in Q4 2021.

As I said earlier, we have a robust model which has continued to disrupt our market through some very challenging times, and we are looking to the future confidently. 

As we enter a new financial year, the markets in which we operate remain buoyant. With a strong order book and a disruptive position in its chosen markets, the Board is confident that CMO will deliver continued growth in the year 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.

CMO Group Plc

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2021

	Unaudited 2021		Unaudited 2020
	Total		Total
	£		£
Revenue	76,339,771		52,351,399
Cost of sales	(60,996,550)		(44,222,088)
Gross profit	15,343,221		8,129,311
Administrative expenses Exceptional payroll expense Costs associated with AIM listing	(13,907,838) (2,938,374) (1,765,053)		(6,651,461) - -
Operating (loss) / profit	(3,268,044)		1,477,850
Finance income	-		761
Finance expense	(1,153,508)		(1,868,816)
Loss before tax	(4,421,552)		(390,205)
Income tax credit / (expense)	65,600		(371,096)
Loss for the year	(4,355,952)		(761,301)
Other comprehensive income for the year	-		-
Total comprehensive income	(4,355,952)		(761,301)
Earnings per share	pence		pence
Basic	(7.11)		(1.49)
Diluted	(7.11)		(1.49)
Adjusted basic earnings per share	2.28		(0.71)
Adjusted diluted earnings per share	2.28		(0.71)

CMO Group Plc

Consolidated Statement of Financial Position as at 31 December 2021

 

	Unaudited 2021		Unaudited 2020
ASSETS	£		£
Non-current assets
Property, plant and equipment	1,580,744		453,257
Right-of-use assets	337,390		582,889
Goodwill	19,413,122		16,859,824
Other intangible assets	2,691,735		1,670,036
Deferred tax assets	128,860		145,732
	24,151,851		19,711,738
Current assets
Inventories	5,474,054		3,342,655
Trade and other receivables	2,942,236		1,223,206
Cash and cash equivalents	9,075,944		6,050,394
	17,492,234		10,616,255
Current liabilities
Trade and other payables	(19,576,964)		(11,296,995)
Loans and borrowings	(2,839)		(392,185)
Lease liabilities	(311,192)		(269,125)
Current tax liabilities	(128,860)		(302,202)
	(20,369,686)		(12,260,507)
Net current liabilities	(2,877,452)		(1,644,252)
Non-current liabilities
Loans and borrowings	(3,088,142)		(23,017,336)
Lease liabilities	(140,499)		(465,468)
	(3,228,641)		(23,482,804)
Net assets	18,045,758		5,415,318
EQUITY
Share capital	719,697		101
Share premium	25,873,451		-
Retained earnings	(7,975,448)		(5,415,419)
Share option reserve	419,748		-
Merger reserve	(513,000)		-
	18,045,758		5,415,318

CMO Group Plc

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2021 (unaudited)

	Share capital	Share Premium	Merger Reserve	Share option reserve	Retained earnings	Total
	£		£	£
Balance at 1 January 2020	101	-	-	-	(4,654,118)	(4,654,017)
Loss for the year	-	-	-	-	(761,301)	(761,301)
Total comprehensive income for the year	-	-	-	-	(761,301)	(761,301)
Balance at 31 December 2020	101	-	-	-	(5,415,419)	(5,415,318)
Balance at 1 January 2021	101	-	-	-	(5,415,419)	(5,415,318)
Loss for the year	-	-	-	-	(4,355,952)	(4,355,952)
Total comprehensive income for the year	-	-	-	-	(4,355,952)	(4,355,952)
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 for the year	719,596	25,873,451	(513,000)	419,748	(3,038,719)	23,461,076
Balance as at 31 December 2021	719,697	25,873,451	(513,000)	419,748	(8,454,138)	(18,045,758)

CMO Group Plc

Consolidated Statement of Cash Flows for the Year Ended 31 December 2021

		Unaudited 2021		Unaudited 2020
		£		£
Cash (outflow)/ inflow from operating activities		(1,857,167)		3,955,876
Cash flow from investing activities
Payments to acquire intangible fixed assets		(603,385)		(472,036)
Payments to acquire tangible fixed assets		(90,871)		(24,594)
Cash outflow on business combination		(2,186,810)		(503,301)
Interest received		-		761
Net cash flow from investing activities		(2,881,066)		(999,171)
Cash flow from financing activities
Receipts from issue of shares net of commission expense		26,179,897		-
Receipts from borrowings draw downs		3,088,142		1,282,000
Repayment of borrowings		(3,230,533)		(390,400)
Repayment of shareholder loans		(17,747,577)		-
Repayment of lease liabilities		(341,000)		(218,554)
Interest paid		(185,146)		(56,838)
Net cash flow from financing activities		7,763,783		616,208
Net increase in cash and cash equivalents		3,025,550		3,572,913
Cash and cash equivalents at 1 January		6,050,394		2,477,481
Cash and cash equivalents at 31 December		9,075,944		6,050,394

Notes to the Financial Statements

Year Ended 31 December 2021

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 2021 is the first 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 2021 and 31 December 2020 does not comprise statutory financial statements within the meaning of section 434 of the Companies Act 2006. The financial statements for the year ended 31 December 2021 will be filed following the Company's annual general meeting. This is the first set of accounts since incorporation of the company on 20 April 2018.

The condensed preliminary results for the year end 31 December 2021 are unaudited.

The preliminary announcement has been prepared in accordance with 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.

On 11 June 2021, the company acquired 100% of the share capital of CMOStores Group Limited by way of a share for share exchange. The accounting treatment in relation to the additions of CMO Group Plc as a new UK holding company of the Group fell outside the scope of IFRS 3 'Business Combinations'. The share scheme arrangement constituted a common control combination of the entities. This was as a result of all the shareholders of CMO Group Plc being issued shares in the same proportion, and the continuity of ultimate controlling parties. The directors believed that this approach presents fairly the financial performance, financial position and cash flows of the Group. The reconstructed Group was consolidated using merger accounting principles, as outlined in the Financial Reporting Standard FRS 102 ("FRS"), and the reconstructed Group treated as if it had always been in existence.

After making appropriate enquiries, the directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future and for at least twelve months from the date of signing these financial statements. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

1  Loss for the year

  Loss for the year has been arrived at after charging (crediting): 

	Unaudited 2021		Unaudited 2020
	£		£

Depreciation of owned property, plant and equipment and right-of use assets	474,649		321,304
Depreciation of leased property, plant and equipment	8,871		13,420
Amortisation of intangible assets	698,161		548,473
Acquisition and other costs	632,272		55,818
Long Term Incentive Plan	419,748
Costs associated with AIM listing Remuneration Company contributions to defined contribution pension schemes	1,765,053 2,907,118 3,770		- 597,097 7,324

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.

Included within directors' emoluments is £1,317,233 relating to a fair value charge on share options granted to employees of the company in July 2021 (2020: £nil) and £1,223,341 gross salary bonus to cover the associated tax charges on the share issue (2020: £nil)

2  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
	Unaudited 2021		Unaudited 2020				Unaudited 2021
	£		£				£
Cash and bank balances	9,075,944		6,050,394				57,192
	9,075,944		6,050,394				57,192

3  Loans, Borrowings and Other Payables

	Group				Company
	Unaudited 31 December 2021		Unaudited 31 December 2020		Unaudited 31 December 2021		Unaudited 31 December 2020
	£		£		£		£
Non-current
Deferred consideration Bank borrowings	- 3,088,142		2,934,954 2,840,133		- 3,088,142		- -
Hire purchase contracts	-		2,374		-		-
Shareholder Loan Notes	-		17,239,875		-		-
	3,088,142		23,017,336		3,088,142		-

	Group				Company
	Unaudited 31 December 2021		Unaudited 31 December 2020		Unaudited 31 December 2021		Unaudited 31 December 2020
	£		£		£		£
Current
Other payables	-		-		-		-
Bank borrowings	-		390,400		-		-
Hire purchase contracts	2,839		1,785		-		-
Other borrowings	-		-		-		-
	2,839		392,185		-		-

  The Directors consider the value of all financial liabilities to be equivalent to their fair value

4  Share capital 

		31 December 2021
		No.	£
Ordinary shares of £0.01 each		71,969,697	719,697

  During the year, 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

  £1.32 per share was paid for shares issued on 8 July 2021.  All other issues were at par value.

  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.

5  Earnings per share

  The calculation of the basic and diluted earnings per share is based on the following data:

		2021		2020
Earnings	Notes	£		£
Net profit attributable to equity holders of the parent for the purpose of basic earnings per share calculations		(4,355,592)		(761,301)
Effect of dilutive potential ordinary shares		-		-
Earnings for the purposes of diluted earnings per share		(4,355,592)		(761,301)
Add back: Exceptional payroll expense	6	2,938,374
Add back: Costs associated with AIM listing	3	1,765,053
Add back: Costs incurred directly related to acquisitions and share option expenses		1,048,550		397,555
Adjusted earnings		1,396,025		(363,746)
Number of shares		'000		'000
Weighted average number of ordinary shares for the purposes of basic earnings per share		61,272		51,177
Effect of dilutive potential ordinary shares		-		-
Weighted average number of ordinary shares for the purposes of diluted earnings per share		61,272		51,177

6  Business combinations

On 1 October 2021, the Group acquired 100% of the equity instruments of JTM Plumbing Limited, a UK based business, thereby obtaining control to expand the product offerings. For the period 1 January to 30 September 2021, JTM Limited, generated revenue of £5,362,275 and profit after tax of £356,543, these results were accounted for in accordance with FRS102. For the 3 month period to 31 December 2021, the subsidiary generated revenue of £1,694,636 and incurred a profit after tax of £177,913. Had JTM Plumbing Limited been consolidated from 1 January 2021, the consolidated statement of comprehensive income would have included revenue of £7,056,911 and profit of £534,456.

	Asset carrying values		Fair value adjustment on transition to IFRS
	£		£		£
Fair value of consideration transferred
Amounts settled in cash					3,000,000
Fair value of deferred consideration					2,555,990
Total Consideration					5,555,990
Recognised amounts of identifiable net assets
Property, plant and equipment	1,277,382		-		1,277,382
Intangible assets	2,663		1,114,000		1,116,663
Total non-current assets	1,280,045		1,114,000		2,394,045
Inventories	743,900		-		743,900
Trade and other receivables	223,648		-		223,648
Cash and cash equivalents	813,190		-		813,190
Total current assets	1,780,738		-		1,780,738

Trade and other payables	989,619		-		989,619
Amounts falling due after more than one year	100,000		-		100,000
Deferred tax provision	82,472		-		82,472
Total liabilities	1,172,091		-		-
Net assets acquired	1,888,692		1,114,000		3,002,692
Goodwill					2,553,298

Consideration transferred

The purchase agreement included a payment on completion and an element of deferred consideration based on both the target net asset value and an earn out.  The agreement includes an adjustment to the deferred consideration calculated based upon the net current assets of JTM Plumbing Limited at 30 September 2021. The deferred consideration is payable in instalments. The first instalment is payable on agreement of the new asset position as set out in the draft accounts for JTM for the period to 30 September 2021.  The second instalment is payable 90 days after the first anniversary of completion with no qualifying criteria. The third instalment is based on achieving a target earn out and is payable on agreement of achievement of the earnout out on or before 120 days after 30 September 2022. The Directors consider the fair value of the deferred consideration to be the equivalent to the carrying value.

7  Changes in liabilities arising from financing activities

Non-cash changes
	At 1 January 2021 £	Financing cash flows £	Interest £	New leases £	Reclass £	Unaudited At 31 December 2021 £
Long-term borrowings	20,080,008	(18,005,025)	1,013,159	-	-	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	21,209,158	(18,737,744)	1,071,258	-	-	3,542,672
financing activities

 

END

 

 

FR BKPBPDBKBKPK