Marks Electrical Group plc

Annual financial results for the year ended 31 March 2026

A strong end to the year after a challenging start, well positioned for the 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 2026 ("the year" or "FY26").

Financial highlights

·      Full-year underlying revenue of £108.4m (FY25: £117.2m), a 7.5% reduction year-on-year as we strategically reduced our marketplace presence, placing elevated focus on organic routes to market via the Group's main website and internal telesales.

·      Resilient underlying gross margin of 24.0% (FY25: 24.4%), leveraging our mature brand relationships.

·      Adjusted EBITDA⁽¹⁾ of £2.5m (FY25: £4.2m) as previously guided. A much improved performance in the second half of the year with a good "peak" period outturn and decisive actions taken, delivering improved operational efficiencies and fixed costs savings.

·      Diluted adjusted EPS of 0.67p⁽²⁾ (FY25: 1.54p), statutory loss per share of 0.40p (FY25 loss per share: 1.38p).

·      No final dividend is proposed as we prioritise delivering trading profit recovery in the year ahead.

·      Robust balance sheet, with Group net cash of £4.4m (2025: £8.8m).

Operational highlights

·      Our dedicated teams remained resilient and maintained an outstanding Trustpilot rating of 4.8, based on over 110,000 reviews, demonstrating the enduring strengths of our differentiated and popular customer proposition.

·      Brand loyalty remains as strong as ever, our returning customers metric improved to 30% (FY25: 28%)

·      Maintained our Major Domestic Appliances ("MDA") market share position in FY26 of 2.6% (FY25: 2.6%)⁽⁴⁾.

·      Reevaluated our relationship with Euronics as our combined values & strategic ambition have realigned, entering the year ahead with a bespoke membership.

·      New enterprise resource planning ("ERP") system Microsoft Dynamics 365 ("D365") now fully operational across the business, supporting the technological advancement in moving to a cloud-based platform. This will enable the business to continue to drive operational efficiencies.

·      Post period-end, resolution reached with the Competition and Markets Authority (CMA) in relation to previously disclosed investigation with financial penalty of £1.2m reduced to £0.7m and consumer redress of c£0.6m all to be met from existing cash resources and will be treated as an exceptional item for accounting purposes.

Current trading and outlook

Current trading is in line with market expectations. MDA activity in May is tracking ahead year-on-year and we are seeing Consumer Electronics activity pick up, with the FIFA World Cup providing a lift and there has been a notable pick up in demand for TV and sound systems. We are well positioned heading into FY27 with positive trading momentum and a positive cash position. That said, overall consumer confidence remains weak with the level of UK inflation, interest rates and unemployment all impacting net disposable income along with concerns around the impact from the ongoing conflict in the Middle East on the cost of living.

Whilst we continue to target profitable growth, with the benefits of our rigorous focus in FY26 on efficiencies and operational cost controls expected to benefit the Group's FY27 adjusted EBITDA performance, we are taking a more cautious outlook for the year ahead on sales growth and gross margin.

Mark Smithson, Chief Executive Officer, commented:

"With the strong business that we have, with growing brand recognition, nationwide distribution and installation capability, I am pleased that after a challenging first half, we were able to deliver an improved second half performance thanks to our disciplined focus on margin and operational cost management.

We are well positioned heading into FY27 with positive trading momentum and a strengthened cash position. We are targeting sustainable growth in both revenue and profitability in FY27 as our focus on margin and operational efficiency yields positive results. We do however remain mindful of the well-documented macro-economic factors within the UK around inflation, interest rates and current unemployment levels, all of which create trading headwinds that we have to navigate to the best of our ability.

I have personally led the business for nearly 40 years now and so this is nothing new for me and we have successfully navigated several economic cycles. With the current experienced leadership team that we have in place in the business and on the Board, I am confident that we will continue to drive the business forward, delivering long-term growth and value creation.

I am extremely proud of the dedication and commitment shown by our colleagues over the past year. Significant progress has been made behind the scenes to strengthen our foundations. We are building a business for the future, and our focus on delivering best-in-class customer service continues to underpin that ambition.

I am pleased to welcome Darren, Chris & Helen to the Board, who will all individually and collectively provide great support and experience as we work to continually deliver on our strategic ambition in the short term."

^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.}

Enquiries:

Marks Electrical Group plc                                                                                              Via DGA Group:

Mark Smithson (CEO)                                                                                                           Tel: +44 (0)20 7664 5095

Tom Pallatt (CFO)                                                                                                                

DGA Group (Financial PR)

Jonathon Brill / James Styles                                                                                                Tel: +44 (0)20 7664 5095

[email protected]                                                                                                                                                                                                        

Canaccord Genuity (NOMAD and Broker)

Max Hartley / George Grainger                                                                                            Tel: +44 (0) 207 886 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 and its retail website: https://markselectrical.co.uk/.

Group Chief Executive Officer's review

A resilient performance under challenging conditions

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:

1. Customer proposition

Our operating model continues to be unique across the MDA sector in that we consistently offer next day delivery 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; and

• Further developing our website to continually improve the customer journey

2. Brand awareness

A key to our success is to optimise our brand awareness. In FY26 we continued to dedicate significant time to further developing our relationships with our brand partners' marketing teams, in order to offer them innovative opportunities to advertise with us going forward as well as continuing to invest in external specialist marketing support as we target increased organic website traffic and checkout conversion rate. We 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. Investment in brand awareness moving into FY27 remains firmly in focus as we seek to optimise the investment we make in this key area.

3. Operational capacity

We have invested heavily in this area over the last few years, covering our warehouse capability and fleet size as well as making a significant investment in technology and the replacement of our entire legacy ERP system in FY25. Optimising the returns on these investments remains the focus as we seek to become more efficient in everything that we do.

The implementation of D365 represents a significant strategic investment in the future capability of the business. As with any major systems transformation, the first year required teams across the organisation to adapt to new ways of working, and we are pleased with how quickly users have built proficiency. That significant investment is already delivering returns: we have seen a marked improvement in efficiency and task completion times as teams have become more confident with the system.

Critically, D365 positions the business for the future in a way the legacy platform it replaced could not. It offers compatibility with a wide range of third-party applications and AI-enabled tools, opening the door to integrate emerging technologies and expands our automation capabilities. With the platform now stable and performing reliably, we have begun introducing automation to drive cost savings and operational efficiencies. While the full benefits are being realised over a longer horizon than first anticipated, we are now firmly on the improvement curve and well positioned to capitalise on the platform's potential in the periods ahead.

We continue to 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. 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.

4. Financial performance

Resilience

The first half of FY26 was challenging for the business, reflecting a highly competitive market environment combined with continued cost pressures. Cost headwinds arose from increases in the National Minimum Wage and National Insurance Contributions, alongside higher operating costs linked to the implementation of D365. We took proactive, decisive and effective steps to mitigate the impact of these increases, rightsizing our fixed cost base. Furthermore, after our peak trading period in FY25, we strategically began repositioning our inventory holdings towards MDA, destocking in CE at lower margin levels which did temporarily impact our top- and bottom-line performance.

Positioned to take advantage

The strength of our performance in the second half of last year, recovering from a challenging H1, provides us with great momentum and positivity going into the new financial year. Across all areas we achieved a marked improvement against H1 with sales +4.6% and EBITDA of £2.0m, well ahead of the £0.5m in the first half and at the same level that we achieved in H2 FY25. The elevated focus on distribution and efficiencies came through strongly, as we achieved 9.6% distribution cost to sales, a 20bps improvement on FY25 and a 160bps improvement on H1 FY26.

We continue to focus on margin and firmly believe that as the economic environment and market backdrop improve, our vertically integrated business model and commitment to delivering an exceptional service for our customers will enable us to leverage higher average order values and drive improved margins.

Finally, I wanted to share where we are as a business in relation to the on-going CMA investigation.

Following constructive engagement with the CMA, the Group has agreed to resolve the matter by way of settlement. In connection with this, the CMA has issued a Final Infringement Notice imposing a financial penalty of £1,200,000, which is reduced to £720,000 following the application of the maximum available settlement discount.

The penalty is payable within six months of the date of the Final Infringement Notice with the ability to apply to the CMA for a revised payment schedule within 14 days of the notice. The Group has also agreed to provide consumer redress of approximately £0.6 million to affected customers in accordance with directions issued by the CMA.

The Group has already ceased the relevant conduct and implemented changes to its checkout processes and will undertake further compliance measures in accordance with the CMA's directions to ensure full compliance with current consumer protection requirements under the DMCC Act. The financial penalty will be met from existing cash resources and will be treated as an exceptional item for accounting purposes.

Marks Electrical takes its obligations under consumer and competition law seriously and remains committed to maintaining high standards of transparency and compliance for the benefit of its customers.

Outlook - focused on delivering profitable market share growth

We operate in a very competitive industry that continues to deal with sustained macro-economic headwinds which currently outweigh the strong fundamentals that have always underpinned the market in which we operate.

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 sustainably grow the business and become the UK's leading premium electrical retailer.

Mark Smithson

Chief Executive Officer

Financial review

The Group's statutory revenue for the year was £107.9m, down by 8% from £117.2m in 2025. Gross profit for the year was £25.5m, down 11% from £28.6m in 2025, with a gross margin of 23.6%, down 80 bps from 2025.

Statutory operating loss was £0.3m up from a statutory loss of £1.7m in 2025.

Statutory loss before tax was £0.4m.

Revenue and gross product margin

The Company delivered revenue of £107.9m, a reduction of 8% driven by the decision during the year to discontinue the low margin, often loss making, marketplace activity placing elevated focus on organic routes to market via the main website and internal telesales. This decision impacted our CE sales order volumes and delivered revenue predominantly which ended c43% down YoY. The core MDA category performed well overall, which is pleasing, with sales orders only c2.9% down YoY, 1.7% of which was driven by reduced average order value, as our customer base continue to be price sensitive

Gross product margin at 23.6% was stable was we moved through the year, only marginally down versus the prior year. It proved difficult to move margin forward meaningfully with our key brand partners during the year, with pressure on average order values across all categories and wider cost inflation dynamics in play throughout.

At a category level, our CE category product margin came under pressure in the year as we sold out of an unfavourable inventory holding position that we came into the year with. That aside, our core MDA margin was resilient, and we were able to improve our Small Domestic Appliance (SDA) category margin by 270bps.

Distribution costs

Revenue performance in H1 drove efforts to improve operational efficiencies. Distribution headcount reduced by 13% across transport & installation over the course of the year, mainly in the second half, giving us a cost run-rate boost into FY27. The cost benefit of this was negated in part by Government driven wage & national insurance increases as well as operational inefficiencies that existed in H1. External courier costs were managed closely. We also gained on fleet insurance costs in the year as negotiations on premiums went well, supported by our solid track record in this respect as well as operating on a reduced fleet.

Advertising and marketing costs

Total advertising costs for the year were £5.0m (2025: £5.8m) and advertising as a percentage of revenue was controlled at 4.7% (2025: 5.0%), with a planned reduction in the final quarter of the year only.

The Group focusses 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.

Other operating expenses

For the full year, overall other operating costs remained flat at £7.3m.

Within fixed employment costs, as headcount was reduced by c15% over the course of the year, this translated into a 5% cost saving in the year. At the same time, our PLC cost base was reduced by £0.1m as we reduced the level of dependence on external consultants that had accumulated post IPO. IT investment increased as expected, following the implementation of Microsoft Dynamics 365, licence, support and security costs associated with moving ahead of last year.

Adjusted EBITDA

The Group achieved adjusted EBITDA in the year of £2.5m (2025: £4.2m), on the back of a much stronger second half performance in which we delivered £2.0m adjusted EBITDA, after a challenging H1. Product margins were consistent throughout the year and improving on these proved difficult. Versus H1, we were able to increase sales in H2 by 5%, improve our distribution efficiencies by 160bps, create greater value within our advertising spend, saving 80bps, and reduce our fixed cost base by c8%. The advertising spend saving was largely a function of timing. We expect to increase our level of advertising spend back to 5%-6% of revenue in FY27 to ensure that brand awareness moves forward in line with the Group's strategy.

*In FY25 the loss on disposal was added back to Adjusted EBITDA

Statutory loss after tax

During the year statutory loss after tax was £0.4m (2025: loss £1.4m).

The improvement year on year is due to the impact of the cost incurred in the prior year to replace our legacy enterprise resourcing planning system with D365 offset in part by the CMA cost accrued in FY26.

Share-based payments

The 2022 LTIP vested during the year, with only the operational cash element measure being achieved, the cost of this was fully accrued in prior years and so there was no direct cost impact of this aside the national insurance at the time of exercises being made.

Based on the very latest information we have and taking a realistic view on short term trading versus the metrics set to trigger a pay-out across EPS, TSR and Cash flow, we do not anticipate to be in the position of having to settle either the 2023 LTIP or the 2024 LTIP in 2026 and 2027 respectively.

No awards were made during the year.

Depreciation and amortisation

Depreciation and amortisation decreased by £0.5m to £1.5m during the year (2025: £2.0m), as we only made selective capital investments in the year and also as we continue to maintain our asset base to a high level, we are seeing that the useful lives of the assets across the business naturally extending.

Taxation

The underlying tax charge for 2026 is £0.1m with an effective underlying tax rate of 15.0%. The gap of 10.0% between the effective tax rate and the 25% rate of corporation tax is coming from an over-accrued tax position in previous periods.

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 0.40p (2025: (1.38p)).

Diluted adjusted EPS is 0.67p per share (2025: 1.54p per share), the reduction year on year being driven by a combination of lower gross product margin, operational efficiencies and impacted fixed cost absorption both impacted by lower sales in the year. The table below shows the reconciliation between statutory and adjusted earnings per share. See Note 3 to the financial statements for further details.

Cash flow and statement of financial position

During the year the Group reported an adjusted cash flow from operating activities of (£0.8)m (2025: £6.7m) with an adjusted operating cash flow for conversion of (£1.7)m (2025: £5.6m) at (69%) (2025: 133%). Underlying free cash flow of (£2.3)m (2025: £5.7m), resulting in a closing net cash position of £4.4m (2025: £8.8m).

Prior to FY26, we consistently applied a policy of delaying supplier payments at September and March to support half year and full year cash reporting, the benefit in FY25 of doing this being £6.2m. During the course of FY26, it was decided to commercially move away from this approach and pay suppliers on time each month, contributing to an in year total cash outflow of £9.9m across total payables.

We placed elevated focus on cash management in the second half of the year, within inventory and receivables in particular, as well as maintaining our capital allocation discipline.

In the lead up to a solid peak trading performance, as is normal, inventory levels were invested in across all categories. As we then moved into the final quarter of the year, we took the opportunity to align stock intake dynamically.

Within receivables, we were able to optimise our debtor position with Domestic & General, improving the underlying process at the same time, as well as ensuring that our cash supplier rebates were agreed and settled pre year end, a huge effort made leading to a more positive closing cash position.

The Group finished the year in a net cash position of £4.4m (2025: £8.8m) and we retain access to a committed revolving credit facility and overdraft with Lloyds Banking Group of £5.0m, which were undrawn at the period end. Moving forward, as we trade profitably and generate cash, the intention is to invest this into the right inventory at the right time to fuel the growth ambition that we have.

Events after the reporting period

Following constructive engagement with the CMA, the Group has agreed to resolve the matter by way of settlement. In connection with this, the CMA has issued a Final Infringement Notice imposing a financial penalty of £1,200,000, which is reduced to £720,000 following the application of the maximum available settlement discount.

The penalty is payable within six months of the date of the Final Infringement Notice with the ability to apply to the CMA for a revised payment schedule within 14 days of the notice. The Group has also agreed to provide consumer redress of approximately £0.6 million to affected customers in accordance with directions issued by the CMA.

The Group has already ceased the relevant conduct and implemented changes to its checkout processes and will undertake further compliance measures in accordance with the CMA's directions to ensure full compliance with current consumer protection requirements under the DMCC Act. The financial penalty will be met from existing cash resources and will be treated as an exceptional item for accounting purposes. Marks Electrical takes its obligations under consumer and competition law seriously and remains committed to maintaining high standards of transparency and compliance for the benefit of its customers.

Current trading and outlook

Our focus is on sustainable growth with key brands across all product categories, margin expansion, optimising operational efficiencies, maintained focus on the fixed cost base, inventory investment and cash management. The Group is mindful of the macro-economic conditions within the UK, in particular around inflation, interest rates and unemployment and so whilst we continue to target growth we expect this to be challenging over the next 12 months.

Dividend Declaration

We delivered an adjusted EPS of 0.67p, a much improved position from our (0.31)p adjusted EPS at the time of our interim results announcement reflecting a stronger underlying performance in the second half of the year. Despite this improvement, and on the back of not declaring an interim dividend earlier in the year, we are not recommending a final dividend. For further information on dividends, see Note 12 to the financial statements.

Mark Smithson

Chief Executive Officer

Consolidated Statement of comprehensive income

Year ended 31 March 2026

All the results arise from continuing operations.