REG - Likewise Group PLC - Final Results
16/05/2023 07:00
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RNS Number : 5067Z Likewise Group PLC 16 May 2023
16 May 2023
Likewise Group plc
("Likewise" or the "Group")
Audited Final Results for the year ended 31 December 2022
104.4% sales growth and underlying profit increased 84.8%
Likewise Group plc (AIM:LIKE), the fast growing UK floor coverings
distributor, announces its audited Final Results for the year ended 31
December 2022 ("FY22" or the "Period").
FY22 Summary Highlights
· Sales increased 104.4% to £123.6 million (FY21: £60.5 million)
· Underlying profit before tax increased 84.8% to £2.56 million
(FY21: £1.38 million)
· Proposed maiden final dividend of 0.2 pence per ordinary share
· Net assets increased to £39.1 million (FY21: £22.4 million)
· Net debt as at 31 December 2022 was £0.1 million (FY21: Net cash
of £4.3 million)
· Gross cash was £5.9 million as at 31 December 2022 (FY21: £8.4
million)
· Distribution capability increased to c.15 million cubic feet
(FY21: c.8 million cubic feet)
· Continued investment into Sales and Marketing initiatives
Chairman and Chief Executive Statement
Likewise is pleased to announce that total Revenue for year ending 31 December
2022 was £123.6 million, an increase of 104.4% on the previous year.
This was a combination of organic growth of 25.7% and the contribution of the
two acquisitions during 2022, Valley Wholesale Carpets Limited ("Valley") and
Delta Carpets Limited ("Delta").
Total Revenue for the first four months of 2023 has shown a further increase
of 17.8% over the corresponding period last year, reflecting strong
performance against macro-economic headwinds.
Underlying Profit Before Tax for 2022 is £2.56 million an increase of 84.8%
on the previous year.
The Group has developed a strong Balance Sheet with Net Assets of £39.1
million including Freehold Property of £22.3 million as at 31 December 2022.
The Group is now clearly established as a leading company in the UK floor
covering industry and is well on target to achieve its medium-term targets.
The organic growth of the Likewise Branded Businesses of 25.7% in 2022,
followed by a further 23.5% in the first four months of 2023, has been
achieved through a significant increase in market presence through substantial
investment in Point of Sales Displays and Sampling, combined with the ongoing
development of Sales Teams throughout the UK.
This has also culminated in the number of Active Customer Accounts increasing
by 27.1%. Furthermore, the Business to Business Website is being utilised by
customers placing orders at any time.
The acquisition of Valley in January 2022 was a very important step for the
Group. Valley performed particularly well during the year and is an important
contributor to profitability and cash flow. Ongoing investment in Erith, the
extension to the Derby Distribution Centre and commencing operations from the
previously unused Newport Distribution Centre, will all contribute to the
ongoing development of Valley as the geographical reach extends to South Wales
and the South West of England.
To support the Sales Development in the Likewise Branded Businesses there has
been significant investment over the last two years in the distribution
infrastructure. In January 2021, the Distribution Hub in Leeds was established
to provide logistics support to all of Likewise Floors.
In January 2022, Likewise North East moved into larger premises in Newcastle.
During H2 2021 the Group took possession of the Birmingham Distribution Hub
which became fully operational, creating Likewise Midlands during 2022. In
July 2022 Likewise South was established in Newbury.
Investment in the distribution infrastructure has continued into the current
year as Likewise London and Floors by Lewis Abbott moved into a much improved
facility in Sidcup in January 2023. Additionally, Likewise Scotland is moving
into a new High Bay Distribution Hub during June 2023 which will significantly
enlarge the capacity for both Scotland and England.
Focus continues to be on relocating A&A in Manchester. Whilst this has
been ongoing for some time, we are optimistic of finding a suitable location
for the business to relocate to. This is the final piece in this stage of the
Group's logistics development.
With the extensive investment above, the Group has created the logistics
capability to double its current cutting capacity for Carpet, Residential
Vinyl and Artificial Grass. This is consistent with the Group's aspirations to
create a business with Revenue well in excess of £200 million.
As previously stated, Likewise has recently become a key funding partner of
Carpet Recycling UK, reflecting the Group's contribution to the floor covering
industry combined with the wider environmental responsibilities. The Group is
also investing in initiatives to recycle Cardboard and Polythene in addition
to 73% of the Company's fleet of cars being Electric or Hybrid. The Group will
continue to examine opportunities to improve its ESG credentials.
Dividend
The Board proposes a Final Dividend payment of 0.2 pence per ordinary share.
This is consistent with the previous 2022 Interim Dividend, which as
previously announced, was reflective of the financial performance in 2021.
Shareholders can also take advantage of the Dividend Reinvestment Plan
("DRIP") by registering their intentions with the Company's registrar by 16
June 2023.
The final dividend, if approved by shareholders at the AGM, will be paid on 7
July 2023 to shareholders on the register at the close of business on 2 June
2023, the ex-dividend date being 1 June 2023.
Outlook
The Group has established a comprehensive infrastructure over the last two
years and, with the ongoing investment in Sales and Marketing, is well placed
to continue to increase market share. This has been clearly evident since 2020
and continues into 2023.
The first four months of 2023 have been positive and the Board is confident
that the experienced Management, combined with strong Sales Teams and all our
Staff, will contribute to the ongoing development and success of the Group.
Revenue for the first four months of 2023 has shown a further increase of
17.8% over the corresponding period last year, and the Group remains in line
with the current market consensus.
Tony Brewer, Chief Executive of Likewise Group plc, said:
"The Group has made a positive start to the first four months of 2023 and in
market conditions which continue to be challenging, has undoubtedly gained
market share.
This has been achieved through continually increasing market presence and the
success of our experienced Sales Teams throughout the UK, supported by the
logistics infrastructure being established.
We would like to thank all of our Suppliers, Customers, Management, Staff and
Shareholders for their ongoing support and huge contribution to the ongoing
development of Likewise.
We continue to be very optimistic in achieving our medium-term objectives."
For further information, please contact:
Likewise Group plc Tel: 0121 817 2900
Tony Brewer, Chief Executive
Roy Povey, Chief Financial Officer
Zeus (Nominated Adviser & Joint Broker) Tel: 0203 829 5000
Jordan Warburton / David Foreman / James Edis (Investment Banking)
Dominic King (Corporate Broking)
Ravenscroft Consultancy & Listing Services Limited (Joint Broker) Tel: 01481 732746
Semelia Hamon (Corporate Finance)
Novella Communications (Financial PR) Tel: 0203 151 7008
Claire de Groot / Tim Robertson
CAUTIONARY STATEMENT
Certain statements included or incorporated by reference within this
announcement may constitute "forward-looking statements" in respect of the
Group's operations, performance, prospects and/or financial condition.
Forward-looking statements are sometimes, but not always, identified by their
use of a date in the future or such words and words of similar meaning as
"anticipates", "aims", "due", "could", "may", "will", "should", "expects",
"believes", "intends", "plans", "potential", "targets", "goal" or "estimates".
By their nature, forward-looking statements involve a number of risks,
uncertainties and assumptions and actual results or events may differ
materially from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be met and
reliance should not be placed on any forward-looking statement. Additionally,
forward-looking statements regarding past trends or activities should not be
taken as a representation that such trends or activities will continue in the
future. No responsibility or obligation is accepted to update or revise any
forward-looking statement resulting from new information, future events or
otherwise. Nothing in this announcement should be construed as a profit
forecast. This announcement does not constitute or form part of any offer or
invitation to sell, or any solicitation of any offer to purchase any shares or
other securities in the Group, nor shall it or any part of it or the fact of
its distribution form the basis of, or be relied on in connection with, any
contract or commitment or investment decisions relating thereto, nor does it
constitute a recommendation regarding the shares or other securities of the
Group. Past performance cannot be relied upon as a guide to future performance
and persons needing advice should consult an independent financial adviser.
Statements in this announcement reflect the knowledge and information
available at the time of its preparation.
STRATEGIC REPORT
Business Overview
Likewise Group Plc is a distributor of floorcoverings and mattings and has the
opportunity to become one of the UK's largest distributors in this sector,
utilising the expertise and industry knowledge of the Board, Executive Board
and Operational Management. Management believe this can be achieved through a
mixture of organic growth, operational leverage and where appropriate,
acquisitions.
The Group has grown rapidly in 2022 with the addition of the newly acquired
Valley Wholesale Carpets completed in January 2022 and Delta Carpets in April
2022. The acquisition of Valley Wholesale Carpets was a particularly important
strategic step for Likewise. Valley continues to operate from its sites in
Erith, Derby and Newport.
The acquisition of Delta Carpets in April 2022 confirmed the Group's intention
to bring bolt on opportunities into the infrastructure being established.
Having transferred to the Leeds distribution hub, the Delta Carpets business
is now fully integrated and successfully operating as a division of Likewise
Floors.
The Group's Distribution Hubs in Glasgow, Leeds, Birmingham and Sudbury,
Manchester Distribution Centre, plus Facilities in Newcastle, Newbury and
Sidcup in addition to the Valley Network in Erith, Derby and Newport totalling
15 million cubic feet, will allow the Group to meet its medium-term
objectives.
The Group will continue to make further investment in organic growth through
sales and marketing initiatives and development in specific geographic
locations. Acquisition opportunities will be considered in the future if they
are earnings enhancing and provide the appropriate strategic rationale.
Trading performance
The Directors are pleased to report the Group's revenue increased from £60.5m
in 2021 to £123.6m for the year ended December 2022.
Following the restructure of the Group at the start of 2022, with the
exception of Valley, all of the operating businesses trade as divisions of
Likewise Floors Limited. These businesses continue to gain traction in their
local markets.
Valley Wholesale Carpets Limited, acquired in January 2022, has performed to
original expectations in an undoubtedly challenging market and we are
therefore very pleased with the contribution from Valley to sales and
profitability. The Valley logistics network, with its main distribution hub in
Erith, is now enhanced by extra storage and cutting capacity in Derby, in
addition to the previously unused centre in Newport commencing operations in
November 2022.
Likewise Floors which now trades from the national distribution hub in Leeds
is a critical part of the Group's logistics network and continues to be a key
component in supplying the wider Group. Delta Carpets, acquired in April 2022
is now fully integrated into the Leeds hub and is able to call upon the
benefits that come with being part of a larger business.
Likewise Midlands is now fully operational from the distribution hub in
Birmingham. From this location the Group is able to supply both North and
South, providing vital support to smaller logistics centres. The sales team
operating from Birmingham continue to increase the Group's market presence by
focusing on the key strengths of the Group, developing strong customer
relationships and providing great products, service and value for our
customers.
Likewise South, which opened in Newbury in July 2022, continues to grow its
presence in the south of England with future development already planned.
Investment in initial start-up costs for the business amounts to £0.497m in
the period.
Likewise London and Floors by Lewis Abbott have now relocated to a newly
refurbished 12,000 square feet logistics centre in Sidcup. This will enable
the business to provide an improved service to existing customers and to
develop additional business with customers in the South East of England.
A&A in Manchester continues to trade from its original premises. The board
is committed to sourcing a more suitable distribution centre to fit with the
Group's medium-term objectives and to support the increased potential of the
A&A brand.
The new facility in Glasgow for Likewise Scotland will enhance the Group's
presence in Scotland and with the committed capital investment, the
operational capacity of the Group will be greatly enhanced. The business is
expected to be fully operational from this location from June 2023.
Overall, the Group continues to expand its presence in all areas, both with
product and geographically. The board now consider that the logistics
capability that has been created can support the Group's medium-term
aspirations to have a business with revenue in excess of £200 million.
Business strategy
It is the belief of the board that value can be generated for suppliers,
customer and shareholders by creating a national supplier and distributor of
UK floorcoverings.
As with the acquisition of Valley and Delta in 2022, where the board consider
future acquisitions, they will focus around increasing the scale and
operational reach of the Group into new regions and consolidate the Group's
overall market position.
The Group has made significant progress in the last two years through
investment in the infrastructure, with new operations being established in
Leeds, Newcastle, Birmingham, Newbury and Sidcup. The new site in Glasgow,
having been completed in November 2022 is currently being fitted out and is
expected to be operational from June 2023. Negotiations for a new development
to relocate A&A in Manchester are continuing and the board are hopeful of
a resolution in the next few months.
In conjunction with the investment in logistics capacity the Group has also
made significant progress in enlarging the sales team and increased point of
sale displays to expand and create a much greater market presence. In addition
to the normal level of cost for sampling, the Group has recorded exceptional
stand, display and point of sale cost of £0.486 million in the year to
December 2022. As previously stated, the board and operational management are
very focused on delivering the appropriate return on this investment to both
secure additional profitability and importantly further investment to
accelerate future growth.
Market and competition
The floorcovering market is made up of manufacturers, distributors, retailers
and installers. It is the strategy of Likewise to become a national
distributor in this market. The UK flooring market is worth c.£2 billion
split between residential, commercial, public and industrial markets. It is
the strategy of the Group to focus on the residential and commercial areas of
the market.
Key performance indicators
The Board consider the following as financial key performance indicators
(KPIs) for the Group: revenue, operating profit and operating cash flow. The
Board review these for each of the businesses on a monthly basis. Individual
subsidiaries have additional key performance indicators specific to their
operations. Sales and margin are also monitored against budget on a daily
basis by the executive management team.
Key performance indicators were as follows:
Currency: £m Year ended 31 December 2022 Year ended 31 December 2021 (as restated**) Increase%
Revenue 123.6 60.5 104.4%
Adjusted profit before tax 2.6 1.4** 84.8%
Operating cash flow (1.3) (0.3) (342.3%)
The above adjusted operating profit/(loss) before tax figure is stated after
adding back:
Currency: £m Year ended Year ended
31 December 2022 31 December 2021
Acquisition fees & related costs 2.3 -
Loss from new operations* 0.5 0.7
Exceptional investment in point of sale 0.5 -
Amortisation of intangibles 0.4 0.3
Share based payments 0.3 0.1
AIM listing costs - 0.4
Impact of IFRS 16** - 0.2
Restructuring costs - 0.1
*Losses from new operations relate to costs incurred in the initial start-up
phase of Likewise Midlands in 2021 and Likewise South in 2022 whilst the
business is in its initial development phase to generate returns.
**In 2021, management considered the impact of the IFRS 16 reporting standard
for leases as an adjustment required in determining their adjusted profit
before tax figure as a key performance indicator of the business. Had the
adjusted profit before tax figure been shown consistent with the 2021
disclosure, this would have led to a reported adjusted profit before tax of
£3.1m.
The Board additionally monitors the square footage of available warehouse
space as a non-financial KPI. The warehouse capacity as at 31 December 2022
was 519,000 square feet(1) (2021 300,000 square feet).
(1) Includes new facilities in Glasgow and Sidcup.
The following tables show a reconciliation of the adjusted results.
Currency: £m 2022 2021*
Underlying Non-underlying** Total Underlying Non-underlying** Total
Revenue 123.6 - 123.6 60.5 - 60.5
Cost of sales (86.7) (0.5) (87.2) (42.4) - (42.4)
Gross profit 37.0 (0.5) 36.5 18.1 - 18.1
Other operating income - - - 0.2 - 0.2
Admin costs (16.3) (2.7) (19.0) (9.5) (1.5) (11.1)
Distribution costs (17.0) - (17.0) (7.1) - (7.1)
Impairment loses on trade receivables (0.2) - (0.2) (0.0) - (0.0)
Profit/(loss) from operations 3.4 (2.7) 0.2 1.7 (1.5) 0.2
Finance income 0.0 - 0.0 0.0 - 0.0
Finance costs (0.8) - (0.8) (0.4) (0.1) (0.4)
Loss on revaluation - (0.8) (0.8)
Profit/(loss) before tax 2.6 (3.9) (1.3) 1.4 (1.6) (0.2)
Taxation 0.6 - 0.6 0.1 - 0.1
Profit/(loss) for the year 3.1 (3.9) (0.8) 1.5 (1.6) (0.1)
* As restated to align treatment with that of the year-end financial
statements.
**Non‐underlying values are exceptional items, which include share based
payment transactions, acquisition costs, amortisation of acquisition
intangibles and strategic project costs. Adjusted results are non‐GAAP
metrics used by management and are not an IFRS disclosure. Details of these
charges can be seen in note 7 in the accounts below.
Financial Results and Dividend
The results of the Group are shown in the Consolidated Statement of Profit or
Loss and Other Comprehensive Income.
An interim dividend of 0.2 pence per ordinary share was paid on 8 July 2022 to
shareholders on the register as at 6 June 2022. Whilst this was an FY22
interim dividend, the payment reflected the financial performance in FY21 but
could not be paid as a final dividend until the capital restructure had been
completed.
The directors propose to pay a final dividend of 0.2 pence per ordinary share
in respect of the financial year ended 31 December 2022. This to be subject to
shareholder approval at the forthcoming AGM.
If approved, the total dividend payable for 2022 will be 0.4 pence per
ordinary share, albeit noting the interim dividend related to the financial
performance in FY21.
Consolidated statement of profit or loss and other comprehensive income for
the year ended 31 December 2022
2022 2021
£ £
Note
5 123,642,673 60,490,559
Revenue
Cost of sales (87,172,444) (42,350,337)
Gross profit 36,470,229 18,140,222
Other operating income 6 - 212,183
Administrative expenses (18,969,610) (11,061,598)
Distribution expenses (17,038,557) (7,050,344)
Impairment losses on trade receivables (238,201) (42,241)
Profit from operations 223,861 198,222
Finance income 5,043 173
Finance expense (796,843) (425,277)
Loss on revaluation of consideration on acquisition (846,380) -
Loss before tax (1,414,319) (226,882)
Taxation 11 578,015 81,459
Loss for the year (836,304) (145,423)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Revaluation of land and buildings 14 309,957 1,802,257
Actuarial loss on defined benefit schemes 33 (5,000) (20,000)
Deferred tax on revaluation 11 - (471,901)
304,957 1,310,356
Items that will or may be reclassified to profit or loss:
Exchange gains/(losses) arising in relation to translation of foreign 16,138 (17,222)
operations
Total comprehensive income (515,209) 1,147,711
The total basic loss per share attributable to the ordinary equity holders of
the Company was 0.3p (2021 ‑ loss of 0.1p). The total diluted loss per share
attributable to the ordinary equity holders of the Company was 0.3p (2021 ‑
loss of 0.1p).
Consolidated statement of financial position as at 31 December 2022
2022 2021
Note £ £
Assets
Non‑current assets
Property, plant and equipment 14 47,300,221 19,718,721
Other intangible assets 15 4,208,884 3,520,997
Goodwill 16 5,624,284 4,216,728
Trade and other receivables 19 - 136,848
57,133,389 27,593,294
Current assets
Inventories 18 18,388,527 10,256,740
Trade and other receivables 19 15,573,303 9,775,075
Cash and cash equivalents 20 5,913,155 8,447,550
39,874,985 28,479,365
Total assets 97,008,374 56,072,659
Liabilities
Non‑current liabilities
Trade and other liabilities 21 4,380,365 -
Loans and borrowings 22 20,222,050 12,129,444
Deferred tax liability 11 2,496,677 1,404,650
27,099,092 13,534,094
Current liabilities
Trade and other liabilities 21 22,970,426 15,802,034
Loans and borrowings 22 7,777,512 4,179,892
Provisions 25 50,075 202,676
30,798,013 20,184,602
Total liabilities 57,897,105 33,718,696
Net assets 39,111,269 22,353,963
Share capital 28 2,438,360 1,923,742
Share premium 29 17,384,625 22,458,816
Share option reserve 34 628,454 308,776
Revaluation reserve 2,662,384 2,406,127
Foreign exchange reserve (40,487) (56,625)
Warrant reserve 128,170 128,170
Retained earnings 15,909,763 (4,815,043)
Total equity 39,111,269 22,353,963
Consolidated statement of changes in equity for the year ended 31 December
2022
Share capital Share premium Share option reserve Revaluation reserve Foreign exchange reserve Warrant reserve Retained earnings Total attributable to equity holders of parent Total equity
£ £ £ £ £ £ £ £ £
1,923,742 22,458,816 308,776 2,406,127 (56,625) 128,170 (4,815,043) 22,353,963 22,353,963
At 1 January 2022
Loss for the year - - - - - - (836,304) (836,304) (836,304)
Other comprehensive income (see note 32) - - - 256,257 16,138 - 48,700 321,095 321,095
Total comprehensive income for the year - - - 256,257 16,138 - (787,604) (515,209) (515,209)
Dividends - - - - - - (487,590) (487,590) (487,590)
Issue of share capital 512,143 17,425,358 - - - - - 17,937,501 17,937,501
Shares options exercised 2,475 22,550 - - - - - 25,025 25,025
Transfer to retained earnings - - - - - - 22,000,000 22,000,000 22,000,000
Reduction in share premium - (22,000,000) - - - - - (22,000,000) (22,000,000)
Share issue costs - (522,099) - - - - - (522,099) (522,099)
Share options - - 319,678 - - - - 319,678 319,678
Total contributions by and distributions to owners 514,618 (5,074,191) 319,678 - - - 21,512,410 17,272,515 17,272,515
At 31 December 2022 2,438,360 17,384,625 628,454 2,662,384 (40,487) 128,170 15,909,763 39,111,269 39,111,269
Consolidated statement of changes in equity for the year ended 31 December
2021
Share capital Share premium account Share option reserve Revaluation reserve Foreign exchange reserve Warrant reserve Retained earnings Total attributable to equity holders of parent Total equity
£ £ £ £ £ £ £ £ £
1,523,420 13,389,295 159,566 1,094,771 (39,403) 128,170 (4,668,620) 11,587,199 11,587,199
At 1 January 2021
Loss for the year - - - - - - (145,423) (145,423) (145,423)
Other comprehensive income (see note 32) - - - 1,311,356 (17,222) - (1,000) 1,293,134 1,293,134
Total comprehensive income for the year - - - 1,311,356 (17,222) - (146,423) 1,147,711 1,147,711
Issue of share capital 400,000 9,600,000 - - - - - 10,000,000 10,000,000
Share options exercised 322 2,898 - - - - - 3,220 3,220
Share issue costs - (533,377) - - - - - (533,377) (533,377)
Share options - - 149,210 - - - - 149,210 149,210
Total contributions by and distributions to owners 400,322 9,069,521 149,210 - - - - 9,619,053 9,619,053
At 31 December 2021 1,923,742 22,458,816 308,776 2,406,127 (56,625) 128,170 (4,815,043) 22,353,963 22,353,963
Consolidated statement of cash flows for the year ended 31 December 2022
2022 2021
£ £
Cash flows from operating activities
Loss for the year (836,304) (145,423)
Adjustments for
Depreciation and amortisation 3,633,356 2,121,858
Impairment of property, plant and equipment - 147,988
Revaluation of consideration 846,380 -
Taxation (578,015) (81,459)
Finance income (5,043) (173)
Finance costs 796,843 425,277
Gain on sale of property, plant and equipment (35,193) (22,846)
Pension contributions (5,000) (20,000)
AIM listing costs - 352,142
Decrease in provisions (152,601) (180,046)
Share options issued 319,678 149,210
Net foreign exchange loss/(gain) 15,429 (15,575)
3,999,530 2,730,953
Movements in working capital:
Increase in trade and other receivables (3,624,487) (2,132,041)
Increase in inventories (4,437,276) (2,700,934)
Increase in trade and other payables 3,249,449 1,802,049
Cash used in operations (812,784) (299,973)
Corporation taxes paid (514,040) -
Net cash used in operating activities (1,326,824) (299,973)
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired 37 (13,541,050) -
Purchases of property, plant and equipment (2,001,322) (1,593,269)
Proceeds from disposal of property, plant and equipment 76,424 27,008
Deferred consideration paid - (1,480,000)
Interest received 5,043 173
Net cash used in investing activities (15,460,905) (3,046,088)
Cash flows from financing activities
Interest paid (225,834) (425,277)
Consideration for new shares 16,025,026 10,003,220
Costs of share issue and AIM listing (522,099) (885,519)
Repayment of lease liabilities (2,448,536) (886,625)
Increase in invoice discounting 2,029,473 1,266,279
Repayment of loans (117,106) (99,362)
Dividends paid to the holders of the parent 13 (487,590) -
Net cash from financing activities
14,253,334 8,972,716
Net cash (decrease)/increase in cash and cash equivalents
(2,534,395) 5,626,655
Cash and cash equivalents at the beginning of year 8,447,550 2,820,895
Cash and cash equivalents at the end of the year 5,913,155 8,447,550
Cash and cash equivalents at 31 December 2022 of £5,913,155 (2021 ‑
£8,447,550) comprised of cash and cash equivalents of £5,913,155 (2021 ‑
£8,447,550) less bank overdrafts of £Nil (2021 ‑ £Nil).
Notes to the consolidated financial statements for the year ended 31 December
2022
1. General information
The Company is a public company limited by shares, registered in England and
Wales and listed on the Alternative Investment Market (AIM). The registered
company number is 08010067 and the address of the registered office is Unit 4
Radial Park, Radial Way, Birmingham Business Park, Solihull, England, B37 7WN.
The principal activity of the Group is the wholesale distribution of
floorcoverings and associated products.
2. Basis of preparation
These financial statements consolidate those of the Company and its
subsidiaries (together referred to as the "Group"). The Parent Company
financial statements present information about the Company as a separate
entity.
The financial information is presented in pounds sterling, which is the
functional currency of the entity and rounded to the nearest £. The financial
statements are prepared on the historical cost basis unless otherwise
specified within these accounting policies.
Both the Company and consolidated financial statements have been prepared and
approved by the Directors in accordance with UK adopted International
Accounting Standards. On publishing the Company financial statements here
together with the consolidated financial statements, the Company is taking
advantage of the exemption in s408 of the Companies Act 2006 not to present
its individual income statement and statement of comprehensive income and
related notes.
The accounting policies set out below have been applied consistently to all
periods presented in these financial statements.
3. Accounting policies
3.1 Going concern
The consolidated financial statements for the Group have been prepared on a
going concern basis.
In the prior year, the Company was admitted to the AIM stock exchange. Listing
on AIM provided the Group with further funding with which to continue to
invest in the organic growth of the Likewise business whilst also identifying
new acquisition targets that would be earnings enhancing to the Group. The
Company's admission to the AIM stock exchange also provides further awareness
of the brand as well as accessibility to new institutional and private
investors alike.
The Group continues to utilise invoice financing arrangements in some
subsidiaries and has the option to draw on additional authorised facilities to
support working capital requirements. The Group has operated within these
facilities throughout the year and continues to do so in 2023. The directors
are confident that the Group will be able to operate within the finance
facilities available to us.
The Board have also undertaken assessments of going concern by building a cash
flow model through to December 2024, based on 2022 actuals, 2023 budget and
forecast performance for 2024. These cashflows indicate that the business has
adequate resources to continue to operate for the foreseeable future and
within the current financing arrangements in place.
Overall, given the strength of the Group's balance sheet, significant cash
reserves on hand, availability of financing arrangements and the strong
forecast performance of the Group, this provides the Directors with sufficient
assurance on the Group's ability to continue as a going concern, and therefore
adopt the going concern basis of accounting in preparing the financial
statements.
3.2 Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the
Group has the power to govern the financial and operating policies of an
investee so as to obtain benefits from its activities, has exposure, or
rights, to variable returns and can use its power to affect those returns.
In assessing control, potential voting rights that are currently exercisable
are taken into account. The financial statements of subsidiaries are included
in the consolidated financial statements from the date that control commences
until the date that control ceases.
3.3 Impact of new international reporting standards
There were a number of narrow scope amendments to existing standards which
were effective from 1 January 2022. None of these had an impact on the Group.
Certain new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for 31 December
2022 reporting periods and have not been early adopted by the Group. These
standards, amendments or interpretations are not expected to have a material
impact on the Group in the current or future reporting periods and on
foreseeable future transactions.
3.4 Revenue
Revenue comprises sales of goods to customers outside the Group, less an
appropriate deduction for discounts, and is stated at the fair value of the
consideration net of value added tax and other sales taxes.
Revenue and receivables are recognised when performance obligations are
satisfied and the goods are delivered to customers as this is the point in
time that the consideration is unconditional, control of goods has passed and
only the passage of time is required before the payment is due.
3.5 Finance income and costs
Interest income and expense is recognised using the effective interest method
which calculates the amortised cost of a financial asset or liability and
allocates the interest income or expense over the relevant period.
3.6 Property, plant and equipment
Property, plant and equipment under the cost model are stated at historical
cost less depreciation less any recognised impairment losses. Cost includes
expenditure that is directly attributable to the acquisition or construction
of these items. Subsequent costs are included in the asset's carrying amount
only when it is probable that future economic benefits associated with the
item will flow to the company and the costs can be measured reliably. All
other costs, including repairs and maintenance costs, are charged to the
Income Statement in the period in which they are incurred.
Depreciation is provided on all property, plant and equipment and is
calculated as follows:
Freehold property ‑ 2% straight line
Leasehold improvements ‑ straight line over the term of the lease
Plant and machinery ‑ 10% ‑ 15% straight line
Motor vehicles ‑ 20% ‑ 50% straight line
Fixtures, fittings and computer equipment ‑ 10% ‑ 33% straight line
Depreciation is provided on cost less residual value. The residual value,
depreciation methods and useful lives are annually reassessed.
Each asset's estimated useful life has been assessed with regard to its own
physical life limitations and to possible future variations in those
assessments. Estimates of remaining useful lives are made on a regular basis
for all machinery and equipment, with annual reassessments for major items.
Changes in estimates are accounted for prospectively.
The gain or loss arising on disposal or scrapping of an asset is determined as
the difference between the sales proceeds, net of selling costs, and the
carrying amount of the asset and is recognised in the Income Statement.
3.7 Revaluation of property
Individual properties are carried at current year value at fair value at the
date of revaluation less any subsequent accumulated depreciation and
subsequent accumulated impairment losses. Revaluations are undertaken with
sufficient regularity to ensure the carrying amount does not differ materially
from that which would be determined using fair value at the Consolidated
Statement of Financial Position date.
Fair values are determined from market based evidence normally undertaken by
professionally qualified valuers.
Revaluation gains and losses are recognised in Other Comprehensive Income
unless losses exceed the previously recognised gains or reflect a clear
consumption of economic benefits, in which case the excess losses are
recognised in the Income Statement.
The difference between depreciation based on the revalued carrying amount of
the asset and depreciation based on the asset's original cost is transferred
from revaluation reserve to retained earnings at the end of each reporting
period. Any remaining revaluation surplus included in equity is transferred
directly to retained earnings when the asset is disposed of.
3.8 Impairment of non‑financial assets (excluding Goodwill)
At each reporting date, the directors review the carrying amounts of the
Group's non current assets, to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss, if any. Where the asset does not generate cash
flows that are independent from other assets, the directors estimate the
recoverable amount of the cash generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs of disposal and
value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre tax discount rate that reflects
current market assessments of the time value of money and the risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset or cash generating unit is estimated to
be less than its carrying amount, the carrying amount of the asset or cash
generating unit is reduced to its recoverable amount. The impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro rata based on the carrying
amount of each asset in the unit.
An impairment loss is recognised as an expense immediately.
Where an impairment loss on non financial assets subsequently reverses, the
carrying amount of the asset or cash generating unit is increased to the
revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset or cash generating unit in
prior periods. A reversal of an impairment loss is recognised in the Income
Statement immediately.
3.9 Inventories
Inventory is valued at the lower of cost and net realisable value, being the
estimated selling price less costs to complete and sell. Cost is based on the
cost of purchase on a first in, first out basis. Work in progress and finished
goods include labour and attributable overheads.
At each reporting date, inventories are assessed for impairment. If
inventories are impaired, the carrying amount is reduced to its selling price
less costs to complete and sell. The impairment loss is recognised immediately
in the Income Statement.
3.10 Cash at bank
Cash at bank comprise cash on hand, deposits held at call with banks and other
short term highly liquid investments with original maturities of three months
or less from inception.
3.11 Financial instruments
Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument.
Financial assets and financial liabilities are measured initially at fair
value plus transactions costs. Financial assets and financial liabilities are
measured subsequently as described below.
Cash equivalents comprise short‑term, highly liquid investments that are
readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value. An investment with a maturity of three
months or less is normally classified as being short‑term.
Derivatives, including forward foreign exchange contracts, are initially
recognised at fair value on the date a derivative contract is entered into and
are subsequently re‑measured at their fair value. Changes in the fair value
of derivatives are recognised in the Income Statement in finance costs or
income as appropriate.
3.12 Financial assets
Trade and other receivables are recorded initially at transaction price and
subsequently measured at amortised cost. This results in their recognition at
nominal value less an allowance for any doubtful debts. This allowance for
expected credit losses (ECL) may be established where evidence of credit
deterioration is observed. In order to assess credit deterioration, the Group
considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and
qualitative information and analysis, based on its historical experience and
informed credit assessment, that includes forward‑looking information. An
additional reserve is established, where required, when a loss is both
probable and the amount is known.
ECLs are a probability‑weighted estimate of lifetime credit losses. Under
the ECL model, the Group calculates the allowance for credit losses by
considering on a discounted basis the cash shortfalls it would incur in
various default scenarios for prescribed future periods and multiplying the
shortfalls by the probability of each scenario occurring. The allowance is the
sum of these probability weighted outcomes. Credit losses are measured as the
present value of all cash shortfalls (i.e. the difference between the cash
flows due to the entity in accordance with the contract and the cash flows
that Group expects to receive) with a discount factor applied to such overdue
amounts. The discount matrix ("ECL Matrix") below is applied to derive an ECL
for overdue amounts:
Past due (days)
31‑60 61‑90
90‑120 120‑250 Over 250
Discount to Amounts Overdue 0%
0% 5%
50% 100%
The Group exercises its discretion in the application of discounts outside of
the ECL Matrix based on extenuating circumstances that may apply from time to
time to the Group's trade receivables (see note 19). An example of such an
extenuating circumstance may occur when it is known that an overdue amount
will be collected post a reporting or measurement date.
3.13 Financial liabilities
The Group's financial liabilities include trade and other payables and
borrowings.
Interest bearing bank loans and overdrafts are initially recorded at fair
value, which equals the proceeds received, net of direct interest costs. They
are subsequently held at amortised cost. Finance charges, including premiums
payable on settlement or redemption are accounted for using an effective
interest rate method and are added to or deducted from the carrying amount of
the instrument to the extent that they are not settled in the period in which
they arise.
Trade and other payables are recognised initially at fair value and
subsequently measured at amortised cost. Generally, this results in their
recognition at their nominal value.
3.14 Foreign currency
The presentation currency for the Group's historical financial information is
pounds sterling.
Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. Any gain or loss on translation of
monetary foreign currency assets and liabilities arising from a movement in
exchange rates subsequent to initial measurement is included as an exchange
gain or loss in the Consolidated Statement of Profit or Loss.
The assets and liabilities of overseas subsidiary undertakings are translated
at the closing exchange rate. Income Statements and cash flows of such
subsidiaries are translated into Sterling at the average rates of exchange.
The adjustments to period end rates are taken to foreign exchange reserve in
equity and reported in the Other Comprehensive Income.
3.15 Taxation
Current taxation
Current taxation is based on the local taxable income at the local statutory
tax rate enacted or substantively enacted at the reporting date and includes
adjustments to tax payable or recoverable in respect of previous
periods.
Deferred taxation
Deferred taxation is calculated using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the historical financial information. However, if the
deferred tax arises from the initial recognition of an asset or liability in a
transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss, it is not
accounted for. No deferred tax is recognised on initial recognition of
goodwill or on investment in subsidiaries. Deferred tax is determined using
tax rates and laws that have been enacted or substantively enacted by the year
end date and are expected to apply when the related deferred tax asset is
realised or the deferred tax liability is settled.
Deferred tax liabilities are provided in full, and are not discounted.
Deferred tax assets are recognised to the extent that it is probable that
future taxable profits will be available against which the temporary
differences can be utilised.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the Income Statement, except where they relate to items that
are charged or credited directly to equity in which case the related deferred
tax is also charged or credited directly to equity.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income tax assets and liabilities relate to income taxes
levied by the same taxation authority where there is an intention to settle
the balances on a net basis.
3.16 Business combinations
The acquisition method of accounting is used to account for all business
combinations, regardless of whether equity instruments or other assets are
acquired. The consideration transferred for the acquisition of a subsidiary
comprises the:
‑ fair values of the assets transferred
‑ liabilities incurred to the former owners of the acquired business
‑ equity interests issued by the Group
‑ fair value of any asset or liability resulting from a contingent
consideration arrangement, and
‑ fair value of any pre‑existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date.
Acquisition related costs are expensed as incurred.
The excess of the consideration transferred and acquisition date fair value of
any previous equity interest in the acquired entity over the fair value of the
net identifiable assets acquired is recorded as goodwill. If those amounts are
less than the fair value of the net identifiable assets of the business
acquired, the difference is recognised directly in the Income Statement as a
bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts
payable in the future are discounted to their present value as at the date of
exchange. The discount rate used is the entity's incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial
liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in the Income
Statement.
3.17 Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill not attributed to a specific intangible asset is not amortised but is
reviewed for impairment at least annually. For the purpose of impairment
testing, goodwill is allocated to each of the Group's cash generating units
expected to benefit from the synergies of the combination. If the recoverable
value of the cash generating unit is less than the carrying amount of
goodwill, the impairment loss is recognised. An impairment loss recognised for
goodwill is not reversed in a subsequent period.
On disposal of a cash generating unit, the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
3.18 Intangible assets
Other intangible assets
Goodwill attributable to the brand name of acquired subsidiaries or customer
base is initially recognised
and measured as set out above. Licences are initially recognised at cost.
Amortisation is provided on all other intangible assets and is calculated as
follows:
Brand name 10 ‑ 15 years straight line
Customer base 10 ‑ 15 years straight line
The useful lives of intangible assets are annually reassessed and all assets
are reviewed for impairment at least annually. On disposal of a subsidiary,
the attributable amount of intangible assets is included in the determination
of the profit or loss on disposal.
3.19 Employment benefits
Provision is made in the financial statements for all employee benefits.
Liabilities for wages and salaries, including non monetary benefits and annual
leave obliged to be settled within 12 months of the reporting date, are
recognised in accruals.
Contributions to defined contribution pension plans are charged to the Income
Statement in the year to which the contributions relate.
Likewise Floors Limited, a subsidiary of the Group operates a defined benefit
pension plan for certain employees.
The amount recognised in the Consolidated Statement of Financial Position in
respect of the defined benefit plan is the present value of the defined
benefit obligation at the end of the reporting date less the fair value of
plan assets at the reporting date (if any) out of which the obligations are to
be settled.
The defined benefit obligation is calculated using the projected unit credit
method. Annually the Group engages independent actuaries to calculate the
obligation. The present value is determined by discounting the estimated
future payments using market yields on high quality corporate bonds that are
denominated in sterling and that have terms approximating to the estimated
period of the future payments ('discount rate').
Where the calculation results in a benefit to the Group, the asset recognised
is limited to the present value of any future refunds from the plan or
reductions in future contributions to the plan.
3.20 Leases
The Group assesses whether a contract is or contains a lease, at inception of
the contract. The Group recognises a right‑of‑use asset and a
corresponding lease liability with respect to all lease arrangements in which
it is the lessee, except for short‑term leases (defined as leases with a
lease term of 12 months or less) and leases of low value assets. For these
leases, the Group recognises the lease payments as an operating expense on a
straight line basis over the term of the lease unless another systematic basis
is more representative of the time pattern in which economic benefits from the
leased assets are consumed.
The lease liability is initially measured at the present value of the lease
payments that are not paid at the commencement date, discounted by using the
rate implicit in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate.
The lease liability is subsequently measured by increasing the carrying amount
to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments
made.
Right‑of‑use assets are depreciated over the shorter period of lease term
and useful life of the underlying asset.
3.21 Borrowing costs
Borrowing costs are recognised in the Income Statement in the year in which
they are incurred.
3.22 Share based payments
The fair value of equity instruments granted to employees is charged to the
Statement of Comprehensive Income, with a corresponding increase in equity.
The fair value of share options is measured at grant date using the
Black‑Scholes pricing model and spread over the period during which the
employee becomes unconditionally entitled to the award. The charge is adjusted
to reflect the number of shares or options that vest.
3.23 Invoice discounting
The Group has an invoice discounting arrangement. The amount owed by customers
to the Group are included within trade receivables and the amount owed to the
invoice discounting company is included within borrowings. The amount owed to
the invoice discounting company represents the difference between the amounts
advanced by the invoice discounting company and the invoices discounted. The
interest element of the invoice discounting charges and other related costs
are recognised as they accrue and are included in the Income Statement with
other finance costs.
3.24 Segment reporting
An operating segment is a component of an entity that engages in business
activities from which it may earn revenues and incur expenses (including
revenues and expenses related to transactions with other components of the
same entity), whose operating results are regularly reviewed by the entity's
Chief Operating Decision Maker to make decisions about resources to be
allocated to the segment and assess its performance, and for which discrete
financial information is available. The Chief Operating Decision Maker has
been identified as the Board of Executive Directors, at which level strategic
decisions are made.
Details of the Group's reporting segments are provided in note 5.
3.25 Government grants
Government grants are not recognised until there is reasonable assurance that
the Group will comply with the conditions attaching to them and that the
grants will be received.
Government grants are recognised in profit or loss on a systematic basis over
the periods in which the Group recognises as expenses the related costs for
which the grants are intended to compensate.
Government grants that are receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate financial support to
the Group with no future related costs are recognised in profit or loss in the
period in which they become receivable.
Government grants receivable from central government under the Coronavirus Job
Retention Scheme are included within other operating income in the
Consolidated Statement of Profit or Loss and are not offset against the
related expenses.
3.26 Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will
be required to settle the obligation, and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the obligation.
When a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash
flows (when the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable is recognised as an
asset if it is virtually certain that reimbursement will be received and the
amount of the receivable can be measured reliably.
4. Judgements and key sources of estimation uncertainty
The preparation of the financial statements, in conformity with adopted IFRSs
requires management to make judgements, estimates and assumptions that affect
the carrying amounts of assets and liabilities at the date of these financial
statements and the reported amount of revenues and expenses during the period.
These judgements, estimates and assumptions are continually evaluated by
management and are based upon historical experiences and other factors,
including expectations of future events that are believed to be reasonable
under the circumstances.
The key assumptions concerning the future and other key sources of estimation
uncertainty at the statement of financial position date, that have a risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial period are as follows:
Acquisition accounting balances
Assets and liabilities must be recognised at their fair value on acquisition.
The identification and measurement of contingent liabilities and intangible
assets are key areas of judgement. The Group's acquisition in the year along
with any assumptions applied is detailed in note 37. As part of the
acquisition the Group performed a purchase price allocation review and has
assessed the fair value of the assets and liabilities acquired.
Contingent consideration was payable in respect of the acquisitions in the
year and is calculated by reference to the Likewise Group Plc share price at
the future determination date. The fair value of contingent consideration at
the date of acquisition and subsequent remeasurement dates requires
significant judgements and estimates and is sensitive to share price changes.
The Group recognises identifiable intangible assets acquired through business
combinations, such as brands and customer relationships, at fair value on
acquisition. Any excess paid over the value of net assets acquired is included
as Goodwill in the balance sheet and is allocated to an appropriate business
segment. Estimates are required to determine the purchase price allocation
(PPA) between intangible assets and goodwill, with the fair value of
intangibles sensitive to these estimates. The key estimates involved in
establishing the fair vales are the future cash flows forecast for the
acquired entity, inputs into appropriate valuation models and expected useful
life of the assets.
Forecast cash flows are based on management's best estimate of the expected
levels of trade and profits following acquisition taking into account actual
results around the time of acquisition with an inflationary 1‑2% growth rate
applied thereafter.
The fair value of brands is based on a relief from royalty method. The brand
value is sensitive to royalty rate incorporated into the model. In the absence
of accessible market data regarding similar acquisitions in the market the
Group have assessed the royalty rate by analysis of the linear relationships
between underlying profitability and royalty rates to determine an appropriate
royalty rate for each acquisition. For acquisitions during the year, the Group
applied a royalty rate of 1.8% based on this analysis.
Intangible assets are amortised over their expected useful life. The annual
amortisation charge and carrying value of the asset is therefore sensitive to
the estimated useful life. The useful life is based on the period over which
management expects to benefit from the intangible assets, based on part
experience and knowledge of the business acquired.
Defined benefit pension scheme
Assumptions for future inflation linked pension increases (where applicable)
are based on the appropriate headline index, adjusted where necessary to
reflect any caps or collars, bearing in mind the proximity of the future
inflation assumption to those caps and collars and the expected variability of
future inflation increases. All other assumptions have been set in accordance
with the statement of funding principals. No allowances have been made for
members transferring benefits out of the scheme in future. The assumptions
selected and associated sensitivity analysis are disclosed in note 33.
Inventory valuation
This is provided for on the basis of the age of the items and dependent on the
frequency of component use. The Group makes appropriate provision for
slow‑moving and discontinued inventory items although a significant shift in
consumer market or customer demand may result in additional provision.
Valuation of land and buildings
The Group carries its land and buildings at fair value, with changes in fair
value being recognised in Other Comprehensive Income unless losses exceed the
previously recognised gains or reflect a clear consumption of economic
benefits, in which case the excess losses are recognised in the Income
Statement. The Group engaged independent valuation specialists to determine
fair value. Significant changes in the commercial property market may impact
the valuation of the Group's property. See note 14 for further information.
Impairment of trade receivables
Trade and other receivables are recognised at nominal value less an allowance
for doubtful debts. This allowance for expected credit losses (ECL) may be
established where evidence of credit deterioration is observed. In order to
assess credit deterioration, the Group considers reasonable and supportable
information that is relevant and available without undue cost or effort. This
includes both quantitative and qualitative information and analysis, based on
its historical experience and informed credit assessment, that includes
forward‑looking information. An additional reserve is established, where
required, when a loss is both probable and the amount is known. See notes 3.12
and 19 for further information.
5. Segmental reporting
For the purposes of segmental reporting, the Group's Chief Operating Decision
Maker (CODM) is considered to be the Executive Board of Directors. The Board
has not identified any separate operating segments within the business. The
Board reviews revenue and expenses for the business as a whole and makes
decisions about resources and assesses performance based on this information.
Revenue arises entirely through the wholesale of goods. Segmental analysis is
therefore not presented.
The Group is not reliant on any one customer and no customer exceeds 10% of
total annual turnover.
The following is an analysis of the Group's revenue for the year from
continuing operations:
2022 2021
£ £
Sale of goods 123,642,673 60,490,559
123,642,673 60,490,559
The Group generates revenue from both the UK and overseas as detailed below:
2022 2021
£ £
United Kingdom 123,432,273 60,254,713
Rest of Europe 182,417 225,771
Rest of the world 27,983 10,075
123,642,673 60,490,559
6. Other operating income
2022 2021
£ £
Government grants receivable - 212,183
- 212,183
Government grants represent income receivable from central government under
the Coronavirus Job Retention Scheme to cover some of the costs of employing
certain members of staff placed on furlough leave in response to the COVID 19
pandemic.
7. Operating profit
Operating profit is stated after charging:
2022 2021
£ £
1,217,258 551,124
Depreciation of property, plant and equipment
Depreciation of right‑of‑use assets 2,049,591 1,283,306
Loss/(gain) on foreign exchange 31,229 (38,701)
Short term lease expense: 174,539 127,620
‑ plant
‑ property 150,000 150,000
Amortisation of intangible assets 366,507 287,428
Share based payments 319,678 149,210
AIM listing costs - 352,142
Restructuring costs - 98,253
Impact of IFRS 16 - 213,765
Loss from new operations (Likewise Midlands) - 724,474
Loss from new operations (Likewise South) 497,968 -
Exceptional investment in point of sale 486,536 -
Acquisition fees and related costs 1,455,992 -
In order to maximise the Group's presence in the market, accelerate further
sales growth and increase market share, Likewise Floors, a subsidiary company,
have accelerated investment and the roll out of various new point of sale
initiatives including sample stands and lecterns including the design,
development and launch of a new Likewise wall stand rolled out to customers in
2022. This development and launch cost is over and above the general marketing
spend incurred and recognised within the statement of profit or loss, with
this additional one off spend recognised in 2022. The Group have incurred one
off costs of £486,536 in relation to this matter in the year and therefore in
management's view, this warrants separate disclosure in order to provide a
true and fair view of these financial statements for the reader.
Acquisition costs related to the acquisition of Valley Wholesale Carpets and
Delta Carpets in the year.
8. Auditors' renumeration
2022 2021
£ £
Fees payable to the Group's auditors for the audit of the Group's financial 150,000 105,000
statements
Fees payable to the Group's auditors:
‑ work in respect of AIM listing ‑ through profit and loss - 95,050
‑ work in respect of AIM listing ‑ through equity - 24,950
‑ taxation advisory services 500 -
‑ work in respect of acquisition due diligence 62,000 -
9. Directors and employees
Group
2022 2021
£ £
Employee benefit expenses (including Directors) comprise:
Wages and salaries 16,289,890 8,197,734
Social security costs 1,722,647 852,302
Pension costs 500,267 318,167
Compensation for loss of office 15,541 8,361
Share based payments 319,678 149,210
18,848,023 9,525,774
Key management personnel compensation
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, including
the Directors of the Company listed on page 2, and other senior management.
2022 2021
£ £
Remuneration 1,703,375 731,028
Social security costs 214,322 98,675
Group pension contribution to defined contribution schemes 61,350 61,347
Share based payments 82,468 77,367
2,061,515 968,417
As at 31 December 2022, 1,285,714 share options remained active under the
Group's SAYE scheme. During the year no options were granted to key management
personnel, no options lapsed and no options were exercised. These options are
due to exercise between March and October 2024.
As at 31 December 2022, 5,900,000 share options remained active under the
Group's EMI scheme. During the year no options were granted to key management
personnel, no options lapsed and no options were exercised. These options are
due to exercise in January 2024.
Group
The monthly average number of persons, including the Directors, employed by
the Group during the year was as follows:
2022 2021
No. No.
Directors 5 4
Other employees 450 254
455 258
2022 2021
£ £
Remuneration of directors
Remuneration 939,327 298,732
Social security costs 107,188 40,037
Group pension contribution to defined contribution schemes 25,600 25,600
Share based payments 14,418 14,418
1,086,533 378,787
In addition, fees of £Nil (2021 £83,000) were paid to non executive
Directors in the year.
The highest paid director received remuneration in the year of £488,780
(2021 £145,338) and pension contributions were made of £Nil (2021
£25,600).
2022 2021
No. No.
1 1
Directors accruing benefits under money purchase pension schemes
1 1
2,700,000 share options were granted to directors during 2019 at an exercise
price of £0.10 per share. There have been no options exercised or additional
options granted since this time. These options are due to exercise between
January and March 2024.
10. Finance income and expense
Recognised in profit or loss
2022 2021
£ £
Finance income
Interest on:
Bank deposits - 4
Other interest receivable 5,043 169
Total finance income 5,043 173
Finance expense
Bank loan interest payable 74,575 84,473
Interest on lease liabilities 571,009 317,913
Other interest payable 22,283 -
Invoice discounting facility interest payable 128,976 22,891
Total finance expense 796,843 425,277
Net finance expense recognised in profit or loss (791,800) (425,104)
11. Taxation on ordinary activities
11.1 Income tax recognised in profit or loss
2022 2021
£ £
Current tax
Adjustments in respect of prior years (70,812) (313,724)
Total current tax (70,812) (313,724)
Deferred tax
Origination and reversal of timing differences (699,135) 232,265
Effect of change in tax rates 191,932 -
Total deferred tax (507,203) 232,265
Total tax credit (578,015) (81,459)
The reasons for the difference between the actual tax credit for the year and
the standard rate of corporation tax in the United Kingdom applied to losses
for the year are as follows:
2022 2021
£ £
(836,304) (145,423)
Loss for the year
Income tax credit (578,015) (81,459)
Loss before income taxes (1,414,319) (226,882)
Tax using the Company's domestic tax rate of 19% (2021:19%) (268,721) (43,108)
Fixed asset differences 391,971 (80,051)
Expenses not deductible for tax purposes 345,325 76,135
Adjustments to tax charge in respect of prior periods (70,812) (313,724)
Non‑taxable consolidation adjustments (2,619) (132,366)
Remeasurement of deferred tax (30,975) 221,009
Movement in deferred tax not recognised (932,774) 208,715
Other differences leading to a decrease in the tax charge (9,410) (18,069)
Total tax credit (578,015) (81,459)
Changes in tax rates and factors affecting the future tax
charges
At 31 December 2022, the Group has tax losses of £11,539,175 (2021:
£9,703,320) which are available for offset against future taxable profits.
11.2 Deferred tax balances
The following is the analysis of deferred tax liabilities presented in the
consolidated statement of financial position:
2022 2021
£ £
(2,496,677) (1,404,650)
Deferred tax liabilities
(2,496,677) (1,404,650)
A deferred tax asset of £1,577,985 (2021: £1,812,747) has not been
recognised in the financial statements in relation to tax losses. In addition,
a deferred tax asset of £Nil (2021: £517,406) has not been recognised in the
financial statements in relation to the future tax benefit on the future
exercise of employee share options.
A deferred tax asset has not been recognised in the year where it is uncertain
that the asset will crystallise in the foreseeable future.
2022
Opening balance Recognised in profit or loss Acquisitions/ disposals Closing balance
£ £ £ £
Fixed asset timing differences (653,904) (381,332) (268,739) (1,303,975)
Arising from business combinations (880,249) 91,627 (263,599) (1,052,221)
Capital gains (502,946) - (1,066,892) (1,569,838)
Short term timing differences 19,366 103,182 - 122,548
Losses and other deductions 613,083 693,726 - 1,306,809
(1,404,650) 507,203 (1,599,230) (2,496,677)
2021
Opening balance Recognised in profit or loss Recognised in other comprehensive income Closing balance
£ £ £ £
Fixed asset timing differences (218,940) (434,964) - (653,904)
Arising from business combinations (723,601) (156,648) - (880,249)
Capital gains (31,045) - (471,901) (502,946)
Short term timing differences 15,851 3,515 - 19,366
Losses and other deductions 257,251 355,832 - 613,083
(700,484) (232,265) (471,901) (1,404,650)
12. Earnings per share
(i) Basic and diluted loss per share
The total basic loss per share attributable to the ordinary equity holders of
the Company was £0.003 (2021: loss of £0.001). The total diluted loss per
share attributable to the ordinary equity holders of the Company was £0.003
(2021: loss of £0.001).
2022 2021
Pence Pence
From continuing operations attributable to the ordinary equity holders of the (0.3) (0.1)
Company
Total basic earnings per share attributable to the ordinary equity holders of (0.3) (0.1)
the Company
(ii) Reconciliation of earnings used in calculating earnings per
share
2022 2021
£ £
Loss attributable to the ordinary equity holders of the Company:
Used in calculating basic and diluted earnings per share (836,304) (145,423)
(iii) Weighted average number of shares used as the denominator
2022 2021
Number Number
Weighted average number of ordinary shares used as the denominator in 241,979,322 167,273,981
calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options 23,640,830 18,945,648
Warrants 2,800,000 2,800,000
Weighted average number of ordinary shares and potential ordinary shares used 268,420,152 189,019,629
as the denominator in calculating diluted earnings per share
13. Dividends
2022 2021
£ £
Interim dividend of £0.002 paid per Ordinary Share in the year (2021 ‑ 487,590 -
£Nil).
487,590 -
The directors are proposing a final dividend of £0.002 per share (2021 ‑
£Nil). The dividend has not been accrued in the consolidated statement of
financial position.
14. Property, plant and equipment
Land and buildings ‑ freehold and long leasehold Right of use assets - Leasehold improvements Plant and machinery Motor vehicles Fixtures, fittings & computer equipment Right of use assets - Total
leasehold property other
£ £ £ £ £ £ £ £
Cost or valuation
At 1 January 2021 4,050,000 4,680,269 114,498 612,130 613,334 1,128,456 1,781,612 12,980,299
Additions - 4,888,501 184,221 876,927 49,545 482,576 2,390,834 8,872,604
Disposals - (451,832) - - (3,943) (2,250) (301,449) (759,474)
Transfers between classes - - - 444,955 - (444,955) - -
Revaluation / (impairment) 1,735,000 (140,249) - - - - - 1,594,751
Foreign exchange movements - - - (5,276) (1,140) (2,420) - (8,836)
5,785,000 8,976,689 298,719 1,928,736 657,796 1,161,407 3,870,997 22,679,344
At 31 December 2021
Additions 517,757 8,172,355 18,692 1,543,168 202,306 983,331 2,577,922 14,015,531
Acquisition of subsidiary 15,966,907 - - 102,981 810,247 42,071 - 16,922,206
Disposals - (434,574) (10,219) - (105,735) (40,469) (301,273) (892,270)
Foreign exchange movements - - - - 836 - - 836
At 31 December 2022 22,269,664 16,714,470 307,192 3,574,885 1,565,450 2,146,340 6,147,646 52,725,647
Land and buildings - Right of use assets - Leasehold improvements Plant and machinery Motor vehicles Fixtures, fittings & computer equipment Right of use assets - Total
freehold leasehold property other
and long leasehold
£ £ £ £ £ £ £ £
Accumulated depreciation and impairment
At 1 January 2021 - 781,258 1,458 110,409 256,098 166,656 407,821 1,723,700
Charge for the year 67,257 - 21,522 142,324 157,249 162,772 - 551,124
Charge for right‑of‑use assets - 667,879 - - - - 615,427 1,283,306
Disposals - (451,832) - - (1,768) (263) (76,937) (530,800)
Impairment charge - - 7,739 - - - - 7,739
On revalued assets (67,257) - - - - - - (67,257)
Exchange adjustments - - - (3,998) (1,140) (2,051) - (7,189)
- 997,305 30,719 248,735 410,439 327,114 946,311 2,960,623
At 31 December 2021
Charge for the year 309,957 - 30,096 297,108 341,492 238,605 - 1,217,258
Charge for right‑of‑use assets - 962,408 - - - - 1,087,183 2,049,591
Transfers intra group - - - 5,636 - (5,636) - -
Disposals - (145,960) (10,219) - (53,089) (1,405) (281,543) (492,216)
On revalued assets (309,957) - - - - - - (309,957)
Exchange adjustments - - - (612) 836 (97) - 127
- 1,813,753 50,596 550,867 699,678 558,581 1,751,951 5,425,426
At 31 December 2022
If the freehold and long leasehold property had not been included at
valuation, it would have been included under the historical cost convention as
follows:
Cost of £18,742,757 (2021 ‑ £3,100,000)
Depreciation of £449,285 (2021 ‑ £193,028)
Net book value of £18,293,472 (2021 ‑ £2,906,972)
14.1. Assets held under leases
The net book value of owned and leased assets included as "Property, plant and
equipment" in the Consolidated Statement of Financial Position is as follows:
31 December 2022 31 December 2021
£ £
Property, plant and equipment owned 28,003,809 8,814,651
Right‑of‑use assets 19,296,412 10,904,070
47,300,221 19,718,721
Information about right of use assets is summarised below:
Net book value
31 December 2022 31 December 2021
£ £
Property 14,900,717 7,979,384
Motor vehicles & plant and machinery 4,395,695 2,924,686
19,296,412 10,904,070
Depreciation charge for the year ended
31 December 2022 31 December 2021
£ £
Property 962,408 667,879
Motor vehicles & plant and machinery 1,087,183 615,427
2,049,591 1,283,306
14.2 Fair value measurement and Impairment
Fair value measurement
Included in land and buildings is land with a cost of £6,254,057 (2021:
£687,167) which is not depreciated.
The Group's freehold and long leasehold land and buildings are stated at their
revalued amounts, being the fair value at the date of revaluation, less any
subsequent accumulated depreciation and subsequent accumulated impairment
losses.
The Group acquired £4,872,179 freehold and £11,094,728 long leasehold land
and buildings as part of the acquisition of the Valley Wholesale Carpets.
These were valued at a total of £15,125,000 as at 29 October 2021 by Gerald
Eve LLP, independent valuers not related to the Group. These were then
revalued to a total of £15,966,907 by the directors at the date of
acquisition based on further valuations obtained on 13 July 2022 by BNP
Paribas Real Estate, independent valuers not related to the Group. The
directors do not believe that this valuation is materially different to the
valuation at the year end for this property.
In addition, the Group holds freehold property in its subsidiary William Armes
Holdings Limited which was valued at £5,785,000 as at 30 March 2022 by
Savills (UK) Limited, independent valuers not related to the Group. The
directors do not believe that this valuation is materially different to the
valuation at the year end for this property.
Gerald Eve, Savills (UK) Limited, BNP Paribas Real Estate are chartered
surveyors and property consultants that have appropriate qualifications and
recent experience in the fair value measurement of properties in the relevant
locations. The valuation reports have been prepared in accordance with Royal
Institution of Chartered Surveyors ("RICS") Valuation ‑ Global Standards
(incorporating the IVSC International Valuation Standards) issued November
2021 and effective from 31 January 2022 together, where applicable, with the
UK National Supplement effective from 14 January 2019, together the "Red
Book".
Property valuations are complex, require a degree of judgement and are based
on data that may or may not be publicly available. Valuation of investment
property and the respective inputs have been classified as level 3 inputs as
defined by IFRS 13 Fair Value Measurement. Level 3 means that the valuation
model cannot rely on inputs that are directly available from an active market;
however there are related inputs from recent property sales that can be used
as a basis.
The freehold property in Sudbury has been valued using the traditional "all
risks" yield method of valuation, having regard to comparable evidence and
current market sentiment. In establishing fair value, the most significant
unobservable input is considered to be the appropriate yield to apply to the
rental income. This is based on a number of factors including financial
covenant strength of the tenant, location, marketability of the unit if it
were to become vacant, quality of the property and its scope for potential
alternative uses.
The yield applied in the valuation is 6.6%. Assuming all else stayed the same;
a decrease of 1% in the yield would result in an increase in fair value of
£1,032,000. An increase of 1% in the yield would result in a decrease in fair
value of £760,000.
The properties acquired as part of the acquisition of Valley Wholesale
Carpets, consisting of two freehold units and a long leasehold site have been
valued using the market (comparative) method of valuation, multiplying the
capital value per square foot by the size of the respective buildings. In
determining the capital value, the valuers have utilised observable capital
values from recent sales in similar locations, condition and size to the
respective sites.
The revaluation of land and buildings for 2022 of £309,957 (2021:
£1,802,257) has been recognised within Other Comprehensive Income.
Impairment losses recognised in the year
During the prior year the Company moved the location of its head office to a
new site. This resulted in an impairment of the leasehold right of use asset
of £140,249.
Capital commitments
As at 31 December 2022, the Group had capital commitments totalling
£1,090,204.
14.3 Assets pledged as security
There is a floating charge against the assets of the subsidiary Likewise
Floors Limited, from NatWest Bank PLC.
There is a fixed charge over the freehold land and buildings held by the Group
in respect of the bank loans in place for the Group.
Floating charges previously held against assets of William Armes Limited have
been supported by cross guarantees from Likewise Group Plc following the
transfer of trade and assets from William Armes Limited to Likewise Floors
Limited. These charges are in respect of bank loans and invoice financing
arrangements of the Group.
Company
Right of use assets - Leasehold improvements Motor vehicles Fixtures, fittings & computer equipment Right of use assets - Total
leasehold property other
£ £ £ £ £ £
Cost or valuation
At 1 January 2021 206,671 10,219 - 25,610 - 242,500
Additions - - - 16,689 - 16,689
Revaluation / (impairment) (140,249) - - - - (140,249)
66,422 10,219 - 42,299 - 118,940
At 31 December 2021
Additions 5,513,875 - 112,000 8,095 39,248 5,673,218
Disposals (66,422) (10,219) (112,000) - - (188,641)
At 31 December 2022 5,513,875 - - 50,394 39,248 5,603,517
Right of use assets - Leasehold improvements Motor vehicles Fixtures, fittings & computer equipment Right of use assets - Total
leasehold property other
£ £ £ £ £ £
Accumulated depreciation and impairment
At 1 January 2021 40,922 1,458 - 6,935 - 49,315
Charge for the year - 1,022 - 6,560 - 7,582
Charge for right‑of‑use assets 25,500 - - - - 25,500
Impairment charge - 7,739 - - - 7,739
66,422 10,219 - 13,495 - 90,136
At 31 December 2021
Charge for the year - - 5,600 9,920 - 15,520
Charge for right‑of‑use assets 90,531 - - - 2,186 92,717
Disposals (66,422) (10,219) (5,600) - - (82,241)
90,531 - - 23,415 2,186 116,132
At 31 December 2022
Net book value
At 1 January 2021 165,749 8,761 - 18,675 - 193,185
At 31 December 2021 - - - 28,804 - 28,804
At 31 December 2022 5,423,344 - - 26,979 37,062 5,487,385
14.4 Assets held under leases
The net book value of owned and leased assets included as "Property, plant and
equipment" in the Company Statement of Financial Position is as follows:
31 December 2022 31 December 2021
£ £
Property, plant and equipment owned 26,979 28,804
Right‑of‑use assets 5,460,406 -
5,487,385 28,804
Information about right of use assets is summarised below:
Net book value
31 December 2022 31 December 2021
£ £
Property 5,423,344 -
Motor vehicles & plant and machinery 37,062 -
5,460,406 -
During the prior year the Company moved the location of its head office to a
new site. This resulted in an impairment of the leasehold right of use asset
of £140,249 in the year ended 31 December 2021.
15. Intangible assets
Group
Delta Carpets Customer base Likewise Floors Customer base Delta Carpets Brandname Likewise Floors Brandname Total
£ £ £ £ £
Cost
At 1 January 2021 - 2,122,349 - 2,189,075 4,311,424
At 31 December 2021 - 2,122,349 - 2,189,075 4,311,424
Additions on acquisition of subsidiary 513,684 - 540,710 - 1,054,394
At 31 December 2022 513,684 2,122,349 540,710 2,189,075 5,365,818
Delta Carpets Customer base Likewise Floors Customer base Delta Carpets Brandname Likewise Floors Brandname Total
£ £ £ £ £
Accumulated amortisation and impairment
At 1 January 2021 - 247,607 - 255,392 502,999
Charge for the year - 141,490 - 145,938 287,428
At 31 December 2021 - 389,097 - 401,330 790,427
Charge for the year 38,526 141,490 40,553 145,938 366,507
At 31 December 2022 38,526 530,587 40,553 547,268 1,156,934
Net book value
At 1 January 2021 - 1,874,742 - 1,933,683 3,808,425
At 31 December 2021 - 1,733,252 - 1,787,745 3,520,997
At 31 December 2022 475,158 1,591,762 500,157 1,641,807 4,208,884
The company held no other intangible assets in any period.
16. Goodwill
Group
2022 2021
£ £
Cost 5,624,284 4,216,728
5,624,284 4,216,728
2022 2021
£ £
Cost
At 1 January 4,216,728 4,216,728
Additions on acquisition of subsidiaries (see note 37) 1,407,556 -
At 31 December 5,624,284 4,216,728
Accumulated impairment
At 31 December - -
16.1 Allocation of goodwill to cash generating units
The carrying amount of goodwill has all been allocated to the Group's primary
activity of wholesale distribution and has been allocated to trading brands as
follows:
2022 2021
£ £
3,253,210 3,253,210
Likewise Floors Limited
467,847 467,847
Lewis Abbott Limited
307,230 307,230
H&V Carpets BVBA
188,441 188,441
A. & A. Carpets Limited
234,864 -
Valley Wholesale Carpets Limited
1,172,692 -
Delta Carpets Limited
5,624,284 4,216,728
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired.
The goodwill is a reflection of the benefit the acquisitions of subsidiaries
will have on the Group by offering greater geographic coverage and providing
the opportunity to expand this further than is currently the case. The
acquisitions will benefit from the collective marketing and the enhanced
product range available to all Group companies. Ultimately this will enable
the acquired businesses and the existing Group members to provide an improved
customer service, across a wider geographic area, with a greater product
portfolio designed to help the Group to continue its development.
The Group has conducted an analysis of the sensitivity of the impairment test
to changes in the key assumptions used being a discount rate of 10% and
original growth rate of 1%.
Likewise Floors Limited
The break even point of goodwill for Likewise Floors Limited is at a growth
level of 1.90% with terminal growth factor of 2%.
Lewis Abbott Limited
The break even point of goodwill for Lewis Abbott Limited is at a growth level
of 20% with terminal growth factor of 2%.
H&V Carpets BVBA
The break even point of goodwill for H&V Carpets BVBA is at a growth level
of 26% with terminal growth factor of 2%.
A. & A. Carpets Limited
The break even point of goodwill for A. & A. Carpets Limited is at a
growth level of 63% with terminal growth factor of 2%.
Valley Wholesale Carpets Limited
The break even point of goodwill for Valley Wholesale Carpets Limited is at a
growth level of 84.92% with terminal growth factor of 1%.
Delta Carpets Limited
The break even point of goodwill for Delta Carpets Limited is at a growth
level of 39.68% with terminal growth factor of 2%.
17. Subsidiaries
Details of the Group's subsidiaries at the end of the reporting period are as
follows:
Name of subsidiary Principal activity Place of incorporation and operation Proportion of ownership interest and voting power held by the Group (%)
2022 2021
1) Likewise Floors Limited Wholesale distribution of floor coverings and associated Great Britain 100 100
products
2) H&V Carpets BVBA Wholesale distribution of floor coverings and associated Belgium 100 100
products
3) Valley Wholesale Carpets (2004) Limited Holding company Great Britain 100 -
4) Valley Wholesale Carpets Limited (100% subsidiary of Valley Wholesale Wholesale distribution of floor coverings and associated Great Britain 100 -
Carpets (2004) Limited) products
5) Delta Carpets (Holdings) Limited (100% subsidiary of Likewise Floors Holding company Great Britain 100 -
Limited)
6) Delta Carpets Limited (100% subsidiary of Delta Carpets (Holdings) Limited) Dormant following transfer of trade and assets to Likewise Floors Great Britain 100 -
Limited
7) William Armes Holdings Limited Holding company Great Britain 100 100
8) William Armes Limited (100% subsidiary of William Armes Holdings Limited) Dormant company Great Britain 100 100
9) A&A Carpets Limited Dormant company Great Britain 100 100
10) Likewise Trading Limited Holding company Great Britain 100 100
11) Lewis Abbott Limited (100% subsidiary of Likewise Trading Limited) Dormant company Great Britain 100 100
12) Factory Flooring Outlet Ltd (100% subsidiary of Likewise Floors Limited) Dormant company Great Britain 100 100
13) Likewise Limited Dormant company Great Britain 100 100
Following acquisition, on 1 April 2022, the trade and assets of Delta Carpets
Limited were transferred to Likewise Floors Limited.
The registered offices of H&V Carpets BVBA are Nijverheidsstraat 26, 8760
Meulebeke, Belgium. The registered offices of all other companies within the
Group are Unit 4 Radial Park, Radial Way, Birmingham Business Park, Solihull,
England, B37 7WN.
Company - Shares in Group undertakings
2022 2021
Note £ £
11,738,831 12,555,774
At 1 January
37 30,158,850 -
Additions
- (891,770)
Impairment following transfer of trade of subsidiaries
221,589 74,827
Share options
42,119,270 11,738,831
On 14 January 2022, the Company acquired the entire issued share capital of
Valley Wholesale Carpets (2004) Limited and its wholly owned subsidiary for
consideration of £29,971,350 see note 37 for further details.
On 1 April 2022, Likewise Floors Limited, a subsidiary of the Company,
acquired the entire issued share capital of Delta Carpets (Holdings) Limited
and its wholly owned subsidiary for consideration of £3,000,135. This
consideration included 500,000 new £0.01 shares in Likewise Group Plc valued
at £187,500 at the date of acquisition. This has been included in the
additions figure above as a further investment in Likewise Floors Limited.
The Group considers impairment of its subsidiaries annually, this is assessed
in the context of the Group's structure, and if appropriate an impairment
provision is made.
18. Inventories
Group
2022 2021
£ £
Finished goods and goods for resale 18,388,527 10,256,740
18,388,527 10,256,740
2022 2021
£ £
87,172,444 42,350,337
Amounts of inventories recognised as an expense during the year
Amounts of inventories impaired during the year 395,225 128,875
The Company did not hold any inventories in either the current or prior year.
19. Trade and other receivables
Group
2022 2021
£ £
Trade receivables 12,007,770 7,639,636
Less: provision for impairment of trade receivables (302,989) (117,799)
Trade receivables ‑ net 11,704,781 7,521,837
Prepayments and accrued income 1,586,490 893,103
Other receivables 2,282,032 1,496,983
Total trade and other receivables 15,573,303 9,911,923
Less: current portion ‑ trade receivables (11,704,781) (7,521,837)
Less: current portion ‑ prepayments and accrued income (1,586,490) (893,103)
Less: current portion ‑ other receivables (2,282,032) (1,360,135)
Total current portion (15,573,303) (9,775,075)
Total non‑current portion - 136,848
Company
2022 2021
£ £
8,265,009 6,230,742
Receivables from group undertakings
Total financial assets other than cash and cash equivalents classified as 8,265,009 6,230,742
loans and receivables
Prepayments and accrued income 72,722 102,376
Other receivables 31,205 11,475
Total trade and other receivables 8,368,936 6,344,593
Less: current portion ‑ prepayments and accrued income (72,722) (102,376)
Less: current portion ‑ other receivables (31,205) (11,475)
Less: current portion ‑ receivables from related parties (8,265,009) (6,230,742)
Total current portion (8,368,936) (6,344,593)
Total non‑current portion - -
All of the above amounts are financial assets of the Group and Parent Company
except certain prepayments.
The Directors consider the carrying value of Group trade and other receivables
is approximate to its fair value, after incorporating an impairment provision
of £302,989 (2021: £117,799).
Trade receivables comprise amounts due from customers for goods sold. The
Group's normal trade credit terms range from 30 to 60 days and therefore all
are classified as current. There are a limited number of customers who are
granted extended credit terms but these are not considered material to the
financial statements. Trade receivables are recognised initially at the amount
of consideration that is unconditional. The Group holds the trade receivables
with the objective to collect the contractual cash flows and therefore
measures them subsequently at amortised cost.
The Group's credit risk is primarily attributable to its trade receivables.
The amounts presented in the Consolidated Statement of Financial Position are
net of allowances for doubtful receivables. An allowance for impairment is
made where there is an identified loss event which, based on previous
experience, is evidence of a reduction in the recoverability of the cash
flows. The Group has no significant concentration of credit risk, with
exposure spread over a large number of customers.
Group Group
2022 2021
£ £
6,360,941 4,118,045
Not more than 30 days
More than 30 days but not more than 60 days 3,638,050 2,323,728
More than 60 days but not more than 90 days 986,714 560,072
More than 90 days but not more than 120 days 135,723 176,091
More than 120 days 886,342 461,700
Loss allowance (302,989) (117,799)
11,704,781 7,521,837
The expected credit loss allowance is calculated using a weighted probability
of loss based on age of the receivable:
2022 ECL
£
135,723 6,786
More than 90 days but not more than 120 days ‑ 5% (adjusted ‑ see below)
More than 120 days ‑ 50% (adjusted for payment plans ‑ see below) 539,632 269,816
Additional loss allowance - 26,387
675,355 302,989
The debtors balance to which the ECL has been applied has been adjusted where
there are specific payment plans in place.
2021
£
Reconciliation of ECL allowance balance
117,799
Balance at 1 January
ECL allowance charged to profit or loss 238,201
Other movements (53,011)
302,989
The carrying amounts of the trade receivables include receivables which are
subject to a factoring agreement. Under this arrangement, the subsidiary
trading companies have transferred the relevant receivables to the factor in
exchange for cash and are prevented from selling or pledging the receivables.
However, the subsidiaries retain the late payment and credit risk. The Group
therefore continues to recognise the transferred assets in their entirety in
its Consolidated Statement of Financial Position. The amount repayable under
the factoring agreement is presented as secured borrowing. The Group considers
the held to collect business model to remain appropriate for these receivables
and hence continues measuring them at amortised cost.
The relevant carrying amounts are:
2022 2021
£ £
Factored receivables 5,851,797 4,295,893
Associated secured borrowings (4,389,016) (2,359,543)
20. Cash and cash equivalents
Group Group Company Company
2022 2021 2022 2021
£ £ £ £
Cash at bank and in hand 5,913,155 8,447,550 689,259 7,077,876
5,913,155 8,447,550 689,259 7,077,876
21. Trade and other payables
Group
2022 2021
£ £
Trade payables 18,106,217 13,315,768
Other payables 429,321 238,210
Accruals 1,727,216 1,398,933
Total financial liabilities, excluding loans and borrowings, classified as 20,262,754 14,952,911
financial liabilities measured at amortised cost
Other payables ‑ tax and social security payments 1,707,672 849,123
Deferred consideration on acquisition of subsidiaries 5,380,365 -
Total trade and other payables 27,350,791 15,802,034
Less: current portion ‑ trade payables (18,106,217) (13,315,768)
Less: current portion ‑ other payables (2,136,993) (1,087,333)
Less: current portion ‑ accruals (1,727,216) (1,398,933)
Less: current portion ‑ deferred consideration (1,000,000) -
Total current portion (22,970,426) (15,802,034)
Total non‑current position 4,380,365 -
Company
2022 2021
£ £
Trade payables 27,657 126,363
Payables to group undertakings 9,569,537 1,699,865
Other payables 1,350 7,875
Accruals 480,257 140,456
Total financial liabilities, excluding loans and borrowings, classified as 10,078,801 1,974,559
financial liabilities measured at amortised cost
Other payables ‑ tax and social security payments 116,772 58,005
Deferred consideration on acquisition of subsidiaries 4,984,750 -
Total trade and other payables 15,180,323 2,032,564
Less: current portion ‑ trade payables (27,657) (126,363)
Less: current portion ‑ payables to related parties (9,569,537) (1,699,865)
Less: current portion ‑ other payables (118,122) (65,880)
Less: current portion ‑ accruals (480,257) (140,456)
Less: current portion ‑ deferred consideration (1,000,000) -
Total current portion (11,195,573) (2,032,564)
Total non‑current position 3,984,750 -
Trade payables and accruals principally comprise amounts outstanding in
relation to trade purchases and ongoing costs. Trade payables are unsecured
and the Group has financial risk management procedures in place to ensure that
all payables are paid within pre‑agreed credit terms.
The Directors consider the carrying value of trade and other receivables is
approximate to its fair value due to their short term nature.
Included within tax and social security payments for the Group is £Nil (2021
‑ £71,749) relating to VAT deferred under the government's COVID‑19 VAT
payment deferral scheme.
All of the above amounts are financial liabilities of the Group and Parent
Company except social security and other taxes.
22. Loans and borrowings
Group
2022 2021
£ £
Non‑current
Bank loans ‑ secured 1,456,025 1,640,563
Lease liabilities 18,766,025 10,488,881
20,222,050 12,129,444
Current
Bank loans and invoice discounting facility 4,595,139 2,498,234
Lease liabilities 3,182,373 1,681,658
7,777,512 4,179,892
Total loans and borrowings 27,999,562 16,309,336
Company
2022 2021
£ £
Non‑current
Bank loans ‑ secured 1,456,025 1,640,563
Lease liabilities 5,226,397 -
6,682,422 1,640,563
Current
Bank loans ‑ secured 206,123 138,691
Lease liabilities 320,191 -
526,314 138,691
Total loans and borrowings 7,208,736 1,779,254
The Directors consider that the carrying amount of the invoice discounting
facility and bank loan approximates their fair value.
The invoice discounting facility is secured against the related trade debtor
balances and by a floating charge over the assets of the Group. The invoice
discounting facility is denominated in Sterling and Euro.
The invoice discounting facility is held for Likewise Floors Limited and has a
fixed service charge of £18,000 per annum.
2022 2021
£ £
Amounts repayable under bank loans ‑ Group and Company
Within one year 206,123 138,691
In the second to fifth year inclusive 706,822 597,494
Beyond five years 749,203 1,043,069
1,662,148 1,779,254
During 2018 the Company obtained a bank loan of £2,280,000. Repayments
commenced on 5th August 2018 and will continue until 5th January 2033. The
loan is secured by a fixed and floating charge over the Group's assets. The
loan carries interest at on a floating rate basis with interest at Bank of
England rate plus a margin of 2.95%.
This loan is at a floating interest rate and exposes the Group to fair value
interest rate risk.
23. Leases
Group
(i) Leases as a lease
The Group's leases include leases for buildings, plant and motor vehicles. The
average lease term is 12 years for buildings and 4 years for other fixed
assets.
A new leasehold distribution centre was established in July 2022 in Newbury in
which the newly formed Likewise South division operates. The addition of this
site led to an increase in lease liabilities of £0.9m at inception of the
lease. Furthermore, new leases were entered into in Q4 2022, in relation to
two new sites for Likewise Scotland and Likewise London respectively. Whilst
leases were agreed in 2022, these new sites are to become operational in 2023.
The new site in Scotland in particular significantly increases the footprint
of the facility from the previous site to help improve logistics capacity in
the North of England as well as fulfil further growth of this division. These
new leases contributed additional lease liabilities of £5.5m at inception.
Various lease incentives of rent free or reduced rent periods are included in
the measurement of the right of use asset and lease liability at inception of
the lease. These predominantly relate to the Group's property lease portfolio.
Lease liabilities are due as follows:
2022 2021
£ £
Contractual undiscounted cash flows due
Not later than one year 3,357,091 1,814,829
Between one year and five years 11,018,626 5,947,403
Later than five years 15,073,388 6,067,895
29,449,105 13,830,127
Lease liabilities included in the Consolidated Statement of Financial Position 21,948,398 12,170,539
at 31 December
Non‑current 18,766,025 10,488,881
Current 3,182,373 1,681,658
The following amounts in respect of leases have been recognised in profit or
loss:
2022 2021
£ £
Interest expense on lease liabilities 571,009 317,913
Depreciation on lease liabilities 2,049,591 1,283,306
Impairment on lease liabilities - 140,249
Profit on termination of lease liabilities (34,535) (80,847)
Expense relating to short‑term leases 324,539 277,620
Company
(ii) Leases as a lessee
The Company's leases include leases for buildings and other assets. The
average lease term is 15 years for buildings and 3 years for other fixed
assets.
Lease liabilities are due as follows:
2022 2021
£ £
Contractual undiscounted cash flows due
Not later than one year 328,506 -
Between one year and five years 2,100,777 -
Later than five years 7,280,760 -
-
9,710,043
5,546,588 -
Lease liabilities included in the Company Statement of Financial Position at
31 December
Non‑current 5,226,397 -
Current 320,191 -
The following amounts in respect of leases have been recognised in profit or
loss:
2022 2021
£ £
Interest expense on lease liabilities 42,148 2,661
Depreciation on lease liabilities 92,717 25,500
Impairment of lease liabilities - 140,249
Expense relating to short‑term leases 25,704 -
24. Financial instruments
Classification of financial instruments
The fair value hierarchy groups financial assets and liabilities into three
levels based on the significance of inputs used in measuring the fair value of
the financial assets and liabilities.
The fair value hierarchy has the following levels:
• Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
• Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is
determined based on the lowest level of significant input to the fair value
measurement.
The only financial instruments the Group holds which are measured at fair
value through the Income Statement (as level 2 above) are forward currency
contracts (see note 26) and deferred consideration in relation to shares
issued on acquisition of subsidiaries (see note 37). The deferred
consideration liability held at fair value at 31 December 2022 totalled
£4,380,365. All other financial assets and liabilities are held at amortised
cost.
The tables below set out the Group's accounting classification of each class
of its financial assets and liabilities.
Group Group Company Company
2022 2021 2022 2021
£ £ £ £
Financial assets at amortised cost
11,704,781 7,521,837 - -
Trade receivables
- - 8,265,009 6,230,742
Amounts owed by Group undertakings
2,282,032 1,496,983 31,205 11,475
Other receivables
5,913,155 8,447,550 689,259 7,077,876
Cash and cash equivalents
17,466,370 8,985,473 13,320,093
19,899,968
All of the above financial assets' carrying values are approximate to their
fair values, as at each reporting date disclosed.
Group Group Company Company
2022 2021 2022 2021
£ £ £ £
Non current financial liabilities
1,456,025 1,640,563 1,456,025 1,640,563
Bank loans ‑ amortised cost
4,380,365 - 3,553,950 -
Deferred consideration ‑ held at fair value
1,640,563 5,009,975 1,640,563
5,836,390
Group Group Company Company
2022 2021 2022 2021
£ £ £ £
Current financial liabilities at amortised cost
18,106,217 13,315,768 27,657 126,363
Trade payables
- - 9,569,537 1,699,865
Amounts owed to Group undertakings
1,000,000 - 1,000,000 -
Deferred consideration on acquisition of subsidiaries
429,321 238,210 1,350 7,875
Other payables
1,727,216 1,398,933 480,257 140,456
Accruals
4,389,016 2,359,543 - -
Invoice discounting facility
206,123 138,691 206,123 138,691
Bank loans ‑ current
17,451,145 11,284,924 2,113,250
25,857,893
All of the above financial liabilities' carrying values are considered by
management to be approximate to their fair values, as at each reporting date
disclosed.
25. Provisions
Group
Dilapidation provision Onerous lease provision Total
£ £ £
114,676 88,000 202,676
At 1 January 2022
(64,601) (88,000) (152,601)
Utilised during the year
50,075 - 50,075
At 31 December 2022
Due within one year or less 50,075 - 50,075
50,075 - 50,075
Company
Onerous lease provision
£
88,000
At 1 January 2022
(88,000)
Utilised during the year
-
At 31 December 2022
26. Financial instrument risk exposure and management
26.1 Financial risk management objectives
The Group's operations expose it to degrees of financial risk that include
liquidity risk, credit risk, interest rate risk, and foreign currency risk.
This note describes the Group's objectives, policies and process for managing
those risks and the methods used to measure them. Further quantitative
information in respect of these risks is presented in the notes above.
26.2 Foreign currency risk
Most of the Group's transactions are carried out in GBP. Exposures to foreign
currency exchange rates arise from the Group's overseas sales and purchases,
which are denominated in a number of currencies, primarily EUR.
The Group assesses exposure and takes out forward currency contracts to
mitigate this foreign exchange risk. As at the 31 December 2022, the value of
forward contracts held by the subsidiary companies were as follows:
Likewise Floors Limited held forward Euro contracts totalling 1,191,033 Euros
(2021 618,000 Euros) and forward USD contracts totalling $299,300
(2021 $1,182,000).
These contracts crystallise between January and May 2023.
26.3 Interest rate risk
The Group has secured debt consisting of an invoice discounting facility and
bank loan.
The interest on the bank loan and discounting facility are at floating rates,
however interest rate risk is considered to be limited due to the low current
interest rates and economic climate. The Directors have performed sensitivity
analysis which shows the impact on cash flows for the coming year would be
less than £0.4m even if interest rates were to rise by 5% which is considered
by the Directors to be highly unlikely.
The Group's only other exposure to interest rate risk is the interest received
on the cash held on deposit, which is immaterial.
26.4 Credit risk
The Group's credit risk is primarily attributable to its cash balances and
trade receivables.
In respect of trade and other receivables, the Group is not exposed to any
significant credit risk exposure to any single counter party or any group of
counterparties having similar characteristics. Trade receivables consist of a
large number of customers in various industries and geographical areas. Based
on historical information about customer default rates management consider the
credit quality of trade receivables that are not past due or impaired to be
good.
The ageing profile of the trade receivables balance can be seen in note 19
above.
The Group's total credit risk amounts to the total of the sum of the
receivables and cash and cash equivalents. At the 2022 reporting date this
amounts to £19,899,968 (2021: £17,466,370).
26.5 Liquidity risk
Liquidity and interest risk tables
Prudent liquidity risk management includes maintaining sufficient cash
balances to ensure the Group can meet liabilities as they fall due, and
ensuring adequate working capital using invoice discounting arrangements.
In managing liquidity risk, the main objective of the Group is therefore to
ensure that it has the ability to pay all of its liabilities as they fall due.
The Group monitors its levels of working capital to ensure that it can meet
its debt repayments as they fall due.
The tables below show the undiscounted cash flows on the Group's financial
liabilities on the basis of their earliest possible contractual maturity.
Carrying amount Total 1 ‑ 3 months 3 ‑ 12 months 1 ‑ 2 years 2 ‑ 5 years More than 5 years
£ £ £ £ £ £ £
31 December 2022
Trade payables 18,106,217 18,106,217 18,106,217 - - - -
Other taxation and social security 1,707,672 1,707,672 1,707,672 - - - -
Other payables 429,321 429,321 429,321 - - - -
Accruals 1,727,216 1,727,216 1,727,216 - - - -
Lease liabilities 21,948,398 29,449,105 855,576 2,501,515 3,490,139 7,528,487 15,073,388
Invoice discounting facility 4,389,016 4,389,016 4,389,016 - - - -
Bank loans 1,662,148 2,293,057 53,013 159,037 212,050 636,150 1,232,807
Deferred consideration 5,380,365 5,380,565 1,000,000 - 4,380,565 - -
55,350,353 63,482,169 28,268,031 2,660,552 8,082,754 8,164,637 16,306,195
Carrying amount Total 1 ‑ 3 months 3 ‑ 12 months 1 ‑ 2 years 2 ‑ 5 years More than 5 years
£ £ £ £ £ £ £
31 December 2021
Trade payables 13,315,768 13,315,768 13,315,768 - - - -
Other taxation and social security 849,123 849,123 849,123 - - - -
Other payables 238,210 238,210 238,210 - - - -
Accruals 1,398,933 1,398,933 1,398,933 - - - -
Lease liabilities 12,170,539 13,830,127 453,707 1,361,122 1,315,791 4,631,612 6,067,895
Invoice discounting facility 2,359,543 2,359,543 2,359,543 - - - -
Bank loans 1,779,254 2,086,831 47,332 141,994 189,326 567,978 1,140,201
32,111,370 34,078,535 18,662,616 1,503,116 1,505,117 5,199,590 7,208,096
27. Capital management
The Group's capital management objectives are:
• To ensure the Group's ability to continue as a going
concern; and
• To provide long term returns to shareholders.
The Group defines and monitors capital on the basis of the carrying amount of
equity plus its outstanding borrowings, less cash and cash equivalents as
presented on the face of the Consolidated Statement of Financial Position as
detailed below:
2022 2021
£ £
39,111,269 22,353,963
Equity
27,999,562 16,309,336
Borrowings
(5,913,155) (8,447,550)
Cash and cash equivalents
30,215,749
61,197,676
28. Share capital
Consolidated and Company
Authorised
2022 2022
Number £
Shares treated as equity
Ordinary shares of £0.01 each 243,835,980 2,438,360
2,438,360
243,835,980
Issued and fully paid
2022 2022
Number £
Ordinary shares of £0.01 each
At 1 January 192,374,194 1,923,742
Shares issued 51,461,786 514,618
At 31 December 243,835,980 2,438,360
The Company has one class of ordinary share which carry no right to fixed
income.
On 11 January 2022, the Company allotted 40,000,000 new £0.01 Ordinary Shares
for consideration of £0.35 per share, totalling £14,000,000.
On 11 January 2022, the Company also allotted a further 5,000,000 new £0.01
Ordinary Shares at par as part of the consideration for the acquisition of
Valley Wholesale Carpets (2004) Limited for more detail see note 37.
On 28 January 2022, the Company allotted 5,714,286 new £0.01 Ordinary Shares
for consideration of £0.35 per share, totalling £2,000,000.
On 23 March 2022, the Company allotted 204,000 new £0.01 Ordinary Shares for
consideration of £0.10 per share, totalling £20,400 and allotted a further
2,500 new £0.01 Ordinary Shares for consideration of £0.21 per share,
totalling £525. These shares were issued under the Company's SAYE scheme.
On 4 April 2022, the Company allotted 500,000 new £0.01 Ordinary Shares where
the share price was £0.375 per share as part of the consideration for the
acquisition of Delta Carpets (Holdings) Limited by Likewise Floors Limited, a
subsidiary company for more detail see note 37.
On 6 September 2022, the Company allotted 41,000 new £0.01 Ordinary Shares
for consideration of £0.10 per share totalling £4,100. These shares were
issued under the Company's SAYE scheme.
29. Share premium
2022 2021
£ £
22,458,816 13,389,295
Share premium at 1 January
17,447,908 9,602,898
Premium on shares issued in the year
(522,099) (533,377)
Share issue costs
(22,000,000) -
Reduction of share premium
17,384,625 22,458,816
Share premium at 31 December
On 22 February 2022, the Company reduced the share premium account by
£22,000,000 and this balance was transferred to the distributable retained
earnings of the Company.
See note 28 for details of shares issued in the year.
30. Reserves
Share capital
This represents the nominal value of shares that have been issued.
Share premium
This reflects proceeds generated on issue of shares in excess of their nominal
value and is a non distributable reserve.
Revaluation reserve
This is used to record increases in the fair value of fixed assets and
decreases to the extent that the decrease relates to a previous increase on
the same asset. The revaluation reserve is a non distributable reserve. The
excess depreciation on revalued assets in comparison to historical cost
depreciation is transferred from the revaluation reserve to retained earnings.
Foreign exchange reserve
This reflects the exchange differences on the translation of the foreign
subsidiary.
Retained earnings
This includes all current and prior period gains and losses.
Share option reserve
This represents the cumulative fair value of options granted.
Warrant reserve
This represents the cumulative fair value of warrants granted.
31. Warrants over ordinary shares
On 9 January 2019, the Company issued warrants over 1,800,000 shares as part
of the IPO at a price of £0.10 per share.
On 1 May 2019, the Company issued warrants over 1,000,000 shares as part of
the acquisition of H&V Carpets BVBA at a price of £0.30 per share. The
fair value of the warrants at the date of grant was considered to be
£128,170.
Warrants are exercisable at any date in the ten years following the date of
grant and none had been exercised as at 31 December 2022.
32. Analysis of amounts recognised in other comprehensive income
Note Revaluation reserve Foreign exchange reserve Retained earnings
£ £ £
Year to 31 December 2022
309,957 - -
Property revaluation
33 - - (5,000)
Actuarial losses on pension
- 16,138 -
Translation in relation to foreign subsidiary
(53,700) - 53,700
Transfer to/from retained earnings
256,257 16,138 48,700
Note Revaluation reserve Foreign exchange reserve Retained earnings
£ £ £
Year to 31 December 2021
1,330,356 - -
Property revaluation
33 - - (20,000)
Actuarial losses on pension
- (17,222) -
Translation in relation to foreign subsidiary
(19,000) - 19,000
Transfer to/from retained earnings
1,311,356 (17,222) (1,000)
33. Retirement plans
Defined contribution scheme
The Group operates a defined contribution pension scheme, the assets of which
are held separately from those of the Group in an independently administered
fund. Contributions made by the Group to the scheme during the year amounted
to £500,267 (2021 £298,167). The amount outstanding at the reporting
date in respect of contributions to the scheme were £114,241 (2021
£45,543).
(i) Defined benefit scheme characteristics and funding
Likewise Floors Limited, a subsidiary of the Group, operates a pension scheme
providing benefits based on final pensionable pay. The Scheme is closed to new
members and is closed to future accrual. For pensions earned after 5 April
1997 and for Guaranteed Minimum Pensions earned between 6 April 1998 and 5
April 1997, increases in payment will be in line with CPI rather than RPI.
Revaluations of pensions in deferment are linked to RPI.
The assets of the Scheme are held separately from those of the Group in
trustee administered funds. The level of contributions is determined by a
qualified actuary on the basis of triennial valuations. The latest full
valuation was completed by an independent actuary on 28 March 2022.
The contribution paid for the year ended 31 December 2022 was £5,000
(2021 £20,000). The Group expects to contribute £Nil to the scheme in
the coming financial year.
Given that the defined benefit pension scheme is in surplus at 31 December
2022, there is expected to be no material impact on the Group's future cash
flows.
(ii) Reconciliation of defined benefit obligation and fair
value of scheme assets
All defined benefit schemes are exposed to materially the
same risks and therefore the reconciliation below is presented in aggregate.
Defined benefit obligation Fair value of scheme assets Effect of asset ceiling Net defined scheme liability
2022 2021 2022 2021 2022 2021 2022 2021
£ £ £ £ £ £ £ £
Balance at 1 January 1,731,000 1,804,000 (1,928,000) (1,846,000) 197,000 42,000 - -
Interest cost 32,000 23,000 (32,000) (23,000) - - - -
Included in profit or loss
1,763,000 1,827,000 (1,960,000) (1,869,000) 197,000 42,000 - -
Remeasurement loss
Actuarial loss from:
‑ Demographic assumptions (402,000) (4,000) - - - - (402,000) (4,000)
‑ Limited by asset ceiling - - - - 114,000 155,000 114,000 155,000
Return on plan assets (excluding interest) - - 293,000 (131,000) - - 293,000 (131,000)
Included in other comprehensive income (402,000) (4,000) 293,000 (131,000) 114,000 155,000 5,000 20,000
Employer contributions - - (5,000) (20,000) - - (5,000) (20,000)
Benefits paid (95,000) (92,000) 95,000 92,000 - - - -
Other movements (95,000) (92,000) 90,000 72,000 - - (5,000) (20,000)
Balance at 31 December 1,266,000 1,731,000 (1,577,000) (1,928,000) 311,000 197,000 - -
Composition of plan assets:
£ £
861,000 1,301,000
Equities / Property
76,000 111,000
Cash
640,000 516,000
Bonds
1,577,000 1,928,000
Total plan assets
Actuarial assumption
The principal actuarial assumptions used in the determining calculating the
present value of the defined benefit obligation (weighted average) include:
2022 2021
4.80 % 1.90 %
Discount rate
2.50 % 2.40 %
Future salary increases
3.30 % 3.20 %
Inflation assumption (RPI)
1.00 % 1.00 %
Mortality rates ‑ for male aged 65 now
1.00 % 1.00 %
Mortality rates ‑ for female aged 65 now
Longevity at retirement age (current pensioners)
86.2 years 86.1 years
‑ Males
88.5 years 88.5 years
‑ Females
Longevity at retirement age (future pensioners)
87.2 years 87.1 years
‑ Males
89.7 years 89.6 years
‑ Females
Sensitivity analysis
Analysis of the sensitivity to the principal assumptions of the present value
of the defined benefit obligation was performed:
‑ A decrease in the interest rates of 0.5% would increase liabilities by
6.3%;
‑ A decrease in inflation of 0.5% would decrease the liabilities by 5.0%;
and
‑ An increase in the long term rate of mortality improvement of 0.5% would
increase the liabilities by 1.5%.
34. Share based payments
Equity settled share option plan
The Company has a Savings Related Share Option Plan ("SAYE") for all employees
of the Group. In accordance with the terms of the plan, as approved by
shareholders, employees of the Group may be granted options to purchase
ordinary shares. There are no performance criteria for the SAYE and options
are issued to participants in accordance with HMRC rules. Vesting is
conditional on continuity of service.
As at 31 December 2021, 7,245,648 share options remained active. During the
current year 2,279,995 new options were issued and 1,137,313 options lapsed on
employees leaving the Group. During the current year 247,500 options were
exercised with an weighted average option price of £0.10 per share. The
remaining contractual life of the remaining 8,140,830 options is approximately
2.25 years.
In addition, as at 31 December 2020, 11,700,000 share options remained active
which were issued under Enterprise Management Incentives (EMIs). During the
current year no new options were issued or exercised and 350,000 options
lapsed on employees leaving the Group. The remaining contractual life of the
remaining 11,350,000 options is approximately 2 years.
During the year, 4,250,000 new options were issued to management under a
Company Share Option Plan (CSOP). 100,000 options lapsed in the year on
employees leaving the Group. The remaining contractual life of the remaining
4,150,000 options is approximately 3.5 years.
Share options are valued using the Black Scholes model. The inputs to the
model are the option price and share price at date of grant, expected
volatility (20%), expected dividend rate (0%) and risk free rate of return
(4%). The model has been adjusted for expected behavioural considerations.
The cost of options is amortised to the Statement of Comprehensive Income over
the service life of the option resulting in a charge of £319,678 for the year
(2021 £149,210).
35. Related party transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties of the Company, have been eliminated on consolidation and are
not disclosed in this note.
A rent charge and early termination settlement of £78,179 (2021 rent charge
of £28,000) was paid in the year for leased office premises from a subsidiary
of REI plc, a Company controlled by the Group's Non Executive Chairman.
Following the move of the Group's head office to the Radial Park facility, no
further fees are payable in respect of the Group's previous head office.
36. Changes in liabilities arising from financing activities
Cash and cash equivalents Borrowing due within one year Borrowing due after one year Total
£ £ £ £
Net debt at 31 December 2020 2,820,895 (2,224,566) (6,749,655) (6,153,326)
Cash flows 5,626,655 - - 5,626,655
Repayment of bank loans - (39,743) 139,105 99,362
Increase in invoice discounting facility - (1,266,279) - (1,266,279)
New lease liabilities - (1,535,929) (5,518,894) (7,054,823)
Repayment of lease liabilities - 886,625 - 886,625
Net debt at 31 December 2021 8,447,550 (4,179,892) (12,129,444) (7,861,786)
Net debt at 31 December 2021 8,447,550 (4,179,892) (12,129,444) (7,861,786)
Cash flows (2,534,395) - - (2,534,395)
Repayment of bank loans - (67,432) 184,538 117,106
Increase in invoice discounting facility - (2,029,473) - (2,029,473)
New / amended lease liabilities - (1,500,715) (10,725,680) (12,226,395)
Repayment of lease liabilities - - 2,448,536 2,448,536
Net debt at 31 December 2022 5,913,155 (7,777,512) (20,222,050) (22,086,407)
37. Business combinations during the year
37.1 Subsidiaries acquired
On 14 January 2022, the Company acquired the entire issued share capital of
Valley Wholesale Carpets (2004) Limited and its wholly owned subsidiary Valley
Wholesale Carpets Limited. Consideration of £29,971,350 for the purchase was
in the form of £14,000,000 cash, £10,000,000 cash extracted from the
acquired company, £1,000,000 deferred cash consideration and the issue of
5,000,000 new shares of £0.01 each in Likewise Group Plc valued at
£1,750,000 at the date of acquisition and which includes a guaranteed cash
payment of the difference between £1 per share and the share price at 14
January 2024. The fair value of this arrangement as at the grant date, being
£3,221,350, has been reflected in the purchase consideration outlined below
as contingent consideration.
On 1 April 2022, Likewise Floors Limited, a subsidiary of the Company,
acquired the entire issued share capital of Delta Carpets (Holdings) Limited
and its wholly owned subsidiary Delta Carpets Limited. Consideration of
£3,000,135 was paid in the form of £1,500,000 cash, £1,000,000 cash
extracted from the acquired companies and 500,000 new £0.01 shares in
Likewise Group Plc valued at £187,500 at the date of acquisition which
includes a guaranteed cash payment of the difference between £1 per share and
the share price at 1 April 2024. The fair value of this arrangement as at the
grant date, being £312,635, has been reflected in the purchase consideration
outlined below as contingent consideration.
Name Principal activity Date of acquisition Proportion of voting equity interests acquired Consideration transferred
% £
Valley Wholesale Wholesale distribution of floor coverings and associated 14/01/22 100 29,971,350
Carpets products
Delta Carpets Wholesale distribution of floor coverings and associated products 01/04/22 100 3,000,135
32,971,485
37.2 Consideration transferred
Valley Wholesale Carpets Delta Carpets
£ £
Cash 24,000,000 2,500,000
Deferred consideration 1,000,000 -
Issue of shares in Likewise Group Plc 1,750,000 187,500
Contingent consideration arrangement 3,221,350 312,635
3,000,135
29,971,350
37.3 Assets acquired and liabilities recognised at the date of acquisition
Valley Wholesale Carpets Delta Carpets Total
£ £ £
Non‑current assets
Property, plant and equipment 16,792,652 129,554 16,922,206
Intangible assets - 1,054,394 1,054,394
16,792,652 1,183,948 17,976,600
Current assets
Cash and cash equivalents 11,806,785 1,152,165 12,958,950
Trade and other receivables 1,608,512 492,986 2,101,498
Inventories 3,026,381 668,130 3,694,511
3,497,229 36,731,559
33,234,330
Non‑current liabilities
Deferred tax liabilities (1,318,590) (280,640) (1,599,230)
3,216,589 35,132,329
31,915,740
Current liabilities
Trade and other liabilities (2,179,254) (1,389,146) (3,568,400)
29,736,486 1,827,443 31,563,929
37.4 Goodwill arising on acquisition
Valley Wholesale Carpets Delta Carpets Total
£ £ £
Consideration transferred 29,971,350 3,000,135 32,971,485
Fair value of identifiable net assets acquired (29,736,486) (1,827,443) (31,563,929)
Goodwill arising on acquisition
234,864 1,172,692 1,407,556
37.5 Net cash outflow on acquisition
2022
£
Consideration paid in cash 26,500,000
Less: cash and cash equivalent balances acquired (12,958,950)
13,541,050
37.6 Impact of acquisition on the results of the Group
Likewise Group plc completed its acquisition of the entire share capital and
100% of the voting rights of Valley Wholesale Carpets (2004) Limited and it's
wholly owned subsidiary Valley Wholesale Carpets Limited on 14th January 2022.
Likewise Floors Limited, a wholly owned subsidiary of the Group, acquired the
entire share capital and 100% of the voting rights of Delta Carpets Holdings
Limited, and it's wholly owned subsidiary Delta Carpets Limited on 1st April
2022.
The acquisition of Valley, increases the Group's overall market share whilst
also increasing the Group's presence in the southeast of England, and the
Midlands, offering many logistical advantages. The acquisition of Delta
Carpets further develops the geographical presence and customer base of
Likewise. Following the acquisition, the business was integrated into
Likewise' nearby Distribution in Leeds utilising the Group's logistics network
whilst enhancing the service to customers.
Valley Wholesale Carpets contributed £41.2m revenue and operating profit of
£2.5m in the Group's annual financial statements in 2022. This acquisition
took place on 14 January 2022 and in the absence of any financial statements
being produced to this date, the year end accounts are considered sufficiently
close to not have a material impact on the profit on operations.
Delta Carpets contributed £3.6m revenue and operating profit of £0.15m to
the Group following acquisition on 1st April 2022. Had the acquisition taken
place at the beginning of the financial year, it would have contributed £5.1m
and £0.19m to revenue and operating profit respectively. Profitability is
forecast to increase once synergies are realised following integration of the
business into Likewise post acquisition.
The contingent consideration payable in respect of the Valley and Delta
acquisitions is calculated by reference to the Likewise share price at the
future determination date. The fair value of contingent consideration at the
date of acquisition and subsequent remeasurement dates requires significant
judgements and estimates and is sensitive to share price changes.
Contingent consideration fair value is calculated using the Black Scholes
model. The inputs to the model are the strike price and share price at date of
valuation and the date of expected payment, expected volatility (61%),
expected dividend rate (0%) and risk free rate of return (1.7% at
acquisition).
An increase or decrease in the share price by 5 pence would result in an
increase or decrease in the contingent consideration liability of
approximately £275,000.
38. Post balance sheet events
On 2 May 2023, the Company allotted 22,500 new £0.01 Ordinary Shares for
consideration of £0.10 per share, totalling £2,250 These shares were issued
under the Company's SAYE scheme.
On 8 July 2022, Likewise Group Plc declared an interim dividend of 0.2p per
share. After the reporting date the Directors became aware that aggregate
dividends totalling £487,590 paid in the period had been made otherwise than
in accordance with the Companies Act 2006 as unaudited interim accounts had
not been filed at Companies House prior to the dividend payment. A resolution
has been proposed at the General Meeting to be held on 27 June 2023 to
authorise the appropriation of distributable profits to the payment of the
relevant dividends and waive the entitlement of the Company to pursue
shareholders and Directors for repayment. This will constitute a related party
transaction under IAS24 'Related party disclosures', the effect of which will
be to return all parties, so far as possible, to the position they would have
been in had the relevant dividends been made in full compliance with the
Companies Act 2006.
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