REG - Likewise Group PLC - Interim Results
29/09/2023 07:00
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RNS Number : 0817O Likewise Group PLC 29 September 2023
29 September 2023
Likewise Group plc
("Likewise", the "Company" or the "Group")
Interim results for the six months ended 30 June 2023
Further positive sales progress and well on track for 2023 and beyond
Likewise Group plc (AIM:LIKE), the fast growing UK floor coverings
distributor, is pleased to announce its unaudited interim results for the six
months ended 30 June 2023 (the "Period" or "H1 23") and a continuation of
positive sales growth, notwithstanding market conditions which provide well
publicised challenges.
Summary highlights
· Total sales revenue increased by 17.3% from £56.8 million to
£66.6 million
· Continued growth in Likewise Branded sales of 23.3%
· Adjusted EBITDA(1) of £3.1 million (H1 2022: £3.6 million)
· Adjusted underlying profit from operations of £1.2 million (H1
2022: £2.0 million)
· Adjusted profit before tax(2) of £0.7 million, principally
impacted as expected by the accelerated investment in the business (H1 2022:
£1.9 million)
· Positive cash generation from Operating Activities of £1.68
million, allowing further investment in property, plant and equipment
· Interim dividend of 0.1p per share
· Increased capacity of distribution network to 15,000,000 cu. ft.
· Continuing investment in point of sale
· On target to meet market expectations for FY23
(
) (1) Adjusted EBITDA is defined as profit before finance costs, tax,
depreciation, amortisation, separately disclosed items and share based
payments.
(2) Adjusted profit before tax is defined as profit before amortisation,
separately disclosed items and share based payments.
H1 23 highlights
Group Revenue in H1 23 increased by 17.3% from £56.8 million to £66.6
million. Whilst profitability reduced in the short term this is principally
due to investing in the future growth.
The strong increases in Group Revenue over the past four years demonstrates an
exponential gain in Market Share and the ongoing enlargement of Logistics and
Sales Infrastructure will facilitate the continuation of Market Share
progress.
The Balance Sheet continues to be strong with Net Assets of £38.9 million
including four Freehold Properties valued at £22.3 million and net debt of
£2.1 million.
To demonstrate the progress the Group has made in the last three years the
Board is proposing its maiden Interim Dividend of 0.1 pence per Ordinary
Share. The dividend will be paid on 17 November 2023 to shareholders on the
register at the close of business on 13 October 2023, the ex-dividend date
being 12 October 2023.
Shareholders can also take advantage of the Dividend Reinvestment Plan
("DRIP") by registering their intentions with the Company's registrar by 27
October 2023.
Current trading and outlook
With H2 23 starting well the Group is well on target to meet market
expectations for the financial year ending 31 December 2023 ("FY23") and more
importantly is now ahead of the Group Revenue milestones to achieve its medium
term aspirations.
Further testimony of the Group's progress is that August was a record month
for Sales Revenue which provides confidence entering the traditionally busy
Autumn period.
The Group is beginning to benefit from operational gearing in H2 this year
which will contribute towards continued investment in order to achieve short
and medium objectives.
The significant investments made in the last three years will allow the Group
to achieve its short term objectives of Group Revenue in excess of £200
million and with that initial target in sight the Group can now progress to
further objectives in Sales with the corresponding Return on Sales and
Investment.
Operations
In conjunction with Suppliers and Customers, the Group continues to invest in
a significant amount of Point of Sale which is increasing market presence and
expanding sales in all key product types; Carpet, Residential Vinyl, Laminate,
Luxury Vinyl Tile, Artificial Grass with both Residential and Commercial
categories performing strongly.
Valley Wholesale Carpets Limited ("Valley") continues to be an important
contributor to Profitability and Positive Operational Cash Flow. Following
development in South Wales, Valley is now poised to expand its operations to
the South West of England and furthermore will extend its product offering
into certain Hard Flooring. The further development of Valley can be achieved
through the infrastructure already established.
Along with normal business development, the Group has accelerated its
logistics capabilities. The New High Bay Distribution Centre in Glasgow is now
operational and the Group is in the process of significantly increasing the
cutting capacity in Birmingham and Derby, with additional opportunities to now
fully utilise the previously dormant Distribution Centre in Newport.
Likewise has now established a sophisticated Logistics Network from its
Distribution Centres in Glasgow, Newcastle, Leeds, Manchester, Birmingham,
Newbury, Sudbury and London. Valley distributes significant volume from
three Distribution Centres in Erith London, Derby and Newport. The Group will
continue to increase Market Share and expand its Geographical reach into
2024.
The Group is currently using less than 60% of its total processing capacity
through its established Logistics Operations and this headroom could be
further increased with relatively small investment and Capital Expenditure.
People
Following five successful years implementing the financial infrastructure,
reporting procedures and supporting our successful listing on AIM, Roy Povey
has chosen to step down from his role as Chief Financial Officer for personal
reasons. Roy will continue to support the business until his proposed exit in
Spring 2024. Roy will be replaced in the immediate term by a combination of
internal promotions for Ben Ashforth to Head of Financial Accounting and
Reporting with Ian Roberts and David Fullard who will be responsible for the
Operational Finance team. The Board wishes Roy well for his future and thanks
him for his significant contribution to the Group's development.
Undoubtedly the most pleasing aspect is that we have recently been able to
make announcements whereby individuals who are "learning their trade" have
been promoted into senior and middle management positions across our various
activities of Logistics, IT, Sales and Finance. As the Group continues to
expand it allows hardworking, diligent people the opportunity to fulfil their
career aspirations with Likewise.
It is really encouraging that our management across the country are developing
their skills in all aspects of the business, whilst in most cases being still
relatively young and have many years ahead of them in their business career.
Additionally there are a number of people who have joined the Group over the
last few years who are already demonstrating skills and commitment with the
likelihood of being management of the future.
The Board would like to thank all Suppliers, Customers, Management and
Employees for their support and contribution to the ongoing development of
Likewise.
The Group has been able to establish a meaningful Flooring Distribution
business in challenging markets which must provide confidence that the
Management Team established along with all employees can accelerate this
growth as the economy and consumer spending improves.
Tony Brewer, Chief Executive of Likewise Group plc, said:
"The Group continues to make significant progress and it is brilliant to see
our people being given the opportunity to progress their careers and make an
increasingly important contribution to the Group's future.
"We have so many opportunities before us as we continue to enlarge the Group's
Infrastructure which will create additional Sales and increased Profitability.
With the original Targets before us, the Group can now focus on creating a
much larger Business than previously anticipated."
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.
CHIEF FINANCIAL OFFICER'S REPORT
2023 2022
Underlying Non-underlying ** Total Underlying* Non-underlying ** Total
Revenue 66,594,132 - 66,594,132 56,759,588 - 56,759,588
Cost of Sales (46,794,353) - (46,794,353) (39,296,875) - (39,296,875)
Gross Profit 19,799,779 - 19,799,779 17,462,713 - 17,462,713
Other operating income - - - 782 - 782
Administrative expenses (9,377,118) (990,064) (10,367,182) (6,981,136) (308,160) (7,289,296)
Distribution costs (9,164,355) (30,537) (9,194,892) (8,470,203) - (8,470,203)
Acquisition costs - - - - (1,293,112) (1,293,112)
Impairment losses on trade receivables (73,264) - (73,264) (21,563) - (21,563)
Profit/(loss) from operations 1,185,042 (1,020,601) 164,441 1,990,593 (1,601,272) 389,321
Finance Income 21,417 - 21,417 161 161
Finance costs (499,520) (176,367) (675,887) (77,631) (225,969) (303,600)
Profit/(loss) before tax 706,939 (1,196,968) (490,029) 1,913,123 (1,827,241) 85,882
Taxation - - - - - -
Profit/(Loss) for the period 706,939 (1,196,968) (490,029) 1,913,123 (1,827,241) 85,882
* The figures initially presented in the interim accounts to 30 June 2022
included consolidation of Valley's results for the full 6 month period 1
January to 30 June 2022, and therefore included 13 days of pre-acquisition
trade as the entity did not prepare daily management accounts and therefore
the pre-acquisition trade was therefore not known. It was subsequently agreed
with the Group's auditors to project the pre-acquisition trade based on
January's full month results and to reduce revenue and cost of sales
accordingly. In addition, the H1 2022 revenue figure previously disclosed also
incorrectly included £582,192 of inter-group sales due to an error in a
supporting schedule, but was identified and subsequently corrected in the
annual financial statements for the year ended 31 December 2022. Please see
note 19 for more information on this restatement of comparative information.
** 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 5 in the accounts below.
Revenue and Margin
In the six months to June 2023, Group revenue was £66.6 million, (H1- 2022:
£56.6 million).
This represents a year on year increase of 17.3%.
Reflecting the continued investment in the group and the Likewise brand, the
organic growth in the six months to June 2023 is 22.3%.
Gross profit for the period increased by 13% from £17.5 million to £19.8
million.
With the opening of the new facility in Glasgow and the distribution capacity
now established at 15 million cubic feet, the group has started to see
improvements in its operational gearing.
In the six months to June 2023, distribution costs as a percentage of sales
were 13.8%, an improvement of more than one percentage point over the 14.9% in
the corresponding period in 2022.
Underlying profit before tax in the period to June 2023 was £0.7 million
compared to £1.91 million for the same period in 2022.
Financial position
Net assets at 30 June 2023 were £38.9 million compared to £39.1 million, as
presented in the full year financial statements to 31 December 2022.
The group balance sheet remains strong and with debt levels relatively low is
well placed to support the business through the next phase of its development.
The closing cash position of £4.5 million was a reduction of -£1.4 million
from the closing balance of £5.9 million as at 31 December 2022.
The positive operating cash generation in the period allowed the group to
continue with investment in property, plant and equipment of £2.9 million and
support the increased levels of working capital required, £0.8 million.
There was a small receipt of asset funding in the six months to June 2023,
£0.3 million and the group will continue to consider appropriate forms of
funding to support future growth.
Consolidated statement of profit or loss and other comprehensive income for
the six months ended 30 June
6 month period ended 6 month period ended
30 June 30 June
2023 2022
Note £ £
Revenue 3 66,594,132 56,759,588
Cost of sales (46,794,353) (39,296,875)
Gross profit 19,799,779 17,462,713
Other operating income 4 - 782
Administrative expenses (10,367,182) (8,582,408)
Distribution costs (9,194,892) (8,470,203)
Impairment losses on trade receivables (73,264) (21,563)
Profit/(loss) from operations 5 164,441 389,321
Finance income 21,417 161
Finance costs (675,887) (303,600)
Profit/(loss) before tax (490,029) 85,882
Taxation 6 - -
Profit for the period (490,029) 85,882
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Revaluation of land and buildings 154,724 161,850
Items that will or may be reclassified to profit or loss:
Exchange losses arising in relation to translation of foreign operations (10,147) (15,406)
Total comprehensive income (345,452) 232,326
Earnings per share Pence per share Pence per share
Basic profit per share 7 (0.20) 0.04
Diluted profit per share 7 (0.18) 0.03
Consolidated statement of financial position as at 30 June
30 June 31 December
2023 2022
Note £ £
Assets
Non‑current assets
9 5,624,284 5,624,284
Goodwill
Other intangible assets 10 4,012,450 4,208,884
Property, plant and equipment 11 29,594,420 28,003,809
Right-of-use assets 11 18,652,438 19,296,412
Trade and other receivables - -
57,883,592 57,133,389
Current assets
20,589,793 18,388,527
Inventories
Trade and other receivables 18,112,605 15,573,303
Cash and cash equivalents 4,523,957 5,913,155
43,226,355 39,874,985
Total assets 101,109,947 97,008,374
Liabilities
Non‑current liabilities
Trade and other liabilities 13 - (4,380,365)
Loans and borrowings 12 (1,409,061) (1,456,025)
Lease liabilities 12 (17,392,572) (18,766,025)
Deferred tax liability (2,496,677) (2,496,677)
(21,298,310) (27,099,092)
Current liabilities
13 (31,323,178) (22,970,426)
Trade and other liabilities
Loans and borrowings 12 (5,232,509) (4,595,139)
Lease liabilities 12 (4,327,825) (3,182,373)
Provisions 14 (45,103) (50,075)
(40,928,615) (30,798,013)
Total liabilities (62,226,925) (57,897,105)
38,883,022 39,111,269
Net assets
15 2,438,585 2,438,360
Share capital
Share premium 15 17,386,650 17,384,625
Warrant reserve 128,170 128,170
Share option reserve 16 743,409 628,454
Revaluation reserve 2,817,108 2,662,384
Foreign exchange reserve (50,634) (40,487)
Retained earnings 15,419,734 15,909,763
Total equity 38,883,022 39,111,269
Consolidated statement of changes in equity for the period ended 30 June
Share capital Share premium Revaluation reserve Retained earnings
£ £ £ £
2,438,360 17,384,625 2,662,384 15,909,763
Balance at 1 January 2023
- - - (490,029)
Profit for the period
Other comprehensive income - - 154,724 -
Issue of share capital 225 2,025 - -
Share options exercised - - - -
Share issue costs - - - -
Reduction of share premium - - - -
Share options valuation - - - -
Dividends - - - -
Balance at 30 June 2023 2,438,585 17,386,650 2,817,108 15,419,734
Share option reserve Warrant reserve Foreign exchange reserve Total
£ £ £ £
628,454 128,170 (40,487) 39,111,269
Balance at 1 January 2023
- - - (490,029)
Profit for the period
Other comprehensive income - - (10,147) 144,577
Issue of share capital - - - 2,250
Share options exercised - - - -
Share issue costs - - - -
Reduction of share premium - - - -
Share options valuation 114,955 - - 114,955
Dividends - - - -
Balance at 30 June 2023 743,409 128,170 (50,634) 38,883,022
Share capital Share premium Revaluation reserve Retained earnings
£ £ £ £
1,923,742 22,458,816 2,406,127 (4,815,043)
Balance at 1 January 2022
- - - 85,882
Profit for the period
Other comprehensive income - - 161,850 -
Issue of share capital 512,143 17,425,357 - -
Share options exercised 2,065 18,860 - -
Share issue costs - (522,098) - -
Reduction of share premium - (22,000,000) - 22,000,000
Share options valuation - - - -
Dividends - - - (487,590)
Balance at 30 June 2022 2,437,950 17,380,935 2,567,977 16,783,249
Share option reserve Warrant reserve Foreign exchange reserve Total
£ £ £ £
308,776 128,170 (56,625) 22,353,963
Balance at 1 January 2022
- - - 85,882
Profit for the period
Other comprehensive income - - (15,406) 146,444
Issue of share capital - - - 17,937,500
Share options exercised - - - 20,925
Share issue costs - - - (522,098)
Reduction of share premium - - - -
Share options valuation 150,547 - - 150,547
Dividends - - - (487,590)
Balance at 30 June 2022 459,323 128,170 (72,031) 39,685,573
Consolidated statement of cash flows for the period ended 30 June
6 month 6 month
period ended period ended
30 June 30 June
2023 2022
£ £
Cash flows from operating activities
(490,029) 85,882
Profit for the period
Adjustments for
2,255,228 1,668,586
Depreciation and amortisation
(Profit) / Loss on disposal of tangible fixed assets (74,021) (34,411)
Finance income (21,417) (161)
Finance costs 675,887 303,600
Decrease in provisions (4,972) (338,852)
Share options issued 114,955 150,547
Net foreign exchange gain (9,880) (15,775)
2,445,751 1,819,416
Movements in working capital:
(2,201,266) (3,960,608)
Increase in trade and other receivables
(Increase)/decrease in inventories (2,539,302) (4,546,649)
Increase in trade and other payables 3,972,387 6,631,758
Cash (used in)/generated from operations 1,677,570 (56,083)
- (500,000)
Income taxes paid
Net cash (used in)/from operating activities 1,677,570 (556,083)
Cash flows from investing activities
(2,865,150) (689,732)
Purchases of property, plant and equipment
Proceeds from disposal of property, plant and equipment 88,197 20,926
Acquisition of subsidiaries, net of cash acquired - (15,477,415)
Interest received 21,417 161
Net cash used in investing activities (2,755,536) (16,146,060)
Cash flows from financing activities
(675,887) (303,600)
Interest paid
Consideration for new shares 2,250 15,498,827
Increase in invoice discounting 637,435 1,885,299
Repayment of lease liabilities (533,601) (854,666)
Cash received on leased assets 305,600
Repayment of loans (47,029) (62,493)
Net cash from/(used in) financing activities (311,232) 16,163,367
(1,389,198) (538,776)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of year 5,913,155 8,447,550
Cash and cash equivalents at the end of the year 4,523,957 7,908,774
Comprising
Cash at bank 4,523,957 7,908,774
Bank overdrafts - -
4,523,957 7,908,774
Notes to the consolidated financial statements for the period ended 30 June
2023
1. General information
The Company is a public company limited by shares, registered
in England and Wales and listed for trading on the Alternative Investment
Market operated by the London Stock Exchange Plc (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, Birmingham, United
Kingdom, B37 7WN.
The principal activity of the Group is the wholesale distribution of
floorcoverings and associated products.
2. Accounting policies
Basis of preparation
The condensed and consolidated interim financial statements for the period
from 1 January 2023 to 30 June 2023 have been prepared in accordance with
International Accounting Standards ("IAS") 34 Interim Financial Reporting as
adopted by the UK and on the going concern basis. They are in accordance
with the accounting policies set out in the statutory accounts for the year
ended 31 December 2022 and those expected to be applied for the year ended 31
December 2023 unless otherwise stated below.
These interim financial statements do not include all of the information
required in annual financial statements in accordance with UK adopted
International Accounting Standards and should be read in conjunction with the
consolidated financial statements for the year ended 31 December 2022.
The comparatives shown are for the period 1 January 2022 to 30 June 2022, and
31 December 2022 and do not constitute statutory accounts, as defined in
section 435 of the Companies Act 2006, but are based on the statutory
financial statements for the year ended 31 December 2022.
A copy of the Group's statutory accounts for the year ended 31 December 2022
has been delivered to the Registrar of Companies and the accounts are
available to download from the Company website at www.likewiseplc.com.
(http://www.likewiseplc.com/)
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.
Going concern
Given the uncertainty in the wider economic climate and the subsequent impact
this has on discretionary household spend, the Group continue to monitor the
impact of the high inflationary environment. Whilst the Group has naturally
faced increased costs, we have continued to work with our suppliers and
ensured where possible we protect our customers from widespread price
increases.
As noted in the Chief Executive's statement, the trading performance of the
business remains positive and as such from review of the Group's projections,
the Board have reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future and thus continue
to adopt the going concern basis in preparing these interim financial
statements.
These projections include the cash outflow required to fulfil the contingent
acquisition consideration linked to the acquisitions of Valley Wholesale
Carpets and Delta Carpets in the prior year. Whilst not expected, the Board
also consider that should there be any deviation from these projections there
are various mitigating factors that could be taken in order to provide the
cash required to fulfil these obligations as they fall due. These include, but
are not limited to increasing the Group's invoice financing facilities or
other borrowing arrangements, reduction in capital expenditure or the disposal
of freehold property.
Impact of new international reporting standards
There are no accounting pronouncements which have become effective from 1
January 2023 that have a significant impact on the Group's interim condensed
consolidated financial statements.
Estimates
The preparation of the interim financial information requires management to
make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing this condensed interim financial information, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those applied to
consolidated financial statements for the year ended 31 December 2022. These
are impairment of trade receivables, accounting for defined benefit pension
scheme, inventory valuation and valuation of land and buildings.
3. 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 is derived from continuing operations and 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 Group generates revenue from both the UK and overseas as detailed below:
6 month period ended 30 June 2023 6 month period ended 30 June 2022
£ £
66,411,859 56,627,013
United Kingdom
Rest of Europe 167,623 118,164
Rest of the world 14,650 14,411
66,594,132 56,759,588
Seasonal fluctuations
The overall demand for the wholesale of goods has previously been higher in
the third and fourth quarters of the year. In the previous six month period to
30 June 2022 revenue equated to 45.9% of the annual revenue generated.
4. Other operating income
6 month period ended 30 June 2023 6 month period ended 30 June
2022
£ £
Sundry income - 782
5. Operating profit
Operating profit is stated after charging:
6 month period ended 30 June 6 month period ended 30 June
2023 2022
£ £
Underlying expenses
2,058,794 1,524,872
Depreciation of property, plant and equipment including right-of-use assets
Amortisation of intangible assets 196,434 143,714
Share based payments 114,955 150,547
Impairment of inventories 274,075 24,969
Short term lease expense 196,610 137,589
Establishment costs of new sites 693,033 -
Muelebeke restructuring cost 47,122 -
Exceptional investment in point of sale 145,424 -
Acquisition costs - 1,293,112
6. Taxation on ordinary activities
Tax is calculated at 23.5% for the six months ended 30 June 2023 representing
the best estimate of the average annual effective tax rate expected to apply
for the full year. No income tax is expected in the period given the losses
previously incurred by the Group.
The Group has tax losses available to be carried forward. Due to uncertainty
around timing of the Group's projects, management have not considered it
appropriate to recognise all losses as an asset in the financial statements.
Tax losses of £11,539,175 were available for offset against future taxable
profits at 31 December 2022. A deferred tax asset of £1,577,985 was not
recognised at 31 December 2022 in relation to these losses.
7. Earnings per share
Basic profit per share is based on the profit after tax for the period and the
weighted average number of shares in issue during each period.
6 month period ended 30 June 2023 6 month period ended 30 June 2022
£ £
(490,029) 85,882
Profit attributable to equity holders of the company
Number Number
243,843,439 239,821,834
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
23,254,963 23,865,832
Options
Warrants 2,800,000 2,800,000
Weighted average number of ordinary shares and potential ordinary shares used 269,898,402 266,487,666
as the denominator in calculating diluted earnings per share
pence per share pence per share
Basic profit per share (pence) (0.20) 0.04
Diluted profit per share (pence) (0.18) 0.03
Number Number
243,843,439 239,821,834
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
23,254,963 23,865,832
Options
Warrants 2,800,000 2,800,000
Weighted average number of ordinary shares and potential ordinary shares used 269,898,402 266,487,666
as the denominator in calculating diluted earnings per share
pence per share pence per share
Basic profit per share (pence) (0.20) 0.04
Diluted profit per share (pence) (0.18) 0.03
8. Dividends
Dividends were declared for the period to 30th June 2023
totalling £Nil (2022 - £487,590).
9. Intangible assets
Goodwill
£
5,624,284
Cost and net book value
at 31 December 2022
Goodwill on acquisition (see note 16) -
Impairment -
Amortisation -
At 30 June 2023 5,624,284
The Group tests goodwill annually for impairment, or more frequently if there
are any indications that goodwill might be impaired.
The Directors have considered the impact of the current economic uncertainty
on the value of the goodwill but do not consider any impairment required as at
30 June 2023 (31 December 2022 - £Nil).
10. Other intangible assets
Delta Carpets Customer base Likewise Floors Customer base Delta Carpets Brand name Likewise Floors Brand name Total
£ £ £ £ £
475,158 1,591,762 500,157 1,641,807 4,208,884
Net book value at 31 December 2022
Impairment - - - - -
Amortisation (25,684) (70,745) (27,036) (72,969) (196,434)
At 30 June 2023 449,474 1,521,017 473,121 1,568,838 4,012,450
11. Property, plant and equipment
Land and buildings Other owned assets Right of use assets Total
£ £ £ £
22,269,664 5,734,145 47,300,221
Net book value at 31 December 2022 19,296,412
Additions 31,338 2,122,354 711,458 2,865,150
Disposals - (473) (13,703) (14,176)
Depreciation (154,724) (562,341) (1,341,729) (2,058,794)
Foreign exchange movements - (267) - (267)
Revaluation 154,724 - - 154,724
At 30 June 2023 22,301,002 7,293,418 18,652,438 48,246,858
12. Loans and borrowings
Consolidated
30 June 2023 31 December 2022
£ £
Current borrowings - secured
5,232,509 4,595,139
Bank loans and invoice discounting facility
Lease liabilities 4,327,825 3,182,373
9,560,334 7,777,512
Non-current borrowings - secured
1,409,061 1,456,025
Bank loans
Lease liabilities 17,392,572 18,766,025
Total loans and borrowings 18,801,633 20,222,050
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.
Carrying amount
30 June 2023 31 December 2022
£ £
Amounts repayable under bank loans
206,058 206,123
Within one year
In the second to fifth year inclusive 706,626 706,822
Beyond five years 702,435 749,203
1,615,119 1,662,148
The invoice discounting facility is held for Likewise Floors Limited and has a
fixed service charge of £18,000 per annum.
During 2018 the Parent Company obtained a bank loan of £2,280,000.
Repayments commenced on 5th August 2018 and were due to continue until 5th
January 2033. The loan is secured by a fixed and floating charge over the
Group's assets. The loan carries interest on a floating rate basis with
interest at Bank of England rate plus a margin of 2.95%. A twelve month
capital repayment holiday was granted effective April 2020, with interest
payments made throughout the period to April 2021 when capital repayments
recommenced.
The loan was refinanced after the period end. Further details are provided in
note 20.
The loan is at a floating interest rate and exposes the Group to fair value
interest rate risk.
13. 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
- Level 3: inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
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. 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.
30 June 2023 31 December 2022
£ £
Financial assets at amortised cost
13,198,764 11,704,781
Trade receivables
Other receivables 4,913,841 2,282,032
Cash and cash equivalents 4,523,957 5,913,155
22,636,562 19,899,968
All of the above financial assets' carrying values are approximate to their
fair values, as at each reporting date disclosed.
30 June 2023 31 December 2022
£ £
Non-current financial liabilities at amortised cost
Deferred consideration - held at fair value - 4,380,365
Bank loans 1,409,061 1,456,025
Lease liabilities 17,392,572 18,766,025
18,801,633 24,602,415
30 June 2023 31 December 2022
£ £
Current financial liabilities at amortised cost
22,387,476 18,106,217
Trade payables
Other payables 628,589 429,321
Accruals 2,049,711 1,727,216
Invoice discounting facility 5,026,451 4,389,016
Bank loans 206,058 206,123
Lease liabilities 4,327,825 3,182,373
Deferred consideration - held at fair value 4,380,365 -
39,006,475 29,040,266
All of the above financial liabilities' carrying values are considered by
management to approximate to their fair values, as at each reporting date
disclosed.
14. Provisions
Dilapidation provision Total
£ £
50,075 50,075
At 31 December 2022
Charged to profit or loss - -
Utilised during the period (4,972) (4,972)
At 30 June 2023 45,103 45,103
All provisions are considered to be due within one year.
15. Share Capital
Consolidated and Company
Issued and fully paid 30 June 31 December 2022
2023
Number Number
Ordinary shares of £0.01 each 243,858,480 243,835,980
The Company has one class of ordinary share which carry no right to fixed
income.
On 2 May 2023, the Company allotted 22,500 new £0.01 shares for consideration
of £0.10 per share, totalling £2,250. These shares were issued under the
Company's SAYE scheme.
16. Share-based payments
Equity settled share option plan
The Group has a number of share options plans including 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 2022, 8,140,830 share options remained active. During the
current period 4,462,181 new options were issued at a weighted average option
price of £0.17 per share and 1,873,707 options lapsed on employees leaving
the Group. During the current period, 22,500 options were exercised as
detailed in note 15. The average remaining contractual life of the remaining
10,706,804 options is approximately 2.5 years.
In addition, as at 31 December 2022, 11,350,000 share options remained active
which were issued under Enterprise Management Incentives (EMIs). During the
current period 150,000 options lapsed on employees leaving the Group. The
remaining contractual life of these options is approximately 1.5 years.
In addition, as at 31 December 2022, 4,150,000 share options remained active
which were issued under a Company Share Option Plan ("CSOP"). During the
current period 200,000 options lapsed on employees leaving the Group. The
remaining contractual life of these options is approximately 3 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%
- 5.25%). 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 £114,955 for the
period.
A deferred tax asset has not been recognised in relation to the charge for
share based payments.
17. Retirement benefit plans
Defined benefit scheme
William Armes Limited, a subsidiary of the Group since 9 January 2018,
operated 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 scheme has been transferred to Likewise Floors Limited as part of the
transfer of trade and assets in December 2021.
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 latest set of workings and assumptions can be found in the full Likewise
Group Plc financial statements to 31 December 2022. At 31 December 2022, there
was no recognition on the statement of financial position as the pension
scheme assets equalled the defined benefit obligation. An updated valuation
could not be obtained at 30 June 2023 and so no further disclosure has been
made in this set of interim financial statements.
18. Related party transactions
Key management personnel remuneration is disclosed as follows:
6 month period ended 30 June 2023 6 month period ended 30 June 2022
£ £
Remuneration of key management
474,046 1,135,850
Remuneration
Social security costs 60,478 153,777
Company pension contribution to defined contribution schemes 30,675 30,675
Share based payments - -
565,199 1,320,302
Included in the figures disclosed for the period ended 30 June 2022 is the
bonus paid in respect of the successful acquisition of Valley Wholesale
Carpets (2004) Limited, as set out in the acquisition document.
19. Restatement of comparative
The Group acquired Valley Wholesale Carpets Limited as a subsidiary entity on
14 January 2022. The figures initially presented in the interim accounts to 30
June 2022 included consolidation of Valley's results for the full 6 month
period 1 January to 30 June 2022, and therefore included 13 days' of
pre-acquisition trade, as the entity did not prepare daily management accounts
and the pre-acquisition trade was therefore not known. It was later agreed
with the Group's auditors to project the pre-acquisition trade based on
January's full month results, and to reduce income and cost of sales
accordingly. The adjustment of £1,013,349 was made in the financial
statements for the year ended 31 December 2022, and has therefore also been
made to the comparatives in these interim financial statements to reflect
this.
In addition, the H1 2022 revenue and cost of sales figures previously
disclosed incorrectly included £582,192 of inter-group sales/purchases due to
a formula error in a supporting schedule. The was not identified prior to
issuance of the 2022 interim results but was identified and corrected in the
annual financial statements for the year ended 31 December 2022, and as such
these were not misstated as a result of this error. Revenue and cost of sales
have been reduced by this amount to correct the results for the comparative
period.
20. Post balance sheet events
On 31 July 2023, the Group obtained a bank loan of £2,495,000 to refinance
its existing borrowing. On 2 August 2023, the existing bank loan, and all
outstanding interest accrued to this date, was repaid in full. Repayments of
the new loan commenced on 31 August 2023 and will continue until 30 June 2038.
This loan is secured by a fixed and floating charge over the Group's assets.
The loan carries interest on a floating rate basis with interest at Bank of
England base rate plus a margin of 2.35%.
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