REG - Lords Group Trading - Final Results
15/05/2024 07:00
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RNS Number : 4416O Lords Group Trading PLC 15 May 2024
The information contained within this announcement is deemed by the Company to
constitute inside information pursuant to Article 7 of EU Regulation 596/2014
as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 as amended. Upon the publication of this announcement
via a Regulatory Information Service, this inside information is now
considered to be in the public domain.
For immediate release 15 May 2024
Lords Group Trading plc
('Lords', the 'Company' or the 'Group')
Final Results
Growth strategy continuing to progress despite challenging markets
Unchanged dividend reflecting medium term confidence
Lords (AIM:LORD), a leading distributor of building materials in the UK, today
announces its annual results for the year ended 31 December 2023 ('FY23' or
the 'year').
Change*
FY23 FY22 (%)
Revenue £462.6m £450.0m +2.8%
Revenue - Merchanting £214.9m £220.8m -2.6%
Revenue - Plumbing & Heating £247.7m £229.3m +8.0%
Adjusted EBITDA((1)) £26.8m £30.0m -10.5%
Adjusted EBITDA margin 5.8% 6.7% -0.9%
EBITDA £23.5m £28.6m -18.1%
Profit before tax £3.0m £12.8m -76.8%
Adjusted Profit before tax((2)) £10.4m £17.4m -40.7%
Basic earnings per share 0.84p 5.68p -85.2%
Adjusted basic earnings per share((3)) 4.35p 8.02p -45.8%
Dividend per share 2.0p 2.0p +0.0%
Free cash flow((4)) £13.9m £19.1m -27.5%
Cash flow conversion((5)) 59.2% 66.9% -7.7%
Net (debt)/cash((6)) £(28.5)m £(19.4)m
(*) Based on underlying, not rounded, figures.
FY23 Financial
Highlights
· Performance in line with market expectations for FY23 and FY24.
Non-discretionary nature of a significant proportion of Lords' product range,
alongside the Group's differentiated growth strategy, delivered this
performance despite material market headwinds across the sector
· Record Group revenue in the year, reaching £462.6 million, up 2.8%
on FY22
· Adjusted EBITDA((1)) of £26.8 million (FY22: £30.0 million), down
10.5% and representing a margin of 5.8% (FY22: 6.7%) with a greater proportion
of Group revenues generated by the Group's Plumbing & Heating division
('P&H') in FY23
· Adjusted basic earnings per share((3)) down 45.8% to 4.35 pence
(FY22: 8.02 pence)
· Strong cash flow generated of £22.8 million (FY22: £26.8 million),
contributing to free cash flow((4)) generation of £13.9 million (FY22: £19.1
million)
· Net debt((6)) at 31 December 2023 of £28.5 million (31 December
2022: £19.4 million), with continued focus on providing a robust balance
sheet
· Total dividend for the year of 2.0 pence per share, unchanged from
FY22 (FY22: 2.0 pence per share) demonstrating the Board's confidence in the
Group's ability to deliver long term value for shareholders.
Operational Highlights
· P&H division revenues increased 8.0% to £247.7 million (FY22:
£229.3 million), 3.7% higher on a like-for-like((7)) basis ('LFL'),
benefitting from extended product ranges at higher margins such as renewables
· Merchanting division revenues decreased 2.6% to £214.9 million
(FY22: £220.8 million), with LFL decrease of 6.3% reflecting price deflation
in some product categories
· Lords' customer first proposition continuing to benefit the Group,
giving superior customer insight and agility in specific product and brand
sales strategies
· Organic growth levers continue to drive value creation:
o Brand roll outs accessing new markets and customers; Mr Central Heating
opened a new site in Edinburgh and will seek to establish a 50 branch network
in the medium term
o Product range continuing to expand with new renewables energy range
increasing its revenues by 60% in FY23
· Successful completion of two acquisitions in the Merchanting division
- Chiltern Timber Supplies and Alloway Timber - adding six branches to the
Group's network and 93 new colleagues
· ESG momentum continues, including the launch of a new environmental
policy alongside setting scope 1,2,3 emission reduction targets
· Post year-end announced the appointment of Stuart Kilpatrick as CFO,
a highly experienced finance executive with a track record in public company
M&A. Stuart will be joining the Board on 4 June 2024.
Current Trading and Outlook
· FY24 has begun with wider market conditions remaining uncertain and as
such we will continue to manage the business carefully and prudently,
particularly when looking at M&A opportunities
· In line with the wider market, trading in Q1 FY24 was impacted by a
combination of macro conditions and wet weather. Furthermore, demand in the
P&H division was turbulent following the timing adjustment to the
Government's Clean Heat Market Mechanism ('CHMM')
· Despite the uncertain market conditions, Lords is trading in line with
market expectations and the Board remains confident in achieving the Group's
medium-term EBTIDA margin target of 7.5%.
(()(1) ) Adjusted EBITDA is EBITDA (defined as earnings before
interest, tax, depreciation, amortisation and impairment charges) but also
excluding exceptional items, and share-based payments.
((2) ) Adjusted profit before tax is profit before tax before
exceptional items, share based payments amortisation of intangible assets and
impairment charges.
((3) ) Adjusted basic earnings per share is earnings
attributable to shareholders of Lords Group Trading plc adjusted for
exceptional items, share based payments, amortisation of intangible assets and
impairment charges, divided by the weighted average number of shares in issue
in the year
((4) ) Free cash flow defined as cash generated by operating
activities plus exceptional items less capital expenditure, taxation and
interest paid
((5) ) Free cash flow conversion is free cash flow as a
percentage of EBITDA.
((6) ) Net debt is defined as gross borrowings less cash and
cash equivalents.
((7) ) Like-for-like sales is a measure of growth in sales,
adjusted for new, divested and acquired locations such that the periods over
which the sales are being compared are consistent
Commenting on the results, Shanker Patel, Chief Executive Officer of Lords,
commented:
"FY23 has demonstrated that we have successfully built a sustainable growth
business. Despite the challenging macroeconomic backdrop, the Group has once
again grown its top line and gained market share, while continuing to invest
to deliver future growth. I would like to thank our colleagues across the
UK, who without their fantastic commitment and support for our strategy, these
results would not have been achieved.
"Whilst short term trading pressures may exist, I remain confident in our
strategy and its ability to deliver sustained growth over the medium term.
Our market remains substantial, highly fragmented and we have a track record
of consolidation and organic growth which combined deliver excellent returns
for all of our stakeholders."
Analyst Briefing
There will be an in person meeting for analysts at 09.00hrs today at
Buchanan's offices, which will be hosted by Gary O'Brien (Non-Executive
Chairman), Shanker Patel (CEO) and Chris Day (CFO and COO).
FOR FURTHER ENQUIRIES:
Lords Group Trading plc Via Buchanan
Gary O'Brien, Non-Executive Chairman Tel: +44 (0) 20 7466 5000
Shanker Patel, Chief Executive Officer
Chris Day, Chief Financial Officer and Chief Operating Officer
Cavendish Capital Markets Limited Tel: +44 (0)20 7220 0500
Nominated Adviser and Joint Broker
Ben Jeynes / Dan Hodkinson (Corporate Finance)
Julian Morse / Henry Nicol / Charlie Combe (Sales and ECM)
Berenberg Tel: +44 (0)20 3207 7800
Joint Broker
Matthew Armitt / Richard Bootle / Detlir Elezi
Buchanan Communications Tel: +44 (0) 20 7466 5000
Henry Harrison-Topham / Stephanie Whitmore / Abby Gilchrist LGT@buchanan.uk.com (mailto:LGT@buchanan.uk.com)
Notes to editors:
Lords is a specialist distributor of building, plumbing, heating and DIY
goods. The Group principally sells to local tradesmen, small to medium sized
plumbing and heating merchants, construction companies and retails directly to
the general public. The Group operates through the following two divisions:
· Merchanting: supplies building materials and DIY goods through its network
of merchant businesses and online platform capabilities. It operates both in
the 'light side' (building materials and timber) and 'heavy side' (civils and
landscaping), through 31 locations in the UK.
·Plumbing and Heating: a specialist distributor in the UK of plumbing and
heating products to a UK network of independent merchants, installers and the
general public. The division offers its customers an attractive proposition
through a multi-channel offering. The division operates over 17 locations
enabling nationwide next day delivery service.
Lords was established over 35 years ago as a family business with its first
retail unit in Gerrards Cross, Buckinghamshire. Since then, the Group has
grown to a business operating from 48 sites. Lords was admitted to trading
on AIM in July 2021 with the ticker LORD.L. For additional information please
visit www.lordsgrouptradingplc.co.uk (http://www.lordsgrouptradingplc.co.uk/)
.
Chairman's statement
Lords demonstrated its resilience in FY23 and outperformed the wider sector
despite the challenging economic environment. This outperformance has
largely been achieved due to approximately 80% of our revenues coming from the
essential areas of the repairs, maintenance and improvement sector where
purchases are not discretionary. This has helped ensure a consistent level
of underlying demand in both our core divisions. We also believe that our
superior customer engagement is now helping our brands take market share,
using the product preference insights and customer loyalty, through periods of
market volatility.
Our performance and growth strategy
Over recent years, the Group's growth strategy has substantially broadened the
business and diversified our revenue streams, and we saw the benefit of this
in FY23. On a like-for-like (LFL) basis, Group revenues held up well and
were 1.2% lower than in FY22. This was the result of 3.7% LFL revenue growth
in the Plumbing and Heating (P&H) division offsetting a LFL decrease of
6.3% in the Merchanting division, where some product categories have seen
price deflation. Adjusted EBITDA reduced in the period to £26.8 million
(FY22: £30.0 million) reflecting the challenging market conditions in our
higher-margin Merchanting division and the impact of loss-making Alloway
Timber as anticipated at acquisition. Adjusted profit before tax of £10.4
million (FY22: £17.4 million) reflected market conditions and interest rate
movements.
Mindful of macro conditions, we continue to leverage our differentiated
customer first position to swiftly respond to volatile market conditions and
ensure we manage the business prudently, focusing on our profitability and
cash flows whilst exercising caution about capital allocation where required.
Furthermore, we selectively completed two acquisitions in the year, which were
a strong geographical and product extension fit and both are performing in
line with our expectations.
Our acquisition strategy is unique among our peers and aims to increase our
market share and profitability, while further diversifying our revenue. This
is delivering CAGR beyond our peer group and demonstrating our ability to
scale in the sector. The markets we operate in are highly fragmented, with
numerous specialist independent merchants, and we consistently demonstrate
that Lords is a great home for these businesses given our customer and
colleague-focused culture, making us an acquirer of choice. Even so, in
current economic conditions, maintaining our balance sheet discipline is
crucial and we are taking a very considered approach to further acquisitions
but remain well positioned as macro conditions improve.
Dividends
The Board is recommending a final dividend of 1.33 pence per share, to give a
total dividend in respect of the year of 2.0 pence per share, unchanged on
FY22.
While the Group's profits were lower in FY23, the total dividend is 2.2 times
covered by adjusted earnings per share and the Board concluded it was
appropriate to maintain the level of payout. This reflects our confidence in
the future growth of the business, its inherent resilience and commitment to a
progressive dividend. Subject to Shareholder approval at the Annual General
Meeting ("AGM"), the Final Dividend will be paid on 28 June 2024, with a
record date of 24 May 2024 and an ex-dividend date of 23 May 2024.
Our purpose and culture
The Group's culture is one of its key strengths. It helps us to stand out as
an employer and deliver great service for our customers, driving organic
growth through increased loyalty and share of wallet expansion.
As we continue to grow, we are focused on maintaining the key parts of our
culture, such as the family feel of the business, while ensuring we are
flexible enough to seize the opportunities ahead. We have therefore done a
considerable amount of work this year to more formally define our culture and
the values that support it, and we are now integrating our refreshed values
into the way we recruit and manage our people. This allows wider stakeholders
to understand why independent vendors, customers and employees alike are
choosing Lords.
As part of this process, we also refined our vision for the Group, which is
set out within our annual report. This encapsulates our fundamental purpose
and the factors that make us stand out in our market, and will help to ensure
all stakeholders are aligned to deliver Lords' growth strategy.
Environmental, social and governance (ESG) matters
The Group's environmental footprint has always been a priority for all of our
management teams. While the Board has ultimate responsibility for this, the
actions that determine our performance are taking place across our business.
We have therefore looked to increase accountability in the divisions and
across local and regional brands, agreeing reduction plans and incentivised
targets. We are in the process of identifying appropriate key performance
indicators at divisional and Group level, so we can set targets and
incentivise delivery, including for the executive directors. Since the end
of the year, the Board has approved an updated environmental policy which is
published on our website.
Our business is built on great customer service and that needs highly engaged
and motivated people. Our regular surveys continue to show strong employee
engagement, reflecting our people-focused culture and the example set by our
CEO, Shanker Patel.
As I noted in my report to you last year, Dawn Moore stepped down as a
non-executive director at the 2023 AGM, to focus on her executive
responsibilities. The Board greatly valued Dawn's expertise in human resources
and we were keen to recruit a new director with a similar skill set. We were
therefore delighted to welcome Sheena Mackay in September 2023. Sheena's
background as a global HR Director in public companies made her the ideal
candidate and she has taken over as Chair of the nomination and remuneration
committees. She also has experience as Chair of the ESG committee, helping
oversee our efforts to formalise our sustainability commitments.
Since the year end, Chris Day informed the Board that he will be leaving to
take up a new opportunity and we thank him for his service. On 8 May 2024,
we were delighted to announce that Stuart Kilpatrick will be joining the Board
as our new Chief Financial Officer (CFO) on 4 June 2024. Stuart is a highly
experienced CFO, with a particular track record in M&A delivery, and we
believe he will make a significant contribution to our continued success.
Lords is well supported by its strong, well established finance team who
will ensure a smooth transition from Chris's departure to Stuart joining.
Looking forward
In the near term, Lords remains focused on driving organic and margin
accretive growth, accessing new markets and customers via new store-roll outs
of existing brands, accelerating our digital capabilities and an increasing
share of customer wallet through marketing new products. In addition, the
Group's access to the growing decarbonisation product market is further
increasing margin expansion.
Whilst we are seeing wider market conditions remaining uncertain in the near
term, and we will continue to manage the business carefully and prudently, we
are confident in the medium-term M&A opportunities that exist. We
continue to hold active conversations with a number of independent merchants
across the UK. As the Group monitors its pipeline of opportunities, Lords'
prudence and commitment to protecting its market reputation in the name of
long-term success is vital. We continue to believe in our differentiated
proposition and diversified growth strategy and, as we move into the second
half of the year, the Board looks to the future with confidence.
Gary O'Brien
Independent Non-Executive Chairman
14 May 2024
Chief Executive Officer's review
Being a decentralised and flexible business has helped us to navigate
difficult conditions in FY23, by allowing our branches to respond to their
customers' needs. Our relentless focus on customer service continues to bear
fruit, as we strive to provide a combined price and service proposition that
our larger, less agile competitors cannot match. This provides us with a
strong base of loyal and satisfied customers who value their relationship with
us, as reflected in our customer satisfaction scores, our Trusted Partner
accreditation on Feefo and the multiple industry awards we received in FY23.
We will continue to take market share as we leverage our best-in-class
customer engagement to get closer to customers. In addition, we continue to
deploy technology and digitalise our processes to increase efficiency and
reduce costs.
Performance
Group revenue reached a new high in FY23 of £462.6 million, up 2.8% on the
£450.0 million achieved in FY22. As the Chairman has discussed in his
statement, like-for-like revenues were resilient overall, with underlying LFL
growth in P&H largely offsetting the impact of market conditions on our
Merchanting division. Our digital revenues have started to benefit from the
launch in the period of new websites for most of our key brands, improving the
customer online experience and customer choice, which is paramount whether in
store in an increasing number of quality physical locations or online.
We also continue to see strong growth in newer product lines such as the
renewables range in P&H, which has excellent prospects as well as enhanced
margins.
Adjusted EBITDA was 10.5% lower at £26.8 million (FY22: £30.0 million), with
the adjusted EBITDA margin down 0.9 percentage points to 5.8% (FY22: 6.7%).
This reflects market conditions and the greater proportion of Group revenues
generated by P&H in FY23, which has a lower margin than Merchanting. We
remain confident of achieving our medium-term EBITDA margin target of 7.5% and
have several levers to do so, including further accretive acquisitions,
improving our productivity and efficiency, growing our higher-margin product
lines and operational leverage.
Once again our cash flow was strong, with adjusted cash generated by operating
activities((8)) of £22.5 million (FY22: £24.1 million), while free cash flow
was £13.9 million (FY22: £19.1 million). Free cash flow conversion was
59.2% (FY22: 66.9%), supporting disciplined investment in our 3Ps - people,
plant and premises - to deliver further growth. Our capital expenditure in
FY23 was £4.9 million (FY22: £3.5 million), including the initial £2.2
million payment to acquire the George Lines' Heathrow site.
The Group's cash flow and our focus on maintaining a robust and prudent
balance sheet resulted in a year-end net debt position of £28.5 million (31
December 2022: £19.4 million).
The movement is explained by the combination of 2023 acquisitions, freehold
purchase and deferred consideration relating to prior year acquisitions.
Combined, these total £13.0 million. At 31 December 2023 we had £46.7
million of headroom in our bank facilities and £19.0 million of accessible
cash, giving us a robust liquidity position. Our balance sheet is also
backed by our freehold property portfolio, which has a book value of at least
£13.0 million.
((8)) Adjusted cash generated from operating activities is defined as net cash
generated by operating activities plus exceptional items.
Strategy
We made good progress with our growth strategy, which aims to deliver
margin-accretive growth by opening new branches, margin-accretive
acquisitions, extending our product range and expanding our digital revenues,
through carefully targeted capital expenditure. Whilst the majority of this
progress in FY23 was driven by organic growth, we also acquired two businesses
that add to our geographical presence and product range.
New branch openings
All our brands have the strong localised reputation which allows us to open
new branches and access new customers, with regional brand power offering
faster market penetration. In particular, we see excellent prospects for Mr
Central Heating and George Lines. We opened Mr Central Heating's eleventh
branch, in Edinburgh, and have identified further sites to expand the brand to
up to 50 branches over the medium term.
George Lines, our civils and landscaping merchant, currently has three
branches in the South East of England and our plans will see it grow to ten
branches nationwide. This will give us national coverage, with each branch
having a delivery radius of 30 to 50 miles.
Product range extension
We are continually introducing complementary or innovative products, so we can
capture untapped demand and further enhance our customer loyalty. Our
renewables range is a prime example of an innovative category, as customers
increasingly demand energy-efficient technologies. This range, which
includes air source heat pumps, controls, under-floor heating and air
conditioning, delivered a 60% revenue increase in FY23.
In Q1 2024, the Government's position was that the Clean Heat Market Mechanism
(CHMM) would come into effect in Q2 2024. The CHMM incentivises boiler
manufacturers and homeowners to accelerate the transition towards renewable
energy sources in UK homes, increasing demand for renewable products including
air source heat pumps. Some manufacturers have claimed that the initiatives
applied to promote air source heat pump sales will also force an increase in
the unit price of gas boilers, which will be passed through to consumers.
In March 2024, the Government confirmed its commitment to the CHMM but
announced a twelve-month adjustment to its introduction, to April 2025.
Lords remains well placed to benefit from the shift in demand towards air
source heat pumps when it comes into force.
An example of the team putting data and customer insights into practice to
broaden product range, demonstrating our agility, is following the success of
the Advance Roofing implant into our Beaconsfield branch where we are
targeting further growth in roofing supplies. Electrical supplies are also a
natural complement to our existing product range in Merchanting, and we are
starting to offer them in selected branches.
Digital expansion
Our online presence is an important tool for attracting and retaining
customers, allowing them to shift between online and in-store as they prefer,
improving their buying experience and helping us to reach new customers.
This year, our in-house digital team has launched upgraded websites for our
Lords, Condell and George Lines brands, increasing their functionality and
conversion rates. We continue to see online platforms as a growing part of the
customers' purchasing journey as they move across channels in their decision
process.
Acquisitions
As the Chairman has outlined, there is a substantial consolidation opportunity
in our sector of independent local merchants, and potential vendors see us as
an attractive buyer given our proven track record, integrating 15 acquisitions
over the past seven years. In FY23 we acquired Chiltern Timber Supplies and
Alloway Timber in the Merchanting division, adding six branches to our network
and increasing our product range through Chiltern's specialist timber
offering. We were delighted to welcome 93 new colleagues to the Group with
these businesses. Both acquisitions are performing in line with market
expectations and are helping to drive EBITDA margin expansion.
Our approach to M&A remains disciplined given the wider volatility and
value fluctuations. For example, we withdrew from two other transactions due
to the more challenging market conditions, remaining disciplined about
securing acquisitions on our stated target range of 4 to 6x EBITDA basis. This
discipline is a key driver of our 25%+ return on investment enjoyed across 13
transactions between 2016 and 2022.
Our 3Ps - people, plant and premises
We continuously invest in our people through promotions, training and
recruitment. The Workvivo platform we introduced in FY23 has been brilliant
for colleague communication and engagement, and we held our first colleague
conference in March 2024, bringing together 100 colleagues to discuss our
strategy, growth ambitions and ESG initiatives. Our strong engagement scores
continue and we have maintained our average length of service, which is six
years.
We have an ongoing programme of modernising our plant with new trucks and
forklifts, and we continue to invest in our systems to support productivity
and customer service. Our investment in premises in FY23 included relocating
our Glasgow branch and refurbishments of other selected locations. In FY24,
we are planning refits at five branches, including four of the recently
acquired Alloway Timber locations.
Outlook
In line with the wider market, trading in FY24 has begun with market
conditions remaining uncertain and Q1 FY24 was impacted by a combination of
macro conditions and wet weather. During Q1 FY24, demand in the Group's
P&H division was volatile following the postponement of the Government's
CHMM but LFL revenue performance has improved across both divisions during
April 2024.
Looking ahead, and whilst there remain risks associated with macroeconomic
shocks that could potentially affect our supply chains, I am confident that
Lords is in a very strong position with less than 1% of the UK building
materials market and a proven, differentiated growth strategy. Furthermore,
we remain well placed to capture the UK's transition to renewable energy
sources in homes and the Board continues to be cautiously optimistic as to the
Group's ability to gain market share via organic growth levers and value-added
acquisition opportunities.
We will continue to manage the business prudently, particularly when looking
at M&A opportunities and in relation to our supply chain, where we
continue to invest in our supplier relationships and to ensure that we hold
sufficient inventory to meet customer needs, while ensuring we carefully
manage our working capital levels.
Shanker Patel
Chief Executive Officer
14 May 2024
Financial review
The Group demonstrated its resilience during FY23 and our focus on controlling
our cost base and carefully managing our financial resources leaves us well
placed for further growth, as market conditions turn more positive.
Revenue
Group revenue was £462.6 million (FY22: £450.0 million), up 2.8%.
Excluding acquisitions and new locations, LFL revenue was down 1.2%.
Acquisitions made in the year contributed revenue of £5.4 million in FY23.
In the year, P&H performed well, with LFL revenue growth of 3.7%,
benefiting from extended product ranges, and contributing to total revenue
growth of 8.0% as a result of the full year effect of the Direct Heating and
HRP Trade businesses acquired in 2022. Market conditions for Merchanting
presented a difficult trading environment in 2023, with LFL revenues declining
by 6.3%, albeit generally outperforming the wider sector. Overall sales were
down 2.6% on FY22, offset by the positive impacts from the contributions of
the 2023 acquisitions of Chiltern Timber Supplies and Alloway Timber.
Administrative expenses
Administrative expenses (excluding depreciation, amortisation, impairment,
exceptional items and share-based payments) totalled £61.3 million (FY22:
£54.9 million), an increase of 11.6%. This partly resulted from the
additional overheads in the businesses we acquired in the year with overhead
synergies delivered in Q4 2023 of £0.5 million.
On a like-for-like basis, administrative expenses were £1.5 million higher in
FY23, reflecting the impact of inflation and our continued investment to
support the Group's growth, including appointing a Group Human Resources
Director in February 2023 and strengthening our finance teams.
Depreciation, amortisation and impairment
Depreciation and amortisation rose by 12.3% to £13.8 million (FY22: £12.3
million). Of this, £7.7 million relates to right-of-use assets (FY22: £6.9
million), with the increase resulting from leases in the acquired businesses.
A further £3.5 million related to intangible assets (FY22: £3.3 million)
and £2.6 million to property, plant and equipment ('PPE') (FY22: £2.1
million). Additionally, in 2023 a £0.5 million impairment charge was taken
in the year relating to two loss-making sites within the Group, having
assessed the recoverable value of the right‑of‑use assets and PPE at these
sites.
Exceptional items
The Group incurred exceptional costs of £2.8 million in FY23. The most
significant items related to: £0.9 million of costs associated with business
combinations completed in the year and for potential acquisitions which will
not occur or did not occur by the end of 2023; £1.4 million in relation to
the impact of the Group reassessing its estimation basis for stock
provisioning within the Merchanting division as well as an isolated stock
theft at one site; and £0.6 million for Group simplification activities as a
result of Group reorganisation in the year to streamline management structures
and generate operational efficiency.
Exceptional items in FY22 totalled a net cost of £0.9 million, with the
largest component being diligence costs associated with acquisitions.
Profitability
EBITDA for FY23 was £23.5 million (FY22: £28.6 million). Adjusted EBITDA,
which excludes the exceptional items set out above as well as share-based
payments, was £26.8 million, down 10.5% from £30.0 million in FY22. The
decline in Adjusted EBITDA reflects challenging market conditions in the
higher margin Merchanting division and anticipated impact of the loss making
Alloway Timber at acquisition. The Adjusted EBITDA margin was 5.8% (FY22:
6.7%).
The table below shows Adjusted EBITDA by division:
FY23 FY23 FY22 FY22
£m margin £m margin
Plumbing and Heating 12.9 5.2% 13.8 6.0%
Merchanting and other services 14.0 6.5% 16.1 7.3%
Total Group 26.8 5.8% 30.0 6.7%
Presented numbers are based on underlying, not rounded, figures
Net finance costs
Net finance costs were £6.2 million (FY22: £3.5 million), with the increase
mainly due to rising interest rates during the year and higher levels of
borrowings as a result of acquisitions made across 2022 and 2023. The
interest expense associated with the Group's leases was £2.3 million (FY22:
£1.9 million).
Profit before tax and adjusted profit before tax
Adjusted profit before tax, which excludes exceptional items, share-based
payments, amortisation of intangible assets and impairment, was £10.4 million
(FY22: £17.4 million). The Group generated profit before tax for the year
of £3.0 million (FY22: £12.8 million).
Earnings per share and adjusted earnings per share
Adjusted earnings per share((3)) was 4.35 pence (FY22: 8.02 pence). Basic
earnings per share was 0.84 pence (FY22: 5.68 pence).
Dividend
The Board has recommended a final dividend of 1.33 pence per share. Combined
with the interim dividend of 0.67 pence per share, this gives a total dividend
for the year of 2.0 pence per share, unchanged on FY22. The final dividend
will be paid on 28 June 2024 to shareholders on the register at the close of
business on 24 May 2024. The cash cost of the total dividend for the year
will be £3.3 million (FY22: £3.3 million). At the year end, the Company had
distributable reserves of £15.8 million (31 December 2022: £19.5 million).
Cash flow
Adjusted cash generated by operating activities was £22.5 million (FY22:
£24.1 million) while free cash flow was £13.9 million (FY22: £19.1
million). Free cash flow conversion, which is free cash flow as a percentage
of EBITDA, was 59.2% (FY22: 66.9%). In FY23, the Group used £5.1 million to
acquire Chiltern Timber Supplies and Alloway Timber. The Group paid deferred
consideration of £3.1 million related to six prior acquisitions (FY22: £2.7
million) and £2.1 million to buy out non-controlling interests (FY22: £2.5
million).
Deferred consideration was higher than typical due to the number of
transactions Lords completed in the aftermath of the Covid pandemic, and will
return to a lower level in FY24 and beyond. The Group maintained its capital
discipline during the year, with capital expenditure of £4.9 million (FY22:
£3.5 million). This included the initial £2.2 million payment to acquire
the George Lines site near Heathrow. Underlying capital expenditure was
therefore £2.7 million, as we invested to deliver our strategic growth
initiatives.
Debt financing and liquidity
In April 2023, we refinanced the Group's £70.0 million facilities with HSBC
and agreed new facilities totalling £95.0 million with HSBC, NatWest and BNP
Paribas. The facilities comprise a £70.0 million revolving credit facility
(RCF) and a £25.0 million receivables financing facility. The RCF includes
a £20.0 million accordion option and both facilities run for an initial three
years, with two one-year extension options. The accordion and extension
options are subject to lender approval.
At 31 December 2023, the Group had net debt (defined as borrowings less cash
and cash equivalents, and before recognising lease liabilities) of £28.5
million (31 December 2022: £19.4 million). The Group had substantial
headroom of £46.7 million (31 December 2022: £34.6 million) within its debt
facilities at the year end, and a further £19.8 million of accessible cash
(31 December 2022: £16.0 million).
Working capital
Inventory decreased by £3.9 million, from £53.2 million at 31 December 2022,
to £49.3 million at the year end. This included inventories acquired from
acquisitions of £1.3 million, and an underlying reduction in inventories of
£5.2 million, as seen in the cash flow, as a result of management focus on
inventory optimisation at its sites. The year-end balance equated to 48 days
of stock (31 December 2022: 50 days).
Current trade and other payables were £4.6 million higher at £98.9 million
(31 December 2022: £94.3 million), equating to trade creditor days of 61 (31
December 2022: 56 days). Current trade and other receivables rose by £10.2
million to £81.2 million (31 December 2022: £71.0 million), resulting in
trade debtor days of 45 at the year end (31 December 2022: 40 days). The
movement in trade debtor days is the result of a surge in demand in December
2023 from B2B customers in our P&H segment ahead of the now postponed
Clean Heat Market Mechanism levy implementation.
Intangible assets
Intangible assets rose to £46.2 million (31 December 2022: £45.3 million),
mainly as a result of the acquisitions during the year, which resulted in the
recognition of customer relationships of £1.2 million, trade names of £0.4
million and goodwill of £2.1 million, partially offset by the amortisation
charge of £3.5 million.
Non-current liabilities
Trade and other payables relate to deferred consideration liabilities. The
liability has increased by £1.2 million to £5.9 million as at 31 December
2023 (31 December 2022: £4.7 million), primarily as a result of the
additional consideration payable from 2025 in relation to businesses acquired
in the year.
Right-of-use assets
Leases that are recorded on the balance sheet principally relate to
properties, cars and distribution vehicles. The right-of-use asset in the
balance sheet at 31 December 2023 was £47.4 million (31 December 2022: £39.0
million). The movement is reflective of additional lease commitments
relating to the six sites acquired in the Chiltern Timber Supplies and Alloway
Timber transactions in FY23.
Post balance sheet events
Since the end of FY23:
· The Group has exercised its extension option under the banking
facilities agreement in relation to the Group's existing £95 million lending
facilities. The terms of the facilities, which consist of a £70 million
revolving credit facility (the 'RCF') and a £25 million receivables financing
facility, were announced by the Company on 6 April 2023 and, pursuant to the
extension now entered, the RCF has now been extended from its initial three
year term by 12 months such that the RCF will now expire on 5 April 2027.
· Chris Day, Chief Financial Officer and Chief Operating Officer,
informed the Board of his decision to leave the Company to take up another
professional opportunity on 9 January 2024. On 8 May 2024, it was announced
that Stuart Kilpatrick will be joining the Board as the new Chief Financial
Officer on 4 June 2024.
Chris Day
Chief Financial Officer and Chief Operating Officer
14 May 2024
Consolidated statement of comprehensive income
For the year ended 31 December 2023
2023 2022
Note £'000 £'000
Revenue 4 462,601 450,020
Cost of sales (370,238) (361,237)
Gross profit 92,363 88,783
Other operating income 766 681
Distribution expenses (5,057) (4,632)
Administrative expenses (61,252) (54,866)
Adjusted EBITDA (1) 26,820 29,966
Share based payments (513) (400)
Exceptional items 5 (2,849) (929)
EBITDA (2) 23,458 28,637
Depreciation (2,610) (2,069)
Amortisation (11,214) (10,240)
Impairment charge (501) -
Operating profit 7 9,133 16,328
Finance income 8 196 42
Finance expense 9 (6,356) (3,572)
Profit before taxation 2,973 12,798
Taxation 10 (1,273) (3,257)
Profit for the year 1,700 9,541
Other comprehensive income - -
Total comprehensive income 1,700 9,541
Total comprehensive income for the year attributable to:
Owners of the parent company 1,382 9,117
Non-controlling interests 318 424
1,700 9,541
Earnings per share
Basic earnings per share (pence) 11 0.84 5.68
Diluted earnings per share (pence) 11 0.82 5.36
(1) Adjusted EBITDA is EBITDA but also excluding exceptional items and
share-based payments.
(2) EBITDA is defined as earnings before interest, tax, depreciation,
amortisation and impairment charge.
The results for the year arise solely from continuing activities.
Consolidated statement of financial position
As at 31 December 2023
2023 2022
Note £'000 £'000
Non-current assets
Intangible assets 12 46,205 45,331
Property, plant and equipment 20,233 13,647
Right-of-use assets 13 47,364 38,968
Other receivables 200 279
Investments 180 85
114,182 98,310
Current assets
Inventories 49,292 53,177
Trade and other receivables 81,171 71,023
Assets classified as held for sale - 1,333
Cash and cash equivalents 19,811 16,038
150,274 141,571
Total assets 264,456 239,881
Current liabilities
Trade and other payables (98,915) (94,343)
Borrowings (9,507) (10,348)
Lease liabilities 13 (7,815) (5,496)
Liabilities classified as held for sale - (675)
Current tax liabilities (7) (1,700)
Total current liabilities (116,244) (112,562)
Non-current liabilities
Trade and other payables (5,917) (4,716)
Borrowings (38,239) (25,086)
Lease liabilities 13 (43,953) (37,024)
Other provisions (1,565) (1,283)
Deferred tax (7,373) (7,022)
Total non-current liabilities (97,047) (75,131)
Total liabilities (213,291) (187,693)
Net assets 51,165 52,188
Equity
Share capital 828 813
Share premium 28,293 28,293
Merger reserve (9,980) (9,980)
Share-based payment reserve 1,009 497
Retained earnings 29,386 31,237
Equity attributable to owners of the parent company 49,536 50,860
Non-controlling interests 1,629 1,328
Total equity 51,165 52,188
Consolidated statement of changes in equity
For the year ended 31 December 2023
Called up Share Merger reserve Share‑ based Retained earnings Equity attributable to owners of parent company Non- Total
share capital premium payments reserve controlling interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2023 813 28,293 (9,980) 497 31,237 50,860 1,328 52,188
Profit for the financial period and total comprehensive income - - - - 1,382 1,382 318 1,700
Share-based payments - - - 512 - 512 - 512
Share capital issued 15 - - - - 15 - 15
Put and call options over non-controlling interests - - - - 78 78 - 78
Corporation tax on options - - - - 515 515 - 515
Deferred tax on options - - - - (515) (515) - (515)
Capital repayment - - - - - - (17) (17)
Dividends paid - - - - (3,311) (3,311) - (3,311)
As at 31 December 2023 828 28,293 (9,980) 1,009 29,386 49,536 1,629 51,165
Called up Share Merger reserve Share-based payments reserve Retained earnings Equity attributable to owners of parent company Non- Total
share capital premium controlling interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2022 788 28,293 (9,980) 96 20,527 39,724 4,337 44,061
Profit for the financial period and total comprehensive income - - - - 9,117 9,117 424 9,541
Share-based payments - - - 400 - 400 - 400
Share capital issued 25 - - - - 25 - 25
Put and call options over non-controlling interests - - - - (609) (609) - (609)
Corporation tax on options - - - - 606 606 - 606
Deferred tax on options - - - 1 515 516 - 516
Non-controlling interests share of acquisitions - - - - - - 745 745
Acquisition of non-controlling interest - - - - 4,168 4,168 (4,168) -
Capital repayment - - - - - - (10) (10)
Dividends paid - - - - (3,087) (3,087) - (3,087)
As at 31 December 2022 813 28,293 (9,980) 497 31,237 50,860 1,328 52,188
Consolidated statement of cash flows
For the year ended 31 December 2023
2022
2023 (restated(1))
£'000 £'000
Cash flows from operating activities
Profit before taxation 2,973 12,798
Adjusted for:
Depreciation of property, plant and equipment 2,610 2,069
Amortisation of intangibles 3,515 3,317
Amortisation of right-of-use assets 7,699 6,923
Impairments of property plant and equipment 77 -
Impairments of right-of-use assets 424 -
Profit on disposal of property, plant and equipment (368) (151)
Profit on sale of business (119) -
Write off of investment 56 -
Share-based payment expense 513 400
Finance income (196) (42)
Finance expense 6,356 3,572
Operating cash flows before movements in working capital 23,540 28,886
Decrease / (increase) in inventories 5,199 (8,438)
Increase in trade and other receivables (8,067) (526)
Increase in trade and other payables 2,112 6,918
Cash generated by operations 22,784 26,840
Corporation tax paid (3,124) (3,679)
Net cash generated by operating activities 19,660 23,161
Cash flows from investing activities
Purchase of intangible assets (734) (236)
Business acquisitions (net of cash acquired) (5,150) (26,854)
Deferred consideration paid (3,116) (2,683)
Purchase of property, plant and equipment (4,905) (3,516)
Purchase of investments (150) -
Proceeds on disposal of property, plant and equipment 4,160 195
Cash received on sale of business 340 -
Interest received 196 42
Net cash used in investing activities (9,359) (33,052)
Cash flows from financing activities
Principal paid on lease liabilities (6,912) (6,482)
Interest paid on lease liabilities (2,340) (1,913)
Issue of share capital 15 25
Dividends (3,311) (3,087)
Purchase of non-controlling interest of Hevey (2,126) (2,480)
Capital repayment to non-controlling interests (17) (10)
Proceeds from borrowings 109,116 110,976
Repayment of borrowings (97,853) (80,450)
Bank interest paid (2,917) (1,306)
Interest paid on invoice discounting facilities (805) (124)
Net cash (outflow) / inflow from financing activities (7,150) 15,149
Net increase in cash and cash equivalents 3,151 5,258
Cash and cash equivalents at the beginning of the year 16,660 11,402
Cash and cash equivalents at the end of the year 19,811 16,660
Cash and cash equivalents 19,811 16,038
Cash and cash equivalents included in assets held for sale - 622
Cash and cash equivalents at the end of the year 19,811 16,660
( )
(1) See note 3.3 for details regarding the restatement.
Notes to the financial statements
For the year ended 31 December 2023
1. General information
Lords Group Trading plc ('the Company') is a public company limited by shares,
listed on AIM and incorporated and domiciled in England. The address of the
Company's registered office and principal place of business is 2nd Floor, 12 -
15 Hanger Green, London, England, W5 3EL.
The principal activity of the Company together with its subsidiary
undertakings (the 'Group') throughout the period is the distribution of
building materials, heating goods and DIY goods to local tradesmen, large
scale developers, small and medium construction companies and retail
customers.
The financial statements were authorised for issue, in accordance with a
resolution of directors, on 14 May 2024. The directors have the power to
amend and reissue the financial statements.
2. Accounting policies
2.1 Basis of preparation of financial statements
Whilst the financial information included in this preliminary results'
announcement has been prepared in accordance with the recognition and
measurement requirements of UK-adopted International Accounting Standards this
announcement does not itself contain sufficient information to comply with
UK-adopted International Accounting Standards and does not constitute
statutory accounts for the purposes of section 434 of the Companies Act 2006.
The principal accounting policies used in preparing this preliminary results
announcement are those that the Company has adopted for its statutory accounts
for the year ended 31 December 2023 and are unchanged from those previously
disclosed in the Group's Annual Report and Accounts for the year ended 31
December 2022.
Statutory accounts for 2022 have been delivered to the Registrar of Companies
and those for 2023 will be delivered in due course. The Company's auditors RSM
UK LLP, have reported on the 2023 accounts; their report was unqualified, did
not draw attention to any matters by way of emphasis without qualifying their
report and did not contain statements under s498 (2) or (3) Companies Act
2006. The 2022 audit report was unqualified, did not draw attention to any
matters by way of emphasis without qualifying their report and did not contain
statements under s498 (2) or (3) Companies Act 2006.
Full financial statements for the year ended 31 December 2023 will be posted
and made available to shareholders in due course.
The financial statements have been prepared on a going concern basis under the
historical cost convention unless otherwise specified within these accounting
policies. The financial information is presented in pounds sterling and all
values are rounded to the nearest thousand (£'000), except when otherwise
indicated.
The preparation of financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Group and Company accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements, are
disclosed in note 3.
2.2 Going concern
At 31 December 2023, the Group had £46.7 million of undrawn facilities as
disclosed in note 26 and £19.8 million of cash. On 1 May 2024, the Group
exercised its option under the facilities agreement signed in 2023 to extend
the expiry date by an additional year to 5 April 2027.
Accounting standards require that the foreseeable future covers a period of at
least twelve months from the date of approval of the financial statements,
although they do not specify how far beyond twelve months a board should
consider. The Board has considered cash flow projections over an extended
period coinciding with the expiry date of the banking facilities on 5 April
2027. The Group is expected to have at least £28.7 million of headroom over
its facilities at all times until 5 April 2027.
The cash flow forecasts have been stress tested by considering the most likely
risks impacting the Group. These are considered to be growth below forecast,
increased working capital requirements through increased debtors and increased
incidence of customer default. The Group's cash flow projections indicate
covenants on facilities will not be breached unless, instead of the
anticipated growth, the Group's projected EBITDA falls by £8.9 million,
debtors increase by 24% or the incidence of customer default is five times
greater than that seen in 2023. While none of these are likely to occur, the
Group has mitigating actions at its disposal that it can take in downside
scenarios, such as delaying capital expenditure and maintaining a strong
credit control function across the Group supported by credit insurance and
restructuring the Group to reduce costs.
Cash flow forecasts are reforecast in the event of a potential acquisition not
already in the forecast. The Group prepares weekly cash flow projections,
daily sales flashes and monthly management accounts compared to budget with
key performance indicators which together will provide an early warning system
to indicate whether any mitigating actions are necessary in any part of the
Group.
In all reasonable scenarios the Group is projected to be compliant with its
banking covenants and therefore the directors are satisfied that the Group has
adequate resources to continue operations for the foreseeable future.
After reviewing the Group and Company's forecasts and risk assessments and
making other enquiries, the Board has formed the judgement at the time of
approving the financial statements that there is a reasonable expectation that
the Group and its subsidiaries have adequate resources to continue in
operational existence until at least 5 April 2027.
Accordingly, the directors continue to adopt the going concern basis in
preparing the Group and Company financial statements.
2.3 New accounting standards, interpretations or amendments adopted by the
Group
In the current year, the Group has applied a number of amendments to standards
issued by the International Accounting Standards Board (IASB) that are
mandatorily effective for an accounting period that begins on or after 1
January 2023.
The amendments relevant to the Group are:
Amendments to standards
· Amendments to IAS 12 Deferred Tax related to Assets and Liabilities
arising from a Single Transaction.
· Amendments to IAS 8 Accounting policies, Changes in Accounting
Estimates and Errors: Definition of Accounting Estimates.
· Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2 Disclosure of Accounting policies.
By adopting the above, there has been no material impact on the financial
statements.
International Financial Reporting Standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not
applied the following amendments to IFRS Standards that have been issued but
are not yet effective:
· Amendments to IAS 1 - Non-current Liabilities with Covenants.
· Amendments to IFRS 16 - Lease Liability in a Sale and Leaseback.
· Amendments to IAS 7 and IFRS 7 - Supplier Finance Arrangements.
The directors do not expect that the adoption of the standards listed above
will have a material impact on the financial statements of the Group.
3. Critical accounting judgements, estimates and errors
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
3.1 Key accounting judgements
Recognition of legal and regulatory provisions
A key area of judgement applied in the preparation of these financial
statements is determining whether a present obligation exists and, where one
does, in estimating the probability, timing and amount of any outflows. In
determining whether a provision needs to be made and whether it can be
reliably estimated, we consult relevant professional experts and reassess our
judgements on an ongoing basis as facts change. In the early stages of legal
and regulatory matters, it is often not possible to reliably estimate the
outcome and in these cases we do not provide for their outcome but instead
include further disclosures outlining the matters within our contingent
liabilities note.
Assessment of who has the risk and reward of ownership of non-controlling
interests with put and call options
A key area of judgement applied in the preparation of these financial
statements is determining whether the risk and rewards of ownership resides
with the non-controlling interests or the Group when an acquisition has put
and call options.
Where the pricing is at a variable price, the Group assesses the risks and
rewards reside with the non controlling interests. This is because the
exposure to any increase or decrease in the value of the business resides with
the non-controlling interest, as they will either retain the investment
indefinitely (if neither party exercises) or they can recover the fair value
of the business through the exercise price.
Where the exercise price is a fixed amount (or an amount that varies only for
the passage of time), then the risks and rewards reside with the Group. This
is because once the put and call become exercisable, one party will be
incentivised to exit because they benefit from doing so.
On 31 March 2022, the Group acquired a 90% interest in the plumbing and
heating businesses DH&P Trade Counters Holdings Limited and DH&P HRP
Holdings Limited and has a put and call policy over the remaining 10%. The
purchase price is based on a formula that approximates market value. There
is also a service agreement which impacts 50% of the price paid for the shares
but as the price paid is still variable the Group assesses the risk and risk
of rewards remain with the non-controlling interest.
In April 2021, the Group acquired a 75% interest in Condell Limited with put
and call interests over the remaining 25%. The purchase price of the options
was at market value and there was no service contract. The Group assesses that
risk and reward remained with the non-controlling interest.
APMs - Adjusting items
Adjusting items relate to certain costs or income that occur based on events
or transactions that fall within the normal activities of the Group but which
are excluded from the Group's APMs by virtue of their size and nature, in
order to provide a helpful alternative perspective of the year-on-year trends,
performance and position of the Group's trading business that is more
comparable over time. This alternative view is consistent with how
management views the business, and how it is reported internally to the Board.
Management exercises judgement in determining the adjustments to apply to
IFRS measurements, based on the nature of the item, the origin of the
occurrence and the size of impact of that item on the performance of the
Group, as well as consistency with prior periods. The amount and timing of
adjusting items can be unpredictable and subject to a higher level of scrutiny
by users of the financial statements. Adjusting items can include, but are
not limited to: amortisation of acquired intangibles, share-based payment
expenses, impairment charges and reversals; Group simplification;
restructuring and redundancy costs; profits or losses on disposal of
businesses; fair value remeasurements of financial instruments; and items of
income and expense that are considered material, either by their size and / or
nature. The tax effect of such items is also classified as adjusting.
3.2 Key accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are addressed below.
Useful economic lives of intangible and tangible assets
The annual amortisation and depreciation charge for intangible and tangible
assets is sensitive to changes in the estimated useful economic lives and
residual values of the assets. The useful economic lives and residual values
are reassessed annually. They are amended when necessary to reflect current
estimates, based on cash- generating unit performance, technological advances,
future investments, economic utilisation and the physical condition of the
assets.
Inventories
The Group carries significant levels of inventory and key judgements are made
by management in estimating the level of provisioning required for slow-moving
inventory. Provision estimates are forward looking and are formed using a
combination of factors including historical experience, management's knowledge
of the industry, Group discounting and sales pricing. Management use a
number of internally generated reports to monitor and continually reassess the
adequacy and accuracy of the inventory provision.
In arriving at their conclusion, the directors consider inventory ageing and
turn analysis. In 2023 the Group reassessed its estimation basis for
inventory provisioning to better identify and account for ageing stock, as a
result of experience of market conditions gained in 2023. The impact of this
change in estimation resulted in a higher level of inventory provision and a
charge of £751,000 recorded in the income statement in the year ended 31
December 2023. The change in estimation basis is not expected to have a
material impact on profit and loss in future years. The charge was recorded
as an exceptional item. The inventory provision is 5.0% of inventory (2022:
3.8%). Doubling the provision would increase cost of sales / reduce the
carrying value of inventory by £2,489,000 in 2023 (2022: £1,997,000).
Fair value of goodwill and intangible assets on acquisition
The fair value of customer relationship assets and trade names separately
acquired through business combinations involves the use of valuation
techniques and the estimation of future cash flows to be generated over
several years. The estimation of the future cash flows requires a
combination of assumptions including assumptions for customer attrition rate,
EBIT and discount rates. The relief from royalty rate is the value that
would be obtained by licensing trade names out to a third party, as a
percentage of sales. See note 12 for the carrying value of the assets.
Goodwill is measured as the excess of the consideration transferred over the
Group's interest in acquisition-date identifiable assets acquired less
liabilities assumed. Therefore changing the assumptions selected by
management could significantly affect the allocation of the purchase price
paid between goodwill and other acquired intangibles.
The assumptions applied by the directors in respect of the business
combinations are as follows:
Trade names
Customer EBIT as a Relief from
attrition rate % of revenue Discount rate royalty rate Discount rate
Chiltern Timber Limited - - - 3.0% 19.9%
Alloway Timber Group 10.1% 3.5% 18.7% - -
These assumptions are no longer provisional as at 31 December 2023.
Impairment of goodwill, intangible assets, tangible assets and right- of- use
assets
Under IAS 36, the Group is required to test goodwill annually for impairment,
and to assess its right-of-use assets and property, plant and equipment for
any indicators of impairment. For impairment testing purposes, the Group has
determined that each branch is a separate cash-generating unit (CGU) on the
basis that each branch has distinct assets at each location and is able to
control their own cash flow. In order to eliminate the judgement in
assessing the indicators of impairment, management has performed an impairment
test for all CGUs by assessing whether the carrying amount exceeds its
recoverable amount.
As part of its review, the Group calculates the recoverable amount of
cash-generating units by estimating future cash flows using latest forecast
information. The key assumptions involved in estimating the recoverable
amount include future performance and growth rates of the CGUs and the
discount rates used. These are underpinned by a number of judgements based
on management's expectation, based on historic performance, understanding of
the market environment, and assessment of the macroeconomic and industry
conditions. The future revenue and cash flow projections of the CGUs are
inherently uncertain and are considered most sensitive to changes in sector
demand and wider market conditions which have been subdued over the last
twelve months. Changing the assumptions selected by management could
significantly affect the amount of any impairment.
For the purposes of testing goodwill and acquired intangibles, CGUs are
aggregated to match the branches acquired at the time of each specific
business combination.
For the individual branch CGU asset impairment assessment, the cash flows are
extrapolated to cover the period to the end of the lease term.
The key assumptions in the calculations are as follows:
Sales growth rate 4.0%-17.2%
Long-term growth rate 2.0%
Discount rate 15.6%
The results of the review indicated that two of the branches within the
Merchanting segment, which were loss-making in 2023, had cash flow projections
that did not support the carrying value of the assets held at the CGU. An
assessment was made on the recoverable value of the assets in question, and
assets which were not easily transferable to other sites, such as vehicles,
were fully impaired. This resulted in an impairment charge of £424,000
within right-of-use leasehold property, and a £77,000 impairment charge
against the property, plant and equipment at these sites. This charge is
disclosed separately on the face of the consolidated income statement.
3.3 Correction of error in cash flow presentation of option to acquire
minority interest
On 22 October 2022, the Group acquired the remaining 25% non-controlling
interest of Hevey Building Supplies Limited ('Hevey'), exercising the option
entered into as part of the agreement to purchase an initial 75% interest in
Hevey in October 2017. On exercise of the option, the Group acquired the
non-controlling interest for £6.2 million in cash, with 40% payable on
completion of the acquisition of the non-controlling interest and the
remaining 60% paid as fixed deferred consideration in seven equal quarterly
instalments over the subsequent two years.
The 2022 consolidated statement of cash flows has been restated to reclassify
the £2,480,000 payment made in 2022 from investing activities to financing
activities, as no change in control occurred on exercise of this option.
There was no impact on net cash flows for the period.
The above changes were prompted by an inquiry from the Corporate Reporting
Review team of the Financial Reporting Council (FRC) as part of its regular
review and assessment of the quality of corporate reporting in the UK. They
requested further information in relation to the Company's 2022 annual report
and accounts.
The Group agreed to make the above changes within its 2023 financial
statements. The FRC's role is not to verify the information provided but to
consider compliance with reporting requirements. Their review was limited to
the published 2022 annual report; the FRC does not benefit from a detailed
understanding of underlying transactions and provides no assurance that the
annual report and accounts are correct in all material respects.
4. Segmental analysis
The Group has two reporting segments, being the distribution of plumbing and
heating, and the sale and distribution of merchanting and other services.
Plumbing and
Heating Merchanting Total
2023 £'000 £'000 £'000
Revenue 247,667 214,934 462,601
Gross profit 33,234 59,129 92,363
Adjusted EBITDA 12,860 13,960 26,820
Share-based payments (156) (357) (513)
Exceptional items (838) (2,011) (2,849)
EBITDA 11,866 11,592 23,458
Depreciation (485) (2,125) (2,610)
Amortisation (3,815) (7,399) (11,214)
Impairment charge - (501) (501)
Operating profit 7,566 1,567 9,133
Finance income 196
Finance costs (6,356)
Profit before taxation 2,973
Taxation (1,273)
Profit for the year 1,700
Additions to non-current assets 5,281 28,670 33,951
Plumbing and
Heating Merchanting Total
2022 £'000 £'000 £'000
Revenue 229,264 220,756 450,020
Gross profit 32,793 55,990 88,783
Adjusted EBITDA 13,846 16,120 29,966
Share-based payments (136) (264) (400)
Exceptional items - (929) (929)
EBITDA 13,710 14,927 28,637
Depreciation (305) (1,764) (2,069)
Amortisation (2,442) (7,798) (10,240)
Operating profit 10,963 5,365 16,328
Finance income 42
Finance costs (3,572)
Profit before taxation 12,798
Taxation (3,257)
Profit for the year 9,541
Additions to non-current assets 10,420 35,495 45,915
5.Exceptional items
Exceptional items are presented separately as one-off costs that are unlikely
to reoccur or costs outside normal business trading.
2023 2022
£'000 £'000
HS2 compensation - (748)
Group simplification 594 -
Stock provisioning / theft 1,382 -
Profit on disposal of Lords at Home Ltd (119) -
Costs of business combinations 936 842
Retentions employment costs on acquisitions 219 681
National insurance (recovery) / payments (13) 338
Reduction in contingent consideration (150) (184)
2,849 929
Year ended 31 December 2023
The Group hived up its Hevey Building Supplies, Alloway Timber and Chiltern
Timber businesses into Carboclass Limited and reorganised the Group to make a
number of other subsidiaries dormant. The cost of these exercises amounted
to £594,000.
The Group reassessed its estimation basis for stock provisioning in 2023 (see
note 3.2). It also suffered a major theft at one of its Plumbing and Heating
branches during the Christmas period. The total impact of these events
amounted to £1,382,000.
The Group disposed of Lords at Home Limited on 1 February 2023. The Group
recorded a profit in excess of the carrying value of the net assets of the
company of £119,000.
The costs associated with the business combinations have been expensed and
disclosed as exceptional items. The total expense, which amounts to
£936,000 (2022: £842,000), also includes costs associated with other
potential acquisitions which will not occur or had not occurred before the
balance sheet date. Where the business combinations include retention
payments to key staff as part of the acquisitions, or amounts payable under
put and call arrangements that, in substance, represent compensation for
employee services, the cost of these is expensed over the period to which it
relates. The costs in the year were £219,000 (2022: £681,000).
On migrating to a new payroll system in 2016, two of the Group's subsidiary
entities determined that there had been an error in the calculation of
employer and employee national insurance over the last four years such that
there was an underpayment of national insurance. The Group promptly notified
HMRC of the error upon discovery in 2022 and agreed to pay a full and final
payment of £338,000 to cover all national insurance due in 2022. The Group
agreed to meet this cost directly if employees stayed with the Group for three
years. In the event of leaving the cost is recovered from the leaver and
£13,000 was recovered in 2023.
The first instalment of the contingent consideration for the purchase of
Chiltern Timber Supplies Limited was due in April 2024. At the balance sheet
date, the Group assessed the likelihood of future EBITDA targets being met and
reduced the contingent liability by £150,000, which resulted in a closing
contingent consideration amount of £285,000. In 2022, £184,000 of the
contingent liability in relation to Condell Limited was released, and the
final contingent consideration was settled in April 2023.
Year ended 31 December 2022
The Group received compensation from HS2 for business disruption that has
occurred to the Lords Builders Merchants Park Royal branch of £748,000.
6. Employee benefit expenses
Staff costs of continuing operations, including directors' remuneration, were
as follows:
2023 2022
£'000 £'000
Wages and salaries 36,864 31,298
Social security costs 3,749 3,050
Defined contribution costs 999 697
Share-based payments 513 400
42,125 35,445
The average monthly number of employees of continuing operations, including
the Directors, during the year were as follows:
2023 2022
Management and administration 127 110
Sales, retail and manufacturing 799 770
926 880
7. Expenses by nature
Operating profit is stated after charging / (crediting):
2023 2022
£'000 £'000
Depreciation of property, plant and equipment 2,610 2,069
Amortisation of intangible assets 3,515 3,317
Amortisation of right-of-use assets 7,699 6,923
Impairment charge 501 -
Inventories recognised as an expense 370,238 361,237
Short-term and low-value lease payments 114 142
Foreign exchange gains (25) (6)
Share-based payments 513 400
Increase / (release) of impairment of inventories 492 (307)
Profit on disposal of property, plant and equipment (286) (151)
Defined contribution pension plan 999 697
8. Finance income
2023 2022
£'000 £'000
Bank interest receivable 196 42
196 42
9. Finance expense
2023 2022
£'000 £'000
Bank loans and overdrafts 2,917 1,306
Invoice discounting facilities 805 124
Unwinding of deferred consideration and call and put options 236 183
Interest on dilapidation provision 58 46
Lease liabilities 2,340 1,913
6,356 3,572
10. Taxation
2023 2022
£'000 £'000
Corporation tax
Current tax on profit for the year 1,975 3,883
Adjustments in respect of previous periods (28) 87
1,947 3,970
Deferred tax
Originating and reversal of temporary differences (289) (762)
Adjustments in respect of previous periods (346) 46
Effect of changes in tax rates (39) 3
(674) (713)
Total tax charge 1,273 3,257
Factors affecting tax charge for the year
The tax assessed for the year is higher than (2022: higher than) the standard
rate of corporation tax in the UK of 23.5% (2022: 19.0%). The difference is
explained below:
2023 2022
£'000 £'000
Profit before taxation 2,973 12,798
Profit multiplied by standard rate of corporation tax in the UK of 23.5% 699 2,432
(2022: 19.0%)
Adjustments in respect of previous periods (374) 133
Expenses not deductible 1,306 660
Income not deductible (284) (148)
Changes in tax rates (39) 3
Share-based payments (35) 70
Deferred tax not recognised - 107
Total tax charge for the year 1,273 3,257
Factors that may affect future tax charges
Deferred taxes at the balance sheet date have been measured using tax rates
enacted at that time.
11. Earnings per share
2023 2022
Basic earnings per share
Earnings from continuing activities (pence) 0.84 5.68
Diluted earnings per share
Earnings from continuing activities (pence) 0.82 5.36
Weighted average shares for basic earnings per share 164,340,814 160,523,582
Number of dilutive share options 3,750,887 9,552,402
Weighted average number of shares for diluted earnings per share 168,091,701 170,075,984
Earnings attributable to the equity holders of the parent (£'000) 1,382 9,117
Both the basic and diluted earnings per share have been calculated using the
earnings attributable to shareholders of the parent company, Lords Group
Trading plc, of £1,382,000 (2022: earnings of £9,117,000) as the numerator,
meaning no adjustment to profit was necessary in either year.
The Group has also presented adjusted earnings per share. Adjusted earnings
per share have been calculated using earnings attributable to shareholders of
the parent company, Lords Group Trading plc, adjusted for the after-tax effect
of exceptional items, share-based payments and amortisation of intangible
assets.
2023 2022
£'000 £'000
Earnings attributable to the equity holders of the parent 1,382 9,117
Add back / (deduct):
Exceptional items 2,849 929
Share-based payments 513 400
Amortisation of intangible assets 3,515 3,317
Impairments 501 -
Less tax impact of adjustments (1,617) (883)
Adjusted earnings 7,143 12,880
Adjusted basic earnings per share
Earnings from continuing activities (pence) 4.35 8.02
Adjusted diluted earnings per share
Earnings from continuing activities (pence) 4.25 7.57
12. Intangible assets
Software Customer relationships Trade names Goodwill Total
£'000 £'000 £'000 £'000 £'000
Year ended 31 December 2023
Opening net book value 1,112 25,316 2,607 16,296 45,331
Additions 734 - - - 734
Acquired through business combinations - 1,167 350 2,138 3,655
Amortisation charge (242) (2,933) (340) - (3,515)
Closing net book value 1,604 23,550 2,617 18,434 46,205
At 31 December 2023
Cost 2,443 34,722 3,741 18,434 59,340
Accumulated amortisation and impairment (839) (11,172) (1,124) - (13,135)
Net book value 1,604 23,550 2,617 18,434 46,205
Year ended 31 December 2022
Opening net book value 952 12,454 1,797 7,470 22,673
Additions 236 - - - 236
Reclassification from tangible assets - - - 1,649 1,649
Acquired through business combinations 140 15,649 1,124 7,177 24,090
Amortisation charge (216) (2,787) (314) - (3,317)
Closing net book value 1,112 25,316 2,607 16,296 45,331
At 31 December 2022
Cost 1,709 33,555 3,391 16,296 54,951
Accumulated amortisation and impairment (597) (8,239) (784) - (9,620)
Net book value 1,112 25,316 2,607 16,296 45,331
Software intangible assets include the inventory management system of a
subsidiary undertaking which was created by an external development firm for
the subsidiary's specific requirements. The asset is carried at £111,000
(2022: £126,000) and has a remaining amortisation period of five years (2022:
six years). In addition, another subsidiary company implemented an ERP and
stock management system with a carrying value at year end of £466,000 (2022:
£557,000) and with a remaining amortisation period of six years (2022: seven
years). There are no other individually material intangible assets.
Goodwill is systematically tested for impairment at each balance sheet date.
The Group has no assets with indefinite lives, other than goodwill. No
intangible assets were identified by management which needed to be impaired.
Cash-generating unit (CGU) assessment
The Group tests the carrying amount of goodwill annually for impairment or
more frequently if there are indications that their carrying value might be
impaired. The carrying amounts of other intangible assets are reviewed for
impairment if there is an indication of impairment. Impairment is calculated
by comparing the carrying amounts to the value-in-use derived from discounted
cash flow projections for each CGU to which the intangible assets are
allocated. A CGU is deemed to be the branch or group of branches acquired at
the time of a business combination. The carrying amount of goodwill is
allocated across multiple cash-generating units and the amount allocated to
each unit is not significant in comparison with the entity's total carrying
amount of goodwill.
The breakdown of the net book value of intangible assets by operating segment
is:
2023 2022
£'000 £'000
Merchanting 34,847 33,104
Plumbing and Heating 11,358 12,227
46,205 45,331
The total recoverable amount in relation to these CGUs at 31 December 2023 was
£299,884,000 (2022: £271,995,000). The value-in-use calculations are based
on five-year management forecasts with a terminal growth rate applied
thereafter, representing management's estimate of the long-term growth rate of
the sector served by the CGUs. The recoverable amounts of the CGUs in both
2023 and 2022 were in excess of the carrying value of the net assets of the
CGU and so no goodwill was impaired.
The key assumptions, which are equally applicable to each CGU, in the cash
flow projections used to support the carrying amount of goodwill were as
follows:
Plumbing and Merchanting
Heating
Five- year sales growth 4.6%-6.2% 4.0%-17.2%
Terminal sales growth 2.0% 2.0%
Discount rate 15.6% 15.6%
Sensitivity analysis
A reasonable change in a key assumption would not cause the carrying value of
either CGU to exceed its recoverable amount; the table below shows the amount
of headroom and the revised assumptions required to eliminate the headroom in
full at 31 December 2023. The headroom relates to the excess of the
recoverable amount over the carrying value of the goodwill, intangible assets
and other applicable net assets of the CGUs.
Plumbing and Merchanting
Heating
Recoverable amount of CGU £123,507,000 £176,377,000
Current headroom £80,721,000 £81,011,000
Five-year sales growth(1) <0% <0% - 5%
Terminal sales growth <0% <0%
Discount rate 16% - 38% 14% - 28%
(1) The majority of CGUs do not require any five-year sales growth in order to
maintain positive headroom, with the following exceptions:
· Three CGUs within the Merchanting division are more sensitive to
assumptions on sales growth, and require projected sales growth over the
initial five-year period at between 1-2% per annum in order to support a
value-in-use higher than the carrying value. This is rationalised by
anticipated market recovery over the coming years. The recoverable amount of
these three CGUs is £38,050,000 and the base headroom is £10,845,000.
· A further two CGUs require sales growth of 5% per annum for no
impairment charge to be recognised, including a recent acquisition, acquired
as a loss-making business but expected to significantly benefit from joining
the Lords network, and a business more heavily exposed to the house building
sector expecting a more significant recovery. These growth rates are within
management forecast projections. The recoverable amount of these CGUs is
£39,093,000 and the base headroom is £21,891,000.
13. Leases and right-of-use assets
Nature of leasing activities
The Group leases a number of assets with all lease payments fixed over the
lease term. The Group has property leases, plant and machinery and motor
vehicles in the scope of IFRS 16, including retail branches, warehouses,
lorries and other vehicles.
2023 2022
Number of active leases 289 240
Description of payments
2023 2022
£'000 £'000
Principal lease payments 6,912 6,482
Interest on dilapidation provision 58 46
Interest payments on leases 2,340 1,913
Short-term and low-value lease costs 114 142
9,424 8,583
Short-term and low-value lease costs relates to individual vans which are
rented on a monthly basis by subsidiaries of the Group.
Right-of-use assets
Leasehold Plant and Motor
property equipment vehicles Total
£'000 £'000 £'000 £'000
Year ended 31 December 2023
Opening net book value 34,015 2,381 2,572 38,968
Additions 5,044 330 5,031 10,405
Acquired through business combinations 5,519 113 378 6,010
Lease modifications 818 (262) 372 928
Disposals (819) - (5) (824)
Impairment (424) - - (424)
Amortisation charge (4,901) (819) (1,979) (7,699)
Closing net book value 39,252 1,743 6,369 47,364
At 31 December 2023
Cost 57,726 4,881 9,861 72,468
Accumulated amortisation and impairment (18,474) (3,138) (3,492) (25,104)
Net book value 39,252 1,743 6,369 47,364
Year ended 31 December 2022
Opening net book value 26,516 3,030 3,725 33,271
Additions 7,346 40 738 8,124
Acquired through business combinations 3,988 - 98 4,086
Lease modifications 410 - - 410
Amortisation charge (4,245) (689) (1,989) (6,923)
Closing net book value 34,015 2,381 2,572 38,968
At 31 December 2022
Cost 48,961 5,995 8,904 63,860
Accumulated amortisation and impairment (14,946) (3,614) (6,332) (24,892)
Net book value 34,015 2,381 2,572 38,968
Lease liabilities
Leasehold Plant and Motor
property equipment vehicles Total
£'000 £'000 £'000 £'000
At 1 January 2023 37,699 1,945 2,876 42,520
Additions 4,894 329 5,029 10,252
Acquired through business combinations 5,402 113 378 5,893
Disposals (901) - (5) (906)
Lease modifications 838 45 38 921
Interest expenses 1,933 90 317 2,340
Lease payments (including interest) (5,699) (978) (2,575) (9,252)
At 31 December 2023 44,166 1,544 6,058 51,768
At 1 January 2022 30,065 2,979 3,588 36,632
Additions 7,302 39 738 8,079
Acquired through business combinations 3,783 - 98 3,881
Lease modifications 410 - - 410
Interest expenses 1,602 167 144 1,913
Lease payments (including interest) (5,463) (1,240) (1,692) (8,395)
At 31 December 2022 37,699 1,945 2,876 42,520
Reconciliation of minimum lease payments and present value
2023 2022
£'000 £'000
Within 1 year 9,769 5,963
Later than 1 year and less than 5 years 26,182 19,415
Later than 5 years and less than 10 years 19,303 14,670
Later than 10 years and less than 15 years 7,878 8,955
After 15 years 5,709 6,550
Total including interest cash flows 68,841 55,553
Less interest cash flows (17,073) (13,033)
Total principal cash flows 51,768 42,520
Reconciliation of current and non-current lease liabilities
2023 2022
£'000 £'000
Current 7,815 5,496
Non‑current 43,953 37,024
Total 51,768 42,520
14. Contingent liabilities
The contingent liabilities detailed below are those which could potentially
have a material impact, although their inclusion does not constitute any
admission of wrongdoing or legal liability. The outcome and timing of these
matters is inherently uncertain. Based on the facts currently known, it is
not possible as at 31 December 2023 to predict the outcome of any of these
matters or reliably estimate any financial impact. As such, at the reporting
date no provision has been made for any of these cases within the financial
statements.
In May 2021, the Group Chief Financial Officer wrote to the HMRC Anti-Money
Laundering division to bring to their attention that it had identified a
historic breach of The Money Laundering, Terrorist Financing and Transfer of
Funds (Information on the Payer) Regulations 2017 by A P P Wholesale Limited,
a company that was acquired by Lords Group Trading plc in December 2019. The
Group has identified a number of occasions where cash banked in a single
transaction was in excess of €10,000 or where smaller sums of cash were
banked which could be regarded as linked transactions in breach of the
regulations.
The breaches occurred over a ten-year period from August 2010, cumulatively
amounting to up to nearly £3,000,000. The Board is unable to predict the
outcome of this reporting to HMRC and therefore the level of any potential
fines. Our legal advice is that penalties for breaches of the regulations
varies between nominal fines to fines which can equate to the full amount of
the cash sum received in contravention of the regulations, depending on the
level of culpability.
The Group has since conducted training for certain staff members within A P P
Wholesale Limited and has updated and implemented improved systems and
controls which were overseen by the Board and supported by professional
advisers. The Board is confident that the situation has been remedied and
the risks in the business are now being appropriately managed. We continue
to engage and fully co-operate with our regulators in relation to these
matters. At this stage it is not practicable to identify the likely outcome
or estimate the potential financial impact with any certainty.
There has been no correspondence with HMRC since the Group wrote to them in
May 2021.
15. Related party transactions
Parent entity
Lords Group Trading plc is the parent entity.
Transactions with related parties
Gempoint 2000 Limited, a company of which Shanker Patel is also a director,
owned properties leased by operating branches of the Group. The leases were
transferred to Old Oak Wharf Limited on 30 September 2023, the holding company
of Gempoint 2000 Limited, of which Shanker Patel is also a director. In
total, the Group was charged rentals by Gempoint of £945,000 (2022:
£963,000). At 31 December 2023, the Group owed Gempoint £140,000 (2022:
£187,000). The Group was charged rentals by Old Oak Wharf Limited of
£75,000 (2022: £nil) and owed it £87,700 (2022: £nil) at 31 December 2023.
The Group directors received dividends in the year from the Company as
follows.
2023 2022
£'000 £'000
Shanker Patel 1,034 1,028
Chris Day 34 11
Andrew Harrison 6 3
Gary O'Brien 3 1
The following transactions occurred between Group companies and companies that
are not wholly owned within the Group:
Condell Limited paid management fees of £130,000 (2022: £320,000), and at 31
December 2023 were owed by / (owed to wholly owned Group companies) £337,000
(2022: £252,000) wholly owned Group companies. Condell made purchases of
£101,000 (2022: £224,000) and sales of £494,000 (2022: £701,000) from
wholly owned Group companies and was owed a net balance of £47,000 (2022:
£89,000) on these transactions at 31 December 2023.
Weldit LLP paid management fees of £27,000 (2022: £22,500), interest of
£24,000 (2022: £19,000) and made purchases of £nil (2022: £nil) to wholly
owned Group companies. At 31 December 2023, Weldit LLP owed £679,000 (2022:
£710,000) to wholly owned Group companies.
Direct Heat and Plumbing purchased £4,065,000 (2022: £361,000) and sold
£919,000 (2022: £2,800,000) to wholly owned Group companies. At 31
December 2023, Direct Heat and Plumbing was owed £12,000 (2022: £13,000) by
wholly owned Group companies.
16. Post balance sheet events
Resignation of Chris Day and appointment of Stuart Kilpatrick
Chris Day, Chief Financial Officer and Chief Operating Officer, informed the
Board of his decision to leave the Company to take up another professional
opportunity on 9 January 2024. On 8 May 2024, it was announced that Stuart
Kilpatrick will be joining the Board as the new Chief Financial Officer on 4
June 2024.
Extension of Group Facilities
On 1 May 2024, the Group has exercised its extension option under the banking
facilities agreement in relation to the Group's existing £95 million lending
facilities. The terms of the facilities, which consist of a £70 million
revolving credit facility (the 'RCF') and a £25 million receivables financing
facility, were announced by the Company on 6 April 2023 and, pursuant to the
extension now entered, the RCF has now been extended from its initial three
year term by 12 months such that the RCF will now expire on 5 April 2027.
- ENDS -
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