Interim Results

RNS Number : 5344A

Likewise Group PLC

26 September 2022

 

26 September 2022

Likewise Group plc

( "Likewise", the "Company" or the " Group " )

Interim results for the six months ended 30 June 2022

Significant Progress and Increased Net Assets

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 2022.

H1 2022 summary highlights

· Total Sales Revenue has increased by 108% from £28.0 million to £58.4 million

· Organic growth of 27% has increased Sales from £28.0 million to £35.8 million

· Gross Margin has improved from 29.4% to 29.9%

· Underlying Profit before Tax is £1.91 million from £1.08 million, an increase of 77%

· The Group Balance Sheet continues to strengthen with Net Assets of £39.7 million compared to £22.4 million

· Gross Cash £7.9 million and Net Cash £1.9 million

Notwithstanding the economic ramifications of the terrible war in Ukraine, the Group has still made significant progress , which demons trates the Group's ability to develop the business in challenging markets. Product cost pressures resulted in a new Trade Price List being issued in May 2022. The Group also continues to experience and manage inflationary costs, particularly fuel and packaging materials.

Furthermore, with the infrastructure well developed, the Group is in a strong position to continue its progress irrespective of market conditions and take further advantage when consumer demand improves.

Likewise has established an extensive distribution infrastructure from it s two National Distribution Hubs in Leeds and Birmingham, plus Distribution Centres in Glasgow, Newcastle, Newbury, Sudbury and Peckham. This allows the Likewise Trade Brand to service customers on a daily basis in most parts of the UK.

The acquisition of Valley Wholesale Carpets Limited ( " Valley " ) in January 2022 was an important strategic step for the Group. Valley currently operates from two Distribution Hubs in Erith and Derby. The Freehold Distribution Hub in Derby is now being extended to 52,000 square feet, providing increased storage and a carpet cutting machine has been installed to enlarge the cutting capacity within Valley.

In October the dormant 35,750 square feet Freehold Distribution Centre in Newport will commence operations. This will increase both Likewise and Valley's trading area to include South Wales and South West England.

Delta Carpets Limited was acquired in April 2022 and is now fully operational from the Likewise Distribution Hub in Leeds. Delta will develop its business utilising the Likewise logistics network.

Construction is nearing completion on the new 42,000 square feet Leasehold High Bay Distribution facility in Glasgow which will be a major increase in capacity for development in Scotland. Also benefiting the whole of Likewise through the established distribution infrastructure into England.

Negotiations are at an advanced stage to be able to relocate A&A into a new 46,700 square feet Leasehold High Bay Distribution facility in North West Manchester to be operational from early 2024.

The logistics capacity of the Group has increased from 8 million cubic feet to 15 million cubic feet in the last year and importantly this provides extra capacity to meaningfully increase sales revenue and profitability over the coming years.

The Group also continually develops new products with manufacturing partners and has significantly increased its market presence. This has been achieved by a clearly defined strategy of investment in recruiting established Sales Representatives to create experienced Sales Teams. They are placing new Wall Stands, Lecterns and various other Point of Sale Displays into independent retailers. The positive relationship with flooring retailers and contractors is vital to the ongoing development of Likewise into a prominent Trade Brand in the UK flooring industry.

The Board has chosen to accelerate these investments including additional delivery trucks, material handling and cutting equipment, plus increased stock holding, to strength en the medium-term opportunities for the  Group.

The Business to Business Website is now fully operational giving Likewise customers the opportunity to check stock and place orders at any time. The take up on this facility is extremely encouraging and further enhances the customer service proposition.

Outlook

The positive sales revenue trend has continued through July, August and September which positions the Group well for the traditionally busy Autumn trading in Q4.

Activity has increased on new products which has significantly improved the market presence of our various businesses in particularly to flooring retailers but also contractors, cumulating in the number of Active Accounts increasing each month.

Given the performance in the last two years combined with the infrastructure development and strong Management Teams, Sales Representatives and all employees, the Group is confident of continuing to develop towards its medium-term targets.

October, November and early December typically represent the most active trading period in the UK  flooring industry. With all of the aforementioned activity, the Group is well placed to take full advantage whilst being conscious of the importance of Q4. 

Tony Brewer, Chief Executive of Likewise Group plc, said:

" Likewise has made considerable progress in the last two years. The acquisition of Valley was a particularly important step. The increase in Net Assets and subsequently solid Balance Sheet provides the Group with strong foundations for the future.

" With the extensive logistics, sales and marketing investment we are confident in progressively building a substantial and profitable floor covering distribution business ."

For further information, please contact:  

Likewise Group plc Tony Brewer, Chief Executive Roy Povey, Chief Financial Officer	Tel: [phone]
Zeus   (Nominated Adviser & Joint Broker) Jordan Warburton / David Foreman / James Edis (Investment Banking) Dominic King (Corporate Broking)	Tel: [phone]
Ravenscroft Consultancy & Listing Services Limited  (Joint Broker) Semelia Hamon (Corporate Finance)	Tel: [phone]
Novella Communications  (Financial PR) Claire de Groot / Tim Robertson	Tel: [phone]

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

	Underlying	2022 Non-underlying **	Total		Underlying	2021* Non-underlying **	Total
Revenue	58,355,129	-	58,355,129		28,036,144	-	28,036,144
Cost of Sales	(40,892,416)	-	(40,892,416)		(19,791,088)	-	(19,791,088)
Gross Profit	17,462,713	-	17,462,713		8,245,056	-	8,245,056
Other operating income	782	-	782		179,850	-	179,850
Administrative expenses	(6,981,136)	(308,160)	(7,289,296)		(3,934,024)	(672,570)	(4,606,594)
Distribution costs	(8,470,203)	-	(8,470,203)		(3,348,499)	-	(3,348,499)
Acquisition costs	-	(1,293,112)	(1,293,112)		-	-	-
Impairment losses on trade receivables	(21,563)	-	(21,563)		(7,872)	-	(7,872)
Profit/(loss) from operations	1,990,593	(1,601,272)	389,321		1,134,511	(672,570)	461,941
Finance Income	161		161		-	-	-
Finance costs	(77,631)	(225,969)	(303,600)		(53,612)	(105,652)	(159,264)
Profit/(loss) before tax	1,913,123	(1,827,241)	85,882		1,080,899	(778,222)	302,677
Taxation	-	-	-		-	-	-
Profit/(Loss) for the period	1,913,123	(1,827,241)	85,882		1,080,899	(778,222)	302,677

*As restated to align treatment with that of the year-end financial statements.

** Non ‐ underlying values are exceptional items, which include share based payment transactions, acquisition costs, amortisation of acquisition intangibles and strategic project costs. Adjusted results are non ‐ GAAP metrics used by management and are not an IFRS disclosure. Details of these charges can be seen in note 5 in the accounts below.

Revenue and Margin

The Group delivered revenue of £58.4 million for the first six months of 2022 (H1-2021: £28.0 million). This represents a year-on-year increase of 108%. When the impact of acquisitions made in the year is excluded then like-for-like revenue increased by 27%, from £28.0 million to £35.8 million. The increase in like-for-like revenue is a direct result of the continuing investment in the Group, through increased logistics capacity, additional sales representatives, additional point of sale and the increase in the number of delivery vehicles.

The distribution capacity will increase from 8 million cubic feet in 2021 to 15 million cubic feet as at December 2022. The logistics capacity will increase further with the completion of the new distribution facility in Glasgow along with the proposed new site for A&A in North West Manchester. This is in addition to the increased capacity resulting from the extended Valley premises in Derby.

Gross profit for the six months to June 2022 increased by 112% from £8.2 million to £17.4 million, with gross margin increasing from 29.4% to 29.9%.

Underlying profit before tax in the period to June 2022 was £1.91 million compared to £1.08 million for the same period in 2021.

Financial position

Net assets increased to £39.7 million at 30 June 2022 from £22.4 million, as presented in the full year financial statements to 31 December 2021.

The increased net assets position of the Group has created a strong foundation for Likewise to continue to develop towards its medium-term targets.

During the six months to 30 June 2022, the Group raised £16 million (gross) through the issue of new shares to fund the acquisition of Valley Wholesale Carpets (2004) Limited.

In April 2022 the Group acquired 100% of the issued share capital of Delta Carpets (Holdings) Limited ("Delta") for a total consideration of £3.0 million, including £1.0 million of cash within Delta, £1.5 million payable in cash on completion plus 0.5 million of Likewise shares.

This acquisition of Delta further develops the geographical presence and customer base of Likewise. The increased capacity created by the new Distribution Hub in Birmingham has released capacity in Leeds to enable the logistics capability to integrate Delta and provide an enhanced service to customers.

The cash movement in the period from £8.4 million to £7.9 million reflects utilisation in the business for the purpose of continuing investment into working capital of £1.5 million and additional fixed assets of £0.7 million.

Consolidated statement of profit or loss and other comprehensive income for the six months ended 30 June

							6 month period ended 30 June 2022		6 month period ended 30 June 2021
					Note		£		£
Revenue						3	58,355,129		28,036,144
Cost of sales							(40,892,416)		(19,791,088)
Gross profit							17,462,713		8,245,056
Other operating income						4	782		179,850
Administrative expenses							(8,582,408)		(4,606,594)
Distribution costs							(8,470,203)		(3,348,499)
Impairment losses on trade receivables							(21,563)		(7,872)
Profit/(loss) from operations						5	389,321		461,941
Finance income							161		-
Finance costs							(303,600)		(159,264)
Profit/(loss) before tax							85,882		302,677
Taxation						6	-		-
Profit for the period							85,882		302,677
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Revaluation of land and buildings							161,850		33,628
Items that will or may be reclassified to profit or loss:
Exchange losses arising in relation to translation of foreign operations							(15,406)		41,109
Total comprehensive income							232,326		377,414
Earnings per share							Pence per share		Pence per share
Basic profit per share				7			0.04		0.20
Diluted profit per share				7			0.03		0.20

Consolidated statement of financial position as at 30 June

		30 June 2022				31 December 2021
Note			£			£
Assets
Non‑current assets
Goodwill	9		7,453,309			4,216,728
Other intangible assets	10		3,377,283			3,520,997
Property, plant and equipment	11		26,516,822			8,814,651
Right-of-use assets	11		13,730,566			10,904,070
Trade and other receivables			-			136,848
			51,077,980			27,593,294
Current assets
Inventories				17,986,096		10,256,740
Trade and other receivables				16,062,251		9,775,075
Cash and cash equivalents				7,908,774		8,447,550
				41,957,121		28,479,365
Total assets				93,035,101		56,072,659
Liabilities
Non‑current liabilities
Loans and borrowings	12			(1,595,632)		(1,640,563)
Lease liabilities	12			(13,368,852)		(10,488,881)
Deferred tax liability				(2,636,987)		(1,404,650)
				(17,601,471)		(13,534,094)
Current liabilities
Trade and other liabilities				(28,176,894)		(15,802,034)
Loans and borrowings	12			(4,365,971)		(2,498,234)
Lease liabilities	12			(2,508,455)		(1,681,658)
Provisions	14			(696,737)		(202,676)
				(35,748,057)		(20,184,602)
Total liabilities				(53,349,528)		(33,718,696)
Net assets				39,685,573		22,353,963
Share capital	15			2,437,950		1,923,742
Share premium	15			17,380,935		22,458,816
Warrant reserve				128,170		128,170
Share option reserve	17			459,323		308,776
Revaluation reserve				2,567,977		2,406,127
Foreign exchange reserve				(72,031)		(56,625)
Retained earnings				16,783,249		(4,815,043)
Total equity				39,685,573		22,353,963

Consolidated statement of changes in equity for the period ended 30 June

	Share capital	Share premium	Revaluation reserve	Retained earnings
	£	£	£	£
Balance at 1 January 2022	1,923,742	22,458,816	2,406,127	(4,815,043)
Profit for the period	-	-	-	85,882
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
	£	£	£	£
Balance at 1 January 2022	308,776	128,170	(56,625)	22,353,963
Profit for the period	-	-	-	85,882
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

	Share capital	Share premium	Revaluation reserve	Retained earnings
	£	£	£	£
Balance at 1 January 2021	1,523,420	13,389,295	1,094,771	(4,668,620)
Profit for the period	-	-	33,628	302,677
Issue of share capital	322	2,898	-	-
Movement of depreciation over historic cost	-	-	(878)	878
FX on subsidiary	-	-	-	-
Share options recognised	-	-	-	-
Balance at 30 June 2021	1,523,742	13,392,193	1,127,521	(4,365,065)

	Share option reserve	Warrant reserve	Foreign exchange reserve	Total
	£	£	£	£
Balance at 1 January 2021	159,566	128,170	(39,403)	11,587,199
Profit for the period	-	-	-	336,305
Issue of share capital	-	-	-	3,220
Movement of depreciation over historic cost	-	-	41,109	41,109
FX on subsidiary	-	-	-	-
Share options recognised	48,290	-	-	48,290
Balance at 30 June 2021	207,856	128,170	1,706	12,016,123

Consolidated statement of cash flows for the period ended 30 June 2022

					6 month period ended 30 June 2022			6 month period ended 30 June 2021
					£			£
Cash flows from operating activities
Profit for the period						85,882		302,677
Adjustments for
Depreciation and amortisation						1,668,586		874,463
(Profit) / Loss on disposal of tangible fixed assets						(34,411)		-
Finance income						(161)		-
Finance costs						303,600		159,264
Decrease in provisions						(338,852)		(142,144)
Share options issued						150,547		48,290
Net foreign exchange gain						(15,775)		41,109
						1,819,416		1,283,659
Movements in working capital:
Increase in trade and other receivables						(3,960,608)		(1,634,843)
(Increase)/decrease in inventories						(4,546,649)		(2,063,238)
Increase in trade and other payables						6,631,758		2,132,654
Cash (used in)/generated from operations						(56,083)		(281,768)
Income taxes paid						(500,000)		(32,222)
Net cash (used in)/from operating activities						(556,083)		(313,990)
Cash flows from investing activities
Purchases of property, plant and equipment						(689,732)		(387,774)
Proceeds from disposal of property, plant and equipment						20,926		-
Acquisition of subsidiaries, net of cash acquired						(15,477,415)		-
Interest received						161		-
Net cash used in investing activities						(16,146,060)		(387,774)
Cash flows from financing activities
Interest paid						(303,600)		(159,264)
Consideration for new shares						15,498,827		3,220
Increase in invoice discounting						1,885,299		544,342
Repayment of lease liabilities						(854,666)		(214,149)
Repayment of loans						(62,493)		(31,149)
Net cash from/(used in) financing activities						16,163,367		143,000
Net increase/(decrease) in cash and cash equivalents						(538,776)		(558,764)
Cash and cash equivalents at the beginning of year						8,447,550		2,820,895
Cash and cash equivalents at the end of the year						7,908,774		2,262,131
Comprising
Cash at bank						7,908,774		2,262,131
Bank overdrafts						-		-
						7,908,774		2,262,131

Notes to the consolidated financial statements for the period ended 30 June 2022

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, Solihull Parkway, Birmingham Business Park, Solihull, England, B37 7YN.

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 2022 to 30 June 2022 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 2021 and those expected to be applied for the year ended 31 December 2022 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 2021.

The comparatives shown are for the period 1 January 2021 to 30 June 2021, and 31 December 2021 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 2021.

A copy of the Group's statutory accounts for the year ended 31 December 2021 has been delivered to the Registrar of Companies and the accounts are available to download from the Company website at 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

Whilst there remains a level of uncertainty regarding the current economic climate and the impact of the ongoing war between Russia and Ukraine, the alleviation of social distancing measures and the lifting of COVID-19 restrictions have benefitted the business as can be seen from the results outlined further within these interim financial statements.

Likewise Group Plc listed on the Alternative Investment Market (AIM) in the prior year raising £10m gross proceeds with which to fund further growth. An additional £16m gross proceeds has been raised in the period to June 2022 as a result of further share issues.

From review of the Group's current forecasts and the continuing positive cash generation, the Directors believe the Group have adequate resources to continue to trade for the foreseeable future and as such have adopted the going concern basis of accounting in preparing the interim financial statements.

Impact of new international reporting standards

There are no accounting pronouncements which have become effective from 1 January 2022 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 2021. 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 2022		6 month period ended 30 June 2021
				£		£
United Kingdom				58,222,554		27,834,575
Rest of Europe				118,164		201,569
Rest of the world				14,411		-
				58,355,129		28,036,144

Seasonal fluctuations

The overall demand for the wholesale of goods has previously been higher in the third quarter of the year. In the previous six month period to 30 June 2021 revenue equated to 46.4% of the yearly revenue generated.

In the current period we would expect to see a growth in revenue for the 6 month period to 30 June 2022 as a result of the acquisition of the two new companies (see note 16). Valley Wholesale Carpets has increased the revenue generated in the 6 month period to 30 June 2020 by £20.8m .

4.  Other operating income

				6 month period ended 30 June 2022		6 month period ended 30 June 2021
				£		£
Sundry income				782		-
Government grants receivable				-		179,850
				782		179,850

Government grants represent income receivable from central government under the Coronavirus Job Retention Scheme to cover some of the costs of employing certain members of staff placed on furlough leave in response to the COVID 19 pandemic.

5.  Operating profit

Operating profit is stated after charging:

						6 month period ended 30 June 2022		6 month period ended 30 June 2021
						£		£
Underlying expenses
Depreciation of property, plant and equipment including right-of-use assets					1,524,872			730,749
Amortisation of intangible assets					143,714			143,714
Share based payments					150,547			48,290
Impairment of inventories					24,969			62,915
Short term lease expense					137,589			176,967
Acquisition costs					1,293,112			-

6.  Taxation on ordinary activities

Tax is calculated at 19% for the six months ended 30 June 2022 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 £9,703,320 were available for offset against future taxable profits at 31 December 2021. A deferred tax asset of £1,812,747 was not recognised at 31 December 2021 in relation to these losses. In addition, a deferred tax asset of £517,406 was not recognised at 31 December 2021 in relation to the future tax benefit on the future exercise of employee share options.

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 2022 6 month period ended 30 June 2022 £ £ Profit attributable to equity holders of the company 85,882 302,677 2021 2020 Number Number Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 239,821,834 152,365,428 Adjustments for calculation of diluted earnings per share: Options 23,865,832 14,487,730 Warrants 2,800,000 2,800,000 Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 266,487,666 169,653,158 pence per share pence per share Basic profit per share (pence) 0.04 0.20 Diluted profit per share (pence) 0.03 0.18

8.  Dividends

Dividends were declared for the period to 30th June 2022 totalling £487,590 (2021 - £Nil).

9.  Intangible assets

	Goodwill
	£
Cost and net book value at 31 December 2021	4,216,728
Goodwill on acquisition (see note 16)	3,236,581
Impairment	-
Amortisation	-
At 30 June 2022	7,453,309

10.  Other intangible assets

			Likewise Floors Customer base	Likewise Floors Brandname	Total
			£	£	£
Net book value at 31 December 2021			1,733,252	1,787,745	3,520,997
Impairment			-	-	-
Amortisation			(70,745)	(72,969)	(143,714)
At 30 June 2022			1,662,507	1,714,776	3,377,283

11.  Property, plant and equipment

				Land and buildings		Other owned assets	Right of use assets	Total
				£		£	£	£
Net book value at 31 December 2021				5,785,000		3,029,651	10,904,070	19,718,721
Additions on acquisition (see note 16)				15,125,000		1,501,669	-	16,626,669
Additions				6,586		1,561,611	4,017,419	5,585,616
Disposals				-		(20,925)	(300,040)	(320,965)
Depreciation				(161,850)		(472,139)	(890,883)	(1,524,872)
Foreign exchange movements				-		369	-	369
Revaluation				161,850		-	-	161,850
At 30 June 2022				20,916,586		5,600,236	13,730,566	40,247,388

12.  Loans and borrowings

	Consolidated
	30 June 2022	31 December 2021
	£	£
Current borrowings - secured
Bank loans and invoice discounting facility	4,365,971	2,498,234
Lease liabilities	2,508,455	1,681,658
	6,874,426	4,179,892
Non-current borrowings - secured
Bank loans	1,595,632	1,640,563
Lease liabilities	13,368,852	10,488,881
Total loans and borrowings	14,964,484	12,129,444

The directors consider that the carrying amount of the invoice discounting facility and bank loan approximates their fair value.

The invoice discounting facility is secured against the related trade debtor balances and by a floating charge over the assets of the Group. The invoice discounting facility is denominated in Sterling and Euro.

	Carrying amount
	30 June 2022	31 December 2021
	£	£
Amounts repayable under bank loans
Within one year	121,129	138,691
In the second to fifth year inclusive	530,700	597,494
Beyond five years	1,064,932	1,043,069
	1,716,761	1,779,254

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 will continue until 5th January 2033. The loan is secured by a fixed and floating charge over the Group's assets. The loan carries interest 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 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 2022	31 December 2021
	£	£
Financial assets at amortised cost
Trade receivables	12,018,556	7,521,837
Other receivables	1,096,008	1,496,983
Cash and cash equivalents	7,908,774	8,447,550
	21,023,338	17,466,370

All of the above financial assets' carrying values are approximate to their fair values, as at each reporting date disclosed.

	30 June 2022	31 December 2021
	£	£
Non current financial liabilities at amortised cost
Bank loans	1,595,632	1,640,563
	1,595,632	1,640,563

	30 June 2022	31 December 2021
	£	£
Current financial liabilities at amortised cost
Trade payables	16,898,738	13,315,768
Other payables	873,388	238,210
Accruals	4,472,134	1,398,933
Invoice discounting facility	4,244,842	2,359,543
Bank loans - current	121,129	138,691
	26,610,231	17,451,145

14.  Provisions

		Dilapidation provision		Onerous lease provision			Restructuring / Other provisions	Total
		£		£			£	£
At 31 December 2021		114,676		88,000			-	202,676
Charged to profit or loss		-		-			-	-
Additions on acquisitions (see note 16)		-		-			898,073	898,073
Utilised during the period		(16,150)		(88,000)			(299,862)	(404,012)
At 30 June 2022			98,526	-			598,211	696,737

All provisions are considered to be due within one year.

15.  Share Capital

Consolidated and Company
Issued and fully paid	30 June 2022	31 December 2021
	Number	Number
Ordinary shares of £0.01 each	243,794,980	192,374,194

All provisions are considered to be due within one year.

The Company has one class of ordinary share which carry no right to fixed income.

On 11 January 2022, the Company allotted 40,000,000 new £0.01 shares for consideration of £0.35 per share, totalling £14,000,000. The Company also allotted 5,000,000 new £0.01 shares for consideration of £0.35 per share as part of the consideration for the acquisition of Valley Wholesale Carpets (2004) Limited on this date.

On 28 January 2022, the Company allotted 5,714,286 new £0.01 shares for consideration of £0.35 per share, totalling £2,000,000.

On 22 February 2022, the Company reduced the share premium account by £22,000,000 and this balance was transferred to the distributable retained earnings of the Company.

On 23 March 2022, the Company allotted 204,000 new £0.01 shares for consideration of £0.10 per share totalling £20,400. They also allotted a further 2,500 new £0.01 shares for consideration of £0.21 per share on this date totalling £525. These shares were issued under the Company's SAYE scheme.

On 4 April 2022, the Company allotted 500,000 new £0.01 shares for consideration of £0.375 per share, totalling £187,500 as part of the consideration for the acquisition of Delta Carpets (Holdings) Limited by Likewise Floors Limited.

16.  Business combination

On 14 January 2022, the Company acquired the entire issued share capital of Valley Wholesale Carpets (2004) Limited and its wholly owned subsidiary. Consideration of £29,615,650 for the purchase was in the form of £14,000,000 cash, £10,000,000 cash extracted from the acquired company, £1,000,000 deferred cash consideration and the issue of 5,000,000 new shares of £0.01 each in Likewise Group Plc valued at £1,750,000 at the date of acquisition and which includes a guaranteed cash payment of the difference between £1 per share and the share price at 14 January 2024. The fair value of this arrangement as at the grant date has been reflected in the purchase consideration outlined.

Recognised amounts of identifiable assets acquired and liabilities assumed for Valley Wholesale Carpets:

				Book Value		Fair Value Adjustment	Fair Value
				£		£	£
Total identifiable net assets				24,681,171		3,497,648	28,178,819
Goodwill							1,436,831
Total purchase consideration							29,615,650
Consideration
Cash							24,000,000
Deferred consideration							1,000,000
Share issue							1,750,000
Contingent consideration at purchase							2,865,650
							29,615,650
Cash outflow on acquisition
Purchase consideration settled in cash, as above							25,750,000
Less: Cash and cash equivalents acquired							(11,807,920)
Net cash outflow on acquisition							13,942,080

Acquisition related costs for Valley Wholesale Carpets amounted to £1,233,555.

Identifiable net assets

The fair values of the identifiable net assets have been determined provisionally at 30 June 2022. This is still subject to the finalisation and the Group is currently obtaining the information as necessary to finalise its valuation.

On 1 April 2022, Likewise Floors Limited, a subsidiary of the Company, acquired the entire issued share capital of Delta Carpets (Holdings) Limited and its wholly owned subsidiary. Consideration of £3,000,000 was paid in the form of £1,500,000 cash, £1,000,000 cash extracted from the acquired companies and 500,000 new £0.01 shares in Likewise Group Plc valued at £175,000 at the date of acquisition which includes a guaranteed cash payment of the difference between £1 per share and the share price at 1 April 2024.

				Book Value		Fair Value Adjustment	Fair Value
				£		£	£
Total identifiable net assets				1,173,003		(11,178)	1,161,825
Goodwill							1,799,750
Total purchase consideration							2,961,575
Consideration
Cash							2,500,000
Share issue							187,500
Contingent consideration at purchase							274,075
							2,961,575
Cash outflow on acquisition
Purchase consideration settled in cash, as above							2,687,500
Less: Cash and cash equivalents acquired							(1,152,165)
Net cash outflow on acquisition							1,535,335

Acquisition related costs for Delta Carpets amounted to £59,557.

17.  Share-based payments

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 2021, 7,245,648 share options remained active. During the current period 2,373,745 new options were issued at a weighted average option price of £0.32 per share and 247,061 options lapsed on employees leaving the Group. During the current period, 206,500 options were exercised as detailed in note 15. The average remaining contractual life of the remaining 9,165,832 options is approximately 3 years.

In addition, as at 31 December 2021, 11,700,000 share options remained active which were issued under Enterprise Management Incentives (EMIs). There were no new share options, options lapsed or options exercised in the period. The remaining contractual life of these options is approximately 2 years.

During the period, 1,941,170 share options were issued at a weighted average option price of £0.34 per share under a Company Share Option Plan ("CSOP"). Additionally, 1,058,830 share options were issued at a weighted average option price of £0.34 per share under a Management Options scheme. The remaining contractual life of these options is approximately 4 years.

Share options are valued using the Black-Scholes model. The inputs to the model are the option price and share price at date of grant, expected volatility (20%), expected dividend rate (0%) and risk free rate of return (4%). The model has been adjusted for expected behavioural considerations.

The cost of options is amortised to the Statement of Comprehensive Income over the service life of the option resulting in a charge of £150,547 for the period.

A deferred tax asset has not been recognised in relation to the charge for share based payments.

18.  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 2021. At 31 December 2021, 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 2022 and so no further disclosure has been made in this set of interim financial statements.

19.  Related party transactions

Key management personnel remuneration is disclosed as follows:

				6 month period ended 30 June 2022		6 month period ended 30 June 2021
				£		£
Remuneration of key management
Remuneration				1,135,850		298,329
Social security costs				153,777		37,099
Company pension contribution to defined contribution schemes				30,675		30,675
Share based payments				-		-
				1,320,302		366,103

All Executive Directors and Key Management Personnel operated with a reduced salary from April 2020 to May 2021 due to COVID-19. Included in 2022 is the bonus paid in respect of the successful acquisition of Valley Wholesale Carpets Ltd, as set out in the acquisition document.

20.  Post balance sheet events

On 6 September 2022, the Company allotted 41,000 new £0.01 shares for consideration of £0.01 per share, totalling £4,100.

 

END

 

 

IR SEAFULEESEIU