Final Results

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

 

 

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

Shanker Patel, Chief Executive Officer

Tel: +44 (0) 20 7466 5000

Chris Day, Chief Financial Officer and Chief Operating Officer




Cavendish Capital Markets Limited

Nominated Adviser and Joint Broker

Tel: +44 (0)20 7220 0500

Ben Jeynes / Dan Hodkinson (Corporate Finance)


Julian Morse / Henry Nicol / Charlie Combe (Sales and ECM)


 

Berenberg

Joint Broker

Matthew Armitt / Richard Bootle / Detlir Elezi

 

Tel: +44 (0)20 3207 7800

Buchanan Communications

Tel: +44 (0) 20 7466 5000

Henry Harrison-Topham / Stephanie Whitmore / Abby Gilchrist

 

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.

 

 

 

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.

 

 

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.

 

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.

 

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.

 

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.

 

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 capital

Share

premium

Merger reserve

Share‑ based

payments reserve

Retained earnings

Equity attributable to owners of parent company

Non-

controlling interests

Total

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 capital

Share

premium

Merger reserve

Share-based payments reserve

Retained earnings

Equity attributable to owners of parent company

Non-

controlling interests

Total

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

(restated1)


£'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

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.

 

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.

 

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.

 

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.

 

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.

 

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

 

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.

 

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

 

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% (2022: 19.0%)

699

2,432

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

 

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.

 

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%

 

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 growth1

<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

 

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

 

 

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.

 

 

 

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

 

 

 





 

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

 

 

 

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

 

 

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

Lords Group Trading plc is the parent entity.

 

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

 

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.

 

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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