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Likewise Group PLC (LIKE)

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Wednesday 25 May, 2022

Likewise Group PLC

Final Results

RNS Number : 6948M
Likewise Group PLC
25 May 2022
 

25 May 2022

Likewise Group plc

 

("Likewise" or the "Group")

 

Audited Final Results for the year ended 31 December 2021

 

28% sales growth and profitability established

 

 

Likewise Group plc (AIM:LIKE), the fast growing UK floor coverings distributor, announces its audited Final Results for the year ended 31 December 2021 ("FY21" or the "Period").

FY21 Summary Highlights

· Sales increased 28% to £60.5 million (FY20: £47.3 million)

 

· Gross profit margin improved to 30.0% (FY20: 26.1%)

· Profitability established with underlying profit before tax of £1.6 million (FY20: Loss before tax of £1.5 million)

· Maiden dividend of 0.2 pence per ordinary share declared and Board committed to a progressive policy

· Net assets increased to £22.4 million (FY20: £11.6 million) and have since grown to £38.7 million as at 30 April 2022 post the acquisitions of Valley Wholesale Carpets and Delta Carpets

· Gross cash increased to £8.4 million as at 31 December 2021

 

· Positive operational and trading performance in 2022 to date

· Distribution capability increased to c.15 million cubic feet (FY20: c.8 million cubic feet)

· Extensive Sales and Marketing initiatives

· Two acquisitions totalling £33.0 million gross completed post year end in addition to Organic Growth delivered in FY21

 

· The Board remains open to share buyback programmes subject to market conditions and alternative opportunities

Chairman and Chief Executive Statement

Likewise is very pleased to announce it has delivered its first profit in the year ended 31 December 2021 following the initial 3 years of investment to establish a meaningful floor covering distribution business in the UK.

Sales increased 28% from £47.3 million to £60.5 million which combined with Gross Margin improving from 26.1% to 30.0%, due to improved product and customer mix, has generated an Underlying Profit Before Tax of £1.6 million (2020: Loss of £1.5 million).

During the last eighteen months Likewise has made significant progress including developing a Profitable Business, successfully floating on AIM during August 2021 and the important strategic acquisition of Valley Wholesale Carpets (2004) Limited ("Valley") in January 2022. Likewise also acquired Delta Carpets (Holdings) Limited ("Delta") in April 2022.

In addition to the increasing profitability, Likewise's Balance Sheet continues to strengthen with a significant Freehold Property Portfolio of c.£20 million and Net Cash of £3.0 million (Gross Cash £8.4 million) as at 31 December 2021. Net Assets as at 31 December 2021 were £22.4 million, increasing to £38.7 million at 30 April 2022 post the acquisition of Valley and Delta.

With the support of Suppliers and Customers, the Management, Sales Representatives and Staff of Likewise have now established a Trade Brand in most geographical areas of the UK with plans to further expand into the South and South West of England plus South Wales.

Significant Point of Sale and Sampling have been introduced in 2021 with an accelerated number of product launches and additional market presence planned during Q2 and Q3 2022.

A Business to Business website has been launched to allow Trade Customers to access stock and place orders at any time.

The acquisition of Valley also significantly propelled Likewise forward. Valley will remain an autonomous business and is trading in line with management expectations.

The economic impacts of COVID-19 and now the horrific war in Ukraine has increased cost prices, particularly due to energy, raw materials and incoming freight costs. During the period we have implemented a number of selling price increases, the most recent on 1 May 2022.

Sales and Marketing activities are supported by the Group's investment in the Distribution infrastructure and material handling capacity. This includes the new Distribution Centre in Glasgow, due to be operational in Q1 2023, the recent move to an enlarged facility in Newcastle and the Birmingham Distribution Hub becoming operational which will also release capacity in the Leeds Distribution Hub. The Newbury Logistics Centre is now operational to service the South of England.

Within Valley, work has commenced to extend the Freehold Distribution Centre in Derby which will provide more storage capability in addition to increased cutting capacity for Carpet and Residential Vinyl. Furthermore the currently unutilised Freehold Distribution Centre in Newport, South Wales will commence trading in Q3 2022.

Delta, acquired in April 2022, originally based in Leeds has now been relocated to the Likewise Distribution Hub in Leeds and is now fully operational through the Likewise Logistics Network including the Distribution Hub in Birmingham.

With the Distribution capacity established to date, combined with the enhancements to become operational during the remainder of 2022, the Group has sufficient storage and processing capacity to exceed its medium-term aspirations.

Dividend and Potential Share Buy Back

The Board is committed to a progressive dividend policy and following the positive performance in FY21 is proposing to pay its maiden dividend. As announced on 1 March 2022, the Company completed a share capital reduction to create distributable reserves. Due to insufficient distributable reserves as at 31 December 2021, this maiden dividend will be classified as an interim dividend, but is reflective of the financial performance in 2021. The Company expects to make annual final dividend payments following the approval at future annual general meetings of the Company.

The proposed dividend is 0.2p per ordinary share. The dividend will be paid on 8 July 2022 to shareholders on the register on 6 June 2022. The Company's ordinary shares will become ex-dividend on 1 June 2022.

The Placing and Open Offer at 35 pence to acquire Valley was significantly Over Subscribed. The Board decided to accept excess funds to satisfy investor demand. Given the current Share Price the Board remain open to share buyback programmes subject to market conditions and alternative value accretive opportunities to deploy Group cash.

Outlook

Likewise continues to increase Sales Revenue and Gross Margin on a like for like basis. With the infrastructure established and further investment in Sales and Marketing, the Board considers that the Group has the Management and Teams in place to out-perform market conditions and increase market share.

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

"Likewise has achieved a good start to the year with a continuation of the positive sales trend and whilst being aware of inflationary pressures and general consumer sentiment, is currently on target to achieve its objectives for the year.

We would like to thank all of our Suppliers and Customers for their support and our Management and Staff for their huge contribution to the business since 2018 which has seen a massive change from the formative period.

Likewise is extremely optimistic with regards to the Medium and Long Term given the business and strong foundations that have been established to date."

 

For further information, please contact:

Likewise Group plc

Tony Brewer, Chief Executive

Roy Povey, Chief Financial Officer  

Tel: 0121 817 2900

Zeus   (Nominated Adviser & Joint Broker)

Jordan Warburton / David Foreman / James Edis (Investment Banking)

Dominic King (Corporate Broking) 

 

 

Tel: 0203 829 5000

Ravenscroft Consultancy & Listing Services Limited  (Joint Broker)

Semelia Hamon (Corporate Finance)

Tel: 01481 732746

Novella Communications  (Financial PR)

Claire de Groot / Tim Robertson

Tel: 0203 151 7008

CAUTIONARY STATEMENT  

 

Certain statements included or incorporated by reference within this announcement may constitute "forward-looking statements" in respect of the Group's operations, performance, prospects and/or financial condition. Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words and words of similar meaning as "anticipates", "aims", "due", "could", "may", "will", "should", "expects", "believes", "intends", "plans", "potential", "targets", "goal" or "estimates". By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast. This announcement does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase any shares or other securities in the Group, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares or other securities of the Group. Past performance cannot be relied upon as a guide to future performance and persons needing advice should consult an independent financial adviser. Statements in this announcement reflect the knowledge and information available at the time of its preparation.   

 
STRATEGIC REPORT  

 

Business Overview

Likewise Group Plc is a distributor of floorcoverings and mattings and has the opportunity to become one of the UK's largest distributors in this sector.

Likewise Group Plc intends to utilise the expertise and industry knowledge of the Board, Executive Board and Operational Management to develop an alternative to larger industry competitors. Management believe this can be achieved through a mixture of organic growth, operational leverage and where appropriate, acquisitions.

The Group has continued to grow rapidly and building on its success has continued to expand in 2021 with the addition of a new national distribution hub of 57,000 sq. ft in Birmingham from which the new Likewise Midlands division has been launched.

The Group now operates from the national distribution hubs in Leeds and Birmingham, a national distribution centre in Sudbury, a regional distribution centre in Manchester, three smaller regional logistics centres in Glasgow, Newcastle and Peckham, as well as the operations of H&V BVBA in Belgium.

The Company successfully floated on the Alternative Investment Market (AIM) in August 2021, raising gross proceeds of £10.0m. The listing on AIM provides significant opportunity to fund further investment in organic growth and earnings enhancing acquisitions in the future. So far, these funds have helped facilitate the acquisition of Valley Wholesale Carpets (2004) Limited and Delta Carpets (Holdings) Limited and their respective subsidiaries. The flotation of the business on AIM also enhances the Group's awareness and presents new opportunities for investment from institutional and retail investors alike.

 

COVID-19

With the impact of the COVID 19 pandemic continuing into 2021, the Group benefitted from strong trading activity in the home improvement sector. The business continued to adapt and successfully navigate the disruption whilst maintaining a high level of service for customers.

The Group benefitted from the ongoing VAT deferral scheme as well as grants available from the Coronavirus Job Retention Scheme (CJRS). All amounts deferred have subsequently been paid by the end of January 2022 in accordance with the payment plans established with HMRC.

Overall, whilst the COVID 19 pandemic presented many challenges in the early stages of 2020, the ability to make significant improvements to IT, logistics and operations of the Group, which would have been more difficult under normal trading conditions, has had a beneficial impact on the Group.

Trading performance

The Directors are pleased to report the Group's revenue increased by 28% from £47.3m in 2020 to £60.5m for the year ended December 2021.

With the ongoing uncertainty of the COVID 19 pandemic, the Group was committed to focusing on developing positive organic growth in all businesses, but particularly that of the new Likewise branded businesses established in 2019. These businesses continue to gain traction in their local markets.

Likewise Midlands was established during 2021, operating from a leasehold distribution centre in Birmingham. This provides further improvement to the Group's UK logistics network whilst also servicing new customers in the region. Significant investment has been undertaken throughout 2021 with the new Midlands facility becoming operational in January 2022. Following the launch of Likewise Midlands in 2021, we expect a meaningful business to develop in 2022. Investment in initial start up costs in the Midlands business amounts to £0.72m in the period (including IFRS 16 impact of new leasehold property undertaken).

A & A in Manchester continues to trade strongly and well exceeded its budgeted performance. A & A has also enlarged its sales territory with the addition of a new sales representative breaking into the Midlands region in H2 2021. A & A is expecting to continue to build this new market throughout 2022. 

Likewise Matting, has benefited from increased trading activity from the hospitality sector which was significantly impacted throughout the course of the pandemic in 2020. Revenue increased 13.7% compared to 2020 as a result.

Likewise Floors (formerly Heatseam) continues to benefit from the improvements made to its network following the amalgamation of its two previous sites into one National Distribution Hub in Leeds at the end of 2020. With the new site fully operational at the beginning of 2021, the impact this has had on the Group's logistics capacity and material handling capabilities has been significantly beneficial to the wider Group.

Overall, the trading performance has continued to strengthen following the COVID 19 pandemic, and improvements to the business throughout that time continue to realise benefits for the wider Group.

 

Business strategy

It is the belief of the Board that value can be generated for shareholders, suppliers and consumers by creating a national supplier and distributor of UK floorcoverings.

As with the acquisition of Valley Wholesale Carpets (2004) Limited and Delta Carpets (Holdings) Limited in 2022, where the Board consider future acquisitions, they will focus around increasing the scale and operational reach of the Group into new regions and consolidate the Group's overall market position.

 

Market and competition

The floorcovering market is made up of manufacturers, distributors, retailers and installers. It is the strategy of Likewise Group to become a national distributor in this market.

The UK flooring market is worth c.£2 billion split between residential, commercial, public and industrial markets. It is the strategy of the Group to focus on the residential and commercial areas of the market.

Key performance indicators

The Board consider the following as financial key performance indicators (KPIs) for the Group: revenue, operating profit and operating cash flow. The Board members review these for each of the businesses on a monthly basis. Individual subsidiaries have additional key performance indicators specific to their operations. Sales and margin are also monitored against budget on a daily basis by the executive management team.

Key performance indicators were as follows:


Year ended
31 December 2021

£

 

Year ended

31 December 2020

£

 Increase

%

Revenue

60,490,559

47,322,673

27.8%

Adjusted profit/(loss) before tax

1,598,390

(1,520,263)

205.1%

Operating cash flow

(299,973)

4,990,771

(106.0%)

The above adjusted operating profit/(loss) before tax figure is stated after adding back:


Year ended

31 December 2021

£

 

Year ended

31 December 2020

£

Loss from new operations (Likewise Midlands)

724,474

Amortisation of intangibles

287,428

287,428

AIM listing costs

352,142

Share based payments

149,210

68,992

Acquisition costs

19,645

Restructuring costs

98,253

821,709

Impact of IFRS 16

213,765

339,404

Loss on revaluation of consideration on acquisition

217,540

The following tables show a reconciliation of the adjusted results.

Adjusted results 2021

 


Underlying performance (adjusted)

 

IFRS16 impact

Amort'n of intangible

Loss from new operations (Likewise Midlands)

Share related costs

Restructur-ing costs

Reported

Revenue

60,490,559






60,490,559

Cost of sales

(42,350,33)






(42,350,33)

Gross profit

18,140,222






18,140,222

Other operating income

212,183






212,183

Admin costs

(9,554,239)

31,269

(287,428)

(651,595)

(501,352)

(98,253)

(11,061,5)

Distribution costs

(7,050,344)






(7,050,34)

Impairment losses on trade receivables

 

(42,241)






 

(42,241)

Profit/(loss) from operations

1,705,581

31,269

(287,428)

(651,59)

(501,352)

(98,253)

198,222

Finance income

173






173

Finance costs

(107,364)

(245,034)


(72,879)



(425,277)

Profit/(loss) before tax

1,598,390

(213,765)

(287,428)

(724,474)

(501,352)

(98,253)

(226,882)

Taxation

81,459






81,459

Profit/(loss) for the year

1,679,849

(213,765)

(287,428)

(724,474)

(501,352)

(98,253)

(145,423)

Items that will not be reclassified to profit or loss:








Revaluation of land and buildings

1,802,257






1,802,257

Actuarial loss on defined benefit schemes

(20,000)






(20,000)

Deferred tax on revaluation

(471,901)






(471,901)

Items that will or may be reclassified to profit or loss:








Exchange losses arising on translation on foreign operations

(17,222)






(17,222)

Total comprehensive income

2,972,983

(213,765)

(287,428)

(724,474)

(501,352)

(98,253)

1,147,711

 

Adjusted results 2020

 


Underlying performance (adjusted)

 

IFRS16 impact

Amort'n of intangibles

Acquis'n costs

Share related costs

Restruc‑

turing costs

Reported

Revenue

47,322,673






47,322,673

Cost of sales

(34,992,37)






(34,992,37)

Gross profit

12,330,303






12,330,303

Other operating income

852,448






852,448

Admin costs

(8,907,583)

(218,116)

(287,428)

(19,645)

(68,992)

(821,709)

(10,323,473)

Distribution costs

(5,624,387)






(5,624,387)

Impairment losses on trade receivables

(64,373)






(64,373)

Loss from operations

(1,413,592)

(218,116)

(287,428)

(19,645)

(68,992)

(821,709)

(2,829,482)

Finance income

10






10

Finance costs

(106,681)

(121,288)





(227,969)

Loss on revaluation of consideration on acquisition




(217,540)



(217,540)

Loss before tax

(1,520,263)

(339,404)

(287,428)

(237,185)

(68,992)

(821,709)

(3,274,981)

Taxation

203,677






203,677

Loss for the year

(1,316,586)

(339,404)

(287,428)

(237,185)

(68,992)

(821,709)

(3,071,304)

Items that will not be reclassified to profit or loss:








Revaluation of land and buildings

238,757






238,757

Actuarial loss on defined benefit schemes

(20,000)






(20,000)

Items that will or may be reclassified to profit or loss:








Exchange losses arising on translation of foreign operations

(39,403)






(39,403)

Total comprehensive income

(1,137,232)

(339,404)

(287,428)

(237,185)

(68,992)

(821,709)

(2,891,950)


The Board additionally monitors the square footage of available warehouse space as a non‑financial KPI. The warehouse capacity as at 31 December 2021 was 300,000 square feet (2020: 243,000 square feet).

 

Process for managing risk

The Board continually assesses and monitors the key risks in the business. Below describes the principal risks and uncertainties that could have a material impact on the Group's performance and prospects and the mitigating activities which are aimed at reducing the impact or likelihood of a major risk materialising. The Board does recognise, however, that it will not always be possible to eliminate risk.

Business Disruption

The Group's operations could be subject to disruption due to factors including incidents such as a major fire or failure of key suppliers. Incidents such as a fire at key premises or failure of key suppliers could result in the temporary cessation in activity or disruption of the Group's facilities impeding the Group's ability to deliver its products to its customers, adversely affecting its financial results. The Board looks to mitigate the failure of any key suppliers by having a wide supplier base with known alternatives as well as maintaining a sufficient level of stock within its UK operations. The Group has developed business continuity and disaster recovery plans. The COVID 19 pandemic has shown that with good communication with all business partners and the full application of emergency procedures, a level of business can be maintained. The Group also maintains insurance to cover business interruption and damage to property from such events.

As a distribution business, the impact of any changes in product preference and changing fashions in the marketplace is limited to the level of stock held at any one time. Changes in ranges offered to the wider customer base generally take place at the lowest level of stock holding. Any cost of discounting of stock that may be necessary is built into the general business model.

Economic Conditions

The Group is dependent on the level of activity in various markets and is therefore susceptible to any changes in economic conditions. Lower levels of activity in key markets in which the Group operates could reduce sales volumes adversely, thus affecting the Group's financial results. The Group monitors trends in the key industries and markets the Group operates in. As a distribution and selling business the Group is well placed to react to changes relatively quickly and implement changes to the business model and practices.

Fluctuations in Input Prices

Adverse fluctuations in raw material commodity prices could affect the profitability of the Group albeit such increases are likely to have an industry wide impact and as such would result in an increase in sales prices to end customers to negate this. A proportion of the Group's purchases are transacted in Euros and US Dollars and as such we are susceptible to foreign exchange risk on such purchases albeit in most instances the Group enters forward contracts to mitigate against any exposure.

In addition, rising freight costs recently experienced inevitably increase the costs of goods from overseas suppliers. Short term increases are negated by maintaining sufficient levels of stock on hand with longer term increases reflected in subsequent price increases passed on to customers.

Post balance sheet events

Share Transactions

On 11 January 2022, the Company allotted 40,000,000 new £0.01 Ordinary Shares for consideration of £0.35 per share, totalling £14,000,000 and allotted a further 5,000,000 new £0.01 Ordinary Shares as part of the consideration for the acquisition of the entire share capital of Valley Wholesale Carpets (2004) Limited.

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

On 22 February 2022, the Company, by way of a capital reduction under section 648 of the Companies Act 2006, 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 Ordinary Shares for consideration of £0.10 per share, totalling £20,400 and allotted a further 2,500 new £0.01 Ordinary Shares for consideration of £0.21 per share, totalling £525. These shares were issued under the Company's SAYE scheme.

On 4 April 2022, the Company allotted 500,000 new £0.01 Ordinary Shares as part of the consideration for the acquisition of the entire share capital of Delta Carpets (Holdings) Limited by Likewise Floors Limited.

Acquisitions

On 14 January 2022, the Company acquired the entire issued share capital of Valley Wholesale Carpets (2004) Limited. Consideration of £30.0m for the purchase of the new subsidiary was in the form of: £14.0m cash, £10.0m cash extracted from the acquired company, £1.0m deferred cash consideration and the issue of 5,000,000 new £0.01 shares in Likewise Group Plc valued at £1.8m 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.

On 1 April 2022, Likewise Floors Limited, a subsidiary of the Company, acquired the entire issued share capital of Delta Carpets (Holdings) Limited and its wholly owned subsidiary Delta Carpets Limited. Consideration of £3.0m was paid in the form of: £1.5m cash, £1.0m cash extracted from the acquired companies and 500,000 new £0.01 shares in Likewise Group Plc valued at £0.2m at the date of acquisition and which includes a guaranteed cash payment of the difference between £1 per share and the share price at 1 April 2024.

Directors' statement of compliance with duty to promote the success of the Group

A director of a company must act in the way he/she considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

• The likely consequences of any decision in the long term

• The interests of the company's employees

• The need to foster the company's business relationships with suppliers, customers and others

• The impact of the company's operations on the community and the environment

• The desirability of the company maintaining a reputation for high standards of business conduct, and

• The need to act fairly as between members of the company.

The directors consider it crucial that the Group maintains a reputation for the highest standards of business conduct and are responsible for setting, reviewing and upholding the culture, values, standards, ethics and reputation of the Group to ensure obligations to key stakeholders are met. By using the core values of the business, we seek to sustain and develop strong, stable, profitable partnerships with all our customers, employees and suppliers by providing outstanding products.

During the year ended 31 December 2021, the directors consider that they have at all times acted in a way that would most likely promote the success of the Group and for the benefit of its members as a whole, and in making those decisions have had particular regard the points outlined above.

The engagement with key stakeholders is summarised as follows:

Our people

Our employees foster strong relationships with both customers and suppliers and are integral in delivering the Group's strategy. As such the Group is committed to attracting talent, developing individuals, and ensuring employees are rewarded for their contribution to the growth of the business. The Board ensure that information and decisions of interest or concern to employees are shared at all levels.

Our shareholders

The shareholders of the business have helped us build the business to where we are today. As we continue on our growth trajectory the Group ensures shareholders are regularly updated on the latest developments. Announcements are shared on the Company's investor website.

Should shareholders have further questions, the AGM promotes the opportunity for questions to be put to the Board or alternatively they are welcome to contact the Board via the investor website to raise queries important to them.

Business relationships

Relationships with our customers are at the heart of what we do. The Group is committed to developing lasting relationships by providing great products, service and value for our customers.

With the help of our employees, and in line with government guidelines customers have been visited regularly to drive the quality of our service offering whilst also providing the opportunity to obtain timely feedback on products, service and any changes in consumer trends that help us develop our business to continue to meet their expectations.

Strong relationships have also been developed with suppliers which continue to allow us to exceed customer expectations. Regular dialogue with suppliers provides mutually beneficial feedback on products whilst exploring new ranges that may be of interest to our customers. 

Community and environment

We try to be a positive influence in the life of the communities in which we operate and strive to minimise our impact on the environment as much as possible.

 

Consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2021





2021


2020




Note

£


£






Revenue

 5

60,490,559


47,322,673

Cost of sales


(42,350,337)


(34,992,370)

 

Gross profit


18,140,222


12,330,303






Other operating income

 6

212,183


852,448

Administrative expenses


 (11,061,598)


(10,323,473)

Distribution costs


 (7,050,344)


 (5,624,387)

Impairment losses on trade receivables


 (42,241)


 (64,373)

 

Profit/(loss) from operations


198,222


 (2,829,482)






Finance income

 10

173


10

Finance costs

 10

 (425,277)


 (227,969)

Loss on revaluation of consideration on acquisition


-


(217,540)

 

Profit/(loss) before tax


(226,882)


 (3,274,981)

 





Taxation

 11

81,459


203,677

 

Loss for the year


(145,423)


 (3,071,304)

 

Other comprehensive income:




Items that will not be reclassified to profit or loss:





Revaluation of land and buildings

13

1,802,257


238,757

Actuarial loss on defined benefit schemes

 31

 (20,000)


 (20,000)

Deferred tax on revaluation

 11

 (471,901)


-



1,310,356


218,757

Items that will or may be reclassified to profit or loss:





Exchange losses arising in relation to translation of foreign operations


 (17,222)


 (39,403)



(17,222)


(39,403)

 

Total comprehensive income


1,147,711


(2,891,950)

 

 

The total basic loss per share attributable to the ordinary equity holders of the Company was £0.001 (2020: loss of £0.020). The total diluted loss per share attributable to the ordinary equity holders of the Company was £0.001 (2020: loss of £0.018).

Consolidated statement of financial position as at 31 December 2021


2021


2020

Note

£


£

 

Assets




 

Non‑current assets





 

Property, plant and equipment

 13

19,718,721


11,256,599

Other intangible assets

 14

3,520,997


3,808,425

Goodwill

 15

4,216,728


4,216,728

Trade and other receivables

 18

136,848


-








27,593,294


19,281,752

 

Current assets





 

Inventories

 17

10,256,740


7,555,806

Trade and other receivables

 18

9,775,075


7,466,158

Cash and cash equivalents


8,447,550


2,820,895








28,479,365


17,842,859






Total assets


56,072,659


37,124,611

 

Liabilities




 

Non‑current liabilities





 

Loans and borrowings

 21

12,129,444


6,749,655

Deferred tax liability

 11

1,404,650


700,484








13,534,094


7,450,139

 

Current liabilities





 

Trade and other liabilities

 20

15,802,034


15,479,985

Loans and borrowings

 21

4,179,892


2,224,566

Provisions

 24

202,676


382,722








20,184,602


18,087,273

Total liabilities


33,718,696


25,537,412

 

Net assets


22,353,963


11,587,199

 

 

Share capital

 27

1,923,742


1,523,420

Share premium


22,458,816


13,389,295

Share option reserve

 32

308,776


159,566

Revaluation reserve


2,406,127


1,094,771

Foreign exchange reserve


 (56,625)


 (39,403)

Warrant reserve


128,170


128,170

Retained earnings


 (4,815,043)


 (4,668,620)

Total equity


22,353,963


11,587,199



Consolidated statement of changes in equity for the year ended 31 December 2021


Share capital

Share premium

Share option reserve

Revaluation reserve

Foreign exchange reserve

Warrant reserve

Retained earnings

Total attributable to equity holders of parent

Total equity

 

 

£

£

£

£

£

£

£

£

£

 

At 1 January 2021

1,523,420

13,389,295

159,566

1,094,771

 (39,403)

128,170

 (4,668,620)

11,587,199

11,587,199

 

Loss for the year

-

-

-

-

-

-

 (145,423)

 (145,423)

 (145,423)

Other comprehensive income (see note 30)

-

-

-

1,311,356

 (17,222)

-

 (1,000)

1,293,134

1,293,134

Total comprehensive income for the year

-

-

-

1,311,356

 (17,222)

-

 (146,423)

1,147,711

1,147,711

Issue of share capital

400,000

9,600,000

-

-

-

-

-

10,000,000

10,000,000

Share options exercised

322

2,898

-

-

-

-

-

3,220

3,220

Share issue costs

-

 (533,377)

-

-

-

-

-

 (533,377)

 (533,377)

Share options valuation

-

-

149,210

-

-

-

-

149,210

149,210

Total contributions by and distributions to owners

400,322

9,069,521

149,210

-

-

-

-

9,619,053

9,619,053

At 31 December 2021

1,923,742

22,458,816

308,776

2,406,127

 (56,625)

128,170

 (4,815,043)

22,353,963

22,353,963

 

Consolidated statement of changes in equity for the year ended 31 December 2020


Share capital

Share premium

Share option reserve

Revaluation reserve

Foreign exchange reserve

Warrant reserve

Retained earnings

Total attributable to equity holders of parent

Total equity

 

 

£

£

£

£

£

£

£

£

£

 

At 1 January 2020

1,523,420

13,389,295

90,574

871,514

-

128,170

(1,592,446)

14,410,527

14,410,527

 

Loss for the year

-

-

-

-

-

-

 (3,071,304)

 (3,071,304)

 (3,071,304)

Other comprehensive income (see note 30)

-

-

-

223,257

 (39,403)

-

 (4,870)

178,984

178,984

Total comprehensive income for the year

-

-

-

223,257

 (39,403)

-

 (3,076,174)

 (2,892,320)

 (2,892,320)

Share options valuation

-

-

68,992

-

-

-

-

68,992

68,992

Total contributions by and distributions to owners

-

-

68,992

-

-

-

-

68,992

68,992

At 31 December 2020

1,523,420

13,389,295

159,566

1,094,771

 (39,403)

128,170

 (4,668,620)

11,587,199

11,587,199

 


Consolidated statement of cash flows for the year ended 31 December 2021





2021


2020





£


£

 

Cash flows from operating activities





 

Loss for the year


 (145,423)


 (3,071,304)

 

Adjustments for





 

Depreciation and amortisation


2,121,858


1,733,339

Impairment of property, plant and equipment


147,988


91,733

Revaluation of consideration


-


217,540

Taxation


 (81,459)


 (203,677)

Finance income


 (173)


 (10)

Finance costs


425,277


227,969

(Gain)/loss on sale of property, plant and equipment


 (22,846)


222,096

Pension contributions


 (20,000)


 (20,000)

AIM listing costs


352,142


-

Increase in provisions


 (180,046)


382,722

Share options issued


149,210


68,992

Net foreign exchange gain


 (15,575)


 (41,378)



2,730,953


 (391,978)

 

Movements in working capital:





 

Increase in trade and other receivables


 (2,132,041)


 (98,740)

(Increase)/decrease in inventories


 (2,700,934)


1,511,188

Increase in trade and other payables


1,802,049


3,855,487

Cash (used in)/generated from operations


 (299,973)


4,875,957






 

Income taxes paid


-


114,814

Net cash (used in)/from operating activities


 (299,973)


4,990,771

 

Cash flows from investing activities





 

Purchases of property, plant and equipment


 (1,593,269)


 (1,086,264)

Proceeds from disposal of property, plant and equipment


27,008


-

Acquisition of subsidiaries


-


 (891,770)

Deferred consideration paid


 (1,480,000)


 (700,000)

Net cash acquired with subsidiaries


-


136,958

Interest received


173


10

Net cash used in investing activities


(3,046,088)


 (2,541,066)

 

Cash flows from financing activities





 

Interest paid


 (425,277)


 (99,585)

Consideration for new shares


10,003,220


-

Costs of share issue and AIM listing


 (885,519)


-

Repayment of lease liabilities


 (886,625)


 (863,841)

Increase in invoice discounting


1,266,279


740,562

Repayment of loans


 (99,362)


 (24,321)

Net cash from/(used in) financing activities


8,972,716


 (247,185)

 

Net cash increase in cash and cash equivalents


5,626,655


2,202,520






Cash and cash equivalents at the beginning of year


2,820,895


618,375

Cash and cash equivalents at the end of the year


8,447,550


2,820,895

 

 

Cash and cash equivalents at 31 December 2021 of £8,447,550 (2020: £2,820,895) comprised of cash and cash equivalents of £8,447,550 (2020: £2,820,895) less bank overdrafts of £Nil (2020: £Nil).

Notes to the consolidated financial statements for the year ended 31 December 2021

1.  General information

The Company is a public company limited by shares, registered in England and Wales. On 18 August 2021, the Company listed on the AIM Market. 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.  Basis of preparation

These financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The Parent Company financial statements present information about the Company as a separate entity.

The financial information is presented in pounds sterling, which is the functional currency of the entity and rounded to the nearest £. The financial statements are prepared on the historical cost basis unless otherwise specified within these accounting policies.

Both the Company and consolidated financial statements have been prepared and approved by the Directors in accordance with UK adopted International Accounting Standards. On publishing the Company financial statements here together with the consolidated financial statements, the Company is taking advantage of the exemption in s408 of the Companies Act 2006 not to present its individual income statement and statement of comprehensive income and related notes.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

3.  Accounting policies

3.1  Going concern

The consolidated financial statements for the Group have been prepared on a going concern basis.

Whilst the impact of the COVID 19 pandemic was still prevalent at the beginning of 2021, the business continued to benefit from strong trading activity in the home improvement sector. Whilst levels of employee absence remained higher due to the requirement to isolate, the business' operations were able to successfully manage this absence whilst ensuring continuity of service for our customers.

On 18 August 2021, the Company was admitted to trading on the AIM Market, issuing 40,000,000 new shares and raising gross proceeds of £10.0m. An additional £2.0m was also raised in January 2022 as a result of an extended offer to existing shareholders. Listing on AIM provided the Group with further funding with which to continue to invest in the organic growth of the Likewise business whilst also identifying new acquisition targets that would be earnings enhancing to the Group. The Company's admission to AIM also provides further awareness of the brand as well as accessibility to new institutional and private investors alike.

The Group continues to utilise invoice financing arrangements in some subsidiaries and has the option to draw on additional authorised facilities to support working capital requirements. The Group has operated within these facilities throughout the year and continues to do so in 2022. The directors are confident that the Group will be able to operate within the finance facilities available to us.

The Board have also undertaken assessments of going concern by building a cash flow model through to December 2023, based on 2021 actuals, 2022 budget and forecast performance for 2023. These cashflows indicate that the business has adequate resources to continue to operate for the foreseeable future and within the current financing arrangements in place. Furthermore, following the acquisition of Valley Wholesale Carpets (2004) Limited and Delta Carpets (Holdings) Limited and their subsidiaries there are further performance enhancing results not factored into the original cash flow forecasts.

Overall, given the strength of the Group's balance sheet, significant cash reserves on hand, availability of financing arrangements and the strong forecast performance of the Group, this provides the Directors with sufficient assurance on the Group's ability to continue as a going concern, and therefore adopt the going concern basis of accounting in preparing the financial statements.

3.2  Basis of consolidation

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an investee so as to obtain benefits from its activities, has exposure, or rights, to variable returns and can use its power to affect those returns.  In assessing control, potential voting rights that are currently exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

3.3  Impact of new international reporting standards

There were a number of narrow scope amendments to existing standards which were effective from 1 January 2021. None of these had an impact on the Group.

Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not mandatory for 31 December 2021 reporting periods and have not been early adopted by the Group. These standards, amendments or interpretations are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

3.4  Revenue

Revenue comprises sales of goods to customers outside the Group, less an appropriate deduction for discounts, and is stated at the fair value of the consideration net of value added tax and other sales taxes.

Revenue and receivables are recognised when performance obligations are satisfied and the goods are delivered to customers as this is the point in time that the consideration is unconditional, control of goods has passed and only the passage of time is required before the payment is due.

3.5  Finance and income costs

Interest income and expense is recognised using the effective interest method which calculates the amortised cost of a financial asset or liability and allocates the interest income or expense over the relevant period.

3.6  Property, plant and equipment

Property, plant and equipment under the cost model are stated at historical cost less depreciation less any recognised impairment losses. Cost includes expenditure that is directly attributable to the acquisition or construction of these items. Subsequent costs are included in the asset's carrying amount only when it is probable that future economic benefits associated with the item will flow to the company and the costs can be measured reliably. All other costs, including repairs and maintenance costs, are charged to the Income Statement in the period in which they are incurred.

Depreciation is provided on all property, plant and equipment and is calculated as follows:

Freehold property 2% straight line

Leasehold improvements straight line over the term of the lease

Plant and machinery 12.5% 15% straight line

Motor vehicles 25% 33% straight line

Fixtures, fittings and computer equipment 20% 33% straight line

Depreciation is provided on cost less residual value. The residual value, depreciation methods and useful lives are annually reassessed.

Each asset's estimated useful life has been assessed with regard to its own physical life limitations and to possible future variations in those assessments. Estimates of remaining useful lives are made on a regular basis for all machinery and equipment, with annual reassessments for major items. Changes in estimates are accounted for prospectively.

The gain or loss arising on disposal or scrapping of an asset is determined as the difference between the sales proceeds, net of selling costs, and the carrying amount of the asset and is recognised in the Income Statement.

3.7  Revaluation of property

Individual freehold properties are carried at current year value at fair value at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are undertaken with sufficient regularity to ensure the carrying amount does not differ materially from that which would be determined using fair value at the Consolidated Statement of Financial Position date.

Fair values are determined from market based evidence normally undertaken by professionally qualified valuers.

Revaluation gains and losses are recognised in the Consolidated Statement of Comprehensive Income unless losses exceed the previously recognised gains or reflect a clear consumption of economic benefits, in which case the excess losses are recognised in the Income Statement.

The difference between depreciation based on the revalued carrying amount of the asset and depreciation based on the asset's original cost is transferred from revaluation surplus to retained earnings at the end of each reporting period. Any remaining revaluation surplus included in equity is transferred directly to retained earnings when the asset is disposed of.

3.8  Impairment of non-financial assets (excluding Goodwill)

At each reporting date, the directors review the carrying amounts of the company's non current assets, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the directors estimate the recoverable amount of the cash generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash generating unit is reduced to its recoverable amount. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit.

An impairment loss is recognised as an expense immediately.

Where an impairment loss on non financial assets subsequently reverses, the carrying amount of the asset or cash generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset or cash generating unit in prior periods. A reversal of an impairment loss is recognised in the Income Statement immediately.

3.9  Inventories

Inventory is valued at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.

At each reporting date, inventories are assessed for impairment. If inventories are impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in the Income Statement.

3.10  Cash at bank

Cash at bank comprise cash on hand, deposits held at call with banks and other short term highly liquid investments with original maturities of three months or less from inception.

3.11  Financial instruments

Financial assets and financial liabilities are recognised when the company becomes a party to the contractual provisions of the financial instrument.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs. Financial assets and financial liabilities are measured subsequently as described below.

Cash equivalents comprise short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. An investment with a maturity of three months or less is normally classified as being short term.

Derivatives, including forward foreign exchange contracts, are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re measured at their fair value. Changes in the fair value of derivatives are recognised in the Income Statement in finance costs or income as appropriate.

3.12  Financial assets

Trade and other receivables are recorded initially at transaction price and subsequently measured at amortised cost. This results in their recognition at nominal value less an allowance for any doubtful debts. This allowance for expected credit losses (ECL) may be established where evidence of credit deterioration is observed. In order to assess credit deterioration, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on its historical experience and informed credit assessment, that includes forward looking information. An additional reserve is established, where required, when a loss is both probable and the amount is known.

ECLs are a probability weighted estimate of lifetime credit losses. Under the ECL model, the Group calculates the allowance for credit losses by considering on a discounted basis the cash shortfalls it would incur in various default scenarios for prescribed future periods and multiplying the shortfalls by the probability of each scenario occurring. The allowance is the sum of these probability weighted outcomes. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that Group expects to receive) with a discount factor applied to such overdue amounts. The discount matrix ("ECL Matrix") below is applied to derive an ECL for overdue amounts:

Past due (days)

31-60

61-90

90-120

120-250

Discounts to Amounts Overdue

0%

0%

5%

50%

The Group exercises its discretion in the application of discounts outside of the ECL Matrix based on extenuating circumstances that may apply from time to time to the Group's trade receivables (see note 18). An example of such an extenuating circumstance may occur when it is known that an overdue amount will be collected post a reporting or measurement date.

3.13  Financial liabilities

The Group's financial liabilities include trade and other payables and borrowings.

Interest bearing bank loans and overdrafts are initially recorded at fair value, which equals the proceeds received, net of direct interest costs. They are subsequently held at amortised cost. Finance charges, including premiums payable on settlement or redemption are accounted for using an effective interest rate method and are added to or deducted from the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost. Generally, this results in their recognition at their nominal value.

3.14  Foreign currency

The presentation currency for the Group's historical financial information is pounds sterling.

Transactions in foreign currencies are recorded using the rate of exchange ruling at the date of the transaction. Any gain or loss on translation of monetary foreign currency assets and liabilities arising from a movement in exchange rates subsequent to initial measurement is included as an exchange gain or loss in the Consolidated Statement of Profit or Loss.

The assets and liabilities of overseas subsidiary undertakings are translated at the closing exchange rate. Income Statements and cash flows of such subsidiaries are translated into Sterling at the average rates of exchange. The adjustments to period end rates are taken to foreign exchange reserve in equity and reported in the Other Comprehensive Income.

3.15  Taxation

Current taxation

Current taxation is based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the reporting date and includes adjustments to tax payable or recoverable in respect of previous periods.   

Deferred taxation

Deferred taxation is calculated using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the historical financial information. However, if the deferred tax arises from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. No deferred tax is recognised on initial recognition of goodwill or on investment in subsidiaries. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the year end date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax liabilities are provided in full, and are not discounted.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Income Statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority where there is an intention to settle the balances on a net basis.

3.16  Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:

− fair values of the assets transferred

− liabilities incurred to the former owners of the acquired business

− equity interests issued by the Group

− fair value of any asset or liability resulting from a contingent consideration arrangement, and

− fair value of any pre existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date.

Acquisition related costs are expensed as incurred.

The excess of the consideration transferred and acquisition date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in the Income Statement as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in the Income Statement.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in the Income Statement.

3.17  Goodwill

Goodwill is initially recognised and measured as set out above.

Goodwill not attributed to a specific intangible asset is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's subsidiaries expected to benefit from the synergies of the combination. If the recoverable value of the subsidiary is less than the carrying amount of goodwill, the impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

3.18  Intangible assets

Other intangible assets

Goodwill attributable to the brand name of acquired subsidiaries or customer base is initially recognised and measured as set out above.  Licences are initially recognised at cost.

Amortisation is provided on all other intangible assets and is calculated as follows:

 



Brand name

15 years straight line



Customer base

15 years straight line



Licenses

10 years straight line

 

The useful lives of intangible assets are annually reassessed and all assets are reviewed for impairment at least annually. On disposal of a subsidiary, the attributable amount of intangible assets is included in the determination of the profit or loss on disposal.

3.19  Employment benefits

Provision is made in the financial statements for all employee benefits. Liabilities for wages and salaries, including non monetary benefits and annual leave obliged to be settled within 12 months of the reporting date, are recognised in accruals.

Contributions to defined contribution pension plans are charged to the Income Statement in the year to which the contributions relate.

William Armes Limited, a subsidiary of the Group operates a defined benefit pension plan for certain employees.

The liability recognised in the Consolidated Statement of Financial Position in respect of the defined benefit plan is the present value of the defined benefit obligation at the end of the reporting date less the fair value of plan assets at the reporting date (if any) out of which the obligations are to be settled.

The defined benefit obligation is calculated using the projected unit credit method. Annually the Group engages independent actuaries to calculate the obligation. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating to the estimated period of the future payments ('discount rate').

Where the calculation results in a benefit to the Group, the asset recognised is limited to the present value of any future refunds from the plan or reductions in future contributions to the plan.

3.20  Leases

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right of use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

Right of use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.

3.21  Borrowing costs

Borrowing costs are recognised in the Income Statement in the year in which they are incurred.

3.22  Share based payments

The fair value of equity instruments granted to employees is charged to the Statement of Comprehensive Income, with a corresponding increase in equity. The fair value of share options is measured at grant date using the Black Scholes pricing model and spread over the period during which the employee becomes unconditionally entitled to the award. The charge is adjusted to reflect the number of shares or options that vest.

3.23  Invoice discounting

The Group has an invoice discounting arrangement. The amount owed by customers to the Group are included within trade receivables and the amount owed to the invoice discounting company is included within borrowings. The amount owed to the invoice discounting company represents the difference between the amounts advanced by the invoice discounting company and the invoices discounted. The interest element of the invoice discounting charges and other related costs are recognised as they accrue and are included in the Income Statement with other finance costs.

3.24  Segment reporting

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses related to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's Chief Operating Decision Maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Chief Operating Decision Maker has been identified as the Board of Executive Directors, at which level strategic decisions are made.

Details of the Group's reporting segments are provided in note 5.

3.25  Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Government grants receivable from central government under the Coronavirus Job Retention Scheme are included within other operating income in the Consolidated Statement of Profit or Loss and are not offset against the related expenses.

3.26  Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

4.  Judgements and key sources of estimation uncertainty

The preparation of the financial statements, in conformity with adopted IFRSs requires management to make judgements, estimates and assumptions that affect the carrying amounts of assets and liabilities at the date of these financial statements and the reported amount of revenues and expenses during the period. These judgements, estimates and assumptions are continually evaluated by management and are based upon historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are as follows:

Impairment of trade receivables

Trade and other receivables are recognised at nominal value less an allowance for doubtful debts. This allowance for expected credit losses (ECL) may be established where evidence of credit deterioration is observed. In order to assess credit deterioration, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on its historical experience and informed credit assessment, that includes forward looking information. An additional reserve is established, where required, when a loss is both probable and the amount is known. See notes 3.12 and 18 for further information.

Defined benefit pension scheme

Assumptions for future inflation linked pension increases (where applicable) are based on the appropriate headline index, adjusted where necessary to reflect any caps or collars, bearing in mind the proximity of the future inflation assumption to those caps and collars and the expected variability of future inflation increases. All other assumptions have been set in accordance with the statement of funding principals. No allowances have been made for members transferring benefits out of the scheme in future. The assumptions selected and associated sensitivity analysis are disclosed in note 31.

Inventory valuation

This is provided for on the basis of the age of the items and dependent on the frequency of component use.  The Group makes appropriate provision for slow moving and discontinued inventory items although a significant shift in consumer market or customer demand may result in additional provision. 

Valuation of land and buildings

The Group carries its land and buildings at fair value, with changes in fair value being recognised in Other Comprehensive Income. The Group engaged independent valuation specialists to determine fair value at 31 December 2021.  Significant changes in the commercial property market may impact the valuation of the Group's property.  See note 13 for further information.

5.  Segmental reporting

For the purposes of segmental reporting, the Group's Chief Operating Decision Maker (CODM) is considered to be the Executive Board of Directors. The Board has not identified any separate operating segments within the business. The Board reviews revenue and expenses for the business as a whole and makes decisions about resources and assesses performance based on this information.

Revenue arises entirely through the wholesale of goods. Segmental analysis is therefore not presented.

The Group is not reliant on any one customer and no customer exceeds 10% of total annual turnover.

The following is an analysis of the Group's revenue for the year from continuing operations:





2021


2020





£


£





 

Sale of goods

60,490,559


47,322,673


60,490,559


47,322,673

The Group generates revenue from both the UK and overseas as detailed below:

 





2021


2020





£


£





 

United Kingdom

60,254,713


46,983,834

Rest of Europe

225,771


338,839

Rest of the world

10,075


-


60,490,559


47,322,673

6.  Other operating income





2021


2020





£


£





 

Government grants receivable

212,183


852,448


212,183


852,448

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

7.  Operating profit/(loss)

Operating profit/(loss) is stated after charging:






2021

2020

 






£

£

 





 

Underlying expenses



 

Depreciation of property, plant and equipment

551,124

490,533

Depreciation of right‑of‑use assets

1,283,306

955,378

Gain on foreign exchange

(38,701)

(28,758)

Auditor's remuneration:
‑ audit services

105,000

100,000

‑ work in respect of AIM listing

95,050

-

Short term lease expense:
‑ plant

127,620

112,755

‑ property

150,000

137,500

Amortisation of intangible assets

287,428

287,428

Share based payments

149,210

68,992

AIM listing costs

352,142

  -

Acquisition related costs

-

237,185

Restructuring costs

98,253

821,709

Impact of IFRS 16

213,765

339,404

Loss from new operations (Likewise Midlands)

724,474

-

 

Acquisition related costs in the prior year related to the costs of acquisition of A&A Carpets Limited.

8.  Auditors' remuneration

 





2021

2020





£

£

 

Fees payable to the Group's auditors for the audit of the Group's financial statements

105,000

100,000

 

Fees payable to the Group's auditors:



‑ work in respect of AIM listing ‑ through profit and loss

95,050

-

‑ work in respect of AIM listing ‑ through equity

24,950

-

 

 

9.  Directors and employees

 

Group




2021

2020





£

£

 

Employee benefit expenses (including Directors) comprise:



 

Wages and salaries

8,197,734

6,586,038

Social security costs

852,302

639,743

Pension costs

318,167

283,550

Compensation for loss of office

8,361

41,842

Share based payments


149,210

68,992



9,525,774

7,620,165

 

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the Directors of the Company, and other senior management.





2021

2020





£

£




Remuneration

731,028

610,976

Social security costs

98,675

77,302

Group pension contribution to defined contribution schemes

61,347

61,347

Share based payments

77,367

17,140


968,417

766,765

During 2019, key management personnel were granted 1,200,000 options under the Group SAYE scheme at an option price of £0.10 per share and 3,900,000 options under the Group EMI scheme at an option price of £0.10 per share. During 2020, 2,000,000 options were granted to key management personnel under the Group EMI scheme at an option price of £0.10 per share.

During 2021, 85,714 options were granted to key management personnel under the Group SAYE scheme at an option price of £0.21.

Group

 

 

The monthly average number of persons, including the Directors, employed by the Group during the year was as follows:

 

 





2021

2020





No.

No.

 

Directors

4

4

Other employees

254

229


258

233





2021




£

 

Remuneration of directors


 

Remuneration

298,732

Social security costs

40,037

Group pension contribution to defined contribution schemes

25,600

Share based payments

14,418

14,418


378,787

296,328

 

In addition, fees of £83,000 (2020: £Nil) were paid to non‑executive Directors in the year.

All executive team members, including the two Directors of Likewise Group Plc, were placed on reduced pay since the start of the COVID‑19 pandemic. This is subject to review by the Remuneration Committee.

The highest paid director received remuneration in the year of £145,338 (2020: £146,421) and pension contributions were made of £25,600 (2020: £25,600).

 





2021

2020





No.

No.




 

Directors accruing benefits under money purchase pension schemes

1

1


1

1

2,700,000 share options were granted to directors during 2019 at an exercise price of £0.10 per share. There have been no options exercised or additional options granted in either the prior or current year.

10. Finance income and expense

 

Recognised in profit or loss





2021

2020





£

£

 

Interest on:



Bank deposits

4

10

Other interest receivable

169

-

Total finance income

173

10

 

Finance expense



 

Bank loan interest payable

84,473

81,299

Interest on lease liabilities

317,913

121,288

Other interest payable

-

13,558

Invoice discounting facility interest payable

22,891

11,824

Total finance expense

425,277

227,969




Net finance expense recognised in profit or loss

(425,104)

(227,959)

 

11. Taxation on ordinary activities

11.1 Inco me tax recognised in profit or loss





2021

2020





£

£

 

Current tax



 

Current tax on losses for the year

-

(7,981)

 

Adjustments in respect of prior years

(313,724)

(106,833)

Total current tax

(313,724)

(114,814)

 

 

Deferred tax expense



 

Origination and reversal of timing differences

232,265

(88,863)

Total deferred tax

232,265

(88,863)




Total tax credit

(81,459)

(203,677)

 

 

Total tax credit



 

Total tax credit

(81,459)

(203,677)


(81,459)

(203,677)

 

The reasons for the difference between the actual tax credit for the year and the standard rate of corporation tax in the United Kingdom applied to losses for the year are as follows:

 

 





2021

2020





£

£




 

Loss for the year

(145,423)

(3,071,304)

 

Income tax credit

(81,459)

(203,677)

Loss before income taxes

(226,882)

(3,274,981)




 

Tax using the Company's domestic tax rate of 19% (2020:19%)

(43,108)

(622,246)

 

Fixed asset differences

(80,051)

(2,552)

Expenses not deductible for tax purposes

76,135

101,999

Adjustments to tax charge in respect of prior periods

(313,724)

(106,833)

Non‑taxable consolidation adjustments

(132,366)

66,048

Remeasurement of deferred tax

221,009

7,235

Deferred tax not recognised

208,715

408,279

Other tax adjustments, reliefs and transfers

-

(43,395)

Other differences leading to a decrease in the tax charge

(18,069)

(12,212)

Total tax credit

(81,459)

(203,677)

 

11.2 Deferred tax balances

 

The following is the analysis of deferred tax liabilities presented in the consolidated statement of financial position:

 

 





2021

2020





£

£

 

Deferred tax liabilities

(1,404,650)

(700,484)


(1,404,650)

(700,484)

 

 

A deferred tax asset of £1,812,747 (2020: £1,682,996) has not been recognised in the financial statements in relation to these losses. In addition, a deferred tax asset of £517,406 has not been recognised in the financial statements in relation to the future tax benefit on the future exercise of employee share options.

A deferred tax asset has not been recognised in the year as it is uncertain that the asset will crystallise in the foreseeable future.

 







Opening balance

Recognised in profit or loss

Recognised in other comprehensive income

Closing balance


£

£

£

£





 

Fixed asset timing differences

 

218,940

 

434,964

 

-

 

653,904

 

Arising from business combinations

 

723,601

 

156,648

 

-

 

880,249

 

Capital gains

 

31,045

 

-

 

471,901

 

502,946

 

Short term timing differences

 

(15,851)

 

(3,515)

 

-

 

(19,366)

 

Losses and other deductions

 

(257,251)

 

(355,832)

 

-

 

(613,083)

 


700,484

232,265

471,901

1,404,650

 







Opening balance

Recognised in profit or loss

Acquisitions/ disposals

Closing balance


£

£

£





 

Fixed asset timing differences

 

159,815

 

95,691

 

(36,566)

 

218,940

 

Arising on business combinations

 

732,942

 

(9,341)

 

-

 

723,601

 

Capital gains

 

-

 

31,045

 

-

 

31,045

 

Short term timing differences

 

(4,580)

 

(18,087)

 

6,816

 

(15,851)

 

Losses and other deductions

 

(69,080)

 

(188,171)

 

-

 

(257,251)

 


819,097

88,863)

(29,750)

700,484

 

 

12. Earnings per share

 

(i) Basic and diluted loss per share

 

The total basic loss per share attributable to the ordinary equity holders of the Company was £0.001 (2020: loss of £0.020). The total diluted loss per share attributable to the ordinary equity holders of the Company was £0.001 (2020: loss of £0.018).

 

 

(ii) Reconciliation of earnings used in calculating earnings per share

 

Loss attributable to the ordinary equity holders of the Group:



 

Used in calculating basic and diluted earnings per share

( 145,423)

(3,071,304)

 

(iii) Weighted average number of shares used as the denominator

 





2021

2020





Number

Number




 

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share

167,273,981

152,341,994

 

Adjustments for calculation of diluted earnings per share:



 

Options

16,498,538

14,122,729

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

186,572,519

169,264,723


 

13. Property, plant and equipment

 

 

Group

 

 





 


Land and buildings

Right of use assets -

leasehold property

Leasehold improvements

Plant and machinery

Motor vehicles

Fixtures, fittings & computer equipment

Right of use assets -

other

Total


£

£

£

£

£

£

£

£

Cost or valuation









 

At 1 January 2020

3,875,000

1,023,297

8,730

315,157

649,679

556,741

837,087

7,265,691

Additions

-

3,907,884

105,768

265,010

-

715,486

1,316,215

6,310,363

Acquisition of subsidiary

-

-

-

93,077

64,583

63,889

-

221,549

Disposals

-

 (159,179)

-

 (7,997)

 (101,811)

 (16,389)

 (371,690)

 (657,066)

Disposals on restructure

-

-

-

 (57,204)

-

 (193,090)

-

 (250,294)

Revaluation / (impairment)

175,000

 (91,733)

-

-

-

-

-

83,267

Foreign exchange movements

-

-

-

4,087

883

1,819

-

6,789

At 31 December 2020

4,050,000

4,680,269

114,498

612,130

613,334

1,128,456

1,781,612

12,980,299

 

Additions

-

4,888,501

184,221

876,927

49,545

482,576

2,390,834

8,872,604

Disposals

-

 (451,832)

-

-

 (3,943)

 (2,250)

 (301,449)

 (759,474)

Transfers between classes

-

-

-

444,955

-

 (444,955)

-

-

Revaluation / (impairment)

1,735,000

 (140,249)

-

-

-

-

-

1,594,751

Foreign exchange movements

-

-

-

 (5,276)

 (1,140)

 (2,420)

-

 (8,836)

At 31 December 2021

5,785,000

8,976,689

298,719

1,928,736

657,796

1,161,407

3,870,997

22,679,344

 


Land and buildings

Right of use assets -

leasehold property

Leasehold improvements

Plant and machinery

Motor vehicles

Fixtures, fittings & computer equipment

Right of use assets -

other

Total


£

£

£

£

£

£

£

£

Accumulated depreciation and impairment









 

At 1 January 2020

-

402,919

437

40,981

141,507

77,064

242,037

904,945

Charge for the year

63,757

-

1,021

90,996

183,792

150,967

-

490,533

Charge for right‑of‑use assets

-

537,518

-

-

-

-

417,860

955,378

Disposals

-

 (159,179)

-

 (1,253)

 (70,084)

 (3,863)

 (252,076)

 (486,455)

Disposals on restructure

-

-

-

 (22,925)

-

 (58,833)

-

 (81,758)

On revalued assets

 (63,757)

-

-

-

-

-

-

 (63,757)

Exchange adjustments

-

-

-

2,610

883

1,321

-

4,814

At 31 December 2020

-

  781,258

1,458

110,409

256,098

166,656

407,821

1,723,700

 

Charge for the year

67,257

-

21,522

142,324

157,249

162,772

-

551,124

Charge for right‑of‑use assets

-

667,879

-

-

-

-

615,427

1,283,306

Disposals

-

 (451,832)

-

-

 (1,768)

 (263)

 (76,937)

 (530,800)

Impairment charge

-

-

7,739

-

-

-

-

7,739

On revalued assets

 (67,257)

-

-

-

-

-

-

 (67,257)

Exchange adjustments

-

-

-

 (3,998)

 (1,140)

 (2,051)

-

 (7,189)

At 31 December 2021

-

997,305

30,719

248,735

410,439

327,114

946,311

2,960,623

 

 

 

Net book value









 

At 1 January 2020

3,875,000

620,378

8,293

274,176

508,172

479,677

595,050

6,360,746

 

At 31 December 2020

4,050,000

3,899,011

113,040

501,721

357,236

961,800

1,373,791

11,256,599

 

At 31 December 2021

5,785,000

7,979,384

268,000

1,680,001

247,357

834,293

2,924,686

19,718,721

 



If the freehold property had not been included at valuation, it would have been included under the historical cost convention as follows:

Cost of £3,100,000 (2020: £3,100,000)
Depreciation of £193,028 (2020: £144,771)
Net book value of £2,906,972 (2020: £2,955,229)

 



 


 

13.1. Assets held under leases

 

The net book value of owned and leased assets included as "Property, plant and equipment" in the Consolidated Statement of Financial Position is as follows:

 


31 December 2021

31 December 2020


£

£




 

Property, plant and equipment owned

8,814,651

5,983,797

Right‑of‑use assets

10,904,070

5,272,802


19,718,721

11,256,599

 

Information about right‑of‑use assets is summarised below:

 

Net book value

 




31 December 2021

31 December 2020




£

£

 

Property

7,979,384

3,899,011

Motor vehicles & plant and machinery

2,924,686

1,373,791


10,904,070

5,272,802

 

Depreciation charge for the year ended

 




31 December 2021

31 December 2020




£

£

 

Property

667,879

537,518

Motor vehicles & plant and machinery

615,427

417,860


1,283,306

955,378

 



 

13.2 Fair value measurement and Impairment

 

Fair value measurement

Included in land and buildings is land with a cost of £687,167 (2020: £687,167) which is not depreciated.

The Group's freehold land and buildings are stated at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The fair value measurement of the Group's freehold land and buildings as at 31 March 2022, which the directors do not believe is materially different to the valuation at year end, was performed by Savills (UK) Limited, independent valuers not related to the Group. Savills (UK) Limited are real estate advisors and have appropriate qualifications and recent experience in the fair value measurement of properties in the relevant locations. The valuation report has been prepared in accordance with Royal Institution of Chartered Surveyors ("RICS") Valuation ‑ Global Standards (incorporating the IVSC International Valuation Standards) issued November 2021 and effective from 31 January 2022 together, where applicable, with the UK National Supplement effective from 14 January 2019, together the "Red Book". Property valuations are complex, require a degree of judgement and are based on data that may or may not be publicly available. Valuation of investment property and the respective inputs have been classified as level 3 inputs as defined by IFRS 13 Fair Value Measurement. Level 3 means that the valuation model cannot rely on inputs that are directly available from an active market; however there are related inputs from recent property sales that can be used as a basis.

In establishing fair value, the most significant unobservable input is considered to be the appropriate yield to apply to the rental income. This is based on a number of factors including financial covenant strength of the tenant, location, marketability of the unit if it were to become vacant, quality of the property and its scope for potential alternative uses.

The yield applied in the valuation is 6.6%. Assuming all else stayed the same; a decrease of 1% in the yield would result in an increase in fair value of £1,032,000. An increase of 1% in the yield would result in a decrease in fair value of £760,000.

The revaluation of land and buildings for 2021 of £1,802,257 has been recognised within Other Comprehensive Income.

Impairment losses recognised in the year

During the prior year, the Group restructured the business to operate from one site. This resulted in an impairment of leasehold property right of use assets of £91,733.

During the current year the Company moved the location of its head office to a new site. This resulted in an impairment of the leasehold right of use asset of £140,249.

 

13.3 Assets pledged as security

 

There is a floating charge against the assets of the subsidiary Likewise Floors Limited, from NatWest Bank PLC.

There is a fixed charge over the freehold land and buildings held by the Group in respect of the bank loans in place for the Group.

Floating charges previously held against assets of William Armes Limited have been supported by cross guarantees from Likewise Group Plc following the transfer of trade and assets from William Armes Limited to Likewise Floors Limited. These charges are in respect of bank loans and invoice financing arrangements of the Group.

 

13.4 Capital commitments

 

During 2021, the Group entered into contracts to purchase property, plant and equipment for £470,423 in respect of assets acquired for the new Likewise Midlands facility. These commitments are expected to be settled in 2022.

 

Company

 

 





 


Right of use assets -

leasehold property

Leasehold improvements

Fixtures, fittings & computer equipment

Total


£

£

£

£

Cost or valuation





 

At 1 January 2020

144,659

8,730

25,066

178,455

Additions

62,012

1,489

544

64,045

At 31 December 2020

206,671

10,219

25,610

242,500

 

Additions

-

-

16,689

16,689

Impairments

(140,249)

-

-

(140,249)

At 31 December 2021

66,422

10,219

42,299

118,940

 


Right of use assets ‑ leasehold property

Leasehold improvements

Fixtures, fittings & computer equipment

Total


£

£

£

£

 

Accumulated depreciation and impairment





 

At 1 January 2020

18,152

437

2,177

20,766

Charge for the year

-

1,021

4,758

5,779

Charge for right‑of‑use assets

22,770

-

-

22,770

At 31 December 2020

40,922

1,458

6,935

49,315

 

Charge for the year

-

1,022

6,560

7,582

Charge for right‑of‑use assets

25,500

-

-

25,500

Impairment charge

-

7,739

-

7,739

At 31 December 2021

66,422

10,219

13,495

90,136

 

Net book value





 

At 1 January 2020

126,507

8,293

22,889

157,689

At 31 December 2020

165,749

8,761

18,675

193,185

At 31 December 2021

-

-

28,804

28,804

 

13.5 Assets held under leases

 

The net book value of owned and leased assets included as "Property, plant and equipment" in the Company Statement of Financial Position is as follows:

 


31 December 2021

31 December 2020


£

£

 

Property, plant and equipment owned

28,804

27,436

Right‑of‑use assets

-

165,74


28,804

193,185

 

During the current year the Company moved the location of its head office to a new site. This resulted in an impairment of the leasehold right of use asset of £140,249.

 

 

14. Intangible assets

 

Group

 






Licences

Likewise Floors Customer base

Likewise Floors Brandname

Total


£

£

£

£

 

Cost





 

At 1 January 2020

2,923

2,122,349

2,189,075

4,314,347

Disposals

(2,923)

-

-

(2,923)

At 31 December 2020

-

2,122,349

2,189,075

4,311,424

At 31 December 2021

-

2,122,349

2,189,075

4,311,424

 

 


Licences

Likewise Floors Customer base

Likewise Floors Brandname

Total


£

£

£

£

 

 

Accumulated amortisation and impairment





 

At 1 January 2020

360

106,117

109,454

215,931

 

Charge for the year

-

141,490

145,938

287,428

Disposals

(360)

-

-

(360)

At 31 December 2020

-

247,607

255,392

502,999

 

Charge for the year

-

141,490

145,938

287,428

At 31 December 2021

-

389,097

401,330

790,427

 

 

Net book value





 

At 1 January 2020

2,563

2,016,232

2,079,621

4,098,416

At 31 December 2020

-

1,874,742

1,933,683

3,808,425

At 31 December 2021

-

1,733,252

1,787,745

3,520,997

 

The Company held no other intangible assets in any period.

 


 

15. Goodwill

 

 

Group

 

 





2021

2020

 





£

£

 

 

Cost

4,216,728

4,216,728

 


4,216,728

4,216,728

 

 





2021

2020





£

£

 

Cost



 

At 1 January

4,216,728

4,028,287

On acquisition of subsidiaries

-

188,441

At 31 December

4,216,728

4,216,728

 

Accumulated impairment



At 31 December

-

-

 

15.1 Allocation of goodwill to cash generating units

 

The carrying amount of goodwill has all been allocated to the Group's primary activity of wholesale distribution and has been allocated to trading brands as follows:

 

 





2021

2020





£

£




Likewise Floors Limited (formerly Heatseam Limited) and its subsidiaries

3,253,210

3,253,210

Lewis Abbott Limited

467,847

467,847

H&V Carpets BVBA

307,230

307,230

A. & A. Carpets Limited

188,441

188,441


4,216,728

4,216,728

 

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.

The goodwill is a reflection of the benefit the acquisitions of subsidiaries will have on the Group by offering greater geographic coverage and providing the opportunity to expand this further than is currently the case. The acquisitions will benefit from the collective marketing and the enhanced product range available to all Group companies. Ultimately this will enable the acquired businesses and the existing Group members to provide an improved customer service, across a wider geographic area, with a greater product portfolio designed to help the Group to continue its development.

The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used being a discount rate of 10% and original growth rate of 1%.

 

Likewise Floors Limited and its subsidiaries

 

The break even point of goodwill for Likewise Floors Limited is at a growth level of ‑26.62% with terminal growth factor of 2%.

 

Lewis Abbott Limited

 

The break even point of goodwill for Lewis Abbott Limited is at a growth level of ‑14.87% with terminal growth factor of 2%.

 

H&V Carpets BVBA

 

The break even point of goodwill for H&V Carpets BVBA is at a growth level of 24.77% with terminal growth factor of 2%.

 

A. & A. Carpets Limited

 

The break even point of goodwill for A. & A. Carpets Limited is at a growth level of ‑81% with terminal growth factor of 2%.

 

 

16. Subsidiaries

 

 

Details of the Group's subsidiaries at the end of the reporting period are as follows:

 

 

Name of subsidiary


 

Principal activity

Place of incorporation and operation

Proportion of ownership interest and voting power held by the Group (%)

 






2021

2020

 








 

1) Likewise Trading Limited

Wholesale distribution of floor coverings and associated products

Great Britain

100

100

 

2) William Armes Holdings Limited

Holding company

Great Britain

100

100

 

3) William Armes Limited (100% subsidiary of William Armes Holdings Limited)

Wholesale distribution of floor coverings and associated products

Great Britain

100

100

 

4) Lewis Abbott Limited (100% subsidiary of Likewise Trading Limited)

Wholesale distribution of floor coverings and associated products

Great Britain

100

100

 

5) Likewise Floors Limited

Wholesale distribution of floor coverings and associated products

Great Britain

100

100

 

6) Factory Flooring Outlet Ltd (100% subsidiary of Likewise Floors Ltd)

Dormant company

 

Great Britain

100

100

 

7) H&V Carpets BVBA

Wholesale distribution of floor coverings and associated products

Belgium

100

100

 

8) A&A Carpets Limited

Wholesale distribution of floor coverings and associated product

Great Britain

100

100

 

9) Likewise Limited

Dormant company

Great Britain

100

-

 

On 31 December 2021, the trade and assets of A. & A. Carpets Limited, William Armes Limited and Lewis Abbott Limited were transferred to Likewise Floors Limited (formerly Heatseam Limited).

The registered offices of H&V Carpets BVBA are Nijverheidsstraat 26, 8760 Meulebeke, Belgium.

The registered offices of all other companies within the Group are Unit 4 Radial Park, Solihull Parkway, Birmingham Business Park, Solihull, England, B37 7YN.

 

 

 

Company ‑ Shares in group undertakings

 




2021

2020




£

£

 

At 1 January


12,555,774

11,626,451

Additions


-

891,770

Impairment following transfer of trade of subsidiaries


(891,770)

-

Share options


74,827

37,553



11,738,831

12,555,774

 

The Group considers impairment of its subsidiaries annually, this is assessed in the context of the Group's structure, and if appropriate an impairment provision is made.

 

 

17. Inventories

 

Group

 





2021

2020





£

£




 

Finished goods and goods for resale

10,256,740

7,555,806


10,256,740

7,555,806

 





2021

2020





£

£




 

Amounts of inventories recognised as an expense during the year

42,350,337

34,992,370

 

Amounts of inventories impaired during the year

128,875

67,381

 

 

18. Trade and other receivables

 

Group


2021

2020


£

£




 

Trade receivables

7,639,636

6,626,374

Less: provision for impairment of trade receivables

(117,799)

(118,137)

 

Trade receivables ‑ net

 

7,521,837

 

6,508,237

 

Prepayments and accrued income

893,103

635,700

Other receivables

1,496,983

322,221

Total trade and other receivables

9,911,923

7,466,158

Less: current portion ‑ trade receivables

(7,521,837)

(6,508,237)

Less: current portion ‑ prepayments and accrued income

(893,103)

(635,700)

Less: current portion ‑ other receivables

(1,360,135)

(322,221)

Total current portion

(9,775,075)

(7,466,158)

Total non‑current portion

136,848

-

 

Company

 


2021

2020


£

£




 

Receivables from related parties

6,230,742

5,263,190

Total financial assets other than cash and cash equivalents classified as loans and receivables

6,230,742

5,263,190

 

Prepayments and accrued income

102,376

186,476

Other receivables

11,475

100

Total trade and other receivables

6,344,593

5,449,766

Total current portion

(6,344,593)

(5,449,766)

 

 

All of the above amounts are financial assets of the Group and Parent Company except certain prepayments.

The Directors consider the carrying value of Group trade and other receivables is approximate to its fair value, after incorporating an impairment provision of £117,799 (2020: £118,137).

Trade receivables comprise amounts due from customers for goods sold. The Group's normal trade credit terms range from 30 to 60 days and therefore all are classified as current. There are a limited number of customers who are granted extended credit terms but these are not considered material to the financial statements. Trade receivables are recognised initially at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost.

The Group's credit risk is primarily attributable to its trade receivables. The amounts presented in the Consolidated Statement of Financial Position are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The Group has no significant concentration of credit risk, with exposure spread over a large number of customers.

 


Group

Group


2021

2020


£

£




 

Not more than 30 days

4,118,045

3,204,227

More than 30 days but not more than 60 days

2,323,728

1,796,272

More than 60 days but not more than 90 days

560,072

476,580

More than 90 days but not more than 120 days

176,091

191,260

More than 120 days

461,700

958,035

Loss allowance

(117,799)

(118,137)


7,521,837

6,508,237

 


The expected credit loss allowance is calculated using a weighted probability of loss based on age of the receivable:

 





2021

ECL





£





 

 

More than 90 days but not more than 120 days ‑ 5% (adjusted ‑ see below)

127,757

6,388

More than 120 days ‑ 50% (adjusted for payment plans ‑ see below)

190,966

95,483

Additional loss allowance

-

15,928


318,723

117,799

 

The debtors balance to which the ECL has been applied has been adjusted where there are specific payment plans in place.

Due to the COVID‑19 pandemic, in the prior year credit terms were extended for a number of customers resulting in a slower recovery of debts. The credit checking process ensured that such terms were only granted where ultimate recovery of the debt was likely and therefore the probability of loss was amended for debtors more than 90 days from 5% to 3% and for debtors more than 120 days from 50% to 32.5%. Following the easing of the pandemic, credit terms have returned to normal and therefore the probability of loss percentages have also been restored to pre‑pandemic levels.

 





2021





£

 

Reconciliation of ECL allowance balance


 

 

Balance at 1 January

118,137

ECL allowance charged to profit or loss

42,241

Other movements

(42,579)


117,799

 

 

The carrying amounts of the trade receivables include receivables which are subject to a factoring agreement. Under this arrangement, the subsidiary trading companies have transferred the relevant receivables to the factor in exchange for cash and are prevented from selling or pledging the receivables. However, the subsidiaries retain the late payment and credit risk. The Group therefore continues to recognise the transferred assets in their entirety in its Consolidated Statement of Financial Position. The amount repayable under the factoring agreement is presented as secured borrowing. The Group considers the held to collect business model to remain appropriate for these receivables and hence continues measuring them at amortised cost.

 

The relevant carrying amounts are:

 





2021

2020





£

£




Transferred receivables

4,295,893

1,434,634

Associated secured borrowings

(2,359,543)

(1,093,264)

 

19. Cash and cash equivalents

 


Group

Group

Company

Company


2021

2020

2021

2020


£

£

£

£






 

Cash at bank and in hand

8,447,550

2,820,895

7,077,876

59,447


8,447,550

2,820,895

7,077,876

59,447

 

 

20 Trade and other payables

 

 


 

Group

 

 


2021

2020

 


£

£

 




 

Trade payables

13,315,768

10,599,998

 

Other payables

238,210

144,716

 

Accruals

1,398,933

1,169,781

 

Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost

14,952,911

11,914,495

 

 

Other payables ‑ tax and social security payments

849,123

2,085,490

 

Deferred consideration on acquisition of subsidiaries

-

1,480,000

 

Total trade and other payables

15,802,034

15,479,985

 

 

Less: current portion ‑ trade payables

(13,315,768)

(10,599,998)

 

 

Less: current portion ‑ other payables

(1,087,333)

(2,230,206)

 

 

Less: current portion ‑ accruals

(1,398,933)

(1,169,781)

 

 

Less: current portion ‑ deferred consideration

-

(1,480,000)

 

Total current portion

(15,802,034)

(15,479,985)

 

Total non‑current position

-

-

 

 

 

Company

 

 


2021

2020

 


£

£

 

Trade payables

126,363

12,363

 

Payables to related parties

1,699,865

2,379,925

 

Other payables

7,875

4,570

 

Accruals

140,456

 

Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost

1,974,559

2,572,639

 

Other payables ‑ tax and social security payments

58,005

59,102

 

Deferred consideration on acquisition of subsidiaries

-

 

Total trade and other payables

2,032,564

4,111,741

 

 

Less: current portion ‑ trade payables

(126,363)

(12,363)

 

 

Less: current portion ‑ payables to related parties

(1,699,865)

(2,379,925)

 

 

Less: current portion ‑ other payables

(65,880)

(63,672)

 

 

Less: current portion ‑ accruals

(140,456)

(175,781)

 

 

Less: current portion ‑ deferred consideration

-

(1,480,000)

 

Total current portion

(2,032,564)

(4,111,741)

 


Total non‑current position

-

-

 


Trade payables and accruals principally comprise amounts outstanding in relation to trade purchases and ongoing costs. Trade payables are unsecured and the Group has financial risk management procedures in place to ensure that all payables are paid within pre‑agreed credit terms.

The Directors consider the carrying value of trade and other receivables is approximate to its fair value due to their short term nature.

Included within tax and social security payments for the Group is £71,749 (2020 £655,189) relating to VAT deferred under the government's COVID‑19 VAT payment deferral scheme.

All of the above amounts are financial liabilities of the Group and Parent Company except social security and other taxes.

 

 


 

 

21 Loans and borrowings

 

Group


2021

2020


£

£

 

Non‑current



 

Bank loans ‑ secured

1,640,563

1,779,668

Lease liabilities

10,488,881

4,969,987


12,129,444

6,749,655

 

Current



 

Bank loans and invoice discounting facility

2,498,234

1,192,212

Lease liabilities

1,681,658

1,032,354


4,179,892

2,224,566

Total loans and borrowings

16,309,336

8,974,221

 

Company


2021

2020


£

£

 

Non‑current



 

Bank loans ‑ secured

1,640,563

1,779,668

Lease liabilities

-

163,840


1,640,563

1,943,508

Current



 

Bank loans ‑ secured

138,691

98,948

Lease liabilities

-

28,161


138,691

127,109

Total loans and borrowings

1,779,254

2,070,617

 

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.

 





2021

2020





£

£

 

Amounts repayable under bank loans ‑ Group and Company



 

Within one year

138,691

98,948

In the second to fifth year inclusive

597,494

580,147

Beyond five years

1,043,069

1,199,521


1,779,254

1,878,616

 

The invoice discounting facility is held for Likewise Floors Limited and has a fixed service charge of £18,000 per annum.

During 2018 the Company obtained a bank loan of £2,280,000. Repayments commenced on 5th August 2018 and will continue until 5th January 2033. The loan is secured by a fixed and floating charge over the Group's assets. The loan carries interest at on a floating rate basis with interest at Bank of England rate plus a margin of 2.95%.

A twelve month capital repayment holiday was granted on the bank loan effective April 2020. Interest payments were made throughout the period with capital repayments recommencing in April 2021. There were no defaults of the loan during the year.

This loan is at a floating interest rate and exposes the Group to fair value interest rate risk.

 


 

 

22. Leases

 

Group

 

(i) Leases as a lessee

 

 

The Group's leases include leases for buildings, plant and motor vehicles. The average lease term is 5 years for buildings and 4 years for other fixed assets.

A new leasehold distribution hub was established in June 2021 in Birmingham from which the newly formed Likewise Midlands division operates. The Group's head office premises were also moved to this site in Q4 2021. The addition of this site led to an increase in lease liabilities of £5.1m at inception of the lease.

Various lease incentives of rent‑free or reduced rent periods are included in the measurement of the right‑of‑use asset and lease liability at inception of the lease. These predominantly relate to the Group's property lease portfolio.

 

Lease liabilities are due as follows:

 





2021

2020





£

£

 

Contractual undiscounted cash flows due



 

Not later than one year

1,814,829

1,069,331

Between one year and five years

5,947,403

3,629,281

Later than five years

6,067,895

2,254,306


13,830,127

6,952,918




Lease liabilities included in the Consolidated Statement of Financial Position at 31 December

12,170,539

6,002,341




Non‑current

10,488,881

4,969,987

Current

1,681,658

1,032,354

 

 

23. Financial instruments

 

Classification of financial instruments

The fair value hierarchy Groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities.

The fair value hierarchy has the following levels:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

The only financial instruments the Group holds which are measured at fair value through the Income Statement (as level 2 above) are forward currency contracts (see note 25). All other financial assets and liabilities are held at amortised cost.

The tables below set out the Group's accounting classification of each class of its financial assets and liabilities.

 

 


Group

Group

Company

Company


2021

2020

2021

2020


£

£

£

£

Financial assets at amortised cost





 

Trade receivables

7,521,837

6,508,237

-

-

Amounts owed by group undertakings

-

-

6,230,742

5,263,190

Other receivables

1,496,983

322,221

11,475

100

Cash and cash equivalents

8,447,550

2,820,895

7,077,876

59,447


17,466,370

9,651,353

13,320,093

5,322,737

 

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

 


Group

Group

Company

Company


2021

2020

2021

2020


£

£

£

£

 

Non current financial liabilities at amortised cost





 

Bank loans

1,640,563

1,779,668

1,640,563

1,779,668


1,640,563

1,779,668

1,640,563

1,779,668

 

 

 

Group

Group

Company

Company


2021

2020

2021

2020


£

£

£

£

 

Current financial liabilities at amortised cost





 

Trade payables

13,315,768

10,599,998

126,363

12,363

Amounts owed to group undertakings

-

-

1,699,865

2,379,925

Deferred consideration on acquisition of subsidiaries

-

1,480,000

1,480,000

Other payables

238,210

144,716

7,875

4,570

Accruals

1,398,933

1,169,781

140,456

175,781

Invoice discounting facility

2,359,543

1,093,264

-

-

Bank loans ‑ current

138,691

98,948

138,691

98,948


17,451,145

14,586,707

2,113,250

4,151,587

 

All of the above financial liabilities' carrying values are considered by management to be approximate to their fair values, as at each reporting date disclosed.

 

 

24. Provisions

 

Group

 





Dilapidation provision

Onerous lease provision

Total


£

£

£

 

 




 

At 1 January 2021

382,722

-

382,722

Charged to profit or loss

-

88,000

88,000

Utilised during the year

(268,046)

-

(268,046)

At 31 December 2021

114,676

88,000

202,676

 

Company





Onerous lease provision


£



Charged to profit or loss

88,000

At 31 December 2021

88,000

 

 

25. Financial instrument risk exposure and management

 

 

25.1 Financial risk management objectives

 

The Group's operations expose it to degrees of financial risk that include liquidity risk, credit risk, interest rate risk, and foreign currency risk.

 

This note describes the Group's objectives, policies and process for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented in the notes above.

 

25.2 Foreign currency risk

 

Most of the Group's transactions are carried out in GBP. Exposures to foreign currency exchange rates arise from the Group's overseas sales and purchases, which are denominated in a number of currencies, primarily EUR.

 

The Group assesses exposure and takes out forward currency contracts to mitigate this foreign exchange risk. As at the 31 December 2021, the value of forward contracts held by the subsidiary companies were as follows:

 

 

William Armes Limited held forward Euro contracts totalling 206,910 Euros.

Likewise Floors Limited held forward Euro contracts totalling 618,000 Euros and forward USD contracts totalling $1,182,000.

These contracts crystallise between January and May 2022.

 

25.3 Interest rate risk

 

 

The Group has secured debt consisting of an invoice discounting facility and bank loan.

The interest on the bank loan and discounting facility are at floating rates, however interest rate risk is considered to be limited due to the low current interest rates and economic climate. The Directors have performed sensitivity analysis which shows the impact on cash flows for the coming year would be less than £200,000 even if interest rates were to rise by 5% which is considered by the Directors to be highly unlikely.

The Group's only other exposure to interest rate risk is the interest received on the cash held on deposit, which is immaterial.

 

25.4 Credit risk

 

The Group's credit risk is primarily attributable to its cash balances and trade receivables.

In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counter party or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good.

The ageing profile of the trade receivables balance can be seen in note 18 above.

The Group's total credit risk amounts to the total of the sum of the receivables and cash and cash equivalents. At the 2021 reporting date this amounts to £17,466,370 (2020: £9,651,353).

 



25.5 Liquidity risk

 


Liquidity and interest risk tables

 

Prudent liquidity risk management includes maintaining sufficient cash balances to ensure the Group can meet liabilities as they fall due, and ensuring adequate working capital using invoice discounting arrangements.

In managing liquidity risk, the main objective of the Group is therefore to ensure that it has the ability to pay all of its liabilities as they fall due. The Group monitors its levels of working capital to ensure that it can meet its debt repayments as they fall due.

The tables below show the undiscounted cash flows on the Group's financial liabilities on the basis of their earliest possible contractual maturity.

 


 

 

 

Carrying amount

Total

1 ‑ 3 months

3 ‑ 12 months

1 ‑ 2 years

2 ‑ 5 years

More than 5 years



  £

  £

  £

  £

  £

  £

  £


31 December 2021

 

 









Trade payables

13,315,768

13,315,768

13,315,768

-

-

-

-


Other taxation and social security

849,123

849,123

849,123

-

-

-

-


Other payables

238,210

238,210

238,210

-

-

-

-


Accruals

1,398,933

1,398,933

1,398,933

-

-

-

-


Lease liabilities

12,170,539

13,830,127

453,707

1,361,122

1,315,791

4,631,612

6,067,895


Invoice discounting facility

2,359,543

2,359,543

2,359,543

-

-

-

-


Bank loans

1,779,254

2,086,831

47,332

141,994

189,326

567,978

1,140,201


 

 

32,111,370

34,078,535

18,662,616

1,503,116

1,505,117

5,199,590

7,208,096

 

 



Carrying amount

Total

1 ‑ 3 months

3 ‑ 12 months

1 ‑ 2 years

2 ‑ 5 years

More than 5 years



  £

  £

  £

  £

  £

  £

  £


31 December 2020

 

 









Trade payables

10,599,998

10,599,998

10,599,998

-

-

-

-


Other taxation and social security

2,085,490

2,085,490

2,085,490

-

-

-

-


Deferred consideration

1,480,000

1,480,000

-

1,480,000

-

-

-


Other payables

144,716

144,716

144,716

-

-

-

-


Accruals

1,169,781

1,169,781

1,169,781

-

-

-

-


Lease liabilities

6,002,341

6,952,918

267,333

801,998

1,150,287

2,478,994

2,254,306


Invoice discounting facility

1,093,264

1,093,264

1,093,264

-

-

-

-


Bank loans

1,878,616

2,240,259

38,357

115,072

189,326

567,978

1,329,526


 

 

24,454,206

25,766,426

15,398,939

2,397,070

1,339,613

3,046,972

3,583,832

 

 

 

 

 

 

 

 


 

26. Capital management

 

The Group's capital management objectives are:
• To ensure the Group's ability to continue as a going concern; and
• To provide long term returns to shareholders.

The Group defines and monitors capital on the basis of the carrying amount of equity plus its outstanding borrowings, less cash and cash equivalents as presented on the face of the Consolidated Statement of Financial Position as detailed below:

 

 





2021

2020





£

£




 

 

Equity

22,353,963

11,587,199

Borrowings

16,309,336

8,974,221

Cash and cash equivalents

(8,447,550)

(2,820,895)


30,215,749

17,740,525

 

The Board of Directors monitors the level of capital as compared to the Group's commitments and adjusts the level of capital as is determined to be necessary by issuing new shares or adjusting the level of debt. The Group is not subject to any externally imposed capital requirements.

 

 

27. Share capital

 

Consolidated and Company

 

Authorised

 



2021

2021


Number

£




Shares treated as equity



Ordinary shares of £0.01 each

 

192,374,194

 

1,923,742

 


192,374,194

1,923,742



Issued and fully paid



2021

2021


Number

£




Ordinary shares of £0.01 each

 



At 1 January

 

152,341,994

 

1,523,420

 

Shares issued

 

40,032,200

 

400,322

 

At 31 December

192,374,194

1,923,742

 

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

On 19 February 2021, the Company allotted 32,200 new £0.01 Ordinary Shares for consideration of £0.10 per share, totalling £3,220.

On 18 August 2021, the Company allotted 40,000,000 new £0.01 Ordinary Shares for consideration of £0.25 per share, totalling £10,000,000.

 

 

28. Reserves

 

 

Share capital

This represents the nominal value of shares that have been issued.

 

Share premium

 

This reflects proceeds generated on issue of shares in excess of their nominal value and is a non‑distributable reserve.

 

Revaluation reserve

 

This is used to record increases in the fair value of fixed assets and decreases to the extent that the decrease relates to a previous increase on the same asset. The revaluation reserve is a non‑distributable reserve. The excess depreciation on revalued assets in comparison to historical cost depreciation is transferred from the revaluation reserve to retained earnings.

 

Foreign exchange reserve

 

This reflects the exchange differences on the translation of the foreign subsidiary.

 

Retained earnings

 

This includes all current and prior period gains and losses.

 

Share option reserve

This represents the cumulative fair value of options granted.

Warrant reserve

This represents the cumulative fair value of warrants granted.

 

 

29. Warrants over ordinary shares

 

On 9 January 2019, the Company issued warrants over 1,800,000 shares as part of the IPO at a price of £0.10 per share.

On 1 May 2019, the Company issued warrants over 1,000,000 shares as part of the acquisition of H&V Carpets BVBA at a price of £0.30 per share.

Warrants are exercisable at any date in the ten years following the date of grant and none had been exercised as at 31 December 2021.

Warrants were valued using the Black‑Scholes model. The inputs to the model were the option price and share price at date of grant, expected date of exercise, expected volatility (20%), expected dividend rate (0%) and risk free rate of return (4%). The fair value of the warrants at the date of grant was considered to be £128,170.

 


 

30. Analysis of amounts recognised in other comprehensive income

 

 


Note

Revaluation reserve

Foreign exchange reserve

Retained earnings

 

 

 


£

£

£

 

 

 

Year to 31 December 2021

 





 

 

Property revaluation


1,330,356

-

 

Actuarial losses on pension

 31

-

-

(20,000)

 

Translation in relation to foreign subsidiary


-

(17,222)

 

Transfer to/from retained earnings


(19,000)

-

19,000

 



1,311,356

 (17,222)

   (1,000)

 

 


Note

Revaluation reserve

Foreign exchange reserve

Retained earnings

 

 


£

£

£

 

 

Year to 31 December 2020

 





 

Property revaluation


238,757

-

-

Actuarial losses on pension

 31

-

-

(20,000) 

Translation in relation to foreign subsidiary


-

(39,403)

-

Other adjustments


-

-

(370)

Transfer to/from retained earnings


(15,500)

-

15,500



223,257

(39,403)

(4,870)

 

 

 

 

 

 

Retirement plans

 

Defined contribution scheme

The Group operates a defined contribution pension scheme, the assets of which are held separately from those of the Group in an independently administered fund. Contributions made by the Group to the scheme during the year amounted to £298,167 (2020: £263,550). The amount outstanding at the reporting date in respect of contributions to the scheme were £45,543 (2020: £57,210).

 

 

(i) Defined benefit scheme characteristics and funding

 

 

William Armes Limited, a subsidiary of the Group since 9 January 2018, operates a pension scheme providing benefits based on final pensionable pay. The Scheme is closed to new members and is closed to future accrual. For pensions earned after 5 April 1997 and for Guaranteed Minimum Pensions earned between 6 April 1998 and 5 April 1997, increases in payment will be in line with CPI rather than RPI. Revaluations of pensions in deferment are linked to RPI. The scheme has been transferred to Likewise Floors Limited as part of the transfer of trade and assets.

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.

The contribution paid for the year ended 31 December 2021 was £20,000 (2020: £20,000). It has been agreed with the trustee that contributions for the next year will be £5,000 (2020: £20,000).

Given that the defined benefit pension scheme is in surplus at 31 December 2021, there is expected to be no material impact on the Group's future cash flows.

 

 

 

 

 

 

 

 

 

 

 

 

 

 



(ii) Reconciliation of defined benefit obligation and fair value of scheme assets

 

 


All defined benefit schemes are exposed to materially the same risks and therefore the reconciliation below is presented in aggregate.

 

 



Defined benefit obligation

Fair value of scheme assets

Effect of asset ceiling

Net defined scheme liability

 



2021

2020

2021

2020

2021

2020

2021

2020

 



  £

  £

  £

  £

  £

  £

  £

  £

 












Balance at 1 January

1,804,000

1,733,000

 (1,846,000)

 (1,902,000)

42,000

169,000

-

-


Interest cost

23,000

34,000

 (23,000)

 (34,000)

-

-

-

-


Included in profit or loss

1,827,000

1,767,000

 (1,869,000)

 (1,936,000)

42,000

169,000

-

-












Remeasurement loss

Actuarial loss from:










  Demographic assumptions

 (4,000)

124,000

  - 

  - 

  - 

  - 

  (4,000) 

  124,000 


  Limited by asset ceiling

-

-

  - 

  - 

  155,000 

  (127,000) 

  155,000 

  (127,000) 


Return on plan assets (excl. interest)

-

-

  (131,000) 

  23,000 

  - 

  - 

  (131,000) 

  23,000 


Change in asset ceiling (excl. interest)

 

-

 

-

 

  - 

 

  - 

 

  - 

 

  - 

 

  - 

 

  - 

 


Included in other comprehensive income

 (4,000)

124,000

 (131,000)

23,000

155,000

 (127,000)

20,000

20,000


Employer contributions

-

-

 (20,000)

  (20,000)

-

-

 (20,000)

 (20,000)


Benefits paid

 (92,000)

 (87,000)

92,000

87,000

-

-

-

-


Other movements

 

 (92,000)

 (87,000)

72,000

67,000

-

-

 (20,000)

 (20,000)


Balance at 31 December

1,731,000

1,804,000

 (1,928,000)

 (1,846,000)

197,000

42,000

-

-

 


 

Actuarial assumption

 

The principal actuarial assumptions used in the determining calculating the present value of the defined benefit obligation (weighted average) include:

 



2021 

2020  

 

Discount rate

1.90% 

1.30% 

Future salary increases

2.40% 

2.00% 

Inflation assumption (RPI)

3.20% 

2.80% 

Mortality rates ‑ for male aged 65 now

1.00% 

1.50% 

Mortality rates ‑ for female aged 65 now

1.00% 

1.00% 

 

Longevity at retirement age (current pensioners)



 

  Males

86.1 years

86.6 years

  Females

88.5 years

88.1 years

 

Longevity at retirement age (future pensioners)