Latest Results
Interim Results
Lords (AIM:LORD), a leading distributor of building materials in the UK, today announces its unaudited Interim Results for the six months ended 30 June 2024 (‘H1 2024’ or the ‘Period’).
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H1 2024 Highlights
- Group revenue of £214.2 million (H1 2023: £222.6 million)
- Group like-for-like1 revenue decreased by 6.1% due to the challenging economic backdrop and previously announced market disruption within Plumbing and Heating relating to the Clean Heat Market Mechanism (‘CHMM’) deferral
- Gross margin broadly in line with prior period and ahead of FY23 reflecting focus on customer service excellence
- Decisive management actions taken on overhead costs expected to deliver annualised savings of £2.6 million in FY 2025
- FY 2023 acquisitions successfully integrated and rebranded
- Adjusted EBITDA2 16.6% lower at £12.6 million (H1 2023: £15.1 million)
- Plumbing and Heating division (‘P&H’) continuing to benefit from the UK’s commitment to sustainable living, with sales of Air Source Heat Pumps up 492%
- Interim dividend of 0.32 pence per share, scaled in line with earnings per share (H1 2023: 0.67 pence per share)
- Well positioned to deliver operational gearing from a recovery in the market
| Note | H1 2024 | H1 2023 | Change | |
| Revenue | £214.2m | £222.6m | (3.8)% | |
| Gross margin | 20.2% | 20.4% | (20) bps | |
| Adjusted EBITDA | 17 | £12.6m | £15.1m | (16.6)% |
| Adjusted EBITDA margin | 5.9% | 6.8% | (90) bps | |
| Adjusted operating profit | 17 | £7.1m | £10.2m | (30.7)% |
| Adjusted diluted earnings per share | 10 | 1.57p | 3.30p | (52.4)% |
| Dividend per share | 0.32p | 0.67p | (52.2)% | |
| Operating profit | £4.5m | £8.1m | (44.4)% | |
| Diluted earnings per share | 0.39p | 2.28p | (82.9)% |
Shanker Patel, Chief Executive Officer of Lords, commented:
“Trading conditions have remained challenging throughout the first half of 2024 with like-for-like (LFL) revenue 6.1% lower. The introduction and subsequent deferral of the Clean Heat Market Mechanism (CHMM) disrupted the Plumbing and Heating market and we experienced a 15% LFL revenue reduction in the first quarter, but a stronger second quarter resulted in a resilient first half with divisional revenue 3.2% down overall.
“In this challenging market, management has remained focused on optimising capital allocation and operating efficiency, with actions taken on costs expected to deliver annualised overhead savings of £2.6 million in FY2025. The Group’s resilience and strategy of maintaining gross margin is testament to our outstanding colleagues and our focus on excellent customer service.
“The Board welcomes the new government’s support for the sector and the recent interest rate reduction which is widely expected to lead to improved conditions for the UK construction market. The Group’s focus on operational efficiency and working capital management will ensure that we are well positioned for any market recovery. In the medium term, the Group is well placed in a highly fragmented and essential repair, maintenance and improvement (‘RMI’) market, to grow the Group’s market share organically and through selective, valued-added acquisitions which will become more attractive as the market returns. We are encouraged by the growth in Renewable product sales and believe this could be an additional near-term growth lever.
“Whilst the outlook for the Construction sector is beginning to improve, the Board is not expecting any change to trading conditions in the second half of 2024 and, recognising the important Autumn season ahead, particularly in Plumbing and Heating, expect that Adjusted EBITDA, will be in line with management expectations.”
Percentages are based on underlying, not rounded, figures.
1 Like-for-like sales is a measure of growth in sales, adjusted for new, divested and acquired locations such that the periods over which the sales are being compared are consistent.
2 Adjusted EBITDA is EBITDA (defined as earnings before interest, tax, depreciation, amortisation and impairment charges) but also excluding exceptional items, and share-based payments.
Chairman’s statement
Lords demonstrated its resilience in FY23 and outperformed the wider sector despite the challenging economic environment. This outperformance has largely been achieved due to approximately 80% of our revenues coming from the essential areas of the repairs, maintenance and improvement sector where purchases are not discretionary. This has helped ensure a consistent level of underlying demand in both our core divisions. We also believe that our superior customer engagement is now helping our brands take market share, using the product preference insights and customer loyalty, through periods of market volatility.
Our performance and growth strategy
Over recent years, the Group’s growth strategy has substantially broadened the business and diversified our revenue streams, and we saw the benefit of this in FY23. On a like-for-like (LFL) basis, Group revenues held up well and were 1.2% lower than in FY22. This was the result of 3.7% LFL revenue growth in the Plumbing and Heating (P&H) division offsetting a LFL decrease of 6.3% in the Merchanting division, where some product categories have seen price deflation. Adjusted EBITDA reduced in the period to £26.8 million (FY22: £30.0 million) reflecting the challenging market conditions in our higher-margin Merchanting division and the impact of loss-making Alloway Timber as anticipated at acquisition. Adjusted profit before tax of £10.4 million (FY22: £17.4 million) reflected market conditions and interest rate movements.
Mindful of macro conditions, we continue to leverage our differentiated customer first position to swiftly respond to volatile market conditions and ensure we manage the business prudently, focusing on our profitability and cash flows whilst exercising caution about capital allocation where required.
Furthermore, we selectively completed two acquisitions in the year, which were a strong geographical and product extension fit and both are performing in line with our expectations.
Our acquisition strategy is unique among our peers and aims to increase our market share and profitability, while further diversifying our revenue. This is delivering CAGR beyond our peer group and demonstrating our ability to scale in the sector. The markets we operate in are highly fragmented, with numerous specialist independent merchants, and we consistently demonstrate that Lords is a great home for these businesses given our customer and colleague-focused culture, making us an acquirer of choice. Even so, in current economic conditions, maintaining our balance sheet discipline is crucial and we are taking a very considered approach to further acquisitions but remain well positioned as macro conditions improve.
Dividends
The Board is recommending a final dividend of 1.33 pence per share, to give a total dividend in respect of the year of 2.0 pence per share, unchanged on FY22.
While the Group’s profits were lower in FY23, the total dividend is 2.2 times covered by adjusted earnings per share and the Board concluded it was appropriate to maintain the level of payout. This reflects our confidence in the future growth of the business, its inherent resilience and commitment to a progressive dividend. Subject to Shareholder approval at the Annual General Meeting ("AGM"), the Final Dividend will be paid on 28 June 2024, with a record date of 24 May 2024 and an ex-dividend date of 23 May 2024.
Our purpose and culture
The Group’s culture is one of its key strengths. It helps us to stand out as an employer and deliver great service for our customers, driving organic growth through increased loyalty and share of wallet expansion.
As we continue to grow, we are focused on maintaining the key parts of our culture, such as the family feel of the business, while ensuring we are flexible enough to seize the opportunities ahead. We have therefore done a considerable amount of work this year to more formally define our culture and the values that support it, and we are now integrating our refreshed values into the way we recruit and manage our people. This allows wider stakeholders to understand why independent vendors, customers and employees alike are choosing Lords.
As part of this process, we also refined our vision for the Group, which is set out within our annual report. This encapsulates our fundamental purpose and the factors that make us stand out in our market, and will help to ensure all stakeholders are aligned to deliver Lords’ growth strategy.
Environmental, social and governance (ESG) matters
The Group’s environmental footprint has always been a priority for all of our management teams. While the Board has ultimate responsibility for this, the actions that determine our performance are taking place across our business. We have therefore looked to increase accountability in the divisions and across local and regional brands, agreeing reduction plans and incentivised targets. We are in the process of identifying appropriate key performance indicators at divisional and Group level, so we can set targets and incentivise delivery, including for the executive directors. Since the end of the year, the Board has approved an updated environmental policy which is published on our website.
Our business is built on great customer service and that needs highly engaged and motivated people. Our regular surveys continue to show strong employee engagement, reflecting our people-focused culture and the example set by our CEO, Shanker Patel.
As I noted in my report to you last year, Dawn Moore stepped down as a non-executive director at the 2023 AGM, to focus on her executive responsibilities. The Board greatly valued Dawn’s expertise in human resources and we were keen to recruit a new director with a similar skill set. We were therefore delighted to welcome Sheena Mackay in September 2023. Sheena’s background as a global HR Director in public companies made her the ideal candidate and she has taken over as Chair of the nomination and remuneration committees. She also has experience as Chair of the ESG committee, helping oversee our efforts to formalise our sustainability commitments.
Since the year end, Chris Day informed the Board that he will be leaving to take up a new opportunity and we thank him for his service. On 8 May 2024, we were delighted to announce that Stuart Kilpatrick will be joining the Board as our new Chief Financial Officer (CFO) on 4 June 2024. Stuart is a highly experienced CFO, with a particular track record in M&A delivery, and we believe he will make a significant contribution to our continued success. Lords is well supported by its strong, well established finance team who will ensure a smooth transition from Chris’s departure to Stuart joining.
Looking forward
In the near term, Lords remains focused on driving organic and margin accretive growth, accessing new markets and customers via new store-roll outs of existing brands, accelerating our digital capabilities and an increasing share of customer wallet through marketing new products. In addition, the Group’s access to the growing decarbonisation product market is further increasing margin expansion.
Whilst we are seeing wider market conditions remaining uncertain in the near term, and we will continue to manage the business carefully and prudently, we are confident in the medium-term M&A opportunities that exist. We continue to hold active conversations with a number of independent merchants across the UK. As the Group monitors its pipeline of opportunities, Lords’ prudence and commitment to protecting its market reputation in the name of long-term success is vital. We continue to believe in our differentiated proposition and diversified growth strategy and, as we move into the second half of the year, the Board looks to the future with confidence.
Gary O’Brien
Independent Non-Executive Chairman
14 May 2024
Chief Executive Officer’s Review
On behalf of the Board, I am pleased to report our Interim Results for the six months ended 30 June 2024.
Overview
Revenue in the first half of 2024 was 3.8% lower at £214.2 million (H1 2023: £222.6 million). Like-for-like (‘LFL’) revenue, which adjusts for branches that were not part of the Group in the whole of the comparator period, was 6.1% lower than the first half of 2023.
Gross margins were in line with the first half of 2023 at 20.2% (H1 2023: 20.4%) but showed an increase on FY 2023 (20.0%) and FY 2022 (19.7%).
Adjusted EBITDA of £12.6 million (H1 2023: £15.1 million) reflected the reduction in LFL revenue and the impact of the Clean Heat Market Mechanism (‘CHMM’) on our Plumbing and Heating division, particularly in the first quarter, traditionally one of its busiest.
Merchanting
Merchanting revenue was 4.4% lower in the H1 2024 at £104.6 million (H1 2023: £109.4 million). The Group acquired Chiltern Timber and Alloway Timber during FY 2023 and after adjusting for their contribution, LFL revenue was 9.3% lower. Whilst our businesses are primarily focused on the more resilient RMI sector, brands such as AW Lumb, Hevey and MAP have exposure to the new build sector which has impacted performance in H1 2024.
Our focus on customer service excellence is demonstrated by a small improvement in gross margin despite the challenging competitive market.
The division renegotiated the terms of its Park Royal branch lease in the first half of 2024 due to the landlord’s intention to redevelop the property at the expiry of the lease in 2026. In doing so, it exchanged certainty of vacant possession for improved terms and flexibility. This resulted in a gain of £1.7 million in the period with nil rental going forward, allowing the business flexibility to relocate during a three and half year period following the agreement.
Alloway Timber, acquired in September 2023 as a business requiring turnaround, has now been fully integrated into the Group and rebranded as Lords Builders Merchants ('LBM'). Four of its five sites in the South-East of England have been fully refurbished, management has been strengthened and greater emphasis placed on business development. Although we are confident that the steps we have taken will result in the business contributing positively to profit in 2025, as previously advised, the business has required more attention than we anticipated, especially in these difficult trading conditions. Similarly, Chiltern Timber, which we acquired in April 2023, has also been successfully integrated into LBM and is trading well in relation to the market with sales growth of 3.2% in H1 2024.
Costs to serve the business were slightly lower on a LFL basis, as inflation increases were offset by efficiencies and Adjusted EBITDA was 10.2% lower at £7.6 million (H1 2023: £8.4 million).
Plumbing and Heating
The introduction of the CHMM resulted in price increases from 1 January 2024, which were passed onto customers. In advance of this, customers stocked up and our Plumbing and Heating division experienced increased demand in the final quarter in 2023. This reversed in the first quarter of 2024 and in traditionally one of the division’s stronger quarters, LFL revenue was down on prior period comparative by 15.1%.
During March 2024, the government deferred the introduction of the CHMM, and increased administration time was incurred as the manufacturer’s price increases had to be returned. Having seen the destocking hit sales in the first quarter, the second quarter resumed to more normal trading resulting in a first half LFL fall of only 3.2% at £109.6 million (H1 2023: £113.2 million).
Gross margin decreased from 14.5% to 13.2% in the period as the market disruption and manufacturer promotions impacted the mix of boilers sold and associated heating products.
Overheads were reduced by £0.3 million compared to the first half of 2023 and Adjusted EBITDA fell by £1.6 million to £5.0 million (H1 2023: £6.6 million) in the period.
Mr Central Heating, our digitally led P&H trade counter business, continued to develop recent branch openings in Edinburgh and West Bromwich, with both expected to contribute in line with normal timeframes in the second half of 2024. With a strong digital proposition and a broad product range, further selective branch openings will drive organic growth as the market improves.
Our P&H range recently broadened after signing an exclusive distribution agreement, with the World’s largest boiler manufacturer, Navien, providing 24-hour availability to over 2,500 independent plumbers merchants. In addition, we are commencing distribution of the Viessmann Climate Solutions’ portfolio of gas boilers, Heat Pumps and commercial heating solutions. In continuation of our strategy of product group diversification, P&H are starting to distribute Termotechnik radiators, who make up approximately 30% of the UK radiator market.
Renewables
The Group supports the initiatives aimed at the decarbonisation of housing stock and is well placed to serve this market through its branch network in both divisions. In H1 2024, air source heat pump (ASHP) revenue increased by 492% and related renewable products, including controls, under floor heating and air conditioning grew strongly. The Group recently agreed an exclusive distribution agreement with South Korean manufacturer, Clivet, to distribute its ASHPs. We continue to look for organic and acquisitive opportunities within the product category where our product knowledge and related system design can differentiate.
Operational efficiencies
I am proud of my 900 colleagues, who have strived to maintain our excellence in customer service throughout this challenging period and worked hard to delivery operational efficiencies that will optimise our financial performance once the underlying market conditions improve. Our teams achieved improvements in working capital whilst maintaining high levels of service and reduced administration costs by c. 2% on a LFL basis, which will benefit operational gearing in advance of a market recovery.
Strategic development
In addition to the organic opportunities to develop our existing brands into new geographies, expand their product range and enhance their digital and direct routes to market, there is a significant consolidation opportunity to combine independent merchants and distributors within the fragmented UK building supplies sector where Lords Group Trading has less than 1% market share. Our selective approach to acquisitions and focus on delivering value to shareholders combined with tight control of costs and working capital gives the Board confidence that the Group will benefit from an improvement in market conditions.
Environmental, social and governance (ESG)
The Group's environmental footprint continues to be a priority for our management teams. We have increased accountability in the divisions and across local and regional brands, agreeing reduction plans and incentivised targets. Emissions data for 2022 and 2023 has now been collated in line with the Task Force on Climate-related Financial Disclosures (‘TCFD’) and progress in 2024 includes solar panel installations, hydrotreated vegetable oil fuel trials and electric forklifts as replacements are required. Our updated environmental policy was published on our website early in 2024.
As previously reported, Chris Day stepped down from the Board on 17 May 2024 to take up a new opportunity and we thank him for his service. On 4 June 2024, Stuart Kilpatrick joined the Board as Chief Financial Officer.
Outlook
The Board welcomes the new government’s support for the sector and the recent interest rate reduction which is widely expected to lead to improved conditions for the UK construction market. The Group’s focus on operational efficiency and working capital management will ensure that we are well positioned for any market recovery. In the medium term, the Group is well placed in a highly fragmented and essential repair, maintenance and improvement (‘RMI’) market, to grow the Group’s market share organically and through selective, valued-added acquisitions which will become more attractive as the market returns. We are encouraged by the growth in Renewable product sales and believe this could be an additional near-term growth lever.
Whilst the outlook for the Construction sector is beginning to improve, the Board is not expecting any change to trading conditions in the second half of 2024 and, recognising the important Autumn season ahead, particularly in Plumbing and Heating, expect that Adjusted EBITDA, will be in line with management expectations.
Shanker Patel
Chief Executive Officer
10 September 2024
Financial review
Our financial objectives during these challenging market conditions have been to maintain our focus on customer service, maintain or improve gross margins, maximise our efficiency in delivering our services and to manage working capital and cash.
Revenue
H1 2024 revenue was 3.8% lower at £214.2 million (H1 2023: £222.6 million), as businesses acquired in FY 2023 contributed 2.3% to revenue in H1 2024.
In Plumbing and Heating (‘P&H’), H1 2024 revenue was 3.2% lower than H1 2023 due to the impact as described above by the uncertainty surrounding the CHMM, with a stronger second quarter mitigating performance. Merchanting, which also had a stronger second quarter, was 4.4% behind H1 2023 but after adjusting for businesses acquired in FY 2023, LFL revenue was 9.3% lower.
Operating performance
Gross margins overall held up well at 20.2% (H1 2023: 20.4%) with improvement in Merchanting offset by a reduction in P&H as the CHMM led to changes in product mix within boilers and in ancillary products.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) was 16.6% lower at £12.6 million (H1 2023: £15.1 million) due to the effect of high levels of operational gearing within the business. Costs to serve the business continue to be tightly managed and after excluding the impact of businesses acquired during 2023, administrative expenses on a LFL basis were c. 2% lower. Full time equivalent employees totalled 890 at 30 June 2024, 7% lower than at 30 September 2023.
| Merchanting | Plumbing and Heating | Group | ||||
| H1 2024 | H1 2023 | H1 2024 | H1 2023 | H1 2024 | H1 2023 | |
| Revenue (£m) | 104.6 | 109.4 | 109.6 | 113.2 | 214.2 | 222.6 |
| Adjusted EBITDA (£m) | 7.6 | 8.4 | 5.0 | 6.6 | 12.6 | 15.1 |
| Adjusted EBITDA margin (%) | 7.3% | 7.7% | 4.5% | 5.8% | 5.9% | 6.8% |
Whilst revenue in P&H was resilient, the market disruption referred to above, impacted gross margin and although overheads were tightly managed, Adjusted EBITDA margin declined from 5.8% to 4.5% in the period. During 2024, following the redesignation of the local area by the local authorities, an agreement was negotiated with the landlord at the Park Royal branch in the Merchanting division, to remove future uncertainty of tenure at that site. The negotiation resulted in a lease surrender premium of £1.7 million included within other income in the period, which arises from a commercial negotiation to balance the benefit of securing the site in the short term whilst compensating for anticipated disruption and potential loss of trade as the business looks for a potential alternative location in the next three and a half years.
Amortisation increased by 15.6% to £6.1 million (H1 2023: £5.3 million) due to the five sites acquired with Alloway Timber adding to amortisation on right of use assets. Depreciation was similar to the prior period at £1.2 million (H1 2023: £1.3 million). Adjusted operating profit was £7.1 million (H1 2023: £10.2 million) and statutory operating profit was £4.5 million (H1 2023: £8.1 million).
Exceptional costs in the period were £0.5 million (H1 2023: £0.2 million) comprising £0.3 million of redundancy, system and wider integration costs of businesses previously acquired and £0.2 million relating to deferred consideration. In the first half of 2023, exceptional items of £0.2 million related to the cost of business combinations (£0.3 million), partly offset by a profit on disposal of business of £0.1 million.
Net finance costs
Net finance costs were £3.4 million (H1 2023: £2.5 million), with £0.3 million of the increase due to the higher interest rates in 2024, which were on average 100bps higher than in 2023. Additionally, the average level of borrowings was higher in the first half of 2024. The interest expense associated with the Group’s leases was also £0.2 million higher at £1.3 million (H1 2023: £1.1 million) due to the additional Alloway Timber branches.
Profit before tax and earnings per share
Adjusted profit before tax, which excludes exceptional items, share-based payments, acquisition related charges, including amortisation of intangible assets and impairment, was £3.7 million (H1 2023: £7.7 million). Statutory profit before tax for the period was £1.1 million (H1 2023: £5.6 million).
Adjusted diluted earnings per share was 1.57 pence (H1 2023: 3.30 pence). Basic diluted earnings per share was 0.39 pence (H1 2023: 2.28 pence).
Dividend
The Board has carefully considered the interests of all of its stakeholders and based on first half financial performance, has scaled the interim dividend in line with the change in adjusted earnings per share. Whilst the Board considers this a prudent approach, its dividend policy through the cycle will continue to be progressive as the market recovers. The interim dividend of 0.32 pence per ordinary share (H1 2023: 0.67p) will be paid on 11 October 2024 to shareholders on the register at the close of business on 20 September 2024. The Company’s ordinary shares will therefore be marked ex-dividend on 19 September 2024.
Cash flow
The Group typically experiences a seasonal outflow in working capital in the first half of the year which reverses in the second half. Whilst the Group made good progress in reducing stock and debtor days, in the first half of 2024, a drop in payables, which were higher in December 2023 due to the market reaction to the CHMM in Plumbing and Heating, resulted in a net outflow of £6.7 million (H1 2023: outflow of £16.2 million). Boiler supply issues in the first half of 2023 exacerbated the seasonal outflow in the first half of 2023. Cash generated by operations was £5.4 million (H1 2023: outflow of £1.4 million). Investing activities included deferred consideration of £0.5 million (H1 2023: £3.5 million) related to two acquisitions and financing activities included £1.1 million (H1 2023: £1.1 million) to buy out non-controlling interests.
Capital expenditure of £2.6 million (H1 2023: £4.4 million) in the period included £0.9 million (H1 2023: £2.2 million) in scheduled payments for the George Lines branch near Heathrow. Other significant capex included £0.5 million to refurbish the Alloway branches acquired in 2023, and the rollout of a new ERP system within the Plumbing and Heating division.
After financing and investing activities, net debt (defined as borrowings less cash and cash equivalents, and before recognising lease liabilities) increased by £7.8 million (H1 2023; £18.6 million) since the end of the year to £36.3 million (H1 2023: £38.0 million).
Debt financing and liquidity
The Group has banking facilities with a syndicate of HSBC, NatWest and BNP Paribas. The facilities comprise a £70.0 million revolving credit facility (‘RCF’) and a £25.0 million receivables financing facility. Entered into in April 2023, the RCF includes a £20.0 million accordion option and both facilities run for an initial three years, with two one-year extension options. The accordion and extension options are subject to lender approval.
In May 2024, the Group exercised its extension option under the banking facilities agreement such that the RCF has now been extended from its initial three-year term by 12 months to expire on 5 April 2027.
The Group had substantial headroom of £47.5 million (H1 2023: £49.6 million) within its debt facilities at the period end, and a further £11.9 million of accessible cash (H1 2023: £7.4 million).
Working capital
Inventories decreased by £7.9 million compared to 30 June 2023 and by £2.0 million since year end. The reduction reflects the continued focus on inventory optimisation, but also industry wide boiler supply issues described earlier at 30 June 2023. The 30 June 2024 balance equated to 46 days of stock (30 June 2023: 53 days).
Current trade and other payables at £79.6 million were £3.4 million higher than 30 June 2023 (£76.2 million), representing trade creditor days of 49 (30 June 2023: 45 days). Current trade and other receivables of £69.2 million remained broadly in line with the prior year balance of £69.0 million, resulting in trade debtor days of 38 relative to 37 at 30 June 2023.
Non-current assets
Intangible assets of £44.8 million were £1.4 million lower than at 31 December 2023 (£46.2 million). Software additions of £0.5 million in relation to an ERP upgrade in the Plumbing and Heating division, were offset by the amortisation charge of £1.8 million (H1 2023: £1.7 million).
Leases that are recorded on the balance sheet as right of use assets, with a corresponding lease liability, relate to properties, cars and distribution vehicles. The right-of-use asset in the balance sheet at 30 June 2024 was £42.5 million (31 December 2023: £47.4 million). The reduction comprises amortisation for the period of £4.3 million, and a £2.2 million reduction as a result of the lease surrender agreement at the Park Royal site within the Merchanting division.
Non-current liabilities
Trade and other payables relate to deferred consideration liabilities. The liability has reduced since the year end by £1.7 million reflecting the scheduled payments on the acquisition of the non-controlling interest of Hevey Building Supplies and in relation to the acquisition of AW Lumb (£0.5 million).
Stuart Kilpatrick
Chief Financial Officer
10 September 2024
Consolidated statement of comprehensive income
For the six months ended 30 June 2024
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) | ||
| Note | £'000 | £'000 | £'000 | |
| Revenue | 214,150 | 222,552 | 462,601 | |
| Cost of sales | (170,929) | (177,153) | (370,238) | |
| Gross profit | 43,221 | 45,399 | 92,363 | |
| Other operating income | 2,069 | 349 | 766 | |
| Distribution expenses | (2,231) | (2,174) | (5,057) | |
| Administrative expenses | (30,494) | (28,517) | (61,252) | |
| Adjusted EBITDA | 17 | 12,565 | 15,057 | 26,820 |
| Depreciation | (1,195) | (1,294) | (2,610) | |
| Amortisation of right-of-use-assets | (4,283) | (3,538) | (7,699) | |
| Adjusted Operating Profit | 17 | 7,087 | 10,225 | 16,511 |
| Share based payments | (301) | (211) | (513) | |
| Exceptional items | 7 | (484) | (165) | (2,849) |
| Amortisation of acquired intangibles | (1,814) | (1,736) | (3,515) | |
| Impairment charge | — | — | (501) | |
| Operating profit | 4,488 | 8,113 | 9,133 | |
| Finance income | 142 | 99 | 196 | |
| Finance expense | 8 | (3,523) | (2,623) | (6,356) |
| Profit before taxation | 1,107 | 5,589 | 2,973 | |
| Taxation | 9 | (355) | (1,699) | (1,273) |
| Profit for the period | 752 | 3,890 | 1,700 | |
| Other comprehensive income | — | — | —- | |
| Total comprehensive income | 752 | 3,890 | 1,700 | |
| Total comprehensive income for the period attributable to: | ||||
| Owners of the parent company | 651 | 3,839 | 1,382 | |
| Non-controlling interests | 101 | 51 | 318 | |
| 752 | 3,890 | 1,700 | ||
| Earnings per share | ||||
| Basic earnings per share (pence) | 10 | 0.39 | 2.35 | 0.84 |
| Diluted earnings per share (pence) | 10 | 0.39 | 2.28 | 0.82 |
The results for the period arise solely from continuing activities.
The condensed financial statements should be read in conjunction with the accompanying notes.Consolidated statement of financial position
As at 30 June 2024
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) | ||
| Note | £'000 | £'000 | £'000 | |
| Non-current assets | ||||
| Intangible assets | 11 | 44,845 | 44,600 | 46,205 |
| Property, plant and equipment | 12 | 20,479 | 20,707 | 20,233 |
| Right-of-use assets | 13 | 42,510 | 42,301 | 47,364 |
| Other receivables | 192 | 337 | 200 | |
| Investments | 180 | 30 | 180 | |
| 108,206 | 107,975 | 114,182 | ||
| Current assets | ||||
| Inventories | 47,323 | 55,184 | 49,292 | |
| Trade and other receivables | 69,195 | 69,029 | 81,171 | |
| Cash and cash equivalents | 11,881 | 7,409 | 19,811 | |
| 128,399 | 131,622 | 150,274 | ||
| Total assets | 236,605 | 239,597 | 264,456 | |
| Current liabilities | ||||
| Trade and other payables | (79,649) | (76,205) | (98,915) | |
| Borrowings | 14 | (9,851) | (6,334) | (9,507) |
| Lease liabilities | 15 | (7,663) | (9,289) | (7,815) |
| Current tax liabilities | (568) | (2,032) | (7) | |
| Total current liabilities | (97,731) | (93,860) | (116,244) | |
| Non-current liabilities | ||||
| Trade and other payables | (2,638) | (6,847) | (5,917) | |
| Borrowings | 14 | (37,686) | (39,080) | (38,239) |
| Lease liabilities | 15 | (40,010) | (37,273) | (43,953) |
| Other provisions | (1,427) | (1,353) | (1,565) | |
| Deferred tax | (7,019) | (7,085) | (7,373) | |
| Total non-current liabilities | (88,780) | (91,638) | (97,047) | |
| Total liabilities | (186,511) | (185,498) | (213,291) | |
| Net assets | 50,094 | 54,099 | 51,165 | |
| Equity | ||||
| Share capital | 829 | 828 | 828 | |
| Share premium | 28,412 | 28,293 | 28,293 | |
| Merger reserve | (9,980) | (9,980) | (9,980) | |
| Share-based payment reserve | 1,127 | 707 | 1,009 | |
| Retained earnings | 27,976 | 32,889 | 29,386 | |
| Equity attributable to owners of the parent company | 48,364 | 52,737 | 49,536 | |
| Non-controlling interests | 1,730 | 1,362 | 1,629 | |
| Total equity | 50,094 | 54,099 | 51,165 |
Consolidated statement of changes in equity
For the six months ended 30 June 2024
| Called up share capital | Share premium | Merger reserve | Share‑ based payments reserve | Retained earnings | Equity attributable to owners of parent company | Non- controlling interests | Total equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| As at 1 January 2024 | 828 | 28,293 | (9,980) | 1,009 | 29,386 | 49,536 | 1,629 | 51,165 |
| Profit for the financial period and total comprehensive income | — | — | — | — | 651 | 651 | 101 | 752 |
| Share-based payments | — | — | — | 303 | — | 303 | — | 303 |
| Exercise of share-based-payments | — | — | — | (185) | 185 | — | — | — |
| Share capital issued | 1 | 119 | — | — | — | 120 | — | 120 |
| Put and call options over non-controlling interests | — | — | — | — | (44) | (44) | — | (44) |
| Dividends paid | — | — | — | — | (2,202) | (2,202) | — | (2,202) |
| As at 30 June 2024 (unaudited) | 829 | 28,412 | (9,980) | 1,127 | 27,976 | 48,364 | 1,730 | 50,094 |
| Called up share capital | Share premium | Merger reserve | Share-based payments reserve | Retained earnings | Equity attributable to owners of parent company | Non- controlling interests | Total equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| As at 1 January 2023 | 813 | 28,293 | (9,980) | 497 | 31,237 | 50,860 | 1,328 | 52,188 |
| Profit for the financial period and total comprehensive income | — | — | — | — | 3,839 | 3,839 | 51 | 3,890 |
| Share-based payments | — | — | — | 212 | — | 212 | — | 212 |
| Share capital issued | 15 | — | — | — | — | 15 | — | 15 |
| Put and call options over non-controlling interests | — | — | — | — | 15 | 15 | — | 15 |
| Deferred tax on options | (2) | — | (2) | — | (2) | |||
| Capital reorganisation | — | — | — | — | — | — | (17) | (17) |
| Dividends paid | — | — | — | — | (2,202) | (2,202) | — | (2,202) |
| As at 30 June 2023 (unaudited) | 828 | 28,293 | (9,980) | 707 | 32,889 | 52,737 | 1,362 | 54,099 |
| Called up share capital | Share premium | Merger reserve | Share‑ based payments reserve | Retained earnings | Equity attributable to owners of parent company | Non- controlling interests | Total equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| As at 1 January 2023 | 813 | 28,293 | (9,980) | 497 | 31,237 | 50,860 | 1,328 | 52,188 |
| Profit for the financial period and total comprehensive income | — | — | — | — | 1,382 | 1,382 | 318 | 1,700 |
| Share-based payments | — | — | — | 512 | — | 512 | — | 512 |
| Share capital issued | 15 | — | — | — | — | 15 | — | 15 |
| Put and call options over non-controlling interests | — | — | — | — | 78 | 78 | — | 78 |
| Corporation tax on options | — | — | — | — | 515 | 515 | — | 515 |
| Deferred tax on options | — | — | — | — | (515) | (515) | — | (515) |
| Capital repayment | — | — | — | — | — | — | (17) | (17) |
| Dividends paid | — | — | — | — | (3,311) | (3,311) | — | (3,311) |
| As at 31 December 2023 (audited) | 828 | 28,293 | (9,980) | 1,009 | 29,386 | 49,536 | 1,629 | 51,165 |
Consolidated statement of cash flows
For the six months ended 30 June 2024
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) | |
| £'000 | £'000 | £'000 | |
| Cash flows from operating activities | |||
| Profit before taxation | 1,107 | 5,589 | 2,973 |
| Adjusted for: | |||
| Depreciation of property, plant and equipment | 1,195 | 1,294 | 2,610 |
| Amortisation of intangibles | 1,814 | 1,736 | 3,515 |
| Amortisation of right-of-use assets | 4,283 | 3,538 | 7,699 |
| Impairments of property plant and equipment | — | — | 77 |
| Impairments of right-of-use assets | — | — | 424 |
| Profit on disposal of property, plant and equipment | — | (27) | (368) |
| Profit on sale of business | — | (103) | (119) |
| Write off of investment | — | 55 | 56 |
| Share-based payment expense | 301 | 211 | 513 |
| Finance income | (142) | (99) | (196) |
| Finance expense | 3,523 | 2,623 | 6,356 |
| Operating cash flows before movements in working capital | 12,081 | 14,817 | 23,540 |
| Decrease / (increase) in inventories | 1,969 | (1,601) | 5,199 |
| Decrease / (increase) in trade and other receivables | 11,984 | 2,108 | (8,067) |
| (Decrease) / increase in trade and other payables | (20,611) | (16,749) | 2,112 |
| Cash generated by operations | 5,423 | (1,425) | 22,784 |
| Corporation tax received / (paid) | 127 | (1,435) | (3,124) |
| Net cash inflow/ (outflow) from operating activities | 5,550 | (2,860) | 19,660 |
| Cash flows from investing activities | |||
| Purchase of intangible assets | (454) | (128) | (734) |
| Business acquisitions (net of cash acquired) | — | (696) | (5,150) |
| Deferred consideration paid | (550) | (3,467) | (3,116) |
| Purchase of property, plant and equipment | (2,184) | (4,301) | (4,905) |
| Purchase of investments | — | — | (150) |
| Proceeds on disposal of property, plant and equipment | 58 | 264 | 4,160 |
| Cash received on sale of business | — | 340 | 340 |
| Interest received | 142 | 99 | 196 |
| Net cash outflow from investing activities | (2,988) | (7,889) | (9,359) |
| Cash flows from financing activities | |||
| Principal paid on lease liabilities | (3,753) | (2,702) | (6,912) |
| Interest paid on lease liabilities | (1,325) | (1,073) | (2,340) |
| Issue of share capital | — | 15 | 15 |
| Dividends | (2,202) | (2,202) | (3,311) |
| Purchase of non-controlling interest of Hevey | (1,063) | (1,063) | (2,126) |
| Capital repayment to non-controlling interests | — | (17) | (17) |
| Proceeds from borrowings | 20,891 | 9,980 | 109,116 |
| Repayment of borrowings | (21,100) | — | (97,853) |
| Bank interest paid | (1,548) | (1,395) | (2,917) |
| Interest paid on invoice discounting facilities | (392) | (45) | (805) |
| Net cash (outflow) / inflow from financing activities | (10,492) | 1,498 | (7,150) |
| Net (decrease) / increase in cash and cash equivalents | (7,930) | (9,251) | 3,151 |
| Cash and cash equivalents at the beginning of the period | 19,811 | 16,660 | 16,660 |
| Cash and cash equivalents at the end of the period | 11,881 | 7,409 | 19,811 |