TIDMLORD
RNS Number : 6789A
Lords Group Trading PLC
24 January 2024
24 January 2024
Lords Group Trading plc
('Lords', the 'Group' or the 'Company')
FY23 Trading Update
Lords, a leading distributor of building materials in the UK, is
pleased to provide a trading update for the year ended 31 December
2023 ('FY23' or the 'period') ahead of publication of its FY23
Final Results in May 2024.
During the period the Group's trading has again demonstrated
Lords' resilience and capability to deliver its growth strategy
amidst the continuing subdued trading conditions. In the face of
these conditions, Lords has made steady operational progress across
both Merchanting and Plumbing & Heating divisions. Furthermore,
seven additional sites across the UK have been added through
acquisitive and organic growth, generating an expected GBP25
million of annualised revenues at maturity.
As a result, the Group expects to report, subject to audit, FY23
revenue of GBP463 million (FY22: GBP450 million) and FY23 adjusted
EBITDA(2) of approximately GBP26.6 million (FY22: GBP30.0 million),
in line with current market expectations(1) , and adjusted profit
before tax(3) of approximately GBP11.0 million (FY22: GBP17.4
million).
Segmental Trading
The table below shows total revenue growth and like-for-like for
FY23:
Like-for-Like Change in Total
Revenue Growth Revenue
----------------
Unaudited FY23 vs. FY22 FY23 vs. FY22
Division FY23 Revenue
---------------- ----------------
Merchanting GBP215m (6.3)% (2.4)%
--------------- ---------------- ----------------
Plumbing & Heating
("P&H") GBP248m 3.7% 7.8%
--------------- ---------------- ----------------
Group GBP463m (1.2)% 2.8%
--------------- ---------------- ----------------
Overall, the Group has experienced further resilient trading
across the business, despite wider market headwinds, resulting in
total sales growth of 2.8%.
In addition to its organic growth levers, the Group successfully
executes a unique M&A strategy that is focused on creating
market share gains, enhanced profitability and further diversifying
revenue streams. Lords targets specialist, independent businesses
that broaden product range or geographic reach in order to do this.
The Merchanting and P&H markets remain highly fragmented,
offering significant opportunity given Lords' reputation as being
an acquirer of choice in the market.
The Group continues to maintain a prudent and considered
approach to inorganic growth and, whilst a pipeline of acquisition
opportunities remains live, in the current environment the Group is
committed to balance sheet discipline which will remain in
FY24.
Renewables product range extension
Lords has strategically focused on product range extension in
the renewables space in recent years, with strong growth drivers
and market dynamics complementing Lords position in the supply
chain.
In Q4 2023, the Government confirmed that the widely consulted
Clean Heat Market Mechanism ('CHMM') will commence in Q2 2024. The
CHMM will incentivise boiler manufacturers and homeowners to
accelerate the transition towards renewable energy sources across
the UK housing stock, increasing demand for renewable products
including air source heat pumps.
Lords is well placed to benefit from a shift in demand towards
air source heat pumps, enjoying successful and growing trading
relationships with six air source heat pump manufacturers and
achieving 60% revenue growth across its wider renewables range(4)
in FY23.
Balance sheet
As at 31 December 2023, the Group had net debt(5) of GBP28.5
million (30 June 2023: GBP38 million), backed by a freehold
property portfolio with an estimated market value of not less than
GBP15 million . The significant reduction in net debt, ahead of
current market expectations(6) , reflects the Board's focus during
the period to reduce net debt through a number of successful
management controls and initiatives and through the normalisation
of working capital.
P&H working capital fully normalised as at 31 December 2023,
in line with previous guidance at the 2023 interim results,
following the resolution of the industry wide boiler supply issues
in 2022.
Current Trading and Outlook
Throughout FY23 Lords has demonstrated resilient organic growth,
in a sector which has seen a challenging period., The Group
continues to successfully apply a number of steps to manage costs
and reduce debt.
The markets in which we operate in are expected to remain
subdued into FY24 and, whilst there are signs of improvement in
customer demand, these signals remain intermittent and price
deflation persists. This has led the Group to continue to take a
prudent approach to FY24 in order to give the market dynamics
appropriate time to recalibrate as economic volatility reduces.
Shanker Patel, Chief Executive Officer of Lords, commented:
"Like many of our peers it has been a challenging year but the
fundamentals of our business have underpinned a resilient
performance that I'm incredibly proud of.
"Our scale and profitability in both Merchanting and Plumbing
& Heating have benefitted from our organic growth levers as we
build our geographic footprint, extend our product range and build
our digital sales expertise. We maintain an ongoing ability to
execute earnings enhancing M&A, but balance sheet discipline
remains a core consideration. In that regard it is pleasing to
report net debt reduction ahead of market expectations. As market
conditions improve we are confident that we are exceptionally well
positioned for growth."
(1) Current consensus analyst forecasts are for FY23 revenues of
between GBP445 million and GBP450 million, FY23 Adjusted EBITDA of
between GBP26.2 million and GBP27.0 million, and Adjusted Profit
Before Tax of between GBP12.1 million and GBP13.2 million.
(2) Adjusted EBITDA is EBITDA (defined as earnings before
interest, tax, depreciation and amortisation and, in accordance
with IFRS) but also excluding exceptional items, the impact of an
in period change to the Group's stock provisioning policy and
share-based payments.
(3) Adjusted profit before tax is profit before tax before
exceptional items, share based payments and amortisation of
intangible assets.
(4) Air Source Heat Pumps, Controls, Under Floor Heating, Air
Con, Electric Boilers
(5) Net debt is defined as borrowings less cash and cash
equivalents.
(6) Current consensus analyst forecasts are for FY23 year-end
net debt of between GBP30.0 million and GBP32.6 million
- Ends -
The information contained within this announcement is deemed by
the Company to constitute inside information pursuant to Article 7
of EU Regulation 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 as amended. Upon
the publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
FOR FURTHER ENQUIRIES:
Lords Group Trading plc Via Buchanan
Shanker Patel, Chief Executive Officer Tel: +44 (0) 20 7466
5000
Chris Day, Chief Financial Officer and
Chief Operating Officer
Cavendish Capital Markets Limited (Nominated Tel: +44 (0)20 7220
Adviser and Joint Broker) 0500
Ben Jeynes / Dan Hodkinson (Corporate
Finance)
Julian Morse / Henry Nicol (Sales)
Berenberg (Joint Broker) Tel: +44 (0)20 3207
Matthew Armitt / Richard Bootle / Detlir 7800
Elezi
Buchanan Communications Tel: +44 (0) 20 7466
5000
Henry Harrison-Topham / Steph Whitmore / LGT@buchanan.uk.com
Abby Gilchrist
Notes to editors:
Lords is a specialist distributor of building, plumbing, heating
and DIY goods. The Group principally sells to local tradesmen,
small to medium sized plumbing and heating merchants, construction
companies and retails directly to the general public.
The Group operates through the following two divisions:
-- Merchanting: supplies building materials and DIY goods
through its network of merchant businesses and online platform
capabilities. It operates both in the 'light side' (building
materials and timber) and 'heavy side' (civils and landscaping),
through 31 locations in the UK.
-- Plumbing and Heating: a specialist distributor in the UK of
plumbing and heating products to a UK network of independent
merchants, installers and the general public. The division offers
its customers an attractive proposition through a multi-channel
offering. The division operates over 17 locations enabling
nationwide next day delivery service.
Lords was established over 35 years ago as a family business
with its first retail unit in Gerrards Cross, Buckinghamshire.
Since then, the Group has grown to a business operating from 48
sites. Lords aims to become a GBP500 million turnover building
materials distributor group by 2024 as it grows its national
presence.
Lords was admitted to trading on AIM in July 2021 with the
ticker LORD.L. For additional information please visit
www.lordsgrouptradingplc.co.uk .
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END
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Lords Group Trading (LSE:LORD)
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