REG - Lords Group Trading - FY22 Trading Update

Lords TradingAnnouncement

25/01/2023 07:00

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RNS Number : 7506N  Lords Group Trading PLC  25 January 2023

     25 January 2023

 

 

Lords Group Trading plc

('Lords', the 'Group' or the 'Company')

 

FY22 Trading Update

 

A year of positive strategic progress underpinned by strong financial
performance

 

Lords, a leading distributor of building materials in the UK, is pleased to
provide a trading update for the year ended 31 December 2022 ('FY22' or the
'period') ahead of publication of its FY22 Final Results in April 2022.

 

Highlights

 

·    Trading ahead of current market expectations for FY22, a record
performance, demonstrating continued delivery of the Group's growth strategy
set out at the time of the Company's IPO in 2021

 

·    FY22 revenues of £450 million resulting in 23.9% total growth for
the full year (FY21: £363 million)

 

·    Merchanting revenue growth of 69.2% in FY22 reflecting increased
market share and value added acquisitions during the period and the continued
and substantial market share opportunity available to the Group

 

·    Exceptional trading performance delivers 26.9% Adjusted EBITDA growth
to not less than £28.3 million for FY22 (FY21: £22.3 million)

 

·    The Board remains confident in Lords' ability to fulfil its objective
to be a £500 million revenue business by 2024 and to achieve a 7.5% Adjusted
EBITDA margin over the medium term

 

FY22 Guidance

 

The Group has delivered a strong performance in 2022 and now expects to report
record revenues, Adjusted EBITDA(1) and Adjusted Profit Before Tax(2) for FY22
of not less than £450 million, £28.3 million and £16.0 million
respectively; all ahead of current market expectations((*)).

 

(*) Current consensus analyst forecasts are for FY22 revenues of £436.7
million (with a range of £435.4 million to £438.0 million), FY22 Adjusted
EBITDA of £26.5 million (with a range of £25.7 million to £27.2 million)
and Adjusted Profit Before Tax of £15.7 million (with a range of £15.5
million to £15.9 million).

 

Segmental Trading

 

The table below shows total revenue growth and like-for-like for H1-22 and
FY22:

 

                                        Like-for-Like Revenue Growth      Change in Total Revenue

                         Unaudited

                         FY22 Revenue
 Division                               H1-22 vs. H1-21  FY22 vs. FY21    H1-22 vs. H1-21  FY22 vs. FY21
 Merchanting             £221m          14.5%            17.4%            73.4%            69.2%
 Plumbing & Heating      £229m          (12.5)%          (9.1)%           (8.2)%           (1.6)%
 Group                   £450m          (3.3)%           0.2%             19.7%            23.9%

 

 

Merchanting

 

The Group's regional brands continue to take market share by offering
customers an expanding product range and entry into new markets.  The
strategy execution translated into Merchanting revenue growth of 69.2% and
like-for-like revenue growth of 17.4%.

 

The Merchanting acquisitions completed by the Group during FY22, being Advance
Roofing (January 2022), AW Lumb (March 2022) and Buildbase Sudbury (April
2022) have been successfully integrated and are performing ahead of management
expectations.  Together these acquisitions delivered the Merchanting division
earnings accretion, product range extension or entry into new geographies.

 

P&H

 

Plumbing and Heating division ('P&H') has demonstrated resilient
performance during FY22, with total P&H revenue growth of (1.6)%, (growth
of (9.1)% on a like-for-like basis), despite the industry wide boiler
component shortages first reported by the Company in H1-22 and which has
continued to ease throughout H2-22.  P&H product range extension during
FY22 has seen new ranges added to support the decarbonisation of the UK
housing stock which have supported continued improvements in P&H EBITDA
margin throughout FY22.

 

The combined acquisition of HRP Trade and Direct Heating (April 2022) was
earnings accretive and has been successfully integrated and is trading in line
with management expectations.  The enlarged P&H business is realising
customer and product range synergies across all P&H brands as a result of
the acquisition.

 

The Group's new store roll out strategy for Mr Central Heating, the Group's
brand which supplies installers and homeowners through online and instore
channels and thus providing an attractive EBITDA margin profile, continues
with a tenth store opened in West Bromwich in H2-22.  The West Bromwich store
opening is the first of an intended 40 new Mr Central Heating store openings
over the next five years.

 

Balance sheet and liquidity

 

As at 31 December 2022, the Group had net debt(3) on a pre-IFRS basis of
£23.5 million (30 June 2022: £21.1 million) which reflects an increase and
normalisation of P&H inventory following boiler supply recovery, which has
been largely offset by continued management of the Group's wider working
capital base.  The Group retains a strong balance sheet supported by a
flexible capital structure and maintains good headroom against bank
facilities, which will support its investment priorities going forward.

 

Current Trading and Outlook

 

Whilst mindful of the uncertain macro-economic environment and its impact on
the sector in the short term, the continued delivery of the Lords organic and
acquisitive led growth strategy gives the Board confidence in Lords' ability
to fulfil its IPO objective to be a £500 million revenue business by 2024 and
an EBITDA margin of 7.5% in the medium term.

 

Shanker Patel, Chief Executive Officer of Lords, commented: "I am proud of the
progress Lords has made during 2022, continuing to deliver against our
strategic plan whilst delivering record financial performance during the
period.  Our teams did a magnificent job serving customers and the quality of
our people remains integral to the success of our customer focused
proposition.

 

"We enter 2023 in a strong financial position that will enable us to continue
to invest in our 3 P's (People, Plant, Premises) to pursue organic and
acquisitive led growth opportunities. While market conditions in 2023 may
become more challenging in the short term, the Group has substantial organic
growth levers through new geographies and product range extension that provide
our Group with the opportunity to continue its track record of growth."

 

 

(1) Adjusted EBITDA is EBITDA (defined as earnings before interest, tax,
depreciation and amortisation and, in accordance with IFRS) but also excluding
exceptional items and share-based payments.

(2) Adjusted Profit before tax (basic) is defined as profits before tax before
exceptional items, share based payments and amortisation of intangible assets.

(3) Net debt is defined as borrowings less cash and cash equivalents.

 

- Ends -

 

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

 Cenkos Securities plc (Nominated Adviser and Joint Broker)  Tel: +44 (0)20 7397 8900
 Ben Jeynes / Max Gould / Dan Hodkinson (Corporate Finance)
 Alex Pollen (Sales)

 

 Berenberg (Joint Broker)                               Tel: +44 (0)20 3207 7800

 Matthew Armitt / Richard Bootle / Ciaran Walsh

 Buchanan Communications                                Tel: +44 (0) 20 7466 5000
 Henry Harrison-Topham / Jamie Hooper / Abby Gilchrist  LGT@buchanan.uk.com (mailto:LGT@buchanan.uk.com)

 

Notes to editors:

 

Lords is a specialist distributor of building, plumbing, heating and DIY
goods.  The Group principally sells to local tradesmen, small to medium sized
plumbing and heating merchants, construction companies and retails directly to
the general public.

 

The Group operates through the following two divisions:

 

·  Merchanting: supplies building materials and DIY goods through its
network of merchant businesses and online platform capabilities.  It operates
both in the 'light side' (building materials and timber) and 'heavy side'
(civils and landscaping), through 30 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 16
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 46 sites.  Lords aims to become a £500
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
(http://www.lordsgrouptradingplc.co.uk/) .

 

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.

 

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