Lords Group Trading plc (LORD) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Lords Group Trading plc 2025 AGM. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. I'd now like to hand you over to Gary O'Brien, Chairman of the Lords Board. Good afternoon, sir.

Good afternoon. Ladies and gentlemen, good afternoon to you as well, and welcome to 2025 Annual General Meeting for the Lords Group Trading plc. My name is Gary O'Brien, as I've just been introduced, and I'm the Chairman of the company, and I'll also be Chairman for this meeting today. Thank you, everyone, for attending both in-person and in the Investor Meet Company platform. We have at least 2 members present in-person or by proxy, so I therefore can declare that a quorum is present. For this morning's -- or not this morning, this afternoon's AGM, I have in the room with me Shanker Patel, sitting on immediate right, who is the Chief Executive Officer of the group; Stuart Kilpatrick, sitting on my left, Chief Financial Officer. And then either end of the table, we've got Andrew Harrison, Independent Non-Executive Director; and Sheena Mackay, also Independent Non-Executive Director. Right. Just a bit of housekeeping for everybody in the room. Could we all make sure we've got our phones switched to silent, if you don't mind. And if there is a fire, run like hell over to the closest exit or follow instructions given by any fire marshals that may be around. Now before we turn to the formal business of the meeting, I'd like to draw the meeting's attention to the trading update that was released this morning at 7:00 a.m. Now not everybody may have seen it, may not have read it, so therefore, I'm going to read it out loud. Bear with me, it's a little bit longer than our normal trading in previous years. So since our fiscal '24 annual results announced on the 8th of May 2025, trading has continued in line with management's expectations. In Plumbing and Heating, as previously communicated, boiler volumes were pulled forward into the first quarter of the current year prior to an industry-wide price increase, which was implemented in April '25, with volumes in the 2 months subsequent being resultantly lower. Merchanting volumes, which were 11% ahead in the first quarter, continued to trend positively against the prior year despite market conditions remaining challenging and new [ brand ] remaining challenging. There are new branch openings in [ Bristol ], Maidstone and Mansfield and are contributing more strongly than we had anticipated during the start-up phase. On June 6, 2025, we acquired the trade and assets of CMO Group Limited, the U.K.'s largest only online retailer of construction products. The acquisition brings together Lords' infrastructure and merchandising expertise with CMO's digital-first online model and accelerates the group's digital offering to the construction materials and plumbing and heating markets. The group continues to focus on growth, margin accretion and cost control. 3 branch openings, 2 strategic acquisitions since October '24 and a significantly stronger balance sheet after the property sale and leaseback, which we announced in April '25, have positioned the group well for any subsequent improvements in the RMI market. The recent addition of 9 online CMO superstores broadens our offering to customers while maintaining our focus on excellent customer service. Performance to date has been as expected. And although the seasonally significant trading period lies ahead, the Board is confident that the group is on track to meet its expectations for fiscal '25. That ends the announcement that was published. You'll be able to see that both on our website and also on the company's London Stock Exchange page if you haven't received a copy. Now as Shanker and Stuart gave a thorough presentation of the company's preliminary results on the 8th of May on the Investor Meet Company platform, we don't intend to actually do a presentation today. And if anybody didn't pick up on that presentation, that is available to view on the Investor Meet Company platform. So you can go back and review it. Right. We'll soon move to conducting the formal business of the AGM. Following this, the directors will be available for any questions that you may have, taking questions from the audience and also any of those submitted online. Shareholders were given the opportunity to submit questions in advance of the AGM, and questions can also be submitted to our team at any time during the meeting. As you'll see from the Investor Meet Company platform, there's a Q&A function, which you'll be able to click on to. That will be explained to you later on in the meeting. Thank you. So I propose that we now proceed to the formal business of the meeting. Right. The notice convening today's Annual General Meeting setting out the resolutions to be proposed and explanatory notes was posted to all shareholders on the 23rd of May. Accordingly, the requisite notice of the meeting has been given. I propose, therefore, that with your consent, the notice of meeting should be taken as read. All agreed? Thank you. So voting. For this meeting, in accordance with best practice, all resolutions will be voted on a poll. I am directing that the votes will be conducted on a poll in accordance with my right to do so under Article 19.8 of the company's Articles of Association. Poll cards were provided on arrival to those eligible to vote. I will cast the proxy votes held by me in the poll. If shareholders are present today and also appointed me as a proxy, then they don't need to do anything. But if you do wish to change your vote, then you can do it through the poll, in which case, the votes already submitted will be deducted from the proxy votes. I'm appointing the company's registrar, MUFG Corporate Markets, as scrutineers. Ordinary resolutions require a simple majority. Special resolutions require 75% or more to pass. I will now go through and present the resolutions as they were presented in the notice. I should also note that I'm holding proxy votes in favor for each resolution in excess of 94%. Right. So resolution 1, the annual report and accounts for the year ending 31st of December '24 have been circulated to shareholders together with the auditor's report thereon. I would now like to propose the passing of the first resolution, which is proposed as an ordinary resolution, to receive the annual report and accounts of the company for the financial year ended 31st of December 2024 together with the directors' report and auditor's report on those accounts. Resolution 2, again, an ordinary resolution; is to declare a final dividend of 0.52p per ordinary share for the financial year ended 31st of December '24. This will be paid on the 4th of July '25 to the ordinary shareholders on the company's register of members at the close of business on the 30th of May 2025. Resolution 3, an ordinary resolution is to reelect Andrew Harrison as a Director of the company. Resolution 4 is to reelect Stuart Kilpatrick as a Director of the company. Resolution 5 is to reelect Sheena as a Director of the company. And Resolution 6, I will have to pass the Shanker as it affects me.

So I propose passing Resolution 6, which is being proposed as an ordinary resolution to reelect Gary O'Brien as Director of the company. I'll hand it back to you.

Thank you. In which case, I'll be reciprocal. I now propose that we should reelect Shanker Patel as a Director of the company as Resolution 7. Now Resolution 8, again, is an ordinary resolution, is to reappoint RSM UK Audit LLP as auditor of the company to hold office until the conclusion of the next general meeting at which accounts are laid before the company. And Resolution 9, ordinary resolution on the same [ date ], is to authorize the directors to determine the fees payable to the auditor. Resolution 10 is an ordinary resolution, and that's the directors be authorized to vote equity securities within the limits set out in Resolution 10. Resolution 11, which is our first special resolution, is that subject to Resolution 10, the directors be authorized to allot equity securities for cash as if Section 561 of the Companies Act 2006 did not apply within the limits set out in Resolution 11. Resolution 12 against a special resolution that subject to Resolution 10 and in addition to Resolution 11, the directors be authorized to allot equity securities for cash as if Section 561 of the Companies Act 2006 did not apply within the limits set out in Resolution 12. Now I've now proposed all the resolutions as set out in the notice, and I declare the poll open. If -- please complete any poll cards and tick the appropriate boxes against the [ specific ] resolution, and these will be collected by the company's registrars. So from that point of view, all done, okay? Am I going to get notice of that or it's just approved?

It is approved.

Okay. Thank you very much. So the actual polls counted will actually be -- will be issued as an RNS later today or even tomorrow, hopefully, so everybody will see what the actual voting for the meeting was. So unfortunately, this concludes the formal business of the meeting. I'm sure everybody is unhappy about that. I will now hand back to Investor Meet Company's host to assist us with the Q&A session. So I can pass it back.

[Operator Instructions] as we articulated earlier, the company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted and publish responses where appropriate to do so on the Investor Meet Company platform. I'd also like to remind you, the recording of today's meeting, along with the Q&A, will be accessed via your Investor dashboard. If I may hand back to you, Gary, Shanker, if there's any questions that you've got there, if you can just read those out and give a response and I'll pick up again.

Yes. Thank you very much. There are several questions here. And obviously, I'll pass to Shanker or Stuart as they feel appropriate. The first one, I think, is -- I'd like to take is in respect of CMO. What are the integration plans? And as I announced in the statement I read a minute ago that we've acquired the assets of CMO. What are the integration plans? And what is the projected net profit? Will goods be distributed via existing outlets? So this is just a general inquiry as to how CMO is going to be integrated and operated. Shanker, can I throw that to you?

Yes. So in terms of the integration plans, CMO will act as an independent division within our group, supported by our Merchanting and Plumbing and Heating divisions because there is a supply and product overlap between CMO, how CMO sells its products and how our offline businesses sell their products. The business will be integrated in terms of group policies, in terms of being part of our group culture. We see a very strong alignment in how CMO has built its business. It has a very strong employee-first culture, very similar to ours. And so integrating the two teams in terms of collaboration, we foresee, will be a much easier route than sometimes can be when you acquire businesses. In terms of the projected net profit, I think at this moment in time, it will be too early to make a statement except for the fact that clearly, the business is in need of a degree of transformation, which we are working on at pace, and we have a plan to do so. A lot of that will involve making CMO grow once again. And again, that will occur because of its ability to leverage the group's strengths, particularly with suppliers and also with any kind of working capital constraint that they may have been operating under over the last 6 months. Could it be distributed via the existing Lords network? Possibly. But at the end of the day, the business is an online digital business, and we intend to respect that. That's part of our strategy, is to ensure that we have a strong digital capability within our business. And it's premised, our acquisition of CMO is not based on the fact that distribution will occur solely out of Lords outlets. It has a -- CMO has an excellent model, and we intend to grow and enhance that model to make it work financially more rewarding than it might have been in the past.

Okay. Thank you, Shanker. Quite a specific question here. As we announced in the AGM statement, there have been 3 organic store openings, [ Bristol ], Maidstone and Mansfield. This one asks, can you come back down? That's okay. How much has Maidstone added beyond expectations? It's quite specific. I think there's a question mark. Who's going to answer this?

Maidstone is doing better than its business plan at the top line level, is strong double digits ahead of where we expect it to be by the end of May. So long way, that continues.

Okay. Next one, this is definitely going to be for you, Stuart, which is what is the net profit projections for '25? I guess that means for the group. I presume we're going to refer [ people ] to the market, but I'll let you answer.

Yes, there are obviously market expectations with our brokers as a group. Obviously, we don't make profit projections or forecasts and we're not really allowed to. But obviously, there are brokers' release estimates of our outcome for 2025.

Okay. And another question, is any current acquisitions in the pipeline. Shanker? If you answer that, we might have to smack...

The group has a very clear strategy. So in terms of acquisitions, it's very clear that it's part of our strategy. And with the recent acquisition of CMO, one can deduce from that where we will be in terms of any kind of pipeline of opportunities. We're always seeking opportunities.

I mean it is part of our strategy, as Shanker said. Obviously, if anything does come along, it is something that will be announced to the market in due course. But we're always looking at. If anyone's offering, please talk to us.

Actually, we're always being approached.

More than we are looking.

Okay. Now I don't think, unless there's any other questions from the room. Are there are any other questions that we need to be addressing?

Can I just say well done, you're building into having fully recyclable [ paper ] last year. You followed that through, and you've achieved the highest level of environmental accreditation. Secondly, can I ask, you do quite a bit of work in the communities, et cetera. I noticed from the annual report, you obviously transmit that to all your staff, they know what you're doing. It's always good to work for a company who appears to do good things in community and enables staff within that organization to maybe get involved.

Can I throw that one to Shanker? Because actually he takes a very keen interest on local involvement. It's part of your philosophy really, isn't it?

Yes, it's a big part of our values, and it is just giving back to the community in the areas that we trade, and that giving back actually occurs through our colleagues. So the ecosystem is that it's a colleague-led giving back into the community program. We do have an ESG and charity manager, who assists with that, either inquiring locally, which are the good community projects to support. But quite often, and in fact, more often than not, almost 80% of our initiatives comes from colleagues who say, we would like to support X, we would like to support Y. And would the foundation be able to provide that support? Of course, we have a strict grant-making policy with checks and balances. And then all of that is supported not just through an ESG manager, there's a group of trustees who are all from within the -- sorry, mostly all from within the business alongside the fact that I would set aside about 3 to 4 days -- 4 days in a year to go and visit some of these initiatives. The most recent one was in Glasgow, where we supported a local hospice. It's been very popular in this particular town, and it's not a well- to-do town. The hospice is one of the centers of the community and -- to visit. And I'm very, very pleased to have been able to support. So it's a very well thought-through strategic approach to giving back to our community, which is a big part of our value system.

And that's transmitted through to all your staff, isn't it?

Yes. All the staff knows about it. It's also an in-house communication system. So it's -- do you know what it's called? [indiscernible] is our in-house communication where staff people on what they're doing, and it's actually used very openly, showing what they've been involved in. It's not just for the charitable things. It's for anything and everything. But it's -- yes, very well communicated throughout the group.

Okay. In which case...

We've got one more question.

I shouldn't have talked so long, should I? The SP rise has been excellent analyst medium, I guess that share price target of 67, is this reasonable? I'm not sure I should pass that to anybody. It has been excellent. We're very pleased to see it. Let's hope it continues. That's probably the best thing to say.

Thank you for everybody for your attention to the day. Can I -- if there's no other questions, I'm just looking to make sure there isn't, there isn't; I will bring the meeting to a formal close and pass back to our host.

Fantastic. Thank you, indeed, Mr. Chairman. Thank you to the attendees for attending today. Can I please ask attendees not to close the session? You should now automatically be redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete and is greatly valued by the company. On behalf of the Board of Lords Group Trading plc, we'd like to thank you for attending today's Annual General Meeting, and good afternoon to you all.