Likewise Group (LSE:LIKE) — Final Results

0:01 Good afternoon, and welcome to the LIKEWISE GROUP PLC final results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated at the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it received during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll.

0:30 I'd now like to hand you over to Tony Britt, CEO. Good afternoon to you, sir. Thank you, Mark, and welcome, everybody, and thanks for taking the time to attend. So this is our full year results for 2021. I'll just flip forward. So I guess the key highlight really is after the development of the business and investment since 2018 that we've produced a profit of 1,600,000 in the year. That's been through an increase in sales revenue, as you can see, of 28 up to NOK 60,500,000, improvement in the gross margin principally through the product mix up to 30%, operating expenses reducing from over 30% to 27.4%, hence the profit of 1,600,000, which is really encouraging for our development.

1:19 Furthermore, that allows us to actually declare our maiden dividend. That's actually a dividend technically in 2022, which will be explained in our full results, but it's really for the performance in 2021. And the board certainly is committed to a progressive dividend policy in line with the earnings of the business going forward. Net assets increasing strongly from 11,600,000 in 2020 through the flotation on AIM and subsequent placing an open offer to acquire Vale, increasing now to 38,700,000. And sat alongside that net sorry, gross cash now of 8,400,000. Okay. For forward to '22, a positive start to the year. And And very importantly, I'll explain a bit more as we go through the presentation, our distribution capability enlarged from 8,000,000 cubic feet to now 15,000,000 cubic feet of warehouse space.

2:16 And that allows us to extend our sales and marketing initiatives both through the the recruitment of additional sales representatives and also the ongoing launch of new products. And importantly, the two acquisitions that we've made in 2022, important strategic acquisition of Vale and followed on by the Bolton acquisition of Delta really allows us to take the business forward. The floor covering market in The UK, is in excess of £2,000,000,000 at manufacturer pricing. So gives us 5% to 6% market share and lots of market to go for. Key driver is, of course, house moves. And when a house move flows into a refurbishment, we see the bulk of our orders are one cut length or one order for room size quantities, typically 20 square meters, refurbishing one room in the house at any one time.

3:08 The timeline was still a young business, starting 2018, developed the business but really propelled forward since the summer of twenty twenty. The flotation name, as I mentioned, and then the major strategic acquisition of Vale followed on by Delta. Management team, we've got an extensive experience in the floor covering industry across our team of people that have joined us over the last few years. And we have a team very much can grow this business and take it forward for the future. Very importantly, our logistics network. As I've mentioned, we've now increased this from 8,000,000 cubic square feet to 15,000,000. Just going around the country in Glasgow, we currently have under construction a distribution center there to rehash that business.

3:56 Newcastle moved into new premises at the beginning of this year. Leeds, we freed up capacity by the launch of the business in Birmingham, allowing more cutting capacity and storage capacity there. Manchester, we are still sourcing premises to move ANA, which has been very successful business since we acquired it beginning beginning of of twenty twenty. In Derby, which is part of the Valley network, we are currently, or commenced extending that property up to 52,000 square feet. In Newport, we actually have an unutilized warehouse currently, which we plan to use in the third quarter. We've just opened in Newbury to service likewise into the South Of England, Erith, which is the hub for Vale, and then Sudbury, we still have plans to extend that.

4:49 This chart really shows the geographical presence that we have and the opportunities for the future. You'll see quite clearly that both Vale and LIKEWISE have little or no presence in the South And and Southwest Southwest of England and South Wales. And also, the coloured in areas of LIKEWISE, there's a number of fledgling businesses there where we have tremendous opportunity to expand the business over the coming years.

5:16 So it's all about developing our market presence, particularly through independent retailers and flooring contractors. We do have opportunities with multiple retailers, particularly with our matting and rug business, very much focused on residential and commercial. As we have done over the years, we'd like to recruit more established sales representatives with customer relationship and product knowledge. And And we we have have plans, particularly in the third quarter, for an extensive launch of new product and display initiatives. That really demonstrates the sales team and the sales management. I think sales management very well established in terms of numbers, but we will continue to recruit external salespeople supported by experienced internal people as well.

6:05 Given that we're a new business, our market presence is still limited, and we see many ways of extending that through various forms of display, whether it be lectured wall stands or other displays to support our overall sampling program. And as I've said, particularly in the third quarter, we would look to extend that and beyond, of course. So that all culminates in, the sales graph you'll see there. The turquoise line represents really the like for like LIKEWISE business, so you can see an upward trend there. And then the top red line includes the benefits of Valley and, more latterly, Delta. So an upward progression on the sales line. In terms of just going back to the numbers, you see, obviously, sales revenue increased, gross margin improved, operating costs under control whilst we're still investing in the business as well, and that important 1,600,000 profit before tax on an underlying basis.

7:04 And then balance sheet, again, just reiterating the increase in net assets from 11,500,000 to 22.3 and now at 38.7 and supported by gross cash at 8,400,000. So I think we have a strong balance sheet to take the business forward for the future. We've introduced this graph now showing both the net cash, which we've shown previously, and also the gross cash. Gross cash available for investment sat around the 8,000,000 and allows us to invest in projects such as Birmingham. But also, you'll see the drop where we acquired the Delta business at the beginning of April. But it puts us in a very good position to take the company forward. And that balance sheet is very much underpinned by the fact that we have four effective freehold properties now in the group, and that very much strengthens our position.

8:02 So just summarizing, we've made a positive start to 2022. I think annualized, we're certainly through the 100,000,000 sales revenue now. The market forecast demonstrates that we can develop deliver a 100% increase in earnings per share compared to 2021. We've obviously announced the main dividend. And as I've said earlier, it is the board's policy that we should have a progressive dividend in line with earnings. We've announced the potential for a share buyback. We have to have shareholder approval for this at the eighth forthcoming AGM. The reason for just considering that is that the placing an open offer to acquire Vale was significantly oversubscribed.

8:49 And to support shareholder demand, we decided to take probably more cash than we actually needed to at that time. Given the current share price, it would only be right for the board to consider that share back buyback possibility. And as we've said, we accept sat with net cash for investment for the future and supported by that freehold property portfolio. So I think it's fair to say that we have made significant steps forward both organically with the business and also with the, obviously, the acquisition of Valley, which was extremely important, followed by the acquisition of Delta. And with that distribution infrastructure

9:29 and the sales teams we've developed, we certainly have the opportunity to deliver our medium term objectives and beyond. Thank you. Tony, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the top right hand corner of your screen. But just while Tony opens up the q and a tab and takes a few moments to review those questions submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed by your investor dashboard. Tony, as you can see, we've received a number of questions throughout today's presentation, and thank you to the investors for submitting those. Could I just ask you to read out those questions and give responses where it is appropriate to do so, and I'll pick up from you at the end. Okay. Thank you. So there's a question.

10:16 I'm a shareholder and also a flooring retailer. Feel there is a lack of sampling available, and I think concentration will be made to increase sales with existing clients rather than more buyers with small independents. I think with regard to the sampling then, I think from from the period under COVID, and people not being able to travel, that certainly impacted on product development with manufacturers and the ability to get new ranges into the marketplace. I've mentioned previously, we certainly, over the coming quarter and beyond, of course, have a lot of initiatives with new product. We're discussing with Adrian earlier on about new new product launches and making sure they're in a timely manner supported by the display stands, both lecterns, wall stands and other forms of display, to really create that market demand and support the independent retailer and, of course, the flooring contractor with as much sampling and point of sale as possible.

11:13 In terms of buyouts of small independents, I think we have distribution capacity now with what we've done with the acquisitions and also with the development of Birmingham, notwithstanding the capacity in Newport. So I think we will certainly consider acquisition of other companies, but that certainly doesn't inhibit the opportunity to put lots of sampling and point of sale into retailers. Second question, do you see a great acquisition opportunities if there was a downturn? I'm not sure they always go hand in hand, to be honest, but we would certainly be considering acquisitions that are strategically fit with the business and can enhance our market position of course, return for shareholders.

12:02 Question. What are the key objectives over the next six months? I think it's continuing to grow the business. Obviously, we've made a lot of progress in the last eighteen months, with the organic growth and the development of of LIKEWISE. Valley was a major step forward. We will keep that autonomous, and there's a separate business within the group as a whole. It's making sure LIKEWISE perform, that Vale performs, and that we deliver our objectives really, you know, over the next six months.

12:33 I think that is the end of the questions. Sorry. There's one just popped up. Acquisitions are clearly important to pace of growth and typically competitive tendons. Do you have a protracted relationship with targets that you leave here in prime position to win? I don't think we can wholly answer that. No. We will consider acquisitions as as they crop up and as opportunities arise. Tony, thank you for that. I think you managed to address all those questions from from investors, of course, the company will review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to yourself, Tony, could I just ask you for a few closing comments?

13:22 Well, I think the key is the profitability of the business. We've made a lot of progress over the last eighteen months, as I've said. Vale was a big step forward, and we're really pleased with the way that business is performing. So there's just another question popped up to say, any plans to increase Vale geographically? Well, yeah, I think I demonstrated that earlier on the slide where it showed the geographical presence, you know, both in the South, Southwest Of England and South Wales, we would look to for both Vale and LIKEWISE to have an increased presence. Tony, thank you very much for updating investors today. I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations.

14:09 This will only take a few minutes to complete, which will be greatly valued by the company. On behalf of the management team of LIKEWISE GROUP PLC, we'd like to thank you for attending today's presentation. Good afternoon to you all. Thank you. Thank you all.