Lords Group Trading (LSE:LORD) — AGM Proceedings

0:00 Good afternoon, and welcome to the LORDS GROUP TRADING PLC AGM proceedings. That is recorded meeting. Attendees will be in listen only mode. Questions can be submitted any time via the Q and A tab situated in the right hand corner of your screen. Simply type in your question and press send. The company may not be in a position to answer every question submitted today. However, all questions will be reviewed with responses published on the investment company platform where appropriate to do so. I'd now like to hand you over to Gary O'Brien, chairman of the LORDS Board, acts as chairman of this AGM. Good afternoon, sir. Good afternoon. Ladies and gentlemen, good afternoon, and welcome to the

0:31 company's twenty twenty three Annual General Meeting of LORDS GROUP TRADING PLC. My name is Gary O'Brien. I'm the Chairman of the company, and I'll be chairing the annual general meeting today. Thank you to everyone who's actually attended Senkos' offices and via the investment company platform. We have at least two members present. I therefore declare that a quorum is present to meet and continue with the meeting. For this morning's AGM in the room, I have with me Shankar Patel, chief executive officer of the company Chris Day, sitting to my media right, chief financial officer and chief operating officer and Andrew Harrison, independent senior independent non executive director. Now before we actually get into, I'll call it, formal aspects of the business, the company did issue our trading release this morning, which is that should now be shown on the screen.

1:22 I will read that out, Although I'm sure you could be reading yourselves, but I'll do it for you. Since the release of our full year results on Sunday, May 23, the resilient trading performance as a group has continued and we maintain expectations for full year trading performance for the year ended 12/31/2023 to be in line with market expectations. Whilst the persistently negative macroeconomic backdrop and uncertain interest rate environment has persisted throughout the fiscal year 2023 and has impacted consumer sentiment, our diverse product offering and end customer base combined with our careful executed M and A strategy has meant that softer demand in some segments of the business year to date have been offset by robust performance in others.

2:16 In merchanting, we continue to expand our geographical presence and broaden our product range as was illustrated by the acquisition of Chewton Timber Supplies in April 2023. In Plumbing and Heating, the group has scope to increase our Mr. Central heating offering to 50 branches nationwide over the next five years. Whilst also expanding our product range and margins through the inclusion of additional products such as air source heat pumps and underfloor heating. The demand for which will be underpinned with the obligation to decarbonize the built environment in the medium term. All acquisitions executed in fiscal year twenty twenty two as well as Chilton timber supplies are performing in line with our expectations at the time of acquisition and the pipeline of M and A opportunities remain strong.

3:10 Following the refinancing of our facilities on the 04/06/2023, we have financial headroom to expand on our less than 1% market share by being one of the few acquirers of choice in the market. That ends the trading statement itself and I'll now go into the formal aspects of the business. Following this, the directors will be available for Q and A sessions and we can take questions from the audience and from those submitted online. Shareholders were given the opportunity to submit questions in advance of the AGM and we've had several of those and questions will be submitted to our team at any time during the meeting using the Q and A function on the Investor Meet company platform.

4:01 For this meeting in line with good governance practice, all resolutions will be voted on by poll to ensure that the proxy votes of all of our members not in attendance today are counted on the resolution. The results of the poll on each resolution would be announced before the conclusion of this Annual General Meeting and published on the company's website as soon as reasonably practical. Now unless there are any comments or questions to the board concerning the matters referred to in the notice, including any of the proposed resolutions, then I propose that we proceed to the business of the meeting and I will put the resolutions to the meeting one after another. The actual terms of the lawyer's resolutions are set out in the full notice. So unless there are any objections, I propose to take the notice as read.

4:56 Okay. If I can go into the resolutions and cover them in turn. We have nine ordinary resolutions. The first one being to receive the company's audited accounts for the financial year ended 12/31/2022 together with the directors and the auditors report thereon. Resolutions two to five are to reelect the directors, Shankar Patel, Christopher Day, Andrew Harrison, and myself, Gary O'Brien. Resolution six seeks to declare a final dividend of £1.01 33, got people excited for a minute, excuse that, pound 1p 33 per ordinary share and to ratify the payments of the $1.01 pence and 26p per ordinary share paid on 07/07/2022 as part of the final dividend for the twelve months ending the 12/31/2021.

5:57 Resolution seven seeks to appoint RSM UK audit LLP as the company's auditor. And resolution eight seeks to authorize the directors to determine the fees payable to the auditors. Resolution nine being the final order resolution seeks to authorize the directors to allot relevant securities pursuant to Section five fifty one of the Companies Act 2000 and six as set out in the notice of the meeting. There are then two special resolutions which I am proposing. Resolution 10 is proposing a special resolution which seeks to authorize limited application of preemption rights pursuant to section five seventy of the Companies Act 2,006.

6:43 I've set out the notice of the meeting and resolution 11. The final resolution is proposing a special resolution which seeks authority to authorize the additional limited dissapplication of preemption rights pursuant to Section five seventy of the Companies Act 2,006, as set out in the notice of the meeting.

7:05 Now since all shareholders were encouraged to submit their proxies in advance of the AGM, we have collated the results of the poll and I'm pleased to confirm that all resolutions have been passed with over 93% of votes passed in favor of each. The detailed voting figures will be released via an RNS published

7:27 on and will be published in the company's website as soon as reasonably after the meeting. I will shortly I will now pass over to Paul to introduce us to the Q and A session. So Paul, if I can pass back to you.

7:44 Gary, thank you. Ladies and gentlemen, please submit your questions using the Q and A tab situated in the top right hand corner of your screen. I'll try to come and take a few moments. I'd like to remind you that the company may not be in a position to answer every question received today. Have all questions be reviewed with responses published on the investment company platform where it's appropriate to do so. Gary, if I may hand back to you to take any questions from the floor or online, if you could please read out the question and give your response where appropriate to do so, I'll pick up from you at the end. Thank you. Okay. I'm going to actually ask Chris if you wouldn't mind reading out the questions. So Chris, if you I think we had three submitted

8:19 Correct. Yeah. Three submitted. So question one, why are you issuing dividends instead of doing share buybacks? What is your view on further dilution for FY 2024 and onwards? Right. I mean, the board, obviously, one of the board's responsibilities is to access the best means of delivering the returns to shareholders going forward. Now the company's acquisition strategy continues to target acquisitions in the four to six times EBITDA range. And at the current time, the company's dividend policy set at the time of the company's IPO and the capital growth capable of being delivered through the execution of the group's organic and inorganic growth strategy are considered to be the most attractive means of delivering returns to shareholders longer term.

9:08 Okay. Second question, given the strong increasing operating working capital, where do you see it for FY 2024 and onwards? So I'll answer that one. I think the question is probably seeing the movement in the balance sheet year on year, which is driven by the four acquisitions that were made in 2022. If you look at it on a like for like or consolidated basis, the net working capital movement was actually 2,000,000, which is consistent with our belief that we've got some efficiency in the core of our working capital that we continue to to drive, which will help fund the initiatives that need to be fully funded.

9:48 And this is the final question in it, unless another one comes through while we're while we're answering. So third question. Like for like FY '22 revenue growth was naught point 2%. Do you think that you are focusing too much on acquisitions? What can be done to achieve organic revenue growth? Think that's an ideal one, Prashanka, to respond Yes. Thank you. So overall, the group's like for like was suppressed by the industry wide boiler supply issue, which we had informed the markets about. And these were presented during 2022, ultimately easing by the year end. What this has done is marks the like for like revenue growth of 17.4% in our merchanting division, and that is materially ahead of the market performance in 2022.

10:34 This has been driven by our organic levers of product range extension, our investments in our digital capability, and of course our investments in our three piece. We're confident that despite the border issues of PNH division, which grew last year in its EBITDA by 34.5%, enhancing its EBITDA margin by 1.6% to 6%. So overall, we're confident that we have sufficient concentration and initiatives on like for like revenue growth into 2023 and beyond. Okay. Thank you, Henka. We've had a fourth question come through. The So share price is so depressed. I am so bullish about LORDS, but have a steep decline in my investment value. I'm pleased with the AGM statement. We would like to know how the board see the share price by the end of the year.

11:26 Well, I'll take that one on. That's from That's from Michael. From Michael. I can understand your frustrations, Michael, and I can assure you probably sitting and looking at people who are equally frustrated. Unfortunately, despite the performance of the business, and as you've seen from the trading statements that we've issued in the past and the year end results, where we performed significantly ahead of what I would say the market generally, the share price languishes. That's not unusual. It's the market that we're currently in a smart the vagaries of the market and generally as opposed to ourselves. So unfortunately, there's no immediate response I can give you in terms of where we're going to be and how we're going to get there. I think our our job is and here I'm addressing both Shankar and Chris, is our job is to make sure we keep our head down and keep the business performing.

12:20 And hopefully, you'll see the rewards. But unfortunately, that's not for me to say. Okay. Okay. No further questions. No further questions. In which case, you know, if that concludes questioning, it also concludes the business of the AGM. And I'll declare the meeting closed, and thank you for all joining us today. Paul, if I can pass back to you. Gary, thank you very much indeed. Thank you for updating attendees today. Can I please ask attendees not to close the session? It should be automatically redirected to provide your feedback in order 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 proceedings. Good afternoon to you all.