Likewise Group (LSE:LIKE) — Interim Results

0:01 Good morning, and welcome to the LIKEWISE GROUP PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review your questions submitted today on published responses, which is appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like

0:31 to hand you over to CEO, Tony Brewer. Good morning to you. Many thanks, and thanks everybody for taking the time to join this presentation. Most of you, on this, meeting will know the structure of the group, but, you know, we're selling, all types of floor covering to independent retailers and flooring contractors throughout The UK. We've now established 12 distribution and logistics centers, with the addition in May of the Plymouth facility coming on on stream that completes our coverage of The UK. And we have a good cross section of suppliers from The UK, Western Europe, Turkey, the Far East, and that's across our key flooring products of carpet, residential vinyl, luxury vinyl tile, laminate, artificial grass, underlay for residential carpet and other flooring accessories, screeds, adhesives, and commercial products.

1:28 And to develop our business, we now have 99 key sales executives across our management and sales teams with the addition of 21 additional sales executives in the last, eighteen months. And also, we've increased our delivery fleet now to a 152 vehicles providing a next day service to our customers. And the 561 staff we now have through management, sales teams, telesales, warehouse and drivers have long standing flooring experience across the vast majority of those employees and management. And we believe there are still huge opportunities to increase our market presence through, ever large point of sale.

2:13 And if we take our various, sales activities, whether that be LIKEWISE, Vale wholesale carpets, we have deduplicated just over 7,000 unique customers. And we believe, whilst our initial objective was to get through 200,000,000, we now believe there's many opportunities to go for 250 and beyond. So in terms of the first six months, we've seen sales revenue increased by just over 10%. Likewise, floor sales actually ahead of 14.1%. And whilst we're certainly competitive in the marketplace in terms of pricing, equally, are not buying market share. And you'll see there a slight improvement in the gross margin of 0.2% up to 31.3.

2:59 EBITDA now at 4,400,000, and very importantly, profit from operations increased by 38% to 1,670,000, and the profit before tax increasing a 120% now to to 740,000. And that gives us a really good position to achieve our objectives for the year. And, positive cash generation of 5,200,000, and that allows us to increase the interim dividend, and I'll talk a bit more about that during the presentation. So in terms of the sales revenue, good start to the year in January, February, as you can see at the top line, and a really strong spring where we saw like for like sales improving by 14.1% in April.

3:44 Inevitably, that hot summer has an effect, but we're still showing like for like increases of in excess of eight and a half percent. And that really puts, as you can see from that graph, in a very good position for that traditional busy autumn trade selling period. In terms of the income statement, given the the key numbers, PBT, well upon previous year. And also, if you take that non underlying column where previously we would have had a restructuring cost where we were coming out of old premises, dilapidation cost, dual running cost, that's now a lot cleaner where really that column is things like share based payments and depreciation and amortization of goodwill, and to be fair, the start up costs for the Southwest operation out of Plymouth.

4:33 And similarly, the balance sheet in very good shape, with that freehold property, a key feature. Stock up slightly, but very much in line with, with sales development. Debtor days are actually reduced and very much under control. And as you can see, cash and cash equivalents increasing year on year. So, you know, very solid position for a relatively young business. Mentioned the dividend. We started paying a dividend in 2021 at 0.2p. In '23, we introduced an interim dividend, and with the 10% increase on the interim in 2025, that kind of indicates an overall dividend of circa 0.4p, which is literally double what we've achieved previously and very much in line with our earning aspiration.

5:28 I think we always say that the key to this business is the management and our staff, and we believe we've got an excellent team of managers across the various businesses, a good blend of experience, and there's some really good people, young people coming through the business. And it's very much a case that these people have learned their trade literally, understand the IT and the logistics, have product knowledge and product understanding, have relationship with suppliers, and of course, And it's really vital. And I think the other interesting feature is that we've got young people coming through the business that are aspiring to join that management team. I think that gives us a really good position for the future. In terms of our sales teams, as I mentioned, we've recruited 21 new sales executives since the start of 2024, now up to 99 people that are constantly visiting our customers, placing new point of sale and servicing our customers' needs.

6:29 And this just gives an indication to the LIKEWISE businesses that the point of sale that we're putting into retailers on a daily basis and literally measuring that by salesperson each week of how many have been placed. And we very much believe this is a key part of our future development. Some specifics are that we started trading with Associated Weavers and one of the leading carpet manufacturers from Belgium in the quarter four last year, and that's been really positive development for us. We started off with five ranges. We've added another six and that will go to seven and eight. So really extensive product portfolio. And similarly, on the right hand side of that page with Unalin, again, we started quarter four last year and it's become our best selling laminate very quickly.

7:18 The key feature is that in May this year, following meetings at the back end of last year, we've now launched a range with with Candine, and we're progressively putting those displays, you can see on the left hand side of the page, into retailers. And with the Harrogate exhibition coming up in just over a week's time, there'll be more of those displays going into the marketplace. And similarly, the floors by Lewis Abbott range, we've just in the process of we've recruited three dedicated sales executives. One is joined, one is joining next week and one in another month's time. And these are people who are experienced in selling premium products. And in addition to the eight ranges we launched last year, we're launching another four again at the Harrogate exhibition.

8:07 And further premium products is the engineered wood, which again, we launched, very back end of last year, and that's really developing well and takes into an additional segment within the marketplace. And Vale wholesale carpets, Vale's had huge success over the years with positioning tens or hundreds of thousands of pattern books into retailers. We enhanced that last year by putting those two carpet stands you can see in the center of the display. And then more recently, the laminate on the right hand side. And again, Vale will be showing at the Harrogate exhibition and launching the vinyl stand you can see on the left hand side of the page. So a lot more market presence from Vale.

8:54 In terms of the infrastructure, as we said, we've got 12 locations around The UK that have been put together literally over the last five years as you can see from those dates. Five sites to which the company owns the freehold, valued at 23,500,000, which is 2,300,000 of debt. Again, that strengthened our balance sheet. But, you know, there's been a huge amount of work to put that infrastructure together over the last five years. Just to give you some idea of that network, so in in likewise, we've got Birmingham, Leeds and Glasgow as the main hubs for carpet, residential vinyl and artificial grass, anything which is wide width. You'll know that we, received planning permission for the extension of the Newport facility, and by quarter two of next year, that will be an additional distribution hub for both, LIKEWISE and Valley.

9:49 And you may note from previous slides, there's an additional line now coming from Glasgow to Leeds, whereby with that second cutting shift we've introduced in Glasgow in the spring of this year, we needed additional vehicles to bring goods back where relevant back into England.

10:08 And Vale's network is driven by by area that's the powerhouse of Vale, where all the cutting is currently done. But again, we've just introduced and employed experienced people, to be able to cut carpet. We had the cutting machine in place for a little time, but now we've, started to cut in Derby, and that allows Valley to very much progress its business. And that really demonstrates the overall, geographical presence we've got, albeit as I'm sure you all appreciate, we're very much committed to keeping LIKEWISE and Valley completely separate from a sales and marketing and operational point of view.

10:50 This just demonstrates again going back to that cutting capacity. As I've said, we invested in the additional cutting shift, which is typically six people, to give us capacity in Glasgow. Furthermore, in Leeds, we've ordered a new cutting machine, which is a fairly significant investment, which will be put in place, as we close for the Christmas holidays and be operational by the end of January. That will give us further capacity in Leeds. As I've mentioned, within Valley, within Erith and Derby, plenty of capacity particularly in Derby, and that Newport extension becoming operational in q two next year really pushes us forward. I think it's a very important step for us that it allows us to, you know, wherever our realistic aspirations are on sales revenue increases, we have the capacity there to handle those, sales revenue increases.

11:49 And just a sketch there of the Newport extension. The light gray on the left hand side is 35,000 square feet, and we have now permission to put a 20,000 square foot extension. You can see from the diagram on the right, the extension actually higher. That gives us plenty of capacity to start a cutting shift in quarter two next year and as sales volumes require, put a second cutting shift in to follow that. In terms of our market presence, LIKEWISE is pretty well covered, albeit still areas of the country where we know our market share is relatively low and we continue to work to increase that. And similarly, with extending Vale's geographical area, to to cover the whole of of England and South Wales.

12:38 So just going back to that sales trend, as I said, particularly strong spring. Summer, maybe slightly off, but still 8.5% ahead on a like for like basis, extremely positive. So like for like sales up 10.2% to the end of August. And I think you can see from that graph, very well positioned for that, busy autumn selling period. So just summarizing, I think we have made significant progress. We have over the last five years, but particularly over the last twelve months. If we take the last four months of '24 and the first eight months of '25. As I've demonstrated, we have the logistics capacity and with that additional benefit of Newport, that is pretty significant going into 2026.

13:27 We believe we have excellent management and sales team and staff in general across our businesses and huge support from our suppliers

13:36 and ever increasing, involvement with our customers. We believe there are widespread industry opportunities to continue to develop this business. And whilst we set out a few years ago and said we'd get 10% market share, with a goal of 200,000,000, I think the board is now turning its attention to how do we deliver 250,000,000 and beyond. So many thanks, and hopefully, that's given you a comprehensive update. That's great, Tony. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. Tony, we did receive a number of questions throughout today's meeting from investors. And if I may, I will get started with the first question here, which reads as follows.

14:23 Is revenue growth primarily from new customers, regional expansion, or is there now growing optimism from existing customers? I think it's all of that. I think we've been increasing our geographical presence. And inevitably, with all loads of displays going into retailers, we're looking to take a bigger share of retailers' business. And there has been an evolution of of all those aspects. So I think it's a combination of doing more business with existing customers and increasing that geographical presence.

14:56 Thank you, Tony. And the next question is on competition. Do you see your main competitors being very aggressive in pricing to protect their market shares and pricing remain rational? I think probably there's been, probably pricing in the commercial market has probably been more aggressive. I think that's where you have, branded suppliers such as Polyfloor, Outro, who create the market presence and market demand for their products, and we service that demand, and that can be quite price sensitive, and it's easier for people to pull a lever on price to try and win business in that particular sector. I think in the residential, where we are creating the demand, working with our suppliers to develop new product, and not all necessarily exclusive, but degrees of exclusivity or created bias with the manufacturer, then that's probably less price sensitive. But as I've said earlier, we're certainly competitive but we're not buying market share.

16:02 Perfect. Thank you very much. And the next question you may have answered but just for completeness. How much of the growth was price driven versus volume? It's virtually all volume. There's been very little price increase. A little bit in the commercial market, but nothing really in residential. Thank you very much. Next question is, can you expand on how the business is exposed to consumer sentiment and housing market fluctuations?

16:31 Well, certainly a a buoyant housing market, certainly in terms of house moves benefits us for sure. But, you know, some of it's been in this industry a long time and seen various economic cycles. When a house moves slow, then refurbishment. And if you think about, you know, our typical order is one cut length, five metres by four metres, refurbishing one room in the house. And as I've said many times over the years, the other aspect is where people do move home, most people won't refurbish the whole of that new property in one go, both in terms of their deciding what they want to do with the rooms and also as their budget allows. So it always begs the question where does a house move, blend into a refurbishment?

17:20 But the business is very much driven by individual orders for for one room at a time. Understood. Thank you very much. And the next question on competition once again. Some of your competitors are refocusing their activity on big customers instead of local businesses. Do you see this as a good opportunity for you to increase sales at a higher rate? Yeah. Sure. We're we're absolutely committed to the independent retailer. We believe there's there's there's very much, you know, there. The independent retailers and foreign contractors, as I said earlier on, debtor days are paying us, you know, on time. We believe there's 7,000 or more out there. And again, we've seen, you know, the coming and going of various multiples over the years, and the independent retailer has continued to be successful.

18:14 Thank you. And the next question here is any plans to target the contract sector more in the near medium term? Well, within LIKEWISE, then a significant amount of business, about a third, is commercial. So we're very much into the commercial sector. In Valley, to be fair, it's pretty much wholly residential. Perfect. Well, look, Tony, that was the last question from today. And thank you for adjusting those questions. And of course, the company can view your questions submitted today. Will I polish those responses on the investment company platform. But Tony, before I redirect investors to provide you with their feedback, which is particularly important to the company, could I please just ask you for a few closing comments? Thank you. Just first of all, to thank everybody for joining the meeting. Hopefully, demonstrated that the group has continued to make extremely good progress this year, and we're very well positioned for that autumn traditional busy selling period. And thanks to everybody for their support.

19:12 Fantastic, Tony. Thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically 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 I'm sure 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, and good morning to you all. Thank you.