Lords Group Trading (LSE:LORD) — Annual General Meeting

0:01 Good afternoon, and welcome to the LORDS GROUP TRADING PLC Annual General Meeting. Throughout this recorded meeting, attendees will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated in the right hand corner of your screen.

0:17 The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. I would now like to hand you over to Chairman, Gary O'Brien. Good afternoon to you. Thank you. Ladies and gentlemen, good afternoon to you all. Welcome to the twenty twenty four, annual general meeting for LORDS GROUP. My name is Gary O'Brien. As I was just introduced a minute ago, I'm chairman of the company, and I'll be chairing the annual general meeting today. Thanks to everybody who joined us via investor meet and also in the room, particularly our major shareholder here, James, who attends every year to make sure we're behaving ourselves. And I we've got two members in the room that I know of, so we can declare the meeting quorum.

1:07 For this morning's AGN, I have with me around the table. It's and I apologize for the reason to do with the camera, but right to call Sydney is Shankar Patel, CEO of the group. Sitting beside Shankar, and welcome, is Stuart Patrick who is our new CFO. Just joined us how long ago, Stuart? Three weeks. Three weeks. Well experienced Okay. Indoctrinated. Andrew Harrison, who is our independent nonexecutive director and our senior independent director Okay. And Sheena Mackay, who's who wasn't with us last year, who's also just recently more recently, who's joined us in the last several months. Yeah. Welcome. Thank you.

1:53 Before turning to the formal business of the meeting, I'd like you to draw your attention to the fact that we actually did a trading update released this morning at 07:00. If we can roll the screen up, I will read it out. This, I'll say, was registered with the stock exchange this morning at 07:00. So since our trading updates on the 05/15/2024, revenue has been in line with management expectations. Demand for the group's repairs, maintenance, and prudence has focused product offering, has been similar to the first quarter of twenty twenty four and due to our customer service culture, margins have also been maintained. The clean heat mechanism market mechanism, which we reported had caused challenges in the first quarter, has had less impact in trading in April and May. Alloway Timber, which we acquired in September 23, has now been fully integrated into the group and rebranded as LORDS GROUP TRADING Four of the five sites in the Southeast Of England have been fully refurbished leading to a strong positive customer feedback.

3:00 And similarly, Chilton Timber, which was acquired in April 23, has also now been fully integrated into LBM and operates from this modern specialist timber site in Mohamstead. While whilst challenging macroeconomic conditions have impacted trading at the start of '24, The group is well positioned in a highly fragmented and it's essential RMI sector with various maintenance and improvements. Our strong customer service culture combined with a proven track record and selective acquisitions gives the board confidence that this will lead to a sustainable increase in shareholder value over the medium term. And that's basically the body of the the release that we did this morning. You'll be able to get a copy of that from our website or you can go on to the London Stock Exchange under our under our name and pick it up from there if you want.

3:56 Now Shankar, Chris Chris Day, who was former CEO, CFO, I should say, gave a presentation on the May 15 when we actually did the initial results and answers. So I don't intend going through the results in the in any detail at all. And if you do want to see that presentation, again, you can go to the investor meets file, you'll be able to see under LORDS, you'll be able to see that presentation in full. Right. Before going on to the formal elements of the business in the AGM, we will we will be available for questions and answers at the end of the the formality, taking questions, and you can submit your questions through the InvestoMe platform or in person, obviously.

4:45 There was people were given the opportunity to file their questions in advance, and we have had several of those. So we know there are some questions there that we will have to respond to or we will be responding to. But please, as I say, during the during the presentation, if there is anything that you want to ask, please submit it via the via the InvestoMe platform. Right. So thank you for that. I'd now proceed to the formal business of the meeting. The notice for the meeting was actually filed on the May 24 or sent out on the May 24 to all shareholders. Accordingly, the requisite notice has been given and I therefore propose that with your consent, the notice of the meeting should be taken as read.

5:32 And if that's agreed, then, I'll proceed to the formality for your business. Now, for the meeting in accordance with best practice, all resolutions will be voted on as, via a poll. I'm directing the votes be conducted on the poll in accordance with the article 19.8 of the company's articles of association. Polls, for anybody present, poll cards were available, and can be cast at the meeting today and our basically, the link group who is the company's registrar will actually summarize those along with any votes that have been received so we can get the results for for all the resolutions at the end of the meeting.

6:19 I'm going to put the resolutions to the meeting one after the other. The actual terms of the resolutions were set out in full notice, so I won't go into it in any detail. And just for information from the voting that we've received to date, we've oh, we've had in excess of 94% acceptance on all of the resolutions. So having said that, now let's get into the the formality of it. Resolution one is the annual report on accounts for the year ended 12/31/2023 being circulated to to all shareholders with the auditor's report thereon. I would now like to propose a passing of the first resolution, which is proposed as an ordinary resolution.

7:06 And we've got two levels of resolution, ordinary, which just needs a a minimum 50% to pass it, and special resolutions which we will have later on where we need 75% as a minimum. But as I said, resolution one is to receive the annual reports and accounts of the company for the financial year ended September 23 together with the director's report and their auditor's report on those accounts.

7:34 Resolution number two, which again is an ordinary resolution, is to declare the final dividend of 1.23p per ordinary share for the financial year ended 12/31/2023. Resolution three, which I now propose, is to reelect Andrew Harrison as the director of the company. Resolution four,

8:00 again, an order resolution is to elect Stuart Kilpatrick as the director of the company. Resolution five, again, an order resolution is to elect Sheila McKay as the director of the company. And in the case of resolution six, I'm going to pass it to Shankar as it's concerned and myself. Thank you, Gary. I propose the passing of resolution six, is being proposed as an ordinary resolution to reelect Gary O'Brien as a director of the company and back to Gary as chair. Thank you, Shankar. Resolution seven, again, a northern resolution is to reelect Shankar Patel as the director of the company. Resolution eight, again, an order 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 of the at which accounts are laid before the company.

8:56 Resolution nine, again, an ordinary resolution is to authorize the directors to determine the fees payable to the auditor. Resolution 10, an order resolution that directors be authorized to allot equity securities within the limits set out in resolution 10. And then resolutions eleven and twelve, both of which are special resolutions. Resolution 11, is it subject to resolution 10, is there actually be authorized to allot equity securities for cash as if section five sixty one of the companies act 2,006 did not apply within the limits set out in resolution 11. Resolution 12, that's subject to resolution 10 and in addition to 11 directors be authorized to allot equity securities for cash as if section five sixty one of the Companies Act 2,006 did not apply within the release of Central Resolution 12.

9:53 That's all of the resolutions, to be proposed. I now declare the poll open. If there are any poll forecasts to be submitted to the company's to sorry, to the company's registrars, then please submit those. I don't believe there is. But what we'll what we will be doing is once we have completed any podcast summaries, we will we will basically declare the poll closed and the results of that will be available on the company's website. We'll we'll have that posted.

10:32 Right. Okay. So having said that, that really concludes the formal aspects of the the meeting. I'll hand back to investor meet. They can assist us with taking any questions that there may be for for the meeting. So if I can pass back to yourselves.

10:52 Perfect, Gary. Thank you very much. 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. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this meeting along with a copy of the slides and the published can be accessed via your investor dashboard. Gary, we did receive a number of questions from investors online. At this point, if I could just ask you to open the Q and A tab, read out the questions, and I'll pick up from you at the end.

11:21 Okay. Bear with me for a second while we try and do that. Oh, okay. It's coming up on the screen. So Michael j asked the question, the market is clearly disagreeing with the future prospects of this one wonderful company. Why? I'm not quite sure why he's saying the market is disagreeing with some future prospects, But I'm gonna pass this to Shankar to defend our defend our position as to why, a, I don't think the market is disagreeing with our future prospects, and b, why we actually I'm saying earlier that the directors and the board believe that in the medium term, our prospects are looking are looking strong. So Shankar?

12:05 Thank you, Gary. I think indeed the the the the point is that the the the company is is is on track to meet its guided forecast. We understand that the market sees a lot more than just the performance of the business and in particular, we believe that the macroeconomic environment is leading the market to take a particularly difficult view of businesses in our sector. But that said, I think as our business continues to perform and in line with our expectations, we see no reason why the market won't correct its view in the future if there is a a poorly dimming view of our business indeed. If there is. Yeah. If there is. Thank you. How does HSS hire for people who don't understand the the what HSS hire is in the in the audience?

12:56 Basically, it's a tool hire business, which we we actually subcontract space to them and operate out of our some of our sites. Shankar, how does that concept fit into our business? It's it fits in very well. HSS have a concession agreement with our business whereby they operate their from our sites and and supply their customers with small tools as well as slightly larger plant plant equipment. We, in return, receive a commission, which is which helps to to reduce our cost to serve from those locations. But in addition to that, it widens our offering to our customers. It allows us access to their customers and vice versa. It allows HSS access to our customers. That complements both both businesses

13:51 to be able to reach customers that we wouldn't otherwise be able to reach. And in particular for us, it widens our customer service offering. We are a customer service based business. This is a product that we're offering to our customers outsourced through our partnership with HSS. How many units do we have Shankar? Sorry, this is my question. We have I think 13 locations at this moment in time. That's obviously working well. Otherwise, we wouldn't I might like to add that. I think we were one of the first Yeah. To agree to this arrangement. Good. Sorry. I did miss a question earlier, which is how is the demand affected by bus? That's not the red bus. I'm gonna pass this one to Andrew. What does bus stand for? So bus is the boiler upgrade scheme. So it's the scheme that the government introduced to incentivize consumers to change their old fossil fuel boilers to a more efficient heat pump via an accredited installer.

14:50 So it's quite difficult for us to track sales specifically through the boiler upgrade scheme, but what we have seen this year particularly is an uptick in our heat pump sales. So I think anything that the government do to incentivize people to change is welcomed by us. K. Thank you. But coming down to shell c, which was actually pre submitted to us earlier as it so happens, but it's now on the screen I can see, who's asking several questions. It's from t, the the engagement appeal. Do you do you know who t stands for, Sheena? No. But I'm going to find out after this meeting. Okay. Right. Sorry. I thought you did. So that's why I asked you.

15:39 But as you can see, the basically, I I wanted to understand how investment through the stock market and gen the gen z generation, how it affects them. So my questions relate to the stakeholder and investor engagement in accordance with section one seven two. I can you please scroll down, Andrew? So there's four questions here. So we'll start with number one.

16:07 If you can go back up a Yeah. Little Yeah. Not a good driver of this. How informed are the younger generation, especially Gen z, about personal finance, capital markets, and investment? Stuart, can I put you in the hot seat and maybe throw one of these to you? Very kindly, Gary. Thank you. Well, the younger generation, especially Gen Z, are renowned for being financially fit and savvy, and many having retirement plans in place and a healthy attitude to investing and saving. We find they're well informed and are passionate about making a positive impact on the world, and this is reflected in their investment decisions with many drawn to companies and funds that prioritize ESG criteria and contribute to a more sustainable future.

16:50 Thank you. Second question, Shankar. This question is our difficult economic circumstances. What impact do you think, if any, could individual investors deliver to the company's overall performance? Okay. Well, companies should act in the best interest of all shareholders, whether they hold large or small investments. We have a dedicated channel for investors to contact us and let us know their views all year round via the IR at lawsgrouptrading dot co dot uk. And indeed, we welcome all feedback and do our best to respond to inbound inquiries in a timely manner. We listen to our shareholders' views, and if accretive to our strategy, we will act and incorporate so that we can deliver the best returns for all our shareholders.

17:31 And, as you said, we've got this IR LORDS GROUP TRADING, which, this all happens. That's, where the questions were first presented to us. So we were able to look at these questions and consider them and respond accordingly. The third question is, in your opinion, what matters most to the younger generation of individual investors? Shankar, Kevin. I suppose every investor is different, and we ensure we give as much information as possible to help guide their investment decisions. We're cognizant that many are passionate about making a positive impact on the world with many drawn to companies and funds that prioritize ESG criteria and contribute to a more sustainable future. I believe our ESG strategy is is well laid out and we are attractive to the younger generation as a result of that particular strategy. Okay.

18:24 And the final question is what more if anything can companies

18:29 like ourselves do to educate and empower and engage individuals on personal, on basic personal finance and investing? I I'll I'll take that one. I mean, it's obviously, you know, we're not here to to basically educate individual shareholders or whatever generation it is in investing, we don't we basically don't give, you know, investment advice as such. But it is, our remit to make sure that we communicate to whatever it is, whether it's through our RNSs, it's through our annual report and accounts, to try and give as good a picture as we can with the the company so people understand us as a business, understand what our strategies are, and how we're going forward.

19:16 So I I I think that's our way of trying to make sure they understand our story. Obviously, it's then down to the individuals as to whether they think that's an investment proposition or not as the case may be.

19:30 So, hopefully, we've answered your questions there. And if we can I'm just gonna get sorry. Move further down. Unfortunately, my operator is not very You're trying to get you go to South after this meeting. Don't be till we Won't do it. Something No. They've been taken away. That's the only thing. Yep. Can you do it from the other end? It's Can you I think we might have to change the last two. Okay. Yeah. It's because those two were the last questions. Yeah. Yeah. Yeah. In which case, I think, we've probably covered everything that investor needs have, has shown us on the screen. Is there anything else from the There's two there's two more. Sorry, guys. There's two more. There's two there. Why doesn't management consider dropping the Go ahead. Read it out. Okay. Why doesn't management consider dropping the dividend? Dividend and buying back stock given the current stock price and also especially considering that the industry is likely near its trough?

20:23 Okay. Well, probably the I'm gonna start off, and then I'm gonna pass to Shankar. So I'll do the easy bit. We, a lot of our investors cover all aspects of investment. Some of that being income funds who are actually looking for income and not just looking for capital growth within it. And we are here to try and represent all of our shareholders. I'm commercially, there might be a there might be a different angle on it, but from an investment point of view and our shareholders, we do have to take that into consideration. Shankar? I think added to that, Carrie, is also we when we listed, we made a commitment to a progressive dividend policy, is annually reviewed. It's robustly discussed and debated, and wider consensus is sought from shareholders, from also our financial advisers. Now in light of the fact that we've always said that the business will try and always aspire to do what it says it's going to do, We have made that commitment and I think, it'll be it'll be wrong of the business to to, renege on that commitment, for the time being. Now, that doesn't mean that we don't, evaluate our options And if there is an option for a buyback in the future that might be better or or or be acceptable, then we would consider it. Yeah. But certainly for the time being, we will stick to the commitment that we made,

21:53 just over three years ago. Good. Thank you, Shankar. That's, points well added. And the oh, is it no. It's not a final question because another one has just come on, but I'll read that in a minute. Any acquisitions lately, Shankar? There are always acquisition opportunities as you as you know and our track track record over the last ten years has been of of multiple acquisitions in any given year. But at the same time, I've always maintained that the business is is one that exercises discipline. And given the current macroeconomic environment, we have to be more selective, and find the right time to to acquire. That doesn't mean that we won't and it doesn't mean that we will wholeheartedly do so. It means that when the timing is right and we have the right opportunity, we will certainly not be shy in in making that commitment. Okay. Thank you. And finally, thank you very much for your engagement, mister chair and the board. Well done on, broadcasting the regime. Oh, this is just a word of thank you. Thank you. How very progressive we are We appreciate it. It doesn't happen very often.

23:00 Okay. So if there are no other questions, I'll probably bring the meeting to a close. Anybody from the room? Sorry. I apologize. First words, congratulations on the fact you've moved to a more environmentally friendly paper, which should appeal to quite a bit. Yeah. And you also did mention the fact that you do quite a bit with the £200,000 that you The foundation charity. Yes. Yep. Which the book should appeal to an audience, which now moves more towards towards that. But I was gonna ask you, profitability between the the merchanting side and the heating side, can you set disclosed? Do you find more growth in the heating side, or do you find have you found more growth in the merchanting?

23:51 I'm gonna Dan, I'll pass it to Shankar to answer that. Yeah. So there's there's growth in in both markets. Our markets are are indeed as you and I'm sure you as you know being being involved in our markets for many years. There's growth in both. Okay? The the the plumbing and heating side has been affected quite substantially through the government policy or the clean heat market mechanism in particular and that's had a pretty destabilizing effect from sort of end of q four to kind of the end of q four twenty three to the end of q four twenty twenty four. But we now expect to see that normalize with opportunities in the renewables market being firmly established. We wouldn't have liked it to to have been deployed in the way that the government decided to, but nonetheless, it is it is now fully in in in traction.

24:44 The merchanting side, so added to that, the plumbing and heating side tends to be a lot more resilient. It's an RMI based business, so, you know, effectively on boiler replacements, etcetera. It's circa one point two million one off boilers a year, and that's quite consistent. So one of our strategies is is to make sure that we're part of a large market that is always consistent, that gives us a sort of a high degree of insulation from from trading volatility, which tends to be a bit more on the merchant side. In the merchant side, house builders putting back interest rates at at a near peak for many decades, it's obviously going to be impacted until we see an interest rate or a slightly better economic environment. So we've got growth levers in both. They're just for for different reasons. And and the way that they feed through into growth also for for quite different through through different channels. It has been reflected in profitability.

25:42 Sorry? Has that been reflected in profitability? Has that been reflected in Profitability. Well, the two markets. Are talking having a different margin between the two markets. Yes. The merchanting market has always been stronger than plumbing and heating. But our investment into plumbing and heating was for exactly the reason Shankar just said. We looked at the site utility of some of these businesses, you know, where we see RMI as a sustained business because everyone needs to appear and maintain their homes. There is no question that, you know, there is ups and downs within the businesses and both of them complement each other fortunately. So even though and between the years, we've actually improved the the margins in plumbinating, there's a tendency to be very much a boiler business and Shankar and the team have been taking it down the road of outside of that.

26:33 And of course, what we haven't talked about is renewable energies and, you know, heat ground and air source heat pumps and things like that, which is substantial opportunity for us as a group. And the margins there, fortunately, are probably gonna be better than the traditional boilers. So it's highly commoditized after being in So will you add to the environmental products? We already have. We we yep. Shut shut them up. Yeah. So Yeah. Was gonna say our sales last year about £9,000,000 in renewable products. That covers what sort of products, Stuart? Well, the whole range is this, not just the the air heat boilers, but it's a whole range of things that that go into the whole supply chain. Yeah. The tiling market.

27:20 So the panels is that match into tiles when it's only roofing. Right. Yeah. Yeah. That market is is is growing. It's certainly an area of focus for us going forward. It is. Yeah. It's clearly appealing to an audience which Oh, yeah. Is more wrapped into the environment side of Yeah. People businesses. It is. Yep. Martina, anything else you wanna do? K. In which case, sorry. I apologize for that, LORD. I will now bring the meeting for a call. Thank you, everybody, for your attention. Okay. Great. K. You you are dismissed. Thank you. Thank you very much. And best of luck. Perfect, Carrie. That's great. And thank you to the board for updating attendees online this afternoon.

28:07 On behalf of the board of group of LORDS GROUP TRADING PLC, we'd like to thank you for attending today's annual general meeting, and good afternoon to you all. Thank you. K.