Valuation is way below true value24 Jan 2024 08:50
A solid set of results in a tough market.
Expect a rally once the true performance is understood by the market.
Record revenue
FY23 revenue of £463 million (FY22: £450 million)
FY23 adjusted EBITDA2 of approximately £26.6 million (FY22: £30.0 million), in line with current market expectations and adjusted profit before tax of approximately £11.0 million (FY22: £17.4 million) which was mainly due to interest rate increases
Furthermore, seven additional sites across the UK have been added through acquisitive and organic growth, generating an expected £25 million of annualised revenues at maturity
The Group continues to maintain a prudent and considered approach to inorganic growth and, whilst a pipeline of acquisition opportunities remains live, in the current environment the Group is committed to balance sheet discipline which will remain in FY24
Lords has strategically focused on product range extension in the renewables space in recent years, with strong growth drivers and market dynamics complementing Lords position in the supply chain.
In Q4 2023, the Government confirmed that the widely consulted Clean Heat Market Mechanism (‘CHMM’) will commence in Q2 2024. The CHMM will incentivise boiler manufacturers and homeowners to accelerate the transition towards renewable energy sources across the UK housing stock, increasing demand for renewable products including air source heat pumps.
Lords is well placed to benefit from a shift in demand towards air source heat pumps, enjoying successful and growing trading relationships with six air source heat pump manufacturers and achieving 60% revenue growth across its wider renewables range in FY23
As at 31 December 2023, the Group had net debt of £28.5 million (30 June 2023: £38 million), backed by a freehold property portfolio with an estimated market value of not less than £15 million. The significant reduction in net debt, ahead of current market expectations, reflects the Board’s focus during the period to reduce net debt through a number of successful management controls and initiatives and through the normalisation of working capital
Shanker Patel, Chief Executive Officer of Lords, commented:
“Like many of our peers it has been a challenging year but the fundamentals of our business have underpinned a resilient performance that I’m incredibly proud of.
“Our scale and profitability in both Merchanting and Plumbing & Heating have benefitted from our organic growth levers as we build our geographic footprint, extend our product range and build our digital sales expertise. We maintain an ongoing ability to execute earnings enhancing M&A, but balance sheet discipline remains a core consideration. In that regard it is pleasing to report net debt reduction ahead of market expectations. As market conditions improve we are confident that we are exceptionally well positioned for growth.”
ALL CONSIDERED THIS IS A DECENT SET OF NUMBERS!
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