First Day of Dealings on AIM

RNS Number : 7382F

Lords Group Trading PLC

20 July 2021

 

"NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, NEW ZEALAND OR JAPAN OR ANY OTHER JURISDICTION IN WHICH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL."

For immediate release

20 July 2021

Lords Group Trading plc

("Lords", "Lords Group", the "Company" and together with its subsidiaries the "Group")

FIRST DAY OF DEALINGS ON AIM

Lords Group Trading plc, a leading distributor of building materials in the UK, is delighted to announce admission of its entire issued share capital to trading on the AIM market of the London Stock Exchange ("Admission"). Admission will take place, and dealings in the Company's ordinary shares will commence, at 8.00 a.m. today under the ticker "LORD".

Lords is a specialist distributor of building, plumbing, heating and DIY goods.  The Group principally sells to local tradesmen, small to medium sized plumbing and heating merchants, construction companies and retails directly to the general public.

In conjunction with Admission, gross proceeds of £52 million have successfully been raised by way of an oversubscribed placing with institutional investors of 54,736,839 new and existing ordinary shares of 0.5 pence each (the "Placing") at a price of 95 pence per share (the "Placing Price").

Cenkos Securities plc is acting as Nominated Adviser, sole broker and sole bookrunner in relation to the Admission.

Key Highlights

· The market capitalisation of the Company will be approximately £150 million on Admission.

· Established over 35 years ago as a family business with its first retail unit in Gerrards Cross, Buckinghamshire.  Since then, the Company has grown to a business operating from 33 sites with a combined turnover in excess of £288 million.

· The Group aims to become a £500 million turnover building materials distributor group by 2024 as it grows its national presence.

· The Group has a strong track record of acquisitions, with the six acquisitions completed between 2016 and 2020 having been fully integrated and performing at a return-on-investment rate of greater than 20 per cent.

· Oversubscribed Placing to raise gross proceeds of £52 million, comprising a primary placing to raise £30 million (before expenses) for the Company and a secondary placing to raise £22 million (before expenses) for certain existing shareholders.

· The Placing attracted strong support from institutional investors and was oversubscribed.

· Net proceeds of the Placing received by the Company will principally be used to repay Group's bank debt and in doing so provide resources to accelerate the Company's growth through a variety of organic and inorganic strategies, including the increase in geographic reach, product expansion, the active expansion of e-commerce platforms and the continued investment in its logistical capability.

· The ISIN of the Company's ordinary shares is GB00BM9CLS53, the SEDOL of the ordinary shares is BM9CLS5 and the Company's LEI number is 9845009A4D87F1CE5145.

Shanker Patel, Chief Executive Officer of Lords Group Trading plc, commented:

"We are delighted to have received such a positive reception from investors and look forward to beginning our journey on the public markets with our wider shareholders on board.  Lords Group has always been proud of our familial culture, and we welcome our new investors and shareholders.

"We have a clearly defined growth strategy in order to expand our business, as we leverage our strong position in the UK building materials distribution space.  Our strong, heritage brands are tradesman's first choice thanks to our superior customer service and product choice.  Furthermore, we are positioned for the future and whilst others in our sector work to apply technology to their businesses, we are leading the field with systems and e-commerce strategies.  We look forward to providing updates on our progress, and delivering value to our shareholders."

FOR FURTHER ENQUIRIES:

Lords Group Trading plc	Via Buchanan
Shanker Patel, Chief Executive Officer	Tel: [phone]
Chris Day, Chief Financial Officer
Cenkos Securities plc	Tel: [phone]
Ben Jeynes / Max Gould / Dan Hodkinson (Corporate Finance)
Alex Pollen (Sales)
Buchanan Communications	Tel: [phone]
Henry Harrison-Topham / Steph Watson	[e-mail]
Kim Looringh-van Beeck / Kiki Norman

The Company's AIM Admission Document is available to view on the Company's website at www.lordsgrouptradingplc.co.uk .

OVERVIEW OF LORDS GROUP

Lords is a specialist distributor of building, plumbing, heating and DIY goods.  The Group principally sells to local tradesmen, small to medium sized plumbing and heating merchants, construction companies and retails directly to the general public.

The Group operates through the following two divisions:

· Merchanting: supplies building materials and DIY goods through its network of merchant businesses and online platform capabilities.  It operates both in the 'light side' (building materials and timber) and 'heavy side' (civils and landscaping), through 24 locations in the UK.

·    Heating and Plumbing: a specialist distributor in the UK of heating and plumbing products to a UK network of independent merchants, installers and the general public.  The division offers its customers an attractive proposition through a multi-channel offering.  The division operates over nine locations enabling nationwide next day delivery service.

Lords was established over 35 years ago as a family business with its first retail unit in Gerrards Cross, Buckinghamshire.  Since then, the Company has grown to a business operating from 33 sites with a combined turnover in excess of £288 million.  The Group aims to become a £500 million turnover building materials distributor group by 2024 as it grows its national presence.

The Group is principally focused on the growing Repairs, Maintenance and Improvement (RMI) market, with approximately 80 per cent. of the Group's demand focused on this segment of the construction market.  The Group's businesses have experienced strong organic growth and remain well placed to take advantage of future favourable conditions in the RMI market.  The Group has also grown via a number of well performing acquisitions. Lords has acquired more than 13 businesses in the last 10 years and it fully understands the issues faced when integrating teams.

The Group's main clients are local tradesmen, hardware stores, plumbing and heating merchants and construction companies, that use Lords' deep product knowledge to source and procure a wide variety of building products.  Customers are offered an excellent buying experience, enabled by the longstanding industry experience held by both the senior management team and employees of Lords, and enhanced through access to a diverse range of suppliers.

KEY STRENGTHS

Strength of customer service offering

·     The Group strives to put the customer at the centre of everything it does at all times.  The Group's business model is focussed on providing customers with the best experience possible and it is for this reason that the Company follows the mantra of "Customer Obsessed, Product Specialists".

· The employees are engaged and each division has specific training to make sure customer service is of the highest calibre.  It is for these reasons that Lords has been recognised within the industry for its customer service with the Platinum FEEFO service award (2021) and Plumbase Supplier of the Year (2017).

Specialist product knowledge and investment in ecommerce and technology

· The Group aims to have significant product range and expertise and is focused on a technology driven strategy to enhance levels of efficiency, and in doing so the customer experience.  The Group prides itself on being extremely flexible and customer centric, with the aim of satisfying the customers' desire for getting the product they are after, when they want it and how they want it.

Acquisition track record and future platform for growth

· The Group has a strong track record of acquisitions, with the six acquisitions completed between 2016 and 2020 having been fully integrated and performing at a return-on-investment rate of greater than 20 per cent.

· The directors of the Company (the "Directors") believe that Lords is a highly attractive 'next custodian' for many vendors.  This is the reason why the majority of the Group's acquisition opportunities since 2016 come from vendors approaching the Group, and thus are presented with a large number of motivated vendors that view Lords as the mechanism through which they can elevate their businesses to the next level.  Post Admission, the Group will have a strong balance sheet to fund future acquisitions.

Group culture and employee engagement

· The Group has focused on establishing a strong company culture, which in turn has led to high levels of employee engagement, which the Directors believe contributes towards the impressive levels of customer satisfaction.

· The Company's strong culture and engagement is demonstrated by high employee retention levels, the average employee length of service and by all five divisional managing directors having been promoted from within the business, including two of which who commenced their employment with the Company working on the shop floor.

·   The Group aims to further increase employee engagement by refreshing and enhancing, on and after Admission, the employee share schemes that were implemented prior to Admission.  The Directors believe in democratised ownership of the business which is intended to remove business dependence on existing management and to focus on the next generation of management leading the Group.

Long-term relationships with UK suppliers

· The Company regards its relationship with its suppliers as critical to its business model and, as such, considers it key to maintain an open and collaborative approach with suppliers.  The Group considers itself to have excellent relationships with its suppliers which is demonstrated by the average tenure with suppliers being much longer than the average builders merchant.

· For example, a number of the Group's timber suppliers have been supplying the Group for more than 20 years.  Its excellent working relationships gives the Group good surety of supply, with the Group not experiencing any major supply issues during recent surges in demand for homebuilding equipment.

 

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