Earnings Call: H1 2026

Sep 28, 2026

Quarterly report

Summary

H1 revenue rose over 15% to just under £90m, with Q3 sales up 29.1% and underlying PBT at £1.3m. An equity raise and expanding logistics capacity underpin a £300m revenue ambition; FY guidance is at least £5m profit.

Good morning, ladies and gentlemen, and welcome to the Likewise Group PLC Interim Results Investor Presentation. Throughout today's recorded meeting, attendees will be in listen only mode. Questions are encouraged. They can be submitted at any time. Please feel free just to use the Q&A tab on the right-hand corner of your screen. Before we begin, we would like to submit the following poll, and I am sure the company will be most grateful for your participation. I would now like to hand over to Tony Brewer, our CEO. Tony, good morning. Good morning. Thank you, Mark. I am also joined this morning by Ben, who is Head of finance at Likewise. Thanks, everybody, for joining this presentation. I think the first slide, you can see our new Corby distribution hub, where we acquired the freehold a few weeks ago. We are now undertaking the fit-out of that, with racking and cutting tables and other establishment costs, to make that building operational from the beginning of next year, which was the timetable we always realized. In terms of when we had the fundraise, again, a few weeks ago, we stated there are many opportunities in the U.K. flooring market. The reason for the fundraise was to create loads of flexibility to take advantage of all those opportunities and make sure we have capacity to take the business forward. In terms of the business, and many of you are very familiar with this, we now have 14 distribution centers across the U.K. 72 suppliers across the key flooring products of carpet, residential vinyl, laminate, luxury vinyl tile, commercial products, adhesives, leveling compound, doormats, and rugs. To sell those products into our customers who are typically independent retailers and flooring contractors, we have 109 very much customer-focused management and sales executives. Continuing to increase the fleet. As our sales grow, obviously, we need the capacity to be able to deliver those goods efficiently on a next day basis. Our 608 staff have got longstanding experience in the flooring industry. Important to our sales team as we continue to maximize getting points of sale into our customer base. We now have literally over 9,000 independent customers. Sales revenue currently heading towards GBP 200 million, but with aspiration and the capacity to take us to GBP 300 million. Thank you, Tony. I will now give you the overview for the financial highlights for H1 2026. I guess the key takeaway is there at the top. Revenue growth of over 15% to just shy of GBP 90 million for the first half of 2026. As Tony will demonstrate in a moment, we have seen strong momentum throughout the period, and further down on that slide, you will see that Q3 sales have increased 29.1%, strengthening the year-to-date revenue increase year on year. Importantly, that growth has been sustainable. As you will see, there is obviously a margin improvement at both top-line gross margin and the underlying profit before tax increasing to GBP 1.3 million in that first half. Fundamentally, that gives obviously the confidence, as Tony just said, in that revised and renewed target of GBP 300 million of where we believe we can grow this business to. But also in line with that, with our commitment to a progressive dividend policy, we are pleased to announce an increase of 20% to the interim dividend at GBP 0.165 pence per share, payable in November of this year. Thanks, Tony. Okay. As we have said many times in these presentations, key to our development and the overall positive trend of the business is our management team, supported by staff throughout the business. These management have a very thorough understanding, have learned the business from the shop floor, understand how the IT and logistics work, have a feel of the product and understand the dynamics of that across our various product sectors, and of course, very much have relationships with our key suppliers and across our customer base. I think what is really encouraging is there is a number of young people on that slide who have got many years ahead of them in developing their career, and also, a number of people that are challenging to be on that slide in the not-too-distant future. In terms of our supplier base, obviously, a significant proportion from the U.K., particularly in the commercial sector, but then from Western Europe as well. We all understand what has been going on in the wider worldwide economy and the crisis in Iran and the Middle East. Whilst we only buy a relatively small proportion of finished product from Turkey, that dot in the east side of Turkey is very important in terms of the extrusion of polypropylene yarn and polyester yarn for the manufacture of carpet. We are managing that supply chain very carefully. We have seen price increases come through. There were some in the first quarter, followed by May and then July, because of the increased cost of raw material. We thought it was really important that we managed that supply chain with our key manufacturing partners, and we have successfully achieved that. In terms of our sales teams, as we mentioned, 109. Those 84 external salespeople literally with our customers day in, day out, launching new products, servicing the customer's needs, putting points of sale into those retailers. That just gives a cross-section of the various different products from the left-hand side, artificial grass, LVT in the forefront from Karndean, Vitality laminate in the rear, Cotswold engineered wood, various types of LVT and sheet vinyl across the back wall, and then equally, array of carpet products on those lecterns. Similarly, in Valley Wholesale Carpets, which we acquired in 2022, primarily a carpet business, as the name suggests through thousands and thousands of pattern books, but we've now increased their market presence with these display stands of both carpet, residential vinyl on the left-hand side, laminate, which was a new product about 18 months ago on the right-hand side, and more recently, luxury vinyl tile in the background. In terms of the proportion, carpet is the biggest single part, but I'm sure you'll appreciate that the business is very much floor covering distribution across all those key product sectors, both in residential and commercial flooring. Just a bit more detail then onto the income statement. As I said, revenue up over 15%. Just to put some color on that, as Tony said, we did see some price inflation from suppliers, which has inevitably featured into that top-line number. There's been very little price inflation over the last few years, and we've been very cognizant that we obviously have been striving to, and needed to have increased our gross margin, which has inadvertently helped with our positioning of those price increases that we had already planned for this year ahead of the war in the Middle East. Importantly, that margin impact as we continue to scale doesn't purely just come from price increases. We obviously like to think we buy sharply, but naturally, as the business develops and grows, there's always some benefits we can realize from our suppliers, which is obviously featuring into that gross margin performance. On the overhead side, naturally, as we've continued to invest in the growth of the business, obviously the overheads increase. But importantly, we are seeing more of that profitability from the top drop down into the bottom line as we continue to scale and use that infrastructure that we've developed and increase our operational gearing. I think as a direct consequence of the Middle East, as aside from the product pricing, we've had direct cost impact headwinds of GBP 200,000 in the round on these numbers here to June, purely as a result of fuel, which is naturally a significant cost as a distributor. That is further exacerbated into Q3. Obviously that impact was really just Q2 in these first half numbers. Equally, as you would have seen in the media, that rate has continued to increase. We continue to monitor that. However, we are obviously very pleased with where we are at and the performance of the business that we are absorbing these cost headwinds. Important to stress that despite those, we still have the confidence both in the long-term target, but also in the market upgrade that you would have seen this morning. Over onto the balance sheet. As I said, probably important just to point out and remind you that this is as of June 30, so pre-raise, so obviously very different balance sheet strength and further post the equity raise we did in August. But we had in terms of continuing to invest in the infrastructure on the top line there in fixed assets, we had both the Howley Park purchase in April, just after the spring, which has been a great addition to the group, circa GBP 3 million addition to that line there. That has really helped streamline the supply chain management of palletized goods from the Far East, as Tony will touch on in due course. Equally, with the new core distribution hub coming on stream, which obviously we have communicated throughout, a significant proportion of those costs were incurred in the January to June period with obviously the distribution hub then going operational and live in July, and we are starting to see real benefits from those. Right-of-use assets, obviously lease liabilities linked are coming down purely as a reflection of the fact that we are now purchasing our fleet of vehicles as opposed to leasing as we have done historically. That trajectory will continue herein. Onto working capital. It is a bit of a mismatch here, obviously looking at December where we are coming off the busiest trading period and therefore inventory reducing and obviously then June position where we are gearing up for that busy autumn period ahead, plus obviously the underlying growth in the business. Similarly, on trade receivables, you have seen with the upturn in that revenue, naturally there is a significant increase in that debtor base, but we continue to use invoice financing in the group to support that. On the inventory side, you will see that we have more than sufficient credit to cover further down within trade and other liabilities on the back of the payment terms that we have well negotiated with suppliers over the years. I think the last comment on there is around the loans and borrowings. On the Howley Park purchase in Leeds, that was backed by a mortgage from NatWest. Again, not to overstretch the balance sheet, we feel we have good rates, and as such, we had a loan against that property secured explaining the increase there. Overall, strong net assets position. The business is a strengthened balance sheet underpinned by the property notwithstanding obviously further covered by the equity raise post period end. That really will allow us to capitalize on the market opportunities ahead as they develop. Thanks, Ben. In terms of the sales growth, you can see that trajectory through the early part of the year and into the spring. But in the summer months, really accelerating and progressively June, July, August, and September being really strong and puts us in a particularly good position for that busy autumn period through October, November. So very strong sales profile, as you can see. In terms of the infrastructure to be able to support those increasing sales, note that we acquired the business in Sudbury in 2018, but everything else on that slide has been achieved since 2021. We did the whole infrastructure in the last five years. As Ben mentioned, the new Leeds site at Howley Park has been a real benefit in our supply chain management of palletized goods, particularly from the Far East, but also certain suppliers in Western Europe as well. Corby, we mentioned, obviously completed on that a few weeks ago, and will be operational at the beginning of next year. The Newport extension, where we had a disused yard at the back of the site, which we owned, so a cost-effective extension to create Newport from being a basic warehouse into being a distribution hub. The new Manchester site where we are at heads of terms, and we would expect to complete that realistically within the next six weeks. That will again become a cutting center and a main distribution hub for the North West of England. So a significant amount has been done there. There are properties, excluding Manchester, valued at GBP 42 million, with a limited amount of fixed debt against them. Whilst it is seven of the current 14 sites, it is actually over 60% of our capacity is now owned. In terms of cutting capacity, as we have said previously, it is fairly easy to gear up with palletized picking. Those are pieces of machinery. It is the warehouse operative. But in cutting, we need the space, we need the large investment in the cutting machines. In our existing sites in Glasgow, Leeds, and Birmingham, working two shifts each, we can cut 1,800 cut lengths of carpet, vinyl, and artificial grass per day. Similarly, where there are three tables in Erith. With the further investment in Newport, which is now operational, Corby at the beginning of next year, Manchester, realistically at the end of the first quarter to be cutting, first quarter of next year. With Derby, we already have one shift cutting, and we are now going to a second shift. That quite clearly demonstrates that is over 50% more capacity than that which we have in the first half of the year. In terms of the logistics network for Likewise Floors, each of those lines, you will know from previous presentations, represent overnight movements of goods, typically taking cut lengths of carpet and vinyl from the main hubs in Birmingham, Leeds, and Glasgow and now Newport, to the other centers from where delivery to customers. Historically, and still currently, there is a huge amount going through Birmingham, but with Corby becoming operational, that will allow trunkers from Leeds going to Sudbury and to Sidcup to pass through Corby rather than Birmingham, therefore releasing capacity in the Birmingham distribution center. So it is a big step change. Of course, Manchester coming on stream as well will release capacity from Glasgow. Then the overall network, including Valley, you will appreciate we keep Valley Wholesale Carpets very separate from a product sales and marketing and logistics perspective, but it just demonstrates the overall footprint we have got across the U.K. market. That is just an insight into the Corby distribution hub, which is 12 meters of high bay warehousing and gives us plenty of capacity to develop that business. Then the new Manchester hub, as I mentioned, we are at heads of terms position, just going through the legal process, but expect to get that completed in the next six weeks. Of course, the fund raised allows us to acquire the freehold of that without overstretching the balance sheet in terms of borrowing. Interestingly, we said about having a five-year plan recently, and it is very much in play that the Morley distribution center in Leeds is just over halfway through a 10-year lease. We have appointed a property specialist to identify land to be able to find where we can develop a new building. This is one particular instance. It is not a done deal at this stage, but it just shows that we are progressing that five-year plan and looking at what we need to do to replace the existing leasehold site that we have in Leeds. So in terms of the overall business, we believe we have got excellent management across the businesses, combined with sales teams and all our staff. The excellent long-term relationship we have with suppliers and, of course, customers are really important. Extra capacity in Leeds, Newport, Derby, and coming on stream Corby and Manchester. We have put the funds in place with the support of both existing and new shareholders to give us loads of flexibility. You can see quite clearly our gains in market share are accelerating quite quickly. The market has upgraded this morning that we will make not less than GBP 5 million this year. I think that GBP 200 million of sales is quite rapidly heading towards GBP 300 million. Of course there, we would expect that the benefit of that capacity and volume, the operational gearing, that we will achieve our aspired return on sales. Many thanks. Thank you. That is great. Thank you to you both. Ladies and gentlemen, please do continue to submit your questions just using the Q&A tab situated on the right-hand corner of the screen. Just while it takes a few moments to review those questions submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, will be available via your Investor Meet Company dashboard. You have either got a number of questions here, I am afraid, but a lot to go through, so thank you to everybody for your engagement this morning. But perhaps, Tony, I could start with the first one. As we expand our logistics network, including the new Corby hub, how do you ensure that the rising overhead and fixed costs do not outpace the actual growth sales? Okay. Well, I think the first thing is we're buying the freehold of these properties, and that obviously avoids having a significant rent and potential rent reviews. That keeps the overhead to a minimum. Obviously, utilizing equity to keep those costs down, particularly on rent. In terms of gearing up the capacity, we'll do that at a certain pace. Yes, if we have a cutting crew of six people, that's a quarter of a million GBP on cost, but we'll measure that very carefully. Also, if we take Corby as a good example, we're making some of the delivery runs currently out of Leeds, Birmingham, and Sudbury, far more efficient in what we call the stem mileage, which is the distance a truck needs to travel before its first deliveries, will be significantly reduced. We're actually moving trucks in January from those other three sites to operate out of Corby to mean, that's not a complete step cost. If we take Manchester, we of course, already have an operation there. Again, there won't be a significant cost increase. Again, with the benefit that we're acquiring the freehold, we're avoiding those rapidly increasing rents that we see across the market. Great. Thank you very much indeed. A question here around maybe plans and products. Do you plan to move beyond carpets and rugs? That's an interesting question, of course, which, back in the day, we were a carpet distributor, of course, in our previous life, but we're far away from that now. You saw the proportion earlier in the slide that carpet represents of the business. Yes, it is the biggest individual part, but we're very much a floor covering distributor across residential vinyl, laminate, luxury vinyl tile, artificial grass, commercial products across the various guises, adhesives, leveling compound, and then of course, rugs and mats as well, which of course was the original business, but we've expanded significantly away from that now to have a very good cross-section of the various flooring products in the U.K. Great. Thank you. Question here, relating to dividends. How will the extra shares in circulation affect the company's ability to offer future dividends? Well, we've announced this morning a 20% increase in the interim dividend, and we'd expect to continue that for the full year. We don't see that diluting the dividend growth at all. Okay. Thank you. Talking around representatives here, sales reps. Do you feel that there's a likely requirement to increase this number of sales reps on the road, in particular, with the Likewise brand? We will do very carefully. We've been investing in sales people across our various businesses, Likewise Floors particularly, but also in Valley Wholesale Carpets, we've increased the number of sales representatives, and equally in the likes of A&A, Delta Carpets, H&V, Floors by Lewis Abbott, all of those individual businesses we would look to continue to invest in our salespeople. An extension of that, Martin asks, there is still a lot of potential customers with whom you are not trading. If so, how do you intend to embrace that opportunity? I think it is a key area for each of our businesses, both in terms of low-trading accounts, non-trading accounts with the sales management on that regularly in terms of making sure we are improving our performance with those smaller customers, which have potential to be much bigger. Of course, we continue to open new accounts across the U.K. A few questions here from Asif. Thank you, Asif. When do you think you can hit the GBP 300 million in revenues? That is the first one. I do not think we want to put a firm timing on that, but I would like to think over the next few years we can achieve that. You can see that sales trajectory from the graph is well above GBP 200 million now. So I think over the next few years, but it is difficult to put a firm timeline on that. Thank you. Are you able to maintain your standards, for example, next day delivery, with the increasing demand that you are seeing? It is a challenge, of course, because we are increasing the number of delivery trucks. We are also, obviously, in line with that, obviously, having to recruit more drivers. We are doing that as quickly as we can. Certainly, in terms of cutting capacity, you can clearly see that we have put extra capacity across the business and plan for additional sites, obviously, as we have expressed in Corby and Manchester. Yes, we have installed, in the previous slide, we have shown 160 delivery trucks. You can see what we have done in the last few weeks in terms of increasing the number of trucks to make sure we can, as much as possible, continue that next day service to customers. Thank you. I think the final question here I have from Asif at the moment is, can you talk about the operating leverage in the business? If you do hit the GBP 300 million in sales, what does this do for your margins and expected net profit? I think we have consistently said from the early days that we aspire to a 5% pre-tax margin. That is clear pre-tax. I think 6% is probably in reach as well, because of that whole operational gearing of putting more volume through our infrastructure, and to be fair, even down to our sales representatives, their revenue increasing. It is all part of that operational gearing effect. Certainly, 5% and 6% is achievable. Thank you very much indeed. Nigel, thank you for your question. Are you looking to move more towards electric vehicles? I assume the larger vehicles are not as cost-efficient yet. Sure. In terms of cars, all of our fleet is either hybrid or electric. With regards to delivery trucks, that technology and the range of those trucks is not really viable for our multi-drop. If you have got a trunker vehicle going from A to B, possibly, but delivery vehicles making, let us say, 20 drops, it is just not viable currently. Thank you. Apologies if you have touched on this, but can you talk about how working capital is changing in light of the strong sales? I do not know if there is any more color you can give towards that. Well, our stock is turning faster. Our debtor days are very much under control. We have really good relationships with our suppliers in terms of our credit terms. Our working capital cycle and cash generation is improving as we speak, for sure. That is great. There are questions from Chris, Ashton, Alan, James, and Finley. I think we have probably covered the themes of those within some of those other questions. Tony, on the basis that there are not any other questions, perhaps if I may, before I redirect investors to give you feedback, which I know is important to you and to the company, I could ask you for a couple of closing comments. Sure. I guess we have been putting the foundations in place for a number of years, and I think we are now reaping the benefit from that. Our supplier relationships through our sales teams, the customer relationships, the huge array of products that we have in the marketplace, combined with the logistics network to support that. It is all coming into fruition, really. But we have got a lot of work to do for the future as well. That is great, Tony. Just say thanks to everybody for your support, the shareholders and suppliers who may be on this or customers, but thanks to everybody for your support. That's great. Tony Brewer, thank you once again for your time this morning for updating investors. If I could please ask investors now to close this session, as we'll now redirect you for your feedback. Once again, on behalf of the management team of Likewise Group PLC, we'd like to thank you for attending this morning's presentation.