Half-year Results

‘Resilient H1 revenue, with operational actions underway to improve performance and reduce leverage’

Lords (AIM:LORD), a leading distributor of building materials in the UK, today announces its unaudited Interim Results for the six months ended 30 June 2026 (‘H1 2026’ or the ‘Period’).

H1 2026 Summary

Financial performance

[1] Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation and impairment charges, excluding adjusting items (note 7).

[2] Adjusted operating profit, adjusted profit before tax and adjusted diluted earnings per share is operating profit, profit before tax and diluted earnings per share excluding adjusting items.

[3] Net debt defined as cash less borrowings before lease liabilities.

Shanker Patel, Chief Executive Officer of Lords, commented:

“The Group delivered resilient revenue in the first half despite continued weakness across a number of our end markets and a particularly challenging period for Plumbing & Heating. Encouragingly, Merchanting performance improved through the second quarter, CMO delivered positive EBITDA and our Spares business continued to grow.

“We have responded decisively to the slower market recovery. In Plumbing & Heating, we have rationalised the depot network, reducing costs and implementing a focused customer recovery programme aimed at improving service levels, re-engaging inactive accounts and recovering market share. Across the Group, our immediate priorities are improving operational execution, converting profit into cash and reducing leverage.

“Market conditions are challenging and the timing of a market recovery remains uncertain, the actions now underway are intended to strengthen the Group and position Lords to deliver sustainable shareholder value as demand recovers. Whilst full details of the recently announced UK government help to buy home scheme, and its potentially positive impacts on the Group's end markets, remain to be confirmed, the Board continues to expect the Group performance for the full year to be in line with market expectations."

Chief Executive Officer’s Review

On behalf of the Board, I am pleased to report the Group’s unaudited Interim Results for the six months ended 30 June 2026.

Overview

The first half of 2026 was characterised by continued challenging conditions across a number of the Group’s end markets. Activity in new housing remained subdued and repair, maintenance and improvement (‘RMI’) demand was softer than anticipated, while conditions within the wholesale plumbing market were particularly difficult.

Against this backdrop, Group revenue was £232.1 million, in line with the £232.1 million reported in H1 2025, with contributions from new branches opened since the beginning of 2025 and CMO substantially offsetting weaker underlying demand; Group like-for-like (’LFL’) revenue, adjusted for trading days, declined by 6.8%. Profitability was lower year-on-year due to lower volumes, increasing the importance of cash generation and balance-sheet discipline.

As reported on publication of the Company’s 2025 final results in May, our end markets have remained subdued. Management has therefore increased the pace of operational improvement activity, with a clear focus on sales execution, margin, cost, working capital and capital discipline.

As volumes recover, we expect to benefit from significantly increased operating leverage as a result of the strategic progress made. With much of our cost base now established, incremental future revenue increases should translate into a disproportionate increase in profitability.

Merchanting

Merchanting experienced a challenging start to the year, reflecting poor weather conditions and the continued weakness in construction activity, particularly in markets with greater exposure to new-build housing.

Revenue for the division was £112.3 million compared with £117.7 million in H1 2025. LFL revenue improved progressively after February 2026, and the rate of decline moderated to 2.3% in the second quarter, compared to a reduction of 4.9% for H1 2026, as a whole.

This improving trajectory reflects a gradual stabilisation in customer activity alongside the benefits of commercial and operational initiatives implemented across the division.

Performance varied across the portfolio. Lords Builders Merchants and George Lines both delivered positive LFL growth during the period, supported by their customer propositions and local market positions, while businesses with greater exposure to new-build housing remained more challenging.

The division is focused on increasing sales intensity, improving gross margin discipline, tightly controlling operating costs and ensuring that each branch delivers an appropriate return on capital employed.

Plumbing and Heating

The Plumbing & Heating division had a challenging first half. Revenue reduced to £96.4 million from £112.2 million in the comparable period, representing a LFL decline of 13.3%. As previously highlighted, the division did not benefit from the exceptional boiler market volumes experienced in March 2025, while the wider UK boiler market is estimated to have contracted by approximately 3% to 4%.

Within APP, performance was impacted by lower market share as we targeted value over volume. We have responded with a depot rationalisation, which reduces operating expenses by £1.5 million annualised, and strengthened the commercial team. A focused customer recovery programme is being implemented to improve service levels, re-engage inactive accounts and recover market share.

Importantly, the Plumbing & Heating division operates more broadly than just in traditional boiler activities. Spares revenue increased by approximately 8% during the period, benefitting from the resilient nature of repair and maintenance demand. Renewables also continued to progress, reflecting increasing customer adoption of low-carbon heating technologies.

These specialist categories remain strategically important and increase the division’s exposure to markets with stronger structural characteristics.

Digital

CMO has made significant progress since its acquisition in June 2025. Revenue increased by approximately 17.5% compared to H1 2026 and the business delivered positive EBITDA. The initial integration programme focused on restoring volumes, simplifying the operating model and reducing the cost base. Management is now focused on sustainable revenue growth, further margin improvement and increased operational efficiency.

The return to positive EBITDA is an important milestone and reflects a more efficient cost base, greater operational discipline and the actions taken to restore the business following acquisition.

Further opportunity remains to improve profitability, develop the product proposition and increase operational efficiency as the business moves into the next phase of its development.

Cash generation and operational improvement

Given the slower-than-anticipated market recovery, we have increased the pace and intensity of the Group’s operational improvement programme.

Each operating business has developed a focused improvement plan covering sales growth, gross margin, cost reduction, working capital and organisational effectiveness, with clearer ownership and regular Executive team review of delivery.

Capital allocation is also being tightly managed. Near-term priorities are to improve operational execution, convert profit into cash and reduce leverage through working capital discipline, restricted capital expenditure and delivery of the business improvement plans.

These actions are intended to strengthen returns and balance sheet resilience while preserving the Group’s ability to benefit from improving market conditions.

Our people

Periods of difficult trading place additional demands on our colleagues, and I would like to thank everyone across Lords for their continued commitment and hard work.

Our decentralised operating model remains an important strength. Our businesses succeed through the relationships our colleagues build with customers and suppliers with nimble decision making based on deep knowledge of the markets we serve.

At the same time, we are strengthening accountability across the Group, with clearer ownership of performance improvement initiatives and more frequent measurement of delivery.

Outlook

Trading in Merchanting improved during Q2 2026, but activity across our markets remains below the levels we had anticipated at the beginning of the year. We expect the recovery across our end markets to be more gradual than previously assumed. Our priorities for the remainder of the year are to increase market share within Plumbing & Heating, build on the improving momentum within Merchanting, deliver further benefits from CMO, grow our specialist businesses and convert profit into cash.

The Group retains established positions in fragmented markets. The operational improvements now underway, together with exposure to the long-term drivers of housing repair and maintenance, infrastructure and lower-carbon heating, are intended to position Lords for sustainable value creation as demand recovers.

Shanker Patel

Chief Executive Officer

Chief Financial Officer Review

Financial review

Group revenue for the six months ended 30 June 2026 was flat at £232.1 million (H1 2025: £232.1 million), with contributions from four new branches opened since the beginning of 2025 and CMO, acquired in June 2025, substantially offsetting weaker underlying trading. Group LFL revenue, adjusted for trading days, declined by 6.8%. Lower volumes were only partly offset by price and mix, resulting in lower profitability compared with both the prior year and our expectations entering 2026.

Adjusted EBITDA before property gains for the period was £8.4 million compared with £10.4 million in H1 2025, with adjusted EBITDA margin reducing to 3.6% from 4.5%. Adjusted operating profit was £2.3 million and adjusted loss before tax was £1.2 million.

Reported operating loss was £3.1 million after charging adjusting items of approximately £5.7 million, principally relating to restructuring activities, depot consolidation in P&H, redundancy costs and acquisition-related non-cash amortisation.

Gross margin and operating expenses

Group gross margin was 20.2% compared to 19.3% in the prior period reflecting pricing discipline and improved gross margin in Plumbing & Heating. Management continued to focus on improving procurement, product mix and branch-level gross margin management as part of the business improvement plans.

Cost control remained a significant focus. On an underlying basis, excluding the impact of new branches and CMO, the Group’s operating cost base reduced year-on-year by 1.9%.

Adjusting items

Adjusting items during the period are set out below:

Business combination charges and amortisation of acquired intangibles were similar to prior period at £2.0 million. In H1 2026, the Group incurred costs associated with the depot rationalisation at P&H of £2.1 million and restructuring, redundancy costs as Condell was rationalised, and further costs initiatives implemented across all divisions.

The Board continues to assess adjusting items carefully to ensure that the presentation of adjusted results provides shareholders with a clear understanding of underlying trading performance.

Cash flow, working capital and capital expenditure

Cash management remains a significant priority. Net debt increased as the December 2025 position unwound and as a result of the typical first half seasonal investment in working capital. A proportion of the first half working capital investment is expected to unwind during the second half.

June 2026 delivered a strong working capital inflow, and further initiatives are underway across the Group to optimise inventory, enhance receivables collection and improve supplier terms.

Capital expenditure is being tightly controlled, and, for the remainder of 2026, expenditure will be prioritised towards essential maintenance and projects offering clear financial returns.

Net debt and liquidity

Net debt at 30 June 2026 was £26.5 million, compared with £20.9 million on 30 June 2025. On 2 April 2026, the Group refinanced its banking facilities, which are committed until 1 April 2029, with extension options. The facilities comprise a £20.0 million committed revolving credit facility (‘RCF’) and a £45.0 million receivables financing facility. At the period end, the Group had £32.4 million of available liquidity headroom.

Current leverage is above the Board’s medium-term target and reducing net debt is a key priority. This is being supported by inventory optimisation, enhanced receivables collection, supplier-term initiatives, restricted capital expenditure, delivery of operating improvement plans and the Group’s expected second-half seasonal cash profile. The Group continues to receive the support of its lending banks and other key stakeholders.

Taxation and earnings per share

The tax credit for the period was £1.4 million, representing an effective tax rate of 20.9%. Adjusted basic loss per share was 0.70 pence compared with 1.35 pence in H1 2025. Reported basic loss per share was 3.30 pence.

Capital allocation and dividend

Given the current trading environment and the Board’s priority on strengthening the balance sheet and reducing leverage, capital allocation is disciplined. Immediate priorities are to support the operating requirements of the Group, invest selectively where returns are compelling and reduce net debt.

No interim dividend will be declared for H1 2026 (H1 2025: 0.32p). The Board recognises the importance of dividends to shareholders and intends to review distributions in light of trading performance, cash generation and progress in reducing net debt.

Working capital at 30 June 2026 was £33.0 million (30 June 2025: £40.1 million) and represented 7.0% of sales (30 June 2025: 8.7%). The movement reflects the Group’s continued focus on inventory optimisation and receivables collection together with the normal seasonal working capital profile.

Lease liabilities in respect of right-of-use assets were £71.4 million (30 June 2025: £67.2 million). Deferred consideration of £1.7 million at the period end (30 June 2025: £2.9 million).

Stuart Kilpatrick

Chief Financial Officer

Condensed consolidated statement of comprehensive income

For the six months ended 30 June 2026

The results for the period arise solely from continuing activities.

The condensed consolidated financial statements should be read in conjunction with the accompanying notes.

Condensed consolidated statement of financial position

As at 30 June 2026

Notes to the condensed consolidated interim financial statements

For the six months ended 30 June 2026

General information

Lords Group Trading plc (‘Lords’, the ‘Company’) is a public limited company incorporated in England and Wales. The registered office is 2nd Floor, 12-15 Hanger Green, London W5 3EL. These condensed consolidated interim financial statements (the ‘interim financial statements’) as at and for the six months ended 30 June 2026 comprise the Company and its subsidiaries (together referred to as the ‘Group’). The Group is a specialist distributor of building, plumbing, heating and DIY goods principally selling to local tradesmen, small to medium sized plumbing and heating merchants, construction companies and retailing directly to the general public.

Material accounting policies

Basis of preparation

These interim financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as adopted for use in the United Kingdom. They do not include all of the information required in the annual financial statements and should be read in conjunction with the Group’s most recent audited consolidated financial statements for the year ended 31 December 2025 (the ‘Annual Financial Statements’) which have been prepared in accordance with UK-adopted International Accounting Standards. The Annual Financial Statements constitute statutory accounts as defined in section 434 of the Companies Act 2006 and a copy of these statutory accounts has been delivered to the Registrar of Companies. The auditor’s report on the Annual Financial Statements was not qualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The consolidated financial statements of the Group for the year ended 31 December 2025 are available at www.lordsgrouptradingplc.co.uk.

These interim financial statements have been prepared on a going concern basis and under the historical cost convention.

The half year financial information is presented in Sterling and all values are rounded to the nearest one thousand pounds (£1k) except where otherwise indicated.

The interim financial statements were approved for issue by the Board of Directors on 29 September 2026.

The accounting policies adopted in the preparation of the interim financial statements are consistent with those applied in the preparation of the Annual Financial Statements and the corresponding interim reporting period.

Going concern

The Group's interim financial statements have been prepared on a going concern basis. In assessing the appropriateness of this basis, the Board has undertaken a detailed review of the Group's cash flow forecasts, liquidity, available financing facilities and the financial covenants applicable to those facilities. The assessment covers the period to at least 12 months from the date of approval of these interim financial statements and includes the Group's latest Board-approved forecast together with a range of severe but plausible downside scenarios.

At 30 June 2026, the Group had committed banking facilities of £65.0 million, comprising a £20.0 million committed revolving credit facility and a £45.0 million invoice financing facility, which are scheduled to mature on 1 April 2029. At 30 June 2026, the Group had cash and cash equivalents of £9.1 million and £23.3 million of undrawn facilities. The borrowings at 30 June 2026 comprise amounts drawn under the invoice financing facility. No amounts were drawn under the revolving credit facility at the reporting date.

The Group maintains constructive relationships with its lending banks and continues to receive their ongoing support. Following discussions with its lending banks, an amendment to its existing financing arrangements has been credit committee approved but is subject to formal documentation at the date of approval of these interim financial statements. The Directors have taken into account the proposed amendment’s ability, on conclusion, to meet the Group’s ongoing liquidity requirements, the progress towards completion of the formal amendment documentation and the Group's ongoing relationship with its lenders in assessing the Group's liquidity and financing position.

The Group's forecasts indicate that the Group has sufficient liquidity to meet its obligations as they fall due throughout the going concern assessment period. The Directors have also considered severe but plausible downside scenarios, including sensitivities to revenue, margins, cash generation and working capital. These scenarios have been considered alongside the mitigating actions available to the Group which, include, inter alia, further cost reductions, working capital management, control of capital expenditure and continued focus on cash generation.

Having reviewed the above the Directors consider that the Group has adequate resources to continue in operational existence for the foreseeable future and that it remains appropriate to prepare the interim financial statements on a going concern basis.

Taxation

Critical accounting judgements and estimates

When preparing the Group’s interim financial statements, management makes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses.

Significant management judgements

Assessment of who has the risk and reward of ownership of non-controlling interests with put and call options

A key area of judgement applied in the preparation of these interim financial statements is determining whether the risk and rewards of ownership reside with the non-controlling interests or the Group when an acquisition has put and call options.

Where the pricing is at a variable price, the Group assesses the risks and rewards that reside with the non-controlling interests. This is because the exposure to any increase or decrease in the value of the business resides with the non-controlling interest, as they will either retain the investment indefinitely (if neither party exercises) or they can recover the fair value of the business through the exercise price.

Where the exercise price is a fixed amount (or an amount that varies only for the passage of time), then the risks and rewards reside with the Group. This is because once the put and call become exercisable, one party will be incentivised to exit because they benefit from doing so.

Estimation uncertainty

Impairment of goodwill, intangible assets, tangible assets and right-of-use assets

Under IAS 36, at the end of each reporting period the Group is required to assess whether there is any indication that goodwill, property, plant and equipment and right-of-use assets may be impaired. For impairment testing purposes, the Group has determined that each branch is a separate cash-generating unit (‘CGU’) on the basis that each branch has distinct assets at each location which are able to generate cash inflows. No indicators of impairment have been found to exist as at 30 June 2026.

Alternative performance measures

The Group uses various measures which are not defined by Generally Accepted Accounting Principles (‘GAAP’) under International Financial Reporting Standards (‘IFRS’). The alternative performance measures (‘APMs’) should be considered in addition to, and not as a substitute for, or superior to, the information presented in accordance with IFRS, as APMs may not be directly comparable with similar measures used by other companies. The Group believes that APMs, when considered together with IFRS results, provide the readers of the interim financial statements with complementary information to better understand and compare the financial performance and position of the Group from period to period. The adjustments are usually items that are significant in size and/or non-recurring in nature. These measures are also used by management for planning, reporting and performance management purposes. Some of the measures form part of the covenant ratios calculations required under the terms of the Group’s borrowings. As APMs include the benefits of restructuring programmes or the use of acquired intangible assets but exclude certain significant costs, such as amortisation of intangible assets, litigation, material restructuring and transaction items, they should not be regarded as a complete picture of the Group’s financial performance, which is presented in IFRS results. The exclusion of adjusting items may result in underlying profits/(losses) being materially higher or lower than IFRS earnings.

For further information on the Group’s adjusting items, see note 7.

Income statement APMs

EBITDA

Adjusted cash generated by operating activities

Adjusted cash generated from operating activities is defined as net cash generated by operating activities plus exceptional items. Further detail on exceptional items can be found in note 7.

Revenue

All of the Group’s revenue was generated from the sale of goods in the UK and was recognised at a point in time (rather than over time). No one customer makes up 10% or more of revenue in any period.

Segmental analysis

Management currently identifies the Group’s three service lines as its operating segments. The Group’s CODM is its Executive Directors, and they monitor the performance of these operating segments, as well as deciding on the allocation of resources to them. Segmental performance is monitored using adjusted segment operating results. Inter‑segmental sales are conducted on an arm’s length basis and are immaterial. Further details on adjusting items can be found in note 7.

Adjusting items

Exceptional items are presented separately as one-off costs that are unlikely to reoccur or costs outside normal business trading.

Adjusting items in the first half of 2026 largely relate to depot rationalisation and restructuring costs of £2.1 million. Costs associated with business combinations included £1.7 million (H1 2025: £1.7 million) in relation to amortisation of acquired intangibles and £0.2 million (H1 2025: £0.4 million) of costs in relation to prior year acquisitions or deferred consideration. No charge was recognised in respect of share-based payments (H1 2025: £0.3 million).

Finance expense

Taxation

Income tax in the first half of 2026 was a credit of £1.4 million (H1 2025: charge of £0.2 million) representing an effective tax rate of 20.9% (H1 2025: 28.4%).

Earnings per share

Both the basic and diluted earnings per share have been calculated using the earnings attributable to shareholders of the Parent company, as the numerator, meaning no adjustment to the loss was necessary in either year. Statutory diluted earnings per share calculation uses the 166.2 million as a denominator as dilutive shares would not increase loss per share.

The Group has also presented adjusted earnings per share which have been calculated using earnings attributable to shareholders of the Parent company, adjusted for the after-tax effects of adjusting items (see note 7).

In 2025, borrowings on revolving credit facilities were classified as ‘non-current’ and at 30 June 2026, there were no borrowings on revolving credit facilities due to the refinancing on 2 April 2026 and all borrowings related to Invoice Financing, which is classified as current’

Total accrued interest of £38k (H1 2025: nil) has been added to bank loans and unamortised transaction costs of £368k (H1 2025: £547k) have been offset against the bank loans.

Unrestricted access was available at the reporting date to the following lines of credit:

Financing facilities comprise a £20.0 million revolving credit facility (‘RCF’) and £45.0 million invoice financing facility (‘IFF’) maturing on 1 April 2029. The facilities include two uncommitted extension options of one year each which would, subject to lender approval, extend the tenor of the RCF to four years or five years if exercised.

The facilities contain covenants that require the ratio of adjusted EBITDA to net debt (excluding lease liabilities) and the ratio of adjusted EBITDA to net finance costs to remain within pre‑defined thresholds at each quarter‑end date. Each testing date covers the results for the previous 12 months.

Funds borrowed under the RCF bear interest at an annual rate of between 2.0% and 3.4% above the compounded Sterling Overnight Index Average (‘SONIA’), dependent on the Group’s leverage covenant. Funds borrowed under the IFF bear interest at an annual rate of 1.75% above the Bank of England Base Rate.

The banking facilities are subject to cross guarantees from the relevant Group undertakings and secured by fixed and floating charges over the land, tangible and other assets and insurances.