Tony Brewer of Likewise Group
Guest co-host James Wilson of Phoenix Asset Management, manager of the Huginn Fund.
A few weeks ago, James Wilson of Phoenix Asset Management ( https://www.phoenixassetmanagement.com/about-us/ ) joined me for a conversation with Tony Brewer, ( https://www.likewiseplc.com/management-team ) the founder and CEO of Likewise Group ( https://www.likewiseplc.com/about ).
James had talked about Tony and his investment in AIM-listed Likewise on a previous episode, and I had been keen to get Tony on ever since.
Tony has spent his entire adult life in the floor coverings business developing Headlam from a small textile distributor to the UK’s leading flooring supplier before leaving in 2016.
Two years later, at a time when many of us might consider slowing down, Tony set up Likewise and set about building national distribution, as James points out, this is a business where scale matters.
James is an investor who leaves few stones unturned when he seeks companies to join his concentrated and eclectic portfolio. With his questioning and observations, James brings to life the investment case for what one might believe to be an overly competitive and low-value-added business.
This episode offers a fascinating insight into a man with a passion for carpet distribution and the views of a professional investor backing him to succeed. Please enjoy our conversation with the maverick, Tony Brewer.
Made possible byProgressive Equity Research ( https://progressive-research.com/home/ ).
In the Company of Mavericks
Episode 25
December 15, 2023
★ Episode details: https://share.transistor.fm/s/41a17407
★ Additional episodes: http://www.inthecompanyofmavericks.com
The following is for information purposes only and should not be used for the purposes of making an investment decision it is not investment advice the following is made possible by Progressive equity research for more information please visit Progressive Equity research.com A few weeks ago James Wilson of Phoenix Asset Management joined me for a conversation with Tony Brewer founder and CEO of likewise group James had talked about Tony and his investment in the aim listed company on a previous episode and I’d been Keen to get Tony on
Ever since Tony has spent his entire adult life in the floor coverings business developing headlam from a small textile distributor to become the UK’s leading flooring supplier before leaving in 2016 2 years later at a time when many of us might consider slowing down Tony set up like wise and set about
Building National Distribution as James points out this is a business where scale matters James is an investor who leaves few Stones unturn when he seeks companies to join his concentrated and eclectic portfolio with his questioning and observations James brings to life the investment case for what one might
Believe to be an overly competitive and low value added business this episode offers a fascinating insight into a man with a passion for carpet distribution and the views of a professional investor backing him to succeed please enjoy our conversation with the Maverick Tony Brewer so hi Tony and thanks for joining
Us today just wanted to start by asking you just to talk a little bit about yourself your background and how you got into this floor coverings business so I started in the Floor Covering industry in 1977 at a business called middle and carpet Distributors based in Kint and
Really learned the business from the warehouse Telly sales product the logistics work in 1977 of course there wasn’t much it but as we developed it understanding of that and I think that reflects the people we’ve got in the business across the UK now they’ve come through a similar Channel probably not
From 1977 hopefully later years but they understand the flooring trade from let’s say the shop floor from warehouse and transport the product manufactur relationship and obviously importantly customers so I developed through that and furthered my career then along with two colleagues who are sadly both no
Longer with us gr Walter and Ian Kirkham we took a stake in hedum as a small textile distributor in 1991 and set about making that into a large Flor and distribution business principally in the UK but also in France Holland and Switzerland I left hedam in 2016 and along with some other senior
Colleagues established likewise in 2018 and we’ve since built that business to to be annualized sales now have about 150 million 11 locations throughout the UK and with aspirations to grow a much bigger business what is it about the floor coverings Market that you obviously become so passionate about and
So you find so interesting doesn’t sound particularly exciting you’re cutting up bits of carpet aren’t you well we we’re buying um we’re buying full containers of various types of Floor Covering we’re known as a carpet business it is still the largeest individual part but we also distribute residential vinyl artificial
Grass laminate luxury vinyl tile flooring accessories and all types of commercial flooring as well so anything that goes on the floor with the exception really of ceramic and stone then we’re involved in the distribution of and we’ve got relationships literally across the world in terms of with suppliers where we’re buying product in
Bulk we’re marketing those products through various types of sample material that we position into independent retailers the retailer then sells to the consumer and we Supply from typically if you take full rolls of car carpet being 30 m long and either four or 5 m wide we’re then cutting the room size length
Required by the manufactured width and supplying that to the retailers the following day and we run a fleet of over 130 Vehicles which allows to do that and as I said earlier operating from 11 distribution centers and I originate from kidderminster which was one of the key homes of carpet manufacturing going
Back to the 70s um sadly that’s no longer the case orbe it obviously Victoria is still technically based in kidster but it’s now worldwide Floor Covering business so kind of carpet is in my blood I guess you’d say and floor covering generally and it’s just what
I’ve done for you know the last 40 plus years if I I jump in here quickly if that’s all right you you’ve expressed a few really interesting little nuggets about the business there and I suppose as a you know seven or eight years ago before I I did did the work on the
Flooring business I thought well it’s just flooring surely it just goes from one place to the other but the more you get into it the more you realize how incredibly complex it is and so Tony would this might be a slightly rudimentary question but could you explain a little bit about how important
Next day delivery is in your business and and why and how you manage the element of seasonal demand and and how you sort of fit this all in with the demands of the big manufacturers who you’re constantly negotiating with and who want visibility because that’s that’s a really difficult logistical job
I think next day delivery service is just an accepted feature of the industry you can argue when the consumer buys from a retailer are they getting it fitted the following day or two probably not to be honest I see the overall service is as much bigger picture it’s
Warn us sourcing the latest Floor Covering products from the key manufacturers a lot of which are in Western Europe for residential but also further a field for other products and ass sourcing that product making sure the retail is up to date with the latest textures and colors that we’re putting
New sampling into those retailers all of this is part of the service hundreds and thousands of displays into retailers giving them that selection to you know enable them to compete against the multiple and you know making sure they’re up to date with those l products and then us having the stock holding and
We’re carrying just over 20 million worth of stock across our 11 distribution centers and making sure we’ve got stopped to be have to service that retailer and that next day service is just a feature as I’ve said it’s just the last part of that chain really
Before we get paid of course and of course if next day delivery is is standard on this very big bulky sort of difficult to deliver item then the minimum efficient scale is actually quite high so in order to provide that service you need quite a lot of business
Already to make it worthwhile sending the lauran and so there’s there’s a scale element to this business which you managed to to sort of build really quickly with likewise I mean blistering speed two or 3 years and you’re above 100 million of sales and I suppose a big
Part of that’s been acquisition and it seems like going through the sort of flicking through the Acquisitions you’ve done it looks like those businesses sold to you because it was you and knew how to look after their life’s work and the people that have been working there for
Decades sort of in a I maybe projecting here A bxa hathway type way so can you kind of tell us how you found those Acquisitions how you found them so quickly or how they found you because we’ve been in the industry so long those businesses are known to us and it’s
Typically you know a meeting with the owner you know these these deals often agreed very quickly bizly that um you know whether it be the heat scene Factory throwing acquisition which gave us the platform for residential products uh whether it be the valley acquisition or equally Delta more recently you know
I think we’ve got a metric on on what we believe we should be paying for businesses and now it can be agreed quite quickly if we believe we’re in the right place and we’re being fair in terms of the multiple of of earnings or relative to the asset base of the
Business I think that the deals we’ve done being agreed quite quickly obviously then there’s the legal process to go through and sometimes the the fundraising process that we’ve had to be able to to make those Acquisitions but the actual striking the deal so to speak has been done I would say quite quickly
In most cases they’re not long negotiations cuz I think we’ve got our price position in the right place and it’s where the probably the vendor expects us to to be as well and I guess to to James’s Point these people would feel more comfortable passing their business and its stakeholders to someone
They knew and trusted and perhaps a I don’t know just a private Equity buyer who’s just in it for the financial return possibly I mean um it’s nice of you to say but it’s all about a fair price I think and also to a degree the vendor believing that we will keep their
Business intact and and in many cases separate I mean it’s not always separate and Valley definitely would keep separate from their three locations and it’s not integrated whatsoever into likewise whereas with Delta it suited the the owners when they were selling the business they own the property
Separately we were able to exit that property move the business to our location in in lead which was three or four miles from their location but still keep that Delta presence in the marketplace we’ve had the this period of Acquisitions where you’ve got a lot of scale very very quickly and profitably
You you mentioned in a few of the updates to invest is that you’re you’re kind of looking at organic growth now how are you going to go about that organic growth what do you do to motivate sales teams to get out there and make the most of the accounts
They’ve got um yeah and indeed you know sign you want well once we have made those Acquisitions I mentioned the matting business to begin with then Lewis Abott followed by Heat Factory flooring h&v Valley and Delta but we shouldn’t underestimate within that 150 million run rate that we’ve now got a
Big proportion of that is new startups that we’ve done starting in 2019 we established likewise Southeast where four people wanted to join us on this journey so we took a team of people to develop that business we followed that sorry just staying on likewise Southeast that’s because we had capacity in in
Sudbury and where the matting business is housed so we started that business up we then had capacity what was then in duesbury now is in leads where we established likewise North where again well five key individuals joined us and then not long after that likewise Northeast in Newcastle where four key
Individuals joined us and then in Scotland we did the same and again I’m going to say five individuals joined us each of those established their business then more recently we’ve established uh likewise Midlands in Burmingham and that’s now a team of 10 people it wasn’t
10 to start with to be fair but uh group of people joined us then last year as well we started likewise South where four people joined and we’re about to launch likewise Wales with three people so all of those have contributed to our growth over the last three years or so
Right so this there still a even though it perhaps might look to the outside Observer that there’s there’s just a been a lot of Acquisitions there’s still a ton of organic growth going on in the background which is now going to start pushing the business forward as well
That’s absolutely and we’re now up to 82 people who are focused on customers product service in terms of 22 managers that are very much customer are facing and as I touched on in the early part of this interview they’ve learned their trade in the flooring industry pretty
Much all of them have started on a trade counter in a warehouse they understand how the logistics work they understand the it they’ve got relationships with the manufacturers they obviously understand the Product Dynamics and very importantly have the customer relationship and those 22 managers alongside those are 60 external salese
And they’re incentified on a monthly basis to grow their business to be hitting their targets probably 25% of their income is probably U bonus related on a monthly basis and they’re you know incentified you to develop their their customer base whether it be new customers low trading customers and but
That’s what they’re actively doing you know day in day out just just on that point Tony when I’ve heard you talk about your business you’re the largest single shareholder I think in likewise today and the chief executive but when you talk about the business you always immediately go to talking about the team
There is a vast amount of experience there that you’ve harnessed in a relatively short period of time what are the secrets of putting a quality team together and how how much of it does emanate from you you know what the sort of structure you put in place how many
People report to you and how or how decentralized is this business of course key colleagues join us Andrew Simpson who’s kind of semi-retired but we worked together for many years and we kind of the co-founds of the business this Adrian laffy and James Kelly to
Joined us Tony judge has been a key part of it and Tony and I after Andrew retired ran headlam together for a number of years know intuitively what each other are thinking almost and what we’re doing and that’s been key then to bringing the next TI of management in
And the relationship that we’ve got with them over many years you know working together and I think it’s fair to say that the managers that have joined us you know have joined us because they wanted to be on this journey that you know not because we’ve given them huge
Golden the lows we haven’t they’ve Jo this they’ve got share options um hopefully benefit from the future success of the business but in terms of their salaries they’ve joined us same salary because they wanted to be with us on this journey and when when you’ve acquired the businesses you’ve acquired
Is it a case of saying to the people you’re buying these businesses from thanks very much we’ll take it from here off you go or is it how do I incentivize you to carry on doing what you’re doing I’m assuming it’s a mix of both it is a
Mixture because if we take the positions then in a number of cases people wanted to retire or do other things um if you take Lewis ABT it was certainly retirement uh Heat seene Factory flooring was because they own want to do other things Delta was definitely retirement where it was own equally by
Four individuals and they subsequently retired they did a Handover for a couple of months as required and one a little bit longer he’s actually just stepping away from the business now from a sales rooll um so in some cases that was only in part of the business Valley is a
Slightly unusual one where where the founder had passed the business on to his son and daughter who we technically bought it from uh they’ve now fully exited the son particularly helped with the Handover as did the daughter for a period of time as well but the Father
The founder still works in the business and he’s an integral part of what valley does alongside Simon Miller who’s been with the business for 16 years but he was with us previously in a headlam subsidiary and as I said Dave Mitchell the founder is is still there on a
Three-day week Thursday Friday Saturday today if we take what we class as the likewise branded businesses then about a third of sales revenue is with flaing contractors in the commercial sector so whe that being in typically refurbishment that be in education or or the health sector but a third of the
Businesses is with contractors and then the 2/3 is with independent flooring retailers typically yes we have some business with some of the multiples but our main driver day in day out is the independent flooring retailer and as I’ve said for Furnishing them with this point of sale having the latest products
Literally on a daily basis that’s a key part of our sales people role is selling new products into retailers the features and benefits of product making sure display stands are addressed correctly and that we the retailers un aable to sell onto the consumer so I suppose
That’s a that’s a key part of the sort of research that that led me to to to you and your your career is is investigating why there are so many of these little m pop stores that that persist for for often generations and and what I realized is this’s this this
Huge logist incredibly efficient incredibly powerful buying machine Behind These retailers so that when you go into the shop you can you can see all these wonderful SKS but they get them get them to you on time at the lowest price uh and exactly when you want it you know your your business effectively
Makes these these really really quite effective little little mom and pop stores able to compete with these larger retailers and and in fact I think if anyone’s ever sort of shopped for a carpet you you’ll realize that you get the best prices and the most flexibility
When you go to these smaller stores and the reason is that wonderful complex logistic machine that is likewise and and Associated businesses and and that was a that was a sort of key Insight that I didn’t realize in the industry yeah and James what I’d emphasize there
Is that when we talk about service it’s not taken in order today and delivering the following working day it’s everything that’s built into that service it’s those you know the barriers to entry for a floor covering retailer is very low we will supply sample books and yes display stands we’d want a
Contribution from the retailer but sample books we’re placing free of charge we’re putting out hundreds of thousands of those in the year which allows you know gives that that point of sale for the retailer of as I’ve said the latest products competitively priced with a huge stock holding to support
That you know over 20 million pounds worth of stock that’s the key to the service proposition it’s not just about taking an order today and delivering it next day it’s about the whole chain of of having that product available through the point of sale and supporting it through the stockh holding you know
There’s there is logistics challenges you know I’ve said a lot of our residential product comes from Western Europe and the largest carpet producer outside of North America is based in Holland and you know residential vinyl we buy from Western Europe as well but then if we we take obviously turkey the
Further away you go that has Logistics challenges with it I was involved in a container being stuck earlier this week and we had to try and get that released and organized these things happen and then you go further a field I discussing with one of our managers before this
Call a container coming in from South Korea once you start going into China and Korea and and Vietnam for luxury vinyl tile artificial grass yes it has its supply chain challenges which we need to manage but we’ve got people in the business to do that and then another
Another key Insight I mean it’s again it’ll seem rather rudimentary but during a project you know small or large if the flooring doesn’t turn up on time it costs the contractor and the client a lot of money because you can’t store a roller carpet anywhere on site really
It’s it’s big it’s bulky it gets wet it’s ruined so if the flooring doesn’t get there on time it delays all those other bits of the the project that need to happen and the fit out and so on that rely on the flooring being in it and so
You’ve got to manage all this great big supply chain all these skews across the country and all these warehouses and you got to get it there on time and then you got to fix it if it doesn’t get there on time and and and like you said it’s that
That service element which Tony does it does it sort of um Foster a sense of loyalty between you and some of your customers if you get it right yeah I think there there is a lot of ly and I’ve talked about the the people that have joined us and you know those
Customers have wanted to do business with us well because again people have relationships you know very importantly across the country with those key customers and I think it’s very fair to say that there’s a number of customers that are shareholders oh right okay that’s interesting encouraging but um I’m sure they’re
Probably more demanding or as demanding but anyway but the but the there is degree of Customer Loyalty but yes if you do something wrong you can upset that that loyalty quite quickly and it’s very important to be competitively priced and have that service and you know we’ve put a network together in the
Likewise businesses you know where we’re moving products around at night as well to be able to give that customer service so trunker vehicles are going from leads to newcast to Glasgow every night and then from Birmingham to Sudbury to sidcup to Newbury and soon to Newport again enhancing that customer
Proposition right so coming back to the some of the organic sort of openings you’ve got you mentioned Wales when you sort of set up a sort of Greenfield site for one of a better phrase what is the competitor reaction what are the what is the existing infrastructure that’s you
Have to compete with what do they do how do they react and and and how do you ultimately you know persuade customers to join you who’ve been with somebody else for many years well I think the first thing is going back to that relationship that the management locally
And the sales representatives and sales Executives have got with the with the customers is key we are not going into the market to undercut anybody but we are positioning product cost effectively we don’t know what price particularly our competitors are going to sell certain products at if it’s the same or
Similar product know we buy the product yes of course we negotiate with the supplier and we have a strong loyalty with our supplier base as well we don’t move from one suppli to another for different prod you know that that their relationships we’ve had for many years
But we get that product into the market cost effectively you know because we believe we’re buying well and we’re selling competitively and that obviously enhances that customer relationship because they need to compete also in the marketplace whether it be you know independent competitors or or multiples
Sure so on that on that point if I just jump in there you’ve spoken about having sight of this2 200 million Revenue Target is is there something magic about 200 million in terms of the terms on which you can get from your suppliers or is that just is it just a number that
Will become a bigger number in due course it is just a number because I think with the acquisition of valley that took us comfortably through the 100 million heading for 150 which is broadly where we are now interly on an annualized basis with the upward trajectory and 200 million is a natural
Next Target and I believe we can go well through that but I think also because of the infrastructure we’ve put in place we quoted that specifically cutting capacity um that’s cut lens of carpet residential vum we’re at about 60% with the investment we’ve made and to qualify
That is that we’ve only opened Scotland a couple of months ago so Scotland capacity is not really being utilized at all we’re probably at 15 perish of Scotland’s capacity if we think about two cutting shifts doing 300 cut lens a shift is broadly where we would be so
600 cut LS in Scotland in leads we are fairly for there are ways of increasing that capacity potentially but in Birmingham we have just gone to the second shift to increase the capacity there and to explain a shift that’s typically six people either bringing carpet to the cutting table controlling
The cutting table or the wrapping and taking product away from the cutting table and The Cutting tables are large 5 m wide the length depends on the number what we call sortation bins but that getting too technical going back to capacity in Valley in ath we have some
Capacity but we’re fairly getting fairly full on three cutting tables there working a total of six shifts in Derby we’ve invested over a million pound in extending the Distribution Center there putting extra racking in and putting a cutting table in which is currently not being used so at some point of course
That gives us extra capacity in the valley business again if you think of that ratio of 300 cut lens per shift so of course capacity is Circ 1,800 um we’re not quite there but getting close and that’s why we put that release valve effectively into Derby to
Able to cut and that 60% does not allow if at some point we wanted to put a cutting table into Newport we obviously could do and just something to pick up there where I’ve given you the locations around the country is that we own four of the premises the other seven are
Least but we have free hold of Sudbury arth Darby and Newport which amounts to believe 22.3 million is the current valuation with only a small amount of debt against one of those properties so I think when we talk about the balance sheet where we’ve got net assets overall
Of around 40 million over 50% that is Freehold property principally unincumbered so on that topic if we talk a little bit about valuation so you mentioned you got about 40 million pounds of assets net Book value mostly backed by property and and readly realizable inventory the market cap at
At the moment roughly speaking is is about 40 million as well is that is that correct correct yes right so that’s for me as a as a as a sort of Fairly Frugal value investor that’s a that’s a really good starting point for an investment
I’d say if we if we sort of look at the the profit and loss account you you mention you you drop all these anecdotes about the future and being much bigger I suppose that means that there’s a lot of investment going in ahead of the the the
Revenue right so if we look at the p&l it surely it must be obscured slightly by that the the cost you’re putting in for the future so absolutely only two of the sites of the 11 were with us you know two and a half years ago we’ put a
Lot of capacity into the business and that’s not nowhere near being fully utilized and as we to get the operational gearing that’s where we want to push that sales revenue up towards the 200 million and then the return on sales should look distinctly different from what it is today where we’re
Carrying a lot of cost in the business for the future so if you I mean I I had you at a 130 140 million sales run rate let’s say there’s a little bit of weakness this year and you’re down at that that level I don’t know this isn’t
A forecast or anything like that this is just a a hypothetical conversation if you if you decided you you didn’t want to go for the growth what would be the the right sort of underlying operating margin for the business at a 13040 million pound run rate of Revenue I
Think looking at another way the we’re really targeting and operating margin of five to six% right okay I think because we’ve put an infrastructure in place it’s difficult to say if we suddenly turn the tables and said right we’re not going to grow anymore we’re going to focus on profitability that is the
Strategy but if if we did then it would be a challenge to get to that level because obviously we’ve got a cost base in the business just in property and overall infrastructure we need to have a bigger business to be fair yeah so ask that question the other
Way when you’re at 200 million on the current invested Capital do you reach those sort of metrics yeah I think it’s Circa 5% is probably right number to think about it depends how fast we get to 200 million because quite obviously if we invest more and grow faster then
The 5% might not quite meet the 200 million I I suppose in a in a slightly odd way for a long-term investor you want to see margins low for a while don’t you because that means that there’s a you and your management team can see this wonderful sort of Glide
Path to even greater scale and even better profits in the future so I suppose just to sort of square the circle on that valuation piece if because I’ve looked at other businesses in the sector some of which that are less efficient than likewise I would say
Who do make you know a 5% margin if if you were to to say that current run rate steady state margin was around 5% that would that would give you I don’t know maybe four or five million pounds of profit after tax which would mean likewise is currently on sort of eight
Times earnings which is again for a a sort of frugal in val value investor a great start you don’t even need growth for this to be a great investment but you do do have growth that’s that’s clear and present and so that’s really quite an exciting time for the business
And certainly an interesting point for the shares um Can at that point can I just ask question for both of you really how you think about that what James has just said and how Tony has talked around this subject in the context of what is a very volatile consumer environment a
Housing market that is been disrupted affected massively by sharply Rising interest rates and the cost of living crisis obviously affecting we are talking about the cyclical industry I think we view it that um you know if we think of a Flor cing Market at cir2 billion pound if that market is is down
A percentage H there’s still a huge market for us to go for given our size so if it’s down 10% let’s call it it’s 1.8 billion for us to go at and that’s that’s what we’re tasked with day in day out you know undoubtedly you know over
The last four years there have been various challenges you know first of all covid the business being closed for a period and then as we came out of covid pent up consumer demand and and savings that allowed you know household refurbishment because people couldn’t do the normal things go on holiday Etc so
They start renovating their their property and there was a huge amount and so 2021 undoubtedly benefited from that up upturn and we’ve saw that in various business but then just about that 10% in context how what what was was the rate of the market decline over the global
Financial crisis so 0809 2010 I guess it was towards 20% I would have thought okay right okay but um go going back to you know 21 Would Have Been a Good Year and we we s we could see that in a business like Valley and we see it in in
As the likewise business going into 22 undoubtedly with all the challenges of course sad very sadly the Ukraine war and the knock on effect of that energy cost whether that be input cost in industry or energy cost cost relative to consumer spending and then more recently obviously interest rates house moves
Slowing it is a challenging Market in the last 18 months no doubt about that so I think it’s fair to say if the market had been more helpful in 22 and 23 we would been much further forward now than we are but I’d still say
There’s a big market for us to go out our competitors are shipping Floor Covering products every day you know we’ve just got to be sharper at getting our our share and increasing our share of the market so so I’m uh obviously I have a vested interest here you know I I
I’ve drank the Kool-Aid on Tony and and his team um so I’ll try and be as you know independent minded and objective as possible with this but I suppose um I have the luxury being very long-term investor so I’m looking for you know the best investments are the ones you never
Have to sell and so I can when I’m thinking about businesses I can look through the cycle and so I I’m I’m not really too scared about a year where volumes might be down 20% especially in in an industry like flooring because there’s there’s certain industries where
Demand goes and it never comes back in in the sense that people didn’t go out for meals during Co you know they they there was a lot less opportunity to do so because the businesses were closed they didn’t go and have 15 meals for a month as soon as the restaurant open did
They those those meals were gone and that that Revenue was lost but with things like flooring you know at some point even if someone says actually that carpet will last another year it needs to be replaced at some point so you get this wonderful wave after a cycle where
There’s all this catchup spending so you made I think you made exactly the same point about champ champagne consumption in the last the last time we spoke James yes that’s um that’s a slightly different product in a different consumer set so um but but yeah so there’s this this
This this catch up which happens and it happens with a lot of the building trade and the the really odd thing is I mean I’m I’m effectively still a child you know I’ve I’ve only been through two or three Market Cycles in my career depending on and how you you classify
Them but it always surprises me how um the headlines and the the the people in the in the investment industry that speak to how they they always speak about the cycle like it’s never going to end like it’s it doesn’t bounce back every time and and so I’m not too too
Worried about it especially when you look at the in the context of of likewise you look at the balance sheet balance Sheet’s absolutely solid they’ve got a lot of liquidity there and you can see in in their actions that that Tony and his team aren’t worried about it
Because what are they doing they’re allocating that c cap counter cyclically they’re looking for opportunities in the mestrom to add value for shareholders while competitors might be retrenching or you know jacking their prices up or or whatever it might be so I suppose I like the industry because it’s simple
And easy to understand and I’m a simple man I like it because you know um you get cycles and people run for the hills and you get opportunities in the shares like I think we do have at the moment likewise and then I like it because it’s
Got a tried and tested management team who are who seem to be incredibly passionate about the the journey they’re on which feels like it’s only just at the beginning you’ve clearly had experience of the life of a PLC previously you listed likewise on AIM I think it was only two years ago yeah
2000 yeah that’s correct what’s your experience been in terms of and you how have you found it coming back into the listed arena in terms of attracting investor interest clearly done a great job job with James attracting investor interest and what using the market for what it’s there for which is to raise
Capital for growing businesses sure so and exactly we I think if we’d have gone into the banking system as a small company we would would not have been able to raise the capital that we’ve been able to through the the markets but it’s allowed us to move much faster than
I think otherwise we would have been with a small company you know trying to raise um Bank debt we know we’ve had you know great support from from a handful of institutional shareh holders I think you know we have this you know situation where probably there’s a lot of even
Small cap funds are not looking at things under 100 million market cap that seems to be a particular threshold and when you get to 100 cap it’ll be 200 million probably I think I might have said this to you before Tony but whenever I see him I always say don’t worry about the
City they don’t know how to run a flooring business just just do the right thing for your customers do the right thing for your staff keep growing keep keep growing profitably and you’ll get the shareholders you deserve that’s a that’s a sort of buffe ism and I think
That’s what’s what’s happening here and and that’s what happens in cical businesses you get this shake out where the people without the stomach or without the right time Horizon they um they leave and then you get some shareholders that turn up that do get the long-term story so sure and I think
You know to be fair I I was always taught that um look after the business yeah and the share price will look after itself I know that’s subject to Market and ratings but fundamentally look after the the business first that’s that’s got to be the priority you talk about the
Business in a lot of detail that’s the thing I always get from you down to like knowing what bad bad debt numbers are at different customers so what what is a typical day for you it doesn’t sound like you sit in an ivory Tower are you driving around lots are you sort of
Giving everyone a headache about how tidy warehouses are what does it look like for you well it’s certainly not an ivory Tower because I have a a table in uh in Birmingham um in the Birmingham Distribution Center there which is uh I’m I’m there probably one or two days a
Week then I’m typically in the other business the businesses so I was in um leads and Manchester ear this week I was in ath also this week uh I saw a a customer yesterday um so variety of things I was last week I was with principal supplier in Holland and
Another supplier in Holland um couple of weeks time I’m going to Turkey for to see um variety of suppliers there you know it’s about that close contact with our people next week I’m in in Glasgow and uh seen some investors as well so that kind of cross-section I think
There’s a balance with with the investment Community obviously we’ve got to keep in touch with them but it’s certainly not for me to be spending two days a week in London um no no no no that would be a bad sign yeah it’s about being in the the businesses and
Suppliers given what you just said then you’re clearly not a young man and you started I think you said in 1977 so you’re probably a similar age to me possibly even a bit older Dar say you finished your last job you know at the time most people of our age would
Probably be thinking about their golf handicap more than starting a new business is there something that you’ve got to prove to yourself or somebody else or something that you wanted to improve on from what you’ve done in the past what what is it that’s put you into
This position um I think it’s a combination that I I enjoy what I do yeah like a nice holiday occasionally and a nice weekend away but I enjoy what I do and I don’t think playing golf or whatever else I do have six grandchildren mind you with three daughters but um congratulations you
Know it is it is about enjoying the business and enjoying working with the people I think that’s the key whether it be people in our business or particularly suppliers across the globe that’s the enjoyment part and it was you know a case that a number of people
Wanted the opportunity to come on this journey and I mentioned across the country where people have joined us we’ve helped facilitate that I think it’s fair to say whil growing a business at the same time who’s your her hero in the in the flooring trade internationally could be
Anybody my gr W undoubtedly W right and that’s did he um did he hire you sorry who was he he was your predecessor hedum or well gr W founded MCD uh mid that I joined in 77 his colleague actually interviewed me but Gran was there at the
Time and he’s been my mentor um through my business career they sadly passed away a couple of years years ago but um undoubtedly he’s my mentor hero Graham really took a stake in headlam at the time 22% I I’m right in saying and in and I developed business with him I
Think it was growing credibility in the in the city and also with the suppliers that allowed us to then grow hlum and I think it’s fair to say that say it was Graham’s credibility it was Ian’s ability in the city to be able to raise money to grow hedum and it was myself
Andrew Tony judge and other people that ran the business business that’s how it how it worked and then Ian stepped away in 2000 let’s call it a disagreement over strategy which I think it gen genuinely was and that sometimes used as a cliche and we’d built up roughly a
Third of headlin was in um textile businesses which started to underperform for a variety of reasons and when Ian left we then sold those textile businesses which were typically in curtaining and upholstery fabric and then continued to build headlam as a floor cover distribution business until I left in
2016 so really putting likewise together you just wanted to keep the band together or put the band back together sounds to me what you’re saying yeah there is there is a degree of that for sure if Tony if you if you weren’t doing likewise now what you think you’d be
Doing difficult to say probably when I first left headlam I got involved in the business in South Africa which is actually where the likewise name comes from and that was with a gentleman called Stefan CER who has worldwide Floor Covering interests and he wanted some help to sort some business out in
South Africa which I went and did and I was going there every other week for three years I’ve I’ve totally exited that business now because as obviously likewise in the UK has got larger then it needed my full attention and has done since pretty much Co covid prior to co I
Was involved in South Africa and I was also doing some consultancy work in that period for other Floor Covering businesses and I guess if I hadn’t developed likewise I would probably be doing that I guess yeah it’s it’s clear you have an enormous passion for it and also you’re very good at
It thank you both very much for spending the time today and I look forward to catching up with both of you in the not too distant future great thank Thanks thanks for listening if you’ve enjoyed en this episode please press subscribe to get future episodes