TIDMBRCK
RNS Number : 1433G
Brickability Group PLC
17 July 2023
Brickability Group PLC
LEI: 213800SK28MWXB3K3P26
17 July 2023
Brickability Group PLC
("Brickability" or "the Group")
Final results for the year ended 31 March 2023
Good performance across all divisions
Brickability Group PLC (AIM: BRCK), the leading construction
materials distributor, is pleased to announce its audited final
results for the twelve-month period ended 31 March 2023.
Financial Highlights
Revenue increased by 30.9% to GBP681.1m (2022: GBP520.2m)
--
Group like-for-like(1) revenue growth of 4.0% versus 2022 (15.4%
-- excluding timber) and 31.9% versus 2021
Gross profit increased by 30.0% to GBP112.9m (2022: GBP86.8m)
--
Gross profit margin of 16.6% (2022: 16.7%), with the slight reduction
-- anticipated due to the full-year inclusion of Taylor Maxwell
Adjusted EBITDA(2) increased by 30.4% to GBP51.5m (2022: GBP39.5m)
--
Adjusted Profit before tax(3) increased by 28.5% to GBP44.6m (2022:
-- GBP34.7m)
Statutory Profit before tax increased by 87.5% to GBP34.5m (2022:
-- GBP18.4m)
Statutory EPS increased by 110.5% to 9.26p (2022: 4.40p)
--
Adjusted EPS increased by 18.6% to 11.93p (2022: 10.06p)
--
Net debt as at 31 March GBP8.0m (2022: net cash GBP0.4m)
--
Final dividend proposed of 2.15 pence per share giving a total
-- dividend for the year of 3.16p, an increase of 5.3% (2022: 3.00p)
2023 2022 % Change
=========
GBPm GBPm
==================================== ======= ======= =========
Revenue 681.1 520.2 30.9%
==================================== ======= ======= =========
Gross profit 112.9 86.8 30.0%
==================================== ======= ======= =========
Adjusted EBITDA (1) 51.5 39.5 30.4%
==================================== ======= ======= =========
Adjusted profit before tax (2) 44.6 34.7 28.5%
==================================== ======= ======= =========
Profit before tax 34.5 18.4 87.5%
==================================== ======= ======= =========
Adjusted EPS (3) 11.93p 10.06p 18.6%
==================================== ======= ======= =========
EPS 9.26p 4.40p 110.5%
==================================== ======= ======= =========
Net (debt)/cash (4) (8.0) 0.4 -
==================================== ======= ======= =========
Annual dividends paid and proposed
per share 3.16p 3.00p 5.3%
==================================== ======= ======= =========
Operational Summary
Good performance reflecting the Group's strategic position within
-- the industry, despite a challenging sector environment.
Acquisitions of Modular Clay Products in May 2022, E.T. Clay and
-- Heritage Clay Tile in September 2022, with all acquisitions integrated
and contributing to the Group's results.
Further expansion of the Distribution division, with property
-- purchased to facilitate continued new branch openings within the
U Plastics business and a warehouse for HBS NE (trading as UPOWA).
Post Period and Outlook
Acquisition of Precision Façade Systems Ltd ("FSL") in June
-- 2023 for GBP0.6m.
Ongoing review and progression of acquisition opportunities.
--
Announcement of CEO succession with Frank Hanna, currently joint
-- CEO of Michelmersh Brick Holdings plc, to join the Group as CEO
Designate. Alan Simpson to remain with the business.
As previously announced, and whilst remaining conscious of the
-- challenges in some of our segments in the short-term, the Group
believes that the underlying long-term demand for UK housing remains
robust as does the demand for quality materials for the construction
sector generally. The Board remains confident that the Group is
well placed to continue delivering on its strategic objectives
and the underlying organic growth of the business and, notwithstanding
a number of industry participants publicly communicating their
own expectations of volume reductions in the near term, trading
in the current financial year to date has remained in line with
Board expectations.
Whilst mindful of the broader macroeconomic uncertainties the
-- Board believes that its diversified multi-business strategy places
it in a good position to meet stakeholder requirements moving
forward for the long-term.
John Richards, Chairman of Brickability, said:
"It has been another strong twelve months for the Group. Our
continued focus on the strategic expansion and diversification of
the business has seen the Group achieve impressive growth in the
year. Over the past year, the housebuilding market has been faced
with new challenges arising from the macroeconomic and geopolitical
environment. Considering the headwinds faced in the wider market
environment, the Board is very pleased with the Group's
performance. The results we achieved this year are thanks to the
dedication and determination of our people, who look to
consistently deliver excellent service while seizing opportunities
as they arise."
(1) like-for-like revenue is a measure of growth in sales, adjusted
for the impact of acquisitions.
(2) Earnings before interest, tax, depreciation, amortisation and other
non-underlying items (See Financial Review and note 5).
(3) Statutory profit before tax excluding non-underlying items (see
Financial Review and note 5).
(4) Adjusted profit after tax (statutory profit after tax before non-underlying
items) divided by the weighted average number of shares in the
year.
(5) Bank borrowings less cash (2022: Cash less bank borrowings).
Enquiries:
Brickability Group PLC via Montfort Communications
John Richards, Chairman
Alan Simpson, Chief Executive Officer
Mike Gant, Chief Financial Officer
Cenkos Securities plc (Nominated
adviser and broker)
Ben Jeynes, Max Gould (Corporate
Finance)
Julian Morse, Alex Pollen (Sales) +44 (0) 207 397 8900
Montfort Communications (Financial +44 (0) 203 514 0897
PR) brickability@montfort.london
James Olley
Ella Henderson
This announcement contains inside information.
About Brickability
Brickability is a leading construction materials distributor,
serving customers across the UK and Europe for over 37 years
through its national and local networks. The Group supplies over
500m bricks annually and has over 70 locations across the country
with over 700 employees.
Chairman's Statement
Overview
It has been another strong twelve months for the Group. Our
continued focus on the strategic expansion and diversification of
the business has seen the Group achieve impressive growth in the
year. Across our four business divisions, the Group has maintained
strong momentum, delivering an excellent financial performance for
the year ended 31 March 2023 with revenue of GBP681.1 million, up
30.9% from the previous year, and an adjusted EBITDA of GBP51.5
million, up 30.4%.
Over the past year, the housebuilding market has been faced with
new challenges arising from the macroeconomic and geopolitical
environment. Considering the headwinds faced in the wider market
environment, the Board is very pleased with the Group's
performance. The results we achieved this year are thanks to the
dedication and determination of our people, who look to
consistently deliver excellent service while seizing opportunities
as they arise.
While major housebuilders reported some improvement in sales
rates in the first calendar quarter of 2023, the market has
experienced a slowdown in housebuilding, particularly in the
first-time buyer sector. Despite these challenges, the fundamentals
of the housebuilding market remain strong. The Board is confident
in the Group's ability to continue delivering on its strategy and
deliver attractive returns, but we remain cautious about the market
outlook.
Acquisitions
This year, we continued to benefit from the strategic decision
to diversify and expand the Group's product portfolio and end-use
markets. We announced three acquisitions in the period, adding to
the scale of our business and increasing the Group's client
base.
In May 2022, we completed the acquisition of Modular Clay
Products Ltd. This acquisition significantly increased the Group's
presence in the specification sector, which we previously addressed
through our Taylor Maxwell and Bespoke Brick Company businesses. It
brought with it new access to a range of European manufacturers,
further boosting our strong import capabilities.
We were also pleased to complete the acquisition of E.T. Clay
Products Limited and Heritage Clay Tiles Limited in September 2022.
These acquisitions represented another important step in the growth
of our importing division, by expanding the supply base of the
Group through new access to a range of overseas manufacturers. Post
period in June 2023, we completed the acquisition of FSL for
consideration of GBP0.6 million.
Environmental, Social and Governance
As the Group continues to grow, we remain committed to our
responsibility as a business to address ESG priorities. In March,
we published our 'Together for the Future' strategy - our roadmap
to transition to a business that delivers consistent financial
returns to our shareholders and maximises long-term value for our
employees, suppliers and customers, while having a positive impact
on the environment, people and communities.
A central goal of our ESG strategy is to reach net zero in our
own Scope 1 and Scope 2 operations of our sales businesses by 2030.
To minimise our environmental impact and cut carbon emissions, this
year we introduced a new fleet of electric company cars and started
the rollout of installing EV chargers at our offices and
warehouses.
We recognise that in order to achieve meaningful change, we need
to work in partnership with our employees, customers, partners, and
suppliers. As noted later in the Annual Report and Accounts, as
part of our ESG strategy, we set a goal to engage with the Supply
Chain Sustainability School (SCSS) and obtain a Gold-level
membership. The SCSS is an award-winning and industry-wide
collaboration that encourages everyone in the supply chain to work
together for a sustainable future for the built environment. I am
delighted to say that we achieved our goal. Engaging with the SCSS
has increased our team's knowledge and confidence on issues
surrounding sustainability, particularly with our valued suppliers
and customers.
Our charitable foundation goes from strength to strength in
supporting causes in the communities of our places of operation.
Since its launch last year, the Brickability Group Foundation Trust
has not only supported incredible causes but has also inspired many
of our staff to take action personally to raise money and volunteer
in our local community. Under the Foundation's charter, the Group
donates 0.5% of its Adjusted EBITDA in each financial year to the
Foundation and matches funds raised through our employees'
fundraising efforts. This year the Group will be donating GBP257k
(2022: GBP200k) to the Foundation. The Foundation has donated
GBP120k across various charities this year (2022: GBP55k).
The Group is committed to creating an inclusive and diverse
culture in which everyone is supported to reach their full
potential. This financial year we completed an in-depth Diversity,
Equity and Inclusion (DEI) and gender pay gap analysis and began a
review of all Group reward and recognition policies. In a sector
that has historically been very heavily male-dominated, we
recognise that there is still plenty of work to be done. Increasing
female participation and representation at the senior levels of our
business is a Group-wide priority.
Board and Governance
I would like to take a moment to recognise Giles Beale, who
stepped down from the Board in March. The Board has been very
fortunate to have had Giles' wise counsel, commitment and valuable
contribution since the Group's IPO. On behalf of the Brickability
Directors, I would like to thank Giles for his service and wish him
all the best for the future.
This year we were delighted to welcome two new Independent
Non-Executive Directors to the Board - Susan McErlain and Sharon
Collins. Susan has replaced me on both the Audit & Risk and
Remuneration committees and joined the Nominations Committee, while
Sharon has taken up the role of Chair of the Remuneration Committee
and has joined both the Nomination and Audit Committee following
Giles' leaving. I speak on behalf of the entire Board when I say
that we are very fortunate to have them on our team and we look
forward to continuing to work with them both.
Following year-end, we announced that 36 years after first
starting work with Brickability, Alan Simpson, Chief Executive
Officer (CEO) and founder of many of the Group's businesses, will
be stepping down from the role of CEO and as a Director of the
Company. Alan has been instrumental in building Brickability into
the successful business it is today, overseeing the Group's IPO in
2019 and multiple transformative acquisitions since. Alan remains a
major shareholder of the Group and will continue to work with the
Group in a non-board role post his stepping down. On behalf of the
Board, I thank Alan for his invaluable years of service and
congratulate him for his immense achievements.
The Board is pleased that Alan will be succeeded as CEO by Frank
Hanna. Frank has more than 30 years' experience in the industry and
I look forward to welcoming Frank to the Brickability family in due
course. I have every confidence in his ability to lead the Group as
it continues to grow.
People
To help people and communities thrive we prioritise health and
safety. We appointed a new Group Health and Safety Manager this
year and conducted an extensive audit around the business to ensure
employee safety and wellbeing. We have also taken on additional
senior staff in Sales, Finance, IT and HR to reflect our increased
scale, both in terms of headcount and our portfolio businesses.
Shareholder returns and dividends
The Group paid an interim dividend of 1.01 pence per share on 23
February 2023, which reflected the performance of the business and
the Board's confidence in the longer-term outlook.
The robust performance of the Group enables the Board to
recommend the payment of a final dividend for the year ended 31
March 2023 of 2.15 pence per share. Subject to shareholder approval
at the Annual General Meeting, the final dividend will be paid on
21 September 2023, with a record date of 25 August 2023 and an
ex-dividend date of 24 August 2023.
John Richards
Chairman
14 July 2023
Chief Executive's Review
I am very pleased to record another set of strong results. I
believe this success is down to a number of factors, namely the
strategy of the Group as it continues to diversify through
acquisition, the strength of Brickability's positioning in the
market, and its ability to adapt and remain agile.
The results are especially pleasing considering the wider
macroeconomic challenges seen in the marketplace during the period.
All our divisions have once again performed well with both revenue
and profit well ahead of the prior financial year, and ahead of
management's expectations going into the financial year.
The Group continued to see strong demand for its goods and
services across all divisions, however, the demand for bricks fell
during the second half of our financial year as a result of the
subdued housing market. Significant year-on-year price inflation
mitigated the financial impact of reduced volumes.
The gross profit margin was 16.6% (2022: 16.7%), with this
slight, and expected reduction when compared to the prior year,
driven by the first full year trading contribution from the Taylor
Maxwell Group (2022: 9 months), which operates on lower margins
than the Group prior to the acquisition, and the fact that timber
margins have fallen back from the exceptional highs of the previous
year. The impact of these factors were partly mitigated by the
acquisitions completed in this financial year, which operate on
margins above the average of the Group.
The continued expansion of the Group has been supported by
investment in recruitment at both Group and divisional levels of
skilled and talented individuals across functions such as Sales,
Finance, IT and HR. In addition, the Group has begun to optimise
its systems through the rollout of standardised IT systems
platforms. The Group is also building skills for the future through
the launch of the Apprentice Scheme in the year, which this year
saw 10 apprentices join various businesses in the Group.
At the beginning of the current financial year, the Group took
the decision to re-align the reporting structure of some of our
businesses and we have moved from three divisions to four, in order
to support the continued growth of the Group and to further improve
efficiencies. Detailed segmental analysis is per note 3 of the
preliminary final results. The Group's four distinct business
divisions are shown below:
Bricks and Building Materials - which incorporates the sale of superior
quality building materials to all sectors of the construction industry
including national house builders, developers, contractors, general
builders and retail to members of the public;
Importing - which is primarily responsible for importing building
products, the majority of which are on an exclusive basis to the
UK market, to complement traditional and contemporary architecture;
Distribution - which focuses on the sale and distribution of a wide
range of products, including windows, doors, radiators and associated
parts and accessories; and
Contracting - which provides flooring and roofing installation services,
primarily within the residential construction sector.
Full details of our divisions and each of our businesses can be
found at https://brickabilitygroupplc.com/
Bricks and Building Materials Division 73% (2022: 78%) of Group
Revenue
Revenue of GBP498.6 million (including internal revenues of
GBP8.1 million (2022: GBP6.4 million)) for the year ended 31 March
2023 was up GBP94.0 million on the prior year (2022: GBP404.6
million), with like-for-like revenue growth of 1.4%. Excluding
timber, like-for-like revenue growth was up 17.1%. Adjusted EBITDA
at GBP30.1 million for the year ended 31 March 2023 was up GBP5.8
million on the prior year (2022: GBP24.3 million).
Throughout the year, the division managed the supply issues from
both UK and European manufacturers, and the softening in demand in
the second half of the year as a result of the uncertainty in the
UK housing market. Like-for-like revenue growth is driven by a
combination of price increases and product mix. In line with our
expectations, timber volumes and pricing have fallen back following
the exceptional highs of the first half of the last financial
year.
Taylor Maxwell & Co continued to perform strongly and has
added new national and regional house builders to its customer
base. The opening of a new showroom in the Grassmarket area of
Edinburgh and the refurbishment of the Manchester showroom in
Albert Square further established the Group's presence in the
specification sector. Cladding, in particular, saw significant
year-on-year growth, most notably highlighted within SBS Cladding,
underpinned by large scale projects with further growth anticipated
in the next financial year. Vobster Cast Stone's (trading as
Vobster Architectural) strong order pipeline led to good revenue
growth throughout the year.
The acquisition of a new yard in Glasgow in the previous
financial year has allowed for the expansion and growth of
Bricklink though providing more flexibility for the local area,
enabling it to build a strong builder's merchant customer base. The
demand for social housing remains an important factor in the Group,
with LBT Bricks & Facades continuing to see good growth in this
area.
In June 2022, Architectural Facades entered a new, long-term
strategic partnership with Thyssenkrupp Materials UK to develop a
new balcony system to produce the next generation of balconies.
This will improve lead times and reduce time spent on-site, whilst
providing exceptional curb appeal and functionality. The patented
design, which has passed the rigorous testing stage that lasted
several months, was launched in the second half of the year and
initial enquiries look very promising.
Importing Division 17% (2022: 14%) of Group Revenue
Revenue of GBP117.6 million (including internal revenues of
GBP30.7 million (2022: GBP21.7 million)) for the year ended 31
March 2023 was up GBP45.3 million on the prior year (2022: GBP72.3
million), with like-for-like revenue growth of 12.1%. Adjusted
EBITDA at GBP13.2 million for the year ended 31 March 2023 was up
GBP4.9 million on the prior year (2022: GBP8.3 million).
The division was further strengthened through the acquisition of
Modular Clay Products, which was acquired on 31 May 2022, and E.T.
Clay and Heritage Clay Tiles, which were acquired on 30 September
2022. These businesses brought new customers to the Group,
particularly in the merchant's channel, further diversifying the
Group's customer and revenue base.
The Bespoke Brick Co. had a strong year with price and volume
growth although some momentum to this growth slowed towards the end
of the financial year. It has invested in a Sustainability School
and Showroom, based in Derbyshire. The Showroom is due to open
later in the year and will showcase all of the Group's
sustainability focussed products.
McCann Logistics has continued to grow in revenue, following the
increase in its trailer fleet and expansion of its operations to
cover haulage from the Netherlands, Germany, France, Spain,
Belgium, and Portugal. Crest, Brick Slate and Tile has continued to
grow through its product mix of both brick and roof tiles.
After the end of the financial year in May 2023, The Bespoke
Brick Company's 'Brick Geek' programme received RIBA accreditation.
This is available to architects and specifiers and showcases the
many benefits of using clay-facing bricks in all sectors of
construction.
Distribution Division 9% (2022: 9%) of Group Revenue
Revenue of GBP63.0 million (including internal revenues of
GBP0.4 million (2022: GBP0.2 million)) for the year ended 31 March
2023 was up GBP16.0 million on the prior year (2022: GBP47.0
million) with like-for-like revenue growth of 25.5%. Adjusted
EBITDA at GBP8.9 million for the year ended 31 March 2023 was up
GBP1.1 million on the prior year (2022: GBP7.8 million).
Revenue growth was seen across all of the businesses within the
Distribution division, led by the first full year of trading within
the Group for HBS NE Ltd (trading as UPOWA). UPOWA continues to win
major national housebuilder contracts and is expected to continue
to grow as the market in renewable forms of energy expands. The
Group invested in a new warehouse for UPOWA, which was fully
operational in the year, to support its growth ambition.
Towelrads also saw strong growth through both the towel radiator
sector and through the new underfloor heating sector that was taken
in-house during the year. This sector is performing strongly and
continuing to win contracts in the market. Frazer Simpson more than
doubled its revenue when compared to the prior year, supported by
strong contract wins and an expansion of its window business.
The Group further invested in the U Plastics (trading as UP
Building Products) business, acquiring new branches in Sutton
Coldfield and Bury St Edmunds. FSN Doors has continued to grow in
the mid-range bracket of the market, and Forum Tiles continues to
develop its product offering and grow its customer base.
Contracting Division 6% (2022: 5%) of Group Revenue
Revenue of GBP41.3 million (including internal revenues of
GBP0.2 million (2022: GBP0.3 million)) for the year ended 31 March
2023 was up GBP16.5 million on the prior year (2022: GBP24.8
million) with like-for-like revenue growth of 12.5%. Adjusted
EBITDA at GBP5.6 million for the year ended 31 March 2023 was up
GBP2.9 million on the prior year (2022: GBP2.7 million).
Beacon Roofing, which was acquired on 31 March 2022, has
performed very well throughout the year and has contributed to the
reported revenue growth in the year. Performance has been further
supported by gaining new contracts following a competitor going
into administration. Crest Roofing and Excel Roofing have continued
to grow through the expansion of work with their customer base.
Leadcraft has performed well with its customer base growing in the
higher value large single-unit housing projects, and DSH Flooring
continues to grow year on year through long-term contracts with
housebuilders. Gross profit margins have started to improve,
following the unprecedented price increases in the cost of sales of
roofing materials experienced last year, through shorter fixed
periods for contracts.
Continental Tile Joint Venture
In March 2022, the Group announced the formation of the
Schermbecker Building Products GmbH joint venture to manufacture
clay tiles with a leading German tile manufacturer and producer of
roofing materials, operating from a factory in Schermbeck, Germany.
Initial manufacture and start-up production of clay roof tiles by
the joint venture was very good however due to the volatility of
energy prices in Germany, production was curtailed. With volatility
in energy prices having since reduced, the Group now expects to
produce the clay roof tiles for the UK market from the second
quarter of the current financial year.
Outlook
The Group's results highlight the strategic strengths of
Brickability, especially when the backdrop of what has been a
period of macroeconomic uncertainty is considered. Its growing and
diversified business divisions continue to demonstrate their
ability to deliver upon the Group's strategic objectives and we
remain committed to continuing to grow in a sustainable manner.
Recent uncertainty in the market has highlighted the strategic
importance of having long-standing relationships with customers and
suppliers, growing importing capabilities, and the ability to
source and provide quality products to clients. Brickability
continues to be able to successfully meet the demands and
requirements of our customers.
Whilst the short-term outlook for the housing market sector
remains uncertain, and we remain cautious, our priority remains
unchanged as we aim to secure strong order intakes with clear and
sustainable margins. The Board believes that the Group's
diversified multi-business strategy positions it well to navigate
what may be uncertain times ahead.
As previously announced, and whilst remaining conscious of the
challenges in some of our segments in the short-term, the Group
believes that the underlying long-term demand for UK housing
remains robust as does the demand for quality materials for the
construction sector generally. The Board remains confident that the
Group is well placed to continue delivering on its strategic
objectives and the underlying organic growth of the business and,
notwithstanding a number of industry participants publicly
communicating their own expectations of volume reductions in the
near term, trading in the current financial year to date has
remained in line with Board expectations.
Finally, as I prepare to hand over the role of CEO to Frank
Hanna, I would like to reflect on my 36 years with the Group to
date. Leading the Group has been and is a great honour, and I have
enjoyed all the challenges and rewarding experiences that I have
shared with my colleagues. The business continues to be well-placed
in the current market, and I look forward to continuing with the
Group in a non-board role. Frank is an exceptional operator,
manager and leader and has excellent understanding and experience
within the industry. Once on board, I have no doubt he will
continue to grow the business in his capacity as Group CEO and I
look forward to working with him in future years.
Alan Simpson
Chief Executive Officer
14 July 2023
Financial Review
Once again, the financial results for the year reflect a
combination of good performance across the divisions, along with
the contribution from acquisitions made in the year and the
annualisation of those acquisitions completed in the prior
year.
Revenue
Revenue totalled GBP681.1 million for the year ended 31 March
2023. This represented an increase of 30.9% compared to the
previous year (2022: GBP520.2 million). Group like-for-like revenue
growth was 4.0% versus 2022.
Division 2023 2022 % Change % Change
===============================
GBPm GBPm LFL
=============================== ======= ======= ========= =========
Bricks and Building Materials 498.6 404.6 23% 1%
=============================== ======= ======= ========= =========
Importing 117.6 72.3 63% 12%
=============================== ======= ======= ========= =========
Distribution 63.0 47.0 34% 26%
=============================== ======= ======= ========= =========
Contracting 41.3 24.8 67% 12%
=============================== ======= ======= ========= =========
Group eliminations (39.4) (28.5) 38% -
=============================== ======= ======= ========= =========
Total 681.1 520.2 31% 4%
=============================== ======= ======= ========= =========
Gross Profit
Gross profit for the year increased to GBP112.9 million from
GBP86.8 million. Gross profit margin has decreased marginally by
0.1% to 16.6% driven by the first full year trading contribution
from the Taylor Maxwell Group (2022: 9 months), which operated on
lower margins than the Group prior to the acquisition. In addition,
timber margins have fallen back from the exceptional highs of the
previous year and the impacts of these factors were partly
mitigated by the acquisitions completed in this financial year
which operate on gross profit margins above the average of the
Group.
Statutory/Adjusted Profit and Adjusted EBITDA
Statutory profit before tax of GBP34.5 million (2022: GBP18.4
million) includes other items of GBP10.1 million (2022: GBP16.3
million) which are not considered to be part of the Group's
underlying operations. These are analysed as follows:
2023 2022
=========================================
GBP'000 GBP'000
========================================= ======== ========
Statutory profit before tax 34,527 18,406
Acquisition costs 281 1,139
----------------------------------------- -------- --------
Re-financing costs - 97
----------------------------------------- --------
Earn-out consideration classified
as remuneration under IFRS 3 5,483 4,333
----------------------------------------- -------- --------
Share based payment expense 1,567 1,597
----------------------------------------- -------- --------
Amortisation of intangible assets 8,399 6,333
----------------------------------------- -------- --------
Impairment of goodwill - 16
----------------------------------------- --------
Unwinding of discount on contingent
consideration 2,891 938
----------------------------------------- -------- --------
Share of post-tax profit of equity
accounted associates (123) (55)
----------------------------------------- -------- --------
Fair value (gains)/losses on contingent
consideration (8,432) 1,916
========================================= -------- ========
Total other items before tax 10,066 16,314
Adjusted profit before tax 44,593 34,720
----------------------------------------- -------- --------
Share of post-tax losses of joint
ventures* - 149
Depreciation and amortisation 4,715 3,342
----------------------------------------- -------- --------
Finance income (143) (54)
----------------------------------------- -------- --------
Finance expenses 2,365 1,311
Adjusted EBITDA 51,530 39,468
----------------------------------------- -------- --------
* The Group's share of losses in its joint venture is included
within Adjusted EBITDA in 2023 to reflect its increased
contribution to the Group's results. The joint venture was in its
initial start-up phase in 2022 and thus not included in order to
present results of ongoing operations on a comparable basis.
Further details regarding the above other items are disclosed in
note 5 to the preliminary final results.
Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation and other non-underlying items.
Adjusted EBITDA increased by 30.4% to GBP51.5 million (2022:
GBP39.5 million) for the year ended 31 March 2023. Detailed
segmental analysis is per note 3 of the preliminary final results.
All our divisions saw like-for-like growth in the year, however,
demand for bricks fell during the second half of our financial year
as a result of the subdued housing market. Significant year-on-year
price inflation mitigated the financial impact of reduced volumes.
Earn-out consideration classified as remuneration relates to
Modular Clay Products and Taylor Maxwell (2022: Taylor Maxwell),
with both tracking in line with expectations. Fair value movements
on contingent consideration result in a gain of GBP8,423k (2022:
loss of GBP1,916k). This predominately relates to the movements in
UPOWA where the combined impact of the application of Part L and
Part S renewable energy legislation taking longer than expected by
housebuilders, and the forecast slowdown in the housing market
compared to prior year forecasts, is expected to delay the period
over which UPOWA will benefit from the new legislation.
Taxation
The statutory charge for taxation was GBP6.8 million (2022:
GBP6.1 million), an effective rate of taxation (Tax expense divided
by Profit Before Tax) of 19.8% (2022: 33.2%). The effective rate
for the year is marginally higher than the statutory rate of
corporation tax of 19% mainly due to the effect of non-deductible
expenses from a tax perspective. In 2022 the effective tax rate was
higher than the main rate of tax largely due to the impact on
deferred tax with the liability remeasured at 25% having originally
being recognised at 19%.
Earnings Per Share
Basic EPS for the year was 9.26p (2022: 4.40p), an increase of
110.5%. The Group also reports an adjusted underlying EPS which
adjusts for the impact of the other items analysed in the table
above. Adjusted EPS for the year was 11.93p (2022: 10.06p) per
share, an increase of 18.6%.
Dividends
As a result of the Group's trading performance and also in
recognition of the strength of the balance sheet at the year-end,
the Board is recommending a final dividend of 2.15 pence per share,
bringing the full-year dividend to 3.16 pence per share.
Subject to approval by shareholders, the final dividend will be
paid on 21 September 2023, with a record date of 25 August 2023 and
an ex-dividend date of 24 August 2023.
Balance sheet review
Inventories at GBP33.2 million (2022: GBP28.1 million) increased
primarily due to the impact of acquisitions, and the higher stock
levels for UPOWA as it continues to grow. The impact of significant
price inflation experienced during the year on the valuation of
inventory was largely mitigated by the managed reduction of
inventory levels. The decrease in both trade and other receivables
and trade and other payables on the balance sheet were in line with
expectations having taken into account the impact of acquisitions,
with the net cashflow impact reflecting similar working capital
movements to prior year.
Cash Flow and Net Debt
Operating cash flows before movements in working capital
increased to GBP46.2 million from GBP35.2 million in 2022. Cash
generated from operations increased to GBP44.9 million from GBP27.5
million.
At 31 March 2023, the Group had net debt (borrowings less cash)
of GBP8.0 million which compares to net cash (cash less borrowings)
of GBP0.4 million at the prior year-end. The main components of the
cash outflows are: additional investment in property, plant and
equipment of GBP7.2 million (2022: GBP6.3 million), tax paid of
GBP11.1 million (2022: GBP7.3 million), net proceeds from the issue
of new shares GBP0.1 million (2022: GBP52.7million), the initial
payments for three new subsidiaries of GBP16.7 million (2022:
GBP50.3 million), net cash acquired with subsidiary undertaking
GBP4.7 million (2022: GBP3.4 million), and the payment of deferred
consideration, in relation to prior year acquisitions, of GBP3.5
million (2022: GBP1.4 million). Dividends of GBP9.1 million (2022:
GBP6.1 million) were also paid in the year. We continue to expect
that the Brickability Group will remain a business that is cash
generative.
Bank Facilities
The Group has revolving credit facilities with HSBC and Barclays
of GBP60 million, which includes an ancillary facility carve out of
a GBP5 million overdraft. The facilities agreement also provides
for an accordion facility to increase the commitment under
revolving facilities by up to a further GBP25 million. As at the
year end, the Group had utilised GBP17.0 million of the
facilities.
Subsequent Events
On 2 June 2023, the Group completed the acquisition of the
entire share capital and 100% of the voting rights in FSL for
consideration of GBP600,000. On completion FSL had net assets of
GBP21,000. On 8 June 2023, the Group completed the sale of its
shares in Lendwell Holdings Limited for consideration of
GBP188,000.
Going Concern
The Directors are confident, having made appropriate enquiries,
that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in preparing the
financial statements.
Mike Gant
Chief Financial Officer
14 July 2023
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended 31 March 2023
2023 2022
Adjusted Other Total Adjusted Other Total
(note (note
5) 5)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============================== ===== ========== ========= ========== ========== ========= ==========
Revenue 681,087 - 681,087 520,169 - 520,169
Cost of sales (568,220) - (568,220) (433,366) - (433,366)
=============================== ===== ========== ========= ========== ========== ========= ==========
Gross profit 112,867 - 112,867 86,803 - 86,803
Other operating income 561 - 561 354 - 354
Administrative expenses (64,281) (15,730) (80,011) (50,581) (13,515) (64,096)
Comprising:
Depreciation and amortisation (4,715) (8,399) (13,114) (3,342) (6,349) (9,691)
Other administrative
expenses (59,566) (7,331) (66,897) (47,239) (7,166) (54,405)
=============================== ===== ========== ========= ========== ========== ========= ==========
Impairment losses
on financial assets (1,611) - (1,611) (450) - (450)
Finance income 143 - 143 54 - 54
Finance expense (2,365) (2,891) (5,256) (1,311) (938) (2,249)
Share of post-tax
profit/(loss) of equity
accounted associates - 123 123 - 55 55
Share of post-tax
loss of equity accounted
joint ventures (721) - (721) (149) - (149)
Fair value gains/(losses) - 8,432 8,432 - (1,916) (1,916)
=============================== ===== ========== ========= ========== ========== ========= ==========
Profit/(loss) before
tax 44,593 (10,066) 34,527 34,720 (16,314) 18,406
Tax (expense)/credit (8,924) 2,094 (6,830) (6,494) 391 (6,103)
Profit/(loss) for
the year 35,669 (7,972) 27,697 28,226 (15,923) 12,303
=============================== ===== ========== ========= ========== ========== ========= ==========
Other comprehensive
income
Items that will not
be reclassified to
profit or loss:
Remeasurements of
defined benefit pension
schemes - 43 43 - (1,970) (1,970)
Deferred tax on remeasurement
of defined benefit
pension schemes - (11) (11) - 374 374
Fair value gain on
investments in equity
instruments designated
as FVTOCI - 10 10 - 53 53
=============================== ===== ========== ========= ========== ========== ========= ==========
Other comprehensive
income/ (loss) for
the year - 42 42 - (1,543) (1,543)
Total comprehensive
income/(loss) 35,669 (7,930) 27,739 28,226 (17,466) 10,760
=============================== ===== ========== ========= ========== ========== ========= ==========
Profit/(loss) for
the year attributable
to:
=============================== ===== ========== ========= ========== ========== ========= ==========
Equity holders of
the parent 35,710 (7,972) 27,738 28,310 (15,923) 12,387
Non-controlling interests (41) - (41) (84) - (84)
35,669 (7,972) 27,697 28,226 (15,923) 12,303
=============================== ===== ========== ========= ========== ========== ========= ==========
Total comprehensive
income/(loss) attributable
to:
=============================== ===== ========== ========= ========== ========== ========= ==========
Equity holders of
the parent 35,710 (7,930) 27,780 28,310 (17,466) 10,844
Non-controlling interests (41) - (41) (84) - (84)
35,669 (7,930) 27,739 28,226 (17,466) 10,760
=============================== ===== ========== ========= ========== ========== ========= ==========
Earnings per share
Basic earnings per
share 7 9.26 4.40 p
=============================== ===== ========== ========= ========== ========== ========= ========== ====
Diluted earnings per
share 7 9.10 4.32 p
=============================== ===== ========== ========= ========== ========== ========= ========== ====
Adjusted basic earnings
per share 7 11.93 10.06 p
=============================== ===== ========== ========= ========== ========== ========= ========== ====
Adjusted diluted earnings
per share 7 11.71 9.86 p
=============================== ===== ========== ========= ========== ========== ========= ========== ====
All results relate to continuing operations.
Consolidated Balance Sheet
As at 31 March 2023
(Restated)*
2023 2022
Note GBP'000 GBP'000
================================== ===== ========== ============
Non-current assets
Property, plant and equipment 24,783 19,057
Right of use assets 18,553 12,162
Intangible assets 152,424 150,951
Investments in equity accounted
associates 324 261
Investments in equity accounted
joint ventures - 279
Investments in financial assets 188 178
Trade and other receivables 3,611 1,023
================================== ===== ========== ============
Total non-current assets 199,883 183,911
================================== ===== ========== ============
Current assets
Inventories 33,159 28,120
Trade and other receivables 125,603 131,202
Employee benefit assets 646 781
Current income tax assets 1,677 101
Cash and cash equivalents 21,645 25,028
================================== ===== ========== ============
Total current assets 182,730 185,232
================================== ===== ========== ============
Total assets 382,613 369,143
Current liabilities
Trade and other payables (131,419) (140,046)
Loans and borrowings (12,624) -
Lease liabilities (3,225) (2,216)
================================== ===== ========== ============
Total current liabilities (147,268) (142,262)
================================== ===== ========== ============
Non-current liabilities
Trade and other payables (9,592) (17,910)
Loans and borrowings 9 (16,800) (24,240)
Lease liabilities (12,967) (10,417)
Provisions (2,364) (1,728)
Deferred tax liabilities (18,244) (18,102)
================================== ===== ========== ============
Total non-current liabilities (59,967) (72,397)
================================== ===== ========== ============
Total liabilities (207,235) (214,659)
================================== ===== ========== ============
Net assets 175,378 154,484
Equity
Called up share capital 3,003 2,985
Share premium account 102,847 102,146
Capital redemption reserve 2 2
Share-based payment reserve 3,509 1,930
Merger reserve 11,146 11,146
Retained earnings 55,002 36,365
================================== ===== ============
Equity attributable to owners of
the Company 175,509 154,574
Non-controlling interests (131) (90)
================================== ===== ========== ============
Total equity 175,378 154,484
================================== ===== ========== ============
*See note 8 for details of restatement.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
Total
attributable
to equity
Share holders
Share premium Capital Share-based Merger Retained of the Non-controlling
capital account redemption payments reserve earnings parent interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============== ============================ ============================ ============================ ============================ ============================ ============================ ======================== ============================ ========================
At 1 April
2021 2,305 49,999 2 266 1,245 31,623 85,440 (6) 85,434
Profit or
(loss) for
the year - - - - - 12,387 12,387 (84) 12,303
Total
comprehensive
income for
the year - - - - - 10,844 10,844 (84) 10,760
Dividends
paid - - - - - (6,102) (6,102) - (6,102)
Issue of
paid shares 578 54,422 - - - - 55,000 - 55,000
Issue of
consideration
shares 99 - - - 9,901 - 10,000 - 10,000
Issue of
shares on
exercise
of share
options 3 12 - - - - 15 - 15
Equity settled
share based
payments - - - 1,173 - - 1,173 - 1,173
Deferred
tax on share
based payment
transactions - - - 491 - - 491 - 491
Share issue
costs - (2,287) - - - - (2,287) - (2,287)
=============== ============================ ============================ ============================ ============================ ============================ ============================ ======================== ============================ ========================
Total
contributions
by and
distributions
to owners 680 52,147 - 1,664 9,901 (6,102) 58,290 - 58,290
=============== ============================ ============================ ============================ ============================ ============================ ============================ ======================== ============================ ========================
At 31 March
2022 2,985 102,146 2 1,930 11,146 36,365 154,574 (90) 154,484
Profit or
(loss) for
the year - - - - - 27,738 27,738 (41) 27,697
Other
comprehensive
income for
the year - - - - - 42 42 - 42
=============== ============================ ============================ ============================ ============================ ============================ ============================ ======================== ============================ ========================
Total
comprehensive
income for
the year - - - - - 27,780 27,780 (41) 27,739
Dividends
paid - - - - - (9,143) (9,143) - (9,143)
Issue of
shares on
exercise
of share
options 18 701 - - - - 719 - 719
Equity settled
share based
payments - - - 1,637 - - 1,637 - 1,637
Deferred
tax on share
based payment
transactions - - - (197) - - (197) - (197)
Current tax
on share
based payment
transactions - - - 139 - - 139 - 139
Total
contributions
by and
distributions
to owners 18 701 - 1,579 - (9,143) (6,845) - (6,845)
At 31 March
2023 3,003 102,847 2 3,509 11,146 55,002 175,509 (131) 175,378
=============== ============================ ============================ ============================ ============================ ============================ ============================ ======================== ============================ ========================
Consolidated Statement of Cash Flows
For the year ended 31 March 2023
2023 2022
Note GBP'000 GBP'000
========================================================= ===== ========== =========
Operating activities
Profit for the year 27,697 12,303
Adjustments for:
Depreciation of property, plant and equipment 1,566 1,143
Depreciation of right of use assets 3,101 2,136
Amortisation of intangible assets 8,447 6,396
Gain on disposal of property, plant and equipment
and right of use assets (314) (75)
Foreign exchange losses/(gains) 29 (27)
Share-based payment expense 1,567 1,597
Other operating income (365) (27)
Share of post-tax profit in equity accounted associates (123) (55)
Share of post-tax loss in joint ventures 721 149
Impairment of goodwill - 16
Fair value changes in contingent consideration (8,176) 1,916
Gain on acquisition (256) -
Movements in provisions (141) 12
Finance income (143) (54)
Finance expense 5,256 2,249
Acquisition costs 5 281 1,236
Income tax expense 6,830 6,103
Pension charge in excess of contributions paid 196 140
Operating cash flows before movements in working
capital 46,173 35,158
Changes in working capital:
Increase in inventories (865) (6,700)
Decrease/(Increase) in trade and other receivables 19,331 (22,194)
(Decrease)/Increase in trade and other payables (19,765) 21,234
Cash generated from operations 44,874 27,498
Payment of acquisition expenses (281) (1,139)
Interest received 125 18
Income taxes paid (11,074) (7,256)
Net cash from operating activities 33,644 19,121
========================================================= ===== ========== =========
Investing activities
Purchase of property, plant and equipment (7,229) (6,317)
Proceeds from sale of property, plant and equipment 441 187
Purchase of right of use assets (2,525) -
Purchase of intangible assets (478) (488)
Acquisition of subsidiaries 8 (16,674) (50,292)
Net cash acquired with subsidiary undertakings 8 4,676 3,422
Acquisition of interests in joint ventures (442) (428)
Loan to joint venture (2,960) -
Proceeds from repayment of directors' loans - 978
Dividends received from associates 60 15
========================================================= =====
Net cash used in investing activities (25,131) (52,923)
========================================================= ===== ========== =========
Financing activities
Equity dividends paid 6 (9,143) (6,102)
Proceeds from issue of ordinary shares net of share
issue costs 719 52,728
Payment of financing costs - (97)
Proceeds from bank borrowings 115,400 52,100
Repayment of bank borrowings (123,000) (43,400)
Payment of lease liabilities (2,791) (2,103)
Payment of deferred and contingent consideration (3,499) (1,358)
Interest paid (2,246) (1,139)
Payment of transaction costs relating to loans
and borrowings - (375)
Net cash flows (used in)/from financing activities (24,560) 50,254
========================================================= ===== ========== =========
Net (decrease)/increase in cash and cash equivalents (16,047) 16,452
Cash and cash equivalents at beginning of year 25,028 8,592
Effect of changes in foreign exchange rates 40 (16)
========================================================= ===== ==========
Cash and cash equivalents at end of year 9,021 25,028
========================================================= ===== ========== =========
Notes to the Preliminary Results
Year ended 31 March 2023
1. General information
This announcement was approved by the Board of Directors on 14
July 2023.
Brickability Group PLC is a company incorporated in England and
Wales (registration number 11123804). The address of the registered
office is South Road, Bridgend Industrial Estate, Bridgend, United
Kingdom CF31 3XG.
The financial information set out above does not constitute the
Group's statutory financial statements for the year ended 31 March
2023 or 2022 but is derived from these financial statements.
Statutory financial statements for 2022 have been delivered to the
Registrar of Companies and those for 2023 will be delivered by 30
September 2023. The auditor reported on these statutory financial
statements; their report was unqualified, did not draw attention to
any matters by way of emphasis and did not contain a statement
under Section 498(2) or (3) of the Companies Act 2006.
2. Basis of preparation
The financial information has been prepared in accordance with
UK adopted international accounting standards in conformity with
the requirements of the Companies Act 2006.
The financial information is presented in pounds sterling, which
is the functional currency of the Company and Group. Amounts are
rounded to the nearest thousand, unless otherwise stated.
The financial information is prepared on the historical cost
basis, with the exception of certain financial assets and
liabilities which are stated at fair value.
Going Concern
The key uncertainly faced by the Group is the demand for its
products and how these are impacted by economic factors.
The expected budget forecast was reviewed with no concerns noted
and sufficient headroom in place. Budget scenarios have been
prepared to compare a number of outcomes where there is a
significant and prolonged drop in demand in the industry.
For each scenario, cash flow and covenant compliance forecasts
have been prepared. A significant drop in revenue of 50% with no
adjustment to overheads would lead to a breach. However, if
overheads were cut by 17%, then a breach could be avoided. The
scenarios in which revenue could fall by this level so rapidly are
considered remote.
Having taken into account the scenarios modelled, the Directors
are satisfied that the Group has sufficient resources to continue
to operate for a period of not less than 12 months from the date of
this report and until at least 30 September 2024. Accordingly, the
consolidated financial information has been prepared on a going
concern basis.
New standards, interpretations and amendments not yet effective
from 1 January 2022
The following standards and amendments became effective for the
current financial year:
Onerous Contracts - Cost of Fulfilling a Contract (Amendments
-- to IAS 37);
Property, Plant and Equipment - Proceeds before Intended Use (Amendments
-- to IAS 16));
Annual Improvements to IFRS Standards 2018-2020 (Amendments to
-- IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
References to the Conceptual Framework (Amendments to IFRS 3).
--
The amendments above did not have any impact on the amounts
recognised in prior periods or the current year. They
are also not expected to significantly affect future
periods.
New standards, interpretations and amendments not yet
effective
Certain new standards and amendments have been issued by the
IASB and will be effective in future accounting periods.
The standards and amendments that are not yet effective, are
likely to impact the Group and have not been adopted
early by the Group include:
Amendments effective from 1 January 2023:
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
-- Practice Statement 2));
Definition of Accounting Estimates (Amendments to IAS 8); and
--
Deferred Tax Related to Assets and Liabilities arising from a
-- Single Transaction (Amendments to IAS 12).
Amendments effective from 1 January 2024:
IFRS 16 Leases (Amendment - Liability in a sale and leaseback);
--
IAS 1 Presentation of Financial Statements (Amendment - Classification
-- of liabilities as current or non-current);
IAS 1 Presentation of Financial Statements (Amendment - Non-current
-- liabilities with covenants).
The amendments to IAS 12 will likely result in the Group
recognising additional deferred tax assets and liabilities in
respect of right of use assets accounted for under IFRS 16. The
other amendments listed above are not expected to have any impact
on the amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
3. Segmental analysis
For management purposes, the Group is organised into segments
based on its products and services. During the year, the Group
changed its reportable segments due to increasing diversification
following recent acquisitions. It now has four reportable divisions
as follows:
Bricks and Building Materials, which incorporates the sale of
-- superior quality building materials to all sectors of the construction
industry including national house builders, developers, contractors,
general builders and retail to members of the public;
Importing, which is primarily responsible for importing building
-- products, the majority of which are on an exclusive basis to the
UK market, to complement traditional and contemporary architecture;
Distribution, which focuses on the sale and distribution of a
-- wide range of products, including windows, doors, radiators and
associated parts and accessories; and
Contracting, which provides flooring and roofing installation
-- services, primarily within the residential construction sector.
This is the first time results have been presented in these
segments within the Group's Annual Report and Accounts and thus the
results reported for the prior year have also been re-presented for
comparison purposes.
The Group's segments are strategic business units that offer
different products and services. Operating segments are reported in
a manner consistent with the internal reporting provided to the
chief operating decision-maker (CODM). The Group considers the CODM
to be the senior management team, including the Board of Directors,
who are responsible for allocating resources and assessing
performance of the operating segments.
The accounting policies of the reportable segments are the same
as the Group's accounting policies. Segment performance is
evaluated based on adjusted EBITDA, without allocation of
depreciation and amortisation, finance expenses and income,
impairment losses, fair value movements or the share of results of
associates and joint ventures. This is the measure reported to the
Board for the purpose of resource allocation and assessment of
segment performance.
The Group's revenue is primarily generated in the United
Kingdom. Of the revenue generated in Europe, GBP229,000 (2022:
GBP66,000) is included within revenue from the sale of goods.
within the Bricks and Building Materials segment and GBP111,000
(2022: GBPnil) is included within revenue from the sale of goods
within the Importing segment. The balance of GBP2,462,000
(2022:
GBP2,742,000) is included within revenue from the rendering of
services within the Importing segment. All of the revenue
generated in Other geographic locations is included within
revenue from the sale of goods within the Bricks and Building
Materials segment.
Revenue from the sale of goods and rendering of services is
analysed by segment below. Revenue from the rendering of services
within the Importing segment relates to the provision of
transportation and distribution services. Revenue from the
rendering of services within the Distribution segment relates to
solar panel installation services.
No individual customer accounts for more than 10% of the Group's
total revenue.
2023 2022
============================================================================================================================ ===========================================================================================================================
Bricks Importing Distribution Contracting Unallocated Consolidated Bricks Importing Distribution Contracting Unallocated Consolidated
and Building & Group and Building & Group
Materials Eliminations Materials Eliminations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============== ================== =============== ================= ====================== ==================== ====================== ================= ============= ================== ======================= ===================== =====================
Revenue from
sale of goods 490,472 75,411 54,510 - - 620,393 398,198 40,451 44,020 - - 482,669
Revenue
from
Rendering
of Services - 11,472 8,085 41,137 - 60,694 - 10,180 2,818 24,502 - 37,500
===============
Total
external
revenue 490,472 86,883 62,595 41,137 - 681,087 398,198 50,631 46,838 24,502 - 520,169
=============== ================== =============== ================= ====================== ==================== ====================== ================= ============= ================== ======================= ===================== =====================
Total
internal
revenue 8,122 30,700 394 201 (39,417) - 6,384 21,649 188 286 (28,507) -
===============
Total revenue 498,594 117,583 62,989 41,338 (39,417) 681,087 404,582 72,280 47,026 24,788 (28,507) 520,169
=============== ================== =============== ================= ====================== ==================== ====================== ================= ============= ================== ======================= ===================== =====================
Group adjusted
EBITDA 30,141 13,188 8,893 5,620 (6,312) 51,530 24,317 8,273 7,849 2,680 (3,651) 39,468
================== =============== ================= ====================== ==================== ====================== ================= ============= ================== ======================= ===================== =====================
Depreciation
and
amortisation (13,114) (13,114) (9,691) (9,691)
Acquisition
and
re-financing
costs (281) (281) (1,236) (1,236)
Earn-out
consideration
classified
as
remuneration
under IFRS
3 (5,483) (5,483) (4,333) (4,333)
Share based
payment
expense (1,567) (1,567) (1,597) (1,597)
Finance income 143 143 54 54
Finance
expense (5,256) (5,256) (2,249) (2,249)
Share of
results of
associates 123 123 55 55
Share of
results of
joint
ventures - - (149) (149)
Fair value
gains and
losses 8,432 8,432 (1,916) (1,916)
Group profit
before tax 30,141 13,188 8,893 5,620 (23,315) 34,527 24,317 8,273 7,849 2,680 (24,713) 18,406
=============== ================== =============== ================= ====================== ==================== ====================== ================= ============= ================== ======================= ===================== =====================
For the purposes of monitoring segment performance and
allocating resources between segments, the CODM monitors the
total non-current and current assets attributable to each
segment. All assets are allocated to reportable segments with the
exception of those used primarily for corporate purposes (central),
investments in associates, joint ventures and financial assets and
deferred tax assets. Goodwill has been allocated to reportable
segments. No other assets are used jointly by reportable segments.
All liabilities are allocated to reportable segments with the
exception of those used primarily for corporate purposes (central),
bank borrowings and deferred tax liabilities.
Right of use assets, in respect of trailers, with a carrying
value of GBP2,706,000 (2022: GBP3,207,000), are either held in the
United
Kingdom or Europe at the year-end, depending on the timing and
location of goods being transported. All other non-
current assets are solely held within the United Kingdom.
2023 2022
========================================================================================================================= ==========================================================================================
Bricks Importing Distribution Contracting Consolidated Bricks Importing Distribution Contracting Consolidated
and Building Central and Central
Materials & Group Building & Group
Eliminations Materials Eliminations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=============== ================ =============== =============== ================= ================= ====================== ============ ============ ================ ================== ================== ==================
Non-current
segment
assets 79,152 33,147 49,880 29,520 7,672 199,371 82,280 16,123 52,901 31,358 531 183,193
Current
segment
assets 114,359 26,403 25,849 11,965 4,154 182,730 131,498 17,258 25,258 10,143 1,075 185,232
=============== ================ =============== =============== ================= ================= ====================== ============ ============ ================ ================== ================== ==================
Total segment
assets 193,511 59,550 75,729 41,485 11,826 382,101 213,778 33,381 78,159 41,501 1,606 368,425
Unallocated
assets:
Investment
in associates 324 261
Investment
in joint
ventures - 279
Investments
in financial
assets 188 178
Group assets 382,613 369,143
=============== ================ =============== =============== ================= ================= ====================== ============ ============ ================ ================== ================== ==================
Total segment
liabilities (96,394) (17,739) (18,601) (4,933) (34,524) (172,191) (99,360) (15,433) (4,357) (4,913) (48,254) (172,317)
Loans and
borrowings
(excluding
leases and
overdrafts) (16,800) (24,240)
Deferred tax
liabilities (18,244) (18,102)
Group
liabilities (207,235) (214,659)
=============== ================ =============== =============== ================= ================= ====================== ============ ============ ================ ================== ================== ==================
Non-current
asset
additions
Property,
plant
and
equipment 485 2,352 2,443 430 1,520 7,230 720 4,676 95 295 531 6,317
Right of use
assets 1,803 1,521 2,939 78 2,618 8,959 438 2,768 126 - - 3,332
Intangible
assets - - 478 - - 478 - - 488 - - 488
Total
non-current
asset
additions 2,288 3,873 5,860 508 4,138 16,667 1,158 7,444 709 295 531 10,137
============= ================== ==================== ================= ====================== ==================== =================== ================= ================= =================== ======================= ===================== ==================
4. Profit before tax
Profit before tax is stated after charging/(crediting): 2023 2022
GBP'000 GBP'000
========================================================= ================= =================
Amortisation of intangible assets 8,447 6,396
Impairment of goodwill - 16
Depreciation of property, plant and equipment 1,566 1,143
Depreciation of right of use assets 3,101 2,136
Gain on disposal of property, plant and equipment
and right of use assets (314) (75)
Cost of inventories recognised as an expense 555,592 418,698
Customer rebates 7,987 6,153
Supplier rebates (8,799) (6,147)
Subcontractor costs 15,984 9,436
Impairment of trade receivables 1,611 450
Net foreign exchange gains 87 (32)
========================================================= ================= =================
5. Other items
In order to assist with the understanding of the Group's
performance, certain business combination related items that are
significant in nature and items that management do not consider to
be directly reflective of the Group's underlying performance in the
period are presented separately, on the face of the Consolidated
Statement of Profit or Loss and Other Comprehensive Income.
This includes certain cash and non-cash items which tend to be
charged or recognised throughout the year regardless of trading
performance. For the purpose of assessing performance on a
comparable basis year on year, management therefore considers both
statutory and adjusted profit measures, with these adjusted
measures presented separately in order to provide additional useful
information about the Group's performance to users of the
accounts.
Other items that are excluded from adjusted profit measures are
as follows:
2023 2022
GBP'000 GBP'000
=========================================================== ================== ================
Amortisation of acquired intangible assets (8,399) (6,333)
Impairment of goodwill - (16)
=========================================================== ================== ================
Total depreciation and amortisation (8,399) (6,349)
Acquisition costs (281) (1,139)
Re-financing costs - (97)
Earn-out consideration classified as remuneration
under IFRS 3 (5,483) (4,333)
Share-based payment expense (including employer
NI) (1,567) (1,597)
=========================================================== ================== ================
Total other administrative expenses (7,331) (7,166)
Unwinding of discount on contingent consideration (2,891) (938)
=========================================================== ================== ================
Total finance expense (2,891) (938)
Share of post-tax profit of equity accounted
associates 123 55
Gain/(loss) on re-measurement of contingent consideration 8,176 (1,916)
Gain on acquisition 256 -
=========================================================== ================== ================
Total fair value gains/(losses) 8,432 (1,916)
================== ================
Total other items before tax (10,066) (18,230)
=========================================================== ================== ================
Tax on other items 2,094 391
=========================================================== ================== ================
Total other items after tax (7,972) (17,839)
=========================================================== ================== ================
Other comprehensive income/(loss)
Remeasurements of defined benefit pension schemes 43 (1,970)
Deferred tax on remeasurement of defined benefit
pension schemes (11) 374
Fair value gain on investments in equity instruments
designated as FVTOCI 10 53
=========================================================== ================== ================
Total other comprehensive income/(loss) 42 (1,543)
=========================================================== ================== ================
Total other items in total comprehensive income (7,930) (19,382)
=========================================================== ================== ================
Impact of business combinations
Following a business combination, intangible assets in respect
of brands, customer relationships and supplier relationships are
recognised as part of the fair value assessment of net assets
acquired. Amortisation on these acquired intangibles is excluded
from adjusted profit as the recognition of these intangibles is not
comparable with the recognition of other internally generated
assets. Its exclusion enables performance to be assessed on a like
for like basis regardless of whether growth is organic or through
acquisition and whether acquired intangibles have been fully
amortised.
Acquisition costs associated with business combinations can
fluctuate from year to year depending on the size and number of
acquisitions. Legal and professional fees for acquisitions are also
generally considered to be greater than those incurred during the
course of regular trading. These are therefore excluded from
adjusted results for improved comparability.
Any gains recognised on acquisition, subsequent changes in the
fair value of contingent consideration and the related finance
expense in connection with discounting deferred and contingent
consideration can also make a comparison of trading performance on
a like for like basis more difficult. These gains/losses and
expenses are therefore also excluded from adjusted results, with
the inclusion within other items consistent with the presentation
of other acquisition related costs.
Fair value gains/(losses) include a gain of GBP8,176,000 (2022:
loss of GBP1,916,000) in respect of changes in contingent
consideration expected to be payable.
Acquisition costs comprise of transaction costs of GBP92,000
(2022: GBP383,000), in relation to stamp duty, plus a further
GBP189,000 (2022: GBP756,000) in respect of legal and professional
fees. GBP259,000 (2022: GBP1,060,000) was directly associated with
the acquisitions in the year, GBP13,000 was in connection with a
prior year acquisition and the remainder related to aborted
acquisitions.
To facilitate the acquisition of Taylor Maxwell Group (2017)
Limited in the prior year, the Group re-financed and agreed an
increase in its available banking facilities, The re-financing
costs directly associated with this are therefore considered to be
connected with the acquisition and outside the normal course of
business.
The agreements to purchase Taylor Maxwell Group (2017) Limited
and Modular Clay Products Ltd include earn-out consideration,
payable if certain performance-based targets are met over the
following three-years. The share purchase agreements also include a
'bad leaver' clause, under which the earn-out consideration payment
to such a leaver is forfeited. The clauses were included with the
intention of protecting the value of the business over the first
few years following acquisition. However, as a result of the
earn-out consideration effectively being contingent on the
continued employment or 'good leaver' status of the individual, the
amount payable has been treated as remuneration in accordance with
current IFRS interpretation guidance of IFRS 3. As such, the amount
payable is considered significant in nature, business combination
related and not reflective of a typical remuneration cost that
would usually be incurred within the underlying trade of the
Group.
Share-based payments
The share-based payment expense represents the share-based
payment charge for the year, including associated accrued employer
taxes. The majority of share options issued are subject to
performance criteria, including both market and non-market
conditions. Changes in market conditions after the grant date are
not reflected in the share-based payment expense recognised. The
accounting charge is therefore not considered to be directly linked
to the Group's trading operations in the year and thus separate
disclosure is deemed appropriate to assist with the understanding
of the Group's performance in the year.
Equity accounted associates
The Group is not directly involved in the day-to-day operations
of its associate and thus considers it appropriate to separate its
share of this entity's results from the Group's adjusted
results.
Tax
The tax credit arising on the other items is presented on the
same basis as the cost to which it relates.
Other comprehensive income
Other comprehensive income relates to the remeasurement of the
defined pension scheme, the associated deferred tax movement and
the fair value gain on investments in equity instruments designated
as fair value through other comprehensive income.
The defined benefit pension scheme was acquired as part of the
net assets of Taylor Maxwell Group (2017) Limited in the prior
year. Shortly afterwards, the Group entered into a buy-in insurance
policy and is in the process of completing a buy-out, whereby the
defined benefit pension liability will be transferred to an
insurer. As such, the scheme related remeasurement and deferred tax
movements are not considered to be part of the Group's underlying
operations and have been reported separately from the Group's
adjusted results.
The fair value change in investments in equity instruments
designated as fair value through other comprehensive income is also
not reflective of the Group's underlying trading performance and
thus is not included in the Group's adjusted comprehensive
income.
6. Dividends
2023 2022
GBP'000 GBP'000
===================================================== ============= =============
Amounts recognised as distributions to equity
holders in the year:
Final dividend for the year ended 31 March 2022
of 2.0400p per share
(2022: for the year ended 31 March 2021 of 1.0850p
per share) 6,111 3,236
Interim dividend for the year ended 31 March 2023
of 1.0100p per share
(2022: for the year ended 31 March 2022 of 0.9600p
per share) 3,032 2,866
Total dividends paid in the year 9,143 6,102
===================================================== ============= =============
The Directors recommend that a final dividend for 2023 of 2.15p
(2022: 2.04p) per ordinary share be paid.
The final dividend will be paid, subject to shareholders'
approval at the Annual General Meeting, to shareholders on the
register at the close of business on 25 August 2023. This dividend
has not been included as a liability in these financial
statements.
7. Earnings per share
Earnings per share (EPS) is calculated by dividing the profit
for the year, attributable to ordinary equity holders of the
parent, by the weighted average number of ordinary shares
outstanding during the year.
Diluted EPS is calculated by dividing the profit for the year,
attributable to ordinary equity holders, by the weighted average
number of ordinary shares outstanding during the year plus the
weighted average number of ordinary shares that would be issued on
conversion of all the dilutive potential ordinary shares into
ordinary shares.
The calculation of basic and diluted earnings per share is based
on the following data:
2023 2022
================================================ ==================================================
Weighted Weighted Earnings
average Earnings average number per
Earnings number per share Earnings of shares share
GBP'000 of shares (p) GBP'000 (p)
================ ================= ============ =============== ================= ================ =============
Basic earnings
per share 27,738 299,439,718 9.26 12,387 281,474,903 4.40
Effect of
dilutive
securities
Employee share
options - 5,403,747 - - 5,512,650 -
Diluted
earnings per
share 27,738 304,843,465 9.10 12,387 231,088,804 4.18
================ ================= ============ =============== ================= ================ =============
Adjusted earnings per share and adjusted diluted earnings per
share based on the adjusted profit attributable to the equity
holders of the parent, as shown in the Adjusted column of the
Consolidated Statement of Profit or Loss and Other Comprehensive
Income. Details of the Other items after tax, forming the
difference between the statutory earnings above and adjusted
earnings below, are outlined in note 5 of the preliminary final
results.
2023 2022
================================================ ==================================================
Weighted Weighted Earnings
average Earnings average number per
Earnings number per share Earnings of shares share
GBP'000 of shares (p) GBP'000 (p)
================= ============ =============== ================= ================ =============
Adjusted basic
earnings
per share 35,710 299,439,718 11.93 28,310 281,474,903 10.06
Effect of
dilutive
securities
Employee share
options - 5,403,747 - - 5,512,650 -
Adjusted
diluted
earnings
per share 35,710 304,843,465 11.71 28,310 286,987,553 9.86
================ ================= ============ =============== ================= ================ =============
8. Business combinations
The Group acquired the entire share capital and 100% of the
voting rights in the following companies during the year:
Acquisition
Company acquired date
=========================== ============
Modular Clay Products Ltd 31 May 2022
E. T. Clay Products Limited 30 September
2022
Heritage Clay Tiles Limited 30 September
2022
=========================== ============
The fair value of the assets acquired and liabilities assumed on
acquisition are as follows:
Heritage
Modular E. T. Clay
Clay Products Clay Products Tiles
Ltd Limited Limited
GBP'000 GBP'000 GBP'000
================================ =============== =============== =========
Property, plant and equipment 16 157 29
Right of use assets 28 792 305
Identifiable intangible assets 3,810 3,083 309
Inventory 164 2,838 1,172
Trade and other receivables 2,888 8,651 1,732
Cash and cash equivalents 4,205 627 (156)
Trade and other payables (2,104) (5,604) (2,864)
Current income tax (514) (858) -
Lease liabilities (28) (792) (305)
Provisions - (27) (5)
Deferred tax (926) (792) (16)
================================== =============== =============== =========
Total identifiable net assets 7,539 8,075 201
================================== =============== =============== =========
Goodwill - 1,630 610
================================== =============== =============== =========
Gain on acquisition (256) - -
================================ =============== =============== =========
Total consideration 7,283 9,705 811
================================== =============== =============== =========
Satisfied by:
Cash paid 7,283 8,662 729
Contingent consideration - 1,043 82
============================ ====== ====== ====
Total consideration 7,283 9,705 811
============================ ====== ====== ====
Cash paid reflects an initial cash payment agreed in respect of
the value attributed to the business, based on a multiple of
Adjusted EBITDA, plus any further amounts paid in respect of excess
working capital, including any surplus cash, based on agreed form
completion accounts.
The Group acquired each of the above subsidiaries in order to
expand its presence in the specification and further broaden the
Group's access to overseas manufacturers, whilst enhancing the
range of products that can be offered to its customers.
The fair value of identifiable intangible assets acquired
through business combinations relate to brands and customer
relationships.
The fair value of brands is based on a relief from royalty
method, with a royalty rate of 0.75% to 1% applied based on
comparable businesses in the market, reflecting the size of the
entities acquired. The fair value of customer relationships is
established using a multi-period excess earnings method, with
discount rates of between 13% and 22% applied to the acquisitions
in the year. Projected cashflows that underpin the valuations are
based on management's best estimate of the expected levels of trade
and profits following acquisition, taking into account actual
results around the time of acquisition. Forecasts are prepared for
a three-year period, with an inflationary 2% growth in revenue
applied thereafter.
Any excess paid over the value of net assets acquired is
included as goodwill. Goodwill principally comprises the value of
expected synergies arising from the acquisitions and the value of
the assembled workforce. None of the goodwill is expected to be
deductible for tax purposes.
A gain has arisen on the acquisition of Modular Clay Products
Ltd, which is recognised within the Fair Value Gains/(Losses) line
in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income (note 13). The Group does not consider the
acquisition to be a bargain purchase commercially. Further amounts
are expected to be payable to the seller depending on future
performance. However, these amounts are recognised as remuneration
for post business combination services, as outlined in the
following Contingent Consideration section. Due to this component
of consideration being accounted for as remuneration, the fair
value of identifiable net assets acquired exceeds the consideration
under IFRS 3. The gain has therefore arisen as a result of
accounting treatments, with IFRS 3 requiring the gain to be
credited to profit or loss on acquisition.
Included within the fair value of trade and other receivables
above are the following gross contractual amounts due and amounts
not expected to be collected in respect of trade receivables:
Heritage
Modular E. T. Clay
Clay Products Clay Products Tiles
Ltd Limited Limited
GBP'000 GBP'000 GBP'000
======================================= =============== =============== =========
Gross contractual trade receivables 2,363 5,482 1,021
========================================= =============== =============== =========
Amounts not expected to be
collected (7) (5) -
========================================= =============== =============== =========
Fair value of contractual receivables 2,356 5,477 1,021
========================================= =============== =============== =========
Included in the consolidated financial statements are the
following amounts of revenue and profit in respect of the
subsidiaries acquired:
Heritage
Modular E. T. Clay
Clay Products Clay Products Tiles
Ltd Limited Limited
GBP'000 GBP'000 GBP'000
============ =============== =============== =========
Revenue 11,119 14,728 2,458
============== =============== =============== =========
Net profit 1,637 618 122
============== =============== =============== =========
Had the current year business combinations taken place at the
beginning of the financial year, the Group's revenue for the year
would have been GBP706,624,000 (2022: GBP617,122,000) and Group
profit would have been GBP30,332,000 (2022: GBP15,507,000).
Acquisition related costs, included in administrative expenses,
amounted to GBP259,000 in respect of the above acquisitions, as
follows:
Heritage
Modular E. T. Clay
Clay Products Clay Products Tiles
Ltd Limited Limited
GBP'000 GBP'000 GBP'000
=================== =============== =============== =========
Acquisition costs 100 133 26
===================== =============== =============== =========
Business combinations completed in prior periods
Whiffen Holdings Limited and Beacon Roofing Limited
The Group acquired 100% of the share capital and voting rights
in Whiffen Holdings Limited and its subsidiary, Beacon Roofing
Limited (together the 'Whiffen Holdings Group'), on 31 March 2022.
As disclosed in the 2022 financial statements, due to the timing of
the acquisition the value of the identifiable net assets was
included on a provisional basis pending a detailed assessment of
the fair value of the contingent consideration and all identifiable
net assets.
Details of the revised fair value of identifiable assets and
liabilities acquired, purchase consideration and goodwill are as
follows:
Book value Restated
originally fair
reported Adjustment value
GBP'000 GBP'000 GBP'000
================================ ============ =========== =========
Property plant and equipment 709 502 1,211
Identifiable intangible assets - 2,255 2,255
Inventory 45 - 45
Trade and other receivables 2,476 - 2,476
Cash and cash equivalents 741 - 741
Trade and other payables (1,206) - (1,206)
Current income tax liabilities (365) - (365)
Provisions (76) - (76)
Deferred tax (73) (675) (748)
================================= ============ =========== =========
Total identifiable net assets 2,251 2,082 4,333
================================= ============ =========== =========
Goodwill 5,968 (1,889) 4,079
================================= ============ =========== =========
Total consideration 8,219 193 8,412
================================= ============ =========== =========
Satisfied by:
Cash paid 5,371 - 5,371
Deferred cash consideration 1,676 - 1,676
Contingent consideration 1,172 193 1,365
=============================== ====== ==== ======
Total consideration 8,219 193 8,412
=============================== ====== ==== ======
Had the full fair value assessment been carried out prior to
announcing the annual results to 31 March 2022, the financial
statements would have differed as follows:
The cost of property, plant and equipment would have been GBP502,000
-- higher, with a corresponding decrease in goodwill.
Intangible assets of GBP2,255,000 and a related deferred tax liability
-- of GBP675,000 would have also been recognised, with a corresponding
net decrease in goodwill.
The contingent consideration liability on acquisition would have
-- been GBP193,000 higher, with a corresponding increase in goodwill.
As the acquisition took place on the final day of the financial
-- year, there is no impact on the profit or loss reported for the
year ended 31 March 2022.
The March 2022 comparatives have been restated in these
financial statements to reflect the above changes.
Under paragraph 10(f) of IAS 1 Presentation of financial
statements, a prior period restatement would usually require the
presentation of a third balance sheet at 1 April 2021. However, as
the restatement of the provisional fair values would have no impact
on the balance sheet at that date, it is not considered that this
would provide additional useful information. As such, a third
consolidated balance sheet has not been included within these
financial statements due to prior period business combinations.
Contingent consideration
The Group has entered into contingent consideration arrangements
during the purchase of several subsidiaries. Final amounts payable
under these agreements are all subject to future performance and
the acquired business achieving pre-determined adjusted EBITDA
targets, over the three years following acquisition, with the
exception of HBS NE Limited which is over five years.
The fair value of all contingent consideration is based on a
discounting cash flow model, applying a discount rate of between
1.7% and 23.6% to the expected future cash flows.
Summarised below are the fair values of the contingent
consideration at both acquisition and reporting date, the potential
undiscounted amount payable and the discount rates applied within
the discounting cash flow models, for each acquisition where
contingent consideration arrangements remain in place.
Fair value Fair value Undiscounted Undiscounted
Fair value at reporting at reporting amount amount
Discount at date date payable payable
rate acquisition 2023 2022 2023 2022
Company acquired GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================== ================ ================== ============= ============= ============== ==============
The Bespoke Brick
Company
Limited 4.9% - - 675 - 686
Brickmongers
(Wessex)
Ltd 4.8% 138 - 87 - 89
U Plastics Limited 3.5% 2,208 962 2,092 964 2,164
Bathroom Barn
Limited 1.7% 231 108 166 110 170
McCann Logistics
Ltd 1.7% 889 1,324 1,597 1,330 1,628
Taylor Maxwell
Group
(2017) Limited 4.1% - 390 422 406 435
SBS Cladding
Limited 4.1% 1,845 1,464 1,804 1,500 1,900
Leadcraft Limited 10.4% 722 964 795 1,128 1,028
16.1%
HBS NE Limited - 10,069 3,901 10,770 6,998 22,188
23.6%
Beacon Roofing
Limited* 13.0% 1,365* 2,355 1,365* 2,802 1,885*
E. T. Clay
Products
Limited 16.0% 1,043 2,433 - 3,210 -
Heritage Clay
Tiles
Limited 20.0% 82 193 - 270 -
================== ================ ================== ============= ============= ============== ==============
*2022 and acquisition values restated following completion of
fair value assessment of total consideration payable and net assets
acquired as noted above.
The potential undiscounted amount payable in respect of E. T.
Clay Products Limited and Heritage Clay Tiles Limited ranges from
GBPnil to GBP3,480,000. In respect of prior period acquisitions,
the undiscounted amount payable for U Plastics Limited ranges from
GBP572,000 to GBP1,200,000 (2022: GBP246,000 to GBP2,400,000) and
the amount payable for SBS Cladding Limited ranges from GBP500,000
to GBP2,000,000 (2022: GBPnil to GBP2,000,0000). It is not possible
to determine a range of outcomes for other acquisitions as the
arrangements do not contain a maximum payable.
Changes in the range of outcomes are due to amounts paid or
payable being determined during the year as milestones within the
performance period are met.
The acquisition of Taylor Maxwell Group (2017) Limited is also
subject to further payments depending on future performance,
ranging from GBPnil to GBP13,000,000, over the three years
following acquisition. Based on current interpretation guidance
concerning contingent payments to employees under IFRS 3, the
earn-out amounts payable are recognised in profit or loss over the
earn-out period as remuneration costs. This is due to the inclusion
of a 'bad leaver' clause in the share purchase agreement, under
which the earn-out consideration payment is forfeited. The earn-out
consideration is therefore deemed to effectively be contingent on
the continued employment of the seller and the seller not being
considered a 'bad leaver'. The anticipated total amount payable,
however, is not expected to change due to other clauses and payment
terms within the share purchase agreement. A charge of GBP4,333,000
has been recognised in the year in respect of this earn-out
consideration, presented within other items (note 5).
Similarly, the acquisition of Modular Clay Products Ltd is also
subject to further amounts payable depending on future performance
over the three years following acquisition, which are recognised as
remuneration due to a 'good leaver' clause within the share
purchase agreement. It is not possible to determine a range for
these future payments as the agreement does not contain a maximum
payable. A charge of GBP1,150,000 has been recognised in the year
in respect of this earn-out consideration, presented within other
items (note 5).
Changes in amounts recognised in respect of contingent
consideration can be reconciled as follows:
Fair value Additions Fair value Fair value
at through (gain)/loss Settlement at
31 March business Finance GBP'000 GBP'000 31 March
2022 combinations expense 2023
Company acquired GBP'000 GBP'000 GBP'000 GBP'000
========================= ============== ==================== ======== ============= ============ ==============
U Plastics Limited 2,092 - 47 (1,177) - 962
McCann Logistics Ltd 1,597 - 26 (124) (175) 1,324
SBS Cladding Limited 1,804 - 60 100 (500) 1,464
HBS NE Limited 10,770 - 2,352 (9,221) - 3,901
Beacon Roofing Limited 1,365 - 178 812 - 2,355
E. T. Clay Products
Limited - 1,043 80 1,310 - 2,433
Other business
combinations 2,146 82 111 124 (808) 1,655
========================= ============== ==================== ======== ============= ============ ==============
During the year, a gain of GBP9,221,000 was recognised in
respect of HBS NE Limited. Upon acquisition, significant growth was
forecast with an anticipated increase in revenues and profits due
to the introduction of Part L and Part S renewable energy
legislation, which requires new homes within the UK to reduce their
carbon footprint.
The application of this legislation by housebuilders has taken
longer than initially anticipated. This, together with a forecast
slow down of the housing market compared to prior years, is
expected to delay the period over which HBS NE will benefit from
the new legislation and achieve the forecast growth. As a result,
an element of the projected future growth is now expected to fall
outside of the performance period under which the contingent
consideration payable is assessed.
In the case of U Plastics Limited, focus has continued to be on
the acquisition and opening of additional branches. Profit levels
achieved in the period immediately following acquisition have
therefore not been as high as originally anticipated due to the
timing of development and opening of these branches. As such, there
has been a fair value gain of GBP1,177,000 recognised in the
year.
Beacon Roofing Limited has performed well following acquisition,
with results exceeding initial expectations. During the year, the
company gained new business from a competitor that entered
administration which has contributed to their strong performance.
Consequently, the contingent consideration expected to be payable
in relation to this acquisition is expected to increase, resulting
in a fair value loss of GBP812,000.
The fair value loss for E. T. Clay Products Limited of
GBP1,310,000 has arisen as a result of forecast results at the year
end, from which the year-end expected contingent consideration
payable has been derived, exceeding the initial expectations on
acquisition. The company was acquired on 30 September 2022, when
the economic environment was particularly volatile with high
inflation and interest rates on the rise. In the second half of the
financial year, whilst interest rates have continued to rise,
inflation has started to fall and economic conditions stabilise,
with the expectation that any recession or downturn in the UK would
not be as severe as originally thought.
Other fair value gains and losses in the year also reflect
changes in performance and/ or anticipated profits compared to
those originally forecast at the end of the prior year or on
acquisition.
9. Loans and borrowings
2023 2022
GBP'000 GBP'000
================= ============================== ==================================
Current
Overdrafts 12,624 -
================= ==============================
12,624 -
================= ============================== ==================================
Non-current
Bank loans 16,800 24,240
================= ============================== ==================================
16,800 24,240
================= ============================== ==================================
Total loans and
borrowings 29,424 24,240
================= ============================== ==================================
The Directors consider that the carrying amount of loans and
borrowings approximates to their fair value. Non-current bank loans
comprise a principal loan value of GBP17,000,000 (2022:
GBP24,600,000) less arrangement fees of GBP200,000 (2022:
GBP360,000), which are amortised over the term of the loan.
The Group has a revolving credit facility of GBP60,000,000,
including an ancillary carve out of a GBP5,000,000 overdraft,
which runs to December 2024. The revolving facility bears
interest at a variable rate based on the SONIA. At the reporting
date, interest was charged at a rate of 1.9% above the adjusted
SONIA interest rate benchmark.
During the year, the Group entered into a notional pool
agreement, whereby certain cash balances within the Group are
entitled to be offset, providing the overall overdrawn balance does
not exceed the GBP5,000,000 facility limit. The Company's overdraft
balance at the year-end is a result of the timing of cash transfers
within the Group and funds being transferred from the Group's
central facility.
The bank loans are secured by a fixed charge over the Group's
properties and floating charges over the remaining assets of the
Group, including all property, investments and assets of the
Company's subsidiary undertakings. A guarantee has also been
provided by certain trading subsidiaries.
10. Pensions
Defined contribution plans
The total expense recognised in profit or loss in relation to
contributions payable under defined contribution pension plans is
GBP1,200,000 (2022: GBP1,024,000).
At the reporting date, contributions of GBP192,000 (2022:
GBP104,000) due in respect of the reporting period had not yet been
paid over to the pension provider.
Defined benefit plans
When the Group acquired Taylor Maxwell Group (2017) Limited on
30 June 2021, the net assets acquired included the Taylor Maxwell
Group Limited Pension and Assurance Scheme, which is funded by the
payment of contributions to a separately administered trust fund
and provides both defined benefit and defined contribution pension
benefits to members. The defined benefit pension scheme is closed
to future accrual. Pension benefits are related to the members'
final salary at retirement (or earlier date of leaving or death)
and their length of service.
The scheme is a registered scheme under UK legislation and is
subject to scheme funding requirements. It was established under
trust and is governed by the scheme's Third Definitive Trust Deed
and Rules, dated 20 September 2016. The trustees are responsible
for the operation and governance of the scheme, including making
decisions regarding the scheme's funding and investment strategy,
in conjunction with the Group.
During the year, the Group made contributions of GBPnil (2022 -
GBPnil) to the scheme. Contributions in the next year are also
expected to be GBPnil. The most recent actuarial valuation was
conducted as at 31 March 2018. On 7 July 2021, an insurance policy
was purchased via the scheme assets with the intention of meeting
future benefits payable and reducing the risk of additional funding
from the Group.
A full buy-out process commenced in order to completely transfer
the risk associated with the scheme to an insurer. This process was
ongoing throughout the year and is substantially complete at the
time of announcing these results. The process is expected to be
finalised and the pension scheme wound up within the financial year
ending 31 March 2024, at which point the scheme liabilities and
associated assets will be derecognised and the residual surplus
repaid net of any final expenses, with are expected to be
immaterial.
A full actuarial valuation has been carried out at 31 March
2023, based on scheme membership data as at 1 October 2022, by a
qualified independent actuary. Scheme invested assets are stated at
their current bid price at 31 March 2023.
The principal assumptions used for the purposes of the actuarial
valuations, on acquisition and at the reporting date, were as
follows:
2023 2022
======================================= ============ ============
Discount rate 4.80% 2.60%
Inflation rate (CPI) 3.00% 3.60%
Pension increases (Post 1988 GMP) 2.60% 2.80%
Pension increases (Post 1997 pension) 3.00% 3.60%
Longevity at retirement age for
current pensioners
Male 22.1 years 22.0 years
Female 24.4 years 24.3 years
Longevity at retirement age for
future pensioners
Male 23.4 years 23.4 years
Female 25.8 years 25.8 years
Amounts recognised in profit or loss in respect of the defined
benefit plan are as follows:
2023 2022
GBP'000 GBP'000
============================ =========================== =========================
Service cost 196 140
Net interest expense (18) (36)
Included in profit or loss 178 104
============================= =========================== =========================
The service cost has been included in profit or loss within
administrative expenses and the net interest expense within other
interest receivable. The remeasurement of the net defined benefit
asset is included in other comprehensive income.
Amounts recognised in other comprehensive income, in respect of
the defined benefit plan, are as follows:
2023 2022
GBP'000 GBP'000
====================================== ========================= ========================
Re-measurement (gain)/loss arising
from:
Financial assumptions (1,974) (637)
Experience assumptions 167 62
Return on assets, excluding interest
income 1,764 2,545
Included in other comprehensive
income/(loss) (43) 1,970
======================================= ========================= ========================
Reconciliation of defined benefit obligation and fair value of
scheme assets
Defined Fair value Net defined
benefit obligation of scheme scheme
assets asset
========================================
GBP'000 GBP'000 GBP'000
======================================== ==================== =========== ============
At 1 April 2021 - - -
Acquired through business combinations (10,210) 13,065 2,855
Interest cost (127) 163 36
Net re-measurement gains - financial 637 - 637
Net re-measurement losses - experience (62) - (62)
Return on assets, excluding interest
income - (2,545) (2,545)
Benefits paid 417 (417) -
Scheme administrative cost - (140) (140)
========================================= ==================== =========== ============
At 31 March 2022 (9,345) 10,126 781
Acquired through business combinations - - -
Interest cost (236) 254 18
Net re-measurement gains - financial 1,974 - 1,974
Net re-measurement losses - experience (167) - (167)
Return on assets, excluding interest
income - (1,764) (1,764)
Benefits paid 522 (522) -
Scheme administrative cost - (196) (196)
At 31 March 2023 (7,752) 7,898 646
========================================= ==================== =========== ============
The weighted average duration of the scheme is 9.3 years (2022:
11.3 years).
Disaggregation of defined benefit scheme assets
The fair value of the scheme assets is analysed as follows:
2023 2022
GBP'000 GBP'000
================================== =========================== =========================
Cash fund and net current assets 852 980
Insured annuities 7,046 9,146
Fair value of scheme assets 7,898 10,126
=================================== =========================== =========================
The scheme assets do not include any of the Group's own
financial instruments or any property occupied by the Group.
Risks
The scheme exposes the Group to actuarial risk, such as market
(investment) risk, interest rate risk, inflation risk, currency
risk and longevity risk.
The key risks are considered to be life expectancy and inflation
risk. The scheme's obligation is to provide a pension for the life
of the member, As the life expectancy increases, the value of the
scheme's liabilities also increase. The benefit obligations are
also linked to inflation. Higher inflation would therefore result
in an increase in the scheme's liabilities.
However, following the purchase of a buy-in insurance policy,
many of the risks associated with future pension obligations are
transferred to the insurer under the policy. The scheme does not
expose the Group to any unusual scheme specific or Group specific
risks.
The value of the insured annuity policy is expected to equal the
value of the liabilities, excluding any additional liability that
may arise from amending benefits for the impact of the recent
Lloyds Banking Group high court ruling on GMP equalisation. The
insured annuity policy therefore provides a high level of
protection against interest, inflation and mortality risks
associated with the benefits. The cash holding is expected to be
sufficient to meet any additional GMP equalisation liabilities and
future expenses of running the scheme.
Sensitivity
A sensitivity analysis has been determined based on reasonably
possible changes the discount rate, rate of inflation (CPI) and
life expectancy, with all other variables held constant. Increases
in pension payments are derived from the assumed inflation
rate.
If the discount rate were to decrease by 0.25%, the defined
benefit scheme obligation would increase by GBP168,000 (2022:
GBP266,000). If the rate of inflation (CPI) were to increase by
0.25%, the defined benefit scheme obligation would increase by
GBP75,000 (2022: GBP111,000). If the life expectancy were to
increase by 1 year, the defined benefit scheme obligation would
increase by GBP281,000 (2022: GBP437,000) at the reporting
date.
11. Post balance sheet events
On 2 June 2023, the Group completed the acquisition of the
entire share capital and 100% of the voting rights in Precision
Façade Systems Ltd.
The acquisition was made in order to supplement and expand the
Group's existing product range in the cladding market.
The book value of the separable assets acquired and liabilities
assumed on acquisition are estimated as follows:
GBP'000
=============================== ========
Property plant and equipment 15
Inventory 5
Trade and other receivables 34
Cash and cash equivalents 7
Trade and other payables (40)
Total identifiable net assets 21
=================================== ========
Due to the timing of the acquisition, a detailed assessment of
the fair value of the identifiable net assets, and value of any
uncollectible contractual cash flows, has not been completed at the
date of approving these financial statements.
The total consideration expected to be payable is:
GBP'000
Cash 600
Total consideration 600
========================= ========
The above consideration is subject to post completion
adjustments.
It is expected that goodwill will arise on the acquisition and
this will primarily comprise the strategic value of the
acquisition, including the potential for future growth within the
framing market. This goodwill is not expected to be deductible for
tax purposes.
Acquisition costs of GBP23,000, in relation to stamp duty and
legal and professional fees, are estimated to be incurred in
connection with this acquisition and will be recognised in profit
or loss. Due to the timing of the acquisition, not all costs have
been invoiced or finalised at the time of approving these financial
statements.
On 8 June 2023, the Group completed the sale of its shares in
Lendwell Holdings Limited for consideration of GBP188,000. There
was a GBPnil gain or loss on the sale of this investment in equity
instruments designated as FVTOCI.
12. Availability of annual report and accounts
The Annual Report and Accounts for the year ended 31 March 2023
will be posted to shareholders on or before 3 August 2023 and laid
before the Group at the Annual General Meeting on 5 September 2023.
Copies of the Annual Report and Accounts for the year ended 31
March 2022 will be available on request from the Company Secretary
at Brickability Group PLC, South Road, Bridgend Industrial Estate,
Bridgend CF31 3XG and from the Group's website
www.brickabilitygroupplc.com .
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END
FR FLFELDVIELIV
(END) Dow Jones Newswires
July 17, 2023 02:00 ET (06:00 GMT)
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