TIDMIBST
RNS Number : 9874H
Ibstock PLC
02 August 2023
Interim results
2 August 2023
LEI: 2138003QHTNX34CN9V93
Ibstock Plc
Interim results for the six months ended 30 June 2023
Resilient first half performance underpins confidence in full
year expectations
Ibstock Plc ("Ibstock" or the "Group"), a leading UK
manufacturer of a diverse range of building products and solutions,
announces results for the six months ended 30 June 2023.
Statutory Results
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Six months ended 30 June 2023 2022 1Y % change
---------------------------- --------- -------- --------- ---------
Revenue GBP223m GBP259m (GBP36)m (14)%
--------- -------- --------- ---------
Profit before taxation GBP30m GBP51m (GBP21)m (42)%
--------- -------- --------- ---------
EPS 5.7p 10.0p (4.3)p (43)%
--------- -------- --------- ---------
Adjusted Results(1)
-----------------------------------------------------------------------
Six months ended 30 June 2023 2022 1Y % change
---------------------------- --------- -------- --------- ---------
Adjusted EBITDA GBP63m GBP71m (GBP8)m (11)%
--------- -------- --------- ---------
Adjusted EBITDA margin 28.2% 27.3% +90bps +3%
--------- -------- --------- ---------
Adjusted EPS 9.0p 11.3p (2.3)p (20)%
--------- -------- --------- ---------
Interim dividend per share 3.4p 3.3p +0.1p +3%
--------- -------- --------- ---------
Adjusted free cashflow (GBP22)m GBP30m (GBP52)m >(100)%
--------- -------- --------- ---------
ROCE 19.6% 19.8% (20)bps (1)%
--------- -------- --------- ---------
Net debt GBP89m GBP36m GBP53m >(100)%
higher
--------- -------- --------- ---------
Resilience and financial strength
-- Resilient trading performance in the first half year with
performance marginally ahead of the Board's expectations.
-- Revenue down 14% to GBP223 million (2022: GBP259 million)
reflecting reduced activity levels in our residential markets.
Despite this more subdued market backdrop, selling prices
remained firm.
-- Adjusted EBITDA(1) was GBP63 million (2022: GBP71 million),
reflecting disciplined approach to pricing, an intense focus
on cost and capacity management, and the benefit of fixed
cost absorption through inventory build.
-- Continued operational and strategic progress in our diversified
growth engine, Ibstock Futures; new innovation hub in West
Midlands now operational, creating a scalable platform for
growth.
-- Statutory Profit before tax of GBP30 million (2022: GBP51
million) reflects exceptional cost(1) of around GBP11 million
arising from potential clay site closure (including GBP1.5m
cash cost).
-- Balance sheet remains strong with leverage of 0.7x (2022:
0.3x), towards the lower end of the target range, and period
end net debt was better than our expectations at GBP89 million
(2022: GBP36 million).
-- Interim dividend up 3% to 3.4 pence per share (2022: 3.3p),
reflecting the resilient trading performance and the Board's
confidence in the Group's prospects.
Investing in future growth
-- Progress on all key growth projects remains on budget and schedule.
-- Brick slips investments at Nostell, West Yorkshire, progressing
to plan, with automated slips line (17 million slips p.a.)
to commission from the end of 2023; construction of larger
slips systems factory (30 million slips p.a. from the end of
2024) now well underway, creating a strong, diversified position
in this fast-growing product category.
-- Continued development of Clay brick factory network to create
low cost, efficient and sustainable capacity in line with our
medium-term growth objectives. Redevelopment of wire cut brick
factories in the West Midlands (Atlas/Aldridge) remain on track
to commission from the end of 2023. Atlas will produce the
UK's first externally verified carbon neutral brick and will
increase annual network capacity by over 100 million bricks
to support our long-term growth. The project is a 'pathfinder'
for more sustainable manufacturing processes to be scaled across
the Group-wide estate on our journey to net zero.
Against the current backdrop of reduced demand and with industry
capacity increasing in 2024, we have announced a proposal to
close our higher-cost Ravenhead wire-cut brick factory in North
West England. Subject to consultation, closure would reduce
the Group's current clay brick network capacity by around 40
million bricks.
Current trading and outlook
-- While overall sales volumes were down significantly in the first
half, demand showed improvement across the period .
-- Our investment in major growth projects remains on track and
the Group continues to drive strategic progress while remaining
intensely focused on managing costs and capacity, with a range
of measures in place, in light of reduced market demand.
-- Balance sheet strength provides resilience and gives optionality
on investment and shareholder returns.
-- While recent macroeconomic events have introduced greater uncertainty
into the outlook, we remain confident in our ability to respond
to market conditions and the Board's expectations for the full
year are unchanged.
-- We are confident in the medium term outlook, and remain committed
to our medium term financial targets.
Joe Hudson, Chief Executive Officer, commented:
"Our first half performance demonstrates our resilience in a
subdued market environment, with lower customer demand across both
new build and RMI segments. Our focus on customer service and
commercial execution, coupled with disciplined management of
capacity and costs, has enabled us to deliver a result marginally
ahead of our expectations, despite more challenging trading
conditions.
"We have continued to make strong progress with our strategic
investment plans that will underpin Ibstock's future growth and
enhance our industry leadership position. By focusing on expansion,
diversification and innovation we are building new capabilities in
faster and sustainability-led growth segments of the UK
construction market.
" Although overall sales volumes were down significantly in the
first half, demand showed improvement across the period . Whilst
recent macroeconomic developments have created increased
uncertainty in the outlook, having performed marginally ahead of
our expectations during the first half we remain confident in our
ability to respond to market conditions in the balance of the year
and the Board's expectations for the full year are unchanged. "
Results presentation
Ibstock is holding a presentation at 10.30am today at 54 Hatton
Garden, London, EC1N 8HN.
Please contact ibstock@citigatedewerogerson.com to register your
in-person attendance.
A live webcast of the presentation and Q&A is also
available. Please register here for the live webcast.
The presentation can also be heard via a conference call, where
there will be the opportunity to ask questions.
Conference Call Dial-In UK-Wide: +44 (0) 33 0551 0200
Details: UK Toll Free: 0808 109 0700
US +1 786 697 3501
Confirmation code: please quote Ibstock Half Year Results
when prompted
An archived version of today's webcast analyst presentation will
be available on www.ibstock.co.uk later today.
Ibstock Plc 01530 261 999
Joe Hudson, CEO
Chris McLeish, CFO
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Holly Gillis
About Ibstock Plc
Ibstock Plc is a leading UK manufacturer of a diverse range of
building products and solutions. The Group concentrates on eight
core product categories, each backed up by design and technical
services capabilities:
- Bricks and Masonry, Façade Systems, Roofing, Flooring and
Lintels, Staircase and Lift Shafts, Fencing and Landscaping,
Retaining Walls and Rail and Infrastructure.
The Group comprises two core business divisions, Ibstock Clay
and Ibstock Concrete. The Ibstock Futures business was established
in 2021 to accelerate growth in new, fast developing segments of
the UK construction market and, while it remains in its initial
growth phase, forms part of the Clay division.
Ibstock Clay: The leading manufacturer by volume of clay bricks
sold in the United Kingdom. With 16 manufacturing sites, Ibstock
Clay has the largest brick production capacity in the UK. It
operates a network of 18 active quarries located close to its
manufacturing plants. Ibstock Kevington provides masonry and
prefabricated component building solutions, operating from 6
sites.
Ibstock Concrete: A leading manufacturer of concrete roofing,
walling, flooring and fencing products, along with lintels and rail
& infrastructure products. The concrete division operates from
14 manufacturing sites across the UK.
Ibstock Futures: Complements the core business divisions by
accelerating diversified growth opportunities which address key
construction trends, including sustainability and the shift towards
Modern Methods of Construction (MMC). Operating from an innovation
hub in the West Midlands, and the Nostell redevelopment in West
Yorkshire.
Ibstock is headquartered in the village of Ibstock,
Leicestershire, with 37 active manufacturing sites across the
UK.
As a leading building products manufacturer, the Group is
committed to the highest levels of corporate responsibility. The
ESG 2030 Strategy sets out a clear path to address climate change,
improve lives and manufacture materials for life, with an ambitious
commitment to reduce carbon emissions by 40% by 2030 and become a
net zero operation by 2040.
Further information can be found at www.ibstock.co.uk
Forward-looking statements
This announcement contains "forward-looking statements". These
forward-looking statements include all matters that are not
historical facts and include statements regarding the intentions,
beliefs or current expectations of the directors. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are difficult
to predict and outside of the Group's ability to control.
Forward-looking statements are not guarantees of future performance
and the actual results of the Group's operations. Forward-looking
statements speak only as of the date of such statements and, except
as required by applicable law, the Group undertakes no obligation
to update or revise publicly any forward-looking statements.
CEO Review
Introduction
I am pleased to report a resilient performance for the first
half of 2023, demonstrating the significant progress we have made
over recent years to improve the quality of our assets, processes
and teams. While customer demand improved across the period,
trading conditions remained subdued and, against this backdrop, to
deliver a performance marginally ahead of our expectations is a
real testament to the strength of our business and our people.
At the halfway point of the year, we have seen a significant
change in the UK macroeconomic outlook, with near-term expectations
for both inflation and interest rates above the levels previously
envisaged. Inevitably, this has created a more uncertain trading
environment for customers in both our residential new build and RMI
markets.
As we have done previously during periods of challenging
trading, we have taken decisive action to reduce costs across the
business; this includes the difficult decision to propose the
closure of our Ravenhead brick factory. We remain vigilant on costs
and, as we have demonstrated in the recent past, will continue to
take any further action necessary to ensure capacity is aligned
with market demand, to protect the performance of the business.
While operating the business in a focused and disciplined
manner, reflecting market conditions in the short term, we have
continued to make strong progress with the strategic plans that
will underpin Ibstock's growth and enhance our industry leadership
position. The projects to redevelop our Atlas and Aldridge wire-cut
brick manufacturing factories in the West Midlands and to invest in
brick slips manufacturing capacity at Nostell are all on track,
with momentum building as they move towards the production
phase.
During the first half we also fully commissioned our new Ibstock
Futures innovation hub, with activity starting to build, as well as
continuing to make good progress with our plans to capture the
significant growth opportunity in the development of sustainable
building materials.
The first half marked a significant milestone as we launched a
new, powerful "One Ibstock" brand, alongside a new set of digital
tools, to make it easier than ever for our customers to access our
full range of building products, solutions and expertise in one
place.
The fundamental drivers underpinning medium term demand in our
markets remain firmly in place, and we are building new
capabilities in both the conventional and diversified segments of
the UK construction markets. Our organic investment projects
support our growth ambitions and underpin our conviction in our
medium term financial targets. We remain excited by their
potential.
As we trade through this more challenging period, we do so from
a position of financial strength, with leverage towards the lower
end of our target range, leaving the Group in a strong position,
both to invest further for growth, and return additional capital to
shareholders into the future.
Financial performance
The Group delivered a resilient trading performance in the first
half year, against a more subdued market backdrop, and achieved a
result marginally ahead of the Board's expectations.
Revenue declined 14% year on year to GBP223 million (2022:
GBP259 million), reflecting a significant reduction in sales
volumes. This was particularly evident across our residential
product categories where we experienced a decline in line with the
domestic market, both in the new build and RMI segments.
Non-residential product sales volumes held up well with
infrastructure revenues up by around 15% compared to 2022. The
overall decline in sales volumes was partly offset by a year on
year pricing benefit, reflecting the timing of inflationary
increases as the Group passed through significant increases in
input costs during the 2022 year.
While cost inflation remained a feature of the first half
environment, the pace of increase was below the levels experienced
in 2022. Selling prices were substantially maintained at the levels
in place at the start of 2023.
Good operational performance, the benefit of fixed cost
absorption as inventories increased, and an intense focus on cost
and capacity management mitigated the impact of lower revenue and
enabled a solid performance, with adjusted EBITDA(1) of GBP63
million, down 11% year on year (2022: GBP71 million). Adjusted
EBITDA margins(1) of 28.2% (2022: 27.3%) reflected this strong
operational performance and also benefited from property gains of
around GBP1.5 million recognised during the second quarter.
Profit before tax of GBP30 million (2022: GBP51 million)
included an exceptional cost(1) of around GBP11 million arising
from potential clay site closure, of which GBP1.5 million is a cash
cost.
Our balance sheet remains strong with period-end leverage of
0.7x net debt to adjusted EBITDA(1) , towards the lower end of our
0.5x to 1.5x target range, despite continued investment across the
business, including GBP24 million invested in growth projects.
In light of the resilient performance of the business, the Board
has declared an interim dividend of 3.4p per share, representing an
increase of 3% (2022: 3.3p). In declaring this level of dividend,
the Board remains mindful of its objective to deliver a sustainable
and progressive ordinary dividend over time.
Divisional review
Ibstock Clay
Once again, good operational performance supported a solid
result from the clay division, with this outcome underpinned by
consistent network reliability and an intense focus on cost
management.
The division delivered a robust performance in the first half,
despite the impact of materially lower year on year sales volumes.
While revenues reduced significantly, down 13% to GBP162 million
(2022: GBP186 million), strong operational performance and good
fixed cost absorption mitigated the impact of lower sales on
adjusted EBITDA(1) , which totalled GBP57 million, down 11% from
the prior year (2022: GBP64 million).
Sales volumes in the period were in line with the trend
experienced across the broader domestic market 2 . As a consequence
of this lower demand, inventory was built at higher-than-typical
levels for the first half of the year providing a benefit to
margins through higher fixed cost absorption. In the second half of
the year, we expect finished goods inventories to stabilise, and
therefore do not expect this benefit to recur.
As expected, brick imports reduced at a faster rate than
domestic supply to 22% of total market (2022: 24%), a reduction of
over 40% year on year, as the UK industry was able to displace
imported product. Our ability to fulfil this demand was supported
by our available capacity and strengthened inventory position.
The division experienced meaningful cost inflation compared to
the equivalent period in 2022 in both variable and fixed cost
categories. Variable costs increased, including the impact of
energy hedges entered into in the prior year, although softer spot
prices during the first half helped to limit the scale of this
increase. We now have around 85% of energy requirements covered for
the second half of the 2023 year, at prices slightly above the
comparative period.
For 2024, around a third of requirements are currently covered,
with cover weighted towards the early part of the year.
The division retained its focus on strong commercial execution
and providing high standards of service for our customers. Our
On-Time, In-Full ("OTIF") service levels continued to improve, and
our enhanced scheduling capabilities supported a reduction in
customer cancellation rates.
We are making good progress in the final stages of development
of our Atlas and Aldridge brick manufacturing facilities, with the
substantial majority of capital now invested and both projects on
track to commission from the end of the 2023 year.
Ibstock Futures
Revenues at Ibstock Futures ("Futures"), which are reported in
the Clay segment, totalled GBP6 million in the first half of the
year 3 , as the business began to benefit from enhanced operational
and commercial disciplines. The trading businesses within Futures
delivered an adjusted EBITDA(1) in line with our expectations. As
Futures scales, we continue to expect GBP5 million of operational
costs to be invested in innovation and building capability in the
current year, with around GBP2 million recognised in the first
half.
Whilst Futures experienced a more cautious demand backdrop, in
line with the core business, the levels of market activity proved
relatively more resilient, and we believe that our customers in
this segment value both the financial strength and industry
expertise of a company such as Ibstock.
In the period, we were pleased to consolidate our new Futures
businesses on a single site at Power Park, our innovation hub in
the West Midlands. The hub, which saw its first operations commence
during the period will, over time, become a state-of-the-art
facility. Secured under a long-term lease, the Innovation Hub
creates a scalable platform for the growth of Futures in the years
ahead.
The brick slips market continues to build, and our investments
in capacity expansion remain on track. The development of our
Nostell facility, in West Yorkshire, is progressing well and we
expect the first phase, a new automated slips line, which will
deliver up to 17 million slips per annum, to commission towards the
end of the second half. The development of the larger brick slips
systems factory, which will initially deliver a further 30 million
slips per annum, is also well underway, with equipment orders
placed and contracts with OEMs well progressed. The factory is on
track to commission by the end of 2024. Combined, this significant
growth in slips capacity will create a strong and diversified
position for Ibstock in this fast-growing and attractive product
category.
We continue to see a strong pipeline of opportunities to grow
Futures, both organically and by acquisition, representing a
significant opportunity for value creation as we selectively expand
and diversify our product offering further over the medium
term.
Ibstock Concrete
The breadth of the concrete division's end-market exposure
supported the delivery of a good performance in the first half of
the year. Revenue reduced by 17% to GBP61 million (2022: GBP74
million), reflecting a material decline in sales volumes within our
residential product categories.
A strong performance from the rail and infrastructure category
and good operational performance across the divisional factory
network helped mitigate the impact of lower residential sales on
the division's financial performance.
Adjusted EBITDA(1) was GBP11 million, broadly in line with the
comparative period, (2022: GBP11 million) as a stronger performance
within infrastructure and the benefit of fixed cost absorption
underpinned a solid improvement in adjusted EBITDA(1) margins to
17.9% (2022: 15.3%).
Towards the end of the period, we completed a small bolt-on
asset acquisition in our infrastructure business, acquiring the
trade and assets of G-Tech, an innovative designer and supplier of
concrete railway platform solutions, to expand our differentiated
proposition in the railway infrastructure market. G-Tech's concrete
platform copers reduce embodied carbon by 80%, compared with
typical reductions of 30-40% achieved by competing solutions. The
acquisition represents a further strategic step in broadening our
rail and infrastructure offering.
Strategic update
Our strategy is to enhance our existing business while investing
for growth in both our core and diversified construction markets.
We are focused on three strategic priorities to Sustain, Innovate
and Grow, with our ambitious ESG goals embedded across all three.
Progress in each area is outlined below.
Sustain
As a scale industrial business, sustainable high performance is
at the heart of what we do. We are focused on three priority areas:
health, safety and wellbeing; operational excellence; and
environmental performance.
Health, safety and wellbeing
We remain focused on creating a positive, proactive safety
culture underpinned by a belief that all incidents across our
operations are preventable. Our further progress in the period was
reflected in the 55% reduction in Lost Time Injury Frequency Rates
(LTIFR) from the 2016 baseline. This was achieved through continued
focus on our six safety rules; successful employee engagement
events such as Safe Start days; and continuing investment in
wellbeing with the introduction of a network of mental health
allies.
We remain committed to driving our business to zero harm for
everyone.
Operational excellence
The reduction in market demand has required a keen focus on cost
and capacity management and we have taken decisive steps to
mitigate the impact on our business performance in the short term
and position the business for longer term sustainable growth.
Actions have included temporary redeployment of colleagues towards
sustaining and maintenance activities, discretionary spending
freezes and headcount reductions. At the end of June 2023, we took
the difficult but necessary decision to announce proposals to cease
production at our Ravenhead brick factory. Subject to consultation,
the closure of this wire cut brick factory in the North West of
England will reduce our current network capacity by around 40
million bricks. Moving forwards, we remain committed to taking any
further actions necessary to ensure capacity is aligned to market
demand.
Environmental performance
We continue to take action at all levels in our business to
deliver our ambitious target of a 40% reduction in carbon by 2030,
and are pleased to receive further external recognition for the
leadership role we are playing in ESG.
During the first half we completed a pilot project to fire
bricks using synthetic gas derived from waste and are in
discussions with our strategic partner to commission these assets
at one of our brick factories. Our first 'pathfinder' factory at
Atlas which will produce bricks with around 50% less embodied
carbon than the original factory, is on track to commission from
the end of the 2023 year. We were pleased to receive funding from
the government's Industrial Energy Transformation Fund to support a
major sustainability investment at our Laybrook brick factory in
West Sussex, which we estimate will deliver a reduction in carbon
emissions of more than 15%.
It is this continuous focus, and the combined benefit from
incremental actions across the business, which moves us forward
towards our target.
Innovate
Product innovation
As market leader in clay and concrete products, we have the
broadest range of building products and solutions available in the
UK, and we continue to invest to enhance our offer.
In order to strengthen our proposition targeted at displacing
imported products, we launched a number of higher-end speciality
bricks during the period, including the new "Rosa Blanca" range,
which has received a very positive reaction from customers.
Within concrete, we are rolling out our professional range of
residential landscaping products, which offer increased
functionality and industry-leading levels of embodied carbon.
Within our rail and infrastructure category, our range of
lower-carbon cable troughing products has enabled us to win new
business serving the major HS2 infrastructure project.
Customer experience - launch of "One Ibstock" brand
Providing the highest standard of products and service to our
customers is critical to our success. Increasingly, our customers
are looking for integrated solutions, rather than single
products.
Although we are well-known as the UK's largest brick
manufacturer, Ibstock's capabilities extend far beyond this core
offer. From Roofing to Flooring, Retaining Walls to Façade Systems,
Fencing and Landscaping to Rail, Infrastructure and more, the Group
offers a diverse range of building products, solutions and expert
technical and design services. There is a clear opportunity to
leverage the breadth of our offering and win a greater proportion
of our customers' total business, supporting overall performance
and driving growth across our product platforms.
The "One Ibstock" initiative aligns our commercial teams more
closely within a single framework and deploys enhanced digital
tools to make it quicker and easier for customers to source more of
their product needs in one place. This is an important development
for Ibstock, and we expect to deliver incremental growth from this
new approach over time.
Digital transformation
The digitisation of our business is a key strategic enabler as
we begin to drive an increasing proportion of our sales activities
through digital channels. During the first half we successfully
piloted our online customer portal with a small number of our
builders' merchant customers, and expect to scale this activity
during the second half of the year.
Grow
Clay - Atlas and Aldridge investments
We continue to invest in our brick manufacturing network in line
with our objective of maintaining the lowest cost, most efficient
and most sustainable capacity in the industry. This approach is
exemplified by the redevelopment of our Atlas plant in the West
Midlands, with the project on track to commission from the end of
2023. As well as increasing our clay brick capacity by over 100
million bricks, Atlas will produce the UK's first certified carbon
neutral brick. Atlas has also been selected as our first
'pathfinder' factory, piloting new, more sustainable production
technologies and processes before they are rolled out across our
wider UK factory network.
The new Atlas factory will produce bricks with around 50% less
embodied carbon than the original factory. This will be achieved
through a range of solutions including the use of energy efficiency
and heat optimisation technologies, renewable electricity and a
shift to electric mobile plant.
This is an important step on our journey to net zero, and we
will continue to trial, test and learn from new developments as we
seek to further reduce levels of carbon and other greenhouse gases
in our products and processes.
The linked investment at our Aldridge factory, focused on
commissioning new driers and packaging equipment, is also on track
to complete by the end of this year.
The cumulative capital invested across these wire-cut
development projects up to 30 June 2023 totalled around GBP55
million, with the remaining GBP20 million to be invested over the
next nine months.
Futures
Within Ibstock Futures, our investments in brick slip capacity
in Nostell, Yorkshire, are progressing well. The faster payback
investment of GBP8 million in an automated slips line, providing
capacity for up to 17 million slips, remains on track to come on
stream by the end of 2023. The main slip systems factory at
Nostell, incorporating more advanced and efficient process
technology, is also progressing well, and on schedule to deliver 30
million slips annually from the end of 2024. Together, these
investments will create a strong, diversified position in this
fast-growth product category.
Concrete
Our GBP2 million investment in automated equipment for our
walling stone factory in Anstone, Yorkshire, remains on track to be
commissioned by the end of the year and is expected to deliver
around GBP1 million in incremental adjusted EBITDA(1) from 2024. We
have a pipeline of further fast payback opportunities to invest
capital in our concrete business over the medium term.
People
Our people are the foundation of our business, and as an
organisation we are seeking to create a culture driven by
performance and led by our values. In June 2022, we launched our
"Ibstock Story" colleague engagement initiative, to galvanise our
organisation and unite all of our people around our collective
purpose and ambitions. The initiative included an all-employee
share grant, made in September 2022, to give every colleague a
direct stake in the future success of the business. I am proud to
say that this story continues to be a strong cultural catalyst,
ensuring that everyone feels valued and is clear on the
contribution they can make to our business progress and
success.
Our industry-leading apprenticeship programme continues to
gather momentum, as we prepare to welcome 17 new joiners to our
existing cohort of 47, ensuring that we continue to attract and
retain the best talent available, along with a wider, more clear
and compelling employer proposition. We have made further progress
in the number of employees in "earn and learn" positions, putting
us firmly on track to hit our target of 10% by 2030.
Outlook
Recent macroeconomic developments have introduced greater
uncertainty into the outlook. Against this backdrop, we are
managing costs and capacity tightly to ensure they are aligned with
market conditions in the short term, while continuing to drive
progress on our strategic growth projects.
Our Atlas and Aldridge investment projects are entering the
final stages of their development and will begin commissioning from
the end of 2023. Atlas will add low cost, highly efficient and
sustainable capacity to our network and produce the UK's first
carbon neutral brick. Within Ibstock Futures, our brick slip
investments at Nostell are progressing well and, once completed,
will strengthen our position in the fast-growing and attractive
brick slips market. Together these projects will make an important
contribution to our future growth and, once operating at full
capacity, are expected to deliver annualised incremental adjusted
EBITDA(1) totalling over GBP30 million.
The strength of our balance sheet and levels of cash generation
provide both resilience in a more challenging market environment
and optionality for further investment-driven growth alongside
incremental returns to shareholders. We are well positioned to
accelerate our strategic progress, through a growing investment
pipeline and have the capacity to take advantage of any
opportunities created by the current backdrop, within the framework
of our disciplined and dynamic capital allocation policy.
Notwithstanding the more cautious outlook, we remain confident
in our ability to respond to market conditions and the Board's
expectations for the full year are unchanged.
Chief Financial Officer's report
Introduction
The Group delivered a resilient financial performance in the
first six months of 2023, against a more subdued market backdrop.
The effective management of plant capacity, combined with proactive
steps to reduce cost, ensured that adjusted EBITDA margins(1) were
maintained in line with the comparative period despite
significantly lower sales volumes.
With strong progress against our strategic investment plans , we
deployed around GBP24 million of capital investments (2022: GBP11
million) in the service of future growth (over and above our
sustaining capital). With our continued strong financial position,
and inherently cash generative business, we expect to generate
significant further cash to support growth and shareholder returns
over the medium term.
Climate Change & TCFD
As a long-term business, a commitment to environmental
sustainability and social progress is central to our purpose. We
have invested significant capital over the last decade, with
investment projects across the Group's plant network contributing
to a material reduction in the carbon intensity of our
manufacturing processes. Our ESG strategy and targets announced in
2021 provide a pathway to reduce carbon emissions by 40% by 2030,
from a 2019 baseline, and be net zero carbon by 2040. We continue
to actively monitor the transitional and physical risks and
opportunities of climate change through our risk management process
and ESG governance framework.
Alternative performance measures
This results statement contains alternative performance measures
("APMs") to aid comparability and further understanding of the
financial performance of the Group between periods. A description
of each APM is included in Note 3 to the financial statements. The
APMs represent measures used by management and the Board to monitor
performance against budget, and certain APMs are used in the
remuneration of management and Executive Directors. It is not
believed that APMs are a substitute for, or superior to, statutory
measures.
Group results
The table below sets out segmental revenue and adjusted
EBITDA(1) for the year.
Clay(2) Concrete Central Total
costs
GBP'm GBP'm GBP'm GBP'm
-------- --------- -------- -------
Six-month period ended
30 June 2023
Total revenue 161.7 61.1 - 222.7
-------- --------- -------- -------
Adjusted EBITDA(1) 57.4 10.9 (5.5) 62.9
======== ========= ======== =======
Margin 35.5% 17.9% 28.2%
Six-month period ended
30 June 2022
Total revenue 185.5 73.8 - 259.3
-------- --------- -------- -------
Adjusted EBITDA(1) 64.4 11.3 (5.0) 70.7
======== ========= ======== =======
Margin 34.7% 15.3% 27.3%
(1) Alternative Performance Measures are described in Note 3 to
the results announcement
(2) Clay segment incorporates Futures business performance, and
excludes exceptional cost(1) of GBP10.7 million (2022: GBP0.8
million)
Due to rounding, numbers presented may not add up precisely to
the totals provided and percentages may not precisely reflect the
absolute figures
Revenue
Group revenue for the six months ended 30 June 2023 decreased by
14% to GBP222.7 million (2022: GBP259.3 million) driven by a
significant reduction in sales volumes, partly offset by a year on
year pricing benefit.
In our Clay division, revenues of GBP161.7 million represented a
decrease of 13% on the prior year period (2021: GBP185.5 million),
resulting from materially lower sales volumes, in line with trends
experienced across the broader domestic market 2 . Despite this
more subdued market backdrop, selling prices remained firm, meaning
that the division achieved a price benefit relative to the
comparative period. Our Futures business contributed around GBP6
million of revenue.
In our Concrete division, revenue decreased by 17% year-on-year
to GBP61.1 million (2022: GBP73.8 million), with materially lower
volumes within our residential product categories, partly offset by
a stronger performance from the infrastructure business. Firm
prices across the division provided a benefit compared to the prior
year period.
Adjusted EBITDA (1)
Management measures the Group's operating performance using
adjusted EBITDA(1) . Adjusted EBITDA(1) decreased by 11% year on
year to GBP62.9 million in 2023 (2022: GBP70.7 million). Strong
operational performance, an intense focus on cost and capacity
management and the benefit of fixed cost absorption as inventories
increased mitigated the impact of lower sales volumes. Adjusted
EBITDA(1) margins increased by 90 basis points to 28.2% (2022:
27.3%). In 2022 the Group recognised a one-off charge for a cost of
living payment to qualifying employees of around GBP4 million.
During the second half, we anticipate finished goods inventories
to stabilise, with adjusted EBITDA margins(1) expected to moderate
as the benefit from fixed cost absorption does not recur.
Within the Clay division, adjusted EBITDA(1) totalled GBP57.4
million (2022: GBP64.4 million), representing an adjusted EBITDA(1)
margin of 35.5% (2022: 34.7%). The modest improvement in adjusted
EBITDA(1) margin reflected a combination of strong operational
performance, actions to remove fixed cost and the benefit of
overhead absorption as finished goods inventories increased. The
division recognised a net cost of GBP2.0 million (2022: cost of
GBP1.2 million) in respect of Ibstock Futures, as the acquired
businesses scale up and we continue to invest in research &
development, in-house innovation and commercial capability. The
division also benefited from property gains totalling around GBP1.5
million in the period.
Adjusted EBITDA(1) in our Concrete division decreased to GBP10.9
million (2022: GBP11.3 million), as the division was impacted by
materially lower sales volumes. Adjusted EBITDA(1) margins of 17.9%
were 260bps above 2022 levels (2022: 15.3%), reflecting a mix
benefit as infrastructure volumes constituted a larger proportion
of divisional activity, disciplined cost and capacity management
across the network and fixed cost absorption as inventories
increased. Performance in the prior year period was impacted by
operational challenges at our roof tile factory in Leighton
Buzzard, which were remediated in the second half of 2022.
Central costs increased to GBP5.5 million (2022: GBP5.0 million)
reflecting inflationary cost increases and a full six month charge
for the all-employee share grant which was made in H2 2022 as part
of the Ibstock Story colleague engagement initiative.
Against the more cautious outlook, we are managing costs and
capacity tightly to ensure they are aligned with market conditions
in the short term, and remain committed to taking the actions
necessary to protect unit margins.
Exceptional items (1)
Based on the application of our accounting policy for
exceptional items(1) , certain income and expense items have been
excluded in arriving at adjusted EBITDA(1) to aid shareholders'
understanding of the Group's underlying financial performance.
The amounts classified as exceptional(1) in the period totalled
a net cost of GBP10.7 million (2022: GBP0.8 million cost),
associated with the proposed closure of Ravenhead as part of the
single co-ordinated restructuring plan at this site comprising:
1. An exceptional cash cost of GBP1.5 million relating to anticipated redundancy costs
2. An exceptional non-cash charge of GBP9.2 million reflecting
an asset impairment associated with the proposed closure
Further details of exceptional items(1) are set out in Note 5 of
the financial statements.
Finance costs
Net finance costs of GBP2.2 million were above the level of the
prior year (2022: income of GBP0.1m) with a modest increase in
interest cost on our RCF borrowings, and reduced non-cash interest
income on the Group's pension assets.
Profit before taxation
Group statutory profit before taxation was GBP29.9 million
(2022: GBP51.2 million), reflecting the slightly lower trading
performance, as well as an exceptional cost(1) of GBP10.7 million
(2022: cost of GBP0.8 million) relating to the proposed closure of
the Ravenhead factory.
Taxation
The Group recorded a taxation charge of GBP7.5 million (2022:
GBP10.4 million) on Group pre-tax profits of GBP29.9 million (2022:
GBP51.2 million), resulting in an effective tax rate ("ETR") of
25.0% (2022: 20.3%) compared with the blended standard rate of UK
corporation tax of 23.5% (2022: 19%).
The adjusted ETR(1) (excluding the impact of the deferred tax
rate change and exceptional items) was 24.3% (2022: 17.4%).
The increase in ETR and adjusted ETR(1) from the prior year was
due primarily to a change in the standard rate of UK corporation
tax to 25% in the 2023/24 tax year.
Full year adjusted ETR(1) is expected to be broadly in line with
adjusted ETR(1) for the period to 30 June 2023.
Earnings per share
Group statutory basic earnings per share (EPS) decreased to 5.7
pence in the six months to 30 June 2023 (2022: of 10.0 pence) as a
result of reduced adjusted EBITDA(1) achieved in the period, an
exceptional charge in respect of the Ravenhead factory, and an
increase in the effective tax rate.
Group adjusted basic EPS(1) of 9.0 pence per share decreased
from 11.3 pence last year, reflecting reduced adjusted EBITDA(1)
and an increase in the adjusted effective tax rate. In line with
prior years, our adjusted EPS(1) metric removes the impact of
exceptional items(1) , the fair value uplifts resulting from our
acquisition accounting and non-cash interest impacts, net of the
related taxation charges/credits. Adjusted EPS(1) has been included
to provide a clearer guide as to the underlying earnings
performance of the Group. A full reconciliation of our adjusted
EPS(1) measure is included in Note 7.
Table 1: Earnings per share
2023 2022
pence pence
========================== ======= =======
Statutory basic EPS -
Continuing operations 5.7 10.0
========================== ======= =======
Adjusted basic EPS(1)
- Continuing operations 9.0 11.3
========================== ======= =======
Cash flow and net debt (1)
Adjusted operating cash flow decreased by GBP38 million to
GBP11.0 million (2022: GBP49.0 million), due to a modest decrease
in adjusted EBITDA(1) , coupled with an increase in working capital
totalling GBP39.5 million (2022: GBP10.5 million outflow) as the
Group built back finished goods inventory levels depleted since the
pandemic. The Group continued its robust management of trade
receivables, with a further reduction in DSO versus the comparative
period.
Adjusted net interest paid in the six months to 30 June 2023
increased to GBP2.4 million (2022: GBP1.6 million) reflecting a
modest increase in floating rate borrowing. Tax payments totalled
GBP3.4 million (2022: GBP0.8 million). Other cash outflows of
GBP6.2 million (2022: GBP8.0 million outflow) included amounts
totalling GBP1.3 million (2022: GBP4.0 million) in respect of
carbon emission credits purchased during the period, with the
balance being principally lease payments.
With Adjusted Operating Cash Flows(1) in the period decreasing
materially from the prior period, the cash conversion(1) percentage
decreased to 18% (from 69% in 2022), reflecting reduced adjusted
EBITDA(1) and an increased investment in working capital.
Adjusted free cash flow(1) decreased in the period to an outflow
of GBP(21.6) million (2022: GBP30.2 million inflow), as capital
expenditure of GBP32.7 million increased by GBP13.9 million on 2022
(GBP18.8 million). The 2023 figure comprised around GBP9 million of
sustaining expenditure, GBP17 million on the Atlas and Aldridge
redevelopments and around GBP7 million on other growth projects.
For the full year, we continue to expect sustaining capital
expenditure to total GBP20 million, and growth capital expenditure
to total GBP55 million (comprising Atlas/Aldridge (GBP30 million)
and other growth projects, principally slips (GBP25 million).
Table 2: Cash flow (non-statutory)
2023 2022 Change
=======================================
GBP'm GBP'm GBP'm
======================================= ======= ======= =========
Adjusted EBITDA(1) 62.9 70.7 (7.9)
--------------------------------------- ------- ------- ---------
Adjusted change in working capital(1) (39.5) (10.5) (29.0)
--------------------------------------- ------- ------- ---------
Net interest (2.4) (1.6) (0.8)
--------------------------------------- ------- ------- ---------
Tax (3.4) (0.8) (2.6)
--------------------------------------- ------- ------- ---------
Post-employment benefits (0.3) (0.9) 0.6
--------------------------------------- ------- ------- ---------
Other(2) (6.2) (8.0) 1.8
======================================= ------- ------- ---------
Adjusted operating cash flow(1) 11.0 49.0 (38.0)
--------------------------------------- ------- ------- ---------
Cash conversion(1) 18% 69% (51)ppts
--------------------------------------- ------- ------- ---------
Total capex (32.7) (18.8) (13.9)
======================================= ------- ------- ---------
Adjusted free cash flow(1) (21.6) 30.2 (51.9)
======================================= ======= ======= =========
(1) Alternative Performance Measures are described in Note 3 to
the consolidated financial statements.
(2) Other includes operating lease payments and emission
allowance purchases in all years.
The table above excludes cash flows relating to exceptional
items(1) in both years.
Net debt(1) (borrowings less cash) at 30 June 2023 totalled
GBP89.1 million (31 December 2022: GBP45.9 million; 30 June 2022:
GBP35.7 million). The movement during the period reflected the
investment in working capital combined with GBP32.7 million of
capital expenditure as the Group invested in its growth
projects.
Adjusted return on capital employed(1)
Adjusted return on capital employed(1) (adjusted ROCE) decreased
to 19.6% (2022: 19.8%) driven by a resilient 12-month profit
performance on a higher capital base. The increase in capital
employed compared to the comparative period reflected the
investment in organic growth projects as well as higher levels of
working capital.
Capital allocation
The Group's capital allocation framework remains consistent with
that laid out in 2020, with the Group committed to allocating
capital in a disciplined and dynamic way.
Our capital allocation framework is set out below:
-- Firstly, we will invest to maintain and enhance our existing asset base and operations;
-- Having done this, we will look to pay an ordinary dividend. We are committed to paying dividends
which are sustainable and progressive, with targeted cover of approximately 2 times underlying
earnings through the cycle;
-- Thereafter, we will deploy capital for growth, both inorganically and organically, in accordance
with our strategic and financial investment criteria;
-- And, finally, we will return surplus capital to shareholders .
Our framework remains underpinned by our commitment to
maintaining a strong balance sheet, and we will look to maintain
leverage at between 0.5 and 1.5 times net debt(1) to adjusted
EBITDA(1) excluding the impact of IFRS 16, through the cycle.
We continue to expect to deploy significant growth capital in
the business, with a growing pipeline of both organic and inorganic
opportunities. The Board expects there to be capital generated in
excess of that required for its investment requirements and remains
committed to returning surplus capital to shareholders as part of
its dynamic and disciplined capital allocation strategy. The
potential for additional returns of capital will be kept under
active review.
Dividend
In light of the resilient performance and the Board's confidence
in prospects, the Group has declared an interim dividend of 3.4p
per share (2022: 3.3p), for payment on 15 September 2023 to
shareholders on the register on 25 August 2023.
Pensions
At 30 June 2023, the defined benefit pension scheme ("the
scheme") was in an actuarial accounting surplus position of GBP10.5
million (31 December 2022: surplus of GBP15.2 million; 30 June
2022: surplus of GBP56.2 million). Applying the valuation
principles set out in IAS19, at the half year end the scheme had
asset levels of GBP348.2 million (31 December 2022: GBP373.6
million; 30 June 2022: GBP475.1 million) against scheme liabilities
of GBP337.7 million (31 December 2022: GBP358.4 million; 30 June
2022: GBP418.9 million).
On 20 December 2022, the Scheme completed a full buy-in
transaction with a specialist third-party provider, which
represented a significant step in the Group's continuing strategy
of de-risking its pension exposure. Together with the partial
buy-in transaction in 2020, this transaction insures the
significant majority of the Group's defined benefit
liabilities.
The decrease in balance sheet surplus over the period is
primarily due to asset performance which has been largely offset by
a significant actuarial gain arising on the liabilities from a
change in market conditions, particularly the rise in corporate
bond yields.
In light of the fact that the pension scheme was in a net
surplus position after the full buy-in, the Trustees and the Group
agreed that the Group would suspend paying contributions with
effect from 1 March 2023.
Related party transactions
Related party transactions are disclosed in Note 15 to the
consolidated financial statements. During the current and prior
year, there have been no material related party transactions.
Subsequent events
Except for the proposed ordinary dividend, no further subsequent
events requiring either disclosure or adjustment to these financial
statements have arisen since the balance sheet date.
Going concern
The Directors are required to assess whether it is reasonable to
adopt the going concern basis in preparing the financial
statements.
In arriving at their conclusion, the Directors have given due
consideration to whether the funding and liquidity resources are
sufficient to accommodate the principal risks and uncertainties
faced by the Group.
Having considered the outputs from this work, the Directors have
concluded that it is reasonable to adopt a going concern basis in
preparing the financial statements. This is based on an expectation
that the Company and the Group will have adequate resources to
continue in operational existence for at least twelve months from
the date of signing these accounts.
Further information is provided in note 2 of the financial
statements.
Principal Risks and Uncertainties
This section should be read in conjunction with the rest of this
Half Year Statement as this provides further information concerning
those important events that have occurred during the first six
months of the financial year.
The Group's activities mean it is exposed to a variety of risks
and uncertainties which could, either separately or in combination,
have a material impact on the Group's performance and shareholder
returns. These risks and uncertainties relate to: climate change,
material operational disruption, market uncertainty, anticipating
product demand, financial risk management, regulatory and
compliance, maintaining customer relationships and market
reputation, people and talent management, product quality, cyber
and information security, and major project delivery.
The Board assesses and monitors the key risks impacting the
business and an explanation of the Group's approach to risk
management is set out in Ibstock Plc's Annual Report 2022, a copy
of which is available on the Group's corporate website,
www.ibstock.co.uk .
The Group continues to be exposed to unfavourable macroeconomic
conditions and uncertainty which has resulted in higher interest
rates and inflation, and the possibility of a prolonged slow-down
in UK residential construction markets. These areas impact a number
of the Group's principal risks including market uncertainty,
anticipating product demand, maintaining customer relationships,
people and talent management and financial risk management which
includes energy price volatility.
The Board has concluded that with clear mitigations and actions
to address these risks and Group's strong and decisive commercial
and operational execution, the Group's existing principal risks and
uncertainties remain unchanged from those set out in its 2022
Annual Report.
A full report on the Group's principal risks will be included
with the FY 2023 annual report and accounts. The Board will
continue to monitor the Group's principal risks during the
remaining six months of the year, with a focus on market
uncertainty, anticipating product demand, maintaining customer
relationships, people and talent management and financial risk
management, alongside major project delivery.
Statement of directors' responsibilities in relation to the
half-yearly financial report
The directors confirm that to the best of their knowledge:
-- The condensed set of financial statements has been
prepared in accordance with IAS 34 Interim Financial
reporting as contained in UK-adopted IFRS;
-- The interim management report includes a fair review
of the information required by DTR 4.2.4R, DTR 4.2.7R
and DTR 4.2.8R, namely:
a) the condensed set of financial statements gives
a true and fair view of the assets, liabilities,
financial position, cash flows and profit or
b) loss of the issuer, or undertakings included
in the consolidation;
an indication of important events that have occurred
during the first six months and their impact
on the condensed set of financial statements,
c) and a description of the principal risks and
uncertainties for the remaining six months of
the financial year; and
material related party transactions in the first
six months and any material changes in the related
party transactions described in the last annual
report.
By order of the Board:
Joe Hudson Chris McLeish
Chief Executive Chief Financial
Officer Officer
1 August 2023 1 August 2023
Condensed consolidated income
statement
for the six months ended 30
June 2023
Unaudited Unaudited Audited
Notes Half Half year Year
year ended ended ended
30/06/2023 30/06/2022 31/12/2022
------ ------------ ------------ ------------
GBP'000 GBP'000 GBP'000
Revenue 4 222,732 259,313 512,886
Cost of sales (150,920) (159,484) (316,521)
----------------------------------- ------ ------------ ------------ ------------
Gross profit 71,812 99,829 196,365
Distribution costs (19,734) (26,065) (47,961)
Administrative expenses (23,278) (23,744) (49,624)
Total profit/(loss) on disposal
of property, plant and equipment 1,393 (73) 6,541
Other income 2,207 1,353 2,630
Other expenses (345) (195) (524)
----------------------------------- ------ ------------ ------------ ------------
Operating profit 32,055 51,105 107,427
----------------------------------- ------ ------------ ------------ ------------
Finance costs (3,007) (1,853) (4,553)
Finance income 827 1,971 1,890
Net finance (cost)/income (2,180) 118 (2,663)
----------------------------------- ------ ------------ ------------ ------------
Profit before taxation 29,875 51,223 104,764
----------------------------------- ------ ------------ ------------ ------------
Taxation 6 (7,479) (10,415) (17,884)
----------------------------------- ------ ------------ ------------ ------------
Profit for the financial period 22,396 40,808 86,880
----------------------------------- ------ ------------ ------------ ------------
Profit attributable to:
Owners of the parent 22,397 40,808 86,908
Non-controlling interest (1) - (28)
----------------------------------- ------ ------------ ------------ ------------
Notes pence pence pence
per share per share per share
------ ------------ ------------ ------------
Earnings per share
Basic 7 5.7 10.0 21.6
Diluted 7 5.7 10.0 21.5
----------------------------------- ------ ------------ ------------ ------------
Non-GAAP measure
Reconciliation of adjusted EBITDA (1)
to Operating profit for the financial
period:
Unaudited Unaudited Audited
Notes Half year Half year Year ended
ended 30/06/2023 ended 30/06/2022 31/12/2022
------------------ ------------------ ------------
Operating profit 32,055 51,105 107,427
------------------ ------------------ ------------
Add back/(less) exceptional
costs/(credit) impacting
operating profit 5 10,728 756 (6,278)
Add back depreciation and
amortisation 20,082 18,882 38,518
------------------ ------------------ ------------
Adjusted EBITDA(1) 62,865 70,743 139,667
----------------------------- ------ ------------------ ------------------ ------------
(1) Alternative performance measures are described in Note 3 to
the interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Notes Unaudited Unaudited Audited
Half year Half year Year ended
ended 30/06/2023 ended 30/06/2022 31/12/2022
------ ------------------ -------------------- --------------
GBP'000 GBP'000 GBP'000
Profit for the financial
period 22,396 40,808 86,880
Other comprehensive (expense)/income:
Items that may be reclassified
subsequently to profit or
loss
Change in fair value of cash
flow hedges(1) 11 (666) 468 641
Realised fair value losses - 14 -
transferred to property,
plant and equipment(1)
Related tax movements(1) 166 (51) (149)
------------------ -------------------- --------------
(500) 431 492
Items that will not be reclassified
to profit or loss
Remeasurement of post employment
benefit assets and obligations(2) 12 (4,917) (2,543) (44,581)
Related tax movements(3) 1,113 637 11,147
------------------ -------------------- --------------
(3,804) (1,906) (33,434)
Other comprehensive expense
for the period net of tax (4,304) (1,475) (32,942)
--------------------------------------- ------ ------------------ -------------------- --------------
Total comprehensive income
for the period, net of tax 18,092 39,333 53,938
--------------------------------------- ------ ------------------ -------------------- --------------
Total comprehensive income
attributable to:
Owners of the parent 18,093 39,333 53,966
Non-controlling interest (1) - (28)
--------------------------------------- ------ ------------------ -------------------- --------------
(1) Impacting the cash flow hedging reserve.
(2) Impacting retained earnings.
CONDENSED CONSOLIDATED
BALANCE SHEET
Unaudited Unaudited Audited
Notes 30/06/2023 30/06/2022 31/12/2022
------ ----------- ----------- -----------
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 84,762 91,264 90,242
Property, plant and equipment 424,035 383,928 409,091
Right-of-use assets 39,475 26,479 31,478
Derivative financial instruments 11 - 130 116
Post-employment benefit
asset 12 10,488 56,219 15,194
558,760 558,020 546,121
---------------------------------- ------ ----------- ----------- -----------
Current assets
Inventories 112,144 78,049 94,275
Trade and other receivables 76,341 93,383 65,935
Current tax receivable 869 111 1,717
Derivative financial instruments 11 - 278 451
Cash and cash equivalents 24,096 64,517 54,283
213,450 236,338 216,661
Assets held for sale 200 875 -
Total assets 772,410 795,233 762,782
---------------------------------- ------ ----------- ----------- -----------
Current liabilities
Trade and other payables (107,875) (124,583) (120,003)
Borrowings 8 (13,422) (424) (436)
Lease liabilities (7,884) (6,701) (7,690)
Derivative financial instruments 11 (99) - -
Provisions (2,535) (1,209) (1,613)
(131,815) (132,917) (129,742)
---------------------------------- ------ ----------- ----------- -----------
Net current assets 81,835 104,296 86,919
---------------------------------- ------ ----------- ----------- -----------
Total assets less current
liabilities 640,595 662,316 633,040
---------------------------------- ------ ----------- ----------- -----------
Non-current liabilities
Borrowings 8 (99,784) (99,753) (99,769)
Lease liabilities (33,330) (21,297) (25,414)
Deferred tax liabilities (85,495) (97,466) (84,349)
Provisions (7,732) (7,008) (7,299)
---------------------------------- ------
(226,341) (225,524) (216,831)
---------------------------------- ------ ----------- ----------- -----------
Total liabilities (358,156) (358,441) (346,573)
---------------------------------- ------ ----------- ----------- -----------
Net assets 414,254 436,792 416,209
---------------------------------- ------ ----------- ----------- -----------
Equity
Share capital 4,096 4,096 4,096
Share premium 4,458 4,458 4,458
Retained earnings 806,141 804,942 807,894
Other reserves 14 (400,491) (376,704) (400,290)
Equity attributable to
owners of the company 414,204 436,792 416,158
---------------------------------- ------ ----------- ----------- -----------
Non-controlling interest 50 - 51
---------------------------------- ------ ----------- ----------- -----------
Total equity 414,254 436,792 416,209
---------------------------------- ------ ----------- ----------- -----------
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN
EQUITY
Share Share Retained Other Total Non-controlling Total
capital premium earnings reserves equity interest Equity
(see attributable
Note to owners
14)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ---------- ---------- -------------- ---------------- ---------
Balance at 1 January
2023 4,096 4,458 807,894 (400,290) 416,158 51 416,209
Profit/(loss) for
the period - - 22,397 - 22,397 (1) 22,396
Other comprehensive
expense - - (3,804) (500) (4,304) - (4,304)
--------- --------- ---------- ---------- -------------- ---------------- ---------
Total comprehensive
Income/(expenses)
for the period - - 18,593 (500) 18,093 (1) 18,092
Transactions with
owners:
Share based payments - - 1,432 - 1,432 - 1,432
Deferred tax on
share based payments - - 87 - 87 - 87
Equity dividends
paid - - (21,566) - (21,566) - (21,566)
Issue of own shares
held on exercise
of share options - - (299) 299 - - -
At 30 June 2023
(unaudited) 4,096 4,458 806,141 (400,491) 414,204 50 414,254
------------------------- --------- --------- ---------- ---------- -------------- ---------------- ---------
Balance at 1 January
2022 4,096 4,458 785,609 (370,934) 423,229 - 423,229
Profit for the
period - - 40,808 - 40,808 - 40,808
Other comprehensive
(expense)/income - - (1,906) 431 (1,475) - (1,475)
--------- --------- ---------- ---------- -------------- ---------------- ---------
Total comprehensive
income for the
period - - 38,902 431 39,333 - 39,333
Transactions with
owners:
Share based payments - - 857 - 857 - 857
Deferred tax on
share based payments - - 109 - 109 - 109
Equity dividends
paid - - (20,438) - (20,438) - (20,438)
Purchase of own
shares - - - (6,298) (6,298) - (6,298)
Issue of own shares
held on exercise
of share options - - (97) 97 - - -
At 30 June 2022
(unaudited) 4,096 4,458 804,942 (376,704) 436,792 - 436,792
------------------------- --------- --------- ---------- ---------- -------------- ---------------- ---------
Balance at 1 July
2022 4,096 4,458 804,942 (376,704) 436,792 - 436,792
Profit for the
period - - 46,100 - 46,100 (28) 46,072
Other comprehensive
(expenses)/income - - (31,528) 61 (31,467) - (31,467)
--------- --------- ---------- ---------- -------------- ---------------- ---------
Total comprehensive
income/(expenses)
for the period - - 14,572 61 14,633 (28) 14,605
Transactions with
owners:
Share based payments - - 1,690 - 1,690 - 1,690
Current tax on
share based payment - - 1 - 1 - 1
Deferred tax on
share based payments - - 7 - 7 - 7
Equity dividends
paid - - (13,263) - (13,263) - (13,263)
Purchase of own
shares - - - (23,702) (23,702) - (23,702)
Issue of own shares
held on exercise
of share options - - (55) 55 - - -
Acquisition on
subsidiary
non-controlling
interest - - - - - 79 79
At 31 December
2022 (audited) 4,096 4,458 807,894 (400,290) 416,158 51 416,209
------------------------- --------- --------- ---------- ---------- -------------- ---------------- ---------
CONDENSED CONSOLIDATED CASH
FLOW STATEMENT
Unaudited Unaudited Audited
Half year Half year Year ended
ended 30/06/2023 ended 30/06/2022 31/12/2022
------------------ ------------------ ------------
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Cash generated from operations
(Note 10) 22,178 59,544 137,765
Interest paid (1,675) (1,345) (2,888)
Other interest paid - lease
liabilities (884) (234) (1,274)
Tax paid (3,369) (768) (11,699)
-----------------------------------------
Net cash inflow from operating
activities 16,250 57,197 121,904
----------------------------------------- ------------------ ------------------ ------------
Cash flows from investing activities
Purchase of property, plant
and equipment (32,667) (18,769) (58,354)
Proceeds from sale of property,
plant and equipment 342 8 50
Proceeds from sale of property, plant
and equipment - exceptional - - 7,833
Purchase of intangible assets (1,908) (4,013) (5,573)
Payment for acquisition of subsidiary,
net of cash acquired - - (959)
Interest receivable 151 - 124
----------------------------------------- ------------------ ------------------ ------------
Net cash outflow from investing
activities (34,082) (22,774) (56,879)
----------------------------------------- ------------------ ------------------ ------------
Cash flows from financing activities
Dividends paid (21,566) (20,438) (33,701)
Drawdown of borrowings 13,000 - -
Debt issue costs - - (259)
Repayment of lease liabilities (3,790) (4,564) (8,010)
Cash outflow from purchase of
shares - (6,099) (30,000)
Net cash outflow from financing
activities (12,356) (31,101) (71,970)
----------------------------------------- ------------------ ------------------ ------------
Net (decrease)/increase in
cash and cash equivalents (30,188) 3,322 (6,945)
Cash and cash equivalents at
beginning of the year 54,283 61,199 61,199
Exchange gains/(losses) on cash
and cash equivalents 1 (4) 29
Cash and cash equivalents at
end of the period 24,096 64,517 54,283
----------------------------------------- ------------------ ------------------ ------------
1. AUTHORISATION OF FINANCIAL STATEMENTS
Ibstock Plc ("Ibstock" or "the Group") is a manufacturer of clay
bricks and concrete products with operations in the United Kingdom.
Ibstock Plc is a public company limited by shares, which is
incorporated and registered in England. The registered office is
Leicester Road, Ibstock, Leicestershire, LE67 6HS and the company
registration number is 09760850.
The interim condensed consolidated financial statements of
Ibstock Plc for the six months ended 30 June 2023 were authorised
for issue in accordance with a resolution of the Directors on 1
August 2023. All disclosed documents relating to these results are
available on the Group's website at www.ibstockplc.co.uk .
Publication of non-statutory accounts
The financial information contained in the interim statement
does not constitute the Group's statutory accounts as defined in
section 434 of the Companies Act 2006. The comparative figures for
the financial year ended 31 December 2022, which have been
extracted from the statutory accounts for that year, are not the
Company's statutory accounts for that financial year. Statutory
accounts for the year ended 31 December 2022 were approved by the
Board of Directors on 7 March 2023. Those accounts have been
reported on by the Company's auditor and delivered to the Registrar
of Companies. The report of the auditor was (i) not qualified, (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis of matter without qualifying
their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
2. BASIS OF PREPARATION
The interim condensed consolidated financial statements for the
six months ended 30 June 2023 have been prepared in accordance with
UK-adopted International Accounting Standard 34 'Interim Financial
Reporting' as contained in UK-adopted IFRS.
They do not include all of the information and disclosures
required in the annual financial statements, and should be read in
conjunction with the Group's Annual Report and Accounts as at 31
December 2022, which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as contained
in UK-adopted IFRS.
The condensed consolidated financial statements are presented in
Sterling and all values are rounded to the nearest thousand, except
where otherwise indicated.
All accounting policies applied by the Group within the interim
condensed consolidated financial statements are consistent with
those applied by the Group in its consolidated financial statements
for the year ended 31 December 2022, except in respect of taxation,
which is based on the expected effective tax rate that would be
applicable to expected annual earnings.
The following new and amended standards and interpretations have
been adopted in the preparation of the condensed consolidated
financial statements:
-- Amendment to IAS 1 - Classification of liabilities as current
or non-current;
-- Amendment to IAS 1 and IFRS Practice statement 2 - Disclosure
of accounting policies;
-- Amendments to IAS8 - Definition of accounting estimates;
and
-- Amendments to IFRS 17 - Insurance contracts.
The adoption of the standards and interpretations listed above
has not led to any changes to the Group's accounting policies or
had any other material impact on the financial position or
performance of the Group.
In preparing the interim condensed consolidated financial
statements the Group has assessed the critical accounting estimates
and judgements applied in the preparation of the consolidated
financial statements for the year ended 31 December 2022. The areas
of critical judgement relating to exceptional items (see Note 5),
and significant source of estimation uncertainty regarding the
Group's pension scheme liability valuation assumptions surrounding
future changes in discount rates, inflation, the rate of increase
in pensions in payment and life expectancy (see Note 12) are still
considered critical to the preparation of the interim financial
statements for the period ended 30 June 2023.
Going concern
The Group's financial planning and forecasting process consists
of a budget for the current year followed by a medium term
projection and re-forecasts the current year performance on a
quarterly basis. The going concern assessment period extends to
December 2024. The Directors have reviewed and robustly challenged
the assumptions about future trading performance, operational and
capital expenditure and debt requirements within these forecasts
including the Group's liquidity and covenant forecasts, and stress
tested within their going concern assessment.
In arriving at their conclusion on going concern, the Directors
have given due consideration to whether the funding and liquidity
resources above are sufficient to accommodate the principal risks
and uncertainties (including climate change) faced by the Group,
particularly those relating to economic conditions and operational
disruption.
Group forecasts have been prepared which reflect both actual
conditions and estimates of the future reflecting macroeconomic and
industry-wide projections, as well as matters specific to the
Group.
During the final quarter of the 2021 year, the Group completed
the refinancing of its March 2023 GBP215 million Revolving Credit
Facility (RCF), replacing the existing facility with the issuance
of GBP100 million of private placement notes with maturities of
between 7 and 12 years and a GBP125 million RCF for an initial four
year tenor, with a one year extension option. In addition, in the
final quarter of 2022, the Group enacted a one-year extension of
the GBP125 million RCF, extending maturity to November 2026 on
similar terms to the original agreement. At 30 June 2023, GBP13
million of the RCF was drawn down.
Covenants under the Group's RCF and private placement notes
require leverage of no more than 3 times net debt to adjusted
EBITDA, and interest cover of no less than 4 times, tested
bi-annually at each reporting date with reference to the previous
12 months. At 30 June 2023, covenant requirements were met with
significant headroom.
The key uncertainty faced by the Group is the industry demand
for its products in light of macroeconomic factors. Accordingly,
the Group has modelled financial scenarios that see reduction in
the industry demands for its products thereby stress testing the
Group's resilience. For each scenario, cash flow and covenant
compliance forecasts have been prepared. In the most severe but
plausible scenario Clay and Concrete revenues are projected to be
around 30% lower in the second half of 2023 than 2022, recovering
to around 25% lower revenues in Clay and 10% lower revenues in
Concrete in 2024 versus 2022.
In addition, the Group has prepared a reverse stress test to
evaluate the industry demand reduction at which it would be likely
to breach the debt covenants, before any further mitigating actions
were taken. This test indicates that, at a revenue reduction in
both Clay and Concrete products of 84% in the second half of 2023,
47% in Clay and 24% in Concrete during the cumulative period up to
the first half of 2024, and 44% and 22% respectively during the
cumulative period up 31 December 2024, the Group would be at risk
of breaching its covenants.
In the severe but plausible low case, the Group has sufficient
liquidity and headroom against its covenants, with covenant
headroom expressed as a percentage of annual adjusted EBITDA being
in excess of 56%.
The Directors consider this to be a highly unlikely scenario,
and in the event of an anticipated covenant breach, the Group would
seek to take further steps to mitigate, including the disposal of
valuable land and building assets and additional restructuring
steps to reduce the fixed cost base of the Group.
Having taken account of the various scenarios modelled, and in
light of the mitigations available to the Group, the Directors are
satisfied that the Group has sufficient resources to continue in
operation for a period of not less than 12 months from the date of
this report. Accordingly, the consolidated financial information
has been prepared on a going concern basis.
3. ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures ("APMs") are used within the
management report where management believes it is necessary to do
so in order to provide further understanding of the financial
performance of the Group. Management uses APMs in its own
assessment of the Group's performance and in order to plan the
allocation of internal capital and resources. Certain APMs are also
used in the remuneration of management and Executive Directors.
APMs serve as supplementary information for users of the
financial statements and it is not intended that they are a
substitute for, or superior to, statutory measures. None of the
APMs are outlined within IFRS and they may not be comparable with
similarly titled APMs used by other companies.
Exceptional items
The Group presents as exceptional at the foot of the Group's
Condensed consolidated income statement those items of income and
expense which, because of their materiality, nature and/or expected
infrequency of the events giving rise to them, merit separate
presentation to allow users of the financial statements to
understand further elements of financial performance in the year.
This facilitates comparison with future periods and the assessment
of trends in financial performance over time.
Details of all exceptional items are disclosed in Note 5.
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is the earnings before interest, taxation,
depreciation and amortisation adjusted for exceptional items.
Adjusted EBITDA margin is Adjusted EBITDA shown as a proportion of
revenue.
The Directors regularly use Adjusted EBITDA and Adjusted EBITDA
margin as key performance measures in assessing the Group's
profitability. The measures are considered useful to users of the
financial statements as they represent common APMs used by
investors in assessing a company's operating performance, when
comparing its performance across periods as well as being used in
the determination of Directors' variable remuneration.
A full reconciliation of Adjusted EBITDA is included at the foot
of the Group's Condensed consolidated income statement within the
consolidated financial statements. Adjusted EBITDA margin is
included within Note 4.
Adjusted EPS
Adjusted EPS is the basic earnings per share adjusted for
exceptional items, fair value adjustments being the amortisation
and depreciation on fair value uplifted assets and non-cash
interest, net of taxation (at the Group's adjusted effective tax
rate).
The Directors have presented Adjusted EPS as they believe the
APM represents useful information to the user of the financial
statements in assessing the performance of the Group, when
comparing its performance across periods, as well as being used in
the determination of Directors' variable remuneration.
Additionally, the APM is considered by management when determining
the proposed level of ordinary dividend. A full reconciliation is
provided in Note 7.
Net debt and Net debt to adjusted EBITDA ("leverage") ratio
Net debt is defined as the sum of cash and cash equivalents less
total borrowings at the balance sheet date. This does not include
lease liabilities arising upon application of IFRS 16.
The Net debt to adjusted EBITDA ratio definition removes the
operating lease expense benefit generated from IFRS16 compared to
IAS 17 within adjusted EBITDA.
The Directors disclose these APMs to provide information as a
useful measure for assessing the Group's overall level of financial
indebtedness and when comparing its performance and position across
periods.
A full reconciliation of the net debt to adjusted EBITDA ratio
(also referred to as 'leverage') is set out below:
Unaudited Unaudited Audited
12 month period 12 month period year ended
ended ended 31/12/2022
30/06/2023 30/06/2022
----------------- ----------------- ------------
GBP'000 GBP'000 GBP'000
Net debt (89,110) (35,660) (45,922)
Adjusted EBITDA 131,789 119,043 139,667
Impact of IFRS 16 (8,946) (7,834) (8,491)
----------------- ----------------- ------------
Adjusted EBITDA prior to
IFRS 16 122,843 111,209 131,176
Ratio of net debt to adjusted
EBITDA 0.7x 0.3x 0.4x
================= ================= ============
Adjusted Return on Capital Employed (Adjusted ROCE)
Adjusted Return on Capital Employed ("Adjusted ROCE") is defined
as Adjusted earnings before interest and taxation as a proportion
of the average capital employed (defined as net debt plus equity
excluding the pension surplus). The average is calculated using the
period end balance and corresponding preceding reported period end
balance (year end or interim).
The Directors disclose the Adjusted ROCE APM in order to provide
users of the financial statements with an indication of the
relative efficiency of capital use by the Group over the period,
assessing performance between periods as well as being used within
the determination of executives' variable remuneration.
The calculation of Adjusted ROCE is set out below:
Unaudited Unaudited
12 month period 12 month period Year ended
ended 30/06/2023 ended 30/06/2022 31 December
2022
------------------ ------------------ -------------
GBP'000 GBP'000 GBP'000
Adjusted EBITDA 131,789 119,043 139,667
Less depreciation (32,779) (30,984) (31,579)
Less amortisation (6,939) (6,941) (6,939)
------------------ ------------------ -------------
Adjusted earnings before
interest and taxation 92,071 81,118 101,149
Average net debt 67,516 37,266 40,791
Average equity 415,232 430,011 426,501
Average pension (12,841) (56,987) (35,707)
------------------ ------------------ -------------
Average capital employed 469,907 410,290 431,585
Adjusted ROCE 19.6% 19.8% 23.4%
Average capital employed figures are derived using the following
closing balance sheet values:
30 June 31 December 30 June 31 December
2023 2022 2022 2021
--------- ------------ --------- ------------
GBP'000 GBP'000 GBP'000 GBP'000
Net debt 89,110 45,922 35,660 38,872
Equity 414,254 416,209 436,792 423,229
Less: pension surplus (10,488) (15,194) (56,219) (57,754)
--------- ------------ --------- ------------
Capital employed 492,876 446,937 416,233 404,347
--------- ------------ --------- ------------
Adjusted effective tax rate
The Group presents an adjusted effective tax rate ("Adjusted
ETR") within its Financial Review. This is disclosed in order to
provide users of the financial statements with a view of the rate
of taxation borne by the Group prior to the impact of exceptional
items (defined above) and the changes in taxation rates on deferred
taxation.
A reconciliation of the adjusted ETR to the statutory rate of
taxation in the UK is set out below.
Unaudited Unaudited Audited
Half year Half year 31 December
ended 30/06/2023 ended 30/06/2022 2022
------------------ ------------------ ------------
Statutory rate of taxation in
the UK 23.5% 19.0% 19.0%
Less impact of permanent differences* 0.8% (1.4%) (0.9%)
Less impact of changes in estimates
re. prior periods - (0.2%) (1.6%)
------------------ ------------------ ------------
Adjusted ETR 24.3% 17.4% 16.5%
Exceptional accounting profit
on PPE - - (1.4%)
Effect of higher rate applied
to deferred tax 0.7% 2.9% 2.0%
Reported ETR 25.0% 20.3% 17.1%
================== ================== ============
* The impact of permanent differences primarily comprises
expenses not deductible, offset by the benefit from the
UK super deduction on qualifying capital expenditure
Cash flow related APMs
The Group presents an adjusted cash flow statement within its
Financial Review. This is disclosed in order to provide users of
the financial statements with a view of the Group's operating cash
generation before the impact of cash flows associated with
exceptional items (as set out in Note 5) and with the inclusion of
interest, lease payment and non-exceptional property disposal
related cash flows.
The Directors use this APM table to allow shareholders to
further understand the Group's cash flow performance in the period,
to facilitate comparison with future years and to assess trends in
financial performance. This table contains a number of APMs, as
described below and reconciled in the following table:
Adjusted change in working capital
Adjusted change in working capital represents the statutory
change in working capital less cash flows associated with
exceptional items arising in the period of GBP1.5 million (30 June
2022: adding back cash flows of GBP0.2 million; 31 December 2022:
adding back cash flows of GBP0.3 million).
Adjusted operating cash flow
Adjusted operating cash flows are the cash flows arising from
operating activities adjusted to exclude cash flows relating to
exceptional items of GBPnil (30 June 2022: GBP0.4 million; 31
December 2022: GBP7.3 million) and inclusion of cash flows
associated with interest income, proceeds from the sale of
property, plant and equipment, purchase of intangibles and lease
payments reclassified from investing or financing activities of
GBP5.2 million (30 June 2022: GBP8.6 million; 31 December 2022:
GBP6.8 million).
Cash conversion
Cash conversion is the ratio of Adjusted operating cash flow
(defined above) to Adjusted EBITDA (defined above). The Directors
believe this APM provides a useful measure of the Group's
efficiency of its cash management during the period.
Adjusted free cash flow
Adjusted free cash flow represents Adjusted operating cash flow
(defined above) less total capital expenditure. The Directors use
the measure of Adjusted free cash flow as a measure of the funds
available to the Group for the payment of distributions to
shareholders, for use within M&A activity and other investing
and financing activities.
Six months ended 30 June Statutory Exceptional Reclassification Adjusted
2023 (unaudited)
---------------------------
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ------------ ----------------- ---------
Adjusted EBITDA 52,137 10,728 - 62,865
--------------------------- ---------- ------------ ----------------- ---------
Change in working capital (38,004) (1,529) - (39,533)
--------------------------- ---------- ------------ ----------------- ---------
Impairment charges 9,199 (9,199) - -
--------------------------- ---------- ------------ ----------------- ---------
Net interest (2,559) - 151 (2,408)
--------------------------- ---------- ------------ ----------------- ---------
Tax (3,369) - - (3,369)
--------------------------- ---------- ------------ ----------------- ---------
Post-employment benefits 149 - (440) (291)
--------------------------- ---------- ------------ ----------------- ---------
Other (1,303) - (4,916) (6,219)
--------------------------- ---------
Adjusted operating cash
flow 16,250 - (5,205) 11,045
--------------------------- ---------
Cash conversion 18%
--------------------------- ---------- ------------ ----------------- ---------
Total capex (32,667) - - (32,667)
--------------------------- ---------- ------------ ----------------- ---------
Adjusted free cash flow (16,417) - (5,205) (21,622)
=========================== ========== ============ ================= =========
Six months ended 30 June Statutory Exceptional Reclassification Adjusted
2022 (unaudited)
------------------------------
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ------------ ----------------- ---------
Adjusted EBITDA 69,987 756 - 70,743
------------------------------ ---------- ------------ ----------------- ---------
Change in working capital (10,689) 167 - (10,522)
------------------------------ ---------- ------------ ----------------- ---------
Impairment charges 554 (554) - -
------------------------------ ---------- ------------ ----------------- ---------
Net interest (1,579) - - (1,579)
------------------------------ ---------- ------------ ----------------- ---------
Tax (768) - - (768)
------------------------------ ---------- ------------ ----------------- ---------
Post-employment benefits (488) - (387) (875)
------------------------------ ---------- ------------ ----------------- ---------
Other 180 - (8,182) (8,002)
------------------------------ ---------- ------------ ----------------- ---------
Adjusted operating cash flow 57,197 369 (8,569) 48,997
------------------------------ ---------- ------------ ----------------- ---------
Cash conversion 69%
------------------------------ ---------- ------------ ----------------- ---------
Total capex (18,769) - - (18,769)
------------------------------ ---------- ------------ ----------------- ---------
Adjusted free cash flow 38,428 369 (8,569) 30,228
============================== ========== ============ ================= =========
Year ended 31 December Statutory Exceptional Reclassification Adjusted
2022 (audited)
---------------------------
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ------------ ----------------- ---------
Adjusted EBITDA 146,115 (6,448) - 139,667
--------------------------- ---------- ------------ ----------------- ---------
Change in working capital (2,035) 267 - (1,768)
--------------------------- ---------- ------------ ----------------- ---------
Impairment charges 382 (382) - -
--------------------------- ---------- ------------ ----------------- ---------
Net interest (4,162) - (135) (4,297)
--------------------------- ---------- ------------ ----------------- ---------
Tax (11,699) - - (11,699)
--------------------------- ---------- ------------ ----------------- ---------
Post-employment benefits (973) - (777) (1,750)
--------------------------- ---------- ------------ ----------------- ---------
Other (5,554) (705) (5,882) (12,141)
--------------------------- ---------- ------------ ----------------- ---------
Adjusted operating cash
flow 122,074 (7,268) (6,794) 108,012
--------------------------- ---------- ------------ ----------------- ---------
Cash conversion 77%
--------------------------- ---------- ------------ ----------------- ---------
Total capex (58,354) - - (58,354)
--------------------------- ---------- ------------ ----------------- ---------
Adjusted free cash flow 63,720 (7,268) (6,794) 49,658
=========================== ========== ============ ================= =========
4. SEGMENT REPORTING
The Directors consider the Group's reportable segments to be the
Clay and Concrete divisions.
The key Group performance measure is adjusted EBITDA, as
detailed below, which is defined in Note 3. The tables, below,
present revenue and adjusted EBITDA and profit/(loss) before
taxation for the Group's operating segments.
Included within the unallocated and elimination columns in the
tables below are costs including share based payments and Group
employment costs. Unallocated assets and liabilities are pensions,
taxation and certain centrally held provisions. Eliminations
represent the removal of inter-company balances. Transactions
between segments are carried out at arm's length. There is no
material inter-segmental revenue and no aggregation of segments has
been applied.
For all the periods presented, the activities of Ibstock Futures
were managed and reported as part of the Clay division.
Consequently, the position and performance of Ibstock Futures for
all periods has been classified within the Clay reportable
segment.
Six months ended 30 June 2023
Clay Concrete Unallocated Total
& elimination
GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 161,660 61,072 - 222,732
--------- --------- --------------- ---------
Adjusted EBITDA 57,432 10,903 (5,470) 62,865
Adjusted EBITDA margin 35.5% 17.9% 28.2%
Exceptional items impacting
operating profit (see Note
5) (10,728) - - (10,728)
Depreciation and amortisation
pre fair value uplift (11,376) (2,534) (81) (13,991)
Incremental depreciation
and amortisation following
fair value uplift (3,510) (2,581) - (6,091)
Net finance costs (305) (239) (1,636) (2,180)
---------
Profit/(loss) before tax 31,513 5,549 (7,187) 29,875
Taxation (7,479)
---------
Profit for the period 22,396
=========
Included within revenue for the six months period ended 30 June
2023 were GBP1.1 million of bill and hold transactions in the Clay
division. At 30 June 2023, GBP1.1 million of inventory relating to
these bill and hold transactions remained on the Clay division's
premises as well as GBP0.2 million of prior bill and hold sales on
the Concrete division's premises. During the current period, one
customer accounted for greater than 10% of Group revenues with
GBP39.4 million of sales across the Clay and Concrete
divisions.
Six months ended 30 June 2022
Clay Concrete Unallocated Total
& elimination
GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 185,532 73,781 - 259,313
--------- --------- --------------- ---------
Adjusted EBITDA 64,377 11,318 (4,952) 70,743
Adjusted EBITDA margin 34.7% 15.3% 27.3%
Exceptional items impacting
operating profit (see Note
5) (756) - - (756)
Depreciation and amortisation
pre fair value uplift (10,452) (2,902) (67) (13,421)
Incremental depreciation
and amortisation following
fair value uplift (3,391) (2,070) - (5,461)
Net finance costs 965 (218) (629) 118
--------- --------- --------------- ---------
Profit/(loss) before tax 50,743 6,128 (5,648) 51,223
--------- --------- --------------- ---------
Taxation (10,415)
---------
Profit for the period 40,808
=========
Year ended 31 December 2022
Clay Concrete Unallocated Total
& elimination
GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 369,193 143,693 - 512,886
--------- --------- --------------- ---------
Adjusted EBITDA 126,687 23,604 (10,624) 139,667
Adjusted EBITDA margin 34.3% 16.4% 27.2%
Exceptional items impacting
operating profit (see Note
5) 6,222 56 - 6,278
Depreciation and amortisation
pre fair value uplift (20,659) (5,546) (187) (26,392)
Incremental depreciation
and amortisation following
fair value uplift (6,936) (5,190) - (12,126)
Net finance costs (366) (430) (1,867) (2,663)
---------
Profit/(loss) before tax 104,948 12,494 (12,678) 104,764
Taxation (17,884)
---------
Profit for the year 86,880
=========
Clay Concrete Unallocated Total
Total segment assets GBP'000 GBP'000 GBP'000 GBP'000
---------- --------- ------------ ----------
At 30 June 2023 619,731 138,307 14,372 772,410
At 31 December 2022 596,769 146,553 19,460 762,782
At 30 June 2022 579,884 152,150 63,199 795,233
Clay Concrete Unallocated Total
Total segment liabilities GBP'000 GBP'000 GBP'000 GBP'000
---------- --------- ------------ ----------
At 30 June 2023 (186,081) (47,470) (124,605) (358,156)
At 31 December 2022 (183,079) (52,172) (111,322) (346,573)
At 30 June 2022 (178,484) (59,631) (120,326) (358,441)
5. EXCEPTIONAL ITEMS
Unaudited Unaudited
Half year Half year Year ended
ended 30/06/2023 ended 30/06/2022 31 December
2022
------------------ ------------------ -------------
GBP'000 GBP'000 GBP'000
Exceptional cost of sales
Impairment charge - Property,
plant and equipment (7,530) (554) (554)
Impairment charge - working (1,668) - -
capital
------------------ ------------------ -------------
Total impairment charge (9,198) (554) (554)
Redundancy costs (1,530) (202) (126)
------------------ ------------------ -------------
Total exceptional cost of
sales (10,728) (756) (680)
Exceptional profit on disposal
of property plant and equipment - - 6,958
------------------ ------------------ -------------
Exceptional items impacting
operating profit (10,728) (756) 6,278
Total exceptional items (10,728) (756) 6,278
================== ================== =============
Included within the current period were the following
exceptional items:
Exceptional cost of sales
Impairment charges arising in the current period related to the
impairment of non-current assets and working capital items at the
Group's Ravenhead site. Due to the materiality and non-recurring
nature of the events giving rise to them, these costs have been
categorised as exceptional.
Exceptional redundancy costs relate to employees engaged in
production activities following the Group's announced restructuring
activity for the Ravenhead site in the Clay division. These costs
have been categorised as exceptional due to their materiality and
the non-recurring nature of the events giving rise to the
costs.
Tax on exceptional items
In the current period, impairment charges arising on non-current
assets are not tax deductible, but give rise to a deferred tax
credit in the period. The impairment charge on current assets and
redundancy costs are treated as tax deductible in the period. The
total tax credit on exceptional items is GBP2.6 million.
Six-month period ended 30 June 2022 and year ended 31 December
2022
Details of exceptional items included within the prior interim
and full year periods are disclosed within Note 5 of the Group's
2022 interim results and 2022 Annual report and accounts,
respectively.
6. TAXATION
The taxation charge for the interim period is an estimate based
on the expected full year effective tax rate.
7. EARNINGS PER SHARE
The basic earnings per share figures are calculated by dividing
profit for the year attributable to the parent shareholders by the
weighted average number of Ordinary Shares in issue during the
year. The diluted earnings per share figures allow for the dilutive
effect of the conversion into Ordinary Shares of the weighted
average number of options outstanding during the year. Where the
average share price for the year is lower than the option price the
options become anti-dilutive and are excluded from the calculation.
The number of shares used for the earnings per share calculation
are as follows:
Half year Half year Year
ended ended ended
30/06/2023 30/06/2022 31 December
2022
(000s) (000s) (000s)
------------ ------------ -------------
Basic weighted average number of
Ordinary Shares 392,063 408,300 402,746
Effect of share incentive awards
and options 3,152 611 2,010
------------ ------------ -------------
Diluted weighted average number of
Ordinary Shares 395,215 408,911 404,756
------------------------------------ ------------ ------------ -------------
The calculation of adjusted earnings per share is a key
measurement used by management that is not defined by IFRS. The
adjusted earnings per share measures should not be viewed in
isolation, but rather treated as supplementary information.
Adjusted earnings per share figures are calculated as the Basic
earnings per share adjusted for exceptional items, fair value
adjustments being the amortisation and depreciation on fair value
uplifted assets and non-cash interest expenses. Adjustments are
made net of the associated taxation impact at the adjusted
effective tax rate. A reconciliation of the statutory profit to
that used in the adjusted earnings per share calculations is as
follows:
Half year Half year Year
ended ended ended
30/06/2023 30/06/2022 31 December2022
GBP'000 GBP000 GBP'000
--------------------------------------------- ------------ ------------ -----------------
Profit for the period attributable
to the parent shareholders 22,397 40,808 86,908
Add back/(less) exceptional items
(Note 5) 10,728 756 (6,278)
Less tax credit on exceptional items (2,605) (132) (453)
Add fair value adjustments 6,091 5,461 12,126
Less tax credit on fair value adjustments (1,480) (951) (2,000)
Less net non-cash interest (225) (1,703) (1,376)
Add back tax expense on non-cash
interest 55 296 227
Add back impact of deferred taxation
rate change 223 1,500 2,095
--------------------------------------------- ------------ ------------ -----------------
Adjusted profit for the period attributable
to the parent shareholders 35,184 46,035 91,249
Half year Half year Year ended
ended ended 31 December
30/06/2023 30/06/2022 2022
pence pence pence
--------------------------------------------- ------------ ------------ -----------------
Basic EPS on profit for the year 5.7 10.0 21.6
Diluted EPS on profit for the year 5.7 10.0 21.5
Adjusted basic EPS on profit for
the year 9.0 11.3 22.7
Adjusted diluted EPS on profit for
the year 8.9 11.3 22.5
8. BORROWINGS
Half year ended Half year 31 December
30/06/2023 ended 30/06/2022 2022
================ ================== ============
GBP'000 GBP'000 GBP'000
Current
Private Placement 324 324 436
Revolving Credit Facility 13,098 100 -
---------------- ------------------ ------------
13,422 424 436
Non-current
Private Placement 99,784 99,753 99,769
---------------- ------------------ ------------
Total borrowings 113,206 100,177 100,205
================ ================== ============
At 30 June 2023, the Group held GBP100 million of private
placement notes from Pricoa Private Capital (Pricoa), with
maturities of between 7 and 12 years and an average total cost of
funds of 2.19% (range 2.04%-2.27%). The agreement with Pricoa also
contains an additional uncommitted shelf facility of up to $88.1
million (or equivalent in available currencies). The agreement
contains debt covenant requirements of leverage (net debt to
adjusted EBITDA) and interest cover (adjusted EBITDA to net finance
charges) of 3 times and 4 times, respectively, tested semi-annually
on 30 June and 31 December in respect of the preceding 12-month
period.
Additionally, a GBP125 million RCF facility is held with a
syndicate of five banks for an initial four year period ending in
November 2025, which was extended to November 2026 in the prior
year. Interest is charged at a margin (depending upon the ratio of
net debt to Adjusted EBITDA) of between 160bps and 260bps above
SONIA, SOFR or EURIBOR according to the currency of the borrowing.
The facility also includes an additional GBP50 million uncommitted
accordion facility. Based on current leverage, the Group will pay
interest under the RCF initially at a margin of 160bps. This
facility contains debt covenant requirements that align with those
of the private placement with the same testing frequency. As at 30
June 2023 the RCF was drawn down by GBP13 million. As at the date
of approval of these financial statements, the drawn down amount
had reduced to GBP8 million.
The carrying value of financial liabilities have been assessed
as materially in line with their fair values, with the exception of
GBP100 million of private placement notes. The fair value of these
borrowings has been assessed as GBP83 million.
No security is currently provided over the Group's
borrowings.
9. IMPAIRMENT
For tangible asset impairment testing purposes, the Group has
determined that each factory is a separate Cash Generating Unit
(CGU), with the exception of the Longley concrete sites, which are
considered together as one CGU. For intangible asset impairment
testing, the Group has determined that each legal entity is a
separate CGU as this is the lowest level at which the intangible
assets can be directly attributed.
In June 2023, following announcement of the proposed cessation
of production at the Ravenhead site in the Clay division,
management performed detailed impairment testing for the carrying
value of the assets associated with the Ravenhead CGU as at 30 June
2023.
Management determined the recoverable amount based on the fair
value less costs to disposal ("FVLCTD"). This assessment falls
within level 3 of the fair value hierarchy and was based on
management's judgement that the assets could not be sold for any
value, this being the assumption the recoverable amount is most
sensitive to.
Determination of FVLCTD by management reflected full impairment
of all items of plant and machinery, buildings, minerals and
majority of working capital for which management's assessment was
that no alternative use, future salvage value or disposal proceeds
are expected for the impacted assets.
However, management separately applies the requirements of IAS
36 to the land on sites owned, according to the accounting policy
and concluded that the recoverable amount for the land is expected
to exceed the carrying value, and hence these assets remain
unimpaired.
This assessment of impairment resulted in the recognition of an
exceptional impairment charge of GBP9.2 million within cost of
sales within the Group's consolidated income statement.
The impairment of assets valued at historical cost impacted the
Clay operating segment of the Group in the current period as
follows:
GBPmillion
Buildings 3.1
-----------
Mineral reserves 1.1
-----------
Plant, machinery and
equipment 3.3
-----------
Working capital 1.7
-----------
Total 9.2
-----------
Detailed impairment testing was performed at 31 December 2022
with no impairment recognised. Management performed an indicators
of impairment review for the Group's remaining CGUs at 30 June 2023
and assessed the impacts that the macroeconomic events may have on
the recoverable value of the CGUs, compared to the assumptions
applied in December 2022 impairment testing. No indicators of
impairment were identified as having arisen since 31 December 2022
warranting further detailed testing, other than those specific
indicators related to the Ravenhead CGU, for which detailed
impairment testing was performed.
10. NOTES TO THE GROUP CASHFLOW STATEMENT
Unaudited Unaudited Unaudited
Half year Half year Year ended
ended 30/06/2023 ended 30/06/2022 31 December
2022
------------------ ------------------ -------------
Cash flows from operating GBP'000 GBP'000 GBP'000
activities
-------------------------------------- ------------------ ------------------ -------------
Profit before taxation 29,875 51,223 104,764
Adjustments for:
Depreciation 16,613 15,413 31,579
Impairment of property plant
and equipment 7,529 554 554
Impairment of working capital 1,670 - -
Amortisation of intangible
assets 3,469 3,469 6,939
Finance costs 2,180 (118) 2,663
Loss/(gain) on disposal of
property, plant and equipment (1,393) 73 (6,541)
Research and development expenditure
credit (750) (750) (1,560)
Share based payments 1,432 857 2,547
Post-employment benefits 149 (488) (973)
Other (592) - (172)
------------------ ------------------ -------------
60,182 70,233 139,800
Increase in inventory (19,539) (5,228) (21,255)
Increase in trade and other
receivables (10,676) (28,642) (930)
Decrease/increase in trade
and other creditors (9,193) 23,704 20,650
Decrease in provisions 1,404 (523) (500)
Cash generated from operations 22,178 59,544 137,765
-------------------------------------- ------------------ ------------------ -------------
11. FINANCIAL INSTRUMENTS
IFRS 13 'Financial Instruments: Disclosures' requires fair value
measurements to be recognised using a fair value hierarchy that
reflects the significance of the inputs used in the measurements,
according to the following levels:
Level 1 - Unadjusted quoted prices in active markets for
identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within Level
1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from
prices).
Level 3 - Inputs for the asset or liability that are not based
on observable market data (that is, unobservable inputs).
At 30 June 2023, 31 December 2022 and 30 June 2022, the Group's
fair value measurements were categorised as Level 2, except for
quoted investments within the Group's pension schemes (No quoted
investments at 30 June 2023, GBP1.8 million at 31 December 2022 and
GBP148.7 million at 30 June 2022), which were valued as Level
1.
The Group entered into forward currency contracts as cash flow
hedges to manage its exposure to foreign currency fluctuations
associated with the future purchases of plant and equipment
required for the construction of the major capital expenditure
projects. These instruments are measured at fair value using Level
2 valuation techniques subsequent to initial recognition.
At 30 June 2023, a liability valued at GBP0.1 million (31
December 2022: an asset of GBP0.6 million; 30 June 2022: an asset
of GBP0.4 million) was recognised for these derivative financial
instruments.
At 30 June 2023, 31 December 2022 and 30 June 2022, all of the
Group's fair value measurements have been categorised as Level 2
with the exception of (i) certain equities within the Group's
pension scheme, which were categorised as Level 1 valuations and
(ii) the insured pensioner and deferred pensioner asset, which was
categorised as a Level 3 valuation and uses assumptions set out in
Note 12 to align its valuation to the related liability.
At 30 June 2023, 31 December 2022 and 30 June 2022, the Group
held no other significant derivative financial instruments. There
were no transfers between levels during any period disclosed.
The carrying value of the Group's short-term receivables and
payables is a reasonable approximation of their fair values. The
fair value of all other financial instruments carried within the
Group's financial statements is not materially different from their
carrying amount, with the exception of GBP100 million of private
placement notes. The fair value of these borrowings has been
assessed as GBP83 million.
12. POST EMPLOYMENT BENEFITS
The Group participates in the Ibstock Pension Scheme (the
'Scheme'), a defined benefit pension scheme in the UK. During the
six-month period ended 30 June 2023, the opening Scheme surplus of
GBP15.2 million decreased to a closing surplus of GBP10.5 million.
Analysis of the movements during the six-month period ended 30 June
2023 was as follows:
GBP'000
Scheme surplus at 1 January
2023 (audited) 15,194
Administration expenses (440)
Interest income 359
Remeasurement due to:
- Change in financial assumptions 20,030
- Change in demographic assumptions 5,774
- Experience losses (7,306)
- Return on plan assets (23,415)
Company contributions 292
Scheme surplus at 30 June 2022
(unaudited) 10,488
=========
On 20 December 2022, the Scheme completed a full buy-in
transaction with a specialist third-party provider, which
represented a significant step in the Group's continuing strategy
of de-risking its pensions exposure. This transaction, together
with the partial buy-in transaction in 2020 insures the significant
majority of the Group's defined benefit liabilities. As a result,
the insured asset and the corresponding liabilities of the Scheme
are assumed to be broadly matched without exposure to interest
rate, inflation risk or longevity risk. However, there is a
residual risk that the insurance premium may be increased following
a data cleanse to reflect a more accurate liability position. If
the surplus Scheme assets are insufficient to meet any additional
premium, then the company may need to pay an additional
contribution into the Scheme.
The 2022 buy-in transaction attracted a total buy-in premium of
GBP175.6 million. The initial premium payment of GBP81.3 million
was settled on 28 December 2022 by the transfer of certain
Scheme-invested assets.
In 2023, two further premium payments totalling GBP74.2 million
were made. The remaining premium of GBP20.1million is expected to
be paid by 20 December 2024, with a present value of GBP18.6
million having been recognised as negative assets against the
Bespoke cash flow-drive investment and the cash and net current
assets of the scheme.
The financial assumptions used by the actuary have been derived
using a methodology consistent with the approach used to prepare
the accounting disclosures at 31 December 2022. The assumptions
have been updated based on market conditions at 30 June 2023:
Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
Per annum Per annum Per annum
Discount rate 5.25% 3.65% 4.80%
RPI inflation 3.25% 3.20% 3.20%
CPI inflation 2.65% 2.60% 2.60%
Rate of increase in pensions
in payment 3.65% 3.65% 3.65%
Mortality assumptions: life
expectation at age 65
For male currently aged 65 21.4 years 21.9 years 21.9 years
For female currently aged 65 24.1 years 24.5 years 24.5 years
For male currently aged 40 23.1 years 23.6 years 23.6 years
For female currently aged 40 25.9 years 26.4 years 26.4 years
In light of the fact that the pension scheme was in a net
surplus position after the full buy-in, the Trustees and the Group
have agreed that the Group would suspend paying contributions with
effect from 1 March 2023.
13. BUSINESS COMBINATION
On 29 July 2022, Ibstock Building Products Limited acquired 75%
of the issued share capital of Generix Facades Limited, for total
consideration of GBP1.1 million, of which GBP0.1 million was
deferred to 29 July 2023.
Management has reviewed the assessment of fair values
attributable to the acquired identifiable assets and concluded that
no further fair value adjustments are required.
14. OTHER RESERVES
Cash Merger Own Treasury Total
flow hedging reserve shares shares other
reserve held reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ---------- -------- --------- ----------
Balance at 1 January
2023 (audited) 418 (369,119) (1,589) (30,000) (400,290)
Other comprehensive
income (500) - - - (500)
Issue of own shares
held on exercise of
share options - - 299 - 299
At 30 June 2023 (unaudited) (82) (369,119) (1,290) (30,000) (400,491)
----------------------------- -------------- ---------- -------- --------- ----------
-
Balance at 1 January
2022 (audited) (74) (369,119) (1,741) - (370,934)
Other comprehensive
expense 431 - - - 431
Purchase of own shares - - - (6,298) (6,298)
Issue of own shares
held on exercise of
share options - - 97 - 97
-------------- ---------- -------- --------- ----------
At 30 June 2022 (unaudited) 357 (369,119) (1,644) (6,298) (376,704)
----------------------------- -------------- ---------- -------- --------- ----------
-
Balance at 1 July
2022 (unaudited) 357 (369,119) (1,644) (6,298) (376,704)
Other comprehensive
expense 61 - - - 61
Purchase of own shares - - - (23,702) (23,702)
Issue of own shares
held on exercise of
share options - - 55 - 55
At 31 December 2022
(audited) 418 (369,119) (1,589) (30,000) (400,290)
----------------------------- -------------- ---------- -------- --------- ----------
Cash flow hedging reserve
The cash flow hedging reserve records movements for effective
cash flow hedges measured at fair value. The accumulated balance in
the cash flow hedging reserve will be reclassified to the cost of
the designated hedged item in a future period.
Merger reserve
The merger reserve of GBP369.1 million arose on the acquisition
of Figgs Topco Limited by Ibstock plc in the period ended 31
December 2015 and is the difference between the share capital and
share premium of Figgs Topco Limited and the nominal value of the
investment and preference shares in Figgs Topco Limited acquired by
the Company.
Own shares held
The Group's holding in its own equity instruments is shown as a
deduction from shareholders' equity at cost totalling GBP1.3
million at 30 June 2023 (30 June 2022: GBP1.6 million, 31 December
2022: GBP1.6 million). These shares represent shares held in the
Employee Benefit Trust to meet the future requirements of the
employee share based payment plans. Consideration, if any, received
for the sale of such shares is also recognised in equity with any
difference between the proceeds from sale and the original cost
being taken to the profit and loss reserve. No gain or loss is
recognised in the income statement on the purchase, sale, issue or
cancellation of equity shares.
Treasury share reserve
The Treasury share reserve represents shares acquired by the
Group as part of its share buyback programme in 2022.
Commencing 10 May 2022, the Group engaged its brokers to
purchase up to GBP30.0 million of shares on the open market on its
behalf. These shares are held by the Group to meet future
requirements of employee share based payment plans. At 30 June
2023, the Treasury shares reserve contained 16,791,470 shares.
15. RELATED PARTY TRANSACTIONS
There were no related party transactions nor any related party
balances in either the 2023 or 2022 financial periods.
16. DIVIDENDS PAID AND PROPOSED
A final dividend for 2022 of 5.5 pence per ordinary share (2021:
5.0 pence) was paid on 12 May 2023. The Directors have declared an
interim dividend of 3.4 pence per ordinary share in respect of 2023
(2022: 3.3 pence), amounting to a dividend of GBP13.3 million
(2022: GBP13.4 million). The interim dividend will be paid on 15
September 2023 to all shareholders on the register at close of
business on 25 August 2023.
These condensed consolidated financial statements do not reflect
the 2023 interim dividend payable.
17. POST BALANCE SHEET EVENTS
Except for the proposed ordinary dividend (see Note 16), no
further subsequent events requiring either disclosure or adjustment
to these financial statements have arisen since the balance sheet
date.
INDEPENDENT REVIEW REPORT TO IBSTOCK PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and related notes 1 to
17.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with United Kingdom adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council for use in the
United Kingdom (ISRE (UK) 2410). A review of interim financial
information consists of making inquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of
Ibstock Plc (the "Group") are prepared in accordance with United
Kingdom adopted international accounting standards. The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with United Kingdom adopted
International Accounting Standard 34, "Interim Financial
Reporting".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410; however future events or conditions
may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our Conclusion, including our Conclusion Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
ISRE (UK) 2410. Our work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
1 August 2023
(1) Alternative Performance measures are described in Note 3 to this results announcement
(2) January - May 2023 UK domestic brick deliveries reduced by
31% compared to the prior year (Source: Department for Business
& Trade Monthly Bulletin of Building Materials - June 2023)
(3) The current period included GBP1m of revenue from Generix
Facades, which was acquired in July 2022
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END
IR KZGGRZMKGFZZ
(END) Dow Jones Newswires
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