We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Brickability Group Plc | LSE:BRCK | London | Ordinary Share | GB00BK63S759 | ORD GBP0.01 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 60.50 | 60.00 | 61.00 | 60.50 | 60.30 | 60.50 | 241,673 | 08:00:28 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Brick, Rel Constr Mail-whsl | 681.09M | 27.74M | 0.0924 | 6.55 | 181.68M |
TIDMBRCK
RNS Number : 6910H
Brickability Group PLC
28 November 2022
28 November 2022
Brickability Group PLC
("Brickability" or "the Group")
Interim Results for the six months ended 30 September 2022
Brickability Group PLC (AIM: BRCK), the leading construction materials distributor, today announces its unaudited interim results for the six months ended 30 September 2022.
Financial Highlights
-- Revenue increased by 57.8% to GBP352.7m (H1 FY22: GBP223.5m) -- Group like-for-like* revenue growth of 9.3% -- Gross profit increased by 40.8% to GBP54.9m (H1 FY22: GBP39.0m) -- Profit before tax increased by 71.9% to GBP15.3m (H1 FY22: GBP8.9m )[1] -- Adjusted EBITDA** increased by 45.7% to GBP25.5m (H1 FY22: GBP17.5m) [1] -- Net debt as at 30 September 2022 of GBP27.4m (H1 FY22: net cash GBP2.8m) -- Interim dividend of 1.01 pence per share (H1 FY22: 0.96 pence)
Operational Highlights
-- Strong performance across all Group divisions in first half of FY23, despite macroeconomic and geopolitical backdrop -- Continued strong order intake moving into the second half -- Two acquisitions in period - Modular Clay Products in May 2022 and ET Clay Products in September 2022 -- Appointment of two additional Independent Non-Executive Directors, Susan McErlain and Sharon Collins, during the period
Post Period and Outlook
-- Board remains vigilant of wider macroeconomic challenges but confident in the Group's ability to deliver performance in line with market expectations for the full year***
[1] Re-stated (see note 8 of the interim financial statements)
*like-for-like ("LFL") sales is a measure of growth in sales, adjusted for the impact of acquisitions.
**Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortisation, share option expense, acquisition costs and exceptional items.
***Full year market expectations as at the date of this announcement of adjusted EBITDA of approximately GBP44.5 million
John Richards, Chairman, commented:
"The first half of the year has seen the Group benefit from the earlier strategic decision to move into new market segments within the construction and housebuilding industries thereby diversifying and expanding both the Group's product portfolio and end markets. This, combined with the increase in import and distribution capacity, has significantly increased the Group's customer base which has in turn led to sales and profit growth across all four divisions.
"Whilst the market continues to be impacted by macroeconomic and geopolitical pressures, the fundamentals of our industry remain strong, albeit the impact of the current UK economic environment on our business during 2023 is unclear. However, having built a robust and increasingly diverse business, we remain confident in the Group's ability to continue to deliver on its strategy and to meet market expectations for the full year."
This announcement contains inside information.
Enquiries:
Brickability Group PLC via Montfort Communications John Richards, Chairman Alan Simpson, CEO Mike Gant, CFO Cenkos Securities plc (Nominated adviser and broker) Ben Jeynes, Max Gould (Corporate Finance) Julian Morse, Alex Pollen (Sales) +44 (0) 207 397 8900 Montfort Communications +44 (0) 203 514 0897 James Olley brickability@montfort.london Georgia Colkin
About Brickability
Brickability is a leading construction materials distributor, serving customers across the UK and Europe for over 37 years through its national and local networks. The Group supplies over 550m bricks annually and has over 55 locations across the country with over 600 employees.
Brickability Group PLC
Interim Report for the six months ended 30 September 2022
Chairman's Statement
Overview
We are pleased to report a strong set of results for the six months to 30 September 2022 with the Group delivering a solid financial performance, achieving an adjusted EBITDA of GBP25.5 million.
Firmly focused on diversifying and driving growth, the Group has continued to achieve both increased scale and presence within the construction and housebuilding industries. Brickability's strategic positioning, underpinned by its differentiated business model and diverse product mix, has enabled us to successfully identify opportunities and effectively manage demand, whilst adapting and responding to market conditions. We continue to operate within a supportive government regulatory environment and continue to experience strong demand across the undersupplied construction and housebuilding sector. Whilst the market continues to be impacted by macroeconomic and geopolitical pressures, the fundamentals of our industry remain strong, albeit the impact of current UK economic environment on our business during 2023 is unclear. However, having built a robust and increasingly diverse business, with a broad product portfolio, strong customer relationships, cost discipline and ability to effectively adapt, we remain confident in the Group's ability to continue to deliver on its strategy and to meet market expectations for the full year.
Acquisitions
During the first half of the year, we announced the strategic acquisition of Modular Clay Products in May 2022 which was followed by the acquisition of ET Clay Products on 30 September 2022. Both acquisitions have significantly strengthened our import capabilities, increasing scale nationally and providing the Group with access to new suppliers in Europe, with the addition of Turkey, as well as the United States. Moving forward, we will continue to look for opportunities to grow the businesses organically and to capitalise on the synergies created within the Group.
Board and Environmental, Social and Governance
With the Group's significant expansion in scale and customer base, it has been important to ensure continued progress is made not only strategically, but also operationally. During the first half of the year, the Group strengthened the financial, marketing and HR departments which have all played a pivotal role in ensuring the smooth transition, integration and governance of new acquisitions into the Group and the identification of internal and external opportunities.
The Board was delighted to announce the appointments of Susan McErlain and Sharon Collins as Independent Non-Executive Directors during the period. Both Susan and Sharon have proven to be valuable additions to the Board, bringing with them a wealth of experience, helping to support the Group as it performs against its stated strategy.
As announced at the time of the Group's Preliminary Results in July 2022, we are acutely aware of the role and responsibility we have in tackling ESG priorities as Brickability grows. W e remain committed to continuously developing our environmental, social and governance strategy, and to identifying additional ways in which all our businesses and people can make small but significant changes in the way we operate to lessen our impact on the environment, as well as taking the time to support local causes.
Over the last six months the Group has launched several initiatives including the use of EV and hybrid vehicles within the Group's fleet, as well as continuing to support charitable initiatives through The Brickability Group Foundation which has provided grants, sponsorship match funding, material donations for community projects, social impact initiatives and humanitarian appeals.
Interim Dividend
The Board is pleased to announce an interim dividend of 1.01p per share (H1 FY22: 0.96p), payable on 23 February 2023, reflecting the performance of the business in the half year and the Board's confidence in the longer-term outlook for the Group. The ex-dividend date is 26 January 2023 with associated record date of 27 January 2023.
John Richards
Chairman
25 November 2022
Chief Executive's Review
Our divisions have once again performed well during the first half of the year with both revenue and profit significantly ahead of the prior period, reflecting the diversity of the Group and the strength of Brickability's positioning within the market.
We are pleased to report the Group has experienced a high level of demand across all businesses, although the availability of some products has continued to be challenging. In addition, significant materials price inflation along with fuel surcharges have substantially contributed to revenue growth during the period.
Group EBITDA margin is lower than the prior year, driven by the Taylor Maxwell business which operates on lower margins than the Brickability business prior to the acquisition, and with the prior year comparator including only three months of post-acquisition trade of Taylor Maxwell. In addition, timber margins have fallen back from the exceptional highs of last year and the margins in some of our businesses have been adversely impacted where we have not yet been able to immediately pass on all costs attributed to both materials price inflation and fuel surcharges.
Over the last couple of years, the Group has grown significantly and we are ensuring we support this growth with recruitment at both Group and divisional levels together with optimising our processes through the rollout of standardised IT system platforms across all businesses. In addition, during the first half of the year, the Group took the decision to re-align the reporting structure of some of our businesses and we have moved from three divisions to four in order to support the continued growth of the Group and to further improve efficiencies. The Group's four distinct business divisions are:
-- Bricks and Building Materials - businesses that are primarily brick, timber and other building materials factors -- Importing - businesses that primarily source, transport and distribute bricks and roof tiles from European and other overseas manufacturers -- Distribution - businesses that stock and distribute products such as towel radiators and valves, facia, soffits and guttering, weatherboard cladding, doors, windows, solar panels and car chargers -- Contracting - businesses that supply and fit roofing and flooring
Full details of our divisions and each of our businesses can be found at https://brickabilitygroupplc.com/
Bricks and Building Materials Division
The Group's largest division, representing c75% of total sales, grew revenues by 57.3%, 4.3% LFL during the period. Despite supply issues from both UK and European manufacturers, brick volumes in the period were comparable with the prior year on a LFL basis against a strong comparator, with price increases and mix being the driver of LFL revenue growth. In line with our expectations, timber volumes and pricing have fallen back following the exceptional highs of H1 FY22. The EBITDA margin of the division has diluted in the first half compared to the prior period due to the impact of Taylor Maxwell businesses as noted above.
Taylor Maxwell's operational and scheduling systems have been successfully implemented into two more of the Group's businesses with further businesses to be transitioned during the second half of the year. The Group is also transitioning to a single financial accounting system and this has also been implemented alongside the scheduling system in the two aforementioned businesses.
In June 2022 we entered a new, long-term strategic partnership with Thyssenkrupp Materials UK to develop a new balcony system to produce the next generation of balconies that will improve lead times and reduce time spent on-site, whilst providing exceptional curb appeal and functionality. The patented design has passed the testing stage and we expect to launch the system in the beginning of the new calendar year.
Importing Division
Importing Division revenue increased by 68.4% in the first half including Modular Clay Products which was acquired on 31 May 2022. Since acquisition Modular Clay Products has performed strongly and, adjusting for this acquisition, LFL Importing Division revenue increased by 51.4% reflecting our expertise in sourcing and our strong relationships with overseas manufacturers. McCann Logistics has seen significant growth in revenue following the increase in its trailer fleet and expansion of its operations to cover haulage from the Netherlands, Germany, France, Spain, Belgium, and Portugal.
Contracting Division
Revenue in the first half grew by 89.2% including Beacon Roofing which was acquired on 31 March 2022 and has performed very well since this time. Adjusting for this acquisition, LFL revenue increased by 18.2%. Margins are beginning to improve from the impacts of the unprecedented number and level of price increases in roof tiles experienced last year. It has been a busy period for the Contracting Division, and we have won a number of new contracts from a competitor who has recently entered administration and the Division continues to work with our Group colleagues at Upowa to explore opportunities to install solar panels.
Distribution Division
Revenue in the first half grew by 50.2% in the Distribution Division and 35.8% LFL. Towelrads continues to grow strongly and Fraser Simpson almost doubled revenues during in the period compared to H1 FY22. Upowa, our renewable energy products business that was acquired in November 2021 has won multiple significant national housebuilder contracts which have commenced installation and are expected to scale up from Q2 FY24. The new EV car charger which has been developed exclusively for the Group, with the installer and end user in mind, is expected to be launched in the first quarter of the new calendar year.
Continental Tile Joint Venture
In March 2022 the Group announced the formation of the Schermbecker Building Products GmbH joint venture operating from a factory in Germany in connection with a leading German tile manufacturer and producer of roofing materials. Initial manufacture and start-up production of clay roof tiles by the joint venture was very good but as a result of volatility of energy prices in Germany, we expect that the commissioning of the new capital investment by the joint venture will now be completed during spring 2023, at which point we will be able to commence production of clay roof tiles much needed by the UK market.
As outlined in the Chairman's Statement, the Group completed the acquisition of ET Clay Products Limited and Heritage Clay Tiles Limited (together "ET Clay Products") on 30 September 2022. Established over 25 years ago, ET Clay Products is a specialist supplier of UK and imported clay facing bricks and high quality handmade and handcrafted clay roof tiles. Operating from three yards, the businesses will bring new customers to the Group, particularly in the merchant's channel, further diversifying the Group's customer and revenue base.
Summary
Brickability has continued to demonstrate its ability to deliver upon its strategic objectives and remains committed to growing the business in a sustainable manner.
Alan J Simpson
Chief Executive
25 November 2022
Financial Review
Revenue and gross margin
The Group delivered revenue of GBP352.7 million in the first six months of H1 FY23 (H1 FY22: GBP223.5 million), representing a total increase of 57.8% (GBP129.2 million). When the impact of acquisitions is excluded from revenue, like for like ("LFL") revenue increased by 9.3% when compared to H1 FY22.
The increase in LFL revenue largely reflects the general increase in prices across the industry. The increase in the Bricks and Building Materials division, however, is at a lower level than the other divisions due to the volatility in the timber market which has seen an expected fall in prices.
Revenue by division was:
H1 FY23 H1 FY22 LFL GBP'000 GBP'000 % Increase % increase ===================== ========== ========== ============= ============= Bricks and Building Materials 270,101 171,713 57.3% 4.3% ===================== ========== ========== ============= ============= Importing 54,125 32,134 68.4% 51.4% ===================== ========== ========== ============= ============= Distribution 31,041 20,666 50.2% 35.8% ===================== ========== ========== ============= ============= Contracting 19,880 10,505 89.2% 18.2% ===================== ========== ========== ============= ============= Group eliminations (22,478) (11,515) 95.2% ===================== ========== ========== ============= ============= Total 352,669 223,503 57.8% 9.3% ===================== ========== ========== ============= =============
Gross profit for the 6 months increased by 40.8% to GBP54.9 million (H1 FY22: GBP39.0 million) whilst the Group's gross margin percentage decreased to 15.6% (H1 FY22: 17.4%). This has been driven primarily by the acquisition of the Taylor Maxwell business during the prior year, which has traditionally operated on lower margins than the original Brickability Group, together with the normalisation of timber margins and inflationary pricing pressures in the market.
Adjusted profit and adjusted EBITDA
Statutory profit before tax of GBP15.3 million (H1 FY22: GBP8.9 million) includes other items of GBP7.1 million (H1 FY22: GBP6.8 million) which are largely acquisition related and not considered reflective of the Group's underlying trading operations. These are analysed below the Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income.
The Group's adjusted EBITDA increased by 45.7% to GBP25.5 million for the first six months of FY23 compared to GBP17.5 million in the same period last year. EBITDA as a percentage of turnover has fallen slightly to 7.2% (H1 FY22 : 7.8%, FY 2022: 7.6%) due mainly to the impact of the of the Taylor Maxwell business as noted above.
Adjusted EBITDA by division was:
H1 FY23 H1 FY22 EBITDA EBITDA H1 FY23 as % H1 FY22 as % GBP'000 turnover GBP'000 turnover ===================== ========== =========== ========== =========== Bricks and Building Materials 15,704 5.8% 11,261 6.6% ===================== ========== =========== ========== =========== Importing 5,424 10.0% 3,151 9.8% ===================== ========== =========== ========== =========== Distribution 4,953 16.0% 3,918 19.0% ===================== ========== =========== ========== =========== Contracting 2,565 12.9% 949 9.0% ===================== ========== =========== ========== =========== Central (3,112) - (1,752) - ===================== ========== =========== ========== =========== Total 25,534 7.2% 17,527 7.8% ===================== ========== =========== ========== ===========
Profit before tax
Profit before tax for the period was GBP15.3 million (H1 FY22: GBP8.9 million). Comparative results to 30 September 2021 have been restated, following completion of the fair value assessment of consideration and net assets acquired through business combinations shortly before the period end.
The decrease of GBP3.0 million in H1 FY22 profit before tax, compared to the GBP11.9 million originally reported, primarily relates to a charge of GBP2.2 million in connection with earn-out consideration payable for the acquisition of Taylor Maxwell. Contingent consideration of GBP13.0 million was initially recognised within goodwill and deferred consideration payable. However, after review and based on interpretation guidance under IFRS 3, the earn-out consideration payable is treated as remuneration costs and recognised as an expense in profit or loss over the earn-out performance period.
Further details of the prior period restatement are included in note 8 to the interim financial statements.
Earnings per share
Basic EPS was 3.90 pence per share (H1 FY22: 1.95p restated), while adjusted basic EPS was 6.00 p per share (H1 FY22: 4.89p restated). Adjusted EPS is an underlying EPS, based on the adjusted profit as noted above.
Dividend
The Board is recommending an interim dividend of 1.01p per share (H1 FY22: 0.96p) to shareholders on the register at 27 January 2023. The ex-date and payment date for the dividend will be 26 January 2023 and 23 February 2023 respectively.
Cash flow and net debt
The Group generated operating cash flows before movements in working capital of GBP23.7 million in the first six months of the year compared to GBP15.4 million in the same period in FY22. Cash generated from operations was GBP6.3 million (H1 FY22: GBP7.0 million).
The net working capital outflow of GBP17.4 million is comprised of a GBP5.7 million outflow in respect of inventories, trade receivables and trade payables and GBP11.7 million of accrual movements and payments, primarily in respect of supplier rebates, employee bonuses and contingent earn-outs which are timing related and mostly expected to unwind by the financial year end.
The net debt position (cash less bank borrowings) as at 30 September 2022 was GBP27.4 million compared to a net cash position as at 30 September 2021 of GBP2.8m, and is an increase of GBP27.0 million since the net cash position at 31 March 2022.
The increase in net debt during the period follows an increase in working capital requirements of GBP17.4 million (H1 FY22: GBP8.4 million), further investment in property plant and equipment and intangible assets of GBP5.8 million (H1 FY22: GBP3.6 million), tax paid of GBP5.0 million (H1 FY22: GBP2.5 million), dividends paid of GBP6.1 million (H1 FY22: GBP3.2 million), the initial payments for acquisitions of GBP15.4 million (H1 FY22: GBP39.5 million) and payment of deferred consideration, in relation to previous acquisitions, of GBP2.0 million (H1 FY22: GBP0.8 million). Net proceeds of GBP0.5 million (H1 FY22: GBP52.7 million) were received in relation to the issue of shares in the period.
Bank facilities
In June 2021, the Group re-financed into a GBP60 million revolving credit facility with an additional GBP25 million accordion, on a club basis with HSBC and Barclays, that runs for 3 years (with the option of two one-year extensions). Total bank debt as at 30 September 2022 was GBP34.1 million with a further GBP25.9 million of undrawn committed facilities available.
Defined benefit pension scheme
The Group acquired a defined benefit pension scheme during the prior period when it acquired Taylor Maxwell (2017) Limited. However, it has commenced a buy-out process to transfer the risk associated with the scheme. A buy-in contract was incepted on 7 July 2021 and the process to reach the full buy-out stage is well progressed. It is expected that it will be completed within the next 6 to 12 months.
Subsequent events
In October 2022, the Group granted a total of 4,037,124 options under its Long Term Incentive Plan (LTIP) to employees, as previously announced, and in November 2022, the Group purchased a property for GBP2.3 million.
There are no other material post balance sheet events.
Mike Gant
Chief Financial Officer
25 November 2022
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months ended 30 September 2022 (unaudited)
6 months 6 months ended ended Year ended 30 Sept 30 Sept 31 March 2022 2021 2022 GBP'000 (Restated) (Audited) Notes GBP'000 GBP'000 ======================================================= =================== ===================== ================ Revenue 352,669 223,503 520,169 Cost of sales (297,720) (184,551) (433,366) =================================================== =================== ===================== ================ Gross profit 54,949 38,952 86,803 Other operating income - - 354 Administrative expenses 5 (37,654) (29,162) (64,096) =================================================== =================== ===================== ================ Comprising: Depreciation and amortisation (6,122) (3,992) (9,691) Other administrative expenses (31,532) (25,170) (54,405) =================================================== =================== ===================== ================ Impairment losses on financial assets (408) (301) (450) Finance income 52 27 54 Finance expense (2,253) (503) (2,249) Share of post-tax profit of equity accounted associates 91 20 55 Share of post-tax loss of equity accounted joint ventures (384) - (149) Fair value gains / (losses) 886 (110) (1,916) Profit before tax 15,279 8,923 18,406 Tax expense (3,640) (3,798) (6,103) =================================================== =================== ===================== ================ Profit for the period 11,639 5,125 12,303 ======================================================= =================== ===================== ================ Other comprehensive income Items that will not be reclassified to profit or loss: Remeasurements of defined benefit pension schemes 26 (1,987) (1,970) Deferred tax on remeasurement of defined benefit pension schemes (5) 378 374 Fair value gain on investments in equity instruments designated as FVTOCI - - 53 ======================================================= =================== ===================== ================ Other comprehensive income for the period 21 (1,609) (1,543) ======================================================= =================== ===================== ================
Total comprehensive income/ (loss) 11,660 3,516 10,760 ======================================================= =================== ===================== ================ Profit/ (loss) for the year attributable to: =================== Equity holders of the parent 11,661 5,160 12,387 Non-controlling interests (22) (35) (84) =================================================== =================== ===================== ================ 11,639 5,125 12,303 =================================================== =================== ===================== ================ Total comprehensive income/ (loss) attributable to: =================== Equity holders of the parent 11,682 3,551 10,844 Non-controlling interests (22) (35) (84) =================================================== =================== ===================== ================ 11,660 3,516 10,760 =================== Earnings per share ==================================== ===== ====== ======= 3.90 Basic earnings per share 7 p 1.95 p 4.40 p ==================================== ===== ====== ======= 3.83 Diluted earnings per share 7 p 1.92 p 4.32 p ==================================== ===== ====== ======= 6.00 Adjusted basic earnings per share 7 p 4.89 p 10.06 p ==================================== ===== ====== ======= 5.89 Adjusted diluted earnings per share 7 p 4.80 p 9.86 p ==================================== ===== ====== =======
Adjusted profit
Adjusted profit excludes those items that are not considered to be directly attributable to the Group's underlying trade. It can be reconciled to statutory profit after tax as follows:
6 months ended Year ended 6 months 30 Sept 31 March ended 2021 2022 30 Sept 2022 (Restated) (Audited) GBP'000 GBP'000 GBP'000 ================================================== ============ ============= ================ Profit for the period 11,639 5,125 12,303 Acquisition costs 171 999 1,139 Re-financing costs - - 97 Earn-out consideration classified as remuneration under IFRS 3 2,167 2,167 4,333 Share-based payment expense (including employer NI) 571 880 1,597 Amortisation and impairment of intangible assets 3,844 2,635 6,349 Unwinding of discount on contingent consideration 1,332 48 938 Share of post-tax profit of equity accounted associates (91) (20) (55) Fair value (gains)/ losses on contingent consideration (886) 110 1,916 Tax on adjusting items (844) 938 (391) ====================================================== ============ ============= ================ Adjusted profit for the period 17,903 12,882 28,226 ====================================================== ============ ============= ================ Share of post-tax loss of equity accounted joint ventures - - 149 Depreciation and amortisation 2,278 1,357 3,342 Finance income (52) (27) (54) Finance expense 921 455 1,311 Tax expense 4,484 2,860 6,494 ====================================================== ============ ============= ================ Adjusted EBITDA 25,534 17,527 39,468 ====================================================== ============ ============= ================
Adjusted EBITDA reflects earnings before interest, tax, depreciation, amortisation and other items considered non-operational in nature. A reconciliation between adjusted EBITDA and statutory profit before tax is included in note 5.
Condensed Consolidated Balance Sheet
Six months ended 30 September 2022 (unaudited) 6 months 6 months ended ended Year ended 30 Sept 30 Sept 31 March 2022 2021 2022 GBP'000 (Restated) (Audited) Notes GBP'000 GBP'000 ================================================== =================== ==================== ============== Non-current assets Property, plant and equipment 23,363 15,860 18,555 Right of use assets 12,489 10,576 12,162 Intangible assets 158,895 133,061 150,585 Investments in equity accounted associates 321 241 261 Investments in equity accounted joint ventures 2,600 - 279 Investments in financial assets 178 125 178 Deferred tax assets - 98 - Trade and other receivables 1,344 491 1,023 ================================================== =================== ==================== ============== Total non-current assets 199,190 160,452 183,043 ================================================== =================== ==================== ============== Current assets Inventories 36,579 26,807 28,120 Trade and other receivables 131,970 118,788 131,202 Employee benefits 660 833 781 Current income tax assets - - 101 Cash and cash equivalents 6,698 18,389 25,028 ============================================== =================== ==================== ============== Total current assets 175,907 164,817 185,232 ================================================== =================== ==================== ============== Total assets 375,097 325,269 368,275 ================================================== =================== ==================== ============== Current liabilities Trade and other payables (126,685) (125,162) (140,046) Current income tax liabilities (756) (1,283) - Lease liabilities (2,289) (1,825) (2,216) ============================================== =================== ==================== ============== Total current liabilities (129,730) (128,270) (142,262) ================================================== =================== ==================== ============== Non-current liabilities Trade and other payables (21,559) (4,490) (17,717)
Loans and borrowings 10 (33,820) (15,160) (24,240) Lease liabilities (10,813) (9,233) (10,417) Provisions (1,413) (1,694) (1,728) Deferred tax liabilities (16,722) (17,429) (17,427) Total non-current liabilities (84,327) (48,006) (71,529) ================================================== =================== ==================== ============== Total liabilities (214,057) (176,276) (213,791) ================================================== =================== ==================== ============== Net assets 161,040 148,993 154,484 ================================================== =================== ==================== ============== Equity Called up share capital 2,997 2,982 2,985 Share premium account 102,633 102,134 102,146 Capital redemption reserve 2 2 2 Share-based payment reserve 2,438 832 1,930 Merger reserve 11,146 11,146 11,146 Retained earnings 41,936 31,938 36,365 ============================================= ======= ======= ======= Equity attributable to equity holders of the parent 161,152 149,034 154,574 ============================================= ======= ======= ======= Non-controlling interests (112) (41) (90) ============================================= ======= ======= ======= Total equity 161,040 148,993 154,484 ============================================= ======= ======= =======
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2022 (unaudited)
Total attributable to equity Share holders Share premium Capital Share-based Merger Retained of the Non-controlling capital account redemption payments reserve Earnings parent interest Total GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 At 1 April 2021 2,305 49,999 2 266 1,245 31,623 85,440 (6) 85,434 ============================= ===== ========== ===== ====== ======= ======= ==== ======= Profit for the six months to 30 September 2021 (as restated) - - - - - 5,160 5,160 (35) 5,125 Other comprehensive income for the six months to 30 September 2021 (as restated) - - - - - (1,609) (1,609) - (1,609) ============================= ===== ========== ===== ====== ======= ======= ==== ======= Total comprehensive income for the period - - - - - 3,551 3,551 (35) 3,516 Dividends paid - - - - - (3,236) (3,236) - (3,236) Issue of paid shares 578 54,422 - - - - 55,000 - 55,000 Issue of consideration shares 99 - - - 9,901 - 10,000 - 10,000 Share issue costs - (2,287) - - - - (2,287) - (2,287) Increase in share-based payment reserve - - - 566 - - 566 - 566 ============================= ===== ========== ===== ====== ======= ======= ==== ======= Total contributions by and distributions to owners 677 52,135 - 566 9,901 (3,236) 60,043 - 60,043 ============================= ===== ========== ===== ====== ======= ======= ==== ======= At 30 September 2021 (restated) 2,982 102,134 2 832 11,146 31,938 149,034 (41) 148,993 ============================= ===== ========== ===== ====== ======= ======= ==== ======= Profit for the six months to 31 March 2022 - - - - - 7,227 7,227 (49) 7,178 Other comprehensive income for the six months to 31 March 2022 - - - - - 66 66 - 66 ============================= ===== ========== ===== ====== ======= ======= ==== ======= Total comprehensive income for the six months to 31 March 2022 - - - - - 7,293 7,293 (49) 7,244 Dividends paid - - - - - (2,866) (2,866) - (2,866) Issue of shares on exercise of share options 3 12 - - - - 15 - 15 Equity settled share-based payments - - - 607 - - 607 - 607 Deferred tax on share-based payment transactions - - - 491 - - 491 - 491 Total contributions by and distributions to owners 3 12 -1,098 - (2,866) (1,753) - (1,753) ============================= ===== ========== ===== ====== ======= ======= ==== ======= At 31 March 2022 2,985 102,146 21,930 11,146 36,365 154,574 (90) 154,484 ============================= ===== ========== ===== ====== ======= ======= ==== ======= At 1 April 2022 2,985 102,146 21,930 11,146 36,365 154,574 (90) 154,484 ============================= ===== ======= ===== ====== ======= ======= ===== ======= Profit for the six months to 30 September 2022 - - - - - 11,661 11,661 (22) 11,639 Other comprehensive income for the six months to 30 September 2022 - - - - - 21 21 - 21 ============================= ===== ======= ===== ====== ======= ======= ===== ======= Total comprehensive income for the period - - - - - 11,682 11,682 (22) 11,660 Dividends paid - - - - - (6,111) (6,111) - (6,111) Issue of shares on exercise of share options 12 487 - - - - 499 - 499 Equity settled share-based payments - - - 670 - - 670 - 670 Deferred tax on share-based payment transactions - - -(162) - - (162) - (162) ============================= ===== ======= ===== ====== ======= ======= ===== ======= Total contributions by and distributions to owners 12 487 - 508 - (6,111) (5,104) - (5,104) ============================= ===== ======= ===== ====== ======= ======= ===== ======= At 30 September 2022 2,997 102,633 22,438 11,146 41,936 161,152 (112) 161,040 ============================= ===== ======= ===== ====== ======= ======= ===== =======
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2022 (unaudited)
6 months ended Year ended 6 months 30 Sept 31 March ended 2021 2022 30 Sept 2022 (Restated) (Audited) GBP'000 GBP'000 GBP'000 =========================================== =================== =================== ============= ================ Operating activities Profit for the period 11,639 5,125 12,303 Adjustments for: Depreciation of property, plant and equipment 940 472 1,143 Depreciation of right of use assets 1,338 885 2,136 Amortisation of intangible assets 3,844 2,635 6,396 Gain on disposal of property, plant & equipment (31) (6) (75) and right of use assets Foreign exchange losses/ (gains) 138 (13) (27) Share-based payments expense 571 880 1,597 Other operating income - - (27) Share of post-tax profit in equity accounted
associates (91) (20) (55) Share of post-tax loss in equity accounted joint ventures 384 - 149 Impairment of goodwill - - 16 Fair value changes in contingent consideration (886) 110 1,916 Movements in provisions (315) (22) 12 Finance income (52) (27) (54) Finance expense 2,253 503 2,249 Acquisition expenses 171 999 1,236 Income tax expense 3,640 3,798 6,103 Pension charge in excess of contributions paid 155 47 140 Operating cash flows before movements in working capital 23,698 15,366 35,158 Changes in working capital: Increase in inventories (4,284) (5,540) (6,700) Decrease/ (Increase) in trade and other receivables 8,949 (11,263) (22,194) (Decrease)/ Increase in trade and other payables (22,071) 8,397 21,234 ================================================================ =================== ============= ================ Cash generated from operations 6,292 6,960 27,498 Payment of exceptional acquisition expenses (171) (999) (1,139) Interest received 8 15 18 Interest paid - (161) - Income taxes paid (5,047) (2,541) (7,256) ================================================================ =================== ============= ================ Net cash generated from operating activities 1,082 3,274 19,121 ================================================================ =================== ============= ================ Investing activities Purchase of property, plant and equipment (5,582) (3,589) (6,317) Proceeds from sale of property, plant and equipment 86 35 187 Purchase of intangible assets (264) (488) Acquisition of subsidiaries (15,403) (39,467) (50,292) Net cash acquired with subsidiary undertakings 4,722 2,679 3,422 Acquisition of interests in joint ventures (2,608) - (428) Proceeds from repayment of directors' loans - - 978 Dividends received from associates 30 - 15 Net cash used in investing activities (19,019) (40,342) (52,923) ===================================================================== ======== ======== ======== Financing activities Equity dividends paid (6,111) (3,236) (6,102) Proceeds from issue of ordinary shares net of share issue costs 499 52,714 52,728 Payment of financing costs - - (97) Proceeds from bank borrowings 53,000 41,100 52,100 Repayment of bank borrowings (43,500) (41,400) (43,400) Payment of lease liabilities (1,357) (1,094) (2,103) Payment of deferred and contingent consideration (2,038) (847) (1,358) Interest paid (882) - (1,139) Payment of transaction costs relating to loans and borrowings - (375) (375) Net cash generated from/ (used in) financing activities (389) 46,862 50,254 ============================================================= ====== ======== ======== ======== Net increase/ (decrease) in cash and cash equivalents (18,326) 9,794 16,452 Cash and cash equivalents at beginning of period 25,028 8,592 8,592 Effect of changes in foreign exchange rates (4) 3 (16) Cash and cash equivalents at end of period 6,698 18,389 25,028 ============================================================= ====== ======== ======== ========
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 30 September 2022 (unaudited)
1. General Information
Brickability Group PLC (the 'Company' or the 'Group') is a public company limited by shares, incorporated in the United Kingdom under the Companies Act 2006 (registration number 11123804) and registered in England and Wales. The registered office address is c/o Brickability Limited, South Road, Bridgend Industrial Estate, Bridgend, United Kingdom, CF31 3XG.
Copies of this Interim Report may be obtained from the registered address or from the Investors section of the Company's website at www.brickabilitygroupplc.com.
2. Basis of Preparation
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 March 2022. They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to understanding changes in the Group's financial position and performance since the last annual financial statements.
The Annual Report and Accounts for the year ended 31 March 2022 was audited and has been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Accounts for the year ended 31 March 2022 was not qualified and did not contain statements under s498(2) or (3) of the Companies Act 2006.
The financial information for the six months ended 30 September 2022 and 30 September 2021 is unaudited and has not been reviewed by the Company's auditors.
The interim financial statements are presented in pounds sterling, which is the functional currency of the Group. Amounts are rounded to the nearest thousand, unless otherwise stated.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and thus continue to adopt the going concern basis in preparing these interim financial statements.
3. Significant Accounting Policies
The Group has applied the same accounting policies in these interim financial statements as in its 2022 annual financial statements. There have been no significant amendments or new standards introduced during the period that would have a material impact on the amounts reported.
4. Use of judgements and estimates
The significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty for the interim financial statements are the same as those described in the 2022 annual financial statements.
5. Segmental analysis
During the period, the Group changed its reportable segments due to increasing diversification following recent acquisitions. It now has four reportable divisions as follows:
-- Bricks and Building Materials, which incorporates the sale of superior quality building materials to all sectors of the construction industry including national house builders, developers, contractors, general builders and retail to members of the public;
-- Importing, which is primarily responsible for importing building products, not otherwise available in the UK, to complement traditional and contemporary architecture;
-- Distribution, which focuses on the sale and distribution of a wide range of products, including windows, doors, radiators and associated parts and accessories; and
-- Contracting, which provides flooring and roofing construction services, primarily within the residential construction sector.
This is the first time results have been presented in these divisions and thus the results reported for previous periods have also been re-presented for comparison purposes. Revenues and profits are reported in the same manner as that reported internally to the Board, as the Group's Chief Operating Decision-Maker (CODM).
6 months ended 30 September 2022 ============================================================================================== Bricks Central and Building and group Materials Importing Distribution Contracting eliminations Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ==================== =============== ============ =============== ============== =============== =============== Revenue from sale of goods 270,101 42,865 27,259 - (17,465) 322,760 Revenue from rendering of services - 11,260 3,782 19,880 (5,013) 29,909 ==================== =============== ============ =============== ============== =============== =============== Total revenue 270,101 54,125 31,041 19,880 (22,478) 352,669 ==================== =============== ============ =============== ============== =============== =============== Adjusted EBITDA 15,704 5,424 4,953 2,565 (3,112) 25,534 ==================== =============== ============ =============== ============== =============== =============== Depreciation and amortisation (6,122) Acquisition costs (171) Earn out consideration classified as remuneration under IFRS 3 (2,167) Share-based payment expense (571) Finance income 52 Finance expense (2,253) Share of results of associates 91 Fair value gains and losses 886 Group profit before tax 15,279 ==================== =============== ============ =============== ============== =============== =============== 6 months ended 30 September 2021 (Re-presented) ============================================================================================== Bricks Central and Building and group Materials Importing Distribution Contracting eliminations Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ==================== =============== ============ =============== ============== =============== =============== Revenue from sale of goods 171,713 25,525 20,666 - (9,463) 208,441 Revenue from rendering of services - 6,609 - 10,505 (2,052) 15,062 ==================== =============== ============ =============== ============== =============== =============== Total revenue 171,713 32,134 20,666 10,505 (11,515) 223,503 ==================== =============== ============ =============== ============== =============== =============== Adjusted EBITDA 11,261 3,151 3,918 949 (1,752) 17,527 ==================== =============== ============ =============== ============== =============== =============== Depreciation and amortisation (3,992) Acquisition costs (999) Earn out consideration classified as remuneration under IFRS 3 (2,167) Share-based payment expense (880) Finance income 27 Finance expense (503) Share of results of associates 20 Fair value gains and losses (110) Group profit before tax 8,923 ==================== =============== ============ =============== ============== =============== =============== Year ended 31 March 2022 (Re-presented) ============================================================================================== Bricks Central and Building and group Materials Importing Distribution Contracting eliminations Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ==================== =============== ============ =============== ============== =============== =============== Revenue from sale of goods 404,582 56,826 44,206 - (22,945) 482,669 Revenue from rendering of services - 15,454 2,820 24,788 (5,562) 37,500 ==================== =============== ============ =============== ============== =============== =============== Total revenue 404,582 72,280 47,026 24,788 (28,507) 520,169 ==================== =============== ============ =============== ============== =============== =============== Adjusted EBITDA 24,317 8,273 7,849 2,680 (3,651) 39,468 ==================== =============== ============ =============== ============== =============== =============== Depreciation and amortisation (9,691) Acquisition and re-financing costs (1,236) Earn out consideration classified as remuneration under IFRS 3 (4,333) Share-based payment expense (1,597) Finance income 54 Finance expense (2,249) Share of results of associates 55 Share of results of joint ventures (149) Fair value gains and losses (1,916) Group profit before tax 18,406 ==================== =============== ============ =============== ============== =============== =============== 6 months ended 30 September 2022 ========================================================================================= Bricks and Building Materials Importing Distribution Contracting Central Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================= =============== ============ =============== ============== ========== =============== Non-current segment assets 80,812 28,263 52,809 30,264 3,943 196,091 Current segment assets 111,735 30,849 23,043 10,281 - 175,907 ========================= =============== ============ =============== ============== ========== =============== Total segment assets 192,547 59,112 75,852 40,545 3,943 371,998 ========================= =============== ============ =============== ============== ========== =============== Investment in associates 321 Investment in joint ventures 2,600 Investments in financial assets 178 Group assets 375,097 ========================= =============== ============ =============== ============== ========== =============== Total segment liabilities (99,418) (26,196) (10,994) (5,307) (21,600) (163,515) Loans and borrowings (excluding leases) (33,820) Deferred tax liabilities (16,722) ========================= =============== ============ =============== ============== ========== =============== Group liabilities (214,057) ========================= =============== ============ =============== ============== ========== =============== 6 months ended 30 September 2021 (Re-presented) ========================================================================================= Bricks and Building Materials Importing Distribution Contracting Central Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ========================= =============== ============ =============== ============== ========== =============== Non-current segment assets 83,923 14,296 38,040 23,729 - 159,988 Current segment assets 124,875 14,526 17,643 6,818 955 164,817 ========================= =============== ============ =============== ============== ========== =============== Total segment assets 208,798 28,822 55,683 30,547 955 324,805 ========================= =============== ============ =============== ============== ========== =============== Investment in associates 241 Investments in financial assets 125 Deferred tax assets 98 Group assets 325,269 ========================= =============== ============ =============== ============== ========== =============== Total segment liabilities (93,743) (11,960) (10,951) (3,780) (23,253) (143,687) Loans and borrowings (excluding leases) (15,160) Deferred tax liabilities (17,429) ========================= =============== ============ =============== ============== ========== =============== Group liabilities (176,276) ========================= =============== ============ =============== ============== ========== =============== Year ended 31 March 2022 (Re-presented) ========================================================================================= Bricks and Building Materials Importing Distribution Contracting Central Consolidated GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ========================= =============== ============ =============== ============== ========== =============== Non-current segment assets 82,280 16,123 52,901 30,490 531 182,325 Current segment assets 131,498 17,258 25,258 10,143 1,075 185,232 ========================= =============== ============ =============== ============== ========== =============== Total segment assets 213,778 33,381 78,159 40,633 1,606 367,557 ========================= =============== ============ =============== ============== ========== =============== Investment in associates 261 Investment in joint ventures 279 Investments in financial assets 178 Deferred tax assets - Group assets 368,275 ========================= =============== ============ =============== ============== ========== =============== Total segment liabilities (99,360) (15,433) (4,357) (4,720) (48,254) (172,124) Loans and borrowings (excluding leases) (24,240) Deferred tax liabilities (17,427) ========================= =============== ============ =============== ============== ========== =============== Group liabilities (213,791) ========================= =============== ============ =============== ============== ========== =============== 6. Dividends Year ended 6 months 6 months 31 March ended ended 2022 30 Sept 30 Sept 2022 2021 (Audited) GBP'000 GBP'000 GBP'000 ============================================= =================== === =========== ========== =============== Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 31 March 2022 of 1.0850p per share (30 Sept 2021: for the year ended 31 March 2021 of 1.0850p per share) (31 March 2022: for the year ended 31 March 2021 of 1.0850p per share) 6,111 3,236 3,236 Interim dividend for the year ended 31 March 2023 (31 March 2022: for the year ended 31 March 2022 of 0.96p per share) - - 2,866 ======================================================================= =========== ========== =============== Total dividends paid during the period 6,111 3,236 6,102 ======================================================================= =========== ========== ===============
The Directors recommend that an interim dividend of 1.01p per ordinary share be paid for the year ended 31 March 2023. This dividend has not been included as a liability in these interim financial statements.
7. Earnings per share
Earnings per share (EPS) is calculated by dividing the profit for the year, attributable to ordinary equity holders of the parent, by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit for the year, attributable to ordinary equity holders, by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The calculation of basic and diluted earnings per share is based on the following data:
6 months ended 30 September 2021 6 months ended 30 September 2022 (Restated) ================================== ==================================== Weighted Weighted average Earnings average number per number Earnings Earnings of share Earnings of per share GBP'000 shares (p) GBP'000 shares (p) ========================== ========= ============ ========= ========= ============ =========== Basic earnings per share 11,661 298,826,434 3.90 5,160 264,356,685 1.95 Effect of dilutive securities Employee share options - 5,411,479 - - 5,017,128 - Diluted earnings per share 11,661 304,237,913 3.83 5,160 269,373,813 1.92 ========================== ========= ============ ========= ========= ============ =========== Year ended 31 March 2022 (Audited) ================================== Weighted average Earnings number per Earnings of share GBP'000 shares (p) ========================== ========= ============ ========= Basic earnings per share 12,387 281,474,903 4.40 Effect of dilutive securities - 5,512,650 - Employee share options Diluted earnings per share 12,387 286,987,553 4.32 ========================== ========= ============ =========
Adjusted earnings per share and adjusted diluted earnings per share, based on the adjusted profit attributable to the equity holders of the parent (adjusted profit for the period add non-controlling interest share of loss), is based on the following data:
6 months ended 30 September 2021 6 months ended 30 September 2022 (Restated) ================================== ==================================== Weighted Weighted average Earnings average number per number Earnings Earnings of share Earnings of per share GBP'000 shares (p) GBP'000 shares (p) =============================== ========= ============ ========= ========= ============ =========== Adjusted basic earnings per share 17,925 298,826,434 6.00 12,917 264,356,685 4.89 Effect of dilutive securities Employee share options - 5,411,479 - - 5,017,128 - Adjusted diluted earnings per share 17,925 304,237,913 5.89 12,917 269,373,813 4.80 =============================== ========= ============ ========= ========= ============ =========== Year ended 31 March 2022 (Audited) ================================== Weighted average Earnings number per Earnings of share GBP'000 shares (p) =============================== ========= ============ ========= Adjusted basic earnings per share 28,310 281,474,903 10.06 Effect of dilutive securities Employee share options - 5,512,650 - Adjusted diluted earnings per share 28,310 286,987,553 9.86 =============================== ========= ============ ========= 8. Business combinations
The Group acquired the entire share capital and 100% of the voting rights in the following companies during the period:
Acquisition Company acquired date ============================= ============== Modular Clay Products Limited 31 May 2022 E. T. Clay Products Limited 30 September 2022 Heritage Clay Tiles Limited 30 September 2022 ============================= ==============
The book value of the assets acquired and liabilities assumed on acquisition are as follows:
Heritage Modular E. T. Clay Clay Products Clay Products Tiles Limited Limited Limited GBP'000 GBP'000 GBP'000 ================================ =============== =============== ========= Property plant and equipment 16 157 29 Right of use assets 28 - - Inventory 164 2,838 1,172 Trade and other receivables 2,569 8,651 1,072 Cash and cash equivalents 4,205 627 (109) Trade and other payables (1,785) (5,524) (2,214) Current income tax liabilities (514) (878) (37) Lease liabilities (28) - - Deferred tax 8 (31) 60 ================================= =============== =============== ========= Total identifiable net assets/ ( liabilities ) 4,663 5,840 (27) ================================= =============== =============== ========= Goodwill 5,010 5,868 1,012 ================================= =============== =============== ========= Total consideration 9,673 11,708 985 ================================= =============== =============== ========= Satisfied by: Cash paid 7,283 7,490 630 Deferred cash consideration - 1,008 85 Contingent consideration 2,390 3,210 270 =============================== ====== ======= ==== Total consideration 9,673 11,708 985 =============================== ====== ======= ====
Due to the timing of the acquisitions, a detailed assessment of the fair value of all identifiable net assets, and the value of any uncollectable contractual cash flows, has not yet been completed at the date of these interim financial statements. The goodwill figure is therefore expected to change. Residual goodwill will primarily comprise the value of the assembled workforce and expected synergies arising from the acquisition. None of the goodwill is expected to be deductible for tax purposes.
The above consideration is subject to post completion adjustments and the deferred and contingent consideration is undiscounted.
The acquisitions were carried out in order to expand the Group's presence in the specification market and further broaden the Group's access to manufacturers outside of the UK.
Included in the consolidated financial statements are the following amounts of revenue and profit in respect of the subsidiaries acquired:
Heritage Modular E. T. Clay Clay Products Clay Products Tiles Limited Limited Limited GBP'000 GBP'000 GBP'000 =========== =============== =============== ========= Revenue 5,088 - - =========== =============== =============== ========= Net profit 829 - - =========== =============== =============== =========
Had the current year business combinations taken place at the beginning of the financial period, the Group's revenue for the period would have been GBP379,958,000 and Group profit would have been GBP14,379,000.
Acquisition related costs in connection with the above companies, included in administrative expenses, amounted to GBP171,000 as shown below. Due to the timing of the acquisitions, not all costs have been invoiced or finalised at the time of approving these interim financial statements.
Heritage Modular E. T. Clay Clay Products Clay Products Tiles Limited Limited Limited GBP'000 GBP'000 GBP'000 =================== =============== =============== ========= Acquisition costs 100 60 11 ===================== =============== =============== =========
Contingent consideration
The Group has entered into contingent consideration arrangements during the purchase of several subsidiaries. Final amounts payable under these agreements are all subject to future performance and the acquired business achieving pre-determined EBITDA targets, over the three years following acquisition, with the exception of HBS NE Limited which is over five years.
The fair value of all contingent consideration is based on a discounting cash flow model, applying a discount rate of between 1.7% and 23.6% to the expected future cash flows.
Summarised below are the fair values of the contingent consideration at both acquisition and reporting date, the potential undiscounted amount payable and the discount rates applied within the discounting cash flow models, for each acquisition where contingent consideration arrangements remain in place.
Undiscounted Undiscounted amount amount Discount Fair value Fair value Fair value payable payable rate at at 30 September at 30 September 30 September 30 September Company acquisition 2022 2021 2022 2021 acquired GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 =============== =============== ================== =============== =============== ============== ============== U Plastics Limited 3.5% 2,208 1,100 2,306 1,116 2,400 Bathroom Barn Limited 1.7% 231 98 227 100 233 McCann Logistics Ltd 1.7% 889 1,584 890 1,604 913 Taylor Maxwell Group (2017) Limited 4.1% - 431 - 435 - SBS Cladding Limited 4.1% 1,845 1,434 - 1,500 - Leadcraft Limited 10.4% 722 700 - 861 - 16.1% HBS NE Limited - 10,069 11,287 - 21,513 - 23.6% Beacon Roofing 4.1% - Limited 10.4% 1,172 1,933 - 2,355 -
As noted above, the amounts included in respect of Modular Clay Products Limited, E. T. Clay Products Limited and Heritage Clay Tiles Limited are undiscounted, pending completion of a detailed fair value assessment.
The amounts for Beacon Roofing Limited, which was acquired on 31 March 2022, are also subject to completion of a detailed fair value assessment which is in progress at the time of preparing these interim financial statements.
The total potential undiscounted amount payable in respect of U Plastics ranges from GBP246,000 to GBP2,400,000 (2021: GBP246,000 to GBP2,400,000). The amount payable for SBS Cladding Limited ranges from GBP500,000 to GBP2,000,000. It is not possible to determine a range of outcomes for the other companies acquired as the arrangements do not contain a maximum payable.
The acquisition of Taylor Maxwell Group (2017) Limited is also subject to further payments depending on future performance, ranging from GBPnil to GBP13,000,000, over the three years following acquisition. Based on current interpretation guidance concerning contingent payments to employees under IFRS 3, the earn-out amounts payable are recognised in profit or loss over the earn-out period as remuneration costs. This is due to the inclusion of a 'bad leaver' clause in the share purchase agreement, under which the earn-out consideration payment is forfeited. The earn-out consideration is therefore deemed to effectively be contingent on the continued employment of the seller and the seller not being considered a 'bad leaver'. The anticipated total amount payable, however, is not expected to change due to other clauses and payment terms within the share purchase agreement. A charge of GBP2,167,000 has been recognised in the period ended 30 September 2022 in respect of this earn-out consideration, presented within other administrative expenses.
A sensitivity in respect of the inputs into the discounted cash flow model, determining the contingent consideration, is outlined in note 9.
Business combinations completed in prior periods
Taylor Maxwell Group (2017) Limited
The Group acquired 100% of the share capital and voting rights in Taylor Maxwell Group (2017) Limited on 30 June 2021. As disclosed in the 2021 interim financial statements, the value of the identifiable net assets of Taylor Maxwell had been included at 30 September 2021 on a provisional basis as an independent valuation of the fair value of was ongoing at the time of preparing the interim financial statements. The values were, however, finalised before reporting the Group's annual results to 31 March 2022.
Details of the revised fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Book value Restated originally fair reported Adjustment value GBP'000 GBP'000 GBP'000 ================================ ============ =========== ========= Property plant and equipment 3,519 - 3,519 Right of use assets 2,971 6 2,977 Identifiable intangible assets 42,099 42,099 Inventory 9,126 - 9,126 Trade and other receivables 63,939 1 63,940 Employee benefits 2,689 166 2,855 Cash and cash equivalents 2,585 1 2,586 Trade and other payables (72,726) (1,441) (74,167) Current income tax liabilities (380) 261 (119) Lease liabilities (3,115) (7) (3,122) Provisions - (469) (469) Deferred tax (439) (10,968) (11,407) ================================= ============ =========== ========= Total identifiable net assets 8,169 29,649 37,818 ================================= ============ =========== ========= Goodwill 54,086 (42,649) 11,437 ================================= ============ =========== ========= Total consideration 62,255 (13,000) 49,255 ================================= ============ =========== ========= Satisfied by: Cash paid 36,167 1,947 38,114 Share consideration 10,000 - 10,000 Deferred cash consideration 3,088 (1,947) 1,141 Contingent consideration 13,000 (13,000) - =============================== ======= ========= ======= Total consideration 62,255 (13,000) 49,255 =============================== ======= ========= =======
Had the full fair value assessment been carried out prior to announcing the interim results to September 2021, these interim financial statements would have differed as follows:
- GBP2,167,000 would have been recognised in administrative expenses in respect of earn-out consideration payable to the sellers of Taylor Maxwell. As outlined earlier in note 8, earn-out consideration is payable depending on the future performance of the business. Due to a clause in the contract, this earn-out consideration is deemed to be treated as remuneration under IFRS 3, with the cost being accrued in the profit and loss over the earn-out period. This would have also led to a reduction in goodwill and deferred consideration.
- Amortisation amounting to GBP702,000 would have been charged on the intangible assets recognised. A deferred tax credit of GBP133,000 would have also been recognised on the release of the associated deferred tax liability over the intangible assets' useful life.
- A decrease of GBP2,022,000 would have been recognised in the defined benefit pension asset, had the scheme been re-valued at 30 September 2021. This would have resulted in a loss of GBP1,987,000 being recorded in OCI, in respect of the re-measurement of the pension scheme, an increase in administrative expenses of GBP47,000 and an increase in interest income of GBP12,000. In addition, deferred tax would have decreased by GBP378,000 with a corresponding credit within OCI.
Rangeley Holdings Limited and Leadcraft Limited
The Group acquired 100% of the share capital and voting rights in Rangeley Holdings Limited and Leadcraft Limited on 31 July 2021. As disclosed in the 2021 interim financial statements, the value of the identifiable net assets of had also been included at 30 September 2021 on a provisional basis as an independent valuation of the fair value of was ongoing at the time of preparing the interim financial statements. The values were, however, finalised before reporting the Group's annual results to 31 March 2022.
Details of the revised fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Book value Restated originally fair reported Adjustment value GBP'000 GBP'000 GBP'000 ================================ ============ =========== ========= Property plant and equipment 128 - 128 Right of use assets 103 30 133 Identifiable intangible assets - 1,782 1,782 Inventory 13 - 13 Trade and other receivables 778 - 778 Cash and cash equivalents 94 - 94 Trade and other payables (247) - (247) Current income tax liabilities (138) - (138) Lease liabilities (103) (30) (133) Deferred tax (18) (424) (442) ================================= ============ =========== ========= Total identifiable net assets 610 1,358 1,968 ================================= ============ =========== ========= Goodwill 4,890 (1,361) 3,529 ================================= ============ =========== ========= Total consideration 5,500 (3) 5,497 ================================= ============ =========== ========= Satisfied by: Cash paid 3,300 232 3,532 Deferred cash consideration 1,320 (77) 1,243 Contingent consideration 880 (158) 722 =============================== ====== ====== ====== Total consideration 5,500 (3) 5,497 =============================== ====== ====== ======
Had the full fair value assessment been carried out prior to announcing the interim results to September 2021, these interim financial statements would have differed as follows:
- Amortisation amounting to GBP36,000 would have been charged on the intangible assets recognised. A deferred tax credit of GBP7,000 would have also been recognised on the release of the associated deferred tax liability over the intangible assets' useful life.
The September 2021 comparatives have been restated in these interim financial statements to reflect the above changes for both acquisitions.
A prior period restatement would usually require the presentation of a third balance sheet at 1 April 2021. However, as the restatement of the provisional fair values would have no impact on the balance sheet at that date, it is not considered that this would provide additional useful information. As such, a third consolidated balance sheet has not been included within these interim financial statements.
9. Financial instruments
Fair values
The significant unobservable inputs used in the fair value measurements categorised within level 3 of the fair value hierarchy, together with a quantitative sensitivity analysis at 30 September and 31 March are shown below:
Significant Financial Valuation Unobservable Range/ Sensitivity of the instrument technique inputs estimate input to fair value ============== =========== ============================ ============== ==================================== Contingent Present Assumed probability-adjusted Sept 2022: The higher the adjusted Consideration value of EBITDA of acquired GBP435,000 - EBITDA, the higher in a business future entities. GBP53,781,000 the combination cash flows fair value. If forecast (note 8) Sept 2021: EBITDA was 10% higher, GBP1,110,000 while all other variables - remained constant, GBP3,766,000 the fair value of the March 2022: overall contingent GBP485,000 consideration liability - would increase by GBP55,468,000 GBP1,486,000 (2021: GBP327,000). A 10% decrease in EBITDA would result in a decrease in the liability of GBP2,138,000 (2021: GBP335,000). Discount rate (March 2022: increase of GBP1,982,000 and Sept 2022: decrease of GBP2,282,000) 1.7% - 23.6% The higher the discount Sept 2021: rate, the lower the 1.7% - 4.9% fair value. If the discount rate applied March 2022: was 2% higher, while 1.7% - 23.6% all other variables remained constant, the fair value of the overall contingent consideration liability would decrease by GBP695,000 (2021: GBP85,000). A 2% decrease in the rate would result in an increase in the liability of GBP629,000 (2021: GBP82,000). (March 2022: decrease of GBP794,000 and increase of GBP730,000) ============== =========== ============================ ============== ====================================
Reconciliation of level 3 fair value measurements of financial instruments
6 months ended Year ended 6 months 30 Sept 31 March ended 2021 2022 30 Sept 2022 (Restated) (Audited) Contingent consideration liability GBP'000 GBP'000 GBP'000 ======================================== =================== === =========== ============= =============== At 1 April 19,581 3,442 3,442 Additions through business combinations 5,870 880 13,808 Finance expense charged to profit or loss 1,309 46 900 Settlement (1,435) (175) (485) Fair value (gains)/ losses recognised in profit or loss (886) 110 1,916 ================================================================== =========== ============= =============== At 30 September/ 31 March 24,439 4,303 19,581 ================================================================== =========== ============= ===============
10. Loans and borrowings
Year ended 6 months 6 months 31 March ended ended 2022 30 Sept 30 Sept 2022 2021 (Audited) GBP'000 GBP'000 GBP'000 ======================================== =========== ============= =============== Current loans and borrowings at 1 April - - - Non-current loans and borrowings at 1 April 24,240 15,750 15,750 =========== ============= =============== Total loans and borrowings at 1 April 24,240 15,750 15,750 Issue of bank loans 53,000 41,100 52,100 Repayment of bank loans (43,500) (41,400) (43,400) Payment of transactions costs - (375) (375) Other movements* 80 85 165 Loans and borrowings at 30 September/ 31 March 33,820 15,160 24,240 ======================================== =========== ============= =============== Analysed as: Current loans and borrowings - - - Non-current loans and borrowings 33,820 15,160 24,240 ======================================== =========== ============= =============== Loans and borrowings at 30 September/ 31 March 33,820 15,160 24,240 ======================================== =========== ============= ===============
*Other movements relate to interest accrued, arrangement fees incurred and the amortisation of those fees.
The Directors consider that the carrying amount of loans and borrowings approximates to their fair value.
11. Pensions
Defined benefit pension plans
On 30 June 2021, the Group acquired Taylor Maxwell Group (2017) Limited, which operated a defined benefit pension scheme. The Group therefore also acquired the Taylor Maxwell Group Limited Pension and Assurance Scheme which is funded by the payment of contributions to a separately administered trust fund. The defined benefit pension scheme is closed to future accrual. Pension benefits are related to the members' final salary at retirement (or earlier date of leaving or death) and their length of service.
The Group commenced a buy-out process to transfer the risk associated with the scheme to an insurer. As part of this process, a buy-in contract was incepted on 7 July 2021 to meet the future benefits payable and reduce the risk of additional funding being required from the Group. The process is ongoing and is expected to reach full buy-out stage within the next 12 months.
The value of the defined benefit scheme at each reporting date is as follows:
Year ended 6 months 31 March ended 2022 6 months 30 Sept (Audited) 2021 ended (Restated) GBP'000 30 Sept GBP'000 2022 GBP'000 ================== =================== ============ ============== ============== Assets 7,481 10,700 10,126 Liabilities (6,821) (9,867) (9,345) Pension net asset 660 833 781 ======================================= ============ ============== ==============
The discount and inflation rate assumptions used in the valuations are as follows:
Year ended 6 months 31 March ended 2022 6 months 30 Sept (Audited) 2021 ended (Restated) GBP'000 30 Sept GBP'000 2022 GBP'000 ====================================== =================== ============ ============== ============== Discount rate 5.6% 2.0% 2.6% Inflation rate (CPI) 3.4% 3.1% 3.6% Pension increases (Post 1988 GMP) 2.8% 2.6% 2.8% Pension increases (Post 1997 pension) 3.4% 3.1% 3.6% =========================================================== ============ ============== ==============
The valuations for September 2021 and September 2022 have been prepared using the same methodology as that included in the Annual Report and Accounts for the year ended 31 March 2022. Other principal assumptions, in respect of mortality rates, are consistent with those set out in that Annual Report and Accounts for all periods.
The fair value of the scheme assets is analysed as follows:
Year ended 6 months 31 March ended 2022 6 months 30 Sept (Audited) 2021 ended (Restated) GBP'000 30 Sept GBP'000 2022 GBP'000 ================================= =================== ============ ============== ============== Cash fund and net current assets 834 1,037 980 Insured annuities 6,647 9,663 9,146 Fair value of scheme assets 7,481 10,700 10,126 ====================================================== ============ ============== ============== 12. Related party transactions
Transactions and balances between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Key management personnel
Year ended 31 March 2022 6 months 6 months (Audited) ended ended 30 Sept GBP'000 2021 30 Sept GBP'000 2022 GBP'000 ====================================== =================== ============ =========== ============== Key management personnel compensation Short-term employee benefits 1,808 1,252 6,355 Post-employment benefits 40 18 56 Share-based payment expense 200 168 417 Termination benefits - - 409 2,048 1,438 7,237 ========================================================== ============ =========== ==============
During the interim period, the Group made sales amounting to GBP21,000 (2021: GBP7,000 and year to 31 March 2022: GBP12,000) to members of key management. A GBPnil balance was included within trade receivables at each the reporting date, in respect of these sales.
A balance of GBPnil (2021: GBPnil and year to 31 March 2022: GBP24,000) is included in other payables in respect of a deposit paid by a member of key management.
Other related parties
Included within trade receivables/ payables are the following amounts due from/ to other related parties, at the reporting date:
Amounts owed Amounts owed by related parties to related parties ============= =========================== ============ ============================= Year Year ended ended 31 March 2022 6 months 6 months 31 March 6 months 6 months (Audited) ended ended 2022 ended ended 30 Sept 30 Sept (Audited) 30 Sept 30 Sept GBP'000 2022 2021 2022 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ====================== ============= =========== ============== ============ ============= ================ Associates - - - 92 138 104 Other related parties - - - - - - ====================== ============= =========== ============== ============ ============= ================ - - - 92 138 104 ==================================== =========== ============== ============ ============= ================
Transactions undertaken between the Group and its related parties during the year were as follows:
Purchases from related parties Year ended 31 March 2022 6 months 6 months (Audited) ended ended 30 Sept GBP'000 2021 30 Sept GBP'000 2022 GBP'000 ====================== =================== ============ =========== ============== Associates 239 297 512 Other related parties 106 109 219 =========================================== ============ =========== ============== 345 406 731 ========================================== ============ =========== ==============
Other related parties comprise of entities owned by directors and key management. Purchases relate to rent and administrative expenses.
13. Post balance sheet events
On 27 October 2022, the Group granted a total of 4,037,124 options under its Long Term Incentive Plan (LTIP) to employees, including to directors and management ('Management Options'). The Management Options were granted on the same terms as previous awards and are subject to a performance period from 1 April 2022 to 31 March 2025. Grants to other employees are not subject to performance criteria but do contain a service condition to remain in employment during the three years to 31 March 2025.
On 24 November 2022, the Group purchased a property for GBP2,336,0000.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
END
IR EAXFSALLAFFA
(END) Dow Jones Newswires
November 28, 2022 02:00 ET (07:00 GMT)
1 Year Brickability Chart |
1 Month Brickability Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions