REG - Brickability Group - Brickability Group plc - Interim Results
01/12/2021 07:00
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RNS Number : 1155U Brickability Group PLC 01 December 2021
01 December 2021
Brickability Group plc
("the Group")
Interim Results for the six months ended 30 September 2021
Brickability Group plc (AIM: BRCK), the leading construction materials
distributor, today announces its unaudited interim results for the six months
ended 30 September 2021.
Financial Highlights:
• Revenue increased by 197% to £223.5m (H1 2020: £75.3m)
• Group like-for-like** revenue growth of 53.6% versus H1 2020 and 30.4% versus
H1 2019
• Gross profit increased by 146.8% to £39.0m (H1 2020: £15.8m)
• Gross profit margin of 17.4% (H1 2020: 21.0%)
• Profit before tax increased by 120.4% to £11.9m (H1 2020: £5.4m)
• Adjusted EBITDA* increased by 120.0% to £17.6m (H1 2020: £8.0m)
• Cash balance at 30 September of £18.4m (H1 2020: £13.8m)
• Net cash as at 30 September of £2.8m (H1 2020: net debt £2.7m)
• Borrowing facility increased to £60 million plus £25m accordion following
re-financing
• Interim dividend proposed of 0.96 pence per share (H1 2020: 0.8678 pence)
Operational Highlights:
• Strong start to 2021, with performance ahead of same period in 2019 pre-COVID
• Acquisitions of Taylor Maxwell, in June 2021 following an oversubscribed share
placing raising equity finance of £55 million, and Leadcraft, as announced in
August 2021
• Taylor Maxwell acquisition recognised with the 2021 AIM Awards 'Transaction of
the Year' Award
• New product ranges added to Group offering, timber and non-combustible
cladding, copper and zinc metal roofing and heritage leadwork
• Focus on revenue and cost synergies
• Strong pipeline of acquisitions and continued organic development
• Strong order book for the second half with positive order intake momentum
• ESG Committee established led by the Group Chairman with members including the
Chief Operating Officer and Group Marketing Director
Post period end and outlook:
• Appointment of Paul Hamilton as Chief Operating Officer with immediate effect
• Acquisition of HBS New Energies and UPOWA in November 2021, the Group's first
acquisition in the renewable energy products sector
• Board remains confident of the Group delivering performance at least in line
with market expectations for the full year
*Adjusted EBITDA is defined as earnings before interest, tax, depreciation and
amortisation, share option expense, acquisition costs and exceptional items.
**like-for-like sales is a measure of growth in sales, adjusted for the impact
of acquisitions
John Richards, Chairman, said:
"We are pleased to have delivered another strong performance across all our
divisions during the period.
"As the housebuilding and construction market has continued to improve, all
our divisions have benefitted from the increased demand which has resulted in
a strong order book.
"Our strategy of bolt on acquisitions has enabled us to significantly expand
our product offering, through the acquisition of Taylor Maxwell and Leadcraft,
as well as, seeing the Group enter the renewable energy product space with the
acquisition of HBS New Energies and UPOWA, a strategically significant sector
for the Group moving forward, post period.
"We believe Brickability is well positioned for the future, and that the scale
and diversity of the business, will enable the Group to capitalise on
opportunities in the market and further strengthen our positioning."
ENDS
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) +44 (0) 207 397 8900
Ben Jeynes, Max Gould (Corporate Finance)
Julian Morse, Alex Pollen (Sales)
Montfort Communications (Financial PR) +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 36 years through its national and
local networks. The Group supplies over 500m bricks annually and has 41
locations across the country with over 500 employees.
Across its 3 divisions the Group supplies bricks, roofing, timber, cladding,
heating, flooring, doors and windows to meet demand from both housebuilders
and contractors.
Interim Report for the six months ended 30 September 2021
Chairman's Statement
Brickability has made a strong start to 2021, delivering a robust financial
performance, with an adjusted EBITDA of £17.6m in the first half of the year
(2020: £8.0m).
Our businesses have performed well, in line with the recovery in the
construction and housebuilding sector, and we have seen strong order intake
momentum across all divisions, which has continued as we move into the second
half of the year.
The fundamentals of the UK housebuilding market remain strong and the industry
is forecast to continue to grow substantially as we move into 2022, driven by
increased demand in the private sector and Government investment into
affordable housing starting to come through. We firmly believe that
Brickability remains well placed to capitalise on this demand, strengthening
its position within the market as a leading construction materials
distributor.
The acquisition of Taylor Maxwell completed in June 2021 brings significant
scale and diversity to our offering and customer base, alongside the
acquisition of Leadcraft Ltd. We are pleased to report that both businesses
are already contributing significantly to the overall performance of the
Group. Our pipeline of acquisitions is very encouraging, and we remain focused
on identifying bolt on acquisitions which will further diversify our
proposition.
To this end, we were pleased to announce the acquisition of HBS New Energies
and UPOWA in November 2021. HBS New Energies marks Brickability's first
acquisition in the renewables energy products sector and the 13th strategic
acquisition for the Group in the last three years. The acquisition comes as
Brickability seeks to broaden its offering for customers and, also
importantly, focus on its own sustainability commitments across its divisions.
Decarbonisation of the built environment is driving significant new
opportunity across the industry, with companies needing to commit to their own
emission reductions while supporting the transition to net-zero of buildings
and the broader supply chain. Cost efficient energy solutions are set to play
a key role in supporting the built environment and housebuilding industry in
meeting the changing Building Regulations landscape, as well as the UK
Government's recently announced deadline for UK listed companies to publish
their pathway to net-zero by 2030, in line with the UK Government's 2050
net-zero target.
This has been another successful period of growth for the Group and the
results today are a testament to the adaptability, strength and diversity of
the businesses we operate and our continued focus on identifying significant
strategic opportunities, whilst operating a lean approach. Overall we maintain
an optimistic market outlook and the Board remains confident of the Group
delivering performance at least in line with market expectations for the full
year. However, the Group remains vigilant of the pressures which continue to
impact our sector and the wider UK economy.
The Board are pleased to announce an interim dividend of 0.96p per share (H1
2020: 0.8678p), payable on 24 February 2022 reflecting the performance of the
business in the half, and the Board's confidence in the longer-term outlook
for the Group.
I would like to take this opportunity to thank all employees for their hard
work and commitment throughout this period. Brickability is well positioned
for the future with a clear strategy and high-quality, diversified business
and we remain confident of the Group's future success as we move forward.
John Richards
Chairman
30 November 2021
Chief Executive's Review
Our businesses have performed well, delivering a strong set of results which
has enabled the Group to continue to focus on investing for future growth
across the divisions. The results achieved, reflect not only the healthy
housebuilding market conditions, following a strong post pandemic recovery,
but also the strength of Brickability's positioning within the market.
The Group continues to deliver against its strategic objectives and aim of
building a diversified construction materials distribution business. Our
expertise in procurement from both the UK and overseas have allowed us to
manage industry supply chain pressures including a shortage of HGV drivers and
increases in materials prices. Whilst we expected margins to be impacted
slightly by industry difficulties, our margin levels remain resilient as our
diverse product offering has helped to mitigate the industry wide inflationary
price pressures. Our roofing division has not been able to fully recover the
significantly increased raw materials costs in the first six months of the
year whilst our newly acquired Taylor Maxwell Timber business has delivered
record margins.
Group margins are lower than prior years as the Taylor Maxwell business
operates on lower margins than the Brickability Group was operating on prior
to the acquisition, as noted at the time. The Taylor Maxwell overall margins
for the three months since acquisition were exceptionally high due mainly to
the unprecedented timber price inflation during this period which has since
been reducing from this peak. Consequently, overall Group margins are expected
to reduce slightly in the second half of the year back to normalised levels.
Bricks and Building Materials
The Group's footprint and product offering in the bricks and building
materials division continued to grow over the period. Brick sales were robust,
and demand remains strong from housebuilders, in particular for imported
products. Whilst the first half of the year has presented industry wide
challenges particularly, product availability and logistics, performance
across the bricks division has been very positive and is expected to continue
to provide good results as we move into the second half.
In June 2021, we announced the transformational acquisition of Taylor Maxwell.
The acquisition has added significant scale and expanded the range of
solutions we are able to deliver to our growing client base. We are pleased to
announce that the integration of Taylor Maxwell within the wider Group is
proceeding successfully. To date, we have focused on leveraging the Finance
and IT functions and will shortly commence the adoption of Taylor Maxwell's
operational and scheduling systems across the Group which will improve
efficiencies by assisting in sales scheduling and forecasting. Since
completion, the business has continued to perform strongly and ahead of
expectations.
Whilst we continue to focus on identifying potential acquisition opportunities
across all our business divisions, organic development remains a priority.
During the period, U Plastics, our specialist merchant for facia, soffits and
guttering, external cladding and ancillary products opened two new branches in
Maidenhead and Enfield expanding its capacity and enabling it to respond to
growing demand. Furthermore, following the appointment of a new sales team
with significant industry experience and online sales expertise, The Matching
Brick Company has more than doubled its sales in H1 compared to the previous
year. We were pleased to also see the Group's start-up business Alfiam
Building Supplies, following the impact of COVID-19, return to trading in line
with expectations and delivering good margins.
Crest Brick, Slate and Tile has performed strongly, and McCann Logistics has
continued to run at full capacity and we expect to see its performance improve
further in the second half.
Heating, Plumbing and Joinery
Our businesses within the heating, plumbing & joinery division also
performed well. Towelrad's range has grown significantly along with sales,
driven by increased new housing being built and its ability to meet this
demand thanks to strong stock availability. DSH Flooring and FSN Doors also
benefitted from the increased demand and FSN Doors, in particular, has won a
number a of new orders due to its ability to offer customers faster delivery
times by sourcing product from Europe. The HPJ division also includes our
ceramic tile business, Forum Tiles. This start-up, launched in January 2021 is
currently growing its order book although with investment ahead of sales
during H1, this has impacted the divisional margin when compared to the prior
year.
Roofing Services
The roofing division has been the most impacted by the current market
conditions surrounding the availability and pricing of materials with revenue
and margins both down on pre-covid levels. This is expected to continue into
the second half with a gradual recovery during the last quarter of our current
financial year and into the new financial year as input costs stabilise and
sales price increases become effective. Encouragingly, the order books are at
an all-time high and we were pleased to announce in August 2021 the
acquisition of Leadcraft Ltd which has enabled us to further expand our
roofing materials business bringing copper and zinc metal roofing and heritage
leadwork capability into the Group.
Post Period
As outlined in the Chairman's Statement, the Group has completed the
acquisition of HBS New Energies, since the period end. Founded in 2008, HBS
New Energies is a market-leading renewable energy expert, specialising in the
design, supply, installation and maintenance of solar PV, battery storage and
electric vehicle charging technologies. With extensive cross-sector
installation experience and technical expertise, HBS New Energies has built an
unrivalled track record in the housebuilding, construction, commercial and
industrial and public sectors, offering cost-effective, easy to install,
energy saving and scalable technologies that simplify the construction of
sustainable, zero-carbon homes. As a market leader with a proven track
record, we believe the acquisition of HBS New Energies will further strengthen
our strategic positioning within the wider market and enable us to expand into
a new product segment.
Management Changes
The Group is pleased to announce that Paul Hamilton, currently Managing
Director of the Heating, Plumbing and Joinery Division, has been appointed
into the newly created role of Chief Operating Officer ("COO") with immediate
effect. The role of COO is not a Board position.
Paul Hamilton has over 15 years' experience in the heating and building
supplier market. He joined the Towelrads business in 2004 and became a
shareholder and Director in 2008. Paul has overseen the growth of the
Towelrads business from sales of less than £1 million to over £22 million a
year. He led a management buyout of the Towelrads business in 2016 and was a
founder of DSH Flooring. Paul is currently Managing Director of the Group's
Heating, Plumbing and Joinery Division including Towelrads, DSH Flooring,
Frazer Simpson and FSN Doors.
As COO Paul will be responsible for the Group's day-to-day operations,
reporting to myself.
Outlook
Across the Group, our priority remains securing strong order intakes with
clear and sustainable margins.
Our acquisition pipeline remains strong, and we continue to look at potential
new businesses that will enhance and broaden Brickability's operations.
As the industry continues to face challenges, we remain cautiously optimistic
and believe that our diversified multi business strategy places us in a good
position to mitigate any pressures and take advantage of current and
anticipated demand. We have entered the second half of the year in a strong
position and the Board expects performance to be at least in line with market
expectations for the full year.
Alan J Simpson
Chief Executive
30 November 2021
Financial Review
Revenue and gross margin
The Group delivered revenue of £223.5 million in the first six months of H1 2021 (H1 2020: £75.3 million), representing a total increase of 197.0% (£148.2 million). When the impact of acquisitions is excluded from revenue, like for like ("LFL") revenue increased by 53.6% when compared to H1 2020 and 30.4% on a two year LFL versus H1 2019.
The increase in LFL revenue reflects of the recovery that the Group has made following the initial COVID-19 lockdowns in April and May 2020. The significant acquisition of Taylor Maxwell, within the Bricks and Building Materials segment, and the addition of Leadcraft, within the Roofing Services segment, have also contributed to the overall increase compared to H1 2020.
Revenue by division was:
H1 2021 H1 2020 % Increase LFL % increase 2 year LFL % change
£'000 £'000
Bricks and Building Materials 198,750 60,313 229.5% 53.7% 35.2%
Roofing Services 8,692 4,953 75.5% 50.9% (17.4%)
Heating, Plumbing and Joinery 16,061 9,991 60.8% 53.3% 15.4%
Total 223,503 75,257 197.0% 53.6% 30.4%
Gross profit for the 6 months increased by 147% to £39.0 million (H1 2020: £15.8 million) whilst the Group's gross margin percentage decreased to 17.4% (H1 2020: 21.0%) driven primarily by the Taylor Maxwell business as it operates on lower margins than the existing Brickability Group as noted in the Chief Executive's Review.
Adjusted profit and adjusted EBITDA
Statutory profit before tax of £11.9 million (H1 2020: £5.4 million) includes other items of £3.9 million (H1 2020: £1.5 million) which are not considered to be part of the Group's underlying operations. These are analysed below the Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income.
The Group's adjusted EBITDA increased by 120% to £17.6 million for the first six months of 2021, compared to £8.0 million in the same period last year, reflecting the impact of the lockdown. EBITDA as a percentage of turnover has fallen to 7.9% (H1 2020: 10.6%) due mainly to the impact of the of the Taylor Maxwell business as noted above.
Adjusted EBITDA by division was:
H1 2021 H1 2021 H1 2020 H1 2020
£'000 EBITDA as % turnover £'000 EBITDA as % turnover
Bricks and Building Materials 15,341 7.7% 5,520 9.2%
Roofing Services 1,269 14.6% 888 17.9%
Heating, Plumbing and Joinery 3,563 22.2% 2,515 25.2%
Central (2,599) - (918) -
Total 17,574 7.9% 8,005 10.6%
Earnings per share
Basic EPS was 3.01p per share (H1 2020: 1.89p), while adjusted basic EPS was 4.79p (H1 2020: 2.39p). Adjusted EPS is an underlying EPS, based on the adjusted profit as noted above.
Dividend
The Board is recommending an interim dividend of 0.96p per share (H1 2020: 0.8678p) to shareholders on the register at 28 January 2022. The ex-date and payment date for the dividend will be 27 January 2022 and 24 February 2022 respectively.
Cash flow and net debt
The Group generated operating cash flows before movements in working capital of £17.5 million in the first six months of the year compared to £8.1 million in the same period in 2020. Cash generated from operations was £7.0 million (H1 2020: £3.6 million).
The net cash position (cash less bank borrowings) as at 30 September 2021 was £2.8 million compared to a net debt position as at 30 September 2020 of £2.7m, and is an increase of £10.1 million since the net debt position at 31 March 2021.
During the period, the Group raised £55 million through the issue of new shares to fund the acquisition of Taylor Maxwell and future bolt-on acquisitions. Initial payments made to acquire these subsidiaries amounted to £39.5 million during the period.
Bank facilities
In June 2021, the Group re-financed into a £60 million revolving credit facility with an additional £25 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 2021 was £15.6 million with a further £44.4 million of undrawn committed facilities available.
Defined benefit pension scheme
The Group acquired a defined benefit pension scheme during the 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 is expected to reach the full buy-out stage within the next 9 months.
Subsequent events
In October 2021, and as previously announced, the Group issued 280,254 new ordinary shares following the vesting and exercising of share options under the Company's Long Term Incentive Plan and Company Share Option Plan. The Group also granted 2,394,286 options under its LTIP and CSOP schemes to its employees.
In November 2021, the Group acquired the entire share capital and 100% of the voting rights in HBS NE Limited, a company specialising in the installation of solar panels and provision of renewable energy services.
There are no other material post balance sheet events.
Mike Gant
Chief Financial Officer
30 November 2021
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the six months ended 30 September 2021 (unaudited)
6 months ended Year ended
6 months ended 30 Sept 2020 31 March 2021
30 Sept 2021 £'000 (Audited)
£'000 £'000
Notes
Revenue 223,503 75,257 181,084
Cost of sales (184,551) (59,457) (143,112)
Gross profit 38,952 15,800 37,972
Other operating income - 1 92
Administrative expenses 6 (22,956) (7,722) (20,624)
Impairment losses on financial assets (301) (74) (341)
Depreciation and amortisation (3,254) (2,527) (5,456)
Finance income 15 11 13
Finance expense (503) (454) (845)
Share of post-tax profit/ (loss) of equity accounted associates 20 - (6)
Fair value (losses)/ gains (110) 381 360
Profit before tax 11,863 5,416 11,165
Tax expense (3,938) (1,064) (1,506)
Profit for the period and total comprehensive income 7,925 4,352 9,659
Attributable to:
Equity holders of the parent 7,960 4,352 9,665
Non-controlling interests (35) - (6)
7,925 4,352 9,659
Earnings per share
Basic earnings per share 8 3.01 p 1.89 p 4.19 p
Diluted earnings per share 8 2.96 p 1.89 p 4.18 p
Adjusted basic earnings per share 8 4.79 p 2.39 p 5.56 p
Adjusted diluted earnings per share 8 4.70 p 2.39 p 5.54 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 ended 30 Sept 2020 31 March 2021
30 Sept 2021 £'000 (Audited)
£'000 £'000
Profit for the period 7,925 4,352 9,659
Acquisition costs 999 - 105
Share-based payment expense 880 43 338
Amortisation of intangible assets 1,897 1,748 3,619
Unwinding of discount on contingent consideration 48 75 127
Share of post-tax (profit)/ loss of equity accounted associates (20) - 6
Fair value losses/ (gains) on contingent consideration 110 (381) (360)
Tax on adjusting items 798 (332) (687)
Adjusted profit for the period 12,637 5,505 12,807
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 2021 (unaudited) 6 months ended Year ended
30 Sept 2020 31 March 2021
6 months ended £'000 (Audited)
30 Sept 2021 £'000
£'000
Notes
Non-current assets
Property, plant and 15,860 4,002 9,125
equipment
Right of use 10,539 5,944 7,945
assets
Intangible 133,926 76,302 76,848
assets
Investments in equity accounted 241 352 221
associates
Investments in financial assets 125 - 125
Deferred tax 98 205 98
assets
Trade and other 491 391 460
receivables
Total non-current assets 161,280 87,196 94,822
Current assets
Inventories 26,807 9,182 12,127
Trade and other receivables 118,788 39,151 42,832
Employee benefits 2,689 - -
Cash and cash 18,389 13,798 8,592
equivalents
Total current assets 166,673 62,131 63,551
Total 327,953 149,327 158,373
assets
Current liabilities
Trade and other payables (125,885) (33,127) (38,769)
Current income tax liabilities (1,544) (529) (426)
Lease liabilities (1,788) (774) (1,497)
Total current liabilities (129,217) (34,430) (40,692)
Non-current liabilities
Trade and other payables (13,159) (2,000) (3,153)
Loans and borrowings 11 (15,160) (16,332) (15,750)
Lease liabilities (9,233) (5,481) (6,796)
Provisions (1,225) (1,325) (1,247)
Deferred tax liabilities (6,556) (5,299) (5,301)
Total non-current liabilities (45,333) (30,437) (32,247)
Total liabilities (174,550) (64,867) (72,939)
Net assets 153,403 84,460 85,434
Equity
Called up share capital 2,983 2,305 2,305
Share premium account 112,035 49,999 49,999
Capital redemption reserve 2 2 2
Share-based payment reserve 832 99 266
Merger reserve 1,245 1,245 1,245
Retained earnings 36,347 30,810 31,623
Equity attributable to equity holders of the parent 153,444 84,460 85,440
Non-controlling interests (41) - (6)
Total equity 153,403 84,460 85,434
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2021 (unaudited)
Share capital Share premium account Retained Total attributable to equity holders of the parent Non-controlling interest Total
Capital redemption Share-based payments Merger reserve Earnings
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2020 2,305 49,999 2 56 1,245 26,458 80,065 - 80,065
Profit for the six months to 30 September 2020 - - - - - 4,352 4,352 - 4,352
Total comprehensive income for the period - - - - - 4,352 4,352 - 4,352
Increase in share-based payment reserve - - - 43 - - 43 - 43
Total contributions by and distributions to owners - - - 43 - - 43 - 43
At 30 September 2020 2,305 49,999 2 99 1,245 30,810 84,460 - 84,460
Profit and total comprehensive income for the six months to 31 March 2021 - - - - - 5,313 5,313 (6) 5,307
Dividends paid - - - - - (4,500) (4,500) - (4,500)
Increase in share-based payment reserve - - - 167 - - 167 - 167
Total contributions by and distributions to owners - - - 167 - (4,500) (4,333) - (4,333)
At 31 March 2021 2,305 49,999 2 266 1,245 31,623 85,440 (6) 85,434
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 - - - - - 7,960 7,960 (35) 7,925
Total comprehensive income for the period - - - - - 7,960 7,960 (35) 7,925
Dividends paid - - - - - (3,236) (3,236) - (3,236)
Issue of paid shares 678 64,322 - - - - 65,000 - 65,000
Share issue costs (2,286) - - - - (2,286) - (2,286)
Increase in share-based payment reserve - - - 566 - - 566 - 566
Total contributions by and distributions to owners 678 62,036 - 566 - (3,236) 60,044 - 60,044
At 30 September 2021 2,983 112,035 2 832 1,245 36,347 153,444 (41) 153,403
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2021 (unaudited)
6 months ended Year ended
30 Sept 2020 31 March 2021
6 months ended £'000 (Audited)
30 Sept 2021 £'000
£'000
Operating activities
Profit for the six months ended 30 September 7,925 4,352 9,659
Adjustments for:
Depreciation of property, plant and equipment 472 334 726
Depreciation of right of use assets 885 445 1,111
Amortisation of intangible assets 1,897 1,748 3,619
(Gain)/ Loss on disposal of property, plant & equipment (6) 14 4
and right of use assets
Foreign exchange (gains)/ losses (13) 68 (19)
Share-based payments expense 880 43 338
Share of post-tax (profit)/ loss in equity accounted associates (20) - 6
Fair value changes in contingent consideration 110 (381) (360)
Movements in provisions (22) (64) (142)
Finance income (15) (11) (13)
Finance expense 503 454 845
Acquisition expenses 999 - 105
Income tax expense 3,938 1,064 1,506
Operating cash flows before movements in working capital 17,533 8,066 17,385
Changes in working capital:
(Increase)/ Decrease in inventories (5,540) 609 (2,011)
Increase in trade and other receivables (11,263) (2,591) (4,077)
Increase/ (Decrease) in trade and other payables 6,230 (2,494) 1,792
Cash generated from operations 6,960 3,590 13,089
Payment of exceptional acquisition expenses (999) - (105)
Interest received 15 11 13
Interest paid (161) (241) (367)
Income taxes paid (2,541) (1,144) (2,435)
Net cash generated from operating activities 3,274 2,216 10,195
Investing activities
Purchase of property, plant and equipment (3,589) (119) (5,669)
Proceeds from sale of property, plant and equipment 35 9 59
Proceeds from sale of right of use assets - - 9
Acquisition of subsidiaries (39,467) - (2,548)
Net cash acquired with subsidiary undertakings 2,679 - 2,274
Net cash used in investing activities (40,342) (110) (5,875)
Financing activities
Equity dividends paid (3,236) - (4,500)
Proceeds from issue of ordinary shares 55,000 - -
Payment of share issue costs (2,286) - -
Proceeds from bank borrowings 41,100 - 3,400
Repayment of bank borrowings (41,400) (8,500) (12,500)
Payment of lease liabilities (1,094) (561) (1,398)
Payment of deferred and contingent consideration (847) (6,427) (7,883)
Payment of transaction costs relating to loans and borrowings (375) (90) (90)
Net cash generated from/ (used in) financing activities 46,862 (15,578) (22,971)
Net increase/ (decrease) in cash and cash equivalents 9,794 (13,472) (18,651)
Cash and cash equivalents at beginning of period 8,592 27,269 27,269
Effect of changes in foreign exchange rates 3 1 (26)
Cash and cash equivalents at end of period 18,389 13,798 8,592
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 30 September 2021 (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 2021. 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 2021 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 2021 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 2021 and 30 September 2020 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 2021 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 2021 annual financial statements.
5. Segmental analysis
The Group generates revenue through three main activities and thus has three reportable segments, 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;
§ Roofing Services, which incorporates the supply of roofing construction
services, primarily within the residential construction sector; and
§ Heating, Plumbing and Joinery, which incorporates the sale of
high-performance joinery materials and the distribution of radiators and
associated parts and accessories.
Inter-segment sales are eliminated from the results reported to the chief operating decision maker (CODM) and from the consolidated interim financial statements.
6 months ended 30 September 2021 6 months ended 30 September 2020
Consolidated Consolidated
Bricks and Building Materials Roofing Services Heating, Plumbing and Joinery £'000 Bricks and Building Materials Roofing Services Heating, Plumbing and Joinery £'000
£'000 £'000 £'000 £'000 £'000 £'000
Revenue from sale of goods 192,141 - 16,061 208,202 60,313 - 9,991 70,304
Revenue from rendering of services 6,609 8,692 - 15,301 - 4,953 - 4,953
Total revenue 198,750 8,692 16,061 223,503 60,313 4,953 9,991 75,257
EBITDA 15,341 1,269 3,563 20,173 5,520 888 2,515 8,923
Centralised costs (2,605) (904)
(Loss)/ profit on disposal of 6 (14)
assets
Group adjusted EBITDA 17,574 8,005
Depreciation (1,357) (779)
Amortisation (1,897) (1,748)
Acquisition costs (999) -
Share-based payment expense (880) -
Finance income 15 11
Finance expense (503) (454)
Share of results of associates 20 -
Fair value gains and losses (110) 381
Group profit before tax 11,863 5,416
Year ended 31 March 2021 (Audited)
Consolidated
Bricks and Building Materials Roofing Services Heating, Plumbing £'000
£'000 £'000 and Joinery
£'000
Revenue from sale of goods 141,019 - 24,452 165,471
Revenue from rendering of services 3,187 12,426 - 15,613
Total revenue 144,206 12,426 24,452 181,084
EBITDA 11,662 2,571 5,766 19,999
Centralised costs (2,453)
Profit on disposal of assets (4)
Group adjusted EBITDA 17,542
Depreciation (1,837)
Amortisation (3,619)
Acquisition costs (105)
Share-based payment expense (338)
Finance income 13
Finance expense (845)
Share of results of associates (6)
Fair value gains and losses 360
Group profit before tax 11,165
6 months ended 30 September 2021 6 months ended 30 September 2020
Consolidated Consolidated
Bricks and Building Materials Roofing Services Heating, Plumbing and Joinery £'000 Bricks and Building Materials Roofing Services Heating, Plumbing and Joinery £'000
£'000 £'000 £'000 £'000 £'000 £'000
Non-current segment assets 108,862 23,036 28,918 160,816 40,958 19,512 26,167 86,637
Current segment assets 146,670 5,505 13,543 165,718 42,448 6,584 10,970 60,002
Total segment assets 255,532 28,541 42,461 326,534 83,406 26,096 37,137 146,639
Investment in associates 241 352
Investments in financial assets 125 -
Deferred tax assets 98 205
Head office 955 2,131
Group assets 327,953 149,327
Total segment liabilities (120,161) (3,882) (6,547) (130,590) (29,900) (4,172) (4,943) (39,015)
Loans and borrowings (15,160) (16,332)
(excluding leases and
overdrafts)
Derivative financial liabilities - -
Deferred tax liabilities (6,556) (5,299)
Other unallocated central (22,244) (4,221)
liabilities
Group liabilities (174,550) (64,867)
Year ended 31 March 2021 (Audited)
Consolidated
Bricks and Building Materials Roofing Services Heating, Plumbing £'000
£'000 £'000 and Joinery
£'000
Non-current segment assets 46,276 18,235 29,867 94,378
Current segment assets 45,635 3,799 12,582 62,016
Total segment assets 91,911 22,034 42,449 156,394
Investment in associates 221
Investments in financial assets 125
Deferred tax assets 98
Head office 1,535
Group assets 158,373
Total segment liabilities (37,570) (2,815) (7,040) (47,425)
Loans and borrowings (15,750)
(excluding leases and
overdrafts)
Deferred tax liabilities (5,301)
Other unallocated central (4,463)
liabilities
Group liabilities (72,939)
6. Government grants
Included within administrative expenses, in the six months to September, is an amount of £nil (2020: £1,358,000 and year ended 31 March 2021: £1,360,000) in respect of government grants received in response to the global COVID-19 pandemic. In the prior periods, £30,000 related to business rates support, while the remainder relates to supporting the payroll costs of the Group's employees. The Group has elected to deduct the grant income from the associated expenses. The Group does not have any unfulfilled obligations relating to the support schemes.
7. Dividends
6 months ended 6 months ended Year ended
30 Sept 2021 30 Sept 2020 31 March 2021
£'000 £'000 (Audited)
£'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 March 2021 of 1.0850p per share 3,236 - 2,500
(31 March 2021: for the year ended 31 March 2020 of 1.0850p per share)
Interim dividend for the year ended 31 March 2022 - - 2,000
(31 March 2021: for the year ended 31 March 2021 of 0.8678p per share)
Total dividends paid during the period 3,236 - 4,500
The Directors recommend that an interim dividend of 0.96p per ordinary share be paid for the year ended 31 March 2022. This dividend has not been included as a liability in these interim financial statements.
8. 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 2020
Earnings Weighted Earnings Earnings Weighted Earnings
£'000 average per share £'000 average per share
number of (p) number of (p)
shares shares
Basic earnings per share 7,960 264,356,685 3.01 4,352 230,458,821 1.89
Effect of dilutive securities
Employee share options - 5,017,128 - - 68,223 -
Diluted earnings per share 7,960 269,373,813 2.96 4,352 230,527,044 1.89
Year ended 31 March 2021 (Audited)
Earnings Weighted Earnings
£'000 average per share
number of (p)
shares
Basic earnings per share 9,665 230,458,821 4.19
Effect of dilutive securities
Employee share options - 629,983 -
Diluted earnings per share 9,665 231,088,804 4.18
Adjusted earnings per share and adjusted diluted earnings per share, based on
the adjusted profit attributable to the equity holders of the parent (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 2020
Earnings Weighted Earnings Earnings Weighted Earnings
£'000 average per share £'000 average per share
number of (p) number of (p)
shares shares
Adjusted basic earnings per share 12,672 264,356,685 4.79 5,505 230,458,821 2.39
Effect of dilutive securities
Employee share options - 5,017,128 - - 68,223 -
Adjusted diluted earnings per share 12,672 269,373,813 4.70 5,505 230,527,044 2.39
Year ended 31 March 2021 (Audited)
Earnings Weighted Earnings
£'000 average per share
number of (p)
shares
Adjusted basic earnings per share 12,813 230,458,821 5.56
Effect of dilutive securities
Employee share options - 629,983 -
Adjusted diluted earnings per share 12,813 231,088,804 5.54
9. Business combinations
The Group acquired the entire share capital and 100% of the voting rights in the following companies during the period:
Company acquired Acquisition date
Taylor Maxwell (2017) Limited 30 June 2021
Leadcraft Limited 30 July 2021
The book value of the assets acquired and liabilities assumed on acquisition are as follows:
Taylor Maxwell (2017) Limited Leadcraft Limited
£'000 £'000
Property plant and equipment 3,519 128
Right of use assets 2,971 103
Inventory 9,126 13
Trade and other receivables 63,939 778
Employee benefits 2,689 -
Cash and cash equivalents 2,585 94
Trade and other payables (72,726) (247)
Current income tax liabilities (380) (138)
Lease liabilities (3,115) (103)
Deferred tax (439) (18)
Total identifiable net assets 8,169 610
Goodwill 54,086 4,890
Total consideration 62,255 5,500
Satisfied by:
Cash paid 36,167 3,300
Share consideration 10,000 -
Deferred cash consideration 3,088 1,320
Contingent consideration 13,000 880
Total consideration 62,255 5,500
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.
Included within the assets acquired for Taylor Maxwell (2017) Limited is £2,178,000 in respect of a surplus on a defined benefit pension scheme. The Group 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 is expected to reach the full buy-out stage within the next 9 months.
The above consideration is subject to post completion adjustments and the deferred and contingent consideration is undiscounted. The share consideration resulted in 9,900,990 new ordinary shares being issued during the period.
The acquisitions were carried out in order to expand the Group's customer base and position in the UK market, increase its product offering and enhance its provision of environmentally sustainable and efficient roofing products and services.
Included in the consolidated financial statements are the following amounts of revenue and profit in respect of the subsidiaries acquired:
Taylor Maxwell (2017) Limited Leadcraft Limited
£'000 £'000
Revenue 89,703 801
Net profit 4,558 164
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 £309,475,000 and Group profit would have been £11,628,000.
Total acquisition related costs amounted to £999,000. Acquisition related costs in connection with the above companies, included in administrative expenses, amounted to £991,000 as shown below, the difference being aborted acquisition costs.
Taylor Maxwell (2017) Limited Leadcraft Limited
£'000 £'000
Acquisition costs 909 82
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.
The fair value of all contingent consideration is based on a discounting cash flow model, applying a discount rate of between 1.7% and 4.9% 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.
Company acquired Fair value at 30 September Fair value at 30 September
Fair value at acquisition 2021 2020
£'000 £'000 £'000 Undiscounted amount payable Undiscounted amount payable
30 September 2021 30 September 2020
Discount rate £'000 £'000
The Bespoke Brick Company Limited 4.9% - - - - -
Brickmongers (Wessex) Ltd 4.8% 138 - 27 - 29
CPG Building Supplies Limited 4.0% (201) - - - -
U Plastics Limited 3.5% 2,208 2,306 2,228 2,400 2,400
Bathroom Barn Limited 1.7% 231 227 - 233 -
McCann Logistics Ltd 1.7% 889 890 - 913 -
As noted above, the amounts included in respect of Taylor Maxwell (2017) Limited and Leadcraft Limited are undiscounted, pending completion of a detailed fair value assessment.
The total potential undiscounted amount payable in respect of U Plastics ranges from £246,000 to £2,400,000 (2020: £nil to £2,400,000). The total potential undiscounted amount payable in respect of Taylor Maxwell (2017) Limited ranges from £nil to £13,000,000 and the undiscounted amount payable in respect of Leadcraft Limited ranges from £nil to £880,000. It is not possible to determine a range of outcomes for the other companies acquired as the arrangements do not contain a maximum payable.
A sensitivity in respect of the inputs into the discounted cash flow model, determining the contingent consideration, is outlined in note 10.
10. 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 2021 and 31 March 2021 are shown below:
Financial instrument Valuation technique Significant Range/ Sensitivity of the
Unobservable estimate input to fair value
inputs
Contingent Present value of future cash flows Assumed probability-adjusted EBITDA of acquired entities. Sept 2021: The higher the adjusted EBITDA, the higher the
Consideration in a business combination (note 9) £1,110,000 - fair value. If forecast
£3,766,000 EBITDA was 10% higher, while all other variables
remained constant, the
Sept 2020: fair value of the overall contingent consideration liability would increase by
£327,000 (2020: £24,000). A 10% decrease in EBITDA would result in a
£917,000 - decrease in the liability of £335,000 (2020: £130,000).
£4,038,000 (March 2021: increase of £140,000 and decrease of £424,000)
March 2021: The higher the discount
£1,142,000 - rate, the lower the fair value. If the discount rate applied was 2% higher,
while all other variables remained constant, the fair value of the overall
£3,852,000 contingent consideration liability would decrease by £85,000 (2020:
£94,000). A 2% decrease in the rate would result in an increase in the
liability of £82,000 (2020: £98,000).
(March 2021: decrease of £110,000 and increase of £108,000)
Discount rate
Sept 2021:
1.7% - 4.9%
Sept 2020:
3.5% - 4.8%
March 2021:
1.7% - 4.9%
Reconciliation of level 3 fair value measurements of financial instruments
6 months ended 6 months ended Year ended
30 Sept 2021 30 Sept 2020 31 March 2021
£'000 £'000 (Audited)
Contingent consideration liability £'000
At 1 April 3,442 2,357 2,357
Additions through business combinations 13,880 - 1,120
Finance expense charged to profit or loss 46 42 89
Settlement (175) 236 236
Fair value (gains)/ losses recognised in profit or loss 110 (381) (360)
At 30 September/ 31 March 17,303 2,254 3,442
11. Loans and borrowings
6 months ended 6 months ended Year ended
30 Sept 2021 30 Sept 2020 31 March 2021
£'000 £'000 (Audited)
£'000
Current loans and borrowings at 1 April - - -
Non-current loans and borrowings at 1 April 15,750 24,912 24,912
Total loans and borrowings at 1 April 15,750 24,912 24,912
Issue of bank loans 41,100 - 3,400
Repayment of bank loans (41,400) (8,500) (12,500)
Payment of transactions costs (375) (90) (90)
Other movements* 85 10 28
Loans and borrowings at 30 September/ 31 March 15,160 16,332 15,750
Analysed as:
Current loans and borrowings - - -
Non-current loans and borrowings 15,160 16,332 15,750
Loans and borrowings at 30 September/ 31 March 15,160 16,332 15,750
*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.
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.
Transactions with directors
Included within receivables are the following balances due from a director and former director:
Year
ended
6 months ended 6 months ended 31 March 2021
30 Sept 2021 30 Sept 2020 (Audited)
£'000 £'000 £'000
Directors' loan accounts - 978 978
The amounts advanced were for the purpose of paying up the subscription price for ordinary D shares of £0.01 each. The loans were unsecured and interest free and repayable on the sale of any of the shares held in the Company by the director and former director. The balances were repaid in full during the period.
Key management personnel
Year ended
31 March 2021
6 months 6 months (Audited)
ended ended £'000
30 Sept 2021 30 Sept 2020
£'000 £'000
Key management personnel compensation
Short-term employee benefits 1,252 1,073 3,219
Post-employment benefits 18 36 75
Share-based payment expense 168 2 96
1,438 1,111 3,390
A finance expense was recognised, in the period, of £nil (2020: £12,000 and year to 31 March 2021: £16,000), in respect of the unwinding of the discount applied to deferred consideration due to key management.
During the interim period, the Group made sales amounting to £7,000 (2020: £5,000 and year to 31 March 2021: £13,000) to members of key management. A balance of £nil (2020: £1,000 and 31 March 2021: £7,000) was included within trade receivables at the reporting date, in respect of these sales.
Other related parties
Included within trade receivables/ payables are the following amounts due from/ to other related parties, at the reporting date:
Amounts owed by related parties Amounts owed to related parties
Year Year
ended ended
6 months ended 6 months ended 31 March 2021 6 months ended 6 months ended 31 March 2021
30 Sept 2021 30 Sept 2020 (Audited) 30 Sept 2021 30 Sept 2020 (Audited)
£'000 £'000 £'000 £'000 £'000 £'000
Associates - 30 - 138 45 88
Other related parties - - - - - 24
- 30 - 138 45 112
Transactions undertaken between the Group and its related parties during the year were as follows:
Purchases from related parties
Year
ended
6 months 6 months 31 March 2021
ended ended (Audited)
30 Sept 2021 30 Sept 2020 £'000
£'000 £'000
Associates 297 179 474
Other related parties 109 89 199
406 268 673
Other related parties comprise of entities owned by directors and key management. Purchases relate to rent and administrative expenses.
A finance expense of £nil (2020: £16,000 and year to 31 March 2021: £21,000) was recognised during the interim period in respect of the unwinding of the discount applied to deferred consideration due to close relatives of key management.
13. Post balance sheet events
On 14 October 2021, the Group issued 280,254 new ordinary shares following the vesting and exercising of share options under the Company's Long Term Incentive Plan and Company Share Option Plan. Following this issue, the total number of shares in issue is 298,534,802.
On 21 October 2021, the Group granted 2,394,286 options under its LTIP and CSOP schemes to its employees. The options were granted on the same terms as previous awards and are subject to a performance period from 1 April 2021 to 31 March 2024.
On 23 November 2021, the Group completed the acquisition of the entire share capital and 100% of the voting rights in HBS NE Limited, a company specialising in the installation of solar panels and provision of renewable energy services.
The acquisition broadens our offering to customers whilst also supporting the Group's own sustainability commitments.
The book value of the separable assets acquired and liabilities assumed are estimated as follows:
£'000
Property plant and equipment 17
Inventory 86
Trade and other receivables 481
Trade and other payables (433)
Total identifiable net assets 151
Due to the timing of the acquisition, a detailed assessment of the fair value
of the identifiable net assets, and value of any uncollectable contractual
cash flows, has not yet been completed at the date of approving these interim
financial statements.
The total consideration expected to be payable is:
£'000
Cash 3,276
Contingent consideration 2,184
Total consideration 5,460
The above consideration is subject to post completion adjustments.
The contingent consideration is subject to future performance of the acquired
business, measured against agreed adjusted EBITDA targets, over the five years
following acquisition. Due to the timing of the acquisition, the above value
represents an initial undiscounted estimate of contingent consideration
payable. It is not possible to determine a range of outcomes for the
contingent consideration payable as the arrangement does not contain a maximum
payable.
It is expected that goodwill will arise on the acquisition and this will
primarily comprise the value of expected synergies arising from the
acquisition and value of the assembled workforce. This goodwill is not
expected to be deductible for tax purposes.
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