REG - Brickability Group - Interim Results for six months ended 30 Sept 2024
26/11/2024 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241126:nRSZ5922Na&default-theme=true
RNS Number : 5922N Brickability Group PLC 26 November 2024
26 November 2024
Brickability Group PLC
("Brickability" or the "Group")
Interim Results for the six months ended 30 September 2024
Brickability Group PLC (AIM: BRCK), leading distributor and provider of
specialist products and services to the UK construction industry, today
announces its unaudited interim results for the six months ended 30 September
2024 ("H1 FY25").
H1 FY25 Financial Summary
H1 FY25 H1 FY24 % Change
£m £m
Revenue 330.9 324.8 1.9
Adjusted results ((1) (2) (3))
Gross profit 63.0 55.0 14.5
Gross profit margin 19.0% 16.9% 210bps
Adjusted EBITDA 27.9 25.6 9.0
Adjusted EBITDA margin 8.4% 7.9% 50bps
Adjusted profit before tax 21.9 21.8 0.5
Adjusted EPS 5.03p 5.30p (5.1)
Net debt ((4)) 56.3 30.9 82.2
Interim dividend - declared 1.12p 1.07p 4.7
Statutory results ((5))
Profit before tax 7.0 16.0 (56.3)
EPS 1.33p 3.78p (64.8)
Half year highlights
· Resilient, in line performance despite sustained macroeconomic conditions,
with revenue growth of 1.9% or a like-for-like (LFL)((6)) reduction of 7.4%
· Improvement in Adjusted EBITDA margin of 50 bps validating the benefits of the
recent strategic and structurally higher margin acquisitions
· Strong revenue performance in the Contracting and Distribution divisions,
driven by a doubling of sales of solar PV in Upowa, highlighting the benefit
of the Group's diversification strategy
· FY24 full-service specialist cladding installation and remediation contracting
acquisitions of Topek and TSL are performing well and trading in line with the
pre-acquisition investment case
· Streamlined senior leadership team, focused on growth and operational
outperformance
· Investment underway in IT systems upgrades and process efficiencies
· Increase in the interim dividend reflects the performance in the first half
and the Board's confidence in the longer-term outlook for the Group
Outlook
· Trading for the first six weeks of the second half is in line with the Board's
expectations
· New build housing market remains soft heading into the new calendar year
· Medium-term housing market fundamentals are strong, with a structural housing
deficit and the new Government's commitment to 1.5 million new homes during
this parliament
· Recent increased order intake is encouraging, particularly within the Bricks
and Building Materials division
· Profitability is expected to be first half weighted due to phasing of project
work in the Contracting division, and the Board is confident in achieving
market expectations for the full year((7))
Frank Hanna, Chief Executive Officer, commented:
"This has been a positive half for the business, and I view the future with
cautious optimism. Enquiry levels are picking up, the order intake is
encouraging, and importantly, well represented across each of our four
divisions. We remain confident in a recovery of the new build housing market,
and Brickability is well positioned to significantly benefit when it happens.
"Having now been in the business for six months I've been able to take a
detailed look at the Group. My initial impressions remain intact, this is a
great business with a strategy of diversification, providing high quality
specialist products and services for our customers. The Group has
significantly evolved from predominantly being a brick distributor, and is now
a diversified group of scale with strong foundations. My focus has been on
improving the fundamentals of the business, ensuring through cycle resilience
whilst retaining the entrepreneurialism spirit at our core, and I look forward
to the future with confidence in our ability to deliver excellent results when
market growth returns."
(1) Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation
and other items (See Financial Review and note 5).
(2) Adjusted profit before tax is statutory profit before tax excluding other
items.
(3) Adjusted EPS is adjusted profit after tax (statutory profit after tax before
other items) divided by the weighted average number of shares in the year.
(4) Bank borrowings, excluding arrangement fees, less cash.
(5) Statutory measures derived from accounting under IFRS.
(6) Like-for-like ("LFL") revenue is a measure of growth in sales, adjusted for
the impact of acquisitions.
(7) The Company considers market expectations for FY25 to be revenue of £630m and
Adjusted EBITDA of £47m.
Enquiries:
Brickability Group via Montfort Communications
PLC
John Richards, Chairman
Frank Hanna, Chief Executive
Officer
Mike Gant, Chief Financial Officer
Peel Hunt LLP (Nominated Adviser and Broker) +44 (0) 20 7418 8900
Ed Allsopp
Tom Graham
Charlotte Sutcliffe
Montfort Communications +44 (0) 203 514 0897
brickability@montfort.london (mailto:brickability@montfort.london)
James Olley
Alex Everett
About Brickability
Brickability Group PLC is a leading distributor and provider of specialist
products and services to the UK construction industry. The business comprises
four divisions: Bricks and Building Materials, Importing, Distribution and
Contracting. With an agile, de-centralised, capital-light business model,
supported by a strong balance sheet, Brickability leverages the skills of its
people company-wide to effectively service the complex and evolving needs of
the construction industry.
Founded in 1985, the Group has grown organically through product
diversification and geographic expansion, as well as through the acquisition
of specialist businesses that support its long-term strategy for growth.
Today, the Group encompasses a diverse portfolio of market-leading brands and
a dedicated team of over 800 skilled and experienced personnel, led by a
management team with deep-rooted knowledge and experience in the UK and
European construction industries.
The Group is committed to building better communities throughout the supply
chain and supporting the delivery of sustainable developments that enhance the
built environment for future generations, while delivering continuous value
for shareholders.
Interim Report for the six months ended 30 September 2024
Chairman's Statement
Overview
I am pleased to report our financial results for the six months ended 30
September 2024. These results continue to validate our strategy of
diversification, which is focused on creating a resilient, broad based and
added-value speciality products distribution and services business with
multiple growth opportunities. As a result of strong operational execution, we
have been able to deliver an increase in H1 FY25 in revenue, gross margin and
Adjusted EBITDA.
Of particular note in the first half within the Distribution division, we have
seen a doubling of sales at Upowa, our renewable energy business, which
provides products and services including solar panels, battery storage and
renewable heating. Specialist solar PV systems for new build homes are the
major contributor to Upowa's sales growth, driven by revisions to Part L of
the Building Regulations, which cover mandatory energy efficiency
requirements. Part L is now applicable to all new housing starts, underlining
the UK's structural shift to sustainable development.
Within the Contracting division, we have also enjoyed a strong first half at
our specialist cladding and fire remediation business where revenue on a LFL
basis has increased by approximately 9%. The momentum in this business, which
comprises our recent Topek and TSL acquisitions, is a result of the urgent
requirement for remediation of unsafe cladding, a significant market where
demand for our services will persist for many years.
The growth drivers behind these higher margin revenue streams are distinct
from our traditional brick import and distribution activities, the performance
of which is closely correlated to new housing starts.
Our financial results for H1 FY25 were resilient, through a period in which
the new build housing and residential and commercial RMI markets remained
subdued, and underlines the valuable contribution from our diversified revenue
streams. Group revenues grew to £330.9 million (H1 FY24: £324.8 million)
and Adjusted EBITDA increased to £27.9 million (H1 FY24: £25.6 million).
Group revenues on a LFL basis were 7.4% lower, which demonstrates the
important contribution from recent acquisitions.
Whilst the new build housing, residential and commercial RMI markets remain
challenging, we are seeing early indications of recovery, for example, in
brick order intakes, roofing orders and other product enquiries. As the market
improves, we continue to view the Group's brick sourcing and distribution
activities as exciting, owing to our differentiated position in the UK brick
market. Our network of premium European manufacturers ensures we are able to
offer a market leading breadth of brick types including clay bricks, which are
favoured by planners, developers and homeowners in parts of the UK such as the
Southeast.
There is structural demand in the UK for imported clay stock bricks as current
UK production is mainly focused on wire-cut manufactured bricks. Additionally,
UK wire-cut brick manufacture has finite capacity increasing the requirement
for imports. Once new build housing is in recovery, and UK brick demand
exceeds manufacturing capacity, the brick market will become more reliant on
imported bricks once again, particularly whilst UK manufacturing capacity
remains below historic norms. We are ideally positioned to satisfy that demand
owing to the strength of our established relationships with brickmakers across
Europe.
The mid to long-term fundamentals of the UK housing market remain robust, with
the historical under supply of housing evidenced through the Government's
commitment to 1.5 million homes under its parliament, presenting a significant
potential for growth within the housebuilding supply chain. We are encouraged
by the improving interest rate environment, a slowing inflation trend, and by
initiatives from the Government to support both private sector and social
housing.
Acquisitions
The Board's acquisition strategy complements the Group's organic growth
initiatives and remains focused on diversifying product offering, services and
geographic reach. Our most recent acquisitions were TSL in January 2024 and
Topek in October 2023. Both of these acquisitions, in the complementary high
growth verticals of cladding remediation, are trading well and in line with
the pre-acquisition investment case. Both businesses have contributed
meaningfully in the period, and represent a conscious effort to drive the
Group's blended margin.
Whilst the current focus is on de-gearing the balance sheet, the Group
continues to evaluate potential acquisition opportunities with a particular
emphasis on focused growth in our existing four divisions.
Since the IPO in August 2019, our acquisition strategy has brought together a
family of specialist businesses focused on providing a range of services to
our customers, and on scaling the Group. We are currently progressing a
systems and data project aimed at standardising business processes to improve
efficiency and analytics, and to create a platform for the integration of
future acquisitions. We look forward to providing further updates on this
project in due course, which we believe will deliver multiple benefits for
Brickability going forward.
Board and Environmental, Social and Governance
Frank Hanna joined the Group as Chief Executive Officer on 15 April 2024,
bringing considerable industry and management expertise to help lead
Brickability on the next stage of its growth journey. I would like to record
my thanks to Frank for his valuable input to date. I would also like to thank
all colleagues within Brickability for their commitment and hard work
throughout the first half.
Our environmental, social and governance strategy is at the heart of our
business and we are committed to making continued progress across all three
areas. During the first half we have laid out plans to deepen our Scope 3
reporting, initiate energy-saving trials and conduct a materiality assessment
with customers to keep our ESG strategy aligned with the evolving market. It
is also gratifying that as a business we have supported over 80 youth sports
clubs nationwide over the last few months through our Charitable Foundation.
Dividend
The Board is pleased to declare an increase in the interim dividend to 1.12
pence per share (H1 FY24: 1.07 pence), in line with the Group's progressive
dividend policy, which reflects the performance of the business in the half
year and the Board's confidence in the future.
Outlook
The third quarter of FY25 has started positively for the Group, and whilst
wider sector headwinds prevail, we are benefiting from diversification and
remain confident of meeting market expectations for the current financial
year. Enquiries and order intake are gaining momentum, and together with a
well-balanced forward order book, favourable operational gearing within the
business and an improving macroeconomic outlook, the Board is increasingly
positive about the near, medium- and long-term prospects for the Group.
John Richards
Chairman
26 November 2024
Chief Executive's Review
Introduction
Since joining Brickability as CEO in April this year, I have been hugely
impressed by the unique nature of the Group within the wider specialist
construction materials sector and by our potential to grow organically,
through cyclical recovery and through targeted strategic acquisitions.
We are differentiated by our ability to source and supply added-value building
products for the total building envelope, and are set apart by the specialism
in everything we do. We have a pivotal role, sitting between building product
manufacturers and brand owners, and the construction industry customers whom
we provide with sourcing, procurement and advisory expertise leading to strong
and long standing relationships.
What is clear is that Brickability adds value to our customers through our
specialised support and procurement in a construction industry with
increasingly complex and demanding regulatory, planning and sustainability
requirements.
My initial review of the Group has enabled me to focus on two vital aspects of
the business: people and processes. We now have a streamlined Senior
Leadership Team to drive the Group forward. We are investing in, and enhancing
our IT, through improving systems and processes to create a robust platform
for future growth. This will help identify and allow us to deliver on
organic growth opportunities, and will provide a stronger platform from which
to quickly integrate and generate value from future acquisitions.
A strong commercial and customer-focused culture is at the heart of our
business, which has been a significant characteristic of the businesses
acquired since IPO. It is important to retain this culture throughout the
organisation, however, we are taking the opportunity to consolidate some of
the back office systems to improve the efficiency of the Group and enhance the
quality of management information alongside our internal Health & Safety
and sustainability infrastructure.
Brickability is a cash generative, margin-focused, capital-light business and
we are benefiting from a strategy of diversification, with bricks currently
representing less than half of Group sales. In particular, our recently
acquired specialist fire remediation and cladding business and our Upowa
renewable energy business are both high-margin businesses operating in end
markets of structural growth, resulting in a more resilient through cycle
Group.
It is well documented that house builders, which represent approximately half
of our customer base, are at trough output, but we are encouraged by the
momentum in our order book, the improving interest rate environment and by the
Government's target of constructing 1.5 million homes over the parliament.
Not only are we well placed for a recovery in end markets, but the specific
role that the Group plays in moving construction towards a more sustainable
future will be a significant driver of future growth. We are a business with
strong ESG credentials. Environmental sustainability and social value are
hallmarks of our portfolio of products and services, underlining our corporate
commitment to Building Better Communities.
Group financial results
It is pleasing to report that Brickability's strategy to diversify revenues
across four divisions, with a focus on margin growth has been reflected in the
first half results. Against a backdrop of wider market challenges, with UK
housebuilding largely on hold, whilst interest rates have been elevated for a
significant period of time, the Group has performed in line with the Board's
expectations during the first half of the year.
Revenue increased, on a reported basis, by 1.9% (H1 FY24: -7.9%), reflecting
the impact of the strategic acquisitions made in FY24 and the growth in our
Distribution division. On a LFL basis, revenues were down 7.4%, a much lower
rate of contraction versus the prior year comparative (H1 FY24: -14.4%).
Gross profit of £63.0m (H1 FY24: £55.0m) has grown by £8.0m, or 14.5% over
the period. Gross Profit margin at 19.0% (H1 FY24: 16.9%) has increased by 210
basis points, reflecting the impact of the specialist cladding and fire
remediation acquisitions. These in turn have also positively impacted Group
Adjusted EBITDA margin which, compared with the prior period, has grown by 50
basis points to 8.4%.
Divisional Update
Bricks and Building Materials Division
This division 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.
From the beginning of the financial year, the E. T. Clay business unit moved
into the division from Importing which better reflects the nature of the
business.
In line with our expectations and reflecting the anticipated softness in the
housing market, revenues decreased 9.4% to £219.9m (H1 FY24: £242.6m),
during the period. The Adjusted EBITDA margins across products fell 80 basis
points, which was largely a result of exposure to bricks, with the average
selling price 8% lower than last year.
The market for UK brick despatches was at a similar level to the comparative
period last year. Divisional volumes were down around 5% reflecting the
challenging trading conditions, particularly in businesses with higher
exposure to premium brick sales, such as the private housebuilding and the
merchant sector. Trading with social housing-led developers has been more
resilient.
Primarily as a result of the softness in bricks, the first half saw a greater
proportion of revenues generated from the cladding supply and timber
businesses. The performance of our cladding supply business was resilient
although trading has to some extent been impacted by project delays, in part
due to the Building Safety Act ('BSA'). Timber revenue was broadly flat when
compared to the comparative period, with volume growth from our UK stock sites
broadly outweighing the average selling price reductions of 4%.
To support growth of our timber and cladding supply businesses, our new
central London showroom in Clerkenwell continues to progress well with an
official launch expected before the end of the financial year in March. This
is a further investment in the specification sector with the new facility over
three times the size of the previous one and it will showcase all the products
in the Taylor Maxwell and SBS portfolios.
Importing Division
This division is primarily responsible for strategic importing of building
products, the majority of which are on an exclusive basis to the UK market, to
complement traditional and contemporary architecture.
As anticipated, the division's revenue was impacted by the lower levels of
activity in the UK market for imported bricks and roof tiles, falling by 10.6%
to £35.6m (H1 FY24: £39.8m) during the period. Imported brick volumes fell
by around 7% whilst the average selling price was 11% lower than last year,
impacting Adjusted EBITDA margin, which fell 270 basis points.
Trading conditions remain challenging with high exposure to the merchant
sector as well as private housebuilding but it remains our expectation that
the performance and profitability of the division will improve as the overall
brick market gathers pace alongside the capacity constraints of domestic
manufacture.
Distribution Division
This division focuses on the sale and distribution of a wide range of
products, including windows, doors, radiators and associated parts and
accessories.
Revenue in the first half grew by 1.5% to £33.7m (H1 FY24: £33.2m) driven by
a doubling of revenue from our solar business, Upowa. However, the weaker
activity in the housing market has significantly impacted sales in almost all
of the other businesses in the division. This impact has driven an adverse
variance in business unit profit mix together with negative operational
leverage leading to a fall of 320 basis points in Adjusted EBITDA margin.
In addition to the significant growth in solar panel installations, the
division continues to expand its sales of other energy efficient solutions
such as electric radiators, hot water heat pump cylinders, and underfloor
heating.
Contracting Division
This division provides cladding, fire remediation, flooring and roofing
installation services within the residential construction sector and
commercial sector.
Revenue in the first half grew by 128.3% to £53.5m but was down 4.7% on a
LFL basis during the period. Revenue growth was driven by the inclusion of
Topek and TSL, the specialist cladding and fire remediation acquisitions
within the division. As expected, the softness in the housing market seen over
the last two years is now being reflected in the results of the roofing
businesses in the division.
Overall, the inclusion of Topek and TSL, structurally higher margin business
has significantly increased the divisional Adjusted EBITDA margin, up 880
basis points to 24.6% from 15.8% in the prior period.
Continental Tile Joint Venture
As noted in September's AGM statement, the Board has decided against issuing a
further loan to its German tile manufacturing joint venture, allowing the
Group to focus on other investment opportunities and capital allocation
priorities, which are expected to generate better returns for shareholders.
The factory is expected to cease operations in the coming weeks. Whilst
various options for the sale of the business and its assets are being
evaluated, the Group has recognised the full impairment of the loans to the
joint venture of £5.3m, which has been treated as a non-cash one-off
exceptional item.
Summary
There has been positive progress in H1 FY25 as we use current markets as an
opportunity to enhance the fitness of the business ahead of a market recovery.
It is our belief that greater attention to process will help drive
efficiencies and facilitate profitable future growth and this will be an
important area of focus for the Group as we move forward. We already operate a
capital-light model, and with the operational leverage of the Group, an
improvement in end markets will benefit near-term profitability and deliver
strong returns for shareholders.
Whilst interest rates may take time to come down sufficiently to boost the
housing market, and we remain cautious, inorganic growth will continue to be a
driver of Brickability's expansion and the Group continues to evaluate its
M&A pipeline where there are a number of earnings enhancing
opportunities.
Against a softer market backdrop, the results show the benefits of product
diversification with revenue and Adjusted EBITDA growth. The business remains
committed to growing in a sustainable manner, the Board's outlook for the 2025
full year remain unchanged, and is consistent with market expectations.
We look to the future with cautious optimism and are cognisant of the
Government's commitment to new housing starts in the UK, the requirement for
more energy efficient and low carbon home, as well the recent Budget stating
that up to £22.4bn would be spent to rectify dangerous cladding, all of which
are significant tailwinds for Brickability.
Frank Hanna
Chief Executive
26 November 2024
Financial Review
Revenue
The Group delivered revenue of £330.9 million in the first 6 months of FY25
(H1 FY24: £324.8 million, an increase of 1.9% or £6.1 million. Group LFL
revenue decrease was 7.4% when compared to H1 FY24.
Revenue by division is analysed as follows:
H1 FY25 H1 FY24 % Change LFL % Change
£'000 £'000
Bricks and Building Materials 219,936 242,632 (9.4)% (9.4)%
Importing 35,560 39,782 (10.6)% (10.6)%
Distribution 33,717 33,227 1.5% 1.5%
Contracting 53,470 23,421 128.3% (4.7)%
Group eliminations (11,754) (14,222) (17.4)% (17.4)%
Total 330,929 324,840 1.9% (7.4)%
Gross Profit
Gross profit for the first 6 months of FY25 increased to £63.0 million (H1
FY24: £55.0 million). Gross profit margin has increased by 210 basis points
to 19.0% (H1 FY24: 16.9%) driven by the impact of the two acquisitions in the
second half of FY24.
Adjusted EBITDA
Adjusted EBITDA for the first 6 months of FY25 increased by 9.2% to £27.9
million (H1 FY24: £25.6 million). Adjusted EBITDA as a percentage of revenue
has increased to 8.4% (H1 FY24: 7.9%), due to the acquisitions completed in
FY24 as noted above.
Adjusted EBITDA by division is analysed as follows:
H1 FY25 EBITDA as % Revenue H1 FY24 EBITDA as % Revenue
H1 FY25 H1 FY24
£'000 £'000
Bricks and Building Materials 11,228 5.1% 14,321 5.9%
Importing 2,784 7.8% 4,188 10.5%
Distribution 4,198 12.5% 5,229 15.7%
Contracting 13,178 24.6% 3,690 15.8%
Central (3,473) - (1,861) -
Total 27,915 8.4% 25,567 7.9%
Statutory And Adjusted Profit
Statutory profit before tax of £7.0 million (H1 FY24: £16.0 million)
includes other items of £15.0 million (H1 FY24: £5.8 million), which are not
considered to be part of the Group's underlying trading operations. These are
analysed as follows:
H1 FY25 H1 FY24
£'000 £'000
Statutory profit before tax 6,951 15,970
Acquisition costs - 23
IT transformation costs 103 -
Earn-out consideration classified as remuneration under IFRS 3 310 2,695
Share-based payment expense 536 830
Amortisation of acquired intangible assets 6,720 4,315
Impairment of loan to joint venture 5,318 -
Unwinding of discount on contingent consideration 1,861 832
Share of post-tax profit of equity accounted associates (15) (97)
Fair value losses/(gains) on contingent consideration 130 (2,815)
Total other items before tax 14,963 5,783
Adjusted profit before tax 21,914 21,753
Depreciation and amortisation 3,216 2,606
Finance income (249) (208)
Finance expense 3,034 1,416
Adjusted EBITDA 27,915 25,567
During the period, the Group recognised an impairment of £5.3 million (H1
FY24: £nil) of the loan to its joint venture, following the joint venture
company appointing administrators. Further details are outlined in note 10.
The impairment is considered to be one-off in nature and over and above the
Group's typical level of impairment recognised from its ongoing operations.
Accordingly, the impairment has been included within other items and excluded
from Adjusted profit before tax.
Earnings per share
Basic EPS was 0.92 pence per share (H1 FY24: 3.78 pence), while adjusted basic
EPS was 5.03 pence per share (H1 FY24: 5.30 pence). Adjusted EPS is an
underlying EPS, based on the adjusted profit as noted above.
Dividends
The Board has declared an interim dividend of 1.12 pence per share (H1 FY24:
1.07 pence) to shareholders on the register as at 24 January 2025. The
ex-dividend date and payment date for the dividend will be 23 January 2025 and
20 February 2025 respectively.
Cash flow and net debt
In the first six months of FY25, the Group generated operating cash flows
before movements in working capital of £26.3 million (H1 FY24: £22.6
million). The increase of £3.7 million is predominately driven by increases
in Group revenue and profit margins as noted above. Cash generated from
operations increased to £19.3 million (H1 FY24: £3.4 million). The working
capital outflow of £7.1 million (H1 FY24: £19.3 million) has decreased
largely due to reduced activity in the Bricks and Building Materials division
in the first 6 months of FY25 as compared to the first 6 months of FY24.
At 30 September 2024, the net debt position was £56.3 million compared to
£30.9 million at 30 September 2023, and has decreased from £56.5 million at
31 March 2024. The main components of the movement in net debt for the first 6
months of FY25 are: movements in working capital of £7.1 million ((H1 FY24:
£19.3 million), corporation tax paid of £5.5 million (H1 FY24: £5.0
million), property, plant and equipment sale proceeds of £2.9 million (H1
FY24: £0.0 million), interest paid of £3.5 million (H1 FY24: £1.8 million),
payment of deferred consideration, in relation to previous acquisitions, of
£3.1 million (H1 FY24: £4.7 million) and dividends paid of £7.3m (H1 FY24:
£6.5m). The Group is expected to remain cash generative into the future.
Bank facilities
The Group refinanced in October 2023 to a £100 million RCF on a club basis
with HSBC and Barclays for an initial term of 3 years, with an option to
extend for another year and then another option to extend for a further year.
The level of the facility reduces over the term of the facility to £80m. At
H1 FY25, the RCF facility had reduced to £96m and the Group had utilised
£59.5 million of the facility.
Mike Gant
Chief Financial Officer
26 November 2024
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the six months ended 30 September 2024 (unaudited)
Year ended
6 months ended 6 months ended 31 March 2024
30 Sept 2024 30 Sept 2023 (Audited)
£'000 £'000 £'000
Notes
Revenue 330,929 324,840 594,076
Cost of sales (267,968) (269,861) (488,240)
Gross profit 62,961 54,979 105,836
Other operating income 203 720 1,197
Administrative expenses (45,576) (40,187) (83,997)
Comprising:
Depreciation and amortisation (9,936) (6,921) (15,905)
Other administrative expenses (35,640) (33,266) (68,092)
Impairment losses on financial assets (5,876) (414) (1,643)
Finance income 249 208 584
Finance expense (4,895) (2,248) (6,956)
Share of post-tax profit of equity accounted associates 15 97 71
Fair value (losses)/gains (130) 2,815 6,352
Profit before tax 6,951 15,970 21,444
Tax expense (2,697) (4,631) (6,080)
Profit for the period 4,254 11,339 15,364
Other comprehensive income
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension schemes - (17) (16)
Deferred tax on remeasurement of defined benefit pension schemes - 6 4
Other comprehensive loss for the period - (11) (12)
Total comprehensive income 4,254 11,328 15,352
Profit/(loss) for the year attributable to:
Equity holders of the parent 4,262 11,336 15,367
Non-controlling interests (8) 3 (3)
4,254 11,339 15,364
Total comprehensive income/(loss) attributable to:
Equity holders of the parent 4,262 11,325 15,355
Non-controlling interests (8) 3 (3)
4,254 11,328 15,352
Earnings per share
Basic earnings per share 7 (#_bookmark67) 1.33 p 3.78 p 5.06 p
Diluted earnings per share 7 (#_bookmark67) 1.31 p 3.70 p 4.96 p
Adjusted basic earnings per share 7 (#_bookmark67) 5.03 p 5.30 p 8.66 p
Adjusted diluted earnings per share 7 (#_bookmark67) 4.94 p 5.20 p 8.49 p
Adjusted
profit
Adjusted profit excludes those items that are not considered to be directly attributable to the Group's underlying trading operations or for which separate disclosure would assist in understanding the Group's performance in the period. It can be reconciled to statutory profit after tax as follows:
Year ended
6 months ended 6 months ended 31 March 2024
30 Sept 2024 30 Sept 2023 (Audited)
£'000 £'000 £'000
Profit for the period 4,254 11,339 15,364
Acquisition costs - 23 828
Re-financing costs - - 111
IT transformation costs 103 - 295
Earn-out consideration classified as remuneration under IFRS 3 310 2,695 4,944
Share-based payment expense (including employer NI) 536 830 1,456
Amortisation and impairment of acquired intangible assets 6,720 4,315 10,233
Impairment of loan to joint venture 5,318 - -
Unwinding of discount on contingent consideration 1,861 832 2,418
Share of post-tax profit of equity accounted associates (15) (97) (71)
Fair value losses/(gains) on contingent consideration 130 (2,815) (6,352)
Tax on adjusting items (3,123) (1,196) (2,913)
Adjusted profit for the period 16,094 15,926 26,313
Depreciation and amortisation 3,216 2,606 5,672
Finance income (249) (208) (584)
Finance expense 3.034 1,416 4,538
Tax expense 5,820 5,827 8,993
Adjusted EBITDA 27,915 25,567 44,932
Adjusted EBITDA reflects earnings before interest, tax, depreciation, amortisation and other items. A reconciliation between Adjusted EBITDA and statutory profit before tax is included in note 5.
Condensed Consolidated Balance Sheet
Six months ended 30 September 2024 (unaudited) Year ended
31 March 2024
6 months ended 6 months ended (Audited)
30 Sept 2024 30 Sept 2023 (Restated)
£'000 £'000 £'000
Notes
Non-current assets
Property, plant and 23,914 28,457 26,859
equipment
Right of use 19,898 17,240 21,483
assets
Intangible 219,482 148,769 226,405
assets
Investments in equity accounted 319 391 335
associates
Investments in equity accounted joint ventures 10 - - -
Trade and other 1,638 6,456 7,123
receivables
Total non-current assets 265,251 201,313 282,205
Current assets
Inventories 31,628 34,347 29,842
Trade and other receivables 120,061 116,357 112,804
Employee benefits 390 523 390
Contract assets 8,971 - 6,532
Current income tax assets 2,996 953 1,865
Cash and cash 15,949 22,920 15,581
equivalents
179,995 175,100 167,014
Assets classified as held for sale 12 2,639 - 2,555
Total current assets 182,634 175,100 169,569
Total 447,885 376,413 451,774
assets
Current liabilities
Trade and other payables (125,097) (101,487) (117,533)
Loans and borrowings 11 (12,702) (15,836) (8,620)
Lease liabilities (3,897) (3,234) (3,907)
Total current liabilities (141,696) (120,557) (130,060)
Non-current liabilities
Trade and other payables (18,817) (6,188) (24,078)
Loans and borrowings 11 (59,028) (37,880) (62,911)
Lease liabilities (13,692) (11,685) (15,137)
Provisions (2,158) (1,967) (2,904)
Deferred tax liabilities (23,071) (17,222) (24,806)
Total non-current liabilities (116,766) (74,942) (129,836)
Total liabilities (258,462) (195,499) (259,896)
Net assets 189,423 180,914 191,878
Equity
Called up share capital 3,206 3,003 3,195
Share premium account 102,965 102,851 102,908
Capital redemption reserve 2 2 2
Share-based payment reserve 5,396 4,169 4,864
Merger reserve 20,548 11,146 20,548
Retained earnings 57,448 59,871 60,495
Equity attributable to equity holders of the parent 189,565 181,042 192,012
Non-controlling interests (142) (128) (134)
Total equity 189,423 180,914 191,878
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 September 2024 (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 2023 3,003 102,847 2 3,509 11,146 55,002 175,509 (131) 175,378
Profit for the six months to 30 September 2023 - - - - - 11,336 11,336 3 11,339
Other comprehensive income for the six months to 30 September 2023 - - - - - (11) (11) - (11)
Total comprehensive income for the period - - - - - 11,325 11,325 3 11,328
Dividends paid - - - - - (6,456) (6,456) - (6,456)
Issue of shares on exercise of share options - 4 - - - - 4 - 4
Equity settled share-based payments - - - 839 - - 839 - 839
Deferred tax on share-based payment transactions - - - (179) - - (179) - (179)
Total contributions by and distributions to owners - 4 - 660 - (6,456) (5,792) - (5,792)
At 30 September 2023 3,003 102,851 2 4,169 11,146 59,871 181,042 (128) 180,914
Profit for the six months to 31 March 2024 - - - - - 4,031 4,031 (6) 4,025
Other comprehensive income for the six months to 31 March 2024 - - - - - (1) (1) - (1)
Total comprehensive income for the period - - - - - 4,030 4,030 (6) 4,024
Dividends paid - - - - - (3,406) (3,406) - (3,406)
Issue of consideration shares 171 - - - 9,402 - 9,573 - 9,573
Issue of shares on exercise of share options 21 57 - - - - 78 - 78
Equity settled share-based payments - - - 497 - - 497 - 497
Deferred tax on share-based payment transactions - - - 100 - - 100 - 100
Current tax on share-based payment transactions - - - 98 - - 98 - 98
Total contributions by and distributions to owners 192 57 - 695 9,402 (3,406) 6,940 - 6,940
At 31 March 2024 3,195 102,908 2 4,864 20,548 60,495 192,012 (134) 191,878
At 1 April 2024 3,195 102,908 2 4,864 20,548 60,495 192,012 (134) 191,878
Profit for the six months to 30 September 2024 - - - - - 4,262 4,262 (8) 4,254
Other comprehensive income for the six months to 30 September 2024 - - - - - - - - -
Total comprehensive income for the period - - - - - 4,262 4,262 (8) 4,254
Dividends paid - - - - - (7,309) (7,309) - (7,309)
Issue of shares on exercise of share options 11 57 - - - - 68 - 68
Equity settled share-based payments - - - 443 - - 443 - 443
Deferred tax on share-based payment transactions - - - 41 - - 41 - 41
Current tax on share-based payment transactions - - - 48 - - 48 - 48
Total contributions by and distributions to owners 11 57 - 532 - (7,309) (6,709) - (6,709)
At 30 September 2024 3,206 102,965 2 5,396 20,548 57,448 189,565 (142) 189,423
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2024 (unaudited)
Year ended
31 March 2024
6 months ended 6 months ended (Audited)
30 Sept 2024 30 Sept 2023 £'000
£'000 £'000
Operating activities
Profit for the period 4,254 11,339 15,364
Adjustments for:
Depreciation of property, plant and equipment 788 715 1,736
Depreciation of right of use assets 2,226 1,847 3,901
Amortisation of intangible assets 6,922 4,359 10,268
Gain on disposal of property, plant & equipment (273) (41) (131)
and right of use assets
Foreign exchange (gains)/losses (73) 147 (64)
Share-based payments expense 450 830 1,292
Other operating income - (60) (1,066)
Share of post-tax profit in equity accounted associates (15) (97) (71)
Impairment of loan to joint venture 5,318 - -
Fair value changes in contingent consideration 130 (2,815) (6,352)
Movements in provisions (746) (397) 8
Finance income (249) (208) (584)
Finance expense 4,895 2,248 6,956
Acquisition costs - 23 939
Income tax expense 2,697 4,631 6,080
Pension charge in excess of contributions paid - 121 267
Operating cash flows before movements in working capital 26,324 22,642 38,543
Changes in working capital:
(Increase)/decrease in inventories (1,786) (1,183) 3,323
(Increase)/decrease in trade and other receivables (9,380) 8,263 14,404
Increase/(decrease) in trade and other payables 4,099 (26,338) (20,861)
Cash generated from operations 19,257 3,384 35,409
Payment of acquisition expenses - (23) (828)
Interest received 178 41 557
Income taxes paid (5,473) (5,042) (8,581)
Net cash generated from/(used in) operating activities 13,962 (1,640) 26,557
Investing activities
Purchase of property, plant and equipment (532) (4,402) (6,144)
Proceeds from sale of property, plant and equipment 2,880 47 193
Purchase of right of use assets (23) (16) (38)
Proceeds from sale of right of use assets 34 - -
Purchase of intangible assets - (124) (325)
Acquisition of subsidiaries, net of cash acquired - (550) (42,787)
Loan to joint venture (191) (1,719) (2,056)
Proceeds from sale of other investments - 188 188
Dividends received from associates 30 30 60
Net cash generated from/(used in) investing activities 2,198 (6,546) (50,909)
Financing activities
Equity dividends paid (7,309) (6,456) (9,862)
Proceeds from issue of ordinary shares net of share issue costs 68 4 82
Payment of financing costs - - (111)
Proceeds from bank borrowings 103,000 60,000 262,500
Repayment of bank borrowings (107,000) (39,000) (216,351)
Payment of lease liabilities (2,051) (1,737) (3,623)
Payment of deferred and contingent consideration (3,080) (4,744) (5,240)
Interest paid (3,526) (1,754) (4,304)
Payment of transaction costs relating to loans and borrowings - - (700)
Net cash (used in)/generated from financing activities (19,898) 6,313 22,391
Net decrease in cash and cash equivalents (3,738) (1,873) (1,961)
Cash and cash equivalents at beginning of period 6,961 9,021 9,021
Effect of changes in foreign exchange rates 24 (64) (99)
Cash and cash equivalents at end of period 3,247 7,084 6,961
Notes to the Condensed Consolidated Interim Financial Statements
For the six months ended 30 September 2024 (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 the Interim Report may be obtained 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 2024. 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 2024 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 2024 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 2024 and 30 September 2023 is unaudited and has not been reviewed by the Company's auditors.
The condensed consolidated 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 2024 annual financial statements. New standards effective from 1 January 2024 are outlined in the 2024 annual financial statements. The application of these standards has not had a material impact on the amounts reported in either the current or prior reporting periods.
There have been no other 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 2024 annual financial statements.
5. Segmental analysis
The Group has four reportable divisions as follows:
§ Bricks and Building Materials - 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 - primarily responsible for strategic importing of building
products, the majority of which are on an exclusive basis to the UK market, to
complement traditional and contemporary architecture;
§ Distribution - focuses on the sale and distribution of a wide range of
products, including windows, doors, radiators and associated parts and
accessories; and
§ Contracting - provides cladding, fire remediation, flooring and roofing
construction services, primarily within the residential construction sector.
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). Segment performance is evaluated based on Adjusted EBITDA, without allocation of depreciation and amortisation, finance expenses and income, impairment losses, fair value movements or the share of results of associates and joint ventures.
During the period, the Group changed the segment within which the results of E. T. Clay Products Limited are reported. From 1 April 2024, the results have been reported within the Bricks and Building Materials division rather than the Importing division as management believes this better reflects the nature of the business. The segmental analysis for the previously reported periods has therefore been re-presented for comparison purposes.
6 months ended 30 September 2024
Consolidated
Bricks and Building Materials Importing Distribution Unallocated and group eliminations £'000
£'000 £'000 £'000 £'000
Contracting
£'000
Revenue from sale of goods 217,482 21,913 25,201 - - 264,596
Revenue from rendering of services - 4,940 7,941 53,452 - 66,333
Total external revenue 217,482 26,853 33,142 53,452 - 330,929
Total internal revenue 2,454 8,707 575 18 (11,754) -
Total revenue 219,936 35,560 33,717 53,470 (11,754) 330,929
Adjusted EBITDA 11,228 2,784 4,198 13,178 (3,473) 27,915
Depreciation and amortisation (9,936) (9,936)
Acquisition and re-financing costs - -
IT transformation costs (103) (103)
Earn out consideration classified as remuneration under IFRS 3 (310) (310)
Share-based payment expense (536) (536)
Finance income 249 249
Finance expense (4,895) (4,895)
Impairment of loan to joint venture (5,318) (5,318)
Share of results of associates 15 15
Fair value gains and losses (130) (130)
Group profit before tax 11,228 2,784 4,198 13,178 (24,437) 6,951
6 months ended 30 September 2023 (Re-presented)
Consolidated
Bricks and Building Materials Importing Distribution Unallocated and group eliminations £'000
£'000 £'000 £'000 £'000
Contracting
£'000
Revenue from sale of goods 239,372 24,884 28,866 - - 293,122
Revenue from rendering of services - 4,363 3,934 23,421 - 31,718
Total external revenue 239,372 29,247 32,800 23,421 - 324,840
Total internal revenue 3,260 10,535 427 - (14,222) -
Total revenue 242,632 39,782 33,227 23,421 (14,222) 324,840
Adjusted EBITDA 14,321 4,188 5,229 3,690 (1,861) 25,567
Depreciation and amortisation (6,921) (6,921)
Acquisition and re-financing costs (23) (23)
Earn out consideration classified as remuneration under IFRS 3 (2,695) (2,695)
Share-based payment expense (830) (830)
Finance income 208 208
Finance expense (2,248) (2,248)
Share of results of associates 97 97
Fair value gains and losses 2,815 2,815
Group profit before tax 14,321 4,188 5,229 3,690 (11,458) 15,970
Year ended 31 March 2024 (Re-presented)
Consolidated
Bricks and Building Materials Importing Distribution Unallocated and group eliminations £'000
£'000 £'000 £'000 £'000
Contracting
£'000
Revenue from sale of goods 421,396 44,676 52,413 - - 518,485
Revenue from rendering of services - 8,191 9,230 58,170 - 75,591
Total external revenue 421,396 52,867 61,643 58,170 - 594,076
Total internal revenue 6,273 17,487 1,072 3 (24,835) -
Total revenue 427,669 70,354 62,715 58,173 (24,835) 594,076
Adjusted EBITDA 25,259 7,058 7,567 10,070 (5,022) 44,932
Depreciation and amortisation (15,905) (15,905)
Acquisition and re-financing costs (939) (939)
IT transformation costs (295) (295)
Earn out consideration classified as remuneration under IFRS 3 (4,944) (4,944)
Share-based payment expense (1,456) (1,456)
Finance income 584 584
Finance expense (6,956) (6,956)
Share of results of associates 71 71
Fair value gains and losses 6,352 6,352
Group profit before tax 25,259 7,058 7,567 10,070 (28,510) 21,444
6 months ended 30 September 2024
Consolidated
Bricks and Building Materials Importing Distribution £'000
£'000 £'000 £'000
Contracting Central
£'000 £'000
Non-current segment assets 78,287 17,317 51,143 109,050 9,135 264,932
Current segment assets 103,633 15,803 30,369 30,993 1,836 182,634
Total segment assets 181,920 33,120 81,512 140,043 10,971 447,566
Unallocated assets:
Investment in associates 319
Investment in joint ventures -
Group assets 447,885
Total segment liabilities (80,557) (15,236) (21,558) (13,602) (45,410) (176,363)
Loans and borrowings (59,028)
(excluding leases and overdrafts)
Deferred tax liabilities (23,071)
Group liabilities (258,462)
6 months ended 30 September 2023 (Re-presented)
Consolidated
Bricks and Building Materials Importing Distribution £'000
£'000 £'000 £'000
Contracting Central
£'000 £'000
Non-current segment assets 82,615 19,579 55,823 29,230 13,675 200,922
Current segment assets 110,261 18,242 28,903 13,503 4,191 175,100
Total segment assets 192,876 37,821 84,726 42,733 17,866 376,022
Unallocated assets:
Investment in associates 391
Investment in joint ventures -
Group assets 376,413
Total segment liabilities (79,449) (11,661) (17,868) (4,960) (26,459) (140,397)
Loans and borrowings (37,880)
(excluding leases and overdrafts)
Deferred tax liabilities (17,222)
Group liabilities (195,499)
Year ended 31 March 2024 (Re-presented)
Consolidated
Bricks and Building Materials Importing Distribution £'000
£'000 £'000 £'000
Contracting Central
£'000 £'000
Non-current segment assets 80,409 17,318 56,045 114,092 14,006 281,870
Current segment assets 95,026 16,646 27,776 28,050 2,071 169,569
Total segment assets 175,435 33,964 83,821 142,142 16,077 451,439
Unallocated assets:
Investment in associates 335
Investment in joint ventures -
Group assets 451,774
Total segment liabilities (81,830) (15,105) (18,551) (10,094) (46,599) (172,179)
Loans and borrowings (62,911)
(excluding leases and overdrafts)
Deferred tax liabilities (24,806)
Group liabilities (259,896)
6. Dividends
6 months ended 6 months ended Year ended
30 Sept 2024 30 Sept 2023 31 March 2024
£'000 £'000 (Audited)
£'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 March 2024 of 2.28p per share 7,309
(30 Sept 2023: for the year ended 31 March 2023 of 2.15p per share) 6,456
(31 March 2024: for the year ended 31 March 2023 of 2.15p per share) 6,456
Interim dividend for the year ended 31 March 2025 - - 3,406
(31 March 2024: for the year ended 31 March 2023 of 1.07p per share)
Total dividends paid during the period 7,309 6,456 9,862
The Directors have declared that an interim dividend of 1.12p per ordinary share be paid for the year ended 31 March 2025. 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 2024 6 months ended 30 September 2023
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 4,262 320,183,217 1.33 11,336 300,289,736 3.78
Effect of dilutive securities
Employee share options - 5,965,108 - 5,971,423 -
Diluted earnings per share 4,262 326,148,325 1.31 11,336 306,261,159 3.70
Year ended 31 March 2024 (Audited)
Earnings Weighted Earnings
£'000 average per share
number of (p)
shares
Basic earnings per share 15,367 303,814,191 5.06
Effect of dilutive securities
Employee share options - 6,157,200 -
Diluted earnings per share 15,367 309,971,391 4.96
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 2024 6 months ended 30 September 2023
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 16,102 320,183,217 5.03 15,923 300,289,736 5.30
Effect of dilutive securities
Employee share options - 5,965,108 - 5,971,423 -
Adjusted diluted earnings per share 16,102 326,148,325 4.94 15,923 306,261,159 5.20
Year ended 31 March 2024 (Audited)
Earnings Weighted Earnings
£'000 average per share
number of (p)
shares
Adjusted basic earnings per share 26,316 303,814,191 8.66
Effect of dilutive securities
Employee share options - 6,157,200 -
Adjusted diluted earnings per share 26,316 309,971,391 8.49
8. Business combinations
Business combinations completed in prior periods
Group Topek Holdings Limited and Topek Limited ("Topek") and TSL Assets Limited and Topek Southern Limited ("TSL")
The Group acquired 100% of the share capital and voting rights in Topek and TSL on 10 October 2023 and 19 January 2024 respectively. Since the reporting of the Group results to 31 March 2024, further information has been identified in respect of income tax receivables that have been recovered and are subsequently payable to the former shareholders under the SPA. As the additional information was identified during the measurement period following acquisition, and relates to an obligation that existed at the acquisition date, an adjustment has been made retrospectively.
The results for the year ended 31 March 2024 have therefore been restated to reflect the additional consideration payable to the sellers. The overall impact has been an increase to goodwill at 31 March 2024 of £677,000, an increase in current income tax assets of £58,000, and a corresponding increase of £735,000 in the deferred consideration liability within current trade and other payables. There has been no impact on the reported profits for the year ended 31 March 2024.
A prior period restatement would usually require the presentation of a third balance sheet at 1 April 2023. However, as the restatement of the previously stated 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.
Contingent consideration
The Group has entered into contingent consideration arrangements in purchasing 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 (trading as Upowa) 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.
Company acquired Fair value at 30 September Fair value at 30 September
Fair value at acquisition 2024 2023
£'000 £'000 Undiscounted amount payable 30 September £'000 Undiscounted amount payable 30 September
2024 2023
Discount rate £'000 £'000
Bathroom Barn Limited 1.7% 231 - - 73 74
Taylor Maxwell Group (2017) Limited 4.1% - 293 293 333 340
SBS Cladding Limited 4.1% 1,845 - - 782 800
Leadcraft Limited 10.4% 722 96 96 957 1,066
HBS NE Limited 16.1% - 10,069 1,557 2,309 4,285 6,998
23.6%
Beacon Roofing Limited 13.0% 1,365 603 682 1,643 1,962
E. T. Clay Products Limited 16.0% 1,043 - - - -
Heritage Clay Tiles Limited 20.0% 82 - - - -
Group Topek Holdings Limited 12.5% 12,134 13,644 15,866 - -
TSL Assets Limited 12.9% 12,319 13,461 16,533 - -
Total 39,810 29,654 35,779 8,073 11,240
The potential undiscounted amount payable in respect of E. T. Clay Products Limited and Heritage Clay Tiles Limited ranges from £nil to £3,480,000, the amount payable for Group Topek Holdings Limited ranges from £nil to £17,700,00, and the amount payable for TSL Assets Limited ranges from £nil to £20,700,000. It is not possible to determine a range of outcomes for other acquisitions as the arrangements do not contain a maximum payable.
Changes in the range of outcomes are due to amounts paid or payable being determined during the year as milestones within the performance period are met.
The acquisition of Modular Clay Products Ltd is subject to further payments depending on future performance 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 'good leaver' clause in the share purchase agreement, under which the earn-out consideration payment is forfeited. It is not possible to determine a range for these future payments as the agreement does not contain a maximum payable The earn-out consideration is therefore deemed to effectively be contingent on the continued employment of the seller. A charge of £310,000 has been recognised in the period ended 30 September 2024 (H1 FY24: £528,000) in respect of this earn-out consideration, presented within other administrative expenses.
Company acquired Finance
Additions expense
through business combinations £'000
Fair value at £'000 Fair value Fair value at
31 March 2024 (gain)/loss Settlement 30 September 2024
£'000 £'000 £'000 £'000
Taylor Maxwell Group (2017) Limited 293 - - - - 293
SBS Cladding Limited 797 - 3 - (800) -
Leadcraft Limited 922 - 33 21 (880) 96
HBS NE Limited 1,417 - 159 (19) - 1,557
Beacon Roofing Limited 1,578 - 99 31 (1,105) 603
Group Topek Holdings Limited 12,870 - 781 (7) - 13,644
TSL Assets Limited 12,571 - 786 104 - 13,461
Total 30,448 - 1,861 130 (2,785) 29,654
A sensitivity in respect of the inputs into the discounted cash flow model, determining the contingent consideration, is outlined in note 9.
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:
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 2024: The higher the Adjusted EBITDA, the higher the
Consideration in a business combination (note 8) £293,000 - fair value. If forecast
£27,665,000 EBITDA was 10% higher, while all other variables
remained constant, the
Sept 2023: fair value of the overall contingent consideration liability would increase by
£2,527,000 (2023: £830,000). A 10% decrease in EBITDA would result in a
£362,000 - decrease in the liability of £2,993,000 (2023: £762,000).
£17,702,000 (March 2024: increase of £2,424,000 and decrease of £3,430,000)
March 2024: The higher the discount
£293,000 - 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
£27,500,000 contingent consideration liability would decrease by £733,000 (2023:
£232,000). A 2% decrease in the rate would result in an increase in the
liability of £772,000 (2023: £245,000).
(March 2024: decrease of £982,000 and increase of £1,042,000)
Discount rate
Sept 2024:
4.1% - 23.6%
Sept 2023:
1.7% - 23.6%
March 2024:
4.1% - 23.6%
Reconciliation of level 3 fair value measurements of financial instruments
6 months ended 6 months ended Year ended
30 Sept 2024 30 Sept 2023 31 March 2024
£'000 £'000 (Audited)
Contingent consideration liability £'000
At 1 April 30,448 14,093 14,093
Additions through business combinations - - 24,453
Finance expense charged to profit or loss 1,861 822 2,410
Settlement (2,785) (4,027) (4,156)
Fair value losses/(gains) recognised in profit or loss 130 (2,815) (6,352)
At 30 September/ 31 March 29,654 8,073 30,448
10. Joint ventures
The Group owns 50% of the share capital in Schermbecker Building Products GmbH, a tile manufacturer in Germany. The joint venture's performance has been below that initially expected due to ongoing delays in becoming fully operational as a result of increased gas prices in Europe, delays in obtaining necessary plant and equipment to facilitate tile production and continued economic volatility resulting in lower demand.
The Group granted loans to the joint venture, in the current and previous reporting periods, amounting to a total of €6,225,000. On 25 July 2024, the Board decided to not provide further funding to the joint venture in the form of an additional loan facility. On 13 August 2024 the board of directors of the joint venture subsequently determined that it was unable to fund its operations, and administrators were appointed to the company.
An assessment has therefore been made for the recoverable amount of the loan balance, concluding full provision of the loan balance to be appropriate due to the ongoing uncertainty in the administration process. The position will continue to be assessed. An impairment loss of £5,318,000 was recognised in the period.
11. Loans and borrowings
6 months ended 6 months ended Year ended
30 Sept 2024 30 Sept 2023 31 March 2024
£'000 £'000 (Audited)
£'000
Current loans and borrowings at 1 April 8,620 12,624 12,624
Non-current loans and borrowings at 1 April 62,911 16,800 16,800
Total loans and borrowings at 1 April 71,531 29,424 29,424
Issue of bank loans 103,000 60,000 262,500
Repayment of bank loans (107,000) (39,000) (216,351)
Movement in overdraft facility 4,082 3,212 (4,003)
Other movements* 117 80 (39)
Loans and borrowings at 30 September/ 31 March 71,730 53,716 71,531
Analysed as:
Current loans and borrowings 12,702 15,836 8,620
Non-current loans and borrowings 59,028 37,880 62,911
Loans and borrowings at 30 September/ 31 March 71,730 53,716 71,531
*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. Non-current bank loans comprise a
principal loan value of £59,500,000 (2023: £38,000,000, March 2024:
£63,500,000) less arrangement fees of £472,000 (2023: £120,000, March 2024:
£589,000), which are amortised over the term of the loan.
At 30 September 2024, the Group had a revolving credit facility
of £96,000,000, including an ancillary carve out of a £5,000,000 overdraft.
The revolving facility bears interest at a variable rate based on the SONIA.
At the reporting date, interest was charged at a rate of 2.15% above the
adjusted SONIA interest rate benchmark.
The Group also has a notional pool agreement, whereby certain
cash balances within the Group are entitled to be offset, providing the
overall overdrawn balance does not exceed the £5,000,000 facility limit.
12. Assets classified as held for sale
In May 2024 the Board announced its intention to dispose of a property used within U Plastics and began marketing the property. The decision was taken to close the branch in Sutton Coldfield with a view to saving fixed costs associated with the branch whilst servicing the customer base from other existing branches, thus maximising profitability and reducing sales overlap with nearby geographical regions.
At the period end, the Group had committed to selling the property, initiated the process to find a buyer and the sale is expected to be completed with 12 months. Accordingly, the property and associated fixtures and fittings were considered to be available for immediate sale and reclassified as held for sale with the Condensed Consolidated Balance Sheet. The assets classified as held for sale are within the Distribution division.
13. Related party transactions
In accordance with IAS 24 and AIM Rule 19, the Group has undertaken the following transactions wit related parties.
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
6 months 6 months 31 March 2024
ended ended (Audited)
30 Sept 2024 30 Sept 2023 £'000
£'000 £'000
Key management personnel compensation
Short-term employee benefits 3,033 1,766 4,373
Post-employment benefits 28 54 102
Share-based payment expense 78 350 693
3,139 2,170 5,168
Key management personnel consists of members on the Board of Directors and the Group's Management Board during the interim period.
During the interim period, the Group made sales amounting to £nil (2023: £nil and year to 31 March 2024: £3,000) to members of key management. A £nil balance was included within trade receivables at each reporting date, in respect of these sales.
Other related parties
Included within trade and other 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 31 March 2024
6 months ended 6 months ended 31 March 2024 6 months ended 6 months ended (Audited)
30 Sept 2024 30 Sept 2023 (Audited) 30 Sept 2024 30 Sept 2023 £'000
£'000 £'000 £'000 £'000 £'000
Associates 4 - - 35 124 75
Joint ventures - 4,881 5,174 - - 26
Other related parties 1 42 127 - 8 -
5 4,923 5,301 35 132 101
During the period, the Group made a loan of €225,000 (2023: €2,000,000 and year to 31 March 2024: €2,550,000) to its joint venture, equating to £190,000 (2023: £1,736,000 and year to 31 March 2024: £2,199,000) at the reporting date. Interest of £142,000 (2023: £152,000 and year to 31 March 2024: £353,000) was charged in the period. The full outstanding balance of £5,318,000 was impaired during the interim period (see note 10).
Transactions undertaken between the Group and its related parties during the year were as follows:
Sales to related parties Purchases from related parties
Year
ended Year ended
6 months ended 6 months ended 31 March 2024 6 months ended 6 months ended 31 March 2024
30 Sept 2024 30 Sept 2023 (Audited) 30 Sept 2024 30 Sept 2023 (Audited)
£'000 £'000 £'000 £'000 £'000 £'000
Associates - - - 96 92 579
Joint ventures - - - - - 242
Other related parties 67 249 412 448 - 574
67 249 412 544 92 1,395
Other related parties comprise of entities owned by directors or key management. Sales to other related parties related to building materials. Purchases from associates related to bricks and tiles, and purchases from other related parties related to rent payable.
Right of use assets in respect of properties leased from other related parties had a carrying value of £5,065,000 (2023: £2,365,000 and 31 March 2024: £5,353,000), while associated lease liabilities of £4,754,000 (2023: £2,214,000 and 31 March 2024: £5,066,000) are included at the period end.
Included within the right of use carrying values of properties leased from other related parties is a total of £4,973,000 (2023: £2,132,000 and 31 March 2024: £5,248,000) in relation to properties leased from Queensgate Bracknell Limited, a company co-owned by and controlled by a director during the period, Alan Simpson, and a member of key management, Paul Hamilton. The associated lease liabilities amounted to £4,653,000 (2023: £1,988,000 and 31 March 2024: £4,951,000). Rent of £431,000 (2023: £135,000 and 31 March 2024: £498,000) was paid to Queensgate Bracknell Limited during the period.
14. Post balance sheet events
There have been no subsequent events requiring further disclosure or adjustments to these financial statements.
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://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 (https://www.lseg.com/privacy-and-cookie-policy)
. END IR KZMZMMKKGDZZRecent news on Brickability
See all newsREG - Brickability Group - Total Voting Rights
AnnouncementREG - Brickability Group - Appointment of Independent Non-Executive Director
AnnouncementREG - Brickability Group - Pre-Close Trading Update
AnnouncementREG - Brickability Group - Holding(s) in Company
AnnouncementREG - Brickability Group - Director/PDMR Shareholding
Announcement