REG - Brickability Group - Unaudited Preliminary Results
16/07/2024 07:00
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RNS Number : 4945W Brickability Group PLC 16 July 2024
Brickability Group PLC
LEI: 213800SK28MWXB3K3P26
16 July 2024
Brickability Group PLC
("Brickability", the "Company" or the "Group")
Unaudited preliminary results for the year ended 31 March 2024
Further strategic progress in a challenging year; well positioned when end
markets improve
Brickability Group PLC (AIM: BRCK), a leading distributor and provider of
specialist products and services to the UK construction industry, is pleased
to announce its unaudited preliminary results for the twelve-month period
ended 31 March 2024.
Financial Summary
(Unaudited) (Audited) % Change
2024 2023
£m £m
Revenue 594.1 681.1 (12.8)%
Gross profit 105.8 112.9 (6.3)%
Adjusted EBITDA ((2)) 44.9 51.5 (12.8)%
Profit before tax 21.4 34.5 (38.0)%
Adjusted profit before tax ((3)) 35.3 44.6 (20.9)%
EPS 5.06p 9.26p (45.4)%
Adjusted EPS ((4)) 8.66p 11.93p (27.4)%
Net (debt) ((5)) (56.5) (8.0)
Final proposed dividend 2.28p 2.15p 6.0%
Total dividend for the year 3.35p 3.16p 6.0%
• Revenue decreased by 12.8% to £594.1m (2023: £681.1m)
• Group like-for-like((1)) revenue decline of 17.9% versus 2023
• Gross profit decreased by 6.3% to £105.8m (2023: £112.9m)
• Gross profit margin of 17.8% (2023: 16.6%)
• Adjusted EBITDA((2)) decreased by 12.8% to £44.9m (2023: £51.5m)
• Adjusted Profit before tax((3)) decreased by 20.9% to £35.3m (2023: £44.6m)
• Statutory Profit before tax decreased by 38.0% to £21.4m (2023: £34.5m)
• Statutory EPS decreased by 45.4% to 5.06p (2023: 9.26p)
• Adjusted EPS((4)) decreased by 27.1% to 8.66p (2023: 11.93p)
• Net debt((5)) as at 31 March £56.5m (2023: £8.0m)
• Proposed final dividend of 2.28 pence per share, totalling 3.35 pence per
share for the year, an increase of 6.0% (2023: 3.16p)
Operational and strategic highlights
• Resilient performance, despite a challenging sector environment, reflecting
the Group's strategic position within the industry.
• Acquisitions of Group Topek Holdings Limited in October 2023 and Topek
Southern Limited in January 2024.
• These strategic acquisitions bring the Group full-service specialist cladding
installation and remediation contracting businesses with national presence,
and further diversification from its traditional housing markets.
• Good progress advancing our ESG strategy.
Current trading and outlook
• Trading in the current financial year to date is in line with management's
expectations.
• Appointment of Frank Hanna to the Board as CEO on 15 April 2024, succeeding
Alan Simpson.
• On 12 June 2024, the Group completed the sale of a freehold property for
consideration of £2.9 million.
• The Board remains confident of the Group's ability to deliver long-term
shareholder value with the business well positioned to recover strongly as
market conditions improve.
John Richards, Chairman of Brickability, said:
"Over the past year there have been a number of well-documented challenges
impacting the housebuilding and RMI markets. Against this macro backdrop, the
Group has continued to demonstrate resilience and deliver a robust financial
performance. It is particularly pleasing to see the Group's strategic focus on
diversification of products and end markets yielding benefits. This, coupled
with our capital-efficient business model and continued focus on disciplined
capital allocation and cost control, has been a key driver of our resilience.
The results we achieved this year are thanks to the dedication and
determination of our people, who look to consistently deliver excellent
service while seizing opportunities as they arise."
(1) Like-for-like revenue is a measure of growth in sales, adjusted for the impact
of acquisitions.
(2) Earnings before interest, tax, depreciation, amortisation and other
non-underlying items (See Financial Review and note 5).
(3) Statutory profit before tax excluding non-underlying items (see Financial
Review and note 5).
(4) Adjusted profit after tax (statutory profit after tax before non-underlying
items) divided by the weighted average number of shares in the year.
(5) Bank borrowings less cash.
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) 207 418 8900
Ed Allsopp
Tom Graham
Montfort Communications (Financial PR) +44 (0) 203 514 0897
brickability@montfort.london (mailto:brickability@montfort.london)
James Olley
Ella Henderson
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 professionals, 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.
Chairman's Statement
Overview
Over the past year, there have been a number of well-documented challenges
impacting the housebuilding and RMI markets. Against this macroeconomic
backdrop, the Group has continued to demonstrate resilience and deliver a
robust financial performance.
It is particularly pleasing to see the Group's strategic focus on
diversification of products and end markets yielding benefits. This, coupled
with our capital-efficient business model and continued focus on disciplined
capital allocation and cost control, has been a key driver of our resilience.
This year the Group expanded further into the cladding remediation market,
acquiring two fantastic businesses that benefit from strong forward order
books. Through these acquisitions we have also brought in new, high-quality
individuals, increasing the bandwidth of our existing management team. We have
an active acquisition opportunity appraisal process which positions the Group
well for future inorganic expansion and we remain committed to pursuing
strategic opportunities aligned with our long-term objectives of building a
sustainable business and delivering value to shareholders.
Whilst activity levels in the housebuilding sector remain subdued, the
longer-term underlying fundamentals of our chosen markets remain strong. The
Board believes that, with leading positions across a diverse portfolio
offering, the Group is well-positioned to benefit from a recovery in volumes.
Following the recent General Election results, the Group awaits further
details from the Labour Government of their housing recovery plan to boost
house building.
This has been another successful year for the Group. The results achieved are
mostly thanks to the commitment and hard work of all our colleagues within the
Group's businesses.
Acquisitions
We continue to focus on diversifying our product portfolio and associated end
markets through acquisition, and it is pleasing to see the benefits from this
strategy emerging.
In October 2023, we completed the first of two strategic acquisitions of
specialist cladding installation and remediation contractors, Group Topek
Holdings Limited ("Topek"). As a result of the acquisition, the Group
significantly increased its exposure to public and commercial end markets and
now has a full range of cladding capabilities including design, fabrication,
supply, and installation.
The acquisition of Topek Southern Limited ("TSL") in January 2024, further
improved the Group's positioning in the cladding market. TSL specialises in
delivering façade systems, fire remediation, roofing, and curtain wall
solutions for live and occupied sites, acting as principal contractor for
commercial and industrial projects across the UK.
The requirement for cladding remediation in the UK has been of huge importance
since 2017, and with the additions of Topek and TSL to our portfolio, the
Group has created a full-service specialist cladding installation and
remediation contracting business with a national presence.
With these fantastic businesses come fantastic people. It has been a pleasure
to welcome our new colleagues to the Brickability Group.
Environmental, Social and Governance (ESG)
As part of our developing ESG strategy, we are committed to delivering real
and lasting impact to the communities and environments of our places of
operation.
This year we commenced a partnership with Earth Trust, an environmental
charity dedicated to ensuring everyone across the UK has access to green
space, to help fund its 'Inspiring Future Green Leaders' programme. Funding
from our Foundation Trust will enable Earth Trust to work with 450 more
children across 15 schools, focusing initially on schools in Reading - close
to our Group headquarters in Bracknell. Our Charity of the Year was 'Heel and
Toe', providing a range of therapies and support for young people with
Cerebral Palsy and other disabilities.
On governance, the Board recognises that high standards of corporate
governance are fundamental to the long-term success of the Group. We have
followed the QCA Corporate Governance Code since entering the public markets
in 2019 and will comply with the new QCA Code as published at the end of the
last calendar year.
Board and leadership
I would like to take a moment to give special thanks to Alan Simpson, who
stepped down from the role of Chief Executive Officer and from the Board. Alan
has been instrumental in building the Group into the highly successful
business it is today, overseeing the IPO in 2019 and multiple transformative
acquisitions since. On behalf of the Board, I thank Alan for his invaluable
years of service and congratulate him for his immense achievements.
We are delighted to have our new CEO, Frank Hanna, on board. Frank has over 30
years' experience in the construction industry, and as such I have known Frank
for a long time and have every confidence that the Group will continue to grow
and deliver value to shareholders under his leadership.
People
I would like to extend my thanks to the many colleagues within the
Brickability Group, for their continued dedication, commitment and hard work
throughout the year.
Dividends
The Group paid an interim dividend of 1.07 pence per share on 22 February
2024, which reflected the performance of the business and the Board's
confidence in the longer-term outlook.
These financial results, coupled with the strength of the balance sheet and
the confidence in the future performance of the Group, enables the Board to
recommend a final dividend for the year ended 31 March 2024 of 2.28 pence per
share, which would bring the total dividend for the year to 3.35 pence,
representing a 6% increase over the prior year.
John Richards
Chairman
15 July 2024
Chief Executive's Review
I am pleased to be able to report, early into my tenure as CEO, that the Group
delivered a resilient performance for the financial year. I consider this a
notable achievement against the backdrop of an uncertain economic environment
and a decline in volumes that continued throughout the financial year. This
stands as a testament to the hard work and resilience of all Brickability
employees, as well as the successful execution of the Group's diversification
strategy.
The Group successfully completed two strategically significant acquisitions in
the second half of the financial year. These acquisitions continue the
successful diversification strategy of the Group, enabling the Group to become
a full-service specialist cladding installation and remediation contracting
business with national presence.
Whilst revenue fell compared to prior year, gross profit margin was strong at
17.8% (2023: 16.6%). The improvement was supported by a part-year contribution
from the higher margin acquisitions, but also improved revenue mix within the
existing business divisions, notably the full-year performance of HBS NE
(trading as UPOWA) with its enhanced focus on higher margin solar
installations for new build homes.
The four divisions, now in the second year of operation, continue to bring
benefits in terms of alignment of processes and routines. In this agile,
capital light structure, the Group's four distinct business divisions are set
out below:
• 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
installation services within the residential construction sector and
commercial sector.
Full details of our divisions and each of our businesses can be found at
https://brickabilitygroupplc.com. (https://brickabilitygroupplc.com/)
Bricks and Building Materials Division 68% (2023: 73%) of Group Revenue
Revenue of £403.2 million (including internal revenues of £5.7 million
(2023: £8.1 million)) for the year ended 31 March 2024 was down £95.4
million on the prior year (2023: £498.6 million), with like-for-like revenue
decline of 19.1%. Excluding timber, like-for-like revenue decline was 20.0%.
Adjusted EBITDA of £24.4 million for the year ended 31 March 2024 was down
£5.7 million on the prior year (2023: £30.1 million).
The impact of weaker economic conditions that have impacted the housing
market, especially the new build sector, is reflected in the results of the
division. Brick volumes have declined by 28%, which is in line with the
market reductions over the financial year. The benefits in the first half of
the year of annualised brick supplier price increases helped partially
mitigate the impact of volume decline.
Whilst brick volumes are the main driver of the division, the performance of
other sectors and the continued growth of higher margin cladding supply
businesses led to margins of the division being maintained.
Relative to the market, Taylor, Maxwell & Co performed strongly due to
focussed growth in the commercial and social housing sectors. Growth was also
seen in the cladding sector, with near double-digit revenue growth in SBS
Cladding due to ongoing projects, which are anticipated to continue into the
new financial year. The performance of the Timber division was recognised by
the industry, winning both Timber Trade of the Year and Softwood Trade:
Importer of the year at this year's Timber Trade Journal Awards.
During the financial year, the buyout process for the defined benefit pension
scheme was completed and the full liability transferred to an insurance
company. The Group now only operates a defined contribution pension scheme.
Importing Division 16% (2023: 17%) of Group Revenue
Revenue of £94.8 million (including internal revenues of £18.1 million
(2023: £30.7 million)) for the year ended 31 March 2024 was down £22.8
million on the prior year (2023: £117.6 million), with like-for-like revenue
decline of 34.3%. Adjusted EBITDA at £7.9 million for the year ended 31 March
2024 was down £5.3 million on the prior year (2023: £13.2 million).
The reported revenue was supported by the full-year inclusion of the
acquisitions made in the prior financial year of Modular Clay Products, E. T.
Clay Products and Heritage Clay Tiles. The weaker economic conditions
impacting the housing market had a greater impact on the demand for
strategically imported bricks, as softer demand results in more availability
of domestically manufactured bricks. Imported brick volumes fell 40%, broadly
in line with the estimated industry decline.
This decline in demand put pressure on pricing, which resulted in margins
declining 288 basis points in the year. It remains our expectation that
performance in the division will improve when overall brick market demand
reverts to more favourable levels. Our flexible supply chain will allow us to
react quickly when this happens.
Distribution Division 11% (2023: 9%) of Group Revenue
Revenue of £62.7 million (including internal revenues of £1.1 million (2023:
£0.4 million)) for the year ended 31 March 2024 was marginally down £0.3
million on the prior year (2023: £63.0 million) with like-for-like revenue
decline of 0.4%. Adjusted EBITDA at £7.6 million for the year ended 31 March
2024 was down £1.3 million on the prior year (2023: £8.9 million).
Revenue growth was seen across the majority of the businesses within the
Distribution division, led by UPOWA. UPOWA grew through the year, focussing on
national housebuilders as the demand for renewable forms of energy expands.
Towelrads, after many years of strong growth, saw a single-digit decline in
revenue, with the reduction in housing starts mitigated in part by growth from
new products and customers.
FSN Doors growth has continued in the mid-range bracket of the market, along
with Forum Tiles as it continues to develop its product offering and grow its
customer base.
Contracting Division 10% (2023: 6%) of Group Revenue
Revenue of £58.2 million (including internal revenues of £0.0 million (2023:
£0.2 million)) for the year ended 31 March 2024 was up £16.9 million on the
prior year (2023: £41.3 million) with like-for-like revenue growth of 1.9%.
Adjusted EBITDA at £10.1 million for the year ended 31 March 2024 was up
£4.5 million on the prior year (2023: £5.6 million).
The division grew both through organic performance as well as through the
significant acquisitions made in the second half of the financial year. Topek
was acquired in October 2023, and TSL in January 2024. Together they
complement the Group's existing cladding portfolio, including Taylor Maxwell
Cladding, SBS Cladding, and Architectural Facades, meaning that the Group now
benefits from a full range of cladding capabilities including design,
fabrication, supply, and installation.
In addition, and reflecting the Group's continued diversification strategy,
the acquisitions increase the Group's presence specialist areas in the
cladding and fire remediation sector. Both acquisitions are performing as
expected with integrations proceeding to plan, and both are experiencing
strong forward order books as part of the enlarged Group.
The organic growth arose through ongoing contracts with house builders, both
in the new build sector and with medium to high-end developers in the South
East of England, as well as being supported by one-off contract wins resulting
from a competitor going into administration. Margins have continued to
recover, driven by the recovery of material price inflation. The division
expects the unfavourable economic conditions that have impacted house building
to be felt in the following financial year.
The margin of the division increased 376 basis points on a reported basis
reflecting the margin recovery across the roofing business in addition to the
margin accretion driven by the acquisitions.
Outlook
The Group's 2024 results, set against a challenging economic backdrop,
highlight the strength and growing resilience of the Brickability model. As
the Group continues to diversify, we increase our exposure to an expanding
range of specialist products and services to the UK construction industry, and
at the same time we remain committed to growing in a sustainable manner.
Brickability is able to successfully meet the demands and requirements of
customers through long-standing relationships with customers and suppliers,
consistently delivering a high-quality service.
Whilst the short-term outlook for the housing market sector is expected to
experience further softness despite some encouraging macro indicators, there
remains a fundamental and significant disconnect between house formations and
the building of new homes. As a Group, we remain cautious and our priority
remains unchanged as we aim to secure strong order intakes with clear and
sustainable margins. The Board believes that the Group's diversified
multi-business strategy positions it well to benefit from improved economic
conditions when they arise. Trading in the current financial year to date is
in line with management's expectations.
Finally, I would like to acknowledge the significant contribution Alan Simpson
has made to the Group and I am delighted to be able to take over the role of
CEO from him. Alan's continued support to the Group in a non-board capacity
will be invaluable, and I look forward to working with him, the rest of the
Board and all the employees in the coming years to further develop and
strengthen Brickability.
Frank Hanna
Chief Executive Officer
15 July 2024
Financial Review
The financial results for the year reflect a combination of resilient
performance across the divisions, along with the contribution from
acquisitions made in the year and the annualisation of those acquisitions
completed in the prior year.
Revenue
Revenue totalled £594.1 million for the year ended 31 March 2024. This
represented a decrease of 12.8% compared to the previous year (2023: £681.1
million). Group like-for-like revenue decrease was 17.9% versus growth of 4.0%
in 2023.
Division (Unaudited) (Audited)
2024 2023 % Change % Change
£m £m LFL
Bricks and Building Materials 403.2 498.6 (19)% (19)%
Importing 94.8 117.6 (19)% (34)%
Distribution 62.7 63.0 (0)% (0)%
Contracting 58.2 41.3 41% 2%
Group eliminations (24.8) (39.4) (37)% (37)%
Total 594.1 681.1 (13)% (18)%
Gross Profit
Gross profit for the year decreased to £105.8 million from £112.9 million.
Gross profit margin has increased notably by 120 basis points to 17.8%. This
is driven by the impact of the two acquisitions in the second half of the
financial year, together with improved gross profit mix across the divisions.
Statutory and Adjusted Profit, and Adjusted EBITDA
Statutory profit before tax of £21.4 million (2023: £34.5 million) includes
other items of £13.9 million (2023: £10.1 million), which are not considered
to be part of the Group's underlying operations. These are analysed as
follows:
(Unaudited) (Audited)
2024 2023
£'000 £'000
Statutory profit before tax 21,444 34,527
Acquisition costs 828 281
Refinancing costs 111 -
IT transformational costs 295 -
Earn-out consideration classified as remuneration under IFRS 3 4,944 5,483
Share-based payment expense 1,456 1,567
Amortisation of intangible assets 10,233 8,399
Unwinding of discount on contingent consideration 2,418 2,891
Share of post-tax profit of equity accounted associates (71) (123)
Fair value (gains) on contingent consideration (6,352) (8,432)
Total other items before tax 13,862 10,066
Adjusted profit before tax 35,306 44,593
Depreciation and amortisation 5,672 4,715
Finance income (584) (143)
Finance expenses 4,538 2,365
Adjusted EBITDA 44,932 51,530
Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation and other non-underlying items.
Adjusted EBITDA decreased by 12.8% to £44.9 million (2023: £51.5 million)
for the year ended 31 March 2024. The impact of the economic slowdown in the
new building housing market was reflected in two of the divisions experiencing
like-for-like revenue decline in the year, with Distribution broadly in line
with the prior financial year and Contracting marginally ahead. Earn-out
consideration classified as remuneration relates to Modular Clay Products and
Taylor Maxwell (2023: Modular Clay Products and Taylor Maxwell), with both
tracking in line with expectations. IT transformational costs relate to
external consultant costs in relation to a strategic review of the Group's
current IT architecture. Fair value movements on contingent consideration
result in a gain of £6.4 million (2023: gain of £8.4 million). This relates
to the movements in E. T. Clay Products and Heritage Clay Tiles being impacted
by lower levels of demand, as well as the slowdown in the building in new
homes further impacting UPOWA's anticipated growth trajectory.
Taxation
The statutory charge for taxation was £6.1 million (2023: £6.8 million), an
effective rate of taxation (Tax expense divided by Profit Before Tax) of 28.4%
(2023: 19.8%). The effective rate for the year is higher than the statutory
rate of corporation tax of 25% mainly due to the effect of non-deductible
expenses from a tax perspective.
Earnings Per Share
Basic EPS for the year was 5.06p (2023: 9.26p), a decrease of 45.4%. The Group
also reported an adjusted underlying EPS, which adjusts for the impact of the
other items analysed in the table above. Adjusted EPS for the year was 8.66
pence (2023: 11.93 pence) per share, a decrease of 27.4%. The increase in the
statutory rate of corporation tax reduced EPS by 0.63 pence, representing 5.3%
of the 27.4% year-on-year decrease.
Dividends
Following a resilient trading performance for the financial year and also in
recognition of the strength of the balance sheet at the year-end, the Board is
recommending a final dividend of 2.28 pence per share, bringing the full-year
dividend to 3.35 pence per share.
Subject to approval by shareholders, the final dividend will be paid on 26
September 2024, with a record date of 30 August 2024 and an ex-dividend date
of 29 August 2024.
Balance sheet
Inventories at £29.8 million (2023: £33.2 million) decreased largely as a
reflection of the reduced trading levels. The decrease in both 'trade and
other receivables', and 'trade and other payables' on the balance sheet were
in line with expectations having taken into account the impact of
acquisitions, with the net cashflow impact reflecting similar working capital
movements to prior year.
Cash Flow and Net Debt
Operating cash flows before movements in working capital decreased to £38.5
million from £46.2 million in 2023. Cash generated from operations decreased
to £35.4 million from £44.9 million.
At 31 March 2024, the Group had net debt (borrowings less cash) of £56.5
million which compares to net debt of £8.0 million at the prior year-end. The
main components of the cash outflows are: additional investment in property,
plant and equipment of £6.1 million (2023: £7.2 million), tax paid of £8.6
million (2023: £11.1 million), the initial payments for three new
subsidiaries net of cash acquired of £42.8 million (2023: £12.0 million),
loans to the joint venture of £2.1 million (2023: £3.0 million), and the
payment of deferred consideration, in relation to prior year acquisitions, of
£5.2 million (2023: £3.5 million). Dividends of £9.9 million (2023: £9.1
million) were also paid in the year. We continue to expect that the
Brickability Group will remain a business that is cash generative.
Bank Facilities
The Group 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 £80
million. As at the year end, the RCF facility has reduced to £98 million and
the Group had utilised £63.5 million of the facility.
Post balance sheet events
In May 2024, the Group committed to selling a property, and associated
fixtures and fittings, that had a carrying value of £2.6 million at the year
end. The consideration from the sale of the property is expected to be in line
with the carrying value of the assets.
On 12 June 2024, the Group completed the sale of a freehold property for
consideration of £2.9 million.
Going Concern
The Directors are confident, having made appropriate enquiries, that the
Company and the Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements.
Mike Gant
Chief Financial Officer
15 July 2024
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 March 2024
2024 (Unaudited) 2023 (Audited)
Adjusted Other Total Adjusted Other Total
(note 5) (note 5)
Note £'000 £'000 £'000 £'000 £'000 £'000
Revenue 594,076 - 594,076 681,087 - 681,087
Cost of sales (488,240) - (488,240) (568,220) - (568,220)
Gross profit 105,836 - 105,836 112,867 - 112,867
Other operating income 1,197 - 1,197 561 - 561
Administrative expenses (66,130) (17,867) (83,997) (64,281) (15,730) (80,011)
Comprising:
Depreciation and amortisation (5,672) (10,233) (15,905) (4,715) (8,399) (13,114)
Other administrative expenses (60,458) (7,634) (68,092) (59,566) (7,331) (66,897)
Impairment losses on financial assets (1,643) - (1,643) (1,611) - (1,611)
Finance income 584 - 584 143 - 143
Finance expense (4,538) (2,418) (6,956) (2,365) (2,891) (5,256)
Share of post-tax profit of equity accounted associates - 71 71 - 123 123
Share of post-tax loss of equity accounted joint ventures - - - (721) - (721)
Fair value gains - 6,352 6,352 - 8,432 8,432
Profit/(loss) before tax 35,306 (13,862) 21,444 44,593 (10,066) 34,527
Tax (expense)/credit (8,993) 2,913 (6,080) (8,924) 2,094 (6,830)
Profit/(loss) for the year 26,313 (10,949) 15,364 35,669 (7,972) 27,697
Other comprehensive income
Items that will not be reclassified to profit or loss:
Remeasurements of defined benefit pension schemes - (16) (16) - 43 43
Deferred tax on remeasurement of defined benefit pension schemes - 4 4 - (11) (11)
Fair value gain on investments in equity instruments designated as FVTOCI - - - - 10 10
Other comprehensive (loss)/income for the year - (12) (12) - 42 42
Total comprehensive income/(loss) 26,313 (10,961) 15,352 35,669 (7,930) 27,739
Profit/(loss) for the year attributable to:
Equity holders of the parent 26,316 (10,949) 15,367 35,710 (7,972) 27,738
Non-controlling interests (3) - (3) (41) - (41)
26,313 (10,949) 15,364 35,669 (7,972) 27,697
Total comprehensive income/(loss) attributable to:
Equity holders of the parent 26,316 (10,961) 15,355 35,710 (7,930) 27,780
Non-controlling interests (3) - (3) (41) - (41)
26,313 (10,961) 15,352 35,669 (7,930) 27,739
Earnings per share
Basic earnings per share 7 5.06 p 9.26 p
Diluted earnings per share 7 4.96 p 9.10 p
Adjusted basic earnings per share 7 8.66 p 11.93 p
Adjusted diluted earnings per share 7 8.49 p 11.71 p
All results relate to continuing operations.
Consolidated Balance Sheet
As at 31 March 2024
(Unaudited) (Audited)
2024 2023
Note £'000 £'000
Non-current assets
Property, plant and equipment 26,859 24,783
Right of use assets 21,483 18,553
Intangible assets 225,728 152,424
Investments in equity accounted associates 335 324
Investments in equity accounted joint ventures - -
Investments in financial assets - 188
Trade and other receivables 7,123 3,611
Total non-current assets 281,528 199,883
Current assets
Inventories 29,842 33,159
Trade and other receivables 112,804 125,603
Contract assets 6,532 -
Employee benefit assets 390 646
Current income tax assets 1,807 1,677
Cash and cash equivalents 15,581 21,645
166,956 182,730
Assets classified as held for sale 2,555 -
Total current assets 169,511 182,730
Total assets 451,039 382,613
Current liabilities
Trade and other payables (116,798) (131,419)
Loans and borrowings (8,620) (12,624)
Lease liabilities (3,907) (3,225)
Total current liabilities (129,325) (147,268)
Non-current liabilities
Trade and other payables (24,078) (9,592)
Loans and borrowings 9 (62,911) (16,800)
Lease liabilities (15,137) (12,967)
Provisions (2,904) (2,364)
Deferred tax liabilities (24,806) (18,244)
Total non-current liabilities (129,836) (59,967)
Total liabilities (259,161) (207,235)
Net assets 191,878 175,378
Equity
Called up share capital 3,195 3,003
Share premium account 102,908 102,847
Capital redemption reserve 2 2
Share-based payment reserve 4,864 3,509
Merger reserve 20,548 11,146
Retained earnings 60,495 55,002
Equity attributable to owners of the Company 192,012 175,509
Non-controlling interests (134) (131)
Total equity 191,878 175,378
Consolidated Statement of Changes in Equity
For the year ended 31 March 2024
Note Share capital Share premium account Capital redemption Share-based payments Merger reserve Retained earnings Total attributable to equity holders of the parent Non-controlling interest Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2022 (Audited) 2,985 102,146 2 1,930 11,146 36,365 154,574 (90) 154,484
Profit or (loss) for the year - - - - - 27,738 27,738 (41) 27,697
Other comprehensive income for the year - - - - - 42 42 - 42
Total comprehensive income/(loss) for the year - - - - - 27,780 27,780 (41) 27,739
Dividends paid 6 - - - - - (9,143) (9,143) - (9,143)
Issue of shares on exercise of share options 18 701 - - - - 719 - 719
Equity settled share-based payments - - - 1,637 - - 1,637 - 1,637
Deferred tax on share-based payment transactions - - - (197) - - (197) - (197)
Current tax on share-based payment transactions - - - 139 - - 139 - 139
Total contributions by and distributions to owners 18 701 - 1,579 - (9,143) (6,845) - (6,845)
At 31 March 2023 (Audited) 3,003 102,847 2 3,509 11,146 55,002 175,509 (131) 175,378
Profit or (loss) for the year - - - - - 15,367 15,367 (3) 15,364
Other comprehensive loss for the year - - - - - (12) (12) - (12)
Total comprehensive income/(loss) for the year - - - - - 15,355 15,355 (3) 15,352
Dividends paid 6 - - - - - (9,862) (9,862) - (9,862)
Issue of consideration shares 8 171 - - - 9,402 - 9,573 - 9,573
Issue of shares on exercise of share options 21 61 - - - - 82 - 82
Equity settled share-based payments - - - 1,336 - - 1,336 - 1,336
Deferred tax on share-based payment transactions - - - (79) - - (79) - (79)
Current tax on share-based payment transactions - - - 98 - - 98 - 98
Total contributions by and distributions to owners 192 61 - 1,355 9,402 (9,862) 1,148 - 1,148
At 31 March 2024 (Unaudited) 3,195 102,908 2 4,864 20,548 60,495 192,012 (134) 191,878
Consolidated Statement of Cash Flows
For the year ended 31 March 2024
(Unaudited) (Audited)
2024 2023
Note £'000 £'000
Operating activities
Profit for the year 15,364 27,697
Adjustments for:
Depreciation of property, plant and equipment 1,736 1,566
Depreciation of right of use assets 3,901 3,101
Amortisation of intangible assets 10,268 8,447
Gain on disposal of property, plant and equipment and right of use assets (131) (314)
Foreign exchange (gains)/losses (64) 29
Share-based payment expense 1,292 1,567
Other operating income (1,066) (365)
Share of post-tax profit in equity accounted associates (71) (123)
Share of post-tax loss in joint ventures - 721
Fair value changes in contingent consideration (6,352) (8,176)
Gain on acquisition - (256)
Movements in provisions 8 (141)
Finance income (584) (143)
Finance expense 6,956 5,256
Acquisition costs 5 939 281
Income tax expense 6,080 6,830
Pension charge in excess of contributions paid 267 196
Operating cash flows before movements in working capital 38,543 46,173
Changes in working capital:
Increase/(decrease) in inventories 3,323 (865)
Decrease in trade and other receivables 14,404 19,331
Decrease in trade and other payables (20,861) (19,765)
Cash generated from operations 35,409 44,874
Payment of acquisition expenses (828) (281)
Interest received 557 125
Income taxes paid (8,581) (11,074)
Net cash from operating activities 26,557 33,644
Investing activities
Purchase of property, plant and equipment (6,144) (7,229)
Proceeds from sale of property, plant and equipment 193 441
Purchase of right of use assets (38) (2,525)
Purchase of intangible assets (325) (478)
Acquisition of subsidiaries 8 (42,787) (11,998)
Acquisition of interests in joint ventures - (442)
Loan to Joint Venture (2,056) (2,960)
Proceeds from sale of other investments 188 -
Dividends received from associates 60 60
Net cash used in investing activities (50,909) (25,131)
Financing activities
Equity dividends paid 6 (9,862) (9,143)
Proceeds from issue of ordinary shares net of share issue costs 82 719
Payment of financing costs (111) -
Proceeds from bank borrowings 262,500 115,400
Repayment of bank borrowings (216,351) (123,000)
Payment of lease liabilities (3,623) (2,791)
Payment of deferred and contingent consideration (5,240) (3,499)
Interest paid (4,304) (2,246)
Payment of transaction costs relating to loans and borrowings (700) -
Net cash flows from/(used in) financing activities 22,391 (24,560)
Net decrease in cash and cash equivalents (1,961) (16,047)
Cash and cash equivalents at beginning of year 9,021 25,028
Effect of changes in foreign exchange rates (99) 40
Cash and cash equivalents at end of year 6,961 9,021
Notes to the Preliminary Results
Year ended 31 March 2024
1. General information
This announcement was approved by the Board of Directors on 15 July 2024.
Brickability Group PLC is a company incorporated in England and Wales
(registration number 11123804). The address of the registered office is South
Road, Bridgend Industrial Estate, Bridgend, United Kingdom CF31 3XG.
The financial information set out above does not constitute the Group's
statutory financial statements for the year ended 31 March 2024 or 2023 but is
derived from these financial statements. Statutory financial statements for
2023 have been delivered to the Registrar of Companies and those for 2024 will
be delivered by 30 September 2024. The auditor reported on the statutory
financial statements for the year ended 31 March 2023; their report was
unqualified, did not draw attention to any matters by way of emphasis and did
not contain a statement under Section 498(2) or (3) of the Companies Act 2006.
The audit of the statutory financial statements for the year ended 31 March
2024 is not yet complete. These financial statements will be finalised on the
basis of the financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the Group's Annual General Meeting.
2. Basis of preparation
The financial information has been prepared in accordance with UK adopted
international accounting standards in conformity with the requirements of the
Companies Act 2006.
The financial information presented in pounds sterling, which is the
functional currency of the Company and Group. Amounts are rounded to the
nearest thousand, unless otherwise stated.
The financial information is prepared on the historical cost basis, with the
exception of certain financial assets and liabilities which are stated at fair
value.
Going Concern
The key uncertainty faced by the Group is the demand for its products and how
these are impacted by economic factors.
After reviewing the Group's forecasts and risk assessments and making other
enquiries, the Board have come to the conclusion that for the period of review
there is a reasonable expectation that the Group has adequate resources to
continue in operational existence.
Budget scenarios have been prepared to compare a number of outcomes where
there is a significant and prolonged drop in demand in the industry.
For each scenario, cash flow and covenant compliance forecasts have been
prepared. A drop in revenue of 56% with no adjustment to overheads would lead
to a breach. However, if overheads were cut by 13%, then a breach could be
avoided.
In another scenario, if revenue dropped 61% and overheads remained the same,
saving cash by £7m p.a. through cutting discretionary Capex and a reduction
in the dividend would prevent a breach. These scenarios in terms of revenue
falling by these levels so rapidly are considered remote.
Having taken into account the scenarios modelled, the Directors are satisfied
that the Group has sufficient resources to continue to operate for a period of
not less than 12 months from the date of this report and until at least 30
Sept 2025. Accordingly, the consolidated financial information has been
prepared on a going concern basis.
New standards, interpretations and amendments not yet effective from 1 January
2023
The following standards and amendments became effective for the current
financial year:
• Insurance Contracts (Amendments to IFRS 17);
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2);
• Definition of Accounting Estimates (Amendments to IAS 8);
• Deferred Tax Related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12); and
• International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12).
The amendments above did not have a material impact on the amounts recognised
in prior periods or the current year.
New standards, interpretations and amendments not yet effective
Certain new standards and amendments have been issued by the IASB and will be
effective in future accounting periods. The standards and amendments that are
not yet effective, are likely to impact the Group and have not been adopted
early by the Group include:
Amendments effective from 1 January 2024:
• IFRS 16 Leases (Amendment - Liability in a sale and leaseback);
• IAS 1 Presentation of Financial Statements (Amendment - Classification of
liabilities as current or non-current);
• IAS 1 Presentation of Financial Statements (Amendment - Non-current
liabilities with covenants); and
• IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures
(Amendment - Supplier Finance Arrangements).
Amendments effective from 1 January 2025:
• IAS 21 The Effects of Changes in Foreign Exchange Rates (Amendment - Lack of
exchangeability).
The amendments listed above are not expected to have any significant impact on
the amounts recognised in prior periods, current or future periods.
3. Segmental analysis
For management purposes, the Group is organised into segments based on its
products and services. The Group's four distinct business divisions are set
out below:
• 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
installation services, primarily within the residential construction sector.
The Group's segments are strategic business units that offer different
products and services. Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating decision-maker
(CODM). The Group considers the CODM to be the senior management team,
including the Board of Directors, who are responsible for allocating resources
and assessing performance of the operating segments.
The accounting policies of the reportable segments are the same as the Group's
accounting policies. Segment performance is evaluated based on Adjusted
EBITDA, without allocation of depreciation and amortisation, finance expenses
and income, impairment losses, fair value movements or the share of results of
associates and joint ventures. This is the measure reported to the Board for
the purpose of resource allocation and assessment of segment performance.
The Group's revenue is primarily generated in the United Kingdom. Of the
revenue generated in Europe, £914,000 (2023: £229,000) is included within
revenue from the sale of goods within the Bricks and Building Materials
segment and £25,000 (2023: £111,000) is included within revenue from the
sale of goods within the Importing segment. The balance of £1,428,000 (2023:
£2,462,000) is included within revenue from the rendering of services within
the Importing segment. All of the revenue generated in Other geographic
locations is included within revenue from the sale of goods within the Bricks
and Building Materials segment.
Revenue from the sale of goods and rendering of services is analysed by
segment below. Revenue from the rendering of services within the Importing
segment relates to the provision of transportation and distribution services.
Revenue from the rendering of services within the Distribution segment relates
to solar panel installation services.
No individual customer accounts for more than 10% of the Group's total
revenue.
2024 (Unaudited) 2023 (Audited)
Bricks and Building Materials Importing Distribution Contracting Unallocated & Group Eliminations Consolidated Bricks and Building Materials Importing Distribution Contracting Unallocated & Group Eliminations Consolidated
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue from sale of goods 397,595 68,477 52,413 - - 518,485 490,472 75,411 54,510 - - 620,393
Revenue from Rendering of Services - 8,191 9,230 58,170 - 75,591 - 11,472 8,085 41,137 - 60,694
Total external revenue 397,595 76,668 61,643 58,170 - 594,076 490,472 86,883 62,595 41,137 - 681,087
Total internal revenue 5,657 18,103 1,072 3 (24,835) - 8,122 30,700 394 201 (39,417) -
Total revenue 403,252 94,771 62,715 58,173 (24,835) 594,076 498,594 117,583 62,989 41,338 (39,417) 681,087
Adjusted EBITDA 24,403 7,914 7,567 10,070 (5,022) 44,932 30,141 13,188 8,893 5,620 (6,312) 51,530
Depreciation and amortisation (15,905) (15,905) (13,114) (13,114)
Acquisition and refinancing costs (939) (939) (281) (281)
IT transformation costs (295) (295) - -
Earn-out consideration classified as remuneration under IFRS 3 (4,944) (4,944) (5,483) (5,483)
Share based payment expense (1,456) (1,456) (1,567) (1,567)
Finance income 584 584 143 143
Finance expense (6,956) (6,956) (5,256) (5,256)
Share of results of associates 71 71 123 123
Fair value gains and losses 6,352 6,352 8,432 8,432
Group profit before tax 24,403 7,914 7,567 10,070 (28,510) 21,444 30,141 13,188 8,893 5,620 (23,315) 34,527
For the purposes of monitoring segment performance and allocating resources
between segments, the CODM monitors the total non-current and current assets
attributable to each segment. All assets are allocated to reportable segments
with the exception of those used primarily for corporate purposes (central),
investments in associates, joint ventures and financial assets and deferred
tax assets. Goodwill has been allocated to reportable segments. No other
assets are used jointly by reportable segments. All liabilities are allocated
to reportable segments with the exception of those used primarily for
corporate purposes (central), bank borrowings and deferred tax liabilities.
Right of use assets, in respect of trailers, with a carrying value of
£2,024,000 (2023: £2,706,000), are either held in the United Kingdom or
Europe at the year-end, depending on the timing and location of goods being
transported. All other non-current assets are solely held within the United
Kingdom.
2024 (Unaudited) 2023 (Audited)
Bricks and Building Materials Importing Distribution Contracting Central & Group Eliminations Consolidated Bricks and Building Materials Importing Distribution Contracting Central & Group Eliminations Consolidated
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Non-current segment assets 75,511 22,216 56,045 113,415 14,006 281,193 79,152 33,147 49,880 29,520 7,672 199,371
Current segment assets 89,095 22,577 27,776 27,992 2,071 169,511 114,359 26,403 25,849 11,965 4,154 182,730
Total segment assets 164,606 44,793 83,821 141,407 16,077 450,704 193,511 59,550 75,729 41,485 11,826 382,101
Unallocated assets:
Investment in associates 335 324
Investment in joint ventures - -
Investments in financial assets - 188
Group assets 451,039 382,613
Total segment liabilities (80,956) (15,979) (18,551) (9,359) (46,599) (171,444) (96,394) (17,739) (18,601) (4,933) (34,524) (172,191)
Loans and borrowings (excluding leases and overdrafts) (62,911) (16,800)
Deferred tax liabilities (24,806) (18,244)
Group liabilities (259,161) (207,235)
Non-current asset additions
Property, plant and equipment 263 125 1,240 203 4,313 6,144 485 2,352 2,443 430 1,520 7,230
Right of use assets 1,541 434 4,143 251 63 6,432 1,803 1,521 2,939 78 2,618 8,959
Intangible assets - - 325 - - 325 - - 478 - - 478
Total non-current asset additions 1,804 559 5,708 454 4,376 12,901 2,288 3,873 5,860 508 4,138 16,667
4. Profit before tax
Profit before tax is stated after charging/(crediting): (Unaudited) (Audited)
2024 2023
£'000 £'000
Amortisation of intangible assets 10,268 8,447
Depreciation of property, plant and equipment 1,736 1,566
Depreciation of right of use assets 3,901 3,101
Gain on disposal of property, plant and equipment and right of use assets (131) (314)
Cost of inventories recognised as an expense 469,583 555,592
Customer rebates 6,415 7,987
Supplier rebates (9,246) (8,799)
Subcontractor costs 16,770 15,984
Impairment of trade receivables 1,643 1,611
Net foreign exchange losses 244 87
5. Other items
In order to assist with the understanding of the Group's performance, certain business combination related items that are significant in nature and items that management do not consider to be directly reflective of the Group's underlying performance in the period are presented separately, on the face of the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
This includes certain cash and non-cash items which tend to be charged or recognised throughout the year regardless of trading performance. For the purpose of assessing performance on a comparable basis year on year, management therefore considers both statutory and adjusted profit measures, with these adjusted measures presented separately in order to provide additional useful information about the Group's performance to users of the accounts.
Other items that are excluded from adjusted profit measures are as follows:
(Unaudited) (Audited)
2024 2023
£'000 £'000
Amortisation of acquired intangible assets (10,233) (8,399)
Total depreciation and amortisation (10,233) (8,399)
Acquisition costs (828) (281)
Refinancing costs (111) -
IT transformation costs (295) -
Earn-out consideration classified as remuneration under IFRS 3 (4,944) (5,483)
Share-based payment expense (including employer NI) (1,456) (1,567)
Total other administrative expenses (7,634) (7,331)
Unwinding of discount on contingent consideration (2,418) (2,891)
Total finance expense (2,418) (2,891)
Share of post-tax profit of equity accounted associates 71 123
Gain on re-measurement of contingent consideration 6,352 8,176
Gain on acquisition - 256
Total fair value gains 6,352 8,432
Total other items before tax (13,862) (10,066)
Tax on other items 2,913 2,094
Total other items after tax (10,949) (7,972)
Other comprehensive (loss)/income
Remeasurements of defined benefit pension schemes (16) 43
Deferred tax on remeasurement of defined benefit pension schemes 4 (11)
Fair value gain on investments in equity instruments designated as FVTOCI - 10
Total other comprehensive (loss)/income (12) 42
Total other items in total comprehensive income (10,961) (7,930)
Impact of business combinations
Following a business combination, intangible assets in respect of brands, customer relationships and supplier relationships are recognised as part of the fair value assessment of net assets acquired. Amortisation on these acquired intangibles is excluded from adjusted profit as the recognition of these intangibles is not comparable with the recognition of other internally generated assets. Its exclusion enables performance to be assessed on a like for like basis regardless of whether growth is organic or through acquisition and whether acquired intangibles have been fully amortised.
Acquisition costs associated with business combinations can fluctuate from year to year depending on the size and number of acquisitions. Legal and professional fees for acquisitions are also generally considered to be greater than those incurred during the course of regular trading. These are therefore excluded from adjusted results for improved comparability.
Any gains recognised on acquisition, subsequent changes in the fair value of contingent consideration and the related finance expense in connection with discounting deferred and contingent consideration can also make a comparison of trading performance on a like for like basis more difficult. These gains/losses and expenses are therefore also excluded from adjusted results, with the inclusion within other items consistent with the presentation of other acquisition related costs.
Fair value gains include a gain of £6,352,000 (2023: £8,176,000) in respect of changes in contingent consideration expected to be payable. A reconciliation of the movement in the year, including details of the reasons for the change in the year is outlined in note 8.
Acquisition costs comprise of £541,000 (2023: £92,000), in relation to stamp duty, plus a further £287,000 (2023: £189,000) in respect of legal and professional fees. £828,000 (2023: £259,0000) was directly associated with the acquisitions in the year (note 8).
To facilitate the acquisitions during the year, the Group refinanced and agreed an increase in its available banking facilities, The refinancing costs directly associated with this are therefore considered to be connected with the acquisition.
The agreements to purchase Taylor Maxwell Group (2017) Limited and Modular Clay Products Ltd include earn-out consideration, payable if certain performance-based targets are met over the following three-years. The share purchase agreements also include a 'bad leaver' clause, under which the earn-out consideration payment to such a leaver is forfeited. The clauses were included with the intention of protecting the value of the business over the first few years following acquisition. However, as a result of the earn-out consideration effectively being contingent on the continued employment or 'good leaver' status of the individual, the amount payable has been treated as remuneration in accordance with current IFRS interpretation guidance of IFRS 3. As such, the amount payable is considered significant in nature, business combination related and not reflective of a typical remuneration cost that would usually be incurred within the underlying trade of the Group.
IT transformation costs
During the year, the group installed a new HR and payroll system and undertook initial investigations with regards to the potential investment in a new group wide IT system. The project set up and installation costs are over and above the Group's annual system upgrade and maintenance costs and thus these costs have been excluded from adjusted results in order to assist with the understanding of the Group's performance in the year.
Share-based payments
The share-based payment expense represents the share-based payment charge for the year, including associated accrued employer taxes. A portion of the share options issued are subject to performance criteria, including both market and non-market conditions. Changes in market conditions after the grant date are not reflected in the share-based payment expense recognised. The accounting charge is therefore not considered to be directly linked to the Group's trading operations in the year and thus separate disclosure is deemed appropriate to assist with the understanding of the Group's performance in the year.
Equity accounted associates
The Group is not directly involved in the day-to-day operations of its associate and thus considers it appropriate to separate its share of this entity's results from the Group's adjusted results.
Tax
The tax credit arising on the other items is presented on the same basis as the cost to which it relates.
Other comprehensive income
The other comprehensive loss for the year relates to the remeasurement of the defined pension scheme and associated deferred tax movement.
During the year, the Group completed a buy-out process to transfer all defined benefit pension liabilities to an insurer (see note 10). As such, the final scheme-related remeasurement and deferred tax movements are not considered to be part of the Group's underlying operations and have been reported separately from the Group's adjusted results.
6. Dividends
(Unaudited) (Audited)
2024 2023
£'000 £'000
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2023 of 2.15p per share 6,456 6,111
(2023: for the year ended 31 March 2022 of 2.04p per share)
Interim dividend for the year ended 31 March 2024 of 1.07p per share 3,406 3,032
(2023: for the year ended 31 March 2023 of 1.01p per share)
Total dividends paid in the year 9,862 9,143
The Directors recommend that a final dividend for 2024 of 2.28p (2023: 2.15p) per ordinary share be paid.
The final dividend will be paid, subject to shareholders' approval at the Annual General Meeting, to shareholders on the register at the close of business on 30 August 2024. This dividend has not been included as a liability in these financial statements.
7. Earnings per share
Earnings per share (EPS) is calculated by dividing the profit for the year, attributable to ordinary equity holders of the parent, by the weighted average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit for the year, attributable to ordinary equity holders, by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The calculation of basic and diluted earnings per share is based on the following data:
2024 (Unaudited) 2023 (Audited)
Earnings £'000 Weighted average number of shares Earnings per share (p) Earnings £'000 Weighted average number of shares Earnings per share (p)
Basic earnings per share 15,367 303,814,191 5.06 27,738 299,439,718 9.26
Effect of dilutive securities
Employee share options - 6,157,200 - - 5,403,747 -
Diluted earnings per share 15,367 309,971,391 4.96 27,738 304,843,465 9.10
Adjusted earnings per share and adjusted diluted earnings per share based on the adjusted profit attributable to the equity holders of the parent, as shown in the Adjusted column of the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Details of the Other items after tax, forming the difference between the statutory earnings above and adjusted earnings below, are outlined in note 5 of the preliminary final results.
2024 (Unaudited) 2023 (Audited)
Earnings £'000 Weighted average number of shares Earnings per share (p) Earnings £'000 Weighted average number of shares Earnings per share (p)
Adjusted basic earnings per share 26,316 303,814,191 8.66 35,710 299,439,718 11.93
Effect of dilutive securities
Employee share options - 6,157,200 - - 5,403,747 -
Adjusted diluted earnings per share 26,316 309,971,391 8.49 35,710 304,843,465 11.71
8. Business combinations
The Group acquired the entire share capital and 100% of the voting rights in the following companies during the year:
Company acquired Acquisition date
Precision Façade Systems Ltd 2 June 2023
Group Topek Holdings Limited and Topek Limited 10 October 2023
TSL Assets Limited and Topek Southern Limited 19 January 2024
The unaudited fair value of the assets acquired and liabilities assumed on acquisition are as follows:
Precision Façade Systems Ltd Group TSL Assets Group Total
£'000 Topek £'000 £'000
Group
£'000
Property, plant and equipment 15 46 312 373
Right of use assets - 505 856 1,361
Identifiable intangible assets - 18,168 19,840 38,008
Inventory 5 - - 5
Trade and other receivables 14 3,547 2,693 6,254
Contract assets - 2,141 1,095 3,236
Cash and cash equivalents - 7,912 9,924 17,836
Trade and other payables (13) (2,356) (3,038) (5,407)
Loans and borrowings - (351) - (351)
Current income tax - (557) 233 (324)
Lease liabilities - (505) (856) (1,361)
Provisions - - (364) (364)
Deferred tax - (4,572) (5,126) (9,698)
Total identifiable net assets 21 23,978 25,569 49,568
Goodwill 579 24,189 20,471 45,239
Total consideration 600 48,167 46,040 94,807
Satisfied by:
Cash paid 600 36,033 23,990 60,623
Shares issued as consideration - - 9,573 9,573
Deferred consideration - - 158 158
Contingent consideration - 12,134 12,319 24,453
Total consideration 600 48,167 46,040 94,807
Cash paid reflects an initial cash payment agreed in respect of the value attributed to the business, based on a multiple of Adjusted EBITDA, plus any further amounts paid in respect of excess working capital, including any surplus cash, based on agreed form completion accounts.
The cash outflow of £42,787,000 (2023: £11,998,000) in the Consolidated Statement of Cash Flows, in respect of the acquisition of subsidiaries, comprises cash consideration paid of £60,623,000 (2023: £16,674,000) less cash acquired of £17,836,000 (2023: £4,676,000).
The Group acquired each of the above subsidiaries in order to complement the Group's existing product range and expand its presence in the cladding remediation market.
The fair value of identifiable intangible assets acquired through business combinations relate to brands and customer relationships.
The fair value of brands is based on a relief from royalty method, with a royalty rate of 1% applied based on comparable businesses in the market, reflecting the size of the entities acquired. The fair value of customer relationships is established using a multi-period excess earnings method, with discount rates of between 12.5% and 12.9% applied to the acquisitions in the year, based on expert advice procured by the directors. Such judgements are sensitive to the underlying assumptions such that a 1% increase in the discount rate applied would reduce the reported value of identifiable intangible assets by £1,600,000, with a corresponding adjustment to goodwill, subject to adjustment for deferred tax.
Projected cashflows that underpin the valuations are based on management's best estimate of the expected levels of trade and profits following acquisition, taking into account actual results around the time of acquisition. Forecasts are prepared for a three-year period, with an inflationary 2% growth in revenue applied thereafter.
Any excess paid over the value of net assets acquired is included as goodwill. Goodwill principally comprises the value of expected synergies arising from the acquisitions and the value of the assembled workforce. None of the goodwill is expected to be deductible for tax purposes.
Included within the fair value of trade and other receivables above are the following gross contractual amounts due and amounts not expected to be collected in respect of trade receivables:
Precision Façade Systems Ltd Group TSL Assets Group
£'000 Topek £'000
Group
£'000
Gross contractual trade receivables 14 508 2,018
Amounts not expected to be collected - - (7)
Fair value of contractual receivables 14 508 2,011
Included in the consolidated financial statements are the following amounts of revenue and profit in respect of the subsidiaries acquired:
Precision Façade Systems Ltd Group TSL Assets Group
£'000 Topek £'000
Group
£'000
Revenue - 10,767 4,664
Net profit - 2,309 691
Had the current year business combinations taken place at the beginning of the financial year, the Group's revenue for the year would have been £632,528,000 (2023: £706,624,000) and Group profit would have been £24,167,000 (2023: £30,332,000).
Acquisition related costs, included in administrative expenses (note 5), amounted to £828,000 in respect of the above acquisitions, as follows:
Precision Façade Systems Ltd Group TSL Assets Group
£'000 Topek £'000
Group
£'000
Acquisition costs 23 395 410
Contingent consideration
The Group has entered into contingent consideration arrangements during the purchase of several subsidiaries. Final amounts payable under these agreements are all subject to future performance and the acquired business achieving pre-determined adjusted EBITDA targets, over the three years following acquisition, with the exception of HBS NE Limited which is over five years.
The fair value of all contingent consideration is based on a discounting cash flow model, applying a discount rate of between 4.1% 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.
(Unaudited) (Audited)
Company acquired Fair value at reporting date Fair value at reporting date
Fair value at acquisition 2024 2023
£'000 £'000 Undiscounted amount payable £'000 Undiscounted amount payable
2024 2023
Discount rate £'000 £'000
U Plastics Limited 3.5% 2,208 - - 962 964
Bathroom Barn Limited 1.7% 231 - - 108 110
McCann Logistics Ltd 1.7% 889 - - 1,324 1,330
Taylor Maxwell Group (2017) Limited 4.1% - 293 293 390 406
SBS Cladding Limited 4.1% 1,845 797 800 1,464 1,500
Leadcraft Limited 7.4% 722 922 961 964 1,128
HBS NE Limited 23.6% 10,069 1,417 2,333 3,901 6,998
Beacon Roofing Limited 13.0% 1,365 1,578 1,757 2,355 2,802
E. T. Clay Products Limited 16.0% 1,043 - - 2,433 3,210
Heritage Clay Tiles Limited 20.0% 82 - - 192 270
Group Topek Holdings Limited 12.5% 12,134 12,870 16,200 - -
TSL Assets Limited 12.9% 12,319 12,571 16,450 - -
Total 42,907 30,448 38,794 14,093 18,718
The potential undiscounted amount payable in respect of Group Topek Holdings Limited ranges from £nil to £17,700,000, while the potential undiscounted amount payable in respect of TSL Assets Limited ranges from £nil to £20,700,000.
In respect of prior period acquisitions, 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 (2023: £nil to £3,480,000) and the total amount payable for SBS Cladding Limited ranges from £1,200,000 to £2,000,000 (2023: £500,000 to £2,000,0000). It is not possible to determine a range of outcomes for other acquisitions as the arrangements do not contain a maximum payable.
Changes in the range of outcomes are due to amounts paid or payable being determined during the year as milestones within the performance period are met.
The acquisition of Taylor Maxwell Group (2017) Limited is also subject to further payments depending on future performance, ranging from £nil to £13,000,000, over the three years following acquisition in June 2021. Based on current interpretation guidance concerning contingent payments to employees under IFRS 3, the earn-out amounts payable are recognised in profit or loss over the earn-out period as remuneration costs. This is due to the inclusion of a 'bad leaver' clause in the share purchase agreement, under which the earn-out consideration payment is forfeited. The earn-out consideration is therefore deemed to effectively be contingent on the continued employment of the seller and the seller not being considered a 'bad leaver'. The anticipated total amount payable, however, is not expected to change due to other clauses and payment terms within the share purchase agreement. A charge of £4,333,000 (2023: £4,333,333) has been recognised in the year in respect of this earn-out consideration, presented within other administrative expenses (note 5).
Similarly, the acquisition of Modular Clay Products Ltd is also subject to further amounts payable depending on future performance over the three years following acquisition in May 2022, which are recognised as remuneration due to a 'good leaver' clause within the share purchase agreement. It is not possible to determine a range for these future payments as the agreement does not contain a maximum payable. A charge of £611,000 (2023: £1,150,000) has been recognised in the year in respect of this earn-out consideration, presented within other administrative expenses (note 5).
Changes in amounts recognised in respect of contingent consideration can be reconciled as follows:
Company acquired Finance
Additions expense
through business combinations £'000
£'000
(Audited) (Unaudited)
Fair value at Fair value Fair value at
31 March 2023 (gains)/loss Settlement 31 March 2024
£'000 £'000 £'000 £'000
U Plastics Limited 962 - 2 - (964) -
McCann Logistics Ltd 1,324 - 6 7 (1,337) -
SBS Cladding Limited 1,464 - 33 - (700) 797
HBS NE Limited 3,901 - 808 (3,292) - 1,417
Beacon Roofing Limited 2,355 - 253 (3) (1,027) 1,578
E. T. Clay Products Limited 2,433 - 187 (2,620) - -
Group Topek Holdings Limited - 12,134 736 - - 12,870
TSL Assets Limited - 12,319 252 - - 12,571
Other business combinations 1,654 - 133 (444) (128) 1,215
Total 14,093 24,453 2,410 (6,352) (4,156) 30,448
During the year, a gain of £3,292,000 was recognised in respect of HBS NE Limited. Upon acquisition, significant growth was forecast with an anticipated increase in revenues and profits due to the introduction of Part L and Part S renewable energy legislation, which requires new homes within the UK to reduce their carbon footprint.
The application of this legislation by housebuilders has taken longer than initially anticipated. This, together with the ongoing slowdown of the housing market compared to prior years, is expected to further delay the period over which HBS NE will benefit from the new legislation and achieve the forecast growth. As a result, an increasing portion of the projected future growth is expected to fall outside of the performance period under which the contingent consideration payable is assessed.
A fair value gain of £2,620,000 for E. T. Clay Products Limited has arisen as trading has been more challenging than previously expected. A gain of £211,000 is also recognised in relation to Heritage Clay Tiles (within 'Other Business Combinations' line), with the total earn-out consideration payable dependent on the overall performance of both companies. Given the ongoing uncertainty in the market, and the anticipated timescales for the industry to return to former levels of demand, further payment in the earn-out period is not currently expected.
Other fair value gains and losses in the year also reflect changes in performance and/ or anticipated profits compared to those originally forecast at the end of the prior year or on acquisition.
9. Loans and borrowings
(Unaudited) (Audited)
2024 2023
£'000 £'000
Current
Overdrafts 8,620 12,624
8,620 12,624
Non-current
Bank loans 62,911 16,800
62,911 16,800
Total loans and borrowings 71,531 29,424
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 £63,500,000 (2023: £17,000,000) less arrangement fees of
£589,000 (2023: £200,000), which are amortised over the term of the loan.
In the prior year, the Group had a revolving credit facility of £60,000,000,
including an ancillary carve out of a £5,000,000 overdraft. During the year,
the Group refinanced, with the revolving credit facility increased to an
initial £100,000,000 which reduces to £80,000,000 over the term of the
facility. As at the year end, the RCF facility had reduced to £98,000,000.
The facility initially runs for 3 years from October 2023 with two extension
options of one year.
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% (2023: 1.9%)
above the adjusted SONIA interest rate benchmark.
The Group 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. The Company's overdraft
balance at the year end is a result of the timing of cash transfers within the
Group and funds being transferred from the Group's central facility.
The bank loans are secured by a fixed charge over the Group's properties and floating charges over the remaining assets of the Group, including all property, investments and assets of the Company's subsidiary undertakings. A guarantee has also been provided by certain trading subsidiaries.
10. Pensions
Defined benefit plans
When the Group acquired Taylor Maxwell Group (2017) Limited on 30 June 2021, the net assets acquired included the Taylor Maxwell Group Limited Pension and Assurance Scheme. The Group commenced a buy-out process shortly afterwards and this process was completed during the year.
On 1 August 2023 the Scheme's liabilities relating to the policy were transferred fully to the insurance company when the policy was converted to individual policies in members' names. Post buy-out residual liabilities, relating to top-up benefit payments due to past members of the Scheme following a High Court ruling on the Lloyds Banking Group pensions court case, were paid out and there was no liability remaining as at 31 March 2024.
Disaggregation of defined benefit scheme assets
The fair value of the scheme assets is analysed as follows:
(Unaudited) (Audited)
2024 2023
£'000 £'000
Cash fund and net current assets 390 852
Insured annuities - 7,046
Fair value of scheme assets 390 7,898
The scheme assets do not include any of the Group's own financial instruments
or any property occupied by the Group. The surplus balance at the year end
reflects the cash held in the pension scheme which is expected to be
transferred to the Group during the financial year ending 31 March 2025. It is
therefore classified as a current asset in the balance sheet.
balance reflecting cash held.
11. Post balance sheet events
In May 2024, the Group committed to selling a property, and associated fixtures and fittings, that had a carrying value of £2,564,000 at the year end. The consideration from the sale of the property is expected to be in line with the carrying value of the assets.
On 12 June 2024, the Group completed the sale of a property for consideration of £2,850,000.
12. Availability of annual report and accounts
The Annual Report and Accounts for the year ended 31 March 2024 will be posted to shareholders on or before 8 August 2024 and laid before the Group at the Annual General Meeting on 11 September 2024. Copies of the Annual Report and Accounts for the year ended 31 March 2024 will be available on request from the Company Secretary at Brickability Group PLC, South Road, Bridgend Industrial Estate, Bridgend CF31 3XG and from the Group's website
www.brickabilitygroupplc.com (http://www.brickabilitygroupplc.com)
.
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