REG - Ibstock PLC - Preliminary Results
06/03/2024 07:00
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RNS Number : 7269F Ibstock PLC 06 March 2024
Preliminary results
6 March 2024
LEI: 2138003QHTNX34CN9V93
Ibstock Plc
Results for the year ended 31 December 2023
Resilient performance in 2023; platform for recovery and growth in place
Ibstock Plc ("Ibstock" or the "Group"), a leading UK manufacturer of a diverse
range of building products and solutions, announces results for the year ended
31 December 2023.
Statutory Results
Year ended 31 December 2023 2022 ∆ 1Y % change
Revenue £406m £513m (£107)m (21)%
Profit before taxation £30m £105m (£75)m (71)%
EPS 5.4p 21.6p (16.2)p (75)%
Adjusted Results(1)
Year ended 31 December 2023 2022 ∆ 1Y % change
Adjusted EBITDA £107m £140m (£33)m (23)%
Adjusted EBITDA margin 26.5% 27.2% (70)bps (3)%
Adjusted EPS 13.9p 22.7p (8.8)p (39)%
Total dividend per share 7.0p 8.8p (1.8)p (20)%
Adjusted free cashflow (£16)m £50m (£66)m >(100)%
Net debt £101m £46m £55m >(100)%
higher
Resilience and financial strength
• Resilient performance against a challenging market backdrop; adjusted
EBITDA(1) of £107 million (2022: £140 million) in line with expectations set
at the start of the year, underlining the quality and resilience of the
business and steps taken to reduce costs
• Revenue down 21% to £406 million (2022: £513 million) as sales volumes
reduced in line with UK domestic brick deliveries(2). Despite this challenging
backdrop, selling prices remained stable through the year
• Adjusted EBITDA(1) margins of 26.5% remained strong (2022: 27.2%) reflecting a
continued focus on customer service and execution, combined with the
disciplined and decisive management of capacity and costs
• Statutory profit before tax of £30 million (2022: £105 million) including an
exceptional charge of £31 million, of which £10 million was a cash cost,
following the restructuring programme undertaken during the year (2022:
exceptional profit of £6 million)
• Robust year-end balance sheet position, with closing net debt of £101 million
(2022: £46 million) representing leverage(1) of 1.1 times (2022: 0.4 times),
in the middle of our target range
• Cash flow for the year included £66 million of capital expenditure and £25
million investment in finished goods inventories providing the platform for
rapid recovery and growth as markets improve
• Recommended final dividend of 3.6p per share (2022: 5.5p), bringing the total
dividend for the year to 7.0p (2022: 8.8p) representing a 50% pay-out on
adjusted earnings per share, consistent with our stated capital allocation
framework
Active management of cost and capacity, while continuing to invest in future
capability
• Comprehensive operational review undertaken during the year to reduce fixed
cost and align capacity to near term demand expectations
• The resulting restructuring programme included a number of actions to
temporarily reduce capacity across the business, as well as the permanent
closure of two clay brick factories
• Headcount reductions and fixed costs savings with an annualised value of £20
million achieved, with around £5 million of this captured in 2023 and the
full amount to be achieved in 2024. One-off cash costs of up to £10 million,
of which around £5 million was paid in 2023; balance to be incurred in 2024
• Good progress on all elements of the Group's capability investment programme,
which is now nearing completion:
• Commissioning of the new Atlas brick factory in the West Midlands commenced on
schedule, with production expected to ramp up over the course of the year
• Organic investments to build a market leading position in brick slips are
progressing to plan. The first slips to be produced on our automated cutting
line at Nostell in West Yorkshire will be delivered during the first half of
2024
Focus on extracting greater value, to accelerate performance as our markets
recover
• Fundamental drivers underpinning demand in our markets remain firmly in place
• The Group is developing opportunities to accelerate its recovery as conditions
normalise over the medium term by extracting higher value:
• From our existing portfolio - Building on the launch of the "One Ibstock"
brand by integrating our Group-wide sales and commercial functions into a
single team to drive improved customer-centricity and cross-selling
• From our factory network - The combined effect of our investment projects and
targeted closures will result in a permanent net capacity increase of up to 5%
within our clay brick manufacturing network compared to 2022, with significant
improvements in efficiency, productivity and environmental performance
• From new product development - Our Nostell investment will provide a step
change in capacity for brick slips, a key pillar in our growing portfolio of
building envelope technologies within Ibstock Futures, targeting high growth
market niches
• From our unrivalled clay reserves - Further progress made towards the
production of calcined clay for use as a low-carbon cementitious replacement,
with further discussions with potential commercial partners expected in 2024
Current trading and outlook
● Activity in the early weeks of 2024 has been in line with the subdued levels
seen in the latter part of the 2023 year; while remaining cautious, we
currently anticipate a degree of improvement as the year progresses
● Significant action on fixed cost will deliver a year-on-year benefit of £15
million in 2024, broadly equivalent to the benefit in 2023 from fixed cost
absorption into finished goods inventories
● With the factory network running at lower levels of utilisation, the Group
will retain a level of elevated fixed cost in 2024, which preserves our
ability to build back quickly as markets recover
● We anticipate year-on-year inflation across the cost base as a whole in 2024
albeit at a more modest rate than 2023. We will continue to monitor and
respond to cost and pricing dynamics through the year
● The continued strength of the balance sheet provides both resilience and
optionality in respect of future growth investments
● Despite the cautious outlook for 2024, the Group remains confident in its
ability to continue to respond to market conditions, and to deliver strong
growth and continued cash generation over the medium term as markets recover
Joe Hudson, Chief Executive Officer, commented:
"We have delivered a resilient performance for the year in what have been very
difficult market conditions, and I am proud of the way that colleagues across
the Group have responded in such challenging circumstances. Our results
reflect both continued strong execution and the difficult but decisive actions
taken to reduce headcount and realign capacity with near term market
conditions. The organisational changes implemented during the second half of
the 2023 year have created a leaner, more customer-focused business, which
will deliver an enduring benefit for years to come.
"In doing so, we have also created a platform to accelerate innovation, with a
particular focus on the sustainability of our products and processes. In
combination with the strength of our brand and unrivalled product portfolio in
the UK construction marketplace, we believe this will unlock significant value
over the years ahead.
"As we focus on doing the right things to respond to market conditions in the
near term, we are moving towards completion of the key investment projects
that will underpin our growth as the market recovers. Our investment in new
low cost, efficient and more sustainable brick capacity at our Atlas facility,
and a significant capacity expansion in the fast-growing brick slips market,
are on track and will support our medium-term growth objectives.
"Activity in the early weeks of 2024 has continued to reflect the more subdued
demand environment experienced throughout the latter part of 2023. As we look
further ahead, it is clear that market fundamentals remain supportive, with
significant unmet demand for new build housing in the UK. The Group's
conviction in its medium-term prospects is underpinned by an expectation of a
return to normalised conditions within its core markets combined with the
incremental returns generated from our significant capital investment
programme. Although the timing of this recovery is uncertain, Ibstock is well
positioned to benefit and to deliver on our growth targets over the medium
term."
Results presentation
Ibstock is holding a presentation at 10.30am today at Peel Hunt, 7th Floor,
100 Liverpool St, London EC2M 2AT.
Please contact ibstock@citigatedewerogerson.com
(mailto:ibstock@citigatedewerogerson.com) to register your in-person
attendance.
A live webcast of the presentation and Q&A is also available. Please
register here
(https://stream.brrmedia.co.uk/broadcast/65c38dec3fb3f51bf67d320e) for the
live webcast.
The presentation can also be heard via a conference call, where there will be
the opportunity to ask questions.
Conference Call Dial-In Details: UK-Wide: +44 (0) 33 0551 0200
UK Toll Free: 0808 109 0700
US +1 786 697 3501
Confirmation code: please quote Ibstock Full Year when prompted by the operator
An archived version of today's webcast analyst presentation will be available
on www.ibstock.co.uk
(https://www.ibstock.co.uk/investors/reports-and-presentations) later today.
Ibstock Plc 01530 261 999
Joe Hudson, CEO
Chris McLeish, CFO
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Jos Bieneman
About Ibstock Plc
Ibstock Plc is a leading UK manufacturer of a diverse range of building
products and solutions. The Group concentrates on eight core product
categories, each backed up by design and technical services capabilities:
- Bricks and Masonry, Façade Systems, Roofing, Flooring and Lintels, Staircase
and Lift Shafts, Fencing and Landscaping, Retaining Walls and Rail and
Infrastructure.
The Group comprises two core business divisions, Ibstock Clay and Ibstock
Concrete. The Ibstock Futures business was established in 2021 to accelerate
growth in new, fast developing segments of the UK construction market and,
while it remains in its initial growth phase, forms part of the Clay Division.
Ibstock Clay: The leading manufacturer by volume of clay bricks sold in the
United Kingdom. With 14 manufacturing sites, Ibstock Clay has the largest
brick production capacity in the UK. It operates a network of 14 active
quarries located close to its manufacturing plants. Ibstock Kevington provides
masonry and prefabricated component building solutions, operating from 4
sites.
Ibstock Concrete: A leading manufacturer of concrete roofing, walling,
flooring and fencing products, along with lintels and rail &
infrastructure products. The Concrete Division operates from 13 manufacturing
sites across the UK.
Ibstock Futures: Complements the core business divisions by accelerating
diversified growth opportunities which address key construction trends,
including sustainability and the shift towards Modern Methods of Construction
(MMC). Operating from an innovation hub in the West Midlands, and the Nostell
redevelopment in West Yorkshire.
Ibstock is headquartered in the village of Ibstock, Leicestershire, with 32
active manufacturing sites across the UK.
As a leading building products manufacturer, the Group is committed to the
highest levels of corporate responsibility. The ESG 2030 Strategy sets out a
clear path to address climate change, improve lives and manufacture materials
for life, with an ambitious target to reduce carbon emissions by 40% by 2030
and become a net zero operation by 2040.
Further information can be found at www.ibstock.co.uk
(http://www.ibstock.co.uk/)
Forward-looking statements
This announcement contains "forward-looking statements". These forward-looking
statements include all matters that are not historical facts and include
statements regarding the intentions, beliefs or current expectations of the
directors. By their nature, forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances that are
difficult to predict and outside of the Group's ability to control.
Forward-looking statements are not guarantees of future performance and the
actual results of the Group's operations. Forward-looking statements speak
only as of the date of such statements and, except as required by applicable
law, the Group undertakes no obligation to update or revise publicly any
forward-looking statements.
Chief Executive's Review
Introduction
The Group delivered a resilient performance for the year, against what has
been a challenging market backdrop. Activity in our core residential markets
was materially below the comparative period, with domestic industry sales
volumes experiencing a slowdown as the 2023 financial year progressed. Despite
these difficult market conditions, adjusted EBITDA(1) for 2023 was in line
with the expectations set at the start of the year, underlining the quality of
the business and steps taken to actively manage costs.
It was particularly pleasing to see the way colleagues across the Group
responded to the challenging market conditions, as the UK new build housing
market adjusted to higher interest rates and increased economic uncertainty.
The result achieved reflects both continued strong commercial execution and
the difficult but necessary action taken during the year to realign costs and
capacity with near term market conditions. Whilst taking this action, we have
been focused on preserving key skills and knowledge to ensure that the Group
retains the ability to build back quickly when markets recover.
As part of the operational review undertaken during the year, we also took
steps to integrate our core commercial and innovation capabilities, meaning we
will now go to market through a single sales force, able to offer customers
our entire range of clay and concrete products from one place. We believe this
will unlock significant value over the years ahead through the quality of our
brand and unrivalled product portfolio in the UK construction marketplace.
As we took appropriate action to respond to difficult market conditions, we
also continued to make good progress with the investment projects that will
underpin our future growth as the market recovers. Our investment in new low
cost, efficient and more sustainable brick manufacturing capacity at our Atlas
facility, and the first phase of a significant capacity expansion in the
fast-growing brick slips market, are both in the commissioning phase, and will
support our medium-term growth objectives as markets recover. We also made
continued progress with our growth project to develop sustainable building
materials from our unrivalled stock of owned clay reserves, successfully
proving the technical feasibility of producing calcined clay for use as a
low-carbon cementitious replacement. We expect to progress commercialisation
discussions with potential partners for this activity during 2024.
The Group remains in a strong financial position, with a robust balance sheet
providing significant resilience and optionality in respect of future growth
investments.
The Board has recommended a final dividend of 3.6p per share (2022: 5.5p),
representing a full year dividend of 7.0p (2022: 8.8p), a pay-out of 50% of
adjusted basic earnings per share, in line with our stated capital allocation
framework.
Financial Performance
Revenue of £406 million was 21% below the prior year (2022: £513 million),
reflecting significantly lower activity levels in our core residential
markets. Sales volumes in our residential product categories reduced in line
with the broader domestic market, which was down by around 30% compared to the
prior year. Having achieved a significant selling price increase during the
second half of the 2022 year, pricing remained stable through the 2023 year.
Adjusted EBITDA(1) was £107 million (2022: £140 million), reflecting the
significant reduction in sales volumes. Performance benefited from the
disciplined management of capacity and costs, as well as around £15 million
of fixed cost absorbed into finished goods inventories, which increased
materially during the year, as the Group replenished stocks from lower levels.
The adjusted EBITDA margin(1) reduced modestly to 26.5%, compared to 27.2% in
2022. Adjusted earnings per share reduced to 13.9 pence (2022: 22.7 pence).
Adjusted Return on Capital Employed(1) (ROCE) reduced to 13.4% (2022: 23.4%)
reflecting both lower levels of operating profit and an increase in invested
capital following investment in growth projects and finished goods inventories
during 2023.
The Group's balance sheet remains strong with closing net debt at £101
million (2022: £46 million) representing leverage of 1.1x adjusted EBITDA(1)
(2022: 0.4x). This robust year-end position was achieved through a resilient
cash flow performance, after around £66 million of fixed capital expenditure
including £45 million of growth expenditure and a £25 million investment in
finished goods inventories as levels were rebuilt to support customer service
and to ensure the business is well placed for market recovery.
Divisional Review
Ibstock Clay
Revenues in the Clay Division reduced by 21% to £292 million (2022: £369
million) driven by a significant reduction in sales volumes, in line with the
trend experienced across the broader UK domestic brick market. Having taken
action to increase prices during the second half of 2022, the Clay Division
achieved a price benefit relative to the comparative period, with selling
prices remaining stable through the 2023 year.
As expected, imported brick volumes reduced at a faster rate than domestic
shipments, being down by 42% at 329 million (2022: 570 million). Domestic
brick market volumes reduced by around 30% over the same period.
Adjusted EBITDA(1) reduced by 22% to £99 million (2022: £127 million),
reflecting a significant reduction in sales volumes, partly mitigated through
a resilient contribution margin performance and decisive action to reduce
fixed costs. Performance benefited from an increase in inventory, with the
absorption of fixed cost as production levels exceeded sales volumes in the
year. The underlying performance of the division also benefited from property
gains totalling around £2 million in the year (2022: £nil).
Ibstock Futures
The Group continued to make good progress with its ongoing development of the
Ibstock Futures business ("Futures") during the year, with both the facades
business based at our new innovation hub in the West Midlands and our organic
investments in brick slip capacity at Nostell, West Yorkshire progressing to
plan. Revenues for Futures, which are reported in the Clay segment, totalled
£12 million (2022: £4 million), with profit performance broadly in line with
our expectations. We continued to invest in research, innovation and business
development, incurring around £5 million of cost in the full year (in line
with 2022).
While near term performance will reflect the more challenging economic and
regulatory backdrop observed across UK construction markets, we continue to
see a strong pipeline of opportunities to grow Futures, both organically and
by acquisition. This represents a significant opportunity for value creation
as we seek to further expand and diversify our product offering over the
medium term to facilitate the growth of Modern Methods of Construction (MMC)
in the UK (particularly targeting the mid to high rise segment as well as
modular house building).
Ibstock Concrete
The breadth of the Concrete Division's end-market exposure supported the
delivery of a strong performance for the year in more difficult trading
conditions, with EBITDA margin percentage maintained despite a significant
reduction in sales volumes.
Revenue reduced by 21% to £114 million (2022: £144 million), reflecting a
material decline in sales volumes within our residential product categories.
Our infrastructure business, which is focused on a number of attractive niche
markets, delivered a strong performance, growing revenues to around £19
million (2022: £17 million) at margins above the residential concrete product
categories.
Adjusted EBITDA(1) for the Concrete Division was £19 million, down 21% year
on year, (2022: £24 million) as a stronger performance within infrastructure
and the benefit of fixed cost absorption maintained adjusted EBITDA margins(1)
at 16.4% (2022: 16.4%).
Ibstock Concrete continued to add to its asset footprint and product offering
during the year. In June the Division completed a small asset acquisition in
its infrastructure business, acquiring the trade and assets of G-Tech, an
innovative designer and supplier of concrete railway platform solutions.
During the final quarter of 2023, the division also completed the bolt-on
acquisition of Coltman Precast, a manufacturer of hollowcore flooring,
staircases and landings, based in the West Midlands. Coltman geographically
complements the Division's existing footprint and will now enable us to offer
a full flooring solution to our customers. Over the medium term, these
acquired businesses are expected to deliver revenues of at least £15 million
per annum.
Operational review
Against the backdrop of subdued market conditions, during the year the Group
completed a comprehensive operational review, with the objective of reducing
our fixed cost base and aligning capacity with near-term demand.
The restructuring programme included the permanent closure of two clay brick
factories, at Ravenhead in the North West and South Holmwood in the South
East. Together, these two factories accounted for just under 10% of the
Group's clay network capacity as at 1 January 2023.
In addition, we have taken a number of temporary steps to reduce capacity. In
doing so, we have retained a core operational team at each factory, to retain
the skills and knowledge at these sites. Although this will cause us to carry
a level of incremental fixed cost in the near-term, crucially, it will
preserve the ability of the business to build back quickly as markets recover.
Overall, the restructuring programme has reduced Group headcount by over 15%
and removed fixed costs with an annualised value of £20 million, with around
£5 million of this captured in 2023 and the full amount to be achieved in
2024. The total exceptional charge arising from this restructuring programme
totalled £31 million. Within this charge, cash costs of the programme
totalled £10 million, of which £5 million was paid in 2023.
The Group also expects to recognise additional costs of around £5 million
over the next 12 months on final closure and decommissioning costs as part of
our restructuring plan for our site closures.
As part of the operational review, we also took steps to integrate our core
commercial and innovation capabilities from across the business into a single,
unified sales team, sharpening our customer proposition and ensuring we go to
market in a more aligned, coordinated way. These changes build on the "One
Ibstock" approach to unify our brand and market-facing communications which
were launched successfully earlier in the year, and mean we will now offer
customers our entire range of clay and concrete products from one place. It is
pleasing to see that these changes are already delivering some initial
commercial benefits through solution selling and a more joined up approach to
commercial pipeline management.
Major projects
The fundamental drivers underpinning medium-term demand in our markets remain
firmly in place. In order to capitalise on these attractive fundamentals, the
Group has completed the majority of a £120 million capital investment
programme which began in 2021, investing in growth projects across both core
and new, diversified markets.
Core clay investments in capacity at Atlas and Aldridge
Commissioning of our new Atlas factory in the West Midlands commenced on
schedule during the final quarter of 2023. Atlas will produce the UK's first
externally verified carbon neutral brick and will increase annual network
capacity by over 100 million bricks to support the Group's long-term growth
objectives. We also completed the investment to upgrade the dryers and
packaging equipment in the adjacent Aldridge factory during the second half of
2023.
Production at both factories will ramp up over the course of the year, with
volumes managed according to prevailing market conditions. The overall
resulting increase in our clay network capacity from these investments (net of
the two permanent closures at Ravenhead and South Holmwood) will be around 5%.
To date, we have invested £66 million in these two related projects, with
around £10 million remaining to be invested during 2024. Once operating at
full capacity, we expect these investments to generate incremental EBITDA of
around £18 million per annum(1).
Diversified growth investments in brick slip capacity at Nostell, Yorkshire
The new automated brick slips cutting line at Nostell, West Yorkshire is now
commissioning, with customer deliveries expected to commence during the first
half of 2024. This line will deliver up to 17 million slips per annum once
operating at full capacity. Customer reaction to this new high-quality source
of domestic supply has been very positive, and this investment represents our
first step towards building a scale leadership position in this fast-growing
product category.
Phase two of the Nostell redevelopment, the construction of a larger brick
slip systems line, is progressing well, and will deliver a further 30 million
slips per annum. We intend to match the remaining build schedule of this
factory to market growth over the next two years.
To date, we have invested around £12 million in these related slips projects,
with around £30 million remaining to be invested over the next two years.
Once both investments are operating at full capacity, we expect these projects
to generate incremental EBITDA of at least £12 million per annum(1).
Strategic update
Our strategy is to enhance our existing business while investing for growth in
both our core and diversified construction markets. Our operational strategy
is centred on three strategic pillars of Sustain, Innovate and Grow, with our
ambitious ESG commitments embedded across all three. At the beginning of 2023,
we established several priorities across the business, based around these
three strategic pillars, and I am pleased to say that we have continued to
make good progress in each area. An update on progress is set out below.
Sustain
As a scale industrial business, sustainable high performance is at the heart
of what we do. We are focused on three priority areas: health, safety and
wellbeing; operational excellence; and environmental performance.
Health, safety and wellbeing
The Group remains committed to driving its business to zero harm for everyone
and we continued to make progress towards our health and safety targets during
the year, achieving a reduction in Lost Time Injury Frequency Rates (LTIFR) of
over 50% from the 2016 baseline.
Key initiatives in year included safety training leadership programmes for
managers and Safe Start 2023 workshops for all employees. 26 of the Group's
factories were recognised for achieving LTIFR free milestones in the year,
with our concrete factory in Bootle, Liverpool achieving over 4,000
incident-free days.
The Group also received several external industry awards in recognition of its
safety progress and sector-leading approach, including the Award of Excellence
from the British Ceramic Council (BCC) for outstanding contribution to Health
& Safety across the industry.
Operational excellence
We have invested significant capital over the last five years to enhance the
reliability and performance of our factory networks, and the Group's
manufacturing estate delivered another robust performance in 2023, driven by a
flexible and disciplined approach to capacity and cost management. Despite a
material reduction in production volumes year-on-year, both the clay and
concrete factory networks delivered a strong performance in reliability,
quality and yield. During the year, we also completed a major kiln rebuild at
the Parkhouse brick factory - another addition to the asset enhancements
undertaken by the Clay Division which deliver energy and cost efficiency.
We continued to make progress on key asset transformation and automation
initiatives, including the commissioning of a growth investment at our walling
stone factory at Anstone, near Sheffield. Once fully operational, this
automated line will drive significant safety benefits, increased product
quality for our customers and an overall capacity uplift of around 30% in this
attractive residential concrete product category.
Environmental performance
We continue to act at all levels of the business to deliver our ambitious
target of a 40% reduction in carbon by 2030. It is pleasing to see a 37%
reduction in our absolute Scope 1 and 2 carbon emissions against our 2019
baseline, and whilst a large proportion of this reduction links to lower
production volumes during 2023, a number of operational efficiency and
dematerialisation projects have contributed to this reduction.
Having established our high level carbon transition plan to 2030, including
the impact of key investment projects and our continued operational
enhancement programme across the factory estate, we remain on track to deliver
our 2030 target.
We were pleased to receive further external recognition for the leadership
role we are playing in ESG, and also to receive funding, from the government's
Industrial Energy Transformation Fund to support a major sustainability
investment at our Laybrook brick factory in West Sussex, which we estimate
will deliver a reduction in carbon emissions of more than 15%.
Innovate
Product Innovation
As market leader in clay and concrete products, we have the broadest range of
building products and solutions available in the UK, and we continue to invest
to enhance our customer offer. To improve the flow of innovative new products
across our business, during the year the Group created a single dedicated
innovation function to serve all the Group's markets, with a mandate covering
new product development, quality and technical standards.
In late 2023, the Group developed the first Environmental Product Declaration
(EPD) for its clay business, providing customers with essential data on the
environmental impact of our product range for the first time. Our masonry
product range offers a competitive sustainability proposition to our
customers, and we will be expanding our EPD footprint further in the years
ahead.
Within the Concrete Division, our infrastructure business continues to lead
the industry for product innovation and carbon reduction. We were honoured to
receive the prestigious Sustainability Supplier award at the global 2023
Siemens Mobility Awards in Munich, for the development of an innovative
sustainable Signal Base solution.
Customer Experience
The Group made significant progress in 2023 on enhancing the customer
experience - making it easier than ever to access the diverse range of
building products and solutions offered by the Group. As well as launching a
new "One Ibstock" brand and website earlier in the year, the recent
restructuring of our sales and commercial teams is bringing a more
co-ordinated and customer-centric approach. We firmly believe that our
powerful brand and unrivalled, unified, product offering will increasingly
provide us with a source of competitive advantage in UK construction markets
over the years ahead.
Digital Transformation
The digitisation of our business is a key strategic enabler as we begin to
drive an increasing proportion of our sales activities through digital
channels. During the 2023 year we successfully piloted our online customer
portal with a small number of our builders' merchant customers and expect to
scale this activity further during the year ahead.
Grow
Grow the core business
Our redeveloped Atlas 'pathfinder' factory will produce the UK's first carbon
neutral brick, and we are excited about making our first customer deliveries
of this innovative new product later this year. We remain committed to levels
of sustaining capital investment which will ensure reliable network
performance, and continue to expect asset reliability and process improvement
initiatives to deliver marginal gains in factory output over the medium term.
Grow through diversification
Ibstock Futures made good operational and strategic progress during the year
as it continued to build its capabilities in new, fast-growth areas of the UK
construction market.
We have made continued progress towards the production of sustainable building
materials from our unrivalled clay reserves, successfully proving the
technical feasibility of using our owned clay reserves to manufacture calcined
clay for use as a cementitious replacement. We expect to progress discussions
with potential partners to commercialise this activity during the year ahead.
During the 2023 year we also completed a pilot project to fire clay bricks
using synthetic gas produced from waste. We are now in commercial negotiations
to commission assets at a Group location.
During the first half of 2023, Futures consolidated its operations into a
single location in the West Midlands. The Power Park facility in Wolverhampton
provides a scalable platform for the growth of Futures in the years ahead, as
we develop the site to become a state-of-the-art innovation hub for Facades
and MMC.
The new automated brick slips cutting line at Nostell, West Yorkshire is now
commissioning with customer deliveries expected to commence during the first
half of the year. This represents a first significant step towards building a
scale leadership position in this fast-growing product category.
Grow our People
Towards the end of 2023, colleagues from across the business shared their
opinions in the bi-annual employee engagement survey. The results of this
survey demonstrated very solid progress, with participation rates increasing
to 76% (2021: 62%) and all engagement measures showing improvement. We are
passionate about establishing culture as a key point of difference across our
organisation, and were delighted to see that the Ibstock Story and the "Fire
Up" recognition programme continue to inspire and unite colleagues across the
business.
As part of our diversity and inclusion initiatives, in September 2023 Ibstock
became a founding member of the Construction Inclusion Coalition (CIC), the
new industry body created to improve equity, diversity and inclusion across
the construction sector. We are taking an active role, with one of our senior
HR leaders being seconded to the coalition to lead efforts to advance
Equality, Diversity and Inclusion (ED&I) across the sector.
Progress towards medium term targets
The Group's conviction in its medium-term prospects is underpinned by an
expectation of a return to normalised conditions within its core markets
combined with the incremental returns generated from our significant capital
investment programme.
Despite the significant reduction in market activity experienced during 2023,
our adjusted EBITDA margin(1) of 26.5% remained strong, and close to our
medium-term ambition of 28%. As conditions normalise in our core residential
markets, we anticipate a recovery in sales volumes and revenues, with
operational leverage delivering an improvement in margins and returns.
Alongside this recovery, we are moving towards completion of the key
investment projects that will underpin incremental growth over the medium
term. Our investment in new low cost, efficient and more sustainable brick
manufacturing capacity at our Atlas facility, and the first phase of a
significant capacity expansion in the fast-growing brick slips market, are on
track and will support our medium-term growth objectives.
Whilst the timing of recovery remains uncertain, given the strength of our
business, and our conviction in the fundamentals of our markets, we remain
confident in achieving our stated medium-term financial targets.
Outlook for 2024
With market conditions in the early weeks of the new financial year similar to
those experienced during the second half of the prior year, we anticipate
residential construction markets to remain subdued in the near term. While
remaining cautious we currently anticipate a degree of improvement as the year
progresses. In line with our well-established forward cover strategy, the
Group has around 70% of its energy needs covered for the 2024 financial year.
The significant action taken to reduce fixed costs, through rationalising
manufacturing capacity and reducing indirect cost, will deliver a year-on-year
benefit of around £15 million in 2024, which is broadly equivalent to the
benefit recognised in the 2023 year from fixed cost absorption.
With the factory network running at lower levels of utilisation, and following
the commissioning of our Atlas factory, the Group will carry a level of
incremental fixed cost in the near-term, although, crucially, this will
preserve our ability to build back quickly as markets recover. We anticipate
year-on-year inflation across the cost base as a whole in 2024, albeit at a
more modest rate than 2023. We will continue to monitor and respond to cost
and pricing dynamics through the year.
Market fundamentals remain supportive, with significant unmet demand for new
build housing in the UK, and we expect a recovery in activity as macroeconomic
conditions improve. While the pace and timing of this remains uncertain, we
will continue to respond to market conditions, taking the action necessary to
protect performance, while ensuring the business remains well-positioned for
an increase in activity. With a robust balance sheet and a clear growth
strategy, and with the fundamental drivers underpinning residential market
demand firmly in place, the Board remains confident in the medium term
prospects for the business.
Chief Financial Officer's report
Introduction
The Group delivered a resilient financial performance in 2023 against a
subdued market backdrop, with both adjusted EBITDA and adjusted earnings per
share in line with expectations set at the start of the year. Both revenue and
profit were significantly below the comparative period, reflecting lower
activity levels in our core residential markets, with the domestic brick
market around 30% below the prior year.
The Group managed the reduction in sales volumes well, through stable pricing
and a disciplined management of capacity and costs. This intense focus on
commercial execution and cost management ensured that adjusted EBITDA(1)
margins remained strong at 26.5% (2022: 27.2%), despite a significant fall in
activity levels.
Group statutory profit before taxation of £30.1 million (2022: £104.8
million), reflected the impact of lower underlying operating profits and an
exceptional charge(1) of £30.8 million (2022: credit of £6.3 million)
arising from the Group's restructuring plan.
The Group maintained a strong balance sheet, with closing net debt(1) of £101
million at 31 December 2023 representing leverage(1) of 1.1 times adjusted
EBITDA(1) (Dec 2022: 0.4 times). This robust year-end position was achieved
through a resilient cash flow performance which included around £66 million
of capital expenditure (including £45 million of growth expenditure) and a
£25 million investment in finished goods inventories as levels were rebuilt
from lower levels. We also acquired Valerie Coltman Precast, a business
engaged in the manufacture of precast and prestressed concrete products, for
cash consideration of £3 million. At 31 December 2023, the Group had £100
million of undrawn committed facilities in place.
With our robust financial position, and inherently cash generative business,
we continue to expect to generate significant cash to support growth and
shareholder returns over the medium term.
Climate Change & TCFD
As a long-term, energy intensive business, a commitment to environmental
sustainability and social progress is central to the company's purpose. In
2022 we launched the Group's ESG 2030 Strategy and remain committed to this
approach. This strategy provides the framework for actions across the three
key areas that the Group needs to focus on:
● Addressing climate change;
● Improving lives; and,
● Manufacturing materials for life.
At the same time, we have considered the impact of both transition and
physical risks of climate change on the financial performance and position of
the Company, through our viability scenario assessment, our impairment testing
and assessment of the useful economic lives of our assets and also our
assessment the resilience of our business model, as part of our strategic
planning process. The outputs from this exercise are detailed in our TCFD
disclosures in the 2023 Annual Report and Accounts.
The Group continues to be committed to increasing the transparency of
reporting around climate impacts, risks, and opportunities. This year we have
enhanced our disclosure to ensure full compliance with the recommendations of
the Task Force for Climate-related Financial Disclosures (TCFD) and those of
Climate-related Financial Disclosure (CFD).
Alternative performance measures
This results statement contains alternative performance measures ("APMs") to
aid comparability and further understanding of the financial performance of
the Group between periods. A description of each APM is included in Note 3 to
the financial statements. The APMs represent measures used by management and
the Board to monitor performance against budget, and certain APMs are used in
the remuneration of management and Executive Directors. It is not believed
that APMs are a substitute for, or superior to, statutory measures.
Group results
The table below sets out segmental revenue and adjusted EBITDA(1) for the year
Clay Concrete Central costs Total
£'m £'m £'m £'m
Year ended 31 December 2023
Total revenue 292.2 113.6 - 405.8
Adjusted EBITDA(1) 98.8 18.6 (10.1) 107.4
Margin 33.8% 16.4% 26.5%
Profit/(loss) before tax 37.9 5.0 (12.9) 30.1
Year ended 31 December 2022
Total revenue 369.2 143.7 - 512.9
Adjusted EBITDA(1) 126.7 23.6 (10.6) 139.7
Margin 34.3% 16.4% 27.2%
Profit/(loss) before tax 104.9 12.5 (12.7) 104.8
(1) Alternative Performance Measures are described in Note 3 to the results
announcement
Due to rounding, numbers presented may not add up precisely to the totals
provided and percentages may not precisely reflect the absolute figures
Revenue
Group revenues for the 2023 year decreased by 21% to £405.8 million (2022:
£512.9 million), reflecting significantly lower activity levels in our core
residential markets. Sales volumes in our residential product categories
reduced in line with the broader domestic market, which was down by around 30%
compared to the prior year, with selling prices remaining stable through the
year.
In our Clay Division, revenues of £292.2 million represented a reduction of
21% on the prior year (2022: £369.2 million). Volumes reduced in line with
the overall domestic brick market. Year-on-year average selling prices
increased, following action to increase prices taken during the second half of
the 2022 year. Our Futures business grew revenues to £12 million (2022: £4
million).
In our Concrete Division, revenue decreased by 21% year-on-year to £113.6
million (2022: £143.7 million), reflecting a material decline in sales
volumes within our residential product categories. Our infrastructure
business, which is focused on a number of attractive niche markets, delivered
a strong performance, growing revenues to around £19 million (2022: £17
million).
Adjusted EBITDA(1)
Management measures the Group's operating performance using adjusted
EBITDA(1). Adjusted EBITDA(1) decreased year on year to £107.4 million in
2023 (2022: £139.7 million) reflecting significantly lower activity levels in
our core residential markets, mitigated by strong commercial execution and the
disciplined management of capacity and cost.
Performance also benefited from the absorption of around £15 million of fixed
cost into finished goods inventories, which increased during the year as the
Group built back finished goods stocks from lower levels. Adjusted EBITDA(1)
margins remained strong at 26.5%, marginally below the prior year (2022:
27.2%) as a strong focus on commercial and operational execution largely
offset the impact of materially lower sales volumes.
Within the Clay Division, adjusted EBITDA(1) totalled £98.8 million (2022:
£126.7 million), representing an adjusted EBITDA(1) margin of 33.8% (2022:
34.3%). The reduction in adjusted EBITDA(1) reflected significantly lower
activity levels in our residential markets offset by resilient contribution
margin performance and disciplined and decisive cost management. The division
also benefited from property gains totalling around £2 million in the year.
In line with our expectations, the division recognised a cost of £5.0 million
(2022: £5.3 million) in Ibstock Futures, as the business continued to invest
in research & development, in-house innovation and commercial capability.
Adjusted EBITDA(1) in our Concrete Division decreased to £18.6 million (2022:
£23.6 million). Whilst the division experienced a significant decline in
demand within its residential product categories, adjusted EBITDA(1) margins
were maintained at 16.4% (2022: 16.4%). This performance was achieved through
significant action on cost and a strong performance from infrastructure, which
achieved margins in excess of the divisional average on volumes broadly in
line with the comparative period. The division also benefited from inventory
build, which led to the absorption of around £2 million of fixed cost during
the 2023 year.
Central costs decreased to £10.1 million (2022: £10.6 million) reflecting
discretionary cost reduction action and lower variable remuneration costs.
Exceptional items(1)
Based on the application of our accounting policy for exceptional items(1),
certain income and expense items have been excluded in arriving at adjusted
EBITDA(1) to aid shareholders' understanding of the Group's underlying
financial performance.
The amounts classified as exceptional(1) in the period totalled a cost of
£30.8 million (2022: £6.3 million gain), comprising:
1. Exceptional cash cost of £10.2 million (of which £4.6 million was cash
settled in the period), associated with the Group's rationalisation and
closure of sites as part of the restructuring plan
2. An exceptional non-cash charge of £20.6 million comprising the impairments
associated with the Group's closure of sites as part of this plan.
The Group expects to recognise additional cash costs of around £5 million
over the next 12 months on final closure and decommissioning costs as part of
our single coordinated plan for our site closures. These costs have not been
accounted for in the 2023 results since the Group was not committed to this
specific expenditure at year-end and so no provision could be recognised.
Further details of exceptional items(1) are set out in Note 5 of the financial
statements.
Finance costs
Net cash interest paid of £5.8 million was slightly above the prior year
(2022: £4.3 million) due to higher levels of average debt. The Group
continued to benefit from its £100 million private placement at a fixed
coupon of 2.19% per annum, and drew down amounts under its variable rate
Revolving Credit Facility (RCF) towards the latter part of the year. For the
2024 year, we expect net cash interest expense to be around £8 million.
Statutory net finance costs of £5.0 million increased in the year (2022:
£2.7 million) principally reflecting reduced interest income from the Group's
main defined benefit pension scheme and increased interest expense following
utilisation of the Group's RCF.
Profit before taxation
Depreciation and amortisation pre fair value uplift increased to £29 million
(2022: £26 million) due to charges related to new haulage assets and the
Futures innovation hub in the West Midlands. We expect depreciation and
amortisation pre fair value uplift to total around £34 million in 2024,
reflecting incremental depreciation from the Atlas and Nostell factories and a
full year of the Futures innovation hub lease cost.
Group statutory profit before taxation of £30.1 million (2022: £104.8
million), reflected the impact of lower underlying operating profits and an
exceptional charge(1) of £30.8 million (2022: credit of £6.3 million)
arising from the Group's restructuring plan.
Taxation
The Group recognised a taxation charge of £9.0 million (2022: £17.9 million)
on Group pre-tax profits of £30.1 million (2022: £104.8 million), resulting
in an effective tax rate ("ETR") of 30.0% (2022: 17.1%) compared with the
average standard rate of UK corporation tax of 23.5%. The lower statutory tax
charge arose from the significant reduction in taxable profits. The ETR
increased as a result of the increase in standard rate of UK corporation tax,
which impacted both current and deferred taxation as well as a reduction in
the permanent benefit arising from the UK tax super deduction.
The adjusted ETR(1) (excluding the impact of the deferred tax rate change and
exceptional items) for the 2023 year was 24.6% (2022: 16.5%). The increase in
adjusted ETR from the prior year was due to the increase in the standard rate
of UK corporation tax and a reduction in permanent benefit arising from the
super deduction which, until March 2023, provided statutory tax relief on 130%
of qualifying capital expenditure. For the 2024 year, we expect the adjusted
ETR to increase to around 26%, reflecting a full year of corporation tax at
25% and normal levels of non-deductible expenses.
Earnings per share
Group statutory basic earnings per share (EPS) decreased to 5.4 pence in the
year to 31 December 2023 (2022: 21.6 pence) as a result of the Group's
reduced profit after taxation, reflecting the reduced trading result and
exceptional costs arising from our 2023 restructuring plan.
Group adjusted basic EPS(1) of 13.9 pence per share reduced from 22.7 pence in
the prior year, reflecting: a decrease in adjusted EBITDA(1); an increase in
the underlying depreciation charge from recent capital investment projects and
leases; and a higher adjusted ETR following an increase in the headline UK
corporation tax rate. In line with prior years, our adjusted EPS(1) metric
removes the impact of exceptional items(1), the fair value uplifts resulting
from our acquisition accounting and non-cash interest impacts, net of the
related taxation charges/credits. Adjusted EPS(1) has been included to provide
a clearer guide as to the underlying earnings performance of the Group. A full
reconciliation of our adjusted EPS(1) measure is included in Note 7.
Table 1: Earnings per share
2023 2022
pence pence
Statutory basic EPS 5.4 21.6
Adjusted basic EPS(1) 13.9 22.7
Cash flow and net debt(1)
Adjusted operating cash flow decreased by £58 million to £50.0 million
(2022: 108.0 million), reflecting a reduction in adjusted EBITDA(1) from
significantly lower activity levels in our core residential markets. The Group
also increased working capital levels by £37.0 million (2022: £1.8 million
increase) as finished goods inventories were built back from lower levels.
Net interest paid in 2023 increased to £5.8 million (2022: £4.3 million)
reflecting an increased interest cost as the Group drew down on its bank
facilities during the latter part of the year. Cash tax amounted to a small
inflow of £0.6 million (2022: payment of £11.7 million), as taxable profit
decreased from the prior year and the Group continued to benefit from the
accelerated tax deduction on qualifying capital expenditure. Other cash
outflows of £14.9 million (2022: £12.1 million outflow) included £1.8
million in respect of carbon emission credits purchased during the year (2022:
£5.6 million), Coltman consideration of £2.7 million and lease payments
totalling £10.0 million (2022: £8.0 million).
The Cash conversion(1) percentage decreased to 47% (2022: 77%), reflecting a
material reduction in adjusted EBITDA(1) and the investment in working capital
as finished goods inventories increased during the year.
Adjusted free cash flow(1) decreased significantly to an outflow of £15.6
million (2022: inflow of £49.7 million). Capital expenditure of £65.7
million increased by £7.3 million on 2022 (£58.4 million), reflecting the
Group's continued investment in its organic growth projects to support our
medium-term growth objectives. The 2023 capital expenditure figure comprised
around £21 million of sustaining expenditure, £29 million on the Atlas and
Aldridge redevelopments, £11 million on the slips project at Nostell (as we
managed the pace of capital deployment on the larger slips systems factory)
and around £5 million on other growth projects. In the 2024 year, sustaining
expenditure is expected to remain at around £20 million, with growth
investments in Atlas, Aldridge and Futures expected to total £25 million to
£30 million.
Table 2: Cash flow (non-statutory)
2023 2022 Change
£'m £'m £'m
Adjusted EBITDA(1) 107.4 139.7 (32.3)
Adjusted change in working capital(1) (37.0) (1.8) (35.2)
Net interest (5.8) (4.3) (1.5)
Tax 0.6 (11.7) 12.3
Post-employment benefits (0.3) (1.8) 1.5
Other(2) (14.9) (12.1) (2.7)
Adjusted operating cash flow(1) 50.0 108.0 (58.0)
Cash conversion(1) 47% 77% -30ppts
Total capex (65.7) (58.4) (7.3)
Adjusted free cash flow(1) (15.6) 49.7 (65.3)
(1) Alternative Performance Measures are described in Note 3 to the
consolidated financial statements.
(2) Other includes operating lease payments and emission allowance purchases
in all years, and Coltman consideration in 2023
The table above excludes cash flows relating to exceptional items(1) in both
years. During 2023, the Group incurred £4.6 million of exceptional cash costs
relating to the Group's rationalisation and closure of sites (2022: £7.8
million inflow).
Net debt(1) (borrowings less cash) at 31 December 2023 totalled £100.6
million (31 December 2022: £45.9 million; 30 June 2023: £89.1 million). The
movement during the 2023 year reflected the investment of £37.0 million in
working capital and £65.7 million of capital expenditure.
At 31 December 2023, the Group had drawn £25 million under its Revolving
Credit Facility (RCF), and had £100 million of undrawn committed facilities
in place.
The present value of lease liabilities increased to around £44 million (2023:
£33 million) due principally to the long-term property lease entered into
during the year for the Futures innovation hub in the West Midlands.
Return on capital employed(1)
Return on capital employed(1) (ROCE) in 2023 reduced to 13.4% (2022: 23.4%).
The reduction reflected both a decrease in adjusted operating profit and an
increase in the capital base, as the Group invested in both working capital
and growth investments to support our medium-term growth objectives.
Capital allocation
The Group's capital allocation framework remains consistent with that laid out
in 2020, with the Group focused on allocating capital in a disciplined and
dynamic way.
Our capital allocation framework is set out below:
● Firstly, we will prioritise investment to maintain and enhance our existing
asset base and operations;
● We are focused on a progressive ordinary dividend, with targeted cover of
approximately 2 times underlying earnings through the cycle;
● Thereafter, we will deploy capital for growth, both inorganically and
organically, in accordance with our strategic and financial investment
criteria;
● And, finally, we will return surplus capital to shareholders.
Our framework remains underpinned by our commitment to maintaining a strong
balance sheet, and we will look to maintain leverage at between 0.5 and 1.5
times net debt(1) to adjusted EBITDA(1) excluding the impact of IFRS 16,
through the cycle.
Dividend
The Board has recommended a final dividend of 3.6p per share (2022: 5.5p), for
payment on 31 May 2024 to shareholders on the register on 10 May 2024. This
will bring the full year dividend to 7.0p (2022: 8.8p), a pay-out of 50% of
adjusted basic earnings per share, consistent with our stated capital
allocation framework.
Pensions
At 31 December 2023, the defined benefit pension scheme ("the scheme") was in
an actuarial accounting surplus position of £9.8 million (31 December 2022:
surplus of £15.2 million). Applying the valuation principles set out in
IAS19, at the year end the scheme had asset levels of £373.7 million (31
December 2022: £373.6 million) against scheme liabilities of £363.9 million
(31 December 2022: £358.4 million).
On 20 December 2022, the Scheme completed a full buy-in transaction with a
specialist third-party provider, which represented a significant step in the
Group's continuing strategy of de-risking its pensions exposure. Together with
the partial buy-in transaction in 2020, this insures the vast majority of the
Group's defined benefit liabilities. This transaction, which involved no
initial cash payment by the Company, completed during the 2023 financial year.
In light of the fact that the pension scheme was in a net surplus position
after the full buy-in, the Trustees and the Group agreed that the Group would
suspend paying contributions with effect from 1 March 2023.
Related party transactions
Related party transactions are disclosed in Note 16 to the consolidated
financial statements. During the current and prior year, there have been no
material related party transactions.
Subsequent events
Except for the proposed ordinary dividend, no further subsequent events
requiring either disclosure or adjustment to these financial statements have
arisen since the balance sheet date.
Going concern
The Directors are required to assess whether it is reasonable to adopt the
going concern basis in preparing the financial statements.
In arriving at their conclusion, the Directors have given due consideration to
whether the funding and liquidity resources are sufficient to accommodate the
principal risks and uncertainties faced by the Group.
Having considered the outputs from this work, the Directors have concluded
that it is reasonable to adopt a going concern basis in preparing the
financial statements. This is based on an expectation that the Company and the
Group will have adequate resources to continue in operational existence for at
least twelve months from the date of signing these accounts.
Further information is provided in note 2 of the financial statements.
Statement of directors' responsibilities in relation to the financial
statements
The 2023 Annual Report and Accounts which will be issued in March 2024,
contains a responsibility statement in compliance with DTR 4.1.12 of the
Listing Rules which sets out that as at the date of approval of the Annual
Report on 5 March 2024, the Directors confirm to the best of their knowledge:
- the Group and unconsolidated Company financial statements, prepared in
accordance with the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit or loss of
the Group and Company, and the undertakings included in the consolidation
taken as a whole; and
- the performance review contained in the Annual Report and Accounts includes
a fair review of the development and performance of the business and the
position of the Group and the undertakings including the consolidation taken
as a whole, together with a description of the principal risks and
uncertainties they face.
This responsibility statement was approved by the Board of Directors on 5
March 2024 and is signed on its behalf by:
Joe Hudson Chris McLeish
Chief Executive Officer Chief Financial Officer
5 March 2024 5 March 2024
CONSOLIDATED INCOME STATEMENT
Notes Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Revenue 4 405,839 512,886
Cost of sales (290,883) (316,521)
Gross profit 114,956 196,365
Distribution costs (36,797) (47,961)
Administrative expenses (47,623) (49,624)
Profit on disposal of property, plant and equipment 1,957 6,541
Other income 3,312 2,630
Other expenses (774) (524)
Operating profit 35,031 107,427
Finance costs (5,932) (4,553)
Finance income 968 1,890
Net finance cost (4,964) (2,663)
Profit before taxation 30,067 104,764
Taxation 6 (9,007) (17,884)
Profit for the financial year 21,060 86,880
Profit attributable to:
Owners of the parent 21,060 86,908
Non-controlling interest - (28)
Notes pence per share pence per share
Earnings per share
Basic - continuing operations 7 5.4 21.6
Diluted - continuing operations 7 5.3 21.5
Non-GAAP measure
Reconciliation of adjusted EBITDA to Operating profit for the financial year
for continuing operations
Notes Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Operating profit 35,031 107,427
Add back/(less) exceptional items impacting operating profit 5 30,762 (6,278)
Add back depreciation and amortisation 4 41,564 38,518
Adjusted EBITDA 107,357 139,667
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Profit for the financial year 21,060 86,880
Other comprehensive income/(expenses):
Items that may be reclassified to profit or loss
Change in fair value of cash flow hedges(1) (591) 641
Related tax movements(1) 148 (149)
(443) 492
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of post employment benefit assets and obligations(1) 13 (5,283) (44,581)
Related tax movements(1) 1,320 11,147
(3,963) (33,434)
Other comprehensive expense for the year net of tax (4,406) (32,942)
Total comprehensive income for the year, net of tax 16,654 53,938
Total comprehensive income attributable to:
Owners of the company 16,654 53,966
Non-controlling interest - (28)
(1) Impacting retained earnings
CONSOLIDATED BALANCE SHEET
Notes 31 December 31 December
2023
2022
£'000 £'000
Assets
Non-current assets
Intangible assets 82,017 90,242
Property, plant and equipment 440,400 409,091
Right-of-use assets 39,831 31,478
Derivative financial instruments - 116
Post-employment benefit asset 13 9,832 15,194
572,080 546,121
Current assets
Inventories 119,189 94,275
Current tax recoverable 1,171 1,717
Derivative financial instruments - 451
Trade and other receivables 37,919 65,935
Cash and cash equivalents 23,872 54,283
182,151 216,661
Total assets 754,231 762,782
Current liabilities
Trade and other payables (80,526) (120,003)
Derivative financial instrument (24) -
Borrowings 8 (25,496) (436)
Lease liabilities (9,292) (7,690)
Provisions 9 (6,002) (1,613)
(121,340) (129,742)
Net current assets 60,811 86,919
Total assets less current liabilities 632,891 633,040
Non-current liabilities
Borrowings 8 (98,992) (99,769)
Lease liabilities (34,541) (25,414)
Deferred tax liabilities (89,929) (84,349)
Provisions 9 (9,562) (7,299)
(233,024) (216,831)
Total liabilities (354,364) (346,573)
Net assets 399,867 416,209
Equity
Share capital 4,096 4,096
Share premium 4,458 4,458
Retained earnings 790,971 807,894
Other reserves 15 (399,658) (400,290)
Equity attributable to owners of the company 399,867 416,158
Non-controlling interest - 51
Total equity 399,867 416,209
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Retained earnings Other reserves Total equity attributable to owners Non-controlling interest Total equity
(see Note 15)
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 4,096 4,458 807,894 (400,290) 416,158 51 416,209
Profit for the year - - 21,060 - 21,060 - 21,060
Other comprehensive expense - - (3,963) (443) (4,406) - (4,406)
Total comprehensive income/(expense) for the year - - 17,097 (443) 16,654 - 16,654
Transactions with owners:
Share based payments - - 2,308 - 2,308 - 2,308
Deferred tax on share based payments - - (147) - (147) - (147)
Equity dividends paid - - (34,907) - (34,907) - (34,907)
Issue of share capital on exercise of share options - - (1,075) 1,075 - - -
Acquisition of subsidiary non-controlling interest - - (199) - (199) (51) (250)
At 31 December 2023 4,096 4,458 790,971 (399,658) 399,867 - 399,867
Share capital Share premium Retained earnings Other reserves Total equity attributable to owners Non-controlling interest Total equity
(see Note 15)
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2022 4,096 4,458 785,609 (370,934) 423,229 - 423,229
Loss for the year - - 86,908 - 86,908 (28) 86,880
Other comprehensive (expense)/income - - (33,434) 492 (32,942) - (32,942)
Total comprehensive income/(expense) for the year - - 53,474 492 53,966 (28) 53,938
Transactions with owners:
Share based payments - - 2,547 - 2,547 - 2,547
Current tax on share based payment - - 1 - 1 - 1
Deferred tax on share based payment - - 116 - 116 - 116
Equity dividends paid - - (33,701) - (33,701) - (33,701)
Purchase of own shares - - - (30,000) (30,000) - (30,000)
Issue of own shares held on exercise of share options - - (152) 152 - - -
Acquisition of subsidiary with non-controlling interest - - - - - 79 79
At 31 December 2022 4,096 4,458 807,894 (400,290) 416,158 51 416,209
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Cash flow from operating activities
Cash generated from operations 11 63,656 137,765
Interest paid (3,667) (2,888)
Other interest paid - lease liabilities (2,368) (1,274)
Tax received/(paid) 630 (11,699)
Net cash inflow from operating activities 58,251 121,904
Cash flows from investing activities
Purchase of property, plant and equipment (65,653) (58,354)
Proceeds from sale of property plant and equipment 2,070 7,883
Purchase of intangible assets (2,423) (5,573)
Settlement of deferred consideration (112) -
Payment for acquisition of subsidiary undertaking, net of cash acquired 14 (2,642) (959)
Interest received 257 124
Net cash outflow from investing activities (68,503) (56,879)
Cash flows from financing activities
Dividends paid (34,907) (33,701)
Drawdown of borrowings 30,000 -
Repayment of borrowings (5,000) -
Debt issue costs - (259)
Repayment of lease liabilities (9,986) (8,010)
Cash outflow from purchase of shares 15 - (30,000)
Acquisition of non-controlling interests (250) -
Net cash outflow from financing activities (20,143) (71,970)
Net decrease in cash and cash equivalents (30,395) (6,945)
Cash and cash equivalents at beginning of the year 54,283 61,199
Exchange (loss)/gain on cash and cash equivalents (16) 29
Cash and cash equivalents at end of the year 23,872 54,283
Reconciliation of changes in cash and cash equivalents to movement in net debt
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Net decrease in cash and cash equivalents (30,395) (6,945)
Proceeds from borrowings (30,000) -
Repayment of borrowings 5,000 -
Non-cash debt movement 717 (134)
Effect of foreign exchange rate changes (16) 29
Movement in net debt (54,694) (7,050)
Net debt at start of year (45,922) (38,872)
Net debt at end of year (Note 3) (100,616) (45,922)
Comprising:
Cash and cash equivalents 23,872 54,283
Short-term borrowings (Note 8) (25,496) (436)
Long-term borrowings (Note 8) (98,992) (99,769)
(100,616) (45,922)
1. AUTHORISATION OF FINANCIAL STATEMENTS
The consolidated financial statements of Ibstock Plc, which has a premium
listing on the London Stock Exchange, for the year ended 31 December 2023 were
authorised for issue in accordance with a resolution of the Directors on 05
March 2024. The balance sheet was signed on behalf of the Board by J Hudson
and C McLeish. Ibstock Plc is a public company limited by shares, which is
incorporated and registered in England. The registered office is Leicester
Road, Ibstock, Leicestershire, LE67 6HS and the company registration number is
09760850.
2. BASIS OF PREPARATION
The consolidated financial statements of Ibstock Plc for the year ended 31
December 2023 have been prepared in accordance with International Accounting
Standards (IAS) and International Financial Reporting Standards (IFRS) and
related interpretations as issued by the IASB and IFRS as adopted by the UK.
They are prepared on the basis of all IFRS accounting standards and
interpretations that are mandatory as at the period ended 31 December 2023 and
in accordance with the Companies Act 2006. The comparative financial
information has also been prepared on this basis.
The financial information set out does not constitute the Company's statutory
accounts for the year ended 31 December 2023 but is derived from those
accounts. Statutory accounts for 2023 will be delivered to the registrar of
companies in due course. The auditors have reported on those accounts; their
reports were (i) unqualified, (ii) did not include a reference to any matters
to which the auditors drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under Section 498 (2) or
(3) of the Companies Act 2006 in respect of the accounts for 2023. The
consolidated financial statements are presented in Pounds Sterling and all
values are rounded to the nearest thousand (£'000) except where otherwise
indicated. The significant accounting policies are set out below.
Basis of consolidation
The consolidated financial statements of Ibstock Plc for the year ended 31
December 2023 have been prepared in accordance with UK adopted International
Accounting Standards (IAS). The financial statements of subsidiaries are
prepared for the same reporting period as the Parent Company, using consistent
accounting policies except Valerie Coltman Holdings Limited and Coltman
Precast Concrete Limited, for which the financial statements are prepared as
at 31 March 2024. All intra-Group balances, transactions, income and expenses
and profit and losses resulting from intra-Group transactions have been
eliminated in full.
Subsidiaries are consolidated from the date on which the Group obtains control
and cease to be consolidated from the date on which the Group no longer
retains control. The Group controls an entity when the Group is exposed to, or
has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity.
Going concern
Despite the macroeconomic downturn, there are initial positive external market
indicators, with inflation continuing to fall and mortgage rates stabilising,
which are expected to increase consumer confidence looking forward. Management
does not believe that the going concern basis of preparation represents a
significant judgement.
The Group's financial planning and forecasting process consists of a budget
for the current year followed by a medium-term projection, and the Group also
re-forecasts current year performance on a quarterly basis. The going concern
assessment period extends to June 2025. The Directors have reviewed and
robustly challenged the assumptions about future trading performance,
operational and capital expenditure and debt requirements within these
forecasts including the Group's liquidity and covenant forecasts, and stress
tested within their going concern assessment.
In arriving at their conclusion on going concern, the Directors have given due
consideration to whether the funding and liquidity resources above are
sufficient to accommodate the principal risks and uncertainties faced by the
Group, particularly those relating to economic conditions, operational
disruption and the effect of climate change.
Group forecasts have been prepared which reflect both actual conditions and
estimates of the future reflecting macroeconomic and industry-wide
projections, as well as matters specific to the Group.
The Group has financing arrangements, comprising £100 million of private
placement notes with maturities of between 7 and 12 years and a £125 million
RCF for an initial four-year tenor, with an enacted one year extension option,
both of which were arranged in 2021. At 31 December 2023 the Group had drawn
£25 million under the RCF.
Covenants under the Group's RCF and private placement notes require leverage
of no more than 3 times net debt to adjusted EBITDA(1), and interest cover of
no less than 4 times, tested bi-annually at each reporting date with reference
to the previous 12 months. At 31 December 2023 covenant requirements were met
with significant headroom.
The key uncertainty faced by the Group is the industry demand for its products
in light of macroeconomic factors. Accordingly, the Group has modelled
financial scenarios that see reduction in the demand for its products, thereby
stress testing the Group's resilience. For each scenario, cash flow and
covenant compliance forecasts have been prepared. In the most severe but
plausible scenario industry demand for Clay and Concrete products are
projected to be around 40% lower than 2022 in the 2024 year, recovering to
around 28% lower than 2022 in 2025.
In the severe but plausible low case, the Group has sufficient liquidity and
headroom against its covenants, with covenant headroom expressed as a
percentage of annual adjusted EBITDA being in excess of 30%.
In addition, the Group has prepared a reverse stress test to evaluate the
industry demand reduction at which it would be likely to breach the debt
covenants, before any further mitigating actions were taken. This test
indicates that, at a reduction of 48% in sales volumes versus 2022 levels, in
both 2024 and the first half of 2025, the Group would be at risk of breaching
its covenants.
The Directors consider this to be a highly unlikely scenario, and in the event
of an anticipated covenant breach, the Group would seek to take further steps
to mitigate, including the disposal of valuable land and building assets and
additional restructuring steps to reduce the fixed cost base of the Group.
Having taken account of the various scenarios modelled, and in light of the
mitigations available to the Group, the Directors are satisfied that the Group
has sufficient resources to continue in operation for a period of not less
than 12 months from the date of this report. Accordingly, the consolidated
financial information has been prepared on a going concern basis.
3. ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures ("APMs") are used within the management
report where management believes it is necessary to do so in order to provide
further understanding of the financial performance of the Group. Management
uses APMs in its own assessment of the Group's performance and in order to
plan the allocation of internal capital and resources. Certain APMs are also
used in the remuneration of management and Executive Directors.
APMs serve as supplementary information for users of the financial statements
and it is not intended that they are a substitute for, or superior to,
statutory measures. None of the APMs are outlined within IFRS and they may not
be comparable with similarly titled APMs used by other companies.
Exceptional items
The Group presents as exceptional at the foot of the Group's Condensed
consolidated income statement those items of income and expense which, because
of their materiality, nature and/or expected infrequency of the events giving
rise to them, merit separate presentation to allow users of the financial
statements to understand further elements of financial performance in the
year. This facilitates comparison with future periods and the assessment of
trends in financial performance over time.
Details of all exceptional items are disclosed in Note 5.
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is the earnings before interest, taxation, depreciation and
amortisation adjusted for exceptional items. Adjusted EBITDA margin is
Adjusted EBITDA shown as a proportion of revenue.
The Directors regularly use Adjusted EBITDA and Adjusted EBITDA margin as key
performance measures in assessing the Group's profitability. The measures are
considered useful to users of the financial statements as they represent
common APMs used by investors in assessing a company's operating performance,
when comparing its performance across periods as well as being used in the
determination of Directors' variable remuneration.
A full reconciliation of Adjusted EBITDA is included at the foot of the
Group's Condensed consolidated income statement within the consolidated
financial statements. Adjusted EBITDA margin is included within Note 4.
Adjusted EPS
Adjusted EPS is the basic earnings per share adjusted for exceptional items,
fair value adjustments being the amortisation and depreciation on fair value
uplifted assets and non-cash interest, net of associated taxation on the
adjusting items.
The Directors have presented Adjusted EPS as they believe the APM represents
useful information to the user of the financial statements in assessing the
performance of the Group, when comparing its performance across periods, as
well as being used in the determination of Directors' variable remuneration.
Additionally, the APM is considered by the Board when determining the proposed
level of ordinary dividend. A full reconciliation is provided in Note 7.
Net debt and Net debt to adjusted EBITDA ("leverage") ratio
Net debt is defined as the sum of cash and cash equivalents less total
borrowings at the balance sheet date. This does not include lease liabilities
arising upon application of IFRS 16.
The Net debt to adjusted EBITDA ratio definition removes the operating lease
expense benefit generated from IFRS16 compared to IAS 17 within adjusted
EBITDA.
The Directors disclose these APMs to provide information as a useful measure
for assessing the Group's overall level of financial indebtedness and when
comparing its performance and position across periods.
A full reconciliation of the net debt to adjusted EBITDA ratio (also referred
to as 'leverage') is set out below:
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Net debt (100,616) (45,922)
Adjusted EBITDA 107,357 139,667
Impact of IFRS 16 (12,134) (8,491)
Adjusted EBITDA prior to IFRS 16 95,223 131,176
Ratio of net debt to adjusted EBITDA 1.1x 0.4x
Adjusted Return on Capital Employed (Adjusted ROCE)
Adjusted Return on Capital Employed ("Adjusted ROCE") is defined as Adjusted
earnings before interest and taxation as a proportion of the average capital
employed (defined as net debt plus equity excluding the pension surplus). The
average is calculated using the period end balance and corresponding preceding
reported period end balance (year end or interim).
The Directors disclose the Adjusted ROCE APM in order to provide users of the
financial statements with an indication of the relative efficiency of capital
use by the Group over the period, assessing performance between periods as
well as being used within the determination of executives' variable
remuneration.
The calculation of Adjusted ROCE is set out below:
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Adjusted EBITDA 107,357 139,667
Less depreciation (34,626) (31,579)
Less amortisation (6,938) (6,939)
Adjusted earnings before interest and taxation 65,793 101,149
Average net debt 94,863 40,791
Average equity 407,061 426,501
Average pension (10,160) (35,707)
Average capital employed 491,764 431,585
Adjusted ROCE 13.4% 23.4%
Average capital employed figures are derived using the following closing
balance sheet values:
31 December 30 June 2023 31 December 30 June 2022
2023
2022
£'000 £'000 £'000 £'000
Net debt 100,616 89,110 45,922 35,660
Equity 399,867 414,254 416,209 436,792
Less: Pension surplus (9,832) (10,488) (15,194) (56,219)
Capital employed 490,651 492,876 446,937 416,233
Adjusted effective tax rate
The Group presents an adjusted effective tax rate (Adjusted ETR) within its
Financial Review. This is disclosed in order to provide users of the financial
statements with a view of the rate of taxation borne by the Group adjusted for
exceptional items, fair value adjustments (being the amortisation and
depreciation on fair value uplifted assets), non-cash interest and changes in
taxation rates on deferred taxation.
A reconciliation of the adjusted ETR to the statutory UK rate of taxation is
included in Note 6.
Cash flow related APMs
The Group presents an adjusted cash flow statement within its Financial
Review. This is disclosed in order to provide users of the financial
statements with a view of the Group's operating cash generation before the
impact of cash flows associated with exceptional items (as set out in Note 5)
and with the inclusion of interest, lease payment and non-exceptional property
disposal related cash flows.
The Directors use this APM table to allow shareholders to further understand
the Group's cash flow performance in the period, to facilitate comparison with
future years and to assess trends in financial performance. This table
contains a number of APMs, as described below and reconciled in the following
table.
Adjusted change in working capital
Adjusted change in working capital represents the statutory change in working
capital less cash flows associated with exceptional items arising in the year
of £5.4 million (2022: adding back cash flows of £0.3 million).
Adjusted operating cash flow
Adjusted operating cash flows are the cash flows arising from operating
activities adjusted to add back cash flows relating to exceptional items of
£4.6 million (2022: less cash flows of £7.3 million) and the inclusion of
cash flows associated with interest income, proceeds from the sale of
property, plant and equipment, purchase of intangibles and lease payments
reclassified from investing or financing activities of £12.8 million (2022:
£6.8 million).
Cash conversion
Cash conversion is the ratio of Adjusted operating cash flow (defined above)
to Adjusted EBITDA (defined above). The Directors believe this APM provides a
useful measure of the Group's efficiency of its cash management during the
period.
Adjusted free cash flow
Adjusted free cash flow represents Adjusted operating cash flow (defined
above) less total capital expenditure. The Directors use the measure of
Adjusted free cash flow as a measure of the funds available to the Group for
the payment of distributions to shareholders, for use within M&A activity
and other investing and financing activities.
Year ended 31 December 2023 Statutory Exceptional Reclassification Adjusted
£'000 £'000 £'000 £'000
Adjusted EBITDA 76,595 30,762 - 107,357
Change in working capital (31,636) (5,355) - (36,991)
Impairment charges 20,599 (20,599) - -
Net interest (6,035) - 257 (5,778)
Tax 630 - - 630
Post-employment benefits 790 - (1,081) (291)
Other (2,692) (177) (12,012) (14,881)
Adjusted operating cash flow 58,251 4,631 (12,836) 50,046
Cash conversion 47%
Total capex (65,653) - - (65,653)
Adjusted free cash flow (7,402) 4,631 (12,836) (15,607)
Year ended 31 December 2022 Statutory Exceptional Reclassification Adjusted
£'000 £'000 £'000 £'000
Adjusted EBITDA 146,115 (6,448) - 139,667
Change in working capital (2,035) 267 - (1,768)
Impairment charges 382 (382) - -
Net interest (4,162) - (135) (4,297)
Tax (11,699) - - (11,699)
Post-employment benefits (973) - (777) (1,750)
Other (5,554) (705) (5,882) (12,141)
Adjusted operating cash flow 122,074 (7,268) (6,794) 108,012
Cash conversion 77%
Total capex (58,354) - - (58,354)
Adjusted free cash flow 63,720 (7,268) (6,794) 49,658
4. SEGMENT REPORTING
The Directors consider the Group's reportable segments to be the Clay and
Concrete Divisions.
The key Group performance measure is adjusted EBITDA, as detailed below, which
is defined in Note 3. The tables, below, present revenue and adjusted EBITDA
and profit before taxation for the Group's operating segments.
Included within the unallocated and elimination columns in the tables below
are costs including share based payments and Group employment costs.
Unallocated assets and liabilities are pensions, taxation and certain
centrally held provisions. Eliminations represent the removal of inter-company
balances. Transactions between segments are carried out at arm's length. There
is no material inter-segmental revenue and no aggregation of segments has been
applied.
For all the periods presented, the activities of Ibstock Futures were managed
and reported as part of the Clay Division. Consequently, the position and
performance of Ibstock Futures for all periods have been classified within the
Clay reportable segment.
Year ended 31 December 2023
Clay Concrete Unallocated & elimination Total
£'000 £'000 £'000 £'000
Total revenue 292,220 113,619 - 405,839
Adjusted EBITDA 98,847 18,623 (10,113) 107,357
Adjusted EBITDA margin 33.8% 16.4% 26.5%
Exceptional items impacting operating profit (see Note 5) (28,170) (2,404) (188) (30,762)
Depreciation and amortisation pre fair value uplift (23,406) (5,733) (175) (29,314)
Incremental depreciation and amortisation following fair value uplift (7,374) (4,876) - (12,250)
Net finance costs (2,015) (569) (2,380) (4,964)
Profit/(loss) before tax 37,882 5,041 (12,856) 30,067
Taxation (9,007)
Profit for the year 21,060
Consolidated total assets 610,867 133,502 9,862 754,231
Consolidated total liabilities (174,062) (46,127) (134,175) (354,364)
Non-current assets
Consolidated total intangible assets 56,178 25,839 - 82,017
Property, plant and equipment 389,165 51,235 - 440,400
Right-of-use assets 29,915 9,310 606 39,831
Total 475,258 86,384 606 562,248
Total non-current asset additions 62,837 6,654 - 69,491
Included within revenue for the year ended 31 December 2023 were £1.1 million
of bill and hold transactions in the Clay Division. At 31 December 2023, £1.1
million of inventory relating to these bill and hold transactions remained on
the Clay Division's premises. Additionally, £0.1 million of inventory related
to bill and hold sales in previous years remained on the Concrete Division's
premises. The unallocated segment balance includes the fair value of the
Group's share-based payments and associated taxes (£2.5 million), plc Board
and other plc employment costs (£5.4 million), pension costs (£1.1 million)
and legal/administrative expenses (£3.5 million). These costs have been
offset by research and development taxation credits (£2.4 million). During
the current period, one customer accounted for greater than 10% of Group
revenues with £70.6 million of sales across the Clay and Concrete Divisions.
Year ended 31 December 2022
Clay Concrete Unallocated & elimination Total
£'000 £'000 £'000 £'000
Total revenue 369,193 143,693 - 512,886
Adjusted EBITDA 126,687 23,604 (10,624) 139,667
Adjusted EBITDA margin 34.3% 16.4% 27.2%
Exceptional items impacting operating profit (see Note 5) 6,222 56 - 6,278
Depreciation and amortisation pre fair value uplift (20,659) (5,546) (187) (26,392)
Incremental depreciation and amortisation following fair value uplift (6,936) (5,190) - (12,126)
Net finance costs (366) (430) (1,867) (2,663)
Profit/(loss) before tax 104,948 12,494 (12,678) 104,764
Taxation (17,884)
Profit for the year 86,880
Consolidated total assets 596,769 146,553 19,460 762,782
Consolidated total liabilities (183,079) (52,172) (111,322) (346,573)
Non-current assets
Consolidated total intangible assets 60,945 29,297 - 90,242
Property, plant and equipment 361,389 47,702 - 409,091
Right-of-use assets 20,869 10,419 190 31,478
Total non-current assets 443,203 87,418 190 530,811
Total non-current asset additions 70,118 8,713 131 78,962
Included within the revenue of our Concrete operations during the year ended
31 December 2022 were £0.1 million of bill and hold transactions. At 31
December 2022, £0.4 million of inventory related to bill and hold sales in
previous years remained on the Group's premises. The unallocated segment
balance includes the fair value of the Group's share based payments and
associated taxes (£2.7 million), Plc Board and other plc employment costs
(£6.4 million), pension costs (£0.8 million) and legal/administrative
expenses (£2.8 million) These costs have been offset by research and
development taxation credits (£1.6 million). During the current period, one
customer accounted for greater than 10% of Group revenues with £80.6 million
of sales across the Clay and Concrete Divisions.
5. EXCEPTIONAL ITEMS
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Exceptional cost of sales
Impairment charge - Property, plant and equipment (15,397) (554)
Impairment charge - Right-of-use assets (1,181) -
Impairment charge - working capital (4,022) -
Total impairment charge (20,600) (554)
Redundancy costs (7,470) -
Other costs associated with restructuring programme (1,196) (126)
Total exceptional cost of sales (29,266) (680)
Exceptional administrative expenses:
Redundancy costs (1,496) -
Total exceptional administrative expenses (1,496) -
Exceptional profit on disposal of property plant and equipment: - 6,958
Exceptional items impacting operating profit (30,762) 6,278
Total exceptional items (30,762) 6,278
Included within the current period were the following exceptional items:
2023
Exceptional cost of sales
Impairment charges arising in the current year related to the impairment of
non-current assets and working capital items at the Group's closed sites as
set out in Note 10. Due to the materiality and non-recurring nature of the
events giving rise to them, these costs have been categorised as exceptional.
Exceptional redundancy costs relate to employees engaged in production
activities following the Group's announced restructuring activity across the
Clay and Concrete Divisions. These costs have been categorised as exceptional
due to their materiality and the non-recurring nature of the events giving
rise to them.
Costs associated with the closure of sites relate to other costs incurred as a
result of the Group's restructuring decisions during the year. These costs
include closed site security and decommissioning activities.
Exceptional administration expenses
Exceptional redundancy costs arising in the current period relate to costs of
redundancy of employees within the Group's selling, general and administrative
("SG&A") functions following the Group's announced restructuring in
October 2023. The costs have been treated as exceptional due to their
materiality, and the non-recurring nature of the event giving rise to them.
Cash flow on exceptional items
Exceptional cash cost of £10.2 million associated with the Group's
rationalisation and closure of sites as part of the restructuring plan, of
which £4.6 million was cash settled in the year as detailed in Note 3.
The exceptional non-cash charge of £20.6 million comprising the impairments
associated with the Group's closure of sites as part of this plan as detailed
in Note 11.
Tax on exceptional items
In the current year, impairment charges arising on non-current assets are not
tax deductible but give rise to a deferred tax credit in the period. The
impairment charge on current assets and redundancy costs are treated as tax
deductible in the period. The total tax credit on exceptional items is £7.0
million.
2022
Exceptional cost of sales
Impairment charge - property, plant and equipment
The Group impaired the fixed assets at Atlas as part of a restructuring
programme in 2020. Upon making the decision to redevelop the factory, a
partial reversal of this amount was recognised in 2021, based on an estimate
of the assets which were fit for continuing usage. As the redevelopment
activity at the Atlas site has continued, existing building assets have been
identified as unfit for usage, thereby requiring replacement.
Accordingly, those assets that have been identified as unfit for usage have
been fully impaired in 2022. This impairment expense is, in effect, an
adjustment to the impairment reversal booked in 2021. As such, it is
considered appropriate to treat this adjustment on a basis consistent with the
corresponding entry in 2021.
Other costs associated with restructuring programme
As part of the Group-wide restructuring plan to upgrade the Group, the
business announced during 2020 a single coordinated plan to rationalise its
sites. This programme proceeded throughout 2021 and the costs, as expected,
concluded during the first half of 2022.
The Group incurred c£0.1m of net residual costs relating to the sites subject
to closure during the 2022 year. The net balance in the current period
comprised rates and other standing charges related to the former operations,
partly offset by savings from previously provided redundancy schemes.
Exceptional profit on disposal of property, plant and equipment
The Group completed the sale of land and buildings at West Hoathly, Sussex in
October 2022 for a total consideration (net of costs and sales tax) of £7.8
million. The combined book value of the site amounted to £0.8 million, which
had previously been disclosed with assets held for resale, leading to a gross
profit of £7.0 million recognised as an exceptional gain in 2022.
In the prior year, the impairment charge relating to property, plant and
equipment was not tax deductible but gave rise to a deferred tax credit in the
period.
The costs associated with the closure of sites are tax deductible in the
period.
The profit on disposal of property, plant and equipment gave rise to a nil
chargeable gain in the period due to the effect of indexation allowance.
Cash flow on exceptional item
Exceptional cash impact comprising cash inflow of £7.8 million associated
with total consideration from the sales of land and buildings and cash outflow
of £0.1 million associated with the restructuring programme.
The exceptional non-cash charge of £0.6 million comprising the impairments
associated the property, plant and equipment.
6. TAXATION
Year ended 31 December 2023 Total statutory Percentage Exceptional and other adjusting items Percentage Adjusted PBT Percentage
£'000
£'000
£'000
Profit before tax 30,067 100% 42,186 100% 72,253 100%
Profit before tax multiplied by the rate of corporation tax in the UK 7,067 23.50% 9,913 23.50% 16,980 23.50%
Effects of:
Expenses not deductible / items not taxable 1,175 3.91% (278) (0.66%) 897 1.24%
Permanent benefit of super-deduction on capital expenditure (292) (0.97%) - - (292) (0.40%)
Changes in estimates relating to prior periods 195 0.65% - - 195 0.27%
Changes in taxation rate on deferred tax 862 2.87% (862) (2.04%) - -
Total taxation expense from continuing operations 9,007 29.95% 8,773 20.80% 17,780 24.61%
Year ended 31 December 2022 Total statutory Percentage Exceptional and other adjusting items Percentage Adjusted PBT Percentage
£'000
£'000
£'000
Profit before tax 104,764 100% 4,473 100% 109,237 100%
Profit before tax multiplied by the rate of corporation tax in the UK 19,905 19.00% 850 19.00% 20,755 19.00%
Effects of:
Expenses not deductible / items not taxable (717) (0.68%) 1,390 31.08% 673 0.61%
Permanent benefit of super-deduction on capital expenditure (1,741) (1.66%) - - (1,741) (1.59%)
Changes in estimates relating to prior periods (1,658) (1.58%) - - (1,658) (1.52%)
Changes in taxation rate on deferred tax 2,095 2.00% (2,095) (46.84%) - -
Total taxation expense from continuing operations 17,884 17.08% 145 3.24% 18,029 16.50%
7. EARNINGS PER SHARE
The basic earnings per share figures are calculated by dividing profit for the
year attributable to the parent shareholders by the weighted average number of
Ordinary Shares in issue during the year. The diluted earnings per share
figures allow for the dilutive effect of the conversion into Ordinary Shares
of the weighted average number of options outstanding during the year. Where
the average share price for the year is lower than the option price the
options become anti-dilutive and are excluded from the calculation. The number
of shares used for the earnings per share calculation are as follows:
Year ended 31 December 2023 Year ended 31 December 2022
(000s) (000s)
Basic weighted average number of Ordinary Shares 392,217 402,746
Effect of share incentive awards and options 3,437 2,010
Diluted weighted average number of Ordinary Shares 395,654 404,756
The calculation of adjusted earnings per share is a key measurement used by
management that is not defined by IFRS. The adjusted earnings per share
measures should not be viewed in isolation, but rather treated as
supplementary information.
Adjusted earnings per share figures are calculated as the Basic earnings per
share adjusted for exceptional items, fair value adjustments being the
amortisation and depreciation on fair value uplifted assets and non-cash
interest expenses. Adjustments are made net of the associated taxation impact
at the adjusted effective tax rate. A reconciliation of the statutory profit
to that used in the adjusted earnings per share calculations is as follows:
Year ended 31 December 2023 Year ended 31 December 2022
£'000 £'000
Profit for the year attributable to the parent shareholders 21,060 86,908
Add back/(less) exceptional items (Note 5) 30,762 (6,278)
Less tax credit on exceptional items (6,952) (453)
Add back fair value adjustments 12,250 12,126
Less tax credit on fair value adjustments (2,878) (2,000)
Less net non-cash interest (826) (1,376)
Add back tax expense on non-cash interest 194 227
Add back impact of deferred taxation rate change 844 2,095
Adjusted profit for the year attributable to the parent shareholders 54,454 91,249
Year ended 31 December 2023 Year ended 31 December 2022
pence pence
Basic EPS on profit for the year 5.4 21.6
Diluted EPS on profit for the year 5.3 21.5
Adjusted basic EPS on profit for the year 13.9 22.7
Adjusted diluted EPS on profit for the year 13.8 22.5
8. BORROWINGS
31 December 31 December
2023
2022
£'000 £'000
Current
Private Placement 333 436
Revolving Credit Facility (RCF) 25,163 -
25,496 436
Non-current
Private Placement 98,992 99,769
Total borrowings 124,488 100,205
At current and prior year end, the Group held £100 million of private
placement notes from Pricoa Private Capital, with maturities of between 2028
and 2033 and an average total cost of funds of 2.19% (range 2.04% - 2.27%).
The agreement with Pricoa also contains an additional uncommitted shelf
facility of up to $88.1 million (or equivalent in available currencies). The
agreement contains debt covenant requirements of leverage (net debt to
adjusted EBITDA) and interest cover (adjusted EBITDA to net finance charges)
of no more than 3 times and at least 4 times, respectively, tested
semi-annually on 30 June and 31 December in respect of the preceding 12-month
period.
Additionally, a £125 million RCF facility is held with a syndicate of five
banks for an initial four year period ending in November 2025, which was
extended to November 2026 in the prior year. Interest is charged at a margin
(depending upon the ratio of net debt to Adjusted EBITDA) of between 160bps
and 260bps above SONIA, SOFR or EURIBOR according to the currency of the
borrowing. The facility also includes an additional £50 million uncommitted
accordion facility. Based on current leverage, the Group will pay interest
under the RCF initially at a margin of 160bps which is expected to increase to
a margin of 180bps in the second quarter of 2024 as a result of an increase of
the Group's leverage. This facility contains debt covenant requirements that
align with those of the private placement with the same testing frequency. As
at 31 December 2023 the RCF was drawn down by £25.0 million (2022: £nil). As
at the date of approval of these financial statements, the drawn down amount
had increased to £48.0 million.
The carrying value of financial liabilities have been assessed as materially
in line with their fair values, with the exception of £100 million of private
placement notes. The fair value of these borrowings has been assessed as
£88.3 million (2022: £86.4 million).
No security is currently provided over the Group's borrowings.
9. PROVISIONS
31 December 31 December
2023
2022
£'000 £'000
Restoration (i) 5,489 4,550
Dilapidations (ii) 4,620 3,910
Restructuring (iii) 5,037 -
Other (iv) 418 452
15,564 8,912
Current 6,002 1,613
Non-current 9,562 7,299
15,564 8,912
(i) The restoration provision comprises obligations governing site remediation
and improvement costs to be incurred in compliance with applicable
environmental regulations together with constructive obligations stemming from
established practice once the sites have been fully utilised. Provisions are
based upon management's best estimate of the ultimate cash outflows. The key
estimates associated with calculating the provision relate to the cost per
acre to perform the necessary remediation work as at the reporting date
together with determining the expected year of retirement. Climate change is
specifically considered at the planning stage of developments when restoration
provisions are initially estimated. This includes projection of costs
associated with future water management requirements and the form of the
ultimate expected restoration activity. Other changes to legislation,
including in relation to climate change, are factored into the provisions when
legislation becomes enacted. Estimates are reviewed and updated annually based
on the total estimated available reserves and the expected mineral extraction
rates. Whilst an element of the total provision will reverse in the
medium-term (one to ten years), the majority of the legal and constructive
obligations applicable to mineral-bearing land will unwind over a greater than
twenty-year timeframe. In discounting the related obligations, expected future
cash outflows have been determined with due regard to extraction status and
anticipated remaining life. Discount rates used are based upon UK Government
bond rates with similar maturities.
(ii) Provisions for dilapidations arose as contingent liabilities recognised
upon the business combination in the period ended 31 December 2015. They are
recognised on a lease-by-lease basis and are based on the Group's best
estimate of the likely contractual cash outflows, which are estimated to occur
over the lease term. Third party valuation experts are used periodically in
the determination of the best estimate of the contractual obligation, with
expected cash flows discounted based upon UK Government bond rates with
similar maturities.
(iii) The restructuring provision comprised obligations arising from the
completion of the Group's review of operations during the second half of 2023,
which involved sites closures and associated redundancy costs. The key
estimates associated with the provision relate to redundancy costs per
impacted employee. All of the cost is expected to be incurred within one year
of the balance sheet date.
(iv) Other provisions include provisions for legal and warranty claim costs,
which are expected to be incurred within one year of the balance sheet date.
10. IMPAIRMENT
For tangible asset impairment testing purposes, the Group has determined that
each factory is a separate Cash Generating Unit (CGU), with the exception of:
Leighton Buzzard and Stretton which are considered as one roofing CGU; Bedford
and Barnwell considered as one South fencing and building CGU; and Thornley
and Northwich considered as a North Rail CGU in Concrete Segment. These
combined CGUs are newly identified CGUs in 2023 as each individual factory was
identified as a separate CGU in 2022. The changes to the CGUs are due to the
production and supply arrangements made in 2023.
For intangible asset impairment testing, the Group has determined that each
legal entity is a separate CGU as this is the lowest level at which the
intangible assets can be directly attributed.
Following announcement of the proposed cessation of production at Ravenhead
and South Holmwood, Gloucester and Hampshire in the Clay Division and
Masoncrete and Castle Dawson in Concrete Division, management performed
detailed impairment testing for the carrying value of the assets associated
with these sites.
Management determined the recoverable amount based on the fair value less
costs to disposal ("FVLCTD"). This assessment falls within level 3 of the fair
value hierarchy and was based on management's judgement that the assets could
not be sold for any value, this being the assumption the recoverable amount is
most sensitive to.
Determination of FVLCTD by management reflected full impairment of all items
of plant and machinery, buildings, minerals and majority of working capital
for which management's assessment was that no alternative use, future salvage
value or disposal proceeds are expected for the impacted assets.
However, management separately apply the requirements of IAS 36 to the land on
sites owned, according to the accounting policy and concluded that the
recoverable amount for the land is expected to exceed the carrying value, and
hence these assets remain unimpaired.
This assessment of impairment resulted in the recognition of an exceptional
impairment charge of £20.6 million within cost of sales within the Group's
consolidated income statement.
The impairment of assets valued at historical cost impacted the Clay and
Concrete operating segment of the Group in the current period as follows:
Clay Concrete Total
£'000 £'000 £'000
Buildings 5,333 195 5,528
Mineral reserves 2,262 - 2,262
Plant, machinery and equipment 7,489 118 7,607
Working capital 3,921 101 4,022
ROU 1,074 107 1,181
Total 20,079 521 20,600
Additionally, management completed detailed impairment testing based on
value-in-use ("VIU"), for the Group's other operating CGUs as at 31 December
2023.
The key assumption used within the VIU calculation is noted below:
- Management has used the latest Board approved budget and strategic planning
forecasts in its estimated future cash flows, covering the period 2024 to
2028, which includes assumptions regarding industry demand for the Group's
products. These forecasts assume a return to normalised levels of industry
demand for the Group's products (defined as a level of demand in line with the
2022 year) over the medium term.
Management is of the view that a downside sensitivity, evaluated as an
unforeseen material reduction of greater than 10% in the long-term industry
demand for the Group's products (against a level of demand in line with the
2022 year) could lead to a risk of impairment of the Group's non-current
assets of between £15 million and £25 million.
The other assumptions used within the VIU calculation are noted below:
1. A pre-tax weighted average cost of capital ("WACC") of 11%-15% was used within
the VIU calculation based on an externally derived rate and benchmarked
against industry peer group companies.
2. Terminal growth rates of 2% were used reflecting long term inflationary
expectations and management's past experience and expectations.
Management is of the view that no reasonable movement in the other assumptions
of the WACC or terminal growth rate outlined would result in impairment of the
Group's non-current assets.
The cash flows include ongoing capital expenditure required to maintain the
productive capacity of the network but exclude any growth capital initiatives
not committed.
The immediately quantifiable impacts of climate change and costs expected to
be incurred in connection with our climate resilient plan, are included within
the budget and strategic plan, which have been used to support the impairment
reviews, with no material impact on cash flows. We also expect any changes
required due to physical risks arising from our assessment of climate change
would be covered by business-as-usual site refurbishments and phased over
multiple years. Therefore, the related cash outflow would not have a material
impact in any given year. As a consequence, there has been no material impact
in the forecast cash flows used for impairment testing.
As a result of the detailed impairment testing performed as at 31 December
2023 no further impairment charges were recognised. No impairment reversals
arose during the year.
Goodwill
The Group's goodwill balance of £4.1 million, arose on the acquisition of the
Longley operations in July 2019 (£3.0 million), acquisition of the Generix
operation in July 2022 (£0.9 million) and acquisition of Coltman in November
2023 (£0.2 million). Based upon management's detailed testing of the
recoverable value of the CGUs to which goodwill is allocated, no impairment
was indicated. Key assumptions used within the testing of goodwill for
impairment are consistent with those set out above.
For the Longley CGU, a pre-tax discount rate of 12.4% has been used, together
with a long-term growth rate of 2%. CGU-specific cash flows for the detailed
five-year time period used by management contain a revenue compound growth
rate of 11.4%.
Based on management's projections, no reasonably possible change in key
assumptions within the VIU calculation supporting the impairment calculation
could cause the carrying value of goodwill to exceed its recoverable amount.
11. NOTES TO THE GROUP CASH FLOW STATEMENT
Year ended 31 December 2023 Year ended 31 December 2022
Cash flows from operating activities £'000 £'000
Profit before taxation 30,067 104,764
Adjustments for:
Depreciation 34,626 31,579
Impairment of property plant and equipment (Note5) 15,397 554
Impairment of right-of-use assets (Note 5) 1,181 -
Impairment of working capital (Note 5) 4,022 -
Amortisation of intangible assets 6,938 6,939
Net finance costs 4,964 2,663
Gain on disposal of property, plant and equipment (1,957) (6,541)
Research and development expenditure credit (2,427) (1,560)
Share based payments 2,308 2,547
Post-employment benefits 790 (973)
Other (617) (172)
95,292 139,800
Increase in inventory (28,495) (21,255)
Increase in debtors 28,298 (930)
Increase in creditors (36,865) 20,650
Decrease in provisions 5,426 (500)
Cash generated from operations 63,656 137,765
12. FINANCIAL INSTRUMENTS
IFRS 13 'Financial Instruments: Disclosures' requires fair value measurements
to be recognised using a fair value hierarchy that reflects the significance
of the inputs used in the measurements, according to the following levels:
Level 1 - Unadjusted quoted prices in active markets for identical assets or
liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices).
Level 3 - Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs).
At 31 December 2023 and 31 December 2022, the Group's fair value measurements
were categorised as Level 2, except for (i) quoted investments within the
Group's pension schemes, which were valued as Level 1 and (ii) the insured
pensioner and deferred pensioner asset, which was categorised as a Level 3
valuation and uses assumptions set out in Note 13 to align its valuation to
the related liability.
The Group entered into forward currency contracts as cash flow hedges to
manage its exposure to foreign currency fluctuations associated with the
future purchases of plant and equipment required for the construction of major
capital expenditure projects. These instruments are measured at fair value
using Level 2 valuation techniques subsequent to initial recognition.
At 31 December, a liability valued at £0.1 million (31 December 2022: an
asset of £0.6 million) was recognised for these derivative financial
instruments.
At 31 December 2023 and 31 December 2022, the Group held no other significant
derivative financial instruments. There were no transfers between levels
during any period disclosed.
The carrying value of the Group's short-term receivables and payables is a
reasonable approximation of their fair values. The fair value of all other
financial instruments carried within the Group's financial statements is not
materially different from their carrying amount, with the exception of £100
million of private placement notes. The fair value of these borrowings has
been assessed as £88.3 million (2022: £86.4 million).
13. POST EMPLOYMENT BENEFITS
The Group participates in the Ibstock Pension Scheme (the 'Scheme'), a defined
benefit pension scheme in the UK. During the year ended 31 December 2023, the
opening Scheme surplus of £15.2 million decreased to a closing surplus of
£9.8 million. Analysis of the movements during the year ended 31 December
2023 was as follows:
£'000
Scheme surplus at 1 January 2023 15,194
Administration expenses (1,082)
Interest income 711
Remeasurement due to:
- Change in financial assumptions (9,272)
- Change in demographic assumptions 5,217
- Experience losses (6,476)
- Return on plan assets 5,248
Company contributions 292
Scheme surplus at 31 December 2023 9,832
On 20 December 2022, the Scheme completed a full buy-in transaction with a
specialist third-party provider, which represented a significant step in the
Group's continuing strategy of de-risking its pensions exposure. This
transaction, together with the partial buy-in transaction in 2020 insured the
majority of the Group's defined benefit liabilities. As a result, the insured
asset and the corresponding liabilities of the Scheme are assumed to be
broadly matched without exposure to interest rate, inflation risk or longevity
risk. However, there is a residual risk that the insurance premium may be
increased following a data cleanse to reflect a more accurate liability
position. If the surplus Scheme assets are insufficient to meet any additional
premium, then the company may need to pay an additional contribution into the
Scheme.
The cover for current deferred pensioners at the date of the transaction
attracted a total buy-in premium of £175.6 million. The initial premium
payment of £81.3 million was settled on 28 December 2022 by the transfer of
certain Scheme-invested assets. The remaining premia were settled in three
instalments, with the final instalment paid in August 2023.
The financial assumptions used by the actuary have been derived using a
methodology consistent with the approach used to prepare the accounting
disclosures at 31 December 2022. The assumptions have been updated based on
market conditions at 31 December 2023:
31 December 31 December
2023
2022
Per annum Per annum
Discount rate 4.55% 4.80%
RPI inflation 3.10% 3.20%
CPI inflation 2.50% 2.60%
Rate of increase in pensions in payment 3.60% 3.65%
Commutation factors 21.20 18.60
Mortality assumptions: life expectancy from age 65
For a male currently aged 65 21.4 years 21.9 years
For a female currently aged 65 24.1 years 24.5 years
For a male currently aged 40 23.1 years 23.6 years
For a female currently aged 40 25.9 years 26.4 years
In light of the fact that the pension scheme was in a net surplus position
after the full buy-in, the Trustees and the Group have agreed that the Group
would suspend paying contributions with effect from 1 March 2023.
14. BUSINESS COMBINATIONS
On 30 November 2023, the Group acquired 100% of the share capital of Valerie
Coltman Holdings Limited and its subsidiary Coltman Precast Concrete Limited.
The acquisition of the Coltman business will expand the Group's Concrete
segment and supports further growth in precast and prestressed concrete
business. The headline price for the acquisition was £3.4 million. The net
cash paid in 2023 totalled £2.7 million (comprising gross payments of £5.2
million less cash acquired of £2.5 million). This net payment of £2.7
million excluded £0.7 million of the headline consideration, withheld ahead
of finalisation of closing adjustments, expected to be concluded during the
first half of the 2024 year.
The goodwill of £0.2 million was attributable to the workforce and
reflected the profitable nature of the acquired business. It was not
deductible for tax purposes.
On 29 July 2022, the Group acquired 75% of the share capital of Generix
Facades Limited with total consideration of £1.1 million, of which £0.1
million was deferred and paid in July 2023. In December 2023, the Group
acquired the remaining 25% of share capital for a consideration of £0.3
million.
Management has reviewed the assessment of fair values attributable to the
acquired identifiable assets and concluded that no further fair value
adjustments are required.
15. OTHER RESERVES
Cash flow hedging reserve Merger reserve Own shares held Treasury shares Total other reserves
£'000 £'000 £'000 £'000 £'000
At 1 January 2023 418 (369,119) (1,589) (30,000) (400,290)
Other comprehensive expense (443) - - - (443)
Issue of own shares held on exercise of share options - - 1,075 - 1,075
At 31 December 2023 (25) (369,119) (514) (30,000) (399,658)
-
At 1 January 2022 (74) (369,119) (1,741) - (370,934)
Other comprehensive income 492 - - - 492
Shares purchased - share buyback scheme - - - (30,000) (30,000)
Issue of own shares held on exercise of share options - - 152 - 152
At 31 December 2022 418 (369,119) (1,589) (30,000) (400,290)
Cash flow hedging reserve
The cash flow hedging reserve records movements for effective cash flow hedges
measured at fair value. The accumulated balance in the cash flow hedging
reserve will be reclassified to the cost of the designated hedged item in a
future period.
Merger reserve
The merger reserve of £369.1 million arose on the acquisition of Figgs Topco
Limited by Ibstock plc in the period ended 31 December 2015 and is the
difference between the share capital and share premium of Figgs Topco Limited
and the nominal value of the investment and preference shares in Figgs Topco
Limited acquired by the Company.
Own shares held
The Group's holding in its own equity instruments is shown as a deduction from
shareholders' equity at cost totalling £0.5 million at 31 December 2023 (31
December 2022: £1.6 million). These shares represent shares held in the
Employee Benefit Trust to meet the future requirements of the employee share
based payment plans. Consideration, if any, received for the sale of such
shares is also recognised in equity with any difference between the proceeds
from sale and the original cost being taken to the profit and loss reserve. No
gain or loss is recognised in the income statement on the purchase, sale,
issue or cancellation of equity shares.
Treasury share reserve
The Treasury share reserve represents shares acquired by the Group as part of
its share buyback programme in 2022.
In 2022, the Group engaged its brokers to purchase up to £30.0 million of
shares on the open market on its behalf. These shares are held by the Group to
meet future requirements of employee share based payment plans. At 31 December
2023, the Treasury shares reserve contained 16,791,470 shares.
16. RELATED PARTY TRANSACTIONS
There were no related party transactions nor any related party balances in
either the 2023 or 2022 financial year.
17. DIVIDENDS PAID AND PROPOSED
The Directors are proposing a final dividend in respect of the financial year
ended 31 December 2023 of 3.6 pence (2022: 5.5 pence) per Ordinary Share,
which will distribute an estimated £14.1 million (2022: £21.6 million) of
shareholders' funds. Subject to approval at the Annual General Meeting, this
will be paid on 31 May 2024, to shareholders on the register at the close of
business on 10 May 2023.
These condensed consolidated financial statements do not reflect the 2023
final dividend declared.
18. POST BALANCE SHEET EVENTS
Except for the proposed ordinary dividend (see Note 17), no further subsequent
events requiring either disclosure or adjustment to these financial statements
have arisen since the balance sheet date.
1 Alternative Performance measures are described in Note 3 to this results
announcement
(2) UK domestic brick deliveries in 2023 reduced by 30% compared to the prior
year (Source: UK Department for Business and Trade Monthly Bulletin)
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