REG - Stelrad Group PLC - Preliminary announcement of final results
07/03/2025 07:00
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RNS Number : 7082Z Stelrad Group PLC 07 March 2025
Stelrad Group plc - preliminary announcement of final results for the year
ended
31 December 2024
Continued strong performance through operational excellence, despite a
challenging market backdrop
Stelrad Group plc ("Stelrad" or "the Group" or "the Company", LSE: SRAD), a
leading specialist manufacturer and distributor of steel panel and other
designer radiators in the UK, Europe and Turkey, today announces its audited
financial results for the year ended 31 December 2024.
Results summary 2024 2023 Movement %
Revenue, £m 290.6 308.2 (5.7)
Operating profit, £m 31.4 26.7 17.6
Operating profit margin, % 10.8 8.7 2.1 ppts
Profit for the year, £m 16.5 15.4 7.1
Earnings per share - basic, pence 12.97 12.11 7.1
Adjusted operating profit, £m ((1)) 31.5 29.3 7.6
Adjusted operating profit margin, % ((1)) 10.8 9.5 1.3 ppts
Adjusted profit for the year, £m ((1)) 16.6 17.3 (4.2)
Adjusted earnings per share - basic, pence ((1)) 13.05 13.62 (4.2)
Free cash flow, £m ((1)) 9.6 17.8 (46.3)
Return on capital employed, % ((1)) 27.1 25.5 1.6 ppts
Net debt before lease liabilities, £m ((1)) 59.7 60.4 (1.2)
Total dividend per share, pence 7.79 7.64 2.0
(1) The Group uses some alternative performance measures to track and assess
the underlying performance of the business. Alternative performance measures
are defined in the glossary of terms and reconciled to the appropriate
financial statements line item at the end of this announcement.
Financial and operational highlights
· Operating profit for the year up 17.6% to £31.4 million, an
increase of £4.7m (2023: £26.7 million), due to continued cost base
optimisation initiatives, favourable materials pricing, strong product mix and
the impact of exceptional items in 2023. Adjusted operating profit for the
year up 7.6% to £31.5 million, an increase of £2.2 million (2023: £29.3
million).
· Contribution per radiator increased again, by 11.4% to £20.15,
the first time the Group has achieved a figure in excess of £20, driven by
margin control, an increased volume of higher output radiators in the UK
market and an increase in overall premium panel sales mix to 5.7%.
· Revenue decline of 5.7% to £290.6 million as a result of ongoing
challenges in RMI and new build markets, with high interest rates and
inflation supressing activity.
o UK & Ireland: revenue down 1.5%, a creditable result despite wider
market headwinds.
o Europe: revenue down 6.8% due to Euro devaluation and continued sales
volume declines.
o Turkey & International: revenue down 27.7% to £14.2 million, driven
by significantly lower sales volumes.
· Return on capital employed grew by 1.6 ppts to 27.1% boosted by
strong operating profit.
· On Time In Full (OTIF) delivery of 98% (2023: 97%) in the UK &
Ireland, reflecting the group's market-leading customer service and product
availability.
· Investment in working capital to enhance service levels meant that
free cash flow decreased by £8.2 million to £9.6 million (2023: £17.8
million).
· Leverage at 31 December 2024 was 1.37x (2023: 1.47x), based on net
debt before lease liabilities.
· Recommended final dividend up 2% to 4.81 pence per share (2024
final dividend: 4.72 pence per share), to be paid on 27 May 2025, reflecting
the Board's confidence in the Group's prospects and balance sheet.
Current trading and outlook
· Although both RMI and new build markets continued to experience
subdued levels of demand during 2024, the robust performance delivered by the
Group in the twelve months to 31 December 2024 has continued into 2025, with
trading since the period end remaining in line with management's expectations.
· Although Stelrad continues to expect softness in market conditions
for the first half of 2025 at least, the Group is seeing a recovery in its
volumes in some of Stelrad's core European territories such as Belgium, the
Netherlands and Poland, where volume gains have been driven by our sustainable
competitive advantages.
· The Group continues to believe that management's considerable
experience of successfully steering the business through other challenging
market cycles will enable the business to navigate the ongoing market
challenges and deliver another year of progress.
· As outlined at our recent Capital Markets Event, a significant
installed radiator base and long-term structural growth drivers of
premiumisation and decarbonisation underpin the Group's confidence in its
future. With these attractive market opportunities and the Group's market
leadership, flexible lowest-cost manufacturing and leading levels of customer
service, Stelrad enters 2025 in a strong position.
Commenting on the Group's performance, Trevor Harvey, Chief Executive Officer,
said:
"2024 largely saw a continuation of the challenging conditions that have
characterised the wider marketplace in recent years. However, as a result of
our rigorous focus on operational excellence, the flexibility of our business
model and the strength of our market position, we have still delivered a
strong financial performance across the business, despite ongoing declines in
revenues and volume.
"Our focus on proactive margin management initiatives has resulted in our
contribution per radiator exceeding £20 for the first time, while an increase
in the penetration of premium panel products into the UK & Ireland
underpins our confidence in the role that premiumisation will continue to play
in driving long term growth.
"We also continue to position our business effectively for decarbonisation,
promoting high output conventional radiators, developing hybrid products for
low temperature systems and introducing electric ranges into our core
markets."
"While we are not expecting the wider market backdrop to improve significantly
during the first half of 2025, we are encouraged by our continued volume
recovery in some of the Group's core European territories and remain confident
that, regardless of wider macro conditions, Stelrad is able to outperform its
peers and deliver continued growth for our stakeholders."
For further information:
Stelrad Group plc +44 (0)191 261 3301
Trevor Harvey, Chief Executive Officer
Leigh Wilcox, Chief Financial Officer
Sodali & Co stelrad@sodali.com (mailto:stelrad@sodali.com)
James White / Pete Lambie +44 (0)7855 432 699
Notes to Editors
Stelrad Group plc is Europe's leading specialist radiator manufacturer,
selling an extensive range of hydronic, hybrid, dual fuel and electrical heat
emitters to more than 500 customers in over 40 countries. These include
standard, premium and low surface temperature (LST) steel panel radiators,
towel warmers, decorative steel tubular, steel multicolumn and aluminium
radiators.
The Group has five core brands: Stelrad, Henrad, Termo Teknik, DL Radiators
and Hudevad. In the data reported by BRG Building Solutions for 2023,
Stelrad extended its market leadership position, with 20.2% share by volume of
the combined UK, European and Turkish steel panel radiator market. The Group
is now market leader in seven countries - the UK, Ireland, France, the
Netherlands, Belgium, Denmark and Greece, with a top 3 position in a further
11 territories.
Stelrad is headquartered in Newcastle upon Tyne in the UK and in 2024 employed
1,400 people, with manufacturing and distribution facilities in Çorlu
(Turkey), Mexborough (UK), Moimacco (Italy) and Nuth (Netherlands), with
further commercial and distribution operations in Kolding (Denmark) and Krakow
(Poland).
The Group's origins date back to the 1930s and Stelrad enjoys long established
commercial relationships with many of its customers, having served each of its
top five current customers for over twenty years.
Further information can be found at: https://stelradplc.com/
(https://stelradplc.com/) .
Chair's statement
Overview
Stelrad delivered another strong performance despite the continued
macroeconomic challenges that we have seen across our core geographies of the
UK, Europe and Turkey & International, with ongoing high interest rates
and inflation continuing to suppress activity in both RMI and new build
markets.
This performance and the progress made during the year reinforce our
confidence in the resilience of the Stelrad business, with a flexible,
low-cost manufacturing footprint, leading levels of customer service and
unrivalled product availability underpinning our competitive positioning in
the market.
Equally, one of our greatest assets remains the experience of both the
Executive and senior management within the Group, many of whom have been with
Stelrad for more than 20 years and their combined experience of trading
through numerous other challenging market cycles remains invaluable.
Performance and results
Despite a 5.7% reduction in revenue to £290.6 million, management actions
delivered a robust profit performance with operating profit of £31.4 million,
an increase of £4.7 million, or 17.6% (2023: £26.7 million) and adjusted
operating profit up by £2.2 million to £31.5 million, an increase of 7.6%
(2023: £29.3 million).
The business also recorded its seventh consecutive annual increase in
contribution per radiator, delivering an 11.4% increase in contribution per
radiator during the year through proactive margin and cost management, in
addition to the price benefit of further increases in average radiator size.
Capital Markets Event
The Group's Executive and Senior management team hosted a number of analysts
and investors at our Capital Markets Event in November 2024. The event
outlined the Group's leading competitive position and attractive market
opportunity. Key structural growth drivers of premiumisation and
decarbonisation are underpinned by the Group's sustainable competitive
advantages of flexible, well-invested, lowest-cost manufacturing, leading
levels of product availability and customer service and a competitive position
of scale.
In addition, we outlined Stelrad's capital allocation priorities alongside the
following medium-term targets:
· Market share improvements of 1-2%
· Contribution per radiator of >£21
· Operating profit margin of 13%
· Operating cash flow conversion of >90%
· Return on capital employed of >30%
These new targets are underpinned by Stelrad's four overarching strategic
objectives of growing market share, improving product mix, optimising routes
to market and positioning effectively for decarbonisation, alongside the
Group's continued focus on operational excellence.
Purpose
Stelrad's purpose is helping to heat homes sustainably. Given Stelrad's
influential market position with system specifiers, suppliers and customers,
we have a pivotal role to play in the transition to decarbonised heating
systems. We continue to develop our product range in this area, ensuring that
we can both capture market share arising from legislative tailwinds, and drive
the wider transition to low carbon systems.
Environmental, social and governance ("ESG") objectives
Achieving our purpose, helping to heat homes sustainably, demands relentless
focus on reducing Stelrad's own environmental impact, a consistently high
level of employee engagement and high standards of corporate governance.
These elements are at the heart of Stelrad's culture and values.
Our sustainability framework, Fit for the Future, is consistent with that core
purpose, setting out our approach to delivering both our business strategy and
our sustainability commitments to stakeholders and the environment. It
reflects Stelrad's vision of the significant role the Group can play in the
transition to a low - and ultimately zero - carbon heating industry.
Alongside this, we continue to make progress in reducing the Group's energy
usage, with our fuel usage reducing by 13% in 2024, transitioning away from
LPG in the Netherlands and investing in several electric lift trucks in the
UK.
Above everything else, the safety of our people is our number one priority.
We continue to make meaningful progress, with a 45% reduction in the number of
lost time incidents in 2024. This significant shift has been driven by
improvements at Radiators SpA and reflects the benefit of instilling our
strong safety culture and applying Group safety processes.
Board
Annette Borén stepped down from the Board on 30 June 2024. I would like to
thank Annette for her positive contribution during her time with Stelrad and
she left with our best wishes for her future endeavours.
Having been appointed Interim Chief Financial Officer on 1 July 2024, we were
delighted to appoint Leigh Wilcox as Chief Financial Officer on 1 October
2024. Leigh previously served as the Group's Finance Director, having joined
Stelrad in 2012. He has a deep commercial understanding of the Group alongside
extensive financial experience and has played a pivotal role in the Group's
development as a listed Company.
During the year, the Board carried out an internal Board evaluation, which
confirmed that the Board continues to have the appropriate mix of skills and
experience. It is the intention of the Board to evaluate the commission of an
external, independent review of the Board's effectiveness during the current
financial year.
Dividend
The Board is recommending a final dividend of 4.81 pence per share, a rise of
2% on the prior year. The final dividend will be paid on 27 May 2025 to
shareholders on the register on 25 April 2025, subject to approval by
shareholders at the Annual General Meeting on 21 May 2025. We thank our
shareholders for their continuing support of the Group.
Summary
While overall RMI and new build activity remains subdued, we are continuing to
see signs of our volumes recovering in some of the Group's core European
territories, including in Belgium, the Netherlands and Poland, where our
competitive strength has driven volume gains.
While we expect continued softness in market conditions to persist at least
through the first half of 2025, we remain confident that the Group is well
positioned for growth, with strong embedded replacement demand across Europe,
an increasing drive for premiumisation and long-term regulatory tailwinds for
decarbonised heating systems.
Bob Ellis
Chair
7 March 2025
Chief Executive Officer's review
Overview
2024 largely saw a continuation of the challenging conditions that have
characterised the wider marketplace in recent years. However, Stelrad's
rigorous focus on operational excellence, the flexibility of our business
model and the strength of the Group's market positioning meant that the
business was still able to deliver a strong financial performance despite
declines in revenue and volume.
The Group's ongoing focus on proactive margin management initiatives resulted
in contribution per radiator exceeding £20 for the first time and is
testament to the continued transfer of production to lower cost facilities and
the price benefit of larger radiators sold.
Furthermore, alongside the operational gains made during the period, the Group
also made investments in working capital to ensure that the business is well
placed to benefit from a market recovery.
While we are not expecting the wider market backdrop to improve during the
first half of 2025, we are encouraged by our continued volume recovery in some
of the Group's core European territories and remain confident that, regardless
of wider macro conditions, Stelrad is able to outperform its peers and deliver
continued growth for our stakeholders.
Continued profit growth despite ongoing volume declines
Revenues during 2024 fell 5.7% to £290.6 million, a decrease of £17.6
million on the prior year (2023: £308.2 million), driven primarily by ongoing
volume declines which fell 5.8% alongside the impact of the Euro devaluing
against GBP.
Operating profit for the year was up 17.6% to £31.4 million, an increase of
£4.7 million (2023: £26.7 million) while adjusted operating profit for the
year was £31.5 million, an increase of 7.6% or £2.2 million (2023: £29.3
million).
Revenue in UK & Ireland was £137.4 million (2023: £139.4 million), a
fall of 1.5% that was driven mainly by the reduction in volumes during the
period offset by the benefit of favourable product mix, meaning that adjusted
operating profit increased by 20.7%.
Europe revenues fell 6.8% due to the devaluation of the Euro against GBP,
continued sales volume declines and adverse mix, resulting in an adjusted
operating profit reduction of 12.4%. This combination of challenging market
conditions particularly impacted the Radiators SpA business in 2024, but the
underlying strategic case for our 2022 acquisition remains compelling.
Radiators SpA provides access to key territories and channels to market,
alongside a product range aligned with the structural drivers of increased
premiumisation and the drive for decarbonisation.
In Turkey & International markets, revenues were down 27.7% as a result of
significantly lower sales volumes with adjusted operating profit falling by
22.7% as a result. The division represents 4.9% of Group revenues and 3.3% of
adjusted operating profit respectively.
Market conditions during the year remained similar to the prior year and were
characterised by subdued demand in RMI and new build markets, principally as a
result of high interest rates and levels of inflation which continue to
supress demand levels.
Nevertheless, Stelrad's focus on operational excellence and cost control
initiatives meant that the Group was able to continue to support margin
management initiatives, resulting in our contribution per radiator exceeding
£20 for the first time at £20.15 (2023: £18.09)
Investing in future growth
During the period, the Group has made investments across the business to
ensure that Stelrad is well placed for a market recovery.
Continued investment was made in our operating plant and equipment as part of
various maintenance and upgrade projects designed to ensure that our operating
platform remains best-in-class. We also made additional investment in our IT
infrastructure alongside significant investment in inventory.
The actions taken to optimise our operational facilities during the second
half of 2023 have resulted in the cost-saving benefits in 2024 with the
continued transfer of volumes to our low-cost facility in Corlu, Turkey
progressing as planned. Our fully invested, flexible and low-cost Turkish
manufacturing capability remains a significant source of competitive advantage
for the Group.
Premiumisation and decarbonisation
As outlined at the Group's Capital Markets Event in November 2024, increasing
premiumisation and the drive for decarbonisation are two key structural growth
drivers that will underpin demand for higher margin, higher added-value
product, enabling Stelrad to grow ahead of the market.
Year on year, the proportion of premium panel sales to total volumes increased
by 0.1 ppts to 5.7% while the penetration of premium panel products into the
UK & Ireland increased in the period from 2.9% to 3.1%, with additional
work being undertaken to drive this growth further. The UK market remains
under-developed compared to other core countries and Stelrad has developed a
clear, three-point strategy to leverage trade strengths, boost consumer appeal
and optimise routes to market for designer radiators. In addition to
providing extended support for traditional trade partners, the Group will
further develop its stelrad.com online trading platform in 2025.
The range of electrical radiators launched in the UK market as the Electric
Series in the second half of 2023 positions Stelrad effectively in a segment
with significant decarbonisation growth potential and has generated favourable
project pipeline potential.
The launch of Stelrad's new range of electrically fan-assisted hybrid
radiators in July 2024 also received strong customer support and our
partnership with a leading European heat source manufacturer and system
supplier continues to position the Group well in this area.
The Group also continues to work closely with new build, social housing and
commercial specifiers to find cost-effective, high-performance solutions for
low temperature systems and as a result, in 2024 we have seen a 66% volume
increase in high heat output K3, 900mm high and vertical radiators in the UK
market, relative to the prior year.
Outlook
Although RMI and new build markets continued to experience subdued levels of
demand during 2024, the robust performance delivered by the Group in the
twelve months to 31 December 2024 has continued into 2025 with trading since
the period end remaining in line with management's expectations.
While Stelrad continues to expect softness in market conditions, at least
through the first half of 2025, the Group has seen a recovery in its volumes
in some of the Group's core European territories such as Belgium, the
Netherlands and Poland where Stelrad volume gains have been driven by our
sustainable competitive advantages.
The Group continues to believe that management's considerable experience of
successfully steering the business through other challenging market cycles
will enable the business to navigate the ongoing market challenges and deliver
another year of progress.
Furthermore, the long-term market drivers of premiumisation and
decarbonisation continue to underpin the Group's confidence in the future
which, alongside our market leadership, flexible lowest-cost manufacturing and
leading levels of customer service ensure that the Group enters 2025 in a
strong position.
Trevor Harvey
Chief Executive Officer
7 March 2025
Finance and business review
Group overview
The following table summarises the Group's results for the years ended 31
December 2024 and 31 December 2023.
2024 2023 Movement Movement
£m £m £m %
Revenue 290.6 308.2 (17.6) (5.7)
EBITDA((1)) 43.5 41.2 2.3 5.6
Adjusted operating profit((1)) 31.5 29.3 2.2 7.6
Exceptional items - (2.5) 2.5 100.0
Amortisation of customer relationships (0.1) (0.1) - 2.8
Operating profit 31.4 26.7 4.7 17.6
Net finance costs (8.0) (7.5) (0.5) (6.7)
Profit before tax 23.4 19.2 4.2 21.9
Income tax expense (6.9) (3.8) (3.1) (82.7)
Profit for the year 16.5 15.4 1.1 7.1
Earnings per share - basic (p) 12.97 12.11 0.86 7.1
Adjusted profit for the year((1)) 16.6 17.3 (0.7) (4.2)
Adjusted earnings per share - basic (p)((1)) 13.05 13.62 (0.57) (4.2)
Total dividend per share (p) 7.79 7.64 0.15 2.0
Return on capital employed (%)((1)) 27.1 25.5 n/a 1.6 ppts
Net debt before lease liabilities((1)) 59.7 60.4 (0.7) (1.2)
(1) The Group uses some alternative performance measures to track and assess
the underlying performance of the business. Alternative performance measures
are defined in the glossary of terms and reconciled to the appropriate
financial statements line item at the end of this announcement.
Financial overview
A strong operating performance driven by ongoing operational excellence and
proactive margin management allowed the Group to more than offset the impact
of a continued reduction in market demand during 2024. In a trend consistent
with 2023, renovation activity across the majority of European countries
remained weak throughout the year, driven by a challenging macroeconomic
environment related to high interest rates and inflation.
Revenue for the year was £290.6 million, a decrease of £17.6 million, or
5.7%, on last year (2023: £308.2 million). The decline in revenue was due to
a 5.8% decrease in sales volumes during the year and the impact of the Euro
devaluing against GBP, partially offset by selling price benefits. Selling
prices have benefited from further increases in average radiator size and the
impact of 2024 price increases, which were applied to recover ongoing
inflationary cost increases, partially offset by adverse mix and modest price
concessions in some European markets.
Operating profit for the year was £31.4 million, an increase of £4.7
million, or 17.6%, compared to last year (2023: £26.7 million). The increase
in operating profit arose despite the 5.8% decrease in sales volumes.
Operating profit grew due to the benefits of cost base management initiatives,
favourable material price, strong product mix in UK & Ireland and the
impact of exceptional items in 2023, partially offset by lower sales volumes
and continued wage inflation. Cost management initiatives include the transfer
of further volume to Turkey and the optimisation of our facilities in the UK
and the Netherlands.
Adjusted operating profit for the year was £31.5 million, an increase of
£2.2 million, or 7.6%, compared to last year (2023: £29.3 million).
Adjusted operating profit is stated before the deduction of exceptional items
of £nil (2023: £2.5 million) and the amortisation of customer relationships
of £0.1 million (2023: £0.1 million). The exceptional costs in 2023 relate
largely to a restructuring exercise undertaken in quarter four of the year in
order to drive cost savings for future periods.
Supported by ongoing operational excellence and margin management, in addition
to favourable UK product mix, the contribution per radiator has increased by
11.4% in the period to over £20 for the first time. The Group continues to
push the sale of premium products throughout its markets, recognising the
additional margin that these products generate. Year on year the proportion of
premium panel sales to total volumes increased by 0.1 ppts to 5.7%.
Positively, the penetration of premium panel products into the UK &
Ireland increased in the period from 2.9% to 3.1% as a result of targeted
management action in the Group's largest segment, with additional work being
undertaken to drive this growth further. This positive trend was partially
offset by a decline in sales to Germany where the penetration of these
products is high.
Profit for the year increased by £1.1 million, or 7.1%, to £16.5 million
(2023: £15.4 million). Adjusted profit for the year decreased by £0.7
million, or 4.2%, to £16.6 million (2023: £17.3 million) due to an increase
in adjusted operating profit offset by increased interest charges and a return
to a more normal effective tax rate after a large deferred tax credit in 2023.
Earnings per share was 12.97 pence (2023: 12.11 pence). Adjusted earnings per
share was 13.05 pence (2023: 13.62 pence).
At 31 December 2024 the Group had cash of £18.6 million (2023: £21.4
million) and undrawn available facilities of £21.1 million (2023: £18.7
million), with net debt before lease liabilities of £59.7 million (2023:
£60.4 million).
Revenue by geographical market
The table below sets out the Group's revenue by geographical market.
Revenue by geographical market 2024 2023 Movement Movement
£m £m £m %
UK & Ireland 137.4 139.4 (2.0) (1.5)
Europe 139.0 149.1 (10.1) (6.8)
Turkey & International 14.2 19.7 (5.5) (27.7)
Total 290.6 308.2 (17.6) (5.7)
UK & Ireland
The Group's revenue in UK & Ireland for the year was £137.4 million
(2023: £139.4 million), a decrease of £2.0 million, or 1.5%. This was
principally a result of a decrease in sales volumes of 7.2%, partially offset
by a continued increase in the average selling price of radiators sold due to
a 6% year on year higher heat output of radiators sold, an increase in the
penetration of premium panel products and the application of a price increase.
Europe
The Group's revenue in Europe for the year was £139.0 million (2023: £149.1
million), a decrease of £10.1 million, or 6.8%. European revenue has been
negatively impacted on consolidation by the GBP strengthening against the
Euro, which reduced revenue by 2.6%. Additionally, revenue has been negatively
impacted by a 0.6% decline in sales volumes, adverse country and customer mix
and the impact of modest price concessions. Encouragingly, we note certain key
geographies in Europe have shown a year on year increase in volumes led by
business gains, including Belgium, the Netherlands and Poland.
Turkey & International
The Group's revenue in Turkey & International for the year was £14.2
million (2023: £19.7 million), a decrease of £5.5 million, or 27.7%. This
was principally a result of significantly lower sales volumes to Turkey due to
the economic slowdown and also lower sales to China.
Adjusted operating profit by geographical market
The table below sets out the Group's adjusted operating profit by geographical
market.
Adjusted operating profit by geographical market 2024 2023 Movement Movement
£m £m £m %
UK & Ireland 29.6 24.5 5.1 20.7
Europe 7.9 9.1 (1.2) (12.4)
Turkey & International 1.0 1.3 (0.3) (22.7)
Central costs (7.0) (5.6) (1.4) (25.0)
Total 31.5 29.3 2.2 7.6
UK & Ireland
The Group's adjusted operating profit in UK & Ireland for the year was
£29.6 million (2023: £24.5 million), an increase of £5.1 million, or
20.7%. This result includes the benefits of the 2023 restructure, favourable
selling and material prices, the increase in the average size of radiators and
stronger premium panel penetration. These factors have combined to more than
offset the lower sales volumes and the impact of ongoing inflation.
Europe
The Group's adjusted operating profit in Europe for the year was £7.9 million
(2023: £9.1 million), a decrease of £1.2 million, or 12.4%. Whilst European
sales volumes improved in the second half of the year, they still fell 0.6%
year on year due to a weak macroeconomic environment. Additionally, adverse
country and customer mix has led to a small reduction in the average
contribution per radiator. Ongoing inflation, combined with the sales volume
decrease and adverse mix, has led to a reduction in operating margin
percentage. The Group continues to focus on improving the margins of Radiators
SpA's sales, and whilst initiatives to drive efficiencies have to date been
offset by lower volumes, we expect margins for Radiators SpA, and the wider
Europe segment, to recover in line with market recovery.
Turkey & International
The Group's adjusted operating profit in Turkey & International for the
year was £1.0 million (2023: £1.3 million), a reduction of £0.3 million,
or 22.7%. This decrease is due to a decline in sales volumes partially offset
by favourable material prices.
Central costs
Central costs for the year were £7.0 million (2023: £5.6 million), an
increase of £1.4 million, or 25.0%. The increase is primarily due
inflationary cost increases, alongside one off consultancy costs related to
our investment in appraisal of premium panel penetration strategies.
Exceptional items
During the year the charge for exceptional items was £nil (2023: £2.5
million).
The exceptional items in 2023 mainly relate to a £2.9 million restructuring
exercise undertaken in quarter four of the year in order to drive cost savings
for future periods, partially offset by exceptional income related to the
acquisition of Radiators SpA of £0.4 million.
These costs are one off in nature and disclosing these costs as exceptional
allows the true underlying performance of the Group to be better understood.
Finance costs
The Group's net finance costs for the year were £8.0 million (2023: £7.5
million). The increase of £0.5 million is due to an increase in the interest
rate of the Group's debt from a blended rate of 6.3% (including a margin of
2.25%) during 2023 to a blended rate of 6.6% (including a margin of 2.25%)
during 2024.
Income tax expense
The Group's income tax expense for the year was £6.9 million (2023: £3.8
million), an increase of £3.1 million, or 82.7%. The 2023 tax charge
benefited from a deferred tax credit associated with higher tax asset values
allowed by the Turkish government due to hyperinflation. The Group's 2023
effective tax rate of 19.6% was low because of the deferred tax credit. In
2024, the effective tax rate was 29.4% which was in line with expectations. In
2025, the Group's effective tax rate is expected to rise to around 30% due to
the announcement of a 5% increase in the withholding tax charges applied to
dividends received from Turkey.
Earnings per share and adjusted earnings per share
Profit for the year increased by £1.1 million, or 7.1%, to £16.5 million
(2023: £15.4 million) and basic earnings per share was 12.97 pence (2023:
12.11 pence). The weighted average number of shares was 127.4 million (2023:
127.4 million). Adjusted profit for the year decreased by £0.7 million, or
4.2%, to £16.6 million (2023: £17.3 million) and, consequently, basic
adjusted earnings per share was 13.05 pence (2023: 13.62 pence).
Dividends and reserves
The Group is committed to delivering returns for its shareholders via a
progressive dividend policy. The Board has confidence in the Group's financial
position and believes that its leading market positions, regulatory tailwinds,
product premiumisation upside and favourable contribution per radiator will
lead to strong future financial performance, as demonstrated by the Group's
medium-term targets published at our Capital Markets Event in November 2024.
On this basis, despite suppressed earnings caused by short term trading
headwinds, the Board recommends payment of a final dividend of 4.81 pence per
share (2023: 4.72 pence per share) on 27 May 2025 to shareholders on the
register at 25 April 2025, an increase of 2% on the 2023 final dividend. The
cost to the Group of the 2024 final dividend is £6.1 million.
The Group paid an interim dividend in respect of the year ended 31 December
2024 of 2.98 pence per share (2023: 2.92 pence), also an increase of 2% on
the 2023 interim dividend. Therefore, the total dividend in respect of the
year ended 31 December 2024 will be 7.79 pence per share (2023: 7.64 pence),
an increase of 2% on 2023.
Cash flow
The following table summarises the Group's cash flow for the years ended 31
December 2024 and 31 December 2023.
2024 2023 Movement
£m £m £m
EBITDA((1)) 43.5 41.2 2.3
Exceptional items - (2.5) 2.5
Gain on disposal of property, plant and equipment (0.1) - (0.1)
Share-based payment charge 0.4 0.5 (0.1)
Working capital (10.1) (0.6) (9.5)
Working capital - exceptional items (2.3) 2.2 (4.5)
Net capital expenditure (8.4) (9.3) 0.9
Cash flow from operations((1)) 23.0 31.5 (8.5)
Income tax paid (6.2) (7.5) 1.3
Net interest paid (7.2) (6.2) (1.0)
Free cash flow((1)) 9.6 17.8 (8.2)
Cash flow from operations 23.0 31.5 (8.5)
Adjusted for
Exceptional items - 2.5 (2.5)
Exceptional items, impact on working capital 2.3 (2.2) 4.5
Adjusted cash flow from operations((1)) 25.3 31.8 (6.5)
2024 2023 Movement
Cash flow from operations((1)) (£m) 23.0 31.5 (8.5)
Adjusted cash flow from operations((1)) (£m) 25.3 31.8 (6.5)
Adjusted operating profit((1)) (£m) 31.5 29.3 2.2
Cash flow from operations conversion((1)) (%) 73.0 107.6 (34.6)
Adjusted cash flow from operations conversion((1)) (%) 80.3 108.6 (28.3)
(1) The Group uses some alternative performance measures to track and assess
the underlying performance of the business. Alternative performance measures
are defined in the glossary of terms and reconciled to the appropriate
financial statements line item at the end of this announcement.
The Group's free cash flow for the year was £9.6 million (2023: £17.8
million), a decrease of £8.2 million. This reflects investments in working
capital, the cash unwind of provisions for one-off restructuring costs and
higher interest paid, partially offset by an increase in EBITDA, lower tax
paid and reduced capital expenditure as the Group returned to a lower level of
spend. The significant working capital investment in the year was in
inventories as the Group continues to invest to ensure that it is able to
continue to be well placed to respond to market demand and maintain
best-in-class delivery performance. During quarter four of 2024, the Group
undertook a proactive price realignment exercise on its core range of contract
products in the UK with equal reductions in both list prices and rebates. The
price realignment is a commercial initiative designed to make the price points
of our contract products more competitive and enhancing customer
relationships. During 2025, because of the reduction in rebates, there will be
an increase in working capital.
The Group's cash flow from operations for the year was £23.0 million (2023:
£31.5 million), a decrease of £8.5 million. Adjusted operating profit for
the period was £31.5 million (2023: £29.3 million), an increase of £2.2
million. Cash flow from operations conversion for the year was 73.0% (2023:
107.6%), a decrease of 34.6 ppts. Adjusted cash flow from operations
conversion for the year was 80.3% (2023: 108.6%), a decrease of 28.3 ppts.
Capital expenditure
The Group's capital expenditure mainly relates to investment in operating
plant and equipment. Key capital expenditure in the year ended 31 December
2024 related to various maintenance and upgrade projects. Capital expenditure
for 2025 will continue to focus on ensuring our operating platform is well
maintained whilst making a periodic investment in our IT infrastructure.
Return on capital employed and capital allocation priorities
Return on capital employed for the year was 27.1% (2023: 25.5%), an increase
of 1.6 ppts. This improvement is largely due to the increase in adjusted
operating profit and a lower level of capital expenditure, partially offset by
the investment made in working capital.
Capital allocation considerations remain high on the Group's agenda, and both
the 2024 and 2025 investments in working capital are considered a key part of
the Group's prioritisation of investment for organic growth. Additionally,
alongside the investment in organic growth during 2024, dividends have
progressively increased by 2%, whilst the Group's debt leverage ratio before
lease liabilities has reduced to 1.37x (2023: 1.47x), demonstrating a
controlled and balanced approach to capital allocation.
Net debt and leverage
At 31 December 2024, net debt (including lease liabilities) of £67.6 million
(2023: £70.3 million) comprises £78.3 million (2023: £81.8 million) drawn
down against the multicurrency facility and £7.9 million (2023: £9.9
million) lease liabilities net of £18.6 million (2023: £21.4 million) cash.
2024 2023
£m £m
Revolving credit facility - GBP 41.8 46.9
Revolving credit facility - Euro 13.1 10.4
Term loan 23.4 24.5
Cash (18.6) (21.4)
Net debt before lease liabilities 59.7 60.4
Lease liabilities 7.9 9.9
Net debt 67.6 70.3
EBITDA 43.5 41.2
Debt leverage ratio before lease liabilities 1.37x 1.47x
The debt leverage ratio before lease liabilities at 31 December 2024 was 1.37x
(2023: 1.47x).
Leigh Wilcox
Chief Financial Officer
7 March 2025
Consolidated income statement
for the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Continuing operations
Revenue 3 290,577 308,193
Cost of sales (201,617) (221,343)
Gross profit 88,960 86,850
Selling and distribution expenses (41,729) (42,278)
Administrative expenses (excluding exceptional items) (17,165) (16,624)
Exceptional items 3 - (2,466)
Administrative expenses (17,165) (19,090)
Other operating income/(expenses) 4 1,319 1,199
Operating profit 31,385 26,681
Finance income 186 182
Finance costs 5 (8,189) (7,681)
Profit before tax 23,382 19,182
Income tax expense 6 (6,864) (3,758)
Profit for the year 16,518 15,424
Note 2024 2023
Earnings per share
Basic 7 12.97p 12.11p
Diluted 7 12.87p 12.11p
Consolidated statement of comprehensive income
for the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Profit for the year 16,518 15,424
Other comprehensive income/(expense)
Other comprehensive income/(expense) that may be reclassified
to profit or loss in subsequent periods:
Net gain on monetary items forming part of net investment in foreign 867 674
operations and qualifying hedges of net investments in foreign operations
Income tax effect 6 (217) (158)
Exchange differences on translation of foreign operations (4,711) (2,250)
Net other comprehensive expense that may be reclassified (4,061) (1,734)
to profit or loss in subsequent periods
Other comprehensive expense not to be reclassified
to profit or loss in subsequent periods:
Remeasurement losses on defined benefit plans (925) (936)
Income tax effect 6 232 206
Net other comprehensive expense not to be reclassified (693) (730)
to profit or loss in subsequent periods
Other comprehensive expense for the year, net of tax (4,754) (2,464)
Total comprehensive income for the year, 11,764 12,960
net of tax attributable to owners of the parent
Consolidated balance sheet
as at 31 December 2024
Note 2024 2023
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 9 79,173 87,247
Intangible assets 10 4,652 5,251
Trade and other receivables 13 284 301
Deferred tax assets 6 4,821 6,685
88,930 99,484
Current assets
Inventories 12 67,311 63,376
Trade and other receivables 13 45,478 50,674
Income tax receivable 235 243
Financial assets 293 -
Cash and cash equivalents 14 18,633 21,442
131,950 135,735
Total assets 220,880 235,219
Equity and liabilities
Equity
Share capital 17 127 127
Merger reserve (114,469) (114,469)
Retained earnings 239,788 233,329
Foreign currency reserve (67,853) (63,792)
Total equity 57,593 55,195
Non-current liabilities
Interest-bearing loans and borrowings 11 83,329 88,227
Deferred tax liabilities 6 209 218
Provisions 16 1,910 1,980
Net employee defined benefit liabilities 5,118 4,053
90,566 94,478
Current liabilities
Trade and other payables 15 69,210 78,056
Financial liabilities 11 - 318
Interest-bearing loans and borrowings 11 2,212 2,469
Income tax payable 550 1,686
Provisions 16 749 3,017
72,721 85,546
Total liabilities 163,287 180,024
Total equity and liabilities 220,880 235,219
Consolidated statement of changes in equity
for the year ended 31 December 2024
Attributable to the owners of the parent
Issued share Merger Retained Foreign Total
capital reserve earnings currency £'000
£'000 £'000 £'000 £'000
At 1 January 2023 127 (114,469) 227,849 (62,058) 51,449
Profit for the year - - 15,424 - 15,424
Other comprehensive expense for the year - - (730) (1,734) (2,464)
Total comprehensive income/(expense) - - 14,694 (1,734) 12,960
Share-based payment charge - - 515 - 515
Dividends paid (note 8) - - (9,729) - (9,729)
At 31 December 2023 127 (114,469) 233,329 (63,792) 55,195
Profit for the year - - 16,518 - 16,518
Other comprehensive expense for the year - - (693) (4,061) (4,754)
Total comprehensive income/(expense) - - 15,825 (4,061) 11,764
Share-based payment charge - - 440 - 440
Dividends paid (note 8) - - (9,806) - (9,806)
At 31 December 2024 127 (114,469) 239,788 (67,853) 57,593
Consolidated statement of cash flows
for the year ended 31 December 2024
Note 2024 2023
£'000 £'000
Operating activities
Profit before tax 23,382 19,182
Adjustments to reconcile profit before tax to net cash flows:
- Depreciation of property, plant and equipment 9 11,692 11,615
- Amortisation of intangible assets 10 468 457
- (Gain)/loss on disposal of property, plant and equipment (118) 11
- Share-based payments charge 440 515
- Finance income (186) (182)
- Finance costs 5 8,189 7,681
Working capital adjustments:
- Decrease in trade and other receivables 3,885 8,237
- (Increase)/decrease in inventories (6,143) 12,884
- Decrease in trade and other payables (6,743) (20,364)
- (Decrease)/increase in provisions (2,176) 2,214
- Movement in other financial assets/liabilities (610) 319
- Decrease in other pension provisions (7) (7)
- Difference between pension charge and cash contributions (581) (1,674)
31,492 40,888
Income tax paid (6,265) (7,497)
Interest received 186 182
Net cash flows generated from operating activities 25,413 33,573
Investing activities
Proceeds from sale of property, plant, equipment and intangible assets 341 352
Purchase of property, plant and equipment 9 (5,861) (6,586)
Purchase of intangible assets 10 (100) (507)
Net cash flows used in investing activities (5,620) (6,741)
Financing activities
Transaction costs related to refinancing - (500)
Proceeds from external borrowings 3,388 -
Repayment of external borrowings (5,150) (8,350)
Payment of lease liabilities (2,865) (2,619)
Interest paid (7,372) (6,428)
Dividends paid 8 (9,806) (9,729)
Net cash flows used in financing activities (21,805) (27,626)
Net decrease in cash and cash equivalents (2,012) (794)
Net foreign exchange difference (797) (405)
Cash and cash equivalents at 1 January 14 21,442 22,641
Cash and cash equivalents at 31 December 14 18,633 21,442
Notes to the consolidated financial statements
for the year ended 31 December 2024
1 Basis of preparation
The results for the year ended 31 December 2024, including comparative
financial information, have been prepared in accordance with UK adopted
international accounting standards ("IFRS") in conformity with the
requirements of the Companies Act 2006 and the disclosure guidance and
transparency rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Stelrad Group plc ("the Company") has adopted all IFRS in issue and effective
for the year.
While the financial information included in this preliminary announcement has
been prepared in accordance
with the recognition and measurement criteria of IFRS, this announcement does
not itself contain sufficient
information to comply with IFRS. The Company expects to publish full financial
statements that comply with
IFRS in March 2025.
The financial information set out above does not constitute the Company's
statutory accounts for the year
ended 31 December 2024 but is derived from those accounts. Statutory accounts
for 2024 will be delivered in due course. The auditors have reported on those
accounts: their report was unqualified, did not draw attention to any matters
by way of emphasis and did not contain statements under s498 (2) or (3) of the
Companies Act 2006.
Going concern
Having considered the Group's current trading, cash flow generation and debt
maturity and applying severe but plausible stress testing scenarios, the
Directors have concluded that it is appropriate to prepare the consolidated
financial statements on a going concern basis. Under a severe but plausible
downside scenario, the Group remains within its debt facilities and its
financial covenants for at least 12 months after the date the accounts are
signed. Based on this going concern review, the Directors have concluded
that, at the time of approving the financial statements, the Group will be
able to continue to operate within its existing facilities and is well placed
to manage its business risks successfully.
The financial information presented in respect of the year ended 31 December
2024 has been prepared on a basis consistent with the financial information
presented for the year ended 31 December 2023.
2 Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements requires
management to make judgements, estimates and assumptions that affect the
reported amounts of revenues, expenses, assets and liabilities, and the
accompanying disclosures, and the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could result in outcomes
that require a material adjustment to the carrying amount of assets or
liabilities affected in future periods.
Judgements
In the process of applying the Group's accounting policies, management has
made judgements which would have a significant effect on the amounts
recognised in the consolidated financial statements.
Impairment of non-financial assets
Intangible assets, including goodwill, that have an indefinite useful life are
not subject to amortisation and are tested annually for impairment. Assets
that are subject to amortisation are reviewed for impairment whenever events
or circumstances indicate that the carrying amount may not be recoverable.
Details of the impairment assessment of goodwill, which includes key
estimates, are disclosed in note 10.
There is an additional judgement relating to the renewal of a significant
supply contract with an existing customer. The contract ends on 31 December
2025 and the base scenario assumes that it is successfully renegotiated on the
basis of management's assessment of the strength of the Group's position with
the customer. Further details of the sensitivity analysis undertaken can be
found in note 10.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date, which have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below. The Group based its assumptions
and estimates on parameters available when the consolidated financial
statements were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances
arising beyond the control of the Group. Such changes are reflected in the
assumptions when they occur.
Rebates
A proportion of rebates is paid to the end consumers of goods sold.
Uncertainties exist over the value of the rebates recognised as, until claims
are made by end consumers, the Group cannot be certain which consumers have
purchased which products. Due to this uncertainty, estimates are made over
what contractual rates, if any, will apply to goods sold.
Management make significant estimates and assumptions in order to assess the
level of rebate required at the balance sheet date. Management is able to
utilise market information and historical/current data and trends in order to
make an appropriate estimate.
A reasonably possible change in the estimates surrounding rebates would not
result in a material impact on the financial statements.
3 Segmental information
IFRS 8 Operating Segments requires operating segments to be determined from
the Group's internal reporting to the Chief Operating Decision Maker ("CODM").
The CODM has been determined to be the Chief Executive Officer and Chief
Financial Officer. The operating segments are determined to be the key
geographical regions in which the Group operates. The CODM receive management
information as part of the internal reporting framework based upon the key
geographical regions. The CODM assesses the performance of geographical
segments based on a measure of revenue and adjusted operating profit.
Adjusted operating profit is earnings before interest, tax, amortisation of
customer relationships and exceptional items.
Revenue by geographical market
2024 2023
£'000 £'000
UK & Ireland 137,351 139,422
Europe 138,971 149,063
Turkey & International 14,255 19,708
Total revenue 290,577 308,193
The revenue arising in the UK, being the Company's country of domicile, was
£134,442,000 (2023: £133,323,000). All revenue arising in the UK was to
external customers.
Adjusted operating profit by geographical market
2024 2023
£'000 £'000
UK & Ireland 29,548 24,485
Europe 7,937 9,061
Turkey & International 1,042 1,348
Central costs (7,005) (5,606)
Adjusted operating profit 31,522 29,288
Exceptional items - (2,466)
Amortisation of customer relationships (137) (141)
Operating profit 31,385 26,681
In the year ended 31 December 2023 the exceptional items relate to a
£2,908,000 restructuring exercise undertaken in quarter four of the year in
order to drive cost savings for future periods, partially offset by
exceptional income related to the acquisition of Radiators SpA of £442,000.
All exceptional items have been presented as such because they are one-off in
nature and separate disclosure allows the underlying trading performance of
the Group to be better understood.
The revenue information above is based on the locations of the customers. All
revenue arises from the sale of goods.
One customer has revenues in excess of 10% of revenue (2023: none).
Non-current operating assets
2024 2023
£'000 £'000
UK 16,324 17,547
The Netherlands 17,453 20,581
Turkey 25,549 26,500
Italy 23,894 26,818
Other 605 1,052
Total 83,825 92,498
The CODM review the non-current operating assets based on the geographical
regions in the table above, rather than those used when reviewing revenue and
adjusted operating profit, because this is the physical location of the
assets. These values agree to the measurement of the assets per the financial
statements.
4 Other operating income/(expenses)
2024 2023
£'000 £'000
Net gain/(loss) on disposal of property, plant and equipment 118 (11)
Foreign currency gains 723 1,736
Net losses on forward derivative contracts (35) (689)
Sundry other expenses - environmental claim - (104)
Sundry other income 513 267
1,319 1,199
5 Finance costs
2024 2023
£'000 £'000
Interest on bank loans 5,723 5,663
Amortisation of loan issue costs 375 513
Interest expense on defined benefit liabilities 921 357
Finance charges payable on lease liabilities 129 120
Other finance charges 1,041 1,028
8,189 7,681
6 Income tax expense
The major components of income tax expense are as follows:
2024 2023
£'000 £'000
Consolidated income statement
Current income tax:
Current income tax charge 5,083 7,214
Adjustments in respect of current income tax charge of previous year (127) 10
Deferred tax:
Relating to origination and reversal of temporary differences 1,908 (3,466)
Income tax expense reported in the income statement 6,864 3,758
2024 2023
£'000 £'000
Consolidated statement of comprehensive income
Tax related to items recognised in other comprehensive income/(expense) during
the year:
Deferred tax on actuarial loss (232) (206)
Current tax on monetary items forming part of net investment and on hedges of 217 158
net investment
Income tax credited to other comprehensive income (15) (48)
Reconciliation of tax expense and the accounting profit at the tax rate in the
United Kingdom of 25% (2023: 23.5%):
2024 2023
£'000 £'000
Profit before tax 23,382 19,182
Profit before tax multiplied by standard rate of corporation tax in the UK of 5,846 4,508
25% (2023: 23.5%)
Adjustments in respect of current income tax charge of previous year (127) 10
Non-deductible expenses 352 60
Differences arising due to tax losses 286 1,205
Other timing differences (including 2023 inflation adjustment to Turkish tax 721 (3,163)
assets)
Benefit of overseas investment incentives (220) (263)
Withholding tax on dividend income 1,032 1,760
Effect of different overseas tax rates (1,026) (359)
Total tax expense reported in the income statement 6,864 3,758
Deferred tax
Deferred tax relates to the following:
Consolidated balance sheet Consolidated income statement
2024 2023 2024 2023
£'000 £'000 £'000 £'000
Capital allowances (641) 279 (742) (538)
Pension 1,010 719 99 (275)
Fixed asset fair value adjustments (1,303) (1,421) 58 252
Losses available for offsetting against future income 3,322 4,387 (965) (1,039)
Other temporary differences 2,224 2,503 (358) 5,066
Deferred tax (charge)/credit (1,908) 3,466
Net deferred tax assets 4,612 6,467
Reflected in the balance sheet as:
Deferred tax assets 4,821 6,685
Deferred tax liabilities (209) (218)
Deferred tax assets, net 4,612 6,467
Reconciliation of deferred tax assets, net
2024 2023
£'000 £'000
Opening balance as at 1 January 6,467 2,786
Tax (charge)/income recognised in income statement (1,908) 3,466
Tax income recognised in other comprehensive income/(expense) 232 206
Exchange adjustment (179) 9
Closing balance as at 31 December 4,612 6,467
The Group offsets tax assets and liabilities if it has a legally enforceable
right to set them off and they are levied by the same tax authority. Deferred
tax assets in respect of losses of £2,118,000 (2023: £2,130,000) have been
recognised in respect of two (2023: two) loss-making subsidiary companies;
these are recognised on the grounds of future projected performance.
Deferred tax asset recognition
During the year ended 31 December 2023, the Group chose to derecognise certain
tax losses, in particular those arising from Corporate Interest Restriction
("CIR") rules. An increase in debt to finance the acquisition of Radiators SpA
and an increase in interest rates mean that these tax losses will take longer
to utilise and therefore an element has been derecognised.
During the year ended 31 December 2024, the Group also chose not to recognise
tax assets connected with higher tax asset values allowed by the Turkish
government due to hyperinflation of the Turkish Lira, on the basis that the
recoverability of the these assets is uncertain.
The deferred tax assets have been analysed in detail at the year end and the
recognition of assets, in particular those in respect of tax losses, has been
scrutinised in detail with modelling undertaken to ensure that they are likely
to be utilised over a period of time where profitability can be estimated with
reasonable certainty.
Unrecognised deferred tax balances
2024 2023
£'000 £'000
Capital allowances 13 20
Losses available for offsetting against future income 3,486 3,733
3,499 3,753
The Group has tax losses which arose in the United Kingdom of £13,944,000
(2023: £14,932,000) that are available indefinitely for offsetting against
future taxable profits of the companies in which the losses arose. Deferred
tax assets have not been recognised in respect of these losses as they either
relate to CIR losses which cannot be reliably utilised in the short term or
they arose prior to April 2017 in subsidiaries that are not profit making and
where there is no evidence of recoverability in the near future.
7 Earnings per share
2024 2023
£'000 £'000
Net profit for the year attributable to owners of the parent 16,518 15,424
Exceptional items - 2,466
Amortisation of customer relationships 137 141
Tax on exceptional items - (651)
Tax on amortisation of customer relationships (38) (39)
Adjusted net profit for the year attributable to owners of the parent 16,617 17,341
2024 2023
Number Number
Basic weighted average number of shares in issue 127,352,555 127,352,555
Diluted weighted average number of shares in issue 128,389,983 127,352,555
Earnings per share
Basic earnings per share (pence per share) 12.97 12.11
Diluted earnings per share (pence per share) 12.87 12.11
Adjusted earnings per share
Basic earnings per share (pence per share) 13.05 13.62
Diluted earnings per share (pence per share) 12.94 13.62
8 Dividends paid
The Board is recommending a final dividend of 4.81 pence per share (2023: 4.72
pence per share), which, if approved, will mean a final dividend payment of
£6,126,000 (2023: £6,011,000).
The proposed final dividend is subject to approval by shareholders at the
Annual General Meeting and has not been included as a liability in these
consolidated financial statements.
2024 2023
£'000 £'000
Declared and paid during the year
Equity dividend on ordinary shares:
Final dividend for 2023: 4.72p per share (2022: 4.72p per share) 6,011 6,011
Interim dividend for 2024: 2.98p per share (2023: 2.92p per share) 3,795 3,718
9,806 9,729
2024 2023
£'000 £'000
Dividend proposed (not recognised as a liability)
Equity dividend on ordinary shares:
Final dividend for 2024: 4.81p per share (2023: 4.72p per share) 6,126 6,011
9 Property, plant and equipment
Freehold land Leasehold Assets under Plant and Fixtures, fittings Total
and buildings buildings construction equipment and motor £'000
£'000 £'000 £'000 £'000 vehicles
£'000
Cost
At 1 January 2023 46,473 12,222 7,269 83,388 11,234 160,586
Additions 233 1,100 3,616 2,833 1,483 9,265
Transfers 406 - (9,539) 8,434 699 -
Disposals (88) (292) - (3,779) (1,006) (5,165)
Exchange adjustment (822) (289) (80) (1,798) (130) (3,119)
At 31 December 2023 46,202 12,741 1,266 89,078 12,280 161,567
Additions 124 214 4,951 980 742 7,011
Transfers 214 - (4,438) 3,820 404 -
Disposals - (140) - (829) (806) (1,775)
Exchange adjustment (1,675) (587) (19) (3,929) (331) (6,541)
At 31 December 2024 44,865 12,228 1,760 89,120 12,289 160,262
Accumulated depreciation and impairment
At 1 January 2023 13,375 4,683 - 43,764 7,160 68,982
Depreciation charge 1,634 1,482 - 6,676 1,823 11,615
Disposals (88) (292) - (3,577) (877) (4,834)
Exchange adjustment (172) (113) - (1,097) (61) (1,443)
At 31 December 2023 14,749 5,760 - 45,766 8,045 74,320
Depreciation charge 1,616 1,489 - 6,766 1,821 11,692
Disposals - (47) - (806) (699) (1,552)
Exchange adjustment (411) (298) - (2,461) (201) (3,371)
At 31 December 2024 15,954 6,904 - 49,265 8,966 81,089
Net book value
At 31 December 2024 28,911 5,324 1,760 39,855 3,323 79,173
At 31 December 2023 31,453 6,981 1,266 43,312 4,235 87,247
At 31 December 2022 33,098 7,539 7,269 39,624 4,074 91,604
The carrying value of right-of-use assets within property, plant and
equipment, by line item, at the year end is:
2024 2023
£'000 £'000
Leasehold buildings 5,299 6,927
Plant and equipment 1,175 1,255
Fixtures, fittings and motor vehicles 1,255 1,700
7,729 9,882
Right-of-use asset additions within property, plant and equipment, by line
item, during the year are:
2024 2023
£'000 £'000
Leasehold buildings 214 1,090
Plant and equipment 523 731
Fixtures, fittings and motor vehicles 413 858
1,150 2,679
Depreciation of right-of-use assets within property, plant and equipment, by
line item, during the year is:
2024 2023
£'000 £'000
Leasehold buildings 1,462 1,456
Plant and equipment 565 374
Fixtures, fittings and motor vehicles 739 700
2,766 2,530
Land and buildings with a carrying amount of £18,095,000 (2023: £20,022,000)
are subject to a first charge to secure the Group's bank loan.
No borrowing costs have been capitalised since the assets have not met the
criteria for qualifying assets.
10 Intangible assets
Goodwill Customer Technology Total
£'000 relationships and software £'000
£'000 costs
£'000
Cost
At 1 January 2024 2,732 1,822 1,319 5,873
Additions - - 100 100
Exchange adjustment (125) (85) (62) (272)
At 31 December 2024 2,607 1,737 1,357 5,701
Accumulated amortisation and impairment
At 1 January 2024 - 199 423 622
Amortisation - 137 331 468
Exchange adjustment - (13) (28) (41)
At 31 December 2024 - 323 726 1,049
Net book value
At 31 December 2024 2,607 1,414 631 4,652
At 31 December 2023 2,732 1,623 896 5,251
Included in technology and software costs are assets under construction of
£nil (2023: £126,000), which are not amortised.
The remaining amortisation period of the customer relationships, being those
acquired upon the acquisition of Radiators SpA, is ten years and seven months.
Impairment assessment of goodwill
Goodwill is subject to annual impairment testing. All of the goodwill
recognised is allocated to a single cash-generating unit ("CGU"), being the
Radiators SpA division which has a total carrying value of £22.9 million. A
CGU represents the lowest level in the Group at which goodwill is monitored
for internal management purposes.
Impairment tests on the carrying amounts of goodwill are performed by
analysing the carrying amount allocated to the CGU against the higher of fair
value less costs to sell or its value in use. Both methods are calculated as
the net present value of the CGU's discounted future cash flows covering a
three-year period. These cash flows are based on budgeted cash flows
information for a period of three years.
Terminal growth rates of 1.8% have been applied beyond this, based on
historical macroeconomic performance and projections of the sector served by
the CGUs.
When assessing for impairment of goodwill, management has considered the
impact of climate change, particularly in the context of the risks and
opportunities identified within the Task Force on Climate-related Financial
Disclosures Report, and has not identified any material short-term impacts
from climate change that would impact the recoverable amount of the CGU. Over
the longer term, the risks and opportunities are more uncertain, and
management will continue to assess the quantitative impact of risks at each
balance sheet date.
For the value in use model, a pre-tax discount rate of 15.1% has been applied
in determining the recoverable amounts of the CGU. The pre-tax discount rate
is estimated based on the Group's risk adjusted cost of capital. Other key
assumptions throughout the budget period are EBITDA, which is included in the
terminal value at a margin of 8.6%, volumes, contribution per radiator sold
and capital expenditure. The key assumptions have been determined using past
experience or external sources of information.
The Group has applied sensitivities to assess whether any reasonably possible
changes in assumptions could cause an impairment that would be material to
these consolidated financial statements. Details of the sensitivity analysis
are disclosed in relation to Radiators SpA because it is sensitive to changes
in assumptions. The base case scenario for Radiators SpA has headroom of £1.5
million. A decrease in EBITDA margin of 0.5 ppts percentage points, holding
all other assumptions constant, would erode the headroom to zero for Radiators
SpA. An increase in discount rate of 0.64 ppts, holding all other assumptions
constant, would erode the headroom to zero for Radiators SpA. A reasonably
possible decrease in the EBITDA margin of 1.0 ppts would give rise to an
impairment of £1.6 million. A reasonably possible decrease in the plan sales
volumes of 10% would give rise to an impairment of £5.0 million.
An extra sensitivity is the renewal of a significant supply contract with an
existing customer. The contract ends on 31 December 2025 and the base scenario
assumes that it is successfully renegotiated on the basis of management's
assessment of the strength of the Group's position with the customer. Holding
all other assumptions constant, the loss of the contract would give rise to an
impairment of between £8.6 million and £11.8 million, depending on the
ability to reduce costs, of the current value of all of the assets in the CGU,
including property, plant and equipment. The impairment modelling makes the
assumption that manufacturing capacity is not utilised for other customers.
11 Financial liabilities
Financial liabilities - other - not interest bearing
Financial instruments through profit or loss reflect the positive change in
fair value of those foreign exchange forward contracts that are not designated
in hedge relationships, but are, nevertheless, intended to reduce the level of
foreign currency risk for expected sales and purchases.
Liabilities 2024 2023
£'000 £'000
Financial instruments at fair value through profit or loss
Derivatives not designated as hedges - foreign exchange forward contracts - 318
Total instruments at fair value through profit or loss - 318
Current - 318
Non-current - -
Financial liabilities - interest-bearing loans and borrowings
Effective Maturity 2024 2023
interest rate £'000 £'000
%
Current interest-bearing loans and borrowings
Lease liabilities 2,212 2,469
2,212 2,469
Non-current interest-bearing loans and borrowings
Lease liabilities 5,671 7,402
Revolving credit facility - GBP SONIA + 2.25% 9 Nov 2026 41,750 46,900
Revolving credit facility - Euro Euribor + 2.25% 9 Nov 2026 13,146 10,399
Term loan Euribor + 2.25% 9 Nov 2026 23,436 24,563
Unamortised loan costs (674) (1,037)
83,329 88,227
Total interest-bearing loans and borrowings 85,541 90,696
The Group has a £100 million loan facility jointly financed by National
Westminster Bank plc and Barclays Bank plc. The facility consists of a
£76.027 million revolving credit facility and a €28.346 million term loan
facility.
During the year ended 31 December 2023, the £76.027 million revolving credit
facility and the €28.346 million term loan facility were extended by two
years to 9 November 2026 by exercising the two-year extension option included
in the facility agreement.
The RCF and term loan facilities are secured on the assets of certain
subsidiaries within the Group.
Changes in liabilities arising from financing activities
1 January Cash flows Non-cash 31 December
2024 £'000 changes 2024
£'000 £'000 £'000
Liabilities from financing activities
Revolving credit facility - GBP 46,900 (5,150) - 41,750
Revolving credit facility - Euro 10,399 3,388 (641) 13,146
Term loan 24,563 - (1,127) 23,436
Lease liabilities 9,871 (1,715) (273) 7,883
91,733 (3,477) (2,041) 86,215
Other assets
Cash and cash equivalents (21,442) 2,012 797 (18,633)
Net liabilities arising from financing activities 70,291 (1,465) (1,244) 67,582
The non-cash changes all relate to foreign exchange differences.
12 Inventories
2024 2023
£'000 £'000
Raw materials 23,818 21,723
Work in progress 3,388 3,327
Finished goods 37,063 34,509
Other consumables 3,042 3,817
67,311 63,376
The cost of inventories recognised as an expense in the year was £201,617,000
(2023: £221,343,000). The provision for the impairment of stocks increased in
the year, giving rise to a cost of £760,000 (2023: cost of £355,000). At 31
December 2024, the provision for the impairment of stocks was £3,974,000
(2023: £3,347,000).
13 Trade and other receivables
2024 2023
£'000 £'000
Current
Trade receivables 42,279 47,619
Other receivables 2,629 2,462
Prepayments 570 593
45,478 50,674
Non-current
Other receivables 284 301
284 301
The table below sets out the movements in the allowance for expected credit
losses of trade receivables:
2024 2023
£'000 £'000
At 1 January 806 763
Charge for the year 14 155
Unused amounts reversed (246) (95)
Exchange adjustment (26) (17)
At 31 December 548 806
As at 31 December, the ageing of trade receivables (gross of impairment) are
as follows:
Total Current <30 days 30-90 days >90 days
£'000 £'000 £'000 £'000 £'000
2024
Gross carrying amount 42,827 33,241 5,464 3,873 249
2023
Gross carrying amount 48,425 41,635 4,600 777 1,413
14 Cash and cash equivalents
2024 2023
£'000 £'000
Cash at bank and on hand 18,633 21,442
15 Trade and other payables
2024 2023
£'000 £'000
Current
Trade payables 46,581 49,263
Other payables and accruals 18,485 22,319
Other taxes and social security 3,822 5,685
Interest payable 322 789
69,210 78,056
16 Provisions
Warranty Compensation Restructuring Unused Total
£'000 fund £'000 vacation £'000
£'000 £'000
At 1 January 2023 593 1,199 719 208 2,719
On business combination - - 131 - 131
Arising during the year 864 50 2,652 728 4,294
Utilised (696) - (799) (506) (2,001)
Exchange adjustment (15) (29) (19) (83) (146)
At 31 December 2023 746 1,220 2,684 347 4,997
Arising during the year 332 126 - 765 1,223
Released (169) - - - (169)
Utilised (430) - (2,323) (440) (3,193)
Exchange adjustment (27) (59) (52) (61) (199)
At 31 December 2024 452 1,287 309 611 2,659
Current 113 - 309 327 749
Non-current 339 1,287 - 284 1,910
Compensation fund
The supplementary customer compensation fund is made in accordance with
European legislation to provide for potential severance payments to agents.
Restructuring
The restructuring provision relates to a Group-wide restructuring programme
undertaken to drive cost savings for future periods.
Unused vacation
A provision is recognised in respect of an unused vacation pay liability due
to certain employees in Turkey. The timing of the provision is dependent on
the rate at which employees take additional vacation.
17 Share capital and reserves
2024 2024 2023 2023
Number £ Number £
Authorised, called up and fully paid
Ordinary shares of £0.001 each 127,352,555 127,353 127,352,555 127,353
127,353 127,353
18 Commitments and contingencies
Commitments
Amounts contracted for but not provided in the financial statements amounted
to £177,000 (2023: £215,000) for the Group. All amounts relate to property,
plant and equipment.
Contingent liabilities
Termo Teknik Ticaret ve Sanayi A.S. has issued letters of guarantee and
letters of credit to its steel suppliers amounting to $17,917,000 (2023:
$18,309,000) and $18,071,000 (2023: $10,204,000) respectively. Termo Teknik
Ticaret ve Sanayi A.S. has also issued letters of guarantee denominated in
Turkish Lira totalling TL26,514,000 (2023: TL14,876,000).
The Group enters into various forward currency contracts to manage the risk of
foreign currency exposures on certain purchases and sales. The total amount of
unsettled forward contracts as at 31 December 2024 is £12,123,000 (2023:
£12,197,000) on purchases and £17,500,000 (2023: £20,750,000) on sales.
The fair value of the unsettled forward contracts held at the balance sheet
date, determined by reference to their market values, is an asset of £293,000
(2023: liability of £318,000).
As part of the £100 million loan facility, entered into in November 2021, and
amended on 8 July 2022, the Group is party to a cross-collateral agreement
secured on specific assets of certain Group companies. No liability is
expected to arise from the agreement.
Under an unlimited multilateral guarantee, the Company, in common with certain
fellow subsidiary undertakings in the UK, has jointly and severally guaranteed
the obligations falling due under the Company's net overdraft facilities. No
liability is expected to arise from this arrangement.
Reconciliation of alternative performance measures and glossary of terms
The Group uses some alternative performance measures to monitor and assess the
underlying performance of the business. These measures include adjusted
operating profit and adjusted profit for the year. These measures are deemed
useful as they aid comparability year on year. The use of alternative
performance measures compared to statutory IFRS measures does give rise to
limitations, including a lack of comparability across companies and the
potential for them to present a more favourable view. Further, these measures
are not a substitute for IFRS measures of profit. Alternative performance
measures are defined in the glossary of terms below. Alternative performance
measures are reconciled to the appropriate financial statements line item
being disclosed.
Reconciliation of adjusted profit for the year and adjusted earnings per share
2024 2023
£'000 £'000
Profit for the year 16,518 15,424
Adjusted for:
Exceptional items - 2,466
Amortisation of customer relationships 137 141
Tax on exceptional items - (651)
Tax on amortisation of customer relationships (38) (39)
Adjusted profit for the year 16,617 17,341
Basic weighted average number of shares in issue 127,352,555 127,352,555
Diluted weighted average number of shares in issue 128,389,983 127,352,555
Earnings per share
Basic earnings per share (pence per share) 12.97 12.11
Diluted earnings per share (pence per share) 12.87 12.11
Adjusted earnings per share
Basic earnings per share (pence per share) 13.05 13.62
Diluted earnings per share (pence per share) 12.94 13.62
Reconciliation of adjusted operating profit and EBITDA
2024 2023
£'000 £'000
Operating profit 31,385 26,681
Adjusted for:
Exceptional items - 2,466
Amortisation of customer relationships 137 141
Adjusted operating profit 31,522 29,288
Adjusted for:
Depreciation 11,692 11,615
Amortisation (excluding customer relationships) 331 316
EBITDA 43,545 41,219
Reconciliation of cash flow from operations, adjusted cash flow from
operations and free cash flow
2024 2023
£'000 £'000
EBITDA (see reconciliation above) 43,545 41,219
Adjusted for:
Exceptional items - (2,466)
(Gain)/loss on disposal of property, plant and equipment (118) 11
Share-based payments 440 515
Working capital adjustments (12,375) 1,609
Net capital expenditure (8,485) (9,360)
Cash flow from operations 23,007 31,528
Income tax paid (6,265) (7,497)
Interest paid - net (7,186) (6,246)
Free cash flow 9,556 17,785
Cash flow from operations (see reconciliation above) 23,007 31,528
Adjusted for:
Exceptional items - 2,466
Exceptional items' impact on working capital 2,320 (2,237)
Adjusted cash flow from operations 25,327 31,757
2024 2023
£'000 £'000
Decrease in trade and other receivables 3,885 8,237
(Increase)/decrease in inventories (6,143) 12,884
Decrease in trade and other payables (6,743) (20,364)
(Decrease)/increase in provisions (2,176) 2,214
Movement in other financial assets/liabilities (610) 319
Decrease in other pension provisions (7) (7)
Difference between pension charges and cash contributions (581) (1,674)
Working capital adjustments (12,375) 1,609
2024 2023
£'000 £'000
Proceeds from sale of property, plant, equipment and intangible assets 341 352
Purchase of property, plant and equipment (5,861) (6,586)
Purchase of intangible assets (100) (507)
Payment of lease liabilities (2,865) (2,619)
Net capital expenditure (8,485) (9,360)
Reconciliation of business capital employed and return on capital employed
2024 2023
£'000 £'000
Property, plant and equipment 79,173 87,247
Technology and software costs 631 896
Inventories 67,311 63,376
Trade and other receivables 45,762 50,975
Trade and other payables (69,210) (78,056)
Provisions (2,659) (4,997)
Net employee defined benefit liabilities (5,118) (4,053)
Financial assets/(liabilities) 293 (318)
Business capital employed 116,183 115,070
2024 2023
£'000 £'000
Adjusted operating profit 31,522 29,288
Business capital employed 116,183 115,070
Return on capital employed 27.1% 25.5%
Reconciliation of net debt and leverage
2024 2023
£'000 £'000
Total interest-bearing loans and borrowings 85,541 90,696
Cash and cash equivalents (18,633) (21,442)
Adjusted for:
Unamortised loan costs 674 1,037
Net debt 67,582 70,291
EBITDA (see reconciliation above) 43,545 41,219
Debt leverage ratio 1.55 1.71
Reconciliation of net debt and leverage before lease liabilities
2024 2023
£'000 £'000
Total interest-bearing loans and borrowings 85,541 90,696
Cash and cash equivalents (18,633) (21,442)
Adjusted for:
Unamortised loan costs 674 1,037
Lease liabilities (7,883) (9,871)
Net debt before lease liabilities 59,699 60,420
EBITDA (see reconciliation above) 43,545 41,219
Debt leverage ratio before lease liabilities 1.37 1.47
Adjusted cash flow from operations: Cash flow from operations before
exceptional items and the impact of exceptional items on working capital.
Adjusted EPS: Adjusted earnings per share is calculated on adjusted profit for
the year divided by the weighted average number of shares in issue.
Adjusted operating profit: Operating profit before exceptional items,
amortisation of customer relationships, foreign exchange differences (until 31
December 2022) and the impact of IAS 29 (until 31 December 2022).
Adjusted profit for the year: Earnings before exceptional items, amortisation
of customer relationships, foreign exchange differences (until 31 December
2022), the impact of IAS 29 (until 31 December 2022) and tax thereon.
Business capital employed: The sum of property, plant and equipment,
technology and software costs, trade and other receivables, inventories, other
current financial assets, provisions, net employee defined benefit
liabilities, trade and other payables and other current financial liabilities.
CAGR: Compound annual growth rate.
Cash flow from operations: EBITDA, less exceptional items, plus or minus
movements in operating working capital, less share‑based payment expense,
less net investments in property, plant and equipment, less technology and
software costs, less finance lease payments.
Cash flow from operations conversion: Calculated by dividing cash flow from
operations by adjusted operating profit.
Contribution: Revenue from sale of the Group's products less any cost of
direct materials, variable distribution costs, variable selling costs, direct
labour costs and other variable costs.
EBITDA: Profit before interest, taxation, depreciation, amortisation,
exceptional items, foreign exchange differences (until 31 December 2022) and
the impact of IAS 29 (until 31 December 2022).
Free cash flow: Cash flow from operations less tax paid less net interest
paid.
Debt leverage ratio: Calculated by dividing net debt by EBITDA.
Debt leverage ratio before lease liabilities: Calculated by dividing net debt
before lease liabilities by EBITDA.
Net debt: The sum of revolving credit facilities, term loan, lease liabilities
net of cash.
Return on capital employed: Adjusted operating profit as a percentage of
business capital employed.
RMI: Repair, maintenance and improvement activities.
Certain statements in this presentation are forward-looking statements which
are based on Stelrad Group plc's expectations, intentions and projections
regarding its future performance, anticipated events or trends and other
matters that are not historical facts. Such forward-looking statements can be
identified by the fact that they do not relate only to historical or current
facts. Forward-looking statements sometimes use words such as "aim",
"anticipate", "target", "expect", "estimate", "intend", "plan", "goal",
"believe", or other words of similar meaning. These statements are not
guarantees of future performance and are subject to known and unknown risks,
uncertainties and other factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking statements.
Given these risks and uncertainties, prospective investors are cautioned not
to place undue reliance on forward-looking statements. Forward-looking
statements speak only as of the date of such statements and, except as
required by applicable law, Stelrad Group plc undertakes no obligation to
update or revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise.
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