REG - Strix Group PLC - Final Results, Annual Report and Notice of AGM
Wed 07:00
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RNS Number : 7215G Strix Group PLC 30 April 2025
30 April 2025
Strix Group Plc
("Strix", the "Group" or the "Company")
Final Results, Notice of AGM and Publication of Annual Report
Financial Summary
Results from continuing operations(1) CER(3) CER(3) AER AER
Adjusted measures FY24 Change FY24 Change FY23
£m %/bps £m %/bps £m
Revenue 145.7 1.3% 144.0 0.1% 143.8
Gross profit 54.6 -4.6% 54 -5.8% 57.3
Gross profit % 37.5% -230bps 37.5% -230bps 39.8%
EBITDA 35.7 -10.0% 35.4 -10.8% 39.7
EBITDA % 24.5% -310bps 24.6% -300bps 27.6%
Operating profit 27.6 -15.1% 27.5 -15.6% 32.5
Profit before tax 18.7 -16.3% 18.5 -17.1% 22.3
Net debt(2) 63.7 -23.9% 83.7
Net debt leverage 1.87x -14.6% 2.19x
Operating cash conversion 114.0% 910bps 104.9%
ROCE 21.7% -60bps 22.3%
Diluted earnings per share (pence) 6.7 -27.7% 6.6 -28.0% 9.2
GAAP Measures
Revenue 141.8 -1.4% 143.8
Gross profit 50.9 -10.9% 57.2
Gross profit % 35.9% -390bps 39.8%
Profit before tax 5.0 -72.6% 18.1
Diluted earnings per share (pence) 0.8 -88.7% 7.5
1. Adjusted results from continuing operations exclude adjusting
items and results from discontinued operation, see notes 6(b) and 28.
2. Net debt is as defined by the Group's bank facility agreement
and excludes the impact of IFRS 16 lease liabilities and accrued interest.
3. "CER", being Constant Exchange Rate, is calculated by
translating the FY24 figures by the average FY23 exchange rate, and "AER"
being Actual Exchange Rate.
Financial Highlights
· Adjusted revenues increased by 1.3% to £145.7m at CER in FY24,
despite challenging macro conditions and ongoing rationalisation
· Adjusted profit before tax of £18.7m, ahead of market consensus
and comfortably within previously announced range of £18.0m-£19.0m
· Management's continued focus on net debt reduction and cash
generation resulted in a £20.0m decrease in net debt to £63.7m (FY23:
£83.7m)
· Strong cash management reduced net debt leverage to 1.87x, well
within announced target range of 1.0x-2.0x
· Following a successful new product launch, Billi returned to
double-digit growth in Q424, contributing 30.3% of Group revenue
· As reported at HY24, further restructuring and rebasing of the
business has led to a number of adjusting items, see note 6(b)
Operational Highlights
· Welcomed Clare Foster as Chief Financial Officer alongside other
key strategic hires across the Group
· Built strong foundations through comprehensive restructure and
rebasing of the business to support the Group's medium-term opportunities for
profitable growth:
o Further rationalisation of Consumer Goods division, with a focus on more
profitable products, geographic expansion and new product development
o Disposal of HaloSource completed in Q424
o Partial relocation of manufacturing facility at the Ramsey factory to
Strix's China facility improving shipping times, cost and environmental
footprint
· Launch and first sales of the new Low-Cost control and the
development of the Next Generation of innovative controls is making good
progress
· Successful launch of new Billi products and initial distribution
agreements in Europe secured
· Consumer Goods division won incremental white label retail
contracts for 2025 and began manufacturing appliances for an existing baby
brand OEM customer out of its China factory
Outlook
· Controls division's new Industrial Design Service proved to be of
particular interest at the Spring Canton Fair, with multiple projects signed
up to and more to follow
· Some evidence that macro-uncertainties could weigh on Q225
Controls sales, potentially deferring volumes into Q325
· Billi's double-digit growth has continued into H125 as it gains
further traction with customers across its key target markets
· Despite some initial weakness in certain sectors, Consumer Goods
is now in a stronger and better focused position to execute on the sale of
more profitable products, geographic expansion and new product innovation
· Too early to determine the net global impact of the evolving
tariff arrangements, however Strix's direct sales into the US are limited with
no material sales from Consumer Goods and none from Billi
· Strong foundations mean the Board remains confident in the
Group's outlook, with its full year expectations unchanged
Mark Bartlett, Chief Executive Officer of Strix Group Plc, commented: "Strix
has continued to make strong progress on achieving its goals for the year, in
particular the restructuring and rebasing of the business which has been
transformative, and reduction of our net debt position to well within our
targeted range. Strategic progress has been made across all divisions - with
our Low-Cost controls successfully launching in less regulated markets,
significant new partnerships secured by the streamlined Consumer Goods
division, and Billi's return to double-digit growth in Q424, to provide clear
validation of Strix's approach to acquisitions which support the Group's
longer-term growth opportunities.
During the period, Strix cemented the foundations for its medium-term growth
prospects - further improving our competitive position and delivering adjusted
profit before tax slightly ahead of consensus. Whilst macroeconomic conditions
remain challenging at least in the short-term, we continue to see opportunity
in our key markets and appropriate investment across the Group remains ongoing
to protect new product development and other projects to support our
medium-term growth aspirations. We look forward to continuing this momentum in
the coming year."
Analyst & Investor Presentation
Strix will be hosting a presentation for analysts later this morning, at
09:30am (BST). Analysts wishing to attend should email strix@gracechurchpr.com
(mailto:strix@gracechurchpr.com) for details.
Strix will also be conducting an online Investor Presentation on Thursday 1
May 2025 at 11.30am (BST) providing an update to investors following today's
results and to answer questions submitted by viewers.
The webinar is open to all existing and potential shareholders, and
registration is free. You can sign up to register here:
https://www.equitydevelopment.co.uk/news-and-events/strixgroup-investorpresentation-1may2025
(https://www.equitydevelopment.co.uk/news-and-events/strixgroup-investorpresentation-1may2025)
For further enquiries, please contact:
Strix Group Plc +44 (0) 1624 829829
Mark Bartlett, CEO
Clare Foster, CFO
Zeus (Nominated Advisor and Joint Broker) +44 (0) 20 3829 5000
Nick Cowles / Jordan Warburton (Investment Banking)
Dominic King (Corporate Broking)
Stifel Nicolaus Europe Limited (Joint Broker) +44 (0) 20 7710 7600
Matthew Blawat / Francis North
Gracechurch Group (Financial PR and IR) +44 (0) 204 582 3500
Heather Armstrong / Claire Norbury
The person responsible for arranging release of this Announcement on behalf of
the Company is Mark Bartlett.
Information on Strix
Founded in 1982, Isle of Man based Strix is a global leader in the design,
manufacture and supply of kettle safety controls and other components and
devices involving water heating and temperature control, steam management and
water filtration.
Strix has built up market leading capability and know-how, expanding into
complementary products and technologies. The Group's brands include Aqua
Optima, LAICA and Billi providing our customers with market leading water
solutions on a global basis.
Strix is quoted on the AIM Market of the London Stock Exchange (AIM: KETL).
CEO's Report
Introduction
2024 was a year of refocus for Strix, during which significant changes were
made to the leadership team and the structure of the business and it is
pleasing to report that each of these initiatives are beginning to deliver
results. The Board's priority has been to cement strong foundations for
Strix's medium-term growth opportunities. Despite the continued global market
volatility, the Group remains resilient and is now in a stronger position to
execute against its growth strategy.
While much of the restructuring carried out this year has been with cost
savings in mind, selective investment has also been made in areas and projects
that produce higher returns for the Group. This flexibility, in addition to
the strengthened balance sheet, allows Strix to focus on its market leading
technology and innovation which supports the Group's future growth.
In addition to the structural improvements made across the Group, Strix has
further strengthened its senior leadership by enhancing the treasury function
and Billi leadership, as well as the commercial and business development teams
to support its long-term growth ambitions.
Deleveraging
Net debt reduction and cash generation has remained a priority for the Board
in 2024 and the Group is pleased to report a £20.0m reduction in the net debt
position to £63.7m. This has been achieved through the implementation of a
number of self-help actions to conserve cash, via enhanced working capital
management and a careful deceleration of capital expenditure. This was
bolstered by an equity placing raising gross £8.7m as announced on 12 June
2024.
Alongside carefully managing the debt reduction, management has ensured
appropriate investment has continued to be made across the Group to protect
new product development and other projects to support long-term growth
prospects.
Restructuring
As part of its rebasing efforts, Strix undertook several initiatives in the
year to support a more efficient and effective structure. Medium-term growth
aspirations have been prioritised with a focus on commerciality across the
Group to better support sustainable revenues and improved margins.
Strix relocated parts of its manufacturing capabilities, primarily the press
production lines, from its Ramsey factory to its China facility, with the core
technology of blades production, a key part of the Group's heritage, remaining
on the Isle of Man. This allows for more cost effective and efficient
transportation of raw materials, as well as being more environmentally
friendly, thereby aligning with Strix's robust ESG strategy.
The Consumer Goods division has refocused its commercial priorities to support
projects with higher returns, namely high margin product launches. This has
resulted in structural improvements through further rationalisation of product
lines and optimising headcount. This provides greater flexibility to
selectively invest time and resources for the short and medium-term.
As stated in the H124 interim results announced in September 2024, the Group
concluded a comprehensive review of its HaloSource unit (the smaller part of
the formerly named Premium Filtration Systems (PFS) division) and agreed that
the Group would dispose of the business on the open market as the HaloSource
technology did not align with the rest of the Group's focus on smaller scale
domestic filtration products. The business had been loss making since
acquisition and was forecast to continue to be so for the medium term, whilst
requiring additional investment to support ongoing growth. The HaloSource unit
was sold for a nominal value on 30 November 2024.
There have been a number of write-off/impairments and other adjusting items
that have been booked during 2024 (see note 6(b)), as a result of the
restructuring and rebasing of the business through the activities described
above.
The segmental reporting structure, as outlined in the Group's H124 interim
results, now comprises:
1. Controls
2. Billi (previously PFS)
3. Consumer Goods
Market
Despite macroeconomic and geopolitical headwinds causing much market
volatility in 2024, the Group's structural growth drivers remain constant.
Political and economic uncertainty in key regulated markets such as the UK,
Germany and the US impacted on consumer spending. However, the Group has seen
significant initial interest in the launch of the new Low-Cost control
products tailored for customers in less regulated markets, further supporting
Strix's commercial decision to invest in this new technology.
Another key driver of Strix's markets is the growing popularity of health and
wellness and the increasing consumer focus on using sustainable products,
which is particularly pertinent to all divisional product suites.
Urbanisation and the return to office refurbishment post Covid are also key
drivers for the Group as both consumers and corporate organisations look to
upgrade their appliances, this change is particularly relevant to Billi.
Overall, Strix expects the global Small Domestic Appliance (SDA) market to
reach 4.1 billion units in 2029 (c. 1.5% CAGR growth 2024-2029).
Controls
The Controls division contributed £69.5m (CER) in adjusted revenue for the
year, after experiencing relatively lower trading for parts of H224,
particularly in regulated markets, namely the UK and Germany. Sales in H124
were stronger as a result of a pipeline refill, however underlying consumer
demand into H224 declined due to cost price inflation, cautious discretionary
spending and international political uncertainty.
Positively, the Controls division saw the launch of the new Low-Cost control,
which has been well received by the Group's customers in less regulated
markets, and sales commenced in China in the second half of the year.
Following planned capital investments in H224, which has continued into the
new financial year, the development of the Next Generation of innovative
controls is making good progress. OEMs are qualifying their use in new
appliances, which will be ready at the end of H125, further protecting Strix's
market-leading position and supporting barriers to entry.
Billi
Billi returned to double-digit growth rates in Q424, following on from the
successful launch of the new multifunction mixer tap and OmniOne under-bench
unit, contributing £44.2m (CER) in adjusted revenue to the Group. The
division has seen an increase in sales in Europe following successful progress
on the division's geographical roll-out strategy focused on Europe, securing a
number of distribution contracts at the time of this announcement. Billi has
secured a new facility with higher capacity in Australia where it can further
ramp up production, demonstrating Strix's commitment to investing in the
division's future growth opportunities, with a planned move in H225. New
products continue to gain traction in in Australia, with expected UK launch
dates in H125.
Billi's key growth areas are focused on developing recurring revenue streams;
product sales, rental, servicing contracts and filter replacements, expanding
international distribution in residential and commercial markets and
developing custom tapware finishes and design profiles.
Consumer Goods
The Consumer Goods division reported £32.0m (CER) in adj. revenue. The
rationalisation of product lines has allowed for a better focus on more
profitable revenue streams, including extending successful product ranges and
deepening relationships with key OEMs.
New product launches include the first Brita-compatible filter to target
emerging water contaminants whilst addressing consumer health trends and
LAICA's new Handheld Vacuum Machine to increase category penetration with a
convenient, easy to use and simple to store solution that helps consumers
conserve fresh food for up to five times longer.
A number of incremental retail contracts have been secured for 2025, the Group
began manufacturing appliances for an existing baby brand OEM customer out of
its China factory, and further products are scheduled to be introduced in
H225. This new revenue stream is relatively lower margin than other routes to
market, however it is offset by the much higher quality customer engagement,
after-sale consumables and retention opportunities it provides to the Group.
IP & protection strategy
Strix continuously monitors risks and threats from the competitive landscape,
resulting in constantly evolving innovative technology. New products and
solutions are protected by a robust IP strategy and sustainable investment,
and the Group retains consumer safety at the core of its product development
strategy.
Strix continues to work with regulatory enforcement authorities to identify
and remove unsafe and poor-quality products from its major markets. Strix has
successfully taken actions against patent infringement throughout the year,
including cases in South Africa, India and China.
Strix's market leading position is built on its unique relationships with its
brands, retailers and OEMs. The Group's comprehensive know-how on complex
design and production applications allows it to provide valuable support
across the production chain, including product design and advice on
specification and manufacturing solutions, as well as the product's ongoing
lifecycle. Strix's reputation for customer focused services and solutions
cements strong relationships, ensuring brand strength and positioning Strix as
a trusted partner in the market.
Sustainability
Sustainability has always been at the core of Strix's purpose driven strategy
for growth. 2024 was another year of solid progress for the Group's
sustainability journey, which is built around Strix's Planet, People, Purpose
philosophy, aligned to the UN's Sustainable Development Goals.
All of the Group's primary operations were carbon neutral in the year,
including Billi for the first time. Energy consumption for the Group increased
by 7.0% to 15,930MWh, due to expansion of the Chinese facility. The Group's
on-site solar installations generated 1,318MWh of electricity, a 2.1%
increase. This accounted for 9.0% of total Group power consumption, down
slightly on the 9.6% of the previous year, reflecting higher overall energy
consumption with no further solar capacity added in the period.
Sustainability is embedded into Strix's new product roadmap. The Group
continued with prudent spending in the year, supporting strategic research and
development costs to ensure positive future growth. The Group invested in the
Next Generation control as it enters commercialisation, and in the increased
level of co-development with the Group's western branded partners as they look
for innovative new products and solutions.
Dividend
Strix has continued to make strong progress in achieving its goals for the
year, in particular the transformative restructuring and rebasing of the
business and reduction of the net debt position to well within the targeted
range of 1.0x-2.0x. The Group also continues to see opportunities in its key
markets and appropriate investment across the Group remains ongoing to protect
new product development and other projects to support growth aspirations over
the medium-term.
Macroeconomic conditions continue to be challenging and it still remains too
early to determine the global net impact of the evolving tariff arrangements
on the Group. To be prudent, the Board has decided to reinstate the FY24 final
dividend of 1.28p per share but for payment to take place in December 2025
alongside the FY25 interim dividend. A resolution to seek approval for the
FY24 final dividend payment will be sought in a general meeting to be
scheduled in Q425.
Outlook
Following the rebasing and restructuring activities undertaken in FY24, and
with leverage remaining within the medium-term stated range of 1.0x to 2.0x,
Strix is now in a stronger position to focus on medium-term growth.
In April 2025, management once again attended the Canton Fair, China's premier
international export event. This provides Strix with valuable opportunities to
engage with existing customers and partners. Despite the obvious uncertainty
surrounding US tariffs, there was plenty of activity, with more than 3,000
models of kettles on display and Strix visibly holding market share. The show
was well attended by OEMs and brands alike, and the Group was particularly
pleased to see a strong pull for the Next Generation controls and new
technology offerings.
While it is still too early to be definitive about the global net impact of
the evolving tariff arrangements on the Group, Strix's direct sales into the
US are limited to c. £7.0m, with no material sales from Consumer Goods and
none from Billi. Strix remains attentive to navigate the broader inflationary
effects of rising global tariffs and any potential indirect consequences.
In the Controls division, initial sales of the new Low-Cost control have been
positive, expanding Strix's target addressable market. The division's Next
Generation control remains on track to be formally launched in H125. The newly
launched Industrial Design service proved to be of particular interest at the
Fair, with multiple projects signed up to and more to follow. Despite a strong
start to the year, there is some evidence that macro-uncertainties could weigh
on Q225 sales volumes. If this does continue, then Strix expects to see
trading volumes in its Control's division normalise back to a greater H2
weighting in FY25.
Billi's double-digit growth has continued into H125 as it gains further
traction with customers across its key target markets in Australasia and
Europe. Scheduled product launches are underway in the UK and Europe as
planned, supported by strong customer appetite.
Consumer Goods has seen its white label retail contracts continue production
for its leading OEM customer in the global baby brand, and has ramped up
manufacturing in the Group's China facility. The division has seen some
initial weakness in certain sectors, including online sales in Q125. However,
with the recruitment of a new dedicated ecommerce sales lead, the division is
already implementing appropriate strategies to improve sales for the remainder
of the year. Following the division's restructure, it is now in a stronger and
better focused position to execute on the sale of more profitable products,
geographic expansion and new product innovation.
With a strengthened balance sheet, growth prospects for Strix and its
divisions remain compelling and as a market leader, Strix continues to be well
positioned to capitalise on these opportunities. Looking ahead, there can be
no doubt that the macroeconomic and geopolitical environment will continue to
present challenges. However, notwithstanding this, the strong foundations of
the Group mean the Board remains confident in the Group's outlook, with its
full year expectations unchanged.
Mark Bartlett
CEO Strix Group Plc
29 April 2025
CFO's Review
Continuing Operations FY24 (CER) FY24 (AER) FY23 (AER)
Adjusted Revenue £m Change Adjusted GP% Change Adjusted Revenue £m Change Adjusted GP% Change Adjusted Revenue £m Adjusted GP%
Controls 69.5 -0.9% 36.3% -270bps 69.5 -0.9% 36.3% -270bps 70.1 39.0%
Billi (previously PFS) 44.2 7.0% 46.5% -40bps 43.1 4.4% 46.6% -30bps 41.3 46.9%
Consumer Goods 32.0 -1.2% 27.7% -490bps 31.4 -3.1% 27.6% -500bps 32.4 32.6%
Group 145.7 1.3% 37.5% -230bps 144.0 0.1% 37.5% -230bps 143.8 39.8%
Unless stated otherwise, amounts and comparisons with prior year are
calculated at CER, and where we refer to 'adjusted' this is defined as being
before adjusting items. All comparisons have been made based on continuing
operations only.
Adjusted revenue
Despite challenging macro conditions in Q424, and the ongoing rationalisation
of the Consumer Goods division, Group adjusted revenues continued to grow
reaching £145.7m, representing a 1.3% increase (at CER) against the prior
year. At AER, growth was lower at 0.1%, reflecting foreign exchange headwinds
in the form of a weaker AUD and EUR.
The Controls division remained broadly in line with prior year, reporting a
slight decrease of 0.9% at CER to £69.5m (AER: 0.9% to £69.5m, FY23:
£70.1m). Despite the widely publicised year-end macro volatility in key end
markets such as the UK and Germany, the Group has continued to see some
year-on-year volume recovery in its higher margin regulated/less regulated
sectors (averaging 85.0-90.0% of division revenues). However, as reported in
HY24 this has been offset by a decrease of c.25.0% in the lower margin China
market, reflecting both a slowdown in this part of the market, and a market
share reduction as the Group continues to walk away from non-profitable
business. Looking ahead, the strategic investments the Group is making into
its Low-Cost control product are already driving volume recoveries in this
highly price-sensitive market.
Following on from the successful introduction of new products into the Group's
established Australian market in Q324, Billi returned to double-digit growth
in the second half of the year at 10.9%, leading to a solid overall year on
year growth of 7.0% at CER to £44.2m (AER: 4.4% to £43.1m, FY23: £41.3m).
This division continues to offer the Group significant future opportunities,
through the development of a residential product and the ongoing geographical
expansion into Europe.
Consumer Goods sales were slightly down, by 1.2% at CER to £32.0m (AER: down
(3.1)% to £31.4m, FY23: £32.4m), predominantly as a result of the previously
announced successful restructuring and rationalisation initiatives (see note
6(b)). Looking ahead, actions taken will see this part of the Group able to
focus more effectively on its core growth opportunities.
Adjusted trading profit
The Group experienced a decrease of 230bps to 37.5% (AER: 37.5%; FY23: 39.8%)
at adjusted gross margin level, predominantly driven by the Controls and
Consumer Goods divisions.
In Controls, adjusted gross margin decreased by 270bps at CER (AER: 270bps) to
36.3%; (FY23: 39.0%). This is largely due to increased commodity costs and a
weaker USD, offset in part by the favourable market mix noted above. Looking
ahead, the Group is expecting commodity costs to continue to weigh on gross
margins in this division. Strix will continue to take appropriate actions to
manage the impact of this as far as possible, via appropriate hedging and
pricing strategies.
Billi continues to report the highest adjusted gross margin in the Group,
staying broadly in line with the prior year at 46.5% at CER (AER: 46.6%; FY23:
46.9%). Looking ahead, the Group expects adjusted gross margin to remain at
this elevated level, supported by the high underlying growth and relative
immaturity of end markets.
The Consumer Goods division reported a more marked decrease in adjusted gross
margin of 490bps to 27.7% at CER (AER: (500)bps to 27.6%; FY23: 32.6%), to end
the year more in line with HY24 where the division reported adjusted gross
margins of 29.6%. The main reason for the H224 vs H124 reduction is the start
of appliance manufacturing for a key OEM in the baby formula sector. This new
revenue stream is relatively lower margin than other routes to market, however
this is offset by the much higher quality customer engagement and retention
opportunities it provides. Looking ahead, as Strix continues to build on its
appliance manufacturing volumes with new products already in the pipeline, the
Group expects adjusted gross margins to remain broadly consistent with FY24.
Adjusted net overhead and distribution costs ran ahead of the prior year at
£27.4m at CER (AER: £26.9m; FY23: £25.2m) largely as the result of ongoing
investments to support continued double-digit growth in Billi, as well as key
strategic hires at a Group level into the commercial, finance and operational
teams.
Reflecting the above, adjusted operating profit at CER has reduced by 15.1% at
£27.6m (AER: 15.6% to £27.5m; FY23: £32.5m) and adjusted PBT by (16.3)% to
£18.7m (AER: 17.1% to £18.5m; FY23: £22.3m). Reported operating profit
reduced by (50.8)% to £13.9m (FY23: £28.3m) and reported profit before tax
reduced by 72.6% to £5.0m (FY23: £18.1m).
Net finance costs
Net finance costs decreased compared to the prior year to £9.0m (FY23:
£10.2m) predominantly due to the reduction in average gross debt. This
decrease is in part due to the strong cash generation and conservation actions
taken by the Group and the £8.4m net proceeds from the reverse equity placing
in June 2024, in addition to the maintenance of a more efficient cash holding
position.
The maintenance of lower net debt leverage of <2.0x in the second half of
the year has also brought the Group into a reduced interest rate ratchet. This
has decreased the interest margin on the Group's facilities by (50)bps to
2.35% when compared to FY23.
Adjusting items from continuing operations
As previously announced, the restructuring and rebasing of the business has
continued in FY24 to allow Strix to build strong foundations to support the
Group's medium-term growth opportunities.
A key part of this process has been the ongoing commercial review of product
lines/groups (predominantly within the Consumer Goods division) with the
intention of providing the business with the flexibility to selectively invest
time and resources in those projects with higher returns. As a result of this
process, the Group has approved the cessation of a number of product
lines/groups and associated capital development projects, which has resulted
in the write-off/impairments of certain items on the balance sheet including
capital development assets, stock and some licensing debtors.
As a result of these activities, the Group has reported non-recurring
adjusting items of £11.9m for the year (FY23: £2.6m) (see note 6(b)) in
continuing operations.
The largest element of these costs relates to write-off/impairments in the
Consumer Goods division of £6.4m, including tooling/intangibles, inventories
and licensing agreements associated with product lines/groups where the Group
does not intend to place further commercial focus or allocate resources. These
decisions have been made based on the level of additional investment in both
time and resources required to ensure specific product lines/groups can be
successfully marketed, including the provision of suitable marketing and
promotional strategies, versus the expected timing and profitability of that
product line/group. Included above, personnel costs relating to the
restructuring of the Consumer Goods division, have also been incurred.
Non-recurring adjusting items have been recognised in the Controls division of
£1.5m. Certain Controls capital expenditure projects were deferred to allow
the business to retain additional cash within the Group and reduce net debt
levels. This timing change has resulted in the £0.9m impairment of specific
fixed-term licensing debtors that related to this technology. Restructuring
costs related to the announced part-closure of the Group's Ramsey
manufacturing site totalled £0.6m.
Central restructuring costs of £0.6m (FY23: £nil) relate to personnel
changes.
The £3.3m of settlements relate predominantly to a £2.2m commercial
settlement with one of the Group's key OEM customers. As this is a
nonrecurring and material amount, it has been presented as an adjusting item
in the FY24 income statement. The other £1.1m largely relates to a final
settlement agreement with all parties to the LAICA acquisition, regarding the
transfer of a Taiwanese property.
Discontinued operations
Following a comprehensive review of the Group's business unit HaloSource (part
of the previously named PFS division), it was concluded that the Group would
look to dispose of this business on the open market. As an industrial farming
filtration product, the HaloSource technology did not fit well with the rest
of the Group's focus on smaller scale domestic filtration products. The
business had been loss making since acquisition and was forecasting to
continue to be for the medium term, whilst requiring additional investment to
support ongoing growth. The business was sold for a nominal value (on 30
November 2024) which led to HaloSource being disclosed as a Discontinued
Operation for the Group. This resulted in an impairment of £2.8m to reflect
the minimal NRV on disposal.
Cash flow
The Group has maintained consistently high operating cash generation, with a
strong adjusted operating cash conversion ratio of 114.0% in the current
period (FY23: 104.9%).
Ongoing improvements in working capital management have reduced net working
capital by £4.4m in the year. Reflecting the Group's success in this area,
working capital as a percentage of sales has reduced significantly to 10.7%
(FY23: 16.7%). Measured and careful monitoring of organic capital expenditure
has allowed the business to maintain reduced investment outflows of £8.2m
(FY24) vs £8.0m (FY23).
Net proceeds from the reverse equity placing generated £8.4m of cash in the
first half of the year, allowing the part repayment of the Group's RCF.
Additional repayments have subsequently been made in the second half of the
year, leaving the Group with access to £10.5m of unutilised RCF facilities as
at 31 December 2024 (FY23: £nil), providing much greater security and
flexibility of funding.
Net debt and capital allocation
Prioritising cash generation and net debt reduction remains a key focus for
the Group. As a result of that focus, and reflecting all the successes
discussed above, the Group saw a marked decrease in its net debt position of
£20.0m to £63.7m (FY23: £83.7m).
Net debt leverage reduced significantly in the period to 1.87x (FY23: 2.19x),
providing substantial headroom against a covenant of 2.75x. The Group
continues to prioritise cash retention and net debt leverage reduction in the
short-term in line with its capital allocation framework. As a result of this
process, a target of initially reducing net debt leverage to 1.5x has been put
in place, after which leverage appetite will remain at between 1.0x to 2.0x
for the medium term.
The Group has continued to work proactively with its banking partners to
enhance flexibility and security of funds within the existing agreement. Step
one of that process was the March 2024 normalisation of the Group's net debt
leverage covenant to 2.75x for the duration of the remaining facility
(previously: 2.25x). This was followed up by the approval of a one-year
extension for the full £80.0m of RCF facility on 11 September 2024, providing
the Group with funding security extending to 25 October 2026.
Looking ahead, the Group intends to initiate a full competitive refinancing
process in the coming months to provide appropriate, cost effective and
flexible funding to support the Group's medium-term investment driven growth
aspirations.
Prior year restatement
The FY23 comparatives have been restated within these financial statements to
correct a historic technical accounting error with the translation of
goodwill, acquired intangibles and deferred tax liabilities for its
subsidiaries Billi Australia and Billi New Zealand, see note 29. Correction of
this, has had no impact on the Group's consolidated income statement,
consolidated statement of cash flows, its banking covenant or its prior year
KPIs.
Clare Foster
CFO Strix Group Plc
29 April 2025
Notice of AGM and Publication of Annual Report
The Company gives notice that its AGM will be held on Thursday 10 July 2025 at
9:00am at its headquarters on the Isle of Man, Forrest House, Ronaldsway, Isle
of Man, IM9 2RG.
The Notice of AGM, along with the Company's annual report and accounts for the
year ended 31 December 2024 (together, the "Documents"), have been published
on the Company's website at:
https://strix.com/documents-reports.html and will be posted to shareholders
who have elected to receive physical copies over the coming week.
CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2024
Note 2024 2023
£000s £000s
Income statement Restated*
Revenue - before adjusting items 143,968 143,807
Revenue - adjusting items 6(b) (2,200) -
Revenue 4 141,768 143,807
Cost of sales - before adjusting items (90,001) (86,537)
Cost of sales - adjusting items 6(b) (818) (65)
Cost of sales (90,819) (86,602)
Gross profit 50,949 57,205
Distribution costs (9,960) (10,555)
Administrative expenses - before adjusting items (16,941) (14,632)
Administrative expenses - adjusting items 6(b) (10,518) (4,127)
Administrative expenses (27,459) (18,759)
Share of profits from joint ventures - 85
Other operating income 405 370
Operating profit - before adjusting items 27,471 32,538
Adjusting items 6(b) (13,536) (4,192)
Operating profit 13,935 28,346
Finance costs 7 (9,187) (10,378)
Finance income 224 175
Profit before taxation - before adjusting items 18,508 22,335
Adjusting items 6(b) (13,536) (4,192)
Profit before taxation 4,972 18,143
Income tax expense - before adjusting items (3,286) (1,872)
Income tax credit - adjusting items 6(b) 271 329
Income tax expense 8 (3,015) (1,543)
Profit from continuing operations - before adjusting items 15,222 20,463
Adjusting items 6(b) (13,265) (3,863)
Profit from continuing operations 1,957 16,600
Loss from discontinued operations - before adjusting items 28 (485) (406)
Loss from discontinued operations - adjusting items 6(b) (2,830) (34)
Loss from discontinued operations 28 (3,315) (440)
(Loss)/profit for the year (1,358) 16,160
(Loss)/profit for the year attributable to:
Equity holders of the Company (1,377) 16,203
Non-controlling interests 19 (43)
(1,358) 16,160
(Loss)/profit for the year attributable to Equity holders of the Company
arises from:
Continuing operations 1,938 16,643
Discontinued operations (3,315) (440)
(1,377) 16,203
Earnings per share (pence) from continuing operations
Basic 9 0.9 7.6
Diluted 9 0.8 7.5
(Loss)/earnings per share (pence)
Basic 9 (0.6) 7.4
Diluted 9 (0.6) 7.3
* Prior period numbers have been restated as a result of discontinued
operations (note 28) and representation of income statement (note 2).
The notes at the end of this statement form part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December
2024
Note 2024 2023
£000s £000s
Restated*
(Loss)/profit for the year (1,358) 16,160
Other comprehensive expense
Items that may be reclassified to profit or loss:
Exchange differences on translation of continuing foreign operations, net of (3,351) (2,869)
tax
Exchange differences on translation of discontinued operation, net of tax (22) (135)
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefit obligations 5(c) (8) -
Total comprehensive (expense)/income for the year (4,739) 13,156
Total comprehensive (expense)/income for the year attributable to:
Equity holders of the Company (4,757) 13,210
Non-controlling interests 18 (54)
(4,739) 13,156
Total comprehensive (expense)/income for the year attributable to Equity
holders of the Company arises from:
Continuing operations (1,420) 13,785
Discontinued operations (3,337) (575)
(4,757) 13,210
* Prior period numbers have been restated as a result of discontinued
operations (note 28), change in presentation of the income statement (note 2)
and correction of a technical accounting error (note 29).
The notes at the end of this statement form part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION for the year ended 31 December
2024
Note 2024 2023
Restated*
ASSETS £000s £000s
Non-current assets
Intangible assets 10 63,021 71,584
Property, plant and equipment 11 44,143 46,215
Deferred tax asset 8 1,512 957
Investments in joint ventures - 1
Net investments in finance leases - 11
Total non-current assets 108,676 118,768
Current assets
Inventories 13 25,391 25,440
Trade and other receivables 14 22,676 27,713
Current income tax receivable 292 220
Cash and cash equivalents 15 15,117 20,114
Total current assets 63,476 73,487
Total assets 172,152 192,255
EQUITY AND LIABILITIES
Equity
Share capital and share premium 22 32,002 23,642
Share-based payment reserve - 572
Retained earnings 18,659 19,134
Foreign currency translation reserve (5,731) (2,359)
Non-controlling interests 671 653
Total equity 45,601 41,642
Current liabilities
Trade and other payables 16 30,729 27,165
Borrowings 17 11,230 16,062
Lease liabilities 24 1,129 1,218
Current income tax liabilities 2,396 2,074
Total current liabilities 45,484 46,519
Non-current liabilities
Lease liabilities 24 2,545 3,592
Deferred tax liabilities 8 8,998 9,871
Borrowings 17 68,807 89,743
Post-employment benefits 5(c) 717 888
Total non-current liabilities 81,067 104,094
Total liabilities 126,551 150,613
Total equity and liabilities 172,152 192,255
* Prior period numbers have been restated as a result correction of technical
accounting errors, see note 29.
The consolidated financial statements in this report were approved and
authorised for issue by the Board of Directors on 29 April 2025 and were
signed on its behalf by:
Mark Bartlett Clare Foster
Director Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December
2024
Share capital and share premium Share based payment reserve Retained earnings Foreign currency translation reserve Total Equity attributable to owners Non-controlling interests Total Equity
£000s £000s £000s £000s £000s £000s £000s
Balance at 1 January 2023 23,861 202 12,479 - 36,542 707 37,249
Profit/(loss) for the year - - 16,203 - 16,203 (43) 16,160
Other comprehensive expenses (restated*) - - (2,993) - (2,993) (11) (3,004)
Total comprehensive income/(expense) for the year (restated*) - - 13,210 - 13,210 (54) 13,156
Dividends paid (note 23) - - (9,070) - (9,070) - (9,070)
Share-based payment transactions (note 21) - 380 - - 380 - 380
Transfers between reserves (note 21) - (10) 10 - - - -
Transaction costs (note 22) (219) - - - (219) - (219)
Total transactions with equity holders recognised directly in equity (219) 370 (9,060) - (8,909) - (8,909)
Other transactions recognised directly in equity - - 146 - 146 - 146
Correction of error (note 29) - - 2,359 (2,359) - - -
Balance at 31 December 2023 (restated*) 23,642 572 19,134 (2,359) 40,989 653 41,642
Balance at 1 January 2024 23,642 572 19,134 (2,359) 40,989 653 41,642
(Loss)/profit for the year - - (1,377) - (1,377) 19 (1,358)
Other comprehensive expenses - - (8) (3,372) (3,380) (1) (3,381)
Total comprehensive (expense)/income for the year - - (1,385) (3,372) (4,757) 18 (4,739)
Share-based payment transactions (note 21) - 343 - - 343 - 343
Transfers between reserves (note 21, 22) 2 (912) 910 - - - -
Issue of shares (note 22) 8,748 - - - 8,748 - 8,748
Transaction costs (note 22) (390) - - - (390) - (390)
Total transactions with equity holders recognised directly in equity 8,360 (569) 910 - 8,701 - 8,701
Other transactions recognised directly in equity (note 21) - (3) - - (3) - (3)
Balance at 31 December 2024 32,002 - 18,659 (5,731) 44,930 671 45,601
* Prior period numbers have been restated as a result of correction of
technical accounting errors, see note 29.
The Group has re-presented the translation of its foreign operations into a
separate component of equity, foreign currency translation reserve. The
translation of foreign operations was previously reported as part of retained
earnings.
The notes at the end of this report form part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2024
2024 2023
Note £000s £000s
Cash flows from operating activities
Cash generated from operations 25 35,817 38,902
Tax paid (3,690) (1,297)
Net cash generated from operating activities 32,127 37,605
Cash flows from investing activities
Purchase of property, plant and equipment 11 (4,952) (3,296)
Capitalised development costs 10 (2,629) (3,560)
Earnout payments regarding the acquisition of LAICA - (7,502)
Consideration refunded regarding the acquisition of Billi 10 - 1,046
Purchase of other intangibles 10 (662) (1,169)
Payment for acquisition of Laica Brand House, net of cash acquired 12 130 -
Disposal of discontinued operation, net of cash disposed 28 (605) -
Finance income 224 180
Net cash used in investing activities (8,494) (14,301)
Cash flows from financing activities
Repayment of borrowings 17 (25,957) (15,114)
Finance costs paid 17 (8,679) (7,611)
Principal elements of lease payments 24 (1,847) (1,426)
Net proceeds from issue of new shares/ (transaction costs) 22 8,358 (219)
Dividends paid 23 - (9,070)
Net cash used in financing activities (28,125) (33,440)
Net decrease in cash and cash equivalents (4,492) (10,136)
Cash and cash equivalents at the beginning of the year 20,114 30,443
Effects of foreign exchange on cash and cash equivalents (505) (193)
Cash and cash equivalents at the end of the year 15,117 20,114
The notes at the end of this statement form part of these consolidated
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December
2024
1. GENERAL INFORMATION
Strix Group Plc ("the Company") was incorporated and registered in the Isle of
Man on 12 July 2017 as a company limited by shares under the Isle of Man
Companies Act 2006 with the registered number 014963V. The address of its
registered office is Forrest House, Ronaldsway, Isle of Man, IM9 2RG.
The Company's shares were admitted to trading on AIM, a market operated by the
London Stock Exchange, on 8 August 2017. The principal activities of Strix
Group Plc and its subsidiaries (together, the "Group") are operating as a
unique global supplier of sustainable technologies, committed to providing
innovative water, beverage, and wellbeing solutions wherever people come
together.
2. MATERIAL ACCOUNTING POLICIES
The Group's material accounting policies set out below have, except for those
applied for the first time, been applied consistently to all of the years
presented.
Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted International Accounting Standards as applicable to companies
reporting under those standards.
The financial statements have been prepared on a historical cost basis with
the exception of certain items which are measured at fair value as disclosed
in the accounting policies below.
During the year, the consolidated financial statements have been prepared in
accordance with UK-adopted International Accounting Standards, which was
changed from IFRS Accounting Standards ("IFRS") and International Financial
Reporting Standards Interpretation Committee ("IFRS IC") interpretations as
adopted by the European Union. This was changed to align with the AIM Listing
Requirements for an Isle of Man entity. The Directors have assessed the impact
on recognition and measurement of assets, liabilities, equity and
comprehensive income and presentation and disclosure requirements and due to
there being no impact of the change, concluded that there is no need to
restate comparative information.
The preparation of consolidated financial statements in conformity with
UK-adopted International Accounting Standards requires the use of certain
critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial
statements, are disclosed in note 3.
As permitted by IAS 1, the Group has elected to present its income statement
(statement of profit or loss) separately from its statement of comprehensive
income as this provides more relevant details to users. The Group previously
presented a single statement of profit or loss and other comprehensive income.
Going concern
These consolidated financial statements have been prepared on the going
concern basis.
The Directors have made enquiries to assess the appropriateness of continuing
to adopt the going concern basis. In making this assessment the Directors have
considered the following:
· The current and historic trading and profitability performance of the
Group.
· Income statement and cash flow forecasts for the period to 30 April
2026, including current and forecast debt covenant headroom.
· The financial position of the Group as at 31 December 2024, including
(i) cash and cash equivalents balances of £15.1m (FY23: £20.1m) and (ii)
undrawn and accessible RCF facilities of £10.5m (FY23: £nil).
· The ability to repay loan facilities due in the next 12 months.
Based on these considerations, the Directors have concluded that there is a
reasonable expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. The key
entities in the Group have traded profitably, excluding non-cash adjusted
items, for an extended period of time. As a result, the Directors continue to
adopt the going concern basis of accounting in preparing the financial
statements and consider there are no material uncertainties about the Group's
ability to continue as a going concern.
Standards, amendments and interpretations adopted
The following standards and amendments apply for the first time in the period
commencing 1 January 2024:
• Lease Liability in Sale and Leaseback - Amendments to IFRS 16.
• Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7.
• Classification of Liabilities as Current or Non-current and Non-current
liabilities with covenants -Amendments to IAS 1.
The amendments listed above did not have a material impact on the Group
financial statements.
Standards, amendments and interpretations which are not effective or early
adopted
Standard/Interpretation Effective date
Periods beginning on or after
Amendments to IAS 21 - Lack of Exchangeability 1 January 2025
Amendments to the Classification and Measurement of Financial Instruments - 1 January 2026
Amendments to IFRS 9 and IFRS 7
IFRS 19 Subsidiaries without Public Accountability: Disclosures 1 January 2027
IFRS 18 Presentation and Disclosure in Financial Statements 1 January 2027
Certain new accounting standards and interpretations have been published that
are not mandatory for 31 December 2024 reporting periods and have not been
early adopted by the Group. These standards and amendments are outlined below.
The Group is currently assessing the impact of these amendments and does not
expect them to have a material impact on the financial statements.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and all of its subsidiary undertakings. The financial statements of
all group companies are adjusted, where necessary, to ensure the use of
consistent accounting policies.
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the
Group is exposed to or has the rights to variable returns from its involvement
with the entity and has the ability to affect those returns through its power
to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. Consolidation of subsidiaries ceases from the date
that control also ceases.
Non-controlling interests in the results and equity of subsidiaries are shown
separately in the consolidated statement of comprehensive income, consolidated
statement of changes in equity and the consolidated statement of financial
position, respectively.
Joint ventures
Joint ventures are joint arrangements of which the Group has joint control,
with rights to the net assets of those arrangements. Joint control is the
contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require the unanimous consent of
the parties sharing control. Interests in joint ventures are accounted for
using the equity method of accounting (detailed below) after being recognised
at cost in the consolidated statement of financial position.
Equity method of accounting
Under the equity method of accounting, investments in joint ventures are
initially recognised at cost and adjusted thereafter to recognise the Group's
share of the post-acquisition profits or losses from the joint venture in
profit or loss, and the Group's share of movements in other comprehensive
income of the joint venture in other comprehensive income. Dividends received
from joint ventures are recognised as a reduction in the carrying amount of
the investment.
Unrealised gains on transactions between the Group and its joint ventures are
eliminated to the extent of the Group's interest in these entities.
The carrying amount of equity-accounted investments is tested for impairment
in accordance with the impairment of assets policy as described below in this
note.
Transactions eliminated on consolidation
Intra-Group balances, and any unrealised gains and losses or income and
expenses arising from intra-Group transactions, are eliminated in preparing
the consolidated financial statements.
Business combinations
Business combinations are accounted for using the acquisition method as at the
acquisition date with the assets and liabilities of subsidiaries being
measured at their fair values. Any excess of the cost of acquisition over the
fair values of the identifiable net assets acquired is recognised as goodwill.
If those amounts are less than the fair value of the net identifiable assets
of the business acquired, the difference is recognised directly in profit or
loss as a bargain purchase. The Group measures goodwill at the acquisition
date as:
· the fair value of the consideration transferred; plus
· the recognised amount of any non-controlling interests in the acquiree; plus
· if the business combination is achieved in stages, the fair value of the
pre-existing interest in the acquiree; less
· the fair value of the identifiable assets acquired and liabilities assumed.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquired entity on an
acquisition-by-acquisition basis at the non-controlling interest's
proportionate share of the fair value of the acquired entity's net
identifiable assets. Transaction costs that the Group incurs in connection
with a business combination are expensed as incurred.
If the initial accounting for a business combination is preliminary by the end
of the reporting period in which the business combination occurs, provisional
amounts are reported. Those provisional amounts are adjusted during the
measurement period, or additional assets or liabilities recognised
retrospectively where material to reflect the new information obtained about
facts and circumstances that existed as at the acquisition date, and if known,
would have affected the measurement of assets and liabilities recognised at
that date. Contingent consideration is classified either as equity or a
financial liability. Amounts classified as a financial liability are
subsequently remeasured to fair value, with changes in fair value recognised
in profit or loss.
Foreign currency translation
Functional and presentational currency
Items included in the financial information of each of the Group's entities
are measured using the currency of the primary economic environment in which
the entity operates (the functional currency). The consolidated financial
statements are presented in Pound Sterling, which is Strix Group Plc's
presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions, and from
the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates, are recognised in the consolidated
income statement within cost of sales.
Group companies
The results and financial position of foreign operations that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
· Assets, including intangible assets and goodwill arising on
acquisition of those foreign operations, and liabilities for each statement of
financial position presented are translated at the closing rate at the date of
that statement of financial position, or at historic rates for certain line
items.
· Income and expenses for each statement of comprehensive income
presented are translated at average exchange rates (unless this is not a
reasonable approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are translated at the
dates of the transactions).
· All resulting exchange differences are recognised in other
comprehensive income. Such translation differences are reclassified to profit
or loss only on disposal or partial disposal of the foreign operation.
Property, plant and equipment
Initial recognition and measurement
Items of property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Cost includes the original purchase price
of the asset and the costs attributable to bringing the
asset to its working condition for its intended use. When parts of an item of
property, plant and equipment have different useful lives, the components are
accounted for as separate items.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. Repairs and maintenance are charged to
profit or loss during the reporting period in which they are incurred.
Subsequent measurement
Depreciation is calculated using the straight-line method to allocate the cost
of the assets, net of any residual values, over their estimated useful lives
as follows:
· Plant and machinery 3-25 years
· Fixtures, fittings and equipment 2-10 years
· Motor vehicles 3-5 years
· Production tools 1-10 years
· Right-of-use assets 3-10 years
· Buildings (including land usage rights) 50 years
· Point-of-use dispensers 4-10 years
The Group manufactures some of its production tools and equipment. The costs
of construction are included within a separate category within property, plant
and equipment ("assets under construction") until the tools and equipment are
ready for use as intended by management at which point the costs are
transferred to the relevant asset category and depreciated. Any items that are
scrapped are written off to the consolidated income statement.
The assets' residual values and useful lives are reviewed at the end of each
reporting period.
Fixtures, fittings and other equipment includes computer hardware.
Derecognition
Property, plant and equipment assets are derecognised on disposal, or when no
future economic benefits are expected from use or disposal. Gains or losses
arising from derecognition of property, plant and equipment, measured as the
difference between net disposal proceeds and the carrying amount of the asset,
are recognised in the consolidated income statement on derecognition.
Impairment
Tangible assets that are subject to depreciation are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell
and value in use.
Intangible assets
Initial recognition and measurement
The Group's intangible assets relate to goodwill, capitalised development
costs, intellectual property, customer relationships, brands and computer
software. Goodwill acquired is allocated to those cash-generating units
("CGUs") expected to benefit from the business combination in which the
goodwill arose. Goodwill is measured at cost less any accumulated impairment
losses and is held in the functional currency of the acquired entity to which
it relates and remeasured at the closing exchange rate at the end of each
reporting period, with the movement taken through other comprehensive income.
The CGUs represent the lowest level within the Group at which goodwill is
monitored for internal management purposes.
Capitalised development costs are recorded as intangible assets and amortised
from the point at which the asset is ready for use. Internal costs that are
incurred during the development of significant and separately identifiable new
products and manufacturing techniques for use in the business are capitalised
when the following criteria are met:
· It is technically feasible to complete the project so that it
will be available for use.
· Management intends to complete the project and use or sell
it.
· It can be demonstrated how the project will develop probable
future economic benefits.
· Adequate technical, financial, and other resources to
complete the project and to use or sell the project output are available.
· Expenditure attributable to the project during its
development can be reliably measured.
Capitalised development costs include employee, travel and other directly
attributable costs necessary to create, produce and prepare the asset to be
capable of operating in the manner intended by management. Refer to note 6(a)
for details.
Intellectual property is capitalised where it is probable that future economic
benefits associated with the patent will flow to the Group, and the cost can
be measured reliably. The costs of renewing and maintaining patents are
expensed in the consolidated income statement as they are incurred.
Customer relationships, intellectual property and brands are recognised on
acquisitions where it is probable that future economic benefits will flow to
the Group.
Computer software is only capitalised when it is probable that future economic
benefits associated with the software will flow to the Group, and the cost of
the software can be measured reliably. Computer software that is integral to
an item of property, plant and equipment is included as part of the cost of
the asset recognised in property, plant and equipment.
Other development expenditures that do not meet these criteria are recognised
as an expense as incurred.
Subsequent measurement
The Group amortises intangible assets with a limited useful life using the
straight-line method over the following periods:
· Capitalised development costs 2-10 years
· Intellectual property Lower of useful or legal life (8-20 years)
· Technology and software 2-10 years
· Customer relationships 10-15 years
· Brands Indefinite useful life
· Goodwill Indefinite useful life
Brands have an indefinite useful life because there is no foreseeable limit on
the period during which the Group expects to consume the future economic
benefits embodied in the asset.
The LAICA brand has been trading since inception and has been a well
recognisable brand amongst the Group's trading partners, and the Group does
not foresee a time limit by when these partnerships will cease.
The Billi brand is a well-established and competitive brand, being one of the
top two brands in the Australian and New Zealand markets, and well recognised
in the United Kingdom among residential and commercial clientele. The Group
does not foresee a time limit by when this market presence will cease.
Derecognition
Intangible assets are derecognised on disposal, or when no future economic
benefits are expected from use or disposal. Gains or losses arising from
derecognition of intangible assets, measured as the difference between the net
disposal proceeds and the carrying amount of the asset, are recognised in the
consolidated income statement when the asset is derecognised. Where a
subsidiary is sold, any goodwill arising on acquisition, net of any
impairment, is included in determining the profit or loss arising on
disposal.
Impairment
Intangible assets that are subject to amortisation are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell
and value in use.
Goodwill and intangible assets that have an indefinite useful life are not
subject to amortisation and are tested annually for impairment, or more
frequently if events or changes in circumstances indicate that they might be
impaired.
An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs of disposal and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of assets
(cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at
the end of each reporting period.
Intangible assets with indefinite useful lives impairment assessments
Intangible assets with indefinite useful lives arising on business
combinations are allocated to the relevant CGU and are treated as the foreign
operation's assets.
Impairment reviews are performed at least annually, or more frequently if
there are indicators that the assets might be impaired. The Group has assessed
the carrying values of goodwill and brands to determine whether any amounts
have been impaired. The recoverable amount of the underlying CGU was based on
a value in use model where future cashflows were discounted using a weighted
average cost of capital as the discount rate with terminal values calculated
applying a long-term growth rate. In determining the recoverable amount, the
Group considered several sources of estimation uncertainty and made certain
assumptions or judgements about the future. Future events could cause the
assumptions used in the impairment review to change with an impact on the
results and net position of the Group refer to note 3 for details.
Leases
Group as a lessee
The Group leases office space, workshops, warehouses, motor vehicles and
factory space. Rental contracts are typically made for periods of 3 - 10 years
but may have extension options. Lease terms are negotiated on an individual
basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets may not be used as
security for borrowing purposes.
Leases are recognised as a right-of-use ("ROU") assets and a corresponding
liability at the date at which the leased asset is available for use by the
Group. Each lease payment is allocated between the liability, finance costs
and foreign exchange (where the lease is denominated in a foreign currency).
The finance cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the
liability for each period. The right-of-use asset is depreciated over the
shorter of the asset's useful life and the lease term on a straight-line
basis.
Measurement of future lease liabilities
Liabilities arising from a lease are initially measured on a present value
basis. Future lease liabilities include the net present value of the following
lease payments:
· Fixed payments (including in-substance fixed payments), less any lease
incentives receivable.
· Variable lease payments that are based on an index or a rate.
· Amounts expected to be payable by the lessee under residual value guarantees.
· The exercise price of a purchase option if the lessee is reasonably certain to
exercise that option.
· The payment of penalties for terminating the lease, if the lease term reflects
the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases in the Group, the lessee's incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset
in a similar economic environment with similar terms, security and conditions.
The lease liability is subsequently measured by increasing the carrying amount
to reflect interest on the lease liability (using the effective interest
method) and by reducing the carrying amount to reflect the lease payments
made.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to the consolidated income statement over the lease period so
as to produce a constant periodic rate of interest on the remaining balance of
the liability for each period.
Measurement of right-of-use assets
Right-of-use assets are measured at cost comprising the following:
· The amount of the initial measurement of lease liability.
· Any lease payments made at or before the commencement date less any lease
incentives received.
· Any initial direct costs.
· Restoration costs.
They are subsequently measured at cost less accumulated depreciation and
impairment losses. Right-of-use assets are generally depreciated over the
shorter of the asset's useful life and the lease term on a straight-line
basis.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired
and accounts for any identified impairment loss as described in the 'Property,
Plant and Equipment' policy.
Payments associated with short-term leases and leases of low-value assets are
recognised on a straight-line basis as an expense in the consolidated income
statement. Short-term leases are leases with a lease term of 12 months or
less. Low-value assets comprise primarily IT equipment.
Extension and termination options
Extension and termination options are included in a number of property leases
across the Group. These terms are used to maximise operational flexibility in
terms of managing contracts. Management exercises judgement in determining
whether these extension and termination options are reasonably certain to be
exercised.
Group as a lessor
Lease income from operating leases where the Group is a lessor, and where
substantially all the risks and rewards associated with the leased asset
remain with the Group, is recognised in other income on a straight-line basis
over the lease term. Billi rental income is recognised in revenue.
Financial assets
Classification
The Group classifies its financial assets as financial assets held at
amortised cost. Management determines the classification of its financial
assets at initial recognition.
The Group classifies its financial assets as at amortised cost only if both of
the following criteria are met:
· The asset is held within a business model whose objective is to
collect the contractual cash flows.
· The contractual terms give rise to cash flows that are solely
payments of principal and interest.
Financial assets held at amortised cost are initially recognised at fair value
and are subsequently stated at amortised cost using the effective interest
method. Financial assets at amortised cost comprise cash and cash equivalents
and trade and other receivables (excluding prepayments, VAT receivables and
the advance purchase of commodities). Trade receivables are amounts due from
customers for products sold performed in the ordinary course of business. They
are due for settlement either on a cash in advance basis, or generally within
45 days, and are therefore all classified as current. Other receivables
generally arise from transactions outside the usual operating activities of
the Group.
Impairment of financial assets
The Group assesses, on a forward-looking basis, the expected credit losses
associated with its debt instruments carried at amortised cost. The impairment
methodology applied depends on whether there has been a significant increase
in credit risk.
The Group applies the expected credit loss model to financial assets at
amortised cost. For trade receivables, the Group applies the simplified
approach permitted by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables. Given the nature of
the Group's receivables, expected lifetime losses are not material.
Financial liabilities
With the exception of contingent consideration, the Group initially recognises
its financial liabilities at fair value net of transaction costs where
applicable and subsequently they are measured at amortised cost using the
effective interest method. Financial liabilities comprise trade payables,
payments in advance from customers and other liabilities. They are initially
recognised at transaction price, unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present
value of the future payments discounted at a market rate of interest.
Contingent consideration is measured at fair value with changes in fair value
recognised in profit or loss.
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Trade payables are
classified as current liabilities if payment is due within one year or less.
If not, they are presented as non-current liabilities. Other liabilities
include customer rebates.
Borrowing costs
Borrowing costs are recognised initially at fair value. Borrowing costs are
subsequently measured at amortised cost.
General and specific borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset are capitalised
during the period of time that is required to complete and prepare the asset
for its intended use or sale. Qualifying assets are assets that necessarily
take a substantial period of time to get ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings,
pending their expenditure on qualifying assets, is deducted from the borrowing
costs eligible for capitalisation. Other borrowing costs are expensed in the
period in which they are incurred.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash
equivalents includes cash on hand, demand deposits held with financial
institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known
amounts of cash, and which are subject to an insignificant risk of changes in
value, and bank overdrafts.
Employee benefits
The Group provides a range of benefits to employees, including annual bonus
arrangements, paid holiday entitlements and defined benefit and contribution
pension plans.
Short-term benefits
Short-term benefits, including holiday pay and similar non-monetary benefits,
are recognised as an expense in the period in which the service is rendered.
The Group recognises a liability and an expense for bonuses where
contractually obliged or where there is a past practice that has created a
constructive obligation.
Termination benefits
Termination benefits are payable when employment is terminated by the group
before the normal retirement date, or when an employee accepts voluntary
redundancy in exchange for these benefits. The group recognises termination
benefits at the earlier of the following dates:
(a) when the group can no longer withdraw the offer of those benefits.
(b) when the Group recognises costs for a restructuring that is within the
scope of IAS 37 and involves the payment of terminations benefits.
In the case of an offer made to encourage voluntary redundancy, the
termination benefits are measured based on the number of employees expected to
accept the offer. Benefits falling due more than 12 months after the end of
the reporting period are discounted to present value.
Pensions
The Group operates both defined contribution and defined benefit plans for the
benefit of their employees.
A defined contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity. The Group has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient
assets to pay all employees the benefits relating to employee service in the
current and prior periods. The Group has no further payment obligations once
the contributions have been paid. The contributions are recognised as employee
benefit expense when they are due. A defined benefit plan is a pension plan
that is not a defined contribution plan.
Typically, defined benefit plans define an amount of pension benefit that an
employee will receive on retirement, usually dependent on one or more factors,
such as age, years of service or compensation.
The liability recognised in the consolidated statement of financial position
in respect of the defined benefit scheme is the present value of the defined
benefit obligation at the statement of financial position date less the fair
value of the scheme assets, together with adjustments for actuarial gains or
losses and past service costs. The defined benefit obligation is calculated by
qualified independent actuaries using the projected unit method. The present
value of the defined benefit obligation is determined by discounting the
estimated future cash outflows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits will be paid,
and that have terms to maturity approximating to the terms of the related
pension liability.
The net pension finance cost is determined by applying the discount rate, used
to measure the defined benefit pension obligation at the beginning of the
accounting period, to the net pension obligation at the beginning of the
accounting period taking into account any changes in the net pension
obligation during the period as a result of cash contributions and benefit
payments.
Pension scheme expenses are charged to the consolidated income statement
within administrative expenses. Actuarial gains and losses are recognised
immediately in the consolidated statement of comprehensive income. Net defined
benefit pension scheme deficits before tax relief are presented separately in
the consolidated statement of financial position within non-current
liabilities.
Share-based payments
The Group has issued conditional equity settled share-based options and
conditional share awards under a Long-Term Incentive Plan ("LTIP") in the
parent company to certain employees. Under the LTIP, the Group receives
services from employees as consideration for equity instruments of the Group.
The fair value of the employee services received in exchange for the grant of
the options is recognised as an expense.
The total amount to be expensed is determined by reference to the fair value
of the options granted:
· Including any market performance conditions such as the
requirement for the Group's shares to be above a certain price for a
pre-determined period.
· Excluding the impact of any service and non-market performance
vesting conditions, including earnings per share targets, dividend targets,
and remaining an employee of the Group over a specified period of time.
· Including the impact of any non-vesting conditions, where
relevant.
These awards are measured at fair value on the date of the grant using an
option pricing model and expensed in the consolidated income statement on a
straight-line basis over the vesting period, after making an allowance for the
estimated number of shares that will not vest. The level of vesting is
reviewed and adjusted bi-annually in the consolidated income statement, with a
corresponding adjustment to equity.
If the terms of an equity settled award are modified, at a minimum, an expense
is recognised as if the terms had not been modified. An additional expense is
recognised for any modification that increases the total fair value of the
share-based payment, or is otherwise beneficial to the employee, as measured
at the date of modification.
If an equity award is cancelled by forfeiture, where the vesting conditions
(other than market conditions) have not been met, any expense not yet
recognised for that award as at the date of forfeiture is treated as if it had
never been recognised. At the same time, any expense previously recognised on
such cancelled equity awards is reversed, effective as at the date of
forfeiture.
The dilutive effect, if any, of outstanding options is included in the
calculation of diluted earnings per share.
Further details on the awards are included in note 21.
Inventories
Inventories consist of raw materials and finished goods which are valued at
the lower of cost and net realisable value. Cost is determined using the
following basis:
Division Raw material Finished Goods
Controls FIFO Weighted Average
Consumer Goods FIFO Weighted Average
Billi (previously PFS) FIFO FIFO
Cost comprises expenditure which has been incurred in the normal course of
business in bringing the products to their present location and condition
including applicable supplier rebates and include all related production and
engineering overheads at cost. Net realisable value is the estimated selling
price in the ordinary course of business, less applicable selling expenses. At
the end of each reporting period, inventories are assessed for impairment. If
inventory is impaired, the identified inventory is reduced to its selling
price less costs to complete and an impairment charge is recognised in the
consolidated income statement.
Supplier rebates
The Group enters into agreements with suppliers whereby volume-related
allowances and various other fees and discounts are received in connection
with the purchase of goods from those suppliers. Most of the income received
from suppliers relates to commercially agreed rebates based on historic sales
volumes.
Rebates are recognised when earned by the Group, which occurs when all
obligations conditional for earning income have been discharged, and the
income can be measured reliably based on the terms of the contract. The income
is recognised as a credit within cost of sales.
Where the income earned relates to inventories which are held by the Group at
the year end, the income is included within the cost of those inventories, and
recognised in cost of sales upon sale of those inventories. Amounts due
relating to supplier rebates are recognised on a gross basis and within trade
and other receivables.
Revenue
The Group primarily recognises revenue from the sale of goods and services to
its customers as well as from licensing arrangements. The transaction price is
based on the sales agreement with the customer. Revenue is reported net of
sales taxes, discounts, rebates and after eliminating intra-group sales.
Rebates are based on a certain volume of purchases by a customer within a
given period and are recognised on a net basis based on an expected value
approach.
Revenue is measured based on the consideration to which the Group expects to
be entitled in a contract with a customer and is recognised when the
performance obligations have been fulfilled. The Group recognises revenue from
the sale of goods and services either at a point in time or over time, based
on the nature of the contract terms. The Group recognises revenue from three
main categories namely Controls, Billi and Consumer Goods.
Controls
Revenue from the sale of goods rendered is recognised net of VAT in the
consolidated income statement when the customer obtains control of the goods.
Where contractual arrangements with customers include an embedded freight or
storage service, an appropriate percentage of revenue is deferred until these
performance obligations have also been satisfied.
All of the amounts recognised as revenue are based on the underlying terms
& conditions we have in place with customers. No element of financing is
deemed present as sales are made under normal credit terms and consistent with
wider market practice.
Payment terms for the majority of customers in this category are to pay cash
in advance of the goods being delivered. The Group recognises the advance
payments within trade and other payables on the consolidated statement of
financial position as "Payments in advance from customers". At the point the
revenue is recognised, these balances are transferred from "Payments in
advance from customers" to revenue. For the majority of other customers
payment is normally due within 30 to 45 days from the date of sale.
Billi
The Group recognises revenue from the following major sources under Billi:
· Sale of tap systems, consumable products and spare parts.
Revenue from the sale of taps systems and consumables including spare parts is
recognised once control of the goods has been transferred to the customer.
Payment terms are 1 month from the invoice date and is recorded within trade
receivables until payment is received.
· Rental of tap systems.
Rental income is made up of revenue from the supply of tap systems where the
Company is lessor in an operating lease. Payment for rental income is in
advance of the rental period and the rental income is recognised over time,
with the transaction price allocated to this service released on a
straight-line basis over the period of the lease. Included in the transaction
price for the rental of tap systems, in some contracts, is the installation of
those tap systems. The supply and installation elements of the contract are
one deliverable, as they are highly interrelated, and therefore there is no
allocation of a portion of the transaction price to the installation.
Initial direct costs incurred in arranging an operating lease (except where
immaterial) are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.
Rental agreements run for a minimum period of twelve months and typically for
three to five years. Some rental agreements have no fixed end date and may be
cancelled by either party.
The average useful economic life for a Point-of-Use ("POU") water device is
approximately four to ten years whilst refurbishment can extend the life of
some devices to eleven years or more. For this reason, existing rental
agreements are not judged to transfer substantially all of the risks and
rewards of ownership to the lessee.
Revenue is recognised for the rental of tap systems from when the taps have
been installed as this is the point in time that the consideration is
unconditional from this point.
· Servicing of tap systems.
The Company has taken advantage of IFRS 15, para 4 whereby they have grouped
contracts for the servicing of taps into a portfolio, on the basis that
applying IFRS 15 to each individual contract would not result in a material
difference. This is on the basis that the underlying contracts are relatively
homogenous and that under the contracts, each unit covered would be serviced
twice per annum and the completion of the performance obligation, being the
completion of the service, would be evenly spread throughout the period over
the various contracts. Therefore the sale of services are recognised
proportionally over the duration of the service period, provided a right to
consideration has been established subject to a minimum notice period or early
termination penalty.
Whilst payment terms are in advance of the service period, revenue is
recognised for the servicing of tap systems from when the contracts have been
entered into as this is the point in time that the consideration is
unconditional.
Consumer Goods
Sales are either 'direct' to the end user customers or 'indirect' to wholesale
and retail distributors. Revenue from the supply of goods is recognised once
control of the goods has been transferred to the customer, being when goods
have been delivered to a customer site or in the case of indirect sales, when
the goods have been delivered to the wholesale distributor.
Deferred revenue
Revenue invoiced but not yet recognised in the consolidated income statement
is held on the consolidated statement of financial position within 'Payments
in advance from customers'.
Licensing income
The Group holds a substantial portfolio of issued and registered intellectual
property rights relating to certain aspects of its hardware devices,
accessories, goods, software and services under controls and consumer goods.
This includes patents, designs, copyrights, trademarks and other forms of
intellectual property rights registered in the U.K. and various foreign
countries.
From time to time, the Group enters into term-based and exclusive licensing
arrangements with some of its customers in respect of its intellectual
property.
The licensing income is recognised at a point in time or over time based on
the following assessment. Where the licensing arrangement is a distinct
performance obligation, Management assess whether the licensing contract gives
the customer either:
· the right to access the Group's intellectual property as it
exists throughout the licence period; or
· right to use the Group's intellectual property as it exists at
the point in time at which the licence is granted.
Revenue from a licensing contract which is considered to provide a right to
the customer to access the Group's intellectual property as it exists
throughout the licence period is recognised over time, as and when the related
performance obligation is satisfied.
A licensing contract gives the customer the right to access the Group's
intellectual property as it exists throughout the licence period when all the
following are met:
· The contract requires, or the customer reasonably expects, that
we will undertake activities that significantly Affect the intellectual
property to which the customer has rights.
· The rights granted by the licence directly expose the customer to
any positive or negative effects of the entity's activities identified above.
· Those activities do not result in the transfer of a good or a
service to the customer as those activities occur.
Revenue relating to a licensing contract which does not meet the above
criteria is recognised at a point in time, which is usually the point at which
the licence is granted to the customer but not before the beginning of the
period during which the customer is able to use and benefit from the licence.
Cost of sales
Cost of sales comprise costs arising in connection with the manufacture of
thermostatic controls, cordless interfaces, and other products such as water
dispensers, taps, jugs and filters. Cost is based on the cost of purchases on
a weighted average basis and first in first out "FIFO" (for Billi) and
includes all direct costs and an appropriate portion of fixed and variable
overheads where they are directly attributable to bringing the inventories
into their present location and condition. This also includes an allocation of
non-production overheads, costs of designing products for specific customers
and amortisation of capitalised development costs.
Research and development
Research expenditure is written off to the consolidated income statement
within cost of sales in the year in which it is incurred. Development
expenditure is written off in the same way unless the Directors are satisfied
as to the technical, commercial and financial viability of the individual
projects. In this situation, the expenditure is classified on the consolidated
statement of financial position as a capitalised development cost.
Finance income
Finance income comprises bank interest earned on financial assets that are
held for cash management purposes. Finance income is recognised using the
effective interest rate method.
Finance costs
Finance costs directly attributable to the acquisition or construction of a
qualifying asset are capitalised. Qualifying assets are those that necessarily
take a substantial period of time to prepare for their intended use. All other
borrowing cost are recognised in the consolidated income statement in finance
costs. Finance costs comprise interest charges on lease liabilities, interest
on borrowings, arrangement fees, the unwind of discounts on the present value
of liabilities, and finance charges relating to letters of credit. Finance
costs are determined using the effective interest rate method.
Taxation
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the statement of financial
position date in the countries where the Company and its subsidiaries operate
and generate taxable income, and any adjustment to tax payable in respect of
previous years.
Current and deferred tax is recognised in profit or loss, except to the extent
that it relates to items recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
Deferred income tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill.
Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantively enacted by the end of the reporting period and are
expected to apply when the related deferred income tax asset is realised, or
the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary
differences between the carrying amount and tax bases of investments in
foreign operations where the company is able to control the timing of the
reversal of the temporary differences and it is probable that the differences
will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally
enforceable right to offset current tax assets and liabilities and where the
deferred tax balances relate to the same taxation authority. Current tax
assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Share capital and share premium
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new ordinary shares are shown in equity as a
deduction from the proceeds. Share premium arising on the issue of shares is
distributable. Share capital and share premium have been grouped for the
purposes of financial statement presentation.
Dividends
Dividends are recognised when they become legally payable. In the case of
interim dividends to equity shareholders, this is when declared by the
Directors. In the case of final dividends, this is when approved by the
shareholders at the AGM.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision maker, who is responsible for allocating resources and assessing the
performance of the operating segments, has been identified as the Board of
Directors. The Board of Directors consists of the Executive Directors and the
Non-Executive Directors.
Government grants
Subsidiary companies receive grants from the Isle of Man and Chinese
governments towards revenue and capital expenditure. Government grants are
recognised at their fair value where there is a reasonable assurance that the
grant will be received, and all attached conditions complied with.
Revenue grants are recognised as income over the period necessary to match the
grant on a systematic basis to the costs that it is intended to compensate.
The grant income is presented within other operating income in the
consolidated income statement.
Capital grants are initially recognised as other liabilities when received and
subsequently recognised as other income in the consolidated income statement
on a straight-line basis over the useful life of the related asset. The grants
are dependent on the subsidiary company having fulfilled certain operating,
investment and profitability criteria in the financial year, primarily
relating to employment.
Provisions
General
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the
obligation. When the Group expects some or all of a provision to be
reimbursed, for example, under an insurance contract, the reimbursement is
recognised as a separate asset, but only when the reimbursement is virtually
certain. The expense relating to a provision is presented in the consolidated
income statement net of any reimbursement. If the effect of the time value of
money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When
discounting is used, the increase in the provision due to the passage of time
is recognised as a finance cost.
Warranty provisions
The Group provides warranties for general repairs of defects that existed at
the time of sale, as required by law. Provisions related to these warranties
are recognised when the product is sold, or the service is provided to the
customer. Initial recognition is based on historical experience which may vary
due to the use of new materials, changes in manufacturing processes or other
developments that affect product quality. The estimate of warranty-related
costs is revised annually. Warranty provisions are recognised in cost of sales
in consolidated income statement and presented in the consolidated statement
of financial position in trade and other payables.
Non-current assets held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as assets held for sale
when their carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. They are measured at the
lower of carrying amount and fair value less costs to sell, with the exception
of assets which are scoped out of the measurement requirements of IFRS 5
'Non-current assets held for sale and discontinued operations', for example
financial assets, which continue to be measured in accordance with IFRS 9
'Financial instruments'.
Where the carrying amount of a non-current asset or disposal group held for
sale exceeds its fair value less costs to sell, a loss is recognised. This is
allocated firstly against any goodwill attributable to the disposal group, and
then to other non-current assets in the disposal group that are in scope of
IFRS 5's measurement requirements. Any excess loss remaining is recognised
against the remaining assets of the disposal group as a whole. Assets and
liabilities classified as held for sale are presented separately in the
statement of financial position.
A component of the Group that is held for sale or disposed of is presented as
a discontinued operation either when it is a subsidiary acquired exclusively
with a view to resale; or it represents, or is part of a coordinated plan to
dispose of, a separate major line of business or geographical area of
operations. The net results of discontinued operations are presented
separately in the Group income statement (and the comparatives restated). Cash
flows from discontinued operations are included in the consolidated statement
of cash flows but are separately disclosed in the notes to the financial
statements.
Non-GAAP alternative performance measures
In the reporting of financial information, the Directors have adopted Earnings
before Interest, Taxation, Depreciation and Amortisation ("EBITDA") and
adjusted EBITDA when assessing the operating performance of the Group.
Adjusting items are excluded from EBITDA to calculate adjusted EBITDA. The
Directors primarily use the adjusted EBITDA measure when making decisions
about the Group's activities.
EBITDA and adjusted EBITDA are non-GAAP measures and may not be calculated in
the same way as by other entities and hence may not be directly comparable to
those reported by other entities. In determining the adjusting items, the
following criteria are considered:
· if a certain event (defined as adjusting) had not occurred, the
costs would not have been incurred, or the income would not have been earned;
or
· the costs attributable to the event have been identified using a
reliable methodology of splitting amounts on an ongoing basis; and economic
resources have been expended or diverted in order to directly contribute
towards the related activities; and
· costs have been incurred that cannot be recovered due to the
event and the related activities.
An item is treated as adjusting if it relates to certain costs or income that
derive from events or transactions that fall within the normal activities of
the Group but which, individually or, if of a similar type, in aggregate, are
excluded from the Group's Alternative Performance Measures (APMs) by virtue of
their nature or size, in order to better reflect management's view of the
underlying trends and operating performance of the Group that is more
comparable over time.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
In the application of the Group's accounting policies, which are described in
Note 2, the directors are required to make judgements (other than those
involving estimations) that have a significant impact on the amounts
recognised and to make estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and
other factors that are considered to be relevant. Actual results may differ
from these estimates. There is no change in applying accounting policies for
critical accounting estimates and judgements from the prior year.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Critical judgements in applying the entity's accounting policies
Functional currency
The Directors consider the factors set out in paragraphs 9, 10 and 11 of IAS
21, "The effects of changes in foreign currency" to determine the appropriate
functional currency of its overseas operations. These factors include the
currency that mainly influences sales prices, labour, material and other
costs, the competitive market serviced, financing cash flows and the degree of
autonomy granted to the subsidiaries.
This may change as the Group's operations and markets change in the future
Capitalisation of development costs
The Directors consider the factors set out in the paragraphs entitled
'Intangible assets - initial recognition and measurement' in note 2 with
regard to the timing of the capitalisation of the development costs incurred.
This requires judgement in determining when the different stages of
development have been met. See note 6a for the amounts capitalised during the
current year.
Alternative performance measures ("APMs") - Adjusting items
Management and the Board consider the quantitative and qualitative factors in
classifying items as adjusting and exercise judgement in determining the
adjustments to apply to IFRS measures. This assessment covers the nature of
the item, cause of occurrence, frequency, predictability of occurrence of the
item or related event, and the scale of the impact of that item on reported
performance. Reversals of previous adjusting items are assessed based on the
same criteria.
For the year ended 31 December 2024, the presentation as discontinued
operations is a new key judgement area, due to the disposal of HaloSource (see
note 28). The Group considered HaloSource to be a separate major line of
business, as this represented a discrete business line for the Group, that
operates outside of its normal markets in the industrial farming space, with
exclusive manufacturing facilities located in Shanghai and a separate
workforce. HaloSource was the first acquisition that the Group made and
Management recognises that the underlying trading results of this business are
therefore of specific and greater interest to stakeholders, notwithstanding
its relatively low level of trading in the period (see note 28).
The ongoing restructuring and rebasing activities undertaken in FY24, have
also led to additional new judgements and estimates being made with regards to
the impact of the de-prioritisation of specific product lines & groups,
predominantly within the Group's Consumer Goods division. A key area of focus
being the estimation of the carrying value of underlying assets, and their
related write off/impairment in the FY24 consolidated statement of financial
position (see note 6b). Creditors relating to settlement claims have also been
recognised in the FY24 consolidated statement of financial position where we
consider that the business has a constructive obligation to pay monies over to
third parties at the consolidated statement if financial position date, to the
extent that amounts are considered to be reasonably certain.
An analysis of the adjusting items included in the consolidated income
statement is disclosed in note 6(b).
Critical estimates in applying the entity's accounting policies
There are no estimates in the financial statements where a reasonably possible
change in the next year could be expected to result in a material change to
amounts recognised. However, an area of estimation performed by management in
the year which is relevant to the financial statements is disclosed below.
Impairment of indefinite lived intangible assets and goodwill
Determining whether goodwill and intangible assets with indefinite lives are
impaired requires an estimation of the value in use or the fair value less
costs to sell of the cash generating unit (CGU) to which the goodwill or
intangible asset has been allocated. The value in use calculation requires
management's estimation of the future cash flows expected to arise from the
CGU.
4. SEGMENTAL REPORTING
Management has determined the operating segments based on the operating
reports reviewed by the Board of Directors that are used to assess both
performance and strategic decisions. Management has identified that the Board
of Directors is the chief operating decision maker in accordance with the
requirements of IFRS 8 'Operating Segments'.
The Board of Directors has identified 3 reportable segments from a product
perspective, selling primarily to Original Equipment Manufacturers ("OEMs"),
commercial and residential customers based in China, Italy, Australia, New
Zealand and the United Kingdom:
1) Controls consists of the design, manufacture and sale of
thermostatic controls, cordless interfaces.
2) Billi (previously premium filtration systems (PFS)) is a leading
brand for the supply of premium instant boiling, chilled and sparkling
filtered water systems.
3) Consumer Goods includes products such as water dispensers, jugs,
filters, water heating and temperature control, steam management and small
household appliances for personal health and wellness.
The Board of Directors primarily uses a measure of gross profit to assess the
performance of the operating segments, broken down into revenue and cost of
sales for each respective segment which is reported to them on a monthly
basis. Information about segment revenue is disclosed below.
Reported gross profit
2024
£000s
Controls Billi Consumer goods Total
Revenue 67,264 43,052 31,452 141,768
Cost of sales (44,676) (22,977) (23,166) (90,819)
Gross profit 22,588 20,075 8,286 50,949
Reported gross profit
2023
Restated*
£000s
Controls Billi Consumer goods Total
Revenue 70,102 41,327 32,378 143,807
Cost of sales (42,787) (21,964) (21,851) (86,602)
Gross profit 27,315 19,363 10,527 57,205
* The FY23 figures have been restated as a result of discontinued operations
and were all included in Billi.
Adjusted gross profit*
2024
£000s
Controls Billi Consumer goods Total
Revenue 69,464 43,052 31,452 143,968
Cost of sales (44,260) (22,977) (22,764) (90,001)
Gross profit 25,204 20,075 8,688 53,967
Adjusted gross profit*
2023
Restated
£000s
Controls Billi Consumer goods Total
Revenue 70,102 41,327 32,378 143,807
Cost of sales (42,746) (21,964) (21,827) (86,537)
Gross profit 27,356 19,363 10,551 57,270
*Adjusted gross profit excludes adjusting items as detailed in note 6(b).
Adjusted results are non-GAAP metrics used by management and are not an IFRS
disclosure.
The FY23 figures have been restated as a result of discontinued operations and
were all included in Billi.
The Group derives revenue from the transfer of goods and services over time
and at a point in time. Revenue derived over time in the current year is
£4.6m (FY23: £3.3m) and this is included in Billi. All other revenues are
derived at a point in time.
Included within the revenue from controls is licensing fee income relating to
intellectual property amounting to £nil (FY23: £0.9m). Included within the
revenue from the consumer goods is licensing fee income relating to
intellectual property amounting to £nil (FY23: £0.3m).
Below is the geographical analysis of revenue based on the locations of
external customers.
2024 2023
Restated
£000s £000s
Australia 26,985
27,301
China 67,210
66,674
Italy 14,478
13,651
UK 16,376
16,417
Others 17,725 18,758
Total 141,768 143,807
Assets and liabilities
No analysis of the assets and liabilities of each operating segment is
provided to the Board of Directors as part of monthly management reporting.
Therefore, no analysis of segmented assets or liabilities is disclosed in this
note.
Non-current assets (i) attributed to country of domicile and (ii) attributable
to all other foreign countries
In accordance with IFRS 8, the following table discloses the non-current
assets located in both the Company's country of domicile (the Isle of Man) and
foreign countries, primarily China, Italy, Australia, New Zealand and the
United Kingdom where the Group's principal subsidiaries are domiciled.
2024 2023
Restated*
£000s £000s
Country of domicile
Intangible assets 10,966 13,084
Property, plant and equipment 1,826 2,599
Total country of domicile non-current assets 12,792 15,683
Foreign countries
Intangible assets 52,055 58,500
Property, plant and equipment 42,317 43,616
Total foreign non-current assets 94,372 102,116
Total 107,164 117,799
* Prior period intangibles have been restated as a result of correction of a
technical accounting error, see note 29
Major customers
In FY24, there was one major customer that accounted for at least 10% of total
revenues (FY23: one customer). The revenue relating to this customer in FY24
was £17.0m (FY23: £16.9m).
5. EMPLOYEES AND DIRECTORS
(a) Employee benefit expenses
2024 2023
Restated*
£000s £000s
Wages and salaries 39,289 36,302
Pension cost (note 5(c)) 1,434 1,352
Employee benefit expenses 40,723 37,654
Share based payment transactions (note 21) 343 380
Total employee benefit expenses 41,066 38,034
* Prior period numbers have been restated as a result of discontinued
operations, see note 28
The total employee benefit expense includes compensation to key management.
(b) Key management compensation
The following table details the aggregate compensation paid in respect of the
key management, which includes the Directors and the members of the Executive
team (previously called the Operational Board), representing members of the
senior management team from all key departments of the Group.
2024 2023
£000s £000s
Wages and salaries 2,159 2,325
Pension cost (note 5c) 184 175
Share based payment transactions (note 21) 279 57
2,622 2,557
-There are no defined benefit schemes for key management. Pension costs under
defined contribution schemes are included in the post-employment benefits
disclosed above.
(c) Retirement benefits
(i) The Strix Limited Retirement Fund
The Strix Limited Retirement Fund is a defined contribution scheme under which
the assets of the scheme are held separately from those of the Group in an
independently administered fund. The pension cost charge represents costs
payable by the Group to the fund and amounted to £0.6m (FY23: £0.6m).
(ii) Billi Retirement fund
The company contributes 11% of salary to an employee nominated superannuation
fund, which is independent to the employing company. Billi has no post
employment liability to employees. The pension cost charge represents costs
payable by the Group to the fund and amounted to £0.7m (FY23: £0.6m).
(iii) LAICA S.p.A. Termination Indemnity
LAICA S.p.A. operates a defined benefit plan for its employees in accordance
with the Italian Termination Indemnity (named "Trattamento di Fine Rapporto"
or "TFR") provisions defined by the National Civil Code (Article 2120). In
accordance with IAS 19, the TFR provision is a defined benefit plan, which is
based on the principle to allocate the final cost of benefits over the periods
of service which give rise to an accrual of deferred rights under each
particular benefit plan.
The calculation of the liability is based on both the length of service and on
the remuneration received by the employee during that period of service.
Article 2120 states that severance pay is due to the employee by the companies
in any case of termination of the employment contract. For each year of
service, severance pay accruals are based on total annual compensation divided
by 13.05. Although the benefit is paid in full by the employer, part (0.5% of
pay) of the annual accrual is paid to INPS by the employer, and is subtracted
from the severance pay accruals for the contribution reference period. As of
31 December, of every year, the severance pay accrued as of 31 December of the
preceding year is revalued by an index stipulated by law as follows: 1.5% plus
75% of the increase over the last 12 months in the consumer price index, as
determined by the Italian Statistical Institute.
In accordance with IAS 19, the determination of the present value of the
liability is carried out by an independent actuary under the projected unit
method. This method considers each period of service provided by workers at
the company as a unit of additional right.
The actuarial liability must therefore be quantified based on seniority
reached at the valuation date and re-proportioned based on the ratio between
the years of service accrued at the reference date of the assessment and the
overall seniority reached at the time scheduled for the payment of the
benefit.
Furthermore, this method provides to consider future salary increases, due to
any cause (inflation, career, contract renewals, etc.), up to the time of
termination of the employment relationship.
The below table summarises the defined benefit pension liability of LAICA
S.p.A. at 31 December 2024:
2024 2023
£000s £000s
Liability as at 1 January 802 832
Service Cost 68 69
Interest Cost 21 27
Total amount recognised in profit or loss 89 96
Remeasurements
Experience losses 7 12
Loss from change in financial assumptions 1 20
Total amount recognised in other comprehensive income 8 32
Exchange differences on translation of foreign operations (35) (14)
Benefits paid (240) (144)
Liability as at 31 December 624 802
The key actuarial assumptions used in arriving at these figures include:
• Annual discount rate of 3.2% (FY23: 3.2%).
• Annual price inflation of 2.0% (FY23: 2.0%).
• Annual TFR increase of 3.0% (FY23: 3.0%).
• Demographic assumptions based on INPS published data.
The remainder of the post-employment benefit liability of £93k (FY23: £86k)
as at 31 December 2024 is made up of contractual post-employment liabilities
within LAICA S.p.A. that do not meet the definition of a defined benefit plan
in accordance with IAS 19.
6. EXPENSES
(a) Expenses by nature
2024 2023
Restated*
£000s £000s
Employee benefit expense (note 5a) 40,723 37,654
Depreciation charges 5,670 5,239
Amortisation 2,258 1,919
Adjusting items before tax (see below) 13,536 4,192
Net foreign exchange losses 259 521
* Prior period numbers have been restated as a result of discontinued
operations, see note 28.
Research and development (R&D) expenditure totalled £4.3m (FY23: £4.3m),
and £2.6m (FY23: £3.6m) of development costs have been capitalised during
the year.
(b) Adjusting items
Adjusting items are excluded from our adjusted results by virtue of their
nature, cause and predictability of occurrence, frequency, and scale of impact
on underlying performance in order to better reflect management's view of the
underlying trends and operating performance of the Group that is more
comparable over time.
Adjusting items have been broken down as follows:
2024
Adjusting items Continuing operations Discontinued operations Total
£000s £000s £000s
Non-recurring items:
Restructuring/rebasing(1):
Controls 1,529 - 1,529
Consumer Goods 6,433 - 6,433
Billi (previously PFS) - 2,830 2,830
Central costs 580 - 580
Mergers and acquisitions 28 - 28
Settlements(2) 3,296 - 3,296
Total (A) 11,866 2,830 14,696
Recurring items:
Share based payments 343 - 343
Amortisation charges on acquired intangible assets 1,327 - 1,327
Total (B) 1,670 - 1,670
Total adjusting items before tax(A+B)(3) 13,536 2,830 16,366
Deferred taxation credits relating to amortisation charges on acquired (271) - (271)
intangible assets
Total adjusting items 13,265 2,830 16,095
2023
Adjusting items Continuing operations Discontinued operations Total
£000s £000s £000s
Non-recurring items:
Restructuring/rebasing(1):
Controls 278 - 278
Billi (previously PFS) - 34 34
Consumer Goods 186 - 186
COVID-19 related costs 14 - 14
Mergers and acquisitions 2,073 - 2,073
Total (A) 2,551 34 2,585
Recurring items:
Share based payments 380 - 380
Amortisation charges on acquired intangible assets 1,261 - 1,261
Total (B) 1,641 - 1,641
Total adjusting items before tax(A+B) 4,192 34 4,226
Deferred taxation credits relating to amortisation charges on acquired (329) - (329)
intangible assets
Total adjusting items 3,863 34 3,897
(1) £0.8m (FY23: £0.1m) of adjusting items from restructuring are included
in cost of sales. The balance of all other adjusting items are in
administrative expenses.
(2)£2.2m (FY23: £nil) of adjusting items in settlements are against controls
revenue, in line with IFRS 15 Revenue from Contracts with Customers.
(3)£10.5m (FY23: £4.1m) of total adjusting items for continuing operations
are included in administrative expenses.
Adjusting items in segmental reporting:
2024
£000s
Controls Billi Consumer goods Total
Revenue: settlements 2,200 - - 2,200
Cost of sales: restructuring 416 - 402 818
2,616 - 402 3,018
2023
Restated*
£000s
Controls Billi Consumer goods Total
Cost of sales: restructuring 65 - - 65
65 - - 65
* Prior period numbers have been restated as a result of discontinued
operations, see note 28
As announced in our FY23 presentations and as part of the Group's subsequent
updates to the market, restructuring and rebasing of the business has
continued into FY24 to build strong foundations for medium-term growth
opportunities as the market continues to recover. The Board is focused on
maximising cash generation to support debt reduction, allocating resources to
optimise commercial success and realigning efforts from commercially less
sustainable projects to commercially more attractive ones.
A key part of this process has been the ongoing commercial review of product
lines/ groups (predominantly within the Consumer Goods division) with the
intention of providing the business with the flexibility to selectively invest
time and resources in those projects with higher returns. As a result of this
process, the business has approved the cessation of a number of product
lines/groups and associated capital development projects, which has resulted
in the write off/impairment of certain items on the balance sheet, including
capital development assets, stock and some licensing debtors. The Group has
also consequently disposed of the HaloSource business in the current year.
Adjusting items non-recurring from continuing operations:
1. Restructuring/rebasing of £8.5m (FY23: £0.5m), includes the following:
a) Consumer Goods £6.4m (FY23: £0.2m) - £5.9m (FY23: £nil) write
off/impairments including tooling/intangibles, inventories and licensing
agreements associated with product lines in the Consumer Goods division where
the group does not intend to place further commercial focus or allocate
resources. Decisions have been made based on the level of additional
investment in both time and resources required to get to an end product that
can be successfully marketed, including the provision of a suitable marketing
and promotional strategy versus the expected timing and profitability of that
product line/group.
Additional personnel costs relate to the restructuring of the Consumer Goods
division totalling £0.5m (FY23: £0.2m).
b) Controls £1.5m (FY23: £0.3m) - Certain controls capital expenditure
projects were deferred to allow the business to retain additional cash within
the Group and reduce net debt levels. This timing change has resulted in the
£0.9m (FY23: £nil) write off/impairment of specific fixed term licensing
debtors that related to this technology.
Additional restructuring costs related to the announced part-closure of our
Ramsey manufacturing site totalled £0.6m (FY23: £0.3m)
c) Central costs of £0.6m (FY23: £nil) - Additional personnel costs relating
to the restructuring of the central team totalling £0.6m (FY23: £nil).
2. Settlements - The £3.3m (FY23: £nil) of non-recurring adjusting costs
relates predominantly to a commercial settlement of £2.2m with one of the
Group's key OEM customers of which a payment of £1.0m was made prior to year
end with a remaining balance of £1.2m to be settled subsequently. £0.7m
relates to a final settlement agreement with all parties to the LAICA
acquisition, regarding the transfer of a Taiwanese property. The remaining
£0.4m relates to provisions for legal costs and other supplier settlements.
3. Mergers and Acquisitions - Current year M&A cost of £28k is not
significant when compared with previous year cost of £2.1m which was mainly
related to legal and consultancy fees and other acquisition related costs
incurred on transition from previous shareholders and integration of the Billi
entities into the group.
Adjusting items from discontinued operations:
Following a comprehensive review of the Group's business unit HaloSource (part
of our Premium Filtration Systems division, now classified as Billi), it was
concluded that, as an industrial farming filtration product, the Halopure
technology does not fit well with the rest of the group's focus on smaller
scale domestic filtration products. The business was loss making since
acquisition and was forecast to continue to be for the medium term, whilst
requiring additional investment to support ongoing growth. HaloSource was
subsequently disposed of via sale at a nominal value which led to HaloSource
being disclosed as a discontinued operation. The £2.8m adjusting costs
relates to write off/impairments of £2.3m of assets before classification as
held for sale, redundancy costs of £0.3m and loss on disposal of £0.2m
Consolidated statement of financial position impact of adjusting items
Intangibles PPE Net investment in finance leases Inventories Debtors Cash Creditors Lease liability Deferred tax liabilities Retained earnings Total
£000s £000s £000s £000s £000s £000s £000s £000s £000s £000s £000s
Continuing operations:
Restructuring/rebasing:
- Controls - - - 17 449 1,025 38 - - - 1,529
- Consumer Goods 3,761 532 - 554 932 661 (7) - - - 6,433
- Central costs - - - 40 539 1 - - - 580
M&A - - - - - 28 - - - - 28
Settlements - - - - - 1,878 1,418 - - - 3,296
Share based payments - - - - - - - - - 343 343
Amortisation charges on acquired intangible assets 1,327 - - - - - - - - - 1,327
Deferred taxation credits relating to amortisation charges on acquired - - - - - - - - (271) - (271)
intangible assets
Total continuing operations (A) 5,088 532 - 571 1,421 4,131 1,450 - (271) 343 13,265
Discontinued operations:
Restructuring/rebasing - - - - - 280 - - - - 280
Loss on disposal - 112 7 - 337 605 (744) (92) - - 225
Impairment to fair value less costs to sell 1,556 111 - 384 274 - - - - - 2,325
Total discontinued operations (B) 1,556 223 7 384 611 885 (744) (92) - - 2,830
Total adjusting items (A+B) 6,644 755 7 955 2,032 5,016 706 (92) (271) 343 16,095
(c) Auditor's remuneration
During the year the Group (including its subsidiaries) obtained the following
services from the Company's auditor, PricewaterhouseCoopers (PwC) LLC and
other firms in the PwC network, as detailed below:
2024 2023
£000s £000s
Fees payable to Company's auditor and its associates for the audit of the 452 283
consolidated financial statements
Fees payable to Company's auditor and its associates for other services:
- the audit of Company's subsidiaries 14 13
- other assurance services 4 4
- tax compliance and other 9 191
479 491
In FY24, fees for the audit of the consolidated financial statements include
one-off amounts relating to commercial reviews and discontinued operations and
the transfer of the Billi Australia audit to PwC.
Included within 'other' are fees of £nil (FY23: £184k) paid to
PricewaterhouseCoopers LLP, UK in relation to integration costs of the Billi
UK acquisition.
7. FINANCE COSTS
2024 2023
Restated*
£000s £000s
Letter of credit charges 184 176
Right-of-use lease interest 240 190
Borrowing costs 8,763 10,012
Total finance costs 9,187 10,378
* Prior period numbers have been restated as a result of discontinued
operations, see note 28
8. TAXATION
The comparatives have been re-presented to conform with the more detailed
current year disclosures.
2024 2023
Analysis of charge/(credit) in year £000s £000s
Current tax (overseas)
Current tax on overseas profits for the year 3,555 3,270
Adjustments to prior years - overseas 443 -
Total current income tax 3,998 3,270
Deferred tax
Movement in deferred tax assets and liabilities (672) (978)
Adjustments to prior years - overseas (311) (749)
Total deferred tax (983) (1,727)
Total tax charge 3,015 1,543
The FY23 numbers for current tax and adjustments to prior year have been
re-presented to show these amounts on a gross basis for better comparability.
Total tax charge relates to continuing operations.
There were no tax provision releases in the current year.
As the most significant subsidiary in the Group is based on the Isle of Man,
this is considered to represent the most relevant standard rate for the Group.
The tax assessed for the year is different to the standard rate of income tax
in the Isle of Man of 0% (FY23: 0%). The differences are explained below:
2024 2023
Restated*
£000s £000s
Profit from continuing operations before income tax 4,972 18,143
Loss from discontinued operation before income tax (3,315) (440)
Accounting profit before income tax 1,657 17,703
At Group's statutory income tax rate of 0% (FY23: 0%) - -
Impact of higher Overseas tax 3,404 3,120
Tax disallowed expenses 97 274
Adjustments to current tax of prior periods 443 -
Adjustments to deferred tax of prior periods (311) (749)
Previously unrecognised tax losses used to reduce current tax expense (15) (583)
Research and development tax credit (418) (399)
Other (185) (120)
Income tax in the consolidated income statement 3,015 1,543
* Prior period numbers have been restated as a result of discontinued
operations, see note 28.
The Group is subject to Isle of Man income tax on profits at a rate of 0%
(FY23: 0%), UK at a rate of 25% (FY23: 25%), China at a rate of 15% (FY23:
25%), Italy at a rate of 27.9% (FY23: 27.9%), Spain at a rate of 25% (FY23:
25%), Taiwan at a rate of 20% (FY23: 20%), Australia at a rate of 30% (FY23:
30%) and New Zealand at a rate of 28% (FY23: 28%).
Deferred tax assets and liabilities are attributable to the following:
Assets Liabilities
2024 2023 2024 2023
Restated*
£000s £000s £000s £000s
Property, plant and equipment - - 393 360
IFRS 16 Leases (299) (200) - -
Intangible assets - - 9,083 9,952
Provision on inventories (518) (482) - -
Expected credit losses on receivables (15) (32) - -
Provisions/accruals (1,085) (534) - -
Pension benefit - - 12 13
IFRS 2 Share‑based Payments (22) (90) - -
Derivatives - (4) - -
Tax losses (63) (69) - -
Tax (assets)/liabilities (2,002) (1,411) 9,488 10,325
Tax set-off - Billi Australia 490 454 (490) (454)
Net tax (assets)/liabilities (1,512) (957) 8,998 9,871
* Prior period numbers have been restated as a result of correction of a
technical accounting error affecting intangible assets, see note 29.
Strix Australia and Billi Australia are tax assessed as a group under the tax
consolidation legislation in Australia, which means that these entities are
taxed as a single entity. As a consequence, the deferred tax assets and
deferred tax liabilities of these entities have been offset in the
consolidated financial statements.
Movement in deferred tax asset during the current year:
1 January 2024 Recognised in year 31 December 2024
£000s £000s £000s
IFRS 16 Leases (200) (99) (299)
Provision on inventories (482) (36) (518)
Expected credit losses on receivables (32) 17 (15)
Provisions/accruals (534) (551) (1,085)
IFRS 2 Share‑based Payments (90) 68 (22)
Derivatives (4) 4 -
Tax losses (69) 6 (63)
Total (1,411) (591) (2,002)
Movement in deferred tax assets during the prior year:
1 January 2023 Recognised in year 31 December 2023
£000s £000s £000s
Property, plant and equipment (10) 10 -
IFRS 16 Leases - (200) (200)
Provision on inventories (190) (292) (482)
Expected credit losses on receivables (6) (26) (32)
Provisions/accruals (21) (513) (534)
IFRS 2 Share‑based Payments (18) (72) (90)
Derivatives (3) (1) (4)
Tax losses (65) (4) (69)
Total (313) (1,098) (1,411)
Included within the amount recognised in the year is £49k recognised in
equity (FY23: (£13k))
Movement in deferred tax liabilities during the current year:
1 January 2024 Recognised in year 31 December 2024
£000s £000s £000s
Property, plant and equipment 360 33 393
Intangible assets 9,952 (869) 9,083
Pension benefit 13 (1) 12
Total 10,325 (837) 9,488
Movement in deferred tax liabilities during the prior year:
1 January 2023 Recognised in year 31 December 2023
Restated*
£000s £000s £000s
Property, plant and equipment 653 (293) 360
Intangible assets 10,719 (767) 9,952
Pension benefit 15 (2) 13
Total 11,387 (1,062) 10,325
* Prior period numbers have been restated as a result of correction of a
technical accounting error relating to intangible assets, see note 29.
Included within the amount recognised in the year is £(0.4)m recognised in
equity (FY23: £(0.4)m)
9. EARNINGS/(LOSS) PER SHARE
The calculation of basic and diluted earnings/(loss) per share is based on the
following data.
2024
Continuing operations Discontinued operations Total
Profit/(loss) (£000s)
Profit/(loss) for the purpose of basic and diluted earnings per share 1,938 (3,315) (1,377)
Number of shares (000s)
Weighted average number of shares for the purposes of basic earnings per share 224,924 224,924 224,924
Weighted average dilutive effect of conditional share awards 4,909 4,909 4,909
Weighted average number of shares for the purposes of diluted earnings per 229,833 229,833 229,833
share (000s)
Earnings/(loss) per ordinary share (pence)
Basic loss per ordinary share 0.9 (1.5) (0.6)
Diluted loss per ordinary share 0.8 (1.5) (0.6)
Adjusted earnings/(loss) per ordinary share (pence)
Basic adjusted earnings/(loss) per ordinary share 6.8 (0.2) 6.6
Diluted adjusted earnings/(loss) per ordinary share 6.6 (0.2) 6.4
The weighted average dilutive effect of conditional share awards of 4,908,871
are not included in the weighted average calculation for diluted loss per
ordinary share for discontinued and total operations and diluted adjusted loss
per ordinary share for discontinued operations because they are anti-dilutive
since there is a loss after tax.
The calculation of basic and diluted adjusted earnings per share is based on
the following data:
2024
Continuing operations Discontinued operations Total
£000s £000s £000s
Profit/(loss) for the year 1,938 (3,315) (1,377)
Total adjusting items before taxation (note 6b) (A) 13,536 2,830 16,366
Deduct adjusting items in taxation credits:
Deferred taxation credits relating to amortisation charges on acquired (271) - (271)
intangible assets
(B) (271) - (271)
Total adjusting items (A+B) 13,265 2,830 16,095
Adjusted earnings/(loss) 15,203 (485) 14,718
2023
Continuing operations Discontinued operations Total
Profit/(loss) (£000s)
Profit/(loss) for the purpose of basic and diluted earnings per share 16,643 (440) 16,203
Number of shares (000s)
Weighted average number of shares for the purposes of basic earnings per share 218,713 218,713 218,713
Weighted average dilutive effect of conditional share awards 3,422 3,422 3,422
Weighted average number of shares for the purposes of diluted earnings per 222,135 222,135 222,135
share (000s)
Earnings/(loss) per ordinary share (pence)
Basic earnings/(loss) per ordinary share 7.6 (0.2) 7.4
Diluted earnings/(loss) per ordinary share 7.5 (0.2) 7.3
Adjusted earnings/(loss) per ordinary share (pence)
Basic adjusted earnings/(loss) per ordinary share 9.4 (0.2) 9.2
Diluted adjusted earnings/(loss) per ordinary share 9.2 (0.2) 9.0
The weighted average dilutive effect of conditional share awards of 3,422,078
are not included in the weighted average calculation for both diluted loss per
ordinary share and diluted adjusted loss per ordinary share for discontinued
operations because they are anti-dilutive since there is a loss after tax.
The calculation of basic and diluted adjusted earnings per share is based on
the following data:
2023
Continuing operations Discontinued operations Total
£000s £000s £000s
Profit/(loss) for the year 16,643 (440) 16,203
Total adjusting items before taxation (note 6b) (A) 4,192 34 4,226
Deduct adjusting items in taxation credits:
Deferred taxation credits relating to amortisation charges on acquired (B) (329) - (329)
intangible assets
Total adjusting items (A+B) 3,863 34 3,897
Adjusted earnings/(loss) 20,506 (406) 20,100
10. INTANGIBLE ASSETS
Capitalised development costs Software Intellectual property Customer relationships Brands Goodwill Intangible assets under construction Total
Cost £000s £000s £000s £000s £000s £000s £000s £000s
At 1 January 2023 19,428 4,452 1,482 18,549 19,785 20,067 103 83,866
Additions 3,870 448 464 - - 242 5,024
Transfers - 9 42 (116) 28 69 (32) -
Purchase consideration refund - - - - - (1,046) - (1,046)
Fair value adjustments - - - (84) - 654 - 570
Disposals (494) (50) - - - - - (544)
Effect of movement in exchange rates (62) (11) (38) (790) (866) (841) 16 (2,592)
At 31 December 2023 - restated* 22,742 4,848 1,950 17,559 18,947 18,903 329 85,278
At 1 January 2024 22,742 4,848 1,950 17,559 18,947 18,903 329 85,278
Additions 2,629 331 370 - - - 6 3,336
Transfers (88) 389 26 - - - (327) -
Disposals - (31) (83) - - - - (114)
Write off/impairment (5,570) (50) (592) - - (384) - (6,596)
Effect of movement in exchange rates (76) (4) (32) (1,172) (1,038) (994) (3) (3,319)
At 31 December 2024 19,637 5,483 1,639 16,387 17,909 17,525 5 78,585
Amortisation and impairment
Balance at 1 January 2023 7,716 1,817 256 703 - - - 10,492
Amortisation charge for the period 1,304 641 159 1,261 - - - 3,365
Disposals (184) (46) - - - - - (230)
Effect of movement in exchange rates 230 (6) (7) (150) - - - 67
At 31 December 2023 - restated* 9,066 2,406 408 1,814 - - - 13,694
Balance at 1 January 2024 9,066 2,406 408 1,814 - - - 13,694
Amortisation charge for the period 1,453 730 184 1,327 - - - 3,694
Write off/impairment (1,145) (41) (93) - - - - (1,279)
Effect of movement in exchange rates (16) (1) (14) (514) - - - (545)
Balance at 31 December 2024 9,358 3,094 485 2,627 - - - 15,564
Net book value
At 31 December 2022 11,712 2,635 1,226 17,846 19,785 20,067 103 73,374
At 31 December 2023 - restated* 13,676 2,442 1,542 15,745 18,947 18,903 329 71,584
At 31 December 2024 10,279 2,389 1,154 13,760 17,909 17,525 5 63,021
* Prior period numbers for customer relationships, brands and goodwill have
been restated as a result of correction of a technical accounting error, see
note 29.
The reconciliation of the carrying amount of intangible assets was presented
on a net basis in the prior year. This has been presented in the current year,
including the comparatives, on a gross basis as the Group believes it provides
users with more sufficient details, as presentation on gross basis ensures
details relating to disposals and write offs are provided to users of the
financial statements particularly due to the adjusting items during 2024.
Amortisation charges for continuing operations allocated to cost of sales are
£1.8m (FY23: £1.5m) and administrative expenses £1.8m (FY23: £1.7m).
Amortisation charges for discontinued operations allocated to cost of sales
are £0.1m (FY23: £0.2m) and administrative expenses £nil (FY23: £nil).
As disclosed in note 6(b), the commercial review of product lines/ groups
resulted in the write off of certain intangible assets. These write
off/impairment charges are allocated to administrative expenses with £3.8m
(FY23: £nil) relating to continuing operations and £1.6m (FY23: £nil) to
discontinued operations.
Impairment review
The Group tests goodwill and brands annually for impairment.
For impairment testing, the goodwill and brands acquired are allocated to the
following cash generating units (CGUs).
Goodwill Brands Total
CGU 2024 2023 2024 2023 2024 2023
Restated Restated Restated
£000s £000s £000s £000s £000s £000s
Billi Australia 6,747 7,335 8,248 8,884 14,995 16,219
Billi New Zealand 227 253 1,005 1,109 1,232 1,362
Billi UK 2,289 2,289 2,548 2,548 4,837 4,837
HaloSource Astrea* - 324 - - - 324
HaloSource Shanghai* - 60 - - - 60
Laica S.p.A 8,262 8,642 6,108 6,406 14,370 15,048
Total 17,525 18,903 17,909 18,947 35,434 37,850
* The prior year numbers have been re-presented to include goodwill relating
to HaloSource Astrea and HaloSource Shanghai to allow reconciliation to the
carrying value table below.
Prior period numbers have been restated as a result of correction of a
technical accounting error, see note 29.
The recoverable amount of cash generating units is determined based on value
in use calculations for goodwill over a five-year forecast period, and for
brands over a twenty-year and ten-year forecast period for Laica and Billi
entities respectively. The recoverable amounts have been calculated with
reference to the key assumptions shown below:
Laica S.p.A Billi Australia Billi New Zealand Billi UK
2024 2023 2024 2023 2024 2023 2024 2023
£000s £000s £000s £000s £000s £000s £000s £000s
Terminal growth rate 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Post-tax discount rate 8.0% 11.8% 12.0% 14.9% 12.5% 16.2% 12.5% 15.4%
Pre-tax discount rate 11.1% 16.4% 17.1% 21.3% 17.4% 22.5% 16.7% 19.0%
Royalty savings for brands 5.6% 5.6% 5.8% 5.8% 5.8% 5.8% 5.8% 5.8%
Royalty Rate
Management used publicly available trademark licensing data and applied
judgement to arrive at an appropriate royalty rate with reference to
comparable data.
Discount rate
The discount rate applied to the cash flows of each of the Group's operations
is based on the Weighted Average Cost of Capital (WACC). The cost of equity
element uses the risk-free rate for thirty-year bonds issued by the government
in Australia, Italy and UK and twenty-year bonds issued by the government in
New Zealand, adjusted for a risk premium to reflect both the increased risk of
investing in equities and the systemic risk of the specific Group operating
company.
In making this adjustment, inputs required are the equity market risk premium
(that is, the increased return required over and above a risk-free rate by an
investor who is investing in the market as a whole) and the risk adjustment,
beta, applied to reflect the risk of the specific Group operating company
relative to the market as a whole.
All discount rates disclosed above have been subject to appropriate review and
recalculation in 2024.
In determining the risk adjusted discount rate, management has applied an
adjustment for the systemic risk to each of the Group's operations determined
using an average of the betas of comparable listed companies and, where
available and appropriate, across a specific territory. Management has used an
equity market risk premium that takes into consideration studies by
independent economists, the average equity market risk premium over the past
five years and the market risk premiums typically used by investment banks in
evaluating acquisition proposals.
To calculate the pre-tax discount rate, we have taken the post-tax discount
rate and divided this by one minus the applicable tax rate. We consider this
an appropriate approximation of the pre-tax rate as there are no significant
timing differences between the tax cash flows and tax charges. Overall,
Management is confident that the discount rate adequately reflects the
circumstances in each location and is in accordance with IAS 36.
Impairments
£0.4m goodwill allocated to HaloSource Astrea and HaloSource Shanghai were
fully written off during the current year as part of the
restructuring/rebasing activities of the Group. £0.3m relates HaloSource
Astrea which is included in restructuring adjusting items (see note 6{b}) for
Consumer Goods. The remaining £60k relates to HaloSource Shanghai which is
included in adjusting items for discontinued operations (see note 6b). No
impairments were recognised in the prior year.
11. PROPERTY, PLANT AND EQUIPMENT
Plant & machinery Fixtures, fittings & equipment Motor vehicles Production tools Land & Buildings Right-of-use assets Point of use dispensers Assets under construction Total
Cost £000s £000s £000s £000s £000s £000s £000s £000s £000s
Balance at 1 January 2023 29,988 8,124 375 13,693 20,690 8,678 1,430 2,247 85,225
Additions 79 705 67 101 332 2,321 297 807 4,709
Transfers 742 - - 492 - - - (1,234) -
Fair value adjustments - - - - - - (136) - (136)
Disposals (183) (378) (67) (11) - (1,143) (36) (18) (1,836)
Effect of movement in exchange rates (96) (136) (86) (3) (10) (283) (2) (11) (627)
Balance at 31 December 2023 30,530 8,315 289 14,272 21,012 9,573 1,553 1,791 87,335
Balance at 1 January 2024 30,530 8,315 289 14,272 21,012 9,573 1,553 1,791 87,335
Additions 535 354 46 280 163 730 469 2,453 5,030
Transfers 579 139 25 390 291 - - (1,424) -
Disposals (88) (203) (94) (28) - (543) (250) - (1,206)
Write off/impairment (290) (308) (1) (63) (51) - - (394) (1,107)
Effect of movement in exchange rates (282) (115) (6) (1) (44) (342) - (37) (827)
Balance at 31 December 2024 30,984 8,182 259 14,850 21,371 9,418 1,772 2,389 89,225
Depreciation and impairment
Balance at 1 January 2023 15,775 4,604 331 11,049 978 5,053 71 - 37,861
Depreciation charge for the period 1,553 1,010 24 601 452 1,321 380 - 5,341
Disposals (164) (240) (65) (6) - (1,127) (30) - (1,632)
Effect of movement in exchange rates (58) (109) (85) (4) (8) (184) (2) - (450)
Balance at 31 December 2023 17,106 5,265 205 11,640 1,422 5,063 419 - 41,120
Balance at 1 January 2024 17,106 5,265 205 11,640 1,422 5,063 419 - 41,120
Depreciation charge for the period 1,521 947 22 882 482 1,503 416 - 5,773
Disposals (88) (202) (85) (28) - (418) - - (821)
Write off/impairment (174) (230) (1) (54) (5) - - - (464)
Effect of movement in exchange rates (235) (84) (4) (1) (38) (165) 1 - (526)
Balance at 31 December 2024 18,130 5,696 137 12,439 1,861 5,983 836 - 45,082
Net book value
At 31 December 2022 14,213 3,520 44 2,644 19,712 3,625 1,359 2,247 47,364
At 31 December 2023 13,424 3,050 84 2,632 19,590 4,510 1,134 1,791 46,215
At 31 December 2024 12,854 2,486 122 2,411 19,510 3,435 936 2,389 44,143
The reconciliation of the carrying amount of property, plant and equipment was
presented on a net basis in the prior year. This has been presented in the
current year, including the comparatives, on a gross basis as the Group
believes it provides users with more sufficient details. The presentation on
gross basis ensures details relating to disposals and write offs are provided
to users of the financial statements.
Depreciation charges for continuing operations allocated to cost of sales are
£4.1m (FY23: £3.9m), distribution costs £0.4m (FY23: £0.2m), and
administrative expenses £1.2m (FY23: £1.1m).
Depreciation charges for discontinued operations allocated to cost of sales
are £0.1m (FY23: £0.1m), distribution costs £1k (FY23: £nil), and
administrative expenses £1k (FY23: £2k).
Write off/impairment charges as a result of the commercial review of product
lines/ groups are allocated to administrative expenses. £0.5m of this amount
relates to continuing operations and £0.1m to discontinued operations (note
6b).
12. SUBSIDIARY UNDERTAKINGS AND JOINT ARRANGEMENTS OF THE GROUP
A list of all subsidiary undertakings controlled by the Group, and existing
joint arrangements the Group is currently part of, which are all included in
the consolidated financial statements, is set out below.
Name of entity Nature of business Country of incorporation % of ordinary shares held by the Group Nature of shareholding
%
Sula Limited Holding company IOM 100 Subsidiary
Strix Limited Manufacture and sale of products IOM 100 Subsidiary
Strix Guangzhou Limited Dormant company China 100 Subsidiary
Strix (U.K.) Limited Holding company and group's sale and distribution centre United Kingdom 100 Subsidiary
Strix Hong Kong Limited Sale and distribution of products Hong Kong 100 Subsidiary
Strix (China) Limited Manufacture and sale of products China 100 Subsidiary
Strix (USA), Inc. Research and development, sales, and distribution of products US 100 Subsidiary
LAICA S.p.A. Manufacture and sales of products Italy 100 Subsidiary
LAICA Iberia Distribution S.L. Sale and distribution of products Spain 100 Subsidiary
LAICA International Corp. Sale and distribution of products Taiwan 67 Subsidiary
Taiwan LAICA Corp. Sale and distribution of products Taiwan 67 Subsidiary
LAICA Brand House Limited Holding and licensing of trademarks Hong Kong 100 Subsidiary
Strix Australia Pty Limited Holding company Australia 100 Subsidiary
Billi UK Limited Manufacture and sale of products United Kingdom 100 Subsidiary
Billi Australia Pty Limited Manufacture and sale of products Australia 100 Subsidiary
Billi New Zealand Limited Manufacture and sale of products New Zealand 100 Subsidiary
Billi R&D Pty Limited Dormant company Australia 100 Subsidiary
Billi Financial Services Pty Limited Dormant company Australia 100 Subsidiary
On January 19 2024 the Group entered in an agreement finally settled on March
18 2024, for acquiring 55% of the shares and voting interests in LAICA Brand
House (LBH), previously owned by Drangon Will Enterprise Limited. As a result,
the Group's equity interest in LBH increased from 45% to 100%, granting it
control of LBH. Cash consideration of £0.1m was paid being the fair value of
55% of the net assets at the acquisition date.
13. INVENTORIES
2024 2023
£000s £000s
Raw materials and consumables 8,009 9,444
Finished goods and goods in transit 17,382 15,996
25,391 25,440
The cost of inventories recognised as an expense and included in cost of sales
amounted to £61.7m (FY23: £59.2m). Included in this amount are adjusting
items from continuing operations of £0.6m arising from impairment due to
restructuring/rebasing activities (FY23: £nil). £0.4m (FY23: £nil) relating
to discontinued operations was also impaired due to restructuring/rebasing
activities and was recognised in administrative expenses. Inventory provisions
in continuing operations amounted to £0.4m (FY23: £nil).
14. TRADE AND OTHER RECEIVABLES
2024 2023
£000s £000s
Amounts falling due within one year:
Trade receivables - current 15,254 11,495
Trade receivables - past due 1,251 8,419
Trade receivables - gross 16,505 19,914
Loss allowance (569) (222)
Trade receivables - net 15,936 19,692
Prepayments 1,434 1,448
Advances to suppliers 520 1,477
VAT receivable 3,576 1,399
Other receivables 1,210 3,697
22,676 27,713
In the current year, current tax receivable of £0.3m (FY23: £0.2m) has been
excluded from the trade and other receivables note as this is separately
presented on the statement of financial position. Consequently, the prior year
numbers have been re-presented.
Trade and other receivables carrying values are considered to be equivalent to
their fair values. The amount of trade receivables impaired at 31 December
2024 is equal to the loss allowance provision (FY23: equal).
Adjusting items from continuing operations of £1.4m (FY23: £nil) relating to
the impairment of trade and other receivables were recognised in
administrative expenses in relation to restructuring/rebasing activities and
£0.6m (FY23: £nil) relating to discontinued operations.
Other receivables include receivables from licensing income of £nil (FY23:
£1.0m) and £0.4m (FY23: £2.0m) rebates receivable from suppliers from
procurements made in prior years. Settlement of the rebates receivable from
suppliers will be via net cash settlement of future purchases.
Government grants due amounted to £0.2m (FY23: £0.1m). There were no
unfulfilled conditions in relation to these grants at the year end, although
if the Group ceases to operate or leaves the Isle of Man within 5 years (FY23:
3 years) from the date of the last grant payment, funds may be reclaimed.
The Group's trade and other receivables are denominated in the following
currencies:
2024 2023
£000s £000s
Pound Sterling 8,333 8,026
Chinese Yuan 1,362 3,068
US Dollar 2,208 5,740
Euro 5,249 6,788
Hong Kong Dollar 85 84
Australian Dollar 5,028 3,539
New Zealand Dollar 304 399
Taiwan Dollar 107 69
22,676 27,713
Movements on the Group's provision for impairment of trade receivables and the
inputs and estimation technique used to calculate expected credit losses have
not been disclosed on the basis the amounts are not material. The provision at
31 December 2024 was £0.6m (FY23: £0.2m).
15. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are denominated in the following currencies:
2024 2023
£000s £000s
Pound Sterling 3,557 3,402
Chinese Yuan 1,779 2,654
US Dollar 5,271 2,869
Euro 2,450 7,132
Hong Kong Dollar 181 78
Australian Dollar 1,148 3,028
New Zealand Dollar 270 352
Taiwan Dollar 430 599
Japanese Yen 31 -
15,117 20,114
16. TRADE AND OTHER PAYABLES
2024 2023
£000s £000s
Trade payables 15,115 13,847
Social security and other taxes 392 410
Customer rebates provisions 1,827 179
Capital creditors 626 756
VAT liabilities 905 721
Other liabilities 2,675 3,618
Payments in advance from customers 3,020 2,483
Accrued expenses 6,169 5,151
30,729 27,165
In the current year, current tax payable of £2.4m (FY23: £2.1m) has been
excluded from the trade and other payable note as this is separately presented
on the statement of financial position. Consequently, the prior year numbers
have been re-presented.
The fair value of financial liabilities approximates their carrying value due
to short maturities. Other liabilities include goods received not invoiced
amounts of £1.0m (FY23: £1.4m).
Movement in payments in advance from customers were all driven by normal
trading, with the full amounts due at beginning of the year released to
revenues in the current year.
Trade and other payables are denominated in the following currencies:
2024 2023
£000s £000s
Pound Sterling 6,923 4,618
Chinese Yuan 11,623 11,175
US Dollar 1,983 2,412
Euro 4,346 3,342
Hong Kong Dollar 187 132
Australian Dollar 4,964 5,116
New Zealand Dollar 615 262
Taiwan Dollar 88 108
30,729 27,165
17. BORROWINGS
2024 2023
£000s £000s
Total current borrowings 11,230 16,062
Total non-current borrowings 68,807 89,743
80,037 105,805
The current portion of borrowings include accrued interest of £1.2m (FY23:
£2.0m).
Current bank borrowings include small individual short-term arrangements for
financing purchases and optimising cash flows within the Italian subsidiary.
Current and non-current borrowings are shown net of loan arrangement fees of
£1.0m (FY23: £1.0m) and £0.7m (FY23: £0.9m), respectively.
Total cash outflows relating to loan/RCF repayments and interest payments were
£26.0m (FY23: £15.1m) and £8.7m (FY23: £7.6m) respectively.
Term and debt repayment schedule for long-term borrowings
Currency Interest rate Maturity date 31 December 2024 Commitments 31 December 2023 Commitments
Revolving credit facility B GBP SONIA + 2.00% to 4.00% 25-Oct-26 69,055 80,120
Term loan (facility A) GBP SONIA + 2.00% to 4.00% 30-Nov-25 10,636 24,818
Unicredit facility EUR EURIBOR 6M + 1.20% 28-Jun-24 - 43
BNP Paribas EUR 4.07% 31-Jan-24 - 379
Credito Emiliano EUR 3.10% 24-Jan-25 346 433
Other EUR - 12
80,037 105,805
Term loan (facility A) - The Company has a three-year term loan of £39.0m
payable by eleven fixed repayments with the first quarterly repayment of
£3.5m made on 31 March 2023. The purpose of the term loan was to part finance
the acquisition of Billi. As at 31 December 2024, the outstanding balance on
the term loan is £10.6m (FY23: £24.8m).
Revolving Credit Facility ("RCF") - The Group has a RCF of £80.0m. The RCF
was utilised to finance the acquisition of LAICA as well as other significant
capital projects including the factory in China and the ongoing working
capital needs of the Group.
In March 2024, the Group received approval from its banking syndicate to
normalize its net debt leverage covenant to 2.75x (FY23: 2.25x).
On 11 September 2024 a one-year extension was approved for the Group's £80m
RCF facility, taking maturity out to 25 October 2026 (FY23: 25 October 2025).
As at 31 December 2024, the total facility utilised is £69.5m (FY23:
£80.0m).
In response to more volatile trading conditions in Q4 of FY24, in December
2024, the Group received approval from its banking syndicate for the temporary
relaxation of the debt service cover covenant to the following.
Relevant period Relaxed debt service cover ratio Original debt service cover ratio
31 December 2024 0.85:1 1.10:1
31 March 2025 0.85:1 1.10:1
30 June 2025 0.70:1 1.10:1
30 September 2025 and each Relevant Period thereafter 1.10:1 1.10:1
Transactions costs amounting to £0.8m (FY23: £0.2m) incurred as part of the
extension and amending the RCF agreement were capitalised and will be
amortised over the extension period.
The various agreements contain representations and warranties which are usual
for an agreement of this nature. The agreements also provide for the payment
of commitment fees, agency fees and arrangement fees, contain certain
undertakings, guarantees and covenants (including financial covenants) and
provide for certain events of default. During FY24, the Group has not breached
any of the financial covenants contained within the agreements - see note
20(d) for further details (FY23: same).
The fair values of the Group's borrowings are not materially different from
their carrying amounts, since the interest payable on those borrowings is
close to current market rates.
Interest applied to the term loan and revolving credit facility is calculated
as the sum of the margin and SONIA. The margin under the amended agreement was
3.5% until 31 March 2023, and then 2.85% from 1 April 2023 to 30 June 2023,
and thereafter the margin is dependent on the net leverage of the Group based
on the following table:
Leverage Facility A Margin % p.a. Facility B Margin % p.a.
Greater than or equal to 3.0:1 4.00 4.00
Less than 3.0:1 but greater than or equal to 2.5:1 3.50 3.50
Less than 2.5:1 but greater than or equal to 2.0:1 2.85 2.85
Less than 2.0:1 but greater than or equal to 1.5:1 2.35 2.35
Less than 1.5:1 but greater than or equal to 1.0:1 2.15 2.15
Less than 1.0:1 2.00 2.00
At 31 December 2024, the margin applied was 2.35% (FY23: 2.85%).
18. CAPITAL COMMITMENTS
2024 2023
£000s £000s
Contracted for but not provided in the consolidated financial statements - 1,792 245
Property, plant and equipment
The above commitments include capital expenditure of £1.7m (FY23: £0.1m)
relating to investment in the Next Gen Automation Line in China.
19. CONTINGENT ASSETS AND CONTINGENT LIABILITIES
There continues to be a number of ongoing intellectual property infringement
cases initiated by the Group, as well as patent validation challenges brought
by the defendants. All of these cases are still subject to due legal process
in the countries in which the matters have been raised. As a result, no
contingent assets have been recognised at 31 December 2024 (FY23: £nil), as
any receipts are dependent on the final outcome of each case. There are also
no contingent liabilities at 31 December 2024 (FY23: £nil).
20. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, interest rate risk and commodity price risk), credit
risk, liquidity risk and capital management risk.
The Group uses financial instruments where required to provide flexibility
regarding its working capital requirements and to enable it to manage specific
financial risks to which it is exposed. Transactions are only undertaken if
they relate to actual underlying exposures and hence cannot be viewed as
speculative.
(a) Market risk
(i) Foreign exchange risk
The Group operates in the Isle of Man ("IOM"), United Kingdom ("UK"), Europe
("EU"), United States of America ("US"), Australia, New Zealand and China and
is therefore exposed to foreign exchange risk. Foreign exchange risk arises on
sales and purchases made in foreign currencies and on recognised assets and
liabilities and net investments in foreign operations.
The Group monitors its exposure to currency fluctuations on an ongoing basis.
The Group uses foreign currency bank accounts to reduce its exposure to
foreign currency translation risk, and the Group is naturally hedged, where
possible, against foreign exchange risk as it both generates revenues and
incurs costs in the major currencies with which it deals. The major currencies
the Group transacts in are:
· British Pounds ("GBP")
· Chinese Yuan ("CNY")
· United States Dollar ("USD")
· Euro ("EUR")
· Hong Kong Dollar ("HKD")
· Australian Dollar ("AUD")
· New Zealand Dollar ("NZD")
· Taiwan Dollar ("TWD")
Exposure by currency is analysed in notes 14, 15 and 16.
(ii) Interest rate risk
The Group is exposed to interest rate risk on its long-term borrowings, being
the revolving credit facility and term loan and other borrowings disclosed in
note 17. The interest rates on the revolving credit facility are variable,
based on SONIA and certain other conditions dependent on the financial
condition of the Group, which exposes the Group to cash flow interest rate
risk which is partially offset by cash held at variable rates. Other
borrowings are made up of both fixed rate loans and variable loans based on
EURIBOR.
(iii) Price risk
The Group is exposed to price risk, principally in relation to commodity
prices of raw materials. The Group enters into forward commodity contracts,
forward commits or makes payments in advance in order to mitigate the impact
of price movements on its gross margin.
The Group has not designated any of these contracts as hedging instruments in
either FY24 or FY23 as they relate to physical commodities being purchased for
the Group's own use. At 31 December 2024 and 2023, £nil payments were made in
advance to buy commodities at fixed prices.
(iv) Sensitivity analysis
Foreign exchange risk: The Group is primarily exposed to exchange rate
fluctuations between GBP and USD, CNY, HKD, EUR, TWD, AUD and NZD. Assuming a
reasonably possible change in FX rates of +10% (FY23: +10%), the impact on
profit would be a decrease of £3.7m (FY23: a decrease of £2.5m), and the
impact on equity would be a decrease of £3.6m (FY23: decrease of £1.5m). A
-10% change (FY23: -10%) in FX rates would cause an increase in profit of
£4.6m (FY23: an increase in profit of £3.0m) and a £4.4m increase in equity
(FY23: £1.8m increase in equity). This has been calculated by taking the
profit generated by each currency and recalculating a comparable figure on a
constant currency basis, and by retranslating the amounts in the consolidated
statement of financial position to calculate the effect on equity.
Interest rate risk: The Group is exposed to interest rate fluctuations on its
non-current borrowings, as disclosed in note 17. Assuming a reasonably
possible change in the SONIA/EURIBOR rate of ±0.5% (FY23: ±0.5%), the impact
on profit/ net assets would be an increase/decrease of £0.4m (FY23: £0.6m).
This has been calculated by recalculating the loan interest using the revised
rate to calculate the impact on profit, and recalculating the year end loan
interest balance payable using the same rate.
Commodity price risk: The Group is exposed to commodity price fluctuations,
primarily in relation to copper and silver. Assuming a reasonably possible
change in commodity prices of ±15% for silver (FY23: ±13%) and ±21% for
copper (FY23: ±15%) based on volatility analysis for the past year, the
impact on profit would be an increase/decrease of £2.4m (FY23: £1.8m). The
Group does not hold significant quantities of copper and silver inventory,
therefore the impact on equity would be the same as the profit or loss impact
disclosed (FY23: same). This has been calculated by taking the average
purchase price of these commodities during the year in purchase currency and
recalculating the cost of the purchases with the price sensitivity applied.
(b) Credit risk
The Group has policies in place to ensure that sales of goods are made to
customers with an appropriate credit history. The Group uses letters of credit
and advance payments to minimise credit risk (see note 16). Management believe
there is no further credit risk provision required in excess of the normal
loss allowances, as disclosed in note 14. The amount of trade and other
receivables written off during the year amounted to 0.2% of revenue (FY23:
0% of revenue).
Cash and cash equivalents are held with reputable institutions. All material
cash amounts are deposited with financial institutions whose credit rating is
at least B based on credit ratings according to Standard & Poor's. At the
year-end 2024, £5.2m was held with one financial institution with a credit
rating of BBB- and the total of £2.2m in BBB+ category was held with three
financial institutions with one of them holding £1.6m. At the year-end 2023,
£4.5m was held with one financial institution with a credit rating of BBB+
and the total of £8.2m in BBB category was held with five financial
institutions with one of them holding £4.7m.
The following table shows the external credit ratings of the institutions with
whom the Group has cash deposits:
Credit risk
2024 2023
£000s £000s
AA 2,635
-
AA- 1,273 -
A+ 3,226 1,037
A 3,086 3,280
BBB+ 2,237 4,462
BBB 8,213
67
BBB- 5,178 -
B+ -
11
B 32
-
NA 455
39
15,117 20,114
(c) Liquidity risk
The Group maintained appropriate cash balances and accessible credit
facilities throughout the period to manage liquidity risk. Cash flow
forecasting is performed for the Group by the finance function, which monitors
rolling forecasts of the Group's liquidity requirements to ensure it has
sufficient cash to meet operational needs and so that the Group minimises the
risk of breaching borrowing limits or covenants on any of its borrowing
facilities. The Group has revolving credit facilities to provide access to
cash for various purposes The total available Revolving credit facility of
£80.0m (FY23: £80.0m) had loan utilisations of £69.5m (FY23: £80.0m) as at
31 December 2024.
The table below analyses the group's financial liabilities as at 31 December
2024 into relevant maturity groupings based on their contractual maturities
for all non-derivative financial liabilities. There are no derivative
financial liabilities. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying
balances as the impact of discounting is not significant.
Less than 6 - 12 2 3-5 Over Total contractual cash flows Carrying
6 months
months
Years Years 5 Years
amount
liabilities
£000s £000s £000s £000s £000s £000s £000s
Trade and other payables 30,729 - - - - 30,729 30,729
Borrowings 10,500 6,366 74,633 - - 91,499 80,037
Lease liabilities 768 768 1,091 1,168 587 4,382 3,674
Total financial liabilities 41,997 7,134 75,724 1,168 587 126,610 114,440
The table below analyses the respective financial liabilities as at 31
December 2023:
Less than 6 - 12 2 3-5 Over Total contractual cash flows Carrying
6 months
months
Years
Years
5 Years
amount
liabilities
£000s £000s £000s £000s £000s £000s £000s
Trade and other payables 27,165 - - - - 27,165 27,165
Borrowings 12,007 10,530 95,700 - - 118,237 105,805
Lease liabilities 852 852 1,406 1,694 746 5,550 4,810
Total financial liabilities 40,024 11,382 97,106 1,694 746 150,952 137,780
(d) Capital risk management
The Group manages its capital to ensure its ability to continue as a going
concern and to maintain an optimal capital structure to reduce the cost of
capital. The aim of the Group is to maintain sufficient funds to enable it to
make suitable capital investments. In order to maintain or adjust capital, the
Group may adjust the amount of cash distributed to shareholders, return
capital to shareholders, issue new shares or raise debt through its access to
the AIM market.
Capital is monitored by the Group on a monthly basis by the finance function.
This includes the monitoring of the Group's gearing ratios and monitoring the
terms of the financial covenants related to the revolving credit facilities as
disclosed in note 17. These ratios are formally reported on a quarterly basis.
The financial covenants were complied with throughout the period. At 31
December 2024 these ratios were as follows:
Debt Service Cover ratio (DSCR): 1.15x (FY23: 1.18x) - minimum per facility
terms is 0.85x; and
Leverage ratio: 1.87x (FY23: 2.19x) - maximum per facility terms is 2.75x.
Net debt as defined in our banking facility agreement is £63.7m (FY23:
£83.7m) as it excludes accrued interest of £1.2m (FY23: £2.0m).
In March 2024, the Group received approval from its banking syndicate to
normalize its net debt leverage covenant to 2.75x (FY23: 2.25x). In December
2024, the Group received approval from its banking syndicate for the
relaxation of the debt service cover covenant to 0.85x {FY23: 1.1x} (see note
17 for details).
The Group has taken a number of actions to prioritise cash generation and
conservation.
As a result of the actions taken, as at 31 December 2024 the Group has:
· Significantly improved RCF headroom of £10.5m (FY23: £nil).
· Reduced net debt to £63.7m (FY23: £83.7m).
· Lowered net debt leverage to 1.87x (FY23: 2.19x), providing
substantial covenant headroom.
· Reduced interest costs on borrowing by 50bps to a margin of 2.35%
(FY23: 2.85%).
21. SHARE BASED PAYMENTS
Long-term incentive plan terms
As part of the admission to trading on AIM in August 2017, the Group granted a
number of share options to employees of the Group. All of the shares granted
were subject to service conditions, being continued employment with the Group
until the end of the vesting period. The shares granted to the executive
Directors and senior staff also included certain performance conditions which
must be met, based on predetermined earnings per share and the achievement of
specific ESG targets for the three financial years from grant date.
During 2020, the Group amended the terms of the Isle of Man share options to
conditional share awards.
Participation in the plan is at the discretion of the Board and no individual
has a contractual right to participate in the plan or to receive any
guaranteed benefits. Where the employee is entitled to share options, these
remain exercisable until the ten-year anniversary of the award date. Where the
employee is entitled to conditional share awards, these are exercised on the
vesting date.
The dividends that would be paid on a share in the period between grant and
vesting reduce the fair value of the award if, in not owning the underlying
shares, a participant does not receive the dividend income on these shares
during the vesting period.
All of the options and conditional share awards are granted under the plan for
nil consideration and carry no voting rights. A summary of the options and
conditional share awards is shown in the table below:
2024 2023
Number of Shares Number of Shares
At 1 January 4,221,520 1,654,667
Granted during the year 2,230,718 2,821,338
Exercised during the year (209,890) (3,448)
Forfeited during the year (1,102,249) (251,037)
As at 31 December 5,140,099 4,221,520
The Group has recognised a total expense of £0.3m (FY23: £0.4m) in respect
of equity-settled share-based payment transactions in the year ended 31
December 2024.
For each of the tranches, the first day of the exercise period is the vesting
date and the last day of the exercise period is the expiry date, as listed in
the valuation model input table below. The weighted average contractual life
of options and conditional share awards outstanding at 31 December 2024 was
8.7 years (FY23: 8.8 years).
Valuation model inputs
The key inputs to the dividend discount model for the purposes of estimating
the fair values of the share options outstanding at the end of the year are as
follows:
Grant date Share price on grant date Expiry date Weighted average probability of meeting performance criteria Share options outstanding at Share options outstanding at
(p)
31 December 2024
31 December 2023
21 April 2021 290.00 21 April 2031 26.3% - 747,493
01 January 2022 303.50 01 January 2032 0.0% 9,164 9,164
21 April 2022 208.50 21 April 2031 15.0% 382,359 382,359
20 April 2023 96.90 20 April 2033 15.0% 1,096,439 1,340,208
01 November 2023 59.60 01 November 2033 0.0% 229,216 229,216
01 May 2024 76.50 01 May 2034 100.0% 546,686 -
03 June 2024 79.10 03 June 2034 100.0% 30,496 -
Total Share Options 2,294,360 2,708,440
The key inputs to the dividend discount model for the purposes of estimating
the fair values of the conditional share awards outstanding at the end of the
year are as follows:
Grant date Share price on grant date (p) Vesting date Weighted average probability of meeting performance criteria Conditional share awards outstanding at Conditional share awards outstanding at
31 December 2024
31 December 2023
21 April 2021 290.00 20 April 2024 0.0% - 210,253
06 December 2021 296.50 20 April 2024 0.0% - -
06 December 2021 296.50 20 April 2024 0.0% - 6,364
21 April 2022 208.50 20 April 2025 15.0% 156,051 160,571
20 April 2023 96.90 19 April 2026 0.0% 1,036,152 1,135,892
01 February 2024 71.60 31 January 2027 100.0% 225,089 -
01 May 2024 76.50 30 April 2027 100.0% 1,394,126 -
03 June 2024 79.10 30 April 2027 100.0% 34,321 -
Total conditional share awards 2,845,739 1,513,080
Total share options and conditional share awards 5,140,099 4,221,520
The reduction in the fair value of the awards as a consequence of not being
entitled to dividends reduced the charge for the options granted during the
year by £32k (FY23: £20k) and the expected charge over the life of the
options by a total of £34k (FY23: £20k).
The other factors in the model do not affect the calculation and have not been
disclosed, as the share options were issued for nil consideration and do not
have an exercise price. The weighted average fair value of the options
outstanding at the period end was £0.9506 (FY23: £1.51).
The movement within the share-based payments reserve during the period is as
follows:
2024 2023
£000s
£000s
Shared based payments reserves as at 1 January 572 202
Share-based payments transactions (note 5(a)) 343 380
Other share-based payments (3) -
Share based-payments transferred to retained earnings upon exercise/vesting (572) (10)
Share based-payments transferred to retained earnings (340) -
Shared based payments reserve as at 31 December - 572
Other movements
Other transactions recognised directly in equity represent employer
contributions to national insurance for vested LTIPs.
The group previously presented its share based payment reserve separately in
the statement of changes in equity. However, management considers it to be
more relevant if it is added to the retained earnings to simplify the
presentation.
22. SHARE CAPITAL AND SHARE PREMIUM
2024
Number of shares Par value Share premium Total
(000s) £000s £000s £000s
Allotted and fully paid: ordinary shares of 1p each
Balance at 1 January 2024 218,714 2,186 21,456 23,642
Shares issued during the year 10,936 109 8,639 8,748
Transaction costs - - (390) (390)
Share options exercised during the year (note 21) 210 2 - 2
Balance at 31 December 2024 229,860 2,297 29,705 32,002
2023
Number of shares Par value Share premium Total
(000s) £000s £000s £000s
Allotted and fully paid: ordinary shares of 1p each
Balance at 1 January 2023 218,711 2,186 21,675 23,861
Transaction costs - - (219) (219)
Share options exercised during the year (note 21) 3 - - -
Balance at 31 December 2023 218,714 2,186 21,456 23,642
Under the Isle of Man Companies Act 2006, the Company is not required to have
an authorised share capital.
Transaction costs of £0.4m (FY23: £0.2m) recognised directly in share
premium relate to costs associated with the raise of equity.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank pari passu in all respects including voting rights
and dividend entitlement.
See note 21 for further information regarding share-based payments which may
impact the share capital in future periods.
23. DIVIDENDS
The following amounts were recognised as distributions in the year:
2024 2023
£000s £000s
Interim FY24 dividend of nil per share (FY23: 0.9p) - 1,967
Final FY23 dividend of nil per share (FY22: 3.25p) - 7,103
Total dividends recognised in the year - 9,070
The Directors have proposed not to pay a final dividend (FY23: Nil).
24. LEASES
a) Amounts recognised in the consolidated statement of financial position
The consolidated statement of financial position shows the following amounts
relating to leases:
2024 2023
£000s £000s
Right-of-use assets
Land and buildings 2,656 3,860
Motor Vehicles 779 650
Total right-of-use assets 3,435 4,510
Lease liabilities
Current future lease liabilities (due within 12 months) 1,129 1,218
Non-current future lease liabilities (due in more than 12 months) 2,545 3,592
Total future lease liabilities 3,674 4,810
In the current year, right-of-use assets have been allocated to the
appropriate category of leased assets, being land and buildings and motor
vehicles. In the prior year, right-of-use assets were reported under land and
buildings. The prior year amounts have been re-presented to reflect this
change.
Additions to the right-of-use liabilities during FY24 were £0.7m (FY23:
£2.3m). Disposals of right-of-use liabilities during the current year were
£14k (FY23: £16k)
Short-term leases and leases of low values were recognised directly in the
consolidated income statement, amounting to £0.4m (FY23: £0.3m). Total cash
outflows relating to all lease payments, including short-term leases and
leases of low values were £2.2m (FY23: £1.7m).
The movement in lease liabilities is as follows:
2024 2023
£000s £000s
Balance as at 1 January 4,810 3,888
Additions 730 2,321
Disposals (14) (16)
Adjustments to leases - (49)
Repayments (1,847) (1,426)
Interest expense (included in finance cost) * 251 198
Disposal of SSH (note 28) (92) -
Foreign exchange differences (164) (106)
Balance as at 31 December 3,674 4,810
*Included in this amount is £11k (FY23: £8k) interest expense relating to
discontinued operations, see note 28.
b) Amounts recognised in the consolidated income statement
The consolidated income statement shows the following amounts relating to
leases from continuing operations:
2024 2023
Restated*
£000s £000s
Depreciation of right-of-use assets (1,427) (1,257)
Short-term and low value leases (363) (317)
Interest expense (included in finance cost) (240) (190)
Total cost relating to leases (2,030) (1,764)
* Prior period numbers have been restated as a result of discontinued
operations, see note 28
c) Group as a lessor
Rental income recognised by the Group during the year is £2.2m (FY23: £2.4m)
is included in the Billi segment as revenue in the consolidated income
statement.
Minimum lease payments receivable under non-cancellable operating leases are
as follows:
2024 2023
£000s £000s
Less than 6 months 727 679
6 - 12 months 1,048 981
1-2 Years 514 1,167
3-5 Years 513 261
Total 2,802 3,088
25. STATEMENT OF CASH FLOWS NOTES
a) Cash generated from operations
2024 2023
Restated*
Note £000s £000s
Cash flows from operating activities
Operating profit from continuing operations 13,935 28,346
Loss from discontinued operations before interest 28 (3,304) (432)
Operating profit 10,631 27,914
Adjustments for:
Depreciation of property, plant and equipment 11 4,270 4,020
Depreciation of right-of-use assets 11 1,503 1,321
Amortisation of intangible assets 10 3,694 3,365
Share of (profits)/losses from joint ventures - (85)
Write off/impairment of intangible assets/PPE from continuing operations 6(b) 4,293 -
Write off/impairment associated with discontinued operations 28 2,325 -
Loss on disposal of discontinued operations 28 203 -
Loss on disposal of property, plant and equipment 343 -
Other non-cash flow items 3,482 73
Share based payment transactions 21 343 380
Net exchange differences 334 (435)
31,421 36,553
Changes in working capital:
(Increase)/decrease in inventories (1,704) 1,639
Decrease/(increase) in trade and other receivables 1,853 (2,422)
Increase in trade and other payables 4,247 3,132
Cash generated from operations 35,817 38,902
* Prior period numbers have been restated as a result of discontinued
operations, see note 28.
Other non-cash flow items include inventory provision of £0.7m (FY23: £nil),
receivable write off of £1.8m (FY23: £nil), provision for settlements of
£1.4m (FY23: £nil), reductions in warranty provision of £0.5m (FY23: £nil)
and others of £0.1m (FY23: £0.1m).
b) Movement in net debt
Non-cash movements
At Cash flows Currency movements Other movements At
01 January 2024 31 December 2024
£000s £000s £000s £000s £000s
Borrowings, net of loan arrangement fees (105,805) 25,957 45 (234) (80,037)
Lease liabilities (4,810) 1,847 164 (875) (3,674)
Total liabilities from financing activities (110,615) 27,804 209 (1,109) (83,711)
Cash and cash equivalents 20,114 (4,492) (505) - 15,117
Net debt (90,501) 23,312 (296) (1,109) (68,594)
26. ULTIMATE BENEFICIAL OWNER
There is not considered to be any ultimate beneficial owner, as the Company is
listed on AIM. No single shareholder beneficially owns more than 25% of the
Company's share capital.
27. RELATED PARTY TRANSACTIONS
(a) Identity of related parties
Related parties include all of the companies within the Group, however, these
transactions and balances are eliminated on consolidation within the
consolidated financial statements and are not disclosed, except for related
party balances held with Joint Ventures which are not eliminated.
The Group also operates a defined contribution pension scheme which is
considered a related party.
(b) Related party transactions
The following transactions with related parties occurred during the year:
2024 2023
Name of related party £000s £000s
Transactions with related parties
Revenue earned from LAICA Brand House Limited - 3
Contributions paid to The Strix Limited Retirement Fund (note 5(c)(i)) (1,434) (1,352)
Revenue earned from Laica Brand House Limited represents the amount earned up
to the date control was gained on 18 March 2024, see note 12.
Further information is given on the related party balances and transactions
below:
· Key management compensation is disclosed in note 5(b).
· Information about the pension schemes operated by the Group is
disclosed in note 5(c), and transactions with the pension schemes operated by
the Group relate to contributions made to those schemes on behalf of Group
employees.
· Information on dividends paid to shareholders is given in note
23.
28. DISCONTINUED OPERATIONS
(a) Description
On 16 May 2024, the Board of Directors approved the disposal of HaloSource
Water Purification Technology (Shanghai) Co. Ltd (known as HSS), a wholly
owned subsidiary. This was announced to the wider business in June 2024.
Following a commercial review, it was determined that the primary product line
of HSS, industrial scale water filtration branded as Halopure, does not align
commercially with the rest of the Group's main focus on smaller scale water
filtration products. The associated assets and liabilities were consequently
presented as held for sale in the HY 2024 financial statements.
Assets which had a carrying value at point of classification to assets held
for sale of £2.3m (intangibles: £1.6m; PPE: £0.1m; inventories: £0.4m and
debtors: £0.3m) were impaired to £nil in line with IFRS5 - Non-current
Assets Held for Sale and Discontinued Operations, to reflect the expected fair
value less costs to sell of the disposal group.
The subsidiary was sold on 30 November 2024, and it is reported in the current
period as a discontinued operation. Before classification as discontinued, HSS
formed part of our Premium Filtration Systems division, which has been
subsequently renamed as Billi (see note 4).
Financial information relating to the discontinued operations for the period
to the date of disposal is set out below.
(b) Financial performance and cash flow information
The financial performance and cash flow information presented below are for
the eleven months ended 30 November 2024 (2024 column) and the year ended 31
December 2023:
2024 2023
£000s £000s
Revenue 196 779
Net expenses (692) (1,177)
Operating loss (496) (398)
Finance costs (11) (8)
Loss before taxation (507) (406)
Income tax expense - -
Loss after taxation before adjusting items (507) (406)
Loss on sale of the subsidiary before reclassification of foreign currency (225) -
reserve (see (c) below)
Impairment loss recognised before classification to held for sale (see note (2,325) -
6{b})
Redundancy/re-organisation costs (see note 6{b}) (280) (34)
Adjusting items (2,830) (34)
Reclassification of foreign currency translation reserve 22 -
Loss from discontinued operations (3,315) (440)
Exchange differences on translation of discontinued operations (22) (135)
Other comprehensive expense from discontinued operations (22) (135)
Earnings per share (pence)
Basic (1.5) (0.2)
Diluted (1.5) (0.2)
The net cash flows incurred by HSS are, as follows:
2024 2023
£000s £000s
Operating (418) (203)
Investing (896) (344)
Financing (133) (45)
Net cash outflow (1,447) (592)
The net cash flow from investing activities includes an outflow of £0.6m
(FY23: £nil) from sale of the subsidiary.
(c) Details of the sale of the subsidiary
2024
£000s
Consideration received -
Carrying amount of net assets sold (225)
Loss on sale before income tax and reclassification of foreign currency (225)
translation reserve
Reclassification of foreign currency translation reserve 22
Income tax expense -
Loss on sale after income tax (203)
The carrying amounts of assets and liabilities as at the date of sale (30
November 2024) were:
30 November 2024
£000s
Assets
Property, plant and equipment 112
Net investments in finance leases 7
Trade and other receivables 337
Cash and cash equivalents 605
Total Assets 1,061
Liabilities
Trade and other payables (744)
Future lease liabilities (92)
Total Liabilities (836)
Net assets 225
29. CORRECTION OF TECHNICAL ACCOUNTING ERRORS
(a) In 2024, the Group discovered a historic technical accounting error with
the translation of the goodwill, acquired intangibles and deferred tax
liabilities on acquired intangibles for its subsidiaries Billi Australia and
Billi New Zealand. The error resulted in a material understatement of other
comprehensive expense recognised for 2023, and a corresponding overstatement
of intangible assets and deferred tax liabilities in the statement of
financial position.
(b) The Group has also re-presented the translation of its foreign
operations into a separate component of equity, foreign currency translation
reserve as required by IAS 21. The translation of foreign operations was
previously reported as part of retained earnings.
These corrections have had no impact on the Group's consolidated income
statement, its consolidated statement of cash flows, its banking covenants or
its prior year KPIs. However, we have presented this as a prior year
restatement to provide full details and context to the corrections, and to
allow improved comparability to the prior year.
The Group has not presented a third balance sheet because it is not considered
material to users of the financial statements. The balance on the reserve at 1
January 2023 would be £0.6m.
The errors have been corrected by restating each of the affected financial
statements line items for the prior period as follows:
Consolidated statement of financial position (extract)
31 December 31 December
2023 Movement 2023
£000s £000s £000s
As previously presented Restated*
Intangible assets (a) 73,409 (1,825) 71,584
Deferred tax liabilities (a) (10,304) 433 (9,871)
Retained earnings (a&b) * 18,167 967 19,134
Foreign currency translation reserve (b) - (2,359) (2,359)
Total equity 43,034 (1,392) 41,642
*£1.0m movement in retained earnings relates to presentational change (see
(b) above).
Consolidated statement of comprehensive income (extract)
2023 Movement 2023
£000s £000s £000s
As previously presented Restated*
Profit for the year 16,160 - 16,160
Other comprehensive expense for the year:
Exchange differences on translation of foreign operations from continuing (1,477) (1,392) (2,869)
operations
Exchange differences on translation of foreign operations from discontinued (135) - (135)
operations
Total comprehensive income/(expense) for the year 14,548 (1,392) 13,156
Total comprehensive income/(expense) is attributable to:
Equity holders of the Company 14,602 (1,392) 13,210
Non-controlling interests (54) - (54)
14,548 (1,392) 13,156
Basic and diluted earnings per share for the prior year have not been restated
as there was no impact on profit after tax. Some of the amounts disclosed in
note 4, note 8 and note 10 were restated, as indicated in those notes.
30. POST BALANCE SHEET EVENTS
The Group does not have any material events after the reporting period to
disclose.
OTHER SUPPLEMENTARY INFORMATION
ALTERNATIVE PERFORMANCE MEASURES
The financial statements include both GAAP measures and Alternative
Performance Measures (APMs), the latter of which are considered by management
to allow the readers of the accounts to understand the underlying trading
performance of the Group. A number of these APMs are used by management to
measure the KPIs of the business and are therefore aligned to the Group's
strategic aims. They are also used at Board level to monitor financial
performance throughout the year. The APMs used in these financial statements
(including the basis of calculation, assumptions, use and relevance) are
detailed in note 2 (EBITDA and adjusted EBITDA - non-GAAP alternative
performance measures) and below.
Constant Exchange Rate (CER) figures
These are used predominantly in the financial review and give the readers a
better understanding of the performance of the Group, regions and entities
from a trading perspective. They have been calculated by translating the FY24
income statement results (of subsidiaries whose presentational currency is not
Sterling) using FY23 average annual exchange rates to provide a comparison
which removes the foreign currency translational impact. The impacts of
translational gains and losses made on non‑functional currency net assets
held around the Group have not been removed.
Adjusted operating margin/EBIT margin
Adjusted operating margin is used in the financial review to give the reader
an understanding of the performance of the Group. It is calculated by dividing
adjusted operating profit (see return on capital employed section for
reconciliation to operating profit) by adjusted revenue in the year.
Adjusted diluted EPS
A key measure for the Group to understand the underlying earnings per share.
The calculation has been disclosed in note 9.
Adjusted profit before tax
A key measure for the Group to understand underlying results before taxes. The
adjustments made to arrive at adjusted profit before tax are detailed below.
Adjusted profit before tax and adjusting items
2024 2023
Restated
£000s £000s
Adjusted profit before taxation from continuing operations 18,508 22,335
Adjusting items in revenue: settlements (2,200) -
Adjusting items in cost of sales: restructuring/rebasing (818) (65)
Adjusting items in administrative expenses:
Restructuring/rebasing (7,724) (399)
COVID-19 related costs - (14)
Mergers and acquisitions (28) (2,073)
Settlements (1,096) -
Amortisation charges on acquired intangible assets (1,327) (1,261)
Share based payments (343) (380)
Total adjusting items (13,536) (4,192)
Profit before taxation - continuing operations 4,972 18,143
2024 2023
Restated
£000s £000s
Adjusted EBITDA from continuing operations 35,399 39,696
Adjusting items in revenue: settlements (2,200) -
Adjusting items in cost of sales: restructuring/rebasing (818) (65)
Adjusting items in administrative expenses:
Restructuring/rebasing (3,431) (399)
Mergers and acquisitions (28) (2,073)
COVID-19 related costs - (14)
Settlements (1,096) -
Share based payments (343) (380)
EBITDA 27,483 36,765
Amortisation charges on acquired intangible assets (1,327) (1,261)
Depreciation and non‑acquired amortisation (7,928) (7,158)
Write off/impairment of non-current assets (4,293) -
Operating profit from continuing operations 13,935 28,346
Adjusted cash conversion as a percentage of adjusted EBITDA
This is another key metric used by investors to understand how effective the
Group was at converting profit into cash. The adjustments made to arrive at
adjusted cash conversion from cash generated from operations are detailed
below. To reconcile operating profit to underlying EBITDA, refer to adjusted
profit before tax and adjusting items section.
2024 2023
£000s £000s
Adjusted cash conversion 40,364 41,657
Adjusting items in revenue: settlements (1,000) -
Adjusting items in cost of sales: restructuring/rebasing (268) (65)
Adjusting items in administrative expenses:
Restructuring/rebasing (1,956) (413)
Settlements (879) -
M&A (28) (2,073)
Cash generated from operations 36,233 39,106
Net debt to adjusted EBITDA (net debt ratio)
This removes the impact of IFRS 16 Leases and accrued interest from net debt
and impact of IFRS 16 Leases from adjusted EBITDA in line with definitions in
our banking facility agreement. Adjusted EBITDA is reconciled to operating
profit, refer to adjusted profit before tax and adjusting items section.
2024 2023
£000s £000s
Net debt (less cash and cash equivalents) 68,594 90,501
Right‑of‑use lease liabilities (3,674) (4,810)
Accrued interest (1,237) (2,031)
Net debt 63,683 83,660
2024 2023
Restated
£000s £000s
Adjusted EBITDA* 35,399 39,585
Right‑of‑use depreciation (1,427) (1,321)
Adjusted EBITDA 33,972 38,264
*Adjusted EBITDA for FY23 includes results from discontinued operations of
£0.1m.
Adjusted return on capital employed (ROCE)
Return on capital employed is a key metric used by investors to understand how
efficient the Group is with its capital employed. It represents earnings
before interest and tax against the money that is invested in the business.
The numerator is adjusted operating profit which has been reconciled to
operating profit below. Capital employed is calculated as total assets less
current liabilities. Adjusting items have been removed to aid understanding of
the underlying performance of the Group.
2024 2023
Restated
£000s £000s
Adjusted operating profit 27,471 32,538
Adjusting items in revenue: settlements (2,200) -
Adjusting items in cost of sales: restructuring/rebasing (818) (65)
Adjusting items in administrative expenses:
Restructuring/rebasing (7,724) (399)
Mergers and acquisitions (28) (2,073)
Settlements (1,096) -
COVID-19 related costs - (14)
Amortisation charges on acquired intangible assets (1,327) (1,261)
Share based payments (343) (380)
Operating profit 13,935 28,346
Working capital as a percentage of revenue
This is calculated as current assets excluding cash, less current liabilities
excluding current portions of lease liabilities and borrowings as a percentage
of Group revenue. It is a KPI for the Group as it remains a key focus to
ensure efficient allocation of capital on the balance sheet to improve quality
of earnings and reduce the additional investment needed to support organic
growth.
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