REG - Victorian Plumbing - Full Year Results
09/12/2021 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20211209:nRSI0478Va&default-theme=true
RNS Number : 0478V Victorian Plumbing Group plc 09 December 2021
Victorian Plumbing Group PLC
Full year results for the year ended 30 september 2021
Victorian Plumbing Group plc ('Victorian Plumbing', 'the Group'), the UK's
leading online specialist bathroom retailer, announces its full year results
for the year ended 30 September 2021 ('2021')
2021 2020 (restated)* Change
Revenue £268.8m £208.7m 29%
Gross profit margin(1) 49% 44% 5 ppts
Adjusted EBITDA(2) £40.1m £26.2m 53%
Adjusted EBITDA margin(3) 15% 13% 2 ppts
Financial highlights
· Revenue up 29% to £268.8 million (2020*: £208.7 million)
· Gross profit(4) up 42% to £130.5 million (2020*: £92.0 million)
with a gross profit margin(1) of 49% (2020*: 44%)
· Adjusted EBITDA(2) up 53% to £40.1 million (2020*: £26.2
million) with adjusted EBITDA margin(3) of 15% (2020*: 13%)
· Operating cash flow(5) up 18% to £32.6 million (2020*: £27.6
million). Operating cash conversion(6) of 81% (2020*: 105%)
· After accounting for £9.4 million of exceptional costs relating
to the IPO in June 2021 and share-based payments of £7.7 million, profit
before tax reduced by 17% to £19.7 million (2020*: £23.7 million)
* Adjustments made to comparative figures previously reported are detailed in
note 2 and are as stated within the IPO Admission document.
Operational highlights
· Total orders(7) up 17% to 906,000 (2020: 776,000)
· Active customers(8) up 13% to 638,000 (2020: 565,000)
· Average order value(9) up 10% to £297 (2020: £269)
· Marketing spend as a percentage of revenue increased marginally
to 26% (2020: 25%) with increased investment in more focused digital
performance-based marketing to complement offline creative content
· Trustpilot rating(10) remains 'Excellent' with an average score
of 4.3 across the year (2020: 4.3)
· We introduced enhanced point-of-sale functionality to support
customer purchasing decisions, adding realistic CGI imagery and 360 degree
product views, more detailed product descriptions, and upgraded interaction
with our consumer finance partner
Outlook
As we reported in our full year trading update on 7 October 2021, we
experienced more subdued market conditions during the summer months following
the easing of restrictions, before customer demand improved somewhat during
September.
Through the first two months of FY22, whilst consumers have continued to spend
more on leisure and less on big ticket material homeware purchases, demand and
revenue have been broadly the same as last year and 41% ahead of FY20.
The adaptability of our supply chain and investment in-stock inventory means
we are currently operating from a position of strength relative to others.
Given the popularity of our own brand offering, we are able to absorb most of
the current supply chain pressures. However, as we look to balance revenue
growth with profitability in the short-term, gross margins may move closer to
those achieved in FY20.
As we move through this changing consumer environment, we are being even more
aggressive on our marketing approach to further increase our market share in
line with our long-term growth ambitions.
We continue to be focused on our long-term goals and to make progress on all
of our strategic areas and we are confident of the future growth prospects of
the Group.
Mark Radcliffe, Founder and Chief Executive Officer of Victorian Plumbing
Group plc, said:
"This has been a milestone year for Victorian Plumbing as we accelerated our
growth, supported by the continued dedication and agility of colleagues around
the business, and successfully completed our listing on the London Stock
Exchange. Our distinctive brand and extensive choice of quality bathroom
products have been key drivers in attracting consumers to our platform, whilst
the strength of our supply chain and our investment in inventory means that
the majority of our products have remained immediately available.
"Although the short-term outlook is difficult to predict as the world
normalises from the events of the last two years, it is inevitable that
consumer buying behaviour will continue to move online. As the UK's largest
online bathroom specialist retailer, Victorian Plumbing is uniquely placed to
help consumers obtain exactly what they need for their dream bathroom.
"The Board remains confident in the medium to long-term growth prospects for
Victorian Plumbing."
Analyst presentation
A presentation for analysts will be held virtually at 8:15am, Thursday 9
December 2021. If you wish to attend, please contact FTI Consulting via
VictorianPlumbing@fticonsulting.com
(mailto:VictorianPlumbing@fticonsulting.com) .
For further information please contact:
Victorian Plumbing Group plc via FTI Consulting
Mark Radcliffe, Chief Executive Officer +44 20 3727 1000
Paul Meehan, Chief Financial Officer
Richard Monaghan, Director of Finance
FTI Consulting (Financial PR) +44 20 3727 1000
Alex Beagley VictorianPlumbing@fticonsulting.com
Eleanor Purdon
Sam Macpherson
Houlihan Lokey UK Limited (Nominated Adviser and Financial Adviser) +44 20 7484 4040
Sam Fuller
Paul Lines
About Victorian Plumbing
Victorian Plumbing is the UK's leading online retailer of bathroom products
and accessories, offering a wide range of over 24,000 products to B2C and
trade customers. Victorian Plumbing offers its customers a one-stop shop
solution for the entire bathroom with more than 125 own and third-party brands
across a wide spectrum of price points.
The Group's product design and supply chain strengths are complemented by its
creative and brand-focused marketing strategy, which predominantly focuses on
online channels to drive significant and growing traffic to its website.
Headquartered in Skelmersdale, Lancashire, the Group employs over 500 staff
across seven locations in Skelmersdale, Manchester and Birmingham.
For more information, please visit
https://www.victorianplumbingplc.com/about-us/
(https://www.victorianplumbingplc.com/about-us/)
Cautionary statement
This announcement of annual results does not constitute or form part of and
should not be construed as an invitation to underwrite, subscribe for, or
otherwise acquire or dispose of any Victorian Plumbing Group plc (the
"Company") shares or other securities in any jurisdiction nor is it an
inducement to enter into investment activity nor should it form the basis of
or be relied on in connection with any contract or commitment or investment
decision whatsoever. It does not constitute a recommendation regarding any
securities. Past performance, including the price at which the Company's
securities have been bought or sold in the past, is no guide to future
performance and persons needing advice should consult an independent financial
advisor. This announcement may include statements that are, or may be deemed
to be, "forward-looking statements" (including words such as "believe",
"expect", "estimate", "intend", "anticipate" and words of similar meaning). By
their nature, forward-looking statements involve risk and uncertainty since
they relate to future events and circumstances, and actual results may, and
often do, differ materially from any forward-looking statements. Any
forward-looking statements in this announcement reflect management's view with
respect to future events as at the date of this announcement. Save as required
by applicable law, the Company undertakes no obligation to publicly revise any
forward-looking statements in this announcement, whether following any change
in its expectations or to reflect events or circumstances after the date of
this announcement.
Summary of performance
Units 2021 2020 (restated)* Change
Income statement
Revenue £m 268.8 208.7 29%*
Gross profit((4)) £m 130.5 92.0 42%*
Gross profit margin((1)) % 49% 44% 5%pts*
Adjusted EBITDA((2)) £m 40.1 26.2 53%*
Adjusted EBITDA margin((3)) % 15% 13% 2%pts*
Profit before tax £m 19.7 23.7 (17%)*
Earnings per share
Basic earnings per share pence 5.3 7.4 (28%)*
Adjusted basic earnings per share pence 11.0 7.4 49%*
Cash flow
Operating cash flow((5)) £m 32.6 27.6 18%*
Cash conversion((6)) % 81% 105% (24%pts) *
Net cash and cash equivalents £m 32.7 10.5
Key performance indicators
Total orders((7)) '000 906 776 17%
Active customers((8)) '000 638 565 13%
Average order value((9)) £ 297 269 10%
Average Trustpilot rating((10)) Score / 5 4.3 4.3 -
Marketing spend as a % of revenue % 26% 25% 1%pt
(1) Gross profit margin is defined as Gross profit as a
percentage of revenue.
(2) Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is
operating profit before depreciation, amortisation, exceptional items and IFRS
2 share-based payments along with associated national insurance.
(3) Adjusted EBITDA margin is defined as adjusted EBITDA as a
percentage of revenue.
(4) Gross profit is defined as revenue less cost of sales. Cost
of sales includes all direct costs incurred in purchasing products for resale
along with packaging, distribution and transaction costs.
(5) Operating cash flow is cash generated from operating
activities before exceptional items and taxation less capital expenditure and
cash flows relating to leases.
(6) Cash conversion is operating cash flow as a percentage of
adjusted EBITDA.
(7) Total orders is defined as the total number of orders
dispatched to customers in the year.
(8) Active customers is the number of unique customers who
placed an order in the year.
(9) Average order value is defined as revenue divided by total
orders in the year.
(10) The average Trustpilot rating is defined as the monthly average
of all ratings made through Trustpilot.
* Adjustments made to comparative figures previously reported are detailed in
note 2 and were detailed within the IPO Admission document.
Summary of FY21 operating performance
Our operating results reflect another excellent year for the business. Revenue
grew by 29% to £268.8m (2020*: £208.7 million) as both total orders and the
average order value increased. Adjusted EBITDA(1) increased by 53% to £40.1
million (2020*: £26.2 million) and adjusted EBITDA margin increased to 15%
(2020*: 13%).
We have strengthened our position as the UK's largest online bathroom
specialist and we have deepened our competitive moat over the past year. The
bold, distinctive and quirky Victorian Plumbing brand continues to be well
received by consumers. We have complemented our creative offline content by
investing in more focused digital performance-based marketing. This ongoing
and relentless marketing strategy has led to an increase in brand awareness,
which reached 64% in the year(2), up from 58% in 2020.
As an e-commerce retailer, we have undoubtedly benefitted during the pandemic
from an acceleration in the ongoing structural shift in consumer buying
behaviour from offline to online. Despite this, online sales of bathroom
products and accessories remains at only 29% of the total UK market according
to Mintel. We expect our addressable market to grow even further in the coming
years.
Audience, defined as the number of unique visitors visiting our platform
measured through Google Analytics, increased by 15% to 2.59 million on average
each month (2020: 2.26 million) which was 1.9 times larger than our nearest
competitor(3) (2020: 2.0 times).
Total orders increased by 17% to 906,000 in the year (2020: 776,000)
as customers continue to appreciate the quality of our products and our
brand. Active customers increased by 13% to 638,000 (2020: 565,000).
A one-stop shop for bathroom products and accessories
Customers can use our platform to browse an extensive choice of quality
products across a wide range of price points, meaning Victorian Plumbing
offers customers a one-stop solution for bathrooms. During the year, we
increased consumer choice to more than 24,000 products from over 125 brands,
including strategic additions of two well known third-party brands: Duravit
and Villeroy & Boch. This unrivalled product range increases the
likelihood that consumers can find the product which is right for them and
also reduces the impact of any stock-outs as popular products can be easily
substituted.
The Victorian Plumbing website is the only place that customers can purchase
products from our stable of own brands. We have now developed over 20 brands
using our in-house development team and these continue to be extremely popular
with consumers. In the year ended 30 September 2021, 76% of revenue (2020:
75%) was generated from own brand products.
Agile supply chain
We have not been exempt from disruption caused by Covid-19. Global supply
chains have been challenged throughout the year, causing many retailers across
every industry to experience slow deliveries, stock shortages and increased
costs.
Over the past 20 years, we have developed long-standing relationships with our
global supplier base. This reliable and agile supply chain has been invaluable
in providing our product team with the necessary transparency and flexibility
over the past 12 months. At various points in the year, including the latter
few months of the financial year, we increased our stock holding to ensure
that when supply chains were at their most disrupted we could service consumer
demand. By taking this approach, we were able to be bold in attracting
consumers when our competitors were experiencing stock shortages, therefore
increasing our market share.
Seamless customer journey
The experience that customers have with us is always front of mind. We
continue to be ranked 'Excellent' by Trustpilot, with an average score of 4.3
(2020: 4.3) across over 27,500 reviews received from consumers over the past
year.
Our convenient and intuitive website provides a seamless, fully digital
journey from homepage to payment. In the year we have enhanced our product
pages with realistic CGI imagery and 360 degree product views whilst
simultaneously improving product information. We also upgraded our integration
with our consumer finance partner to provide consumers with near real-time
decisions on whether they can obtain credit for their purchases.
Bathroom upgrades are often considered important decisions for consumers, and
we know from customer feedback that many appreciate guidance through their
purchasing journey. We therefore increased the level of assistance offered to
customers as they browse by improving our AI-powered chatbot, or where
necessary, linking consumers through to a member of our customer services
team.
Our data-driven approach
Our bespoke, scalable e-commerce platform comprises built-for-purpose
inventory, enterprise resource planning and customer relationship management
systems to provide real-time data to various teams and functions within the
business.
We have continued to develop our platform in the year and have grown our
technology and infrastructure team to facilitate this. We recognise that to
remain best in class there is a need to continually develop. It is because of
this need to evolve that we are in the process of developing a new platform
which will allow for further enhancements to the customer experience.
Our strategic focus
Our strategy has been developed with reference to three commercial growth
horizons covering: core B2C, trade, and adjacent products.
Our core market is retailing bathroom products and accessories to consumers in
the UK through our online platform. The Covid-19 pandemic has shifted
consumers' buying behaviour online for bathroom products and accessories, and
we believe that there is still some way to go before this transition reaches
maturity. We are well placed to continue to gain market share in the short
term through both these structural tailwinds and by taking share from
traditional physical retailers and other online competitors by leveraging our
market and brand position.
In the medium term we remain encouraged that, with strategic planning and
execution, there is a valuable further opportunity to translate our domestic
success into carefully selected international market expansions.
Our second horizon focuses on the opportunity to retail bathroom products and
accessories to the trade, an area in which we are currently underpenetrated.
In the year ended 30 September 2021, just 16% of our revenue came from trade
accounts, compared with an estimated 30-40% of the market. The Victorian
Plumbing brand has largely been consumer-focused, with the trade element of
the market being secondary in any of our marketing or initiatives. By
broadening our marketing approach, expanding our focus to provide relevant
products to trade customers and providing the best platform on which to browse
and order, we believe we can make meaningful gains in this area.
Finally, our third horizon focuses on adjacent products that consumers look
for when renovating a bathroom. Given our position in the bathroom product and
accessories market, we have an exciting opportunity to expand our reach into
products that often come later in the buying journey, such as tiles and
lighting. Expanding these adjacent product ranges and increasing their
prominence on our website will allow consumers to use Victorian Plumbing for
everything they need to complete their bathrooms.
ESG
Taking 'responsibility' is one of our core values, and every one of us has a
role to play in making a difference to the environment and the communities in
which we operate. During the year we established our ESG strategy, which is
centred around three pillars: governance and ethics, diversity and inclusion,
and environmental sustainability. Initiatives undertaken within each area this
year include supplier audits, the employer engagement survey, and partnering
with a waste management provider.
We recognise that we have a lot of work to do against each of these areas in
the months and years to come.
Our people
We are proud of the values-led, principles-driven culture that we have and it
is this culture that underpins our ability to adapt to change in all
circumstances. The past year has presented challenges for many colleagues, but
we are immensely proud of how everyone in the business has supported each
other throughout this period. It is a testament to the hard work, dedication
and ability of the people we work with every day that our business has been
able to navigate the past 12 months with such success.
We would like to thank our people, our customers, our suppliers and other
stakeholders for their support this year and in the year ahead. These are
still challenging times for all, but we feel well placed to carry on pursuing
the multiple opportunities ahead of us in a way that is both ambitious and
responsible.
(1) Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA
is operating profit before depreciation, amortisation, exceptional items and
IFRS 2 share-based payments along with associated national insurance.
(2) YouGov prompted brand awareness - February 2021.
Comparative as of February 2020
(3) SimiliarWeb - average unique visitors per month
Financial review
We are pleased to report a successful year, growing revenue, gross margin and
adjusted EBITDA margin whilst also increasing net cash. This has been achieved
in a year of rapid change for the Group and through a period when we have had
to overcome the challenges presented by Covid-19 and disruption to global
supply chains.
2020* Change
2021 (restated) %
£m £m
Revenue 268.8 208.7 29%
Cost of sales (138.3) (116.7) (19%)
Gross profit 130.5 92.0 42%
Underlying costs (90.4) (66.0) (37%)
Other operating income - 0.2 (100%)
Adjusted EBITDA 40.1 26.2 53%
Depreciation and amortisation (3.0) (2.2) (36%)
Share-based payments (7.7) - n.m.
Exceptional items (9.4) - n.m.
Operating profit 20.0 24.0 (17%)
* Adjustments made to comparative figures previously reported are detailed in
note 2 and were detailed within the IPO Admission document.
Revenue
In 2021, revenue grew by 29% to £268.8 million (2020*: £208.7 million)
through an increase in both total orders and average order value.
The change in consumer buying behaviour towards online channels has
accelerated during the Covid-19 pandemic and the Group has capitalised on the
opportunity to serve customers through this structural long-term shift. Total
orders in the year increased by 17% to 906,000 (2020: 776,000) as we grew our
active customer base by 13% to 638,000 (2020: 565,000).
Average order value ('AOV') increased by 10% to £297 (2020: £269). The
majority of this increase resulted from an uplift in prices. As the popularity
of our own brand products has grown, the Group has been able to increase the
prices of these products to reflect the customers' perception of value. These
price increases were further supported by high demand for bathroom products
overall, coupled with tightened supply resulting from disruption in global
supply chains. The Group generated 76% of revenue from own brand products in
the year (2020: 75%).
Gross profit
Gross profit increased by 42% to £130.5 million (2020*: £92.0 million) and
gross profit margin increased by five percentage points to 49% (2020: 44%). We
define gross profit as revenue less cost of sales. Cost of sales includes all
direct costs incurred in purchasing products for resale along with packaging,
distribution and transaction costs.
Cost of sales increased by 19% to £138.3 million (2020*: £116.7 million)
primarily as sales volumes increased. The disruption caused by Covid-19
impacted our supply chain throughout the year, causing increases in the cost
of raw materials, transport and packaging. The strength of the Group's
supplier relationships and the agility of our team ensured robust sourcing
processes for good product availability. Furthermore, the pricing power of the
Group, particularly on own brand products, allowed us to increase prices to
protect gross margin.
Gross margin from own brand products increased to 53% (2020: 49%), whilst
gross margin from third-party products increased to 33% for the year (2020:
30%).
Underlying costs
Underlying costs, which we define as administrative expenses before
depreciation and amortisation, exceptional items and share-based payments,
increased by 37% to £90.4 million (2020*: £66.0 million).
2020* Change
2021 (restated) %
£m £m
Marketing costs 69.7 52.2 34%
People costs excluding share-based payments 13.8 9.4 47%
Property costs 4.1 2.6 58%
Other overheads 2.8 1.8 56%
Underlying costs 90.4 66.0 37%
Growing our brand awareness and increasing traffic to our site remains a focus
for the Group. Marketing costs increased by 34% to £69.7 million (2020*:
£52.2 million) which resulted in a marginal increase in marketing costs as a
percentage of revenue to 26% (2020: 25%).
People costs, excluding share-based payments but including costs relating to
agency staff and contractors, increased by 47% to £13.8 million (2020*: £9.4
million). This was mostly as a result of an increased number of full-time
equivalent employees ('FTEs') in demand-based roles relating to customer
service and warehouse operations. Total FTEs increased by 44% year on year to
532 (2020: 369). Property costs increased by 58% to £4.1 million (2020: £2.6
million). The majority of this increase was as a result of the Group
increasing its warehouse capacity on a short-term basis. Other overheads
increased by 56% to £2.8 million (2020*: £1.8 million).
Other operating income
Other operating income for the year was £nil (2020*: £0.2 million). During
the 2021 financial year the Group repaid £0.1 million of amounts claimed
under the Coronavirus Job Retention Scheme. This amount was originally
recognised within other operating income in 2020.
Adjusted EBITDA
Significant items of income and expense that do not relate to the trading of
the Group are disclosed separately. Examples of such items are exceptional
items and share-based payment charges, as these primarily relate to the
changing ownership of the Group.
The table below provides a reconciliation from operating profit to adjusted
EBITDA, which is a non-GAAP metric used by the Group to assess the operating
performance.
2020* Change
2021 (restated) %
£m £m
Operating profit 20.0 24.0 (17%)
Share-based payments (including associated NI) 7.7 - n.m.
Exceptional items 9.4 - n.m.
Adjusted operating profit 37.1 24.0 55%
Depreciation and amortisation 3.0 2.2 36%
Adjusted EBITDA 40.1 26.2 53%
Adjusted EBITDA increased by 53% to £40.1 million (2020*: £26.2 million) and
adjusted EBITDA margin increased by two percentage points to 15% (2020*: 13%).
Exceptional items
Total fees incurred in relation to the IPO were £9.8 million, of which £9.4
million has been expensed through the income statement as an exceptional item,
with the balance of £0.4 million being charged to the share premium account.
Share-based payments
The Group incurred share-based payment charges (including associated NI) of
£7.7 million (2020: £nil). The majority of the charge recognised relates to
shares awarded to management to incentivise a change in ownership such as the
IPO that occurred in June 2021.
Depreciation and amortisation
Depreciation and amortisation increased by £0.8 million to £3.0 million
(2020: £2.2 million). The Group continues to invest in its platform and
bespoke inventory management systems, with £1.8 million capitalised during
the 2021 financial year (2020: £2.0 million). The increased investment in
this area over the last two years has resulted in an increase in the
amortisation charge.
Operating profit
Operating profit decreased by 17% to £20.0 million (2020*: £24.0 million).
Operating profit margin decreased by four percentage points to 7% (2020: 11%).
Profit before taxation
Profit before taxation decreased by 17% to £19.7 million (2020: £23.7
million). This decrease results from the operating profit performance while
net finance costs remained flat at £0.3 million (2020: £0.3 million).
Interest charged on the Group's lease arrangements under IFRS 16 increased to
£0.3 million (2020: £0.2 million).
In June 2021 the Group signed into a new revolving credit facility (the 'RCF')
with HSBC. The RCF has a total commitment of £10.0 million and a termination
date of June 2024. The facility remained undrawn throughout the financial
year.
Taxation
The Group tax charge of £5.4 million (2020*: £4.0 million) represents an
effective tax rate of 27% (2020: 18%), which is higher than the standard rate
of tax primarily due to the level of non-deductible exceptional items relating
to the IPO.
Earnings per share
Basic earnings per share ('EPS') from continuing operations, which is
calculated for both the current and comparative year based upon the weighted
average number of shares in issue immediately prior to the IPO, was 5.3 pence
per share (2020*: 7.4 pence per share).
The adjusted basic earnings per share from continuing operations increased by
49% to 11.0 pence per share (2020*: 7.4 pence per share). The table shows the
effect on the Group's basic earnings per share of the exceptional items and
share-based payments.
2021 2020* (restated) Change
£m £m %
Profit for EPS 14.3 19.7 (27%)
Share-based payments (including associated NI) 7.7 - n.m.
Exceptional items 9.4 - n.m.
Tax effect (1.9) - n.m.
Adjusted profit for EPS 29.5 19.7 50%
Weighted average number of ordinary shares for basic EPS (millions) 267.8 265.6 1%
Adjusted earnings per share (pence) 11.0 7.4 49%
Cash flow and net cash
2020* (restated)
2021 £m
£m
Adjusted EBITDA 40.1 26.2
Movement in working capital (3.2) 4.7
Capital expenditure (3.2) (2.6)
Lease payments - principal (0.8) (0.5)
Lease payments - interest (0.3) (0.2)
Operating cash flow 32.6 27.6
Cash conversion 81% 105%
The Group continues to see strong cash generation with operating cash flow 18%
higher at £32.6 million (2020*: £27.6 million), resulting in cash conversion
of 81% (2020*: 105%).
Changes in working capital resulted in a cash outflow of £3.2 million in the
year. Global supply chains were disrupted for a number of months in the year
for a combination of reasons, most notably the pandemic. As a result, we made
the decision to increase our stock holding to decrease the risk of stock-outs,
therefore providing a better and more dependable experience for customers.
This increase in stock holding across the year end resulted in a working
capital outflow of £9.4 million. This was offset partially by an increase in
creditors, which resulted in a net cash inflow of £7.3 million.
Capital expenditure of £3.2 million (2020: £2.6 million) included £1.2
million of capitalised salaries relating to development of the Group's
platform and bespoke inventory management systems (2020: £0.6 million). At
the year end the Group had net cash of £32.7 million (2020: £10.5 million).
Events after the reporting period
There have been no material events to report after the end of the reporting
period.
Prior year adjustments
As detailed in note 2, following a review of the Group's historical financial
information for the Group's IPO in June 2021, a number of adjustments have
been made to correct previously reported figures within the Group's statutory
consolidated financial statements. These adjustments have been corrected by
restating each of the affected financial statement line items for the prior
period. These adjustments were detailed within the Admission document.
Dividend
No final dividend for the year ended 30 September 2021 has been declared. The
current intention of the Board is to pay a dividend in relation to the
financial year ending 30 September 2022.
Mark
Radcliffe
Paul Meehan
Chief Executive Officer
Chief Financial Officer
9 December
2021 9
December 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Note 2021 2020
£m (restated)
£m
Revenue 4 268.8 208.7
Cost of sales (138.3) (116.7)
Gross profit 130.5 92.0
Administrative expenses before separately disclosed items 5 (93.4) (68.2)
Other operating income - 0.2
Adjusted operating profit 37.1 24.0
Separately disclosed items:
Share-based payments 19 (7.7) -
Exceptional items 6 (9.4) -
Operating profit 5 20.0 24.0
Finance costs (0.3) (0.3)
Profit before tax 19.7 23.7
Income tax expense 7 (5.4) (4.0)
Profit for the year 14.3 19.7
Basic earnings per share (pence) 9 5.3 7.4
Diluted earnings per share (pence) 9 4.5 7.4
All amounts relate to continuing operations.
There are no items to be recognised in the statement of comprehensive income
and hence, the Group has not presented a separate statement of other
comprehensive income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 SEPTEMBER 2021
Note 2021 2020 As at 1 Oct 2019 (restated)
£m (restated) £m
£m
Assets
Non-current assets
Intangible assets 10 2.7 2.5 1.8
Property, plant and equipment 11 1.7 0.8 0.5
Right-of-use assets 12 5.3 6.0 3.5
9.7 9.3 5.8
Current assets
Inventories 32.4 23.0 18.3
Trade and other receivables 13 4.9 10.0 5.2
Tax recoverable 1.0 2.3 -
Cash and cash equivalents 32.7 10.5 2.7
71.0 45.8 26.2
Total assets 80.7 55.1 32.0
Equity and liabilities
Equity attributable to the owners of the Company
Share capital 17 0.3 - -
Share premium 11.2 - -
Capital redemption reserve 0.1 - -
Capital reorganisation reserve (320.6) - -
Retained earnings 339.8 13.0 2.8
Total equity 30.8 13.0 2.8
Liabilities
Non-current liabilities
Lease liabilities 15 4.9 5.7 3.3
Deferred taxation liability 0.1 0.1 -
5.0 5.8 3.3
Current liabilities
Trade and other payables 14 36.0 28.1 21.2
Contract liabilities 7.9 7.3 3.8
Lease liabilities 15 0.9 0.7 0.5
Provisions 0.1 0.2 0.1
Corporation tax - - 0.3
44.9 36.3 25.9
Total liabilities 49.9 42.1 29.2
Total equity and liabilities 80.7 55.1 32.0
The financial statements were approved by the Board of Directors on 9 December
2021 and authorised for issue.
Paul Meehan
Chief Financial Officer
Victorian Plumbing Group plc
Registered number: 13379554
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Share capital Share premium Capital reorganisation reserve Share-based payment reserve Retained earnings Total equity
£m £m £m £m £m £m
Balance at 1 October 2019 - - - - 4.7 4.7
Impact of prior year restatement (note 2) - - - - (1.9) (1.9)
Balance at 1 October 2019 (restated) - - - - 2.8 2.8
Comprehensive income
Profit for the year - - - - 19.7 19.7
Transactions with owners
Dividends paid (note 8) - - - - (9.5) (9.5)
Balance at 30 September 2020 (restated) - - - - 13.0 13.0
Comprehensive income
Profit for the year - - - - 14.3 14.3
Transactions with owners
Employee share schemes - value of employee services (note 19) - - - - 6.5 6.5
Tax impact of employee share schemes - - - - 0.7 0.7
Capital transaction - Group restructure, share-for-share exchange and issue of 0.3 11.2 (320.6) 0.1 320.2 11.2
Victorian Plumbing Group plc shares (note 17)
Dividends paid on ordinary shares (note 8) - - - - (14.9) (14.9)
Total transactions with owners recognised directly in equity 0.3 11.2 (320.6) 0.1 312.5 3.5
Balance at 30 September 2021 0.3 11.2 (320.6) 0.1 339.8 30.8
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2021
Note 2021 2020
£m (restated)
£m
Cash flows from operating activities
Cash generated from operating activities before exceptional operating items 36.9 30.9
Cash outflow from exceptional operating items (9.1) -
Cash generated from operating activities 20 27.8 30.9
Income tax paid (3.4) (6.5)
Net cash generated from operating activities 24.4 24.4
Cash flows from investing activities
Purchase of intangible assets 10 (1.8) (2.0)
Purchase of property, plant and equipment 11 (1.4) (0.6)
Amounts received/(paid) in respect of related party loans 5.9 (3.8)
Net cash generated by/(used in) investing activities 2.7 (6.4)
Cash flows from financing activities
Dividends paid 8 (14.9) (9.5)
Finance arrangement fees 16 (0.1) -
Proceeds from the issue of shares, net of costs 17 11.2 -
Payment of interest portion of lease liabilities 15 (0.3) (0.2)
Payment of principal portion of lease liabilities 15 (0.8) (0.5)
Net cash used in financing activities (4.9) (10.2)
Net increase in cash and cash equivalents 22.2 7.8
Cash and cash equivalents at the beginning of the year 10.5 2.7
Cash and cash equivalents at the end of the year 32.7 10.5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Basis of preparation
The consolidated financial statements have been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006, and in accordance with international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/202 as it applies in the
European Union.
The following amendments to standards have been adopted by the Group for the
first time for the financial year beginning on 1 April 2020:
· Amendments to References to Conceptual Framework in IFRS
Standards;
· Definition of a Business - Amendments to IFRS 3;
· Definition of Material - Amendments to IAS 1 and IAS 8; and
· Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and
IFRS 7.
The adoption of these amendments has had no material effect on the Group's
consolidated financial statements. There are a number of amendments to IFRS
that have been issued by the IASB that become mandatory in a subsequent
accounting period including: COVID-19 Related Rent Concessions - Amendment to
IFRS 16 and Interest Rate Benchmark Reform Phase 2 - Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16. The Group has evaluated these changes and none
are expected to have a significant impact on these consolidated financial
statements.
The consolidated financial statements have been prepared on the going concern
basis and under the historical cost convention.
On 27 May 2021, the Company obtained control of the entire share capital of
VIPSO Limited via a share-for-share exchange. There were no changes in rights
or proportion of control exercised as a result of this transaction. Although
the share-for-share exchange resulted in a change of legal ownership, this was
a common control transaction and therefore outside the scope of IFRS 3. In
substance these financial statements reflect the continuation of the
pre-existing Group, headed by VIPSO Limited, and the financial statements have
been prepared applying the principles of predecessor accounting ownership.
This was a common control transaction and therefore outside the scope of IFRS
3.
As a result of the above, the comparatives presented in these financial
statements are the consolidated results of VIPSO Limited. The prior year
statement of financial position reflects the share capital structure of VIPSO
Limited. The current period balance sheet presents the legal change in
ownership of the Group, including the share capital of Victorian Plumbing
Group plc and the capital reorganisation reserve arising as a result of the
share-for-share exchange transaction. The consolidated statement of changes in
equity and the additional disclosures in note 17 explain the impact of the
share-for-share exchange in more detail.
The financial information set out in this document does not constitute the
statutory accounts of the Group for the financial years ended 30 September
2021 or 30 September 2020 but is derived from the 2021 Annual Report and
Financial Statements. The Annual Report and Financial Statements for 2021 will
be delivered to the Registrar of Companies in due course. The auditors have
reported on those accounts and have given an unqualified report, which does
not contain a statement under Section 498 of the Companies Act 2006.
Going concern
The Group's ability to continue as a going concern is dependent on maintaining
adequate levels of resources to continue to operate for the foreseeable
future. When assessing the going concern of the Group, the Directors have
reviewed the year to date financial results, as well as detailed financial
forecasts for the period up to 31 December 2022. The assumptions used in the
financial forecasts are based on the Group's historical performance and
management's extensive experience of the industry. Taking into consideration
the wider economic environment, the forecasts have been assessed and stress
tested to ensure that a robust assessment of the Group's working capital and
cash requirements has been performed.
The Group has sufficient liquidity headroom through the forecast period. The
Directors therefore have reasonable expectation that the Group has the
financial resources to enable it to continue in operational existence for the
period to 31 December 2022. Accordingly, the Directors conclude it is
appropriate that these consolidated financial statements be prepared on a
going concern basis.
2. Accounting policies, estimates and judgements
The accounting policies applied by the Group in these consolidated financial
statements are the same as those applied by the Group in its consolidated
financial statements as at and for the year ended 30 September 2020 unless
stated below.
Restatement of prior year comparatives
Following a review of the Group's historical financial information for the
Group's IPO in June 2021, a number of adjustments have been made to correct
errors in balances previously reported within the Group's consolidated
financial statements. These adjustments have been corrected by restating each
of the affected financial statement line items for the prior period as
follows. The Group's statement of cash flows was not impacted.
Reconciliation of equity and total comprehensive income as at 30 September
2020
Statement of financial position as at 30 September 2020
Notes Previously reported 30 September 2020 £m Impact of adjustments Restated 30 September 2020
£m £m
Non-current assets
Intangible assets A 2.3 0.2 2.5
Property, plant and equipment 0.8 - 0.8
Right-of-use assets B 2.9 3.1 6.0
6.0 3.3 9.3
Current assets
Inventories C, D, E 24.0 (1.0) 23.0
Trade and other receivables F, G 9.4 0.6 10.0
Tax recoverable K 1.4 0.9 2.3
Cash and cash equivalents 10.5 - 10.5
45.3 0.5 45.8
Current liabilities
Trade and other payables D, G (26.7) (1.4) (28.1)
Provision H - (0.2) (0.2)
Contract liability C, F (4.7) (2.6) (7.3)
Lease liabilities B (0.5) (0.2) (0.7)
(31.9) (4.4) (36.3)
Non-current liabilities
Lease liabilities B (2.7) (3.0) (5.7)
Deferred taxation liabilities (0.1) - (0.1)
(2.8) (3.0) (5.8)
Net assets 16.6 (3.6) 13.0
Equity attributable to the owners of the Company
Share capital - - -
Retained earnings 16.6 (3.6) 13.0
Total equity 16.6 (3.6) 13.0
Statement of total comprehensive income year ended 30 September 2020
Notes Previously reported 30 September 2020 £m Impact of adjustments Restated 30 September 2020
£m £m
Revenue C, G, I 209.9 (1.2) 208.7
Cost of sales C, D, E, G, H, J (167.7) 51.0 (116.7)
Gross profit 42.2 49.8 92.0
Administrative expenses A, B, J (16.2) (52.0) (68.2)
Other operating income I 0.1 0.1 0.2
Operating profit 26.1 (2.1) 24.0
Finance costs B (0.2) (0.1) (0.3)
Profit before tax 25.9 (2.2) 23.7
Tax on profit (4.5) 0.5 (4.0)
Profit for the financial year 21.4 (1.7) 19.7
A Intangible assets
The Group has intangible assets relating to purchased software and internal
capitalised development spend. On review, the Group recorded amortisation in
the year ended 30 September 2020 in excess of what was required as per the
Group's amortisation policy. An adjustment has been included to increase the
level of intangible assets by £0.2 million and reduce the amount of
amortisation included within administrative expenses.
B Recognition of a lease under IFRS 16
During the year, the Group agreed the terms to lease warehouse and office
space from Radcliffe Property Management, a related party. The lease agreement
was signed in October 2020, after the reporting date of 30 September 2020, and
so the Group did not recognise a right-of-use asset or lease liability in the
year ended 30 September 2020.
On review, the Group had been given control of the asset prior to the
reporting date and, although the lease agreement had not been signed,
terms had been agreed. The Group has therefore made an adjustment to
recognise the lease in the statement of financial position at the reporting
date. A right-of-use asset of £3.1 million has been recorded as at 30
September 2020 with a corresponding lease liability of £3.2 million.
Depreciation of £0.1 million and interest of £0.1 million have been charged
to the income statement and are presented within administrative expenses and
net finance costs respectively.
C Recognition of revenue on delivery of items
The Group has previously recognised revenue on dispatch of goods from the
Group's warehouses. On review, management believe that control is only passed
to the customer on delivery of items. As a result of this change in policy, an
adjustment has been made for the year ended 30 September 2020.
Revenue recognised has been reduced by £2.3 million, with a corresponding
increase of £2.3 million in the Group's contract liability. Offsetting this
was £1.6 million of revenue now recognised in the year ended 30 September
2020 for which an adjustment was made to the opening statement of financial
position. The total impact to revenue of this change in policy was therefore a
reduction in revenue of £0.7 million.
The reduction in revenue has an associated reduction in cost of sales. Cost of
sales was reduced by £1.3 million, with a corresponding increase in
inventory. Offsetting this was £0.9 million of cost of sales now recognised
in the year ended 30 September 2020, for which an adjustment was made to the
opening statement of financial position. The total impact to cost of sales of
this change in policy was therefore a reduction of £0.4 million.
D Inventory adjustments
On review, the Group has identified some differences between the financial
statements and the stock listing as at 30 September 2020 along with
misstatements in relation to purchase cut-off and the recognition of import
duties. The net result of these differences is an increase to inventory of
£0.3 million, an increase in cost of sales of £0.2 million and an increase
to trade payables of £0.5 million.
E Adjustment to deferred costs recognised in other receivables
The Group had deferred costs of £2.7 million in the year ended 30 September
2020. On review, these costs should have been recognised within cost of sales
in the year ended 30 September 2020. An adjustment has therefore been made to
reduce inventory by £2.7 million, with a corresponding increase in cost of
sales.
Offsetting this is a £1.3 million reduction in cost of sales as a result of
the corresponding adjustment to the year ended 30 September 2019.
F Reclassification of receivables
The Group has reclassified £0.2 million to trade receivables relating to a
debtor balance with a customer. This balance had been offset against the
Group's 'contract liability' in the financial statements for the year ended 30
September 2020.
G Recognition of an accrual for returns
On review, the Group believes that it is necessary to recognise an accrual for
returns made after the reporting date that related to sales made during the
period. This change has had an impact on the statement of financial position
as at 30 September 2020.
The Group has recognised an adjustment to increase the returns accrual by
£1.0 million and a right-of-return asset of £0.4 million has been recorded
within trade and other receivables. After considering the impact of the
adjustment made to the statement of financial position as at 30 September
2019, this adjustment results in a reduction in revenue of £0.5 million and
gross profit of £0.3 million.
H Recognition of a provision for assurance warranties
The Group has historically not provided for any potential liability relating
to assurance-type warranties offered to customers. On review, the Group
believes it is necessary to provide for these potential liabilities. A total
of £0.1 million was charged to the income statement in the year in respect of
this provision.
I Other adjustments to revenue
On review, the Group identified a contract liability of £0.1 million of
revenue recognised in the year ended 30 September 2019 which should have been
deferred to the year ended 30 September 2020. An adjustment has been made to
recognise an additional £0.1 million of revenue in the year ended 30
September 2020.
The Group recognised an amount of £0.1 million relating to supplier
promotions as revenue in the year ended 30 September 2020. On review, this
amount has been reclassified as 'Other operating income'.
J Reclassification of marketing costs
The Group classified marketing costs as cost of sales in the year ended 30
September 2020. On review, the Group believes that costs relating to marketing
are an administrative expense and not directly attributable to the goods sold.
Marketing costs of £52.1 million have therefore been reclassified from cost
of sales to administrative expenses.
K Tax impact of adjustments
The impact of the adjustments proposed decreases the income tax expense by
£0.5 million. The corporation tax liability decreased by £0.9 million.
Statement of cash flows for the year ended 30 September 2020
Previously reported 30 September 2020 £m Impact of adjustments Restated 30 September 2020
£m £m
Cash generated from operating activities 27.1 3.8 30.9
Income tax paid (6.5) - (6.5)
Net cash generated from operating activities 20.6 3.8 24.4
Net cash used in investing activities (2.6) (3.8) (6.4)
Net cash used in financing activities (10.2) - (10.2)
Net increase in cash and cash equivalents 7.8 - 7.8
Cash and cash equivalents at the start of the year 2.7 - 2.7
Cash and cash equivalents at the end of the year 10.5 - 10.5
The cash flows for operating activities and investing activities have been
restated in relation to 30 September 2020. This is due to cash flows relating
to advances made to related parties being incorrectly classified as operating
cash flows instead of investing cash flows. This has resulted in previously
reported total cash outflows from investing activities increasing by £3.8
million and total cash inflows from operating activities decreasing by £3.8
million. This has no effect on the financing cashflows, total cash flows or
the cash position at 30 September 2020.
Reconciliation of opening equity - Statement of financial position as at 01
October 2019
Notes Previously reported 1 October 2019 £m Impact of adjustments Restated 1 October 2019
£m £m
Non-current assets
Intangible assets 1.8 - 1.8
Property, plant and equipment 0.5 - 0.5
Right-of-use assets 3.5 - 3.5
5.8 - 5.8
Current assets
Inventories A, B 16.4 1.9 18.3
Trade and other receivables C, D 6.2 (1.0) 5.2
Tax recoverable G 0.2 (0.2) -
Cash and cash equivalents 2.7 - 2.7
25.5 0.7 26.2
Current liabilities
Trade and other payables B, D (19.8) (1.4) (21.2)
Provision F - (0.1) (0.1)
Contract liability E (2.1) (1.7) (3.8)
Lease liabilities (0.5) - (0.5)
Corporation tax G (0.9) 0.6 (0.3)
(23.3) (2.6) (25.9)
Non-current liabilities
Lease liabilities (3.3) - (3.3)
(3.3) - (3.3)
Net assets 4.7 (1.9) 2.8
Equity attributable to the owners of the Company
Share capital - - -
Retained earnings 4.7 (1.9) 2.8
Total equity 4.7 (1.9) 2.8
A Recognition of revenue on delivery of items
The Group has previously recognised revenue on dispatch of goods from the
Group's warehouses. On review, management believes that control is only passed
to the customer on delivery of items. As a result of this change in policy, an
adjustment has been made for the year ended 30 September 2019.
Revenue recognised has been reduced by £1.6 million, with a corresponding
increase of £1.6 million in the Group's contract liability. The reduction in
revenue has an associated reduction in cost of sales. Cost of sales was
reduced by £0.9 million, with a corresponding increase in inventory.
B Inventory adjustments
On review, the Group has identified some differences between the financial
statements and the stock listing as at 30 September 2019, along with
misstatements in relation to purchase cut-off and the recognition of import
duties. The net result of these differences is an increase to inventory of
£1.0 million and an increase to trade payables of £0.8 million.
The Group had classified a balance of £0.1 million that related to goods in
transit as a prepayment in the year ended 30 September 2019. An adjustment has
been made to increase inventory by £0.1 million, with a corresponding
decrease in trade and other receivables.
C Adjustment to deferred costs recognised in other receivables
The Group had deferred costs of £1.3 million in the year ended 30 September
2019. On review, these costs should have been recognised within cost of sales
in the year ended 30 September 2019. An adjustment has therefore been made to
reduce other receivables by £1.3 million, with a corresponding increase in
cost of sales.
D Recognition of an accrual for returns
On review, the Group believes that it is necessary to recognise an accrual for
returns made after the reporting date that related to sales made during the
period. The change has had an impact on the statement of financial position as
at 30 September 2019.
The Group has recognised an adjustment to increase the returns accrual by
£0.5 million and a right-of-return asset of £0.2 million has been recorded
within trade and other receivables.
E Contract liability adjustment
On review, the Group identified £0.1 million of revenue recognised in the
year ended 30 September 2019 which should have been deferred. An adjustment
has therefore been made to increase the contract liability by £0.1 million,
with the corresponding reduction being made to revenue.
F Recognition of a provision for assurance warranties
The Group has historically not provided for any potential liability relating
to assurance-type warranties offered to customers. On review, the Group
believes it is necessary to provide for these potential liabilities. The
result of this change on the statement of financial position as at 30
September 2019 is an increase of £0.1 million.
G Tax impact of adjustments
The corporation tax liability decreased by £0.4 million.
Judgements in applying accounting policies
Intangible assets
Intangible assets include capitalised internal salaries and third-party costs
for computer software development. A certain proportion of the total costs are
capitalised, as they relate to development costs, whilst the remaining costs
are deemed to be maintenance costs and are expensed to the statement of
comprehensive income. The proportion is calculated using a combination of
management's best estimate and information provided by the third party.
Revenue cut-off
The Group's management information systems are configured to recognise revenue
upon dispatch of the inventory items from the Group's warehouse, which may not
be aligned to when control has transferred to the customer. Management
therefore performs an assessment in order to capture items that may have been
dispatched from the Group's warehouse but not delivered by the reporting date,
and subsequently defers the recognition of revenue and associated costs into
the following year. This gives rise to deferred income, which is recognised as
a contract liability, and associated inventory in the consolidated statement
of financial position. The assessment performed by management includes
assumptions, which management believes are reasonable, in order to identify
items that fit the criteria for deferral. Management limits the review to a
fixed number of distributors and extrapolates the shipment delay identified in
the distributors tested to the remaining distributors.
Share-based payments
Share-based payment arrangements in which the Group receives goods or services
as consideration for its own equity instruments are accounted for as
equity-settled share-based payment transactions. The fair value of services
received in return for share options is calculated with reference to the fair
value of the award on the date of grant. A Black-Scholes model has been used
where appropriate to calculate the fair value and the Directors have therefore
made estimates with regard to the inputs to that model and the period over
which the share award is expected to vest (note 19) of the consolidated Group
financial statements.
On 15 April 2020, 845 ordinary A shares were issued at a price of £0.10 per
share, which is the nominal value of the shares. Of the 845 shares issued, 800
of the A ordinary shares were issued to the existing shareholders by way of
bonus issue so as not to dilute their existing holding. These shares are
considered outside the scope of IFRS 2, on the basis that these shareholders
do not receive any additional value for their shares. This is considered to be
a key judgement.
Judgements in applying accounting policies
Refund liability
The refund liability that is recognised within the historical financial
information relates to the obligation to refund some or all of the
consideration received from a customer. The liability is measured at the
amount the Group ultimately expects it will have to return to the customer.
The refund liability therefore requires management to estimate the amount
expected to be returned to customers after the reporting date. The refund
liability is estimated using historical rates of the level of refunds relative
to revenue. The table below shows the percentage of average quarterly sales in
the period and the impact that increasing the refund rate by 1% of quarterly
sales would have on the consolidated statement of comprehensive income.
2021 2020
(restated)
Refund liability (£m) 0.9 1.0
Revenue (£m) 268.8 208.7
Refund liability % average quarterly sales 1.3% 1.9%
Impact of increasing the refund rate by 1% of quarterly sales on PBT (£m) (0.7) (0.5)
Warranty provision
The Group provides for the cost expected to be incurred in order to replace
damaged or faulty items that existed at the time of sale. The provision
related to these assurance-type warranties are recognised when the product is
sold. Initial recognition is based on historical experience.
The table below shows the percentage of average quarterly sales in the period
and the impact that increasing the warranty rate by 0.5% of quarterly sales
would have on profit before tax ('PBT').
2021 2020
(restated)
Warranty provision (£m) 0.1 0.2
Revenue (£m) 268.8 208.7
Warranty provision % average quarterly sales 0.2% 0.4%
Impact of increasing the warranty provision by 0.5% of quarterly sales on PBT (0.3) (0.3)
(£m)
3. Segmental information
IFRS 8 'Operating Segments' requires the Group to determine its operating
segments based on information which is provided internally. Based on the
internal reporting information and management structures within the group, it
has been determined that there is only one operating segment, being the Group,
as the information reported includes operating results at a consolidated Group
level only (the 'Operating group'). There is also considered to be only one
reporting segment, which is the Group, the results of which are shown in the
consolidated statement of comprehensive income.
Management has determined that there is one operating and reporting segment
based on the reports reviewed by the Senior Leadership Team ('SLT') which is
the chief operating decision-maker ('CODM'). The SLT is made up of the
Executive Directors and Key Management and is responsible for the strategic
decision-making of the Group.
Adjusted EBITDA
Operating costs, comprising administrative expenses, are managed on a Group
basis. The SLT measures the overall performance of the Operating group by
reference to the following non-GAAP measure:
· Adjusted EBITDA, which is EBITDA (earnings before interest, tax,
depreciation and amortisation) less exceptional items and IFRS 2 charges in
respect of share-based payments along with associated national insurance.
This adjusted profit measure is applied by the SLT to understand the earnings
trends of the Operating group and is considered an additional, useful measure
under which to assess the true operating performance of the Operating group.
In addition to annual bonuses which are linked to the Operating group's
financial performance, the Operating group has implemented a number of
longer-term share-based payment incentives linked to changes in ownership of
the Operating group rather than the achievement of individual or Company
specific financial performance targets.
The Directors believe that these items and adjusted measures of performance
should be separately disclosed in order to assist in the understanding of
financial performance achieved by the Operating group and for consistency with
prior years.
2021 2020
£m (restated)
£m
Operating profit 20.0 24.0
Depreciation of property, plant and equipment 0.6 0.3
Depreciation of right-of-use assets 0.8 0.6
Amortisation 1.6 1.3
Exceptional items 9.4 -
Share-based payments (including associated NI) 7.7 -
Adjusted EBITDA 40.1 26.2
4. Revenue
An analysis of revenue by class of business is as follows:
2021 2020
£m (restated)
£m
Online 267.9 207.7
Showroom 0.9 1.0
268.8 208.7
All revenue arose within the United Kingdom.
5. Operating profit
Expenses by nature including exceptional items:
2021 2020
£m (restated)
£m
Employee costs (excluding share-based payments) 12.6 8.3
Share-based payments 7.7 -
Agency and contractor costs 1.1 1.1
Marketing costs 69.7 52.2
Depreciation of property, plant and equipment (note 11) 0.6 0.3
Depreciation of right-of-use assets (note 12) 0.9 0.6
Amortisation charge (note 10) 1.6 1.3
Loss/(gain) on foreign exchange 0.1 (0.7)
Other costs 16.2 5.1
Total administrative expenses 110.5 68.2
Share-based payments (note 19) (7.7) -
Included within exceptional items (note 6) (9.4) -
Total administrative expenses before separately disclosed items 93.4 68.2
6. Exceptional items
2021 2020
£m £m
IPO costs 9.4 -
IPO costs relate to costs incurred in respect of the Group's listing on AIM in
June 2021.
7. Taxation
2021 2020
£m (restated)
£m
Corporation tax
Current tax on profits for the year 5.4 4.5
Adjustments in respect of previous periods - (0.6)
Total current tax 5.4 3.9
Deferred tax
Adjustments in respect of previous periods - 0.1
Total deferred tax - 0.1
Taxation on profit 5.4 4.0
Factors affecting tax charge for the year
The tax assessed for the period is higher (2020: lower) than the standard rate
of corporation tax in the UK of 19% (2020: 19%). The differences are explained
below:
2021 2020
£m (restated)
£m
Profit on ordinary activities before tax 19.7 23.7
Profit on ordinary activities multiplied by standard rate of corporation tax 3.7 4.5
in the UK of 19% (2020: 19%)
Effects of:
Expenses not deductible for tax purposes 1.4 -
Share options 0.3 -
Adjustments to tax charge in respect of prior periods - (0.5)
Total tax charge for the year 5.4 4.0
Taxation on items taken directly to equity was a credit of £0.7m (2020:
£nil) relating to tax on share-based payments.
Factors that may affect future tax charges
The rate of corporation tax in the UK throughout the period was 19%. Changes
to the UK corporation tax rates were substantively enacted as part of the
Finance Act 2021 on 24 May 2021. The rate applicable from 1 April 2023 will
increase from 19% to 25%. Deferred taxes at the reporting date have been
measured using these enacted tax rates.
Tax recoverable
Tax recoverable represents overpaid corporation tax and Section 455 tax which
has been paid and is to be reclaimed.
8. Dividends
2021 2020
£m £m
Dividends paid 14.9 9.5
Prior to the Group restructure, ordinary dividends of £14.9 million (2020:
£9.5 million) were paid in respect of the year ended 30 September 2020 to the
shareholders of VIPSO Limited. Certain shareholders have waived their right to
receive dividends and therefore the dividends paid are not based on the total
number of ordinary shares in issue at the time. No dividends were paid to the
shareholders of Victorian Plumbing Group plc during the year ended 30
September 2021.
9. Earnings per share
Basic and diluted earnings per share
Basic earnings per share ('EPS') is calculated by dividing the profit for the
period attributable to ordinary equity holders of the parent by the weighted
average number of ordinary shares outstanding during the year.
As a consequence of a share-for-share exchange on 27 May 2021 (note 17) in
preparation for the IPO, these consolidated financial statements reflect the
continuation of the pre-existing Group, headed by VIPSO Ltd. In order for
EPS to be comparable year on year, the shares allotted and vested at Admission
have been used to calculate basic EPS for the year ended 30 September 2020 and
for the period between 1 October 2020 and Admission on 22 June 2021.
Diluted EPS is calculated by dividing the profit attributable to ordinary
equity holders of the parent by the weighted average number of ordinary shares
outstanding during the year plus the number of incremental ordinary shares,
calculated using the treasury stock method, that would be issued on conversion
of all the dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in the EPS
calculations:
Weighted average number of ordinary shares Total earnings Pence per share
£m
Year ended 30 September 2021
Basic EPS 267,781,231 14.3 5.3
Diluted EPS 315,755,339 14.3 4.5
Year ended 30 September 2020
Basic EPS 265,559,733 19.7 7.4
Diluted EPS 265,559,733 19.7 7.4
The number of shares in issue at the time of listing on 22 June 2021 is
reconciled to the basic and diluted weighted average number of shares below:
Weighted average number of shares
Number of ordinary shares in issue immediately prior to IPO 305,943,729
Weighted effect impact of shares issued for primary offering 1,237,269
Weighted effect of ordinary shares issued for share based payments 3,501,409
Weighted effect of shares issued but unvested (42,901,176)
Weighted average number of shares for basic EPS 267,781,231
Dilutive impact of unvested shares in relation to restricted share awards 47,970,764
Impact of ordinary shares held in ESOT 3,344
Weighted average number of shares for diluted EPS 315,755,339
The average market value of the Group's shares for the purposes of calculating
the dilutive effect of share-based incentives was based on quoted market
prices for the period during which the share-based incentives were
outstanding.
Adjusted earnings per share ('Adjusted EPS')
Adjusted basic and diluted earnings per share figures are calculated by
dividing adjusted profit after tax for the year by the weighted average number
of shares in issue (as set out above).
2021 2020
£m (restated)
£m
Profit for the year 14.3 19.7
Exceptional items 9.4 -
Share-based payments 7.7 -
Tax effect (1.9) -
Total adjusted profit for the year 29.5 19.7
Adjusted basic earnings per share (pence) 11.0 7.4
Adjusted diluted earnings per share (pence) 9.3 7.4
10. Intangible assets
Computer software
£m
Cost
At 30 September 2019 3.7
Additions (restated) 2.0
At 30 September 2020 (restated) 5.7
Additions 1.8
At 30 September 2021 7.5
Accumulated amortisation
At 30 September 2019 1.9
Charge for the year 1.3
At 30 September 2020 3.2
Charge for the year 1.6
At 30 September 2021 4.8
Net book value
At 30 September 2019 1.8
At 30 September 2020 (restated) 2.5
At 30 September 2021 2.7
Computer software comprises both internal salaries and external development
capitalised in relation to the Group's bespoke operational software. The Group
capitalised internal salaries of £1.2 million in the year ended 30 September
2021 (2020: £0.6 million) for development of computer software.
For the year to 30 September 2021, the amortisation charge of £1.6 million
(2020: £1.3 million) has been charged to administrative expenses in the
income statement. At 30 September 2021, there were no software and website
development costs representing assets under construction (2020: £nil).
11. Property, plant and equipment
Leasehold improvements Plant and machinery Fixtures Office Total
£m £m and fittings equipment £m
£m £m
Cost
At 30 September 2019 - 0.5 0.9 0.6 2.0
Additions - 0.2 0.1 0.3 0.6
At 30 September 2020 - 0.7 1.0 0.9 2.6
Additions 0.1 0.7 0.2 0.5 1.5
At 30 September 2021 0.1 1.4 1.2 1.4 4.1
Accumulated depreciation
At 30 September 2019 - 0.3 0.8 0.4 1.5
Charge for the year - 0.1 0.1 0.1 0.3
At 30 September 2020 - 0.4 0.9 0.5 1.8
Charge for the year - 0.3 0.1 0.2 0.6
At 30 September 2021 - 0.7 1.0 0.7 2.4
Net book value
At 30 September 2019 - 0.2 0.1 0.2 0.5
At 30 September 2020 - 0.3 0.1 0.4 0.8
At 30 September 2021 0.1 0.7 0.2 0.7 1.7
12. Right-of-use assets
Right-of-use assets
£m
Cost
At 30 September 2019 5.0
Additions (restated) 3.1
At 30 September 2020 (restated) 8.1
Additions 0.6
Modifications (0.4)
Disposals (0.1)
At 30 September 2021 8.2
Accumulated depreciation
At 30 September 2019 1.5
Charge for the year 0.6
At 30 September 2020 2.1
Charge for the year 0.9
On disposals (0.1)
At 30 September 2021 2.9
Net book value
At 30 September 2019 3.5
At 30 September 2020 (restated) 6.0
At 30 September 2021 5.3
During the year the Group reassessed the likelihood of executing the
termination option on one of its properties. It is now deemed likely that
the termination option will be exercised and as a result this represents a
modification under IFRS 16. The right-of-use asset was decreased by £0.4
million to reflect the value of the asset after the modification and the
corresponding lease liability reduced by £0.4 million.
13. Trade and other receivables
2021 2020
£m (restated)
£m
Trade receivables 2.3 1.9
Amounts owed by related parties - 5.9
Other receivables - 0.2
Right-of-return asset 0.3 0.3
Accrued income 0.9 1.0
Prepayments 1.4 0.7
4.9 10.0
The Group provides against trade receivables using the forward-looking
expected credit loss model under IFRS 9. An impairment analysis is performed
at each reporting date. Trade receivables, accrued income, amounts owed by
related parties and other receivables expected credit losses have been
reviewed by management and have been determined to have an immaterial impact
on these balances.
14. Trade and other payables
2021 2020
£m (restated)
£m
Trade payables 23.5 21.7
Other taxation and social security 8.8 3.7
Refund liability 0.9 1.0
Other payables 1.2 0.7
Accruals 1.6 1.0
36.0 28.1
15. Lease liabilities
Lease liability
£m
At 30 September 2019 3.8
Additions (restated) 3.1
Interest expense 0.2
Lease payment (0.7)
At 30 September 2020 (restated) 6.4
Additions 0.6
Modifications (0.4)
Interest expense 0.3
Lease payment (1.1)
At 30 September 2021 5.8
During the year the Group reassessed the likelihood of executing the
termination option on one of its properties. It is now deemed likely that
the termination option will be exercised and as a result this represents a
modification under IFRS 16. The right-of-use asset was decreased by £0.4
million to reflect the value of the asset after the modification and the
corresponding lease liability reduced by £0.4 million.
The Group had total cash outflows for leases of £1.1 million (2020: £0.7
million). The Group also had non-cash additions to right-of-use assets and
lease liabilities of £0.6 million (2020: £3.1 million).
Lease liabilities as at 30 September were classified as follows:
2021 2020
£m £m
Current 0.9 0.7
Non-current 4.9 5.7
Total 5.8 6.4
16. Borrowings
2021 2020
£m £m
Amounts drawn under revolving credit facility - -
Unamortised debt issue costs (0.1) -
(0.1) -
On 7 June 2021, the Group signed into a new Revolving Credit Facility (the
'RCF'). The RCF has total commitments of £10 million and a termination date
of June 2024. The facility is secured by a debenture dated 7 June 2021.
Interest on the RCF is charged at SONIA plus a margin of between 2.3% and 2.8%
depending on the consolidated leverage of the Group. A commitment fee of 40%
of the margin applicable to the RCF is payable quarterly in arrears on
unutilised amounts of the RCF. There is no requirement to settle all, or part,
of the debt earlier than the termination date. At 30 September 2021 the Group
had not utilised the RCF.
Unamortised debt issue costs of £0.1 million (2020: £nil) are included in
prepayments (note 13).
17. Share capital
2021 2020
£ £
Allotted, called up and fully paid
325,062,985 ordinary shares of 0.1p (2020: £nil) 325,063 -
Nil ordinary shares of £1.00 (2020: 800) - 800
Nil A ordinary shares of £0.10 (2020: 845) - 85
325,063 885
The share capital of the Group is represented by the share capital of the
parent company, Victorian Plumbing Group plc. The Company was incorporated on
6 May 2021 to act as the holding company of the Group. Prior to this the share
capital of the Group was represented by the share capital of the previous
parent, VIPSO Limited. The table below summarises the movements in share
capital during the year ended 30 September 2021.
£
At 1 October 2020 885
Change in capital as a result of the Group restructure 410,365
Ordinary shares of 0.1p issued on Admission 11,260
Ordinary shares of 0.1p issued for the Share Incentive Plan 636
Cancellation of ordinary deferred shares of 0.1p (98,083)
At 30 September 2021 325,063
Victorian Plumbing Group plc was incorporated on 6 May 2021 and issued one
ordinary share of £1.45 at par.
On 27 May 2021 as part of the Group restructuring, the following steps took
place:
· Victorian Plumbing Group plc issued 199,999,999 ordinary shares
of £1.45 and 211,250,000 A ordinary shares of £0.145 in exchange for the
entire share capital of VIPSO Limited.
· The 200,000,000 of ordinary shares were sub-divided into
200,000,000 of 0.1p ordinary shares and 200,000,00 of £1.449 deferred
ordinary shares.
· The 211,250,000 of A ordinary shares were sub-divided into
211,250,000 A ordinary shares of 0.1p and 211,250,000 A ordinary deferred
shares of £0.144.
· Victorian Plumbing Group plc undertook a capital reduction by
cancelling 200,000,000 ordinary deferred shares of £1.449 each and
211,250,000 A ordinary deferred shares of £0.144 each. In total, these shares
had an aggregate nominal value of £320,220,000.
On 22 June 2021, the date of Admission, the following steps took place:
· The 200,000,000 ordinary shares of 0.1p and 211,250,000 A
ordinary shares of 0.1p were consolidated to 313,166,698 new ordinary shares
of 0.1p and 98,083,302 new deferred ordinary shares of 0.1p.
· Victorian Plumbing Group plc cancelled the 98,083,302 ordinary
deferred shares of 0.1p with an aggregate nominal value of £98,083.
· Victorian Plumbing Group plc issued 11,260,783 of 0.1p ordinary
shares at an aggregate nominal value of £11,260. Of the shares issued
6,833,302 were to satisfy share awards and 4,427,481 for a primary issue. The
issue raised gross proceeds of £11.6 million for the Company, or £11.2
million net of all fees incurred. Share premium of £11.2 million has been
recorded.
On 2 August 2021 the Company issued 635,504 ordinary shares of 0.1p at an
aggregate nominal value of £636, which are held by the Employee Share Option
Trust (ESOT).
18. Own shares held
The Employee Share Option Trust purchases shares to fund the Share Incentive
Plan. At 30 September 2021, the trust held 635,504 (2020: nil) ordinary shares
with a book value of £636 (2020: £nil). The market value of these shares as
at 30 September 2021 was £1.6 million (2020: £nil). During the year the ESOT
purchased 635,504 shares of the Company at a cost of £636, representing 0.2%
of issued share capital.
Number of shares £
ESOT shares reserve
Own shares held at 1 October 2020 - -
Shares acquired by the ESOT in relation to the SIP 635,504 636
Own shares held at 30 September 2021 635,504 636
On 27 July 2021, Victorian Plumbing Group plc issued 635,504 ordinary shares
of 0.1p each to eligible employees in connection with the Share Incentive Plan
('SIP'). On the same date, the ordinary shares were acquired by the Employee
Share Option Trust ('ESOT') at nominal value.
19. Share-based payments
During the year the Group operated two share plans being the Share Incentive
Plan ('SIP') and a Management Incentive Plan ('MIP'). In addition, both prior
to and following Admission to AIM in June 2021, the Group awarded shares to
the Chairman and certain members of Key Management which had restrictions
placed against them that bring the awards into the scope of IFRS 2.
All share-based incentives carry a service condition. Such conditions are not
taken into account in the fair value of the service received. The fair value
of services received in return for share-based incentives is measured by
reference to the fair value of share-based incentives granted. The estimate of
the fair value of the share-based incentives is measured using the
Black-Scholes pricing model as is most appropriate for each scheme.
Sensitivity analysis has been performed in assessing the fair value of the
share-based incentives. There are no changes to key assumptions that are
considered by the Directors to be reasonably possible, which give rise to a
material difference in the fair value of the share-based incentives.
The total charge in the year was £7.7m (2020: £nil) with a Company charge of
£0.7m (2020: £nil). This included associated national insurance ('NI') at
13.8%, which management expects to be the prevailing rate when the awards are
exercised, and apprenticeship levy at 0.5%, based on the share price at the
reporting date.
2021 2020
£m £m
Share Incentive Plan ('SIP') 0.1 -
A ordinary growth shares award - April 2020 0.4 -
Management incentive Plan award - December 2020 4.4 -
IPO restricted share awards 1.6 -
Total IFRS 2 charge 6.5 -
National insurance and apprenticeship levy on applicable schemes 1.2 -
Total charge 7.7 -
During the year, the Directors in office in total had gains of £5.9m (2020:
£nil) arising on the exercise of share-based incentive awards.
Share Incentive Plan
The Group operates a Share Incentive Plan ('SIP') scheme that was made
available to all eligible employees following Admission to AIM in June 2021.
On 27 July 2021, all eligible employees were awarded free shares valued at
£3,600 each based on the closing share price on 26 July 2021 of £2.67. A
total of 635,504 shares were awarded under the scheme, subject to a three-year
service period (the 'Vesting Period').
The SIP awards have been valued using the Black-Scholes model and the
resulting share-based payments charge spread evenly over the Vesting Period.
The SIP shareholders are entitled to dividends over the Vesting Period. No
performance criteria are applied to the vesting of SIP shares. Fair value at
the grant date was measured to be £2.67.
2021 2020
number number
Outstanding at 1 October 2020 - -
Shares awarded 635,504 -
Forfeited (58,772) -
Outstanding at 30 September 2021 576,732 -
Vested and outstanding at 30 September 2021 - -
The total charge in the year, included in operating profit, in relation to
these awards was £0.1m (2020: £nil). The Company charge for the year was
£nil (2020: £nil).
A ordinary shares
On 15 April 2020 (the 'grant date'), 845 A ordinary shares in VIPSO Ltd, the
former ultimate parent company, were issued at a price of £0.10 per share
which was the nominal value of the shares. Of the 845 shares issued, 800 of
the A ordinary shares were issued to the existing shareholders by way of bonus
issue so as not to dilute their existing holding. These 800 shares are
considered outside the scope of IFRS 2, on the basis that these shareholders
do not receive any additional value for their shares.
The remaining 45 A ordinary shares were awarded to certain members of Key
Management (together the 'A ordinary shareholders'). In order to realise value
from the shares awarded, a participant must remain employed until an 'Exit'
event is achieved. The equity value on 'Exit' must also be in excess of the
equity hurdle which has been set at £130 million. The 'Exit' requirement is a
non-market performance vesting condition and the hurdle amount is considered
to be a market-based performance condition.
The fair value of services received in return for shares awarded is measured
by reference to the fair value of the shares at the date of the award. The
fair value of the shares awarded has been calculated with reference to a
Black-Scholes pricing model.
The significant inputs into the model were:
· a 1- to 5-year time frame for 'Exit'. Three scenarios were
modelled with equal probability of an 'Exit' after 1 year, 3 years and 5
years. An average of the three scenarios was then calculated;
· an equity value of £99 million at the date of award;
· an exercise price of £nil;
· volatility of between 34% and 40%, depending on the expected time
frame to 'Exit'. The expected volatility is based on the average annualised
historic equity value volatility of comparable companies over a period equal
to the exit horizon;
· a dividend yield of 0%; and
· a risk-free rate of between 0.07% and 0.14% depending on the time
period to 'Exit'.
The fair value of each share was determined to be £8,475 per share. The
resulting share-based payments charge was to be spread evenly over the period
between the award and the date at which an 'Exit' event occurs. No charge was
recognised if an 'Exit' event was not deemed to be probable as the performance
vesting condition would not be met.
On 27 May 2021 the Group undertook a reorganisation, through which the A
ordinary shareholders exchanged their shares for an equivalent value in
Victorian Plumbing Group plc. After all of the steps relating to the
reorganisation were executed, the A ordinary shareholders had exchanged their
45 A ordinary shares in VIPSO Ltd for 7,222,969 ordinary shares in Victorian
Plumbing Group plc. The share-for-share exchange does not represent a
modification of the award under IFRS 2 as the value of the award, and the
related service and performance conditions, remained unchanged.
On 11 June 2021 the A ordinary shareholders entered into a deed (the 'deed'),
which would become effective on Victorian Plumbing Group plc's Admission to
AIM, to modify the terms of the award. The performance condition would no
longer be relevant since an Exit event would have already occurred. The
service condition for the A ordinary shareholders was modified so as to
restrict the number of shares that vest on Admission. The vesting profile of
the remaining shares (the 'restricted shares') was defined to be as follows:
· 10% of the restricted shares will vest on the first anniversary
of Admission;
· 10% of the restricted shares will vest on the second anniversary
of Admission;
· 15% of the restricted shares will vest on the third anniversary
of Admission;
· 25% of the restricted shares will vest on the fourth anniversary
of Admission; and
· 40% of the restricted shares will vest on the fifth anniversary
of Admission.
On 22 June 2021 Victorian Plumbing Group plc was admitted to AIM, which was an
Exit event under the terms of the award. On Admission 1,059,369 shares vested.
The deed agreed to by the A ordinary shareholders took effect.
The execution of the deed represents a modification of the award under IFRS 2.
Management considered the fair value of the existing awards in accordance with
IFRS 2. The modification resulted in additional vesting conditions and as a
result the value of the award decreased on modification. As the fair value of
the award decreased, the original grant date fair value was recognised over
the original vesting period (the date of the Exit event) in accordance with
IFRS 2.
2021
Number
Outstanding at 6 May 2021 (incorporation) -
Restricted shares awarded on share-for-share exchange 7,222,969
Vested (1,059,369)
Outstanding and unvested 30 September 2021 6,163,600
The total charge in the year, included in operating profit, in relation to
these awards was £0.4 million (2020: £nil). The Company charge for the year
was £nil (2020: £nil). The restricted share awards outstanding at 30
September 2021 have a weighted average remaining vesting period of 3.5 years.
Management Incentive Plan
An Executive Director was awarded share options under a management incentive
plan ('MIP') prior to Admission.
On 2 December 2020, VIPSO Ltd (the former ultimate parent company of the
Group) awarded eight nil cost ordinary share options and nine nil cost A
ordinary share options under the MIP. All of the options awarded were to vest
on the earlier of an 'Exit' event or three years from the date of grant.
Options would be forfeited if the employee leaves the Group before the options
vest, unless under exceptional circumstances.
The fair value of services received in return for the share options granted
has been measured by reference to the fair value of the options at the grant
date. The fair value of the options has been calculated with reference to a
Black-Scholes pricing model.
The significant inputs into the model were:
· a 1- to 3-year time frame for exit. Three scenarios were modelled
with equal probability of an exit after 10 months, 1.8 years and 3 years. An
average of the three scenarios was then calculated;
· an equity value of £453 million at the date of award;
· an exercise price of £nil;
· volatility of between 45% and 53% depending on the expected
timeframe to exit. The expected volatility is based on the average annualised
historic equity value volatility of comparable companies over a period equal
to the exit horizon;
· a dividend yield of 0%; and
· a risk-free rate of 0%.
The value of each ordinary share option was determined to be £344,651 and
each A ordinary share option has been determined to be £184,993. The
resulting share-based payments charge was to be spread evenly over the period
between the grant date and the vesting date.
On 27 May 2021 the Group undertook a reorganisation, through which the options
granted under the MIP were converted to be options over ordinary shares and
ordinary deferred shares in Victorian Plumbing Group plc. After all of the
steps relating to the reorganisation were executed, the participant of the MIP
had exchanged its eight ordinary shares and none A ordinary shares in VIPSO
Ltd for 3,219,948 ordinary share options in Victorian Plumbing Group plc. The
exchange does not represent a modification of the award under IFRS 2 as the
value of the award, and the related service and performance conditions
remained unchanged.
On 11 June 2021 the MIP participant entered into a deed ('the MIP deed'),
which would become effective on Victorian Plumbing Group plc's Admission to
AIM, to modify the terms of the award. All of the options would convert when
the performance condition was satisfied (i.e. on Admission) resulting in the
participant being awarded ordinary shares. However, 30% of the shares would
remain restricted and subject to a service condition (the 'restricted
shares').
The vesting profile of the restricted shares was defined to be as
follows:
· 30% of the restricted shares will vest on the first anniversary
of Admission;
· 30% of the restricted shares will vest on the second anniversary
of Admission; and
· 40% of the restricted shares will vest on the third anniversary
of Admission.
On 22 June 2021 Victorian Plumbing Group plc was admitted to AIM which was an
Exit event under the terms of the award. The deed agreed to by the MIP
participants took effect.
On Admission the options converted to 3,219,948 ordinary shares and 2,253,964,
or 70%, of those shares vested at an average price of £2.62.
The execution of the deed represents a modification of the award under IFRS 2.
Management considered the fair value of the existing awards in accordance with
IFRS 2. The modification resulted in additional vesting conditions and as a
result the value of the award decreased on modification. As the fair value of
the award decreased, the original grant date fair value was recognised over
the original vesting period (the date of the Exit event) in accordance with
IFRS 2.
2021
Number
Outstanding at 6 May 2021 (incorporation) -
Restricted shares awarded on share-for-share exchange 3,219,948
Vested (2,253,964)
Outstanding and unvested 30 September 2021 965,984
The weighted average market value per ordinary share for the restricted shares
awarded under the MIP that vested in the year was £2.62. The restricted share
awards outstanding under the MIP at 30 September 2021 have a weighted average
remaining vesting period of 1.8 years.
The total charge in the year, included in operating profit, in relation to
these awards was £4.4m (2020: £nil). The Company charge for the year was
£0.1 million (2020: £nil).
IPO restricted share awards
During the year, the Chairman and certain members of Key Management were
granted restricted share awards. The restricted share awards do not have a
performance condition attached to them but the extent to which they vest
depends on a service condition being satisfied. The restricted shares are
forfeited if the employee leaves the Group before the vesting date, unless
under exceptional circumstances.
On 22 June 2021, the date of Admission, 3,613,354 ordinary shares in Victorian
Plumbing Group plc were granted to the Chairman and other Key Management
personnel. Of the total number of shares awarded, 208,664 vested immediately.
The remaining 3,404,690 ordinary shares became restricted share awards with
the following vesting profile:
· 569,477 of the restricted shares vest on the first anniversary of
Admission;
· 663,375 of the restricted shares vest on the second anniversary
of Admission;
· 663,375 of the restricted shares vest on the third anniversary of
Admission;
· 851,173 of the restricted shares vest on the fourth anniversary
of Admission; and
· 657,290 of the restricted shares vest on the fifth anniversary of
Admission.
The fair value of the award was determined using a Black-Scholes pricing model
and was £2.62 per share. The resulting share-based payments charge is being
spread evenly over the period between the grant date and the vesting date.
On 10 August 2021, an agreement was reached to award certain Key Management
38,168 restricted ordinary shares in Victorian Plumbing Group plc. The
restricted shares would not be subject to a performance condition, but the
extent to which they vest depends on a service condition being satisfied. The
restricted shares are forfeited if the employee leaves the Group before the
vesting date, unless under exceptional circumstances. Of the 38,168 restricted
shares awarded:
· 19,084 (50%) restricted shares vest on 30 September 2022; and
· 19,084 (50%) restricted shares vest on 30 September 2023.
The fair value of the award was determined using a Black-Scholes pricing model
and was £2.59 per share. The resulting share-based payments charge is being
spread evenly over the period between the grant date and the vesting date.
Grant date Share price at grant date Employee contribution per share Vesting period (years) Risk-free rate Dividend yield Volatility Fair value per restricted share
£ % % %
22/06/2021 2.62 £0.001 5.0 - - - 2.62
22/06/2021 2.62 £0.001 4.0 - - - 2.62
10/08/2021 2.59 nil 2.1 - - - 2.59
The number of restricted shares outstanding at 30 September 2021 was as
follows:
2021
Number
Outstanding at 6 May 2021 (incorporation) -
Awarded 3,651,522
Vested (208,664)
Outstanding and unvested at 30 September 2021 3,442,858
The weighted average market value per ordinary share for restricted shares
that vested in the year was £2.62. The IPO restricted share awards
outstanding at 30 September 2021 have a weighted average remaining vesting
period of 2.8 years.
The total charge in the year, included in operating profit, in relation to
these awards was £1.6m (2020: £nil). The Company charge for the year was
£0.6m (2020: £nil).
20. Cash generated from operating activities
2021 2020
(restated)
£m £m
Cash flows from operating activities
Profit before taxation for the financial year 19.7 23.7
Adjustments for:
Amortisation of intangible assets (note 10) 1.6 1.3
Depreciation of property, plant and equipment (note 11) 0.6 0.3
Depreciation of right-of-use assets (note 12) 0.9 0.6
Share-based payments 7.7 -
Finance costs 0.3 0.3
Increase in inventories (9.4) (4.7)
Increase in receivables (0.8) (1.0)
Increase in payables 7.3 10.3
(Decrease)/increase in provisions (0.1) 0.1
Cash generated from operating activities 27.8 30.9
21. Post balance sheet events
There have been no events between the year-end date and the date of this
report which represent a reportable event after the reporting period under IAS
10.
PRINCIPAL RISKS AND UNCERTAINTIES
RISK POTENTIAL IMPACT CHANGES IN THE YEAR
1. Macroeconomic trends Specific macroeconomic factors and changes due to geopolitical uncertainty can Over the past 12 months Brexit and the Covid-19 pandemic have provided
have an impact on how customers behave and can also have an impact on our challenges to both our operations and those of our supply chain. Although both
operations and the operations of our supply chain. In turn this could impact issues have evolved from 12 months ago, there is no increased risk to the
our overall financial performance. Group.
2. Failure to innovate and changes in consumer buying behaviour Failure to innovate new desirable products may impact our ability to attract We remain at the forefront of innovation in the sector and we have
new customers or retain our existing customers. strengthened our position through partnerships with additional well known
bathroom product brands.
A failure to maintain and enhance our customer journey in a manner that
responds to our customers' evolving needs could also have a material adverse Through the year we have innovated and launched several new products across a
effect on our financial performance. number of our brands with good levels of success.
We have adapted the consumer experience to make purchasing easier and evolved
our 'pay later' proposition with our partner Klarna to give consumers a near
real-time response to their application for credit.
Overall, there has been no change to the level of risk in the year.
3. Pandemic The Covid-19 pandemic has caused unprecedented levels of disruption to every Our business was able to operate fully throughout the year, although at times
aspect of the economy, our customers, our suppliers and the way we operate our this was at reduced capacity due to isolation requirements in relation to
business. There is a risk that further restrictions or a stricter and more COVID-19. Our suppliers were also impacted from time to time by these
prolonged lockdown could adversely impact the ability for our business and our restrictions.
supply chain to operate efficiently.
The overall situation has improved from a year ago but there are still a
As an e-commerce business we benefitted from the acceleration of consumers significant number of infections in the UK. There is a chance that additional
towards online retail. As restrictions lift there remains a risk that consumer measures could be brought in through the winter months and so we have
buying behaviour reverts and the size of the online market reduces. determined there to be no change in the level of risk.
4. Brand and reputation Our brand is one of our biggest assets. Failure to maintain and protect our Our prompted brand awareness has consistently increased over the last three
brand, or negative publicity that affects our reputation, could diminish the years, according to YouGov, and was at 64% in February 2021 when measured as
confidence that customers have in our products and the service we provide, part of our annual brand health survey. Our bold, differentiated and quirky
resulting in a reduction in revenue and profit. marketing content alongside our data-driven pay-per-click strategy helps us to
stay front-of-mind with consumers.
During the year we have maintained our high Trustpilot score at 4.3/5 despite
the increase in order volumes.
There has been no overall change to this risk in the year.
5. Cyber security and data protection As an e-commerce business, we are reliant on our IT infrastructure to continue We continue to invest in our technology and infrastructure team.
to operate. Any significant downtime of our systems would result in an
interruption to the services we provide. We have made substantial progress in re-platforming our website which, once
completed, will increase our resilience and allow us to implement updates more
A significant data breach, whether as a result of our own failures or a cyber easily.
attack, would lead to a loss in confidence by both customers and suppliers.
This could result in reputational damage, loss of audience, loss of revenue We have migrated a number of our applications to the cloud, which increases
and potential financial losses in the form of penalties. the resilience of our systems and the security of our data.
During the year we performed an independent review of our IT infrastructure
and implemented new solutions to mitigate risks identified.
There has been no overall change to this risk in the year.
6. Supply chain We are reliant on multiple third-party suppliers and service providers As our business grows, we increase our reliance on third parties, most notably
throughout the customer journey, from website to fulfilment, to the product suppliers of our stock and the distribution channels we use to deliver items
itself. This means that if there is a failure on their part, we may suffer to customers.
from a disruption to our operations and overall business.
We have invested in our purchasing team in the year, which has increased the
Any failure in day-to-day operations risks negatively impacting our ability to level of experience in the team and broadened our relationships with
process or fulfil customer orders, resulting in reduced customer proposition, suppliers.
lost opportunity and a loss of customer confidence.
We have also invested in a team based in China, which allows us to more
Our customers expect us to provide quality products without compromising on readily perform due diligence on suppliers. We implemented an auditing
the integrity of how they are produced. They want to feel confident about programme in the first half of the year with key Chinese suppliers and have
where their products come from and know that the people who make them are not since audited 34 factories.
being exploited. Failure to monitor our supply chain could lead to extensive
reputational damage and ultimately financial loss. Different macroeconomic factors, such as Covid-19 and rising energy costs,
have put significant pressure on supply chains, and these pressures continue
to exist at the date of this report. The Group has mitigated its risk through
expanding its supplier base and increasing inventory held, whilst we have
increased retail prices to maintain gross profit margin.
Our website relies on third-party cloud infrastructure as well as a number of
other third-party providers. Our increasing traffic levels mean that a drop in
service from any of these providers would have a greater impact than it would
have previously.
Supply chain pressures have increased in the year and as such we recognise an
increase in this area.
7. Increase in competition The UK market for bathroom products and accessories is highly competitive, The competitive landscape continues to develop, particularly as more of the
particularly with respect to customer experience, price, quality, market moves online. The impact of Covid-19 has resulted in some traditional
availability, product and delivery options, as well as digital capabilities. store-based retailers reiterating their focus on providing an omni-channel
Increased competition could lead to an increase in customer acquisition costs. experience that includes an online element.
Competitors could also develop either a customer experience or products that
we were unable to replicate. All of these factors could impact our financial Our diversification into adjacent products and a larger focus on trade sales
performance. also results in a wider competitor set.
Small increase in risk given our expansion into adjacent products and
increasing focus on digital channels from traditional offline retailers.
8. Sustainability and climate change The focus on climate change and sustainability is growing, and is in the The climate change crisis is one of the biggest we have ever faced. The UN's
spotlight more now than ever before. We recognise that we need to play our IPCC published a report in August 2021 that reiterated the ever increasing and
part in combating climate change and if we fail to do this, we risk adversely irreversible impact human activity is having on our climate. The report warned
impacting our brand and reputation. that time is running out to cut emissions and called on governments,
businesses and individuals to do their part in ensuring the goals of the Paris
climate change agreement are met. As such we have recognised an increased
level of risk.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR KVLFBFLLLFBXRecent news on Victorian Plumbing
See all newsREG - Victorian Plumbing - AIM Rule 17 – Notification of shareholding
AnnouncementREG - Victorian Plumbing - Result of 2025 Annual General Meeting
AnnouncementREG - Victorian Plumbing - AGM Trading Update and Notice of Results
AnnouncementREG - Victorian Plumbing - Director / PDMR LTIP Awards
AnnouncementREG - Victorian Plumbing - Posting of Annual Report and Notice of AGM
Announcement