REG - Victorian Plumbing - Full Year Results
22/11/2023 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:20231122:nRSV1922Ua&default-theme=true
RNS Number : 1922U Victorian Plumbing Group PLC 22 November 2023
Victorian Plumbing Group PLC
Full year results for the year ended 30 september 2023
Increased revenue, continued market share gains and strong growth in profits
Victorian Plumbing Group plc ("Victorian Plumbing", the "Group"), the UK's
leading bathroom retailer(1), announces its audited full year results for the
year ended 30 September 2023 ("2023"), highlighting the significant progress
made against its strategic priorities.
2023 2022 Change
Revenue £285.1m £269.4m 6%
Gross profit(2) £134.6m £121.0m 11%
Gross profit margin(3) 47% 45% 2ppts
Adjusted EBITDA(4) £23.8m £19.5m 22%
Adjusted EBITDA margin(5) 8% 7% 1ppt
Operating profit £15.3m £12.1m 26%
Adjusted PBT(6) £20.3m £15.7m 29%
Operating cash conversion(7) 68% 73% (5ppts)
Net cash £46.4m £45.5m 2%
Adjusted diluted earnings per share(8) 4.7p 3.8p 24%
Ordinary full year dividend per share 1.40p 1.10p 27%
Financial highlights
· Revenue up 6% on last year to £285.1 million (2022: £269.4
million).
o Order volume grew by 6% to 932,000 and average order value ("AOV")(9)
remained flat in the same period.
· Gross profit up 11% on last year at £134.6 million (2022: £121.0
million).
o Gross profit margin increased in H2 2023 to 49% (H1 2023: 46%), with 2023
full year gross profit margin of 47% (2022: 45%).
o Profitability has improved year-on-year, driven by product mix shifting
towards Victorian Plumbing own brand ranges as well as by reduced shipping
costs and favourable foreign exchange movements.
· Adjusted EBITDA of £23.8 million up on last year by 22% (2022:
£19.5 million) with adjusted EBITDA margin progression, from 7% last year to
8% in 2023.
· Operating profit of £15.3 million up on last year by 26% (2022:
£12.1 million).
· Adjusted PBT of £20.3 million up on last year by 29% (2022: £15.7
million) with adjusted PBT margin(10) progression, from 6% last year to 7% in
2023.
· Robust, debt-free balance sheet with closing net cash position
of £46.4 million (2022: £45.5 million).
· Free cash flow(11) of £16.1 million (2022: £14.3 million) and
operating cash conversion of 68% (2022: 73%).
· Proposed final ordinary dividend of 0.95p, giving a total ordinary
dividend of 1.40p for the year (2022: 1.10p) while maintaining a robust
balance sheet with a strong net cash position as we invest in the business.
Operational and strategic highlights
· Retained our position as the UK's number one bathroom retailer,
testament to the strength of our brand, our extensive range and availability.
· Marketing spend as a percentage of revenue reduced from 28.3% last
year to 27.8% and brand awareness score(17) improved to 64% (2022: 60%)
following the launch of our new creative 'Boss Your Bathroom' concept in
December 2022.
o Launched a three-year partnership with Bolton Wanderers Football Club as
their title and front of shirt sponsor from the 2023/24 season.
· Further progress in our strategic growth areas of 'trade' and
'expansion categories':
o Trade revenue grew 13% to £59.5 million (2022: £52.8 million),
representing 21% of total revenue (2022: 20%). Our Victorian Plumbing app,
designed with both trade and consumer in mind, was released successfully in
October 2023 and should drive further engagement.
o Tiles and lighting revenue grew by 35% to £7.3 million (2022: £5.4
million) and the upcoming increase in warehouse space will facilitate further
growth in these, and other, expansion categories.
· Investment in our technology platform to drive future growth:
o Successful website re-platforming completed in December 2022, enabling our
expansion categories to be more prominent on the website and improving search
functionality using bespoke developed AI technology.
· The lease on our new 544,000 square feet purpose-built distribution
centre in Leyland, Lancashire, achieved legal completion in October 2023. The
warehouse development remains on time and within budget, with the expectation
that the new distribution centre will be operational on schedule in 2024.
· Trustpilot rating(12) of 'Excellent' maintaining a sector-leading
average score of 4.5 out of 5.0 (2022: 4.5).
Board change
· On 1 April 2023, Daniel Barton replaced Paul Meehan as the
Group's Chief Financial Officer.
Current trading and outlook
· Albeit early in the year and against a volatile consumer backdrop,
the Group has had a positive start to the current year with continued revenue
growth and gross profit margin progression versus the comparative period last
year.
· The opening of our new distribution centre in 2024 will remove space
constraints, unlock growth potential and create efficiency; all of which will
support the delivery of the medium-term outlook.
· We continue to focus on our long-term goals and are making good
progress across our strategic growth areas. Underpinned by our market share
gains in recent years, we are confident in the future growth prospects of the
Group.
Mark Radcliffe, Founder and Chief Executive Officer of Victorian Plumbing,
said:
"We have further strengthened our position in the market and maintained our
position as the number one UK bathroom retailer.
"This has been a year of continued delivery of our growth plans. Our clearly
defined strategy and unique business model have resulted in increased order
volumes and resilient average order values, with customers continuing to
appreciate the choice of great value products that we offer across our ranges.
"As a highly cash generative business with a strong balance sheet, we continue
to invest in the business - across people, technology and infrastructure. Our
new purpose-built 544,000 square feet distribution centre, once operational,
will enable further growth in the core bathroom category, as well as
unlocking further strategic category expansion. We are confident that
Victorian Plumbing's profitable growth strategy will continue to deliver
long-term value to all stakeholders."
Analyst presentation
A presentation for analysts will be held at 09:00am GMT, Wednesday 22 November
2023. If you wish to attend, please contact FTI Consulting via
VictorianPlumbing@fticonsulting.com
(mailto:VictorianPlumbing@fticonsulting.com) .
-ENDS-
For further information, please contact:
Victorian Plumbing Group plc via FTI Consulting
Mark Radcliffe, Chief Executive Officer +44 20 3727 1000
Daniel Barton, Chief Financial Officer
FTI Consulting (Financial PR) +44 20 3727 1000
Alex Beagley, Eleanor Purdon, Harriet Jackson, Amy Goldup VictorianPlumbing@fticonsulting.com
Houlihan Lokey UK Ltd (Nominated Adviser) +44 20 7484 4040
Sam Fuller, Tim Richardson
Barclays Bank PLC (Joint Broker) +44 20 7623 2323
Nicola Tennent, Stuart Muress
Deutsche Numis (Joint Broker) +44 20 7260 1000
Luke Bordewich, Oliver Steele
About Victorian Plumbing
Victorian Plumbing is the UK's leading bathroom retailer, offering a wide
range of over 34,000 products to B2C and trade customers. Victorian Plumbing
offers its customers a one-stop shop solution for the entire bathroom with
more than 130 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, the Group employs over 600 staff across ten
locations in Lancashire, Manchester and Birmingham.
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 2023 2022 Change
Income statement
Revenue £m 285.1 269.4 6%
Gross profit £m 134.6 121.0 11%
Gross profit margin % 47% 45% 2ppts
Adjusted EBITDA £m 23.8 19.5 22%
Adjusted EBITDA margin % 8% 7% 1ppt
Profit before tax £m 15.6 11.8 32%
Adjusted PBT £m 20.3 15.7 29%
Adjusted PBT margin % 7% 6% 1ppt
Earnings per share
Statutory diluted earnings per share pence 3.7 2.9 28%
Adjusted diluted earnings per share pence 4.7 3.8 24%
Ordinary full year dividend per share pence 1.40 1.10 27%
Cash flow
Free cash flow £m 16.1 14.3 13%
Operating cash conversion % 68% 73% (5ppts)
Net cash and cash equivalents £m 46.4 45.5 2%
Key performance indicators
Total orders(13) '000 932 880 6%
Active customers(14) '000 634 608 4%
Average order value £ 306 306 -%
Average Trustpilot score Score / 5.0 4.5 4.5 -%
Marketing spend as a % of revenue % 27.8% 28.3% (0.5ppts)
Trade revenue as a % of total revenue % 21% 20% 1ppt
Own brand / third party revenue ratio % 78% / 22% 75% / 25% 3% / (3%)
1. Bathrooms and Bathroom Accessories UK, 2023, Mintel Group
Ltd.
2. 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 (which include
mark to market movements on forward currency contractual arrangements in line
with the Group's treasury policy).
3. Gross profit margin is defined as gross profit as a
percentage of revenue.
4. Adjusted EBITDA is defined as operating profit before
depreciation, amortisation, exceptional items and IFRS 2 share-based payments.
5. Adjusted EBITDA margin is defined as adjusted EBITDA as a
percentage of revenue.
6. Adjusted profit before tax ("PBT") is defined as adjusted
EBITDA less finance costs/(income), depreciation and amortisation.
7. Operating cash conversion is free cash flow as a
percentage of adjusted EBITDA.
8. Adjusted diluted earnings per share ("EPS") is defined as
total adjusted profit for the year divided by total issued share capital.
Total adjusted profit for the year is defined as profit for the year before
exceptional items and IFRS 2 share-based payments and after adjusting for the
tax impact of those items.
9. Average order value ("AOV") is defined as revenue divided
by total orders in the period.
CEO statement
Overview
The business has continued to deliver on its strategy to grow profitably,
achieving revenue growth of 6%. This has been supported by continued order
growth, with AOV flat as the mix of sales shifted to our own brand range. The
consumer continues to choose Victorian Plumbing as the number one bathroom
retailer ahead of the competition as a result of our fair pricing, unrivalled
high quality product range and excellent product availability. Order levels
have returned to the highs achieved during the Covid period, and our
Trustpilot scores have remained high alongside this continued growth.
Consumers have been switching to our own brand product range, which retails at
a higher margin comparable to third party brands, and this has supported the
continued improvement in our profitability throughout the year. Our commitment
to provide the most extensive choice of high quality bathroom products and the
best customer experience sets us up well for the next phase of profitable
growth, irrespective of wider market conditions.
Summary of operating performance
Revenue returned to growth (6%) compared to the prior year at £285.1 million
(2022: £269.4 million) reflecting an increase in total orders of 6% and
flat AOV. Adjusted EBITDA increased by 22% to £23.8 million (2022: £19.5
million) and adjusted EBITDA margin increased to 8% (2022: 7%). Operating
profit increased by 26% to £15.3 million (2022: £12.1 million).
The first half of the financial year saw an increase in both order volume (6%)
and AOV (3%) resulting in revenue growth of 10%. The second half of the
financial year saw order volume grow by 6% vs. the second half of 2022 as
momentum continued from the first half, but AOV reduced by 3% in the same
period due to the shift in mix between third party and own brand products,
resulting in revenue growth of 2%.
This shift, together with continuing tailwinds from shipping and foreign
exchange rate improvement, resulted in gross margin improvement of two
percentage points to 47% (2022: 45%). Marketing cost as a % of revenue
declined from 28.3% in 2022 to 27.8% in 2023.
This financial performance demonstrates the resilience of our business model
and our competitive advantage, underpinning our confidence in short-, medium-
and long-term profitable growth.
Our strategic focus
We are able to leverage our market and brand position and our strong balance
sheet to deliver on our clear strategic objectives, which remain unchanged and
focus on three growth horizons: core B2C, expansion categories and trade.
Our core market is retailing bathroom products and accessories to consumers
in the UK through our market leading online platform. Consumers are continuing
to shift online for the purchase of bathroom products and accessories and
there is still some way to go before this transition reaches maturity. We are
particularly well placed to continue to gain further market share in the short
term through these structural tailwinds and by taking share from traditional
physical retailers and other online competitors.
In the medium term there is a potential further opportunity to translate our
domestic success into carefully selected international markets.
Our second horizon focuses on expansion categories that consumers look for
when renovating the home. 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
décor, heating and kitchens. We were pleased to see tiles and lighting
revenue significantly increase in 2023 by 35% to £7.3 million.
10. Adjusted PBT margin is defined as adjusted PBT as a
percentage of revenue.
11. Free cash flow is cash generated from operating activities before
exceptional items and taxation less capital expenditure (excluding assets
under construction) and cash flows relating to leases.
12. The average Trustpilot score is defined as the monthly
average of all Trustpilot scores.
13. Total orders is defined as the total number of orders
dispatched to customers in the year.
14. Active customers are the number of unique customers who
placed an order in the year.
Following the successful re-platforming of our website in December 2022, we
enhanced the front end in June 2023 to improve the customer journey around our
expansion categories. We have also improved the search functionality to
incorporate the latest advances in AI technology. These website enhancements,
together with other 'UX' improvements, have resulted in improved
conversion(15) as consumers use Victorian Plumbing for everything they need to
complete their bathroom. We have also continued to make good progress in
extending the product ranges in each expansion category, though space remains
a limiting factor. The new distribution centre, due to become operational in
2024, will remove this constraint.
Finally, our third growth horizon focuses on the B2B opportunity to retail
bathroom products and accessories to trade customers. The Victorian Plumbing
brand has historically been mainly consumer focused. In the year ended 30
September 2023, 21% (2022: 20%) of our revenue came from trade accounts,
compared with an estimated 50% of the market(16). We believe we can make
further meaningful market share gains in this area by broadening our marketing
approach, such as via targeted radio advertising, expanding the range of
relevant products we offer to trade customers and in particular by providing
the best platforms tailored for trade customers' needs. The release of the
Victorian Plumbing app in October 2023 further enhances our proposition and is
well placed to attract trade customers, alongside consumers.
Strengthening our competitive position
Over the past year, we have retained our position as the UK's largest bathroom
specialist, we have continued to strengthen our competitive moat and we have
improved the customer journey through innovative technology improvement and
category expansion.
Our investment in marketing has enhanced brand awareness and supported
customer acquisition, and consumers continue to respond positively to the
bold, distinctive, and quirky Victorian Plumbing brand. Our three-year
partnership with Bolton Wanderers Football Club as their title and front of
shirt sponsor further improves our brand awareness, as well as positioning us
as a prominent employer in the North West.
We complement our creative offline content by investing in increasingly
targeted digital performance-based marketing. This ongoing and relentless
marketing strategy, together with a bold new marketing campaign to 'Boss Your
Bathroom', has led to a brand awareness score of 64%(17) (2022: 60%), which is
the only increase amongst our closest competitors this year.
As an online retailer, we continue to benefit from the ongoing structural
shift in consumer buying behaviour from offline to online. Online sales
represented c.26% of total retail sales in 2023(18), and we expect our
addressable market to grow even further in the coming years.
A one-stop shop for bathroom products and accessories
Offering customers a wide selection of products across a variety of price
points ensures that we are the true one-stop solution when considering a
bathroom-related purchase. At 30 September 2023, we had increased the number
of available products to more than 34,000 from over 130 brands, ensuring there
is something available, affordable and suitable for everyone.
Relationships that we have developed over time with well-known third party
brands enable us to complement our own brand offerings, which are exclusively
available on the Victorian Plumbing website. We have developed over 25 own
brands using our in-house product development team, and these are increasingly
popular with customers. In the year to 30 September 2023, 78% of revenue
generated (2022: 75%) came from own brand products including Stonehouse
Studio, our new in-house designed tile range.
15. Google Analytics G4A.
16. State of the Industry (2022), Euromonitor International.
17. Internal prompted brand awareness research.
18. ONS, SCM Research.
Agile supply chain
Whilst we have not been immune to the widely reported global supply challenges
of recent years, the deep and trusted relationships that we have built with
our global suppliers over our 20 years of trading have enabled us to navigate
these challenges well and secure sufficient inventory to satisfy customer
demand. This, together with our strong balance sheet, has allowed us to be
confident when attracting consumers to site, safe in the knowledge that we
have available stock to satisfy orders.
Equally, the local experts and partners that we work with on the ground in
China ensure that we are aware of any potential issues that may arise, giving
us time to pivot to alternatives as and when needed. This, alongside the work
they do on auditing our suppliers' factories, gives us confidence in the
availability of products together with their quality and reliability.
We have been working more closely with tile and décor manufacturers, many of
whom are based in Southern Europe, to expand this category at margins that are
closely aligned with the existing Group margin.
Seamless customer journey
Our customers' experience with us throughout their buying journey is of
paramount importance to us. We are extremely proud that we continue to be
rated 'Excellent' by Trustpilot and have maintained our average score in the
year of 4.5 (2022: 4.5) out of 5.0.
We received a record number of reviews via Trustpilot in the year ended 30
September 2023 and have now surpassed 200,000 reviews in total, the highest of
any specialist bathroom retailer listed. The 'Excellent' rating we have across
this volume of reviews is testament to the work that our colleagues do,
whether providing the on-site experience for the customer, speed and
efficiency of delivery, quality of product or swift resolution of any customer
questions throughout the process.
Development of our technology platform
The systems that drive the performance of the business are primarily bespoke
platforms that we improve continually. Our growing Technology and
Infrastructure team help to facilitate this continual development to ensure we
remain best in class across e-commerce retail platforms.
There has been significant work over the last 12 months and beyond to
completely re-platform our website to improve its functionality and
scalability, introduce a newly designed structure to give prominence to our
expansion categories, enhance our search functionality to include AI features
and introduce other developments.
The Victorian Plumbing app, designed with both trade and consumer in mind, was
released successfully in October 2023 and will enable our customers to browse
and purchase products more efficiently. Initial uptake of the app has been
encouraging, and we will continue to develop functionality ahead of a fuller
launch in 2024.
In addition, the Development Technology team continues to improve our existing
warehouse management system alongside the larger project to transform the
warehouse operations, with the new distribution centre in Lancashire due to be
operational in 2024. By performing this work in-house, we can control costs,
improve quality, and provide more certainty over the benefits that the
improved technology brings.
New distribution centre
We achieved legal completion on the 20-year lease to operate from our new
purpose-built 544,000 square feet distribution centre on 4 October 2023.
Whilst the investment necessitates a short period of elevated capital
expenditure, this building will enable us to grow our core offering, expansion
categories and trade offering. A semi-automated design, together with new ways
of working and improved processes, will result in improved efficiency in our
operations which will aid the progression of our profitability, most notably
in 2025.
Entrepreneurial approach
Our entrepreneurial approach and our desire to trial new ideas has played a
key part in the success of the business to date, for instance feeding into the
designs for our technology developments, such as the new Victorian Plumbing
app.
We will continue to be entrepreneurial, knowing that this gives us a
competitive edge, whilst maintaining robust and appropriate monitoring and
reporting procedures.
ESG
Taking responsibility is one of our core values, and we are clear that every
one of us has a role to play in making a positive difference to the
environment and the communities in which we operate.
Our ESG strategy is centred around three focus areas: environmental
sustainability, diversity and inclusion, and governance and ethics.
We have made particular progress during the year with our people priorities
through, for example, the launch of a Charity Committee and a programme of
employee volunteering days, and the introduction of Mental Health Champions,
as well as supporting our workforce with life and family events through the
launch of enhanced employee benefits.
We have transitioned all our electricity contracts to 100% renewable energy
and continue to work with suppliers to reduce the levels of plastic
packaging. We have also transitioned to a new finance system, further
strengthening our internal controls and governance framework.
Whilst we have made good progress this year against all these focus areas, we
are mindful that we must retain a critical and progressive approach across
each.
Our people
As a Board, we continue to be impressed by the commitment and capability of
our people - collectively, their innovation and hard work have been the
driving force behind the growth and success experienced by the Group over
recent years. We are proud of the values-led, principles-driven culture that
is deep-rooted throughout Victorian Plumbing, and it is this culture that
underpins our ability to adapt to change and respond positively to
challenges.
Over the last couple of years, we have placed significant emphasis on
listening to feedback from colleagues through many different forums and have
worked hard to make our benefits and rewards package one that both attracts
and retains the best talent. We remain committed to further improving our
people experience and helping to fuel our future growth. Employee engagement
targets feature as part of the Executive management incentive targets.
We would like to thank our employees, contractors, customers, suppliers and
other stakeholders for their continued support. Whilst we are mindful of the
current macroeconomic conditions that many of our customers are battling
against, we remain confident in our ability to continue to execute our
strategic plan, underpinned by our strong financial position, to take further
market share and consolidate our position as the UK's number one bathroom
retailer.
Board change
Daniel Barton replaced Paul Meehan as Chief Financial Officer during the year.
The Board would like to thank Paul for his significant contribution to
Victorian Plumbing since he joined the business in 2020. Paul's work preparing
the Finance function and the wider Group for its IPO in 2021 has ensured that
the business has the necessary systems and structures in place to deliver its
growth ambitions. We wish Paul all the best in his future endeavours.
Current trading and outlook
Albeit early in the year and against a volatile consumer backdrop, the Group
has had a positive start to the current year with revenue growth and gross
profit margin progression versus the comparative period last year.
The opening of our new distribution centre in 2024 will remove space
constraints, unlock growth potential and create efficiency; all of which will
support the delivery of the medium-term outlook.
We continue to focus on our long-term goals and are making good progress
across our strategic growth areas. Underpinned by our market share gains in
recent years, we are confident in the future growth prospects of the Group.
Financial review
Introduction
Whilst navigating continuing macroeconomic volatility in the year, we are
pleased to report a strong financial performance and good operating cash
generation in the year to 30 September 2023.
2023 2022 Change
£m £m
Revenue 285.1 269.4 6%
Cost of sales (150.5) (148.4) (1%)
Gross profit 134.6 121.0 11%
Gross profit margin % 47% 45% 2ppts
Underlying costs (110.8) (101.5) (9%)
Adjusted EBITDA 23.8 19.5 22%
Adjusted EBITDA margin % 8% 7% 1ppt
Depreciation and amortisation (3.8) (3.5) (9%)
Share-based payments (3.9) (3.9) -
Exceptional items (0.8) - n/a
Operating profit 15.3 12.1 26%
Finance income/(costs) 0.3 (0.3) 200%
Profit before tax 15.6 11.8 32%
Revenue
Revenue grew by 6% in 2023, from £269.4 million in 2022 to £285.1 million.
Order volume grew by 6% to 932,000 and AOV remained flat in the same period.
Order volume growth remained consistent throughout the year and the average
number of items per basket remained stable at 3.1. The second half saw a
small decline in AOV as customers shifted away from more expensive third party
brands to our own brand product range, which carries a higher margin.
Consumer revenue grew by 4% from £216.6 million in 2022 to £225.6 million
and represents 79% of revenue in 2023 (2022: 80%). Trade revenue grew by 13%
from £52.8 million in 2022 to £59.5 million and represents 21% of revenue
(2022: 20%). A slowdown in trade growth in the second half of the year
reflected a change in demand for trade as the post-Covid installation backlog
was fulfilled and instability in the UK political and macroeconomic
environment impacted broader spending confidence.
Revenue continued to grow at a pace in our expansion categories, albeit from a
small base given the space constraints we face until our new distribution
centre is operational in 2024. Tiles and lighting revenue grew by 35%, from
£5.4 million in 2022 to £7.3 million, delivering a gross margin that is the
same as the wider core bathroom range.
Product selection is largely driven by the consumer, irrespective of channel,
and we saw a shift away from the more expensive third party branded products
to our own brand range. The split between own brand vs. third party brands in
revenue was 78% vs. 22% (2022: 75% vs. 25%), which was a contributing factor
to AOV holding flat. The pricing power of the Group, particularly on own brand
products, allowed us to increase prices throughout the first half of the year,
albeit at a slower rate compared to previous years considering the challenging
consumer demand dynamic. We saw some price reductions from our largest online
competitor just prior to its administration on 29 September 2023, but this
dynamic did not materially affect our performance as our unrivalled range,
excellent availability and strong financial health delivered sustainably for
our customers.
Gross profit
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 (which include mark to market
movements on forward currency contractual arrangements in line with our
treasury policy).
Cost of sales increased by just 1% to £150.5 million (2022: £148.4 million).
The strength of the Group's supplier relationships and the agility of our
team ensured continued robust sourcing processes and good product
availability.
Gross profit margin increased in H2 2023 to 49% (H1 2023: 46%), with gross
profit for the year increasing by 11% to £134.6 million (2022: £121.0
million) and overall gross profit margin increasing by two percentage points
to 47% (2022: 45%). In addition to reduced shipping costs and favourable
foreign exchange rates, as reported at the half year, the improvement in gross
profit also reflects the product mix change throughout the year. Gross margin
from own brand products increased to 53% (2022: 50%), whilst gross margin from
third party products decreased to 27% for the year (2022: 29%). We are proud
to partner with some of the industry's leading names which, alongside our own
brand offering, allows us to provide consumers with a wide choice of price
points. This dynamic is a compelling component of our unique ungeared
operating model, protecting shareholder return and building the foundation for
future growth.
Underlying costs
Underlying costs, which we define as administrative expenses before
depreciation and amortisation, exceptional items and share-based payments,
increased by 9% to £110.8 million (2022: £101.5 million).
2023 2022 Change
£m £m
Marketing 79.2 76.2 (4%)
People costs (excl. share-based payments) 19.6 16.0 (23%)
Property costs 6.3 5.1 (24%)
Other overheads 5.7 4.2 (36%)
Underlying costs 110.8 101.5 (9%)
Growing our brand awareness and increasing traffic to our site remains a focus
for the Group. Marketing costs increased by 4% to £79.2
million (2022: £76.2 million). Marketing costs as a percentage of revenue
reduced from 28.3% to 27.8% reflective of our improving brand awareness and
less competitive pressure enabling us to retain our position as the UK's
largest bathroom retailer.
People costs, excluding share-based payments but including costs relating to
agency staff, increased by 23% to £19.6 million (2022: £16.0 million)
reflecting a combination of inflationary dynamics, investments in key roles
(within Development Technology, Data Protection and HR in particular), and
growth in the business giving rise to increased FTE by 7% from 572 in 2022 to
612. Space constraints and challenges in the recruitment market are expected
to reduce once we begin to operate in our new distribution centre, leading to
efficiencies in the medium-term.
Property costs and other overheads increased by 29% to £12.0
million (2022: £9.3 million). The majority of this increase was as a
result of the Group increasing its warehouse capacity on a more expensive
short-term basis to support the growth of the business, together with the
annualisation of plc related costs during the previous financial year.
Operating profit and adjusted EBITDA
Significant items of income and expense that do not relate to the trading of
the Group are disclosed separately. Share-based payment charges are an example
of such items.
The table below provides a reconciliation from operating profit to adjusted
EBITDA and adjusted PBT, which are non-GAAP metrics used by the Group to
assess financial performance.
2023 2022 Change
£m £m
Operating profit 15.3 12.1 26%
Share-based payments (incl. national insurance) 3.9 3.9 -
Exceptional items 0.8 - n/a
Adjusted operating profit(19) 20.0 16.0 25%
Depreciation and amortisation 3.8 3.5 (9%)
Adjusted EBITDA 23.8 19.5 22%
Finance income/(costs) 0.3 (0.3) 200%
Depreciation and amortisation (3.8) (3.5) (9%)
Adjusted PBT 20.3 15.7 29%
Operating profit increased by 26% to £15.3 million (2022: £12.1 million).
Operating profit margin increased to 5% (2022: 4%). Adjusted EBITDA increased
by 22% to £23.8 million (2022: £19.5 million) and adjusted EBITDA margin
increased to 8% (2022: 7%).
Share-based payments
The Group incurred share-based payment charges (including associated national
insurance ("NI")) of £3.9 million (2022: £3.9 million). Share-based payment
charges for the year included £2.3 million (2022: £3.4 million) for
schemes relating to the Group's IPO in June 2021, along with £1.6
million (2022: £0.5 million) for ongoing schemes put in place post IPO.
Exceptional items
Total expenses incurred in the year of £0.8 million related to legal and
other costs associated with acquiring the new distribution centre.
Depreciation and amortisation
Depreciation and amortisation increased by £0.3 million to £3.8 million
(2022: £3.5 million). The Group continues to invest in its platform and
bespoke inventory management systems, with £2.6 million of internal
salaries capitalised during the 2023 financial year (2022: £2.2 million). The
increased investment over the last two years has resulted in an increase in
the amortisation charge.
Capitalisation of property, plant and equipment, and intangible assets for the
new warehouse totalled £4.1 million during the year. This related to the
purchase of fixed assets and third party costs for software development and
has not yet started to depreciate given that the asset is under
construction.
Finance income/(costs)
The Group seeks to make a return on its cash balances by investing in deposit
saving bank accounts. Increasing interest rates on a larger average cash
balance compared to the previous year have given rise to finance income of
£0.6 million (2022: £nil) which, when netted off against the non-utilisation
fee for the Group's Revolving Credit Facility with HSBC plc (the "RCF") and
lease expense, results in net finance income of £0.3 million (2022: net
finance cost of £0.3 million).
On 6 July 2023, we successfully completed an extension of the RCF, which has
total commitments of £10 million and a termination date of 31 December 2025.
The facility is secured by a debenture dated 7 June 2021. Interest on the RCF
is charged at SONIA plus a margin based 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 2023, the Group had not utilised the RCF.
19. Adjusted operating profit is defined as operating profit
before exceptional items and IFRS 2 share-based payments.
Profit before tax and adjusted profit before tax
Profit before tax increased by 32% to £15.6 million (2022: £11.8 million).
Profit before tax margin increased to 5% (2022: 4%). Adjusted profit before
tax increased by 29% to £20.3 million (2022: £15.7 million). Adjusted profit
before tax margin increased to 7% (2022: 6%).
Taxation
The Group tax charge of £3.8 million (2022: £2.6 million) represents an
effective tax rate of 24% (2022: 22%) which is higher than the standard rate
of UK tax of 22% (2022: 19%) due to the tax impact of share-based payments.
Adjusted profit after tax reflects a tax effect of £1.1 million (2022: £0.7
million) relating to share-based payments and expenses not deductible for tax
purposes. The adjusted effective tax rate is 24% (2022: 21%).
Earnings per share
Diluted earnings per share ("EPS") from continuing operations increased by 28%
to 3.7 pence per share (2022: 2.9 pence per share).
The adjusted diluted EPS from continuing operations increased by 24% to 4.7
pence per share (2022: 3.8 pence per share).
Assets under construction
The warehouse transformation has given rise to £4.1 million of additions
during the year (split as: £0.2 million intangibles and £3.9 million
property, plant and equipment) recognised as an asset under construction given
the fit-out of the new distribution centre continues into 2024. Of these
additions, £2.0 million were settled in cash during the year.
Cash flow and net cash
The Group continues to achieve strong cash generation with an increase in free
cash flow of 13% to £16.1 million (2022: £14.3 million), resulting in robust
operating cash conversion of 68% (2022: 73%).
2023 2022
£m £m
Adjusted EBITDA 23.8 19.5
Movement in working capital (4.0) (1.2)
VAT not yet recovered on assets under construction 0.4 -
Capital expenditure (excluding assets under construction) (3.0) (2.9)
Repayment of lease liabilities (1.1) (1.1)
Free cash flow 16.1 14.3
Operating cash conversion 68% 73%
Changes in working capital resulted in a cash outflow of £4.0 million in the
year, largely because of timing differences with supplier payments. Stock
value was maintained during the year as we continued to deploy effective stock
management. Given the nature of our stock we continue to incur low levels of
obsolescence and our proprietary knowledge over two decades of trading
benefits us in low levels of returns and damages.
Capital expenditure (excluding assets under construction) of £3.0 million
(2022: £2.9 million) included £2.6 million of capitalised salaries included
in intangible assets relating to development of the Group's platform and
bespoke inventory management systems (2022: £2.2 million).
At the year end, the Group had net cash of £46.4 million (2022: £45.5
million).
Events after the reporting period
On 4 October 2023, the Group achieved legal completion on a new 544,000 square
feet purpose-built distribution centre in Leyland, Lancashire. In the
financial year ending 30 September 2024, the 20-year lease will result in the
recognition of a right-of-use asset and corresponding IFRS 16 lease liability
of c. £45.0 million (provisionally estimated using an incremental borrowing
rate of 6.5%).
The future payments related to this non-cancellable lease contract are £2.0
million within one year, an additional £10.0 million within five years, and
an additional £68.0 million thereafter.
During the fit-out of and transition to the new distribution centre, the Group
will incur double running costs for certain people and property related
expenses. The Board estimates that the additional non-recurring expenditure in
the financial year ending 30 September 2024 will be c. £8.0 million.
The Group also expects to incur an additional c. £24.0 million of intangible
and tangible capital expenditure (non-recurring in nature) during the
financial year ending 30 September 2024 to complete the fit-out of the new
distribution centre.
On 2 November 2023, the Group entered into arrangements with the main
contractor who is overseeing the fit-out of the new distribution centre, which
committed the Group to capital commitments of £13.0 million. This leaves c.
£11.0 million of uncommitted capital expenditure after that date.
There have been no other material events to report after the end of the
reporting period.
Dividend
Victorian Plumbing generates significant operating cashflows and the
underlying priority is to reinvest into the business and drive further
profitable growth. The Board implemented a capital allocation policy in 2022
with an aim to maintain an adjusted diluted EPS to dividend cover ratio of c.
3.0-3.5x. This recognises that most growth opportunities, excepting the
one-off warehouse transformation and optimisation, do not require
significant capital, and reflect confidence in the strength, future growth
prospects and cash generation of the business. Additionally, the Board may
from time to time conclude that it has surplus cash, at which point it will
consider further returns to shareholders.
In order to distribute a total ordinary dividend for the year of 1.40 pence
per share (2022: 1.10 pence per share), which would represent growth of 27%,
the Board is recommending a full year final ordinary dividend of 0.95 pence
per share (2022: 1.10 pence per share). The proposed dividend would represent
an adjusted diluted EPS to dividend cover ratio for 2023 of 3.4x (2022:
3.5x).
The Board is not recommending a special dividend (2022: 1.70 pence per share)
as it preserves cash to finance the warehouse transformation without the need
for indebtedness and to maintain the robustness of the balance sheet.
This results in a total cash distribution to shareholders of £4.6 million
(£1.5m interim paid and £3.1 million final to be paid), subject to
shareholders' approval at the AGM on 27 February 2024. The final dividend will
be paid on 8 March 2024 to shareholders on the register of members at the
close of business on 9 February 2024.
Mark Radcliffe Daniel Barton
Chief Executive Officer Chief Financial Officer
22 November 2023 22 November 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Note 2023 2022
£m £m
Revenue 4 285.1 269.4
Cost of sales (150.5) (148.4)
Gross profit 134.6 121.0
Administrative expenses before separately disclosed items 5 (114.6) (105.0)
Adjusted operating profit 20.0 16.0
Separately disclosed items:
Share-based payments 20 (3.9) (3.9)
Exceptional items 6 (0.8) -
Operating profit 5 15.3 12.1
Finance income/(costs) 7 0.3 (0.3)
Profit before tax 15.6 11.8
Income tax expense 8 (3.8) (2.6)
Profit for the year 11.8 9.2
Basic earnings per share (pence) 10 4.1 3.3
Diluted earnings per share (pence) 10 3.7 2.9
All amounts relate to continuing operations.
There are no items to be recognised in the statement of comprehensive income
in the current year or prior year, and hence the Group has not presented a
separate statement of other comprehensive income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 30 SEPTEMBER 2023
Note 2023 2022
£m £m
Assets
Non-current assets
Intangible assets 11 4.0 3.3
Property, plant and equipment 12 4.9 1.4
Right-of-use assets 13 4.3 4.5
Derivative financial instruments 0.4 0.7
Deferred tax asset - 0.1
13.6 10.0
Current assets
Inventories 34.2 33.9
Trade and other receivables 14 4.8 5.1
Cash and cash equivalents 46.4 45.5
85.4 84.5
Total assets 99.0 94.5
Equity and liabilities
Equity attributable to the owners of the Company
Share capital 18 0.3 0.3
Share premium 11.2 11.2
Capital redemption reserve 0.1 0.1
Capital reorganisation reserve (320.6) (320.6)
Retained earnings 357.8 353.0
Total equity 48.8 44.0
Liabilities
Non-current liabilities
Lease liabilities 16 3.8 4.1
3.8 4.1
Current liabilities
Trade and other payables 15 38.0 37.9
Contract liabilities 5.4 7.1
Lease liabilities 16 1.0 0.9
Provisions 0.2 0.2
Corporation tax 1.8 0.3
46.4 46.4
Total liabilities 50.2 50.5
Total equity and liabilities 99.0 94.5
The financial statements were approved by the Board of Directors on 21
November 2023 and authorised for issue.
Daniel Barton
Chief Financial Officer
Victorian Plumbing Group plc
Registered number: 13379554
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Share capital Share premium Capital redemption reserve Capital reorganisation reserve £m Retained earnings Total equity
£m £m £m £m £m
Balance at 1 October 2021 0.3 11.2 0.1 (320.6) 339.8 30.8
Comprehensive income
Profit for the year - - - - 9.2 9.2
Transactions with owners
Employee share schemes - value of employee services (note 20) - - - - 3.9 3.9
Tax impact of employee share schemes - - - - 0.1 0.1
Total transactions with owners recognised directly in equity - - - - 4.0 4.0
Balance at 30 September 2022 0.3 11.2 0.1 (320.6) 353.0 44.0
Comprehensive income
Profit for the year - - - - 11.8 11.8
Transactions with owners
Dividends paid - - - - (10.6) (10.6)
Employee share schemes - value of employee services (note 20) - - - - 3.5 3.5
Tax impact of employee share schemes - - - - 0.1 0.1
Total transactions with owners recognised directly in equity - - - - (7.0) (7.0)
Balance at 30 September 2023 0.3 11.2 0.1 (320.6) 357.8 48.8
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Note 2023 2022
£m £m
Cash flows from operating activities
Cash generated from operating activities before exceptional items 21 19.8 18.3
Cash outflow from exceptional items (0.6) -
Cash generated from operating activities 19.2 18.3
Income tax paid (2.1) (1.4)
Interest received on cash deposits 0.6 -
Net cash generated from operating activities 17.7 16.9
Cash flows from investing activities
Purchase of intangible assets (3.0) (2.6)
Purchase of property, plant and equipment (2.0) (0.3)
Net cash used in investing activities (5.0) (2.9)
Cash flows from financing activities
Dividends paid (10.6) -
Finance arrangement fees (0.1) (0.1)
Payment of interest portion of lease liabilities (0.2) (0.2)
Payment of principal portion of lease liabilities (0.9) (0.9)
Net cash used in financing activities (11.8) (1.2)
Net increase in cash and cash equivalents 0.9 12.8
Cash and cash equivalents at the beginning of the year 45.5 32.7
Cash and cash equivalents at the end of the year 46.4 45.5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted International Accounting Standards. The consolidated financial
statements have been prepared on the going concern basis and on the historical
cost convention modified for the revaluation of certain financial instruments.
The financial information set out in this document does not constitute the
statutory accounts of the Group for the financial years ended 30 September
2023 or 30 September 2022 but is derived from the 2023 Annual Report and
Financial Statements. The Annual Report and Financial Statements for 2023 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 2024. 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 2024. 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 2023 unless
stated below.
Judgements in applying accounting policies and sources of estimation
uncertainty
2a) Significant judgements in applying the entity's accounting policies
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.
On 15 April 2020, 845 ordinary A shares were issued in VIPSO Ltd 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.
2b) Significant sources of estimation uncertainty
Other share-based payments
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 20).
Revenue cut-off
The Group's management information systems are configured to recognise revenue
upon dispatch of inventory from the Group's warehouses, which may not be
aligned to when control has transferred to the customer. Management therefore
performs an assessment to capture items that have been dispatched from the
Group's warehouses but not yet delivered by the reporting date, subsequently
deferring the recognition of revenue and associated cost of sales into the
following period. This gives rise to deferred income, which is recognised as a
contract liability and associated inventory in the consolidated statement of
financial position.
Management uses a fixed number of distributor platforms to establish the value
of revenue to defer. Where this is not possible in good time, an estimate is
made based on the last quarter's data. The shipment delay identified in the
distributors tested is extrapolated to the remaining couriers.
2c) Other accounting judgements and sources of estimation uncertainty
Refund liability and right of return asset
The refund liability that is recognised within the consolidated financial
statements 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 and associated right of return asset are estimated using
historical rates of the level of refunds relative to revenue.
2023 2022
Revenue (£m) 285.1 269.4
Refund liability (£m) 0.9 1.0
Refund liability % average quarterly sales 1.3% 1.3%
Right of return asset (£m) 0.3 0.3
Right of return asset % average quarterly sales 0.4% 0.4%
The impact on profit before tax of increasing the refund rate by 1% of average
quarterly revenue would be a reduction of £0.7 million (2022: £0.7 million).
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 warranty provision is estimated with reference to the historical level of
credit notes raised relative to revenue.
2023 2022
Revenue for the period (£m) 285.1 269.4
Warranty provision (£m) 0.2 0.2
Warranty provision % average quarterly sales 0.3% 0.2%
The impact on profit before tax of increasing the warranty provision by 0.5%
of average quarterly revenue would be a reduction of £0.4 million (2022: a
reduction of £0.3 million).
Intangible assets
Intangible assets relate to the development of the Group's internal bespoke
software solutions and comprise of both capitalised internal salaries and
third party costs. Initial capitalisation of costs is based on management's
judgement that technological and economic feasibility is confirmed, usually
when a product development project has reached a defined milestone according
to an established project management model.
Capitalisation of salaries
The Group capitalises salary costs for product development projects where
employees have been working to enhance an asset. In determining the amounts to
be capitalised, management makes assumptions regarding the proportion of time
spent by employees on each project.
Impairment review
The Group does not have any indefinite life intangible assets and, given the
short time periods between software releases, WIP is minimal. Any assets
held in the 'assets under construction' category will be brought into use in
the next 12 months. Due to the nature of these assets and the efficiency gains
we anticipate they will bring, an impairment review of these assets is not
deemed to be necessary.
Inventory provision
Management has evaluated the level of inventory held and the ageing of
inventory in order to consider the need for a provision over stock to cover
either slow-moving items, obsolete items or items which the Group may sell at
lower than cost. Management do not believe it is necessary to hold an
inventory provision based on this analysis, which is consistent with the
estimate made in previous years.
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 Executive Leadership Team ("ELT") which
is the chief operating decision-maker ("CODM"). The ELT 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 ELT measures the overall performance of the Operating Group by
reference to Adjusted EBITDA, a non-GAAP measure. Adjusted EBITDA is defined
as EBITDA (earnings before interest, tax, depreciation and amortisation) less
exceptional items and IFRS 2 charges in respect of share-based payments along
with associated NI.
This adjusted profit measure is applied by the ELT 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.
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.
2023 2022
£m £m
Operating profit 15.3 12.1
Depreciation of property, plant and equipment 0.6 0.6
Depreciation of right-of-use assets 0.9 0.9
Amortisation of intangible assets 2.3 2.0
Exceptional items 0.8 -
Share-based payments (including associated NI) 3.9 3.9
Adjusted EBITDA 23.8 19.5
Adjusted PBT
Operating costs, comprising administrative expenses, are managed on a Group
basis. The ELT measures the overall performance of the Operating Group by
reference to adjusted profit before tax ("PBT"), a non-GAAP measure. Adjusted
PBT is defined as adjusted EBITDA less interest, depreciation and
amortisation.
This adjusted profit measure is applied by the ELT as an alternative
profitability measure, which incorporates the capital investment and the
financing structure of the Group.
2023 2022
£m £m
Adjusted EBITDA 23.8 19.5
Finance income/(costs) 0.3 (0.3)
Depreciation of property, plant and equipment (0.6) (0.6)
Depreciation of right-of-use assets (0.9) (0.9)
Amortisation (2.3) (2.0)
Adjusted PBT 20.3 15.7
4. Revenue
An analysis of revenue by class of business is as follows:
2023 2022
£m £m
Online 283.6 267.7
Showroom 1.5 1.7
285.1 269.4
All revenue arose within the United Kingdom.
5. Operating profit
Expenses by nature including exceptional items:
2023 2022
£m £m
Employee costs (excluding share-based payments) 18.4 15.2
Share-based payments (including associated NI) 3.9 3.9
Agency and contractor costs 1.3 0.8
Marketing costs 79.2 76.2
Property costs 6.3 5.1
Computer costs 2.5 1.6
Depreciation of property, plant and equipment (note 12) 0.6 0.6
Depreciation of right-of-use assets (note 13) 0.9 0.9
Amortisation of intangibles (note 11) 2.3 2.0
Other costs 3.1 2.6
Exceptional items 0.8 -
Total administrative expenses 119.3 108.9
Share-based payments (including associated NI) (note 20) (3.9) (3.9)
Exceptional items (note 6) (0.8) -
Total administrative expenses before separately disclosed items 114.6 105.0
6. Exceptional items
2023 2022
£m £m
Warehouse transformation costs 0.8 -
Warehouse transformation costs relate to legal and other costs associated with
entering into a 20-year lease for a new 544,000 square feet, purpose-built UK
distribution centre in Lancashire.
7. Finance income/(costs)
2023 2022
£m £m
Interest on undrawn revolving credit facility (note 17) (0.1) (0.1)
Interest expense on lease liability (0.2) (0.2)
Interest received on cash deposits 0.6 -
Total finance income/(costs) 0.3 (0.3)
8. Income tax expense
2023 2022
£m £m
Corporation tax
Current tax on profits for the year 3.8 3.1
Adjustments in respect of previous periods (0.2) (0.3)
Total current tax 3.6 2.8
Deferred tax
Adjustments in respect of previous periods 0.2 (0.1)
Effect of changes in tax rates - (0.1)
Total deferred tax 0.2 (0.2)
Taxation on profit 3.8 2.6
Factors affecting tax charge for the year
The tax assessed for the period is higher (2022: higher) than the standard
rate of corporation tax in the UK of 22% (2022: 19%). The differences are
explained below:
2023 2022
£m £m
Profit on ordinary activities before tax 15.6 11.8
Profit on ordinary activities multiplied by standard rate of corporation tax 3.4 2.2
in the UK of 22% (2022: 19%)
Effects of:
Expenses not deductible for tax purposes 0.1 -
Share options 0.3 0.8
Adjustments to tax charge in respect of prior periods - (0.4)
Total tax charge for the year 3.8 2.6
Taxation on items taken directly to equity was a credit of £0.1 million
(2022: £0.1 million credit) relating to tax on share-based payments.
9. Dividends paid and proposed
2023 2022 2023 2022
Pence per share Pence per share £m £m
Final ordinary dividend recognised as distributions in the year 1.10 - 3.6 -
Special dividend recognised as distributions in the year 1.70 - 5.5 -
Interim ordinary dividend recognised as distributions in the year 0.45 - 1.5 -
Total dividend paid in the year 10.6 -
Interim ordinary dividend 0.45 - 1.5 -
Final ordinary dividend 0.95 1.10 3.1 3.5
Total ordinary dividend 1.40 1.10 4.6 3.5
Special dividend - 1.70 - 5.5
Total dividend 1.40 2.80 4.6 9.0
In order to distribute a total ordinary dividend for the year of 1.40 pence
per share (2022: 1.10 pence per share), which would represent growth of 27%,
the Board is recommending a full year final ordinary dividend of 0.95 pence
per share (2022: 1.10 pence per share). The Board is not recommending a
special dividend (2022: 1.70 pence per share) as it prioritises the
preservation of cash to finance the fit-out of the warehouse transformation,
without the need for indebtedness and to maintain the robustness of the
balance sheet.
This results in a total cash distribution to shareholders of £4.6 million
(£1.5 million interim paid and £3.1 million final to be paid), subject to
shareholders' approval at the AGM on 27 February 2024. The dividends will be
paid on 8 March 2024 to shareholders on the register of members at the close
of business on 9 February 2024.
10. 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.
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 2023
Basic EPS 284,604,317 11.8 4.1
Diluted EPS 317,483,119 11.8 3.7
Year ended 30 September 2022
Basic EPS 275,832,944 9.2 3.3
Diluted EPS 315,898,691 9.2 2.9
The number of shares in issue at the start of the year is reconciled to the
basic and diluted weighted average number of shares below:
2023 2022
Weighted average number of shares for basic EPS 284,604,317 275,832,944
Dilutive impact of unvested shares in relation to share awards 32,878,802 40,065,747
Weighted average number of shares for diluted EPS 317,483,119 315,898,691
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 diluted earnings per share
Adjusted diluted EPS is an Alternative Performance Measure (APM) and has been
calculated using profit for the purpose of basic EPS, adjusted for total
adjusting items and the tax effect of those items.
2023 2022
£m £m
Profit for the year 11.8 9.2
Exceptional items 0.8 -
Share-based payments 3.9 3.9
Tax effect (1.1) (0.7)
Total adjusted profit for the year 15.4 12.4
Number Number
Weighted average number of ordinary shares for the purposes of adjusted basic 284,604,317 275,832,944
earnings per share
Total issued share capital for the purposes of adjusted diluted earnings per 325,227,984 325,062,985
share
Adjusted diluted earnings per share (pence) 4.7 3.8
The Directors and management have redefined adjusted diluted EPS following
stakeholder feedback, to aid comparability and simplicity. The denominator
used in the calculation reflects the aggregate of shares in issue and those
shares held in trust, to represent a fully diluted EPS.
Comparison of adjusted diluted EPS under original measure vs revised measure:
Number Number
Weighted average number of shares for the purposes of adjusted diluted 317,483,119 315,898,691
earnings per share (original measure)
Total issued share capital for the purposes of adjusted diluted earnings per 325,227,984 325,062,985
share (revised measure)
Adjusted diluted earnings per share, original measure (pence) 4.8 3.9
Adjusted diluted earnings per share, revised measure (pence) 4.7 3.8
11. Intangible assets
Computer software Assets under construction Total
£m £m £m
Cost
At 30 September 2021 7.5 - 7.5
Additions 2.6 - 2.6
At 30 September 2022 10.1 - 10.1
Additions 2.8 0.2 3.0
At 30 September 2023 12.9 0.2 13.1
Accumulated amortisation
At 30 September 2021 4.8 - 4.8
Charge for the year 2.0 - 2.0
At 30 September 2022 6.8 - 6.8
Charge for the year 2.3 - 2.3
At 30 September 2023 9.1 - 9.1
Net book value
At 30 September 2021 2.7 - 2.7
At 30 September 2022 3.3 - 3.3
At 30 September 2023 3.8 0.2 4.0
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 £2.6 million in the year ended 30 September
2023 (2022: £2.2 million) for development of computer software. Assets under
construction wholly represent capitalised internal salaries in relation to the
warehouse transformation project.
For the year to 30 September 2023, the amortisation charge of £2.3 million
(2022: £2.0 million) has been charged to administrative expenses in the
income statement.
12. Property, plant and equipment
Leasehold improvements Plant and machinery Fixtures Office Assets under construction £m Total
£m £m and fittings equipment £m
£m £m
Cost
At 30 September 2021 0.1 1.4 1.2 1.4 - 4.1
Additions - 0.1 - 0.2 - 0.3
Disposals - (0.1) (0.4) (0.1) - (0.6)
At 30 September 2022 0.1 1.4 0.8 1.5 - 3.8
Additions - - - 0.2 3.9 4.1
Disposals - (0.1) (0.3) (0.5) - (0.9)
At 30 September 2023 0.1 1.3 0.5 1.2 3.9 7.0
Accumulated depreciation
At 30 September 2021 - 0.7 1.0 0.7 - 2.4
Charge for the year - 0.2 0.1 0.3 - 0.6
Disposals - (0.1) (0.4) (0.1) - (0.6)
At 30 September 2022 - 0.8 0.7 0.9 - 2.4
Charge for the year - 0.2 0.1 0.3 - 0.6
Disposals - (0.1) (0.3) (0.5) - (0.9)
At 30 September 2023 - 0.9 0.5 0.7 - 2.1
Net book value
At 30 September 2021 0.1 0.7 0.2 0.7 - 1.7
At 30 September 2022 0.1 0.6 0.1 0.6 - 1.4
At 30 September 2023 0.1 0.4 - 0.5 3.9 4.9
The items within 'assets under construction' wholly represent capital
expenditure in relation to the warehouse transformation project.
13. Right-of-use assets
Right-of-use assets
£m
Cost
At 30 September 2021 8.2
Modifications 0.1
At 30 September 2022 8.3
Modifications 0.7
At 30 September 2023 9.0
Accumulated depreciation
At 30 September 2021 2.9
Charge for the year 0.9
At 30 September 2022 3.8
Charge for the year 0.9
At 30 September 2023 4.7
Net book value
At 30 September 2021 5.3
At 30 September 2022 4.5
At 30 September 2023 4.3
During the year the Group renewed the leases on two of its properties that had
expired; this represents a modification under IFRS 16. The right-of-use asset
was increased by £0.7 million to reflect the value of the asset after the
modification and the corresponding lease liability increased by £0.7 million.
14. Trade and other receivables
2023 2022
£m £m
Trade receivables 2.2 2.0
Right-of-return asset 0.3 0.3
Accrued income 0.6 1.3
Prepayments 0.9 1.5
Amounts in escrow 0.8 -
4.8 5.1
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, and other
receivables expected credit losses have been reviewed by management and have
been determined to have an immaterial impact on these balances. Accrued
income relates to rebates earned but not yet received.
15. Trade and other payables
2023 2022
£m £m
Trade payables 23.9 26.2
Other taxation and NI 7.4 6.9
Refund liability 0.9 0.8
Other payables 1.3 1.2
Accruals 4.5 2.8
38.0 37.9
16. Lease liabilities
Lease liability
£m
At 30 September 2021 5.8
Modifications 0.1
Interest expense 0.2
Lease payment (1.1)
At 30 September 2022 5.0
Modifications 0.7
Interest expense 0.2
Lease payment (1.1)
At 30 September 2023 4.8
During the period the Group renewed the lease on two of its properties that
had expired; this represents a modification under IFRS 16. The right-of-use
asset was increased by £0.7 million to reflect the value of the asset after
the modification and the corresponding lease liability increased by £0.7
million.
The Group had total cash outflows for leases of £1.1 million (2022: £1.1
million). The Group had non-cash additions to right-of-use assets and lease
liabilities of £nil (2022: £nil).
Lease liabilities as at 30 September were classified as follows:
2023 2022
£m £m
Current 1.0 0.9
Non-current 3.8 4.1
Total 4.8 5.0
17. Borrowings
2023 2022
£m £m
Amounts drawn under revolving credit facility - -
Unamortised debt issue costs (0.1) (0.1)
(0.1) (0.1)
On 6 July 2023, we successfully completed an extension of the RCF, which has
total commitments of £10.0 million and a termination date of 31 December
2025. The facility is secured by a debenture dated 7 June 2021. Interest on
the RCF is charged at SONIA plus a margin based 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 2023, the Group had not utilised the RCF.
Unamortised debt issue costs of £0.1 million (2022: £0.1 million) are
included in prepayments (note 14).
18. Share capital
2023 2022
£m £m
Allotted, called up and fully paid
325,227,984 ordinary shares of 0.1p (2022: 325,062,985 ordinary shares of 0.3 0.3
0.1p)
19. Own shares held
The Employee Share Option Trust purchases shares to fund the Share Incentive
Plan. At 30 September 2023, the trust held 635,504 (2022: 635,504) ordinary
shares with a book value of £636 (2022: £636). The market value of these
shares as at 30 September 2023 was £0.6 million (2022: £0.2 million).
Number of shares £
ESOT shares reserve
Own shares held at 30 September 2023 and 30 September 2022 635,504 636
20. Share-based payments
The Group operates four share plans being the Share Incentive Plan ("SIP"), a
Deferred Bonus Plan ("DBP"), a Long-Term Incentive Plan ("LTIP") and a
Sharesave scheme ("SAYE"). 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. These schemes are referred to as
the Management Incentive Plan ("MIP"), A ordinary shares, and Restricted Share
Awards ("RSAs").
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. Monte Carlo or
Black-Scholes pricing models have been used where appropriate to calculate the
fair value of share-based incentives with market conditions.
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 £3.9 million (2022: £3.9 million) with a
Company charge of £1.3 million (2022: £1.8 million). This included
associated NI at 13.8% (2022: 15.1%), 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.
2023 2022
£m £m
Share Incentive Plan 0.3 0.2
Restricted Share Awards 2.2 3.4
Deferred Bonus Plans 0.7 0.3
Long Term Incentive Plans 0.2 -
Sharesave schemes 0.1 -
Total IFRS 2 charge 3.5 3.9
NI and apprenticeship levy on applicable schemes 0.4 -
Total charge 3.9 3.9
Share Incentive Plan
The Group operates a 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.
2023 2022
number number
Outstanding at 1 October 426,974 576,732
Awarded (dividend shares) 15,084 -
Forfeited (95,021) (149,758)
Outstanding at 30 September 347,037 426,974
The total charge in the year, included in operating profit, in relation to
these awards was £0.3 million (2022: £0.2 million). The Company charge for
the year was £nil (2022: £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.
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, 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.
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.
2023 2022
Number
Number
Outstanding at 1 October 5,547,240 6,163,600
Vested (616,360) (616,360)
Outstanding and unvested at 30 September 4,930,880 5,547,240
The total charge in the year, included in operating profit, in relation to
these awards was £nil (2022: £nil). The Company charge for the year was
£nil (2022: £nil). The share awards outstanding at 30 September 2023 have
a weighted average remaining vesting period of 2.1 years (2022: 2.8 years).
Management Incentive Plan
An Executive Director was awarded share options under a 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.
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 zero 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, which would become
effective on Victorian Plumbing Group plc's Admission to AIM, to modify the
terms of the award. All 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
restricted shares are forfeited if the employee leaves the Group before the
vesting date, unless under exceptional circumstances.
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.
2023 2022
Number
Number
Outstanding at 1 October 676,189 965,984
Vested (289,795) (289,795)
Outstanding and unvested at 30 September 386,394 676,189
The market value per ordinary share for the restricted shares awarded under
the MIP that vested in the year was £0.72. The shares outstanding under the
MIP at 30 September 2023 have a weighted average remaining vesting period of
0.75 years (2022: 1.3 years).
The total charge in the year, included in operating profit, in relation to
these awards was £nil (2022: £nil). The Company charge for the year was
£nil (2022: £nil).
Restricted Share Awards
The Chairman and certain members of Key Management have been granted RSAs. The
RSAs 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.
Grant date Share price at grant date Employee contribution per share Vesting period (years) Risk-free rate Dividend yield Non-vesting condition 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
05/09/2022 0.41 nil 2.0 - - - 0.48
The number of restricted shares outstanding at 30 September 2023 was as
follows:
2023 2022
Number
Number
Outstanding at 1 October 3,043,547 3,442,858
Awarded - 208,334
Forfeited - (38,168)
Vested (767,543) (569,477)
Outstanding and unvested at 30 September 2,276,004 3,043,547
The market values per ordinary share for restricted shares that vested in the
year were £0.72 and £0.82. The RSAs outstanding at 30 September 2023 have a
weighted average remaining vesting period of 1.7 years.
The total charge in the year, included in operating profit, in relation to
these awards was £2.2 million (2022: £3.4 million). The Company charge for
the year was £0.9 million (2022: £1.8 million).
Deferred Bonus Plan
The Group operates a DBP for the ELT and certain key employees. It is both a
cash bonus plan and a discretionary employee share plan under which a
proportion of a participant's annual bonus is deferred into an award over
shares. Awards under the plan are contingent on the satisfaction of pre-set
internal targets relating to financial and operational objectives. A nil cost
option will be granted following determination of performance against targets,
with 40% of the award vesting immediately, 30% after 1 year and 30% after 2
years. Awards are potentially forfeitable during that period should the
employee leave employment.
During the year the Group made awards over 4,418,641 ordinary shares under the
DBP scheme, subject to the satisfaction of certain performance criteria to be
determined by the Remuneration Committee. The fair value of the award was
determined to be £0.57, being the average Market Value of a Share on 1
October 2022 and 1 January 2023.
2023 2022
Number Number
Outstanding at 1 October 1,893,219 -
Options granted in the year 4,418,641 1,893,219
Forfeited (1,486,025) -
Vested (164,999) -
Outstanding at 30 September 4,660,836 1,893,219
The total charge in the period, included in operating profit, in relation to
these awards was £0.7 million (2022: £0.3 million). The Company charge for
the period was £nil (2022: £nil).
Long Term Incentive Plan
The Group operates a LTIP for the Executive Directors. The extent to which
awards vest will depend upon the satisfaction of the Group's financial and
operational performance in the financial year of the award date.
The 2022 LTIP awards are subject to performance conditions based on adjusted
EPS (75% of award) and absolute Total Shareholder Return ("Absolute TSR") (25%
of award). Awards vest 3 years after grant subject to EPS and Absolute TSR
performance conditions, with a two-year post-vesting holding period
applying.
The 2023 LTIP awards are subject to performance conditions based on adjusted
EPS (100% of award). Awards vest 3 years after grant subject to EPS
performance conditions, with a two-year post-vesting holding period
applying.
On 22 February 2023 the Group awarded 870,168 nil cost options under the LTIP
scheme. The fair value for the EPS element of the award at £0.81 was based
on the share price at the grant date.
2023 2022
Number Number
Outstanding at 1 October 323,472 -
Options granted in the year 870,168 323,472
Options lapsed in the year (75,143) -
Outstanding at 30 September 1,118,497 323,472
The total charge in the year, included in operating profit, in relation to
these awards was £0.2 million (2022: £nil). The Company charge for the
period was £0.2 million (2022: £30,000).
Sharesave scheme
The Group operates a SAYE scheme for all employees under which employees are
granted an option to purchase ordinary shares in the Company at up to 20% less
than the market price at invitation, in three years' time, dependent on their
entering into a contract to make monthly contributions into a savings account
over the relevant period. Options are granted and are linked to a savings
contract with a term of three years. These funds are used to fund the option
exercise. No performance criteria are applied to the exercise of Sharesave
options. The assumptions used in the measurement of the fair value at grant
date of the Sharesave plan are as follows:
Grant date Share price at grant date Exercise price Expected volatility Option life Risk-free rate Dividend yield Non-vesting condition Fair value per option
£ £ % years % % %
30/03/2022 0.51 0.57 67 3.17 1.42 0 0 0.22
30/03/2023 0.79 0.68 69 3.17 3.52 1.39 0 0.40
Expected volatility is estimated by considering the historical 3.17 year
volatility of the FTSE AIM retailers.
2023 2022
Number of share options Number of share options
Outstanding at 1 October 443,747 -
Options granted in the year 211,539 443,747
Options lapsed in the year (121,313) -
Outstanding at 30 September 533,973 443,747
Exercisable at 30 September - -
The total charge in the year, included in operating profit, in relation to
these awards was £0.1 million (2022: £16,000). The Company charge for the
period was £nil (2022: £nil).
21. Cash generated from operating activities
Cash flows from operating activities 2023 2022
£m £m
Profit before taxation for the financial year 15.6 11.8
Adjustments for:
Amortisation of intangible assets (note 11) 2.3 2.0
Depreciation of property, plant and equipment (note 12) 0.6 0.6
Depreciation of right-of-use assets (note 13) 0.9 0.9
Share-based payments (including NI) 3.9 3.9
Finance (income)/expense (0.3) 0.3
Exceptional items 0.8 -
Adjusted EBITDA 23.8 19.5
Fair value loss/(profit) on financial derivatives 0.3 (0.7)
Increase in inventories (0.3) (1.5)
Increase in receivables (0.3) (0.2)
(Decrease)/increase in payables (3.7) 1.1
Increase in provisions - 0.1
Cash generated from operating activities before exceptional items 19.8 18.3
Free cash flows 2023 2022
£m £m
Cash generated from operating activities before exceptional items 19.8 18.3
Repayment of lease liabilities (1.1) (1.1)
Purchase of intangible assets (excluding assets under construction) (2.8) (2.6)
Purchase of property, plant and equipment (excluding assets under (0.2) (0.3)
construction)
VAT not yet recovered on assets under construction 0.4 -
Free cash flows 16.1 14.3
Adjusted EBITDA 23.8 19.5
Cash conversion 68% 73%
VAT not yet recovered on assets under construction relates to timing
differences on warehouse transformation expenditure.
22. Events after the reporting period
a) Lease commitments
On 4 October 2023, the Group achieved legal completion on a new 544,000 square
feet purpose-built distribution centre in Leyland, Lancashire. In the
financial year ending 30 September 2024, the 20-year lease will result in the
recognition of a right of use asset and corresponding IFRS 16 lease liability
of c. £45.0 million (provisionally estimated using an incremental borrowing
rate of 6.5%).
The future payments related to this non-cancellable lease contract are £2.0
million within one year, an additional £10.0 million within five years, and
an additional £68.0 million thereafter.
During the fit-out of and transition to the new distribution centre, the Group
will incur double running costs for certain people and property related
expenses. The Board estimates that the additional non-recurring expenditure in
the financial year ending 30 September 2024 will be c. £8.0 million.
b) Capital commitments
The Group also expects to incur an additional c. £24.0 million of intangible
and tangible capital expenditure (non-recurring in nature) during the
financial year ending 30 September 2024 to complete the fit-out of the new
distribution centre.
On 2 November 2023, the Group entered into arrangements with the main
contractor who is overseeing the fit-out of the new distribution centre, which
committed the Group to capital commitments of £13.0 million. This leaves c.
£11.0 million of uncommitted capital expenditure after that date.
There have been no other material events to report after the end of the
reporting period.
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 DFLFLXFLFFBBRecent news on Victorian Plumbing
See all newsREG - Victorian Plumbing - Acquisition of Victoria Plum
AnnouncementREG - Victorian Plumbing - Holding(s) in Company
AnnouncementREG - Victorian Plumbing - Holding(s) in Company
AnnouncementREG - Victorian Plumbing - Director/PDMR Dealing & Change of NOMAD name
AnnouncementREG - Victorian Plumbing - Result of 2024 Annual General Meeting
Announcement