REG - Victorian Plumbing - Full Year Results
15/01/2025 07:00
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RNS Number : 3343T Victorian Plumbing Group PLC 15 January 2025
Victorian Plumbing Group PLC
AUDITED results for the year ended 30 september 2024
Strong growth in profits and successful completion of the warehouse
transformation.
Well positioned for further growth.
Victorian Plumbing Group plc ("Victorian Plumbing", the "Group"), the UK's
leading bathroom retailer(1), announces its audited results for the year ended
30 September 2024 ("2024"), highlighting the significant progress made against
its strategic priorities.
2024 2023 Change LFL Change
Revenue £295.7m £285.1m 4% (1%)
Gross profit(2) £147.8m £134.6m 10% 5%
Gross profit margin(3) 50% 47% 3ppt 3ppt
Adjusted EBITDA(4) £27.2m £23.8m 14% 24%
Adjusted EBITDA margin(5) 9% 8% 1ppt 2ppt
Operating profit £11.2m £15.3m (27%) (6%)
Adjusted PBT(6) £23.1m £20.3m 14% 25%
Operating cash conversion(7) 68% 68% - N/a
Free cash flow(8) £18.6m £16.1m 16% N/a
Cash £11.2m £46.4m (76%) N/a
Adjusted diluted earnings per share(9) 5.3p 4.7p 13% N/a
Ordinary full year dividend per share 1.61p 1.40p 15% N/a
Financial highlights
· Revenue growth of 4% to £295.7m (2023: £285.1m); on a
like-for-like ("LFL") basis, excluding the impact of the acquisition of AHK
Designs Limited ("Victoria Plum") in May 2024, revenue decreased 1%, still
outperforming the wider RMI market(10).
o Order volume grew by 10% to over one million orders for the first time and
average order value ("AOV")(11) decreased by 5% in the same period; LFL order
volume growth of 3% was offset by an AOV decrease of 4%, as customers continue
to buy an increasing proportion of our own brand products.
· Strong gross profit growth of 10% to £147.8m (2023: £134.6m);
LFL gross profit up 5%.
o Gross profit margin stable in H2 2024 at 50% (H1 2024: 50%), with an
increase in 2024 full year gross profit margin to 50% (2023: 47%); LFL gross
profit margin was also 50%, representing our highest gross margin since
listing in 2021, underpinned by own brand sales.
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 £27.2m up 14% versus the prior year (2023:
£23.8m) with adjusted EBITDA margin progression to 9% in 2024 from 8% last
year; on a LFL basis, adjusted EBITDA of £29.4m up on last year by 24%.
· Operating profit of £11.2m decreased by 27% (2023: £15.3m) after
exceptional costs of £8.2m associated with the warehouse transformation and
the acquisition and closure of Victoria Plum.
· Adjusted PBT of £23.1m grew by 14% versus the prior year (2023:
£20.3m) with adjusted PBT margin(12) progression from 7% last year to 8% in
2024.
· PBT was £9.0m (2023: £15.6m), after £11.0m of exceptional costs
associated with the warehouse transformation and Victoria Plum investment, and
£3.1m of share-based payments.
· Free cash flow of £18.6m (2023: £16.1m) and operating cash
conversion of 68% (2023: 68%).
· Robust, debt-free balance sheet with closing cash position
of £11.2m (2023: £46.4m), following investment in acquiring Victoria Plum
for consideration of £22.2m and warehouse transformation spend of £26.4m.
· Adjusted diluted EPS of 5.3p, reflecting a 13% increase.
· Proposed final ordinary dividend of 1.09p, giving a total
ordinary dividend of 1.61p for the year (2023: 1.40p) while maintaining a
robust balance sheet with a strong cash position.
Operational and strategic highlights
· Consolidated our position as the UK's number one bathroom retailer,
testament to the strength of our brand, our extensive range and availability.
· Completed the acquisition of Victoria Plum for £22.2m on 17 May
2024. The acquisition contributed £14.7m of revenue and incurred an adjusted
EBITDA loss of £2.2m during the four and a half month period to the end of
the financial year.
o As previously announced, we took the decision in August 2024 to close
Victoria Plum and its operations in Doncaster. This resulted in the website
traffic being redirected to Victorian Plumbing from November 2024, with all
remaining inventory transferred from the exited Doncaster site by 31 January
2025.
· Successfully transitioned into the new 544,000 square feet
distribution centre ("DC") in Leyland, Lancashire and, by the end of December
2024, were dispatching all orders from our new warehouse infrastructure.
· Customers continued to purchase proportionately more of our own brand
products, reducing AOV by 4% (on a LFL basis); own brand products represented
79% of total revenue (2023: 78%), which had a beneficial impact on gross
margin.
· Online marketing spend as a percentage of revenue (on a LFL basis)
reduced from 26.3% to 26.2% which helped to fund, in part, a strategic
increase in brand marketing from £4.2m in 2023 to £6.9m in 2024.
o Our brand awareness score(13) improved to 66% (2023: 64%).
· Progress in our strategic growth areas of 'trade' and 'expansion
categories'.
o Trade revenue grew 13% to £67.3m (2023: £59.5m), representing 23% of
total revenue (2023: 21%). Our Victorian Plumbing app, designed with both
trade and consumer in mind, was enhanced in summer 2024 and is helping to
drive further engagement, with c.2% of revenue now generated through the app.
o Tiles and décor revenue grew by 23% to £12.4m (2023: £10.1m) and our
new warehouse infrastructure will facilitate further growth.
· Investment in people and technology.
o Bolstered our dedicated Trade team during H1 2024, helping us to attract
new trade customers and drive further growth in trade revenue.
o Introduced new front end website features such as an improved search tool
that encompasses AI technology and enhanced product detail pages, along with
advanced back end integration with our couriers and upgrades to our warehouse
management system.
· Trustpilot rating of 'Excellent' - a sector-leading average
score(14) improving in the year to 4.6 out of 5.0 (2023: 4.5).
Current trading and outlook
· Overall Q1 revenue was up 3% on 2024, against a tough comparator.
o Trading in October and November was soft, impacted by:
§ A cautious approach to marketing as we sought to bed in our new warehouse
infrastructure without disrupting the customer experience; and
§ Ongoing UK consumer uncertainty.
o As the transition to our new warehouse infrastructure neared
completion, we reverted to our usual marketing approach and, pleasingly, we
recorded high single digit growth in December.
· Gross profit margin improvement continues as the benefits of the closure
of Victoria Plum and our new warehouse infrastructure are starting to come
through (albeit some of this benefit will be eroded by above inflationary
increases in National Living Wage and employer national insurance costs).
· Through 2025 we will prioritise our expansion category growth plans and
more confidently spend on efficient marketing to drive more volume.
· We remain confident in delivering profit in line with full year
market expectations.
Mark Radcliffe, Founder and Chief Executive Officer of Victorian Plumbing,
said:
"We have successfully delivered on two strategic priorities, firstly
completing our warehouse transformation on time and in line with budget and,
secondly, to accelerate growth through the acquisition of our namesake
Victoria Plum, which reduces considerable brand marketing confusion for our
customers.
"2024 has been a year of transformation against a subdued trading backdrop and
continued uncertainty in UK consumer behaviour. Despite this, 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, now fully
operational, will enable further growth in the core bathroom category, as
well as unlocking 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 10:00am GMT, Wednesday 15 January
2025. 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
Daniel Barton, Chief Financial Officer
FTI Consulting (Financial PR) +44 20 3727 1000
Alex Beagley, Harriet Jackson, Amy Goldup, Lia Bevan VictorianPlumbing@fticonsulting.com
Houlihan Lokey UK Ltd (Nominated Adviser) +44 20 7839 3355
Sam Fuller, Tim Richardson
Barclays Bank PLC (Joint Broker) +44 20 7623 2323
Nicola Tennent, Stuart Muress
Canaccord Genuity Limited (Joint Broker) +44 20 7597 5970
Bobbie Hilliam, Elizabeth Halley Stott
About Victorian Plumbing
Victorian Plumbing is the UK's leading bathroom retailer, offering a wide
range of over 36,000 products to B2C and trade customers. The Group provides a
one-stop shop solution for the entire bathroom with more than 150 own and
third party brands across a wide spectrum of price points.
Victorian Plumbing's product design and supply chain strengths are
complemented by its creative and brand-focused marketing strategy to drive
significant and growing traffic to its platforms.
Headquartered in Leyland, the Group employs over 600 staff across several
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 2024 2023 Change LFL Change
Income statement
Revenue £m 295.7 285.1 4% (1%)
Gross profit £m 147.8 134.6 10% 5%
Gross profit margin % 50% 47% 3ppt 3ppt
Adjusted EBITDA £m 27.2 23.8 14% 24%
Adjusted EBITDA margin % 9% 8% 1ppt 2ppt
Profit before tax £m 9.0 15.6 (42%) (22%)
Adjusted PBT £m 23.1 20.3 14% 25%
Adjusted PBT margin % 8% 7% 1ppt 2ppt
Earnings per share
Statutory diluted earnings per share pence 1.7 3.7 (54%) N/a
Adjusted diluted earnings per share pence 5.3 4.7 13% N/a
Ordinary full year dividend per share pence 1.61 1.40 15% N/a
Cash flow
Free cash flow £m 18.6 16.1 16% N/a
Operating cash conversion % 68% 68% - N/a
Cash and cash equivalents £m 11.2 46.4 (76%) N/a
Key performance indicators
Total orders(15) '000 1,022 932 10% 3%
Active customers(16) '000 699 634 10% 1%
Average order value £ 290 306 (5%) (4%)
Average Trustpilot score Score / 5.0 4.6 4.5 2% N/a
Marketing spend as a % of revenue % 28.9% 27.8% (1.1ppt) (0.9ppt)
Online marketing spend as a % of revenue % 26.5% 26.3% (0.2ppt) 0.1ppt
Brand spend as a % of revenue % 2.4% 1.5% (0.9ppt) (1.0ppt)
Trade revenue as a % of revenue % 23% 21% 2ppt 2ppt
Own brand / third party revenue ratio % 79% / 21% 78% / 22% 1% / (1%) 1% / (1%)
1. Bathrooms and Bathroom Accessories - UK - 2024, 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. 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.
9. 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.
10. Barclays UK Consumer Spend Report - during the year homeware
spend was between 2ppt and 7ppt below the previous year.
11. Average order value ("AOV") is defined as revenue divided by
total orders in the period.
12. Adjusted PBT margin is defined as adjusted PBT as a
percentage of revenue.
13. Victorian Plumbing brand tracking - summer 2024 versus
winter 2023.
14. The average Trustpilot score is defined as the monthly
average of all Trustpilot scores during the year.
15. Total orders is defined as the total number of orders
dispatched to customers in the year.
16. Active customers are the number of unique customers who
placed an order in the year.
17. State of the Industry (2022), Euromonitor International.
18. ONS Retail Sales Index.
19. Google Analytics GA4 - H2 2024 vs H2 2023.
CEO statement
Overview
The business has continued to deliver on its strategy to grow profitably, with
revenue growth of 4%. This has been driven by continued order growth (10%),
alongside an AOV reduction (5%) that reflects the impact of the lower priced
range at Victoria Plum in the four and a half months following its
acquisition. On a LFL basis, revenue declined by 1%, with order growth of 3%
offset by a 4% reduction in AOV, as the mix of sales continued to shift to our
own brand range.
The consumer continues to choose Victorian Plumbing as the number one bathroom
retailer because of our fair pricing, unrivalled high-quality product range
and excellent stock availability. Order levels have surpassed previous records
with over one million orders delivered in the year, and our Trustpilot scores
have improved in the face of this continued growth.
The switch to higher margin product has continued to improve our profitability
throughout the year. Our commitment to provide the most extensive choice of
high quality bathroom products and the best customer experience, together with
investment in our warehouse infrastructure, sets us up well for the next phase
of profitable growth.
Summary of operating performance
Revenue grew by 4% compared to the prior year at £295.7m (2023: £285.1m)
reflecting an increase in total orders of 10% and a reduction in AOV of 5%.
Adjusted EBITDA increased by 14% to £27.2m (2023: £23.8m) and adjusted
EBITDA margin increased to 9% (2023: 8%).
Victorian Plumbing (LFL)
Outperforming the wider RMI market, on a LFL basis we reported revenue decline
of 1% at £281.0m (2023: £285.1m), reflecting an increase in total orders of
3% and a decline in AOV of 4%. The first half of the financial year saw an
increase in order volume (2%) and reduction in AOV (4%), resulting in a 1%
decline in revenue. The second half of the financial year saw the trends
continue, with order volume growth of 3% versus the second half of 2023, and
AOV reduction of 4%, resulting in revenue decline of 1%.
The reduced AOV represented a continued shift to own brand products which,
together with continuing tailwinds from shipping and foreign exchange rate
improvement, resulted in gross margin improvement of 3ppt to 50% (2023: 47%).
Online marketing spend as a % of revenue decreased from 26.3% in 2023 to 26.2%
in 2024, with brand marketing spend increasing from 1.5% to 2.5% in the same
period, resulting in overall marketing spend increasing from 27.8% in 2023 to
28.7% in 2024.
The investment in brand reflects the creation of new marketing content that
will go live in 2025 to drive profitable growth following the removal of the
Victoria Plum brand after its acquisition, and to capitalise on the increased
capacity unlocked by the finalisation of our warehouse transformation
programme.
This financial performance proves the resilience of our business model and our
competitive advantage irrespective of consumer sentiment, underpinning our
confidence in delivering short, medium and long-term profitable growth.
Our strategic focus
We continue to leverage our market and brand position, as well as 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 UK
consumers through our market leading online platform. Consumers are continuing
to shift online to purchase bathroom products and accessories and there is
still a considerable 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, omnichannel players and other online
competitors.
We continue to improve the customer buying journey, with the launch of
'product detail pages' that better showcase the different options and
specifications available to purchase within a selected range, and the search
functionality has been developed to incorporate the latest advances in AI.
Our second horizon focuses on expansion categories. Given our solid position
in the bathroom product and accessories market, we have an exciting
opportunity to expand our reach into areas such as tiles and décor. We were
very pleased to see our expansion category revenue increase by 23% to £12.4m
(2023: £10.1m), despite the space constraints that we operated within prior
to the new warehouse becoming operational.
Finally, our third growth horizon focuses on the B2B opportunity to retail
bathroom products and accessories to trade customers. During 2024, our trade
revenue grew by 13% to £67.3m (2023: £59.5m), representing 23% (2023: 21%)
of our total revenue, compared with an estimated 50:50 split across the wider
market(17). Whilst we primarily target smaller independent traders, the
Victorian Plumbing brand has historically been consumer focused and so we
believe we can make meaningful market share gains in this area by broadening
our marketing approach, including via targeted radio advertising, expanding
the range of relevant products we offer to trade customers, and by continually
improving the platforms so that they are more tailored to suit trade
customers' needs. The technology enhancements made to the Victorian Plumbing
app during the year further strengthens our proposition in this regard and,
along with the investment in our dedicated Trade team during H1 2024, means we
are well placed to attract trade customers and drive further growth in trade
revenue.
Strengthening our competitive position
We are the UK's largest bathroom retailer and, during the period, we have
continued to strengthen our competitive moat by improving the customer journey
through innovative technology improvement and category expansion.
Our investment in marketing continues to enhance brand awareness and supports
customer acquisition, as consumers continue to respond positively to the bold
and distinctive Victorian Plumbing brand. We have entered our second year of a
three-year partnership with Bolton Wanderers Football Club as their title and
front of shirt sponsor. We also partnered with the World Snooker Tour as the
headline sponsor of the Victorian Plumbing UK Championship 2024, part of
snooker's Triple Crown Series, that aired live on the BBC in November 2024 and
attracted over 14 million viewers.
Our creative offline content is complemented by our investment in increasingly
targeted digital performance-based marketing. This dynamic marketing strategy,
together with our bold marketing campaign, 'Boss Your Bathroom', has further
improved our strong brand awareness score of 66% (2023: 64%).
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.27% of total retail sales in 2024(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 for any bathroom-related
purchase. At 30 September 2024, we have increased the number of available
products to more than 36,000 from over 150 brands, ensuring there is something
available, affordable and suitable for everyone.
The 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 platforms. We have developed over 25 own
brands using our in-house product development team, and these are increasingly
popular with customers. In the period, 79% of revenue generated (2023: 78%)
came from own brand products, including Stonehouse Studio, our in-house tile
range. This unique own brand proposition alongside established third party
brands helps to ensure that profitability is maintained, irrespective of wider
market conditions, and is testament to the resilience of the business model.
Agile supply chain
Geopolitical tensions resulted in shipping cost increases in the second half
of the year. However, by leveraging the positive working relationships we have
with our shipping partners, as well as those built with our global suppliers
over 20 years of trading, we have avoided supply chain disruption - also
evidencing the benefits of scale we have achieved in recent years.
We continue to work closely with specialist 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
We are extremely proud that we continue to be rated 'Excellent' by Trustpilot
and have improved our average score in the period to 4.6 (2023: 4.5) out of
5.0.
We received a record number of reviews via Trustpilot during the period and as
a Group have surpassed 370,000 reviews in total, the highest of any specialist
bathroom retailer on the site. The 'Excellent' rating we have across this
volume of reviews is testament to the dedicated work of our colleagues.
Development of our technology platforms
Our growing Technology Development and Infrastructure teams work hard to
facilitate the continual development of our bespoke technology platforms to
ensure we remain best in class across online retail.
There has been significant work undertaken over the last 24 months to
completely re-platform the 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, such as improved courier software to augment
the customer experience. These strategic developments have supported an
improvement in user conversion from 3.5ppt to 3.8ppt in 2024(19).
The Victorian Plumbing app was released in October 2023 and has enabled our
customers to browse and purchase products more efficiently. A successful full
launch completed in summer 2024 has developed functionality further and driven
more customers to use the app, with c.2% of revenue currently generated
through the app.
In addition, the Technology Development team successfully enhanced our
existing warehouse management system alongside the larger project to transform
warehouse operations, with the new DC becoming operational with minimal
issues. By performing this work in-house, we can better control costs, improve
quality, and provide more certainty over the benefits that the improved
technology brings.
Acquisition and subsequent closure of Victoria Plum
Victoria Plum was acquired by Victorian Plumbing from existing cash reserves
for £22.2m on 17 May 2024. The acquisition contributed £14.7m of revenue and
incurred an adjusted EBITDA loss of £2.2m during the four and a half month
period to the end of the financial year.
As previously announced, we took the decision in August 2024 to close Victoria
Plum and its operations in Doncaster. This resulted in the website traffic
being redirected to Victorian Plumbing from November 2024, with all remaining
inventory transferred from the exited Doncaster site by 31 January 2025.
The acquisition and subsequent closure of Victoria Plum represents the removal
of a confusing factor for our customers, owing to the business trading with a
similar name, which was a drag on the Victorian Plumbing reputation. This
provides an opportunity to invest in brand marketing with confidence for a
greater return.
New distribution centre
We achieved legal completion on the 20-year lease of our new 544,000 square
feet DC on 4 October 2023 and became fully operational in our new warehouse
infrastructure, as planned and within budget, by the end of December 2024; a
timeframe that is best in class when compared to other warehouse
transformation programmes in the retail industry.
We now look forward to reaping the benefits of this landmark investment for
the rest of the current year and beyond, as capacity constraints have been
removed and efficiency gains can be extracted as we become a more scalable
organisation.
Entrepreneurial approach
Our entrepreneurial approach and our desire to trial new concepts, such as
expanding into tiles and décor, has played a key part in the success of the
business to date. We 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 continue to support our chosen charity, Emmaus, who work to end
homelessness, with employee volunteering days. In collaboration with Bolton
Wanderers in the Community, the charity name is adorned on the back of the
Bolton Wanderers third kit for the second year running.
Our electricity contracts remain 100% renewable, and we continue to work with
suppliers to reduce the levels of plastic packaging on our products. We have
installed photovoltaic panels on the new DC to ensure we are maximising the
renewable energy source opportunities available to us.
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 and respond positively to challenges.
Current trading and outlook
· Overall Q1 revenue was up 3% on 2024, against a tough comparator.
o Trading in October and November was soft, impacted by:
§ A cautious approach to marketing as we sought to bed in our new
warehouse infrastructure without disrupting the customer experience; and
§ Ongoing UK consumer uncertainty.
o As the transition to our new warehouse infrastructure neared completion,
we reverted to our usual marketing approach and, pleasingly, we recorded high
single digit growth in December.
· Gross profit margin improvement continues and the benefits of the
closure of Victoria Plum and our new warehouse infrastructure are starting to
come through (albeit some of this benefit will be eroded by above inflationary
increases in National Living Wage and employer national insurance costs).
· Through 2025 we will prioritise our expansion category growth plans and
more confidently spend on efficient marketing to drive more volume.
· We remain confident in delivering profit in line with full year
market expectations.
Financial review
Introduction
Whilst navigating continuing macroeconomic volatility in the year, we are
pleased to report strong financial performance, good operating cash generation
and further market share gains in the year to 30 September 2024.
Victorian Plumbing Victoria Plum* 2024 2023 Reported Change LFL Change
£m £m
Revenue 281.0 14.7 295.7 285.1 4% (1%)
Cost of sales (139.3) (8.6) (147.9) (150.5) 2% 8%
Gross profit 141.7 6.1 147.8 134.6 10% 5%
Gross profit margin % 50% 41% 50% 47% 3ppt 3ppt
Underlying costs (112.3) (8.3) (120.6) (110.8) (8%) (1%)
Adjusted EBITDA 29.4 (2.2) 27.2 23.8 14% 24%
Adjusted EBITDA margin % 10% (15%) 9% 8% 1ppt 2ppt
Depreciation and amortisation (4.7) (3.8)
Share-based payments (3.1) (3.9)
Exceptional items (8.2) (0.8)
Operating profit 11.2 15.3
Finance income/(costs) 0.6 0.3
Exceptional items (2.8) -
Profit before tax 9.0 15.6
*Acquired on 17 May 2024
Revenue
Reported revenue grew by 4% in 2024, from £285.1m in 2023 to £295.7m. On a
LFL basis revenue decreased by 1% in 2024, from £285.1m in 2023 to £281.0m.
Order volume grew on a reported basis by 10% to a record level of 1,022,000,
with AOV decreasing by 5% to £290. On a LFL basis, order volume grew 3% to
956,000 and AOV decreased by 4% to £295. On a reported basis, the average
number of items per basket remained stable at 3.1 in both 2023 and 2024.
On a LFL basis, both order volume growth and AOV remained consistent
throughout the year, with a continuation of the shift from third party brands
to our own brand product range, the latter carrying a higher margin, as
reported in previous announcements.
The acquisition of Victoria Plum increased revenue by £14.7m and added 66,000
orders in the four and a half month period to 30 September 2024, at an AOV of
£220; reflective of lower basket sizes and the discounted pricing policy
under previous ownership. The profile of consumer and trade revenue from
Victoria Plum was similar to Victorian Plumbing. Victoria Plum did not sell
any tiles and décor range during the period post-acquisition and its revenue
in the period related to sales of own brand products, as third party brands
had ceased trading with the business following its administration, under
previous ownership, in September 2023.
Consumer revenue, on a LFL basis, reduced by 4% from £225.6m in 2023 to
£217.0m and represents 77% of revenue in 2024 (2023: 79%). Trade revenue,
driven by consistently higher order volumes offset by a 3% reduction in AOV,
grew by 8% from £59.5m in 2023 to £64.0m on a LFL basis, and represents 23%
of revenue (2023: 21%).
Revenue continued to grow at pace in our expansion categories, albeit from a
small base given the space constraints we faced because, as planned, our new
DC only become fully operational in December 2024. Despite the space
constraints, tiles and décor revenue grew by 23%, from £10.1m in 2023 to
£12.4m, and delivered a gross margin that was in line with the wider core
bathroom range.
Product selection is largely driven by the consumer, irrespective of channel,
and we saw a continued shift away from the more expensive third party branded
product to our own brand range. The split between own and third party brands,
on a LFL basis, was 79% vs. 21% (2023: 78% vs. 22%), which was a key
contributing factor to AOV decline in the year.
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).
Reported cost of sales reduced by 2% to £147.9m (2023: £150.5m). Reported
gross profit margin increased to 50% (2023: 47%), with reported gross profit
for the year increasing by 10% to £147.8m (2023: £134.6m). On a LFL basis
cost of sales reduced by 8% to £139.3m (2023: £150.5m), gross profit margin
increased to 50% (2023: 47%) and gross profit for the year increased by 5% to
£141.7m.
In addition to reduced shipping costs, the improvement in gross profit, on a
LFL basis, also reflects the product mix change throughout the year. Gross
margin from own brand products, on a LFL basis, increased to 55% (2023: 53%),
and gross margin from third party products increased to 35% (2023: 27%),
driven by more favourable supplier arrangements.
Gross profit margin of 41% in Victoria Plum reflects the discounted pricing
policy established by the previous owners and the less favourable arrangements
compared to Victorian Plumbing within its supply chain.
We continue to partner with the bathroom industry's leading names which,
alongside our own brand offering, allows us to provide consumers with a wide
range 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
Reported underlying costs, which we define as administrative expenses before
depreciation and amortisation, exceptional items and share-based payments,
increased by 8% to £120.6m (2023: £110.8m) and represented 41% of revenue.
Underlying costs on a LFL basis increased by 1% and represented 40% of
revenue.
The Victoria Plum underlying cost base was mainly fixed in nature and
disproportionately large compared to its customer base, owing to its rapid
decline following sustained competition from Victorian Plumbing prior to the
acquisition. The Victoria Plum underlying cost base represents 56% of its
revenue.
LFL basis: 2024 2023 Change
£m £m
Marketing - online 73.7 75.0 2%
Marketing - brand 6.9 4.2 (64%)
Total marketing 80.6 79.2 (2%)
People costs (excluding share based payments) 22.4 19.6 (14%)
Property & other overheads 9.3 12.0 23%
Underlying costs 112.3 110.8 (1%)
Growing our brand awareness and increasing traffic to our site remains a focus
for the Group and we have seen an improvement in our brand awareness score to
66% (2023: 64%). Total marketing costs increased by 2% to £80.6m (2023:
£79.2m) and represent 28.7% (2023: 27.8%) of total revenue. Online marketing
costs reduced by 2% to £73.7m (2023: £75.0m) representing 26.2% (2023:
26.3%) of total revenue, which is considered an excellent performance and
reflects our brand strength improvement, which is well-timed against a
backdrop of inflation in the pay-per-click environment in the UK. Investment
in brand spend, including our three-year partnership with Bolton Wanderers
Football Club and TV and outdoor advertising, increased to £6.9m (2023:
£4.2m) representing 3% of total revenue (2023: 2%).
People costs, excluding share-based payments but including costs relating to
agency staff, increased 14% to £22.4m (2023: £19.6m). This is in line with
expectation given continued inflationary pressure from significant, above
inflationary increases to the National Living Wage in a tight labour market,
together with investments in certain other areas such as our dedicated Trade
team. Overall full-time equivalents ("FTE") increased by 9% to 665 (2023: 612)
as we transitioned away from expensive agency staff.
Property and other overhead costs reduced by 23% to £9.3m (2023: £12.0m) as
the Group exited expensive third party short-term rental properties in the
second half of the financial year.
Exceptional items
2024 2023
£m £m
Warehouse transformation:
- Double running and non-recurring administrative expenses 5.7 0.8
- Impairment of right-of-use assets 0.8 -
- Double running finance costs 2.8 -
9.3 0.8
Acquisition and closure of Victoria Plum:
- Closure costs: Victoria Plum 1.1 -
- Legal and professional fees associated with business combinations 0.6 -
1.7 -
Total exceptional items 11.0 0.8
Warehouse transformation
On 4 October 2023, the Group entered into a 20-year lease agreement for a new
DC in Leyland, Lancashire and commenced a period of fit-out ending in December
2024. Exceptional items in 2025 relating to the warehouse transformation are
anticipated to be c.£2m.
Cash outflows in 2025 relating to the warehouse transformation are anticipated
to be c.£8m.
Acquisition and closure of Victoria Plum
On 17 May 2024, Victorian Plumbing Ltd, a subsidiary, acquired 100% of the
share capital of Victoria Plum and, in August 2024, the decision was taken by
the Group to cease trading Victoria Plum. The Victoria Plum website was
redirected to Victorian Plumbing from November 2024. The legal and
professional fees associated with the acquisition, and certain costs
associated with the subsequent closure of that business, have been recognised
as exceptional costs as they are non-recurring. During 2024, associated
exceptional cash outflows of £0.8m (2023: £nil) have been incurred and
recognised in the consolidated statement of cash flows in respect of these
items.
Following the closure of Victoria Plum, the Group anticipates a cash outflow
in 2025 of c.£7m. Stock transferred from Victoria Plum to Victorian Plumbing
in total will be c.£8.5m.
Exceptional cash flows
2024 2023
£m £m
Cash flows from operating activities
Cash outflow from exceptional items: double running (2.5) (0.6)
Cash outflow from exceptional items: business combinations (0.8) -
Cash flows from investing activities
Purchase of intangible assets: warehouse transformation (0.3) (0.2)
Purchase of property, plant and equipment: warehouse transformation (20.8) (1.8)
Cash flows from financing activities
Payment of interest portion of lease liabilities: double running (2.7) -
Payment of principal portion of lease liabilities: double running (0.1) -
Cash flows from exceptional items (27.2) (2.6)
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, which is a non-GAAP metric used by the Group to assess the
operating performance.
Victorian Plumbing Victoria 2024 2023
£m Plum £m £m
£m
Operating profit 14.3 (3.1) 11.2 15.3
Amortisation of intangible assets 3.1 - 3.1 2.3
Depreciation of property, plant and equipment 0.5 - 0.5 0.6
Depreciation of right-of-use assets 1.1 - 1.1 0.9
Share-based payments (including associated NI) 3.1 - 3.1 3.9
22.1 (3.1) 19.0 23.0
Double running and non-recurring administrative expenses 5.7 - 5.7 0.8
Impairment of right-of-use assets 0.8 - 0.8 -
Closure costs: Victoria Plum 0.2 0.9 1.1 -
Legal and professional fees associated with business combinations 0.6 - 0.6 -
7.3 0.9 8.2 0.8
Adjusted EBITDA 29.4 (2.2) 27.2 23.8
Profit before tax and adjusted PBT
We also measure the overall performance by reference to adjusted PBT, a
non-GAAP measure. This adjusted profit measure is an alternative profitability
measure, which incorporates the capital investment and the financing structure
of the Group.
2024 2023
£m £m
Profit before tax 9.0 15.6
Share-based payments (including associated NI) 3.1 3.9
Double running and non-recurring administrative expenses 5.7 0.8
Impairment of right-of-use assets 0.8 -
Double running finance costs 2.8 -
Closure costs: Victoria Plum 1.1 -
Legal and professional fees associated with business combinations 0.6 -
Adjusted PBT 23.1 20.3
2024 2023
£m £m
Adjusted EBITDA 27.2 23.8
Amortisation of intangibles (3.1) (2.3)
Depreciation of property, plant and equipment (0.5) (0.6)
Depreciation of right-of-use assets (1.1) (0.9)
Finance income 1.0 0.6
Finance costs (not included in exceptional items) (0.4) (0.3)
Adjusted PBT 23.1 20.3
Share-based payments
The Group incurred share-based payment charges (including associated national
insurance ("NI")) of £3.1m (2023: £3.9m). Share-based payment charges for
the year include £1.7m (2023: £2.2m) for schemes relating to the Group's IPO
in June 2021, along with £1.4m (2023: £1.7m) for ongoing schemes put in
place post IPO.
Depreciation, amortisation and impairment
The Group continues to invest in its platform and bespoke operational
software, with £3.8m intangible assets capitalised in 2024 (2023: £3.0m).
Capitalised intangible assets of £1.1m have been categorised as assets under
construction and relate to the Group's bespoke operational software. Cash
outflows of £1.0m have been incurred in relation to this asset under
construction, £0.8m in the financial year ended 30 September 2024 (2023:
£0.2m). These assets will be amortised over their useful economic life of 3
years once the software is ready for its intended use.
£23.4m property, plant and equipment was capitalised in 2024 (2023: £4.1m),
the majority of which related to the fit-out of the new DC recognised as
assets under construction. Once the assets under construction meet the
criteria to be depreciated, they will be depreciated over a useful economic
life of 5 to 20 years.
On 4 October 2023, the Group entered into a 20-year lease agreement for the
DC. An addition of £44.8m has been recognised as a right-of-use asset. This
asset is being amortised over its useful economic life of 20 years.
Finance income/(costs)
Finance income of £1.0m during the year compares to a finance income of
£0.6m for 2023 due to, inter alia, cash being placed on deposit to take
advantage of recent high interest rates. Finance costs of £2.8m have been
included within exceptional items as 'double running' (2023: £nil).
Profit before taxation and adjusted profit before tax
Profit before taxation reduced by 42% to £9.0m (2023: £15.6m). Profit before
tax margin reduced to 3% (2023: 5%) due to improved performance offset by
warehouse transformation related costs and business combination costs.
Adjusted profit before tax increased by 14% to £23.1m (2023: £20.3m).
Adjusted profit before tax margin increased to 8% (2023: 7%) due to improved
performance.
Taxation
The Group tax charge of £3.5m (2023: £3.8m) represents an effective tax rate
of 39% (2023: 24%) which is higher than the standard rate of UK tax of 25%
because of Victoria Plum losses that cannot be utilised for tax purposes. The
adjusted effective tax rate is 25% (2023: 24%) after considering the tax
effect of exceptional items and share-based payments.
Earnings per share
Diluted EPS decreased by 54% to 1.7 pence per share (2023: 3.7 pence per
share).
Adjusted diluted EPS increased in line with adjusted profit before tax by 13%
to 5.3 pence per share (2023: 4.7 pence per share).
Cash flow
The Group continues to achieve strong cash generation with an increase in free
cash flow of 16% to £18.6m (2023: £16.1m), resulting in robust operating
cash conversion of 68% (2023: 68%).
2024 2023
£m £m
Adjusted EBITDA 27.2 23.8
Movement in working capital (4.8) (4.0)
Repayment of lease liabilities (1.3) (1.1)
VAT not yet recovered on exceptional items 1.2 0.4
Capital expenditure (excluding assets under construction) (3.7) (3.0)
Free cash flow 18.6 16.1
Operating cash conversion 68% 68%
Changes in working capital resulted in a cash outflow of £4.8m in the year,
largely because of timing differences with supplier payments. Stock value
increased in the year due to the acquisition of Victoria Plum. 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 exceptional items) of £3.7m (2023: £3.0m)
included £3.3m (2023: £2.6m) of capitalised salaries included in intangible
assets relating to development of the Group's bespoke software solutions.
At the year end, the Group had cash of £11.2m (2023: £46.4m).
Events after the reporting period
In August 2024, the decision was taken by the Group for Victoria Plum to cease
trading and from November 2024, the Victoria Plum website was redirected to
Victorian Plumbing. Victoria Plum will be treated as a discontinued operation
in accordance with IFRS 5 'Non-current assets held for sale and discontinued
operations' in the financial year ending 30 September 2025.
On 18 December 2024, the Group entered into a new three-year revolving credit
facility ("RCF") with HSBC, replacing the £10m RCF which was due to expire in
December 2025. The new RCF has total commitments of £30m. The Group has
provided a cross-guarantee by way of a debenture dated 7 June 2021 as security
for the facility. The RCF remains undrawn at the date of this report.
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 dividend policy in 2022 with an aim
to maintain a 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 1.61 pence
per share (2023: 1.40 pence per share), which would represent growth of 15%,
the Board is recommending a full year final ordinary dividend of 1.09 pence
per share (2023: 0.95 pence per share). This would represent dividend cover
for 2024 of 3.3x (2023: 3.4x).
The Board is not recommending a special dividend (2023: £nil) as it preserves
cash to finance the remainder of the fit-out of the warehouse transformation
and the closure of Victoria Plum without the need for indebtedness, and to
maintain the robustness of the balance sheet.
This results in a total cash distribution to shareholders of £5.2m (£1.5m
interim paid and £3.5m final to be paid) (2023: total cash distribution to
shareholders £4.6m), subject to shareholders' approval at the AGM on 25
February 2025. The dividends will be paid on 7 March 2025 to shareholders on
the register of members at the close of business on 7 February 2025.
Mark Radcliffe Daniel Barton
Chief Executive Officer Chief Financial Officer
14 January 2025 14
January 2025
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2024
Note Victorian Plumbing Victoria Plum 2024 2023
£m £m
Revenue 4 281.0 14.7 295.7 285.1
Cost of sales (139.3) (8.6) (147.9) (150.5)
Gross profit 141.7 6.1 147.8 134.6
Administrative expenses 5 (126.6) (9.2) (135.8) (119.3)
Impairment of assets (0.8) - (0.8) -
Operating profit / (loss) 5 14.3 (3.1) 11.2 15.3
Finance income 7 1.0 - 1.0 0.6
Finance costs 7 (3.2) - (3.2) (0.3)
Profit / (loss) before tax 12.1 (3.1) 9.0 15.6
Income tax expense 8 (3.5) - (3.5) (3.8)
Profit / (loss) for the year 8.6 (3.1) 5.5 11.8
Basic earnings per share (pence) 10 1.8 4.1
Diluted earnings per share (pence) 10 1.7 3.7
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 2024
Note 2023
£m
2024
£m
Assets
Non-current assets
Goodwill 18.8 -
Intangible assets 13 4.7 4.0
Property, plant and equipment 14 27.8 4.9
Right-of-use assets 15 45.4 4.3
Derivative financial instruments - 0.4
96.7 13.6
Current assets
Inventories 43.7 34.2
Trade and other receivables 16 6.9 4.8
Cash and cash equivalents 11.2 46.4
61.8 85.4
Total assets 158.5 99.0
Equity and liabilities
Equity attributable to the owners of the Company
Share capital 20 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 361.3 357.8
Total equity 52.3 48.8
Liabilities
Non-current liabilities
Lease liabilities 18 43.0 3.8
Derivative financial instruments 0.5 -
Provisions 1.9 -
Deferred tax liability 2.8 -
48.2 3.8
Current liabilities
Trade and other payables 17 44.2 38.0
Contract liabilities 9.5 5.4
Lease liabilities 18 3.1 1.0
Provisions 1.0 0.2
Corporation tax 0.2 1.8
58.0 46.4
Total liabilities 106.2 50.2
Total equity and liabilities 158.5 99.0
The financial statements were approved by the Board of Directors on 14 January
2025 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 2024
Share capital Share premium Capital redemption reserve Capital reorganisation reserve Retained earnings Total equity
£m £m £m £m £m £m
Balance at 1 October 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 - - - - 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
Comprehensive income
Profit for the year - - - - 5.5 5.5
Transactions with owners
Dividends paid - - - - (4.8) (4.8)
Employee share schemes - value of employee services - - - - 2.8 2.8
Total transactions with owners recognised directly in equity - - - - (2.0) (2.0)
Balance at 30 September 2024 0.3 11.2 0.1 (320.6) 361.3 52.3
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2024
Note 2024 2023
£m £m
Cash flows from operating activities
Cash generated from operating activities before exceptional items 23 22.4 19.8
Cash outflow from exceptional items (3.3) (0.6)
Cash outflow from share-based payments (0.2) -
Cash generated from operating activities 18.9 19.2
Income tax paid (2.5) (2.1)
Interest received on cash deposits 1.0 0.6
Net cash generated from operating activities 17.4 17.7
Cash flows from investing activities
Purchase of intangible assets (3.8) (3.0)
Purchase of property, plant and equipment (21.0) (2.0)
Acquisition of subsidiary - net of cash acquired (19.1) -
Net cash used in investing activities (43.9) (5.0)
Cash flows from financing activities
Dividends paid (4.8) (10.6)
Finance arrangement fees (0.1) (0.1)
Payment of interest portion of lease liabilities (3.0) (0.2)
Payment of principal portion of lease liabilities (0.8) (0.9)
Net cash used in financing activities (8.7) (11.8)
Net increase in cash and cash equivalents (35.2) 0.9
Cash and cash equivalents at the beginning of the year 46.4 45.5
Cash and cash equivalents at the end of the year 11.2 46.4
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
2024 or 30 September 2023 but is derived from the 2024 Annual Report and
Financial Statements. The Annual Report and Financial Statements for 2024 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 28 February 2026. The assumptions used in the
base case financial forecast 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.
At 30 September 2024, the Group held instantly accessible cash of £11.2m. The
Group also had access to a revolving credit facility of £10.0m with HSBC
which was undrawn at 30 September 2024. On 18 December 2024, the Group entered
into a three year agreement with HSBC for a £30m revolving credit facility.
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 28 February 2026. 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 2024 unless
stated below.
Judgements in applying accounting policies and sources of estimation
uncertainty
2.1 Accounting judgements
Business combinations
The acquisition method of accounting is applied in accounting for the
acquisition of subsidiaries. The acquiree's identifiable assets and
liabilities are recognised at their fair values at the acquisition date.
Goodwill arising on acquisition is recognised as an asset and measured at
cost, representing the excess of the aggregate of the consideration, the
amount of any non-controlling interests in the acquiree, and the fair value of
the acquirer's previously held equity interest in the acquiree (if any) over
the net of the fair value of its identifiable assets and liabilities at the
date of acquisition. The consideration is measured at fair value, which is the
aggregate of the fair values of the assets transferred, liabilities incurred
or assumed, and the equity instruments issued in exchange for control of the
acquiree.
Impairment of goodwill and other intangibles
During the period the Group recognised goodwill upon the acquisition of AHK
Designs Limited trading as Victoria Plum ("Victoria Plum"). The goodwill
arising upon this acquisition has been allocated to the main Group's cash
generating unit ("CGU"), Victorian Plumbing. The CGU of Victorian Plumbing has
been assessed for impairment and at that level there is no indication of
impairment.
An impairment review of other intangible assets, being 'computer software' and
'assets under construction' has been performed and due to the growth enabling
features and efficiency gains it was concluded that the future value of the
investments made is greater than the carrying value. Any assets held in the
'assets under construction' category will be brought into use during the year
ended 30 September 2025.
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.
2.2 Sources of estimation uncertainty
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.
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.
2024 2023
Revenue (£m) 295.7 285.1
Refund liability (£m) 0.8 0.9
Refund liability % average quarterly sales 1.1% 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 100% would be
a reduction of £0.8m (2023: £0.9m).
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.
2024 2023
Revenue for the period (£m) 295.7 285.1
Warranty provision (£m) 0.3 0.2
Warranty provision % average quarterly sales 0.4% 0.3%
The impact on profit before tax of increasing the warranty provision by 100%
would be a reduction of £0.3m (2023: £0.2m).
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.
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 that is provided internally. Based on the
internal reporting information and management structures within the Group, it
has been determined that there are two operating segments, Victorian Plumbing
and Victoria Plum, as the two entities are clearly and separately reported on
internally. There is also considered to be two reporting segments, Victorian
Plumbing and Victoria Plum. The results of each operating segment are shown in
the consolidated statement of comprehensive income to provide a LFL
comparison, given the decision in August 2024 to close Victoria Plum and
redirect its website traffic from November 2024.
Management has determined that there are two operating and reporting segments
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 group by reference to
Adjusted EBITDA, a non-GAAP measure. This adjusted profit measure is applied
by the ELT to understand the earnings trends of the Group and is considered an
additional, useful measure under which to assess the true operating
performance of the 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 Group and for consistency with prior
years.
Victorian Plumbing Victoria Plum 2023
£m £m 2024 £m
£m
Operating profit 14.3 (3.1) 11.2 15.3
Amortisation of intangible assets 3.1 - 3.1 2.3
Depreciation of property, plant and equipment 0.5 - 0.5 0.6
Depreciation of right-of-use assets (not included in exceptional items) 3.3 - 3.3 0.9
Depreciation capitalised during the fit-out of the DC (2.2) - (2.2) -
Share-based payments (including associated NI) 3.1 - 3.1 3.9
22.1 (3.1) 19.0 23.0
Double running and non-recurring administrative expenses 5.7 - 5.7 0.8
Impairment of right-of-use assets 0.8 - 0.8 -
Closure costs: Victoria Plum 0.2 0.9 1.1 -
Legal and professional fees associated with business combinations 0.6 - 0.6 -
7.3 0.9 8.2 0.8
Adjusted EBITDA 29.4 (2.2) 27.2 23.8
Adjusted PBT
Operating costs, comprising administrative expenses, are managed on a Group
basis. The ELT measures overall performance of the 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.
2024 2023
£m £m
Profit before tax 9.0 15.6
Share-based payments (including associated NI) 3.1 3.9
Double running and non-recurring administrative expenses 5.7 0.8
Impairment of right-of-use assets 0.8 -
Double running finance costs 2.8 -
Closure costs: Victoria Plum 1.1 -
Legal and professional fees associated to business combinations 0.6 -
Adjusted PBT 23.1 20.3
2024 2023
£m £m
Adjusted EBITDA 27.2 23.8
Amortisation of intangibles (3.1) (2.3)
Depreciation of property, plant and equipment (0.5) (0.6)
Depreciation of right-of-use assets (1.1) (0.9)
Finance income 1.0 0.6
Finance costs (not included in exceptional items) (0.4) (0.3)
Adjusted PBT 23.1 20.3
4. Revenue
An analysis of revenue by class of business is as follows:
2024 2023
£m £m
Online 294.3 283.6
Showroom 1.4 1.5
295.7 285.1
All revenue arose within the United Kingdom.
5. Operating profit
Expenses by nature including exceptional items:
2024 2023
£m £m
Employee costs (excluding share-based payments) 23.0 18.4
Agency and contractor costs 1.7 1.3
Share-based payments (including associated NI) 3.1 3.9
Marketing costs 85.4 79.2
Property costs 4.8 6.3
Computer costs 2.9 2.5
Depreciation of property, plant and equipment 0.5 0.6
Depreciation of right-of-use assets 3.3 0.9
Depreciation capitalised during the fit-out of the DC (2.2) -
Amortisation of intangibles 3.1 2.3
Exceptional items 8.2 0.8
Other costs 2.8 3.1
Total administrative expenses 136.6 119.3
Share-based payments (including associated NI) (3.1) (3.9)
Exceptional items (8.2) (0.8)
Total administrative expenses before separately disclosed items 125.3 114.6
6. Exceptional items
a. By nature
2024 2023
£m £m
Warehouse transformation costs:
- Double running and non-recurring costs 5.7 0.8
- Impairment of right-of-use assets 0.8 -
Closure costs: Victoria Plum 1.1 -
Professional fees associated with business combinations 0.6 -
Exceptional items recognised within administrative expenses 8.2 0.8
Warehouse transformation costs:
- Double running finance costs 2.8 -
Exceptional items recognised within finance costs 2.8 -
Total exceptional items 11.0 0.8
b. By function
2024 2023
£m £m
Warehouse transformation costs:
- Double running and non-recurring costs 5.7 0.8
- Impairment of right-of-use assets 0.8 -
- Double running finance costs 2.8 -
9.3 0.8
Acquisition and closure of AHK Designs Ltd:
- Closure costs: Victoria Plum 1.1 -
- Professional fees associated with business combinations 0.6 -
Exceptional items recognised within finance costs 1.7 -
Total exceptional items 11.0 0.8
Warehouse transformation
On 4 October 2023, the Group entered into a 20-year lease agreement for the DC
and commenced a period of fit-out ending in December 2024. In accordance with
IFRS 16, a lease liability of £41.7m has been recognised, with a
corresponding right-of-use asset recognised in non-current assets.
For the duration of the fit-out, the new DC was not generating economic
benefit for the Group. Therefore, operating expenditure incurred during the
fit-out period, together with non-recurring transformation costs such as
associated professional fees, totalling £5.7m (2023: £0.8m) have been
recognised as exceptional costs. During 2024, associated exceptional cash
outflows of £2.5m (2023: £0.6m) have been incurred and recognised in the
consolidated statement of cash flows in respect of these items.
Certain right-of-use assets will not be in use following completion of the
warehouse transformation and will, accordingly, not generate any economic
benefit for the group. An impairment expense of £0.8m (2023: £nil) has been
recognised during the year. No associated cash flows have been recorded.
The imputed interest recognised against IFRS 16 lease liabilities for property
considered to be non-underlying during the fit-out period has been recognised
as 'double running finance costs'. Associated cash outflows of £2.8m have
been expended for double running finance costs during the period (2023:
£nil).
These costs are being treated as exceptional to enable better LFL comparison.
Acquisition and closure of Victoria Plum
On 17 May 2024, Victorian Plumbing Ltd, a subsidiary, acquired 100% of the
share capital of Victoria Plum and, in August 2024, the decision was taken by
the Group to cease trading Victoria Plum. The Victoria Plum website was
redirected to Victorian Plumbing from November 2024. The legal and
professional fees associated with the acquisition, and certain costs
associated with the subsequent closure of that business, have been recognised
as exceptional costs as they are non-recurring. During 2024, associated
exceptional cash outflows of £0.8m (2023: £nil) have been incurred and
recognised in the consolidated statement of cash flows in respect of these
items.
c. Exceptional cash flows
2024 2023
£m £m
Cash flows from operating activities
Cash outflow from exceptional items: warehouse transformation costs (2.5) (0.6)
Cash outflow from exceptional items: business combinations (0.8) -
Cash flows from investing activities
Purchase of intangible assets: assets under construction (0.3) (0.2)
Purchase of property, plant and equipment: assets under construction (20.8) (1.8)
Cash flows from financing activities
Payment of interest portion of lease liabilities: double running - finance (2.7) -
costs
Payment of principal portion of lease liabilities (0.1) -
Cash flows from exceptional items (27.2) (2.6)
7. Finance income/(costs)
2024 2023
£m £m
Interest received on cash deposits 1.0 0.6
Interest on undrawn revolving credit facility (0.1) (0.1)
Interest expense on lease liability (3.1) (0.2)
Total finance income/(costs) (2.2) 0.3
8. Income tax expense
2024 2023
£m £m
Corporation tax
Current tax on profits for the year 0.4 3.8
Adjustments in respect of previous periods 0.2 (0.2)
Total current tax 0.6 3.6
Deferred tax
Origination of temporary timing differences 2.9 -
Adjustments in respect of previous periods - 0.2
Total deferred tax 2.9 0.2
Taxation on profit 3.5 3.8
Factors affecting tax charge for the year
The tax assessed for the period is higher (2023: higher) than the standard
rate of corporation tax in the UK of 25% (2023: 22%). The differences are
explained below:
2024 2023
£m £m
Profit on ordinary activities before tax 9.0 15.6
Profit on ordinary activities multiplied by standard rate of corporation tax 2.3 3.4
in the UK of 25% (2023: 22%)
Effects of:
Expenses not deductible for tax purposes 0.4 0.1
Share options 0.1 0.3
Adjustments to tax charge in respect of prior periods 0.2 -
Losses not recognised in the year 0.5 -
Total tax charge for the year 3.5 3.8
Taxation on items taken directly to equity was £nil (2023: £0.1m credit)
relating to tax on share-based payments.
9. Dividends paid and proposed
2024 2023 2024 2023
Pence per share Pence per share £m £m
Final ordinary dividend recognised as distributions in the year 0.95 1.10 3.1 3.6
Interim ordinary dividend recognised as distributions in the year 0.52 0.45 1.7 1.5
Total ordinary dividend paid in the year 1.47 1.55 4.8 5.1
Special dividend recognised as distributions in the year - 1.70 - 5.5
Total dividend paid in the year 1.47 3.25 4.8 10.6
Interim ordinary dividend 0.52 0.45 1.7 1.5
Final ordinary dividend 1.09 0.95 3.5 3.1
Total ordinary dividend 1.61 1.40 5.2 4.6
Special dividend - - - -
Total dividend 1.61 1.40 5.2 4.6
In order to distribute a total ordinary dividend for the year of 1.61 pence
per share (2023: 1.40 pence per share), which would represent growth of 15%,
the Board is recommending a full year final ordinary dividend of 1.09 pence
per share (2023: 0.95 pence per share). The Board is not recommending a
special dividend (2023: nil 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 £5.2m (£1.7m
interim paid and £3.5m final to be paid), subject to shareholders' approval
at the AGM on 25 February 2025. The dividends will be paid on 7 March 2025 to
shareholders on the register of members at the close of business on 7 February
2025.
10. Earnings per share
Basic and diluted earnings per share
Basic 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 2024
Basic EPS 302,424,169 5.5 1.8
Diluted EPS 327,498,168 5.5 1.7
Year ended 30 September 2023
Basic EPS 284,604,317 11.8 4.1
Diluted EPS 317,483,119 11.8 3.7
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:
2024 2023
Weighted average number of shares for basic EPS 302,424,169 284,604,317
Dilutive impact of unvested shares in relation to share awards 25,073,999 32,878,802
Weighted average number of shares for diluted EPS 327,498,168 317,483,119
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.
2024 2023
£m £m
Profit for the year 5.5 11.8
Exceptional items 11.0 0.8
Share-based payments 3.1 3.9
Tax effect (2.3) (1.1)
Total adjusted profit for the year 17.3 15.4
Number Number
Total issued share capital for the purposes of adjusted diluted EPS 326,334,279 325,227,984
Adjusted diluted EPS (pence) 5.3 4.7
11. Business combinations
Acquisition of AHK Designs Ltd - May 2024
On 17 May 2024, Victorian Plumbing Ltd, a subsidiary, acquired the entire
issued share capital of AHK Designs Ltd, trading as Victoria Plum ("Victoria
Plum").
Victoria Plum was acquired for initial consideration of £22.5m, with £0.3m
repaid by the seller through the completion accounts adjustment.
£m
Purchase consideration:
Initial consideration 22.5
Completion accounts adjustment (0.3)
Total consideration 22.2
The provisional fair value of assets and liabilities recognised as a result of
this acquisition are as follows:
£m
Tangible fixed assets -
Intangible fixed assets -
Inventory 8.9
Cash 3.1
Trade and other receivables 1.1
Trade payables (3.2)
Other taxation and NI (1.5)
Corporation tax (0.3)
Other payables (0.7)
Accruals (2.3)
Contract liabilities (1.7)
Net identifiable assets acquired 3.4
Goodwill 18.8
Net assets acquired 22.2
The acquired business contributed revenues of £14.7m, an adjusted EBITDA loss
of £2.2m and loss before tax of £3.1m to the Group for the period from the
date of acquisition to 30 September 2024.
12. Goodwill
£m
Cost
At 30 September 2022 -
At 30 September 2023 -
Additions 18.8
At 30 September 2024 18.8
Net book value
At 30 September 2023 -
At 30 September 2024 18.8
During the period the Group recognised goodwill upon the acquisition of
Victoria Plum. The goodwill represents the removal of a nuisance factor, being
the competing brand with a similar name, and is allocated to the Victorian
Plumbing CGU.
This balance has been reviewed for impairment taking into account the
forecasted benefits that the acquisition will bring to the Group. Sensitivity
testing has been performed to assess the impact of changes in assumptions on
the value of benefit. The sensitivity analysis performed assessed the impact
of pessimistic but reasonably possible changes to future cash flows, long term
growth rates and pre-tax discount rates. Significant headroom was retained
over the carrying value of goodwill, leading to the conclusion that the
carrying value of goodwill exceeds the recoverable value.
13. Intangible assets
Computer software Assets under construction Total
£m £m £m
Cost
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
Additions 2.9 0.9 3.8
At 30 September 2024 15.8 1.1 16.9
Accumulated amortisation
At 30 September 2022 6.8 - 6.8
Charge for the year 2.3 - 2.3
At 30 September 2023 9.1 - 9.1
Charge for the year 3.1 - 3.1
At 30 September 2024 12.2 - 12.2
Net book value
At 30 September 2022 3.3 - 3.3
At 30 September 2023 3.8 0.2 4.0
At 30 September 2024 3.6 1.1 4.7
Assets under construction represent costs incurred in the development of
internal management systems that are not yet available for use in the manner
intended by management.
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 £3.3m in the year ended 30 September 2024
(2023: £2.6m) for development of computer software.
For the year to 30 September 2024, the amortisation charge of £3.1m (2023:
£2.3m) has been charged to administrative expenses in the income statement.
14. 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 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
Additions - - - - 23.4 23.4
At 30 September 2024 0.1 1.3 0.5 1.2 27.3 30.4
Accumulated depreciation
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
Charge for the year 0.1 0.1 - 0.3 - 0.5
At 30 September 2024 0.1 1.0 0.5 1.0 - 2.6
Net book value
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
At 30 September 2024 - 0.3 - 0.2 27.3 25.6
Assets under construction wholly represent capital expenditure for the fit-out
of the new DC. This project remained ongoing as at 30 September 2024 and was
ready for use in the manner intended by management by the end of December 2024
15. Right-of-use assets
Right-of-use assets
£m
Cost
At 30 September 2022 8.3
Modifications 0.7
At 30 September 2023 9.0
Additions 44.8
Modifications 0.4
Disposals (0.3)
Impairment (0.8)
At 30 September 2024 53.1
Accumulated depreciation
At 30 September 2022 3.8
Charge for the year 0.9
At 30 September 2023 4.7
Charge for the year 3.3
Disposals (0.3)
At 30 September 2024 7.7
Net book value
At 30 September 2022 4.5
At 30 September 2023 4.3
At 30 September 2024 45.4
On 4 October 2023, the Group entered into a 20-year lease agreement for the
DC. An addition of £44.8m has been recognised as a right-of-use asset, in
accordance with IFRS 16 'Leases', representing the discounted future cashflows
under the contract including stamp duty paid and an asset retirement
obligation.
During the period, the Group renewed the lease on three of its properties that
had expired; this represents a modification under IFRS 16. The right-of-use
asset was increased by £0.4m to reflect the value of the asset after the
modification and the corresponding lease liability increased by £0.4m.
In accordance with IAS 16 'Property, Plant and Equipment', £2.2m of
right-of-use-asset depreciation was recognised as an addition to assets under
construction within property, plant and equipment.
Certain right-of-use assets will not be in use following completion of the
warehouse transformation and will, accordingly, not generate any economic
benefit for the group. An impairment expense of £0.8m (2023: £nil) has been
recognised during the year.
16. Trade and other receivables
2024 2023
£m £m
Trade receivables 3.8 2.2
Right-of-return asset 0.3 0.3
Accrued income 1.2 0.6
Prepayments 1.6 0.9
Amounts in escrow - 0.8
6.9 4.8
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.
17. Trade and other payables
2024 2023
£m £m
Trade payables 24.7 23.9
Other taxation and NI 8.8 7.4
Refund liability 0.8 0.9
Other payables 1.5 1.3
Accruals 8.4 4.5
44.2 38.0
18. Lease liabilities
Lease liability
£m
At 30 September 2022 5.0
Modifications 0.7
Finance costs 0.2
Lease payment (1.1)
At 30 September 2023 4.8
Additions 41.7
Modifications 0.4
Finance costs (not included in exceptional items) 0.2
Finance costs (included in exceptional items) 2.8
Lease payment (not included in exceptional items) (1.0)
Lease payment (included in exceptional items) (2.8)
At 30 September 2024 46.1
On 4 October 2023, the Group entered into a 20-year lease agreement for the DC
and commenced a period of fit-out. In accordance with IFRS 16, a lease
liability of £41.7m has been recognised, with a corresponding right-of-use
asset recognised in non-current assets.
During the period the Group renewed the lease on three of its properties that
had expired; this represents a modification under IFRS 16. The right-of-use
asset was increased by £0.4m to reflect the value of the asset after the
modification and the corresponding lease liability increased by £0.4m. The
Group had total cash outflows for leases of £3.8m (2023: £1.1m).
Lease liabilities as at 30 September were classified as follows:
2024 2023
£m £m
Non-current 43.0 3.8
Current 3.1 1.0
Total 46.1 4.8
19. Borrowings
2024 2023
£m £m
Amounts drawn under revolving credit facility - -
Unamortised debt issue costs (0.1) (0.1)
(0.1) (0.1)
At 30 September 2024, the £10m RCF remained undrawn. On 18 December 2024 a
new RCF agreement was secured for £30m with a termination date of 17 December
2027. 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 35% 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.
Unamortised debt issue costs of £0.1m (2023: £0.1m) are included in
prepayments.
20. Share capital
2024 2023
£m £m
Allotted, called up and fully paid
326,334,279 ordinary shares of 0.1p (2023: 325,227,984 ordinary shares of 0.3 0.3
0.1p)
21. Own shares held
The Employee Share Option Trust purchases shares to fund the Share Incentive
Plan. On 27 July 2024, the third anniversary of the Share Incentive Plan share
award, the shares vested. At 30 September 2024, the trust held 472,248 (2023:
635,504) ordinary shares with a book value of £432 (2023: £636). The market
value of these shares as at 30 September 2024 was £0.5m (2023: £0.6m).
Number of shares £
ESOT shares reserve
Own shares held at 30 September 2023 635,504 635
Dividend shares transferred in 3,725 4
Sale/transfers out (166,981) (167)
Own shares held at 30 September 2024 472,248 472
22. 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 Chair 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 £3.1m (2023: £3.9m) with a Company charge
of £0.8m (2023: £1.3m). This included associated NI at 13.8% (2023: 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.
2024 2023
£m £m
Share Incentive Plan 0.2 0.3
Restricted Share Awards 1.3 2.2
Deferred Bonus Plans 0.8 0.7
Long Term Incentive Plans 0.3 0.2
Sharesave schemes 0.1 0.1
Total IFRS 2 charge 2.7 3.5
NI and apprenticeship levy on applicable schemes 0.4 0.4
Total charge 3.1 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.
2024 2023
number number
Outstanding at 1 October 347,037 426,974
Sale/transfers out (178,504) -
Awarded (dividend shares) 3,725 15,084
Forfeited (44,484) (95,021)
Outstanding at 30 September 127,774 347,037
The total charge in the year, included in operating profit, in relation to
these awards was £0.2m (2023: £0.3m). The Company charge for the year was
£nil (2023: £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 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.
2024 2023
Number
Number
Outstanding at 1 October 4,930,880 5,547,240
Vested (924,540) (616,360)
Outstanding and unvested at 30 September 4,006,340 4,930,880
The total charge in the year, included in operating profit, in relation to
these awards was £nil (2023: £nil). The Company charge for the year was
£nil (2023: £nil). The share awards outstanding at 30 September 2024 have
a weighted average remaining vesting period of 1.4 years (2023: 2.1 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.
2024 2023
Number
Number
Outstanding at 1 October 386,394 676,189
Vested (386,394) (289,795)
Outstanding and unvested at 30 September - 386,394
The market value per ordinary share for the restricted shares awarded under
the MIP that vested in the year was £0.92.
The total charge in the year, included in operating profit, in relation to
these awards was £nil (2023: £nil). The Company charge for the year was
£nil (2023: £nil).
Restricted Share Awards
The Chair 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 2024 was as
follows:
2024 2023
Number
Number
Outstanding at 1 October 2,276,004 3,043,547
Vested (767,542) (767,543)
Outstanding and unvested at 30 September 1,508,462 2,276,004
The market values per ordinary share for restricted shares that vested in the
year were £0.92 and £1.01. The RSAs outstanding at 30 September 2024 have a
weighted average remaining vesting period of 1.2 years.
The total charge in the year, included in operating profit, in relation to
these awards was £1.3m (2023: £2.2m). The Company charge for the year was
£0.5m (2023: £0.9m).
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. An 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 2,998,636 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 £0.89, being the average Market Value of a Share on 30
September 2023 and 30 November 2023.
2024 2023
Number Number
Outstanding at 1 October 4,660,836 1,893,219
Options granted in the year 2,998,636 4,418,641
Forfeited (2,375,186) (1,486,025)
Vested (990,228) (164,999)
Outstanding at 30 September 4,294,058 4,660,836
The total charge in the period, included in operating profit, in relation to
these awards was £0.8m (2023: £0.7m). The Company charge for the period was
£nil (2023: £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 three years after grant subject to EPS and Absolute
TSR performance conditions, with a two-year post-vesting holding period
applying. Performance conditions on this scheme have not been met and post
year end the options lapsed.
The 2023 and 2024 LTIP awards are subject to performance conditions based on
adjusted EPS (100% of award). Awards vest three years after grant subject to
EPS performance conditions, with a two-year post-vesting holding period
applying.
On 12 January 2024, the Group awarded 827,236 options under the LTIP scheme.
The fair value for the EPS element of the award at £0.86 was based on the
share price at the grant date.
2024 2023
Number Number
Outstanding at 1 October 1,118,497 323,472
Options granted in the year 827,236 870,168
Options lapsed in the year - (75,143)
Outstanding at 30 September 1,945,733 1,118,497
The total charge in the year, included in operating profit, in relation to
these awards was £0.3m (2023: £0.2m). The Company charge for the period was
£0.3m (2022: £0.2m).
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 Non-vesting condition Fair value per option
£ £ % years % %
Dividend yield
%
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
30/03/2024 0.79 0.67 59 3.17 3.92 1.77 0 0.36
Expected volatility is estimated by considering the historical 3.17 year
volatility of the FTSE AIM retailers.
2024 2023
Number of share options Number of share options
Outstanding at 1 October 533,973 443,747
Options granted in the year 194,042 211,539
Options lapsed in the year (131,534) (121,313)
Outstanding at 30 September 596,481 533,973
Exercisable at 30 September - -
The total charge in the year, included in operating profit, in relation to
these awards was £0.1m (2023: £0.1m). The Company charge for the period was
£nil (2023: £nil).
23. Cash generated from operating activities
Cash flows from operating activities 2024 2023
£m £m
Profit before taxation for the financial year 9.0 15.6
Adjustments for:
Amortisation of intangible assets 3.1 2.3
Depreciation of property, plant and equipment 0.5 0.6
Depreciation of right-of-use assets 3.3 0.9
Depreciation capitalised during the fit-out of the DC (2.2) -
Share-based payments (including NI) 3.1 3.9
Finance income (1.0) (0.6)
Finance costs (excluding exceptional items) 0.4 0.3
Exceptional items recognised within finance costs 2.8 -
Exceptional items recognised within administrative expenses 8.2 0.8
Adjusted EBITDA 27.2 23.8
Fair value loss on financial derivatives 0.9 0.3
Increase in inventories (0.5) (0.3)
Increase in receivables (1.1) (0.3)
Decrease in payables (4.1) (3.7)
Cash generated from operating activities before exceptional items 22.4 19.8
Free cash flows 2024 2023
£m £m
Cash generated from operating activities before exceptional items 22.4 19.8
Repayment of lease liabilities (excluding exceptional items) (1.3) (1.1)
Purchase of intangible assets (excluding exceptional items) (3.5) (2.8)
Purchase of property, plant and equipment (excluding exceptional items) (0.2) (0.2)
VAT not yet recovered on exceptional items 1.2 0.4
Free cash flows 18.6 16.1
Adjusted EBITDA 27.2 23.8
Operating cash conversion 68% 68%
VAT not yet recovered on exceptional items relates to timing differences on
warehouse transformation expenditure.
24. Events after the reporting period
In August 2024, the decision was taken by the Group for Victoria Plum to cease
trading and from November 2024 the Victoria Plum website was redirected to
Victorian Plumbing. Victoria Plum will be treated as a discontinued operation
in accordance with IFRS 5 'Non-current assets held for sale and discontinued
operations' in the financial year ending 30 September 2025.
On 18 December 2024, the Group entered into a new three-year RCF with HSBC,
replacing the £10m RCF which was due to expire in December 2025. The new RCF
has total commitments of £30m. The Group has provided a cross-guarantee by
way of a debenture dated 7 June 2021 as security for the facility. The RCF
remains undrawn at the date of this report.
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