TIDMIBST
RNS Number : 0786T
Ibstock PLC
22 March 2021
22 March 2021
Ibstock plc ("the Company" or "the Group")
Annual Financial Report
Further to the release of the Company's preliminary results
announcement on 10 March 2021 (the "Results Announcement"), the
Company announces that it has today published its full Annual
Report and Accounts for the year ended 31 December 2020.
The Company also announces that it will be posting copies of the
documents listed below to shareholders later today:
1. 2020 Annual Report and Accounts
2. Notice of Annual General Meeting ("AGM") 2021
The AGM will be held at 11:00am on Thursday 22 April 2021 at the
offices of Ibstock plc, 54 Hatton Garden, London EC1N 8HN.
A copy of each of these documents will be submitted to the UK
Listing Authority via the National Storage Mechanism and will
shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The 2020 Annual Report and Accounts and Notice of Annual General
Meeting 2021 will also be accessible later today via the Company's
website at www.ibstockplc.co.uk/investor-relations
Regretfully, the current issues surrounding COVID-19 and the
public health guidance in the UK have meant that we have taken the
decision to discourage shareholders from attending the AGM in
person, but we will be providing details on our website of a
webcast so shareholders are able to observe proceedings. For the
avoidance of doubt this approach does not impact shareholders'
ability to vote on the resolutions being proposed and information
regarding the voting procedure can be found in the Notice of AGM.
Any changes to the AGM (including any change to the location) will
be communicated to shareholders before the meeting through our
website and, where appropriate, by RNS announcement.
The Appendix to this announcement is a supplement to the Results
Announcement and should be read together with the Results
Announcement. It contains the information required, pursuant to DTR
6.3.5, to be communicated to the media in unedited full text that
is in addition to the information communicated in the Results
Announcement. This announcement is not a substitute for reading the
full Annual Report and Accounts. Page numbers and cross references
in the text below refer to page numbers and cross references in the
Annual Report and Accounts 2020.
Appendix
Principal risks and uncertainties
DESCRIPTION MITIGATION
Climate change
The Group may not deliver upon We recognise the importance
its of being a sustainable business
sustainability commitments and that climate change affects
and those targets set out in natural and economic systems,
the Sustainability Roadmap. and recognise their implications
in all we do.
An inability to manage energy
demand needs within our sustainability As a business, there are a
targets or changes in consumer number of International and
demand may reduce our competitive British standards operated
advantage. throughout our businesses
which include environmental,
Failure to respond to climate energy, responsible sourcing
change risks may also result and quality. These provide
in reductions in investor interest a consistent set of
and support. procedures which are regularly
reviewed and updated to identify
As a business engaged in the ways in which they can be
extraction of made more effective.
natural resources and the manufacture
of The Group aims to provide
concrete products, there is visibility and assurance to
a risk that the our stakeholders through our
Group's operations are targeted disclosure in relation to
by sustainability (see pages
environmental activists. This 36 to 45), which is supported
could result in disruption by continued investment to
at one or more of the Group's improve the sustainability
manufacturing facilities inhibiting of our operations and internal
the ability to manufacture sustainability KPIs to track
or despatch product or receive measures. A new KPI centred
supplies. on carbon reduction has been
introduced for the FY 2020
The impact of climate change and is an additional measure
and for our LTIP.
Government's response to this
could also lead to changes The Group has a proven record
to laws and regulations that of investment in the latest
could systems, plant, machinery
require that the Group make and technology and we continue
significant to address the need for enabling
capital investments or otherwise conditions to address climate
increase its change concerns through the
costs or could result in material development of our Sustainability
liabilities. Roadmap 2025.
The global increase in focus The Group Technical team and
on corporate Group Engineering function
social responsibility following are investing in longer-term
the pandemic strategic supplier partnerships
has greatly raised the profile in order to deliver longer-term
of the Group's sustainable products to our
approach and success with its customers.
sustainability
programme. The approach taken We operate proactive management
by the of the sustainability descriptions
Group when dealing with all associated with the Group's
its stakeholders products. Physical security
will be placed under increased measures are in place at the
scrutiny in the Group's production facilities,
wake of the current crisis together with real-time monitoring
and beyond. of social media to identify
threats of environmental activism.
The introduction of a new
ESG Committee will provide
clear and strategic oversight
of the Group's sustainability
strategy. It will provide
the basis to ensure that all
existing
and emerging issues are covered
appropriately so that the
Group will be able to continue
to meet both its legal obligations
and further develop its Sustainability
Roadmap.
The Group will continually
keep under review the level
of resourcing and structure
in place to manage sustainability
within the business.
-----------------------------------------
Operational disruption The Group has the ability
to transfer some of its production
A material disruption, including across its network of plants
those caused and is able to engage subcontractors
by extreme weather, power to reduce the impact of certain
outages or a production disruptions. Groupwide
global pandemic, at one of business continuity plans
the Group's are being refreshed and improved
manufacturing facilities or to take account of those learnings
quarries, or at coming from the COVID-19 pandemic.
one of the Group's suppliers'
facilities, In relation to supplier disruption
could prevent the Group from or failure, further third
meeting party suppliers have been
customer demand. identified who can maintain
service in
The Group depends on efficient the event of a disruption.
and In relation to IT, a major
uninterrupted operations of incident action plan has been
its information developed and the Group maintains
and communication technology, data backups and a comprehensive
and any disaster recovery plan covering
disruption to these operations Group and individual factory
could have a locations.
material adverse effect on
the Group's The Group maintains a capital
operations and financial performance. expenditure development plan,
Failure to deliver capital which is focused on integrating
enhancements on a the latest technology and
timely basis could similarly replacing end-of-life assets
extend planned to ensure
closures and adversely impact continued operational capability.
the Group's The ongoing
production capabilities. maintenance programme ensures
a disciplined approach to
Additionally, the Group is plant outages, whilst ensuring
exposed to the greater investment in
impact of unexpected or prolonged maintenance on an ongoing
periods of basis. This is supported by
bad weather, which could adversely qualified project management
affect resource to ensure disruption
construction activity and, is minimised.
as a result,
demand for the Group's products Management does not underestimate
the potential impact that
future prolonged periods of
bad weather could have. Weather
conditions are beyond the
Group's
control, although historically
adverse weather has not impacted
trading in the context of
any full year.
The Group maintains appropriate
business interruption insurance,
whilst its wide geographical
spread mitigates this
risk to some extent and allows
it to manage its production
facilities to mitigate the
impact of such disruption
.
-----------------------------------------
Economic conditions
Wider macroeconomic conditions
The Group's business could are largely beyond the control
be materially of the Group. However, the
impacted by changes in the Group seeks to analyse construction
macroeconomic data using independent forecasts
environment in the UK. Specifically, of construction statistics
demand and forecasts of future demand
for the Group's products is based on stated customer requirements
strongly correlated with
with residential construction the aim of anticipating market
and renovation movements.
activities and non-residential
construction, The Group has historically
together with the supply chain's flexed capacity and its cost
attitude to base where possible during
stock levels, which are cyclical. economic downturns to allow
more of the Group's manufacturing
Continued uncertainty around plants to remain open and
the progress of viable, maintaining skills,
the COVID-19 pandemic and development and training.
the introduction Actions taken during the year
of further lockdowns and restrictions in order to reduce the ongoing
could fixed cost footprint of the
further damage the economy Group through an organisational
with the review and restructuring will
resulting impacts on the Group's provide flexibility for the
business. business so that it can meet
future demand levels in a
In addition, should negative cost-effective way.
impacts on
economic conditions arise Ibstock ensures that its fulfilment
as a result of the and customer service capabilities
change in the relationship to support and serve customers
with the EU, this are maintained and actively
could include a reduction engage with industry bodies
in housing demand, to ensure the promotion of
or reduced mortgage availability housebuilding and construction,
or whilst seeking to promote
affordability. Such consequences the differentiating qualities
would likely of our business in the core
reduce demand for the Group's markets in which we compete.
products
The Group's RMI and specification
product ranges diversify end-use
exposure and provide greater
resilience in light of changing
market demand in any of its
end-use markets
-----------------------------------------
Anticipating the market and
new product development
There is a risk that the business Consideration of relevant
is not able to market data and trends in
identify opportunities in the divisions highlights emerging
the housing market risks as soon as they are
or construction sector and identified, providing the
miss chances to leadership teams with the
maximise or exploit opportunities information required to make
ahead of considered and fact based
our competitors. As result, decisions.
our product
offering and the customer The Group has a culture of
journey may not innovation through its organisational
meet changing customer requirements. structure, including suitably
qualified and experienced
If the business is not able people such as product managers
to respond to changes or opportunities in each of the operating divisions.
in the market this could result
in a direct financial cost The Group's Growth Engine
whereby revenue numbers stagnate to secure sales opportunities
or decline. In addition, there enables more effective new
is the risk that the business and sustainable product development.
may not be perceived as market
leader and this will directly
impact their reputation and
ability to expand market share.
Failure to be at the forefront
of innovation as the Group's
markets evolve may lead to
a loss in market position or
customers resulting in declining
revenue or margins.
A lack of new product development
and failure to optimise our
supply chain to support our
customers may also be detrimental
to the
long-term achievement of the
Group's strategy
-----------------------------------------
Financial risk management
In addition to the input cost Foreign exchange risk: The
risks outlined, the Group undertakes limited foreign
Group is subject to the following exchange transactions selling
other domestically with largely
financial risks: local input costs. Some capital
expenditure requires foreign
Foreign exchange risk: As the exchange purchases and management
Group transacts in currencies considers foreign exchange
other than Sterling, exchange hedging strategies where significant
rate fluctuations may adversely exposures arise.
impact the Group's results.
Credit risk: Customer credit
Credit risk: Through its customers, risk is managed by each subsidiary
the Group is exposed to a counterparty subject to the Group's policy
risk that accounts receivable relating to customer credit
will not be settled leading risk management. The Group
to a financial loss to the principally manages credit
Group. risk through management of
customer credit limits. The
Liquidity risk: Insufficient credit limits are set for
funds could result in each customer based on the
the Group being unable to creditworthiness of the customer
fund its operations. and the anticipated levels
of business activity.
Interest rate risk: Movements These limits are initially
in interest rates determined when the customer
could adversely impact the account is first set up and
Group and result in higher are regularly monitored thereafter.
financing payments to service
debt. Liquidity risk: The Group's
policy is to ensure that it
The impacts of COVID-19 and has sufficient funding and
the adoption facilities in place to meet
of home working, changes to any foreseeable peak in borrowing
volumes and requirements and liabilities
patterns of transactional when they become due. At
activity all served to 31 December 2020, the Group
increase the financial control has net debt1 of GBP69 million
risks, through a - well within the banking
heightened potential for fraud facilities
and compromising the integrity of GBP215 million, as set
of data within the organisation out in Note 19 of the Group
financial statements. During
the year it negotiated a number
of amendments to a number
of covenants under the RCF
and
secured access to the COVID
Corporate Financing Facility.
Interest rate risk: The Group
finances its operations through
a mixture of retained profits
and bank borrowings. The Group's
bank borrowings, other facilities
and deposits are in Sterling
and at floating rates.
No interest rate derivative
contracts have been entered
into during the year or at
the year end.
See mitigations under Cyber
risk relative to the increased
of financial control.
-----------------------------------------
Government regulation and standards
relating to the manufacture
and use of building products
The Group monitors the law
The Group's production, manufacturing across its markets to ensure
and the effects of changes are
distribution activities are minimised and the Group complies
subject to health with all applicable laws.
and safety risks. The Group The Group aligns Company-wide
is subject to policies and procedures accordingly
environmental, health and with training on mandatory
safety laws and topics and compliance requirements
regulations and these may undertaken.
change.
These laws and regulations The health and wellbeing of
could cause the our employees is fundamental
Group to make modifications to our business. We have stringent
to how it health and safety policies
manufactures and prices its and monitor compliance regularly
products. through internal and external
auditing activity. This has
Greater regulation following been particularly important
the Grenfell tragedy has increased in light of COVID-19.
the risk that the Group's failure
to comply with the relevant We reorganised the management
regulations would result in of the health and safety function
the Group being liable to fines to provide more coordinated,
or a suspension of operations, central oversight to ensure
which would impact the Group's alignment and consistency
financial results, together throughout the business.
with any associated negative
reputational damage. We have also invested considerable
resources in employee training
Additional regulation and responsibilities across our manufacturing processes.
as We have invested heavily in
a result of continuing COVID-19 safe systems and facilities
restrictions to protect our employees.
including health and safety These activities have continued
and wellbeing of virtually, where possible,
our workforce may also impact. as a result of COVID-19.
-----------------------------------------
Customer relationships and
reputation
The Group has a service-led
The Group receives a significant ethos with many top customer
portion of its relationships lasting over
revenue from key customers 40 years. The Group differentiates
and the loss of itself through the continued
any such customer through quality of its products and
our failure to service levels with Net Promoter
evolve effectively and meet Score (NPS)
the changing surveys completed to build
needs of our customers could customer relationships through
result in a proactive response to customer
significant loss of revenue requirements.
and cash flow.
Constriction in activity levels The Group's sales and production
within the teams are highly integrated
construction industry introduces to ensure that production
a risk that aligns with customers' needs.
price levels cannot be maintained, Sales teams receive in-depth
resulting in technical training and are
dilution of margins or level assisted by a design support
of market share service team as well as targeted
and adversely impacting the marketing materials to assist
Group's with specification and selection.
financial results.
The Group's divisions each
Further, the Group does not have their own sales teams
have long-term contracts with aligned by customer group
its customers and the Group's and region in order to focus
revenue could be reduced if on key decision-makers and
its customers switch some or customers. Key account
all of their business with management is supervised
the Group to other suppliers at a senior level where long-term
or if we are unable to leverage relationships benefit from
our customer the Group's commitment to
relationships effectively quality, service and consistency.
During the 2020 year, we amended
our organisational structure
to
move marketing teams into
the divisional commercial
teams, enabling us to understand
and respond more effectively
to the evolving needs of our
customers.
Access to 145 million tonnes
of clay reserves, Ibstock
Clay's primary raw material,
ensures an ability to satisfy
customer demand.
-----------------------------------------
Recruitment and retention of
key personnel
Focused action plans are in
The Group is dependent on qualified place as a result of the 'Great
personnel in key positions place to work' employee engagement
and employees survey aimed at further building
having special technical knowledge on employee satisfaction.
and skills.
Any loss of such personnel Improved methods of communication
without timely such as My Ibstock and a focus
replacement could disrupt on employee well being will
business help
operations, damage customer in developing our culture
relationships or and following an extremely
result in the loss of corporate difficult year.
knowledge.
Investment in our people through
There is a risk that the Group training and
faces difficulties in attracting development programmes is
and retaining staff in production in place to upskill our existing
roles, which are labour-intensive workforce whilst we recognise
and potentially less attractive the changing labour markets,
to the younger population. and packages for key and senior
staff remain competitive.
Recent experience of COVID-19 We are proposing a new Senior
and the impact of restructuring Managers Share Plan (SMSP)
and redundancies could negatively for 2021.
affect morale
The Group believes that it
is essential to support and
develop the management team,
where appropriate, ensuring
that the team is structured
in a way which best
takes advantage of the available
skills and robustly identifies
the team and structure for
the future. Succession plans
are in place, which is key
to ensuring a managed transfer
of roles and responsibilities.
Apprenticeship schemes are
in operation with a yearly
intake across the business
(engineering and technical
based). High potential individuals
are identified with
development plans formulated.
External recruits are brought
in where any skill gaps are
identified and to enhance
the talent pool.
-----------------------------------------
Input prices
The Group's business may be Significant input costs are
affected by under constant review, with
volatility in extraction expenses continuous monitoring of raw
and raw material costs, energy prices
material costs. Risks exist and haulage expenses, with
around our ability the aim of achieving the best
to pass on increased costs possible prices and assuring
through price stability of supply.
increases to our customers.
With regard to possible energy
The Group's business may also shortages, the Group operates
be affected by forward purchasing to mitigate
volatility in energy costs the impact of sudden price
or disruptions in increases and monitors the
energy supplies. Significant carbon market
changes in the on an ongoing basis and has
cost or availability of transportation modelled the impact of such
could rises to assess the financial
affect the Group's results implications (see Viability
Statement on page 64).
As competitors of the Group
are likely to experience similar
levels of input price increases,
we aim to have appropriate
pricing policies to remain
competitive within our markets
and pass on significant increases
in input costs.
-----------------------------------------
Product quality
The nature of the Group's business Focus on detailed product
may information has intensified,
expose it to warranty claims with the Group's customers
and to claims for demanding greater information
product liability, construction regarding the product specifics.
defects, project
delay, property damage, personal The Group operates comprehensive
injury and quality control procedures
other damages. across its sites with both
internal and external audit
Ensuring accuracy of the Group's reviews of product quality
product data completed to ensure conformance
is important to the Group's with internationally recognised
continued success standards.
with any inaccurate data potentially
placing All accredited staff undergo
the end user at risk. rigorous training
programmes on quality and
Any damage to the Group's brands, the Group's Technical teams
including carry out regular testing
through actual or alleged of all of our products to
issues with its provide
products, could harm our business, full technical data on our
reputation product range.
and the Group's financial
results. The Group maintains appropriate
insurance cover against product
liability related claims.
-----------------------------------------
Cyber security
High-profile attacks on companies The Group is committed to
across a ensure that its network, applications
number of industry sectors and data are protected.
(including one of
our own major customers) have The Group has completed a
highlighted review using an external cyber
the damage that can now be security programme framework,
caused by which provides coverage across
hackers and cyber terrorists. the key areas of cyber security
Unauthorised access to the and aligns with industry standards.
Group's IT This has culminated in the
systems, malware attacks or Group's achievement of the
hacking incidents represent UK Government's Cyber Essentials
the greatest cyber security accreditation, which is subject
risks to the Group. to independent audit annually.
Such IT security risks have Despite the pace of the change
the ability to significantly introduced when lockdown commenced
disrupt the Group's business, in March, all equipment deployed
resulting in financial loss. was built to be image compliant
Potential penalties could arise with Ibstock policies and
from the loss of data as a standards. In addition, the
result of breaches to the Group's fast track introduction of
IT security or new industry leading VPN services
reputational damage as a result to handle the extended homeworking
of negative user community, the use of
publicity associated with new applications such as Microsoft
control lapses in Teams/OneDrive to enable virtual
this area. meetings and collaboration
and the disablement of existing
Changes in employees' working vulnerable applications and
patterns processes ensure the business
and use of technology as a could and is expected to continue
direct result of to operate effectively in
COVID-19, along with the resulting the 'new normal'.
risks to
information security have
materially increased
cyber risks. The continuing
prevalence of many colleagues
continuing to work from home
in some capacity for the foreseeable
future will compound the near
term challenges.
-----------------------------------------
Directors' Responsibility Statement
The Directors, whose names and functions are given on pages 68
and 69 of the 2020 Annual Report and Accounts confirm that to the
best of their knowledge:
- the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Group and Company and the undertakings included in the
consolidation
taken as a whole;
- the Strategic Report and Directors' Report include a fair
review of the development and performance of the business and the
position of the Group and Company and the undertakings included in
the consolidation taken as a whole, together with a description of
the principal risks and uncertainties that they face.
The Directors consider that the Annual Report and Accounts taken
as a whole, are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Group's
position and performance, business and strategy.
Enquiries to:
Ibstock plc
Nick Giles, Group Company Secretary 01530 257438
About Ibstock Plc
Ibstock plc is a leading UK manufacturer of clay bricks and a
diversified range of clay and concrete products. Its principal
products are clay bricks, brick components, concrete roof tiles,
concrete substitutes for stone
masonry, concrete fencing and pre -- stressed concrete products.
The Group's two divisions are:
Ibstock Clay: The leading manufacturer by volume of clay bricks
sold in the United Kingdom. With 16 manufacturing sites Ibstock
Brick has the largest brick production capacity in the United
Kingdom. It operates a network of 18 active quarries located close
to its manufacturing plants. Ibstock Kevington provides masonry and
pre-fabricated component building solutions, operating from 6 sites
across the United Kingdom.
Ibstock Concrete: A leading manufacturer of concrete roofing,
walling, flooring and fencing products, along with lintels and
general concrete building products, with 14 manufacturing plants in
the United Kingdom.
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