TIDMIBST
RNS Number : 2216S
Ibstock PLC
08 March 2023
Preliminary results
8 March 2023
Ibstock plc
Results for the year ended 31 December 2022
Strong financial performance and further strategic progress
Ibstock plc ("Ibstock" or the "Group"), a leading UK
manufacturer of clay bricks and concrete products and solutions,
announces its results for the year ended 31 December 2022.
Statutory Results
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Year ended 31 December 2022 2021 1Y % change
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Revenue GBP513m GBP409m +GBP104m +26%
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Profit before taxation GBP105m GBP65m +GBP40m +61%
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EPS 21.6p 7.8p +13.8p >100%
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Adjusted Results(1)
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Year ended 31 December 2022 2021 1Y % change
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Adjusted EBITDA GBP140m GBP103m GBP37m +36%
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Adjusted EBITDA margin 27.2% 25.2% +200bps +8%
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Adjusted EPS 22.7p 13.9p 8.8p +63%
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Total dividend per share 8.8p 7.5p +1.3p +17%
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Adjusted free cashflow GBP50m GBP51m GBP(1)m (3)%
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ROCE 23.4% 15.8% +760bps +48%
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Net debt GBP46m GBP39m +GBP7m (18)%
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A year of strong performance
-- Strong trading performance for the year, with both revenue and
profit materially ahead of both the prior year and pre-pandemic
comparators
-- Adjusted EBITDA [1] of GBP140 million (2021: GBP103 million) was
ahead of our expectations set at the beginning of the year, with
EBITDA margin of 27.2% (2021: 25.2%)
-- Return on Capital Employed1 (ROCE) increased to 23.4% (2021: 15.8%)
ahead of medium term target of 20%
-- Balance sheet strength maintained with closing leverage of 0.4x
(Dec 21: 0.4x) after GBP38 million of growth capital and GBP30
million share buyback during the year
-- Recommended final dividend of 5.5 pence per share (2021: 5.0p),
growing full year dividend by 17% to 8.8 pence per share (2021:
7.5p)
Building for the future
-- Growth capital of GBP38 million deployed in the year to support
our strategic growth over the medium-term
-- Atlas and Aldridge brick projects are on track to commission from
the end of 2023, delivering over 100 million bricks of lower-cost
capacity per annum, with the whole Atlas range to be externally
verified as carbon neutral
-- Strategic acquisitions and investments in fast-growth areas of
UK construction markets during the year have accelerated diversified
growth through Ibstock Futures
-- Brick slip investment strategy further refined, to both accelerate
commissioning of an initial capacity extension, as well as incorporate
more advanced and efficient process technology in the purpose
built factory
-- Continued strong progress towards ambitious ESG targets, including
commitment to deliver 40% absolute reduction in carbon by 2030
-- Ibstock Futures to open new state of the art innovation hub in
West Midlands during H1 2023
-- Continued investment in people and culture delivering a step change
in health, safety and wellbeing during the year
-- Balance sheet strength provides resilience and strategic optionality
to invest further for growth and return additional capital to
shareholders over the medium term
Current trading and outlook
-- Activity in the early weeks of 2023 has continued to reflect the
more cautious demand environment seen in Q4 2022
-- Energy price risk well covered with over 80% of energy requirements
secured for H1 2023 and 65% secured for the full year
-- Our focus will balance disciplined management of price, cost and
capacity in the near-term with the delivery of our major growth
projects and strategic progress to ensure delivery against our
medium-term targets
-- We expect conditions to remain subdued through the early part
of 2023, but anticipate this to improve as the year progresses,
supported by sequential demand improvement
-- As such, the Board's expectations for the full year are unchanged
Joe Hudson, Chief Executive Officer, commented:
"These strong results reflect our continued focus on commercial
and operational execution, which has enabled the Group to deliver
significant growth and improved returns despite a challenging
backdrop. Revenue and profit were materially ahead of both the
prior year and pre-pandemic levels, reflecting the strategic
progress we have made over the last five years, with the
development of a high quality, lower cost and highly efficient
asset base allied to the strength of our market positions.
"We have faced into the challenges of recent years to emerge as
a more diverse, higher quality business, with a strong management
team and a clear strategy focused on value creation in the years
ahead. As we face another period of uncertainty, we will draw on
this experience to optimise our performance in the short term,
while continuing to invest in, and diversify, the business to
ensure we remain well placed to deliver on our medium-term
targets.
"Activity in the early weeks of 2023 has continued to reflect
the more subdued demand environment experienced towards the end of
last year, although we anticipate this to improve as the year
progresses. With the strong strategic platform we now have in
place, I am confident both in our ability to respond effectively to
conditions this year, and to achieve significant growth over the
medium-term."
Results presentation
Ibstock is holding a presentation at 10.30am today at 54 Hatton
Garden, London, EC1N 8HN.
Please contact ibstock@citigatedewerogerson.com to register your
in-person attendance.
A live webcast of the presentation and Q&A is also
available. Please register here for the live webcast.
The presentation can also be heard via a conference call, where
there will be the opportunity to ask questions.
Conference Call Dial-In UK: +44 (0) 33 0551 0200
Details:
US: +1 786 697 3501
Confirmation code: please quote Ibstock Full Year Results
when prompted
An archived version of today's webcast analyst presentation will
be available on http://www.ibstockplc.com later today.
Ibstock plc 01530 261 999
Joe Hudson, CEO
Chris McLeish, CFO
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Holly Gillis
About Ibstock plc
Ibstock plc is a leading UK manufacturer of clay bricks and a
diversified range of clay and concrete products and solutions. Its
principal products are clay bricks, brick components, concrete roof
tiles, concrete alternatives for stone masonry, concrete fencing
and pre -- stressed concrete products.
The Group comprises two core business divisions, Ibstock Clay
and Ibstock Concrete, with Ibstock Futures established to
accelerate diversified growth opportunities.
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 Futures: Complements our core businesses by accelerating
diversified growth opportunities and addressing key construction
trends, including sustainability and the shift towards Modem
Methods of Construction (MMC).
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.
Forward-looking statements
This announcement contains "forward-looking statements". These
forward-looking statements include all matters that are not
historical facts and include statements regarding the intentions,
beliefs or current expectations of the directors. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are difficult
to predict and outside of the Group's ability to control.
Forward-looking statements are not guarantees of future performance
and the actual results of the Group's operations. Forward-looking
statements speak only as of the date of such statements and, except
as required by applicable law, the Group undertakes no obligation
to update or revise publicly any forward-looking statements.
Chief Executive's Review
Introduction
This has been an outstanding year for Ibstock, and it is
pleasing to see how our performance in 2022 reflects the
significant strategic progress we have made as a business over the
last few years. The transformed platform of capability we now have
in place has been critical in enabling the delivery of very strong
financial performance in the 2022 year, and I am confident that it
will underpin the continuing success of our business over the years
ahead. I am grateful for the incredible team of people at Ibstock
who have enabled us to navigate the challenges of recent years and
emerge stronger, whilst always retaining focus on our longer-term
goals.
Over recent years, we have made significant investment in
strategic growth, enabling us to anticipate and respond to evolving
trends in the construction sector, and positioning us well to
maximise opportunities in a range of emerging, fast-growing niche
segments of this market. We have also invested consistently in our
people, building strength in our business, and creating opportunity
for all our colleagues. At the same time, our unwavering focus on
execution and disciplined capital allocation have ensured
resilience in our performance, supporting returns to shareholders
even in the most challenging of times.
Recent months have presented different challenges, with
macroeconomic uncertainty, inflation and higher interest rates
weighing on the demand picture. We will face into these challenges
with the same disciplined approach to capacity management, costs
and commercial execution to ensure we optimise performance in the
short term.
Ibstock has been, and will remain, an extremely cash generative
business, having returned around GBP265 million to shareholders,
equivalent to around 68 pence per share, over the last 7 years. We
remain committed to deploying these strong cash flows to support
both incremental investment and additional shareholder returns over
the years ahead.
Overview
We are reporting a strong performance for 2022, with revenue and
profit materially ahead of both the prior year and pre-pandemic
comparators. Trading was robust, supported by good commercial and
operational execution across the business, together with strong
demand from our new build residential, Repairs, Maintenance and
Improvement (RMI), and infrastructure customers.
The Group managed supply chain and inflation challenges well and
we continued to price dynamically to recover cost inflation
throughout the year, delivering a 26% increase in revenues with
volumes broadly in line with the prior year.
Market conditions were buoyant for most of the year, although we
experienced lower sales volumes in the final quarter, reflecting a
more cautious demand environment. Industry brick inventories
remained at historically low levels, with the market having to rely
on imported bricks to satisfy around 23% of delivered volumes, due
to the constraints on UK capacity.
The more subdued demand conditions observed in the final quarter
of 2022 have continued in the early weeks of 2023 although we
anticipate this to improve as the year progresses, supported by
sequential demand improvement. The strength of our balance sheet
provides resilience as we trade through these more challenging
conditions, and our focus will be on cost and capacity management,
alongside dynamic commercial execution, to ensure that we optimise
near-term performance regardless of market conditions. With the
inherent advantages in our domestic business model, we are well
positioned to displace imported products if overall demand remains
at lower levels for any sustained period.
On a medium and longer-term view, the UK residential
construction markets we serve remain underpinned by positive
structural growth drivers, including projected population growth, a
continuing shortage of housing and supportive government policy. We
are also well positioned to capitalise upon opportunities across
the diversified markets in which we operate, building on the
initial expansion of our Ibstock Futures business, which has grown
its scale and capabilities rapidly over the last 12 months. Overall
growth capital of GBP38 million was invested across our core
business and Futures during the year to support our medium-term
growth, and we expect to invest further growth capital of around
GBP55 million during the 2023 year.
Ibstock has an ambition to be the most sustainable manufacturer
of clay and concrete products in the UK, and also to lead our
sector in ESG disclosure and transparency. In 2022, we achieved an
absolute carbon reduction of 13% relative to our 2019 baseline.
Whilst this represented a slight increase year on year, we remain
committed to taking the actions necessary to ensure that the Group
achieves a 40% reduction in absolute carbon by 2030, and that we
are a net-zero carbon operation by 2040.
Reflecting the strong profit performance of the business, the
Board is pleased to recommend a final dividend of 5.5p per share
(2021: 5.0p), bringing the full year dividend to 8.8p per share
(2021: 7.5p), an increase of 17%. In recommending this level of
dividend, the Board remains mindful of its objective to deliver a
sustainable and progressive ordinary dividend over time.
Financial Performance
The Group delivered a strong trading performance in 2022, with
revenue, operating profit and free cash flow materially ahead of
the prior year.
Revenue of GBP513 million was 26% up on 2021 as the Group
performed well, with robust demand across its end markets.
Industry-wide supply chain challenges were well managed and the
impact of inflationary pressures on our cost base, particularly
energy, was mitigated through our well-established dynamic
commercial approach in both the clay and concrete divisions.
Adjusted EBITDA(1) grew by 36% to GBP140 million (2021: GBP103
million) and the adjusted EBITDA(1) margin increased to 27.2%,
compared to 25.2% in 2021 and 16.5% in 2020. Statutory earnings per
share grew by 13.8 pence to 21.6 pence (2021: 7.8 pence) reflecting
the strength of earnings in the year.
Our Return on Capital Employed(1) (ROCE) increased materially to
23.4% (2021: 15.8%), with both the stronger operating profit
performance and a continuing focus on capital management
contributing to this improvement. We will continue to deploy
capital in a dynamic and disciplined way and target a ROCE(1)
consistent with the stated medium-term target of 20%.
The balance sheet remains strong with closing leverage of 0.4x
net debt to adjusted EBITDA(1) (Dec 21: 0.4x) after investing GBP38
million of growth capital and a GBP30 million share buyback during
the year. Adjusted Free cash flow(1) was strong at GBP50 million
(2021: GBP51 million), reflecting robust trading and a continued
focus on the efficient management of working capital.
The Board expects to generate capital in excess of that required
for its investment requirements and remains committed to returning
surplus capital to shareholders as part of its dynamic and
disciplined capital allocation strategy. The potential for
additional returns of capital will be kept under active review.
Divisional Review
Ibstock Clay
Divisional revenue grew by 32% year on year to GBP369 million
(2021: GBP280 million) and adjusted EBITDA(1) increased by 40% to
GBP127 million (2021: GBP91 million), delivering an adjusted
EBITDA(1) margin of 34.3%, up by 200 basis points on the prior year
(2021: 32.3%). Ibstock Futures recognised net operating costs of
GBP5 million, reflecting a small loss of around GBP1m from the
acquired businesses, and GBP4 million of operational investment in
research and development, and in building in-house innovation and
commercial capability.
The clay business delivered a strong result in the year,
benefiting from solid operational performance, disciplined cost
management and a dynamic commercial approach that recovered in full
significant variable cost inflation. Commercial and operational
actions to enhance sales mix also contributed to the strong margin
performance.
Market conditions were positive for most of 2022, reflecting
resilient new build and RMI residential demand, with overall
volumes consistent with the prior year. Housing starts in 2022 were
broadly in line with the prior year, although activity slowed in
the final quarter in response to a more cautious demand
environment. RMI demand also remained resilient for the majority of
the year, although we again experienced some softening in volumes
towards the end of the period as macroeconomic uncertainty and
rising interest rates began to impact on discretionary consumer
expenditure.
A solid operational performance underpinned the strength of the
results, with consistent reliability and efficiency across the
plant network.
Our Atlas and Aldridge brick manufacturing growth projects are
on track to commission from the end of 2023, and set to deliver
over 100 million bricks of lower-cost capacity per annum, with the
whole Atlas range to be externally verified as carbon neutral.
Ibstock Futures
Ibstock Futures ("Futures") accelerated its development in the
year, underpinned by strategic investments made to build its
capabilities in fast-growth areas of the UK construction
market.
The asset acquisition from glass reinforced concrete panel
technology specialist, Telling GRC, in early 2022 established a
strong position in a new market that offers cost savings and
environmental benefits to customers through the construction
process. The Telling assets were integrated successfully during the
year, and progress and performance have continued to be in line
with our expectations.
Later in the year, the acquisition of Generix, a UK supplier of
non-combustible façade systems, represented a further strategic
step to broaden the range of systems offered by Futures, as our
customers seek lower carbon, non-combustible forms of cladding for
use in the mid- to high- rise and modular market segments.
We have a strong pipeline of opportunities to invest further
capital within Ibstock Futures in the service of diversified growth
over the years ahead.
We have also continued to develop the brick slip investment
strategy and identified opportunities to re-configure the project,
to both accelerate commissioning of an initial capacity extension,
as well as incorporate more advanced and efficient process
technology in the purpose built factory. As part of this, we
initiated in 2022 an investment of up to GBP8 million, to be
deployed over the next 12 months, on an automated slip line,
providing capacity for up to 17 million slips, coming on stream by
the end of 2023.
At this stage, commissioning for the main line is expected in
late 2024.
We have made further progress during the year to unlock value
from our unrivalled clay reserves. During the second half of the
year, we commissioned a pilot plant for the production of expanded
clay - a lightweight aggregate that has multiple application uses
in the construction sector and which is in short supply. We have
also advanced our project focused on calcined clay, which has huge
potential as a lower carbon cementitious replacement. Over the
coming year we expect to continue to develop these projects, which
are firmly centred on the Group's strategic ambition to lead our
sector for sustainability and environmental impact. We are also
excited to report that, during the 2022 year we fired our first
bricks using synthetic gas from a waste source in partnership with
a strategic partner with funding support from Innovate UK, the UK's
innovation agency.
We continue to see Futures as a key driver of Ibstock's growth
over the medium-term and, in addition to acquisitions, we are
making organic investment in our assets and capabilities to support
future expansion. We are announcing today the creation of a
state-of-the-art innovation hub in the West Midlands to provide a
platform for rapid innovation and expansion. This facility, which
has been secured on a long-term lease, is expected to be
operational by the end of the second quarter of 2023.
Ibstock Concrete
The Concrete division delivered a strong performance, benefiting
from its exposure to a broad range of residential and
infrastructure markets, with a resilient demand backdrop and solid
operational performance.
Divisional revenue in 2022 grew 12% to GBP144 million (2021:
GBP128 million), reflecting stronger pricing across the business.
Adjusted EBITDA(1) of GBP24 million was around 9% higher than the
prior year (2021: GBP22 million), reflecting strong commercial
execution across all product categories. Adjusted EBITDA(1) margins
of 16.4%, were marginally below the level achieved in 2021 of
16.9%, reflecting operational inefficiencies within our roof tile
business in the early part of the year. As expected, we saw the
divisional margins improve during the second half of the year
towards our medium-term ambition of 18%.
Overall, sales volumes were marginally below the prior year,
reflecting some softening in demand during the final quarter of the
year. Infrastructure volumes grew strongly, with both rail and
structural categories showing double-digit growth year-on-year.
This helped to offset lower volumes across floor beams and
associated ancillaries, with a reduction in year-on-year sales
towards the end of the year as house builder demand reduced.
Walling stone volumes were ahead of the prior year as the business
grew share in key regional territories. Roofing volumes were
modestly lower, held back by production issues at our roof tile
factory in Leighton Buzzard during the first half of the year. The
actions taken to enhance operational performance at this factory
delivered material improvements in reliability and efficiency
during the latter part of the year.
Strategic Update
As a business, we remain focused on delivering strong strategic
progress to provide further sustainable advantage over the years
ahead, and I am pleased with the progress we made in this regard
during the year. The strong performance in 2022 has delivered
significant progress towards the medium-term financial targets we
set out in March 2022.
Our strategy is driven from our belief that the construction
market will continue to evolve, adopting more sustainable and
industrialised processes, practices and products. We are focused on
building our capabilities across the business to position us well
to maximise our opportunities in these developing new markets.
Our strategic development extends far beyond the acquisitions
and partnerships we have made in the year. Our three strategic
pillars: Sustain; Innovate; and Grow focus our activities across
all of our operations to align to our collective goals. Progress
achieved this year is detailed further below.
Sustain
As a large scale industrial business, sustainable high
performance is at the heart of what we do. 2022 was a further year
of strong progress, with improvement in all areas: health, safety
and wellbeing; operational excellence; and environmental
performance.
Health, safety and wellbeing
The health, safety and wellbeing of our employees is always our
first priority, and our continuing commitment is core to our
success. Our key health and safety metric is Lost Time Injury
Frequency Rate ("LTIFR"), which saw a marked improvement in the
year to 1.47 and is now ahead of our medium term target. Our
concrete division achieved a fantastic milestone in 2022 by
operating for a full year without a Lost Time Incident (LTI).
During the year, we placed considerable focus on evolving our
culture through the launch of the "Ibstock Story" acting as a
strong cultural catalyst, embedded a new health and safety
management system across the business and created a Health &
Wellbeing network to promote focus on mental health.
Operational excellence
The consistent performance of our factories is vital to ensure
that we have a sustainable, cost-competitive operating footprint.
During the year, we successfully rolled out the second phase of our
Asset Transformation Programme across the clay network, driving a
stronger culture of preventative maintenance and improved
reliability. This investment programme is starting to deliver
significant benefits to our clay business, reflected in the strong
fixed cost performance achieved during the 2022 year.
Within concrete, the establishment of a five-year automation
plan within our fencing and building factories will support a
significant uplift in capacity, efficiency and quality over the
years ahead, helping to maintain our industry-leading margins.
Environmental performance
Our ESG 2030 Strategy provides a comprehensive framework to
drive progress in our environmental performance. During the year,
we established a set of detailed, factory-level targets, with an
increased focus on measuring and improving environmental
outcomes.
In 2022, we achieved an absolute carbon reduction of 13%
relative to our 2019 baseline. Whilst this represented a slight
increase year on year, we remain focussed on achieving our ambition
of a 40% reduction by 2030. Noteworthy achievements in the year
included a 31% reduction in mains water use and a 16% reduction in
plastic packaging (with both metrics calculated per tonne of
production against a 2019 baseline).
We are proud to have been awarded the 2022 Manufacturer of the
Year at the Business Green awards, in recognition of our industry
leadership for environmental sustainability.
Innovate
Innovation is at the heart of our growth plans, and we are
committed to the continuing enhancement of our product portfolio
and customer proposition to strengthen our market-leading
positions.
Product innovation
In a fast evolving construction market, continual product
innovation is crucial to our success.
Within the clay division, we launched a number of new brick
types, with a particular focus on simulated handmade bricks,
premium products which will compete against brick types currently
imported into the UK market.
In September 2022, our Concrete Division entered into a new
partnership to create ultra-low carbon concrete products with Earth
Friendly Concrete (EFC). EFC is more sustainable than traditional
concrete, with around 70% less embodied carbon. The partnership
will see EFC's ultra-low carbon, zero cement technology integrated
into our diverse portfolio of high-performance building products
over the years ahead, including our range of products for the rail,
infrastructure and UK housing markets.
Customer experience
We continue to seek ways to enhance the experience of our
customers at every stage of their engagement with us.
To this end, during the 2022 year we strengthened and
diversified our nationwide distribution capabilities through the
establishment of two new haulage relationships. This change will
ensure that our business can access industry-leading technology,
pursue greener fuel alternatives and optimise the efficiency of our
haulage routes.
We have also taken steps during the year to simplify and improve
the customer experience through further investment in our customer
services teams and the development of a digital portal, allowing
customers to place and amend orders more easily.
Digital transformation
The digitisation of our business will be a key strategic enabler
over the coming years as we look to drive an increasing proportion
of our activity through digital channels.
During 2022, we made the key appointment of a new Chief
Information and Digital Officer (CIDO) who has been central to
defining a medium-term digital transformation programme. This
programme will be centred on two core principles: adopting a "One
Ibstock" mind-set, standardising core platforms and ways of working
to improve efficiency and reduce complexity; and customer
centricity, focusing on superior integration and automation with
our customers. In order to maintain our digital advantage, the year
ahead will see us upgrade our core infrastructure, focused on the
ERP platform, enterprise data and key customer-facing
applications.
Grow
The Group's growth strategy is based on a combination of
continued development of its core business and effective
diversification into attractive new segments of the construction
market. The strategy is being supported by targeted investment
projects and acquisitions which create value and accelerate
delivery.
Investment in core
The enhancement projects within our existing Clay business,
which were initiated in 2019, are now complete and delivering the
planned capacity uplifts and process efficiencies. The Atlas and
Aldridge growth projects are on track to commission from the end of
2023. These investments will deliver significant further capacity
and with Atlas being our pathfinder factory on our journey to Net
Zero, expected to produce an exciting range of carbon neutral
verified products for our customers within the next 12 months.
Diversified growth
The continuing development of Ibstock Futures provides a focus
for our strategic ambitions to grow through the introduction of
products, solutions and technology designed to support, and benefit
from, the megatrends of sustainability and the industrialisation of
construction methods.
The two acquisitions completed in 2022 within Futures are
strategically important, and both present the opportunity to scale
rapidly over the medium term. We have also made significant
progress in developing the organisation, strategy and medium-term
goals of Futures and have a strong pipeline of opportunities to
invest further capital in the service of diversified growth over
the years ahead.
People
Our people will always be our most important asset, and as an
organisation, we are seeking to create a culture driven by
performance and led by our values. In 2022, we launched a people
strategy centred on four elements: employee experience; attracting
future talent; capabilities for resilience and growth; and creating
culture as a point of difference.
Having a diverse workforce, which is truly representative of the
communities in which we operate, is important to both our cultural
ambitions and business success. At the end of the year, female
leadership representation stood at 27%. We have clear plans in
place to support the achievement of our 40% target by 2030.
Our industry-leading Apprenticeship programme continues to
gather momentum, growing our pipeline of future talent. We are part
of the "5% club" which targets having at least 5% of employees in
"earn and learn" positions. We finished the 2022 year with over 50
early career positions (including apprentice roles) and over 120 of
our other employees engaged in qualifying learning activities. This
represented a total of 7.5% of earn & learn positions across
the business, putting us firmly on course to achieve our ambition
of at least 10% by 2030.
A central pillar of our social agenda is our commitment to
develop and support our people, and to maintain a strong workforce
with the capability to deliver our strategic objectives over the
long-term. To this end, during the final quarter of the 2022 year,
we made a one-off payment of up to GBP2,000 to colleagues most
heavily impacted by the cost of living crisis, representing a total
cost of around GBP4 million. We also made a grant of 500 free
shares (Fire-up share award) during the 2022 year to all employees
below the senior leadership team level, to ensure that value
created flows through to all our employee stakeholders.
Progress towards medium-term targets
The platform of capability we now have in place, combined with
the investments we are making, provide confidence in our ability to
deliver strong growth over the medium-term.
Within the clay business, we are on track to commission our
redeveloped Atlas and Aldridge factories by the end of the year,
creating over 100 million bricks of lower cost capacity, and the
UK's first verified carbon neutral clay bricks. With around GBP35
million of capital still to be spent, we expect to deliver at least
an incremental GBP18 million of adjusted EBITDA(1) from 2025.
Alongside this, incremental growth within the clay business will be
driven by continuing to capture marginal gains in commercial
execution, new product development and capacity/cost over the years
ahead.
Within our concrete products business, we have a number of
opportunities to deploy capital to realise further capacity in the
network, access adjacent categories and capture cost savings
through greater automation. We invested around GBP2 million of
growth capital in 2022 in automated equipment for our walling stone
factory in Anstone, Yorkshire, which will deliver around GBP1
million in incremental adjusted EBITDA(1) from 2024. We have a
pipeline of further opportunities in concrete to invest capital for
fast payback over the medium-term.
Within Futures, we have an ambition to create a significant,
diversified business operating in modern construction markets over
the next four years. The business, from its inception around 12
months ago, is already delivering strong growth, and will target
revenues approaching GBP20 million in 2023, with both Telling and
Generix scaling quickly as part of the Ibstock group. Our brick
slips investments, comprising an automated slip line delivering up
to 17 million slips, commissioning from the end of 2023, and the
larger Nostell slip systems factory, at this stage expected to
commission from the end of 2024, will create a strong, diversified
position in this fast growing product category. And we have a
pipeline of further opportunities, including our exciting
sustainability projects, to deliver growth over the next few years.
Overall, we expect Futures to grow revenues to GBP100 million, with
adjusted EBITDA(1) margins approaching 20%, by 2026.
We have made strong initial progress, and expect this to
momentum to continue over the next 6-18 months as we build towards
our medium term ambitions.
Outlook for 2023
Trading in the early weeks of 2023 has continued to reflect the
cautious demand environment experienced towards the end of last
year although we anticipate this to improve as the year progresses,
supported by sequential demand improvement. Against this
background, we are maintaining a disciplined approach to capacity
management, costs and commercial execution.
The Group is in good shape, with a clear strategy based on both
core and diversified growth, sustainable market leadership
positions and a strong balance sheet. As such, the Board's
expectations for the full year are unchanged.
Chief Financial Officer's report
Introduction
The Group delivered a strong financial performance in 2022, with
both profit and operating cash flows materially ahead of the
comparative period. Demand in our end markets was firm, although we
experienced lower volumes in the final quarter of the year,
reflecting a more cautious demand environment.
The Group managed supply chain and inflationary challenges well,
and the dynamic pricing approach taken in both the clay and
concrete divisions was successful in recovering cost inflation
during the year. A continued disciplined focus on cost management
underpinned an improved margin performance, with adjusted EBITDA(1)
margins increasing by 200 basis points to 27.2% in the 2022 year
(2021: 25.2%).
Alongside this strong trading performance, the Group maintained
its intense focus on capital management, delivering a good cash
flow performance for the year. This was instrumental in enabling
the Group to maintain a strong balance sheet, with closing net
debt(1) of GBP46 million at 31 December 2022 resulting in
leverage(1) of 0.4 times (Dec 2021: 0.4 times).
In line with our dynamic approach to capital allocation, we
deployed around GBP38 million of capital investments in the service
of future growth (over and above our sustaining investments), and
completed a GBP30 million share buyback. With our strong financial
position, and inherently cash generative business, we expect to
generate significant further cash to support growth and shareholder
returns over the medium term.
During the final quarter of the year, the Group took the
opportunity to extend its Revolving Credit Facility, in accordance
with the terms of its 4+1 year agreement completed in November
2021, thereby extending by a further 12 months its debt maturity
profile on terms aligned to the existing agreement. At 31 December
2022, the Group had GBP125 million of undrawn committed facilities
in place.
In December 2022 the Group also agreed a buy-in transaction for
the main defined benefit pension scheme, involving the purchase of
an insurance contract with a specialist pensions provider which
will cover all remaining pension liabilities. This transaction,
which involved no initial cash payment by the Company, is expected
to substantially complete during the 2023 financial year. We are
delighted to have completed this significant further step towards
removing pensions risk from the Group's balance sheet.
Climate Change & TCFD
As a long-term business, a commitment to environmental
sustainability and social progress is central to the company's
purpose. We have invested significant capital over the last decade,
with investment projects across the Group's plant network
contributing to a material reduction in the carbon intensity of our
manufacturing processes. Having achieved strong progress against
our previous targets, during 2021 we reviewed our ESG strategy and
ambitions in order to drive progress and continue to show industry
leadership in this area.
At the same time, in order to assess the resilience of our
business model, as part of our strategic planning process we have
modelled the impact of both transition and physical risks of
climate change on the financial performance and position of the
Company. The outputs from this exercise are detailed in our TCFD
disclosures in the 2022 Annual Report and Accounts.
The Group is committed to increasing the transparency of
reporting around climate impacts, risks, and opportunities. This
year we have progressed to achieve full compliance with the
recommendations of the Task Force for Climate-related Financial
Disclosures (TCFD).
Alternative performance measures
This results statement contains alternative performance measures
("APMs") to aid comparability and further understanding of the
financial performance of the Group between periods. A description
of each APM is included in Note 3 to the financial statements. The
APMs represent measures used by management and the Board to monitor
performance against budget, and certain APMs are used in the
remuneration of management and Executive Directors. It is not
believed that APMs are a substitute for, or superior to, statutory
measures.
Group results
The table below sets out segmental revenue and adjusted
EBITDA(1) for the year
Clay Concrete Central Total
costs
GBP'm GBP'm GBP'm GBP'm
------- --------- -------- -------
Year ended 31 December
2022
Total revenue 369.2 143.7 - 512.9
------- --------- -------- -------
Adjusted EBITDA(1) 126.7 23.6 (10.6) 139.7
======= ========= ======== =======
Margin 34.3% 16.4% 27.2%
Year ended 31 December
2021
Total revenue 280.2 128.4 - 408.7
------- --------- -------- -------
Adjusted EBITDA(1) 90.6 21.7 (9.3) 103.1
======= ========= ======== =======
Margin 32.3% 16.9% 25.2%
(1) Alternative Performance Measures are described in Note 3 to
the results announcement
Due to rounding, numbers presented may not add up precisely to
the totals provided and percentages may not precisely reflect the
absolute figures
Revenue
Group revenue for the 2022 year increased by 26% to GBP512.9
million (2021: GBP408.7 million). Performance benefited from strong
pricing management, and reflected a robust demand backdrop for the
majority of the year, although market activity slowed in the final
quarter, reflecting a more cautious demand environment.
In our Clay division, revenues of GBP369.2 million represented
an increase of 32% on the prior year period (2021: GBP280.2
million). Performance reflected a material price benefit, delivered
through a dynamic commercial approach. Volumes were in line with
the comparative period, despite lower volumes in the final quarter
as activity slowed in response to a reduction in end-market demand.
Our Futures business contributed around GBP4 million of revenue
(2021: nil).
In our Concrete division, revenue increased by 12% year-on-year
to GBP143.7 million (2021: GBP128.4 million), with marginally lower
volumes more than offset by a strong pricing benefit, which
recovered in full the impact of significant cost inflation.
Infrastructure sales volumes increased year-on-year, and walling
stone volumes also increased as the Group grew share in certain key
regional territories. This helped offset lower sales volumes in
flooring and roof tiles.
Whilst we expect market conditions in 2023 to be more
challenging, we continue to monitor cost impacts closely and remain
committed to taking the actions necessary to protect unit
margins.
Adjusted EBITDA (1)
Management measures the Group's operating performance using
adjusted EBITDA(1) . Adjusted EBITDA(1) increased materially year
on year to GBP139.7 million in 2022 (2021: GBP103.1 million).
Performance in 2022 benefited from resilient end markets,
alongside strong commercial execution to recover in full
significant variable cost inflation. These actions, combined with
the disciplined management of cost, resulted in a material
improvement in adjusted EBITDA(1) margins, which increased by 200
basis points to 27.2% (2021: 25.2%). In response to the challenges
faced by our employees, we made a one-off cost of living payment,
totalling a cost of around GBP4 million, during the 2022 year.
Within the Clay division, adjusted EBITDA(1) totalled GBP126.7
million (2021: GBP90.6 million), representing an adjusted EBITDA(1)
margin of 34.3% (2021: 32.3%). The improvement in adjusted
EBITDA(1) reflected a combination of significant pricing benefits,
solid operational performance and disciplined cost management. The
division recognised a loss of GBP5.3 million in respect of Ibstock
Futures, as the business continued to invest in research &
development, in-house innovation and commercial capability.
Adjusted EBITDA(1) in our Concrete division increased to GBP23.6
million (2021: GBP21.7 million), as the division continued to
benefit from its exposure to a broad range of residential and
infrastructure markets. Adjusted EBITDA(1) margins of 16.4% were
marginally below 2021 levels (2021: 16.9%), reflecting principally
the impact of operational challenges during the first half of the
year at our roof tile factory in Leighton Buzzard. As expected,
adjusted EBITDA(1) margins moved forwards during the second half of
the year.
Central costs increased to GBP10.6 million (2021: GBP9.3
million) reflecting higher variable remuneration costs and the
initial impact of the Fire-up share award to all employees below
the senior leadership team level .
Exceptional items (1)
Based on the application of our accounting policy for
exceptional items(1) , certain income and expense items have been
excluded in arriving at adjusted EBITDA(1) to aid shareholders'
understanding of the Group's underlying financial performance.
The amounts classified as exceptional(1) in the period totalled
a net gain of GBP6.3 million (2021: GBP5.2 million gain),
comprising:
1. Exceptional net cash credit of GBP6.9 million (which were substantially
cash settled in the period):
a) GBP7.0 million of exceptional cash profits arising from the
disposal of a surplus property in Sussex during the 2022 year;
b) GBP0.1 million charge of other one-off operating costs;
2. An exceptional non-cash charge of GBP0.6 million comprising of
an impairment associated with the Group's closure of sites as
part of its single co-ordinated restructuring plan.
Further details of exceptional items(1) are set out in Note 5 of
the financial statements.
Finance costs
Net finance costs of GBP2.7 million were below the level of the
prior year (2021: GBP5.0m) with lower interest cost on our
borrowings (reflecting the favourable debt refinancing completed in
November 2021) and increased interest income from the Group's main
defined benefit pension scheme. The Group incurred costs of around
GBP0.3 million during the second half of the 2022 year related to
the 12-month extension of its Revolving Credit Facility.
Profit before taxation
Group statutory profit before taxation was GBP104.8 million
(2021: GBP64.9 million), reflecting stronger trading, with the
current year result including an exceptional credit(1) of GBP6.3
million (2021: credit of GBP5.2 million).
Taxation
The Group recorded a taxation charge of GBP17.9 million (2021:
GBP33.1 million) on Group pre-tax profits of GBP104.8 million
(2021: GBP64.9 million), resulting in an effective tax rate ("ETR")
of 17.1% (2021: 51.0%) compared with the standard rate of UK
corporation tax of 19%. The lower statutory tax charge and ETR are
primarily due to no taxable gain arising on the land disposal
during the year as well as a prior year deferred tax credit being
recognised as a result of reassessing the deferred tax balance
relating to property, plant and equipment.
The adjusted ETR(1) (excluding the impact of the deferred tax
rate change and exceptional items) for the 2022 year was 16.5%
(2021: 18.1%). The reduction in adjusted ETR from the prior year
was due primarily to the higher level of permanent benefit arising
from the super deduction which provides statutory tax relief on
130% of qualifying capital expenditure. The other main item
affecting the adjusted ETR is the prior year deferred tax credit
referred to above.
Earnings per share
Group statutory basic earnings per share (EPS) increased to 21.6
pence in the year to 31 December 2022 (2021: of 7.8 pence)
principally as a result of the Group's increased profit after
taxation, reflecting the stronger trading result.
Group adjusted basic EPS(1) of 22.7 pence per share increased
significantly from the 13.9 pence reported last year, reflecting
the increased adjusted EBITDA(1) achieved in the year and a modest
reduction in the adjusted effective tax rate. In line with prior
years, our adjusted EPS(1) metric removes the impact of exceptional
items(1) , the fair value uplifts resulting from our acquisition
accounting and non-cash interest impacts, net of the related
taxation charges/credits. Adjusted EPS(1) has been included to
provide a clearer guide as to the underlying earnings performance
of the Group. A full reconciliation of our adjusted EPS(1) measure
is included in Note 7.
Table 1: Earnings per share
2022 2021
pence pence
========================== ======= =======
Statutory basic EPS -
Continuing operations 21.6 7.8
========================== ======= =======
Adjusted basic EPS(1)
- Continuing operations 22.7 13.9
========================== ======= =======
Cash flow and net debt (1)
Adjusted operating cash flow increased by GBP32 million to
GBP108.0 million (2021: 76.0 million), principally due to a
material increase in adjusted EBITDA(1) . The Group reported a
modest increase in working capital totalling GBP1.8 million outflow
(2021: GBP5.4 million inflow) as a small increase in finished goods
inventory levels was substantially offset by robust management of
trade receivables, reflecting the continuing progress made by the
organisation in reducing DSO.
Net interest paid in 2022 reduced to GBP4.3 million (2021:
GBP5.6 million) reflecting the lower interest coupon following the
refinancing of the Group's debt in November 2021. Tax payments
totalled GBP11.7 million (2021: GBP10.0 million), on higher levels
of taxable profit compared to the prior year. Other cash outflows
of GBP12.1 million (2021: GBP15.1 million outflow) included amounts
totalling GBP5.6 million in respect of carbon emission credits
purchased during the year (2021: GBP6.4 million), with the balance
being principally operating leases payments.
With Adjusted Operating Cash Flows(1) in 2022 increasing
materially from the prior year, the Cash conversion(1) percentage
increased to 77% (from 74% in 2021), reflecting strong balance
sheet discipline and working capital focus.
Adjusted free cash flow(1) decreased marginally in the year to
GBP49.7 million (2021: GBP51.0 million), as capital expenditure of
GBP58.4 million increased by GBP33.4 million on 2021 (GBP25.0
million). The 2022 figure comprised around GBP21 million of
sustaining expenditure, GBP33 million on the Atlas and Aldridge
redevelopments and around GBP4 million on other growth projects. In
the 2023 year, sustaining expenditure is expected to be around
GBP20 million, with growth investments in Atlas, Aldridge and
Futures expected to total approximately GBP55 million.
During the 2022 year, we completed a GBP30 million share buyback
programme, demonstrating our ability to deliver enhanced returns to
shareholders whilst continuing to invest in our future growth.
Table 2: Cash flow (non-statutory)
2022 2021 Change
=======================================
GBP'm GBP'm GBP'm
======================================= ======= ======= =======
Adjusted EBITDA(1) 139.7 103.1 36.6
--------------------------------------- ------- ------- -------
Adjusted change in working capital(1) (1.8) 5.4 (7.1)
--------------------------------------- ------- ------- -------
Net interest (4.3) (5.6) 1.3
--------------------------------------- ------- ------- -------
Tax (11.7) (10.0) (1.7)
--------------------------------------- ------- ------- -------
Post-employment benefits (1.8) (1.8) -
--------------------------------------- ------- ------- -------
Other(2) (12.1) (15.1) 2.9
======================================= ------- ------- -------
Adjusted operating cash flow(1) 108.0 76.0 32.0
--------------------------------------- ------- ------- -------
Cash conversion(1) 77% 74% +3ppts
--------------------------------------- ------- ------- -------
Total capex (58.4) (25.0) (33.4)
======================================= ------- ------- -------
Adjusted free cash flow(1) 49.7 51.0 (1.4)
======================================= ======= ======= =======
(1) Alternative Performance Measures are described in Note 3 to
the consolidated financial statements.
(2) Other includes operating lease payments and emission
allowances purchases in all years
The table above excludes cash flows relating to exceptional
items(1) in both years. During 2022, the Group completed the sale
of surplus property, generating cash inflows of GBP7.8 million
(2021: GBP2.9 million), which was classified as an exceptional
item. We continue to focus on recycling capital from the Group's
property portfolio, and anticipate further surplus land disposals
over the medium term.
Net debt(1) (borrowings less cash) at 31 December 2022 totalled
GBP45.9 million (31 December 2021: GBP38.9 million; 30 June 2022:
GBP35.7 million). The movement during the 2022 year reflected the
benefit of strong operating cash flows offset by around GBP58.4
million of capital expenditure and the impact of a GBP30 million
share buy-back.
During the final quarter of the year, the Group extended by a
further 12 months its Revolving Credit Facility, in accordance with
the terms of its 4+1 year agreement completed in November 2021, on
terms aligned to the existing agreement. At 31 December 2022, the
Group had GBP125 million of undrawn committed facilities in
place.
Return on capital employed(1)
Return on capital employed(1) (ROCE) in 2022 increased to 23.4%
(2021: 15.8%). The substantial improvement compared to the prior
year reflected both a significant increase in adjusted operating
profit and a small increase in the capital base, as both working
and fixed capital were well controlled.
Capital allocation
The Group's capital allocation framework remains consistent with
that laid out in 2020, with the Group committed to allocating
capital in a disciplined and dynamic way.
Our capital allocation framework is set out below:
-- Firstly, we will invest to maintain and enhance our existing asset
base and operations;
-- Having done this, we will look to pay an ordinary dividend. We
are committed to paying dividends which are sustainable and progressive,
with targeted cover of approximately 2 times underlying earnings
through the cycle;
-- Thereafter, we will deploy capital for growth, both inorganically
and organically, in accordance with our strategic and financial
investment criteria;
-- And, finally, we will return surplus capital to shareholders.
Our framework remains underpinned by our commitment to
maintaining a strong balance sheet, and we will look to maintain
leverage at between 0.5 and 1.5 times net debt(1) to adjusted
EBITDA(1) excluding the impact of IFRS 16, through the cycle.
During the 2022 year, we completed a GBP30 million share buyback
programme, purchasing around 17 million shares, and equivalent to
around 4% of the Group's issued share capital.
We expect to deploy significant growth capital in the business
during the 2023 year and beyond, with a growing pipeline of both
organic and inorganic opportunities. The Board expects there to be
capital generated in excess of that required for its investment
requirements and remains committed to returning surplus capital to
shareholders as part of its dynamic and disciplined capital
allocation strategy. The potential for additional returns of
capital will be kept under active review.
Dividend
Reflecting the very strong profit performance of the business,
the Board is pleased to recommend a final dividend of 5.5p per
share (2021: 5.0p), for payment on 12 May 2023 to shareholders on
the register on 21 April 2023. This will bring the full year
dividend to 8.8p per share (2021: 7.5p), an increase of 17%. In
recommending this level of dividend, the Board remains mindful of
its objective to deliver a sustainable and progressive ordinary
dividend over time.
Pensions
At 31 December 2022, the defined benefit pension scheme ("the
scheme") was in an actuarial accounting surplus position of GBP15.2
million (31 December 2021: surplus of GBP57.8 million). Applying
the valuation principles set out in IAS19, at the year end the
scheme had asset levels of GBP373.6 million (31 December 2021:
GBP618.0 million) against scheme liabilities of GBP358.4 million
(31 December 2021: GBP560.3 million).
On 20 December 2022, the Scheme completed a full buy-in
transaction with a specialist third-party provider, which
represented a significant step in the Group's continuing strategy
of de-risking its pensions exposure. Together with the partial
buy-in transaction in 2020, this will insure all of the Group's
defined benefit liabilities. This transaction, which involved no
initial cash payment by the Company, is expected to substantially
complete during the 2023 financial year.
The net decrease in balance sheet surplus over the period is
primarily due to asset performance which has been largely offset by
a significant actuarial gain arising on the liabilities from a
change in market conditions, particularly the rise in corporate
bond yields, coupled with the asset loss from the full Scheme
buy-in which transacted in December 2022.
Based on an existing funding agreement, a contribution level of
GBP1.75 million per annum has applied from February 2022,
increasing to GBP2.0 million from 1 December 2023 and then to
GBP2.25 million from 1 December 2024. In light of the fact that the
pension scheme was in a net surplus position after the full buy-in,
the Trustees and the Group have agreed that the Group would suspend
paying regular contributions with effect from 1 March 2023.
Related party transactions
Related party transactions are disclosed in Note 15 to the
consolidated financial statements. During the current and prior
year, there have been no material related party transactions.
Subsequent events
In light of the fact that the Ibstock Pension Scheme was in a
net surplus position after the full pension buy-in, the Group and
the Trustees of the Ibstock Pension Scheme agreed on 27 February
2023 that the Group would suspend regular contributions into the
pension scheme with effect from 1 March 2023.
Except for this pension contribution agreement and the proposed
ordinary dividend, no further subsequent events requiring either
disclosure or adjustment to these financial statements have arisen
since the balance sheet date.
Going concern
The Directors are required to assess whether it is reasonable to
adopt the going concern basis in preparing the financial
statements.
In arriving at their conclusion, the Directors have given due
consideration to whether the funding and liquidity resources are
sufficient to accommodate the principal risks and uncertainties
faced by the Group.
Having considered the outputs from this work, the Directors have
concluded that it is reasonable to adopt a going concern basis in
preparing the financial statements. This is based on an expectation
that the Company and the Group will have adequate resources to
continue in operational existence for at least twelve months from
the date of signing these accounts.
Further information is provided in note 2 of the financial
statements.
Statement of directors' responsibilities in relation to the
financial statements
The 2022 Annual Report and Accounts which will be issued in
March 2023, contains a responsibility statement in compliance with
DTR 4.1.12 of the Listing Rules which sets out that as at the date
of approval of the Annual Report on 7 March 2023, the Directors
confirm to the best of their knowledge:
- the Group and unconsolidated Company financial statements,
prepared in accordance with the applicable set of accounting
standards, 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;
and
- the performance review contained in the Annual Report and
Accounts includes a fair review of the development and performance
of the business and the position of the Group and the undertakings
including the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they face.
This responsibility statement was approved by the Board of
Directors on 7 March 2023 and is signed on its behalf by:
Joe Hudson Chris McLeish
Chief Executive Chief Financial
Officer Officer
7 March 2023 7 March 2023
CONSOLIDATED INCOME STATEMENT
Notes Year ended Year ended
31 31
December 2022 December
2021
GBP'000 GBP'000
---------------- ------------
Revenue 4 512,886 408,656
Cost of sales before exceptional items (315,841) (267,662)
Exceptional (cost of)/income from sales 5 (680) 3,495
-------------------------------------------------- -------
Cost of sales (316,521) (264,167)
Gross profit 196,365 144,489
Distribution costs (47,961) (38,829)
Administrative expenses before exceptional
items (49,624) (41,511)
Exceptional administrative items 5 - (287)
-------------------------------------------------- -------
Administrative expenses (49,624) (41,798)
Profit on disposal of property, plant
and equipment before exceptional items (417) 1,638
Exceptional profit on disposal of property,
plant and equipment 5 6,958 2,022
-------------------------------------------------- -------
Total profit on disposal of property,
plant and equipment 6,541 3,660
Other income 2,630 2,524
Other expenses (524) (112)
---------------- ------------
Operating profit 107,427 69,934
Finance costs (4,553) (5,831)
Finance income 1,890 839
Net finance cost (2,663) (4,992)
Profit before taxation 104,764 64,942
---------------- ------------
Taxation 6 (17,884) (33,129)
Profit for the financial year 86,880 31,813
---------------- ------------
Profit attributable to:
Owners of the parent 86,908 31,813
Non-controlling interest (28) -
Notes pence per share pence per
share
Earnings per share
Basic - continuing operations 7 21.6 7.8
Diluted - continuing operations 7 21.5 7.7
-------------------------------------------------- ------- ---------------- ------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Notes Year ended Year ended
31 31
December 2022 December
2021
GBP'000 GBP'000
Profit for the financial year 86,880 31,813
Other comprehensive income/(expenses):
Items that may be reclassified to profit
or loss:
Change in fair value of cash flow hedges(1) 641 (74)
Related tax movements(1) (149) 14
492 (60)
Items that will not be reclassified subsequently
to profit or loss:
Remeasurement of post-employment benefit
assets and obligations(1) 12 (44,581) 12,862
Related tax movements(1) 11,147 (2,525)
---------------- ------------
(33,434) 10,337
Other comprehensive (expense)/income
for the year net of tax (32,942) 10,277
Total comprehensive income for the year,
net of tax 53,938 42,090
Total comprehensive income/(expense)
attributable to:
Owners of the parent 53,966 42,090
Non-controlling interest (28) -
(1) Impacting retained earnings
Non-GAAP measure
-------------------------------------------------- ------- ---------------- ------------
Reconciliation of adjusted EBITDA to Operating profit
for the financial year for continuing operations
Notes Year ended Year ended
31 31
December 2022 December
2021
-------------------------------------------------- ------- ---------------- ------------
GBP'000 GBP'000
---------------- ------------
Operating profit 107,427 69,934
---------------- ------------
Less exceptional items impacting operating
profit 5 (6,278) (5,230)
Add back depreciation and amortisation 4 38,518 38,349
Adjusted EBITDA 139,667 103,053
----------------
CONSOLIDATED BALANCE SHEET
------- ---------------- ------------
Notes 31 December 31 December
2022 2021
------- ---------------- ------------
GBP'000 GBP'000
------- ---------------- ------------
Assets
Non-current assets
Intangible assets 90,242 94,625
Property, plant and equipment 409,091 375,800
Right-of-use assets 31,478 25,114
Derivative financial instruments 116 -
Post-employment benefit asset 12 15,194 57,754
---------------- ------------
546,121 553,293
Current assets
Inventories 94,275 72,821
Current tax recoverable 1,717 3,199
Derivative financial instruments 451 -
Trade and other receivables 65,935 64,756
Cash and cash equivalents 54,283 61,199
---------------- ------------
216,661 201,975
Assets held for sale - 875
---------------- ------------
Total assets 762,782 756,143
Current liabilities
Trade and other payables (120,003) (103,132)
Derivative financial instrument - (74)
Borrowings 8 (436) (333)
Lease liabilities (7,690) (6,860)
Provisions 9 (1,613) (1,869)
---------------- ------------
(129,742) (112,268)
---------------- ------------
Net current assets 86,919 90,582
---------------- ------------
Total assets less current liabilities 633,040 643,875
Non-current liabilities
Borrowings 8 (99,769) (99,738)
Lease liabilities (25,414) (20,324)
Deferred tax liabilities (84,349) (92,352)
Provisions 9 (7,299) (8,232)
---------------- ------------
(216,831) (220,646)
---------------- ------------
Total liabilities (346,573) (332,914)
Net assets 416,209 423,229
================ ============
Equity
Share capital 4,096 4,096
Share premium 4,458 4,458
Retained earnings 807,894 785,609
Other reserves 14 (400,290) (370,934)
Equity attributable to owners of the
company 416,158 423,229
Non-controlling interest 51 -
Total equity 416,209 423,229
================ ============
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Share Share Retained Other Total Non-controlling Total
capital premium earnings reserves equity interest equity
(Note attributable
14) to owners
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ---------- ---------- -------------- ---------------- ---------
Balance at 1
January 2022 4,096 4,458 785,609 (370,934) 423,229 - 423,229
Profit for the
year - - 86,908 - 86,908 (28) 86,880
Other comprehensive
(expense)/income - - (33,434) 492 (32,942) - (32,942)
--------- --------- ---------- ---------- -------------- ---------------- ---------
Total comprehensive
income/(expense)
for the year - - 53,474 492 53,966 (28) 53,938
Transactions
with owners:
Share based payments - - 2,547 - 2,547 - 2,547
Current tax on
share based payment - - 1 - 1 - 1
Deferred tax on
share based payment - - 116 - 116 - 116
Equity dividends
paid - - (33,701) - (33,701) - (33,701)
Purchase of own
shares - - - (30,000) (30,000) - (30,000)
Issue of own shares
held on exercise
of share options - - (152) 152 - - -
Acquisition of
subsidiary
non-controlling
interest - - - - - 79 79
At 31 December
2022 4,096 4,458 807,894 (400,290) 416,158 51 416,209
--------- --------- ---------- ---------- -------------- ---------------- ---------
Share Share Retained Other Total Non-controlling Total
capital premium earnings reserves equity interest equity
(Note attributable
14) to owners
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ---------- ---------- -------------- ---------------- ---------
At 1 January
2021 4,096 4,333 759,483 (370,041) 397,871 - 397,871
Profit for the
year - - 31,813 - 31,813 - 31,813
Other comprehensive
income/(expense) - - 10,351 (74) 10,277 - 10,277
--------- --------- ---------- ---------- -------------- ---------------- ---------
Total comprehensive
income/(expense)
for the year - - 42,164 (74) 42,090 - 42,090
Transactions
with owners:
Share based payments - - 890 - 890 - 890
Deferred tax on
share based payment - - 35 - 35 - 35
Equity dividends
paid - - (16,780) - (16,780) - (16,780)
Purchase of own
shares - - - (1,309) (1,309) - (1,309)
Issue of share
capital on exercise
of share options - 125 - - 125 - 125
Issue of own shares
held on exercise
of share options - - (183) 490 307 - 307
--------- --------- ---------- ---------- -------------- ---------------- ---------
At 31 December
2021 4,096 4,458 785,609 (370,934) 423,229 - 423,229
--------- --------- ---------- ---------- -------------- ---------------- ---------
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------- -------------
Cash flow from operating activities
Cash generated from operations 11 137,765 100,497
Interest paid (2,888) (2,928)
Other interest paid - lease liabilities (1,274) (1,107)
Tax paid (11,699) (9,960)
------------- -------------
Net cash inflow from operating activities 121,904 86,502
Cash flows from investing activities
Purchase of property, plant and equipment (58,354) (24,960)
Proceeds from sale of property plant
and equipment 50 874
Proceeds from sale of property plant
and equipment - exceptional 7,833 2,882
Purchase of intangible assets (5,573) (6,402)
Settlement of deferred consideration - (413)
Payment for acquisition of subsidiary
undertaking, net of cash acquired 13 (959) -
Interest received 124 -
------------- -------------
Net cash outflow from investing activities (56,879) (28,019)
Cash flows from financing activities
Dividends paid (33,701) (16,780)
Drawdown of borrowings - 170,000
Repayment of borrowings - (160,000)
Debt issue costs (259) (1,563)
Repayment of lease liabilities (8,010) (7,575)
Proceeds from issuance of equity shares - 432
Purchase of own shares by Employee Benefit
Trust - (1,309)
Cash outflow from purchase of shares 14 (30,000) -
Net cash outflow from financing activities (71,970) (16,795)
Net (decrease)/increase in cash and
cash equivalents (6,945) 41,688
Cash and cash equivalents at beginning
of the year 61,199 19,552
Exchange losses on cash and cash equivalents 29 (41)
------------- -------------
Cash and cash equivalents at end of
the year 54,283 61,199
============= =============
Reconciliation of changes in cash and
cash equivalents to movement in net debt
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------- -------------
Net (decrease)/increase in cash and cash
equivalents (6,945) 41,688
Proceeds from borrowings - (170,000)
Repayment of borrowings - 160,000
Non-cash debt movement (134) (1,335)
Effect of foreign exchange rate changes 29 (41)
------------- -------------
Movement in net debt (7,050) 30,312
Net debt at start of year (38,872) (69,184)
Net debt at end of year (Note 3) (45,922) (38,872)
============= =============
Comprising:
Cash and cash equivalents 54,283 61,199
Short-term borrowings (Note 8) (436) (333)
Long-term borrowings (Note 8) (99,769) (99,738)
(45,922) (38,872)
============= =============
1. AUTHORISATION OF FINANCIAL STATEMENTS
The consolidated financial statements of Ibstock plc, which has
a premium listing on the London Stock Exchange, for the year ended
31 December 2022 were authorised for issue in accordance with a
resolution of the Directors on 7 March 2023. The balance sheet was
signed on behalf of the Board by J Hudson and C McLeish. Ibstock
plc is a public company limited by shares, which is incorporated
and registered in England. The registered office is Leicester Road,
Ibstock, Leicestershire, LE67 6HS and the company registration
number is 09760850.
2. BASIS OF PREPARATION
The consolidated financial statements of Ibstock plc for the
year ended 31 December 2022 have been prepared in accordance with
International Accounting Standards (IAS) and International
Financial Reporting Standards (IFRS) and related interpretations as
issued by the IASB and IFRS as adopted by the UK. They are prepared
on the basis of all IFRS accounting standards and interpretations
that are mandatory for the period ended 31 December 2022 and in
accordance with the Companies Act 2006. The comparative financial
information has also been prepared on this basis.
The financial information set out does not constitute the
Company's statutory accounts for the year ended 31 December 2022
but is derived from those accounts. Statutory accounts for 2022
will be delivered to the registrar of companies in due course. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
Section 498 (2) or (3) of the Companies Act 2006 in respect of the
accounts for 2022. The consolidated financial statements are
presented in Pounds Sterling and all values are rounded to the
nearest thousand (GBP'000) except where otherwise indicated. The
significant accounting policies are set out below.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Ibstock plc and its subsidiaries as at 31 December
2022. The financial statements of subsidiaries are prepared for the
same reporting period as the Parent Company, using consistent
accounting policies. All intra-Group balances, transactions, income
and expenses and profit and losses resulting from intra-Group
transactions have been eliminated in full.
Subsidiaries are consolidated from the date on which the Group
obtains control and cease to be consolidated from the date on which
the Group no longer retains control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
New standards, amendments and interpretations not yet
adopted
A number of new standards and amendments to standards and
interpretations are effective for periods beginning after 1 January
2022, and have not been applied in preparing these consolidated
financial statements. None of these is expected to have a
significant effect on the consolidated financial statements of the
Group.
Following the end of the Brexit transition period on 31 December
2020, IFRS Standards as adopted by the EU were brought into UK law
and UK-adopted IFRS Standards came into effect for the prior year
commencing 1 January 2021.
Going concern
Despite the macroeconomic downturn and the resulting decrease in
activity levels across the UK construction industry in quarter four
of 2022, there are initial positive external market indicators and
consequently reduced levels of uncertainty looking forward.
Management does not believe that the going concern basis of
preparation represents a significant judgement.
The Group's financial planning and forecasting process consists
of a budget for the next year followed by a medium term projection.
The Directors have reviewed and robustly challenged the assumptions
about future trading performance, operational and capital
expenditure and debt requirements within these forecasts including
the Group's liquidity and covenant forecasts, and stress testing
within their going concern assessment.
In arriving at their conclusion on going concern, the Directors
have given due consideration to whether the funding and liquidity
resources above are sufficient to accommodate the principal risks
and uncertainties faced by the Group, particularly those relating
to economic conditions and operational disruption. The strategic
report sets out in more detail the Group's approach and risk
management framework.
Group forecasts have been prepared which reflect both actual
conditions and estimates of the future reflecting macroeconomic and
industry-wide projections, as well as matters specific to the
Group.
During the final quarter of the 2021 year, the Group completed
the refinancing of its March 2023 GBP215 million Revolving Credit
Facility (RCF), replacing the existing facility with the issuance
of GBP100 million of private placement notes with maturities of
between 7 and 12 years and a GBP125 million RCF for an initial four
year tenor, with a one year extension option. In addition, in the
final quarter of 2022, the Group enacted a one-year extension of
the GBP125 million RCF, extending maturity to November 2026 on
similar terms to the original agreement. At 31 December 2022 the
RCF was undrawn.
Covenants under the Group's RCF and private placement notes
require leverage of no more than 3 times net debt to adjusted
EBITDA, and interest cover of no less than 4 times, tested
bi-annually at each reporting date with reference to the previous
12 months. At 31 December 2022 covenant requirements were met with
significant headroom.
The key uncertainty faced by the Group is the industry demand
for its products in light of macroeconomic factors. Accordingly,
the Group has modelled financial scenarios which see reduction in
the industry demands for its products thereby stress testing the
Group's resilience. For each scenario, cash flow and covenant
compliance forecasts have been prepared. In the most severe but
plausible scenario industry demand for Clay and Concrete products
in 2023 is projected to be around 34% and 30% lower respectively
than 2022, which is modestly worse than the sales reduction seen in
2020 during the height of the pandemic, recovering to around 10%
lower than 2022 in 2024.
In addition, the Group has prepared a reverse stress test to
evaluate the industry demand reduction at which it would be likely
to breach the debt covenants, before any further mitigating actions
are taken. This test indicates that, at a reduction of 45% in sales
volumes in 2023 and 40% in the first half of 2024 versus 2022
levels, the Group would be at risk of breaching its covenants.
In the severe but plausible scenario, the Group has sufficient
liquidity and headroom against its covenants, with covenant
headroom expressed as a percentage of annual adjusted EBITDA(1)
being in excess of 45%.
The Directors consider this to be an highly unlikely scenario,
and in the event of an anticipated covenant breach, the Group would
seek to take further steps to mitigate, including the disposal of
valuable land and building assets and additional restructuring
steps to reduce the fixed cost base of the Group.
Having taken account of the various scenarios modelled, and in
light of the mitigations available to the Group, the Directors are
satisfied that the Group has sufficient resources to continue in
operation for a period of not less than 12 months from the date of
this report. Accordingly, the consolidated financial information
has been prepared on a going concern basis.
3. ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures ("APMs") are used within the
management report where management believes it is necessary to do
so in order to provide further understanding of the financial
performance of the Group. Management uses APMs in its own
assessment of the Group's performance and in order to plan the
allocation of internal capital and resources. Certain APMs are also
used in the remuneration of management and Executive Directors.
APMs serve as supplementary information for users of the
financial statements and it is not intended that they are a
substitute for, or superior to, statutory measures. None of the
APMs are outlined within IFRS and they may not be comparable with
similarly titled APMs used by other companies.
In the current year, the previously reported APMs of
like-for-like revenue and like-for-like Adjusted EBITDA margin have
been removed to reflect full current and comparative period
ownership of the Longley business eliminating the need for these
measures.
Exceptional items
The Group presents as exceptional on the face of the income
statement those items of income and expense which, because of their
materiality, nature and/or expected infrequency of the events
giving rise to them, merit separate presentation to allow users of
the financial statements to understand further elements of
financial performance in the year. This facilitates comparison with
future periods and to assess trends in financial performance over
time.
Details of all exceptional items are disclosed in Note 5.
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is the earnings before interest, taxation,
depreciation and amortisation adjusted for exceptional items.
Adjusted EBITDA margin is Adjusted EBITDA shown as a proportion of
revenue.
The Directors regularly use Adjusted EBITDA and Adjusted EBITDA
margin as key performance measures in assessing the Group's
profitability. The measures are considered useful to users of the
financial statements as they represents common APMs used by
investors in assessing a company's operating performance, when
comparing its performance across periods as well as being used in
the determination of Directors' variable remuneration.
A full reconciliation of Adjusted EBITDA is included at the foot
of the Group's consolidated statement of comprehensive income
within the consolidated financial statements. Adjusted EBITDA
margin is included within Note 4.
Adjusted EPS
Adjusted EPS is the basic earnings per share adjusted for
exceptional items, fair value adjustments being the amortisation
and depreciation on fair value uplifted assets and non-cash
interest, net of taxation (at the Group's adjusted effective tax
rate).
The Directors have presented Adjusted EPS as they believe the
APM represents useful information to the user of the financial
statements in assessing the performance of the Group, when
comparing its performance across periods, as well as being used in
the determination of Directors' variable remuneration.
Additionally, the APM is considered by management when determining
the proposed level of ordinary dividend. A full reconciliation is
provided in Note 7.
Net debt and Net debt to adjusted EBITDA ("leverage") ratio
Net debt is defined as the sum of cash and cash equivalents less
total borrowings at the balance sheet date. This does not include
lease liabilities arising upon application of IFRS 16.
The Net debt to adjusted EBITDA ratio definition removes the
operating lease expense benefit generated from IFRS16 compared to
IAS 17 within adjusted EBITDA.
The Directors disclose these APMs to provide information as a
useful measure for assessing the Group's overall level of financial
indebtedness and when comparing its performance and position across
periods.
Net debt is shown at the foot of the Group consolidated cash
flow statement. A full reconciliation of the net debt to adjusted
EBITDA ratio (also referred to as 'leverage') is set out below:
Year ended Year ended
31 December 31 December
2022 2021
------------- -------------
GBP'000 GBP'000
Net debt (45,922) (38,872)
Adjusted EBITDA 139,667 103,053
Impact of IFRS 16 (8,491) (7,171)
------------- -------------
Adjusted EBITDA prior
to IFRS 16 131,176 95,882
Ratio of net debt to
adjusted EBITDA 0.4x 0.4x
============= =============
Adjusted Return on Capital Employed (Adjusted ROCE)
Adjusted Return on Capital Employed ("Adjusted ROCE") is defined
as Adjusted earnings before interest and taxation adjusted for
exceptional items as a proportion of the average capital employed
(defined as net debt plus equity excluding the pension surplus).
The average is calculated using the period end balance and
corresponding preceding reported period end balance (year end or
interim).
The Directors disclose the Adjusted ROCE APM in order to provide
users of the financial statements with an indication of the
relative efficiency of capital use by the Group over the period,
assessing performance between periods as well as being used within
the determination of executives' variable remuneration.
The calculation of Adjusted ROCE is set out below:
Year ended Year ended
31 December 31 December
2022 2021
------------- -------------
GBP'000 GBP'000
Adjusted EBITDA 139,667 103,053
Less depreciation (31,579) (31,409)
Less amortisation (6,939) (6,940)
------------- -------------
Adjusted earnings before
interest and taxation 101,149 64,704
Average net debt 40,791 46,169
Average equity 426,501 412,761
Average pension (35,707) (50,138)
------------- -------------
Average capital employed 431,585 408,792
Adjusted ROCE 23.4% 15.8%
Average capital employed figures comprise:
31 December 30 June 31 December 30 June
2022 2022 2021 2021
------------ --------- ------------ ---------
GBP'000 GBP'000 GBP'000 GBP'000
Net debt 45,922 35,660 38,872 53,466
Equity 416,209 436,792 423,229 402,293
Pension 15,194 56,219 57,754 42,521
Adjusted effective tax rate
The Group presents an adjusted effective tax rate ("Adjusted
ETR") within its Financial Review. This is disclosed in order to
provide users of the financial statements with a view of the rate
of taxation borne by the Group prior to the impact of exceptional
items (defined above) and the changes in taxation rates on deferred
taxation
A reconciliation of the adjusted ETR to the statutory UK rate of
taxation is included in Note 6.
Cash flow related APMs
The Group presents an adjusted cash flow statement within its
Financial Review. This is disclosed in order to provide users of
the financial statements with a view of the Group's operating cash
generation before the impact of cash flows associated with
exceptional items (as set out in Note 5) and with the inclusion of
interest, lease payment and non-exceptional property disposal
related cash flows.
The Directors use this APM table to allow shareholders to
further understand the Group's cash flow performance in the period,
to facilitate comparison with future years and to assess trends in
financial performance. This table contains a number of APMs, as
described below and reconciled in the following table:
Adjusted change in working capital
Adjusted change in working capital represents the statutory
change in working capital adding back cash flows associated with
exceptional items arising in the year of GBP0.3 million (2021:
adding back cash flows of GBP2.0 million).
Adjusted operating cash flow
Adjusted operating cash flows are the cash flows arising from
operating activities adjusted to exclude cash flows relating to
exceptional items of GBP7.3 million (2021: GBP1.7 million) and
inclusion of cash flows associated with interest income, proceeds
from the sale of property, plant and equipment and lease payments
reclassified from investing or financing activities of GBP6.8
million (2021: GBP12.2million).
Cash conversion
Cash conversion is the ratio of Adjusted operating cash flow
(defined above) to Adjusted EBITDA (defined above). The Directors
believe this APM provides a useful measure of the Group's
efficiency of its cash management during the period.
Adjusted free cash flow
Adjusted free cash flow represents Adjusted operating cash flow
(defined above) less total capital expenditure. The Directors use
the measure of Adjusted free cash flow as a measure of the funds
available to the Group for the payment of distributions to
shareholders, for use within M&A activity and other investing
and financing activities.
Year ended 31 December Statutory Exceptional Reclassification Adjusted
2022
---------------------------
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ------------ ----------------- ---------
Adjusted EBITDA 146,115 (6,448) - 139,667
--------------------------- ---------- ------------ ----------------- ---------
Change in working capital (2,035) 267 - (1,768)
--------------------------- ---------- ------------ ----------------- ---------
Impairment charges 382 (382) - -
--------------------------- ---------- ------------ ----------------- ---------
Net interest (4,162) - (135) (4,297)
--------------------------- ---------- ------------ ----------------- ---------
Tax (11,699) - - (11,699)
--------------------------- ---------- ------------ ----------------- ---------
Post-employment benefits (973) - (777) (1,750)
--------------------------- ---------- ------------ ----------------- ---------
Other (5,554) (705) (5,882) (12,141)
--------------------------- ---------- ------------ ----------------- ---------
Adjusted operating cash
flow 122,074 (7,268) (6,794) 108,012
--------------------------- ---------- ------------ ----------------- ---------
Cash conversion 77%
--------------------------- ---------- ------------ ----------------- ---------
Total capex (58,354) - - (58,354)
--------------------------- ---------- ------------ ----------------- ---------
Adjusted free cash flow 63,720 (7,268) (6,794) 49,658
=========================== ========== ============ ================= =========
Year ended 31 December Statutory Exceptional Reclassification Adjusted
2021
---------------------------
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ------------ ----------------- ---------
Adjusted EBITDA 108,283 (5,230) - 103,053
--------------------------- ---------- ------------ ----------------- ---------
Change in working capital 3,330 2,028 - 5,358
--------------------------- ---------- ------------ ----------------- ---------
Impairment charges (5,797) 5,797 - -
--------------------------- ---------- ------------ ----------------- ---------
Net interest (4,035) - (1,563) (5,598)
--------------------------- ---------- ------------ ----------------- ---------
Tax (9,960) - - (9,960)
--------------------------- ---------- ------------ ----------------- ---------
Post-employment benefits (789) - (961) (1,750)
--------------------------- ---------- ------------ ----------------- ---------
Other (4,530) (860) (9,673) (15,063)
--------------------------- ---------- ------------ ----------------- ---------
Adjusted operating cash
flow 86,502 1,735 (12,197) 76,040
--------------------------- ---------- ------------ ----------------- ---------
Cash conversion 74%
--------------------------- ---------- ------------ ----------------- ---------
Total capex (24,960) - - (24,960)
--------------------------- ---------- ------------ ----------------- ---------
Adjusted free cash flow 61,542 1,735 (12,197) 51,080
=========================== ========== ============ ================= =========
4. SEGMENT REPORTING
The Directors consider the Group's reportable segments to be the
Clay and Concrete divisions.
The key Group performance measure is adjusted EBITDA, as
detailed below, which is defined in Note 3. The tables, below,
present revenue and adjusted EBITDA and profit/(loss) before
taxation for the Group's operating segments.
Included within the unallocated and elimination columns in the
tables below are costs including share based payments and Group
employment costs. Unallocated assets and liabilities are pensions,
taxation and certain centrally held provisions. Eliminations
represent the removal of inter-company balances. Transactions
between segments are carried out at arm's length. There is no
material inter-segmental revenue and no aggregation of segments has
been applied.
For both years presented, the activities of Ibstock Futures were
managed and reported as part of the Clay division. Consequently,
the position and performance of Ibstock Futures for all periods has
been classified within the Clay reportable segment.
Year ended 31 December 2022
Clay Concrete Unallocated Total
& elimination
GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 369,193 143,693 - 512,886
---------- --------- --------------- ----------
Adjusted EBITDA 126,687 23,604 (10,624) 139,667
Adjusted EBITDA margin 34.3% 16.4% 27.2%
Exceptional items impacting
operating profit (see
Note 5) 6,222 56 - 6,278
Depreciation and amortisation
pre fair value uplift (20,659) (5,546) (187) (26,392)
Incremental depreciation
and amortisation following
fair value uplift (6,936) (5,190) - (12,126)
Net finance costs (366) (430) (1,867) (2,663)
----------
Profit/(loss) before
tax 104,948 12,494 (12,678) 104,764
Taxation (17,884)
----------
Profit for the year 86,880
==========
Consolidated total assets 596,769 146,553 19,460 762,782
Consolidated total liabilities (183,079) (52,172) (111,322) (346,573)
Non-current assets
Consolidated total intangible
assets 60,945 29,297 - 90,242
Property, plant and equipment 361,389 47,702 - 409,091
Right-of-use assets 20,869 10,419 190 31,478
Total 443,203 87,418 190 530,811
Total non-current asset
additions 70,118 8,713 131 78,962
Included within the revenue of our Concrete operations during
the year ended 31 December 2022 were GBP0.1 million of bill and
hold transactions. At 31 December 2022, GBP0.4 million of inventory
relating to these bill and hold transactions remained on the
Group's premises. The unallocated segment balance includes the fair
value of the Group's share based payments and associated taxes
(GBP2.7 million), plc Board and other plc employment costs (GBP6.4
million), pension costs (GBP0.8 million) and legal/administrative
expenses (GBP2.8 million). These costs have been offset by research
and development taxation credits (GBP1.6 million) and GBP0.5
million of provision credits related to the discount rate applied.
During the current year, one customer accounted for greater than
10% of Group revenues with GBP80.6 million of sales across the Clay
and Concrete divisions.
Year ended 31 December 2021
Clay Concrete Unallocated Total
& elimination
GBP'000 GBP'000 GBP'000 GBP'000
Total revenue 280,235 128,421 - 408,656
---------- --------- --------------- ----------
Adjusted EBITDA 90,634 21,740 (9,321) 103,053
Adjusted EBITDA margin 32.3% 16.9% 25.2%
Exceptional items impacting
operating profit (see
Note 5) 5,347 (117) - 5,230
Depreciation and amortisation
pre fair value uplift (22,101) (5,981) (135) (28,217)
Incremental depreciation
and amortisation following
fair value uplift (5,834) (4,298) - (10,132)
Net finance costs (809) (202) (3,981) (4,992)
----------
Profit/(loss) before
tax 67,237 11,142 (13,437) 64,942
Taxation (33,129)
----------
Profit for the year 31,813
==========
Consolidated total assets 547,472 145,478 63,193 756,143
Consolidated total liabilities (155,589) (56,764) (120,561) (332,914)
Non-current assets
Consolidated total intangible
assets 61,084 33,541 - 94,625
Property, plant and equipment 329,288 46,512 - 375,800
Right-of-use assets 15,438 9,430 246 25,114
Total non-current assets 405,810 89,483 246 495,539
Total non-current asset
additions 30,834 6,035 - 36,869
Included within the revenue of our Concrete operations during
the year ended 31 December 2021 were GBP1.2 million of bill and
hold transactions. At 31 December 2021, GBP0.7 million of inventory
relating to these sales remained on the Group's premises. The
unallocated segment balance includes the fair value of the Group's
share based payments and associated taxes of (GBP0.9 million), plc
Board and other plc employment costs (GBP5.8 million), pension
costs (GBP1.0 million) and legal/administrative expenses (GBP3.3
million). These costs have been offset by research and development
taxation credits (GBP1.7 million). During the current year, one
customer accounted for greater than 10% of Group revenues with
GBP56.7m of sales within the Clay division.
5. EXCEPTIONAL ITEMS
Year ended Year ended
31 December 31 December
2022 2021
------------- -------------
GBP'000 GBP'000
Exceptional (cost of)/income
from sales
Impairment (charge)/reversal
- Property, plant and equipment (554) 5,623
Impairment reversal - Right-of-use
assets - 174
Total impairment (charge)/credit (554) 5,797
Other costs associated with
restructuring programme (126) (2,302)
------------- -------------
Total exceptional (cost
of)/income from sales (680) 3,495
Exceptional administrative
expenses:
Redundancy costs - (100)
COVID-19 administrative expenses - (187)
------------- -------------
Total exceptional administrative
expenses - (287)
Exceptional profit on disposal
of property plant and equipment 6,958 2,022
------------- -------------
Exceptional items impacting
operating profit 6,278 5,230
Total exceptional items 6,278 5,230
============= =============
2022
Included within the current year were the following exceptional
items:
Impairment charge - property, plant and equipment
The Group impaired the fixed assets at Atlas as part of a
restructuring programme in 2020. Upon making the decision to
redevelop the factory, a partial reversal of this amount was
recognised in 2021, based on an estimate of the assets which were
fit for continuing usage. As the redevelopment activity at the
Atlas site has continued, existing building assets have been
identified as unfit for usage, thereby requiring replacement.
Accordingly, those assets that have been identified as unfit for
usage have been fully impaired in the current period. This
impairment expense is, in effect, an adjustment to the impairment
reversal booked in 2021. As such, it is considered appropriate to
treat this adjustment on a basis consistent with the corresponding
entry in 2021.
Other costs associated with restructuring programme
As part of the Group-wide restructuring plan to upgrade the
Group, the business announced during 2020 a single coordinated plan
to rationalise its sites. This programme proceeded throughout 2021
and the costs, as expected, concluded during the first half of
2022.
The Group incurred cGBP0.1m of net residual costs relating to
the sites subject to closure during the 2022 year. The net balance
in the current period comprised rates and other standing charges
related to the former operations, partly offset by savings from
previously provided redundancy schemes.
Exceptional profit on disposal of property, plant and
equipment
The Group completed the sale of land and buildings at West
Hoathly, Sussex in October for a total consideration (net of costs
and sales tax) of GBP7.8m. The combined book value of the site
amounted to GBP0.8m, which had previously been disclosed with
assets held for resale, leading to a gross profit of GBP7.0m being
recognised as an exceptional gain in 2022.
2021
Included within the prior year were the following exceptional
items:
Exceptional income from sales
Impairment reversals arose in the period following the Group's
announcements during 2021 to redevelop its Atlas and Nostell
manufacturing sites within the Clay segment, together with the
decision to retain the leased Northwich administrative facility
within the Concrete segment. These decisions are expected to lead
to the utilisation of assets that were impaired in 2020 following
the Group's restructuring programme in response to the
deterioration in near-term demand outlook caused by the COVID-19
pandemic. Due to the initial impairment charge treatment as
exceptional items, the reversal is similarly categorised as
exceptional.
Other costs associated with the closure of sites represent other
expenses incurred as a result of the Group's restructuring
programme during the prior year. These costs include site security,
insurance, rates and other standing charges in connection with
closed sites. These costs were categorised as exceptional due to
the non-recurring nature of the event giving rise to them.
Exceptional administration expenses
Exceptional redundancy costs incurred in the prior year related
to residual costs of redundancy of employees within the Group's
selling, general and administrative ("SG&A") functions
following the restructuring programme announced in June 2020. The
costs are net of savings achieved by the Group as a result of
decisions to retain employees, who had initially been notified of
redundancy. Due to the initial restructuring charge treatment as
exceptional, the reversal is similarly categorised as an
exceptional item.
COVID-19 administrative costs in 2021 related to costs incurred
in acquiring personal protective and health screening equipment
associated with the return to work, and the costs of acquiring
information technology equipment to be used in the short-term
during the COVID-19 lockdown. These costs were categorised as
exceptional in 2H 2020 and 1H 2021 due to the non-recurring nature
of the event giving rise to them. It is not expected that similar
costs would be treated as exceptional in the future, due to the
normalisation of operating conditions.
Exceptional profit on disposal of property, plant and
equipment
The exceptional profit on disposal in 2021 related to the sale
of the Group's surplus property near Kingswinford. The profit on
disposal has been categorised as exceptional due to the materiality
of the amount recorded.
Tax on exceptional items
2022
In the current year, the impairment charge relating to property,
plant and equipment is not tax deductible but gives rise to a
deferred tax credit in the current period.
The costs associated with the closure of sites are tax
deductible in the current period.
The profit on disposal of property, plant and equipment gave
rise to a nil chargeable gain in the current period due to the
effect of indexation allowance.
2021
In 2021, the reversal of impairment charges relating to
property, plant and equipment and right-of-use assets was not tax
deductible but gave rise to a deferred tax charge in the prior
year.
The costs associated with the closure of sites, COVID-19
administrative expenses and redundancy costs were tax deductible in
the prior year.
The profit on disposal of property, plant and equipment gives
rise to a chargeable gain which was taxable in the prior year.
6. TAXATION
The Group recorded a taxation charge of GBP17.9 million (2021:
GBP33.1 million) on a pre-tax profit of GBP104.8 million (2021:
pre-tax loss of GBP64.9 million), resulting in an effective tax
rate ("ETR") of 17.1% (2020: 51.0%).
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 Percentage GBP'000 Percentage
----------------- -------------------------------- ---------------------------------- --------------------------- -----------------------
Profit before
tax 104,764 100% 64,942 100%
----------------- -------------------------------- ---------------------------------- --------------------------- -----------------------
Profit before
tax multiplied
by the rate of
corporation
tax in the UK 19,905 19.00% 12,339 19.00%
Effects of:
Expenses not
deductible 771 0.74% 510 0.79%
Accounting
profit on
disposal
of property,
plant and
equipment - - (333) (0.51%)
Permanent
benefit of
super-deduction
on capital
expenditure (1,741) (1.66%) (829) (1.28%)
Changes in
estimates
relating
to prior
periods (1,658) (1.58%) 66 0.10%
Adjusted ETR 17,277 16.50% 11,753 18.10%
Exceptional
accounting
profit on
disposal of
property,
plant and
equipment (1,488) (1.42%) (252) (0.39%)
Rate change on
deferred
tax provision 2,095 2.00% 21,628 33.30%
Total taxation
expense
from continuing
operations 17,884 17.08% 33,129 51.01%
----------------- -------------------------------- ---------------------------------- --------------------------- -----------------------
There are no income tax consequences for the Company in respect
of dividends declared prior to the date of authorisation of these
financial statements and for which a liability has not been
recognised.
As part of the measures announced in the 2022 Autumn Statement,
the Chancellor of the Exchequer reinstated the previously cancelled
increase in the standard rate of corporation tax from 19% to 25%
with effect from 1 April 2023. The impact of this rate change was
recognised in the previous year's financial statements and gave
rise to an increase in the Group's net deferred tax liabilities of
GBP21.6 million.
In the current period, the permanent benefit of the temporary
enhancement to tax relief on capital expenditure on plant and
machinery, known as the "super-deduction" was GBP1.7 million. This
benefit is offset by an increase in the associated deferred tax
liability of GBP1.4 million being recognised at 25%, being the
future tax rate at which it is expected to unwind.
The GBP2.1 million rate change on deferred tax provision is a
result of recognising deferred tax assets and liabilities at the
future tax rate of 25% in respect of items that are taxable or
tax-deductible in the current period. GBP1.4 million of this
balance relates to capital expenditure that has attracted the
super-deduction as mentioned above.
In the current period, no capital gain arose in relation to the
GBP7.0 million profit on disposal of property, plant and equipment,
resulting in a reduction in the effective tax rate as shown in the
table above.
The main reason for the income tax charge of GBP1.3 million
arising on changes in estimates relating to prior periods is due to
a lower level of capital expenditure qualifying for the
super-deduction than originally estimated. Tax relief on the
capital expenditure will instead accrue over future periods, thus
giving rise to a GBP1.6 million prior year deferred tax credit. The
remaining GBP1.4 million of the deferred tax credit relates to the
correction of deferred tax overprovided in the prior year in
relation to tangible fixed assets.
The Group expects its effective tax rate in the future to be
affected by the outcome of any future tax audits as well as the
impact of changes in tax law.
7. EARNINGS PER SHARE
The basic earnings per share figures are calculated by dividing
profit for the year attributable to the parent shareholders by the
weighted average number of Ordinary Shares in issue during the
year. The diluted earnings per share figures allow for the dilutive
effect of the conversion into Ordinary Shares of the weighted
average number of options outstanding during the year. Where the
average share price for the year is lower than the option price the
options become anti-dilutive and are excluded from the calculation.
The number of shares used for the earnings per share calculation
are as follows:
Year Year ended
ended 31 December
31 December 2021
2022
(000s) (000s)
------------- -------------
Basic weighted average number of
Ordinary Shares 402,746 409,118
Effect of share incentive awards
and options 2,010 1,494
------------- -------------
Diluted weighted average number of
Ordinary Shares 404,756 410,612
------------------------------------ ------------- -------------
The calculation of adjusted earnings per share is a key
measurement used by management that is not defined by IFRS. The
adjusted earnings per share measures should not be viewed in
isolation, but rather treated as supplementary information.
Adjusted earnings per share figures are calculated as the Basic
earnings per share adjusted for exceptional items, fair value
adjustments being the amortisation and depreciation on fair value
uplifted assets and non-cash interest expenses. Adjustments are
made net of the associated taxation impact at the adjusted
effective tax rate. A reconciliation of the statutory profit to
that used in the adjusted earnings per share calculations is as
follows:
Year Year ended
ended 31 December
31 December 2021
2022
GBP'000 GBP'000
--------------------------------------------- ------------- -------------
Profit for the period attributable
to the parent shareholders 86,908 31,813
Less back exceptional items (Note
5) (6,278) (5,230)
(Less)/add back tax (credit)/charge
on exceptional items (453) 695
Add fair value adjustments 12,126 10,132
Less tax credit on fair value adjustments (2,000) (1,834)
Less net non-cash interest (1,376) (606)
Add back tax expense on non-cash
interest 227 110
Add back impact of deferred taxation
rate change 2,095 21,628
--------------------------------------------- ------------- -------------
Adjusted profit for the period attributable
to the parent shareholders 91,249 56,708
Year Year ended
ended 31 December
31 December 2021
2022
pence pence
--------------------------------------------- ------------- -------------
Basic EPS on profit for the year 21.6 7.8
Diluted EPS on profit for the year 21.5 7.7
Adjusted basic EPS on profit for
the year 22.7 13.9
Adjusted diluted EPS on profit for
the year 22.5 13.8
8. BORROWINGS
31 December 31 December
2022 2021
============ ============
GBP'000 GBP'000
Current
Private Placement 436 333
------------ ------------
436 333
Non-current
Private Placement 99,769 99,738
------------ ------------
99,769 99,738
------------ ------------
Total borrowings 100,205 100,071
============ ============
During the final quarter of 2022, the group concluded a 12-month
extension to the GBP125 million RCF, extending maturity to November
2026 on terms aligning with the original refinancing in November
2021. Fees of GBP0.3 million related to this extension were
capitalised.
The Group refinanced its debt facilities in the final quarter of
2021 repaying the existing Revolving Credit Facility ("RCF") in
November 2021 and expensed the remaining capitalised arrangement
fees of GBP0.7 million. This expense is presented within finance
costs in the consolidated income statement.
These facilities were replaced with the issuance of GBP100
million of Private Placement notes from Pricoa Private Capital,
with maturities of between 7 and 12 years and an average total cost
of funds of 2.19% (range 2.04%-2.27%). An additional uncommitted
shelf facility of up to $88.1 million (or equivalent in available
currencies) was agreed. The facility contains debt covenant
requirements of leverage (net debt to adjusted EBITDA1) and
interest cover (adjusted EBITDA1 to net finance charges) of no more
than three times and at least four times, respectively, tested
semi-annually on 30 June and 31 December in respect of the
preceding 12-month period.
In November 2021 a GBP125 million RCF facility was provided by a
syndicate of five banks for an initial four year period, with a one
year extension option. Interest is charged at a margin (depending
upon the ratio of net debt to Adjusted EBITDA) of between 160bps
and 260bps above SONIA, SOFR or EURIBOR according to the currency
of the borrowing. The facility also includes an additional GBP50
million uncommitted accordion facility. Based on current leverage
the Group will pay interest under the RCF initially at a margin of
160bps. This facility contains debt covenant requirements that
align with those of the private placement with the same testing
frequency.
The carrying value of financial liabilities have been assessed
as materially in line with their fair values.
No security is currently provided over the Group's
borrowings.
9. PROVISIONS
31 December 31 December
2022 2021
============ ============
GBP'000 GBP'000
Restoration (i) 4,550 4,749
Dilapidations (ii) 3,910 4,363
Restructuring (iii) - 100
Other (iv) 452 889
8,912 10,101
------------ ------------
Current 1,613 1,869
Non-current 7,299 8,232
8,912 10,101
------------ ------------
(i) The restoration provision comprises obligations governing
site remediation and improvement costs to be incurred in compliance
with applicable environmental regulations together with
constructive obligations stemming from established practice once
the sites have been fully utilised. Provisions are based upon
management's best estimate of the ultimate cash outflows. The key
estimates associated with calculating the provision relate to the
cost per acre to perform the necessary remediation work as at the
reporting date together with determining the expected year of
retirement. Climate change is specifically considered at the
planning stage of developments when restoration provisions are
initially estimated. This includes projection of costs associated
with future water management requirements and the form of the
ultimate expected restoration activity. Other changes to
legislation, including in relation to climate change, are factored
into the provisions when legislation becomes enacted. Estimates are
reviewed and updated annually based on the total estimated
available reserves and the expected mineral extraction rates.
Whilst an element of the total provision will reverse in the
medium-term (one to ten years), the majority of the legal and
constructive obligations applicable to mineral-bearing land will
unwind over a period exceeding 20 years. In discounting the related
obligations, expected future cash outflows have been determined
with due regard to extraction status and anticipated remaining
life. Discount rates used are based upon similarly dated UK
Government bond rates.
(ii) Provisions for dilapidations arose as contingent
liabilities recognised upon the business combination in the period
ended 31 December 2015, are recognised on a lease by lease basis
and are based on the Group's best estimate of the likely
contractual cash outflows, which are estimated to occur over the
lease term. Third party valuation experts are used periodically in
the determination of the best estimate of the contractual
obligation, with expected cash flows discounted at similarly lived
UK Government bond rates.
(iii) The restructuring provision comprises obligations arising
as a result of the site closures and associated redundancy costs
announced during the year ended 31 December 2020 following the
completion of the Group's review of operations. The remaining cost
is expected to be incurred within one year of the current year
balance sheet date.
(iv) Other provisions include provisions for legal and warranty
claim costs, which are expected to be incurred within one year of
the balance sheet date.
10. IMPAIRMENT
2022
In the year, in light of the anticipated macroeconomic downturn
and the resulting projected decrease in activity levels across the
UK construction industry, Management identified possible indicators
of impairment and subsequently generated an estimate of the
recoverable amounts based on value in use for the Group's
cash-generating units (CGUs).
Based on Management's projections, no reasonably possible change
in key assumptions within the value in use ("VIU") recoverable
amount calculation contained within the impairment calculation
could cause the carrying value of tangible assets to exceed its
recoverable amount.
2021
The Group's announcements in April 2021 and November 2021
regarding the capital expenditure projects at the Atlas and Nostell
sites, respectively, represent significant changes with a
favourable effect on the assets held at these sites, which were
previously impaired. The site redevelopments at Atlas and Nostell
increased the estimated service potential from the use of certain
assets. The Group had estimated the recoverable amounts relating to
these assets and recognised an exceptional impairment reversal of
GBP5.6 million in the year ended 31 December 2021. This reversal
arose within the Clay segment.
Additionally, the Group's decision to retain the leased
Northwich administrative facility within the Concrete segment
triggered an impairment reversal of GBP0.2 million to the related
right-of-use asset.
Goodwill
Impairment testing was performed as at 31 December 2022 on the
Group's goodwill balance of GBP3.9 million, primarily relating to
the acquisition of the Longley CGU in July 2019. Based upon
management's detailed testing of the recoverable value of the CGUs
to which goodwill is allocated, no impairment was indicated.
For the Longley CGU, the key assumptions used within the testing
of goodwill included a pre-tax discount rate of 10.5%, together
with a long-term growth rate of 2%. The CGU-specific cash flows for
the detailed five-year time period used by management contain a
revenue compound growth rate of 4.6%.
Based on management's projections, no reasonably possible change
in key assumptions within the value in use ("VIU") recoverable
amount calculation contained within the impairment calculation
could cause the carrying value of goodwill to exceed its
recoverable amount.
11. NOTES TO THE GROUP CASHFLOW STATEMENT
Year ended Year ended
31 December 31 December
2022 2021
Cash flows from operating GBP'000 GBP'000
activities
-------------------------------- ------------- -------------
Profit before taxation 104,764 64,942
Adjustments for:
Depreciation 31,579 31,409
Impairment of property
plant and equipment 554 (5,623)
Impairment of right-of-use
assets - (174)
Amortisation of intangible
assets 6,939 6,940
Net finance costs 2,663 4,992
Gain on disposal of property,
plant and equipment (6,541) (3,660)
Research and development
expenditure credit (1,560) (1,673)
Share based payments 2,547 890
Post-employment benefits (973) (789)
Other (172) (87)
------------- -------------
139,800 97,167
Increase in inventory (21,255) (9,435)
Increase in debtors (930) (2,617)
Increase in creditors 20,650 18,504
Decrease in provisions (500) (3,122)
Cash generated from operations 137,765 100,497
-------------------------------- ------------- -------------
12. POST EMPLOYMENT BENEFITS
The Group participates in the Ibstock Pension Scheme (the
'Scheme'), a defined benefit pension scheme in the UK. During the
year ended 31 December 2022, the opening Scheme surplus of GBP57.8
million decreased to a closing surplus of GBP15.2 million. Analysis
of movements during the year ended 31 December 2022:
GBP'000
Scheme surplus at 31 December
2021 57,754
Charge within operating
profit (777)
Interest income 1,048
Remeasurement due to:
- Change in financial assumptions 211,786
- Change in demographic
assumptions (1,701)
- Experience gains (18,844)
- Return on plan assets (235,822)
Company contributions 1,750
Scheme surplus at 31 December
2022 15,194
==========
On 20 December 2022, the Scheme completed a full buy-in
transaction with a specialist third-party provider, which
represented a significant step in the Group's continuing strategy
of de-risking its pensions exposure. This transaction, together
with the partial buy-in transaction in 2020 insures all Group's
defined benefit liabilities. As a result, the insured asset and the
corresponding liabilities of the Scheme are assumed to be fully
matched without exposure to interest rate, inflation risk or
longevity risk. However, there is a residual risk that the
insurance premium may be increased following a data cleanse to
reflect a more accurate position. If the surplus Scheme assets are
insufficient to meet any additional premium, then the company may
need to pay an additional contribution into the Scheme.
The cover for current deferred pensioners at the date of the
transaction attracted a total buy-in premium of GBP175.6 million.
The initial premium payment of GBP81.3 million was settled on 28
December 2022 by the transfer of certain Scheme-invested assets.
The remaining premiums will be settled in three instalments, with
the final instalment expected to be paid by 20 December 2024. The
deferred premia of GBP94.3 million with a present value of GBP91.7
million have been recognised as negative assets against the Bespoke
cash flow-driven investment.
The difference between the buy-in premium and the IAS 19
liability for these members has been taken through the consolidated
statement of other comprehensive income in the year ended 31
December 2022 as an asset loss of GBP23.4 million.
The increased levels of short-term inflation during the year
leading to significant expected pension increase in deferment and
payment to be awarded in 2023. This has been offset by a
significant actuarial gain arising on the liabilities from a change
in market conditions, particularly reflecting the significant rise
in corporate bond yields and therefore the discount rate over
2022.
The financial assumptions used by the actuary have been derived
using a methodology consistent with the approach used to prepare
the accounting disclosures at 31 December 2021. The assumptions
have been updated based on market conditions at 31 December
2022:
31 December 31 December
2022 2021
Per annum Per annum
Discount rate 4.80% 1.80%
RPI inflation 3.20% 3.40%
CPI inflation 2.60% 2.70%
Rate of increase in pensions
in payment 3.75% 3.75%
Commutation factors 18.60 17.31
Mortality assumptions:
life expectancy from age
65
For a male currently aged
65 21.9 years 21.8 years
For a female currently
aged 65 24.5 years 24.5 years
For a male currently aged
40 23.6 years 23.6 years
For a female currently
aged 40 26.4 years 26.3 years
Based on an existing funding agreement, a contribution level of
GBP1.75 million per annum has applied from February 2022,
increasing to GBP2.0 million from 1 December 2023 and then to
GBP2.25 million from 1 December 2024. Subsequently, in light of the
fact that the pension scheme was in a net surplus position after
the full buy-in, the Trustees and the Group have agreed that the
Group would suspend paying regular contributions with effect from 1
March 2023.
13. BUSINESS COMBINATION
On 29 July 2022, the Group acquired 75% of the share capital of
Generix Facades Limited. The acquired entity and its fully owned
subsidiary Generix Facades International Limited specialise in
ventilated rainscreen facade systems. The acquisition of the
Generix business is complementary to the Group's Futures operations
and supports the further growth of the Futures business.
Cash consideration of GBP1.0 million, was paid during the year
ended 31 December 2022. Deferred consideration of GBP0.1 million is
payable on the first anniversary of completion.
In the acquisition, the Group acquired identifiable assets of
GBP0.2 million and goodwill of GBP0.9 million.
14. OTHER RESERVES
Cash Merger Own shares Treasury Total
flow reserve held shares other
hedging reserves
reserve
------------------------ --------- ---------- ----------- --------- ----------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --------- ---------- ----------- --------- ----------
Balance at 1 January
2022 (74) (369,119) (1,741) - (370,934)
Other comprehensive
expense 492 - - - 492
Shares purchased
- share buy back
scheme (Note 12) - - - (30,000) (30,000)
Issue of own shares
held on exercise
of share options - - 152 - 152
At 31 December 2022 418 (369,119) (1,589) (30,000) (400,290)
------------------------ --------- ---------- ----------- --------- ----------
-
Balance at 1 January
2021 - (369,119) (922) - (370,041)
Other comprehensive
income (74) - - - (74)
Purchase of own shares - - (1,309) - (1,309)
Issue of own shares
held on exercise
of share options - - 490 - 490
At 31 December 2021 (74) (369,119) (1,741) - (370,934)
------------------------ --------- ---------- ----------- --------- ----------
Cash flow hedging reserve
The cash flow hedging reserve records movements for effective
cash flow hedges measured at fair value. The accumulated balance in
the cash flow hedging reserve will be reclassified to the cost of
the designated hedged item in a future period.
Merger reserve
The merger reserve of GBP369.1 million arose on the acquisition
of Figgs Topco Limited by Ibstock plc in the period ended 31
December 2015 and is the difference between the share capital and
share premium of Figgs Topco Limited and the nominal value of the
investment and preference shares in Figgs Topco Limited acquired by
the Company.
Own shares held
The Group's holding in its own equity instruments is shown as a
deduction from shareholders' equity at cost totalling GBP1.6
million at 31 December 2022 (31 December 2021: GBP1.7 million).
These shares represent shares held in the Employee Benefit Trust to
meet the future requirements of the employee share based payment
plans. Consideration, if any, received for the sale of such shares
is also recognised in equity with any difference between the
proceeds from sale and the original cost being taken to the profit
and loss reserve. No gain or loss is recognised in the income
statement on the purchase, sale, issue or cancellation of equity
shares.
Treasury share reserve
The Treasury share reserve represents shares acquired by the
Group as part of its share buyback programme in 2022.
Commencing 10 May 2022, the Group engaged its brokers to
purchase up to GBP30.0 million of shares on the open market on its
behalf. These shares are held by the Group to meet future
requirements of employee share based payment plans. At 31 December
2022, the Treasury shares reserve contained 16,791,470 shares.
15. RELATED PARTY TRANSACTIONS
There were no related party transactions nor any related party
balances in either the 2022 or 2021 financial years.
16. DIVIDENDS PAID AND PROPOSED
The Directors are proposing a final dividend in respect of the
financial year ended 31 December 2022 of 5.5 pence (2021: 5.0
pence) per Ordinary Share, which will distribute an estimated
GBP21.6 million (2021: GBP20.5 million) of shareholders' funds.
Subject to approval at the Annual General Meeting, this will be
paid on 12 May 2023, to shareholders on the register at the close
of business on 21 April 2023.
17. POST BALANCE SHEET EVENTS
In light of the fact that the Ibstock Pension Scheme was in a
net surplus position after the full pension buy-in, the Group and
the Trustees of the Ibstock Pension Scheme agreed on 27 February
2023 that the Group would suspend regular contributions into the
pension scheme with effect from 1 March 2023 (see Note 12).
Except for this pension contribution agreement and the proposed
ordinary dividend (see Note 16), no further subsequent events
requiring either disclosure or adjustment to these financial
statements have arisen since the balance sheet date.
[1] Alternative Performance measures are described in Note 3 to
this results announcement
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END
FR UBAORORUORUR
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