Brickability Group Plc - Interim Results

RNS Number : 4947U
Brickability Group PLC
25 November 2019
 

 

25 November 2019

 

Brickability Group plc

("the Group")

 

Interim Results for the six months ended 30 September 2019

 

Brickability Group plc, the leading construction materials distributor, today announces its unaudited Interim results for the six months ended 30 September 2019 showing steady delivery of the objectives it set out at IPO.

 

Financial Highlights:

 

·    Revenue increased by 19.8% to £97.9m (H1 18 : £81.7m)

·    Gross profit increased to £19.1m (H1 18 : £16.0m)

·    Profit before tax increased 33.4% to £6.8m (H1 18 : £5.1m)

·    Adjusted EBITDA* increased to £10.4m (H1 18 : £8.7m)

·    Maiden interim dividend declared of 0.87p per share

 

Operational Highlights:

 

·    Completion of successful IPO on AIM

·    New product ranges added to the Group offering in flooring, specialist brick, facades, and extended brick ranges

·    Four acquisitions made in-line with strategy: DSH Flooring, Bespoke Brick, LBT Facades and Brickmongers

·    Ongoing assessment of further acquisition opportunities to add to our distribution and product offering

·    Continued focus on improved efficiencies in the supply chain

·    Advanced preparations put in place for business continuity post EU withdrawal

 

Outlook

 

We are confident of building on a strong first half and the acquisitions made during the period are performing in line with expectations.  We have a healthy acquisition pipeline, the outlook for our markets is positive and the board remains confident of meeting full year expectations.

 

Looking ahead, the longer-term outlook for our markets remains encouraging and we are pleased to see that all the main political parties have made substantial commitments to build more houses.  Overall, the fundamentals for the housebuilding sector remain strong which gives us confidence that we will make further progress in the future. 

 

John Richards, Chairman, said:

 

"This is a strong set of results with which to update the market in our first set of financials since our successful IPO in the summer. I'm pleased that we're delivering what we said we would. The housing market is generally robust across the UK and we're very well placed to service that. With a set of good acquisitions under our belt we've enhanced our geographic spread and expanded our product offering. This will put us in a good position for future growth and we'll be looking at further bolt-on opportunities to support that."

 

*Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, exceptional and acquisition costs.

 

 

Enquiries:

 

Brickability Group PLC


John Richards, Chairman

Alan Simpson, Chief Executive officer


Stuart Overend, Chief Financial Officer

c/o Montfort Communications


Cenkos Securities (Nomad and Broker)

Max Hartley (Corporate Finance)

0207 397 8900

Julian Morse (Sales)


Montfort Communications (Financial PR)

0203 770 7916

James Olley

Woolf Thomson Jones


 

 

About Brickability

 

Brickability is a leading construction materials distributor, serving customers across the UK for over 25 years through its mainstream and local networks. The Company supplies over 300m bricks annually and already has 25 sites and sales offices, employing approximately 225 people throughout the UK. Across its three divisions, the Group supplies bricks, roofing, heating, flooring, doors and windows to meet UK housebuilder demand.

 

 

 

Brickability Group PLC

 

 

Chairman's Statement

 

Market conditions in new build housing remained stable throughout the period (with some regional variation) and I am delighted to report on a very active six months for the Brickability Group which included its successful admission to trading on AIM on 29 August 2019.

 

Following our successful IPO, the Group has been focused on maintaining and building on its excellent customer and supplier relationships. The Group has continued to pursue its stated aim of making bolt-on acquisitions that are aligned with the Group's strategy of adding to the Group's revenues while sharing the same route to market and enhancing our geographic spread of operations within the UK.  During the period the Group has made four new acquisitions increasing our distribution and product offering.

 

I am also pleased to report that the acquisition pipeline remains strong and we are in discussions with a number of potential businesses that would both enhance and broaden the Group's operations.

 

It is our strong performance that underpins our first Interim Dividend payment to shareholders of 0.87p per share.

 

Alongside our focus on trading and acquisitions, we have also made great strides in developing and delivering Group-wide policies on Health and Safety, Compliance and Sustainability, as well as staff retention, training and development.

 

External consultants have worked hand in hand with our staff to develop uniform Health and Safety Standards, while the introduction of CSOP and LTIP schemes will assist both retention and recruitment of key staff.  The Group is also very active in ensuring that we have first rate succession plans with options for filling key roles as and when required.

 

The majority of the products distributed by the Group are manufactured in the UK, while our towel radiators are primarily sourced from Turkey.  We import bricks, windows and doors from E.U. countries and have in place detailed plans to continue to distribute and indeed transport these products whatever form Brexit may take.

 

This has been another successful period of growth for Brickability in which we have achieved the significant milestone of a public listing. I am extremely grateful to everyone in the business for their continued hard work and dedication.

 

 

John Richards

Chairman

25 November 2019

 

Brickability Group PLC

 

Chief Executive's Review

 

I am pleased to report increases in Group revenue, EBITDA, and profit for the period. This reflects a strong UK housing market into which the majority of our products are delivered.

 

Overall brick sales remain in-line with our expectations as housebuilders continue to demand traditional bricks and masonry. Our geographic coverage continues to grow alongside our supply base.

 

Sales from our Heating and Plumbing division remain strong with our customer list continuing to grow. Our products are mostly sourced from Turkey and are paid for in sterling. Additional staff have been employed to extend our offering into panel radiators and associated products.

 

Our flooring distribution business, DSH Flooring Limited, is growing quickly and while our geographic coverage is currently local in its spread, the increase in the business's revenue since acquisition in April is extremely encouraging and there are further opportunities to grow the business.

 

Timber window sales remain at expected levels, while the sourcing of a new supplier enables us to take advantage additional business. Internal door sales opportunities remain limited as we await the sourcing of further suppliers.

 

Roofing sales remain robust with order books stretching to over a year, with long-term supply agreements on major housing developments in place.

 

During the last six months, our acquisition strategy has added four businesses to the Group.  DSH Flooring Limited was acquired in April, becoming our first business specialising in the distribution and fitting of flooring.  May saw the acquisition of The Bespoke Brick Company Limited, our second specialist brick import distributor.  LBT Brick & Facades Ltd and Brickmongers (Wessex) Limited were also acquired during this period, adding to our brick distribution coverage in the North West and South Coast respectively.

 

Acquisition opportunities exist in all of our product areas and indeed we are exploring some in new product types that enjoy the same route to market and end-use customer base that we believe would add to the Group's strengths.

 

Lastly, we were very pleased that during the period we supplied products that were used in the winning project of the 2019 Stirling Prize (Mikhail Riches' Goldsmith Street Social Housing, Norwich City Council).

 

We are confident of building on a strong first half and the acquisitions made during the period are performing in line with expectations.  We have a healthy acquisition pipeline, the outlook for our markets is positive and the board remains confident of meeting full year expectations.

 

Looking ahead, the longer-term outlook for our markets remains encouraging and we are pleased to see that all the main political parties have made substantial commitments to build more houses.  Overall, the fundamentals for the housebuilding sector remain strong which gives us confidence that we will make further progress in the future. 

 

 

Alan J Simpson

Chief Executive

25 November 2019


Brickability Group PLC

 

Financial Review

Revenue and Gross Margin

 

The Group delivered £97.9m of revenue in the first six months of 2019 (H1 2018: £81.7m), representing a total increase of 19.8% (£16.2m). When the impact of acquisitions are excluded from revenue, like for like ("LFL") revenue growth was up 4.8%.

 

Gross margins across the Group remained stable at 19.5% (H1 2018: 19.5%).  Gross Profit for the 6 months increased to £19.1m (H1 2018: £16.0). 

 

Administrative expenses

 

There was an overall net increase in administrative expenses of £1.5m across the Group primarily relating to the additional overheads of acquired businesses and £0.1m additional central overhead.

 

Exceptional items

 

Exceptional income in the period of £1m relates to an insurance recovery under a keyman policy that paid out following medical diagnosis.  The person concerned has made a full recovery. 

 

The other exceptional costs relate to the IPO (£0.5m) and the release of the loan arrangement fee provision following the repayment of the term loan on listing (£0.3m).

 

EBITDA

 

The Group's adjusted EBITDA increased to £10.4m in the first six months of 2019, compared to £8.7m in the same period last year, reflecting the growth in the existing business and the four acquisitions.

Operating profit

 

The Group generated an operating profit for the period of £8.6m, compared to £7.0m in the prior period. 

 

Interest expense fell slightly to £1.8m as the term loan was paid off with proceeds from the IPO in August 2019.

 

Earnings per share

 

Earnings per share for the first six months is calculated on an average of shares during the period which reflects both the pre IPO debt and loan note structure as well as the number of shares in issue pre IPO and is therefore not reflective of the expected earnings per share going forward.

 

Earnings per share based on the number of shares at the IPO was 2.23p per share.

 

Dividend

 

In keeping with the Group's stated strategy at IPO and encouraged by our strong first half performance, the Board has decided to declare a maiden interim dividend of 0.87p per share to shareholders on the register at 6 December 2019.  The ex-date and payment date for the dividend will be 5 December and 20 December 2019 respectively.

 

Cashflow

 

The Group generated operating cash flow of £2.2m in the first six months of the year compared to £8.8m in the same period in 2018. The key reason for the large change in working capital was due to the change in timing of the payment to major suppliers (c£5m) from just after the month end to the month end and the increase in net current assets from the four acquisitions (c£2.2m).  Importantly, the Group remains cash generative when adjusted for the year end creditor position.  For the 18 months period ending 30 September, removing the timing difference of creditor payments at 31 March, the cash conversion was 92%.

 

Balance Sheet

 

The net bank debt position as at 30 September 2019 was £1.9m, a decrease of £17.9m from the 31 March 2019 position. This mid-year decrease was due to repayment of the term loan from proceeds of the IPO and £5.4m of investor loan notes of which repayment was delayed until after 30 September 2019.

 

Post balance sheet events

 

In October 2019, the remaining £5.4m of investor loan notes plus interest were repaid. Following this the Company has no outstanding loan notes.  There are no other material post balance sheet events.

 

 

Stuart J Overend

Chief Financial Officer

25 November 2019


Condensed and Consolidated Income Statement

6 Months Ended 30 September 2019 (unaudited)

6 months


6 months


Year


Ended


Ended


Ended



30 Sept

2019


30 Sept 2018


31 March 2019


 £'000


 £'000


 £'000







Revenue


97,945


81,740


             163,294

(78,889)


(65,779)


           (130,371)







Gross profit


19,056


15,962


               32,923







4


97


                    96

(10,504)


(9,016)


             (18,950)







Profit from operations


8,556


7,043


               14,069













10,396


8,705


17,678

(1,402)


(1,266)


              (2,694)

2


                       -  


                    47

(601)


(396)


                 (962)

1,000


                       -  


                        -  

(522)


                       -  


                        -  

(317)


                       -  


                        -  






Profit from operations


8,556


7,043


14,069







(1,772)


(1,949)


              (4,172)

                            39


4


                    31

25


29


                    13

(40)


(23)


                   (49)







Profit before tax


6,808


5,104


                 9,892







(1,670)


(1,140)


              (2,396)







Profit from continuing operations


5,138


3,964


                 7,496

 

*Adjusted EBITDA reflects earnings before interest, taxation, depreciation, exceptional items, acquisition costs and intangible amortisation.

 

 

 

 

Earnings per share

For the six months ended 30 September 2019 (unaudited)

 


6 months ended

6 months ended

Year ended 31

Note

30 September 2019

30 September 2018

March 2019

 

Basic earnings per share - pence

3

13.31

 

1,760.8

 

3,151

Diluted earnings per share - pence

3

12.98

1,760.8

3,151


Statement of Condensed and Consolidated Changes in Equity

6 Months Ended 30 September 2019 (unaudited)

 

Share capital

Share Premium

Capital Redemption Reserve

Merger Reserve

Retained earnings

Total equity


 £'000

 £'000

 £'000

 £'000

 £'000

 £'000


As at 31 March 2018

4

7,170

-

1,245

(294)

8,125







-

-

-

-

7,496

7,496







-

1,800

-

-

-

1,800







Total contributions by and distributions to owners

-

1,800

-

-

7,496

9,296













As at 31 March 2019

4

8,970

-

1,245

7,202

17,421








-

-

-

-

5,138

5,138







2,065

56,877

-

-

-

58,942








(2)

-

2

-

-

-








(13,000)



13,000

-








(2,610)




(2,610)








Total contributions by and distributions to owners

2,063

41,267

2

-

18,138

61,470













At 30 September 2019

50,237

2

1,245

25,340

78,891




















Comparative for 6 Months Ended 30 September 2018












As at 31 March 2018

4

7,170

-

1,245

(294)

8,125







-

-

-

-

3,964

3,964







Total contributions by and distributions to owners

-

-

-

-

3,964

3,964













As at 30 September 2018

4

7,170

-

1,245

3,670

12,089

 

 

 

 

 

Condensed and Consolidated Balance Sheet

6 Months Ended 30 September 2019 (unaudited)

 



6 months


6 months


12 Months





Ended


Ended


Ended





30 Sept 2019


30 Sept 2018


31 March 2019

Assets


 £'000


 £'000


 £'000

Current assets







7,364


4,501


5,422

39,558


34,970


34,111

18,089


10,256


17,001

65,011


49,727


56,534

Non-current assets







3,947


3,754


3,623

2,868


1,443


1,595

74,764


67,224


68,788

1,207


621


1,239

744


300


744

155


                       -  


155

83,685


73,342


76,144






Total assets


                    148,696


            123,069

132,678






Liabilities







Current liabilities







(34,267)


(30,769)


(37,062)

(5,510)


(4,270)


(3,085)

(666)


(345)


(378)


(40,443)


(35,384)


(40,525)







Non-current liabilities







(879)


(9,597)


(3,957)

(20,000)


(58,013)


(62,977)

(2,217)


(1,107)


(1,227)

(138)


                       -  


(106)

(1,801)


(2,338)


(1,975)

(4,327)


(4,541)


(4,490)


(29,362)


(75,596)


(74,732)







Total liabilities


(69,805)


(110,980)


(115,257)







NET ASSETS


78,891


12,089


17,421







Issued capital and reserves attributable to







owners of the parent







2,067


4


4

50,237


7,170


8,970

2


                       -  


                        -  

1,245


1,245


1,245

25,340


3,670


7,202







TOTAL EQUITY


78,891


12,089


17,421

 

 

 

 

 

 

Condensed and Consolidated Cash Flow Statement

6 Months Ended 30 September 2019 (unaudited)

 

6 Months


6 Months


12 Months


Ended


Ended


Ended


30 Sept 2019


30 Sept 2018


31 March 2019


£'000


£'000


£'000

Cash flows from operating activities


5,138


3,964


7,496


Adjustments for;


(1,000)


839


601


396


962

1,402


1,266


2,694

40


23


49

(25)


(29)


(13)

(39)


(4)


(31)

1,772


1,949


4,172

(2)


(47)

1,670


1,140


2,396


Changes in;


(1,114)


731


(371)

1,807


(7,017)


(5,041)

(8,851)


6,416


11,279

2,238


8,835


23,545


1,000


(3,567)


(510)


(1,488)

39


4


31

18


18


36

(3,313)


(1,446)


(3,210)


(3,585)


6,901


18,914


Cash flows from investing activities


(444)


(467)


(1,243)

14


71

(4)

(7,271)


(2,644)

(194)

1,906


(4)

(523)


(234)


(6,552)


(467)


(4,018)


Cash flows from financing activities


43,923


1,500

8,158


1,500


2,115

(388)


(242)


(534)

1,500

(9,113)


(25,158)


(1,053)


(3,158)

(6,197)


(1,729)


(4,664)


11,225


(1,524)


(3,241)


1,088


4,910


11,655

17,001


5,346


5,346


18,089


10,256


17,001

 

 


Notes to the Interim report

 

 

1.   GENERAL INFORMATION

 

Brickability Group plc (the 'Company' or the 'Group') is a public company limited by shares incorporated in the United Kingdom under the Companies Act 2006 (registration number 11123804) and is registered in England and Wales. The registered address is c/o Brick-ability Ltd South Road, Bridgend Industrial Estate, Bridgend, United Kingdom, CF31 3XG.

Copies of this Interim Report may be obtained from the registered address or on the Corporate (Investor Relations) section of the Company's website at www.brickabilityplc.co.uk. 

Statement of compliance and basis of preparation

 

The condensed consolidated financial information presented in this Interim Report has been prepared in accordance with applicable IFRS including standards and interpretations issued by the International Accounting Standards Board as adopted by the EU and in accordance with Article 4 of the IAS Regulation. The financial information has been prepared using the historical cost convention and on a going concern basis.

The Annual Financial Report for the year ended 31 March 2019 was audited and has been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Accounts for the year ended 31 March 2019 was not qualified and did not contain statements under s498(2) or (3) of the Companies Act 2006.

The financial information for the six months ended 30 September 2019 and 30 September 2018 is unaudited and has not been reviewed by the Company's auditors.

The Interim financial statements are presented in sterling and all values are rounded to the nearest hundred thousand pounds (£0.1m) except where otherwise indicated.

 

2.   SEGMENTAL ANALYSIS

 

Brickability Group plc generates all of its revenues within the UK. Brickability Group plc generates revenue from the following activities:

 

-    Revenue from the sale of superior quality building materials to all sectors of the construction industry including national house builders, developers, contractors, general builders and retail to the public;

-    Revenue from the distribution of radiators and associated parts and accessories;

-    Revenue from the supply of roofing construction services primarily within the residential construction sector;

 

Brickability Group plc therefore has three business segments, being Bricks, Heating Plumbing and Joinery ("HPJ"); and Roofing. The Group's segments are strategic business units that offer different products and services.

 

Segmental analysis


Segmental analysis

For the 6 months ended 30 September 2019


For the 6 months ended 30 September 2018












Bricks

HPJ

Roofing

Total



Bricks

HPJ

Roofing

Total


£'000

£'000

£'000

£'000



£'000

£'000

£'000

£'000


          75,123

          13,052

           9,770

          97,945

          61,384

          11,812

           8,544

          81,740









           6,450

           2,980

           1,917

          11,347

           5,297

           2,513

           1,730

           9,540






(951)


(835)




Group adjusted EBITDA


          10,396


Group adjusted EBITDA


            8,705




(2,001)


(1,662)




           1,000

                -  



(839)


                -  



(1,748)


(1,939)




Profit before tax


            6,808


Profit before tax


            5,104




Segmental analysis


For the year ended 31 March 2019







Bricks

HPJ

Roofing

Total


£'000

£'000

£'000

£'000


        123,443

          23,338

          16,513

        163,294





          10,754

           4,887

           3,947

          19,588



(1,910)



Group adjusted EBITDA


          17,678



(3,609)



(4,177)



Profit before tax


            9,892


 

 

 

3.   EARNINGS PER SHARE

 

Earnings per share for the first six months is calculated on an average of shares during the period which reflects both the pre IPO debt and loan note structure as well as the number of shares in issue pre IPO and is therefore not reflective of the expected earnings per share going forward.

 

Earnings per share based on the number of shares at the IPO was 2.23p per share. The number of shares in issue post the IPO on 29th August 2019 is 230,458,821.

 

6 months Ended


6 months Ended


 Year Ended


30 September 2019


30 September 2018


31 March 2019


Profit

Weighted average


Profit

Weighted average


Profit

Weighted average


£'000

number of shares


£'000

number of shares


£'000

number of shares


5,138

38,612,470


3,964

225,150


7,496

237,846

13.31


1,760.8


3151


Profit

Diluted average


Profit

Diluted average


Profit

Diluted average


£'000

number of shares


£'000

number of shares


£'000

number of shares


5,138

39,575,538


3,964

225,150


7,496

237,846

12.98


1,760.8


3151

 

 

 

4.   DEFERRED CONSIDERATION

 

Future deferred consideration falls due as follows: £2.9m in the next 12 months and £1.1m after more than 12 months. Deferred consideration payments due in relation to PVH Holdings Limited and The Bespoke Brick Company Limited are linked to future profitability. Management has made an estimate of the deferred consideration due based on expected future profitability of these entities. There are no employment related obligations attached to future deferred consideration.

 

 

 

5.   ACQUISITIONS

 

During the 6 months ended 30 September 2019 the Group acquired 100% of the issued share capital of the companies listed below. All of the companies are incorporated in the UK.

 

Sector

Acquisition date

Initial Cash consideration

Loan notes

Deferred consideration

Deferred contingent consideration




£'000

£'000

£'000

£'000


HPJ

1 April 2019

300

                       -  

                       -  

                       -  


Bricks

15 May 2019

2,612

                       -  

                       -  

                       -  


Bricks

17 May 2019

4,645

955

300

1,200


Bricks

17 May 2019

20

5

                       -  

                       -  


Bricks

1 July 2019

831

554

                       -  

                       -  


 

The transactions have been accounted for by the acquisition method of accounting.

 

The provisional carrying amount of each class of assets before combination is set out below:

 

DSH Flooring Limited

LBT Brick and Facades Limited

The Bespoke Brick Company Limited

The Brick Slip Business Limited

Brickmongers (Wessex) Limited

Total


£'000

£'000

£'000

£'000

£'000

£'000



8

33

24

12

60

137

183

658

433

1,274

631

1,379

3,116

10

730

5,866

(13)

696

701

24

497

1,906

(573)

(1,163)

(2,439)

(32)

(931)

(5,139)


237

945

2,060

13

788

4,043

 

Due to the timing of the acquisitions, the acquisition accounting adjustments were not complete as at 30 September 2019, however, will be finalised prior to 31 March 2020.

 

 

6.   DIVIDENDS

 

No dividends were paid during the period. However, the Company has declared an interim dividend for the 2019 year of 0.8678p per share and intends to pay this to shareholders on 20 December 2019 to shareholders on the register on 6 December 2019 (Ex dividend date 5th December 2019).

 

 

7.   POST BALANCE SHEET EVENTS



In October 2019 £5.4m of investor loan notes plus interest where repaid and an additional £1.0m of keyman insurance was received. There were no other post balance sheet events.

 

- Ends -

 


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