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Brickability Group (BRCK)

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Wednesday 01 December, 2021

Brickability Group

Brickability Group plc - Interim Results

RNS Number : 1155U
Brickability Group PLC
01 December 2021
 

 

01   December 2021

 

Brickability Group plc

("the Group")

 

Interim Results for the six months ended 30 September 2021

 

Brickability Group plc (AIM: BRCK), the leading construction materials distributor, today announces its unaudited interim results for the six months ended 30 September 2021.

 

Financial Highlights:

Revenue increased by 197% to £223.5m (H1 2020: £75.3m)

Group like-for-like** revenue growth of 53.6% versus H1 2020 and 30.4% versus H1 2019

Gross profit increased by 146.8% to £39.0m (H1 2020: £15.8m)

Gross profit margin of 17.4% (H1 2020: 21.0%)

Profit before tax increased by 120.4% to £11.9m (H1 2020: £5.4m)

Adjusted EBITDA* increased by 120.0% to £17.6m (H1 2020: £8.0m)

Cash balance at 30 September of £18.4m (H1 2020: £13.8m)

Net cash as at 30 September of £2.8m (H1 2020: net debt £2.7m)

Borrowing facility increased to £60 million plus £25m accordion following re-financing

Interim dividend proposed of 0.96 pence per share (H1 2020: 0.8678 pence)

 

Operational Highlights:

Strong start to 2021, with performance ahead of same period in 2019 pre-COVID

Acquisitions of Taylor Maxwell, in June 2021 following an oversubscribed share placing raising equity finance of £55 million, and Leadcraft, as announced in August 2021

Taylor Maxwell acquisition recognised with the 2021 AIM Awards 'Transaction of the Year' Award

New product ranges added to Group offering, timber and non-combustible cladding, copper and zinc metal roofing and heritage leadwork

Focus on revenue and cost synergies

Strong pipeline of acquisitions and continued organic development

Strong order book for the second half with positive order intake momentum

ESG Committee established led by the Group Chairman with members including the Chief Operating Officer and Group Marketing Director

 

Post period end and outlook:

Appointment of Paul Hamilton as Chief Operating Officer with immediate effect

Acquisition of HBS New Energies and UPOWA in November 2021, the Group's first acquisition in the renewable energy products sector

Board remains confident of the Group delivering performance at least in line with market expectations for the full year

 

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

 

**like-for-like sales is a measure of growth in sales, adjusted for the impact of acquisitions

 

John Richards, Chairman, said:

 

"We are pleased to have delivered another strong performance across all our divisions during the period.

 

"As the housebuilding and construction market has continued to improve, all our divisions have benefitted from the increased demand which has resulted in a strong order book.

 

"Our strategy of bolt on acquisitions has enabled us to significantly expand our product offering, through the acquisition of Taylor Maxwell and Leadcraft, as well as, seeing the Group enter the renewable energy product space with the acquisition of HBS New Energies and UPOWA, a strategically significant sector for the Group moving forward, post period.

 

"We believe Brickability is well positioned for the future, and that the scale and diversity of the business, will enable the Group to capitalise on opportunities in the market and further strengthen our positioning."

 

 

ENDS

 

This announcement contains inside information.

 

Enquiries: 

 

Brickability Group plc 

John Richards, Chairman 

Alan Simpson, CEO 

Mike Gant, CFO 

 

via Montfort Communications 

Cenkos Securities plc (Nominated adviser and broker)  

Ben Jeynes, Max Gould (Corporate Finance)  

Julian Morse, Alex Pollen (Sales) 

 

+44 (0) 207 397 8900 

Montfort Communications (Financial PR)  

James Olley 

Georgia Colkin

 

 +44 (0) 203 514 0897

[email protected] 

 

About Brickability 

 

Brickability is a leading construction materials distributor, serving customers across the UK and Europe for over 36 years through its national and local networks. The Group supplies over 500m bricks annually and has 41 locations across the country with over 500 employees.

 

Across its 3 divisions the Group supplies bricks, roofing, timber, cladding, heating, flooring, doors and windows to meet demand from both housebuilders and contractors.

 

 

 

 

Interim Report for the six months ended 30 September 2021

 

Chairman's Statement

 

Brickability has made a strong start to 2021, delivering a robust financial performance, with an adjusted EBITDA of £17.6m in the first half of the year (2020: £8.0m).

 

Our businesses have performed well, in line with the recovery in the construction and housebuilding sector, and we have seen strong order intake momentum across all divisions, which has continued as we move into the second half of the year.

 

The fundamentals of the UK housebuilding market remain strong and the industry is forecast to continue to grow substantially as we move into 2022, driven by increased demand in the private sector and Government investment into affordable housing starting to come through. We firmly believe that Brickability remains well placed to capitalise on this demand, strengthening its position within the market as a leading construction materials distributor.

 

The acquisition of Taylor Maxwell completed in June 2021 brings significant scale and diversity to our offering and customer base, alongside the acquisition of Leadcraft Ltd. We are pleased to report that both businesses are already contributing significantly to the overall performance of the Group. Our pipeline of acquisitions is very encouraging, and we remain focused on identifying bolt on acquisitions which will further diversify our proposition.

 

To this end, we were pleased to announce the acquisition of HBS New Energies and UPOWA in November 2021. HBS New Energies marks Brickability's first acquisition in the renewables energy products sector and the 13th strategic acquisition for the Group in the last three years. The acquisition comes as Brickability seeks to broaden its offering for customers and, also importantly, focus on its own sustainability commitments across its divisions.

 

Decarbonisation of the built environment is driving significant new opportunity across the industry, with companies needing to commit to their own emission reductions while supporting the transition to net-zero of buildings and the broader supply chain. Cost efficient energy solutions are set to play a key role in supporting the built environment and housebuilding industry in meeting the changing Building Regulations landscape, as well as the UK Government's recently announced deadline for UK listed companies to publish their pathway to net-zero by 2030, in line with the UK Government's 2050 net-zero target.

 

This has been another successful period of growth for the Group and the results today are a testament to the adaptability, strength and diversity of the businesses we operate and our continued focus on identifying significant strategic opportunities, whilst operating a lean approach. Overall we maintain an optimistic market outlook and the Board remains confident of the Group delivering performance at least in line with market expectations for the full year. However, the Group remains vigilant of the pressures which continue to impact our sector and the wider UK economy.

 

The Board are pleased to announce an interim dividend of 0.96p per share (H1 2020: 0.8678p), payable on 24 February 2022 reflecting the performance of the business in the half, and the Board's confidence in the longer-term outlook for the Group.

 

I would like to take this opportunity to thank all employees for their hard work and commitment throughout this period. Brickability is well positioned for the future with a clear strategy and high-quality, diversified business and we remain confident of the Group's future success as we move forward.

 

John Richards

Chairman

30 November 2021

 

Chief Executive's Review

 

Our businesses have performed well, delivering a strong set of results which has enabled the Group to continue to focus on investing for future growth across the divisions. The results achieved, reflect not only the healthy housebuilding market conditions, following a strong post pandemic recovery, but also the strength of Brickability's positioning within the market.

 

The Group continues to deliver against its strategic objectives and aim of building a diversified construction materials distribution business. Our expertise in procurement from both the UK and overseas have allowed us to manage industry supply chain pressures including a shortage of HGV drivers and increases in materials prices. Whilst we expected margins to be impacted slightly by industry difficulties, our margin levels remain resilient as our diverse product offering has helped to mitigate the industry wide inflationary price pressures. Our roofing division has not been able to fully recover the significantly increased raw materials costs in the first six months of the year whilst our newly acquired Taylor Maxwell Timber business has delivered record margins.

 

Group margins are lower than prior years as the Taylor Maxwell business operates on lower margins than the Brickability Group was operating on prior to the acquisition, as noted at the time. The Taylor Maxwell overall margins for the three months since acquisition were exceptionally high due mainly to the unprecedented timber price inflation during this period which has since been reducing from this peak. Consequently, overall Group margins are expected to reduce slightly in the second half of the year back to normalised levels.

 

Bricks and Building Materials

The Group's footprint and product offering in the bricks and building materials division continued to grow over the period. Brick sales were robust, and demand remains strong from housebuilders, in particular for imported products. Whilst the first half of the year has presented industry wide challenges particularly, product availability and logistics, performance across the bricks division has been very positive and is expected to continue to provide good results as we move into the second half.

 

In June 2021, we announced the transformational acquisition of Taylor Maxwell. The acquisition has added significant scale and expanded the range of solutions we are able to deliver to our growing client base. We are pleased to announce that the integration of Taylor Maxwell within the wider Group is proceeding successfully. To date, we have focused on leveraging the Finance and IT functions and will shortly commence the adoption of Taylor Maxwell's operational and scheduling systems across the Group which will improve efficiencies by assisting in sales scheduling and forecasting. Since completion, the business has continued to perform strongly and ahead of expectations.

 

Whilst we continue to focus on identifying potential acquisition opportunities across all our business divisions, organic development remains a priority. During the period, U Plastics, our specialist merchant for facia, soffits and guttering, external cladding and ancillary products opened two new branches in Maidenhead and Enfield expanding its capacity and enabling it to respond to growing demand. Furthermore, following the appointment of a new sales team with significant industry experience and online sales expertise, The Matching Brick Company has more than doubled its sales in H1 compared to the previous year. We were pleased to also see the Group's start-up business Alfiam Building Supplies, following the impact of COVID-19, return to trading in line with expectations and delivering good margins.

 

Crest Brick, Slate and Tile has performed strongly, and McCann Logistics has continued to run at full capacity and we expect to see its performance improve further in the second half.

 

Heating, Plumbing and Joinery

Our businesses within the heating, plumbing & joinery division also performed well. Towelrad's range has grown significantly along with sales, driven by increased new housing being built and its ability to meet this demand thanks to strong stock availability. DSH Flooring and FSN Doors also benefitted from the increased demand and FSN Doors, in particular, has won a number a of new orders due to its ability to offer customers faster delivery times by sourcing product from Europe. The HPJ division also includes our ceramic tile business, Forum Tiles. This start-up, launched in January 2021 is currently growing its order book although with investment ahead of sales during H1, this has impacted the divisional margin when compared to the prior year.

 

Roofing Services

The roofing division has been the most impacted by the current market conditions surrounding the availability and pricing of materials with revenue and margins both down on pre-covid levels. This is expected to continue into the second half with a gradual recovery during the last quarter of our current financial year and into the new financial year as input costs stabilise and sales price increases become effective. Encouragingly, the order books are at an all-time high and we were pleased to announce in August 2021 the acquisition of Leadcraft Ltd which has enabled us to further expand our roofing materials business bringing copper and zinc metal roofing and heritage leadwork capability into the Group.

 

Post Period

As outlined in the Chairman's Statement, the Group has completed the acquisition of HBS New Energies, since the period end.   Founded in 2008, HBS New Energies is a market-leading renewable energy expert, specialising in the design, supply, installation and maintenance of solar PV, battery storage and electric vehicle charging technologies. With extensive cross-sector installation experience and technical expertise, HBS New Energies has built an unrivalled track record in the housebuilding, construction, commercial and industrial and public sectors, offering cost-effective, easy to install, energy saving and scalable technologies that simplify the construction of sustainable, zero-carbon homes.   As a market leader with a proven track record, we believe the acquisition of HBS New Energies will further strengthen our strategic positioning within the wider market and enable us to expand into a new product segment.

 

Management Changes

The Group is pleased to announce that Paul Hamilton, currently Managing Director of the Heating, Plumbing and Joinery Division, has been appointed into the newly created role of Chief Operating Officer ("COO") with immediate effect. The role of COO is not a Board position.

 

Paul Hamilton has over 15 years' experience in the heating and building supplier market. He joined the Towelrads business in 2004 and became a shareholder and Director in 2008. Paul has overseen the growth of the Towelrads business from sales of less than £1 million to over £22 million a year. He led a management buyout of the Towelrads business in 2016 and was a founder of DSH Flooring. Paul is currently Managing Director of the Group's Heating, Plumbing and Joinery Division including Towelrads, DSH Flooring, Frazer Simpson and FSN Doors.

 

As COO Paul will be responsible for the Group's day-to-day operations, reporting to myself.

 

Outlook  

Across the Group, our priority remains securing strong order intakes with clear and sustainable margins.

 

Our acquisition pipeline remains strong, and we continue to look at potential new businesses that will enhance and broaden Brickability's operations.

 

As the industry continues to face challenges, we remain cautiously optimistic and believe that our diversified multi business strategy places us in a good position to mitigate any pressures and take advantage of current and anticipated demand. We have entered the second half of the year in a strong position and the Board expects performance to be at least in line with market expectations for the full year.

 

Alan J Simpson

Chief Executive

30 November 2021

 

Financial Review

Revenue and gross margin

The Group delivered revenue of £223.5 million in the first six months of H1 2021 (H1 2020: £75.3 million), representing a total increase of 197.0% (£148.2 million). When the impact of acquisitions is excluded from revenue, like for like ("LFL") revenue increased by 53.6% when compared to H1 2020 and 30.4% on a two year LFL versus H1 2019.

The increase in LFL revenue reflects of the recovery that the Group has made following the initial COVID-19 lockdowns in April and May 2020. The significant acquisition of Taylor Maxwell, within the Bricks and Building Materials segment, and the addition of Leadcraft, within the Roofing Services segment, have also contributed to the overall increase compared to H1 2020.

Revenue by division was:

 

 

H1 2021

£'000

 

H1 2020

£'000

 

% Increase

 

LFL % increase

 

2 year LFL % change

Bricks and Building Materials

198,750

60,313

229.5%

53.7%

35.2%

Roofing Services

8,692

4,953

75.5%

50.9%

(17.4%)

Heating, Plumbing and Joinery

16,061

9,991

60.8%

53.3%

15.4%

Total

223,503

75,257

197.0%

53.6%

30.4%

 

Gross profit for the 6 months increased by 147% to £39.0 million (H1 2020: £15.8 million) whilst the Group's gross margin percentage decreased to 17.4% (H1 2020: 21.0%) driven primarily by the Taylor Maxwell business as it operates on lower margins than the existing Brickability Group as noted in the Chief Executive's Review.

Adjusted profit and adjusted EBITDA

Statutory profit before tax of £11.9 million (H1 2020: £5.4 million) includes other items of £3.9 million (H1 2020: £1.5 million) which are not considered to be part of the Group's underlying operations. These are analysed below the Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income.

The Group's adjusted EBITDA increased by 120% to £17.6 million for the first six months of 2021, compared to £8.0 million in the same period last year, reflecting the impact of the lockdown. EBITDA as a percentage of turnover has fallen to 7.9% (H1 2020: 10.6%) due mainly to the impact of the of the Taylor Maxwell business as noted above.

Adjusted EBITDA by division was:

 

 

H1 2021

£'000

 

H1 2021

EBITDA as % turnover

 

H1 2020

£'000

 

H1 2020

EBITDA as % turnover

Bricks and Building Materials

15,341

7.7%

5,520

9.2%

Roofing Services

1,269

14.6%

888

17.9%

Heating, Plumbing and Joinery

3,563

22.2%

2,515

25.2%

Central

(2,599)

-

(918)

-

Total

17,574

7.9%

8,005

10.6%

 

Earnings per share

Basic EPS was 3.01p per share (H1 2020: 1.89p), while adjusted basic EPS was 4.79p (H1 2020: 2.39p). Adjusted EPS is an underlying EPS, based on the adjusted profit as noted above.

 

Dividend

The Board is recommending an interim dividend of 0.96p per share (H1 2020: 0.8678p) to shareholders on the register at 28 January 2022. The ex-date and payment date for the dividend will be 27 January 2022 and 24 February 2022 respectively.

 

Cash flow and net debt

The Group generated operating cash flows before movements in working capital of £17.5 million in the first six months of the year compared to £8.1 million in the same period in 2020. Cash generated from operations was £7.0 million (H1 2020: £3.6 million).

The net cash position (cash less bank borrowings) as at 30 September 2021 was £2.8 million compared to a net debt position as at 30 September 2020 of £2.7m, and is an increase of £10.1 million since the net debt position at 31 March 2021.

During the period, the Group raised £55 million through the issue of new shares to fund the acquisition of Taylor Maxwell and future bolt-on acquisitions. Initial payments made to acquire these subsidiaries amounted to £39.5 million during the period.

 

Bank facilities

In June 2021, the Group re-financed into a £60 million revolving credit facility with an additional £25 million accordion, on a club basis with HSBC and Barclays, that runs for 3 years (with the option of two one-year extensions). Total bank debt as at 30 September 2021 was £15.6 million with a further £44.4 million of undrawn committed facilities available.

 

Defined benefit pension scheme

The Group acquired a defined benefit pension scheme during the period when it acquired Taylor Maxwell (2017) Limited. However, it has commenced a buy-out process to transfer the risk associated with the scheme. A buy-in contract was incepted on 7 July 2021 and the process is expected to reach the full buy-out stage within the next 9 months.

 

Subsequent events

In October 2021 , and as previously announced, the Group issued 280,254 new ordinary shares following the vesting and exercising of share options under the Company's Long Term Incentive Plan and Company Share Option Plan. The Group also granted 2,394,286 options under its LTIP and CSOP schemes to its employees.

In November 2021, the Group acquired the entire share capital and 100% of the voting rights in HBS NE Limited, a company specialising in the installation of solar panels and provision of renewable energy services.

There are no other material post balance sheet events.

 

 

 

Mike Gant

Chief Financial Officer

30 November 2021

 

 

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months ended 30 September 2021 (unaudited)

 

 

 

 

 

Notes

 

6 months ended

30 Sept 2021

£'000

6 months ended

30 Sept 2020

£'000

Year ended

31 March 2021

(Audited)

£'000

Revenue

Cost of sales

 

 

223,503

(184,551)

75,257

(59,457)

181,084

(143,112)

Gross profit

 

38,952

15,800

37,972

Other operating income

 

-

1

92

Administrative expenses

6

(22,956)

(7,722)

(20,624)

Impairment losses on financial assets

 

(301)

(74)

(341)

Depreciation and amortisation

 

(3,254)

(2,527)

(5,456)

Finance income

 

15

11

13

Finance expense

 

(503)

(454)

(845)

Share of post-tax profit/ (loss) of equity accounted associates

 

20

-

(6)

Fair value (losses)/ gains

 

(110)

381

360

Profit before tax

 

11,863

5,416

11,165

Tax expense

 

(3,938)

(1,064)

(1,506)

Profit for the period and total comprehensive income

7,925

4,352

9,659

Attributable to:

 

 

 

 

Equity holders of the parent

 

7,960

4,352

9,665

Non-controlling interests

 

(35)

-

(6)

 

 

7,925

4,352

9,659

 

 

 

 

 

Earnings per share

 

 

 

 

Basic earnings per share

8

3.01 p

1.89 p

4.19 p

Diluted earnings per share

8

2.96 p

1.89 p

4.18 p

Adjusted basic earnings per share

8

4.79 p

2.39 p

5.56 p

Adjusted diluted earnings per share

8

4.70 p

2.39 p

5.54 p

 

 

Adjusted profit 

Adjusted profit excludes those items that are not considered to be directly attributable to the Group's underlying trade. It can be reconciled to statutory profit after tax as follows:

 

 

 

6 months ended

30 Sept 2021

£'000

6 months ended

30 Sept 2020

£'000

Year ended

31 March 2021

(Audited)

£'000

Profit for the period

 

7,925

4,352

9,659

Acquisition costs

 

999

-

105

Share-based payment expense

 

880

43

338

Amortisation of intangible assets

 

1,897

1,748

3,619

Unwinding of discount on contingent consideration

 

48

75

127

Share of post-tax (profit)/ loss of equity accounted associates

 

(20)

-

6

Fair value losses/ (gains) on contingent consideration

 

110

(381)

(360)

Tax on adjusting items

 

798

(332)

(687)

Adjusted profit for the period

 

12,637

5,505

12,807

 

Adjusted EBITDA reflects earnings before interest, tax, depreciation, amortisation and other items considered non-operational in nature. A reconciliation between adjusted EBITDA and statutory profit before tax is included in note 5.

 

Condensed Consolidated Balance Sheet

Six months ended 30 September 2021 (unaudited)

 

 

 

 

Notes

 

 

6 months ended

30 Sept 2021

£'000

6 months ended

30 Sept 2020

£'000

Year ended

31 March 2021

(Audited)

£'000

Non-current assets

 

 

 

Property, plantandequipment 

15,860

4,002

9,125

Right of use assets     

10,539

5,944

7,945

Intangibleassets 

133,926

76,302

76,848

Investmentsin equity accountedassociates 

241

352

221

Investments in financial assets

125

-

125

Deferredtaxassets   

98

205

98

Trade and other receivables 

491

391

460

Total non-current assets

161,280

87,196

94,822

Current assets

 

 

 

 

Inventories

 

26,807

9,182

12,127

Trade and other receivables

 

118,788

39,151

42,832

Employee benefits

 

2,689

-

-

Cash and cash equivalents 

 

18,389

13,798

8,592

Total current assets

166,673

62,131

63,551

Total assets 

327,953

149,327

158,373

Current liabilities

 

 

 

 

Trade and other payables

 

(125,885)

(33,127)

(38,769)

Current income tax liabilities

 

(1,544)

(529)

(426)

Lease liabilities

 

(1,788)

(774)

(1,497)

Total current liabilities

(129,217)

(34,430)

(40,692)

Non-current liabilities

 

 

 

 

Trade and other payables

 

(13,159)

(2,000)

(3,153)

Loans and borrowings

11 

(15,160)

(16,332)

(15,750)

Lease liabilities

 

(9,233)

(5,481)

(6,796)

Provisions

 

(1,225)

(1,325)

(1,247)

Deferred tax liabilities

 

(6,556)

(5,299)

(5,301)

Total non-current liabilities

(45,333)

(30,437)

(32,247)

Total liabilities

(174,550)

(64,867)

(72,939)

Net assets

153,403

84,460

85,434

Equity

 

 

 

Called up share capital

2,983

2,305

2,305

Share premium account 

112,035

49,999

49,999

Capital redemption reserve

2

2

2

Share-based payment reserve

832

99

266

Merger reserve

1,245

1,245

1,245

Retained earnings

36,347

30,810

31,623

Equity attributable to equity holders of the parent

153,444

84,460

85,440

Non-controlling interests

(41)

-

(6)

Total equity

153,403

84,460

85,434

 

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 September 2021 (unaudited)

 

 

 

Share capital

Share premium account

 

Share-based payments

 

Merger reserve

Retained

Earnings

Total attributable to equity holders of the parent

Non-controlling interest

Total

 

 

£'000

  £'000

£'000

£'000

£'000

£'000

£'000

£'000

 

At 1 April 2020

 

2,305

49,999

2

56

1,245

26,458

80,065

-

80,065

Profit for the six months to 30 September 2020

 

-

-

-

-

-

4,352

4,352

-

4,352

Total comprehensive income for the period

 

-

-

-

-

-

4,352

4,352

-

4,352

Increase in share-based payment reserve

 

-

-

-

43

-

-

43

-

43

Total contributions by and distributions to owners

 

-

-

-

43

-

-

43

-

43

At 30 September 2020

 

2,305

49,999

2

99

1,245

30,810

84,460

-

84,460

Profit and total comprehensive income for the six months to 31 March 2021

 

-

-

-

-

-

5,313

5,313

(6)

5,307

Dividends paid

 

-

-

-

-

-

(4,500)

(4,500)

-

(4,500)

Increase in share-based payment reserve

 

-

-

-

167

-

-

167

-

167

Total contributions by and distributions to owners

 

-

-

-

167

-

(4,500)

(4,333)

-

(4,333)

At 31 March 2021

 

2,305

49,999

2

266

1,245

31,623

85,440

(6)

85,434

 

 

 

At 1 April 2021

 

2,305

49,999

2

266

1,245

31,623

85,440

(6)

85,434

Profit for the six months to 30 September 2021

 

-

-

-

-

-

7,960

7,960

(35)

7,925

Total comprehensive income for the period

 

-

-

-

-

-

7,960

7,960

(35)

7,925

Dividends paid

 

-

-

-

-

-

(3,236)

(3,236)

-

(3,236)

Issue of paid shares

 

678

64,322

-

-

-

-

65,000

-

65,000

Share issue costs

 

 

(2,286)

-

-

-

-

(2,286)

-

(2,286)

Increase in share-based payment reserve

 

-

  -

-

566

-

-

566

-

566

Total contributions by and distributions to owners

 

678

62,036

-

566

-

(3,236)

60,044

-

60,044

At 30 September 2021

 

2,983

112,035

2

832

1,245

36,347

153,444

(41)

153,403

 

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 September 2021 (unaudited)

 

 

 

 

 

 

 

 

6 months ended

30 Sept 2021

£'000

6 months ended

30 Sept 2020

£'000

Year ended

31 March 2021

(Audited)

£'000

Operating activities

 

 

 

 

Profit for the six months ended 30 September

 

7,925

4,352

9,659

Adjustments for:

 

 

 

 

  Depreciation of property, plant and equipment

 

472

334

726

  Depreciation of right of use assets

 

885

445

1,111

  Amortisation of intangible assets

 

1,897

1,748

3,619

  (Gain)/ Loss on disposal of property, plant & equipment

 

(6)

14

4

  and right of use assets

 

 

 

 

  Foreign exchange (gains)/ losses

 

(13)

68

(19)

  Share-based payments expense

 

880

43

338

  Share of post-tax (profit)/ loss in equity accounted associates

 

(20)

-

6

  Fair value changes in contingent consideration

 

110

(381)

(360)

  Movements in provisions

 

(22)

(64)

(142)

  Finance income

 

(15)

(11)

(13)

  Finance expense

 

503

454

845

  Acquisition expenses

 

999

-

105

  Income tax expense

 

3,938

1,064

1,506

Operating cash flows before movements in working capital

 

17,533

8,066

17,385

Changes in working capital:

 

 

 

 

  (Increase)/ Decrease in inventories

 

(5,540)

609

(2,011)

  Increase in trade and other receivables

 

(11,263)

(2,591)

(4,077)

  Increase/ (Decrease) in trade and other payables

 

6,230

(2,494)

1,792

Cash generated from operations

 

6,960

3,590

13,089

Payment of exceptional acquisition expenses

 

(999)

-

(105)

Interest received

 

15

11

13

Interest paid

 

(161)

(241)

(367)

Income taxes paid

 

(2,541)

(1,144)

(2,435)

Net cash generated from operating activities

 

3,274

2,216

10,195

Investing activities

 

 

 

 

Purchase of property, plant and equipment

 

(3,589)

(119)

(5,669)

Proceeds from sale of property, plant and equipment

 

35

9

59

Proceeds from sale of right of use assets

 

-

-

9

Acquisition of subsidiaries

 

(39,467)

-

(2,548)

Net cash acquired with subsidiary undertakings

 

2,679

-

2,274

Net cash used in investing activities

 

(40,342)

(110)

(5,875)

Financing activities

 

 

 

 

Equity dividends paid

 

(3,236)

-

(4,500)

Proceeds from issue of ordinary shares

 

55,000

-

-

Payment of share issue costs

 

(2,286)

-

-

Proceeds from bank borrowings

 

41,100

-

3,400

Repayment of bank borrowings

 

(41,400)

(8,500)

(12,500)

Payment of lease liabilities

 

(1,094)

(561)

(1,398)

Payment of deferred and contingent consideration

 

(847)

(6,427)

(7,883)

Payment of transaction costs relating to loans and borrowings

 

(375)

(90)

(90)

Net cash generated from/ (used in) financing activities

 

46,862

(15,578)

(22,971)

Net increase/ (decrease) in cash and cash equivalents

 

9,794

(13,472)

(18,651)

Cash and cash equivalents at beginning of period

 

8,592

27,269

27,269

Effect of changes in foreign exchange rates

 

3

1

(26)

Cash and cash equivalents at end of period

 

18,389

13,798

8,592

 

 

 

 

 

           

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended 30 September 2021 (unaudited)

 

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 registered in England and Wales. The registered office address is c/o Brickability Limited, South Road, Bridgend Industrial Estate, Bridgend, United Kingdom, CF31 3XG.

Copies of this Interim Report may be obtained from the registered address or from the Investors section of the Company's website at www.brickabilitygroupplc.com.

 

2.  Basis of Preparation

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 March 2021. They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to understanding changes in the Group's financial position and performance since the last annual financial statements.

The Annual Report and Accounts for the year ended 31 March 2021 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 2021 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 2021 and 30 September 2020 is unaudited and has not been reviewed by the Company's auditors.

The interim financial statements are presented in pounds sterling, which is the functional currency of the Group. Amounts are rounded to the nearest thousand, unless otherwise stated.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and thus continue to adopt the going concern basis in preparing these interim financial statements.

 

3.  Significant Accounting Policies

The Group has applied the same accounting policies in these interim financial statements as in its 2021 annual financial statements. There have been no significant amendments or new standards introduced during the period that would have a material impact on the amounts reported.

4.  Use of judgements and estimates

  The significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty for the interim financial statements are the same as those described in the 2021 annual financial statements.

5.  Segmental analysis

The Group generates revenue through three main activities and thus has three reportable segments, as follows:

 

§ Bricks and Building Materials, which incorporates 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 members of the public;

§ Roofing Services, which incorporates the supply of roofing construction services, primarily within the residential construction sector; and

§ Heating, Plumbing and Joinery, which incorporates the sale of high-performance joinery materials and the distribution of radiators and associated parts and accessories.

Inter-segment sales are eliminated from the results reported to the chief operating decision maker (CODM) and from the consolidated interim financial statements.

 

 

6 months ended 30 September 2021

6 months ended 30 September 2020

 

 

Bricks and Building Materials

£'000

 

Roofing Services

£'000

 

Heating, Plumbing and Joinery

£'000

Consolidated

£'000

 

Bricks and Building Materials

£'000

 

Roofing Services

£'000

 

Heating, Plumbing and Joinery

£'000

Consolidated

£'000

Revenue from sale of goods

192,141

-

16,061

208,202

60,313

-

9,991

70,304

Revenue from rendering of services

6,609

8,692

-

15,301

-

4,953

-

4,953

Total revenue

198,750

8,692

16,061

223,503

60,313

4,953

9,991

75,257

EBITDA

15,341

1,269

3,563

20,173

5,520

888

2,515

8,923

Centralised costs

 

 

 

(2,605)

 

 

 

(904)

(Loss)/ profit on disposal of

assets

 

 

 

6

 

 

 

(14)

Group adjusted EBITDA

 

 

 

17,574

 

 

 

8,005

Depreciation

 

 

 

(1,357)

 

 

 

(779)

Amortisation

 

 

 

(1,897)

 

 

 

(1,748)

Acquisition costs

 

 

 

(999)

 

 

 

-

Share-based payment expense

 

 

 

(880)

 

 

 

-

Finance income

 

 

 

15

 

 

 

11

Finance expense

 

 

 

(503)

 

 

 

(454)

Share of results of associates

 

 

 

20

 

 

 

-

Fair value gains and losses

 

 

 

(110)

 

 

 

381

Group profit before tax

 

 

 

11,863

 

 

 

5,416

 

 

Year ended 31 March 2021 (Audited)

 

 

 

Bricks and Building Materials

£'000

 

Roofing Services

£'000

 

Heating, Plumbing

and Joinery

£'000

Consolidated

£'000

Revenue from sale of goods

141,019

-

24,452

165,471

Revenue from rendering of services

3,187

12,426

-

15,613

Total revenue

144,206

12,426

24,452

181,084

EBITDA

11,662

2,571

5,766

19,999

Centralised costs

 

 

 

(2,453)

Profit on disposal of assets

 

 

 

(4)

Group adjusted EBITDA

 

 

 

17,542

Depreciation

 

 

 

(1,837)

Amortisation

 

 

 

(3,619)

Acquisition costs

 

 

 

(105)

Share-based payment expense

 

 

 

(338)

Finance income

 

 

 

13

Finance expense

 

 

 

(845)

Share of results of associates

 

 

 

(6)

Fair value gains and losses

 

 

 

360

Group profit before tax

 

 

 

11,165

           

 

 

6 months ended 30 September 2021

6 months ended 30 September 2020

 

 

Bricks and Building Materials

£'000

 

Roofing Services

£'000

 

Heating, Plumbing and Joinery

£'000

Consolidated

£'000

 

Bricks and Building Materials

£'000

 

Roofing Services

£'000

 

Heating, Plumbing and Joinery

£'000

Consolidated

£'000

 

Non-current segment assets

108,862

23,036

28,918

160,816

40,958

19,512

26,167

86,637

 

Current segment assets

146,670

5,505

13,543

165,718

42,448

6,584

10,970

60,002

 

Total segment assets

255,532

28,541

42,461

326,534

83,406

26,096

37,137

146,639

 

Investment in associates

 

 

 

241

 

 

 

352

 

Investments in financial assets

 

 

 

125

 

 

 

-

 

Deferred tax assets

 

 

 

98

 

 

 

205

 

Head office

 

 

 

955

 

 

 

2,131

 

Group assets

 

 

 

327,953

 

 

 

149,327

 

 

Total segment liabilities

(120,161)

(3,882)

(6,547)

(130,590)

(29,900)

(4,172)

(4,943)

(39,015)

Loans and borrowings

(excluding leases and

overdrafts)

 

 

 

(15,160)

 

 

 

(16,332)

Derivative financial liabilities

 

 

 

-

 

 

 

-

Deferred tax liabilities

 

 

 

(6,556)

 

 

 

(5,299)

Other unallocated central

liabilities

 

 

 

(22,244)

 

 

 

(4,221)

Group liabilities

 

 

 

(174,550)

 

 

 

(64,867)

 

 

Year ended 31 March 2021 (Audited)

 

 

 

Bricks and Building Materials

£'000

 

Roofing Services

£'000

 

Heating, Plumbing

and Joinery

£'000

Consolidated

£'000

Non-current segment assets

46,276

18,235

29,867

94,378

Current segment assets

45,635

3,799

12,582

62,016

Total segment assets

91,911

22,034

42,449

156,394

Investment in associates

 

 

 

221

Investments in financial assets

 

 

 

125

Deferred tax assets

 

 

 

98

Head office

 

 

 

1,535

Group assets

 

 

 

158,373

           

 

Total segment liabilities

(37,570)

(2,815)

(7,040)

(47,425)

Loans and borrowings

(excluding leases and

overdrafts)

 

 

 

(15,750)

Deferred tax liabilities

 

 

 

(5,301)

Other unallocated central

liabilities

 

 

 

(4,463)

Group liabilities

 

 

 

(72,939)

6.  Government grants

Included within administrative expenses, in the six months to September, is an amount of £nil (2020: £1,358,000 and year ended 31 March 2021: £1,360,000) in respect of government grants received in response to the global COVID-19 pandemic. In the prior periods, £30,000 related to business rates support, while the remainder relates to supporting the payroll costs of the Group's employees. The Group has elected to deduct the grant income from the associated expenses. The Group does not have any unfulfilled obligations relating to the support schemes.

7.  Dividends

 

 

 

 

 

 

6 months ended

30 Sept 2021

£'000

6 months ended

30 Sept 2020

£'000

Year ended

31 March 2021

(Audited)

£'000

Amounts recognised as distributions to equity holders in the period:

 

 

 

 

 

Final dividend for the year ended 31 March 2021 of 1.0850p per share

(31 March 2021: for the year ended 31 March 2020 of 1.0850p per share)

 

 

 

 

3,236

-

2,500

Interim dividend for the year ended 31 March 2022

(31 March 2021: for the year ended 31 March 2021 of 0.8678p per share)

 

 

 

 

-

-

2,000

Total dividends paid during the period

 

 

3,236

-

4,500

The Directors recommend that an interim dividend of 0.96p per ordinary share be paid for the year ended 31 March 2022. This dividend has not been included as a liability in these interim financial statements.

8.  Earnings per share

Earnings per share (EPS) is calculated by dividing the profit for the year, attributable to ordinary equity holders of the parent, by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is calculated by dividing the profit for the year, attributable to ordinary equity holders, by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The calculation of basic and diluted earnings per share is based on the following data:

 

6 months ended 30 September 2021

6 months ended 30 September 2020

 

Earnings

£'000

Weighted

average

number of

shares

Earnings

per share

(p)

Earnings

£'000

Weighted

average

number of

shares

Earnings

per share

(p)

7,960

264,356,685

3.01

4,352

230,458,821

1.89

 

-

 

5,017,128

 

-

 

-

 

68,223

 

-

Diluted earnings per share

7,960

269,373,813

2.96

4,352

230,527,044

1.89

 

Year ended 31 March 2021 (Audited)

 

Earnings

£'000

Weighted

average

number of

shares

Earnings

per share

(p)

9,665

230,458,821

4.19

 

-

 

629,983

 

-

Diluted earnings per share

9,665

231,088,804

4.18

 

Adjusted earnings per share and adjusted diluted earnings per share, based on the adjusted profit attributable to the equity holders of the parent (adjusted profit for the period add non-controlling interest share of loss), is based on the following data:

 

 

6 months ended 30 September 2021

6 months ended 30 September 2020

 

Earnings

£'000

Weighted

average

number of

shares

Earnings

per share

(p)

Earnings

£'000

Weighted

average

number of

shares

Earnings

per share

(p)

Adjusted basic earnings per share

12,672

264,356,685

4.79

5,505

230,458,821

2.39

Effect of dilutive securities

  Employee share options

 

-

 

5,017,128

 

-

 

-

 

68,223

 

-

Adjusted diluted earnings per share

12,672

269,373,813

4.70

5,505

230,527,044

2.39

 

 

Year ended 31 March 2021 (Audited)

 

Earnings

£'000

Weighted

average

number of

shares

Earnings

per share

(p)

Adjusted basic earnings per share

12,813

230,458,821

5.56

Effect of dilutive securities

  Employee share options

 

-

 

629,983

 

-

Adjusted diluted earnings per share

12,813

231,088,804

5.54

 

9.  Business combinations

The Group acquired the entire share capital and 100% of the voting rights in the following companies during the period:

 

Company acquired

Acquisition date

Taylor Maxwell (2017) Limited

30 June 2021

 

Leadcraft Limited

30 July 2021

 

 

The book value of the assets acquired and liabilities assumed on acquisition are as follows:

 

 

 

 

Taylor Maxwell (2017) Limited

£'000

Leadcraft Limited

£'000

Property plant and equipment

 

 

 

3,519

128

Right of use assets

 

 

 

2,971

103

Inventory

 

 

 

9,126

13

Trade and other receivables

 

 

 

63,939

778

Employee benefits

 

 

 

2,689

-

Cash and cash equivalents

 

 

 

2,585

94

Trade and other payables

 

 

 

(72,726)

(247)

Current income tax liabilities

 

 

 

(380)

(138)

Lease liabilities

 

 

 

(3,115)

(103)

Deferred tax

 

 

 

(439)

(18)

Total identifiable net assets

 

 

 

8,169

610

Goodwill

 

 

 

54,086

4,890

Total consideration

 

 

 

62,255

5,500

 

Satisfied by:

 

 

 

 

 

Cash paid

 

 

 

36,167

3,300

Share consideration

 

 

 

10,000

-

Deferred cash consideration

 

 

 

3,088

1,320

Contingent consideration

 

 

 

13,000

880

Total consideration

 

 

 

62,255

5,500

Due to the timing of the acquisitions, a detailed assessment of the fair value of all identifiable net assets, and the value of any uncollectable contractual cash flows, has not yet been completed at the date of these interim financial statements. The goodwill figure is therefore expected to change. Residual goodwill will primarily comprise the value of the assembled workforce and expected synergies arising from the acquisition. None of the goodwill is expected to be deductible for tax purposes.

Included within the assets acquired for Taylor Maxwell (2017) Limited is £2,178,000 in respect of a surplus on a defined benefit pension scheme. The Group has commenced a buy-out process to transfer the risk associated with the scheme. A buy-in contract was incepted on 7 July 2021 and the process is expected to reach the full buy-out stage within the next 9 months.

The above consideration is subject to post completion adjustments and the deferred and contingent consideration is undiscounted. The share consideration resulted in 9,900,990 new ordinary shares being issued during the period.

The acquisitions were carried out in order to expand the Group's customer base and position in the UK market, increase its product offering and enhance its provision of environmentally sustainable and efficient roofing products and services.

Included in the consolidated financial statements are the following amounts of revenue and profit in respect of the subsidiaries acquired:

 

 

 

 

Taylor Maxwell (2017) Limited

£'000

Leadcraft Limited

£'000

Revenue

 

 

 

89,703

801

Net profit

 

 

 

4,558

164

Had the current year business combinations taken place at the beginning of the financial period, the Group's revenue for the period would have been £309,475,000 and Group profit would have been £11,628,000.

Total acquisition related costs amounted to £999,000. Acquisition related costs in connection with the above companies, included in administrative expenses, amounted to £991,000 as shown below, the difference being aborted acquisition costs.

 

 

 

 

 

Taylor Maxwell (2017) Limited

£'000

Leadcraft Limited

£'000

Acquisition costs

 

 

 

909

82

Contingent consideration

The Group has entered into contingent consideration arrangements during the purchase of several subsidiaries. Final amounts payable under these agreements are all subject to future performance and the acquired business achieving pre-determined EBITDA targets, over the three years following acquisition.

The fair value of all contingent consideration is based on a discounting cash flow model, applying a discount rate of between 1.7% and 4.9% to the expected future cash flows.

Summarised below are the fair values of the contingent consideration at both acquisition and reporting date, the potential undiscounted amount payable and the discount rates applied within the discounting cash flow models, for each acquisition where contingent consideration arrangements remain in place.

Company acquired

 

 

 

 

Discount rate

 

Fair value at acquisition

£'000

Fair value at 30 September

2021

£'000

Fair value at 30 September

2020

£'000

 

 

Undiscounted amount payable

30 September 2021

£'000

 

 

Undiscounted amount payable

30 September 2020

£'000

The Bespoke Brick Company Limited

4.9%

-

-

-

-

-

Brickmongers (Wessex) Ltd

4.8%

138

-

27

-

29

CPG Building Supplies Limited

 

4.0%

(201)

-

-

-

-

U Plastics Limited

3.5%

2,208

2,306

2,228

2,400

2,400

Bathroom Barn Limited

1.7%

231

227

-

233

-

McCann Logistics Ltd

1.7%

889

890

-

913

-

As noted above, the amounts included in respect of Taylor Maxwell (2017) Limited and Leadcraft Limited are undiscounted, pending completion of a detailed fair value assessment.

The total potential undiscounted amount payable in respect of U Plastics ranges from £246,000 to £2,400,000 (2020: £nil to £2,400,000). The total potential undiscounted amount payable in respect of Taylor Maxwell (2017) Limited ranges from £nil to £13,000,000 and the undiscounted amount payable in respect of Leadcraft Limited ranges from £nil to £880,000. It is not possible to determine a range of outcomes for the other companies acquired as the arrangements do not contain a maximum payable.

A sensitivity in respect of the inputs into the discounted cash flow model, determining the contingent consideration, is outlined in note 10.

10. Financial instruments

Fair values

The significant unobservable inputs used in the fair value measurements categorised within level 3 of the fair value hierarchy, together with a quantitative sensitivity analysis at 30 September 2021 and 31 March 2021 are shown below:

 

Financial instrument

 

Valuation technique

Significant

Unobservable

 inputs

Range/

estimate

Sensitivity of the

 input to fair value

Contingent

Consideration in a business combination (note 9)

 

Present value of future cash flows

Assumed probability-adjusted EBITDA of acquired entities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

Sept 2021:

£1,110,000 -

£3,766,000

 

Sept 2020:

£917,000 -

£4,038,000

 

March 2021:

 1,142,000 -

£3,852,000

 

 

 

 

 

 

 

Sept 2021:

1.7% - 4.9%

 

Sept 2020:

3.5% - 4.8%

 

March 2021:

1.7% - 4.9%

 

The higher the adjusted EBITDA, the higher the

fair value. If forecast

EBITDA was 10% higher, while all other variables

remained constant, the

fair value of the overall contingent consideration liability would increase by £327,000 (2020: £24,000). A 10% decrease in EBITDA would result in a decrease in the liability of £335,000 (2020: £130,000).

(March 2021: increase of £140,000 and decrease of £424,000)

 

The higher the discount

rate, the lower the fair value. If the discount rate applied was 2% higher, while all other variables remained constant, the fair value of the overall contingent consideration liability would decrease by £85,000 (2020: £94,000). A 2% decrease in the rate would result in an increase in the liability of £82,000 (2020: £98,000).

(March 2021: decrease of £110,000 and increase of £108,000)

 

Reconciliation of level 3 fair value measurements of financial instruments

 

 

 

 

Contingent consideration liability

 

 

6 months ended

30 Sept 2021

£'000

6 months ended

30 Sept 2020

£'000

Year ended

31 March 2021

(Audited)

£'000

At 1 April

 

 

3,442

2,357

2,357

Additions through business combinations

 

 

13,880

-

1,120

Finance expense charged to profit or loss

 

 

46

42

89

Settlement

 

 

(175)

236

236

Fair value (gains)/ losses recognised in profit or loss

 

 

 

 

110

(381)

(360)

At 30 September/ 31 March

 

 

17,303

2,254

3,442

 

11. Loans and borrowings

 

 

 

 

 

   

6 months ended

30 Sept 2021

£'000

6 months ended

30 Sept 2020

£'000

Year ended

31 March 2021

(Audited)

£'000

Current loans and borrowings at 1 April

-

-

-

Non-current loans and borrowings at 1 April

15,750

24,912

24,912

Total loans and borrowings at 1 April

15,750

24,912

24,912

Issue of bank loans

41,100

-

3,400

Repayment of bank loans

(41,400)

(8,500)

(12,500)

Payment of transactions costs

(375)

(90)

(90)

Other movements*

85

10

28

Loans and borrowings at 30 September/ 31 March

15,160

16,332

15,750

 

 

 

 

Analysed as:

 

 

 

Current loans and borrowings

-

-

-

Non-current loans and borrowings

15,160

16,332

15,750

Loans and borrowings at 30 September/ 31 March

15,160

16,332

15,750

*Other movements relate to interest accrued, arrangement fees incurred and the amortisation of those fees.

The Directors consider that the carrying amount of loans and borrowings approximates to their fair value.

12.  Related party transactions

Transactions and balances between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Transactions with directors

Included within receivables are the following balances due from a director and former director:

 

   

 

 

6 months ended

30 Sept 2021

£'000

 

 

6 months ended

30 Sept 2020

£'000

Year

 ended

31 March 2021

(Audited)

£'000

Directors' loan accounts

-

978

978

The amounts advanced were for the purpose of paying up the subscription price for ordinary D shares of £0.01 each. The loans were unsecured and interest free and repayable on the sale of any of the shares held in the Company by the director and former director. The balances were repaid in full during the period.

Key management personnel

 

 

 

 

6 months

ended

30 Sept 2021

£'000

 

 

6 months

ended

30 Sept 2020

£'000

Year ended

31 March 2021

(Audited)

£'000

Key management personnel compensation

 

 

 

 

 

Short-term employee benefits

 

1,252

1,073

3,219

 

Post-employment benefits

 

18

36

75

Share-based payment expense

 

168

2

96

 

 

1,438

1,111

3,390

           

A finance expense was recognised, in the period, of £nil (2020: £12,000 and year to 31 March 2021: £16,000), in respect of the unwinding of the discount applied to deferred consideration due to key management.

During the interim period, the Group made sales amounting to £7,000 (2020: £5,000 and year to 31 March 2021: £13,000) to members of key management. A balance of £nil (2020: £1,000 and 31 March 2021: £7,000) was included within trade receivables at the reporting date, in respect of these sales.

Other related parties

Included within trade receivables/ payables are the following amounts due from/ to other related parties, at the reporting date:

 

 

Amounts owed by related parties

 

Amounts owed to related parties

 

 

   

 

 

6 months ended

30 Sept 2021

£'000

 

 

6 months ended

30 Sept 2020

£'000

Year

ended

31 March 2021

(Audited)

£'000

 

 

6 months ended

30 Sept 2021

£'000

 

 

6 months ended

30 Sept 2020

£'000

Year

ended

31 March 2021

(Audited)

£'000

Associates

-

30

-

138

45

88

Other related parties

-

-

-

-

-

24

 

-

30

-

138

45

112

               

Transactions undertaken between the Group and its related parties during the year were as follows:

 

 

 

Purchases from related parties

 

   

 

 

 

6 months

ended

30 Sept 2021

£'000

 

 

6 months

ended

30 Sept 2020

£'000

Year

ended

31 March 2021

(Audited)

£'000

Associates

 

297

179

474

Other related parties

 

109

89

199

 

 

406

268

673

Other related parties comprise of entities owned by directors and key management. Purchases relate to rent and administrative expenses.

A finance expense of £nil (2020: £16,000 and year to 31 March 2021: £21,000) was recognised during the interim period in respect of the unwinding of the discount applied to deferred consideration due to close relatives of key management.

13.  Post balance sheet events

On 14 October 2021, the Group issued 280,254 new ordinary shares following the vesting and exercising of share options under the Company's Long Term Incentive Plan and Company Share Option Plan. Following this issue, the total number of shares in issue is 298,534,802.

On 21 October 2021, the Group granted 2,394,286 options under its LTIP and CSOP schemes to its employees. The options were granted on the same terms as previous awards and are subject to a performance period from 1 April 2021 to 31 March 2024.

On 23 November 2021, the Group completed the acquisition of the entire share capital and 100% of the voting rights in HBS NE Limited, a company specialising in the installation of solar panels and provision of renewable energy services.

The acquisition broadens our offering to customers whilst also supporting the Group's own sustainability commitments.

The book value of the separable assets acquired and liabilities assumed are estimated as follows:

 

 

 

 

 

£'000

Property plant and equipment

 

 

 

 

17

Inventory

 

 

 

 

86

Trade and other receivables

 

 

 

 

481

Trade and other payables

 

 

 

 

(433)

Total identifiable net assets

 

 

 

 

151

 

Due to the timing of the acquisition, a detailed assessment of the fair value of the identifiable net assets, and value of any uncollectable contractual cash flows, has not yet been completed at the date of approving these interim financial statements.

The total consideration expected to be payable is:

 

 

 

 

 

£'000

Cash

 

 

 

 

3,276

Contingent consideration

 

 

 

 

2,184

Total consideration

 

 

 

 

5,460

The above consideration is subject to post completion adjustments.

The contingent consideration is subject to future performance of the acquired business, measured against agreed adjusted EBITDA targets, over the five years following acquisition. Due to the timing of the acquisition, the above value represents an initial undiscounted estimate of contingent consideration payable. It is not possible to determine a range of outcomes for the contingent consideration payable as the arrangement does not contain a maximum payable.

It is expected that goodwill will arise on the acquisition and this will primarily comprise the value of expected synergies arising from the acquisition and value of the assembled workforce. This goodwill is not expected to be deductible for tax purposes.

 

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