Brickability Group PLC Annual Report 2019

← All annual reports

FY2019 Annual Report · Brickability Group PLC

Loading PDF…

ANNUAL
REPORT
& ACCOUNTS
2019/20

Telephone
0870 143 3332

Email
investors@brickabilitygroupplc.com

Website
www.brickabilitygroupplc.com

Annual Report
& Accounts
for the year ended
31 March 2020

Contents

Strategic Report
Brickability at a Glance

Chairman’s Statement

Chief Executive’s Review

Business Model

The Complete Solution

Group Strategy and Delivery

Key Performance Indicators

Risk Management

Principal Risks and Uncertainties

Section 172 (1) Statement

Chief Financial Officer’s Review

Going Concern and Outlook

Corporate Responsibility

Corporate Governance
Board of Directors

Group Management Board

Corporate Governance Statement

Report of the Audit Committee

Report of the Remuneration Committee

Report of the Directors

Statement of Directors’ Responsibilities

Independent Auditor’s Report

Annual Report

& Accounts

for the year ended

31 March 2020

Financial Statements
Consolidated Statement of Profit or Loss and other Comprehensive Income

Consolidated Balance Sheet

Company Balance Sheet

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Financial Statements

Company Information and Financial Calendar

Page
0404
0606
0808
1010
1212
1414
1616
1818
2020
2222
2424
2626
2828

3030
3232
3434
3636
3939
4747
5050
5151

6060
6161
6262
6363
6464
6565
6666
119119

I N T R O D U C T I O N
INTRODUCTION

Brickability at a Glance…
• Full year results are in line with
market expectations at IPO.
• Seven strategic acquisitions.
• Encouraging market recovery in
the light of Brexit uncertainty, the
General Election during quarter 3
and record rainfall in quarter 4.
• Robust Covid 19 protocols in place.

G P R O D U CTS

O FI N

Y R O

R
E
N
O

D
N
A

BRICKABILITY KEY FACTS….
Three Core Divisions
Bricks and Building Materials;
Revenue
13 businesses operating from 24 sites
by Division
Roofing Products and Services;
4 businesses operating from 3 sites.
Heating, Plumbing and Joinery;
4 businesses operating from 3 sites.
H

UILDING MATERIA

B
R
C
K
S
A
N
D B

The Group currently employs in excess
of 280 skilled and experienced personnel.

£17.1 M

ROOFING
PRODUCTS

1
.
6
2
£

HEATING,
PLUMBING AND
JOINERY

BRICKS AND
BUILDING MATERIAL

Revenue by Division

£187m (£163m 2019)
Revenue
£37.7m (£32.7m 2019)
Gross Profit
Gross Profit % 20.1% (20.1% 2019)
£19.5m (£17.7m 2019)
EBITDA*

£2.3m
(2019: £19.5m net debt)
Net Cash***

£14.7m (2019 £13.1m)
PBIT
4.79p (2019 4.51p)
EPS
4.03p (2019 2.80p)
Adjusted EPS

* Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation, exceptional and acquisition costs.
** Adjusted EPS is calculated by dividing the profit for the year by the number of

ordinary shares at IPO.

***Net cash is defined as cash less bank debt.

£187m (£163m 2019)

Gross Profit

Gross Profit % 20.1% (20.1% 2019)

£19.5m (£17.7m 2019)

EBITDA*

£14.7m (2019 £13.1m)

4.79p (2019 4.51p)

4.03p (2019 2.80p)

The Group distributes, and in
many cases installs superior
quality and strategically important
building materials from major
UK and European manufacturing
partners, providing product
solutions to both private
and commercial specifiers,
contractors, developers
and builders.

S T R A T E G I C R E P O R T

John Richards
Chairman

Chairman’s Statement

I am delighted to report on our
first year as a public company
which saw a successful listing,
seven strategic acquisitions and
an adjusted EBITDA of £19.5M.

Bearing in mind the market challenges of the
pre-General Election period, the unusually wet
weather in late January and February and the
early ramifications of the COVID-19 lockdown
from mid-March, the result is one with which we
are very satisfied.

At our IPO, we made our growth and bolt-on acquisition strategy very clear and I am
pleased to note that we have been able to deliver against those ambitions.

The market for the year ending 31st March 2020 began robustly, particularly the demand
for new build housing, but softened during the third quarter reflecting both political
and economic uncertainty as we went through the Brexit process and approached the
General Election. The market for new build housing began to improve at the start of
2020 only to slow again in the face of record levels of rainfall and turned down sharply as
a result of the effects of the COVID-19 pandemic. These market challenges again show
the Group’s performance in a positive light.

From mid-May 2020, construction and the new build housing market have begun to
significantly improve as businesses return to work, although initial output levels were
restricted as builders came to terms with the new health and safety protocols around
which they now operate. Higher levels of market activity have now returned and
consequently product demand, and the fundamentals for construction and in particular
for new build housing remain strong as does government support for increasing the UK
housing supply.

The business continues to operate with strong focus on costs. This ‘lean’ approach has
enabled the Group to cut overheads quickly as the restrictions driven by ‘lockdown’ took
hold. After a tough April the business returned to profitability in May and in June sales
returned to 83% of June 2019. In July the performance was even stronger.

Details of the Group’s acquisitions can be found in the Chief Executive’s Review, however,
all of them are already contributing to performance, have added to our management
strength and have helped broaden our distribution offering. Our pipeline of acquisitions
is very encouraging and provided that those businesses meet our very stringent
criteria that include sustainability credentials, EBITDA multiples and limits to upfront
payment, we will continue to follow that strategy as outlined at the time of the IPO.
Potential acquisitions include those businesses that distribute factory assembled building
components and those that are involved with Modern Methods of Construction.

Shareholder Returns & Dividends
The Group paid an interim dividend of 0.87p per ordinary share on 20th December
2019. While the Board expected to pay a final dividend of 1.74p per ordinary share for
the year ended 31 March 2020, bearing in mind the ramifications of the COVID-19
pandemic and our prudent approach, we have determined that we will pay a dividend
1.085p per ordinary share. Subject to shareholder approval, the final dividend will be
paid on 23rd October 2020 to shareholders on the register on 25th September 2020.

Corporate Governance
I am pleased to report that the
Group is fully compliant with the
Quoted Companies Alliances’
Ten Principles of Corporate
Governance. Further details of
the activities of our Board and
its Committees during the year
can be found in this report in the
Corporate Governance section.

Employees
I would like to thank all of our
employees for their remarkable
commitment and performance
during the challenges of our
first year as a public company.
Despite the political and
economic demands of the
third quarter and the record
rainfall and ramifications of the
Government’s response to the
COVID-19 pandemic in the final
quarter, their determination,
the excellence of their customer
contacts and their focus have
enabled the Group’s performance
to remain on schedule. My sincere
thanks also for our employees’
patience, understanding and
discipline during the early parts of
2020-21. Our employees are able
to work within our new health and
safety protocols which are now
well established.

S T R A T E G I C R E P O R T

Chief Executive’s Review
We delivered against our strategy of bolt-on
acquisitions, with a total of seven new
businesses joining the Group during the year.
These businesses brought with them excellent
management which has strengthened our
position and this influx of talent has been added
to by some recruitment of excellent management
from outside the Group that has, in particular,
strengthened our Finance team.

The market in the early months of the year ending 31 March 2020 was mostly stable and,
in places, was encouraging particularly in the new build housing market. Quarter 3 saw
challenging trading conditions as the market slowed in the face of both Brexit and the
upcoming General Election. The final quarter began well and indeed a bounce in both
activity and demand was apparent before the record levels of rainfall caused interruptions to
construction activity and before the implications of the Government response to the COVID-19
pandemic caused a much steeper decline in demand.

Despite these challenges the Group was able to achieve revenue in the year to 31 March
2020 of £187million (2019 £163million) with Group adjusted EBITDA of £19.5million (2019
£17.7million).

Our strong balance sheet and cash conversion have enabled us to continue with our strategy
of growth and acquisitions. Seven acquisitions were made during the year; LBT Facades
and Brickmongers, which strengthened our brick distribution in the North West and the South
Coast along with our range of cladding materials. Bespoke Brick and the Brick Slip Business
brought us further strength in imported bricks, while DSH Flooring is our first venture into this
area of construction materials. UPlastics has significantly strengthened our cement fibreboard
offering, while McCann Roofing brings further product ranges and geographic coverage to
our roofing distribution. We have also continued to grow organically with the creation of a new
cladding division headed up by one of that industry’s most experienced Sales Managers.

All of our acquisitions have met our demanding investment criteria:
• Every acquisition has to complement our established routes to market.

• We aim to pay a maximum of 60% upfront for a business with the remainder
deferred and contingent upon performance.

• We have defined limits of EBITDA multiples that we will pay along with
expected minimum margin levels.

• We also demand that businesses bring with them high quality
management whenever possible.

Alan Simpson
Chief Executive Officer

I am pleased
to report a
first year of
performance
as a public
company
in line with
expectations.

I am pleased to report that our acquisition pipeline continues to be in
a very healthy position and I am excited about some of the potential
opportunities. We expect to continue to fund our bolt-on acquisition
programme from our cash generation and we will consider businesses
that strengthen our current product ranges or our geographic
coverage, along with those that can bring expertise in new products
that serve our existing markets.

The health and safety of everyone who works within this business is a
critical priority. The year to 31 March 2020 we re-evaluated all of our
health and safety processes and procedures, along with our training
guided by our external partner, Safety Forward. Every business within
the Group now has an enhanced plan, a set of revised standards and
responsibilities and an accelerated timeframe for health and safety.
The return to work protocols following the COVID-19 pandemic have
presented their own challenges, however, they are now in place, are
robust and included a comprehensive briefing for each person on their
return to work, along with a risk assessment to be completed for every
employee who has a need to visit a third party site or premises. The
same robust protocols and risk assessments apply to visitors to any of
our premises. Health and safety is reviewed at each scheduled
Board meeting and indeed Group Management Board meeting.
We have continued to develop and strengthen our relationships with
our key suppliers, both in the UK and abroad, and have prepared
accordingly to ensure that our final relationship with the EU will not
affect our ability to obtain and distribute product to our customers,
whatever form that relationship might take. The same focus applies
with our customers, and, with each acquisition, we either gain new
customers or are able to offer newly acquired businesses access to the
strength of our existing customer base.

In terms of outlook, while the market for building materials was at very
low levels in April, we have seen a continued increase in demand since,
albeit employing new and very different safety and social distancing
measures. All of our sites are open and we have applied stringent
control of costs during the ‘lock down’ period and continue to do so.
While the outlook for the remainder of this financial year continues
to be uncertain, the underlying fundamentals for construction and in
particular new build homes remain robust. Looking to the long-term,
we believe the outlook for our market remains positive, supporting our
confidence in the prospects for the Group.

The health and safety
of everyone who works
within this business
is a critical priority.

S T R A T E G I C R E P O R T

Business Model

Our vision is to
be the leading
specialist supplier
of products to
house builders
and developers.

Brickability

EXCEPTION

A
L C

Supplier
relationships

LLED PRO D U

A
IV
R
N
U

Complementary
products &
services

o w t
h
o w c

y o f h
r
e a fl

u m m a
d
c l u
i n
R Q

ALITY

o
p

p w o
u
g
e d i a

e g
r t t
Trained
Staff

r
r

Geographic
t
s
coverage

s ( m o
k
a m ) .

R
V
C
E

A L U E & SUPPORT

Satisfied
customer base

ROUTES TO MARKET
• Established regional sales network
The Group has 30 locations throughout the UK servicing
local customers.
• Established Regional brands
The Group over a number of years has acquired regional companies
and have maintained the local branding while adding the advantage
of being part of a large Group with stronger buying power.
• National contracts with local delivery
The Group has central agreements with larger customers which
are delivered by the regional offices.

OUR STRENGTHS
• Regional sales network
• Specialist knowledge
• Access to a broad range of quality products from UK and Europe
• Strong balance sheet
• Scale / buying power
• Established track record
• Strong and long standing customer relationships

We have unrivalled customer relationships and understanding of their needs
• Highly experienced management team
• Long term supplier relationships

HOW WE CREATE VALUE FOR
OUR STAKEHOLDERS?
• For shareholders
Share price growth with a focus on acquisitions.
A progressive dividend policy that balances growth and income.
• For customers
Working closely with customers and suppliers we source products
that meet customer requirements, are priced competitively,
and delivered on time.
• For employees and local communities
The Group has over 280 employees across the UK. We provide
employment in our local regional communities and opportunities for
long term career development. The Group also aims to raise money
for local causes.
• Supplier satisfaction
We pay our supply chain on time and they are confident about
investing in their relationship with the group.

Our Brands

BRICKS AND BUILDING MATERIALS

ROOFING PRODUCTS AND SERVICES

HEATING, PLUMBING & JOINERY

Specialist
Builders Merchant

S T R A T E G I C R E P O R T

The Complete Solution
The Complete Solution
The Group has been formed to pool
The Group has been formed to pool
the combined success of individual
the combined success of individual
businesses into one cohesive structure
businesses into one cohesive structure
that will maximise revenue and growth.
that will maximise revenue and growth.

Together we are stronger and will take advantage of
Together we are stronger and will take advantage of
our individual specialisms to provide a supply hub of
our individual specialisms to provide a supply hub of
extraordinary efficiency and service.
extraordinary efficiency and service.

ROOFING
ROOFING

Crest Roofing
Crest Roofing
Crown Roofing
Crown Roofing
Excel Roofing
Excel Roofing
McCann Roofing Products
McCann Roofing Products

CLADDING
CLADDING

UPlastics
UPlastics

WINDOWS
WINDOWS

Frazer Simpson
Frazer Simpson

EXTERNAL DOORS
EXTERNAL DOORS

Frazer Simpson
Frazer Simpson

12
12

The Complete Solution

The Group has been formed to pool

the combined success of individual

businesses into one cohesive structure

that will maximise revenue and growth.

Together we are stronger and will take advantage of

our individual specialisms to provide a supply hub of

extraordinary efficiency and service.

ROOFING

Crest Roofing

Crown Roofing

Excel Roofing

McCann Roofing Products

CLADDING

UPlastics

WINDOWS

Frazer Simpson

BRICK SUPPLY & SERVICES
BRICK SUPPLY & SERVICES

FASCIAS, SOFFITS & GUTTERING
FASCIAS, SOFFITS & GUTTERING

Brickability
Brickability
Apex Brick Cutters
Apex Brick Cutters
Matching Brick
Matching Brick
The Bespoke Brick
The Bespoke Brick
Company
Company
Bricklink
Bricklink
Brick Mongers Wessex
Brick Mongers Wessex

Brick Services
Brick Services
CPG Building Supplies
CPG Building Supplies
Crest Brick
Crest Brick
LBT Brick & Facades
LBT Brick & Facades
Plansure
Plansure
Alfiam Building Supplies
Alfiam Building Supplies

UPlastics
UPlastics

TOWEL RAILS & RADIATORS
TOWEL RAILS & RADIATORS

FLOORING SERVICES
FLOORING SERVICES

Towelrads
Towelrads
Radiators Online
Radiators Online

DSH Flooring
DSH Flooring

EXTERNAL DOORS

Frazer Simpson

INTERNAL DOORS
INTERNAL DOORS

FSN Doors
FSN Doors

UNDERFLOOR HEATING
UNDERFLOOR HEATING

Towelrads
Towelrads

STRATEGIC REPORT

13
13

Group Strategy and Delivery
Group Strategy and Delivery
The group has developed an effective strategy for
The group has developed an effective strategy for
growth. It is based around the four key areas of; like
growth. It is based around the four key areas of; like
for like growth, geographical expansion, acquisitions
for like growth, geographical expansion, acquisitions
and product range expansion. By focussing on these
and product range expansion. By focussing on these
4 areas the Group is able to lever the combined
4 areas the Group is able to lever the combined
expertise of our individual group businesses to
expertise of our individual group businesses to
optimise revenue and profitable growth.
optimise revenue and profitable growth.

Achievements

Future
Future
outlook
outlook

Link to KPI

Link to
Link to
risks
risks

The Boards
The Boards
Governance
Governance

Organic
Organic
Growth
Growth

Like for Like
Like for Like
sales increase
sales increase
of 0.6%.
of 0.6%.

- Cross selling
- Cross selling
across
across
Group
Group

- Focus on
- Focus on
continued
continued
growth with
growth with
existing
existing
customers
customers

-Revenue

-Gross Profit

- Economic
- Economic
environment
environment

-EBITDA

- Margin
- Margin
Management
Management

- Extreme
- Extreme
Weather
Weather

The Board
The Board
monitors
monitors
performance
performance
and ensures
and ensures
any necessary
any necessary
corrective
corrective
action is taken
action is taken

Geographical
Geographical
expansion
expansion

6 new offices
6 new offices
in different
in different
locations
locations
through
through
acquisitions
acquisitions

Roll out
Roll out
newly
newly
acquired
acquired
products
products
across
across
existing
existing
network
network

-Revenue

-Gross Profit

- Economic
- Economic
environment
environment

-EBITDA

- Loss of
- Loss of
trading
trading
partner
partner

The Board
The Board
approves
approves
expansion
expansion
plans
plans

Acquisitions

7 acquisitions
7 acquisitions
(2 post IPO)
(2 post IPO)

-Revenue

-Gross Profit

-EBITDA

- Failure to
- Failure to
integrate key
integrate key
acquisition
acquisition

The Board
The Board
approves
approves
acquisitions
acquisitions

- Retention of
- Retention of
talent
talent

Target
Target
businesses in
businesses in
geographical
geographical
areas not
areas not
represented
represented
or with new
or with new
products.
products.

Product
Product
Expansion
Expansion

The seven
The seven
acquisitions
acquisitions
helped grow
helped grow
product
product
portfolio.
portfolio.

Seek
Seek
products
products
customers’
customers’
want.
want.

-Revenue

-Gross Profit

-EBITDA

The Board
The Board
approves
approves
annual
annual
Budget.
Budget.

- Modern
- Modern
Methods of
Methods of
Construction
Construction

- Loss of
- Loss of
Trading
Trading
partner
partner

14
14

n
o
d
n
o
L
,
s
o
d
u
t
S
n
r
e
t
s
e

W
t
a
e
r
G
n
e
e
r
c
s
n
a
R
a
t
t
o
c
a
r
r
e
T

Case Study - LBT Brick & Facades
Case Study - LBT Brick & Facades
The acquisition of LBT Brick and Facades is an
The acquisition of LBT Brick and Facades is an
excellent example of the Brickability Group’s
excellent example of the Brickability Group’s
‘bolt-on’ growth strategy in action. The
‘bolt-on’ growth strategy in action. The
business, established for almost 30 years has
business, established for almost 30 years has
developed a strong position with specifiers and
developed a strong position with specifiers and
housing associations in the major North West
housing associations in the major North West
conurbations as well as supplying a number of
conurbations as well as supplying a number of
prestigious projects in London area.
prestigious projects in London area.

LBT Brick and Facades brings to the Group an experienced
LBT Brick and Facades brings to the Group an experienced
management team with a demonstrable track record in
management team with a demonstrable track record in
both product design and business development. They
both product design and business development. They
also bring extra sources of products supply from leading
also bring extra sources of products supply from leading
European manufacturers as well as supporting many of
European manufacturers as well as supporting many of
our partners in our existing supplier network. These include;
our partners in our existing supplier network. These include;
terracotta, premium bricks, stone, precast and prefabricated
terracotta, premium bricks, stone, precast and prefabricated
building components and brick cladding systems. LBT Brick
building components and brick cladding systems. LBT Brick
and Facades have developed many close relationships
and Facades have developed many close relationships
with specifiers in the North West and have been involved in
with specifiers in the North West and have been involved in
many major commercial and Housing Association projects.
many major commercial and Housing Association projects.
They take a ‘concept to reality’ approach where they
They take a ‘concept to reality’ approach where they
help develop the facade design with the specifier, source
help develop the facade design with the specifier, source
the facade products and then working with the specialist
the facade products and then working with the specialist
subcontractors to ensure that the final building meets the
subcontractors to ensure that the final building meets the
client expectation. There are many examples whereby
client expectation. There are many examples whereby
working together with other Brickability businesses, their
working together with other Brickability businesses, their
expertise in alternative facade materials has enabled our
expertise in alternative facade materials has enabled our
customers to benefit from additional product solutions.
customers to benefit from additional product solutions.

LBT Brick and Facades represents a valuable addition to
LBT Brick and Facades represents a valuable addition to
the Group and working within the the Brickability framework
the Group and working within the the Brickability framework
will continue to develop and contribute to the success of the
will continue to develop and contribute to the success of the
Group as a whole.
Group as a whole.

Terracotta Rainscreen Bickerdike Court, Manchester

S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T

15
15

r
e
t
s
e
h
c
n
a
M

,
s
o
d
u
t
S
t
e
e
r
t
S
n
o
i
t
a
n
o
r
o
C
d
n
e
B
k
c
i
r
B
e
k
o
p
s
e
B

r
e
t
s
e
h
c
n
a
M

,
s
o
d
u
t
S
t
e
e
r
t
S
n
o
i
t
a
n
o
r
o
C
d
n
e
B
k
c
i
r
B
e
k
o
p
s
e
B

Key Performance
Key Performance
Indicators
Indicators

REVENUE
REVENUE

£187m 2018
£187m 2018

Revenue growth is a key driver of profit growth

19/20

18/19

19/20

GROSS PROFIT
GROSS PROFIT

£37.7m 2018
£37.7m 2018

19/20
19/20
2019
2019

18/19

Gross Profit percentage acts as a cross check
Gross Profit percentage acts as a cross check
against Revenue growth to ensure new sales
against Revenue growth to ensure new sales
maintain margin.
maintain margin.

ADJUSTED EBITDA
ADJUSTED EBITDA

£19.5m
£19.5m

Earning before Interest, Tax, Depreciation and
Earning before Interest, Tax, Depreciation and
Amortisation and exceptional income and costs.
Amortisation and exceptional income and costs.

18/19

19/20

CASH GENERATED
CASH GENERATED
FROM OPERATIONS
FROM OPERATIONS

£20.9m
£20.9m

18/19

19/20

The following charts/tables illustrate

a number of the key performance

indicators that the Group reviews on

a regular basis and by which overall

business performance is measured.

£163m

£187m

£32.7m (20.1%)

£37.7m (20.1%)

£17.7m

£19.5m

£23.6m

£20.9m

NET CASH
NET CASH

£2.3mThe net cash position after deducting the
£2.3mThe net cash position after deducting the

cash held from the amount of bank debt.

18/19
18/19
2018
2018

£19.5m Net debt

19/20

£2.3m Net cash

16
16

S T R A T E G I C R E P O R T

The following charts/tables illustrate
The following charts/tables illustrate
a number of the key performance
a number of the key performance
indicators that the Group reviews on
indicators that the Group reviews on
a regular basis and by which overall
a regular basis and by which overall
business performance is measured.
business performance is measured.

S T R A T E G I C R E P O R T

17
17

Risk
management

MANAGING RISK IN ORDER TO DELIVER OUR STRATEGY
The Group is exposed to a number of risks in the markets it serves.
The Board considers the risks to the business and the adequacy of internal controls
with regard to the risks identified at every scheduled Board meeting. It formally
reviews and updates the risk register to the business at least annually.

01
02
03
04
05

RISK MANAGEMENT STRUCTURE

IDENTIFY RISK
The Board has overall responsibility for monitoring the Group’s systems of internal control, for
identification of risks and for taking appropriate action to prevent, mitigate or manage those
risks. The Board will continually assess and review the business and operating environment to
identify any new risks to be managed.

ASSESS RISK
A detailed schedule of risks is considered at each scheduled Board meeting under the
following categories: Competitors, Economic environment, Financial Risk, People and
Suppliers. These risks are graded against a criteria of likelihood and potential impact in order
to identify the key risks impacting the Group (see page 19).

MITIGATE RISK
The Board seeks to ensure that the Group’s activities do not expose it to significant risk.
The Group’s aim is to diversify sufficiently to ensure it is not exposed to risk of concentration
in product, market or channel.

UPDATE RISK REGISTER
The risk register is updated at each scheduled Board meeting and in-between
as necessary.

REVIEW AND EVALUATE RISKS
The Board and Group Management Board are all responsible for reviewing and evaluating
risk. The Group Management Board meet at least monthly to review ongoing trading
performance, discuss budgets and forecasts and consider new risks associated with
ongoing trading. Feedback from these meetings regarding changes to existing risks or the
emergence of new risks is then provided to the Board.

05
Review and
evaluate
risks

01
Identify
risk

Board
of Directors

02
Assess
risk

04
Update
risk register

03
Mitigate
risk

Remuneration
Committee

Audit
Committee

Nomination
Committee

Group Management Board and
Subsidiary company boards

Divisional and
functional teams

SEVERE

T
C
A
P
M

MINOR

LOW

LIKELIHOOD

HIGH

RISK HEAT MAP
The risk heat map summarises the potential impact of a range of
risks and uncertainties identified by the management team. They are
logged on the ‘Risk Matrix’ and reported on and reviewed regularly.

Competitors
This includes:
• Margin Management
• Change in employment
status for group
subcontractors

Economic environment
This includes:
• COVID 19 impact
• Brexit
• Extreme weather events

Financial risk
This includes:
• Margin management
• Change in employment status
of group subcontractors
• Failure to integrate key
acquisitions

People
This includes:
• Retention of talent
• Failure to integrate
key acquisitions

Suppliers
This includes:
• Loss of key trading partner
• Modern methods of
construction

S T R A T E G I C R E P O R T

Principal risks and uncertainties
The Board has overall responsibility for monitoring internal and external risks to which the Group and its
businesses may be subject. The Group has established internal controls and systems to identify and assess
such risks. The Board reviews such risks and our ability to effectively monitor them at each scheduled
Board meeting. Where appropriate specific up-dates and reports are circulated to Board members in
between such meetings.

A report, the ‘risk matrix’ is maintained on a rolling
basis by our chief financial officer and the subject of
regular review by the Group’s Management Board
team with each senior manager responsible for
underlying operating Group companies reporting
into the operating board’s review. The Group’s
Management Board meets monthly, is attended
by each executive director and is chaired by John
Richards, chairman of the Board. As part of these
meetings the Management Board meet to review
on-going trading, budgets and forecast and
consider new and on-going risks and uncertainties
to the Group’s operating businesses. Where
appropriate additional, separate analyses
or follow-up is undertaken of particular risks and
issues identified.

In recent months the COVID-19 pandemic has given
rise to significant additional risks and uncertainties.
These have been the subject of specific contingency
planning and risk mitigation. As our customers and
suppliers businesses have resumed trading so have
we and indeed we have continued where possible
to support key clients throughout the pandemic.
Our priority throughout this period has been the
health and wellbeing of all of our stakeholders,
including colleagues, clients, our contractors and
the communities within which we work as well
as the commercial and financial health of our
businesses and the preservation of shareholder
value. Board meetings have increased in frequency
as we continue to monitor the current situation, its
risks and uncertainties and the rapidly changing
environment in which we are doing business.

Principal risks and uncertainties facing the Group are set out below.

Risk

Key controls

Ongoing action

Economic environment
The COVID-19 pandemic is expected to result
in a severe recessionary shock in the UK, the
extent and duration of which is yet to become
apparent. Whilst the government has remained
supportive of the UK’s construction industry
and housebuilding market the speed and
nature of recovery remains uncertain.
Brexit continues to provide an additional
uncertainty to the economic environment.

Retention of talent
The success of the Group depends to
a significant degree upon our senior
management team. Failure to attract and
retain individuals with the right skills, drive
and capability may impact our ability to meet
performance expectations.

Margin management
Prices may not remain at levels which
are both competitive and achieve
adequate margins. Rebate income may
not be adequately monitored and
accounted for. Both or either may
adversely impact financial performance.

We monitor our core markets closely and maintain close relationships with our
principle customers, suppliers and manufacturers. Our key customers within
the housebuilding market are financially robust but we monitor credit risk and
debtors continuously.
The Group’s supply lines have remained resilient but are monitored closely and
our risk mitigation plans are regularly reviewed.
Working capital is monitored on a daily basis with robust and active debtor
control. Budgets and financial performance against KPIs are regularly reviewed.
Following an earlier review we entered into new, more flexible banking facilities
prior to the pandemic being declared.
Health & Safety remains a priority both at our sites and in interacting with clients
and contacts; compliance is tightly managed. We maintain a Brexit plan which
outlines our plans for continued supply of products from Europe.

The recruitment and training of talent from within is actively promoted, when
appropriate, with a focus on internal succession management.
We also endeavour to ensure that talent acquired from acquisitions is retained.
We continue to review our remuneration policies to ensure that we are able
to recruit and retain talent of the highest calibre as well as maintaining
entrepreneurial drive through the use of responsible incentives.

We continuously review and monitor margins and pricing within the market by
customer, supplier and product.
Where possible we seek to secure fixed pricing over a longer period with key
trading partners so as to maintain pricing continuity.
We regularly review and audit our rebate debtors and income. Monthly
performance is reviewed against rebate reports from suppliers and internal
rebate assumptions are closely monitored.
Volume arrangements with UK manufacturers are carefully maintained.
Arrangements with key trading partners, including rebates and relationships
with other key trading partners are an important consideration when reviewing
potential acquisitions.

Where opportunity presents itself we will
continue to prudently expand our geographical
presence and the diversity of our business in
order to better serve our clients and diversify risk.
We continue to monitor Brexit risk and develop
mitigation plans accordingly.
Health & Safety procedures are the subject of
regular review and external review by Health &
Safety consultants, Safety First.

We are reviewing key aspects of our incentive
arrangements for senior managers.

We continue to monitor and improve the
accuracy of ordering, scheduling and
forecasting. Maintain core relationships with key
trading partners and seek to agree prices on an
annual basis where possible.
We are increasing our focus on business
derived from the architectural specification
and housing associations.

The loss of a key trading partner
The loss of a key customer or
supplier could adversely impact
business performance.

Relationships with key trading partners are valued and kept under continuous
review. We monitor our markets and ensure that all key trading partners remain
up-to-date as to our unique selling propositions.
The impact of potential acquisitions on our key trading relationships are carefully
assessed as part of our due diligence process.

The active development of new
trading partners and the maintenance
of sustainable long term relations with
our existing partners are key performance
metrics for senior managers.

Change in employment status of
Group sub-contractors
HMRC may reconsider their view on labour only
‘sub-contractors’ employment status. For those
members of our Group using such contractors
in their business this could have a significant
adverse impact on overheads in the short term.

Modern Methods of Construction (MMC)
MMC, or the factory construction of modular
units for subsequent on-site assembly, have
increased and attracted significant investment
from several market participants.

Extreme weather
Extreme weather events whether in the
form of excessive rain and flooding or
snow can have a material impact on clients’
construction sites and adversely affect turnover
amongst our businesses.

Failure to integrate key acquisitions
As the Group has acquired a number of
companies there is a risk that the Group fails to
integrate an acquisition.

Such a change, if made, would in our view be industry-wide. As adversely affect-
ed contractual obligations are completed we would expect new pricing in the
market to reflect increased overheads.

Group businesses potentially affected
will endeavour to maintain robust
margins so as to mitigate any short
term effects on overheads.

We continue to monitor the scale and use of MMC and the approach of Local
Authority planners to their use and how members of the Group might be affected
were their products, for example roof coverings, to fall into the factory build stage
of such units.

We seek to ensure that the Group has close
relationships with builders using MMC.

The Group’s geographical diversity across the UK reduces the impact of extreme
regional weather events.

We continue to increase our geographical
reach through strategic acquisition and
organic growth.

The Group does both financial and legal due diligence to reduce the risk. The Group
Management Board executives also meet with the senior management of the
company being acquired to ensure they will fit in with the Group.

Continue to monitor existing acquisitions and
maintain the due diligence discipline.

S T R A T E G I C R E P O R T

Section 172(1) statement
Section 172(1) statement
In compliance with the Companies Act 2006, the Board of Directors are
In compliance with the Companies Act 2006, the Board of Directors are
required to act in accordance with a set of general duties. During the year to
required to act in accordance with a set of general duties. During the year to
31 March 2020, the Board of Directors consider that they have, individually
31 March 2020, the Board of Directors consider that they have, individually
and collectively, acted in a way they consider, in good faith, would be most
and collectively, acted in a way they consider, in good faith, would be most
likely to promote the success of the Company for the benefit of its shareholders
likely to promote the success of the Company for the benefit of its shareholders
as a whole, having regard to a number of broader matters including the
as a whole, having regard to a number of broader matters including the
likely consequence of decisions for the long term and the Company’s wider
likely consequence of decisions for the long term and the Company’s wider
relationships. In doing so, the Board has had regard to the matters contained
relationships. In doing so, the Board has had regard to the matters contained
in section 172(1) (a)-(f) of the Companies Act 2006.
in section 172(1) (a)-(f) of the Companies Act 2006.

Our directors have regard, amongst other matters, to the:
Our directors have regard, amongst other matters, to the:
• likely consequences of any decisions in the long-term;
• likely consequences of any decisions in the long-term;
• interests of the company’s employees;
• interests of the company’s employees;
• need to foster the company’s business relationships with suppliers, customers and others;
• need to foster the company’s business relationships with suppliers, customers and others;
• impact of the company’s operations on the community and environment;
• impact of the company’s operations on the community and environment;
• desirability of the company maintaining a reputation for high standards of business conduct; and
• desirability of the company maintaining a reputation for high standards of business conduct; and
• need to act fairly between members of the company.
• need to act fairly between members of the company.

This statement focuses on matters material to shareholders. The Group’s key resources and
This statement focuses on matters material to shareholders. The Group’s key resources and
relationships are detailed in the Business Model on pages 10 and 11. The Board recognises the
relationships are detailed in the Business Model on pages 10 and 11. The Board recognises the
importance of building and maintaining relationships with its key stakeholders, and considering
importance of building and maintaining relationships with its key stakeholders, and considering
the external impact of the Group’s operations, in order to achieve long term success. The Board’s
the external impact of the Group’s operations, in order to achieve long term success. The Board’s
understanding of the interests of the Group’s stakeholders is informed by the Board’s programme
understanding of the interests of the Group’s stakeholders is informed by the Board’s programme
of stakeholder engagement.
of stakeholder engagement.

Matters that have impacted key decisions and strategies during the year ended 31 March 2020
Matters that have impacted key decisions and strategies during the year ended 31 March 2020
are set out below.
are set out below.

Floatation
Floatation
Floatation was key event this year and a
Floatation was key event this year and a
key strategic step for the business to enable
key strategic step for the business to enable
the continued growth of the business. The
the continued growth of the business. The
Board believes that the floatation was the
Board believes that the floatation was the
best option for all stakeholders in the Group
best option for all stakeholders in the Group
by de-gearing the Group and widening the
by de-gearing the Group and widening the
shareholder base.
shareholder base.

Link to strategy: Organic Growth and
Link to strategy: Organic Growth and
Acquisitions
Acquisitions

Acquisitions
Acquisitions
During the year, the Group acquired seven
During the year, the Group acquired seven
companies. The acquisitions provided the
companies. The acquisitions provided the
Group with additional scale, geographical
Group with additional scale, geographical
diversity and additional product ranges.
diversity and additional product ranges.
The acquisitions provided enhanced sales
The acquisitions provided enhanced sales
opportunities and revenue generation,
opportunities and revenue generation,
providing returns to shareholders in the
providing returns to shareholders in the
longer term and enhanced employment
longer term and enhanced employment
opportunities as part of a wider Group. Prior
opportunities as part of a wider Group. Prior
to the acquisitions the Board considered the
to the acquisitions the Board considered the

effects it would have on the Group’s gearing
effects it would have on the Group’s gearing
and creditors but reached the conclusion
and creditors but reached the conclusion
that creditors’ interests would not be impacted
that creditors’ interests would not be impacted
significantly and any impact would be offset
significantly and any impact would be offset
by the positive effects of the acquisition on
by the positive effects of the acquisition on
the Group.
the Group.

Link to strategy: Acquisitions, Geographical
Link to strategy: Acquisitions, Geographical
expansion and Product Expansion.
expansion and Product Expansion.

Retention of staff
Retention of staff
Promoting the success of our business for
Promoting the success of our business for
the benefit of our shareholders, whether
the benefit of our shareholders, whether
large institutions or small retail investors,
large institutions or small retail investors,
is fundamental and has to be aligned with
is fundamental and has to be aligned with
employees. The Board believes that the
employees. The Board believes that the
issue of CSOP shares to all staff that
issue of CSOP shares to all staff that
had been with the Group over 2 years
had been with the Group over 2 years
ensures alignment of interest between
ensures alignment of interest between
the shareholders and employees.
the shareholders and employees.

Link to strategy: Organic Growth
Link to strategy: Organic Growth

The directors also take into account the views and interests of a wider

set of stakeholders when making decisions. During the year the Board

received information to enable them to consider the impact of the

company’s decisions on its key stakeholders. This information was

distributed in a range of different formats, including through reports

and presentations on our financial and operational performance, non-

financial KPIs and risk. We acknowledge that every decision we make will

not necessarily result in a positive outcome for all of our stakeholders and

the Board frequently has to make difficult decisions based on competing

priorities. By considering the company’s purpose and values, together

with its strategic priorities and having a process in place for decision-

making, we do, however, aim to balance those different perspectives.

The Group has identified six main stakeholder groups which are relevant

to the proper discharge of the duty of the Directors of relevant group

companies under section 172(1) to promote the success of their company.

• industry regulators and other public bodies involved

These are:

• the Group’s customers

in the UK Housing industry

• the Group’s suppliers

• the Group’s external lenders

• the Group’s employees

• the Group’s shareholders.

Details of these groups, and the main methods that the Directors have

used to engage with those stakeholders during the course of the year,

is set out in the Company’s corporate governance statement set out on

pages 34 to 35 of the Annual report and Financial Statements of the

Company for the year ended 31 March 2020.

As the parent company of the Group, the Board of the Company is

responsible for setting the Group’s overall strategy and maintaining

oversight of its activities. The Board therefore believes that having regard

to each of these stakeholder groups is relevant to the proper discharge of

the duties of the Directors of the Company under section 172(1).

Impact on the environment and the community in addition to

understanding and having regard to the interests of these stakeholder

groups, the Group is committed to reducing the environmental impact

of its operations and to making a positive impact in the community.

Further information on the steps taken to reduce the environmental

impact of the Group’s operations, and its charitable activities, are set

out on in the corporate governance statement set out on pages

34 to 35 of the Annual report and Financial Statements of the

Company for the year ended 31 March 2020.

22
22

S T R A T E G I C R E P O R T

The directors also take into account the views and interests of a wider
The directors also take into account the views and interests of a wider
set of stakeholders when making decisions. During the year the Board
set of stakeholders when making decisions. During the year the Board
received information to enable them to consider the impact of the
received information to enable them to consider the impact of the
company’s decisions on its key stakeholders. This information was
company’s decisions on its key stakeholders. This information was
distributed in a range of different formats, including through reports
distributed in a range of different formats, including through reports
and presentations on our financial and operational performance, non-
and presentations on our financial and operational performance, non-
financial KPIs and risk. We acknowledge that every decision we make will
financial KPIs and risk. We acknowledge that every decision we make will
not necessarily result in a positive outcome for all of our stakeholders and
not necessarily result in a positive outcome for all of our stakeholders and
the Board frequently has to make difficult decisions based on competing
the Board frequently has to make difficult decisions based on competing
priorities. By considering the company’s purpose and values, together
priorities. By considering the company’s purpose and values, together
with its strategic priorities and having a process in place for decision-
with its strategic priorities and having a process in place for decision-
making, we do, however, aim to balance those different perspectives.
making, we do, however, aim to balance those different perspectives.

The Group has identified six main stakeholder groups which are relevant
The Group has identified six main stakeholder groups which are relevant
to the proper discharge of the duty of the Directors of relevant group
to the proper discharge of the duty of the Directors of relevant group
companies under section 172(1) to promote the success of their company.
companies under section 172(1) to promote the success of their company.

These are:
These are:
• the Group’s customers
• the Group’s customers
• industry regulators and other public bodies involved
• industry regulators and other public bodies involved
in the UK Housing industry
in the UK Housing industry
• the Group’s suppliers
• the Group’s suppliers
• the Group’s external lenders
• the Group’s external lenders
• the Group’s employees
• the Group’s employees
• the Group’s shareholders.
• the Group’s shareholders.

Details of these groups, and the main methods that the Directors have
Details of these groups, and the main methods that the Directors have
used to engage with those stakeholders during the course of the year,
used to engage with those stakeholders during the course of the year,
is set out in the Company’s corporate governance statement set out on
is set out in the Company’s corporate governance statement set out on
pages 34 to 35 of the Annual report and Financial Statements of the
pages 34 to 35 of the Annual report and Financial Statements of the
Company for the year ended 31 March 2020.
Company for the year ended 31 March 2020.

As the parent company of the Group, the Board of the Company is
As the parent company of the Group, the Board of the Company is
responsible for setting the Group’s overall strategy and maintaining
responsible for setting the Group’s overall strategy and maintaining
oversight of its activities. The Board therefore believes that having regard
oversight of its activities. The Board therefore believes that having regard
to each of these stakeholder groups is relevant to the proper discharge of
to each of these stakeholder groups is relevant to the proper discharge of
the duties of the Directors of the Company under section 172(1).
the duties of the Directors of the Company under section 172(1).

Impact on the environment and the community in addition to
Impact on the environment and the community in addition to
understanding and having regard to the interests of these stakeholder
understanding and having regard to the interests of these stakeholder
groups, the Group is committed to reducing the environmental impact
groups, the Group is committed to reducing the environmental impact
of its operations and to making a positive impact in the community.
of its operations and to making a positive impact in the community.
Further information on the steps taken to reduce the environmental
Further information on the steps taken to reduce the environmental
impact of the Group’s operations, and its charitable activities, are set
impact of the Group’s operations, and its charitable activities, are set
out on in the corporate governance statement set out on pages
out on in the corporate governance statement set out on pages
34 to 35 of the Annual report and Financial Statements of the
34 to 35 of the Annual report and Financial Statements of the
Company for the year ended 31 March 2020.
Company for the year ended 31 March 2020.

S T R A T E G I C R E P O R T

23
23

Chief Financial Officer’s Review

£187m £37.7m

Revenue growth of 14.6% to
£187 million, with like-for-like
growth of 0.6%.

Gross Profit increased by
15.2% to £37.7m

£19.5m

Adjusted EBITDA increased
by 10.1% to £19.5m

£12.2m

Profit before tax increased
by 41.7% over 2019

2020 was a solid performance, given the political events at the end of 2019 and the poor weather in the first two months
of 2020. Overall business performance is shown in our key performance indicators on page 16.

REVENUE
Revenue totalled £187.1 million for the year ended 31 March 2020. This represented an increase of 14.6% over the previous year
(2019: £163.3 million).

Division

Bricks & Building Materials

HPJ

Roofing

Total

2019

123.4

23.3

16.5

163.3

2020

144.0

26.1

17.1

187.1

%Increase

16.6%

11.7%

3.6%

14.6%

Sales performance was very different in the two halves of the year as shown in the table below on a like for like basis.

Full year

Brick

4.7%

-4.3%

0.2%

Roofing

14.3%

-5.0%

5.0%

HPJ

-1.5%

0.4%

-0.5%

Total

4.8%

-3.7%

0.6%

GROSS PROFIT
Gross profit for the year increased to £37.7m from £32.9m
with a consistent gross margin of 20.1% over both years.

ADJUSTED EBITDA
Adjusted EBITDA increased by 10.1% to £19.5m for the year
ended 31 March 2020. Detailed segmental analysis is per note
6 of the Financial Statements. Heating, Plumbing & Joinery
Adjusted EBITDA increased from £4.9m to £6.2m through the
strong performance of Towelrads, the improved performance of
Frazer Simpson and FSN Doors and the addition of DSH Flooring.
Roofing adjusted EBITDA decreased by £0.1m from £3.8m to
£3.7m on the back of the poor turnover in the second half of the

year. Bricks & Building Material adjusted EBITDA increased from
£10.8m to £11.5m.

PROFIT BEFORE TAX
Profit before taxation was £12.2million, an increase of £3.6 million
on 2019 (£8.6m) of which £2.0m was due to the reduced
finance expenses.

EPS
Earnings per share increased from 4.51p to 4.79p per share.
The Adjusted EPS based on the numbers of shares at 31 March
2020 was up 43.9% to 4.03p (2019 2.80p).

TAXATION
The charge for taxation was
£2.9 million (2019: £2.1 million),
an effective rate of taxation (Tax
expense divided by Profit before
tax) of 23.7% (2019: 24.9%).

DIVIDENDS
The Board proposed a final dividend of
1.085p per share giving a total dividend for
the year of 1.9528p. This final dividend is
expected to be paid on 23 October 2020 to
shareholders on the register on 25 September
2020 with an ex-dividend date of 24
September 2020. Our dividend is 2.1x times
Profit after tax and 4.3x Adjusted EBITDA.
The Board considers this to be a prudent level
of cover. The Group remains committed to a
progressive dividend policy.

CASH FLOW AND NET DEBT
Operating cash flows before movements
in working capital increased to
£21.0m up from £17.3m in 2019. Cash
generated from operations decreased
to £20.9m from £23.6m due to the
reversal of creditor movement at the
year ended 31 March 2019 and the
additional working capital balances
from acquisitions made during the year.

At 31 March 2020, net cash was £2.3
million representing a £21.8 million
improvement on 31 March 2019
(net debt of £19.5 million). This was
after new equity subscription capital
investment of £43.9 million, acquisition
of new businesses of £11.4m, dividend
payments of £2 million and tax of £4.7
million. We continue to expect that the
Brickability Group will remain a business
that is cash generative.

BANK FACILITIES
The Group has agreed new debt
facilities with HSBC, totalling £30
million and a standby government
backed loan of £5m. This consists of
a £25 million revolving credit facility
repayable in full in March 2023
(with the option of two one year
extensions), a £5 million overdraft
facility until March 2023, and a £5m
standby government backed loan.
The Board do not plan to use the
standby government loan however
it is credit approved.

INTEREST AND
FINANCING COSTS
Finance costs reduced substantially
following the listing as the investor loan
notes were repaid as part of the process.
The Company refinanced to HSBC
on the 3 March 2020 which has lower
margin than the previous facility.

S T R A T E G I C R E P O R T

Going Concern and Outlook
The business activities of the Group, its current operations and
factors likely to affect its future development, performance and
position are set out in the Chief Executive’s Statement on page 8
and in the Financial Review on page 24. In addition, note 32 of the
Financial Statements includes an analysis of the Group’s financial
risk management objectives, details of its financial instruments and
hedging activities and its exposures to credit and liquidity risk.

The Group has a formalised process of monthly budgeting,
reporting and review, and information is provided to the Board
of Directors in order to allow sufficient review to be performed to
enable the Board to ensure the adequacy of resources available for
the Group to achieve its business objectives and in particular the
impact of the Covid 19.

At the year end the Group had net
cash of £2.3million and unutilised
bank facilities with available
funding of £10 million. Cash
generated from operations was
strong during the year at 20.9
million (2019: £23.6 million).

Budget scenarios have been prepared comparing a number of
scenarios however the Board focussed on two cases: a) an operating
budget case (assuming c40% drop in turnover but varying specifically
to each company in the Group); and b) a low case assuming a second
COVID 19 wave (where for the 2 months of lock down sales dropped
a further 50%). There models where assessed and used to evaluate
how the virus could impact the Group in the period to 31 March 2022.
In determining these the Group considered macro-economic and
industry wide projections as well as matters specific to the Group. In

both scenarios, the Group has sufficient liquidity and would expect to
remain in compliance with the exiting bank covenants.

In addition, the Group prepared various periods of shut down to
evaluate at which the bank covenants would be breached, before
any further mitigating actions were taken. The models indicated
that it would take a 6 month complete shut down before the Group
breached its bank covenant. In such an extreme circumstance, the
Group would reasonably expect to renegotiate the terms of the bank
facility and amend the bank’s covenant terms.

At the year end the Group had net cash of £2.3 million
and had unutilised bank facilities with available funding of
£10 million. Cash generated from Operations was strong
during the year at £20.9 million (2019: £23.6 million).

The Group sells throughout the UK and has a spread of
customers, with credit insurance covering the main brick
business. The Group sources a range of products from
third-party suppliers both in UK and Europe.

After making enquiries and reviewing the various scenarios,
budgets and forecasts for the Group, the Directors have
a reasonable expectation that the Company and the
Group have adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the
Annual Report and Accounts.

OUTLOOK
While we still face economic and political uncertainties including Brexit and COVID-19, we have great
confidence in our performance during 2020-21 and current trading along with the strength of our order books
reinforces this confidence. While it is still too early to give accurate guidance bearing in mind these uncertainties,
we will update the market as soon as it is possible.

Our strategy remains unchanged. We are focused on driving profitable sales growth through organic
development and acquisition. We remain confident in our ability to deliver shareholder value in the short,
medium and long term.

Approved by the Board of Directors and signed on behalf of the Board.

S T R A T E G I C R E P O R T

Corporate Responsibility

CORPORATE AND SOCIAL RESPONSIBILITY
We are committed to fairness, integrity and doing the right
thing. We believe in treating our people well and giving back to
the communities where our people work.

The Group has need focused on recruiting younger staff to
ensure the skills are transferred but also to help with succession
planning. A number of the acquisitions recently make have had
young management teams who we hope will develop over time
to provide the talent the Group needs as growth continues.

SAFETY AND WELL-BEING
The safety and well-being of colleagues is the Group’s first
priority. The Group promotes a positive health and safety
culture throughout the business to ensure that all our people
consider health, safety and welfare issues while at work.
A workforce that is safe and physically and mentally healthy
is key to the success of the Group.

All new employees receive in-house health and safety training
with further training undertaken as the employee role or need
requires. All our processes and procedures are reviewed
regularly by an external agency.

DIVERSITY AND GENDER
Building a diverse workforce and maintaining an inclusive
workplace is vitally important to the Group. A diverse workforce
and an inclusive workplace ensures everyone feels welcome
and valued. As a Group we strive to eliminate any gender bias
in our pay and employment policies and practices. We have
a robust recruitment policy that the Group will recruit, train
and reward based on merit and provide opportunities for our
employees to fulfill their ambitions regardless of gender. The
Group reached the threshold on 5th April 2020 to report gender
pay gap and will therefore publish their gender pay report by
5th April 2021.

OUR PEOPLE
Growing our business generates opportunities for our employees
and creates value for our shareholders and stakeholders. Our
focus is to create a high performance entrepreneurial culture
through effective employee engagement, people development
plans and effective resource management.

Our people are our key asset. The Group’s performance
and its success within our marketplace are directly related to
the effectiveness of our people, who deliver the high quality
products and provide exceptional services. The Group aims to
attract, retain and motivate the highest calibre of employees.

TRAINING & DEVELOPMENT
Developing talent and supporting diversity across our Group
helps to ensure that we have the best teams motivated to
deliver our goals. In an industry that is keen to attract young
talent, development programmes allow the Group to retain and
nurture new staff.

REWARD AND RECOGNITION
Key to the retention of our employees is recognizing and
rewarding their hard work. Our reward strategy aims to align
the interests of the employee and the company. As a sales
organisation the sales persons rewards are based on bonus/
commission based on sales achieved.

As part of the IPO staff that had been with the Group for
more than 2 years received options over shares to ensure
staff interests are aligned with the Group.

EMPLOYEE ENGAGEMENT
We recognise highly competent and engaged staff is key for
customers. Our customers are central to our
success and the day to day relationships staff have with
customers is key. Many of these relationships have been built
over many years so it is important that we maintain a high
employee retention rate.

A variety of methods are used to engage with employees,
including office and team meetings and an annual in house
Conference. We will use one or more of these channels to brief
employees about our business performance and financial and
economic factors affecting us.

COMMUNITY AND SOCIAL
The communities where our offices and premises are based
are important to us and we try and encourage our employees
to make a difference within our local communities by being
involved in local charities.

Most of our financial contributions to charities come from the
efforts and personal involvement of our employees. During
the year ended 31 March 2020 the company made £14,283
donations to charities.

ETHICS AND RELATIONSHIPS
Our vision to be a leading specialist supplier in the house
building sector will only be maintained through a culture of
honesty, integrity and openness and by respecting human rights
and the interests of our employees, customers and third parties.

RELATIONS WITH EMPLOYEES
The Group has policies for dealing with gifts, hospitality,
bribery, corruption, modern slavery, whistle-blowing and
inside information.

RELATIONS WITH CUSTOMERS
The Group is committed to putting its customers at the heart
of everything it does by providing high quality products and
service. All employees are expected to behave respectfully
and honestly in all their dealings with customers and the
general public.

RELATIONS WITH SUPPLIERS
The Group expects its suppliers to adhere to business principles
consistent with the Group’s own. Suppliers are expected
to adopt and implement acceptable health and safety,
environmental, product quality, labour, human rights, social and
legal standards. Conformance to these standards is assessed
by on site supplier visits on a regular basis.

RELATIONS WITH THIRD PARTIES
The Group does not make political donations and charitable
donations are made only where legal and ethical according to
local laws and practices.

Carbon Dioxide Equivalent (CO2e) Tonnes

2020

Scope 1

Scope 2

Intensity
Tonnes of CO2e from scope 1 and 2 sources per £m of turnover

25.8

29.6

0.79

2019

27.2

21.5

0.69

Brick-ability Limited being the largest subsidiary has reported on all the emissions’ sources
required under the Companies Act 2006 (Strategic Report and Directors Reports) Regulation
2013. Other parts of the group are outside the reporting requirement. Scope 1 and 2 emissions
are calculated using the UK Government Conversion Factors for Company Reporting 2019
on an operational control basis. 86% of Scope 1 and 2 data is from measured sources
with the remainder extrapolated from either expenditure on fuel or distance
travelled. The increase in Scope 2 in 2020 relates to the increased use of
electricity for the new Alfiam warehouse.

ENVIRONMENTAL
The Group is dedicated to being
environmentally responsible
through our commitment to
eliminate waste and wasteful
practices. We strive for
operational excellence whilst
reducing environmental impact.

Policies are designed and
implemented to reduce damage
that might be caused by the
Group’s activities. Initiatives to
reduce the Group’s impact on the
environment include the recycling
of waste, reducing carbon
emissions and utilisation of
recyclable packaging materials.

Strategic Report on pages 4 to 29
was reviewed and approved by the
Board on 15 September 2020.

Alan J. Simpson
Chief Executive Officer

S T R A T E G I C R E P O R T

Board of Directors

JOHN RICHARDS
Chairman

ALAN SIMPSON
Chief Executive Officer

STUART OVEREND
Chief Financial Officer

John Richards joined the building
materials industry after serving
a graduate traineeship with the
Delta Engineering Group. He
served at Ibstock Brick for 31 years
as Sales and Marketing Director,
Director and General Manager
and as Managing Director of
several of the group’s subsidiaries.
He now also serves as Chairman
of ADF, a leading supplier of
trailers and logistics to the TV
and film industry, Chairman of
JR and M Investments, a supplier
of finance to contractors and is a
Director of Birmingham Moseley
Rugby Club. John joined the
Board of Brickability in March
2018 as Chairman.

Alan Simpson joined Building
Materials Distribution with Taylor
Maxwell in 1983 and five years
later moved to Brick-ability. He
became Sales Director and a
shareholder, graduating to the
position of Managing Director.
He founded Towelrads, Frazer
Simpson and FSN Doors, all of
which are now part of the Group.
Alan became a Director in
1996 before stepping up to
Chief Executive Officer of the
Group following the successful
management buyout of Peter
Milton, the founder of the
Brickability business, in
September 2016.

Stuart Overend is a Chartered
Accountant (KPMG) and
qualified Corporate Treasurer with
a mix of industrial and investment
experience. His previous
experience includes a high growth
pan European Pharmaceutical
business and running and
operating a private equity fund.
Stuart joined the Board of
Brickability in May 2018 as Chief
Financial Officer.

Our board of directors has exceptional
experience within the supply and manufacture
of building materials for the construction industry.
Within the Group businesses there is a large pool
of talented people who bring dynamism and
growth to our operations.

CLIVE NORMAN
Non-Executive Director

DAVID SIMPSON
Non-Executive Director

GILES BEALE
Non-Executive Director

Clive Norman has over 30 years’
experience in the radiator import
and service business throughout
both Europe and the UK. As
the Vice-President of Delonghi
Heating and CEO of Ferroli, a
commercial producer of boilers,
radiators, towelrails and air
conditioning, he oversaw sales
growth to substantial numbers.
Clive joined the Board of
Brickability in March 2018 as
Non-Executive Director.

David Simpson, an Accountant
by profession, has significant
experience in the housebuilding
sector, having worked with luxury
home developer, Millgate for over
17 years, including as Managing
Director for nine years. He was
appointed to the Executive
Committee Board of Countryside
Properties plc from 2014 to 2018,
following its merger with Millgate.
David joined the Board of
Brickability in July 2019 as
a Non-Executive Director.

Giles Beale, a Solicitor by
profession, has over 30 years’
experience of working with listed
and quoted companies and
their corporate governance. As
a Corporate Lawyer he also has
significant experience of mergers
and acquisitions and related
matters both domestically and
internationally. He is a Freeman
of the City of London.
Giles joined the Board of
Brickability in August 2019 as
a Non-Executive Director.

Board

Total Meetings held

Meetings attended

J Richards (Chairman)

A J Simpson (CEO)

G Beale (Non Executive)

C Norman (Non Executive)

S J Overend (CFO)

D Simpson (Non Executive)

Audit
Committee

Remuneration
Committee

Nomination
Committee

N/A

C O R P O R A T E G O V E R N A N C E

Group Management Board

JOHN RICHARDS
Chairman

ALAN SIMPSON
Chief Executive Officer

STUART OVEREND
Chief Financial Officer

Simon Mellor has over
30 years’ experience in
the brick market. He first
gained experience in brick
manufacturing at Steetley
Brick as a Regional Sales
Manager. He joined
Brickability in 1995 as
Wales Sales Manager and
was appointed Managing
Director of The Matching
Brick Company in 2007
and of Brickability Limited
in 2009, overseeing a
number of acquisitions and
developing relationships
with European suppliers.

Simon Pearson has over
35 years of construction
and roofing sector
experience, having first
joining the industry in
1981 and setting up his
first roofing business in
1984. He formed Crest
Building Products in
1989 and Crest Roofing
in 1993, which became
part of the Group in
2018 and has been
Managing Director
of the Roofing
Division since.

SIMON MELLOR
Managing Director
of Bricks Division

SIMON PEARSON
Managing Director of
Roofing Division

The Management Board
is responsible for the
day to day operations
of the Group. The
members are drawn from
key managers within
individual Brickability
Group businesses.

Paul Hamilton has 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 £15 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 Towelrads, DSH
Flooring, Frazer Simpson
and FSN Doors.

Arnold Van Huet has over
35 years’ experience in
the brick and tile market
across Europe, having been
heavily involved in import
and exports markets and
the development of many
brick and roofing products
in Europe. He was the
founder of the Crest Group
of companies over 30 years
ago which became part
of the Group in 2018. He
has also held senior and
board positions in Desimpel
Brick plc, Hanson Brick and
Enhobel plc.

Andy joined the brick
industry in 2004 after
graduating with 2:1 BA Hons
from Nottingham Trent
University. Andy served as
Regional Sales Manager for
Traditional Brick & Stone Ltd
before joining Wienerberger
as Southern Specification
Manager. In 2014 Andy
founded The Bespoke Brick
Co Ltd, followed by The
Brick Slip Business Ltd in
2016. He later co founded
William Wilson Properties
Ltd in April 2019. Andy
joined the Management
Board of Brickability Group
in May 2019.

PAUL HAMILTON
Managing Director of
Heating, Plumbing and
Joinery Division

ARNOLD VAN HUET
Managing Director
of Crest Group

ANDY WILSON
Managing Director of
The Bespoke Brick Co

C O R P O R A T E G O V E R N A N C E

Corporate Governance

QCA CODE OF CORPORATE GOVERNANCE AND AIM RULE 26
The Board recognises the importance of good corporate governance and
since our flotation on the AIM in August 2019 we have chosen to adopt the
Quoted Companies Alliance Corporate Governance Code which we believe
will provide a meaningful set of ten core principles that should provide our
shareholders with confidence in how the Company operates.

The 10 QCA principles are:

DELIVER GROWTH
1. Establish a strategy and business model which
promote long-term value for shareholders.
2. Seek to understand and meet shareholder

needs and expectations.

We have ensured that presentations have
been made to both shareholders and
potential investors. Both have been able
to make comment to and question the
directors. We also regularly get questions
from private shareholders by email, all of
which are dealt with.

3. Take into account wider stakeholder and social
responsibilities and their implications for long-
term success.

4. Embed effective risk management, considering
both opportunities and threats, throughout
the organisation.

Our growth is being delivered both organically
and through acquisition and this will continue
to be the case. Both these routes of growth are
subject to rigorous analysis and this includes
their value to the business and it’s shareholders,
their focus on social responsibility, their
management of their staff and of risk, their quality
of management and their corporate culture. The
Board monitors corporate culture to ensure that it
is consistent with the required standards.

MAINTAIN A DYNAMIC
MANAGEMENT FRAMEWORK
5. Maintain the Board as a well-functioning,

balanced team led by the chair.

6. Ensure that between them the Directors have
the necessary up-to-date experience, skills
and capabilities.

All our directors have expertise in the relevant
areas and we use our professional advisers to
ensure that their knowledge and skill sets are
kept up to date.

7. Evaluate Board performance based on clear and

relevant objectives, seeking continuous improvement.
We evaluate the Board’s performance against

the companies objectives laid out at the
time of IPO. This evaluation also extends
to performance in areas of compliance,
risk management, remuneration and
communication amongst others.

8. Promote a corporate culture that is based on

ethical values and behaviours.

The Board’s assessment is that the corporate
culture is consistent with ethical values
and behaviors.

9. Maintain governance structures and processes

that are fit for purpose and support good decision-
making by the Board.

BUILD TRUST
10. Communicate how the
Company is governed
and is performing by
maintaining a dialogue
with shareholders and other
relevant stakeholders.

The corporate governance culture will be measured
against the QCA Code fundamentals and
regularly reviewed with developments and changes
communicated to shareholders. The QCA Code is
built on the three fundamentals of delivering growth,
maintaining a dynamic management framework and
building trust. The Board is committed to each one
of the fundamentals, as it believes these will support
the Company’s medium to long-term success.

C O R P O R A T E G O V E R N A N C E

COMMITTEE CHAIRMAN
David Simpson

OTHER MEMBERS
John Richards
Giles Beale

Report of the Audit Committee
On behalf of the Board I am pleased to present my
report to you as Chair of the Audit Committee for the
financial year to 31st March 2020. This report provides
shareholders with an overview of the activities carried
out by the Committee during the year.

DUTIES, ROLE AND RESPONSIBILITIES
OF THE AUDIT COMMITTEE
The main duties of the Audit Committee are set out in its terms of
reference which can be found at www.brickabiltygroupplc.com

COMMITTEE CALENDAR
During the year the committee met on three occasions.

Areas of focus in 2019/20

Delivering the FPPP action plan

Review of the FY 2019/20 audit plan

Review of the interim results

Consideration of key audit matters and how they are addressed

Reviewing significant accounting and reporting judgements

Going concern review

Monitoring and reviewing the effectiveness of the Group’s external audit

Monitoring auditor independence

Meeting the external auditor without management present

Considering the external audit report

Reviewing the Financial Statements and Annual Report

Developing and implementing policy on non-audit services provided by
the external auditor

Review of risk management and internal control systems

Reviewing the Group’s procedures for detecting and preventing fraud, bribery
and the governance of anti-money laundering systems and controls

Monitoring the Groups integrity of the Group’s Financial Statements and
formal announcements.

COVID-19
With a year-end date of 31st March the impact of Covid-19 on the
financial performance of the Group has been minimal. The year-
end audit programme however has been impacted in that certain
stock takes were not attended by the auditor on the actual year
end date. However since then stock takes have been conducted in
the presence of the auditor and to the extent there has only been
minimal stock deliveries and despatches between the year-end
and the actual physical stock take, enabling management and
the auditor to retrospectively verify the 31st March physical stock
count. The Audit Committee is satisfied with the accuracy of the
stock records.

ROLE OF THE EXTERNAL AUDITOR
The Audit Committee monitors the relationship with the external
auditor, BDO LLP, to ensure that auditor independence and
objectivity is maintained. As part of its review the Committee
monitors the provision of non-audit services by the external auditor.
The Breakdown of fees between audit and non-audit services is
provided in Note 9 to the Financial Statements. The non-audit
fees relate to reporting accountants work and share options plans
at the IPO. Having reviewed the auditor’s independence and
performance the Committee recommends that BDO LLP be
re-appointed as the Group’s auditor at the inaugural AGM.

EXTERNAL AUDIT PROCESS
The Group CFO and the chair of the Audit Committee liaise with
the auditor throughout the year to ensure that if there are areas
of significant risk, or other matters of audit relevance, they are
regularly communicated. The external auditor prepares a plan
for its audit of the Financial Statements. The audit plan sets
out the scope of the audit, areas to be targeted and the audit
timetable. The plan is reviewed and by the Committee. Following
the audit, the auditor presents their findings to Audit Committee
for discussion. No major areas of concern were highlighted by the
auditor during the year.

EXTERNAL AUDIT TENDER
This year as part of the IPO process the Board, prior to the
formation of the Audit Committee, have conducted a tender
for the future provision of external audit services in compliance
with legislation and Financial Reporting Council (FRC) on best
practice, in particular ensuring independence in respect of
potential audit firms.

This concluded in the appointment of BDO LLP. BDO LLP
replaced Kilsby Williams who have admirably served as Group
auditor for the last 8 years. The Board would like to place on
record their thanks to Kilsby Williams LLP for their work up to 2019
as Group auditor.

RISK MANAGEMENT AND INTERNAL CONTROLS
The Board, assisted by the Audit Committee, is responsible for
regularly reviewing the operation and effectiveness of the Group’s
internal controls. The internal control system is designed to manage,
rather than eliminate, the risk of failure to achieve business objectives.
The Group’s key internal control procedures include a review of the
Group’s strategy and the performance of subsidiaries. This involves
a comprehensive system of reporting based on variances to annual
budgets, key performance indicators and regular forecasting.
The Audit Committee recommended the appointment of additional
experienced and qualified staff to support the Group CFO, in the
Group’s first year post IPO, primarily in the arena of subsidiary
internal controls and improving consistent management reporting.
The Audit Committee in partnership with the Board is responsible
for reviewing the risk management and internal control framework
and ensuring that it operates effectively. During the period, the
Committee is satisfied that the internal control systems in place
were operating effectively.

GOING CONCERN
The Group is required to assess its ability to trade as a going
concern for a period of 12 months from the period of signing
the annual Financial Statements. The Committee reviewed the
Board’s assessment page 26 and concluded that it remained
appropriate to continue to adopt the going concern basis in
preparing the Financial Statements.

WHISTLEBLOWING
The Group has in place a whistleblowing policy which sets out
the formal process by which an employee of the Group may, in
confidence raise concerns about possible improprieties in financial
reporting or other matters. No concerns were raised during the period.

ANTI-BRIBERY
The Group has in place an anti-bribery and corruption policy
which sets out a zero tolerance position and provides information
and guidance to those working for the Group on how to recognise
and deal with bribery and corruption matters. The Committee
relies upon assurances from senior management in satisfying
itself that the current policy is operating effectively. During the
period the Committee is satisfied that the policy in place has been
operating effectively.
Approved by the Audit Committee on 14 September 2020.

A S i

David Simpson
Chair of Audit Committee

C O R P O R A T E G O V E R N A N C E

This image of our wonderful, bespoke brick
This image of our wonderful, bespoke brick
showroom gives some indication of the
showroom gives some indication of the
breadth of brick product range that we are
breadth of brick product range that we are
able to offer our customers. Product selection,
able to offer our customers. Product selection,
technical assistance and the start of the
technical assistance and the start of the
service delivery journey all take place here.
service delivery journey all take place here.

38
38

Report of the
Report of the
Remuneration Committee
Remuneration Committee

On behalf of the Board I am pleased to present
On behalf of the Board I am pleased to present
my report to you as Chair of the Remuneration
my report to you as Chair of the Remuneration
Committee for the financial year to 31st March
Committee for the financial year to 31st March
2020. The purpose of this report is to provide
2020. The purpose of this report is to provide
shareholders with the information necessary
shareholders with the information necessary
to understand our remuneration policy, its
to understand our remuneration policy, its
linkage to the Group’s performance, strategy
linkage to the Group’s performance, strategy
and core values as well as providing a clear
and core values as well as providing a clear
explanation of how our directors have been
explanation of how our directors have been
rewarded over the period.
rewarded over the period.

Whilst not subject to the Large and Medium-sized Companies and Groups
Whilst not subject to the Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations or the UK Corporate
(Accounts and Reports) (Amendment) Regulations or the UK Corporate
Governance Code we have adopted, where considered appropriate, a similar
Governance Code we have adopted, where considered appropriate, a similar
format. Where we have done so but departed from aspects of that format we
format. Where we have done so but departed from aspects of that format we
explain why. This report has not been audited.
explain why. This report has not been audited.

Given that the company’s IPO occurred during the period being reported on
Given that the company’s IPO occurred during the period being reported on
and that there has been no subsequent change in the company’s remuneration
and that there has been no subsequent change in the company’s remuneration
policy or that of its directors following the IPO, no shareholder vote regarding this
policy or that of its directors following the IPO, no shareholder vote regarding this
report or its content will be proposed at the company’s 2020 AGM.
report or its content will be proposed at the company’s 2020 AGM.

We recognise the importance of shareholder views and their feedback on
We recognise the importance of shareholder views and their feedback on
remuneration policy. Engagement is valued and I welcome feedback from our
remuneration policy. Engagement is valued and I welcome feedback from our
shareholders on the content of this report.
shareholders on the content of this report.

THE COMMITTEE, ITS CONSTITUTION
THE COMMITTEE, ITS CONSTITUTION
AND TERMS OF REFERENCE
AND TERMS OF REFERENCE
The Remuneration Committee’s members comprise Giles Beale, David Simpson
The Remuneration Committee’s members comprise Giles Beale, David Simpson
and John Richards. Giles Beale and David Simpson are considered independent
and John Richards. Giles Beale and David Simpson are considered independent
by the Board within the meaning of the QCA Code. John Richards, Chairman
by the Board within the meaning of the QCA Code. John Richards, Chairman
and the Chairman of the Group Management Board, is also a member of
and the Chairman of the Group Management Board, is also a member of
the committee. The Board regard John as independent for this purpose; his
the committee. The Board regard John as independent for this purpose; his
experience and role in liaising with shareholders assists the committee and
experience and role in liaising with shareholders assists the committee and
his membership is considered both appropriate and beneficial. Since its
his membership is considered both appropriate and beneficial. Since its
establishment Giles Beale has chaired the committee.
establishment Giles Beale has chaired the committee.

C O R P O R A T E G O V E R N A N C E

39
39

THE COMMITTEE, ITS CONSTITUTION
AND TERMS OF REFERENCE CONT.
The committee was established on 21st August 2019. The company’s
articles of association under which it was established, together
with the committee’s terms of reference, are available at www.
brickabilitygrouplpc.com. The committee’s core role is to assist the
Board in ensuring that the Group’s remuneration policy rewards
fairly and responsibly with a clear link to individual performance. Key
roles include the determination of executive directors’ remuneration,
to monitor and recommend that of the Group’s wider senior
management team and the oversight and administration of Group
share plans. No member of the committee has a personal interest
(save as a shareholder in the company) in the outcome of its decisions.

The committee gives due regard to the interests of shareholders and
the financial and commercial health of the company. No director is
party to a decision or recommendation regarding their own remuneration.

The committee meets at least twice a year and further as necessary
to fulfil its role. Over the period the committee met four times. Jurit
LLP and Travers Smith LLP provided advice during the period. When
required, the Chief Executive and Chief Financial Officer attended
deliberations of the committee by invitation.

REMUNERATION POLICY;
OBJECTIVES AND APPLICATION
The Remuneration Committee is responsible for determining, with
the Board, the framework for the executive directors and Group’s
senior management remuneration as well as the administration
of the Group’s share plans. Remuneration for executive and other
senior management include, where appropriate, pensions, bonuses,
incentive arrangements, share options and other share based
awards. The Remuneration Committee’s focus is to reward fairly and
responsibly with the establishment of a common remuneration policy
throughout the Group.

The Group has historically grown by acquisition through which it
has inherited several differing remuneration arrangements often
embedded by contract. Growth by acquisition remains an important
element of the company’s strategy.

In several cases, members of the senior management team are party
to on-going earn-out arrangements. A number of the Group’s senior
management are significant shareholders of the company and some
are also party to a concert party identified by the Panel on Takeovers
and Mergers identified and disclosed at the time of the company’s IPO.

The committee considers it important, subject to regulatory constraints,
to establish a consistent remuneration policy that supports and
encourages senior managers and Group employees generally with a
clear link to individual performance as well as the financial health of the
company and the interests of its shareholders as a whole.

The directors believe that the success of the Group depends to a
significant degree on the future performance of its senior management
team. The Board and the committee also recognise the importance of
ensuring that all Group employees remain well motivated and identify
closely with its success. The committee reviews information regarding
the remuneration and reward levels of other Group employees to provide
context when considering remuneration policy and the remuneration of
the senior management team including that of the executive directors.

The remuneration packages of our senior management team are
designed to attract, motivate and retain executives of the highest calibre
and to reward them for enhancing shareholder value.

The determination of executive directors’ annual remuneration,
including bonus and related performance criteria is undertaken by the
committee. In addition, the committee reviews and recommends the
level and structure of the wider senior management team to the Board.
In each case these include some or all of the following elements:

• basic salary and benefits;

• annual bonus and/or commission arrangements;

• share plans including awards under the Group’s LTIP;

• pension arrangements (all of which are defined contribution).

We consider it important that a significant proportion of the executives
and senior management teams’ remuneration should be performance
related with the objective of enhancing shareholder returns as well as the
long term financial health and stability of the company. This includes, as
appropriate, the exploitation of Group synergies, the development and
enhancement of our potential and existing senior management team,
specific unit performance and the upholding of our values and culture.
Objectives for individuals will vary depending upon their role within the
Group but we consider that a consistent, transparent remuneration
programme based upon common principles is important to ensure that
overall Group performance and shareholder value is enhanced.

The committee is responsible for the administration of the company’s
share plans, being the company’s employee share option plan and a
long term incentive plan LTIP. It is not the committee’s current policy to
make annual grants under either plan. Rather, the committee’s purpose
is to make meaningful, individual grants, under the LTIP, that align
grantees interests with the enhancement of shareholder value. Where
appropriate grants under the company’s employee share option plan
may also be utilised. No grants under the LTIP scheme were issued in the
year. The committee’s policy regarding the administration of grants under
these plans may develop to accommodate changing needs of the Group.

Members of the Group operate several defined benefit pension schemes. In addition there is an auto
enrolment Group pension scheme managed by Scottish Widows. Generally contributions are 5%
employee and 3% employer; in some cases each of the proportions rise to 10%.

The remuneration policies within the Group were established prior to the IPO. The committee will
review these during the current financial year to ensure that they best serve the core objectives outlined
above and, in particular, are consistent with a common Group remuneration policy that
continues to promote the enhancement of shareholder value. Any significant changes
in existing policy will be the subject of consultation with our key shareholders.

C O R P O R A T E G O V E R N A N C E

EXECUTIVE DIRECTORS’ REMUNERATION
The table below summarises the key elements of our executive directors’
remuneration under their current service contracts being those made on
21st August 2019 in anticipation of the company’s IPO. The tables set out
on page 44 and 45 set out our executive directors total remuneration for
the financial year ended 31st March 2020 as well as their post-IPO annual
salary with effect from the IPO.

Note: Because of his membership of a concert party identified
by the Panel on Takeovers and Mergers and disclosed at the
time of the IPO the Chief Executive is unable to participate
in Group share option plans. Several members of the wider
senior management team are similarly constrained. Details
of the concert party are set out in the company’s admission
document which is available on the company’s website
(www.brickabilitygroupplc.com).

Purpose and link to
strategy

Operation

Maximum potential value

Performance conditions

Base salary
The provision of a com-
petitive, fixed salary that
attracts and retains key
individuals reflecting their
experience and role.

Benefits
To provide market benefits
on a cost-effective basis.

Pension
To assist executive
directors in providing
for retirement where this
is considered an aid in
attracting and retaining
the individual.

Annual bonus
To recognise an executive’s
achievement of annual
objectives that support
the Group’s strategy and
financial well-being.

Share plans
To encourage value
creation by way of share
price growth through the
delivery of shares.
The purpose of the LTIP
is to provide meaningful
awards based upon
demanding performance
criteria that provide
a significant incentive
to grantees that is
aligned with our
shareholders’ interests.

To be reviewed on an annual basis having
regard to our competitors, industry and needs
as well as pay levels elsewhere within the
Group, its size and complexity.

Total salaries paid during the
period are set out on page
44. Changes in the scope of
responsibilities or role may
require an adjustment to
salary levels.

Assessment of personal and corpo-
rate performance.

A car allowance, private medical insurance
and reimbursement for reasonable business
expenses. Other benefits may be offered in
line with market practice if it is considered
appropriate to do so.

Our policy is to provide a contribution (or cash
allowance in lieu) to a personal pension plan
as a capped proportion of basic salary if it is
considered appropriate to do so.

The maximum potential value
is the cost to the company in
providing these benefits.

Not applicable.

The Chief Executive Officer
does not receive a pension
contribution or allowance.
The Chief Financial Officer
receives a contribution to a
personal pension plan of
10% of his basic salary.

The current performance targets were set
prior to the establishment of the committee.
Going forward the committee will consider
annual bonus targets as part of its review of
remuneration policy.

Each executive director is
entitled to receive a cash
bonus of up to 50% of basic
salary on the attainment of
performance objectives.

The Remuneraion Committee reviews
the performance measures annually.

The Chief Financial Officer as part of the
IPO arrangements received a grant under
the company’s employee share option plan
and an award under the LTIP that has still
to be issued.

Grants may not normally exceed 200% of the
grantee’s base salary.

Grants are the subject of discretionary good
leaver/bad leaver provisions and, in the case
of the [LTIP], malpus and clawback provisions.

Further details of the share plans and their
operation are set out on note 35 of the
Financial Statements.

Subject to exercise or vesting,
the market value of the
shares the subject of the
grant less any cost payable
by the grantee on exercise
or vesting. Under the LTIP, a
grantee maybe entitled to a
dividend equivalent to the
value of dividends paid on a
vested share had it been in
issue from the date of
the grant.

Options granted under the company
share plans may be subject to
performance conditions. The options
granted during the period under the
employee share option plan were
granted prior to the IPO and are not
subject to performance conditions.

Our policy for grants under the
LTIP is that they are the subject of
performance conditions which will
be measured. Performance conditions
are divided equally between two
metrics; compound annual growth in
adjusted EBITDA and compound annual
growth in total shareholder return.

NON-EXECUTIVE DIRECTORS’ REMUNERATION (INCLUDING THAT OF THE CHAIRMAN)
The table below summarises the key elements for the period of our non-executive directors’ remuneration; they remain as disclosed at the IPO.
The tables set out on page 44 and 45 set out our non-executive directors total remuneration for the financial year ended 31st March 2020 as
well as their annual fees with effect from the IPO.

DIRECTORS’ CURRENT SERVICE CONTRACTS AND TERMS OF ENGAGEMENT
Each executive director has a service contract with an indefinite term.

The tables set out on page 44 and 45 show our directors total
remuneration for the financial year ended 31st March
2020 and, for additional clarity, each of our directors’
annual salary or fee applicable from the IPO.

In the event of termination, each executive director’s service contract
provides for an amount equal to the executive’s gross salary
(including any declared bonus) and benefits receivable during the
notice period. Each executive director’s appointment is subject to
re-election in accordance with the company’s articles of association
and non-competition and non-solicitation covenants for a period of
12 months following termination of his employment. No benefits are
provided following termination.

Save as noted, each non-executive director was appointed under a
letter of appointment on 21st August 2019. Mr Simpson’s services
are provided through a consultancy arrangement which was also
made on 21st August 2019 the terms of which, for the purposes
of this report, are equivalent to the other non-executives’ terms of
appointment. Each non-executive director is appointed for an initial
term of three years subject to re-election in accordance with the
company’s articles of association, applicable corporate governance
rules and regulatory requirements. Each appointment is subject to
one months’ notice by either party. No non-executive or their service
company is entitled to compensation in the event of a termination of
services or failure to be re-elected by shareholders.

C O R P O R A T E G O V E R N A N C E

Executive directorRoleDate of service contractNotice periodAlan SimpsonChief executive Officer21 August 2019Up to 6 months by either party.Stuart OverendChief Financial Officer21 August 2019Up to 6 months by either party.Purpose and link to strategyOperationMaximum potential valuePerformance conditionsBase feeTo provide competitive fixed fees so as to (a) procure and retain the appropriate skills and experience required and (b) expected time commitment.Non-executive fees are reviewed on a periodic basis. Fees payable to non-executives are a matter for the chairman (save in respect of his own fee) and executive members of the Board.Fees paid during the period are set out on page 44 and 45.Assessment of personal and corporate performance.Benefits and incentivesThe provision of market benefits on a cost-effective basis.Reimbursement for reasonable business expenses.Save as noted above, non-executives do not receive any benefits provided to Group employees or otherwise. No non-executive director participates in any bonus, incentive or share plan provided by the Group.The maximum potential value is the cost to the company in providing these benefits.Not applicable.Directors’ remuneration
in the year ended 31st
March 2020

The aggregate directors’ remuneration paid by Group members were as follows:

Each individual director’s total remuneration paid over the period by Group members is summarised below together with a total
comparison for the financial year ended 31st March 2019.

** Part time for the year ending 31 March 2019.

Prior to the IPO a Group company provided a loan to Mr Stuart Overend of £838,584 and Mr John Richards of £139,764 to
purchase shares in the Group as disclosed in the Admission document. The loans are unsecured and interest free and
repayable on the sale of the shares.

The tables on page 44 and 45 have been audited.

Year ended 31st March 2020£’000Year ended 31st March 2019£’000Aggregate remuneration (net of pension contributions)9301,268Aggregate pension contributions2685DirectorSalary or fee£’000Taxable benefits£’000Bonus£,000Pension contributions£’000Total Year ended 31st March 2020£’000Total Year ended 31st March 2019£’000ExecutiveA.J. Simpson380380-463346S.J. Overend260-5526341137**Non-executiveG.W.K. Beale32---32C.S. Norman29---2936J. Richards59---5936D. Simpson32 ---32During the period Mr Stuart Overend received a grant of options under the company’s employee share option plan resulting in
options over 72,443 shares. The grant was made prior to the IPO as part of a wider grant to Group employees in August 2019
in anticipation of the IPO, none of which were the subject of performance conditions and which are further described at note 35 of
the Financial Statements.

No share options were exercised by directors in the period and there were no gains made by directors from other long term
incentive schemes.

The table below sets out the annual salary or fee of each director under their current service contracts or terms of engagement,
in each case being those entered into on 21st August 2019. The core terms of these contracts and terms of engagement are
summarised on page 43.

Base salary or fee
£’000

Potential annual bonus (maximum)

50%

400

275

Director

Executive

A.J. Simpson

S.J. Overend

Non-executive

G.W.K. Beale

C.S. Norman

J. Richards

D. Simpson

Note: That these terms may change in
the event of a review or change of role or
responsibility prior to their annual review.
No such change occurred in the period.

C O R P O R A T E G O V E R N A N C E

Share plans
The company operates two share plans, the Brickability 2019 Share Option Plan
(employee share option plan) and the Brickability Group plc Long Term Incentive
Plan 2019 (LTIP). Grants made under the share plans may be made to selected
employees and full time directors of Group members. The operation of both plans
are overseen by the remuneration committee. Grants under the share plans,
including grants under any other share based incentive plan that may be adopted by
the Group, may not exceed 10% of the company’s issued share capital in any ten year
period. No other share based plans are currently operated by Group members.

The employee share option plan was adopted
on 2nd August 2019. As part of a corporate
reorganisation conducted prior to the IPO,
options over the equivalent of 3,681,311
shares under the employee share option
plan were granted effective as at the IPO
to Group employees including members
of the senior management team. These
options are exercisable at an effective
exercise price of 41p between the third and
tenth anniversary of grant 2nd August
2019) subject to the grantee remaining
an employee but are not subject to
performance conditions.
The LTIP provides for the grant to selected
employees and full time directors of Group
members. Grants may not be made over
shares having a market value in excess of
200% of a grantee’s salary in a financial
year. Grants may take the form of options
(which must be exercised within ten years of
grant) with a nominal or nil exercise price or
as an award of conditional rights to acquire

shares. At the time of the IPO awards were
proposed to be granted on or shortly after
the company’s IPO. The proposed awards
were to be the subject of performance
conditions, 50% of which to be based on
compound annual growth in adjusted
EBITDA and 50% based on compound
annual growth in total shareholder return,
in each case, of between 6% and 10%
over a three year performance period
measured on a pro rata straight-line basis.
The proposed awards were the subject
of revised proposals and have yet to be
granted. It is the intention of the committee
that awards or options the subject of
appropriate performance conditions be
granted as soon as possible.
Grants under the share plans are the
subject of discretionary good/bad leaver
provisions and, in the case of the LTIP,
malpus and clawback arrangements.

This report has been approved by each of the Remuneration Committee and the
Board and signed on behalf of both by:

Giles Beale, Chair of the Remuneration Committee

A B e

REPORT OF THE DIRECTORS
The Directors have pleasure in presenting their Annual Report
on the affairs of the Group, together with the audited Financial
Statements of the Company and its subsidiary undertakings for
the year ended 31 March 2020. The Corporate Governance
Statement set out on pages 34 to 35 forms part of this report.
The Company is a public limited company, registered in England
and Wales and is listed on AIM of the London Stock Exchange.
The Company has been permanently domiciled in the UK
since incorporation and is the ultimate parent company of the
Brickability Group.

As permitted by Paragraph 1A of Schedule 7 to the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 certain matters which are required to be
disclosed in the Report of the Directors have been omitted as
they are included in the Strategic Report on pages 1 to 28. These
matters relate to a full review of the performance of the Group for
the year, current trading and future outlook.

Information about the use of financial instruments by the
Company and its subsidiaries is given in note 32 of the Financial
Statements. This note also includes information of financial risk
including an assessment of the Group’s exposure to financial risk.

REVIEW OF THE BUSINESS
The Strategic report on pages 4 to 29 provides an operating
and financial review of the business, the Group’s trading for the
year ended 31 March 2020, as well as risk management and an
indication of future developments.

RESULT AND DIVIDEND
The Group has reported its Consolidated Financial Statements in
accordance with International Financial Reporting Standards
as adopted by the European Union applying FRS101 reduced
disclosure framework for the Company. The Group’s results for the
year are set out in the Consolidated statement of comprehensive
income on page 60.

The Directors recommend a final dividend for the year of 1.085p
per share payable on 23 October 2020 (2019: 0p per share). An
interim dividend of 0.8678p was paid during the year (2019: 0p).
The estimated final dividend to be paid is £2.5m (2019: £0m).

DIRECTORS
The Directors of the Company are listed on pages 30 and
31 together with biographical and Committee membership
details. David Simpson and Giles Beal joined the Board on 31
July 2019 and 21 August 2019 respectively. All other Directors
served throughout the year ended 31 March 2020. Directors’
remuneration, share options, long-term executive plans, pension
contributions, benefits and interests are set out in the Directors’
remuneration report on pages 39 to 46.

In accordance with our commitment to good corporate
governance practice that is relevant to our business, the Board
has voluntarily adopted the policy that in normal circumstances all
continuing Directors stand for re-election on an annual basis
in line with the recommendations.

The Company maintains liability insurance for its Directors
and Officers, the Company’s articles of association allow the
indemnification of Directors out of the assets of the Company to
the extent permitted by law. These indemnities came into force on
29 August 2019 and remain in force as at the date of this Annual
Report and Accounts.

SHARE CAPITAL AND SUBSTANTIAL
SHAREHOLDINGS
Full details of the authorised and issued share capital of the
Company are set out in note 33 to the Financial Statements.
At 31 August 2020, the latest practicable date prior to the
approval of this document, the Company had been notified of the
following interests amounting to 3% or more of the voting rights
attaching to the Company’s issued share capital:
Significant Shareholder as at 31 August 2020.

Shareholder Percentage of Enlarged Share Capital No. of Ordinary Shares as of 31 August 2020

15.9%

36,595,012
Alan Jonathan Simpson

13.4%

30,798,898
Paul Michael Hamilton

11.1%

25,500,149
Liontrust Asset
Management

6.0%

13,858,492
Sarah Simpson

5.0%

11,602,900
Otus Capital
Management

4.3%

9,897,133
BlackRock Investment
Management

4.0%

9,230,000
Soros Fund
Management

3.7%

8,545,588
Canaccord Genuity
Wealth Management

5.0%

11,548,476
Arnold Bernard
Geradus van Huet

3.3%

7,500,000
Ruffer

C O R P O R A T E G O V E R N A N C E

SIGNIFICANT AGREEMENTS
SIGNIFICANT AGREEMENTS
(CHANGE OF CONTROL)
(CHANGE OF CONTROL)
The Company is required to disclose any significant
The Company is required to disclose any significant
agreements that take effect, alter or terminate on a change
agreements that take effect, alter or terminate on a change
of control of the Company following a takeover bid.
of control of the Company following a takeover bid.
The Company has committed debt facilities all of which are
The Company has committed debt facilities all of which are
directly or indirectly subject to change of control provisions,
directly or indirectly subject to change of control provisions,
albeit the facilities do not necessarily require mandatory
albeit the facilities do not necessarily require mandatory
prepayments on a change of control.
prepayments on a change of control.
In the event of a takeover or other change of control
In the event of a takeover or other change of control
outstanding awards under the Group share plans will
outstanding awards under the Group share plans will
become excercisable.
become excercisable.

EMPLOYEE INVOLVEMENT PROCESS
EMPLOYEE INVOLVEMENT PROCESS
The Directors believe that the involvement of employees is
The Directors believe that the involvement of employees is
an important part of the business culture. Employees are
an important part of the business culture. Employees are
its most important asset and contribute to the successes
its most important asset and contribute to the successes
achieved to date (view our Corporate Responsibility
achieved to date (view our Corporate Responsibility
statement on pages 28 and 29).
statement on pages 28 and 29).

EQUAL OPPORTUNITIES
EQUAL OPPORTUNITIES
The Group is committed to eliminating discrimination and
The Group is committed to eliminating discrimination and
encouraging diversity. Its aim is that each employee is able
encouraging diversity. Its aim is that each employee is able
to perform to the best of their ability. The Group will not
to perform to the best of their ability. The Group will not
make assumptions about a person’s ability to carry out
make assumptions about a person’s ability to carry out
their work, for example on their ethnic origin, gender, sexual
their work, for example on their ethnic origin, gender, sexual
orientation, marital status, religion or beliefs, age
orientation, marital status, religion or beliefs, age
or disability.
or disability.

DISABLED EMPLOYEES
DISABLED EMPLOYEES
In the event of an employee becoming disabled, every effort
In the event of an employee becoming disabled, every effort
is made to retain them in order that their employment with
is made to retain them in order that their employment with
the Group may continue. It is the policy of the Group that
the Group may continue. It is the policy of the Group that
training, career development and promotion opportunities
training, career development and promotion opportunities
should be available to all employees.
should be available to all employees.

ENVIRONMENTAL POLICY
ENVIRONMENTAL POLICY
Maintaining and improving the quality of the environment
Maintaining and improving the quality of the environment
in which we live is an important concern for the Group,
in which we live is an important concern for the Group,
our staff, customers, suppliers, sub-contractors and
our staff, customers, suppliers, sub-contractors and
communities. We have adopted high standards of
communities. We have adopted high standards of
environmental practices and aim to minimise our impact
environmental practices and aim to minimise our impact
on the environment wherever this is practical. In particular,
on the environment wherever this is practical. In particular,
we comply with, and endeavour to exceed the requirements
we comply with, and endeavour to exceed the requirements
of all laws and regulations relating to the environment.
of all laws and regulations relating to the environment.
For further details see our Corporate Responsibility
For further details see our Corporate Responsibility
statement on pages 28 and 29.
statement on pages 28 and 29.

48
48

HEALTH AND SAFETY
HEALTH AND SAFETY
The Group recognises the importance of
The Group recognises the importance of
maintaining high standards of health and
maintaining high standards of health and
safety for everyone working within our
safety for everyone working within our
business and also for anyone who may be
business and also for anyone who may be
affected by our business. Further details on
affected by our business. Further details on
health and safety are given on page 28.
health and safety are given on page 28.

POLITICAL AND CHARITABLE
POLITICAL AND CHARITABLE
DONATIONS
DONATIONS
Donations of £14,283 were made by the
Donations of £14,283 were made by the
Group for charitable purposes during the
Group for charitable purposes during the
year (2019: £17,000). The Group
year (2019: £17,000). The Group
does not make political donations.
does not make political donations.
Further details on our charitable
Further details on our charitable
initiatives are given on page 28.
initiatives are given on page 28.

FINANCIAL RISK
FINANCIAL RISK
MANAGEMENT
MANAGEMENT
Information in respect of the financial
Information in respect of the financial
risk management of the Group, is
risk management of the Group, is
contained in note 27 on borrowings and
contained in note 27 on borrowings and
note 32 on financial instruments of the
note 32 on financial instruments of the
financial statements.
financial statements.

RELATED PARTY
RELATED PARTY
TRANSACTIONS
TRANSACTIONS
Any related party transactions
Any related party transactions
required to be disclosed under the
required to be disclosed under the
AIM rules are disclosed in note 37
AIM rules are disclosed in note 37
to the Financial Statements.
to the Financial Statements.

MODERN SLAVERY ACT
MODERN SLAVERY ACT
Our Anti-slavery policy, which sets out
Our Anti-slavery policy, which sets out
our commitment to preventing modern
our commitment to preventing modern
slavery and human trafficking from
slavery and human trafficking from
occurring within any part of our business
occurring within any part of our business
and supply chain, is available on our
and supply chain, is available on our
website www.brickabilitygroupplc.com.
website www.brickabilitygroupplc.com.

STATEMENT, AS TO
STATEMENT, AS TO
DISCLOSURE OF
DISCLOSURE OF
INFORMATION TO AUDITORS
INFORMATION TO AUDITORS
The Directors in office on 11th September
The Directors in office on 11th September
2020 have confirmed that, as far as
2020 have confirmed that, as far as
they are aware, there is no relevant audit
they are aware, there is no relevant audit
information of which the auditor is unaware.
information of which the auditor is unaware.
Each of the Directors have confirmed that
Each of the Directors have confirmed that
they have taken all steps that they ought to
they have taken all steps that they ought to
have taken as Directors in order to make
have taken as Directors in order to make
themselves aware of any relevant audit
themselves aware of any relevant audit
information and to establish that it has been
information and to establish that it has been
communicated to the auditor.
communicated to the auditor.

FUTURE DEVELOPMENTS
FUTURE DEVELOPMENTS
The Board intends to continue to pursue
The Board intends to continue to pursue
its business strategy as outlined in the
its business strategy as outlined in the
Strategic report on pages 4 to 28.
Strategic report on pages 4 to 28.

ANNUAL GENERAL MEETING
ANNUAL GENERAL MEETING
The AGM will be held on 29th September
The AGM will be held on 29th September
2020 at 11am at Queensgate House,
2020 at 11am at Queensgate House,
Cookham Road, Bracknell.
Cookham Road, Bracknell.

GOING CONCERN
GOING CONCERN
The Directors are satisfied that the Group
The Directors are satisfied that the Group
has adequate resources to continue in
has adequate resources to continue in
operation for the foreseeable future and
operation for the foreseeable future and
that it is appropriate to prepare Financial
that it is appropriate to prepare Financial
Statements on the going concern basis.
Statements on the going concern basis.
Further details are given in page 26.
Further details are given in page 26.

APPROVAL
APPROVAL
This Directors’ report was approved by the
This Directors’ report was approved by the
Board of Directors and signed on behalf of
Board of Directors and signed on behalf of
the Board on 15 September 2020.
the Board on 15 September 2020.

Stuart J. Overend
Director & Company Secretary
15 September 2020

C O R P O R A T E G O V E R N A N C E

49
49

Statement of Directors’ Responsibilities
The directors are responsible for preparing the Strategic Report, the Report
of the Directors and the Financial Statements in accordance with applicable
law and regulations.

Company law requires the directors to prepare Financial
Statements for each financial year. Under that law the Directors
have prepared the Group and Company Financial Statements
in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union.
International Accounting Standard 1 requires that IFRS Financial
Statements present fairly for each financial year the Group

and Company financial position, financial performance and
cash flows. This requires the fair representation of the effects of
transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, income
and expenses set out in the International Accounting Standards
Board’s “Framework for the preparation and presentation of
Financial Statements”.

In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS.
Directors are also required to:

• properly select and apply accounting policies;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether IFRS as adopted by the European Union have been followed subject to any material departures disclosed
and explained in the Financial Statements;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and
understandable information; and
• provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users
to understand the impact of particular transactions, other events and conditions on the entity’s financial position and
financial performance.

The Directors have elected to prepare the Company Financial Statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union. The Company Financial Statements are required by law to give a true and fair
view of the state of affairs of the Company.

In preparing these Financial Statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether IFRS as adopted by the European Union have been followed subject to any material departures disclosed
and explained in the Financial Statements; and
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial
position of the Group and the Company and enable them to ensure that the Group and the Company Financial Statements comply
with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s
website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from
legislation in other jurisdictions.
These statements were approved by the Board of Directors on 15 September 2020 and signed on its behalf by:

Alan J. Simpson
Chief Executive

Stuart J. Overend
Chief Financial Officer

Independent Auditor’s Report
to the members of Brickability Group PLC

Opinion

We have audited the financial statements of Brickability
Group plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 March 2020 which comprise
the Consolidated Statement of Profit or Loss and Other
Comprehensive Income, the Consolidated and parent
Company Balance Sheet, the Consolidated and parent
Company Statement of Changes in Equity, the Consolidated
and parent Company Statement of Cash Flows and notes to
the financial statements, including summaries of significant
accounting policies applicable to the consolidated and parent
company financial statements.

In our opinion:
• the financial statements give a true and fair view of the
state of the Group’s and of the Parent Company’s affairs
as at 31 March 2020 and of the Group’s profit for the year
then ended;

• the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;

The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable
law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The financial reporting
framework that has been applied in the preparation of the
Parent Company financial statements is applicable law and
United Kingdom Accounting Standards, including Financial
Reporting Standard 101 Reduced Disclosure Framework,
(United Kingdom Generally Accepted Accounting Practice).

• the Parent Company financial statements have been
properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and

• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.

S T R A T E G I C R E P O R T

Independent Auditor’s Report
to the members of Brickability Group PLC

Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the Group’s or the Parent Company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.

Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Risk – Manual adjustments to Revenue

Our response to the risk

Risk of inappropriate revenue recognition through
manual adjustments.

See note 3.4 to the financial statements for the directors’
disclosures of the related revenue recognition accounting policies.

We performed end to end process notes of the Group’s sales cycles for
all revenue streams. From performing this audit procedure we generated
an understanding of the IT systems in the Group used to process revenue
transactions, the degree and significance of management intervention and
the identification of key controls operated within the Group.

In all three of the key divisions, we consider that there is a risk
of inappropriate revenue recognition arising from manual
adjustments to automatically generated figures or from
inaccurate calculation of adjustments relating to rebates and
warranties.

The majority of the Groups’ brick revenues are supported by
a control which does not permit a sales invoice to be made
unless there is a corresponding purchase.

This therefore highlights the principal risk of fraud or error
being derived from manual journals made by management.

Regarding the roofing and heating, plumbing & joinery
divisions, the principal risk of fraud or error exists from manual
adjustments to revenue arising as a result of period end
adjustments for accruals or deferrals.

We identified and investigated any instances of unusual manual entries made
to revenue accounts made by management by assessing the journal entries
made to revenue accounts;

For revenues recognised in the period, we agreed a sample of invoices raised
through to supporting documentation (goods despatch documentation,
corresponding purchase order from 3rd party supplier and where
appropriate, cash receipts from the customer) and gained assurance over the
appropriateness over the occurrence of the revenue recognised, investigating
any manual adjustments made to these items.

We agreed a sample of sales invoices recognised around the period end
through to supporting third party documentation, to confirm that the Group
has satisfied its performance obligations and revenue was appropriately
accrued or deferred.

We reviewed rebate agreements key to the Group with respect to the
requirements of IFRS 15, variable consideration. We challenged management
on the appropriateness of any estimates made, and where appropriate,
agreed the settlement of these rebates to post period end documentation.

We reviewed the key service agreements held within the roofing division,
Group for the existence of any non-standard warranty arrangements which
may give rise to separate performance obligations in the context of IFRS 15.

Key observations communicated to the Audit Committee:
We did not identify any material misstatements regarding manual adjustments to revenue.

Risk – Existence of Inventory

Our response to the risk

There is a risk that inventory does not exist or cannot be
verified at the balance sheet date.

We obtained an understanding of the nature and timing of stock count
procedures performed by the group for each different stock location.

The emergence and spread of Coronavirus is having an effect
on the operations of many businesses in the UK. The UK
entered lockdown on the 23 March 2020, at which point only
a small proportion of the Group’s annual stock takes had taken
place. These procedures were deferred until such a time that
restrictions were eased and when management considered it
to be safe for employees to return to operational sites.

As a result of the length of time between the year-end date
and the date of the annual stock counts, we considered
that there was an increased risk of misstatement in the
determination of the Group’s inventory holding as at
31 March 2020.

We performed test counts at a sample of these significant locations and at
a time when it was deemed practical and safe for BDO staff to be able to
access the sites after the easing of restrictions from the UK lockdown.

We audited management’s roll back of the purchases and sales and other
stock movements from the date of the count (after year end) to the year-end
for all perpetual stock systems.

We performed additional procedures to obtain evidence for the movement
of purchases and sales and other stock movements for those not on
accounted for on a perpetual stock system, including an understanding of
management’s procedures for accounting for these transactions and we
assessed the accuracy of the audit trail presented to us by management.

We obtained confirmations of stock held on a consignment basis or at
warehouses managed by third party logistics companies and compared these
confirmations to the quantities included in the financial statements.

Key observations communicated to the Audit Committee:
We did not identify any material misstatements regarding the existence of inventory.

Risk – Acquisition Accounting

Our response to the risk

Accounting for acquisitions under IFRS 3 Business
combinations can represent an inherently judgemental
exercise. In particular, judgement is required in
determining the appropriate assumptions to use to
value the acquired customer relationships and the
brands purchased by Brickability Group.

Refer to note 21 for detailed disclosures in relation to these items.

Management are required to fair value the assets and liabilities
to account for the acquired entities under IFRS 3, business
combinations. This includes identifying and valuing any
intangible assets as part of the purchase price allocation method
detailed in the standard. This involves an area of significant and
inherent management judgement.

In particular, judgement is required in determining the
appropriate assumptions used to value the acquired customer
relationships and the brands. It also requires judgement in
defining the cash generating units (“CGU”) under which future
impairment testing is required.

We obtained and reviewed the key contracts associated with the acquisitions,
including the sale and purchase agreement, to confirm that significant terms
and conditions were appropriately accounted for.

With support of BDO business valuations specialists, we evaluated
management’s determination of the fair values of the assets and liabilities
acquired and in particular the valuation of intangible assets. We audited the key
assumptions made by management such as the useful economic lives, discount
rates applied and the forecast future cash flows within the identified CGU.

We audited the accuracy and completeness of the current and deferred
tax balances included in the acquisition balance sheet (where applicable),
including the impact on the tax balances of the fair value adjustments applied
in the acquisition accounting.

We considered the disclosures made in respect of the acquisitions with
reference to the requirements of IFRS 3 business combinations.

Key observations communicated to the Audit Committee:
We consider the judgements made in the identification and valuation of the intangible assets and in defining the
CGUs to be reasonable and we consider the disclosures made in the financial statements to be appropriate.

S T R A T E G I C R E P O R T

Independent Auditor’s Report
Independent Auditor’s Report
to the members of Brickability Group PLC
to the members of Brickability Group PLC

Risk - Carrying value of goodwill
and intangible assets

Our response to the risk

The carrying amounts of the Group’s goodwill
The carrying amounts of the Group’s goodwill
and acquired intangible assets are assessed
and acquired intangible assets are assessed
each year for impairment against potential
each year for impairment against potential
future cash flows. There is a risk that the year-
future cash flows. There is a risk that the year-
end values assigned to goodwill and intangible
end values assigned to goodwill and intangible
assets are materially misstated.
assets are materially misstated.

As this is subjective and judgemental, this
increases the risk of error.

Refer to note 4 to the financial statements for the
Refer to note 4 to the financial statements for the
directors’ disclosures on the critical accounting
directors’ disclosures on the critical accounting
estimates and judgements related to impairment.
estimates and judgements related to impairment.

As a consequence of the Group’s growth strategy a
As a consequence of the Group’s growth strategy a
significant value of goodwill and intangible assets
significant value of goodwill and intangible assets
has arisen from acquisitions. There is a risk that cash
has arisen from acquisitions. There is a risk that cash
generating units (‘CGUs’) may not be identified
generating units (‘CGUs’) may not be identified
correctly as well as not achieving the anticipated
correctly as well as not achieving the anticipated
business performance to support the carrying value
business performance to support the carrying value
of these assets. This risk has been heightened by
of these assets. This risk has been heightened by
uncertainty over future trading prospects and cash
uncertainty over future trading prospects and cash
flows caused by the Covid-19 pandemic. This may
flows caused by the Covid-19 pandemic. This may
lead to an impairment charge that has not been
lead to an impairment charge that has not been
recognised by management.
recognised by management.

We examined management’s methodology for reviewing impairments and their models for
We examined management’s methodology for reviewing impairments and their models for
assessing the valuation of significant goodwill and intangible balances to understand the
assessing the valuation of significant goodwill and intangible balances to understand the
composition of management’s future cash flow forecasts, and the process undertaken to
composition of management’s future cash flow forecasts, and the process undertaken to
prepare them.
prepare them.

We assessed management’s determination of the CGUs under which these cash flows are
We assessed management’s determination of the CGUs under which these cash flows are
grouped. These procedures included confirming the underlying cash flows were consistent
grouped. These procedures included confirming the underlying cash flows were consistent
with the Board approved budgets, which reflected the forecasted impact of COVID-19 on
with the Board approved budgets, which reflected the forecasted impact of COVID-19 on
the business and reasonableness of the assumptions. We re-performed the calculations in
the business and reasonableness of the assumptions. We re-performed the calculations in
the model to test the mathematical integrity.
the model to test the mathematical integrity.

For all CGUs we calculated the degree to which the key assumptions would need to
For all CGUs we calculated the degree to which the key assumptions would need to
fluctuate before an impairment was triggered and considered the likelihood of this
fluctuate before an impairment was triggered and considered the likelihood of this
occurring. In respect of the CGUs identified as having impairment indicators or lower levels
occurring. In respect of the CGUs identified as having impairment indicators or lower levels
of headroom we performed detailed testing with support from our valuation specialists to
of headroom we performed detailed testing with support from our valuation specialists to
critically assess and corroborate the key inputs of the forecast cash flows including:
critically assess and corroborate the key inputs of the forecast cash flows including:

An assessment of the discount rate used by obtaining the underlying data used in the
An assessment of the discount rate used by obtaining the underlying data used in the
calculation and benchmarking it against comparable organisations and market data;
calculation and benchmarking it against comparable organisations and market data;

A consideration of the length of the period for which cash flows were modelled and the
A consideration of the length of the period for which cash flows were modelled and the
growth rates assumed in the cash flows as well as the terminal value, by comparing them to
growth rates assumed in the cash flows as well as the terminal value, by comparing them to
economic and industry forecasts; and
economic and industry forecasts; and

An analysis of the historical accuracy of budgets to actual results to determine whether
forecast cash flows are reliable based on past experience and ensuring that sensitivities
applied to the models are in excess of any forecasting inaccuracy.

We considered the disclosures in respect of goodwill and intangibles with reference to the
We considered the disclosures in respect of goodwill and intangibles with reference to the
requirements of IAS 36 and confirmed their consistency with the audited impairment models.
requirements of IAS 36 and confirmed their consistency with the audited impairment models.

Key observations communicated to the Audit Committee:
Key observations communicated to the Audit Committee:
We consider that the assumptions used in the impairment models including the cash flow forecasts, the discount rate
We consider that the assumptions used in the impairment models including the cash flow forecasts, the discount rate
applied and management’s assessment of the identification of CGUs was appropriate.
applied and management’s assessment of the identification of CGUs was appropriate.

54
54

Risk – Going Concern

Our response to the risk

There is a risk that management’s forecasts do not
There is a risk that management’s forecasts do not
adequately capture reasonably possible scenarios
adequately capture reasonably possible scenarios
which may cast doubt on the Group’s ability to
which may cast doubt on the Group’s ability to
maintain compliance with its financial covenants and
maintain compliance with its financial covenants and
continue as a going concern.
continue as a going concern.

Refer to pages 26 to 27 of the Strategic Report for the directors’
Refer to pages 26 to 27 of the Strategic Report for the directors’
assessment of going concern and note 4 for the directors’
assessment of going concern and note 4 for the directors’
disclosures for the critical accounting estimates and judgements.
disclosures for the critical accounting estimates and judgements.

The emergence and spread of Covid-19 has had and will
The emergence and spread of Covid-19 has had and will
continue to have, an effect on the operations of many businesses
continue to have, an effect on the operations of many businesses
in the UK. The UK entered lockdown on the 23 March 2020,
in the UK. The UK entered lockdown on the 23 March 2020,
which had a material impact on the operation of the business
which had a material impact on the operation of the business
and the trading activities during this period.
and the trading activities during this period.

Following the pandemic and the economic uncertainty which
Following the pandemic and the economic uncertainty which
quickly followed, there is heightened risk that Management’s
quickly followed, there is heightened risk that Management’s
forecasts do not adequately capture reasonably possible
forecasts do not adequately capture reasonably possible
scenarios which may cast doubt on the Group’s ability to
scenarios which may cast doubt on the Group’s ability to
maintain compliance with its financial covenants and continue
maintain compliance with its financial covenants and continue
as a going concern.
as a going concern.

We audited the Group’s trading and cash flow forecast for at least 12 months
We audited the Group’s trading and cash flow forecast for at least 12 months
from the planned sign-off of the consolidated financial statements. We
from the planned sign-off of the consolidated financial statements. We
agreed the mathematical accuracy of the forecasts made by management;
agreed the mathematical accuracy of the forecasts made by management;

We audited the key management assumptions in relation to future sales
We audited the key management assumptions in relation to future sales
performances in each part of the business, capital expenditure, working
performances in each part of the business, capital expenditure, working
capital movements, cost savings initiatives included in the forecast and
capital movements, cost savings initiatives included in the forecast and
assumptions included in relation to the impact of Covid-19.
assumptions included in relation to the impact of Covid-19.

Where possible, we performed an assessment of management’s historical
Where possible, we performed an assessment of management’s historical
ability to forecast by reviewing previous forecasts made and track current year
ability to forecast by reviewing previous forecasts made and track current year
performance against the business cases and forecasts previously presented
performance against the business cases and forecasts previously presented
to the Board.
to the Board.

We assessed the liquidity available to the Group and the performance
against the available credit facilities and its relevant covenants.

We considered the Group’s ability to be able to comply with any covenants
We considered the Group’s ability to be able to comply with any covenants
and tested management’s calculations of forecast covenant compliance.
and tested management’s calculations of forecast covenant compliance.

We challenged the Board on the nature and appropriateness of the
We challenged the Board on the nature and appropriateness of the
sensitivities adopted in their going concern assessment and challenged
sensitivities adopted in their going concern assessment and challenged
management in light of the implications of Covid-19 that the sensitivities
management in light of the implications of Covid-19 that the sensitivities
adopted represent scenarios which are reasonably plausible in light of the
adopted represent scenarios which are reasonably plausible in light of the
current macro-economic uncertainty. We performed our own sensitivities and
current macro-economic uncertainty. We performed our own sensitivities and
stress testing over management’s models and review the likelihood of these
stress testing over management’s models and review the likelihood of these
circumstances arising.
circumstances arising.

We evaluated the adequacy of the directors’ disclosure of their basis for
determining that the going concern basis of preparation of the financial
statements is appropriate.

Our application of materiality
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions
of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements below these levels will
of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements below these levels will
not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

We determined materiality for the financial statements as a whole as follows:
We determined materiality for the financial statements as a whole as follows:

Group materiality £600,000
Group materiality £600,000
Basis for materiality 4.9% group profit before taxation
Basis for materiality 4.9% group profit before taxation

Rationale for the benchmark adopted: We consider
Rationale for the benchmark adopted: We consider
that statutory profit before tax is a key performance
that statutory profit before tax is a key performance
measure to the stakeholders of the entity and therefore
measure to the stakeholders of the entity and therefore
determined materiality based on this number.
determined materiality based on this number.

Parent company materiality £495,000
Parent company materiality £495,000
Basis of materiality 26% of net assets capped
Basis of materiality 26% of net assets capped
at 60% of group materiality
at 60% of group materiality

Rationale for benchmark adopted: The parent company does
Rationale for benchmark adopted: The parent company does
not recognise any external revenue therefore a net asset value
not recognise any external revenue therefore a net asset value
measure is considered appropriate as the company holds the
measure is considered appropriate as the company holds the
investments in subsidiaries and does not trade.
investments in subsidiaries and does not trade.

S T R A T E G I C R E P O R T

55
55

Independent Auditor’s Report
Independent Auditor’s Report
to the members of Brickability Group PLC
to the members of Brickability Group PLC

Our application of materiality (continued)
Our application of materiality (continued)
In considering individual account balances and classes of transactions we apply a lower
In considering individual account balances and classes of transactions we apply a lower
level of materiality (performance materiality) in order to reduce to an appropriately low
level of materiality (performance materiality) in order to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected misstatements
level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality. In setting the level of performance materiality we considered a
exceeds materiality. In setting the level of performance materiality we considered a
number of factors including the areas of estimation with the financial statements and
number of factors including the areas of estimation with the financial statements and
the type of audit testing to be completed. Group performance materiality was set at
the type of audit testing to be completed. Group performance materiality was set at
£400,000 and the Parent company performance materiality was set at £326,000
£400,000 and the Parent company performance materiality was set at £326,000
representing 65% of materiality.
representing 65% of materiality.

For each significant component in the group
For each significant component in the group
we allocated a planning materiality lower than
we allocated a planning materiality lower than
our overall group planning materiality in the
our overall group planning materiality in the
range of £118,000 to £495,000 with a similar
range of £118,000 to £495,000 with a similar
restriction of 65% for performance materiality.
restriction of 65% for performance materiality.
The materiality level was calculated by
The materiality level was calculated by
reference to a proportion of group materiality
reference to a proportion of group materiality
appropriate to the relative size and risk of the
appropriate to the relative size and risk of the
component concerned, based on revenue.
component concerned, based on revenue.

We agreed with the audit committee that we
We agreed with the audit committee that we
would report to the committee all individual
would report to the committee all individual
audit differences identified during the audit
audit differences identified during the audit
in excess of £14,000 for group purposes
in excess of £14,000 for group purposes
and £14,000 for the parent company only.
and £14,000 for the parent company only.
We also agreed to report differences below
We also agreed to report differences below
these thresholds that, in our view, warranted
these thresholds that, in our view, warranted
reporting on qualitative grounds.
reporting on qualitative grounds.

An overview of the scope of our audit
An overview of the scope of our audit
Our assessment of audit risk, our evaluation of materiality and our allocation of performance
Our assessment of audit risk, our evaluation of materiality and our allocation of performance
materiality determine our audit scope for each entity within the Group. Taken together, this enables
materiality determine our audit scope for each entity within the Group. Taken together, this enables
us to form an opinion on the consolidated financial statements. Our Group audit was scoped by
us to form an opinion on the consolidated financial statements. Our Group audit was scoped by
obtaining and understanding of the Group and its environment, including the Group’s system of
obtaining and understanding of the Group and its environment, including the Group’s system of
internal control, and assessing the risks of material misstatement in the financial statements at the
internal control, and assessing the risks of material misstatement in the financial statements at the
Group level.
Group level.

In determining the scope of our audit we considered the size and nature of each component within
In determining the scope of our audit we considered the size and nature of each component within
the group to determine the level of work to be performed at each in order to ensure sufficient
the group to determine the level of work to be performed at each in order to ensure sufficient
assurance was gained to allow us to express an opinion on the financial statements as a whole.
assurance was gained to allow us to express an opinion on the financial statements as a whole.

6 components were identified as significant components of the group (Brick-ability Limited, Brick
6 components were identified as significant components of the group (Brick-ability Limited, Brick
Services Limited, Crest Brick Slate & Tile Limited, Towelrads.com Limited, Crest Roofing Limited and
Services Limited, Crest Brick Slate & Tile Limited, Towelrads.com Limited, Crest Roofing Limited and
Brickability Group plc,) and were subject to a full scope audit by BDO LLP. The significant components
Brickability Group plc,) and were subject to a full scope audit by BDO LLP. The significant components
represent 67% of revenue, 111% of profit before taxation and 74% of net assets of the Group.
represent 67% of revenue, 111% of profit before taxation and 74% of net assets of the Group.

There are 22 other components within the Group that were not considered to be significant
There are 22 other components within the Group that were not considered to be significant
components. For these components, we performed other procedures, including analytical review,
components. For these components, we performed other procedures, including analytical review,
testing of consolidation journals, intercompany eliminations, enquiries of management to respond
testing of consolidation journals, intercompany eliminations, enquiries of management to respond
to any potential risks of material misstatement to the Group financial statements and substantive
to any potential risks of material misstatement to the Group financial statements and substantive
audit procedures on any individual balances or items considered significant with reference to the
audit procedures on any individual balances or items considered significant with reference to the
Group materiality threshold. These audit procedures performed increase the level of coverage
Group materiality threshold. These audit procedures performed increase the level of coverage
obtained from our audit over revenue, profit before taxation and net assets.
obtained from our audit over revenue, profit before taxation and net assets.

We obtained an understanding of the internal control environment related to the financial reporting
We obtained an understanding of the internal control environment related to the financial reporting
process and assessed the appropriateness, completeness and accuracy of the group journals and
process and assessed the appropriateness, completeness and accuracy of the group journals and
other adjustments performed on consolidation.
other adjustments performed on consolidation.

56
56

S T R A T E G I C R E P O R T

57
57

Independent Auditor’s Report
to the members of Brickability Group PLC

Other information
The Directors are responsible for the other information.
The other information comprises the information included
in the annual report, other than the financial statements and
our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the Directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
• the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been

received from branches not visited by us; or

• the Parent Company financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 50, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the
Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the
financial statements is located on the Financial Reporting
Council’s website: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.

Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.

Sarah Joannidi (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Bristol
15 September 2020

BDO LLP is a limited liability partnership
registered in England and Wales
(with registered number OC305127).

S T R A T E G I C R E P O R T

Financial Statements

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2020

All results relate to continuing operations.

Notes2020£’0002019 (Restated)£’000Revenue5187,126163,294Cost of sales (149,442)(130,577)Gross profit 37,68432,717Other operating income72696Administrative expenses(17,766)(14,540)Impairment losses on financial assets24(433)(542)Depreciation and amortisation (4,387)(3,555)Finance income117131Finance expense12(2,527)(4,489) Share of post-tax (loss)/ profit of equity accounted associates 22(32)(13)Fair value gains/ (losses)13(45)(1,135)Exceptional income142,000-Exceptional expenses14(2,407)-Profit before tax 812,1848,596Tax expense15(2,893)(2,141)Profit for the year and total comprehensive income9,2916,455Attributable to:Equity holders of the parent9,2916,455Earnings per shareBasic earnings per share174.79p4.51 pDiluted earnings per share174.77p4.51 pCONSOLIDATED BALANCE SHEET
31 MARCH 2020

These Financial Statements were approved by the Board of Directors and authorised for issue on 15 September 2020.
They were signed on its behalf by:

Alan J. Simpson Director
Stuart J. Overend Director

Company registration number: 11123804

F I N A N C I A L S T A T E M E N T S

Notes2020£’0002019 (Restated)£’000As at1 Apr 2018 (Restated)£’000Non-current assets Property, plant and equipment184,1733,5143,262Right of use asset286,3752,1731,617Intangible assets1978,05066,75367,216Investments in equity accounted associates223521,292636Deferred tax assets30205744300Trade and other receivables24391333146Total non-current assets 89,54674,80973,177Current assetsInventories239,7915,4225,031Trade and other receivables2436,56034,13727,770Cash and cash equivalents2527,26917,0015,346Total current assets73,62056,56038,147Total assets163,166131,369111,324Current liabilitiesTrade and other payables26(41,912)(35,094)(23,034)Current income tax liabilities(277)(1,688)(1,798)Loans and borrowings27-(3,053)(3,158)Lease liabilities28(776)(428)(340)Total current liabilities(42,965)(40,263)(28,330)Non-current liabilitiesTrade and other payables26(2,402)(4,507)(7,095)Loans and borrowings27(24,912)(62,335)(59,718)Lease liabilities28(5,802)(1,705)(1,259)Derivative financial liabilities -(106)-Provisions29(1,389)(1,975)(2,338)Deferred tax liabilities30(5,631)(4,092)(4,453)Total non-current liabilities(40,136)(74,720)(74,863)Total liabilities(83,101)(114,983)(103,193)Net assets80,06516,3868,131EquityCalled up share capital332,30544Share premium account3449,9998,9707,170Capital redemption reserve 342--Share-based payment reserve3456--Merger reserve341,2451,2451,245Retained earnings3426,4586,167(288)Total equity80,06516,3868,131Financial Statements

COMPANY BALANCE SHEET
31 MARCH 2020

Non-current assets

Investment in subsidiaries

Trade and other receivables

Total non-current assets

Current assets

Trade and other receivables

Total current assets

Total assets

Current liabilities

Trade and other payables

Current income tax liabilities

Total current liabilities

Non-current liabilities

Loans and borrowings

Total current liabilities

Total liabilities

Net assets

Equity

Called up share capital

Share premium account

Capital redemption reserve

Share-based payment reserve

Merger reserve

Retained earnings

Total equity

Notes

2020
£’000

6,542

9,343

15,885

79,819

95,704

(166)

(15)

(181)

(24,912)

(25,093)

70,611

2,305

56,505

6,506

11,743

70,611

2019
(Restated)
£’000

As at
1 Apr 2018
(Restated)
£’000

6,542

7,802

14,344

1,837

16,181

(8)

(125)

(133)

16,048

15,476

6,506

568

16,048

6,542

6,845

13,387

337

13,724

(8)

13,716

7,170

6,506

13,716

The profit of the Company for the financial year was £174,000 (£2019: £532,000).
These Financial Statements were approved by the Board of Directors and authorised
for issue on 15 September 2020. They are signed on behalf of the Board by:

Alan J. Simpson Director
Stuart J. Overend Director

Company registration number: 11123804

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2020

*See note 39 for details of restatement.

F I N A N C I A L S T A T E M E N T S

Share capital£’000Share premium account £’000Capital redemption£’000Share based payment reserve£’000Merger reserve£’000RetainedEarnings£’000Total£’000At 1 April 2018 (restated*)47,170--1,245(288)8,131Profit for the year-----6,4556,455Total comprehensive income for the year-----6,4556,455Issue of paid shares (note 36)-1,500----1,500Conversion of debt to equity (note 36)-300----300Total contributions by and distributions to owners-1,800----1,800At 31 March 201948,970--1,2456,16716,386Profit for the year-----9,2919,291Total comprehensive income for the year-----9,2919,291Dividends paid-----(2,000)(2,000)Issue of paid shares (note 36)67844,223----44,901Bonus issue of shares1,429(1,429)-----Conversion of debt to equity (note 36)19613,736----13,932Purchase of own shares(2) 2----Increase in share-based payment reserve---56--56Transfer on exercise or lapse of options-------Share issue costs-(2,501)----(2,501)Share premium reduction-(13,000)---(13,000)-Total contributions by and distributions to owners2,30141,029256-11,00054,388At 31 March 20202,30549,9992561,24526,45880,065Financial Statements
COMPANY STATEMENT OF
CHANGES IN EQUITY FOR THE
YEAR ENDED 31 MARCH 2020

*See note 39 for details of restatement.

Share capital£’000Share premium account £’000Capital redemption£’000Share based payments£’000Merger Reserve£’000RetainedEarnings£’000Total£’000At 1 April 2018 (restated*)47,170--6,5063613,716Profit for the year-----532532Total comprehensive income for the year-----532532Issue of paid shares (note 36)-1,500----1,500Conversion of debt to equity-300----300Total contributions by and distributions to owners-1,800----1,800At 31 March 201948,970--6,50656816,048Profit for the year-----175175Total comprehensive income for the year-----175175Dividends paid-----(2,000)(2,000)Issue of paid shares (note 36)67844,223----44,901Bonus issue of shares1,429(1,429)-----Conversion of debt to equity (note 36)19613,736----13,932Purchase of own shares(2)-2----Increase in share-based payment reserve---56--56Share issue costs-(2,501)----(2,501)Share premium reduction-(13,000)---13,000-Total contributions by and distributions to owners 2,30141,029256-11,00054,388At 31 March 20202,30549,9992566,50611,74370,611CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2020

F I N A N C I A L S T A T E M E N T S

Notes2020£’0002019 (Restated)£’000Operating activities Operating profit for the year9,2916,455Adjustments for: Depreciation of property, plant and equipment18595529 Depreciation of right of use assets28717451 Amortisation of intangible assetss193,0592,575 Gain on disposal of property, plant & equipment and right of use assets 8(8)(47) Foreign exchange losses 471 Share-based payments expense3556- Share of post-tax loss/ (profit) in equity accounted associates2232(13) Impairment of goodwill1916- Fair value changes in contingent consideration13451,135 Movements in provisions29(586)(363) Finance income11(71)(31) Finance expense122,5274,489 Exceptional expenses142,407- Income tax expense152,8932,141 Amortisation of loan note issue costs 27Operating cash flows before movements in working capital20,97917,399Changes in working capital: Increase in inventories(1,890)(371) Decrease/ (Increase) in trade and other receivables6,862(5,058) (Decrease)/ Increase in trade and other payables(5,024)11,588Cash generated from operations20,92723,558Payment of exceptional acquisition expenses (320)-Interest received 7031Interest paid(6,049)(1,488)Income taxes paid(4,710)(3,210)Net cash from operating activities9,91818,891Investing activitiesPurchase of property, plant and equipment18(941)(628)Proceeds from sale of property, plant and equipment2547Purchase of right of use assets28(32)-Proceeds from sale of right of use assets-21Purchase of intangible assets-(4)Acquisition of subsidiaries21(11,426)(2,645)Net cash acquired with subsidiary undertakings215,146(4)Acquisition of interests in associates-(194)Dividends received from associates223336Net cash used in investing activities(7,195)(3,371)Financial Statements

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2020

The notes on pages 66 to 118 form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

1. General Information
Brickability Group plc is a company incorporated in England and
Wales. The address of the registered office is shown on page 119.
The nature of the Group’s operations and its principal activities are
set out in the Strategic Report on pages 4 to 29.

2. Basis of Preparation
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
adopted for use in the European Union and the Companies Act
2006 applicable to companies reporting under IFRS.
For periods up to and including 31 March 2019, the Group prepared
its financial statements in accordance with FRS 102, ‘The Financial
Reporting Standard applicable in the UK and the Republic of
Ireland’ (United Kingdom Generally Accepted Accounting Practice
(UK GAAP)). As part of the AIM listing process, the Group
transitioned to IFRS and the first set of annual financial statements
prepared under IFRS was included within the AIM listing admission
document. The Group transitioned from FRS 102 to IFRS as at 22
December 2017.
These consolidated financial statements are the first statutory
financial statements that the Group has prepared in accordance
with IFRS, since listing. Details of how the transition to IFRS has
impacted the reported financial position, financial performance and
cash flows is outlined in note 39. Reconciliation has been included to
both the FRS 102 results reported previously and the first set of IFRS
financial statements included in the admission document.

The Company, as the ultimate parent of the Group, has elected
prepare its individual financial statements in accordance with FRS 101
Reduced Disclosure Framework. The Company’s individual financial
statements are presented within these Group financial statements
The Company has adopted the following disclosure exemptions:
i. the requirements of IFRS 7 Financial Instruments: Disclosures;
ii. the requirement to present a cash flow statement

under IAS 7 Statement of Cash Flows;

iii. the requirement to disclose key management personnel

compensation; and

iv. the requirement to disclose related party transactions with wholly

owned members of the Group.

The 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 financial statements are prepared on the historical cost basis,
with the exception of derivative financial instruments which are
stated at fair value. After making appropriate enquiries, the Directors
have a reasonable expectation that the Company and Group have
adequate resources to continue in operational existence for the
foreseeable future and for at least twelve months from the date of
signing these financial statements. For this reason, they continue to
adopt the going concern basis in preparing the financial statements.
The Group’s going concern basis has been considered further on
pages 26 to 27 of the Strategic Report.

Notes2020£’0002019 (Restated)£’000Financing activitiesEquity dividends paid16(2,000)-Proceeds from issue of ordinary shares43,9231,500Payment of share issue costs(414)-Payment of exceptional financing costs(490)-Proceeds from bank borrowings13,0151,500Repayment of bank borrowings(25,000)(3,158)Proceeds from loan notes issued-1,500Repayment of loan notes(14,562)-Payment of lease liabilities28(871)(541)Payment of deferred consideration36(5,885)(4,663)Payment of transaction costs relating to loans and borrowings(70)-Settlement of derivative financial instruments36(105)-Net cash outflow from financing activities7,541(3,862)Net increase in cash and cash equivalents10,26411,658Cash and cash equivalents at beginning of year17,0015,346Effect of changes in foreign exchange rates4(3)Cash and cash equivalents at end of year2527,26917,001
3. Significant Accounting Policies
The accounting policies which follow set out those policies which
were applied in preparing the Financial Statements for the year
ended 31 March 2020.

3.1 Basis of consolidation
The consolidated Financial Statements comprise the Financial
Statements of Brickability Group plc and its subsidiary undertakings.
Control is achieved when the Group:
• has power over the investee;
• is exposed or has rights to variable returns from its involvement
with the investee; and
• has the ability to use its power to affect those variable returns.
The results of subsidiaries acquired or disposed of during
the year are included from or to the date that control passes.
Intra-group transactions and balances are eliminated fully on
consolidation and the consolidated Financial Statements reflect
external transactions only. Subsidiaries’ accounting policies are
amended where necessary to ensure consistency with the policies
adopted by the Group.
All accounts for subsidiary undertakings have been prepared
for the year ended 31 March 2020 except for the accounts of
McCann Roofing Products Limited and U Plastics Limited, which
both have a year end of 31 December 2019. The Group accounts
therefore include interim financial information to
31 March 2020 for each of these, following acquisition.
The Company has applied the exemption under section 408
of the Companies Act 2006 and not presented its individual
income statement.

3.2 Investments
Non-current asset investments by the Company in subsidiaries
and associates are initially recorded at cost and subsequently
stated at cost less any accumulated provision for impairment.

3.3 Investment in associates and joint ventures
An associate is an entity over which the Group has significant
influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is not
control or joint control over those policies.
Investments in associates are accounted for using the equity
method of accounting. Under the equity method, investments are
initially recognised at cost and subsequently adjusted to reflect
changes in the Group’s share of the net assets of the associate or
joint venture since the acquisition date.
Where a Group company transacts with an associate of the
Group, unrealised profits and losses are eliminated to the extent
of the Group’s interest in the relevant entity.

3.4 Revenue recognition
Revenue is recognised when the Group has satisfied its performance
obligations to the customer. Revenue is measured at the fair
value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal
course of business, net of discounts and Value Added Tax.

The Group generates revenue through three main activities:
• 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;
• the supply of roofing construction services, primarily
within the residential construction sector; and
• the sale of high-performance joinery materials and the
distribution of radiators and associated parts and accessories.
The Group considers itself to be the principal in its revenue
arrangements as it typically controls the goods or services before
transferring them to the customer.
Revenue from the sale of goods is recognised when control of
the goods has transferred to the buyer. This is usually when the
goods are delivered to the customer.
Revenue for completed bespoke goods, attributable to specific
customer contracts but yet to be delivered to the customer, is
recognised within contract assets. It is measured at the fair value
of the consideration receivable, as the Group’s performance
creates an asset with no alternative use to the entity and has an
enforceable right to payment for those goods. Upon delivery
to the customer, the amount recognised as a contract asset is
reclassified to trade receivables.
Revenue from contracts for the provision of services, in relation
to roof installations, is recognised over time by reference to the
stage of completion. Jobs in progress are reviewed and invoiced
at the end of each month to reflect the value of work carried out
in the period.
The Group has applied the practical expedients within IFRS 15 in
respect of the following:
• not accounting for significant financing components where
the time difference between receiving consideration and
transferring control of the goods or services to its customers is
one year or less; and
• expensing the incremental costs of obtaining a contract when
the amortisation period of the asset otherwise recognised is one
year or less.
Customer rebates
The Group offers customer rebates in respect of volume
discounts. These customer rebates give rise to variable
consideration. Where the consideration in a contract includes
a variable amount, the Group estimates the amount of
consideration to which it will be entitled in exchange for
transferring its goods to the customer. The Group applies the
most likely amount method to estimate the variable consideration
in the contract.
Where the Group has rebate agreements with its customers,
rebates payable are deducted from revenue in the period that the
associated revenue is recognised. The value of rebates payable
is based on the terms of the individual contracts in place, to the
extent that it is highly probable that the variable consideration
estimated will not result in a significant reversal in the amount of
cumulative revenue recognised when the uncertainty associated
with the variable contract is subsequently resolved.

F I N A N C I A L S T A T E M E N T S

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

3.5 Foreign currencies The individual Financial Statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). The results and financial position of each Group company are expressed in pounds sterling, which is also the functional currency of the Company and the presentation currency for the consolidated Financial Statements.Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate on the dates of the transactions. Monetary assets and liabilities, that are denominated in foreign currencies, are retranslated at the exchange rates ruling at the reporting date. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the year.Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction and not retranslated at the reporting date. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date at which the fair value is determined.3.6 Group pension schemes Payments to defined contribution retirement benefit schemes are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset to the extent that the prepayment will lead to a reduction in future payments or a cash refund.3.7 Government grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Grants relating to expense items are recognised as income on a systemic basis over the period that the related costs, for which the grant is intended to compensate, are expensed. Grants relating to assets are recognised as deferred income and transferred to income in the profit or loss on a systemic basis over the expected useful life of the related assets.3.8 Taxation The tax expense represents the sum of the tax currently payable and deferred tax. Tax is recognised in the statement of profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, tax is recognised in other comprehensive income or directly in equity, respectively.Current tax Current tax is the expected tax payable or recoverable based on taxable profit for the year and any adjustment to tax payable in respect of prior years. Current tax is calculated using tax rates and laws that have been enacted or substantively enacted at the reporting date.Deferred tax Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit. It is accounted for using the balance sheet liability method. Deferred tax assets and liabilities are recognised where the carrying value of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:• the initial recognition of goodwill;• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and• investments in subsidiaries and joint arrangements where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Unrecognised deferred tax assets are also re-assessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on the tax rates and laws that have been enacted or substantively enacted at the reporting date.Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable group company or different taxable group companies which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.3.9 Property, plant and equipment
Property, plant and equipment is initially recorded at cost and
subsequently stated at cost less any accumulated depreciation
and impairment losses. Any property, plant and equipment
carried at revalued amounts are recorded at the fair value
at the date of revaluation less any subsequent accumulated
depreciation and impairment losses.
An increase in the carrying value of an asset, as a result of a
valuation, is recognised in other comprehensive income and
accumulated in equity, except to the extent that it reverses a
revaluation decrease of the same asset previously recognised
in the statement of profit or loss. A decrease in the carrying
value of an asset, as a result of revaluation, is recognised in
other comprehensive income to the extent of any previously
recognised revaluation increase accumulated in equity in
respect of that asset. Where a revaluation decrease exceeds
the accumulated revaluation gains accumulated in equity, in
respect of that asset, the excess is recognised in the statement
of profit or loss.
Depreciation is charged so as to write off the cost or
valuation of an asset, less its residual value, over the
estimated useful life of that asset, using the straight-line or
reducing balance method, as follows:

Freehold land is not depreciated.

3.10 Leases
The Group assesses, at the inception of a contract, whether
a contract is, or contains, a lease. A contract is, or contains,
a lease if it conveys the right to control the use of an identified
asset for a period of time in exchange for consideration.
Control is conveyed when the Group has both the right to
direct the identified asset’s use and to obtain substantially all
the economic benefits from that use.
For contracts that both convey a right to the Group to use
an identified asset and require services to be provided to the
Group by the lessor, the Group has elected not to separate
non-lease components and thus account for the entire
contract as a lease.
Lessee accounting
All leases are accounted for by recognising a right of use asset
and a lease liability except for:

• leases of low value assets; and
• leases with a term of 12 months or less.

Lease payments for short-term (those with a term of 12 months
or less) and low value asset leases are recognised as an
expense, in the statement of profit or loss, on a straight-line
basis over the lease term.
Right of use assets
At the lease commencement date, right of use assets are
measured at the amount of the corresponding lease liability,
less any lease incentives received, plus the following:
• lease payments made at or before the lease commencement date;
• initial direct costs incurred;
• the amount of any provision recognised where the Group
is contractually obliged to dismantle, remove or restore the
leased asset or site on which the leased asset is located.
Right of use assets are presented as a separate line in the
consolidated statement of financial position.
Right of use assets are subsequently measured at cost less
accumulated depreciation and impairment losses.
Right of use assets are depreciated, on a straight-line basis,
over the shorter period of the lease term and useful life of
the underlying asset. If a lease transfers ownership of the
underlying asset, or the cost reflects that the Group expects
to exercise a purchase option, the related right of use asset is
depreciated over the useful life of the asset.
Lease liabilities
At the lease commencement date, lease liabilities are
measured at the present value of the lease payments due to
the lessor over the lease term, discounted at the rate implicit in
the lease, where this can be readily determined. Where the rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability include:

• fixed lease payments (including in-substance fixed
payments), less any lease incentives receivable;

• variable lease payments that depend on an index or rate;
• amounts expected to be paid under residual value
guarantees;
• the exercise price of any purchase option, if it is reasonably
certain to be exercised by the Group; and
• any penalties payable for terminating the lease, if the lease
term reflects the Group exercising the option to terminate.
Variable lease payments that do not depend on an index or a
rate are recognised as an expense, in the statement of profit or
loss, in the period to which they relate.
Lease liabilities are presented as a separate line in the
consolidated statement of financial position.
Lease liabilities are subsequently increased to reflect interest
charged on the lease liability, using the effective interest
method, and reduced for lease payments made.

F I N A N C I A L S T A T E M E N T S

Freehold property2% – 25% per annumLeasehold propertyOver the term of the leasePlant and machinery20% to 33% per annumFixtures, fittings and equipment10% to 33% per annumMotor vehicles10% to 25% per annum

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

Lease liabilities are remeasured if there is a modification (and
the lease modification is not accounted for as a separate
lease), a change in the lease term, a change in the lease
payments due to changes in an index or rate, a change in the
expected payment under a guaranteed residual value or a
change in the assessment to exercise a purchase option.
In the event of a lease modification, change in lease term
or change in the assessment of a purchase option, the
lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
In the event of a change in the lease payments, the lease
liability is remeasured by discounting the revised lease
payments using an unchanged discount rate, unless the lease
payment change is due to a change in a floating interest rate,
in which case a revised discount rate is used,
When a lease liability is remeasured, a corresponding
adjustment is made to the carrying value of the right of use
asset, with the revised asset value being depreciated over the
remaining lease term.
Lessor accounting
The Group enters into lease agreements as a lessor in respect
of sub-leasing some of its leasehold property. Where the
Group is an intermediate lessor, it accounts for the head lease
and the sub-lease as two separate contracts. The sub-lease is
classified as an operating lease by reference to the right of use
asset arising from the head lease.
Rental income from operating leases is recognised on a
straight-line basis over the term of the lease. Initial direct costs
incurred in negotiating and arranging an operating lease are
added to the carrying amount of the underlying asset and
recognised on a straight-line basis over the lease term.
3.11 Intangible assets
Intangible assets acquired separately are initially recognised
at cost. The cost of intangible assets acquired as part of a
business combination is their fair value at the acquisition date.
Intangible assets are subsequently stated at cost less any
accumulated amortisation and impairment losses.
Amortisation is charged so as to write off the cost of the asset,
less its residual value, over the estimated useful life of that
asset, using the straight-line method, as follows:

If there is an indication that there has been a change in the
amortisation rate, useful life or residual value of an intangible
asset, the amortisation charge is revised prospectively to
reflect the new estimates.

3.12 Business combinations and goodwill
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, measured at
acquisition date fair value, and the amount of any non-
controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the
non-controlling interests in the acquiree at fair value or the
proportionate share of the acquiree’s identifiable net assets.
Acquisition related costs are expensed as incurred and
included in profit or loss.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification
and designation in accordance with the contractual terms,
economic circumstances and pertinent conditions as at the
acquisition date. This includes the separation of embedded
derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, any previously
held equity interest is remeasured at its acquisition date fair
value and any resulting gain or loss is recognised in profit or loss.
Contingent consideration is recognised at fair value at the
acquisition date. Contingent consideration classified as equity
is not remeasured and its subsequent settlement is accounted
for within equity. Contingent consideration classified as an
asset or liability that is a financial instrument, and within
the scope of IFRS 9 Financial Instruments, is measured at
fair value at the reporting date with changes in fair value
recognised in the statement of profit or loss in accordance with
IFRS 9. Other contingent consideration, that is not within the
scope of IFRS 9, is measured at fair value at each reporting
date, with changes in fair value recognised in profit or loss.
Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous
interest held, over the net identifiable assets acquired and
liabilities assumed. If the fair value of the net assets acquired
is in excess of the aggregate consideration transferred, the
Group reassesses whether it has correctly identified all of
the assets acquired and all of the liabilities assumed and
reviews the procedures used to measure the amounts to be
recognised at the acquisition date. If the reassessment still
results in an excess of the fair value of net assets acquired
over the aggregate consideration transferred, then the gain is
recognised in profit or loss.

Brands10% – 12% per annumCustomer and supplier relationships and other intangibles 10% – 25% per annumAfter initial recognition, goodwill is measured at cost less
any accumulated impairment losses. For the purpose
of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to each of
the Group’s cash-generating units that are expected to benefit
from the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
Where goodwill has been allocated to a cash-generating unit
and part of the operation within that unit is disposed of, the
goodwill associated with the disposed operation is included in
the carrying amount of the operation when determining the gain
or loss on disposal. Goodwill disposed of in these circumstances
is remeasured based on the relative values of the disposed
operation and the portion of the cash-generating unit retained.

3.13 Group re-organisations
The Group acquired Brickability Enterprises Investments Limited
and its subsidiary undertakings on 6 March 2018. The directors
consider that the insertion of Brickability Group plc as the new
parent of Brickability Enterprises Investments Limited is not a
business combination but rather a group re-organisation and
thus falls outside the scope of IFRS 3. IFRS does not specifically
state how group re-organisations are accounted for. Therefore,
in accordance with IAS 8, the Directors have considered the
accounting for group re-organisations using merger accounting
principles, as set out in FRS 102, The Financial Reporting
Standard applicable in the UK and Republic of Ireland.

Under merger accounting, the assets and liabilities are not
remeasured to fair value but are initially recorded at their
previous carrying amounts. The difference between the
carrying value of the assets and liabilities and the value of the
consideration issued is recorded in a merger reserve. The results
of Brickability Enterprises Investments Limited and its subsidiary
undertakings have been included in the Group consolidated
Financial Statements from the acquisition date.

3.14 Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is
an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is
required, the Group estimates the recoverable amount of the
asset. The recoverable amount is the higher of the value in use
and the fair value less costs of disposal.
The recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows that
are largely independent of those from other assets or groups
of assets, in which case the recoverable amount is estimated
for the smallest group of assets to which it belongs and for
which there are separately identifiable cash flows (its cash
generating unit (CGU)).

When the carrying value of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is
written down to its recoverable amount. Impairment losses
are recognised as an expense in the statement of profit or
loss, except to the extent that they reverse gains previously
recognised in other comprehensive income, in which case the
impairment loss is also recognised in other comprehensive
income up to the amount of any previous gain.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money and the risks specific to the asset.
In determining fair value less costs of disposal, recent market
transactions are taken into account. If no such transactions
can be identified, an appropriate valuation model is used.
For assets, excluding goodwill, an assessment is made at each
reporting date to determine whether there is an indication that
previously recognised impairment losses no longer exist or
have decreased. If such indication exists, the Group estimates
the recoverable amount of the asset or CGU. When an
impairment loss subsequently reverses, the carrying amount
of the asset is increased to the revised recoverable amount
but only to the extent that the carrying value does not exceed
the carrying amount that would have been determined, net
of amortisation or depreciation, had no impairment loss been
recognised for the asset in prior years. The reversal of an
impairment loss is recognised in the statement of profit or loss.
Goodwill is not amortised but is reviewed for impairment at
least annually. CGUs, to which goodwill has been allocated,
are tested for impairment annually, or more frequently when
there is an indication that the unit may be impaired. If the
recoverable amount of the CGU is less than its carrying value,
an impairment loss is recognised. It is allocated first to reduce
the carrying amount of any goodwill allocated to the unit and
then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset of the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.

3.15 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and costs that have
been incurred in bringing the inventories to their present
location and condition. Net realisable value represents the
estimated selling price less all estimated costs of completion
and sale.

F I N A N C I A L S T A T E M E N T S

Financial Statements
Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020
YEAR ENDED 31 MARCH 2020

3.16 Financial instruments
3.16 Financial instruments
A financial instrument is any contract that gives rise to a
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
financial asset of one entity and a financial liability or equity
instrument of another entity. Financial assets and liabilities
instrument of another entity. Financial assets and liabilities
are recognised in the Group’s statement of financial position
are recognised in the Group’s statement of financial position
when the Group becomes party to the contractual provisions
when the Group becomes party to the contractual provisions
of the instrument.
of the instrument.

Financial assets
Financial assets
Financial assets, on initial recognition, are classified as those
Financial assets, on initial recognition, are classified as those
to be subsequently measured at amortised cost or those
to be subsequently measured at amortised cost or those
to be subsequently measured at fair value (either through
to be subsequently measured at fair value (either through
profit or loss or through other comprehensive income). The
profit or loss or through other comprehensive income). The
classification depends on the financial asset’s contractual
classification depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for
cash flow characteristics and the Group’s business model for
managing them.
managing them.

Financial assets held at amortised cost comprise trade and
Financial assets held at amortised cost comprise trade and
other receivables and cash and cash equivalents in the
other receivables and cash and cash equivalents in the
statement of financial position. They are assets held for the
statement of financial position. They are assets held for the
collection of contractual cash flows where those cash flows
collection of contractual cash flows where those cash flows
represent solely payments of the principal and interest.
represent solely payments of the principal and interest.

They are initially recognised at fair value plus transaction
They are initially recognised at fair value plus transaction
costs that are directly attributable to their acquisition. They
costs that are directly attributable to their acquisition. They
are subsequently stated at amortised cost, using the effective
are subsequently stated at amortised cost, using the effective
interest rate method, less provision for impairment.
interest rate method, less provision for impairment.

Impairment provisions for trade receivables are recognised
Impairment provisions for trade receivables are recognised
based on the simplified approach within IFRS 9, using lifetime
based on the simplified approach within IFRS 9, using lifetime
expected credit losses. During this process, the probability
expected credit losses. During this process, the probability
of the non-payment of the trade receivables is assessed and
of the non-payment of the trade receivables is assessed and
multiplied by the amount of the expected loss arising from
multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
default to determine the lifetime expected credit loss for the
trade receivables. For trade receivables that are reported net,
trade receivables. For trade receivables that are reported net,
such provisions are recorded in a separate provision account
such provisions are recorded in a separate provision account
with the loss being recognised within in the statement of
with the loss being recognised within in the statement of
profit or loss. The gross carrying amount of a financial asset
profit or loss. The gross carrying amount of a financial asset
is reduced when the Group has no reasonable expectation of
is reduced when the Group has no reasonable expectation of
recovering the financial asset in its entirety or a portion thereof.
recovering the financial asset in its entirety or a portion thereof.

Assets measured at fair value are subsequently remeasured at
Assets measured at fair value are subsequently remeasured at
fair value, with gains and losses being recognised in profit or
fair value, with gains and losses being recognised in profit or
loss. Transaction costs of financial assets carried at fair value
loss. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
through profit or loss are expensed in profit or loss.

Financial liabilities
Financial liabilities
Financial liabilities, on initial recognition, are classified as those
Financial liabilities, on initial recognition, are classified as those
to be subsequently measured at amortised cost or those to be
to be subsequently measured at amortised cost or those to be
subsequently measured at fair value through profit or loss.
subsequently measured at fair value through profit or loss.

All financial liabilities are initially recognised at fair value and,
All financial liabilities are initially recognised at fair value and,
in the case of loans and borrowings and payables, net of
in the case of loans and borrowings and payables, net of
directly attributable transaction costs.
directly attributable transaction costs.

Financial liabilities measured at amortised cost include trade
Financial liabilities measured at amortised cost include trade
and other payables and loans and other borrowings, including
and other payables and loans and other borrowings, including
bank overdrafts. These are subsequently stated at amortised
bank overdrafts. These are subsequently stated at amortised
cost, using the effective interest rate method. The interest
cost, using the effective interest rate method. The interest
expense includes initial transaction costs and any premium
expense includes initial transaction costs and any premium
payable on redemption, as well as any interest or coupon
payable on redemption, as well as any interest or coupon
payable while the liability is outstanding.
payable while the liability is outstanding.

Financial liabilities measured at fair value are subsequently
Financial liabilities measured at fair value are subsequently
remeasured at fair value, with gains and losses recognised in
remeasured at fair value, with gains and losses recognised in
profit or loss.
profit or loss.

Derivative financial instruments
Derivative financial instruments
The Group uses derivative financial instruments, such as
The Group uses derivative financial instruments, such as
forward currency contracts and interest rate swaps, to
forward currency contracts and interest rate swaps, to
hedge its exposure to foreign currency exchange risk and
hedge its exposure to foreign currency exchange risk and
interest risk. The Group does not enter into speculative
interest risk. The Group does not enter into speculative
financial instruments.
financial instruments.

Such derivative financial instruments are initially recognised
Such derivative financial instruments are initially recognised
at fair value on the date on which the derivative contract is
at fair value on the date on which the derivative contract is
entered into and subsequently remeasured at fair value, with
entered into and subsequently remeasured at fair value, with
gains and losses recognised in profit or loss.
gains and losses recognised in profit or loss.

Derivatives are held as financial assets when their fair value is
Derivatives are held as financial assets when their fair value is
positive and as financial liabilities when the fair value is negative.
positive and as financial liabilities when the fair value is negative.

Equity instruments
Equity instruments
An equity instrument is any contract that evidences a residual
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities.
interest in the assets of an entity after deducting all of its liabilities.

Dividends are recognised in other income in profit or loss when
Dividends are recognised in other income in profit or loss when
the Group’s right to receive payment of the dividend is established
the Group’s right to receive payment of the dividend is established

Repurchase of the Company’s own equity instruments is
Repurchase of the Company’s own equity instruments is
recognised and deducted directly in equity. No gain or loss
recognised and deducted directly in equity. No gain or loss
is recognised in profit or loss on the purchase, sale, issue or
is recognised in profit or loss on the purchase, sale, issue or
cancellation of the Company’s own equity instruments.
cancellation of the Company’s own equity instruments.

Fair value measurement
Fair value measurement

All assets and liabilities for which fair value is measured or
All assets and liabilities for which fair value is measured or
disclosed in the Financial Statements are categorised within
disclosed in the Financial Statements are categorised within
the fair value hierarchy, based on the degree to which the fair
the fair value hierarchy, based on the degree to which the fair
value is observable, as follows:
value is observable, as follows:

• Level 1 fair value measurements are those derived from
• Level 1 fair value measurements are those derived from
quoted prices (unadjusted) in active markets for identical
quoted prices (unadjusted) in active markets for identical
assets or liabilities;
assets or liabilities;

The Group provides for the expected cost of restoring its

operating premises to their original state in accordance with

its lease terms. Provision is based on management’s best

estimate of the work and cost involved in completing this

restoration. The cost is recognised as part of the right of use

asset and is depreciated over the remaining term of the lease.

3.18 Share-based payments

Equity-settled share option schemes and long-term incentive

plans are measured at the fair value of the equity instruments

at the grant date. The fair value excludes the effect of non-

market-based vesting conditions. Details regarding the

determination of the fair value of equity-settled share-based

transactions are set out in note 35.

The fair value, determined at the grant date of the equity-

settled share-based payments, is expensed on a straight-line

basis over the vesting period, based on the Group’s estimate

of equity instruments that will eventually vest. At each

reporting date, the Group revises its estimate of the number

of equity instruments expected to vest as a result of the effect

of non-market-based vesting conditions. The impact of the

revision of the original estimates, if any, is recognised in profit

or loss such that the cumulative expense reflects the revised

estimate, with a corresponding adjustment to equity reserves.

• Level 2 fair value measurements are those derived from

Dilapidations

inputs other than quoted prices included within level 1 that

are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e derived from prices); and

• Level 3 fair value measurements are those derived from

valuation techniques that include inputs for the asset or

liability that are not based on observable market data

(unobservable inputs).

Details of significant unobservable inputs used in determining

fair values within level 3 are disclosed in note 32.

3.17 Provisions

Provisions are recognised when the Group has a present

obligation (legal or constructive) as a result of a past event,

it is probable that the Group will be required to transfer

economic benefits to settle that obligation and a reliable

estimate can be made of the amount of the obligation.

Provisions are recognised as a liability in the balance sheet

with a corresponding expense recognised in profit or loss.

The amount recognised as a provision is the best estimate

of the consideration required to settle the present obligation

at the reporting date, taking into account the risks and

uncertainties surrounding the obligation. When the effect of

the time value of money is material, provisions are discounted

using a pre-tax rate that reflects, where appropriate, the risks

specific to the liability. When discounting is used, the increase

in the provision due to the passage of time is recognised as a

finance expense.

When some or all of the economic benefits required to settle

a provision are expected to be recovered from a third party,

a receivable is recognised as an asset if it is virtually certain

that reimbursement will be received and the receivable can be

measured reliably.

Warranties

The Group provides for the expected cost of warranty

obligations for defects that existed at the time of sale, as

required by law. Provision is based on historical experience

and management’s best estimate of the amount

required to settle the Group’s obligation.

Further details are outlined in note 29.

72
72

F I N A N C I A L S T A T E M E N T S

Dilapidations
Dilapidations
The Group provides for the expected cost of restoring its
The Group provides for the expected cost of restoring its
operating premises to their original state in accordance with
operating premises to their original state in accordance with
its lease terms. Provision is based on management’s best
its lease terms. Provision is based on management’s best
estimate of the work and cost involved in completing this
estimate of the work and cost involved in completing this
restoration. The cost is recognised as part of the right of use
restoration. The cost is recognised as part of the right of use
asset and is depreciated over the remaining term of the lease.
asset and is depreciated over the remaining term of the lease.

3.18 Share-based payments
3.18 Share-based payments
Equity-settled share option schemes and long-term incentive
Equity-settled share option schemes and long-term incentive
plans are measured at the fair value of the equity instruments
plans are measured at the fair value of the equity instruments
at the grant date. The fair value excludes the effect of non-
at the grant date. The fair value excludes the effect of non-
market-based vesting conditions. Details regarding the
market-based vesting conditions. Details regarding the
determination of the fair value of equity-settled share-based
determination of the fair value of equity-settled share-based
transactions are set out in note 35.
transactions are set out in note 35.

The fair value, determined at the grant date of the equity-
The fair value, determined at the grant date of the equity-
settled share-based payments, is expensed on a straight-line
settled share-based payments, is expensed on a straight-line
basis over the vesting period, based on the Group’s estimate
basis over the vesting period, based on the Group’s estimate
of equity instruments that will eventually vest. At each
of equity instruments that will eventually vest. At each
reporting date, the Group revises its estimate of the number
reporting date, the Group revises its estimate of the number
of equity instruments expected to vest as a result of the effect
of equity instruments expected to vest as a result of the effect
of non-market-based vesting conditions. The impact of the
of non-market-based vesting conditions. The impact of the
revision of the original estimates, if any, is recognised in profit
revision of the original estimates, if any, is recognised in profit
or loss such that the cumulative expense reflects the revised
or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to equity reserves.
estimate, with a corresponding adjustment to equity reserves.

• Level 2 fair value measurements are those derived from
• Level 2 fair value measurements are those derived from
inputs other than quoted prices included within level 1 that
inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (i.e. as
are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e derived from prices); and
prices) or indirectly (i.e derived from prices); and

• Level 3 fair value measurements are those derived from
• Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or
valuation techniques that include inputs for the asset or
liability that are not based on observable market data
liability that are not based on observable market data
(unobservable inputs).
(unobservable inputs).

Details of significant unobservable inputs used in determining
Details of significant unobservable inputs used in determining
fair values within level 3 are disclosed in note 32.
fair values within level 3 are disclosed in note 32.

3.17 Provisions
3.17 Provisions
Provisions are recognised when the Group has a present
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event,
obligation (legal or constructive) as a result of a past event,
it is probable that the Group will be required to transfer
it is probable that the Group will be required to transfer
economic benefits to settle that obligation and a reliable
economic benefits to settle that obligation and a reliable
estimate can be made of the amount of the obligation.
estimate can be made of the amount of the obligation.
Provisions are recognised as a liability in the balance sheet
Provisions are recognised as a liability in the balance sheet
with a corresponding expense recognised in profit or loss.
with a corresponding expense recognised in profit or loss.

The amount recognised as a provision is the best estimate
The amount recognised as a provision is the best estimate
of the consideration required to settle the present obligation
of the consideration required to settle the present obligation
at the reporting date, taking into account the risks and
at the reporting date, taking into account the risks and
uncertainties surrounding the obligation. When the effect of
uncertainties surrounding the obligation. When the effect of
the time value of money is material, provisions are discounted
the time value of money is material, provisions are discounted
using a pre-tax rate that reflects, where appropriate, the risks
using a pre-tax rate that reflects, where appropriate, the risks
specific to the liability. When discounting is used, the increase
specific to the liability. When discounting is used, the increase
in the provision due to the passage of time is recognised as a
in the provision due to the passage of time is recognised as a
finance expense.
finance expense.
When some or all of the economic benefits required to settle
When some or all of the economic benefits required to settle
a provision are expected to be recovered from a third party,
a provision are expected to be recovered from a third party,
a receivable is recognised as an asset if it is virtually certain
a receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the receivable can be
that reimbursement will be received and the receivable can be
measured reliably.
measured reliably.

Warranties
Warranties
The Group provides for the expected cost of warranty
The Group provides for the expected cost of warranty
obligations for defects that existed at the time of sale, as
obligations for defects that existed at the time of sale, as
required by law. Provision is based on historical experience
required by law. Provision is based on historical experience
and management’s best estimate of the amount
and management’s best estimate of the amount
required to settle the Group’s obligation.
required to settle the Group’s obligation.
Further details are outlined in note 29.
Further details are outlined in note 29.

F I N A N C I A L S T A T E M E N T S

73
73

3.19 Invoice discounting facilities
The Group has in place an invoice discount facility
based on the value of trade receivables. Under this
arrangement, the Group has retained both the credit
and late payment risk associated with the receivables.
As the Group has retained substantially all the
risk and rewards of ownership of the receivables, it
continues to recognise the receivables in the balance
sheet, with advances from the facility provider
recognised as a separate liability.
The expenses associated with the facility are included
within the finance expense within the statement of
profit or loss.
IAS 7 requires cash flows to be presented in a manner
which is most appropriate to an entity’s business.
Cash inflows and outflows relating to the invoice
discounting facility are assessed to be operating
cash flows as it includes cash flows from the
receivables as if the factoring has not been entered
into. Management feel that the operating cash
flow presentation best reflects the substance of the
relationship entered into.

3.20 Alternative performance measures
Alternative performance measures (APMs) are
disclosed within the 2020 Annual Report and
Accounts where management believes it is necessary
to do so to provide further understanding of the
financial performance of the Group.
Underlying results are used in the day to day
management of the Group. They represent statutory
measures adjusted for items which could distort the
understanding of performance and comparability
year on year.

Adjusted EBITDA
Adjusted EBITDA is the primary non-statutory
measure which is used by the Group. This is
represented by earnings before interest, tax,
depreciation, amortisation and exceptional items,
including acquisition costs. A reconciliation between
adjusted EBITDA and statutory IFRS measures is
included in note 6.
Exceptional items are those which the Group
considers to be significant in nature and quantum
but not in the normal course of business. Details of
exceptional items are disclosed in note 14.

Adjusted basic EPS
Adjusted basic EPS is defined as profit for the year
divided by the total number of shares in issue following
the Initial Public Offering (IPO). Adjusted basic EPS is
outlined in note 17.

Net Cash
Net cash is defined as cash and cash equivalents
less bank borrowings.

4. Critical Accounting Judgements and Key Sources of
Estimation Uncertainty
In the application of the Group’s accounting policies, which
are described in note 3, the Directors are required to make
judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are
considered to be relevant. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised
in the year in which the estimate is revised if the revision affects
only that year, or in the year of the revision and future years if the
revision affects both current and future years.

Critical judgements in applying the Group’s
accounting policies
The following are the critical judgements that the Directors
have made in the process of applying the Group’s accounting
policies and that have the most significant effect on the amounts
recognised in the Financial Statements.
Associates
Investments in associates are accounted for using the equity
method of accounting, whereby the investment is initially
recognised at the transaction price and subsequently
adjusted to reflect the Group’s share of the profit or loss, other
comprehensive income and equity of the associate. Judgements
are made as to whether the Group has significant influence (but
not control or joint control), being the power to participate in the
financial and operating policy decisions of the associate or not.

Provisions
Provisions are a key area of the Financial Statements and are
subject to both judgement and estimation uncertainty. Provisions
are recognised on product defect warranties when claims are
made in relation to the products and services supplied. This
requires judgement as to whether a claim would likely give rise
to a provision based on the Group’s knowledge of its products,
services and customers. The provision would then need to be
estimated based on management’s assessment of the likely work
and cost required to rectify any defect. This estimate is subjective
and based on management’s knowledge of the products,
services and past customerexperience (see note 29).

Lease term
Judgement is required in determining the lease term where
a lease includes periods covered by an option to extend the
lease or an option to terminate the lease. The Directors apply
judgement in evaluating whether it is reasonably certain or not
that an option will be exercised. When recognising the lease, all
relevant factors are taken into account, including the Group’s
intentions and any factors that create an economic incentive
to exercise an option. After the commencement date, the lease
term will be re-assessed if there is a significant event or change
in circumstances that is within the Group’s control and affects its
ability to exercise an option.

Key sources of estimation uncertainty
The key assumptions concerning the future and other key
sources of estimation uncertainty at the reporting date, that
may have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next
financial year, are described below.

Intangible assets are amortised over their expected useful
life. The annual amortisation charge and carrying value of
the asset is therefore sensitive to the estimated useful life. The
useful life is based on the period over which management
expects to benefit from the intangible assets, based on past
experience and knowledge of the business acquired.

Impairment of non-financial assets
The Group acquires intangible assets and goodwill during
a business combination. These assets are primarily the
assets subject to an impairment review. They are initially
recorded at fair value and subsequently at cost less
any amortisation (in the case of intangible assets) and
impairment losses. Goodwill is reviewed for impairment
annually while other assets are assessed when an indication
of impairment is identified. In assessing whether an asset
is impaired, the asset’s or CGU’s value in use is calculated
based on a discounting cash flow model. The cash flows are
derived from forecasts covering the next three years. The
recoverable amount is therefore sensitive to the assumptions
and estimates used in determining the amount and timing
of future cash flows, the discount factor applied and the
growth rate used for extrapolation purposes. Details of the
key assumptions, including consideration of sensitivity, are
disclosed further in note 19.

Intangible assets
The Group recognises identifiable intangible assets acquired
through business combinations, such as brands and customer
and supplier relationships, at fair value on acquisition. Any
excess paid over the value of net assets acquired is included
as goodwill. Estimates are required to determine the purchase
price allocation (PPA) between intangible assets and
goodwill, with the fair value of intangibles sensitive to these
estimates. The key estimates involved in establishing the fair
values are the future cash flows forecast for the acquired
entity, inputs into appropriate valuation models and the
expected useful life of the assets.

Projected cash flows underpin the valuation of all identifiable
intangible assets. These are based on management’s best
estimate of the expected levels of trade and profits following
acquisition, taking into account actual results around the time
of acquisition. Forecasts are prepared for a three year period,
with an inflationary 2% growth rate applied thereafter.

The fair value of brands is based on a relief from royalty method.
The royalty rates applied in this model are based on a percentage
of earnings before interest and tax (EBIT), discounted to reflect
the size of the entity and its limited reach, given it is largely a
business to business operation. The brand value is therefore
sensitive to the discount rate applied and subsequent royalty rate
incorporated into the model. For acquisitions during the year,
the Group applied a discount of 60% to an implied royalty rate
based on 25% of the EBIT margin.

Provision for expected credit losses (ECLs)
The Group uses a provision matrix to calculate the ECLs
for trade receivables. The provision rates are based on
days past due for groupings of customers with similar credit
risk characteristics. The provision matrix is initially based
on the Group’s historical observed default rates. However,
the historical rate is adjusted to consider forward looking
information, which may lead to a change in the expected
number of defaults. The assessment of correlation between
the historically observed default rates and forecast economic
conditions is therefore a significant estimate. The ECLs
calculated are sensitive to changes in circumstances and
forecast economic conditions as the historical experience and
forecasts may not be representative of a customer’s actual
default in the future. Details of the ECLs on the Group’s trade
receivables and contract assets, are disclosed in note 24.

Share-based payments
Key estimates are used in determining the fair value of
share-based payment transactions, including selecting the
most appropriate valuation model and related inputs into
that model. The Group operates a Company Share Option
Plan (CSOP) with equity settled transactions. Fair value is
measured using a binomial model at the grant date. Estimates
are also required, at each reporting date, in determining the
number of options that are expected to vest. Details of the
assumptions and model used are disclosed in note 35.

Fair value measurement of financial instruments
When fair values cannot be measured based on quoted
prices in an active market, the fair value is measured using
valuation techniques, including the discounted cash flow
model. Inputs into this model are taken from observable
markets where possible but a degree of judgement is required
where this is not possible. Expert valuers are engaged by the
Group where appropriate.

Contingent consideration, resulting from business
combinations, is valued at fair value at the acquisition date
as part of the business combination. When contingent
consideration meets the definition of a financial asset or
liability, it is subsequently remeasured to fair value at each
reporting date. The fair value is determined using discounted
cash flows. The key estimates are therefore the probability of
the performance target being met and the discount rate used.
Further details are disclosed in note 32.

F I N A N C I A L S T A T E M E N T S

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

4. Critical Accounting Judgements and Key Sources of Estimation Uncertainty (continued)

Lease incremental borrowing rate
Where the interest rate in a lease cannot be readily determined,
the Group uses its incremental borrowing rate to measure the
lease liability. The incremental borrowing rate is that which the
Group would have to pay to borrow over a similar term, and
with a similar security, the funds necessary to obtain an asset
of a similar value to the right of use asset in a similar economic
environment. This rate therefore requires estimation when no
observable rates are available. The Group estimates the rate
by assessing the rates implied in similar agreements and using
observable inputs, such as market interest rates, when available.

COVID-19
On 31 December 2019, China reported a pneumonia outbreak of
unknown cause to the World Health Organisation (“WHO”). On
30 January 2020, the WHO declared a Public Health Emergency
of International Concern.
On 11 March 2020 the WHO declared the virus a pandemic
and, from 16 March 2020, the UK Government announced
major government-backed loans. From this date, day-to-day
life in the UK also began to be impacted through announced
social distancing measures, with additional stay at home

measures being enforced soon after. The scale of the Government
interventions and impact on daily life in the UK gave rise to
significant market movements, with global lock downs occurring
before the Group’s reporting date of 31 March 2020.
The assessment of the impact of COVID-19 on the consolidated
Financial Statements requires judgement and affects the
estimates included in certain areas, including the assessment
of the appropriateness of the going concern basis in preparing
the Financial Statements and the testing for impairment of
assets (see note 19).
Given the timing of the global pandemic, management
determined that the conditions in relation to COVID- 19 existed
at the balance sheet date and therefore the events which quickly
unfolded, subsequent to 31 March 2020, provide additional
information about conditions which existed at the balance sheet
date. Information available to management after the balance
sheet date has been considered in the Group’s impairment
assessment, assessment of recoverability of trade receivables
and other relevant areas of the balance sheet. The impact of
COVID-19 is considered by the Board to be an adjusting event
for the Group.

5. Revenue

All of the Group’s revenue is derived from contracts with
customers and generated within the UK. Revenue in relation to
the sale of goods comprises amounts receivable from the sale
of building and joinery materials. Revenue in connection with
the rendering of services relates to amounts receivable from
the provision of roofing construction and installation services.
Revenue by segment is included in note 6.

Trade receivables and contract assets arising are disclosed
in note 24. The Group does not have a significant level of
contract assets. These arise where bespoke goods are prepared

specifically for a customer, for which the Group has a right to
consideration but the goods have not yet been transferred to
the customer.

Included within other payables is an amount of £202,000
(2019: £128,000) (1 April 2018: £89,000) in relation to contract
liabilities in respect of amounts paid or invoiced in advance of
goods being transferred to the customer. Due to the nature of
the business and short turnaround between orders being placed
and goods being delivered, liabilities at the reporting date are
recognised within revenue in the following year.

6. Segmental Analysis
For management purposes, the Group is organised into segments based on its products and services. The Group generates revenue
through three main activities and thus has three reportable segments, as follows:

An analysis of the Group’s revenue is as follows:2020£’0002019£’000Sale of goods170,022147,797Rendering of services17,10415,497 187,126163,294• 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 Products and 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.
The Group’s segments are strategic business units that offer
different products and services. Operating segments are reported in
a manner consistent with the internal reporting provided to the chief
operating decision-maker (CODM).
The CODM, who is responsible for allocating resources and
assessing performance of the operating segments, has been
identified as the steering committee that makes strategic decisions.

The accounting policies of the reportable segments are the
same as the Group’s accounting policies as described in note 3.
Segment performance is evaluated based on EBITDA, without
allocation of depreciation and amortisation, finance expenses
and income, impairment losses, fair value movements or the
share of results of associates. This is the measure reported to the
CODM for the purpose of resource allocation and assessment of
segment performance.
The whole of the Group’s revenue is generated in the United
Kingdom. Included within revenue is a total of £31,282,000 (2019:
£32,182,000) in respect of a customer accounting for more than
10% of the Group’s total revenue. Revenue from this customer is
included within all three reportable segments.
Inter-segment sales are eliminated from the results reported to the
CODM and from the consolidated Financial Statements.

F I N A N C I A L S T A T E M E N T S

2020Bricks and BuildingMaterials £’000Roofing Productsand Services £’000Heating, Plumbing and Joinery £’000Consolidated £’000Revenue143,95417,10426,068187,126EBITDA11,4693,6836,15621,308Centralised costs (1,805)Profit on disposal of assets8Group adjusted EBITDA19,511Impairment of goodwill(16)Depreciation(1,312)Amortisation(3,059)Finance income71Finance expense(2,527)Share of results of associates(32)Fair value gains and losses(45)Exceptional income2,000Exceptional expenses(2,407)Group profit before tax12,1842019 (Restated)Bricks and BuildingMaterials £’000Roofing Productsand Services £’000Heating, Plumbing and Joinery £’000Consolidated £’000Revenue123,44216,51323,339163,294EBITDA10,7743,8744,89219,540Centralised costs (1,856)Profit on disposal of assets47Group adjusted EBITDA17,731Depreciation(980)Amortisation(2,575)Finance income31Finance expense(4,489)Share of results of associates13Fair value gains and losses(1,135)Group profit before tax8,596Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

6. Segmental Analysis (continued)

For the purposes of monitoring segment performance and allocating resources between segments, the CODM monitors the total
non-current and current assets attributable to each segment. All assets are allocated to reportable segments with the exception
of those used primarily for corporate purposes (head office), investments in associates and deferred tax assets. Goodwill has been
allocated to reportable segments as detailed in note 19. No other assets are used jointly by reportable segments.

2020Bricks and BuildingMaterials £’000Roofing Productsand Services £’000Heating, Plumbing and Joinery £’000Consolidated £’000Non-current segment assets42,16619,68427,13488,984Current segment assets51,8563,79810,83766,491Total segment assets94,02223,48237,971155,475Investment in associates352Deferred tax assets205Head office7,134Group assets163,166Total segment liabilities(34,205)(2,265)(4,744)(41,214)Loans and borrowings (excluding leases and overdrafts)(24,912)Deferred tax liabilities(5,631)Other unallocated central liabilities(11,344)Group liabilities(83,101)2019 (Restated)Bricks and BuildingMaterials £’000Roofing Productsand Services £’000Heating, Plumbing and Joinery £’000Consolidated £’000Non-current segment assets24,30919,95628,49972,764Current segment assets41,1043,9249,61554,643Total segment assets65,41323,88038,114127,407Investment in associates1,292Deferred tax assets744Head office1,926Group assets131,369Total segment liabilities(27,683)(3,397)(4,691)(35,771)Loans and borrowings (excluding leases and overdrafts)(36,422)Derivative financial liabilities(106)Deferred tax liabilities(4,092)Other unallocated central liabilities(38,592)Group liabilities(114,983)7. Other Operating Income

8. Profit before tax

Profit before tax is stated after charging/ (crediting):

Adjusted EBITDA for the year, as defined in paragraph 3.20 of the accounting policies, is £19,511,000 (2019: £17,731,000).

F I N A N C I A L S T A T E M E N T S

As at 1 April 2018 (Restated)Bricks and BuildingMaterials £’000Roofing Productsand Services £’000Heating, Plumbing and Joinery £’000Consolidated £’000Non-current segment assets21,58320,37330,27072,226Current segment assets25,2923,2978,95437,543Total segment assets46,87523,67039,224109,769Investment in associates 636Deferred tax assets300Head office619Group assets111,324Total segment liabilities(15,188)(2,811)(5,180)(23,179)Loans and borrowings (excluding leases and overdrafts)(37,975)Deferred tax liabilities(4,453)Other unallocated central liabilities(37,586)Group liabilities(103,193)2020£’0002019£’000Rental income96Other179026962020£’0002019(Restated) £’000Amortisation of intangible assets3,0592,575Impairment of goodwill16-Depreciation of property, plant and equipment595529Depreciation of right of use assets717451(Gain)/ loss on disposal of property, plant and equipment and right of use assets(8)(47)Cost of inventories recognised as an expense25,42417,646Impairment of trade receivables433542Net foreign exchange gains(170)(206)
Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

9. Auditors’ remuneration
During the year, the Group incurred the following costs for services provided by the Company’s auditor:

Auditors’ remuneration reported for the prior year relates to amounts charged by the Group’s former auditor.

10. Staff numbers and costs
The average number of persons employed by the Group during the year, including the directors, amounted to:

The aggregate remuneration costs incurred during the year were:

2020£’0002019 (Restated)£’000Fees payable for audit services:Audit of the company annual Financial Statements139Audit of the company’s subsidiaries169131Total audit related fees182140Fees payable for other services:Reporting accountant292-Tax compliance services-22Other services 41-Total non-audit fees33322Total auditors’ remuneration5151622020Number2019NumberProduction staff912Distribution staff2410Administrative staff5148Management staff3224Sales staff1691312852252020£’0002019 (Restated)£’000Staff costs:Wages and salaries10,7579,416Social security costs1,198970Other pension costs (note 31)463382Share-based payments expense (note 35)56-12,47410,768

The directors’ aggregate remuneration in respect of qualifying services was:

The number of directors who accrued benefits under company pension plans was as follows:

Remuneration of the highest paid director in respect of qualifying services was:

Full details of directors’ remuneration is included within the report of the remuneration committee on pages 39– 46.

F I N A N C I A L S T A T E M E N T S

2020£’0002019 (Restated)£’000Directors’ emoluments:Remuneration1,2481,405Pension contributions42851,2901,4902020£’0002019£’000Defined contribution pension plans122020£’0002019£’000Remuneration463413Pension contributions-23463436
Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

13. Fair value gains and losses

Loss on re-measurement of contingent consideration (notes 21 & 32)

2020
£’000

(45)

2019 (Restated)
£’000

(1,135)

14. Exceptional income and expenses
Exceptional items are those which the Group consider to be significant, one-off items that are not incurred aspart of the Group’s
normal operations.

Exceptional income

Insurance proceeds in respect of keyman policies

2020
£’000

2,000

2019
£’000

The exceptional income relates to a recovery under keyman insurance policies, following a medical diagnosis, in connection with a
member of key management.

Exceptional expenses

IPO costs

Refinancing costs

Acquisition costs

Impairment of investments in associates (note 22)

Total exceptional expenses

2020
£’000

(522)

(585)

(425)

(875)

(2,407)

2019
£’000

11. Finance income2020£’0002019£’000Interest on cash and cash equivalents7031Gain on fair value adjustment of financial liabilities at fair value through profit or loss1-713112. Finance expense2020£’0002019 (Restated)£’000Interest on bank loans and overdrafts 1,0131,615Interest on lease liabilities280106Loss on fair value adjustment of financial liabilities at fair value through profit or loss-106Interest payable on loan notes9772,275Interest payable on deferred consideration1360Unwinding of discount on contingent consideration227317Other interest payable17102,5274,489During the year, the Company completed an IPO. Exceptional
legal and professional fees of £522,000 are included within
the profit or loss in connection with the IPO. Transactions costs
of £2,501,000, directly attributable to the issue of shares, have
been included as a reduction in the share premium account.

During the year, the Group acquired seven subsidiaries,
incurring costs of £425,000. This comprised transaction costs
on acquisition of £103,000, in relation to stamp duty, and
£322,000 in respect of legal and professional fees directly
associated with these acquisitions.

The Group also undertook a re-financing exercise, incurring
exceptional costs of £585,000 in respect of the release of loan
arrangement fees, following repayment of the previous term loan
on listing, and legal fees associated with the re-financing.

Further details regarding the impairment of investments in
associates is disclosed in note 22.

15. Tax on profit
The major components of the income tax expense are:

Current tax

UK current tax expense

Adjustments in respect of prior periods

Total current tax

Deferred tax

Origination and reversal of temporary differences

Total tax on profit

2020
£’000

2019 (Restated)
£’000

2,885

(618)

2,267

626

2,893

3,150

(83)

3,067

(926)

2,141

Reconciliation of tax expense
The standard rate of corporation tax in the UK is 19% (2019: 19%). The charge for the year can be reconciled, to the standard
rate applied to the profit before tax, as follows:

On 17 March 2020, a future rate of corporation tax in the United Kingdom of 19% was substantively enacted. Previously, the rate of
corporation tax expected to apply from 1 April 2020 was 17%. As such, deferred tax assets and liabilities were recognised at 17% in
the prior year but have been remeasured at 19% at the reporting date.

F I N A N C I A L S T A T E M E N T S

2020£’0002019 (Restated)£’000Profit on ordinary activities before taxation12,1848,596Tax on profit on ordinary activities at standard rate2,3151,633Adjustments to tax charge in respect of prior periods(109)(50)Effect of expenses not deductible for tax purposes94451Effect of capital allowances and depreciation2630Effect of changes in UK tax rates54961Effect of utilisation of tax losses29Changes in unrecognised deferred tax assets(1)7Other tax adjustments17-Tax on profit2,8932,141Financial Statements
Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020
YEAR ENDED 31 MARCH 2020

The Directors did not recommend that a dividend was paid for the year ended 31 March 2019.
The Directors did not recommend that a dividend was paid for the year ended 31 March 2019.
The Directors recommend that a final dividend for 2020 of 1.085p (2019: nil p) per ordinary share be paid.
The Directors recommend that a final dividend for 2020 of 1.085p (2019: nil p) per ordinary share be paid.
The final dividend will be paid, subject to shareholders’ approval at the Annual General Meeting, to shareholders on the register at
The final dividend will be paid, subject to shareholders’ approval at the Annual General Meeting, to shareholders on the register at
the close of business on 25 September 2020. This dividend has not been included as a liability in these Financial Statements.
the close of business on 25 September 2020. This dividend has not been included as a liability in these Financial Statements.

The Board of Directors recently become aware of a technical issue in respect of the Company’s procedure for the payment of
The Board of Directors recently become aware of a technical issue in respect of the Company’s procedure for the payment of
the Interim Dividend of 0.8678p per ordinary share, in aggregate £1,999,921.65, paid to shareholders in December 2019. The
the Interim Dividend of 0.8678p per ordinary share, in aggregate £1,999,921.65, paid to shareholders in December 2019. The
Company had sufficient profits to pay the Interim Dividend at the relevant time. However, under the Companies Act 2006, a public
Company had sufficient profits to pay the Interim Dividend at the relevant time. However, under the Companies Act 2006, a public
company can only pay a dividend out of its distributable profits as shown in the last accounts filed with Companies House. A public
company can only pay a dividend out of its distributable profits as shown in the last accounts filed with Companies House. A public
company can prepare and file interim accounts with Companies House showing a more recent distributable profit position if the last
company can prepare and file interim accounts with Companies House showing a more recent distributable profit position if the last
filed accounts do not show sufficient distributable profits. When the Company paid the Interim Dividend, although it had sufficient
filed accounts do not show sufficient distributable profits. When the Company paid the Interim Dividend, although it had sufficient
distributable reserves to make such payment, the last accounts filed at Companies House for the year ended 31 March 2019 showed
distributable reserves to make such payment, the last accounts filed at Companies House for the year ended 31 March 2019 showed
distributable profits of only £567,732. Interim accounts showing the requisite level of distributable profits for the whole of the Interim
distributable profits of only £567,732. Interim accounts showing the requisite level of distributable profits for the whole of the Interim
Dividend had been prepared but, due to an oversight, they had not been filed with the Registrar of Companies. As a result, part of
Dividend had been prepared but, due to an oversight, they had not been filed with the Registrar of Companies. As a result, part of
the Interim Dividend, to the extent of £1,432,189.65 was paid in technical infringement of the Companies Act 2006. A resolution at
the Interim Dividend, to the extent of £1,432,189.65 was paid in technical infringement of the Companies Act 2006. A resolution at
the AGM (Number 16) has been proposed to fix the technical breach. The effect of the resolution proposed is to return all parties to
the AGM (Number 16) has been proposed to fix the technical breach. The effect of the resolution proposed is to return all parties to
the position that they would have been in had the interim dividend been made in compliance with the Companies Act 2006.
the position that they would have been in had the interim dividend been made in compliance with the Companies Act 2006.

84
84

16. Dividends2020£’0002019£’000Amounts recognised as distributions to equity holders in the year: Interim dividend for the year ended 31 March 2020 of 0.8678p per share(2019: for the year ended 31 March 2019 of nil p per share)2,000-Total dividends paid in the year2,000-16. Dividends2020£’0002019£’000Amounts recognised as distributions to equity holders in the year: Interim dividend for the year ended 31 March 2020 of 0.8678p per share(2019: for the year ended 31 March 2019 of nil p per share)2,000-Total dividends paid in the year2,000-17. Earnings per share
17. 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
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.
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 after adjusting for interest on
Diluted EPS is calculated by dividing the profit for the year, attributable to ordinary equity holders after adjusting for interest on
convertible preference shares, by the weighted average number of ordinary shares outstanding during the year plus the weighted
convertible preference shares, 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.
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:
The calculation of basic and diluted earnings per share is based on the following data:

2020
2020

Weighted
Weighted
average
average
number of
number of
shares
shares

Earnings
Earnings
£’000
£’000

2019 (Restated)
2019 (Restated)

Earnings
Earnings
per share
per share
(p)
(p)

Earnings
Earnings
£’000
£’000

Weighted
Weighted
average
average
number of
number of
shares
shares

Earnings
Earnings
per share
per share
(p)
(p)

Basic earnings per share

9,291

194,093,236

4.79

6,455

143,168,012

Effect of dilutive securities
Effect of dilutive securities
Employee share options
Employee share options
Diluted earnings per share
Diluted earnings per share

582,220

9,291

194,675,456

4.77

6,455

143,168,012

4.51

Based on the 230,458,821 shares in issue after the IPO, basic EPS would have been 4.03p at the year end compared to 2.80p in the
Based on the 230,458,821 shares in issue after the IPO, basic EPS would have been 4.03p at the year end compared to 2.80p in the
prior year, had the same number of shares been in issue.
prior year, had the same number of shares been in issue.

18. Property, plant and equipment
18. Property, plant and equipment

Cost
Cost
At 1 April 2018 (restated)
At 1 April 2018 (restated)
Additions
Additions
Acquisition through business combinations
Acquisition through business combinations
Disposals
Disposals
At 31 March 2019
At 31 March 2019
Additions
Additions
Acquisition through business combinations
Acquisition through business combinations
Disposals
Disposals
At 31 March 2020
At 31 March 2020
Depreciation
Depreciation
At 1 April 2018 (restated)
At 1 April 2018 (restated)
Charge for the year
Charge for the year
On disposals
On disposals
At 31 March 2019
At 31 March 2019
Charge for the year
Charge for the year
On disposals
On disposals
At 31 March 2020
At 31 March 2020
Net book value
Net book value
At 31 March 2020
At 31 March 2020
At 31 March 2019
At 31 March 2019
At 1 April 2018
At 1 April 2018

Land and
Land and
buildings
buildings
£’000
£’000

Plant and
Plant and
machinery
machinery
£’000
£’000

Fixtures,
Fixtures,
fittings and
fittings and
equipment
equipment
£’000
£’000

Motor
Motor
vehicles
vehicles
£’000
£’000

2,602
2,602
233
233
190
190
-
-
3,025
3,025
398
398
60
60
-
-
3,483
3,483

8
8
205
205
-
-
213
213
247
247
-
-
460
460

3,023
3,023
2,812
2,812
2,594
2,594

221
221
105
105
10
10
-
-
336
336
299
299
63
63
(1)
(1)
697
697

10
10
113
113
-
-
123
123
141
141
-
-
264
264

433
433
213
213
211
211

183
183
56
56
3
3
-
-
242
242
67
67
62
62
-
-
371
371

5
5
88
88
-
-
93
93
81
81
-
-
174
174

197
149
178

293
293
250
250
10
10
(87)
(87)
466
466
187
187
144
144
(43)
(43)
754
754

14
14
123
123
(11)
(11)
126
126
126
126
(18)
(18)
234
234

520
520
340
340
279
279

Total
Total
£’000
£’000

3,299
3,299
644
644
213
213
(87)
(87)
4,069
4,069
951
951
329
329
(44)
(44)
5,305
5,305

37
37
529
529
(11)
(11)
555
555
595
595
(18)
(18)
1,132
1,132

4,173
4,173
3,514
3,514
3,262
3,262

The Company has no property, plant and equipment.
The Company has no property, plant and equipment.
Included within land and buildings is freehold land amounting to £348,000 (2019: £348,000) which is not depreciated.
Included within land and buildings is freehold land amounting to £348,000 (2019: £348,000) which is not depreciated.
Property, plant and equipment with a carrying value of £2,983,000 (2019: £2,623,000) is pledged as security for the Group’s bank loans.
Property, plant and equipment with a carrying value of £2,983,000 (2019: £2,623,000) is pledged as security for the Group’s bank loans.

F I N A N C I A L S T A T E M E N T S

85
85

Financial Statements
Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020
YEAR ENDED 31 MARCH 2020

19. Intangible assets
19. Intangible assets

Cost
Cost
At 1 April 2018 (restated)
At 1 April 2018 (restated)
Additions
Additions
Acquisition through business combinations
Acquisition through business combinations
At 31 March 2019
At 31 March 2019
Additions
Additions
Acquisition through business combinations
Acquisition through business combinations
Disposals
Disposals
At 31 March 2020
At 31 March 2020
Amortisation
Amortisation
At 1 April 2018 (restated)
At 1 April 2018 (restated)
Charge for the year
Charge for the year
At 31 March 2019
At 31 March 2019
Charge for the year
Charge for the year
Impairment
Impairment
On disposals
On disposals
At 31 March 2020
At 31 March 2020
Net book value
Net book value
At 31 March 2020
At 31 March 2020
At 31 March 2019
At 31 March 2019
At 1 April 2018
At 1 April 2018

The Company has no intangible assets.
The Company has no intangible assets.

Customer & supplier
Customer & supplier
relationships and
relationships and
other intangibles
other intangibles
£’000
£’000

Goodwill
Goodwill
£’000
£’000

Brands
£’000

5,157
5,157
-
-
194
194
5,351
5,351
-
-
2,564
2,564
-
-
7,915
7,915

43
43
523
523
566
566
639
639
-
-
-
-
1,205
1,205

6,710
6,710
4,785
4,785
5,114
5,114

20,306
20,306
5
5
490
490
20,801
20,801
-
-
5,734
5,734
-
-
26,535
26,535

169
169
2,052
2,052
2,221
2,221
2,420
2,420
-
-
-
-
4,641
4,641

21,894
21,894
18,580
18,580
20,137
20,137

41,965
41,965
-
-
1,423
1,423
43,388
43,388
-
-
6,074
6,074
-
-
49,462
49,462

-
-
-
-
16
-
16

49,446
49,446
43,388
43,388
41,965
41,965

Total
Total
£’000
£’000

67,428
67,428
5
5
2,107
2,107
69,540
69,540
-
-
14,372
14,372
-
-
83,912
83,912

212
212
2,575
2,575
2,787
2,787
3,059
3,059
16
16
-
-
5,862
5,862

78,050
78,050
66,753
66,753
67,216
67,216

Goodwill is reviewed annually for impairment. As outlined within the key sources of estimation uncertainty, in note 4 of the Financial
Goodwill is reviewed annually for impairment. As outlined within the key sources of estimation uncertainty, in note 4 of the Financial
Statements, the COVID-19 pandemic led to significant changes in the market in which the Group operates. This has given rise to
Statements, the COVID-19 pandemic led to significant changes in the market in which the Group operates. This has given rise to
an indication of potential impairment. As such, impairment reviews have also been carried out in respect of other intangible assets
an indication of potential impairment. As such, impairment reviews have also been carried out in respect of other intangible assets
and other non financial assets, including property, plant and equipment and right of use assets. Investments in associates have also
and other non financial assets, including property, plant and equipment and right of use assets. Investments in associates have also
been assessed for impairment, details of which are disclosed in note 22.
been assessed for impairment, details of which are disclosed in note 22.
The carrying amount of goodwill and impairment losses by segment are as follows:
The carrying amount of goodwill and impairment losses by segment are as follows:

At 1 April 2018 (restated)
At 1 April 2018 (restated)
Recognised on acquisitions
Recognised on acquisitions
At 31 March 2019
At 31 March 2019
Recognised on acquisitions
Recognised on acquisitions
Impairment
Impairment
At 31 March 2020
At 31 March 2020

Bricks and Building
Bricks and Building
Materials
Materials
£’000
£’000

Roofing Products
Roofing Products
and Services and
and Services and
Heating
Heating
£’000
£’000

Plumbing and
Plumbing and
Joinery
Joinery
£’000
£’000

Consolidated
£’000

16,976
16,976
1,423
1,423
18,399
18,399
5,940
5,940
(16)
(16)
24,323
24,323

12,299
12,299
-
-
12,299
12,299
-
-
-
-
12,299
12,299

12,690
12,690
-
-
12,690
12,690
134
134
-
-
12,824
12,824

41,965
41,965
1,423
1,423
43,388
43,388
6,074
6,074
(16)
(16)
49,446
49,446

Impairment losses regarding goodwill are included within the depreciation and amortisation expense in the statement of profit or loss.
Impairment losses regarding goodwill are included within the depreciation and amortisation expense in the statement of profit or loss.

86
86

The carrying amount of goodwill is allocated to CGUs as follows:
The carrying amount of goodwill is allocated to CGUs as follows:

Brick-ability trading group

PVH trading group

HHG trading group

Other CGUs

Total

2020
2020
£’000
£’000

12,845

16,399

12,690

7,512

49,446

2019 (Restated)
£’000

As at 1 Apr 2018
As at 1 Apr 2018
(Restated) £’000
(Restated) £’000

12,845

16,399

12,690

1,454

43,388

12,845

16,399

12,690

41,965

The goodwill allocated to the Brick-ability trading group, PVH
The goodwill allocated to the Brick-ability trading group, PVH
trading group and HHG trading group CGUs is considered
trading group and HHG trading group CGUs is considered
significant in comparison with the Group’s total carrying amount
significant in comparison with the Group’s total carrying amount
of goodwill. CGUs within the Other CGU category represent
of goodwill. CGUs within the Other CGU category represent
between 0.03% and 6.22% of the total goodwill and relate to the
between 0.03% and 6.22% of the total goodwill and relate to the
business operations of entities acquired during the current and
business operations of entities acquired during the current and
previous year.
previous year.
The Group estimates the recoverable amount of each CGU using
The Group estimates the recoverable amount of each CGU using
a value in use model by projecting cash flows for the next three
a value in use model by projecting cash flows for the next three
years together with a terminal value using a growth rate. The key
years together with a terminal value using a growth rate. The key
assumptions underpinning the recoverable amounts of the CGUs
assumptions underpinning the recoverable amounts of the CGUs
tested for impairment are forecast revenues and EBITDA and the
tested for impairment are forecast revenues and EBITDA and the
discount rate applied.
discount rate applied.
Revenue and EBITDA forecast in the impairment models are based
Revenue and EBITDA forecast in the impairment models are based
on management’s past experience and future expectations of
on management’s past experience and future expectations of
performance. Projections also incorporate the potential downturn
performance. Projections also incorporate the potential downturn
in revenues anticipated in the short-term as a result of the
in revenues anticipated in the short-term as a result of the
COVID-19 pandemic. For each CGU, a growth rate of 2% (2019
COVID-19 pandemic. For each CGU, a growth rate of 2% (2019
and 1 April 2018: 2%) is used to extrapolate cash flow projections
and 1 April 2018: 2%) is used to extrapolate cash flow projections
beyond the three year period covered by the most recent forecasts.
beyond the three year period covered by the most recent forecasts.

This rate does not exceed the average long-term growth rate for
This rate does not exceed the average long-term growth rate for
the relevant markets. The rate used to discount the forecast cash
the relevant markets. The rate used to discount the forecast cash
flows is 10.00% (2019: 10.21%) (1 April 2018: 11.42%), derived from
flows is 10.00% (2019: 10.21%) (1 April 2018: 11.42%), derived from
the CGU’s weighted average cost of capital (WACC).
the CGU’s weighted average cost of capital (WACC).
The impairment loss of £16,000 in the period relates to goodwill
The impairment loss of £16,000 in the period relates to goodwill
held in a subsidiary and is included within the Other CGU total
held in a subsidiary and is included within the Other CGU total
above. This goodwill arose following incorporation of that
above. This goodwill arose following incorporation of that
subsidiary and acquisition of the business previously operating as
subsidiary and acquisition of the business previously operating as
a partnership. Given the age of the goodwill asset, management
a partnership. Given the age of the goodwill asset, management
no longer consider that economic benefits generated by that
no longer consider that economic benefits generated by that
subsidiary are attributable to this asset. Its carrying amount has
subsidiary are attributable to this asset. Its carrying amount has
therefore been written down to £nil, based on its value in use.
therefore been written down to £nil, based on its value in use.
The total recoverable amount in respect of goodwill arising on
The total recoverable amount in respect of goodwill arising on
consolidation, other intangibles and other non-financial assets, as
consolidation, other intangibles and other non-financial assets, as
assessed by management using the above assumptions, is greater
assessed by management using the above assumptions, is greater
than the carrying amount. No further impairment loss has therefore
than the carrying amount. No further impairment loss has therefore
been recorded, in either the current or previous year. Management
been recorded, in either the current or previous year. Management
currently consider that it is not reasonably possible for the
currently consider that it is not reasonably possible for the
assumptions to change so significantly as to eliminate
assumptions to change so significantly as to eliminate
the excess.
the excess.

20. Subsidiaries
20. Subsidiaries

F I N A N C I A L S T A T E M E N T S

87
87

Company2020 £’0002019 £’000Shares in group undertakings Cost and carrying value6,5426,542Company2020 £’0002019 £’000Shares in group undertakings Cost and carrying value6,5426,542Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

20. Subsidiaries (continued)
At the reporting date, the Company had the following subsidiary undertakings, all of which are included in these consolidated Financial Statements:

Subsidiary

Brickability Enterprises Holding Limited

Brickability Enterprises Investments Limited

Brickability UK Holdings Limited (1)

Brick-ability Ltd. (2)

Brick Services Limited (2)

The Matching Brick Company Limited (2)

Brick-Link Limited (2)

Plansure Building Products Limited (2)

P V H Holdings Limited (1)

Crest Brick Slate & Tile Limited (3)

Crest Roofing Limited (3)

Crown Roofing (Centres) Limited (5)

Excel Roofing Services Limited (5)

Hamilton Heating Group Limited (1)

Towelrads.com Limited (6)

Radiatorsonline.com Ltd (6)

Frazer Simpson Limited (1)

FSN Doors Limited (1)

DSH Flooring Limited (6)

CPG Building Supplies Limited (1)

Brickwise Ltd (1)

The Bespoke Brick Company Limited (1)

The Brick Slip Business Limited (1)

Brickmongers (Wessex) Ltd (2)

LBT Brick & Facades Limited (2)

McCann Roofing Products Limited (4)

U Plastics Limited (1)

Country of operation
and incorporation

Class of
share held

Proportion of shares
held 2020

Proportion of shares
held 2019

England and Wales

Ordinary

100%

(1) Wholly owned by Brickability Enterprises Investments Limited.
(2) Wholly owned by Brickability UK Holdings Limited.

(3) Wholly owned by P V H Holdings Limited.
(4) Wholly owned by Crest Brick Slate & Tile Limited.

(5) Wholly owned by Crest Roofing Limited.
(6) Wholly owned by Hamilton Heating Group Limited.

By virtue of section 479A of the Companies Act 2006, the following subsidiaries are exempt from the requirements relating to the audit of
individual accounts, with the ultimate parent company, Brickability Group plc, providing a guarantee for these companies under section 479C:

Subsidiary

Company number

Subsidiary

Company number

Brickability Enterprises Holding Limited

Brickability Enterprises Investments Limited

Brickability UK Holdings Limited

Brick-Link Limited

10332050

10332505

07805178

02245364

P V H Holdings Limited

Hamilton Heating Group Limited

CPG Building Supplies Limited

The Brick Slip Business Limited

02484708

09921801

02937329

09707800

The Directors believe that the likelihood of the guarantee being called upon is remote, based on the above subsidiaries either being
intermediate parents within the group, with primarily just group debt balances, or considered extremely low risk.

21. Business combinations

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

Company acquired

DSH Flooring Limited

LBT Brick & Facades Limited

The Bespoke Brick Company Limited

The Brick Slip Business Limited

Acquisition date

Company acquired

Brickmongers (Wessex) Ltd

Acquisition date

5 July 2019

McCann Roofing Products Limited

13 February 2020

U Plastics Limited

10 March 2020

1 April 2019

15 May 2019

17 May 2019

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

DSH Flooring
Limited
£’000

LBT Brick
& Facades
Limited
£’000

The Bespoke
Brick
Company
Limited
£’000

The Brick
Slip Business
Limited
£’000

Brickmongers
(Wessex) Ltd
£’000

McCann
Roofing
Products
Limited
£’000

U Plastics
Limited
£’000

Property plant and equipment
Right of use assets
Identifiable intangible assets
Inventory
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Lease liabilities
Deferred tax
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:

Cash
Loan notes
Deferred consideration
Contingent consideration
(note 32)
Total consideration

3
-
-
182
517
7
(543)
-
-
166
134
300

300
-
-

300

33
-
1,595
-
1,379
697
(1,198)
-
(276)
2,230
382
2,612

2,612
-
-

2,612

24
49
1.999
658
3,159
701
(2,480)
(49)
(344)
3,717
3,075
6,792

4,913
955
924

6,792

-
55
-
11
13
24
(36)
(55)
-
12
13
25

20
5
-

47
-
614
433
736
339
(757)
-
(106)
1,306
217
1,523

831
554
-

138

1,523

3
9
1,285
429
1,227
1,105
(1,180)
(9)
(220)
2,649
148
2,797

2,750
-
47

2,797

219
836
2,805
766
1,697
2,273
(2,167)
(871)
(506)
5,052
2,105
7,157

-
-
4,950

2,207

7,157

Included in the consolidated Financial Statements are the following amounts of revenue and profit in respect of the subsidiaries acquired

DSH Flooring
Limited
£’000

2,828

161

LBT Brick
& Facades
Limited
£’000

The Bespoke
Brick Company
Limited
£’000

The Brick
Slip Business
Limited
£’000

Brickmongers
(Wessex) Ltd
£’000

McCann
Roofing
Products
Limited £’000

6,316

385

10,253

704

3,617

129

1,256

U Plastics
Limited
£’000

615

Revenue

Net profit

Had the business combinations taken place at the beginning of the financial year, the Group’s revenue for the year would have been
£206,278,000 and Group profit would have been £11,215,000.

F I N A N C I A L S T A T E M E N T S

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

21. Business combinations (continued)

Acquisition related costs, included in exceptional expenses (note 14), amounted to £425,000, made up as follows:

DSH Flooring
Limited
£’000

Transaction costs

LBT Brick
& Facades
Limited
£’000

The Bespoke
Brick Company
Limited
£’000

The Brick
Slip Business
Limited
£’000

Brickmongers
(Wessex) Ltd
£’000

McCann
Roofing
Products
Limited £’000

101

U Plastics
Limited
£’000

The Group acquired all of the above subsidiaries in order to expand its network within the UK and increase the range of products that can
be offered to its customers. Goodwill principally comprises the value of expected synergies arising from the acquisitions and the value of the
assembled workforce. None of the goodwill is expected to be deductible for tax purposes.

Contingent consideration
A contingent consideration arrangement was agreed during the
purchase of The Bespoke Brick Company Limited. Additional cash
payments of £300,000 per annum are payable if the entity meets
an agreed EBITDA target in the three years following acquisition. In
addition, an amount of £0.50 is payable for every £1 that the target is
exceeded. These terms are conditional on the former owner remaining
employed within the Group. Should the target EBITDA be met and
the former owner is no longer employed, the amount payable is
£100,000 per annum.

At the acquisition date, the fair value of this contingent consideration
was estimated to be £nil as the target EBITDA was not expected to
be met. At the reporting date, this was also the case and thus there
has been no change in the estimated contingent consideration.

During the purchase of Brickmongers (Wessex) Limited, a contingent
consideration arrangement was agreed whereby £0.50 is payable for
every £1 that the entity exceeds an agreed EBITDA target in the three
years following acquisition.

At the acquisition date, the fair value of this contingent consideration
was estimated to be £138,000. The fair value is based on a
discounting cash flow model, applying a discount rate of 4.8% to the
cash flows that are expected to arise. At the reporting date, the entity
was still expected to meet its EBITDA targets and the fair value of
the contingent consideration was £143,000. The total undiscounted
amount payable is estimated to be £155,000.

A contingent consideration agreement was also entered into during
the purchase of U Plastics Limited. An amount of £800,000 per
annum is payable, if an agreed EBITDA target is met in the three
years following acquisition. The annual amount is reduced on a £1
for £1 basis for any shortfall below the target. However, any shortfall
in the first and second year will be repaid at the end of the third year
if the target EBITDA is exceeded at the end of year three for all three
years, up to a maximum of £2.4m.

At the acquisition date, the fair value of the contingent consideration
was estimated to be £2,208,000. The fair value is based on a
discounting cash flow model, applying a discount rate of 3.5% to the

cash flows that are expected to arise. The fair value at the reporting
date was £2,214,000 and the total undiscounted amount payable is
estimated to be £2,400,000.

In the prior year, a contingent consideration arrangement was entered
into on the purchase of CPG Building Supplies Limited. Under
the terms of the agreement, an amount is repayable by the seller
if an agreed EBITDA target is not met in the three years following
acquisition. The amount repayable would be equal to any shortfall on
a £1 for £1 basis.

At the acquisition date, the fair value of the contingent consideration
was estimated to be an asset of £201,000. This was based on a
discounted cash flow technique, with expected cash flows discounted
by 4%. The fair value of the asset at 31 March 2019 was £204,000,
with the undiscounted receivable estimated to be £222,000. At
the reporting date of 31 March 2020, no contingent consideration
is expected to be received and thus the contingent consideration
receivable has been reduced to £nil.

The Group acquired PVH Holdings Limited and its subsidiaries
on 6 March 2018. This also included a contingent consideration
agreement. If an agreed EBITDA target is met, a further amount is
payable at a rate of 0.6 x the excess over the EBITDA target. If the
target is not met, an amount is repayable at the same rate.

At the acquisition date, the fair value of the contingent consideration
was an asset of £452,000. The amount that became repayable was
£96,000. Under the terms of the contract, amounts repayable are
permitted to be deducted from the contractual deferred consideration
due. The associated contingent asset has therefore been presented
within other payables, alongside the contractual deferred consideration.

At 31 March 2019, performance had improved and thus the
contingent consideration was remeasured at an amount payable of
£770,000, for the remaining two years. An amount of £627,000
was subsequently paid in connection with the second year following
acquisition. At the reporting date of 31 March 2020, the fair value
of contingent consideration was estimated to be £nil. The fair values
are again based on a discounted cash flow model and anticipated
payments or repayments. A discount rate of 4.7% has been applied to
the anticipated cash flows.

22. Associates
At the reporting date, the Group had the following associated undertakings, all of which are included in the consolidated
Financial Statements using the equity method:

Subsidiary

Apex Brickcutters Limited

Financewell Limited

Country of operation
and incorporation

England and Wales

Class of
share held

Ordinary

Proportion of shares held

50%

25%

During the year, an impairment loss of £509,000 was recognised
in relation to the investment in Financewell Limited. The company
is not trading profitably and further losses are anticipated. Since
the reporting date, an agreement in principle has been reached to
sell the investment for consideration of £125,000. The investment
has therefore been written down to its recoverable amount of
£125,000, based on fair value less costs of disposal. Costs of
disposal are expected to be minimal. As the fair value Is based
on the price agreed in an active market, but is not quoted, it is
considered to be at level 2 of the fair value hierarchy.

During the year, an impairment loss of £366,000 was also
recognised in relation to Apex Brickcutters Limited as the
company is not trading as profitably as it had been historically.

The investment in Apex Brickcutters Limited has been written
down to its recoverable amount of £227,000, based on its
fair value less costs of disposal. The fair value has been based
on an amount equal to the Group’s share of the net assets of
the associate, based on its latest Financial Statements. As the
associate is unquoted but its net asset value is observable, with its
carrying value of assets and liabilities not expected to be subject
to significant adjustments to reflect fair value, it is considered to
be at level 2 of the fair value hierarchy.

Investments in associates are not attributed to the Group’s
reportable segments. Impairment losses in respect of investments
in associates are included within exceptional expenses within the
statement of profit or loss (note 14).

23. Inventories

Goods for resale

Group

2019
(Restated)
£’000

As at
1 Apr 2018
(Restated)
£’000

5,422

5,031

2020
£’000

9,791

Company

2020
£’000

2019
£’000

F I N A N C I A L S T A T E M E N T S

Interest in associates2020£’0002019 (Restated)£’000At 1 April 1,292 636Additions-679Dividends received from associates(33)(36)Share of profit or loss(32)13Impairment of investments (note 14)(875)-At 31 March3521,292Aggregate information of associates that are not individually material2020£’0002019£’000Group’s share of profit or loss from continuing operations(32)13Group’s share of other comprehensive income--Group’s share of total comprehensive income(32)13Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

24. Trade and other receivables

Current

Trade receivables

Less allowance for expected credit loss

Contract assets

Amounts owed by group undertakings

Prepayments and accrued income

Directors’ loan accounts

Other receivables

Non-current

Trade receivables

Other receivables

Group

2019
(Restated)
£’000

Company

As at
1 Apr 2018
(Restated)
£’000

2020
£’000

2019
(Restated)
£’000

31,680

(710)

30,970

1,798

1,312

26,425

(457)

25,968

1,169

633

79,819

1,837

2020
£’000

33,696

(592)

33,104

1,911

978

530

36,560

34,137

27,770

79,819

1,837

391

155

178

333

146

36,951

34,470

27,916

9,343

89,162

7,802

9,639

Other receivables for the Company relate to loan notes receivable.
The balance is due on the 10th anniversary of the loan note
instrument, and is receivable from 6 March 2028. Interest is
accrued at 9.5% per annum and is receivable when the loan
notes are repaid.

An impairment analysis is performed at each reporting date using
a provision matrix to measure expected credit losses. The provision
rates are based on days past due for groupings of various customer
segments that have similar credit risk and loss patterns, for example
by customer type, size or credit rating.

Trade receivables are non-interest bearing. The allowance for credit
losses has been determined by reference to past default experience
and a review of specific customers’ debts at the year end. The
Group considers a financial asset to be in default when contractual
payments are 90 days past due. However, the Group may also
consider a financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive the
outstanding contractual amounts in full before taking into account
any credit enhancements held by the Group. Trade receivables are
written off when there is no reasonable expectation of recovering the
amounts due, for example when a customer has entered liquidation.

In determining the recoverability of a trade receivable, the Group
considers any change in the credit quality of the trade receivable
from the date credit was initially granted up to the reporting date.
The concentration of credit risk is limited due to the customer base
being large and unrelated.

The provision matrix is initially based on the Group’s historical
observed default rates over the previous 2 years.

The Group will then adjust the historical loss rate to take into
account forward looking information, for example when forecast
economic conditions, such as gross domestic product or
unemployment rates, are expected to deteriorate. At each reporting
date, the historical default rates are updated and forward looking
estimates reassessed.

At the reporting date, the COVID-19 pandemic gave rise to an
indication of a potential increase in credit risk for certain customers
given the significant impact on the UK market. The forward looking
estimates have therefore taken into account this increased risk. The
Group does, however, have credit insurance for its main customers
within the Bricks and Building Materials segment which will
mitigate some of this risk. Market recovery following the initial lock
down period has also been considered. Details of the Group’s credit
exposure is included in note 32.

Set out below is the risk profile of trade receivables and contract assets based on the Group’s provision matrix. Any reasonable
change in rates applied would not result in a material adjustment to the expected credit loss recognised.

Trade Receivables and Contract Assets
Days past due

31 March 2020

Expected credit loss rate

Gross carrying amount

Expected credit loss

Current
£’000

0.19%

16,899

< 30 days
£’000

30-60 days
£’000

61-90 days
£’000

>91 days
£’000

Total
£’000

0.29%

12,444

9.31%

2,990

278

4.24%

307

15.69%

1,484

233

34,124

592

Trade Receivables and Contract Assets
Days past due

31 March 2019

Expected credit loss rate

Gross carrying amount

Expected credit loss

Current
£’000

< 30 days
£’000

30-60 days
£’000

61-90 days
£’000

0.24%

17,608

0.29%

10,136

12.98%

2,589

336

4.12%

328

>91 days
£’000

23.94%

1,210

289

Total
£’000

31,871

710

Trade Receivables and Contract Assets
Days past due

1 April 2018

Expected credit loss rate

Gross carrying amount

Expected credit loss

Current
£’000

< 30 days
£’000

30-60 days
£’000

61-90 days
£’000

>91 days
£’000

Total
£’000

0.19%

13,310

0.28%

9,546

14.22%

2,628

374

5.40%

343

1.81%

744

26,571

457

F I N A N C I A L S T A T E M E N T S

Movement in the allowance for expected credit losses2020£’0002019£’000Balance at the beginning of the year 710457Impairment losses recognised433542Amounts written off as uncollectable(551)(289)59271027. Loans and borrowings

Current

Bank loans

Non-current

Bank loans

Loan notes

Group

Company

2020

£’000

2019

(Restated)

£’000

As at

1 Apr 2018

(Restated) £’000

2020

£’000

2019

£’000

24,912

3,053

33,369

28,966

62,335

65,388

3,158

34,817

24,901

59,718

62,876

24,912

The Directors consider that the carrying amount of loans and

payment after more than five years from the reporting date.

borrowings approximates to their fair value.

The bank loans are secured by a fixed charge over the Group’s

freehold property and floating charges over the remaining

assets of the Group, including all property, investments and

assets of the Company’s subsidiary undertakings. A guarantee

has also been provided by trading subsidiaries.

Included within non-current borrowings is an amount of

£ nil (2019: £28,966,000) in respect of liabilities payable or

repayable otherwise than by instalments which fall due for

These liabilities were A series, B series and B1 series loan notes

which accrued interest at 9.5% per annum. Both interest and

capital were repayable on the loan notes redemption date of

13 September 2026. The loan notes were secured by fixed and

floating charges over the assets of the Company.

These loan notes were settled during the year by way of cash

settlement and conversion to equity. A reconciliation of the

change in loan note liabilities arising from financing activities is

included in note 36.

Financial Statements
Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020
YEAR ENDED 31 MARCH 2020

25. Cash and Cash Equivalents
25. Cash and Cash Equivalents

Cash and cash equivalents

Group

2019
2019
£’000
£’000

17,001

2020
2020
£’000
£’000

27,269

Company
Company

As at
As at
1 Apr 2018
1 Apr 2018
£’000
£’000

2020
2020
£’000
£’000

5,346

2019
2019
£’000
£’000

Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less.
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three months or less.
The carrying amount of these assets approximates to their fair value.
The carrying amount of these assets approximates to their fair value.

26. Trade and other payables
26. Trade and other payables

Current

Trade payables

Amounts owed to group undertakings

Accruals and deferred income

Other taxation and social security

Deferred consideration

Other payables

Non-current

Other payables

Group

Company
Company

2020
2020
£’000
£’000

2019
2019
(Restated)
(Restated)
£’000
£’000

As at
As at
1 Apr 2018
1 Apr 2018
(Restated)
(Restated)
£’000
£’000

2020
2020
£’000
£’000

2019
2019
£’000
£’000

27,159

24,490

12,776

3,289

3,070

8,020

374

3,692

2,492

3,942

478

3,830

2,108

4,078

242

120

41,912

35,094

23,034

166

2,402

44,314

4,507

39,601

7,095

30,129

166

Trade payables are non-interest bearing and principally comprise amounts outstanding for trade purchases and ongoing costs.
Trade payables are non-interest bearing and principally comprise amounts outstanding for trade purchases and ongoing costs.
The Group’s policy is to pay all payables within its pre-agreed credit terms, which, for the majority of suppliers, is a period of 30
The Group’s policy is to pay all payables within its pre-agreed credit terms, which, for the majority of suppliers, is a period of 30
days. The Directors consider that the carrying amount of trade payables approximates to their fair value.
days. The Directors consider that the carrying amount of trade payables approximates to their fair value.

94
94

27. Loans and borrowings
27. Loans and borrowings

Current

Bank loans

Non-current

Bank loans

Loan notes

Group

Company
Company

2020
2020
£’000
£’000

2019
2019
(Restated)
(Restated)
£’000
£’000

As at
As at
1 Apr 2018
1 Apr 2018
(Restated) £’000
(Restated) £’000

2020
2020
£’000
£’000

2019
2019
£’000
£’000

24,912

3,053

33,369

28,966

62,335

65,388

3,158

34,817

24,901

59,718

62,876

24,912

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

The bank loans are secured by a fixed charge over the Group’s
The bank loans are secured by a fixed charge over the Group’s
freehold property and floating charges over the remaining
freehold property and floating charges over the remaining
assets of the Group, including all property, investments and
assets of the Group, including all property, investments and
assets of the Company’s subsidiary undertakings. A guarantee
assets of the Company’s subsidiary undertakings. A guarantee
has also been provided by trading subsidiaries.
has also been provided by trading subsidiaries.

Included within non-current borrowings is an amount of
Included within non-current borrowings is an amount of
£ nil (2019: £28,966,000) in respect of liabilities payable or
£ nil (2019: £28,966,000) in respect of liabilities payable or
repayable otherwise than by instalments which fall due for
repayable otherwise than by instalments which fall due for

payment after more than five years from the reporting date.
payment after more than five years from the reporting date.
These liabilities were A series, B series and B1 series loan notes
These liabilities were A series, B series and B1 series loan notes
which accrued interest at 9.5% per annum. Both interest and
which accrued interest at 9.5% per annum. Both interest and
capital were repayable on the loan notes redemption date of
capital were repayable on the loan notes redemption date of
13 September 2026. The loan notes were secured by fixed and
13 September 2026. The loan notes were secured by fixed and
floating charges over the assets of the Company.
floating charges over the assets of the Company.

These loan notes were settled during the year by way of cash
These loan notes were settled during the year by way of cash
settlement and conversion to equity. A reconciliation of the
settlement and conversion to equity. A reconciliation of the
change in loan note liabilities arising from financing activities is
change in loan note liabilities arising from financing activities is
included in note 36.
included in note 36.

F I N A N C I A L S T A T E M E N T S
F I N A N C I A L S T A T E M E N T S

95
95

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

Land and buildings
£’000

Plant and vehicles
£’000

Equipment
£’000

Total
£’000

1,368

767

2,135

3,364

891

(19)

6,371

305

326

522

(19)

829

5,542

1,809

1,347

255

180

(46)

406

563

(31)

996

129

(13)

124

169

(31)

262

734

282

247

100

143

1,647

1,023

(46)

2,641

3,970

949

(50)

7,510

451

(13)

468

717

(50)

1,135

6,375

2,173

1,617

28. Leases

Group as lessee
Right of use assets

Cost

At 1 April 2018 (restated)

Additions

Acquisition through business combinations

Disposals

At 31 March 2019

Additions

Acquisition through business combinations

Disposals

At 31 March 2020

Depreciation

At 1 April 2018 (restated)

Charge for the year

Depreciation on disposals

At 31 March 2019

Charge for the year

Depreciation on disposals

At 31 March 2020

Carrying value

At 31 March 2020

At 31 March 2019

At 1 April 2018

Lease liabilities

At 1 April 2018 (restated)

Additions

Acquisition through business combinations

Interest expense

Lease payments

At 31 March 2019

Additions

Acquisition through business combinations

Interest expense

Lease payments

At 31 March 2020

Maturity analysis

Due within 1 year

Due between 1 and 5 years

Due after 5 years

Land and buildings
£’000

Plant and vehicles
£’000

Equipment
£’000

1,324

767

(364)

1,814

3,477

926

257

(624)

5,850

251

130

(175)

238

532

(219)

628

(23)

(28)

100

Total
£’000

1,599

973

106

(562)

2,133

4,052

984

280

(871)

6,578

2020
£’000

776

2,034

3,768

6,578

2019 (Restated)
£’000

As at
1 Apr 2018 (Restated)
£’000

428

1,086

619

2,133

340

1,008

251

1,599

The undiscounted maturity analysis in respect of lease payments is disclosed in note 32.

Included within administration expenses within the consolidated statement of profit or loss is an amount of £69,000 (2019:
£25,000) in respect of short-term leases and an amount of £3,000 (2019: £2,000) in respect of low value asset leases.

The lease liabilities are secured over the assets to which they relate. The Group is not permitted to pledge these assets as security for
any other borrowings or to sell them to another entity.

The Company does not have any right of use assets or lease liabilities.

Group as lessor
The Group does not have significant leasing activities acting as a lessor. Operating leases, in which the Group is the lessor relate to
the sub-let of part of its leasehold property.

Rental income on operating leases recognised in the statement of profit or loss is as follows:

Rental income

2020
£’000

2019
£’000

F I N A N C I A L S T A T E M E N T S

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

Future minimum rentals receivable under non-cancellable operating leases at the reporting date are as follows:

Maturity analysis

Due within 1 year

Due between 1 and 5 years

The Company does not have any operating lease arrangements.

29. Provisions

Group

At 1 April 2018

Additions

Unused amounts reversed

At 31 March 2019

Additions

Utilised in the year

Unused amounts reversed

At 31 March 2020

2020
£’000

2019
£’000

As at
1 Apr 2018
£’000

Defect provisions
£’000

Dilapidation
provisions
£’000

2,325

102

(465)

1,962

(650)

1,389

(13)

Total
£’000

2,338

102

(465)

1,975

(13)

(650)

1,389

The Company does not have any provisions.

Defect provisions
A 10 year warranty is offered in connection with roofing services. These warranties are offered in the normal course of business and
are in line with industry standards. Provision is therefore recognised for expected defect claims on goods and services sold during the
last 10 years. The provision is based on management’s best estimate of the Group’s liability under the warranties granted, based on
past experience. The main uncertainty relates to estimating the value and number of claims expected to be made.

Management consider their estimate on a case by case basis, following a specific review of jobs carried out during the year. This is
considered to be the most appropriate method for determining the provision due to the individual nature of the materials used in
construction, the size and geography of the site and other external factors. The cost and number of historical claims forms the basis
of the estimated costs that could potentially arise from future claims over the 10 year warranty period. The cost of any warranty claim
is charged against the associated provision as those costs become payable. Once the 10 year warranty period has expired, any
unutilised provision is released back to profit or loss. Due to the long-term nature of the liabilities and uncertainty surrounding the
potential timing of the claims, the provision is inherently subjective. The potential impact of discounting is considered immaterial.

Dilapidation provisions
Provision is recognised for expected repairs on the Group’s operating premises. Leasehold dilapidations relate to the estimated
cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms. The cost is
recognised as part of the right of use asset and is depreciated over the remaining term of the lease. The main uncertainty relates to
estimating the cost that will be incurred at the end of the lease.

30. Deferred tax

Group
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and
prior reporting period:

At 1 April 2018 (restated)

Charged to profit or loss

Acquired through business combinations

At 31 March 2019

Charged to profit or loss

Acquired through business combinations

At 31 March 2020

Accelerated tax
depreciation
£’000

Other temporary
differences
£’000

(35)

701

(4)

662

(843)

(28)

(209)

(4,118)

225

(117)

(4,010)

217

(1,424)

(5,217)

Total
£’000

(4,153)

926

(121)

(3,348)

(626)

(1,452)

(5,426)

Deferred tax assets and liabilities are presented in the consolidated statement of financial position as follows:

The Company has no deferred tax assets or liabilities.

At the reporting date, the Group had no unused tax losses (2019: £ 17,000), available for offset against future profits,
where deferred tax assets have not been provided.

31. Pensions

Defined contribution plans
The total expense recognised in profit or loss in relation to contributions payable under defined contribution pension
plans is £463,000 (2019: £382,000).

At the reporting date, contributions of £ 72,000 (2019: £ 32,000) (1 April 2018: £19,000) due in respect of the
reporting period had not yet been paid over to the pension provider.

F I N A N C I A L S T A T E M E N T S

2020£’0002019 (Restated)£’000As at1 Apr 2018 (Restated) £’000Deferred tax assets205744300Deferred tax liabilities(5,631)(4,092)(4,453)(5,426)(3,348)(4,153)Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

32. Financial instruments

The Group has the following financial assets and liabilities:

Fair values
Financial instruments not measured at fair value include cash and
cash equivalents, trade and other receivables, trade and other
payables, loans and borrowings and lease liabilities.

Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables and trade and

other payables approximates their fair value. For details of the fair
value of loans and borrowings, refer to note 27.

Interest rate swaps are valued using present value valuation
techniques, which employ the use of market observable inputs.

100

Financial assets2020£’0002019 (Restated)£’000As at1 Apr 2018 (Restated)£’000Financial assets measured at amortised costCash and cash equivalents27,26917,0015,346Trade and other receivables35,04032,46826,74762,30949,46932,093Financial assets measured at fair value through profit or lossContingent consideration-204452Total financial assets62,30949,67332,545Financial liabilities2020£’0002019£’000As at1 Apr 2018£’000Financial liabilities measured at amortised costTrade and other payables38,88736,33928,473Loans and borrowings24,91265,38862,876Lease liabilities6,5782,1331,59970,377103,86092,948Financial liabilities measured at fair value through profit or lossDerivatives-106-Contingent consideration2,357770-2,357876-Total financial liabilities72,734104,73692,948
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 31 March 2020, 31 March 2019 and 1 April 2018 are shown below:

Financial
instrument

Valuation
technique

Significant
Unobservable
inputs

Range/
estimate

Contingent
Consideration
in a business
combination
(note 21)

Present value
of future cash
flows

Assumed probability
adjustedEBITDA of
acquired entities

2020:
£1,231,000 –
£3,750,000

Discount rate

2019: £1,182,000 –
£11,584,000

2018: £14,230,000

2020: 3.5% - 4.8%

2019: 4.0% - 4.7%

2018: 4.7%

Sensitivity of the input to fair value

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 £67,000. A 10%
decrease in EBITDA would result in a decrease in the liability
of £404,000. (2019: increase of £771,000 and decrease of
£778,000) (1 April 18: increase and decrease of £803,000)

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 £103,000. A 2% decrease in the rate would
result in an increase in the liabilityof £109,000. (2019: decrease and
increase of £4,000) (2018: increase and decrease of £4,000)

Reconciliation of level 3 fair value measurements of financial instruments.

At 1 April 2018

Additions through business combinations

Finance expense charged to profit or loss

Settlement

Fair value losses recognised in profit or loss

At 31 March 2019

Additions through business combinations

Finance expense credited to profit or loss

Settlement

Fair value losses recognised in profit or loss

At 31 March 2020

Contingent consideration
£’000

452

201

(96)

(1,135)

(566)

(2,345)

(28)

627

(45)

2,357

Financial risk management objectives
The Group’s activities expose it to a variety of financial risks:
market risk (including cash flow, interest rate and currency risk),
investment risk, liquidity risk and credit risk. Risk management is
carried out by the directors. The Group finances its operations
through a mixture of debt finance, cash and liquid resources
and various items such as trade receivables and payables which
arise directly from the Group’s operations.

Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows
associated with an instrument will fluctuate due to changes in
market interest rates. Interest bearing assets, including cash
and cash equivalents, are considered to the short-term liquid
assets. It is the Group’s policy to settle trade payables within the
credit terms allowed and thus the Group does not incur interest
on overdue balances. The Group’s exposure to interest rate risk is
therefore primarily in respect of its long-term floating rate borrowings.

The Group has a portfolio with an appropriate mix of fixed and
floating rate borrowings and purchases interest rate swaps to

manage interest rate risk volatility and hedge against interest
exposure on future firm commitments. The fair values of the
assets and liabilities held at fair value through profit or loss at
the reporting date are determined using quoted prices. Where
quoted prices are not available for derivatives, the fair value of
derivatives has been calculated by discounting the expected
future cash flows at prevailing interest rates.

The Group also has the facility to offset cash and cash
equivalents against its bank borrowings in order to minimise its
interest charge.

Interest rate sensitivity analysis
The following table demonstrates the impact on the Group’s
profit before tax and equity based on the sensitivity of a
reasonably possible change in interest rates on the Group’s
floating rate borrowings, with all other variables held constant.
The analysis is prepared assuming the liability outstanding at
the reporting date was outstanding for the whole year.

F I N A N C I A L S T A T E M E N T S

101

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

32. Financial instruments (continued)

Sterling

2020

2019

Change in rate

Effect on profit
before tax £’000

+ 0.25%

-0.25%

(63)

Change
in rate

+0.5%

-0.5%

Effect on profit
before tax £’000

(184)

184

The change in interest rate is based on the observable market environment.

Foreign currency risk
The Group undertakes transactions denominated in foreign currencies and thus there is the risk of exposure to changes in foreign currency
exchange rates. The Group enters into forward foreign exchange contracts in order to hedge against fluctuations in exchange rates.

The carrying amounts of the Group’s foreign currency denominated monetary assets and liabilities at the reporting date are as follows:

Euro

USD

Assets

2019
£’000

527

2020
£’000

132

144

As at
1 Apr 2018
£’000

211

2020
£’000

2,190

Liabilities

2019
£’000

1,323

1,329

As at
1 Apr 2018
£’000

706

742

Foreign currency sensitivity analysis

The Group is mainly exposed to the Euro currency.

The following table demonstrates the Group’s sensitivity to a reasonably possible change in the Euro exchange rates, with all other
variables held constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities,
including non-designated foreign currency derivatives. The impact on equity is due to changes in the fair value of forward contracts
and changes as a result of translating outstanding foreign currency denominated monetary items at the revised exchange rates.

Euro

USD

2020

2019

Change in rate

Effect on profit
and equity
before tax

+ 10%

- 10%

+ 10%

- 10%

187

(229)

(1)

Change
in rate

+ 10%

- 10%

+ 10%

- 10%

Effect on profit
and equity
before tax

(88)

(1)

The change in exchange rate is based on management’s assessment of the reasonably possible change in foreign exchange rates.

102

Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash balances and reserves and by ensuring it has adequate banking
and borrowing facilities available. Management reviews cash flow forecasts on a regular basis to determine whether the Group has
sufficient cash reserves to meet future working capital requirements and to take advantage of business opportunities.

Liquidity and inherent risk tables
The following tables detail the Group’s remaining contractual maturity for its financial liabilities, based on the undiscounted cash flows

F I N A N C I A L S T A T E M E N T S

103

31 March 2020< 1 year £’0001 – 5 years £’000> 5 years £’000Total £’000Non-derivative financial liabilitiesTrade and other payables39,0232,515-41,538Lease liabilities1,0782,9334,9368,947Bank loans-25,000-25,000Total financial liabilities40,10130,4484,93675,48531 March 2019< 1 year £’0001 – 5 years £’000> 5 years £’000Total £’000Non-derivative financial liabilitiesTrade and other payables32,8044,550-37,354Lease liabilities5241,2967272,547Bank loans3,15833,684-36,842Loan notes--29,01729,01736,48639,53029,744105,760Derivative financial liabilitiesInterest rate swaps-106-106-106-106Total financial liabilities36,48639,63629,744105,866As at 1 April 2018< 1 year £’0001 – 5 years £’000> 5 years £’000Total £’000Non-derivative financial liabilitiesTrade and other payables20,9797,576-28,555Lease liabilities3951,1472871,829Bank loans3,15835,342-38,500Loan notes--24,95924,959Total financial liabilities24,53244,06525,24693,843Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

32. Financial instruments (continued)

Capital risk management
The capital structure of the Group consists of cash and cash equivalents, debt and equity. Equity comprises share
capital, share premium, retained earnings and the merger reserve which is equal to the amount shown as ‘Equity’
in the balance sheet. Debt comprises various items which are set out in further detail in note 27.

The Group’s objectives when maintaining capital are to:

• Safeguard the Group’s ability to remain a going concern so that it can continue to pursue its growth plans;
• Provide a reasonable expectation of future returns to shareholders; and
• Maintain adequate financial flexibility to preserve its ability to meet financial obligations, both current and long term.

The Group is not subject to any externally imposed capital requirements.

The Board reviews the capital structure annually, considering the cost of capital and the risks associated with each class of capital.

The Group’s gearing ratio at the reporting date is as follows:

Debt

Cash and cash equivalents

Net debt

Equity

2020
£’000

31,490

(27,269)

4,221

2019
£’000

67,521

(17,001)

50,520

As at
1 Apr 2018
£’000

64,475

(5,346)

59,129

80,065

16,386

8,131

Net debt to equity ratio

308%

727%

Debt is defined as short and long-term loans and borrowings and lease liabilities as detailed in notes 27 and 28. Equity includes all
capital and reserves.

Credit risk and impairment
Credit risk refers to the risk that a counterparty will default on
its contractual obligations, resulting in a financial loss to the
Group. In order to minimise the risk, the Group endeavours
to only deal with companies which are demonstrably
creditworthy. This, together with the aggregate financial
exposure, is continuously monitored; Credit approval processes
are in place for new customers and regular reviews of credit
limits carried out. Credit insurance is also taken out where
appropriate. Policies in place primarily cover customers within the
Bricks and Building Materials segment.

The maximum exposure to credit risk is the carrying value of the
Group’s financial assets, including trade and other receivables

and cash and cash equivalents. The Group does not consider
that there is any concentration of risk within either trade or other
receivables. The age of receivables is analysed and evaluated
on a regular basis for potential credit losses, considering historic,
current and forward-looking information. Details regarding the
credit risk exposure on trade receivables is outlined in note 24.

Credit risk on cash and cash equivalents is considered to be very
low as the counterparties are all substantial banks with high
credit ratings.

The Group does not hold any collateral or other credit
enhancements to cover its credit risks associated with its
financial assets.

104

33. Share capital

Group and Company

2020

2019

Number

Authorised, issued and fully paid

Ordinary shares of £0.01 each

230,458,821

2,304,588

Ordinary A shares of £0.01 each

Ordinary B shares of £0.01 each

Ordinary C shares of £1 each

Ordinary D shares of £0.01 each

17,088

82,912

2,085

138,317

230,458,821

2,304,588

240,402

As at
1 Apr 2018

Number

17,088

82,912

2,085

123,065

225,150

171

829

2085.00

1,231

4,316

171

829

2,085

1,383

4,468

During the year, the Company sub-divided 2,085 Ordinary C
shares of £1 each into 208,500 Ordinary C shares of £0.01
each. 206,415 Ordinary C shares were re-designated as deferred
shares of £0.01 which were then purchased by the Company and
subsequently cancelled.

The Company issued 9,791,424 new bonus Ordinary A shares of
£0.01 each, 47,508,576 new bonus Ordinary B shares of £0.01
each, 1,194,705 new bonus Ordinary C shares of £0.01each
and 84,451,489 new Ordinary D shares of £0.01 each. Of the
Ordinary D shares issued, 4,761 were issued on the conversion
of loan notes to equity, 4,291 were issued for consideration (see
note 37) and 84,442,437 were bonus shares.

The Company’s Ordinary A, B, C and D shares were re-
designated as Ordinary shares. Following the redesignation, the
Company issued 87,272,225 new Ordinary shares of £0.01 each.

Any profits distributed shall be applied pari passu amongst the
holders of the ordinary shares. In the event of a liquidation, the
surplus assets shall be applied pari passu amongst the holders of
the ordinary shares.

The Company has a share option scheme under which options
have been granted to certain employees to acquire ordinary
shares. Further details are included in note 35.

F I N A N C I A L S T A T E M E N T S

105

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

34. Reserves
The share capital reserve represents the nominal value
received for shares issued.

The share premium reserve represents the amount received, for
shares issued, in excess of the nominal value, less transaction costs.

The capital redemption reserve represents the par value
of shares purchased back by the Company and
subsequently cancelled.

The share-based payment reserve represents the value of equity
settled share-based payments provided to employees, including key
management personnel, as part of their remuneration. See note 35.

106

The retained earnings reserve represents the total of all current
and prior period retained profits and losses.

The merger reserve in the consolidated balance sheet represents
the difference between the carrying value of the assets and
liabilities acquired and the value of consideration transferred on
a previous group reorganisation.

Within the company balance sheet, it represents the merger
relief arising on a share for share exchange in which the
Company acquired a subsidiary.

35. Share based payments

Equity settled share option plans
The Company operates a Company Share Option Plan (CSOP) for certain employees, including senior management and directors.

Company Share Option Plan (CSOP)
Options are exercisable at a price equal to the market value per ordinary share at the grant date. Options have a vesting period of
three years and a contractual life of ten years. Options are forfeited if the employee leaves employment before the options vest.

Details of the share options outstanding during the year are as follows:

2020

Number of share
options

Weighted average
exercise price £

Number
of share
options

Weighted
average
exercise price
£

3,681,311

(45,889)

3,635,422

0.41

Outstanding at 1 April

Granted during the year

Forfeited during the year

Outstanding at 31 March

Exercisable at 31 March

No share options were exercised during the year.
The options outstanding at 31 March have an exercise price of £0.41 and a remaining contractual life of 9.33 years.

During the year, options were granted on 2 August 2019. The aggregate of the estimated fair value of those options is £257,692.

The fair value was determined using the binomial option pricing model. The inputs into this model are as follows:

Weighted average share price

Weighted average exercise price

Expected volatility

Option life

Expected dividend yield

Risk free interest rate

Sub-optimal exercise multiple

2020

£0.41

23%

10 years

2.6%

0.34%

4.5x

2019

The sub-optimal exercise multiple builds into the binomial option pricing model the assumption that once a vested option’s intrinsic
value reaches a certain multiple of the exercise price, the option-holder will choose to ‘cash in’ and exercise the option before it
reaches the end of its contractual life.

Expected volatility was determined using the average volatility of listed companies in the Building Materials FTSE ICB Subsector
weighted by market cap, as obtained from the LBS Risk Measurement Service’s report for the relevant period.

F I N A N C I A L S T A T E M E N T S

107

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

36. Notes to the statement of cash flows

Changes in liabilities arising from financing activities
The table below outlines the changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.

Non-cash changes

1 April 2019
£’000

Financing
cash flows
(1) £’000

New leases
£’000

Acquisition
of
subsidiaries
£’000

Conversion
to equity
£’000

Changes In
fair value
£’000

Other
changes (2)
£’000

31 March
2020 £’000

Bank borrowings (note 27)

36,422

Loan notes (note 27)

Lease liabilities (note 28)

Deferred consideration

Derivative financial
instruments

Total liabilities from
financing activities

(12,055)

(14,562)

(871)

(5,885)

28,966

2,133

8,449

106

(105)

5,036

1,514

8,266

(11,845)

76,076

(33,478)

5,036

9,780

(11,845)

(167)

(1)

(168)

545

(4,073)

280

(241)

24,912

6,578

10,422

(3,489)

41,912

(1) The cash flows make up the net amount of proceeds and repayments of loans and borrowings in the cash flow statement.
(2) Other changes include interest and fee accruals and payments.

Non-cash changes

1 April 2018
£’000

Financing
cash flows
(1) £’000

New leases
£’000

Acquisition
of
subsidiaries
£’000

Conversion
to equity
£’000

Changes In
fair value
£’000

Other
changes (2)
£’000

31 March
2019 £’000

Bank borrowings (note 27)

Loan notes (note 27)

Lease liabilities (note 28)

Deferred consideration

Derivative financial
instruments

Total liabilities from
financing activities

37,975

24,901

1,599

11,173

(1,658)

1,500

(541)

(4,663)

973

75,648

(5,362)

973

600

485

1,102

(300)

1,135

106

1,241

105

2,265

319

36,422

28,966

2,133

8,449

106

2,774

76,076

(1) The cash flows make up the net amount of proceeds and repayments of loans and borrowings in the cash flow statement.
(2) Other changes include interest and fee accruals and payments. Other changes within lease liabilities also includes settlement of a lease liability directly from

proceeds on the disposal of the corresponding right of use asset.

Non cash changes in equity arising from financing activities
Shares issued for consideration of £978,000 were funded by
directors’ loans (note 37). The cash inflow of £43,923,000 as
proceeds from the issue of ordinary shares is therefore £978,000
less than the total reported in the Consolidated and Company
Statement of Changes in Equity, for the issue of paid shares.

In addition to the conversion of loan notes into equity, amounting
to £11,845,000 (2019: £300,000), fees of £2,087,000 (2019:

£nil), in connection with the IPO, were settled by the issue of shares
in the Company. Total debt converted to equity was therefore
£13,932,000 (2019: £300,000).

The above mentioned fees of £2,087,000 and the £414,000
of share issue costs paid, form the total share issue costs of
£2,501,000, as presented in the Consolidated and Company
Statement of Changes in Equity.

108

37. Related party transactions

Group
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 directors:

Directors’ loan accounts

2020
£’000

978

2019
£’000

As at 1 Apr
2018 £’000

In respect of directors who had an overdrawn loan account during the year,
the following transactions took place between the directors and the Group:

The amounts advanced were for the purpose of paying up the subscription price for
ordinary D shares of £0.01 each. The loans are unsecured and interest free and are
repayable on the sale of any of the shares held in the Company by those directors.

Opening balance

Amounts advanced

Amounts repaid

Closing balance

£’000

978

(21)

978

Included within non-current loans and borrowings is an amount
of £nil (2019: 17,784,000) (1 April 2018: £15,314,000) payable
to directors in respect of loan notes and interest. During the year,
interest of £317,000 (2019: £1,432,000) was charged, at a rate
of 9.5% per annum, to profit or loss in respect of loan notes
payable to directors.

During the year, loan notes payable to directors amounting
to £5,883,000 (2019: £nil) were exchanged for shares in the

Company. Loan notes and accrued interest amounting to
£3,818,000 (2019: £nil) were paid to directors. Included within
the deferred consideration liability is an amount of £nil (2019:
£798,000) (1 April 2018: £1,566,000) in respect of deferred
consideration payable to directors in relation to acquisitions made
by the Group on 6 March 2018. A finance expense of £nil (2019:
£29,000) was recognised in respect of the unwinding of the
discount applied to deferred consideration due to directors.

Key management personnel

Key management personnel compensation

Short-term employee benefits

Post-employment benefits

Share-based payment expense

2020 £’000

2019 £’000

2,033

2,101

1,571

1,656

During the year, interest of £279,000 (2019: £nil) was charged, at
a rate of 9.5% per annum, to profit or loss in respect of loan notes
payable to key management personnel. Loan notes payable to
key management personnel amounting to £3,850,000 (2019:
£nil) were exchanged for shares in the Company. Loan notes and
accrued interest amounting to £4,403,000 (2019: £nil) were paid
to key management personnel.

Included within the deferred consideration liabilities is an amount
of £1,001,000 (2019 and 1 April 2018: £nil) in respect of deferred
consideration payable to key management personnel,

in connection with acquisitions made by the Group on 6 March
2018. A finance expense of £85,000 (2019: £nil) was recognised
in respect of the unwinding of the discount applied to deferred
consideration due to key management.

During the year, the Group made sales amounting to £68,000
(2019: £13,000) to a member of key management. A balance of
£33,000 (2019: £nil) was included within trade receivables at the
reporting date, in respect of these sales. The Group also purchased
a motor vehicle from a member of key management personnel
for £35,000 (2019: £nil). No balance was outstanding at the
reporting date in respect of this purchase.

F I N A N C I A L S T A T E M E N T S

109

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

37. Related party transactions
Other related parties
Included within receivables/ liabilities are the following amounts due from/ to other related parties, at the reporting date:

Associates

Other related parties

Amounts owed by related parties

Amounts owed to related parties

2020
£’000

2019
£’000

As at
1 Apr 2018
£’000

2020
£’000

2019
£’000

As at
1 Apr 2018
£’000

120

196

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

Associates

Other related parties

Sales to related parties

Purchases from related parties

2020
£’000

100

2019
£’000

2020
£’000

565

178

743

2019
£’000

377

224

601

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

Included within non-current loans and borrowings is an amount
of £nil (2019: 1,977,000) (1 April 2018: £1,414,000) in respect
of loan notes and interest payable a close relative of a director.
Interest of £71,000 (2019: £325,000) was accrued during the
year in respect of these loan notes, at a rate of 9.5% per annum.
£2,048,000 was paid to this close relative, in respect of these
loan notes, in the year.

Included within the deferred consideration liability is an amount of
£1,363,000 (2019 and 1 April 2018: £ nil) in respect of deferred
consideration payable to close relatives of key management, in
connection with acquisitions made by the Group on 6 March
2018. A finance expense of £116,000 (2019: £nil) was recognised
in respect of the unwinding of the discount applied to deferred
consideration due to these close relatives.

In the prior year, one of the members of key management
was a director. The amount payable at 31 March 2019 to the
close relative of this director was £1,457,000 (1 April 2018:
£2,133,000). A finance expense of £78,000 was recognised in
respect of the unwinding of the discount applied to this deferred
consideration in the year ended 31 March 2019.

During the year, the Group was charged £50,000 (2019:
£120,000), in respect of monitoring fees, by an entity in which
members of that entity have significant influence over the Group.

Included within non-current loans and borrowings is an amount of
£nil (2019: 6,767,000) (1 April 2018: £6,249,000) in respect of
loan notes and interest payable to an entity in which members of
that entity have significant influence over the Group. Interest of
£211,000 (2019: 518,000) was accrued during the year in respect
of the loan notes issued. The loan notes were secured with interest
payable, at 9.5% per annum, on redemption. The loan notes were
redeemable on 13 September 2026 but were settled during the
year, with a total of £6,978,000 paid on settlement.

Company
In accordance with the exemption under FRS 101, transactions and balances with wholly owned Group members and key
management personnel are not disclosed.

110

38. Post balance sheet events

There have been no subsequent events requiring further disclosure or adjustments to these financial statements.

39. Reconciliation to previously reported results

As reported in note 2, these are the first statutory financial statements that the Group has prepared under IFRS, since listing.
Accordingly, the Group has prepared financial statements that comply with IFRS applicable as at 31 March 2020, together with
the comparative period data for the period ended 31 March 2019 and as at 1 April 2018, as described in the summary of significant
accounting policies.

This note explains the principal adjustments made by the Group in restating its financial statements prepared under UK GAAP,
including the balance sheet as at 1 April 2018 and the financial statements as of, and for, the year ended 31 March 2019. This note
also outlines the prior period adjustments compared to the first financial statements prepared under IFRS, as reported within the AIM
admission document.

Group reconciliation of equity from FRS 102 as at 1 April 2018

1 April
2018
FRS 102
£’000

IFRS 3
£’000

IFRS 16
£’000

Deferred tax
£’000

IAS 28
£’000

Group
re-organisation
and
re-classification
£’000

Non-current assets

Property, plant and equipment

3,317

Right of use asset

Intangible assets

Investments in associates

Deferred tax assets

Trade and other receivables

69,644

632

2,832

(55)

1,617

Total non-current assets

73,593

2,832

1,563

Current assets

Inventories

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

Current liabilities

5,031

28,216

5,346

38,593

112,186

2,832

1,563

Trade and other payables

(23,146)

Current income tax

Loans and borrowings

Lease liabilities

(1,798)

(3,158)

(45)

Total current liabilities

(28,147)

112

(295)

1 April
2018
IFRS
£’000

3,262

1,617

67,216

636

300

146

(5,261)

300

146

(4,815)

73,177

(446)

(5,261)

5,031

27,770

5,346

38,147

111,324

(23,035)

(1,798)

(3,158)

(340)

(28,330)

F I N A N C I A L S T A T E M E N T S

111

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

39. Reconciliation to previously reported results (continued)

Group reconciliation of equity from FRS 102 as at 1 April 2018 (continued)

IFRS 3
£’000

IFRS 16
£’000

Deferred tax
£’000

IAS 28
£’000

Group
re-organisation
and
re-classification
£’000

884

(4,434)

(3,550)

(3,438)

(606)

-
(606)

(606)

(1,245)

(1,540)

-
23

-
40

-
4

1 April
2018
IFRS
£’000

(7,095)

(59,718)

(1,259)

(2,338)

(4,453)

(74,863)

(103,193)

(5,261)

8,131

(6,506)

1,245
-

(5,261)

7,170

1,245
(288)

8,131

1 April
2018
FRS 102
£’000

(7,979)

(59,718)

(14)

(2,338)

(59)

Non-current liabilities

Trade and other payables

Loans and borrowings

Lease liabilities

Derivative financial liabilities

Provisions

Deferred tax liabilities

Total non-current liabilities

(70,108)

Total liabilities

Net assets

Equity

Called up share capital

Share premium account

Merger reserve

Retained earnings

Total equity

(98,255)

13,931

13,676

-
251

13,931

112

Group reconciliation of equity from FRS 102 as at 31 March 2019

31 March
2019
FRS 102
£’000

IFRS 3
£’000

IFRS 16
£’000

Deferred tax
£’000

IAS 28
£’000

Non-current assets

Property, plant and equipment

3,623

Right of use asset

Intangible assets

Investments in associates

Deferred tax assets

Trade and other receivables

65,285

1,239

Total non-current assets

70,147

Current assets

Inventories

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

Current liabilities

5,422

35,010

17,001

57,433

127,580

6,725

178

6,903

(109)

2,173

2,068

6,929

2,068

Trade and other payables

(35,392)

298

Current income tax

Loans and borrowings

Lease liabilities

(1,688)

(3,053)

(32)

Total current liabilities

(40,165)

298

Non-current liabilities

Trade and other payables

Loans and borrowings

Lease liabilities

Derivative financial liabilities

Provisions

Deferred tax liabilities

(4,550)

(62,335)

(32)

(106)

(1,975)

(69)

(4,552)

Total non-current liabilities

(69,067)

(4,509)

Total liabilities

Net assets

Equity

Called up share capital

Share premium account

Merger reserve

Retained earnings

Total equity

(109,232)

18,348

4,211

2,718

15,476

2,868

18,348

2,718

(396)

(1,673)

(2,069)

(1)

529

Group
re-organisation
and
re-classification
£’000

31 March
2019
IFRS
£’000

(5,261)

744

155

3,514

2,173

66,753

1,292

744

333

(4,362)

74,809

(899)

(5,261)

5,422

34,137

17,001

56,560

131,369

(35,094)

(1,688)

(3,053)

(428)

(40,263)

(4,507)

(62,335)

(1,705)

(106)

(1,975)

(4,092)

(74,720)

(114,983)

(5,261)

16,386

(6,506)

(1,245)

8,970

1,245

6,167

(5,261)

16,386

F I N A N C I A L S T A T E M E N T S

113

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS
YEAR ENDED 31 MARCH 2020

39. Reconciliation to previously reported results (continued)

Group reconciliation of total comprehensive income from FRS 102 for the year ended 31 March 2019
Group
re-organisation
and
re-classification
£’000

31 March
2019
FRS 102
£’000

Deferred
tax
£’000

IFRS 16
£’000

IAS 28
£’000

IFRS 3
£’000

Revenue

Cost of sales
Gross profit
Other operating income
Administrative expenses
Impairment losses
on financial assets
Depreciation and amortisation
Finance income
Finance expense
Share of results of equity
accounted associates
Amounts written off investments
Fair value gains and losses
Profit before tax

Tax expense

Profit for the year

163,294

(130,371)
32,923
96
(15,217)
(542)

(7,936)
31
(4,072)

(49)
-
5,247

(2,630)

2,617

-
-
-
-
(16)
-

4,792
-
(317)

-
(1,135)
3,324

3,324

-
-
-
487
-

(411)
-
(100)

-
-
(24)

(24)

-
-
-
-
-

-
-

-
-
-

489

-
-
-
-
-

-
-

49
-
49

(206)
(206)
-
206
-

-
-

31 March
2019
IFRS
£’000

163,294

(130,577)
32,717
96
(18,746)
(542)

(3,555)
31
(4,489)

(13)

-
(1,135)
8,596

(2,141)

6,455

Statement of cash flows
Cash flows arising from operating lease payments are classified as cash flows from operating activities under FRS 102. However, under IFRS, all
lease payments are classified as cash flows from financing activities. The IFRS 16 adjustments on transition, as outlined later in this note, have
therefore resulted in an increase in cash generated from operating activities of £487,000, with a corresponding decrease in cash flows from
financing activities, for the year ended 31 March 2019. The impact of other transition adjustments on the statement of cash flows is not material.

The changes in accounting policies applied for the adoption of IFRS were as follows:

IFRS 3
Under FRS 102, goodwill recognised on the acquisition of subsidiaries
is amortised over its useful life. However, goodwill under IFRS is not
amortised but instead undergoes an annual impairment review. The
amortisation charge included under FRS 102 has therefore been
reversed in the IFRS financial statements.

This resulted in an increase in the carrying value of intangible assets
and increase in profit or loss reserves of £592,000 at 1 April 2018.
The equivalent adjustment in the prior year resulted in an increase in
intangible assets and decrease in amortisation charge of £7,366,000.

Transaction costs incurred in connection with the acquisition of
subsidiaries are capitalised as part of the cost of acquisition under FRS
102. However, under IFRS, they are expensed. Intangible assets and
retained earnings have therefore been reduced by the value of costs
directly associated with the business combination.

At 1 April 2018, transaction costs of £952,000 had been removed
from goodwill, with a corresponding adjustment against profit or loss

reserves. The equivalent adjustment for the year ended 31 March
2019, resulted in an increase in administration expenses and decrease
in goodwill of £16,000.

Intangible assets acquired during business combinations, in respect
of brands, customer and supplier relationships were not separately
identified and recognised under FRS 102. These have been recognised
at fair value in the IFRS accounts. Deferred tax on these intangibles
has also been recognised. The separately identifiable assets have then
been amortised over their useful life.

Acquisitions in the period ended 31 March 2018, resulted in an
adjustment of £4,434,000 at 1 April 2018 in order to record the
intangible assets at fair value and recognise the deferred tax liability.
The equivalent adjustment in the prior year resulted in an increase in
intangible assets and deferred tax liabilities of £117,000. Amortisation
that would have been charged prior to 1 April 2018, resulted in a
decrease in opening reserves of £212,000. The equivalent charge in
the prior year amounted to £2,574,000.

114

Contingent consideration on a business combination was not
recognised under FRS 102 and subsequent changes in the
consideration were adjusted against the carrying value of goodwill.
However, under IFRS 3, contingent consideration is recognised at fair
value at the acquisition date and subsequently re-measured at fair
value at the reporting date. Deferred and contingent consideration had
also not been discounted to take into account the time value of money.

IFRS 3 has been applied to acquisitions from 6 March 2018.
At 1 April 2018, the recognition of contingent consideration and
the discounting of deferred and contingent consideration resulted
in a decrease in the carrying value of goodwill of £1,030,000 a
nd a reduction in deferred consideration of £996,000. A finance
expense, being the unwinding of the discount, resulted in a
decrease of £34,000 in opening profit or loss reserves.

In the year ended 31 March 2019, the re-measurement of contingent
consideration and unwinding of the discount resulted in a fair value
loss of £1,135,000 and a finance expense of £317,000 in the profit or
loss account, a reduction in reported goodwill of £1,000,000 and an
increase in the overall deferred consideration liability of £452,000.

IFRS 16
Under FRS 102, leases are accounted for as either finance leases or
operating leases, depending on the substance of the transaction.
Operating lease payments are recognised as an expense, on a
straight-line basis, over the term of the lease. However, under IFRS,
a single recognition and measurement approach is applied for
all leases, with the optional exception of short-term or low-value
asset leases. A lease liability and right-of use asset is recognised,
representing the right to use the underlying asset.

Payments, previously recognised in the statement of profit or loss,
have therefore been removed from administration expenses and
the appropriate liability and right-of-use asset recognised at the
transition date.

Lease liabilities are subsequently reduced for lease payments made
and increased for interest charged at a constant rate, with the interest
expense recognised in the statement of profit or loss. Right-of-use
assets are subsequently depreciated over the shorter of the term of the
lease or the asset’s useful life, with the depreciation charge recognised
as an expense in the statement of profit-or loss.

At 1 April 2018, the above adjustments resulted in an increase in
right-of-use assets of £1,561,000, an increase in lease liabilities of
£1,539,000 and an increase in retained earnings of £22,000.

Under IFRS 16, all leased assets must either be presented in a single
line within right of use assets or within property, plant and equipment
with a separate disclosure. The Group has elected to show all leased
assets within the right of use asset line on the balance sheet. An
adjustment has therefore also been made at 1 April 2018 to re-classify
£55,000 from property, plant and equipment to right of use assets.

In the year ended 31 March 2019, the equivalent adjustments
resulted in an increase in right-of-use assets of £559,000, a
decrease in property, plant and equipment of £54,000, an increase
in lease liabilities of £529,000, a decrease in administrative
expenses of £487,000, an increase in depreciation of £411,000
and an increase in the finance expense of £100,000.

Lease liabilities acquired as part of a business combination are
measured at the present value of the lease payments at the date
of acquisition, with a corresponding right of use asset recognised.

At 1 April 2018, an adjustment was made to the fair value of an
asset and liability acquired during a prior business combination,
resulting in an increase in goodwill and retained earnings of £1,000.
The equivalent adjustment in the prior year resulted in an increase in
goodwill and decrease in the right of use asset value of £3,000.

Deferred tax
Under FRS 102, internally generated intangible assets acquired in
a business combination are subsumed within goodwill. However,
under IFRS, identifiable intangible assets acquired in a business
combination are recognised separately, at fair value. Deferred tax
had not been recognised on these separately identifiable intangible
assets and thus has been recognised as a transition adjustment, as
noted above.

The deferred tax liability recognised on the identifiable intangibles
is charged to the profit or loss account over the corresponding
amortisation period of the related asset. At 1 April 2018, the deferred
tax liability was reduced and profit or loss reserves increased by
£40,000 to reflect the charge due in the period ended 31 March 2018.

The equivalent adjustment for the year ended 31 March 2019
resulted in a decrease in the deferred tax charge and reduction in
deferred tax liability of £489,000.

IAS 28
Under FRS 102, any excess paid over the share in net assets acquired
of an associate is treated as implied goodwill and amortised.
However, under IAS 28, any goodwill remains as part of the
investment cost and is not amortised. An adjustment has therefore
been made on transition to exclude the amortisation charge. This has
resulted in an increase in investments in associates of £4,000, with a
corresponding increase in profit or loss reserves, as at 1 April 2018.

The equivalent adjustment in the year ended 31 March 2019 resulted
in an increase in the investment in associates and decrease in the
investment amortisation charge of £49,000.

Group re-organisation
As noted in the accounting policies (3.13), the Directors consider
the acquisition of Brickability Enterprises Investments Limited and its
subsidiary undertakings to be a group re-organisation rather than a
business combination. This is due to the transaction, in substance,
relating to the insertion of a new parent company within the group
structure. IFRS has been applied retrospectively to acquisitions from 6
March 2018 and thus an adjustment has been made on transition to
reflect the transaction under merger accounting.

The transaction had previously been accounted for under acquisition
accounting under FRS 102. The adjustment has resulted in a decrease
in goodwill of £5,261,000, a decrease in the share premium balance
of £6,506,000 and the formation of a merger reserve of £1,245,000.
Re-classifications
Deferred tax assets and debtors due after one year were presented
within current assets in the financial statements prepared under
FRS 102. These have been re-classified to non-current assets under
IFRS. A total of £446,000 was re-classified as at 1 April 2018. The
equivalent adjustment for the year ended 31 March 2019 amounted
to £899,000.

An amount of £206,000 has also been re-classified from cost of
sales to administration expenses in the prior year in order to present
foreign exchange gains within administration expenses, in line with
the Group’s policy.

F I N A N C I A L S T A T E M E N T S

115

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2020

39. Reconciliation to previously reported results (continued)

Prior period errors and reconciliation to AIM admission document
On 22 August 2019, historical financial information (HFI)
was prepared and published under IFRS, as part of the AIM
listing admission document. This included the Group’s first
financial statements prepared under IFRS and reported a profit
of £7,496,000 for the year ended 31 March 2019. A loss of
£294,000 was reported for the period ended 31 March 2018.

However, in preparing the Group’s annual statutory financial
statements, for the year ended 31 March 2020, management
has reviewed the conditions that existed at the time of transition
to IFRS, and in the prior year, and certain assumptions made for
the HFI have been re-assessed. This has resulted in prior period
adjustments compared to the HFI reported in the admission

document. At 1 April 2018, the effect of these adjustments was an
increase in profit or loss reserves of £6,000, with a corresponding
increase in equity. At 31 March 2019, the effect was a decrease in
profit or loss reserves and equity of £1,041,000.

The assumptions affected the fair value recognition and
accounting for contingent consideration and separately identifiable
intangible assets, on retrospective application of IFRS 3. The lease
term for certain leases under IFRS 16 was also re-considered,
following evaluation of whether the Group would likely exercise
options within those lease agreements. The adjustments in
connection with IAS 28 and re-classifications, as outlined earlier in
this note, were also applied to the statutory financial statements.

The effect of these prior period adjustments can be reconciled as follows:
Reconciliation of equity from HFI as at 1 April 2018

1 April 2018
HFI £’000

3,317
1,371
68,491
633
300
145
74,257

5,031
27,770
5,346
38,147
112,404

(23,191)
(1,798)
(3,158)
(308)
(28,455)

(1,683)
(66,028)
(1,061)
(2,338)
(4,714)
(75,824)

Non-current assets

Property, plant and equipment
Right of use asset
Intangible assets
Investments in associates
Deferred tax assets
Trade and other receivables
Total non-current assets
Current assets

Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities

Trade and other payables
Current income tax
Loans and borrowings
Lease liabilities
Total current liabilities

Non-current liabilities

Trade and other payables
Loans and borrowings
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities

116

IFRS 3
£’000

-
-
(1,275)
-
-
-
(1,275)

-
-
-
-
(1,275)

112
-
-
-
112

884
-
-
-
261
1,145

IFRS 16
£’000

IAS 28
£’000

Reclassification
and rounding
£’000

1 April 2018
IFRS £’000

(55)
246
-
-
-
-
191

-
-
-
-
191

-
-
-
13
13

-
-
(184)
-
-
(184)

-
-
-
4
-
-
4

-
-
-
-
4

-
-
-
-
-

-
-
-
-
-
-

-
-
-
(1)
-
1
-

-
-
-
-
-

45
-
-
(45)
-

(6,296)
6,310
(14)
-
-
-

3,262
1,617
67,216
636
300
146
73,177

5,031
27,770
5,346
38,147
111,324

(23,034)
(1,798)
(3,158)
(340)
(28,330)

(7,095)
(59,718)
(1,259)
(2,338)
(4,453)
(74,863)

1 April 2018
HFI £’000

IFRS 3
£’000

IFRS 16
£’000

IAS 28
£’000

Reclassification
and rounding
£’000

1 April 2018
IFRS £’000

Equity

Called up share capital
Share premium account
Merger reserve
Retained earnings
Total equity

4
7,170
1,245
(294)
8,125

-
-
-
(18)
(18)

-
-
-
20
20

-
-
-
4
4

-
-
-
-
-

4
7,170
1,245
(288)
8,131

Reconciliation of equity from HFI as at 31 March 2019

31 March 2019
HFI £’000

IFRS 3
£’000

IFRS 16
£’000

IAS 28
£’000

Reclassification
£’000

31 March 2019
IFRS £’000

Non-current assets

Property, plant and equipment
Right of use asset
Intangible assets
Investments in associates
Deferred tax assets
Trade and other receivables
Total non-current assets
Current assets

Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities

Trade and other payables
Current income tax
Loans and borrowings
Lease liabilities
Total current liabilities

Non-current liabilities

Trade and other payables
Loans and borrowings
Lease liabilities
Derivative financial liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities

Total liabilities

Net assets

3,623
1,595
68,789
1,239
744
155
76,145

5,422
34,111
17,001
56,534
132,679

(35,374)
(1,688)
(3,085)
(378)
(40,525)

(3,958)
(62,977)
(1,227)
(106)
(1,975)
(4,490)
(74,733)

(115,258)

17,421

-
-
(2,040)
-
-
178
(1,862)

-
26
-
26
(1,836)

280
-
-
-
280

60
-
-
-
-
398
458

738

(1,098)

(109)
578
4
-
-
-
473

-
-
-
-
473

-
-
-
(18)
(18)

-
-
(445)
-
-
-
(445)

(463)

-
-
-
53
-
-
53

-
-
-
-
53

-
-
-
-
-

-
-
-
-
-
-
-

-
-
-
-
-

-
-
32
(32)
-

(609)
642
(33)
-
-
-
-

3,514
2,173
66,753
1,292
744
333
74,809

5,422
34,137
17,001
56,560
131,369

(35,094)
(1,688)
(3,053)
(428)
(40,263)

(4,507)
(62,335)
(1,688)
(3,053)
(3,053)
(428)
(74,720)

(114,983)

16,386

F I N A N C I A L S T A T E M E N T S

117

Financial Statements

NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 MARCH 2020

39. Reconciliation to previously reported results (continued)

31 March 2019
FRS 102 £’000

IFRS 3
£’000

IFRS 16
£’000

IAS 28
£’000

Reclassification
£’000

31 March 2019
IFRS £’000

Equity

Called up share capital
Share premium account
Merger reserve
Retained earnings
Total equity

4
8,970
1,245
7,202
17,421

-
-
-
(1,098)
(1,098)

-
-
-
10
10

-
-
-
53
53

-
-
-
-
-

4
8,970
1,245
6,167
16,386

Reconciliation of total comprehensive income from HFI for the year ended 31 March 2019

31 March 2019
HFI £’000

IFRS 3
£’000

IFRS 16
£’000

IAS 28
£’000

Reclassification
£’000

31 March 2019
IFRS £’000

Revenue

Tax expense

Profit for the year

163,294

(130,371)
32,923
96
(14,752)
(542)

(3,655)
31
(4,222)

-
9,892

(2,396)

7,496

-
-
-
-
-
-

119
-
(317)

(1,135)
(1,333)

255

(1,078)

-
-
-
6
-

(19)
-
(1)

-
(12)

(12)

-
-
-
-
-

-
49

(206)
(206)
-
206
-

-
-

163,294

(130,577)
32,717
96
(14,540)
(542)

(3,555)
31
(4,489)

(13)

(1,135)
8,596

(2,141)

6,455

The basic and diluted EPS reported in the HFI was 3,151 p for the year ended 31 March 2019. The effect of the above adjustments is to reduce
this to 2,714 p. The comparative figure disclosed in note 17 has been restated further to reflect the bonus shares issued during the year.

Company prior period errors
An adjustment has been made in the prior year, in the Company’s financial statements, to re-classify £7,802,000 of other receivables
from current assets to non-current assets. An adjustment was also made at 1 April 2018 to re-classify £6,845,000 from current to
non-current assets. These balances relate to loan notes receivable from 6 March 2018. There has been no impact on reported profit
for the Company.

An adjustment was also made in the period ended 31 March 2018, to account for the merger relief arising on a share for share
exchange in which the Company acquired a subsidiary on 6 March 2018. The effect of this has to been to reduce the
share premium account and increase the merger reserve by £6,506,000, within equity.

118

Financial Statements