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Annual Report
& Accounts
Year Ended
31 March 2023
Brickability at a Glance
Brickability Key Facts
• Year-on-year growth across
all divisions.
• Further delivery of IPO
strategy with three strategic
acquisitions completed in the
year.
• Continued focus on
delivering stakeholder value
in a safe and sustainable
manner.
• £500m increase in Revenue
across 2 years.
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.
G P
Y R O
Four Core Divisions
R O D U CTS
Bricks and Building Materials
O FI N
11 businesses operating from 44 sites
Importing
7 businesses operating from 16 sites
Distribution
R
E
N
7 businesses operating from 12 sites
O
Contracting
5 businesses operating from 5 sites
Revenue
by Division
D
N
A
G
N
I
J
B
I
I
B
R
C
K
S
A
N
D B
M
U
L
G
P
N
,
The Group currently employs in excess of 700
skilled and experienced personnel.
H
S
TI
E
A
L
UILDING MATERIA
Revenue by Operating Division
. 3m
m £ 4 1
CONTRACTING
£63.0
DISTRIBUTION
m
.6
7
1
1
£
IMPORTING
£
4
9
8
.
6
m
BRICKS AND
BUILDING MATERIALS
Revenue by Division
Contents
STRATEGIC REPORT
Brickability at a Glance
Chairman’s Statement
Chief Executive’s Review
Business Model
Group Strategy and Delivery
The Complete Solution
Key Performance Indicators
Risk Management
Principal Risks and Uncertainties
Chief Financial Officer’s Review
Going Concern and Outlook
Section 172(1) Statement
Environmental, Social and Governance (ESG)
CORPORATE GOVERNANCE
Board of Directors
Group Management Board
Corporate Governance Statement
Report of the Nomination Committee
Report of the Audit & Risk Committee
Report of the Remuneration Committee
Report of the Directors
Statement of Directors’ Responsibilities
Independent Auditor’s Report
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
Highlights
Revenue
£681.1m
(2022: £520.2m)
Gross Profit
£112.9m 16.6%
(2022: £86.8m, 16.7%)
Adjusted EBITDA*
£51.5m
(2022: £39.5m)
Net debt**
£8.0m
(2022: £0.4m net cash)
Adjusted Profit Before Tax***
£44.6m
(2022: £34.7m)
EPS Tax
9.26p
(2022: 4.40p)
Adjusted EPS****
11.93p
(2022: 10.06p)
*
Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation and other non-underlying items.
** Net cash/ (debt) is defined as cash balances at bank less bank debt.
*** Statutory profit before tax excluding non-underlying items.
**** Adjusted EPS is calculated by dividing the adjusted profit for the year by the weighted
average number of ordinary shares in issue.
INCINC
22
44
77
99
1010
1188
2020
2222
2424
2626
2828
3030
4040
4242
4444
4949
5050
5353
5858
6060
6161
6868
6969
7070
7171
7272
7373
7575
121255
1
Brickability Group Plc Annual Report & Accounts 2022/23 Chairman’s Statement
Overview
It has been another strong twelve months for the Group. Our
continued focus on the strategic expansion and diversification
of the business has seen the Group achieve impressive growth
in the year. Across our four business divisions, the Group has
maintained strong momentum, delivering an excellent financial
performance for the year ended 31 March 2023 with revenue of
£681.1 million, up 30.9% from the previous year, and an adjusted
EBITDA of £51.5 million, up 30.4%.
Over the past year, the housebuilding market has been faced with
new challenges arising from the macroeconomic and geopolitical
environment. Considering the headwinds faced in the wider market
environment, the Board is very pleased with the Group’s performance.
The results we achieved this year are thanks to the dedication and
determination of our people, who look to consistently deliver excellent
service while seizing opportunities as they arise.
While major housebuilders reported some improvement in
sales rates in the first calendar quarter of 2023, the market has
experienced a slowdown in housebuilding, particularly in the first-
time buyer sector. Despite these challenges, the fundamentals of
the housebuilding market remain strong. The Board is confident
in the Group’s ability to continue delivering on its strategy and
deliver attractive returns, but we remain cautious about the market
outlook.
Acquisitions
This year, we continued to benefit from the strategic decision to
diversify and expand the Group’s product portfolio and end-use
markets. We announced three acquisitions in the period, adding to
the scale of our business and increasing the Group’s client base.
In May 2022, we completed the acquisition of Modular Clay
Products Ltd. This acquisition significantly increased the
Group’s presence in the specification sector, which we previously
addressed through our Taylor Maxwell and Bespoke Brick
Company businesses. It brought with it new access to a range
of European manufacturers, further boosting our strong import
capabilities.
We were also pleased to complete the acquisition of E.T. Clay
Products Limited and Heritage Clay Tiles Limited in September
2022. These acquisitions represented another important step
in the growth of our importing division, by expanding the supply
base of the Group through new access to a range of overseas
manufacturers. Post period in June 2023, we completed the
acquisition of Precision Façade Systems Ltd for consideration of
£0.6 million.
Environmental, Social and Governance
As the Group continues to grow, we remain committed to our
responsibility as a business to address ESG priorities. In March,
we published our ‘Together for the Future’ strategy – our roadmap
to transition to a business that delivers consistent financial
returns to our shareholders and maximises long-term value for
our employees, suppliers and customers, while having a positive
impact on the environment, people and communities.
JOHN RICHARDS CHAIRMAN
Our continued focus on the
strategic expansion and
diversification of the business
has seen the Group achieve
impressive growth in the year.
2
STRATEGIC REPORT Brickability Group Plc Annual Report & Accounts 2022/23 A central goal of our ESG strategy is to reach net zero in our own
Scope 1 and Scope 2 operations of our sales businesses by 2030.
To minimise our environmental impact and cut carbon emissions,
this year we introduced a new fleet of electric company cars and
started the rollout of installing EV chargers at our offices and
warehouses.
We recognise that in order to achieve meaningful change, we
need to work in partnership with our employees, customers,
partners, and suppliers. As noted later in the Annual Report and
Accounts, as part of our ESG strategy, we set a goal to engage
with the Supply Chain Sustainability School (SCSS) and obtain
a Gold-level membership. The SCSS is an award-winning and
industry-wide collaboration that encourages everyone in the
supply chain to work together for a sustainable future for the built
environment. I am delighted to say that we achieved our goal.
Engaging with the SCSS has increased our team’s knowledge
and confidence on issues surrounding sustainability, particularly
with our valued suppliers and customers.
Our charitable foundation goes from strength to strength in
supporting causes in the communities of our places of operation.
Since its launch last year, the Brickability Group Foundation Trust
has not only supported incredible causes but has also inspired
many of our staff to take action personally to raise money
and volunteer in our local community. Under the Foundation’s
charter, the Group donates 0.5% of its adjusted EBITDA in
each financial year to the Foundation and matches funds raised
through our employees’ fundraising efforts. This year the Group
will be donating £256k (2022: £200k) to the Foundation. The
Foundation has donated £120k across various charities this year
(2022: £55k).
The Group is committed to creating an inclusive and diverse
culture in which everyone is supported to reach their full potential.
This financial year we completed an in-depth Diversity, Equity
and Inclusion (DEI) and gender pay gap analysis and began a
review of all Group reward and recognition policies. In a sector that
has historically been very heavily male-dominated, we recognise
that there is still plenty of work to be done. Increasing female
participation and representation at the senior levels of our business
is a Group-wide priority.
Board and Governance
I would like to take a moment to recognise Giles Beale, who
stepped down from the Board in March. The Board has been
very fortunate to have had Giles’ wise counsel, commitment and
valuable contribution since the Group’s IPO. On behalf of the
Brickability Directors, I would like to thank Giles for his service and
wish him all the best for the future.
This year we were delighted to welcome two new Independent
Non-Executive Directors to the Board – Susan McErlain and
Sharon Collins. Susan has replaced me on both the Audit &
Risk and Remuneration committees and joined the Nominations
Committee, while Sharon has taken up the role of Chair of the
Remuneration Committee and has joined both the Nomination
and Audit Committee following Giles’ leaving.
I speak on behalf of the entire Board when I say that we are very
fortunate to have them on our team and we look forward to
continuing to work with them both.
Following year-end, we announced that 36 years after first
starting work with Brickability, Alan Simpson, Chief Executive
Officer (CEO) and founder of many of the Group’s businesses,
will be stepping down from the role of CEO and as a Director of
the Company. Alan has been instrumental in building Brickability
into the successful business it is today, overseeing the Group’s
IPO in 2019 and multiple transformative acquisitions since. Alan
remains a major shareholder of the Group and will continue to
work with the Group in a non-board role post his stepping down.
On behalf of the Board, I thank Alan for his invaluable years of
service and congratulate him for his immense achievements.
The Board is pleased that Alan will be succeeded as CEO by
Frank Hanna. Frank has more than 30 years' experience in the
industry and I look forward to welcoming Frank to the Brickability
family in due course. I have every confidence in his ability to lead
the Group as it continues to grow.
People
To help people and communities thrive we prioritise health and
safety. We appointed a new Group Health and Safety Manager
this year and conducted an extensive audit around the business
to ensure employee safety and wellbeing. We have also taken on
additional senior staff in Sales, Finance, IT and HR to reflect our
increased scale, both in terms of headcount and our portfolio
businesses.
Shareholder returns and dividends
The Group paid an interim dividend of 1.01 pence per share
on 23 February 2023, which reflected the performance of the
business and the Board’s confidence in the longer-term outlook.
The robust performance of the Group enables the Board to
recommend the payment of a final dividend for the year ended
31 March 2023 of 2.15 pence per share. Subject to shareholder
approval at the Annual General Meeting, the final dividend will
be paid on 21 September 2023, with a record date of 25 August
2023 and an ex-dividend date of 24 August 2023.
John Richards
Chairman
14 July 2023
3
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
STRATEGIC REPORT
Chief Executive’s Review
ALAN SIMPSON CHIEF EXECUTIVE OFFICER
I am very pleased to record
another set of strong results.
I believe this success is down to a number of factors, namely
the strategy of the Group as it continues to diversify through
acquisition, the strength of Brickability’s positioning in the market,
and its ability to adapt and remain agile.
The results are especially pleasing considering the wider
macroeconomic challenges seen in the marketplace during the
period. All our divisions have once again performed well with
both revenue and profit well ahead of the prior financial year, and
ahead of management’s expectations going into the financial
year.
The Group continued to see strong demand for its goods and
services across all divisions, however, the demand for bricks fell
during the second half of our financial year as a result of the
subdued housing market. Significant year-on-year price inflation
mitigated the financial impact of reduced volumes.
The gross profit margin was 16.6% (2022: 16.7%), with this
slight, and expected reduction when compared to the prior year,
driven by the first full year trading contribution from the Taylor
Maxwell Group (2022: 9 months), which operates on lower
margins than the Group prior to the acquisition, and the fact that
timber margins have fallen back from the exceptional highs of the
previous year. The impact of these factors was partly mitigated by
the acquisitions completed in this financial year, which operate on
margins above the average of the Group.
* like-for-like revenue is a measure of performance, adjusted for the impact of acquisitions
4
The continued expansion of the Group has been supported by
investment in recruitment at both Group and divisional levels
of skilled and talented individuals across functions such as
Sales, Finance, IT and HR. In addition, the Group has begun
to optimise its systems through the rollout of standardised IT
systems platforms. The Group is also building skills for the future
through the launch of the Apprentice Scheme in the year, which
this year saw 10 apprentices join various businesses in the Group.
At the beginning of the current financial year, the Group took
the decision to re-align the reporting structure of some of our
businesses and we have moved from three divisions to four, in
order to support the continued growth of the Group and to
further improve efficiencies. Detailed segmental analysis is per
note 6 of the financial statements. The Group’s four distinct
business divisions are shown below:
•
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;
Importing – which is primarily responsible for importing
building products, the majority of which are on an exclusive
basis to the UK market, to complement traditional and
contemporary architecture;
Distribution – which focuses on the sale and distribution of
a wide range of products, including windows, doors, radiators
and associated parts and accessories; and
Contracting – which provides flooring and roofing
installation services, primarily within the residential
construction sector.
•
•
•
STRATEGIC REPORT Brickability Group Plc Annual Report & Accounts 2022/23 Stone’s (trading as Vobster Architectural) strong order pipeline
led to good revenue growth throughout the year.
The acquisition of a new yard in Glasgow in the previous financial
year has allowed for the expansion and growth of Bricklink
though providing more flexibility for the local area, enabling it to
build a strong builder’s merchant customer base. The demand
for social housing remains an important factor in the Group, with
LBT Brick & Facades continuing to see good growth in this area.
In June 2022, Architectural Facades entered a new, long-term
strategic partnership with Thyssenkrupp Materials UK to
develop a new balcony system to produce the next generation of
balconies. This will improve lead times and reduce time spent on-
site, whilst providing exceptional curb appeal and functionality.
The patented design, which has passed the rigorous testing stage
that lasted several months, was launched in the second half of the
year and initial enquiries look very promising.
Importing Division
17% (2022: 14%) of Group Revenue
Revenue of £117.6 million (including internal revenues of £30.7 million
(2022: £21.7 million)) for the year ended 31 March 2023 was up
£45.3 million on the prior year (2022: £72.3 million), with like-for-like
revenue growth of 12.1%. Adjusted EBITDA at £13.2 million for the
year ended 31 March 2023 was up £4.9 million on the prior year
(2022: £8.3 million).
The division was further strengthened through the acquisition of
Modular Clay Products, which was acquired on 31 May 2022,
and E.T. Clay and Heritage Clay Tiles, which were acquired on
30 September 2022. These businesses brought new customers
to the Group, particularly in the merchant’s channel, further
diversifying the Group’s customer and revenue base.
The Bespoke Brick Co. had a strong year with price and volume
growth although some momentum to this growth slowed towards
the end of the financial year. It has invested in a Sustainability
School and Showroom, based in Derbyshire. The Showroom is
due to open later in the year and will showcase all of the Group’s
sustainability focussed products.
McCann Logistics has continued to grow in revenue, following
the increase in its trailer fleet and expansion of its operations to
cover haulage from the Netherlands, Germany, France, Spain,
Belgium, and Portugal. Crest, Brick Slate and Tile has continued
to grow through its product mix of both brick and roof tiles.
After the end of the financial year in May 2023, The Bespoke
Brick Company’s ‘Brick Geek’ programme received RIBA
accreditation. This is available to architects and specifiers and
showcases the many benefits of using clay-facing bricks in all
sectors of construction.
5
Full details of our divisions and each of our businesses can be
found at https://brickabilitygroupplc.com.
Bricks and Building Materials Division
73% (2022: 78%) of Group Revenue
Revenue of £498.6 million (including internal revenues of £8.1 million
(2022: £6.4 million)) for the year ended 31 March 2023 was
up £94.0 million on the prior year (2022: £404.6 million), with
like-for-like revenue growth of 1.4%. Excluding timber, like-for-like
revenue growth was up 17.1%. Adjusted EBITDA at £30.1 million for
the year ended 31 March 2023 was up £5.8 million on the prior year
(2022: £24.3 million).
Throughout the year, the division managed the supply issues
from both UK and European manufacturers, and the softening
in demand in the second half of the year as a result of the
uncertainty in the UK housing market. Like-for-like revenue
growth is driven by a combination of price increases and product
mix. In line with our expectations, timber volumes and pricing
have fallen back following the exceptional highs of the first half of
the last financial year.
Taylor Maxwell & Co continued to perform strongly and has
added new national and regional house builders to its customer
base. The opening of a new showroom in the Grassmarket
area of Edinburgh and the refurbishment of the Manchester
showroom in Albert Square further established the Group’s
presence in the specification sector. Cladding, in particular,
saw significant year-on-year growth, most notably highlighted
within SBS Cladding, underpinned by large scale projects with
further growth anticipated in the next financial year. Vobster Cast
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT / CHIEF EXECUTIVE’S REVIEW CONTINUED
Distribution Division
9% (2022: 9%) of Group Revenue
Revenue of £63.0 million (including internal revenues of
£0.4 million (2022: £0.2 million)) for the year ended 31 March
2023 was up £16.0 million on the prior year (2022: £47.0 million)
with like-for-like revenue growth of 25.5%. Adjusted EBITDA at
£8.9 million for the year ended 31 March 2023 was up £1.1 million
on the prior year (2022: £7.8 million).
Revenue growth was seen across all of the businesses within the
Distribution division, led by the first full year of trading within the Group
for HBS NE Ltd (trading as UPOWA). UPOWA continues to win
major national housebuilder contracts and is expected to continue to
grow as the market in renewable forms of energy expands. The Group
invested in a new warehouse for UPOWA, which was fully operational
in the year, to support its growth ambition.
Towelrads also saw strong growth through both the towel radiator
sector and through the new underfloor heating sector that was
taken in-house during the year. This sector is performing strongly and
continuing to win contracts in the market. Frazer Simpson more than
doubled its revenue when compared to the prior year, supported by
strong contract wins and an expansion of its window business.
The Group further invested in the U Plastics (trading as UP
Building Products) business, acquiring new branches in Sutton
Coldfield and Bury St Edmunds. FSN Doors has continued to grow
in the mid-range bracket of the market, and Forum Tiles continues
to develop its product offering and grow its customer base.
Contracting Division
6% (2022: 5%) of Group Revenue
Revenue of £41.3 million (including internal revenues of £0.2 million
(2022: £0.3 million)) for the year ended 31 March 2023 was up
£16.5 million on the prior year (2022: £24.8 million) with like-for-
like revenue growth of 12.5%. Adjusted EBITDA at £5.6 million for
the year ended 31 March 2023 was up £2.9 million on the prior
year (2022: £2.7 million).
Beacon Roofing, which was acquired on 31 March 2022, has
performed very well throughout the year and has contributed
to the reported revenue growth in the year. Performance has
been further supported by gaining new contracts following a
competitor going into administration. Crest Roofing and Excel
Roofing have continued to grow through the expansion of work
with their customer base. Leadcraft has performed well with
its customer base growing in the higher value large single-unit
housing projects, and DSH Flooring continues to grow year on
year through long-term contracts with housebuilders. Gross profit
margins have started to improve, following the unprecedented
price increases in the cost of sales of roofing materials
experienced last year, through shorter fixed periods for contracts.
Continental Tile Joint Venture
In March 2022, the Group announced the formation of the
Schermbecker Building Products GmbH joint venture to
manufacture clay tiles with a leading German tile manufacturer
6
and producer of roofing materials, operating from a factory in
Schermbeck, Germany. Initial manufacture and start-up production
of clay roof tiles by the joint venture was very good. However,
due to the volatility of energy prices in Germany, production was
curtailed. With volatility in energy prices having since reduced, the
Group now expects to produce the clay roof tiles for the UK market
from the second quarter of the current financial year.
Outlook
The Group’s results highlight the strategic strengths of Brickability,
especially when the backdrop of what has been a period of
macroeconomic uncertainty is considered. Its growing and
diversified business divisions continue to demonstrate their ability
to deliver upon the Group’s strategic objectives and we remain
committed to continuing to grow in a sustainable manner.
Recent uncertainty in the market has highlighted the strategic
importance of having long-standing relationships with customers
and suppliers, growing importing capabilities, and the ability
to source and provide quality products to clients. Brickability
continues to be able to successfully meet the demands and
requirements of our customers.
Whilst the short-term outlook for the housing market sector
remains uncertain, and we remain cautious, our priority remains
unchanged as we aim to secure strong order intakes with clear
and sustainable margins. The Board believes that the Group’s
diversified multi-business strategy positions it well to navigate
what may be uncertain times ahead.
As previously announced, and whilst remaining conscious of the
challenges in some of our segments in the short-term, the Group
believes that the underlying long-term demand for UK housing
remains robust as does the demand for quality materials for the
construction sector generally. The Board remains confident that
the Group is well placed to continue delivering on its strategic
objectives and the underlying organic growth of the business
and, notwithstanding a number of industry participants publicly
communicating their own expectations of volume reductions in
the near term, trading in the current financial year to date has
remained in line with Board expectations.
Finally, as I prepare to hand over the role of CEO to Frank Hanna,
I would like to reflect on my 36 years with the Group to date.
Leading the Group has been and is a great honour, and I have
enjoyed all the challenges and rewarding experiences that I have
shared with my colleagues. The business continues to be well-
placed in the current market, and I look forward to continuing with
the Group in a non-board role. Frank is an exceptional operator,
manager and leader and has excellent understanding and
experience within the industry. Once on board, I have no doubt he
will continue to grow the business in his capacity as Group CEO
and I look forward to working with him in future years.
Alan Simpson
Chief Executive Officer
14 July 2023
Brickability Group Plc Annual Report & Accounts 2022/23 Business Model
“Our vision is to be the UK’s leading specialist supplier
of products to house builders and contractors.”
Strategy
Our strategy is one of growth, through 4 main areas:
ORGANIC GROWTH
We continue to grow
organically through
leveraging enhanced,
long-term relationships
and delivering exceptional
customer service to both
trade and retail customers.
GEOGRAPHICAL
EXPANSION
We continue to grow
through extending our
geographical footprint
through further investment
in both people and
premises.
ACQUISITIONS
We continue to grow
through carefully thought-
through acquisitions, that
are complementary to our
existing portfolio.
DIVERSIFICATION
Through our acquisitive
nature, we look to
diversify our portfolio of
products and services to
strengthen our offering
to our customer base and
to ensure we provide the
complete solution to both
trade and retail customers.
ROUTES TO
MARKET
OUR
STRENGTHS
Strong regional sales
network
The Group has over 70 UK locations serving
local, regional and national customers.
Our People
•
Specialised regional sales teams proving
national coverage through over 70
locations across the UK.
Established brands
The Group has developed or acquired
businesses that have built local, regional or
national brand strength while being part of a
business with strong buying power.
National agreement with local delivery
The Group has central agreements with larger
customers which are delivered by the regional
businesses.
•
•
•
Technical expertise and knowledge across a
diverse product portfolio.
Specialist knowledge of market and
products supported by technical expertise.
Highly experienced management team with
proven track record.
Our Offering
•
Our scale provides buying power and access
to high-quality products and supplies in UK
and abroad.
•
•
•
Strong customer relationships through
providing exceptional customer service.
Ability to deliver exceptional customer
service.
Ability to cross-sell to customers, utilising
our diverse product portfolio.
Our Experience
•
Unrivalled, long-term customer
relationships.
•
•
•
Excellent specialist knowledge across
product portfolio and within the industry.
Strong track record in identifying, acquiring
and integrating acquisitions to further
strengthen the Group.
Competitively sourcing and supplying
products to our customers.
HOW WE CREATE
VALUE FOR OUR
STAKEHOLDERS?
For shareholders
Developing a robust Group through
acquisition and organic development. Strong
financial record with a progressive dividend
policy.
For customers
Through our long-standing relationships,
we are able to effectively source and supply
products that continually meet customer
needs; these products are priced competitively
and are delivered on time.
For suppliers
We work collaboratively with our suppliers
ensuring they are paid on time, and we also
respect our commitments to them on the
distribution of products, prices and volumes.
For employees and local communities
The Group has over 700 employees to whom
we provide employment opportunities along
with long-term career development.
The Brickability Group Foundation supports
charities local to our business locations.
For the environment
Doing our part to protect the environment
by becoming a more sustainable business,
including educating and supporting our
employees.
Brickability Group Plc Annual Report & Accounts 2022/23
7
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT
Our Divisions and Brands
BRICKS AND BUILDING MATERIALS
IMPORTING
*
*
*
CONTRACTING
DISTRIBUTION
*Acquired in the financial year
8
Brickability Group Plc Annual Report & Accounts 2022/23
Group Strategy and Delivery
The Group continues to follow its strategy for growth, which
is based on four key areas: Organic Growth, Geographic
Expansion, Acquisitions and Product Expansion.
Achievements
Outlook
KPIs
Risks
Governance
ORGANIC GROWTH
Growth in all divisions
through the year
despite a challenging
macro-economic
backdrop.
• Continued cross-
selling
• Growth with
existing customers
• Access to new
customers
• Revenue
• Cost of sales
• Gross profit
• Adjusted EBITDA
• Economic
environment
• Extreme weather
• Major event
The Divisional
Managing
Directors monitor
performance and
take any necessary
action. Divisional
performance is
reported to the
Board.
GEOGRAPHICAL EXPANSION
New locations have
been added to the
Group through
expansion and via
acquisitions.
Further geographic
expansion is planned
with the existing
product range.
• Revenue
• Gross profit
• Adjusted EBITDA
at new locations
• Economic
environment
• Limited acquisitions
The Board reviews
acquisition/
expansion plans.
ACQUISITIONS
3 acquisitions were
completed during
the year.
DIVERSIFICATION
Acquisitions have
continued to expand
the product portfolio,
together with new
product development
across a number of
existing businesses.
Further acquisitions
in the pipeline to
expand product
offering and
customer base.
• Revenue
• Gross profit
• Adjusted EBITDA
• Past acquisition
audit
• Failure to integrate
an acquisition
• Retention of talent
The Board reviews
acquisition strategy
and plans.
Further acquisitions
and start-ups are
planned.
• Revenue
• Gross profit
• Adjusted EBITDA
• 5-year start-up
plans
• Loss of a major
supplier
• Loss of key
management
The Board reviews
and approves
acquisitions and
start-ups with
consideration given
to the Group’s
existing portfolio.
9
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT
1
BALCONIES
Architectural Facades
2
The
Complete
Residential
Solution
BRICK SUPPLY
& SERVICES
Apex Brick Cutters
Brickability
Bricklink
Brickmongers Wessex
Brick Services
CPG Building Supplies
Crest Brick Slate & Tile
E.T. Clay Products*
LBT Brick & Facades
Matching Brick
Modular Clay Products*
Taylor Maxwell & Co.
The Bespoke Brick Co.
The Group has successfully
combined individual specialist
businesses into one cohesive
structure that continues to
maximise revenue and growth.
Collectively we are stronger as a Group; we are focused
on efficiency and service, and providing a diverse
product portfolio to both trade and retail customers.
3
CLADDING
Architectural Facades
SBS Cladding
Taylor Maxwell & Co.
EXTERNAL DOORS
& WINDOWS
Frazer Simpson
FLOORING SERVICES
DSH Flooring
FLOOR & WALL TILES
Forum Tiles
GRP PRODUCTS
Frazer Simpson
GUTTERING
& DRAINAGE
UP Building Products
INTERNAL DOORS &
WARDROBE SYSTEMS
FSN Doors
4
5
6
7
8
9
8
4
1
13
14
14
4
9
7
10
14
16
*Acquired in the financial year
10
Brickability Group Plc Annual Report & Accounts 2022/23
RENEWABLE
TECHNOLOGIES
10
UPOWA
ROOFING
CONTRACTING
Beacon Roofing
11
Crest Roofing
Excel Roofing
Leadcraft
12
ROOFING SUPPLIES
Crest Brick Slate & Tile
McCann Roofing Products
Heritage Clay Tiles*
Schermbecker Building Products
13
14
15
STONE SUPPLY
& SERVICES
Frazer Simpson
Vobster Architectural
TIMBER &
LANDSCAPING
Alfiam Building Supplies
Brickmongers Wessex
Taylor Maxwell Timber
UP Building Products
TOWEL RAILS
& RADIATORS
RadiatorsOnline.co m
Radiator Valves UK
Towelrads
16
17
TRANSPORTATION
McCann Logistics
UNDERFLOOR HEATING
Towelrads
8
11
10
14
2
15
6
12
3
5
17
14
STRATEGIC REPORT The Group has successfully
combined individual specialist
businesses into one cohesive
structure that continues to
maximise revenue and growth.
Collectively we are stronger as a Group; we are focused
on efficiency and service, and providing a diverse
product portfolio to both trade and retail customers.
1
2
BALCONIES
Architectural Facades
BRICK SUPPLY
& SERVICES
Apex Brick Cutters
Brickability
Bricklink
Brickmongers Wessex
Brick Services
CPG Building Supplies
Crest Brick Slate & Tile
E.T. Clay Products*
LBT Brick & Facades
Matching Brick
Modular Clay Products*
Taylor Maxwell & Co.
The Bespoke Brick Co.
3
CLADDING
Architectural Facades
SBS Cladding
Taylor Maxwell & Co.
EXTERNAL DOORS
& WINDOWS
Frazer Simpson
FLOORING SERVICES
DSH Flooring
FLOOR & WALL TILES
Forum Tiles
GRP PRODUCTS
Frazer Simpson
GUTTERING
& DRAINAGE
UP Building Products
INTERNAL DOORS &
WARDROBE SYSTEMS
FSN Doors
4
5
6
7
8
9
7
10
14
1
13
14
14
10
11
12
RENEWABLE
TECHNOLOGIES
UPOWA
ROOFING
CONTRACTING
Beacon Roofing
Crest Roofing
Excel Roofing
Leadcraft
ROOFING SUPPLIES
Crest Brick Slate & Tile
McCann Roofing Products
Heritage Clay Tiles*
Schermbecker Building Products
13
14
15
STONE SUPPLY
& SERVICES
Frazer Simpson
Vobster Architectural
TIMBER &
LANDSCAPING
Alfiam Building Supplies
Brickmongers Wessex
Taylor Maxwell Timber
UP Building Products
TOWEL RAILS
& RADIATORS
RadiatorsOnline.co m
Radiator Valves UK
Towelrads
16
TRANSPORTATION
McCann Logistics
17
UNDERFLOOR HEATING
Towelrads
8
8
4
11
10
14
2
15
6
12
3
16
4
9
5
17
14
Brickability Group Plc Annual Report & Accounts 2022/23
11
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT
The
The
Complete
Complete
Façade
Façade
Solution
Solution
1
1
2
2
12
12
STONE CLADDING
STONE CLADDING
FIRE BRAKES
FIRE BRAKES
10
10
BALCONIES
BALCONIES
FRAMING SYSTEMS
FRAMING SYSTEMS
INSULATION
INSULATION
MESH CLADDING
MESH CLADDING
11
12
11
12
7
8
9
7
8
9
BRISE SOLEIL
BRISE SOLEIL
1
BRICK CLADDING
BRICK CLADDING
2
METAL CLADDING
METAL CLADDING
3
POWDER COATED
ALUMINIUM COLUMNS
POWDER COATED
ALUMINIUM COLUMNS
4
TERRACOTTA CLADDING
TERRACOTTA CLADDING
5
FIBRE CEMENT CLADDING
FIBRE CEMENT CLADDING
6
3
3
4
4
8
8
11
11
10
10
9
9
6
6
5
5
7
7
1
2
3
4
5
6
12
Brickability Group Plc Annual Report & Accounts 2022/23 The
Complete
Façade
Solution
BRISE SOLEIL
BRICK CLADDING
METAL CLADDING
POWDER COATED
ALUMINIUM COLUMNS
TERRACOTTA CLADDING
FIBRE CEMENT CLADDING
1
2
3
4
5
6
3
4
1
12
2
5
6
7
8
9
7
STONE CLADDING
BALCONIES
INSULATION
FIRE BRAKES
FRAMING SYSTEMS
MESH CLADDING
10
11
12
8
11
9
10
13
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT
STRATEGIC REPORT / CHIEF EXECUTIVE’S REVIEW CONTINUED
Case Study: Architectural Facades
14
Brickability Group Plc Annual Report & Accounts 2022/23
STRATEGIC REPORT Architectural Facades
were engaged by Falconer
Chester Hall Architects to
create a completely unique
façade with the brief for
the old to meet new in this
historic and conservation
area of city centre
Manchester.
The idea was to provide a modern working
environment for the new headquarters for a
leading British fashion brand whilst paying respect
to the historic brick and faience terracotta of the
surrounding buildings.
The brief was that they wanted to use core ten
steel which as it oxidises it puts its very own unique
`protective coating` of an orangey brown `rust`
over the top that ties in well with the red brick of
Manchester.
The difficulty was twofold in that we had to make
the core ten fins light enough to fix off the glass
curtain walling system, whilst showing no visible
fixings so that we met the architect’s aspirations
that they look like they are `floating` across the
façade.
Architectural Facades came up with a unique way
to use thin steel core ten steel covering a super
lightweight honeycomb aluminium which is similar
technology used in the aerospace industry.
The final finished effect completely met the brief
and the added steps and change of direction
in the fins again paid homage to the brickwork
detailing of the surrounding buildings.
Brickability Group Plc Annual Report & Accounts 2022/23
15
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT
Case Study:
Goldstone Hall,
Mithras Student Village
16
Brickability Group Plc Annual Report & Accounts 2022/23
STRATEGIC REPORT Goldstone Hall in Mithras Student Village is part of a
large regeneration project, providing accommodation
for students at the University of Brighton.
Overview
Mithras Student Village sits within the wider development of
the Moulsecoomb campus, which houses various university
teaching buildings, as well as leisure facilities and student
accommodation for over 800 students. One of five towers
within the student village, at 18 storeys, Goldstone Hall is
the tallest building to have been built in Brighton for the
past 50 years. Goldstone Hall was designed to be the focal
point of the project, towering above the other buildings, and
clad with a staggering 17 different coloured tiles of Argeton
terracotta cladding.
The campus is built on a brownfield site which was once
home to two university car parks and Preston Barracks, a
Georgian army base owned by the Ministry of Defence that
had been derelict for 20 years. The area was highlighted
as an opportunity for regeneration, to bring life back to
the site and provide much needed housing for the growing
University of Brighton. Over the past three decades, an
influx of students to the city has caused housing issues,
especially in the neighbourhood of Moulsecoomb, where the
largest of the four university campuses is situated.
Taylor Maxwell worked with architects ECE Architecture
and Hassell Studio, alongside main contractors Bouygues,
to specify and supply Argeton terracotta cladding to
Goldstone Hall. Once on-site, the terracotta cladding tiles
were installed by sub-contractors M Price.
Concept
Highlighted as being the focal point of the masterplan,
Goldstone Hall needed to have distinctive features and
reflect the local architecture. The architects wanted to use a
material that was both natural and robust, whilst allowing
for a design that would help the building stand out against
the rest of the development, where light cream coloured
facing bricks had been selected. Argeton terracotta cladding
was therefore specified, as it met all design requirements
and facilitated the desire to make Goldstone Hall a striking
building in Brighton’s skyline.
The use of 17 different colour terracotta tiles, from white
through to blue, gold and brown, makes the building
distinctive and unique. The tiles were selected by analysing
colours found in the surrounding landscape, as well as
colours found on the façade of a demolished pub that was
once the local go-to for students. An algorithm was then
used to randomly set these colours out across the façade
to showcase the tones of the local architecture and the
Brighton sky. The colours get darker as the tiles go down
the building, assisting the façade in mirroring it’s landscape
backdrop.
Brighton has historically had a low-rise skyline, due to its
location between the sea and the South Downs National
Park. In recent years, land has become scarcely available
and the population of the city has continued to grow.
Therefore, local planning committees recognised the need
for high-rise buildings. Due to the existing architecture
and the city’s cultural identity, the planning committees
are strict, with any new high-rise buildings being expected
to demonstrate high levels of design and contribute to the
visual quality of the local environment. Goldstone Hall’s
historical achievement of being the tallest building to be
built in Brighton for the past 50 years, demonstrates the
quality of the design.
Completion
Due to the complex design of the façade, it was important
that the terracotta tiles could be fixed to the building quickly
and easily. The Argeton Tampa tiles were selected as they
are restrained using concealed clips rivetted to vertical rails,
creating a sleek and clean façade that can be quickly installed.
The quick installation process of the tiles reduced overall time
on site and had both cost and environmental benefits.
Sustainability was a large focus of the overall development,
with the scheme meeting BREEAM (Excellent) requirements.
To receive this rating, buildings have to achieve a score of
at least 85%. Argeton terracotta cladding provided the
perfect solution as a sustainable façade product, being
manufactured directly adjacent to the quarry where the clay
used to make it is sourced, meaning the transport of raw
materials is low. The tiles that are made from 100% natural
materials also have an ISO 14025 and EN 15804 status and
are fully recyclable at the end of their 35-year plus life cycle.
Further to its forward-thinking sustainability credentials,
the development features a 1km fitness and running route
around its perimeter, to promote wellbeing and exercise.
There are also over 1,000 bicycle parking spaces and 55 EV
charging points for students, residents and guests.
It was important to the architects that the five towers in
the student village had minimal visual and noise impact
on the neighbouring buildings. The towers are therefore
purposefully staggered and the grounds enriched with over
300 trees to break up the vast expanse of architecture.
The creation of this student village has enabled the
university to guarantee accommodation for all students
in their first year of study, releasing pressure from the local
housing market and increasing student satisfaction. The
redeveloped campus creates a gateway into Brighton and
has transformed the local area into an inspiring place for
residents and university staff.
Brickability Group Plc Annual Report & Accounts 2022/23
17
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT
Key Performance
Indicators
REVENUE
£681.1m
Revenue growth is a key driver of profit growth
GROSS PROFIT
£112.9m
Gross Profit percentage acts as a cross check against
revenue growth to ensure new sales maintain margin.
ADJUSTED EBITDA
£51.5m
Earnings before interest, tax, depreciation, amortisation
and other non-underlying items.
CASH GENERATED
FROM OPERATIONS
£44.9m
(£8.0m)
NET (DEBT)/CASH
The net debt position after deducting the
amount of bank debt from cash held.
DIVIDEND
3.16p
Annual dividend per share
18
Brickability Group Plc Annual Report & Accounts 2022/23
22/23
21/22
20/21
19/20
22/23
21/22
20/21
19/20
22/23
21/22
20/21
19/20
22/23
21/22
20/21
19/20
22/23
21/22
20/21
19/20
22/23
21/22
20/21
19/20
£681.1m
£520.2m
£181.1m
£187.1m
£112.9m (16.6%)
£86.8m (16.7%)
£38.0m (21.0%)
£37.7m (20.1%)
£51.5m
£39.5m
£17.5m
£19.5m
£44.9m
£27.5m
£13.1m
£20.9m
£(8.0m ) Net debt
Net cash £0.4m
£(7.3m) Net debt
Net cash
£2.3m
3.16p
3.00p
1.95p
1.95p
STRATEGIC REPORT The presented figures illustrate a
number of the key performance
indicators that the Group reviews on
a regular basis and by which overall
business performance is measured.
Brickability Group Plc Annual Report & Accounts 2022/23
19
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Risk
Management
MANAGING RISK IN ORDER
TO DELIVEROUR STRATEGY
The Group is exposed to a number of risks in
its businesses and the markets it serves.
The Board considers the risks to the business
and the adequacy of internal controls with
regard to the risks that are identified at every
scheduled Board meeting. The detailed
review of risks is undertaken by the Audit &
Risk Committee, who present their findings to
the Board. The Board formally reviews and
updates the risk register of the business at
least annually. Where appropriate, specific
updates and reports are circulated to Board
members in between such meetings.
RISK MANAGEMENT STRUCTURE
01 02
IDENTIFY RISK
ASSESS 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
continually assesses and reviews
the business and operating
environment to identify any new
risks to be managed.
A detailed schedule of risks is
considered at each scheduled Audit
& Risk Committee meeting under the
following categories: Competitors,
Economic environment, Financial
Risk, People, and Suppliers. These
risks are graded against the criteria
of likelihood and potential impact
in order to identify the key risks
impacting the Group see page 22.
05
Update
risk register
01
Identify
risk
Board
of Directors
02
Assess
risk
04
Review and
evaluate
risks
03
Mitigate
risk
Remuneration
Committee
Audit & Risk
Committee
Nomination
Committee
Group Management Board and
Subsidiary company boards
Divisional and
functional teams
20
STRATEGIC REPORT Brickability Group Plc Annual Report & Accounts 2022/23 03 04 05
REVIEW AND EVALUATE RISKS
UPDATE RISK REGISTER
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.
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.
The risk register is updated as
appropriate at scheduled Board
meetings and in-between as necessary.
E
S
P
C
F
SEVERE
T
C
A
P
M
I
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.
C
E
Competitors
This includes:
• Margin management.
• Environmental and social
responsibility.
Economic environment
This includes:
• Consumer recession.
• Government action and
policy.
• Adverse inflationary
environment.
• Extreme weather events.
• Product supply shortages.
F
P
S
Financial risk
This includes:
• Margin management.
• Failure to integrate key
acquisitions.
• Cyber and information
security.
People
This includes:
• Retention of talent.
• Failure to integrate key
acquisitions.
Suppliers
This includes:
• Loss of key trading partner.
• Modern methods of
construction.
21
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
Principal Risks and Uncertainties
Our priority throughout the year has continued to be
the health and wellbeing of all of our stakeholders.
The ‘risk matrix’ is maintained on a rolling basis by our Chief
Financial Officer and is 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 regularly, is attended by both Executive Directors
and is chaired by John Richards, chairman of the Board.
As part of these meetings, the Management Board meets to
review on-going trading, budgets and forecasts 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.
Principal risks and uncertainties facing the Group are set out below,
with changes to prior year as indicated:
Increased
Remains the same
Decreased
New Risk
Risk
Change
Key controls
Ongoing action
Economic environment
The Group has experienced a good
trading performance throughout the
year. Uncertainty around inflationary
pressures poses a future risk.
The recent, significant increases in
interest rates and knock-on impact to
mortgages and housing starts poses the
risk of reduced demand for construction
materials.
C
E
F
Talent retention & succession
planning
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.
We also focus on ensuring that we plan
for the future through the development of
our people and recruitment of talented,
experienced individuals.
Margin management
Prices may not remain at levels that are
both competitive and achieve adequate
margins. There is a risk that not all
inflationary price increases can be passed
on, resulting in lower margins. Rebate
income may also not be adequately
monitored and accounted for. Both or
either may adversely impact financial
performance.
P
F
22
We monitor our core markets closely and maintain close
relationships with our principal 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.
The recruitment and training of talent from within are
actively promoted, when appropriate, with a focus on
internal succession management.
Where outside recruitment is needed, focus is on talent,
industry experience and the reputation of individuals.
We also endeavour to ensure that talent acquired
through acquisitions is retained. We continue to review
our remuneration policies to facilitate the recruitment
and retention of talent at the highest calibre, in addition
to maintaining entrepreneurial drive through the use of
responsible incentives.
We regularly 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.
Our ongoing strategy of developing
through acquisitions and organic
growth maintains a high level of
buying power within both the UK
and EU markets, ensuring the Group
can source sufficient products
competitively to meet demand.
The Group has employee incentive
schemes in place and continues to
review the key aspects of its incentive
arrangements and rewarding of staff.
We continue to monitor and improve
the accuracy of ordering, scheduling
and forecasting. Core relationships are
maintained with key trading partners
and, where possible, we seek to agree
to prices on an annual basis.
We also seek to diversify the products
and services offered by the Group,
to mitigate the impact of margin
pressures in specific areas.
STRATEGIC REPORT Brickability Group Plc Annual Report & Accounts 2022/23
Risk
Change
Key controls
Ongoing action
Government action and policy
UK Government policy has a significant
influence on the construction sector.
These changes could be broad across
the macro-economic spectrum, including
rates of taxation and interest rates, as
well as more specific policies targeted
at growing the rate of construction of
new properties in the UK, for example
changing planning applications rules and
scrapping national housebuilding targets.
Maintaining customer relationships
& market reputation
The loss of a key customer or supplier
could impact business performance.
E
E
S
S
E
P
F
E
Modern Methods of Construction
(MMC)
MMC, or the factory construction of
modular units for subsequent on-site
assembly, has 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 customers’ construction sites and
adversely affect demand for goods and
services.
Failure to integrate key acquisitions
Given the Group’s acquisitive nature, there
is a risk that the Group fails to integrate an
acquisition.
Cyber & Information security
There is also a growing risk of fraudulent
attacks on businesses. Such an attack
could have the potential to significantly
disrupt the Group’s operations and result
in loss to the business.
Sustainability & Climate Change
The move towards a lower carbon econo-
my in the UK is resulting in increasing regu-
lation and requirements for companies
in respect of environmental and social
reporting and practices. Should these
expectations and requirements not be met
the Company’s reputation and ability to
do business could be impacted.
We attend industry events, are members of relevant
trade bodies and associations and closely monitor
Government policy changes that would impact the
construction section.
The Group remains confident in the
long-term growth opportunity of the
construction of new properties in the
UK.
The Group invests in line with its overall
strategy. This investment continues
despite potential uncertainty over
Government action and policy.
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 with our unique selling propositions.
The impact of potential acquisitions on our key trading
relationships is carefully assessed as part of our due
diligence process.
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.
The development of new trading
partners and the maintenance of
sustainable long-term relations
with our existing partners are key
performance metrics for senior
managers.
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 seek to increase our
geographical reach through strategic
acquisitions and organic growth.
The Group completes both financial and legal due
diligence, prior to an acquisition, to mitigate this 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.
Following acquisition, the Group ensures compliance
with its systems and reporting, while also undertaking
regular business and performance reviews.
The Group has recovery plans in place, and ensures
systems are up to date with the latest cyber protection.
Ongoing updates to legislation and social
expectations are discussed at regular senior
management and Board meetings to ensure the
Group is aware of any key changes.
The Group has employed sustainability professionals
to identify and help the Group implement initiatives
to become more climate conscious. This incorporates
an educational programme for our people as well as
data collection and reporting.
We continue to monitor existing acqui-
sitions and maintain the due diligence
discipline.
Group policies and practices also under-
go continuous review, to work towards
a Group wide approach as quickly as
possible.
We continuously monitor IT systems
in place to ensure they are up to date
and regularly updated with the latest
security protection. Ongoing training
is also provided so staff maintain
awareness of the risks and appropriate
action to take should an issue arise.
We monitor the impact that the
Group’s operations have on the
environment and its stakeholders to
ensure compliance with all appropri-
ate regulations.
We also carry out checks on suppliers
to ensure that they are also maintain-
ing the high standards expected.
23
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT
Chief Financial Officer’s Review
£681.1m £112.9m
£51.5m
£44.6m
Revenue increase of 30.9% to
£681.1 million, with like-for-like**
increase of 4.0%.
** like-for-like revenue is a measure of performance,
adjusted for the impact of acquisitions
Gross Profit increased
by 30.0% to £112.9 million.
Adjusted EBITDA increased
by 30.4% to £51.5 million.
Adjusted Profit Before Tax
increased by 28.4% from
£34.7 million to £44.6 million.
The Chairman’s Statement and the Chief Executive Officer’s Review
provide an analysis of the key factors contributing to our financial results
for the year ended 31 March 2023.
Once again, the financial results for the year reflect a
combination of good performance across the divisions, along
with the contribution from acquisitions made in the year and the
annualisation of those acquisitions completed in the prior year.
Overall business performance is shown in our key performance
indicators on page 18.
Revenue
Revenue totalled £681.1 million for the year ended 31 March 2023.
This represented an increase of 30.9% compared to the previous
year (2022: £520.2 million). Group like-for-like revenue growth
was 4.0% versus 2022.
2023
£m
2022
£m
%
Change
%
Change
like-for-like
Division
Bricks and Building
Materials
Importing
Distribution
Contracting
Group eliminations
498.6
404.6
117.6
63.0
41.3
(39.4)
72.3
47.0
24.8
(28.5)
Total
681.1
520.2
23%
63%
34%
67%
38%
31%
1%
12%
26%
12%
-
4%
Gross Profit
Gross profit for the year increased to £112.9 million from £86.8
million. Gross profit margin has decreased marginally by 0.1%
to 16.6% driven by the first full year trading contribution from the
Taylor Maxwell Group (2022: 9 months), which operated on lower
margins than the Group prior to the acquisition. In addition, timber
margins have fallen back from the exceptional highs of the previous
year and the impacts of these factors were partly mitigated by the
acquisitions completed in this financial year which operate on gross
profit margins above the average of the Group.
24
Statutory and Adjusted Profit, and Adjusted EBITDA
Statutory profit before tax of £34.5 million (2022: £18.4 million)
includes other items of £10.1 million (2022: £16.3 million),
which are not considered to be part of the Group’s underlying
operations. These are analysed as follows:
Statutory profit before tax
Acquisition costs
Re-financing costs
Earn-out consideration classified as
remuneration under IFRS 3
Share based payment expense
Amortisation of intangible assets
Impairment of goodwill
Unwinding of discount on contingent
consideration
Share of post-tax profit of equity accounted
associates
Fair value (gains)/losses on contingent
consideration
Total other items before tax
Adjusted profit before tax
Share of post-tax losses of joint ventures*
Depreciation and amortisation
Finance income
Finance expenses
2023
£’000
2022
£’000
34,527
18,406
281
–
5,483
1,567
8,399
–
2,891
(123)
1,139
97
4,333
1,597
6,333
16
938
(55)
(8,432)
10,066
1,916
16,314
44,593
34,720
–
4,715
(143)
2,365
149
3,342
(54)
1,311
51,530
Adjusted EBITDA
39,468
* The Group’s share of losses in its joint venture is included within
Adjusted EBITDA in 2023 to reflect its increased contribution
to the Group's results. The joint venture was in its initial start-up
phase in 2022 and thus not included in order to present results
of ongoing operations on a comparable basis. Further details
regarding the above other items are disclosed in note 14 to the
financial statements.
Brickability Group Plc Annual Report & Accounts 2022/23
Adjusted EBITDA is defined as earnings before interest, tax,
depreciation, amortisation and other non-underlying items.
the impact of acquisitions, with the net cashflow impact reflecting
similar working capital movements to prior year.
Adjusted EBITDA increased by 30.4% to £51.5 million (2022:
£39.5 million) for the year ended 31 March 2023. Detailed
segmental analysis is per note 6 of the financial statements.
All our divisions saw like-for-like growth in the year, however,
demand for bricks fell during the second half of our financial year
as a result of the subdued housing market. Significant year-on-
year price inflation mitigated the financial impact of reduced
volumes. Earn-out consideration classified as remuneration
relates to Modular Clay Products and Taylor Maxwell (2022:
Taylor Maxwell), with both tracking in line with expectations. Fair
value movements on contingent consideration result in a gain of
£8,423k (2022: loss of £1,916k). This predominately relates to
the movements in UPOWA where the combined impact of the
application of Part L and Part S renewable energy legislation
taking longer than expected by housebuilders, and the forecast
slowdown in the housing market compared to prior year forecasts,
is expected to delay the period over which UPOWA will benefit
from the new legislation.
Taxation
The statutory charge for taxation was £6.8 million (2022:
£6.1 million), an effective rate of taxation (Tax expense divided by
Profit Before Tax) of 19.8% (2022: 33.2%). The effective rate for
the year is marginally higher than the statutory rate of corporation
tax of 19% mainly due to the effect of non-deductible expenses
from a tax perspective. In 2022 the effective tax rate was higher
than the main rate of tax largely due to the impact on deferred
tax with the liability remeasured at 25% having originally being
recognised at 19%.
Earnings Per Share
Basic EPS for the year was 9.26p (2022: 4.40p), an increase of
110.5%. The Group also reported an adjusted underlying EPS,
which adjusts for the impact of the other items analysed in the
table above. Adjusted EPS for the year was 11.93p (2022: 10.06p)
per share, an increase of 18.6%.
Dividends
As a result of the Group's trading performance and also in
recognition of the strength of the balance sheet at the year-end,
the Board is recommending a final dividend of 2.15 pence per
share, bringing the full-year dividend to 3.16 pence per share.
Subject to approval by shareholders, the final dividend will be
paid on 21 September 2023, with a record date of 25 August
2023 and an ex-dividend date of 24 August 2023.
Balance sheet review
Inventories at £33.2 million (2022: £28.1 million) increased
primarily due to the impact of acquisitions, and the higher
stock levels for UPOWA as it continues to grow. The impact
of significant price inflation experienced during the year on the
valuation of inventory was largely mitigated by the managed
reduction of inventory levels. The decrease in both trade and
other receivables, and trade and other payables on the balance
sheet were in line with expectations having taken into account
Cash Flow and Net Debt
Operating cash flows before movements in working capital
increased to £46.2 million from £35.2 million in 2022. Cash
generated from operations increased to £44.9 million from
£27.5 million.
At 31 March 2023, the Group had net debt (borrowings less
cash) of £8.0 million which compares to net cash (cash less
borrowings) of £0.4 million at the prior year-end. The main
components of the cash outflows are: additional investment
in property, plant and equipment of £7.2 million (2022: £6.3
million), tax paid of £11.1 million (2022: £7.3 million), net proceeds
from the issue of new shares £0.1 million (2022: £52.7million), the
initial payments for three new subsidiaries of £16.7 million (2022:
£50.3 million), net cash acquired with subsidiary undertaking
£4.7 million (2022: £3.4 million), and the payment of deferred
consideration, in relation to prior year acquisitions, of £3.5
million (2022: £1.4 million). Dividends of £9.1 million (2022: £6.1
million) were also paid in the year. We continue to expect that the
Brickability Group will remain a business that is cash generative.
Bank Facilities
The Group has revolving credit facilities with HSBC and Barclays
of £60 million, which includes an ancillary facility carve out of a
£5 million overdraft. The facilities agreement also provides for
an accordion facility to increase the commitment under revolving
facilities by up to a further £25 million. As at the year end, the
Group had utilised £17.0 million of the facilities.
Subsequent Events
On 2 June 2023, the Group completed the acquisition of the
entire share capital and 100% of the voting rights in Precision
Façade Systems Ltd (“FSL”) for consideration of £600,000. On
completion FSL had net assets of £21,000. On 8 June 2023,
the Group completed the sale of its shares in Lendwell Holdings
Limited for consideration of £188,000. Full details of events
occurring since the year end are disclosed in note 41 to the
financial statements.
Going Concern
The Directors are confident, having made appropriate enquiries,
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 financial statements. Further details concerning
the assessment of going concern are outlined within the Going
Concern and Outlook section on page 26.
Mike Gant
Chief Financial Officer
14 July 2023
25
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Going Concern and Outlook
The period covered by the
Going Concern review is the
18 month period from the
year-end to 30 September
2024.
After reviewing the Group’s forecasts and risk assessments and
making other enquiries, the Board has come to the conclusion that
for the period of review, there is a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future.
The key uncertainty faced by the Group is the demand for its products
and how these are impacted by economic factors. The expected
Budget forecast was reviewed with no concerns noted and sufficient
headroom in place. Budget scenarios have been prepared to compare
a number of outcomes where there is a significant and prolonged
drop in demand in the industry.
For each scenario, cash flow and covenant compliance forecasts
have been prepared. A significant drop in revenue of 50% with no
adjustment to overheads would lead to a breach. The scenarios
in which revenue could fall by this level so rapidly are considered
remote.
Having taken into account the scenarios modelled, the Directors
are satisfied that the Group has sufficient resources to continue to
operate for a period of not less than 12 months from the date of
this report and until at least 30 September 2024. Accordingly, the
consolidated financial information has been prepared on a going
concern basis.
26
STRATEGIC REPORT Brickability Group Plc Annual Report & Accounts 2022/23
Case Study: Chelsea Flower Show
In partnership with IKO
Polymeric, Excel Roofing
were thrilled to work with
treehouse specialists, Blue
Forest, to supply a crisp,
modern roof to a luxury
treehouse project.
In keeping with the ‘wild’ theme of this year’s show,
Blue Forest ensured that the products used were as
eco-friendly as possible. This includes the FSC-certified
timber structure and the slate grey fleece-backed PVC
membrane used on the treehouse roof, which will
increase heat retention through its long service life.
To further benefit the natural environment, the one-
of-a-kind treehouse project is immersed in a natural
planting scheme full of native plants that will surely
benefit the local wildlife.
The brief was to produce a roof with a contemporary
finish, clean lines and a luxurious feel, that would suit
the treehouse’s final location, as part of their luxurious
treehouse accommodation offering on the grounds of
Fairmont Windsor Park, in Berkshire.
Excel Roofing and IKO Polymeric worked together to
construct the roof offsite, within a short period of time,
before it was transferred to its show location.
Blue Forest said: ‘Each Blue Forest treehouse is a
celebration of wood and natural materials and is
finished to the highest standard by experienced
craftsmen. This year we have collaborated with
a number of companies whose vision and values
are aligned with ours, and we thank them for their
continued support and contribution to this year’s RHS
Chelsea Flower Show.’
Excel Roofing has offices centrally located at Bishops
Waltham to service Hampshire, Dorset, Berkshire,
Surrey and West Sussex and provides a competitive
supply and fix service that encompasses all your
roofing needs including roof tiling, slating, flat roofing,
single ply, metal cladding, specialist leadwork service,
solar panels and green roofs.
To find out more about other projects Excel Roofing
have been involved with and the services they offer,
visit – https://www.excelroofingservices.co.uk
Brickability Group Plc Annual Report & Accounts 2022/23
27
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Section 172(1) Statement
Section 172 of the Companies Act 2006 (“S172”) requires Brickability’s Directors to act in good faith and in the way that they consider
to be most likely to promote the success of the Company for the benefit of its members as a whole and, in doing so, to have regard to
the interests of other stakeholders. The Directors should also consider the desirability of maintaining high standards of business conduct
and the likely long-term consequences of their decisions.
In the table below, we set out our key stakeholder groups and how we engage with each of them. Each type of engagement is designed
to foster effective and mutually beneficial relationships so that we continue to work effectively with our stakeholders.
Stakeholder Group
SHAREHOLDERS
The Company is in regular contact with its
shareholders and listens to them when they
express concerns and takes action to rectify
those concerns.
How We Engage
The Chairman and Executive Directors hold investor roadshows twice a year based around the half
and full-year results. Feedback from investors is received at this time, as well as during the year.
The Board listened to those shareholders who expressed concerns over the Board’s independence.
Two new independent Non-Executive Directors, Susan McErlain and Sharon Collins were
appointed in May 2022 and September 2022, respectively.
In addition, the Chairman and Executive Directors meet with investors on an adhoc basis
including site visits where investors are able to meet local management.
The Company takes into account how
shareholders might be affected when it
makes investment decisions to grow the
business via acquisitions, a key part of the
Group strategy.
The Company made three acquisitions during the year, which were Modular Clay Products Ltd
in May 2022 and E.T. Clay Products Limited and Heritage Clay Tiles Limited in September 2022.
Shareholders have been advised of the rationale for the acquisitions and have been very supportive
of the Company.
When making decisions to fund acquisitions, the Company takes into consideration how issuing
new shares, or increasing debt, might have an effect on the Company’s share price.
EMPLOYEES
As at 31 March 2023, we employ over 700
people in the Group, across four divisions
in over 70 locations across the UK and also
operate a roof tile joint-venture in Germany.
SUPPLIERS
The Group recognises and actively develops
its relationships with its suppliers and
works closely with them to ensure that the
relationships are productive for all parties.
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.
28
Our employees bring a broad range of experience, expertise and perspective to Brickability that
contributes to the delivery of our strategic objectives. The Board recognises that employees are
the cornerstone of the business.
For details on how we engage with our employees, please see page 32 of the Environment,
Social and Governance report.
Our supply chain includes professional services providers, product suppliers, engineering &
electrical suppliers and energy 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.
The Group’s policy is to pay suppliers in line with its standard terms except where alternative
arrangements have been agreed in advance with individual suppliers.
The Group does not follow any external procurement or payment code.
The Group has good relationships with its customers.
The Group works with its customers to provide sustainable products in order to help customers to
meet their ESG targets. Due to the changes in building regulations, we are now including balconies
and home car chargers as standard.
The Group’s Joint Venture in Germany produces clay tiles to ensure that we’re meeting customer
demand.
STRATEGIC REPORT Brickability Group Plc Annual Report & Accounts 2022/23 Each type of engagement is designed to foster
effective and mutually beneficial relationships so that
we continue to work effectively with our stakeholders.
Stakeholder Group
COMMUNITIES
The Group is committed to making a positive
impact to communities.
How We Engage
During the year, we pledged to support Maggie’s Cancer Centres with a substantial financial grant.
Maggie’s operate support centres online and alongside cancer treatment hospitals to provide
support specialists, psychologists and benefits advisers to those undergoing cancer treatment and
their families all across the UK.
In addition to supporting Maggie’s, we have also made funds available for grants, sponsorship
match funding, material donations for community projects, social impact initiatives and
humanitarian appeals.
The charities we support reflect the passions of our own employees and their families, ensuring that
our Foundation is led with heart and integrity and aligned with our values every step of the way.
Please see page 32 of the Environment, Social and Governance report for further information on
how we engage with the communities in which we work.
Brickability Group Plc Annual Report & Accounts 2022/23
29
STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Environmental, Social and
Governance (ESG)
The Group supplies building materials to contractors, developers,
merchants, and builders across the UK. As a major business in
the construction supply chain, we have a role to play in tackling
environmental challenges. Our stakeholders – namely our people,
shareholders, customers, suppliers, and our local communities
rightly expect us to rise to the challenge of sustainability and act
across all the businesses in the Group.
The Board takes this responsibility seriously and is working to
create a sustainable business fit for the future. In March 2023 we
published our first ESG strategy ‘Together for the Future’ which
sets out our approach planet, people, and partners.
Planet: to be Carbon Net Zero by 2030
People: by empowering people to be the
best that they can be
Partners: to be one of the most trusted
partners for suppliers and customers
Our ESG Strategic Priorities
Our ESG strategy underpins our work to support our
customers to design and build sustainable developments,
where people can thrive and to work with our partners
to drive positive change in the construction industry. We
believe our strategy helps guide us to continue to take the
necessary actions to future-proof our business in areas
that are material for our stakeholders.
Achieving our Mission
John Richards, the Chairman, heads up the ESG team,
and Paul Hamilton, Chief Operating Officer, oversees the
development of strategy and implementation of the initiatives.
Senior sustainability consultant, Georgina McLeod, Director
of EthicallyBe, works across the Group leading the delivery of
our new strategy, building our KPIs, action plans and internal
expertise to build ESG resilience into the organisation. We have
appointed a full-time ESG Co-ordinator, who is responsible for
the day-to-day delivery of the strategy and keeping our teams
across the Group engaged.
The ESG focus this year has been on developing and publishing our
ESG strategy, communicating this with our partners, and engaging
the teams across all of our 30 diverse commercial businesses with
the importance of doing business differently. Our focus for 2023 is
to continue to integrate the ESG Strategy into our business and the
rollout of the ESG strategic priorities is underway, alongside further
data collection to help us develop KPIs to track our progress.
RESPONSIBLE
PROCUREMENT
RESOURCE USE &
MANAGEMENT
PART N E R S
PARTNERSHIP &
COLLABORATION
B
A
AIN
T
S
U
S
L E BRIC
K
A
B
I
L
I
T
Y
PRODUCTS &
SERVICES
HEALTH &
SAFETY
DECARBONISATION
P
L
A
N
E
T
RESTORING
BALANCE
COMMUNITIES &
GIVING BACK
WELLBEING
ENGAGEMENT
DIVERSITY &
INCLUSION
LEARNING,
DEVELOPMENT &
EARLY CAREERS
PEOPL E
30
Brickability Group Plc Annual Report & Accounts 2022/23
STRATEGIC REPORT
Planet (Environmental)
To meet the challenge of climate and ecological emergencies, we are committed to changing the
way we do business, both within our own operations and through the supply chain. Our ambition is
to be a Group of businesses operating in balance with the planet - not taking more than we can give
back.
Decarbonisation
It is our goal to be carbon net zero in our
own Scope 1 and 2 operations of our sales
businesses by 2030.
2022/23 marks the first financial year we have completed a
full carbon measurement of all of our Scope 1 and 2 emissions.
We have continued to develop our systems and expertise in
measurement, and using new software, we are now able to easily
track data from our haulage freight business, McCann Logistics.
The significant increase in emissions reported is accounted for by
the inclusion of this data for the first time, alongside that of our
sales businesses and small manufacturing units.
Carbon Dioxide Equivalent
(CO2e) Tonnes
2023*
2022**
2021***
Total Energy usage KwH1
16,666,183.7
N/A
Scope 1
Scope 2
4,156.8
1,762.0
222.0
65.9
N/A
94.8
22.3
Intensity
Tonnes of CO2e from scope 1 and
2 sources per £m of turnover
6.37
3.52
2.00
*
**
Brickability Group PLC including our haulage business McCann Logistics. Data is from 1 January-
31 December 2022.
Brickability Group PLC data minus McCann Logistics – based on pre-pandemic measurement
19/20.
*** Brickability Ltd data only. For 2021 the then largest subsidiary reported on the emissions sources as
required under the Companies Act 2006 (Strategic Report and Directors Reports) Regulation 2013.
Conversion factors taken from Department for Energy Security and Net Zero, Greenhouse gas
reporting: conversion factors 2023.
1
Renewable Energy (procurement)
The planned transition to procuring only fully renewable energy
into all of our buildings is now underway. Our first focus has been
the buildings we own, with 24 out of 33 contracts in our owned
properties now using renewable energy.
Renewable Energy (generation)
Surveys of our owned buildings are now complete, and we are
planning a phased rollout of solar panels with our renewable
technologies company UPOWA.
Car fleet
Implementation of our new car policy has now begun, which will
see all cars electric within the Group by 2030. We currently have
over 50 electric cars which is over 50% of the leased company
car-fleet. UPOWA plans to fit charge points across the estate.
The replacement of the last of our diesel forklifts with electric
models is also well underway.
Net Zero Supply Chain
Working closely with our suppliers to achieve a net-zero supply
chain is a key part of our strategy. We are communicating with
our key customers and suppliers on this and are developing our
staff understanding and expertise.
Resource use and management
We will effectively manage and reduce our
resource use.
Behaviour change and capacity building
Building our employees sustainability expertise is key to the
success of our ESG strategy. Our team of Environmental
Champions is now operational, taking the lead on making
change happen in each of our businesses. Most of our businesses
are now signed up to the Supply Chain Sustainability School,
with key members of the teams engaged in active learning. We
are developing bespoke learning programmes for the Group.
Waste
To support our drive towards zero avoidable waste we continue
to monitor our waste and its journey after disposal at our offices
to ensure we have full transparency and are able to make
necessary changes. We will shortly be rolling out the new reduce,
recycle, reuse policy.
Resource use
The drive to keep single-use plastics out of our workplaces and
events continues as does work with our key suppliers to reduce
the amount of single-use packaging on our products.
Measurement
We cannot succeed in driving change if we do not understand
and track our actions. After developing the appropriate systems
through new software, we have completed the first full year of
measurement for our freight business McCann Logistics. We
are further developing the software to help us calculate Scope 3
emissions from McCann's freight partners.
Restoring balance
We will give back to the planet and contribute
to biodiversity.
We have confirmed a partnership with the Earth Trust Charity.
The project is being funded by the Brickability Foundation at
£20,000 a year for three years and will enable hundreds of
children in Reading, a community close to our HQ, to connect
with nature and access environmental education.
31
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT / ESG (CONTINUED)
People
We are on a journey to create a culture of inclusion, diversity and equality where differences are
welcomed, celebrated and appreciated, and everyone is supported to reach their potential.
Wellbeing
We began the development of our Wellbeing Programme to
support our employees’ physical and mental health to provide a
good working environment; work-life balance; personal growth
and financial wellbeing and support. We made a cost-of-living
payment to qualifying employees to support them through these
difficult economic times, relaunched our Cycle to Work Scheme
and began to roll out weekly fruit boxes.
Learning and Development
To support our drive to build skills for the future and foster a culture
of high performance we launched a new Apprenticeship Scheme.
Communities and Giving Back
We had a significant impact on communities and the
environment through the Brickability Foundation, which we also
refocused strategically to more directly support the delivery of
our ESG strategy. In addition, our employees across the Group
developed their own initiatives, including monthly food bank
collections in many of our businesses and a period poverty
project in Taylor Maxwell.
CASE STUDY:
THE BRICKABILITY ACADEMY,
BUILDING FOR TOMORROW...
The Brickability Academy, Building for Tomorrow,
saw for the first time, 10 sales trainees from across
the Group taking part in a sales foundation course.
This offers individuals an entry level opportunity
to build a career in Sales. Apprentices learn by
shadowing our experienced Sales Team, attending
regular training days with specialist mentors from
around the group, and will work to achieve a Level 4
Sales Executive qualification.
We aim to connect with the communities in which we live and
work and improve our social impact. We will ensure that all
people in our supply chains are treated fairly and are free of
modern slavery. We will actively support the development of
opportunities and careers for women in construction, recognising
and making opportunities available to all.
This year has seen an acceleration in the roll-out of Group wide
systems across the Group to help implement and manage our
developing policies.
Engagement
We want our employees to enjoy coming to work and feel
engaged and motivated so they do their best everyday. We
completed our ESG workshops with the majority of our 700
employees and established our Environmental Champions
network to keep engagement high.
Diversity and Inclusion
Embracing and involving all people, irrespective of race, gender,
ability, and experience as well as building a diverse, equal,
and inclusive workforce representative of local communities is
vitally important to the Group. We completed our DEI (diversity,
equity, inclusion) and gender pay gap analysis. The data was
published, together with priorities for action, in our ESG Strategy
on pages 12 and 13 of the document available at https://
brickabilitygroupplc.com/documents/2023/Brickability-Group-
PLC-ESG-Strategy.pdf.
Our review of the Group reward and recognition policies is
ongoing across the business. Steps taken to date include the
harmonisation of the annual leave entitlement across the Group
from April 2023, and further steps are being taken with regard
to harmonising further employee benefits, for example improving
the Group Pension Scheme through consolidating the separate
policies across the businesses in the Group into one provider.
Health and Safety
The first priority of the Group is to create a safe and healthy
workplace where safety first is a way of life. All employees receive
training and are working together to create supportive “speak
up” environments, striving for zero recordable injuries. We recently
created a new position of Group Health and Safety Manager, to
continue to prioritise this work and collaborate with our external
Health and Safety Agency.
32
Brickability Group Plc Annual Report & Accounts 2022/23 Partners
Partnership working is at the core of Brickability’s success.
We need to work in partnership with everyone in the supply chain
to reduce the impact of our products and services on people and
the environment. We are continually working to understand the
needs of current and future customers and create new market
opportunities through new sustainable technologies.
Partnership and Collaboration
We were delighted to achieve Gold membership of the Supply
Chain Sustainability School, which covers all of our 30 commercial
businesses. This achievement is important in terms of profile
and partnership with our customers, to win tenders and remain
competitive. It also continues the development of our expertise
to work collaboratively on delivery of a net zero supply chain,
deepening the sustainability knowledge of our employees.
Responsible Procurement
We updated our Modern Slavery policy and began to roll out
training across the Group, beginning with our procurement
teams. Securing Environmental Product Declarations (EPDs)
and embodied carbon data of our products has been a growing
priority this year. We developed resources to support our
procurement professionals in their relationships with our suppliers.
The development is underway of a responsible procurement
training programme to be rolled out to relevant employees
across the Group in the coming year, together with new supplier
onboarding processes.
CASE STUDY:
PARTNERSHIP TO TRANSFORM
THE SUPPLY CHAIN
Our Taylor Maxwell team sponsored the London
Festival of Architecture (LFA) in June 2022. They invited
supply chain partners Morgan Sindall and Higgins
Partnerships, and brick manufacturers Michelmersh and
Wienerberger to join them in delivering events at their
London Showroom. The businesses joined forces to talk
about sustainable supply chain transformation and the
collective journey to net zero for construction.
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Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT / ESG (CONTINUED)
ESG Governance Framework
Brickability Group PLC Board
Chief Operating Officer and Leadership Team
Overall responsibility for the implementation and progress of the ESG Strategy sits with our Chief Operating Officer, Paul Hamilton supported
by Georgina McLeod, senior ESG lead.
ESG is integrated into the Senior Management team – alongside Directors responsible for HR, Marketing and IT. The Operational Leadership team
reports on ESG issues to the Divisional MD leadership team made up of the Directors responsible for: Brick (Simon Mellor), Importing (Andy Wilson),
Contracting (Simon Pearson), Distribution (Paul Hamilton), Brick and Timber TM (Kenny Hirst-Sewell and Alex Moffatt) who take oversight of ESG
progress quarterly and feed it back into the Group businesses.
ESG Team
The ESG team is made up of Georgina McLeod, our senior lead and Esme Wilson, full-time ESG Coordinator.
Informing
Reporting
• Drives the delivery of the ‘Together for the Future’ strategy.
• Oversees measurement and reporting.
•
• Working in collaboration with all of our 30 commercial businesses.
Integration of ESG into the business and engagement with employees.
Environmental Champions
The ESG team is supported in implementation by a team of over 50 Environmental Champions across the Group.
Group Business MDs
Informing
Reporting
Informing
Reporting
Our team of MDs across the Group are responsible for providing data, implementing policies and sharing best practice and our eyes and ears
with suppliers and customers to feed in priorities for future action. They are our connection into the local communities across the UK.
34
Brickability Group Plc Annual Report & Accounts 2022/23
STRATEGIC REPORT Governance
We recognise that good governance is not only crucial for our performance and relationship with
shareholders, but it is also important for society and the environment.
Board and leadership gender diversity has continued to improve
with the appointment of a second female independent Non-
Executive Board Director.
The Board has embraced the ESG leadership role, guiding the
ESG strategy development and begun work in embedding the
ESG framework through all of our processes. We have reviewed
our investments, with a focus on our pension investment funds
and their plans to divest from fossil fuels. We have begun to
develop our approach to Climate Related Financial Disclosures
reporting requirements and have integrated key risks into our
Board oversight.
Climate Related Financial Disclosures
As a company admitted to AIM, the year ending 31 March 2024
will be the first year under which we are required to report under
the Climate-related Financial Disclosures regime. As such we
are preparing for disclosures required in next year’s financial
statements.
Task Force on Climate-Related Financial
Disclosures (TCFD)
The Task Force on Climate-related Financial Disclosures was
established by the Financial Stability Board in 2015 and the
voluntary disclosure framework was laid out in the report
“Recommendations of the Task Force on Climate related Financial
Disclosures” in June 2017. This year, and further updates to this,
identified eleven topics organised under four broad categories
– Governance; Strategy; Risk Management and Metrics and
Targets.
This year for the first time UK companies with securities admitted
to AIM with more than 500 employees have been required to
incorporate TCFD-aligned climate disclosures in their annual
reports.
The Group has begun to develop our approach to TCFD and is
committed to increasing the transparency of reporting around
climate impacts and risks. In the preparation of this first TCFD
disclosure for the Group we have identified areas of focus to
further develop our approach to TCFD reporting and disclosures.
This includes internal expertise, scenarios planning, our metrics
including the development of KPIs this year for our ESG strategy
as we grow our data and understanding.
1. Governance
a) Describe the Board’s oversight of climate-related risks
and opportunities
The Board has ultimate responsibility for oversight of climate-
related risks and opportunities.
During the year, key Board members were involved in the
development of our first climate related scenario planning
exercise. We are now in the process of integrating reporting into
our Board meetings. Our ESG Governance is set out above.
Priorities for 2023
Our plans
The Board oversees the continuing
delivery of the ESG strategy.
The Board oversees the
development of KPIs for the ESG
strategy.
Training/updates on key climate-
related topics to be added to the
Board calendar for 2023.
The Chairman and Board will
ensure that ESG is integrated into
the management structure and that
appropriate resource is allocated.
KPIs to be agreed with Board and
added into the reporting framework.
Focused training session and
update papers will be provided
to support Board member
understanding of emerging climate
and construction topics.
b) Describe management’s role in assessing and managing
climate-related risks and opportunities
The Chief Operating Officer is responsible for leading the ESG
response, supported by the ESG team. Consultation takes place
with the Divisional Directors who receive ESG reports – and
this is reported to the team of MDs. In 2022, the majority of our
700 employees received training in climate related issues through
a series of workshops, and were able to feed in their observations,
risks, and opportunities into the ESG strategy development.
Priorities for 2023
Our plans
To continue to integrate
climate related thinking into the
organisation.
We will make climate/ESG reporting
an integral part of our management
and team meetings.
Embed risk and opportunity thinking
into our Environmental Champions
network.
Climate related risk training to the
senior management team
Schedule training for our
Champions on climate related
risk & opportunity and emerging
climate issues.
Schedule a Teams briefing session
for MDs and Divisional Directors to
support future facing thinking.
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Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT / ESG (CONTINUED)
2. Strategy
a) Describe the climate-related risks & opportunities the organisation has identified over the short, medium, and long term
This year is the first year we have carried out a climate-related risk & opportunity planning session. This took place with key Board members
and Divisional Directors, and was supplemented by information from research, industry groups and employees. As we deepen climate
forecasting expertise within the organisation, we will develop our strategic view and priorities. We have classified our time frames as
measured in years as follows:
Short term = 2020 – 30
= 2031 – 40
Medium
= 2041 – 50
Long
Summary of our identified risks & opportunities
TCFD Category
Climate related risks & opportunities
Potential financial impacts
Possible timeframe
TRANSITION:
Policy & legal
Technology
Risk: Regulation changes re reaching net zero
sooner for our entire business and the supply chain.
Potential carbon taxation.
Opportunity: Reports that up to 19 million
homes would be climate retrofitted under a new
administration.
Opportunity: To develop more renewable energy
technology products through our company
UPOWA as the way new build houses are powered
changes.
Risk and opportunity: Embodied carbon likely to be
in regulation in five years. Future Homes standards
currently looking at timber as a building material.
Significant investment required and/or
offset costs.
Opportunity to supply.
Short
Short
Increased demand for products and
services.
Short/medium
The financial impact will depend on
the market demands for clay or timber
products. We will monitor and focus on
supply chain developments.
Short
Medium
Long
Risk: Our joint venture Schermbecker is a high
energy business making tiles.
Possible impact through energy
prices.
Risk: According to some industry experts gas could
become unavailable in 20 to 30 years.
Possible impact on our suppliers
and their manufacturing process.
Innovation is already underway.
Risk and opportunity: Rapid market change may
occur if the single use plastic laws change rapidly.
Construction is the biggest user after food.
Change in demand from customers.
Opportunity to develop the supply
chain.
Short/medium
Market
Risk and opportunity: (Bricks & Building Materials
and Importing division) Transition to new building
technologies means that different materials
are required – which may impact supply chain
development.
Risk and opportunity: (Distribution division) The
phasing out of gas boilers may mean a transition
to new systems requiring larger radiators.
Increased demand for lower carbon
products.
Short/medium
Need to transition with suppliers to
maintain sales.
Short
Priorities for 2023
Our plans
To continue to monitor the identified strategic risks and opportunities and
identify new ones.
Deepen our understanding of them, including timeframes.
Integrate climate risk and opportunity horizon scanning and analysis into our
management structures.
36
Brickability Group Plc Annual Report & Accounts 2022/23 b) Describe the impact of climate-related risks and
opportunities on the organisation’s businesses, strategy,
and financial planning.
As regulation and consumer demand continue to influence
construction, it is possible that materials required by our
customers will change. Our strategy and financial planning will
focus on future forecasting, working closely with our customers,
and supply chain development from a climate perspective.
3. Risk Management
a) Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2C or lower scenario
We will begin to test the resilience of the organisation’s strategy
against climate-related scenarios in the coming year. We will
do this working alongside our suppliers and other partners and
with reference to the future of the housing and other construction
markets. However, the Group has grown to date successfully using
an acquisition strategy, recently moving into advanced renewable
technologies with UPOWA. Dependent on the future direction
of the construction market, this strategic approach could be
applied to meet the demands of our customer base. Its success
will depend on our ability to horizon scan successfully, plan
accordingly and act quickly and decisively.
b) Describe the organisation’s processes for identifying and
assessing climate-related risk
As described above, the Board has led the process in 2022,
supported by the ESG Management Team and Divisional Directors.
This feeds through to the risk register. We will continue to strengthen
this process as internal experience and expertise grows.
c) Describe the organisation’s processes for managing
climate-related risks and how processes for identifying,
assessing and managing climate-related risks are
integrated into the organisation’s overall risk management
Following the completion of our first review, material risks were fed
into our Group risk register.
Priorities for 2023
Our plans
To complete more detailed risk
assessments based on time frame
and likely impact
To formally assess the identified risks
and report to Board as part of our
quarterly processes.
4. Metrics And Targets
a) Disclose the metrics used by the organisation to assess
climate-related risk and opportunities in line with its
strategy and risk management processes.
We are currently developing our metrics for our ESG strategy, and
we will develop metrics for our risk and opportunities in line with
this during 2023. More data collection and analysis is required,
before we can carry this out.
b) Disclose the Scope 1, 2 and, if appropriate, Scope 3
greenhouse gas emissions (GHG), and the related risks
This data can be found on page 31.
c) Describe the targets used by the organisation to manage
climate related risks and opportunities and performance against
targets.
The metrics for our ESG strategy and TCFD reporting will be
developed during 2023, to include but not limited to:
Category
Measure
Metric/target
GHG Emissions Scope 1 & 2
Absolute tonnes of carbon reduction (per £)
Metric being developed in 2023
Renewable energy
% of sites powered by renewable energy
Renewable energy
% of sites powered by renewable energy
All owned sites to be powered by renewable energy
by 2030
75% of leased sites to be powered by renewable
energy by 2030
Car fleet
% of EV cars in the owned car fleet
All cars to be electric by 2030
GHG Emissions Scope 3
Absolute tonnes of carbon reduction
Net Zero Carbon by 2050
Climate-related opportunities
% of revenue from climate-related opportunities
Target to be developed in 2023.
Water usage
M3 of water used across all sites
Metric being developed in 2023
Waste management
Tonnes of waste to landfill
Zero avoidable waste to landfill. Target year to be
developed in 2023.
37
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS STRATEGIC REPORT / ESG (CONTINUED)
The Brickability Group Foundation
This was an exciting first full year for
our Foundation, following the launch in
February 2022.
Sponsorship and Grants
We funded 20 charities through sponsorship and grants, donating
a total of £120k (2022: £55k) to support local communities and
causes close to our employees’ hearts. These included Focus Surrey;
Moira Anderson Foundation; Combat Stress; Sunshine Wishes
Scotland; Hotline Meals Service for the Elderly; The Elizabeth
Foundation and Demelza Children’s Hospice Care; the Outward
Bound Trust; Macmillan Cancer support; Asthma and Lung UK;
Rainbow Trust Children’s charity; John Taylor Hospice; Ramsbottom
Pantry; Aspire Powerchart Sports Club and Penrith College.
With many of the Group’s businesses having suppliers in Turkey,
it was important to us to show support for those affected by the
earthquake and we donated £5,000 to the Turkish and Syrian
earthquake disaster appeal.
Our amazing employees
Part of our strategy as a Foundation is to actively inspire and
enable our employees to make a difference. In 2022/23 we
donated a total of £46,013 to match our employees’ fundraising
efforts, making a total of £92,027 donated to charities close to
their hearts. Events ranged from Iron Man challenges, to skydives,
coffee mornings, full and half marathons and raffles. These
benefitted various charities; Heel and Toe Children’s Charity; the
Rainbow Trust; the Royal Hospital for Neuro-disability charity;
Outward Bound Trust and the John Taylor Hospice.
Brick Services hosted a ball to raise funds for the Heel and Toe
Children’s Charity, with the Foundation donating £23,666
making a total of £47,334 to the charity.
CASE STUDY
Loz Glennon from The
Bespoke Brick Company
ran the London Marathon,
the Foundation donated
£5,200 - making the total
Loz raised £10,400 for
Maggie’s.
Our 2022/23 Charity of the Year
Maggie’s operate support centres online and alongside cancer
treatment hospitals, to provide specialists, psychologists, and
benefits advisers to those undergoing cancer treatment and their
families across the UK. Our support for Maggie’s was inspired by
the experience of one of our MD's daughters. The total pledged
to be donated to Maggie’s by the Brickability Foundation is
£35,940.
Our Charity of the Year for 2023/24 is the Heel and Toe Foundation
who provide support for young people with Cerebral Palsy, inspired
by the experience of one of our employees at Brick Services.
Strategic refocus
In order to ensure the Foundation supports the aims of our ESG
strategy and our drive to have positive social and environmental
impact as a business we have refocused our charity mission
to ‘give back to the communities we operate in and to support
environmental projects in the UK which protect and enhance the
natural world’.
In addition, to maximise our investments we have created two
partnerships which will each receive £20,000 a year over a three-
year period. The partnerships launched in April 2023 will deliver
real and long-term impacts in the communities we work in and to
the natural environment.
The Earth Trust is an environmental charity that inspires people
to address the biodiversity, climate, and public health crises
through the power of natural green spaces. Our programme
will provide access to green space and environmental education
to hundreds of children from schools in Reading and create
a community of schools focused on the importance of this
education for the environment – helping create the earth
guardians of the future.
Sports Connect are an inclusive sport for all, education
organisation using the power of sport to inspire, motivate and
educate in the South-East. Our partnership will help to support
the programme with three core projects, calm club and mental
health, support through sport and lastly a mentoring programme.
The Sports Connect wellbeing programme can be tailored to
support youth justice, vulnerable adults, victims of domestic
abuse, parental wellbeing and more.
The Strategic Report on pages INC to 38 was reviewed and
approved by the Board on 14 July 2023.
Alan Simpson
Chief Executive Officer
38
Brickability Group Plc Annual Report & Accounts 2022/23 Corporate
Governance
Brickability Group Plc Annual Report & Accounts 2022/23
39
Board of Directors
Committee Key:
A Audit & Risk
R Remuneration
N Nominations
E Committee Chair
JOHN RICHARDS
Non-Executive Chairman
ALAN SIMPSON
Chief Executive Officer
MIKE GANT
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 Facilities by ADF plc, 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 in March
2018 as Chairman.
Committee membership:
N
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, FSN
Doors, DSH Flooring and more
recently Forum Tiles, all of which are
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.
Alan has been instrumental in the
acquisition growth of the Group
and its admission to the London
Alternative Investment Market in 2019.
Mike is a Chartered Management
Accountant with an MBA from
Nottingham Business School who
joined the Board in 2021. Prior to
joining, he served as Group CFO
at Walker Greenbank plc.
Mike is a highly experienced CFO
and brings a breadth of financial,
strategic and M&A experience to
the Group from his previous roles
at Bass plc, Marstons plc, Geest
plc, Constellation Brands Inc,
Britvic plc and Walker Greenbank
plc.
Mike joined the Board in April
2021.
The Board oversees the growth, strategic development
and governance of the Group. It is formed from
representatives of various stakeholders and brings
together both investment and operational expertise.
40
CORPORATE GOVERNANCEBrickability Group Plc Annual Report & Accounts 2022/23 CLIVE NORMAN
Non-Executive Director
DAVID SIMPSON
Independent Non-Executive
Director
SUSAN MCERLAIN
Independent Non-Executive
Director
SHARON COLLINS
Independent 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 in March 2018.
Committee membership:
N
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 in July 2019.
Committee membership:
A N R
Susan McErlain has had an
executive career spanning 35
years, advising listed companies
and other organisations across
many sectors, most notably
in the industrial sector. She
founded, grew and sold Square
Mile Communications Limited,
a successful communications
and investor relations business.
More recently, Susan acted as
a Corporate Affairs Director
for FTSE 250 company Ultra
Electronics plc until 2019.
Susan has been a Non-Executive
Director since 2020. She joined
the board of AIM listed company
Dewhurst Group plc in 2021 and
is currently a member of both
its Audit and Remuneration
Committees.
Susan joined the Board in May
2022.
Committee membership:
A N R
Sharon Collins has more than 20
years’ experience predominantly in
marketing, international sales and
business development roles within
the Healthcare sector.
Having previously worked for a
leading dental manufacturer for
seven years, Sharon also spent
five years within the International
Business Development field
with Sinclair Pharmaceuticals.
Sharon qualified from Lancaster
University in 1996 with a degree
in Marketing and gained her
MBA (with Distinction) in 2005.
In 2010, Sharon co-founded the
Venture Life Group; in 2014, the
company floated on AIM, part of
the London Stock Exchange, and
she remains the Chief Commercial
Officer and Board Director of
Venture Life Group PLC until
August 2023.
Sharon joined the Board in
September 2022.
Committee membership:
A N R
41
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Group Management Board
JOHN RICHARDS
Non-Executive Chairman
ALAN SIMPSON
Chief Executive Officer
MIKE GANT
Chief Financial Officer
See bio in previous section.
See bio in previous section.
See bio in previous section.
PAUL HAMILTON
Group Chief Operating
Officer & Managing Director
of the Distribution Division
SIMON MELLOR
Managing Director within the
Bricks and Building Materials
Division
KENNY HIRST-SEWELL
Managing Director of Taylor
Maxwell & Co Limited within
the Bricks and Building
Materials Division
ALEX MOFFAT
Managing Director of
Taylor Maxwell Timber
Limited within the Bricks and
Building Materials Division
Paul Hamilton has over 19 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 £25 million a year. He led
a management buyout of the
Towelrads business in 2016 and
was a founder of DSH Flooring.
Paul was appointed Chief
Operating Officer of Brickability
Group in November 2021 whilst
remaining Managing Director for
the Distribution Division.
42
Simon Mellor has 38 years of
experience in the Brick Market
having joined the industry in 1985.
He first gained experience in
Brick Manufacturing at Steetley
Brick and Redland Brick where he
worked for 10 Years as a Regional
Sales Manager.
Simon joined Brickability in 1995
as Wales Sales Manager and was
appointed Managing Director at
the Matching Brick Company in
2007 and Brickability Ltd in 2009.
He has been at Brickability for 28
Years, overseeing a number of
acquisitions in that time as well
as establishing relationships with
European Suppliers in Holland,
Spain and Portugal and developing
exclusive Ranges of Bricks for the
UK Market.
Beginning his career in the
construction industry in 2011,
Kenny has a wealth of experience
in the sourcing, specification
and supply of brick and masonry
materials.
Joining Taylor Maxwell as a
Senior Sales Executive in 2016,
Kenny has quickly progressed
through to Regional Business
Manager, Sales Director and
more recently, Managing Director
of Taylor Maxwell & Co Limited in
April of 2022.
Starting as a Sales Trainee for the
Taylor Maxwell Timber Division
in 2003, Alex has been with the
business for almost 20 years.
Having worked as Sales
Executive, Regional Director
and a Director and joining the
Board in 2017, Alex has first-hand
experience of all aspects of the
business.
Based in Taylor Maxwell’s Stirling
office, Alex is now Managing
Director for Taylor Maxwell
Timber, bringing with him many
years of experience in the timber
industry and an unrivalled
knowledge of timber products.
CORPORATE GOVERNANCEBrickability Group Plc Annual Report & Accounts 2022/23 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.
SIMON PEARSON
Managing Director of the
Contracting Division
Simon Pearson has over 35
years of construction and roofing
sector experience, 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. Simon
is currently Managing Director of
the Contracting Division.
ARNOLD VAN HUET
Managing Director of Crest
Group within the Importing
Division
Arnold Van Huet has over 35
years’ experience in the brick and
tile market across Europe, having
been heavily involved in import
and export 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 is
Managing Director of the Crest
Group of companies within the
Group. He has also held senior
and board positions in Desimpel
Brick plc, Hanson Brick and
Enhobel plc.
ANDY WILSON
Managing Director of the
Importing Division
Andy joined the construction industry
in 2004 after graduating from
Nottingham Trent University. For the next
10 years he worked for Traditional Brick
& Stone, Wienerberger and RGB.
In 2014 Andy founded The Bespoke
Brick Company Limited, followed by
The Brick Slip Business Limited in 2016.
He later co-founded BUF Architecture
in 2017 followed by William Wilson
Properties Limited in April 2019.
Andy was appointed to the
Management Board of the Brickability
Group PLC in May 2019 following
the acquisition of The Bespoke Brick
Company and The Brick Slip Business.
Andy is currently Managing Director of
the Import Division.
43
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Corporate Governance
Statement
As Chairman of the Company, I have pleasure in presenting the Corporate
Governance Statement for the financial year ended 31 March 2023.
The QCA Corporate Governance Code 2018
(“QCA Code”)
The Board is collectively responsible to shareholders of the Company
for the effective oversight and long-term success of the Company.
The Board believes that sound governance is fundamental to this and
has chosen to follow the QCA Corporate Governance Code since
2019. However, the Board recognises that corporate governance is
not a static process and that there is a need to ensure that policies
and practices are kept under review to ensure that the Company
meets the required standards, and that this area develops in line
with the growth and overall strategic plans for the Group. The Board
considers that the policies, procedures and relevant systems which
have been implemented to date have given us a firm foundation for our
governance structure.
44
Brickability Group Plc Annual Report & Accounts 2022/23
During the financial year, the Company complied with 9 of the 10 principles set out within the QCA Code until May 2022 when
John Richards was able to step down as a member from both the Audit & Risk and Remuneration Committees. At this point the
Company has since complied with all 10 principles, as follows:
Principles of the QCA Code
How the Company has complied
1.
2.
3.
4.
5.
6.
7.
8.
9.
Establish a strategy and business model which promote
long-term value for shareholders.
Seek to understand and meet shareholder needs and
expectations.
Take into account wider stakeholder and social
responsibilities, and their implications for long-term
success.
Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
The Board has collective responsibility for setting the strategic aims and objectives
of the Group. Our strategy is articulated on page 9 and on our website.
In the course of implementing our strategic aims, the Board takes into account
expectations of the Company’s shareholders and also its wider stakeholders and
social responsibilities. We set out our key stakeholder groups and how we engage
with each of them on pages 28 and 29.
The Board also has responsibility for the Group’s internal control and risk
management systems. The Board reviews the risks faced and ensures the
mitigation strategies in place are the most effective and appropriate to the
Group’s operations.
Maintain the Board as a well-functioning, balanced
team led by the Chairman.
Ensure that between them the Directors have the
necessary up-to-date experience, skills and capabilities.
Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement.
Promote a corporate culture that is based on ethical
values and behaviours.
Maintain governance structures and processes that are
fit for purpose and support good decision-making by
the Board.
As Chairman, I regularly consider the operation of the Board as a whole and the
performance of the Directors individually.
The Directors have the necessary up-to-date experience, skills and capabilities
required for the Board and to oversee the management of the Company.
In February 2023, a formal evaluation of the Board was undertaken and the
feedback shared with the Board.
All appointments to the Board will be on merit, but with due consideration to the
need for diversity on the Board. Such appointments will be made to complement
the existing balance of skills and experience on the Board, as illustrated with the
appointment of Sharon Collins.
The Company operates an open and inclusive culture and this is reflected in the
way that the Board conducts itself.
10. Communicate how the Company is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders.
The Board will continue to monitor its application of the QCA Code and revise its
governance framework as appropriate as the Group evolves.
The Board recognises the importance of maintaining regular dialogue with
institutional (both existing and potential) and retail shareholders to ensure that
the Group’s strategy is communicated and to understand the expectations of our
shareholders.
45
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS CORPORATE GOVERNANCE / CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Board meetings
The Board has an established schedule of meetings throughout the year,
with additional meetings convened when required. The Board addresses
several recurring items at each Board meeting, including operational and
financial performance updates and acquisitions. The Directors maintain a
dialogue between Board meetings on a variety of matters.
The table below sets out the attendance record of individual Directors at
the Board meetings held during the financial year:
Director
John Richards
Alan Simpson
Mike Gant
Giles Beale1
Clive Norman
David Simpson2
Susan McErlain3
Sharon Collins4
Board Meetings
9/9
9/9
9/9
8/9
9/9
7/9
8/8
3/3
1
Giles Beale stepped down from the Board on 31 March 2023. He was unable to attend one
meeting due to a date change at short notice.
2
David Simpson was unable to attend two meetings due to being ill for one and due to a date
change for the second at very short notice.
3 Susan McErlain joined the Board in May 2022.
4
Sharon Collins joined the Board in September 2022.
Division of responsibilities
The Chairman and Chief Executive have separate, clearly defined
roles. The Chairman leads the Board and is responsible for its overall
effectiveness in directing the Company, and the Chief Executive is
responsible for implementing the Group’s strategy and for its operational
performance. The Executive Directors are full-time employees of the
Company and have entered into service agreements with the Company.
Non-Executive Directors
Each of the Non-Executive Directors has entered into a letter of
appointment with the Company, which set out the duties of the Director
and commitment expected. They are expected to commit at least 20 days
per annum to their role and are specifically tasked with:
•
•
bringing independent judgement to bear on issues put to the Board;
applying their knowledge and experience in considering matters such
as strategy, company performance, use of resources and standards of
conduct; and
ensuring high standards of financial probity and corporate governance.
Composition and independence of the Board
During the year until May 2022, the Board consisted of six Directors: The
Non-Executive Chairman, two Executive Directors, one Non-Executive
Director and two independent Non-Executive Directors. On 9 May 2022,
a further independent Non-Executive Director was appointed, and later
on 6 September 2022 another independent Non-Executive Director was
appointed.
Details of each Director’s experience and background are given in their
biographies on pages 40 and 41. Their skills and experience are relevant
and cover areas including building materials, financial management
and control, corporate governance, legal, mergers and acquisitions,
communications and marketing.
Appointments to the Board and re-election
The Board has delegated the tasks of reviewing Board composition,
searching for appropriate candidates and making recommendations to
the Board on candidates to be appointed as Directors to the Nomination
Committee. Further details on the role of the Nomination Committee,
together with details of the recruitment process for Sharon Collins, may be
found on page 49.
All Directors will offer themselves for annual election or re-election, in
accordance with best practice in corporate governance.
The Board considers all Directors to be effective and committed to
their roles.
How the Board works
The Board has overall responsibility for the Company’s purpose, strategy,
business model, performance, capital structure, approval of key contracts
and major capital investment plans, the framework for risk management
and internal controls, governance matters and engagement with
shareholders and other key stakeholders.
The Board remains committed to understanding the needs of our
shareholders and the wider stakeholders and it always considers how the
Board’s decisions impact them in the longer term. In the Section 172(1)
Statement on pages 28 and 29 we explain who the key stakeholders are
and how the Directors engage with them. The Board’s full responsibilities
are set out in a formal schedule of matters reserved for its decision.
•
46
Brickability Group Plc Annual Report & Accounts 2022/23 How the Board operates
The Board is responsible for:
•
•
•
•
•
•
developing Group strategy, business planning, budgeting and risk
management;
monitoring performance against budget and other agreed objectives;
setting the Group’s values and standards, including policies on
employment, health and safety, environment and ethics;
relationships with shareholders and other major stakeholders;
determining the financial and corporate structure of the Group
(including financing and dividend policy);
major investment and divestment decisions, including acquisitions, and
approving material contracts; and
Group compliance with relevant laws and regulations.
•
The Board retains control of certain key decisions through the schedule
of matters reserved for the Board. It has delegated other matters,
responsibilities and authorities to its Board Committees, details of which
are stated later in this report. Anything falling outside of the schedule of
matters reserved or the Committees Terms of Reference falls within the
responsibility and authority of the Chief Executive, including all executive
management matters.
The Board meets at regular intervals and formally met nine times during
the financial year. Directors also have a monthly call to discuss a variety of
issues between formal meetings.
An agenda and accompanying detailed papers, covering key business
and governance issues are circulated to the Board in advance of each
Board meeting. At each meeting, the Board reviews comprehensive
financial and trading information produced by the management team
and considers the trends in the Company’s business and its performance
against strategic objectives and plans.
All Directors are expected to attend each meeting of the Board and any
Committees of which they are members, and to devote sufficient time to
the Company’s affairs to fulfil their duties as Directors. Where Directors are
unable to attend a meeting, they are encouraged to submit any comments
to be considered at the meeting to the Chairman in advance to ensure that
their views are recorded and taken into account during the meeting.
Directors are encouraged to question and voice any concerns they may
have on any topic put to the Board for debate. The Board is supported in
its work by Board Committees, which are responsible for a variety of tasks
delegated by the Board. There is also a Management Board composed
of the Chairman, Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer and those members of the senior management team
whose responsibilities are to implement the decisions of the Board and
review the key business objectives and status of projects.
The main activities of the Board during the year
There are a number of standing and routine items included for review on
each Board agenda. These include operational reports, financial reports,
governance and investor relations updates. In addition, key areas put to
the Board for consideration and review included:
• approval of annual and half-year reports and financial statements;
•
•
•
•
•
•
•
•
•
•
• approval of modern slavery act statement; and
• consideration and approval of the response to an FRC review.
appointment of new Chief Executive Officer;
appointment of new Non-Executive Director;
consideration and approval of dividends;
review and approval of budget;
review against and implementation of strategy;
review of insurance arrangements;
consideration of banking arrangements;
review and approval of ESG strategy;
investor relations;
acquisitions and integration;
Board Committees
The Board delegates certain responsibilities to its Committees, so that
it can operate efficiently and give an appropriate level of attention and
consideration to relevant matters. The Company has an Audit & Risk
Committee, a Remuneration Committee, a Nomination Committee and
a Disclosure Committee, all of which operate within a scope and remit
defined by specific terms of reference determined by the Board. Details
of the operation of the Board Committees are set out in their respective
reports. All of the Board Committees are authorised to obtain, at the
Company’s expense, professional advice on any matter within their Terms
of Reference and to have access to sufficient resources in order to carry
out their duties.
Board and Committee Evaluations
I consider the operation of the Board and the performance of the Directors
on an ongoing basis as part of my duties and will bring any areas of
improvement I consider are needed to the attention of the Board. To assist
with this, the Company Secretary undertook an evaluation of the Board
and its Committees by way of a questionnaire sent to each Director.
The responses were then collated and a report presented to the Board
and to each Committee for the Directors to review. While no substantive
actions were required to be taken as a result of the evaluations, more
focus is required on succession planning at the senior management team
level and there are operational issues, such as timing of meetings and
timeliness of papers, that do require further review and improvements to
be made. The evaluations will continue to be undertaken on an annual
basis.
47
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS CORPORATE GOVERNANCE / CORPORATE GOVERNANCE STATEMENT (CONTINUED)
Financial and business reporting
The Board seeks to present a fair, balanced and understandable
assessment of the Group’s position and prospects in all half-year, final and
any other ad-hoc reports, and other information as may be required from
time to time. The Board receives a number of reports, including those
from the Audit & Risk Committee, to enable it to monitor and clearly
understand the Group’s financial position.
Annual General Meeting (AGM)
This year’s AGM will be held on Tuesday 5 September 2023. The Notice
of Annual General Meeting is available on the Company’s website at
www.brickabilitygroupplc.com. Separate resolutions are provided on each
issue so that they can be given proper consideration and all shareholders
are encouraged to submit their votes.
John Richards
Chairman
14 July 2023
External advisors
The Board seeks advice on various matters from its Nominated Adviser
Cenkos Securities plc and other advisers, as appropriate. The Board also
sought remuneration advice from h2glenfern during the financial year.
Development, information and support
Directors keep their skillset up to date with a combination of attendance
at industry events, individual reading and study, and experience gained
from other Board roles. The Company Secretary ensures the Board
is aware of any applicable regulatory and governance changes and
developments and updates the Board as and when relevant. Directors
are able to take independent professional advice in the furtherance of
their duties, if necessary, at the Company’s expense. Directors also have
direct access to the advice and services of the Company Secretary. The
Company Secretary supports the Chairman in ensuring that the Board
receives the information and support it needs to carry out its roles.
Conflicts of interest
Under the Company’s Articles, the Directors may authorise any actual
or potential conflict of interest a Director may have and may impose any
conditions on the Director that are felt to be appropriate. Directors are
not able to vote in respect of any contract, arrangement or transaction
in which they have a material interest and they are not counted in the
quorum. A process is in place to identify any of the Directors’ potential or
actual conflicts of interest.
Accountability
The Company has in place a system of internal financial controls
commensurate with its current size and activities, which is designed to
ensure that the possibility of misstatement or loss is kept to a minimum.
These procedures include the preparation of management accounts,
forecast variance analysis and other ad-hoc reports. There are clearly
defined authority limits throughout the Group, including matters reserved
specifically for the Board.
Risk management and internal control
Risks throughout the Group are considered and reviewed on a regular
basis. Risks are identified and mitigating actions put into place as
appropriate. Principal risks identified are set out in the Strategic report on
pages 22 and 23. Internal control and risk management procedures can
only provide reasonable and not absolute assurance against material
misstatement. The internal control procedures were in place throughout
the financial year and up to the date of approval of this report.
48
CORPORATE GOVERNANCEBrickability Group Plc Annual Report & Accounts 2022/23 Report of the Nomination
Committee
As Chairman of the Nomination Committee (“the Committee”)
I am pleased to present the report of the Committee for the financial year
ended 31 March 2023.
Committee Chair
John Richards
Other Members
Clive Norman, David Simpson,
Sharon Collins, Susan McErlain
Meetings and attendance
The Committee meets as and when
required with the Chief Executive
invited to attend meetings as and when
appropriate. There were four Nomination
Committee meetings held during the
financial year. The following table sets
out individual attendance by members:
Member
John Richards, Chairman
Meetings
attended
4/4
Giles Beale1,3
Clive Norman
David Simpson3
Sharon Collins2
Susan McErlain4
3/4
3/4
2/4
–
–
1
2
3
4
5
Giles Beale stepped down from the Committee on 31 March
2023.
Sharon Collins was appointed as a member of the
Committee on 31 March 2023.
Due to a late change in the March meeting dates, neither
Giles Beale nor David Simpson could attend the final
meeting of the year.
Susan McErlain was appointed as a member of the
Committee on 30 May 2023.
Where Directors could not attend meetings, their comments
were provided to either the Chairman or the Company
Secretary for them to inform the rest of the Committee.
All members of the Committee are
Non-Executive Directors of the Company
whose biographies are contained
pages 40 and 41.
Duties
The Duties of the Committee are set out in
terms of reference which are available for
inspection on the Company’s website at
www.brickabilitygroupplc.com. The terms of
reference are subject to an annual review by the
Committee.
As well as considering succession planning
for the Board, the Committee also considers
succession planning for senior executive
positions. The Committee is aware of gender
and diversity issues, and these are considered,
amongst other factors, when reviewing
potential candidates for Board and other senior
management positions and determining their
suitability for such positions.
Appointment of a new Non-
Executive Director
At the Company’s 2021 Annual General
Meeting (AGM), it was noted that some
shareholders had questioned the composition
of the Audit & Risk Committee and the
Remuneration Committee, which both had
me as a member of the Committees. The
shareholders concerned did not think I was
independent enough as I am also Chairman
of the Company. It was also noted that the
Board’s gender composition had been raised
as a concern by some of the Company’s larger
shareholders.
Accordingly, a search for a new independent
Non-Executive Director was commenced after
the AGM was held. We did not use an external
recruitment agent to assist in the process.
Instead, we used the existing network of our
advisers and Directors.
In addition to Susan McErlain being
recommended and appointed to the Board in
May 2022 (the details of which are included in
2022 Annual Report), the search also resulted
in Sharon Collins being suggested as a new
independent Non-Executive Director. Sharon’s
CV was circulated to the Committee, and the
Committee noted Sharon’s extensive executive
experience predominantly in marketing,
international sales, acquisitions, and business
development roles. Sharon is the co-founder
of Venture Life Group, which is an AIM listed
company, and has been a Board director since
the company’s inception (2010) and remains
Chief Commercial Officer until August 2023.
Mr Simpson and I both met Ms Collins and
agreed that her expertise would be of great
benefit to the Company and Board.
I am pleased to announce that Sharon was
appointed as an independent Non-Executive
Director of the Company on 6 September 2022.
Sharon’s biography can be found on page 41
and I have welcomed Sharon to the Board in my
Chairman’s statement on page 3.
As a result of Sharon’s appointment, we now
have a better gender balance on the Board, with
a male to female ratio of 5 to 2 (29%).
Committee activity during the year
In addition to appointing Sharon, the
Committee also undertook the following
activities:
•
reviewed the terms of reference for the
Committee;
undertook a Committee evaluation (the
results of which can be seen in the Board
& Committee evaluation section of the
Corporate Governance report on page 47);
and
conducted a review of Board composition
and diversity and considered matters relating
to succession planning.
•
•
By order of the Board
John Richards
Chairman of the Nomination Committee
14 July 2023
49
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Report of the Audit & Risk
Committee
Committee Chair
David Simpson
Other Members
Susan McErlain
Sharon Collins
Meetings and attendance
There were five Audit & Risk
Committee meetings held during
the financial year. The following
table sets out individual attendance
by members:
Member
David Simpson, Chair
Giles Beale1
Susan McErlain2
Sharon Collins3
Meetings
attended
5/5
5/5
5/5
3/3
1
2
3
Giles Beale stepped down from the Committee
at the end of March 2023.
Susan McErlain was appointed to the
Committee in May 2022.
Sharon Collins was appointed to the Committee
in September 2022.
Committee Members,
Attendance and
Independence
The Committee is currently
composed of three Non-Executive
Directors, all of whom are
considered independent by the
Board within the meaning of the
QCA Code.
As Chairman of the Audit & Risk Committee (“the Committee”),
I am pleased to present the report of the Committee for the financial
year ended 31 March 2023.
(2)
Financial Reporting Council (FRC) Review
In November 2022, the FRC wrote to the Company having undertaken a review of its 2022 Annual
Report. The FRC requested the following:
(1)
an explanation of the differences between the consideration amounts reported in the
Company’s 2022 Annual Report and the related RNS announcements made in connection with
two acquisitions during the year;
clarification on the discount rates applied in estimating the fair value of contingent consideration
in respect of one acquisition during the year; and
an analysis of the tax effect of individual other items excluded from adjusted profit for the year,
including an explanation for the low effective tax rate of 2.4% attributed to these items.
Detailed explanations and the analysis were provided to the FRC and the FRC confirmed that it
accepted the responses provided. The Company welcomed the FRC’s review and more disclosure will
be provided in the notes to the financial statements concerning discount rates and tax calculations.
BDO’s audit for the year ended 31 March 2022 was selected for review by the FRC’s Audit
Quality Review (AQR) team. The Audit Committee chairman held discussions with the FRC, and
subsequently the Committee discussed the AQR’s report findings with the auditor and was satisfied
with their response. No matters of significant concern to the Committee were raised.
(3)
Duties Undertaken During the Year
The Duties of the Committee are set out in terms of reference which are available for inspection on
the Company’s website at www.brickabilitygroupplc.com. The terms of reference are subject to an
annual review by the Committee.
Specifically, the Committee performed the following duties during the financial year:
Duties
How performed during the year
Financial Reporting
The Committee must monitor the
integrity of the financial statements of
the Group.
The Committee shall review all
significant financial reporting issues
and all judgements which they
contain.
The Committee reviewed the interim and full-year financial statements,
together with the full-year Annual Report, recommending their approval to the
Board. The Committee reviewed and approved the Going Concern statement.
The Committee reviewed the key audit matters raised by the external
auditor, together with the significant judgements raised by the management
team. These were discussed in depth by the Committee, together with
management and BDO. The Committee agreed that the audit matters and
significant adjustments were appropriate. The noted key audit matters are
included within the independent auditor’s report on pages 62 and 63.
Risk Management and Internal Controls
The Committee determines and
reviews the Group’s risk profile,
including the nature and extent of
significant risks that the Group is
willing to take in achieving its strategic
objectives.
The Committee shall keep under
review the scope, adequacy and
effectiveness of the Group’s internal
financial controls, internal control and
risk management systems.
The risk management report, together with the principal risks and
uncertainties can be found on pages 22 and 23.
The Committee reviewed these on behalf of the Board at the interim and
full-year stages to ensure that they were still appropriate and that the risk
profile was still right for the growing business.
The Group does not have an internal audit department. The Committee
keeps this under review but at present believes that the need for such a
department is not yet warranted.
The Committee reviewed the findings of the Audit Completion Report and
discussed the internal controls with the financial management team. The
Committee is satisfied that the procedures and controls are adequate and
effective for a Group of Brickability’s size and complexity.
50
Brickability Group Plc Annual Report & Accounts 2022/23
Duties
How performed during the year
Whistleblowing & Anti-Bribery
The Committee shall review the scope, adequacy
and effectiveness of the Group’s arrangements
for its employees and, if appropriate, contractors
to raise concerns about possible wrongdoing in
financial reporting or other matters.
The Committee shall review the Group’s systems
and controls for the prevention of bribery and
corruption and receive reports of non-compliance.
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 year.
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 Group also maintains a gifts and hospitality register whereby employees must register any gifts or any hospitality
events that they have attended, which have been given by suppliers or customers.
The Committee relies upon assurances from senior management in satisfying itself that the current policy is operating
effectively. The Committee is satisfied that the policy in place has been operating effectively during the year.
Informed by the external auditors regarding an Audit Quality Review of the prior year financial statements.
Other matters reviewed during the year:
• Review of the external auditor’s effectiveness.
• Review of subsidiaries seeking audit exemption under section 479 Companies Act 2006.
• Audit Committee performance evaluation.
•
Significant Issues Considered by the Committee
The Committee reviews accounting papers prepared by management that provide details of significant financial reporting issues, together with
reports from the external Auditor prepared in conjunction with the half and full-year results.
The significant issues considered by the Audit and Risk Committee in respect of the financial year ended 31 March 2023 are set out in the
following table:
Significant issue/
accounting judgement identified
Intangible Assets
Identifiable intangible assets (such as brands
and customer and supplier relationships) are
recognised at fair value on acquisition. Any excess
paid over the value of net assets acquired is
included as goodwill.
Impairment
Goodwill is not amortised but instead reviewed for
impairment annually.
External advisors are engaged to assist with determining this fair value and the Purchase Price Allocation (PPA) between
intangibles and goodwill. PPA Valuations have been carried out for the acquisitions of Modular Clay Products Ltd, E.T.
Clay Products Limited and Heritage Clay Tiles Limited that took place during the financial year.
Where indicators of impairment exist, such as an economic downturn, the potential impairment of other non-financial
assets, such as intangibles and investments, is also considered. Key assumptions included within the impairment reviews
are around cash flows and discount rates.
How it was de
alt with
Contingent Consideration
Contingent consideration is recognised for those
acquisitions where future consideration may be
payable depending on certain results being met,
such as meeting an EBITDA target.
Leases
Under IFRS, a lease liability and right of use asset
is recognised, over the term of the lease, for all
lease agreements (except for those deemed as
short-term of low value).
Provisions
Provisions are included in the accounts in respect
of the following: expected credit losses; inventory;
defects and warranties.
Defined Benefit Pension Contributions
When Taylor Maxwell was acquired, it operated a
defined benefit pension scheme.
Joint Arrangements
During the prior financial year, the Group invested
in, and now holds, a 50% share in Schermbecker
Building Products GmbH.
The amount payable is calculated based on the terms of the contract and future forecast results. Judgement is therefore
required in order to prepare appropriate forecasts, based on management’s knowledge of the market and industry, for
the assessment of how much consideration may be payable.
The lease term includes periods covered by options to extend or terminate the lease, depending on whether it is
reasonably certain that those options will be exercised or not.
Judgement is required in evaluating whether it is reasonably certain or not that an option will be exercised, in order to
determine the lease term. The Group’s incremental borrowing rate is used in determining the lease liability, where an
interest rate in the lease cannot be readily determined.
Provisions by nature are estimates and, whilst historical data and trends can be used to quantify the values to be
provided, management judgement will also be exercised.
A buy-out process commenced in July 2021 to transfer the risk and liability to an insurer. However, as this process was
not completed before the end of the financial year, an external pension consultant has been engaged to prepare the
valuation report and guidance for disclosure in the financial statements for the year ended 31 March 2023.
The accounting of a joint arrangement depends on the substance of the agreement and whether the Group is
considered to have control. Where it is considered to be a joint venture (JV), the Group will account for the investment
using the equity method, with a share of the JV’s profit or loss recognised in the Group’s accounts.
The Committee agreed with management’s view that the agreement should be considered a JV based on the existence
of joint control and the requirement of unanimous consent as defined by IFRS 11.
51
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS
CORPORATE GOVERNANCE / REPORT OF THE AUDIT & RISK COMMITTEE (CONTINUED)
External Auditor
The Audit & Risk Committee owns 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 on page 87 in note 9 to the financial statements. The non-audit fees for the year were £27,000
(2022: £8,000) which was in relation to a limited scope review of the Group’s half-year results, testing the workings for a bank covenant report
and reviewing the Company’s replies to the Corporate Reporting Review Team in response to the FRC’s review of the 2022 Annual Report and
Accounts.
Both management and the Committee Chair 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 by the Committee. Following the audit, the
Auditor presents their findings to Audit & Risk Committee for discussion. No major areas of concern were highlighted by the Auditor during the year.
Having reviewed the Auditor’s independence and performance to date, the Committee has recommended to the Board that BDO LLP be
re-appointed as the Group’s Auditor and a resolution to this effect will be proposed at the forthcoming Annual General Meeting.
David Simpson
Chairman of the Audit & Risk Committee
14 July 2023
52
Brickability Group Plc Annual Report & Accounts 2022/23 CORPORATE GOVERNANCE
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
Report of the Remuneration
Committee
Committee Chair
Sharon Collins
Other Members
David Simpson
Susan McErlain
Meetings and attendance
There were five Remuneration
Committee meetings held during the
financial year. The following table sets
out individual attendance by members:
Member
Giles Beale, Chair1
Sharon Collins, Chair2
David Simpson
Susan McErlain
Meetings
attended
4/5
3/3
4/5
5/5
1
2
3
Giles Beale stepped down as Chair of the
Committee on 31 March 2023.
Sharon Collins was appointed as a member of the
Committee on 6 September 2022 and subsequently
became Chair of the Committee on 31 March 2023.
Due to a late change in the March meeting dates,
neither Giles Beale nor David Simpson could attend
the final meeting of the year.
As Chairman of the Remuneration Committee (“the Committee”), I am
pleased to present the report of the Committee for the financial year ended
31 March 2023.
Committee Members and Independence
The Committee is composed of three Non-Executive Directors, all of whom are considered
independent by the Board within the meaning of the QCA Code. Giles Beale was Chair of the
Committee until 31 March 2023 when he stepped down from the Board and I was appointed Chair
of the Committee in his stead. On behalf of the current members, I would like to thank Giles for his
contribution to the Committee and its business.
Duties
The Duties of the Committee are set out in the Terms of Reference, which are available for inspection
on the Company’s website at www.brickabilitygroupplc.com. The Terms of Reference are subject to
an annual review by the Committee.
Specifically, the Committee performs the following duties for the Company:
Duties
Remuneration
The Committee shall be responsible for
setting the remuneration policy of the
Company and reviewing the ongoing
appropriateness and relevance of the
policy.
The Group operates two share incentive
plans, a company share option plan
and a long-term incentive plan. The
Committee is responsible for the
administration of these plans including
whether awards will be made under
the share incentive plans and, if so, the
overall amount of such awards and,
where appropriate, the performance
targets to be used.
The Committee shall determine the total
individual remuneration package for
each Executive Director.
Other matters reviewed during the year:
• Review of Committee evaluation report.
How performed during the year
The remuneration policy was introduced in 2019 and during the
financial year was updated to be in force with effect from 1 April
2023. No substantial changes were made from the previous
policy. The Committee engaged an external consultant to assist
in updating the policy to ensure that it is relevant, appropriate
and meets best practice.
Details of awards made under the Long-Term Incentive Plan are
shown on page 55. The Committee has kept the plan and its use,
including the terms and conditions attaching to any grants, under
review. Awards may be made under the plan on an annual basis.
The first awards were made under the Company Share Option
Plan in 2019 when the Company listed, and these vested in
August 2022. Details of the shares issued as a result of the
exercises can be found in note 36. During the prior financial
year, following the Company’s acquisition of Taylor Maxwell,
additional awards were made under the CSOP, and these
awards will vest in October 2024.
The Committee reviewed and approved the bonus payments
for the financial year for each Executive Director. Details of
the bonus payments can be found in the Executive Directors
Remuneration table. The Committee also approved salary
increases for the financial year.
When considering the bonus payments and salary increases,
the Committee considered the performance of the Group during
the year; whether the payment would be in the best interest of all
stakeholders within the Group and the Group wide remuneration
of all employees.
The Committee also reviewed the bonus plan for the following
financial year and the proposed performance targets.
Details of the remuneration for the Executive Directors can be
found on page 54.
53
Brickability Group Plc Annual Report & Accounts 2022/23 CORPORATE GOVERNANCE / REPORT OF THE REMUNERATION COMMITTEE (CONTINUED)
54
ANNUAL REMUNERATION REPORTThe information on pages 54 to 56 has been audited.Executive Directors’ RemunerationEach individual Executive Director’s total remuneration paid over the year is summarised below.Executive DirectorBase Salary£’000Taxable Benefits1£’000Bonus£’000Pension Contributions2£’000Total Remuneration2023 £’000Total Remuneration 2022£’000Alan Simpson4854606-1,095904Mike Gant32513406247686831 Taxable benefits comprise of private medical insurance benefits and car allowance payments.2 Members of the Group operate several defined contributions, and one defined benefit, pension schemes. In addition, there is an auto enrolment Group-wide defined contribution pension scheme. Under these schemes, contributions are based upon base salary with a contribution of 5% per employee and 3% by the employer. In certain cases, the employer’s proportion (or cash in lieu where applicable) rise to 7.5% or 10%. Mr Gant receives a cash allowance equal to 7.5% of base salary in lieu of pension. Mr Simpson does not receive a pension contribution.Annual BonusAn annual bonus plan is in place, which recognises the emphasis on rewarding key Group employees with competitive performance related remuneration. For the Executive Directors, a maximum of 125% of base salary can be paid with 50% linked to performance against an adjusted EBITDA target and 50% linked to performance against individual KPIs. Based on the adjusted EBITDA growth for the year and the progress achieved against the individual KPIs, the Committee judged that performance targets had been met in full and accordingly, 125% of base salary was paid as a bonus to both the Chief Executive Officer and the Chief Financial Officer.Non-Executive Directors’ RemunerationEach individual Non-Executive Director’s total remuneration paid over the year is summarised below.Executive DirectorSalary£’000Taxable Benefits£’000Bonus£’000Pension Contributions£’000Total Remuneration 2023£’000Total Remuneration 2022£’000John Richards120---120100Giles Beale57---5755Clive Norman51---5150David Simpson57---5755Susan McErlain146---46-Sharon Collins230---30-(1) Susan McErlain from May 2022(2) Sharon Collins from September 2022Directors’ Interests in SharesThe beneficial interests of Directors’, and persons connected with them, as at 31 March 2023 in the ordinary shares of the Company (excluding share options) were as follows:Held at 31 March 2022Sold in the yearAcquired in the yearHeld at 31 March 2023Alan Simpson133,446,358--33,446,358John Richards4,047,685--4,047,685Clive Norman3,807,096--3,807,096David Simpson151,500--151,500Susan McErlain--24,37424,374(1) Total for Alan Simpson and his wife Sarah Simpson.Brickability Group Plc Annual Report & Accounts 2022/23 55
LONG TERM INCENTIVE PLAN (LTIP)The table below details the LTIP awards granted to the Executive Directors during the year, together with those which were unvested at 31 March 2023. Mr Simpson does not receive awards under the LTIP due to his substantial shareholding in the Company.MAXIMUM AWARDSHARES VESTINGAward and Vesting dateNumber of options awarded% of salaryFace value at grant £’000Market price at grant1 (pence)ThresholdMaximumEnd of Performance PeriodMike Gant04/06/21 – 01/04/24506,82512537573.9950%100%01/04/241 1 The weighted average share price calculated over the 10 working days prior to 1 April 2021.Performance Conditions50% adjusted EBITDA and 50% Total Shareholder Return. Vesting will occur on a straight-line basis on achieving 18% (equivalent to 6% annually) to 30% (equivalent to 10% annually) of the relevant performance condition over the performance period. There is no vesting if the relevant target is not met, but 50% vesting if the initial 18% hurdle is met with a proportionate additional vesting up to 100% at the 30% threshold being met. MAXIMUM AWARDSHARES VESTINGAward and Vesting dateNumber of options awarded% of salaryFace value at grant £’000Market price at grant1 (pence)ThresholdMaximumEnd of Performance PeriodMike Gant21/10/21 – 01/04/24214,2867522510525%100%01/04/241 The weighted average share price calculated over the 10 working days prior to 21 October 2021.Performance Conditions50% adjusted EBITDA and 50% Total Shareholder Return. Vesting will occur on a straight-line basis on achieving 18% (equivalent to 6% annually) to 30% (equivalent to 10% annually) of the relevant performance condition over the performance period. There is no vesting if the relevant target is not met but a 25% vesting if the initial 18% hurdle is met with a proportionate additional vesting up to 100% at the 30% threshold being met. MAXIMUM AWARDSHARES VESTINGAward and Vesting dateNumber of options awarded% of salaryFace value at grant £’000Market price at grant1 (pence)ThresholdMaximumEnd of Performance PeriodMike Gant27/10/22 – 31/03/25440,3791003257425%100%31/03/251 The weighted average share price calculated over the 10 working days prior to 27 October 2022.Performance Conditions50% adjusted EBITDA and 50% Total Shareholder Return. Vesting will occur on a straight-line basis on achieving 18% (equivalent to 6% annually) to 30% (equivalent to 10% annually) of the relevant performance condition over the performance period. There is no vesting if the relevant target is not met, but 25% vesting if the initial 18% hurdle is met with a proportionate additional vesting up to 100% at the 30% threshold being met. Holding PeriodThe LTIP options are exercisable on at a nominal purchase price of £0.01 per share and, subject to sufficient shares being sold to meet the purchase price and any tax liabilities, the balance of shares must be held for a further period of two years.Dividend Equivalent SharesThe LTIP options are eligible for dividend equivalent shares during the vesting period.Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS CORPORATE GOVERNANCE / REPORT OF THE REMUNERATION COMMITTEE (CONTINUED)
56
Malus & ClawbackAll awards made under the LTIP are subject to malus & clawback within five years from the grant date in the following circumstances:(a) if any of the audited financial results for the Company are materially misstated; or(b) if the Company, any Group Company and/or a relevant business unit has suffered serious reputational damage as a result of the relevant Participant's misconduct or otherwise; or(c) there has been serious misconduct on the part of the relevant Participant; or(d) such other circumstances as the Committee determines.COMPANY SHARE OPTION PLAN (CSOP)The CSOP is a plan under which selected employees (including Executive Directors) may be granted rights to acquire ordinary shares in the form of tax favoured options or non-tax favoured options with a market value exercise price. Under the current policy all employees below the management board are eligible to participate in the CSOP. An award of up to £30,000 of tax favoured options can be made to each participant in total. There are no tax liabilities on the exercise of tax favoured options subject to the exercise price being paid. Options can be exercised between the third and tenth anniversary of the date of award.Date of AwardVesting DateExercise Price (pence)Number of SharesForfeitedLapsedExercisedBalance at 31/03/2302/08/1902/08/22413,030,31484,461(4,627)(1,751,765)1,358,38321/10/2121/10/24105352,346---352,346Service Agreements & Letters of Appointment of the BoardThe Executive Directors who served during the financial year each have a service agreement with the Company as follows:Executive DirectorDate of service agreementNotice periodAlan Simpson21 August 20196 months Mike Gant1 April 202112 months Each Non-Executive Director has specific terms of engagement which are terminable on not less than three months’ notice by either party, including the Chairman, unless waived by the Board. AGMAn advisory resolution to approve our 2021 Remuneration Report was put to shareholders at our AGM in September 2022 and was supported by 99.99% of votes cast. A resolution to approve this Remuneration Report will be put to an advisory resolution at our 2023 AGM.External Remuneration AdviserThe Committee has access to external advice as required. The remuneration adviser to the Committee is h2glenfern Remuneration Advisory, who is a member of the UK Remuneration Consultants Group and as such, voluntarily adheres to its code of conduct.h2glenfern has provided advice and support around the following key areas:• advising on the ongoing drafting of a revised remuneration policy;• advising on the LTIP and CSOP plans and levels and frequency of awards under those plans; and• informing the Committee on market practice and governance issues.The total fees paid to h2glenfern in relation to advice to the Committee in the year were £6,250. The Committee considers the advice that it receives from h2glenfern to be independent.Brickability Group Plc Annual Report & Accounts 2022/23 57
Remuneration Policy During the financial year, the Committee, with the assistance of h2glenfern Remuneration Advisory, reviewed the remuneration policy at that time and updated it to meet market practice. No substantive changes were made, and the new policy was adopted at the end of March 2023. The new policy will be in force for the following financial year and the table below summarises the key points of the new policy.Purpose and link to strategyOperationMaximum potential valuePerformance conditionsBase SalaryCompetitive fixed salary that attracts and retains key individuals, reflecting the Company’s current scale and growth ambitions.Reflects likely shareholder views and set in context of peer data. Appropriate differentials reflecting seniority.Paid in cash.Salaries will be reviewed annually in line with the financial year. Any changes are effective 1 April.Base salaries are set at appropriate level, based on comparable sized business and reflecting personal and company performance.Not applicable.Pension and benefitsSupports recruitment and retention of high calibre Executive Directors.Policy is to provide a contribution to a defined contribution scheme at a proportion of base salary.The CEO does not currently receive a pension contribution or allowance. Pension funding for CFO is 7.5% of salary payment in lieu. Car allowance, private medical insurance, death in service insurance and reimbursements for reasonable business expenses. Other benefits may be offered in line with market practice if it is considered appropriate to do so.Not applicable.Annual BonusSupports a performance-based culture linking pay to performance. Attractive and effective structured annual cash bonus that supports recruitment and retention.Aligns with business performance over the near term.Annual bonus is based on targets determined at the start of each year. It is paid in cash following completion of the audit.For Executive Directors, the maximum amount is 125% of basic salary on the attainment of performance objectives.The Remuneration Committee sets demanding internal financial and non-financial targets each year, and reviews performance measures annually.LTIPsSupports recruitment and retention and aligns remuneration and business performance and shareholder interests over the long term.There is an effective balance between earnings and share price.LTIP awards are granted annually as performance share awards with a nominal value exercise price, which normally vest after three years subject to meeting objective three-year performance targets.Grants are subject to standard leave provisions and malus and clawback provisions. Awards to Executive Directors are subject to a two year post vesting holding period. 200% of salary.The LTIP award each year is based on demanding targets set by the Remuneration Committee. The Remuneration Committee may amend the type of target applied for each round of awards. Targets applied to date provides an effective and equal balance between growth in earnings and total shareholder return measured over a three-year period. Chairman and NED feesSupports the appointment of high calibre NEDs.Base fee plus reasonable expenses.Base fees for NEDs are set with reference to market rates. Additional fees are paid for additional responsibilities, e.g. committee chair.Not applicable.By order of the BoardSharon CollinsChairman of the Remuneration Committee14 July 2023Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Report of the Directors
The Directors have pleasure in presenting their Annual Report together with the
audited financial statements of the Company for the year ended 31 March 2023.
The following information is provided in other sections as noted below and is incorporated by reference into this report:
Information
Strategic Report
ESG Report inc SECR
Corporate Governance Report
Statement of Directors’ Responsibilities
Directors Remuneration Report
Going Concern Statement
Future development and events
occurring after the balance sheet date
Reported
Pages INC to 38
Pages 30 to 38
Pages 44 to 48
Page 60
Pages 53 to 57
Page 26
Details can be found in the strategic report on
pages INC to 38
The Company is a public limited company, registered in England and
Wales, with registered number 11123804 and is listed on the AIM segment
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 of companies. Detail of the companies
in the Brickability Group are included in note 21 to the audited financial
statements on pages 96 to 98.
Review of the Business
The Strategic report on pages INC to 38 provides an operating and
financial review of the business and the Group’s trading for the year
ended 31 March 2023 as well as risk management.
Dividends
The Directors recommend a final dividend for the year of 2.15 pence
per share payable on 21 September 2023 (2022: 2.04 pence). An
interim dividend of 1.01 pence per share was paid on 23 February 2023
(2022: 0.96 pence).
Directors
Biographical details of the Directors currently serving on the Board and
their dates of appointment along with details of their membership of
Board Committees are set out on pages 40 to 41.
The Directors who served during the year are as follows:
Executive Directors
Non-Executive Directors
Alan Simpson
Mike Gant
John Richards
Giles Beale***
Clive Norman
David Simpson
Susan McErlain*
Sharon Collins**
* Susan McErlain joined the Board as an independent Non-Executive Director on 9 May 2022.
** Sharon Collins joined the Board as an independent Non-Executive Director on 6 September
2022.
*** Giles Beale stepped down as a Non-Executive Director on 31 March 2023.
Directors’ remuneration, share options, long-term executive plans,
pension contributions, benefits and interests are set out in the Directors’
remuneration report on pages 53 to 57.
In accordance with our commitment to good corporate governance
practice that is relevant to our business, the Board has voluntarily
adopted the policy that all continuing Directors will stand for re-election
on an annual basis in line with best practice recommendations.
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. The
Company maintains liability insurance for its Directors and Officers.
58
Brickability Group Plc Annual Report & Accounts 2022/23 Share Capital and Substantial Shareholders
Full details of the issued share capital of the Company are set out in
note 36 to the Financial Statements on page 119. At 30 June 2023, the
latest practicable date prior to the approval of this report, 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:
18.04%
54,171,326
Octopus Investments
Nominees Limited
8.00%
23,970,456
Alan Simpson
4.21%
12,602,900
Otus Capital
Management
3.38%
10,123,500
Arnold van Huet
9.91%
29,694,391
Liontrust Asset
Management
6.70%
20,007,298
Paul Hamilton
4.05%
12,157,852
FIL Limited
3.16%
9,475,902
Sarah Simpson
Significant Agreements (Change of Control)
The Company is required to disclose any significant agreements that
take effect, alter or terminate on a change of control of the Company
following a takeover bid.
The Company has committed debt facilities all of which are directly or
indirectly subject to change of control provisions.
In the event of a takeover or other change of control outstanding
awards under the Group share plans will become exercisable.
Financial Risk Management
Information in respect of the financial risk management of the Group,
is contained on page 107 in note 30 on borrowings and on pages 115
to 119 in note 35 on financial instruments of the Financial Statements.
Related Party Transactions
Any related party transactions required to be disclosed under the AIM
rules are disclosed on page 123 in note 40 to the Financial Statements.
Disclosure of Information to the Auditor
The Directors in office on 14 July 2023 have confirmed that, as far as
they are aware, there is no relevant audit information of which the
auditor is unaware. Each of the Directors have confirmed that they
have taken all steps that they ought to have taken as Directors in order
to make themselves aware of any relevant audit information and to
establish that it has been communicated to the auditor.
Auditor
BDO LLP has indicated its willingness to continue in office as
auditor and a resolution to re-appoint them will be proposed at the
forthcoming Annual General Meeting.
Annual General Meeting (AGM)
The AGM will be held on Tuesday 5 September 2023 at 12.00p.m. at
Queensgate House, Cookham Road, Bracknell, Berkshire, RG12 1RB.
The 2023 Notice of AGM will be available on the Company’s website,
www.brickabilitygroupplc.com.
This Directors’ report was approved by the Board of Directors on
14 July 2023.
By Order of the Board
Prism Cosec Limited
Company Secretary
14 July 2023
59
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable laws and
regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law, the Directors have prepared
the Group financial statements in accordance with UK-adopted
international accounting standards. The Directors have elected to
prepare the Parent Company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 101 Reduced
Disclosure Framework, and applicable law).
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs and profit or loss of the Group and the Company for
that period. In preparing these financial statements, the Directors are
required to:
the Company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company’s website in accordance with
the legislation in the UK governing the preparation and dissemination
of financial statements, which may differ from legislation in other
jurisdictions. The maintenance and integrity of the Company’s website
is the responsibility of the Directors. The Directors’ responsibility
also extends to the ongoing integrity of the financial statements
contained therein.
In the case of each Director in office at the date the Directors’ report is
approved:
•
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
for the Group financial statements state whether they have been
prepared in accordance with UK-adopted international accounting
standards, subject to any material departures disclosed and
explained in the financial statements;
•
•
so far as the Director is aware, there is no relevant audit information
of which the Group’s and parent Company’s auditors are unaware;
and
they have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit
information and to establish that the Group’s and parent Company’s
auditors are aware of that information.
for the Parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
prepare the financial statements on a going concern basis unless it
is inappropriate to presume that the Group and the Company will
continue in business.
This Responsibility Statement was approved by the Board on 14 July
2023 and is signed on its behalf by:
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company's transactions and
disclose with reasonable accuracy at any time the financial position of
Alan Simpson
Chief Executive
14 July 2023
Mike Gant
Chief Financial Officer
60
CORPORATE GOVERNANCEBrickability Group Plc Annual Report & Accounts 2022/23 Independent Auditor’s Report
to the members of Brickability Group PLC
Opinion on the 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 2023 and of the Group’s profit for the year
then ended;
the Group financial statements have been properly
prepared in accordance with UK adopted international
accounting standards;
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.
We have audited the financial statements of Brickability Group PLC
(the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 31 March 2023 which comprise the Consolidated Statement
of Profit or Loss and Other Comprehensive Income, the Consolidated
Balance Sheet, the Company Balance Sheet, the Consolidated
Statement of Changes in Equity, the Company Statement of Changes
in Equity, the Consolidated Statement of Cash Flows and notes to the
financial statements, including a summary of significant accounting
policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law
and UK adopted international accounting standards. 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).
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 believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We remain 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the Directors’ assessment of the Group and the Parent Company’s
•
•
•
•
•
ability to continue to adopt the going concern basis of accounting
included:
•
We obtained the going concern assessment, approved by the
Directors, including detailed cash flow forecasts covering the period
to 30 September 2024 and checked their arithmetic accuracy.
We compared the going concern risk assessment to the risk register
to check that identified risks had been considered in the going
concern assessment.
We assessed the Directors’ assumptions in the going concern
forecast including revenue and growth projections, profit margin,
consideration payments in respect of past acquisitions and
funding headroom availability. We performed this with reference
to available market data and reviewed the forecasts for any
anomalies. We assessed actual historical trading performance and
how this was incorporated into future projections.
We assessed the historical accuracy of the Directors’ forecasts,
including comparing the current forecasts against post year-end
actual results.
We inspected the Group’s signed revolving facility agreements to
check that the Group has sufficient funds to settle the deferred and
contingent consideration due of £22.1m (note 22) for acquisitions
made in the prior year as well as the three new acquisitions in the
current year, and maintain sufficient working capital to continue
daily operations as normal.
We obtained documentation of the available facilities that the
group is using to fund acquisitions and working capital to check that
the facilities are available until 31 December 2024.
We assessed the debt covenants of the drawn facilities to determine
if they would be breached within the forecast period.
We assessed the appropriateness of sensitivity analyses prepared
by the Directors over the Group’s cash flow forecasts including the
effects of adverse movements in revenue to determine the sufficiency
of available cash resources to settle short term liabilities as they fall
due over the period to 30 September 2024.
We reviewed the reverse stress testing and challenged the Directors’
assessment of the quantification of the revenue shortfall required
for covenants to be breached in the forecast period. We considered
the likelihood and reasonableness of the shortfall with reference to
the Directors’ historical data of revenue and earnings before tax,
interest, depreciation and amortisation.
We reviewed the adequacy of disclosures in note 2 to the financial
statements regarding going concern against the requirements of the
accounting standards and consistency of the disclosure against the
forecast and reverse stress test assessment that the Directors have
considered in performing their going concern assessment.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and the Parent
Company’s ability to continue as a going concern for a period of at
least twelve months from when the financial statements are authorised
for issue.
Our responsibilities and the responsibilities of the Directors with respect
to going concern are described in the relevant sections of this report.
•
•
•
•
61
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS CORPORATE GOVERNANCE / INDEPENDENT AUDITOR’S REPORT (CONTINUED)
Overview
Coverage
Key audit matters
92% (2022: 92%) of Group profit before tax
90% (2022: 93%) of Group revenue
91% (2022: 94%) of Group total assets
2023
–
2022
4
Pricing of Revenue
IFRS 3, Business Combinations, and Acquisition Accounting
in respect of the Taylor Maxwell Group (acquired in prior year)
IFRS 3, Business Combinations, and Acquisition Accounting
in respect of Modular Clay Products Ltd and
–
E.T. Clay Products Limited (acquired during the year).
Revenue cut-off of direct sales
–
Pricing of Revenue is no longer considered to be a key audit matter based on the conclusions reached in the prior
year, our risk assessment and consideration of audit evidence obtained as well as time and resource spent on this
risk in the current year.
4
4
4
4
Materiality
Group financial statements as a whole
£1,750,000 (2022: £1,430,000) based on 4.9% (2022: 4.5%) of Adjusted profit before taxation
An overview of the scope of our audit
Our Group audit was scoped by obtaining an 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. We also addressed the risk of management override of internal controls,
including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
In determining the scope of our audit, we considered the size and nature of each component within the Group based on revenue and profit before
tax 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.
We have identified four components to be significant to the Group. All significant components were subject to full scope audits by BDO LLP
component teams. Non-significant components were subject to either full scope audits to increase coverage over profit before tax and revenue,
specified audit procedures and/or desktop review procedures by either the component or Group engagement team. We also assessed the
appropriateness, completeness and accuracy of the Group journals and other adjustments performed on consolidation.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude whether sufficient
appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements as a whole. Our involvement with
component auditors included the following:
•
Issue of detailed reporting instructions, which included the significant areas to be covered by their audit (including applicable key audit matters
as detailed below), materiality levels, and matters relating to irregularities and fraud. The instructions also set out the information required to be
reported to the Group audit team;
Regular communication with the component auditors throughout the planning, execution and completion phases of the audit;
Members of the Group audit team attended the key meetings and had detailed discussions with the component auditors and component
management throughout the audit process in respect of significant risk areas; and
•
•
• Review of their working papers with additional challenge and specific work requests to ensure alignment with conclusions drawn.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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) that 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.
62
Brickability Group Plc Annual Report & Accounts 2022/23
Key audit matter
IFRS 3, Business
Combinations, and
Acquisition Accounting
in respect of Modular
Clay Products Ltd and
E.T. Clay Products
Limited (acquired
during the year).
See note 3.15 to the
financial statements for
the Directors’ disclosures
for significant accounting
policies regarding
business combinations
and goodwill and note 22
for the detailed business
combination disclosures.
Revenue cut-off of
direct sales
See note 3.4 to the
financial statements for
the Directors’ disclosures
of the related revenue
recognition accounting
policies. See note 5 to the
financial statements for
the detailed disclosure for
Revenue
In May 2022, the Group acquired Modular Clay
Products Ltd. The fair value of consideration
was £8.7m. There was an initial cash payment
of £7.3m with contingent consideration payable
over 3 years dependent on future performance
and continued employment of the selling
shareholder.
In September 2022, the Group acquired
E.T. Clay Products Limited. The fair value
of consideration was £9.7m. There was an
initial cash payment of £8.7m with contingent
consideration payable over 3 years dependent
on future performance.
The determination of the contingent
consideration involves significant judgement
about whether the financial forecasts will be met,
which creates a risk that the resulting valuation is
inaccurate.
This also involves a review of whether an
element of the contingent consideration is in fact
remuneration where the contingency is linked to
continued employment of a selling shareholder.
The Group has recorded assets and liabilities
acquired at fair value including the recognition
intangible assets (customer relationships, brands,
and goodwill on acquisition).
As part of the purchase price allocation, an
independent expert was involved in the valuation
of intangible assets acquired which requires the
use of assumptions and estimates.
Due to the complexity of the acquisition
accounting involving significant judgement and
estimates by management, as well as the use of
valuation techniques, there is a risk that the fair
value of the acquired assets and liabilities are not
accounted for in accordance with IFRS 3 Business
Combinations.
Due to above, we identified the business
combination and acquisition accounting of
Modular Clay Products Limited and E.T. Clay
Products Limited as a key audit matter.
Trade in the Bricks and Building materials and
Importing divisions predominantly comprises
direct sales where goods are delivered directly
from the supplier to the customer. Satisfaction
of performance obligations is at a point in time
when the goods are delivered by the Group to
customers.
We considered that there is a significant risk
of inappropriate revenue recognition arising
from cut-off of direct sales when revenue is
incorrectly recorded by reference to the invoice
date and not the date when delivery of the
good takes place.
This could lead to the overstatement or
understatement of revenue as a result of the
recognition of revenue in the incorrect period.
How the scope of our audit addressed the key audit matter
•
•
•
We have performed the following procedures to address this key audit matter:
We obtained management’s calculation of the purchase consideration
•
and agreed the cash portion to bank statements.
We have reviewed management’s assessment of the consideration, and
checked whether there is any element of remuneration included as part of
the consideration price. This procedure was performed for the Modular
Clay Products Ltd. acquisition as the contingent consideration was
dependent on continued employment.
We reviewed and challenged management’s cash flow forecasts and
estimates in determining the value of the contingent consideration.
This included a review of growth rates applied to future revenues and
expenses, forecast capital expenditures and once off items included in the
forecasts.
We tested the completeness and appropriateness of management’s
identification of intangible assets acquired through a review of due
diligence reports, financial statements of Modular Clay Products Ltd and
E.T. Clay Products Limited and enquiries with management.
We obtained the valuation report from management’s expert and
with the support of our own valuation experts, we reviewed the
appropriateness of the valuation methods used (multi-period excess
earnings method for the customer relationships and valuation & relief
from royalty method for the brands). We evaluated the reasonableness
of the significant assumptions and judgement applied by management in
the valuation of the identifiable intangibles at acquisition by comparing
with publicly available industry data and historical financial information
of the Modular Clay Products Ltd and E.T Clay Products Limited.
We have considered the competence, capabilities, and objectivity of both
our internal experts and managements experts.
We tested the existence, measurement and completeness of the acquired
assets and liabilities on a sample basis to supporting documentation and
considered whether any fair value adjustment was required.
With the assistance of our internal tax specialists, we tested the accuracy
and completeness of the current and deferred tax assets and liabilities
acquired including the impact on the tax balances of the fair value
adjustments applied in the acquisition accounting.
•
•
•
•
Key observations:
Based on our work performed above we did not identify matters to indicate
that the judgements and assumptions made in accounting for these business
combinations was inappropriate.
We challenged management on the accounting policies with reference to the
cut-off of direct sales and the application to the timing of the satisfaction of
performance obligations in accordance with the accounting standards and
terms and conditions of these types of sales.
We agreed a sample of sales invoices recognised covering a risk period before
and after year-end through to supporting third party delivery documentation
or customer confirmation to check that revenue had been recognised in the
correct period.
Key observations:
Based on our work performed above we did not identify matters to indicate
that revenue cut-off was inappropriate.
63
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS CORPORATE GOVERNANCE / INDEPENDENT AUDITOR’S REPORT (CONTINUED)
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 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.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed. 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 circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group financial statements
Parent company financial statements
2023
£
2022
£
2023
£
2022
£
Materiality
1,750,000
1,430,000
1,312,500
929,000
Basis for
determining
materiality
Rationale for
the benchmark
applied
Performance
materiality
Basis for
determining
performance
materiality
Rationale for
the percentage
applied for
performance
materiality
4.9% of Adjusted Profit before
Taxation
4.5% of Adjusted Profit before
Taxation
65% of Group materiality
65% of Group materiality
We considered that adjusted profit before tax is a key
performance measure to the stakeholders of the Group and
therefore an appropriate benchmark. The Group is acquisitive
with large intangible asset balances; hence the Group’s
performance is more accurately reflected when adjusted for
amortisation, fair value changes in contingent consideration,
and acquisition and other exceptional costs.
Capped at 65% of Group materiality (2022: 65% of Group
materiality) given the assessment of the significant components’
aggregation risk.
1,225,000
1,005,000
918,000
650,000
70% (2022: 70%) of Group materiality
70% (2022: 70%) of Parent Company materiality.
We have considered the overall risk assessment of the Group,
including factors such as areas of estimation within the financial
statements, the type of audit testing to be completed and history
of misstatements.
We have considered the overall risk assessment of the Parent
Company, including factors such as areas of estimation
within the financial statements, the type of audit testing to be
completed and history of misstatements.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, apart from the Parent Company
whose materiality is set out above, based on a percentage of between 43% and 57% (2022: 3% and 65%) of Group materiality dependent on the
size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £750,000 to £1,000,000
(2022: £44,000 to £929,000). In the audit of each component, we further applied performance materiality levels of 70% (2022: 75%) of the
component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £35,000 (2022: £28,600). We
also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
64
Brickability Group Plc Annual Report & Accounts 2022/23 Other information
The Directors are responsible for the other information. The other information comprises the information included in the Annual Report and
Accounts 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. 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 course of 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 this gives rise to a material misstatement in the financial
statements themselves. 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.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006
and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
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.
•
In the light of the knowledge and understanding of the Group and 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.
Matters on which we
are required to report by
exception
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 Statement of Directors’ Responsibilities, 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.
65
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS CORPORATE GOVERNANCE / INDEPENDENT AUDITOR’S REPORT (CONTINUED)
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.
Extent to which the audit was capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is
detailed below:
We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group and determined that the
most significant are the Companies Act 2006, accounting standards,
AIM Rules and the Corporation Tax Act 2010. We identified these
areas of laws and regulations as those that could reasonably be
expected to have a material effect on the financial statements from
sector experience and through discussion with the Directors and
other management.
Our procedures in respect of the above included:
•
Review of minutes of meeting of those charged with governance
for any instances of non-compliance with laws and regulations;
Review of correspondence with regulatory and tax authorities for
any instances of non-compliance with laws and regulations;
Review of financial statement disclosures and agreeing to
supporting documentation;
Involvement of tax specialists in the audit; and
Review of legal expenditure accounts to understand the nature of
expenditure incurred.
•
•
•
•
We assessed the susceptibility of the Group’s financial statements
to material misstatement, including how fraud might occur. We
believed the areas in which fraud might occur were in management
override of controls, bias in accounting estimates and inappropriate
revenue recognition, specifically in respect of revenue cut-off and the
recording of revenue, specifically direct sales in the inappropriate
period and manual journal entries. In addressing the risk of fraud:
•
We have performed journals testing based on a set of fraud risk
criteria and tested to supporting documentation also verifying
the business rationale. These criteria included round sum posted
journals, material journals, unexpected account combinations and
unusual journal descriptions.
We made enquiries with management and the Audit Committee
about their knowledge of any known or suspected instances of fraud.
We checked the discretionary bonus payments to approval from
the remuneration committee.
We assessed the appropriateness of key estimates and judgements
including those set out in the key audit matter above relating to
contingent consideration.
•
•
•
66
•
•
•
We incorporated unpredictability into our procedures covering
all components of the Group as part of our response to the risk of
management override of controls.
We addressed the risk of fraud in revenue recognition through
testing of manual entries impacting reported revenue as well as the
procedures set out in the key audit matters section of our report.
We analysed the automated journal entries made to revenue
account codes across the Group and investigated the reason
for journal entries made that appeared unusual and not in line
with our expected transaction flows. We agreed management’s
explanations back through to supporting documentation.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members and
component auditors, who were all deemed to have the appropriate
skills and competence and remained alert to any indications of fraud
or non-compliance with laws and regulations throughout the audit.
We also reviewed the work performed by the component auditors in
this regard.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk
of not detecting a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery, misrepresentations
or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with
laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council’s website at: 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.
Paul Etherington BSc FCA CF (Senior Statutory
Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Reading, UK
14 July 2023
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Brickability Group Plc Annual Report & Accounts 2022/23 Financial
Statements
Brickability Group Plc Annual Report & Accounts 2022/23
67
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 31 March 2023
All results relate to continuing operations.
68
FINANCIAL STATEMENTS20232022NoteAdjusted £’000Other (note 14) £’000Total £’000Adjusted£’000Other (note 14)£’000Total£’000Revenue5681,087-681,087520,169-520,169Cost of sales(568,220)-(568,220)(433,366)-(433,366)Gross profit112,867-112,86786,803-86,803Other operating income7561-561354-354Administrative expenses(64,281)(15,730)(80,011)(50,581)(13,515)(64,096) Comprising: Depreciation and amortisation(4,715)(8,399)(13,114)(3,342)(6,349)(9,691) Other administrative expenses(59,566)(7,331)(66,897)(47,239)(7,166)(54,405)Impairment losses on financial assets27(1,611)-(1,611)(450)-(450)Finance income11143-14354-54Finance expense12(2,365)(2,891)(5,256)(1,311)(938)(2,249)Share of post-tax profit of equity accounted associates23-123123-5555Share of post-tax loss of equity accounted joint ventures24(721)-(721)(149)-(149)Fair value gains/(losses)13-8,4328,432-(1,916)(1,916)Profit/(loss) before tax844,593(10,066)34,52734,720(16,314)18,406Tax (expense)/credit15(8,924)2,094(6,830)(6,494)391(6,103)Profit/(loss) for the year35,669(7,972)27,69728,226(15,923)12,303Other comprehensive incomeItems that will not be reclassified to profit or loss:Remeasurements of defined benefit pension schemes34-4343-(1,970)(1,970)Deferred tax on remeasurement of defined benefit pension schemes33-(11)(11)-374374Fair value gain on investments in equity instruments designated as FVTOCI25-1010-5353Other comprehensive income/(loss) for the year-4242-(1,543)(1,543)Total comprehensive income/(loss)35,669(7,930)27,73928,226(17,466)10,760Profit/(loss) for the year attributable to:Equity holders of the parent35,710(7,972)27,73828,310(15,923)12,387Non-controlling interests(41)-(41)(84)-(84)35,669(7,972)27,69728,226 (15,923)12,303 Total comprehensive income/(loss) attributable to:Equity holders of the parent35,710(7,930)27,78028,310(17,466)10,844Non-controlling interests(41)-(41)(84)-(84)35,669(7,930)27,73928,226(17,466)10,760Earnings per shareBasic earnings per share179.26 p4.40 pDiluted earnings per share179.10 p4.32 pAdjusted basic earnings per share1711.93 p10.06 pAdjusted diluted earnings per share1711.71 p9.86 pBrickability Group Plc Annual Report & Accounts 2022/23 Consolidated Balance Sheet
As at 31 March 2023
69
Note2023£’0002022(Restated)*£’000Non-current assetsProperty, plant and equipment1824,78319,057Right of use assets3118,55312,162Intangible assets20 152,424 150,951Investments in equity accounted associates23324261Investments in equity accounted joint ventures24-279Investments in financial assets25188178Trade and other receivables27 3,611 1,023Total non-current assets 199,883 183,911Current assetsInventories2633,15928,120Trade and other receivables27125,603131,202Employee benefit assets34646781Current income tax assets1,677101Cash and cash equivalents28 21,645 25,028Total current assets 182,730 185,232Total assets 382,613 369,143Current liabilitiesTrade and other payables29(131,419)(140,046)Loans and borrowings30(12,624)-Lease liabilities31(3,225)(2,216)Total current liabilities(147,268)(142,262)Non-current liabilitiesTrade and other payables29(9,592)(17,910)Loans and borrowings30(16,800)(24,240)Lease liabilities31(12,967)(10,417)Provisions32(2,364)(1,728)Deferred tax liabilities33(18,244)(18,102)Total non-current liabilities(59,967)(72,397)Total liabilities(207,235)(214,659)Net assets 175,378 154,484EquityCalled up share capital363,0032,985Share premium account37102,847102,146Capital redemption reserve3722Share-based payment reserve373,5091,930Merger reserve3711,14611,146Retained earnings37 55,002 36,365Equity attributable to owners of the Company 175,509 154,574Non-controlling interests(131)(90)Total equity 175,378 154,484*See note 22 for details of restatement.These financial statements were approved by the Board of Directors and authorised for issue on 14 July 2023. They are signed on behalf of the Board by:Alan Simpson Director Mike Gant DirectorCompany registration number: 11123804Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Company Balance Sheet
As at 31 March 2023
Non-current assets
Right of use assets
Investment property
Investment in subsidiaries
Deferred tax assets
Trade and other receivables
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Loans and borrowings
Total current liabilities
Non-current liabilities
Trade and other payables
Loans and borrowings
Total non-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
Note
31
19
21
33
27
27
28
29
30
29
30
36
37
37
37
37
37
2023
£’000
2,523
2,023
58,720
359
153,527
217,152
1,902
-
1,902
219,054
(51,756)
(6,885)
(58,641)
(67)
(16,800)
(16,867)
(75,508)
143,546
3,003
102,847
2
3,191
16,407
18,096
143,546
2022
£’000
-
531
57,572
186
116,883
175,172
3,171
372
3,543
178,715
(17,950)
-
(17,950)
(108)
(24,240)
(24,348)
(42,298)
136,417
2,985
102,146
2
1,524
16,407
13,353
136,417
The profit of the Company for the financial year was £13,886,000 (2022: profit of £12,978,000).
These financial statements were approved by the Board of Directors and authorised for issue on 14 July 2023. They are signed on behalf of the board by:
Alan Simpson Director
Mike Gant Director
Company registration number: 11123804
70
FINANCIAL STATEMENTSBrickability Group Plc Annual Report & Accounts 2022/23
Consolidated Statement of Changes in Equity
For the year ended 31 March 2023
71
Share capital£’000Share premium account £’000Capital redemption£’000Share-based payments£’000Merger reserve£’000Retainedearnings£’000Total attributable to equity holders of the parent£’000Non- controlling interest£’000Total£’000At 1 April 20212,30549,99922661,24531,62385,440(6)85,434Profit or (loss) for the year-----12,38712,387(84)12,303Other comprehensive income for the year-----(1,543)(1,543)-(1,543)Total comprehensive income for the year-----10,84410,844(84)10,760Dividends paid-----(6,102)(6,102)-(6,102)Issue of paid shares57854,422----55,000-55,000Issue of consideration shares99---9,901-10,000-10,000Issue of shares on exercise of share options312----15-15Equity settled share-based payments---1,173--1,173-1,173Deferred tax on share based payment transactions---491--491-491Share issue costs-(2,287)----(2,287)-(2,287)Total contributions by and distributions to owners68052,147-1,6649,901(6,102)58,290-58,290At 31 March 20222,985102,14621,93011,14636,365154,574(90)154,484Profit or (loss) for the year----- 27,738 27,738 (41) 27,697 Other comprehensive income for the year-----4242-42Total comprehensive income for the year----- 27,780 27,780 (41) 27,739 Dividends paid-----(9,143)(9,143)-(9,143)Issue of shares on exercise of share options18701----719-719Equity settled share-based payments---1,637--1,637-1,637Deferred tax on share-based payment transactions---(197)--(197)-(197)Current tax on share-based payment transactions---139--139-139Total contributions by and distributions to owners18701-1,579-(9,143)(6,845)-(6,845)At 31 March 20233,003102,84723,50911,146 55,002 175,509 (131) 175,378 Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Company Statement of Changes in Equity
For the year ended 31 March 2023
72
FINANCIAL STATEMENTSShare capital£’000Share premium account £’000Capital redemption£’000Share-based payments£’000Merger reserve£’000Retainedearnings£’000Total£’000At 1 April 20212,30549,99922666,5066,47765,555Profit for the year-----12,97812,978Total comprehensive income for the year-----12,97812,978Dividends paid-----(6,102)(6,102)Issue of paid shares57854,422----55,000Issue of consideration shares99---9,901-10,000Issue of shares on exercise of share options312----15Equity settled share-based payments---1,173--1,173Deferred tax on share-based payment transactions---85--85Share issue costs-(2,287)----(2,287)Total contributions by and distributions to owners68052,147-1,2589,901(6,102)57,884At 31 March 20222,985102,14621,52416,40713,353136,417Profit for the year----13,88613,886Total comprehensive income for the year-----13,88613,886Dividends paid-----(9,143)(9,143)Issue of shares on exercise of share options18701----719Equity settled share-based payments---1,637--1,637Deferred tax on share-based payment transactions---(6)--(6)Current tax on share-based payment transactions---36--36Total contributions by and distributions to owners18701-1,667-(9,143)(6,757)At 31 March 20233,003102,84723,19116,40718,096143,546Brickability Group Plc Annual Report & Accounts 2022/23 Consolidated Statement of Cash Flows
For the year ended 31 March 2023
The Consolidated Statement of Cash Flows continues on the following page.
73
Note2023£’0002022£’000Operating activitiesProfit for the year 27,697 12,303Adjustments for:Depreciation of property, plant and equipment181,5661,143Depreciation of right of use assets313,1012,136Amortisation of intangible assets208,4476,396Gain on disposal of property, plant and equipment and right of use assets8(314)(75)Foreign exchange losses/(gains)29(27)Share-based payment expense381,5671,597Other operating income(365)(27)Share of post-tax profit in equity accounted associates23(123)(55)Share of post-tax loss in joint ventures24 721 149Impairment of goodwill20-16Fair value changes in contingent consideration13(8,176)1,916Gain on acquisition22(256)-Movements in provisions32(141)12Finance income11(143)(54)Finance expense12 5,256 2,249Acquisition costs142811,236Income tax expense156,8306,103Pension charge in excess of contributions paid34196140Operating cash flows before movements in working capital 46,173 35,158Changes in working capital:Increase in inventories(865)(6,700)Decrease/(Increase) in trade and other receivables19,331(22,194)(Decrease)/Increase in trade and other payables(19,765)21,234Cash generated from operations44,87427,498Payment of acquisition expenses(281)(1,139)Interest received12518Income taxes paid(11,074)(7,256)Net cash from operating activities33,64419,121Investing activitiesPurchase of property, plant and equipment18(7,229)(6,317)Proceeds from sale of property, plant and equipment441187Purchase of right of use assets31(2,525)-Purchase of intangible assets20(478)(488)Acquisition of subsidiaries22(16,674)(50,292)Net cash acquired with subsidiary undertakings224,6763,422Acquisition of interests in joint ventures24(442)(428)Loan to joint venture(2,960)-Proceeds from repayment of directors' loans-978Dividends received from associates6015Net cash used in investing activities(25,131)(52,923)Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS Consolidated Statement of Cash Flows (continued)
For the year ended 31 March 2023
The notes on pages 75 to 124 form an integral part of these Financial Statements.
74
FINANCIAL STATEMENTSNote2023£’0002022£’000Financing activitiesEquity dividends paid16(9,143)(6,102)Proceeds from issue of ordinary shares net of share issue costs71952,728Payment of financing costs-(97)Proceeds from bank borrowings115,40052,100Repayment of bank borrowings(123,000)(43,400)Payment of lease liabilities31(2,791)(2,103)Payment of deferred and contingent consideration39(3,499)(1,358)Interest paid(2,246)(1,139)Payment of transaction costs relating to loans and borrowings-(375)Net cash flows (used in)/from financing activities(24,560)50,254Net (decrease)/increase in cash and cash equivalents(16,047)16,452Cash and cash equivalents at beginning of year25,0288,592Effect of changes in foreign exchange rates40(16)Cash and cash equivalents at end of year399,02125,028Brickability Group Plc Annual Report & Accounts 2022/23 Notes to the Financial Statements
Year ended 31 March 2023
1. General information
Brickability Group PLC is a public company, limited by shares,
incorporated in England and Wales. The address of the registered
office is shown on page 125. The nature of the Group’s operations
and its principal activities are set out in the Strategic Report on pages
INC to 38.
2. Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK adopted international accounting standards in
conformity with the requirements of the Companies Act 2006.
The Company, as the ultimate parent of the Group, has elected to
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 Company and 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 certain financial assets and liabilities which are
stated at fair value.
Going Concern
The key uncertainly faced by the Group is the demand for its
products and how this is impacted by economic factors.
The expected budget forecast was reviewed with no concerns
noted and sufficient headroom in place. Budget scenarios have
been prepared to compare a number of outcomes where there is a
significant and prolonged drop in demand in the industry.
For each scenario, cash flow and covenant compliance forecasts
have been prepared. A significant drop in revenue of 50% with
no adjustment to overheads would lead to a breach. However, if
overheads were cut by 17%, then a breach could be avoided. The
scenarios in which revenue could fall by this level so rapidly are
considered remote.
Having taken into account the scenarios modelled, the Directors
are satisfied that the Group and Company has sufficient resources
to continue to operate for a period of not less than 12 months
from the date of this report and until at least 30 September 2024.
Accordingly, the financial information has been prepared on a
going concern basis.
New standards, interpretations and amendments effective
from 1 January 2022
The following standards and amendments became effective for the
current financial year:
•
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to
IAS 37);
Property, Plant and Equipment – Proceeds before Intended Use
(Amendments to IAS 16));
Annual Improvements to IFRS Standards 2018-2020
(Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
References to the Conceptual Framework (Amendments to
IFRS 3).
•
•
•
The amendments above did not have any impact on the amounts
recognised in prior periods or the current year. They are also not
expected to significantly affect future periods.
New standards, interpretations and amendments not yet
effective
Certain new standards and amendments have been issued by the IASB
and will be effective in future accounting periods. The standards and
amendments that are not yet effective, are likely to impact the Group
and have not been adopted early by the Group include:
Amendments effective from 1 January 2023:
•
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2));
Definition of Accounting Estimates (Amendments to IAS 8); and
Deferred Tax Related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12).
Amendments effective from 1 January 2024:
•
•
IFRS 16 Leases (Amendment – Liability in a sale and leaseback);
IAS 1 Presentation of Financial Statements (Amendment –
Classification of liabilities as current or non-current);
IAS 1 Presentation of Financial Statements (Amendment –
Non-current liabilities with covenants).
•
•
•
The amendments to IAS 12 will likely result in the Group recognising
additional deferred tax assets and liabilities in respect of right of
use assets accounted for under IFRS 16. The other amendments
listed above are not expected to have any impact on the amounts
recognised in prior periods and are not expected to significantly affect
the current or future periods.
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 2023.
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;
75
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. Significant accounting policies (continued)
3.1 Basis of consolidation (continued)
•
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.
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,
associates and joint ventures 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.
A joint venture is a joint arrangement whereby the parties that
have control of the arrangement have rights to the net assets of the
arrangement. Joint control is the contractually agreed sharing of control
of an arrangement, which exists only when decisions about the relevant
activities require unanimous consent from those sharing the control.
Investments in associates and joint ventures 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 profit or loss and other
comprehensive income of the associate or joint venture since the
acquisition date.
Where a Group company transacts with an associate or joint venture
of the Group, unrealised profits and losses are eliminated to the
extent of the Group’s interest in the relevant entity.
Dividends received from associates and joint ventures are recognised
as a reduction in the carrying amount of the investment.
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 primarily through the following
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;
76
•
•
•
the transportation and distribution of building materials from Europe
to the UK;
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; the Group is primarily responsible
for fulfilling its promise to provide the goods or services and for those
goods or services meeting customer specifications, it assumes the
inventory risk prior to delivery to the customer and it has complete
discretion in setting its prices for the required goods or services.
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.
There is limited judgement required in identifying the point at which
the service is complete or control passes as, once physical delivery
has taken place, the Group no longer has possession of the goods,
does not retain the significant risks and rewards of those goods and
has an unconditional right to consideration. A receivable is therefore
recognised on delivery and payment expected according to the
specific credit terms agreed with each customer.
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.
This is considered an appropriate measure of the progress towards
complete satisfaction of the Group’s performance obligations and
reflects the Group’s right to consideration for services performed to
date. Payment is due throughout the duration of the contract, based
on the amounts invoiced and according to the credit terms agreed.
Revenue from the provision of transportation and distribution
services is also recognised over time, by reference to the stage of
completion of the Group’s performance obligations, as the customer
simultaneously receives and consumes the benefits from the delivery
service provided. The revenue is recognised in the consolidated profit
or loss in the period in which the services are rendered.
Determining the transaction price and allocating amounts to
performance obligations
The majority of the Group’s revenue is derived from fixed price
contracts with stand-alone selling prices. There is therefore no
judgement involved in allocating the contract price to the goods or
services provided.
Certain roofing products and services provided by the Group are
subject to warranty, requiring the Group to rectify defects during the
warranty period should those goods and services not comply with
agreed-upon specifications. Such warranties cannot be purchased
separately and are therefore accounted for in accordance with IAS
37 Provisions, Contingent Liabilities and Contingent Assets. Further
details are disclosed in notes 3.19 and 32.
Practical exemptions
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
Brickability Group Plc Annual Report & Accounts 2022/23 77
• expensing the incremental costs of obtaining a contract when the amortisation period of the asset otherwise recognised is one year or less.Customer rebatesThe 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.3.5 Supplier rebatesThe Group receives volume rebates from its suppliers. Amounts receivable are recognised as a reduction to cost of sales in the period in which the associated purchase is recorded. The Group estimates the amount receivable based on the terms of the agreements in place, to the extent that it is probable that the rebates will be received and the amounts can be reliably estimated.3.6 Foreign currenciesThe 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.3.7 Group pension schemesDefined contribution schemesPayments 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.Defined benefit schemesDuring the prior year, the Group acquired a defined benefit pension scheme as part of the net assets acquired in Taylor Maxwell Group (2017) Limited. The scheme is closed to further accrual and an insurance policy was incepted shortly afterwards. Where the Group retains a legal or constructive obligation in respect of insured benefits, the plan is treated as a defined benefit plan.The retirement benefit obligation recognised in the Consolidated Balance Sheet represents the surplus or deficit in the Group’s defined benefit plans. A surplus is recognised to the extent that it will lead to a refund or reduction in future payments.Actuarial valuations are carried out at the reporting date to determine the cost of providing benefits using the projected unit credit method. Remeasurements, including the effect of actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan assets (excluding interest) are recognised immediately in the balance sheet, with a charge or credit recognised in other comprehensive income in the period in which it occurs. Remeasurements recognised in other comprehensive income are not re-classified. Past service cost is recognised in profit or loss when a plan amendment or curtailment occurs, or when the Group recognises related restructuring costs or termination benefits, if earlier. Gains or losses on settlement of a defined benefit plan are recognised when the settlement occurs. Net interest is calculated by applying a discount rate to the net defined benefit obligation or asset. Defined benefit costs are split into three categories:• service costs, including current service cost, past service cost and gains and losses on curtailments and settlements;• net interest expense or income; and• remeasurements.The Group recognises service costs within administrative expenses in profit or loss. The net interest expense or income is recognised in finance expense or income.3.8 Short-term employee benefitsA liability is recognised for benefits accruing to employees in respect of wages and salaries and annual leave in the period that the related service is rendered and in which the benefit is earned. Liabilities in respect of short-term employee benefits are recognised at the undiscounted amount of the benefits expected to be paid in exchange for the related service.3.9 TaxationThe tax expense represents the sum of the tax currently payable and deferred tax. Tax is recognised in 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 taxCurrent 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 taxDeferred 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 Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. Significant accounting policies (continued)
3.9 Taxation (continued)
Deferred tax (continued)
in the computation of taxable profit. It is accounted for using the
liability method.
Deferred tax assets and liabilities are recognised where the carrying
value of an asset or liability in the Consolidated Balance Sheet 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.
Tax on other items
Where alternative performance measures are presented, the tax
impact of ‘other items’ outlined in note 14 is considered and also
included within ‘other items’ in order to match the relevant tax charge
or credit with the associated income or expense.
3.10 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.
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.
78
3.11 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:
•
•
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
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; and
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.
leases of low value assets; and
leases with a term of 12 months or less.
Right of use assets are presented as a separate line in the
Consolidated Balance Sheet.
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.
•
•
•
•
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 annumBrickability Group Plc Annual Report & Accounts 2022/23 Variable lease payments that do not depend on an index or a rate
are recognised as an expense, in profit or loss, in the period to which
they relate.
Lease liabilities are presented as a separate line in the Consolidated
Balance Sheet.
Lease liabilities are subsequently increased to reflect interest charged
on the lease liability, using the effective interest method, and reduced
for lease payments made.
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.
3.12 Investment property
The Group does not hold any investment property.
Investment properties held by the Company are all leased to
subsidiaries within the Group. The Company recognises its
investment property at cost and subsequently measures it using
the cost model, with the carrying value stated at cost less any
accumulated depreciation and impairment losses.
Depreciation is charged so as to write off the cost of the asset over the
estimated useful life of that asset on a straight-line basis as follows:
Land is not depreciated.
3.13 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 or reducing balance method, as follows:
Other intangibles relate to software and product development costs.
If there is an indication that there has been a change in the useful life
or residual value of an intangible asset, the amortisation charge is
revised prospectively to reflect the new estimates.
3.14 Research and development
Expenditure on research activities is recognised as an expense in the
period in which it is incurred. Development costs are only recognised
as an intangible asset if, and only if, the Group can demonstrate all of
the following:
•
the technical feasibility to complete the development so that the
asset will be available for use or sale;
its intention to complete the intangible asset and use or sell it;
its ability to use or sell the intangible asset;
how the intangible asset will generate probable economic benefits;
the availability of adequate technical, financial and other resources
to complete the development and to use or sell the asset; and
its ability to measure reliably the expenditure attributable to the
intangible asset during its development.
•
•
•
•
•
3.15 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 a 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 and Other
Comprehensive Income in accordance with IFRS 9.
79
Investment property2% per annumBrands7% – 12% per annumCustomer and supplier relationships7% – 25% per annumOther intangibles33% per annumBrickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. Significant accounting policies (continued)
3.15 Business combinations and goodwill (continued)
In accordance with interpretation guidance of IFRS 3, where amounts
payable based on future performance are deemed to effectively be
contingent on continued employment due to ‘good leaver’ clauses
within the purchase agreements, the amounts payable are recognised
as remuneration in profit or loss in the period in which the further
amounts payable are earned.
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.
After 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.
3.16 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 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
80
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 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.
3.17 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.
3.18 Financial instruments
A financial instrument is any contract that gives rise to a financial
asset of one entity and a financial liability or equity instrument of
another entity. Financial assets and liabilities are recognised in the
Consolidated Balance Sheet when the Group becomes party to the
contractual provisions of the instrument.
Financial assets
Financial assets, on initial recognition, are classified as those to be
subsequently measured at amortised cost or those to be subsequently
measured at fair value (either through profit or loss or through other
comprehensive income). The classification depends on the financial
asset’s contractual cash flow characteristics and the Group’s business
model for managing them.
Financial assets held at amortised cost comprise trade and other
receivables and cash and cash equivalents in the Balance Sheet.
They are assets held for the collection of contractual cash flows
where those cash flows represent solely payments of the principal
and interest.
They are initially recognised at fair value plus transaction costs that
are directly attributable to their acquisition. They are subsequently
stated at amortised cost, using the effective interest rate method, less
provision for impairment.
Impairment provisions for trade receivables are recognised based on
the simplified approach within IFRS 9, using lifetime expected credit
losses. During this process, the probability of the non-payment of the
Brickability Group Plc Annual Report & Accounts 2022/23 trade receivables is assessed and multiplied by the amount of the
expected loss arising from default to determine the lifetime expected
credit loss for the trade receivables. For trade receivables that are
reported net, such provisions are recorded in a separate provision
account with the loss being recognised within profit or loss. The gross
carrying amount of a financial asset is reduced when the Group has
no reasonable expectation of recovering the financial asset in its
entirety or a portion thereof.
Assets measured at fair value through profit or loss are subsequently
remeasured at fair value, with gains and losses being recognised in
profit or loss. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.
For investments in equity instruments that are not held for trading and
fall within the scope of IFRS 9, the Group may (on an instrument-by-
instrument basis) irrevocably elect to present subsequent changes
in fair value within other comprehensive income. Where this election
is made, there is no subsequent re-classification of fair value gains
and losses to profit or loss following derecognition of the investment.
Dividends from such investments are recognised in profit or loss
as other income when the Group’s right to receive payment is
established.
Financial liabilities
Financial liabilities, on initial recognition, are classified as those to be
subsequently measured at amortised cost or those to be subsequently
measured at fair value through profit or loss.
All financial liabilities are initially recognised at fair value and, in
the case of loans and borrowings and payables, net of directly
attributable transaction costs.
Financial liabilities measured at amortised cost include trade and
other payables and loans and other borrowings, including bank
overdrafts. These are subsequently stated at amortised cost, using
the effective interest rate method. The interest expense includes initial
transaction costs and any premium payable on redemption, as well
as any interest or coupon payable while the liability is outstanding.
Financial liabilities measured at fair value are subsequently
remeasured at fair value, with gains and losses recognised in profit or
loss.
Equity instruments
An equity instrument is any contract that evidences a residual interest
in the assets of an entity after deducting all of its liabilities.
Repurchase of the Company’s own equity instruments is recognised
and deducted directly in equity. No gain or loss is recognised in profit
or loss on the purchase, sale, issue or cancellation of the Company’s
own equity instruments.
Fair value measurement
All assets and liabilities for which fair value is measured or disclosed
in the financial statements are categorised within the fair value
hierarchy, based on the degree to which the fair value is observable,
as follows:
•
level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
level 2 fair value measurements are those derived from 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 35.
3.19 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 32.
Dilapidations
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.
3.20 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. Market conditions are taken into account when estimating
the fair value. Details regarding the determination of the fair value of
equity-settled share-based transactions are set out in note 38.
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
probability of market conditions being met are not subsequently
adjusted for. 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.
81
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
3. Significant accounting policies (continued)
3.21 Statement of cash flows
For the purposes of the Consolidated Statement of Cash Flows,
cash and cash equivalents consist of cash and cash equivalents net
of outstanding bank overdrafts which are repayable on demand
and form an integral part of the Group’s cash management.
Such overdrafts are presented as short-term borrowings in the
Consolidated Balance Sheet.
Deferred and contingent consideration arrangements contain an
implicit financing element. As such, the Group’s policy is to include
the payment of deferred and contingent consideration within cash
flows from financing activities.
Cash flows in respect of the payment of lease liabilities are also
included within cash flows from financing activities.
Payments in respect of short-term or low value leases that are not
included within the measurement of the lease liabilities are presented
within cash flows from operating activities.
The Group’s finance expenses include interest payable and
commitment fees on the unutilised portion of the Group’s finance
facility. Interest payable on loans and borrowings is therefore
considered to be in connection with obtaining financial resources
and is presented within cash flows from financing activities.
Interest on loans and borrowings, lease liabilities and deferred and
contingent consideration is presented on a separate line in financing
activities, within the statement of cash flows.
3.22 Alternative performance measures
Alternative performance measures (APMs) are disclosed within the
2023 Annual Report and Accounts where management believes it
is helpful 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 may reduce comparability year on year. Adjusted EBITDA is
primarily used when providing guidance to the Group’s investors,
which is in line with similar companies and expectations within
the market.
The provision of alternative performance measures is intended to
provide additional information to users of the financial statements to
assist with their understanding of the Group’s trading performance.
They are not intended to be used as a replacement for IFRS
measures nor are they considered superior to the IFRS measures.
As adjusted results exclude certain costs, particularly in connection
with business combinations, but include associated net revenues,
adjusted measures may present a materially different result to the
statutory measures.
Adjusted Profit
Adjusted profit is defined as statutory profit adjusted for other items
that management does not consider to relate to its underlying
trading operations or for which separate disclosure would assist in
understanding the Group’s performance in the period. Further details
are provided in note 14.
Adjusted EBITDA
Adjusted EBITDA is the primary non-statutory measure used by
the Group. This is represented by earnings before interest, tax,
depreciation, amortisation and other non-underlying items. Such other
82
items include acquisition and share based payment related expenses,
including fair value gains/losses on the remeasurement of contingent
consideration and contingent consideration accounted for as
remuneration, as outlined in note 14. A reconciliation between adjusted
EBITDA and statutory profit before tax is included in note 6.
Adjusted basic and diluted EPS
Adjusted basic EPS is defined as the adjusted profit after tax divided
by the weighted average number of shares outstanding during the
year.
Adjusted diluted EPS is defined as the adjusted profit after tax
divided by the weighted average number of shares outstanding
during the year plus the weighted average number of shares that
would be issued on conversion of all the dilutive potential ordinary
shares into ordinary shares.
Adjusted basic and diluted EPS are outlined in note 17.
Net debt/cash
Net debt is defined as bank borrowings (excluding the impact of
arrangement fees) less cash and cash equivalents. Net cash arises
when the cash and cash equivalents exceed bank borrowings and 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.
Joint ventures
Investments in joint ventures 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 joint venture. Judgement is required when assessing
the substance of the joint arrangement to determine whether
it should be classified as a joint venture or joint operation. This
includes consideration of whether the Group has the rights to the
joint arrangement’s net assets and whether decisions concerning the
entity’s activities require unanimous consent from those sharing the
control.
Provisions
Provisions are a key area of the financial statements and are subject
to both judgement and estimation uncertainty. Defect provisions
are recognised for the potential rectification cost or claims made
Brickability Group Plc Annual Report & Accounts 2022/23 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 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.
Contingent consideration is discounted at a rate based on the cost
of debt or acquired company’s WACC. Where forecast cash flows
are adjusted to take into account the probability of the contingent
consideration being payable, a lower discount rate is used with the
residual risk effectively being the time value of money. Where forecast
cash flows are less certain, a higher discount rate based on the
WACC is used, with the greater risk incorporated into the discount
rate. The WACC rate is calculated from the perspective of a market
participant, including an additional risk premium where significant
growth is forecast and/or the earn-out period is longer than the
Group’s usual three-year period.
Further details are disclosed in note 35.
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,
for new leases acquired in the year. The Group estimates the rate
by assessing the rates implied in similar agreements and using
observable inputs, such as market interest rates, when available.
Defined benefit pension
The determination of the Group’s defined benefit obligations
depends on certain key assumptions, including the discount rate,
inflation rate and life expectancy of the members. The Group
engages an experienced pension consultant to establish the value of
its defined benefit obligations. The key estimates and a sensitivity of
the rates used are disclosed in note 34.
in respect of products and services sold under warranty. Provision
is based on the potential claims that could be 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 customer experience (see note 32).
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.
Defined benefit pension
The Group acquired a defined benefit pension scheme, as part of the
net assets acquired in Taylor Maxwell Group (2017) Limited, during
the prior year and an insurance backed buy-in policy was incepted
on 7 July 2021. Any defined benefit asset is recognised to the extent
that the asset will result in a refund or reduction in future payments.
Judgement is therefore required in determining whether the Group
has an unconditional right to a refund. Upon the winding up of the
pension scheme, any residual value would be payable to the Group.
The right to obtain a refund is not affected by future costs that could
change the amount of the surplus ultimately recovered. Therefore,
while the trustees could, at their discretion, enhance members’
benefits and reduce the surplus payable to the Group, this event is
not anticipated and would not remove the Group’s unconditional
right to the surplus. The Group therefore considers that is has an
unconditional right to a refund or reduction in future payments and
has recognised the defined benefit pension asset. Upon completion
of the buy-out process that was in progress at the reporting date, the
Group expects to receive any residual surplus and this will be payable
to the sellers of Taylor Maxwell Group (2017) Limited as part of the
consideration. Details of the defined benefit pension scheme are
disclosed in note 34.
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.
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.
83
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
5. Revenue
The Group’s revenue is primarily derived from contracts with customers. 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, installation services and the transportation and distribution of building materials. Revenue by segment is included in note 6. Trade
receivables are disclosed in note 27.
Included within other payables is an amount of £982,000 (2022: £1,314,000) in relation to contract liabilities in respect of amounts paid 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.
Included within accruals and deferred income is an amount of £5,889,000 (2022: £4,774,000) in relation to customer rebates payable at the year end.
•
•
6. Segmental analysis
For management purposes, the Group is organised into segments based on its products and services. During the year, the Group changed its
reportable segments due to increasing diversification following recent acquisitions. It now has four reportable divisions as follows:
•
Bricks and Building Materials, which incorporates the sale of superior quality building materials to all sectors of the construction industry
including national house builders, developers, contractors, general builders and retail to members of the public;
Importing, which is primarily responsible for importing building products, the majority of which are on an exclusive basis to the UK market, to
complement traditional and contemporary architecture;
Distribution, which focuses on the sale and distribution of a wide range of products, including windows, doors, radiators and associated parts
and accessories; and
Contracting, which provides flooring and roofing installation services, primarily within the residential construction sector.
•
This is the first time results have been presented in these segments within the Group’s Annual Report and Accounts and thus the results reported for
the prior year have also been re-presented for comparison purposes.
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 Group considers the CODM to be the senior
management team, including the Board of Directors, who are responsible for allocating resources and assessing performance of the operating
segments.
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 Adjusted EBITDA, without allocation of depreciation and amortisation, finance expenses and income, impairment losses,
fair value movements or the share of results of associates and joint ventures. This is the measure reported to the Board for the purpose of resource
allocation and assessment of segment performance.
The Group’s revenue is primarily generated in the United Kingdom. An analysis by geographic location is included within note 5. Of the revenue
generated in Europe, £229,000 (2022: £66,000) is included within revenue from the sale of goods within the Bricks and Building Materials
segment and £111,000 (2022: £nil) is included within revenue from the sale of goods within the Importing segment. The balance of £2,462,000
(2022: £2,742,000) is included within revenue from the rendering of services within the Importing segment. All of the revenue generated in Other
geographic locations is included within revenue from the sale of goods within the Bricks and Building Materials segment.
Revenue from the sale of goods and rendering of services is analysed by segment below. Revenue from the rendering of services within the Importing
segment relates to the provision of transportation and distribution services. Revenue from the rendering of services within the Distribution segment
relates to solar panel installation services.
No individual customer accounts for more than 10% of the Group’s total revenue.
84
An analysis of the Group’s revenue, by type, is as follows:2023 £’0002022 £’000Sale of goods 620,393 482,669 Rendering of services 60,694 37,500 681,087 520,169 An analysis of the Group’s revenue, by geographic location, is as follows:2023 £’0002022 £’000UK 678,267 517,351 Europe 2,802 2,808 Other 18 10 681,087 520,169 Brickability Group Plc Annual Report & Accounts 2022/23 Bricks and
Building
Materials
£’000
490,472
-
490,472
8,122
498,594
30,141
Year ended 31 March 2023
Importing
£’000
Distribution
£’000
Contracting
£’000
75,411
11,472
86,883
30,700
117,583
13,188
54,510
8,085
62,595
394
62,989
8,893
-
41,137
41,137
201
41,338
5,620
Unallocated
and group
eliminations
£’000
-
-
-
(39,417)
(39,417)
(6,312)
(13,114)
(281)
Consolidated
£’000
620,393
60,694
681,087
-
681,087
51,530
(13,114)
(281)
(5,483)
(5,483)
(1,567)
143
(5,256)
123
8,432
30,141
13,188
8,893
5,620
(23,315)
Year ended 31 March 2022 (Re-presented)
(1,567)
143
(5,256)
123
8,432
34,527
Bricks and
Building
Materials
£’000
398,198
–
398,198
6,384
404,582
24,317
Importing
£’000
Distribution
£’000
Contracting
£’000
40,451
10,180
50,631
21,649
72,280
8,273
44,020
2,818
46,838
188
47,026
7,849
–
24,502
24,502
286
24,788
2,680
Unallocated
and group
eliminations
£’000
Consolidated
£’000
–
–
–
(28,507)
(28,507)
(3,651)
(9,691)
(1,236)
(4,333)
(1,597)
54
(2,249)
55
(149)
(1,916)
482,669
37,500
520,169
–
520,169
39,468
(9,691)
(1,236)
(4,333)
(1,597)
54
(2,249)
55
(149)
(1,916)
18,406
Revenue from sale of goods
Revenue from rendering of services
Total external revenue
Total internal revenue
Total revenue
Adjusted EBITDA
Depreciation and amortisation
Acquisition and re-financing costs
Earn-out consideration classified as remuneration
under IFRS 3
Share based payment expense
Finance income
Finance expense
Share of results of associates
Fair value gains and losses
Group profit before tax
Revenue from sale of goods
Revenue from rendering of services
Total external revenue
Total internal revenue
Total revenue
Adjusted EBITDA
Depreciation and amortisation
Acquisition and re-financing costs
Earn-out consideration classified as remuneration
under IFRS 3
Share based payment expense
Finance income
Finance expense
Share of results of associates
Share of results of joint ventures
Fair value gains and losses
Group profit before tax
24,317
8,273
7,849
2,680
(24,713)
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 (central), investments in associates, joint ventures and financial assets and deferred tax assets. Goodwill has been allocated to reportable
segments as detailed in note 20. No other assets are used jointly by reportable segments. All liabilities are allocated to reportable segments with the
exception of those used primarily for corporate purposes (central), bank borrowings and deferred tax liabilities.
85
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
6. Segmental analysis (continued)
Non-current segment assets
Current segment assets
Total segment assets
Unallocated assets:
Investment in associates
Investment in joint ventures
Investments in financial assets
Group assets
Total segment liabilities
Loans and borrowings (excluding leases and
overdrafts)
Deferred tax liabilities
Group liabilities
Non-current asset additions
Property, plant and equipment
Right of use assets
Intangible assets
Total non-current asset additions
Non-current segment assets (Restated: note 22)
Current segment assets
Total segment assets
Unallocated assets:
Investment in associates
Investment in joint ventures
Investments in financial assets
Group assets (As restated)
Total segment liabilities (Restated: note 22)
Loans and borrowings (excluding leases and
overdrafts)
Deferred tax liabilities (Restated: note 22)
Group liabilities (As restated)
Non-current asset additions
Property, plant and equipment
Right of use assets
Intangible assets
Total non-current asset additions
86
Year ended 31 March 2023
Bricks and
Building
Materials
£’000
79,152
114,359
193,511
Importing
£’000
Distribution
£’000
Contracting
£’000
33,147
26,403
59,550
49,880
25,849
75,729
29,520
11,965
41,485
Central
£’000
7,672
4,154
11,826
Consolidated
£’000
199,371
182,730
382,101
(96,394)
(17,739)
(18,601)
(4,933)
(34,524)
485
1,803
-
2,288
Bricks and
Building
Materials
£’000
82,280
131,498
213,778
2,352
1,521
-
3,873
2,443
2,939
478
5,860
430
78
-
508
Year ended 31 March 2022 (Re-presented)
Importing
£’000
Distribution
£’000
Contracting
£’000
16,123
17,258
33,381
52,901
25,258
78,159
31,358
10,143
41,501
1,520
2,618
-
4,138
Central
£’000
531
1,075
1,606
(99,360)
(15,433)
(4,357)
(4,913)
(48,254)
720
438
-
1,158
4,676
2,768
-
7,444
95
126
488
709
295
-
-
295
531
-
-
531
324
-
188
382,613
(172,191)
(16,800)
(18,244)
(207,235)
7,230
8,959
478
16,667
Consolidated
£’000
183,193
185,232
368,425
261
279
178
369,143
(172,317)
(24,240)
(18,102)
(214,659)
6,317
3,332
488
10,137
Brickability Group Plc Annual Report & Accounts 2022/23 7. Other operating income
Rental income
Other
8. Profit before tax
Profit before tax is stated after charging/(crediting):
Amortisation of intangible assets
Impairment of goodwill
Depreciation of property, plant and equipment
Depreciation of right of use assets
Gain on disposal of property, plant and equipment and right of use assets
Cost of inventories recognised as an expense
Customer rebates
Supplier rebates
Subcontractor costs
Impairment of trade receivables
Net foreign exchange losses/(gains)
9. Auditor’s remuneration
During the year, the Group incurred the following costs for services provided by the Company’s Auditor:
Fees payable for audit services:
Audit of the company and group annual financial statements
Audit of the company’s subsidiaries
Total audit related fees
Fees payable for other services:
Other services
Total non-audit fees
Total auditors’ remuneration
2023
£’000
124
437
561
2023
£’000
8,447
-
1,566
3,101
(314)
555,592
7,987
(8,799)
15,984
1,611
87
2023
£’000
1,000
-
1,000
27
27
1,027
2022
£’000
127
227
354
2022
£’000
6,396
16
1,143
2,136
(75)
418,698
6,153
(6,147)
9,436
450
(32)
2022
£’000
123
427
550
8
8
558
87
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
10. Staff numbers and costs
The average number of persons employed by the Company during the year amounted to nil (2022: nil).
The average number of persons employed by the Group during the year, including the Directors, amounted to:
2023
Number
2022
Number
Production staff
Distribution staff
Administrative staff
Management staff
Sales staff
Staff costs:
Wages and salaries
Social security costs
Other pension costs (note 34)
Share-based payments expense including NI (note 38)
Directors’ emoluments:
Remuneration
Remuneration of the highest paid Director in respect of qualifying services was:
Remuneration
26
128
259
69
243
725
2023
£’000
39,793
4,419
1,200
1,567
46,979
2023
£’000
2,224
2,224
2023
£’000
1,095
1,095
No Directors accrue benefits under company pension plans.
Full details of Directors’ remuneration is included within the Report of the Remuneration Committee on pages 53 to 57.
11. Finance income
Interest on cash and cash equivalents
Other interest receivable
88
2023
£’000
15
128
143
22
72
180
70
260
604
2022
£’000
31,633
3,793
1,024
1,597
38,047
2022
£’000
1,847
1,847
2022
£’000
904
904
2022
£’000
2
52
54
Brickability Group Plc Annual Report & Accounts 2022/23 12. Finance expense
Interest on bank loans and overdrafts
Interest on lease liabilities
Unwinding of discount on deferred and contingent consideration
Other interest payable
13. Fair value gains and losses
Gain/(loss) on re-measurement of contingent consideration (notes 22 & 35)
Gain on acquisition (note 22)
2023
£’000
1,676
675
2,891
14
5,256
2023
£’000
8,176
256
8,432
2022
£’000
779
532
938
-
2,249
2022
£’000
(1,916)
-
(1,916)
14. Other items
In order to assist with the understanding of the Group’s performance, certain business combination related items that are significant in nature and
items that management do not consider to be directly reflective of the Group’s underlying performance in the period are presented separately, on
the face of the Consolidated Statement of Profit or Loss and Other Comprehensive Income.
This includes certain cash and non-cash items which tend to be charged or recognised throughout the year regardless of trading performance. For the
purpose of assessing performance on a comparable basis year on year, management therefore considers both statutory and adjusted profit measures, with
these adjusted measures presented separately in order to provide additional useful information about the Group’s performance to users of the accounts.
Other items that are excluded from adjusted profit measures are as follows:
Amortisation of acquired intangible assets (note 20)
Impairment of goodwill (note 20)
Total depreciation and amortisation
Acquisition costs
Re-financing costs
Earn-out consideration classified as remuneration under IFRS 3
Share-based payment expense (including employer NI)
Total other administrative expenses
Unwinding of discount on contingent consideration (note 12)
Total finance expense
Share of post-tax profit of equity accounted associates (note 23)
Gain/(loss) on re-measurement of contingent consideration (notes 22 & 35)
Gain on acquisition (note 22)
Total fair value gains/(losses) (note 13)
Total other items before tax
Tax on other items (note 15)
Total other items after tax
Other comprehensive income/(loss)
Remeasurements of defined benefit pension schemes
Deferred tax on remeasurement of defined benefit pension schemes
Fair value gain on investments in equity instruments designated as FVTOCI
Total other comprehensive income/(loss)
Total other items in total comprehensive income
2023
£’000
(8,399)
-
(8,399)
(281)
-
(5,483)
(1,567)
(7,331)
(2,891)
(2,891)
123
8,176
256
8,432
(10,066)
2,094
(7,972)
43
(11)
10
42
(7,930)
2022
£’000
(6,333)
(16)
(6,349)
(1,139)
(97)
(4,333)
(1,597)
(7,166)
(938)
(938)
55
(1,916)
-
(1,916)
(16,314)
391
(15,923)
(1,970)
374
53
(1,543)
(17,466)
89
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
14. Other items (continued)
Impact of business combinations
Following a business combination, intangible assets in respect of brands, customer relationships and supplier relationships are recognised as part
of the fair value assessment of net assets acquired. Amortisation on these acquired intangibles is excluded from adjusted profit as the recognition of
these intangibles is not comparable with the recognition of other internally generated assets. Its exclusion enables performance to be assessed on a
like for like basis regardless of whether growth is organic or through acquisition and whether acquired intangibles have been fully amortised.
Acquisition costs associated with business combinations can fluctuate from year to year depending on the size and number of acquisitions. Legal
and professional fees for acquisitions are also generally considered to be greater than those incurred during the course of regular trading. These are
therefore excluded from adjusted results for improved comparability.
Any gains recognised on acquisition, subsequent changes in the fair value of contingent consideration and the related finance expense in
connection with discounting deferred and contingent consideration can also make a comparison of trading performance on a like for like basis
more difficult. These gains/losses and expenses are therefore also excluded from adjusted results, with the inclusion within other items consistent
with the presentation of other acquisition related costs.
Fair value gains/(losses) include a gain of £8,176,000 (2022: loss of £1,916,000) in respect of changes in contingent consideration expected to be
payable. A reconciliation of the movement in the year, including details of the reasons for the change in the year is outlined in note 22.
Acquisition costs comprise of transaction costs of £92,000 (2022: £383,000), in relation to stamp duty, plus a further £189,000 (2022:
£756,000) in respect of legal and professional fees. £259,000 (2022: £1,060,000) was directly associated with the acquisitions in the year (note
22), £13,000 was in connection with a prior year acquisition and the remainder related to aborted acquisitions.
To facilitate the acquisition of Taylor Maxwell Group (2017) Limited in the prior year, the Group re-financed and agreed an increase in its available
banking facilities, The re-financing costs directly associated with this are therefore considered to be connected with the acquisition and outside the
normal course of business.
The agreements to purchase Taylor Maxwell Group (2017) Limited and Modular Clay Products Ltd include earn-out consideration, payable if
certain performance-based targets are met over the following three-years. The share purchase agreements also include a ‘bad leaver’ clause,
under which the earn-out consideration payment to such a leaver is forfeited. The clauses were included with the intention of protecting the value
of the business over the first few years following acquisition. However, as a result of the earn-out consideration effectively being contingent on the
continued employment or ‘good leaver’ status of the individual, the amount payable has been treated as remuneration in accordance with current
IFRS interpretation guidance of IFRS 3. As such, the amount payable is considered significant in nature, business combination related and not
reflective of a typical remuneration cost that would usually be incurred within the underlying trade of the Group.
Share-based payments
The share-based payment expense represents the share-based payment charge for the year, including associated accrued employer taxes.
The majority of share options issued are subject to performance criteria, including both market and non-market conditions. Changes in market
conditions after the grant date are not reflected in the share-based payment expense recognised. The accounting charge is therefore not
considered to be directly linked to the Group’s trading operations in the year and thus separate disclosure is deemed appropriate to assist with the
understanding of the Group’s performance in the year.
Equity accounted associates
The Group is not directly involved in the day-to-day operations of its associate and thus considers it appropriate to separate its share of this entity’s
results from the Group’s adjusted results.
Tax
The tax credit arising on the other items is presented on the same basis as the cost to which it relates. The tax impact attributable to each other item
is outlined in note 15.
Other comprehensive income
Other comprehensive income relates to the remeasurement of the defined pension scheme, the associated deferred tax movement and the fair
value gain on investments in equity instruments designated as fair value through other comprehensive income.
The defined benefit pension scheme was acquired as part of the net assets of Taylor Maxwell Group (2017) Limited in the prior year. Shortly
afterwards, the Group entered into a buy-in insurance policy and is in the process of completing a buy-out, whereby the defined benefit pension
liability will be transferred to an insurer. As such, the scheme related remeasurement and deferred tax movements are not considered to be part of
the Group’s underlying operations and have been reported separately from the Group’s adjusted results. Further details of the scheme are disclosed
in note 34.
The fair value change in investments in equity instruments designated as fair value through other comprehensive income is also not reflective of the
Group’s underlying trading performance and thus is not included in the Group’s adjusted comprehensive income.
90
Brickability Group Plc Annual Report & Accounts 2022/23 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
2023
£’000
8,949
(319)
8,630
(1,800)
6,830
2022
£’000
6,730
(286)
6,444
(341)
6,103
Reconciliation of tax expense
The standard rate of corporation tax in the UK is 19% (2022: 19%). The charge for the year can be reconciled, to the standard rate applied to the
profit before tax, as follows:
Profit on ordinary activities before taxation
Tax on profit on ordinary activities at standard rate
Adjustments to current tax charge in respect of prior periods
Adjustments to deferred tax charge in respect of prior periods
Effect of expenses not deductible for tax purposes
Effect of changes in deferred and contingent consideration
Effect of remuneration under IFRS 3 not deductible for tax purposes
Effect of gain on acquisition
Effect of capital allowances and depreciation
Effect of changes in UK tax rates
Effect of utilisation of tax losses
Effect of share options
Tax on profit
2023
£’000
34,527
6,560
(319)
62
565
(1,004)
1,042
(49)
(15)
10
99
(121)
2022
£’000
18,406
3,497
(286)
69
311
542
823
(64)
1,211
–
–
6,830
6,103
On 11 March 2021, the UK Government announced that the main rate of corporation tax in the United Kingdom would increase to 25%, with effect
from April 2023. This change was substantively enacted during the prior year. Deferred tax assets and liabilities, previously recognised at 19%, were
therefore remeasured at 25%. This change resulted in an increase of £1,211,000 in the deferred tax liability recognised at 31 March 2022.
The tax impact of the ‘other’ items outlined in note 14 and within the Consolidated Statement of Profit or Loss and Other Comprehensive Income is as follows:
Amortisation of acquired intangible assets
Remeasurement of deferred tax liability associated with acquired intangibles
Impairment of goodwill
Acquisition costs
Re-financing costs
Earn-out consideration classified as remuneration under IFRS 3
Share-based payment expense (including employer NI)
Unwinding of discount on contingent consideration
Share of post-tax profit of equity accounted associates
Gain/(loss) on re-measurement of contingent consideration
Gain on acquisition
Total other items
2023
2022
Other item
£'000
Tax impact
£'000
(8,399)
1,596
Other item
£'000
(6,333)
-
-
(281)
-
(5,483)
(1,567)
(2,891)
123
8,176
256
-
-
23
-
-
475
-
-
-
-
(10,066)
2,094
-
(16)
(1,139)
(97)
(4,333)
(1,597)
(938)
55
(1,916)
-
(16,314)
Tax impact
£'000
1,203
(1,158)
-
-
-
-
346
-
-
-
-
391
91
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
15. Tax on profit (continued)
2023
2022
Other item
£'000
Tax impact
£'000
Other item
£'000
Tax impact
£'000
Other comprehensive income/(loss)
Remeasurements of defined benefit pension schemes
Fair value gain on investments in equity instruments designated as FVTOCI
Total other items in other comprehensive income/(loss)
43
10
53
(11)
-
(11)
(1,970)
53
(1,917)
374
-
374
The effective tax rate on other items was particularly low in the year to 31 March 2022 due to the remeasurement of deferred tax on acquired intangibles.
Included within the income tax expense is a net credit of £45,000, comprising a tax credit of £1,203,000 in respect of the amortisation charge, with a
charge of £1,158,000 offsetting this as a result of remeasuring the deferred tax liability due to the increase in UK tax rate from 19% to 25%.
16. Dividends
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 March 2022 of 2.0400p per share
(2022: for the year ended 31 March 2021 of 1.0850p per share)
Interim dividend for the year ended 31 March 2023 of 1.0100p per share
(2022: for the year ended 31 March 2022 of 0.9600p per share)
Total dividends paid in the year
2023
£’000
6,111
3,032
9,143
2022
£’000
3,236
2,866
6,102
The Directors recommend that a final dividend for 2023 of 2.15p (2022: 2.04p) 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 close of
business on 25 August 2023. This dividend has not been included as a liability in these financial statements.
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 weighted
average number of ordinary shares outstanding during the year.
Diluted EPS is calculated by dividing the profit for the year, attributable to ordinary equity holders, by the weighted average number of ordinary
shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares.
The calculation of basic and diluted earnings per share is based on the following data:
2023
Weighted
average
number of
shares
Earnings
£’000
Earnings
per share
(p)
Earnings
£’000
2022
Weighted
average
number of
shares
Earnings
per share
(p)
27,738
299,439,718
9.26
12,387
281,474,903
4.40
-
5,403,747
27,738
304,843,465
-
9.10
-
12,387
5,512,650
286,987,553
-
4.32
Basic earnings per share
Effect of dilutive securities:
Employee share options
Diluted earnings per share
Adjusted earnings per share and adjusted diluted earnings per share based on the adjusted profit attributable to the equity holders of the parent, as
shown in the Adjusted column of the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Details of the Other items after
tax, forming the difference between the statutory earnings above and adjusted earnings below, are outlined in note 14 of the financial statements.
92
Brickability Group Plc Annual Report & Accounts 2022/23
2023
Weighted
average
number of
shares
Earnings
per share
(p)
Earnings
£’000
Adjusted basic earnings per share
35,710
299,439,718
11.93
2022
Weighted
average
number of
shares
Earnings
per share
(p)
281,474,903
10.06
Earnings
£’000
28,310
Effect of dilutive securities:
Employee share options
-
5,403,747
Adjusted diluted earnings per share
35,710
304,843,465
-
11.71
-
5,512,650
28,310
286,987,553
-
9.86
18. Property, plant and equipment
Group
Cost
At 1 April 2021
Additions
Acquisition through business combinations (Restated: note 22)
Disposals
At 31 March 2022 (As restated)
Additions
Acquisition through business combinations
Transferred from right of use assets
Disposals
At 31 March 2023
Depreciation
At 1 April 2021
Charge for the year
On disposals
At 31 March 2022
Charge for the year
Transferred from right of use assets
On disposals
At 31 March 2023
Net book value
At 31 March 2023
At 31 March 2022 (As restated)
Land and
buildings
(Restated)
£’000
Plant and
machinery
£’000
Fixtures,
fittings and
equipment
£’000
Motor
vehicles
£’000
Total
(Restated)
£’000
8,543
5,086
3,658
-
17,287
5,667
27
-
(71)
22,910
765
422
-
1,187
483
-
(63)
1,607
21,303
16,100
789
329
425
(9)
1,534
256
-
-
(27)
1,763
396
200
(9)
586
224
-
(18)
792
971
948
689
229
278
(2)
1,194
473
162
-
(7)
1,822
267
248
-
515
300
-
(7)
808
1,014
679
964
673
513
(290)
1,860
833
13
35
(316)
2,425
432
273
(175)
530
559
20
(179)
930
10,985
6,317
4,874
(301)
21,875
7,229
202
35
(421)
28,920
1,860
1,143
(184)
2,818
1,566
20
(267)
4,137
1,495
1,330
24,783
19,057
Included within land and buildings is freehold land amounting to £2,479,000 (2022: £1,113,000) which is not depreciated.
Property, plant and equipment with a carrying value of £23,301,000 (2022: £17,715,000) is pledged as security for the Group’s bank loan.
93
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
94
19. Investment propertyCompanyInvestmentproperty£’000CostAt 1 April 2021-Additions531At 31 March 2022531Additions1,520At 31 March 20232,051DepreciationAt 1 April 2021 and 31 March 2022-Charge for the year28At 31 March 202328Net book valueAt 31 March 20232,023At 31 March 2022531The Company’s investment properties are all used by its subsidiaries. The Group therefore has no investment property, with the properties included within Property, Plant and Equipment within the consolidated financial statements.The Company recognises its investment properties at cost. One property was purchased at the end of the prior year. As such, no depreciation charge was incurred or recognised in the year to 31 March 2022.Rental income of £198,000 (2022: £nil) is included within the individual company’s profit for the year. The Company did not incur any direct operating expenses in respect of the properties during the year.At both 31 March 2023 and 31 March 2022, there were no restrictions on the realisability of investment property or the remittance of income and proceeds of disposal. There are also no contractual obligations to purchase, construct or develop investment property.As all properties were acquired during the year or at the end of the prior financial year on commercial market terms, the Directors consider that the fair value of the properties at 31 March 2023 is not materially different to the cost value at which they are recorded in the financial statements.20. Intangible assetsBrands(Restated)£’000Customer & supplier relationships (Restated)£’000Other intangibles£’000 Goodwill(Restated)£’000Total(Restated)£’000Cost or valuationAt 1 April 20218,33628,020449,96986,329Additions–– 488 – 488 Acquisition through business combinations (Restated: note 22) 15,185 37,263 – 27,579 80,027 At 31 March 2022 (As restated)23,52165,28349277,548166,844Additions–– 478 – 478 Acquisition through business combinations 1,700 5,502 – 2,240 9,442 At 31 March 202325,22170,78597079,788176,764Amortisation and impairmentAt 1 April 20212,0117,451316 9,481 Charge for the year1,5594,77463– 6,396 Impairment––– 16 16 At 31 March 20223,57012,225663215,893Charge for the year 1,993 6,406 48 – 8,447 At 31 March 20235,56318,6311143224,340Net book valueAt 31 March 202319,65852,15485679,756152,424At 31 March 2022 (As restated)19,95153,05842677,516150,951The Company has no intangible assets.Brickability Group Plc Annual Report & Accounts 2022/23 Goodwill is reviewed annually for impairment. The economic climate continued to be volatile during the year and since the year end, with increased
interest rates and fluctuations in inflation which rose significantly during the year before falling since the year end. This could give rise to an indication
of potential impairment as outlined within the key sources of estimation uncertainty in note 4 of the financial statements. 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.
The carrying amount of goodwill and impairment losses by segment are as follows:
Bricks and Building
Materials
£’000
Importing
£’000
Distribution
£’000
Contracting
£’000
At 1 April 2021 (Re-presented)
Recognised on acquisitions
(Restated: note 22)
Impairment
At 31 March 2022 (As restated)
Recognised on acquisitions
At 31 March 2023
14,882
11,437
(16)
26,303
-
26,303
7,740
-
-
7,740
2,240
9,980
14,897
8,534
-
23,431
-
23,431
12,434
7,608
-
20,042
-
20,042
Total
£’000
49,953
27,579
(16)
77,516
2,240
79,756
Impairment losses regarding goodwill are included within the depreciation and amortisation expense in the Statement of Profit or Loss and Other
Comprehensive Income.
The carrying amount of goodwill is allocated to CGUs as follows:
Brick-ability trading group
PVH trading group
HHG trading group
Taylor Maxwell trading group
HBS NE
Other CGUs
Total
2023
£’000
12,845
16,399
12,690
11,437
8,534
17,851
79,756
2022
£’000
12,845
16,399
12,690
11,437
8,534
15,611
77,516
The goodwill allocated to the Brick-ability trading group, PVH trading group, HHG trading group, Taylor Maxwell trading group and HBS NE CGUs
is considered significant in comparison with the Group’s total carrying amount of goodwill. CGUs within the Other CGU category each represent
between 0.02% and 5.04% of the total goodwill and relate to the business operations of entities acquired during the current and previous years.
CGU’s representing more than 10% of the total goodwill are considered to be significant to the Group.
The recoverable amount is the higher of fair value less costs of disposal (FVLCD) and value in use (VIU). The Group estimates the recoverable
amount of each significant CGU, using a VIU model by projecting cash flows for the next three years together with a terminal value using a long-term
growth rate. The key assumptions underpinning the recoverable amounts of the CGUs tested for impairment are forecast revenues and EBITDA,
upon which the forecast cash flows are based, the long-term growth rates and the discount rates applied to the forecast cash flows.
Revenue and EBITDA forecast in the impairment models are based on management’s past experience and future expectations of performance.
The projections also consider the ongoing uncertainty in the market, with assumptions for future trade supported by actual trends and previous
performance. The growth rate and discount rate applied for each CGU is as follows:
Brick-ability trading group
PVH trading group
HHG trading group
Taylor Maxwell trading group
HBS NE
Other CGUs
Growth rate
Discount rate
2023
%
2.0
2.0
2.0
2.0
2.0
2.0
2022
%
2.0
2.0
2.0
2.0
2.0
2.0
2023
%
12.7
15.0
12.7
12.7
23.3
12.7 - 17.5
2022
%
11.8
11.8
11.8
11.8
23.6
11.8
95
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
20. Intangible assets (continued)
The long-term growth rates used to extrapolate the cash flow projections beyond the initial three-year period do not exceed the average long-term
growth rates for the relevant markets. The discount rates applied are derived from the CGU’s weighted average cost of capital (WACC), by reference
to comparable quoted company data. Inputs into the calculation of the discount rates reflect the risks associated with the CGU’s size and industry
within which it operates. A growth risk factor of 5% (2022: 10%) has also been incorporated into the discount rate for HBS NE given the company
was relatively recently formed and there being a significant level of growth anticipated during the forecast period, due to changes in renewable
energy legislation. Risk-free rates included within the discount rate calculations are obtained from observable market rates.
The impairment loss of £16,000 in the prior period related to goodwill held in a subsidiary and is included within the Other CGU total above. This
goodwill arose following incorporation of that subsidiary and acquisition of the business previously operating as a partnership. Given the age of the
goodwill asset, management no longer considered that economic benefits generated by that subsidiary are attributable to this asset. Its carrying
amount was therefore written down to £nil, based on its value in use.
Sensitivity
The total recoverable amount in respect of goodwill arising on consolidation, other intangibles and other non-financial assets, as assessed by
management using the above assumptions, is greater than the carrying amount. No further impairment loss has therefore been recorded, in either
the current or previous year.
The projections used in the impairment reviews have also been sensitised. Management considers it not reasonably possible for the
assumptions to change so significantly as to eliminate the excess level of headroom for any of the significant CGUs, with EBITDA required to
fall to between 28.53% and 76.34% of forecasted results or the discount rate required to increase by between 5.95% and 64.39% in order for
there to be an impairment.
If there were to be a drop in forecast EBITDA of 20%, the carrying amount of all non-current assets for three CGUs within the ‘Other CGUs’
category may exceed the CGU’s recoverable amount. Should EBITDA fall by 20%, there would be a decrease in the VIU of £ 6,279,000 which
may result in an impairment of £1,391,000.
21. Subsidiaries
Company
Shares in group undertakings
Cost and carrying value
At 1 April
Additions
At 31 March
2023
£’000
57,572
1,148
58,720
2022
£’000
6,542
51,030
57,572
An addition of £1,148,000 (2022: £956,000) was recognised in the year in respect of the company issuing share options to employees of its
subsidiaries, which are the receiving entities of the associated employee services.
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)
96
Country of operation
and incorporation
Class of
share held
Proportion of shares
held 2023
Proportion of shares
held 2022
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Brickability Group Plc Annual Report & Accounts 2022/23 Country of operation
and incorporation
Class of
share held
Proportion of shares
held 2023
Proportion of shares
held 2022
Subsidiary
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)
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)
Bathroom Barn Limited (7)
McCann Logistics Ltd (3)
Forum Tiles Limited (8)
Taylor Maxwell Group (2017) Limited (9)
Taylor Maxwell Group Limited (10)
Taylor Maxwell Holdings Limited (11)
Taylor, Maxwell & Co Limited (12)
Taylor Maxwell Timber Limited (13)
The Vobster Cast Stone Company Limited (12)
SBS Cladding Ltd (13)
Pacific Lumber Services (UK) Limited (14)
Timber Marketing Corporation Limited (14)
Taymax Independent Plywood Limited (14)
Michael Douglas & Co Limited (12)
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Taylor Maxwell Timber Consolidated Limited (12)
England and Wales
Proctor & Lavender Brick Distributors Limited (13)
England and Wales
Taylor Maxwell Hardwoods Limited (12)
Taylor Maxwell (International) Limited (14)
Taymax Forest Products Limited (14)
Added Value Timber Products Limited (14)
Leadcraft Limited (15)
Rangeley Holdings Limited (1)
HBS NE Limited (1)
HBS NE Two Limited (17)
Whiffen Holdings Limited (1)
Beacon Roofing Limited (16)
Modular Clay Products Ltd (1)
E. T. Clay Products Limited (1)
Heritage Clay Tiles Limited (1)
(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.
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
75%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
97
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
21. Subsidiaries (continued)
(4) Wholly owned by Crest Brick Slate & Tile Limited.
(5) Wholly owned by Crest Roofing Limited.
(6) Wholly owned by Hamilton Heating Group Limited.
(7) Wholly owned by Towelrads.com Limited.
(8) 75% owned by Towelrads.com Limited.
(9) Wholly owned by Brickability Group PLC.
(10) Wholly owned by Taylor Maxwell Group (2017) Limited.
(11) Wholly owned by Taylor Maxwell Group Limited.
(12) Wholly owned by Taylor Maxwell Holdings Limited.
(13) Wholly owned by Taylor, Maxwell & Co Limited.
(14) Wholly owned by Taylor Maxwell Timber Limited.
(15) Wholly owned by Rangeley Holdings Limited.
(16) Wholly owned by Whiffen Holdings Limited.
(17) Wholly owned by HBS NE Limited.
Forum Tiles Limited was incorporated in January 2021, with the Group owning 75% of the issued share capital. The non-controlling interest is not
material to the Group and thus no further disclosure is included in respect of the profit or loss allocated to non-controlling interests.
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-ability Ltd.
Brick Services Limited
The Matching Brick Company Limited
Brick-Link Limited
Plansure Building Products Limited
P V H Holdings Limited
Crest Brick Slate & Tile Limited
Crest Roofing Limited
Crown Roofing (Centres) Limited
Excel Roofing Services Limited
Hamilton Heating Group Limited
Towelrads.com Limited
Radiatorsonline.com Ltd
Frazer Simpson Limited
FSN Doors Limited
DSH Flooring Limited
CPG Building Supplies Limited
The Bespoke Brick Company Limited
The Brick Slip Business Limited
10332050
10332505
07805178
01972562
03719911
02530773
02245364
06016447
02484708
03633185
02487387
02828966
03595977
09921801
04906064
10757797
06838234
07304174
08209834
02937329
08723889
09707800
Brickmongers (Wessex) Ltd
LBT Brick & Facades Limited
McCann Roofing Products Limited
U Plastics Limited
McCann Logistics Ltd
Forum Tiles Limited
Taylor Maxwell Group (2017) Limited
Taylor Maxwell Group Limited
Taylor Maxwell Holdings Limited
Taylor, Maxwell & Co Limited
Taylor Maxwell Timber Limited
The Vobster Cast Stone Company Limited
SBS Cladding Ltd
Leadcraft Limited
Rangeley Holdings Limited
HBS NE Limited
Whiffen Holdings Limited
Beacon Roofing Limited
Modular Clay Products Ltd
E. T. Clay Products Limited
Heritage Clay Tiles Limited
06944174
02545642
08732318
05110347
01403830
13134891
10596770
05726000
01913316
00476749
01295681
00843928
07607128
03839874
10476725
13451727
07804032
02830038
06471686
03373142
05044301
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 low risk.
98
Brickability Group Plc Annual Report & Accounts 2022/23 22. Business combinations
The Group acquired the entire share capital and 100% of the voting rights in the following companies during the year:
Company acquired
Modular Clay Products Ltd
E. T. Clay Products Limited
Heritage Clay Tiles Limited
The fair value of the assets acquired and liabilities assumed on acquisition are as follows:
Acquisition date
31 May 2022
30 September 2022
30 September 2022
Modular Clay
Products Ltd
£’000
E. T. Clay Products
Limited
£’000
Heritage Clay Tiles
Limited
£’000
Property, plant and equipment
Right of use assets
Identifiable intangible assets (note 20)
Inventory
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Current income tax
Lease liabilities
Provisions
Deferred tax
Total identifiable net assets
Goodwill
Gain on acquisition (note 13)
Total consideration
Satisfied by:
Cash paid
Contingent consideration (note 35)
Total consideration
16
28
3,810
164
2,888
4,205
(2,104)
(514)
(28)
-
(926)
7,539
-
(256)
7,283
7,283
-
7,283
157
792
3,083
2,838
8,651
627
(5,604)
(858)
(792)
(27)
(792)
8,075
1,630
-
9,705
8,662
1,043
9,705
29
305
309
1,172
1,732
(156)
(2,864)
-
(305)
(5)
(16)
201
610
-
811
729
82
811
Cash paid reflects an initial cash payment agreed in respect of the value attributed to the business, based on a multiple of Adjusted EBITDA, plus any
further amounts paid in respect of excess working capital, including any surplus cash, based on agreed form completion accounts.
The Group acquired each of the above subsidiaries in order to expand its presence in the specification market and further broaden the Group’s
access to overseas manufacturers, whilst enhancing the range of products that can be offered to its customers.
The fair value of identifiable intangible assets acquired through business combinations relate to brands and customer relationships.
The fair value of brands is based on a relief from royalty method, with a royalty rate of 0.75% to 1% applied based on comparable businesses in the
market, reflecting the size of the entities acquired. The fair value of customer relationships is established using a multi-period excess earnings method,
with discount rates of between 13% and 22% applied to the acquisitions in the year. Projected cashflows that underpin the valuations 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 in revenue applied thereafter.
Any excess paid over the value of net assets acquired is included as goodwill. 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.
A gain has arisen on the acquisition of Modular Clay Products Ltd, which is recognised within the Fair Value Gains/(Losses) line in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income (note 13). The Group does not consider the acquisition to be a bargain purchase
commercially. Further amounts are expected to be payable to the seller depending on future performance. However, these amounts are recognised
as remuneration for post business combination services, as outlined in the following Contingent Consideration section. Due to this component of
consideration being accounted for as remuneration, the fair value of identifiable net assets acquired exceeds the consideration under IFRS 3. The
gain has therefore arisen as a result of accounting treatments, with IFRS 3 requiring the gain to be credited to profit or loss on acquisition.
99
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
22. Business combinations (continued)
Included within the fair value of trade and other receivables above are the following gross contractual amounts due and amounts not expected to
be collected in respect of trade receivables:
Gross contractual trade receivables
Amounts not expected to be collected
Fair value of contractual receivables
Modular Clay
Products Ltd
£’000
E. T. Clay Products
Limited
£’000
Heritage Clay Tiles
Limited
£’000
2,363
(7)
2,356
5,482
(5)
5,477
1,021
-
1,021
Included in the consolidated financial statements are the following amounts of revenue and profit in respect of the subsidiaries acquired:
Revenue
Net profit
Modular Clay
Products Ltd
£’000
E. T. Clay Products
Limited
£’000
Heritage Clay Tiles
Limited
£’000
11,119
1,637
14,728
618
2,458
122
Had the current year business combinations taken place at the beginning of the financial year, the Group’s revenue for the year would have been
£706,624,000 (2022: £617,122,000) and Group profit would have been £30,332,000 (2022: £15,507,000).
Acquisition related costs, included in administrative expenses (note 14), amounted to £259,000 in respect of the above acquisitions, as follows:
Acquisition costs
Modular Clay
Products Ltd
£’000
E. T. Clay Products
Limited
£’000
Heritage Clay Tiles
Limited
£’000
100
133
26
Business combinations completed in prior periods
Whiffen Holdings Limited and Beacon Roofing Limited
The Group acquired 100% of the share capital and voting rights in Whiffen Holdings Limited and its subsidiary, Beacon Roofing Limited (together the
‘Whiffen Holdings Group’), on 31 March 2022. As disclosed in the 2022 financial statements, due to the timing of the acquisition the value of the identifiable
net assets was included on a provisional basis pending a detailed assessment of the fair value of the contingent consideration and all identifiable net assets.
Details of the revised fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Book value
originally reported
£’000
Adjustment
£’000
Restated fair value
£’000
Property plant and equipment
Identifiable intangible assets
Inventory
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Current income tax liabilities
Provisions
Deferred tax
Total identifiable net assets
Goodwill
Total consideration
Satisfied by:
Cash paid
Deferred cash consideration
Contingent consideration
Total consideration
100
709
-
45
2,476
741
(1,206)
(365)
(76)
(73)
2,251
5,968
8,219
5,371
1,676
1,172
8,219
502
2,255
-
-
-
-
-
-
(675)
2,082
(1,889)
193
-
-
193
193
1,211
2,255
45
2,476
741
(1,206)
(365)
(76)
(748)
4,333
4,079
8,412
5,371
1,676
1,365
8,412
Brickability Group Plc Annual Report & Accounts 2022/23 Had the full fair value assessment been carried out prior to announcing the annual results to 31 March 2022, the financial statements would have
differed as follows:
- The cost of property, plant and equipment would have been £502,000 higher, with a corresponding decrease in goodwill.
-
Intangible assets of £2,255,000 and a related deferred tax liability of £675,000 would have also been recognised, with a corresponding net
decrease in goodwill.
As the acquisition took place on the final day of the financial year, there is no impact on the profit or loss reported for the year ended 31 March 2022.
- The contingent consideration liability on acquisition would have been £193,000 higher, with a corresponding increase in goodwill.
-
The March 2022 comparatives have been restated in these financial statements to reflect the above changes.
Under paragraph 10(f) of IAS 1 Presentation of financial statements, a prior period restatement would usually require the presentation of a third
balance sheet at 1 April 2021. However, as the restatement of the provisional fair values would have no impact on the balance sheet at that date,
it is not considered that this would provide additional useful information. As such, a third consolidated balance sheet has not been included within
these financial statements due to prior period business combinations.
Contingent consideration
The Group has entered into contingent consideration arrangements during the purchase of several subsidiaries. Final amounts payable under these
agreements are all subject to future performance and the acquired business achieving pre-determined adjusted EBITDA targets, over the three
years following acquisition, with the exception of HBS NE Limited which is over five years.
The fair value of all contingent consideration is based on a discounting cash flow model, applying a discount rate of between 1.7% and 23.6% to the
expected future cash flows.
Summarised below are the fair values of the contingent consideration at both acquisition and reporting date, the potential undiscounted amount
payable and the discount rates applied within the discounting cash flow models, for each acquisition where contingent consideration arrangements
remain in place.
Discount
rate
Fair value at
acquisition
£’000
Fair value at
reporting date
2023
£’000
Fair value at
reporting date
2022
£’000
Undiscounted
amount payable
2023
£’000
Undiscounted
amount payable
2022
£’000
Company acquired
The Bespoke Brick
Company Limited
Brickmongers (Wessex)
Ltd
U Plastics Limited
Bathroom Barn Limited
McCann Logistics Ltd
Taylor Maxwell Group
(2017) Limited
SBS Cladding Limited
Leadcraft Limited
HBS NE Limited
Beacon Roofing Limited*
E. T. Clay Products Limited
4.9%
4.8%
3.5%
1.7%
1.7%
4.1%
4.1%
10.4%
16.1% -
23.6%
13.0%
16.0%
Heritage Clay Tiles Limited
20.0%
-
138
2,208
231
889
-
1,845
722
10,069
1,365*
1,043
82
-
-
962
108
1,324
390
1,464
964
3,901
2,355
2,433
193
675
87
2,092
166
1,597
422
1,804
795
10,770
1,365*
-
-
-
-
964
110
1,330
406
1,500
1,128
6,998
2,802
3,210
270
686
89
2,164
170
1,628
435
1,900
1,028
22,188
1,885*
-
-
* 2022 and acquisition values restated following completion of fair value assessment of total consideration payable and net assets acquired as noted
above.
The potential undiscounted amount payable in respect of E. T. Clay Products Limited and Heritage Clay Tiles Limited ranges from £nil to £3,480,000.
In respect of prior period acquisitions, the undiscounted amount payable for U Plastics Limited ranges from £572,000 to £1,200,000 (2022: £246,000
to £2,400,000) and the amount payable for SBS Cladding Limited ranges from £500,000 to £2,000,000 (2022: £nil to £2,000,0000). It is not
possible to determine a range of outcomes for other acquisitions as the arrangements do not contain a maximum payable.
Changes in the range of outcomes are due to amounts paid or payable being determined during the year as milestones within the performance period
are met.
101
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
22. Business combinations (continued)
The acquisition of Taylor Maxwell Group (2017) Limited is also subject to further payments depending on future performance, ranging from £nil to
£13,000,000, over the three years following acquisition. Based on current interpretation guidance concerning contingent payments to employees under
IFRS 3, the earn-out amounts payable are recognised in profit or loss over the earn-out period as remuneration costs. This is due to the inclusion of a ‘bad
leaver’ clause in the share purchase agreement, under which the earn-out consideration payment is forfeited. The earn-out consideration is therefore
deemed to effectively be contingent on the continued employment of the seller and the seller not being considered a ‘bad leaver’. The anticipated
total amount payable, however, is not expected to change due to other clauses and payment terms within the share purchase agreement. A charge of
£4,333,000 has been recognised in the year in respect of this earn-out consideration, presented within other administrative expenses (note 14).
Similarly, the acquisition of Modular Clay Products Ltd is also subject to further amounts payable depending on future performance over the three years
following acquisition, which are recognised as remuneration due to a ‘good leaver’ clause within the share purchase agreement. It is not possible to
determine a range for these future payments as the agreement does not contain a maximum payable. A charge of £1,150,000 has been recognised in the
year in respect of this earn-out consideration, presented within other administrative expenses (note 14).
Changes in amounts recognised in respect of contingent consideration can be reconciled as follows:
Fair value at
31 March
2022
£’000
Additions
through
business
combinations
£’000
Finance expense
(note 12)
£’000
Fair value
(gain)/loss
(note 13)
£’000
Settlement
£’000
Fair value at
31 March 2023
£’000
Company acquired
U Plastics Limited
McCann Logistics Ltd
SBS Cladding Limited
HBS NE Limited
Beacon Roofing Limited
2,092
1,597
1,804
10,770
1,365
E. T. Clay Products Limited
-
Other business
combinations
2,146
-
-
-
-
-
1,043
82
47
26
60
2,352
178
80
111
(1,177)
(124)
100
(9,221)
812
1,310
124
-
(175)
(500)
-
-
-
(808)
962
1,324
1,464
3,901
2,355
2,433
1,655
During the year, a gain of £9,221,000 was recognised in respect of HBS NE Limited. Upon acquisition, significant growth was forecast with an
anticipated increase in revenues and profits due to the introduction of Part L and Part S renewable energy legislation, which requires new homes
within the UK to reduce their carbon footprint.
The application of this legislation by housebuilders has taken longer than initially anticipated. This, together with a forecast slowdown of the
housing market compared to prior years, is expected to delay the period over which HBS NE will benefit from the new legislation and achieve the
forecast growth. As a result, an element of the projected future growth is now expected to fall outside of the performance period under which the
contingent consideration payable is assessed.
In the case of U Plastics Limited, focus has continued to be on the acquisition and opening of additional branches. Profit levels achieved in the
period immediately following acquisition have therefore not been as high as originally anticipated due to the timing of development and opening of
these branches. As such, there has been a fair value gain of £1,177,000 recognised in the year.
Beacon Roofing Limited has performed well following acquisition, with results exceeding initial expectations. During the year, the company gained
new business from a competitor that entered administration which has contributed to their strong performance. Consequently, the contingent
consideration expected to be payable in relation to this acquisition is expected to increase, resulting in a fair value loss of £812,000.
The fair value loss for E. T. Clay Products Limited of £1,310,000 has arisen as a result of forecast results at the year end, from which the year-end
expected contingent consideration payable has been derived, exceeding the initial expectations on acquisition. The company was acquired on 30
September 2022, when the economic environment was particularly volatile with high inflation and interest rates on the rise. In the second half of the
financial year, whilst interest rates have continued to rise, inflation has started to fall and economic conditions stabilise, with the expectation that
any recession or downturn in the UK would not be as severe as originally thought.
Other fair value gains and losses in the year also reflect changes in performance and/ or anticipated profits compared to those originally forecast at
the end of the prior year or on acquisition.
A sensitivity in respect of the inputs into the discounted cash flow model, determining the contingent consideration, is outlined in note 35.
102
Brickability Group Plc Annual Report & Accounts 2022/23 2023
£’000
261
(60)
123
324
2023
£’000
123
-
123
2022
£’000
221
(15)
55
261
2022
£’000
55
-
55
23. Associates
At the reporting date, the Group had the following associated undertaking, which is included in the consolidated financial statements using the
equity method:
Country of operation
and incorporation
England and Wales
Class of
share held
Ordinary
Proportion of shares held
50%
Associate
Apex Brickcutters Limited
Interest in associates
At 1 April
Dividends received from associates
Share of profit
At 31 March
Aggregate information of associates that are not individually material
Group’s share of profit from continuing operations
Group’s share of other comprehensive income
Group’s share of total comprehensive income
Investments in associates are not attributed to the Group’s reportable segments. No impairment loss has been recognised in either the current or prior
year.
24. Joint Ventures
At the reporting date, the Group had the following associated undertaking, which is included in the consolidated financial statements using the
equity method:
Joint Venture
Schermbecker Building Products GmbH
Interest in joint ventures
At 1 April
Additions
Share of loss
At 31 March
Country of operation
and incorporation
Germany
Class of
share held
Ordinary
Proportion of shares held
50%
2023
£’000
279
442
(721)
-
2022
£’000
-
428
(149)
279
During the prior year, the Group acquired 50% of the share capital in Schermbecker Building Products GmbH, a tile manufacturer in Germany. The
joint venture company was not fully trading at the reporting date and incurred only a nominal level of set up costs in the prior year. It was therefore
not considered material to the group.
The Group made a further capital investment of €500,000, equating to £442,000, during the year.
The Group also issued a loan of €3,450,000 to the joint venture, which equated to a balance of £3,033,000 at the year end (note 27). The loan
is repayable by 30 June 2025 and carries interest, payable monthly, at a rate of 3% above the Bank of England base rate.
The Group has performed an ECL review in accordance with IFRS 9 and carried out an impairment review on its investment in the joint venture.
The joint venture’s performance has been below that initially expected due to delays in becoming fully operational as a result of increased gas
prices in Europe and delays in obtaining necessary plant and machinery to facilitate tile production. The joint venture is, however, expected to trade
profitably in the near future.
103
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
24. Joint Ventures (continued)
Summarised financial information in relation to the joint venture is presented below:
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Included in the above amounts are:
Cash and cash equivalents
Current financial liabilities (excluding trade and other payables and provisions)
Non-current financial liabilities (excluding trade and other payables and provisions)
Net (liabilities)/assets (100%)
Group share of net (liabilities)/assets (50%)
Year ended 31 March
Revenue
Loss from continuing operations
Post-tax profit or loss from discontinued operations
Other comprehensive income
Total comprehensive loss
Group share of total comprehensive loss (50%)
Dividends received by Group from joint venture
Included in the above amounts are:
Depreciation and amortisation
Interest income
Interest expense
Income tax expense
Reconciliation between above summarised financial information and the carrying amount of
investments in equity accounted joint ventures
Net (liabilities)/assets of joint venture
Group's share of net (liabilities)/assets
Group's share of loss not recognised
Cumulative effect of foreign exchange translation
Carrying amount of investment in joint venture
104
2023
£’000
2,586
2,732
2,575
3,033
382
-
3,033
(290)
(145)
4,487
(1,699)
-
-
(1,699)
(849)
-
196
-
165
1
2023
£’000
(290)
(145)
128
17
-
2022
£’000
809
1,355
1,619
-
120
-
-
544
272
84
(297)
-
-
(297)
(149)
-
31
-
-
-
2022
£’000
544
272
-
7
279
Brickability Group Plc Annual Report & Accounts 2022/23 25. Investments
Investments in equity instruments at fair value through other comprehensive income
Non-current
At 1 April
Change in fair value recognised in OCI
At 31 March
2023
£’000
178
10
188
2022
£’000
125
53
178
At the year end, the Group held an investment of 14.46% (2022: 12.5%) in Lendwell Holdings Limited. The change in shareholding percentage
follows Lendwell Holdings buying back a number of shares held by other investors.
The equity investments are not held for trading and thus the Group made an irrevocable election to classify the equity instruments at fair value
through other comprehensive income as it is considered more appropriate for this nature of investment.
The fair value is based on the Group’s share of the net assets of the entity in which it has the investment, under a cost approach. The investment is in
an unquoted entity but the fair value of the assets and liabilities are not expected to be significantly different to the carrying value. As the net asset
value is observable, it is considered to be at level 2 of the fair value hierarchy.
Since the year end, the Group agreed to sell its share of Lendwell Holdings to the majority shareholder (see note 41). The amount recovered from
this transaction is consistent with the carrying value of the investment.
26. Inventories
Goods for resale
27. Trade and other receivables
Current
Trade receivables
Less allowance for expected credit loss
Amounts owed by group undertakings
Prepayments and accrued income
Other receivables
Non-current
Trade receivables
Loan to joint venture (note 24)
Amounts owed by group undertakings
Group
Company
2022
£’000
28,120
2023
£’000
-
Group
Company
2022
£’000
123,263
(854)
122,409
-
6,242
2,551
131,202
1,023
-
-
1,023
132,225
2023
£’000
-
-
-
1,893
9
-
1,902
-
-
153,527
153,527
155,429
2022
£’000
-
2022
£’000
-
-
-
3,066
-
105
3,171
-
-
116,883
116,883
120,054
2023
£’000
33,159
2023
£’000
118,598
(1,699)
116,899
-
5,092
3,612
125,603
578
3,033
-
3,611
129,214
Included within Prepayments and accrued income for the Group is an amount of £768,000 (2022: £1,987,010) in relation to supplier rebates
receivable at the year end.
Non-current trade receivables for the Group relate to retentions payable after one year, in connection with contracting services.
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 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.
105
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
27. Trade and other receivables (continued)
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. 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
re-assessed.
The Group’s ECL rate has increased due to there being greater uncertainty in the market, following an increase in inflation and interest rates, which
have a subsequent impact on mortgages and the construction and housebuilding sectors. The forward-looking estimates applied have considered the
ongoing impact of economic challenges and the potential future risk of loss, also taking into account any known cases of default that have occurred
since the 2 year period on which the historical rate is initially calculated.
The Group maintains credit insurance for its main customer accounts within the Bricks and Building Materials division, which will mitigate some of this
risk. Details of the Group’s credit exposure are included in note 35.
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.
31-Mar-23
Expected credit loss rate
Gross carrying amount
Expected credit loss
31-Mar-22
Expected credit loss rate
Gross carrying amount
Expected credit loss
Trade Receivables
Days past due
< 30 days
£’000
30-60 days
£’000
0.51%
35,829
184
1.44%
5,359
77
61-90 days
£’000
24.83%
1,164
289
Trade Receivables
Days past due
< 30 days
£’000
30-60 days
£’000
61-90 days
£’000
0.10%
39,465
38
0.92%
6,077
56
8.26%
2204
182
>91 days
£’000
14.35%
6,361
913
>91 days
£’000
15.69%
3,371
529
Current
£’000
0.33%
70,463
236
Current
£’000
0.07%
73,169
49
Movement in the allowance for expected credit losses
Balance at the beginning of the year
Increase in loss allowance arising from acquisitions
Impairment losses recognised
Amounts written off as uncollectible
28. Cash and cash equivalents
2023
£’000
854
12
1,611
(778)
1,699
Cash and cash equivalents
Group
Company
2023
£’000
21,645
2022
£’000
25,028
2023
£’000
-
Total
£’000
119,176
1,699
Total
£’000
124,286
854
2022
£’000
358
402
450
(356)
854
2022
£’000
372
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.
106
FINANCIAL STATEMENTSBrickability Group Plc Annual Report & Accounts 2022/23 29. Trade and other payables
Group
Company
Current
Trade payables
Amounts owed to group undertakings
Accruals and deferred income
Other taxation and social security
Deferred and contingent consideration
Other payables
Non-current
Accruals and deferred income
Deferred and contingent consideration
Other payables
2023
£’000
83,262
-
22,121
9,852
7,762
8,422
131,419
191
8,647
754
9,592
141,011
2022
(Restated)
£’000
92,839
-
24,378
9,810
6,544
6,475
140,046
342
17,568
-
17,910
157,956
2023
£’000
-
45,294
576
22
1,531
4,333
51,756
67
-
-
67
2022
£’000
6
10,926
1,122
-
1,563
4,333
17,950
108
-
-
108
51,823
18,058
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 days. The Directors consider that the
carrying amount of trade payables approximates to their fair value.
30. Loans and borrowings
Current
Overdrafts
Non-current
Bank loans
Total loans and borrowings
Group
Company
2023
£’000
12,624
12,624
16,800
16,800
29,424
2022
£’000
-
-
24,240
24,240
24,240
2023
£’000
6,885
6,885
16,800
16,800
23,685
2022
£’000
-
-
24,240
24,240
24,240
The Directors consider that the carrying amount of loans and borrowings approximates to their fair value. Non-current bank loans comprise a
principal loan value of £17,000,000 (2022: £24,600,000) less arrangement fees of £200,000 (2022: £360,000), which are amortised over the
term of the loan.
The Group has a revolving credit facility of £60,000,000, including an ancillary carve out of a £5,000,000 overdraft, which runs to December
2024. The revolving facility bears interest at a variable rate based on the SONIA. At the reporting date, interest was charged at a rate of 1.9%
above the adjusted SONIA interest rate benchmark.
During the year, the Group entered into a notional pool agreement, whereby certain cash balances within the Group are entitled to be offset,
providing the overall overdrawn balance does not exceed the £5,000,000 facility limit. The Company’s overdraft balance at the year-end is a result
of the timing of cash transfers within the Group and funds being transferred from the Group’s central facility.
The bank loans are secured by a fixed charge over the Group’s properties 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 certain trading subsidiaries.
107
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
31. Leases
Group as lessee
Right of use assets
Cost
At 1 April 2021
Additions
Acquisition through business combinations
Disposals
At 31 March 2022
Additions
Acquisition through business combinations
Transferred to property, plant and equipment
Disposals
At 31 March 2023
Depreciation
At 1 April 2021
Charge for the year
Depreciation on disposals
At 31 March 2022
Charge for the year
Transferred to property, plant and equipment
Depreciation on disposals
At 31 March 2023
Carrying value
At 31 March 2023
At 31 March 2022
Land and buildings
£’000
Plant and vehicles
£’000
Equipment
£’000
7,192
387
3,031
(94)
10,516
6,227
1,016
-
(1,531)
16,228
1,460
1,024
(5)
2,479
1,693
-
(1,031)
3,141
13,087
8,037
2,637
2,939
79
(83)
5,572
2,630
110
(35)
(912)
7,365
533
1,080
(83)
1,530
1,358
(20)
(838)
2,030
5,335
4,042
181
6
-
-
187
102
-
-
(6)
283
72
32
-
104
50
-
(2)
152
131
83
Total
£’000
10,010
3,332
3,110
(177)
16,275
8,959
1,126
(35)
(2,449)
23,876
2,065
2,136
(88)
4,113
3,101
(20)
(1,871)
5,323
18,553
12,162
108
Brickability Group Plc Annual Report & Accounts 2022/23 Lease liabilities
At 1 April 2021
Additions
Acquisition through business combinations
Interest expense
Lease payments
Foreign exchange losses
Disposals
At 31 March 2022
Additions
Acquisition through business combinations
Interest expense
Lease payments
Foreign exchange losses
Disposals
At 31 March 2023
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
6,105
387
3,175
375
(1,395)
-
(94)
8,553
2,974
1,016
441
(1,793)
-
(530)
10,661
2,077
2,939
80
151
(1,204)
(50)
-
3,993
2,630
110
221
(1,610)
123
(75)
5,392
111
6
-
6
(36)
-
-
87
102
-
13
(63)
-
-
139
2023
£’000
3,225
7,668
5,299
16,192
Total
£’000
8,293
3,332
3,255
532
(2,635)
(50)
(94)
12,633
5,706
1,126
675
(3,466)
123
(605)
16,192
2022
£’000
2,216
5,512
4,905
12,633
The undiscounted maturity analysis in respect of lease payments is disclosed in note 35.
Included within administration expenses within the Consolidated Statement of Profit or Loss and Other Comprehensive Income is an amount of
£213,000 (2022: £167,000) in respect of short-term leases and an amount of £15,000 (2022: £8,000) 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.
109
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
31. Leases (continued)
Company as lessee
Right of use assets
Cost
At 1 April 2021 and 31 March 2022
Additions
At 31 March 2023
Depreciation
At 1 April 2021 and 31 March 2022
Charge for the year
At 31 March 2023
Carrying value
At 31 March 2023
At 31 March 2022
Land and
buildings
£’000
-
2,525
2,525
-
2
2
2,523
-
The Company’s right of use asset relates to a long leasehold property for which a negligible fee is payable annually, if requested. It is not expected
that any lease payments will be made in respect of the long leasehold property and thus there is no lease liability associated with the right of use
asset.
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 freehold and leasehold property.
Rental income on operating leases recognised in the Statement of Profit or Loss and Other Comprehensive Income is as follows:
Rental income
2023
£’000
124
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
2023
£’000
102
158
260
2022
£’000
127
2022
£’000
109
252
361
The Company did not have any formal non-cancellable operating lease arrangements in place at the reporting date, with rent charged to
subsidiaries during the year on a rolling basis.
110
Brickability Group Plc Annual Report & Accounts 2022/23 32. Provisions
Group
At 1 April 2021
Additions
Arising through business combinations
Utilised in the year
Unused amounts reversed
At 31 March 2022
Additions
Arising through business combinations
Utilised in the year
Unused amounts reversed
At 31 March 2023
Defect provisions
£’000
Dilapidation
provisions
£’000
1,247
75
76
(20)
(119)
1,259
26
-
(49)
(68)
1,168
-
-
469
-
-
469
745
32
(50)
-
1,196
Total
£’000
1,247
75
545
(20)
(119)
1,728
771
32
(99)
(68)
2,364
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 the estimated cost to rectify potential claims as a proportion of sales, applied to sales in the previous 10 years. The rectification cost 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. 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.
111
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
33. 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:
Group
At 1 April 2021
(Charged)/Credited to profit or loss
Credited to other comprehensive income
Credited directly to equity
Acquired through business combinations (Restated:
note 22)
At 31 March 2022 (As restated)
(Charged)/Credited to profit or loss
Credited to other comprehensive income
Credited directly to equity
Acquired through business combinations
At 31 March 2023
Accelerated tax
depreciation
£’000
Acquired
intangibles
(Restated)
£’000
Other temporary
differences
£’000
(145)
(195)
-
-
(214)
(554)
(51)
-
-
(23)
(628)
(5,110)
45
-
-
(12,837)
(17,902)
1,596
-
-
(1,647)
(17,953)
52
491
374
491
(1,054)
354
255
(11)
(197)
(64)
337
Total
(Restated)
£’000
(5,203)
341
374
491
(14,105)
(18,102)
1,800
(11)
(197)
(1,734)
(18,244)
The credit to the consolidated profit or loss account in the prior year, of £341,000, includes a charge of £1,211,000 following the announcement
that the main rate of corporation tax in the United Kingdom would increase from 19% to 25%, with effect from April 2023. As the rate change was
substantively enacted by 31 March 2022, deferred tax assets and liabilities, previously recognised at 19%, were remeasured at 25%.
Company
At 1 April 2021
Credited to profit or loss
Credited directly to equity
At 31 March 2022
Credited to profit or loss
Credited directly to equity
At 31 March 2023
Other temporary
differences
£’000
-
101
85
186
179
(6)
359
Deferred tax assets and liabilities are presented in the Consolidated Balance Sheet and Company Balance Sheet as follows:
Deferred tax assets
Deferred tax liabilities
Group
Company
2023
£’000
-
(18,244)
(18,244)
2022
(Restated)
£’000
-
(18,102)
(18,102)
2023
£’000
359
-
359
Total
£’000
-
101
85
186
179
(6)
359
2022
£’000
186
-
186
At the reporting date, the Group had no unused tax losses (2022: £nil), available for offset against future profits, where deferred tax assets have
not been recognised.
112
Brickability Group Plc Annual Report & Accounts 2022/23 113
34. PensionsDefined contribution plans The total expense recognised in profit or loss in relation to contributions payable under defined contribution pension plans is £1,200,000 (2022: £1,024,000).At the reporting date, contributions of £192,000 (2022: £104,000) due in respect of the reporting period had not yet been paid over to the pension provider.Defined benefit plansWhen the Group acquired Taylor Maxwell Group (2017) Limited on 30 June 2021, the net assets acquired included the Taylor Maxwell Group Limited Pension and Assurance Scheme, which is funded by the payment of contributions to a separately administered trust fund and provides both defined benefit and defined contribution pension benefits to members. The defined benefit pension scheme is closed to future accrual. Pension benefits are related to the members’ final salary at retirement (or earlier date of leaving or death) and their length of service.The scheme is a registered scheme under UK legislation and is subject to scheme funding requirements. It was established under trust and is governed by the scheme’s Third Definitive Trust Deed and Rules, dated 20 September 2016. The trustees are responsible for the operation and governance of the scheme, including making decisions regarding the scheme’s funding and investment strategy, in conjunction with the Group.During the year, the Group made contributions of £nil (2022 - £nil) to the scheme. Contributions in the next year are also expected to be £nil. The most recent actuarial valuation was conducted as at 31 March 2018. On 7 July 2021, an insurance policy was purchased via the scheme assets with the intention of meeting future benefits payable and reducing the risk of additional funding from the Group.A full buy-out process commenced in order to completely transfer the risk associated with the scheme to an insurer. This process was ongoing throughout the year and is substantially complete at the time of approving these financial statements. The process is expected to be finalised and the pension scheme wound up within the financial year ending 31 March 2024, at which point the scheme liabilities and associated assets will be derecognised and the residual surplus repaid net of any final expenses, which are expected to be immaterial. A full actuarial valuation has been carried out at 31 March 2023, based on scheme membership data as at 1 October 2022, by a qualified independent actuary. Scheme invested assets are stated at their current bid price at 31 March 2023.The principal assumptions used for the purposes of the actuarial valuations, on acquisition and at the reporting date, were as follows:20232022Discount rate4.80%2.60%Inflation rate (CPI)3.00%3.60%Pension increases (Post 1988 GMP)2.60%2.80%Pension increases (Post 1997 pension)3.00%3.60%Longevity at retirement age for current pensionersMale 22.1 years 22.0 yearsFemale 24.4 years 24.3 yearsLongevity at retirement age for future pensionersMale 23.4 years 23.4 yearsFemale 25.8 years 25.8 yearsAmounts recognised in profit or loss in respect of the defined benefit plan are as follows:2023£’0002022 £’000Service cost 196 140 Net interest expense(18)(36) Included in profit or loss 178 104 The service cost has been included in profit or loss within administrative expenses and the net interest expense within other interest receivable (note 11). The remeasurement of the net defined benefit asset is included in other comprehensive income.Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
34. Pensions (continued)
Amounts recognised in other comprehensive income, in respect of the defined benefit plan, are as follows:
Re-measurement (gain)/loss arising from:
Financial assumptions
Experience assumptions
Return on assets, excluding interest income
Included in other comprehensive income/(loss)
Reconciliation of defined benefit obligation and fair value of scheme assets
2023
£’000
(1,974)
167
1,764
(43)
2022
£’000
(637)
62
2,545
1,970
Defined benefit
obligation
£’000
Fair value of
scheme assets
£’000
Net defined
scheme asset
£’000
At 1 April 2021
Acquired through business combinations
Interest cost
Net re-measurement gains - financial
Net re-measurement losses - experience
Return on assets, excluding interest income
Benefits paid
Scheme administrative cost
At 31 March 2022
Interest cost
Net re-measurement gains - financial
Net re-measurement losses - experience
Return on assets, excluding interest income
Benefits paid
Scheme administrative cost
At 31 March 2023
The weighted average duration of the scheme is 9.3 years (2022: 11.3 years).
Disaggregation of defined benefit scheme assets
The fair value of the scheme assets is analysed as follows:
Cash fund and net current assets
Insured annuities
Fair value of scheme assets
-
(10,210)
(127)
637
(62)
-
417
-
(9,345)
(236)
1,974
(167)
-
522
-
(7,252)
-
13,065
163
-
-
(2,545)
(417)
(140)
10,126
254
-
-
(1,764)
(522)
(196)
7,898
2023
£’000
852
7,046
7,898
-
2,855
36
637
(62)
(2,545)
-
(140)
781
18
1,974
(167)
(1,764)
-
(196)
646
2022
£’000
980
9,146
10,126
The scheme assets do not include any of the Group’s own financial instruments or any property occupied by the Group.
114
Brickability Group Plc Annual Report & Accounts 2022/23 Risks
The scheme exposes the Group to actuarial risk, such as market (investment) risk, interest rate risk, inflation risk, currency risk and longevity risk.
The key risks are considered to be life expectancy and inflation risk. The scheme’s obligation is to provide a pension for the life of the member, As the
life expectancy increases, the value of the scheme’s liabilities also increase. The benefit obligations are also linked to inflation. Higher inflation would
therefore result in an increase in the scheme’s liabilities.
However, following the purchase of a buy-in insurance policy, many of the risks associated with future pension obligations are transferred to the
insurer under the policy. The scheme does not expose the Group to any unusual scheme specific or group specific risks.
The value of the insured annuity policy is expected to equal the value of the liabilities, excluding any additional liability that may arise from
amending benefits for the impact of the recent Lloyds Banking Group high court ruling on GMP equalisation. The insured annuity policy therefore
provides a high level of protection against interest, inflation and mortality risks associated with the benefits. The cash holding is expected to be
sufficient to meet any additional GMP equalisation liabilities and future expenses of running the scheme.
Sensitivity
A sensitivity analysis has been determined based on reasonably possible changes the discount rate, rate of inflation (CPI) and life expectancy, with
all other variables held constant. Increases in pension payments are derived from the assumed inflation rate.
If the discount rate were to decrease by 0.25%, the defined benefit scheme obligation would increase by £168,000 (2022: £266,000). If the
rate of inflation (CPI) were to increase by 0.25%, the defined benefit scheme obligation would increase by £75,000 (2022: £111,000). If the life
expectancy were to increase by 1 year, the defined benefit scheme obligation would increase by £281,000 (2022: £437,000) at the reporting date.
35. Financial instruments
The Group has the following financial assets and liabilities:
Financial assets
Financial assets measured at amortised cost
Cash and cash equivalents (note 28)
Trade and other receivables (note 27)
Total financial assets
Financial liabilities
Financial liabilities measured at amortised cost
Trade and other payables (note 29)
Loans and borrowings
Lease liabilities
Financial liabilities measured at fair value through profit or loss
Contingent consideration
Total financial liabilities
2023
£’000
21,645
124,122
145,767
2023
£’000
117,067
29,424
16,192
162,683
14,093
14,093
176,776
2022
£’000
25,028
125,983
151,011
2022
(Restated)
£’000
128,372
24,240
12,633
165,245
19,581
19,581
184,826
115
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
35. Financial instruments (continued)
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, deferred consideration 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 30.
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 2023 and 31 March 2022 are shown below:
Financial
instrument
Contingent
Consideration
in a business
combination
(note 22)
Valuation
technique
Significant
Unobservable inputs
Range/
estimate
Sensitivity of the input to fair value
Present value
of future cash
flows
Assumed
probability-adjusted
EBITDA of acquired
entities.
Discount rate
2023:
£406,000 –
£17,702,000
2022:
£485,000 –
£55,468,000
2023: 1.7% - 23.6%
2022: 1.7% - 23.6%
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 £706,000. A 10% decrease in EBITDA would result in a
decrease in the liability of £706,000.
(2022: increase of £1,982,000 and decrease of £2,282,000)
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 £372,000. A 2% decrease in the rate would result
in an increase in the liability of £393,000.
(2022: decrease of £794,000 and increase of £730,000)
Reconciliation of level 3 fair value measurements of financial instruments
At 1 April 2021
Additions through business combinations (Restated: note 22)
Finance expense charged to profit or loss
Settlement
Fair value gains recognised in profit or loss
At 31 March 202 (As restated)
Additions through business combinations
Finance expense charged to profit or loss
Settlement
Fair value losses recognised in profit or loss
At 31 March 2023
Contingent
consideration
£’000
(3,442)
(14,001)
(900)
485
(1,916)
(19,774)
(1,125)
(2,853)
1,483
8,176
(14,093)
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.
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Brickability Group Plc Annual Report & Accounts 2022/23 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.
In the prior year, the Group had a mix of fixed and floating rate borrowings and used an interest rate swap 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.
Sterling
2023
2022
Change in rate
+1.0%
-1.0%
Effect on profit
before tax
£’000
(170)
170
Change
in rate
+1.0%
-1.0%
Effect on profit
before tax
£’000
(246)
246
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 manage 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
Total
Assets
Liabilities
2023
£’000
1,317
173
1,490
2022
£’000
740
100
840
2023
£’000
6,951
163
7,114
2022
£’000
7,767
3
7,770
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 and USD 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.
Euro
USD
2023
2022
Effect on profit
and equity
before tax
£’000
512
(626)
(1)
1
Change in rate
10%
-10%
10%
-10%
Change in rate
10%
-10%
10%
-10%
Effect on profit
and equity
before tax
£’000
639
(781)
9
(11)
The change in exchange rate is based on management’s assessment of the reasonably possible change in foreign exchange rates.
117
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
35. Financial instruments (continued)
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.
31-Mar-23
Non-derivative financial liabilities
Trade and other payables
Lease liabilities
Loans and borrowings
Total financial liabilities
31-Mar-22
Non-derivative financial liabilities
Trade and other payables (Restated: note 22)
Lease liabilities
Bank loans
Total financial liabilities (As restated)
< 1 year
£’000
121,815
3,906
12,624
138,345
< 1 year
£’000
130,380
2,787
-
133,167
1 – 5 years
£’000
> 5 years
£’000
13,980
9,556
18,635
42,171
1 – 5 years
(Restated)
£’000
30,213
6,981
24,240
61,434
-
6,570
-
6,570
> 5 years
£’000
-
6,225
-
6,225
Total
£’000
135,795
20,032
31,259
187,086
Total
(Restated)
£’000
160,593
15,993
24,240
200,826
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 loans and borrowings and
lease liabilities.
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
Net debt to equity ratio
2023
£’000
45,616
(21,645)
23,971
2022
£’000
36,873
(25,028)
11,845
175,378
154,484
14%
8%
Debt is defined as short and long-term loans and borrowings and lease liabilities, as detailed in notes 30 and 31. Equity includes all capital and reserves.
118
Brickability Group Plc Annual Report & Accounts 2022/23
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 are outlined in note 27.
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.
36. Share capital
Group and Company
2023
2022
Number
£’000
Number
£’000
Issued and fully paid - Ordinary shares of £0.01
each
At 1 April
Issued during the year
At 31 March
298,534,802
1,751,765
300,286,567
2,985
18
3,003
230,458,821
68,075,981
298,534,802
2,305
680
2,985
During the year, a total of 1,751,765 (2022: 280,254) ordinary shares of £0.01 each were issued upon the exercising of share options, for
consideration of £719,000 (2022: £15,000).
Any profits distributed shall be applied pari passu amongst the holders of the ordinary shares. In the event of liquidation, the surplus assets shall be
applied pari passu amongst the holders of the ordinary shares.
The Company has share option schemes under which options have been granted to certain employees to acquire ordinary shares. Further details
are included in note 38.
37. 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 38.
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 includes £1,245,000 in respect of a difference between the carrying value of assets and
liabilities acquired and the value of consideration transferred in a historical group re-organisation. £9,901,000 is also included in respect of merger
relief applied when shares were issued at a premium in exchange for obtaining the shareholding of Taylor Maxwell Group (2017) Limited in the
prior year.
Within the Company Balance Sheet, the merger reserve represents merger relief arising on historical acquisitions following a share for share
exchange and the issue of shares as consideration.
119
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
38. Share-based payments
Equity settled share option plans
The Company operates a Company Share Option Plan (CSOP) and Long-term Incentive Plan (LTIP) 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, unless considered a ‘good leaver’.
Some CSOP awards are subject to performance based vesting conditions dependent on total shareholder return (TSR) and adjusted EBITDA, with each
award split equally between the two performance conditions. Vesting occurs on a straight-line basis on achieving 18% (equivalent to 6% per annum) to
30% (equivalent to 10% per annum) of the relevant performance period. There is no vesting is the relevant target is not met but a 25% vesting if the initial
18% hurdle is met, with a proportionate additional vesting of up to 100% at the 30% threshold being met.
Details of the CSOP share options outstanding during the year are as follows:
Outstanding at 1 April
Granted during the year
Forfeited during the year
Exercised during the year
Lapsed during the year
Outstanding at 31 March
Exercisable at 31 March
2023
2022
Number of share
options
Weighted average
exercise price
£
Number of share
options
Weighted average
exercise price
£
3,382,660
-
84,461
(1,751,765)
(4,627)
1,710,729
1,358,383
0.48
-
0.41
0.41
0.41
0.54
0.41
3,115,629
352,346
(50,145)
(31,160)
(4,010)
3,382,660
90,524
0.41
1.05
0.41
0.41
0.41
0.48
0.41
The options outstanding at the reporting date have an exercise price ranging between £0.41 and £1.05. The options have a remaining weighted
average contractual life of 6.8 years (2022: 7.58 years).
No options were granted under the CSOP scheme during the year. The aggregate of the estimated fair value of options granted in the prior year
was £79,000. The fair value of awards granted in the prior year, subject a TSR performance condition, was determined using a Monte Carlo
model. The fair value of awards subject to an EBITDA performance condition was determined using a Black-Scholes model. The inputs to these
models were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Option life
Expected dividend yield
Risk free interest rate
2023
-
-
-
-
-
-
2022
£1.05
£1.05
38.5%
10 years
3.5%
1.2%
Long Term Investment Plan (LTIP)
Options granted under the LTIP scheme are exercisable at the nominal price of £0.01 and, mostly, have performance based vesting conditions
dependent on total shareholder return (TSR) and adjusted EBITDA, with each award split equally between the two performance conditions. Vesting
occurs on a straight-line basis on achieving 18% (equivalent to 6% per annum) to 30% (equivalent to 10% annually) of the relevant performance
condition over the performance period. There is no vesting if the relevant target is not met but a 50% or 25% vesting if the initial 18% hurdle is met with
a proportionate additional vesting of up to 100% at the 30% threshold being met. Some awards granted in the year are only subject to service-related
vesting conditions and not TSR and EBITDA performance criteria.
Options are forfeited if the employee leaves employment before the options vest, unless considered a ‘good leaver’.
120
Brickability Group Plc Annual Report & Accounts 2022/23 Details of the share options outstanding during the year are as follows:
2023
2022
Number of share
options
Weighted average
exercise price
£
6,845,054
4,037,124
(124,549)
-
10,757,629
-
0.01
0.01
0.01
0.01
0.01
-
Number
of share
options
4,862,015
2,599,248
(367,114)
(249,095)
6,845,054
-
Weighted
average
exercise price
£
0.01
0.01
0.01
0.01
0.01
-
Outstanding at 1 April
Granted during the year
Forfeited during the year
Exercised during the year
Outstanding at 31 March
Exercisable at 31 March
The options outstanding at the reporting date have an exercise price of £0.01 and a remaining weighted average contractual life of 8.56 years
(2022: 8.87 years).
Options were granted under the LTIP scheme on 27 October 2022. Those issued to senior management (‘Management options’) are subject to
a two-year holding period in addition to the performance criteria outlined above. Awards to other staff do not have performance based vesting
conditions but do require that the employee remains employed with the Group for a period of three years. The aggregate of the estimated fair value
of the options granted during the year is £2,030,000 (2022: £1,705,000). For options granted during the year, the fair value in connection with the
TSR awards was determined using a Monte Carlo model. The fair value of the EBITDA awards and service only awards was determined using a
Black-Scholes model. The weighted average inputs to these models are as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Option life
Expected dividend yield
Risk free interest rate
Adjustment for holding period
2023
£0.74
£0.01
32.4%
10 years
3.5%
3.2%
10.0%
2022
£1.04
£0.01
39.1%
10 years
3.5%
1.1%
10%
121
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
39. Notes to the statement of cash flows
Cash and cash equivalents
Cash and cash equivalents within the Consolidated Statement of Cash Flows comprise:
Cash and bank balances (note 28)
Bank overdrafts (note 30)
Cash and cash equivalents
2023
£’000
21,645
(12,624)
9,021
2022
£’000
25,028
-
25,028
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.
1 April 2022
£’000
Financing
cash flows (1)
£’000
24,240
12,633
(7,600)
(2,791)
New leases
£’000
-
5,706
23,919
(3,499)
-
-
1,125
1,318
Non-cash changes
Acquisition of
subsidiaries
£’000
Changes in
fair value
£’000
Other
changes(2)
£’000
-
-
160
(481)
31 March
2023
£’000
16,800
16,192
(8,176)
2,846
16,408
60,792
(13,890)
5,706
2,443
(8,176)
2,525
49,400
Bank borrowings (note 30)
Lease liabilities (note 31)
Deferred and contingent
consideration
Total liabilities from
financing activities
Non-cash changes
1 April 2021
£’000
Financing
cash flows (1)
£’000
New leases
£’000
Acquisition of
subsidiaries
£’000
Changes in
fair value
£’000
Other
changes(2)
£’000
31 March
2022
£’000
Bank borrowings (note 30)
Lease liabilities (note 31)
Deferred and contingent
consideration (Restated: note 22)
Total liabilities from financing
activities (As restated)
15,750
8,293
4,524
8,325
(2,103)
(1,358)
-
3,332
-
-
3,255
18,095
28,567
4,864
3,332
21,350
-
-
1,916
1,916
165
(144)
935
956
24,240
12,633
24,112
60,985
(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, foreign currency movements and right of use lease remeasurements.
Non-cash changes in equity arising from financing activities
During the prior year, the Company issued new shares for consideration of £55,000,000. Share issue costs of £2,287,000 were incurred in
connection with the placing of these new shares, with the fees deducted from the proceeds received by the Company.
The proceeds of £52,728,000 from the issue of ordinary shares, presented in the Consolidated Statement of Cash Flows is net of the share issue
costs. The full share proceeds and share issue costs are reported separately in the Consolidated and Company Statement of Changes in Equity in
the comparative period.
122
Brickability Group Plc Annual Report & Accounts 2022/23 40. 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.
Key management personnel
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payment expense
Termination benefits
2023
£’000
6,031
80
538
-
6,649
2022
£’000
6,355
56
417
409
7,237
Key management personnel consists of members on the Board of Directors and Group’s Management Board.
During the year, the Group made sales amounting to £31,000 (2022: £12,000) to members of key management. A balance of £nil (2022: £nil)
was included within trade receivables at the reporting date, in respect of these sales.
A balance of £nil (2022: £24,000) is included in other payables in respect of a deposit paid by a member of key management.
Other related parties
Included within trade and other receivables/payables are the following amounts due from/to other related parties, at the reporting date:
Associates
Joint ventures (note 24)
Other related parties
Amounts owed by related parties
Amounts owed to related parties
2023
£’000
6
3,033
200
3,239
2022
£’000
-
-
-
-
2023
£’000
184
88
27
299
2022
£’000
104
-
-
104
Transactions undertaken between the Group and its related parties during the year were as follows:
Associates
Joint ventures
Other related parties
Sales to related parties
Purchases from related parties
2023
£’000
5
-
202
207
2022
£’000
-
-
-
-
2023
£’000
537
431
218
1,186
2022
£’000
512
-
219
731
Other related parties comprise of entities owned by Directors or key management. Sales relate to building materials. Purchases relate to rent and
administrative expenses payable.
Right of use assets in respect of properties leased from other related parties had a carrying value of £2,377,000 (2022: £407,000), while
associated lease liabilities of £2,209,000 (2022: £434,000) are included at the year end.
Company
In accordance with the exemption under FRS 101, transactions and balances with wholly owned Group members and key management personnel
are not disclosed.
At the year end, a balance of £33,000 (£nil) was due from a subsidiary that is not wholly owned within the Group.
123
Brickability Group Plc Annual Report & Accounts 2022/23STRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS FINANCIAL STATEMENTS / NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
41. Post balance sheet events
On 2 June 2023, the Group completed the acquisition of the entire share capital and 100% of the voting rights in Precision Façade Systems Ltd.
The acquisition was made in order to supplement and expand the Group’s existing product range in the cladding market.
The book value of the separable assets acquired and liabilities assumed on acquisition are estimated as follows:
Property plant and equipment
Inventory
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Total identifiable net assets
£’000
15
5
34
7
(40)
21
Due to the timing of the acquisition, a detailed assessment of the fair value of the identifiable net assets, and value of any uncollectible contractual
cash flows, has not been completed at the date of approving these financial statements.
The total consideration expected to be payable is:
Cash
Total consideration
£’000
600
600
The above consideration is subject to post completion adjustments.
It is expected that goodwill will arise on the acquisition and this will primarily comprise the strategic value of the acquisition, including the potential
for future growth within the framing market. This goodwill is not expected to be deductible for tax purposes.
Acquisition costs of £23,000, in relation to stamp duty and legal and professional fees, are estimated to be incurred in connection with this
acquisition and will be recognised in profit or loss. Due to the timing of the acquisition, not all costs have been invoiced or finalised at the time of
approving these financial statements.
On 8 June 2023, the Group completed the sale of its shares in Lendwell Holdings Limited for consideration of £188,000. There was a £nil gain or
loss on the sale of this investment in equity instruments designated as FVTOCI.
124
Brickability Group Plc Annual Report & Accounts 2022/23 Company Information
Board of Directors
Chairman
John Richards
Chief Executive Officer
Alan Simpson
Chief Financial Officer
Mike Gant
Non-Executive Directors
Clive Norman
David Simpson
Susan McErlain
Sharon Collins
Company Secretary
Prism Cosec Limited
Registered office and number
C/O Brickability Limited
South Road
Bridgend Industrial Estate
Bridgend
United Kingdom
CF31 3XG
Registered number: 11123804
Auditor
BDO LLP
Level 12, Thames Tower
Station Road
Reading
RG1 1LX
FINANCIAL CALENDAR
Annual General Meeting
Interim Report
Dividends:
Final announced
Paid
Interim announced
Paid
Registrars
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Solicitors
Addleshaw Goddard LLP
Cornerstone
107 West Regent Street
Glasgow
G2 2BA
Nominated Adviser and Broker
Cenkos Securities plc
6-8 Tokenhouse Yard
London
EC2R 7AS
Tel: +44 (0)20 7397 8900
Financial PR Advisers
Montfort Communications
2nd Floor, Berkeley Square House
Berkeley Square
Mayfair
London
W1J 6BD
Tel: +44 (0)20 3514 0897
5 September 2023
November 2023
July 2023
September 2023
November 2023
February 2024
125
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Group PLC Head Office
Brickability Group PLC
Queensgate House
Cookham Rd
Bracknell
Berkshire
RG12 1RB
Telephone
0870 143 3332
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investors@brickabilitygroupplc.com