Annual Report and Accounts 2022
DELIVERING ON
OUR COMMITMENTS
About Ibstock
Our purpose
Ibstock exists to build a better world by being at the heart
of building through our vision of enabling the construction of
homes and spaces that inspire people to work and live better.
Who we are
Ibstock is a leading manufacturer and supplier of clay, concrete
and diversified building products and solutions to the UK
construction industry with a focus on the environmental and
social impacts of our business, specialising in products and
systems for the residential building envelope and infrastructure
markets. We have been helping to shape the homes, places
and spaces of Britain since we began over 200 years ago.
What we do
Our core business focuses on the residential construction sector
and we have built strong relationships with our house builder,
developer, builders’ merchant and distributor customers
over many years. Ibstock Futures has been established to
accelerate diversified growth opportunities, to address key
construction trends of sustainability and Modern Methods of
Construction (MMC). MMC includes processes which focus on
off-site construction techniques such as mass production and
factory assembly as alternatives for traditional building.
Find out more online
www.ibstockplc.co.uk
linkedin.com/company
/ibstock-plc
Contents
34 & 50
Health and Safety
30
Our Strategy
Sustain
Driving sustainable
performance
Innovate
Market-led innovation
ESG
2030
Strategy
Grow
Well positioned to invest in
further growth projects
42
Responsible Business
Strategic Report
02
04
06
08
10
18
22
24
28
30
40
42
56
60
70
75
76
88
90
Highlights of our year
Investment Proposition
Ibstock at a Glance
Chairman’s Statement
Chief Executive Officer’s Review
People and Culture
Futures
Our Markets
Our Purpose and Business Model
Our Strategy
Our Key Performance Indicators
Responsible Business
Operations Review
Our Principal Risks and Uncertainties
Financial Review
Non-financial Information Statement
Environmental Reporting Disclosures
Section 172(1) Statement
Viability and Going Concern Statements
Introduction to Governance
Board of Directors and Company Secretary
Executive Leadership Team
Corporate Governance Statement
Governance
92
94
96
97
105 Nomination Committee Report
ESG Committee Report
108
Audit Committee Report
110
115 Directors’ Remuneration Report
135 Directors’ Report
138
Independent Auditor’s Report
Financial statements
Consolidated income statement
145
Consolidated statement of comprehensive income
146
Consolidated balance sheet
147
Consolidated statement of changes in equity
148
Consolidated cash flow statement
149
Reconciliation of changes in cash and cash
149
equivalents to movement in net debt
Company balance sheet
Company statement of changes in equity
150 Notes to the consolidated financial statements
193
194
195 Notes to the Company financial statements
199 Group five-year summary
Additional information
200 Cautionary Statement
IBC
Shareholder Information
01
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information Highlights of our year
DELIVERING
ON PROGRESS
Financial
highlights
Revenue +£104m
Statutory reported profit before tax +£40m
£513m
2021: £409m
2020: £316m
£105m
2021: £65m
2020: £(24)m
Statutory reported basic EPS +13.8p
Total dividend per share +1.3p
Adjusted EBITDA* +£37m
21.6p
2021: 7.8p
2020: (6.8)p
8.8p
2021: 7.5p
2020: 1.6p
£140m
2021: £103m
2020: £52m
2019: £122m
Adjusted EPS* +8.8p
Adjusted free cash flow* £(1)m
Net debt* +£7m
22.7p
2021: 13.9p
2020: 4.0p
£50m
2021: £51m
2020: £26m
£46m
2021: £39m
2020: £69m
Alternative Performance Measures (APMs) are described in Note 3 to the consolidated financial statements.
*
All future references to APMs within the Strategic Report and Corporate Governance section are denoted by an asterisk, unless otherwise indicated.
Project – St Hilda’s College
Ibstock Product – Ivanhoe Cream bricks.
02
Ibstock Plc Annual Report and Accounts 2022 Non-financial
highlights
Clay reserves
74m
Tonnes of consented clay reserves
See page 29
LTIFR +17% reduction
Carbon reduction metric
61%
Reduction in lost time injury frequency
rate against a 2016 baseline
2021: 44%
2020: 41%
See page 50
13%
Decrease in absolute carbon relative to 2019
baseline. The baseline was reset in 2022,
therefore no year on year comparator
See page 48
Plastic reduction
Water reduction
16%
Reduction in use of plastic packaging per
tonne of production relative to a 2019 baseline
2021: 13%
See page 53
2022 Net Promoter Score
45%
The Net Promoter Score (NPS) measures
the loyalty that exists between a company
and its customers
Share of revenue from new and sustainable
products
13%
Proportion of revenue generated from
new and sustainable products
2021: 33%
2020: 39%
See page 41
2021: 13%
2020: 11.7%
See page 52
31%
Reduction in mains water use per tonne of
production relative to 2019 baseline. The
baseline was reset in 2022, therefore no
year on year comparator
See page 49
Women in Leadership
27%
27% female representation in senior
leadership (as defined by the FTSE Women
Leaders Review) as at year end, increasing
to 29% as at the date of this report
2021: 26%
See page 51
03
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information Investment Proposition
Our compelling
investment case
A strong, profitable platform from which to grow:
invested asset base
by production capacity
of local material supply
1 Market-leading UK clay brick business
2 Significant, diversified and well
3 Clear ESG ambitions and strategy
4 High barriers to entry and security
5 Diversified concrete products division
6 Ibstock Futures growth engine focusing on
7 Excellent people with strong
8 Unrivalled UK-wide network driving
9 Structurally high EBITDA margins, robust
Read more about our Business Model on
management teams
greener footprint
balance sheet and strong cash generation
high growth areas of the construction market
pages 28-29 and Strategy on pages 30-39.
04
Ibstock Plc Annual Report and Accounts 2022 Ambition to deliver strong
growth and returns over
the period to 2026
Structural undersupply of housing stock, with continuing preference for clay brick
• Government remains committed to growing housing supply and ownership
• Strong preference for brick in low-rise residential, with increasing penetration
in mid- to high-rise
• Preference driven by aesthetic, longevity and environmental footprint
Domestic clay brick demand expected to exceed supply in short- to medium-term view
• Imports from wider catchment area fill the gap where demand outstrips capacity
in traditional markets:
– Higher transportation costs for imported brick
– Significant carbon differential increasingly driving procurement decisions
• Clear financial and environmental benefits of domestic versus imported bricks
Unrivalled asset base, range and service proposition will underpin continuing
UK market leadership
• Our focus continues to be on building quality and resilience of the business with
a clear operational strategy
• Optimise and integrate the core over time to achieve growth, margin and
return commitments
Sources of growth and margin improvement: 2022 to 2026
• Pipeline of Ibstock Futures investments
• Atlas & Aldridge (add more than 10% clay network capacity from 2024)
• Brick slips investments (producing up to 60m slips from 2025)
• Growth within Concrete from pricing, volume and cost efficiencies
• Clay volume and margin improvement
Our targets
Target to grow revenues to more than £600m
by 2026 with an ambition to grow beyond
this, representing a 50% upside from 2021.
Medium-term profitability targets:
• EBITDA margins in core clay business
of more than 35%
• Overall Group margins of at least 28%
Targeting revenues outside of traditional
clay brick to represent more than 40%of the
Group (from around 30% in 2021) by 2026.
Committed to retaining our capital
discipline with ROCE at more than 20%
in the medium-term.
“We are confident that our
strategy will deliver meaningful
growth in shareholder returns
over the medium-term.”
Joe Hudson, CEO
Revenue growth driven by
• Volume growth in existing network and our
already committed investments give us a
clear pathway to revenues above £550m
• Incremental organic and inorganic
initiatives in Ibstock Futures provide the
potential to grow beyond our £600m target
Revenue growth target
£513m
>£600m
£409m
£316m
2020
2021
2022
2026
05
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information Ibstock at a Glance
Ibstock Plc is a leading manufacturer
of clay and concrete building products
and solutions, proud to be at the heart
of building for over 200 years
Key:
I-Studio innovation centre
Manufacturing and sales locations
Key facts
200
Over 200 years of experience
c.2,300
Employees across the UK
95%
Raw materials sourced in UK
c.74m
Tonnes of consented clay reserves
No.1
Manufacturer of clay bricks
in the UK by production capacity
06
Principal products across our
two divisions, Ibstock Clay
and Ibstock Concrete, include
clay bricks, brick components,
concrete roof tiles, concrete
alternatives for stone masonry,
concrete fencing and pre-
stressed concrete products.
Our product portfolio places
us in a strong position as the
customer’s partner of choice.
lbstock Futures complements our core
business by focusing on the acceleration
of diversified growth opportunities,
particularly those addressing key construction
trends, including sustainability and the
shift towards Modern Methods of
Construction (MMC).
We are committed to being a responsible
business, with our ESG 2030 Strategy
setting out a clear pathway to address
climate change, improve lives and
manufacture materials for life.
We are passionate about providing
solutions to meet the evolving
needs of our customers and
the built environment for
the long term.
40
Manufacturing sites across the UK
300+
Different brick products
Ibstock Plc Annual Report and Accounts 2022 Our business
Our brands
Our products
Bricks and Masonry
• Facing Bricks
• Engineering Bricks
• Brick Slips
• Special Shaped Bricks
• Walling Stone
• Architectural
Masonry
• Prefabricated
Components
• Eco-habitats
• Padstones
and Lintels
Retaining Walls
• Stepoc
• Slopeloc
• Keystone
Staircases and Liftshafts
• Precast Staircases
• Lift Shafts
lbstock comprises two core business divisions,
lbstock Clay and lbstock Concrete, with lbstock
Futures established to accelerate diversified
growth opportunities, including MMC
Façade Systems
• MechSlip
• Ibstock Telling GRC
• Generix Genbrix
• Generix Lite
• Generix Infinity
• Nexus
Fencing and Landscaping
• Fence Posts
• Copings and Cappings
• Gravel Boards
• Bollards
• Balustrades
• Path Edging
• Gully Surrounds
• Urban Landscaping
Rail and Infrastructure
• Rail Troughs
• Platform Copers
• Cable Theft Protection
• Signal Bases
• Utility Ducts
• Inspection
Chambers
Roofing
• Roof Tiles
• Roof Accessories
• Chimneys
Flooring
• Beam and Block Flooring
• Insulated Flooring
• Hollowcore
• Screed Rails
Services
• Design and Technical Support
• Off-site Solutions
• Bespoke Concrete Products
• Engraving and Cutting Service
07
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information Chairman’s Statement
DELIVERING
ON OUR
COMMITMENTS
The Group has continued to deliver on its
long-term strategic commitments to sustain,
innovate and grow our business
Jonathan Nicholls
Chairman
Alongside the rest of the world, the past
year has seen the UK construction industry
dealing with challenges emanating from
the continuing war in Eastern Europe. This
has meant that the trading environment
for much of 2022 has been impacted by
unprecedentedly high energy pricing, inflation
running at its highest levels for 40 years and
rising interest rates. As a heavy user of gas in
our production process, the management of
these increased costs has called for sound and
flexible stewardship throughout the business
but has also served to highlight the need for
our business to really focus upon its journey
to become a net zero operation.
The trading environment has also significantly
impacted our employees who have seen
a dramatic increase in their costs of living
throughout the year. Ibstock reacted swiftly
to introduce a number of initiatives intended
to ease this burden for all of our employees.
Despite these challenges I am extremely
pleased that this year’s Annual Report
and Accounts demonstrates a really
strong set of results with both revenue
and profit materially ahead of the prior year.
Over the course of the year, the Group has
continued to deliver on its long-term strategic
commitments to sustain, innovate and grow
our business. This performance is a testament
to the hard work and resilience of our people
and is something which gives me a real sense
of pride and achievement.
08
Ibstock Plc Annual Report and Accounts 2022 Results
The Group delivered a strong trading
performance in 2022, with both revenue
and operating profit materially ahead
of the prior year.
Revenue of £513m was 26% up on 2021
(2021: £409m) as the Group responded well
to robust demand across its end markets.
Supply chain challenges were well managed
and the impact of inflationary pressures
on our cost base, particularly energy, was
mitigated through our well-established
dynamic commercial approach in both
the clay and concrete divisions. Adjusted
EBITDA* grew by 36% to £140 million
(2021: £103 million) and the adjusted EBITDA*
margin increased to 27.2%, compared to
25.2% in 2021 and 16.5% in 2020. Statutory
earnings per share grew by 13.8 pence to
21.6 pence (2021: 7.8 pence) reflecting the
strength of earnings in the year.
The balance sheet remains strong with
closing leverage of 0.4x net debt to EBITDA
(2021: 0.4x). This was after a £38 million
investment in growth capital and a
£30 million share buyback during the year.
The strength of the balance sheet continues
to provide Ibstock with strategic options to
invest further for growth or the ability to
return additional capital to shareholders.
Dividend
The Group’s performance, financial strength
and prospects support the Board’s decision
to recommend a final dividend of 5.5p per
share, growing the full year dividend to
8.8p per share (2021: 7.5p).
Our employees
We have continued to focus on the wellbeing
of all employees, whilst maintaining a high
quality service to our customers and delivering
positive outcomes for all our stakeholders. This
year has seen the development of our Ibstock
story which unites everyone at Ibstock in our
pride and heritage, and also captures the
importance of our ongoing evolution, a desire
to ‘Fire Up’ our organisation, and the power
of every employee playing their part. Further
information on this initiative can be found
in the People and Culture section on page 18.
We want our employees to feel part of our
business and we encouraged this by awarding
deferred shares of 500 Ibstock Plc ordinary
shares to all employees, below the Senior
Leadership Team level, in September. In
addition, we made a one-off cost of living
adjustment payment to those earning less
than £50,000 to ease the pressures caused
through increased energy pricing, interest
rates and high inflation.
As always, it is the hard work, dedication,
and efforts of those who have worked for,
and with, Ibstock over the past year that
has enabled us to deliver this strong
performance. On behalf of the Board,
I would like to express our gratitude to all
those who have contributed to this result and
for their ongoing commitment to the business.
Further information concerning engagement
with our workforce and some of our workforce
achievements during the year can be found
in the People and Culture section on pages
18 to 21.
Governance and culture
We remain committed to driving long-term
sustainable performance for the benefit
of all our stakeholders. This includes the
application of high standards of corporate
governance and making sure that these
principles are embedded into our culture.
The Responsible Business section on page 42
provides insight into how the Board engages
with all key stakeholders to understand what
matters to them, further informing its
decision-making and the actions taken as
a consequence. The Board made several
principal decisions during the year. Further
detail on decision-making can be found in
both the Section 172(1) Statement (s172(1))
on pages 88 and 89 and in the Corporate
Governance Statement on page 101. Our
full Governance section includes details of
our application of the Principles of the UK
Corporate Governance Code 2018 (The Code)
and this starts on page 92.
Diversity and Board changes
The Board had a number of discussions
regarding composition and succession during
the year under review. In view of the Group’s
overall commitment to ensuring a diverse,
fair and inclusive workforce, the Board
formalised its approach to Board diversity
in its diversity policy. Over the course of the
year, the Board has continued to oversee
management as it promotes and develops
the Group’s diversity and inclusion strategy
as well as its practical application.
With respect to Board changes, Tracey
Graham, Senior Independent Director
and Remuneration Committee Chairman,
indicated her intention to step down from the
Board at the conclusion of the forthcoming
AGM. We are well advanced in the recruitment
of her successor, and these matters are
discussed in further detail in the Nomination
Committee report on page 105.
ESG and net zero
We maintain our ambition to be the most
sustainable manufacturer of clay and concrete
products in the UK, and to lead our sector in the
disclosure and transparency of Environmental,
Social and Governance (ESG) matters. We
have invested significant capital over the last
decade on projects across the Group’s plant
network to reduce the carbon intensity of our
manufacturing processes. Further information
can be found in the Our Strategy section on
page 30.
Last year we were pleased to announce
the launch of our ESG 2030 Strategy, which
details a set of ambitious new commitments,
including a commitment to be net zero carbon
(Scope 1 and 2) by 2040. These targets are
underpinned by our industry-leading approach
to sustainable and responsible growth. Details
of our progress in the embedding of the ESG
2030 Strategy and our achievements during
2022 can be found in the Responsible Business
section on page 42 and the work of the ESG
Committee is summarised in the ESG
Committee report on page 108.
We realise that our carbon reduction journey
will not result in linear year on year progression,
and as such whilst our absolute and intensity
carbon metrics have improved since our
2019 baseline and we remain on target to
our 2040 carbon commitments, these have
declined slightly since last year. The ESG
Committee have reviewed this performance
in detail and the Group will make a concerted
effort to drive performance this year.
The Group is committed to increasing the
transparency of reporting around climate
impacts and risks, and we have made further
progress during 2022 to improve our disclosure
against the Listing Rules requirements relating
to the recommendations of the Task Force for
Climate-related Financial Disclosures (TCFD).
Further information can be found in the
Principal Risks section on page 60 and the
TCFD report on page 76.
Looking towards the future
We remain mindful of broader macroeconomic
uncertainties, particularly in light of the
ongoing tragic conflict in Ukraine. With
our strong business model, strategy and
management team, the Group remains well
placed to meet these challenges. In the year
ahead, the Board will continue to discharge its
stewardship role in supporting the long-term
success of the business.
Jonathan Nicholls
Chairman
09
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Chief Executive Officer’s Review
DELIVERING FOR
THE LONG TERM
Our strong results reflect our continued focus
on commercial and operational execution,
which has enabled the Group to deliver
significant growth and improved returns
despite a challenging backdrop
Joe Hudson
Chief Executive Officer
10
Ibstock Plc Annual Report and Accounts 2022 Introduction
This has been an outstanding year for
Ibstock, and it is pleasing to see how our
performance in 2022 reflects the significant
strategic progress we have made as a
business over the last few years. The
transformed platform of capability we now
have in place has been critical in enabling the
delivery of very strong financial performance
in the 2022 year, and I am confident that it
will underpin the continuing success of our
business over the years ahead. I am grateful
for the incredible team of people at Ibstock
who have enabled us to navigate the
challenges of recent years and emerge
stronger, whilst always retaining focus
on our longer-term goals.
Over recent years, we have made significant
investment in strategic growth, enabling us
to anticipate and respond to evolving trends
in the construction sector, and positioning
us well to maximise opportunities in a range
of emerging, fast-growing niche segments
of this market. We have also invested
consistently in our people, building strength
in our business, and creating opportunity
for all our colleagues. At the same time,
our unwavering focus on execution and
disciplined capital allocation have ensured
resilience in our performance, supporting
returns to shareholders even in the most
challenging of times.
Recent months have presented different
challenges, with macroeconomic uncertainty,
inflation and higher interest rates weighing
on the demand picture. We will face into
these challenges with the same disciplined
approach to capacity management, costs
and commercial execution to ensure we
optimise performance in the short term.
Ibstock has been, and will remain, an
extremely cash generative business, having
returned around £265 million to shareholders,
equivalent to around 68 pence per share, over
the last 7 years. We remain committed to
deploying these strong cash flows to support
both incremental investment and additional
shareholder returns over the years ahead.
Project – 79 Fitzjohn’s Avenue
Ibstock Product – Birtley Olde English Grey.
Overview
We are reporting a strong performance for
2022, with revenue and profit materially
ahead of both the prior year and pre-
pandemic comparators. Trading was
robust, supported by good commercial
and operational execution across the
business, together with strong demand
from our new build residential, Repairs,
Maintenance and Improvement (RMI),
and infrastructure customers.
The Group managed supply chain and
inflation challenges well and we continued
to price dynamically to recover cost inflation
throughout the year, delivering a 26%
increase in revenues with volumes broadly
in line with the prior year.
Market conditions were buoyant for most of
the year, although we experienced lower sales
volumes in the final quarter, reflecting a more
cautious demand environment. Industry brick
inventories remained at historically low levels,
with the market having to rely on imported
bricks to satisfy around 23% of delivered
volumes due to the constraints on UK capacity.
The more subdued demand conditions
observed in the final quarter of 2022
have continued in the early weeks of 2023
although we anticipate this to improve as
the year progresses, supported by sequential
demand improvement. The strength of our
balance sheet provides resilience as we trade
through these more challenging conditions,
and our focus will be on cost and capacity
management, alongside dynamic commercial
execution, to ensure that we optimise
near-term performance regardless of market
conditions. With the inherent advantages
in our domestic business model, we are well
positioned to displace imported products
if overall demand remains at lower levels
for any sustained period.
On a medium and longer-term view, the UK
residential construction markets we serve
remain underpinned by positive structural
growth drivers, including projected population
growth, a continuing shortage of housing and
supportive government policy. We are also
well positioned to capitalise upon opportunities
across the diversified markets in which we
Our
Markets
Our Purpose
and Business
Model
Our
Strategy
Our Key
Performance
Indicators
Responsible
Business
Our Principal
Risks and
Uncertainties
See pages 24-27
See pages 28-29
See pages 30-39
See pages 40-41
See pages 42-55
See pages 60-69
11
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Chief Executive Officer’s Review continued
operate, building on the initial expansion
of our Ibstock Futures business, which has
grown its scale and capabilities rapidly over
the last 12 months. Overall growth capital
of £38 million was invested across our core
business and Futures during the year to
support our medium-term growth, and we
expect to invest further growth capital of
around £55 million during the 2023 year.
Ibstock has an ambition to be the most
sustainable manufacturer of clay and
concrete products in the UK, and also to lead
our sector in ESG disclosure and transparency.
In 2022, we achieved an absolute carbon
reduction of 13% relative to our 2019
baseline. Whilst this represented a slight
increase year on year, we remain committed
to taking the actions necessary to ensure
that the Group achieves a 40% reduction
in absolute carbon by 2030, and that we
are a net-zero carbon operation by 2040.
Reflecting the strong profit performance
of the business, the Board is pleased to
recommend a final dividend of 5.5p per share
(2021: 5.0p), bringing the full year dividend
to 8.8p per share (2021: 7.5p), an increase of
17%. In recommending this level of dividend,
the Board remains mindful of its objective to
deliver a sustainable and progressive ordinary
dividend over time.
Financial Performance
The Group delivered a strong trading
performance in 2022, with revenue,
operating profit and free cash flow
materially ahead of the prior year.
Revenue of £513 million was 26% up on 2021
as the Group performed well, with robust
demand across its end markets. Industry-
wide supply chain challenges were well
managed and the impact of inflationary
pressures on our cost base, particularly
energy, was mitigated through our
well-established dynamic commercial
approach in both the clay and concrete
divisions. Adjusted EBITDA* grew by 36%
to £140 million (2021: £103 million) and
the adjusted EBITDA* margin increased
to 27.2%, compared to 25.2% in 2021
and 16.5% in 2020. Statutory earnings
per share grew by 13.8 pence to 21.6 pence
(2021: 7.8 pence) reflecting the strength
of earnings in the year.
Our Return on Capital Employed* (ROCE)
increased materially to 23.4% (2021: 15.8%),
with both the stronger operating profit
performance and a continuing focus on
capital management contributing to this
improvement. We will continue to deploy
capital in a dynamic and disciplined way
and target a ROCE* consistent with the
stated medium-term target of 20%.
The balance sheet remains strong with
closing leverage of 0.4x net debt to adjusted
EBITDA* (Dec 21: 0.4x) after investing
£38 million of growth capital and a
£30 million share buyback during the year.
Adjusted Free cash flow* was strong at
£50 million (2021: £51 million), reflecting
robust trading and a continued focus on the
efficient management of working capital.
The Board expects to generate capital in
excess of that required for its investment
requirements and remains committed to
returning surplus capital to shareholders
as part of its dynamic and disciplined
capital allocation strategy. The potential
for additional returns of capital will be
kept under active review.
Manufacturing employee at our Leighton Buzzard Factory.
12
Divisional Review
Ibstock Clay
Divisional revenue grew by 32% year on
year to £369 million (2021: £280 million)
and adjusted EBITDA* increased by 40%
to £127 million (2021: £91 million), delivering
an adjusted EBITDA* margin of 34.3%, up by
200 basis points on the prior year (2021: 32.3%).
Ibstock Futures recognised net operating
costs of £5 million, reflecting a small loss of
around £1m from the acquired businesses,
and £4 million of operational investment in
research and development, and in building
in-house innovation and commercial capability.
The clay business delivered a strong
result in the year, benefitting from solid
operational performance, disciplined cost
management and a dynamic commercial
approach that recovered in full significant
variable cost inflation. Commercial and
operational actions to enhance sales mix also
contributed to the strong margin performance.
Market conditions were positive for most of
2022, reflecting resilient new build and RMI
residential demand, with overall volumes
consistent with the prior year. Housing starts
in 2022 were broadly in line with the prior
year, although activity slowed in the final
quarter in response to a more cautious
demand environment. RMI demand also
remained resilient for the majority of the
year, although we again experienced some
softening in volumes towards the end of the
period as macroeconomic uncertainty and
rising interest rates began to impact on
discretionary consumer expenditure.
A solid operational performance
underpinned the strength of the results,
with consistent reliability and efficiency
across the plant network.
Our Atlas and Aldridge brick manufacturing
growth projects are on track to commission
from the end of 2023, and set to deliver over
100 million bricks of lower-cost capacity per
annum, with the whole Atlas range to be
externally verified as carbon neutral.
Ibstock Futures
Ibstock Futures (“Futures”) accelerated
its development in the year, underpinned
by strategic investments made to build
its capabilities in fast-growth areas of
the UK construction market.
The asset acquisition from glass reinforced
concrete panel technology specialist, Telling
GRC, in early 2022 established a strong
position in a new market that offers cost
savings and environmental benefits to
customers through the construction process.
Ibstock Plc Annual Report and Accounts 2022 Ibstock Apprentices at Make UK training centre in Birmingham.
The Telling assets were integrated
successfully during the year, and progress
and performance have continued to be
in line with our expectations.
Later in the year, the acquisition of Generix,
a UK supplier of non-combustible façade
systems, represented a further strategic
step to broaden the range of systems offered
by Futures, as our customers seek lower
carbon, non-combustible forms of cladding
for use in the mid- to high-rise and modular
market segments.
We have a strong pipeline of opportunities
to invest further capital within Ibstock
Futures in the service of diversified growth
over the years ahead.
We have also continued to develop the
brick slip investment strategy and identified
opportunities to re-configure the project, to
both accelerate commissioning of an initial
capacity extension, as well as incorporate
more advanced and efficient process
technology in the purpose built factory.
As part of this, we initiated in 2022 an
investment of up to £8 million, to be deployed
over the next 12 months, on an automated slip
line, providing capacity for up to 17 million
slips, coming on stream by the end of 2023.
At this stage, commissioning for the main
line is expected in late 2024.
We have made further progress during the
year to unlock value from our unrivalled
clay reserves. During the second half of the
year, we commissioned a pilot plant for the
production of expanded clay – a lightweight
aggregate that has multiple application uses
in the construction sector and which is in
short supply. We have also advanced our
project focused on calcined clay, which has
huge potential as a lower carbon cementitious
replacement. Over the coming year we expect
to continue to develop these projects, which
are firmly centred on the Group’s strategic
ambition to lead our sector for sustainability
and environmental impact. We are also
excited to report that, during the 2022 year
we fired our first bricks using synthetic gas
from a waste source in partnership with a
strategic partner with funding support from
Innovate UK, the UK’s innovation agency.
We continue to see Futures as a key driver
of Ibstock’s growth over the medium-term
and, in addition to acquisitions, we are
making organic investment in our assets
and capabilities to support future expansion.
We are announcing today the creation of a
state-of-the-art innovation hub in the West
Midlands to provide a platform for rapid
innovation and expansion. This facility,
which has been secured on a long-term
lease, is expected to be operational by
the end of the second quarter of 2023.
Ibstock Concrete
The Concrete division delivered a strong
performance, benefitting from its exposure to
a broad range of residential and infrastructure
markets, with a resilient demand backdrop and
solid operational performance.
Divisional revenue in 2022 grew 12% to
£144 million (2021: £128 million), reflecting
stronger pricing across the business. Adjusted
EBITDA* of £24 million was around 9%
higher than the prior year (2021: £22 million),
reflecting strong commercial execution across
all product categories. Adjusted EBITDA*
margins of 16.4%, were marginally below the
level achieved in 2021 of 16.9%, reflecting
operational inefficiencies within our roof
tile business in the early part of the year.
As expected, we saw the divisional margins
improve during the second half of the year
towards our medium-term ambition of 18%.
Overall, sales volumes were marginally below
the prior year, reflecting some softening in
demand during the final quarter of the year.
Infrastructure volumes grew strongly,
13
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Chief Executive Officer’s Review continued
Operational excellence
The consistent performance of our factories
is vital to ensure that we have a sustainable,
cost-competitive operating footprint. During
the year, we successfully rolled out the second
phase of our Asset Transformation Programme
across the clay network, driving a stronger
culture of preventative maintenance and
improved reliability. This investment
programme is starting to deliver significant
benefits to our clay business, reflected in
the strong fixed cost performance achieved
during the 2022 year.
Within concrete, the establishment of
a five-year automation plan within our
fencing and building factories will support
a significant uplift in capacity, efficiency
and quality over the years ahead, helping
to maintain our industry-leading margins.
Environmental performance
Our ESG 2030 Strategy provides a
comprehensive framework to drive
progress in our environmental performance.
During the year, we established a set of
detailed, factory-level targets, with an
increased focus on measuring and
improving environmental outcomes.
In 2022, we achieved an absolute carbon
reduction of 13% relative to our 2019
baseline. Whilst this represented a slight
increase year on year, we remain focused on
achieving our ambition of a 40% reduction
by 2030. Other noteworthy achievements in
the year included a 31% reduction in mains
water use and a 16% reduction in plastic
packaging (with both metrics calculated per
tonne of production against a 2019 baseline).
We are proud to have been awarded
the 2022 Manufacturer of the Year
at the Business Green awards, in
recognition of our industry leadership
for environmental sustainability.
Innovate
Innovation is at the heart of our growth
plans, and we are committed to the
continuing enhancement of our product
portfolio and customer proposition to
strengthen our market-leading positions.
Product innovation
In a fast evolving construction market,
continual product innovation is crucial
to our success.
Manufacturing employees at our Eclipse Factory.
with both rail and structural categories
showing double-digit growth year-on-year.
This helped to offset lower volumes across
floor beams and associated ancillaries, with
a reduction in year-on-year sales towards the
end of the year as house builder demand
reduced. Walling stone volumes were ahead
of the prior year as the business grew share
in key regional territories. Roofing volumes
were modestly lower, held back by production
issues at our roof tile factory in Leighton
Buzzard during the first half of the year.
The actions taken to enhance operational
performance at this factory delivered
material improvements in reliability and
efficiency during the latter part of the year.
Strategic Update
As a business, we remain focused on delivering
strong strategic progress to provide further
sustainable advantage over the years ahead,
and I am pleased with the progress we made
in this regard during the year. The strong
performance in 2022 has delivered significant
progress towards the medium-term financial
targets we set out in March 2022.
Our strategy is driven from our belief that
the construction market will continue to
evolve, adopting more sustainable and
industrialised processes, practices and
products. We are focused on building our
capabilities across the business to position
us well to maximise our opportunities in
these developing new markets.
14
Our strategic development extends far
beyond the acquisitions and partnerships
we have made in the year. Our three strategic
pillars: Sustain; Innovate; and Grow focus our
activities across all of our operations to align
to our collective goals. Progress achieved this
year is detailed further below.
Sustain
As a large scale industrial business, sustainable
high performance is at the heart of what we
do. 2022 was a further year of strong progress,
with improvement in all areas: health, safety
and wellbeing; operational excellence; and
environmental performance.
Health, safety and wellbeing
The health, safety and wellbeing of our
employees is always our first priority,
and our continuing commitment is core to our
success. Our key health and safety metric is Lost
Time Injury Frequency Rate (“LTIFR”), which
saw a marked improvement in the year to 1.47
and is now ahead of our medium-term target.
Our Concrete division achieved a fantastic
milestone in 2022 by operating for a full year
without a Lost Time Incident (LTI).
During the year, we placed considerable focus
on evolving our culture through the launch of
the “Ibstock Story” acting as a strong cultural
catalyst, embedded a new health and safety
management system across the business and
created a Health & Wellbeing network to
promote focus on mental health.
Ibstock Plc Annual Report and Accounts 2022 Within the Clay division, we launched a
number of new brick types, with a particular
focus on simulated handmade bricks,
premium products which will compete
against brick types currently imported
into the UK market.
In September 2022, our Concrete division
entered into a new partnership to create
ultra-low carbon concrete products with
Earth Friendly Concrete (EFC). EFC is more
sustainable than traditional concrete, with
around 70% less embodied carbon. The
partnership will see EFC’s ultra-low carbon,
zero cement technology integrated into
our diverse portfolio of high-performance
building products over the years ahead,
including our range of products for the rail,
infrastructure and UK housing markets.
Customer experience
We continue to seek ways to enhance the
experience of our customers at every stage
of their engagement with us.
To this end, during the 2022 year
we strengthened and diversified our
nationwide distribution capabilities
through the establishment of two new
haulage relationships. This change will
ensure that our business can access
industry-leading technology, pursue
greener fuel alternatives and optimise
the efficiency of our haulage routes.
We have also taken steps during the year
to simplify and improve the customer
experience through further investment
in our customer services teams and the
development of a digital portal, allowing
customers to place and amend orders
more easily.
Digital transformation
The digitisation of our business will be a
key strategic enabler over the coming years
as we look to drive an increasing proportion
of our activity through digital channels.
During 2022, we made the key
appointment of a new Chief Information
and Digital Officer (CIDO) who has been
central to defining a medium-term digital
transformation programme. This programme
will be centred on two core principles:
adopting a “One Ibstock” mind-set,
standardising core platforms and ways of
working to improve efficiency and reduce
complexity; and customer centricity, focusing
on superior integration and automation with
our customers. In order to maintain our
digital advantage, the year ahead will see us
upgrade our core infrastructure, focused on
the ERP platform, enterprise data and key
customer-facing applications.
Grow
The Group’s growth strategy is based on a
combination of continued development of
its core business and effective diversification
into attractive new segments of the construction
market. The strategy is being supported by
targeted investment projects and acquisitions
which create value and accelerate delivery.
Investment in core
The enhancement projects within our existing
Clay business, which were initiated in 2019,
are now complete and delivering the planned
capacity uplifts and process efficiencies. The
Project – 50-60 Station Road, Cambridge
Ibstock Product – Telling Grade 18P GRC.
Atlas and Aldridge growth projects are on
track to commission from the end of 2023.
These investments will deliver significant
further capacity and with Atlas being our
pathfinder factory on our journey to Net
Zero, expected to produce an exciting range
of carbon neutral verified products for our
customers within the next 12 months.
Diversified growth
The continuing development of Ibstock
Futures provides a focus for our strategic
ambitions to grow through the introduction
of products, solutions and technology
designed to support, and benefit from,
the megatrends of sustainability and the
industrialisation of construction methods.
The two acquisitions completed in 2022
within Futures are strategically important,
and both present the opportunity to scale
rapidly over the medium-term. We have
also made significant progress in developing
the organisation, strategy and medium-term
goals of Futures and have a strong pipeline
of opportunities to invest further capital in
the service of diversified growth over the
years ahead.
People
Our people will always be our most important
asset, and as an organisation, we are seeking
to create a culture driven by performance and
led by our values. In 2022, we launched a
people strategy centred on four elements:
employee experience; attracting future
talent; capabilities for resilience and growth;
and creating culture as a point of difference.
Having a diverse workforce, which is truly
representative of the communities in which
we operate, is important to both our cultural
ambitions and business success. At the end
of the year, female leadership representation
stood at 27%. We have clear plans in place
to support the achievement of our 40%
target by 2030.
Our industry-leading Apprenticeship
programme continues to gather momentum,
growing our pipeline of future talent. We are
part of the “5% club” which targets having
at least 5% of employees in “earn and learn”
positions. We finished the 2022 year with
over 50 early career positions (including
apprentice roles) and over 120 of our other
employees engaged in qualifying learning
activities. This represented a total of 7.5% of
earn and learn positions across the business,
putting us firmly on course to achieve our
ambition of at least 10% by 2030.
15
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Chief Executive Officer’s Review continued
Environmental, Social and
Governance (ESG) Update
Our commitment to our new ESG 2030
Strategy, launched at the beginning of
2022, has seen us focus on the issues
that really matter to our stakeholders
The UK construction sector continued
to change at pace through 2022 on the
ESG agenda, with increasing focus and
awareness on embodied carbon, Scope 3
emissions, emerging regulation and
continued skills shortages and supply
chain pressures. Ibstock has seen a step
change in engagement with our customers
ESG 2030 Strategy
Our commitment to our new ESG 2030
Strategy, launched at the beginning of
2022, has seen us focus on the issues
that really matter to our stakeholders.
and suppliers on these issues, presenting
both challenges and opportunities.
Addressing Climate Change
As an energy intensive manufacturer,
the main focus for our business is the
mitigation of climate change through
carbon reduction. In 2022 we calculated
our Scope 3 carbon emissions and
developed our Scope 3 reduction strategy.
We continued to reduce impacts from our
carbon emissions and water consumption
relative to our new 2019 baseline.
Improving Lives
Building our social value involves investing in
our people, our culture and our communities.
In 2022 we took great strides to improve
our Health and Safety performance and
we started to move the dial on our internal
culture including wellbeing and inclusion
as key areas of support and engagement
for our people.
Manufacturing Materials for Life
Evolving our products involves incorporating
whole life cycle design, preserving raw
materials and future-proofing our offer
to our customers through a diversified
portfolio. In 2022 we increased our focus
on external partnerships and research into
alternative materials science and reduction
in key materials categories, we reported
on our progress in our first White Paper
on Dematerialisation.
For more details on our progress on our
ESG 2030 Strategy see the Responsible
Business section of this report on page 42.
Awards
We were delighted to receive a number of
awards in 2022 for our work ESG including
the Business Green Manufacturer of the
Year Award, two awards from the British
Ceramics Confederation for Net Zero
Leadership, and a special recognition
award for our Group Sustainability
Manager, Michael McGowan, for his
contribution to industry decarbonisation.
Ibstock won the 2022 Business Green Leaders Award.
16
Ibstock Plc Annual Report and Accounts 2022 Outlook
for 2023
Trading in the early weeks of 2023 has
continued to reflect the cautious demand
environment experienced towards the
end of last year although we anticipate
this to improve as the year progresses,
supported by sequential demand
improvement. Against this background,
we are maintaining a disciplined
approach to capacity management,
costs and commercial execution.
The Group is in good shape, with a
clear strategy based on both core and
diversified growth, sustainable market
leadership positions and a strong balance
sheet. As such, the Board’s expectations
for the full year are unchanged.
Within Futures, we have an ambition to
create a significant, diversified business
operating in modern construction markets
over the next four years. The business,
from its inception around 12 months ago,
is already delivering strong growth, and will
target revenues approaching £20 million in
2023, with both Telling and Generix scaling
quickly as part of the Ibstock Group. Our brick
slips investments, comprising an automated
slip line delivering up to 17 million slips,
commissioning from the end of 2023, and
the larger Nostell slip systems factory, at
this stage expected to commission from
the end of 2024, will create a strong,
diversified position in this fast growing
product category. And we have a pipeline
of further opportunities, including our
exciting sustainability projects, to deliver
growth over the next few years. Overall,
we expect Futures to grow revenues to
£100 million, with adjusted EBITDA*
margins approaching 20%, by 2026.
We have made strong initial progress, and
expect this to momentum to continue over
the next 6-18 months as we build towards
our medium-term ambitions.
Joe Hudson
Chief Executive Officer
A central pillar of our social agenda is our
commitment to develop and support our
people, and to maintain a strong workforce
with the capability to deliver our strategic
objectives over the long-term. To this end,
during the final quarter of the 2022 year,
we made a one-off payment of up to £2,000
to colleagues most heavily impacted by the
cost of living crisis, representing a total cost
of around £4 million. We also made a grant
of 500 free shares (Fire Up share award)
during the 2022 year to all employees below
the Senior Leadership Team level, to ensure
that value created flows through to all our
employee stakeholders.
Progress towards medium-term targets
The platform of capability we now have in
place, combined with the investments we are
making, provide confidence in our ability to
deliver strong growth over the medium-term.
Within the clay business, we are on track
to commission our redeveloped Atlas and
Aldridge factories by the end of the year,
creating over 100 million bricks of lower
cost capacity, and the UK’s first verified
carbon neutral clay bricks. With around
£35 million of capital still to be spent, we
expect to deliver at least an incremental
£18 million of adjusted EBITDA* from 2025.
Alongside this, incremental growth within
the clay business will be driven by continuing
to capture marginal gains in commercial
execution, new product development and
capacity/cost over the years ahead.
Within our concrete products business,
we have a number of opportunities to
deploy capital to realise further capacity
in the network, access adjacent categories
and capture cost savings through greater
automation. We invested around £2 million
of growth capital in 2022 in automated
equipment for our walling stone factory in
Anstone, Yorkshire, which will deliver around
£1 million in incremental adjusted EBITDA*
from 2024. We have a pipeline of further
opportunities in concrete to invest capital
for fast payback over the medium-term.
Employees handing over a cheque for £180,000, as part of
our fundraising efforts for Shelter over the last three years.
17
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 People and Culture
Ibstock has always had a strong, collegiate
culture and we are keen to further develop
this and to ensure meaningful and consistent
engagement across the Group. This year, the
People department has been instrumental in
our cultural transformation journey, which
has been implemented under our ‘Fire Up’
Ibstock programme. ‘Fire Up’ is our drive to
celebrate the best of our heritage, working
practices and supportive culture, and to
empower our employees to build on these
strengths. The objective is to leverage
our common culture and identity across
the whole business under one powerful
Ibstock brand.
A number of our employees have been
involved in the initial development of
the programme and it has been heartening
to see how ‘Fire Up’ has been adopted
across our entire business, gaining its own
momentum over the course of the year.
The level of employee involvement in this
project has been exceptional, generating
constructive conversations and engagement
well beyond that originally envisaged.
DELIVERING
ON CULTURE
Our strong corporate culture is a defining feature
of Ibstock. At the heart of our focus on people this
year has been the development of the Ibstock story.
Created by an extensive team with representation
from every area of the business, the story unites
us in our pride and heritage, but also captures the
importance of ongoing evolution, a desire to ‘Fire Up’
our organisation and the power of every employee
playing their part.
Joanne Hodge
Group People Director
18
Ibstock Plc Annual Report and Accounts 2022 We will build on these experiences to
achieve our vision that all our employees:
• Understand our journey and their
individual contributions
• Can identify the role they can play
in realising our vision
• Feel energised and empowered to
own their role in our journey
• Are recognised for their contribution and
strive to set the standards for our future
• Share good practice across the business
and unite around our shared goals under
one Ibstock brand
As part of the programme we also made
a one-off award of 500 Ibstock Plc ordinary
shares to each of our employees below the
Senior Management Team (SLT), giving
our employees an interest in the business. We
believe that this award, together with regular
recognition of high performance, such as our
new ‘FUSE’ (Fire Up Star Employee) awards,
will further align our employee experience
with the performance of the Company and
help underpin our culture.
We see ‘Fire Up’ as an initiative continuing
to set a framework for engagement going
forwards and as an important part of our
culture for the foreseeable future. On pages
20 to 21 we explore how we have delivered
for our people through our wider people
strategy during 2022, which is also intrinsic
to our ESG 2030 Strategy initiative ‘we will
improve lives’ discussed on pages 50 to 51.
Employee at our Leighton Buzzard Factory.
Employee at our Cebastone Factory.
19
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Employee Experience
Our aim is to create a sense of belonging
for all our employees through a focus
on inclusion, wellbeing and engagement.
Our Diversity and Inclusion Working Group
comprises employees from across the business.
The Group has taken a lead role in both
educating and supporting employees to
celebrate what makes them unique as
individuals. This has included a focus on
PRIDE, Women in Construction, Ethnicity
and Religious Holidays to name a few.
In addition, our Wellbeing Working Group
has made good progress, with our CFO, Chris
McLeish, alongside employees from across the
business focusing on a number of key wellbeing
topics such as mental health, menopause and
men’s health. From our dedicated sessions held
with employees, we are encouraged by the
feedback which suggests a cultural shift in
removing the stigma around mental health.
Simply taking the time to have more
courageous conversations is making a
real difference to our employees.
Development for all
Ibstock recognises the need to ensure
that every employee has the opportunity
to fulfil their potential is critical to
organisational growth, employee
engagement and retention. To support
this, Ibstock has introduced a structured
programme to ensure that development
plans are discussed and agreed with every
employee, and plan progress is regularly
monitored and communicated.
During 2022, leadership development has
been a particular focus, with each of our
Senior Leadership Team (SLT) members
developing and refining their personal
leadership style through development sessions
enabling individual reflection, training,
working groups and sharing of best practice.
People and Culture
DELIVERING
FOR OUR PEOPLE
Apprentices at our Leighton Buzzard Factory.
We recognise the vital role our people
and culture play in the success of the
organisation. To support the delivery
of exceptional performance, in 2022,
we developed a people strategy focused
around four pillars:
• Employee Experience
• Attracting Future Talent
• Capabilities for Resilience & Growth
• Creating culture as a point of difference
Whilst this strategy is focused on the
medium term, we have already made
significant progress.
20
Ibstock Plc Annual Report and Accounts 2022 Employees at our I-Studio London meeting Board members.
Fair reward for all
Ensuring all employees are fairly rewarded for
their contribution to our business is incredibly
important to us. We recognise that the current
macroeconomic environment makes this even
more relevant. In 2022, we took specific steps
to further support our employees including:
• An ex gratia cost of living allowance
payment made to all employees earning
less than £50k per annum
• A one-off share grant of 500 ordinary
shares for every employee below the SLT
• The launch of a MyIbstock retail
rewards platform
Giving Back
A focus on ‘giving back’ to our local
communities remains a core part of
our culture and a source of pride to our
employees. Following the end of our
corporate Shelter partnership, in which
Ibstock and its employees raised around
£180k, we are now looking to support our
employees to make a real difference within
local communities. We are doing this by
allowing employees to determine the
partners and organisations they wish to
support, and making matched funding
from the Company available.
Attracting Future Talent
Creating an organisation that reflects
diversity of all kinds is of great importance.
As such, we launched a diversity charter
within our organisation and began a
programme of activity focused on building
greater connections with the communities
in which we operate. We have also focused
on crystallising what makes our employees
join, invest and remain in our business
through the development of an Employee
Value Proposition.
Capabilities for Resilience and Growth
Building our employees’ capabilities for
resilience and growth supports capability
of the organisation as a whole. Providing
targeted development initiatives over the
year for both commercial and operational
teams has been a key deliverable in 2022.
Individual and organisational resilience has
been particularly important with respect to
the impact of the COVID-19 pandemic on
our employees, and their readjustment to
a post-pandemic work environment.
Culture as a point of difference
At the heart of our focus on people this year
has been the development of our Ibstock
‘Fire Up’ programme. The programme was
developed by representatives from all sites
and functions within the Group, before
being rolled out in a carefully planned and
supported way across the entire workforce.
‘Fire Up’ is described fully on page 18.
From this work we have continued to see
increased engagement and enthusiasm
across all sites and functions.
Please see page 50 for more information
on how our ‘We will improve lives’ initiatives
enhance our social impact.
21
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Ibstock Futures
DELIVERING
FIRM FOUNDATIONS
FOR FUTURES
Ibstock Futures (Futures) has two focus areas.
Firstly, participating in the Modern Methods
of Construction (MMC) aimed at driving the
industrialisation of construction to deliver higher
productivity. Secondly, being at the forefront
of sustainable construction by supporting the
growth of lightweight construction methods
as well as more carbon efficient ways of
manufacturing. Our initial concentration is on
two key market segments: the mid- to high-rise
Façades market and MMC (Modern Methods of
Construction, which includes off-site manufacture
and assembly, and modular housebuilding).
Employees at Ibstock Telling.
22
Jeremie Rombaut,
Managing Director
of Futures, provides an
overview of progress in
accelerating diversified
growth opportunities
in the Futures business’
first year.
Q. What is the strategic
ambition for Ibstock Futures?
The strategic ambition for Futures is to
be a £100m turnover business by 2026,
comprising businesses that produce
construction solutions with higher efficiency
and a lower carbon footprint. This will be
achieved through the industrialisation
and scaling up of our existing operations,
supplemented by targeted mergers and
acquisitions (M&A) and partnerships which
will be focused on scalable businesses.
Together, this will enable us to develop a
broader product offering in the mid- to
high-rise Façades market and in MMC.
Part of our ambition is to predict and influence
future industry trends, through technology
development and other forms of innovation,
which is supported by our ‘Ventures’ arm.
We believe that our initiatives in this area
will assist us in driving significant growth
opportunities going forwards.
Ibstock Plc Annual Report and Accounts 2022 Q. What is the
market opportunity?
The UK Façades market size is estimated
at £10bn with the current addressable
market share (cladding element) estimated
at £1.5bn in value. This is driven through
the growing trend for a brick finish in the
Façades market, led by customer demand
for a superior aesthetic and a compliance
need for non-combustible systems.
The pace of growth is also being accelerated
through a shift towards MMC. This is faster
and more efficient than the traditional
approach of on-site installation of Façade
systems, which is not only a slower process, but
is also constrained by labour shortage issues.
The brick slip market (which is a core
component of the Façades market) is
estimated at 180m slips per year in the
UK. Whilst today, this represents just 5%
of the UK brick market, we believe the
Façades market to be an area of huge growth
opportunity. Examples of such growth can
be seen in other countries such as the US,
where the brick slips market continues to
grow and is now around one billion slips
(circa 33% of the three billion brick market).
As part of our offering to customers we will
promote the DFMA (Design For Manufacturing
and Assembly) design approach, advocating a
lightweight Façade option to be considered in
the early stages of structure and foundation
design. This approach can provide significant
cost savings for our customers.
By adopting a scalable approach to our
operations and through a combination of M&A
investments and a clear innovation drive, we
are well positioned to become market leaders.
Q. What progress
has been made?
In 2022 Futures has integrated two businesses
under the Ibstock brand, Ibstock Telling and
Generix Façades. Ibstock Telling was formed
from assets acquired from Telling Architectural
Limited, and Generix as a majority acquisition
of Generix Façades Limited. Ibstock Telling
manufactures an innovative Glass Reinforced
Concrete (GRC) product. GRC delivers significant
sustainability benefits through carbon and
weight efficiencies whilst being able to create
impressive bespoke shapes, including brick
fascias. Generix is a fast growing family
of mechanical fix Façades systems that offers
a brick slips, stone and ceramics range. These
businesses complement our existing ranges
Project – Easterbush, Edinburgh
Ibstock Product: System – Generix Lite Rainscreen
Material – Stanton Moor Stone.
within our product portfolio (Mechslip, our
other mechanical slip system, and Nexus)
and provides us with broader offering
to the Façades market.
The integration of both businesses have
now been completed, and the current focus
is now on scaling them over the coming years.
We have continued to develop the brick
slip investment strategy and identified
opportunities to re-configure our Nostell
brick slips factory project, to both accelerate
commissioning of an initial capacity extension,
as well as incorporate more advanced and
efficient process technology in the purpose
built factory. At this stage, commissioning
for the main line is expected in late 2024.
We have also invested in a new automated slip
and corner cutting facility that will allow us to
cut a slip and associated corners from any soft
mud brick, which will allow us to ramp up our
existing operations to 17 million slips and
associated corners each year. This facility
will not only make production safer and
more reliable, but also allows us to build a
complementary range to the main factory,
further boosting the growth of our own
mechanical fix systems as well as other
systems currently used in the market.
There are a number of exciting strategic
projects in the research and development
stages, particularly around energy and
alternative use of clays, with a circular
economy approach. Additionally, we
continue to develop our pipeline of other
opportunities as part of our M&A strategy.
Q. Where next for Futures?
As mentioned, we have a good
pipeline of organic opportunities,
and continue to explore further
inorganic investment opportunities.
However, one of the key next steps for
us will be to increase the pace of progress
within our Ventures innovation arm. We
are looking to collaborate with start-ups
on technology and new business models.
These include technologies such as
Automation, 3D printing, Design for
Manufacturing & Assembly (DFMA),
and Parametric Architecture.
The goal is to increase productivity and
create a smooth interface between design
and manufacturing, which is key to the
success of off-site manufacturing. Currently
there is a technology adoption gap in the
fragmented MMC value chain, which is a
limiting factor in exploiting its full potential.
We have developed a clear roadmap to
achieve a turnover of over £100m over
the planned horizon, through scalable
businesses with invested assets, and
are confident and energised to deliver
this within our projected timescales.
23
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Our Markets
DELIVERING
FOR OUR MARKETS
We are well positioned in markets with
positive long-term fundamental drivers
trend in recent years of structural changes in our markets towards
greater consolidation of the supply chain, particularly in the merchant
and distribution channels.
Through our deep understanding of
the key drivers in our markets, we are
able to formulate our strategy based
on the biggest growth opportunities
for our business
With the largest clay brick production capabilities in the UK, the Group
continues to hold a market-leading position, together with leading
market positions in UK concrete products. In the UK, the three largest
brick manufacturers account for the vast majority of UK brick
production. Conversely, many of the UK concrete markets within which
the Group operates are fragmented with a number of small players.
Demand for our products is directly affected by developments in the
construction markets in which we operate, as well as the general level of
construction activity. Several macroeconomic factors influence the levels
and growth of construction activity, including demographic trends, the
state of the housing market, mortgage availability, mortgage interest
rates, household income, inflation and Government policy.
Since last year, the overall UK economy has seen further adverse
impacts from a number of factors including the war in Ukraine.
These have led to price increases for energy, particularly natural
gas, and broader inflation and interest rate rises, which has had
an impact on input costs. We have also seen the continuation of the
UK macro trends
• Expected population growth from 2020-2030 of +2.1m people
• Household formations per annum is currently c.200k, which
means a shortage of housing and ageing of current housing stock
• Political support for house building is strong with a target of
+300k additional homes built on average per annum
• There is an increasing focus on Modern Methods
of Construction (MMC)
For more information on how Ibstock maximises market
opportunity and mitigates market risk, see:
Our Business Model pages 28 to 29
Our Strategy pages 30 to 31
Responsible Business pages 42 to 55
Operations Reviews pages 56 to 59
Principal Risks and Uncertainties pages 60 to 69
24
Looking forward to 2023, we anticipate a set of more challenging
market conditions, driven by higher interest rates, higher inflation
and lower levels of consumer confidence, but anticipate this to
improve as the year progresses.
The pages that follow illustrate the developing trends in our segments, and
detail how our business is well positioned to succeed in these markets.
UK Construction Market1
2021
£171bn
£173bn
£165bn
2022
2023
% UK Construction Output by Sector – 2022
3
17
22
3
13
19
5
13
4
Private Housing
Public Housing
Private Housing Repair,
Maintenance and Improvement
Public Housing Repair,
Maintenance and Improvement
Commercial
Public Non-housing
Non-housing Repair
and Maintenance
Infrastructure
Industrial
22%
3%
14%
4%
13%
5%
19%
17%
3%
UK Construction Output
Our diverse and growing range of clay and concrete products and
systems for the entire building envelope gives us access to a wide
range of construction industry sectors. They are integral components
for both new build housing and housing repair, maintenance and
improvement. We also have a growing position in commercial, public
sector non-housing and infrastructure. The positive fundamental
drivers in these sectors are expected to underpin demand for our
products over the medium-term.
Ibstock Plc Annual Report and Accounts 2022 The Construction Product Association (CPA) Winter 2022/23 forecast
(CPA Forecast) shows total construction output is anticipated to fall
by 4.7% in 2023 with growth of 0.6% in 2024.
The CPA forecast shows:
Private housing output
Public Housing output
Private housing repair, maintenance
and improvement (RMI)
Public housing repair, maintenance
and improvement (RMI)
Commercial output
Public non-housing
Infrastructure output
2023
2024
(projected)
fall 11.0% fall 1.0%
fall 10.0% fall 2.0%
fall 9.0% rise 1.0%
flat rise 2.0%
fall 5.4% rise 1.3%
fall 1.7% rise 0.3%
rise 2.4% rise 2.5%
New Housing Market
The new build housing market1
construction output in the UK. This market is a core focus for us and
we hold market-leading positions in many of our product categories.
accounts for around a quarter of total
(number of units)
Private
Housing Starts
Private Housing
Completions
2023 (F)
2021 (E)
2020 (E)
2022 (E)
2024 (P)
118,264 162,458 164,083 141,111 143,933
2%
134,100 160,749 163,964 145,928 143,009
-2%
-11%
-14%
-19%
-19%
20%
37%
1%
2%
(number of units)
Public
Housing Starts
Public Housing
Completions
2020 (E)
34,198
-10%
31,882
-23%
2021 (E)
41,998
23%
40,502
27%
2022 (E)
39,898
-5%
40,097
-1%
2023 (F)
36,307
-9%
36,088
-10%
2024 (P)
36,307
0%
35,366
-2%
With continuing population growth in the UK resulting in ongoing
increases in household formation and a substantial housing deficit,
the Government remains committed to significant growth in levels
of house building over the mid- to long-term.
Why are we well positioned?
• We have long-standing strategic relationships with housebuilders,
distributors and builders’ merchants across the UK
• Broad product range across the building envelope provides
differentiation and competitive advantage: bricks, cast stone,
roof tiles, fencing and landscape products, retaining wall systems,
flooring solutions, Façade systems and components
• Market leader in the UK brick market, the most popular Façade
material in new build housing
• Investments in new and sustainable manufacturing facilities
to enhance capacity and ensure long-term supply of materials
• Investment and development of MMC, a key growth area in
this sector
Project – Gardenmore Green
Ibstock Product – Ivanhoe Cream Original.
Housing RMI
Housing Repair Maintenance and Improvement (RMI)1 is another
major sector of the UK construction industry, accounting for over
15% of total construction output. This is another core sector for
us where we have a strong position.
Private housing RMI reached its highest level on record in March 2022,
reflecting a spike in activity following the initial COVID-19 lockdowns in
early 2020. Although output is expected to decline in 2023, it remains
at a relatively high level compared to the long-term trend.
Growth in public housing RMI is being driven by the pipeline of
cladding remediation and fire safety work, general maintenance
of social housing stock and publicly funded energy efficiency projects
on council and housing association properties.
(£m)
Private
Housing RMI
Public
Housing RMI
2020 (A)
20,207
-11%
6,773
-17%
2021 (A)
25,173
25%
7,196
6%
2022 (E)
24,166
-4%
7,196
0%
2023 (F)
21,991
-9%
7,196
0%
2024 (P)
22,211
1%
7,340
2%
Why are we well positioned?
• We have long-standing strategic relationships with builders’
merchants and distributors across the UK
• Leading range of products for housing repairs, maintenance
and improvement (RMI) projects across the building envelope
• Our growing range of Façade systems provide solutions for
re-cladding projects, a significant growth area in this sector
1 Construction data sourced from Construction Products Association Construction Industry
Scenarios Winter 2022/23 Edition. These charts shows actual, estimated, forecast or
projected figures and year-on-year percentage change.
Key: A=Actual, E=Estimate, F=Forecast, P=Projection
25
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Our Markets continued
Commercial and Public Sector
Commercial and public sector1 construction is another significant part
of the UK construction industry accounting for almost 20% of total
output. Many project types are covered within these sectors including
offices, retail, schools, hospitals and other public buildings. We have
a long track record of supplying a wide range of products and systems
into these sectors, including many award winning projects.
(£m)
Commercial
Public Non-
Housing
2020 (A)
23,667
-22%
9,614
-8%
2021 (A)
22,020
-7%
9,521
-1%
2022 (E)
22,009
0%
8,905
-6%
2023 (F)
20,829
-5%
8,752
-2%
2024 (P)
21,097
1%
8,776
0%
Why are we well positioned?
• Dedicated experienced specification sales teams focused
on developing relationships with architects and specifiers
• Extensive design and technical expertise to support architects
and specifiers throughout the whole project life-cycle from
concept to build
• Wide range of products and systems across the whole
building envelope
• Our growing range of Façade systems provides significant
opportunities in growth sectors such as mid- to high-
rise developments
Infrastructure
Infrastructure1 is a growing sector of the UK construction market,
currently accounting for around 17% of total construction output.
Infrastructure is a key focus area for Government, and the sector
has shown strong growth over the past few years with further growth
forecast over the next three years. We have a growing presence in this
sector, particularly in the rail sub sector, which has seen significant
growth over the past two years with further growth forecast in 2023.
(£m)
Total
Infrastructure
Rail
Sub-Sector
2020 (A)
21,799
-5%
3,419
-18%
2021 (A)
27,975
28%
6,704
96%
2022 (E)
29,348
5%
8,045
20%
2023 (F)
30,058
2%
8,689
8%
2024 (P)
30,797
2%
8,689
0%
Why are we well positioned?
• We have strong, well established relationships with customers
across rail and infrastructure markets
• We manufacture bespoke products for the infrastructure sector
• We are leading the way in the development of innovative,
sustainable infrastructure products, a key driver in this sector
1
Construction data sourced from Construction Products Association Construction Industry
Scenarios Winter 2022/23 Edition. These charts shows actual, estimated, forecast or
projected figures and year-on-year percentage change.
Key: A= Actual, E= Estimate, F= Forecast, P=Projection
26
Group Opportunities
Over the course of our 200-year history, we have developed
a thorough understanding of the key drivers in our markets.
This enables us to formulate our strategy based on the changing
demands of our customers to focus on the biggest growth
opportunities for our business. We also manufacture and supply
a wide range of diversified products to satisfy changing demand.
Strengthen leading position in core market
In the UK, the three largest brick manufacturers account for the
vast majority of UK brick production. Ibstock has the largest clay
brick production capability in the UK and continues to enjoy a
market-leading position. In a structurally under-supplied brick
market, imports coming into the UK reached record highs of over
550 million bricks in 2022. We believe that continued investment
in new domestic capacity represents a significant opportunity
for our business. We are investing a total of £75m in our factories
in the West Midlands including the development of Atlas, our
pathfinder factory on our journey to net zero, with a capacity
of over 100 million bricks by 2024.
Investment in our West Midlands factories
£75m
Why are we well positioned?
• We have invested significantly in the expansion and
improvement of our production facilities over the past
few years
• We continue to invest in organic opportunities to enhance
production capabilities for the long-term
• We are investing £75 million in our factories in the West
Midlands including the development of Atlas, with a capacity
of >100 million bricks per year by 2024
Growth in Diversified Markets
The increasing focus on non-combustible cladding systems
coupled with brick being the most popular Façade aesthetic
in the UK provides us with growth opportunities outside of
our core markets of low-rise housing. Brick Façades are taking
an increased share of fast growth markets:
Find out more about how we are addressing this market
in Futures on pages 22 to 23
Ibstock Plc Annual Report and Accounts 2022 Mid- to High-Rise Sector
Off-site Construction
Sector growth driven by re-cladding and build to rent market,
with planning applications increasing by over 100% since 2015.
The use of off-site manufactured systems and MMC continues
to grow, particularly in the off-site residential market supported
by Government commitment and investment.
Market for off-site housing systems
£m
18,000
Mid- to high-rise active projects
with approved planning permission
14,000
7,000
2015
2021
2022
Build to Rent
Build to Rent (BTR) continues to be a driver of growth across UK
residential markets with the trend towards private renting forecast
to grow further over the coming years. 190 thousand homes are
estimated to be built by the BTR section by 2027.
Cumulative Build to Rent Completions 2016 to 2020
with Forecasts for 2021 to 2024 – Number of Units
99,000
(fcst)
83,000
(fcst)
70,500
(fcst)
60,400
(fcst)
52,694
(est)
43,592
30,923
22,684
14,510
2016
2017
2018
2019
2020
2021
2022
2023
2024
Source: AMA Research Ltd/Barbour ABI Planning Data/Trade Estimates
2017
2018
2019
2020 (Est)
2021 (Est)
2022 (Est)
2023 (Est)
2024 (Est)
2025 (Est)
550
600
640
570
604
652
691
733
777
Source: AMA Offsite Housing Market Report UK 2021-2025
Why are we well positioned?
• Brick is the dominant Façade material in UK residential projects
• We are investing in the UK’s first large scale purpose made
brick slip systems factory
• Our new two businesses Telling and Generix enhance our
Façade systems offering and strengthen our position in the
market for MMC
• Our growing range of Façade systems are suitable for both
new build and renovation projects, including re-cladding
• Futures’ focus on investment opportunities in growth areas in
the fields of sustainability and industrialisation will strengthen
our position further over the coming years
27
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Our Purpose and Business Model
Our Purpose and Business Model
Ibstock exists to build a better world by being at the heart of building through
our vision of enabling the construction of homes and spaces that inspire people
to work and live better.
Who we are
Our business operations
Extraction
Clay and shale used in our brick production process is sourced from clay quarries
that the Group operates on land that it owns or leases under long-term agreements.
The quarries are in the vicinity of our brick manufacturing plants providing security
of supply of the key raw material used in brick manufacture.
Principal Risks: 2, 6, 8
Procurement
The Group is a major customer for a number of its key third party suppliers, which allows
efficient purchasing and transportation, together with the establishment of long-term
relationships. Additionally, for the Group’s concrete products, the main raw materials
are bulky in nature and are locally sourced. Natural gas and electricity costs represent
the greatest input costs apart from labour. The Group regularly reviews its energy costs
and uses forward purchasing contracts to increase pricing certainty when favourable
compared to future price expectations in the open market.
Principal Risks: 1, 5, 6, 8
Product design
The Group continually seeks to improve the quality of its existing products and also
introduce new and sustainable products through innovation and investment in new
technology. Its new product development programme works closely with customers
and our sales team to identify opportunities for new products.
Principal Risks: 4, 6, 8, 9, 11
Manufacturing
The Group has the largest brick production capacity and a strategic footprint across the
UK. We also have the most advanced concrete roof tile line in the UK and our concrete
landscaping and flooring manufacturing facilities provide us with market leading positions.
The Group manufactures bricks through two main methods: wire cut and soft mud, which
take their names from the processes to create them. The Group’s concrete products
are made from cement, sand, admixtures and pigments, which are mixed together.
Principal Risks: 1, 2, 6, 8, 9, 10, 11
Sales
The Group differentiates itself as a manufacturer by employing people to assist
specifiers and customers in their designs and efficient use of our products. Ibstock
sells its products to a diverse group of customers in the UK construction industry.
Each business has its own sales team that is aligned by customer group and region
in order to focus on key decision-makers and customers. This is monitored through
extensive and regular customer satisfaction surveys.
Principal Risks: 1, 3, 4, 5, 6, 7, 8, 9, 10
Distribution
The Group’s 40 principal manufacturing locations across the UK are strategically
located close to main transportation links to facilitate onward distribution.
The Group outsources the majority of its haulage to contractors.
Principal Risks: 2, 6, 8, 10
Ibstock is a leading manufacturer and
supplier of clay, concrete and diversified
building products and solutions to the UK
construction industry with a focus on the
environmental and social impacts of our
business, specialising in products and
systems for the residential building
envelope and infrastructure markets.
What we do
Our core business focuses on the residential
construction sector and we have built
strong relationships with our house builder,
developer, builders’ merchant and distributor
customers over many years. Ibstock Futures
has been established to accelerate diversified
growth opportunities, to address key
construction trends of sustainability and
Modern Methods of Construction (MMC).
Find out more
Our Markets page 24
Our Strategy page 30
Our Key Performance Indicators page 40
Responsible Business page 42
Our Principal Risks and Uncertainties
page 60
Underpinned by our
values and behaviours
Our stated values were developed
internally through a series of interviews
and face-to-face workshops attended by
employees from every part of our business.
Teamwork We work together to
achieve great things
Trust
Care
We earn the trust placed
in us by delivering on
our promises
We care about each
other, our customers
and our wider impact
Courage
We have the courage
to do the right thing
28
Ibstock Plc Annual Report and Accounts 2022 What makes us different
Our stakeholder value proposition
Market leadership
Our market-leading businesses enable
us to benefit from the expected growth
in demand in the UK. We have over
74 million tonnes of consented clay reserves
and 145 million tonnes of clay resources,
providing good support for production
capacity across all our clay plants.
Long-standing customer relationships
Our customer focus is based on quality,
service and consistency. Our service-led
ethos is one of the key drivers in the growth
of our market share in bricks over the past
10 years. Alongside gaining new customers,
many of our long-standing customer
relationships have lasted for over 40 years.
Growing capacity
We are investing new facilities and in the
latest technology to increase capacity
and to meet the growing market demands.
Highly experienced management team
Our motivated and dedicated management
team has extensive experience in the
building products industry.
People
Alongside our focus on providing a safe and healthy working
environment, we invest in ongoing training, development and
career progression. We also encourage employee share ownership
through our Sharesave scheme and our Fire Up share grant, to
ensure that value flows through to all our employee stakeholders.
Communities
In addition to being an important employer as well as taxpayer
in the many areas where our manufacturing facilities are located,
we interact directly with the communities in which we operate,
contributing to them through our work with local schools and charities.
Customers
Builders’ merchants, house builders, specialist brick distributors,
contractors and installers are the five main customer groups for
the Group’s clay and concrete products in the UK. Customers play
a crucial role in shaping our growth and driving our innovation.
Building our understanding of our customers’ priorities is imperative
to meeting their needs. The unrivalled choice of products available
within the Group’s range of clay bricks provide these customers with
the widest selection from which to choose. As a full-range supplier,
our concrete businesses provide customers with a broad product
set upon which to base their buying decisions.
Suppliers
We forge long-term relationships with our key suppliers, and
conduct business in a fair, open and transparent way. Our policies
and procedures are all aimed at ensuring we work safely, equitably
and in the best interests of both our suppliers and ourselves, as well
as the Group’s other stakeholders.
Investors
We have a sustainable and progressive dividend policy. This policy
is supported by businesses with structurally high margins and strong
cash generation and a strategy that provides a strong platform for
future growth and value creation. We are recommending a final
dividend of 5.5p per share for the 2022 year.
Resources and relationships
• Strong heritage and brand known for quality and consistency
• Well invested manufacturing facilities and technology
to support customer service
• Highly skilled workforce
• Strong design focus
• High barriers to entry in our market
• Strong Health and Safety (H&S) track record
• Strong balance sheet
• Unrivalled operational footprint and clay reserves
Environment
We aim to minimise our impact on the environment
wherever possible. Our ESG 2030 Strategy details our
commitment to achieve 40% absolute carbon reduction
by 2030 and to be net zero by 2040 (Scope 1 and 2).
See Responsible Business
on pages 42 to 55.
29
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Our Strategy
Delivering our Strategy
Ibstock’s Strategy is to optimise and enhance
our existing business, whilst investing for
growth in both core and diversified construction
markets. Our Strategy comprises three pillars:
Sustain, Innovate and Grow
Our Strategy comprises three clear pillars,
which are sustain, innovate and grow.
These support the delivery of our purpose.
We believe in ensuring that our business
operates responsibly and delivers value to
all of our stakeholders. We are committed
to delivering our Strategy in the context
of our Environment, Social and Governance
(ESG) 2023 Strategy, and see that these
are fundamentally interlinked.
Underpinning the delivery of our strategy
is our robust business model, our strong
corporate culture and our core values of
Teamwork, Trust, Care and Courage.
It is the combination of all of these elements
that will enable us to deliver our purpose
and our ambition to drive sustainability
in our manufacture of clay and concrete
building products.
Our KPIs on pages 40 and 41 measure
our success against our strategy pillars,
with examples of our strategy in action
across pages 34 to 39.
Sustain
Driving sustainable
performance
Innovate
Market-led innovation
ESG
2030
Strategy
Grow
Well positioned to invest in
further growth projects
30
For more information:
Our Purpose and Business Model, page 28
Responsible Business, pages 42 to 55
Ibstock Plc Annual Report and Accounts 2022 Project – Hudson Quarter
Ibstock Product – Birtley Olde English Buff.
Our strategic pillars
Sustain
Innovate
Grow
As a large-scale industrial business,
sustainable high performance is at
the core of what we do. We are focused
on the following three priorities:
• Health, Safety and Wellbeing
• Operational Excellence
• Environmental Performance
For more information:
Innovation is a critical element of our
growth plans and we are committed to the
continuing enhancement of our product
portfolio and customer proposition to
strengthen our market-leading positions.
Our initiatives are centred around:
• Product Innovation
• Customer Experience
• Digital Transformation
For more information:
Delivering against our Strategy,
pages 32 to 33
Sustain case studies, pages 34 to 35
Improving lives, pages 50 to 51
Operations Review, pages 56 to 59
Delivering against our ESG 2030 Strategy,
pages 46 to 47
Delivering against our Strategy,
pages 32 to 33
Innovation case studies, pages 36 to 37
Futures, pages 22 to 23
Manufacturing materials for life,
pages 52 to 53
Operations Review, pages 56 to 59
Clear path for growth and value
creation through a combination of:
• Expanding our core business
• Diversification into adjacent
market segments
• Grow our people and develop/
embed our culture
For more information:
Delivering against our Strategy,
pages 32 to 33
Growth case studies, pages 38 to 39
Futures, pages 22 to 23
Operations Review, pages 56 to 59
ESG 2030 Strategy
At the heart of our strategic pillars
is our ESG 2030 Strategy setting
out a clear pathway to:
• Address Climate Change
• Improve Lives
• Manufacture Materials for Life
More on pages
42 to 55
31
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Our Strategy – Progress and Targets
Key to progress:
Achieved
On target
Not achieved
Delivering against our Strategy
Strategic Pillar and 2022 Priorities
2022 progress
KPIs/Measure (pages 40 to 41)
Risks (pages 60 to 69)
Priorities for 2023
Link to ESG1
Sustain
Health, safety and wellbeing
• Deliver milestones on the Health and Safety (H&S)
roadmap with completion of site specific action plans
from the standards and procedures maturity matrix
• Complete wellbeing and health actions
• Further progress on safety roadmap with the delivery of several key projects
• Tracking ahead of achieving reduction in Lost Time Injury Frequency Rate
(LTIFR) by 2023 (from 2016 baseline)
• Concrete division achieved a full year without any Lost Time Injuries (LTIs)
(more detail on page 34)
• Health and wellbeing action areas/initiatives continued to gather momentum
with a well established Wellbeing Working Group and focus on mental health
training and awareness weeks now in place and operating successfully
Operational Excellence
• Roll out phase two of the Asset Transformation Plans
(ATP) for maintenance practices in clay sites
• Complete remaining enhancement project at Ellistown
factory in Leicestershire
• Automation and productivity improvements at concrete sites
• All 2022 targets for asset transformation achieved across targeted Clay sites,
along with the Ellistown factory becoming fully operational
• Accelerated our drive to further automate concrete operations, including
the development of a five-year automation plan for fencing and building
manufacturing sites that will continue to support a significant uplift in
capacity, throughput and quality
• LTIFR
• Regulatory and Compliance
• Continue to deliver against H&S roadmap with
• % completion against target actions
• Maintaining Customer Relationships
completion of site specific action plans from the
• % employees trained
and Market Reputation
standards and procedures maturity matrix
• Commence implementation of behavioural safety plan
• Continue to ramp up focus on health, wellbeing and
in particular mental health including introduction
of mental health allies
• Return on Capital Employed (ROCE)
• Product Quality
• Financial Risk Management
• Revenue
• Adjusted EBITDA*
• Adjusted EPS*
• Net Promoter Score *
• Material Operation Disruption
• Continue ATP roll out to underpin reliability agenda
across Clay estate and progress automation activities
across Concrete sites, both underpinned by ongoing
capability support
Environmental performance
• Work to reduce CO2 by 40% from 2019 levels by 2030;
• Work to become a net zero carbon business by 2040
(for Scope 1 and 2)
Innovate
Product innovation
• Complete transformational projects (plastic reduction
and material optimisation)
• Deliver new and sustainable product development plans
for 2022
• Deliver a market development plan and product/solution
offer for mid- to high-rise market segments
Customer experience
• Complete Clay division’s order and service delivery project
Digital transformation
• Complete phase two of the digital transformation
journey for customer experience and service delivery
Grow
Investment in our core
• Complete project milestones for Atlas and Aldridge
projects in the West Midlands
• Complete project milestones to develop the UK’s first
automated brick slip systems factory in Nostell, Yorkshire
• Awarded ‘Manufacturer of the Year’ by Business Green awards in recognition of
our industry leadership on sustainability. There has been continued progress in
the delivery of our ESG 2030 Strategy. Further information can be found in the
Responsible Business section on page 42
• Carbon reduction metric
• Climate Change
• Work to reduce CO2 by 40% from 2019 levels by
• Material Operational Disruption
2030, and become a net zero carbon business
by 2040 (Scope 1 and 2)
• Focus on dematerialisation (plastics and voids)
• Earth Friendly Concrete (more detail on page 36)
• New product ranges and prototyping
• Strengthened nationwide distribution capabilities through the successful
implementation of haulage partnerships across several of our Clay sites.
The approach is driving a step change across the industry in enhancing
customer service, in conjunction with customer service team and digital
portal development. More detail on page 37.
• Appointment of a new Chief Information & Digital Officer focused on developing
technology roadmap, accelerating digital and process enablement plans
• Revenue
• Adjusted EBITDA*
• Both Atlas and Aldridge investment projects are progressing well to schedule.
Please see pages 10 to 17 for further information
• Delivery of key strategic projects across our estate
including Atlas, Aldridge, Anstone, Parkhouse & Nostell
Diversified growth
• Develop organisation, strategy, governance and mid-term
goals of Ibstock Futures
• The scale of Futures division continues to build with firm foundations in place
and the brick slips market opportunity gathering pace
• 2022 progress is discussed on pages 22 and 23
People
Deliver talent and capability outcomes for:
• Early careers
• Strategic recruits
• Diversity and Inclusion (D&I) project
• Significant progress in 2022 with the development and delivery of a focused
people strategy. More detail on page 20
• Female Leadership representation stood at 27% at the end of the year, increasing to
29% March 2023 as at the date of this report, with plans in place to hit a 40% target
by 2030. Further details on pages 50 and 51
32
• Revenue
• Adjusted EBITDA*
• % sales from new and
sustainable products
• Net Promoter Score
• Market Uncertainty
• Continue delivery against New Product Development
• Regulatory and Compliance
(NPD) pipeline in year, with ongoing focus to build
• Material Operational Disruption
pipeline for 2024 and beyond
• Deliver market development plan for modular
segment aligned to Nostell project
• Maintaining Customer
Relationships and Market
Reputation
• Product Quality
• Broaden customer offering through one Ibstock
brand and enhance process efficiency
• Enhance our service offering with the launch
of new digital portal
• Market Uncertainty
• Digital evolution to continue using technology
• Regulatory and Compliance
to deliver improved efficiency, focusing
• Material Operational Disruption
on standardisation of processes, integration
and automation
• Revenue
• Adjusted EBITDA*
• Net debt to Adjusted EBITDA*
• Adjusted ROCE*
• Adjusted EPS*
• Revenue, Adjusted EBITDA*
• Net debt to Adjusted EBITDA*
• Adjusted ROCE*
• Adjusted EPS*
• Female representation on
Senior Management teams
(FTSE Women Leaders definition)
• Market Uncertainty
• Regulatory and Compliance
• Financial Risk Management
• Product Quality
• Market Uncertainty
• Regulatory and Compliance
• Financial Risk Management
• Product Quality
• Scale the Telling and Generix businesses in line with
operational plans. Continue to develop Futures
organisation to underpin growth goals
• Market Uncertainty
• Continue to ‘Fire Up’ cultural development in
• People & Talent Management
service of performance and delivery of results
• Ongoing focus on creating an organisation in
which all employees can belong, grow and thrive
Ibstock Plc Annual Report and Accounts 2022 Sustain
Innovate
Grow
Key to ESG 2030 Strategy
G CLI M
NG E
A
H
C
IN
S
S
E
R
D
D
A
A T E
I
M
P
R
L
I
O
V
V
E
I
S
N
G
M
M
A
NUFAC T U R I N G
ATERIALS F O R L I F E
Sustain
Health, safety and wellbeing
• Deliver milestones on the Health and Safety (H&S)
roadmap with completion of site specific action plans
from the standards and procedures maturity matrix
• Complete wellbeing and health actions
• Further progress on safety roadmap with the delivery of several key projects
• Tracking ahead of achieving reduction in Lost Time Injury Frequency Rate
(LTIFR) by 2023 (from 2016 baseline)
• Concrete division achieved a full year without any Lost Time Injuries (LTIs)
(more detail on page 34)
• Health and wellbeing action areas/initiatives continued to gather momentum
with a well established Wellbeing Working Group and focus on mental health
training and awareness weeks now in place and operating successfully
Operational Excellence
• All 2022 targets for asset transformation achieved across targeted Clay sites,
• Roll out phase two of the Asset Transformation Plans
along with the Ellistown factory becoming fully operational
(ATP) for maintenance practices in clay sites
• Complete remaining enhancement project at Ellistown
factory in Leicestershire
• Accelerated our drive to further automate concrete operations, including
the development of a five-year automation plan for fencing and building
manufacturing sites that will continue to support a significant uplift in
• Automation and productivity improvements at concrete sites
capacity, throughput and quality
Environmental performance
• Work to reduce CO2 by 40% from 2019 levels by 2030;
• Work to become a net zero carbon business by 2040
• Awarded ‘Manufacturer of the Year’ by Business Green awards in recognition of
our industry leadership on sustainability. There has been continued progress in
the delivery of our ESG 2030 Strategy. Further information can be found in the
Responsible Business section on page 42
(for Scope 1 and 2)
Innovate
Product innovation
• Complete transformational projects (plastic reduction
and material optimisation)
• Deliver new and sustainable product development plans
for 2022
• Deliver a market development plan and product/solution
offer for mid- to high-rise market segments
Customer experience
• Complete Clay division’s order and service delivery project
Strategic Pillar and 2022 Priorities
2022 progress
KPIs/Measure (pages 40 to 41)
Risks (pages 60 to 69)
Priorities for 2023
Link to ESG1
• LTIFR
• % completion against target actions
• % employees trained
• Regulatory and Compliance
• Maintaining Customer Relationships
and Market Reputation
• Continue to deliver against H&S roadmap with
completion of site specific action plans from the
standards and procedures maturity matrix
• Commence implementation of behavioural safety plan
• Continue to ramp up focus on health, wellbeing and
in particular mental health including introduction
of mental health allies
• Revenue
• Adjusted EBITDA*
• Return on Capital Employed (ROCE)
• Adjusted EPS*
• Net Promoter Score *
• Material Operation Disruption
• Financial Risk Management
• Product Quality
• Continue ATP roll out to underpin reliability agenda
across Clay estate and progress automation activities
across Concrete sites, both underpinned by ongoing
capability support
• Carbon reduction metric
• Climate Change
• Material Operational Disruption
• Work to reduce CO2 by 40% from 2019 levels by
2030, and become a net zero carbon business
by 2040 (Scope 1 and 2)
• Focus on dematerialisation (plastics and voids)
• Earth Friendly Concrete (more detail on page 36)
• New product ranges and prototyping
• Revenue
• Adjusted EBITDA*
• % sales from new and
sustainable products
• Market Uncertainty
• Regulatory and Compliance
• Material Operational Disruption
• Continue delivery against New Product Development
(NPD) pipeline in year, with ongoing focus to build
pipeline for 2024 and beyond
• Deliver market development plan for modular
segment aligned to Nostell project
• Strengthened nationwide distribution capabilities through the successful
implementation of haulage partnerships across several of our Clay sites.
The approach is driving a step change across the industry in enhancing
customer service, in conjunction with customer service team and digital
portal development. More detail on page 37.
• Net Promoter Score
• Maintaining Customer
Relationships and Market
Reputation
• Product Quality
• Broaden customer offering through one Ibstock
brand and enhance process efficiency
• Enhance our service offering with the launch
of new digital portal
Digital transformation
• Complete phase two of the digital transformation
journey for customer experience and service delivery
• Appointment of a new Chief Information & Digital Officer focused on developing
technology roadmap, accelerating digital and process enablement plans
• Revenue
• Adjusted EBITDA*
• Market Uncertainty
• Regulatory and Compliance
• Material Operational Disruption
• Digital evolution to continue using technology
to deliver improved efficiency, focusing
on standardisation of processes, integration
and automation
Grow
Investment in our core
Diversified growth
goals of Ibstock Futures
People
• Early careers
• Strategic recruits
• Complete project milestones for Atlas and Aldridge
Please see pages 10 to 17 for further information
• Both Atlas and Aldridge investment projects are progressing well to schedule.
projects in the West Midlands
• Complete project milestones to develop the UK’s first
automated brick slip systems factory in Nostell, Yorkshire
• Develop organisation, strategy, governance and mid-term
and the brick slips market opportunity gathering pace
• 2022 progress is discussed on pages 22 and 23
• The scale of Futures division continues to build with firm foundations in place
Deliver talent and capability outcomes for:
people strategy. More detail on page 20
• Significant progress in 2022 with the development and delivery of a focused
• Female Leadership representation stood at 27% at the end of the year, increasing to
29% March 2023 as at the date of this report, with plans in place to hit a 40% target
• Diversity and Inclusion (D&I) project
by 2030. Further details on pages 50 and 51
• Revenue
• Adjusted EBITDA*
• Net debt to Adjusted EBITDA*
• Adjusted ROCE*
• Adjusted EPS*
• Revenue, Adjusted EBITDA*
• Net debt to Adjusted EBITDA*
• Adjusted ROCE*
• Adjusted EPS*
• Female representation on
Senior Management teams
(FTSE Women Leaders definition)
• Market Uncertainty
• Regulatory and Compliance
• Financial Risk Management
• Product Quality
• Market Uncertainty
• Regulatory and Compliance
• Financial Risk Management
• Product Quality
• Market Uncertainty
• People & Talent Management
• Delivery of key strategic projects across our estate
including Atlas, Aldridge, Anstone, Parkhouse & Nostell
• Scale the Telling and Generix businesses in line with
operational plans. Continue to develop Futures
organisation to underpin growth goals
• Continue to ‘Fire Up’ cultural development in
service of performance and delivery of results
• Ongoing focus on creating an organisation in
which all employees can belong, grow and thrive
1 See pages 42 to 55 for the ESG 2030 Strategy.
33
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Our Strategy in Action: Sustain
DELIVERING A STEP
CHANGE IN SAFETY
Celebrating ONE year with ZERO lost time
incidents across the Concrete Division.
Will Hicks, Operations Director, talks about
our safety journey and why it’s so important
Employees at our Barnwell Factory, celebrating over
5,000 days without a lost time incident on site.
“Safety is our number one
priority. Every single visitor,
employee and contractor
should be able to come to
work and go home to friends
and family in the same
condition they arrived in.”
Since 2018, we’ve taken considerable
steps forward, with:
• Safe Start – every site employee receives
half a day’s reminder training at the start
of the year
• A real focus on culture – setting a zero
tolerance approach towards our Health
and Safety (H&S) rules
• Connecting with all employees – setting
clear direction that there is nothing more
important than safety. Developing
everyone’s understanding of expectations,
rules, regulations and most importantly
what a good safety culture looks like
• Risk prioritising – we have taken a
risk-based approach across critical
milestones detailed in our H&S roadmap,
with a clear framework to progress
• Leadership – investment in our leadership
has played a key role, we have appointed
Safety, Health, Environment & Quality
Coordinators (SHEQ) at every site. As well
as Senior Managers, Factory Managers
and SHEQs successfully completed
National Examination Board in
Occupational Safety and Health
(NEBOSH) certificates during the year
• Investment – we have made strategic
investments into dedicated safety/welfare
improvement projects
Our focus on H&S has improved operational
efficiency and increased employee engagement
across the division. We continue to strive for
improvement but we are steadily building a
safety culture, which everyone believes in.
There are many examples of employees
looking out for each other and we are seeing
large numbers of positive observations being
raised, as well as people stopping processes
if something is not right or warning others
if their safety behaviour does not meet our
expectations. Equally, we retain our rigour
in ensuring any LTI is appropriately reported.
We will continue embedding our safety
culture with increased coaching, drive our
H&S roadmap actions, and champion the
improvement of welfare and wellbeing
across our sites over the coming year.
34
Ibstock Plc Annual Report and Accounts 2022 DELIVERING
OPERATIONAL EFFICIENCY
In the centre of our historic Leicester Estate, our
SM2 Factory (soft mud), producing over 40 million
bricks per annum. Wayne Belcher, Factory Manager,
shares how the site has gone from strength to strength
Project: Vistry Group – Northstowe Homes
Product: Ivanhoe Cream Original range products from our SM2 Factory.
“I am delighted with the
continuous improvement of
the site which is now home
to the new Albus, Niveus and
Tenebris brick ranges that
we launched in 2022.”
We have increased operational efficiency
significantly at the site over the last few
years, driven by three key initiatives:
Firstly, our continued focus on safety.
I am pleased to say that safety is regarded
as a shared responsibility by each of our
employees, and this level of engagement
makes our working environment much safer.
Secondly, we have focused on ensuring that
our employees receive the right training and
development so that they can do their jobs
to the highest standards, including safety.
Finally, we have invested resource into our
operational equipment efficiency (OEE)
which has resulted in a significant increase
in our OEE rate. Integrating our maintenance
with the brick making process has given us
greater flexibility in proactively servicing
our assets, whereas historically this had
been performed on a reactive basis.
These initiatives have helped us improve
production accuracy, speed and efficiency.
We can monitor our operations and take
action before a maintenance issue can
impact our production, enabling us to meet
production volumes, maintain kiln speeds
and ultimately deliver on our business and
customer commitments.
I am proud of the progress we have made
on-site over the year, and pleased that the
production team continues to uphold high
H&S standards and push for ever higher
efficiency rates.
35
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Our Strategy in Action: Innovate
DELIVERING
INNOVATIVE
PRODUCTS FOR
CUSTOMERS
As part of our delivery of innovative new
products for customers, we proactively seek
new solutions with improved environmental
performance. An example is our new
partnership with Earth Friendly Concrete
Northwich Concrete Factory.
36
In September 2022, our Concrete Division
entered into a new partnership to create
ultra-low carbon concrete products with
Earth Friendly Concrete, UK. Earth Friendly
Concrete (EFC) is more sustainable than
traditional concrete, with around 70% less
embodied CO2. It is made from a binder
consisting of industrial waste products,
ground granulated blast furnace slag and
pulverised fly ash with no Portland Cement.
The partnership will see EFC’s ultra-low
carbon, zero cement technology integrated
into our diverse portfolio of high performance
building products including our range of
products for the rail, infrastructure and
UK housing markets. We are excited about
the potential for offering complementary
concrete product ranges with a lower
embodied carbon element.
This technology offers interesting
possibilities for further product
development, having different properties
to, and some performance advantages
over, conventional Portland Cement-based
products. These include improved durability,
lower shrinkage, higher flexural tensile
strength and increased fire resistance.
EFC is the only zero cement concrete
technology that has been proven at scale
in commercial projects around the world.
Since it was launched in 2020, EFC has
saved around 2,000 tonnes of CO2 across
construction projects. It has been used in
several high-profile projects including High
Speed 2 (HS2) and the Silvertown Tunnel.
Ibstock Plc Annual Report and Accounts 2022 Great progress has been made in improving
our customer service performance resulting
from our continued successful enhancement
of our haulage partnerships.
Within the first few weeks of ‘going live’
with new haulage contracts, our service
delivery scores were achieving greater
than 97% on time delivery consistently.
We are delighted with the initial feedback
from customers and plan to build on
this success in developing our customer
service plans.
On time delivery
>97%
This year we have invested in our customer
service teams and new technology to improve
the customer experience. Our new customer
portal will further strengthen our customer
offering, facilitating speedier ordering and
increased flexibility for our customers.
Alongside our haulage improvements,
we are investigating how we can improve
environmental performance by reducing
empty miles and exploring alternative
fuels, whilst ensuring we manage cost and
reliability. We anticipate that this will assist
in reducing carbon emissions, benefitting our
customers, our business and the environment.
“Ensuring that Ibstock
remains the supplier of
choice is fundamental to
the success of the Group,
and our distribution service is
a significant contributor to this.”
Joanne Humphrey
Logistics and Supply Chain Director
37
New Ibstock haulage vehicle livery.
DELIVERING
ON CUSTOMER
EXPERIENCE
Strengthening our nationwide distribution
capabilities and customer service has
been a focus in 2022, and we have
made significant progress in this area
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Our Strategy in Action: Grow
Atlas Factory in West Midlands, currently under construction .
DELIVERING GROWTH
IN OUR CORE BUSINESS
Redevelopment of our Atlas factory in the West
Midlands is an important part of our growth
strategy. Andrew Craddock, Manufacturing
Development Director explains progress to date
Our pathfinder factory on our journey to
NET
ZERO
The project to redevelop Atlas is on track
to commence commissioning from the end
of 2023, with production scheduled to be
ramped up in 2024.
Atlas is the next crucial part of our journey to
net zero and is our pathfinder factory where
we are taking a test and learn approach to
further reduce the embodied carbon of our
products. Once operational, our Atlas product
range will include our lowest embodied carbon
bricks and will be verified to PAS2060
standard for carbon neutrality.
The new Atlas factory will produce significantly
lower carbon emissions per product than the
previous factory – estimated at 50%. This will
be achieved through investment in a number
of energy efficiency and heat optimisation
technologies, as well as on-site renewable
electricity and a shift to electric mobile plant.
During the year good progress has been made on
the project. The pre-existing site has been cleared
of redundant equipment, the building extension
has been completed, the new foundations have
been largely laid, the kiln and dryer build are well
progressed, brick making equipment manufacture
is well advanced, with some equipment delivered
to site and people recruitment has commenced,
with the site operational management team now
in place. Project delivery has been supported by
the close collaboration of our teams across the
business, which has been a highlight of the
activities to date. In line with our commitment
to Health and Safety (H&S), the construction
team has established a strong H&S culture on
site, with no Lost Time Injuries to date.
Altas will support our carbon reduction
commitments and wider ESG ambitions.
We believe that Altas will set a new benchmark
in our industry, create quality skilled jobs
and add real value to the local economy.
38
Ibstock Plc Annual Report and Accounts 2022 DELIVERING
DIVERSIFIED
GROWTH
Diversification into innovative forms of
Façade Cladding and Glass Reinforced
Concrete (GRC) began with the acquisition
of assets to form Ibstock Telling, the first
successful investment completed as part
of our wider Futures strategy
Employee at our Ibstock Telling Factory in the West Midlands.
Ibstock Telling is based in the West Midlands,
where the team expertly design, develop and
engineer modern methods of construction for
mid- and high-rise buildings in the residential
and commercial sectors. The product range
includes energy efficient Façade technologies,
large format panel systems and bespoke
Façade total solutions.
Ibstock Telling’s skilled workforce produce
a wide range of GRC projects, from basic
flat panel formats, to complex 3D and
curved forms, prefabricated and pre-
finished with ceramic or brick. All products
are manufactured and assembled prior to
reaching building sites, and hence provide
our customers with substantial time and
cost benefits.
As the leading European manufacturer of
GRC, we are proud of our unique technology,
leadership and manufacturing expertise
offering. Our innovative approach and design
of modern day Façades includes:
• Pigmented colour or natural grey
or white Façades
• Textural or smooth-faced Façades
• Pre-mixed GRC cast in moulds made
from GRC, rubber or timber
We are able to produce an unmatched
consistency in detail and quality available
across both GRC and Brick Faced GRC, all of
which are tested to EN 13501-1, hold an A1
Non-combustible Euro Class Fire Rating and
have a BRE certified Environmental Product
Declaration (EPD). This provides an excellent
platform for growth in the mid- to high-rise
building sector.
Our extensive storage facilities enable panels
to be manufactured in advance and stored
in readiness for delivery to construction sites,
enabling speed and efficiency of build.
39
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Our Key Performance Indicators
Financial
KPIs
Revenue
£m
Adjusted EBITDA1
£m
2018
2019
2020
2021
2022
391
409
409
316
2018
2019
2020
2021
2022
513
52
112
122
103
140
Description
Revenue represents the value for the sale
of our building products, net of local sales
tax and trade discounts.
Description
Represents profit before interest, taxation,
depreciation and amortisation after
adjusting for exceptional items1.
Why important?
Revenue provides a measurement of
the financial growth of the Group.
Why important?
Adjusted EBITDA1 provides a key measure
to assess the Group’s profitability.
Link to strategy
Link to strategy
Remuneration linkage
No specific linkage to remuneration
structures at present.
Remuneration linkage
A key financial measure within the Annual
and Deferred Bonus Plan (ADBP).
Net debt to adjusted EBITDA1
Ratio
Adjusted ROCE1
%
Adjusted EPS1
Pence per share
0.74
2018
2019
2020
2021
2022
0.43
0.40
0.40
1.50
2018
2019
2020 3.7
2021
2022
20.6
19.3
15.8
23.4
2018
2019
2020
2021
2022
4.0
18.8
18.3
13.9
22.7
Description
Net debt, comprising short- and long-term
borrowings less cash, over adjusted EBITDA1
(as defined) prior to the impact of IFRS 16.
Why important?
Net debt to adjusted EBITDA1 provides a
useful measure in assessing the Group’s
management of its borrowings.
Link to strategy
Description
The ratio of profit before interest and
taxation, after adjusting for exceptional
items1, to average net assets and debt
(excluding pension).
Why important?
Adjusted ROCE1 provides an indication
of the relative efficiency of capital use
by the Group over the year.
Link to strategy
Remuneration linkage
No specific linkage to remuneration
structures at present.
Remuneration linkage
A key measure within the current
LTIP construct with a weighting
of 20% of total opportunity.
Description
Basic earnings per share adjusted for
exceptional items1, amortisation and
depreciation on fair valued uplifted
assets and non-cash interest, net of
tax (at the Group’s effective tax rate).
Why important?
Adjusted EPS1 provides useful information
in assessing the performance of the Group
and when comparing its performance across
comparative periods.
Link to strategy
Remuneration linkage
A key measure within the current
LTIP construct with a weighting
of 30% of total opportunity.
1 Alternative Performance Measures are described in Note 3 to the consolidated financial statements.
40
Ibstock Plc Annual Report and Accounts 2022
Non-
Financial
KPIs
Lost time injury frequency rate
Net promoter score
%
2018
2019
2020
2021
2022
2.8
3.4
2.2
2.1
1.47
000
2018
2019
2020
2021
2022
40
39
34
33
45
Description
The number of lost time injuries occurring in
our workplace per one million hours worked.
Why important?
The measure gives a picture of how
safe a workplace is for its workers.
Link to strategy
Remuneration linkage
No specific linkage to remuneration
structures at present.
Description
As part of our annual satisfaction survey,
customers are asked how likely they are
to recommend the Group to friends and
colleagues. Responses are between zero
(unlikely) to 10 (very likely). The Net Promoter
Score (NPS) is derived from the proportion
of our customers scoring nine or 10 less
those scoring six or lower.
Why important?
It is used as a proxy for gauging our
customer’s overall satisfaction with our
products, service levels and the customer’s
loyalty to the brand.
Link to strategy
Remuneration linkage
No specific linkage to remuneration
structures at present.
Carbon reduction metric
Share of revenue from new products %
2018
2019
2020
2021
2022
0.167
0.159
0.160
0.141
0.145
2018
2019
2020
2021
2022
No data collected prior to 2019.
11.5
11.7
13.0
13.0
Description
KPI shows the amount of carbon produced
per tonne of finished production in the
manufacture of building products.
Why important?
Provides a key measure of our progress
against our carbon reduction targets
(see page 46) and demonstrates our
commitment to addressing our impacts
on the environment through the reduction
in our use of energy.
Link to strategy
Remuneration linkage
Measure in LTIP with 10%
weighting of opportunity.
Description
Proportion of revenue as defined above
generated from new and sustainable
products introduced to the market
within the last five years.
Why important?
This demonstrates our progress relative
to our new product development goals.
Link to strategy
Remuneration linkage
Measure in LTIP with 5%
weighting of opportunity.
Key to progress:
Sustain: sustainable performance
Innovate: market-led innovation
Grow: selective growth
41
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Responsible Business
DELIVERING
ON OUR ESG
COMMITMENTS
42
Introduction
Environment, Social and Governance (ESG)
agenda matters are central to how we operate
and we are committed to leading our sector
in this space. As an energy intensive user we
know we have a critical role to play in shifting
to a low carbon built environment that is
designed and manufactured for the long-term
success of local communities. This includes
providing safe, strong, low carbon products
for our customers that, through their integral
durability and beauty, will last for generation.
Stakeholders
To ensure our long-term success, we must
take account of what is important to all
our stakeholders. Pages 44 to 45 set out
the details of our key stakeholder groups. This
includes a snapshot of their principal areas of
focus, how we engage and how we respond.
Consideration of our stakeholder interests
forms a significant part of Board decision-
making processes. Further information on
this can be found in the Section 172(1)
Statement and the Corporate Governance
Statement on pages 88 and 101 respectively.
ESG 2030 Strategy launch
In 2022 we launched our ESG 2030 Strategy
which embodies our structured approach
to achieve our ambitions. Our ESG 2030
Strategy focuses on three key areas and
is underpinned by our responsible business
governance and practice:
1. Addressing Climate Change
The main driver is the mitigation of climate
change through carbon reduction. We will
decarbonise our products, processes and
supply chain by focusing on carbon reduction,
water efficiency and biodiversity gains. This
will drive us to achieve 40% absolute carbon
reduction by 2030 and to be net zero by 2040
(Scope 1 and 2).
2. Improving Lives
Building our social value by investing in our
people, our culture and our communities.
Ensuring our employees belong, thrive and
grow and that we make a positive impact
in the communities that we operate.
3. Manufacturing Materials for Life
Evolving our products, processes and services by
incorporating whole life cycle design, preserving
raw materials and future proofing our offer
to customers through a diversified portfolio.
Each of our ESG 2030 Strategy ambitions
and milestones focus on an area that has
been identified as the most material to
our business, through engagement with
our key stakeholder groups.
Ibstock Plc Annual Report and Accounts 2022 Embedding our strategy in 2022
This year, we have worked to integrate
the ESG 2030 Strategy into our business.
A significant part of this process has been
to consider the transformational changes
required to achieve our target of net zero
by 2040 (Scope 1 and 2). Our work to address
future energy consumption to lower process
emissions within our business have been
supported by increased engagement with
industry partners and experts. It is clear that
investing now in research and trials will bring
the longer-term step changes needed to
achieve our absolute carbon target.
Our carbon intensity ratio was 0.145 tonnes
of CO2 per tonne of production during the
year. Although this was a year-on-year decline
this still represents a 9% improvement relative
to our 2019 baseline. Our carbon efficiency
progress was behind our projection so we are
addressing underlying factors to ensure we
are in line with our ESG 2030 Strategy targets.
Our new Atlas factory build progressed in
2022. This is our pathfinder factory on our
journey to net zero and will deliver significant
carbon efficiencies in its brick production.
Our commitment to manufacturing
materials for life has seen strong progress
this year with our concrete division leading
on innovative trials and developments.
The announcement of our partnership with
Earth Friendly Concrete is an example of this
as we innovate to find new, lower carbon
solutions for our customers. Ibstock Futures
has also been accelerating our progress on
more sustainable and Modern Methods of
Construction (MMC). An example is Ibstock
Telling, described on page 39. This business,
alongside our acquisition of Generix, will
support our expansion into the mid- to
high-rise market over the years.
By making these longer-term commitments
and embedding climate-related risk and
opportunity into the business, with strong
governance and internal targets, we have
improved our Carbon Disclosure Project
rating from C- to B in only our second year
of reporting.
It is not only in carbon reduction where
we are driving major change. Our social
focus on improving lives includes significantly
increasing female senior leader representation,
to an ambitious target of 40% by 2027. Along
with a range of other ambitions to improve
diversity, this has pushed the business to
rethink inclusivity, as part of our building
belonging culture.
Joe Hudson and Emily Landsborough receiving industry awards
in recognition of our net zero ambitions and progress.
Taskforce for Climate-related
Financial Disclosure (TCFD)
Understanding the transition and physical
risks of climate change on our business,
including our operations, infrastructure,
people and customers, means taking into
account the likely increase in extreme
weather events and the consequent impacts
on our service reliability, energy supply
and our supply chain. The opportunities
to mitigate these risks will vary depending
on the geographic location of our facilities.
During 2022, we strengthened our climate
related governance processes and risk
scenario analysis, alongside the completion
of financial impact assessment of our most
material risks and opportunities. As we
continue to embed climate considerations
into our operations, this will refine our
understanding of risk interdependencies
and guide our risk mitigation plans.
Further information on our Principal Risks
and Uncertainties can be found on page 60,
and our TCFD Statement can be found on
page 76.
ESG in Remuneration and Objectives
Executive remuneration continues to align
to the ESG targets with three of the Group’s
non-financial KPIs being included in the
Long-Term Incentive Plan (LTIP) performance
targets. The targets regarding carbon
reduction, new product development (NPD)
and women in senior leadership positions
will continue to be included within the 2023
LTIP framework. In addition to Executive
remuneration all senior leaders were given
an ESG-linked objective in 2022 supporting
the embedding of our ESG 2030 Strategy.
Further information on this can be found
in the Directors’ Remuneration Report on
page 115.
Focus for 2023
In 2023 we will continue to deliver against
our ESG 2030 Strategy. In particular we
will be focusing on our carbon commitments
with a drive for further efficiencies across our
operations. We will continue to research new
and alternative technologies to make step
changes in carbon reduction, and deliver
improvements in our product embodied
carbon data transparency.
Joe Hudson
Chief Executive Officer
43
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Responsible Business continued
Stakeholder
Engagement
The Board carefully considers the outcomes for stakeholders as part
of their duty to act in the way, they consider, would be most likely to
promote the success of the Company (s172 of the Companies Act
2006). This results in an approach whereby decisions are made that
result in consistently high standards of business conduct and the
success of Ibstock in the long-term. By understanding each key
stakeholder’s interests, priorities and views, the Board is able to
consider these when making decisions where such interests and
priorities potentially conflict. Although the Board engages directly
Employees
Communities
Customers
The people who live and
work in the local communities
around our sites and operations
The businesses and
organisations that
buy our products
Areas of focus:
• Localised environmental impacts
• Employment, education and training
• Equal opportunities
• Financial support for local
Community activity
How we engage across the Company:
• Factory Managers link with local
community
• Estates team liaison with local authorities
and interest groups
Areas of focus:
• Product value, pricing and quality
• Volume and availability
• Quality of customer service
• Strong, collaborative relationships
• Visibility into embodied carbon in products
How we engage across the Company:
• Account Management Teams
• Customer Service Team
• Design and Specification Advisors
• Customer feedback, including focus groups
• Charity Champion network
• Early Careers engagement with training
for specific customer categories, for example
architects and builders’ merchants
and education sector
• MyIbstock community stories
• Quality and complaints team
• Social media
How we engage at Board level:
• The members of the ESG Committee
How we engage at Board level:
• The Board receives updates on the
receive a quarterly summary of material
issues or points of interest from Ibstock’s
community stakeholder champions
including the Estates Team, Early Careers,
Charity Champions and Factory Managers
• Through MyIbstock, significant content is
shared by employees on our community
work and charitable activities. This system
enables the Board to engage with and
monitor activity
Outcomes:
The Board were supportive of colleague
preference to devolve our approach to
Giving Back to support more local causes
with our matched funding offer
The Board reviewed the proposed approach
to measuring the social value of the business
relationships with existing customers
• Customer and employee feedback is fed
into Board discussions, which together
with market insights shapes strategic
decisions, including plans related to
capital investment and innovation
• The Board receives and considers the
Net Promoter Score (NPS) results
Outcomes:
Due to increased input costs from rising
energy prices and inflation, the Board in
recognition of consultation with customers,
approved the pricing strategy for 2022
Futures acquisitions this year were
supported by the Board following
market insights
Employees that work
in our business
Areas of focus:
• Fair pay and benefits
• Culture that cares and is inclusive
• Development for growth and resilience
How we engage across the Company:
• ‘Fire Up’ cultural transformation
programme (see more on page 18)
• The Week – weekly video update from
an Executive Leadership Team member
posted on MyIbstock, published on digital
screens and emailed to all employees
• Ibstock Informed presentations and
live open Q&A panel sessions
• MyIbstock news and employee
blogs Safe Start conversations
• Employees are encouraged to visit
other sites and share best practice
How we engage at Board level:
• The Listening Post is our formal mechanism
for employee engagement and sharing
employee views with the Board
• Board members visit our sites and senior
management join meetings for specific
items for example through ESG
Committee visits
• Regular direct progress reports on People
and Culture from the Group People Director
• MyIbstock provides employee blogs and
thought pieces which members of the
Board are able to interact with
Outcomes:
Board oversight of employee pay
and reward philosophy
Board sponsorship of the Fire Up cultural
transformation programme, Fire Up
share grant and cost of living adjustment,
see page 21 for further information
Senior leadership gender diversity
target supported by the Board
44
Ibstock Plc Annual Report and Accounts 2022 with some stakeholders, the majority of engagement takes place
across various levels and teams within the business. The Chairs
of the Board and the various Committees are available to engage
with shareholders on their areas of responsibility on request.
The output from engagement below Board level is reported to
the Board and/or Board Committees to help inform both Board
and other business level decisions. During 2022 we developed
our approach to monitoring stakeholder engagement, focusing
on qualitative reporting to the Executive Leadership Team (ELT) and
Board, with the objective of identifying trends and emerging issues
of pertinence to each stakeholder group. This enabled the ELT and
the Board to readily consider stakeholder issues in decision-making.
The Section 172(1) Statement can be found on page 88. Key activities
and an explanation of some of the principal decisions undertaken by
the Board in 2022 are detailed on page 101.
Suppliers
Investors
Government and Regulators
Our trusted partners provide
us with materials, goods
and services
Areas of focus:
• Continuity of supply
• Risk management
• Open dialogue in rapidly changing
circumstances
• Mutually beneficial formalised agreements
How we engage across the Company:
• Regular supplier review meetings
• Procurement team meetings
• Supplier Sustainability Code of
Business Conduct
• Knowledge sharing from key
external boards and partner projects
• Supplier engagement day with
26 key suppliers
How we engage at Board level:
• Oversight of major supplier agreements
• Updates on supplier engagements such
as supplier engagement days, and matters
of interest to suppliers
Outcomes:
The Board supported the Group-wide
haulage review which has seen successful
appointment of two new haulage partners,
resulting in an improved on-time delivery
rate of over 97%
Individuals or institutions
who own shares in Ibstock Plc
Government bodies
and agencies
Areas of focus:
• Financial performance and progress
against strategy
• ESG performance and ambitions
• Balance sheet management and
approach to capital allocation
• Business resilience and prospects
• Return on investment
• Risk management
How we engage across the Company:
• Investor roadshows
• Results presentations
• Annual General Meeting
• One-to-one meetings and calls with
investors and brokers
• Chairman and NED meetings on request
How we engage at Board level:
• Members of the Board including the
CEO and CFO meet with shareholders and
analysts as part of the regular annual cycle
• Communications are maintained with the
market in accordance with all requirements
and we publish results and trading updates
through the year. Feedback from these
meetings and communications were
reported to the Board on a regular basis
Outcomes:
The Board considered shareholder
views when assessing the share buyback.
Investors were supportive, with the
repurchase of shares generally considered
to represent a good use of shareholders’
capital when benchmarked against
alternatives uses. More details on
the share buyback programme can
be found on page 73
Areas of focus:
• Workplace health and safety
• Energy and climate change
• Legal and regulatory compliance
How we engage across the Company:
• Industry bodies, forums and conferences
• Direct liaison with Government and
Regulatory bodies where pertinent
How we engage at Board level:
• Updates from the Group Company
Secretary at each Board Meeting
• Reports from our external advisors
• Direct liaison as required
Outcomes:
During the year the Board accessed
subject matter expertise and training on
legislative, regulatory and best practice
changes and considered the impact on
strategy and business activity
Pension Fund Members
and Trustees
The trustees and members of the
Ibstock pension schemes:
Areas of focus:
• Pension scheme member interests
How we engage across the Company:
• Direct liaison with Trustees
• Financial oversight
How we engage at Board level:
• Regular reports from the finance team
Outcomes:
With the Company’s support in 2022
the Trustees agreed a buy-in transaction
covering all remaining pension liabilities
45
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Responsible Business continued
Delivering against our
ESG 2030 Strategy
Focus ESG 2030 Strategy Ambitions
Milestones
Progress in 2022
SDGs1
Rationale for Ibstock
Carbon reduction
Reduce absolute carbon by 40% (Scope 1 and 2)
against a 2019 baseline
2030 – 40% reduction in carbon emissions (Scope 1 and 2)
13% decrease in absolute carbon relative to 2019 baseline,
Clean Water and Sanitation: Water scarcity is a growing concern
9% reduction in tonnes of carbon per tonne of production
in the UK and a risk to our business
relative to 2019 baseline
Biodiversity Net Gain
Achieve Biodiversity Net Gain (BNG) across our estate using
a Biodiversity Metric (measures an area’s value to wildlife)
Water Efficiency
Reduce mains water use by 25% per tonne of production
against a 2019 baseline
Health, Safety and Wellbeing
Ensure all of our employees can be at their best more of the
time through our health, safety and wellbeing strategies
Inspiring Futures
Provide development and growth for all with every
employee developing their skills annually and 10%
in Earn and Learn positions
Employee Experience
Increase female senior leadership representation to 40%
by 2027 as part of our proactive approach to diversity
and inclusion
Innovation
Achieve 20% sales turnover from new products and
solutions that deliver enhanced customer value and
improved sustainability
Circular Economy
Embed circular economy principles into the business,
prioritising zero waste and driving demand for secondary
materials markets
2022 – Scope 3 carbon reduction strategy developed
Scope 3 carbon reduction strategy developed
2023 – Atlas factory opens
Construction underway of Atlas our pathfinder factory
2024 – 100% of mobile plant to be hybrid and/or electric
14% of mobile plant is fully electric
2024 – On-site renewable energy generation review published
Solar being included at the Atlas factory, Wind power
2026 – Biodiversity Action Plans implemented across all sites
2030 – 25% reduction in mains water use
2023 – Water footprint and reduction strategy implemented
2023 – 50% reduction in LTIFR
2022 – Launch mental health programme
2023 – Launch wellbeing strategy
2030 – 10% in Earn and Learn positions
review feasibility ongoing
First site reviews of biodiversity value complete,
ongoing responsible estate management
31% reduction in mains water use per tonne
of production relative to 2019 baseline
Water working group established to develop
water reduction strategy
61% reduction in LTIFR
Mental health programme launched
Wellbeing working group established to develop the strategy
7.5% of our employees in earn and learn positions
2023 – Commence ethnicity data pay gap reporting
Baseline data gathering commenced
generations entering our sector
2022 – Establish social value framework
Most material social value indicators identified for the business
2026 – 200 Ibstock employees as active Science Technology
Engineering Maths (STEM) Ambassadors
18 active STEM ambassadors
2027 – Increase female senior leadership representation to 40%
27% women in senior leadership roles
2022 – Launch Building Belonging
Building belonging programme for inclusion launched
2030 – 20% sales turnover from new products and solutions
13% sales turnover from new and sustainable products
2022 – Ibstock Futures launch
2024 – Slips factory opens at Nostell
2024 – Research into alternative and secondary materials published
Research into alternative and secondary materials
2025 – Zero waste to landfill achieved
2024 – Product data transparency project
Ibstock Futures launched
Development of the Nostell site underway
underway with external partners
2.4% general waste going to landfill
Investment in Environmental Product Declarations
(EPDs) for key ranges
Affordable and Clean Energy: Self generation of renewable energy
reduces our carbon impacts and reliance on the national grid
Responsible Consumption and Production: Production efficiency
is at the heart of modern manufacturing and we continuously strive
to improve by reducing energy and materials consumption
Climate Action: Building climate risk and opportunity into our
business model and strategic planning processes supports our
decarbonisation journey
Use of Land: All sites operate with due care and consideration
for biodiversity. Moving to a net positive position will see Ibstock
introduce more proactive biodiversity programmes
Good Health and Wellbeing: Wellbeing of our employees
is paramount in enabling them to perform, develop and thrive
at work and at home
Quality Education: Education, training and development of our
people is essential for our success as is our support for future
Gender Equality: Proactively supporting women into the
construction sector helps tackle the skills shortage and brings
diversity of thought to the way the sector behaves
Decent Work and Economic Growth: Ibstock’s Modern
Slavery Statement can be found on our corporate website
www.ibstockplc.co.uk
Industry, Innovation and Infrastructure: Innovation in building
products and solutions will support the transition to a low carbon
economy and transform the industry
Sustainable Cities and Communities: Creating sustainable products
that meet the needs of our customers to build connected, integrated
and healthy communities presents a growth opportunity
Responsible Consumption and Production: Preserving raw materials
for future generations and sourcing responsibly safeguards our
business and our suppliers
Dematerialisation
Reduce raw materials consumption with a focus on plastics,
secondary aggregate and cementitious replacements
2022 – Impacts of clay dematerialisation project published
‘Delivering Dematerialisation’ White Paper published
2025 – 40% plastic reduction achieved
16% reduction in preventable plastic achieved
G
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46
Ibstock Plc Annual Report and Accounts 2022
Focus ESG 2030 Strategy Ambitions
Milestones
Progress in 2022
SDGs1
Rationale for Ibstock
Carbon reduction
Reduce absolute carbon by 40% (Scope 1 and 2)
against a 2019 baseline
2030 – 40% reduction in carbon emissions (Scope 1 and 2)
13% decrease in absolute carbon relative to 2019 baseline,
9% reduction in tonnes of carbon per tonne of production
relative to 2019 baseline
Clean Water and Sanitation: Water scarcity is a growing concern
in the UK and a risk to our business
G
N
I
S
S
E
R
D
D
A
E
G
N
A
H
C
E
T
A
M
I
L
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N
I
V
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S
L
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R
E
T
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2024 – On-site renewable energy generation review published
Biodiversity Net Gain
2026 – Biodiversity Action Plans implemented across all sites
Achieve Biodiversity Net Gain (BNG) across our estate using
a Biodiversity Metric (measures an area’s value to wildlife)
Reduce mains water use by 25% per tonne of production
Water Efficiency
against a 2019 baseline
2030 – 25% reduction in mains water use
2023 – Water footprint and reduction strategy implemented
Health, Safety and Wellbeing
2023 – 50% reduction in LTIFR
Ensure all of our employees can be at their best more of the
time through our health, safety and wellbeing strategies
2022 – Launch mental health programme
2023 – Launch wellbeing strategy
2030 – 10% in Earn and Learn positions
Inspiring Futures
Provide development and growth for all with every
employee developing their skills annually and 10%
in Earn and Learn positions
and inclusion
Innovation
Achieve 20% sales turnover from new products and
solutions that deliver enhanced customer value and
improved sustainability
Circular Economy
Embed circular economy principles into the business,
prioritising zero waste and driving demand for secondary
materials markets
2022 – Ibstock Futures launch
2024 – Slips factory opens at Nostell
2024 – Research into alternative and secondary materials published
2025 – Zero waste to landfill achieved
2024 – Product data transparency project
2022 – Scope 3 carbon reduction strategy developed
Scope 3 carbon reduction strategy developed
2023 – Atlas factory opens
Construction underway of Atlas our pathfinder factory
2024 – 100% of mobile plant to be hybrid and/or electric
14% of mobile plant is fully electric
Solar being included at the Atlas factory, Wind power
review feasibility ongoing
First site reviews of biodiversity value complete,
ongoing responsible estate management
31% reduction in mains water use per tonne
of production relative to 2019 baseline
Water working group established to develop
water reduction strategy
61% reduction in LTIFR
Mental health programme launched
Wellbeing working group established to develop the strategy
7.5% of our employees in earn and learn positions
2023 – Commence ethnicity data pay gap reporting
Baseline data gathering commenced
2022 – Establish social value framework
Most material social value indicators identified for the business
2026 – 200 Ibstock employees as active Science Technology
Engineering Maths (STEM) Ambassadors
18 active STEM ambassadors
Employee Experience
2027 – Increase female senior leadership representation to 40%
27% women in senior leadership roles
Increase female senior leadership representation to 40%
by 2027 as part of our proactive approach to diversity
2022 – Launch Building Belonging
Building belonging programme for inclusion launched
2030 – 20% sales turnover from new products and solutions
13% sales turnover from new and sustainable products
Dematerialisation
2022 – Impacts of clay dematerialisation project published
‘Delivering Dematerialisation’ White Paper published
Reduce raw materials consumption with a focus on plastics,
secondary aggregate and cementitious replacements
2025 – 40% plastic reduction achieved
16% reduction in preventable plastic achieved
Ibstock Futures launched
Development of the Nostell site underway
Research into alternative and secondary materials
underway with external partners
2.4% general waste going to landfill
Investment in Environmental Product Declarations
(EPDs) for key ranges
Affordable and Clean Energy: Self generation of renewable energy
reduces our carbon impacts and reliance on the national grid
Responsible Consumption and Production: Production efficiency
is at the heart of modern manufacturing and we continuously strive
to improve by reducing energy and materials consumption
Climate Action: Building climate risk and opportunity into our
business model and strategic planning processes supports our
decarbonisation journey
Use of Land: All sites operate with due care and consideration
for biodiversity. Moving to a net positive position will see Ibstock
introduce more proactive biodiversity programmes
Good Health and Wellbeing: Wellbeing of our employees
is paramount in enabling them to perform, develop and thrive
at work and at home
Quality Education: Education, training and development of our
people is essential for our success as is our support for future
generations entering our sector
Gender Equality: Proactively supporting women into the
construction sector helps tackle the skills shortage and brings
diversity of thought to the way the sector behaves
Decent Work and Economic Growth: Ibstock’s Modern
Slavery Statement can be found on our corporate website
www.ibstockplc.co.uk
Industry, Innovation and Infrastructure: Innovation in building
products and solutions will support the transition to a low carbon
economy and transform the industry
Sustainable Cities and Communities: Creating sustainable products
that meet the needs of our customers to build connected, integrated
and healthy communities presents a growth opportunity
Responsible Consumption and Production: Preserving raw materials
for future generations and sourcing responsibly safeguards our
business and our suppliers
1 United Nations Sustainable Development Goals (SDGs).
47
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Responsible Business continued
DELIVERING ON
OUR INITIATIVES
TO ADDRESS
CLIMATE CHANGE
ADDRESS
CLIMATE CHANGE
As an energy intensive manufacturer, carbon
reduction is our main response to mitigate
climate change. In 2022 we committed to
decarbonise our products, processes and
supply chain by focusing on carbon reduction,
water efficiency and biodiversity gains. This
will drive us to achieve 40% absolute carbon
reduction for Scope 1 and 2 by 2030 and to
be net zero (Scope 1 and 2) by 2040. Our
Scope 3 carbon emissions reduction strategy
will achieve net zero before 2050.
Key to delivering carbon reduction across
the business is the integration of climate
change risks and opportunities into our
decision-making and behaviours. We have
made good progress in 2022; please see
page 76 for our full TCFD disclosure, and
the embedding of our carbon reduction
plans across the business. This has been
recognised by the Carbon Disclosure
Project (CDP) Climate Change Survey
where we improved our score to B in the
2022 disclosure (compared to C- in 2021).
This is a great achievement in only our
second year of reporting.
Carbon
In 2022 our absolute carbon reduction was
13% relative to our 2019 baseline. Year-on-
year this was a slight increase in our absolute
carbon and our carbon intensity metric which
was behind our projection due to a number of
underlying factors. We are addressing these
factors to ensure we are in line with our ESG
2030 Strategy targets. Our carbon reduction
per tonne of product was 9% relative to the
2019 baseline.
Absolute carbon reduction since 2019
13%
To continue our reduction in carbon per
tonne of production we have employed a
combination of awareness and behavioural
change, capital investment and major
operational improvement programmes.
The step change we need to make in absolute
carbon reduction will come through our
investment in transformational programmes
and materials science to reduce process
emissions, and exploring alternative fuels
and estate renewal to tackle our Scope 1
carbon emissions, specifically in the Clay
division. For example we are in the second
year of our materials science research
with Sheffield Hallam University, exploring
alternative body fuels for our products.
This is a Knowledge Transfer Partnership
funded by UKRI through Innovate UK.
48
Scope 3 carbon emissions strategy
We have delivered on our initiative to develop a
Scope 3 Carbon Emissions strategy in 2022. This
involved mapping our emissions against the 15
Scope 3 categories. Our Scope 3 emissions are
around 100k tonnes of carbon based on those
categories most material to our business which
were identified as:
• Purchased goods and services
• Fuel and energy-related activities
• Upstream transport and distribution
• Waste generated in operations
• Business travel
• Downstream transportation
and distribution
Our plan is to deliver net zero for our Scope 3
emissions before 2050, this is in line with our
understanding of the current journey our key
suppliers are on.
Our strategy to deliver our Scope 3
carbon emissions reduction will focus
on four key areas:
• Accurate and transparent data reporting
from our suppliers
• Our most material suppliers based on
carbon emissions
• Engagement and collaboration with suppliers
• Partnership projects
Supply Chain Engagement Day
In 2022 we ran our second carbon focused,
supply chain engagement day with 26 suppliers
attending, including representatives from
energy, raw materials, packaging and
engineering parts sectors.
The aim of the event was to support
discussions on meeting some of the
sustainability challenges faced by the
construction sector, in particular identifying
opportunities for collaboration on carbon
reduction initiatives.
“Events like our Supply Chain
Engagement Day are so
important. By understanding the
challenges being faced, we can
co-create solutions that will lead to
more rapid and effective change.”
Joanne Humphrey,
Logistics and Supply Chain Director
Ibstock Plc Annual Report and Accounts 2022 Supply Chain Sustainability School
Ibstock has been a long-term member of the
Supply Chain Sustainability School achieving
Gold status in 2022 and became a Partner
of the school, supporting the cross sector
initiative and promoting the school within
our own supply chain as part of our partner
commitment. Ibstock has over 60 employees as
active members of the school, utilising training
modules to build organisational knowledge
across the spectrum of sustainability subjects.
Water
We have continued to focus on improving
data collection for our mains water usage.
Our mains water usage remains low
accounting for less than 20% of our overall
water consumption. The majority of our
water is from non-mains sources including
quarry water, rain water harvesting and some
borehole water. Process water recycling is
functioning at the majority of our factory
The British Ceramic Confederation (BCC) presenting Michael McGowan, Ibstock Sustainability
Manager, with a special recognition award for contribution to industry decarbonisation.
sites. We achieved a 31% reduction in mains
water use per tonne of production in 2022
against the 2019 baseline.
Biodiversity
Climate change poses a great threat to
habitats and wildlife across the globe and
in turn the continued destruction of habitats
continues to contribute to global carbon
emissions. The UK Government has set
out a 25-year environmental plan focused
on protection and enhancement of our
landscapes and habitats. Ibstock supports
this and has committed to being a
Biodiversity Net Gain business by 2030.
We take our responsibility to manage our estate
of 3,673 acres of land very seriously. Our
minerals extraction activity reduces biodiversity
when a site is in use and we have always
implemented responsible management
through the life of the site and at restoration.
Our quarrying operations are covered by
planning consents which include conditions for
site restoration in accordance with the local
mineral planning authority and take into
consideration local and wider environmental
needs. Our new commitment will encourage
us to question and reassess how to maximise
the potential of our sites for biodiversity
improvements through the life of the site.
This year our sites have reported a fantastic
range of initiatives and projects including
the identification and protection of breeding
Peregrine Falcons at Leicester, Great Crested
Newt identification, protection and relocation
at West Hoathly and rewilding at Chesterton.
These initiatives demonstrate the richness
of habitat our sites can provide.
49
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Responsible Business continued
DELIVERING
ON OUR SOCIAL
COMMITMENTS
TO IMPROVE LIVES
“Our main priority has been
breaking down the stigma
associated with mental health, and
really encouraging employees to
recognise the signs when someone
is suffering with mental health.”
Kate Whyte,
Learning and Development Manager, and
member of the Wellbeing Working Group
There were three main mental health
campaigns held during the year, as described
on page 20. The awareness campaigns received
positive feedback from employees, and have
enabled employees across the business to
connect and talk about a range of issues
such as loneliness, mental health and suicide.
Inspiring futures
As an organisation we are committed to
providing development and growth for all of our
employees, and to attracting new talent to the
business. This links right through to our early
career focus on apprentices and inspiring young
people into construction and engineering career
through our schools and college engagement.
Our ESG 2030 Strategy
sets out our Inspiring
Futures ambition for 10%
of employees to be earn
and learn positions by
2030. As members of the
‘5% Club’, an employer-led initiative dedicated
to addressing employee skills shortages, we
are pushing well beyond good practice with
7.5% of our employees in earn and learn
roles by the end of 2022. Of this, 52 were
early career positions including apprentice
roles and 121 of our employees were
supported as mature students.
We are encouraged by the progress we have
made in ensuring we develop and retain
skills in our business over the long term.
We continue to review our processes and
implement changes in line with our health
and safety standards, sharing lessons
learned across our business divisions. Last
year we reported on the roll out of our more
comprehensive management system to help
us monitor and track health, safety, quality
and environmental activities. This has led
to improved monitoring over 2022, with all
employees expected to track and report any
concerns, areas for improvement and positive
safety observations. This has provided greater
reporting and oversight efficiencies.
Health and wellbeing
As an organisation the health and wellbeing
of our employees is very important to us.
Use of the Employee Assistance Programme,
which offers support to employees and their
families, remained at 4.9% of employees
using it during the year. This, together with
ongoing discussions through our engagement
forums and the Wellbeing Working Group
highlight the value of continuing to develop
our support structures to assist with our
employees’ wellbeing.
In 2022 we increased our focus on mental
health with the launch of our mental health
programme, aimed at raising awareness of
its importance with all our employees. This
included an increased investment in mental
health training, and a series of campaigns
aimed at specific topics of relevance.
Listening Post Employee Forum, takes place three times a year. With a cross section of
employees from across the business, members of the Board and Executive Committee.
IMPROVE LIVES
Health, safety & wellbeing
We are committed to building a safe, healthy
and happy workplace where our employees
can be at their best more of the time through
our health, safety and wellbeing strategies.
The Executive Leadership Team (ELT) and the
wider senior leadership group take an active
responsibility towards the health and wellbeing
of our employees.
Safety performance
Our ambition is to achieve zero harm for all of
our people. In 2022 we continued to make good
overall progress against our health and safety
targets with a 61% reduction in the Loss Time
Injury Frequency Rate (LTIFR) relative to our
2016 baseline. This represents a very positive
step putting us ahead of our target for 50%
reduction by the end of 2023. Our concrete
division celebrated zero Lost Time Injuries (LTIs)
in the year more information on page 34.
Safety risk exists at all sites, not least
where people are interacting with industrial
machinery, product handling and mobile
plant so we are never complacent. Our
commitment to safety is underpinned at the
start of each year with our compulsory Safe
Start workshops. These interactive sessions
are delivered at every operational site as well
as office and Group functions ensuring all
employees have a clear focus on our health,
safety and wellbeing processes and priorities.
50
Ibstock Plc Annual Report and Accounts 2022 Gender Diversity
373
2,293
1,920
All employees
Female 373
Male 1,920
10
16.3%
83.7%
36
27
Senior Management (Executive Leadership
Team and Direct Reports)
Female 10
Male 27
27%
73%
3
8
5
Plc Board Directors
Female 3
Male 5
Employees from across multiple Ibstock
sites, inspiring the next generation at
a STEM school event in the North West.
Employee experience
Employee experience is a key focus for the
Improving Lives section of our ESG 2030
Strategy. As an organisation we recognise
the vital role our people and culture play
in the success of the organisation. Through
2022 we saw progress in key areas including
inclusion, talent attraction and development,
and giving back and fair reward. More detail
is provided in People and Culture on page 18.
Diversity and inclusion
Ibstock’s employee population reflects
the traditional nature of our industry with
lower levels of diversity across a number
of characteristics. This is being challenged
through the Diversity and Inclusion Working
Group, our commitments to increased diversity
and initiatives such as our Diversity Charter.
As at the year end, due to the timings
of recruitment, female senior leadership
representation stood at 27%. However,
following the year end and as at the date
of this report, female representation stood
at 29%. We are on track to meet our
ambition of 40% female representation
at senior leadership level by 2027.
“I am delighted to have
joined an organisation
where people development
and inclusion is deeply
embedded in the culture.”
37.5%
62.5%
Sheener Ooi,
Finance Director, Futures Division
Communication and engagement
This last year has seen a further shift
in how we connect and communicate
with our employees.
We have been leveraging technology
to assist with this and the MyIbstock
intranet site is now well established
within the business, enabling employees
to access all Company information quickly
and efficiently, and becoming a culture
hub of activity with employee blogs, team
stories and leader video blogs.
Digital display screens and weekly
newsletters at our manufacturing sites
provide another channel for information
sharing. Interaction at our Ibstock Informed
broadcast events continue to reach hundreds
of employees, as well as providing an
opportunity for live Q&A session with leaders.
There is a continued focus on communication
and wider engagement activity, particularly
in 2022 with the launch of our Ibstock story,
which under the banner of ‘Fire Up’, connects
and empowers all of our employees on our
journey, more information on page 18.
Our next employee engagement survey is
scheduled for 2023, in which we hope to see
our continued efforts pay off and surpass
our 2021 Best Companies rating of a ‘good
company to work for’.
The Listening Post, our forum established
to facilitate two-way communication
with employees, met three times during
the year. This forum meets the requirements
of the UK Corporate Governance Code and
provides an opportunity for a number of
Ibstock employees representing different
parts of the business to get together with
Joe Hudson, our CEO, Joanne Hodge, Group
People Director and at least one independent
Non-Executive Director from the Board, in
order to discuss issues, ideas and concerns
raised by their fellow employees. The meetings
covered a range of issues including health,
safety and wellbeing, business performance,
business priorities, remuneration initiatives
and communication and engagement approach.
51
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Responsible Business continued
DELIVERING ON
OUR COMMITMENT
TO MANUFACTURE
MATERIALS FOR LIFE
The challenge to reduce embodied carbon
and associated negative environmental
impacts of construction products through
their lifetime is significant. Our core products
provide durability and performance, with no
or minimal maintenance requirements and
are typically recyclable at the end of their life,
but we know we can still make improvements.
Our ESG 2030 Strategy commits us to
evolve our products, processes and services
by incorporating whole life-cycle design,
preserving raw materials and future
proofing our offer to customers through
a diversified portfolio.
MANUFACTURE
MATERIALS FOR LIFE
Dematerialisation – published white paper in December 2022.
52
Product innovation
New product development has been
maintained in 2022 with 13% of revenue
coming from new and sustainable products.
Our investment in research and development
and our new product pipeline indicates we
are on track to achieve our 20% target by
2025. See Our KPIs on pages 40 to 41 and
Our Strategy sections on pages 30 to 39
for more information.
Evolving our core products to reduce carbon
and improve our sustainability credentials
continues in both our Clay and Concrete
divisions. In September 2022, our Concrete
division entered into a new partnership to
create ultra-low carbon concrete products
with Earth Friendly Concrete, UK (EFC).
See our Strategy in action section for
more details on page 36.
Ibstock Telling design and supply of innovative
forms of Façade cladding and Glass Reinforced
Concrete (GRC). Benefits of GRC lightweight
systems include the reduced load meaning
lower demand on foundation and structural
strength requirements (steel and concrete)
which lowers embodied carbon of the
building. See Strategy in action for more
information on page 39.
Circular Economy
The circular economy presents an enormous
opportunity for reducing climate change
specifically through the elimination of
waste in the built environment sector.
Our commitment is to embed circular
economy principles into the business,
prioritising zero waste to landfill and driving
demand for secondary materials markets.
Our focus to date has been on waste reduction
but we are now shifting our attention to a
broader circular economy perspective.
Ibstock Plc Annual Report and Accounts 2022 In 2022 Ibstock became members of
the UK Green Building Council (UKGBC)
whose mission is to radically improve the
sustainability of the built environment.
“UKGBC is working with its
members and other stakeholders
to develop practical guidance,
raise awareness and influence
policy to enable organisations
working in the built environment
to overcome the barriers
to implementing circular
economy principles.”
Mihailo Simeunovitch,
Head of Design and Technical Services
Our target to achieve zero waste to landfill
is on track. Only 2.4% of our general waste
goes to landfill (total general waste in 2022
was 143 tonnes). This is an improvement
of 90% against the 2015 baseline. This
significant improvement is in part due to
collaboration and engagement with our
waste management companies through the
provision of more meaningful and detailed
reporting data.
We have a strong focus on reducing process
waste. The waste that we do produce during
manufacture does not go to landfill and we
are prioritising the highest value re-use of
these process materials. In our Concrete
division we recycled 5k tonnes of material
back into our process in 2022.
Our Concrete division has been trialling
the use of basalt in several of our pre-cast
concrete products to provide an alternative
to steel reinforcement. One of the benefits
of basalt, on top of it being inert and strong,
comes at the end of life as the basalt can
be broken down into a secondary aggregate
without energy intensive separation required
to extract steel at the demolition phase.
90%
Improvement in waste that went
to landfill from our 2015 baseline
BeeHabitat Brick.
Dematerialisation
We are reducing the pressure on virgin
resources, including our own reserves,
by focusing on plastic reduction and
secondary materials such as aggregates
and cementitious replacement. As part
of this commitment we published our
first white paper in 2022 ‘Delivering on
Dematerialisation’ demonstrating our
progress to our stakeholders but also
sharing what we have learnt and the
challenges we face in order to promote
positive action in our sector.
Preventable plastic packaging is that by
removal has no detriment to product quality,
pack integrity or health and safety relating
to the handling of the product. In the year
under review, we achieved 16% reduction in
preventable plastic packaging per tonne of
production relative to a 2019 baseline as part
of our drive to achieve our target of 40%
reduction by 2025 against the 2019 baseline.
Having reduced the thickness of our plastic
packaging across our estate, our focus in
2022 was to increase the recycled content of
the materials we use. Supply chain pressures
continued during 2022 meaning we have not
always been able to access materials with
over 30% recycled content. We continue
working with our suppliers to overcome
these challenges.
Reducing plastics remains a high priority
with our customers and we are working to
eliminate plastic packaging where possible.
For example, our Cast Stone factories have
moved away from plastic wrapping their
products unless specifically requested by
a customer.
Raw materials reduction
One of our transformational projects in the
Clay division, delivered through 2022 and
ongoing, is our voids project. Changing the
void pattern in our bricks enables us to reduce
the quantity of clay consumed without
compromising the physical performance,
quality and aesthetic characteristics of the
bricks. The outcomes of the project include:
• Reduced embodied carbon of each
brick by up to 8% (the exact reduction
varies by factory)
• Extending the life of the quarry from
which our clay is sourced
• Less water is used and there is less
overall mass to dry reducing energy
demand in the drying stage
• Less mass to fire means less natural
gas is required to heat the kiln and
redesigned voids create more airflow
through each brick
• Less mass enables bricks to be run
through the kiln more quickly and
efficiently, delivering reduced run
time and cost of changing worn parts
• Lighter products reduce transport
related environmental costs
53
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Responsible Business continued
DELIVERING ESG
OUTCOMES THROUGH
OUR GOVERNANCE
Governance Structure
Ibstock Plc Board
ESG matters are considered as a regular agenda item in strategy and performance discussions
ESG Committee
Oversees the ESG Strategy, implementation and progress
ELT
Reviews performance and manages the implementation and achievement of ESG strategy
ESG Team
Dedicated professionals in our ESG team drive sustainability strategy and programmes,
supporting integration of sustainability across the Group and divisions
Operations
Site-level targets on resource safety, efficiency, engagement and community
Innovation and transformation
Sustainability criteria integrated into to all decision-making
Managers and individuals
Encouraged and supported to make sustainable changes, share ideas and best practice
The Governance section that begins
on page 92 sets out how the Board and
its Committees operate and apply the
principles of the Corporate Governance
Code, other regulation and best practice.
This section provides an overview of the
management of ESG issues specifically.
Ibstock’s TCFD, SECR and SASB disclosures
can be found on pages 76 to 87.
How we manage ESG at Ibstock
ESG is a key component of Ibstock’s strategy
and therefore oversight of ESG is critical. The
governance framework not only allows the
Board to understand more holistically the
impact of its decisions on key stakeholders
and the environment, but also ensures it is
kept aware of any significant changes in the
market that can be factored into the business
strategy. This includes the identification of
emerging trends and risks, which in turn can
be factored into its strategy discussions. ESG
is overseen principally by the Board, the ESG
Committee and the Executive Leadership
Team (ELT). Claire Hawkings, one of our
Non-Executive Directors, is the designated
Director with overall accountability for ESG
matters. Claire oversees the review and
performance of our ESG agenda work as
Chair of the ESG Committee. A full report
of the activities of the ESG Committee’s
activities can be found on page 108.
To support management and operational
integration and embedding of the ESG 2030
Strategy throughout the business, a number of
specific working groups have been established
that are dedicated to specific areas of the
strategy, with a responsibility for the delivery
of specific targets.
Further information on Ibstock’s sustainability
activities can be found in the separate
sustainability report which is available
on our website, www.ibstockplc.co.uk.
54
Ibstock Plc Annual Report and Accounts 2022 Compliance with law and regulation
As the laws governing business dealings
become ever more complex we need to
ensure the judgements and decisions we
make are taken with both the knowledge and
application of the highest ethical principles.
Ibstock operates appropriate policies
and procedures to ensure that risks from
unethical conduct and illegal business
practice are reduced and eliminated as
far as possible. These underpin our Code
of Business Conduct, which together with
our Supplier Sustainability Code of Business
Conduct, sets out the behaviours expected
of our staff and the third parties we do
business with.
Oversight of the operation of the Group’s
key policies in this area has been delegated
to the Audit Committee who, in turn, make
recommendations to the Board. There have
been no reported breaches of the Group’s
Code of Business Conduct in 2022.
The Code of Business Conduct is underpinned
by a number of additional standalone policies
including those covering bribery and corruption,
competition law and data protection. Taken
together these policies ensure that we operate
in an open, fair and honest manner in all of our
business dealings.
Modern Slavery
We support the Modern Slavery Act 2015.
Our Modern Slavery Policy confirms our zero
tolerance approach to any potential or actual
breaches of the policy and sets out the steps
taken by Ibstock to prevent modern slavery
and human trafficking in its business and
supply chains. The Company’s full Modern
Slavery Statement can be accessed on the
corporate website, www.ibstockplc.co.uk.
Whistleblowing
To help us encourage the highest standards of
ethical behaviours, corporate governance and
accountability in our business activities, the
Group operates an anonymous whistleblowing
hotline, which is available 24 hours a day, seven
days a week. A summary of whistleblowing
activity, together with details of related
investigations, is provided to the Board on a
twice-yearly basis. There were three incidents
reported through the external whistleblowing
line during the year (2021: 7). Each case was
investigated and action taken appropriately.
Anti-Bribery and Corruption Policy
We prohibit any inducement which results in
a personal gain and is intended to influence
action which may not be solely in the
interests of the Code.
Employees at our Leicester Head Office.
Sustainable Procurement Policy
We have policy and framework guidelines for
all procurement activity in order to maintain
the highest standards of integrity.
Sustainability Policy
As part of our vision for sustainable growth,
we continuously work to minimise our impact
on the environment.
Diversity and Inclusion Policy
We are committed to ensuring our culture is
inclusive. Any type of discrimination including
harassment, victimisation, favouritism and
bullying is not accepted.
Trade Association Policy
Our Trade Association Policy helps to support
employees in their dealings with fellow
employees, customers, suppliers, regulators
and colleagues in competing businesses.
Health and Safety Policy Statement
We are committed to ensuring the health
and safety of all our employees.
For more information relating to all of the
aforementioned policies please see our
corporate website, www.ibstockplc.co.uk.
Compliance training
Ibstock’s web-based compliance training is
completed by appropriate employees and
covers a wide range of the Group’s policies
and codes of practice, including anti-bribery,
conflicts of interest, business ethics
and diversity.
Human rights
Ibstock is supported by the principles set out
in the UK Declaration of Human Rights and
the requirements of the Human Rights Act
and seeks to act accordingly in all aspects
of its operations.
Tax strategy
Our tax strategy is published on the Group’s
website, www.ibstockplc.co.uk. This formalises
the Group’s approach to conducting its tax
affairs and managing our tax risks. Our vision
for tax is to be a responsible corporate citizen,
contributing the right amount of tax to society
on time and in the right tax jurisdiction.
Ibstock resides only in the UK and not in
countries considered as partially compliant
or non-compliant according to the OECD
tax transparency report or blacklisted or
grey listed by the EU in February 2023.
55
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Operations Review
Ibstock Clay
Operations Review
Ibstock Clay is the leading clay brick
manufacturer in the UK, with an extensive
product range, and 16 manufacturing sites
across the country, strategically located near
to extensive self-owned clay reserves
The division also manufactures special brick shapes
and bespoke products, including arches, chimneys and
cladding solutions out of six sites in the UK, through its
Ibstock Kevington business. The division is a significant
supplier to the new build housing sector, the Repair,
Maintenance and Improvement (RMI) market through
builders’ merchants and the specification sector
through a number of our direct distribution channels
Project: Royal College of Art
Product: Bespoke Birtley Blend.
Our clay brands
See our website for more details
56
Reported sales in 2022 of £369 million
were 32% higher than 2021 (£280 million),
driven by price growth, reflecting our dynamic
commercial strategy. Sales volumes were
in line with the prior year, although activity
slowed in the final quarter in response to
a more cautious demand environment.
The impact of the Ukrainian war meant
energy costs were subject to significant
volatility in 2022, although the combination
of our energy forward purchasing strategy
and dynamic pricing approach enabled us
to manage this situation well. We applied
a commercial approach that moved selling
prices dynamically in response to in-year
inflationary impacts. We will maintain a
disciplined approach to capacity management,
costs and commercial execution as we
navigate through the 2023 year.
As a business, we continue to benefit from
significant levels of self-owned clay reserves
located strategically across the UK providing
our manufacturing sites with longevity of
supply. We own 18 active quarries with around
c.71 million tonnes of proven freehold clay
reserves alongside a committed interest in
c.4 million tonnes of proven leasehold clay
reserves, which, when combined, would serve
the current business for over 40 years. In
addition, we have access to 145 million tonnes
(estimated) of clay resources, subject to the
receipt of acceptable planning permissions
being granted at a point in the future when
further resources are required and we continue
to assess strategic opportunities as they arise
to further enhance our clay reserve portfolio.
As part of our logistics strategy, we
successfully migrated five sites to a new
haulage provider from 1st July with a new,
dedicated core vehicle fleet being put in place
across the second half of the 2022 year. This
change ensures that our business can access
industry-leading technology, pursue greener
fuel alternatives and optimise the efficiency
of our haulage routes.
In response to the cost of living impact on our
colleagues, in addition to the annual wage
award, we paid in the 2022 year a one-off
“cost of living allowance” of £2.5 million
targeted at employees most affected by
the cost of living crisis. We also took action
to respond to elevated wage inflation within
skilled engineering roles, to ensure that we
remain competitive and can retain key skills
within the division that drive forward our plans
around asset transformation and reliability.
Ibstock Plc Annual Report and Accounts 2022
How we are
integrating ESG
Our factories in the clay division have
carbon reduction targets integrated
into their operational reporting process.
Our day to day focus is on operational
efficiency through process improvement
and capital investment.
The roll out of our clay voids project is
reducing the amount of raw material in
our products, with results indicating that
some factories could reduce embodied
carbon by up to 8%. This is one of the
many initiatives that we are rolling out
across the division to reduce the carbon
intensity of our products.
The clay team worked with a number
of external partners, through the year,
including the British Ceramics Confederation
on ‘Demonstrating Hydrogen in the
Ceramics Sector’.
We also went into the second year of
our work with Sheffield Hallam University
exploring alternative body fuels for our
products, this is a Knowledge Transfer
Partnership funded by UKRI through
Innovate UK.
Divisional Results
Revenue
£369m
2021: £280m
Adjusted EBITDA
£127m
2021: £91m
Statutory profit before tax
£105m
2021: £67m
Divisional revenue totalled £369 million
in 2022, 32% up year-on-year. Adjusted
EBITDA* was £127 million in 2022, 40%
up year-on-year (2021: £91 million). This
strong underlying performance reflected
the dynamic commercial actions taken
during the year, which ensured full cost
inflation recovery. The clay division included
£5 million of cost (2021: £nil) relating to the
Ibstock Futures business, reflecting a small
loss of around £1 million from the acquired
businesses and £4 million of operational
investment in research and development,
building in-house innovation and commercial
capability. Overall adjusted EBITDA* margin
moved forward during the year to 34.3%,
(2021: 32.3%), also supported by network
efficiencies and fixed cost control in the core
business. Divisional statutory profit before
tax was £105 million (2021: £67m).
57
Project: 197 High Street, Kensington
Product: Otterburn Antique.
The strategic growth investments at our
Atlas and Aldridge factories are progressing
well and are on track to start commissioning
as expected from the end of 2023. These
facilities will provide the Clay division with
efficient, low-cost capacity, support the
diversification of our unrivalled product
range, and produce the UK’s first carbon
neutral brick.
At the same time, we are progressing with
the refurbishment and enhancement of our
brick kiln at Parkhouse. We also continue
to invest at appropriate levels towards
achieving our ESG commitment. Progress
has been made this year in research and
development for alternative energy sources
that support decarbonisation, as well as our
continued focus in dematerialisation within
our core brick making process.
Overall, the total UK market consumed
c.2.5 billion bricks in the year (2021: 2.4 billion
bricks), with the split of domestic and imported
bricks of c.77% and c.23% respectively.
Inventory levels remain low, representing
12% of total market in line with 2021.
Operational cash generation and
deployment remained in sharp focus
in 2022, with c.£51 million total capital
expenditure invested, including c£34 million
on our major redevelopment projects. Cost
inflation drove a c.£13 million inventory
investment across raw materials, stores
and spares and finished goods. Overall
trade working capital continued to be a
key strength, with a material improvement
in cash collection delivered in 2022.
Finally, as part of our surplus asset divestment
pipeline and recycling of our land assets,
we completed the disposal of land in
Sussex (a former brick factory closed in
2020) achieving proceeds of c.£8 million.
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information Operations Review continued
Ibstock Concrete
Operations Review
Ibstock Concrete is one of the largest specialist
manufacturers of concrete construction products
in the UK, occupying strong positions in the
new build housing, repair maintenance and
improvement (RMI) and infrastructure markets
Ibstock Concrete consists of four well-established
and strong brands, Forticrete, Supreme, Anderton
and Longley, organised into three product groups,
Pre-cast Building and Landscaping, Pre-stressed
Flooring, and Rail and Structural products. Ibstock
Concrete operates across 14 manufacturing sites
geographically spread across the UK
Project: Colchester New Build
Ibstock Product: Supreme Concrete, Beam and Block flooring.
Our concrete brands
See our website for more details
58
While the nature of these markets differs from
those of our larger Clay business, the products
remain principally within our core business and
strategic focus area of the residential building
envelope. The business benefits from the same
fundamental growth drivers and produces
similar returns on capital as the Clay division
through the cycle. During 2022, the Concrete
division continued to benefit from strong
structural demand within its markets.
The division saw stable market conditions
in the majority of categories during 2022 as
the recovery post the COVID-19 pandemic
continued. Volumes as expected decreased in
the final quarter versus the comparative period.
Overall, the Concrete division delivered strong
sales growth of 12% versus 2021.
This performance was achieved against
a backdrop of supply chain challenges,
unstable labour availability, and inflationary
cost pressures, which the business managed
dynamically. The business faced isolated
operational challenges in the early part of
the year at our roof tile factory at Leighton
Buzzard, which were overcome through
focused action and improvement activities.
During 2022 the Board approved a small
growth investment of £2.8m to expand our
Walling business and we also continued to
invest selectively in enhancing our capital
base. This included adding capacity and
capability to our Pre-cast and Fencing
product categories.
Whilst the industry continues to face more
cautious market conditions, we are well
positioned to maintain our momentum
in the year ahead. We expect demand in
the early part of 2023 to remain subdued,
but currently anticipate this to improve
as the year progresses.
Our strategy is underpinned by our strong
market positions, established brands and
focused investment plans to drive operational
improvement. We remain confident that this
will continue to deliver profitable long-term
growth and that we will be able to continue
to manage inflation through effective
dynamic pricing management.
Ibstock Plc Annual Report and Accounts 2022
How we are
integrating ESG
Our factories in the Concrete division
implemented a number of environmental
initiatives during 2022 these include:
• Our Anderton factory in Northwich
has used rainwater harvesting to
capture over 200k litres of water
which goes into the manufacturing
process avoiding mains water use,
further mains water reduction is
being explored across our division
• All product and process waste
material at our Anstone, Thornley
and Sittingbourne sites is reprocessed
as secondary aggregate for resale or
use in our own product range
• Across the concrete factories, concrete
additives are being delivered in bulk
tankers rather than Intermediate Bulk
Containers (IBCs) reducing transport
and waste
• At our Forticrete walling stone sites,
in Anstone and Shearstone, plastic
shrink wrap has been removed from
all products as part of Ibstock’s
commitment to reducing plastic
shrink wrap across the business
This year our concrete factory managers
demonstrated how they support their
local communities with a number of
local schools visits and careers talks
as part of our inspiring futures agenda.
59
Project: Crossrail, Maidenhead
Ibstock Product: Anderton Rail Trough.
Divisional Results
Revenue
£144m
2021: £128m
Adjusted EBITDA*
£24m
2021: £22m
Statutory profit before tax
£12m
2021: £11m
Ibstock Concrete revenue was £144 million
in 2022, representing a 12% increase on
2021 (£128 million). Activity levels remained
resilient across most product categories,
with supplies of Walling, Cast stone and
Rail products showing strong growth
year-on-year, coupled with dynamic
pricing responding to the inflationary
cost pressures faced by the sector.
In our smaller infrastructure business, the
spend cycle in the rail industry resulted in
strong levels of demand for our products
and we secured significant contracts in
2022, resulting in a healthy order book as
we enter 2023. Investment in new products,
focused on both sustainable solutions and
operational efficiency, are expected to
underpin further growth in the years ahead.
Adjusted EBITDA* of £24 million in 2022
was 9% higher than 2021 (2021: £22 million)
reflecting resilient activity levels and dynamic
price management.
Adjusted EBITDA* margins of 16.4% were
marginally below the level achieved in
2021 (2021: 16.9%), reflecting operational
inefficiencies within our roof tile business
in the early part of the year. As expected,
we saw divisional margins improve during
the second half of the year towards our
medium-term ambition of 18%.
Divisional statutory profit before tax was
£12 million (2021: £11 million) reflecting the
more favourable trading conditions in 2022.
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information Our Principal Risks and Uncertainties
An established risk
management framework
Risk and risk profile
The Group’s activities expose it to a variety
of risks that could impact the business. The
Board has established a risk management
and internal control framework that supports
the effective identification, assessment and
mitigation of risk and has completed a robust
assessment of the Company’s emerging and
principal risks as required by the Code for the
year ended 31 December 2022. It has also
carried out a review of the effectiveness
of these controls. The assessment includes
those risks that would threaten Ibstock’s
business model, its future performance,
solvency or liquidity.
To support the discharge of these
responsibilities, the Audit Committee
reviews the Company’s internal control and
risk management systems including internal
financial controls and reports the outcome of
this review to the Board. Further information
on the role of the Audit Committee and details
of the Group’s system of internal controls can
be found in the Corporate Governance
Statement on pages 97 to 104.
Risk management framework
and risk appetite
The Board has overall responsibility for
ensuring that the Group has an appropriate
risk management framework encompassing
the nature and level of risk it is willing to
accept to achieve its strategic objectives.
The Board has oversight of the Group’s
operations ensuring that internal controls
are in place and operating effectively.
Management are responsible for effective
design, implementation and operation of
controls and risk mitigation plans.
60
Risks are identified by individuals across our
businesses and functions by identifying what
could stop us achieving our objectives or
impact the sustainability of our business
model. Risk owners assess the risk’s likelihood
and impact, taking into account current
mitigating control activities and identifying
where additional actions may be needed to
bring the risk within our risk appetite. Risk
owners bring the results of their assessment,
current status and action plans to business
and functional reviews, for support, challenge
and oversight.
During the year, the Board reviewed and
challenged the Group’s assessment of risks
as presented by management. This was
the final stage in a process that included
the review of the divisional and functional
registers by senior management prior to
the Executive Leadership Team’s (ELT)
approval of the Group’s principal risks and
uncertainties for presentation to the Audit
Committee and the Board.
Ibstock has set an overall low tolerance
to risk, which informs its approach and the
Board’s risk appetite. When considering
the principal risks and uncertainties, in the
context of the Board’s low appetite for risk,
the Board seeks to ensure that each risk is
mitigated in terms of likelihood and potential
impact as far as possible, within the confines
of reasonability and proportionality.
Management operate a ‘three lines of
defence’ structure to its internal controls
(see diagram below). The first line of defence
is operated by management and covers
the day-to-day risk management activities
of implementing and executing internal
controls. The second line (health and safety,
quality control and other central functions)
works alongside the risk owners to support
the design and implementation of the
controls framework, whilst the independent
third line is operated by our outsourced
Internal Audit provider, RSM UK Risk
Assurance Services LLP (RSM).
The Board is committed to a continual
process of improvement and embedding
of the risk management framework within
the Group. This ensures that the business
identifies both existing and emerging risks
and continues to develop appropriate risk
mitigation strategies and action plans.
Climate change risk
We have an ambition to be the most
sustainable manufacturer of clay and
concrete products in the UK, and to lead our
sector in the disclosure and transparency
around ESG issues. We have invested
significant capital over the last decade
across the Group contributing to a reduction
in the carbon intensity of our manufacturing
processes. At the beginning of last year
we launched our ESG 2030 Strategy which
Board
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Ibstock Plc Annual Report and Accounts 2022
Find out more
Our Markets
Our Purpose and
Business Model
Our Strategy
Our Key
Performance
Indicators
Responsible
Business
See pages 24-27
See pages 28-29
See pages 30-39
See pages 40-41
See pages 42-55
established a stretching set of goals
to achieve our ambition of net zero by
2040 (Scope 1 and 2), which is discussed
in further detail on pages 42 to 55.
At the same time, in order to assess the
resilience of our business model, we have
modelled the impact of both transition
and physical risks of climate change on the
financial performance and position of the
Company. Details of impacts are disclosed
in the TCFD Statement on page 76.
We consider climate change to be a principal
risk given the Group’s material commitments
with regard to its ESG 2030 Strategy and
target to be a net zero operation by 2040.
This carries significant reputational risk and
is a material focus for the Group. Details on
risks and opportunities related to climate
change are detailed in the TCFD report
on page 76, but to date these are not
considered principal risks in their own right.
Principal risks and uncertainties
A principal risk and uncertainty is one that is
currently impacting the Group or could impact
the Group over the next 12 months. Our
principal risks are not an exhaustive list of all
risks facing the Group but are a snapshot of
the Group’s main risk profile as at 31 December
2022. All risks carry equal importance and
weighting for the Board, however, additional
focus and priority may be given to specific risks
for a period of time in certain circumstances.
The Group’s principal risks are broadly
categorised as strategic, operational or
financial in nature. Strategic risks arise
from decisions taken by the Board and
management concerning the Group’s
strategy and concern the positioning of the
Group within the building products market.
Operational risks result from the failure of
internal processes and controls or external
events. Financial risks arise from movements
within the financial markets in which the
Group operates or the inefficient allocation
of the Group’s capital resources.
Our principal risks are identified and
managed in the same way as other risks.
Principal risks are owned by at least one
member of the ELT and subject to a review
at an ELT meeting at least once each year,
before a review by the Board or relevant
Board Committee.
We have reviewed our principal risks over the
course of the year and have updated them to
reflect changes to the external environment
and our strategy.
The full list of what the Board considers to be
those current principal risks and uncertainties
facing the Group can be found from page 63.
Our disclosure for each principal risk includes
the mitigating actions for each and, where
applicable, updates on any change in the
profile of each risk during the past year.
Key Achievements in 2022
During the year, as part of our commitment to improving Ibstock’s risk management approach,
management and processes, we further incorporated risk management into the routine
performance management cycle. A brief summary of some of the key achievements during
the year, along with priorities for the coming year have been set out below.
Progress in FY 2022
Priorities for FY 2023
Key risks reviewed monthly by divisional
management at performance reviews
Development of Ibstock Futures risk register
and approach
Deep dives into additional, specific risk areas
Programme of deep dive presentations
into specific risks agreed including cyber
risk which was considered by the Board
in November 2022
Strengthening of risk management
processes under ownership of CFO
The principal risks and uncertainties
should be read in conjunction with the
Operations Reviews (page 56) and the
Financial Review, (page 70). Additional
risks and uncertainties of which Ibstock
is not currently aware or are believed not
to be significant may also adversely affect
strategy, business performance or financial
condition in the future.
Emerging Risks
We continue to review additional emerging risks
that could significantly impact or challenge
our current strategy and business model
and these will be considered by the Board
in 2023. Examples of emerging risks that
were considered during the year included:
Geo political environment
Whilst Ibstock is a UK business, the continuing
conflict in Eastern Europe creates broad
macroeconomic uncertainty, the effects of
which have been experienced throughout
the UK and have an impact the Group’s
operations. We are mindful of changes in
the geo political environment, and seek to
mitigate potential impact where possible.
Product substitution
The construction industry is dynamic and
evolving in its use of materials, construction
methods and products. Failure to keep pace
with market demand and trends has been
an ever-present risk to the Group, and we
pride ourselves in ensuring our product
offering is the best available. We are seeing
the emergence of new and cheaper building
products, albeit we believe with inferior
properties, taking a place in the market; an
example being concrete blocks. This creates
a risk of alternative substitute products
displacing demand of Ibstock product and
services. We are mitigating this risk through
the delivery of our strategy (see pages 30
to 39), which is designed to ensure that our
products remain superior in quality, aesthetic
and longevity, whilst investing in diversified
markets and product innovation.
The digital agenda
A failure to embrace innovative technologies
to deliver efficiencies and enhanced ways
of working to the Group and its customers.
We are mitigating this risk through increased
investment, see page 15.
61
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information Our Principal Risks and Uncertainties continued
Mapping risk to our strategy
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Climate change
Material Operational Disruption
Market Uncertainty
Anticipating Product Demand
Financial Risk Management
Regulatory and Compliance
Maintaining Customer Relationships and Market Reputation
People and Talent Management
Product Quality
Cyber and Information Security
Major Project Delivery
O S
O
O
S
F
O S
O
O
O
O
O
Key
S Strategic
O Operational
F Financial
Sustain: Sustainable performance
Innovate: Market-led innovation
Growth: Selective growth
62
Ibstock Plc Annual Report and Accounts 2022 1. Climate Change
Owner: Group Company Secretary & ESG Director
Risk trend:
Strategy:
Link to Business Model:
Sales, Manufacturing, Procurement
Stakeholder Groups impacted: Communities, Investors, Employees, Customers, Suppliers, Pension Fund Members
Detail
• Delivery of ESG commitments and targets
• An inability to manage energy demand needs against these ESG targets
• Changes in consumer demand may reduce our competitive advantage
• Failure to respond to climate change risks may result in reductions in investor interest and support
• Changes to laws and regulations that could require significant capital investments or result in increased costs and/or material liabilities
• Increasing focus on reporting, data assurance and monitoring of ESG measures, targets and performance from all stakeholders
Mitigation
• Compliance with International and British standards including environmental, energy, responsible sourcing and quality. ESG disclosures
(see page 76 onwards) provide visibility and assurance to all stakeholders
• Continued investment to improve the sustainability of our operations and monitoring of internal sustainability KPIs to track progress
• Introduction of a carbon reduction KPI in FY 2020 and its inclusion in our LTIP. A revised ESG measure, incorporating three targets linked
to the new ESG strategy was included as a performance measure for LTIP awards from 2022 onwards
• Investment in the latest systems, plant, machinery and technology to address the need for enabling conditions to address climate
change concerns
• Investment in longer-term strategic supplier partnerships in order to deliver longer-term sustainable products to our customers
• Proactive management of the sustainability descriptions associated with the Group’s products
• Provision of clear and strategic oversight of the Group’s ESG strategy by the ESG Committee
Risk trend key:
Strategy key:
Increase
Sustain
Decrease
Innovate
No change
Grow
63
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information
Our Principal Risks and Uncertainties continued
2. Material Operational Disruption
Owner: Chief Operating Officer
Risk trend:
Strategy:
Stakeholder Groups impacted: Communities, Investors, Employees, Customers
Detail
Link to Business Model:
Extraction, Manufacturing, Distribution
• Material disruption, caused by extreme weather which could increase in severity or frequency given the impact of climate change, power
outages or a global pandemic, at one of the Group’s manufacturing facilities or quarries, or at one of the Group’s suppliers’ facilities could
prevent Ibstock meeting customer demand
• Dependence on efficient and uninterrupted operation of Group information and communication technology for continued operation
• Failure to deliver capital enhancements on a timely basis could extend planned closures and adversely impact the Group’s production capabilities
• Exposure to the impact of unexpected or prolonged periods of bad weather, which could adversely affect construction activity and,
as a result, demand for the Group’s products
• Targeting Group’s businesses by activists, including those with environmental interests, due to nature of operations resulting in impacted
ability to manufacture or despatch product or receive supplies
Mitigation
• Transfer of some production across manufacturing network
• Engagement of subcontractors to reduce the impact of certain production disruptions
• Alternative third party suppliers have been identified who can maintain service in the event of a disruption
• We plan and practise IT disaster recovery, business continuity and crisis management exercises
• We invest in capacity, equipment and facilities
• We undertake supplier diligence
• We take out relevant and appropriate insurance
• Physical security measures together with real-time monitoring of social media to identify threats of environmental activism
Trend change
Increased incidence of more extreme weather events and temperatures have been experienced during the year, we anticipate that these
types of weather patterns will continue in future years. As part of our operational resilience planning we are developing climate resilience
plans for each facility which encompass extreme weather events.
Risk trend key:
Strategy key:
64
Increase
Sustain
Decrease
Innovate
No change
Grow
Ibstock Plc Annual Report and Accounts 2022
3. Market Uncertainty
Owner: Chief Executive Officer
Risk trend:
Strategy:
Link to Business Model: Sales
Stakeholder Groups impacted: Investors, Employees, Customers, Pension Fund Members
Detail
• Material impact on the Group’s business as a result of changes in the wider macroeconomic environment in the UK
• Correlation of demand with residential construction and renovation activities and non-residential construction, together with the supply
chain’s attitude to stock levels, which are cyclical
• Negative impacts on economic conditions and business climate through global geo political events
Mitigation
• Analysis of trends, market demand and future market forecasts in corporate trends, demand and other dependencies in our financial
forecasts
• Ability to adjust capacity and cost base where possible during economic downturns to allow more of the Group’s manufacturing plants
to remain open and viable, maintaining skills, development and training
• Active engagement with industry bodies to ensure the promotion of housebuilding and construction, whilst seeking to promote the
differentiating qualities of our business in the core markets in which we compete
• Diversification of end use exposure providing greater resilience in light of changing market demand in any of its end-use markets
Trend change
Changes in the macro environment have contributed to more uncertain economic outlook. We mitigate changes in the macro environment
through our market forecasting, strategic planning and financial management strategies.
4. Anticipating Product Demand
Owner: Chief Executive Officer
Risk trend:
Strategy:
Link to Business Model: Product Design, Sales
Stakeholder Groups impacted: Communities, Investors, Employees, Customers, Suppliers
Detail
• Failure to identify opportunities and emerging trends in the housing market or construction sector and missing chances to
maximise or exploit opportunities ahead of our competitors
• Loss of position as perceived market leader with resulting impact on reputation and ability to expand market share
• Loss in market position or customers resulting in declining revenue or margins
• A lack of new product development and innovation and a failure to optimise our supply chain to support our customers could
be detrimental to the long-term achievement of the Group’s strategy
Mitigation
• Consideration of relevant market data and trends highlights emerging risks, providing management with the information required
to make considered and fact-based decisions
• Innovation culture embedded through organisational structure, including suitably qualified and experienced product managers
• Horizon scanning for emerging innovation and other competitive threats
• Launch of Ibstock Futures business unit
65
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information
Our Principal Risks and Uncertainties continued
5. Financial Risk Management
Owner: Chief Financial Officer
Risk trend:
Strategy:
Link to Business Model: Procurement, Sales
Stakeholder Groups impacted: Communities, Investors, Employees, Customers, Suppliers, Pension Fund Members
Detail
The Group is subject to the following financial risks:
• Foreign exchange risk: As the Group transacts in currencies other than Sterling, exchange rate fluctuations may adversely impact
the Group’s results
• Credit risk: Through its customers, the Group is exposed to a counterparty risk that accounts receivable will not be settled leading
to a financial loss to the Group
• Liquidity risk: Insufficient funds could result in the Group being unable to fund its operations
• Interest rate risk: Movements in interest rates could adversely impact the Group and result in higher financing payments to service
debt Input costs: The Group’s business may be affected by volatility in extraction expenses and raw material costs. Risks exist around
our ability to pass on increased costs through price increases to our customers
• Energy and Carbon pricing: The Group’s business may also be affected by volatility in energy costs or disruptions in energy supplies.
Significant changes in the cost or availability of transportation could affect the Group’s results
Mitigation
• Our internal control framework is designed to reduce financial reporting risks
• We develop, review and communicate a Group-wide treasury policy
• Foreign exchange risk: The Group undertakes limited foreign exchange. Some capital expenditure requires foreign exchange purchases
and management undertakes foreign exchange hedging strategies where significant exposures arise
• Credit risk: The Group principally manages credit risk through management of customer credit limits. The credit limits are set for
each customer based on the creditworthiness of the customer and the anticipated levels of business activity. These limits are initially
determined when the customer account is first set up and are regularly monitored thereafter
• Liquidity risk: The Group’s policy is to ensure that it has sufficient funding and facilities in place to meet any foreseeable peak in borrowing
requirements and liabilities when they become due, and monitors this regularly
• Interest rate risk: The Group finances its operations through a mixture of retained profits, bank borrowings and private placement loan
notes. No interest rate derivative contracts have been entered into during the year or at the year end
• Input cost: Significant input costs are under constant review, with continuous monitoring of raw material costs, energy prices and
haulage expenses
• Energy and Carbon pricing: The Group operates forward purchasing to mitigate the impact of sudden price increases and monitors the
markets on an ongoing basis and has modelled the impact of such rises to assess the financial implications in light of potential impact
from Climate change (see Viability Statement on page 90)
• Sales pricing: appropriate pricing policies to remain competitive within our markets and pass on significant increases in input costs
Trend change
Input costs linked to energy prices, and energy prices have risen materially in 2022, exacerbated by the conflicting conflict in Ukraine. We have
incorporated this change risk into our financial planning and modelling with a view to minimising the impact of these changes on our business.
Risk trend key:
Strategy key:
66
Increase
Sustain
Decrease
Innovate
No change
Grow
Ibstock Plc Annual Report and Accounts 2022
6. Regulatory and Compliance
Owner: Group Company Secretary & ESG Director
Risk trend:
Strategy:
Link to Business Model: All
Stakeholder Groups impacted: Communities, Investors, Employees, Customers, Suppliers, Pension Fund Members
Detail
• Group activities are subject to environmental, health and safety laws and regulations and these may change. These laws and regulations
could require the Group to make modifications to how it manufactures and prices its products
• Greater regulation with an increased risk of fines, sanctions and liability exposures could impact the Group’s financial results, together
with any associated negative reputational damage
Mitigation
• Monitoring of the law across relevant markets to ensure the effects of changes are minimised and Ibstock remains compliant with applicable laws
• Alignment of Group-wide policies and procedures with training on mandatory topics and compliance requirements
• Appropriate health and safety policies combined with the regular monitoring of compliance through internal and external auditing activity
• Restructuring of the health and safety function to provide more coordinated, central oversight to ensure alignment and consistency
throughout the business
• Investment in employee training across our manufacturing processes
• Investment in safe systems and facilities to protect our employees. Health and wellbeing practices and safety requirements, are embedded
in our approach
7. Maintaining Customer Relationships and Market Reputation
Owner: Chief Operating Officer
Risk trend:
Strategy:
Link to Business Model: Sales
Stakeholder Groups impacted: Communities, Investors, Customers
Detail
• The loss of any key customer through our failure to evolve effectively and meet the changing needs of our customers could result
in a significant loss of revenue and cash flow
• Constriction in activity levels within the construction industry introduces a risk that price levels cannot be maintained, resulting in dilution
of margins or level of market share and adversely impacting the Group’s financial results
• The Group does not have long-term contracts with its customers and the Group’s revenue could be reduced if its customers switch some
or all of their business with the Group to other suppliers or if we are unable to leverage our customer relationships effectively
Mitigation
• Service led ethos with many top customer relationships lasting over 40 years
• Differentiation through the continued quality of its products and service levels with NPS surveys completed to build customer
relationships through proactive response to customer requirements
• Sales and production teams are highly integrated to ensure that production aligns with customers’ needs
• In-depth technical training for sales teams
• Sales teams assist design support service team as well as targeted marketing materials to assist with specification and selection
• Divisional sales teams provide focus on key decision-makers and customers
• Key account management is supervised at a senior level
• Organisational structure enables us to understand and respond more effectively to the evolving needs of our customers
• Access to c. 218 million tonnes of clay reserves, Ibstock Clay’s primary raw material, ensures an ability to satisfy customer demand
• Comprehensive ESG 2030 Strategy, robust policies and procedures including Business and Supplier Codes of Conduct
67
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information
Our Principal Risks and Uncertainties continued
8. People and Talent Management
Owner: Group People Director
Risk trend:
Strategy:
Stakeholder Groups impacted: Communities, Employees
Detail
Link to Business Model:
All (especially Extraction and Manufacturing)
• Dependency on qualified personnel in key positions and employees having special technical knowledge and skills. Any loss of such personnel
without timely replacement could disrupt business operations, damage customer relationships or result in the loss of corporate knowledge
• Aging demographic in key employee groups may result in loss of knowledge
• Difficulties in attracting and retaining staff in production roles, which are labour-intensive and potentially less attractive to the younger population
Mitigation
• Launch of ‘Fire Up’ Ibstock cultural programme, and 2022 cost of living allowance and Free Share Award
• Focused action plans put in place as a result of the ‘Great place to work’ employee engagement survey in 2021 aimed at further building
on employee satisfaction
• Improved methods of employee engagement including MyIbstock and Ibstock Informed
• Investment in people through training and development programmes
• Maintenance of succession plans to ensure a managed transfer of roles and responsibilities
• Operation and management of apprenticeship schemes with a yearly intake across the business (engineering and technical based)
• Identification of high potential individuals and development plans formulated
• External recruitment to bridge skill gaps and to enhance the talent pool
9. Product Quality
Owner: Chief Operating Officer
Risk trend:
Strategy:
Stakeholder Groups impacted: Communities, Investors, Customers
Detail
Link to Business Model:
Manufacturing, Product Design, Sales
• Exposure to warranty claims and to claims for product liability, construction defects, project delay, property damage, personal injury and
other damages
• Failure to maintain accurate product data could place end user at risk
• Damage to the Group’s brands, including through actual or alleged issues with its products, could harm our business, reputation and the
Group’s financial results
Mitigation
• Maintenance and management of detailed product information
• Operation of comprehensive quality control procedures across Ibstock sites with both internal and external audit reviews of product quality
completed to ensure conformance with internationally recognised standards
• Training programmes on quality for appropriate employees
• Completion of regular testing of all products to provide full technical data on our product range
• Maintenance of appropriate insurance cover against product liability related claims
Risk trend key:
Strategy key:
68
Increase
Sustain
Decrease
Innovate
No change
Grow
Ibstock Plc Annual Report and Accounts 2022
10. Cyber and Information Security
Owner: Chief Financial Officer
Risk trend:
Strategy:
Stakeholder Groups impacted: Investors, Employees
Detail
Link to Business
Model: Manufacturing, Sales, Distribution
• Damage caused to the Group, its customers, suppliers through unauthorised access, manipulation, corruption or destruction of data
or systems or reputational damage as a result of negative publicity associated with control lapses in this area
• Changes in employees’ working patterns and use of technology along with the resulting risks to information security have materially
increased cyber risks
Mitigation
• Achievement of the UK Government’s Cyber Essentials accreditation, which is subject to independent audit annually
• We regularly train our employees on cyber threats including phishing
• All IT equipment deployed is compliant with Ibstock policies and standards
• Use of new industry-leading VPN services to handle hybrid working arrangements
• Use of new applications such as Microsoft Teams/OneDrive with up-to-date security features enable virtual meetings and collaboration
• The disablement of existing vulnerable applications and processes ensure the business can continue to operate effectively and efficiently
Trend change
We perceive cyber risk as a growing threat. During the year we recruited a new Chief Information and Digital Officer to lead us on our digital
security enhancement, and we continue to invest in our technology teams and estate to mitigate this risk.
11. Major Projects Delivery
Owner: Chief Executive Officer and Chief Financial Officer
Risk trend:
Strategy:
Stakeholder Groups impacted: Investors, Employees, Customers
Detail
Link to Business Model:
Product Design, Manufacturing
• Failure to deliver major projects such as Atlas and Nostell
• Reputational damage resulting from a part or complete failure to deliver major projects
• Fines and penalties as a result of delay or regulatory infringements
• Budgetary overspend and impacts on financial position of the Group
• Impacts on Company valuation as a result of a failure to deliver against growth ambitions
Mitigation
• Formalised project governance process and procedures
• Clear and robust project management encompassing monitoring and reporting to ensure projects remain on track
69
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information
Financial Review
DELIVERING
STRONG PERFORMANCE
WITH SIGNIFICANT
GROWTH IN MARGINS
A continued disciplined focus on cost management
underpinned an improved margin performance,
with EBITDA margins increasing by 200 basis
points to 27.2%
Chris McLeish
Chief Financial Officer
70
Ibstock PlcAnnual Report and Accounts 2022 Introduction
The Group delivered a strong financial
performance in 2022, with both profit
and operating cash flows materially
ahead of the comparative period. Demand
in our end markets was firm, although
we experienced lower volumes in the final
quarter of the year, reflecting a more
cautious demand environment.
The Group managed supply chain and
inflationary challenges well, and the
dynamic pricing approach taken in both
the clay and concrete divisions was
successful in recovering cost inflation
during the year. A continued disciplined
focus on cost management underpinned
an improved margin performance, with
adjusted EBITDA* margins increasing by
200 basis points to 27.2% in the 2022
year (2021: 25.2%).
Alongside this strong trading performance,
the Group maintained its intense focus
on capital management, delivering a
good cash flow performance for the year.
This was instrumental in enabling the
Group to maintain a strong balance sheet,
with closing net debt1 of £46 million at
31 December 2022 resulting in leverage1
of 0.4 times (Dec 2021: 0.4 times).
In line with our dynamic approach to capital
allocation, we deployed around £38 million
of capital investments in the service of future
growth (over and above our sustaining
investments), and completed a £30 million
share buyback. With our strong financial
position, and inherently cash generative
business, we expect to generate significant
further cash to support growth and
shareholder returns over the medium-term.
During the final quarter of the year, the
Group took the opportunity to extend
its Revolving Credit Facility, in accordance
with the terms of its 4+1 year agreement
completed in November 2021, thereby
extending by a further 12 months its debt
maturity profile on terms aligned to the
existing agreement. At 31 December 2022,
the Group had £125 million of undrawn
committed facilities in place.
In December 2022 the Group also agreed
a buy-in transaction for the main defined
benefit pension scheme, involving the
purchase of an insurance contract with
a specialist pensions provider which will
cover all remaining pension liabilities. This
transaction, which involved no initial cash
payment by the Company, is expected to
substantially complete during the 2023
financial year. We are delighted to have
completed this significant further step
towards removing pensions risk from the
Group’s balance sheet.
Climate Change & TCFD
As a long-term business, a commitment
to environmental sustainability and social
progress is central to the Company’s purpose.
We have invested significant capital over the
last decade, with investment projects across
the Group’s plant network contributing to
a material reduction in the carbon intensity
of our manufacturing processes. Having
achieved strong progress against our
Group results
The table below sets out segmental revenue and adjusted EBITDA1 for the year
previous targets, during 2021 we reviewed
our ESG strategy and ambitions in order
to drive progress and continue to show
industry leadership in this area.
At the same time, in order to assess the
resilience of our business model, as part
of our strategic planning process we have
modelled the impact of both transition
and physical risks of climate change on the
financial performance and position of the
Company. The outputs from this exercise are
detailed in our TCFD disclosures on page 76.
The Group is committed to increasing
the transparency of reporting around
climate impacts, risks, and opportunities.
This year we have progressed to achieve
full compliance with the recommendations
of the Task Force for Climate-related
Financial Disclosures (TCFD).
Alternative performance measures
This results statement contains alternative
performance measures (“APMs”) to aid
comparability and further understanding
of the financial performance of the Group
between periods. A description of each
APM is included in Note 3 to the financial
statements. The APMs represent measures
used by management and the Board to
monitor performance against budget, and
certain APMs are used in the remuneration
of management and Executive Directors.
It is not believed that APMs are a substitute
for, or superior to, statutory measures.
Year ended 31 December 2022
Total revenue
Adjusted EBITDA1
Margin
Year ended 31 December 2021
Total revenue
Adjusted EBITDA1
Margin
Clay
£m
369.2
126.7
34.3%
280.2
90.6
32.3%
Concrete
£m
143.7
23.6
16.4%
128.4
21.7
16.9%
Central costs
£m
–
(10.6)
–
(9.3)
Total
£m
512.9
139.7
27.2%
408.7
103.1
25.2%
1 Alternative Performance Measures are described in Note 3 to the consolidated financial statements. Due to rounding, numbers presented may not add up precisely to the totals provided
and percentages may not precisely reflect the absolute figures.
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Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information
Financial Review continued
Revenue
Group revenue for the 2022 year increased by
26% to £512.9 million (2021: £408.7 million).
Performance benefited from strong pricing
management, and reflected a robust demand
backdrop for the majority of the year, although
market activity slowed in the final quarter,
reflecting a more cautious demand environment.
In our Clay division, revenues of £369.2 million
represented an increase of 32% on the prior
year period (2021: £280.2 million). Performance
reflected a material price benefit, delivered
through a dynamic commercial approach.
Volumes were in line with the comparative
period, despite lower volumes in the final
quarter as activity slowed in response to
a reduction in end-market demand. Our
Futures business contributed around
£4 million of revenue (2021: nil).
In our Concrete division, revenue increased
by 12% year-on-year to £143.7 million
(2021: £128.4 million), with marginally lower
volumes more than offset by a strong pricing
benefit, which recovered in full the impact of
significant cost inflation. Infrastructure sales
volumes increased year-on-year, and walling
stone volumes also increased as the Group
grew share in certain key regional territories.
This helped offset lower sales volumes in
flooring and roof tiles.
Whilst we expect market conditions in
2023 to be more challenging, we continue
to monitor cost impacts closely and remain
committed to taking the actions necessary
to protect unit margins.
Adjusted EBITDA*
Management measures the Group’s
operating performance using adjusted
EBITDA*. Adjusted EBITDA* increased
materially year on year to £139.7 million
in 2022 (2021: £103.1 million).
Performance in 2022 benefited from resilient
end markets, alongside strong commercial
execution to recover in full significant variable
cost inflation. These actions, combined
with the disciplined management of cost,
resulted in a material improvement in
adjusted EBITDA* margins, which increased
by 200 basis points to 27.2% (2021: 25.2%).
In response to the challenges faced by our
employees, we made a one-off cost of
living payment, totalling a cost of around
£4 million, during the 2022 year.
Within the Clay division, adjusted EBITDA*
totalled £126.7 million (2021: £90.6 million),
representing an adjusted EBITDA* margin of
34.3% (2021: 32.3%). The improvement in
adjusted EBITDA* reflected a combination of
significant pricing benefits, solid operational
performance and disciplined cost management.
The division recognised a loss of £5.3 million
in respect of Ibstock Futures, as the business
continued to invest in research and development,
in-house innovation and commercial capability.
Adjusted EBITDA* in our Concrete division
increased to £23.6 million (2021: £21.7 million),
as the division continued to benefit from
its exposure to a broad range of residential
and infrastructure markets. Adjusted EBITDA*
margins of 16.4% were marginally below 2021
levels (2021: 16.9%), reflecting principally the
impact of operational challenges during the
first half of the year at our roof tile factory
in Leighton Buzzard. As expected, adjusted
EBITDA* margins moved forwards during the
second half of the year.
Central costs increased to £10.6 million
(2021: £9.3 million) reflecting higher variable
remuneration costs and the initial impact of
the Fire Up share award to all employees
below the Senior Leadership Team level.
Exceptional items*
Based on the application of our accounting
policy for exceptional items*, certain income
and expense items have been excluded in
arriving at adjusted EBITDA* to aid shareholders’
understanding of the Group’s underlying
financial performance.
The amounts classified as exceptional* in
the period totalled a net gain of £6.3 million
(2021: £5.2 million gain), comprising:
1. Exceptional net cash credit of £6.9 million
(which were substantially cash settled in
the period):
a) £7.0 million of exceptional cash profits
arising from the disposal of a surplus
property in Sussex during the 2022 year;
b) £0.1 million charge of other one-off
operating costs;
2. An exceptional non-cash charge of
£0.6 million comprising of an impairment
associated with the Group’s closure of
sites as part of its single co-ordinated
restructuring plan.
Further details of exceptional items* are set
out in Note 5 of the financial statements.
Finance costs
Net finance costs of £2.7 million were below
the level of the prior year (2021: £5.0m)
with lower interest cost on our borrowings
(reflecting the favourable debt refinancing
completed in November 2021) and increased
interest income from the Group’s main
defined benefit pension scheme. The Group
incurred costs of around £0.3 million during
the second half of the 2022 year related to
the 12-month extension of its Revolving
Credit Facility.
Profit before taxation
Group statutory profit before taxation
was £104.8 million (2021: £64.9 million),
reflecting stronger trading, with the current
year result including an exceptional credit*
of £6.3 million (2021: credit of £5.2 million).
Taxation
The Group recorded a taxation charge
of £17.9 million (2021: £33.1 million) on
Group pre-tax profits of £104.8 million
(2021: £64.9 million), resulting in an effective
tax rate (“ETR”) of 17.1% (2021: 51.0%)
compared with the standard rate of UK
corporation tax of 19%. The lower statutory
tax charge and ETR are primarily due to no
taxable gain arising on the land disposal
during the year as well as a prior year
deferred tax credit being recognised as a
result of reassessing the deferred tax balance
relating to property, plant and equipment.
The adjusted ETR* (excluding the impact of
the deferred tax rate change and exceptional
items) for the 2022 year was 16.5% (2021: 18.1%).
The reduction in adjusted ETR from the prior
year was due primarily to the higher level of
permanent benefit arising from the super
deduction which provides statutory tax relief
on 130% of qualifying capital expenditure.
The other main item affecting the adjusted
ETR is the prior year deferred tax credit
referred to above.
Earnings per share
Group statutory basic earnings per share
(EPS) increased to 21.6 pence in the year
to 31 December 2022 (2021: of 7.8 pence)
principally as a result of the Group’s increased
profit after taxation, reflecting the stronger
trading result.
Group adjusted basic EPS* of 22.7 pence
per share increased significantly from the
13.9 pence reported last year, reflecting the
increased adjusted EBITDA* achieved in the
year and a modest reduction in the adjusted
effective tax rate. In line with prior years, our
adjusted EPS* metric removes the impact of
exceptional items*, the fair value uplifts
72
Ibstock Plc Annual Report and Accounts 2022 resulting from our acquisition accounting and
non-cash interest impacts, net of the related
taxation charges/credits. Adjusted EPS* has
been included to provide a clearer guide
as to the underlying earnings performance
of the Group. A full reconciliation of our
adjusted EPS* measure is included in Note 11.
During the 2022 year, we completed a
£30 million share buyback programme,
demonstrating our ability to deliver
enhanced returns to shareholders whilst
continuing to invest in our future growth.
Table 2: Cash flow (non-statutory)
Table 1: Earnings per share
Statutory basic EPS –
Continuing operations
Adjusted basic EPS*
– Continuing operations
2022
pence
2021
pence
21.6
7.8
22.7
13.9
Cash flow and net debt*
Adjusted operating cash flow increased by
£32 million to £108.0 million (2021: 76.0 million),
principally due to a material increase in
adjusted EBITDA*. The Group reported a
modest increase in working capital totalling
£1.8 million outflow (2021: £5.4 million
inflow) as a small increase in finished goods
inventory levels was substantially offset by
robust management of trade receivables,
reflecting the continuing progress made
by the organisation in reducing DSO.
Net interest paid in 2022 reduced to
£4.3 million (2021: £5.6 million) reflecting
the lower interest coupon following the
refinancing of the Group’s debt in November
2021. Tax payments totalled £11.7 million
(2021: £10.0 million), on higher levels of
taxable profit compared to the prior year.
Other cash outflows of £12.1 million
(2021: £15.1 million outflow) included
amounts totalling £5.6 million in respect
of carbon emission credits purchased during
the year (2021: £6.4 million), with the balance
being principally operating leases payments.
With Adjusted Operating Cash Flows* in
2022 increasing materially from the prior
year, the Cash conversion* percentage
increased to 77% (from 74% in 2021),
reflecting strong balance sheet discipline
and working capital focus.
Adjusted free cash flow* decreased
marginally in the year to £49.7 million
(2021: £51.0 million), as capital expenditure
of £58.4 million increased by £33.4 million
on 2021 (£25.0 million). The 2022 figure
comprised around £21 million of sustaining
expenditure, £33 million on the Atlas and
Aldridge redevelopments and around
£4 million on other growth projects. In the
2023 year, sustaining expenditure is expected
to be around £20 million, with growth
investments in Atlas, Aldridge and Futures
expected to total approximately £55 million.
Adjusted EBITDA1
Adjusted change in
working capital1
Net interest
Tax
Post-employment
benefits
Other2
Adjusted operating
cash flow1
Cash conversion1
Total capex
Adjusted free
cash flow1
2022
£m
2021
£m
139.7 103.1
Change
£m
36.6
(1.8)
(4.3)
(11.7)
5.4
(5.6)
(10.0)
(7.1)
1.3
(1.7)
(1.8)
(12.1)
(1.8)
(15.1)
–
2.9
108.0
76.0
32.0
77% 74% +3ppts
(33.4)
(25.0)
(58.4)
49.7
51.0
(1.4)
1 Alternative Performance Measures are described in
Note 3 to the consolidated financial statements.
2 Other includes operating lease payments and emission
allowances purchases in all years.
The table above excludes cash flows relating
to exceptional items* in both years. During
2022, the Group completed the sale of
surplus property, generating cash inflows
of £7.8 million (2021: £2.9 million), which
was classified as an exceptional item.
We continue to focus on recycling capital
from the Group’s property portfolio, and
anticipate further surplus land disposals
over the medium-term.
Net debt* (borrowings less cash) at
31 December 2022 totalled £45.9 million
(31 December 2021: £38.9 million; 30 June
2022: £35.7 million). The movement during
the 2022 year reflected the benefit of strong
operating cash flows offset by around
£58.4 million of capital expenditure and
the impact of a £30 million share buyback.
During the final quarter of the year, the
Group extended by a further 12 months
its Revolving Credit Facility, in accordance
with the terms of its 4+1 year agreement
completed in November 2021, on terms
aligned to the existing agreement.
At 31 December 2022, the Group had
£125 million of undrawn committed
facilities in place.
Return on capital employed*
Return on capital employed* (ROCE) in
2022 increased to 23.4% (2021: 15.8%).
The substantial improvement compared
to the prior year reflected both a significant
increase in adjusted operating profit
and a small increase in the capital base,
as both working and fixed capital were
well controlled.
Capital allocation
The Group’s capital allocation framework
remains consistent with that laid out in 2020,
with the Group committed to allocating
capital in a disciplined and dynamic way.
Our capital allocation framework is set
out below:
• Firstly, we will invest to maintain
and enhance our existing asset base
and operations;
• Having done this, we will look to pay an
ordinary dividend. We are committed to
paying dividends which are sustainable
and progressive, with targeted cover
of approximately 2 times underlying
earnings through the cycle;
• Thereafter, we will deploy capital for
growth, both inorganically and organically,
in accordance with our strategic and
financial investment criteria;
• And, finally, we will return surplus capital
to shareholders.
Our framework remains underpinned by our
commitment to maintaining a strong balance
sheet, and we will look to maintain leverage
at between 0.5 and 1.5 times net debt* to
adjusted EBITDA* excluding the impact
of IFRS 16, through the cycle.
During the 2022 year, we completed a
£30 million share buyback programme,
purchasing around 17 million shares, and
equivalent to around 4% of the Group’s
issued share capital.
We expect to deploy significant growth
capital in the business during the 2023
year and beyond, with a growing pipeline
of both organic and inorganic opportunities.
The Board expects there to be capital
generated in excess of that required for
its investment requirements and remains
committed to returning surplus capital
to shareholders as part of its dynamic
and disciplined capital allocation strategy.
The potential for additional returns of
capital will be kept under active review.
Dividend
Reflecting the very strong profit performance
of the business, the Board is pleased to
recommend a final dividend of 5.5p per share
(2021: 5.0p), for payment on 12 May 2023 to
shareholders on the register on 21 April 2023.
This will bring the full year dividend to 8.8p
per share (2021: 7.5p), an increase of 17%.
In recommending this level of dividend, the
73
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information
Financial Review continued
Board remains mindful of its objective
to deliver a sustainable and progressive
ordinary dividend over time.
Pensions
At 31 December 2022, the defined benefit
pension scheme (“the scheme”) was in an
actuarial accounting surplus position of
£15.2 million (31 December 2021: surplus
of £57.8 million). Applying the valuation
principles set out in IAS19, at the year end
the scheme had asset levels of £373.6 million
(31 December 2021: £618.0 million) against
scheme liabilities of £358.4 million
(31 December 2021: £560.3 million).
On 20 December 2022, the Scheme
completed a full buy-in transaction with
a specialist third-party provider, which
represented a significant step in the
Group’s continuing strategy of de-risking
its pensions exposure. Together with the
partial buy-in transaction in 2020, this will
insure all of the Group’s defined benefit
liabilities. This transaction, which involved
no initial cash payment by the Company,
is expected to substantially complete
during the 2023 financial year.
The net decrease in balance sheet surplus
over the period is primarily due to asset
performance which has been largely
offset by a significant actuarial gain
arising on the liabilities from a change
in market conditions, particularly the rise
in corporate bond yields, coupled with
the asset loss from the full Scheme buy-in
which transacted in December 2022.
Based on an existing funding agreement, a
contribution level of £1.75 million per annum
has applied from February 2022, increasing
to £2.0 million from 1 December 2023 and
then to £2.25 million from 1 December 2024.
In light of the fact that the pension scheme
was in a net surplus position after the full
buy-in, the Trustees and the Group have
agreed that the Group would suspend
paying regular contributions with effect
from 1 March 2023.
Related party transactions
Related party transactions are disclosed
in Note 31 to the consolidated financial
statements. During the current and prior
year, there have been no material related
party transactions.
Subsequent events
In light of the fact that the Ibstock Pension
Scheme was in a net surplus position after
the full pension buy-in, the Group and the
Trustees of the Ibstock Pension Scheme
agreed on 27 February 2023 that the
Group would suspend regular contributions
into the pension scheme with effect from
1 March 2023.
Except for this pension contribution
agreement and the proposed ordinary
dividend, no further subsequent events
requiring either disclosure or adjustment
to these financial statements have arisen
since the balance sheet date.
Going concern
The Directors are required to assess whether
it is reasonable to adopt the going concern
basis in preparing the financial statements.
In arriving at their conclusion, the Directors
have given due consideration to whether the
funding and liquidity resources are sufficient
to accommodate the principal risks and
uncertainties faced by the Group.
Having considered the outputs from this
work, the Directors have concluded that it is
reasonable to adopt a going concern basis
in preparing the financial statements. This is
based on an expectation that the Company
and the Group will have adequate resources
to continue in operational existence for at
least twelve months from the date of signing
these accounts.
Further information is provided in Note 2
of the financial statements.
74
Ibstock Plc Annual Report and Accounts 2022 Non-Financial Information Statement
This section of the Strategic Report constitutes
the Non-Financial Information Statement in
compliance with Sections 414CA and 414CB
of the Companies Act 2006.
The information listed in the table below is
incorporated by cross reference to the relevant
parts of the Annual Report.
Requirement
Environmental matters
Employees
Human rights
Policies
• ESG 2030 Strategy reports
• Sustainable Procurement Policy
• Health and Safety Policy Statement
• Diversity and Inclusion Policy
• Anti-bullying and Harassment Policy
• Code of Business Conduct
• Whistleblowing Policy
• Modern Slavery Statement
• Data Protection Policy
Social matters
• ESG 2030 Strategy and Framework
Anti-corruption and bribery
• Anti-bribery and Corruption Policy
• Competition Law Compliance Policy
• Supplier Sustainability Code of Business Conduct
Description of the Business Model
Principal risks and impact
of business activity
Non-financial key
performance indicators
Additional information
Responsible Business
pages 42 to 55
Responsible Business
pages 54 to 55
Responsible Business
pages 54 to 55
Responsible Business
Responsible Business
pages 42 to 55
pages 54 to 55
Corporate Governance Statement
page 92
Our Purpose and Business Model
pages 28 to 29
Our Principal Risks and Uncertainties pages 60 to 69
Corporate Governance Statement
page 92
Audit Committee Report
pages 110 to 114
Responsible Business
pages 54 to 55
TCFD Statement
Strategic Report
Our KPIs
page 76 to 85
pages 3 to 91
pages 40 to 41
The policies mentioned above provide the link between our purpose and values and how Ibstock is managed and does business.
75
Ibstock Plc Annual Report and Accounts 2022Strategic ReportGovernanceFinancial StatementsAdditional information Environmental Reporting Disclosures
Task Force on
Climate-related
Financial Disclosures
(TCFD)
The Task Force on Climate-related Financial Disclosures
(TCFD) was established by the Financial Stability
Board in 2015 and published its final report entitled
“Recommendations of the Task Force on Climate-
related Financial Disclosures” in June 2017. This year
we report in compliance with Rule 9.8.6R(8), which
sets out the continuing obligations for climate related
disclosures reporting for premium listed companies
in annual reports.
Pursuant to this rule the Board of Directors
confirm the following:
a) Ibstock has made disclosures that are
consistent with the four recommendations
and eleven recommended disclosures set out
in section C of the TCFD Final Report in their
Annual Report. Management considers that
they have given sufficient information to be
consistent with the TCFD framework in the
current year.
b) These disclosures are set out below and in
the relevant sections of this Annual Report
(where stated).
In 2022 we enhanced our disclosures on
the physical and transition risks that climate
change poses to our business. The following
sections address how climate change is
incorporated into our corporate governance
processes, its potential impact on our strategy
and financial planning, its treatment in our
risk management procedures, and the relevant
climate related KPIs for our business. The
following sections and subsection headings
correspond with the pillars of the TCFD
framework. Ibstock Plc is committed to
transitioning to net zero carbon emissions
(Scope 1 and 2) by 2040.
76
Ibstock Plc Annual Report and Accounts 2022 Governance framework
Ibstock Plc Board
page 94
Meeting frequency in 2022: 7
Considers climate change as a fundamental part of planning in the following:
• Group Strategy
• Oversees climate change risk
• Ensures the interests of all stakeholders considered in decision-making
• Approves Annual Budget
• Oversees major capital expenditures, acquisitions, and divestitures
Informing
Reporting
ESG Committee
page 108
• ESG Committee Chair, Claire Hawkings
• Meeting frequency in 2022: 4
• Monitors ESG 2030 Strategy implementation
• Reviews strategies, policies and performance against target KPIs
• Promotes understanding of Group environmental impact
• Informs the Board on processes and mechanisms used to engage
key stakeholders on ESG
• Oversees ESG governance framework
• Receives advice and training from ESG specialist RSM
Audit Committee
page 110
Remuneration Committee
page 115
• Audit Committee Chair,
• Remuneration Committee
Justin Read
• Meeting frequency in 2022: 4
• Risk Management process
• Internal Controls
• Financial Statements
and disclosures
Chair, Tracey Graham
• Meeting frequency in 2022: 4
• Alignment of LTIP performance
targets to ESG KPIs
Informing
Reporting
Chief Executive Officer and Executive Leadership Team
Overall responsibility for the ESG 2030 Strategy remains with the Chief Executive Officer, Joe Hudson. The Group Company Secretary & ESG
Director, Becky Parker, leads the Group ESG Team, a dedicated team of subject matter experts, and has responsibility for the Climate Change
Principal Risk (see page 63). The Executive Leadership Team (ELT) met ten times during the year, and reviews performance and manages the
implementation and progress of the ESG 2030 Strategy.
Informing
Reporting
ESG Team and Business Divisions
ESG Team
• Drives the ESG 2030 Strategy and programmes
• Supports integration of sustainability across the Group
and divisions
• Team works in constant collaboration with operational
management and the operations themselves
Operational Management
• Quarterly Factory Managers Meetings
• Disseminates ESG performance information
• Raises issues
• Enables practical implementation
Informing
Reporting
Operations
Local business units implement initiatives, policies and share best practice, and consider targets on resource efficiency, engagement and
community. They raise issues directly with management which are escalated both through regular management meetings and through
the operational management hierarchy.
77
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Environmental Reporting Disclosures continued
Governance
Recommended Disclosures
Describe the Board’s oversight of climate-related risks and opportunities
The Board has ultimate oversight of climate related risks and opportunities. These are discussed at strategy meetings and routinely at Board
meetings, alongside business performance and risk. The Board delegates the oversight and monitoring of progress to the ESG Committee (see
ESG Committee Report on page 108 for further information on its role and responsibilities). The ESG Committee is chaired by Claire Hawkings,
who has significant experience in the energy sector notably executive responsibility for sustainability issues. The Board receives updates from
this Committee following each meeting and input is provided on specific issues to the Audit and Remuneration Committees, including confirmation
of the achievement of remuneration linked KPIs and to provide assurance over processes and progress relative to climate related metrics and
targets. During the year the Board and its Committees received specific training on climate related issues from RSM UK Risk Assurance Services
LLP, (RSM), our external consultants, details of which can be found on page 109.
Ibstock has integrated climate related considerations into the discussions and considerations of the Board, the ELT and the senior management
of Ibstock. A detailed governance structure describing information flows throughout the organisation is provided on page 77.
Further information of the Company’s risk management processes can be found in the Principal Risks and Audit, Risk and Internal Control
sections on pages 60 and 104 respectively.
Last year we reported on our priorities for 2022. The table below details how our priorities were addressed, our priorities for the coming year
and our plans to address them:
Priorities for 2022
How they were met
The Board and the ESG Committee will be focusing on implementation
of the new ESG strategic framework and net zero commitment
Training on key climate related topics has been added to the Board
calendar for 2022
The Board and the ESG Committee met regularly during the year
(details can be found in the table on page 77 and in the Governance
Report on page 97), monitoring and making recommendations on the
implementation of the ESG 2030 Strategy. The Board was satisfied
with progress against the associated targets
Training has been provided by dedicated advisors RSM, covering key
and emerging climate related topics. Specific training is discussed in
the ESG Committee report on pages 108 to 109
Priorities for 2023
Our plans
The Board and ESG Committee will continue focusing on delivery
of the ESG 2030 Strategy, and closely monitor the effectiveness
of the ESG Governance framework
The Board and the ESG Committee will ensure that sufficient time
and resource is allocated to ensuring the successful delivery of the
ESG 2030 Strategy against its targets
Continue upskilling the Board and its Committee with respect
to the ongoing development of the Climate change landscape
Focused training sessions will be arranged with RSM to undertake
‘deep dives’ into specific and emerging topics in the climate agenda
Recommended Disclosures
Describe management’s role in assessing and managing climate related risks and opportunities
The assessment and management of climate related risks and opportunities issues below Board level is the responsibility of the Chief Executive
Officer, who through the Executive Leadership Team (ELT) implements the Group’s climate related strategy. Progress against the strategy is
reported back to the ESG Committee and the Board. The reporting structure for management is detailed in the governance structure on page 77.
The ELT are assisted in this function by the ESG team, a team of dedicated subject matter specialists, led by the Group Company Secretary &
ESG Director. Ibstock has in place a number of dedicated teams that are responsible for reducing Ibstock’s operational impacts on the climate,
the vulnerability of facilities to physical climate risk, and transitional risks related to climate. These teams are coordinated by and regularly
report to the ESG Team, which in turn reports into the ELT and the ESG Committee. These are grouped by strategic responsibility and are
detailed in the table below.
Further information on role in assessing and managing climate related risks and opportunities can be found in the Responsible Business section
on page 42, the Principal Risks and Uncertainties section on pages 60 to 69 and the Viability Statement on page 90.
Strategic Pillar
Addressing
Climate Change
Focus
Carbon
Water
Exec Sponsor
Action & Monitoring Responsibility
Chief Operations
Officer
Net Zero Working Group, mixed representation
of operational and subject matter specialists
Chief Operations
Officer
Operations Director, Clay
Operations Director, Concrete
Biodiversity
Chief Executive Officer Planning & Estates Manager
Manufacturing
Materials for Life
New Product
Development
Managing Director
of Futures
Futures business, Clay Growth Engine, Concrete Growth Engine
78
Ibstock Plc Annual Report and Accounts 2022 Doing Business
Responsibly
(Governance)
TCFD
Company Secretary
& ESG Director
TCFD Working Group, chaired by the Group Financial Controller
and formed of subject matter specialists
Last year the Company reported on our priorities for 2022. The table below details how our priorities were addressed, our priorities for the
coming year and our plans to address them:
Priorities for 2022
How they were met
We will look to enhance cross functional collaboration on climate
issues and greater climate risk training across departments within
Ibstock during 2022 and continue to strengthen our governance
in this area
Cross functional collaboration has been facilitated through our
governance structure and division of responsibilities. Operations
directors hold regular meetings to facilitate embedding of climate
initiatives within their departments and share best practice
A suite of internal climate know how resources will be developed that
will be accessible by all of our colleagues which will operate alongside
training sessions on all areas of climate related risk and opportunity
The ESG 2030 Strategy documents form the foundation of the
Group’s approach to climate change. These have been made
accessible through the Group intranet for easy access. The ESG
team have been instrumental in upskilling areas of the business
through targeted training sessions
Priorities for 2023
Our plans
Continued focus to embed climate change initiatives within the
business so that management of climate related risks becomes
part of the Group’s culture
Further climate change risk analysis and mitigation training
We will continue to use our ESG 2030 Strategy as this forms
the foundation of the Group’s approach to climate change.
We will embed more regular reporting and set more detailed
targets across our operations
Deliver targeted climate risk training sessions to increase awareness
and aid horizon scanning for developing and emerging risks
Strategy
Recommended Disclosures
Describe the climate related risks and opportunities the organisation has identified over the short, medium, and long term
As part of our on-going development of scenario planning, Ibstock completed a comprehensive scenario analysis for climate related physical
and transitional risks, including relevant geographical analysis in line with TCFD recommendations. Material risks and opportunities are
evaluated by considering their potential impact, for example financial or reputation, together with their likelihood. These have been judged
in reference to the Representative Concentration Pathways (RCPs) as determined by the Intergovernmental Panel on Climate Change (IPCC),
which provide scenarios of climate change by average temperature in varying degrees of severity. Ibstock has used these models to evaluate
the impact on identified transitional and physical climate change risks and opportunities, so that plans can be made to ensure the resilience
of our business operations. The RPCs considered in our planning are detailed in the table below.
In line with the above, and in accordance with the recommendations of the TCFD, we have detailed our climate related risks and opportunities
together with materiality and strategic response and resilience in the table below taking into consideration RCP 2.6 (2.0°C) and RCP 8.5 (4.3°C):
Scenario
Description
RCP2.6 (2.0°C)
RCP4.5 (2.4°C)
RCP8.5 (4.3°C)
The IPCC’s RCP2.6 scenario represents a pathway that is likely to limit global warming to below 2°C. CO2 emissions
remain constant until early this century, then decline, becoming negative by the end of the century
The IPCC’s RCP4.5 scenario represents slowly declining emissions where warming may reach 2.4°C. There is a slight
increase in CO2 emissions until mid century, then it declines.
The IPCC’s RCP8.5 scenario represents a high emissions scenario where warming may exceed 4°C. By the end of the
century, CO2 emissions will be three times higher than present.
We carried out a maturity assessment based on guidelines within the four reporting areas as identified by TCFD, and a gap analysis was
conducted to identify areas of focus. Broader climate-related risks and opportunities can manifest themselves beyond those described in the
principal risk. Therefore our assessment is based on the risks and opportunities set out in the TCFD guidance and our view of the material risks
and opportunities with input from across the business and external sources. We identified relevant specific climate-related transitional and
physical risks and opportunities to the business, categorised under the following headings, Transitional Risks – Policy and Legal, Technology,
Market and Reputation and Physical Risks – Acute and Chronic. We then carried out an assessment to identify most material physical and
transitional risks and opportunities based on a probability and impact assessment using input from internal stakeholders and external parties.
A financial model based on our strategic plan was then developed which allows the modelling of the potential financial impacts of the
identified most material risks and opportunities across the short-, medium- and long-term time horizons. This modelling specifically looked
at the financial impacts in terms of revenue and adjusted EBITDA* of the scenarios against the base case financial plan under our two chosen
RCP scenarios, RCP2.6 and RCP8.5.
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The assessment and financial impact of our identified risks and opportunities was an integral part of our strategic planning process in 2022,
and consideration was given to potential impact on business strategy. The assessment also provided an input into our indicators of impairment
assessment and the useful economic lives of our assets review. At each stage in the process we considered relevant best practice guidance and
recommendations and input from our ESG advisors.
Summary of our most material risks and opportunities
The table below illustrates the material risks and opportunities identified and their associated impact and our strategic response.
Temperature range
RCP 2.6 – RCP 8.51
<2°C – 4.3°C
2023–2030
(Short-term)
2031–2040
(Medium-term)
2041–2050
(Long-term)
TCFD category
Climate related risks and opportunities
Potential financial impacts
Potential Materiality1
Strategic response and mitigation
Transition:
Policy & Legal
Risk:
As an energy intensive business we require carbon allowances. Changes
in the regulatory or legislative environment could result in the reduction
or removal of free carbon allowances, or increased cost of allowances
Increased costs related to compliance
Transition:
Technology
Transition:
Technology
Transition:
Market
Transition:
Market
Transition:
Reputation
Risk:
Customers switching to alternative products with lower embodied carbon
Reduced demand for products
and services
Opportunity:
Develop more sustainable products and services to satisfy customer
demand and willingness to pay for low carbon solutions
Increased revenue through demand
for lower emissions products and
services through volume or pricing
Risk:
Transition to new building technologies and approaches results in
requirement for different materials and manufacturing processes
for our businesses
Increased production costs due
changing input prices, for example
carbon, energy and water
Opportunity:
Changes in customers preference and building practices result
in new and emerging markets developing
Increased revenues through access
to new and emerging markets
Risk:
Ibstock credibility and brand is damaged if unable to keep up
with changing customer behaviour and societal change
Reduced revenue from decreased
demand for products and services
Physical Risk Acute
Risk:
Increased severity of changes in precipitation patterns and extreme
variability in weather patterns such as storms, cyclones and floods
Reduced revenue from decreased
production capacity
1 Potential materiality conducted for RCP 2.6 and RCP 8.5. The assessed financial impacts for both RCPs were the same, therefore the materially indicators represent both RCPs.
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
ESG 2030 Strategy in place committing to carbon emissions reduction
by 40% and an increased share of renewable energy generated by 2030
Transition to low carbon technologies and increased diversification
(for example launch of Ibstock Futures), target of 20% revenue from
new and sustainable products by 2030
Transition to low carbon technologies and increased diversification
(for example launch of Ibstock Futures), target of 20% revenue from
new and sustainable products by 2030
Continued investment in research and development of production
processes and materials
Launch of Ibstock Futures business to address emerging trends such
as Modern Methods of Construction (MMC)
Delivery of the ESG 2030 Strategy, development of new products or services
through research and development and innovation, target 20% revenue
from new and sustainable products by 2030
Development of preventative measures including resilience enhancements
of the facilities located in the areas at the highest risk
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Ibstock Plc Annual Report and Accounts 2022 Impact on adjusted EBITDA*:
Low <10%
Medium 10%-20%
High >20%
In last year’s Annual Report and Accounts, we reported on short-, medium-, and long-term time horizons as less than one year and one to five
years and more than 5 years respectively, which aligned with Ibstock’s five-year strategic plan. Through further analysis, as conducted by our
internal teams supported by external advisors, we have reassessed our short, medium, and long-term time as 2020 to 2030, 2031 to 2040 and
2041 to 2050. These timeframes closely reflect our risk profile, our measured approach to climate change planning, and realistic timeframes
in which we will deliver systemic change.
TCFD category
Climate related risks and opportunities
Potential financial impacts
Transition:
Policy & Legal
Risk:
Transition:
Technology
Risk:
Transition:
Technology
Opportunity:
Transition:
Market
Risk:
for our businesses
Opportunity:
Transition:
Market
Transition:
Reputation
Risk:
Physical Risk Acute
Risk:
As an energy intensive business we require carbon allowances. Changes
in the regulatory or legislative environment could result in the reduction
or removal of free carbon allowances, or increased cost of allowances
Increased costs related to compliance
Customers switching to alternative products with lower embodied carbon
Reduced demand for products
and services
Develop more sustainable products and services to satisfy customer
Increased revenue through demand
demand and willingness to pay for low carbon solutions
for lower emissions products and
services through volume or pricing
Transition to new building technologies and approaches results in
Increased production costs due
requirement for different materials and manufacturing processes
changing input prices, for example
carbon, energy and water
Changes in customers preference and building practices result
Increased revenues through access
in new and emerging markets developing
to new and emerging markets
Ibstock credibility and brand is damaged if unable to keep up
with changing customer behaviour and societal change
Reduced revenue from decreased
demand for products and services
Increased severity of changes in precipitation patterns and extreme
variability in weather patterns such as storms, cyclones and floods
Reduced revenue from decreased
production capacity
1 Potential materiality conducted for RCP 2.6 and RCP 8.5. The assessed financial impacts for both RCPs were the same, therefore the materially indicators represent both RCPs.
Temperature range
RCP 2.6 – RCP 8.51
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
<2°C – 4.3°C
Potential Materiality1
Strategic response and mitigation
2023–2030
(Short-term)
2031–2040
(Medium-term)
2041–2050
(Long-term)
ESG 2030 Strategy in place committing to carbon emissions reduction
by 40% and an increased share of renewable energy generated by 2030
Transition to low carbon technologies and increased diversification
(for example launch of Ibstock Futures), target of 20% revenue from
new and sustainable products by 2030
Transition to low carbon technologies and increased diversification
(for example launch of Ibstock Futures), target of 20% revenue from
new and sustainable products by 2030
Continued investment in research and development of production
processes and materials
Launch of Ibstock Futures business to address emerging trends such
as Modern Methods of Construction (MMC)
Delivery of the ESG 2030 Strategy, development of new products or services
through research and development and innovation, target 20% revenue
from new and sustainable products by 2030
Development of preventative measures including resilience enhancements
of the facilities located in the areas at the highest risk
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Priorities for 2022
How they were met
We will revisit and refine the set of perceived risks and opportunities
in the short-, medium- and long-term to provide a more detailed set
of data with which to integrate these results into our ongoing
financial analysis and modelling processes
Our strategy implementation will be developed through a combination
of strengthening climate risk assessment requirements, considering
climate risk in supplier/provider selection, pursuing transition finance
opportunities, and evaluating sector exposures to reduce portfolio
emissions over time
The process for identifying and quantifying risks and opportunities
has been refined through the work of the TCFD Working Group
in conjunction with external advisors. This has resulted in the
quantification of the impacts of material risk and opportunities
as discussed on page 80
We have strengthened our climate change risk assessments,
and continue to refine our approach with respect to our climate
risk within the business
Priorities for 2023
Our plans
Continued horizon scanning and enhancing risk planning process
Supply chain visibility and resilience
We will continue to build on our existing framework, working with our
external advisors to continually refine our processes and ensure our
resilience. We will deliver targeted climate risk training sessions to
increase awareness and aid horizon scanning for developing and
emerging risks across our business. We will also consider our planning
with respect to climate risk in supplier/provider selection, pursuing
transition finance opportunities, and evaluating sector exposures to
reduce portfolio emissions over time
An area of focus will be the development of a reporting platform to
facilitate greater visibility into Scope 3 emissions. We will continue to
collaborate closely with our suppliers to ensure supply chain visibility.
We will also be holding our annual supplier collaboration day in the
second half of 2023 with a focus on carbon reporting and reduction,
supply chain resilience, and the journey to net zero through
collaboration and partnerships
Recommended Disclosures
Describe the impact of climate related risks and opportunities on the organisation’s businesses, strategy, and financial planning
Transitional Risk Impacts
No high financial impacts are anticipated with regard to identified transitional risks in the short term. In the medium-term our expectation
is increasing financial impact from transitional risks as regulations increase and customer knowledge and preference for more sustainable
products and services increase. We also anticipate stricter design standards and requirements, particularly those applicable to the construction
of homes, will become more prevalent.
Physical Impacts
There is an expectation of the rising frequency of extreme weather events in the medium-term coupled with the severity of flooding and surge
precipitation increasing. This could result in damage or prolonged outages at our operational facilities. This year, we commissioned JBA Risk
Management Limited (JBA) to assess baseline and climate change flood risk for all our manufacturing and office locations, to inform our
climate mitigation plans. We have modelled the financial impact of our material risk and opportunities, which informed our indicators of
impairment review and our assessment of useful economic lives of our assets.
Our ESG 2030 Strategy focuses on three distinct areas with clear ambitions, targets and milestones in order to ensure we meet our objectives.
Part of this is our commitment to reduce the level of absolute carbon in the business by 40% by 2030 and to be net zero (Scope 1 and 2)
by 2040. Full details can be found in the Responsible Business section on page 42, and in the ESG 2030 Strategy which can be found on
www.ibstockplc.co.uk.
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Ibstock Plc Annual Report and Accounts 2022 Priorities for 2022
How they were met
We will look in more detail at the impacts of climate related risks
using previously identified scenarios with a specific emphasis on
the organisation’s acute and chronic physical risks
All material risks and opportunities have been reviewed and updated
including physical risks
Priorities for 2023
Our plans
Continue to develop our approach to impact assessment and
scenario analysis
We will continue to refine our scenario analysis approach reflecting
emerging best practice an guidance
Recommended Disclosures
Describe the resilience of the organisation’s strategy, taking into consideration different climate related scenarios, including a 2°C
or lower scenario
As part of the strategic planning process we have considered the possible transitional and physical risks and opportunities to Ibstock with regard
to several RCP scenarios including the below 2°C sustainable development scenario. In the short- and medium-term the impacts vary depending
on the identified risk and opportunity, ranging from less than 10% to greater than 20% impact on adjusted EBITDA*. Further information on
the specific scenario is included in the table on pages 80 to 81.
The consequences of a significant production facility being unable to manufacture for a prolonged period and also an outage at factories
identified in our third party flooding assessment as high risk for a period of one month as a result of water stress, storms or flooding, would
represent around 30% of production.
We have also considered the potential impact of identified climate change risk and opportunities through our indicators of impairment reviews
and also assessment of useful economic lives of assets.
Priorities for 2022
How they were met
The outputs from the consideration of risks relative to the three
scenarios will be used to input into more detailed modelling of the
organisation’s longer-term viability and resilience in 2022
We considered the International Energy Agency’s World Energy Model
climate risk scenarios of 1.5°C, <2°C and a >2°C used in the prior year.
We decided that the RCP scenarios of <2°C and >4°C allowed for more
robust risk planning. This has formed the basis of our detailed
planning for viability and resilience this year
Risk Management
Recommended Disclosures
Describe the organisations processes for identifying and assessing climate related risk
Climate change is a Principal Risk for Ibstock. The process for identifying and managing risk is described in detail on pages 60 to 69.
Climate related risks are identified as part of the existing risk management process through the review and updating of our operational risk
registers in order to capture new existing and emerging risks. These registers separate climate change and ESG issues on both an individual
basis and from the perspective of their impact and influence on other Group risks. Climate is considered and prioritised with equal significance
to other risks.
Assessment of the impact and probability of climate related risks is undertaken before and after the effect of mitigating controls in order
to understand the implications of such risks to the business.
The Group’s existing risk management process encapsulates climate risk. A specialist TCFD climate related risk assessment process provides
the strategic framework for identifying material climate related risks and opportunities, ensuring that climate risk considerations are reviewed
appropriately but that outputs and considerations are fed into the broader risk management processes of the Group.
Recommended Disclosures
Describe the organisation’s processes for managing climate related risks
Following the completion of the risk management review, each risk is considered relative to its residual rating having taken into account all
existing controls. Each risk is assessed in order to establish appropriate actions, to be delivered by the risks owners so that each risk is managed
to a level that is consistent with Ibstock’s risk appetite. These are then monitored on a regular basis.
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Recommended Disclosures
Describe how processes for identifying, assessing, and managing climate related risks are integrated into the organisation’s
overall risk management
Climate change risks are considered as part of the review of operational risk registers at the half and full year with the results being reviewed
and mapped to the Group’s principal risk register by the ELT prior to their presentation to the Audit Committee and the Board. Risk management is
a top down and bottom up process, with risk reviews originating at operational level, and risk registers populated and refined through the
various operational and management committees as demonstrated in the Governance structure detailed above on page 77.
Priorities for 2022
How they were met
Risk management processes to be further developed to provide more
detailed and specific consideration of climate risks and opportunities
The 2021 Carbon Disclosure Project (CDP) corporate climate
questionnaire scores on Ibstock’s submission indicated an
opportunity to improve how we report on identification and
management of climate related risks and opportunities
We have developed specific climate change risk register covering
transitional and physical risks. This has formed the basis of the
identification of material risk and opportunities which we have
assessed for financial impact on the business
Having analysed the results and identified improvements with the
assistance of our internal experts and external advisors, disclosures
were addressed in 2022 resulting in an improved CDP score from
‘C-’ to ‘B’. We expect incremental increases in the future as Scope 3
emission reporting is developed
Metrics and Targets
Recommended Disclosures
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk
management process
The metrics the Group uses to assess climate-related risks and opportunities include the financial evaluation of risks and opportunities,
as discussed in the ‘summary of our most material risks and opportunities’ table on page 80, the metrics described in our SECR and
SASB reporting on pages 86 and 87, and the metrics and targets described in the ESG 2030 Strategy as described on pages 46 to 47.
In determining our metrics we have considered all-sector and industry-specific guidance. As a business that uses a large amount of
energy, carbon reduction is a key metric and KPI of the business. Executive remuneration in the form of the LTIP performance conditions
has been tied to carbon reduction performance since 2021.
Recommended Disclosures
Disclose Scope 1, Scope 2, and, if appropriate, Scope greenhouse gas (GHG) emissions, and the related risks
We publicly report on our Scope 1, 2 and 3 GHG emissions and the carbon intensity of electricity generated. These have been calculated
in accordance with the GHG reporting protocol methodology. Comparatives for prior periods have been included where available. The risks
associated with our emissions are discussed on page 80 in the summary of our most material risks and opportunities, and also within our
principal risks and uncertainties. Our Streamlined Energy and Carbon Reporting Disclosure (SECR) can be found on page 86.
Recommended Disclosures
Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets
A full list of our targets to manage climate risk can be found in the Responsible Business section on page 42. The ESG 2030 Strategy summarises
these under our three ambitions and we have provided tables setting out our 2022 performance against our targets on pages 46 and 47, and
against a range of SASB aligned metrics on page 87.
Priorities for 2022
How they were met
Consider the need for any additional metrics, notably those relating
to the measurement of the impact of certain physical risks
The metrics detailed in the following table were identified as those
against which we will report going forwards, and measuring against
these will occur in 2023
Priorities for 2023
Our plans
Deliver our augmented suite of reporting metrics
A key focus for the TCFD team in 2023 will be to review, agree and
publish relevant metrics as described above to support our climate
change initiatives
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Ibstock Plc Annual Report and Accounts 2022 Reporting Metrics going forwards
Work is underway to increase our underlying metrics for climate change performance, which will in future include the dashboard metrics shown
in the table below:
Category
GHG Emissions
Scope 1 & 2
GHG Emissions
Scope 3
Measure
Metric/Target
Absolute tonnes of carbon reduction
40% reduction in absolute carbon by 2030
based on 2019 benchmark year and net zero
carbon by 2040 (Scope 1 and 2)
Absolute tonnes of carbon reduction
Net zero carbon before 2050
Transition risks
Number of sites vulnerable to transition risks
% of total number sites
% of sites highly exposed to transition risk
Metric being developed throughout 2023
with plan to have a target published in 2024
Physical risks
Number of sites vulnerable to physical risks
% of total number sites
Climate related opportunities
Proportion of revenue, assets, or other
business activities aligned with climate-
related opportunities
Capital deployment
Amount of capital expenditure and
investment deployed toward climate-
related risks and opportunities
% of revenues
% of revenues
Internal carbon price
Price of each tonne of GHG emissions
used internally
£/tonne
Proportion of estate in UK at risk to
flooding, heat stress, or water stress
% of sites with climate resilience plans
Metric being developed throughout 2023
with plan to have a target published in 2024
20% of revenue from new and sustainable
products by 2030
Percentage of annual revenue invested
in R&D of low-carbon products/services
Investment in climate adaptation measures
Metric being developed throughout 2023
with plan to have a target published in 2024
Metric being developed throughout 2023
with plan to have target published 2024
Water usage
Volume of mains water used in the
production process at manufacturing sites
Waste management
Volume of waste generated from
manufacturing sites to include hazardous
and non-hazardous
Remuneration
LTIP performance assessed on a broader
ESG metric, including an element based
on carbon reduction.
M3 of mains water used per tonne
of production
25% reduction in mains water usage
by 2030 based on 2019 benchmark
Tonnes of waste to landfill per tonne
of production
Zero waste to landfill by 2025
Carbon Emissions reduction
% Female leadership
% Sales revenue coming from new and
sustainable products
20% of LTIP performance assessed
on a broader ESG
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ESG Data and Reporting
Data assurance
Lucideon CICS Limited (a global assurance provider) are providing independent 3rd Party Assurance to the ISAE 3000 standard over a number of
the metrics reported in this section. The full assurance statement will be available on the Company’s corporate website from the end of May 2023.
ESG 2030 Strategy KPIs
Carbon (Scope 1 and 2)
ESG 2030 Strategy KPIs
% Absolute carbon reduction Tonnes CO2 (relative to 2019 baseline)
Water
Product innovation
Waste
Plastic packaging
% reduction in CO2 per tonne of production (relative to 2019 baseline)
% reduction in mains water use per tonne of production (relative to 2019 baseline)
% of sales turnover from new and sustainable products
% general waste to landfill (relative to 2019 baseline)
% reduction in preventable plastic packaging per tonne of production (relative to
2019 baseline)
% reduction in LTIFR (relative to 2016 baseline)
Health and Safety
Earn and Learn positions % of employees in earn and learn positions
Women in senior leadership % of women in senior leadership positions
2022
13%
9%
31%
13%
90%
16%
61%
7.5%
27%
Target
40% by 2030
Net Zero by 2040
15% by 2025
25% by 2030
20% by 2030
Zero by 2025
40% by 2025
50% by 2023
10% by 2030
40% by 2027
These targets were set in 2022 so comparisons to previous years are not shown – see SASB for more detail on page 87.
Streamlined Energy and Carbon Reporting (SECR) disclosure
Scope 1 Tonnes of CO2e combustion of fuel and operation of facilities
Scope 2 Tonnes of CO2e
Electricity TWh used per annum
Solar generated electricity TWh used per annum3
Gas TWh used per annum
4
Scope 3 Tonnes of CO2
Intensity Ratio Tonnes of CO2e per tonne of production
2015
329,749
48,530
0.11
N/A
1.14
N/A
0.170
2020
2019
223,229
349,200
16,429
28,429
0.07
0.11
N/A 0.0000021
0.78
1.23
N/A
N/A
0.160
0.159
20212
299,698
19,912
0.09
0.002
1.05
N/A
0.141
20221
303,173
17,514
0.09
0.004
1.08
103,000
0.145
2
1 All emissions and energy are consumed in the UK. For reporting purposes, Ibstock defines its organisational boundary on an operational control basis, and our Scope 1 and 2 emissions and
other ESG metrics are reported on this basis (i.e. account for 100 per cent of such emissions from operations over which Ibstock Plc has operational control). ‘Scope 3’ is the term used to
describe the indirect GHG emissions resulting from activities in our value chain but outside of our operational control.
Following full verification the 2021 figures have been amended as follows:
Scope 1 carbon previously stated figure 288,557;
Scope 2 carbon previously stated figure 19,648; and
Intensity Ratio Tonnes of CO2e per tonne of production previous stated figure 0.138.
Measurements for Solar generated electricity TWh used per annum started in 2020.
3
4 We started measurement in 2022 as part of our Scope 3 emissions strategy, using the spend-based approach as permitted in the GHG Protocol Value Chain Reporting Guidance for Scope 3.
Throughout 2022 Ibstock procured 100% of its electricity through Total Gas & Power’s Pure Green energy tariff. This enables us to report
zero emissions for electricity under the GHG Protocol Corporate Standards, Scope 2 as the electricity can be matched to Renewable Energy
Guarantee of Origin (REGO) certificates. Scope 1 and 2 emissions are calculated in accordance with the methodology set out in the GHG
Protocol (January 2015 revised edition). In January 2015, the GHG Protocol published a guidance document on method used to account for
Scope 2 greenhouse gas emissions, which introduces dual reporting:
• Location-based reporting, which reflects emissions due to electricity consumption from a conventional power grid. It therefore uses primarily
an average emissions factor of the country’s energy mix
• Market-based reporting, which reflects emissions from energy consumption taking into account the specific features of the energy contacts
chosen, and also considers the impact of the use of energy from renewable sources
• Electricity emissions factors allow the hierarchy defined in the new Scope guidance document of the GHG Protocol for market-based reporting
• Suppliers specific factors must be certified by instruments that prove the origin of electricity (guarantee of origin certificates)
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Ibstock Plc Annual Report and Accounts 2022 Sustainability Accounting Standards
Board (SASB) table
The following table covers our wider sustainability metrics, which is aligned where possible to the SASB disclosure for construction materials.
We will continue to review this data suite on an ongoing basis for future reporting periods.
Topic
Metric
2020
2021
2022
CO2e Emissions and Energy
Scope 1 emissions
Scope 2 emissions
Scope 3 emissions
Intensity ratio
Other fuels for mobile
plant and company cars
Tonnes of CO2e combustion of fuel and operation of facilities
223,229
299,698
303,173
Tonnes of CO2e electricity
Tonnes of CO2
Tonnes of CO2e per tonne of production
Litres of fuel used per annum
16,429
19,912
17,514
103,000
0.160
0.141
0.145
2,085,811 2,956,121 1,531,593
Company cars
Low emission cars as a % of the total fleet
Not available
45%
55%
Water
Mains water
Intensity ratio
Recycled water
Total water
Waste
M3 mains water use per annum
M3 mains water use per tonne of production
M3 non-mains water use per annum
M3 total water use per annum
165,983
197,883
127,544
0.110
0.092
0.072
834,832
962,560
652,391
1,000,815 1,160,443
779,935
Tonnes of waste to landfill
Tonnes of general waste sent to landfill
Tonnes of hazardous waste (landfill) Tonnes of hazardous waste sent to landfill
1,888
204
278
178
143
48
Intensity ratio
Tonnes of waste sent to landfill per tonne of production
0.001
0.0002
0.0001
Tonnes of waste recycled
Tonnes of waste recycled and diverted from landfill
Total tonnes of waste
Total tonnes of waste generated by the business
3,709
5,801
3,034
3,490
5,605
5,945
Plastic
Packaging
Intensity ratio
Customer
Revenue from new and
sustainable products
Net Promoter Score
Social
Total tonnes of plastic packaging
Kg of preventable plastic per tonne of production
998
0.69
1,476
0.72
1,447
0.69
% of Products
11.7%
13.0%
13.0%
% of customers likely to recommend Ibstock
39.0%
33.0%
45.0%
Health and Safety – LTIFR
No. of accidents per million of man hours worked
Number of employee deaths
Number of deaths recorded for employees on our sites
Number of contractor deaths
Number of deaths recorded for contractors on our sites
Employee engagement
Best companies score %
Earn and Learn positions
% of employees in formal earn and learn training
Apprentices
Total number of apprentices
Employee population
Total number of employees
Employee Diversity – Gender
Board Diversity – Gender
% of women
% of women
Senior Leader Diversity – Gender
% of women
2.2
0
0
N/A
N/A
35
2.1
0
0
61.2%
N/A
38
2,064
2,119
15.7%
28.5%
18.5%
15.0%
37.5%
19.0%
1.47
0
0
N/A
7.5%
47
2,293
16%
37.5%
27%
Charitable Contributions
product donations (brick)
Not available
83,094 >140,000
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Section 172(1) Statement
The purpose of this Strategic Report is to inform
current and potential members of the Company
and help them assess how the Directors have
performed their duty under section 172 of the
Companies Act 2006 (s172)
This s.172 Statement incorporates information from other
areas of the Annual Report to avoid unnecessary duplication.
The Board of Directors confirms that during
the year under review, it has acted in good
faith to promote the long-term success of
the Company for the benefit of its members
as a whole, whilst having due regard to the
matters set out in section 172(1)(a) to (f)
of the Companies Act 2006.
Examples of matters discussed in
the year by the Board and their impact
on our stakeholders are included in the
table below and discussed throughout
the Strategic Report and in the Corporate
Governance Statement on page 92. The
table also identifies where, in the Annual
Report, information on the issues, factors
and stakeholders the Board has considered
in respect of s172 can be found.
It is acknowledged that it is not possible
for all of the Board’s decisions to result in
a positive outcome for every stakeholder
group. When making decisions, the Board
considers the Company’s purpose, vision and
values, together with its strategic priorities
and takes account of its role as a responsible
business. By doing this, the aim is to ensure
that decisions are robust and sustainable
and drive long-term success for the Company.
Further information about how we engage
with our stakeholders and their needs can
be found on pages 44 to 45.
88
Employee at our Leicester Head Office.
Ibstock Plc Annual Report and Accounts 2022 s172(1) factor
(a) the likely consequences of any decisions in the long term;
Example: During the year the Board continued to ensure that the Group’s
strategy remained appropriate to deliver the long-term success of the Company,
and oversaw Management’s execution of the strategy. The Board carefully
evaluated the likely consequences of its decisions, challenging management
where necessary to ensure that the impact of any decisions over the long-term
would be of benefit to the Company. An example of this is the Board’s oversight
of strategic acquisitions to support the growth of the Futures business, positioning
the Group to take advantage of opportunities in fast growing and emerging
adjacent markets, supporting the long-term success of the Group.
(b) the interests of the Company’s employees;
Example: Particularly through the work of the ESG Committee, the Board retained
oversight of the formulation and delivery of the Group People Strategy. The Board
ensured that the People Strategy remained true to the core values of Teamwork,
Trust, Care and Courage, and that our employees were appropriately supported.
The Board also approved a Cost of Living Adjustment (COLA) payment this year.
The Board received and considered feedback from the Group’s employees through
the Listening Post.
(c) the need to foster the Company’s business relationships with suppliers,
customers and others;
Example: Reaching mutually agreeable and pragmatic solutions to supply
chain challenges and increasing input costs has been a key aspect of the
Board’s decisions when having regard to this factor. An example of this is
the Board’s oversight and support of new haulage contracts during the year
resulting in significantly improved on-time delivery rates for our customers.
(d) the impact of the Company’s operations on the community and environment;
Example: The Board and ESG Committee have supported and are driving
Ibstock’s ambition to be sector leading in its approach to ESG issues and
approved the ESG 2030 Strategy to maintain this position through to 2030,
as well as a commitment to be a net zero business (Scope 1 and 2) by 2040.
Through the work of the ESG Committee, the Board has overseen progress
relative to our targets under the ESG 2030 Strategy, whilst supporting and
encouraging the Group’s efforts in this area.
(e) the desirability of the Company maintaining a reputation for high
standards of business conduct;
Example: The Board remains committed to ensuring the business operates
with the highest standards of integrity, and continually reviews and tests the
compliance arrangements in place. A significant part of the Board’s leadership
responsibility is to ensure that the Company’s purpose, strategy and culture
remain aligned, and it recognises that a robust and transparent culture is a
solid foundation for maintaining the Group’s reputation for high standards
of business conduct. Over the course of the year the Board has overseen
and supported the initiatives undertaken on culture.
(f) the need to act fairly between shareholders and the Company.
Example: The Board seeks to ensure that communications are clear and its
actions are in accordance with the Group’s stated strategic aims to promote
the long-term success of the Company. All of our shareholders have the
opportunity to engage with the Board and ask questions at the Company’s
Annual General Meeting. When considering the share buyback and dividend
payments during the year, the Board carefully considered the interests and
needs of both institutional and retail shareholders, ensuring these were
carefully balanced prior to making recommendations.
Where to find out more
Strategic Report
Chairman’s Statement
Chief Executive Officers’ review
Our Markets
Futures
Our Purpose and Business Model
Our Strategy
Our KPIs
Our Principal Risks and Uncertainties
Governance
Board Leadership and Company Purpose
Strategic Report
Our Purpose and Business Model
Our Strategy
Responsible Business
Governance
Board Leadership and Company Purpose
ESG Committee Report
Strategic Report
Our Markets
Our Purpose and Business Model
Our Strategy
Responsible Business
Governance
Board leadership and company purpose
Strategic Report
Responsible Business
ESG Committee Report
Strategic Report
People and Culture
Responsible Business
Governance
Audit Committee Report
Strategic Report
Chairman’s statement
Responsible Business
Governance
Board Leadership and Company Purpose
Directors’ Report
Page 8
Page 10
Page 24
Page 22
Page 28
Page 30
Page 40
Page 60
Page 97
Page 28
Page 30
Page 42
Page 97
Page 108
Page 24
Page 28
Page 30
Page 42
Page 97
Page 42
Page 108
Page 18
Page 42
Page 110
Page 8
Page 42
Page 97
Page 135
89
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Viability and Going Concern Statement
Viability and Going Concern
Background
The Board’s assessment of the longer-term
viability of the Group is an integral part of
our business planning processes. These
processes include financial forecasting and
risk and opportunity management, as well as
longer-term scenario planning incorporating
potential future economic conditions, market
trends, emerging opportunities or threats
and the potential impact of climate change.
The output of the Group’s business planning
processes reflects the best estimate of the
future prospects of the business based on a
range of possible future scenarios. To make
an assessment of viability, these forecasts are
rigorously stress-tested based upon potential
adverse impacts arising from the Group’s
principal risks and uncertainties which
are outlined on pages 60 to 69, in severe
but plausible scenarios which test the
Group’s resilience.
Assessment
Management’s viability exercise, reviewed by
the Audit Committee on behalf of the Board,
has robustly assessed the market conditions,
risks and the liquidity and solvency of the
Group, including consideration of the
heightened economic uncertainty. The
Group has leading positions within the
markets in which it operates, as noted on
pages 24 to 27, and its business strategy
(see page 30) is aimed at continuing to
strengthen its position in those markets,
create value for its shareholders and ensure
its operations and finances are sustainable.
Lookout period
The Group may use longer-term time horizons
for the purposes of capital investment and
capital allocation given its markets and
construction timeframes. However, the
Directors believe that a three-year period
provides the most appropriate horizon over
which to assess viability. The performance
of the building products industry is sensitive
to the level of macroeconomic activity, which
is influenced by factors outside of the Group’s
control, including demographic trends,
the state of the housing market, mortgage
availability, interest rates and changes in
household income, inflation and Government
policy, which currently is experiencing a
period of increased uncertainty.
90
The Group’s financing which matures post
the lookout period consists of £100 million of
private placement notes from Pricoa Private
Capital, with maturities between 2028 and
2033 and a £125 million Revolving Credit
Facility (RCF) with a syndicate of five banks,
which is undrawn and matures in Q4 2026.
SCENARIO 1
Economic downturn
Link to risk
Risk 3 market uncertainty, Risk 4
anticipating product demand
Stress testing
Although each of the Group’s principal
risks has a potential effect and has been
considered as part of the assessment, only
those that result in a severe but plausible
scenario have been modelled. The Group’s
viability modelling has stress tested the
annual budget and strategic plan in the
following scenarios both individually and
in combination. This included the Group
experiencing two compound scenarios
of reputational damage during a period
of economic downturn and also business
disruption during an economic downturn.
The Group’s viability modelling also included
a sensitivity involving a reverse stress test to
understand the Group’s resilience through
establishing the financial headroom that
exists before viability is threatened. This was
conducted by reducing profitability through
reducing industry demand for the Group’s
products and therefore sales.
Assumptions
In determining the viability of the Group,
the Board made the following assumptions:
• The economic climate in which the Group
operates remains in line with a broad
consensus of external forecasts;
• There is no material change in the legal
and regulatory frameworks with which
the Group complies;
• There are no material changes in
construction methods used in the
markets in which the Group operates;
• The Group’s risk mitigation strategies
continue to be effective; and
• The Group’s past record of successfully
mitigating significant construction
industry declines can be replicated.
The impact of a severe and prolonged
reduction in demand for its products
on the basis of reduced house building
activity arising from either a macroeconomic
down-turn or negative impacts of geo
political events; unexpected changes to
Government policy resulting in reduced
volume of product sold or future impacts on
customer activities as a result of COVID-19
or other pandemic, as well as a benign
environment of prolonged price stagnation
on sales. This considered a demand reduction
of 34% and 30% for the Clay and Concrete
divisions respectively in 2023 versus 2022,
recovering to a 10% in 2024 and 5%
reduction versus 2022 in both divisions
thereafter, representing a gradual recovery
after the first year.
Given the current systemic under supply
of housing stock, the Directors believe
any reduction in underlying demand above
these levels would lead to Government
stimulus to underpin levels of new build
housing. The Group has proven mitigating
strategies including the mothballing or
closure of production facilities, together
with negotiation of workforce Voluntary
Alternative Arrangements, which could
reduce operating costs whilst minimising
redundancies, allowing the retention of
our highly skilled workers through such
a potential economic downturn.
SCENARIO 2
Production cost increases
Link to risk
Risk 5 financial risk management, Risk
6 regulatory and compliance, Risk 1
climate change
A situation whereby the cost of production
for all products increases by 20% and 25%
specifically for carbon and energy costs
(recognising the material increase included
in the budget and strategic plan) as a result
Ibstock Plc Annual Report and Accounts 2022 of inflationary input cost rises across the
Group arising from economic uncertainty,
geo political events, or additional regulatory
costs imposing additional cost within the
production process arising from climate
change related increases or tariffs, in the
remote scenario whereby the Group is unable
to pass on these costs to customers. This is
based on historical cost inflation and price
volatility seen in wholesale energy markets.
The Group seeks to mitigate and improve
resilience to this scenario, through operating
a policy of forward purchasing its energy
requirements to lock in the costs of production
to inform price negotiations with its customers,
adopting a dynamic pricing strategy in relation
to inflationary cost increases. Further,
production plans could be flexed to reduce
the available product range, either to focus
upon more energy efficient products or to
reduce changeovers at factories, which would
provide mitigating production efficiencies.
SCENARIO 3
Disruption in business activities
Link to risk
Risk 2 material operational disruption,
Risk 10 cyber and information security,
Risk 1 climate change
The impact of an event, such as prolonged
weather events as a result of climate change
(such as mean temperature changes, water
stress, storms or flooding), a cyber attack,
local/national restrictions on the ability to
work or other unanticipated event, which
prevents production at one or more of the
Group’s facilities and therefore prevents
customer demand being met. This specifically
models the consequences of a significant
production facility (Eclipse) being unable to
produce for a prolonged period and also an
outage at factories in the South East for a
period of one month as a result of temperature,
water stress, storms or flooding, which have
been assessed as high risk through the
Group climate change physical risk study.
The impact of which would represent
around 30% of production.
The Group aims to mitigate the risk
associated with disruption through its
business continuity and climate change
resilience plans, which operate at a factory
level, and its ability to transfer some of its
production across its network of facilities.
SCENARIO 4
Reputational damage
Link to risk
Risk 7 Maintaining customer relationships
and market reputation, Risk 8 people and
talent management, Risk 9 product quality
A scenario whereby the Group’s reputation
is damaged, as a result of customer
relationship breakdown, significant employee
disengagement or product quality issues,
resulting in a sudden reduction in sales
activity. The scenario modelled includes
a reduction in revenue of 10% for a period
of three years, representing potential impact
or price reduction to maintain customers.
The Group seeks to mitigate the risks of
reputational damage on an ongoing basis
with its internal control framework and
series of independent reviews and audit.
The Group’s viability assessment also considered
two compound scenarios whereby the Group
experienced reputational damage during an
economic downturn and business disruption
during an economic downturn.
The scenarios also consider the covenants
with respect to the Group’s borrowings,
ensuring these thresholds are met.
The scenarios are hypothetical and severe for
the purpose of creating situations that have
the ability to threaten the Group’s viability.
The results of the stress testing demonstrate
that due to the Group’s cash generative
nature and access to its RCF, it would be
able to withstand the impacts of these
scenarios and remain cash generative.
Viability Statement
Based on their assessment of prospects and
viability above, the Directors confirm that
they have a reasonable expectation that the
Group will be able to continue in operation
and meet its liabilities as they fall due over
the three year period ending March 2026.
Going Concern
The Directors also considered it appropriate
to prepare the financial statements on the
going concern basis, as explained in the basis
of preparation paragraph in Note 1 to the
financial statements.
Strategic Report
The Strategic Report on pages 2 to 91
has been approved and signed by order
of Board by:
Becky Parker
Group Company Secretary
7 March 2023
91
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Introduction to Governance
Jonathan Nicholls
Chairman
Dear Shareholders,
I am pleased to introduce the Governance
section of this year’s Annual Report. As
in previous years, the Governance section
has been structured to provide a clear and
transparent overview of the Board’s oversight
of Ibstock’s governance framework. To further
our drive to improve corporate reporting,
we have reviewed our disclosures in line
with the various reporting best practice
recommendations published throughout
the course of the year, and as ever welcome
feedback and suggestions from all of our
stakeholders on our continuing development
in this area.
This section includes the Corporate
Governance Statement, the reports of
the main Board Committees, including
the Directors’ Remuneration Report and
a number of other disclosures that we are
required to make by law. Taken together and
including cross references to relevant parts of
the Strategic Report, they contain all of the
information that is required to demonstrate
how we have applied the principles and
complied with the provisions of the UK
Corporate Governance Code (the Code).
Review of the year
In another challenging year, our Board
has continued to fulfil its stewardship of
the Company, promoting the long-term
sustainable success of the Company, and
overseeing the Group’s value generation for
shareholders, and its contribution to wider
society. In doing so we have ensured that our
purpose, strategy and culture remain fully
92
Board changes and Diversity
With respect to changes on the Board, Tracey
Graham will step down as a Non-Executive
Director at the conclusion of the 2023 Annual
General Meeting (AGM). Tracey discharges
the Senior Independent Director and Chair
of the Remuneration Committee roles, and
has served on the Board since February 2016.
On behalf of the Board, I would like to take
this opportunity to thank Tracey for her
invaluable contribution over the years.
After a carefully managed selection process,
Louis Eperjesi will assume the role of Senior
Independent Director from the conclusion
of the AGM, and we have commenced the
search for an additional Non-Executive
Director to join the Board as Chair of the
Remuneration Committee.
The Board, with the support of the
Nomination Committee, has continued
to work with management to support and
develop the Group’s approach to diversity
within our workforce. A number of discussions
on this topic have taken place over the course
of the year, and focus continues to be on the
Group’s initiatives to drive performance in
this area, see page 51 for further details. With
respect to Board diversity, the Board remains
cognisant of the need for an appropriately
diverse Board, and has formalised its policy
in this area.
Becky Parker was appointed Group Company
Secretary & ESG Director on 27 January 2023,
following the resignation of Nick Giles effective
as at the same date. The Board welcomes
Becky, and extends its thanks to Nick for his
valuable contribution during his tenure.
Remuneration Policy
The Board was pleased that the Remuneration
Policy, put to a shareholder vote at the AGM
held 21 April 2022, received overwhelming
support from our shareholders. This followed
extensive engagement with our shareholders,
the feedback from which was valuable in
informing the decisions and conclusions of the
Remuneration Committee in its finalisation
of the Policy. Details on how the Policy has
been applied during the year can be found
in the Directors’ Remuneration Report on
page 115.
aligned. All of the Directors take pride in the
discharge of our Board duties and responsibilities
in a transparent, open and honest manner,
and we are heartened that this continues
to be reflected by senior management and
across the Group.
As a Board we have continued to oversee
management’s drive and performance to
deliver the strategy and business performance
despite the significant headwinds of economic
uncertainty, high energy costs and price inflation.
The unprecedented changes in the external
environment experienced by all businesses
over the past few year has underlined the
essential qualities of flexibility and adaptability
to changing conditions, which are key
attributes of our Board.
The Board is answerable to shareholders for
the successful delivery of the Group’s strategy
and financial performance; for the efficient
use of resources having regard to social,
environmental and ethical matters; and
for taking account of the interests of all our
other stakeholders. We approve the Group’s
governance framework, taking into account
contributions from Board Committees in their
specialist areas such as remuneration policy,
internal controls and risk management
and succession planning. On a regular basis
we review our level of oversight and the
monitoring of risks over a variety of areas
including strategy, acquisitions and disposals,
capital expenditure on new projects, finance,
people, and ESG matters. This process will
continue to adapt to meet the evolving needs
of Ibstock. Our aim is to ensure that good
governance extends beyond the Boardroom
and is continually borne in mind as part of
the successful delivery of the Group’s strategic
pillars over both the short and long term.
Culture
Ibstock has always had a strong, collegiate
culture and this is promoted by the Board.
This year, the Board has been particularly
impressed by the work undertaken to develop
the Group’s culture and engage meaningfully
with the Group’s employees. This has not
only furthered the Board’s ambitions for
the Group in this area, but has provided new
feedback mechanisms for monitoring culture.
The Board has been fully supportive of these
initiatives, and we are particularly proud of
the Group’s approach to investing in the
Company’s employees, especially in this
challenging economic climate. Further
information on the Group’s culture
initiatives can be found on page 18.
Ibstock Plc Annual Report and Accounts 2022 ESG
This year was the first full year of
operation of our new ESG 2030 Strategy
which we announced in last year’s
Annual Report. The ESG Committee has
continued to monitor and support the
delivery of the strategy, and I am pleased
to report that the Committee itself
and consequently the Board has made
significant strides in its understanding
of and engagement with some of the
most pressing challenges of our time,
most notably how we as a Group can
contribute to limiting the effects of
climate change. As a Board we have
devoted more time to ESG Committee
meetings, and to boost our collective
understanding of this key area. Those
members of the Board that are not
Committee members have made efforts
to attend ESG meetings and associated
training where existing commitments
have allowed. Further information on the
work of the ESG Committee can be found
on page 108, and performance against
the ESG strategy on page 46.
Progress to meeting the Group’s
commitment to make Ibstock a Scope 1
and 2 net zero business by 2040 is going
well, with performance against our Carbon
Reduction KPI on track. Last year we
reported on the introduction of a new
performance condition for LTIP awards
encompassing three separate elements
that were linked to the ESG strategy, in
order to assist in driving our performance
against these targets. The elements
include carbon reduction, female
representation in senior management and
new sustainable product development.
Further information on this can be found
in the ESG Committee Report and the
Directors’ Remuneration Report on
pages 108 and 115 respectively.
Compliance and other statements
Application and compliance with the UK
Corporate Governance Code 2018 (Code)
The principles set out in the Code
emphasise the value of good corporate
governance to the long-term sustainable
success of listed companies. These principles,
and the supporting provisions, cover five
broad themes and the Board is responsible for
ensuring that the Company has appropriate
frameworks in place to comply with the
requirements of the Code. The Board believes
that throughout 2022, the Company has
applied the principles and complied with
the majority of the relevant provisions of
the Code with one exception set out below:
Audit, Risk and Internal Control
Page 104 and the Audit Committee Report
on page 110 contain information on financial
and business reporting, risk management,
internal control and the internal and
external audit functions. The Audit
Committee Report summarises the
activities of the Committee for the year
including areas of significant judgement.
Remuneration
The Directors’ Remuneration Report on
page 115 contains information on the
Company’s Remuneration Policy as well
as its application in 2022 and for the
coming financial year.
Provision 38 – Alignment of pension
rates with the workforce
During the year in review the CEO received
a cash payment in lieu of pension contribution
of 20% of base salary. This was reduced to
10% of salary in alignment with the wider
workforce and the Code on 31 December
2022, in accordance with the timings
stipulated in the Investment Association’s
Principles of Remuneration.
The Code is available on the Financial
Reporting Council website at www.frc.org.uk.
Application of the Code Principles
References to those parts of the Annual
Report and Accounts (Annual Report) that
demonstrate how we have applied the main
principles of the Code can be found below:
Board Leadership and Company Purpose
Information on how the Board led the
Company, establishing and overseeing the
purpose, values, strategy and integration of
culture, ensuring that necessary resources
are in place and that stakeholder engagement
was effective can be found on page 97.
Division of Responsibilities
The roles and responsibilities of key aspects
of the Group’s governance framework can
be found on page 102.
Composition, Succession and Evaluation
Page 103 and the Nomination
Committee Report on page 105 contain
information on Board composition, the
process for appointments to the Board
and wider succession planning, the
Board evaluation and effectiveness
review procedures and the approach to
induction, training and development.
Viability and going concern
Statements in respect of viability and going
concern are set out on pages 90 to 91.
Robust assessment of emerging and
principal risks
The Board confirms that it has carried out
a robust assessment of the emerging and
principal risks facing the Group (including
those which would threaten the business
model, future performance, solvency,
liquidity or reputation), its appetite with
respect to those risks and the systems
required to mitigate and manage them.
Details on the review process are set out
on page 113. Further details on the emerging
and principal risks and uncertainties can
be found on page 60.
Annual review of systems of risk
management and internal control
The Board monitored the Group’s systems of
risk management and internal control and
carried out a review of their effectiveness.
The Board concluded that, whilst there
remained opportunities to improve in
certain areas, overall these systems were
effective. Details regarding this review
process are set out on page 114.
Fair, balanced and understandable
The Directors consider that, taken as a whole,
this Annual Report is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Group’s position, performance, business model
and strategy. Details on the process for arriving
at this conclusion are set out on page 112.
Section 172(1)
The Directors have performed their duty
under s172(1) of the Companies Act 2006.
The statement on how this duty has been
fulfilled is contained in the Strategic Report
on page 88.
93
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Board of Directors and Company Secretary
Jonathan Nicholls BA (Hons), ACA, FCT
Chairman
Date appointed to the Board:
22 September 2015
(Chairman since 24 May 2018)
Joe Hudson BA (Hons), FCIPD
Chief Executive Officer
Date appointed to the Board:
2 January 2018
(CEO since 4 April 2018)
Tenure on Board:
7 years 5 months
Tenure on Board:
5 years 2 months
Committee memberships:
Committee memberships:
Independent:
On appointment
Independent:
No
Relevant skills and experience:
Degree in Economics and Accounting
awarded by Manchester University.
Member of the Institute of Chartered
Accountants in England and Wales,
having qualified with KPMG in 1982.
Fellowship member of the Association
of Corporate Treasurers. Over 20 years’
experience at the senior management
or director level of businesses, including
those in brick manufacturing, roofing
and construction, and property
development. Significant experience as
CFO and other senior finance roles in
public companies.
Current external appointments:
Chairman of Shaftesbury PLC.
Past board roles include:
Non-Executive Directorships: SIG plc,
DS Smith plc, Great Portland Estates
plc. CFO of Hanson plc, CFO of Old
Mutual plc.
Relevant skills and experience:
BA (Hons) Degree in Education
awarded by the University of
Exeter. General Management
programmes at INSEAD and
London Business School. Fellow of
the Chartered Institute of Personnel
and Development. Varied international
career in general management,
operations and strategic human
resources in Europe, North America
and Africa. Operational line
management experience in cement,
plasterboard, concrete products and
construction materials. Experience of
large scale business combinations.
Current external appointments:
Director of the Construction
Products Association.
Past board roles include:
Managing Director, Cement &
Concrete Products, Aggregate
Industries UK. Chief Executive
Officer, Lafarge Africa plc.
Christopher McLeish BSc, ACA
Chief Financial Officer
Date appointed to the Board:
1 August 2019
Tracey Graham
Senior Independent Director
Date appointed to the Board:
3 February 2016
Tenure on Board:
3 years 7 months
Committee memberships:
None
Independent:
No
Relevant skills and experience:
BSc (Hons) Business Economics
awarded by the University of Salford.
Member of the Institute of Chartered
Accountants in England and Wales.
Wealth of experience in key finance
leadership roles with a broad
background in manufacturing,
media and technology sectors.
Extensive experience of Group
finance and controls, as well as
global shared services operations.
Demonstrable success in a range of
senior operational, corporate and
financial communication roles.
Current external appointments:
None.
Past board roles include:
Finance Director, Tate & Lyle
North American Sugars.
Tenure on Board:
7 years 1 month
Committee memberships:
Independent:
Yes
Relevant skills and experience:
Experience of MBO and M&A
activity. Led the management
buyout of Talaris Limited from
De La Rue. Proven track record of
creating successful growth in a wide
variety of businesses. Significant
experience gained in senior positions
in banking and insurance with
HSBC and AXA Insurance.
Current external appointments:
Non-Executive Directorships:
Nationwide Building Society, Close
Brothers Group plc, discoverIE Group
plc, Link Scheme Limited. Chair of
LINK Consumer Council.
Past board roles include:
Non-Executive Director of Royal
London Group. Chief Executive
of Talaris Limited.
Key to Committee Membership:
Nomination Committee
Remuneration Committee
Audit Committee
ESG Committee
Chair
1
3
2
Board tenure
1 >6 years
2 3-6 years
3 0-3 years
3 Directors
4 Directors
1 Director
94
Ibstock Plc Annual Report and Accounts 2022
Justin Read MA, MBA
Non-Executive Director
Date appointed to the Board:
1 January 2017
Tenure on Board:
6 years 2 months
Louis Eperjesi
Non-Executive Director
Date appointed to the Board:
1 June 2018
Tenure on Board:
4 years 9 months
Claire Hawkings BSc (Hons), MBA
Non-Executive Director
Date appointed to the Board:
1 September 2018
Tenure on Board:
4 years 6 months
Peju Adebajo
Non-Executive Director
Date appointed to the Board:
26 November 2021
Tenure on Board:
1 year 4 months
Committee memberships:
Committee memberships:
Committee memberships:
Committee memberships:
Independent:
Yes
Independent:
Yes
Independent:
Yes
Independent:
Yes
Relevant skills and experience:
Educated at Oxford University and
holds an MBA from INSEAD. Nine years
as a CFO of FTSE-listed companies.
Financial and management experience
working across a number of different
industry sectors, including real estate,
support services, building materials
and banking. Experience of managing
businesses across multiple jurisdictions.
Experience of strategy, M&A, business
development, investor relations and
capital raising.
Current external appointments:
Non-Executive Directorships:
Grainger PLC, Affinity Water Limited,
Marshall of Cambridge (Holdings) Ltd.
Past board roles include:
Non-Executive Director of Carillion
plc (for a six-week period from
1 December 2017). Group Finance
Director of Segro plc. Group Finance
Director at Speedy Hire plc.
Relevant skills and experience:
Experience of manufacture and
supply of building products in
international markets. 11 years’
experience in UK roofing or brick
markets. Experience of strategy
development, change management
programmes and M&A activity.
Strong commercial, marketing
and product background. 13 years’
experience in UK capital markets.
Current external appointments:
Non-Executive Directorships:
Accsys Technologies PLC,
Trifast Plc. Chairman of Trustee
of The Cheltenham Trust.
Past board roles include:
Executive Director of Kingspan
Group plc. Chief Executive Officer
of Tyman plc. Chairman of
CMS Windows Ltd.
Becky Parker BSc (Hons), MSc, ACMA/
CGMA, GradCG
Group Company Secretary1
Date appointed:
27 January 2023
Relevant skills and experience:
BA (Hons) Degree in Environmental
Studies awarded by Northumbria
University. MBA from Imperial
College Management School.
Fellow of the Energy Institute.
Sustainability leadership and
management expertise. Experience
in developing and delivery of
organisational strategies including
business process transformation,
leadership succession, and
diversity and inclusion. Significant
experience (30 years) in the energy
sector in a variety of international
leadership positions including: P&L
responsibilities, M&A, portfolio
management and leading complex
commercial transactions.
Current external appointments:
Non-Executive Directorships: Defence
Equipment and Support, James
Fisher and Sons Plc, FirstGroup plc.
Past board roles include:
Director, Tullow Oil Netherlands.
Director, Tullow Oil Bangladesh.
Director, Gujarat Gas Co. Ltd.
Director, British Gas India Pvt. Ltd.
Relevant skills and experience:
CEO with experience across a number
of industrial sectors including building
materials, renewables, consulting and
banking. Over 13 years’ experience
in commercial expansion and
development of products and services.
Experience in sustainability leadership,
as well as corporate communications.
Educated at Imperial College London
and holds a Bachelors and Masters
Degree in Engineering (Chemical
Engineering). MBA from Harvard
University and alumna of INSEAD.
Current external appointments:
Non-Executive Director of
Wolseley Jersey Limited. Advisory
board member of Lagos Business
School, and the Renewable Energy
Association of Nigeria.
Past board roles include:
Chair of Traxi Limited (Nigeria).
CEO/MD of Major State Agricultural
Department, Nigeria. MD of Lafarge
Africa PLC. CEO of Mouka Ltd
(Nigeria). Non-Executive Director
of Ladgroup Limited (Nigeria).
Relevant skills and experience:
Undergraduate degree in
Management Sciences and a
Master’s degree in Management
Science and Operational Research
awarded by the University of
Warwick. Member of the Chartered
Institute of Management Accountants
and a graduate of the Chartered
Governance Institute UK and Ireland.
10 years’ experience in FTSE 100
listed governance, compliance and
senior finance roles. Broad range
of commercial experience across
a range of sectors from early career
as a Management Consultant at
The PA Consulting Group.
1 For the year under review, Nick Giles served as Group Company Secretary.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Executive team
Executive
Leadership Team
Joe Hudson BA (Hons), FCIPD
Chief Executive Officer
See page 94 for skills and experience.
Christopher McLeish BSc ACA
Chief Financial Officer
See page 94 for skills and experience.
Becky Parker BSc (Hons), MSc, ACMA/CGMA,
GradCG
Group Company
Secretary & ESG Director
See page 95 for skills and experience.
Joanne Hodge BA (Hons), MCIPD
Group People Director
Joined the business
in January 2022
Relevant skills and experience:
BA Degree in Business and Finance
awarded by University of Coventry.
Member of Chartered Institute of
Personnel and Development. Career
which started as an Apprentice and
progressed through a number of
operational management roles
before moving to HR within a Global
FMCG organisation. Since worked
across Finance and Logistics sectors
and led sizeable organisational and
cultural transformation programmes.
Jeremie Rombaut BA, BTech (Hons.)
Managing Director,
Ibstock Futures
Joined the business
in January 2022
Relevant skills and experience:
MBA (Distinction) Degree in General
Management awarded from
IMD, Lausanne and a Bachelor
of Technology degree from Roorkee
(India) and HES, Switzerland.
Diversified and international
experience in innovation, business
development (new market entry
with industrial investment, as well
as startup ventures) and general
management roles in Europe and
fast-growing emerging markets.
Experience in construction industry
including Cement, Aggregates,
Concrete and Plasterboard.
96
Ibstock Plc Annual Report and Accounts 2022 Corporate Governance Statement
Governance framework
Board
Board of Directors
Audit
Committee
Nomination
Committee
Remuneration
Committee
ESG
Committee
Disclosure
Committee
Executive
Chief Executive Officer
Executive Leadership Team
Management
Health and Safety Steering Committee
Senior Leadership Team
Operational
Operational team meetings, Sustainability Working Groups (D&I, Carbon)
Board attendance during the year
The number of scheduled meetings of the Board and its Committees and the attendance by the Directors at meetings that they were eligible
to attend during the year is disclosed in the following table:
Name
Jonathan Nicholls
Joe Hudson
Chris McLeish
Tracey Graham
Justin Read
Louis Eperjesi
Claire Hawkings
Peju Adebajo
Board
Audit Committee
Remuneration Committee
Nomination Committee
ESG Committee
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
–
–
–
4/4
4/4
4/4
4/4
4/4
4/4
–
–
4/4
4/4
4/4
4/4
4/4
3/3
–
–
2/21
3/3
3/3
3/3
3/3
–
4/4
–
–
–
4/4
4/4
4/4
1 Tracey Graham was recused from the Nomination Committee concerning the recruitment of her successor.
Governance framework
The Board holds seven or eight scheduled
meetings during the year, one of which will
be an off-site strategy session. To facilitate
Board engagement with our employees and
operations, the Board and its Committees
hold meetings at various locations across
the business during the year. If Directors
are unable to attend a meeting because
of exceptional circumstances, they continue
to receive the papers in advance of the
meeting and have the opportunity to
discuss with the relevant Chair or the
Group Company Secretary any matters
on the agenda which they wish to raise.
Feedback is also provided to the Director
on the decisions taken at the meeting.
Board Leadership and Company Purpose
An effective Board
The Board is collectively responsible for
the effective and entrepreneurial leadership
of the Group in order to ensure its long-term
sustainable success, including the generation
of value for Ibstock’s shareholders and society
as a whole. It achieves this by doing business
that is consistent with its purpose, vision and
values whilst remaining clear on the interests
of its key stakeholders as well as its impacts on
the environment. Each member of the Board
acts in a way which they consider to be in the
best long-term interests of the Group and in
compliance with their duties under sections
170 to 177 of the Companies Act 2006. Both
the Stakeholder Engagement section on page
44 and the Section 172(1) Statement on page
88 provide further information. The main
activities of the Board are set out on page 100
including information as to which stakeholder
groups were considered as part of different
agenda items during the year.
Shareholders look to the Board for the
successful delivery of the Group’s strategy
and financial performance so the Board
has established a framework of prudent
and effective controls that enable risk to be
assessed and managed. More information
on the risk management and risk control
framework can be found in the Principal
Risks and Uncertainties section on page 60
and the Audit, Risk and Internal Control
section on page 104. On a regular basis,
the Board reviews its level of oversight
and the monitoring of risks over a variety
of areas including strategy, acquisitions
and disposals, capital expenditure on new
projects, finance, people, and ESG matters.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Corporate Governance Statement continued
Our purpose, values, strategy, and culture
The construction industry plays a vital part
in the UK economy. Ibstock has a clear and
simple purpose to be at the heart of building
and helping to shape homes, places and
spaces that help people live better lives,
with its range of clay, concrete and diversified
building products, as we have been doing
for over 200 years. We have a clear strategy
that is informed by our purpose and aligned
with our responsible business ambitions,
underpinned by a culture that is defined
by our core values of Teamwork, Trust, Care,
and Courage.
The Board and its Committees monitor culture
throughout the year, receiving updates on
new initiatives and the development of
plans provided by the CEO and the Group
People Director. In addition, the attending
Non-Executive Director updates the Board
following meetings of The Listening Post,
our chosen method of workforce engagement
(referenced) below, as this serves as a
good monitoring tool for views within
the wider business.
The Board is assisted in monitoring the
culture of the Group through reference to
numerous indicators, including those set
out in the table below:
The Board aims to ensure that our values
are integrated into decision-making and that
the policies and procedures we put in place
are consistent with and support our culture.
Where behaviour is not aligned with these
values, the Board and Management seek
to ensure that appropriate action is taken.
The Board has not needed to seek corrective
action during 2022.
During the year the Board has been
impressed by and has fully supported the
initiatives of management to bring culture
to the forefront of employee experience at
Ibstock. Details of these initiatives can be
found in the People and Culture section
on pages 18 to 21.
Stakeholder interests
The Board has a good understanding of its
key stakeholders and recognises the interests,
importance and value of each relative to the
Group’s business and strategy. This is based
on regular engagement with these groups
over a number of years. An overview of the
Group’s key stakeholders including a summary
of the methods of engagement and information
on how their interests have been taken into
account in Board decision-making can be
found on page 44 of the Strategic Report.
Some examples of principal Board decisions
that were discussed during the year, and how
the Board considered these stakeholder
groups, can be found on page 101.
Workforce engagement
The Listening Post, an employee forum
comprising Claire Hawkings our Chair of
the ESG Committee, the CEO, Group People
Director and employee representatives,
is our method of engagement with the
workforce. Whilst not one of the methods
set out in the Code, The Listening Post
is a combination of being a workforce
advisory panel with Non-Executive Director
representation. This method of employee
engagement provides a safe space for our
employees, and encourages open and honest
discussion. Four sessions were held during the
year, in which a cross-section of employees
from around the business attended to share
insights and views from the workforce. In
addition to Claire Hawkings, other Non-
Executive Directors attend the meetings.
Meeting agendas comprise management
updates and employee-led topics. Discussions
covered a broad spectrum of topics including:
• The Listening Post and its part in
Ibstock’s culture
• The ‘Fire Up Ibstock’ initiative and
associated recognition schemes
• Health and Safety performance and updates
• Business and operational performance
• Employee experience, communication
and development
• Employee Value Proposition, Wellbeing,
Diversity and Inclusion
• Site facility improvements
The outcomes of discussions were reported
to the Board and informed the Board as to
employee issues and interests, providing an
additional feedback mechanism for the
Board on employee sentiment. An example
of the Listening Post’s contribution to the
Board’s decision-making during the year
was its part in informing the Board of
the desirability to make a cost of living
adjustment payment to employees, and
latterly how the Board’s actions were
positively received by employees.
Shareholder engagement
Investor meetings
As part of the Group’s annual financial
calendar, the CEO and CFO conduct a
round of meetings with analysts and
investors following the announcement
of the Full Year and Half Year results.
Other meetings are arranged as and
when required. During the 2022 financial
year, we held over ten meetings with
groups of existing and potential investors.
The Chairman seeks regular engagement
with the Company’s major shareholders
in order to understand their views on
governance and performance against
the strategy whilst the Committee Chairs
also engage on significant matters related
to their area of responsibility.
Tracey Graham, our Senior Independent
Director (SID), was available to shareholders
throughout the year if they have concerns
that contact through the normal channels
has failed to resolve or for which such
contact is inappropriate.
Shareholder feedback
The Chairman ensures that the whole of the
Board has a clear understanding of the views
of shareholders. There is an effective flow
of communication between the Board and
all shareholders, particularly with regard to
business developments and financial results.
The Board aims to communicate on a regular
basis and at present the Company utilises
news releases, investor presentations and
Company publications, and will expand
communication channels as appropriate.
Health and Safety
People
Compliance
Customers and Suppliers
ESG
• Results of employee
engagement survey
• Gender pay gap
disclosures
• Diversity and
inclusion statistics
• Internal audit reports
• Fraud and
misconduct updates
• Issues raised
via the Group’s
whistleblowing system
• Supplier days
• Feedback through the
Chief Executive Officer
• Progress against the
ESG 2030 Strategy
• Charitable contributions
and initiatives
• Lost time injury
frequency score
• Safety audits
and results
• Progress against
the Health and
Safety Roadmap
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Ibstock Plc Annual Report and Accounts 2022 The Company’s brokers prepare a report
that provides anonymised objective
feedback received from investors following
those meetings. The report is shared with
all members of the Board who act upon
the feedback as necessary. The Executive
Directors also provide feedback on their
conversations with investors which provides
an opportunity for all Non-Executive
Directors to develop a better understanding
of the views of Ibstock’s major shareholders.
Further information on engagement with
shareholders can be found in the Stakeholder
engagement section on page 44.
Investor visits
Interested institutional investors are
provided with opportunities to visit
the Group’s operational sites and are
encouraged to do so in order to increase
their understanding of Ibstock’s business.
Annual General Meeting (AGM)
Ibstock’s AGM will be held on 27 April 2023.
Any shareholder who wishes to ask a question
can do so in advance of the meeting. Please
email company.secretariat@ibstock.co.uk
with any questions prior to the start of the
AGM. We endeavour to answer as many
questions as possible and will respond by
email if we are unable to answer your
question during the meeting.
Details of the arrangements together with the
resolutions to be proposed at the AGM can be
found in the Notice of Meeting (Notice). The
Notice, together with explanatory notes on
the resolutions to be proposed and full details
of the deadlines for appointing proxies will
be circulated to all shareholders at least 20
working days before the AGM, together with
this Annual Report. This document will also be
available on our website www.ibstockplc.co.uk.
Results of voting at the AGM are announced to
the London Stock Exchange following the
meeting and are then published on the
Company’s website.
Annual Report
Our Annual Report is available to all
shareholders and we aim to make our
Annual Report as accessible as possible.
Shareholders can opt to receive a hard
copy in the post, a PDF copy via email or
download a copy from our website. In line
with our sustainability ethos we encourage
you to view a digital copy of our Annual
Report where possible, however, if you
require a hard copy of the Annual Report
please contact the Link Group, our Registrars.
Contact details can be found on the inside
back cover of this Annual Report.
Corporate website
Our corporate website has a dedicated
investor section with Company information
and results, our Annual Reports, results
presentations (including webcasts) and an
investor news section including information
which may be of interest to our shareholders.
We recognise that continual improvement
is necessary and in recognition of feedback
received around the current website’s
suitability and ease of use we have begun
a project to upgrade and refresh the website
to take account of these comments and to
make it more useful and intuitive to all users
going forward.
Conflicts of interest
A register of conflicts of interest is maintained
by the Group Company Secretary and
considered by the Board twice a year. The
Company’s Articles of Association, which are
in line with the Companies Act 2006, allow
the Board to authorise potential conflicts of
interest that may arise and to impose limits
or conditions, as appropriate, when giving
such authorisation. During the year, and as
at the date of this report, no conflicts had
been reported to the Board.
Any concerns of the Directors around the
operation of the Board or the management
of the Company that cannot be resolved are
recorded in the Board minutes. Directors are
asked to provide a written statement to the
Chairman for circulation to the Board should
they have such concerns when they resign
from the Board.
Whistleblowing
Although the Audit Committee reviews
the operation of Ibstock’s whistleblowing
arrangements, the Board retains responsibility
and receives a consolidated report setting
out those material incidents that have been
reported under the Company’s Whistleblowing
Policy on a half-yearly basis. This provides
appropriate oversight of the arrangements
in place for our employees to raise legitimate
concerns, in confidence, about any matter
including those related to financial reporting,
health and safety or other improper conduct.
Having reviewed these reports, the Board
concurred with the actions taken by
management and were satisfied that this
provided an appropriate level of assurance
that confirmed the system was working
and that all members of the workforce
were familiar with the procedures in
place, and that no further action from
the Board was required.
Activities of the Board in 2022
The key activities considered by the Board
during the year are set out on the page
overleaf. The Board recognises the value
of maintaining close relationships with its
stakeholders, understanding their views
and the importance of these relationships
in delivering our strategy and the Group’s
purpose. The Group’s key stakeholders and
their differing perspectives are taken into
account as part of the Board’s discussions.
You can read more in our Section 172(1)
Statement on page 88 and our Section 172(1)
approach on page 101.
Board meetings follow a clear agenda
that is agreed in advance by the Chairman,
in conjunction with the CEO and Group
Company Secretary. Each meeting will
start with a review of the Group’s progress
against its Health and Safety Roadmap
and include a number of standing elements
such as reports on operational and
financial performance from the CEO and
CFO and legal and governance updates.
Details of the Directors’ attendance
at the scheduled meetings can be
found on page 97.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Corporate Governance Statement continued
Strategy
There is a dedicated session assigned to consideration and review of the Group’s strategy on an annual basis. During this time the Board will
receive inputs from its key advisors, the Executive Directors and members of the senior management teams.
Health and Safety
The Board considers the health and safety report from the Group’s Head of Health and Safety covering progress relative to targets, updates
on new projects and initiatives and analysis of any incidents. A more detailed summary round up of incidents is presented once a year.
Operational
The CEO provides regular reports to the Board providing information on Ibstock’s performance in the preceding period with updates on all areas
of the business including people, major projects, sustainability initiatives and stakeholder engagement.
Financial
The Board receives a pack of financial data on a regular basis that provides sufficient information on Ibstock’s trading and financial position for historic
periods as well as forward-looking forecast and budgets. Longer-term plans and information on the Group’s banking relationships is also provided.
Legal and Governance
Formal annual updates on governance are received from the Group’s advisors between which the Board receives regular updates on other
major legal and governance developments from the Group Company Secretary. Papers regarding compliance with the Board’s administrative
procedures are also provided.
Key Stakeholder Groups
Customers
Communities
Investors
Employees
Suppliers
Regulators and Government
Pension Fund Members and Trustees
100
Ibstock Plc Annual Report and Accounts 2022
Section 172(1) Approach
The needs of our different stakeholders as well as the consequences of any decision in the long term are well considered by the Board.
This includes those decisions which involve the competing interests and priorities of our key stakeholders. We remain clear on the overriding
duty to promote the success of the Company placed on the Board and other senior managers within the Group, and recognise that conflicts
between differing interests will often arise. More information on section 172(1) can be found on page 88.
Principal decisions during 2022
The main areas of Board activity can be found on page 100. All of these areas involve a range of inputs from stakeholders which are
communicated to the Board in a variety of different ways. We detail below how the Board factored stakeholders, and the information
we received through engagement, into four principal decisions in 2022. When making each decision, the Board carefully considered how
it promoted the long-term success of the Group, its financial and non-financial impacts, and had due regard to the other matters set out
in s172(1)(a) to (f) of the Companies Act 2006.
Share
Buyback
Stakeholder Group
Investors, Pension
Fund Members
and Trustees
Investments
Investors, Employees,
Customers,
Communities
Cost of living
Allowance
(COLA)
Employees,
Communities,
Investors
Dividend
Investors, Pension
Fund Members
and Trustees
The Board approved the repurchase of up to £30million worth in aggregate of Ibstock Plc 1p
Ordinary Shares during the year. In reaching its decision, the Directors considered the capital needs
of the Group, the position of our defined benefit pension schemes and canvassed the opinions of our
investors. It was determined that a share buyback was the most efficient use of surplus capital and
would provide the greatest benefits to stakeholders overall, and align with the capital allocation
framework, which seeks to maintain leverage at approximately 0.5 -1.5x EBITDA.
A number of investments were made over the year to support the growth of the Futures business and
these are discussed in greater detail on page 15. The Board considered the interests of our customers
with respect to product range, investors in ensuring the long-term value of the investments, and the
impact on the employees of the associated workforces to ensure they were treated fairly and equitably.
Satisfied that the needs of the business and stakeholder interests had been suitably balanced and
that impacts on stakeholder groups had been mitigated as far as possible, the Board supported
the investments.
The Board considered the pressures on the workforce as a result of inflation and rising energy costs.
In doing so, the Board weighed the interests of our employees, our local communities and the need to
be a responsible employer, and the interests of our investors in our long-term sustainable performance,
with the short-term cost impact of COLA payments to our employees. In contemplation of these
matters, and the Group’s other stakeholders, the Board decided that it was in the best interest of all
stakeholders to ensure that the workforce was well placed to meet the extra financial costs placed
upon them and awarded COLA payments as detailed on page 17.
The Board is conscious of the importance of the ordinary dividend as an income stream for many of
our shareholders and, taking into account the financial position of the Company, and underpinned
by the continued confidence in the financial strengths and prospects of the business, the directors
decided it was appropriate to pay interim and final dividends totalling 8.8p per share. The Board will
keep the dividend policy under review to ensure it remains appropriate and continues to be in the
interests of shareholders, with due regard paid to the interests of the Company’s other stakeholders.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Corporate Governance Statement continued
Division of Responsibilities
The Board has clearly defined the roles of the Chairman, CEO and SID and, as required by the Code, the roles of Chairman and CEO are not
being exercised by the same individual. Full details of the roles and responsibilities of all parts of the Group’s governance arrangements
including those concerning the Chairman, CEO and SID can be found on the Company’s website.
There are a number of key areas that are specifically reserved for the decision of the Board and a list of these can be
found on our website www.ibstockplc.co.uk. Other matters, including the day to day management of the Group, may
be delegated to the Executive Directors. Although a wide range of the Board’s powers and authorities are delegated
to the CEO, the Board retains ultimate responsibility and authority for their exercise. Details of the number of meetings
held during the year can be found on page 97. The Board approves the Group’s governance framework, taking into
account contributions from Board Committees in their specialist areas such as remuneration policy, internal controls
and risk management and succession planning. The Board is content with the level of external directorships held by
the Chairman and the independent Non-Executive Directors, as these do not impact on the time that any Director
devotes to the Company. The Board is satisfied that Directors have sufficient time to perform their duties and
furthermore, the Board believes that this external experience serves to enhance the capability of the Board.
The Board has five main committees: the Nomination Committee, Remuneration Committee, Audit Committee,
ESG Committee and the Disclosure Committee. The terms of reference for each Committee are available on the
Group’s website www.ibstockplc.co.uk.
The ELT has been established to support the CEO in his management of the business on a day to day basis and exercise of
any authority delegated to him by the Board. Members of the ELT include the Chief Financial Officer, the Chief Operations
Officer, Managing Director of Ibstock Futures, Group People Director and the Group Company Secretary & ESG Director.
Meetings are held on a monthly basis.
The Chairman is responsible for the leadership and effectiveness of the Board. The Chairman, with assistance of the CEO
and the Group Company Secretary, sets the agenda for Board meetings, manages the meetings (in conjunction with the
Group Company Secretary) and facilitates open and constructive dialogue during those meetings. He also holds meetings
without the CEO and CFO being present.
The CEO has specific responsibility for recommending the Group’s strategy to the Board and for delivering the strategy
once approved. In undertaking such responsibilities, he is supported by the ELT and other Board colleagues. The CEO
and CFO monitor the Group’s operating and financial results and directs the day to day business of the Group. The CEO
is also responsible for the recruitment, leadership and development of the ELT.
The CFO is responsible for the financial matters in the Group. He supports the CEO in the achievement of the Group’s
strategic objectives and manage the relationships with Ibstock’s investors and analysts. Further information can be
found in the Financial Review on page 70.
The SID provides advice to the Chairman and serves as an intermediary for the other Directors and shareholders.
The Non-Executive Directors meet without the Chairman present at least annually to appraise the Chairman’s
performance, and on other occasions as necessary.
The Non-Executive Directors provide an external perspective, sound judgement and objectivity to the Board’s deliberations
and decision-making. With their diverse range of skills and expertise, they support and constructively challenge the Executive
Directors and monitor and scrutinise the Group’s performance against agreed goals and objectives. The Non-Executive
Directors are also responsible for determining appropriate levels of executive remuneration, appointing and removing
Executive Directors, and succession planning through their membership of the Remuneration and Nomination Committees.
The Non-Executive Directors together with the Chairman meet regularly without any Executive Directors being present.
The Group Company Secretary supports and works closely with the Chairman, the CEO and the Chairs of the Board
Committees in setting agendas for meetings of the Board and its Committees. She ensures accurate, timely and clear
information flows to and from the Board and the Board Committees, and between Directors and senior management.
In addition, she supports the Chairman in designing and delivering Directors’ induction programmes and the Board and
Committee performance evaluations, advises the Board on corporate governance matters and Board procedures, and
is responsible for administering the Share Dealing Code and the AGM.
The Directors of all Group companies, as well as the Board, have access to the advice and services of the Group
Company Secretary although independent external legal and professional advice can also be taken when necessary
to do so. Furthermore, each Committee of the Board has access to sufficient and tailored resources to carry out its
duties. The appointment and the removal of the Group Company Secretary is a matter for the Board as a whole.
The independence of the Non-Executive Directors is considered on an annual basis by the Nomination Committee on
behalf of the Board and following this year’s review, it was concluded that all of the Non-Executive Directors continue
to remain independent in character and judgement and are free from any business or other relationships that could
materially affect the exercise of their judgement. The balance of skills and experience ensures that no one individual
or small group of individuals dominates the Board’s decision-making processes. The Board and Nomination Committee
also review Committee membership annually to ensure that undue reliance is not placed on individuals.
The Board
Board
Committees
Executive
Leadership
Team (ELT)
Chairman
Chief Executive
Officer (CEO)
Chief Financial
Officer (CFO)
Senior
Independent
Director (SID)
Independent
Non-Executive
Directors
Board support
and the Group
Company
Secretary
Independence
102
Ibstock Plc Annual Report and Accounts 2022 Composition,
Succession and
Evaluation
Nomination Committee
The Board has established a Nomination
Committee to which it has delegated a
number of responsibilities. Information on the
Committee’s composition, together with the
principal activities carried out during the year
are included in the Nomination Committee
Report on page 105.
Board composition
The Board comprised eight Directors at
the year end: two Executive Directors,
five Non-Executive Directors and the
Chairman. Over half of our Board (excluding
the Chairman) are deemed independent
Non-Executive Directors and the composition
of all Board Committees complies with
the Code. Additionally, the Chairman was
considered independent on his appointment.
The Nomination Committee is responsible for
regularly reviewing the composition of the
Board. The Board and its Committees benefit
from a combination of skills, experience and
knowledge drawn from across several
industries and functional roles. Length of
tenure and the range of skills and experience
of the Board can be found in the Directors
and Company Secretary section on page 94.
Appointments and succession
The Nomination Committee leads the process
for the appointment of new Directors to the
Board. Appointments are made on merit and
measured against objective criteria set with
regard to the benefits of a diversified Board. The
process is a formal, rigorous and transparent
procedure. Effective succession plans are
maintained for Board and senior management.
The Board and the Nomination Committee
considered Board succession and that of the
wider Executive Leadership Team during the
course of the year to ensure that the Board
has the right mix of skills and experience, as
well as the capability to provide constructive
challenge and promote diversity. Further
details on the activity of the Nomination
Committee during the year can be found
on page 105.
The Board is mindful the Chairman’s tenure is
coming up to nine years in September 2024, and
will consider appropriate succession planning.
Evaluation
Process and methodology
The Board undertook an evaluation of its own
performance, and that of its Committees and
the individual Directors in respect of the year
under review. The format and method of the
evaluation was agreed, approved and
overseen by the Nomination Committee in
line with its duties. When conducting its
annual evaluation, the Board considers its
composition, diversity and how effectively
members work together to achieve the
Group’s objectives. The Chairman conducts
individual evaluations of the Non-Executive
Directors to determine whether they have
made an effective contribution to the Board.
Having completed an external evaluation
during the 2020 financial year, the 2022
evaluation was internally facilitated and
supported by the Group Company Secretary.
To enable this, in continuity with the
evaluation conducted in 2021, a questionnaire
was completed by all members of the Board
which included questions around the Group’s
strategy, effectiveness and accountability.
The process provided the Board with the
opportunity to make specific comments
in response to a series of ‘open’ questions.
The results were collated by the Group
Company Secretary and a report provided
to the members of the Board for review.
Individual evaluation
The Senior Independent Director met with
the Non-Executive Directors, in the absence
of the Chairman, to appraise the Chairman’s
performance, taking into account the views
of Executive Directors. The review concluded
that the Chairman’s performance continued
to be effective and that he demonstrates
commitment to the role. The SID informed
the Chairman of the review’s findings.
The Chairman met with all Non-Executive
Directors individually to conduct an appraisal
of their performance. The reviews concluded
that the Non-Executive Directors continued
to be effective and had demonstrated
commitment to their roles.
Outcomes
The result of the 2022 Board evaluation found
that the Board was operating effectively, had
a strong composition of skills and experience
on the Board, and was well supported in terms
of information flow. Each Director continued
to contribute effectively and supported
appropriate levels of challenge and debate.
Areas for development identified in the prior
year evaluation had included increased
visibility of the Group’s people strategy,
providing detail of the governance structure
and operating procedures for the new Futures
business, and improving the Board’s visibility
of the various stakeholder engagement
initiatives throughout the Group. These
matters had been addressed during the year,
and while the Board felt it appropriate to
retain a focus on stakeholder engagement
to promote the understanding of the issues
most important to our stakeholders, the
Board noted the improvement and increased
clarity and level of information the Board
had received on these topics.
The 2022 evaluation identified a number of
areas of focus for the Board over the coming
year. As is the case each year, a formal action
plan will be developed to ensure these matters
are addressed, progress against these will be
reported on in the Annual Report for the
forthcoming financial year.
Induction, training and development
All new Directors receive a tailored induction
programme upon joining the Board and
additional training is made available to
members of the Board in accordance with
their requirements. The Nomination
Committee reviewed the training requirements
of the Board and agreed upon a suitable
regime for training and information flows
to enable the Directors to satisfy their
training and development needs. Information
provided to the Board included updates on
developments on Corporate Governance,
the regulatory framework and accounting
matters. The Chairman and the Group
Company Secretary will continue to identify
broader areas of training for the Board as
a whole and the Chairman will discuss
and agree the training requirements with
individual Directors as and when required.
Directors may, at the Company’s expense,
take independent professional advice and
are encouraged to continually update their
professional skills and knowledge of the business.
Induction of Peju Adebajo
Peju Adebajo was appointed as a Director
on 26 November 2021. To provide insight
into the process for the induction of a
Non-Executive Director at Ibstock Plc, we
have included a breakdown of the activities
and meetings that were planned for her
shortly after joining the business within the
Nomination Committee Report on page 105.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Audit
Details of the Internal Audit function and
the External Auditors are provided in the
Audit Committee Report on page 110. The
Board is satisfied that the necessary policies
and procedures are in place to ensure the
independence and effectiveness of both.
Remuneration
The Remuneration Committee
The Board has established a Remuneration
Committee, which has delegated responsibility
for determining the policy for executive
remuneration and setting remuneration
for the Chairman of the Board, CEO and
members of the ELT including the Group
Company Secretary. When doing so, the
Remuneration Committee takes account of
wider workforce remuneration and related
policies and the alignment of incentives and
rewards with Ibstock’s culture. Further details
of the work of the Remuneration Committee
are set out from page 115.
Corporate Governance Statement continued
Re-election of Directors
With the exception of Tracey Graham, who
will step down at the conclusion of the 2023
AGM, all of the Directors are subject to annual
re-election and intend to submit themselves for
re-election at the 2023 AGM. The Notice sets
out the reasons why the Board considers their
respective contributions to be and to continue
to be important to the Company’s long-term
sustainable success.
Audit, Risk and
Internal Control
Audit Committee
The Board has established an Audit
Committee to which it has delegated a
number of responsibilities. Information
on the Committee’s composition, its role,
together with information regarding the
principal activities that it carried out during
the year, are included in the Audit Committee
Report on page 110. The Board considers
that the Chairman of the Audit Committee,
Justin Read, possesses the level of recent
and relevant financial experience required
and that the Committee, as a whole, has
competence relevant to the sector in which
the Group operates. Additional information
on the skills and experience of the members
of the Audit Committee can be found in the
Board of Directors and Company Secretary
section on page 94.
Financial and business reporting
The Board has established arrangements to
ensure that reports and other information
published by the Group provide a fair, balanced
and understandable assessment of Ibstock’s
position and prospects. The Strategic Report
on pages 2 to 91 explains the Group’s Business
Model and the strategy for delivering the
objectives of the Group. A statement on the
Group as a going concern and the Viability
Statement is set out on page 90.
With the support of the Audit Committee, the
Board has reviewed the 2022 Annual Report
and considers that, taken as a whole, it is fair,
balanced and understandable and provides
the information necessary for shareholders
to assess the Company’s position and
performance, business model and strategy.
Further details of the review work carried out
by the Audit Committee in relation to the
2022 Annual Report can be found in the
Audit Committee Report on page 110.
Risk management
The Board ensures that the necessary
resources are in place for the Company
to meet its objectives and to measure
performance against them. It has established
a robust risk management and internal
control framework that supports the effective
identification, assessment and mitigation of
risk and completes a robust assessment of
the Company’s emerging and principal risks
as required by the Code. Please refer to page
60 for further information on the Group’s
ongoing risk management process and the
Group’s principal and emerging risks and
uncertainties together with details around
their related mitigating factors.
The Audit Committee provides support in
the discharge of these responsibilities by
reviewing and monitoring the Group’s risk
management framework and the reporting
of risk internally and externally. The Audit
Committee Report on page 110 sets out how
these responsibilities have been discharged
during the year.
The processes for management of Group
Risk continued to develop over the year, with
particular emphasis on how climate-related
risks are identified and mitigated. Further
information can be found in the Principal
Risks and Uncertainties section on page 60.
Internal control
The Group’s internal control systems are
designed to manage, rather than eliminate,
the risk of failure to achieve business objectives.
They are based on assessment of risk and
a framework of control procedures to
manage risks and to monitor compliance
with procedures. The internal control systems
are designed to meet the Group’s particular
needs and the risks to which it is exposed and,
by their nature, can provide only reasonable,
not absolute, assurance against material loss
to the Group or material misstatement in the
financial accounts. The overall responsibility
for Ibstock’s system of internal control and
for reviewing its effectiveness rests with
th Board but this responsibility has been
delegated to the Audit Committee. Further
details of the review and monitoring procedures
can be found within the Audit Committee
Report on page 110.
104
Ibstock Plc Annual Report and Accounts 2022 Nomination Committee Report
Nomination Committee Report
Jonathan Nicholls
Chair of the Nomination Committee
Promoting diversity, and the economic
and social benefits achievable from a
truly diverse workforce, remains a focus of
the Board, the Committee and executive
management. The Committee believes that
diverse Board membership supports the
Group strategy by bringing the widest range
of viewpoints and experience possible to
debate. In view of this, the Committee has
considered and recommended to the Board
for adoption a new Board Diversity Policy,
which details our ambitions in this area.
Membership, meetings and attendance
Membership comprises the independent
Non-Executive Directors with support from
the Group Company Secretary. Details of
meeting attendance can be found on page
97. The Committee met on three occasions
during the year.
Introduction
I am pleased to present my report, as Chair of
the Nomination Committee (the Committee),
to you for the year ended 31 December 2022.
The Committee leads the process for
appointments, ensures plans are in place
for orderly succession to both the Board
and senior management positions, and
oversees the development of a diverse
pipeline for succession. During the year
succession planning included that for
Tracey Graham, our Senior Independent
Director (SID) and Chairman of the
Remuneration Committee, who steps down
from the Board at the close of the Annual
General Meeting to be held 27 April 2023.
Following a clear and thorough selection
process, the Committee provided its
recommendation to the Board that Louis
Eperjesi assume the role of SID on Tracey’s
departure. Whilst the Committee is mindful
of the FTSE Women Leaders recommendation
to have at least one of the Chair, CEO, CFO or
SID role fulfilled by a woman, the Committee
concluded that Louis was the best candidate
for fulfilling the SID role given his service and
performance on the Board to date.
To assist with the search for suitable
candidates to discharge the Remuneration
Committee Chair role, the Committee
appointed Russell Reynolds, a specialist third
party recruitment agency which has no other
connection to the Company or to individual
Directors. It is anticipated that a successful
recruitment will be made during 2023.
Activities and focus during 2022
The table summarises the agenda items covered by the Committee during the year.
Activity
Board Diversity
H1
H2
Reviewed Committee’s terms of reference
Reviewed size, structure and composition of the Board
Reviewed time commitment required from Non-Executive Directors
Reviewed the independence of Non-Executive Directors
Annual review of the Committee’s effectiveness
Reviewed succession planning arrangements and organisational changes
Recommended appointment of additional Non-Executive Director
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Nomination Committee Report continued
Role and responsibilities
The key responsibilities of the Committee
are to:
• Develop and maintain a formal, rigorous
and transparent procedure for making
recommendations to the Board on
appointments and on the structure,
size and composition of the Board
• Ensure that planning is in place for orderly
succession of both the Board and senior
management positions
• Oversee the development of a diverse
pipeline of talent for succession
• Evaluate the balance of skills, diversity,
knowledge and experience of the Board
• Prepare a description of the role
and capabilities required for a
particular appointment and lead
the recruitment process
• Identify and nominate, for the approval
of the Board, candidates to fill Board and
senior management vacancies, ensuring
that candidates have the necessary skills,
knowledge and experience to effectively
discharge their responsibilities
• Review the time commitment required
from Non-Executive Directors and evaluate
the membership and performance of the
Board and its Committees
• Ensure that evaluations of the effectiveness
of the Board and its Committees, and
performance assessments of the Chairman,
the Chief Executive Officer, and the Chief
Financial Officer are undertaken annually
• Recommend, where appropriate, the
re-election of Directors
Succession planning
The composition of the Board is constantly under
review with the aim of ensuring that it has the
depth and breadth of skills to discharge its
responsibilities effectively. The Committee,
through its oversight of succession planning,
applies a similar approach to the layer of
management that sits immediately below the
Board. By way of an example, in the year under
review, the Committee oversaw the process
undertaken to promote Joanne Hodge, an
internal candidate, to the Group People
Director role. Joanne joined the Executive
Committee in May 2022.
The Committee aims to ensure that the Board
and senior management are well balanced in
the skills and experience appropriate for the
needs of the business and the achievement
of the Company’s strategy. Furthermore,
the Committee ensures that the Board
includes Non-Executive Directors who
are appropriately experienced and are
independent of character and judgement.
106
Time commitment
In making recommendations to the Board
on Non-Executive Director appointments,
the Nomination Committee specifically
considers the expected time commitment
of the proposed Non-Executive Director and
their existing commitments. Agreement of
the Board is required before a Director may
accept any additional commitments to
ensure possible conflicts of interest are
identified at an early stage and that
they will continue to have sufficient time
available to devote to the Company.
Any other potential conflicts of interest
are also considered at each Board meeting.
In addition, the Nomination Committee
concluded, through discussions with the
Chairman, the Board and the Committee
evaluation process, that the Non-Executive
Directors had committed sufficient time to
fulfil their duties and that their performance
continued to be effective.
Board and Committee evaluation
The Committee reviewed the annual
Board evaluation process, as described
on page 103, and determined that the
methodology used for the internally led
evaluation was appropriate and sufficiently
probing. In respect of reporting on key
outcomes and actions taken, the Committee
has encouraged greater transparency of key
developmental areas in the Annual Report,
which is reflected in the disclosures for the
Board and its Committees for the year under
review. With respect to composition, the
evaluation determined that a strong balance
of skills was present on the Board, with the
need to replace the skills set of the departing
Remuneration Committee Chair in the
coming year. The Committee will consider
the appointment of advisors for the triennial
externally facilitated evaluations in 2023.
Committee effectiveness
Through the evaluation process, the Committee
was deemed to be operating effectively with
strong Committee leadership. The prior year
evaluation had identified that succession
planning required further focus, and whether
external advice could be utilised more
effectively in this respect. In response, over
the year the Committee has continued to focus
on its succession planning remit and oversight
responsibilities. It was decided that use of
external advisors will be held as a potential
course of action should this become necessary.
Appointment Process
The process for appointing new Board
members is set out in the Committee Terms
of Reference which can be found on our
website www.ibstockplc.co.uk. The Committee
is responsible for identifying and nominating,
for the approval of the Board, candidates to
fill Board vacancies as and when they arise.
Before any appointment is made to the
Board, the Committee evaluates the balance
of skills, knowledge, independence, experience
and diversity on the Board, including the
balance of Non-Executive Directors to Executive
Directors. In the light of this evaluation, the
Committee prepares a description of the role
and capabilities required of the particular
appointment, and assessed the time
commitment expected.
In identifying suitable candidates,
the Committee:
• Uses open advertising or the services of
external advisors to facilitate the search
• Considers candidates from different
genders and a wide range of backgrounds
• Considers candidates on merit and against
objective criteria taking into account the
benefits of diversity on the Board
• Ensures that appointees have enough
time to devote to the position
The Nomination Committee considers the
selection and reappointment of Directors
carefully before making a recommendation
to the Board. Non-Executive Directors and
the Chairman of the Board are generally
appointed for an initial period of three years,
which may be renewed for a further two
terms. Reappointment is not automatic
at the end of each three-year term.
Non-Executive Director induction
A comprehensive induction programme
was arranged for Peju Adebajo, following her
appointment as a Non-Executive Director on
26 November 2021. This included meetings
with senior management and operational
teams, and visits to our factories. The
induction was structured to help Peju gain
an insight into how the business works
and to understand its strategic priorities,
principal risks, values and people.
Diversity and inclusion
Our current employee population reflects the
traditional nature of our industry across all
diversity characteristics including age, race,
gender, sexual orientation and disability. We
recognise the challenge we face with 84%
of roles being occupied by men including a
higher percentage of men in factory based
production roles. Further information on
Ibstock Plc Annual Report and Accounts 2022 Details of some of the activities undertaken by Peju Adebajo are set out below:
Area
Board and Committees
Provided by
Non-Executive Directors,
Group Company Secretary
External and Internal Audit
External Audit Partner
RSM (Internal Auditor)
Brokers and Legal Advisors
Managing Director, UBS
Partner, Slaughter and May
Head Office functions and
Clay operations, site visit
CEO, COO
Factory Manager, Eclipse
Senior Managers
Manufacturing
Concrete operations, site visit
Finance
Clay Operations, site visit
Environmental,
Social Governance
Technical and Strategic
Projects Director, Production
Operations Director, Concrete
Factory Manager, Sittingbourne
CFO
COO
Operations Director, Clay
Factory Manager, South Holmwood
ESG Advisor
Subjects discussed / matters covered
• Board and Committee operation
• Skills and backgrounds of Board members
• Board responsibilities
• Audit cycle, audit plans
• Interaction with Audit Committee
• Audit development horizon
• Market and industry development
• Investor landscape
• Key legal, regulatory and best practice environment
• Group strategy
• Clay and Concrete operations overview
• Eclipse Factory operation and brick production
• Insight into Head Office functions
• Manufacturing and Production
• Strategic projects
• Concrete operations overview
• Sittingbourne Factory operations and production
• Financial control framework and governance processes
• Financial reporting
• Clay operations overview
• South Holmwood operations and production
• ESG strategy
• Roadmap to net zero
• Challenges and opportunities
The Board met this recommendation as
at the 2022 year end, but is conscious that
with the appointment of Louis Eperjesi
as Senior Independent Director at the
conclusion of the 2022 AGM, this will change
during 2023. Our succession planning will
seek to address gender balance within these
roles as appropriate going forwards.
Diversity Policy
Ibstock operates a Diversity and Inclusion
Policy which is applicable to the whole
organisation and which informs the Board’s
approach in this area. The policy is accessible
to everyone at Ibstock through the People
team and on MyIbstock.
We continue to work with our recruitment
partners to ensure that we are able to attract
high quality candidates from a wide range
of backgrounds, strengths and abilities. We
recognise that achievement of our strategic
objectives is reliant on the recruitment and
retention of a diverse and engaged workforce
and efforts in this area will continue.
diversity and inclusion progress during
the year under review can be found in the
Responsible Business section on page 51.
The Board acknowledges and supports
the aims, objectives and recommendations
outlined in the FTSE Women Leaders Review
and is aware of the need to achieve an
appropriate balance of women on our Board
and in senior positions throughout the Group.
The Board also acknowledges and supports
the aims, objectives and recommendations
of the Parker Review on ethnic diversity and
the emphasis in the Disclosure Guidance and
Transparency Rules on disclosure around
diversity with regard to aspects such as age,
gender and educational and professional
background. As at the end of the year under
review, we are satisfied that we are aligned
with the recommendations of both reviews.
Furthermore, the Committee is cognisant
of the FTSE Women Leaders Review
recommendation that FTSE 350 companies
should have at least one woman in the Chair
or Senior Independent Director role on the
Board, and or one woman in the Chief
Executive Officer or Finance Director Role
in the Company by the end of 2025, and the
Listing Rule obligation to report against these
in the Annual Report and Accounts, effective
for the Company from its 2023 year end.
In consideration of the need for diversity on
the Board, the Committee recommended to
the Board the adoption of a Board Diversity
Policy, which was subsequently approved.
The Board Diversity Policy formalises that
Board’s commitment to appropriately diverse
membership and compliance with reporting
regulations, and can be found on the Group
website www.ibstockplc.co.uk. We retain our
stated target to increase female representation
in the senior management group to 40%
by 2027. This group includes those members
of the ELT and their direct reports.
Jonathan Nicholls
Chair of the Nomination Committee
7 March 2023
Priorities for 2023
The focus for the coming year will
be to secure the recruitment of the
Remuneration Committee Chair, and to
continue to work on our Board succession
plans to ensure future compliance with
our aspirational diversity targets. The
Committee will continue to work on
ensuring robust succession plans at
all levels of the organisation.
107
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 ESG Committee Report
ESG Committee Report
A major part of the Committee’s remit is
to ensure that our ESG strategy remains
aligned with the Company’s purpose, values
and culture, and is an intrinsic part of our
corporate strategy. A key milestone was the
launch of the ESG 2030 Strategy, and the
Committee is focusing on the implementation
of the strategy, ensuring we have a robust
plan with ambitious interim targets. The
Committee developed ESG targets that align
to the ESG 2030 and corporate strategies and
recommended the inclusion of ESG targets
into the LTIP performance conditions which
were agreed by the Remuneration Committee.
As part of our governance process, the
CEO was absent for any discussions or final
decision-making on any decision-making
on any remuneration target proposals.
This year, Committee attendance has
reflected the importance the Board places
on understanding the ESG challenges facing
the Group. The Committee has remained
committed to our strategic goals on climate
change, and the management of associated
risks and opportunities. The ESG Committee
visited two sites, and saw first hand how the
strategy is being operationalised and
implemented at factory level.
The Committee remains cognisant that
the carbon reduction journey will not
always show linear progression. Whilst we
recognise that the 2022 carbon metrics
show a slight decline against the strong
performance in 2021, the Committee
remains confident that the Group will make
progress in the year ahead and that we are
on course to achieve the carbon commitments
made in our ESG 2030 Strategy.
Positive progress has been made on TCFD
through deeper analysis in scenario planning
plus considerable improvements in data
integrity, data governance and the control
environment as it pertains to ESG data.
Further detail on the key areas covered
by the Committee during the year can
be found on the following page.
Membership, meetings and attendance
Membership of the ESG Committee consists
of three Non-Executive Directors and the
CEO. The Group Company Secretary & ESG
Director also attends in her capacity as the
member of the ELT responsible for ESG and
Sustainability issues at Ibstock. Members
of the ESG team and other group functions
attend meetings at the invitation of the
Activities and focus during 2022
The table summarises the agenda items covered by the Committee during the year.
There were four meetings held during the year:
Q1
Q2
Q3
Q4
2022
KPI performance update
ESG Governance Reports & Horizon Scanning
ESG Framework and Strategy
Committee training
Deep dive on People & Social Value
Net Zero strategy development
Health, Safety & Wellbeing initiatives
Stakeholder Engagement Update
TCFD Implementation Updates
Approve Sustainability Report (External)
Annual Report disclosures
LTIP Performance Condition Review
Effectiveness of the ESG Committee
Claire Hawkings
Chair of the ESG Committee
Introduction
I am pleased to introduce the ESG
Committee (the Committee) Report for
what is the second year of its operation.
Unsurprisingly for a Committee with such
a broad and varied remit, our workload over
the past year has continued to increase in
volume and complexity. As a Committee,
we have adapted and evolved our annual
programme of work to reflect the increasing
demands on the Committee and the Group.
Ensuring that the Committee and Board
are fully briefed and appropriately trained
on ESG matters is a continuing focus
of the Committee. The Committee has
matured rapidly in both its knowledge
and understanding of the critical ESG
issues facing the Company. In this
endeavour we have been supported
by our team of internal subject matter
experts as well as an independent
Committee advisor who has provided
practical advice on a range of issues.
108
Ibstock Plc Annual Report and Accounts 2022 Committee Chair. Details of meeting attendance
can be found on page 97. The ESG Committee
met on four occasions during the year and
the table setting out the main agenda items
for each meeting can be found opposite.
Role and responsibilities
The Committee is appointed to assist the
Board in the discharge of its duties through
overseeing Ibstock’s strategies, policies and
performance in relation to environmental,
social and governance matters and suggest
ways to drive improvement in these areas
as appropriate.
The key responsibilities of the Committee
are to:
• Develop a corporate ESG strategy
and ensure it is in alignment with the
corporate strategy, purpose and values
• Develop and recommend to the Board, ESG
targets and key performance indicators
• Understand the impact of the Company’s
operations on the environment
• Oversee the promotion of socially responsible
values and standards that relate to the
social and economic community in which
the Company operates
• Recommend to the Remuneration
Committee performance measures used
in the Company’s incentive plans
• Work with the Remuneration Committee
in assessing actual performance relative
to ESG
• Oversee Company disclosures of ESG
matters in the Annual Report and Accounts
ESG Governance
The Board holds ultimate responsibility for
all ESG matters, but the Committee takes the
lead in managing the Company’s approach
and implementation of the ESG framework,
to enable us to meet our commitments to all
stakeholders. The Committee is supported
by an internal ESG team, and this year we
appointed RSM, specialist advisors in the ESG
field, to provide expert technical advice to the
Committee. Implementation of the strategy
is the responsibility of the Chief Executive,
who through the Executive Leadership Team
oversees a number of ESG working groups
that each have ownership of an area of the
strategy. These working groups are coordinated
by the ESG team. A full description of how our
ESG governance operates can be found in the
Responsible Business section on page 42, and
in the TCFD statement on page 76.
ESG 2030 Strategy
Last year we reported on the launch of our
ESG 2030 Strategy, which was implemented
during the year. The ESG 2030 Strategy
complements the group strategy, with its
targets and milestones distributed across
our corporate strategic pillars of Sustain,
Innovate and Grow.
Our ESG 2030 Strategy defines how we
are taking a longer term view and shares
our forward plan with our key external
stakeholders, as well as our employees.
Bringing our people with us on this journey
enables us to make progress more swiftly
and with greater force.
Much of the work of the Committee over the
year has been to oversee the embedding of
the ESG 2030 strategy into the business, to
ensure that consideration of ESG matters
becomes intrinsic to the Group’s culture and
hence everyday decision-making process.
To achieve this, the Committee has received
regular reports from management providing
updates on the ESG 2030 Strategy.
This year the Committee has also taken
the opportunity to see operations and
strategy in action at each of our Leighton
Buzzard and Cattybrook sites. Full details
of the ambitions, targets and milestones
of the ESG 2030 Strategy are set out in the
Responsible Business section on page 42.
Net zero commitment
A key part of our ESG strategy is the
commitment to become a net zero carbon
operation by 2040 and achieving a 40%
reduction in Scope 1 and 2 emissions
by 2030. Our pathway to net zero is
summarised on page 49.
Task Force on Climate-related
Financial Disclosures (TCFD)
The Committee has continued to oversee
the work of the internal TCFD working group,
reviewing progress at each meeting. Led by
the Group Financial Controller, the TCFD
working group comprises representatives
from the Company Secretariat, ESG and
Finance functions. It meets on a regular
basis to analyse and apply the various
developments and recommendations
published throughout the course of the year.
Committee effectiveness
The Committee evaluation, as conducted in
line with the process described on page 103,
was deemed to be operating effectively
with strong Committee leadership. Areas
for improvement identified in the prior year
evaluation had included ongoing training on
ESG topics and that allowing sufficient time
and resource to tackle the wide breadth of
its agenda. These were addressed during
the year with additional time and training
provided to the Committee, supported by
high quality internal and external advisors.
Committee Training
Ensuring the knowledge of the Committee
is continually refreshed is a priority. This
year the Committee received training
from RSM covering the following topics:
• Climate change and greenhouse
gas emissions
• Carbon reporting and product
lifecycle carbon
• Regulation and legislation including TCFD
• UK Emissions Trading Scheme
• Carbon pricing
• Carbon offsetting standards
• Net zero and SBTi
• Climate transition plans
Claire Hawkings
Chair of the ESG Committee
7 March 2023
Priorities for 2023
Over the coming year, the Committee
will continue to drive ESG ambition,
implementation of the ESG 2030 Strategy
and integration of ESG performance
across the Group. Climate change will
remain a key focus area and will require
further work, not least on transition
planning. Aligned with the ESG agenda,
the Committee will continue to ensure
ESG training is appropriately delivered
across the business and the Committee
itself improves its own knowledge and
depth of understanding on key ESG issues.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Audit Committee Report
Audit Committee Report
Over the year, the Committee continued to
deliver on its commitments, retaining a focus
on monitoring the integrity of the Group’s
financial statements. We have continued
to oversee the work of the Group’s External
Auditor and the internal audit function,
and ensure that the Company’s risk
processes, and financial and compliance
control environments remain robust.
In addition to the programme of work
that forms the basis of our annual calendar,
the Committee has spent time considering
the implications of the developing regulatory
and governance framework. This year the
Government outlined the proposals it intends
to progress from the Department for Business,
Energy and Industrial Strategy (BEIS)
consultation ‘Restoring Trust in Audit and
Corporate Governance’. The proposals,
once effected, will introduce changes in
reporting, governance and external
auditing. As a Committee, we will continue
to monitor developments to ensure the
Company’s compliance with the new rules.
The Group reported against the Task Force
on Climate-related Financial Disclosures
(TCFD) recommendations last year. Climate
change, associated risk and potential
impact on the financial statements is
an area of increasing focus, and the
Committee expects these considerations
to form a greater part of its oversight
remit going forwards. Disclosures for the
year in review have been developed
by the TCFD working group, composed
of an internal team of subject matter
experts, and carefully considered and
took appropriate action on the FRC’s
‘CRR Thematic Review of TCFD’.
A feature of the Committee’s annual work
programme is to target specific risks as ‘deep
dives’. Cyber risk continues to be a significant
risk area for the Group in common with many
other businesses worldwide, and was the
focus of the ‘deep dive’ session held in
November. As a result of the review, the
Committee gained more comfort that
appropriate protections were in place to
secure the Group’s technology estate.
Further information regarding the activities
of the Committee during the year can be
found on the subsequent pages.
Activities and focus during 2022
The table summarises the main agenda items covered at the Committee’s meetings
during the year.
2022
Q1
Q2
Q3
Q4
Financial and narrative reporting
External Audit Planning and Reporting
Risk Management and Internal Control Processes
Independence and objectivity of the External Auditor
Internal Audit updates
Annual review of the Committee’s effectiveness
Review of significant accounting matters and judgements
Consideration of incidences of fraud and whistleblowing
Review of compliance systems
Consideration of the effectiveness of the internal and external
audit functions
TCFD Reporting
Cyber and Information Security
Consideration of BEIS consultation
FRC FRRP Review Response
Justin Read
Chair of the Audit Committee
Introduction
I am pleased to present my report to
you, as Chair of the Audit Committee
(the Committee), for the year ended
31 December 2022. The purpose of the
Committee is to make recommendations
on the reporting, control, risk management
and compliance aspects of the Directors’
and the Group’s responsibilities. At the
same time, the Committee provides
independent monitoring, guidance and
challenge to management in these areas.
The Committee also provides a forum for
reporting and discussion with the Group’s
External Auditor in respect of the Group’s
Half Year and Full Year results and certain
senior managers have attended meetings
during the year, as and when required,
by invitation.
110
Ibstock Plc Annual Report and Accounts 2022 Membership, meetings and attendance
Membership comprises the independent
Non-Executive Directors with support from
the Group Company Secretary. Details of
meeting attendance can be found on page
97. The Audit Committee met on four
occasions during the year and the table
setting out the main agenda items for each
meeting can be seen on the page opposite.
The Chairman, CEO, CFO and the Group
Financial Controller are routinely invited to
attend Committee meetings. The External
Auditor and the Internal Auditor also
attended all meetings during the year.
Other individuals are invited to attend the
Committee’s meetings, as and when required.
The Chair has regular meetings with the
CFO, External Audit partner and Internal
Audit partner to discuss key audit related
topics ahead of each Committee meeting.
In addition, the Committee also holds
private sessions with the CEO, CFO,
External Audit partner and RSM LLP
(RSM), the Internal Auditor, on a
rotational basis after each meeting.
Role and responsibilities
The Committee is appointed by the Board
and reviews and makes recommendations
to the Board on the Group’s financial
reporting, internal control and risk
management systems. Its role, duties
and responsibilities are governed by a
clear set of terms of reference (available
in full on our website) that are reviewed
by the Committee and in conjunction with
the Group Company Secretary approved by
the Board on an annual basis with the last
review having taken place in November 2022.
The Committee provides independent
monitoring, guidance and challenge to the
Executive Directors. In addition, it assesses
the effectiveness of the external audit process
and the External and Internal Auditor.
Through these processes the Committee’s
aim is to ensure high standards of corporate
and regulatory reporting, risk management
and compliance, and an appropriate control
environment. The Committee believes that
excellence in these areas enhances effectiveness,
reduces risks to the business, and protects
the interests of the shareholders with regard
to the integrity of financial information
published by the Group.
Financial Reporting Review Panel
(FRRP) Letter to Ibstock
During the period, the Company received
a letter from the FRC, which advised that
the Group’s Annual Report and Financial
Statements for the year ended 31 December
2021 had been included in the thematic
review of Task Force for Climate-Related
Financial Disclosures (TCFD) and climate in
financial statements. The FRC also requested
further information concerning an impairment
reversal of £5.6m reported in the 2021 year,
in relation to the Atlas and Nostell factories.
The appendix to the letter set out observations
on TCFD disclosures that the Company
should consider in future reporting.
Although we and the FRC had different
views on whether the decisions to redevelop
the Atlas and Nostell sites should be treated
as an asset enhancement or restructuring,
following our responses, the FRC closed
its enquiries in respect of these matters,
recognising that there would be a trigger
for reversal on either basis. The FRC has
provided its recommendations for improving
the clarity and extent of disclosure in this
area going forwards, including with regards
to the assumptions relating to impairment
reversals and, if differing accounting
judgements are possible, the disclosure
of this fact in accordance with IAS 1 –
Presentation of Financial Statements.
Whilst we welcome the FRC’s review of our
2021 Annual Report, readers of the document
are reminded that such a review does not
provide the FRC’s assurance that our Annual
Report was correct in all material respects.
The FRC does not benefit from detailed
knowledge of our business or an understanding
of the underlying transactions. Its job is to
consider compliance with reporting requirements
and not to verify the information provided.
Financial and narrative reporting
Financial statements
During the year the Committee:
• Reviewed the Full and Half Year results
and associated announcements and
recommended them to the Board
for approval
• Reviewed the Group’s Annual Report to
consider whether, taken as a whole, it
was fair, balanced and understandable
and whether it provided the necessary
information required for shareholders
to assess the Company’s position,
performance, business model and strategy
and recommended it to the Board for
approval. Further information on the
format of this review can be found on
page 112
• Considered the appropriateness of
the Group’s accounting policies and
practices, focusing on areas of significant
management judgement or estimation,
and questioned the rationale for decisions
taken in application of the policies. Policies
and practices were found to be appropriate
and correctly applied (see significant
accounting and key areas of judgement
considered by the Committee during the
year below)
• Received updates on corporate reporting
and corporate governance from the
External Auditor
• Considered the process for preparing the
2022 Annual Report
• Received updates on training for Committee
members, including changes in financial
reporting requirements and company law
Significant accounting and key areas
of judgement
A key factor in the integrity of financial
statements is ensuring that suitable
accounting policies are adopted and applied
consistently on a year-on-year basis. The
Committee specifically uses the Audit Planning
meetings in June and November/ December
each year to consider the adoption of any
relevant new standards, proposed accounting
treatments for major transactions, significant
reporting judgements and key assumptions
related to those judgements. In addition,
these matters are reviewed at each
Committee meeting throughout the year.
Exceptional items
Matter considered
The Group presents as exceptional items*
on the face of the income statement
those items of income and expense which,
because of the materiality, nature and/or
expected infrequency of the events giving
rise to them, merit separate presentation
to allow shareholders to further understand
elements of financial performance in the
period, so as to facilitate comparison with
future years and to assess trends in financial
performance, and in determination of
Directors’ variable remuneration.
Details of exceptional items* are set out
in Note 5 to the financial statements.
Additionally, the Group financial statements
present a number of alternative performance
measures (APMs) within its published financial
information, including the 2022 Annual Report,
with the objective of providing readers with
further understanding of financial performance
in the period, in order to facilitate comparison
between periods and to assess trends in financial
performance. Definitions of APMs used are
set out in Note 3 to the financial statements.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Audit Committee Report continued
Committee’s response
In light of the guidance issued by the
European Securities and Markets Authority
and more recently the UK’s Financial
Reporting Council, the Committee continues
to assess management’s rationale for
including an item as an exceptional item*
and the wider use of APMs.
The Committee challenged management’s
rationale for the use of specific APMs; and
the link between APMs reported within the
financial statements and incentive measures
within the Directors’ Remuneration Report
The Committee concluded that the presentation
of APMs gave additional clarity on performance
and were reconciled appropriately to reported
amounts, with sufficient prominence, and is
satisfied that the resulting presentation and
disclosure is appropriate.
Pension liability accounting and disclosure
Matter considered
The Group has a defined benefit pension
scheme, which is closed to future accrual.
Management exercise their judgement
around the assumptions used by its actuary,
including the sensitivities to these assumptions,
to calculate the pension scheme liabilities
under IAS 19 (R) Employee Benefits.
As at 31 December 2022, the scheme had an
actuarial accounting surplus of £15.2 million
(2021: £57.8 million), including liabilities of
£358.4 million (2021: £560.3 million), as
detailed in Note 21 to the financial statements.
Committee’s response
The Committee concurred with management’s
assessment that the estimates used within
the valuation of the Group’s pension liability
(including future changes in discount rates,
inflation, increases in pension payments
and life expectancy) represented significant
sources of estimation uncertainty, as set
out within IAS 1 Presentation of Financial
Statements. A review of management’s
proposed disclosure in relation to this
estimation uncertainty was completed.
Additionally, the Committee reviewed the
assumptions with management and sought
views from the External Auditor before it
concluded on the appropriateness of the
actuarial balances disclosed.
This review considered the financial
assumptions used by management as part
of the actuarial valuation and the range of
possible assumptions using available market
data to assess the reasonableness.
112
In conclusion, the Committee determined
that the actuarial assumptions used in the
valuation of the period end pension liabilities
were in an acceptable range, disclosed
appropriately and was satisfied that the
resulting presentation and disclosure
was appropriate.
Going Concern and Viability Statements
On behalf of the Board, the Committee
reviewed the Going Concern and Viability
Statements prepared by management,
together with the supporting documentation
and sensitivity analysis including the
consideration of climate change. Details
of the review process and the conclusion
reached are set out on pages 90 and 91.
Following its review, the Committee
recommended the approval of both
statements to the Board.
Fair, balanced and understandable
It is the Board’s responsibility to determine
whether the 2022 Annual Report and Accounts
are fair, balanced and understandable.
The Committee reviewed the process for
preparing the 2022 Annual Report, reviewed
management’s analysis of the 2022 Annual
Report and how this met the objectives of
providing fair, balanced and understandable
disclosures that provided the information
necessary for shareholders to assess the
Company’s position, performance, business
model and strategy.
The Committee took into account the
following when completing this process:
• Input from the CEO and CFO on the overall
messages and tone of the Annual Report
• That individual sections of the Annual
Report were drafted by appropriate senior
management with regular review to ensure
consistency across the entire document
• That detailed reviews of appropriate
draft sections of the Annual Report were
undertaken by the Executive Directors
• That an advanced draft of the Annual
Report was reviewed by the Committee
and the auditors on a timely basis to allow
sufficient consideration and was discussed
with the CFO and senior management
prior to consideration by the Board
• The results of an independent review by
an external corporate reporting consultant
After consideration the Committee arrived
at the decision to recommend that the
2022 Annual Report be approved by the
Board as fair, balanced and understandable.
The Board statement on a fair, balanced
and understandable Annual Report is set
out on page 93.
External audit relationship
• Reviewed and concurred with Deloitte
LLP’s (Deloitte) plans for their review of
the 2022 Half Year statement and audit
of the 2022 Full Year financial results
• Reviewed and considered the reports
presented by Deloitte to the Committee
following the Half Year review and Full
Year audit
• Reviewed the performance of the
External Auditor and the effectiveness
of the external audit process
• Discussed and approved the fees for
audit and non-audit services and
obtained assurance on the objectivity
and independence of the External
Auditor, taking into consideration relevant
professional and regulatory standards
• Discussed and approved the Directors’
Letter of Representation provided
to Deloitte
• Reviewed and approved the policy for
the employment of former employees
of the External Auditor, without
amendment, confirming with
management that no such employees
had been appointed during 2022
• Held planned meetings with Deloitte,
following Committee meetings, without
management present, on two occasions.
No material issues were brought to the
Committee’s attention at those meetings
• Recommended to the Board that a
shareholder resolution should be proposed
for the reappointment of Deloitte
• Considered the adequacy of the Group’s
procedures with regard to the objectivity
and independence of the External Auditor.
The Committee formed the opinion that
Deloitte had demonstrated their
independence and objectivity
Review of Internal Audit activities
• Reviewed reports presented by RSM on
Internal Audit assignments that had been
completed during the year and discussed
the results and agreed actions arising from
RSM’s recommendations
• Reviewed reports presented by RSM on
the testing of the design and operating
effectiveness of control areas in readiness
of the ‘Restoring Trust in Audit and
Corporate Governance’ consultation
• The Committee reviewed, and were satisfied
with, management’s responsiveness to
RSM’s findings and recommendations
• Agreed a plan of work for the 2023 Internal
Audit programme with RSM
• The Committee met with RSM, without
management present, on two occasions.
Ibstock Plc Annual Report and Accounts 2022 No material issues were brought to the
Committee’s attention at those meetings
Oversight of risk and internal control
• Reviewed principal business risks, risk
management processes and internal
controls. Further information can be
found in the Principal Risks and
Uncertainties section on page 60
• Received a report from the CFO on
the internal controls operating in the
business and any associated action plans
• Reviewed fraud risks (including the results
of a fraud risk assessment), the Code of
Business Conduct and Whistleblowing
Policy. The review did not identify any
material matters of interest
• Considered the appropriateness of the
Group’s Viability Statement at the Full
Year, and Going Concern Statement
assumptions at the Half Year and Full
Year, including a review of the sensitivity
analysis and scenarios prepared by
management. The Viability Statement
and the Going Concern Statement are
set out on pages 90 and 91
• Concluded that, whilst there remained
opportunities to improve in certain areas,
overall the systems of internal control
and risk management were effective
External and Internal Audit
External Auditor
Following a competitive tender process
conducted in 2016, Deloitte was appointed
as auditor for the financial year commencing
1 January 2017. The Committee received
formal confirmation from Deloitte itself
that the audit engagement team, and
others in the firm as appropriate, and,
where applicable, all Deloitte network
firms were and remained independent of
the Group. The Committee’s policy is that
the role of External Auditor will be put out
to tender at least every 10 years in line with
the applicable rules, or at other times should
it be required by specific circumstances.
Lee Highton is the current audit partner,
having completed his first year in role for
the year ended 31 December 2022. Lee
Highton was well prepared for assuming
the role, having met with members of the
Board and the Committee as well as with
a number of senior members of the Group’s
finance function prior to his appointment,
and the Committee has continued to ensure
that he is well supported in increasing his
knowledge of the business.
The Company has complied throughout
the year under review with the Statutory
Audit Services for Large Companies Market
Investigation (Mandatory Use of Competitive
Tender Processes and Audit Committee
Responsibilities) Order 2014.
Audit Quality Review
The FRC’s Audit Quality Review (AQR) team
elected to review the audit of the Company’s
2021 financial statements as part of their
2021 annual inspection of audit firms. The
focus of the review and their reporting is on
identifying areas where improvements are
required rather than highlighting areas
performed to or above the expected level.
The Chairman of the Audit Committee
received a full copy of the findings of the
AQR team and has discussed these with
Deloitte. Some matters were identified as
requiring improvement and we have agreed
an action plan with Deloitte to ensure the
matters identified by the AQR have been
addressed in the audit of the Company’s
2022 financial statements.
Effectiveness of the External Auditor
The Committee has the responsibility for
overseeing the Group’s relationship with
the External Auditor and advises the Board
on their appointment/reappointment, their
effectiveness, independence and objectivity,
and discusses the nature and results of the
audit with the External Auditor.
The review of the FY 2022 external audit
process included consideration of the following:
• The effectiveness of the External Audit firm
• Quality controls
• The audit team
• Audit fee
• Audit communications and effectiveness
• Governance and independence
• Ethical standards
• Potential impairment of independence
by non-audit fee income
• Deloitte’s ability to make valid
improvement suggestions
As part of the review of the effectiveness of
the External Audit process, the Committee
received a report on the External Auditor’s
quality control procedures and conducted
a formal evaluation procedure.
In addition to reviewing the formal report
received from the External Auditor, which
outlines how points raised by them have
been addressed by management, feedback
is also sought on the conduct of members
of the finance team during the audit
process. The Committee Chair also met
with the lead audit partner outside the
formal Committee process.
The Committee also considers the effectiveness
of management in the External Audit process
in respect of the timely identification and
resolution of areas of accounting judgement
with input from the External Auditor as
appropriate. They also consider management’s
timely provision of the draft Half Year results
announcement, Annual Report and supporting
documentation for review by the auditor and
the Committee.
Group auditor independence
and non-audit services
The non-audit services policy (Policy)
sets out clearly the non-audit services that
may be provided by the External Auditor.
Under the Policy, prior approval is required
by the Committee for any non-statutory
assignments where the fee would exceed
£10,000, or where such an assignment
would take the cumulative total of non-audit
fees paid to the External Auditor over 70%
of that year’s statutory audit fees. However,
when appropriate, a detailed calculation
will be performed to ensure that the Group
is compliant with the European Union’s
Statutory Audit Framework. This Policy
is reviewed on an annual basis and was
adopted without amendment in December
2022. The External Auditor is responsible for
the annual audit of the Group’s subsidiaries
and other services which the Committee
believe it is best placed to provide.
Details of the amounts paid to the External
Auditor are set out in Note 6 to the Group
consolidated financial statements. The ratio
of audit fees to non-audit fees was 10:1.
The Committee considers that the External
Auditor continues to be independent. Deloitte
has indicated its willingness to continue in
office and the Committee has recommended
Deloitte’s re-appointment to the Board.
A resolution to re-appoint Deloitte as the
External Auditor will therefore be proposed
at the AGM to be held on 27 April 2023.
Internal Audit
The provision of Internal Audit services is
outsourced to RSM and the Internal Audit
programme for the subsequent year is
approved by the Committee in December
each year. This contains a schedule of
reviews to audit a range of processes
and controls throughout the year covering
each component of the Group. Updates
on the status of audits against the annual
Internal Audit plan are provided to the
Committee by RSM on a regular basis.
These set out any control weaknesses
identified as well as management’s actions
to address control recommendations.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Priorities for the year
The Committee will continue to focus on
the delivery of its core responsibilities,
ensuring robust monitoring of the integrity
of the financial statements of the Company
and any formal announcements relating
to the Group’s financial performance, and
reviewing significant financial reporting
judgements contained in them.
Specific focus areas for the Committee
will be:
• Implementation of recommendations in
response to the ‘Restoring Trust in Audit
and Corporate Governance’ consultation
• Performing deep-dives into key risk areas
• Implementation of recommendations
arising from the FRC consultation on
an Audit Committee Standard
• Reviewing management’s plans and
recommendations for identified areas
of improvement in the Group’s
internal controls
Compliance and whistleblowing
On behalf of the Board, the Committee
reviews the operation of the Group’s
procedures that are in place for the detection
of fraud and the systems and controls in place
to prevent a breach of anti-bribery legislation.
The Committee receives regular updates
at each meeting and discusses any
incidents brought to its attention. It also
receives updates on the operation of the
Company’s confidential whistleblowing
arrangements including those material
incidents raised through the whistleblowing
line. A summary of all incidents raised
through the whistleblowing line is presented
to the Board twice a year, further details
of which can be found on page 55.
The Group is committed to a zero
tolerance position with regard to bribery.
Anti-bribery guidance and training is provided
to employees, as appropriate, applying what
the Group has determined to be a risk based
and proportionate approach. The Group
maintains a record of all employees who
have received this guidance and training.
Committee effectiveness
The effectiveness of the Committee
was reviewed by both the Board and
the Committee, in compliance with the
Code. Further information regarding the
evaluation process can be found in the
Corporate Governance Report on page 103.
The Committee scored highly overall and
was considered to be Chaired effectively.
The Committee performed their role and
undertook their responsibilities in an effective
manner. No specific developmental areas
were identified in the prior year evaluation.
Justin Read
Chair of the Audit Committee
7 March 2023
Audit Committee Report continued
Risk management and internal control
The Committee supports the Board in
monitoring Ibstock’s exposure to risk and is
responsible for reviewing the effectiveness
of its risk management and internal control
systems and assisting in the assessment of
the Group’s principal risks and uncertainties.
The key elements that comprise the Group’s
internal control framework include a clear
management structure with appropriate
authorities, robust financial controls, an
appropriate enterprise risk management
system, an internal audit function and
appropriate policies and procedures.
Review of Effectiveness
The Committee completes a biannual review
in accordance with the FRC’s guidance on
Risk Management, Internal Control and
Related Financial and Business Reporting.
Following a review by senior management
in the operating business and the Executive
Leadership Team, the Committee considers
papers on internal control and risk management
presented by the CFO and Group Company
Secretary respectively and provides challenge
on management’s conclusions and assertions
as appropriate.
The outcomes of the 2021 review included a
number of recommendations with regard to
Ibstock’s approach to risk management that
have been included along with those other
areas of focus identified as a set of 2022
priorities, which are reported against on
pages 60 to 69.
RSM completed its review of the Group’s
internal financial controls in 2022 and
presented their final report to the Committee
at the December meeting. No significant
weaknesses in the Group’s internal controls
were identified although areas of improvement
were suggested, which management are now
in the process of addressing.
Assessment of Principal Risks
The Committee also considered the principal
risks and uncertainties and their associated
mitigation prepared by management in
advance of their submission to the Board.
This formed a key component of the Board’s
robust assessment of the emerging and
principal risks facing the Group, including
those that would threaten its business model,
future performance, solvency or liquidity.
The Group’s principal risks are set out on
pages 60 to 69.
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Ibstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report
Directors’ Remuneration Report
Directors’ Remuneration Report
Tracey Graham
Chair of the Remuneration Committee
As the Chair of the Remuneration Committee
(the Committee), I am pleased to present the
Directors’ Remuneration Report (DRR) for the
year ended 31 December 2022. The report has
been prepared in accordance with Schedule 8
of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations
2008 as amended in 2013, the provisions of
the Code and the Listing Rules. The report
consists of three sections:
• This Annual Statement (pages 115 to 117);
• A summary of the Directors’ Remuneration
Policy (Policy) which was approved by
shareholders at the 2022 AGM (pages 118
to 121 ); and
• The Annal Report on Remuneration which
sets out payments made to the Directors
for the 2022 financial year (FY 2022) and
details how the policy will be implemented
for the 2023 financial year (FY 2023)
(pages 122 to 134).
The Directors’ Remuneration Policy was
approved by shareholders at the 2022 AGM
and has a three-year life. The remainder of
the Remuneration Report which includes this
Annual Statement and the Annual Report on
Remuneration will be subject to the usual
advisory vote at the 2023 AGM.
As this will be my last statement as Chair,
I would like to take this opportunity to
express my thanks to our shareholders
and other stakeholders. I wish my successor
every success as they assume the leadership
of the Committee following my departure.
Business performance in FY 2022
Ibstock has delivered a strong performance
this year with both profit and cash materially
ahead of the prior year, supported by
robust demand across end markets.
Trading performance has seen year on
year improvement in our key financial
metrics as set out below:
• Strong trading performance for the year,
with both revenue and profit materially
ahead of both the prior year and pre-
pandemic comparators
• Capitalised on periods of robust demand,
and end market diversification; volumes
consistent with the prior year despite
more cautious demand environment
in the final quarter
• Adjusted EBITDA* of £140 million
(2021: £103 million) was ahead of
our expectations
• Adjusted Return on Capital Employed*
(ROCE) increased to 23.4% (2021: 15.8%)
ahead of medium term target of 20%
• Balance sheet strengthened with closing
leverage of 0.4x (Dec 21: 0.4x) after
£38 million investment in growth capital and
a £30 million share buyback during the year
• Recommended a final dividend of 5.5p per
share, growing full year dividend by 20%
to 8.8p per share (2021: 7.5p), reflecting
the Board’s continued confidence in the
Group’s financial strength and prospects
There has been strong initial progress
towards our medium-term financial targets
set out at the beginning of the year.
Ibstock has also continued to deliver progress
against the ESG 2030 Strategy. We have made
significant progress on the development and
delivery of a people and culture strategy
including a step change in health and safety,
with in-year LTIFR performance ahead of
medium-term target, a cultural shift with the
launch of the Ibstock story and the creation
of a Health and Wellbeing network to
promote focus on mental health.
Further details can be found in the CEO
review (from page 10), Key Performance
Indicators (page 40), the Responsible
Business section on page 42 and in the
Financial Review on page 70.
Remuneration outcomes for FY 2022
At all times the Committee has carefully
balanced the interests of all stakeholders
as well as the wider business and societal
context in making these decisions. Further
details on our stakeholders can be found
on page 44.
In line with our remuneration philosophy,
incentive outcomes are largely driven by
corporate performance and shareholder
value creation. The 2022 annual bonus for
our Executive Directors was based 70%
on the Group’s financial performance
and 30% on non-financial objectives.
115
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report continued
Bonus – Financial performance
• Adjusted EBITDA* (40%) – this element
of the bonus was based 20% on full year
adjusted EBITDA* performance, 10% on H1
performance and 10% on H2 performance.
Reflecting the strong performance of the
business, the H1, H2 and full year targets
were achieved in full
• Adjusted Operating Cash Flow (30%) – the
Group delivered adjusted operating cash
flow of £62m (for bonus purposes) which
was significantly above the maximum
target set. Therefore, this part of the
bonus was also met in full
Bonus – Non-financial performance
• Directors each had a set of non-financial
objectives that were specific to their roles
and the Company’s strategic ambitions.
Both Directors achieved a score of 28.5%
out of 30%
Based on the performance set out above,
bonuses for FY22 performance were achieved
at 98.5% of maximum opportunity. Further
details of the annual bonus targets for the
year and performance against those targets
are provided on page 126. The Committee
considered carefully whether the bonus payout
is commensurate with the performance of the
business during the year and in the context of
broader stakeholders. Given the strong recovery
in financial performance with adjusted EBITDA*
36% higher than last year, and the support
provided to employees during the difficult
economic conditions (see below), the
Committee was comfortable that the annual
bonus outcome reflects the exceptional
performance delivered in 2022.
LTIP awards granted in 2020 were based on
three-year EPS, ROCE and TSR performance,
each with an equal one-third weighting. The
EPS and ROCE metrics were measured to the
end of the 2022 financial year and vested at
74.3% and 0% respectively. The TSR measure
runs three years from the date of grant and
therefore the measurement period will end
on 13 April 2023. Based on performance to
31 January 2023, the estimated vesting under
the TSR condition is nil. Therefore, the overall
estimated vesting of the 2020 LTIP is 24.8%.
in line with the forecast outcome in our 2021
DRR, the 2019 LTIP awards lapsed during the
year. Full details are provided on page 128.
The Committee carefully considered the
formulaic outcomes under the annual bonus
and the LTIP and is satisfied that, taken
together, there is no basis for operating
discretion (either upwards or downwards)
in respect of these outcomes.
116
Looking after our employees
Whilst as a business we have always been
committed to fairness and inclusion, during
2022 we took some notable steps to look
after our employees during a period of
macroeconomic volatility.
At half year, as inflation began to rise, we
took the decision to announce a one-off
£1,000 or £2,000 cost of living payment
to all employees earning less than £30,000
or £50,000 respectively. This payment was
made in October 2022 to coincide with
increased domestic energy costs.
We also launched the Ibstock Rewards
platform, provided by Sodexo, which
allows all employees to benefit from
shopping discounts. This platform will now
be used to consider other financial wellbeing
offerings which may be useful to employees.
Finally, we also took the opportunity, aligned
to the launch of our Ibstock story (a cultural
lever aimed at increasing employee voice and
engagement), to grant all 2,140 employees
on 29th June a Fire Up share grant. This gave
every employee, below Senior Leadership
Team level, an award over 500 Ibstock Plc
ordinary shares, which will vest in two years
time, subject to continued employment.
We are proud of the focus on employee
wellbeing that has taken place in 2022
and commit to continuing this, with a
focus on financial wellbeing into 2023.
Shareholder support at the 2022 AGM
Last year, we sought approval for our Policy
which was largely a rollover of the previous
one but updated to include post-cessation
shareholding requirements and pension
alignment for Executive Directors. We also set
out details of changes to executive directors’
base salaries to reflect their strong performance
in the role and their below market positioning.
This was accompanied by a one-off exceptional
LTIP award at 200% of salary to align executives
with our ambitious growth strategy.
I would like to thank shareholders once again
for their engagement on our proposals and for
your support of both the binding and advisory
remuneration votes in 2022 which achieved
support of 99% and 94% respectively.
The year ahead
• Our two Executive Directors will receive
base salary increases of 5% each, which
is aligned with the increase provided to
other ELT members and compares with
a 6.4% increase for the wider workforce.
The Committee believes the CEO and
CFO increases are merited and reflect their
considerable contributions during the year
• The CFO’s pension contribution rate will
continue to be 10% of salary which is in
line with the rate offered to the wider
workforce. The CEO’s contribution rate
has been reduced from 20% of salary
to 10% of salary from 1 January 2023
• The annual bonus opportunity will remain
unchanged at 125% of salary and the
bonus will be based 50% on adjusted
EBITDA* (based on full year targets),
20% on adjusted operating cash flow
and 30% on personal objectives. There
is a slight reweighting from last year with
an upweighting of adjusted EBITDA* over
cash to reflect the importance of delivering
profit in 2023. Both measures will be based
on annual performance noting that the
2022 EBITDA metric was based both
on half and full year targets
• The LTIP will revert to the normal grant
level of 150% of salary and will be based
25% on EPS, 25% on ROCE, 30% on
relative TSR and 20% on ESG objectives
relating to carbon reduction, diversity
and new product development
We will also be seeking shareholders’
approval at the 2023 AGM for a new set of
Long-Term Incentive Plan (LTIP) rules. The
2023 LTIP substantively replicates the terms
which the Company has operated since its
IPO, but has been updated to reflect current
best practice, such as by extending the ability
of the Committee to operate clawback if the
Company were to suffer a corporate failure.
All awards under the new plan to Executive
Directors will remain subject to the terms of
the Directors’ remuneration policy supported
by 99% of shareholders at the 2022 AGM.
Shareholder engagement
The Board regularly engages with our
shareholders in a two-way communication
process to maintain their support and to
ensure we have a transparent executive
reward structure aligned to shareholder
experience. I look forward to receiving
your support at our 2023 AGM, where I will
be available to respond to any questions
shareholders may have on this report or in
relation to any of the Committee activities.
In the meantime, if you would like to discuss
any aspect of our Remuneration Policy,
please feel free to contact me through
the Group Company Secretary, at
company.secretariat@Ibstock.co.uk.
Tracey Graham
Chair of the Remuneration Committee
7 March 2023
Ibstock Plc Annual Report and Accounts 2022 Remuneration at a glance
Single figure remuneration for our Executive Directors
The single total figure of remuneration table for the Executive Directors and Non-Executive Directors is set out on page 126 .
Executive Directors
Joe Hudson (CEO)
Chris McLeish (CFO)
Year
Fixed remuneration
Variable remuneration
Salary/Fees
2022 £485,503
2021 £454,793
2022 £326,655
2021 £306,000
Taxable
benefits1
£19,978
£15,627
£16,179
£15,817
Pension
Sub-total Annual Bonus
Other
LTIP
Sub- total
Total
£97,101 £602,582 £610,380
£90,959 £561,379 £543,023
£32,666 £375,500 £410,671
£28,338 £350,155 £365,364
– £139,935 £750,315 £1,352,897
£0 £543,023 £1,104,401
–
£94,153 £504,824 £880,324
£0 £365,364 £715,519
–
Annual & Deferred Bonus Plan (ADBP) FY 2022 outcome
• Our 2022 ADBP outcomes outlined below reflect the performance targets and measures in place during the year. The financial targets,
non-financial objectives and outcomes can be found on page 126.
Joe Hudson (CEO) and Chris McLeish (CFO)
Achievement (% of maximum)
Estimated 2020 LTIP outcome
Measure
Relative TSR
Adjusted EPS* growth
ROCE
Total
Adjusted
EBITDA FY*
(20%)
£139.7m
100%
Adjusted
EBITDA H1*
(10%
£70.7m
100%
Adjusted
EBITDA H2*
(10%)
£68.9m
100%
Adjusted operating
cash flow*
(30%)
£65.9m
100%
Non-financial
objectives
(30%)
95%
95%
2022 Annual
bonus outcome
(% of maximum)
98.5%
98.5%
Weighting (%)
33.3
33.3
33.3
Threshold (%)
Maximum (%)
Actual (%)
Median Upper quartile below Median1
7.6%p.a.
10%p.a.
3%p.a.
15.2%p.a.
20.77%p.a.
18.76%p.a.
Vesting (% of total
award)
0%
24.8%
0%
24.8%
1 As the TSR performance condition period ends after the date of signing this Annual Report the TSR outcome is an estimated level of vesting taken as at 31 January 2023.
The three-year performance period for the 2020 LTIP awards ended on 31 December 2022 for the EPS and ROCE measures and will end on
13 April 2023 for the TSR measure. The TSR vesting outcome is therefore an estimate and subject to change. The actual vesting outcome will
be reported in next year’s Remuneration Report. The 2019 LTIP award lapsed in full.
Share ownership
Joe Hudson (CEO)
(% of salary)
Shareholder
requirement
Current
shareholding
Value of unvested
LTIP awards
37%
200%
207%
Chris McLeish (CFO)
(% of salary)
Shareholder
requirement
Current
shareholding
Value of unvested
LTIP awards
71%
200%
207%
The number of shares of the Company in which Directors had a beneficial interest as at 31 December 2022 is set out in detail on page 130.
117
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Directors’ Remuneration Report continued
Our Remuneration Policy and its link to our Group strategy
The key elements of the Company’s strategy and how its successful implementation is linked to the Director’s remuneration are set out in the
following table.
Sustain
Sustainable high performance
is at the heart of what we do.
We are focused on three
priorities: health and safety;
operational excellence; and
environmental performance.
Non-financial measures
target customer satisfaction
and Health and Safety in
the workplace and therefore
support this objective.
ESG, ROCE*
Achievement of the
Group’s key targets
contained in its ESG
2030 Strategy. This will
help contribute to our
objectives of being
the sector leader in
sustainability matters.
Healthy returns on
capital employed will
support the long-term
success of the business.
Innovate
Strengthening our
market-leading position.
Our initiatives are centred
on three specific areas:
product innovation;
customer experience; and
digital transformation.
Adjusted EBITDA*,
Adjusted operating
cash flow*
The efficient development
of innovative products
measured through adjusted
EBITDA* will be reflected in
increased profitability and
adjusted operating cash flow*.
TSR, ESG
The generation of cash and
profit growth targeted by
the annual bonus will help
enhance the value of the
Company which will be
measured through the
success of the Company’s
TSR performance against
its comparators. The new
product development (NPD)
measure in the ESG target
will promote innovation, as
will the drive towards
carbon reduction.
Grow
Clear path for growth
and value creation –
combining expansion in
our core business, alongside
diversified growth.
Equity
ownership
and
retention
of shares.
Retain
and
reward
the
Executive
team to
deliver the
strategy.
Adjusted EBITDA*,
Adjusted operating
cash flow*
The success in maximising
operational excellence
will be reflected through
increased profitability
and cash flow.
ROCE*, Adjusted EPS*, TSR
The success in maximising
operational excellence will
be measured through the
long-term adjusted EPS*
growth targeted by the LTIP
and sustained strong ROCE*.
In addition, sustained value
generation will be reflected
in the shareholder returns
of the Company which will
be measured through the
Company’s TSR performance
under the LTIP.
Encourages employee participation in our success and encourages retention.
Creates alignment with our shareholders.
Strategic priorities
Remuneration Policy
Annual bonus
The maximum bonus
(including any part of
the bonus deferred into
shares) deliverable under
the ADBP will not exceed
125% of a participant’s
annual base salary.
LTIP
Maximum annual award
is normally 150% of salary.
Awards will vest at the end
of three years with a further
two-year holding period.
For 2023, the performance
conditions for awards are:
• Relative Total Shareholder
Return (TSR) (30%);
• Adjusted Earnings per
Share* (EPS) growth
(25%)*;
• Return on Capital
Employed* (ROCE)
(25%); and
• ESG (20%)
Sharesave Plan
(Sharesave)
Minimum shareholding
requirements
200% of salary.
118
Ibstock Plc Annual Report and Accounts 2022 Remuneration Policy Summary
Introduction
The Directors’ Remuneration Policy was approved by shareholders at the AGM on 21 April 2022 and became effective from that date. The
Policy applies for the period of three years from the date of approval. This part of the Directors’ Remuneration Report summarises the key
components of Ibstock’s remuneration arrangements for the Executive Directors which form part of the Policy. A full copy of the Policy can
be found in the 2021 Annual Report and Accounts on our website at www.ibstockplc.co.uk.
Summary of 2022 Policy for Executive Directors
Element of remuneration
Base salary
Link to strategic objectives
Provides a base level of
remuneration to support
recruitment and retention
of Executive Directors.
Operation
An Executive Director’s base
salary is set on appointment
and reviewed annually or
when there is a change in
position or responsibility.
Maximum opportunity
In general, salary
increases for Executive
Directors will be in line
with the increase for
employees across the Group.
Performance metrics
None
Benefits
Pensions
Annual and
Deferred Bonus
Plan (“ADBP”)
Provides a benefits package
in line with practice relative
to its comparator group
to enable the Company
to recruit and retain
Executive Directors.
Provides retirement
benefit to enable the
Company to recruit and
retain Executive Directors.
The ADBP provides a
significant incentive to the
Executive Directors linked to
achievement in delivering
goals that are closely aligned
with the Company’s strategy
and the creation of value
for shareholders.
Long-Term
Incentive Plan
(“LTIP”)
The purpose of the LTIP is
to incentivise and reward
Executive Directors in relation
to long-term performance
and achievement of
Group strategy.
The Executive Directors
receive a company car
or car allowance, private
health cover and death
in service cover.
The Company operates
a defined contribution
pension or salary
supplement arrangement
for Executive Directors.
The annual bonus will
be paid in cash and
deferred shares.
The Committee will
determine each year
what part of the ADBP is
deferred for three years.
The minimum value of
deferred shares is one-third of
the bonus earned.
The ADBP contains clawback
and malus provisions.
Awards are granted
annually and vest at the
end of a three-year period.
A post-vesting holding
period of two years will
apply for the LTIP.
The Committee may award
dividend equivalents in
shares on awards to the
extent that these vest.
The LTIP contains clawback
and malus provisions.
An alternative approach
may be taken in relation
to the individuals who are
recruited or promoted to
the Board.
The maximum will depend
on the cost of providing
the relevant benefits. The
Company has monitoring
practices in place to ensure
spend on benefits is efficient.
• 10% of salary for
Executive Directors
None
None
• Up to 125% of salary
Percentage of maximum
bonus earned for levels
of performance:
• Threshold: 0%
• On-target: 50%
• Maximum: 100%
A minimum of 50% of the
targets will be financial.
The Board will determine
the bonus to be delivered
following the end of the
relevant financial year.
Actual targets, performance
achieved and awards made
will be published at the end
of the performance period.
• Up to 150% of salary
• Up to 200% of salary in
exceptional circumstances
25% of the award will vest
for threshold performance.
100% of the award will vest
for maximum performance.
There is straight line vesting
between these points.
The performance conditions
for the 2023 LTIP awards
are Adjusted EPS growth,
comparative TSR, ROCE and
ESG. The Committee may
change the balance of the
measures, or use different
measures for subsequent
awards, as appropriate.
119
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report continued
Element of remuneration
Link to strategic objectives
Operation
Maximum opportunity
Performance metrics
Sharesave Plan
(“SAYE”)
The plan is designed to
encourage all employees
to become shareholders
in the Company.
All employees including
Executive Directors are
eligible to participate
in the plans.
Maximum opportunity for
awards and purchases are
kept in line with HMRC limits.
The Company, in accordance
with the legislation, may
impose objective conditions
on participation in the plan
for employees.
Minimum
shareholding
requirement
Executive Directors are expected to build up over a five-year period and then subsequently hold a shareholding equivalent
to 200% of base salary. This will include deferred shares at their net-of-tax value and shares subject to a holding period at
their full value. Adherence to these guidelines is a condition of continued participation in the equity incentive arrangements.
In addition, a post-cessation minimum shareholding requirement will apply to Executive Directors who leave the Company.
Leavers will have a requirement to hold 200% of their pre-cessation shareholding requirement for two years from leaving.
Alignment of Policy with requirements under the UK Corporate Governance Code
As indicated in the compliance statement on page 93, the Board believes that Ibstock has applied the principles of the UK Corporate Governance
Code (the Code) and complied with its relevant provisions during FY2022, with one exception. As noted on page 93, the Committee aligned the
pension contribution rate for the CEO to that of the wider workforce from 1 January 2023.
The Committee has considered the principles set out in Provision 40 of the Code and explains below how these have been addressed:
Remuneration arrangements
should be transparent and promote
effective engagement with
shareholders and the workforce.
• We proactively consult our shareholders on any changes to the Remuneration
Policy and seek their views.
• We regularly engage with the workforce and seek to bring employee voice
in the Boardroom.
Clarity
Simplicity
Risk
Remuneration structures should
avoid complexity and their
rationale and operation should
be easy to understand.
Remuneration arrangements
should ensure reputational and
other risks from excessive rewards,
and behavioural risks that can arise
from target-based incentive plans,
are identified and mitigated.
Predictability
Proportionality
Alignment to
culture
The range of possible values of
rewards to individual directors and
any other limits or discretions should
be identified and explained at the
time of approving the Policy.
The link between individual
awards, the delivery of strategy
and the long-term performance
of the Company should be clear.
Outcomes should not reward
poor performance.
Incentive schemes should drive
behaviours consistent with Company
purpose, values and strategy.
120
• We always seek to improve the quality of disclosure in our DRR and conduct
an annual review of disclosure provided to add relevant information to
increase transparency.
• The structure of the ADBP and LTIP are in line with standard UK market
practice and hence should be familiar to all stakeholders.
• Performance metrics are chosen to focus on the key operational and financial
performance objectives of the business.
The Policy helps mitigate risks as follows:
• The Committee has discretion to override formulaic outcomes in instances
where payouts do not accurately reflect the overall performance of the business.
• Malus and clawback in incentive plan rules provide flexibility to prevent
excessive payouts in exceptional circumstances.
• Post-vesting holding periods and shareholding requirements encourage focus
on sustainable performance over the long term.
• Incentive performance metrics are aligned with the Company’s strategy.
• Maximum award limits are set within the Policy.
• The Policy sets out potential levels of vesting available for varying degrees of
performance (threshold, on-target and maximum) and calculation methodology.
• The DRR illustrates graphically the potential levels of remuneration received
by Executive Directors under various performance scenarios.
• The ADBP and LTIP reward Executive Directors for delivering the Company’s strategy.
• The use of deferral and multi-year performance periods ensure Executive
Directors are focused on long-term sustainable performance.
• The Committee’s discretion to adjust outcomes prevents Executive Directors
from being rewarded for poor underlying business performance.
• Alignment of our incentives structure to strategy is illustrated on page 118.
Strategic priorities are supported by the Company’s culture.
• In addition, the Board believes that our remuneration structure is structured to
drive the right culture and performance and is aligned with the Company’s values.
Ibstock Plc Annual Report and Accounts 2022 Illustrations of the application of the Remuneration Policy
The charts below illustrate the total remuneration that would be paid to each of the Executive Directors, based on increased base salaries
for the 2023 financial year, under four different performance scenarios: (i) minimum; (ii) on-target; (iii) maximum; and (iv) maximum including
the impact of a 50% increase in share price on the LTIP outcome.
Chris McLeish (CFO)
£’000
£2,414
2500
£390
16%
Joe Hudson (CEO)
£’000
2500
2000
1500
1000
£2,024
£781
38%
£781
32%
£651
32%
£651
27%
2000
1500
1000
£1,308
£390
30%
£325
25%
£593
£1,627
£263
16%
£1,365
£525
38%
£525
32%
£438
32%
£438
27%
£883
£263
30%
£219
25%
£402
£593
100%
£593
46%
£593
29%
£593
25%
£402
100%
£402
46%
£402
29%
£402
25%
0
Minimum
On-Target
Maximum
Maximum
including
share price
appreciation
0
Minimum
On-Target
Maximum
Maximum
including
share price
appreciation
■
■
Element
Fixed
(salary1, benefits
and pension2)
Annual bonus
(125% of salary)
LTIP
(150% of salary)3
Share price gain
(50% over 3 years)
Minimum
Included
On-target
Included
Maximum
Included
Maximum including
share price appreciation
Included
Not included
50% of maximum
100% of maximum
100% of maximum
Not included
50% of maximum
100% of maximum
100% of maximum
Not included
Not included
Not included
50% of the maximum LTIP value
1 Salary is the 2023 base salary following the increase approved by the Remuneration Committee in March 2023. This increase is effective from 1 April 2023.
2 Based on the 2022 value of benefits and a 10% of salary pension contribution.
3 An LTIP grant of 150% of base salary will be awarded to both Executive Directors in 2023.
121
Fixed ■ Annual Variable ■ LTIP ■ Share Price Appreciation500 Fixed ■ Annual Variable ■ LTIP ■ Share Price Appreciation500Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report continued
Annual Report on Remuneration
Membership meetings and attendance of the Committee
Membership comprises the Group’s Chairman and the independent Non-Executive Directors with support from the Group Company Secretary.
Details of meeting attendance can be found on page 97. The Committee also receives assistance from Joanne Hodge, the Group People
Director who attends meetings by invitation, except when issues relating to her own remuneration are being discussed. The ESG Committee
advise the Committee on the setting and outcome of ESG performance measures in the LTIP Awards. The CEO is absent from any part of the
ESG Committee meeting pertaining to decisions on ESG targets or outcomes. The CEO and CFO attend by invitation on occasions but are
absent from discussions regarding setting of their own pay arrangements. The independent advisor to the Committee attends by invitation.
Role and responsibilities
The Board has delegated to the Committee, under agreed terms of reference, responsibility for the Policy and for determining specific packages
for the Executive Directors and members of the ELT. The Company consults with key shareholders in respect of the Policy and on any material
changes to the way the Policy is implemented. The annual review of the terms of reference was conducted at the December 2022 meeting and
these are available on the Company’s website.
Our main responsibilities are:
• To determine and agree with the Board the Policy for the Executive Directors and the ELT, including the Group Company Secretary;
• To review the ongoing appropriateness and relevance of the Policy, taking into consideration the UK Corporate Governance Code 2018
(the Code) and associated guidance;
• To ensure that the Policy drives behaviours consistent with Company purpose, values and strategy;
• To ensure that the Policy promotes effective engagement with shareholders and the workforce;
• To ensure remuneration structures and their operation are simple and easy to understand;
• To ensure that remuneration arrangements prevent excessive rewards and do not reward poor performance;
• To review wider workforce remuneration and related policies;
• To review and approve the gender pay gap report on an annual basis;
• To engage with the workforce regarding the Policy and wider Company pay policy; and
• To review any major changes in employee benefit structures throughout the Company or Group and to administer all aspects of any share scheme.
On the following pages we provide a detailed description of the 2022 Executive Directors’ pay outcomes and supporting information.
Company remuneration at Ibstock
Fairness, diversity and wider workforce considerations
Ibstock is committed to creating an inclusive working environment and rewarding our employees throughout the organisation in a fair manner.
In making decisions on executive pay, the Committee considers wider workforce remuneration and conditions. We believe that employees
throughout the Company should be able to share in the Company’s success. We have, on three occasions operated a very popular Sharesave
plan and we will continue to investigate additional opportunities for our employees to share in our success going forwards. We also believe that
employees should have the opportunity to save for their futures and to this end we operate defined contribution Group personal pension plans
into which the Company and our employees make contributions. During the year we made a share award to Ibstock employees as part of the
broader Fire Up Ibstock cultural change programme that was launched in June. Under this arrangement, every Ibstock employee below the
Senior Leadership Team received an award over 500 Ibstock Plc ordinary shares that would be released after two years.
As part of our commitment to fairness and in line with the evolving reporting regulations, for the sixth year we have included this section into
our Annual Report on Remuneration which sets out more information on our wider workforce pay conditions, our CEO to employee pay ratio,
our Gender Pay statistics, and our Diversity and Inclusion Policy. Whilst we recognise there is much work still to do, we believe that transparency
is an important first step towards making improvements in relation to these important issues.
122
Ibstock Plc Annual Report and Accounts 2022 Area
Competitive
pay and cascade
of incentives
Considerations
The Committee ensures that pay is fair throughout the Company and makes decisions in relation to the structure of
executive pay in the context of the cascade of incentives throughout the business. The Committee’s remit extends down
to the senior executives, senior management and other managers and employees for which it recommends and monitors
the level and structure of remuneration.
Participation in
bonus
Participation in
LTIP
Participation in
Share Option Plan/SMSP
Participation in
Sharesave
Level
Executive Directors
Senior executives
Senior managers
Managers
Employees
Area
Considerations
Remuneration
and its link to
the Company’s
objectives
Plan
Sharesave
Annual bonus
Share Option
Plan/SMSP
LTIP
Purpose
To broaden
share
ownership and
share in
corporate
success over
the medium
term
Incentivise and
reward
short-term
performance.
At senior level
an element of
bonus may be
deferred in
shares
Broaden share
ownership,
alignment,
retention,
long-term
performance
Incentivise and
reward
long-term
performance
Eligibility
All employees
Financial
performance
Strategic and
operational goals
Executive
Directors,
senior
executives,
senior
managers,
managers and
employees
Senior
executives and
senior
management
Executive
Directors and
senior
executives
Long-term value
creation
(encouraged
through equity
retention)
Objectives
Share ownership
The Company uses a number of remuneration comparison measurements to assess the fairness of pay structures across
the Group. Detailed disclosure of our approach to fairness, diversity and wider workforce considerations is presented
above on this page. In setting the Policy for Directors, the pay and conditions of other employees of the Company are
taken into account to ensure consistency of approach throughout the Company, including data on the remuneration
structure for management level tiers below the Executive Directors, average base salary increases awarded to the
overall employee population and the cascade of pay structures throughout the business.
As a Committee, we are keenly aware of the sensitivity of shareholders and the wider public regarding executive
remuneration. The Committee will continue to monitor external remuneration developments closely and intends to
embrace these changes and continue to comply with best practice reporting requirements as they come into force.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report continued
Area
Considerations
Pay comparisons
CEO pay ratio
Year
2018
2019
2020
2021
2022
In line with the remuneration reporting regulations, we report the ratio of CEO single figure pay to the pay of our
employees in 2022. As in 2021, we have calculated the ratios set out above using Option A, as described in the Directors’
Remuneration Reporting Regulations, as we believe that this reflects the most comprehensive approach.
Method
Option A
Option A
Option A
Option A
Option A
50th
percentile
24:1
35:1
16:1
30:1
35:1
75th
percentile
19:1
23:1
13:1
25:1
27:1
25th
percentile
30:1
43:1
21:1
41:1
44:1
The 2022 pay ratio figures are broadly comparable to prior year figures. This reflects high bonus payouts in each year.
The median ratio is slightly higher in 2022 largely due to modest LTIP vesting in 2022 (24.8%) versus nil in 2021. The
ratios were determined as at 31 December 2022.
The following summarises the employee salary, total pay and base salary for the year ended 31 December 2022.
Total Remuneration and Base salary quartiles
Total remuneration
Base Salary
CEO pay in the last eight years
CEO
£1,352,897
£485,503
25th
percentile
£30,835
£23,278
50th
percentile
£38,929
£27,082
75th
percentile
£49,495
£36,833
The table below sets out the single total figure of remuneration and incentive outcomes for the Director holding the post
of CEO in each year since Ibstock listed on the London Stock Exchange in 2015.
Year
Single figure
remuneration
% of maximum
annual bonus
earned
% of maximum
LTIP awards
vesting1
Wayne Sheppard2
2017
£’000
2016
£’000
2015
£’000
2018
£’000
2018
£’000
2019
£’000
2020
£’000
2021
£’000
2022
£’000
Joe Hudson3
773
789
906
184
592
737
540
1,104
1,353
100%
33%
58% 32.5% 32.5% 33.1%
0.0% 95.5% 98.5%
N/A
N/A
N/A
38.5%
N/A
N/A
0%
0% 24.8%
1 Following the IPO in 2015, no award under the LTIP vested in the period 2016 to 2018.
2 Wayne Sheppard stepped down as CEO and Board Director on 4 April 2018 and his 2018 remuneration has been pro-rated to reflect this.
3 Joe Hudson became CEO on 4 April 2018. His 2018 single figure only includes compensation paid to him in 2018 in his capacity as the CEO from 4 April to
31 December 2018 and does not include compensation paid to him as CEO designate before 4 April 2018.
Percentage change in CEO’s remuneration
The table below shows how the percentage change in the CEO’s salary, benefits and bonus between 2021 and 2022
compares with the percentage change in the average of each of those components of pay for the employees.
Year
CEO1
Average per eligible
employee2
Salary
Taxable benefits
Bonus
2021
£’000
455
2022
£’000
Percentage
change
486
6.8%
2021
£’000
16
2022
£’000
Percentage
change
20
25%
2021
£’000
543
2022
£’000
Percentage
change
610
12.4%
39
43
10.3%
7
6
(14.3)%
22
15
(31.8%)
1 The CEO’s remuneration disclosed in the table above has been calculated to take into account base salary and taxable benefits (excluding pension) and
annual bonus (including any amount deferred).
2 The pay for eligible employees in continuing operations has been calculated using the following elements: annual salary – base salary and standard monthly
allowances; taxable benefits – car allowance and private medical insurance premiums; annual bonus – company bonus, management bonus, commission and
incentive payments.
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Ibstock Plc Annual Report and Accounts 2022 Area
Gender pay
Considerations
The UK Government Equalities Office legislation requires employers with 250 or more employees in the UK to disclose
annually information on their gender pay gap. This disclosure of the pay gap is based on amounts paid in the year to
5 April 2022. The bonus gap is based on incentives paid in respect of the year to 5 April 2022. As Ibstock Brick is the
largest employing entity, we have chosen to report these figures in this report. We are committed to regular analysis
and monitoring of pay where we will continue to work to remedy any gap that we have.
The mean gender pay gap at Ibstock Brick is minus 6% which is significantly lower than the UK average of 14.9%.
We continue to work hard to encourage more females into the business. Our current employee population reflects
the traditional nature of the industry, with 84% of roles being occupied by men, including a high percentage of
males employed in factory based production roles. This can clearly be seen in the quartiles set out below, which
show the number of male and female employees in each pay quartile:
Quartile A (lowest) 1 Male: 72%
1 Male: 91%
Quartile B
Quartile C
2 Female: 28%
1 Male: 91%
2 Female: 9%
2 Female: 9%
Quartile D (highest) 1 Male: 84%
2 Female: 16%
Note: The figures quoted above are for Ibstock Brick Limited, a subsidiary of Ibstock Plc, only.
Area
Diversity policy
Considerations
We believe the diversity of our people strengthens our judgement, independence and decision-making. We also
know that attracting a more diverse workforce widens our pool of talent which is key for our succession planning
and sustainable growth. Our commitment is backed by our Diversity and Inclusion Policy and will be supported
during the coming year by the commitment to appoint a senior sponsor in the business for diversity and inclusion.
Informing the Committee on the wider workforce
To build the Committee’s understanding of reward arrangements applicable to the wider workforce, the Committee was provided with summary
data on the remuneration arrangements for all employees across the Group. The Committee annually reviews the pay proposals for the senior
executives/senior management team, including annual bonus targets and outcomes and long-term incentives, and is aware of the pay increases
awarded to the broader employee population. The Committee uses this information to ensure consistency and fairness of approach throughout
the Company in relation to remuneration.
Workforce engagement
The Group operates an employee forum called The Listening Post. Under the initiative the CEO and one of the Non-Executive Directors,
together with certain members of the ELT, meet regularly during the year with nominated employee champions elected from all parts of
the business to discuss the Group, how it is performing and to identify potential areas for improvement. During the year feedback from
our employees through The Listening Post has included topics including remuneration. Further information can be found in the Responsible
Business section on page 42.
Remuneration justification
The Committee is comfortable that the pay relativity reference points set out above provide justification that the application of the Policy
is appropriate.
Application of the Policy in FY 2022
Single total figure of remuneration (audited)
The table below sets out the single total figure of remuneration and breakdown for each Director in respect of the financial year to
31 December 2022.
Figures provided have been calculated in accordance with the UK disclosure requirements: the Large and Medium-Sized Companies
and Groups (Accounts and Reports) (Amendment) Regulations 2013 (Schedule 8 to the Regulations).
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Directors’ Remuneration Report continued
Executive Directors
Joe Hudson (CEO)
Chris McLeish (CFO)
Non-Executive Directors
Jonathan Nicholls
Tracey Graham
Justin Read
Louis Eperjesi
Claire Hawkings
Peju Adebajo
Year
Fixed remuneration
Variable remuneration
Salary/Fees
2022 £485,503
2021 £454,793
2022 £326,655
2021 £306,000
Taxable
benefits1
£19,978
£15,627
£16,179
£15,817
2022 £188,458
2021 £182,963
£74,704
2022
£72,525
2021
£64,404
2022
£62,730
2021
£53,846
2022
£52,275
2021
£64,404
2022
£59,424
2021
£53,846
2022
£4,959
2021
–
–
–
–
–
–
–
–
–
–
–
–
Pension
Sub-total Annual Bonus
Other
LTIP2
Sub- total
Total
£97,101 £602,582 £610,380
£90,959 £561,379 £543,023
£32,666 £375,500 £410,671
£28,338 £350,155 £365,364
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– £139,935 £750,315 £1,352,897
£0 £543,023 £1,104,401
–
£94,153 £504,824 £880,324
£0 £365,364 £715,519
–
–
–
–
–
–
–
–
–
–
–
–
– £188,458
– £182,963
£74,704
–
£72,525
–
£64,404
–
£62,730
–
£53,846
–
£52,275
–
£64,404
–
£59,424
–
£53,846
–
£4,959
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Taxable benefits in the 2022 financial year comprised a company car allowance, private health cover and death in service cover. Joe Hudson and Chris McLeish were entitled to receive
car allowances of £18,000 and £15,000 per annum, respectively. The actual amounts received for the 2022 financial year are shown as part of the total taxable benefits figure above.
2 The LTIP vesting for 2022 is estimated at 24.8% and is based on the three month average share price to 31 December 2022 157.98p. No discretion was applied to determine the vesting
outcome and none of the 2022 LTIP value shown is attributed to share price growth over the vesting period.
Pension entitlements (audited)
The Company’s Defined Benefit Scheme was closed in 2017. Executive Directors receive a salary supplement in lieu of pension contributions
with the CEO and CFO receiving contributions of 20% and 10% of base salary respectively. In order to ensure all executives’ contributions are
at the same level as the majority of the wider workforce, contributions payable to the CEO have now reduced to 10% from 1 January 2023.
ADBP (audited)
The 2022 ADBP was based on a range of financial measures and non-financial objectives. 40% of the bonus was based on adjusted EBITDA,
30% was based on adjusted Operating Cash Flow and 30% on non-financial objectives. The EBITDA element was split between full year
performance and targets relating to H1 and H2. The Committee set half year targets due to the uncertain outlook at the start of 2022.
The 2023 targets are based on full year performance.
One-third of any bonus payable will be deferred for three years into Company shares subject to continued employment.
Performance condition
Adjusted EBITDA*
Adjusted EBITDA H1*
Adjusted EBITDA H2*
Adjusted operating cash flow*1
Non-financial objectives
Total
Weighting
20%
10%
10%
30%
30%
100%
Actual
performance
Threshold
performance
required
(£’m)
£111.7
£53.6
£58.1
£18.9
Maximum
performance
required
(£’m)
£ 126.1
£ 60.5
£ 65.6
£ 21.3
(£’m)
£139.7
£70.7
£68.9
£65.9
A summary of the personal objectives
for 2022 are outlined below.
Percentage of
maximum
performance
achieved
100%
100%
100%
100%
95%
98.5%
1 Adjusted free cash flow plus tax, net interest, post employment benefits, R&D tax credits, leases, and share based payments , further adjusted for capital items deemed outside of target performance.
Operating cash performance was also above maximum reflecting very strong trading performance, a tight focus on cost and effective working
capital management. Profit performance exceeded the maximum targets set at the start of the year reflecting very strong performance, driven
by a 26% increase in revenue, dynamic pricing to recover significant cost inflation and disciplined cost management.
The personal objectives for the CEO and the CFO along with their associated outcomes are set out below.
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Ibstock Plc Annual Report and Accounts 2022
Summary of personal objectives
Name
Joe Hudson
Objective area
Continue to drive our performance and culture in health,
safety, and wellbeing completing road map actions
Assessment
(% of maximum) Assessment of completed objective
95%
Roll out the new sustainability strategy with the
delivery of the key Year 1 actions
Drive continued Operational Performance for
Industrial and commercial
100%
85%
Support the establishment of the Futures division
strategy, business plan and governance and ensure the
in-year delivery of the brick slips investment strategy
90%
Complete assessment of options for calcined clay /
expanded clay
In year delivery of the Shadowfax (Atlas and Aldridge
factories) project plan
95%
95%
Bed in and support the organisational effectiveness
of the ELT and SLT and key functional support areas
100%
Continue to develop the M&A pipeline for core business
with progress and bolt on adjacencies
95%
Promote and deliver continuing improvement in risk
management and controls
90%
Continue to enhance the framework and culture
of performance management across the Group
Deliver committed improvements in Finance/IT
functional operating model and performance
Develop Futures Division business plan, ensure in year
delivery of the brick slips investment strategy and
establish an effective M&A acquisition pipeline
100%
100%
90%
Roadmap actions delivered in year with LTIFR
performance of 1.4 vs target of 2.2. Wellbeing
plan developed and initial actions completed
(e.g. mental health awareness) but more to be
done around wellbeing in 2023
Roadmap actions delivered in year and progress
reported in ARA
Commercial performance strong with approach
to customer partnerships and pricing both driving
benefit. Focused improvements in operational
performance across divisions with key sites such
as Dorket Head and Leighton Buzzard showing
reliability improvement in year. However,
performance in two clay sites continue to
require focus to ensure greater reliability in 2023
Futures strategy clearly defined as set out in ARA
and leadership team put in place. Initial approach
to the brick slips investment strategy was reviewed
and will now benefit from progressive technology
to deliver greater range flexibility
Assessment completed in line with milestone
plan with only a small rework of critical path
Delivered in line with milestone plan
although reforecast required given
changes in external environment
Excellent progress made with continued focus
into 2023. Focus on SLT leadership development
saw increased in year performance ownership
and leadership of enterprise topics
Pipeline further developed with delivery in year
focused on Futures
Roadmap actions delivered in year with LTIFR
performance of 1.4 vs target of 2.2. Wellbeing
plan developed and initial actions completed
(e.g. mental health awareness) but more to be
done around wellbeing in 2023
Notable improvement made in year against
plan (based on RSM testing outcomes). Some
work in 2023 to improve factory audit
performance around despatch controls
Excellent progress made with continued focus
into 2023. Focus on SLT leadership development
saw increased in year performance ownership
and leadership of enterprise topics
Strong improvement in year. New CIDO hired
and Tech roadmap developed
Futures strategy clearly defined as set out in ARA
and leadership team put in place. Initial approach
to the brick slips investment strategy was reviewed
and will now benefit from progressive technology
to deliver greater range flexibility
Overall the assessment was 95% (i.e. 28.5% out of 30%)
Name
Chris McLeish
Objective area
Continue to drive our performance and culture
in health, safety, and sustainability
Assessment
(% of maximum) Assessment of completed objective
95%
Overall the assessment was 95% (i.e. 28.5% out of 30%)
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report continued
The Committee determined that overall performance equates to a 95% achievement for the non-financial element of the bonus (28.5% of
30% of maximum annual bonus opportunity). This has resulted in bonuses of £610,380 for the CEO and £410,671 for the CFO. In line with
the policy, one-third of the bonus will be deferred into shares for 3 years.
As set out above, no discretion was exercised by the Committee in relation to the outcome of the bonus awards. The bonus level at 98.5%
was a reflection of Ibstock’s delivery of strong performance with profit and cash materially ahead of the prior year.
LTIP vesting (audited)
2020 LTIP vesting
The three-year performance period for the awards granted on 14 April 2020 ended on 31 December 2022 in respect of the EPS and ROCE
measures and will end on 13 April 2023 for the relative TSR measure. As the performance period for the TSR element has not concluded,
vesting is based on an estimate undertaken to 31 January 2023. The Committee reviewed the performance against the three performance
conditions and determined an overall estimated vesting level of 24.8%.
2020 LTIP vesting
Measure
Relative TSR (estimated vesting)
Adjusted EPS*
ROCE (annual average)
Total
Weighting
(%)
33.3
33.3
33.3
100
Threshold
(%)
Maximum
(%)
Actual
(%)
Median Upper Quartile below Median
10%p.a.
3%p.a.
7.6%p.a.
15.2%p.a.
20.77%p.a.
18.76%p.a.
–
–
–
Vesting
(% of total award)
0%
24.8%
0%
24.8%
The 2022 EPS outcome was 22.9p which represented an annual compound growth of 7.6%p.a. from the 2019 base year figure. The 2022 figure
included an adjustment of 0.2p relating to the impact of the Atlas and Nostell major growth projects which were not anticipated at the time
that the LTIP was granted. The cost has been added back to ensure the outcome and targets are on a like-for-like basis.
The value of vested awards as set out in the single figure table is based on a vesting of 24.8% and uses the average three-month share price
to 31 December 2022 of 157.98p. The actual vesting value will be reported in next year’s Directors’ Remuneration Report.
2019 LTIP vesting
The CEO was granted an LTIP award on 3 May 2019 which was based on EPS and relative TSR. The three-year performance period for the
awards granted on 3 May 2019 ended on 31 December 2021 in respect of the EPS measure and on 2 May 2022 for the relative TSR measure.
The CFO was granted an award upon his recruitment in 2019 which was based on the same EPS condition, measured to 31 December 2021.
The TSR measure attached to his award had a performance period which ended on 12 August 2022.
Measure
Relative TSR (vesting outcome for the CEO)
Relative TSR (vesting outcome for the CFO)
Adjusted EPS*
Total
Weighting
(%)
50
50
50
100
Threshold
(%)
Maximum
(%)
Actual
(%)
Median Upper Quartile below Median
Median Upper Quartile below Median
<0%p.a.1
12%p.a.
6%p.a.
–
–
–
Vesting
(% of total award)
0%
0%
0%
0%
1 Earnings per share reduced between 2018 and 2021 due to the adverse impact of the pandemic on demand and Company performance.
Both the CEO’s and CFO’s awards lapsed as neither performance measure had been achieved.
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Ibstock Plc Annual Report and Accounts 2022 LTIP and ADBP awards granted during the year (audited)
LTIP awards granted in 2022
The table below sets out the details of the long-term incentive awards granted in the 2022 financial year where vesting will be determined
according to the achievement of performance conditions that will be tested in future reporting periods.
Name
Award type
Award size (% of
base salary)
Date of grant Number of Awards
Face value on the
date of grant1
Joe Hudson
(CEO)
Chris McLeish
(CFO)
LTIP
200% 14 April 2022
578,122
£991,479
LTIP
200% 14 April 2022
388,967
£667,078
Percentage of
award vesting at
threshold
performance
Percentage
Maximum
percentage of face
value that
could vest
Percentage
25
25
100
100
Performance
conditions
Relative TSR,
EPS*, average
ROCE* and ESG
Relative TSR,
EPS*, average
ROCE* and ESG
1 Share price by reference to which the awards were granted is £1.715 (closing share price on 13 April 2022).
The LTIP awards will vest on 14 April 2025 subject to the achievement of performance criteria – see below. Any vested awards will be subject
to a further two-year post vesting holding period.
Vesting of the 2022 awards are subject to the achievement of a challenging sliding scale of adjusted EPS* and ROCE* conditions over a three-year
performance period ending 31 December 2024, together with ESG related measures, and relative TSR against the FTSE 250 construction and
building materials companies measured over a three-year period from the date of grant. For each measure, 25% of the award vests for threshold
performance; 100% of the award vesting for maximum performance, with straight line vesting between these points. The performance schedule
for these measures is as follows:
Measure
Relative TSR
Adjusted EPS*
ROCE*
Carbon reduction (carbon produced per tonne of finished product)
Senior leader female representation (additional women) by 2024
New product development sales revenue coming from new and most
sustainable products
Weighting
30%
30%
20%
10%
5%
Maximum
Upper quartile
22.1p
Threshold
Median
16.9p
17.64% per annum 19.5% per annum
0.132
3
0.124
5
5%
16%
20%
1 Relative TSR will be measured from the date of grant over a three-year period (with one-month averaging of TSR used to derive the start and the end values for the calculation). Adjusted EPS
will be measured over three consecutive financial years. ROCE* performance will be taken to be the average of each of the three years of the performance period. Carbon reduction is
measured over the three years ending 31 December 2024 and senior women leaders and new product sales revenues will be measured using FY 2024 performance. A two-year post-vesting
holding period applies to 2022 LTIP awards.
ADBP awards granted in 2022
Under the terms of the Policy, part of the bonus earned for 2021 performance was delivered in the form of deferred bonus shares under the
ADBP. Details of the awards granted are set out in the table below.
Name
Joe Hudson (CEO)
Chris McLeish (CFO)
Award type
ADBP – deferred shares
ADBP – deferred shares
Award size
33.33% of 2021 bonus
33.33% of 2021 bonus
Date of grant
14 April 2022
14 April 2022
Shares awarded
91,325
61,447
Face value on the
date of grant1
£181,006
£121,788
1 Share price by reference to which the awards were granted is £1.982 being the average share price measured over the last 30 days of the financial year to which the bonus relates ending
31 December 2021.
The ADBP awards will vest on 14 April 2025, subject to continued employment.
Payments for loss of office (audited)
There were no payments for loss of office during the period under review.
Payments to past Directors (audited)
There were no payments to past Directors of the Company made during the year under review.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report continued
Directors’ share interests
Executive Directors’ incentive awards at 31 December 2022
The following table shows details of those options held by the Directors under the Company’s share plans as at 31 December 2022:
Joe Hudson
LTIP1
ADBP
Date of
Award
2019
2020
2021
2022
Interest at
1 January 2022
–
357,167
317,888
–
2019
2020
2022
–
21,571
–
Awarded
during
the year
–
–
–
578,122
–
–
91,325
Vested
during
the year
–
–
–
–
28,942
–
–
Sharesave
2021
10,227
–
–
Lapsed
during
the year
170,181
–
–
–
Exercised
during
the year
–
–
–
–
Interest at
31 December
2022
–
357,167
317,888
578,122
Market
price on
award date
2.0351
1.9100
2.1460
1.7150
Exercise/
option price
Nil cost
Nil cost
Nil cost
Nil cost
Expiry
date
03/05/29
14/04/30
25/03/31
14/04/32
–
–
–
–
–
–
–
–
28,942
21,571
91,325
2.0351
2.8500
1.982
Nil cost
Nil cost
Nil cost
03/05/29
14/04/30
14/04/32
10,227
N/A
1.76
N/A
Chris McLeish
LTIP1
Date of
Award
2019
Interest at
1 January 2022
–
240,314
213,886
–
2020
2021
2022
2020
2022
ADBP
5,829
–
–
61,447
Awarded
during
the year
–
–
–
388,967
Sharesave
2021
10,227
–
Vested
during
the year
–
Lapsed
during
the year
170,145
Exercised
during
the year
–
Interest at
31 December
2022
–
Market
price on
award date
2.2000
1.9100
2.1460
1.7150
Exercise/
option price
Nil cost
Nil cost
Nil cost
Nil cost
Expiry
date
12/08/29
14/04/30
25/03/31
14/04/32
240,314
213,886
388,967
5,829
61,447
2.8500
1.982
Nil cost
Nil cost
14/04/30
14/04/32
10,227
N/A
1.76
N/A
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Where not made available in the Company’s Annual Report and Accounts for the year ended 31 December 2022, performance conditions for LTIP awards can be found in the Annual Reports
and Accounts of the Company for the year corresponding with the respective year of grant.
Statement of Directors’ shareholdings and share interests (audited)
Directors’ share interests and, where applicable, achievement of shareholding requirements are set out below. The CEO and CFO, having joined the
Company in 2018 and 2019 respectively, are expected to build up over a five-year period and then subsequently hold a shareholding equivalent to
200% of base salary. The Committee recognise that neither Joe Hudson nor Chris McLeish have yet met their shareholding requirements, with Joe’s
five-year deadline ending January 2023 and Chris’ deadline to end August 2024. The Committee considered this, noting that both LTIP and ABP
payouts have been below the expectations of the Committee when they joined and that neither Director has sold any of their shareholding during
the year. As such, the Committee were comfortable that the Executive Directors will continue to build up their shareholding requirements and no
further action is required.
Shares held directly Other interests held
Shareholding
requirement
% salary
200%
200%
Current
shareholding1
% salary Beneficially owned2
20,558
50,551
37%
71%
Interests subject to
performance
conditions
1,253,177
843,167
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
10,000
10,000
17,500
20,000
10,000
10,000
N/A
N/A
N/A
N/A
N/A
N/A
Directors
Joe Hudson
Chris McLeish
Jonathan
Nicholls
Tracey Graham
Justin Read
Louis Eperjesi4
Claire Hawkings
Peju Adebajo
Interests not
subject to
performance
conditions
112,896
67,276
N/A
N/A
N/A
N/A
N/A
N/A
Vested but
unexercised
interests3
54,146
106,584
Outstanding
Sharesave awards
10,227
10,227
Shareholding
requirement met
No
No
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1 As at 31 December 2022 (unless stated otherwise). This was based on a closing share price of £1.548 at 31 December 2022 and the 2023 salaries of the Executive Directors. For Executive
Directors, this is the value of beneficially held shares plus the value of unvested deferred bonus awards on a net of tax basis plus vested but unexercised share awards on a net of tax basis.
Values are not calculated for Non-Executive Directors as they are not subject to shareholding requirements.
2 All shares held through nominees.
3 This represents those shares that vested under the buyout award made to Joe Hudson and Chris McLeish in 2018 and 2019 respectively but that have not been exercised.
4 Note that the holding is legally held by Louis Eperjesi’s spouse.
130
Ibstock Plc Annual Report and Accounts 2022 There were no changes in shareholdings from the year end to the date of this report.
Fees retained for external Non-Executive Directorships
Executive Directors may hold positions in other companies as Non-Executive Directors and retain the fees. The current Executive Directors do
not hold any external directorships in other listed companies.
Comparison of overall performance and pay
The graph below shows the value of £100 invested in the Company’s shares since listing compared with the FTSE 250 index and the FTSE 250
Construction and Building materials companies. The graph shows the Total Shareholder Return generated by both the movement in share value
and reinvestment over the same period of dividend income.
Total Shareholder Return
£100 invested in the Company’s shares since listing compared with the FTSE 250 index and the FTSE 250 Construction and Materials index
250
200
150
100
50
0
21 Oct 15
31 Dec 16
31 Dec 17
31 Dec 18
31 Dec 19
31 Dec 20
31 Dec 21
31 Dec 22
Ibstock
FTSE 250
FTSE 250 Construction and Materials
Source: Thomson Reuters Datastream
The Committee considers that the FTSE 250 is an appropriate index because the Company has been a member of this index since listing.
It should be noted that the Company listed on 27 October 2015 and therefore only has a listed share price for the period of 27 October 2015
to 31 December 2022. Additionally, the FTSE 250 Construction and Building materials index is shown as it reflects the sector in which the
Company operates.
Chief Executive Officer historic remuneration
The table below sets out the total remuneration delivered to the CEO over the period 26 February 2015 to 31 December 2022, valued using
the methodology applied to the single total figure of remuneration. There is no relevant data before 2015.
Wayne Sheppard1
Joe Hudson2
Chief Executive Officer
Single total figure
Annual bonus
payment level
achieved (% of
maximum
opportunity)
LTIP vesting level
achieved (% of
maximum
opportunity)
2015
£773,309
2016
£788,685
2017
£906,300
2018
£183,640
2018
£592,039
2019
£737,287
2020
2022
£539,524 £1,104,401 £1,352,897
2021
100%
33%
58%
32.5%
32.5%
33.1%
0.0%
95.5%
98.5%
N/A
N/A
N/A
38.5%
N/A
N/A
0%
0%
24.8%
1 Wayne Sheppard stepped down as CEO and Board Director on 4 April 2018 and his remuneration for 2018 reflects his time in the role of CEO.
2 Joe Hudson became CEO on 4 April 2018. His single figure only includes compensation paid to him in 2018 in his capacity as the CEO from 4 April to 31 December 2018 and does not include
compensation paid to him as CEO designate before 4 April 2018.
131
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report continued
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in the 2022 and 2021 financial years. All figures provided are taken from the
relevant Company’s accounts.
Profit distributed by way of dividend
Overall spend on employee pay including Executive Directors (continuing operations)
In addition, the Company completed a share buyback during the year totalling £30m.
2021 financial
year
£’m
16.8
105.9
2022 financial
year
£’m
33.7
125.4
change
%
101%
18%
Directors’ percentage change in remuneration versus employee group
The table below shows how the percentage change in each Director’s salary/fee, taxable benefits and annual bonus between 2020 to 2022 and
compares with the average percentage change in each of those components of pay for the UK-based employees of the Group as a whole.
In 2022 the Annual Bonus paid at near maximum levels, and the Group also paid a cost of living adjustment (COLA) to employees earning less
than £50,000. This explains the higher increase in employee salary compared to that in 2021.
Director
Jonathan Nicholls
Joe Hudson
Chris McLeish
Tracey Graham
Justin Read
Louis Eperjesi
Claire Hawkings1
Peju Adebajo2
All employees3
% increased/decreased in remuneration in
2020 compared with remuneration in 2019
% increased/decreased in remuneration in
2021 compared with remuneration in 2020
% increase/(decrease) in remuneration in
2022 compared with remuneration in 2021
(3.1)%
N/A
(3.1)% (5.5)% (100)%
N/A
7.3%
(3.1)%
(3.3)%
(3.1)%
N/A
(8.7)%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0% (100)%
Benefits
Salary
5.3%
N/A
5.3% (5.4)%
2.0%
5.3%
N/A
1.4%
N/A
5.3%
N/A
6.5%
N/A
19.7%
N/A
N/A
3.8%
3.9%
Bonus
N/A
100%
100%
N/A
N/A
N/A
N/A
N/A
100%
Benefits
Salary
N/A
3.0%
27.8%
6.8%
2.3%
6.8%
N/A
3.0%
N/A
2.7%
N/A
3.0%
N/A
8.4%
100%
N/A
10.3% (14.3%)
Bonus
N/A
12.4%
12.4%
N/A
N/A
N/A
N/A
N/A
(31.8%)4
1 Claire Hawkings was appointed Chair of the new ESG Committee in 2021 and so received an additional fee to reflect this additional responsibility.
2 Peju Adebajo was appointed to the Board in November 2021 and received a pro-rated amount of her annual fee in 2021, hence the large % increase in 2022.
3 Ibstock Plc as the Parent Company has no employees, therefore employees of the Group employed as full time equivalent for the three years have been used.
The Committee monitors the changes year-on-year between our Director pay and the average employee increase.
Statement of voting at the General Meeting
The current Policy was put to a binding vote at the AGM on 21 April 2022. The ARR was also put to an advisory vote at the same AGM.
The voting outcomes are set out in the table below.
AGM resolution
Annual Report on Remuneration (2022)
Directors’ Remuneration Policy (2022)
Votes for
297,214,775
317,532,159
% of votes cast
Votes against
94% 20,366,650
1,851,842
99%
% of votes cast
Total votes cast
(excluding withheld)
6% 317,581,425
1% 319,384,001
Votes withheld
1,860,687
58,111
Advisors to the Remuneration Committee
In September 2022, the Remuneration Committee undertook a competitive selection process and has engaged the services of FIT Remuneration
Consultants LLP (FIT) as its independent remuneration advisor. FIT only advises on executive pay matters and the Committee is satisfied that
no conflicts of interest exist. In the period since their appointment, FIT has advised the Remuneration Committee on year end disclosures,
market practice and investor views, and on performance measures and targets for 2023. Prior to FIT’s appointment the Committee had
taken advice from PricewaterhouseCoopers LLP (PwC). PwC advised the Committee on the Policy for Executive Directors and members of
the Executive team. PwC also provided the Company with tax and accountancy advice during the year. The Committee is satisfied that
no conflict of interest exists or existed in the provision of PWC’s services.
Both FIT and PwC are members of the Remuneration Consultants Group and abide by the voluntary Code of Conduct to ensure objective and
independent advice is given to remuneration committees. Fees of £19,458 + VAT were paid to FIT and £41,333 + VAT to PwC for advice in 2022
(2021: PwC £81,750) and were charged on a fixed fee basis.
132
Ibstock Plc Annual Report and Accounts 2022 Implementation of our Remuneration Policy for 2023 financial year
Our proposed implementation of the Remuneration Policy for the 2023 financial year is set out below.
Year
+1
+2
+3
+4
+5
Key elements and time period
Overview of Remuneration Policy implementation for 2023
Base salary
Pension
Benefits
Annual and
Deferred
Bonus Plan
(ADBP)
Cash
Deferred award
Salaries for the Executive Directors from will increase
by 5% from 1 April 2023 as follows:
• Joe Hudson: £520,527
• Chris McLeish: £350,217
The increases are in the context of strong individual
performances in their respective roles and a wider
workforce increase of 6.4%.
The pension contribution for the CEO has been reduced
from 20% of salary to 10% of gross base salary since
1 January 2023. A 10% of gross base salary contribution
applies for Chris McLeish which is in line with the wider
workforce pension arrangements.
Standard benefits will be provided, including a company
car and/or a cash alternative. Both Directors also receive
private health cover and death in service cover.
For 2023, the maximum bonus opportunity will be 125%
of salary for Joe Hudson and Chris McLeish and one-third
of any bonus earned will be deferred in shares which will
vest after three years.
The performance conditions and their weightings for the
2023 annual bonus are as follows:
• Adjusted EBITDA* based on full year performance (50%).
• Adjusted operating cash flow* (20%).
• Non-financial objectives: defined operational/strategic
objectives (30%).
• The Committee has set appropriately stretching
financial targets and in doing so has considered the
internal plan (budget), current market consensus and
the prevailing macroeconomic environment. Maximum
payments under these measures will require significant
outperformance of internal and external expectations.
• The Committee is of the opinion that given the
commercial sensitivity arising in relation to the detailed
financial targets used for the annual bonus, disclosing
precise targets for the ADBP in advance would not be
in shareholders’ interests. Actual targets, performance
achieved and awards made will be published at the end of
the relevant performance period so shareholders can fully
assess the basis for any payouts under the annual bonus.
133
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Remuneration Report continued
Year
+1
+2
+3
+4
+5
Key elements and time period
Overview of Remuneration Policy implementation for 2023
LTIP
Non-
Executive
Directors’
fees
• The Committee has consider the prevailing share price
and believes no adjustment is required to the policy
grant level. Accordingly, in 2023 the LTIP award will
be 150% of salary for Joe Hudson and Chris McLeish.
• The performance conditions for awards will be Adjusted
Earnings per Share (EPS)* (25%), relative Total Shareholder
Return (TSR) (30%), ROCE* (25%) and ESG (20%), each
assessed over a three-year performance period commencing
on 1 January 2023.
• TSR performance will be measured against the constituents
of the FTSE 250 excluding investment trusts and financial
services companies – with threshold vesting for median
performance against the index and full vesting for upper
quartile. This peer group is a more robust one in the event
of delistings over the performance period.
• EPS* – Performance is measured over three consecutive
financial years with threshold vesting (25%) requiring
EPS of 17p in FY 2025; stretch vesting (70%) requiring 19p;
and, full vesting for 24.4p or higher. These figures are
set against challenging market conditions and therefore
delivery requires strong performance in current market
conditions for vesting to occur.
• ROCE* – Performance will be taken to be the average
of each of the three years of the performance period
(2023-2025) with threshold performance at 17.4%
and maximum performance of 19.23% with straight
line vesting between these points. These targets are
set against what are expected to be challenging market
conditions during the initial part of the measurement
period. The targets require a material improvement
during the three year period, requiring return levels in
2025 in line with the very strong reported performance
levels achieved in the 2022 year.
• ESG – Carbon Reduction (10%): Threshold vesting for
0.131 tonnes of C02 per tonne of finished production
and 0.123 tonnes for maximum vesting. Diversity (5%):
Threshold vesting requires 32% of the senior management
reports in FY 2025 to be female for threshold vesting and
40% for full vesting. New Product Development (5%):
Threshold 18% of FY 2025 sales revenue to come from
new and sustainable products and 22% for full vesting.
• A two-year holding period will apply to the 2023 LTIP
awards following vesting.
The 2023 fee levels will increase by 5% (2022: 4%) in line with
those for Executive Directors (with effect from 1 April 2023):
• Chairman – £199,805
• Board fee (including Committee membership) – £57,089
• Committee Chair (per Committee) – £11,193
• Senior Independent Director – £10,920
I hope that you find this report to be clear about our remuneration practices and that you will be supportive at the coming AGM.
Tracey Graham
Chair of the Remuneration Committee
7 March 2023
134
Ibstock Plc Annual Report and Accounts 2022 Directors’ Report
Directors’ Report
The Directors’ Report for the year ended
31 December 2022 comprises pages 92
to 137 together with the sections of the
Annual Report incorporated by reference.
The Corporate Governance Statement on
pages 92 to 114 is incorporated into the
Directors’ Report by reference. As permitted
by legislation, some of the matters required
to be included in the Directors’ Report have
instead been included in the Strategic
Report on pages 2 to 91. The Strategic
Report includes an indication of future
likely developments in the Company,
details of important events and the
Company’s business model and strategy.
The Strategic Report and the Directors’ Report
together form the Management Report for
the purposes of the Disclosure Guidance and
Transparency Rules (DTR) 4.1.8R.
Principal activity
The principal activity of the Group is
the manufacture and supply of clay and
concrete building products and solutions
primarily to customers in the UK residential
construction sector. Details of the Group’s
principal subsidiaries can be found in Note 30
to the financial statements.
Results and dividend
The results for the year can be found in the
Financial Review on pages 70 to 74 and these
are incorporated by reference into this report.
Going Concern and Viability Statement
Information relating to the Going Concern
and Viability Statement is set out on pages
90 and 91 of the Strategic Report and is
incorporated by reference into this report.
Research and development
Information relating to research and
development is set out in the Our
Strategy section on page 30 of the
Strategic Report and is incorporated
by reference into this report.
Greenhouse gas emissions
Information relating to the greenhouse
gas emissions of the Company is set out
on page 86 of the Strategic Report and
is incorporated by reference into this report.
Board of Directors and their interests
The names and biographies of the Directors
as at the date of this report are shown on
pages 94 and 95. The interests of the
Directors holding office at the end of the year
in the issued Ordinary Share capital of the
Company and any interests in Ibstock’s share
incentive plans are given in the Directors’
Remuneration Report on page 130.
Powers of the Directors
The powers given to the Directors are
contained in the Company’s Articles
of Association and are subject to relevant
legislation and, in certain circumstances,
including in relation to the issuing or buying
back by the Company of its shares, subject
to authority being given to the Directors by
shareholders in general meeting. The Articles
of Association also govern the appointment
and replacement of Directors.
Re-election of Directors
All Directors will retire and submit themselves
for election or re-election, annually, by
shareholders at the AGM. Specific reasons why
each Director’s contribution is, and continues
to be, important to the Company’s long-term
sustainable success are set out in the Notice.
Amendment of the Articles of Association
The Articles of Association may be amended
in accordance with the provisions of the
Companies Act 2006 by way of a special
resolution of the Company’s shareholders.
Share capital and control
Details of the Company’s share capital
are contained in Note 25 to the Group
consolidated financial statements. The
rights attaching to the shares are set out
in the Articles of Association.
The Company has established a trust in
connection with the Group’s Share Incentive
Plan (the SIP), which holds Ordinary Shares
on trust for the benefit of employees of the
Group. The Trustees of the SIP trust may vote
in respect of Ibstock shares held in the SIP
trust, but only as instructed by participants in
the SIP in accordance with the SIP trust deed
and rules. The Trustees will not otherwise vote
in respect of shares held in the SIP trust.
The Trustee of the Employee Benefit Trust
(the Trust), which is used to purchase shares
on behalf of the Company as described in
Note 25, has the power to vote or not vote,
at its absolute discretion, in respect of any
shares in the Company held unallocated
in the Trust. However, in accordance with
good practice, the Trustee adopts a policy
of not voting in respect of such shares.
In accordance with Listing Rule 9.8.4(c),
the Company notes that the Trustee has a
dividend waiver in place in respect of shares
which are the beneficial property of the Trust.
Purchase of own shares
At the AGM held on 21 April 2022,
shareholders passed a special resolution in
accordance with the Companies Act 2006
to authorise the Company to purchase in
the market a maximum of 40,963,159
Ordinary Shares, representing 10% of the
Company’s issued Ordinary Share capital
as at the latest practicable date prior to
publication of the AGM circular.
As announced on 10 May 2022, the Company
entered into a Share Buyback Programme of
an aggregated value of £30million in order to
return value to shareholders, in line with the
Group’s capital allocation policy. The Buyback
Programme concluded on 21 October 2022,
with a total of 16,791,470 shares purchased,
representing a nominal value of £167,914.70
equivalent to 4.1% of the issued capital
of the Company. All 16,791,470 shares
purchased are held in treasury, exclusive
of voting and dividend rights.
The Directors are seeking renewal of
the authority at the forthcoming
AGM, in accordance with relevant
institutional guidelines.
Post balance sheet events
On 7 March 2023 a final dividend of
5.5p per Ibstock Plc Ordinary Share was
proposed to be paid on 12 May 2023 to
shareholders of record as at 21 April 2023.
There were no further post balance sheet
events. See Note 33 on page 192.
Re-appointment of Auditors
It will be proposed that Deloitte LLP be
re-appointed as the Company’s auditor
at the Annual General Meeting to be
held on 27 April 2023.
135
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Directors’ Report continued
Substantial shareholdings
As at 31 December 2022, the Company had been notified, in accordance with the Disclosure Guidance and Transparency Rules, of the following
interests in its Ordinary Share capital.
Name of shareholder
Lansdowne Partners
Vulcan Value Partners, LLC
Aviva plc and its subsidiaries
J O Hambro Capital Management Limited
Ameriprise Financial, Inc.
Franklin Templeton Management
Odey Asset Management LLP
Norges Bank
In the period from 31 December 2022 to
the date of this report there have been no
notifications that have been made to the
Company pursuant to DTR 5. Information
provided to the Company under the Disclosure
Guidance and Transparency Rules is publicly
available via the regulatory information
service and on the Company’s website.
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, albeit the
facilities do not necessarily require mandatory
prepayment on a change of control.
During the previous year the Company
completed the refinancing of its £215 million
Revolving Credit Facility (RCF), diversifying
its credit sources at attractive rates, whilst
simultaneously achieving a significant
extension of the Group’s debt maturity profile.
The existing facility was replaced with the
issuance of £100 million of private placement
notes from Pricoa Private Capital, with
maturities of between 7 and 12 years at an
average total cost of funds of 2.19%, and a
£125 million RCF provided by a syndicate of
five banks. The RCF is for an initial four year
tenure, with a one-year extension option,
at a margin of between 1.60% and 2.60%,
and also includes an additional £50 million
uncommitted accordion.
The RCF extension option was exercised in
the current year at the same margin range
and underlying terms.
In the event of a takeover or other change
of control (usually excluding an internal
reorganisation), outstanding awards under
the Group’s incentive plans vest and become
exercisable (including Annual & Deferred
Bonus Plan (ADBP) awards, SMSP share
136
Shares disclosed
39,263,142
32,135,541
23,253,224
20,367,209
20,408,608
17,674,986
12,085,210
12,218,525
awards and Long Term Incentive Awards
(LTIP) awards), to the extent any performance
conditions (if applicable) have been met, and
subject to time pro-rating (if applicable)
unless determined otherwise by the Board
in its discretion, in accordance with the rules
of the plans. In certain circumstances, the
Board may decide (with the agreement of the
acquiring company) that awards will instead
be cancelled in exchange for equivalent
awards over shares in the acquiring company.
Directors’ and Officers’ liability
insurance and indemnities
The Company has purchased and maintains
appropriate insurance cover in respect of
Directors’ and Officers’ liabilities. The Company
has also entered into qualifying third party
indemnity arrangements for the benefit of all
its Directors, in a form and scope which comply
with the requirements of the Companies Act
2006. These indemnities came into force on
22 October 2015 and remain in force as at the
date of this Annual Report.
Financial instruments
Details of the financial instruments used
by the Group are set out in Note 23 to the
Group consolidated financial statements,
which are incorporated into this Directors’
Report by reference. The Group’s financial
risk management objectives and policies
are included in the risk management section
on page 60 and in Note 23 of the Group
consolidated financial statements.
Political donations
No political donations were made during the
year ended 31 December 2022 (2021: £nil).
Annual General Meeting 2023
The AGM will be held on 27 April 2023 at 11:00
a.m. at the I-Studio in Hatton Garden, London.
The Notice convening the meeting together
with explanatory notes on the resolutions to
be proposed and full details of the deadlines
for appointing proxies is contained in a circular
which will be circulated to all shareholders at
least 20 working days before such meeting
together with this report.
%
9.99
8.18
5.68
4.98
4.96
4.32
2.99
2.98
Nature
Indirect
Indirect
Indirect and Direct
Indirect
Indirect and Direct
Indirect
Direct
Direct
Employees
The average number of employees within
the Group is shown in Note 7 to the Group
financial statements.
The Group is an equal opportunities
employer and considers applications
for employment from disabled persons
(having regard to their particular aptitudes
and abilities) and encourages and assists,
wherever practicable, the recruitment,
training, career development and promotion
of disabled people and the retention of
and appropriate training for those who
become disabled during their employment.
Employee engagement
Due to our commitment to transparent and
best practice reporting, we have included our
section on employee engagement on page
51 of the Strategic Report as the Board
considers these disclosures to be of strategic
importance and is therefore incorporated
into the Directors’ Report by cross-reference.
The Stakeholder engagement section on
page 44 demonstrates how the Directors
have engaged with employees and how
they have had regard to employee interests
and the effect of that regard including the
principal decisions by the Company during
the financial year.
The Company is also keen to encourage
greater employee involvement in the Group’s
performance through share ownership. To help
align employees’ interests with the success
of the Company’s performance, we operate
an HMRC approved all-employee plan, the
Ibstock plc Sharesave Scheme (Sharesave),
which is offered to UK employees. To further
increase employee ownership, each employee
of the Company below ELT and SLT level
received an award of 500 shares under the
Senior Managers Share Plan, as the Fire Up
Ibstock Share Grant, further details of which
can be found on page 21.
Ibstock Plc Annual Report and Accounts 2022 Business relationships
The Stakeholders section on pages 44 to 45
and Section 172(1) Statement demonstrate
how the Directors have had regard to its
engagement with suppliers, customers and
others and how the effect of that regard had
influenced the principal decisions taken by
the Company during the financial year. The
Board considers this disclosure to be of strategic
importance. That section is incorporated into
the Directors’ Report by cross-reference.
Directors’ responsibilities
The Directors are responsible for preparing
the Annual Report in accordance with
applicable law and regulations.
Company law requires the Directors
to prepare financial statements for
each financial year. Under that law
the Directors are required to prepare the
Group consolidated financial statements in
accordance with United Kingdom adopted
international accounting standards and
International Financial Reporting Standards
(IFRSs) as issued by the International Accounting
Standards Board (IASB) and have elected
to prepare the Parent Company financial
statements in accordance with United
Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting
Standards), including FRS 102, the Financial
Reporting Standard applicable in the United
Kingdom and the Republic of Ireland, and
applicable law. Under company law the
Directors must not approve the Annual
Report unless they are satisfied that they
give a true and fair view of the state of
affairs of the Group and Company and of
the profit or loss of the Group for that year.
In preparing the Parent Company financial
statements, the Directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and accounting estimates
that are reasonable and prudent;
• state whether applicable United Kingdom
Accounting Standards have been
followed, subject to any material
departures disclosed and explained
in the financial statements; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
In preparing the Group consolidated financial
statements, International Accounting Standard
No.1 requires Directors to:
• properly select and apply accounting policies;
• present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information;
• provide additional disclosures when
compliance with the specific requirements
in IFRS is insufficient to enable users to
understand the impact of particular
transactions, other events and conditions
on the entity’s financial position and
financial performance; and
• make an assessment of the Group’s
ability to continue as a going concern
and prepare the financial statements
on the going concern basis unless it
is inappropriate to presume that the
Group will continue in business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group’s and
Company’s transactions and to disclose with
reasonable accuracy at any time the financial
position of the Group and Company and to
enable them to ensure that the financial
statements comply with the Companies Act
2006 and Article 4 of the IAS Regulation.
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.
Website publication
The Directors are responsible for ensuring
the Annual Report, including the Financial
Statements, is made available on a website.
Financial statements are published on the
Company’s website in accordance with
legislation in the United Kingdom governing
the preparation and dissemination of financial
statements, which may vary from legislation
in other jurisdictions. The maintenance
and integrity of the Company’s website
(www.ibstockplc.co.uk) is the responsibility
of the Directors. The Directors’ responsibility
also extends to the ongoing integrity of the
Financial Statements contained therein.
Disclosure of information to auditors
Each person who is a Director of the
Company as at the date of approval
of this Report confirms that:
(a) so far as the Director is aware, there is
no relevant audit information of which the
Company’s auditors are not aware; and
(b) the Director has taken all the steps that
he or she ought to have taken as a Director
in order to make him/herself aware of any
relevant audit information and to establish
that the Company’s auditors are aware of
that information.
Directors’ Responsibility Statement
The Directors in office as at 31 December
2022 and whose names and functions are
given on pages 94 and 95 confirm that to
the best of their knowledge:
• the Financial Statements, prepared in
accordance with the relevant financial
reporting framework, give a true and fair
view of the assets, liabilities, financial
position and profit or loss of the Group and
Company and the undertakings included
in the consolidation taken as a whole; and
• the Strategic Report and Directors’ Report
include a fair review of the development
and performance of the business and
the position of the Group and Company
and the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face.
The Directors consider that this Annual
Report, taken as a whole, is fair, balanced
and understandable and provides the
information necessary for shareholders
to assess the Group’s position and
performance, business and strategy.
The Directors’ Report (pages 92 to 137)
has been approved and is signed by order
of the Board by:
Becky Parker
Group Company Secretary
7 March 2023
Registered Office: Leicester Road, Ibstock,
Leicestershire, LE67 6HS
Company registration number 09760850
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Report on the audit of
the financial statements
1. Opinion
In our opinion:
• the financial statements of Ibstock plc (the ‘parent company’) and
its subsidiaries (the ‘group’) give a true and fair view of the state of
the group’s and of the parent company’s affairs as at 31 December
2022 and of the group’s profit for the year then ended;
• the group financial statements have been properly prepared
in accordance with United Kingdom adopted international
accounting standards and International Financial Reporting
Standards (IFRSs) as issued by the International Accounting
Standards Board (IASB);
• the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting
Standard 102 “The Financial Reporting Standard applicable
in the UK and Republic of Ireland”; and
• the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
• the consolidated income statement;
• the consolidated statement of comprehensive income;
• the consolidated and parent company balance sheets;
• the consolidated and parent company statements of changes in equity;
• the consolidated cash flow statement;
• the related notes 1 to 33 to the consolidated financial statements; and
• the related notes 1 to 12 to the parent company financial statements.
The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and
United Kingdom adopted international accounting standards and
IFRSs as issued by the IASB. 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 FRS 102 “The Financial Reporting Standard
applicable in the UK and Republic of Ireland” (United Kingdom
Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the auditor’s responsibilities
for the audit of the financial statements section of our report.
We are independent of the group and the parent company in
accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial
Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to
listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. The non-audit
services provided to the group and parent company for the year are
disclosed in note 6 to the financial statements. We confirm that we
have not provided any non-audit services prohibited by the FRC’s
Ethical Standard to the group or the parent company.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Revenue recognition- customer rebates; and
• Classification of exceptional items
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
Scoping
The materiality that we used for the group financial statements was £4.8 million which was determined on the basis
of 4.6% of profit before tax.
The group is organised into two divisions, within which there are seven trading components. We performed full scope
audit procedures over four of the components and analytical review procedures over the remainder.
The full scope procedures covered 95% of revenue, 100% of profit before tax and 95% of net assets.
Significant changes
in our approach
All work was completed by the group audit engagement team.
In the current year we have changed the benchmark used in determining materiality. Due to the uncertainty caused
by COVID-19, revenue was used as the benchmark of materiality for the prior two years. As the level of uncertainty
has significantly reduced in the current year, we have reverted back to profit before tax as the basis for determining
our materiality as we consider this to be the most relevant benchmark and was utilised prior to Covid-19.
We have also revised our approach to determining and scoping of components to better align to the internal structure
of the group.
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Ibstock Plc Annual Report and Accounts 2022
4. 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’s and
parent company’s ability to continue to adopt the going concern
basis of accounting included:
• assessing the reasonableness of assumptions applied by directors
in preparing their forecasts;
• assessing the historical accuracy of forecasts prepared by directors;
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’s and 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.
In relation to the reporting on how the group has applied the UK
Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
• considering the impact of climate change risks and commitments
on the expected cash flows in the outlook period;
Our responsibilities and the responsibilities of the directors with respect
to going concern are described in the relevant sections of this report.
• assessing the level of headroom available to the group from its
loan facilities and evaluated the risk of covenants being breached;
• challenging management’s reasonable worst-case analysis and
whether it is appropriately plausible but severe, and performed
sensitivity analysis on key variables;
• evaluating the additional external funding facilities accessible to
the group;
• obtaining and performing analysis on post year end results and
benchmarked this against management’s forecasts; and
• evaluating whether the disclosures in respect of going concern
within the financial statements meet the requirements of IAS 1
Presentation of financial statements.
5.1. Revenue recognition- customer rebates
5. 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. These matters included 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.
Key audit matter
description
The group has recognised revenue for the year ended 31 December 2022 of £512.9 million (2021: £408.7 million).
The group enters into various agreements whereby it offers customers retrospective rebates. The rebate agreements
are often complex in nature, with different types of rebates being offered to each customer, with the nature of those
rebates differing across different product ranges. Due to the level of complexity involved, we have determined that
there is a potential for fraud risk through possible manipulation of this balance.
The key audit matter in relation to customer rebates is focussed on the completeness and occurrence of the reduction
against revenue in respect of rebates for customers in Brick and Supreme components.
How the scope
of our audit
responded to the
key audit matter
Further information on rebates can be found in the group’s summary of significant accounting policies in note 1 on
pages 155 to 156.
We have performed the following procedures to address this key audit matter:
• obtained an understanding of the relevant controls over the revenue recognition process to address the key audit matter;
• performed a year-on-year analysis of revenue and rebates to understand any material changes in the rebate
provision at a customer level;
• selected a sample of customer rebate agreements, inspected the terms and dates, and recalculated selected rebates
in accordance with the contract terms, including evaluating the sales data on which the rebate calculations are based;
• identified the largest customers in each of Brick and Supreme components and requested written confirmation from
a sample of the largest customers to confirm that the rebate provided by the Group is the full rebate due to the
customer as at 31 December 2022;
• assessed the completeness of rebates by evaluating credit notes raised during 2022 and post year-end, assessing
whether payments had been made to customers where we had been informed that no rebate agreement was in
place and made enquiries of management as to the existence of any other rebate arrangements; and
Key observations
• agreed a sample of rebates to settlement post year-end.
Based on the work performed as outlined above we concur with management that revenue recognition in relation
to customer rebates is appropriate for the year ended 31 December 2022.
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5.2. Classification of exceptional items
Key audit matter
description
The group has identified £6.3 million of exceptional items in the group consolidated income statement
(2021: £5.2 million) which are adjusted by management in order to eliminate factors which they consider
to distort year-on-year comparisons.
The presentation of certain income and costs as exceptional is not defined by IFRS and therefore significant
judgement is required in determining the appropriate classification in line with guidance from the FRC and ESMA.
The presentation and consistency of costs and income presented within adjusting items is a key determinant in
assessing the quality of the group’s underlying earnings. The adjusting items presented separately include items
which by virtue of their size and/or nature, do not reflect the group’s ongoing trading performance.
We therefore identified this as a possible risk of fraud and a key audit matter as a possible risk of inappropriate
manipulation of items, which are not exceptional, are labelled as such in the financial statements.
Further information on exceptional items can be found in the Audit Committee Report on pages 111 to 112, the
Group’s summary of significant accounting policies in note 1 on page 156, note 2 (critical accounting judgements
and key sources of estimation uncertainty) on page 157, note 3 (alternative performance measures) on pages 157
to 160 and note 5 (exceptional items) on pages 163 to 164.
We have performed the following procedures to address this key audit matter:
• obtained an understanding of the management review controls over the classification of items as exceptional;
• challenged the classification and consistency of items management proposed to include as exceptional against
FRC and ESMA guidance, including an assessment of the completeness of items classified as exceptional,
• agreed a sample of these items to supporting documentation to assess the appropriateness and accuracy of these items;
• assessed the adequacy of the disclosures to explain the nature of the exceptional items; and
• for all significant adjustments recorded in calculating underlying profits, discussed the appropriateness of these
items and disclosure considerations with the Audit Committee.
How the scope
of our audit
responded to the
key audit matter
Key observations
Based on the work performed as outlined above we are satisfied that the classification of items as exceptional is
appropriate for the year ended 31 December 2022.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of
a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and
in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
Group financial statements
£4.8 million (2021: £4.2 million)
Approximately 4.6% of profit before tax
(2021: 1.0% of revenue)
Profit before tax is considered to be the most relevant
benchmark to the users of the financial statements.
In the current year we have changed the benchmark
used in determining materiality. Due to the uncertainty
caused by COVID-19, revenue was used as the
benchmark of materiality for the prior two years.
As the level of uncertainty has significantly reduced
in the current year, we have reverted back to profit
before tax as the basis for determining our materiality.
Company financial statements
£3.1 million (2021: £3.4 million)
3.0% of net assets (2021: 3.0% of net assets)
Net assets are considered to be an appropriate
benchmark for the Company given that it is
predominantly a holding Company.
140
Ibstock Plc Annual Report and Accounts 2022 Profit before tax £104.8m
Profit before tax
● Group materiality
Group materiality £4.8m
Component materiality
range £1.2m to £4.2m
Audit Committee
reporting threshold
£0.24m
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the financial statements as a whole.
Performance
materiality
Basis and rationale
for determining
performance
materiality
Group financial statements
70% (2021: 70%) of group materiality
Company financial statements
70% (2021: 70%) of Company materiality
In determining performance materiality, we considered the following factors:
• Our risk assessment, including our assessment of the group’s overall control environment;
• No significant changes in the business; and
• Our past experience of the audit, which has indicated a low number of corrected and uncorrected misstatements
identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report
to the Committee all audit differences in excess of £240,000
(2021: £210,000), as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters
that we identified when assessing the overall presentation
of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
The group operates in the United Kingdom. Our group audit
was scoped by obtaining an understanding of the group and
its environment, including group-wide controls, and assessing
the risks of material misstatement at a group level.
For the purposes of the current year audit, we have also revised
our approach over determination and scoping of components to
better align to the internal structure of the group. The materiality
and scope of work for each component has been assessed based
upon its significance and contributions to the group. Audit procedures
were then performed based upon the level of scope identified.
Scope A:
Full scope audit procedures were performed on the Ibstock
Brick, Forticrete, Supreme and Anderton components of the
group. Component materiality was £4.2 million for Ibstock Brick,
£1.2 million for Forticrete, £1.7 million for Supreme and £1.3 million
for Anderton. Our audit work for Ibstock Brick, Forticrete, Supreme
and Anderton was executed at levels of materiality applicable
to each individual entity which were lower than the respective
component materiality, in accordance with local GAAP. At the
group level, we tested the consolidation process.
Scope B:
Analytical review procedures for remaining components have
been performed to group materiality.
All work has been performed by the group engagement team.
The full scope procedures covered 95% of revenue, 100%
of profit before tax and 95% of net assets.
5%
0%
5%
Revenue
Profit before tax
Net assets
95%
100%
95%
Full audit scope
Review at group level
Full audit scope
Review at group level
Full audit scope
Review at group level
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Independent Auditor’s Report to the members of Ibstock Plc continued
7.2. Our consideration of the control environment
The group uses JD Edwards as the main accounting system across
all of its components, ResourceLink for payroll and Hubble as a
financial reporting tool.
With the assistance of our IT specialists, we assessed the IT control
environment and tested general IT controls of the JD Edwards system
and performed limited procedures over ResourceLink and Hubble in
relation to passwords and privileged access. All deficiencies identified
from our procedures were fully mitigated.
We had planned to take controls reliance approach over material streams
of revenue and payroll business processes, however, due to deficiencies
identified we were unable to do so. We also identified deficiencies in
the current year audit, over other business processes. In response to
the deficiencies identified, we revisited our risk assessment and altered
the nature and extent of our planned testing, including re-evaluating
the appropriateness of our group performance materiality, tailoring our
risk-focused procedures and revising the adequacy of substantive testing
across these areas. As described in the Audit Committee Report on
page 113, they will review management’s actions and monitor progress
made against these control deficiencies identified from our audit.
7.3. Our consideration of climate related risks
Throughout the course of the year, the group has taken a number of
steps to understand impact of climate change on its operations which
has included performing a risk assessment to consider various matters
and scenarios as well as the likelihood of events occurring and their
potential financial impact over the short, medium and longer term.
The most significant future impact on the group’s operations are
explained on page 63 within principal risks and uncertainties.
As disclosed within the “Delivering against our ESG Strategy” section
on page 46, the group plans to take specific actions in addressing
climate change and have set specific metrices and targets to measure
progress against carbon reduction, biodiversity and water efficiencies.
During the year, the group has engaged with external experts to
continue to build on their Task Force on Climate Related Financial
Disclosures (“TCFD”) recommendations from previous year.
Our audit procedures on climate change have included:
• we have inquired with those charged with governance (TCWG),
management, and others;
• we have reviewed internal and external communications
surrounding climate change such as sustainability reports, group’s
risk assessments, press releases and climate-related disclosures;
• we have understood climate may affect group’s business and
operating environment and its financial reporting, including,
but not limited to:
– group-specific climate initiatives and commitments;
– Internal and external risk factors affected by climate-related
matters including key performance indicators, regulatory
environment, governance structure;
– group’s assessment of the implications of climate-related
matters on the financial statements and control environment.
• we have assessed the impact of climate related commitments
made in the latest sustainability report and the impact on
accounting for restoration provisions.
• we have evaluated director’s going concern and viability assessment
as to whether this appropriately considered climate related risks and
the impact on cash flows.
• we also challenged directors as to the impact on the useful
economic lives of certain classes of assets in relation to
sustainability commitments being made in the public domain.
• together with our internal specialists we have read the climate-
related disclosures included within other information of the
annual report and assessed group on the consistency with
the financial statements, with the disclosure requirements
and knowledge obtained during the audit. Specifically, we
have reviewed disclosures in the financial statements in
notes 13 and 20 to clarify how climate related risks have
been considered in reaching accounting conclusions.
8. Other information
The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s
report thereon. The directors are responsible for the other information
contained within the annual report.
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.
142
Ibstock Plc Annual Report and Accounts 2022 9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, 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.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered 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.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect
of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
• the nature of the industry and sector, control environment
and business performance including the design of the group’s
remuneration policies, key drivers for directors’ remuneration,
bonus levels and performance targets;
• results of our enquiries of management, internal audit, the
directors and the audit committee about their own identification
and assessment of the risks of irregularities, including those that
are specific to the group’s sector;
• any matters we identified having obtained and reviewed the
group’s documentation of their policies and procedures relating to:
– identifying, evaluating and complying with laws and regulations
and whether they were aware of any instances of non-compliance;
– detecting and responding to the risks of fraud and whether they
have knowledge of any actual, suspected or alleged fraud;
– the internal controls established to mitigate risks of fraud or
non-compliance with laws and regulations;
• the matters discussed among the audit engagement team and
relevant internal specialists, including tax, valuations, pensions, IT,
and industry specialists regarding how and where fraud might occur
in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities
and incentives that may exist within the organisation for fraud
and identified the greatest potential for fraud in the following
areas: revenue recognition, specifically customer rebates, and
the presentation of exceptional items. In common with all
audits under ISAs (UK), we are also required to perform specific
procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory
frameworks that the group operates in, focusing on provisions of those
laws and regulations that had a direct effect on the determination of
material amounts and disclosures in the financial statements. The key
laws and regulations we considered in this context included the UK
Companies Act, Listing Rules, pensions legislation and tax legislation.
In addition, we considered provisions of other laws and regulations
that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the group’s ability to
operate or to avoid a material penalty. These included employment
law, occupational health and safety regulations, the environment Act,
the Water Framework Directive, the Waste Directive, the Environment
Protection Act and the Energy Efficiency Directive.
11.2. Audit response to risks identified
As a result of performing the above, we identified revenue recognition,
specifically customer rebates, and the presentation of exceptional
items related to the potential risk of fraud. The key audit matters
section of our report explains the matters in more detail and also
describes the specific procedures we performed in response to those
key audit matters.
In addition to the above, our procedures to respond to risks identified
included the following:
• reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct
effect on the financial statements;
• enquiring of management, the audit committee and external
legal counsel concerning actual and potential litigation and
claims; performing analytical procedures to identify any unusual
or unexpected relationships that may indicate risks of material
misstatement due to fraud;
• reading minutes of meetings of those charged with governance,
reviewing internal audit reports and reviewing correspondence
with HMRC; and
• in addressing the risk of fraud through management override of
controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making
accounting estimates are indicative of a potential bias; and
evaluating the business rationale of any significant transactions
that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members including
internal specialists, and remained alert to any indications of fraud
or non-compliance with laws and regulations throughout the audit.
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Report on other legal and
regulatory requirements
• 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
12. Opinions on other matters prescribed by the Companies Act 2006
with the accounting records and returns.
In our opinion the part of the directors’ remuneration report to be
audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course
of the audit, we have not identified any material misstatements in
the strategic report or the directors’ report.
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in
relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the group’s compliance
with the provisions of the UK Corporate Governance Code specified
for our review.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements and our knowledge obtained during the audit:
• the directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 150;
• the directors’ explanation as to its assessment of the group’s
prospects, the period this assessment covers and why the period
is appropriate set out on page 90;
• the directors’ statement on fair, balanced and understandable
set out on page 93;
• the board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 93;
• the section of the annual report that describes the review of
effectiveness of risk management and internal control systems
set out on page 114; and
• the section describing the work of the audit committee set out
on page 111.
We have nothing to report in respect of these matters
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our
opinion certain disclosures of directors’ remuneration have not been
made or the part of the directors’ remuneration report to be audited
is not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the audit committee, we were
appointed by the Board of Directors on 24 May 2017 to audit the
financial statements for the year ending 31 December 2017 and
subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of
the firm is 6 years, covering the years ending 31 December 2017
to 31 December 2022.
15.2. Consistency of the audit report with the additional report
to the audit committee
Our audit opinion is consistent with the additional report to the audit
committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the 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
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 company and the company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure
Guidance and Transparency Rule (DTR) 4.1.14R, these financial
statements form part of the European Single Electronic Format
(ESEF) prepared Annual Financial Report filed on the National
Storage Mechanism of the UK FCA in accordance with the ESEF
Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report
provides no assurance over whether the annual financial report
has been prepared using the single electronic format specified
in the ESEF RTS.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
• we have not received all the information and explanations we
require for our audit; or
Lee Highton FCA
(Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
7 March 2023
144
Ibstock Plc Annual Report and Accounts 2022 Consolidated income statement
Revenue
Cost of sales before exceptional items
Exceptional (cost of)/income from sales1
Cost of sales
Gross profit
Distribution costs
Administrative expenses before exceptional items
Exceptional administrative items1
Administrative expenses
(Loss)/profit on disposal of property, plant and equipment before exceptional items
Exceptional profit on disposal of property, plant and equipment1
Total profit on disposal of property, plant and equipment
Other income
Other expenses
Operating profit
Finance costs
Finance income
Net finance cost
Profit before taxation
Taxation
Profit for the financial year
Profit/(loss) attributable to:
Owners of the Company
Non-controlling interest
Earnings per share
Basic
Diluted
All amounts relate to continuing operations.
The notes on pages 150 to 192 form an integral part of these consolidated financial statements.
Year ended
31 December
2022
£’000
512,886
(315,841)
(680)
(316,521)
196,365
(47,961)
(49,624)
–
(49,624)
(417)
6,958
6,541
2,630
(524)
107,427
(4,553)
1,890
(2,663)
Year ended
31 December
2021
£’000
408,656
(267,662)
3,495
(264,167)
144,489
(38,829)
(41,511)
(287)
(41,798)
1,638
2,022
3,660
2,524
(112)
69,934
(5,831)
839
(4,992)
Notes
4
5
6
5
5
6
8
9
10
104,764
(17,884)
86,880
64,942
(33,129)
31,813
86,908
(28)
31,813
–
Notes
pence per share
pence per share
11
11
21.6
21.5
7.8
7.7
145
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Consolidated statement of comprehensive income
Profit for the financial year
Other comprehensive income/(expense):
Items that may be reclassified subsequently to profit or loss
Change in fair value of cash flow hedges2
Related tax movements2
Items that will not be reclassified subsequently to profit or loss
Remeasurement of post-employment benefit assets and obligations2
Related tax movements2
Other comprehensive (expense)/income for the year, net of tax
Total comprehensive income for the year, net of tax
Total comprehensive income/(expense) attributable to:
Owners of the Company
Non-controlling interest
The notes on pages 150 to 192 form an integral part of these consolidated financial statements.
Non-GAAP measure
Reconciliation of adjusted EBITDA1 to operating profit for the financial year for continuing operations
Operating profit
Add back exceptional items1 impacting operating profit
Add back depreciation and amortisation
Adjusted EBITDA1
Year ended
31 December
2022
£’000
86,880
Year ended
31 December
2021
£’000
31,813
Notes
23
10
21
10
641
(149)
492
(44,581)
11,147
(33,434)
(32,942)
53,938
(74)
14
(60)
12,862
(2,525)
10,337
10,277
42,090
53,966
(28)
42,090
–
Year ended
31 December
2022
£’000
107,427
(6,278)
38,518
139,667
Year ended
31 December
2021
£’000
69,934
(5,230)
38,349
103,053
Notes
5
6
1 Alternative performance measures are described in Note 3 and exceptional items are described in Note 5 to the consolidated financial statements.
2 Impacting retained earnings.
146
Ibstock Plc Annual Report and Accounts 2022 Consolidated balance sheet
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Derivative financial instruments
Post-employment benefit asset
Current assets
Inventories
Current tax recoverable
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Assets held for sale
Total assets
Current liabilities
Trade and other payables
Derivative financial instrument
Borrowings
Lease liabilities
Provisions
Net current assets
Total assets less current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings
Other reserves
Equity attributable to owners of the Company
Non-controlling interest
Total Equity
At
31 December
2022
£’000
At
31 December
2021
£’000
Notes
12
13
27
23
21
14
15
23
16
18
23
19
27
20
19
27
22
20
24
25
25
90,242
409,091
31,478
116
15,194
546,121
94,275
1,717
65,935
451
54,283
216,661
–
762,782
(120,003)
–
(436)
(7,690)
(1,613)
(129,742)
86,919
633,040
(99,769)
(25,414)
(84,349)
(7,299)
(216,831)
(346,573)
94,625
375,800
25,114
–
57,754
553,293
72,821
3,199
64,756
–
61,199
201,975
875
756,143
(103,132)
(74)
(333)
(6,860)
(1,869)
(112,268)
90,582
643,875
(99,738)
(20,324)
(92,352)
(8,232)
(220,646)
(332,914)
416,209
423,229
4,096
4,458
807,894
(400,290)
416,158
51
416,209
4,096
4,458
785,609
(370,934)
423,229
–
423,229
The notes on pages 150 to 192 form an integral part of these consolidated financial statements.
These financial statements were approved by the Board and authorised for issue on 07 March 2023. They were signed on its behalf by:
J Hudson
Director
C McLeish
Director
147
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Consolidated statement of changes in equity
Balance at 1 January 2022
Profit for the year
Other comprehensive (expense)/income
Total comprehensive income/(expense)
for the year
Transactions with owners:
Share based payments
Current tax on share based payment
Deferred tax on share based payment
Equity dividends paid
Purchase of own shares
Issue of own shares held on exercise of
share options
Acquisition of subsidiary non-controlling
interest
At 31 December 2022
Balance at 1 January 2021
Profit for the year
Other comprehensive income/(expense)
Total comprehensive income/(expense)
for the year
Transactions with owners:
Share based payments
Deferred tax on share based payment
Equity dividends paid
Purchase of own shares
Issue of share capital on exercise of
share options
Issue of own shares held on exercise of
share options
At 31 December 2021
Notes
26
22
32
25
Notes
26
22
32
25
Share
capital
£’000
4,096
–
–
Share
premium
£’000
4,458
–
–
Retained
earnings
£’000
Other reserves
(See Note 25)
£’000
Total equity
attributable to
owners
£’000
Non-controlling
interest
£’000
785,609
86,908
(33,434)
(370,934)
–
492
423,229
86,908
(32,942)
–
(28)
–
Total equity
£’000
423,229
86,880
(32,942)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
53,474
492
53,966
(28)
53,938
2,547
1
116
(33,701)
–
–
–
–
–
(30,000)
2,547
1
116
(33,701)
(30,000)
(152)
152
–
–
–
–
–
–
–
2,547
1
116
(33,701)
(30,000)
–
–
4,096
–
4,458
–
807,894
–
(400,290)
–
416,158
79
51
79
416,209
Share
capital
£’000
4,096
–
–
Share
premium
£’000
4,333
–
–
Retained
earnings
£’000
759,483
31,813
10,351
Other reserve
(See Note 25)
£’000
(370,041)
–
(74)
Total equity
attributable to
owners
£’000
397,871
31,813
10,277
Non-controlling
interest
£’000
–
–
–
–
–
–
–
–
–
–
4,096
–
–
–
–
–
125
–
4,458
42,164
(74)
42,090
890
35
(16,780)
–
–
–
–
(1,309)
890
35
(16,780)
(1,309)
–
–
125
(183)
785,609
490
(370,934)
307
423,229
–
–
–
–
–
–
–
–
Total equity
£’000
397,871
31,813
10,277
42,090
890
35
(16,780)
(1,309)
125
307
423,229
The notes on pages 150 to 192 form an integral part of these consolidated financial statements.
148
Ibstock Plc Annual Report and Accounts 2022
Consolidated cash flow statement
Cash flow from operating activities
Cash generated from operations (Note 28)
Interest paid
Other interest paid – lease liabilities
Tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Proceeds from sale of property, plant and equipment – exceptional
Purchase of intangible assets
Settlement of deferred consideration
Payment for acquisition of subsidiary undertaking, net of cash acquired
Interest received
Net cash outflow from investing activities
Cash flows from financing activities
Dividends paid (Note 32)
Drawdown of borrowings
Repayment of borrowings
Debt issue costs
Repayment of lease liabilities
Proceeds from issuance of equity shares
Purchase of own shares by Employee Benefit Trust
Cash outflow from purchase of shares
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at end of the year
The notes on pages 150 to 192 form an integral part of these consolidated financial statements.
Reconciliation of changes in cash and cash equivalents to movement in net debt1
Net (decrease)/increase in cash and cash equivalents
Proceeds from borrowings
Repayment of borrowings
Non-cash debt movement
Effect of foreign exchange rate changes
Movement in net debt1
Net debt1 at start of year
Net debt1 at end of year (Note 3)
Comprising:
Cash and cash equivalents
Short-term borrowings (Note 19)
Long-term borrowings (Note 19)
1 Alternative performance measures are described in Note 3 to the consolidated financial statements.
Year ended
31 December
2022
£’000
Year ended
31 December
2021
£’000
137,765
(2,888)
(1,274)
(11,699)
121,904
(58,354)
50
7,833
(5,573)
–
(959)
124
(56,879)
(33,701)
–
–
(259)
(8,010)
–
–
(30,000)
(71,970)
(6,945)
61,199
29
54,283
100,497
(2,928)
(1,107)
(9,960)
86,502
(24,960)
874
2,882
(6,402)
(413)
–
–
(28,019)
(16,780)
170,000
(160,000)
(1,563)
(7,575)
432
(1,309)
–
(16,795)
41,688
19,552
(41)
61,199
Year ended
31 December
2022
£’000
(6,945)
–
–
(134)
29
(7,050)
(38,872)
(45,922)
Year ended
31 December
2021
£’000
41,688
(170,000)
160,000
(1,335)
(41)
30,312
(69,184)
(38,872)
54,283
(436)
(99,769)
(45,922)
61,199
(333)
(99,738)
(38,872)
149
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements
1. Summary of significant accounting policies
Authorisation of financial statements
The consolidated financial statements of Ibstock Plc, which has
a premium listing on the London Stock Exchange, for the year ended
31 December 2022 were authorised for issue in accordance with
a resolution of the Directors on 7 March 2023. The balance sheet
was signed on behalf of the Board by J Hudson and C McLeish.
Ibstock Plc is a public company limited by shares, which is
incorporated in the United Kingdom and registered in England.
The registered office is Leicester Road, Ibstock, Leicestershire
LE67 6HS and the company registration number is 09760850.
The principal activities of the Company and its subsidiaries
(the ‘Group’) and the nature of the Group’s operations are set
out in the Strategic Report on pages 2 to 91.
Basis of preparation
The consolidated financial statements of Ibstock Plc for the year
ended 31 December 2022 have been prepared in accordance with
International Accounting Standards (IAS) and International Financial
Reporting Standards (IFRS) and related interpretations as issued
by the IASB and IFRS as adopted by the UK. They are prepared
on the basis of all IFRS accounting standards and interpretations
that are mandatory for the period ended 31 December 2022 and
in accordance with the Companies Act 2006. The comparative
financial information has also been prepared on this basis.
These consolidated financial statements are prepared on a going
concern basis, under the historical cost convention. The consolidated
financial statements are presented in Sterling and all values are
rounded to the nearest thousand, except where otherwise indicated.
The significant accounting policies are set out below.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of Ibstock Plc and its subsidiaries as at 31 December
2022. The financial statements of subsidiaries are prepared for
the same reporting period as the Parent Company, using consistent
accounting policies. All intra-Group balances, transactions, income
and expenses and profit and losses resulting from intra-Group
transactions have been eliminated in full. Subsidiaries are consolidated
from the date on which the Group obtains control and cease to be
consolidated from the date on which the Group no longer retains
control. Details of all the subsidiaries of the Group are given in Note 30.
The subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity.
Going concern
Despite the macroeconomic downturn and the resulting decrease
in activity levels across the UK construction industry in quarter
four of 2022, there are initial positive external market indicators
and consequently reduced levels of uncertainty looking forward.
Management does not believe that the going concern basis of
preparation represents a significant judgement.
The Group’s financial planning and forecasting process consists of
a budget for the next year followed by a medium-term projection.
The Directors have reviewed and robustly challenged the assumptions
about future trading performance, operational and capital expenditure
and debt requirements within these forecasts including the Group’s
liquidity and covenant forecasts, and stress testing within their
going concern assessment.
In arriving at their conclusion on going concern, the Directors
have given due consideration to whether the funding and liquidity
resources above are sufficient to accommodate the principal risks
and uncertainties faced by the Group, particularly those relating
to economic conditions and operational disruption. The Strategic
Report sets out in more detail the Group’s approach and risk
management framework.
Group forecasts have been prepared which reflect both actual
conditions and estimates of the future reflecting macroeconomic and
industry-wide projections, as well as matters specific to the Group.
During the final quarter of the 2021 year, the Group completed the
refinancing of its March 2023 £215 million Revolving Credit Facility
(RCF), replacing the existing facility with the issuance of £100 million
of private placement notes with maturities of between seven and
12 years and a £125 million RCF for an initial four-year tenor, with a
one-year extension option. In addition, in the final quarter of 2022,
the Group enacted the one-year extension of the £125 million RCF,
extending maturity to November 2026 on similar terms to the original
agreement. At 31 December 2022 the RCF was undrawn.
Covenants under the Group’s RCF and private placement notes require
leverage of no more than three times net debt to adjusted EBITDA1,
and interest cover of no less than four times, tested bi-annually
at each reporting date with reference to the previous 12 months.
At 31 December 2022 covenant requirements were met with
significant headroom.
The key uncertainty faced by the Group is the industry demand for
its products in light of macroeconomic factors. Accordingly, the Group
has modelled financial scenarios which see reduction in the industry
demands for its products thereby stress testing the Group’s resilience.
For each scenario, cash flow and covenant compliance forecasts have
been prepared. In the most severe but plausible scenario industry
demand for Clay and Concrete products in 2023 is projected to be
around 34% and 30% lower respectively than 2022, which is modestly
worse than the sales reduction seen in 2020 during the height of the
pandemic, recovering to around 10% lower than 2022 in 2024.
In addition, the Group has prepared a reverse stress test to evaluate
the industry demand reduction at which it would be likely to breach
the debt covenants, before any further mitigating actions were taken.
This test indicates that, at a reduction of 45% in sales volumes in
2023 and 40% in the first half of 2024 versus 2022 levels, the Group
would be at risk of breaching its covenants.
In the severe but plausible scenario, the Group has sufficient liquidity
headroom against its covenants, with covenant headroom expressed
as a percentage of annual adjusted EBITDA1 being in excess of 45%.
The Directors consider this to be a highly unlikely scenario, and in
the event of an anticipated covenant breach, the Group would seek
to take further steps to mitigate, including the disposal of valuable
land and building assets and restructuring steps to reduce the fixed
cost base of the Group.
Having taken account of the various scenarios modelled, and in light
of the mitigations available to the Group, the Directors are satisfied
that the Group has sufficient resources to continue in operation for
a period of not less than 12 months from the date of this report.
150
Ibstock Plc Annual Report and Accounts 2022 1. Summary of significant accounting policies continued
Accordingly, the consolidated financial information has been
prepared on a going concern basis.
New or amended accounting standards
In the current year, the Group has applied the below amendments
to IFRS Standards and Interpretations issued by the Board that are
effective for an annual period that begins on or after 1 January 2022.
Their adoption has not had any material impact on the disclosures
or on the amounts reported in these financial statements.
• Amendments to IFRS 3 – Reference to the conceptual framework;
• Amendments to IAS 16 – Property, plant and equipment –
Proceeds before intended use;
• Amendments to IAS 37 – Onerous contracts – Cost of Fulfilling
a Contract; and
• Annual improvement to IFRS standards 2018-2020 cycle.
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
Future accounting standards
At the date of authorisation of these financial statements, the Group
has not applied the following new and revised IFRS Standards that
have been issued but are not yet effective:
• Amendment to IAS 1 – Classification of liabilities as current
or non-current;
• IFRS 17 – Insurance contracts;
• Amendment to IAS 1 and IFRS Practice statement 2 –
Disclosure of accounting policies;
• Amendments to IAS8 – Definition of accounting estimates;
• Amendments to IAS 12 – Deferred tax related to assets
and liabilities arising from a single transaction; and
• Amendments to IFRS10 and IAS28 Sale or contribution of
assets between an investor and its associate or joint venture.
The Directors do not expect that the adoption of the Standards listed
above will have a material impact on the financial statements of the
Group in the current or future reporting periods.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-makers
(CODMs). The CODMs, who are responsible for allocating resources
and assessing performance of the operating segments, have been
identified as the Chief Executive Officer and Chief Financial Officer
of the Group.
The CODMs review the key profit measure, Adjusted EBITDA1, as
defined in Note 3, and consider the Group’s reportable segments
to be Clay and Concrete.
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”).
The consolidated financial statements are presented in Sterling (£),
which is the Group’s presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where items are remeasured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign currencies are
recognised in the income statement, except when deferred in other
comprehensive income as qualifying cash flow hedges and qualifying
net investment hedges. Foreign exchange gains and losses that relate
to borrowings and cash and cash equivalents are presented in the
income statement within net finance costs. All other foreign exchange
gains and losses are presented within the income statement.
Property, plant and equipment
Property, plant and equipment is stated at the cost to the Group
less depreciation. The cost of property, plant and equipment includes
directly attributable costs. Costs incurred to gain access to mineral
reserves (typically stripping costs) are capitalised and depreciated
over the life of the quarry, which is based on the estimated tonnes of
raw material to be extracted from the reserves. Management assesses
the Group’s assets separating their cost into (i) the local statutory
books’ historical cost and (ii) the associated fair value uplift, which
arose on the acquisition of the Group in February 2015.
Details of cost and accumulated depreciation are included in Note 13.
Depreciation is provided on the cost of all assets (except assets
in the course of construction and land), so as to write off the cost,
less residual value, on a straight line basis over the expected useful
economic life of the assets concerned, as follows:
Asset classification
Land
Freehold buildings
Plant, machinery and equipment
Mineral reserves
Useful life
Not depreciated
20 – 40 years
5 – 40 years
Amortised on a usage basis
Exploration expenditure relates to the initial search for mineral
deposits with economic potential and is not capitalised. Evaluation
expenditure relates to a detailed assessment of deposits or other
projects that have been identified as having economic potential and
in obtaining permissions to extract clay. Capitalisation of evaluation
expenditure within ‘Mineral reserves’ commences when there is a high
degree of confidence that the Group will determine that a project is
commercially viable, i.e., the project will provide a satisfactory return
relative to its perceived risks, and therefore it is considered probable
that future economic benefits will flow to the Group.
Mineral reserves may be declared for an undeveloped project before
its commercial viability has been fully determined. Evaluation costs
may continue to be capitalised during the period between declaration
of reserves and approval to extract clay as further work is undertaken
in order to refine the development case to maximise the project’s returns.
The carrying values of property, plant and equipment are reviewed
for impairment if events or changes in circumstances indicate the
carrying value may not be recoverable. The carrying values of
capitalised evaluation expenditure are reviewed for impairment
by management.
Useful lives and residual values are reviewed at each balance sheet
date and revised where expectations are significantly different from
previous estimates. In such cases, the depreciation charge for current
and future periods is adjusted accordingly.
151
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Notes to the consolidated financial statements continued
1. Summary of significant accounting policies continued
Intangible assets
Separately acquired brands and non-contractual customer
relationships are shown at historical cost. Brands and customer
relationships have a finite useful life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the
straight line method to allocate the cost of brands and customer
relationships over their estimated useful lives as follows:
Useful life
Asset classification
Brands
10 – 50 years
Customer contracts and relationships 10 – 20 years
Licences include carbon allowances the Group purchased, which are
held at cost and surrendered, as required, to meet carbon emissions
in excess of the Group’s granted allowances under the UK Emission
Trading Scheme (ETS). The carbon allowances are recognised as
intangible assets and, in the absence of clear guidance from the
accounting standards, classified as non-current assets. The costs
to settle the forecast emissions in the year in excess of granted
allowances are recognised on a straight line basis across the year.
For implementation costs in a cloud service contract which are distinct
from the related software, the costs are recognised as an expense as
incurred (as the service is received) unless it gives rise to a separate
intangible asset. The costs of services provided by the cloud vendor,
which are not distinct from access to the software are recognised
as an expense over the period of access to the software.
Goodwill is initially recognised and measured as the excess of
consideration transferred over the fair value of the net assets
acquired in a business combination. Goodwill is not amortised
but is reviewed for impairment at least annually. For the purpose
of impairment testing, goodwill is allocated to the Group’s cash-
generating unit (or groups of cash-generating units) expected to
benefit from the synergies of the combination. Cash-generating
units 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 cash-generating unit is less than
the carrying amount of the unit, the impairment loss 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 in the unit. Any impairment
loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a cash-generating unit, the attributable amount
of goodwill is included in the determination of the profit or loss
on disposal. There has been no impairment of goodwill in
the current or prior year.
For further details, see Note 12.
Impairment of non-financial assets
Assets that are subject to amortisation or depreciation, such as
brands and non-contractual customer relationships and property,
plant and equipment, are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying
amount may not be recoverable.
An impairment loss is recognised immediately within the income
statement for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs of disposal and value-in-use.
152
For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are largely independent cash inflows
(cash-generating units). Prior impairments of non-financial assets
(other than goodwill) are reviewed for possible reversal at each
reporting date at which point they are immediately recognised
within the income statement.
For assets excluding goodwill, an assessment is made at each
reporting date whether there is any indication that previously
recognised impairment losses may no longer exist or may have
decreased. If such indication exists, the Group estimates the asset’s or
CGU’s recoverable amount. A previously recognised impairment loss is
reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment
was recognised. The reversal is limited so that the carrying amount
of the asset does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognised for the asset in prior years.
As the Group has no assets carried at revalued amounts, such reversal
is recognised in the consolidated income statement.
The group, where appropriate, separately applies the requirements of
IAS 36 to land and to buildings on sites owned considering the individual
recoverable values of each and the reliability in estimating these.
For further details, see Note 17.
Leases
The Group as lessee
The Group leases various offices, warehouses, factories, mobile plant
and cars. Rental contracts are typically made for fixed periods of three
to 12 years, but may have extension options, as described below, and
contain a range of terms and conditions. The lease agreements do not
impose any covenants, but leased assets may not be used as security
for borrowing purposes. Management also reviews other contracts
entered into during the period to assess whether they may contain
embedded leases. Such contracts are, or contain, a lease if it conveys
the right to control the use of a specified asset (e.g. plant, property
and equipment) over a period in exchange for consideration.
Leases are recognised as right-of-use assets and a corresponding
liability at the date on which the leased asset is available for use
by the Group. Each lease payment is allocated between the liability
and finance cost.
The finance cost is charged to the income statement over the lease
period, so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. The right-of-use
asset is depreciated over the shorter of the asset’s useful life and
the lease term on a straight line basis.
Assets and liabilities arising from a lease are initially measured on
a present value basis. Lease liabilities include the net present value
of the following lease payments:
• fixed payments (including in-substance fixed payments), less any
incentives receivable;
• variable lease payments that are based on an index or rate;
• the exercise price of a purchase option, if the lessee is reasonably
certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option.
Ibstock Plc Annual Report and Accounts 2022
1. Summary of significant accounting policies continued
The lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be determined, the lessee’s incremental
borrowing rate is used, being the rate that the lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value
in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date
less any lease incentives received;
• any initial direct costs; and
• restoration costs.
Payments associated with short-term leases and leases of low-value
assets are recognised on a straight line basis as an expense within
the income statement. Short-term leases are leases with a term of
12 months or less. Low-value assets generally comprise IT equipment.
(i) Variable lease payments
Some property leases contain variable lease payment terms that are
linked to the extraction of raw materials. For individual properties,
a percentage of the lease payments are on the basis of the variable
payment terms.
Variable lease payments that are dependent upon the level of
extraction are recognised within the income statement in the
period in which the extraction which triggers that payment occurs.
The value of variable lease payments and the impact of movements
in the Group’s levels of extraction are insignificant in current and
prior periods.
(ii) Extension and termination options
Extension and termination options are included in a small number
of property leases across the Group. The majority of such options
are exercisable only by the Group and not by the respective lessor.
In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise
an extension option, or not exercise a termination option.
Extension options (or periods after termination options) are only
included in the future cash outflows if the lease is reasonably certain
to be extended (or not terminated). This assessment is reviewed if
a significant event or a significant change in circumstances occurs
which affects this assessment and that is within the control of the
lessee. During the current financial period, the financial effect of
revising lease terms to reflect the effect of exercising extension
and termination options was insignificant.
The Group as lessor
The Group enters into lease agreements as a lessor with respect
to some of its surplus properties.
Leases for which the Group is a lessor are classified as either
finance or operating leases. Whenever the terms of the lease
transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease.
All other leases are classified as operating leases.
When 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 a finance or 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 relevant lease. Initial direct costs incurred
in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and amortised on a straight line
basis over the lease term.
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost includes all costs incurred in bringing each product to its present
location and condition. Raw materials, consumables and goods for
resale are recognised on a weighted average cost basis, while work
in progress and finished goods are held at direct cost plus an
appropriate proportion of production overheads. Net realisable
value is the estimated selling price in the ordinary course of business,
less applicable variable selling expenses.
The Group records provisions for obsolete and slow-moving inventory
on the basis of historical sales values and volumes, respectively.
These inventory provisions are updated regularly to reflect
management’s most recent data.
Investments and other financial assets
Classification
The Group classifies its financial assets in the following
measurement categories:
• those to be measured subsequently at fair value (either through
other comprehensive income (OCI) or through profit or loss); and
• those to be measured at amortised cost.
The classification depends on the entity’s business model for
managing the financial assets and the contractual terms of
the cash flows.
The Group reclassifies debt investments when and only when
its business model for managing those assets changes.
Recognition and derecognition
Purchases and sales of financial assets are recognised on trade date,
the date on which the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash
flows from the financial assets have expired or have been transferred
and the Group has transferred substantially all the risks and rewards
of ownership.
On derecognition of a financial asset measured at amortised cost,
the difference between the asset’s carrying amount and the sum
of the consideration received and receivable is recognised within
the income statement.
Measurement
At initial recognition, the Group measures a financial asset at its fair
value plus, in the case of a financial asset not at fair value through
profit or loss (FVPL), transaction costs that are directly attributable
to the acquisition of the financial asset.
Forward energy contracts
The Group has a long-standing practice of locking in prices for gas
and electricity used in its production activities and achieves this by
committing to a certain volume of consumption in future months
which creates a contractual commitment and secures a certain price.
The Group takes delivery of the energy and so the Directors believe
it meets the requirements of the own use scope exemption in IFRS 9
Financial Instruments. As such, these contracts are not held on the
balance sheet at fair value but rather treated as executory contracts
and energy purchases are accounted for in the period in which the
gas and electricity is consumed, at the contracted price.
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1. Summary of significant accounting policies continued
Derivatives and hedging
The Group enters into derivative transactions to manage its exposure
to foreign exchange rate risks on major capital expenditure projects.
Derivatives are recognised initially at fair value on the date the
contract is entered into and subsequently remeasured to their fair
value at each reporting date.
A derivative with a positive fair value is recognised as a financial asset,
whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements
unless the Group has both the legal right and intention to offset.
A derivative is presented as a non-current asset or a non-current
liability if the remaining maturity of the instrument is more than
12 months and is not expected to be realised or settled within
12 months. Other derivatives are presented as current assets or
current liabilities.
The Group designates certain derivatives as hedging instruments
in respect of foreign currency risk.
These derivatives are designated and effective as hedging
instruments, in which event the timing of the transfer within the
balance sheet or recognition in the income statement depends on
the nature of the hedge relationship.
Hedges of foreign exchange risk on firm commitments are accounted
for as cash flow hedges. At the inception of the hedge relationship, the
Group documents the relationship between the hedging instrument
and the hedged item, along with its risk management objectives and
its strategy for undertaking various hedge transactions. The Group
documents whether the hedging instrument is effective in offsetting
the hedged risk, by confirming that:
• there is an economic relationship between hedged items and
the hedging instrument;
• the effect of credit risk does not dominate the value changes
that result from that economic relationship; and
• the planned ratio of hedge: hedge item is the same as the actual
ratio of hedge: hedge item.
The effective portion of changes in the fair value of derivatives that are
designated as cash flow hedges is recognised in other comprehensive
income and accumulated under the cash flow hedging reserve. Any gain
or loss relating to the ineffective portion of the hedge is recognised
immediately in profit or loss. Amounts previously recognised in other
comprehensive income and accumulated in equity are reclassified to
the related capital expenditure project within the balance sheet in the
periods when the underlying hedged item affects the balance sheet.
The Group discontinues hedge accounting should the hedge
relationship cease to meet the qualifying criteria, or when the
hedging instrument expires, is sold, terminated or exercised.
Debt instruments
Subsequent measurement of debt instruments depends on the
Group’s business model for managing the asset and the cash flow
characteristics of the asset. The measurement category into which
the Group classifies its debt instruments is amortised cost.
Assets that are held for collection of contractual cash flows where
those cash flows represent solely payments of principal and interest
are measured at amortised cost. Interest income from these financial
assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised
directly in the income statement.
Impairment
The Group assesses on a forward-looking basis the expected credit
losses associated with its debt instruments carried at amortised cost
and fair value through other comprehensive income. The impairment
methodology applied depends on whether there has been a significant
increase in credit risk. For trade receivables, the Group applies the
simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the
receivables, see Note 23 for further details.
No significant impairment losses were recorded in the current or prior
year. Should they arise, impairment losses are presented as a separate
line item in the Group consolidated income statement.
Trade and other receivables
Trade receivables are amounts due from customers for merchandise
sold in the ordinary course of business. Collection is expected in one year
or less and trade receivables are classified as current assets accordingly.
Trade receivables are measured at amortised cost using the effective
interest method, less provision for impairment. In the current and prior
periods, the Group did not engage in material factoring arrangements.
Cash and cash equivalents
In the consolidated balance sheet, cash and cash equivalents
reflects cash in hand at the balance sheet date, deposits held
at call with banks, other short-term highly liquid investments
with original maturities of three months or less.
Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities where payment is due
within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method.
In the current and prior periods, the Group did not engage in material
reverse factoring arrangements.
Borrowings
The Group’s borrowings comprise a revolving credit facility (RCF)
and private placement loan notes. Borrowings are recognised initially
at fair value, net of directly attributable transaction costs incurred.
All other costs are expensed as incurred. Borrowings are subsequently
carried at amortised cost.
Borrowings are classified as current liabilities unless the Group has
an unconditional right to defer settlement of the liability for at least
12 months after the balance sheet date.
Finance cost on borrowings is treated as an expense in the income
statement, with the exception of interest costs incurred on the
financing of major projects, which are capitalised within property,
plant and equipment, where material. There were no borrowing
costs capitalised during the current or prior years.
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Ibstock Plc Annual Report and Accounts 2022 1. Summary of significant accounting policies continued
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee
is deferred until the draw-down occurs.
To the extent there is evidence that it is probable that some or all of
the facility will be drawn down, the fee is capitalised as a prepayment
for liquidity services and amortised over the period of the facility to
which it relates. Fees relating to short-term variations in financing
conditions and terms are recognised in profit or loss in the period
in which they are incurred.
An exchange of debt instruments with substantially different terms
is accounted for as an extinguishment of the original financial liability
and the recognition of a new financial liability. Similarly, a substantial
modification of the terms of an existing financial liability is accounted
for as an extinguishment of the original financial liability and the
recognition of a new financial liability.
Employee benefits
The Group operates various post-employment schemes, including
both defined benefit and defined contribution pension plans.
Pensions
A defined contribution plan is a pension plan under which the Group
pays fixed contributions into a separate entity. The Group has no
legal or constructive obligations to pay further contributions if
the fund does not hold sufficient assets to pay all employees the
benefits relating to employee service in the current and prior periods.
For defined contribution plans, the Group pays contributions
to publicly or privately administered pension insurance plans on
a mandatory, contractual or voluntary basis. The Group has no
further payment obligations once the contributions have been paid.
The Group recognises contributions payable to defined contribution
plans in exchange for employee services in employee benefit expense.
A defined benefit plan is a pension plan that is not a defined
contribution plan. Typically defined benefit plans define an
amount of pension benefit that an employee will receive on
retirement, usually dependent on one or more factors such
as age, years of service and compensation.
The amount recognised in the balance sheet in respect of defined
benefit pension plans is the fair value of plan assets less the present
value of the defined benefit obligation at the end of the reporting
period. The defined benefit obligation is calculated annually by
independent actuaries using the projected unit credit method.
The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates
of high-quality corporate bonds that are denominated in the currency
in which the benefits will be paid, and that have terms to maturity
approximating to the terms of the related pension obligation.
Where defined benefit schemes have a surplus, the surplus is
recognised if future economic benefits are available to the entity in
the form of a reduction in the future contributions or a right to refund.
Past-service costs are recognised immediately in the income statement.
The net interest cost is calculated by applying the discount rate to
the net balance of the defined benefit obligation and the fair value
of plan assets, taking account of any changes in the defined benefit
asset/liability during the period as a result of contributions and
benefit payments. This cost is included in interest expense in the
income statement.
When the benefits of a defined benefit plan are changed or when
the plan is curtailed, the change in the present value of the defined
benefit obligation arising that relates to the plan amendment or
curtailment is recognised immediately within the income statement
on its occurrence. Before determining the past service cost (including
curtailment gains or losses) or a gain or loss on settlement, the net
defined benefit obligation (asset) is remeasured using the current fair
value of plan assets and current actuarial assumptions (including
current market interest rates and other current market prices) reflecting
the benefits offered under the plan before the plan amendment,
curtailment or settlement.
Costs of managing the plan assets, remeasurement gains and losses
arising from experience adjustments and changes in actuarial
assumptions are charged or credited in other comprehensive
income in the period in which they arise.
Provisions
Provisions are recognised when: the Group has a present legal or
constructive obligation as a result of past events; it is probable that
an outflow of resources will be required to settle the obligation;
and the amount has been reliably estimated. Provisions are not
recognised for future operating losses.
Provisions are measured at the present value of the risk-assessed
expenditures expected to be required to settle the obligation using a
pre-tax risk-free discount rate to reflect current market assessments of
the time value of money. The increase in the provision due to passage
of time is recognised as interest expense.
The restoration provision is to fund future obligations at a number of
sites that the Group is associated with and where the Group has any
constructive obligation to restore once it has fully utilised the site.
Provisions for dilapidations are recognised on a lease-by-lease basis
and are based on the Group’s discounted best estimate of the likely
committed cash outflows.
Revenue
Revenue represents the fair value of consideration receivable
for goods supplied by the Group, exclusive of local sales tax and
trade discounts and after eliminating sales within the Group. All of
revenue is attributable to the principal activities of the Group being
the manufacture and sale of concrete products, clay facing bricks
and associated special shaped and fabricated clay products.
Revenue is recognised when the Group’s performance obligation is
satisfied, which is usually when the promised goods are transferred
to the customer. In a bill and hold arrangement, revenue is recognised
when a customer has obtained control of a product, which arises when
all of the following criteria are met: (a) the reason for the arrangement
is substantive, (b) the product has been identified separately as
belonging to the customer, (c) the product is ready for delivery in
accordance with the terms of the arrangement, and (d) the Company
does not have the ability to use the product or sell the product to
another customer.
Customer rebates
Provisions for rebates to customers are based upon the terms of
individual contracts, with rebates granted based upon a tiered
structure dependent upon an individual customer’s purchases
during the rebate period. Customer rebates are recorded in the
same period as the related sales as a deduction from revenue and
the vast majority are coterminous with the Group’s financial year end.
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1. Summary of significant accounting policies continued
For those individual contracts that are non-coterminous, the
Group estimates the provision for this variable consideration based
on the most likely outcome amount determined by the terms of each
agreement at the time the revenue is recognised. At the financial
year end, due to settlement of rebates with customers, the level of
remaining estimation is limited and the risk of a significant reversal
of recognised revenue is negligible.
Other income
Other income is attributable to rental income from properties,
landfill and gas activity. Other expenses represent associated
expenses. This is not deemed to be a principal activity of the Group.
Rental income received under operating leases is recognised on a
straight line basis over the term of the relevant lease. Assets leased
by the Group to third parties are depreciated in line with the Group’s
normal depreciation policy.
Research and development
Research and development expenditure is written off as incurred,
except that development expenditure incurred on an individual
project is capitalised when its future recoverability can reasonably
be regarded as assured. Any expenditure carried forward is amortised
in line with the expected future sales from the related project.
Development costs capitalised were not material in either the
current or prior years.
Exceptional items1
The Group presents as exceptional on the face of the income
statement those items of income and expense which, because of the
materiality, nature and/or expected infrequency of the events giving
rise to them, merit separate presentation to allow shareholders to
further understand elements of financial performance in the period,
so as to facilitate comparison with future years and to assess trends
in financial performance. See Note 5 for further details of exceptional
items1 recognised in the current period.
The Directors believe that the use of alternative performance
measures (APMs), such as exceptional items1, provide useful
information for shareholders. The Group uses APMs to aid
comparability of its performance and position between periods.
The APMs used represent measures used by management and
Board to monitor performance and plan. Additionally, certain
APMs are used by the Group in setting Director and management
remuneration. Detailed descriptions of APMs used throughout
these financial statements are included within Note 3.
APMs used by the Group are generally not defined under IFRS and
may not be comparable with similarly titled measures reported by
other companies.
It is not believed that adjusted measures are a substitute for,
or superior to, statutory measurements.
Government grants
Government grants are recognised within the income statement
on a systematic basis over the periods in which the Group recognises
as expenses the related costs for which the grants are intended to
compensate. Grants are presented as part of the income statement
and are deducted in reporting the related expense.
Government grants that are receivable as compensation for expenses
or losses already incurred or for the purpose of giving immediate
financial support to the Group with no future related costs are
1 Alternative performance measures are described in Note 3 and exceptional items are
described in Note 5 to the consolidated financial statements.
156
recognised within the income statement in the period in which they
become receivable. Government grants are not recognised until
there is reasonable assurance that the Group will comply with the
conditions attached to them and that the grants will be received.
Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except
for tax relating to items recognised in other comprehensive income
or directly in equity.
Current tax is the expected tax payable or recoverable on the taxable
income or loss for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax
payable in respect of previous years.
During the ordinary course of business, there are transactions
and calculations for which the ultimate tax determination may be
uncertain. The calculation of the tax charge therefore necessarily
involves a degree of estimation and judgement. The tax liabilities
are based on estimates of whether additional taxes will be due
and tax assets are recognised on the basis of probable future
recoverability. This requires management to exercise judgement
based on its interpretation of tax laws and the likelihood of
settlement of tax liabilities or recoverability of tax assets. To the
extent that the final outcome differs from the estimates made, tax
adjustments may be required which could have an impact on the tax
charge and profit for the year in which such a determination is made.
Deferred tax is provided on temporary differences between the tax
bases of assets and liabilities and their carrying amounts included
in the financial statements. However, deferred tax liabilities are
not recognised if they arise from the initial recognition of goodwill;
deferred tax is not accounted for if it arises from initial recognition
of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither
accounting nor taxable profit or loss.
The amount of deferred tax is calculated using tax rates that have
been enacted or substantively enacted at the balance sheet date
and are expected to apply when the related deferred tax asset is
realised or deferred tax liability is settled. Deferred tax assets and
liabilities are not subject to discounting.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available, against
which the temporary difference can be utilised.
Deferred tax liabilities are provided on taxable temporary differences
arising from investments in subsidiaries except for deferred tax
liabilities where the timing of the reversal of the temporary difference
is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised on deductible temporary
differences arising from investments in subsidiaries only to the
extent that it is probable the temporary difference will reverse in
the future and there is sufficient taxable profit available against
which the temporary difference can be utilised. Deferred tax assets
and liabilities are offset where there is a legally enforceable right
to offset current tax assets against current tax liabilities where
these have been levied by the same tax authority on either the
same taxable entity or different taxable entities within the Group
where there is an intention to settle the balances on a net basis.
Ibstock Plc Annual Report and Accounts 2022 1. Summary of significant accounting policies continued
Dividend distribution
Dividend distributions to Ibstock Plc shareholders are recognised
in the Group’s financial statements in the period in which the
dividends are approved in a general meeting, or when paid in
the case of an interim dividend.
Assets held for sale
Non-current assets and disposal groups are classified as held for
sale only if available for immediate sale in their present condition
and a sale is highly probable and expected to be completed within
one year from the date of classification. Such assets and disposal
groups are measured at the lower of carrying amount and fair value
less the costs to sell. Non-current assets classified as held for sale
(or that form part of a disposal group classified as held for sale)
are not depreciated or amortised.
Share based payments
The Group operates a number of equity-settled share based
compensation plans, under which the entity receives services from
employees as consideration for equity instruments (for example
options or shares) of Ibstock Plc. The fair value of the employee
services received in exchange for the grant of the equity instruments
is recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the instruments granted:
• including any market performance conditions (for example,
the Group’s share price);
Critical judgements in applying the Group’s accounting policies
The following critical judgement, that the Directors made in the process
of applying the Group’s accounting policies, has the most significant
effect on the amounts recorded in the financial statements.
Exceptional items1
Exceptional items1 are disclosed separately in the financial statements
where the Directors believe it is necessary to do so to provide further
understanding of the financial performance of the Group. The Group
presents as exceptional items1 on the face of the income statement
those items of income and expense which, because of the materiality,
nature and/or expected infrequency of the events giving rise to them,
merit separate presentation to allow shareholders to understand
elements of financial performance in the financial period, so as to
facilitate comparison with future years and further assess underlying
trends in financial performance. Judgement is required in relation to
significant material transactions as to whether they are exceptional
in nature.
Further details on exceptional items1 are given within Note 5.
Key sources of estimation uncertainty
Estimates and underlying assumptions are reviewed by management
on an ongoing basis, with revisions recognised in the period in which
the estimates are revised, and in any future period affected. The areas
that may have a significant risk of resulting in a material adjustment
to the carrying amounts of assets and liabilities within the next
financial year are as follows:
• excluding the impact of any service and non-market performance
vesting conditions (for example, profitability, sales growth targets
and remaining an employee of the entity over a specified time
period); and
Defined benefit pension schemes – valuation of liabilities
For defined benefit schemes, management is required to make annual
estimates and assumptions about future changes in discount rates,
inflation, the rate of increase in pensions in payment and life expectancy.
• including the impact of any non-vesting conditions (for example,
the requirement for employees to save or hold shares for a specific
period of time).
At the end of each reporting period, the Group revises its estimates
of the number of instruments that are expected to vest based on the
non-market vesting conditions and service conditions. It recognises
the impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity. In addition,
in some circumstances employees may provide services in advance
of the grant date and therefore the grant date fair value is estimated
for the purposes of recognising the expense during the year between
service commencement period and grant date. For the equity-settled
share based payment transactions, the fair value of the share
instruments granted is derived from established option pricing
models. Further details on share based payments are set out in
Note 26.
2. Critical accounting judgements and key sources of
estimation uncertainty
In applying the Group’s accounting policies, as described in Note 1,
the Directors are required to make judgements (other than those
involving estimations) that have a significant impact on the amounts
recognised and to make estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. Due to
the inherent uncertainty in making these critical judgements and
estimates, actual outcomes could be different.
1 Alternative performance measures are described in Note 3 and exceptional items are
described in Note 5 to the consolidated financial statements.
The assumptions used may vary from year to year, which would
affect future net income and net assets. Any differences between
these assumptions and the actual outcome also affect future net
income and net assets. In making these estimates and assumptions,
management considers advice provided by external advisors, such
as actuaries. These assumptions are subject to periodic review.
Note 21 describes the assumptions used together with an analysis of
the sensitivity of the defined benefit scheme liability (£358.4 million
at 31 December 2022) to changes in key assumptions.
3. Alternative performance measures
Alternative performance measures (APMs) are disclosed within the
consolidated financial statements where management believes it is
necessary to do so to provide further understanding of the financial
performance of the Group.
Management uses APMs in its own assessment of the Group’s
performance and in order to plan the allocation of internal capital
and resources. Certain APMs are used in the remuneration of
management and Executive Directors, as set out in the Directors’
Remuneration Report on page 115 to 134.
APMs serve as supplementary information for users of the financial
statements and it is not intended that they are a substitute for,
or superior to, statutory measures. None of the APMs are outlined
within IFRS and they may not be comparable with similarly titled
APMs used by other companies.
Within the notes to the consolidated financial statements, all APMs
are identified with a superscript.
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Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
3. Alternative performance measures continued
In the current year, the previously reported APMs of like-for-like revenue and like-for-like Adjusted EBITDA margin have been removed to reflect
full current and comparative period ownership of the Longley business eliminating the need for these measures.
Exceptional items
The Group presents as exceptional on the face of the income statement those items of income and expense which, because of their materiality,
nature and/or expected infrequency of the events giving rise to them, merit separate presentation to allow users of the financial statements
to understand further elements of financial performance in the year. This facilitates comparison with future periods and to assess trends in
financial performance over time.
Details of all exceptional items are disclosed in Note 5.
Adjusted EBITDA and Adjusted EBITDA margin
Adjusted EBITDA is the earnings before interest, taxation, depreciation and amortisation adjusted for exceptional items. Adjusted EBITDA
margin is Adjusted EBITDA shown as a proportion of revenue.
The Directors regularly use Adjusted EBITDA and Adjusted EBITDA margin as key performance measures in assessing the Group’s profitability.
The measures are considered useful to users of the financial statements as they represent common APMs used by investors in assessing a
company’s operating performance, when comparing its performance across periods as well as being used in the determination of Directors’
variable remuneration.
A full reconciliation of Adjusted EBITDA is included at the foot of the Group’s consolidated statement of comprehensive income within the
consolidated financial statements. Adjusted EBITDA margin is included within Note 4.
Adjusted EPS
Adjusted EPS is the basic earnings per share adjusted for exceptional items, fair value adjustments being the amortisation and depreciation
on fair value uplifted assets and non-cash interest, net of taxation (at the Group’s adjusted effective tax rate).
The Directors have presented Adjusted EPS as they believe the APM represents useful information to the user of the financial statements
in assessing the performance of the Group, when comparing its performance across periods, as well as being used within the determination
of Directors’ variable remuneration. Additionally, the APM is considered by management when determining the proposed level of ordinary
dividend.
A full reconciliation is provided in Note 11.
Net debt and Net debt to adjusted EBITDA (“leverage”) ratio
Net debt is defined as the sum of cash and cash equivalents less total borrowings at the balance sheet date. This does not include lease
liabilities arising upon application of IFRS 16 in order to align with the Group’s banking facility covenant definition.
The Net debt to adjusted EBITDA ratio definition removes the operating lease expense benefit generated from IFRS16 compared to IAS 17
within adjusted EBITDA.
The Directors disclose these APMs to provide information as a useful measure for assessing the Group’s overall level of financial indebtedness
and when comparing its performance and position across periods.
Net debt is shown at the foot of the Group consolidated cash flow statement on page 149.
A full reconciliation of the net debt to adjusted EBITDA ratio (also referred to as ‘leverage’) is set out below:
Net debt
Adjusted EBITDA
Impact of IFRS 16 (Note 27)
Adjusted EBITDA prior to IFRS 16
Ratio of net debt to adjusted EBITDA
Year ended
31 December
2022
£’000
(45,922)
Year ended
31 December
2021
£’000
(38,872)
139,667
(8,491)
131,176
103,053
(7,171)
95,882
0.4x
0.4x
Adjusted return on capital employed
Adjusted return on capital employed (Adjusted ROCE) is defined as earnings before interest and taxation adjusted for exceptional items as
a proportion of the average capital employed (defined as net debt plus equity excluding the pension surplus). The average is calculated using
the period end balance and corresponding preceding reported period end balance (year end or interim).
The Directors disclose the Adjusted ROCE APM in order to provide users of the financial statements with an indication of the relative efficiency
of capital use by the Group over the period, assessing performance between periods as well as being used within the determination of executives’
variable remuneration.
158
Ibstock Plc Annual Report and Accounts 2022 3. Alternative performance measures continued
The calculation of Adjusted ROCE is set out below:
Adjusted EBITDA
Less depreciation
Less amortisation
Adjusted earnings before interest and taxation
Average net debt
Average equity
Average pension
Average capital employed
Adjusted Return on Capital Employed
Average capital employed figures comprise:
Net debt
Equity
Pension
Year ended
31 December
2022
£’000
139,667
(31,579)
(6,939)
101,149
40,791
426,501
(35,707)
431,585
23.4%
Year ended
31 December
2021
£’000
103,053
(31,409)
(6,940)
64,704
46,169
412,761
(50,138)
408,792
15.8%
31 December
2022
£’000
45,922
416,209
15,194
30 June
2022
£’000
35,660
436,792
56,219
31 December
2021
£’000
38,872
423,229
57,754
30 June
2021
£’000
53,466
402,293
42,521
Adjusted effective tax rate (ETR)
The Group presents an adjusted effective tax rate (Adjusted ETR) within its Financial Review. This is disclosed in order to provide users of the
financial statements with a view of the rate of taxation borne by the Group prior to the impact of exceptional items (defined above) and the
changes in taxation rates on deferred taxation. A reconciliation of the adjusted ETR to the statutory UK rate of taxation is included in Note 10.
Cash flow related APMs
The Group presents an adjusted cash flow statement within its Financial Review on page 73. This is disclosed in order to provide users of the
financial statements with a view of the Group’s operating cash generation before the impact of cash flows associated with exceptional items
(as set out in Note 5) and with the inclusion of interest, lease payment and non-exceptional property disposal related cash flows.
The Directors use this APM table to allow shareholders to further understand the Group’s cash flow performance in the period, to facilitate
comparison with future years and to assess trends in financial performance. This table contains a number of APMs, as described below and
reconciled in the following table:
Adjusted change in working capital
Adjusted change in working capital represents the statutory change in working capital adding back cash inflows associated with exceptional
items arising in the year of £0.3 million (2021: removing cash outflows of £2.0 million).
Adjusted operating cash flow
Adjusted operating cash flows are the cash flows arising from operating activities adjusted to exclude cash inflows relating to exceptional items
of £7.3 million (2021: cash outflows £1.7 million) and inclusion of cash flows associated with interest income, proceeds from the sale of property,
plant and equipment and lease payments reclassified from investing or financing activities of £7.0 million (2021: £12.2 million).
Cash conversion
Cash conversion is the ratio of Adjusted operating cash flow (defined above) to Adjusted EBITDA (defined above). The Directors believe this
APM provides a useful measure of the Group’s efficiency of its cash management during the period.
Adjusted free cash flow
Adjusted free cash flow represents Adjusted operating cash flow (defined above) less total capital expenditure. The Directors use the measure
of Adjusted free cash flow as a measure of the funds available to the Group for the payment of distributions to shareholders, for use within
M&A activity and other investing and financing activities.
159
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Statutory
£’000
146,115
(2,035)
382
(4,162)
(11,699)
(973)
(5,554)
122,074
(58,354)
63,720
Statutory
£’000
108,283
3,330
(5,797)
(4,035)
(9,960)
(789)
(4,530)
86,502
(24,960)
61,542
Exceptional
£’000
Reclassification
£’000
(6,448)
267
(382)
–
–
–
(705)
(7,268)
–
(7,268)
–
–
–
(135)
–
(777)
(5,882)
(6,794)
–
(6,794)
Exceptional
£’000
(5,230)
2,028
5,797
–
–
–
(860)
1,735
Reclassification
£’000
–
–
–
(1,563)
–
(961)
(9,673)
(12,197)
–
1,735
–
(12,197)
Adjusted
£’000
139,667
(1,768)
–
(4,297)
(11,699)
(1,750)
(12,141)
108,012
77%
(58,354)
49,658
Adjusted
£’000
103,053
5,358
–
(5,598)
(9,960)
(1,750)
(15,063)
76,040
74%
(24,960)
51,080
Notes to the consolidated financial statements continued
3. Alternative performance measures continued
Reconciliation of statutory cash flow statement to adjusted cash flow statement
Year ended 31 December 2022
Adjusted EBITDA
Change in working capital
Impairment charges
Net interest
Tax
Post-employment benefits
Other
Adjusted operating cash flow
Cash conversion
Total capex
Adjusted free cash flow
Year ended 31 December 2021
Adjusted EBITDA
Change in working capital
Impairment charges
Net interest
Tax
Post-employment benefits
Other
Adjusted operating cash flow
Cash conversion
Total capex
Adjusted free cash flow
160
Ibstock Plc Annual Report and Accounts 2022 4. Segment reporting
The Directors consider the Group’s reportable segments to be the Clay and Concrete.
The key Group performance measure is adjusted EBITDA1, as detailed below, which is defined in Note 3. The tables, below, present revenue and
adjusted EBITDA1 and profit before taxation for the Group’s operating segments.
Included within the unallocated and elimination columns in the tables below are costs including share based payments and Group employment
costs. Unallocated assets and liabilities are pensions, taxation and certain centrally held provisions. Eliminations represent the removal of
inter-company balances. Transactions between segments are carried out at arm’s length. There is no material inter-segmental revenue and
no aggregation of segments has been applied.
For both years presented, the activities of Ibstock Futures were managed and reported as part of the Clay division. Consequently, the position
and performance of Ibstock Futures for all periods has been classified within the Clay reportable segment.
Total revenue
Adjusted EBITDA1
Adjusted EBITDA margin1
Exceptional items1 impacting operating profit (see Note 5)
Depreciation and amortisation pre fair value uplift
Incremental depreciation and amortisation following fair value uplift
Net finance costs
Profit before tax
Taxation
Profit for the year
Consolidated total assets
Consolidated total liabilities
Non-current assets
Consolidated total intangible assets
Property, plant and equipment
Right-of-use assets
Total non-current assets
Year ended 31 December 2022
Concrete
£’000
143,693
23,604
16.4%
56
(5,546)
(5,190)
(430)
12,494
Unallocated and
elimination
£’000
–
(10,624)
–
(187)
–
(1,867)
(12,678)
Clay
£’000
369,193
126,687
34.3%
6,222
(20,659)
(6,936)
(366)
104,948
Total
£’000
512,886
139,667
27.2%
6,278
(26,392)
(12,126)
(2,663)
104,764
(17,884)
86,880
596,769
146,553
19,460
762,782
(183,079)
(52,172)
(111,322)
(346,573)
60,945
29,297
361,389
47,702
–
–
90,242
409,091
20,869
10,419
190
31,478
443,203
87,418
190
530,811
Total non-current asset additions
70,118
8,713
131
78,962
Included within the revenue of our Concrete operations during the year ended 31 December 2022 were £0.1 million of bill and hold transactions.
At 31 December 2022, £0.4 million of inventory relating to these bill and hold transactions remained on the Group’s premises. The unallocated
segment balance includes the fair value of the Group’s share based payments and associated taxes (£2.7 million), Plc Board and other Plc
employment costs (£6.4 million), pension costs (£0.8 million) and legal/administrative expenses (£2.8 million). These costs have been offset by
research and development taxation credits (£1.6 million) and £0.5 million of provision releases related to the discount rate applied. During the
current year, one customer accounted for greater than 10% of Group revenues with £80.6 million of sales across the Clay and Concrete divisions.
The Group pension surplus is unallocated and amounts to £15.2 million.
1 Alternative performance measures are described in Note 3 and exceptional items are described in Note 5 to the consolidated financial statements.
161
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
4. Segment reporting continued
Total revenue
Adjusted EBITDA1
Adjusted EBITDA margin1
Exceptional items1 impacting operating profit (see Note 5)
Depreciation and amortisation pre fair value uplift
Incremental depreciation and amortisation following fair value uplift
Net finance costs
Profit/(loss) before tax
Taxation
Profit for the year
Consolidated total assets
Consolidated total liabilities
Non-current assets
Consolidated total intangible assets
Property, plant and equipment
Right-of-use assets
Total non-current assets
Year ended 31 December 2021
Concrete
£’000
128,421
21,740
16.9%
(117)
(5,981)
(4,298)
(202)
11,142
Unallocated and
elimination
£’000
–
(9,321)
–
(135)
–
(3,981)
(13,437)
Clay
£’000
280,235
90,634
32.3%
5,347
(22,101)
(5,834)
(809)
67,237
Total
£’000
408,656
103,053
25.2%
5,230
(28,217)
(10,132)
(4,992)
64,942
(33,129)
31,813
547,472
145,478
63,193
756,143
(155,589)
(56,764)
(120,561)
(332,914)
61,084
33,541
329,288
46,512
–
–
94,625
375,800
15,438
9,430
246
25,114
405,810
89,483
246
495,539
Total non-current asset additions
30,834
6,035
–
36,869
1 Alternative performance measures are described in Note 3 and exceptional items are described in Note 5 to the consolidated financial statements.
Included within the revenue of our Concrete operations during the year ended 31 December 2021 were £1.2 million of bill and hold transactions.
At 31 December 2021, £0.7 million of inventory relating to these sales remained on the Group’s premises. The unallocated segment balance
includes the fair value of the Group’s share based payments and associated taxes of (£0.9 million), Plc Board and other Plc employment costs
(£5.8 million), pension costs (£1.0 million) and legal/administrative expenses (£3.3 million). These costs have been offset by research and
development taxation credits (£1.7 million). During the current year, one customer accounted for greater than 10% of Group revenues with
£47.2 million of sales within the Clay division.
The Group pension surplus is unallocated and amounts to £57.8 million.
162
Ibstock Plc Annual Report and Accounts 2022 5. Exceptional items1
Exceptional (cost of)/income from sales
Impairment (charge)/reversal – Property, plant and equipment
Impairment reversal – Right-of-use assets
Total impairment reversal (Note 17)
Other costs associated with closure of sites
Total exceptional (cost of)/income from sales
Exceptional administrative expenses:
Redundancy costs
COVID-19 administrative expenses
Total exceptional administrative expenses
Exceptional profit on disposal of property, plant and equipment
Exceptional items1 impacting operating profit
Year ended 31
December 2022
£’000
Year ended 31
December 2021
£’000
(554)
–
–
(126)
(680)
–
–
–
6,958
6,278
5,623
174
5,797
(2,302)
3,495
(100)
(187)
(287)
2,022
5,230
Total exceptional items1
6,278
5,230
2022
Included within the current year are the following exceptional items1:
Exceptional cost of sales
The Group impaired the fixed assets at Atlas as part of a restructuring programme in 2020. Upon making the decision to redevelop the factory,
a partial reversal of this amount was recognised in 2021, based on an estimate of the assets, which were fit for continuing usage. As the redevelopment
activity at the Atlas site has continued, existing building assets have been identified as unfit for usage, thereby requiring replacement.
Accordingly, those assets that have been identified as unfit for usage have been fully impaired in the current period. This impairment expense
is, in effect, an adjustment to the impairment reversal booked in 2021. As such, it is considered appropriate to treat this adjustment on a basis
consistent with the corresponding entry in 2021.
Other costs associated with the closure of sites represent other expenses incurred as a result of the Group’s restructuring programme
announced during 2020. This programme proceeded throughout 2021 and the costs concluded during the first half of 2022.
As anticipated, during 2022, the Group incurred £0.1 million of net residual costs relating to the sites subject to closure. The net balance in the
current year comprised rates and other standing charges related to the former operations, partly offset by savings from previously provided
redundancy schemes.
Exceptional profit on disposal of property, plant and equipment
The exceptional profit on disposal in the current year relates to the sale of the Group’s surplus property at West Hoathly in Sussex. The profit
on disposal has been categorised as exceptional due to the materiality of the amount recognised.
2021
Exceptional income from sales
Impairment reversals arose in prior year following the Group’s announcements during 2021 to redevelop its Atlas and Nostell manufacturing
sites within the Clay segment, together with the decision to retain the leased Northwich administrative facility within the Concrete segment.
These decisions are expected to lead to the utilisation of assets that were impaired in 2020 following the Group’s restructuring programme in
response to the deterioration in near-term demand outlook caused by the COVID-19 pandemic. Due to the initial impairment charge treatment
as exceptional items, the reversal was similarly categorised as exceptional.
Other costs associated with the closure of sites represented other expenses incurred as a result of the Group’s restructuring programme
announced during the prior year. These costs included site security, insurance, rates and other standing charges in connection with closed
sites. These costs were categorised as exceptional due to the non-recurring nature of the event giving rise to them.
1 Alternative performance measures are described in Note 3 and exceptional items are described in Note 5 to the consolidated financial statements.
163
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
5. Exceptional items continued
Exceptional administration expenses
Exceptional redundancy costs incurred in the prior year relate to residual costs of redundancy of employees within the Group’s selling, general
and administrative (SG&A) functions following the restructuring programme announced in June 2020. The costs were net of savings achieved
by the Group as a result of decisions to retain employees, who had initially been notified of redundancy. These net costs were categorised as
exceptional due to the non-recurring nature of the event giving rise to the costs.
COVID-19 administrative costs in the prior period related to costs incurred in acquiring personal protective and health screening equipment
associated with the return to work, and the costs of acquiring information technology equipment to be used in the short-term during the
COVID-19 lockdown. These costs were categorised as exceptional in 2H 2020 and 1H 2021 due to the non-recurring nature of the event giving
rise to them. It was not expected that similar costs would be treated as exceptional in the future, due to the normalisation of operating conditions.
Exceptional profit on disposal of property, plant and equipment
The exceptional profit on disposal in the prior year relates to the sale of the Group’s surplus property near Kingswinford. The profit on disposal
had been categorised as exceptional due to the materiality of the amount recorded.
Tax on exceptional items1
2022
In the current year, the impairment charge relating to property, plant and equipment is not tax deductible but gives rise to a deferred tax
credit in the current period.
The costs associated with the closure of sites are tax deductible in the current period.
The profit on disposal of property, plant and equipment gave rise to a nil chargeable gain in the current period due to the effect of
indexation allowance.
2021
In the prior year, the reversal of impairment charges relating to property, plant and equipment and right-of-use assets is not tax deductible
but gave rise to a deferred tax charge in the current period.
The costs associated with the closure of sites, COVID-19 administrative expenses and redundancy costs were tax deductible in the prior year.
The profit on disposal of property, plant and equipment gives rise to a chargeable gain which was taxable in the prior year.
164
Ibstock Plc Annual Report and Accounts 2022 6. Operating profit
Operating profit includes the effect of crediting/(charging):
Changes in inventories of finished goods and work in progress
Raw material and consumables used
Employee benefit expense (Note 7)
Depreciation – Property, plant and equipment (Note 13)
Depreciation – Right-of-use assets (Note 27)
Amortisation (Note 12)
Exceptional (cost of)/income from sales (Note 5)
Other production costs
Total cost of sales
Transportation expenses
Other employee benefit expenses (Note 7)
(Loss)/profit on disposal of property, plant and equipment (Note 13)
Advertising costs
Operating lease income
Exceptional administrative expenses (Note 5)
Exceptional profit on disposal of property, plant and equipment (Note 5 and 13)
Auditor’s remuneration
During the year the Group obtained the following services from the Company’s auditor.
Fees payable to the Company's auditor and its associates for the
audit of Parent Company and consolidated financial statements:
Fees payable to Company's auditor and its associates for other services to the Group:
– Audit of the Company's subsidiaries
Total audit fees
– Audit related assurance services
Total non-audit fees
Year ended
31 December
2022
£’000
11,923
(86,823)
(92,998)
(23,841)
(7,738)
(6,939)
(680)
(109,425)
(316,521)
(47,961)
(32,441)
(417)
(1,192)
97
–
6,958
Year ended
31 December
2021
£’000
4,384
(77,684)
(77,720)
(24,013)
(7,396)
(6,940)
3,495
(78,293)
(264,167)
(38,829)
(28,171)
1,638
(987)
157
(287)
2,022
Year ended
31 December
2022
£’000
Year ended
31 December
2021
£’000
180
180
608
788
80
80
599
779
75
75
165
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
7. Employees and Directors
Employee benefit expenses for the Group during the period:
Wages and salaries – gross
Voluntary repayment of furlough payments
Wages and salaries – net amount recognised within the income statement
Social security costs
Pensions costs – defined benefit plans (Note 21)
Pensions costs – defined contribution plans (Note 21)
Share based payments (Note 26)
Year ended
31 December
2022
£’000
107,622
–
107,622
9,743
777
4,750
2,547
125,439
Year ended
31 December
2021
£’000
90,120
1,759
91,879
8,013
961
4,148
890
105,891
In October 2022, the Group made a one-off payment of £3.6 million to those employees who were the most heavily impacted by the cost
of living crisis.
In prior year, the Group voluntarily returned £1.8 million of furlough funds received during 2020 under the UK Government’s Coronavirus
Job Retention Scheme (CJRS) in respect of colleagues subsequently made redundant.
Average monthly number of people (including Executive Directors) employed:
Sales staff
Administrative staff
Production staff
Key management compensation:
Short-term employee benefits
Post-employment benefits
Share-based payment
Year ended
31 December
2022
263
220
1,782
2,265
Year ended
31 December
2022
£’000
3,582
229
1,048
4,859
Year ended
31 December
2021
249
209
1,648
2,106
Year ended
31 December
2021
£’000
3,180
216
405
3,801
Key management personnel has been defined as the Board of Ibstock Plc, together with the Group’s Executive Leadership Team (ELT).
Members of the ELT are set out on page 102 of the Annual Report and Accounts 2022. Details of remuneration for Ibstock Plc Directors,
including the highest paid director, are presented in the Remuneration Report on pages 115 to 134. The aggregate remuneration of the
Directors for the purposes of the financial statements is £2.7 million (year ended 31 December 2021: £2.2 million).
166
Ibstock Plc Annual Report and Accounts 2022 8. Finance costs
Interest costs:
Interest payable on Revolving Credit Facility
Interest payable on Private Placement
Foreign exchange translations
Total interest payable on bank borrowings
Other interest payable
Interest expense on financial liabilities at amortised cost
Interest on lease liabilities
Other interest payable
Total finance costs
Year ended
31 December
2022
£’000
Year ended
31 December
2021
£’000
(993)
(2,220)
–
(3,213)
(66)
(3,279)
(1,274)
(1,274)
(4,553)
(4,184)
(338)
(41)
(4,563)
(161)
(4,724)
(1,107)
(1,107)
(5,831)
2022
In the current year, the Revolving Credit Facility (“RCF”) was not drawn upon and therefore interest expense comprised no interest on
funds drawn down (2021: £1.7 million), £0.6 million of facility commitment fees (2021: £1.0 million) and £0.4 million of deal fee amortisation
(2021: £1.5 million). During the final quarter of 2022, the Group concluded a 12-month extension to the £125 million RCF, extending maturity
to November 2026 on terms aligning with the original refinancing in November 2021. Fees of £0.3m related to the extension were capitalised.
See Note 19 for additional disclosure.
2021
The Group refinanced its debt facilities in November 2021 fully repaying the existing RCF and expensing the remaining capitalised arrangement
fees of £0.7 million. These facilities were replaced with the issuance of £100 million of private placement notes from Pricoa Private Capital and
a new £125 million RCF facility provided by a syndicate of five banks.
In both the current and prior years, no borrowing costs are directly attributable to the construction or production of qualifying assets.
9. Finance income
Interest income:
Foreign exchange translations
Net interest income arising on the UK pension scheme (Note 21)
Net unwinding of discount on provisions/change in discount rate (Note 20)
Other interest receivable
Total finance income relating to continuing operations
10. Taxation
Analysis of income tax charge
Current tax on profit for the year
Adjustments in respect of prior period
Total current tax
Deferred tax on profit for the year
Impact of change in tax rate
Adjustments in respect of prior period
Total deferred tax
Year ended
31 December
2022
£’000
Year ended
31 December
2021
£’000
29
1,048
689
124
1,890
–
527
312
–
839
Year ended
31 December
2022
£’000
13,747
1,340
15,087
Year ended
31 December
2021
£’000
8,726
(718)
8,008
3,700
2,095
(2,998)
2,797
17,884
2,709
21,628
784
25,121
33,129
167
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
10. Taxation continued
Income tax recognised within the consolidated statement of other comprehensive income
Tax adjustments arising on the UK pension scheme assets and liabilities:
Current tax credit
Deferred tax (credit)/charge
Tax adjustments arising on gains and losses relating to cash flow hedges:
Deferred tax charge/(credit)
Income tax recognised within the consolidated statement of changes in equity
Current tax credit on share-based payments
Deferred tax credit on share-based payments
Year ended
31 December
2022
£’000
Year ended
31 December
2021
£’000
(333)
(10,814)
–
2,525
149
(14)
Year ended
31 December
2022
£’000
(1)
(116)
Year ended
31 December
2021
£’000
–
(35)
The tax expense for the period differs from the applicable standard rate of corporation tax in the UK of 19% for the year ended 31 December
2022 (2021: 19%). The differences are explained below:
Profit before tax from continuing operations
Profit before tax multiplied by the rate of corporation tax in the UK
Effects of:
Expenses not deductible
Accounting profit on disposal of property, plant and equipment
Permanent benefit of super deduction on capital expenditure
Changes in estimates relating to prior periods
Adjusted ETR
Exceptional accounting profit on disposal of property, plant and equipment
Rate change on deferred tax provision
Total taxation expense from continuing operations
Year ended
31 December
2022
£’000
104,764
19,905
771
–
(1,741)
(1,658)
17,277
(1,488)
2,095
17,884
Year ended
31 December
2021
£’000
64,942
12,339
510
(333)
(829)
66
11,753
(252)
21,628
33,129
Percentage
100%
19.00%
0.74%
–
(1.66%)
(1.58%)
16.50%
(1.42%)
2.00%
17.08%
Percentage
100%
19.00%
0.79%
(0.51%)
(1.28%)
0.10%
18.10%
(0.39%)
33.30%
51.01%
There are no income tax consequences for the Company in respect of dividends declared prior to the date of authorisation of these financial
statements and for which a liability has not been recognised.
As part of the measures announced in the 2022 Autumn Statement, the Chancellor of the Exchequer reinstated the previously cancelled
increase in the standard rate of corporation tax from 19% to 25% with effect from 1 April 2023. The impact of this rate change was
recognised in the previous year’s financial statements and gave rise to an increase in the Group’s net deferred tax liabilities of £21.6 million.
In the current period, the permanent benefit of the temporary enhancement to tax relief on capital expenditure on plant and machinery,
known as the “super-deduction” was £1.7million. This benefit is offset by an increase in the associated deferred tax liability of £1.4 million
being recognised at 25%, being the future tax rate at which it is expected to unwind.
The £2.1 million rate change on deferred tax provision is a result of recognising deferred tax assets and liabilities at the future tax rate of
25% in respect of items that are taxable or tax-deductible in the current period. £1.4 million of this balance relates to capital expenditure
that has attracted the super-deduction as mentioned above.
In the current period, no capital gain arose in relation to the £7.0 million profit on disposal of property, plant and equipment, resulting in
a reduction in the effective tax rate as shown in the table above.
The main reason for the income current tax charge of £1.3million arising on changes in estimates relating to prior periods is due to a lower
level of capital expenditure qualifying for the super-deduction than originally estimated. Tax relief on the capital expenditure will instead
accrue over future periods, thus giving rise to a £1.6million prior year deferred tax credit. The remaining £1.4million of the deferred tax
credit relating to the correction of deferred tax overprovided in the prior year in relation to tangible fixed assets.
The Group expects its effective tax rate in the future to be affected by the outcome of any future tax audits as well as the impact of
changes in tax law.
168
Ibstock Plc Annual Report and Accounts 2022
11. Earnings per share
The basic earnings per share figures are calculated by dividing profit for the year attributable to the Parent shareholders by the weighted average
number of Ordinary Shares in issue during the year. The diluted earnings per share figures allow for the dilutive effect of the conversion into
Ordinary Shares of the weighted average number of options outstanding during the year. Where the average share price for the year is lower
than the option price the options become anti-dilutive and are excluded from the calculation.
The number of shares used for the earnings per share calculation are as follows:
Basic weighted average number of Ordinary Shares
Effect of share incentive awards and options
Diluted weighted average number of Ordinary Shares
Year ended
31 December
2022
402,746
2,010
404,756
Year ended
31 December
2021
409,118
1,494
410,612
The calculation of adjusted earnings per share1 is a key measurement used by management that is not defined by IFRS. The adjusted earnings
per share1 measures should not be viewed in isolation, but rather treated as supplementary information.
Adjusted earnings per share1 figures are calculated as the Basic earnings per share adjusted for exceptional items1, fair value adjustments being
the amortisation and depreciation on fair value uplifted assets and non-cash interest expenses. Adjustments are made net of the associated
taxation impact at the adjusted effective tax rate. A reconciliation of the statutory profit to that used in the adjusted earnings per share1
calculations is as follows:
Profit for the period attributable to the Parent shareholders
Add back exceptional items1 (Note 5)
(Less)/add back tax (charge)/credit on exceptional items1
Add fair value adjustments (Note 4)
Less tax credit on fair value adjustments
Less net non-cash interest
Add back tax expense on non-cash interest
Add back impact of deferred taxation rate change
Adjusted profit for the period attributable to the Parent shareholders
Basic EPS on profit for the year
Diluted EPS on profit for the year
Adjusted basic EPS1 on profit for the year
Adjusted diluted EPS1 on profit for the year
Year ended
31 December
2022
Total
£’000
86,908
(6,278)
(453)
12,126
(2,000)
(1,376)
227
2,095
91,249
Year ended
31 December
2022
Total
pence
21.6
21.5
22.7
22.5
Year ended
31 December
2021
Total
£’000
31,813
(5,230)
695
10,132
(1,834)
(606)
110
21,628
56,708
Year ended
31 December
2021
Total
pence
7.8
7.7
13.9
13.8
1 Alternative performance measures are described in Note 3 and exceptional items are described in Note 5 to the consolidated financial statements.
169
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
12. Intangible assets
Cost
At 1 January 2021
Additions in the year
At 31 December 2021
Additions in the year
Utilised in the year
At 31 December 2022
Accumulated amortisation and impairment
At 1 January 2021
Charge for the year
At 31 December 2021
Charge for the year
At 31 December 2022
Net book amount
At 31 December 2021
At 31 December 2022
Customer
contracts and
relationships
£’000
92,868
–
92,868
–
–
92,868
(32,270)
(5,884)
(38,154)
(5,883)
(44,037)
Goodwill
£’000
2,964
–
2,964
888
–
3,852
–
–
–
–
–
Brands
£’000
Licences
£’000
Total
£’000
37,159
–
37,159
–
–
37,159
(5,558)
(1,056)
(6,614)
(1,056)
(7,670)
–
6,402
6,402
5,573
(3,905)
8,070
–
–
–
–
–
132,991
6,402
139,393
6,461
(3,905)
141,949
(37,828)
(6,940)
(44,768)
(6,939)
(51,707)
2,964
3,852
54,714
48,831
30,545
29,489
6,402
8,070
94,625
90,242
Management performed a goodwill impairment testing in current and prior year with no goodwill impairment recognised (see Note 17).
The Group has been part of the UK ETS scheme since 01 January 2021. During the current year, the Group received 223,034 (2021: 227,157)
free allowances from the Government at no cost. Licences include carbon allowances purchased by the Group, which are held at cost and
surrendered, as required, to meet carbon emissions in excess of the Group’s granted allowances..
Amortisation is included within cost of sales in the income statement.
The remaining amortisation period of customer contracts and relationships is five to fifteen years. At 31 December 2022, the remaining
amortisation period of brands is outlined below:
Net book value
at 31 December
2022
£’000
Remaining
amortisation
period (years)
26,988
173
1,433
895
29,489
42.20
2.20
7.20
6.60
Brands
Ibstock Brick
Forticrete
Supreme
Longley
170
Ibstock Plc Annual Report and Accounts 2022 13. Property, plant and equipment
Cost
At 1 January 2021
Additions
Transfer to/(from) AICC
Transfer to Assets held for sale
Disposals
At 31 December 2021
Additions
Transfer to/(from) AICC
Disposals
At 31 December 2022
Accumulated depreciation and impairment
At 1 January 2021
Charge for the year
Disposals
Impairment reversals
At 31 December 2021
Charge for the year
Disposals
Impairment
At 31 December 2022
Net book amount
At 31 December 2021
At 31 December 2022
Land and
buildings
£’000
Mineral
reserves
£’000
Plant, machinery
and equipment
£’000
193,368
1,404
454
(875)
(625)
193,726
3,308
103
(275)
196,862
(42,665)
(6,137)
204
5,623
(42,975)
(6,855)
264
(554)
(50,120)
75,034
–
–
–
–
75,034
–
–
–
75,034
(21,148)
(4,964)
–
–
(26,112)
(3,073)
–
–
(29,185)
187,575
19,153
1,564
–
(5,458)
202,834
11,967
991
(8,515)
207,277
(35,458)
(12,912)
4,906
–
(43,464)
(13,913)
8,059
–
(49,318)
Assets in the
course of
construction
(AICC)
£’000
14,689
4,086
(2,018)
–
–
16,757
42,878
(1,094)
–
58,541
–
–
–
–
–
–
–
–
–
Total
£’000
470,666
24,643
–
(875)
(6,083)
488,351
58,153
–
(8,790)
537,714
(99,271)
(24,013)
5,110
5,623
(112,551)
(23,841)
8,323
(554)
(128,623)
150,751
146,742
48,922
45,849
159,370
157,959
16,757
58,541
375,800
409,091
Management reviews the business performance based on segments reported in Note 4. In the current year, impairment includes £0.6 million
relating to Atlas site in Clay division as set out in Note 5. Further tangible assets impairment tests were conducted at the end of the 2022 with
no further impairment required for the rest of the assets (see Note 17).
A net profit on disposal of property, plant and equipment of £6.5 million has been recognised in the year ended 31 December 2022 (year ended
31 December 2021: profit on disposal of £3.7 million). The current year profit on disposal of property, plant and equipment includes £7.0 million
(2021: £2.0 million) of exceptional profit, as set out in Note 5.
As part of the Group’s strategic planning process, Management have considered the impact of both transitional and physical risks and
opportunities with regard to several global warming scenarios. Through its scenario analysis, management has assessed no indicators of
impairment for property, plant and equipment in the short term (2023 – 2030) as a result of changes in precipitation patterns and variability
in weather patterns such as more frequent storms, cyclones and floods.
Management have also considered the potential future requirement to switch to alternative fuels in order to reduce the Group’s CO2 emissions.
Although this is an evolving area as technology and capability advances, management’s current assumption is that existing factories, and in
particular kilns, are able to be retrofitted with no material impact to current useful economic lives or carrying values.
There are no assets which are used as security.
14. Inventories
Raw materials
Work in progress
Finished goods
31 December
2022
£’000
37,370
3,777
53,128
94,275
31 December
2021
£’000
27,839
3,019
41,963
72,821
The replacement cost of inventories is not considered to be materially different from the values above. At 31 December 2022, a provision of
£2.2 million (31 December 2021: £2.8 million) was held against the inventory balance.
171
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
15. Trade and other receivables
Trade receivables
Provision for impairment of receivables
Net trade receivables
Prepayments and accrued income
Other tax
Other receivables
Total trade and other receivables
31 December
2022
£’000
59,314
(676)
58,638
5,334
577
1,386
65,935
31 December
2021
£’000
55,860
(636)
55,224
5,383
551
3,598
64,756
The Directors consider that the carrying amount of trade and other receivables approximates their fair value. The Group’s assessment of any
expected credit losses is included in Note 23.
16. Assets held for sale
Assets classified as held for sale as of the beginning of the period
Additions
Disposals
Assets classified as held for sale as of the end of the period
31 December
2022
£’000
875
–
(875)
–
31 December
2021
£’000
1,186
875
(1,186)
875
In the prior year, the Group’s surplus property in West Hoathly had been categorised as held for sale. The disposal of this asset was completed
in October 2022. The assets was held within the Clay segment.
The fair value of the asset less costs to sell was assessed as exceeding the asset’s carrying value, and there were no liabilities directly associated
with the asset categorised as held for sale in the prior year.
17. Impairment
In the year, in light of the anticipated macroeconomic downturn and the resulting projected decrease in activity levels across the UK construction
industry, management identified indicators of potential impairment. Subsequently recoverable amounts across the Group’s cash-generating
units (CGUs) were generated and compared with the carrying value of the assets that were allocated to the relevant CGUs. For tangible asset
impairment testing purposes, the Group has determined that each factory is a separate CGU, with the exception of the Longley concrete sites,
which are considered together as one CGU. For intangible asset impairment testing, the Group has determined that each legal entity is a
separate CGU as this is the lowest level at which the intangible assets can be directly attributed.
The value in use recoverable value of each CGU was calculated based on the Group’s latest budget and forecast cash flows, which have regard
to historic performance and knowledge of the current market, together with the Group’s views on the future achievable growth and the impact
of committed growth and improvement initiatives. Cash flows beyond this budget period are extrapolated using a long-term growth rate of 2%,
which is based on management’s future expectations.
In the current year an impairment charge of £0.6 million was recognised within exceptional cost of sales in relation to the Atlas site (Note 5
and 13). The asset is held within the Clay reporting segment. The assets recoverable amount was assessed as £nil on a fair value less costs
to sell basis. This assessment falls within level 3 of the fair value hierarchy and was based on management’s judgement that the assets could
not be sold for any value this being the assumption the recoverable amount is most sensitive to.
The Group has not recognised any other impairment in current and prior year.
In the current and prior year, the Directors assessed whether there was any indication that the impairment loss recognised in the prior period
may no longer exist or may have decreased.
The Group has not recognised any impairment reversal in the year ended 31 December 2022.
In the year ended 31 December 2021, the Group’s announcements in April 2021 and November 2021 regarding the redevelopment projects
at the Atlas and Nostell sites, respectively, represent significant changes with a favourable effect on the assets held at these sites, which
were previously impaired. The site redevelopments at Atlas and Nostell increase the estimated service potential from the use of certain assets.
The Group had recognised an exceptional impairment reversal in 2021 of £5.6 million within exceptional cost of sales, being £4.9 million of
property, plant and equipment assets in the Atlas CGU and £0.7 million in the Nostell CGU within the Clay segment. Further £0.2 million of
right-of-use assets in Northwich CGU within the Concrete segment was also reversed within exceptional cost of sales as management decided
to keep using the sales office in Northwich. Each of these CGU’s represents a factory. The impairment reversals were written back to the assets’
‘value in use’ recoverable amount. As at 31 December 2021, the ‘value in use’ recoverable amount of the Atlas CGU, Nostell CGU and Northwich
CGU were estimated to be £136.2 million, £38.8 million and £39.8 million by using a range of pre tax discount rates of 10.0% to 11.0%. The
carrying amounts Atlas CGU, Nostell CGU and Northwich CGU, were £10.1 million, £1.0 million and £1.4 million as at 31 December 2021. The
Group, where appropriate, separately applies the requirements of IAS 36 to land and to buildings on sites owned considering the individual
recoverable values of each and the reliability in estimating these.
172
Ibstock Plc Annual Report and Accounts 2022 17. Impairment continued
Goodwill
Impairment testing was performed as at 31 December 2022 on the Group’s goodwill balance of £3.9 million, primarily relating to the acquisition
of the Longley CGU in July 2019. Based upon management’s detailed testing of the recoverable value of the CGUs to which goodwill is allocated,
no impairment was indicated. Key assumptions used within the testing of goodwill included a pre-tax discount rate of 10.5%, together with a
long-term growth rate of 2%.
The Longley CGU-specific cash flows for the detailed five-year time period used by management contain a revenue compound growth rate of 4.6%.
Based on management’s projections, no reasonably possible change in key assumptions within the ‘value in use’ recoverable amount calculation
contained within supporting the impairment calculation could cause the carrying value of goodwill to exceed its recoverable amount.
18. Trade and other payables
Trade payables
Deferred consideration (Note 29)
Other tax and social security payable
Accruals and other payables
31 December
2022
£’000
63,169
112
7,770
48,952
120,003
31 December
2021
£’000
55,120
–
9,461
38,551
103,132
There are no material differences between the fair values and book values stated above. As at 31 December 2022, all items were payable within
12 months of the balance sheet date. At 31 December 2022, deferred consideration of £0.1 million related to the consideration payable to the
vendor following the purchase of 75% of the share capital of the Generix businesses completed in July 2022. This deferred consideration will be
paid in July 2023.
19. Borrowings
Current
Private placement
Non-current
Private placement
Total borrowings
31 December
2022
£’000
31 December
2021
£’000
436
333
99,769
99,738
100,205
100,071
During the final quarter of 2022, the Group concluded a 12-month extension to the £125 million RCF, extending maturity to November 2026
on terms aligning with the original refinancing in November 2021. Fees of £0.3 million related to this extension were capitalised.
The Group refinanced its debt facilities in the final quarter of 2021 repaying the existing Revolving Credit Facility (“RCF”) in November 2021
and expensed the remaining capitalised arrangement fees of £0.7 million. This expense is presented within finance costs in the consolidated
income statement.
These facilities were replaced with the issuance of £100 million of private placement notes from Pricoa Private Capital, with maturities of
between seven and 12 years and an average total cost of funds of 2.19% (range 2.04% – 2.27%). An additional uncommitted shelf facility
of up to $88.1 million (or equivalent in available currencies) was agreed. The facility contains debt covenant requirements of leverage (net
debt to adjusted EBITDA1) and interest cover (adjusted EBITDA1 to net finance charges) of no more than three times and at least four times,
respectively, tested semi-annually on 30 June and 31 December in respect of the preceding 12 month period.
In November 2021 a £125 million RCF facility was provided by a syndicate of five banks for an initial four-year period, with a one-year
extension option. Interest is charged at a margin (depending upon the ratio of net debt to Adjusted EBITDA1) of between 160bps and
260bps above SONIA, SOFR or EURIBOR according to the currency of the borrowing. The facility also includes an additional £50 million
uncommitted accordion facility. Based on current leverage the Group will pay interest under the RCF initially at a margin of 160bps.
This facility contains debt covenant requirements that align with those of the private placement with the same testing frequency.
During the year no facilities has been drawn down (2021: £170 million) and no repayment in the year (2021: repayment of £160 million).
The RCF was undrawn as at 31 December 2022 and 31 December 2021.
The carrying value of financial liabilities have been assessed as materially in line with their fair values.
No security is currently provided over the Group’s borrowings.
173
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
20. Provisions
Restoration (i)
Dilapidations (ii)
Restructuring (iii)
Other (iv)
Current
Non-current
31 December
2022
£’000
4,550
3,910
–
452
8,912
1,613
7,299
8,912
At 1 January 2022
Utilised
Charged to the income statement
Unwind of discount/change in rate
Reversed unused
At 31 December 2022
The current expected timeframe of provision requirements is as follows:
Within one year
Between two and five years
Between five and ten years
Between ten and twenty years
Over twenty years
Restoration (i)
£’000
Dilapidations (ii)
£’000
Restructuring (iii)
£’000
Other (iv)
£’000
4,749
(30)
398
(431)
(136)
4,550
4,363
(210)
15
(258)
–
3,910
100
(100)
–
–
–
–
889
(597)
160
–
–
452
Restoration (i)
£’000
Dilapidations (ii)
£’000
Restructuring (iii)
£’000
Other (iv)
£’000
996
–
177
3,167
210
4,550
165
1,267
1,533
869
76
3,910
–
–
–
–
–
–
452
–
–
–
–
452
31 December
2021
£’000
4,749
4,363
100
889
10,101
1,869
8,232
10,101
Total
£’000
10,101
(937)
573
(689)
(136)
8,912
Total
£’000
1,613
1,267
1,710
4,036
286
8,912
(i) The restoration provision comprises obligations governing site remediation and improvement costs to be incurred in compliance with applicable
environmental regulations together with constructive obligations stemming from established practice once the sites have been fully utilised.
Provisions are based upon management’s best estimate of the ultimate cash outflows. The key estimates associated with calculating the
provision relate to the cost per acre to perform the necessary remediation work as at the reporting date together with determining the expected
year of retirement. Climate change is specifically considered at the planning stage of developments when restoration provisions are initially
estimated. This includes projection of costs associated with future water management requirements and the form of the ultimate expected
restoration activity. Other changes to legislation, including in relation to climate change, are factored into the provisions when legislation
becomes enacted or when the Group creates a constructive obligation. Estimates are reviewed and updated annually based on the total
estimated available reserves and the expected mineral extraction rates. Whilst an element of the total provision will reverse in the short
to medium term (one to ten years), the majority of the legal and constructive obligations applicable to mineral-bearing land will unwind
over a period exceeding 20 years. In discounting the related obligations, expected future cash outflows have been determined with due
regard to extraction status and anticipated remaining life. Discount rates used are based upon similarly dated UK Government bond rates.
Management has also considered the Group’s ESG commitments, there is no significant impact noted to the existing estimates.
(ii) Provisions for dilapidations arose upon the business combination in the period ended 31 December 2015, are recognised on a lease-by-lease
basis and are based on the Group’s best estimate of the likely contractual cash outflows, which are estimated to occur over the lease term.
Third-party valuation experts are used periodically in the determination of the best estimate of the contractual obligation, with expected
cash flows discounted at similarly lived UK Government bond rates.
(iii) The restructuring provision comprises obligations arising as a result of the site closures and associated redundancy costs announced during
the year ended 31 December 2020 following the completion of the Group’s review of operations. In the current year, the provision was fully
utilised and no further costs are expected.
(iv) Other provisions include provisions for legal and warranty claim costs, which are expected to be incurred within one year of the balance
sheet date.
174
Ibstock Plc Annual Report and Accounts 2022
21. Post-employment benefit obligations
(a) Defined Benefit plan
Analysis of movements in the net asset during the year:
Funded plan at 31 December
Opening balance
Charge within operating profit
Interest income
Remeasurement (loss)/gain recognised in the statement of comprehensive income
Contributions
Carried forward at 31 December
31 December
2022
£’000
31 December
2021
£’000
57,754
(777)
1,048
( 44,581)
1,750
15,194
43,576
(961)
527
12,862
1,750
57,754
The Group participates in the Ibstock Pension Scheme (the ‘Scheme’), a defined benefit pension scheme in the UK. The Scheme closed to
future accrual from 1 February 2017. The Scheme has four participating employers – Ibstock Brick Limited, Forticrete Limited, Anderton
Concrete Products Limited and Figgs Bidco Limited – and was funded by payment of contributions to a separate Trustee administered fund.
The Scheme is a revalued earnings plan and provides benefits to its members based on their length of membership in the Scheme and their
average salary over that period. The Scheme is administered by Trustees who employ independent fund managers for the investment of the
pension scheme assets. These assets are kept entirely separate from those of the Group.
Total annual contributions to the Scheme are based on independent actuarial advice, and are gauged to fund future pension liabilities
in respect of service up to the balance sheet date. The Scheme is subject to an independent actuarial valuation at least every three years
using the projected unit method.
The valuation used as at 31 December 2022 has been based on the results of the 30 November 2020 valuation, as updated for changes
in demographic assumptions, as appropriate.
On 20 December 2022, the Scheme completed a full buy-in transaction with a specialist third-party provider, which represented a significant
step in the Group’s continuing strategy of de-risking its pensions exposure. This transaction, together with the partial buy-in transaction in 2020
insure all Group’s defined benefit liabilities. As a result, the insured annuity assets and liabilities of the Scheme are assumed to be fully matched
and the interest rate, inflation risk and longevity risk are removed. However, there is a residual risk that the insurance premium may be increased
following a data cleanse to reflect a more accurate position. If the surplus Scheme assets are insufficient to meet any additional premium, then
the Company may need to pay an additional contribution into the Scheme.
The cover for current deferred pensioners at the date of the transaction attracted a total buy-in premium of £175.6 million. The initial premium
payment of £81.3 million was settled on 28 December 2022 by the transfer of certain Scheme-invested assets. The remaining premiums will
be settled in three instalments, with the final instalment expected to be paid by 20 December 2024. The deferred premia of £94.3 million with
a present value of £91.7 million have been recognised as negative assets against the Bespoke cash flow-driven investment.
The difference between the buy-in premium and the IAS 19 liability for these members has been taken through the consolidated statement
of other comprehensive income in the year ended 31 December 2022 as an asset loss of £23.4 million.
The defined benefit pension scheme (measured under IAS 19 Employee Benefits) is in a net surplus position as the Trust Deed provides Ibstock
with an unconditional right to a refund of surplus asset. This assumes the full gradual settlement of plan liabilities over time until all members
have left the plan in the event of a plan wind-up. Furthermore, in the ordinary course of business the Trustees have no right to unilaterally wind
up, or otherwise augment the benefits due to the members of the Scheme. In line with IFRIC 14, a net pension asset has been recognised.
The corresponding deferred tax liability should be measured by applying either the standard rate of corporation tax to the taxable temporary
difference, or the 35% rate applicable to refunds from pension schemes. As the Directors do not consider it likely that there will be a refund
from the Scheme due to expected future settlement costs, the deferred tax liability of £3.8 million (2021: £14.4 million) has been measured
at the standard rate of corporation tax.
175
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
21. Post-employment benefit obligations continued
Balance sheet assets/(obligations):
Equities
Liability-driven investment
Bespoke cash flow-driven investment
Insured annuities
Cash
Total market value of assets
Present value of Scheme liabilities
Net Scheme asset
31 December
2022
£’000
–
290
9,857
358,425
5,047
373,619
(358,425)
15,194
31 December
2021
£’000
77,718
108,915
135,431
293,253
2,687
618,004
(560,250)
57,754
Liability-driven investments (LDI) are funds constructed to reduce the inflation risk and interest rate risk within the Scheme. They are predominantly
unquoted and is set up as ‘bespoke pooled funds’ with valuations undertaken on a regular basis with rebalancing occurring on a quarterly basis
to reflect the movements in the Scheme’s other assets and cash flows.
The bespoke cash flow-driven investment is held with M&G Investment Managers in order to provide a flow of income to the Scheme and meet the
liability requirements. At 31 December 2022, the Bespoke cash flow-driven investment had a net asset value of £9.9 million (2021: £135.4 million),
which comprised invested assets of £101.6 million and negative assets of £91.7 million representing the buy-in deferred premiums.
Equities are valued at Level 1 in the fair value hierarchy and all other assets held by the Scheme are Level 2 in the hierarchy. All equities had
a quoted market price in an active market, whilst cash and cash equivalents are unquoted.
The amounts recognised in the income statement are:
Administrative expenses
Defined contribution scheme costs (Note 21b)
Charge within labour costs and operating profit
Interest income
Total charge to the income statement
Remeasurements recognised in the statement of comprehensive income:
Remeasurement loss on defined benefit scheme assets
Remeasurement gain from changes in financial assumptions
Remeasurement loss from changes in demographic assumptions
Experience losses
Other comprehensive (expense)/income
Changes in the present value of the defined benefit obligations are analysed as follows:
Present value of defined benefit obligation at beginning of year
Interest cost
Experience losses
Benefits paid
Remeasurement gain arising from change in financial assumptions
Remeasurement loss arising from change in demographic assumptions
Present value of defined benefit obligations carried forward at 31 December
176
31 December
2022
£’000
777
4,750
5,527
(1,048)
4,479
31 December
2022
£’000
(235,822)
211,786
(1,701)
(18,844)
(44,581)
31 December
2022
£’000
(560,250)
(9,901)
(18,844)
20,485
211,786
(1,701)
(358,425)
31 December
2021
£’000
961
4,148
5,109
(527)
4,582
31 December
2021
£’000
(6,195)
36,925
(1,266)
(16,602)
12,862
31 December
2021
£’000
(595,603)
(7,008)
(16,602)
23,304
36,925
(1,266)
(560,250)
Ibstock Plc Annual Report and Accounts 2022 21. Post-employment benefit obligations continued
Changes in the fair value of plan assets are analysed as follows:
Fair value of pension scheme assets at beginning of the year
Interest income
Remeasurement loss on pension scheme assets
Employer contributions
Benefits paid
Administrative expenses
Fair value of pension scheme assets carried forward
Plan assets are comprised as follows:
Bespoke cash flow-driven investment
Buy-in deferred premia
Net bespoke cash flow-driven investment
Liability-driven investment
Insured annuities
Cash and net current assets
Total
Equity instruments
– UK equities
– Overseas equities
Liability-driven investment
Bespoke cash flow-driven investment
Insured pensioners
Cash and net current assets
Total
31 December
2022
£’000
618,004
10,949
(235,822)
1,750
(20,485)
(777)
373,619
31 December
2021
£’000
639,179
7,535
(6,195)
1,750
(23,304)
(961)
618,004
31 December 2022
Quoted
£’000
67,604
(65,827)
1,777
–
–
–
1,777
Unquoted
£’000
33,951
(25,871)
8,080
290
358,425
5,047
371,842
31 December 2021
Quoted
£’000
77,718
21,347
56,371
–
99,683
–
–
177,401
Unquoted
£’000
–
–
–
108,915
35,748
293,253
2,687
440,603
Total
£’000
101,555
(91,698)
9,857
290
358,425
5,047
373,619
Total
£’000
77,718
21,347
56,371
108,915
135,431
293,253
2,687
618,004
%
3%
0%
96%
1%
100%
%
3%
9%
18%
22%
47%
1%
100%
During the year ended 31 December 2022, based on the previous valuation (as at November 2020), a contribution of £1.75 million was made
by the Group in line with the payment schedule agreed with the Trustees of the Ibstock Pension Scheme. Under the agreement with the
Scheme’s Trustees, a contribution level of £1.75 million per annum continues to apply from February 2022, increasing to £2.0 million from
1 December 2023 and then to £2.25 million from 1 December 2024 until a subsequent valuation and any revised contribution level is agreed.
The agreement also includes certain provisions to increase contributions to £2.5 million in the event of a material deterioration in the Scheme’s
financial position. Considering the pension scheme was in a net surplus position after the full buy-in, on 27 February 2023, the Trustees and
the Group agreed that the Group would suspend paying regular contributions with effect from 1 March 2023 (see Note 33). The schedule of
contributions will be reviewed again as part of the 30 November 2023 actuarial valuation.
The weighted average duration of the defined benefit obligation is 14 years (2021: 18 years).
177
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
21. Post-employment benefit obligations continued
The principal assumptions used by the actuary in his calculations were:
Discount rate
RPI inflation
CPI inflation
Rate of increase in salary
Rate of increase in pensions in payment
Commutation factors
Mortality assumptions: life expectancy from age 65
For a male currently aged 65
For a female currently aged 65
For a male currently aged 40
For a female currently aged 40
31 December
2022
Per annum
4.80%
3.20%
2.60%
N/A
3.65%
18.60
31 December
2021
Per annum
1.80%
3.40%
2.70%
N/A
3.75%
17.31
21.9 years
24.5 years
23.6 years
26.4 years
21.8 years
24.5 years
23.6 years
26.3 years
The post-retirement mortality assumptions allow for expected changes to life expectancy. The life expectancies quoted for members currently
aged 40 assume that they retire at age 65 (i.e. 25 years after the balance sheet date).
The principal financial assumption is the real discount rate, being the excess of the discount rate over the rate of inflation. The discount rate is
based on the market yields on high-quality corporate bonds of appropriate currency and term to the defined benefit obligations. The obligations
are primarily in Sterling and have a maturity in line with the duration of Scheme liabilities. If the real discount rate increased/decreased by
0.25%, the defined benefit obligations at 31 December 2022 would decrease/increase by approximately 3%.
The impact on the defined benefit obligation to changes in the financial and demographic assumptions is shown below:
Present value of defined benefit obligations at 31 December
0.25% increase in discount rate
0.25% decrease in discount rate
0.25% increase in pension growth rate
0.25% decrease in pension growth rate
0.25% increase in inflation rate
0.25% decrease in inflation rate
1 year increase in life expectancy
1 year decrease in life expectancy
31 December
2022
£’000
(358,425)
11,583
(12,209)
(8,417)
8,085
(6,007)
7,270
(14,042)
14,110
31 December
2021
£’000
(560,250)
23,432
(25,009)
(16,617)
15,859
(12,074)
14,748
(28,310)
27,711
(b) Defined contribution plan
The Group operates defined contribution schemes under the Ibstock Pension Scheme, the Supreme Concrete Limited Pension Scheme, the
Anderton Concrete Pension Scheme, the Supreme Concrete Group Personal Plan and the Longley Concrete Pension scheme. Contributions
by both employees and Group companies are held in externally invested, externally administered funds.
The Group contributes a specified percentage of earnings for members of the above defined contribution schemes, and thereafter has no
further obligations in relation to the Scheme. The total cost charged to income in relation to the defined contribution scheme in the year
was £4.8 million (year ended 31 December 2021: £4.1 million).
178
Ibstock Plc Annual Report and Accounts 2022 22. Deferred tax assets/liabilities
The movement on the deferred tax account is shown below:
Net deferred tax liability at beginning of period
Arising on business combination
Tax charged to the consolidated income statement
Tax credited/(charged) within other comprehensive income
Tax credited directly to equity
Net deferred tax liability at period end
Presented in the consolidated balance sheet after offset as:
Deferred tax liabilities
Deferred tax assets and liabilities before offsetting of balances within the same tax jurisdiction are as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax liability at period end
Deferred tax assets expected to unwind within one year
Deferred tax assets expected to unwind after one year
Deferred tax liabilities expected to unwind within one year
Deferred tax liabilities expected to unwind after one year
31 December
2022
£’000
(92,352)
19
(2,797)
10,665
116
(84,349)
31 December
2021
£’000
(64,755)
–
(25,121)
(2,511)
35
(92,352)
(84,349)
(84,349)
(92,352)
(92,352)
4,107
(88,456)
(84,349)
4,008
(96,360)
(92,352)
955
3,152
4,107
404
3,604
4,008
(3,064)
(85,392)
(88,456)
(1,936)
(94,424)
(96,360)
179
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
22. Deferred tax assets/liabilities continued
The movement in the net deferred tax liability analysed by each type of temporary difference is as follows:
Deferred tax assets/(liabilities)
Intangible fixed assets
Tangible fixed assets
Right-of-use assets
Rolled-over and held-over
capital gains
Employee pension liabilities
Provisions
Share incentive plans
Derivative financial
instrument
Tax losses
Deferred tax assets/
(liabilities) before offsetting
Offset of balances within
the same tax jurisdiction
Net deferred tax liabilities
Deferred tax assets/(liabilities)
Intangible fixed assets
Tangible fixed assets
Right-of-use assets
Rolled-over and held-over
capital gains
Employee pension liabilities
Provisions
Share incentive plans
Other temporary
differences
Deferred tax assets/
(liabilities) before offsetting
Offset of balances within
the same tax jurisdiction
Net deferred tax liabilities
Year ended 31 December 2022
As at 31 December 2022
Net balance at
1 January 2022
£’000
Arising on
business
combination
£’000
(20,795)
(58,311)
510
(2,699)
(14,439)
2,978
390
14
–
(92,352)
–
(8)
–
–
–
–
–
–
27
19
Recognised
in income
statement
£’000
1,320
(4,029)
(94)
–
(174)
(118)
298
–
–
Recognised
in OCI
£’000
Recognised
directly in equity
£’000
–
–
–
–
10,814
–
–
(149)
–
–
–
–
–
–
–
116
–
–
Net
£’000
(19,475)
(62,348)
416
(2,699)
(3,799)
2,860
804
(135)
27
Deferred tax
assets
£’000
Deferred tax
liabilities
£’000
–
–
416
–
–
2,860
804
–
27
(19,475)
(62,348)
–
(2,699)
(3,799)
–
–
(135)
–
(2,797)
10,665
116
(84,349)
4,107
(88,456)
Year ended 31 December 2021
As at 31 December 2021
(4,107)
–
4,107
(84,349)
Recognised
in OCI
£’000
–
–
–
Recognised
directly in equity
£’000
–
–
–
Net balance at
1 January 2021
£’000
(17,518)
(40,307)
406
Arising on
business
combination
£’000
–
–
–
(2,051)
(8,279)
2,692
302
–
(64,755)
–
–
–
–
–
–
Recognised
in income
statement
£’000
(3,277)
(18,004)
104
(648)
(3,635)
286
53
–
(2,525)
–
–
–
14
(25,121)
(2,511)
–
–
–
35
–
35
Net
£’000
(20,795)
(58,311)
510
(2,699)
(14,439)
2,978
390
Deferred tax
assets
£’000
–
116
510
–
–
2,978
390
Deferred tax
liabilities
£’000
(20,795)
(58,427)
–
(2,699)
(14,439)
–
–
14
14
–
(92,352)
4,008
(96,360)
(4,008)
–
4,008
(92,352)
There are no unrecognised deferred tax assets or liabilities as at 31 December 2022 or the prior year end.
180
Ibstock Plc Annual Report and Accounts 2022 23. Financial instruments – risk management
Financial assets
Trade and other receivables (Note 15)
Derivative financial instruments
Cash and cash equivalents
Total
Financial liabilities
Trade and other payables (Note 18)
Derivative financial instruments
Lease liabilities (Note 27)
Borrowings (Note 19)
Total
31 December
2022
£’000
60,024
567
54,283
114,874
31 December
2022
£’000
112,233
–
33,104
100,205
245,542
31 December
2021
£’000
58,822
–
61,199
120,021
31 December
2021
£’000
93,671
74
27,184
100,071
221,000
With the exception of the Group’s derivative financial instruments, see below, all financial assets and liabilities are held at amortised cost.
Credit risk
Credit risk arises from cash and cash equivalents, trade receivables and deposits with banks and is managed on a Group basis. This risk arises from
transactions with banks, such as those involving cash and cash equivalents and deposits. To reduce the credit risk, the Group has concentrated
its main activities with a Group of banks that have strong, independently verified credit ratings. For each bank, individual risk limits are set based
on its financial position, credit ratings, past experience and other factors. The utilisation of credit limits is regularly monitored.
The Group has significant sales contracts with a number of ‘blue-chip’ companies and accordingly the Directors believe there is a limited
exposure to credit risk, but this is actively monitored at the operational Company level. The Group’s policy on credit risk requires appropriate
credit checks on potential customers before sales commence. The Group also maintains credit insurance.
The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime
expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared
credit risk characteristics and the days past due.
The ageing analysis of the trade receivables (from date of past due) assessed for impairment, but concluded as no impairment is required,
is as follows:
Not past due
Less than one month past due
One to six months past due
Six to twelve months past due
More than 12 months past due
The ageing analysis of the trade receivables (from date of past due) determined to be impaired is as follows:
Less than one month past due
One to six months past due
Six to twelve months past due
More than 12 months past due
31 December
2022
£’000
38,385
16,870
3,749
998
22
60,024
31 December
2021
£’000
31,393
18,280
8,499
568
82
58,822
31 December
2022
£’000
31 December
2021
£’000
437
40
111
88
676
39
79
462
56
636
181
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
23. Financial instruments – risk management continued
Movements in the provision for impairment of trade receivables are as follows:
Opening balance
Charged to the income statement
Utilised
Released
Exchange movements
Closing impairment provision
31 December
2022
£’000
(636)
(133)
–
93
–
(676)
31 December
2021
£’000
(691)
(125)
–
180
–
(636)
The gross carrying amount of trade receivables, reflecting the maximum exposure to credit risk, is £59.3 million (2021: £55.9 million).
Other financial assets at amortised cost are insignificant and the associated credit risk is considered immaterial.
Market risk
Market risk is defined as the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risk comprises three types of risk, being currency risk, interest rate risk and other price risk. The Group’s interest rate risk arises
principally from the Revolving Credit Facility, which attracts floating rate interest, see Note 19. The Group manages its interest rate risk through
the use of the fixed rate Private Placement in addition to using this floating rate RCF debt with varying repayment terms. The Group does not
trade in derivative financial instruments and is not considered to be significantly exposed to this and other price risks. The exposure to currency
risk is considered low.
Interest rate sensitivity analysis:
For the Group’s borrowings, sensitivity analysis is considered assuming the amount of liability outstanding at the reporting date was outstanding
for the whole year. A 0.25 percentage points increase or decrease represents management’s assessment of the reasonably possible change
in interest rates. However in 2022 no variable rate borrowings were drawn down.
If interest rates had been 0.25 percentage points higher/lower and all other variables were held constant, the Group’s profit for the year ended
31 December 2021 would decrease/increase by £0.2 million, which is attributable to the Group’s exposure to interest rates on its variable rate
borrowings. Interest rate sensitivity at 31 December 2022 and 31 December 2021 has reduced as the carrying value of the Private Placement
borrowings and the related service costs do not change as interest rates move.
The exposure in different currencies of financial assets and liabilities is as follows:
At 31 December 2022
Financial assets
Cash and cash equivalents
Derivative financial instruments
Trade and other receivables (Note 15)
Financial liabilities
Borrowings (Note 19)
Lease liabilities (Note 27)
Trade and other payables (Note 18)
At 31 December 2021
Financial assets
Cash and cash equivalents
Trade and other receivables (Note 15)
Financial liabilities
Derivative financial instruments
Borrowings (Note 19)
Lease liabilities (Note 27)
Trade and other payables (Note 18)
182
Sterling
£’000
US Dollar
£’000
Euro
£’000
Other
£’000
Total
£’000
54,147
567
58,857
113,571
(100,205)
(33,104)
(110,698)
(244,007)
69
–
–
69
–
–
(44)
(44)
Sterling
£’000
US Dollar
£’000
60,165
57,911
118,076
(74)
(100,071)
(27,184)
(92,491)
(219,820)
2
–
2
–
–
–
(24)
(24)
67
–
1,167
1,234
–
–
(1,481)
(1,481)
Euro
£’000
1,032
911
1,943
–
–
–
(1,095)
(1,095)
–
–
–
–
–
–
(10)
(10)
Other
£’000
–
–
–
–
–
–
(61)
(61)
54,283
567
60,024
114,874
(100,205)
(33,104)
(112,233)
(245,542)
Total
£’000
61,199
58,822
120,021
(74)
(100,071)
(27,184)
(93,671)
(221,000)
Ibstock Plc Annual Report and Accounts 2022 23. Financial instruments – risk management continued
There are no material differences between the fair values and the book values stated above with the exception of borrowings comprise
£100m of private placement notes. The fair value of these borrowings is assessed as £86.4m, this amount was determined using discounted
cash flows based on observable market data. In 2021 there were no material differences between the fair values and book values stated above.
At 31 December 2022, the Group has negligible risk to currency fluctuations as the majority of assets and liabilities are held in the same
functional currency.
Liquidity risk
The Group has generated sufficient cash from operations to meet its working capital requirements and finance its investing activities.
The Group manages liquidity risk by entering into committed bank borrowing facilities to ensure the Group has sufficient funds available,
and monitors cash flow forecasts to ensure the Group has adequate borrowing facilities. Excess cash is placed on interest-bearing deposits
with maturity fixed at no more than three months.
The maturity of the Group’s borrowings is as follows:
At 31 December 2022
Borrowings
Borrowings
Total
At 31 December 2021
Borrowings
Borrowings
Total
Less than six
months
£’000
Six months to
one year
£’000
One to two
years
£’000
Two to five
years
£’000
Greater than
five years
£’000
Total
£’000
436
436
–
–
–
–
–
–
99,769
99,769
100,205
100,205
Less than six
months
£’000
Six months to
one year
£’000
One to two
years
£’000
Two to five
years
£’000
Greater than
five years
£’000
Total
£’000
333
333
–
–
–
–
–
–
99,738
99,738
100,071
100,071
At 31 December 2022, the Group had a £125 million Revolving Credit Facility (31 December 2021: £125 million). These facilities were not
utilised during the year, resulting in an interest charge of £0.6 million in the form of a commitment fee (2021: £4.2 million interest charge).
For details of the maturity of other financial liabilities, see Notes 19 and 27.
The contractual non-discounted minimum future cash flows in respect of these borrowings are:
At 31 December 2022
Borrowings
Borrowings
Total
At 31 December 2021
Borrowings
Borrowings
Total
Less than one
year
£’000
One to two
years
£’000
Two to five
years
£’000
Greater than
five years
£’000
Total
£’000
2,897
2,897
2,899
2,899
7,982
7,982
107,386
107,386
121,164
121,164
Less than one
year
£’000
One to two
years
£’000
Two to five
years
£’000
Greater than
five years
£’000
Total
£’000
2,840
2,840
2,840
2,840
7,871
7,871
109,575
109,575
123,126
123,126
Fair value hierarchy
IFRS 13 Financial Instruments: Disclosures requires fair value measurements to be recognised using a fair value hierarchy that reflects the
significance of the inputs used in the measurements, according to the following levels:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices).
Level 3
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
Derivative financial instruments
The Group entered into forward currency contracts as cash flow hedges to manage its exposure of foreign currency fluctuations associated
with the future purchase of plant and equipment required for the construction of the major capital expenditure projects announced in the year.
These instruments are measured at fair value using Level 2 valuation techniques subsequent to initial recognition.
183
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
23. Financial instruments – risk management continued
At 31 December 2022, an asset value of £0.6 million (2021: liability of £0.1 million) was recognised for these derivative financial instruments.
No amounts have been reclassified to profit or loss as a result of the hedged cash flow during the year. The cash flow hedging reserve within
equity includes an accumulated amount of £0.4 million surplus (2021: £0.1 million deficit) relating to these derivative financial instruments.
At 31 December 2022 and 31 December 2021, all of the Group’s fair value measurements have been categorised as Level 2 with the exception
of (i) certain equities within the Group’s pension scheme, which were categorised as Level 1 valuations and (ii) the insured pensioner asset,
which was categorised as a Level 3 valuation and uses assumptions set out in Note 21 to align its valuation to the related liability.
Capital risk management
The capital structure of the Group consists of net debt1 (borrowings disclosed in Note 19 after deducting cash and bank balances) and equity
of the Parent Company, comprising issued capital, reserves and retained earnings, as disclosed in Note 25.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares, or borrow additional debt.
The Group must comply with two covenants each half year, as set out in Note 19. The covenants are certain ratios of interest cover and
leverage, which are monitored on a regular basis by the Board. At the year end date, management believes significant headroom exists
on both covenant conditions.
Dividend policy
In line with our capital allocation framework, we will look to pay an ordinary dividend. We are committed to paying dividends which are
sustainable and progressive, with a targeted cover of approximately two times adjusted profit after tax. This adjusted profit measure can
be seen in Note 11 to the Group financial statements. After investing to maintain, enhance and grow our assets, we will return surplus capital
to shareholders.
In the current year, the Board is recommending a final ordinary dividend of 5.5 pence per share for the 2022 (2021: 5.0 pence per share).
See Note 32 for further detail. At 31 December 2022, the Parent maintains significant distributable reserves of c.£341.7 million (2021:
c.£383.8 million).
24. Share capital
At 1 January 2021
Issued, called-up and fully paid:
Ordinary Shares of £0.01 each
Issue of Ordinary Shares of £0.01 each
At 31 December 2021 and 31 December 2022
Comprising:
Issued, called-up and fully paid:
Ordinary Shares of £0.01 each
Number of shares
Share
Capital
£‘000
409,559,785
4,096
71,809
409,631,594
–
4,096
409,631,594
4,096
In the year ended 31 December 2022, there was no share capital movement. In the year ended 31 December 2021, share capital increased by
71,809 shares as a result of the issue of Ordinary Share capital of £0.01 each in order to satisfy share option exercises. The Company does not
have a limited amount of authorised capital.
184
Ibstock Plc Annual Report and Accounts 2022 25. Reserves
Share premium
The share premium account is used to record the aggregate amount or value of premiums paid when the Company’s shares are issued/
redeemed at a premium.
Other reserves
The movement in other reserves during the period is set out in the table below:
Balance at 1 January 2022
Other comprehensive income
Shares purchased – share buyback scheme
Issue of own shares held on exercise of share options
At 31 December 2022
Balance at 1 January 2021
Other comprehensive expense
Purchase of own shares
Issue of own shares held on exercise of share options
At 31 December 2021
Cash flow
hedging reserve
£’000
Merger reserve
£’000
Own shares held
£’000
Treasury shares
£’000
(74)
492
–
–
418
–
(74)
–
–
(74)
(369,119)
–
–
–
(369,119)
(369,119)
–
–
–
(369,119)
(1,741)
–
–
152
(1,589)
(922)
–
(1,309)
490
(1,741)
–
–
(30,000)
–
(30,000)
–
–
–
–
–
Total other
reserves
£’000
(370,934)
492
(30,000)
152
(400,290)
(370,041)
(74)
(1,309)
490
(370,934)
Cash flow hedging reserve
The cash flow hedging reserve records movements for effective cash flow hedges measured at fair value as set out in Note 23. The accumulated
balance in the cash flow hedging reserve will be reclassified to the cost of the designated hedged item in a future period.
Merger reserve
The merger reserve of £369.1 million arose on the acquisition of Figgs Topco Limited by Ibstock Plc in the period ended 31 December 2015 and
is the difference between the share capital and share premium of Figgs Topco Limited and the nominal value of the investment and preference
shares in Figgs Topco Limited acquired by the Company.
Own shares held
The Group’s holding in its own equity instruments is shown as a deduction from shareholders’ equity at cost totalling £1.6 million at
31 December 2022 (31 December 2021: £1.7 million). These amounts represent shares held in the Employee Benefit Trust to meet the future
requirements of the employee share based payment plans. Consideration, if any, received for the sale of such shares is also recognised in equity
with any difference between the proceeds from sale and the original cost being taken to the profit and loss reserve. No gain or loss is recognised
in the income statement on the purchase, sale, issue or cancellation of equity shares.
Treasury share reserve
The Treasury share reserve represents shares acquired by the Group as part of its share buyback programme in 2022.
Commencing 10 May 2022, the Group engaged its brokers to purchase up to £30.0 million of shares on the open market on its behalf. These
shares are held by the Group to meet future requirements of employee share based payment plans. At 31 December 2022, the Treasury shares
reserve contained 16,791,470 shares.
185
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Notes to the consolidated financial statements continued
26. Share incentive plans
Share based payment charges:
Long Term Incentive Plan 26(a))
Share Option Plan (26(b))
Senior Manager Share Plan (26(c))
Annual and Deferred Bonus Plan (26(d))
Save As You Earn/Share Incentive Plan (26(e)/(f))
Reserves transfer in relation to prior periods (26(d))
Year ended
31 December
2022
£000
1166
3
172
100
754
352
2,547
Year ended
31 December
2021
£000
480
28
59
29
294
–
890
Executive share option plans
The Group operates a number of share based payment awards for selected management.
(a) Long-Term Incentive Plan (LTIP)
The Group granted LTIPs during the year for Executive Directors and other key management at the discretion of the Board and this has been
approved by the shareholders at the Annual General Meeting. Awards under the scheme are granted in the form of nil-priced share options.
The LTIP awards contain performance conditions dependent upon the growth of the Group’s Total Shareholder Return (TSR), adjusted earnings
per share1 (EPS), adjusted return on capital employed1 (Adjusted ROCE) and certain environmental, social and governance (ESG) targets. Please
refer to the information given in the Directors’ Remuneration Report on pages 115 to 134 for details in relation to the vesting conditions in
relation to the LTIP.
During the year, 1,366,767 options (2021: 894,350) over Ordinary Shares of one pence each were granted to management under the LTIP and
18,005 were exercised at a weighted average share price at the date of exercise of 200p (2021: no shares exercised). During the year ended
31 December 2022, 643,585 options (2021: 460,893) lapsed and at 31 December 2022, the weighted average contractual life remaining was
1.4 years (2021: 1.4 years).
(b) Share Option Plan (SOP)
The Group maintains a Share Option Plan at the discretion of the Board and this has been approved by shareholders at the Annual General
Meeting. During the years ended 31 December 2022 and 31 December 2021, no options were granted to management under the SOP.
In the year ended 31 December 2022, no options (2021: 150,254) were exercised under the historical SOP awards, in the prior year the weighted
average share price at the date of exercise was 308p. In the year ended 31 December 2022, no options (2021: 142,752 options) lapsed. The
weighted average exercise price of options outstanding is 243p (2021: 243p). At 31 December 2022, there was no weighted average contractual
life remaining (2021: 0.1 years). The SOP has an employment condition of three years and no other performance conditions.
(c) Senior Manager Share Plan (SMSP)
During the year ended 31 December 2021, the Group introduced the SMSP for certain members of management. Awards under the scheme are
granted in the form of nil-priced share options. The SMSP awards contain performance conditions dependent upon the growth of the Group’s
adjusted EBITDA1. The SMSP has an employment condition of two years.
In the year ended 31 December 2021, 98,831 options over Ordinary Shares of one pence each were granted to management under the SMSP.
No awards were exercised in the current year, but 3,555 options lapsed. In the year ended 31 December 2022, 147,999 options over Ordinary
Shares of 1p each were granted to management under the 2022 SMSP. No awards were exercised in the current year, but 13,741 options lapsed.
At 31 December 2022, the weighted average contractual life remaining was 0.9 years (2021: 1.3 years).
(d) Annual and Deferred Bonus Plan (ADBP)
The ADBP incorporates the Company’s executive bonus scheme as well as a mechanism for the deferral of bonus into awards over Ordinary
Shares. The ADBP operates in respect of the annual bonus earned for the financial year. The Board can determine that part of the bonus earned
under the ADBP is provided as an award of deferred shares, which take the form of a £nil cost option. The maximum value of deferred shares is
1/3 of the bonus earned. In the year ended 31 December 2022, 232,760 options (2021: no options) were awarded over Ordinary Shares under
the ADBP in relation to the prior year end bonus. The main terms of these awards are a minimum deferral period of three years, during which no
performance conditions will apply; and the participants’ employment at the end of the deferral period. In the year ended 31 December 2022,
61,562 options (2021: 118,474 options) were exercised under the ADBP at a weighted average share price at the date of exercise of 181p
(2021: 222p). At 31 December 2022, the weighted average contractual life remaining was 0.9 years (2021: 0.4 years). In the current year and
prior year, no options lapsed, at 31 December 2021, an amount of £166,000 (2021: £97,000) had been recorded in accruals for the award
relating to the bonus earned for the year ended 31 December 2022.
In the current year, £0.4 million (2021: nil) of prior period accruals for the ADBP were reclassified to the share based payment reserve.
186
Ibstock Plc Annual Report and Accounts 2022 26. Share incentive plans continued
All-employee share schemes
In addition to the executive share option plans, the Group has two all-employee share based payment arrangements – the Save As You
Earn and Share Incentive Plan awards:
(e) Save As You Earn (SAYE)
In order to participate in the Group’s Sharesave Plan, an employee must enter into a linked savings contract with a bank or building society
to make contributions from salary on a monthly basis over a three-year period. A participant who enters into a savings agreement is granted
an option to acquire Ordinary Shares of one pence each under the Sharesave Plan at a specified exercise price.
In the year ended 31 December 2022, no awards were issued under this scheme (2021: 3,724,859). In the current year, 575,793 options
(2021: 1,005,195) lapsed with a weighted average exercise price of 176p (2021: 213p) and no shares were exercised (2021: 54,992). As at
31 December 2022, the weighted average exercise price of outstanding options was 176p (2021: 176p), and the range of exercise prices of
outstanding options in 2022 and 2021 is 176p to 230p. The remaining option life was 1.4 years (2021: 2.4 years).
(f) Share Incentive Plan (SIP)
In the current year the Company announced a SIP referred to as the “Fire Up share grant”. Subject to qualifying employment conditions, all
employees were entitled to 500 share options at a nil exercise price. The number of shares issued under the SIP in the year was 1,070,000. The
free shares have a two-year employment condition and no further vesting conditions. In the year ended 31 December 2022, 500 shares lapsed.
Following the Group’s Initial Public Offering, the Company announced a SIP. Subject to qualifying employment conditions, all employees were
entitled to apply for free shares up to a value of £800 depending on their period of service. The number of shares issued under the SIP in the
year ended 31 December 2016 was 553,150. The free shares had a three-year employment condition and no further vesting conditions. In the
year ended 31 December 2022, 800 shares lapsed (2021: 18,550) and 48,200 shares were exercised (2021: 80,900) at a weighted average share
price at date of exercise of 174p (2021: 225p).
The assumptions used to calculate the fair value of the LTIP, SOP and ADBP awards granted during the year ended 31 December 2022 are
detailed below:
Grant date
Share price at grant date
Exercise price
Number of shares issued
Vesting period
Pricing model
% expected to vest
Expected share price volatility
Expected dividend yield
Expected option life
Fair value per share
Risk-free rate
Fire Up
share grant
ADBP
LTIP
SMSP
05-Sep-22
£1.85
14-Apr-22
£1.65
14-Apr-22
£1.65
14-Apr-22
£1.65
nil
232,760
3 years
nil
1,070,000
2 years
nil
1,366,767
3 years
Share price Share price Monte Carlo
100%
39.46%
n/a
3 years
£1.38
1.59%
80%
n/a
n/a
2 years
1.85
n/a
95%
n/a
n/a
3 years
£1.65
n/a
nil
147,999
2 years
Share Price
90%
n/a
n/a
2 years
£1.65
n/a
Awards under the executive share option plans and all-employee share schemes are as follows:
Outstanding at 1 January 2022
Awards granted
Awards exercised
Awards lapsed/forfeited
Awards outstanding at 31 December 2022
Executive share
options
All-employee
schemes
3,232,748
1,747,526
(79,567)
(657,326)
4,243,381
3,602,298
1,070,000
(48,200)
(577,093)
4,047,005
The expected volatility level has been calculated using historical daily data over a term commensurate with the expected life of each award.
187
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
27. Leases and commitments
Amounts recognised within the consolidated balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
Buildings
Equipment
Vehicles
Total right-of-use assets
Lease liabilities
Less than six months
Six months to one year
Current
One to two years
Two to five years
Greater than five years
Non-current
Total lease liabilities
Movement in right-of-use asset:
Cost
At 1 January 2021
Additions
Disposals
At 31 December 2021
Additions
Disposals
At 31 December 2022
Accumulated depreciation and impairment
At 1 January 2021
Impairment reversal
Charge for the year
At 31 December 2021
Charge for the year
At 31 December 2022
Net book amount
At 31 December 2021
At 31 December 2022
31 December
2022
£’000
31 December
2021
£’000
14,844
14,672
1,962
31,478
(3,828)
(3,862)
(7,690)
(6,316)
(13,774)
(5,324)
(25,414)
(33,104)
14,980
7,428
2,706
25,114
(3,966)
(2,894)
(6,860)
(5,184)
(8,941)
(6,199)
(20,324)
(27,184)
Buildings
£’000
Equipment
£’000
Vehicles
£’000
Total
£’000
22,673
327
–
23,000
2,424
–
25,424
(6,008)
174
(2,186)
(8,020)
(2,560)
(10,580)
13,272
4,421
–
17,693
10,838
–
28,531
(7,115)
–
(3,150)
(10,265)
(3,594)
(13,859)
6,580
1,076
(141)
7,515
1,086
(246)
8,355
(2,749)
–
(2,060)
(4,809)
(1,584)
(6,393)
42,525
5,824
(141)
48,208
14,348
(246)
62,310
(15,872)
174
(7,396)
(23,094)
(7,738)
(30,832)
14,980
14,844
7,428
14,672
2,706
1,962
25,114
31,478
1 Alternative performance measures are described in Note 3 and exceptional items are described in Note 5 to the consolidated financial statements.
188
Ibstock Plc Annual Report and Accounts 2022 27. Leases and commitments continued
Movement in lease liabilities:
As at 1 January
Additions
Disposals
Interest payments
Cash rental payments
As at 31 December
Amounts recognised within the consolidated income statement
Depreciation charge of right-of-use assets
Buildings
Equipment
Vehicles
Impairment reversal
Depreciation expense (included within cost of sales)
Interest expense (included within finance costs)
Year ended
31 December
2022
£’000
(27,184)
(14,175)
245
(1,274)
9,284
(33,104)
Year ended
31 December
2021
£’000
(29,076)
(5,824)
141
(1,107)
8,682
(27,184)
Year ended
31 December
2022
£’000
2,560
3,594
1,584
7,738
–
7,738
1,274
Year ended
31 December
2021
£’000
2,186
3,150
2,058
7,396
(174)
7,222
1,107
In the year ended 31 December 2022, the benefit to Adjusted EBITDA1 as a result of IFRS 16 leases was £8.5 million (2021: £7.2 million).
Operating lease charges now expensed via depreciation increased by £7.1 million (2021: £6.2 million) and interest by £1.2 million
(2021: £1.0 million) resulting in a net reduction in profit before taxation of £0.2 million (2021: £0.1 million).
The Group is lessee on a number of properties in addition to plant and machinery which it uses in its operations. The operating leases run for
a variety of terms and their non-cancellable commitments are set out above. There is no material contingent rent payable, renewal or purchase
options, escalation clauses or restrictions imposed by the lease agreements.
The Group as lessor
The Group acts as lessor on a number of properties where it leases surplus land not currently utilised by the business. The operating leases run
for a variety of terms and their future minimum lease payments receivable are set out as follows:
Within one year
Between one and five years
After five years
Capital commitments
Capital expenditure committed to but not yet incurred at the balance sheet date is as follows:
Amount contracted for, which has not been provided
31 December
2022
£’000
70
47
12
129
31 December
2021
£’000
64
41
–
105
31 December
2022
£’000
76,765
31 December
2021
£’000
57,356
At 31 December 2022, the Group entered into a conditional lease agreement for Power Park in Wolverhampton. The lease agreement is expected
to commence on March 2023. The Group is expected to recognise right-of-use assets of £7.7 million.
At 31 December 2021, under a letter of intent entered into in December 2021, the Group acted as guarantor to a number of lease agreements
with a third party supplier. These agreements were expected to result in delivery of leased assets during 2022 and 2023 and required the
Group to recognise related right-of-use assets, estimated to be valued at approximately £9 million in total. At 31 December 2022, £7.1 million
right-of-use assets were recognised.
189
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
28. Notes to the Group cash flow statement
Cash flows from operating activities
Profit before taxation
Adjustments for:
Depreciation
Asset impairment charge/(reversal) – property, plant and equipment
Asset impairment reversal – right-of-use assets
Amortisation of intangible assets
Net finance costs
Gain on disposal of property, plant and equipment
Research and development expenditure credit
Share based payments
Post-employment benefits
Other
Increase in inventory
Increase in debtors
Increase in creditors
Decrease in provisions
Cash generated from operations
31 December
2022
£’000
104,764
31 December
2021
£’000
64,942
31,579
554
–
6,939
2,663
(6,541)
(1,560)
2,547
(973)
(172)
139,800
(21,255)
(930)
20,650
(500)
137,765
31,409
(5,623)
(174)
6,940
4,992
(3,660)
(1,673)
890
(789)
(87)
97,167
(9,435)
(2,617)
18,504
(3,122)
100,497
29. Business combinations
On 29 July 2022, the Group acquired 75% of the share capital of Generix Facades Limited. The acquired entity and its fully owned subsidiary
Generix Facades International Limited specialise in ventilated rainscreen facade systems. The acquisition of the Generix business is complementary
to the Group’s Futures operations and supports the further growth of the Futures business.
Cash consideration of £1.0 million was paid during the year ended 31 December 2022. Deferred consideration of £0.1 million is payable on the
first anniversary of completion. The net cash outflow arising on acquisition was £1.0 million.
Provisional details of the net assets acquired and goodwill are as follows:
Cash
Trade receivables
Other receivables
Inventories
Property, plant and equipment
Trade payables
Other payables
Corporation tax assets
Deferred tax assets
Non-controlling interest
Net identifiable assets acquired
Add Goodwill
Net assets acquired
Fair Value
£000
54
99
8
201
44
(112)
(9)
12
19
(79)
237
888
1,125
The goodwill is attributable to the workforce and the profitable nature of the acquired business. It is not deductible for tax purposes.
The fair value of acquired trade receivables is £0.1 million. The gross contractual amount for trade receivables due is £0.1 million, with no loss
allowance at the time of acquisition.
The Group elected to recognise the non-controlling interest at its proportionate share of acquired net identifiable assets.
The acquired business contributed revenues of £0.5 million and net loss of £0.1 million to the Group from the period from acquisition to
31 December 2022. If the acquisition had occurred on 1 January 2022, consolidated pro-forma revenue and profit for the year ended
31 December 2022 would have been £1.0 million and £nil million, respectively.
The fair values of acquired identifiable assets and liabilities are reported as provisional, pending final reviews. The valuations of these assets
and liabilities shall be completed prior to the end of the measurement period.
190
Ibstock Plc Annual Report and Accounts 2022
30. Group subsidiaries
Ibstock Plc had the following subsidiaries as at 31 December 2022:
Entity
Ibstock Building Products Ltd1
Figgs Bidco Ltd
Ibstock Telling GRC Ltd2
Ibstock Group Ltd
Forticrete Ltd
Home Building Supplies Ltd3
Baldwin Industries Ltd3
Anderton Concrete Products Ltd
Oakhill Holdings Ltd3
Supreme Concrete Ltd
Gee-Co Holdings Ltd3
Ibstock Brick Holding Company Ltd
Ibstock Brick Ltd
Ibstock Manufacturing Services Ltd
Ibstock Leasing Ltd3
Kevington Building Products Ltd
Ibstock Brick Leicester Ltd
Ibstock Brick Aldridge Ltd
Ibstock Brick Himley Ltd
Ibstock Westbrick Ltd
Ibstock Brick Aldridge Property Ltd
Moore & Sons Ltd
Manchester Brick & Precast Ltd
Ibstock Brick Nostell Ltd
Ibstock Brick Roughdales Ltd
Ibstock Brick Cattybrook Ltd
Ibstock Hathernware Ltd
Ibstock Bricks (1996) Ltd
Wealdbeam Systems Ltd3
Loopfire Systems Ltd
Longley Holdings Ltd
Longley Precast Ltd
Longley Concrete Ltd
Generix Facades Ltd
Generix Facades International Ltd
Principal activity
Holding Company
Holding Company
Manufacturer and supplier of glass
reinforced concrete products
Holding Company
Manufacturer of concrete products
Non-trading
Dormant
Manufacturer and supplier of precast
and prestressed concrete products
Dormant
Manufacturer and supplier of precast
and prestressed concrete products
Dormant
Holding Company
Brick manufacturer
Brick manufacturer
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Holding Company
Dormant
Manufacturer and supplier of precast
and prestressed concrete products
Manufacturer and supplier of facades
Dormant
Registration
number
09329395
09332893
09415340
Country of
incorporation
UK
UK
UK
Proportion of
Ordinary Shares
held directly by
the parent
100%
100%
100%
Proportion of
Ordinary Shares
held by the
Group
100%
100%
100%
00984268
00221210
07350732
01516334
01900103
04077204
01410463
02480251
00784339
00063230
12292985
05378321
02122467
00106667
00614225
00092769
01606990
00251918
00118818
02888297
00531826
00598862
00011298
00424843
00246855
06932047
04105160
02027916
00888875
00440463
08432030
09777110
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
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%
100%
100%
100%
100%
100%
100%
100%
100%
75%
75%
All entities have a place of business in the UK. The registered office address for all entities is the same as for the ultimate Parent Company,
Leicester Road, Ibstock, Leicestershire, LE67 6HS.
All subsidiary undertakings are included in the consolidated financial statements. The proportion of the voting rights in the subsidiary
undertakings held directly by the Parent Company do not differ from the proportion of Ordinary Shares held. At 31 December 2022,
the Parent Company does not have any shareholdings in the preference shares of subsidiary undertakings included in the Group.
During the year Ibstock Management Services Ltd and Ibstock Finance Co Ltd were dissolved following a legal entity rationalisation project.
1 Ibstock Building Products Ltd is owned directly by Ibstock Plc. All other companies are indirectly owned.
2 Ibstock USA Ltd was renamed as Ibstock Telling GRC Ltd on 28 January 2022.
3 After the year end these companies have been dissolved following a legal entity rationalisation project.
191
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the consolidated financial statements continued
31. Related party transactions
Balances and transactions between Ibstock Plc (the ultimate Parent) and its subsidiaries (listed in Note 30), which are related parties,
are eliminated on consolidation and are not disclosed in this note.
See Note 7 for details of Director and key management personnel remuneration.
There are no further related party transactions nor any related party balances in either the 2022 or 2021 financial years.
32. Dividends paid and proposed
Cash flows from operating activities
Declared and paid during the year
Equity dividends on Ordinary Shares:
Final dividend for 2021: 5.0 pence (2020: 1.6 pence)
Interim dividend for 2022: 3.3 pence (2021: 2.5 pence)
Proposed (not recognised as a liability as at 31 December)
Equity dividends on Ordinary Shares:
Final dividend for 2022: 5.5 pence (2021: 5.0 pence)
31 December
2022
£’000
31 December
2021
£’000
20,438
13,263
33,701
6,547
10,233
16,780
21,560
21,560
20,482
20,482
At the beginning of 2023, the Directors proposed a final dividend in respect of the financial year ended 31 December 2022 of 5.5 pence
(2021: 5.0 pence) per Ordinary Share, which will distribute an estimated £21.6 million (2021: £20.5 million) of shareholders’ funds. Subject to
approval at the Annual General Meeting, this will be paid on 12 May 2023, to shareholders on the register at the close of business on 21 April 2023.
33. Post balance sheet events
In light of the fact that the Ibstock Pension Scheme was in a net surplus position after the full pension buy-in, the Group and the Trustees of
the Ibstock Pension Scheme agreed on 27 February 2023 that the Group would suspend regular contributions into the pension scheme with
effect from 1 March 2023 (see Note 21).
Except for this pension contribution agreement and the proposed dividend (see Note 32), no further subsequent events requiring further
disclosure or adjustment to these financial statements have been identified since the balance sheet date.
192
Ibstock Plc Annual Report and Accounts 2022 Company balance sheet
(prepared in accordance with UK GAAP – FRS 102)
Company number: 09760850
As at 31 December 2022
Fixed assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors – amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Creditors – amounts falling due after more than one year
Net assets
Capital and reserves
Called-up share capital
Share premium
Own shares held
Profit and loss account
Total equity
31 December
2022
£’000
31 December
2021
£’000
Notes
4
5
6
7
9
626,556
625,581
5,075
300
5,375
5,100
1,130
6,230
(213,471)
(208,096)
418,460
(141,398)
(135,168)
490,413
(99,769)
(99,738)
318,691
390,675
4,096
4,458
(31,589)
341,726
318,691
4,096
4,458
(1,741)
383,862
390,675
The notes on pages 195 to 198 are an integral part of these financial statements. As permitted by Section 408 of the Companies Act 2006,
the Parent Company’s profit and loss account has not been presented in these financial statements. The Parent Company’s loss after tax for
the year was £10.8 million (year ended 31 December 2021: loss of £8.1 million).
These financial statements were approved by the Board and authorised for issue on 07 March 2023. They were signed on its behalf by:
J Hudson
Director
C McLeish
Director
193
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022
Company statement of changes in equity
At 31 December 2022
Notes
Balance as at 1 January 2022
Loss for the year
Other comprehensive income
Total comprehensive expense for the financial year
Transactions with owners:
Issue of share capital
Share based payments
Other adjustment
Equity dividends paid
Purchase of own shares
Issue of share capital on exercise of share options
Transactions with owners
Balance at 31 December 2022
At 31 December 2021
Balance as at 1 January 2021
Loss for the year
Other comprehensive income
Total comprehensive expense for the financial year
Transactions with owners:
Issue of share capital
Share based payments
Other adjustment
Equity dividends paid
Purchase of own shares
Issue of share capital on exercise of share options
Issue of own shares held on exercise of share options
Transactions with owners
Balance at 31 December 2021
Notes
9
Share
capital
£’000
4,096
–
–
–
–
–
–
–
–
–
–
4,096
Share
capital
£’000
4,096
–
–
–
–
–
–
–
–
–
–
–
4,096
Share
premium
£’000
4,458
–
–
–
–
–
–
–
–
–
–
4,458
Share
premium
£’000
4,333
–
–
–
–
–
–
–
–
125
–
125
4,458
Retained
earnings
£’000
383,862
(10,830)
–
(10,830)
–
2,547
–
(33,701)
–
(152)
(31,306)
341,726
Retained
earnings
£’000
409,543
(8,068)
–
(8,068)
–
890
(1,540)
(16,780)
–
–
(183)
(17,613)
383,862
Own shares
held
£’000
(1,741)
–
–
–
–
–
–
–
(30,000)
152
(29,848)
(31,589)
Own shares
held
£’000
(922)
–
–
–
–
–
–
–
(1,309)
–
490
(819)
(1,741)
Total
equity
£’000
390,675
(10,830)
–
(10,830)
–
2,547
–
(33,701)
(30,000)
–
(61,154)
318,691
Total
equity
£’000
417,050
(8,068)
–
(8,068)
–
890
(1,540)
(16,780)
(1,309)
125
307
(18,307)
390,675
The notes on pages 195 to 198 form an integral part of these financial statements.
194
Ibstock Plc Annual Report and Accounts 2022 Notes to the Company financial statements
1. Authorisation of financial statements
The Parent Company financial statements of Ibstock Plc (the ‘Company’)
for the year ended 31 December 2022 were authorised for issue by
the Board of Directors on 7 March 2023 and the balance sheet was
signed on its behalf by J Hudson and C McLeish.
Dividend distribution
Dividend distributions to Ibstock’s shareholders are recognised in
the Company’s financial statements in the periods in which the final
dividends are approved in the Annual General Meeting, or when paid
in the case of an interim dividend.
Ibstock Plc is a public company limited by shares, which is
incorporated and domiciled in England whose shares are publicly
traded. The Company’s Ordinary Shares are traded on the London
Stock Exchange. The registered office is Leicester Road, Ibstock,
Leicestershire LE67 6HS and the Company registration number
is 09760850.
2. Summary of significant accounting policies
The financial statements have been prepared in accordance with
applicable accounting standards, the Financial Reporting Standard
applicable in the United Kingdom and Republic of Ireland (FRS 102)
and the Companies Act 2006. As a qualifying entity, as defined by
FRS 102, the Company has elected to adopt the reduced disclosure
exemptions set out with paragraph 1.12 of FRS 102, as described below.
These financial statements are prepared on a going concern basis,
under the historical cost convention.
The Company has not disclosed the information required by regulation
5(1)(b) of the Companies (Disclosure of Auditor’s Remuneration and
Liability Limitation Agreements) Regulations 2008 as the Group
accounts of the Company are required to comply with regulation 5(1)(b)
as if the undertakings included in the consolidation were a single group.
Going concern
The Directors reviewed detailed cash flows and forecasts of financial
performance and stress-tested the projections. The forecasts include
estimates of trading performance, operational and capital expenditure
and debt requirements within the period to 30 June 2024.
Despite the net current liability position of the company, the Company
is forecast to be able to meet its liabilities as they fall due throughout
the reviewing period. Therefore, having assessed the principal risks
and all other relevant matters, the Directors consider it appropriate to
adopt the going concern basis of accounting in preparing the financial
statements of the Parent Company. The Group going concern assessment
can be found in Note 1 of the Group financial statements.
Fixed asset investments
Investments in subsidiaries are included at cost stated at the historical
value at the time of investment less any provisions for impairment
and net of merger and Group reconstruction relief available.
Share based payments
The Company operates a number of equity-settled share based
compensation plans on behalf of the Group. The fair value of the
employee services received under such plans is capitalised as an
investment in the Company’s subsidiary until such time as intra-Group
recharges are levied by the Company to recover this cost from its
subsidiaries. Upon recharge, the amounts recharged are treated as
a return of capital contribution and recorded as a credit to equity (up
to the value of the initial share based payment treated as a capital
contribution). Any recharge in excess of the capital contribution is
recognised within the Company income statement. The amount to
be recognised over the vesting period is determined by reference to
the fair value of share based payments. For further details of share
based payments, see Note 26 of the Group financial statements.
Financial instruments
(i) Objectives and policies
The Company, in common with its Group subsidiaries, must comply
with the Group’s finance guidelines that set out the principles and
framework for managing Group-wide finances. Further information
on the Group’s policies and procedures is available in the Group
financial statements. The Company does not enter into speculative
treasury arrangements.
(ii) Foreign exchange, credit, liquidity and financial risks
Foreign exchange risk management
The Company primarily transacts in Sterling and therefore exposure
to foreign exchange risk is regarded as low.
Credit risk management
For the Company, this risk arises from cash and cash equivalents and
deposits with banks. This is managed on a Group basis and there are
a number of initiatives underway to mitigate this risk. These include
concentrating activities with a group of banks that have strong,
independently verified credit ratings. For each bank, individual risk
limits are set based on its financial position, credit ratings, past
experience and other factors.
Liquidity planning, trends and risks
The Company has sufficient committed borrowing facilities to meet
planned liquidity needs with headroom, through facilities provided
by the Group.
The Company has adopted IAS 39 for recognition and measurement
of financial instruments.
(iii) Financial assets
Financial assets, including trade and other receivables, loans to fellow
Group companies and cash and bank balances, are initially recognised
at fair value.
Such assets are subsequently carried at amortised cost using the
effective interest method.
(iv) Financial liabilities
Financial liabilities, including trade and other payables and loans
from fellow Group companies, are initially recognised at fair value.
Debt instruments are subsequently carried at amortised cost, using
the effective interest rate method in accordance with IAS 39.
Taxation
Taxation expense for the year comprises current and deferred tax
recognised in the reporting year. Tax is recognised in the profit and
loss account, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case tax
is also recognised in other comprehensive income or directly in
equity respectively.
195
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the Company financial statements continued
(b) The Parent Company is a qualifying entity and has taken
advantage of the exemption from disclosing key management
compensation (other than Directors’ emoluments) under FRS 102
(Section 1.12(e)), as it is a Parent entity whose separate financial
statements are presented alongside the consolidated financial
statements, which contain the requisite equivalent disclosures.
(c) The Parent Company is a qualifying entity and has taken
advantage of the exemption from disclosing certain financial
instrument disclosures under FRS 102 (Section 1.12(c)), as it is a
Parent entity whose separate financial statements are presented
alongside the consolidated financial statements, which contain
the requisite equivalent disclosures.
(d) The Company has elected to avail itself of the disclosure
exemption within FRS 102 (Section 1.12(d)) in relation to
certain share based payment disclosure requirements as it
is a Parent entity whose separate financial statements are
presented alongside the consolidated financial statements,
which contain the requisite equivalent disclosures.
(e) The Company has taken advantage of the reduced disclosure
exemption under FRS 102 (Section 1.12(a)) and is not required to
follow the requirements of paragraph 4.12(a)(iv) of FRS 102 and
as such only discloses a reconciliation of shares outstanding
between the beginning and end of the year and not the prior year.
In addition, the Company has taken the exemption within Section 33
of FRS 102 from disclosing intra-Group transactions with wholly
owned subsidiaries.
Critical accounting judgements and estimation uncertainty
In applying the Company’s accounting policies, as described above,
the Directors are required to make judgements (other than those
involving estimations) that have a significant impact on the amounts
recognised and to make estimates and assumptions that affect the
reported amounts of assets, liabilities, income and expenses. Due to
the inherent uncertainty in making these critical judgements and
estimates, actual outcomes could be different.
There are no critical accounting judgements or estimates were
made in applying the Company’s accounting policies in current
and prior year.
3. Employee information
The Company has no employees. Non-Executive Directors of the
Company are employed under letters of appointment. Full details
of Executive and Non-Executive remuneration is disclosed in the
Annual Report on Remuneration on pages 115 to 134. For further
details of Directors’ remuneration, refer to Note 7 of the Group
financial statements.
2. Summary of significant accounting policies continued
During the ordinary course of business, there are transactions
and calculations for which the ultimate tax determination may be
uncertain. The calculation of the tax charge therefore necessarily
involves a degree of estimation and judgement. The tax liabilities are
based on estimates of whether additional taxes will be due and tax
assets are recognised on the basis of probable future recoverability.
This requires management to exercise judgement based on its
interpretation of tax laws and the likelihood of settlement of tax
liabilities or recoverability of tax assets. To the extent that the final
outcome differs from the estimates made, tax adjustments may be
required which could have an impact on the tax charge and profit
for the period in which such a determination is made.
(i) Current tax
Current tax is the amount of income tax payable in respect of the
taxable profit for the year or prior years. Tax is calculated on the
basis of tax rates and laws that have been enacted or substantively
enacted by the year end.
Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate
on the basis of amounts expected to be paid to the tax authorities.
(ii) Deferred tax
Deferred tax arises from timing differences that are differences
between taxable profits and total comprehensive income as
stated in the financial statements. These timing differences arise
from the inclusion of income and expenses in tax assessments
in periods different from those in which they are recognised
in financial statements.
Deferred tax is recognised on all timing differences at the reporting
date. Unrelieved tax losses and other deferred tax assets are only
recognised when it is probable that they will be recovered against
the reversal of deferred tax liabilities or other future taxable profits.
Deferred tax is measured using tax rates and laws that have been
enacted or substantively enacted by the year end and that are
expected to apply to the reversal of the timing differences.
Share capital
Ordinary Shares are classified as equity. Incremental costs directly
attributable to the issue of new Ordinary Shares or options are
shown in equity as a deduction, from the proceeds.
Related parties
The Group discloses transactions with related parties which are
not wholly owned within the same Group. Where appropriate,
transactions of a similar nature are aggregated unless, in the opinion
of the Directors, separate disclosure is necessary to understand
the effect of the transactions on the Group financial statements.
Disclosure exemptions
In preparing the Parent Company financial statements, the Company
has elected to adopt the reduced disclosure exemptions set out in
paragraph 1.12 of FRS 102, because the Company prepares Group
consolidated financial statements, as described below:
(a) Under FRS 102 (Section 1.12(b)), the Parent Company is exempt
from the requirements to prepare a cash flow statement on the
grounds that its cash flows are included within the Ibstock Plc
Group consolidated financial statements.
196
Ibstock Plc Annual Report and Accounts 2022 4. Fixed asset investments
Cost
At 1 January 2021
Additions – fair value of share incentives issued to Group employees
Other adjustment
At 31 December 2021
Additions – fair value of share incentives issued to Group employees
At 31 December 2022
The Company holds 100% of the issued share capital of Ibstock Building Products Limited.
5. Debtors
Amounts owed by subsidiary undertakings
Group relief receivable
Deferred tax asset
Other tax asset
Prepayments and other debtors
Amounts owed by subsidiary undertakings are unsecured, repayable on demand and interest free.
6. Creditors – amounts falling due within one year
Trade creditors
Amounts owed to subsidiary undertakings
Borrowings
Accruals and other creditors
Corporation tax
Investment in
subsidiary
undertakings
£’000
626,722
399
(1,540)
625,581
975
626,556
31 December
2022
£’000
2,925
–
267
2
1,881
5,075
31 December
2021
£’000
2,201
980
106
–
1,813
5,100
31 December
2022
£’000
318
208,301
436
4,344
72
213,471
31 December
2021
£’000
208
136,328
333
4,529
–
141,398
Amounts owed to subsidiary undertakings are unsecured, repayable on demand and interest free. The Group has a cash pooling arrangement
with its transactional bank.
7. Creditors – amounts falling due after more than one year
Borrowings
31 December
2022
£’000
99,769
99,769
31 December
2021
£’000
99,738
99,738
In November 2021, the Company issued £100 million of private placement notes to Pricoa Private Capital, with maturities of between seven
and twelve years and an average total cost of funds of 2.19% (range 2.04% – 2.27%).
Additionally, at the same time the Company entered into a £125 million Revolving Credit Facility (RCF) provided by a syndicate of five banks
for an initial four-year period, with a one-year extension option. This facility remains undrawn during the year ended 31 December 2022.
Further details of the Private Placement and RCF are provided in Note 19 of the Group financial statements.
The carrying values of financial liabilities have been assessed as materially in line with their fair values.
No security is currently provided over the Company’s borrowings.
197
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Notes to the Company financial statements continued
8. Financial instruments
The Company has the following financial instruments:
Financial assets that are debt instruments measured at amortised cost:
Amounts owed by subsidiary undertakings
Group relief receivable
Cash and bank balances
Financial liabilities measured at amortised cost:
Trade creditors
Amounts owed to subsidiary undertakings
Borrowings
Accruals and other creditors
Loans and receivables
31 December
2022
£’000
31 December
2021
£’000
2,925
–
300
3,225
2,201
980
1,130
4,311
Loans and payables
31 December
2022
£’000
31 December
2021
£’000
318
208,301
100,205
4,344
313,168
208
136,328
100,071
4,529
241,136
The Company has no derivative financial instruments. The fair value of the financial assets and liabilities has been assessed as materially in line
with their carrying values.
9. Called-up share capital
Number of
shares
Share
capital
£’000
Issued, called-up and fully paid:
At 1 January 2022 and 31 December 2022
Ordinary Shares of £0.01 each
409,631,594
4,096
In the current year, There was no share capital movement. In the year ended 31 December 2021, share capital has increased by 71,809
Ordinary Shares of £0.01 as a result of the issue of shares to satisfy share options exercised in the year. Details of outstanding share
options and other awards relating to the Company’s share awards are included in Note 26 to the Group financial statements.
10. Contingent liabilities
The Company has guaranteed all Group bank borrowings as detailed in Note 19 of the Group financial statements. As part of the Group’s
joint and several liability, the Company is a party to the guarantee of the Group’s VAT liability.
11. Related party transactions
During the year, there were no related party transactions between the Company and its non-wholly owned subsidiaries.
The Company is exempt from disclosing related party transactions with other companies that are wholly owned within the Group.
See Note 30 of the Group financial statements.
The ultimate Parent Company and the smallest and largest group to consolidate these financial statements is Ibstock Plc.
Share awards to key management personnel resulted in an amount of £1.0 million in the year ended 31 December 2022 (year ended
31 December 2021: £0.4 million), which has been taken to the fixed asset investment. See Note 26 of the Group financial statements
and the Directors’ Remuneration Report on pages 115 to 134 for further details of share based payments.
12. Post balance sheet events
A final dividend of 5.5 pence (2021: 5.0 pence) per Ordinary share is proposed in respect of the financial year ended 31 December 2022.
See Note 32 of the Group financial statements.
See Note 33 of the Group financial statements for details of other post balance sheet events.
198
Ibstock Plc Annual Report and Accounts 2022 Group five-year summary
Results summary
Continuing operations
Revenue
Adjusted EBITDA1
Exceptional items1 impacting EBITDA
Depreciation and amortisation
Operating profit/(loss)
Exceptional finance costs
Net finance costs
Year ended 31 December
2018
2019
2020
2021
2022
391,402
409,257
316,172
408,656
512,886
112,371
8,025
(24,405)
95,991
122,265
(2,833)
(35,409)
84,023
52,122
(35,257)
(36,477)
(19,612)
103,053
5,230
(38,349)
69,934
139,667
6,278
(38,518)
107,427
–
(3,475)
–
(2,032)
(414)
(3,914)
–
(4,992)
–
(2,663)
Profit/(loss) before taxation
92,516
81,991
(23,940)
64,942
104,764
Taxation
(16,102)
(15,516)
(4,081)
(33,129)
(17,884)
Profit/(loss) from continuing operations
76,414
66,475
(28,021)
31,813
86,880
Profit/(loss) from discontinued operations
652
(383)
–
–
–
Profit/(loss)
Profit/(loss) attributable to owners of the Company
Profit/(loss) attributable to non-controlling interest
77,066
77,066
–
66,092
66,092
–
(28,021)
(28,021)
–
31,813
31,813
–
86,880
86,908
(28)
Employment of capital
Goodwill and intangible assets
Property, plant and equipment
Right-of-use assets
Non-current assets
Inventories
Receivables
Current tax recoverable
Assets held for sale
Current assets
Payables
Lease liabilities
Other liabilities excluding debt
Net assets excluding pension and debt
Net debt1
Pension
Derivative financial instruments
Total net assets
Called-up share capital
Reserves
Equity attributable to owners of the Company
Equity attributable to non-controlling interest
Total equity
2018
100,587
365,478
–
466,065
68,426
55,733
–
–
124,159
(92,447)
–
(82,069)
415,708
(48,382)
80,705
–
448,031
4,065
443,966
448,031
–
448,031
2019
102,594
386,255
30,479
519,328
84,327
58,088
–
1,186
143,601
(88,150)
(30,361)
(83,922)
460,496
(84,851)
88,656
–
464,301
4,093
460,208
464,301
–
464,301
At 31 December
2020
95,163
371,395
26,653
493,211
63,386
58,906
–
1,186
123,478
(85,423)
(29,076)
(78,711)
423,479
(69,184)
43,576
–
397,871
4,096
393,775
397,871
–
397,871
2021
94,625
375,800
25,114
495,539
72,821
64,756
3,199
875
141,651
(103,132)
(27,184)
(102,527)
404,347
(38,872)
57,754
–
423,229
4,096
419,133
423,229
–
423,229
1 Alternative performance measures are described in Note 3 to the consolidated financial statements.
2022
90,242
409,091
31,478
530,811
94,275
65,935
1,717
–
161,927
(120,003)
(33,104)
(93,261)
446,370
(45,922)
15,194
567
416,209
4,096
412,062
416,158
51
416,209
199
Strategic ReportGovernanceFinancial StatementsAdditional informationIbstock Plc Annual Report and Accounts 2022 Group five-year summary continued
Business ratios
Adjusted EBITDA1 margin
Interest cover (times)
Net debt to adjusted EBITDA1
Return on capital employed1
Adjusted operating cash flow1,2 (£m)
Capital expenditure (£m)
Adjusted free cash flow1,2 (£m)
Statutory basic earnings per share
Adjusted basic earnings per share1
Interim dividend per share
Final dividend per share
Supplementary dividend per share
Total dividend per share
Closing share price
Closing market capitalisation (£m)
2018
28.7%
35x
0.43x
20.6%
84
(31)
53
18.8p
18.8p
3.0p
6.5p
6.5p
16.0p
199p
807.7
2019
29.9%
37x
0.74x
19.3%
72
(39)
33
16.3p
18.3p
3.2p
–
5.0p
3.2p
315p
1,289.3
At 31 December
2020
16.5%
10x
1.53x
3.7%
50
(24)
26
(6.8p)
4.0p
–
1.6p
–
1.6p
207p
846.2
2021
25.2%
21x
0.41x
15.8%
76
(25)
51
7.8p
13.9p
2.5p
5.0p
–
7.5p
204p
834.8
2022
27.2%
51x
0.35x
23.5%
108
(58)
49
21.4p
22.7p
3.3p
5.5p
–
8.8p
154p
630.8
1 Alternative performance measures are described in Note 3 to the consolidated financial statements.
2 Adjusted operating and free cash flow measures are shown for continuing operations following the disposal of the US Glen-Gery business in November 2018. Prior periods have not been restated.
Cautionary Statement
This Annual Report and Accounts has been prepared for, and only for, the members of the Company, as a body, and no other persons.
The Company, its Directors, employees, agents or advisors do not accept or assume responsibility to any other person to whom this document
is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed. By their nature, the statements
concerning the risks and uncertainties facing the Group in this Annual Report and Accounts involve uncertainty, since future events and
circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect
knowledge and information available at the date of preparation of this Annual Report and Accounts and the Company undertakes no
obligation to update these forward-looking statements. Nothing in this Annual Report and Accounts should be construed as a profit forecast.
200
Ibstock Plc Annual Report and Accounts 2022 Shareholder Information
Group Company Secretary
Becky Parker
Registered office
Leicester Road
Ibstock
Leicestershire
LE67 6HS
United Kingdom
Tel: +44 (0)1530 261 999
Company registration number
09760850
Auditor
Deloitte LLP
Four Brindleyplace
Birmingham
B1 2HZ
Joint corporate brokers
UBS AG London Branch
5 Broadgate
London
EC2M 2QS
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
Financial PR
Citigate Dewe Rogerson
8th Floor
Holborn Gate
26 Southampton Buildings
London WC2A 1AN
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
0371 664 0300
From overseas call +44 (0)371 664 0300.
Calls are charged at the standard
geographical rate and will vary by provider.
Calls outside the United Kingdom will be
charged at the applicable international rate.
Open between 09:00–17:30, Monday to Friday
excluding public holidays in England and Wales
or email Link at enquiries@linkgroup.co.uk.
Corporate website
www.ibstockplc.co.uk
Brand websites
Ibstock Brick
Ibstock Kevington
Forticrete
Supreme
Anderton
Longley
www.ibstockbrick.co.uk
www.ibstockbrick.co.uk/kevington
www.forticrete.co.uk
www.supremeconcrete.co.uk
www.andertonconcrete.co.uk
www.longley.uk.com
Analysis of shareholders – 31 December 2022
2022
1-1,000
1,001–5,000
5,001–10,000
10,001–50,000
50,001–Highest
Total
Holder type
Individuals
Nominee and institutional investors
Total
Number of
holdings
307
254
84
129
225
999
Number of
holdings
596
403
999
%
30.73
25.43
8.41
12.91
22.52
100
%
59.66
40.34
100
Balance as at
31 December 2022
136,199
690,421
611,949
2,940,084
405,252,941
409,631,594
Balance as at
31 December 2022
1,798,823
407,832,771
409,631,594
%
0.03
0.17
0.15
0.72
98.93
100
%
0.44
99.56
100
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