Company Announcements

Stelrad Group plc - preliminary announcement of final results for the year ended 31 December 2021

 

Strong results, ahead of expectations, following successful admission to the London Stock Exchange.

 

Stelrad Group plc ("Stelrad" or "the Group" or "the Company", LSE: SRAD), a leading specialist manufacturer and distributor of steel panel radiators in the UK, Europe and Turkey, today announces its audited financial results for the 12 months ended 31 December 2021.

 

Results summary

 

	2021		2020		Increase/ (decrease) %
Revenue, £m	272.3		196.6		38.5
Adjusted operating profit, £m *	33.2		15.6		112.3
Adjusted operating profit margin, % *	12.2		7.9		4.3pp
Adjusted profit after tax, £m *	21.6		5.7		281.0
Adjusted Earnings per share, pence *	16.92		4.44		281.0
Statutory operating profit, £m	26.6		19.5		36.0
Statutory profit after tax, £m	14.7		8.7		68.5
Statutory earnings per share, pence	11.51		6.83		68.5
Adjusted free cash flow, £m *	18.2		12.5		46.5
Net debt (excluding lease liabilities), £m	40.9		58.5		(30.1)
Dividend per share, pence	0.96		-		n/a

 

*Adjusted figures are stated before exceptional items, foreign exchange differences and tax thereon where applicable.

 

Financial and operational highlights

·        Good progress across all territories during 2021:

-      UK & Ireland - 45.8% revenue growth, 150.5% growth in adjusted operating profit.

-      Europe - 30.4% revenue growth, 31.6% growth in adjusted operating profit.

-      Turkey & International - 43.7% revenue growth, 137.9% growth in adjusted operating profit.

·      Total sales volume increased by 20% versus 2020 and was 9% higher than in 2019, the last pre-pandemic year.

·      Profitability enhanced by further production transfers to low-cost Turkish facility and an improved mix of premium steel panel radiators where volumes rose by 15% versus 2020 and 23% relative to 2019.

·      Proactive price optimisation in light of substantial increases in steel prices.

·      Completed a six-year, c£25 million programme of incremental investment into Stelrad's three main operational facilities.

·      Successful IPO on the London Stock Exchange's Main Market.

 

Commenting on the Group's performance, Trevor Harvey, Chief Executive Officer, said:

"2021 was a pivotal year for Stelrad and, following our successful IPO in November and a robust end to the year from a trading perspective, we enter 2022 with strong momentum.  Macro trends such as the ongoing focus on decarbonisation and the growing appeal of premium steel panel radiators continue to provide a positive backdrop for our business and support ongoing demand for our products.  As a result, the Group remains confident in its ability to deliver on its long-term growth plans."

 

Current trading and outlook

Trading since the period end has remained broadly in line with management expectations with some reduction in overall volumes more than offset by increased revenues and improving margins.  

 

The Group's market leading products and brands, coupled with unrivalled access to specifiers, mean that the Group remains very well positioned versus its competitors across all key geographies. 

 

Notwithstanding supply chain challenges impacting the building products sector, including the situation in Ukraine, expectations for the year remain unchanged and the Group remains well placed to build on the strong momentum generated in 2021.

 

For further information:

Media enquiries

Stelrad Group plc Trevor Harvey, Chief Executive Officer George Letham, Chief Financial Officer	+44 (0)191 261 3301
Powerscourt James White / Genevieve Ryan	stelrad@powerscourt-group.com +44 (0)7855 432 699

 

Notes to Editors

Stelrad Group plc is a leading specialist manufacturer and distributor of steel panel radiators in the UK, Europe and Turkey, selling an extensive range of standard and premium steel panel radiators, low surface temperature (LST) radiators, towel warmers, decorative steel tubular radiators and other steel "column" radiators to more than 500 customers annually.

 

The Group has four core brands: Stelrad, Henrad, Hudevad and Termo Teknik, which had approximately 16.6 per cent. share by volume of total markets in the UK, Europe, and Turkey in 2020, including 50.2 per cent. market share in the UK. In 2020, the Group held top 3 share positions in 11 countries and was #1 in the UK, Ireland, the Netherlands, Belgium and Denmark. 

 

It is headquartered in Newcastle upon Tyne in the United Kingdom with manufacturing and distribution facilities at Mexborough in the UK, Nuth in the Netherlands and Çorlu in Turkey, employing 1,326 employees across the business, during 2021.

 

The origins of the Group date back to the 1930s and, today, Stelrad enjoys long established commercial relationships with many of its customers, having served each of its top five customers for over twenty years.

 

Chair's statement

 

Overview

It is a pleasure to be addressing you as Chair of Stelrad Group plc, following our successful flotation on the London Stock Exchange in November 2021. Despite the impact of the Covid-19 pandemic across the world, Stelrad's impressive progress continued in 2021 as we achieved a record financial performance.

 

This underlines the resilience of Stelrad's business model and the robustness of our strategy in the face of an unpredictable trading environment and volatility in commodity prices. I believe this resilience positions us well to capitalise on the opportunities of the future, as economies recover post-pandemic and decarbonisation initiatives increasingly influence the specification of tomorrow's heating systems.

 

Purpose

We define our purpose as helping to heat homes sustainably, recognising the valuable role that the Group has to play, both now and in the future, in the specification and supply of heating products that contribute effectively to environmental and social improvement.

 

People

Our main priority over the last two years has been the safety and wellbeing of our employees and their families. We are extremely grateful to our dedicated and loyal teams for their commitment during this unprecedented period of global disruption and for their outstanding contribution to ensuring a safe working environment whilst generating such exceptional business performance.

 

Performance and results

Stelrad's strong set of results reflects the underlying resilience of the business despite the pandemic, with a 39% rise in Group revenue to £272.3 million alongside adjusted operating profit more than doubling to £33.2 million underlining the quality of our business. 

 

The Group made good progress in all territories during 2021 with UK & Ireland, Europe and Turkey & International all delivering strong revenue and profit growth.  This performance was aided by the supportive backdrop of the continued focus on decarbonisation and the move towards higher added value premium steel panel radiators. We completed our six-year programme of upgrading our three main facilities, which has seen a total of £25 million invested in our best-in-class manufacturing capabilities.

 

Dividends

The Group's strong financial results led the Board to recommend a final dividend of 0.96 pence per share, to be paid on a pro rata basis relating to the period between listing and 31 December 2021. Subject to approval by shareholders at the Annual General Meeting on 16 May 2022, the final dividend will be paid on 27 May 2022 to shareholders on the register on 29 April 2022.

 

Strategy

Our strong results in 2021 were driven by clear commercial and operational strategies developed, over many years, in pursuit of four key objectives: growing market share, improving product mix, optimising routes to market and positioning effectively for decarbonisation. We are confident the Group will have increased its overall market share in 2021, a year which saw us complete our significant programme of operational investment to provide the platform for future profitable growth.

 

2021 showed increasing contribution to performance from higher added value premium steel panel and design radiators. In addition, the Group continues to adapt quickly and effectively to evolving routes to market, with changes in distributor ownership and digital transformation set to affect the heating products supply chain over the longer term. 

 

2021 was also notable for Stelrad's introduction of new products and expansion of product ranges particularly well adapted to lower temperature systems, in readiness for the transition to low and zero carbon heat sources anticipated over the coming years, as we strive to achieve our purpose of helping to heat homes sustainably.

 

Environmental, social and governance ("ESG") objectives

Stelrad is committed to high standards of corporate responsibility, sustainability and employee engagement. We aim to consider fully the long-term impact of all our business operations. To that end, we have set up a task force, led by the Chief Executive Officer, to develop our ESG strategy more fully during the course of 2022, in line with our purpose of helping to heat homes sustainably.

 

To ensure sustainability remains at the heart of what we do, the task force will conduct a detailed review of the Group's activities in order to develop a comprehensive ESG strategy.  This will build on our existing work to redefine our ambitions and targets and identify how we can better contribute to supporting wider international goals and will be fully aligned with our corporate aims, objectives and values.

 

Board

I would like to take this opportunity to welcome our independent Non-Executive Directors Terry Miller, Nicola Bruce and Martin Payne to the Board and look forward to Stelrad benefiting from their experience and expertise over the coming years.

 

Governance

The Group is committed to high levels of corporate governance, in line with its status as a company with a premium listing on the Main Market of the London Stock Exchange. Our compliance with the 2018 edition of the UK Corporate Governance Code is set out in the Governance Report.

 

Summary

Stelrad has continued to progress despite the disruption of the Covid-19 pandemic and our first Annual Report as a listed company underlines the strength of the business during challenging times. This strength is founded on a coherent and robust strategy for profitable long-term growth, substantial investment in our operational assets and the hard work and innovation of our experienced and dedicated people.

 

With the inevitable changes decarbonisation and digital transformation will bring, the Group is well positioned to maximise its opportunities as markets evolve, motivated by our core purpose to help to heat homes sustainably both now and in the future.

 

 

Bob Ellis

Chair

14 March 2022

 

Chief Executive Officer's review

 

Overview

This financial year has been one of significant progress by the Stelrad Group, which culminated in November 2021 with our successful listing on the premium segment of the London Stock Exchange.

 

The Group delivered substantial organic revenue growth in 2021, increasing by 38.5% from £196.6 million in 2020 to £272.3 million, whilst adjusted operating profit rose by 112.3% to £33.2 million (2020: £15.6 million).

 

Satisfying performance against KPIs

In addition to revenue and profit growth, the Group also performed strongly against its other key metrics.

 

Sales volume increased by 20% versus 2020 and was 9% higher than in 2019, the last pre-pandemic year. This reflects Stelrad's progress in all of its key territories. The UK & Ireland delivered revenue growth of 45.8% and adjusted operating profit growth of 150.5% while, for Europe, revenue and adjusted operating profit were up 30.4% and 31.6% respectively.  In our Turkey & International markets, revenue grew by 43.7% while adjusted operating profit rose by 137.9%.

 

Our growth in these metrics across all geographies was driven by volume recovery and timely, proactive price optimisation as steel prices rose substantially. Profitability was enhanced by further production transfers to our low-cost Turkish facility, and an improved mix of premium steel panel and design radiators.

 

As compared to 2020, Stelrad achieved very satisfying volume growth of 15% in higher added value premium steel panel radiators, representing an increase of 23% when compared to 2019. This is the outcome of our clear strategy to develop and grow this profitable segment, enabling us to fully capitalise on the Group's sustainable competitive advantage in this product category, notably in the UK, where total market volume is high, premium steel penetration is low and Stelrad has a strong leadership position.

 

Investment for the future

In 2021, Stelrad completed a six-year, c£25 million programme of incremental investment into its three main operational facilities. Our goals were to increase production flexibility, capacity and productivity, along with improving product quality. As a result, during 2021, we benefited from further transfers of production from our mainland European sites to the Group's lowest cost facility in Turkey.

 

The investment in our operational facilities is crucial to the Group improving the health, safety and wellbeing of our employees as demonstrated by our sites in the UK and Netherlands (as of January 2022) currently having both operated for over one full year without any lost time accidents. The Group is now focused on utilising the successes in the UK and Netherlands to further reduce the risk of lost time accidents in Turkey.

 

The transfer of production to Turkey combined with an improved premium steel panel product mix, drove a 4% increase in contribution per radiator versus 2020, an increase of 23% relative to 2019. Low-cost manufacturing remains an essential enabling strategy for market share growth and positions Stelrad as a natural consolidator of the radiator market over the longer term.

 

Following the creation of our European Distribution Centre in the Netherlands in 2019, we have also continued to pursue our strategy of making our products readily available for our customers, with 2021 investments in our warehousing facilities in Turkey and the UK. In the Danish market, where we gained market leadership in 2020, we established a new commercial and distribution hub to provide improved logistics for local customers.

 

Product range innovation

Stelrad has one of the radiator market's most comprehensive and innovative ranges of products. 2021 saw the addition of new electric and fan assisted radiators in the form of the Dahlia E and Vento ranges and further expansion of higher heat output vertical and triple panel, triple convector K3 steel panel ranges. These will form an increasingly important part of the Group's offer as we ensure we continue to provide heat emitters suitable for low and zero carbon heating systems, regardless of heat source. As countries look to decarbonise homes and meet long-term net zero carbon commitments, we have a significant opportunity to help heat homes sustainably and, in so doing, build a stronger business for all Stelrad stakeholders.

 

Embracing digital transformation

In the private residential RMI segment, routes to market are evolving and sustained progress is being made by multichannel players, which combine a network of physical retail outlets with a strong online presence.  Stelrad is well positioned to benefit from the opportunities arising from digital transformation, both through supply to the leading players in the specialist online and multichannel segment and through a programme of increasing investment in its own digital presence in the business to consumer (B2C) market.

 

The Group also continues to invest in Building Information Modelling to ensure specifiers in new build and commercial segments can easily incorporate Stelrad products into their building and heating system designs.

 

 

Trevor Harvey

Chief Executive Officer

14 March 2022

 

Finance and business review

 

Group overview

 

The following table summarises the Group's results from operations for the years ended 31 December 2021 and 31 December 2020.

 

	2021		2020		Increase / (decrease)		Increase / (decrease)
	£m		£m		£m		%
Revenue	272.3		196.6		75.7		38.5
Adjusted operating profit	33.2		15.6		17.6		112.3
Exceptional items	(9.6)		-		(9.6)		-
Foreign exchange differences	3.0		3.9		(0.9)		(23.6)
Operating profit	26.6		19.5		7.1		36.0
Net finance costs	(10.3)		(10.3)		-		1.0
Profit before tax	16.3		9.2		7.1		77.7
Income tax expense	(1.6)		(0.5)		(1.1)		(240.4)
Profit for the year	14.7		8.7		6.0		68.5
Earnings per share (p)	11.51		6.83		4.68		68.5%
Adjusted Earnings per share (p)(1)	16.92		4.44		12.48		281.0%
Dividend per share (p)	0.96		-

 

⁽¹⁾ Adjusted earnings per share is calculated on adjusted profit after tax, being earnings before exceptional items and foreign exchange differences and tax on exceptional items and foreign exchange differences.

 

Financial overview

Revenue for the year was £272.3 million, an increase of £75.7 million, or 38.5%, on last year (2020: £196.6 million). This was principally as a result of increased sales volumes which were exceptionally low in Q2 2020 due to the Covid-19 pandemic, and implementation of selling price increases in 2021, recovering a significant rise in steel prices.

 

Adjusted operating profit for the year was £33.2 million, an increase of £17.6 million, or 112.3%, compared to last year (2020: £15.6 million).  This was principally as a result of an increase in sales volumes, the transfer of production to lower cost facilities, a growth in premium panel sales volumes and the benefit of increased selling prices, partially offset by the impact of steel price rises.  The Group benefited from its normal policy of forward purchasing steel in Turkey when steel prices increased rapidly during 2021 to unprecedented levels.

 

Statutory operating profit for the year was £26.6 million (2020: £19.5 million), including exceptional costs of £9.6 million (2020: £nil) and the impact of foreign exchange gains of £3.0 million (2020: £3.9 million). The Group's effective tax rate in the year benefited from the one-off recognition of UK deferred tax assets.

 

Profit attributable to shareholders increased by £6.0 million, or 68.5%, to £14.7 million (2020: £8.7 million). Earnings per share was 11.51 pence (2020: 6.83 pence) and adjusted earnings per share was 16.92 pence (2020: 4.44 pence).

 

There was a significant devaluation of the Turkish Lira during 2021.  When the opening reserves and current year profits of the Group were retranslated at the closing exchange rate, the result was a charge of £26.1 million through the consolidated statement of comprehensive income in the year.

 

On 10 November 2021, the Group listed on the premium segment of the London Stock Exchange, having previously been under private ownership. As part of this process, the Group repaid all legacy financing arrangements including shareholder loans.  This was funded by a part drawdown on a new £80 million debt facility, a share capital raise of £25.1 million and existing cash. The new debt is a revolving credit facility with an initial three-year term, then two one-year extension options. At 31 December 2021 the Group had cash of £15.6 million and undrawn available facilities of £23.5 million, with net debt excluding finance leases of £40.9 million.

 

Revenue by geographical market

The table below sets out the Group's revenue by geographical market.

 

Revenue by geographical market	2021		2020		Increase / (decrease)		Increase / (decrease)
	£m		£m		£m		%
UK & Ireland	130.4		89.4		41.0		45.8
Europe	118.1		90.6		27.5		30.4
Turkey & International	23.8		16.6		7.2		43.7
Total	272.3		196.6		75.7		38.5

 

UK & Ireland

The Group's revenue in UK & Ireland for the year was £130.4 million (2020: £89.4 million), an increase of £41.0 million, or 45.8%. This was principally as a result of increased sales volumes which were lower in Q2 2020 due to the impact of the Covid-19 pandemic on the UK market. Additionally, four selling price increases were applied in 2021 following a significant rise in steel prices.

 

Europe

The Group's revenue in Europe for the year was £118.1 million (2020: £90.6 million), an increase of £27.5 million, or 30.4%. This was principally as a result of market share gains through growth in sales volumes with existing customers and four selling price increases during 2021 due to rising steel prices.

 

Turkey & International

The Group's revenue in Turkey & International for the year was £23.8 million (2020: £16.6 million), an increase of £7.2 million, or 43.7%. This was principally as a result of increased sales volumes which were lower in 2020 due to the Covid-19 pandemic and selling price increases in 2021 following a significant rise in steel prices.

 

 

 

Adjusted operating profit by geographical market

The table below sets out the Group's adjusted operating profit by geographical market.

 

Adjusted operating profit by geographical market	2021		2020		Increase / (decrease)		Increase / (decrease)
	£m		£m		£m		%
UK & Ireland	21.6		8.6		13.0		150.5
Europe	12.9		9.8		3.1		31.6
Turkey & International	2.9		1.2		1.7		137.9
Central costs	(4.2)		(4.0)		(0.2)		(5.3)
Total	33.2		15.6		17.6		112.3

 

UK & Ireland

The Group's adjusted operating profit in the UK & Ireland for the year was £21.6 million (2020: £8.6 million), an increase of £13.0 million, or 150.5%. This was principally as a result of an increase in sales volumes after the initial impact of the Covid-19 pandemic on the UK market, increased premium panel sales volumes, the transfer of additional production to lower cost facilities and the benefit of increased selling prices, partially offset by the impact of steel price rises.

 

Europe

The Group's adjusted operating profit in Europe for the year was £12.9 million (2020: £9.8 million), an increase of £3.1 million, or 31.6%. This was principally as a result of an increase in sales volumes, the transfer of additional production to lower cost facilities and the benefit of increased selling prices, partially offset by the impact of steel price rises.

 

Turkey & International

The Group's adjusted operating profit in Turkey & International for the year was £2.9 million (2020: £1.2 million), an increase of £1.7 million, or 137.9%. This was principally as a result of an increase in sales volumes after the initial impact of the Covid-19 pandemic in Turkey and China and the benefit of increased selling prices, partially offset by the impact of steel price rises.

 

Central costs

Central costs for the year were £4.2 million (2020: £4.0 million), an increase of £0.2 million, or 5.3%.  Costs increased principally as a result of additional expenditure arising due to the Group being listed, following the completion of the IPO in November 2021.

 

Exceptional items

During the year exceptional costs of £9.6 million were incurred (2020: £nil) relating to professional advisers employed to consider the potential recapitalisation of the Group and the costs associated with the IPO undertaken by the Group in the year. These costs are one-off in nature and disclosing these costs as exceptional allows the true underlying performance of the Group to be more easily reviewed.

 

Finance costs

The Group's finance costs for the year were £10.3 million (2020: £10.3 million). The 1.0% decrease was primarily due to a reduction in interest payable on external loans due to a lower average revolving credit facility usage during 2021 and the benefit of ongoing repayments on the Group's term loans. The 2021 finance costs include accrued interest on repaid shareholder loans which will not recur in future years as a consequence of the Group's new capital structure.

 

Income tax expense

The Group's income tax expense for the year was £1.6 million (2020: £0.5 million), an increase of £1.1 million, or 240.4%. The increase was primarily due to an increase in profits chargeable to taxation and an increase in overseas tax rates with the tax rate in Turkey increasing from 22% to 25%.

 

The tax charge for 2021 has been reduced as the Group has recognised previously unrecognised deferred tax assets relating to tax losses.  The newly recognised losses are all post-April 2017 UK losses and the decision has been taken to recognise the losses in the year because the new capital structure of the Group post-IPO means that tax deductible interest will be lower which, along with higher UK profitability, will lead to these losses being utilised over a much shorter time frame.

 

Earnings per share and adjusted earnings per share

Profit attributable to shareholders increased by £6.0 million, or 68.5%, to £14.7 million (2020: £8.7 million) and earnings per share was 11.51 pence (2020: 6.83 pence).  The weighted average number of shares was 127.4 million.  Profit attributable to shareholders before exceptional items, foreign exchange differences and tax thereon increased by £15.9 million, or 281.0%, to £21.6 million (2020: £5.7 million) and consequently, adjusted earnings per share was 16.92 pence (2020: 4.44 pence). 

 

Dividends and reserves

The Group is committed to delivering returns for its shareholders. It intends to adopt a progressive dividend policy targeting an initial annualised pay-out of approximately 40% of adjusted earnings, with capital allocation focused on reinvestment for growth.  The Group intends to split dividend payments approximately 33% and 67% between the Group's interim and final dividend payments respectively, across the fiscal year.  The Group expects to pay its first dividend in May 2022 which, due to the timing of the Group's admission, will be the only dividend paid in respect of 2021.  The 2021 dividend will be determined on a pro rata basis for the period from admission to 31 December 2021.

 

The Company successfully submitted an application to the High Court of Justice of England and Wales (the "Court") to reduce the value of each ordinary share of the Company from £1.00 to £0.001; the reduction will be credited to the retained earnings of the Company. Under the same application the Court approved the removal of the share premium account of the Company in full, with the reduction credited to the retained earnings of the Company. The Court approved the application on 25 January 2022.

 

Cash flows

The following table summarises the Group's cash flow for the years ended 31 December 2021 and 31 December 2020.

 

	2021		2020		Increase / (decrease)
	£m		£m		£m
EBITDA (1)	40.6		23.5		17.1
Gain on disposal of property plant and equipment	(0.2)		(0.1)		(0.1)
Working capital adjustments	(8.7)		0.8		(9.5)
Net capital expenditure	(9.9)		(9.9)		-
Adjusted cash flow from operations	21.8		14.3		7.5
Income tax paid	(3.7)		(1.9)		(1.8)
Interest received	0.1		0.1		-
Adjusted free cash flow	18.2		12.5		5.7

 

	2021		2020		Increase / (decrease)
	£m		£m		£m
Adjusted cash flow from operations (£'000)	21.8		14.3		7.5
Adjusted operating profit (£'000)	33.2		15.6		17.6
Adjusted cash flow from operations conversion (%)	65.8		91.6		(25.8)

 

⁽¹⁾ EBITDA is profit before interest, taxation, depreciation, amortisation, exceptional items and foreign exchange differences.

 

The Group's adjusted free cash flow for the year was £18.2 million (2020: £12.5 million), an increase of £5.7 million. This reflected an increase in the profitability of the Group and increased working capital, due to the replenishment of inventories as the 31 December 2020 inventory levels were exceptionally low.

 

The Group's adjusted cash flow from operations for the year was £21.8 million (2020: £14.3 million), an increase of £7.5 million.  This was principally as a result of an increase in the profitability of the Group partially offset by an increase in working capital, linked to an increase in inventories, and higher income tax paid in 2021.  Adjusted operating profit for the year was £33.2 million (2020: £15.6 million), an increase of £17.6 million.  This was principally as a result of an increase in the profitability of the Group.  Adjusted cash flow from operations conversion for the year was 65.8% (2020: 91.6%), a reduction of 25.8pp, due to the significant impact of replenishment of inventories during 2021 and the higher level of capital expenditure related to the incremental development capital expenditure programme, which was completed in 2021.

 

On 10 November 2021, the Group listed on the premium segment of the London Stock Exchange, having previously been under private ownership. As part of this process, the Group repaid all legacy financing arrangements including shareholder loans funded by a part draw down on a new £80 million revolving credit facility, of which £56.5 million was drawn at 31 December 2021, a share capital raise of £25.1 million and existing cash.

 

Capital expenditures

The Group's capital expenditures mainly relate to investment in operating plant and equipment.  The following table sets out the Group's capital expenditure, including right-of-use assets, net of transfers from assets under construction.

 

	2021		2020
	£m		£m
Freehold land and buildings	0.7		1.0
Leasehold buildings	0.6		0.5
Assets under construction (1)	2.0		(1.4)
Plant and equipment	5.2		8.8
Fixtures and fittings	1.2		0.7
Total	9.7		9.6

⁽¹⁾ The significant parts of the assets under construction relate to plant and equipment.

 

Since 2015, approximately £25 million of development capital expenditure has been invested by the Group in an incremental programme across all three of its manufacturing plants to provide flexibility and improve quality, capacity and productivity. The incremental capital expenditure programme was completed in the current financial year.

 

Key capital expenditure in the year ended 31 December 2021 related to: investment in an additional hybrid production line and robotic systems at the manufacturing site in Turkey; production line upgrades at the UK manufacturing site; and vertical welding line upgrades at the manufacturing site in the Netherlands.  Investments in warehousing facilities have also been made in Turkey and the UK.

 

Net debt

During the year ended 31 December 2021, the Group refinanced and repaid all legacy financing arrangements and shareholder loans, replacing them with a new three-year revolving credit facility of £80 million.

 

At 31 December 2021, statutory net debt (including IFRS 16 leases) of £50.2 million comprises £56.5 million drawn down against the revolving credit facility and £9.3 million finance leases net of £15.6 million cash.

 

At 31 December 2020, statutory net debt (including IFRS 16 leases) of £69.1 million comprised £67.6 million shareholder loans, a £1.8 million ABL revolving credit facility, £9.2 million ABL and Lombard term loans and £10.6 million finance leases net of £20.1 million cash.

 

 

	2021		2020
	£m		£m
Revolving credit facility	56.5		-
ABL revolving credit facility	-		1.8
ABL and Lombard term loans	-		9.2
Shareholder loans	-		67.6
Cash	(15.6)		(20.1)
Net debt before finance leases	40.9		58.5
Finance leases	9.3		10.6
Net debt	50.2		69.1

 

 

George Letham

Chief Financial Officer

14 March 2022

 

 

Consolidated income statement

for the year ended 31 December 2021

 

				Unaudited
		2021		2020
	Notes	£'000		£'000
Continuing operations
Revenue	4	272,285		196,565
Cost of sales		(192,279)		(139,372)
Gross profit		80,006		57,193
Selling and distribution expenses		(35,478)		(31,265)
Administrative expenses (excluding exceptional items)		(11,584)		(11,741)
Exceptional items	4	(9,589)		-
Administrative expenses		(21,173)		(11,741)
Other operating income	5	3,204		5,356
Other operating expenses		-		(19)
Operating profit	4	26,559		19,524
Finance income		141		68
Finance costs	6	(10,379)		(10,405)
Profit before tax		16,321		9,187
Income tax expense	7	(1,661)		(488)
Profit for the year		14,660		8,699
	Notes	2021		2020
Earnings per share
Basic	8	11.51p		6.83p
Diluted	8	11.51p		6.83p
Adjusted earnings per share
Basic	8	16.92p		4.44p
Diluted	8	16.92p		4.44p

 

Consolidated statement of comprehensive income

for the year ended 31 December 2021

 

				Unaudited
		2021		2020
	Notes	£'000		£'000
Profit for the year		14,660		8,699
Other comprehensive income/(expense)
Other comprehensive income/(expense) that may be reclassified to profit or loss in subsequent periods:
Net gain on monetary items forming part of net investment in foreign operations and qualifying hedges of net investments in foreign operations		5,192		1,337
Income tax effect	7	(1,235)		(286)
Exchange differences on translation of foreign operations		(26,072)		(8,890)
Net other comprehensive expense that may be reclassified to profit or loss in subsequent periods		(22,115)		(7,839)
Other comprehensive expense not to be reclassified to profit or loss in subsequent periods:
Remeasurement losses on defined benefit plans		(141)		(317)
Income tax effect	7	35		70
Net other comprehensive expense not to be reclassified to profit or loss in subsequent periods		(106)		(247)
Other comprehensive expense for the year, net of tax		(22,221)		(8,086)
Total comprehensive (expense)/income for the year, net of tax attributable to owners of the parent		(7,561)		613

 

 

Consolidated balance sheet

as at 31 December 2021

 

					Unaudited
			2021		2020
	Notes		£'000		£'000
Assets
Non-current assets
Property, plant and equipment	10		53,694		61,024
Trade and other receivables	13		10		17
Deferred tax assets	7		6,284		4,342
			59,988		65,383
Current assets
Inventories	12		56,781		30,986
Trade and other receivables	13		46,731		39,024
Income tax receivable			104		70
Cash and cash equivalents			15,563		20,083
			119,179		90,163
Total assets			179,167		155,546
Equity and liabilities
Equity
Share capital	16		127,353		65
Share premium	16		13,391		198
Merger reserve			(114,469)		940
Retained earnings			57,814		43,260
Foreign currency reserve			(57,177)		(35,062)
Total equity attributable to owners of the parent			26,912		9,401
Non-current liabilities
Interest-bearing loans and borrowings	11		62,865		85,785
Deferred tax liabilities	7		126		-
Provisions	15		158		203
Net employee defined benefit liabilities			1,728		2,529
			64,877		88,517
Current liabilities
Trade and other payables	14		83,883		53,658
Interest-bearing loans and borrowings	11		1,794		3,347
Income tax payable			1,522		431
Provisions	15		179		192
			87,378		57,628
Total liabilities			152,255		146,145
Total equity and liabilities			179,167		155,546

 

 

Consolidated statement of changes in equity

for the year ended 31 December 2021

 

	Attributable to the owners of the parent
	Issued share capital			Share premium		Merger reserve		Retained earnings		Foreign currency		Total
	£'000			£'000		£'000		£'000		£'000		£'000
At 1 January 2020	65			198		940		34,808		(27,223)		8,788
Profit for the year	-			-		-		8,699		-		8,699
Other comprehensive expense for the year	-			-		-		(247)		(7,839)		(8,086)
Total comprehensive income/(expense)	-			-		-		8,452		(7,839)		613
At 31 December 2020 (Unaudited)	65			198		940		43,260		(35,062)		9,401
Profit for the year	-		-			-		14,660		-		14,660
Other comprehensive expense for the year	-		-			-		(106)		(22,115)		(22,221)
Total comprehensive income/(expense)	-		-			-		14,554		(22,115)		(7,561)
Shares issued on incorporation	50		-			-		-		-		50
"C" share redemption	(13)		-			-		-		-		(13)
Noosa share reorganisation	(50)		50			-		-		-		-
Share for share exchange - old	(2)		(248)			250		-		-		-
Share for share exchange - new	115,659		-			(115,659)		-		-		-
Shares issued	11,644		13,391			-		-		-		25,035
At 31 December 2021	127,353			13,391		(114,469)		57,814		(57,177)		26,912

 

 

Consolidated statement of cash flows

for the year ended 31 December 2021

				Unaudited
		2021		2020
	Notes	£'000		£'000
Operating activities
Profit before tax		16,321		9,187
Adjustments to reconcile profit before tax to net cash flows:
Depreciation of property, plant and equipment	10	7,409		7,921
Gain on disposal of property, plant and equipment		(213)		(142)
Finance income		(141)		(68)
Finance costs	6	10,379		10,405
Working capital adjustments:
Increase in trade and other receivables		(17,380)		(6,373)
(Increase)/decrease in inventories		(31,695)		3,681
Increase in trade and other payables		40,291		3,549
Increase in provisions		158		8
Movement in other financial assets and liabilities		-		(33)
Decrease in other pension provisions		(59)		(39)
Difference between pension charge and cash contributions		(22)		5
		25,048		28,101
Income tax paid		(3,734)		(1,927)
Interest received		141		68
Net cash flows from operating activities		21,455		26,242
Investing activities
Proceeds from sale of property, plant and equipment		487		474
Purchase of property, plant and equipment	10	(8,646)		(8,640)
Net cash flows used in investing activities		(8,159)		(8,166)
Financing activities
Transaction costs related to refinancing		(1,171)		(153)
Proceeds from external borrowings		56,500		-
Repayment of external borrowings		(11,001)		(6,999)
Repayment of shareholder loans		(76,528)		-
Settlement of deferred consideration		(202)		-
Payment of lease liabilities		(1,666)		(1,723)
Share capital issued		25,085		-
Share capital repaid - "C" shares		(13)		-
Interest paid		(779)		(684)
Net cash flows used in financing activities		(9,775)		(9,559)
Net increase in cash and cash equivalents		3,521		8,517
Net foreign exchange difference		(8,041)		(3,664)
Cash and cash equivalents at 1 January		20,083		15,230
Cash and cash equivalents at 31 December		15,563		20,083

 

 

Notes to the consolidated financial statements

for the year ended 31 December 2021