Stelrad Group plc - interim results for the six months ended 30 June 2022

 

Continued progress across all territories.

Acquisition of DL Radiators in July 2022 strongly aligned with strategic objectives.

 

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 unaudited interim results for the six months ended 30 June 2022.

 

Results summary*

 

	Six months ended 30 June 2022		Six months ended 30 June 2021		Increase/ (decrease) %
Revenue, £m	150.1		127.9		17.4
Adjusted operating profit, £m **	19.0		16.8		13.1
Adjusted operating profit margin, % **	12.7		13.1		(0.4pp)
Adjusted profit after tax, £m **	13.9		8.1		72.7
Adjusted Earnings per share, pence **	10.95		6.34		72.7
Statutory operating profit, £m	11.9		17.9		(33.5)
Statutory profit after tax, £m	0.7		8.8		(92.5)
Statutory earnings per share, pence	0.52		6.94		(92.5)
Adjusted free cash flow, £m **	(2.5)		15.1		(116.6)
Net debt (excluding lease liabilities), £m	47.5		53.2		(10.7)
Dividend per share, pence	2.92		-		n/a

 

*As a result of inflation in Turkey exceeding 100% over a three-year period, the Group was required to adopt IAS 29 in respect of its Turkish subsidiary for the first time in the financial statements for the six months ended 30 June 2022. The impact of the adoption of IAS 29 is a non-cash item but has a £10.9m negative impact on statutory profit after tax. See note 15 for further details.

 

**Adjusted figures are stated before exceptional items, foreign exchange differences, the impact of IAS 29 and tax thereon where applicable. See note 9 for a reconciliation of adjusted profit after tax.  See note 5 for a reconciliation of adjusted operating profit.  See the finance and business review for a reconciliation of adjusted free cash flow.

 

Financial and operational highlights

·      Continued progress across all territories during the first half of 2022:

-      UK & Ireland - 13.1% revenue growth, 19.4% growth in adjusted operating profit.

-      Europe - 17.7% revenue growth, 11.9% growth in adjusted operating profit.

-      Turkey & International - 42.9% revenue growth, 33.3% growth in adjusted operating profit.

·      Increased margin per radiator more than offset a 12.3% year-on-year decline in volumes versus exceptionally strong first half comparatives in 2021.

·      Performance underpinned by pro-active margin management and an improved mix of premium steel panel radiators.

·      Completion of production line transfer from UK to lower cost Turkish facility in the period.

·    Net cash of £13.5 million (December 2021: £15.6 million) and undrawn available facilities of £19.0 million (December 2021: £23.5 million) provides the Group with significant financial flexibility.

·      Acquisition of Italian manufacturer of heat emitters, DL Radiators for €28.3 million in July 2022.

·    Rising energy costs across Europe expected to drive increased, long-term demand for more energy efficient heating solutions.

·      Recommended interim dividend of 2.92 pence per share, to be paid on 28 October 2022.

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

 

"After entering 2022 with good momentum, we are pleased to have delivered strong financial performance during the first half of the year, testament to the underlying resilience of our business, with increased revenues and improving margins per radiator more than offsetting previously flagged volume reductions.

 

"Rising energy costs across Europe are sharpening consumers' focus on the need for more energy efficient heating solutions and this, combined with the ongoing decarbonisation agenda, is expected to drive increased, long-term demand for our products.

 

"Whilst we continue to monitor the challenging economic conditions in our end markets closely, we remain confident in the outcome for the full year and are well-positioned to drive long-term shareholder value thanks to the resilience of our business model, our market-leading positions and the strength of our customer and supplier relationships."

 

Analyst Conference Call

 

Trevor Harvey (CEO) and George Letham (CFO) will host an analyst presentation at 9:00am GMT today, Friday 12 August 2022, to talk through the Group's operational and financial performance.

 

Please advise whether you and/ or a colleague would like to attend to Powerscourt, either by phone on +44 (0) 20 7250 1446 or by email to stelrad@powerscourt-group.com for dial in details.

 

For further information:

 

Stelrad Group plc Trevor Harvey, Chief Executive Officer George Letham, Chief Financial Officer	+44 (0)191 261 3301
Investec Bank plc (Sole Corporate Broker) Bruce Garrow Ben Griffiths	+44 (0)20 7597 5970
Powerscourt (PR Advisor) 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 18.3 per cent. share by volume of total markets in the UK, Europe, and Turkey in 2021, including 52.1 per cent. market share in the UK. In 2021, the Group held top 3 share positions in 12 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.

 

In July 2022, the Group acquired DL Radiators, an Italian radiator manufacturer located in Moimacco, near Udine, who employs approximately 350 people. Its product range includes steel panel, multicolumn steel, aluminium and towel warmer radiators. DL Radiators generated €86.9 million revenue for its financial year ended December 2021.

Further information can be found at: https://stelradplc.com/

 

CHIEF EXECUTIVE OFFICER'S REVIEW

 

Overview

 

Stelrad's results in the first half of 2022 continue to demonstrate the resilience of our business model and the robustness of our strategy. 

 

The Group delivered 17.4% organic revenue growth in the first half of 2022, resulting in revenue up from £127.9 million in H1 2021 to £150.1 million this year.  Adjusted operating profit rose to £19.0 million, a 13.1% increase from the £16.8 million reported in the first half of last year.

 

In line with our strategic objectives, Stelrad Group's recent acquisition of Italy's DL Radiators offers considerable potential for the future, extending the range of heat emitters for sale through our existing sales and distribution networks and, through DL Radiators' highly regarded brands, providing access to markets in countries and channels where the Group has historically been underrepresented.

 

Results and performance for the period

 

In the first half of 2022, good progress has been made across all territories.  The UK & Ireland delivered revenue growth of 13.1%, whilst adjusted operating profit rose by 19.4%.  In Europe, revenue and adjusted operating profit were up 17.7% and 11.9% respectively, whilst in our Turkey & International markets, revenue grew by 42.9%, adjusted operating profit by 33.3%.

 

Our growth in revenue has been driven primarily by timely and proactive margin management, as steel, logistics and energy costs increased.  Profitability was enhanced by optimisation of our low-cost Turkish facility and an improvement in the mix of premium steel panel radiators sold. This improvement was achieved despite a 12.3% decrease in volume relative to the exceptionally strong first half comparatives of 2021.  

 

Strategic priorities

 

To fulfil our purpose of helping to heat homes sustainably, we continue to pursue the commercial and operational strategies developed to achieve our four key objectives:  growing market share, improving product mix, optimising routes to market and positioning effectively for decarbonisation.

 

DL Radiators acquisition

 

Stelrad Group completed the acquisition of leading Italian heat emitter manufacturer DL Radiators for €28.3 million in July 2022.  This acquisition extends the range of radiators available to the Group's existing sales and distribution network, expands our routes to market, increases manufacturing capacity and gives the Group access to the well-established and complementary DeLonghi brand.

 

From its Moimacco, Italy, facility DL Radiators generated €86.9 million revenue and €5.0 million normalised EBITDA for its financial year ended December 2021, with gross assets of €62.9 million.

 

Its product range includes steel panel, multicolumn steel, aluminium and towel warmer radiators, providing customers with flexible heat emitter solutions in both hydronic and electric technologies, suitable for a wide variety of installations.

 

The acquisition is expected to be earnings enhancing in this financial year. It is well aligned with Stelrad's stated strategic objectives and will allow us to grow share both in steel panel and other heat emitter categories, to drive product mix improvement and to position the Group more effectively for decarbonisation whilst increasing our access to market through a combination of retail and trade channels.

 

Sustainability

 

Stelrad Group is fully committed to high standards of corporate responsibility, sustainability and employee engagement and aims to consider fully the long-term impact of all our business operations.

 

At the end of 2021, we set up a task force to develop a comprehensive and well-integrated ESG strategy, consistent with our purpose of helping to heat homes sustainably.  Understanding the needs of Stelrad Group's stakeholders has been central to the development of our strategic framework "Fit for the future". 

 

During the second half of 2022, we plan to develop our sustainability targets, including Key Performance Indicators for future publication.

 

Interim dividend

 

Based on the Group's financial results in the first half of 2022, the Board recommends an interim dividend of 2.92 pence per share.  The interim dividend will be paid on 28 October 2022 to shareholders on the register on 7 October 2022.

 

Outlook

 

We continue to monitor the challenging economic conditions in our end markets closely, and particularly consumer sentiment. While we are mindful of broader macro-economic uncertainties and key leading indicators, we remain confident in the outcome for the full year. This is testament to the resilience of our business model, our market-leading positions which improved further in 2021 (Source: BRG Building Solutions), and the strength of customer and supplier relationships.

 

Our acquisition of DL Radiators extends the range of radiators available to our existing sales and distribution network, expands our routes to market, provides well-established complementary brands and increases our manufacturing capacity. Providing improved access to the European heat emitter market, the acquisition is in line with our strategic objectives and our role as a natural consolidator within the sector.  Early integration of the business is proceeding to plan and remains in line with expectations. We expect the acquisition to be earnings enhancing in this financial year and to deliver double digit earnings accretion in future years.

 

Longer term, the conflict in Ukraine has highlighted structural considerations relating to European energy security and fossil fuel costs and, as a result, we believe that there will be an inevitable focus on, and acceleration of, renewable energy initiatives across Europe which in turn, will continue to drive interest in and awareness of our products.

 

Trevor Harvey

Chief Executive Officer

12 August 2022

 

 

 

FINANCE AND BUSINESS REVIEW

 

Group overview

 

The following table summarises the Group's results from operations for the six months ended 30 June 2022 and 30 June 2021.

 

	Six months ended 30 June 2022	Six months ended 30 June 2021	Increase/ (decrease)	Increase/ (decrease)
	£m	£m	£m	%
Revenue	150.1	127.9	22.2	17.4
Adjusted operating profit	19.0	16.8	2.2	13.1
Exceptional items	-	(1.5)	1.5	100.0
Foreign exchange differences	(3.0)	2.6	(5.6)	(215.4)
Impact of IAS 29	(4.1)	-	(4.1)	n/a
Operating profit	11.9	17.9	(6.0)	(33.5)
Net finance costs	(1.8)	(5.5)	3.7	67.3
Monetary losses - net (IAS 29)	(5.4)	-	(5.4)	n/a
Profit before tax	4.7	12.4	(7.7)	(62.1)
Income tax expense	(4.0)	(3.6)	(0.4)	(11.1)
Profit for the period	0.7	8.8	(8.1)	(92.5)
Earnings per share (p)	0.52	6.94	(6.42)	(92.5)
Adjusted profit for the period	13.9	8.1	5.8	71.6
Adjusted earnings per share (p)(1)	10.95	6.34	4.61	72.7
Dividend per share (p)	2.92	-	2.92	n/a

 

⁽¹⁾ Adjusted earnings per share is calculated on adjusted profit after tax, being earnings before exceptional items, IAS 29 adjustments and foreign exchange differences and tax on these items.

 

Financial overview

 

Revenue for the six months ended 30 June 2022 was £150.1 million, an increase of £22.2 million, or 17.4%, on the six months ended 30 June 2021 (2021: £127.9 million). This was principally a result of the impact of selling price increases implemented in the second half of 2021, partially offset by a decrease in sales volumes. Steel price volatility continued in the first half of 2022. Selling price increases were applied in the period to recover steel and other inflationary cost increases.

 

Adjusted operating profit for the period was £19.0 million, an increase of £2.2 million, or 13.1%, compared to the same period last year (2021: £16.8 million). This was principally as a result of the benefit of increased margins per radiator, partially offset by a decrease in sales volumes of 12.3%.

 

Statutory operating profit for the period was £11.9 million (2021: £17.9 million), including the non-cash impact of IAS 29 of £4.1 million, exceptional costs of £nil (2021: £1.5 million) and the impact of foreign exchange losses of £3.0 million (2021: gains of £2.6 million). 

 

Adjusted profit for the period increased by £5.8 million, or 71.6%, to £13.9 million. Statutory profit for the period, including the impact of IAS 29, being £4.1 million within operating profit and £5.4 million of monetary losses, decreased by £8.1 million, or 92.1%, to £0.7 million (2021: £8.8 million). Adjusted earnings per share was 10.95 pence (2021: 6.34 pence), whilst the statutory earnings per share after the impact of IAS 29 was 0.52 pence (2021: 6.94 pence).

 

There was a further devaluation of the Turkish Lira against all hard currencies during the first half of 2022. Historically devaluation of Turkish Lira has led to foreign exchange gains (non-cash in nature) being recorded in the income statement. The USD strengthened more significantly against Turkish Lira than both GBP and Euro in the first half of 2022, resulting in non-cash foreign exchange losses of £3.0 million (2021: gains of £2.6 million). These currency differences arise from the retranslation of our hard currency assets and liabilities in our Turkish subsidiary with the business maintaining a net hard currency asset position consistent with the Group's historical approach. Non-cash currency gains and losses have been excluded from adjusted operating profit.

 

At 30 June 2022 the Group had cash of £13.5 million (December 2021: £15.6 million) and undrawn available facilities of £19.0 million (December 2021: £23.5 million), with net debt excluding finance leases of £47.5 million (December 2021: £40.9 million). During the six months ended 30 June 2022, the Group's working capital increased due to an increase in inventories, with the intention of improving customer service, and this has contributed to the continued strength of our customer relationships. Working capital at 30 June, reflects a seasonal high point with the lowest level of working capital historically experienced in December each year. 2021 was exceptional in that working capital did not follow the normal seasonal patterns due to the impact of Covid-19. The Group expects a reduction in net debt by the end of the financial year.

 

IAS 29

 

As a result of inflation in Turkey exceeding 100% over a three-year period, the Group was required to adopt IAS 29 in respect of its Turkish subsidiary for the first time in the financial statements for the six months ended 30 June 2022. The impact of the adoption of IAS 29 is explained in more detail in note 15 of the consolidated interim financial statements, with the accounting policy outlined in note 2.

 

The impact at 31 December 2021 is accounted for as a restatement to opening reserves. A negative adjustment to operating profit in the period of £4.1 million has been removed in arriving at adjusted operating profit, as management believe that the pre-IAS 29 results give a more meaningful presentation of the Group's underlying performance due to more than 80% of assets, liabilities, revenues and costs in the Turkish subsidiary being denominated in hard currencies. Similarly, adjusted profit after tax is stated before the full impact of IAS 29 loss for the period of £10.9 million.

 

The impact of IAS 29 on the results for the six months ended 30 June 2022 is outlined below.

 

	Statutory position	IAS 29	Pre-IAS 29 position
	£m		£m
Revenue	150.1	2.3	147.8
Adjusted operating profit	19.0	-	19.0
Exceptional items	-	-	-
Foreign exchange differences	(3.0)	(0.1)	(2.9)
Impact of IAS 29	(4.1)	(4.1)	-
Operating profit / (loss)	11.9	(4.2)	16.1
Net finance costs	(1.8)	-	(1.8)
Monetary losses - net (IAS 29)	(5.4)	(5.4)	-
Profit / (loss) before tax	4.7	(9.6)	14.3
Income tax expense	(4.0)	(1.3)	(2.7)
Profit / (loss) for the period	0.7	(10.9)	11.6

 

 

Revenue by geographical market

 

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

 

Revenue by geographical market	Six months ended 30 June 2022	Six months ended 30 June 2021	Increase	Increase
	£m	£m	£m	%
UK & Ireland	71.5	63.2	8.3	13.1
Europe	64.6	54.9	9.7	17.7
Turkey & International	14.0	9.8	4.2	42.9
Total	150.1	127.9	22.2	17.4

 

UK & Ireland

 

The Group's revenue in the UK & Ireland for the period was £71.5 million (2021: £63.2 million), an increase of £8.3 million, or 13.1%. This was principally a result of the impact of selling price increases implemented in the second half of 2021 partially offset by a decrease in sales volumes.

 

Europe

 

The Group's revenue in Europe for the period was £64.6 million (2021: £54.9 million), an increase of £9.7 million, or 17.7%. This was principally a result of the impact of selling price increases implemented in the second half of 2021 partially offset by a decrease in sales volumes.

 

Turkey & International

 

The Group's revenue in Turkey & International for the period was £14.0 million (2021: £9.8 million), an increase of £4.2 million, or 42.9%. This was principally a result of the impact of selling price increases implemented in the second half of 2021.

 

 

 

 

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	Six months ended 30 June 2022	Six months ended 30 June 2021	Increase/ (decrease)	Increase/ (decrease)
	£m	£m	£m	%
UK & Ireland	12.3	10.3	2.0	19.4
Europe	7.5	6.7	0.8	11.9
Turkey & International	2.0	1.5	0.5	33.3
Central costs	(2.8)	(1.7)	(1.1)	(64.7)
Total	19.0	16.8	2.2	13.1

 

UK & Ireland

 

The Group's adjusted operating profit in the UK & Ireland for the period was £12.3 million (2021: £10.3 million), an increase of £2.0 million, or 19.4%. This was principally as a result of the benefit of increased margins per radiator, partially offset by lower sales volumes.

 

Europe

 

The Group's adjusted operating profit in Europe for the period was £7.5 million (2021: £6.7 million), an increase of £0.8 million, or 11.9%. This was principally as a result of the benefit of increased margins per radiator, partially offset by lower sales volumes.

 

Turkey & International

 

The Group's adjusted operating profit in Turkey & International for the period was £2.0 million (2021: £1.5 million), an increase of £0.5 million, or 33.3%. This was principally as a result of the benefit of increased margins per radiator and higher sales volumes.

 

Central costs

 

Central costs for the period were £2.8 million (2021: £1.7 million), an increase of £1.1 million, or 64.7%. 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 period exceptional costs of £nil were incurred (2021: £1.5 million).  The exceptional costs incurred in 2021 related to the cost of professional advisers employed to consider the potential recapitalisation of the Group. 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 period were £1.8 million (2021: £5.5 million). The 67.3% decrease of £3.7 million is primarily due to the repayment of the historic shareholder loans in November 2021, with these being replaced by the Group's current debt structure which has lower interest rates.

 

Income tax expense

 

The Group's income tax expense for the period was £4.0 million (2021: £3.6 million), an increase of £0.4 million, or 11.1%. On an underlying, pre-IAS 29 basis, the Group's income tax expense was £2.7 million which is a reduction of £0.9 million from 2021. The 2022 tax charge includes a £1.3 million charge due to IAS 29, with a deferred liability recognised to reflect the higher assets values arising under IAS 29. The reduction in the underlying tax charge is due to a number of factors, including: a reduction in the Turkish tax rate from 25% to 22%; a large part of the 2021 interest charge being non-deductible for tax purposes; and a higher proportion of investment in Turkey in 2022 qualifying for tax relief.

 

Earnings per share and adjusted earnings per share

 

Profit attributable to shareholders decreased by £8.1 million, or 92.5%, to £0.7 million (2021: £8.8m) and earnings per share was 0.52 pence (2021: 6.94 pence). The weighted average number of shares was 127.4 million (2021: 127.4 million). Profit attributable to shareholders before exceptional items, foreign exchange differences, the impact of IAS 29 and tax thereon increased by £5.8 million, or 71.6%, to £13.9 million (2021: £8.1 million) and consequently adjusted earnings per share was 10.95 pence (2021: 6.34 pence).

 

Dividends and reserves

 

The Group is committed to delivering returns for its shareholders. It has adopted a progressive dividend policy targeting a 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 paid its first dividend in May 2022 which, due to the timing of the Group's admission, was the only dividend paid in respect of 2021. The 2021 dividend was determined on a pro rata basis for the period from admission to 31 December 2021.

 

The Group intends to pay an interim dividend of 2.92 pence per share on 28 October 2022.

 

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 has been credited to the retained earnings of the Company, resulting in an increase in distributable reserves. 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. This created adequate distributable reserves in the Company to enable both the 2021 final dividend and the 2022 interim dividend distributions to be made.

 

 

 

Cash flows

 

The following table summarises the Group's cash flow for the six months ended 30 June 2022 and 30 June 2021.

 

	Six months ended 30 June 2022	Six months ended 30 June 2021	Increase/ (decrease)
	£m	£m	£m
Operating profit	11.9	17.9	(6.0)
Depreciation add back	4.2	3.8	0.4
Exceptional items add back	-	1.5	(1.5)
Gain on disposal of property, plant and equipment	(0.2)	(0.2)	-
Income statement adjustment - IAS 29	3.0	-	3.0
Share based payments	0.1	-	0.1
Working capital movements	(15.1)	(2.8)	(12.3)
Net capital expenditure	(4.3)	(3.4)	(0.9)
Adjusted cash flow from operations	(0.4)	16.8	(17.2)
Income tax paid	(2.2)	(1.8)	(0.4)
Interest received	0.1	0.1	-
Adjusted free cash flow	(2.5)	15.1	(17.6)

 

 

	Six months ended 30 June 2022	Six months ended 30 June 2021	Increase/ (decrease)
Adjusted cash flow from operations (£m)	(0.4)	16.8	(17.2)
Adjusted operating profit (£m)	19.0	16.8	2.2
Adjusted cash flow from operations conversion (%) *	(2.1)	100	(102.1)

*Adjusted cash flow from operations conversion is the ratio of adjusted cash flow from operations to adjusted operating profit

 

The Group's adjusted free cash outflow for the period was £2.5 million (2021: inflow £15.1 million), a decrease of £17.6 million. This reflects increased working capital, with inventories higher due to a customer service led recovery in finished goods stocks.

 

The Group's adjusted cash outflow from operations for the period was £0.4 million (2021: inflow £16.8 million), a decrease of £17.2 million. This was principally as a result of an increase in working capital consistent with the Group's historical seasonal pattern. 2021 was exceptional in that working capital did not follow the normal seasonal patterns due to the impact of Covid-19. Adjusted operating profit for the period was £19.0 million (2021: £16.8 million), an increase of £2.2 million, following an increase in the profitability of the Group. Adjusted cash flow from operations conversion for the period was minus 2.1% (2021: plus 100.0%), a reduction of 102.1pp, mainly due to the increase in working capital which is expected to reduce by December 2022.

 

 

Capital expenditures

 

The Group's capital expenditures mainly relate to investment in buildings and operating plant and equipment. Key capital expenditure in the period ended 30 June 2022 related to investment in warehousing and an additional production line at the Group's facilities in Turkey. Capital expenditure for the remainder of 2022 will be in line with previous expectations, except for the incremental spend of DL Radiators, who have committed to purchase a new steel panel radiator production line at a cost of £3.6 million, to be incurred in the next 12 months.

 

Net debt

 

At 30 June 2022, statutory net debt (including finance leases) of £56.5 million (2021: £50.2 million) comprises £61.0 million (2021: £56.5 million) drawn down against the revolving credit facility and £9.0 million (2021: £9.3 million) finance leases net of £13.5 million (2021: £15.6 million) cash.

 

	30 June 2022	31 December 2021
	£m	£m
Revolving credit facility	61.0	56.5
Cash	(13.5)	(15.6)
Net debt before finance leases	47.5	40.9
Finance leases	9.0	9.3
Net debt	56.5	50.2

 

Going concern

After reviewing the Group's current liquidity, net debt, financial forecasts and stress testing of potential risks, the Board confirms there are no material uncertainties which impact the Group's ability to continue as a going concern for the period to 31 December 2023 and therefore these condensed consolidated interim financial statements have therefore been prepared on a going concern basis.

 

George Letham

Chief Financial Officer

12 August 2022

                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

                                                                                                                                                                                                       

FORWARD-LOOKING STATEMENTS

 

This document may contain forward-looking statements which are made in good faith and are based on current expectations or beliefs, as well as assumptions about future events. You can sometimes, but not always, identify these statements by the use of a date in the future or such words as "will", "anticipate", "estimate", "expect", "project", "intend", "plan", "should", "may", "assume" and other similar words. By their nature, forward-looking statements are inherently predictive and speculative and involve risk and

uncertainty because they relate to events and depend on circumstances that will occur in the future. You should not place undue reliance on these forward-looking statements, which are not a guarantee of future performance and are subject to factors that could cause our actual results to differ materially from those expressed or implied by these statements. The Company undertakes no obligation to update any forward-looking statements contained in this document, whether as a result of new information, future events or otherwise.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

·      an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

·      material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.

 

The directors of Stelrad Group plc are listed in the Annual Report and Accounts for the year ended 31 December 2021.

 

For and on behalf of the Board

 

 

Trevor Harvey                                     George Letham                                  

Chief Executive Officer                    Chief Financial Officer                     

12 August 2022                                   12 August 2022

 

Stelrad Group plc. Registered number 13670010

                                                                                                                                                                                               

 

 

Independent review report to Stelrad Group plc

 

Report on the condensed consolidated interim financial statements

 

Our conclusion

 

We have reviewed Stelrad Group plc's condensed consolidated interim financial statements (the "interim financial statements") in the interim results of Stelrad Group plc for the six month period ended 30 June 2022 (the "period").

 

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

The interim financial statements comprise:

 

·      the condensed consolidated interim balance sheet as at 30 June 2022;

·      the condensed consolidated interim income statement and condensed consolidated interim statement of comprehensive income for the period then ended;

·      the condensed consolidated interim statement of cash flows for the period then ended;

·      the condensed consolidated interim statement of changes in equity for the period then ended; and

·      the explanatory notes to the interim financial statements.

 

The interim financial statements included in the interim financial results of Stelrad Group plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

Basis for conclusion

 

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

We have read the other information contained in the interim financial statements and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

 

 

Conclusions relating to going concern

 

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with this ISRE. However, future events or conditions may cause the group to cease to continue as a going concern.

 

Responsibilities for the interim financial statements and the review

 

Our responsibilities and those of the directors

 

The Interim results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the interim results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the interim results, including the interim financial statements, the directors are responsible for assessing the group'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 to cease operations, or have no realistic alternative but to do so.

 

Our responsibility is to express a conclusion on the interim financial statements in the interim results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

PricewaterhouseCoopers LLP

Chartered Accountants

Newcastle upon Tyne

12 August 2022

 

 

 

Condensed consolidated interim income statement

for the six months ended 30 June 2022

 

		Six months ended 30 June 2022 (not audited)		Six months ended 30 June 2021 (not audited)		Year ended 31 December 2021 (audited)
	Notes	£'000		£'000		£'000
Continuing operations
Revenue	5	150,110		127,925		272,285
Cost of sales		(109,823)		(88,717)		(192,279)
Gross profit		40,287		39,208		80,006
Selling and distribution expenses		(18,974)		(17,276)		(35,478)
Administrative expenses (excluding exceptional items)		(6,685)		(5,331)		(11,584)
Exceptional items	5	-		(1,446)		(9,589)
Administrative expenses		(6,685)		(6,777)		(21,173)
Other operating income	6	205		2,811		3,204
Other operating expenses	7	(2,988)		(50)		-
Operating profit	5	11,845		17,916		26,559
Finance income		31		103		141
Finance costs		(1,761)		(5,602)		(10,379)
Monetary losses - net	15	(5,420)		-		-
Profit before tax		4,695		12,417		16,321
Income tax expense	8	(4,030)		(3,575)		(1,661)
Profit for the period		665		8,842		14,660
	Notes
Earnings per share
Basic	9	0.52p		6.94p		11.51p
Diluted	9	0.52p		6.94p		11.51p
Adjusted earnings per share
Basic	9	10.95p		6.34p		16.92p
Diluted	9	10.93p		6.34p		16.92p

 

 

 

Condensed consolidated interim statement of comprehensive income

for the six months ended 30 June 2022

 

		Six months ended 30 June 2022 (not audited)		Six months ended 30 June 2021 (not audited)		Year ended 31 December 2021 (audited)
	Notes	£'000		£'000		£'000
Profit for the period		665		8,842		14,660
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		1,362		645		5,192
Income tax effect	8	(340)		(137)		(1,235)
Exchange differences on translation of foreign operations		(4,575)		(8,346)		(26,072)
Net other comprehensive expense that may be reclassified to profit or loss in subsequent periods		(3,553)		(7,838)		(22,115)
Other comprehensive expense not to be reclassified to profit or loss in subsequent periods:
Remeasurement losses on defined benefit plans		(840)		(100)		(141)
Income tax effect	8	185		22		35
Net other comprehensive expense not to be reclassified to profit or loss in subsequent periods		(655)		(78)		(106)
Other comprehensive expense for the period, net of tax		(4,208)		(7,916)		(22,221)
Total comprehensive income/(expense) for the period, net of tax attributable to owners of the parent		(3,543)		926		(7,561)

 

 

 

Condensed consolidated interim balance sheet

as at 30 June 2022

			30 June 2022 (not audited)		30 June 2021 (not audited)		31 December 2021 (audited)
	Notes		£'000		£'000		£'000
Assets
Non-current assets
Property, plant and equipment			69,139		56,861		53,694
Trade and other receivables			9		14		10
Deferred tax assets			2,399		3,487		6,284
			71,547		60,362		59,988
Current assets
Inventories			65,452		41,039		56,781
Trade and other receivables			49,198		50,906		46,731
Income tax receivable			12		24		104
Other current financial assets			-		140		-
Cash and cash equivalents			13,488		27,914		15,563
			128,150		120,023		119,179
Total assets			199,697		180,385		179,167
Equity and liabilities
Equity
Share capital			127		65		127,353
Share premium			-		198		13,391
Merger reserve			(114,469)		940		(114,469)
Retained earnings			222,667		52,024		57,814
Foreign currency reserve			(60,730)		(42,900)		(57,177)
Total equity attributable to owners of the parent			47,595		10,327		26,912
Non-current liabilities
Interest-bearing loans and borrowings	11		67,109		87,473		62,865
Deferred tax liabilities			171		-		126
Provisions			262		225		158
Net employee defined benefit liabilities	13		2,520		2,326		1,728
			70,062		90,024		64,877
Current liabilities
Trade and other payables			78,596		75,099		83,883
Interest-bearing loans and borrowings	11		1,921		3,205		1,794
Income tax payable			1,427		1,507		1,522
Provisions			96		223		179
			82,040		80,034		87,378
Total liabilities			152,102		170,058		152,255
Total equity and liabilities			199,697		180,385		179,167

The financial statements on pages 15 to 31 were approved by the Board of Directors on 12 August 2022 and signed on its behalf by:

 

George Letham

Chief Financial Officer