TIDMIBST
RNS Number : 2638X
Ibstock PLC
09 August 2018
9 August 2018
Ibstock plc
Interim results for the six months ended 30 June 2018
Positive market backdrop and strong cashflow underpin payment of
first supplementary dividend
Ibstock plc ("Ibstock" or the "Group"), a leading manufacturer
of clay bricks and concrete products with operations in the United
Kingdom and the United States, announces its unaudited results for
the six months ended 30 June 2018.
Results for the period:
Half year to 30 June 2018 2017 Change
Revenue GBP229.9m GBP228.3m +0.7%
------------ ----------- -------
Adjusted EBITDA(1) GBP58.4m GBP59.7m (2.2%)
------------ ----------- -------
Profit before tax GBP50.9m GBP38.9m +30.8%
------------ ----------- -------
Statutory basic EPS 10.3 pence 7.6 pence +35.5%
------------ ----------- -------
Adjusted basic EPS(1) 9.6 pence 9.5 pence +1.1%
------------ ----------- -------
Interim dividend 3.0 pence 2.6 pence +15.4%
------------ ----------- -------
Supplementary dividend 6.5 pence - n/a
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Financial Highlights:
n Adjusted EBITDA in the first half reflects
previously announced weather impacted
start to the year and increased energy
input costs
n Successful surplus major asset disposal
in 1H 2018 resulted in c.GBP6 million
exceptional profit
n Net debt(1) to adjusted EBITDA at 1.1x,
after GBP16 million of capex in 1H 2018
n Continued strong underlying cash conversion(1)
n Interim dividend of 3.0 pence per share
(2017: 2.6 pence per share) reflecting
the Board's policy of paying one-third
of the prior year's full year dividend
n Supplementary dividend of 6.5 pence per
share declared in line with the Group's
policy announced in March 2018
Operational Highlights
n UK Clay benefitting from good activity
levels within the UK, particularly from
the new build housing sector
n Commissioning of the Group's investment
in a 100m per annum capacity brick plant
in Leicestershire running to plan
n Review of UK brick manufacturing assets
identified requirement for increased maintenance
and refurbishment activity over 2H 2018
and 1H 2019 to sustain manufacturing capability,
as announced on 30 July 2018
n UK concrete revenues flat year on year,
reflecting the weather impacted start
to the year and lower activity levels
in the Repair, Maintenance and Improvement
("RMI") market
n US performance down marginally year-on-year
on a constant currency basis against a
strong comparative but with improved momentum
going into 2H 2018
Full year expectations
n As announced on 30 July 2018, management
expects adjusted EBITDA for the year ended
31 December 2018 will be in the range
of GBP121m to GBP125m with reported EBITDA
in the range GBP130m to GBP134m
Joe Hudson, Chief Executive Officer, commented:
"Demand from the Group's UK brick customers was strong over the
first half, particularly from the new build housing sector,
although our performance also reflected some impact from poor
weather and increased energy costs. The Group remained strongly
cash generative in the period and we are pleased to be declaring
both an increased interim dividend and our first supplementary
dividend, in line with the policy announced in March.
"Looking ahead, while our decision to increase maintenance
spending on our UK brick manufacturing assets will have a
short-term impact on our financial performance, this programme will
put our UK Clay business in a much stronger position to meet
ongoing demand, which continues to be robust, with domestic
production remaining below market need. In the US, Glen Gery enters
the second half with its order book ahead of the prior year and
showing good momentum for the remainder of 2018.
"Overall, market fundamentals remain favourable and Ibstock is
well-placed to benefit from this positive backdrop. We are fully
focused on delivering our business plan as we trade through the
second half."
(1 Alternative Performance Measures are described in Note 3 of
the financial statements)
Ibstock is holding a presentation to analysts and investors at 09:00 today at the offices
of UBS, 5 Broadgate, London, EC2M 2AN. Analysts wishing to attend should contact ibstock@citigatedewerogerson.com
to register.
Analysts unable to attend in person may listen to the presentation live by using the details
below:
Webcast link: https://edge.media-server.com/m6/p/8pvz4yu8
Conference Call Dial-In Details: 0808 109 0700
Standard International Access: +44 (0) 20 3003 2666
Password: Ibstock
Results presentation
An archived version of today's analyst presentation will be
available on www.ibstockplc.com later today.
Enquiries
Ibstock (enquiries via Citigate Dewe Rogerson)
Joe Hudson (CEO)
Kevin Sims (CFO)
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Nick Hayns
Notes to Editors:
Ibstock plc is a leading manufacturer of clay bricks, with a
diversified range of clay and concrete products, and operations in
the United Kingdom and the United States. Its principal products
are clay bricks, brick components, concrete roof tiles, concrete
substitutes for stone masonry, concrete fencing and pre-stressed
concrete products.
The Group's four primary businesses are:
-- UK business:
-- Ibstock Brick: The leading manufacturer
by volume of clay bricks sold in the United
Kingdom. With 19 manufacturing plants Ibstock
Brick has the largest brick production
capacity in the United Kingdom. It operates
a network of 23 active quarries which are
generally located close to its manufacturing
plants. Ibstock Brick is currently commissioning
a new soft mud brick manufacturing plant
in Leicestershire that has been designed
to add approximately 100 million bricks
(c13%) to its brick production capacity
per annum. The new plant is expected to
be fully commissioned towards the end of
2018.
-- Supreme: A leading manufacturer of concrete
fencing products, concrete lintels and
general concrete building products, with
seven manufacturing plants in the United
Kingdom.
-- Forticrete: A leading manufacturer of concrete
substitutes for natural stone walling,
dressings and concrete roof tiles, with
seven manufacturing plants in the United
Kingdom.
-- US business:
-- Glen-Gery: A leading manufacturer of bricks
by volume of despatches in the Northeast
and Midwest regions of the United States,
with a network of ten manufacturing plants,
ten distribution centres and 29 active
quarries, covered by 20 active quarry permits.
Chief Executive's review
Introduction
I am pleased to present my first review of the Group's
performance since my appointment as CEO in April 2018.
Our UK Clay business continued to benefit from good activity
levels across the period, particularly from the new build housing
sector, and our new Leicestershire factory will be operating at
full capacity by year-end, as planned. In the US, revenues declined
marginally on a constant currency basis against a strong
comparative but the business is showing improved momentum going
into the second half. Our cash generation remains strong, augmented
by a surplus property disposal, and we are pleased to be declaring
both an interim dividend and a supplementary dividend in line with
expectations. However, towards the period end, and particularly
thereafter in July, we had to contend with some production issues
in the UK brick business that will impact on the outcome for the
next twelve months.
Shortly after my appointment, I instigated a review of Ibstock's
operations, including our UK brick manufacturing assets. These
plants have been producing at, or close to, full production
capacity for an extended period but recently production output has
been lower than expected despite corrective measures being
taken.
As announced on 30 July 2018, the review identified a number of
measures required to sustain the quality and range of our
production output and a twelve-month period of increased
maintenance activity is now planned to ensure the factories can
operate at sustainable levels to meet continued increasing demand.
While the resulting additional maintenance shutdowns and extra
spending on maintenance and refurbishment will have a short-term
impact on our financial performance, we firmly believe that it is
the right thing to do for our customers and to maximise long-term
value for shareholders.
Business review
Group revenue in the six months to 30 June 2018 was GBP230
million (1H 2017: GBP228 million). Group adjusted EBITDA(1) was
down 2% to GBP58 million (1H 2017: GBP60 million), reflecting a
weather impacted start to the year and higher energy costs, as
announced in the trading update given at May's AGM. Profit before
taxation was GBP51 million in 1H 2018 (1H 2017: GBP39 million).
United Kingdom
The UK businesses, which accounted for 83% of Group revenue (1H
2017: 81%), reported revenue of GBP192 million in 1H 2018, a 3%
increase year-on-year (1H 2017: GBP186 million). We have seen good
demand from our UK brick customers, with particularly strong
activity levels from the new build housing sector. Overall market
fundamentals remain in place with continued support from housing
demand and positive Government policy.
Adjusted EBITDA for the UK segment in 1H 2018 at GBP58 million
was 1.5% higher than in the prior year period (1H 2017: GBP57
million), driven by above inflation price rises achieved within UK
Brick. Overall the UK adjusted EBITDA margin reduced slightly as
improvements in the customer management process and price increases
were offset by higher gas costs, where we saw price increases in
the mid-teen percentages. These higher energy prices are expected
to remain a feature in the second half of 2018.
UK Clay revenue increased by 4% to GBP142 million (1H 2017:
GBP136 million) with sales volumes remaining flat as they were
constrained by a slower than expected start to the year, which
largely reflected an extended winter season. Mid-single digit price
increases were achieved on average across sales channels,
contributing to the revenue growth in the period.
Our new 100 million per annum soft mud brick factory at Ibstock
in Leicestershire, which started commissioning in 4Q 2017, has been
performing in line with management's expectations. As previously
announced, production volumes are ramping-up progressively across
the year. These will be weighted to the second half of 2018 with
approximately 50% capacity utilisation anticipated over the full
year.
Revenues from our UK concrete businesses were flat at GBP50
million in the first half (1H 2017: GBP50 million). The performance
of both Supreme and Forticrete in 1H 2018 was constrained by both
the weather and lower activity levels within the RMI market. Our
new Forticrete SL8 roof tile product continues to be well-received
by developers and the manufacturing improvements implemented in the
second half of 2017 have delivered the planned production
efficiencies in 1H 2018.
United States
Our US business, which accounted for 17% of Group revenue (1H
2017: 19%), reported revenue of GBP38 million in the six months to
30 June 2018. This compared to GBP42 million in 1H 2017 and was a
c.10% decrease year-on-year. However, adjusting for an adverse
exchange rate impact of c.GBP4 million, revenue declined only
marginally on a constant currency basis(1) .
Sales volumes fell slightly in our primary markets in the
period, although this was against a challenging comparative
following the strong start to 2017. However, as 1H 2018 drew to a
close, the US business' order book heading into 2H 2018 was ahead
of the equivalent period last year and shows good momentum for the
remainder of 2018. Of particular note is the uptick in our order
book for higher value, specification products.
Adjusted EBITDA for 1H 2018 was GBP4 million (1H 2017: GBP5
million), although this performance was impacted by some currency
headwinds. In constant currency, Adjusted EBITDA declined by c.20%
impacted by weather fluctuations year-on-year and reflective of the
strong start to 2017.
Strategy
I am conscious that Ibstock's established strategy and business
fundamentals, supported by a favourable market, have served the
Group well over recent years. The review currently being undertaken
seeks to build on this strategy and identify opportunities for
further growth in light of the supportive market backdrop. We
expect that any resulting changes will be evolutionary rather than
revolutionary in nature and will update shareholders further at the
time of our full year results in March 2019.
The steps being taken to ensure our UK brick manufacturing
capabilities can continue to operate at full strength will enable
Ibstock to remains in a strong position, as market-leader, and to
fulfil its growth potential. We have made good progress with our
major investment projects and we continue to evaluate opportunities
for value-creating organic or acquisitive investments that would
broaden our portfolio.
Current trading and outlook
Demand from the Group's UK brick customers continues to be
robust, particularly from the new build housing sector, and market
fundamentals remain favourable. The Group remains strongly cash
generative and we are well placed to consider opportunities to
invest for future growth.
While our decision to increase maintenance spending on our UK
brick manufacturing assets will have a short-term impact on our
financial performance, this programme will put our UK Clay business
in a much stronger position to meet ongoing demand, which continues
to be robust, with domestic production remaining below market need.
In the US, Glen Gery enters the second half with its order book
ahead of the prior year and showing good momentum for the remainder
of 2018.
As announced on 30 July 2018, we expect that adjusted EBITDA for
the year ended 31 December 2018 will be in the range of GBP121m to
GBP125m with reported EBITDA in the range GBP130m to GBP134m.
Overall, market fundamentals remain favourable and Ibstock is
well placed to benefit from this positive backdrop. We are fully
focused on delivering our business plan as we trade through the
second half.
(1 Alternative Performance Measures are described in Note 3 of
the financial statements)
Chief Financial Officer's report
Group results
Group revenue in the six month period ended 30 June 2018
increased by 0.7% to GBP229.9 million (1H 2017: GBP228.3 million).
Growth was driven primarily by the performance of the UK Clay
business, which, after a slower, weather-impacted start to the
year, saw increased sales volumes in Q2 2018 and ended the period
with cumulative 1H volumes in line with last year. UK Clay sales
growth was supported by mid-single digit price increases, whilst
revenue performance within the UK Concrete and US Clay businesses
was flat. On a constant currency basis(1) , overall Group revenue
growth was 2.3%.
Group profit before taxation was GBP50.9 million (1H 2017:
GBP38.9 million) - an increase of 30.8%. Given a broadly level
first half trading performance, this largely reflects some one-off
credits in 1H 2018, including the profit on disposal of our surplus
property near to Bristol, and the absence of the significant
non-cash finance costs which arose in 1H 2017 when the Group
undertook a refinancing. Prior to exceptional items (see below),
profit before taxation was GBP43.0 million, representing a slight
decline of just over 1% on the prior year on a constant currency
basis.
Alternative performance measures
This interim results statement contains multiple alternative
performance measures (APMs). A description of each APM is included
in Note 3 to the condensed financial statements. The metrics are
consistent with those presented in our 2017 Annual Report &
Accounts and there have been no changes to the bases of
calculation.
Adjusted EBITDA
Management measure the Group's operating performance using
Adjusted EBITDA(1) , which decreased by 2.2% to GBP58.4 million in
the six month period ended 30 June 2018. The decrease reflects the
higher energy costs experienced in 1H 2018, which were flagged in
our 2018 AGM trading update announcement in May 2018. The Group's
Adjusted EBITDA performance was also adversely impacted by the
severe weather experienced in 1H 2018, which was noted across the
construction sector; and the slower RMI sector, which has
constrained the Concrete businesses' performance.
Cash flow and Net Debt
Cash generated from operations during 1H 2018, excluding the
impact of exceptional operating items is shown in the below
table:
Table 1 1H 2018 1H 2017 Change
(GBPm) (GBPm) (GBPm)
Adjusted EBITDA(1) 58.4 59.7 (1.3)
Share-based payments 0.8 0.7 +0.1
Capex before major
projects(2) (8.7) (5.9) (2.8)
Change in working
capital (26.0) (30.0) +4.0
-------- -------- --------
Adjusted EBITDA
- maintenance
capex - change
in WC 24.5 24.5 -
Major project
capex(2) (7.1) (11.1) +4.0
-------- -------- --------
Cash flow from
operating and
investing activities 17.4 13.4 +4.0
Net interest (1.6) (2.0) +0.4
Tax (4.3) (7.5) +3.2
Post-employment
benefits (4.1) (3.5) (0.6)
-------- -------- --------
Adjusted free
cash flow 7.4 0.4 +7.0
======== ======== ========
Cash conversion(1) 41.9% 41.1% +1%pt
1 - Alternative Performance Measures are descried in Note 3 to
the financial statements.
2 - Capex on major projects is that capex relating to strategic
projects in Leicester, Leighton Buzzard and Cannock.
Our operations remain strongly cash generative with the Group's
cash conversion improving marginally from that reported at 1H 2017.
As noted in the Chief Executive Officer's review, the Group's
expenditure on routine maintenance and capital expenditure will
increase in 2H 2018 and 1H 2019 as a programme to sustain the
quality and range of our production capabilities is implemented.
Surplus asset sales will assist in covering this cost in 2H 2018.
Additionally, major capital expenditure has reduced as existing
projects reach a conclusion and remaining commissioning continues
apace.
A net working capital balance at 30 June 2018 of GBP84.9 million
compares to GBP48.2 million at 31 December 2017 and GBP77.0 million
at 30 June 2017, which is consistent with the Group's normal
seasonal trading cycle and intensified by the stronger sales in May
and June 2018 following the poor weather earlier in the year.
Net debt(1) (borrowings less cash) of GBP135.9 million at 30
June 2018, compares to GBP117.0 million at the prior year end and
GBP159.9 million at the prior half year date, reflecting the cash
generative nature of the business year-on-year. The Group has a
GBP250 million revolving credit facility (RCF) with a group of six
major banks. The five-year facility was entered into in March 2017
and contains interest cover and leverage covenant limits of 4x and
3x, respectively. The Group remains comfortably within both
covenant requirements.
Exchange rates
The Group is exposed to movements in exchange rates when
translating the results of its US operations from US Dollars to UK
Sterling. In the six months to 30 June 2018, the average exchange
rate of $1.3762:GBP1 was above that of the equivalent period in
2017 ($1.2595:GBP1) and has resulted in a GBP3.5 million reduction
in revenue and a GBP0.3 million cost to Adjusted EBTIDA in 1H
2018.
Exceptional items
In line with our accounting policy for exceptional items, we
have excluded certain items from our Adjusted EBITDA to aid
shareholders' understanding of our financial performance.
Material items, such as the material profit on disposal of
surplus land, discussed below; and infrequent events, such as the
income statement credit of GBP1.9 million arising on the release of
our provision for contingent consideration following finalisation
of negotiations with CRH during 1H 2018, have been treated as
exceptional in the current period. Further details of exceptional
items are set out in Note 5 to the financial statements.
Profit on disposal of surplus land
During 1H 2018, the Group successfully negotiated the sale of a
former quarry near Bristol, England, for a consideration of GBP9.3
million in cash. The contractually committed consideration is
payable in full on completion, which is expected to be 31 August
2018, and resulted in a pre-tax profit on disposal of GBP6.4
million, which has been classified as exceptional in the period due
to the significance of the profit achieved.
Corporate overheads
Unallocated corporate overheads increased from GBP2.0 million to
GBP3.1 million in the six month period to 30 June 2018. The growth
in the period is a result of increased share-based payment costs
and the incremental expense which has arisen during the transition
to a new CEO. This latter cost has been classified as exceptional
due to its non-recurring nature (see Note 5).
Finance costs
Net finance costs of GBP1.6 million were incurred in 1H 2018 (1H
2017: GBP9.7 million). The improvement in the current year as a
result of both the lower interest rates achieved due to reduced
debt levels year-on-year, and interest income arising on the
pension surplus. Additionally, the comparative cost included
exceptional finance costs of GBP6.4 million arising on the
refinancing in March 2017 and which have not arisen in the current
period.
Taxation
The Group has recognised a tax charge of GBP8.8 million (1H
2017: GBP8.2 million) on the Group's pre-tax profits of GBP50.9
million (1H 2017: GBP38.9 million) resulting in an effective tax
rate of 17.4% (1H 2017: 21.0%), compared to the standard rate of UK
corporation tax of 19.0%.
Earnings per share
Statutory basic EPS increased by 36.1% to 10.3 pence in 1H 2018
(1H 2017: 7.6 pence) as a result of the Group's increased statutory
profitability in the period as discussed above.
Adjusted EPS(1) of 9.6 pence is a marginal increase from 1H 2017
- this metric removes the impact of exceptional non-trading items.
Additionally, the fair value uplifts resulting from our acquisition
accounting have been removed from the Adjusted EPS calculations,
together with non-cash interest impacts (net of the related
taxation charge/credit). Adjusted EPS is the Group's measure for
calculating distributions to shareholders and 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 7.
Table 2 1H 2018 1H 2017
Statutory Basic EPS 10.3p 7.6p
-------- --------
Adjusted Statutory
Basic EPS 9.6p 9.5p
-------- --------
Dividend
The Board has approved an interim dividend of 3.0 pence per
ordinary share (2017: 2.6 pence) in line with the Board's policy of
paying one-third of the prior full year dividend in order to
provide greater certainty to shareholders.
Additionally, following the policy announcement in March 2018,
the Board has approved the Group's first supplementary dividend of
6.5 pence per ordinary share reflecting the capital allocation
strategy and continued strong adjusted free cash flow. The
supplementary dividend is in line with the final dividend announced
in March 2018, and brings the total dividend payment for the period
to 9.5 pence per ordinary share.
Both dividends will be due for payment on 21 September 2018 to
shareholders on the register at the close of business on 17 August
2018.
Pensions
At 30 June 2018, the defined benefit scheme was in an actuarial
accounting surplus position of GBP71.0 million (31 December 2017:
GBP46.1 million). At the period end, the scheme had assets of
GBP607.4 million (31 December 2017: GBP659.4 million) against
pension liabilities of GBP536.4 million (31 December 2017: GBP613.4
million). The reductions in both pension assets and liabilities
have arisen as a result of some members transferring out of the
scheme following its closure. Overall, the improvement in the
Group's net pension position principally resulted from a
combination of strong investment returns, together with actual
inflation being lower than assumed and actuarial gains due to
changes in assumptions - the latter being driven by changes in gilt
rates.
Related party transactions
There were no related party transactions during the period ended
30 June 2018 nor any balances with related parties at 30 June
2018.
Related party transactions in the comparative period are
disclosed in Note 13 to the condensed consolidated financial
statements. During the prior period, Bain Capital Partners LLC
ceased to hold any ordinary shares in Ibstock plc and no longer had
significant influence over the Group and was no longer a related
party.
Subsequent events
Interim and supplementary dividends totalling 9.5 pence per
ordinary share (2017: 2.6 pence) amounting to a total of
GBP38,612,000 were declared by the Board on 8 August 2018.
There have been no further events subsequent to 30 June 2018
which management believe require adjustment or disclosure.
Going concern
The Group has maintained its positive cash position in the
period. In order to ensure that the Group can maintain its strong
liquidity, it has a GBP250 million committed revolving credit
facility. The Group's forecasts and projections, which allow for
reasonably possible variations, show that the Group will continue
to maintain its strong liquidity position, and therefore supports
the Directors' view that the Group has sufficient funds available
to meet its foreseeable requirements. Additionally, the Group has
significant headroom on each of its covenant requirements. The
Directors have concluded therefore that the going concern basis
remains appropriate of at least 12 months from approval of the
interim financial statements.
Risks and Uncertainties
The Board continually assesses and monitors the key risks
impacting the business. The Group's activities expose it to a
variety of risks; economic conditions, government action and
policy, government regulation and standards relating to the
manufacture and use of building products, customer relationships
and reputation, business disruption, recruitment and retention of
key personnel, input prices, product quality, financial risk
management, pension obligations and cyber security.
The Group's risk management approach together with these
principal risks and mitigating actions are unchanged from those set
out on pages 32 to 37 of the 2017 Annual Report & Accounts.
(1 Alternative Performance Measures are described in Note 3 of
the financial statements)
Statement of directors' responsibilities in relation to the
half-yearly financial report
We confirm that to the best of our knowledge:
-- The condensed set of financial statements has been
prepared in accordance with IAS 34 Interim Financial
reporting as adopted by the European Union;
-- The interim management report includes a fair review
of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency
Rules, being an indication of important events
that have occurred during the first six months
of the financial year; and a description of
the principal risks and uncertainties for the
remaining six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency
Rules, being related party transactions that
have taken place in the first six months of
the current financial year and that have materially
affected the financial position or performance
of the entity during that period; and any changes
in the related party transactions described
in the last annual report that could do so.
Joe Hudson Kevin Sims
Chief Executive Officer Chief Financial
Officer
8 August 2018 8 August 2018
Condensed consolidated income statement
for the six months ended 30 June 2018
Unaudited Unaudited
1H 2018 1H 2017
Notes GBP'000 GBP'000
Revenue 229,906 228,260
Cost of sales (144,020) (140,100)
---------------------------------------------------------------- ----- --------- ---------
Gross profit 85,886 88,160
---------------------------------------------------------------- ----- --------- ---------
Distribution costs (19,392) (19,290)
---------------------------------------------------------------- ----- --------- ---------
Administrative expenses before exceptional items (23,161) (23,202)
Exceptional administrative items 5 1,487 1,968
---------------------------------------------------------------- ----- --------- ---------
Administrative expenses (21,674) (21,234)
---------------------------------------------------------------- ----- --------- ---------
Exceptional profit on disposal of property, plant and equipment 5 6,371 -
Other income 1,663 1,320
Other expenses (416) (318)
--------- ---------
Operating profit 52,438 48,638
Finance costs before exceptional items (2,274) (3,356)
Exceptional finance costs 5 - (6,386)
---------------------------------------------------------------- ----- --------- ---------
Finance costs (2,274) (9,742)
---------------------------------------------------------------- ----- --------- ---------
Finance income 721 -
Net finance cost (1,553) (9,742)
Profit before taxation 50,885 38,896
Taxation (8,846) (8,156)
--------- ---------
Profit for the financial period 42,039 30,740
========= =========
Profit attributable to:
Owners of the parent 42,039 30,740
========= =========
Notes Pence Pence
Earnings per share
Basic 7 10.3 7.6
Diluted 7 10.3 7.5
All amounts relate to continuing operations.
Condensed consolidated statement of comprehensive income
for the six months ended 30 June 2018
Unaudited Unaudited
1H 2018 1H 2017
Notes GBP'000 GBP'000
Profit for the financial period 42,039 30,740
--------- ---------
Other comprehensive income/(expense):
Items that will not be reclassified to the profit or loss
Re-measurement of post-employment benefit assets and obligations 21,302 54,742
Re-measurement of post-employment benefits - removal of surplus restriction - 14,223
Related tax movements (3,029) (12,860)
--------- ---------
18,273 56,105
Items that may be subsequently reclassified to profit or loss
Currency translation differences 2,129 (4,527)
Other comprehensive income for the period net of tax 20,402 51,578
--------- ---------
Total comprehensive income for the period, net of tax 62,441 82,318
========= =========
Total comprehensive income attributable to:
Owners of the parent 62,441 82,318
========= =========
Non-GAAP measure
Reconciliation of Adjusted EBITDA to Operating profit for the
financial period:
Unaudited Unaudited
1H 2018 1H 2017
Notes GBP000 GBP000
Adjusted EBITDA 58,407 59,690
Add back exceptional items 5 7,858 1,968
Less depreciation and amortisation (13,827) (13,020)
--------- ---------
Operating profit 52,438 48,638
========= =========
Condensed consolidated balance sheet
as at 30 June 2018
Unaudited Audited 31 December 2017
30 June 2018 GBP'000
Notes GBP'000
Assets
Non-current assets
Intangible assets 113,035 116,010
Property, plant and equipment 406,567 400,480
Deferred tax 1,260 1,412
Post-employment benefit asset 11 70,970 46,064
------------- ------------------------
591,832 563,966
------------- ------------------------
Current assets
Inventories 100,681 91,118
Trade and other receivables 89,761 53,416
Cash and cash equivalents 28,164 31,490
------------- ------------------------
218,606 176,024
Assets held for sale 2,003 4,853
------------- ------------------------
Total assets 812,441 744,843
Current liabilities
Trade and other payables (95,008) (85,342)
Borrowings 9 (796) (551)
Current tax payable (6,411) (3,735)
Provisions (367) (350)
------------- ------------------------
(102,582) (89,978)
------------- ------------------------
Net current assets 120,027 90,899
------------- ------------------------
Total assets less current liabilities 709,859 654,865
------------- ------------------------
Non-current liabilities
Borrowings 9 (163,223) (147,980)
Post-employment benefit obligations 11 (8,737) (8,735)
Deferred tax liabilities (69,668) (66,702)
Provisions (10,171) (10,620)
------------- ------------------------
(251,799) (234,037)
------------- ------------------------
Net assets 458,060 420.828
============= ========================
Equity
Share capital 4,064 4,064
Share premium 824 781
Retained earnings 811,972 776,912
Merger reserve (369,119) (369,119)
Currency translation reserve 10,319 8,190
------------- ------------------------
Total equity 458,060 420,828
============= ========================
Condensed consolidated statement of changes in equity
(unaudited) for six months ended 30 June 2018
Currency Total equity
Retained translation attributable
Share capital Share premium earnings Merger reserve Other reserves reserve to owners
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2018 4,064 781 776,912 (369,119) - 8,190 420,828
------------- ------------- --------- -------------- -------------- -------------- -------------
Profit for the
period - - 42,039 - - - 42,039
Other
comprehensive
income - 18,273 - - 2,129 20,402
------------- ------------- --------- -------------- -------------- -------------- -------------
Total
comprehensive
income for
the period - 60,312 - - 2,129 62,441
Transactions
with owners:
Share based
payments - 842 - - - 842
Deferred tax
on share
based payment - 339 - - - 339
Equity
dividend paid - (26,421) - - - (26,421)
Issue of share
capital - 43 (12) 31
------------- ------------- --------- -------------- -------------- -------------- -------------
Balance at 30
June 2018 4,064 824 811,977 (369,119) - 10,319 458,060
============= ============= ========= ============== ============== ============== =============
Condensed consolidated statement of changes in equity
(unaudited) for six months ended 30 June 2017
Currency Total equity
Retained Merger Other translation attributable
Share capital Share premium earnings reserve reserves reserve to owners
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2017 4,063 - 677,361 (369,119) 1,109 16,043 329,457
------------- ------------- ------------- ------------- ------------- ------------- ------------
Profit for the
period - - 30,740 - - - 30,740
Other
comprehensive
income - - 56,105 - - (4,527) 51,578
------------- ------------- ------------- ------------- ------------- ------------- ------------
Total
comprehensive
income for
the period - - 86,845 - - (4,527) 82,318
Transactions
with owners:
Release of
contingent
consideration
provision - - 1,109 - (1,109) - -
Share based
payments - - 733 - - - 733
Deferred tax
on share
based payment - - 74 - - - 74
Equity
dividend paid - - (21,532) - - - (21,532)
Issue of share
capital 1 - (1) -
------------- ------------- ------------- ------------- ------------- ------------- ------------
Balance at 30
June 2017 4,064 - 744,589 (369,119) - 11,516 391,050
============= ============= ============= ============= ============= ============= ============
Condensed consolidated cash flow statement
for the six months ended 30 June 2018
Unaudited Unaudited
1H 2018 1H 2017
Note GBP000 GBP000
Cash flow from operating activities
Cash generated from operations 8 29,819 28,663
Interest paid (1,640) (1,975)
Tax paid (4,278) (7,490)
--------- ---------
Net cash inflow from operating activities 23,901 19,198
Cash flows from investing activities
Purchase of property, plant and equipment (15,838) (16,950)
Proceeds from sale of property plant and equipment 10 -
Interest received 4 2
--------- ---------
Net cash outflow from investing activities (15,824) (16,948)
Cash flows from financing activities
Dividends paid (26,421) (21,532)
Drawdown of borrowings 35,000 180,000
Repayment of borrowings (20,000) (185,000)
Debt issue costs - (2,408)
--------- ---------
Net cash outflow from financing activities (11,421) (28,940)
Net decrease in cash and cash equivalents (3,344) (26,690)
Cash and cash equivalents at beginning of the period 31,490 45,829
Exchange gains/(losses) on cash and cash equivalents 18 (624)
--------- ---------
Cash and cash equivalents at end of period 28,164 18,515
========= =========
1. Authorisation of financial statements
Ibstock plc ("Ibstock" or the "Group") is a manufacturer of clay
bricks and concrete products with operations in the United Kingdom
and the United States. Ibstock plc is a public company limited by
shares, which is incorporated and domiciled in England whose shares
are publicly traded. The registered office is Leicester Road,
Ibstock, Leicestershire, LE67 6HS and the company registration
number is 09760850.
The interim condensed consolidated financial statements of
Ibstock plc for the six months ended 30 June 2018 were authorised
for issue in accordance with a resolution of the Directors on 8
August 2018.
Publication of non-statutory accounts
The financial information contained in the interim statement
does not constitute the Group's statutory accounts as defined in
section 434 of the Companies Act 2006. The comparative figures for
the financial period ended 31 December 2017, which have been
extracted from the statutory accounts for that period, are not the
company's statutory accounts for that financial period. Statutory
accounts for the year ended 31 December 2017 were approved by the
Board of Directors on 5 March 2018. Those accounts have been
reported on by the company's auditor and delivered to the Registrar
of Companies. The report of the auditor was (i) not qualified, (ii)
did not include a reference to any matters to which the auditor
drew attention by way of emphasis of matter without qualifying
their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
2. Basis of preparation
The interim condensed consolidated financial statements for the
six months ended 30 June 2018 have been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting,
as adopted by the European Union ("EU").
They do not include all of the information and disclosures
required in the annual financial statements, and should be read in
conjunction with the Group's Annual Report and Accounts as at 31
December 2017 which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the EU.
The condensed consolidated financial statements are presented in
Sterling and all values are rounded to the nearest thousand
(GBP'000), except where otherwise indicated.
All accounting policies applied by the Group, and the critical
accounting estimates and judgements within the interim condensed
consolidated financial statements are the same as those applied by
the Group in its consolidated financial statements for the year
ended 31 December 2017, except for the adoption of new standards
and interpretations as of 1 January 2018, which did not have any
impact on the accounting policies, financial position or
performance of the Group.
In January 2016 the IASB issued IFRS 16 "leases" on accounting
for leases, which specifies how an IFRS reporter will recognise,
measure, present and disclose leases. The standard provides a
single lessee accounting model, requiring lessees to recognise
assets and liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low value. Lessors
continue to classify leases as operating or finance, with IFRS 16's
approach to lessor accounting substantially unchanged from its
predecessor, IAS 17. The Group will adopt IFRS 16 from 1 January
2019.
At the commencement date of a lease, a lessee will recognise a
liability to make lease payments (i.e., the lease liability) and an
asset representing the right to use the underlying asset during the
lease term (i.e., the right-of-use asset). Lessees will be required
to separately recognise the interest expense on the lease liability
and the depreciation expense on the right-of-use asset. Under IFRS
16 lessees will be required to remeasure the lease liability upon
the occurrence of certain events (e.g., a change in lease term or a
change in future lease payments resulting from a change in an index
or rate used to determine those payments). The lessee will
generally recognise the amount of the remeasurement of the lease
liability as an adjustment to the right-of-use asset.
This standard will have a material effect on the Group's
consolidated financial statements as follows:
Income statement: Operating expenses will decrease, as the Group
currently recognises operating lease costs within either cost of
sales or administrative expenses, depending upon the nature of the
lease. The Group's lease expense for the year ended 31 December
2017 was GBP7,163,000 as set out in Note 6 to the 2017 Annual
Report and Accounts. Depreciation and finance costs as currently
reported in the Group's Income Statement will increase, as under
the new standard the right-of-use asset will be capitalised and
depreciated over the term of the lease with an associated finance
cost applied annually to the lease liability.
Balance sheet: At transition date, the Group will determine the
lease payments outstanding at that date and apply the appropriate
discount rate to calculate the present value of the lease payments.
The Group is currently considering adopting the new standard by
applying the modified retrospective approach. The Group's
commitment outstanding on all leases as at 31 December 2017 was
GBP43,292,000 as set out in Note 26 of the 2017 Annual Report and
Accounts. The Group continues to assess the impact of the new
standard and whilst the exact financial impact is currently unknown
due to the number of factors still to be finalised (such as
discount rate, expected lease terms), this provides an indication
of the scale of the leases held and how significant they are within
the Ibstock plc Group.
In addition to the impacts above, there will also be
significantly increased disclosures when the Group adopts IFRS
16.
Going concern
The Group has maintained its positive cash position in the
period. In order to ensure that the Group can maintain its strong
liquidity, it has a GBP250 million committed revolving credit
facility. The Group's forecasts and projections, which allow for
reasonably possible variations show that the Group will continue to
maintain its strong liquidity position, and therefore supports the
Directors' view that the Group has sufficient funds available to
meet its foreseeable requirements. Additionally, the Group has
significant headroom on each of its covenant requirements. The
Directors have concluded therefore that the going concern basis
remains appropriate for a period of at least 12 months from
approval of the interim financial statements.
3. Alternative Performance Measures
Alternative Performance Measures (APMs) are disclosed within the
interim management report 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. It is not intended that APMs
are a substitute for, or superior to, statutory measurements. None
of the APMs are outlined within IFRS and they may not be comparable
with similarly titled APMs used by other companies.
Exceptional items
The Group presents items as exceptional on the face of the
income statement, those items which, because of their materiality,
nature and/or expected infrequency of the events giving rise to
them, merit separate presentation to allow shareholders to
understand better elements of financial performance in the period,
so as to facilitate comparison with future periods and to assess
trends in financial performance. Details of all exceptional items
are disclosed in Note 5.
Adjusted EBITDA
Adjusted EBITDA is the earnings before interest, taxation,
depreciation and amortisation adjusted for exceptional items. A
full reconciliation is included at the foot of the Group's
condensed consolidated statement of comprehensive income within the
financial statements.
Adjusted EPS
Adjusted EPS is the basic earnings per share adjusted for
exceptional items, amortisation and depreciation on fair value
uplifted assets and non-cash interest net of tax (at the Group's
effective tax rate). A full reconciliation is provided in Note
7.
Net debt
Net debt is defined as the sum of cash and total borrowings at
the balance sheet date. Net debt to EBITDA is the ratio of net debt
to Adjusted EBITDA (as defined above). A full reconciliation is
included in Note 9.
Cash conversion
Cash conversion is the ratio of Adjusted EBITDA after movements
in working capital less maintenance capital expenditure and share
based payments, to Adjusted EBITDA. The calculation of the cash
conversion ratio is set out within Table 1 of the Chief Financial
Officer's report.
Constant currency
Constant currency measures are used in management's description
of performance within the Chief Executive Officer's review and
Chief Financial Officer's report. Where used, constant currency
figures translate all amounts for our US segment using the US
dollar exchange rate for the six month period ended 30 June 2017
(GBP1:$1.2595).
Cash flow before major projects
Cash flow before major capex is a key performance indicator of
cash flow prior to capital expenditure on major projects. This
represents adjusted EBITDA plus share-based payment costs less
maintenance capital expenditure and adjusted for changes in working
capital. The calculation of the cash flow before major projects is
set out within Table 1 of the Chief Financial Officer's report.
Adjusted free cash flow
Adjusted free cash flow represents cash flow before major
projects (defined above) less expenditure on major projects and
cash outflows for taxation, net interest costs and post-employment
benefits. The calculation of adjusted free cash flow is set out
within Table 1 of the Chief Financial Officer's report.
4. SEGMENT REPORTING
The Directors considers the reportable segments to be the UK and
the US. The key Group performance measure is adjusted EBITDA, as
detailed below, which is earnings before interest, taxation,
depreciation and amortisation adjusted for exceptional items. The
below tables present revenue and adjusted EBITDA for the Group's
operating segments for the six months ended 30 June 2018 and 2017,
respectively. Transactions between segments are carried out at
arm's length. No aggregation of segments has been applied.
Six months ended 30 June 2018 (unaudited)
UK US Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Clay revenue 141,941 38,258 - 180,199
Concrete revenue 49,707 - - 49,707
-------- -------- ------------ --------
Total revenue from external customers 191,648 38,258 - 229,906
Adjusted EBITDA 57,680 3,551 (2,824) 58,407
Exceptional items 8,141 5 (288) 7,858
Depreciation and amortisation
pre fair value uplift (7,197) (2,091) - (9,288)
Incremental depreciation and amortisation
following fair value uplift (4,278) (261) - (4,539)
Net finance costs (745) (808) - (1,553)
-------- -------- ------------ --------
Profit/(loss) before tax 53,601 396 (3,112) 50,885
All revenue is recognised at a point in time (usually point of
delivery, at which point control of the goods transfers to the
customer).The unallocated segment balance include the fair value of
share based payments and associated taxes of (GBP1.0 million), plc
Board costs (GBP1.7 million), legal expenses associated with the
listed business (GBP0.3 million).
Six months ended 30 June 2017 (unaudited)
UK US Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000
Clay revenue 135,902 42,380 - 178,282
Concrete revenue 49,978 - - 49,978
-------- -------- ------------ --------
Total revenue from external customers 185,880 42,380 - 228,260
Adjusted EBITDA 56,821 4,867 (1,998) 59,690
Exceptional items 1,968 - - 1,968
Depreciation and amortisation
pre fair value uplift (6,106) (2,136) - (8,242)
Incremental depreciation and amortisation
following fair value uplift (4,313) (465) - (4,778)
Net finance costs (9,288) (454) - (9,742)
-------- -------- ------------ --------
Profit/(loss) before tax 39,082 1,812 (1,998) 38,896
All revenue is recognised at a point in time (usually point of
delivery, at which point control of the goods transfers to the
customer). In the period ended 30 June 2017, the unallocated
segment balance included the fair value of share based payments and
associated taxes of (GBP0.9 million), plc Board costs (GBP0.7
million) and legal expenses associated with the listed business
(GBP0.3 million).
Seasonality
The Group's trading operations when assessed on a half yearly
basis are mainly unaffected by seasonal factors. In the year ended
2017, the period to 30 June accounted for 50.5% of the Group's
annual revenue and 49.9% of the Group's annual adjusted EBITDA. The
year ending 31 December 2018 will be influenced by the ongoing
commissioning and ramping-up of production of the Group's new soft
mud brick factory, where production is expected to be significantly
weighted to the second half of 2018.
5. EXCEPTIONAL ITEMS
Unaudited Unaudited
1H 2018 1H 2017
GBP'000 GBP'000
Exceptional administrative items:
Pension related costs (117) (111)
Release of provision for contingent consideration 1,892 2,079
Exceptional corporate costs (288) -
---------- ----------
Total exceptional administrative items 1,487 1,968
Exceptional profit on disposal of property,
plant and equipment 6,371 -
Exceptional finance costs - (6,386)
Total exceptional items 7,858 (4,418)
========== ==========
Period ended 30 June 2018
Included within the current period are the following exceptional
items:
Exceptional administration expenses
Pension related costs which arose in the period ended 30 June
2018 include residual professional advisor fees associated with the
closure of the Group's UK defined benefit pension scheme and costs
associated with the pension data cleansing exercise currently
taking place as part of the Group's pension de-risking
exercise.
The release of a provision for contingent consideration of
GBP1,892,000 arose in the current period following the finalisation
of negotiations relating to outstanding contingent consideration
following the Group's disposal by CRH plc in February 2015 (see
Note 10).
Exceptional corporate costs relate to the duplication of Chief
Executive Officer's expenses in the period ended 30 June 2018.
Exceptional profit on disposal of property, plant and
equipment
The exceptional profit on disposal relates to the sale of the
Group's surplus quarry property near Bristol, England which
occurred in the current period.
Period ended 30 June 2017
Included within the prior period were the following exceptional
items:
Exceptional administration expenses
Pension closure costs which arose in the period ended 30 June
2017 represent residual professional advisor fees associated with
the closure of the Group's UK defined benefit pension scheme, which
took place in the year ending 31 December 2016.
The release of a provision for contingent consideration of
GBP2,079,000 arose in the comparative period following the disposal
of all interests in the Group by Bain Capital LLC (see Note
13).
Exceptional finance costs
Exceptional finance costs, which arose in the comparative
period, resulted from the refinancing of the Group's loan in March
2017, representing GBP3.3 million of accelerated loan deal fees and
GBP3.1 million of interest charges as a result of the effective
interest method of accounting.
Tax on exceptional items
In the current period, the release of contingent consideration
of GBP1,892,000 is non-taxable, whilst the pension closure costs
and corporate expenses are tax deductible and the profit on
disposal is taxable in the current period.
In the prior period, the release of contingent consideration of
GBP2,079,000 is non-taxable whilst the pension closure costs of
GBP111,000 and exceptional finance costs of GBP6,386,000 are tax
deductible.
6. TAXATION
The taxation expense for the interim period is an estimate based
on the expected full year effective tax rate on full year
profits.
7. EARNINGS PER SHARE
The basic earnings per share figures are calculated by dividing
profit for the period attributable to the parent shareholders by
the weighted average number of ordinary shares in issue during the
period.
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 period. Where the
average share price for the period 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:
Unaudited Unaudited
1H 2018 1H 2017
(000s) (000s)
Basic weighted average number of shares 406,427 406,321
Effect of share incentive awards and options 3,232 1,848
---------- ----------
Diluted weighted average number of shares 409,660 408,169
The calculation of adjusted earnings per share is a key
measurement of management that is not defined by IFRS. The adjusted
EPS measures should not be viewed in isolation, but rather treated
as supplementary information.
Adjusted earnings per share figures are calculated as the basic
earnings per share adjusted for exceptional items, amortisation and
depreciation on fair value uplifted assets and non-cash interest
expenses. All adjustments are made net of the associated taxation
impact at the Group's Effective Tax Rate.
A reconciliation of the statutory profit to that used in the
adjusted earnings per share calculations is as follows:
Unaudited Unaudited
1H 2018 1H 2017
Notes GBP000 GBP000
Profit for the period attributable
to the parent shareholders 42,038 30,740
Add back exceptional items 5 (7,858) 4,418
Add back tax expense/(credit) on exceptional
items 1,366 (926)
Add fair value adjustments 4,539 4,778
Less tax credit on fair value adjustments (789) (1,002)
Add back non-cash interest (531) 734
Less back tax credit on non-cash interest 92 (154)
---------- ----------
Adjusted profit for the period attributable
to the parent shareholders 38,857 38,588
========== ==========
Unaudited Unaudited
1H 2018 1H 2017
Pence Pence
Basic EPS on profit for the period 10.3 7.6
Diluted EPS on profit for the period 10.3 7.5
Adjusted basic EPS on profit for the period 9.6 9.5
8. NOTES TO THE GROUP CASH FLOW STATEMENT
Unaudited Unaudited
1H 2018 1H 2017
Cash flows from operating activities GBP'000 GBP'000
Profit before taxation 50,885 38,896
Adjustments for:
Depreciation of property, plant and
equipment 10,616 9,760
Amortisation of intangible assets 3,211 3,260
Finance costs 1,553 9,742
Gain on disposal of property, plant
and equipment (6,371) -
Share based payments 842 733
Other non-cash items 648 -
Research and development taxation credit (1,500)
Deferred income - (159)
Post-employment benefits (4,026) (3,531)
---------- ----------
55,858 58,701
Increase in inventory (8,468) (2,890)
Increase in debtors (26,763) (26,215)
Increase in creditors 9,723 722
Decrease in provisions (532) (1,655)
---------- ----------
Cash generated from operations 29,819 28,663
========== ==========
During the six months ended 30 June 2018, the Group acquired
assets with a cost of GBP15,838,000 (1H 2017: GBP16,950,000).
Capital expenditure commitments for which no provision has been
made were GBP9,163,000 at 30 June 2018 (31 December 2017:
GBP16,067,000).
9. MOVEMENTS IN CASH AND NET DEBT
The Group refinanced its debt facilities in March 2017 and
agreed a five-year GBP250 million Revolving Credit Facility (RCF).
The RCF attracts interest at LIBOR plus a margin ranging from
100-225bps depending upon the ratio of net debt to adjusted EBITDA
(see Note 3 for definitions) and was initially set at 125bps.
The facility contains debt covenant requirements of leverage
(net debt to adjusted EBITDA) and interest cover (adjusted EBITDA
to net finance charge) of 3x and 4x, respectively, to be tested
semi-annually on 30 June and 31 December.
30 June 31 December
2018 2017
GBP'000 GBP'000
Cash and cash equivalents 28,164 31,490
Current
Revolving credit facility (796) (551)
Non-current
Revolving credit facility (163,223) (147,980)
---------- ------------
Total borrowings (164,019) (148,531)
Net debt (135,855) (117,041)
========== ============
10. FINANCIAL INSTRUMENTS
IFRS 13 requires that the classification of financial
instruments measured at fair value be determined by references to
the source of inputs used to derive the fair value. The
classification uses the following three-level hierarchy:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets and liabilities.
Level 2 - Other techniques for which all inputs, which have a
significant effect on the recorded fair value, are observable,
either directly or indirectly.
Level 3 - Techniques which use inputs, which have a significant
effect on the recorded fair value, that are not based on observable
market data.
At 30 June 2018, the Group has no financial instruments measured
at using Level 1 or Level 2 methods. A provision for contingent
consideration associated with the business combination which took
place in February 2015 is the only instrument valued using Level 3
inputs.
Under the terms of the sale and purchase agreement, half of any
tax relief, over a contracted amount, received by the acquired
business as a result of the one-off pension payment, shall be
payable to the seller. At 31 December 2016, management estimated
the fair value of the future obligation of contingent consideration
at GBP4,000,000, with a range being nil to GBP4,000,000.
In the six month period ended 30 June 2017, management released
GBP2,079,000 in relation to this contingent consideration following
the disposal of remaining shares in Ibstock plc by the Bain Capital
Partners LLC, as disclosed in Note 13. This amount was disclosed as
an exceptional item (see Note 5). In the current period, following
the finalisation of negotiations with CRH plc, the remaining
balance of the provision for contingent consideration
(GBP1,892,000) has been released and similarly classified as an
exceptional item.
There were no transfers between levels during any period
disclosed.
At 30 June 2018 and 31 December 2017, the Group held no
significant derivative financial instruments.
The carrying value of the Group's short-term receivables and
payables is a reasonable approximation of their fair values. The
fair value of all other financial instruments carried within the
Group's financial statements is not materially different from their
carrying amount.
11. POST EMPLOYMENT BENEFITS
The Group participates in the Ibstock Pension Scheme (the
'Scheme'), a defined benefit pension scheme in the UK. During the
six month period to 30 June 2018, the Scheme surplus of
GBP46,064,000 has increased to a surplus of GBP70,970,000. Analysis
of movements during the six month period ended 30 June 2018:
GBP'000
UK Scheme surplus at 31 December 2017 46,064
Charge within labour costs and operating profit (475)
Interest income 579
Remeasurement due to:
Change in financial assumptions 34,818
Change in demographic assumptions 3,319
Experience gains (1,785)
Return on plan assets (15,050)
Company contributions 3,500
---------
UK Scheme surplus at 30 June 2018 70,970
US scheme obligation at 30 June 2018 (8,737)
---------
Net pension balance sheet position at 30 June
2018 62,233
=========
The improvement in the underlying balance sheet position over
the period is primarily due to a combination of actuarial gains due
to a change in assumptions, partially offset by lower than expected
investment returns.
The financial assumptions used by the actuary have been derived
using a methodology consistent with the approach used to prepare
the accounting disclosures at 31 December 2017. The assumptions
have been updated based on market conditions at 30 June 2018:
30 June 31 December
Assumption 2018 2017
Discount rate 2.65% 2.45%
RPI inflation 2.95% 3.15%
CPI inflation 1.95% 2.15%
The Group also participates in two multi-employer defined
benefit pension schemes in the US. The liability recognised in
respect of these schemes at 30 June 2018 of GBP8,737,000 (31
December 2017: GBP8,735,000), which remains largely unchanged since
the prior period end.
12. SHARE BASED PAYMENTS
On 6 April 2018, the Group launched its 2018 Save As You Earn
(SAYE) scheme, under which an employee must enter into a linked
savings contract with a bank or building society to make
contributions on a monthly basis over a three year period.
1,368,879 options were granted under the 2018 SAYE scheme at an
exercise price of 230 pence per share.
On 9 April 2018, 535,347 and 442,791 share options were granted
to senior executives under the LTIP and Company's Share Option Plan
(CSOP), respectively. The exercise price of the CSOP is 290 pence
being equal to the market price of shares on the date of grant. The
LTIP, which has a nil exercise price, contains Total Shareholder
Return (TSR) and EPS performance conditions. There are no
performance conditions associated with the CSOP. Both plans contain
a three year service period. The fair value at the grant date is
estimated using a binomial pricing model, taking into account the
terms and condition upon which the options were granted.
In addition, 138,918 shares were awarded under the Annual
Deferred Bonus Plan (ADBP) in relation to the bonus achieved in the
year ending 31 December 2017. There are no performance conditions
associated with the ADBP, which contains a three year service
period.
The fair value of options granted during the six months ended 30
June 2018 was estimated on the date of grant using the following
assumptions:
SAYE LTIP CSOP ADBP
Dividend yield (%) 4.50% N/A 4.50% N/A
Expected volatility (%) 32.19% 32.19% 32.19% N/A
Risk-free interest rate (%) 0.91% 0.91% 1.20% N/A
Expected life of the share options
(years) 3.25 3.0 6.5 3.0
Weighted average fair value at
grant(GBP) 0.70 1.879 0.54 2.89
For the six months ended 30 June 2018, the Group has recognised
GBP842,000 of share-based payments expense in the condensed
consolidated income statement (30 June 2017: GBP733,000).
13. RELATED PARTY TRANSACTIONS
In the six month period ended 30 June 2018
There were no related party transactions during the six month
period ended 30 June 2018 nor any balances with related parties at
30 June 2018.
In the six month period ended 30 June 2017
On 9 March 2017, Diamond (BC) S.a.r.l (a wholly owned subsidiary
of Bain Capital Partners LLC) announced the proposed placing of
approximately 40,600,000 ordinary shares in the capital of Ibstock
plc. On 10 March 2017, the Company announced that 48,600,000
ordinary shares were sold due to strong investor demand. Following
the sale, Bain Capital Partners LLC held ordinary shares
representing approximately 25.0% of the entire issued share
capital. On 25 April 2017, Diamond (BC) S.a.r.l announced the
proposed placing of approximately 50,000,000 ordinary shares in the
capital of Ibstock plc. On 26 April 2017, the Company announced
that 101,600,000 ordinary shares were sold due to strong investor
demand. Following the sale, Bain Capital Partners LLC ceased to
hold any ordinary shares in Ibstock plc. As at 30 June 2017, the
board of directors of the company, considered, based on the facts
and circumstances, that Bain Capital Partners LLC no longer had
significant influence over the Group and is no longer a related
party.
14. DIVIDENDS PAID AND PROPOSED
A final dividend for 2017 of 6.5 pence per ordinary share (2016:
5.3 pence) was paid on 8 June 2018. The Directors have declared an
interim dividend of 3.0 pence per ordinary share in respect of 2018
(2017: 2.6 pence), amounting to a dividend of GBP12,193,000 (2017:
GBP10,566,000). The interim dividend will be paid on 21 September
2018 to all shareholders on the register at close of business on 17
August 2018.
In addition, the directors declared a supplementary dividend of
6.5 pence per ordinary share to be paid alongside the interim
dividend amounting to a dividend of GBP26,419,000 (2017: nil). The
supplementary dividend will be paid on 21 September 2018 to all
shareholders on the register at close of business on 17 August
2018.
These condensed consolidated financial statements do not reflect
the 2018 interim or supplementary dividends payable.
15. POST BALANCE SHEET EVENTS
Other than the interim and supplementary dividends of 3.0 and
6.5 pence per ordinary share declared by the Directors (see Note
14), since the balance sheet date no further subsequent events
requiring further disclosure or adjustments to these financial
statements have been identified.
INDEPENDENT REVIEW REPORT TO IBSTOCK PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2018 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and related notes 1 to
15. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review 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, for our review
work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, 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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2018 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
8 August 2018
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DMGGRNRGGRZM
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August 09, 2018 02:00 ET (06:00 GMT)
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