BRICKABILITY GROUP PLC

Interim / Quarterly Report • Dec 1, 2021

National Storage Mechanism | Additional information

RNS Number : 1155U

Brickability Group PLC

01 December 2021

01 December 2021

Brickability Group plc

("the Group")

Interim Results for the six months ended 30 September 2021

Brickability Group plc (AIM: BRCK), the leading construction materials distributor, today announces its unaudited interim results for the six months ended 30 September 2021.

Financial Highlights:

•	Revenue increased by 197% to £223.5m (H1 2020: £75.3m)
•	Group like-for-like** revenue growth of 53.6% versus H1 2020 and 30.4% versus H1 2019
•	Gross profit increased by 146.8% to £39.0m (H1 2020: £15.8m)
•	Gross profit margin of 17.4% (H1 2020: 21.0%)
•	Profit before tax increased by 120.4% to £11.9m (H1 2020: £5.4m)
•	Adjusted EBITDA* increased by 120.0% to £17.6m (H1 2020: £8.0m)
•	Cash balance at 30 September of £18.4m (H1 2020: £13.8m)
•	Net cash as at 30 September of £2.8m (H1 2020: net debt £2.7m)
•	Borrowing facility increased to £60 million plus £25m accordion following re-financing
•	Interim dividend proposed of 0.96 pence per share (H1 2020: 0.8678 pence)

Operational Highlights:

•	Strong start to 2021, with performance ahead of same period in 2019 pre-COVID
•	Acquisitions of Taylor Maxwell, in June 2021 following an oversubscribed share placing raising equity finance of £55 million, and Leadcraft, as announced in August 2021
•	Taylor Maxwell acquisition recognised with the 2021 AIM Awards 'Transaction of the Year' Award
•	New product ranges added to Group offering, timber and non-combustible cladding, copper and zinc metal roofing and heritage leadwork
•	Focus on revenue and cost synergies
•	Strong pipeline of acquisitions and continued organic development
•	Strong order book for the second half with positive order intake momentum
•	ESG Committee established led by the Group Chairman with members including the Chief Operating Officer and Group Marketing Director

Post period end and outlook:

•	Appointment of Paul Hamilton as Chief Operating Officer with immediate effect
•	Acquisition of HBS New Energies and UPOWA in November 2021, the Group's first acquisition in the renewable energy products sector
•	Board remains confident of the Group delivering performance at least in line with market expectations for the full year

*Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortisation, share option expense, acquisition costs and exceptional items.

**like-for-like sales is a measure of growth in sales, adjusted for the impact of acquisitions

John Richards, Chairman, said:

"We are pleased to have delivered another strong performance across all our divisions during the period.

"As the housebuilding and construction market has continued to improve, all our divisions have benefitted from the increased demand which has resulted in a strong order book.

"Our strategy of bolt on acquisitions has enabled us to significantly expand our product offering, through the acquisition of Taylor Maxwell and Leadcraft, as well as, seeing the Group enter the renewable energy product space with the acquisition of HBS New Energies and UPOWA, a strategically significant sector for the Group moving forward, post period.

"We believe Brickability is well positioned for the future, and that the scale and diversity of the business, will enable the Group to capitalise on opportunities in the market and further strengthen our positioning."

ENDS

This announcement contains inside information.

Enquiries: 

Brickability Group plc  John Richards, Chairman  Alan Simpson, CEO  Mike Gant, CFO	via Montfort Communications
Cenkos Securities plc (Nominated adviser and broker)  Ben Jeynes, Max Gould (Corporate Finance)  Julian Morse, Alex Pollen (Sales)	+44 (0) 207 397 8900
Montfort Communications (Financial PR)  James Olley  Georgia Colkin	+44 (0) 203 514 0897 brickability@montfort.london

About Brickability 

Brickability is a leading construction materials distributor, serving customers across the UK and Europe for over 36 years through its national and local networks. The Group supplies over 500m bricks annually and has 41 locations across the country with over 500 employees.

Across its 3 divisions the Group supplies bricks, roofing, timber, cladding, heating, flooring, doors and windows to meet demand from both housebuilders and contractors.

Interim Report for the six months ended 30 September 2021

Chairman's Statement

Brickability has made a strong start to 2021, delivering a robust financial performance, with an adjusted EBITDA of £17.6m in the first half of the year (2020: £8.0m).

Our businesses have performed well, in line with the recovery in the construction and housebuilding sector, and we have seen strong order intake momentum across all divisions, which has continued as we move into the second half of the year.

The fundamentals of the UK housebuilding market remain strong and the industry is forecast to continue to grow substantially as we move into 2022, driven by increased demand in the private sector and Government investment into affordable housing starting to come through. We firmly believe that Brickability remains well placed to capitalise on this demand, strengthening its position within the market as a leading construction materials distributor.

The acquisition of Taylor Maxwell completed in June 2021 brings significant scale and diversity to our offering and customer base, alongside the acquisition of Leadcraft Ltd. We are pleased to report that both businesses are already contributing significantly to the overall performance of the Group. Our pipeline of acquisitions is very encouraging, and we remain focused on identifying bolt on acquisitions which will further diversify our proposition.

To this end, we were pleased to announce the acquisition of HBS New Energies and UPOWA in November 2021. HBS New Energies marks Brickability's first acquisition in the renewables energy products sector and the 13th strategic acquisition for the Group in the last three years. The acquisition comes as Brickability seeks to broaden its offering for customers and, also importantly, focus on its own sustainability commitments across its divisions.

Decarbonisation of the built environment is driving significant new opportunity across the industry, with companies needing to commit to their own emission reductions while supporting the transition to net-zero of buildings and the broader supply chain. Cost efficient energy solutions are set to play a key role in supporting the built environment and housebuilding industry in meeting the changing Building Regulations landscape, as well as the UK Government's recently announced deadline for UK listed companies to publish their pathway to net-zero by 2030, in line with the UK Government's 2050 net-zero target.

This has been another successful period of growth for the Group and the results today are a testament to the adaptability, strength and diversity of the businesses we operate and our continued focus on identifying significant strategic opportunities, whilst operating a lean approach. Overall we maintain an optimistic market outlook and the Board remains confident of the Group delivering performance at least in line with market expectations for the full year. However, the Group remains vigilant of the pressures which continue to impact our sector and the wider UK economy.

The Board are pleased to announce an interim dividend of 0.96p per share (H1 2020: 0.8678p), payable on 24 February 2022 reflecting the performance of the business in the half, and the Board's confidence in the longer-term outlook for the Group.

I would like to take this opportunity to thank all employees for their hard work and commitment throughout this period. Brickability is well positioned for the future with a clear strategy and high-quality, diversified business and we remain confident of the Group's future success as we move forward.

John Richards

Chairman

30 November 2021

Chief Executive's Review

Our businesses have performed well, delivering a strong set of results which has enabled the Group to continue to focus on investing for future growth across the divisions. The results achieved, reflect not only the healthy housebuilding market conditions, following a strong post pandemic recovery, but also the strength of Brickability's positioning within the market.

The Group continues to deliver against its strategic objectives and aim of building a diversified construction materials distribution business. Our expertise in procurement from both the UK and overseas have allowed us to manage industry supply chain pressures including a shortage of HGV drivers and increases in materials prices. Whilst we expected margins to be impacted slightly by industry difficulties, our margin levels remain resilient as our diverse product offering has helped to mitigate the industry wide inflationary price pressures. Our roofing division has not been able to fully recover the significantly increased raw materials costs in the first six months of the year whilst our newly acquired Taylor Maxwell Timber business has delivered record margins.

Group margins are lower than prior years as the Taylor Maxwell business operates on lower margins than the Brickability Group was operating on prior to the acquisition, as noted at the time. The Taylor Maxwell overall margins for the three months since acquisition were exceptionally high due mainly to the unprecedented timber price inflation during this period which has since been reducing from this peak. Consequently, overall Group margins are expected to reduce slightly in the second half of the year back to normalised levels.

Bricks and Building Materials

The Group's footprint and product offering in the bricks and building materials division continued to grow over the period. Brick sales were robust, and demand remains strong from housebuilders, in particular for imported products. Whilst the first half of the year has presented industry wide challenges particularly, product availability and logistics, performance across the bricks division has been very positive and is expected to continue to provide good results as we move into the second half.

In June 2021, we announced the transformational acquisition of Taylor Maxwell. The acquisition has added significant scale and expanded the range of solutions we are able to deliver to our growing client base. We are pleased to announce that the integration of Taylor Maxwell within the wider Group is proceeding successfully. To date, we have focused on leveraging the Finance and IT functions and will shortly commence the adoption of Taylor Maxwell's operational and scheduling systems across the Group which will improve efficiencies by assisting in sales scheduling and forecasting. Since completion, the business has continued to perform strongly and ahead of expectations.

Whilst we continue to focus on identifying potential acquisition opportunities across all our business divisions, organic development remains a priority. During the period, U Plastics, our specialist merchant for facia, soffits and guttering, external cladding and ancillary products opened two new branches in Maidenhead and Enfield expanding its capacity and enabling it to respond to growing demand. Furthermore, following the appointment of a new sales team with significant industry experience and online sales expertise, The Matching Brick Company has more than doubled its sales in H1 compared to the previous year. We were pleased to also see the Group's start-up business Alfiam Building Supplies, following the impact of COVID-19, return to trading in line with expectations and delivering good margins.

Crest Brick, Slate and Tile has performed strongly, and McCann Logistics has continued to run at full capacity and we expect to see its performance improve further in the second half.

Heating, Plumbing and Joinery

Our businesses within the heating, plumbing & joinery division also performed well. Towelrad's range has grown significantly along with sales, driven by increased new housing being built and its ability to meet this demand thanks to strong stock availability. DSH Flooring and FSN Doors also benefitted from the increased demand and FSN Doors, in particular, has won a number a of new orders due to its ability to offer customers faster delivery times by sourcing product from Europe. The HPJ division also includes our ceramic tile business, Forum Tiles. This start-up, launched in January 2021 is currently growing its order book although with investment ahead of sales during H1, this has impacted the divisional margin when compared to the prior year.

Roofing Services

The roofing division has been the most impacted by the current market conditions surrounding the availability and pricing of materials with revenue and margins both down on pre-covid levels. This is expected to continue into the second half with a gradual recovery during the last quarter of our current financial year and into the new financial year as input costs stabilise and sales price increases become effective. Encouragingly, the order books are at an all-time high and we were pleased to announce in August 2021 the acquisition of Leadcraft Ltd which has enabled us to further expand our roofing materials business bringing copper and zinc metal roofing and heritage leadwork capability into the Group.

Post Period

As outlined in the Chairman's Statement, the Group has completed the acquisition of HBS New Energies, since the period end. Founded in 2008, HBS New Energies is a market-leading renewable energy expert, specialising in the design, supply, installation and maintenance of solar PV, battery storage and electric vehicle charging technologies. With extensive cross-sector installation experience and technical expertise, HBS New Energies has built an unrivalled track record in the housebuilding, construction, commercial and industrial and public sectors, offering cost-effective, easy to install, energy saving and scalable technologies that simplify the construction of sustainable, zero-carbon homes. As a market leader with a proven track record, we believe the acquisition of HBS New Energies will further strengthen our strategic positioning within the wider market and enable us to expand into a new product segment.

Management Changes

The Group is pleased to announce that Paul Hamilton, currently Managing Director of the Heating, Plumbing and Joinery Division, has been appointed into the newly created role of Chief Operating Officer ("COO") with immediate effect. The role of COO is not a Board position.

Paul Hamilton has over 15 years' experience in the heating and building supplier market. He joined the Towelrads business in 2004 and became a shareholder and Director in 2008. Paul has overseen the growth of the Towelrads business from sales of less than £1 million to over £22 million a year. He led a management buyout of the Towelrads business in 2016 and was a founder of DSH Flooring. Paul is currently Managing Director of the Group's Heating, Plumbing and Joinery Division including Towelrads, DSH Flooring, Frazer Simpson and FSN Doors.

As COO Paul will be responsible for the Group's day-to-day operations, reporting to myself.

Outlook 

Across the Group, our priority remains securing strong order intakes with clear and sustainable margins.

Our acquisition pipeline remains strong, and we continue to look at potential new businesses that will enhance and broaden Brickability's operations.

As the industry continues to face challenges, we remain cautiously optimistic and believe that our diversified multi business strategy places us in a good position to mitigate any pressures and take advantage of current and anticipated demand. We have entered the second half of the year in a strong position and the Board expects performance to be at least in line with market expectations for the full year.

Alan J Simpson

Chief Executive

30 November 2021

Financial Review

Revenue and gross margin

The Group delivered revenue of £223.5 million in the first six months of H1 2021 (H1 2020: £75.3 million), representing a total increase of 197.0% (£148.2 million). When the impact of acquisitions is excluded from revenue, like for like ("LFL") revenue increased by 53.6% when compared to H1 2020 and 30.4% on a two year LFL versus H1 2019.

The increase in LFL revenue reflects of the recovery that the Group has made following the initial COVID-19 lockdowns in April and May 2020. The significant acquisition of Taylor Maxwell, within the Bricks and Building Materials segment, and the addition of Leadcraft, within the Roofing Services segment, have also contributed to the overall increase compared to H1 2020.

Revenue by division was:

	H1 2021 £'000	H1 2020 £'000	% Increase	LFL % increase	2 year LFL % change
Bricks and Building Materials	198,750	60,313	229.5%	53.7%	35.2%
Roofing Services	8,692	4,953	75.5%	50.9%	(17.4%)
Heating, Plumbing and Joinery	16,061	9,991	60.8%	53.3%	15.4%
Total	223,503	75,257	197.0%	53.6%	30.4%

Gross profit for the 6 months increased by 147% to £39.0 million (H1 2020: £15.8 million) whilst the Group's gross margin percentage decreased to 17.4% (H1 2020: 21.0%) driven primarily by the Taylor Maxwell business as it operates on lower margins than the existing Brickability Group as noted in the Chief Executive's Review.

Adjusted profit and adjusted EBITDA

Statutory profit before tax of £11.9 million (H1 2020: £5.4 million) includes other items of £3.9 million (H1 2020: £1.5 million) which are not considered to be part of the Group's underlying operations. These are analysed below the Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income.

The Group's adjusted EBITDA increased by 120% to £17.6 million for the first six months of 2021, compared to £8.0 million in the same period last year, reflecting the impact of the lockdown. EBITDA as a percentage of turnover has fallen to 7.9% (H1 2020: 10.6%) due mainly to the impact of the of the Taylor Maxwell business as noted above.

Adjusted EBITDA by division was:

	H1 2021 £'000	H1 2021 EBITDA as % turnover	H1 2020 £'000	H1 2020 EBITDA as % turnover
Bricks and Building Materials	15,341	7.7%	5,520	9.2%
Roofing Services	1,269	14.6%	888	17.9%
Heating, Plumbing and Joinery	3,563	22.2%	2,515	25.2%
Central	(2,599)	-	(918)	-
Total	17,574	7.9%	8,005	10.6%

Earnings per share

Basic EPS was 3.01p per share (H1 2020: 1.89p), while adjusted basic EPS was 4.79p (H1 2020: 2.39p). Adjusted EPS is an underlying EPS, based on the adjusted profit as noted above.

Dividend

The Board is recommending an interim dividend of 0.96p per share (H1 2020: 0.8678p) to shareholders on the register at 28 January 2022. The ex-date and payment date for the dividend will be 27 January 2022 and 24 February 2022 respectively.

Cash flow and net debt

The Group generated operating cash flows before movements in working capital of £17.5 million in the first six months of the year compared to £8.1 million in the same period in 2020. Cash generated from operations was £7.0 million (H1 2020: £3.6 million).

The net cash position (cash less bank borrowings) as at 30 September 2021 was £2.8 million compared to a net debt position as at 30 September 2020 of £2.7m, and is an increase of £10.1 million since the net debt position at 31 March 2021.

During the period, the Group raised £55 million through the issue of new shares to fund the acquisition of Taylor Maxwell and future bolt-on acquisitions. Initial payments made to acquire these subsidiaries amounted to £39.5 million during the period.

Bank facilities

In June 2021, the Group re-financed into a £60 million revolving credit facility with an additional £25 million accordion, on a club basis with HSBC and Barclays, that runs for 3 years (with the option of two one-year extensions). Total bank debt as at 30 September 2021 was £15.6 million with a further £44.4 million of undrawn committed facilities available.

Defined benefit pension scheme

The Group acquired a defined benefit pension scheme during the period when it acquired Taylor Maxwell (2017) Limited. However, it has commenced a buy-out process to transfer the risk associated with the scheme. A buy-in contract was incepted on 7 July 2021 and the process is expected to reach the full buy-out stage within the next 9 months.

Subsequent events

In October 2021, and as previously announced, the Group issued 280,254 new ordinary shares following the vesting and exercising of share options under the Company's Long Term Incentive Plan and Company Share Option Plan. The Group also granted 2,394,286 options under its LTIP and CSOP schemes to its employees.

In November 2021, the Group acquired the entire share capital and 100% of the voting rights in HBS NE Limited, a company specialising in the installation of solar panels and provision of renewable energy services.

There are no other material post balance sheet events.

Mike Gant

Chief Financial Officer

30 November 2021

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the six months ended 30 September 2021 (unaudited)

Notes		6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
Revenue Cost of sales		223,503 (184,551)	75,257 (59,457)	181,084 (143,112)
Gross profit		38,952	15,800	37,972
Other operating income		-	1	92
Administrative expenses	6	(22,956)	(7,722)	(20,624)
Impairment losses on financial assets		(301)	(74)	(341)
Depreciation and amortisation		(3,254)	(2,527)	(5,456)
Finance income		15	11	13
Finance expense		(503)	(454)	(845)
Share of post-tax profit/ (loss) of equity accounted associates		20	-	(6)
Fair value (losses)/ gains		(110)	381	360
Profit before tax		11,863	5,416	11,165
Tax expense		(3,938)	(1,064)	(1,506)
Profit for the period and total comprehensive income		7,925	4,352	9,659
Attributable to:
Equity holders of the parent		7,960	4,352	9,665
Non-controlling interests		(35)	-	(6)
		7,925	4,352	9,659
Earnings per share
Basic earnings per share	8	3.01 p	1.89 p	4.19 p
Diluted earnings per share	8	2.96 p	1.89 p	4.18 p
Adjusted basic earnings per share	8	4.79 p	2.39 p	5.56 p
Adjusted diluted earnings per share	8	4.70 p	2.39 p	5.54 p

Adjusted profit                                                        

Adjusted profit excludes those items that are not considered to be directly attributable to the Group's underlying trade. It can be reconciled to statutory profit after tax as follows:

		6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
Profit for the period		7,925	4,352	9,659
Acquisition costs		999	-	105
Share-based payment expense		880	43	338
Amortisation of intangible assets		1,897	1,748	3,619
Unwinding of discount on contingent consideration		48	75	127
Share of post-tax (profit)/ loss of equity accounted associates		(20)	-	6
Fair value losses/ (gains) on contingent consideration		110	(381)	(360)
Tax on adjusting items		798	(332)	(687)
Adjusted profit for the period		12,637	5,505	12,807

Adjusted EBITDA reflects earnings before interest, tax, depreciation, amortisation and other items considered non-operational in nature. A reconciliation between adjusted EBITDA and statutory profit before tax is included in note 5.

Condensed Consolidated Balance Sheet

Six months ended 30 September 2021 (unaudited) Notes		6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
Non-current assets
Property, plant and equipment		15,860	4,002	9,125
Right of use assets		10,539	5,944	7,945
Intangible assets		133,926	76,302	76,848
Investments in equity accounted associates		241	352	221
Investments in financial assets		125	-	125
Deferred tax assets		98	205	98
Trade and other receivables		491	391	460
Total non-current assets		161,280	87,196	94,822
Current assets
Inventories		26,807	9,182	12,127
Trade and other receivables		118,788	39,151	42,832
Employee benefits		2,689	-	-
Cash and cash equivalents		18,389	13,798	8,592
Total current assets		166,673	62,131	63,551
Total assets		327,953	149,327	158,373
Current liabilities
Trade and other payables		(125,885)	(33,127)	(38,769)
Current income tax liabilities		(1,544)	(529)	(426)
Lease liabilities		(1,788)	(774)	(1,497)
Total current liabilities		(129,217)	(34,430)	(40,692)
Non-current liabilities
Trade and other payables		(13,159)	(2,000)	(3,153)
Loans and borrowings	11	(15,160)	(16,332)	(15,750)
Lease liabilities		(9,233)	(5,481)	(6,796)
Provisions		(1,225)	(1,325)	(1,247)
Deferred tax liabilities		(6,556)	(5,299)	(5,301)
Total non-current liabilities		(45,333)	(30,437)	(32,247)
Total liabilities		(174,550)	(64,867)	(72,939)
Net assets		153,403	84,460	85,434
Equity
Called up share capital		2,983	2,305	2,305
Share premium account		112,035	49,999	49,999
Capital redemption reserve		2	2	2
Share-based payment reserve		832	99	266
Merger reserve		1,245	1,245	1,245
Retained earnings		36,347	30,810	31,623
Equity attributable to equity holders of the parent		153,444	84,460	85,440
Non-controlling interests		(41)	-	(6)
Total equity		153,403	84,460	85,434

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 September 2021 (unaudited)

		Share capital	Share premium account	Capital redemption	Share-based payments	Merger reserve	Retained Earnings	Total attributable to equity holders of the parent	Non-controlling interest	Total
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

At 1 April 2020		2,305	49,999	2	56	1,245	26,458	80,065	-	80,065
Profit for the six months to 30 September 2020		-	-	-	-	-	4,352	4,352	-	4,352
Total comprehensive income for the period		-	-	-	-	-	4,352	4,352	-	4,352
Increase in share-based payment reserve		-	-	-	43	-	-	43	-	43
Total contributions by and distributions to owners		-	-	-	43	-	-	43	-	43
At 30 September 2020		2,305	49,999	2	99	1,245	30,810	84,460	-	84,460
Profit and total comprehensive income for the six months to 31 March 2021		-	-	-	-	-	5,313	5,313	(6)	5,307
Dividends paid		-	-	-	-	-	(4,500)	(4,500)	-	(4,500)
Increase in share-based payment reserve		-	-	-	167	-	-	167	-	167
Total contributions by and distributions to owners		-	-	-	167	-	(4,500)	(4,333)	-	(4,333)
At 31 March 2021		2,305	49,999	2	266	1,245	31,623	85,440	(6)	85,434

At 1 April 2021		2,305	49,999	2	266	1,245	31,623	85,440	(6)	85,434
Profit for the six months to 30 September 2021		-	-	-	-	-	7,960	7,960	(35)	7,925
Total comprehensive income for the period		-	-	-	-	-	7,960	7,960	(35)	7,925
Dividends paid		-	-	-	-	-	(3,236)	(3,236)	-	(3,236)
Issue of paid shares		678	64,322	-	-	-	-	65,000	-	65,000
Share issue costs			(2,286)	-	-	-	-	(2,286)	-	(2,286)
Increase in share-based payment reserve		-	-	-	566	-	-	566	-	566
Total contributions by and distributions to owners		678	62,036	-	566	-	(3,236)	60,044	-	60,044
At 30 September 2021		2,983	112,035	2	832	1,245	36,347	153,444	(41)	153,403

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 September 2021 (unaudited)

			6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
Operating activities
Profit for the six months ended 30 September			7,925	4,352	9,659
Adjustments for:
Depreciation of property, plant and equipment			472	334	726
Depreciation of right of use assets			885	445	1,111
Amortisation of intangible assets			1,897	1,748	3,619
(Gain)/ Loss on disposal of property, plant & equipment			(6)	14	4
and right of use assets
Foreign exchange (gains)/ losses			(13)	68	(19)
Share-based payments expense			880	43	338
Share of post-tax (profit)/ loss in equity accounted associates			(20)	-	6
Fair value changes in contingent consideration			110	(381)	(360)
Movements in provisions			(22)	(64)	(142)
Finance income			(15)	(11)	(13)
Finance expense			503	454	845
Acquisition expenses			999	-	105
Income tax expense			3,938	1,064	1,506
Operating cash flows before movements in working capital			17,533	8,066	17,385
Changes in working capital:
(Increase)/ Decrease in inventories			(5,540)	609	(2,011)
Increase in trade and other receivables			(11,263)	(2,591)	(4,077)
Increase/ (Decrease) in trade and other payables			6,230	(2,494)	1,792
Cash generated from operations			6,960	3,590	13,089
Payment of exceptional acquisition expenses			(999)	-	(105)
Interest received			15	11	13
Interest paid			(161)	(241)	(367)
Income taxes paid			(2,541)	(1,144)	(2,435)
Net cash generated from operating activities			3,274	2,216	10,195
Investing activities
Purchase of property, plant and equipment			(3,589)	(119)	(5,669)
Proceeds from sale of property, plant and equipment			35	9	59
Proceeds from sale of right of use assets			-	-	9
Acquisition of subsidiaries			(39,467)	-	(2,548)
Net cash acquired with subsidiary undertakings			2,679	-	2,274
Net cash used in investing activities			(40,342)	(110)	(5,875)
Financing activities
Equity dividends paid			(3,236)	-	(4,500)
Proceeds from issue of ordinary shares			55,000	-	-
Payment of share issue costs			(2,286)	-	-
Proceeds from bank borrowings			41,100	-	3,400
Repayment of bank borrowings			(41,400)	(8,500)	(12,500)
Payment of lease liabilities			(1,094)	(561)	(1,398)
Payment of deferred and contingent consideration			(847)	(6,427)	(7,883)
Payment of transaction costs relating to loans and borrowings			(375)	(90)	(90)
Net cash generated from/ (used in) financing activities			46,862	(15,578)	(22,971)
Net increase/ (decrease) in cash and cash equivalents			9,794	(13,472)	(18,651)
Cash and cash equivalents at beginning of period			8,592	27,269	27,269
Effect of changes in foreign exchange rates			3	1	(26)
Cash and cash equivalents at end of period			18,389	13,798	8,592

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended 30 September 2021 (unaudited)

1.     General Information

Brickability Group plc (the 'Company' or the 'Group') is a public company limited by shares, incorporated in the United Kingdom under the Companies Act 2006 (registration number 11123804) and registered in England and Wales. The registered office address is c/o Brickability Limited, South Road, Bridgend Industrial Estate, Bridgend, United Kingdom, CF31 3XG.

Copies of this Interim Report may be obtained from the registered address or from the Investors section of the Company's website at www.brickabilitygroupplc.com.

2.     Basis of Preparation

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 March 2021. They do not include all of the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to understanding changes in the Group's financial position and performance since the last annual financial statements.

The Annual Report and Accounts for the year ended 31 March 2021 was audited and has been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Accounts for the year ended 31 March 2021 was not qualified and did not contain statements under s498(2) or (3) of the Companies Act 2006.

The financial information for the six months ended 30 September 2021 and 30 September 2020 is unaudited and has not been reviewed by the Company's auditors.

The interim financial statements are presented in pounds sterling, which is the functional currency of the Group. Amounts are rounded to the nearest thousand, unless otherwise stated.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and thus continue to adopt the going concern basis in preparing these interim financial statements.

3.     Significant Accounting Policies

The Group has applied the same accounting policies in these interim financial statements as in its 2021 annual financial statements. There have been no significant amendments or new standards introduced during the period that would have a material impact on the amounts reported.

4.     Use of judgements and estimates

The significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty for the interim financial statements are the same as those described in the 2021 annual financial statements.

5.     Segmental analysis

The Group generates revenue through three main activities and thus has three reportable segments, as follows:

§  Bricks and Building Materials, which incorporates the sale of superior quality building materials to all sectors of the construction industry including national house builders, developers, contractors, general builders and retail to members of the public;

§  Roofing Services, which incorporates the supply of roofing construction services, primarily within the residential construction sector; and

§  Heating, Plumbing and Joinery, which incorporates the sale of high-performance joinery materials and the distribution of radiators and associated parts and accessories.

Inter-segment sales are eliminated from the results reported to the chief operating decision maker (CODM) and from the consolidated interim financial statements.

	6 months ended 30 September 2021				6 months ended 30 September 2020
	Bricks and Building Materials £'000	Roofing Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000	Bricks and Building Materials £'000	Roofing Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Revenue from sale of goods	192,141	-	16,061	208,202	60,313	-	9,991	70,304
Revenue from rendering of services	6,609	8,692	-	15,301	-	4,953	-	4,953
Total revenue	198,750	8,692	16,061	223,503	60,313	4,953	9,991	75,257
EBITDA	15,341	1,269	3,563	20,173	5,520	888	2,515	8,923
Centralised costs				(2,605)				(904)
(Loss)/ profit on disposal of assets				6				(14)
Group adjusted EBITDA				17,574				8,005
Depreciation				(1,357)				(779)
Amortisation				(1,897)				(1,748)
Acquisition costs				(999)				-
Share-based payment expense				(880)				-
Finance income				15				11
Finance expense				(503)				(454)
Share of results of associates				20				-
Fair value gains and losses				(110)				381
Group profit before tax				11,863				5,416

	Year ended 31 March 2021 (Audited)
	Bricks and Building Materials £'000	Roofing Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Revenue from sale of goods	141,019	-	24,452	165,471
Revenue from rendering of services	3,187	12,426	-	15,613
Total revenue	144,206	12,426	24,452	181,084
EBITDA	11,662	2,571	5,766	19,999
Centralised costs				(2,453)
Profit on disposal of assets				(4)
Group adjusted EBITDA				17,542
Depreciation				(1,837)
Amortisation				(3,619)
Acquisition costs				(105)
Share-based payment expense				(338)
Finance income				13
Finance expense				(845)
Share of results of associates				(6)
Fair value gains and losses				360
Group profit before tax				11,165

	6 months ended 30 September 2021				6 months ended 30 September 2020
	Bricks and Building Materials £'000	Roofing Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000	Bricks and Building Materials £'000	Roofing Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Non-current segment assets	108,862	23,036	28,918	160,816	40,958	19,512	26,167	86,637
Current segment assets	146,670	5,505	13,543	165,718	42,448	6,584	10,970	60,002
Total segment assets	255,532	28,541	42,461	326,534	83,406	26,096	37,137	146,639
Investment in associates				241				352
Investments in financial assets				125				-
Deferred tax assets				98				205
Head office				955				2,131
Group assets				327,953				149,327

Total segment liabilities	(120,161)	(3,882)	(6,547)	(130,590)	(29,900)	(4,172)	(4,943)	(39,015)
Loans and borrowings (excluding leases and overdrafts)				(15,160)				(16,332)
Derivative financial liabilities				-				-
Deferred tax liabilities				(6,556)				(5,299)
Other unallocated central liabilities				(22,244)				(4,221)
Group liabilities				(174,550)				(64,867)

	Year ended 31 March 2021 (Audited)
	Bricks and Building Materials £'000	Roofing Services £'000	Heating, Plumbing and Joinery £'000	Consolidated £'000
Non-current segment assets	46,276	18,235	29,867	94,378
Current segment assets	45,635	3,799	12,582	62,016
Total segment assets	91,911	22,034	42,449	156,394
Investment in associates				221
Investments in financial assets				125
Deferred tax assets				98
Head office				1,535
Group assets				158,373

Total segment liabilities	(37,570)	(2,815)	(7,040)	(47,425)
Loans and borrowings (excluding leases and overdrafts)				(15,750)
Deferred tax liabilities				(5,301)
Other unallocated central liabilities				(4,463)
Group liabilities				(72,939)

6.     Government grants

Included within administrative expenses, in the six months to September, is an amount of £nil (2020: £1,358,000 and year ended 31 March 2021: £1,360,000) in respect of government grants received in response to the global COVID-19 pandemic. In the prior periods, £30,000 related to business rates support, while the remainder relates to supporting the payroll costs of the Group's employees. The Group has elected to deduct the grant income from the associated expenses. The Group does not have any unfulfilled obligations relating to the support schemes.

7.     Dividends

			6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 March 2021 of 1.0850p per share (31 March 2021: for the year ended 31 March 2020 of 1.0850p per share)			3,236	-	2,500
Interim dividend for the year ended 31 March 2022 (31 March 2021: for the year ended 31 March 2021 of 0.8678p per share)			-	-	2,000
Total dividends paid during the period			3,236	-	4,500

The Directors recommend that an interim dividend of 0.96p per ordinary share be paid for the year ended 31 March 2022. This dividend has not been included as a liability in these interim financial statements.

8.     Earnings per share

Earnings per share (EPS) is calculated by dividing the profit for the year, attributable to ordinary equity holders of the parent, by the weighted average number of ordinary shares outstanding during the year.

Diluted EPS is calculated by dividing the profit for the year, attributable to ordinary equity holders, by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The calculation of basic and diluted earnings per share is based on the following data:

	6 months ended 30 September 2021			6 months ended 30 September 2020
	Earnings £'000	Weighted average number of shares	Earnings per share (p)	Earnings £'000	Weighted average number of shares	Earnings per share (p)
Basic earnings per share	7,960	264,356,685	3.01	4,352	230,458,821	1.89
Effect of dilutive securities   Employee share options	-	5,017,128	-	-	68,223	-
Diluted earnings per share	7,960	269,373,813	2.96	4,352	230,527,044	1.89

	Year ended 31 March 2021 (Audited)
	Earnings £'000	Weighted average number of shares	Earnings per share (p)
Basic earnings per share	9,665	230,458,821	4.19
Effect of dilutive securities   Employee share options	-	629,983	-
Diluted earnings per share	9,665	231,088,804	4.18

Adjusted earnings per share and adjusted diluted earnings per share, based on the adjusted profit attributable to the equity holders of the parent (adjusted profit for the period add non-controlling interest share of loss), is based on the following data:

	6 months ended 30 September 2021			6 months ended 30 September 2020
	Earnings £'000	Weighted average number of shares	Earnings per share (p)	Earnings £'000	Weighted average number of shares	Earnings per share (p)
Adjusted basic earnings per share	12,672	264,356,685	4.79	5,505	230,458,821	2.39
Effect of dilutive securities   Employee share options	-	5,017,128	-	-	68,223	-
Adjusted diluted earnings per share	12,672	269,373,813	4.70	5,505	230,527,044	2.39

	Year ended 31 March 2021 (Audited)
	Earnings £'000	Weighted average number of shares	Earnings per share (p)
Adjusted basic earnings per share	12,813	230,458,821	5.56
Effect of dilutive securities   Employee share options	-	629,983	-
Adjusted diluted earnings per share	12,813	231,088,804	5.54

9.     Business combinations

The Group acquired the entire share capital and 100% of the voting rights in the following companies during the period:

Company acquired	Acquisition date
Taylor Maxwell (2017) Limited	30 June 2021
Leadcraft Limited	30 July 2021

The book value of the assets acquired and liabilities assumed on acquisition are as follows:

				Taylor Maxwell (2017) Limited £'000	Leadcraft Limited £'000
Property plant and equipment				3,519	128
Right of use assets				2,971	103
Inventory				9,126	13
Trade and other receivables				63,939	778
Employee benefits				2,689	-
Cash and cash equivalents				2,585	94
Trade and other payables				(72,726)	(247)
Current income tax liabilities				(380)	(138)
Lease liabilities				(3,115)	(103)
Deferred tax				(439)	(18)
Total identifiable net assets				8,169	610
Goodwill				54,086	4,890
Total consideration				62,255	5,500

Satisfied by:
Cash paid				36,167	3,300
Share consideration				10,000	-
Deferred cash consideration				3,088	1,320
Contingent consideration				13,000	880
Total consideration				62,255	5,500

Due to the timing of the acquisitions, a detailed assessment of the fair value of all identifiable net assets, and the value of any uncollectable contractual cash flows, has not yet been completed at the date of these interim financial statements. The goodwill figure is therefore expected to change. Residual goodwill will primarily comprise the value of the assembled workforce and expected synergies arising from the acquisition. None of the goodwill is expected to be deductible for tax purposes.

Included within the assets acquired for Taylor Maxwell (2017) Limited is £2,178,000 in respect of a surplus on a defined benefit pension scheme. The Group has commenced a buy-out process to transfer the risk associated with the scheme. A buy-in contract was incepted on 7 July 2021 and the process is expected to reach the full buy-out stage within the next 9 months.

The above consideration is subject to post completion adjustments and the deferred and contingent consideration is undiscounted. The share consideration resulted in 9,900,990 new ordinary shares being issued during the period.

The acquisitions were carried out in order to expand the Group's customer base and position in the UK market, increase its product offering and enhance its provision of environmentally sustainable and efficient roofing products and services.

Included in the consolidated financial statements are the following amounts of revenue and profit in respect of the subsidiaries acquired:

				Taylor Maxwell (2017) Limited £'000	Leadcraft Limited £'000
Revenue				89,703	801
Net profit				4,558	164

Had the current year business combinations taken place at the beginning of the financial period, the Group's revenue for the period would have been £309,475,000 and Group profit would have been £11,628,000.

Total acquisition related costs amounted to £999,000. Acquisition related costs in connection with the above companies, included in administrative expenses, amounted to £991,000 as shown below, the difference being aborted acquisition costs.

				Taylor Maxwell (2017) Limited £'000	Leadcraft Limited £'000
Acquisition costs				909	82

Contingent consideration

The Group has entered into contingent consideration arrangements during the purchase of several subsidiaries. Final amounts payable under these agreements are all subject to future performance and the acquired business achieving pre-determined EBITDA targets, over the three years following acquisition.

The fair value of all contingent consideration is based on a discounting cash flow model, applying a discount rate of between 1.7% and 4.9% to the expected future cash flows.

Summarised below are the fair values of the contingent consideration at both acquisition and reporting date, the potential undiscounted amount payable and the discount rates applied within the discounting cash flow models, for each acquisition where contingent consideration arrangements remain in place.

Company acquired	Discount rate	Fair value at acquisition £'000	Fair value at 30 September 2021 £'000	Fair value at 30 September 2020 £'000	Undiscounted amount payable 30 September 2021 £'000	Undiscounted amount payable 30 September 2020 £'000
The Bespoke Brick Company Limited	4.9%	-	-	-	-	-
Brickmongers (Wessex) Ltd	4.8%	138	-	27	-	29
CPG Building Supplies Limited	4.0%	(201)	-	-	-	-
U Plastics Limited	3.5%	2,208	2,306	2,228	2,400	2,400
Bathroom Barn Limited	1.7%	231	227	-	233	-
McCann Logistics Ltd	1.7%	889	890	-	913	-

As noted above, the amounts included in respect of Taylor Maxwell (2017) Limited and Leadcraft Limited are undiscounted, pending completion of a detailed fair value assessment.

The total potential undiscounted amount payable in respect of U Plastics ranges from £246,000 to £2,400,000 (2020: £nil to £2,400,000). The total potential undiscounted amount payable in respect of Taylor Maxwell (2017) Limited ranges from £nil to £13,000,000 and the undiscounted amount payable in respect of Leadcraft Limited ranges from £nil to £880,000. It is not possible to determine a range of outcomes for the other companies acquired as the arrangements do not contain a maximum payable.

A sensitivity in respect of the inputs into the discounted cash flow model, determining the contingent consideration, is outlined in note 10.

10. Financial instruments

Fair values

The significant unobservable inputs used in the fair value measurements categorised within level 3 of the fair value hierarchy, together with a quantitative sensitivity analysis at 30 September 2021 and 31 March 2021 are shown below:

Financial instrument		Valuation technique	Significant Unobservable  inputs	Range/ estimate	Sensitivity of the  input to fair value
Contingent Consideration in a business combination (note 9)		Present value of future cash flows	Assumed probability-adjusted EBITDA of acquired entities. Discount rate	Sept 2021: £1,110,000 - £3,766,000 Sept 2020: £917,000 - £4,038,000 March 2021:  £1,142,000 - £3,852,000 Sept 2021: 1.7% - 4.9% Sept 2020: 3.5% - 4.8% March 2021: 1.7% - 4.9%	The higher the adjusted EBITDA, the higher the fair value. If forecast EBITDA was 10% higher, while all other variables remained constant, the fair value of the overall contingent consideration liability would increase by £327,000 (2020: £24,000). A 10% decrease in EBITDA would result in a decrease in the liability of £335,000 (2020: £130,000). (March 2021: increase of £140,000 and decrease of £424,000) The higher the discount rate, the lower the fair value. If the discount rate applied was 2% higher, while all other variables remained constant, the fair value of the overall contingent consideration liability would decrease by £85,000 (2020: £94,000). A 2% decrease in the rate would result in an increase in the liability of £82,000 (2020: £98,000). (March 2021: decrease of £110,000 and increase of £108,000)

Reconciliation of level 3 fair value measurements of financial instruments

Contingent consideration liability			6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
At 1 April			3,442	2,357	2,357
Additions through business combinations			13,880	-	1,120
Finance expense charged to profit or loss			46	42	89
Settlement			(175)	236	236
Fair value (gains)/ losses recognised in profit or loss			110	(381)	(360)
At 30 September/ 31 March			17,303	2,254	3,442

11. Loans and borrowings

	6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
Current loans and borrowings at 1 April	-	-	-
Non-current loans and borrowings at 1 April	15,750	24,912	24,912
Total loans and borrowings at 1 April	15,750	24,912	24,912
Issue of bank loans	41,100	-	3,400
Repayment of bank loans	(41,400)	(8,500)	(12,500)
Payment of transactions costs	(375)	(90)	(90)
Other movements*	85	10	28
Loans and borrowings at 30 September/ 31 March	15,160	16,332	15,750
Analysed as:
Current loans and borrowings	-	-	-
Non-current loans and borrowings	15,160	16,332	15,750
Loans and borrowings at 30 September/ 31 March	15,160	16,332	15,750

*Other movements relate to interest accrued, arrangement fees incurred and the amortisation of those fees.

The Directors consider that the carrying amount of loans and borrowings approximates to their fair value.

12.   Related party transactions

Transactions and balances between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

Transactions with directors

Included within receivables are the following balances due from a director and former director:

	6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year  ended 31 March 2021 (Audited) £'000
Directors' loan accounts	-	978	978

The amounts advanced were for the purpose of paying up the subscription price for ordinary D shares of £0.01 each. The loans were unsecured and interest free and repayable on the sale of any of the shares held in the Company by the director and former director. The balances were repaid in full during the period.

Key management personnel

		6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000		Year ended 31 March 2021 (Audited) £'000
Key management personnel compensation
Short-term employee benefits		1,252	1,073		3,219
Post-employment benefits		18	36		75
Share-based payment expense		168	2	96
		1,438	1,111	3,390

A finance expense was recognised, in the period, of £nil (2020: £12,000 and year to 31 March 2021: £16,000), in respect of the unwinding of the discount applied to deferred consideration due to key management.

During the interim period, the Group made sales amounting to £7,000 (2020: £5,000 and year to 31 March 2021: £13,000) to members of key management. A balance of £nil (2020: £1,000 and 31 March 2021: £7,000) was included within trade receivables at the reporting date, in respect of these sales.

Other related parties

Included within trade receivables/ payables are the following amounts due from/ to other related parties, at the reporting date:

		Amounts owed by related parties			Amounts owed to related parties
	6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000	6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
Associates	-	30	-	138	45	88
Other related parties	-	-	-	-	-	24
	-	30	-	138	45	112

Transactions undertaken between the Group and its related parties during the year were as follows:

		Purchases from related parties
		6 months ended 30 Sept 2021 £'000	6 months ended 30 Sept 2020 £'000	Year ended 31 March 2021 (Audited) £'000
Associates		297	179	474
Other related parties		109	89	199
		406	268	673

Other related parties comprise of entities owned by directors and key management. Purchases relate to rent and administrative expenses.

A finance expense of £nil (2020: £16,000 and year to 31 March 2021: £21,000) was recognised during the interim period in respect of the unwinding of the discount applied to deferred consideration due to close relatives of key management.

13.   Post balance sheet events

On 14 October 2021, the Group issued 280,254 new ordinary shares following the vesting and exercising of share options under the Company's Long Term Incentive Plan and Company Share Option Plan. Following this issue, the total number of shares in issue is 298,534,802.

On 21 October 2021, the Group granted 2,394,286 options under its LTIP and CSOP schemes to its employees. The options were granted on the same terms as previous awards and are subject to a performance period from 1 April 2021 to 31 March 2024.

On 23 November 2021, the Group completed the acquisition of the entire share capital and 100% of the voting rights in HBS NE Limited, a company specialising in the installation of solar panels and provision of renewable energy services.

The acquisition broadens our offering to customers whilst also supporting the Group's own sustainability commitments.

The book value of the separable assets acquired and liabilities assumed are estimated as follows:

					£'000
Property plant and equipment					17
Inventory					86
Trade and other receivables					481
Trade and other payables					(433)
Total identifiable net assets					151

Due to the timing of the acquisition, a detailed assessment of the fair value of the identifiable net assets, and value of any uncollectable contractual cash flows, has not yet been completed at the date of approving these interim financial statements.

The total consideration expected to be payable is:

					£'000
Cash					3,276
Contingent consideration					2,184
Total consideration					5,460

The above consideration is subject to post completion adjustments.

The contingent consideration is subject to future performance of the acquired business, measured against agreed adjusted EBITDA targets, over the five years following acquisition. Due to the timing of the acquisition, the above value represents an initial undiscounted estimate of contingent consideration payable. It is not possible to determine a range of outcomes for the contingent consideration payable as the arrangement does not contain a maximum payable.

It is expected that goodwill will arise on the acquisition and this will primarily comprise the value of expected synergies arising from the acquisition and value of the assembled workforce. This goodwill is not expected to be deductible for tax purposes.

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