TIDMSRAD
RNS Number : 6589S
Stelrad Group PLC
13 March 2023
Stelrad Group plc - preliminary announcement of final results
for the year ended 31 December 2022
Record results underpinned by resilient business model
Stelrad Group plc ("Stelrad" or "the Group" or "the Company",
LSE: SRAD), a leading specialist manufacturer and distributor of
steel panel and other designer radiators in the UK, Europe and
Turkey, today announces its audited financial results for the year
ended 31 December 2022.
Increase/
(decrease)
Results summary* 2022 2021 %
Revenue (pre-IAS 29), GBPm** 312.1 272.3 14.6
Adjusted operating profit,
GBPm ** 34.0 33.2 2.4
Adjusted profit for the
year, GBPm ** 24.3 21.6 12.9
Adjusted Earnings per share,
pence ** 19.11 16.92 12.9
Statutory revenue, GBPm 316.3 272.3 16.2
Statutory operating profit,
GBPm 22.6 26.6 (14.8)
Statutory profit for the
year, GBPm 4.3 14.7 (70.6)
Statutory earnings per share,
pence 3.38 11.51 (70.6)
Adjusted free cash flow,
GBPm ** 17.2 21.2 (18.9)
Net debt (excluding lease
liabilities), GBPm 68.4 40.9 67.2
Total dividend per share,
pence 7.64 0.96 695.8
*As a result of inflation in Turkey exceeding 100% over a
three-year period, the Group was required to adopt IAS 29 in
respect of its Turkish subsidiary for the first time in the
financial statements for the year ended 31 December 2022. The
impact of the adoption of IAS 29 is a non-cash item but has a
GBP16.3m negative impact on statutory profit for the year. See
Finance and business review for further details. Due to a change in
functional currency, IAS 29 will no longer apply after 1 January
2023.
**Adjusted figures are stated before the impact of IAS 29,
exceptional items, foreign exchange differences, amortisation of
customer relationships and tax thereon where applicable. See note 8
for a reconciliation of adjusted profit after tax. See note 3 for a
reconciliation of adjusted operating profit. See the finance and
business review for a reconciliation of adjusted free cash
flow.
Financial and operational highlights
-- Record Group financial performance as a result of Stelrad's resilient business model:
- UK & Ireland: 6.5% revenue growth (pre-IAS 29), 5.2% growth in adjusted operating profit.
- Europe: 25.3% (-0.8% organic) revenue growth (pre-IAS 29),
7.3% growth in adjusted operating profit.
- Turkey & International: 6.4% (+3.1% organic) revenue
growth (pre-IAS 29), 29.1% reduction in adjusted operating
profit.
-- Contribution per radiator (pre-IAS 29) increased by 16.5%
(18.6% like-for-like increase), more than offsetting a 9.2% year on
year sales volume decline (15.3% like-for-like decline) versus
exceptionally strong comparatives in 2021.
-- Improved performance underpinned by proactive margin
management and operational improvements across the business.
-- Completion of two further production line transfers from
Western European plants to lower cost Turkish facility in the
period.
-- Acquisition of Italian manufacturer of heat emitters, DL
Radiators for EUR28.3 million in July 2022.
-- Continued to strengthen our market position, thanks to
strong, long-lasting customer relationships, market-leading product
availability and customer service and product innovation.
-- Recommended final dividend of 4.72 pence per share, to be paid on 26 May 2023.
Commenting on the Group's performance, Trevor Harvey, Chief
Executive Officer, said:
"We delivered a record performance in 2022 thanks to the
resilience of our business model combined with the hard work of our
employees, the strength of our product offering, the quality of our
customer relationships and our relentless approach to operational
improvements across the firm. While the market backdrop is not
easy, as a business with a near 100-year track record, we have
successfully navigated previous market downturns and our current
management team has the experience and ability to deliver ongoing
outperformance despite the challenging macroeconomic environment.
Longer-term, the twin drivers of decarbonisation and energy
efficient heating remain firmly in place and we remain well-placed
to deliver value for stakeholders."
Current trading and outlook
The Group's outlook for FY23 remains in line with current market
expectations. Whilst it is early in the year and we are mindful of
the exceptionally strong comparatives in H1 2022, trading since the
period end has been encouraging. We remain confident in our
strategic objectives of growing market share, improving product
mix, optimising routes to market, and positioning the business for
decarbonisation.
For further information:
Media enquiries
Stelrad Group plc
Trevor Harvey, Chief Executive
Officer
George Letham, Chief Financial
Officer +44 (0)191 261 3301
Investec - Sole Broker stelrad@powerscourt-group.com
Bruce Garrow / Ben Griffiths +44 (0)7855 432 699
Powerscourt
James White / Genevieve Ryan
Notes to Editors
Stelrad Group plc is a leading specialist radiator manufacturer,
selling an extensive range of hydronic, hybrid, dual fuel and
electrical heat emitters to more than 500 customers in over 40
countries. These include standard, premium and low surface
temperature (LST) steel panel radiators, towel warmers, decorative
steel tubular, steel multicolumn and aluminium radiators.
Following the acquisition of DL Radiators in July 2022, the
Group has five core brands: Stelrad, Henrad, Termo Teknik, DL
Radiators and Hudevad. In 2021, the latest year for which data is
available, Stelrad held 18.4% share by volume of the combined UK,
European and Turkish steel panel radiator market, being the clear
market leader in five countries - the UK, Ireland, the Netherlands,
Belgium and Denmark - and having a top 3 position in a further
seven markets.
Stelrad is headquartered in Newcastle upon Tyne in the UK and in
2022 employed 1,500+ people, with manufacturing and distribution
facilities in Çorlu (Turkey), Mexborough (UK), Moimacco (Italy) and
Nuth (Netherlands), with further commercial and distribution
operations in Kolding (Denmark) and Krakow (Poland).
The Group's origins date back to the 1930s and Stelrad enjoys
long established commercial relationships with many of its
customers, having served each of its top five current customers for
over twenty years.
Further information can be found at: https://stelradplc.com/
Chair's statement
Overview
In 2022, our first full year as a plc, I am pleased to report
that Stelrad has continued to make strong progress. Although
macroeconomic conditions have been challenging, with an
unpredictable trading environment and significant inflationary
pressures, the Group's record financial performance was ahead of
last year's results which were also a record. This underlines the
resilience of our business model and management's ability to
execute our long-term strategy.
I would like to take this opportunity to welcome DL Radiators'
employees to the Stelrad Group. The acquisition of DL Radiators was
completed in July 2022 and is highly complementary, bringing the
group an expanded product portfolio and additional routes to
market.
Performance and results
Despite a reduction in volume of 9.2% in 2022, Stelrad's revenue
(pre-IAS 29) increased by 14.6% to GBP312.1 million, whilst
adjusted operating profit rose from GBP33.2 million in 2021 to
GBP34.0 million, up 2.4%. As these results show, Stelrad's business
model and strategy, built on our market leadership in five
countries and top three position in seven more, continue to
demonstrate high levels of resilience despite the difficult trading
environment, supply chain challenges and significant inflationary
pressures.
Dividends
The Board is recommending a final dividend of 4.72 pence per
share. Subject to approval by shareholders at the Annual General
Meeting on 22 May 2023, the final dividend will be paid on 26 May
2023 to shareholders on the register on 28 April 2023. In addition
to the interim dividend of 2.92 pence per share, this brings total
dividends for the year to 7.64 pence per share and reflects our
commitment to delivering returns for our shareholders.
Purpose
Stelrad continues to make meaningful progress towards achieving
our purpose: helping to heat homes sustainably. The Group has an
important role to play in facilitating the transition to low and
zero carbon heating systems, both through influencing specification
and by supplying products able to contribute effectively to
environmental and social improvement.
Strategy
Stelrad's clear commercial and operational strategies delivered
strong results in 2022, as the Group continued to pursue its four
key strategic objectives: growing market share, improving product
mix, optimising routes to market and positioning effectively for
decarbonisation.
The acquisition of DL Radiators will enable further progress
against these objectives in 2023 and beyond. The resulting market
share growth in steel panel radiators in Germany will move Stelrad
into a Top 3 position in this key European heating market.
Furthermore, the Group's Standardised product design across all
manufacturing facilities alongside our extensive product range,
multi-brand strategy, strong customer relationships and increased
penetration of the specialist distributor channel, mean that the
Group is well-placed to continue to deliver market outperformance
in the year ahead, despite well-publicised macro-economic
headwinds.
Environmental, social and governance ("ESG") objectives
High standards of corporate responsibility, sustainability and
employee engagement are central to Stelrad Group's values and we
take them into account as we consider the long-term impact of all
our business operations.
During 2022, we set up a task force, led by the Chief Executive
Officer, to conduct a detailed review of the Group's activities and
to develop our ESG strategy further, consistent with our purpose of
helping to heat homes sustainably.
This has resulted in the creation of our ESG framework Fit for
the Future, which supports our belief that our long-term success
depends on the responsible treatment of all our stakeholders and
the natural environment, building on our well-established ways of
working and focusing on the most material issues for Stelrad and
our stakeholders.
Summary
Although 2022's turbulent macroeconomic conditions are expected
to continue into 2023, the proven strength of Stelrad's management
team, business model and strategic approach positions the Group
effectively to benefit from market recovery over the
medium-term.
The strategic acquisition of DL Radiators will enable Stelrad to
leverage a complementary product range, increased access to
additional territories and channels to market and the transition to
the low and zero carbon heating systems of the future. This
provides a significant opportunity to maximise the clear synergies
that exist across our portfolio of leading brands.
Although 2022 was Stelrad's first full year as a plc, the
Group's proven track record for progress in challenging times
continued, with strong financial performance, a successful
acquisition and the development of our sustainability framework Fit
for the Future.
Bob Ellis
Chair
13 March 2023
Chief Executive Officer's review
Overview
Stelrad continued to make significant progress in 2022,
delivering a record year despite testing trading conditions. Across
the heating industry, this has been a period of supply chain
disruption coupled with significant material and labour cost
inflation. In order to mitigate the effects for our stakeholders,
the Group has effectively managed these input cost risks and acted
quickly and proactively to optimise prices, whilst continuing to
pursue our strategic objectives in the face of the current
macroeconomic headwinds.
In July 2022, Stelrad acquired leading Italian heat emitter
manufacturer DL Radiators, a well-established business which
complements Stelrad's existing commercial and operational strategy.
The acquisition case was compelling, providing Stelrad with market
share growth, increased access to key territories and channels to
market and a product range orientated towards higher added-value
designs, including those suitable for use in decarbonised heating
systems. As a result, the Group is more effectively positioned than
ever for future success. Integration of DL Radiators is progressing
to plan.
In addition, over the course of the year, we have developed our
Fit for the Future sustainability framework, seeking to build upon
our robust existing practices and to formalise a more structured
approach to ESG, consistent with Stelrad's plc status.
Strong financial performance
During the course of 2022, Stelrad continued to outperform the
market across the key geographies where it operates.
Including DL Radiators' sales from August 2022, Stelrad
delivered revenue growth (pre-IAS 29) of 14.6% relative to 2021,
increasing from GBP272.3 million to GBP312.1 million. Adjusted
operating profit rose by 2.4% to GBP34.0 million (2021: GBP33.2
million). Our flexible manufacturing footprint continues to provide
us with an important cost advantage. We moved further manufacturing
lines to Turkey during the period which, along with careful
management of pricing, enabled us to increase contribution per
radiator by 16.5%.
In the UK & Ireland, revenue (pre-IAS 29) grew by 6.5%,
adjusted operating profit by 5.2%, whilst in Europe, revenue
(pre-IAS 29) and adjusted operating profit increased by 25.3% and
7.3% respectively. In Turkey and International markets, revenue
(pre-IAS 29) increased by 6.4% whilst adjusted operating profit
fell by 29.1% due to a 55% sales volume decrease in China.
In 2022, general inflationary pressures, rising interest rates
and the effects of the war in Ukraine, notably on energy costs,
combined to halt and reverse the post-pandemic recovery and were
coupled with compensating distributor inventory reductions to
reflect lower underlying levels of demand.
The impact of this challenging macroeconomic environment was
clearly felt in terms of sales volume, which reduced by 9.2% versus
the prior year. 2021 was an extremely strong comparator year, when
volume was enhanced by post-Covid spending and stock levels
throughout the distribution channel increased in anticipation of a
sustained period of recovery.
Compared to 2021, the volume mix for higher added-value premium
steel panel radiators remained around 6% overall. Between 2015 and
2022, Stelrad achieved 48.5% volume growth in premium steel panel
radiators and is positioned effectively for the future, as economic
conditions improve and markets recover. Penetration increased
slightly in European markets, reflecting effective upselling in the
distribution channels. The European market for premium steel panel
products is more mature than UK and, as a result, we remain excited
by the opportunity to substantially increase UK premium panel
volumes in the future.
Continued investment for the future
During the course of 2022, Stelrad continued to invest in our
state-of-the-art operational facilities whilst simultaneously
managing the supply chain to minimise any impact on our customers
and to scale production output appropriately for reduced levels of
market demand. To enhance manufacturing flexibility, a production
line was transferred from the UK to our low-cost Turkish facility,
an operational investment further supported by additional local
warehousing capacity, which will enable ongoing improvements in
customer service across the Group.
Investment in our facilities continues to drive improvements in
the health, safety and wellbeing of our employees. Across the Group
during 2022, we recorded a 26% reduction in lost time incidents
(LTIs) relative to the prior year and, at the end of February 2023,
our UK site had gone 942 days without an LTI, beating the previous
record of 929 days.
Outlook
Despite well-documented market headwinds, Stelrad's scale,
strong brands and resilient business model, combined with the
highly complementary strategic acquisition of DL Radiators, mean
that the Group is well positioned as we enter 2023.
In the short term, while trading since the period end has been
encouraging and slightly ahead of expectations, the Group still
anticipates the lower volumes experienced in the second half of
2022 to continue into the first half of 2023. The Group is
expecting 2023 to return to historical seasonal patterns with the
second half of the year being stronger than the first half.
In the longer term, energy security concerns in the wake of the
Russian invasion of Ukraine continue to stimulate increased
discussion around the provision of sustainable future heating
solutions and Stelrad clearly has an important role to play in
driving better environmental performance through enabling lower
temperature heating solutions as we aim to fulfil our purpose:
helping to heat homes sustainably.
Furthermore, an underlying requirement for new homes, increasing
demand for premium design radiators and, as part of the transition
to net zero carbon, greater consumer focus on low temperature
heating systems needing higher output heat emitters remain
supportive macro trends that underpin the broader outlook for the
business.
Trevor Harvey
Chief Executive Officer
13 March 2023
Finance and business review
Group overview
The following table summarises the Group's results for the years
ended 31 December 2022 and 31 December 2021.
Increase Increase
2022 2021 / (decrease) / (decrease)
GBPm GBPm GBPm %
------ ------- -------------- --------------
Revenue (post-IAS 29) 316.3 272.3 44.0 16.2
------ ------- -------------- --------------
Revenue (pre-IAS 29) 312.1 272.3 39.8 14.6
Adjusted operating profit 34.0 33.2 0.8 2.4
Exceptional items (1.8) (9.6) 7.8 81.1
Amortisation of customer relationships (0.1) - (0.1) n/a
Foreign exchange differences (3.5) 3.0 (6.5) (215.7)
Impact of IAS 29 (6.0) - (6.0) n/a
------ ------- -------------- --------------
Operating profit 22.6 26.6 (4.0) (14.8)
Net finance costs (4.5) (10.2) 5.7 55.8
Monetary losses - net (IAS
29) (7.9) - (7.9) n/a
------ ------- -------------- --------------
Profit before tax 10.2 16.4 (6.2) (37.2)
Income tax expense (5.9) (1.7) (4.2) (257.4)
------ ------- -------------- --------------
Profit for the year 4.3 14.7 (10.4) (70.6)
------ ------- -------------- --------------
Earnings per share (p) 3.38 11.51 (8.13) (70.6)
------ ------- -------------- --------------
Adjusted profit for the year 24.3 21.6 2.7 12.9
------ ------- -------------- --------------
Adjusted earnings per share
(p)(1) 19.11 16.92 2.19 12.9
------ ------- -------------- --------------
Total dividend per share
(p) 7.64 0.96 6.68 695.8
------ ------- -------------- --------------
(1) Adjusted earnings per share is calculated on adjusted profit
after tax, being earnings before exceptional items, amortisation of
customer relationships, foreign exchange differences and the impact
of IAS 29 and tax thereon.
Financial overview
The business was negatively impacted by a decline in demand
during 2022. Renovation activity across the majority of European
countries was weaker throughout the year. The reduced demand for
radiators in Europe was mainly driven by a challenging
macroeconomic environment due to high inflation and increasing
interest rates. The market price for steel spiked upwards in the
second quarter of 2022 and gradually decreased during the second
half of the year but energy costs increased significantly in the
same period.
Revenue (pre-IAS 29) for the year was GBP312.1 million, an
increase of GBP39.8 million, or 14.6%, on last year (2021: GBP272.3
million), supported by the acquisition of DL Radiators in July 2022
and the impact of selling price increases, partially offset by a
decrease in sales volumes. Steel price volatility continued in 2022
and selling price increases were applied in the year to recover
steel and other inflationary cost increases. Revenue growth
(pre-IAS 29) was 3.0% on a like-for-like basis.
Adjusted operating profit for the year was GBP34.0 million, an
increase of GBP0.8 million, or 2.4%, compared to last year (2021:
GBP33.2 million), with the benefits of a successful focus on margin
management and operational improvements leading to increased
margins per radiator, which have more than offset a decrease in
sales volumes of 9.2%. Adjusted operating profit increased by 1.6%
on a like-for-like basis.
Statutory operating profit for the year was GBP22.6 million
(2021: GBP26.6 million), after deducting the non-cash impact of IAS
29 of GBP6.0 million (2021: GBPnil), exceptional costs of GBP1.8
million (2021: GBP9.6 million), the amortisation of customer
relationships of GBP0.1m (2021: GBPnil) and the impact of foreign
exchange losses of GBP3.5 million (2021: gains of GBP3.0 million).
The exceptional costs incurred in 2022 related to restructuring
costs to reconfigure and optimise production, acquisition costs and
the reversal of the IFRS 3 uplift on finished goods and work in
progress required as part of business combination accounting.
Adjusted profit for the year increased by GBP2.7 million, or
12.9%, to GBP24.3 million. Statutory profit for the year, after
deducting the GBP6.0 million impact of IAS 29 within operating
profit and GBP7.9 million of net monetary losses, decreased by
GBP10.4 million, or 70.6%, to GBP4.3 million (2021: GBP14.7
million). Adjusted earnings per share was 19.11 pence (2021: 16.92
pence), whilst the statutory earnings per share after the impact of
IAS 29 was 3.38 pence (2021: 11.51 pence).
On 13 July 2022, the Group purchased DL Radiators s.r.l. for
EUR28,346,000. As part of this process, the GBP80 million revolving
credit facility jointly financed by National Westminster Bank plc
and Barclays PLC was increased by GBP20 million by means of an
accordion option on 8 July 2022. The amended and restated facility
agreement is made up of a GBP76.0 million revolving credit facility
and a EUR28.3 million term loan facility expiring in November 2024
with a two-year extension option.
There was a further devaluation of the Turkish Lira against all
hard currencies during 2022. Historically devaluation of Turkish
Lira has led to foreign exchange gains (non-cash in nature) being
recorded in the income statement. The USD strengthened more
significantly against Turkish Lira than both GBP and Euro in 2022,
resulting in non-cash foreign exchange losses of GBP3.5 million
(2021: gains of GBP3.0 million). The currency differences arise
from the retranslation of our hard currency assets and liabilities
in our Turkish subsidiary and these non-cash currency gains and
losses have been excluded from adjusted operating profit.
At 31 December 2022 the Group had cash of GBP22.6 million (2021:
GBP15.6 million) and undrawn available facilities of GBP10.1
million (2021: GBP23.5 million), with net debt before finance
leases of GBP68.4 million (2021: GBP40.9 million).
IAS 29
As a result of inflation in Turkey exceeding 100% over a
three-year period, the Group was required to adopt IAS 29 in
respect of its Turkish subsidiary for the first time in its
financial statements during the year ended 31 December 2022. The
impact of the adoption of IAS 29 is explained in more detail in
note 21 of the statement, with the accounting policy outlined in
note 1 of the statement.
The impact of IAS 29 at 31 December 2021 is accounted for as a
positive restatement to opening reserves. Management believes that
the pre-IAS 29 results give a more meaningful representation of the
Group's underlying performance in the year due to more than 80% of
assets, liabilities, revenues and costs in the Turkish subsidiary
being denominated in hard currencies. A negative adjustment to
operating profit in the year ended 31 December 2022 of GBP6.0
million has therefore been removed in arriving at adjusted
operating profit. Similarly, adjusted profit after tax is stated
before the full impact of the IAS 29 loss for the year of GBP16.3
million.
The impact of IAS 29 on the results for the year ended 31
December 2022 is outlined below.
Statutory Pre-IAS
position IAS 29 29 position
GBPm GBPm GBPm
---------- ------- -------------
Revenue 316.3 4.2 312.1
---------- ------- -------------
Adjusted operating profit 34.0 - 34.0
Exceptional items (1.8) - (1.8)
Amortisation of customer relationships (0.1) - (0.1)
Foreign exchange differences (3.5) (0.5) (3.0)
Impact of IAS29 (6.0) (6.0) -
---------- ------- -------------
Operating profit/(loss) 22.6 (6.5) 29.1
Net finance costs (4.5) - (4.5)
Monetary losses - net (IAS
29) (7.9) (7.9) -
---------- ------- -------------
Profit/(loss) before tax 10.2 (14.4) 24.6
Income tax expense (5.9) (1.9) (4.0)
Profit/(loss) for the year 4.3 (16.3) 20.6
---------- ------- -------------
Functional currency
The Group determined that the functional currency of its Turkish
business has changed following the increased production
capabilities at the Turkish factory arising from the installation
of two new manufacturing lines in the second half of 2022. The new
lines are intended to predominantly serve the European and UK
export markets which has given rise to a change in currency profile
and therefore functional currency of the business. The change in
functional currency of the Turkish business from Turkish Lira to
Euros will be accounted for prospectively from 1 January 2023,
after which date IAS 29 will no longer be adopted.
DL Radiators acquisition
During the year, the Group completed the acquisition of DL
Radiators for EUR28,346,000. DL Radiators is a leading Italian heat
emitter manufacturer which produces and sells both hydronic and
electric radiators into the European domestic heating market.
Further analysis of DL Radiators, and its strategic fit within
the Group, will be included in the Group's 2022 Annual Report and
Accounts. The business combination accounting for the acquisition
is outlined in note 12 of this statement.
Revenue (pre-IAS 29) by geographical market
The table below sets out the Group's revenue (pre-IAS 29) by
geographical market.
Revenue (pre-IAS 29) by geographical Increase Increase
market 2022 2021 / (decrease) / (decrease)
GBPm GBPm GBPm %
------ ------ -------------- --------------
UK & Ireland 138.9 130.4 8.5 6.5
Europe 147.9 118.1 29.8 25.3
Turkey & International 25.3 23.8 1.5 6.4
Total 312.1 272.3 39.8 14.6
------ ------ -------------- --------------
UK & Ireland
The Group's revenue (pre-IAS 29) in UK & Ireland for the
year was GBP138.9 million (2021: GBP130.4 million), an increase of
GBP8.5 million, or 6.5%. This was principally a result of the
impact of selling price increases implemented to mitigate the
impact of inflationary costs, partially offset by a decrease in
sales volumes.
Europe
The Group's revenue (pre-IAS 29) in Europe for the year was
GBP147.9 million (2021: GBP118.1 million), an increase of GBP29.8
million, or 25.3%, supported by the acquisition of DL Radiators and
the impact of selling price increases implemented to mitigate the
impact of inflationary costs, offset by a decrease in sales
volumes. Excluding the acquisition of DL Radiators, the Group's
revenue (pre-IAS 29) in Europe for the year was GBP117.1
million.
Turkey & International
The Group's revenue (pre-IAS 29) in Turkey & International
for the year was GBP25.3 million (2021: GBP23.8 million), an
increase of GBP1.5 million, or 6.4%. This was principally a result
of the impact of selling price increases implemented to mitigate
the impact of inflationary costs, partially offset by a decrease in
sales volumes.
Adjusted operating profit by geographical market
The table below sets out the Group's adjusted operating profit
by geographical market.
Adjusted operating profit Increase Increase
by geographical market 2022 2021 / (decrease) / (decrease)
GBPm GBPm GBPm %
------ ------ -------------- --------------
UK & Ireland 22.7 21.6 1.1 5.2
Europe 13.9 12.9 1.0 7.3
Turkey & International 2.1 2.9 (0.8) (29.1)
Central costs (4.7) (4.2) (0.5) (9.9)
Total 34.0 33.2 0.8 2.4
------ ------ -------------- --------------
UK & Ireland
The Group's adjusted operating profit in UK & Ireland for
the year was GBP22.7 million (2021: GBP21.6 million), an increase
of GBP1.1 million, or 5.2%. This was principally as a result of
successful margin management leading to increased margins per
radiator, partially offset by lower sales volumes.
Europe
The Group's adjusted operating profit in Europe for the year was
GBP13.9 million (2021: GBP12.9 million), an increase of GBP1.0
million, or 7.3%. This was principally as a result of successful
margin management leading to increased contributions per radiator,
combined with the acquisition of DL Radiators, partially offset by
lower sales volumes.
Turkey & International
The Group's adjusted operating profit in Turkey &
International for the year was GBP2.1 million (2021: GBP2.9
million), a reduction of GBP0.8 million, or 29.1%. Despite
proactive margin management, a decline of 55% in sales volumes in
China reduced operating profit in this territory.
Central costs
Central costs for the year were GBP4.7 million (2021: GBP4.2
million), an increase of GBP0.5 million, or 9.9%. Costs increased
principally as a result of additional expenditure arising due to
the Group being listed, following the completion of the IPO in
November 2021.
Exceptional costs
During the year exceptional costs of GBP1.8 million were
incurred (2021: GBP9.6 million).
The exceptional costs incurred in 2022 related to restructuring
costs to reconfigure and optimise production, acquisition costs and
the reversal of the IFRS 3 uplift on finished goods and work in
progress required as part of business combination accounting.
The exceptional costs incurred in 2021 related to the cost of
professional advisers employed to consider the potential
recapitalisation of the Group and the costs associated with the IPO
undertaken by the Group.
These costs are one-off in nature and disclosing these costs as
exceptional allows the true underlying performance of the Group to
be more easily reviewed.
Finance costs
The Group's net finance costs for the year were GBP4.5 million
(2021: GBP10.2 million). The 55.8% decrease of GBP5.7 million is
primarily due to the repayment of the historical shareholder loans
in November 2021, replaced by the Group's current debt structure
with lower interest rates. The interest rate of the Group's debt is
based on a margin of 2% plus SONIA/Euribor dependent on the
currency of the drawing.
Income tax expense
The Group's income tax expense for the year was GBP5.9 million
(2021: GBP1.7 million), an increase of GBP4.2 million, or 257.4%.
On an adjusted basis the Group's income tax expense was GBP5.1
million which is an increase of GBP3.7 million from 2021. The 2022
statutory tax charge includes a GBP1.9 million charge due to IAS
29, with a deferred liability recognised to reflect the higher
asset values arising under IAS 29. The increase in the underlying
tax charge is due to a number of factors but significantly the 2021
charge benefiting from the recognition of previously unrecognised
deferred tax assets.
Earnings per share and adjusted earnings per share
Profit for the year decreased by GBP10.4 million, or 70.6%, to
GBP4.3 million (2021: GBP14.7 million) and earnings per share was
3.38 pence (2021: 11.51 pence). The weighted average number of
shares was 127.4 million (2021: 127.4 million). Adjusted profit for
the year increased by GBP2.7 million, or 12.9%, to GBP24.3 million
(2021: GBP21.6 million) and consequently, adjusted earnings per
share was 19.11 pence (2021: 16.92 pence).
Dividends and reserves
The Group is committed to delivering returns for its
shareholders. It has initially adopted a dividend policy targeting
an annualised pay-out of approximately 40% of adjusted earnings,
with capital allocation focused on reinvestment for growth. The
Group intends to split dividend payments approximately 33% and 67%
between the Group's interim and final dividend payments
respectively, across the fiscal year.
The Group paid an interim dividend in respect of the year ended
31 December 2022 of 2.92 pence per share. The Board has recommended
a final dividend of 4.72 pence per share at a cost of GBP6.0
million to the Group. The total dividend in respect of the year
ended 31 December 2022 will be 7.64 pence per share (2021: 0.96
pence per share on a pro rata basis from 10 November 2021 to 31
December 2021).
Cash flow
The following table summarises the Group's cash flow for the
years ended 31 December 2022 and 31 December 2021.
Increase
2022 2021 / (decrease)
GBPm GBPm GBPm
------- ------ --------------
EBITDA 42.2 40.6 1.6
Gain on disposal of property,
plant and equipment (0.2) (0.2) -
Share based payments 0.3 - 0.3
Working capital adjustments
(adjusted for foreign exchange) (9.8) (5.7) (4.1)
Net capital expenditure (11.6) (9.9) (1.7)
------- ------ --------------
Adjusted cash flow from operations 20.9 24.8 (3.9)
------- ------ --------------
Income tax paid (3.8) (3.7) (0.1)
Interest received 0.1 0.1 -
------- ------ --------------
Adjusted free cash flow 17.2 21.2 (4.0)
------- ------ --------------
Increase
2022 2021 / (decrease)
----- ----- --------------
Adjusted cash flow from operations
(GBPm) 20.9 24.8 (3.9)
----- ----- --------------
Adjusted operating profit (GBPm) 34.0 33.2 0.8
----- ----- --------------
Adjusted cash flow from operations
conversion (%) 61.5 74.8 (13.3)
----- ----- --------------
The Group's adjusted free cash flow for the year was GBP17.2
million (2021: GBP21.2 million), a decrease of GBP4.0 million. This
reflects a reduction in the Group's adjusted cash flow from
operations.
The Group's adjusted cash flow from operations for the year was
GBP20.9 million (2021: GBP24.8 million), a decrease of GBP3.9
million. This was principally as a result of increased working
capital outflows arising from reduced production output in Turkey
and capital expenditure relating to a new production line in Italy,
partially offset by an increase in EBITDA. Adjusted operating
profit for the period was GBP34.0 million (2021: GBP33.2 million),
an increase of GBP0.8 million, following an increase in the
profitability of the Group. Adjusted cash flow from operations
conversion for the period was 61.5% (2021: 74.8%), a reduction of
13.3pp, reflecting the movements in adjusted cash flow from
operations described above.
Capital expenditures
The Group's capital expenditures mainly relate to investment in
buildings and operating plant and equipment. The following table
sets out the Group's capital expenditure, including right-of-use
assets, net of transfers from assets under construction.
2022 2021
GBPm GBPm
----- -----
Freehold land and buildings 2.0 0.7
Leasehold buildings 0.4 0.5
Assets under construction(1) 1.6 2.0
Plant and equipment 5.6 5.2
Fixtures and fittings 1.6 1.2
Intangible assets 0.2 -
Total 11.4 9.6
----- -----
(1) The significant parts of the assets under construction
relate to plant and equipment.
Key capital expenditure in the year ended 31 December 2022
related to investment in warehousing and additional production
lines at the Group's facilities in Turkey and the installation of a
new steel panel radiator production line in Italy. The Group's
capital expenditure will reduce in future years.
Net debt
During the year ended 31 December 2021, the Group refinanced and
repaid all legacy financing arrangements and shareholder loans,
replacing them with a new three-year revolving credit facility of
GBP80.0 million. During the year ended 31 December 2022, the Group
increased the availability on existing facilities to GBP100.0
million (before foreign exchange movements) by exercising an
accordion option. The amended and restated facility agreement is
made up of a GBP76.0 million revolving credit facility and a
EUR28.3 million term loan facility.
At 31 December 2022, statutory net debt (including finance
leases) of GBP78.4 million (2021: GBP50.2 million), comprises
GBP91.0 million (2021: GBP56.5 million) drawn down against the
multicurrency facility and GBP10.0 million (2021: GBP9.3 million)
finance leases net of GBP22.6 million (2021: GBP15.6 million)
cash.
2022 2021
GBPm GBPm
------- -------
Revolving credit facility -
GBP 55.3 56.5
Revolving credit facility -
Euro 10.6 -
Term loan 25.1 -
Cash (22.6) (15.6)
Net debt before finance leases 68.4 40.9
Finance leases 10.0 9.3
------- -------
Net debt 78.4 50.2
------- -------
George Letham
Chief Financial Officer
13 March 2023
Consolidated income statement
for the year ended 31 December 2022
2022 2021
Note GBP'000 GBP'000
Continuing operations
Revenue 3 316,315 272,285
Cost of sales (excluding exceptional
items) (235,194) (192,279)
Exceptional items 3 (1,054) -
-------------------------------------- ----- ---------- ----------
Cost of sales (236,248) (192,279)
Gross profit 80,067 80,006
Selling and distribution expenses (40,800) (35,478)
-------------------------------------- ----- ---------- ----------
Administrative expenses (excluding
exceptional items) (12,811) (11,584)
Exceptional items 3 (755) (9,589)
-------------------------------------- ----- ---------- ----------
Administrative expenses (13,566) (21,173)
Other operating income 4 373 3,204
Other operating expenses 5 (3,446) -
Operating profit 22,628 26,559
Finance income 50 141
Finance costs 6 (4,573) (10,379)
Monetary losses - net 21 (7,860) -
Profit before tax 10,245 16,321
Income tax expense 7 (5,936) (1,661)
Profit for the year 4,309 14,660
---------- ----------
Note 2022 2021
Earnings per share
Basic 8 3.38p 11.51p
Diluted 8 3.38p 11.51p
Adjusted earnings per share
Basic 8 19.11p 16.92p
Diluted 8 19.11p 16.92p
Consolidated statement of comprehensive income
for the year ended 31 December 2022
2022 2021
Note GBP'000 GBP'000
Profit for the year 4,309 14,660
Other comprehensive income/(expense)
Other comprehensive income/(expense) that
may be reclassified to profit or loss in
subsequent periods:
Net gain on monetary items forming part
of net investment in foreign operations
and qualifying hedges of net investments
in foreign operations 1,691 5,192
Income tax effect 7 (631) (1,235)
Exchange differences on translation of
foreign operations (5,941) (26,072)
-------- ---------
Net other comprehensive expense that may
be reclassified to profit or loss in subsequent
periods (4,881) (22,115)
Other comprehensive expense not to be
reclassified to profit or loss in subsequent
periods:
Remeasurement losses on defined benefit
plans (1,932) (141)
Income tax effect 7 423 35
-------- ---------
Net other comprehensive expense not to
be reclassified to profit or loss in subsequent
periods (1,509) (106)
Other comprehensive expense for the year,
net of tax (6,390) (22,221)
Total comprehensive expense for the year,
net of tax attributable to owners of the
parent (2,081) (7,561)
-------- ---------
Consolidated balance sheet
as at 31 December 2022
2022 2021
Note GBP'000 GBP'000
Assets
Non-current assets
Property , p l an t and equipmen t 10 91,604 53,694
Intangible assets 11 3,855 -
Trade and other receivables 15 317 10
Deferred tax assets 7 5,397 6,284
---------- ----------
101,173 59,988
---------- ----------
Current assets
I nventor i es 14 77,851 56,781
Trade and other re cei vab l es 15 60,497 46,731
Income tax receiva ble 235 104
Cash and cash equivalents 22,641 15,563
---------- ----------
161,224 119,179
---------- ----------
Total assets 262,397 179,167
---------- ----------
Equity and liabilities
Equity
Share cap it a l 18 127 127,353
Sh a r e premium 18 - 13,391
Merger reserve (114,469) (114,469)
Retained earnings 227,849 57,814
Foreign currency reserve (62,058) (57,177)
---------- ----------
Total equity 51,449 26,912
Non-current liabilities
I n t erest -b earing l oans and borro
wi ngs 13 98,513 62,865
Deferred tax liabilities 7 2,611 126
Provis ion s 17 1,799 158
Net em pl oyee defined bene fit lia b ilitie
s 4,542 1,728
107,465 64,877
---------- ----------
Current liabilities
Trade and other payab l es 16 99,214 83,883
Interes t- bear i ng loans and borrowings 13 1,520 1,794
Income tax paya ble 1,829 1,522
Provisions 17 920 179
---------- ----------
103,483 87,378
---------- ----------
Total liabilities 210,948 152,255
---------- ----------
Total equity and liabilities 262,397 179,167
---------- ----------
Consolidated statement of changes in equity
for the year ended 31 December 2022
Attributable to the owners of the parent
Issued Share Merger Retained Foreign Total
share premium reserve earnings currency
capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2021 65 198 940 43,260 (35,062) 9,401
Profit for the year - - - 14,660 - 14,660
Other comprehensive
expense for the year - - - (106) (22,115) (22,221)
Total comprehensive
income/(expense) - - - 14,554 (22,115) (7,561)
Shares issued on incorporation 50 - - - - 50
"C" share redemption (13) - - - - (13)
Noosa share reorganisation (50) 50 - - - -
Share for share exchange
- old (2) (248) 250 - - -
Share for share exchange
- new 115,659 - (115,659) - - -
Shares issued 11,644 13,391 - - - 25,035
At 31 December 2021 127,353 13,391 (114,469) 57,814 (57,177) 26,912
IAS 29 adjustment
(note 21) - - - 8,327 - 8,327
At 31 December 2021
(restated) 127,353 13,391 (114,469) 66,141 (57,177) 35,239
Profit for the year - - - 4,309 - 4,309
Other comprehensive
expense for the year - - - (1,509) (4,881) (6,390)
Total comprehensive
income/(expense) - - - 2,800 (4,881) (2,081)
Capital reduction (127,226) (13,391) - 140,617 - -
IAS 29 adjustment
to retained earnings
in the year (note
21) - - - 22,982 - 22,982
Share-based payment
charge - - - 250 - 250
Dividends paid (note
9) - - - (4,941) - (4,941)
At 31 December 2022 127 - (114,469) 227,849 (62,058) 51,449
---------- --------- ---------- ---------- ---------- ---------
Consolidated statement of cash flows
for the year ended 31 December 2022
2022 2021
Note GBP'000 GBP'000
Operating activities
Profit before tax 10,245 16,321
Adjustments to reconcile profit before
tax to net cash flows:
- Depreciation of property, plant and
equipment 10 9,700 7,409
- Amortisation of intangible assets 11 163 -
- Gain on disposal of property, plant
and equipment (220) (213)
- Monetary loss IAS 29 21 7,860 -
- Monetary loss IAS 29 income statement 3,530 -
element
- Share-based payments 250 -
- Finance income (50) (141)
- Finance costs 6 4,573 10,379
Working capital adjustments:
- Decrease/(increase) in trade and other
receivables 1,632 (17,380)
- Decrease/(increase) in inventories 5,831 (31,695)
- (Decrease)/increase in trade and other
payables (11,528) 40,291
- (Decrease)/increase in provisions (1,297) 158
- Decrease in other pension provisions (23) (59)
- Difference between pension charge and
cash contributions (319) (22)
--------- ---------
30,347 25,048
Income tax paid (3,801) (3,734)
Interest received 50 141
Net cash flows generated from operating
activities 26,596 21,455
--------- ---------
Investing activities
Proceeds from sale of property, plant
and equipment and intangibles 316 487
Purchase of property, plant and equipment 10 (9,671) (8,646)
Purchase of intangible assets 11 (164) -
Business combination of subsidiaries,
net of cash acquired 12 (20,484) -
Net cash flows used in investing activities (30,003) (8,159)
--------- ---------
Financing activities
Transaction costs related to refinancing (429) (1,171)
Proceeds from external borrowings 34,122 56,500
Repayment of external borrowings (1,250) (11,001)
Repayment of borrowings acquired with (10,746) -
subsidiary
Repayment of shareholder loans - (76,528)
Settlement of deferred consideration - (202)
Payment of lease liabilities (2,049) (1,666)
Share capital issued - 25,085
Share capital repaid - "C" shares - (13)
Interest paid (3,269) (779)
Dividends paid 9 (4,941) -
Net cash flows generated from/(used in)
financing activities 11,438 (9,775)
--------- ---------
Net increase in cash and cash equivalents 8,031 3,521
Net foreign exchange difference (953) (8,041)
Cash and cash equivalents at 1 January 15,563 20,083
Cash and cash equivalents at 31 December 22,641 15,563
--------- ---------
Notes to the consolidated financial statements
for the year ended 31 December 2022
1 Basis of preparation
The results for the year ended 31 December 2022, including
comparative financial information, have been prepared in accordance
with UK adopted international accounting standards ("IFRS") in
conformity with the requirements of the Companies Act 2006 and the
disclosure guidance and transparency rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Stelrad Group plc ("the Company") has adopted all IFRS in issue
and effective for the year.
While the financial information included in this preliminary
announcement has been prepared in accordance
with the recognition and measurement criteria of IFRS, this
announcement does not itself contain sufficient
information to comply with IFRS. The Company expects to publish
full financial statements that comply with
IFRS in March 2023.
The financial information set out above does not constitute the
Company's statutory accounts for the years
ended 31 December 2022 but is derived from those accounts.
Statutory accounts for 2022 will be delivered in due course. The
auditors have reported on those accounts: their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain statements under s498 (2) or (3) of
the Companies Act 2006.
Going concern
Having considered the Group's current trading, cash flow
generation and debt maturity and applying severe but plausible
stress testing scenarios, the Directors have concluded that it is
appropriate to prepare the consolidated financial statements on a
going concern basis. Under a severe but plausible downside
scenario, the Group remains within its debt facilities and its
financial covenants until 31 December 2025. Based on this going
concern review, the Directors have concluded that, at the time of
approving the financial statements, the Group will be able to
continue to operate within its existing facilities and is well
placed to manage its business risks successfully.
The financial information presented in respect of the year ended
31 December 2022 has been prepared on a basis consistent with the
financial information presented for the year ended 31 December 2021
except for the application of three new accounting policies which
are:
Business combinations and goodwill (IFRS 3)
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the consideration
transferred measured at acquisition date. When the Group acquires a
business, it assesses the financial assets and liabilities assumed
for appropriate classification and designation in accordance with
the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.
Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred over the fair values of
net identifiable assets acquired, liabilities assumed and
contingent liabilities.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group's cash-generating
units that are expected to benefit from the combination.
Where goodwill has been allocated to a cash-generating unit and
part of the operation within that unit is disposed of, the goodwill
associated with the disposed operation is included in the carrying
amount of the operation when determining the gain or loss on
disposal. Goodwill disposed in these circumstances is measured
based on the relative values of the disposed operation and the
portion of the cash-generating unit retained.
Financial reporting in hyperinflationary economies (IAS 29)
The financial statements of any subsidiary entity whose
functional currency is the currency of a hyperinflationary economy
have been restated for changes in the general purchasing power of
that currency. The financial statements of entities whose
functional currency is the Turkish Lira have been restated from 1
January 2022 by applying a general price index. As a result, the
financial statements are stated in terms of the measuring unit
current at the balance sheet date. In summary:
-- non-monetary assets and liabilities (other than those that
are carried at current amounts at the end of the reporting period,
such as net realisable value and fair value) have been restated for
the change in purchasing power caused by inflation from the date of
initial recognition to the balance sheet date;
-- monetary assets and liabilities have not been restated;
-- all items in the statement of comprehensive income have been
expressed in terms of the measuring unit current at the end of the
reporting period and have therefore been restated for inflation
from the dates when the items of income and expenses were initially
recorded in the financial statements; and
-- a gain or loss on the net monetary position has been included
in profit or loss for the period from 1 January 2022 to the end of
the reporting period to reflect the impact of inflation on holding
monetary assets and liabilities in local currency.
The general price index used at the balance sheet date is the
TUIK Index provided by the Turkish Statistical Institute. The
movement in the index during the current reporting period was
64%.
One of the indicators of a hyperinflationary currency is
cumulative inflation over a three-year period in excess of 100%.
This became the case for the Turkish Lira at 31 March 2022 and, as
such, the use of inflation accounting is required in respect of
Turkish Lira functional operations for periods ending on or after
30 June 2022 using the published consumer price index.
In the process of applying IAS 29, management does not consider
that it has made any judgements which would have a significant
effect on the amounts recognised in the consolidated financial
statements.
The financial statements of a subsidiary entity that has the
functional currency of a hyperinflationary economy are restated in
accordance with IAS 29, as outlined above, before being included in
the consolidated financial statements. All amounts in the
subsidiary's financial statements, including all items in the
statement of comprehensive income (which would usually be
translated at average exchange rate), have then been translated at
the closing exchange rate.
Comparative amounts presented previously in a stable currency
have not been restated.
The difference between the closing equity of the previous year
and the opening equity of the current year has been recognised as
an IAS 29 adjustment in the consolidated statement of changes in
equity.
The combined effect of restating in accordance with IAS 29 and
translation in accordance with IAS 21 have been presented as a net
change in other comprehensive income.
Further details on the application of IAS 29 are presented in
note 21.
Share-based payments (IFRS 2)
The fair value of equity-settled share options granted is
recognised as an employee expense with a corresponding increase in
equity. The fair value is measured as at the date the options are
granted and the charge is only amended if vesting does not take
place due to non-market conditions not being met. Various option
pricing models are used according to the terms of the option scheme
under which the options were granted. The fair value is spread over
the period during which the employees become unconditionally
entitled to the options. At the balance sheet date, if it is
expected that non-market conditions will not be satisfied, the
cumulative expense recognised in relation to the relevant options
is reversed.
With respect to share-based payments, a deferred tax asset is
recognised on the relevant tax base. The tax base is then compared
to the cumulative share-based payment expense recognised in the
income statement. Deferred tax arising on the excess of the tax
base over the cumulative share-based payment expense recognised in
the income statement has been recognised directly in equity outside
the SOCI as share-based payments are considered to be transactions
with shareholders.
Where the company grants options over its own shares to
employees of its subsidiaries, it recognises, in its individual
financial statements, an increase in the cost of investment in its
subsidiaries equivalent to the equity-settled share-based payment
charge recognised in its consolidated financial statements, with
the corresponding credit being recognised in equity.
2 Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements
requires management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and
liabilities, and the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected
in future periods.
Judgements
In the process of applying the Group's accounting policies,
management has made judgements which would have a significant
effect on the amounts recognised in the consolidated financial
statements.
Business combinations
In July 2022, the Group acquired DL Radiators SpA, an Italian
manufacturer of heat emitters, for EUR28.3m.
As a result, an exercise was undertaken to measure the fair
value of assets and liabilities acquired as part of the business
combination. This included ascertaining a fair value for all
inventory acquired as part of the business combination. Management
exercised judgement in determining whether any additional
intangible assets, such as customer relationships, should be
identified and the valuation assigned to these. Management engaged
with experts in order to assist with the valuation of certain
tangible and intangible assets, including customer
relationships.
Estimates and assumptions
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, which have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are described below. The Group based its assumptions and estimates
on parameters available when the consolidated financial statements
were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or
circumstances arising beyond the control of the Group. Such changes
are reflected in the assumptions when they occur.
Rebates
A proportion of rebates is paid to the end consumers of goods
sold. Uncertainties exist over provisions made as, until claims are
made by end consumers, the Group cannot be certain which consumers
have purchased which products. Due to this uncertainty it is
therefore judgemental what contractual rates, if any, will apply to
goods sold.
Significant management judgement is required in order to assess
the provision required at the balance sheet date. Management is
able to utilise market information and historical/current data and
trends in order to make an appropriate provision.
A reasonably possible change in the estimates surrounding
rebates would not result in a material impact to the financial
statements.
3 Segmental information
IFRS 8 Operating Segments requires operating segments to be
determined by the Group's internal reporting to the Chief Operating
Decision Maker ("CODM"). The CODM has been determined to be the
Chief Executive Officer and Chief Financial Officer, who receive
information on the Group's revenue channels in key geographical
regions based on the Group's management and internal reporting
structure. The CODM assesses the performance of geographical
segments based on a measure of revenue and adjusted operating
profit.
Adjusted operating profit is earnings before interest, tax,
amortisation of customer relationships, exceptional items, the
impact of IAS 29 and foreign exchange differences. IAS 29 was
applied for the first time in the year ended 31 December 2022. The
impact of IAS 29 has been removed in arriving at revenue (pre-IAS
29) and adjusted operating profit, as management believe that the
pre-IAS 29 results give a more meaningful presentation of the
Group's underlying performance.
Revenue (pre-IAS 29) by geographical
market 2022 2021
GBP'000 GBP'000
UK & Ireland 138,874 130,405
Europe 147,909 118,063
Turkey & International 25,335 23,817
Revenue (pre-IAS 29) 312,118 272,285
Impact of IAS 29 4,197 -
Total revenue 316,315 272,285
-------- --------
Adjusted operating profit by geographical
market 2022 2021
GBP'000 GBP'000
UK & Ireland 22,716 21,589
Europe 13,877 12,929
Turkey & International 2,055 2,898
Central costs (4,668) (4,247)
Adjusted operating profit 33,980 33,169
Exceptional items (1,809) (9,589)
Amortisation of customer relationships (57) -
Foreign exchange differences (3,446) 2,979
Impact of IAS 29 (6,040) -
Operating profit 22,628 26,559
-------- --------
In the year ended 31 December 2022 the exceptional items within
administrative expenses relate to redundancy costs and acquisition
costs, and the exceptional item within cost of sales relates to the
reversal of the IFRS 3 fair value uplift on finished goods and work
in progress.
The exceptional items in the year ended 31 December 2021 are
costs relating to professional advisers employed by the Group to
explore the potential sale of the Group and to subsequently execute
the IPO. These costs are one-off in nature and disclosing these
costs as exceptional allows the true underlying performance of the
Group to be more easily reviewed.
The revenue information above is based on the locations of the
customers. All revenue arises from the sale of goods.
No customer has revenues in excess of 10% of revenue (2021:
one).
Non-current operating assets 2022 2021
GBP'000 GBP'000
UK 18,823 20,237
The Netherlands 22,757 23,606
Turkey 26,854 8,362
Italy 22,686 -
Other 1,239 1,489
Total 92,359 53,694
-------- --------
4 Other operating income
2022 2021
GBP'000 GBP'000
Net gain on disposal of property, plant
and equipment 220 213
Foreign currency gains - 2,575
Net gains on forward derivative contracts - 404
Sundry other income 153 12
373 3,204
-------- --------
5 Other operating expenses
2022 2021
GBP'000 GBP'000
Foreign currency losses 3,446 -
-------- --------
6 Finance costs
2022 2021
GBP'000 GBP'000
Interest on bank loans 2,564 370
Interest on ultimate shareholder loans - 9,117
Amortisation of loan issue costs 492 178
Interest expense on defined benefit
liabilities 481 260
Finance charges payable on lease liabilities 124 127
Other finance charges 912 327
4,573 10,379
-------- --------
7 Income tax expense
The major components of income tax expense are as follows:
2022 2021
GBP'000 GBP'000
Consolidated income statement
Current income tax:
Current income tax charge 4,090 4,179
Adjustments in respect of current income tax
charge of previous year (290) (68)
Deferred tax:
Relating to origination and reversal of temporary
differences 2,802 (2,095)
Relating to change in tax rates (666) (355)
Income tax expense reported in the income
statement 5,936 1,661
-------- --------
2022 2021
GBP'000 GBP'000
Consolidated statement of comprehensive income
Tax related to items recognised in other comprehensive
income/(expense) during the year:
Deferred tax on actuarial loss (423) (35)
Current tax on monetary items forming part
of net investment and on hedges of net investment 631 1,235
Income tax expensed to other comprehensive
income 208 1,200
-------- --------
Reconciliation of tax expense and the accounting profit at the
tax rate in the United Kingdom of 19% (2021: 19%):
2022 2021
GBP'000 GBP'000
Profit before tax 10,245 16,321
-------- --------
Profit before tax multiplied by standard rate
of corporation tax in the UK of 19% (2021:
19%): 1,947 3,101
Adjustments in respect of current income tax
charge of previous year (290) (68)
Non-deductible expenses 147 2,715
Adjustments due to IAS 29 - non-tax deductible 4,779 -
expenses
Differences arising due to tax losses (321) (3,052)
Other timing differences (161) (271)
Benefit of overseas investment incentives (1,042) (1,723)
Withholding tax on dividend income 527 -
Effect of changes in overseas tax rates (127) (102)
Effect of different overseas tax rates 1,016 1,314
Effect of changes in UK deferred tax rate (539) (253)
Total tax expense reported in the income
statement 5,936 1,661
-------- --------
Deferred tax
Deferred tax relates to the following:
Consolidated balance Consolidated income
sheet statement
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
Capital allowances 204 579 (730) (42)
Pension 806 414 10 134
Fixed asset fair value
adjustments (1,711) (491) 116 (41)
Losses available for offsetting
against future income 5,471 4,440 572 1,659
Other temporary differences
(including IAS 29) (1,984) 1,216 (2,104) 740
Deferred tax (charge)
/ credit (2,136) 2,450
---------- ----------
Net deferred tax assets 2,786 6,158
----------- ----------
Reflected in the balance
sheet as:
Deferred tax assets 5,397 6,284
Deferred tax liabilities (2,611) (126)
Deferred tax assets,
net 2,786 6,158
----------- ----------
Reconciliation of deferred tax assets, net
2022 2021
GBP'000 GBP'000
Opening balance as at 1 January 6,158 4,342
On business combination 315 -
IAS 29 opening balance sheet adjustment (2,284) -
Tax (charge)/income recognised in income
statement (2,136) 2,450
Tax income recognised in other comprehensive
income/(expense) 423 35
Exchange adjustment 310 (669)
Closing balance as at 31 December 2,786 6,158
-------- --------
The Group offsets tax assets and liabilities if it has a legally
enforceable right to set them off and they are levied by the same
tax authority. Deferred tax assets in respect of losses of
GBP1,821,000 (2021: GBP581,000) have been recognised in respect of
two (2021: one) loss making subsidiary companies; these are
recognised on the grounds of future projected performance.
Deferred tax asset recognition
During the year ended 31 December 2021, the Group chose to
recognise previously unrecognised deferred tax assets in relation
to tax losses. The newly recognised losses are all post-April 2017
UK losses and the decision has been taken to recognise the losses
in the year because the new capital structure of the Group post-IPO
means that tax deductible interest will be lower which, along with
higher UK profitability, will lead to these losses being utilised
over a much shorter time frame.
During the year ended 31 December 2022, the Group chose to
derecognise certain tax losses, in particular those arising from
Corporate Interest Restriction ("CIR") rules. An increase in debt
to finance the acquisition of DL Radiators SpA and an increase in
interest rates means that these tax losses will take longer to
utilise and therefore an element has been derecognised.
The deferred tax assets have been analysed in detail at the year
end and the recognition of assets, in particular those in respect
of tax losses, has been scrutinised in detail with modelling
undertaken to ensure that they are likely to be utilised over a
period of time where profitability can be estimated with reasonable
certainty.
Unrecognised deferred tax balances
2022 2021
GBP'000 GBP'000
Capital allowances 17 29
Losses available for offsetting
against future income 2,810 1,904
2,827 1,933
-------- --------
The Group has tax losses which arose in the United Kingdom of
GBP11,240,000 (2021: GBP8,653,000) that are available indefinitely
for offsetting against future taxable profits of the companies in
which the losses arose. Deferred tax assets have not been
recognised in respect of these losses as they either relate to CIR
losses which cannot be reliably utilised in the short-term or they
arose prior to April 2017 in subsidiaries that are not profit
making and where there is no evidence of recoverability in the near
future.
Changes in the corporate income tax rate
The UK corporation tax rate will rise to 25% from 1 April
2023.
8 Earnings per share
2022 2021
GBP'000 GBP'000
Net profit for the year attributable to owners
of the parent 4,309 14,660
Exceptional items 1,809 9,589
Amortisation of customer relationships 57 -
Foreign exchange differences 3,446 (2,979)
Impact of IAS 29 13,906 -
Tax on exceptional items, foreign exchange differences,
amortisation and IAS 29 806 282
Adjusted net profit for the year attributable
to owners of the parent 24,333 21,552
-------- --------
2022 2021
Number Number
Basic weighted average number of shares in
issue 127,352,555 127,352,555
Diluted weighted average number of shares in
issue 127,352,555 127,352,555
Earnings per share
Basic earnings per share (pence per share) 3.38 11.51
Diluted earnings per share (pence per share) 3.38 11.51
------------ ------------
Adjusted earnings per share
Basic earnings per share (pence per share) 19.11 16.92
Diluted earnings per share (pence per share) 19.11 16.92
------------ ------------
9 Dividends paid
The Board is recommending a final dividend of 4.72 pence per
share (2021: 0.96 pence per share), which, if approved, will mean a
final dividend payment of GBP6,011,000 (2021: GBP1,223,000).
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting and has not been
included as a liability in these consolidated financial
statements.
2022 2021
GBP'000 GBP'000
Declared and paid during the period
Equity dividend on ordinary shares:
Final dividend for 2021: 0.96p per share 1,223 -
(2020: nil p per share)
Interim dividend for 2022: 2.92p per share 3,718 -
(2021: nil p per share)
4,941 -
-------- --------
2022 2021
GBP'000 GBP'000
Dividend proposed (not recognised as
a liability)
Equity dividend on ordinary shares:
Final dividend for 2022: 4.72p per share
(2021: 0.96p per share) 6,011 1,223
-------- --------
10 Property, plant and equipment
Freehold Leasehold Assets under Plant Fixtures Total
land and buildings construction and equipment and fittings
buildings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2021 23,729 11,179 3,412 52,961 7,014 98,295
Additions 138 546 6,379 1,724 863 9,650
Transfers 550 - (4,400) 3,521 329 -
Disposals - - (32) (163) (593) (788)
Exchange adjustment (2,589) (706) (591) (10,137) (694) (14,717)
At 31 December 2021 21,828 11,019 4,768 47,906 6,919 92,440
IAS 29 opening adjustment 7,282 - 31 14,517 1,005 22,835
----------- ----------- -------------- --------------- -------------- ---------
At 1 January 2022 29,110 11,019 4,799 62,423 7,924 115,275
On business combination 10,608 127 974 4,321 1,498 17,528
Additions 228 427 7,773 1,577 1,276 11,281
Transfers 1,820 - (6,183) 4,068 295 -
Disposals - - - (94) (488) (582)
IAS 29 adjustment 5,528 - - 13,853 922 20,303
Exchange adjustment (821) 649 (94) (2,760) (193) (3,219)
At 31 December 2022 46,473 12,222 7,269 83,388 11,234 160,586
----------- ----------- -------------- --------------- -------------- ---------
Accumulated depreciation
and impairment
At 1 January 2021 9,008 2,132 - 21,058 5,073 37,271
Depreciation charge 850 1,151 - 4,688 720 7,409
Disposals - - - (90) (424) (514)
Exchange adjustment (556) (160) - (4,340) (364) (5,420)
At 31 December 2021 9,302 3,123 - 21,316 5,005 38,746
IAS 29 opening adjustment 1,845 - - 10,748 847 13,440
----------- ----------- -------------- --------------- -------------- ---------
At 1 January 2022 11,147 3,123 - 32,064 5,852 52,186
Depreciation charge 1,289 1,330 - 5,785 1,296 9,700
Transfers - - - (101) 101 -
Disposals - - - (87) (457) (544)
IAS 29 adjustment 1,180 - - 7,502 575 9,257
Exchange adjustment (241) 230 - (1,399) (207) (1,617)
At 31 December 2022 13,375 4,683 - 43,764 7,160 68,982
----------- ----------- -------------- --------------- -------------- ---------
Net book value
At 31 December 2022 33,098 7,539 7,269 39,624 4,074 91,604
----------- ----------- -------------- --------------- -------------- ---------
At 31 December 2021 12,526 7,896 4,768 26,590 1,914 53,694
----------- ----------- -------------- --------------- -------------- ---------
At 1 January 2021 14,721 9,047 3,412 31,903 1,941 61,024
----------- ----------- -------------- --------------- -------------- ---------
The carrying value of right-of-use assets within property, plant
and equipment, by line item, at the year end is:
2022 2021
GBP'000 GBP'000
Leasehold buildings 7,466 7,814
Plant and equipment 896 911
Fixtures and fittings 1,672 638
10,034 9,363
-------- --------
Right-of-use asset additions within property, plant and
equipment, by line item, during the year are:
2022 2021
GBP'000 GBP'000
Leasehold buildings 418 543
Plant and equipment 153 79
Fixtures and fittings 1,039 382
1,610 1,004
-------- --------
Depreciation of right-of-use assets within property, plant and
equipment, by line item, during the year is:
2022 2021
GBP'000 GBP'000
Leasehold buildings 1,307 1,127
Plant and equipment 282 348
Fixtures and fittings 439 204
2,028 1,679
-------- --------
Land and buildings with a carrying amount of GBP21,547,000
(2021: GBP10,890,000) are subject to a first charge to secure the
Group's bank loan.
No borrowing costs have been capitalised since the assets have
not met the criteria for qualifying assets.
11 Intangible assets
Goodwill Customer Technology Total
relationships and software
costs
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2022 - - - -
On business combination 1,222 1,761 713 3,696
Additions - - 164 164
Disposals - - (58) (58)
Exchange adjustment 72 104 46 222
At 31 December 2022 1,294 1,865 865 4,024
--------- --------------- -------------- --------
Accumulated amortisation
and impairment
At 1 January 2022 - - - -
Depreciation charge - 57 106 163
Exchange adjustment - 2 4 6
At 31 December 2022 - 59 110 169
--------- --------------- -------------- --------
Net book value
At 31 December 2022 1,294 1,806 755 3,855
--------- --------------- -------------- --------
At 31 December 2021 - - - -
--------- --------------- -------------- --------
Included in technology and software costs are assets under
construction of GBP345,000 (2021: GBPnil), which are not
amortised.
The remaining amortisation period of the customer relationships,
being those acquired upon the acquisition of DL Radiators SpA, is
twelve years and seven months.
Impairment assessment of goodwill
All of the goodwill recognised is allocated to a single
cash-generating unit, being the DL Radiators SpA division.
Given the proximity of the year end to the acquisition date of
DL Radiators SpA on 13 July 2022, the impairment assessment of
goodwill has been calculated using fair value at acquisition less
costs of disposal. Using this approach confirms that no impairment
charge is required.
12 Business combinations
On 13 July 2022, Stelrad Radiator Holdings Limited, a wholly
owned subsidiary of the Group, acquired 100% of DL Radiators SpA, a
radiator manufacturer incorporated in Italy. The total
consideration paid was EUR28,346,000.
The fair value of the net assets acquired were as follows:
Book value Fair value Fair value
adjustments
GBP'000 GBP'000 GBP'000
Intangible assets 713 1,761 2,474
Property, plant and equipment 11,054 6,474 17,528
Inventory 24,499 1,034 25,533
Trade and other receivables 17,837 - 17,837
Trade and other payables (28,403) - (28,403)
Deferred taxation 1,853 (1,538) 315
Current taxation (49) - (49)
Cash and cash equivalents 3,490 - 3,490
Provisions (3,580) - (3,580)
Pension liabilities (1,033) - (1,033)
Loans and other borrowings (11,360) - (11,360)
Total identifiable net assets 15,021 7,731 22,752
----------- ------------- -----------
Goodwill on the business combination 1,222
-----------
Discharged by:
Cash consideration 23,974
-----------
Goodwill of GBP1,222,000 reflects certain intangibles that
cannot be individually separated and reliably measured due to their
nature. These items include the value of expected synergies arising
from the business combination and the experience and skill of the
acquired workforce. The fair value of the customer relationships
was identified and included in intangible assets.
The gross amount of trade and other receivables is
GBP18,681,000. All of the trade and other receivables are expected
to be collected in full, other than those that have been provided
for.
Transaction costs relating to professional fees associated with
the business combination in the year ended 31 December 2022 were
GBP251,000 and have been expensed.
DL Radiators generated revenue of GBP31,541,000 and loss for the
year of GBP405,000 (adjusted profit for the year of GBP485,000) in
the period from acquisition to 31 December 2022 which are included
in the consolidated statement of comprehensive income for this
reporting period. If the combination had taken place at 1 January
2022, the Group's revenue would have been GBP40,588,000 higher and
the profit for the year from continuing operations would have been
GBP1,296,000 lower than reported.
13 Interest-bearing loans and borrowings
Effective interest
rate Maturity 2022 2021
% GBP'000 GBP'000
Current interest-bearing loans and borrowings
Lease liabilities 1,520 1,794
1,520 1,794
-------- --------
Non-current interest-bearing loans and borrowings
Lease liabilities 8,516 7,524
Revolving credit facility
- GBP SONIA + 2% 9 Nov 2024 55,250 56,500
Revolving credit facility Euribor + 2% 9 Nov 2024 10,647 -
- Euro
Term loan Euribor + 2% 9 Nov 2024 25,150 -
Unamortised loan costs (1,050) (1,159)
98,513 62,865
-------- --------
Total interest-bearing loans and borrowings 100,033 64,659
-------- ----------
On 10 November 2021, the Group refinanced its external debt as
part of the IPO and entered into an GBP80 million revolving credit
facility ("RCF") jointly financed by National Westminster Bank plc
and Barclays PLC , which was first drawn on 10 November 2021.
On 8 July 2022, the GBP80 million revolving credit facility was
increased by GBP20 million by means of an accordion option. The
facility consists of a GBP76.027 million revolving credit facility
and a EUR28.346 million term loan facility.
The RCF and term loan facilities are secured on the assets of
certain subsidiaries within the Group.
14 Inventories
2022 2021
GBP'000 GBP'000
Raw materials - cost 32,111 18,647
Work in progress - cost 3,530 1,293
Finished goods - lower of cost and net
realisable value 38,974 34,181
Other consumables 3,236 2,660
77,851 56,781
-------- --------
The cost of inventories recognised as an expense in the year was
GBP 236,248 ,000 (2021: GBP192,279,000). The provision for the
impairment of stocks increased in the year, giving rise to a cost
of GBP138,000 (2021: credit of GBP127,000). At 31 December 2022,
the provision for the impairment of stocks was GBP2,640,000 (2021:
GBP1,534,000).
15 Trade and other receivables
2022 2021
GBP'000 GBP'000
Current
Trade receivables 55,739 42,749
Other receivables 4,197 3,314
Prepayments 561 668
60,497 46,731
-------- --------
Non-current
Trade receivables - 10
Other receivables 317 -
317 10
-------- --------
The table below sets out the movements in the allowance for
expected credit losses of trade receivables:
2022 2021
GBP'000 GBP'000
At 1 January 204 130
On business combination 844 -
Charge for the year - 108
Utilised (223) (23)
Unused amounts reversed (122) -
Exchange adjustment 60 (11)
At 31 December 763 204
-------- --------
As at 31 December, the details of the provision matrix used to
calculate provisions for trade receivables (with the ageing gross
of impairment) are as follows:
30-90
Total Current <30 days days >90 days
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
Gross carrying amount 56,502 49,403 3,217 3,056 826
Expected credit loss
rate (%) 1 - 1 3 77
Expected credit loss 763 - 32 92 639
2021
Gross carrying amount 42,963 38,014 1,464 2,645 840
Expected credit loss
rate (%) - - 1 4 10
Expected credit loss 204 - 15 106 83
16 Trade and other payables
2022 2021
GBP'000 GBP'000
Current
Trade payables 73,903 57,751
Other payables and accruals 18,860 22,198
Other taxes and social security 6,045 3,858
Interest payable 406 76
99,214 83,883
-------- --------
17 Provisions
Warranty Compen-sation Restructuring Unused Total
fund vacation
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2021 50 - - 345 395
Arising during
the year 30 - - 397 427
Utilised (28) - - (223) (251)
Unused amounts
reversed - - - (19) (19)
Exchange adjustment (17) - - (198) (215)
At 31 December
2021 35 - - 302 337
On business combination 587 1,125 1,868 - 3,580
Arising during
the year 218 12 - 537 767
Utilised (274) (5) (1,184) (557) (2,020)
Unused amounts
reversed - - (27) (16) (43)
Exchange adjustment 27 67 62 (58) 98
At 31 December
2022 593 1,199 719 208 2,719
--------- -------------- -------------- ---------- --------
Current 162 - 719 39 920
Non-current 431 1,199 - 169 1,799
Compensation fund
The supplementary customer compensation fund is made in
accordance with European legislation to provide for potential
severance payments to agents.
Restructuring
Restructuring provisions relate to the remaining costs still to
be settled in respect of the closure of a manufacturing site in
Italy. The site was closed prior to the acquisition of DL Radiators
and the costs were provided for at the point of acquisition.
Unused vacation
A provision is recognised in respect of an unused vacation pay
liability due to certain employees in Turkey. The timing of the
provision is dependent on the rate at which employees take
additional vacation.
18 Share capital and reserves
2022 2022 2021 2021
Number GBP Number GBP
Authorised, called up
and fully paid
Ordinary shares of GBP0.001
each 127,352,555 127,353 - -
Ordinary shares of GBP1
each - - 127,352,555 127,352,555
127,353 127,352,555
-------- ------------
On 25 January 2022, a capital reduction application was approved
by the courts, reducing the value of ordinary shares in issue from
GBP1 to GBP0.001. Under the same application the courts approved
the reduction of the Company's share premium account in full. The
reduction of capital and share premium will be transferred to
accumulated losses.
During the year ended 31 December 2021, the Company carried out
a reorganisation of its share capital to facilitate a listing to
the premium segment of the Official List of the Financial Conduct
Authority and to trade on the London Stock Exchange Main Market for
listed securities. This is described below in the detail on
transactions in the year.
The movements in the ordinary share capital during the year
ended 31 December 2021 and 31 December 2022 were as follows:
Shares Share capital
Number GBP
At 1 January 2021 263,000 65,000
Issued on incorporation of Stelrad
Group plc 50,000 50,000
Redemption of ordinary "C" shares (13,000) (13,000)
Noosa Holdings Jersey Limited share
reorganisation - (49,500)
Share for share exchange:
- Noosa Holdings Jersey Limited (250,000) (2,500)
- Stelrad Group plc 115,658,370 115,658,370
Shares issued 11,644,185 11,644,185
At 31 December 2021 127,352,555 127,352,555
Capital reduction - (127,225,202)
At 31 December 2022 127,352,555 127,353
------------ --------------
Transactions in the year ended 31 December 2022
On 25 January 2022, a capital reduction application was approved
by the courts, reducing the value of ordinary shares in issue from
GBP1 to GBP0.001. Under the same application the courts approved
the reduction of the Company's share premium account in full. The
reduction of share capital and share premium will be transferred to
retained earnings.
Transactions in the year ended 31 December 2021
On incorporation on 8 October 2021, Stelrad Group plc (the
"Company") issued 50,000 ordinary shares with a nominal value of
GBP1 each for a total cash consideration of GBP50,000. This was
paid up in full on 10 November 2021.
On 15 October 2021, Noosa Holdings Jersey Limited redeemed its
13,000 ordinary "C" shares at par value.
On 10 November 2021, the following transactions arose:
-- Noosa Holdings Jersey Limited redesignated its 200,000
ordinary "A" shares as 200,000 ordinary shares of GBP0.01 each.
-- Noosa Holdings Jersey Limited split its 50,000 ordinary "B"
shares as 50,000 ordinary shares of GBP0.01 each and 50,000
deferred redeemable shares of GBP0.99 each. The 50,000 deferred
redeemable shares of GBP0.99 each were immediately redeemed with
the credit applied to share premium.
-- The Company acquired 100% of the ordinary shares of Noosa
Holdings Jersey Limited by way of a share for share exchange by
issuing 115,658,370 ordinary shares of GBP1 each to the
shareholders of Noosa Holdings Jersey Limited.
-- The Company issued an additional 11,644,185 ordinary shares
of GBP1 each at a value of GBP2.15, giving rise to a share premium
of GBP13,391,000.
19 Commitments and contingencies
Commitments
Amounts contracted for but not provided in the financial
statements amounted to GBP433,000 (2021: GBP1,389,000) for the
Group. All amounts relate to property, plant and equipment.
Contingent liabilities
Termo Teknik Ticaret ve Sanayi A.S. has issued letters of
guarantee and letters of credit to its steel suppliers amounting to
$22,685,000 (2021: $30,089,000) and $11,175,000 (2021: $40,518,000)
respectively. Termo Teknik Ticaret ve Sanayi A.S. has also issued
letters of guarantee denominated in Turkish Lira totalling
TL13,220,000 (2021: TL9,497,000).
The Group enters into various forward currency contracts to
manage the risk of foreign currency exposures on certain purchases
and sales. The total amount of unsettled forward contracts as at 31
December 2022 is GBPnil (2021: GBPnil).
The fair value of the unsettled forward contracts held at the
balance sheet date, determined by reference to their market values,
is a liability of GBPnil (2021: GBPnil).
As part of the GBP100 million loan facility, entered into in
November 2021, and amended and restated on 8 July 2022, the Group
is party to a cross-collateral agreement secured on specific assets
of certain Group companies. No liability is expected to arise from
the agreement.
Under an unlimited multilateral guarantee, the Company, in
common with certain fellow subsidiary undertakings in the UK, has
jointly and severally guaranteed the obligations falling due under
the Company's net overdraft facilities. No liability is expected to
arise from this arrangement.
20 Related party disclosures
Prior to admission to the London Stock Exchange on 10 November
2021, the ultimate controlling party was The Bregal Fund III
LP.
The ultimate shareholder loans bore interest at 15% and
consisted of two amounts: i) an amount funded by the ultimate
controlling party of the Group, The Bregal Fund III LP; and ii) an
amount funded by certain managers of the Company.
The value of the loans at 31 December 2021 was GBPnil, due to
repayment of the shareholder loans and all accrued interest
totalling GBP76,528,000 (The Bregal Fund III LLP: GBP64,632,000;
managers: GBP11,896,000) as part of the Group reorganisation on 10
November 2021.
At 31 December 2021, the Group owed deferred consideration to
shareholders related to the sale of a business of GBPnil as the
deferred consideration to shareholders was repaid on 15 October
2021.
During 2021, interest was accrued totalling GBP9,117,000 (The
Bregal Fund III LP: GBP7,700,000; managers: GBP1,417,000).
During 2021, under the ownership agreement, before the Group
reorganisation, the Group was charged a monitoring fee of
GBP200,000 per annum by Bregal Capital LLP, which was the
management company of the ultimate controlling party of the Group,
The Bregal Fund III LP.
During the year, the Group spent GBP6,000 (2021: GBP9,000) on
purchases from Polypal Netherlands BV (whose ultimate controlling
party is also The Bregal Fund III LP); the balance outstanding at
the year end was GBPnil (2021: GBPnil).
The key management personnel are considered to be the Executive
Directors of the Group. The following table highlights the
remuneration that is recorded in the income statement in respect of
these personnel, including Company social security costs:
2022 2021
GBP'000 GBP'000
Short-term employment benefits 1,466 2,175
21 IAS 29 Financial Reporting in Hyperinflationary Economies
The Turkish economy was designated as hyperinflationary from 19
April 2022. As a result, application of IAS 29 Financial Reporting
in Hyperinflationary Economies has been applied to all Stelrad
Group plc entities whose functional currency is the Turkish Lira.
IAS 29 requires that adjustments are applicable from the start of
the relevant entity's reporting period. For Stelrad Group plc that
is from 1 January 2022. The application of IAS 29 includes:
-- adjustment of historical cost non-monetary assets and
liabilities for the change in purchasing power caused by inflation
from the date of initial recognition to the balance sheet date;
-- adjustment of the income statement for inflation during the reporting period;
-- the income statement is translated at the period-end foreign
exchange rate instead of an average rate; and
-- adjustment of the income statement to reflect the impact of
inflation and exchange rate movement on holding monetary assets and
liabilities in local currency.
Reconciliation of opening equity at 1 January 2022
The differences between the closing equity of the prior year at
31 December 2021 and the opening equity of the current year at 1
January 2022 have been recognised as an IAS 29 adjustment in the
consolidated statement of changes in equity.
GBP'000
Retained earnings at 31 December 2021 57,814
IAS 29 adjustment 8,327
Retained earnings at 31 December 2021
(restated) 66,141
--------
The IAS 29 adjustment at 1 January 2022 is made up as
follows:
At 1 January
2022
GBP'000
Property, plant and equipment 9,395
Inventories 1,183
Prepayments 33
Deferred tax liability (2,284)
IAS 29 adjustment 8,327
-------------
Statement of changes in equity for the year ended 31 December
2022
The impact of the restatement of the opening reserves of
entities whose functional currency is the Turkish Lira was
GBP22,982,000; this is credited to the statement of changes in
equity in the period and subsequently reversed through the
"monetary losses - net" line in the income statement.
Year ended
31 December
2022
GBP'000
Retained earnings credit 22,982
-------------
Monetary losses - net for the year ended 31 December 2022
The monetary loss for the year ended 31 December 2022 is made up
as follows:
Year ended
31 December
2022
GBP'000
Retained earnings (22,982)
Property, plant and equipment 11,046
Inventories 234
Prepayments (16)
Income statement 3,858
Monetary losses - net (7,860)
-------------
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END
FR GPURCWUPWGAP
(END) Dow Jones Newswires
March 13, 2023 03:00 ET (07:00 GMT)
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