Than a UK Brick Maker Ibstock Plc
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Annual Report & Accounts 2016 More than a UK brick maker Ibstock plc Ibstock Annual Report & Accounts 2016 Financial highlights Revenue +5% Strategic report 01 Ibstock today £435m 02 Group at a glance 04 Chairman’s Statement Adjusted EBITDA1 +4% 06 Our markets 08 Chief Executive’s Statement £112m 11 Our strategy 18 Key performance indicators Statutory reported profit 20 Business model before taxation +29% 22 Resources and relationships 26 Business review £111m 28 Financial review 32 Risk management Statutory EPS2 -32% Governance 38 Board of Directors 22.3p 40 Corporate Governance Statement 47 Statement of Directors’ responsibilities Net debt3 -8% 48 Governance in action 50 Nomination Committee Report £133m 52 Audit Committee Report 58 Directors’ Remuneration Report Dividend per share +20% 74 Directors’ Report 5.3p Financial statements 78 Independent Auditor’s Report 84 Consolidated income statement 85 Consolidated statement of comprehensive income 86 Consolidated balance sheet 87 Consolidated statement of changes in equity 88 Consolidated cash flow statement 89 Notes to the Group consolidated financial statements 137 Company balance sheet 138 Company statement of changes in equity 139 Notes to the Company financial statements Other information Movements in revenue and adjusted EBITDA represent the current year figures compared to the 12-month trading 144 Additional information result for the year ended 31 December 2015, which differs from our statutory reported numbers for 2015. A full reconciliation is included in Note 3 to the Group consolidated financial statements. 1 – Adjusted EBITDA is the earnings before interest, taxation, depreciation and amortisation adjusted for exceptional items. A full reconciliation is included at the foot of the Consolidated statement of comprehensive income within the financial statements. 2 – Movement in statutory EPS is impacted by the weighted average number of shares in the comparative period. 3 – Net debt is defined as short and long-term borrowings less cash as at the balance sheet date. Strategic report Governance Financial statements Other information Ibstock plc Annual Report & Accounts 2016 01 Ibstock today Having completed our first full year as a listed business, we are pleased to report that 2016 marked another year of progress for your company: n Profitability improved despite geopolitical events. n Major capital investments were made to support future growth in the UK roofing and brick businesses. n Future financing costs reduced due to the arrangement of new debt facilities. n Continued strong cash generation allowed further debt reduction. n Risk has significantly reduced with the closure of the UK pension scheme. We therefore look forward to the future with optimism from the good foundations laid in 2016. Strategic report Governance Financial statements Other information 02 Ibstock plc Annual Report & Accounts 2016 Group at a glance Ibstock plc is a leading manufacturer of clay bricks and concrete building products with operations in the United Kingdom and the United States. UK Ibstock is the leading manufacturer Ibstock Kevington is the UK’s Forticrete is a leading manufacturer by volume of clay bricks sold in the biggest manufacturer of brick special of concrete substitutes for natural stone UK. With 19 manufacturing plants, shapes and components. The range walling, dressings and concrete roof Ibstock Brick has the largest brick includes prefabricated arches, tiles, with seven manufacturing plants production capacity in the UK. chimneys and wall cladding systems in the UK. Forticrete has invested in a It operates a network of 23 active designed to make using brick quick new concrete roof tile manufacturing quarries which are generally located and easy. plant at its Leighton Buzzard facility, close to its manufacturing plants. which has added c.5% to UK concrete roof tile market capacity. Where our products get used Concrete roof tiles Forticrete Roong accessories Forticrete Faststack Chimney™ Ibstock Kevington XXI Flooring T-Beams XXI Brick engraving Supreme Ibstock Kevington Retaining walls Anderton Copings Forticrete Supreme Concrete fencing products Supreme Concrete Inspection Clay bricks Clay paving Arches Cast Stone Heads, Reconstructed stone walling lintels chambers Ibstock Ibstock Ibstock Kevington Sills and Quoins Forticrete Supreme Supreme Glen-Gery Glen-Gery Glen-Gery Forticrete Glen-Gery Strategic report Governance Financial statements Other information Ibstock plc Annual Report & Accounts 2016 03 North America Supreme is a leading manufacturer of Anderton Concrete is the UK Glen-Gery is a leading manufacturer concrete fencing products, concrete market leader in the supply of lineside of bricks by volume of despatches in lintels and general concrete building cable housing systems for railway and the North East and Mid West regions products, with seven manufacturing infrastructure projects as well as a of the United States, with a network plants in the UK. major supplier of retaining walling, of ten manufacturing plants, ten fencing and structural components distribution centres and 29 active to the wider building industry. quarries, covered by 20 active quarry permits. Operations Key figures UK Group revenue Group revenue Manufacturing plants by subsidiary by end market Speciality brick Other assembly sites Glen-Gery 2% Brick centres 21% Factors Builders’ 19% merchants 51% Supreme 12% Ibstock 58% House builders Forticrete 28% 9% North America Capital Return Cash from expenditure on capital operating on major employed and investing investments activities £44m 19% £54m Strategic report Governance Financial statements Other information 04 Ibstock plc Annual Report & Accounts 2016 Chairman’s Statement I am pleased to report another good set of results, which once again demonstrate the strength of the Group’s business model and the strategy outlined last year. The Group is a family of brands of building products with a diversified range of clay and concrete products. We are a leading manufacturer of clay bricks and concrete products with operations in both the UK and the US. The UK Referendum on EU membership added some uncertainty to the UK market during the year, but we continue to believe firmly in the fundamentals which exist in that market and have maintained our strategy. In 2016, the UK brick business experienced a marginal increase in volumes over the full year after lower first half volumes, primarily as a result of industry‑wide destocking within the builders’ merchant and distributor supply chain. This muted start to UK brick sales helped to emphasise the significant progress made in our concrete businesses whilst the strong performance of our US operations, partially due to the mild weather at the beginning of 2016, further demonstrated that we are much more “I continue to believe than a UK brick manufacturer. that the Group is well prepared to benefit from the continuing demand for new housing.” Strategic report Governance Financial statements Other information Ibstock plc Annual Report & Accounts 2016 05 The market and our strategy Board, corporate Outlook Housing market fundamentals in both governance and our Looking back, the past year proved to of our key geographies remain positive, employees be one of considerable change with the and I continue to believe that the Group I am proud of the great strides we made Referendum on European Union (“EU”) is well prepared to benefit from the during 2016 in establishing robust membership in the UK and Presidential continuing demand for new housing. governance arrangements within the Election in the US. Our businesses navigated these uncertainties very During 2016, the Group has continued Group. In February 2016, we appointed effectively and I am confident that they its strategy of growth through investment Tracey Graham and Lynn Minella to the will continue to do so as the full impacts and product innovation, together with Board. Both joined the Board’s of these major geopolitical events unfold expansion of its existing product portfolios, Remuneration Committee, Audit over the next few years. which have been at the heart of its Committee and Nomination Committee, success over many years. and Lynn became Chair of the Forecasts for our key markets both in Remuneration Committee. In January 2017, UK and US remain positive and we have The construction of our new brick plant Justin Read also joined our Board as a invested in the UK to improve efficiency in Leicestershire continues at pace and Non‑Executive Director. I am delighted to and meet increased demand. The is expected to be commissioned in the welcome all three to the Board. Together fundamentals supporting demand for our second half of 2017, whilst our new roof tile they bring a wealth of experience that will products in UK remain unchanged and manufacturing plant at Leighton Buzzard be of great benefit to Ibstock as we indeed the current government continues became operational in the second half of continue to develop our business. to demonstrate its commitment to delivering 2016 in line with our plans. The addition of two new Non‑Executive increased home building. In the US we Our strategy is discussed in more detail Directors is just one area in which we have sufficient capacity to accommodate on pages 11 to 17. have progressed along our corporate forecast increases in our key markets. governance journey in 2016. I am pleased Following the debt refinancing and UK Our results to present a significantly increased level pension closure projects combined with of compliance with the UK Corporate Revenue for the year ending 31 December positive market fundamentals and the Governance Code for 2016, as described 2016 was £435 million and the profit after strength and depth of our management more fully on pages 40 to 46. taxation for the year was £90 million with teams, I remain confident that Ibstock EPS of 22.3 pence. Our adjusted results Our business is run by an extremely will continue to deliver from the strong saw an adjusted EBITDA of £112 million. experienced management team – Wayne foundations laid in 2016 and I look to Sheppard, Chief Executive Officer and the future with confidence.