22 March 2021
Ibstock plc ("the Company" or "the Group")
Annual Financial Report
Further to the release of the Company's preliminary results announcement on 10 March 2021 (the "Results Announcement"), the Company announces that it has today published its full Annual Report and Accounts for the year ended 31 December 2020.
The Company also announces that it will be posting copies of the documents listed below to shareholders later today:
2020 Annual Report and Accounts
Notice of Annual General Meeting ("AGM") 2021
The AGM will be held at 11:00am on Thursday 22 April 2021 at the offices of Ibstock plc, 54 Hatton Garden, London EC1N 8HN.
A copy of each of these documents will be submitted to the UK Listing Authority via the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The 2020 Annual Report and Accounts and Notice of Annual General Meeting 2021 will also be accessible later today via the Company's website at www.ibstockplc.co.uk/investor-relations
Regretfully, the current issues surrounding COVID-19 and the public health guidance in the UK have meant that we have taken the decision to discourage shareholders from attending the AGM in person, but we will be providing details on our website of a webcast so shareholders are able to observe proceedings. For the avoidance of doubt this approach does not impact shareholders' ability to vote on the resolutions being proposed and information regarding the voting procedure can be found in the Notice of AGM. Any changes to the AGM (including any change to the location) will be communicated to shareholders before the meeting through our website and, where appropriate, by RNS announcement.
The Appendix to this announcement is a supplement to the Results Announcement and should be read together with the Results Announcement. It contains the information required, pursuant to DTR 6.3.5, to be communicated to the media in unedited full text that is in addition to the information communicated in the Results Announcement. This announcement is not a substitute for reading the full Annual Report and Accounts. Page numbers and cross references in the text below refer to page numbers and cross references in the Annual Report and Accounts 2020.
Principal risks and uncertainties
The Group may not deliver upon its
sustainability commitments and those targets set out in the Sustainability Roadmap.
An inability to manage energy demand needs within our sustainability targets or changes in consumer demand may reduce our competitive advantage.
Failure to respond to climate change risks may also result in reductions in investor interest and support.
As a business engaged in the extraction of
natural resources and the manufacture of
concrete products, there is a risk that the
Group's operations are targeted by
environmental activists. This could result in disruption at one or more of the Group's
manufacturing facilities inhibiting the ability to manufacture or despatch product or receive supplies.
The impact of climate change and
Government's response to this could also lead to changes to laws and regulations that could
require that the Group make significant
capital investments or otherwise increase its
costs or could result in material liabilities.
The global increase in focus on corporate
social responsibility following the pandemic
has greatly raised the profile of the Group's
approach and success with its sustainability
programme. The approach taken by the
Group when dealing with all its stakeholders
will be placed under increased scrutiny in the
wake of the current crisis and beyond.
We recognise the importance of being a sustainable business and that climate change affects natural and economic systems, and recognise their implications in all we do.
As a business, there are a number of International and British standards operated throughout our businesses which include environmental, energy, responsible sourcing and quality. These provide a consistent set of
The Group aims to provide visibility and assurance to our stakeholders through our disclosure in relation to sustainability (see pages 36 to 45), which is supported by continued investment to improve the sustainability of our operations and internal sustainability KPIs to track measures. A new KPI centred on carbon reduction has been introduced for the FY 2020 and is an additional measure for our LTIP.
The Group has a proven record of investment in the latest systems, plant, machinery and technology and we continue to address the need for enabling conditions to address climate change concerns through the development of our Sustainability Roadmap 2025.
The Group Technical team and Group Engineering function are investing in longer-term strategic supplier partnerships in order to deliver longer-term sustainable products to our customers.
We operate proactive management of the sustainability descriptions associated with the Group's products. Physical security measures are in place at the Group's production facilities, together with real-time monitoring of social media to identify threats of environmental activism.
The introduction of a new ESG Committee will provide clear and strategic oversight of the Group's sustainability strategy. It will provide the basis to ensure that all existing
The Group will continually keep under review the level of resourcing and structure in place to manage sustainability within the business.
A material disruption, including those caused
The Group depends on efficient and
Additionally, the Group is exposed to the
The Group has the ability to transfer some of its production across its network of plants and is able to engage subcontractors to reduce the impact of certain production disruptions. Groupwide business continuity plans are being refreshed and improved to take account of those learnings coming from the COVID-19 pandemic.
In relation to supplier disruption or failure, further third party suppliers have been identified who can maintain service in
Management does not underestimate the potential impact that future prolonged periods of bad weather could have. Weather conditions are beyond the Group's
The Group maintains appropriate business interruption insurance, whilst its wide geographical spread mitigates this
The Group's business could be materially
Continued uncertainty around the progress of
In addition, should negative impacts on
Wider macroeconomic conditions are largely beyond the control of the Group. However, the Group seeks to analyse construction data using independent forecasts of construction statistics and forecasts of future demand based on stated customer requirements with
The Group has historically flexed capacity and its cost base where possible during economic downturns to allow more of the Group's manufacturing plants to remain open and viable, maintaining skills, development and training. Actions taken during the year in order to reduce the ongoing fixed cost footprint of the Group through an organisational review and restructuring will provide flexibility for the business so that it can meet future demand levels in a cost-effective way.
Ibstock ensures that its fulfilment and customer service capabilities to support and serve customers are maintained and actively engage with industry bodies to ensure the promotion of housebuilding and construction, whilst seeking to promote the differentiating qualities of our business in the core
The Group's RMI and specification product ranges diversify end-use exposure and provide greater resilience in light of changing market demand in any of its end-use markets
Anticipating the market and new product development
There is a risk that the business is not able to
Failure to be at the forefront of innovation as the Group's markets evolve may lead to a loss in market position or customers resulting in declining revenue or margins.
A lack of new product development and failure to optimise our supply chain to support our customers may also be detrimental to the
Consideration of relevant market data and trends in the divisions highlights emerging risks as soon as they are identified, providing the leadership teams with the information required to make considered and fact based decisions.
Financial risk management
In addition to the input cost risks outlined, the
Foreign exchange risk: As the Group transacts in currencies other than Sterling, exchange rate fluctuations may adversely impact the Group's results.
Interest rate risk: Movements in interest rates
The impacts of COVID-19 and the adoption
Foreign exchange risk: The Group undertakes limited foreign exchange transactions selling domestically with largely local input costs. Some capital expenditure requires foreign exchange purchases and management
Credit risk: Customer credit risk is managed by each subsidiary subject to the Group's policy relating to customer credit risk management. The Group principally manages credit risk through management of customer credit limits. The credit limits are set for each customer based on the creditworthiness of the customer and the anticipated levels of business activity.
Liquidity risk: The Group's policy is to ensure that it has sufficient funding and facilities in place to meet any foreseeable peak in borrowing requirements and liabilities
Government regulation and standards relating to the manufacture and use of building products
The Group's production, manufacturing and
Greater regulation following the Grenfell tragedy has increased the risk that the Group's failure to comply with the relevant regulations would result in the Group being liable to fines or a suspension of operations, which would impact the Group's financial results, together with any associated negative reputational damage.
Additional regulation and responsibilities as
The Group monitors the law across its markets to ensure the effects of changes are minimised and the Group complies with all applicable laws. The Group aligns Company-wide policies and procedures accordingly with training on mandatory topics and compliance requirements undertaken.
The health and wellbeing of our employees is fundamental to our business. We have stringent health and safety policies and monitor compliance regularly through internal and external auditing activity. This has been particularly important in light of COVID-19.
We reorganised the management of the health and safety function to provide more coordinated, central oversight to ensure alignment and consistency throughout the business.
We have also invested considerable resources in employee training across our manufacturing processes. We have invested heavily in safe systems and facilities to protect our employees. These activities have continued virtually, where possible, as a result of COVID-19.
Customer relationships and reputation
The Group receives a significant portion of its
Further, the Group does not have long-term contracts with its customers and the Group's revenue could be reduced if its customers switch some or all of their business with the Group to other suppliers or if we are unable to leverage our customer
The Group has a service-led ethos with many top customer relationships lasting over 40 years. The Group differentiates itself through the continued quality of its products and service levels with Net Promoter Score (NPS)
The Group's sales and production teams are highly integrated to ensure that production aligns with customers' needs. Sales teams receive in-depth technical training and are assisted by a design support service team as well as targeted marketing materials to assist with specification and selection.
Access to 145 million tonnes of clay reserves, Ibstock Clay's primary raw material, ensures an ability to satisfy customer demand.
Recruitment and retention of key personnel
The Group is dependent on qualified
Focused action plans are in place as a result of the 'Great place to work' employee engagement survey aimed at further building on employee satisfaction.
Improved methods of communication such as My Ibstock and a focus on employee well being will help
Investment in our people through training and
The Group believes that it is essential to support and develop the management team, where appropriate, ensuring that the team is structured in a way which best
Apprenticeship schemes are in operation with a yearly intake across the business (engineering and technical based). High potential individuals are identified with
The Group's business may be affected by
The Group's business may also be affected by
Significant input costs are under constant review, with continuous monitoring of raw material costs, energy prices and haulage expenses, with the aim of achieving the best possible prices and assuring stability of supply.
With regard to possible energy shortages, the Group operates forward purchasing to mitigate the impact of sudden price increases and monitors the carbon market
The nature of the Group's business may
Ensuring accuracy of the Group's product data
Any damage to the Group's brands, including
Focus on detailed product information has intensified, with the Group's customers demanding greater information regarding the product specifics.
The Group operates comprehensive quality control procedures across its sites with both internal and external audit reviews of product quality completed to ensure conformance with internationally recognised standards.
All accredited staff undergo rigorous training
High-profile attacks on companies across a
Such IT security risks have the ability to significantly disrupt the Group's business, resulting in financial loss. Potential penalties could arise from the loss of data as a result of breaches to the Group's IT security or
Changes in employees' working patterns
The Group is committed to ensure that its network, applications and data are protected.
The Group has completed a review using an external cyber security programme framework, which provides coverage across the key areas of cyber security and aligns with industry standards. This has culminated in the Group's achievement of the UK Government's Cyber Essentials accreditation, which is subject to independent audit annually.
Despite the pace of the change introduced when lockdown commenced in March, all equipment deployed was built to be image compliant with Ibstock policies and standards. In addition, the fast track introduction of new industry leading VPN services to handle the extended homeworking user community, the use of new applications such as Microsoft Teams/OneDrive to enable virtual meetings and collaboration and the disablement of existing vulnerable applications and processes ensure the business could and is expected to continue to operate effectively in the 'new normal'.
Directors' Responsibility Statement
The Directors, whose names and functions are given on pages 68 and 69 of the 2020 Annual Report and Accounts confirm that to the best of their knowledge:
- the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and Company and the undertakings included in the consolidation
taken as a whole;
- the Strategic Report and Directors' Report include a fair review of the development and performance of the business and the position of the Group and Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
The Directors consider that the Annual Report and Accounts taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's position and performance, business and strategy.
Nick Giles, Group Company Secretary
About Ibstock Plc
Ibstock plc is a leading UK manufacturer of clay bricks and a diversified range of clay and concrete products. Its principal products are clay bricks, brick components, concrete roof tiles, concrete substitutes for stone masonry, concrete fencing and pre ‐ stressed concrete products.
The Group's two divisions are:
Ibstock Clay: The leading manufacturer by volume of clay bricks sold in the United Kingdom. With 16 manufacturing sites Ibstock Brick has the largest brick production capacity in the United Kingdom. It operates a network of 18 active quarries located close to its manufacturing plants. Ibstock Kevington provides masonry and pre-fabricated component building solutions, operating from 6 sites across the United Kingdom.
Ibstock Concrete: A leading manufacturer of concrete roofing, walling, flooring and fencing products, along with lintels and general concrete building products, with 14 manufacturing plants in the United Kingdom.