Stelrad : Annual Report and Accounts for the year ended 31 December 2022

Stelrad Group plc

Annual Report 2022

Record results
01	Highlights
02	At a glance
underpinned by	04	Our investment case
06	Chair's statement
08	Chief Executive Officer's review
our resilient	10	Market overview
11	Market trends
12	Our business model
business model	14	Our strategy
20	Key performance indicators
22	Stakeholder engagement
26	Sustainability Report
42	Finance and business review
48	Risk management
55	Viability statement and going concern
56	Non-financial information statement

STRATEGIC REPORT

Revenue (pre-IAS 29)	Adjusted operating profit(1)
£312.1m	£34.0m
(2021: £272.3m)	(2021: £33.2m)
Adjusted free cash flow(1)	Adjusted EPS(1)
£17.2m	19.11p
(2021: £21.2m)	(2021: 16.92p)

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 €28.3 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

  (1)

• • Recommended final dividend of 4.72 pence per share, to be paid on 26 May 2023

Adjusted figures are stated before the impact of IAS 29, exceptional items, amortisation of customer relationships and foreign exchange differences and tax thereon where applicable.

GOVERNANCE REPORT

• 57 Chair's introduction to governance

• 58 Board of Directors

• 60 Statement of corporate governance

• 64 Audit & Risk Committee Report

• 68 Nomination Committee Report

• 70 Directors' Remuneration Report

• 84 Directors' Report

FINANCIAL STATEMENTS

• 88 Independent auditors' report to the members of Stelrad Group plc

• 93 Consolidated income statement

• 94 Consolidated statement of comprehensive income

• 95 Consolidated balance sheet

• 96 Consolidated statement of changes in equity

• 97 Consolidated statement of cash flows

• 98 Notes to the consolidated financial statements

• 131 Company balance sheet

• 132 Company statement of changes in equity

• 133 Notes to the Company financial statements

ADDITIONAL INFORMATION 137 Shareholder Information

STRATEGIC REPORT

At a glance

We are a leading radiator manufacturer, helping to heat homes sustainably

Our heat emitters transform people's experience of their worlds

Standard steel panel radiators

Premium steel panel and low surface temperature steel panel radiators

Towel warmers

Decorative steel tubular and column radiators

Electric, hybrid and dual fuel radiators

An important long-term player in the global radiator market

500+ 40+ 1,500+

customers countries people

• • Head office

• • Manufacturing, distribution and sales

• • Distribution warehouse

• • Sales presence

02

1 Head office

Our international presence is significant and growing

Newcastle upon Tyne, UK

• 2 UK Radiators Mexborough, UK

• 3 Continental Radiators Nuth, Netherlands

• 4 Termo Teknik

  Çorlu, Istanbul, Turkey

• 5 DL Radiators Moimacco, Italy

• 6 Hudevad Kolding, Denmark

7 Caradon Polska

Kraków, Poland

Stelrad has well-invested, state-of-the-art manufacturing facilities supported by market-leading distribution centres, designed to provide our customers with high levels of service and product availability wherever they are based and supported by an extensive sales and marketing network. In July 2022, our operational footprint grew, following the acquisition of DL Radiators in Moimacco, Italy (see page 16).

£25.3m

Number1 brand in the Netherlands Henrad is a channel differentiated European brand with a particularly strong presence in the Netherlands, Belgium, the UK and France.

Number 5 brand in Turkey

Sold primarily into Turkey and Eastern European markets, Termo Teknik offers a high quality to cost ratio.

High-end design brand

Hudevad represents the best of Danish design, a favourite brand of architects, interior designers and commercial specifiers.

An ESG strategy fit for the future

Our strategy is aligned with and depends up on the responsible treatment of both stakeholders and the environment. Consistent with our core purpose, helping to heat homes sustainably,

Stelrad's sustainability framework reflects our vision of the significant role we can play in facilitating the transition to a low and zero carbon heating industry.

Fit for the Future comprises two strategic pillars.

The first will focus on reducing our impact on the environment whilst also engaging, educating and influencing others to achieve an effective transition to the heating systems of the future. The second enables our people to contribute positively to delivering our strategy and our sustainability objectives. Fundamental issues such as safety, governance and supply chain management underpin the achievement of these objectives.

Our framework sets out our approach to delivering our business strategy whilst also delivering on our sustainability commitments to stakeholders and the environment.

Advanced technology, Italian innovation DL Radiators is a brand blending style and innovation, employing advanced heat emission technologies suitable for a wide variety of heat sources and heating systems.

FIT FR THE

FUTURE

» Read more in the Sustainability section on page 26

Annual Report 2022 Stelrad Group plc

03