Stelrad Group plc
Annual Report 2022
Leading with
Delivering on
Stelrad Group plc Annual Report 2022
OUR CORE PURPOSE
Helping to heat
Read more on page 27
UNDERPINNING FOUNDATIONS
Read more on page 36
STRATEGIC PILLAR
environmental
performance
Read more on page 30
STRATEGIC PILLAR
exceptional
workforce
Read more on page 34
STRATEGIC REPORT
Highlights
At a glance
Our investment case
Chair’s statement
Market trends
Our business model
Our strategy
Key performance indicators
Stakeholder engagement
Sustainability Report
Risk management
Viability statement and going concern
GOVERNANCE REPORT
Chair’s introduction to governance
Board of Directors
Statement of corporate governance
Audit & Risk Committee Report
Nomination Committee Report
Directors’ Remuneration Report
Directors’ Report
FINANCIAL STATEMENTS
Independent auditors’ report to the
members of Stelrad Group plc
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated balance sheet
Consolidated statement of
Notes to the consolidated
Company balance sheet
Company statement of changes
Notes to the Company
ADDITIONAL INFORMATION
Shareholder Information
Financial and operational highlights
• Record Group financial performance as a result of Stelrad’s resilient
business model
–
–
–
•
• Improved performance underpinned by proactive margin
management and operational improvements across the business
•
•
•
availability and customer service and product innovation
•
Revenue (pre-IAS 29)
£312.1m
(2021: £272.3m)
Adjusted operating profit
(1)
£34.0m
(2021: £33.2m)
Adjusted free cash flow
(1)
£17.2m
(2021: £21.2m)
Adjusted EPS
(1)
19.11p
(2021: 16.92p)
amortisation of customer relationships and foreign exchange differences
Record results
underpinned by
stelradplc.com
STRATEGIC REPORT
Stelrad Group plc
At a glance
We are a leading radiator
Our heat emitters transform people’s experience of their worlds
Standard steel
panel radiators
Premium steel panel
temperature steel
panel radiators
Decorative steel tubular
and column radiators
dual fuel radiators
An important long-term player in the global radiator market
UK & Ireland
£138.9m
Europe
£147.9m
Turkey & International
£25.3m
Our international
presence is significant
and growing
state-of-the-art manufacturing
facilities supported by
market-leading distribution
levels of service and product
based and supported by an
extensive sales and marketing
• Head office
•
distribution and sales
•
• Sales presence
Head office
1
UK Radiators
2
Continental Radiators
3
DL Radiators
5
Termo Teknik
4
1
2
3
6
5
7
4
500+
customers
40+
countries
1,500+
people
Hudevad
6
Caradon Polska
7
Revenue (pre-IAS 29)
Stelrad Group plc
Five strong brands
Europe’s number 1 brand
Number 1 brand in the Netherlands
Henrad is a channel differentiated European
Number 5 brand in Turkey
Sold primarily into Turkey and Eastern European
cost ratio.
High-end design brand
and commercial specifiers.
FIT F R THE
FUTURE
the responsible treatment of both stakeholders
helping to heat homes sustainably
influencing others to achieve an effective transition
to the heating systems of the future. The second
and supply chain management underpin the
sustainability commitments to stakeholders and
Advanced technology, Italian innovation
sources and heating systems. Read more in the Sustainability section on page 26
STRATEGIC REPORT
Stelrad Group plc
Our investment case
Leveraging our business
strengths and delivering
on our strategy
Leading market position
A long-term player of scale in steel panel radiators
•
• Providing cost leadership and unrivalled production flexibility
from a multisite manufacturing and logistics platform
No.1
market share position in the UK, Ireland, the Netherlands,
Belgium and Denmark in 2021, with a top 3 position in twelve
countries in total
Read more about our markets on page 10
us to leverage our scale and robust business model to achieve
Trevor Harvey
Robust business model
Attractive long-term dynamics led by replacement demand
in mature European markets
• Proven financial resilience to external shocks through
macroeconomic climate
• Increasingly broad geographic spread and an underlying
40.1%
organic volume growth in higher added-value
Read more about our business model on page 12
Stelrad Group plc
Experienced management
A lean, customer-orientated leadership team with unparalleled
sector experience
•
innovation and customer service
• Effective channel management driven by a multibrand
to evolving channels to market
500+
customers in 40 countries
Read more about our strategy on page 14
Read more about our Board of Directors on pages 58 and 59
Long-term focus on
decarbonisation and ESG
Our Fit for the Future sustainability framework positions Stelrad
effectively for the transition to low and zero carbon home heating
over the coming decades
• Anticipated pan-European legislation relating to the heating
of buildings and the reduction in fossil fuel use is expected to
•
sector transformation to a more sustainable heating model
61.2%
reduction in Scope 1 and Scope 2 carbon emissions
Read more about our ESG priorities on page 27
A track record of consistent growth
• Sector leading margins
• Strong cash generation and return on capital employed
11.1% CAGR
sales growth between 2018 and 2022
Read more about our KPIs on page 20
STRATEGIC REPORT
Page title
Stelrad Group plc
Chair’s statement
Dear shareholders,
Stelrad has continued to make strong progress. Although
an unpredictable trading environment and significant
level. This underlines the resilience of our business model
Performance and results
to demonstrate high levels of resilience despite the difficult
inflationary pressures.
Record results are
underpinned by our
Stelrad made the strategic
despite facing a challenging
macroeconomic climate.
Bob Ellis
Chair
Stelrad Group plc
Dividend
Purpose
achieving our purpose: helping to heat homes sustainably.
The Group has an important role to play in facilitating the
influencing specification and supplying products able to
Strategy
Stelrad’s clear commercial and operational strategies
positioning effectively for decarbonisation.
overall product mix. Increased access to channels and
territories continues to build the Group’s distribution footprint
products effectively complements Stelrad’s expanding
heating systems.
Environmental, social and governance
employee engagement are central to Stelrad Group’s values
impact of all our business operations.
long-term success depends on the responsible treatment
of all our stakeholders and the natural environment. Fit for
and focuses on the most material issues for Stelrad and
supported by three strategic components. Driving better
environmental performance focuses on reducing our
and influence others in the value chain in order to achieve
Enabling
an exceptional workforce is intended to help our people
contribute positively to the realisation of our goals.
Conducting business responsibly represents the structural
chain management and exceptional safety standards.
Board
The Board expanded significantly in advance of our listing
practice in our corporate governance. The future focus of
stakeholders over the coming years.
Governance
The Group remains committed to high levels of corporate
Corporate Governance Code is set out in the Governance
Report on page 57.
Summary
approach positions the Group effectively to benefit from
market recovery over the medium term.
access to additional territories and channels to market and
of the future. This provides a significant opportunity to
maximise the clear synergies that exist across our portfolio
.
Bob Ellis
Chair
STRATEGIC REPORT
Stelrad Group plc
Overview
delivering a record year despite testing trading conditions.
cost inflation. In order to mitigate the effects for our stakeholders
the Group has effectively managed these input cost risks
our Fit for the Future
build upon our robust existing practices and to formalise a
more effectively positioned than ever for future success.
Leveraging our business
strengths, delivering on
our strategy
to the resilience of our business
the strength of our product
relationships and our relentless
approach to operational
improvements across
the business.
Trevor Harvey
Stelrad Group plc
Strong financial performance
Our flexible manufacturing footprint continues to provide us
decrease in China.
combined to halt and reverse the post-pandemic recovery
The impact of this challenging macroeconomic environment
spending and stock levels throughout the distribution channel
increased in anticipation of a sustained period of recovery.
premium steel panel radiators remained around 6% overall.
channels. The European market for premium steel panel
remain excited by the opportunity to substantially increase
UK premium steel panel volumes in the future.
Continued investment for the future
supply chain to minimise any impact on our customers and
scaling production output appropriately for reduced levels
ongoing improvements in customer service across the Group.
Investment in our facilities continues to drive improvements
942
Outlook
market and positioning the business for decarbonisation.
half of the year being stronger than the first.
Russian invasion of Ukraine continue to stimulate increased
aim to fulfil our purpose: helping to heat homes sustainably.
heat emitters remain supportive macro trends underpinning
the broader outlook for the business.
outperformance despite the challenging macroeconomic
Trevor Harvey
13 March 2023
STRATEGIC REPORT
Stelrad Group plc
Scale in steel panel radiators,
low-cost manufacturing operations
platform are at the heart of
Stelrad’s continuing success
Residential heating
systems by type
Hydronic heat emitters
by type
Steel panel radiator
demand drivers
Stelrad operates across three core geographies
UK & Ireland
52%
market share in 2021
The UK & Ireland represented 45% of
maintaining clear market leadership in
Europe
11%
market share in 2021
European sales represented 47%
market leader in its long-established
core markets of Belgium and the
Turkey & International
7%
market share in 2021
5 position in both the Turkish and
Chinese markets.
Read more in our associated strategy in action
on page 18
80%
hydronic
radiators
60%
steel panel
radiators
61%
replacement
and first time
installation
Stelrad Group plc
Our strategy aligns with
underlying market trends
Historical market stability impacted by
short-term macroeconomic headwinds
Increasing adoption of
A positive outlook for radiators in
decarbonised heating systems
shocks resulting from Russia’s invasion of Ukraine and high
particularly in the private residential replacement sector.
annualisation of these macro effects eases and underlying
demand recovers.
Our opportunity
these short-term challenges and to profit from healthy
longer-term fundamentals. There is a clear opportunity to
act as a natural consolidator and to increase our market
share in select geographies as smaller competitors exit
The longer-term fundamentals for premium steel panel
short-term effects of the challenging macroeconomic
trend is expected to continue once consumer confidence
and disposable income recover.
Our opportunity
Stelrad has the most extensive range of premium steel
types to the Group’s manufactured design radiator
market in our key countries of operation.
construction is the secondary volume driver and despite
including the UK.
Our opportunity
through our traditional trade distribution outlets and
Stelrad to leverage its leading trade brands across all market
sectors. Although residential construction is expected to
cost electricity and electricity prices become increasingly
decoupled from fossil fuel energy sources.
Our opportunity
Stelrad is a trusted adviser to specifiers and has a clear
opportunity to engage and educate to influence the
leading logistics capabilities.
Read more on page 14
Read more on page 15 Read more on page 14
Read more on page 15
Link to strategy Growing market share
Link to strategy Improving product mix
Link to strategy Optimising routes to market
Link to strategy Positioning effectively for decarbonisation
1
2
3
4
Market trends
STRATEGIC REPORT
Stelrad Group plc
Our business model
Stelrad’s robust business model
drives sustainable long-term
value for our stakeholders
ESG fit for the future
Brand strength
Stelrad is the number one steel panel radiator brand across
routes to market. This maximises access to specifiers in all
segments and optimises channels to market.
Product availability
largest radiator distribution centres in the UK and mainland
units. Our customers are further supported by additional
regional distribution hubs.
Range innovation
Stelrad pioneered premium steel panel and vertical steel
Standardised core design
The Group’s core steel panel radiator design is used in all
standard and premium steel panel ranges produced in the
People
the most stable and experienced senior management
International network
Brands
brand. Completing our portfolio is the Hudevad Danish
specification and high-end residential sectors.
Operational assets
focused on manufacturing automation and logistics
operational platform.
Fit for the Future
centred around our core purpose: helping to heat
homes sustainably. Stelrad has a significant role
Driving better environmental performance
focused on reducing both the direct and indirect
environmental impacts of our products and on
helping to drive the decarbonisation of heating.
suitable products as part of a coherent offering for
What makes us differentOur resources
Read more on page 27
Stelrad Group plc
ESG fit for the future
Customers
People
provide a desirable long-term career environment.
Investors
investors by making Stelrad a better business year on year:
striving for cost leadership and harnessing the skills and
commitment of our people.
Suppliers
and to maximise long-term value for our investors.
Communities and the environment
Stelrad plays an important role in the life of the communities
positively and striving to minimise our impact on the
Enabling an exceptional workforce
Our people are fundamental to the success of our
programme to ensure our employees’ voices
continue to be heard.
Conducting business responsibly
Nothing is more important than keeping our
people safe and healthy and conducting ourselves
embedded a positive safety culture and effective
our programme of manufacturing investment
our approach to business is guided by a strong set
Driving better environmental performance is central to
Shared valueHow we create value
Package
Design and
innovate
Recycle
and reuse
ManufactureDistribute
Source
Engage,
educate and
influence
Formulate
strategy
STRATEGIC REPORT
Stelrad Group plc
Our strategy
Four key objectives are at the
heart of Stelrad’s strategy
Growing
market share
Links to risks
Links to risks
Improving
product mix
Strive for cost leadership
Now
programme of investment for cost leadership resulted in the upgrade of
Future
higher cost competitors exit the market.
Provide market-leading product availability
Now Standardised core design across three facilities enables
production planning flexibility. Our market-leading UK and
European distribution centres are supported by dedicated inventory
best-in-class logistics offer.
Future
steel panel and other design radiators in order to expand the market
Selectively target share growth in key
geographic markets
Now
position in seven more. Important share gains continue to be made
in France and Scandinavia.
Future
provides a clear opportunity to leverage our strong brands in our key
geographies to gain share beyond the steel panel radiator category.
Act as a market consolidator
Now
Future
business gains or competitor exits.
Read more in our associated strategy in action on page 18
Accelerate upselling to premium
Now
Group's profitability.
Future
leveraging Stelrad’s brand strength and
market leadership position in key geographies
Pursue complementary acquisition
opportunities
Now
Future There are opportunities to develop
Read more in our associated strategy in action
on page 16
1 4 72 5 8 93 6 1 42 53 6
Stelrad Group plc
Risk key
Business disruption
1
Reliance on key customers
2
Loss of competitive advantage
3
IT failure or cyber breach
5
Political and economic
environment
8
Climate change
9
Supply chain risk
4
People and culture
6
Health and safety
7
Links to risks Links to risks
Optimising routes
to market
Positioning effectively
for decarbonisation
Adapt quickly to channel evolution
Now Stelrad continues to manage changes in channel
clearly demonstrating the benefits of our longstanding
Future
in our brands to position them appropriately to maximise
Radiators increases Stelrad’s penetration of the DIY and
retail channel and notably expands the Group’s presence
European market.
Embrace digital transformation
Now
architects and consultant engineers. Online sales to the
UK private residential replacement market continue to
develop positively despite this sector having been strongly
Future
and online presence to ensure the continuing strength
to market.
Maximise sales of products compatible with
low-temperature systems
Now The full impact of heating system decarbonisation
cycles and the significant numbers of radiators already
continue to expand our portfolio of higher output heat
be more fragmented in terms of heat source technology.
Future
emitters in addition to existing high output steel panel
core markets through our comprehensive sales and
sustainably through optimising heat emitter selection
heat source.
Leverage our market position to unlock
Now
operational infrastructure position the Group to play a
pivotal role in the development of European heating
distribution channels as decarbonisation initiatives gain
momentum over the coming decade.
Future
further diversification into complementary heat emitters
and into other product areas relating to the long-term
decarbonisation of home heating.
1 42 53 6 1 63 8 94
STRATEGIC REPORT
Stelrad Group plc
Strategy in action
DL Radiators is a well-established, well-invested
• Based in Moimacco, near
Udine, Italy
• Manufactures steel panel, steel
column, aluminium, decorative
steel tubular and towel warmer
radiators, with a 2021 volume
of c.1 million units
• Employs approximately
350 people
• Experienced management team
• Generates 17% of its electricity
requirement through
solar energy
• 2021 revenue of €86.9 million
The acquisition of leading
Italian manufacturer
aligned with Stelrad’s key
strategic objectives
c.60%
of sales are in higher added-value design ranges
c.90%
DL Radiators is an extremely
complementary acquisition
Stelrad Group plc
The acquisition of DL Radiators delivers against
all four of Stelrad Group’s strategic objectives
Growing market share
geographic markets through
market consolidation
Improving product mix
of higher added-value
heat emitter types and
upselling opportunities
through existing Stelrad
Group channels
Optimising routes to market
Increases access to key
channels and
routes to market
Positioning effectively
for decarbonisation
Extends Stelrad’s offer for
compatible products and
provides an electric range
suitable for decarbonised
heating systems
through higher added-value designs and a
Trevor Harvey
STRATEGIC REPORT
Stelrad Group plc
Strategy in action
Growing market share
Stelrad made important gains in market share and
foundation to meet future market challenges.
UK
#1
Market
position
Stelrad’s leadership position in
Europe’s largest single steel panel
radiator market.
Expansion of our distribution base has
Belgium
#1
Market
position
UK market share
52.1%
52.1
50.2
49.7
Belgium market share
38.2%
38.2
33.5
31.1
Netherlands
#1
Market
position
Netherlands market share
45.8%
45.8
39.4
37.3
Stelrad is outperforming its peer group
Of the top five players in the European steel panel radiator
experienced share decline.
Holding a significant market-leading UK share position
According to the latest available steel panel market data for
important markets.
to be challenging for European market leadership from
Stelrad Group plc
Stelrad moved from number 5 position
Sweden
#2
Market
position
Sweden market share
18.2%
18.2
6.0
5.3
Stelrad had previously identified France
France
#2
Market
position
France market share
26.4%
26.4
19.8
14.9
Denmark
#1
Market
position
Denmark market share
42.6%
42.6
37.5
21.2
countries of operation positioned Stelrad Group positively
Trevor Harvey
STRATEGIC REPORT
Stelrad Group plc
Key performance indicators
Management considers
and the Directors believe
that each of these
measures provides
respect to the Group’s
business and operations.
These are non-IFRS
Revenue (pre-IAS 29)
£312.1m
Adjusted operating profit
£34.0m
312.1 34.0
272.3 33.2
Description
The Group generates revenue from
three operating segments: the UK
International. Revenue arises from the
sale of products to consumers and
represents the gross invoiced sales less
credit notes and rebates.
Performance
selling price increases implemented in
a decrease in sales volumes. Steel price
volatility continued in the first half of
throughout the period to recover steel
and other inflationary cost increases.
Description
performance from operations.
Performance
contribution per radiator and the
offset by a decrease in sales volumes.
Measuring and analysing
Links to strategy Links to strategy1 12 23 34 4
Strategy key
Growing market share
Improving product mix
Optimising routes to market
Positioning effectively for
decarbonisation
1
2
3
4
Links to strategy
Adjusted EPS
19.11p
19.11
16.92
Description
the year of the Group per share in issue.
Performance
operating profit and reduced interest
not recur.
1 2 3 4Links to strategy
Adjusted free cash flow
£17.2m
17.2
21.2
Description
available to service debt and make
distributions to shareholders.
Performance
Italian site.
1 2 3 4
196.6 15.6
4.44
16.4
Stelrad Group plc
Total radiator
volumes sold
5,404k units
Total premium panel
304k units
304
346
Description
The sales volumes of premium panel
radiators sold across all geographical
segments in the reporting period.
Premium panel radiators include
vertical radiators and are differentiated
from standard steel panel radiators by
their design.
Performance
due to a decline in overall volumes.
5,404
5,952
Description
The sales volumes of radiators across
all geographical segments in the
reporting period.
Performance
global macroeconomic uncertainty
improvement activity.
Glossary of terms
Adjusted cash flow from operations:
Adjusted cash flow from operations
conversion: calculated by dividing
Adjusted EPS:
average number of shares in issue.
Adjusted free cash flow:
received less tax paid.
Adjusted operating profit: operating
foreign exchange differences and the
Adjusted profit for the year: earnings
Business capital employed: the sum
trade and other payables and other
current financial liabilities.
CAGR:
Contribution: revenue from sale of the
Group’s products less any cost of direct
and other variable costs.
EBITDA:
Return on capital employed:
operating profit as a percentage of
business capital employed.
RMI:
improvement activities.
Links to strategy
Contribution
per radiator (pre-IAS 29)
£16.01
16.01
13.74
Description
The value of contribution generated per
radiator sold.
Performance
Contribution per radiator has
offset by the impact of steel and other
inflationary price rises.
2 4
Links to strategy
Return on capital employed
27.2%
27.2
46.5
Description
operating profit as a percentage of
business capital employed.
Performance
Return on capital employed reduced in
1 2 3 4
Links to strategy Links to strategy1 23
300
4,969
13.19
21.0
We are committed to engaging
our stakeholders in all aspects
of our strategic vision
STRATEGIC REPORT
Stelrad Group plc
to promote the long-term success of the Group and
the importance of the communities and environment in
its stakeholders seriously in setting and implementing
the Group strategy and believes that good stakeholder
engagement is key to the long-term success of Stelrad
Group plc. Stakeholder considerations also form part of
Each year the Group undertakes a detailed business
success of the Group for all stakeholders. The Board
the Group to explore various alternatives and the likely
The remainder of this section of the Annual Report sets
delivery of our plan.
Read more in our Corporate Governance Report on page 57
Stakeholder engagement
Board discussion
•
including the long-term impacts on
•
decision making
• The Board satisfies itself that
accurate and comprehensive to
• The Executive team provides
information on a timely basis and
Board information
•
• Board papers including financial
and non-financial information
• Advice and presentations by
internal and external experts
•
key stakeholders
Board review
•
information on outcomes
and actions of its decisions
Board decision
• Actions are taken to implement
the Board’s decisions
1
4
2
3
Decision making by the Board Section 172 statement
Stelrad Group plc
People
Why we engage
Our people are fundamental to delivering
our strategy and driving the future
a responsible employer and an attractive
colleagues are an important input in the
part of our decision-making process.
unions and employee representatives.
Through a combination of these
engagement approach is effective and
appropriate for the Group.
for ensuring that employee engagement
need for alternative methods of engagement.
How we engage
• Regular access to and provision of training and development
•
•
•
• Annual Report
• Employee surveys
• Board member visits to sites
• Code of Conduct
•
Outcomes
• Communication of relevant and timely information
•
higher retention rates
• Development and improvement of skills throughout
•
•
Code of Conduct
• High standards of health and
Read more about our workforce in our Sustainability Report on page 34
People Customers Suppliers Investors Communities and
the environment
Our stakeholders
STRATEGIC REPORT
Stelrad Group plc
Stakeholder engagement continued
Customers
Suppliers
Why we engage
and high standards of business conduct
are critical to our Group’s performance.
strengthen these key relationships
How we engage
• Management of ongoing customer relationships
• Customer events and product launches
•
•
• Annual Report
•
heating systems
•
Outcomes
• Continued customer satisfaction and loyalty
• Establishment of long-term partnerships
• Successful and mutually beneficial product development
Why we engage
Our suppliers are intrinsic to the
performance of our business. Maintaining
a fully integrated supply chain means
undertake sustainability initiatives.
How we engage
• Ongoing supplier performance and relationship
building meetings
•
•
innovative solutions in a collaborative manner
• Collaboration as appropriate on product development
•
• Timely payment of suppliers
• Annual Report
Outcomes
•
•
• Fair payment terms
• Support of our ESG initiatives
Stelrad Group plc
Communities and the environment
Investors
Why we engage
The Group's ESG strategy is key to ensuring
The Group has clear ESG initiatives in each
make a positive impact in the communities
impact it has on the environment and this
is a critical part of our decision-making and
business planning process.
How we engage
• Community investment initiatives
• Sponsorship and employee volunteering
•
national initiatives
•
businesses to identify and support the delivery of
educational and vocational initiatives
• Participation in initiatives to help reduce environmental
impact of our business
•
heating systems
Outcomes
• Support and development of local educational institutions
•
charitable events and fundraising
• Cleaner and friendlier areas for the local communities
•
Read more about our environmental performance in our
Why we engage
strategy and sustainability initiatives is
key to ensuring that they are engaged in
the business and motivated to support
future investment opportunities that may
arise. Continued investor engagement is
and understandable information about the
business to enable informed investment
decisions to be made.
How we engage
• Annual Report
• Annual General Meeting
•
• Results presentations and post-results engagement
•
results announcements
•
our corporate brokers
•
communicating to investors
Outcomes
• Maximising demand for the Group’s shares
• Support for investment opportunities including potential
Establishing the foundations
for sustainability
Introduction to our
Sustainability Report
at Stelrad this year. Using our findings from a stakeholder
stakeholders and our business. This is enabling us to target
future actions to support our sustainability priorities and our
core purpose of helping to heat homes sustainably.
Highlights of 2022
•
•
•
•
• Our manufacturing site in the Netherlands gained
Next steps for 2023
•
setting of targets
•
include all business units
•
•
• Roll-out of supplier audit process to all business units
Trevor Harvey
Chief Executive Officer
sustainability steering group made up of senior managers
group is responsible for driving our sustainability actions
across Stelrad and helping us achieve our longer-term
sustainability goals.
by conducting supplier audits and expanded our methods
of collecting feedback from our employees. Each of these
development of an expanded set of sustainability metrics
This year hasn’t only been about developing the foundations
on reducing the impacts of our energy usage. A particular
reduced production volumes. Our goal is to decouple our
carbon intensity.
This year has also been characterised by a challenging
economic environment for our employees. In response to
the pressures of the rising cost of living and hyperinflation
actions are useful examples of our culture in practice: acting
The number of lost time incidents and the total number of
conditions and near misses. I am hopeful that these actions
Trevor Harvey
13 March 2023
STRATEGIC REPORT
Stelrad Group plc
Sustainability Report
Stelrad Group plc
Our commitment to sustainability
responsible treatment of all stakeholders and the
Focusing on the material issues for Stelrad and its
is centred around our core purpose: helping to heat homes
sustainably
heating industry.
commitments to stakeholders and the environment. Fit for
educating and influencing others throughout the value chain
FIT F R THE
FUTURE
OUR CORE PURPOSE
Helping to heat
UNDERPINNING FOUNDATIONS
Conducting business
responsibly
Read more on page 36
STRATEGIC PILLAR
Driving better
environmental
performance
Read more on page 30
STRATEGIC PILLAR
Enabling an
exceptional
Read more on page 34
STRATEGIC REPORT
Stelrad Group plc
Sustainability Report continued
Our commitment to
sustainability continued
Materiality
and the potential impact it could have on our business. This
the greatest level of importance and focus. These material
issues are the ones specifically addressed through our Fit for
of focus. This contributed to an evolution rather than a
comprehensive redesign of our sustainability approach.
Material issues
Driving better
environmental
performance
1
Decarbonisation of heating
2
3
Greenhouse gas emissions
4
Product innovation
5
Energy management
6
Product packaging impacts
Enabling an
exceptional
workforce
7
Employment and skills
8
Diversity and inclusion
9
Conducting
business
responsibly
10
Anti-bribery and corruption
11
12
Supply chain human rights
Materiality matrix
Exposure/impact on the business
High
Significance to stakeholders
Alignment with the UN Sustainable Development Goals
Through our sustainability work, we are supporting several of the Sustainable Development Goals (“SDGs”).
Of the 17 SDGs, seven align most closely with our sustainability activities.
Driving better environmental performance Enabling an exceptional workforce
We promote
sustainable
manufacture and
resilient
infrastructure and
contribute to
sustainable industry
Our products can
deliver low-cost and
efficient heat
distribution and are
suitable for
low-carbon
heating systems
We actively manage
our environmental
footprint, reducing
our resource usage
and waste
where possible
We combat climate
change by reducing
carbon in our value
chains and
supporting the
decarbonisation of
heating systems
We prioritise the
health and safety of
our people,
ensuring access to
healthcare and
aiding mental health
We promote equal
opportunities for
women, including
leadership roles.
discrimination
We provide
productive
employment and
decent work, and
maintain high
standards,
responsible growth
6
7
2
8
4
1
3
9
11
10
12
5
Stelrad Group plc
Stelrad’s sustainability journey
Up to 2015
•
•
•
• Apprenticeship programmes established
• Group develops minimum ESG standards
•
2016–2018
•
•
•
2019–2020
•
•
•
• Stelrad UK becomes a Disability Confident employer
2021
•
•
•
•
• First Sustainability and TCFD Report as part
of Annual Report
2022
•
• Stakeholder materiality assessment completed
• Sustainability steering group formed
•
lifecycle analysis completed
•
•
Sustainability metrics
to provide a transparent assessment of our progress against
time. The metrics in this section do not currently include data
and further alignment to external standards.
reason for significant reductions in our carbon emissions and
make improvements and reduce this intensity in future.
Metric
Driving better environmental performance
Plastic packaging intensity
Enabling an exceptional workforce
Training days per employee
Conducting business responsibly
—
STRATEGIC REPORT
Stelrad Group plc
Sustainability Report continued
Driving better environmental
performance
A key pillar of our strategy focuses on reducing the direct
and indirect environmental impacts of our products and on
the urgent need to reduce global emissions and manage
in meeting these global aims.
innovate and introduce complementary products as part of a
positive behavioural change for consumers to encourage the
decarbonisation of heating.
of plastic in our packaging.
Our strategy to drive better environmental performance
Spotlight on UK water usage
usage. This enabled us to identify several significant
installation of additional valves and controls to manage
1. Formulate strategy
Environmental considerations feature strongly in our strategy.
importance of environmental aspects reinforces the need to
opportunities to reduce the environmental impact of our
products through the sharing of best practice and reinforced
2. Design and innovate
Our radiators are designed to strike the best compromise
of improving our material consumption is to design products
product offering.
Package
Design and
innovate
Recycle
and reuse
ManufactureDistribute
Source
Engage,
educate and
influence
Formulate
strategy
Stelrad Group plc
3. Source
purchased goods and services and upstream transportation
Conscious of this and the environmental impact of the steel
suppliers to understand their plans to decarbonise steel
enabler for reducing the environmental impact of our steel.
4. Manufacture
Improving efficiency in our manufacturing operations
facility. This investment has contributed to improved carbon
spotlight above.
Spotlight on energy usage – fan optimisation
energy consumption and performance. The second
change involved automatically stopping a fan if there
replicate this success in our other facilities.
e/t to
e/t. Our manufacturing and distribution facilities
largely on multi-year contracts and it is our aim to maintain
A key enabler of improving energy efficiency is our energy
contribute to future energy savings.
STRATEGIC REPORT
Stelrad Group plc
Spotlight on low-carbon heating –
carbon heating supplied from the Glenrothes Energy
This innovative district heating system benefited from
positively to the UK’s Net Zero Strategy. The choice
of Stelrad products to effectively distribute this heat
carbon heating systems.
Driving better environmental
performance continued
5. Package
specification of packaging is essential to avoid damages.
to publish a range of packaging metrics for the first time.
last year. This change has been successfully implemented
Packaging used (2022), by material type
3,017t
(2021: 3,832t)
6. Distribute
investing significantly in the reorganisation of our European
and aim for all vehicles across the Group to emit less than
Sustainability Report continued
7. Engage, educate and influence
to make more informed decisions on heating systems and
accelerate the decarbonisation of home heating. In support
and specifiers in the form of continuing professional
system design agencies.
8. Recycle and reuse
It is estimated that the lifecycle of our radiators is in excess
the highest recycling rates of all materials. Recycled steel is
Stelrad Group plc
Streamlined Energy and Carbon Reporting
The table below summarises our energy usage and associated emissions for the Group during 2022. This table does not
include data from DL Radiators for this year; this will be incorporated in future years.
We achieved 96.15% verifiable data coverage, with only 3.85% of consumption data being estimated.
Our chosen intensity metric is tCO
2
e per tonne of product produced. The results of this intensity metric are as follows:
Variance
Market-based
UK Non-UK Total UK Non-UK Total Variance
Consumption
Total
UK Non-UK Total UK Non-UK Total Variance
Market-based
Market-based
— —
— —
emissions — —
emissions
Market-based
Reporting methodology
reporting guidance.
have been sourced for our countries of operation.
STRATEGIC REPORT
Stelrad Group plc
Sustainability Report continued
Enabling an exceptional workforce
Our people are fundamental to the success of our business.
ensure our employees’ voices continue to be heard. Outside
tailored to local needs across our broad geographic spread.
Our people
bridges and values the rich heritage of our people and the
in each country. Our flat management structure also assists us
Development
leadership capability to support and develop our current
and future leaders and a key focus is on enhancing technical
and sell heat pump systems. This included information on
These initiatives and a large increase in safety training in
Turkey have contributed to an increase in our key metric of
Developing our employees of the future
Continental Radiator for more information.
hosting open days and school leaver days across the Group.
Engineering at Sheffield College as part of the Employer
Skills Academy.
Spotlight on Continental Radiators –
how we develop employees
the shortage of operators and maintenance technicians
by promoting enrolment in training courses. As part
including providing Company tours for secondary
school students and their parents and participating in
targeted support to give them the skills and experience
internal candidates.
Employee engagement
Our approach to employee engagement is decentralised and
the diversity of our people.
identify areas for improvement.
union partners across our main sites.
Stelrad Group plc
as this reflects the success of our approach to employee
our people.
Equality, diversity and inclusion
diversity and inclusion into our key people processes and
improve representation. Our success in achieving this is
number attending training courses. The Code of Conduct
Policy sets out the standards of behaviour expected from
underlines our commitment to continue to develop as an
open and inclusive organisation.
Gender
in our business and in leadership roles is important to our
access to technical education.
Wellbeing
already offer a range of occupational health services across
cost of essential healthcare. This includes optical and dental
Community
sponsorships and local partnerships.
their flights and enabling them to take part in an ultimately
through our employee feedback scheme. This involves
through any of several hosted events that take place
throughout the year. These activities are underpinned
This enables us to tailor benefits to support retention and
an on-site prayer room and an annual festival for all
employees and their families.
All employees
SG&A
Management
Board
Male Female
34.3%
19.2%
25.0%
90.8%
65.7%
80.8%
75.0%
9.2%
STRATEGIC REPORT
Stelrad Group plc
Sustainability Report continued
Conducting business responsibly
Conducting business responsibly is a key foundation in
including our sustainability strategy.
Our approach to business is guided by a clear set of Company
values and a culture of safety that is overseen by the strong
development and progression.
training and manufacturing processes to keep our colleagues
safe and healthy and to reduce accident rates.
Governance of sustainability
Our Chief Executive Officer continues to have overall
accountability for sustainability. He is assisted in this by
a sustainability steering group and our sustainability
to provide greater senior management support and
driving the implementation of our sustainability strategy.
on stakeholder engagement and the development of our
Sustainability Manager and comprises local representatives
from each business unit. This group is responsible for
data and progress to the steering group and acting as
effective by expanding the membership to reflect Stelrad's
ongoing development.
Spotlight on safety – collision warning
happen regularly and are complemented by daily tours
risk of accidents. This pedestrian detection system has
pedestrian interaction.
Stelrad Group plc
Health and safety
Our number one priority is to keep our employees and contractors
number of days lost. This increase is driven by accidents in
procedures. Corrective actions have been identified and are
conditions reporting. Focus on these aspects helps to identify
strong culture of safety. Our increased focus on reporting
incidents captured.
Supply chain management
Conducting business responsibly also extends to ensuring that
of the activities of each supplier and helps ensure meaningful
Anti-bribery, corruption and labour standards
supported by in-person training to a large number of colleagues.
Our Code of Conduct is reinforced by our Group Conflicts
Our approach to labour standards is typified by our approach
to collective bargaining and pay. This is also reflected in our
and Continental Radiators maintaining a silver medal.
Lost time severity rate
51.8
32.1
Lost time frequency rate
6.1
7.2
Fatality rate
0
0
Total recordable incident rate
5.1
7.3
STRATEGIC REPORT
Stelrad Group plc
Sustainability Report continued
TCFD Report
against the recommendations of the Task Force on Climate-
risks and opportunities into our strategy. Our focus in the
disclosures not currently made: climate scenario modelling
not made this year due to a desire to ensure any scenarios or
taking into consideration different climate-related scenarios.
Climate governance
Our Chief Executive Officer has overall accountability for our
opportunities. The Board is responsible for ensuring that
appropriate systems and processes are in place to monitor
and manage progress. The Board is guided by the Audit &
Risk Committee in matters relating to climate risk. The Audit
& Risk Committee is also responsible for overseeing the
and processes.
risk. This means that significant emerging or evolving
Committee on an ongoing basis.
Group Sustainability Manager maintains a climate-related
advantageously separating this from existing business unit
on emerging risks to our Group Sustainability Manager and
alongside business unit registers.
Progress on the execution of our sustainability strategy is
driven and monitored by our sustainability steering group. This
Director and Group Strategic Marketing Director. This group
our strategy across the business. Members of the steering group
periodically update the Chief Executive Officer and the Board on
progress and the Board has embedded a process to ensure that
Co-ordination of sustainability actions across the Group is
led by our Group Sustainability Manager and he is supported
Strategy
homes sustainably. Sustainability and climate are significantly
are addressing our climate-related risks and opportunities.
strategy and financial planning.
Risk management
captured in a climate-specific risk and opportunity register. This
climatic temperature increases and any opportunities that may
Our climate-related risks and opportunities are assessed in
terms of the likelihood of the risk arising over three different
or opportunity is unlikely to occur in the period and level three
suggesting that the risk is more likely than not to happen.
impact if a risk does occur. This impact is defined based on
the likely financial or reputational damage or gain that could
halt our ability to service our customers for a period.
advantage of the opportunity. The management of the risk
acceptable level as defined by the Board and for updating
on changes.
related risks and opportunities that have been identified
through this process.
Metrics and targets
there is also a description of the main contributors to our
including setting targets in key areas and expanding the
ensure that our metrics are developed in consideration of our
main climate-related risks.
Stelrad Group plc
Failure to meet stakeholder sustainability expectations or our previous commitments.
Category
Transition risk
Description Impact Mitigation/realisation actions
stakeholders of a company's
around climate and achieving carbon
reductions. This includes examination of
performance against previously stated
commitments. There is a risk that these
expectations are not met.
• Customers may move their business
• Stelrad’s access to capital may
costly to invest and impacting the
Company’s valuation.
An appropriate governance structure
exists to ensure that sustainability
matters are prioritised according to
stakeholders’ climate expectations.
perceptions are accurate.
Increased cost of business due to a combination of legislation and market dynamics.
Category
Transition risk
Description Impact Mitigation/realisation actions
Climate change may result in suppliers
example through using green hydrogen.
These may come at a higher cost.
Sustainability targets are also leading to
the introduction of legislation to
encourage companies to reduce their
environmental impacts and increase
transparency in reporting. This trend is
likely to continue and may differ by
than others.
•
energy and transport.
• Cost drivers may lead to changes
to the relative competitiveness of
radiators against alternatives.
•
data gathering and reporting
changes and ensure that appropriate
responses are developed. Any internal
also focus on efficiency improvements.
necessary to understand market
changes in a timely manner and
implement appropriate responses.
trade bodies are especially important.
An increase in the use of alternative technology.
Category
Transition risk
Description Impact Mitigation/realisation actions
The drive to reduce carbon in heating
competing technology.
This could be driven by consumer
behaviour and could be intensified
The future changes may also support
differentiation described on the
• Any increase in the presence of
competing technologies may reduce
the relative share of radiators and
may impact on Stelrad's market share
and profitability.
changes and assess these for their likely
impact on product choices.
customers and specifiers to ensure the
positive attributes of radiators are
understood and incorporated.
to market as part of our offering.
STRATEGIC REPORT
Stelrad Group plc
Sustainability Report continued
TCFD Report continued
Differentiation of Stelrad's product and service offering.
Category
Opportunity
Description Impact Mitigation/realisation actions
The drive to reduce carbon in heating
may also lead to changes that could
demand for higher output products.
There is also the opportunity to bring
our offering.
The buying decision on heating
products is likely to encompass broader
opportunity for differentiation.
• Opportunities for development of
our product and service offering
• Diversified or increased revenue
Increased severity and frequency of extreme weather events.
Category
Physical risk
Description Impact Mitigation/realisation actions
damage is increasing. These events
• Damage or disruption to our
production facilities may reduce our
ability to fulfil customer demand.
• Disruption to global supply chains
may reduce our ability to move
product and materials.
• Extreme heat may necessitate
impact on productivity or cost.
• Prolonged periods of heat may
All facilities have reactionary processes
in place to adapt to acute events.
Production volume can be flexed
across the Group if specific facilities
have issues.
Many inputs are sourced from multiple
reducing the risk if specific supply
routes are disrupted.
Stelrad Group plc
Sustainability metrics table
Unit of measure SASB reference Change
Driving better
environmental
performance
Energy and carbon
Total energy consumed
Grid energy %
%
kgCO
e
kgCO
e n/a
kgCO
e/tonne n/a
Water and waste
m
stress
%
l/tonne n/a
tonnes
kg/tonne n/a
% n/a
Materials
% n/a
Packaging material used tonnes n/a
Plastic packaging material % n/a
Plastic packaging intensity kg/tonne n/a
Recycled content of packaging
material used
% n/a
Enabling an
exceptional
Training and development
Training days per person days n/a
Number of apprentices FTE n/a
Labour practices
Employee turnover % n/a
Absence rates % n/a
Gender diversity
Female % n/a
Male % n/a
Not available % n/a — — —
Conducting
business
responsibly
Health and safety
rate n/a
rate n/a
Total recordable incident rate rate
Fatality rate rate — — —
Business ethics
Total amount of monetary
losses as a result of legal
bribery or corruption
— — —
Total amount of monetary
losses as a result of legal
anti-competitive behaviour
regulations
— — —
STRATEGIC REPORT
Page title
Stelrad Group plc
performance positions the
Group for continuing growth
Group overview
£m
Increase/
Increase/
%
Revenue
Adjusted operating profit
Exceptional items
Amortisation of customer relationships — n/a
Foreign exchange differences
— n/a
Operating profit
Net finance costs
— n/a
Profit before tax
Income tax expense
Profit for the year
Earnings per share (p)
Adjusted profit for the year
Adjusted earnings per share (p)
Total dividend per share (p)
Stelrad Group plc
Financial overview
by a challenging macroeconomic environment due to high
inflation and increasing interest rates. The market price for steel
costs increased significantly in the same period.
decrease in sales volumes. Steel price volatility continued in
recover steel and other inflationary cost increases. Revenue
margin management and operational improvements leading
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
IAS 29
respect of its Turkish subsidiary for the first time in its financial
accounting policy outlined in note 5.
as a positive restatement to opening reserves. Management
representation of the Group’s underlying performance in the
costs in the Turkish subsidiary being denominated in hard
A strong focus on margin
management and operational
improvements more than
George Letham
STRATEGIC REPORT
Stelrad Group plc
continued
IAS 29 continued
Statutory
position
position
Revenue
Adjusted operating profit —
Exceptional items —
Amortisation of customer relationships —
Foreign exchange differences
—
Operating profit/(loss)
Net finance costs —
—
Profit/(loss) before tax
Income tax expense
Profit/(loss) for the year
Functional currency
profile and therefore functional currency of the business. The change in functional currency of the Turkish business from Turkish
DL Radiators acquisition
Revenue (pre-IAS 29) by geographical market
geographical market
£m
Increase
Increase
%
UK & Ireland
Europe
Turkey & International
Total
UK & Ireland
partially offset by a decrease in sales volumes.
Europe
Turkey & International
Stelrad Group plc
Adjusted operating profit by geographical market
Adjusted operating profit by
geographical market
£m
Increase/
Increase/
%
UK & Ireland
Europe
Turkey & International
Central costs
Total
UK & Ireland
Europe
Turkey & International
profit in this territory.
Central costs
Exceptional costs
Finance costs
Income tax expense
charge benefiting from the recognition of previously unrecognised deferred tax assets.
Earnings per share and adjusted earnings per share
STRATEGIC REPORT
Stelrad Group plc
continued
Dividends and reserves
The Group is committed to delivering returns for its shareholders.
It has initially adopted a dividend policy targeting an annualised
Group intends to split dividend payments approximately
The Group paid an interim dividend in respect of the year
Cash flow
£m
Increase/
EBITDA
Gain on disposal of
—
Share-based payments —
Net capital expenditure
Adjusted cash flow
from operations
Income tax paid
Interest received —
Adjusted free cash
flow
increase
from operations.
output in Turkey and capital expenditure relating to a
Capital expenditures
The Group’s capital expenditures mainly relate to investment
under construction.
£m
Freehold land and buildings
Assets under construction
Fixtures and fittings
Intangible assets —
Total
production lines at the Group’s facilities in Turkey and
future years.
Stelrad Group plc
Net debt
refinanced and repaid all legacy financing arrangements
amended and restated facility agreement is made up of a
loan facility.
£m
—
Term loan —
Cash
Net debt before finance leases
Finance leases
Net debt
George Letham
13 March 2023
market conditions.
George Letham
STRATEGIC REPORT
Stelrad Group plc
Risk management
The Board has ultimate responsibility for the Group’s system of internal control and risk
processes that enable the monitoring and mitigation of existing risks and the early
Risk management approach
The Group’s approach to risk management combines a top
bottom up operational identification and reporting process.
and Audit & Risk Committee and consider the strategy and
operating environment of the Group. Bottom up activities
take place across the Group and capture risks that are
regular exercises undertaken by management to identify
and document the significant risks facing the businesses.
This process ensures risks are identified and monitored and
mitigating management controls are embedded in the
businesses’ operations. Risk management teams are also
management team. The risk assessments from each of the
and are considered in determining the principal risks of the
environment. The principal risks of the Group are presented
Emerging risks are also collated from assessments made by
the business units and through considered risk oversight
across the Group and industry.
The Group considers that the process for the management of
risk consists of three lines of defence. The first line of defence
bottom up activities detailed here. The second line of defence
is Group oversight provided by the Group Board and Audit
and other external assurance providers.
Board Ultimate responsibility for risk management
• Sets Group strategy
•
• Sets the Group’s risk appetite
•
•
• Sets delegated levels of authority
Audit & Risk Committee Monitors risk management and assurance arrangements
• Supports the Board in risk management responsibilities and activities
•
Executive Directors Monitor performance and changes in key risks
• Provide regular risk management update reports to the Board and the Audit &
Risk Committee
• Report to the Board and the Audit & Risk Committee on the status of key risks
•
mitigating actions
• Oversee health and safety activities
Business units/
operational and
management teams
Identify, manage and report local risks
•
• Identify risks
• Identify and implement mitigating actions
• Assess the likelihood and impact of each risk before and after mitigating and
contingent actions are taken
Risk management framework
Identification of emerging risks
Stelrad Group plc
Assessment of risk direction
1. Business disruption
Risk
The Group could be subject to disruption due to incidents including,
but not limited to, pandemics, major accidents or natural disasters.
Change from
prior year
No change
Impact
• A further global pandemic could reduce
market demand for the Group’s products.
•
capacity due to staff shortages.
• The Group’s production and distribution
customer demands.
Mitigations
• Infection and pandemic risk assessments and response procedures are
short notice include:
– social distancing;
– regular testing on site;
–
–
• Appropriate fire safety measures are in place at key sites.
• Building modifications have been made to address flooding risk.
•
• Accident prevention measures are put in place.
• There is an option and ability to flex production volume across facilities
around the Group.
• Appropriate business interruption insurance is in place.
Risk appetite
The Group Board is responsible for setting and monitoring
certain level of risk.
appetite across a number of risk categories according to a
tolerance for risks relating to health and safety.
The Group establishes its risk appetite through use of
delegated authorities so that matters considered higher
Group Board. The Group’s risk appetite remains unchanged
in the year.
Principal risks
The Board confirms that it has carried out a thorough
assessment of the principal and emerging risks facing the
the impact and strategic relevance of the risks and an
risks that are believed to have the greatest impact on the
Climate change has been presented as a separate principal
risk for the first time this year due to an increased focus
on climate change in the regulatory environment and
document our approach to climate risk management and
STRATEGIC REPORT
Stelrad Group plc
Risk management continued
Assessment of risk direction continued
2. Reliance on key customers
Risk
The Group, in some geographies, is overly dependent on
a small number of customers, or on a particular market or
business segment.
Change from
prior year
No change
Relevant
stakeholder
Customers
See page 24
Impact
•
Group derives a significant proportion of its
revenue from a small number of customers.
Failure to manage these relationships or
of demand.
Mitigations
•
market channels.
• The Group continues to maintain strong specifier relationships to generate
demand for the Group’s brands through the distribution channel.
• The Group actively manages and maintains its ongoing customer relationships.
•
•
•
final consumer.
•
•
3. Loss of competitive advantage
Risk
New products, innovations or routes to market could cause a loss
Change from
prior year
No change
Relevant
stakeholder
Customers
See page 24
Impact
•
or product advantage that results in a loss
of market share for the Group.
•
or increase market share as part of the
assisted heat exchanger products. There
could be a resultant loss of Group
sales volumes.
Mitigations
• The Group continues to monitor legislative changes.
•
• The Group continues to maintain strong customer and specifier
relationships to determine the most appropriate solutions.
• Appropriate product types are brought to market under the
Group’s brands.
• The Group continues to maintain and develop strong relationships
• The Group continues to maintain strong specifier relationships
distribution channel.
•
•
•
on sustainability.
•
• The Group invests in appropriate energy saving initiatives across
•
Stelrad Group plc
4. Supply chain risk
Risk
Failure of the supply chain either due to lack of availability
Change from
prior year
No change
Relevant
stakeholder
Suppliers
See page 24
Impact
•
ability of the Group to manufacture products
or harm profit margins.
•
to manufacture products.
•
could harm profit margins.
• Inflationary price increases could harm
profit margins.
•
success of the Group and any disruption in
the supply chain could impact on the ability
and/or cause a reduction in profitability.
Mitigations
•
having a secondary provider; this extends to location dual sourcing.
•
understanding of future prices.
•
selling price increases.
•
short-term supply issues.
• The Group undertakes ongoing supplier performance and relationship
•
shipping partners.
•
trucks instead of shipping.
•
option is available.
• There is an option and ability to flex production volume across facilities
around the Group.
• The Group pays suppliers on a timely basis.
•
•
•
STRATEGIC REPORT
Stelrad Group plc
Risk management continued
5. IT failure or cyber breach
Risk
Prolonged or major failure of the Group’s IT systems or a significant
security breach.
Change from
prior year
No change
Impact
• A cyber attack at one of the Group’s
facilities could disrupt its production and/
or distribution capabilities leading to an
• Failure of our IT and communication
systems could affect any or all of our
business processes and have significant
and make payments.
Mitigations
• Training and education are delivered to all staff.
• Appropriate access rights are applied on all IT systems across
•
to protect our IT systems.
• Email scanning processes are implemented.
• Robust systems and processes are in place including data back-ups.
• Third party penetration testing is carried out by all sites.
• The business uses internal and third party expertise to keep up to date
• Disaster recovery plans are in place.
• There is continued investment in and maintenance of IT systems across
the Group.
•
6. People and culture
Risk
Being unable to retain key personnel and attract skilled individuals
Change from
prior year
No change
Relevant
stakeholder
People
See page 23
Impact
• The loss of key personnel or the inability
to put the correct succession planning in
place could lead to a shortage of experience
that could damage business performance.
•
increase in costs of skilled labour could
increase the costs of the Group or lead to
delays in production.
•
create a risk of losing talent to more
• Inflationary increases in staff costs could
harm profit margins.
•
Mitigations
• Deputies are in place for immediate interim assumption of key roles.
•
development of potential successors for key roles.
• Documented processes are in place for key functions to ensure
continuity of process.
• Policies and procedures are embedded to ensure appropriate
management practices.
•
and sites.
•
•
• Pay rates are maintained at a competitive level to attract and
retain staff.
•
•
•
through a range of approaches.
• The Group rolled out the updated Code of Conduct to all employees
during the year.
Assessment of risk direction continued
Stelrad Group plc
7. Health and safety
Risk
Failure to comply with health and safety legislation and regulatory
requirements including obligations to take the correct measures
to prevent fatalities or serious injury.
Change from
prior year
No change
Impact
•
and distribution operations are carried out
detrimental to the health and safety of the
could have a material adverse effect on
financial results.
Mitigations
•
to identify and manage risks.
• Health and safety training is provided regularly across the Group.
•
appropriate machinery guarding and also introducing robotics.
•
in place to learn from these incidents and put in place procedures and
training to prevent them from reoccurring.
8. Political and economic environment
Risk
Failure to evolve business practices and operations in response
to the changing political and economic environment.
Change from
prior year
Continued increase due to
the energy crisis
Impact
• The change in political conditions in
Turkey could give rise to an adverse
availability of labour or the ability for Turkey
• A change in political conditions in any of
could give rise to an adverse change in the
Group's operations.
• The Group is exposed to potential
changes in economic circumstances
exchange rate fluctuations and private
disposable income.
• Inflationary price increases could harm
profit margins; this is a particular risk in
hyperinflationary during the year.
• The energy crisis and high inflation
increased costs across the Group during
the year and could lead to a reduction in
consumer spending.
• A significant increase in interest rates
• Market lending capacity could reduce.
Mitigations
• The Group continuously monitors legislative changes and evaluates
any potential impact.
• Exchange rate fluctuations are mitigated using the natural hedge of
•
hedging policy.
•
currency hedging strategy.
•
• There is an option and ability to flex production volumes at each of the
Group's facilities.
STRATEGIC REPORT
Stelrad Group plc
Climate change
Failure to manage and mitigate climate change is identified as a risk on the Group register. Given the scale and the
have been allocated to manage climate risk across the organisation and to determine the impact that this risk may have
Assessment of risk direction continued
9. Climate change
Risk
Failure to evolve business practices and operations in response
Change from
prior year
Continued
increase due
to heightened
stakeholder
focus on
climate change
initiatives
Relevant
stakeholder
Communities
and the
environment
See page 25
Impact
•
Mitigations
•
Risk management continued
Stelrad Group plc
Viability statement and going concern
Viability statement
The Board has considered the viability of the Group over a three-year
principal risks and uncertainties facing the Group. The three-year period
recognises that there is inherent uncertainty involved in looking further
increases reliability in the modelling and stress testing of the Group’s
monitors performance through the financial year against this budget
additional years.
The Board believes that the business model remains highly relevant to
greener solutions for heating homes.
The Board has carried out a robust assessment of the principal risks
business are identified through the risk management process and are
to assess the viability of the Group. The sensitivities modelled used the
The Board has carefully considered the principal risks of the Group and
the impact of those risks on the viability of the Group and has concluded
period assessed.
Going concern statement
financial statements outlines the Group’s financial risk management
principal risks facing the Group. Management has also applied severe
also used the financial forecasts as the basis for their assessment of the
statements have been prepared on a going concern basis.
more than three times and for interest cover of not less than four times.
covenants for the next three financial years.
The forecast base case scenario has been prepared using robust
• the reduction in volumes; and
• a reduction of the contribution per radiator from forecast levels
Volumes
Volumes could reduce in the future due to competitive pressures or
Contributions per radiator
Group’s contributions in the future.
delayed/reduced dividend payments and active management of net
STRATEGIC REPORT
Stelrad Group plc
Non-financial information statement
Reporting requirement
Relevant policies and standards
Read more in this report
Page
reference
Environmental matters •
• Code of Conduct
•
responsibility policies
• UN SDGs
•
• Sustainability strategy and
• Risk management
• Sustainability Report
• Task Force on Climate-related
Financial Disclosures
• Stakeholder engagement
Employees •
•
• Code of Conduct
• Health and safety policies and procedures
• Sustainability strategy and
• Stakeholder engagement
• Sustainability Report
• Directors’ Remuneration Report
• Nomination Committee Report
• Statement of corporate governance
• Audit & Risk Committee Report
64
Social matters • Group purpose and values
• Code of Conduct
•
responsibility policies
•
• Stakeholder engagement
• Sustainability Report
Human rights • Modern slavery statement
•
• Code of Conduct
• Stakeholder engagement
• Sustainability Report
• Statement of corporate governance
Anti-bribery and
corruption
• Code of Conduct
• Anti-bribery policy
• Dealing policy
• Insider dealing and market abuse policy
• Statement of corporate governance
• Audit & Risk Committee Report
64
Business model n/a • Our business model
• Our strategy
Principal risks • • Risk management
Non-financial KPIs n/a • Key performance indicators
• Sustainability Report
Stelrad Group plc
GOVERNANCE REPORT
Chair’s introduction to governance
Dear shareholders,
On behalf of the Board, I am pleased to present the second
Corporate Governance Report of Stelrad Group plc as a publicly
listed company. The report summarises the governance
structure and the governance procedures of the Group. Since
our listing on the Main Market of the London Stock Exchange
functioning effectively.
• details of the Board of Directors and their biographies
•
• the key roles of the Board and the division of
•
•
•
•
First full year as a plc Board
The Board believes that good governance enhances long-
term shareholder value and promotes a sustainable business.
The Board also believes that all decisions should be made for
the benefit of all stakeholders and to ensure the long-term
success of the Group. It is a priority of the Board to set the
culture and values of the Group and to lead by example.
The Board expanded significantly in advance of the listing in
practice in our corporate governance duties and requirements.
fresh perspective has enabled them to provide independent
business model and strategy. Details of the Board of Directors
The first full year of operation of the Board and the Committees
has included a thorough and complete induction and training
programme, including deep dives into the business units, and
a full timetable of Board and Committee meetings, details
continuing to aid the success of the business over coming years.
Governance Code
The Board is committed to the highest standards of corporate
further details are included in the statement of corporate
Purpose, culture and values
from the Board. Our core purpose is a key component
The Group has established five values that provide its moral
•
•
•
•
expertise and resources to make a positive difference to
•
Board composition and diversity
The Board recognises the advantages of having a diverse
and inclusive Board in bringing different perspectives to the
debate and decision-making processes of the Board, to the
benefit of all stakeholders. Female Directors have made up
During the year, the Group has enhanced the Group Equality,
Diversity and Inclusion Policy and developed a Board Diversity
and Inclusion Policy. The Board continues to encourage
diversity and inclusion across the Group, and examples of this
Stakeholders
The Board understands the importance of listening to all
The strategy and business model of the Group aim to deliver
for all stakeholders.
our stakeholders.
Bob Ellis
Chair
Bob Ellis
Chair
Stelrad Group plc
GOVERNANCE REPORT
Board of Directors
Bob Ellis
Chair
Bob Ellis is a Director and the
Chair of the Board and joined
Skills and experience
Mr Ellis has a strong financial
experience in operational
restructuring and has
number of sectors, including
the retail, manufacturing
and construction sectors.
External appointments
Mr Ellis currently holds
directorships on the
remuneration and audit
committees and the board
of Reconomy as chair of the
board and remuneration
George Letham
Chief Financial Officer
George Letham is a Director
and the Chief Financial
Officer of the Group
having joined the Group in
Skills and experience
years of finance experience
and held multiple senior
finance roles before joining
the Group, including at Price
Blue Circle Industries PLC.
Mr Letham is a member of
the Institute of Chartered
Accountants of Scotland.
External appointments
None.
Trevor Harvey
Chief Executive Officer
Executive Officer of the
Skills and experience
Prior to joining the
management positions
as managing director
of Myson Radiators and
managing director of Myson
radiator and heat emitter
sector. Trevor studied at
upon Tyne and graduated
External appointments
a director of ISG Boiler
subsidiaries are engaged
in the manufacture and
distribution of boilers, and
has held this position since
Edmund Lazarus
Non-Executive Director
Non-Executive Director
and joined the Group in
Skills and experience
partner of Bregal Capital
private equity positions for
and as an M&A and corporate
before entering the private
Stanley Capital Partners.
External appointments
In addition to being a
number of other external
appointments in private
equity portfolio companies.
A broad range of leading
industry, corporate and
N
Stelrad Group plc
Nicholas Armstrong
Non-Executive Director
Nicholas Armstrong is a
Non-Executive Director
and joined the Group in
Skills and experience
Mr Armstrong is a partner
and member of the founding
of the Bregal Capital team
extensively across a number
of portfolio companies
including Stelrad Group.
Prior to joining Bregal,
in London and Nomura’s
Australian M&A team in
of Commerce.
External appointments
In addition to being a
LLP, Mr Armstrong holds a
number of other external
appointments in private
equity portfolio companies.
Nicola Bruce
Non-Executive Director
Nicola Bruce is an
independent Non-Executive
Director and joined the
Skills and experience
In addition to her significant
non-executive board
partner at the Monitor Group
director of strategy at De La
Rue plc. She has chaired the
remuneration committees at
Society Ltd and the Anchor
Institute of Management
Accountants and holds both
an MBA from INSEAD and
External appointments
Ms Bruce is currently a
non-executive director
independent director and
chair of the remuneration
Terry Miller
Non-Executive Director and
Senior Independent Director
Terry Miller is an independent
Non-Executive Director and
the Senior Independent
Director, and joined the Group
Skills and experience
non-executive board
experience, Ms Miller is a
career, held senior executive
positions in the public and
private sector, including
as general counsel for
the London Organising
Committee of the Olympic
Games and Paralympic Games
and, prior to her LOCOG
appointment, as a partner and
international general counsel
for Goldman Sachs. She holds
of Michigan (Bachelor of Arts,
(Juris Doctor, summa cum
External appointments
Ms Miller is a non-executive
director of Goldman Sachs
International and Goldman
Sachs International Bank, part
of the multinational Goldman
Sachs Group of financial
services businesses. Ms Miller
is also a non-executive director
of Rothesay Life plc, and the
senior independent director of
Martin Payne
Non-Executive Director
Martin Payne is an
independent Non-Executive
Director and joined the
Skills and experience
Mr Payne is an experienced
chief executive officer and
executive officer of Genuit
Group plc (formerly Polypipe
construction industry by
and climate management
solutions. Prior to that Mr
officer of Polypipe Group plc,
and has also held the roles
of group finance director
at Norcros plc and group
financial controller at JCB,
the construction equipment
also a director and chairman
of the Construction Products
Association, the trade
association that represents
industry. Mr Payne is a
qualified accountant and
Institute of Management
Accountants and holds a
External appointments
None.
Committee key
A
Audit & Risk
N
Nomination
R
Remuneration
Chair of Committee
A
A
A
R
R
R
N
N
N
Stelrad Group plc
GOVERNANCE REPORT
Statement of corporate governance
Compliance with the Code
The Board is committed to the highest standards of corporate
Board composition
At least half the board, excluding the chair, should be
non-executive directors whom the board considers
been composed of eight members. The Directors regard
only three of the Non-Executive Directors as independent.
recommendation that at least half the board, excluding
Non-Executive Directors are representatives of the Major
Shareholder as a condition of the Relationship Agreement.
Although the number of Non-Executive Directors on the
of the Major Shareholder leading to adjustment of the
conditions set by the Relationship Agreement, the Board
also continues to consider potential recruitment of additional
independent Directors as part of Board succession planning.
Independent chair
The chair should be independent on appointment
The Code recommends that the chair of a company should
circumstances set out in the Code. The Chair, Bob Ellis, has in
as being independent on appointment by reference to the
year ahead is unanimously of the opinion that his continued
of the Company.
Role of the Board and its Committees
Board
The role of the Board is to set and monitor the Group’s
and the long-term success of the business and, in doing so,
generate value for the shareholders. It is the responsibility
of the Board to ensure that the strategy of the business is in
The Board is also responsible for taking into account the
The Board, supported by the Audit & Risk Committee, is
responsible for the Group’s systems of internal control and
governance are strong and effective. The Board also sets the
risk appetite of the Group.
The Board’s main responsibilities are included in a schedule
• strategic matters – responsibility for the overall leadership
of the Group and setting and monitoring the Group’s
• structure and capital – approving or recommending any
• financial reporting and controls – approving the Group’s
annual financial statements and reports, and approving
• agreements – approving major capital projects,
•
• Board appointments and remuneration – approving
• risk assessment and internal controls – ensuring the
maintenance of sound systems of internal control and risk
•
corporate governance arrangements and assessing and
monitoring the Group’s culture.
•
•
• three independent Non-Executive Directors, including a
•
year and up to the date of signing the financial statements
As envisaged by the Code, the Board has established an
Audit & Risk Committee, a Nomination Committee and a
The Committees play an essential role in supporting the
Board and provide focused oversight of key aspects of the
business. A summary of the membership and responsibilities
of each Committee is detailed in this report. The full terms of
reference for each Committee are available on the Company’s
Stelrad Group plc
Chief Executive Officer and Senior Independent Director have
been clearly defined and agreed by the Board. A summary of
Chair
• Responsible for the leadership of the Board, promoting
• Promotes the highest standards of integrity, probity
• Sets the Board agenda, ensuring it has a focus
• Oversees the development, induction and performance
• Ensures that Directors receive accurate, timely, high-quality
sound decisions.
•
order to understand their issues and concerns, and by
communicating issues to the Board.
Chief Executive Officer
• Responsible for the leadership of the business.
•
• Represents the Company and oversees and manages all
business activities, operations and performance of the
• Leads the senior management team of the Group in the
day-to-day running of the business.
•
and strategic direction and reports accurately in agreed
formats to the Board and the Committees.
• Monitors and maintains high standards of
•
Senior Independent Director
• Provides a sounding board to the Chair and supports
• Appraises the Chair’s performance.
•
•
Audit & Risk Committee Nomination Committee Remuneration Committee
Responsibility for oversight of
the Group’s financial reporting,
internal controls, risk management
external auditors.
Responsibility for the composition
and make-up of the Board and
Committees of the Board including
succession planning and ongoing
Responsibility for the Remuneration
Policy, setting individual
remuneration levels for Executive
Directors and the Chair, and
Group’s strategy and culture and
the requirements of the Code.
Members:
• Three independent
Non-Executive Directors –
and Nicola Bruce
Members:
• Three independent
Non-Executive Directors –
and Nicola Bruce
• One Major Shareholder
Representative Director –
Members:
• Three independent
Non-Executive Directors –
and Martin Payne
The Audit & Risk Committee Report
The Nomination Committee Report
The Remuneration Committee Report
Stelrad Group plc
GOVERNANCE REPORT
Statement of corporate governance continued
Governance report
Board meetings and attendance
The Board held ten scheduled meetings during the year ended
each Director versus the maximum number of meetings they
Board
Audit & Risk
Committee
Nomination
Committee
Remuneration
Committee
— — —
George Letham — — —
Bob Ellis — — —
Terry Miller
Martin Payne
Nicola Bruce
— —
Nicholas
Armstrong
— — —
number of meetings due to pre-existing commitments.
•
•
•
•
•
•
•
•
•
• Equality, Diversity and Inclusion Policy for the Group
•
•
•
• internal controls and the establishment of an internal
audit process.
Appointment and election
There has been no change to the composition of the Board
The Board is satisfied that all Directors are effective and
committed to their roles and have sufficient time available
Board induction and training
Details of the Board induction and training can be found in
Board evaluation
of operation. Overall, the results confirmed that the Board
presented to the Board to agree actions for addressing the
recommendations of the evaluation. In summary, key areas
• succession planning for senior management and
•
• stakeholder engagement.
Board effectiveness review
and Committee responsibilities. The completed questionnaires
of the Nomination Committee and Company Secretary.
overall the Board and its Committees have been operating
effectively during the first full year of the Company’s life as a
the findings and develop proposals for action by the Board to
address recommendations arising from the evaluation.
Senior Independent Director provided a performance
each Board member throughout the year and an annual
to ensure that performance, contribution, commitment and
any training and development needs are discussed.
Succession planning
Details of Board succession planning and senior
management pipeline evaluation can be found in the
Stelrad Group plc
Non-Executive Director independence
The Non-Executive Directors bring a broad range of skills and
experience to Stelrad Group plc, and they are qualified to provide
considered insights to refine the strategy of the Group over the
coming years. The independence of the Non-Executive Directors
the Code in relation to majority of independence of the board
and the independence of the chair on appointment. Three
Representative Directors and the Chair – are not independent.
Company regards the three independent Non-Executive
Directors as independent and free from any business or other
their independent judgement.
Time commitment
All Non-Executive Directors are required to devote appropriate
time to meet their Board responsibilities and demonstrate
commitment to their role. The time commitment of each Non-
letters of appointment contain information in relation to the
time commitment expected of each Director in their role.
ensure Directors can allocate the necessary time and effort
to the Company. This process is continually managed by the
Company Secretary and the Chair and takes into consideration
outside appointments and commitments.
other appointments, they are each able to dedicate sufficient
time to fulfil their duties and obligation to the Company.
Directors’ conflicts of interest
The Group has a formal ongoing procedure for the disclosure,
commitments. Potential and actual conflicts of interest are
carefully considered and, if deemed appropriate, the continuing
existence of the potential or actual conflict of interest may be
approved by the Board. All conflicts of interest are recorded
Internal control and risk management
The Board, supported by the Audit & Risk Committee, is
responsible for the Group’s systems of internal control and
risk management and for ensuring that these systems of
governance are strong and effective.
assesses the effectiveness of the system of internal control
can be found in the Audit & Risk Committee Report on pages
control can only manage, and not eliminate, risk, and that
they are designed to provide reasonable, and not absolute,
assurance against material misstatement or loss.
The Board is responsible for the oversight of the risk
processes in place to calculate and manage risk effectively.
The Board is also responsible for setting the risk appetite
the principal risks facing the Group and the mitigation
Whistleblowing
feel need to be brought to the attention of management
Group believes that it is important to have a culture of
openness to prevent such situations occurring or to bring
Information and support
The information presented to the Board is clear, accurate
and timely, and intended to enhance Board effectiveness. A
comprehensive Board procedures manual is maintained in
The standing information held there includes Board and
Committee terms of reference, the duties and responsibilities
of Directors, including standards of conduct and compliance,
and training documents. The Board and Committee papers
are also posted in the online Board portal.
All Directors have access to the advice and services of the
them on governance matters. The Directors may also take
independent professional advice at the Group’s expense
Business ethics
The Group’s core values and principles, and the standards
is expected to uphold, are set out in the Stelrad Group plc
Code of Conduct. These values and principles are applied to
other stakeholders of the business.
to all employees through business units’ intranets and readily
In addition, training courses are provided locally.
The Group is opposed to modern slavery and human trafficking
to the Group’s ethical trading policy. The Board has approved
Equality, diversity and inclusion
Diversity and Inclusion Policy. The Board has also approved
Board appointments so that the Board membership reflects
a broad combination of factors such as diversity of gender,
age, educational and professional background, social,
ethnic and geographical background, and cognitive and
Succession planning
Succession planning, both for the Board and for senior
management, has been a major focus over the past year.
Details of the Nomination Committee’s consideration
of succession planning can be found in the Nomination
Stelrad Group plc
GOVERNANCE REPORT
Audit & Risk Committee Report
management
Dear shareholders,
As Chair of the Audit & Risk Committee, I am pleased to
of the Committee’s role and activities for the financial year
The Committee plays a vital role in delivering the Company’s
corporate governance obligations, by overseeing the
accounting, financial reporting and internal control and risk
management processes, and providing valuable independent
Group’s internal control environment and risk management
Committee composition
The Committee has comprised three independent Non-
Nicola Bruce, Terry Miller and Martin Payne as Committee
Chair. The Major Shareholder is entitled to nominate an
observer to the Audit & Risk Committee and has exercised
aim of providing the range of financial, commercial and
sector expertise necessary to meet the responsibilities of
that the Committee has the competence and experience that
Accountant and a former finance director, has recent and
relevant financial experience and he has been designated
Details of the Directors’ experience and skill sets can be found
Committee remit
•
the significant financial reporting judgements made in
•
•
of the Company’s internal financial controls and internal
•
• Implementation of a strengthened internal audit
approach using external resource.
• Continued development of the Group’s risk
•
• Continued development of the Group’s
• Continued development of the Group’s risk
•
•
•
DL Radiators.
• Develop a formal process for external
building upon the strong
foundations already in place
Martin Payne
Chair of the Audit & Risk Committee
Committee members
Terry Miller
Nicola Bruce
Stelrad Group plc
• overseeing and maintaining an appropriate relationship
the independence, objectivity and effectiveness of the
• ensuring that internal audit arrangements are appropriate
•
potential for fraud and financial impropriety.
Further details on the remit and responsibilities of the
Committee can be found in its terms of reference. The terms
How the Committee operates
dates in the Company’s financial calendar. The dates of the
ensure it is able to devote sufficient time to discussing and
its responsibilities in full. Additional meetings are held as
appropriate functional currency of the Turkish business, and
further details of the decision can be found later in this report.
Board, the Chief Financial Officer, the Group Finance Director
The Committee also sets time aside at each meeting to
members of the management team.
The Committee met four times during the year ended
•
• an update on the Group’s financial position and prospects
procedures and the steps the Group has taken during the
year to address any outstanding action points identified as
• consideration of the relevant elements of the
accounting judgements and the going concern and
•
•
•
•
of the Group risk register, including the incorporation of
• consideration of the Group’s approach to internal audit,
and development of this approach culminating in the
•
to climate change.
functional currency of the Turkish business due to a change
in its currency profile. This has arisen from the increased
to have given rise to a change in currency profile and the
functional currency of the business. The functional currency
Financial reporting review
A key requirement of the financial statements is that
they are fair, balanced and understandable. In reaching
balanced and understandable in terms of the form and
content of the strategic, governance and financial information
presented therein.
Significant issues and other
statements and all formal announcements relating to the
Group’s financial performance. This included an assessment
Revenue recognition and indirect rebates
recognition and indirect rebate provisions.
Accounting for business combinations
Italian manufacturer of heat emitters. The Group has applied
liabilities acquired as part of the business combination.
additional intangible assets, such as customer relationships,
should be identified and the valuation assigned to these.
involved in the accounting for business combinations arising
from the acquisition of DL Radiators SpA.
Stelrad Group plc
GOVERNANCE REPORT
Audit & Risk Committee Report continued
Significant issues and other
continued
Hyperinflationary Economies
the projected three-year cumulative inflation exceeded
requires restatement of the financial statements into the current
recognised in the statement of comprehensive income. The
Going concern and long-term viability
long-term viability disclosures in this Annual Report, along
appropriateness. More detail on these disclosures can be
especially considering the potential ongoing impact of the
current economic situation.
External auditors and audit effectiveness
parent company of the Group prior to the Group’s listing,
the Company.
to be rotated every five years.
In assessing the independence of the auditors from the Group,
assurances that all of the auditors’ partners and staff involved
Subsequent to the year end, the Committee assessed the
assessment and the Committee concluded that the external
the audit of the financial statements for the year ended
Non-audit services
A policy governing the provision of non-audit services is in
place in order to ensure the independence of the external
auditors. Non-audit services should not be carried out by the
independence. The provision of non-audit services by the
either by specific pre-approval or on a case by case approval
• the skills and experience of the external auditors to
• the effect of the non-audit services on the audited financial
• the potential impact of each project on the external
• the resulting ratio of non-audit to audit fees.
•
related to bank covenant reporting.
•
on a one-off basis in relation to the historical financial
information required for the Company’s IPO.
•
the financial statements.
Internal control framework
The day-to-day management of our principal risks is
embedded in our management and operational processes.
The most significant elements of the Group’s internal control
Communication of policies and procedures
The Group has documented policies and procedures
underpinning its key business and finance processes.
at a business unit level to support the local conditions.
Promoting a culture of honesty and ethical behaviour
the business through employee handbooks and induction
training sessions. The content and structure of the employee
handbooks vary across the business units to support local
conditions. Areas covered include terms of employment
and health and safety. In addition to the local employee
handbooks, the Group maintains complementary key
Stelrad Group plc
Monitoring and oversight by those charged
facilitate the Executive Directors’ monitoring of the Group’s
financial performance and position. In addition, business
process controls are in place for the key operational cycles.
The Group has a documented organisational structure that
clearly specifies roles and reporting lines for all business units
the Board is through the Chair, Chief Executive Officer and
the Chief Executive Officer and Chief Financial Officer and
business unit management teams.
Segregation of duties
Appropriate segregation of duties has been put in place
across the Group.
Risk management
Board, supported in its role by the Audit & Risk Committee,
the risk management methodology and the effectiveness of
internal control.
underpinned by the use of business unit and Group level risk
to the organisation are identified, reported and reassessed on
an ongoing basis.
In addition to the assurance provided by the formal risk
involved in the day-to-day running of the business and have
The Group continually assesses and monitors the impact
actions are put in place to reduce the likelihood or impact of
such risks to an acceptable level.
Group Board accepts that, in order to achieve its strategic
objectives and generate suitable returns for shareholders, it
must accept, and manage, a certain level of risk.
Internal audit
external providers should be engaged to deliver the Group’s
•
•
all remaining key sites including Turkey, Continental Radiators
Assessment of the Group’s system of internal
control and risk management framework
management of significant business risks is a key area of
focus for the Committee. The Committee’s undertakings
identified by the Group and the actions it had put in place to
address these – as described in the Risk Management section
The Group’s internal control environment is designed to
been identified. Management is responsible for establishing
and maintaining adequate internal controls over financial
reporting and the Committee has responsibility for ensuring
the effectiveness of these controls.
an analysis of the Group’s system of internal control and risk
as needing further improvement, and the Committee
continued to receive updates on completing and embedding
The Committee recognises the importance of effective
strengthen governance, by ensuring a reliable system is
conduct. The Committee monitors any reported incidents
prevent a breach of anti-bribery legislation. The policy is
the Committee.
Martin Payne
Chair of the Audit & Risk Committee
Stelrad Group plc
GOVERNANCE REPORT
Nomination Committee Report
Ensuring Board effectiveness
and succession planning
Dear shareholders,
I am pleased to present the Nomination Committee Report of
during the year and examines the future focus areas of
Nomination Committee composition
information on the Directors’ experience and skill sets can
financial year end, the Committee comprised a majority
Nomination Committee remit
• to assist the Board in discharging its responsibilities
relating to the composition and make-up of the Board
•
potential candidates to be appointed as Directors or
•
and Committees of the Board, and retirements and
appointments of additional and replacement Directors
and Committee members, and to make appropriate
• to assist the Chair in the annual evaluation of the Board’s
• to put in place plans for the orderly succession of
appointments to the Board and to senior management
and to oversee the development of a diverse pipeline
for succession, taking into account the importance of
maintaining the Group’s culture, the challenges and
opportunities facing the Group, and the skills, experience
•
Diversity and Inclusion Policy and the progress in meeting
its objectives for the Board, its Committees and the Group,
recommending changes to the Board as appropriate.
• Approval of enhanced Group Equality, Diversity and
Inclusion Policy.
•
Inclusion Policy.
•
•
succession planning.
• Focus on actions to address the outcomes of the
• Continuing development of Board and senior
management succession planning.
to address the outcomes of
and continue to focus on
succession planning.
Terry Miller
Chair of the Nomination Committee
Committee members
Martin Payne
Nicola Bruce
Stelrad Group plc
Further details on the remit and responsibilities of the
Committee can be found in its terms of reference. The terms
the Board. During the course of this year, the Committee
recommended some enhancements to the terms of
Board induction and training
The Committee continued to focus on the implementation of
a comprehensive induction plan for the three independent
Non-Executive Directors, building on the initial programme
of induction and training has been developed, covering site
visits to key operational centres, training on statutory and
During the course of the year, induction and training activities
and distribution facility in Mexborough, and a detailed
Diversity and inclusion
The Board recognises the significant advantages of having
the Equality, Diversity and Inclusion Policy and the Group’s
applied for Board and senior management appointments,
meeting diversity objectives and strategies for the Group, and
The Board also believes it has a responsibility to support
the top is communicated clearly and consistently throughout
the Group, and that adherence to the Group’s culture is taken
into account in developing the pipeline for Board and senior
management succession planning.
recommended enhancements to the Group’s diversity policy,
and Inclusion Policy for the Board, ensuring that diversity and
so that the Board membership reflects as broad a
combination of skills, experience, gender, ethnicity, age,
sexuality, disability, education and background as possible.
Board evaluation
Company Secretary to facilitate the content and process of a
comprehensive internally managed Board and Committee
and outcome of the Board evaluation process can be found
Committee meetings and agenda
The Committee meets as often as needed and, in any case,
ensure it is discharging its duties as a Committee in full and
Agenda items for the Committee’s meetings during the
•
•
• consideration of the Group Equality, Diversity and Inclusion
• succession planning for the Board and the pipeline for
• further development of an ongoing induction and training
•
• development of diversity reporting across the Group.
A major focus of consideration for the Committee over the
past year has been succession planning both for the Board
to identify and maintain robust pipelines of immediate, short-
management team, and is-supported by the Chief People
Board succession planning.
consideration of these topics.
Annual re-election of Directors
The Committee has considered each of the current Board
members in the context of re-election and is satisfied that
each Director has dedicated sufficient time to their duties
on the Committee’s advice, the Board recommends that each
Director be re-elected.
Terry Miller
Chair of the Nomination Committee
Stelrad Group plc
GOVERNANCE REPORT
Directors’ Remuneration Report
Overseeing how we
Annual Statement by the
Remuneration Committee Chair
Dear shareholders,
On behalf of the Board, I am pleased to present the Directors’
• the Annual Statement and associated high-level summary
• a summary of the Directors’ Remuneration Policy approved
•
the decisions made by the Remuneration Committee
not be asking shareholders to vote on a revised Policy at the
The key highlights of the performance of the business
during the year can be found in the Strategic Report on
Fixed remuneration
•
Directors’ Remuneration Policy.
•
• Determining incentive outcomes for Executive
Directors and senior management.
•
• Setting incentive targets and determining
incentive outcomes for Executive Directors and
senior management, including the design of an
ESG component for inclusion in future years.
•
and senior management and its alignment
•
and policies.
An important consideration for
the Remuneration Committee
of the cost of living crisis on
Nicola Bruce
Chair of the Remuneration Committee
Nicola Bruce
Chair of the
Remuneration Committee
Stelrad Group plc
Bonus
•
•
• a strategic measure based on the increase in volumes sold
Full details of the targets and performance against them are
for Group adjusted operating profit delivered performance
nor the target in relation to increase in volumes sold of
LTIP
Directors and other members of senior management. The
against EPS and relative TSR targets over the three financial
vesting in respect of performance in the year ended
in the cost of living. In response to cost of living pressures,
•
•
management. Senior management, excluding Executive
union representatives.
Salary
of the challenging macroeconomic environment and the
George Letham have requested that their salary increase is
Annual Bonus Plan
For Executive Directors, the ABP provides that they can
Stelrad Group plc
GOVERNANCE REPORT
continued
Annual Bonus Plan continued
In continued support of our strategy as set out for
recognising the importance of stability and continuity,
particularly in this period of more challenging trading
macroeconomic environment and the key importance
Policy, the Committee retains discretion to adjust formulaic
ABP outcomes based on a holistic assessment of Company
also take into account the quality of the cash generated as
part of that overall assessment given the increase in the
It is the Committee’s intention to retrospectively disclose
commercially sensitive.
all of our stakeholders, both internally and externally, and
to sustainability as outlined in our Sustainability Report.
activities included in the Sustainability Report. Based on the
Long Term Incentive Plan
Executive Directors or senior management.
Conclusion
the resolution requesting approval of the Annual Report
on Remuneration at this year’s Annual General Meeting on
Nicola Bruce
Chair of the Remuneration Committee
Directors’ Remuneration Report continued
maintaining a clear, open
executive remuneration.
Nicola Bruce
Chair of the Remuneration Committee
Stelrad Group plc
Remuneration at a glance
Element of pay
Fixed remuneration
Base salary
Pension
of salary.
Benefits Each Executive Director receives the benefit of a life assurance scheme, private health cover,
Variable pay
ABP
Based on the stretching targets, a bonus of
of base salary, based on the achievement
deferred shares.
LTIP
Stelrad Group plc
GOVERNANCE REPORT
Remuneration Policy
Governance Code.
Criteria Approach
Clarity – Remuneration arrangements should be transparent
The Committee operates a consistent remuneration approach
remuneration and undertook a detailed consultation ahead
Simplicity – Remuneration structures should avoid
to understand.
Our remuneration arrangements for Executive Directors are
based on a market-standard remuneration structure consisting
of fixed pay, an annual bonus and a single long-term incentive.
Risk – Remuneration arrangements should ensure
behavioural risks that can arise from target-based incentive
plans, are identified and mitigated.
retains the ability to override formulaic incentive outcomes
Group’s remuneration principles.
Alignment to culture – Incentive schemes should drive
and strategy.
The variable incentive schemes and performance measures are
across
the business is a key element of supporting our culture,
fulfilling our
values and being a strong driver of business performance.
Predictability
to individual Directors and any other limits or discretions
should be identified and explained at the time of approving
the Policy.
The Committee maintains clear caps on incentive
The potential value and composition of the Executive Directors’
maximum scenarios are provided in the Remuneration Policy.
Proportionality
delivery of strategy and the long-term performance of the
performance.
Executives are incentivised to achieve stretching targets over
annual and three-year performance periods. The Committee
assesses performance holistically at the end of each period,
taking into account underlying business performance and the
internal and external context to ensure that pay outcomes are
appropriate and reflective of overall performance.
Wider workforce considerations and engagement
insights from the broader employee population via regular briefings from the Company, including feedback from the employee
Committee considers the general level of salary increase across the Group and in the external market.
Directors’ Remuneration Report continued
Stelrad Group plc
Remuneration Policy summary
Element of
remuneration
Purpose and link to
strategy Operation Maximum opportunity
Performance
measures
Base salary To provide
competitive fixed
remuneration.
To attract, retain and
motivate Executive
Directors of the
calibre required
to deliver the
Group’s strategy.
An Executive Director’s salary
takes into account the individual’s
professional experience,
individual performance, level of
responsibility and the scope and
reference to market. Base salaries
annual basis.
Any Executive Director salary
exceed those of the majority of
the Group’s employees unless
exceptional correctional increases
are appropriate (for example if an
Not applicable.
Benefits
and pension
To provide market
competitive levels of
employment benefits.
The Executive Directors receive
a salary supplement in lieu of
of salary. This contribution
the average of the Group’s
Each Executive Director is
entitled to the benefit of a life
assurance scheme, private health
The benefits package is set at
considers provides an appropriate
level of benefits for the role and
is appropriate in the context of
Not applicable.
ABP and
Deferred
Share Bonus
Plan (“DSBP”)
year achievement of
demanding annual
performance metrics.
Performance measures,
Committee and may be changed
from time to time.
Threshold, targets and
performance measure.
after the end of the financial year.
may be made equal to the
have accrued on vested shares
of vesting.
provisions apply.
Percentage of maximum bonus
•
•
•
A minimum
be associated
targets.
determine the
actual bonus
outcome based
on achievement
against
predetermined
targets.
Actual targets,
performance
achieved
published at
the end of the
performance
period.
Stelrad Group plc
GOVERNANCE REPORT
Element of
remuneration
Purpose and link to
strategy Operation Maximum opportunity
Performance
measures
LTIP To provide a
direct link to the
achievement
of sustainable
performance over
the longer term.
the achievement of performance
conditions determined by the
Committee at the time of grant.
The measurement period for the
performance conditions for LTIP
three financial years.
at the end of each relevant vesting
period for Executive Directors.
An additional payment, normally in
shares, may be made equal to the
the grant date and date of vesting.
base salary.
The Committee
the appropriate
performance
conditions
prior to grant
each year, to
Company’s
longer-term
strategy.
Performance
conditions
may include
financial,
market-based
financial
measures.
Financial and
market-based
account for at
Share
ownership
guidelines
To provide long-
term alignment
Directors
Executive Directors are expected to
build up and then subsequently hold
base salary.
that have been granted under the LTIP
termination.
Progress against the
shareholding requirement
Committee annually.
Not applicable.
Non-
Executive
Director fees
To attract and
retain Non-
Executive Directors
of a high calibre
commercial
experience.
Non-Executive Directors receive
a base fee and additional fees for
acting as Senior Independent
Director or Chair of the Board
Committees and for membership
of Board Committees (or to reflect
any additional time commitments –
The Chair receives a fixed annual
reflect additional time commitment
in certain circumstances, such as in
periods of exceptionally high activity
taking into account the time
commitment requirements and
responsibility of the individual roles,
comparable companies.
The fee paid to the Chair is determined
other Non-Executive Directors are
For the Non-Executive
Directors, there is no prescribed
maximum annual increase.
The maximum cap for the total
aggregate remuneration paid
to the Chair of the Company
and the Non-Executive Directors
Articles of Association.
Actual fee levels are disclosed
in the Annual Report on
financial year.
reimburse any reasonable
expenses incurred.
Not applicable.
Directors’ Remuneration Report continued
Remuneration Policy summary continued
Stelrad Group plc
Malus and clawback provisions
used at the Committee’s discretion in relation to ABP, DSBP
also require the employee to pay back amounts.
of the Group, errors or inaccuracies or misleading information
misconduct, material failure of risk management by the
Group’s reputation.
Service agreements and letters of appointment
In advance of admission, each of the Executive Directors
each of the Non-Executive Directors entered into a letter of
The Committee’s policy for setting notice periods is that a
Name Position
Date of service
agreement
Notice
period by
Company
Notice
period by
Director
CEO
George Letham CFO
The Non-Executive Directors of the Company (including
terms are subject to their re-election by the Company’s
Name Date of appointment
Bob Ellis
Nicholas Armstrong
Terry Miller
Nicola Bruce
Martin Payne
Annual Report on Remuneration
to an advisory shareholder vote at the AGM to be held on
Some sections of this report have been reported on by the
auditors and are thus clearly indicated as audited. All other
information in this report is unaudited.
Membership and meetings of the
Remuneration Committee
further independent Non-Executive Directors (Terry Miller
Secretary. The Committee also receives assistance from
invitation. The CEO also attends by invitation. The Committee
appropriate. The Board is satisfied that the Committee has the
competence and experience necessary to discharge its duties
effectively. Details of the Directors’ experience and skill sets can
The Major Shareholder remains entitled to nominate an
observer to the Remuneration Committee, subject to
the terms of the shareholder agreement outlined in the
Prospectus at the time of admission.
Governance Code in respect of Remuneration Committees.
•
the total remuneration packages for all Executive Directors,
• to approve the design of, and determine targets for,
any performance-related pay schemes operated by the
Company and approve the total annual payments made
•
Code’s requirement for clarity, simplicity, risk mitigation,
• to ensure that the Policy drives behaviours that are
•
•
Further details on the remit and responsibilities of the
Committee can be found in its terms of reference. The terms
Advisers (unaudited)
executive remuneration matters. Deloitte is a signatory to the
The fees paid to Deloitte in relation to advice provided to the
annually and is content that it does not have any connections
the year, Deloitte also provided advice in relation to corporate
accounting purposes, and tax reporting in relation to
Stelrad Group plc
GOVERNANCE REPORT
Year
fees
All taxable
Pension-
related
Annual
bonus LTIP
Total
remuneration
Total fixed
remuneration
Total variable
remuneration
Executive Directors
— — —
George Letham — — —
Non-Executive Chair
Bob Ellis — — — — —
Non-Executive Directors
Terry Miller — — — — —
Nicola Bruce — — — — —
Martin Payne — — — — —
— — — — — — — —
Nicholas Armstrong
— — — — — — — —
Total — — —
Year
fees
All taxable
Pension-
related
Annual
bonus LTIP
Total
remuneration
Total fixed
remuneration
Total variable
remuneration
Executive Directors
—
George Letham
—
Non-Executive Chair
Bob Ellis — — — — —
Non-Executive Directors
Terry Miller — — — — —
Nicola Bruce — — — — —
Martin Payne — — — — —
— — — — — — — —
Nicholas Armstrong
— — — — — — — —
Total —
Directors’ Remuneration Report continued
Stelrad Group plc
Performance targets
Metric Threshold On target Stretch Actual
earned
maximum
maximum
Group adjusted operating profit
threshold
threshold
Long Term Incentive Plan vesting (audited)
have vested in the year or in respect of performance during the year.
Payments for loss of office (audited)
Payments to past Directors (audited)
LTIP awarded during the financial year (audited)
George Letham
Remuneration Report.
Stelrad Group plc
GOVERNANCE REPORT
Information on remuneration for the year ended
continued
LTIP awarded during the financial year (audited) continued
Performance measure
Threshold
Maximum
Relative TSR vs constituents of the FTSE Small Cap index (excluding investment
Median
quartile
Statement of Directors’ interests (audited)
Interests
Ordinary
shares held at
Ordinary
shares held at
Subject to
holding period
subject to
performance
conditions
Total of all
scheme
interests and
shareholdings
as at
Executive Directors
—
George Letham —
Non-Executive Directors
Bob Ellis — —
Terry Miller — —
Nicola Bruce — —
Martin Payne — —
— — — — —
Nicholas Armstrong — — — — —
Executive Directors’ share ownership guidelines (audited)
Beneficially
shares as at
Shareholding
requirement
Current
shareholding
Shareholding
requirement
met?
Yes
George Letham Yes
of salary.
Directors’ Remuneration Report continued
Stelrad Group plc
Performance graph (unaudited)
comparator because its constituents have a comparable market capitalisation to that of the Group.
Financial year CEO single figure
CEO pay ratio (audited)
Total remuneration ratio Method Median
A
A
CEO Median
Basic salary
Total remuneration
CEO Median
Basic salary
Total remuneration
Stelrad
FTSE Small Cap
Stelrad Group plc
GOVERNANCE REPORT
Information on remuneration for the year ended
continued
Relative importance of spend on pay (unaudited)
Percentage
change
Overall spend on pay including Executive Directors
Distribution to shareholders —
Percentage change in Directors’ remuneration (unaudited)
group used for the CEO Pay Ratio disclosure.
therefore been excluded from the table.
Average
employee
Trevor
George
Letham
Bob
Ellis
Terry
Miller
Nicola
Bruce
Martin
Payne
Salary fees
Taxable benefits
Annual bonus
External appointments
The Executive Directors are permitted to hold external appointments and are entitled to retain the fees earned from such
appointments. All Directors are required to seek approval from the Board prior to accepting external appointments. Currently
the CEO holds one external appointment and the CFO has three external appointments.
Shareholder approval of our Directors’ Remuneration Policy and Directors’ Remuneration Report
Resolution Votes for Votes against
against
Votes
Approve the Directors’ Remuneration Policy
Directors’ Remuneration Report continued
Stelrad Group plc
Role
Chair
Non-Executive Director base fee
Additional fees
Senior Independent Director fee
Chair of the Remuneration Committee
Member of the Remuneration Committee
Chair of the Audit & Risk Committee
Member of the Audit & Risk Committee
Chair of the Nomination Committee
Member of the Nomination Committee
On behalf of the Board
Nicola Bruce
Chair of the Remuneration Committee
Stelrad Group plc
GOVERNANCE REPORT
Directors’ Report
The Directors present their report and audited financial
report as required under the Disclosure Guidance and
sections of the Annual Report and is incorporated by reference,
•
• Information relating to future business developments
can be found throughout the Strategic Report on
•
• Information relating to risk management can be found on
• The going concern and long-term viability statements can
• The Group’s global greenhouse gas emissions during the
• The Group is exposed to a number of financial instrument-
to the consolidated financial statements.
•
long-term incentive schemes can be found in the
•
General information
limited by shares. The Company is incorporated, domiciled
of the Official List of the Financial Conduct Authority and to
trading on the London Stock Exchange’s Main Market for
listed securities.
Principal activities
The Group’s principal activities are the manufacture and
distribution of radiators. The principal activity of the Company
is that of a holding company. More detailed information about
the activities of the Group during the year, and its likely future
Profit and dividends
The Group profit for the year, after taxation, amounted to
recommending a final dividend in respect of the year ended
Articles of Association
Company’s Directors and their appointment and replacement.
The Articles may only be amended by a special resolution at a
general meeting of the shareholders. Shareholders of the Group
can request a copy of the Articles by contacting the Group
Share capital
are listed for trading on the Main Market of the London Stock
respect of voting and participation, and carry the right to
be exercised by members in person, by proxy or by corporate
The ordinary shares are free from any restriction on transfer,
in the capital of the Company up to a maximum aggregate
shares have been purchased as at the date of this report. This
Substantial shareholdings
Shareholder Interest
The Bregal Fund III LP
Chelverton Asset Management
George Letham
Charles Stanley
Lombard Odier Asset
Management
As at the date of this report, the Company has not been made
Stelrad Group plc
Relationship agreement with
The Company has entered into a relationship agreement
its associates, holds, in aggregate, ordinary shares in the
the ordinary shares in issuance by the Company from time
to time, the Company is capable of carrying on its business
independently of the Major Shareholder and its associates.
The provisions of the Relationship Agreement imposing
of the voting rights of the ordinary shares in issuance by
the Company.
or appears to be intended to circumvent the proper
application of the Listing Rules.
Shareholder shall be entitled to appoint (and remove and
rights of the ordinary shares, then the Major Shareholder
Non-Executive Representative Directors to the Board. The
Major Shareholder’s first appointed shareholder Directors are
the ordinary shares, the Major Shareholder is entitled to
nominate a shareholder Director to be a member of the
Nomination Committee. Furthermore, for so long as the
Major Shareholder is entitled to appoint an observer to each
of the Nomination Committee, Audit & Risk Committee and
rights, including for the purposes of its accounting and other
The Board of Directors
Director biographies of all Directors for the year ended
The appointment and removal of Directors are governed
Executive Director appointments can be terminated by
either the Company or by the individual upon three months’
can be appointed or removed either by the Board or by the
Directors’ interests and conflicts of interest
Details regarding the share interests of the Directors in the
share capital of the Company are set out in the Remuneration
service agreements and Non-Executive Directors’ letters
of appointment are available in the Remuneration Report
The Group has a formal ongoing procedure for the disclosure,
other commitments. Potential and actual conflicts of interest
are carefully considered and, if deemed appropriate, the
continuing existence of the potential or actual conflict of
interest may be approved by the Board. All conflicts of interest
are recorded in the conflicts register. The conflicts of interest
remain authorised.
Directors’ indemnities
an indemnity to one or more of its Directors against liability
in respect of proceedings brought by third parties, subject
force as at the date of approving the Directors’ Report.
In addition, the Group maintained a Directors’ and officers’
liability insurance policy throughout the year.
Change of control provisions
Directors or employees providing for compensation for loss
of office or employment that occurs because of a takeover
is party that take effect, alter or terminate upon a change
Share plans
The Company’s share plans contain specific provisions
Stelrad Group plc
GOVERNANCE REPORT
Change of control provisions continued
Bank agreement
event of the occurrence of a change of control event, the
to require that all outstanding participations in utilisations
amounts accrued.
Relationship Agreement
The Relationship Agreement ceases to apply if the Company’s
shares cease to be listed and traded on the London Stock
Company’s shares.
Employee engagement
The Group is committed to involving its employees in the
decisions that affect them. Regular meetings take place
the Group seeks to keep employees informed through regular
across the Group.
The Board has elected to continue to use a combination of
to adopt one of the three measures set out in the Code.
The majority of employees are located in manufacturing
countries. Given the relatively small number of employees in
each location, the diversity of cultural norms and the differing
statutory requirements for each location, a decentralised
and tailored approach to employee engagement has been
through our long-established collective forums, through our
the Group, is effective and meaningful in representing the
voice of our employees.
valued as an individual and feels supported and motivated
Further examples of employee engagement across the Group
Equality, diversity and inclusion
Diversity and Inclusion Policy. The Group is a committed
• prevent discrimination, eliminate prejudice, promote
•
• ensure that equality, diversity and inclusion is embedded
The Equality, Diversity and Inclusion Policy covers all
aspects of equality including race, religion or belief, sex,
gender reassignment, marriage and civil partnership,
pregnancy, maternity and other matters relating to parental
responsibility, sexual orientation, disability and age.
It underlines our commitment to develop as an open and
Code of Conduct.
Diversity and Inclusion Policy.
Research and development expenditure
Political donations and expenditure
It is the Group’s policy not to make political donations and,
commonly regarded as donations to any political party.
very broadly and so it is possible that normal business
activities, such as sponsorship, subscriptions, payment of
expenses, paid leave for employees fulfilling certain public
duties and support for bodies representing the business
thought of as political expenditure in the usual sense, could
At the Annual General Meeting of the Company held on
to incur political expenditure up to a maximum aggregate
authority is due to expire at the Annual General Meeting
AGM, authorising political donations and expenditure, is to
ensure that the Group does not commit any technical breach
Important developments since
There have been no material events or developments
affecting the Company or any of its operating subsidiaries
Independent auditors
General Meeting.
Directors’ Report continued
Stelrad Group plc
Fair, balanced and understandable
processes in place to ensure that the content of the Annual
Report is fair, balanced and understandable. The Directors
consider, on the advice of the Audit & Risk Committee, that
understandable and provides the information necessary for
shareholders to assess the Group’s performance, position,
business model and strategy.
Annual General Meeting (“AGM”)
be sent to shareholders separately. Further information on
out fully in the Notice of AGM and Form of Proxy.
Statement of Directors’ responsibilities in
respect of the financial statements
The Directors are responsible for preparing the Annual Report
Directors have prepared the Group and the Company
international accounting standards.
statements unless they are satisfied that they give a true and
and of the profit or loss of the Group and Company for that
period. In preparing the financial statements, the Directors
• select suitable accounting policies and then apply
•
any material departures disclosed and explained in the
• make judgements and accounting estimates that are
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
The Directors are responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate
reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the
financial statements and the Directors’ Remuneration Report
The Directors are responsible for the maintenance and integrity
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and accounts,
provides the information necessary for shareholders to assess
the Group’s and Company’s position and performance,
business model and strategy.
In the case of each Director in office at the date the Directors’
•
• they have taken all the steps that they ought to have taken as
audit information and to establish that the Group’s and
George Letham
Stelrad Group plc
FINANCIAL STATEMENTS
Opinion
In our opinion:
• Stelrad Group plc’s Group financial statements and
Company financial statements (the “financial statements”)
give a true and fair view of the state of the Group’s and of
the Group’s profit and the Group’s cash flows for the year
then ended;
•
prepared in accordance with UK-adopted international
accounting standards as applied in accordance with the
•
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom
•
We have audited the financial statements, included within
the Annual Report, which comprise: the Consolidated and
Consolidated income statement, the Consolidated statement
of comprehensive income, the Consolidated and Company
statements of changes in equity and the Consolidated
statement of cash flows for the year then ended; and the
notes to the financial statements, which include a description
Our opinion is consistent with our reporting to the Audit &
We conducted our audit in accordance with International
We remained independent of the Group in accordance
with the ethical requirements that are relevant to our audit
of the financial statements in the UK, which includes the
Other than those disclosed in the Audit and Risk Committee
to the Company or its controlled undertakings in the period
Overview
•
•
•
•
•
•
•
•
•
•
for exceptional items, foreign exchange differences and the
•
•
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the
audit of the financial statements of the current period
and include the most significant assessed risks of material
auditors, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the
our procedures thereon, were addressed in the context of our
audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
Stelrad Group plc
continued
continued
Completeness and accuracy of indirect rebates (Group)
Refer to Accounting policies on revenue recognition and
radiator), as well as management judgement, are used in
•
calculations of historic take up and poundage rates to sales during
the period;
•
included in management’s calculation of historic take up and poundage
• Performed sensitivity analysis over management’s take up and poundage
assumptions taking into account historic actuals to challenge the
Completeness and valuation of assets and liabilities in
the business combination (Group)
SpA, a radiator manufacturer incorporated in Italy, for a
which required management to undertake an acquisition
acquired are identified and due to the judgement involved
identified through:
•
•
• Engaged our internal valuation experts to challenge the methodology and
•
accounting (Group)
lira as their functional currency should start to apply IAS
to restate the financial statements, including the cash flow
statements, into the current purchasing power at the end
•
all non-monetary items;
•
•
• Reperformed management’s monetary gain or loss proof calculation;
•
• We assessed the disclosures included within the financial statements in
Carrying value of investments (parent)
sheet and it is necessary for management to consider
the judgement involved in assessing impairment indicators
independently performed the following to challenge management’s
assessment that there were no indicators:
•
compared to historic trading;
•
•
Group; and
•
Stelrad Group plc
FINANCIAL STATEMENTS
continued
continued
We tailored the scope of our audit to ensure that we
the financial statements as a whole, taking into account the
structure of the Group and the Company, the accounting
processes and controls, and the industry in which
entities are in scope for the Group audit given the size of
As part of our audit we made enquiries of management to
understand the extent of the potential impact of climate risk
on the Group’s and Company’s financial statements, and we
remained alert when performing our audit procedures for any
not identify any material impact as a result of climate risk on
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in
continued
Overall materiality
How we determined it
adjusted for exceptional items, foreign
Rationale for
benchmark applied
shareholders in assessing performance
For each component in the scope of our Group audit, we
allocated a materiality that is less than our overall Group
components were audited to a local statutory audit materiality
We use performance materiality to reduce to an appropriately
Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our
In determining the performance materiality, we considered
assessment and aggregation risk and the effectiveness of
controls
and concluded that an amount in the middle of our
We agreed with the Audit & Risk Committee that we would
report to them misstatements identified during our audit
•
evaluating management’s downside scenarios, including
appropriateness and underlying assumptions;
• Evaluating the level of forecast liquidity and forecast
any material uncertainties relating to events or conditions
concern for a period of at least twelve months from when the
In auditing the financial statements, we have concluded that
predicted, this conclusion is not a guarantee as to the Group’s
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to
Stelrad Group plc
Annual Report other than the financial statements and our
does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise
In connection with our audit of the financial statements, our
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
material misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other
conclude that there is a material misstatement of this other
of the audit, the information given in the Strategic report
In light of the knowledge and understanding of the Group
of the audit, we did not identify any material misstatements
and that part of the corporate governance statement relating
to the Company’s compliance with the provisions of the
have concluded that each of the following elements of the
corporate governance statement is materially consistent with
the audit, and we have nothing material to add or draw
attention to in relation to:
•
•
principal risks, what procedures are in place to identify
managed or mitigated;
•
whether they considered it appropriate to adopt the going
identification of any material uncertainties to the Group’s
of at least twelve months from the date of approval of the
financial statements;
•
the Group’s and Company’s prospects, the period this
assessment covers and why the period is appropriate; and
•
fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary
less in scope than an audit and only consisted of making
their statement; checking that the statement is in alignment
with the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent
with the financial statements and our knowledge and
understanding of the Group and Company and their
our audit, we have concluded that each of the following
elements of the corporate governance statement is materially
consistent with the financial statements and our knowledge
•
model and strategy;
•
of effectiveness of risk management and internal control
systems; and
•
Company’s compliance with the Code does not properly
disclose a departure from a relevant provision of the Code
and the audit
intend to liquidate the Group or the Company or to cease
Stelrad Group plc
FINANCIAL STATEMENTS
continued
the audit continued
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
guarantee that an audit conducted in accordance with ISAs
material if, individually or in the aggregate, they could
Irregularities, including fraud, are instances of non-compliance
identified that the principal risks of non-compliance with laws
and regulations related to health and safety regulations and
employment laws, and we considered the extent to which
non-compliance might have a material effect on the financial
that have a direct impact on the financial statements such as
management’s incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk
of override of controls), and determined that the principal
risks were related to posting inappropriate journal entries
this risk assessment with the component auditors so that
they could include appropriate audit procedures in response
auditors included:
•
known or suspected instances of non-compliance with laws
and regulation and fraud;
•
and the Audit and Risk Committee;
• Evaluation of management’s controls designed to prevent
and detect irregularities;
•
management in their significant accounting estimates, in
• Identifying and testing journal entries, in particular any
instances of non-compliance with laws and regulations that
are not closely related to events and transactions reflected
material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve
Our audit testing might include testing complete populations
whom this report is shown or into whose hands it may come save
you if, in our opinion:
•
we require for our audit; or
•
•
law are not made; or
• the company financial statements and the part of the
Following the recommendation of the Audit & Risk Committee,
to audit the financial statements for the year ended
financial statements will form part of the ESEF-prepared
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Newcastle upon Tyne
continued
93Annual Report 2022 Stelrad Group plc
Consolidated income statement
for the year ended 31 December 2022
Note
2022
£’000
2021
£’000
Continuing operations
Revenue 7 316 , 31 5 27 2 , 28 5
Cost of sales (excluding exceptional items) (2 35 , 19 4 ) (192, 279 )
Exceptional items 7 (1 , 05 4 ) —
Cost of sales (236, 24 8 ) (1 92 , 279 )
Gross profit 80, 067 80,0 0 6
Selling and distribution expenses (4 0, 8 0 0 ) (3 5 , 47 8 )
Administrative expenses (excluding exceptional items) (1 2 , 8 11 ) (11 , 5 8 4 )
Exceptional items 7 (755 ) (9 ,589 )
Administrative expenses (13, 56 6 ) (2 1 , 17 3 )
Other operating income 8 373 3, 20 4
Other operating expenses 9 (3, 446 ) —
Operating profit 10 22 , 628 2 6 , 5 59
Finance income 14 50 141
Finance costs 15 (4, 573 ) (10 , 3 7 9 )
Monetary losses – net 32 (7, 8 6 0 ) —
Profit before tax 10 , 2 4 5 16 , 3 2 1
Income tax expense 16 (5 , 936 ) (1, 66 1 )
Profit for the year 4, 30 9 14 , 6 6 0
Note 2022 2021
Earnings per share
Basic 17 3. 38 p 11 . 51 p
Diluted 17 3. 38 p 11 . 51 p
Adjusted earnings per share
Basic 17 1 9 . 11 p 16 . 9 2 p
Diluted 17 1 9 . 11 p 16 . 9 2 p
Stelrad Group plc Annual Report 202294
FINANCIAL STATEMENTS
Note
2022
£’000
2021
£’000
Profit for the year 4, 30 9 14 , 6 6 0
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
andqualifying hedges of net investments in foreign operations 1 , 6 91 5, 192
Income tax effect 16 (6 31 ) (1, 23 5 )
Exchange differences on translation of foreign operations (5 , 9 41 ) (2 6, 072 )
Net other comprehensive expense that may be reclassified
to profit or loss in subsequent periods (4 , 8 81 ) (22,115 )
Other comprehensive expense not to be reclassified
to profit or loss in subsequent periods:
Remeasurement losses on defined benefit plans 30 (1,9 3 2 ) (1 41 )
Income tax effect 16 423 35
Net other comprehensive expense not to be reclassified
to profit or loss in subsequent periods (1 , 5 0 9 ) (10 6 )
Other comprehensive expense for the year, net of tax (6 , 39 0 ) (22, 221 )
Total comprehensive expense for the year,
net of tax attributable to owners of the parent (2 , 0 81 ) (7, 5 6 1 )
Consolidated statement of comprehensive income
for the year ended 31 December 2022
95Annual Report 2022 Stelrad Group plc
Note
2022
£’000
2021
£’000
Assets
Non-current assets
Property, plant and equipment 19 91 , 6 0 4 53 ,69 4
Intangible assets 20 3, 855 —
Trade and other receivables 24 3 17 10
Deferred tax assets 16 5 , 39 7 6, 28 4
Current assets
Inventories 23 7 7, 8 5 1 5 6 ,7 8 1
Trade and other receivables 24 60,497 4 6 ,7 31
Income tax receivable 235 10 4
Cash and cash equivalents 25 22 , 6 41 15, 56 3
Total assets 262 , 397 17 9 , 1 6 7
Equity and liabilities
Equity
Share capital 28 127 1 2 7, 3 5 3
Share premium 28 — 1 3 , 3 91
Merger reserve (1 14,469 ) (1 1 4,469 )
Retained earnings 2 2 7, 8 4 9 5 7, 8 14
Foreign currency reserve (62 ,05 8 ) (5 7, 17 7 )
Total equity 5 1,449 2 6 , 91 2
Non-current liabilities
Interest‑bearing loans and borrowings 22 9 8 , 51 3 62, 8 65
Deferred tax liabilities 16 2 , 6 11 126
Provisions 27 1 ,7 9 9 15 8
Net employee defined benefit liabilities 30 4 , 542 1 ,7 2 8
Current liabilities
Trade and other payables 26 9 9 , 21 4 83,883
Interest‑bearing loans and borrowings 22 1, 520 1 ,7 9 4
Income tax payable 1, 829 1 , 52 2
Provisions 27 920 17 9
Total liabilities 210 , 9 4 8 152, 255
Total equity and liabilities 262 , 397 17 9 , 1 6 7
The financial statements on pages 93 to 130 were approved by the Board of Directors on 13 March 2023 and signed on its
behalf by:
George Letham
Chief Financial Officer
Consolidated balance sheet
as at 31 December 2022 (Registered Number 13670010)
Stelrad Group plc Annual Report 202296
FINANCIAL STATEMENTS
Attributable to the owners of the parent
Issued share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Retained
earnings
£’000
Foreign
currency
£’000
Total
£’000
At 1 January 2021 65 19 8 94 0 43 , 26 0 (35 ,0 62 ) 9 , 4 01
Profit for the year — — — 14 , 6 6 0 — 14 , 6 6 0
Other comprehensive expense
fortheyear — — — (10 6 ) (22 ,115 ) (22, 221 )
Total comprehensive income/(expense) — — — 14 , 5 5 4 (22 ,115 ) (7, 5 6 1 )
Shares issued on incorporation 50 — — — — 50
“C” share redemption (13 ) — — — — (13 )
Noosa share reorganisation (50 ) 50 — — — —
Share for share exchange – old (2 ) (24 8 ) 250 — — —
Share for share exchange – new 11 5 , 6 59 — (1 15 ,6 59 ) — — —
Shares issued 11 , 6 4 4 1 3 , 391 — — — 25,035
At 31 December 2021 1 2 7, 3 5 3 1 3 , 391 (1 1 4,469 ) 5 7, 8 14 (5 7, 17 7 ) 2 6 , 91 2
IAS 29 adjustment (note 32) — — — 8, 32 7 — 8, 327
At 31 December 2021 (restated) 1 2 7, 3 5 3 1 3 , 391 (1 1 4,469 ) 6 6 , 141 (5 7, 17 7 ) 35 , 2 39
Profit for the year — — — 4 ,30 9 — 4 , 309
Other comprehensive expense
fortheyear — — — (1 , 5 0 9 ) (4 , 8 81 ) (6 , 39 0 )
Total comprehensive income/
(expense) — — — 2,80 0 (4 , 8 8 1 ) (2 , 0 8 1 )
Capital reduction (1 2 7, 2 2 6 ) (1 3 , 3 91 ) — 1 4 0 , 617 — —
IAS 29 adjustment to retained earnings
in the year (note 32) — — — 22 , 98 2 — 22 , 9 82
Share‑based payment charge (note 13) — — — 250 — 250
Dividends paid (note 18) — — — (4 , 9 41 ) — (4 , 9 41 )
At 31 December 2022 127 — (1 14,469 ) 2 2 7, 8 4 9 (62 ,05 8 ) 5 1,449
Consolidated statement of changes in equity
for the year ended 31 December 2022
97Annual Report 2022 Stelrad Group plc
Note
2022
£’000
2021
£’000
Operating activities
Profit before tax 10 , 2 4 5 16 , 3 2 1
Adjustments to reconcile profit before tax to net cash flows:
– Depreciation of property, plant and equipment 19 9,7 0 0 7, 4 0 9
– Amortisation of intangible assets 20 16 3 —
– Gain on disposal of property, plant and equipment (220 ) (21 3 )
– Monetary loss IAS 29 32 7, 8 6 0 —
– Monetary loss IAS 29 income statement element 3, 530 —
– Share‑based payments 250 —
– Finance income 14 (50 ) (141 )
– Finance costs 15 4 , 57 3 10 , 3 7 9
Working capital adjustments:
– Decrease/(increase) in trade and other receivables 1, 632 (17, 3 8 0 )
– Decrease/(increase) in inventories 5 , 8 31 (31 , 69 5 )
– (Decrease)/increase in trade and other payables (11 , 5 2 8 ) 4 0 , 2 91
– (Decrease)/increase in provisions (1 , 2 97 ) 158
– Decrease in other pension provisions (23 ) (59 )
– Difference between pension charge and cash contributions (31 9 ) (2 2 )
Income tax paid (3 , 8 01 ) (3 ,7 3 4 )
Interest received 50 141
Net cash flows generated from operating activities 26 , 59 6 21 , 4 55
Investing activities
Proceeds from sale of property, plant, equipment and intangible assets 316 487
Purchase of property, plant and equipment 19 (9 , 6 71 ) (8 ,6 4 6 )
Purchase of intangible assets 20 (16 4 ) —
Business combination of subsidiaries, net of cash acquired 21 (20,4 84 ) —
Net cash flows used in investing activities (3 0, 0 03 ) (8 , 1 59 )
Financing activities
Transaction costs related to refinancing (429 ) (1 , 17 1 )
Proceeds from external borrowings 3 4 , 122 56 ,5 00
Repayment of external borrowings (1 , 2 50 ) (1 1 , 0 01 )
Repayment of borrowings acquired with subsidiary (10 ,74 6 ) —
Repayment of shareholder loans — (76 , 528 )
Settlement of deferred consideration — (20 2 )
Payment of lease liabilities (2 ,0 49 ) (1, 666 )
Share capital issued — 25,0 85
Share capital repaid – “C” shares — (13 )
Interest paid (3 , 26 9 ) (7 79 )
Dividends paid 18 (4 , 9 41 ) —
Net cash flows generated from/(used in) financing activities 11 , 4 3 8 (9 ,7 7 5 )
Net increase in cash and cash equivalents 8 , 0 31 3 , 521
Net foreign exchange difference (953 ) (8 , 0 41 )
Cash and cash equivalents at 1 January 25 15 , 563 20,0 83
Cash and cash equivalents at 31 December 25 22 , 6 41 15, 56 3
Consolidated statement of cash flows
for the year ended 31 December 2022
Stelrad Group plc
Stelrad Group plc Annual Report 2022 104
FINANCIAL STATEMENTS
Stelrad Group plc Annual Report 2022 108
FINANCIAL STATEMENTS
Stelrad Group plc Annual Report 2022 114
FINANCIAL STATEMENTS
Stelrad Group plc Annual Report 2022 116
FINANCIAL STATEMENTS
Stelrad Group plc Annual Report 2022 124
FINANCIAL STATEMENTS
Stelrad Group plc
Stelrad Group plc
Investments
—
Equity
Called up share capital
Share premium —
—
—
Stelrad Group plc
FINANCIAL STATEMENTS
Called up
share capital
Share premium
(Accumulated
earnings
— —
— —
— —
Share for share exchange — —
Shares issued —
Profit for the year — —
— —
Capital reduction —
— —
— —
—
Company statement of changes in equity
Stelrad Group plc
•
•
•
Stelrad Group plc
FINANCIAL STATEMENTS
continued
continued
indication exists, or when annual impairment testing for an investment is required, the Company estimates the investment’s
—
—
—
Stelrad Group plc
—
Acquisition via share for share exchange
Acquisition of investment via dividend in specie
—
—
£
£
— —
— —
were as follows:
Shares
Share capital
£
Share for share exchange
Shares issued
Capital reduction —
Stelrad Group plc
FINANCIAL STATEMENTS
continued
Country of incorporation
United Kingdom Ordinary
United Kingdom Ordinary
United Kingdom Ordinary
United Kingdom Ordinary Radiator manufacturer
*Caradon Polska Sp ZOO
Poland Ordinary
Ordinary Radiator manufacturer
Ordinary
United Kingdom Ordinary
Ordinary Radiator manufacturer
China Ordinary
Ordinary
Ordinary
Ordinary
Italy Ordinary — Radiator manufacturer
in the UK
Stelrad Group plc
Stelrad’s commitment to environmental issues
is reflected in this Annual Report, which has
®
which minimises the impact of printing on the
environment, with 99% of dry waste diverted from
landfill. Both the printer and the paper mill are
registered to ISO 14001.
ADDITIONAL INFORMATION
Registered office
Stelrad Group plc
69–75 Side
Newcastle upon Tyne
Tyne and Wear
NE1 3JE
Shareholder enquiries: investorrelations@stelrad.com
Tel: +44 (0) 191 261 3301
Registered in England and Wales
Computershare Governance Services, UK
120 London Wall
London
EC2Y 5ET
Registrar
Computershare Investor Services PLC
Bridgwater Road
Bristol
BS99 6ZZ
Tel: +44 (0) 370 702 0003
External independent auditors
PricewaterhouseCoopers LLP
Level 5 and 6
Central Square South
Orchard Street
NE1 3AZ
Corporate broker
Investec Bank plc
30 Gresham Street
London
EC2V 7QN
Legal adviser
Clifford Chance
London
E14 5JJ
Financial PR adviser
Powerscourt
1 Tudor Street
London
EC4Y 0AH
Tel: +44 (0) 20 7250 1446
Principal bankers
National Westminster Bank plc
Newcastle upon Tyne
NE1 7EL
London
Shareholder information
Stelrad Group plc
69–75 Side
Newcastle upon Tyne
Tyne and Wear
NE1 3JE
Spine to be
calculated once
all text has
been supplied
Stelrad Group plc Annual Report 2022