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Stelrad Group plc
Annual Report 2021
Stelrad Group plc Annual Report 2021
Helping to heat
homes sustainably
Stelrad Group plc Annual Report 20214
STRATEGIC REPORT
Driven by our core purpose
Our purpose is helping to
heat homes sustainably
STRATEGIC REPORT
 Highlights
 At a glance
 Our investment case
 Chair’s statement
 Chief Executive Oﬃcer’s review
 Market overview
 Market trends
 Our business model
 Our strategy
 Key performance indicators
 Stakeholder engagement
 Sustainability
 Finance and business review
 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
changes inequity
 Consolidated statement of cash ﬂows
 Notes to the consolidated
ﬁnancial statements
 Company balance sheet
 Company statement of changes
inequity
 Notes to the Company ﬁnancial
statements
ADDITIONAL INFORMATION
 Shareholder Information
Highlights
 Adjusted operating profit rose by % to million
 Good progress across all territories during 
 UK & Ireland  % revenue growth % growth in adjusted
operating profit
 Europe  % revenue growth % growth in adjusted operating profit
 Turkey & International  % revenue growth % growth in adjusted
operating profit
 Total sales volume increased by % versus  and was % higher than in 
the last prepandemic year
 Profitability enhanced by further production transfers to lowcost Turkish facility
and an improved mix of premium steel panel radiators where volumes rose by
% versus  and % relative to 
 Proactive price optimisation in light of substantial increases in steel prices
 Completed a six year c million programme of incremental investment into Stelrad’s
three main operational facilities
 Successful IPO on the London Stock Exchange’s Main Market
Revenue
m
(2020: £196.6m)
Adjusted operating profit

m
(2020: £15.6m)
Adjusted free cash flow

m
(2020: £12.5m)
Adjusted EPS

p
(2020: 4.44p)
stelradplccom
Visit us online to see how we are
innovatingto drive sustainability
 Adjusted figures are stated before exceptional items foreign exchange differences and tax thereon
where applicable
STRATEGIC REPORT
Stelrad Group plc Annual Report 202102
At a glance
We are a leading radiator
manufacturerand supplier,
helpingtoheat homessustainably
The Group’s foundations are built on its four strong wellestablished brands
Number  brand in the
UK & Ireland
Originating in the UK and present
across the world Stelrad is our
premier brand
Number  brand in
theNetherlands
Originating in Belgium Henrad
is a channel differentiated brand
across European markets and was
the fastestgrowing steel panel
radiator brand in the UK between
 and 
Number  brand in Turkey
Our main brand in Turkey and
across Eastern European markets
Termo Teknik is well regarded for
its high quality relative to cost
High end design
radiator brand
Acquired by Stelrad Group
in  the Hudevad brand
represents the best of Danish
design a favourite of architects
interior designers and
commercialspecifiers
03Annual Report 2021 Stelrad Group plc
Our heat emitters transform people’s experience of their worlds
Developing an ESG strategy ﬁt for the future is our commitment
towardshelpingtoheathomes sustainably
Standard steel
panel radiators
Premium steel
panel radiators
Towel warmers Low surface
temperature radiators
Decorative steel tubular
andcolumn radiators
 Read more on pages 20 to 35
Supporting the future
of home heating
We design home heating
products which as part of a
welldesigned system help reduce
carbon emissions from buildings
and support an equitable net
zerotransition
Minimising our
environmental impacts
We reduce our own footprint
by focusing on energy waste
and water in our operations
and the resources needed
to produce package and
transport our products
Building an
exceptional workplace
We empower our employees
to be the best they can be
prioritising their safety wellbeing
and development and promoting
equality diversity and inclusion
Maintaining high
business standards
We manage the Group for the
benefit of all stakeholders through
high ethical and corporate
governance standards and a
culture of accountability integrity
transparency and responsibility
A signiﬁcant longterm presence in the global radiator market
UK & Ireland
m
Europe
m
Turkey & International
m
Our global presence is
well established
Stelrad’s three mature wellinvested
state of the art manufacturing
facilities are supported by market
leading distribution facilities
designed to provide our customers
across the world with high levels
of product availability and service
backed up by an extensive sales
operation in the UK& Ireland
Europe Turkey and China
 Head office
 Manufacturing
distribution and sales
 Distribution warehouse
 Sales presence
Head Office
Newcastle upon Tyne UK
UK Radiators
Mexborough UK
Continental Radiators
Nuth Netherlands
Hudevad
Kolding Denmark
Caradon Polska
Krakw Poland
Termo Teknik
Çorlu Istanbul Turkey
1
2
3
5
6
4
1
2
3
5
6
4

customers

countries
STRATEGIC REPORT
Stelrad Group plc Annual Report 202104
Our investment case
Building on our
businessstrengths
Leading market position
A longterm player of scale
in steel panel radiators
Robust business model
Attractive dynamics
led by underlying
replacement demand
 Operating in a market with high
barriers to entry
 Providing cost leadership and unrivalled
production flexibility from a multisite
manufacturing and logistics platform
 Proven resilience to external shocks
through economic cycles including
’s global financial crisis and the
Covid pandemic
 Broad geographic spread and a growing
mix of higher value design radiators
underpinned by focused costmanagement
No
market share position in the UK
Ireland the Netherlands Belgium and
Denmark in  with a top  market
share position in eleven countries

product ranges with design and
higher added value radiators
representing % of total stock
keeping units
 Read more about our markets on page 10  Read more about our business model on page 12
Our brand strength and
wellestablished relationships
with major distributors
and speciﬁers coupled
with an extensive product
portfolio and highly eﬃcient
operating infrastructure
mean we are well placed for
growth  both organically
and through strategic
acquisition
Trevor Harvey
Chief Executive Oﬃcer
05Annual Report 2021 Stelrad Group plc
Strong ﬁnancial position
A track record of
consistent growth
Experienced
management and
eﬀective strategy
A customerorientated
leadership team
with unparalleled
sectorexperience
Longterm focus on
decarbonisation and ESG
Commitment to develop
our ESG credentials
continuously as the
decarbonisation of
residential home heating
drives market transition
overthe coming decades
 Sector leading margins with scope to
improve through further operational
leverage and product mix improvement
 Strong cash generation and return on
capital employed
 Focus on quality innovation
andcustomer service
 Effective channel management driven
by a multibrand strategy active product
repositioning and timely adaptation to
continuously evolving routes to market
 Anticipated panEuropean changes
in environmental legislation relating
to buildings are expected to present
favourable nearterm growth drivers
forthe radiator market as higher
outputheat emitters are required
 Stelrad and all its stakeholders
will benefit from longterm sector
transformation to a more sustainable
heating model
% CAGR
sales growth between  and 

customers in
 countries
%
of waste recycled in 
 Read more about our KPIs on page 16 Read more about our strategy on page 14  Read more about our ESG on page 20
STRATEGIC REPORT
Stelrad Group plc Annual Report 202106
Chair’s statement
We are extremely grateful to
ourdedicated and loyal teams
for their commitment
Stelrad has continued to progress
despite the disruption of the Covid
pandemic and this ﬁrst Annual Report
underlines the resilience of the business
during challenging times
Bob Ellis
Chair
07Annual Report 2021 Stelrad Group plc
Dear shareholder
It is a pleasure to be addressing you as Chair of Stelrad Group plc
following our successful flotation on the London Stock Exchange in
November  Despite the impact of the Covid pandemic across
the world Stelrad’s impressive progress continued in  as we
achieved a record financial performance
This underlines the resilience of Stelrad’s business model and the
robustness of our strategy in the face of an unpredictable trading
environment and volatility in commodity prices I believe this resilience
positions us well to capitalise on the opportunities of the future as
economies recover postpandemic and decarbonisation initiatives
increasingly influence the specification of tomorrow’s heating systems
Purpose
We define our purpose as helping to heat homes sustainably
recognising the valuable role that the Group has to play both now and
in the future in the specification and supply of heating products that
contribute effectively to environmental and social improvement
People
Our main priority over the last two years has been the safety and
wellbeing of our employees and their families We are extremely grateful
to our dedicated and loyal teams for their commitment during this
unprecedented period of global disruption and for their outstanding
contribution to ensuring a safe working environment whilst generating
such exceptional businessperformance
 Read more on page 29
Performance and results
Stelrad’s strong set of results reflects the underlying resilience of the
business despite the pandemic with a % rise in Group revenue to
 million alongside adjusted operating profit more than doubling
to million underlining the quality of our business
The Group made good progress in all territories during  with
UK & Ireland Europe and Turkey & International all delivering strong
revenue and profit growth This performance was aided by the
supportive backdrop of the continued focus on decarbonisation and
the move towards higher added value premium steel panel radiators
We completed our sixyear programme of upgrading our three main
facilities which has seen a total of  million invested in our bestin
class manufacturing capabilities
Dividends
The Group’s strong financial results led the Board to recommend a
final dividend of  pence per share to be paid on a pro rata basis
relating to the period between listing and  December  Subject to
approval by shareholders at the Annual General Meeting on  May 
the final dividend will be paid on  May  to shareholders onthe
register on  April 
Strategy
Our strong results in  were driven by clear commercial and
operational strategies developed over many years in pursuit of four key
objectives growing market share improving product mix optimising
routes to market and positioning effectively for decarbonisation We are
confident the Group will have increased its overall market share in 
a year which saw us complete our significant programme of operational
investment to provide the platform for future profitable growth
 showed increasing contribution to performance from higher added
value premium steel panel and design radiators In addition the Group
continues to adapt quickly and effectively to evolving routes to market
with changes in distributor ownership and digital transformation set
toaffect the heating products supply chain over the longer term
 was also notable for Stelrad’s introduction of new products
and expansion of product ranges particularly well adapted to lower
temperature systems in readiness for the transition to low and zero
carbon heat sources anticipated over the coming years as we strive
toachieve our purpose of helping to heat homes sustainably
 Read more on page 14
Environmental social and governance
“ESG”objectives
Stelrad is committed to high standards of corporate responsibility
sustainability and employee engagement We aim to consider fully the
longterm impact of all our business operations To that end we have
setup a task force led by the Chief Executive Officer to develop our
ESGstrategy more fully during the course of  in line with our
purpose of helping to heat homes sustainably
To ensure sustainability remains at the heart of what we do the task
force will conduct a detailed review of the Group’s activities in order to
develop a comprehensive ESG strategy This will build on our existing
work to redefine our ambitions and targets and identify how we can
better contribute to supporting wider international goals and will be
fullyaligned with our corporate aims objectives and values
 Read more on page 20
Board
I would like to take this opportunity to welcome our independent
NonExecutive Directors Terry Miller Nicola Bruce and Martin Payne to
the Board and look forward to Stelrad benefiting from their experience
and expertise over the coming years
 Read more on page 48
Governance
The Group is committed to high levels of corporate governance in line
with its status as a company with a premium listing on the Main Market
of the London Stock Exchange Our compliance with the  edition of
the UK Corporate Governance Code is set out in the Governance Report
on page 
Summary
Stelrad has continued to progress despite the disruption of the Covid
pandemic and our first Annual Report as a listed company underlines
the strength of the business during challenging times This strength is
founded on a coherent and robust strategy for profitable longterm
growth substantial investment in our operational assets and the hard
work and innovation of our experienced and dedicated people
With the inevitable changes decarbonisation and digital transformation
will bring the Group is well positioned to maximise its opportunities as
markets evolve motivated by our core purpose to help to heat homes
sustainably both now and in the future
Bob Ellis
Chair
 March 
STRATEGIC REPORT
Stelrad Group plc Annual Report 202108
Chief Executive Oﬃcer’s review
We are conscious that how we
perform as a business impacts
our customers, our workforce
and our world
As countries look to decarbonise homes and
meet longterm net zero carbon commitments
we have a signiﬁcant opportunity to help heat
homes sustainably and in so doing build a
stronger business for all Stelrad stakeholders
Trevor Harvey
Chief Executive Oﬃcer
09Annual Report 2021 Stelrad Group plc
Overview
This financial year has been one of significant progress by the Stelrad
Group which culminated in November  with our successful listing
on the premium segment of the London Stock Exchange
The Group delivered substantial organic revenue growth in 
increasing by % from  million in  to  million
whilst adjusted operating profit rose by % to  million 
 million
Satisfying performance against KPIs
In addition to revenue and profit growth the Group also performed
strongly against its other key metrics
Sales volume increased by % versus  and was % higher than in
 the last prepandemic year This reflects Stelrad’s progress in all of
its key territories The UK & Ireland delivered revenue growth of %
and adjusted operating profit growth of % while for Europe
revenue and adjusted operating profit growth were up % and %
respectively In our Turkey & International markets revenue grew by
% while adjusted operating profit rose by %
Our growth in these metrics across all geographies was driven by volume
recovery and timely proactive price optimisation as steel prices rose
substantially Profitability was enhanced by further production transfers
to our lowcost Turkish facility and an improved mix of premium steel
panel and design radiators
As compared to  Stelrad achieved very satisfying volume growth of
% in higher added value premium steel panel radiators representing
an increase of % when compared to  This is the outcome of
our clear strategy to develop and grow this profitable segment enabling
us to fully capitalise on the Group’s sustainable competitive advantage
in this product category notably in the UK where total market volume
is high premium steel panel penetration is low and Stelrad has a strong
leadership position
Investment for the future
In  Stelrad completed a sixyear c million programme of
incremental investment into its three main operational facilities Our
goals were to increase production flexibility capacity and productivity
along with improving product quality As a result during  we
benefited from further transfers of production from our mainland
European sites to the Group’s lowest cost facility in Turkey
The investment in our operational facilities is crucial to the Group
improving the health safety and wellbeing of our employees as
demonstrated by our sites in the UK and Netherlands as of January
 currently having both operated for over one full year without any
lost time accidents The Group is now focused on utilising the successes
in the UK and Netherlands to further reduce the risk of lost time
accidents in Turkey
The transfer of production to Turkey combined with an improved
premium steel panel product mix drove a % increase in contribution
per radiator versus  an increase of % relative to  Lowcost
manufacturing remains an essential enabling strategy formarket share
growth and positions Stelrad as a natural consolidator of the radiator
market over the longer term
Following the creation of our European Distribution Centre in the
Netherlands in  we have also continued to pursue our strategy
of making our products readily available for our customers with
 investments in our warehousing facilities in Turkey and the UK
In the Danish market where we gained market leadership in 
we established a new commercial and distribution hub to provide
improvedlogistics for local customers
Product range innovation
Stelrad has one of the radiator market’s most comprehensive and
innovative ranges of products  saw the addition of new electric
and fan assisted radiators in the form of the Dahlia E and Vento ranges
and further expansion of higher heat output vertical and triple panel
triple convector K steel panel ranges These will form an increasingly
important part of the Group’s offer as we ensure we continue to
provide heat emitters suitable for low and zero carbon heating systems
regardless of heat source As countries look to decarbonise homes and
meet longterm net zero carbon commitments we have a significant
opportunity to help heat homes sustainably and in so doing build a
stronger business for all Stelrad stakeholders
Embracing digital transformation
In the private residential RMI segment routes to market are evolving
and sustained progress is being made by multichannel players which
combine a network of physical retail outlets with a strong online
presence Stelrad is well positioned to benefit from the opportunities
arising from digital transformation both through supply to the leading
players in the specialist online and multichannel segment and through a
programme of increasing investment in its own digital presence in the
business to consumer “BC” market
The Group also continues to invest in Building Information Modelling
to ensure specifiers in new build and commercial segments can
easily incorporate Stelrad products into their building and heating
system designs
Outlook
Trading since the period end has remained broadly in line with
management expectations with some reduction in overall volumes more
than offset by increased revenues and improving margins
The Group’s market leading products and brands coupled with unrivalled
access to specifiers mean that the Group remains very well positioned
versus its competitors across all key geographies
Notwithstanding supply chain challenges impacting the building products
sector including the situation in Ukraine expectations for the year
remain unchanged and the Group remains well placed to build on the
strong momentum generated in 
Trevor Harvey
Chief Executive Oﬃcer
 March 
STRATEGIC REPORT
Stelrad Group plc Annual Report 202110
Market overview
In a mature and competitive market,
scale in steel panel radiators and a
strategy of diﬀerentiation position
Stelrad eﬀectively for continued success
Hydronic systems dominate the heating market with steel panel radiators by far
the most popular heat emitter Demand for radiators is driven substantially by the
replacement market which reduces exposure to economic cycles
Residential heating
systems by type
Hydronic heat emitters
by type
Steel panel radiator
demand drivers
The Group operates across three core geographies
UK & Ireland
%
market share in 
Sales to the UK & Ireland represented
% of Stelrad’s  turnover with the
Group holding a clear leadership position
in both countries in  Between 
and  we recorded % compound
annual sales growth in this geography also
benefiting significantly from competitor
QRL’s exit from the market after entering
administration during  Sales value in
 rose following postCovid volume
growth and selling price increases
Europe
%
market share in 
Across Europe which represented %
of Stelrad’s  turnover Stelrad held
a further nine top  market positions in
 We led the market in our long
established core countries Belgium and the
Netherlands In Denmark we leveraged our
 acquisition of Hudevad to introduce
local distribution capabilities for the Stelrad
brand launching into three of the top four
distributors and gaining number one status in
the process We have continued to develop
market share in France holding a clear
number three position in  following
% compound annual sales growth
between  and  Overall growth
has been driven by successful business
development activity with several of Europe’s
leading building productsdistributors
Turkey & International
%
market share in 
Our third geography represented % of
Stelrad’s  turnover The Group held a
number  market position in Turkey with
% share in  following our 
strategic decision to reduce risk exposure
to this market and its currency In China
% share in  represented a number
seven market position as we positioned
our brands as a premium European offer
inthis growing market
ȎǍ̮ǍǛ ȞǍԻǍǛ ɇǍ൫ǍǛ
%
hydronic
radiators
%
steel panel
radiators
%
replacement
and first time
installation
11Annual Report 2021 Stelrad Group plc
Market trends
Our strategy aligns with
underlying market trends
Historical market stability
Increasing adoption of premium
design radiators
Replacement is the primary
volume driver
A positive outlook for radiators in
decarbonised heating systems
Between  and  overall hydronic radiator market volumes
were broadly flat with little evidence of cyclical demand drivers as
demonstrated by % CAGR for steel panel radiators over that
period Following the impact of Covid during  markets
fundamentally recovered to prepandemic levels during the
course of 
Our opportunity
Leveraging Stelrad’s scale operational flexibility and low cost
manufacturing derived from wellinvested assets in combination
with a market leading logistics capability provides the Group with
a clear opportunity to gain share in strategic geographies and
to continue to act as a proven natural consolidator as smaller
competitors leave the radiator market
Notably in mature markets for central heating consumer focus
on home design is driving rising demand for premium steel panel
and other design radiators This trend may have been accelerated
during the Covid pandemic due to extended periods of working
from home with people’s inability to travel for holidays boosting
home improvement spend
Our opportunity
Stelrad has the most extensive range of premium steel panel
radiator designs on the market coupled with state of the art low
cost manufacturing operations Having developed strong sales in
the design conscious markets of Belgium and the Netherlands
the Group now has a significant opportunity to leverage its market
leading position to develop the large UK market which currently has
low levels of premium steel panel and design radiator penetration
compared to mainland Western Europe
For steel panel radiators replacement and first time installation
represents around % of UK market volume % in mature
Western European markets and around % in the developing
markets of Turkey and Eastern Europe New residential construction
is the secondary driver with strong demand for new homes in many
geographies including the UK
Our opportunity
Stelrad has already adapted quickly to the evolution of routes to
the replacement radiator market continuing to supply its traditional
distribution base whilst also expanding activities with retailers such
as Kingfisher which is increasingly targeting this segment with
multichannel offers Further digital transformation provides the
Group with the opportunity to leverage its leading trade brands for
future growth In addition our strong links to new build housing
specifiers ensure we benefit from increased residential construction
as the world builds back better postCovid
Decarbonisation initiatives and low carbon homes are expected
to drive the installation of larger higher value radiators as low
temperature heating systems replace fossil fuel sources and require
a combination of increased insulation and larger heat emitters in
order to maintain a comfortable home climate
Our opportunity
Stelrad’s position as a trusted adviser to specifiers notably in the
new residential housing market provides us with the opportunity
to develop sales from our earlier proactive introduction of
products compatible with low carbon low temperature heating
systems In addition our strong brands and market leading logistics
capabilities provide a credible platform for the Group to introduce
complementary products appropriate to the needs of low and zero
carbon heating
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

Read more on page 14
 Read more on page 14
 Read more on page 15
 Read more on page 15
STRATEGIC REPORT
Stelrad Group plc Annual Report 202112
Our business model
Long-term sustainable value for
keystakeholders results from our
robust business model…
How we create value
Our proven process
is fundamental to our
ongoing success
Our resources
People
Stelrad has a lean global team of
employees

and the most stable
experienced senior management team in the
industry with an average of  years’ service
International network
With a manufacturing distribution and sales
presence across all key international radiator
markets Stelrad aims to provide exceptional
technical commercial and logistical support
for specifiers and distributors throughout
the world
Brands
Stelrad Henrad and Termo Teknik are leading
industry recognised steel panel radiator brands
with loyal extensive and growing customer
bases The recently acquired Hudevad brand
is an equally wellestablished high end designer
radiator brand which gives the Group increased
access to the profitable commercial market
What makes us diﬀerent
Brand strength
Stelrad is the number one steel panel radiator
brand across the UK Europe and Turkey
The Group leverages a powerful multibrand
strategy to manage evolving routes to
market maximising access to specifiers in
allmarket segments and minimising conflict
indistribution channels
Product availability
Stelrad has the largest radiator distribution
centres in the UK and mainland Western
Europe with respective capacities of k and
k units and these are further supported
by regional distribution hubs We place strong
emphasis on providing best in class lead times
to our customers
Range innovation
Stelrad pioneered premium steel panel and
vertical radiators which offer a combination
of design aesthetics ease of installation and
value for money The Group has achieved
significant market penetration with these
products in Western Europe and has first
mover advantage in the UK with an innovative
upselling approach
Shared value
Customers
Decarbonisation will drive significant change in
the heating industry and our goal is to continue
to provide trusted partnership to our loyal and
longstanding customers as we jointly navigate
the path to zero carbon heating systems
People
Stelrad is a place where commitment is rewarded
and where people are encouraged to fulfil their
potential Our objective is to develop a sustainable
business fit for the long term which provides a
desirable longterm career environment
Investors
We aim to deliver sustainable reliable returns
for those who invest in the Group through
developing longterm customer relationships
and harnessing the commitment of our people
to make Stelrad a better business year on year
Manufacture
Design
Formulate
strategy
 Fulltime employees “FTEs”
Innovate
13Annual Report 2021 Stelrad Group plcAnnual Report 2021 Stelrad Group plc 13
...and ensures
ESG is integrated
Operational assets
Between  and  significant capital
investment with a focus on automation has
delivered upgrades to all sites resulting in
an efficient and low cost manufacturing
platform supported by a market leading
logisticsinfrastructure
Standardised core design
The Group’s core heat emitter design is used
inall standard and higher added value premium
steel panel radiators It is common to all three
of our manufacturing facilities ensuring high
levels of quality at the lowest possible cost
The consistency of core design across Stelrad’s
facilities provides production flexibility cost
efficiency and mitigates risk
Suppliers
We aim to be a reliable straightforward but
challenging partner as we strive to deliver
costeffective and sustainable solutions
for ourcustomers and maximise longterm
valuefor our shareholders
Maintaining high standards of business
All business activities are conducted to high ethical
standards and we strive to ensure that all employees
act in accordance with our Group values In addition
we seek to develop longterm trading relationships
with suppliers which share our standards and values
We will only work with organisations which formally
commit to our ethical trading policy and we conduct
regular audits of our suppliers
 Read more on page 32
Minimising our environmental impacts
We acknowledge the impact we have on the
environment and actively work to reduceit
This helps to create shared value for our
communities both local and global We focus
strongly on energy and waste in our own
operations and work with partners throughout
the value chain to ensure that our products can
be manufactured and used sustainably
 Read more on page 25
Building an exceptional workplace
We work hard to keep our employees safe and invest
in people development to help them to become
the best that they can be We actively work to
promote equality and diversity and we foster strong
relationships with labour representatives All of this
contributes to a happy and productive workforce
being one of our most important resources
 Read more on page 29
Supporting the future of home heating
Stelrad is well positioned to support efforts to
decarbonise the heating sector and to benefit from
the transition to low and zero carbon heat sources
We design products that work effectively with a wide
variety of heating systems and our strong market
position ensures we are well placed to achieve our
purpose of helping to heat homes sustainably
 Read more on page 23
Distribute
Innovate
STRATEGIC REPORT
Stelrad Group plc Annual Report 202114
Our strategy
Stelrad’s strategy is founded
onfour key objectives

Growing
market share
Links to risks Links to risks

Improving
product mix
Strive for cost leadership
Now Stelrad has invested for cost leadership with a standardised core
design and significant development and upgrading of our manufacturing
facilities including our low cost Turkish operation In addition we have
the benefits of our scale as a leading radiator producer
Future We will leverage the benefits of our multisite manufacturing
platform with our cost leadership allowing us to maximise
profitable growth as smaller higher cost competitors exit
the market
Provide market leading product availability
Now Standardised core design allows production planning flexibility
across our three facilities Our market leading UK and European
distribution centres are supported by facilities with dedicated inventory
in other key geographies resulting in a best in class logistics offer
Future The Group will maximise the benefits of the European
Distribution Centre and will seek to increase availability for premium
steel panel and other design radiators with the objective of
expanding the market for these higher value ranges
Selectively target share growth in key
geographic markets
Now Stelrad is market leader in five countries and holds a top 
position in six more In / important market share gains were
made in the French and Scandinavian markets
Future We will continue to develop our mainland European
relationship with SaintGobain and the longestablished regional
players in those territories ensuring we continue to adapt to
evolving routes to market
Act as a market consolidator
Now As a player of scale the Group benefited from the exit of key
competitor QRL to increase share in the UK Ireland Belgium and France
Stelrad is perceived by distributors as a longterm scale player and is
a proven organic consolidator both as competitors have left the
market and through deploying a highly effective sales strategy
Future Smaller competitors will increasingly come under increased
pressure on profitability providing opportunities to gain share
organically through business gains or competitor exits We will
investigate acquisitions which extend the range of radiators available
to our sales and distribution network expand routes to market where
Stelrad’s presence is less strong provide a strong brand in markets
where Stelrad’s share is low or increase manufacturing capacity at a
lower cost than developing our existing lines
Accelerate upselling to premium steel panel
anddesign products
Now The Group has achieved significant success in driving sales
growth in the higher margin premium steel panel radiator segment
resulting in the Group’s volume of premium steel panel sales
increasing from k units in  to k units in  delivering
a significant contribution benefit
Future We will continue to focus on expanding the market
for these products particularly in key geographies with low
premium steel panel and design radiator penetration such as
the UK leveraging Stelrad’s brand strength and leading market
share position
Pursue complementary acquisition
opportunities
Now Stelrad acquired Hudevad Radiator Design in 
strengthening our presence in the Scandinavian radiator market and
providing the Group with a truly high end design radiator brand We
have since reengineered the entire range to use our standard core
heat emitter design
Future The Hudevad brand will now be developed across our core
geographies and we will investigate further potential design radiator
acquisitions with the aim of extending the range of radiators
available to our international sales and distribution network
1 4 72 5 83 6 1 42 53 6
15Annual Report 2021 Stelrad Group plc
Risk key
Business disruption1
Reliance on key customers2
Loss of competitive advantage3
IT failure or cyber breach5
Political environment and climate change
8Supply chain risk4
People
6
Health and safety7
Links to risks Links to risks

Optimising routes
to market

Positioning eﬀectively
fordecarbonisation
Adapt quickly to channel evolution
Now Stelrad has successfully managed changes in channel mix to
capitalise on recent opportunities entering the UK retail channel by
supplying Kingfisher’s multichannel trade and retail brand Screwfix
In mainland Europe we benefited from a longstanding relationship
with SaintGobain to develop materially our sales in France and
Scandinavia  saw further growth with UK merchant buying
group PHG following our proactive development of the Henrad
brand for the independent merchant channel
Future We will maximise profitable growth with SaintGobain
outside the UK and further develop our close relationship with
existing customer UK Plumbing Supplies in the UK following its
acquisition of former SaintGobain brand Graham We will continue
to invest in all our brands positioning them appropriately for
changing market circumstances
Embrace digital transformation
Now Across the Group we have embraced Building Information
Modelling “BIM” to facilitate specification by architects and
consultant engineers In the UK private residential replacement
market Stelrad provides an online radiator purchasing facility
including direct delivery to a customer’s address
Future We will continue to develop our digital capability and online
presence to ensure the continuing strength of our brands with all
specifier groups regardless of channel to market
Maximise sales of current products compatible
with low temperature systems
Now Long replacement cycles and the large installed radiator base
mean that the full impact of decarbonisation will take decades to
be felt Legislation will primarily focus on heat source technologies
requiring heat emitters compatible with low temperature systems
We have continued to develop our portfolio of higher heat output
radiators expanding our vertical and multipanel multiconvector
steel panel radiator ranges In  we launched the fully
programmable Dahlia electric towel warmer range and introduced
Vento a fan assisted steel panel radiator specifically designed to
partner heat pump systems
Future Stelrad’s role as a trusted customer adviser now provides
us with a unique opportunity to influence new residential build
specification in a positive way helping to heat homes sustainably
through optimising radiator selection for low temperature low
carbon systems irrespective of heat source
Leverage our market position to unlock
adjacentopportunities
Now Stelrad’s brand strength channel access and operational
infrastructure position the Group to play a pivotal role in
the development of European hydronic heating distribution
channels as decarbonisation initiatives gain momentum over
thecoming decade
Future Our wellknown and trusted brands coupled with unrivalled
access to distribution channels will enable us to diversify into
complementary heat emitter solutions and other product areas
related to the zero carbon transformation of home heating
1 42 53 6 1 63 84
STRATEGIC REPORT
Stelrad Group plc Annual Report 202116
Key performance indicators
Management considers
a variety of ﬁnancial and
nonﬁnancial measures and
metrics when analysing the
Group’s performance and
the Directors believe that
each of these measures
provides useful information
with respect to the Group’s
business and operations
With the exception of revenue
these are nonIFRS ﬁnancial
measures and metrics
Revenue
m
Adjusted operating profit
m
 
 
 
 
 
 
Description
The Group generates revenue from three
operating segments the UK & Ireland Europe
and Turkey & International Revenue arises
from the sale of products to consumers and
represents the gross invoiced sales less credit
notes and rebates
Performance
Revenue grew by % driven by increased
sales volumes which were exceptionally low in
Q  due to the Covid pandemic and
selling price increases in  recovering a
significant rise in steel prices
Description
Adjusted operating profit is the Group’s key
profit measure to show performance from
operations
Performance
Adjusted operating profit grew by % driven
by increased sales volumes the transfer of
production to lower cost facilities a growth in
premium panel sales volumes and the benefit
of increased selling prices partially offset by
the impact of steel price rises
Measuring and analysing
theGroup’s performance
1 42 3
Links to strategy
1 42 3
Links to strategy
Strategy key
Growing market share1
Improving product mix2
Optimising routes to market3
Positioning effectively for decarbonisation
4
Adjusted free cash flow
m
Adjusted EPS
p





Description
Adjusted EPS is the adjusted profit after tax
ofthe Group per share in issue
Performance
Adjusted EPS grew significantly in the period
supported by strong growth in adjusted
operating profit






Description
Adjusted free cash flow shows the cash
available to service debt and make distributions
to shareholders
Performance
Adjusted free cash flow grew by % with
strong EBITDA growth partially offset by
aninvestment in working capital

1 42 3
Links to strategy
1 42 3
Links to strategy
17Annual Report 2021 Stelrad Group plc
Total radiator
volumes sold
k units
Total premium panel
radiatorvolumes sold
k units






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
Premium panel volumes grew %
underpinned by commercial initiatives put in
place by the Group  volumes were only
marginally impacted by Covid






Description
The sales volumes of radiators across all
geographical segments in the reporting period
Performance
Volumes increased % in the year with
volumes suppressed in Q  due to
Covid and  volumes benefiting
from high private repairs maintenance
andimprovement activity
Glossary of terms
Adjusted cash flow from operations
EBITDA plus or minus movements in
operating working capital less share
based payment expense less net
investments in property plant and
equipment less finance lease payments
Adjusted cash flow from operations
conversion calculated by dividing
adjusted cash flow from operations by
adjusted operating profit
Adjusted EPS adjusted earnings per
share is calculated on adjusted profit
after tax divided by the weighted average
number of shares in issue
Adjusted free cash flow adjusted
cash flow from operations plus interest
received less tax paid
Adjusted operating profit operating
profit before exceptional items and
foreign exchange differences
Adjusted profit after tax
earningsbefore exceptional items
foreign exchange differences and tax
on exceptional items and foreign
exchange differences
Business capital employed the sum
of property plant and equipment trade
and other receivables inventories other
current financial assets provisions net
employee defined benefit liabilities trade
and other payables and other current
financial liabilities
CAGR compound annual growth rate
Contribution revenue from sale of the
Group’s products less any cost of direct
materials variable distribution costs
variable selling costs direct labour costs
and other variable costs
EBITDA profit before interest taxation
depreciation amortisation exceptional
items and foreign exchange differences
Return on capital employed adjusted
operating profit as a percentage of
business capital employed
RMI repair maintenance and
improvement activities
1 23
Links to strategy Links to strategy
Contribution
per radiator







Description
The value of contribution generated per
radiator sold
Performance
Contribution per radiator has increased %
benefiting from the transfer of production
to lower cost facilities a growth in premium
panel sales volumes and increased selling prices
partially offset by the impact of steel price rises
with a large part of the volume recovery in 
being standard panel radiators
Return on capital employed
%






Description
Return on capital employed is adjusted
operating profit as a percentage of business
capital employed
Performance
Return on capital employed grew strongly
inthe period primarily due to a %
increasein adjusted operating profit
2 4
Links to strategy
1 42 3
Links to strategy
STRATEGIC REPORT
Stelrad Group plc Annual Report 202118
Stakeholder engagement
We are committed to engaging
our stakeholders in all aspects
of our strategic vision
Section  statement
The Board of Directors of Stelrad Group plc
both individually and together consider that
they have acted in a way that in good faith
would be most likely to promote the longterm
success of the Group and Company for the
benefit of their members as a whole having
regard to the stakeholders and matters set
out in section af of the Act in
the decisions taken during the year ended
 December 
The Board considers its key stakeholders
to be its employees customers suppliers
and investors and the communities
and environment in which the Group
operates TheBoard takes the views of
these 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 form
part of any Board discussions which lead to
decision making
Each year the Group undertakes a detailed
business planning process during which the
Group sets out its longterm plans and as
part of this process carefully assesses any
consequences of these plans The Board will
also on an adhoc basis ask the Group to
explore other longterm options and their
likely consequences The main objective of
the business planning process is to define a
direction that will most likely promote the
success of the Group for all stakeholders
The remainder of this section of the Annual
Report sets out how Stelrad Group plc and the
Board have engaged with key stakeholders
In addition to the information provided here
the Group’s business model on pages  and
 and the Group’s strategy on pages  and
 outline how the Group engages with its
stakeholders and how the business creates
value for each of them Furthermore our ESG
strategy and activity which directly impact
many of our stakeholders are outlined in the
Sustainability section on page 
As the Board of Directors our intention is to
behave responsibly towards our stakeholders
and treat them fairly and equally so that
they all benefit from the successful delivery
of our plan
Employees
Why we engage
Our employees are fundamental to the
delivery of our business plan and to the future
performance of the Group We aim to be a
responsible employer in our approach to the
pay and benefits our employees receive and
through continuous investment in training
for our employees The health safety and
wellbeing of our employees is one of our
primary considerations in the way we do
business and is a critical part of our investment
decisionmaking process Engaging with our
employees assists the maintenance of strong
collaborative relationships with our trade
unions and employee representatives
How we engage
 Training and development
 Individual performance reviews
 Recognition and reward
 Apprenticeships
 Regular communications such
as newsletters
 Annual Report and Accounts
 Commencement of employee engagement
survey and Board member visits to sites
during 
Outcomes
 Communication of relevant and timely
information and sharing of knowledge
 Improved level of engagement and lower
absence rates
 Regular access to training at all levels
 Improved awareness and support for health
and wellbeing issues
 Processes improved initiatives developed
and management buyin at different levels 
facilitated by the Group’s Code of Conduct
Why we engage
Trusted relationships with our customers and
high standards of business conduct are critical
to our Group’s performance Accordingly
we continuously seek to build and strengthen
these key relationships and conduct business
with integrity and in a professional manner
How we engage
 Management of ongoing customer
relationships
 Customer events and product launches
 Participation in industry forums exhibitions
and events
 Brand websites and social media
 Annual Report and Accounts
Outcomes

Continued customer satisfaction and loyalty
 Establishment of longterm partnerships
 Successful and mutually beneficial results
from the transition to zero carbon
heating systems
Customers
19Annual Report 2021 Stelrad Group plc
Why we engage
Our suppliers are intrinsic to the performance
of our business Maintaining a fully integrated
supply chain means that we can ensure security
of supply and speed to market in addition to
achieving a high quality competitive supply
whilst gaining the support of our suppliers in
sustainability initiatives that we undertake
How we engage
 Ongoing supplier performance and
relationship building meetings
 Supplier reviews and audits
 Partnering with key suppliers to develop
initiatives for innovative solutions in a
collaborative manner
 Collaboration as appropriate on
product development
 Effective communication of quality
cost competitiveness and future
order requirements
 Timely payment of suppliers
Outcomes
 Stable sourcing product quality and
competitive pricing
 Longterm partnering reducing supply
chain volatility
 Fair payment terms
 Support of our ESG initiatives
Why we engage
The Group’s ESG strategy is key to ensuring our
ESG ambitions are realised and ESG has been
a significant focus area for the Board this year
and will remain so going forward The Group
has strong ESG initiatives in each of the main
territories in which we operate all of which
strive to allow the Group to make a positive
impact in the communities where we are
based The Group is also aware of the impact
we have on the environment and this is a
critical part of our investment decisionmaking
and business planning process
How we engage
 Community investment initiatives
 Sponsorship and employee volunteering
 Contributing to national initiatives in society
 Regular engagement with local authorities
and businesses supporting the delivery of
educational and vocational initiatives
 Participation in initiatives to help reduce the
environmental impact of our business
Outcomes
 Support and development of local
educational institutions
 Longstanding sponsorship of local
sport clubs regular charitable events
and fundraising
 Cleaner and friendlier areas for the
local communities
Why we engage
We consider that helping our investors to
understand our business model 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 also fundamental to
addressing the regulatory requirements to
provide fair balanced and understandable
information about the business to enable
informed investment decisions to be made
How we engage

Annual Report and Accounts
 Annual General Meeting
 Corporate website including dedicated
investor section
 Results presentations and postresults
engagement with major shareholders
 Regular investor roadshows comprising
both onetoone meetings with our largest
institutional shareholders and investor
group meetings to take place following
results announcements
 Regular indepth feedback on investor views
provided by our corporate brokers
Outcomes
 Supported demand for the Group’s shares
 Support for investment opportunities
including potential acquisitions or capital
investment programmes
 Acceptance of temporarily higher levels
of debt in support of business strategies
inthe event that this was desirable
Suppliers Communities and
the environment
Investors
STRATEGIC REPORT
Stelrad Group plc Annual Report 202120
Sustainability
Introduction to ESG
As Chief Executive Oﬃcer I am pleased to
introduce our ﬁrst Sustainability Report
Thisreport allows us to discuss the progress
we are making within environmental social
and governance “ESG” areas at Stelrad
Wealso set out our current strategic thinking
on ESG and our role in helping to heat homes
sustainably This strategic direction reﬂects
our belief in a future where low and zero
carbon domestic heating systems are widely
available and provided in a way that beneﬁts
all our stakeholders
We have seen
signiﬁcant
progress in our
management of
ESG priority areas
Never has the need to support our stakeholders been more clearly
demonstrated than during the last two years The Covid pandemic
has had a dramatic impact on working practices and has been a
dominant consideration for the Board Throughout this the safety
and wellbeing of our workforce and contractors and the communities
in which we operate has been our main concern The response and
determination shown by all involved reflect well on our Company culture
and values and are a real source of pride for me
Despite the challenges of  we have seen significant progress
in our management of ESG priority areas We have taken action to
broaden the skill set at all levels of the business welcoming new Board
members with strong ESG experience and forming a new international
working group to oversee the development and implementation of our
evolving ESG strategy We have also taken action to improve our access
to the detailed information necessary to make informed decisions
expanding our data collection and enabling the publication of Group
wide environmental performance metrics for the first time in this report
This focus on further understanding our Group impacts will continue as
we aim to identify and measure our relevant Scope  emissions in the
coming years and initiate lifecycle analysis to quantify the environmental
impacts of our products throughout the value chain All this work will
help provide the necessary strong foundations to be able to target
improvements and measure and demonstrate our performance over time
This quantification work will form part of what promises to be an
exciting period for ESG at Stelrad During  we will conduct a
detailed review of our ESG activities using the findings to develop a full
ESG strategy that builds on the work presented here By engaging with
our stakeholders and employing a robust and wideranging materiality
assessment our new strategy will have the needs of our stakeholders
embedded within it and will be fully aligned with our corporate aims
objectives and values As part of this work we will redefine our ESG
ambitions and targets and identify where and how we can contribute to
wider international goals
I want to finish this introduction by focusing in on safety which is a key
priority for Stelrad Our operations in the UK achieved the milestone of
one year with zero lost time accidents I am sure you will agree this is
an outstanding achievement and reflects the positive safety culture that
exists throughout the Company This achievement only reinforces the
need to continue our drive towards zero harm  we must build on this
strong performance and continually look to improve
I hope you find this report and the information included within it useful
and we very much welcome feedback on how we could enhance this in
future years
Trevor Harvey
Chief Executive Oﬃcer
 March 
21Annual Report 2021 Stelrad Group plcAnnual Report 2021 Stelrad Group plc 21
Introducing our strategic direction
and our role in helping to heat homes
sustainably
Climate change resource scarcity social inequality and corporate
transparency are some of the defining issues of our time Stakeholder
interests are increasingly driven by ESG factors and having a robust
sustainability strategy at the heart of decision making is key for any
business aiming for longevity and future growth All businesses must play
their part developing solutions to the biggest challenges we face and
transforming business models so that they are compatible with a low
carbon green and inclusive world
The impact of heating on our environment and society is a significant
and important one Heating contributes to almost a quarter of all UK
emissions and is the largest single energy user in Europe

 Globally heat
accounts for nearly half of all energy consumption and % of energy
related carbon dioxide emissions

 At the same time households in
almost every market are currently facing steep energy price rises as a
result of accelerating global demand as the global economy recovers
from the pandemic
Our purpose is to help heat homes sustainably We believe Stelrad has
a key role to play in a future where low and zero carbon home heating
is widely available  bringing intelligently and thoughtfully designed heat
emitters to the market that work seamlessly in systems that are less
reliant on fossil fuels We have been proactive in developing products
that are compatible with low carbon low temperature systems such as
heat pumps and we have for a long time worked with housebuilders
and installers to help design systems that support low and zero carbon
in homes Now with governments in nearly all our major markets
accelerating net zero ambitions and outlining their detailed plans
for decarbonising home heating we are well placed to embrace the
opportunity of greener markets
Our ESG approach also means we are constantly examining every
element of our business from our care for our people and how we
work with our suppliers and partners to our impact on the environment
ensuring that we are integrating high standards throughout our business
and operating as efficiently as possible In our first Annual Report we
share Stelrad’s new sustainabilityorientated business purpose our
evolving strategic direction on ESG and our commitment to further our
ESG ambitions and credentials over the years to come This year we have
developed as an initial step a fourpillar ESG framework representing a
strategic direction that reflects our current priorities including our key
role in helping to heat homes sustainably We look forward to a planned
indepth review of our ESG activities over the course of  including
a fullscale materiality assessment and an indepth strategy development
process engaging our stakeholders throughout
 The Oxford Institute for Energy Studies  Decarbonisation of Heat in Europe
Implications for Natural Gas Demand University of Oxford
 Vivid Economics/Imperial College London  International Comparisons of
Heating Cooling and Heat Decarbonisation Policies BEIS
Supporting the future
ofhome heating
We design home heating products which help
reducecarbon emissions from buildings and
supportanequitablenet zero transition
 Read more on page 23
Minimising our
environmental impacts
We reduce our own footprint by focusing on energy
wasteand water in our operations and the resources
needed to produce package and transport our products
 Read more on page 25
Building an exceptional workplace
We empower our employees to be the best they can be
prioritising their safety wellbeing and development and
promoting equality diversity and inclusion
 Read more on page 29
Maintaining high standards
of business
We manage the Group for the benefit of all stakeholders
through high ethical and corporate governance standards
and a culture of accountability integrity transparency
andresponsibility
 Read more on page 32
STRATEGIC REPORT
Stelrad Group plc Annual Report 202122
Supporting global priorities
We have used the UN SDGs to help identify areas where through our actions we can have the biggest economic environmental social and
governance impact and play our part in achieving a better and more sustainable future for all The infographic below shows the findings from
this initial assessment  the goals that we believe are most aligned to our business and why
As part of the next phase of work we plan to conduct a detailed assessment of the targets and indicators that sit underneath the goals
inorderto identify those that Stelrad is best positioned to contribute to
Sustainability continued
Introducing our strategic direction
and our role in helping to heat homes
sustainably continued
How does our work on ESG align with our
business model?
The ESG approach that we have organically evolved over the last decade
is deeply linked to driving value for our business whether that is opening up
market opportunities accelerating operational efficiencies or building
our resilience to external threats In this way it has underpinned our
commercial aims It also delivers value for our stakeholders by prioritising
and responding to the needs of our customers people investors
and suppliers and the communities where we live and work This is
an approach that has developed without extensive structure external
review or guidance but through our natural ways of working and our
positive approach to doing business
By undertaking a thorough review of our material ESG issues and
developing a wellrounded longterm targeted and effective strategy
over the course of the next year we are aiming for this positive organic
approach to sustainability to be transformed into the basis of our
strategic framework Our aim is for ESG to be fully embedded in our
business decision making investments and governance in a manner
which both reflects our historically positive ways of doing business
andformalises our future commitments to sustainable value creation
We have also started using the  United Nations Sustainable
Development Goals “SDGs” to inform our approach so that we are
contributing meaningfully to global priorities The SDGs were published
in  and highlight the priorities negotiated by the international
community as vital for economic growth and development towards
the year  In the section underneath you can see how we believe
Stelrad can best contribute to seven of the globally important SDGs
Addressing priority issues through our new
strategic direction
The four strategic pillars we have developed so far represent a starting
point for our wider strategy development plans In developing our strategic
direction to this point we have worked with external consultants to
undertake a light touch internal audit of ESG issues that we believe are
materially important to the business spoken informally with customers
employees and suppliers and crossreferenced existing internal documents
 including business plans and risk registers  with recognised external
standards and frameworks including the Global Reporting Initiative “GRI”
the Sustainable Accounting Standards Board “SASB” and the SDGs
These four pillars set out our strategic direction and key priorities for
the year ahead of our commitment to undertake deeper strategy
development moving forward

Supporting the future of home heating focuses on the wider
issues of climate change and energy equity and on how our products
can help support an equitable transition to the low carbon economy

Minimising our environmental impacts summarises the
responsibilities we have to reduce our own greenhouse gas “GHG”
emissions to manage energy waste and water in our operations
and to steward the resources used in producing packaging and
transporting our products

Building an exceptional workplace describes our social
responsibilities to our people and local communities prioritising
their health safety wellbeing and development and promoting
equality diversity and inclusion throughout our business

Maintaining high standards of business highlights our
governance responsibilities with a focus on embedding a strong
positive culture which promotes responsible and ethical behaviours
across the Group and the suppliers we work with
We have developed our first year of reporting to focus in on these four
pillars and to chart the progress we have made over the last twelve
months Over the following pages we share metrics case studies and
future plans in line with the four pillars
During  we will be working with external consultants to carry out a
detailed materiality assessment as part of our review with the intention
of verifying and testing our priority ESG topics and further developing
our strategy Whilst we do expect these four strategic direction pillars
to evolve and change as a result of our deeper dive strategic work we
wanted to share where we are starting from with our key stakeholders
We see this as an opportunity to open a dialogue with all our
stakeholders and welcome early feedback and comments
Stelrad prioritises
the health
of its people
and promotes
wider wellbeing
through more
accessible home
heating solutions
Stelrad pursues
partnerships
and promotes
opportunities for
women in STEM
Stelrad maintains
high workplace
standards,
protects workers’
rights and pursues
responsible
business growth
Stelrad innovates
in products
that support
energy resilience
in buildings
Stelrad designs
products that help
reduce energy
usage in homes
and work with
lower temperature
and low
carbon systems
Stelrad manages
its environmental
impacts across the
product lifecycle
and aims to bring
its products
to market as
efficiently
as possible
Stelrad brings
products to
market that
support the low
carbon transition
by helping to
decarbonise
home heating
23Annual Report 2021 Stelrad Group plc
Supporting the future of home heating
We design home heating products which help
reduce carbon emissions from buildings and
support an equitable net zero transition
 Eurostat  Energy Transport and Environment Indicators European Commission
Our progress and key initiatives
Products fit for the future
With an average installed product lifecycle of around
years Stelrad’s existing radiators provide a costeffective
heat emitter solution for low temperature systems
designed from the outset to use recyclable steel and to
strike the best compromise between material consumption
and performance in terms of radiator heat output We are
continuing to develop our product portfolio to make sure
Stelrad provides highly capable products for the heating
systems of the future whether in new construction or for
replacement applications
The latest additions to our heat pump compatible range
include triple panel triple convector K type  radiators
vertical radiators featuring vertical waterways designed to
maximise heat output and the Vento radiator with electrical
fan convection We have also recently launched fully electric
towel warmer and vertical ranges which when coupled
with a renewable source of electricity can eliminate the
need for fossil fuels during the lifetime of the product
Tackling climate change by reducing greenhouse gas emissions is now a
global priority Both UK and EU markets have set legally binding targets
to reach net zero carbon emissions by  with further ambitious
interim reductions of % by  and % by  respectively from
 levels The th Conference of Parties “COP” was held in
Glasgow UK in  and saw the development of further international
net zero pledges including from China and India
In  space heating in residential buildings accounted for % of total
European energy consumption

 so moving quickly to low and zero
carbon heating systems is a critical element in achieving these ambitious
commitments To support this legislation is being introduced across
Europe to limit or prohibit fossil fuel heating systems in both commercial
and domestic settings over the next five years and beyond focusing in
the initial phase on new construction activity The UK Government for
example has set out how it plans to stimulate the market for low carbon
heat in its Heat and Buildings Strategy published in October 
including an ambition to phase out the installation of natural gas boilers
beyond 
Of the existing  million centrally heated homes across the UK
Europe and Turkey % feature hydronic systems And while the need
and size of the opportunity are clear retrofitting this stock with low or
zero carbon heating systems such as those that use heat pumps for
example remains challenging due to the likely combined need for higher
levels of insulation and air management
Despite the uncertainties and challenges of this evolving landscape
Stelrad is well placed to support this transition We remain at the
forefront of understanding and influencing evolving legislation in the
heating market as an active member of two influential trade associations
consulted by the Government the European Heating Industry
“EHI’’ which recently brought together industry representatives and
policymakers to identify barriers and solutions to bringing heat pumps
to the mass market and the UK Energy and Utilities Alliance “EUA”
currently advising the Government on its proposed marketbased
mechanism for low carbon heat following publication of its Heat and
Buildings Strategy in 
While future heat sources are likely to see a combination of more heat
pumps and alternative boiler technologies we believe the vast majority
of future heating systems will remain waterbased hydronic types
especially given the significant replacement market for heating systems
within existing buildings One thing does appear certain at this stage
though  that space heating of the future will operate at lower system
temperatures requiring higher levels of building insulation combined
with heat emitters that have a larger surface area
For this reason we have been proactive in both designing and promoting
products that maximise heating performance and are entirely compatible
with low carbon low temperature heating sources such as heat pumps
as well as working with housebuilders specifiers and installers to help
ensure the right products are selected and installed Stelrad is fully
committed to providing a range of radiators and other heat emitters that
will keep people warm in their homes with the minimum environmental
impact as we undergo this important transition
We are continuing to develop our
product portfolio to make sure Stelrad
provides highly capable products for
the heating systems of the future
STRATEGIC REPORT
Stelrad Group plc Annual Report 202124
Supporting the future of home heating continued
Case study Southway Housing Trust
Major apartment developments show the
potential of pairing radiators with ground
source heat pumps
Two major “extra care” apartment developments by Southway
Housing Trust in Manchester are seeing radiators paired with
ground source heat pumps to provide heating for over s
who are moving into brand new apartments which may be their
homes for life
Gorton Mill House in Gorton and Dahlia House in Burnage are
rapidly taking shape on brownfield sites in Manchester with the aim
of providing zero carbon sites Southway Housing Trust has taken
the decision that wherever possible none of its future new build
properties will have gas as the source of heating and hot water and
is % dedicated to renewable heating and hot water systems for
its tenants in the years to come
Paul Maidment from Southway Housing Trust says “These
developments are the results of a policy decision we have taken to
utilise renewable heating and hot water systems in all our new build
properties But we are keen to provide equipment in our homes
that is most suitable to the demographic of the likely householders
who live in our properties and we have thought this through
very carefully One major outcome of this was that we decided
we wanted to utilise modern efficient radiators to share the heat
around our homes because nowadays radiators are aesthetically
pleasing and can be part of the décor rather than simply heat
sharing appliances They are familiar to most of our tenants
and moving into a new home with us they will feel immediately
comforted by the fact that even if the driver of the heating system
is new modern technology it all looks and feels the same as the
heating systems they have had in their homes before”
Case study My Home Farm
My Home Farm renovation shows the power
ofchoosing the right products
Kirsten and Mars left London to discover a new slowerpaced
life in the countryside and now share renovation and lifestyle
experiences with followers of their My Home Farm blog YouTube
and Instagram channels
To be environmentally conscious and financially economical over
the long term they switched from oil central heating to an air
source heat pump supported by solar PV Radiator sizes originally
chosen for some rooms were unsuitable prompting Stelrad to
suggest installing triple panel triple convector K radiators
“We could feel the difference from the moment we replaced the
previous radiators with the Ks from Stelrad Heating for us is
all about comfort and sustainability and if you have the heating
on full and still need to wear two jumpers it’s just not working
efficiently” says Kirsten “It was so important to us to get expert
advice and then get the right equipment fitted to ensure we were
getting the maximum performance from our air source heat pump
Our garden room was really chilly even with the heating on and we
avoided using it Now we can feel the heat the Ks generate simply
by walking into the room giving us back a whole living space We
had no idea that a radiator would literally mean we could reclaim a
big part of our house that we love and now can enjoy every day no
matter what the weather is like outside”
Case study Operational impacts
Reducing our reliance on gas
This year we completed a fiveyear k upgrade project to
install  modern fully modulating gas burners on the electrocoat
ovens in our manufacturing site in Mexborough UK These ovens
are used to cure the paint on our products and are an integral
part of the manufacturing operation The older burners were not
only less energy efficient but difficult to maintain due to their age
We anticipate that the new equipment will result in gas savings
of at least % compared to the older units and in  we will
investigate alternative heating systems in the factory offices to
further reduce our gas reliance across the site
Partnering with others to maximise heating performance
System performance is driven by good design with radiators sized
appropriately to allow the heat source to operate most effectively
Stelrad has developed its own basic and advanced heat loss calculation
programmes to support all specifiers in optimising radiator selection no
matter what the building the heat source or the system temperature
This is easily accessible online and provided free of charge
Consultants and architects can also benefit from Stelrad’s Continuing
Professional Development “CPD” courses which provide training on
making the most appropriate radiator selection for a given situation
We have also made a significant investment in our Building Information
Modelling “BIM” allowing designers to incorporate our products into
their building models during development
We also work closely with leading housing developers and social
housing providers engaging with various stakeholders including
heating contractors and social housing residents We aim to find
the best possible solution when considering various factors such as
budget ease of installation and operation and longterm heating
system effectiveness We provide radiator expertise offering a full
heating system design service with the intention of ensuring that future
occupiers benefit from costeffective performance that also reduces
theimpact on the environment
Sustainability continued
25Annual Report 2021 Stelrad Group plc
Minimising our environmental impacts
We reduce our own carbon footprint by
focusing on energy waste and water in our
operations and the resources needed to
produce package and transport our products
Total Group Scope  and  carbon emissions 
 tCO

e
Total Group energy use 
 MWh
Total Group waste generated 
 tonnes
Total Group water usage 
 m

Total carbon intensity
 tCO

e per tonne of product produced
Total energy intensity
 kWh per tonne of product produced
Total waste intensity
 kg per tonne of product produced
Total water intensity
 litres of water per tonne of product produced
At the same time as recognising the role we can play in the transition to
low carbon heating we are resolutely focused on our own operational
environmental impacts and those of our products Our aim is to drive
ongoing efficiencies throughout our business and work with others to
reduce our overall environmental footprint
To date we have concentrated on energy and resource efficiency in
our operations by embedding environmental and energy management
systems at our major sites in the UK the Netherlands and Turkey
and now we are working hard to better understand the indirect and
lifecycle impacts of our operations and products so that we can work
with our suppliers and customers to continually improve environmental
performance across all our activities
A key priority is understanding and reducing emissions of the
greenhouse gases that contribute to climate change and aligning our
ambitions with global efforts To that aim we are fully supportive of
government targets to reach net zero and the next step for us is scoping
out our future contribution to these targets
UK Radiators %
Continental Radiators %
Termo Teknik %
Hudevad %
UK Radiators %
Continental Radiators %
Termo Teknik %
Hudevad %
UK Radiators %
Continental Radiators %
Termo Teknik %
Hudevad %
UK Radiators %
Continental Radiators %
Termo Teknik %
Hudevad %
șǍѯǍ࿪Ǎਖ਼ǍǛ
ɡǍᏢǍݫǍਖ਼ǍǛ
ɣǍᒛǍबǍਖ਼ǍǛ
ɚǍᆋǍԺǍਖ਼ǍǛ
Emissions tCO

e by operating division %
Waste split by operating division %
Energy split by operating division %
Water split by operating division %
Our progress and key initiatives
Over the last twelve months our focus has been on improving our
understanding of our operational impacts a significant step which will
enable us to identify target areas and improve overall performance
Whilst we have previously reported Scope  and  carbon emissions for
our UK operations in line with Streamlined Energy and Carbon Reporting
“SECR” this has since been expanded to include data from around
the Group This enhanced data collection now includes energy carbon
water and waste contributing to the KPIs in this report and establishing
our baselines in these important environmental impact areas
This focus on a full understanding of our impacts will continue into 
with two projects designed to understand our impacts up and down our
value chain Firstly we will begin recording relevant Scope  emissions
which we will report in future This will also enable us to identify priorities
and set targets that map out our journey to net zero Secondly full
lifecycle assessments will begin across our product ranges with a view to
reducing impacts across the product lifecycle and determining a suite of
Environmental Product Declarations
STRATEGIC REPORT
Stelrad Group plc Annual Report 202126
Sustainability continued
Energy in our operations
During  we reported total global energy use of  MWh This
corresponded to total Group Scope  and  emissions of  tCO

e
or  tCo

e per tonne of packed product As this is the first year where
this data has been collected for all sites a Group comparison to previous
years is not possible However the UK operation has seen total energy
use increase slightly by % in  reporting total energy use of
 MWh in    MWh However when considered
against increased output in  as a consequence of increased
demand following recovery after the initial impact of Covid energy
use per tonne of packed product reduced from  MWh per tonne
in to  MWh per tonne in 
In addition to ongoing energy efficiency upgrades and projects during
the last year see example case studies on pages  and  we
recognise the important role that renewable energy sourcing plays in
reducing our emissions We made further progress during  with all
the electricity used in the UK coming from renewable sources and by
the middle of the year our European warehouse in the Netherlands also
switched to renewables This means that energy from renewable sources
now accounts for % of our Group supply
Furthermore we have undertaken a review of our company car policy
with the aim of minimising fuel emissions In the UK all company cars are
already subg/km of CO

and in  for the first time all UK scheme
members are now able to select an allelectric vehicle Other countries
will follow this lead and have as an initial step committed to ensuring all
vehicles across the Group will emit less than g/km of CO

by  We
have also started offsetting carbon emissions that we cannot eliminate
as both the UK and Turkish operations participated in carbon offsetting
projects through which  trees were planted to offset  tonnes
of carbon
Water and waste in our operations
Our water usage in  was m

of water which equates to
litres per tonne of packed product Nearly all % of the
waste that we generate is processed through recycling plants In 
that waste totalled  tonnes which equates to kg of waste per
tonne of packed product Along with energy and emissions both water
usage and waste generation are areas that we are collecting standardised
data on for the first time This enhanced data will enable better sharing
and more consistent practices across the Group as our manufacturing
and distribution operations continuously look for opportunities
to improve
This work will continue in  and beyond and will be further
supported by our plans to understand the full lifecycle impacts of our
products Additionally the achievement during  of the ISO 
energy management standard in our Continental Radiators division
isakey goal
Minimising our environmental impacts continued
Case study Energy management
Managing energy efficiencies in manufacturing
During  our manufacturing site in Çorlu Turkey became the
second site to achieve ISO  As part of this achievement we
carried out an energy audit with an independent expert This helped
to map out a fiveyear energy savings plan targeting significant
reductions in electricity and gas usage by focusing on shorter
term “quick wins” as well as identifying medium and longerterm
actions that will maintain momentum in our drive for continuous
improvement Our Turkish team has already started putting the
plan in place completing a number of relatively straightforward
actions that are already resulting in significant energy savings These
include reducing the timer on infrared heaters switching to LED
lighting and reducing air leaks in the operation which together
areprojected to save over MWh per year
Managing impacts in our supply chain
Beyond our direct operations and while we work to quantify our
impacts we have identified packaging and the impacts associated
withthe steel used in our products as key supply chain issues
Our steel suppliers currently use around % of recycled steel in their
manufacturing processes and we are actively encouraging our suppliers
to move towards the production of lower carbon steel While many
especially those in Europe are already advanced in their thinking here
others need more time to develop plans We will continue to monitor
this by engaging with our suppliers on the issue and looking for ways
that we can contribute to this important transition In the meantime
we are proactive in reducing our steel usage by building efficiency
and substitution considerations into product design The technical
composition of steel is constantly evolving with Stelrad working in
partnership with suppliers to reduce overall steel consumption through
a combination of high strength steel “HSS” and reduced steel gauge
both of which are achievable without any compromise on product
quality or performance
Another target area in our supply chain is packaging A key plank of our
packaging work next year will be to bring together a working group with
representatives from across the business who will help to coordinate
our approach as we look to reduce material inputs increase the use
of recycled material and improve recycling rates up and down the
value chain In  the UK began trials with its suppliers to introduce
alternative polythene wrapping with % recyclable content which were
successful and have led to similar trials in other locations
27Annual Report 2021 Stelrad Group plc
Streamlined Energy and Carbon Reporting “SECR”
This report summarises our energy usage associated emissions
energy efficiency actions and energy performance for the global
Groupoperations over the  financial year
It also summarises the methodologies utilised for all calculations
relatedto the elements reported under Energy & Carbon
As of November  Stelrad Group plc is a quoted Company The
business is now mandated to include energy consumption emissions
intensity metrics and all energy efficiency improvements implemented
in our most recent financial year in Group accounts moving forwards
An organisational boundary has been applied for the purposes of
thereporting
We are proud to say we achieved % verifiable data coverage and
% of consumption data used for this global reporting has been
required to be estimated to achieve % data coverage
Year 
Stelrad’s Scope  direct emissions combustion of natural gas and
transportation fuels for this year of reporting are  tCO

e
resulting from the direct combustion of  kWh of fuel
Scope  indirect emissions purchased electricity for this year of
reporting are  tCO

e resulting from the consumption of
 kWh of electricity purchased and consumed in daytoday
business operations
Our global operations have an intensity metric of  tCO

e per tonnes
of product produced for this reporting year
Consumption kWh and Greenhouse Gas
emissions tCOe totals

The following figures show the consumption and associated emissions
for this reporting year for our global operations
Scope  consumption and emissions relate to direct combustion of
natural gas and fuels utilised for transportation operations such as
company vehicle fleets and onsite transport
Scope  consumption and emissions relate to indirect emissions
relatingto the consumption of purchased electricity in daytoday
business operations
Totals
The total consumption kWh figures for reportable energy supplies are
as follows
Utility and Scope  Global consumption kWh
GridSupplied Electricity Scope  
Gaseous and other fuels Scope  
Transportation Scope  
Transportation Scope  
Total

The total emission tCO

e figures for reportable energy supplies are as
follows Conversion factors utilised in these calculations are detailed in
the reporting methodology
The Group have elected to voluntarily dual report for  also
utilising marketbased emission factors to demonstrate the current
carbon position of the business As the business increases the amount
of renewable energy used throughout global operations this will
demonstrate the impact on the overall global carbon footprint
Utility and Scope
 Global
consumption tCO

e
locationbased
 Global
consumption tCO

e
mar ketb as ed
GridSupplied Electricity
Scope   
Gaseous and other fuels
Scope   
Transportation
Scope   
Transportation
Scope   
Total
 

This period






Scope  emissions buildings and process
Scope  emissions buildings and process
Scope  and  emissions transport
Scope  and  emissions tCO₂e
thisreporting period
 Greenhouse gas emissions in tCo

e reporting includes carbon dioxide CO


methane CH

 hydrofluorocarbons HFCs nitrous oxide N

O
perfluorocarbons PFCs sulphur hexafluoride SF


STRATEGIC REPORT
Stelrad Group plc Annual Report 202128
Sustainability continued
Intensity metric
An intensity metric of tCO

e per tonne of product produced has been
applied for our annual total emissions The methodology of the intensity
metric calculations are detailed in the reporting methodology and the
results of this analysis are as follows
Intensity metric
 Intensity metric
locationbased
 Intensity metric
mar ketb as ed
tCO

e/tonne of product produced  
Global operations
Stelrad Group plc operates on a global scale and has four main operating
divisions encompassing seven business units The emissions of each
operating division is detailed below
Reporting methodology
Scope  and  consumption and CO

e emission data has been calculated
in line with the  UK Government environmental reporting guidance
The following Emission Factor Databases consistent with the  UK
Government environmental reporting guidance have been used utilising
the current published kWh gross calorific value “CV” and kgCO

e
emissions factors relevant for reporting year //  //
Database  Version 
Where available country specific emissions factors have been utilised for
the global operational emissions of Stelrad Group plc Residual emissions
factors have also been used for nonrenewable energy reported under
marketbased calculations and where possible these have been sourced
for the countries of operation for Stelrad Group plc
Estimations undertaken to cover missing billing periods for properties
directly invoiced to Stelrad Group plc were calculated on a kWh/day
prorata basis at meter level These estimations equated to % of
reported consumption
Intensity metrics have been calculated utilising the  reportable
figures for the following metrics and tCO

e for both individual sources
and total emissions were then divided by this figure to determine the
tCO

e per metric
 UK Radiators tonnage of product produced  
 Termo Teknik tonnage of product produced  
 Continental Radiators tonnage of product produced  
Streamlined Energy and Carbon Reporting “SECR” continued
UK Radiators %
Continental Radiators %
Termo Teknik %
Hudevad %
șǍѯǍ࿪Ǎਖ਼ǍǛ
Emissions tCO

e by operating division %
Energy consumption and emissions by location
UK Radiators Total nonUK
GridSupplied Electricity Scope 
Consumption kWh
 
Gaseous and other fuels Scope   
Transportation Scope   
Transportation Scope   
GridSupplied Electricity Scope 
tCO

e locationbased


Gaseous and other fuels Scope   
Transportation Scope   
Transportation Scope   
GridSupplied Electricity Scope 
tCO

e marketbased


Gaseous and other fuels Scope   
Transportation Scope   
Transportation Scope   
Total
Consumption kWh  
tCOe locationbased  
tCOe marketbased  
29Annual Report 2021 Stelrad Group plc
Building an exceptional workforce
We empower our employees to be the best
they can be prioritising their safety wellbeing
and development and promoting equality
diversity and inclusion
Stelrad’s people are the lifeblood of our organisation As such our success
or failure as a business is intrinsically linked to our ability to attract nurture
and retain a happy and talented team This is something that we can
directly influence by maintaining high labour standards and respecting
rights prioritising safety and wellbeing promoting equality diversity and
inclusion and empowering our employees to be the best they can be
Achieving this ambition has never been more important than during the
last two years The ongoing pandemic has presented an unprecedented
challenge that has required increased flexibility and exceptional
communication with all employees During this time our number one
priority has been to protect the health and wellbeing of our staff and
contractors and the communities in which we operate However the
pandemic has also had some positive outcomes For example it has
accelerated our understanding of the benefits of flexible working and
weare now committed to embedding flexible working arrangements into
our “business as usual” to support our broader diversity and inclusion
aims We recognise we can build further upon this strong base and
in  we plan to develop our health and wellbeing and employee
engagement programmes
We are really proud of the talented dedicated and stable teams we have
built Our low labour turnover rates are testament to our belief in paying
competitive salaries providing good working conditions and investing
in training and development All of this is underpinned by strong and
collaborative industrial relations where employees at our three major
sites are represented by trade unions
Safety and wellbeing is also a cornerstone of our business In 
we intend to double down on our goal of zero harm and build on this
by cultivating a wellbeing culture in the business that promotes both
physical and mental health This will support our aim of strengthening
employee engagement which we will also do by establishing more
structured mechanisms to listen to employees and act on their feedback
Primary measures
Our primary measures related to our accident performance are the lost time frequency rate “LTFR” and the lost time severity rate “LTSR”
Anyaccident resulting in an employee not being able to attend work the following day is regarded as a lost time accident
People metrics

%

% National average
Absence
 UK   % 
 Netherlands   % 
 Turkey   
Labour turnover
 UK   %  / % 
 Netherlands   
 Turkey
  
Training days per person days Target
 UK
   days
 Netherlands
   days
 Turkey    days
Case study Ongoing development
Using internships to benefit our business
We use internships extensively across our business to foster links
to local education and provide a steady flow of talented individuals
from different backgrounds to our business In  Martyn Slaghuis
completed an internship in our European technical department at
our Nuth manufacturing facility in the Netherlands as part of his
mechanical engineering studies Under the guidance of experienced
colleagues he developed into a fully fledged mechanic working full
time in the department Martyn displayed significant potential and
in  began a universitylevel engineering qualification which we
helped to facilitate On successful completion of his course and
following further coaching we were delighted to promote Martyn
to the position of Maintenance Manager this year and look forward
to developing his career even further with Stelrad As Martyn says
in respect of opportunities at Stelrad “If you want it badly enough
there are no limits to what you can achieve”
STRATEGIC REPORT
Stelrad Group plc Annual Report 202130
Sustainability continued
Our progress and key initiatives
Health safety and wellbeing
There is nothing more important than ensuring our people come to no
harm As a manufacturing business there will always be risks but our
actions can minimise those risks Our approach to safety is driven by the
Board and firmly embedded within our business culture This culture
promotes continuous improvement exemplified this year by the upgrade
of guarding standards detailed in the safety case study on page 
In July our UK operations successfully transitioned from BS  to
ISO  This resulted in a wider range of people becoming engaged
in the management of safety and contributed to the achievement
of one full year with zero lost time accidents This confirms that our
goal of zero harm is achievable Across the Group both our UK and
Continental divisions significantly reduced their lost time frequency
rate “LTFR” offsetting an increase in Turkey and resulting in overall
Group performance falling back from   to  per million
hours worked Frequency and severity rates in our Turkish operations
were impacted by several lost time accidents in May September and
December Our review identified the problem as a rapid increase of
production to satisfy customer demand requiring a significant increase
in headcount The immediate focus in  is to continue the longterm
downward trend in both lost time accident frequency and the lost time
severity rate
Over the coming year our commitment to safety will continue and
wewill increase our focus on employee wellbeing by training and
embedding mental health champions rolling out Groupwide mental
health awareness training and enhancing our employee assistance
programmes The Covid pandemic has shone a light on the
importance of mental wellbeing and resilience in the workplace and
weare looking forward to developing further support mechanisms for
our colleagues in these areas
Building an exceptional workforce continued
Employee engagement
Building relationships based on trust integrity and twoway
communication is integral to our employee engagement approach All
three of our major sites have established strong positive relationships
with trade union partners for collective bargaining purposes and we
actively encourage employee representation We also recognise the
importance of exposing Board members to the concerns and ideas
of the workforce We will address this in  by having all Non
Executive Board members visit our factories and spend time with local
management and employees
We also invest heavily in our people In the UK and the Netherlands
we pay above national minimum rates for all roles and we regularly
benchmark our rates to ensure they are correctly positioned In Turkey
all established employees are paid in excess of the national minimum
rate while new entrants are placed at the minimum rate for a short
period whilst training before moving up our pay scales We encourage
and support employees to constantly develop and improve and are
determined to promote career progression success stories as shown in
the case study on ongoing development While we have seen a notable
decrease in training days per person over the last two years this is
attributed to the restrictions imposed by Covid and we are planning
to recover this in the short term
Our commitment to employee engagement and development is
reflected in our performance which although impacted by Covid
in  and  still compares favourably with peers Absence rates
in the UK and Continental units were not substantially increased and
remain in line with expected national averages and in Turkey absence
rates reduced in  from a significant Covid related spike in 
Whilst all three sites showed increases in labour turnover in  the UK
is significantly below the  national average figure whilst the increase
in Turkey represents a return to longterm averages after an unusual
year In  we intend to build on the existing employee engagement
practices we will conduct our first UK employee survey and will
implement an employee engagement briefing at Board level These two
initiatives will ensure that everyone has a chance to provide feedback and
highlight any key areas for improvement and will ensure that workforce
wellbeing is monitored by the Board
Diversity and inclusivity
Over the last twelve months we have made some good progress in
pursuit of our ambition to promote equality diversity and inclusion
throughout our business
Lost time frequency rate  five years Lost time severity rate  five years
LTFR calculation Lost time accidents in a rolling twelvemonth
period x /hours worked in that period
LTSR calculation Working days lost in a rolling twelvemonth period
x /hours worked in that period
Jan






Jan
Jan
Jan
Jan
Jan
Jan






Jan
Jan
Jan
Jan
Jan
Termo Teknik Continental UK Stelrad Group
31Annual Report 2021 Stelrad Group plc
At Board level
Notable progress was made during the year on addressing female
representation at the highest level with two of our three new
independent NonExecutive Directors being women As outlined in our
Nomination Committee Report on page  we prioritised diversity as an
essential consideration when undertaking the search for the new Non
Executive Directors The Company sees great value in having a diverse
and inclusive Board enabling us to draw on different perspectives
and backgrounds as part of our decisionmaking processes We have
committed to considering diversity and inclusion in all forwardlooking
Board membership processes including skills experience gender
ethnicity age sexuality disability education and background This is
important as the Board is committed to maintaining a culture where all
our team members feel supported included valued and recognised as
Stelrad employees and as individuals Our Board Nomination Committee
and Human Resources team work together to set diversity objectives
and strategies monitor their progress and set the tone of Group culture
from the top of the organisation
Opening up opportunities
Highlights of the year include our involvement in the UK Government’s
Kickstart Scheme Through this programme we have created five six
month work placements for young people who are at risk of longterm
unemployment Opening up opportunities for young people from
different backgrounds benefits our business as diversity is an ingredient
for financial success as well as allowing us to contribute to reducing
inequality in wider society Two of the four young people recruited
to date are female and have commenced work in our warehouse
in what was previously an entirely male environment We have also
signed up with the UK Government as a Disability Confident employer
demonstrating our commitment to taking action to improve how we
recruit retain and develop disabled people
Promoting diversity in our industry
When it comes to gender equality we like the wider engineering sector
face considerable challenges in attracting women into technical roles
We remain proactive in addressing the challenges we face through our
work on STEM initiatives with local schools colleges and training bodies
In August  our UK business hosted a STEM event in conjunction
with local schools aimed specifically at encouraging more females into
STEM careers Outside the UK we are equally committed to our diversity
and inclusion ambitions In the Netherlands we hosted events aimed
at identifying work opportunities for young people with disabilities and
we have hosted factory tours aimed specifically at attracting refugees
into our industry In Turkey we have strong links with the local technical
college and have hosted several factory tours and career Q&A events
We aim to build on these initiatives and relationships as we continue to
look at how we can attract more diverse talent into our business and
support the wider sector to do similar
Gender pay gap
In respect of gender pay gap reporting in the UK our main UK employer
Stelrad Limited with a headcount of  employees was below the
mandatory reporting threshold of  employees on the snapshot date
of  April  However we recognise the importance of gender pay
gap data in our pursuit of equality diversity and inclusion and therefore
we report the gender pay gap statistics of Stelrad Limited on a voluntary
basis in order to monitor progress For the purpose of evaluation we
have compared our  data with that from  as the  data
is unrepresentative due to a significant number of employees being on
furlough at that time In  the mean gender pay gap improved to
% meaning that the mean hourly rate for women was higher than
that of men from % in  The median pay gap reduced to %
from % in 
Case study Safety
Improving safety through upgrades and
processautomation
A key focus this year has been on updating machine guarding
in order to improve safety and introduce additional process
automation A set of Group Machine Safety Standards has been
created and externally audited by guarding specialists and this has
prompted upgrades at all three manufacturing sites This work will
continue throughout  and beyond
The work includes eliminating possible reach points where
employees could come into contact with equipment upgrading
guarding switches to modern “dual channel” specification
reconfiguring perimeter guarding to allow better employee access
and improving visibility of the machinery from a safe distance All
three manufacturing sites carried out upgrade projects including
work in the UK to complete one of its production lines and the first
half of a second line Continental work on production line robot
cells packaging line robot cells and shrinkwrap ovens and work in
Turkey to complete the guarding replacement on one of its lines
aswell as two robot cells
These figures exclude our other UK employer Stelrad Management
Limited which had  employees as of  April  For future snapshot
dates commencing  April  we intend to publish a single gender
pay gap report on our website that includes all employees of our UK
entities Whilst we have made good progress in improving our gender
pay data we recognise that we still have much to do As of  December
 we had  employees on our UK payrolls % of these were
male and % were female However there is stronger representation in
sales general and administrative positions where % of the workforce
are female  of our  employees work in these positions
Community investment
An important part of the culture at Stelrad is making a positive
contribution to the neighbourhoods and communities we operate
in To support community relations the business allocates an annual
Community Investment Fund which is then managed by local teams
For example in the UK this is managed by the Social Charity and
Community Forum a group of employee volunteers from all areas of the
business This fund is used for charitable sponsorships social enterprises
and education including supporting individual causes raised by
employees such as providing financial assistance to a colleague whose
home was one of  damaged during the flooding in Valkenburg
STRATEGIC REPORT
Stelrad Group plc Annual Report 202132
Sustainability continued
Maintaining high standards of business
We manage the Group for the beneﬁt of all stakeholders through
high ethical and corporate governance standards and a culture of
accountability integrity transparency and responsibility
We uphold high ethical and corporate governance standards by
establishing and embedding a culture of accountability integrity
transparency and responsibility that ensures the Group is managed
forthe longterm benefit of all stakeholders
Good governance is integral to ensuring the longterm sustainability
of the Group and the CEO takes ultimate responsibility for our
sustainability strategy He is supported in this by the other members
of the Board local management and a dedicated ESG working group
Details of the Board and the work of the established Committees are
shown on pages  to 
UK Net Promoter Score 
%
(UK all sector average: 21.2%)
Our progress and key initiatives
Our business and employee activities are governed by our revised Group
Code of Conduct which will be reinforced during  to all parts of
the business and supported by training to embed it into our culture
The Code of Conduct sets out our policies and procedures and helps
to ensure that all employees can act according to Stelrad’s values The
Code of Conduct is supported by several policy documents and the
case study below highlights work undertaken to review these documents
during  Each of our policies are supported by training programmes
The policies in operation include
 the whistleblowing policy
 the conflicts of interest policy
 the antibribery and corruption policy
 the modern slavery statement
 the health and safety policy
 the environmental policy and
 the accounting and tax policy
The processes and values within these policies are then embedded within
our management systems Where possible we engage with accreditation
bodies to certify that our systems are in line with recognised best
practice which has led to most areas of the business holding ISO 
  and  During  Termo Teknik in Turkey became
the latest site to achieve an ISO  certification with the Continental
Radiators division also aiming to achieve this in  The certifications
held by each site are subject to external audit verification with any areas
of noncompliance actively addressed ensuring our processes are kept
up to date
ESG governance
During  several actions were taken to further improve our
management of sustainability matters throughout all layers of the
business Firstly a consideration in the recent appointments to the
Board was experience in sustainability This strengthened the knowledge
and skill set of toplevel management in this area In addition an
international ESG working group was formed which will focus on the
development and implementation of our ESG strategy in all business
units reporting on progress to the Board
This working group is formed of representatives from our three main
divisions and from across the Operations and HR functions These
representatives are key to ensuring all aspects of our business are
considered in the strategy development process and in working
with local management to implement change in pursuit of our
sustainability aims
Case study Strengthening a Groupwide culture
Achieving consistent standards
Our historical approach to policy setting has been to blend
centralised direction with local knowledge and expertise This has
allowed us to address the local needs of stakeholders more directly
with a mix of a top down and bottom up approach that encourages
stakeholder engagement and input During  we undertook
a review of our existing policies with the recognition that greater
consistency was needed between sites to promote our culture
more effectively This has resulted in the updating or creation of
several Groupwide documents that have been rolled out across
our site teams to support existing processes and encourage a
consistent standard for all employees
Case study ESG performance
Working with our customers to raise standards
We are working with our customers on a range of initiatives to
benchmark our ESG performance leading to the identification
of priorities for the future An example is that in  our three
main manufacturing sites each completed an
EcoVadis sustainability assessment for the
first time We are pleased to note that both
the UK and Continental sites achieved
silver awards indicating that our historical
approach has provided a good foundation
forfuturedevelopment
33Annual Report 2021 Stelrad Group plc
Climaterelated ﬁnancial disclosures TCFD statement
In line with our pillars focusing on minimising our environmental impact
as well as maintaining high standards of business by constantly assessing
future risks we acknowledge and support the requirement for UK
companies with a premium listing to make disclosures consistent with
the recommendations of the Task Force on Climaterelated Financial
Disclosures “TCFD” Stelrad supports the transition to a zero carbon
global economy and we are aware of the need to reduce our exposure
to climaterelated risks Whilst we are still in the early days of embedding
the TCFD recommendations we are committed to using this framework
as part of our strategy to mitigate risks and adapt to opportunities
This section responds to our regulatory obligation to make disclosures
aligned with the recommendations of the TCFD We share disclosures
according to the four overarching pillars set out by the TCFD and where
we have encountered technical or transitional challenges in addressing
the eleven underlying recommendations we have provided commentary
on our workstreams to achieve full alignment
We share disclosures against all four thematic areas below and already
share commentary on existing workstreams that align with several of
the eleven underpinning recommendations We intend to deepen our
integration across the four areas and eleven recommendations of the
TCFD over the next financial year as we increase our reporting as a
newly listed company from November  Through this process we
have identified multiple climaterelated risks including the impacts on
manufacturing facilities of floods or other natural disasters and the
legislative changes being implemented in support of the decarbonisation
of the economy
Governance
Stelrad is aware of the need to oversee and govern climaterelated
risks and opportunities Climate change and climaterelated risks and
opportunities are governed as part of the wider ESG strategy as well
as through our approach to risk management more widely The CEO
has overall responsibility to lead the development and implementation
of the Group’s ESG strategy and policies including successful response
to identified risks and opportunities The Board has oversight of the
risk process and updates or changes to significant risks including
climate risks are included as a standing agenda item in scheduled Board
meetings The Audit & Risk Committee assists the Board in the oversight
of the risk process Operational management assists in the identification
of emerging risks and implements any agreed mitigating actions
Our Commercial Project Manager is responsible for producing a monthly
ESG Highlights Report which incorporates our projects relating to
climate change climate risk and mitigation and adaptation and which is
reviewed by the Board with specific project updates presented in person
on a quarterly basis The Board and our Project Management function
are exploring new opportunities for crossfunctional roles and tasks to
strengthen our approach to climate mitigation and climate riskrelated
projects and our reporting across the spectrum from climate change
training to datamanagement
ESG working group
Stelrad Group Board
Bob Ellis  Chair
Trevor Harvey  CEO
George Letham  CFO
Terry Miller  NED
Nicola Bruce  NED
Martin Payne  NED
Edmund Lazarus  NED
Nicholas Armstrong  NED
Andrew Dent  Project Manager
Continental Radiators
HR Manager
HSE Manager
Stelrad UK
HR Manager
Sustainability Support Manager
Termo Teknik
HR Manager
HSE Manager
Energy Manager
Trevor Harvey  CEO
STRATEGIC REPORT
Stelrad Group plc Annual Report 202134
Sustainability continued
Strategy
Our overall strategy is outlined on pages  to  and our support for
the future of home heating on pages  to  The Board is committed
to the need to evaluate climaterelated risk and opportunity in the
ongoing development and delivery of our strategy We have identified
areas of opportunity related directly to the mitigation of climate change
through our role in supporting the low carbon economy These sections
reflect the business opportunity related to the transition to low carbon
heating which represents a direction of growth for us The drivers
for these market conditions are becoming embedded in international
climate policy including the European Green Deal and the UK Net
Zero Strategy suggesting that they will persist and support our chosen
strategy over the medium to long term This situation is constantly
monitored to ensure our strategy remains relevant
Moving our business strategy in a low carbon direction is a response
to the clear opportunity raised by international policy and consumer
response to the climate crisis It also offers a risk mitigation mechanism
for the business as we can diversify our income dependencies towards a
wider range of markets
Risk management
The TCFD separates physical risks  those related to the impact of
climate change such as disruption to manufacturing or supply chains due
to extreme weather  and transition risks  those caused by regulatory
changes There is the potential for both types of risks to impact on
Stelrad but the probability of regulatory changes in our sectors is high
and the likelihood of these changes ensures that transition risks are seen
as more significant to Stelrad
The identification assessment management and mitigation of climate
related risks fall within our wider Enterprise Risk Management “ERM”
process more details of which can be found on pages  to  Our
ERM approach captures some of the potential physical and transition
risks and opportunities related to climate including risks to assets
markets and reputation
The process for managing these climate risks and opportunities is fully
integrated into our wider risk management approach which is described
on pages  to  There are two principal risks related to “business
disruption” and “political environment and climate change” included
in this report that could be described as climate related see pages 
and As we continue to evaluate our emerging and principal risks we
will continue to monitor our exposure to climaterelated risks with the
expectation of more developed reporting on this area in future years
Metrics and targets
We have previously reported on Scope  and  emissions in a limited
way and this report includes full reporting on Scope  and  emissions
for the first time see page  This section also includes several
metrics related to our environmental impact
Future TCFD priorities
Our focus in / is to develop our approach in relation to each
of the four pillars and the eleven recommended disclosures with a
particular focus on
 defining the division of responsibilities for ESG matters at Board level
and including this in job roles
 further articulating the key climaterelated risks and opportunities for
our business and how they relate to the achievement of our strategic
objectives and our financial performance
 undertaking scenario analysis to assess our strategic resilience
conducted following recognised best practices
 separating out climaterelated risks and opportunities within our ERM
governance process and
 developing methodologies to capture our emissions in the most
material Scope  categories and using enhanced lifecycle data to
develop coherent and ambitious metrics and targets in climate
related areas including a timeline to becoming net zero
Climaterelated ﬁnancial disclosures TCFD statement continued
Moving our business strategy in a
low carbon direction is a response
to the clear opportunity raised by
international policy and consumer
response to the climate crisis It also
oﬀers a risk mitigation mechanism for
the business as we can diversify our
income dependencies towards awider
range of markets
35Annual Report 2021 Stelrad Group plc
Beginning in January  we will be working with specialist consultancy
Design Portfolio to conduct a detailed review of our ESG activities
and plans and develop a fully fledged ESG strategy for Stelrad Building
on our progress to date our aim is to create a holistic longterm
strategy that is fully aligned to our corporate aims and the needs of
our stakeholders as well as identifying our national and international
ambitions and the standards with which we want to align
By putting our first indepth materiality assessment at the heart of the
process we aim to ensure that our new strategy addresses priority risks
and opportunities and the issues that matter most to our business and
our stakeholders We will be engaging widely with internal and external
stakeholders to understand their views conducting a business impact
assessment of the risks and opportunities that have the potential to
affect Stelrad and undertaking a comprehensive review of internal and
external factors and trends that may be crucial to our strategy The strategy
that we develop will outline our ESG priorities the targets that we are
setting out to achieve our plans for progressing our goals and how we will
measure our performance along the way As such it marks an important
milestone in the ongoing integration of sustainability into our business
Our immediate plans also continue apace We know how important
it is going to be for our future to fully understand our ESG impacts
as a business From an environmental perspective having measured
our global Scope  and  greenhouse gas emissions for the first time
in  we have put in place plans for next year to conduct an initial
assessment of our indirect Scope  emissions and a lifecycle analysis
of our products for the first time This will help to pinpoint where our
biggest impacts are in the process of bringing our products to the
market  from the steel we process and energy we use in our operations
through to how we package and transport our products  and the steps
we can take to reduce these
It promises to be a busy and exciting year ahead and we are already
looking forward to sharing our new strategy and progress with you
Developing our ESG approach next steps
Stelrad’s ESG journey and next steps
 Mexborough gains ISO 
 Mexborough achieves zero waste to landfill and joins
Valpak packaging compliance scheme
 Çorlu gains ISO  and OHSAS 
 Social Charity and Community Forum established
 Apprenticeship programmes established
 Mexborough gains ISO 
 Nuth gains ISO  and ISO 
 Use of high strength steel in mainstream production
 Mexborough sources % renewable electricity
 Mexborough migrates to ISO 
 Çorlu gains ISO  and migrates to ISO 
 STEM links established with UK colleges
 Group joins EcoVadis sustainability ratings scheme
 ESG working group formed
 ESG strategy refresh and first ESG and TCFD report
aspart of the Annual Report and Accounts
 Mexborough gains OHSAS  and joins
theClimateChange Agreements scheme
 Group develops ESG minimum standards
policyand targets
 Çorlu reforestation project started
 Mexborough and Çorlu join SEDEX responsible
sourcing platform
 First Scope  and  emissions report produced
for the UK
 Mexborough joins the forest carbon project
 Disability Confident employer
 Group to conduct first materiality assessment
andfullESG strategic review
 Enhanced ESG strategy to be developed and new
targets set
 Scope  emissions measurement and lifecycle analysis
 Environmental product declarations
 Nuth to gain ISO 
Up to






planned
STRATEGIC REPORT
Stelrad Group plc Annual Report 202136
Finance and business review
Our ﬁnancial position is more
robust than ever having successfully
navigated through the impacts
of both the global pandemic and
unprecedented steel price volatility
Proﬁt attributable to shareholders
increased by k or % to
k  k
George Letham
Chief Financial Oﬃcer
Financial overview
Revenue for the year was k an increase of k or %
on last year  k This was principally as a result of
increased sales volumes which were exceptionally low in Q  due to
the Covid pandemic and implementation of selling price increases in
 recovering a significant rise in steel prices
Adjusted operating profit for the year was k an increase of
k or % compared to last year  k This
was principally as a result of an increase in sales volumes the transfer
of production to lower cost facilities a growth in premium panel sales
volumes and the benefit of increased selling prices partially offset by the
impact of steel price rises The Group benefited from its normal policy
of forward purchasing steel in Turkey when steel prices increased rapidly
during  to unprecedented levels
Statutory operating profit for the year was k  k
including exceptional costs of k  nil and the impact
of foreign exchange gains of k  k The Group’s
effective tax rate in the year benefited from the oneoff recognition of
UK deferred tax assets
Profit attributable to shareholders increased by k or %
to k  k Earnings per share was  pence
 pence and adjusted earnings per share was  pence
  pence
There was a significant devaluation of the Turkish Lira during 
When the opening reserves and current year profits of the Group were
retranslated at the closing exchange rate the result was a charge of
k through the consolidated statement of comprehensive income
in the year
On  November  the Group listed on the premium segment
of the London Stock Exchange having previously been under private
ownership As part of this process the Group repaid all legacy financing
arrangements including shareholder loans This was funded by a part
drawdown on a new  million debt facility a share capital raise of
k and existing cash The new debt is a revolving credit facility
with an initial threeyear term then two oneyear extension options
At  December  the Group had cash of k and undrawn
available facilities of k with net debt excluding finance leases
of k
37Annual Report 2021 Stelrad Group plc
Group overview
The following table summarises the Group’s results from operations for the years ended  December  and  December 
Increase/ Increase/
  decrease decrease
’ ’ ’ %
Revenue    
Adjusted operating profit
   
Exceptional items    
Foreign exchange differences
   
Operating profit    
Net finance costs    
Profit before tax
   
Income tax expense    
Profit for the year
   
Earnings per share p    
Adjusted earnings per share p

   
Dividend per share p  
 Adjusted earnings per share is calculated on adjusted profit after tax being earnings before exceptional items and foreign exchange differences and tax on exceptional items and foreign
exchange differences
Revenue by geographical market
The table below sets out the Group’s revenue by geographical market
Revenue by   Increase Increase
geographical market
’ ’ ’ %
UK & Ireland    
Europe    
Turkey &
International
   
Total
   
UK & Ireland
The Group’s revenue in the UK & Ireland for the year was k
 k an increase of k or % This was
principally as a result of increased sales volumes which were lower in
Q due to the impact of the Covid pandemic on the UK market
Additionally four selling price increases were applied in  following
asignificant rise in steel prices
Europe
The Group’s revenue in Europe for the year was k 
k an increase of k or % This was principally
asa result of market share gains through growth in sales volumes with
existing customers and four selling price increases during  due
torising steel prices
Turkey & International
The Group’s revenue in Turkey & International for the year was k
 k an increase of k or % This was
principally as a result of increased sales volumes which were lower in
 due to the Covid pandemic and selling price increases in 
following a significant rise in steel prices
STRATEGIC REPORT
Stelrad Group plc Annual Report 202138
Finance and business review continued
Adjusted operating profit by geographical market
The table below sets out the Group’s adjusted operating profit by
geographical market
Adjusted operating
profit by
 
Increase/
decrea se
Increase/
decrea se
geographical market
’ ’ ’ %
UK & Ireland    
Europe
   
Turkey &
International    
Central costs       
Total    
UK & Ireland
The Group’s adjusted operating profit in the UK & Ireland for the year
was k  k an increase of k or %
This was principally as a result of an increase in sales volumes after the
initial impact of the Covid pandemic on the UK market increased
premium panel sales volumes the transfer of additional production to
lower cost facilities and the benefit of increased selling prices partially
offset by the impact of steel price rises
Europe
The Group’s adjusted operating profit in Europe for the year was
k  k an increase of k or % This
was principally as a result of an increase in sales volumes the transfer of
additional production to lower cost facilities and the benefit of increased
selling prices partially offset by the impact of steel price rises
Turkey & International
The Group’s adjusted operating profit in Turkey & International for the
year was k  k an increase of k or %
This was principally as a result of an increase in sales volumes after the
initial impact of the Covid pandemic in Turkey and China and the
benefit of increased selling prices partially offset by the impact of steel
price rises
Central costs
Central costs for the year were k  k an increase
of k or % Costs increased principally as a result of additional
expenditure arising due to the Group being listed following the
completion of the IPO in November 
Exceptional items
During the year exceptional costs of k were incurred  nil
relating to professional advisers employed to consider the potential
recapitalisation of the Group and the costs associated with the IPO
undertaken by the Group in the year These costs are oneoff in nature
and disclosing these costs as exceptional allows the true underlying
performance of the Group to be more easily reviewed
Finance costs
The Group’s finance costs for the year were k  k
The % decrease of k was primarily due to a reduction in interest
payable on external loans due to a lower average revolving credit facility
usage during  and the benefit of ongoing repayments on the
Group’s term loans The  finance costs include accrued interest
on repaid shareholder loans which will not recur in future years as a
consequence of the Group’s new capital structure
Income tax expense
The Group’s income tax expense for the year was k 
k an increase of k or % The increase was primarily
due to an increase in profits chargeable to taxation and an increase
in overseas tax rates with the tax rate in Turkey increasing from
% to %
The tax charge for  has been reduced as the Group has recognised
previously unrecognised deferred tax assets relating to tax losses
The newly recognised losses are all postApril  UK losses and the
decision has been taken to recognise the losses in the year because the
new capital structure of the Group postIPO means that tax deductible
interest will be lower which along with higher UK profitability will lead to
these losses being utilised over a much shorter time frame
Earnings per share and adjusted earnings per share
Profit attributable to shareholders increased by k or % to
k  k and earnings per share was  pence
  pence The weighted average number of shares was
million Profit attributable to shareholders before exceptional
items foreign exchange differences and tax thereon increased by
k or % to k  k and consequently
adjusted earnings per share was  pence   pence
Dividends and reserves
The Group is committed to delivering returns for its shareholders
It intends to adopt a progressive dividend policy targeting an initial
annualised payout of approximately % of adjusted earnings with
capital allocation focused on reinvestment for growth The Group
intends to split dividend payments approximately % and % between
the Group’s interim and final dividend payments respectively across the
fiscal year The Group expects to pay its first dividend in May  which
due to the timing of the Group’s admission will be the only dividend paid
in respect of  The  dividend will be determined on a pro rata
basis for the period from admission to  December 
The Company successfully submitted an application to the High Court of
Justice of England and Wales the “Court” to reduce the value of each
ordinary share of the Company from  to  the reduction
will be credited to the retained earnings of the Company Under the
same application the Court approved the removal of the share premium
account of the Company in full with the reduction credited to the
retained earnings of the Company The Court approved the application
on  January 
39Annual Report 2021 Stelrad Group plc
Cash flows
The following table summarises the Group’s cash flow for the years
ended  December  and  December 
Increase/
  decrease
’ ’ ’
EBITDA

  
Gain on disposal of property
plant and equipment
  
Working capital adjustments   
Net capital expenditure
  
Adjusted cash flow from
operations
  
Income tax paid
  
Interest received
  
Adjusted free cash flow   
Increase/
  decrease
Adjusted cash flow from
operations ’   
Adjusted operating profit
’
  
Adjusted cash flow from
operations conversion %   
 EBITDA is defined in the glossary of terms on page 
The Group’s adjusted free cash flow for the year was k 
k an increase of k This reflected an increase in the
profitability of the Group and increased working capital due to the
replenishment of inventories as the  December  inventory levels
were exceptionally low
The Group’s adjusted cash flow from operations for the year was
k  k an increase of k This was principally
as a result of an increase in the profitability of the Group partially offset
by an increase in working capital linked to an increase in inventories
and higher income tax paid in  Adjusted operating profit for the
year was k  k an increase of k This
was principally as a result of an increase in the profitability of the Group
Adjusted cash flow from operations conversion for the year was %
 % a reduction of pp due to the significant impact of
replenishment of inventories during  and the higher level of capital
expenditure related to the incremental development capital expenditure
programme which was completed in 
On  November  the Group listed on the premium segment
of the London Stock Exchange having previously been under private
ownership As part of this process the Group repaid all legacy financing
arrangements including shareholder loans funded by a part drawdown on
a new  million revolving credit facility of which k was drawn at
 December  a share capital raise of k and existing cash
Capital expenditures
The Group’s capital expenditures mainly relate to investment in operating
plant and equipment The following table sets out the Group’s capital
expenditure including rightofuse assets net of transfers from assets
under construction
 
’ ’
Freehold land and buildings  
Leasehold buildings  
Assets under construction

 
Plant and equipment  
Fixtures and fittings
 
Total  
 The significant parts of the assets under construction relate to plant and equipment
Since  approximately  million of development capital expenditure
has been invested by the Group in an incremental programme across
all three of its manufacturing plants to provide flexibility and improve
quality capacity and productivity The incremental capital expenditure
programme was completed in the current financial year
Key capital expenditure in the year ended  December  related
to investment in an additional hybrid production line and robotic
systems at the manufacturing site in Turkey production line upgrades
at the UK manufacturing site and vertical welding line upgrades at the
manufacturing site in the Netherlands Investments in warehousing
facilities have also been made in Turkey and the UK
Net debt
During the year ended  December  the Group refinanced and
repaid all legacy financing arrangements and shareholder loans replacing
them with a new threeyear revolving credit facility of  million
At  December  statutory net debt including IFRS  leases of
k comprises k drawn down against the revolving credit
facility and k finance leases net of k cash
At  December  statutory net debt including IFRS  leases
of k comprised k shareholder loans a k ABL
revolving credit facility k ABL and Lombard term loans and
k finance leases net of k cash
 
’ ’
Revolving credit facility  
ABL revolving credit facility  
ABL and Lombard term loans
 
Shareholder loans  
Cash
 
Net debt before finance leases  
Finance leases
 
Net debt  
George Letham
Chief Financial Oﬃcer
 March 
STRATEGIC REPORT
Stelrad Group plc Annual Report 202140
Risk management
The Board has ultimate responsibility for the Group’s system of internal control and risk
management supported by the Audit & Risk Committee The Board understands that successful
delivery of its strategic objectives depends on eﬀective risk management processes that enable
the monitoring and mitigation of existing risks and the early identiﬁcation of emerging risks
Risk management approach
The Group’s approach to risk management combines a top down
strategic assessment of risk and risk appetite with a bottom up
operational identification and reporting process Top down activities
are carried out by the Group Board 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
significant at a business unit project or functional level
The risk evaluation process begins in the business units with 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 The risk assessments from each of the operating businesses are
then considered by Group management to determine the principal risks of
the Group with reference to the Group’s strategy and operating environment
The principal risks of the Group are reported to the Board for review
New and emerging risks are considered through the regular risk activities
outlined above regular review of risk research and other publications
and the results of assurance activities 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 is business unit and
management activity which aligns to the bottom up activities detailed above
The second line of defence is Group oversight provided by the Group Board
and Audit & Risk Committee assurance model which corresponds to the top
down activities outlined above Finally the third line of defence is independent
review performed by external audit and other external assurance providers
Risk appetite
The Group Board is responsible for setting and monitoring the Group’s
risk appetite The 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
The Group’s approach is to minimise exposure to reputational financial
and operational risk while accepting and recognising a risk and reward
tradeoff in the pursuit of its strategic and commercial objectives
For example the Group has a zero tolerance for risks relating to
health and safety However management recognises that certain
strategic commercial and investment risks will be involved to capture
opportunities and deliver growth in line with the Group’s strategic
objectives The Group establishes its risk appetite through use of
delegated authorities so that matters considered higher risk require the
approval of senior management or the 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 Group Set out below is the
Board’s view of the principal risks currently facing the Group along
with details of the impact and strategic relevance of the risks and an
explanation of how the risks are managed or mitigated The trend for
each risk has also been identified based upon the changes from prior
year The Board acknowledges that the Group is exposed to a wide range
of risks however only the risks that are believed to have the greatest
impact on the Group delivering its strategic objectives have been listed
Board Ultimate responsibility for risk management
 Sets Group strategy
 Approves the Group risk management framework
 Sets the Group’s risk appetite
 Top down risk identification
 Reviews the Group’s principal risks
 Sets delegated levels of authority
Audit & Risk Committee Monitors risk management and assurance arrangements
 Supports the Board in risk management responsibilities and activities
 Reviews the effectiveness of key risk management and control processes
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
 Provide guidance and advice to operating companies to assist with identifying risks assessing
the extent of the impact of identified risks and implementing mitigating actions
 Oversee health and safety activities
Business units Identify manage and report local risks

Maintain local risk registers and risk management plans
 Identify and assess risks
 Identify and implement mitigating actions
Risk management framework
Top down bottom up approach
Identification of emerging risks
41Annual Report 2021 Stelrad Group plc
 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
 There is a risk of Covid infection without any control measures
in place and a consequential loss of production capacity due to
staff shortages
 A further wave of Covid could reduce market demand for the
Group’s products
 The Group’s production and distribution facilities could be
disrupted due to events including major accidents and natural
disasters leading to an inability to meet customer demands
Mitigations
 Covid risk assessments are in place and reviewed regularly
Measures include
 social distancing
 regular testing on site
 working from home and segregation of staff and
 following all applicable government guidance in each location
asprescribed
 Home working is applied where possible and infected employees
are quarantined off site until clear of infection
 Appropriate fire safety measures are in place at key sites in
particular new fire safety systems have been installed in Çorlu
andat the Heerlen warehouse
 Building modifications have been made to address flooding risk
 The majority of stock is stored in racking high off the ground
 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
 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
Impact
 In certain markets particularly the UK the Group derives a
significant proportion of its revenue from a small number of
customers Failure to manage these relationships or a change in
the organisational structure of these entities could lead to a loss
of demand
Mitigations
 The Group continues to maintain and develop strong relationships
in all market channels
 The Group continues to maintain strong specifier relationships
to generate demand for the Group’s brands through the
distribution channel
 The Group will take appropriate measures to regain lost
customers
 Commercial policies will be reviewed and modified if appropriate
STRATEGIC REPORT
Stelrad Group plc Annual Report 202142
Risk management continued
 Loss of competitive advantage
Risk
New products innovations or routes to market could cause a loss
ofcompetitive advantage
Change from prior year
No change
Impact
 Competitors could gain a cost reputation or product advantage
that results in a loss of market share for the Group
 New product types could enter the market or increase market
share as part of the drive to “zero carbon” for example underfloor
heating electrification or fan assisted heat exchanger products
There could be a resultant loss of Group sales volumes
Mitigations

The Group continues to monitor legislative changes
 The Group will evaluate the potential impact of zero carbon initiatives
 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
in all market channels
 The Group continues to maintain strong specifier relationships
to generate demand for the Group’s brands through the
distribution channel
 Supply chain risk
Risk
Failure of the supply chain either due to lack of availability
orunforeseen price increases
Change from prior year
No change
Impact
 A reduction of raw material availability in particular steel
availability could restrict the ability of the Group to manufacture
products or harm profit margins
 Unforeseen increases in raw material prices in particular steel
price could harm profit margins
 The Group has a complex wideranging distribution chain which
is critical to the success of the Group and any disruption in the
supply chain could impact on the ability of the Group to meet
customer demands and/or cause a reduction in profitability
Mitigations
 Raw material is dual sourced with all key components and materials
having a secondary provider this extends to location dual sourcing
 Following the threat of Covidrelated supply chain disruptions
raw material stockholdings have been increased
 Raw material prices are constantly monitored by the business For
the purchase of raw materials stocks are maintained to protect
against sharp price rises and buy prices are agreed in advance
which gives a clear understanding of future prices
 Where prices are rising the business has sufficient foresight
toimplement selling price increases
 High stocks levels are maintained across the Group to prevent
against shortterm supply issues
 Longterm relationships are maintained on good terms with
trusted shipping partners
 Options are available to use alternative forms of transport
forexample trucks instead of shipping
43Annual Report 2021 Stelrad Group plc
 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
Slight increase due to heightened sophistication and frequency
of cyber attacks across a number of industry sectors
Impact
 A cyber attack at one of the Group’s facilities could disrupt its
production and/or distribution capabilities leading to an inability
tomeet customer demands
 Failure of our IT and communication systems could affect any or all
of our business processes and have significant impact on our ability
to trade collect cash and make payments
Mitigations
 Training and education are delivered to all staff
 Appropriate access rights are applied on all IT systems across
the business
 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 with the latest developments
 Disaster recovery plans are in place
 There is continued investment in and maintenance of IT systems
across the Group
 People
Risk
Being unable to retain key personnel and attract skilled individuals
orthere is deterioration of our relationships with unions
Change from prior year
No change
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
 Labour shortages/workforce strikes or the increase in costs of
skilled labour could increase the costs of the Group or lead to
delays in production
Mitigations

Successive deputies are in place for immediate interim assumption
of key roles
 Longerterm succession planning focuses on identification and
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
 Identified successors can be stepped up
 Knowledge sharing and support are available from other functions
and sites
 Any necessary recruitment process will be identified commenced
and progressed in a timely manner where necessary
 Relationships with unions and works councils are managed closely
 Pay rates are maintained at a competitive level to attract and
retain staff
 Training and development programmes are in operation including
apprenticeship and other formal trainee programmes
 Employee relationships are well maintained locally through
employee engagement activities
STRATEGIC REPORT
Stelrad Group plc Annual Report 202144
 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
 The Group’s production manufacturing and distribution
operations are carried out under potentially hazardous conditions
Accidents events or conditions that are detrimental to the health
and safety of the Group’s employees including for example as a
result of operating heavy machinery could have a material adverse
effect on the Group’s business reputation and financial results
Mitigations
 Health and safety is proactively managed with robust processes
inplace to identify and manage risks
 Health and safety training is provided across the Group
 The Group has invested heavily in trying to remove risk for
example by introducing appropriate machinery guarding and also
introducing robotics
 Where health and safety incidents arise there are rigorous
processes in place to learn from these incidents and put in place
procedures and training to prevent them from reoccurring
 Political environment and climate change
Risk
Failure to evolve business practices and operations in response
to the changing political environment particularly in respect of
climate change
Change from prior year
Slight increase due to heightened focus on climate change
initiatives and the volatile Turkish Lira exchange rate
Impact

The change in political conditions in Turkey could give rise to an
adverse change in the Group’s Turkish operations either due to the
costs to produce the availability of labour or the ability for Turkey
to interact globally with other economies
 Increasing legislative pressures on matters such as climate change
could have an adverse impact on the demand for the Group’s
product offering particularly through the decarbonisation
political agenda
 The Group is also exposed to potential changes in economic
circumstances as a consequence of political events examples
of which include public funding exchange rate fluctuations and
private disposable income
Mitigations

The Group continuously monitors legislative changes and evaluates
any potential impact
 The Group continues to maintain strong customer and specifier
relationships to gain insight into potential market evolution and to
influence the selection of the Group’s brands
 The Group continues to develop market appropriate products and
commercial solutions and ensures appropriate product types are
brought to market under the Group’s brands
 Mitigating actions against exchange rate fluctuations include
 the natural hedge of key currency spend where possible and
 for currencies where there is no natural hedge and where
deemed necessary appropriate exchange forward contracts are
entered into to fix the parity over the short to medium term
Risk management continued
45Annual Report 2021 Stelrad Group plc
Viability statement
The Board has considered the viability of the Group over a threeyear
period to  December  taking into account the Group’s current
financial position and forecasts as well as the potential impact of the
principal risks and uncertainties facing the Group The threeyear period
chosen is one for which the Board believes that it can forecast with
a degree of accuracy and certainty While the Board has no reason
to believe that the Group will not be viable over a longer period it
recognises that there is inherent uncertainty involved in looking further
forward than three years The Board believes that this time frame also
increases reliability in the modelling and stress testing of the Group’s
viability and provides the users of the Annual Report with a reasonable
degree of confidence over the Group’s viability Additionally three
years aligns with the Group’s business planning cycle and a threeyear
horizon is typically the period over which the Group reviews its external
banking facilities
The Group’s annual business plan process looks at financial projections
for the next three years including profitability balance sheet liquidity and
cash flow The business plan is a detailed bottom up process and is used
to perform central debt headroom and covenant compliance analysis
A sensitivity review is performed on the most significant risks as well
as a combination of those risks The output of the annual business plan
process is reported to the Board for consideration The Group monitors
performance through the financial year against this budget and prior
year actual performance with a formal reforecast process conducted
as required
During the year ended  December  significant additional
work was carried out in preparation for the IPO This involved the
preparation of financial projections for the following two years a review
of liquidity headroom and covenant compliance and stress testing of
significant risks
The financial position of the Group remains robust On  November 
the Group refinanced its bank debt and now has in place an million
multicurrency revolving credit facility of which  million was drawn
down at  December  The facility matures in November 
with the option to extend for up to two additional years
The Board believes that the business model will remain highly relevant to
the longterm viability of the Group The regulatory drive towards making
new and existing homes more energy efficient will continue meaning
that there will be increased opportunities to play a part in providing
greener solutions for heating homes
The Board has carried out a robust assessment of the principal risks
facing the Group including those that would threaten its business
model future performance liquidity or solvency Principal risks to the
business are identified through the risk management process and are set
out on pages  to  They are recorded in a Group risk register which
is reviewed and discussed at all Audit & Risk Committee meetings which
are held at least three times per annum
The review has considered all the principal risks identified by the Group
but a selection of risks were considered to pose a severe but plausible
downside scenario if they occurred These risks have been stress tested
to assess the viability of the Group The sensitivities modelled used the
same assumptions as for the going concern statement as set out in
the going concern statement on the next page for the years ending
 December  and  December  with further assumptions
applied for the year ending  December 
The Directors note that the Covid pandemic had a shortterm
negative impact on the Group’s UK trading results in Q  For
the second half of the year ended  December  demand in the
UK returned to in excess of % of  budget levels despite the
UK experiencing a range of regional and national lockdowns A key
difference from the initial lockdown in Q  is that merchants
housebuilders and installers were able to continue their activities as
these were all deemed essential services which could be conducted while
remaining socially distanced During  demand across all markets
has remained strong and largely unaffected by any regional or national
lockdowns that have been in place
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
that there is no reason to believe the Group will not be viable over the
period assessed
Viability statement and going concern
STRATEGIC REPORT
Stelrad Group plc Annual Report 202146
Viability statement and going concern continued
Going concern statement
The financial position of the Group its cash flows and liquidity position
are set out in the financial statements Furthermore note  to the
consolidated financial statements includes the Group’s objectives and
policies for capital management and note  to the consolidated
financial statements outlines the Group’s financial risk management
objectives and policies details of its financial instruments and its
exposure to credit and liquidity risk
As part of its yearend review management has performed a detailed
going concern review looking at the Group’s current financial position
and forecasts cash flows liquidity and loan covenant compliance over
the forecast period and taking into account the potential impact of the
principal risks facing the Group Management has also applied severe
but plausible downside scenario testing to the Group forecasts Under
a severe but plausible downside scenario the Group remains within
its debt facilities and its financial covenants until  December 
Based on the output of this going concern review the Directors have
concluded that at the time of approving the financial statements the
Group will be able to continue to operate within its existing facilities and
is well placed to manage its business risks successfully The Directors
also used the financial forecasts as the basis for their assessment of the
Group’s ability to continue as a going concern for at least twelve months
from the date of the financial statements Therefore the financial
statements have been prepared on a going concern basis
The Group meets its daytoday working capital requirements through
an  million bank loan facility which is in place up to November 
with the option to extend for up to two years At the yearend date
the Group had drawn down  million of the  million bank loan
facility The remainder of the facility and cash balances of million
were available to enable daytoday working capital requirements
to be met
The financial covenants on the  million bank loan facility are for
leverage net debt excluding IFRS  finance leases/adjusted EBITDA
before exceptional items and foreign exchange differences of not
more than three times and for interest cover of not less than four times
The Group has complied with the covenants during the year ended
 December  and as discussed above is forecast to comply with
the covenants for the next three financial years
The forecast base case scenario has been prepared using robust
forecasts from each of our operating companies with each considering
the risks and opportunities the businesses face Two key sensitivities have
been applied to prepare what is considered to be a severe but plausible
downside scenario these being
 the reduction in volumes to  levels and
 a reduction of the contribution per radiator from forecast levels
toreflect a reduction in profitability due to external factors
Volumes
The business has performed strongly in recent years on a commercial
basis and volumes have grown In  mainly due to the conscious
decision to reduce sales into the Turkish market volumes were much
lower Volumes could reduce in the future due to competitive pressures
or market weakness and this has been modelled as a downside risk
Contribution per radiator
The Group’s contribution per radiator sold has increased in recentyears
with the improvement being supported by several sustainable developments
 shift of sales volumes from the Turkish market to more profitable
Western European markets
 movement of production from UK and Western European facilities
to the lower cost base Turkish facility
 selling price recovery following the failure of a significant
competitor and
 the growth of premium panel radiators as a proportion of total sales
The Group believes that these benefits are sustainable but at the same
time there is a downside risk that competitive pressures could reduce
contributions in the future
In the downside scenario volumes have been reduced to  levels
and the contribution per radiator has been reduced for the whole
period Under these circumstances the Group would remain compliant
with both of its covenants without the adoption of mitigating actions
Mitigating actions could include restructuring the cost base and
implementation of further cash saving measures such as reducing
advertising costs and other discretionary expenditure deferral of
capital expenditure delayed/reduced dividend payments and active
management of net working capital
47Annual Report 2021 Stelrad Group plc
GOVERNANCE REPORT
Chair’s introduction to governance
Dear shareholders
On behalf of the Board, I am pleased to present the first Corporate
Governance Report of Stelrad Group plc. The report summarises the
new governance structure and the enhanced governance procedures
of the Group, which have been put in place following our listing on the
Main Market of the London Stock Exchange in November 2021. We look
forward to bedding in the new Board and the new Committees of the
Board over the next year.
This report sets out the following:
• details of the Board of Directors and their biographies
(pages48 and 49);
• the role of the Board and how it delegates authority
(pages50 and 51);
• the key roles of the Board and the division of
responsibilities (page 51)
• the Audit & Risk Committee Report (pages 54 to 57);
• the Nomination Committee Report (pages 58 and 59);
• the Remuneration Committee Report (pages 60 to 73); and
• the Directors’ Report (pages 74 to 77).
Establishing 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 to 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 November
2021 to ensure that we could demonstrate good practice in our
corporate governance duties and requirements. We welcomed three
new independent Non-Executive Directors as members of the Board:
Terry Miller, Martin Payne and Nicola Bruce. Each new member of the
Board brings their own skills, knowledge and experience. We also believe
that their fresh perspective will enable them to provide independent
challenge in Board discussions and new insight to the Group’s business
model and strategy. Details of the Board of Directors and their
biographies can be found on pages 48 and 49.
The future focus of the Board is to establish ourselves as a listed
company and to aid the continued success and growth of the business
over coming years.
Compliance with the  UK Corporate
Governance Code
The Board is committed to the highest standards of corporate
governance. Since admission, we have strived to comply with the 2018
UK Corporate Governance Code (the “Code”); further details are
included in the Statement of Corporate Governance on page 50.
Board composition and diversity
As a result of the Company announcing its intention to list as a public
company, and its subsequent admission, during the year, the Board
membership grew from five members to eight members in October
2021, as three new independent Non-Executive Board members were
appointed. Building a diverse Board was an essential consideration when
searching for and appointing the new Non-Executive Directors. 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. As a result of
the new appointments, female Directors make up 25% of the Board.
During the year, the Group has continued to encourage diversity and
inclusion across the Group. Examples of this can be found in the ESG
Report on pages 20 to 35.
Stakeholders
The Board understands the importance of listening to all stakeholders
and making sure that their views are heard and acted upon. Our Section
172 Statement on page 18 details how the Board has engaged with
stakeholders during the year.
The strategy and business model of the Group aim to deliver sustainable
growth for the business and long-term benefits for all stakeholders.
During the IPO process, the Executive Directors spent a significant
amount of time meeting potential investors and engaging with them and
informing them about the Stelrad Group plc products, business model
and strategy, as well as the markets in which we operate.
The Board looks forward to the first Annual General Meeting of the
Group as an opportunity to continue to engage with our stakeholders.
Bob Ellis
Chair
14 March 2022
The future focus of the Board is to
establish ourselves as a listed company
and to aid the continued success
and growth of the business over
coming years.
Bob Ellis
Chair
Stelrad Group plc Annual Report 202148
GOVERNANCE REPORT
Board of Directors
Bob Ellis
Chair
Bob Ellis is a Director and the
Chair of the Board and joined
theGroup in August 2009.
Skills and experience
Mr Ellis has a strong financial
background with significant
experience in operational
restructuring and has also worked
with various companies with
private equity ownership, across
a number of sectors, including
the retail, manufacturing and
construction sectors.
External appointments
Mr Ellis currently holds
directorships on the board of
Whittan Group as chair of the
board and remuneration and
audit committees and the board
of Reconomy as chair of the
board and remuneration and
audit committees. Mr Ellis is also
a board adviser to Perceptive
eClinical Limited, a medical
technology company.
George Letham
Chief Financial Officer
George Letham is a Director and
the Chief Financial Officer of the
Group having joined the Group in
January 2003.
Skills and experience
Mr Letham has over 40 years
of finance experience and held
multiple senior finance roles
before joining the Group,
including at Price Waterhouse
Hong Kong and Blue Circle
Industries PLC. Mr Letham
is a member of the Institute
of Chartered Accountants
of Scotland.
External appointments
From January 2021 until
December 2021, Mr Letham
was on the board of The
Rangers Football Club Ltd as
anon-executive director.
Trevor Harvey
Chief Executive Officer
Trevor Harvey is the Chief
Executive Officer of the Groupand
joined the Group inJanuary 2000.
Skills and experience
Prior to joining the Group,
Mr Harvey held management
positions as managing director of
Myson Radiators and managing
director of Myson Heat Emitters,
both of which operate within the
radiator and heat emitter sector.
Trevor studied at the University
of Newcastle upon Tyne and
graduated with a BSc (Hons) in
Mechanical Engineering.
External appointments
Mr Harvey is currently a director
of ISG Boiler Holdings Limited,
a holding company whose
subsidiaries are engaged in the
manufacture and distribution of
boilers, and has held this position
since January 2002.
Edmund Lazarus
NonExecutive Director
Edmund Lazarus is a Non-Executive
Director and joined the Group in
November 2014.
Skills and experience
Mr Lazarus is also managing
partner and founder of EMK
Capital. Prior to EMK Capital, Mr
Lazarus was managing partner
of Bregal Capital which he co-
founded in 2002. He has been
in senior private equity positions
for over 20 years. Mr Lazarus’
prior career was as a strategic
consultant with Bain & Co and as
an M&A and corporate finance
adviser with SG Warburg and
Merrill Lynch before entering
the private equity industry with
Morgan Stanley Capital Partners.
External appointments
In addition to being a partner
of EMK Capital LLP, Mr Lazarus
holds a number of other external
appointments in private equity
portfolio companies.
A broad range of leading industry,
corporate and financial skills
andexperience
N
49Annual Report 2021 Stelrad Group plc
Nicholas Armstrong
NonExecutive Director
Nicholas Armstrong is a
Non-Executive Director and joined
the Group in November 2015.
Skills and experience
Mr Armstrong is a partner and
member of the founding team
at EMK Capital. Prior to EMK, Mr
Armstrong was part of the Bregal
Capital team from mid-2014
and worked extensively across a
number of portfolio companies
including Stelrad Group. Prior
to joining Bregal, Mr Armstrong
worked in Nomura’s UK M&A
team in London and Nomura’s
Australian M&A team in Sydney.
He graduated from the University
of Sydney with a Bachelor and
Master of Commerce.
External appointments
In addition to being a partner of
EMK Capital LLP, Mr Armstrong
holds a number of other external
appointments in private equity
portfolio companies.
Nicola Bruce
NonExecutive Director
Nicola Bruce is a Non-Executive
Director and joined the Group in
October 2021.
Skills and experience
In addition to her significant
non-executive board experience,
Ms Bruce was a partner at the
Monitor Group (now Deloitte)
and group director of strategy at
De La Rue plc. She has chaired
the remuneration committees
at the Civil Service Healthcare
Society Ltd and the Anchor
Hanover Group. Ms Bruce is a
Fellow of the Chartered Institute
of Management Accountants and
holds both an MBA from INSEAD
and an MA (Hons) in PPE from
Oxford University.
External appointments
Ms Bruce is currently a non-
executive director of OFWAT, the
UK water regulator, and senior
independent director and chair of
the remuneration committee at
theAnchor Hanover Group.
Terry Miller
NonExecutive Director and
Senior Independent Director
Terry Miller is a Non-Executive
Director and the Senior
Independent Director, and joined
the Group in October 2021.
Skills and experience
As well as her significant
non-executive board experience,
MsMiller has also previously held
senior executive positions 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.
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
GallifordTry Holdings plc.
Martin Payne
NonExecutive Director
Martin Payne is a Non-Executive
Director and joined the Group
inOctober 2021.
Skills and experience
Mr Payne is an experienced chief
executive officer and up until
recently was the chief executive
of Genuit Group plc, a UK FTSE
250 company which serves the
construction industry by providing
sustainable water and climate
management solutions. Previously
Mr Payne has also held the roles
of group financial director at
Norcros plc and group financial
controller at JCB Group. Mr Payne
is a qualified accountant and a
Fellow of the Chartered Institute
of Management Accountants and
holds a BA (Hons) in Economics
from Durham University.
External appointments
Mr Payne is currently a
non-executive director of
the Construction Products
Association, where he is chair.
Committee key
A
Audit & Risk
N
Nomination
R
Remuneration
Chair of Committee
A
A
A
N
N
N
R
R
R
Stelrad Group plc Annual Report 202150
GOVERNANCE REPORT
Statement of corporate governance
Compliance with the Code
The Board is committed to the highest standards of corporate
governance. Since admission, we have complied with the 2018 UK
Corporate Governance Code (the “Code”) except in the following areas:
Board composition
At least half the board excluding the chair should be
nonexecutive directors whom the board considers
tobeindependent
On admission and at the year end, the Board was composed of eight
members. The Directors regard only the three newly appointed
Non-Executive Directors as being independent. The Company therefore
does not comply with the Code recommendation that at least half the
board, excluding the chair, should be non-executive directors whom the
board considers to be independent. Two of the current Non-Executive
Directors are representatives of the Major Shareholder as a condition
of the Relationship Agreement. The number of Non-Executive Directors
on the Board who are not considered to be independent will reduce
over time if the Relationship Agreement lapses due to a reduction in the
shareholding of the Major Shareholder.
Independent chair
The chair should be independent on appointment
The Code recommends that the chair of a company should be
independent on appointment when assessed against the circumstances
set out in the Code. The Chair, Bob Ellis, has in the past held, and
continues to hold, various positions with portfolio companies owned by
affiliates of The Bregal Fund III LP, the Company’s Major Shareholder, and
was initially appointed as a Non-Executive Director of the Group in 2009.
By virtue of holding these positions with portfolio companies owned
by affiliates of the Major Shareholder and taking into account MrEllis’
tenure as a Non-Executive Director, the Board does not consider that
the Chair should be viewed as being independent on appointment by
reference to the independence criteria set out in the Code. However, in
view of the Chair’s involvement with the Group over the last twelve years,
and as Chair since 2013, the Board considers that he has made a major
contribution to the Group’s growth and success and is unanimously of
the opinion that his continued involvement asChair will help to ensure
the ongoing success of the Company following admission.
A copy of the Code can be found at www.frc.org.uk.
Annual evaluation
An annual evaluation of the performance of the
boardshouldbe performed
An annual evaluation of the performance of the Board has not yet taken
place given the short period of time between admission and the financial
year end. The Board is committed to holding an annual Board evaluation
of its own performance, and that of its Committees and the individual
Directors. The first formal evaluation will be reported in the 2022
Annual Report.
Role of the Board and its Committees
Board
The role of the Board is to set and monitor the Group’s purpose
and strategy in order to promote sustainable growth 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 alignment with the culture and values of the
organisation. The Board is also responsible for taking into account the
views and interests of all stakeholders, including the wider community,
through engagement with a wide range of stakeholders.
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.
The Board also sets the risk appetite of the Group.
The Board’s main responsibilities are included in a schedule of matters
reserved for the Board, as set out below:
• strategic matters – responsibility for the overall leadership of
the Group and setting and monitoring the Group’s strategy,
valuesandstandards;
• structure and capital – approving or recommending any changes
relating to the Group’s capital structure;
• financial reporting and controls – approving the Group’s annual
financial statements and reports, and approving the Group’s business
plan, budget and forecasts;
• agreements – approving major capital projects, investments,
contracts and lending or borrowing by the Group (outside of the
treasury policy);
• communications with shareholders – ensuring an effective
engagement strategy with shareholders;
• Board appointments and remuneration – approving changes to
thestructure, size and composition of the Board;
• risk assessment and internal controls – ensuring the maintenance
of sound systems of internal control and risk management, and
monitoring these systems; and
• corporate governance – reviewing the Company’s overall corporate
governance arrangements and assessing and monitoring the
Group’s culture.
The membership of the Board is detailed below:
• a Non-Executive Chair;
• two Executive Directors;
• three independent Non-Executive Directors, including a Senior
Independent Director; and
• two Major Shareholder Representative Directors.
The Directors of the Company who were in office during the year and
up to the date of signing the financial statements are detailed on pages
48 and 49.
As envisaged by the Code, the Board has established an Audit & Risk
Committee, a Nomination Committee and a Remuneration Committee,
each with formally delegated duties and responsibilities with written
terms of reference. 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 website, www.stelradplc.com.
51Annual Report 2021 Stelrad Group plc
Audit & Risk Committee
Responsibility for oversight of the Group’s financial reporting, internal controls, risk management and relationship with the external auditors.
Members
• Three independent Non-Executive Directors – Martin Payne (Chair), Terry Miller and Nicola Bruce.
The Audit & Risk Committee Report can be found on page 54.
Nomination Committee
Responsibility for the composition and make-up of the Board and Committees of the Board including succession planning and ongoing review
ofdiversity policies.
Members
• Three independent Non-Executive Directors – Terry Miller (Chair), Martin Payne and Nicola Bruce.
• One Major Shareholder Representative Director – Edmund Lazarus.
The Nomination Committee Report can be found on page 58.
Remuneration Committee
Responsibility for the Remuneration Policy, setting individual remuneration levels for Executive Directors and the Chair, and aligning workforce
remuneration and related policies with the Group’s strategy and culture and the requirements of the Code.
Members
• Three independent Non-Executive Directors – Nicola Bruce (Chair), Terry Miller and Martin Payne.
The Remuneration Committee Report can be found on page 60.
Key roles of the Board
The roles and division of responsibilities between the Chair, Chief
Executive Officer and Senior Independent Director have been clearly
defined and agreed by the Board. A summary of the key roles and
responsibilities is given below:
Chair
• Responsible for the leadership of the Board, promoting a culture
ofopenness and debate.
• Promotes the highest standards of integrity, probity and corporate
governance, in line with best practice.
• Sets the Board agenda, ensuring it has a focus on strategy,
performance, value creation, culture, stakeholders and accountability.
• Oversees the development, induction and performance evaluation
ofeach Director.
• Ensures that Directors receive accurate, timely, high quality and clear
information on the basis of which they can make sound decisions.
• Ensures that the Board listens to the views of shareholders, the
workforce, customers and other key stakeholders by ensuring
effective communication with them in order to understand their
issues and concerns, and by communicating issues to the Board.
Chief Executive Officer
• Responsible for the leadership of the business.
• Works closely with the Chair and the Board to propose, develop
andimplement the Company’s strategy.
• Represents the Company and oversees and manages all business
activities, operations and performance of the Group within the
authority delegated by the Board.
• Leads the senior management team of the Group in the day-to-day
running of the business.
• Regularly reviews the Group’s operational performance and strategic
direction and reports accurately in agreed formats to the Board and
the Committees.
• Monitors and maintains high standards of corporate governance.
• Manages the Group’s risk profile in line with the extent and
categoriesof risk identified as acceptable by the Board and the
Audit& Risk Committee.
Senior Independent Director
• Provides a sounding board to the Chair and supports the Chair in
thedelivery of their objectives.
• Appraises the Chair’s performance.
• Acts as an intermediary between the Chair and the other Directors,
when necessary.
• Available to shareholders if they have concerns which have not been
resolved through the normal channels.
Stelrad Group plc Annual Report 202152
GOVERNANCE REPORT
Statement of corporate governance continued
Board activities and priorities during 
Since admission in November 2021, the new plc Board has met
twice. The following areas have been prioritised and discussed during
this period:
• purpose and culture of the Group;
• health and safety;
• training on section 172;
• ESG strategy;
• 2022 budget approval;
• risk management; and
• internal controls.
Governance report
Board meetings and attendance
The Board held two scheduled meetings during the period under review,
which took place between our admission to the London Stock Exchange
in November and 31 December 2021. The table below sets out the
attendance of each Director versus the maximum number of meetings
they could have attended following completion of the IPO.
Board
Audit & Risk
Committee
Remuneration
Committee
Trevor Harvey 2/2 — —
George Letham 2/2 — —
Bob Ellis 2/2 — —
Terry Miller 2/2 1/1 2/2
Martin Payne 2/2 1/1 2/2
Nicola Bruce 2/2 1/1 2/2
Edmund Lazarus 1/2
(1)
— —
Nicholas Armstrong 1/2
(1)
— —
(1) Edmund Lazarus and Nicholas Armstrong were unable to attend the first Board
meeting due to commitments arranged prior to admission.
The Nomination Committee did not meet in the period from admission
to 31 December 2021.
Appointment and election
The identification and appointment of the three new independent
Non-Executive Directors was a significant factor in establishing the
new governance structure prior to the IPO. A full, detailed search was
undertaken, led by executive search firm Ridgeway, to find individuals
with a range of experience and skill sets that would complement the
business. The dates of appointment of the Directors can be found in
their biographies on pages 48 and 49.
The Board is satisfied that all Directors are effective and committed to
their roles and have sufficient time available to perform their duties. In
line with the Code and the Company’s Articles, all of the Directors will be
subject to annual re-election. Therefore, having been appointed during
the period under review, all members of the Board will be standing for
election at the 2022 Annual General Meeting to be held on 16 May 2022.
The Group’s core values and principles,
and the standards of behaviour to
which every employee across the
Group is expected to uphold, are
set out in the Stelrad Group plc
Code of Conduct. These values and
principles are applied to dealings
with our employees, customers and
suppliers and all other stakeholders
ofthe business.
53Annual Report 2021 Stelrad Group plc
Board induction and training
Details of the Board induction and training can be found in the
Nomination Committee Report on pages 58 and 59.
Board evaluation
It is intended that a Board and Committee evaluation will take place in
2022 when the Board has been in operation for a full year. Details of the
Board evaluation process can be found in the Nomination Committee
Report on pages 58 and 59.
Succession planning
Areas of focus for the Nomination Committee during the course of
2022will include Board succession planning and senior management
pipeline evaluation.
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 constructive
challenge in Board discussions, where needed, and considered insights
to refine the strategy of the Group over the coming years. From 2022
onwards, the independence of the Non-Executive Directors will be
reviewed as part of an annual Board evaluation process. As stated
within the Statement of Corporate Governance above, the Board does
not currently comply with the requirements of the Code in relation to
majority of independence of the board and the independence of the
chair on appointment. Three of the Non-Executive Directors – the two
Major Shareholder Representative Directors and the Chair – are not
independent. Under the meaning of independence within the Code, the
Company regards the three independent Non-Executive Directors as
independent and free from any business or other relationship that could
materially interfere with the exercise of 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-Executive Director
was considered prior to their appointment to determine that it was
appropriate. The Non-Executive Directors’ letters of appointment
contain information in relation to the time commitment expected of
each Director in their role. Directors’ external time commitment is
regularly reviewed to 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.
The Board has concluded that, notwithstanding Directors’ 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, review
and authorisation of Directors’ conflicts of interest. All Directors are
required to make the Board aware of any 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 are reviewed
annually to determine whether they should remain authorised.
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.
Details of how the Audit & Risk Committee reviews and assesses the
effectiveness of the system of internal control can be found in the Audit
& Risk Committee Report on pages 54 to 57. The Board understands
that systems of internal 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 management
process, which involves reviewing the processes in place to calculate
and manage risk effectively. The Board is also responsible for setting
the risk appetite of the Group and acknowledges its responsibility for
determining the extent of the risks it is willing to take in achieving its
strategic objectives. The Board regularly reviews the principal risks facing
the Group and the mitigation measures for each risk which are set out
on pages 40 to 44.
Whistleblowing
The Group has a whistleblowing policy in place and a whistleblowing
contact email address is available to enable employees to raise any
legitimate concerns which they feel need to be brought to the attention
of management concerning any wrongdoings within their workplace.
The Group believes that it is important to have a culture of openness to
prevent such situations occurring or to bring them to the attention of
management when they do occur.
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 online Board portal, to which
all Directors have access. 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
deposited in the online Board portal.
All Directors have access to the advice and services of the Group
Company Secretary, who can specifically advise them on governance
matters. The Directors may also take independent professional advice
at the Group’s expense when it is judged necessary to perform their
duties effectively.
Business ethics
The Group’s core values and principles, and the standards of behaviour
to which every employee across the Group is expected to uphold, are
set out in the Stelrad Group plc Code of Conduct. These values and
principles are applied to dealings with our employees, customers and
suppliers and all other stakeholders of the business.
The Group has anti-bribery policies which are communicated to all
employees through business units’ intranets and readily available from
the respective Human Resources departments. The policy is prepared
in light of the UK Bribery Act 2010 and describes the legal framework
applicable to the business as well as standards and policies to be adhered
to by employees. In addition training courses are provided locally.
The Group is opposed to modern slavery and human trafficking
and will only work with organisations which formally commit to the
Group’s ethical trading policy. The Board has approved the modern
slavery statement which can be found on the Group’s website at
www.stelradplc.com.
Stelrad Group plc Annual Report 202154
GOVERNANCE REPORT
Audit & Risk Committee report
Overseeing financial reporting
andrisk management
Dear shareholders
As Chair of the Audit & Risk Committee, I am pleased to introduce the
inaugural Committee’s report as a listed company. This report provides
a summary of the Committee’s role and activities for the period from
admission on 10 November 2021 to the end of the financial year ended
31 December 2021.
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 challenge where required.
As well as detailing the composition and remit of the Committee, this
report will also outline how the Committee operates; give an appraisal of
the external auditors and auditor effectiveness; and provide an overview
of the Group’s internal control environment and risk management
framework, including the Committee’s assessment of its effectiveness.
Audit & Risk Committee composition
The Committee comprises three independent Non-Executive Directors:
Nicola Bruce, Terry Miller and Martin Payne as Committee Chair. The
Major Shareholder is entitled to nominate an observer to the Audit &
Risk Committee.
The initial membership of the Committee was selected at the time of
listing with the aim of providing the range of financial, commercial and
sector expertise necessary to meet the responsibilities of the Committee
and the requirements of the Code.
Going forward, the Committee will keep its composition under review
to ensure it remains appropriate. In agreeing the membership of the
Committee, the Board was satisfied that, as a whole, it had competence
and experience that are relevant to the sector in which the Company
operates. The Board is also satisfied that Martin Payne, a Chartered
Accountant and a former finance director, has recent and relevant
financial experience and he has been designated as the financial expert
on the Committee for the purposes of the Code.
Details of the Directors’ experience and skill sets can be found in the
Director biographies on pages 48 and 49.
Highlights of 
• Examining the Group’s risk management framework and
risk register.
• Review of the planned audit approach for the 2021
financial year.
• Agreeing the approach for the Group’s viability statement
andgoing concern assessment.
Focus areas for 
• Monitor the integrity of the Group’s financial reporting.
• Carry out a review of the effectiveness of the
external auditors.
• Review the effectiveness of the Group’s risk management
and internal control procedures.
• Oversee the implementation of new reporting requirements
relating to climate change.
• Review our performance during our first year as
a Committee.
Committee members
Martin Payne (Chair)
Terry Miller
Nicola Bruce
Post-admission, particular focus
was placed on understanding the
Group’s financial reporting and risk
management processes.
Martin Payne
Chair of the Audit & Risk Committee
55Annual Report 2021 Stelrad Group plc
Audit & Risk Committee remit
The key responsibilities of the Committee are:
• reviewing and monitoring the integrity of the Group’s annual and
interim financial statements, and reviewing the significant financial
reporting judgements made in connection with their preparation;
• reviewing the content of the Annual Report and Accounts and
advising the Board on whether, taken as a whole, it is fair, balanced
and understandable;
• monitoring and reviewing the adequacy and effectiveness of the
Company’s internal financial controls and internal control and risk
management systems;
• overseeing and maintaining an appropriate relationship with the
Company’s external auditors and reviewing the independence,
objectivity and effectiveness of the audit process;
• ensuring that internal audit arrangements are appropriate and
effective; and
• ensuring that fraud prevention and whistleblowing arrangements
are established which minimise the 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 of reference, which are
reviewed annually and approved by the Board, can be found on our
website, www.stelradplc.com.
How the Committee operates
Between the Group’s listing on the London Stock Exchange’s Main
Market on 10 November 2021 and the end of the financial year the
Committee had one meeting which was attended by all Committee
members. Looking ahead, the Committee has arranged to schedule its
meetings to align with the key dates in the Company’s financial calendar.
The dates of the meetings have been set using a structured forward
planner, developed in conjunction with the Company Secretary, to
ensure it is able to devote sufficient time to discussing and debating the
key matters within its remit and discharge its responsibilities in full.
Currently the Committee is planning to meet three times per annum,
but the planner will be reviewed regularly. The external auditors,
PricewaterhouseCoopers LLP, are invited to attend each meeting
together with the Chair of the Board, the Chief Financial Officer, the
Group Finance Director and the Company Secretary. The Committee
Chair will also update the Board as needed on its discussions following
each meeting.
The Committee also plans to set time aside at each meeting to seek
the views of the external auditors, in the absence of management. In
between meetings the Committee Chair keeps in touch with the Chief
Financial Officer and other members of the management team.
 Committee activities
The Committee met once during the period under review on
14December 2021, and key areas covered at the first meeting
of the Committee were:
• an update from the external auditors on the planned approach and
scope for the full year audit;
• an update on the Group’s financial position and prospects procedures
and the steps the Group had taken both during and after the IPO to
address any action points identified as part of the listing process;
• consideration of the Group’s proposed approach to the going
concern assessment and viability statement to be disclosed in the
Annual Report;
• consideration of the risk management framework and the Group risk
register; and
• consideration of the Group’s approach to internal audit.
Financial reporting review
A key requirement of the financial statements is that they are fair,
balanced and understandable. In reaching a judgement as to whether
this is the case, the Annual Report and Accounts are reviewed and
assessed by the Committee. The Committee considers that the 2021
Annual Report and Accounts are fair, balanced and understandable in
terms of the form and content of the strategic, governance and financial
information presented therein.
Significant issues and other accounting judgements
The Committee reviewed the integrity of the Group’s financial
statements and all formal announcements relating to the Group’s
financial performance. This included an assessment of each critical
accounting policy, as set out in note 6 to the financial statements,
aswellas review of the following key areas of judgement:
Revenue recognition and indirect rebates
In conjunction with the annual audit, the Committee continued to
reviewkey judgements in respect of revenue recognition and indirect
rebate provisions.
Going concern and longterm viability
The Committee has reviewed the Group’s going concern and long-term
viability disclosures in this Annual Report, along with supporting documents,
and advised the Board on their appropriateness. More detail on these
disclosures can be found on page 46 of the Strategic Report. As part of
its review, the Committee considered the appropriateness of the “severe
but plausible” downside scenario modelled by the business, especially
considering the potential ongoing impact of the Covid-19 pandemic.
Stelrad Group plc Annual Report 202156
GOVERNANCE REPORT
Audit & Risk Committee report continued
External auditors and audit effectiveness
PricewaterhouseCoopers LLP (“PwC”) were appointed as the auditors
of Noosa Holdings Jersey Limited, which was the parent company of the
Group prior to the Group’s listing, in 2017 and have subsequently been
appointed as auditors of the Company.
For the financial year ending 31 December 2022, the Committee has
recommended to the Board that PwC be reappointed as external
auditors and the Company will be seeking shareholder approval for the
reappointment of PwC at its AGM to be held in May 2022.
The current lead audit partner, Jonathan Greenaway, was appointed
in 2017. Current professional standards require a lead partner to be
rotated every five years. Following the completion of the audit for
thefinancial year ended 31 December 2021 Jonathan will therefore
stand down as audit partner, and a new partner will be appointed
shortly thereafter.
In assessing the independence of the auditors from the Group, the
Committee has been provided with information and assurances
that all of the auditors’ partners and staff involved with the audit are
independent of any links to the Group. The Committee has reviewed,
and is satisfied with, the independence of PwC as the external auditors.
Subsequent to the year end, the Committee assessed the effectiveness
of PwC and the external audit process for 2021 through discussions
with senior members of management across the Group who had been
involved in the audit process. A summary of the findings was prepared
for consideration by the Committee and PwC.
There were no substantive matters identified during this assessment and
the Committee concluded that the external audit process for 2021 had
been effective.
The Committee reviewed PwC’s findings in respect of the audit of
the financial statements for the year ended 31 December 2021.
TheCommittee met separately with the auditors without management
present and with management without the auditors present, to ensure
that there were no issues in the relationship between management
and the external auditors which it should address, in which no matters
were raised.
Nonaudit services
A policy governing the provision of non-audit services was put in place
during the financial year as part of the preparation for the IPO, in order
to ensure the independence of the external auditor. Non-audit services
should not be carried out by the external auditor where doing so would
compromise its independence. The provision of non-audit services by
the external auditor must always be approved by the Board, either by
specific pre-approval or on a case by case approval basis. In deciding
whether the external auditor should be appointed to carry out any non-
audit services, the following areas should be taken into consideration:
• the skills and experience of the external auditor to perform the
required services;
• the effect of the non-audit services on the audited financial statements;
• the potential impact of each project on the external auditors’
independence and objectivity; and
• the resulting ratio of non-audit to audit fees.
In 2021, PwC received total fees of £849k (2020: £217k) comprising
£272k of audit fees (2020: £179k) and £577k of non-audit service fees
(2020: £38k). The fees for non-audit services during the year include:
• £523k related to work undertaken by PwC on a one-off basis in
relation to the historical financial information required for the
Company’s IPO; and
• £24k (2020: £38k) related to tax compliance services for 2020
and 2019 respectively and £30k (2020: £nil) related to tax advisory
services. From 2022, the tax compliance and advisory services will no
longer be performed by PwC.
Further details of fees paid to PwC are set out in note 10 to the financial
statements.
Internal control framework
The day-to-day management of our principal risks is supported by an
internal control environment which is embedded in our management
and operational processes. The most significant elements of the Group’s
internal control environment include the following:
Communication of policies and procedures
The Group has documented policies and procedures underpinning its
key business and finance processes. Policies and procedures documents
are held at both Group and business unit level, with more detailed
documents held at a business unit level to support the local conditions.
Promoting a culture of honesty and ethical behaviour
The Group educates new staff on the values and culture of 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 policies and
procedures for HR, anti-bribery, modern slavery and whistleblowing.
Monitoring and oversight by those charged with governance
There are a number of operational controls in place which 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 and departments
within the Group. The reporting line to the Board is through the Chair,
Chief Executive Officer and Chief Financial Officer. There is frequent
interaction between 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.
57Annual Report 2021 Stelrad Group plc
Risk management
Overall responsibility for risk management lies with the Board, supported
in its role by the Audit & Risk Committee, which has been delegated the
responsibilities of reviewing the risk management methodology and the
effectiveness of internal control.
The Group has in place a risk management framework, underpinned
by the use of business unit and Group level risk registers, which clearly
documents procedures to ensure risks to the organisation are identified,
reported and reassessed on an ongoing basis.
In addition to the assurance provided by the formal risk management
framework, the Executive Directors are very involved in the day-to-day
running of the business and have overview of potential risks in the
business units.
The Group continually assesses and monitors the impact of the most
significant risks. Where necessary, mitigating actions are put in place to
reduce the likelihood or impact of such risks to an acceptable level.
The Group’s risk appetite is largely risk averse. However, the 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
The Group Finance team, led by the Chief Financial Officer, develops and
delivers an annual programme of internal audits, which includes business
unit key control reviews, balance sheet audits and commercial reviews.
During the year ending 31 December 2022, these reviews will be formally
documented and delivered to the Committee for its appraisal.
Assessment of the Group’s system of internal
control and risk management framework
The risk assessment process within the Group and the management of
significant business risks is a key area of focus for the Committee. The
Committee’s undertakings with regard to risk assessment have focused
on the key risks identified by the Group and the actions it had put in
place to address these – as described in the Risk Management section of
the Strategic Report on pages 40 to 44.
The Group’s internal control environment is designed to protect the
business from the material risks which have 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.
As part of the review of financial position and prospects procedures
that was undertaken in preparation for listing, an analysis of the Group’s
system of internal control and risk management framework was carried
out by external advisers. Significant progress has been made in any areas
identified as needing further improvement and the Committee
will continue to receive updates on completing and embedding
outstanding recommendations.
In accordance with the requirements of the Code, the Committee
confirms it has reviewed the Group’s risk management framework and
internal control environment. No significant failings or weaknesses were
identified as a result of the review that may significantly impact the
financial statements.
Fraud whistleblowing and the UK Bribery Act
The Committee recognises the importance of effective whistleblowing
policies as being an additional tool to strengthen governance, by
ensuring a reliable system is in place to identify and correct any unlawful
or unethical conduct. The Committee monitors any reported incidents
under the Group’s whistleblowing policy, which is explained in more
detail on page 53 of the Statement of Corporate Governance. There
were no incidents during the year which were required to be brought to
the attention of the Committee.
The Committee also reviews the Group’s procedure for detecting
fraudand the systems and controls in place to prevent a breach of
anti-bribery legislation. The policy is explained in more detail on page 53
of the Statement of Corporate Governance. There were no breaches
during the year which were required to be brought to the attention of
the Committee.
Martin Payne
Chair of the Audit & Risk Committee
14 March 2022
Stelrad Group plc Annual Report 202158
GOVERNANCE REPORT
Nomination Committee report
The Nomination Committee was
established in October 2021 and met
for the first time in January 2022
Dear shareholders
I am pleased to present the first Nomination Committee Report of
Stelrad Group plc following the Group’s admission to the London
Stock Exchange’s Main Market on 10 November 2021. The Nomination
Committee was formed in October 2021 in anticipation of the listing
and, as a result, the Committee did not have the cause to meet formally
during the year ended 31 December 2021 but subsequently met as a
Committee in January 2022. As well as detailing the composition and
remit of the Committee, this report will also examine the future focus
areas of the Committee.
Nomination Committee composition
During the period since admission, the Nomination Committee
comprised the Committee Chair (Terry Miller), who is an independent
Non-Executive Director and the Senior Independent Director, two
further independent Non-Executive Directors (Nicola Bruce and Martin
Payne) and one non-independent Non-Executive Director (Edmund
Lazarus) who is a Representative Director of the Major Shareholder.
Details of the Directors’ experience and skill sets can be found in the
Director biographies on pages 48 and 49.
Nomination Committee remit
The key responsibilities of the Nomination Committee are:
• to assist the Board in discharging its responsibilities relating to the
composition and make-up of the Board and any Committees of
the Board;
• to periodically review the Board’s structure and identify potential
candidates to be appointed as Directors or Committee members
asthe need may arise;
• to evaluate the balance of skills, knowledge and experience and
the size, structure and composition of the Board and Committees
of the Board, and retirements and appointments of additional and
replacement Directors and Committee members, and to make
appropriate recommendations to the Board on such matters;
• to assist the Chair in the annual evaluation of the Board’s
performance and to review the results relating to Board composition
and performance;
• 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 and
knowledge needed within the Group and on the Board; and
• to maintain an ongoing review of the Group’s diversity policy and the
progress in meeting its objectives for the Board, its Committees and
the Group, recommending changes to the Board as appropriate.
Further details on the remit and responsibilities of the Committee can
be found in its terms of reference. The terms of reference, which are
reviewed at least annually and approved by the Board, can be found on
our website, www.stelradplc.com.
Highlights to date
• Establishing the Nomination Committee.
• Agreeing the Nomination Committee’s remit and
plans for 2022.
• Consideration of the Board diversity policy.
Focus areas for 
• Review Board and senior management appointment
andsuccession planning processes.
• Review of diversity and inclusion policies and initiatives.
• Develop and implement the Board effectiveness review.
Committee members
Terry Miller (Chair)
Martin Payne
Nicola Bruce
Edmund Lazarus
In 2022, the Nomination Committee
will focus on the key areas of succession
planning, Board effectiveness and our
diversity policies.
Terry Miller
Chair of the Nomination Committee
59Annual Report 2021 Stelrad Group plc
Appointing the new Stelrad Group plc Board
An executive search firm, Ridgeway, was engaged in July 2021 to assist
with the search for three independent Non-Executive Directors to be
appointed to the new plc Board. The prospective candidates were
required to be a good fit in terms of organisational culture and be able
to provide a well-rounded commercial perspective to the business. A
range of experience and skill sets was sought to complement the existing
expertise on the Board and to provide constructive challenge to its
established ways of thinking. The importance of diversity and inclusion
as core values of the business was taken into account in making the new
Board appointments.
The search also focused on identifying Non-Executive Directors who
had relevant plc experience that would make them well qualified to
chair the Nomination Committee, Remuneration Committee or Audit
& Risk Committee. Additionally, it was a requirement that one of the
Non-Executive Directors be qualified to be appointed to be our Senior
Independent Director.
A shortlist of suitable candidates was drawn up and interviews
conducted by the Chair and members of the pre-plc Board. The
recommendation to appoint Terry Miller, Martin Payne and Nicola Bruce
as independent Non-Executive Directors, and Terry Miller as Senior
Independent Director, was approved by the Board on 22 October
2021 and they formally joined the Board prior to the completion of
the IPO and the admission to listing. Edmund Lazarus and Nicholas
Armstrong were appointed to the Board as Representative Directors
of the Major Shareholder. Following the completion of the IPO and
the formal constitution of the plc Board and its principal Committees,
the responsibility for overseeing the search process for future Board
appointments now rests with the Nomination Committee.
All the Directors have service agreements or letters of appointment
which are available for inspection at the Company’s registered office
during normal business hours and will be on display at the Company’s
2022 Annual General Meeting.
Board induction and training
A comprehensive induction plan has been developed for the three new
independent Non-Executive Directors, including:
• introductory sessions with the Chair, covering the structure of
theBoard and its Committees and their responsibilities;
• detailed overviews of the operations of each area of the business
through meetings with the Chief Executive Officer, Chief Financial
Officer and members of the leadership team, which will be built
upon during 2022 through deep dives into the Group’s three
largestbusiness units;
• site visits during 2022 to key operational centres;
• training on the statutory and regulatory duties and obligations
ofdirectors of public companies; and
• meetings with the external auditors and advisers, where appropriate.
Diversity and inclusion
Building a diverse Board was an essential consideration when searching
for three independent Non-Executive Directors to join the new plc
Board. The Board recognises the advantages of having a diverse
and inclusive Board, and that diversity brings different perspectives
to the debate and decision-making processes, which is a benefit to
all stakeholders. Going forward, and despite being a relatively small
Board, diversity and inclusion will be considered in all future Board
appointments, to ensure that the Board membership reflects as broad
a combination of skills, experience, gender, ethnicity, age, sexuality,
disability, education and background as possible.
Maintaining oversight of the diversity policy and the Group’s progress in
meeting its objectives for Board and senior management appointments
is an important element of the Committee’s work. The Committee
works with the Human Resources team, taking an active role in setting
and meeting diversity objectives and strategies for the Group, and
monitoring the impact of diversity initiatives.
The Board also believes it has a responsibility to support the business
in maintaining a culture where everyone feels supported and included
in the work they carry out, and where individuals are valued and
recognised. The Committee’s work includes ensuring that the right
tone from 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.
Board evaluation
As the Group’s listing only occurred in November 2021 a formal Board
performance evaluation has not yet been conducted. It is intended
that the Committee will assist the Chair in working with the Company
Secretary to facilitate a Board and Committee evaluation in 2022
when the Board has been in operation for a full year. The process and
results of the evaluation, along with an action plan, will be reported
to the Board following completion, and the aspects relating to Board
and Committee composition and performance will be reviewed by
theCommittee.
Future focus
The Committee will meet as often as needed and, in any case, no less
than twice per year, depending on circumstances, to ensure we are
discharging our duties as a Committee in full and in accordance with
ourterms of reference.
The agenda items for the Committee’s first meeting on 18 January
2022 included: a review of its terms of reference; an initial review of
the Board’s composition; consideration of the diversity policy; and
succession planning for the Board and the pipeline for recruitment for
key roles within the senior leadership team. The Committee’s future
focus will continue to include consideration of these topics.
Annual reelection of Directors
As required by the Corporate Governance Code 2018, all Directors
will be subject to re-election at the next AGM. 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 and that they have shown commitment to their role.
Acting on the Committee’s advice, the Board recommends that each
Director be elected.
Terry Miller
Chair of the Nomination Committee
14 March 2022
Stelrad Group plc Annual Report 202160
GOVERNANCE REPORT
Directors’ remuneration report
Overseeing how we reward
ourpeople
Annual Statement by the Remuneration
Committee Chair
Dear shareholders
On behalf of the Board, I am pleased to present the Directors’
Remuneration Report for the year ended 31 December 2021.
As the Company is now a constituent of the premium segment of the
London Stock Exchange’s Main Market, this report has been prepared in
accordance with The Large and Medium-sized Companies and Groups
Accounts and Reports (Amendment) Regulations 2013, the Companies
(Directors’ Remuneration Policy and Directors’ Remuneration Report)
Regulations 2019, the FCA Listing Rules and the UK Corporate
Governance Code. This report consists of three sections:
• the Annual Statement and associated high level summary
(remuneration at a glance);
• the Directors’ Remuneration Policy, which is to be put to a binding
shareholder vote at the 2022 AGM on 16 May 2022; and
• the Annual Report on Remuneration, which outlines the decisions
made by the Remuneration Committee (the “Committee”) and
payments made to Directors in respect of 2021, describes the link
between Company performance and remuneration for 2021 and
setsout the proposed approach to remuneration in 2022.
The Directors’ Remuneration Report (excluding the Policy) will be put
toan advisory shareholder vote at the 2022 AGM.
Background to the Remuneration Policy
The Group’s Remuneration Policy is designed to motivate our senior
leaders to deliver strategic objectives and deliver long-term sustainable
value. The core elements of our incentive framework are summarised in
the Remuneration Policy summary table (page 62).
Before being admitted to the London Stock Exchange’s Main Market, the
Group had been in private ownership since 2000. Regular remuneration
benchmarking had been undertaken in connection with the Chief
Executive Officer (“CEO”), the Chief Financial Officer (“CFO”) and
other members of senior management in the context of private
ownership. In preparation for listing on the London Stock Exchange’s
Main Market, the Board engaged consultants to review the Executive
Directors’ remuneration structure and packages in a plc context in order
to ensure that remuneration fairly and accurately reflected individual
responsibilities and performance, and that the existing remuneration
framework was appropriate for a Main Market-listed company.
In the development of the Remuneration Policy, the Committee took
account of prevailing market and best practices, including the UK
Corporate Governance Code and various investor body guidelines.
Priorto listing, pension contributions for Executive Directors were
reduced to 9% of salary, to align with average contributions for the
Group’s UK workforce.
Highlights of 
• Refinement of Annual Bonus Plan to include new measures
and a share deferral requirement.
• Introduction of a Long Term Incentive Plan for Executive
Directors and key members of the senior management team.
• Development of the Directors’ Remuneration Policy.
Focus areas for 
• Implement the post-IPO Remuneration Policy.
• Carry out Executive Director and senior management
pay review.
• Carry out a wider workforce remuneration review.
• Determine incentive scheme outcomes and set incentive
scheme targets.
• Review performance and effectiveness during our first year
as a Committee.
Committee members
Nicola Bruce (Chair)
Terry Miller
Martin Payne
The principal work of the Remuneration
Committee in 2021 has been to develop
Stelrad’s first Remuneration Policy as a
listed company.
Nicola Bruce
Chair of the Remuneration Committee
61Annual Report 2021 Stelrad Group plc
Remuneration outcomes in 
The key highlights of the performance of the business during the year
can be found in the Strategic Report on page 1.
The single figure of remuneration payable for Executive Directors for the
period ended 31 December 2021 shown in this report is based on the
period from admission on 10 November 2021 to 31 December 2021.
The base salary, benefits and pension are the amounts payable over
this period.
The Annual Bonus Plan (“ABP”) structure for the year ended
31December 2021 was determined pre-admission and was based on
the delivery of a Group EBITDA (before foreign exchange differences
and exceptional items) target. In the context of a strong trading
performance throughout the year, the Group EBITDA target was
exceeded. The Committee reviewed the ABP outcomes in the context of
the broader business performance and the experience of all stakeholders
over the year. Recognising the strong performance of the Group against
set targets, the Committee determined that the pay-out of the maximum
bonus opportunity to Executive Directors was appropriate, resulting in
an award of 75% of base salary. This bonus will be paid wholly in cash,
inline with the previous Remuneration Policy prior to admission.
During the year, the Committee did not exercise any discretion to
determine any remuneration outcomes for Executive Directors.
There were no long-term incentive awards outstanding as at the date
ofadmission.
Major decisions on Directors’ remuneration for 
Salary
The Committee noted that the CEO and the CFO’s salaries were not
adjusted at admission. From January 2022, the salaries of the CEO and
the CFO have been set at £495,101 and £316,866 respectively, which
represent an increase of 4% to salaries at admission, which is in line with
the average increase awarded to the broader UK workforce.
Annual and Deferred Bonus Plan performance targets for 
The Committee considered which performance metrics would best
support the continued and sustainable growth of the business in
line with its strategy. It is the Committee’s view that a mix of financial
measures and strategic objectives is most appropriate to supporting the
delivery of our business strategy. To this end, the Committee determined
that for 2022 90% of the ABP would be linked to two financial measures
and 10% would be linked to strategic objectives:
• We have selected Group adjusted operating profit as the target
profit measure, to align with our key performance indicators
going forward. This measure will have a weighting of 70% of
themaximumopportunity.
• We have introduced an adjusted cash flow from operations
conversion measure to supplement adjusted operating profit as a
second financial measure in order to support cash flow management
across the Group, with a weighting of 20% of the maximum opportunity.
• The strategic element will have a weighting of 10% of the
maximumopportunity.
The Committee has determined that from 2022 the maximum annual
bonus payable to Executive Directors will be set at 125% of base
salary. In addition, no more than 75% of any annual bonus awarded
to Executive Directors will be paid in cash, with the remaining 25% to
be issued as deferred shares, under the Deferred Share Bonus Plan
(“DSBP”). Deferred share awards vest after two years, subject to
continued employment. Malus and clawback provisions apply for a
period of three years following vesting.
It is the Committee’s intention to retrospectively disclose the targets for
the 2022 ABP once pay-outs have been considered, as the targets are
currently deemed to be commercially sensitive.
Long Term Incentive Plan and performance targets
As part of our review of remuneration, we have looked at the use of
equity-based remuneration and have introduced a Long Term Incentive
Plan (“LTIP”) for Executive Directors and certain key individuals in the
senior management team below Executive Director level. To ensure
alignment with our business strategy, and in line with good practice, the
Committee has selected one financial performance measure and one
market performance measure. The financial measure will be adjusted
EPS with a weighting of 50% of the total award; the market measure
will be the Group’s total shareholder return (“TSR”) as compared to
the selected benchmark, the FTSE Small Cap index, with a weighting of
50% of the total award. Awards will be granted in the first half of 2022.
Vesting will be conditional on the achievement of three-year EPS and
TSR performance targets, which are outlined in detail in the table at the
bottom of page 72. Executive Directors’ shares from vested awards will
be required to be held for a further two years.
Malus and clawback provisions apply for a period of three years
following vesting.
The Committee’s view is that these changes create an annual and
long-term bonus structure which effectively supports the key elements
of our strategy, aligning the interests of our senior leadership with our
shareholders and other stakeholders.
As the Group’s ESG strategy evolves, the Committee will continue to
consider the development of appropriate ESG metrics for inclusion in
the incentives.
Conclusion
We are committed to maintaining a clear, open and transparent dialogue
with our shareholders on executive remuneration. The Committee has
communicated to all shareholders the remuneration decisions made
pre-admission in preparation for listing and those made post-admission
following the formation of the Committee.
On behalf of the Board, I would like to thank shareholders for their
support and we hope that you will support the resolutions requesting
approval of the Annual Report on Remuneration at this year’s Annual
General Meeting on 16 May 2022.
Nicola Bruce
Chair of the Remuneration Committee
14 March 2022
Stelrad Group plc Annual Report 202162
GOVERNANCE REPORT
Directors’ remuneration report continued
Remuneration at a glance
Implementation of the Remuneration Policy in 
For 2022, the Executive Directors will be remunerated in line with the proposed Remuneration Policy, as summarised in the table below.
Element of pay Implementation for 
Fixed remuneration
Base salary
The salaries of the Executive Directors, Trevor Harvey and George Letham, have been set at £495,101 and
£316,866 respectively, which represent a 4% increase to the salaries at admission, in line with the average
increase awarded to the wider UK workforce.
Pension
The Executive Directors will receive a salary supplement in lieu of pension contribution of 9% of salary.
Benefits
Each Executive Director will receive the benefit of a life assurance scheme, private health cover, a car allowance
and the reimbursement of fuel expenses.
Variable pay
ABP and DSBP
The ABP will award up to a maximum of 125% of base salary, based on the achievement of two financial measures
and one strategic measure: Group adjusted operating profit (70%); adjusted cash flow from operations
conversion (20%); and a strategic measure (10%).
75% of the annual bonus will be paid in cash, with the remaining 25% issued as awards under the DSBP.
LTIP
The LTIP will award up to a maximum of 150% of base salary, based on the achievement of two performance
conditions: adjusted EPS (50%); and relative TSR as compared to the selected benchmark index, the FTSE Small
Cap index (50%).
The LTIP has a three-year performance period for all participants, followed by a two-year holding period for
allExecutive Directors.
63Annual Report 2021 Stelrad Group plc
Remuneration Policy
In accordance with the Remuneration Reporting Regulations, the Directors’ Remuneration Policy (the “Policy”) as detailed below is subject to
shareholder approval at the AGM on 16 May 2022 and will apply for a period of three years thereafter unless a new Policy is approved by the
Company’s shareholders prior to expiry. The Policy builds on the information disclosed to shareholders in the Group’s Prospectus as issued when
theCompany listed on the Main Market in November 2021.
Our Policy is underpinned by the philosophy that remuneration should support the delivery of the Group’s evolving business strategy, and align
Executive Directors with the creation of long-term shareholder value. The Policy incorporates prevailing best practice design features, as set out in the
latest UK Corporate Governance Code and various investor body guidelines. For the Executive Directors, remuneration will typically consist of four
elements: (i) salary; (ii) annual bonus; (iii) share-based remuneration; and (iv) pension, or a salary supplement in lieu of pension contribution. In
addition, all employees, including Executive Directors, are entitled to a range of employment benefits.
Corporate Governance Code principles
The table below reflects how the Remuneration Policy fulfils the factors set out in provision 40 of the 2018 UK Corporate Governance Code.
Criteria Approach
Clarity – Remuneration arrangements should be transparent and
promote effective engagement with shareholders and the workforce.
The Committee operates a consistent remuneration approach that is well
understood internally and externally. The Committee regularly engages
with major shareholders on executive remuneration and undertook a
detailed consultation ahead of the admission to the Main Market.
Simplicity – Remuneration structures should avoid complexity and
theirrationale and operation should be easy 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. This design is simple in nature and
well understood by participants as well as other stakeholders.
Risk – Remuneration arrangements should ensure reputational and
other risks from excessive rewards, and behavioural risks that can arise
from target-based incentive plans, are identified and mitigated.
Targets are reviewed annually to ensure they are adequately stretching
yet achievable without encouraging excessive risk taking. Using recovery
provisions or discretion, the Committee retains the ability to override
formulaic incentive outcomes in the event that these produce a result
inconsistent with the Group’s remuneration principles.
Alignment to culture – Incentive schemes should drive behaviours
consistent with Company purpose, values and strategy.
The variable incentive schemes and performance measures are designed
to be consistent with the Group’s purpose, values and strategy. We believe
that aligning remuneration practices across the business is a key element
of supportingour culture, fulfilling our values and being a strong driver of
business performance.
Predictability – The range of possible values of rewards 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 opportunities and will
use its available discretion if necessary.
The potential value and composition of the Executive Directors’
remuneration packages at below threshold, target and maximum scenarios
are provided in the Remuneration Policy.
Proportionality – The link between individual awards, the delivery of
strategy and the long-term performance of the Group should be clear.
Outcomes should not reward poor 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.
Consistent with best practice, the Committee may apply discretion with respect to outcomes that affect the actual level of reward payable to individuals,
both upwards and downwards. Such discretion, if exercised, would be disclosed in the report on implementation of the Policy (i.e. the Annual Report
on Remuneration) for the year in question.
Stelrad Group plc Annual Report 202164
GOVERNANCE REPORT
Directors’ remuneration report continued
Remuneration Policy continued
Remuneration Policy summary table
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 nature of their role and is set with
reference to market. Base salaries will
typically be reviewed on an annual basis.
Any Executive Director salary increases
will not normally exceed those of the
majority of the Group’s employees
unless exceptional correctional
increases are appropriate (for
example if an Executive Director was
initially appointed below the relevant
benchmark level).
Not applicable.
Benefits
and pension
To provide market
competitive levels of
employment benefits.
The Executive Directors receive a
salary supplement in lieu of pension
contribution of 9% of salary. This
contribution percentage is in line
with the average of the Group’s
UKworkforce. Any new Executive
Directors will have their pension
contributions set in line with the
majority of the UK workforce.
Each Executive Director is entitled
to the benefit of a life assurance
scheme, private health cover, a car
allowance and the reimbursement
offuel expenses.
The benefits package is set at a level
which the Committee considers
provides an appropriate level of
benefits for the role and is appropriate
in the context of the benefits offered to
the wider workforce or to comparable
roles in companies of a similar size
andcomplexity.
Not applicable.
ABP and DSBP
To reward the year-
on-year achievement
of demanding annual
performance metrics.
Performance measures, weightings and
targets are reviewed annually by the
Committee and may be changed from
time to time.
Threshold, targets and stretch goals
areset for each performance measure.
No more than 75% of the annual bonus
will be paid out as cash after the end of
the financial year. The remainder will be
issued as awards under the DSBP.
DSBP awards will be in the form of
conditional awards or nil-cost options
with awards normally vesting after
two years.
Under the DSBP, an additional
payment, in cash and/or shares, may be
made equal to the value of dividends
which would have accrued on vested
shares between the grant date and date
of vesting.
Malus and clawback provisions apply.
Up to 125% of salary.
Percentage of maximum bonus earned
for levels of performance:
• Threshold: 24%
• On target: 50%
• Maximum: 100%
A minimum of
70% of weighting
will be associated
with financial
targets.
The Board will
determine the
actual bonus
outcome based
on achievement
against pre-
determined
targets.
Actual targets,
performance
achieved and
awards made will
be published at
the end of the
performance
period.
65Annual Report 2021 Stelrad Group plc
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.
Awards will be in the form of
conditional awards or nil-cost options
with vesting subject to the achievement
of performance conditions determined
by the Committee at the time of
grant. The measurement period for
the performance conditions for LTIP
awards will normally be a period of
three financial years.
Additionally, a two-year post-vesting
holding period will normally apply at the
end of each relevant vesting period for
Executive Directors.
An additional payment, normally in
shares, may be made equal to the value
of dividends which would have accrued
on vested shares between the grant
date and date of vesting.
Malus and clawback provisions apply.
LTIP award levels will be no greater than
150% of base salary.
The Committee
will determine
the appropriate
performance
conditions prior
to grant each year,
to align with the
Company’s longer-
term strategy.
Performance
conditions may
include financial,
market-based and/
or non-financial
measures.
Financial and
market-based
measures will
account for at
least 70% of the
total award.
Share
ownership
guidelines
To provide long-term
alignment between
Executive Directors
andshareholders.
Executive Directors are expected to
build up and then subsequently hold
a shareholding equivalent to 200% of
base salary.
Following cessation of employment,
Executive Directors will also be
required to retain for two years the
lower of: (i)the 200% shareholding
requirement; and (ii) the shares
accumulated toward the shareholding
requirement that have been granted
under the LTIP from 2022 onwards, at
the date of termination.
Progress against the shareholding
requirement will be reviewed by the
Committee annually.
Not applicable.
NonExecutive
Director fees
To attract and retain
Non-Executive Directors
of a high calibre with
relevant commercial
andother 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 – subject to approval
from the Chair).
The Chair receives a fixed annual fee
with additional fees payable to reflect
additional time commitment in certain
circumstances, such as in periods of
exceptionally high activity – subject
to approval.
Fees are typically reviewed annually,
taking into account the time
commitment requirements and
responsibility of the individual roles,
and after reviewing practice in other
comparable companies.
The fee paid to the Chair is determined
by the Committee, while the fees for
other Non-Executive Directors are
determined by the Board as a whole.
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 is set within the
Company’s Articles of Association.
Actual fee levels are disclosed in the
Annual Report on Remuneration for
therelevant financial year.
The Company will reimburse any
reasonable expenses incurred.
Not applicable.
Stelrad Group plc Annual Report 202166
GOVERNANCE REPORT
Remuneration Policy continued
Payments from previously agreed remuneration
arrangements
The Committee reserves the right to make any remuneration payments
where the terms of the payment were agreed: (i) prior to the
Company’s admission; or (ii) before the Policy came into effect; or
(iii) at a time when the relevant individual was not a Director of the
Company and, in the opinion of the Committee, the payment was not
in consideration for the individual becoming a Director of the Company.
Details of any such payments will be set out in the Annual Report on
Remuneration as they arise.
Malus and clawback provisions
Consistent with best practice, malus and clawback will be used at the
Committee’s discretion in relation to ABP, DSBP and LTIP awards. Malus
permits the Company to reduce the amount of any unvested award,
including awards in holding periods. Clawback permits the Company to
reduce the amount of any vested award or any future salary or bonus
and also require the employee to pay back amounts.
Malus and clawback may be applied at any time before an award vests
(or would have vested but for the operation of any holding period)
orfor three years after vesting in the following circumstances: material
misstatement of the results of the Group, errors or inaccuracies or
misleading information leading to incorrect grant or vesting of the
award, gross misconduct, material failure of risk management by the
Group, corporate failure (e.g. administration or liquidation) or any
other circumstance which in the opinion of the Committee could have
asignificantly adverse impact on the Group’s reputation.
Remuneration Committee discretion
The Committee may make minor revisions to the Policy without
obtaining shareholder approval. Further, there are a number of specific
areas in which the Committee may exercise discretion, including:
• to vary the ABP and LTIP performance measures and weightings
eachyear to reflect strategic priorities;
• to adjust the formulaic ABP and LTIP outcomes, positively or
negatively, based on a holistic assessment of Company performance,
to ensure that the final outcome is a fair and true reflection of
underlying business performance and stakeholder experience;
• to adjust the performance conditions for in-flight LTIP awards in
exceptional circumstances, provided the new conditions are no
tougher or easier than the original conditions were intended to be
at the time;
• to adjust in-flight LTIP awards in the event of a variation of the
Company’s share capital or a demerger, delisting, special dividend,
rights issue or other event, which may, in the Committee’s opinion,
affect the current or future value of awards; and
• to settle awards in cash (for example on a termination).
The exercise of any Committee discretion will be fully disclosed in
therelevant year’s Annual Report on Remuneration.
Performance measures and targets
For each financial year, appropriate performance measures and their
respective weightings will be selected by the Committee for both the
ABP and the LTIP. The selection of measures will be guided by and
aligned to the Group’s strategy and also take into account multiple
reference points, including internal and broker forecasts. The current
year measures have been selected to support the Group strategy and
align with the KPIs and growth ambitions outlined by the Company in
theProspectus at the time of admission.
Service agreements and letters of appointment
In advance of admission, each of the Executive Directors entered into
a service agreement with the Company and each of the Non-Executive
Directors entered into a letter of appointment with the Company.
The Committee’s policy for setting notice periods is that a twelve-
month period will apply for the CEO and a six-month period will apply
for the CFO.
Name Position Date of service agreement
Notice
period by
Company
(months)
Notice
period by
Director
(months)
Trevor Harvey CEO 22 October 2021 12 12
George Letham CFO 21 October 2021 6 6
The Non-Executive Directors of the Company (including the Chair) are
appointed by letters of appointment. Their terms are subject to their
re-election by the Company’s shareholders at any AGM at which the
Non-Executive Directors stand for re-election (in accordance with the
Company’s Articles of Association). The details of each Non-Executive
Director’s current terms are set out below:
Name Date of appointment
Bob Ellis 8 October 2021
Edmund Lazarus 8 October 2021
Nicholas Armstrong 8 October 2021
Terry Miller 22 October 2021
Nicola Bruce 22 October 2021
Martin Payne 22 October 2021
Remuneration policy on recruitment
On recruitment, the Committee would seek to align the remuneration
package with the policy approved by shareholders. When determining a
remuneration package for a new Executive Director, the Committee will
consider the relevant skills and experience of the individual as well as the
internal and external market conditions. Incentive opportunities will be
consistent with the Remuneration Policy set out above. Additionally, the
Committee will have the ability to buy out any entitlements lost at their
previous employer on similar terms to the entitlements forgone. The
Committee will seek to use the current remuneration structure in making
such awards, but in some cases it may be required to use the flexibility
afforded by Listing Rule 9.4.2R, if appropriate. Shareholders will be
informed of any such awards or payments at the time of appointment.
Directors’ remuneration report continued
67Annual Report 2021 Stelrad Group plc
Remuneration policy on termination
In the event of termination, any payments will be in accordance with the
terms of the Executive Director’s service contract with the Company,
having regard to all of the relevant facts and circumstances available at
that time.
The annual bonus may be payable in respect of the proportion of the
year worked by the Director, at the Committee’s discretion. There is
no provision for an amount in lieu of bonus to be payable for any part
of the notice period not worked. The bonus would be payable at the
normal date and would be subject to deferral provisions under the terms
of the plan.
Deferred bonus awards granted under the DSBP are governed by the
DSBP rules which contain discretionary good leaver provisions for
designated reasons (that is, participants who leave early on account
of death, injury, disability, sale of their employing company or business
unit, or any other reason at the discretion of the Committee). In these
circumstances, a participant’s awards will not be forfeited on cessation
of employment and instead will vest on the normal vesting date or such
earlier date to the extent that the Committee may determine.
Long-term incentives granted under the LTIP are governed by the LTIP
rules which contain discretionary good leaver provisions for designated
reasons (that is, participants who leave early on account of death, injury,
disability, sale of their employing company or business unit, or any other
reason at the discretion of the Committee). In these circumstances, a
participant’s awards will not be forfeited on cessation of employment
and instead will vest on the normal vesting date or such earlier date
to the extent that the Committee may determine. In either case, the
extent to which the awards will vest depends on the extent to which
the Committee considers that the performance conditions have been
satisfied or are likely to be satisfied by the end of the performance period
and a pro rata reduction of the awards will be applied by reference to the
time of cessation (although the Committee has discretion to disapply
time pro-rating if it considers that the circumstances warrant it). All
other leavers would forfeit all outstanding awards. In respect of vested
LTIP awards that are still subject to a holding period, the holding period
will continue to apply unless the Committee determines otherwise,
taking into account the circumstances at the time.
On a change of control, the payment of any annual bonus will be at the
Committee’s discretion. DSBP awards will normally vest immediately
on a change of control. LTIP awards will normally vest immediately on
a change of control, with a pro rata reduction for time served. The
Committee will use its discretion to determine the extent to which the
LTIP performance conditions have been met at the time of change of
control. Alternatively, participants may choose, or at the discretion
of the Committee may be required, to accept an exchange for new
equivalent awards in the acquiring company, in respect of both the DSBP
and the LTIP.
Remuneration policy for other employees
The reward package for the Group’s wider employees is based on
the principle that it should enable the Group to attract and retain
the best talent, rewarding employees for their contribution to Group
performance. It is driven by local market practice as well as level of
seniority and accountability of each role. There is alignment in the
pay structures for executives and the wider workforce, in the way that
remuneration principles are followed as well as the mechanics of the
salary review process and incentive plan design, which are broadly
consistent throughout the organisation.
Statement of consideration of employment
conditions elsewhere in the Group
The Committee has responsibility for reviewing remuneration and
related policies applicable to the wider workforce. To support this, the
Committee is periodically briefed on the structure and quantum of the
all-employee remuneration as well as being informed about the context,
challenges and opportunities related to wider workforce remuneration
topics. This enables the Committee to take the wider workforce into
account when setting the policy for executive remuneration. The
Committee receives insights from the broader employee population via
regular briefings from the Company. When considering salary increases
for the Executive Directors, the Committee considers the general level of
salary increase across the Group and in the external market.
Statement of consideration of shareholder views
In line with our commitment to full transparency and engagement
with our shareholders on the topic of executive remuneration, the
Committee Chair will in future years conduct an annual programme of
consultation with major shareholders. This will typically involve setting
out the changes planned for the following year in writing and seeking
shareholder input and views on various executive remuneration matters
including the development of, or potential changes to, the Remuneration
Policy or arrangements.
The Major Shareholder is 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.
Stelrad Group plc Annual Report 202168
GOVERNANCE REPORT
Directors’ remuneration report continued
Remuneration Policy continued
Illustration of the application of the Remuneration Policy
The chart below indicates the level of remuneration receivable by the Executive Directors in accordance with the proposed Remuneration Policy
as applied in 2022. The chart contains separate bars representing: (i) minimum performance (fixed pay); (ii) target performance; (iii) maximum
performance; and (iv) maximum performance plus 50% share price appreciation. The charts below exclude the effect of any Company share price
appreciation except in the maximum plus 50% scenario.
Minimum or fixed pay comprises base salary, 9% of salary supplement in lieu of pension contribution and the estimated value of benefits in 2022.
Target comprises fixed pay, plus an ABP pay-out of 50% of the maximum (i.e. 62.5% of salary) and an LTIP vesting level of 25% of the maximum
(i.e.37.5% of salary).
Maximum comprises fixed pay, plus full ABP pay-out (i.e. 125% of salary) and full LTIP vesting (i.e. 150% of salary).
Maximum plus 50% comprises fixed pay, plus full ABP pay-out and full LTIP vesting plus 50% share price appreciation.
Annual Report on Remuneration
The following section sets out our Annual Report on Remuneration and
outlines the decisions made by the Committee in relation to Directors’
remuneration in respect of 2021 and how the Committee intends to
apply the proposed Remuneration Policy for 2022. The Annual Report
on Remuneration will be subject to an advisory shareholder vote at the
AGM to be held on 16 May 2022.
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
Membership comprises the Committee Chair (Nicola Bruce), who is an
independent Non-Executive Director, and two further independent Non-
Executive Directors (Terry Miller and Martin Payne) with support from
the Group’s Company Secretary. The Committee also receives assistance
from the Group HR Director who attends meetings by invitation. The
CEO also attends by invitation. The Committee will keep its composition
under review to ensure it remains 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 be found in the Director biographies on pages 48 and 49.
The Committee will meet not less than three times a year. Sincelisting
in November 2021, the Committee met on two occasions prior to
the year end. TheDirectors consider that the Company complies with
the requirements of the Corporate Governance Code in respect of
remuneration committees.
Key responsibilities
The key responsibilities of the Remuneration Committee are:
• to determine the Remuneration Policy (the “Policy”) and the total
remuneration packages for all Executive Directors and the Chair of
the Company;
• 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 under such schemes;
• to align the Policy with the UK Corporate Governance Code’s
requirement for clarity, simplicity, risk mitigation, predictability
andproportionality;
• to ensure that the Policy drives behaviours that are consistent
withCompany purpose, values and strategy;
• to review workforce remuneration and related policies and the
alignment of incentives and rewards with culture; and
• to review any major changes in employee benefit structure
andtoadminister all aspects of any share scheme.
Further details on the remit and responsibilities of the Committee can
be found in its terms of reference. The terms of reference, which are
reviewed annually and approved by the Board, can be found on our
website, www.stelradplc.com.
Advisers unaudited
The Committee has appointed Mercer to provide independent advice
on executive remuneration matters. Mercer is a signatory to the Code
of Conduct for Remuneration Consultants in the UK. The fees paid
to Mercer in relation to advice provided to the Committee for 2021
were £8,000.
The Committee will evaluate the support provided by Mercer annually
and is content that it does not have any connections with the Group that
may impair its independence. No non-remuneration-related advice was
provided by Mercer to the Group in the year.
£0.00
Minimum MinimumTarget TargetMaximum MaximumMax + 50% Max + 50%
£500,000.00
£1,000,000.00
£1,500,000.00
£2,000,000.00
£2,500,000.00
Fixed pay Annual bonus LTIP Share price growth – LTIP
Trevor Harvey George Letham
69Annual Report 2021 Stelrad Group plc
Information on remuneration for the year ended  December 
Single total figure of remuneration for the period from admission to  December  audited
The following table sets out the single figure of total remuneration received by the Directors who served during the period from admission
(10 November 2021) to 31 December 2021:
£’000 Year Basic salary/fees
All taxable
benefits
(2)
Pension-related
benefits
(3)
Annual bonus LTIP
Total
remuneration
Total fixed
remuneration
Total variable
remuneration
Executive Directors
Trevor Harvey
(1)
2021 67 4 6 51 —  77 51
George Letham
(1)
2021 43 3 4 32 —  50 32
NonExecutive Chair
Bob Ellis 2021 17 — — — —  17 —
NonExecutive Directors
Terry Miller 2021 12 — — — —  12 —
Nicola Bruce 2021 10 — — — —  10 —
Martin Payne 2021 10 — — — —  10 —
Edmund Lazarus
(4)
2021 — — — — —  — —
Nicholas Armstrong
(4)
2021 — — — — —  — —
Total         
(1) During 2021, the annual salaries of the Executive Directors were £476,058 and £304,678 for the CEO and CFO, respectively.
(2) Benefits provided include: life assurance cover, private health cover, a car allowance and the reimbursement of fuel expenses.
(3) Salary supplement in lieu of pension contribution of 9%.
(4) Edmund Lazarus and Nicholas Armstrong are representatives of the Major Shareholder and receive no fees for their roles as Non-Executive Directors.
Incentive outcomes for  audited
The 2021 annual bonus for Executive Directors was based on the delivery of a Group EBITDA (before foreign exchange differences and exceptional
items) target. In the context of a strong trading performance throughout the year, this Group EBITDA target was exceeded. The Committee reviewed
the ABP outcomes in the context of the broader business performance and the experience of all stakeholders over the year. Based on the scheme
rules in place prior to admission, the Committee determined that the pay-out of the maximum bonus opportunity to Executive Directors was
appropriate, resulting in an award of 75% of base salary. This bonus will be paid wholly in cash.
Corporate measures
Performance against the corporate financial measures is set out below:
Performance targets
% of
maximum bonus
Metric Weighting On target Stretch Actual opportunity
67% of
maximum 100%
EBITDA before foreign exchange and exceptional items 100% £36.0m £37.8 m £40.6m 100%
Based on the performance described above, the Committee determined that the Executive Directors should be awarded their full formulaic bonus
entitlement for the period as shown below:
% of maximum % of salary
Bonus amount,
pro rata since
admission
£’000
Trevor Harvey 100% 75% 51
George Letham 100% 75% 32
The 2021 bonus amounts will be paid fully in cash in line with the 2021 ABP scheme rules defined prior to admission.
Stelrad Group plc Annual Report 202170
GOVERNANCE REPORT
Directors’ remuneration report continued
Information on remuneration for the year ended  December  continued
Long Term Incentive Plan vesting audited
In relation to pre-admission share incentive arrangements, the Company has not operated any share incentive arrangements under which employees
have acquired shares, or been awarded a right to receive shares, in the Company. As such, no long-term incentives have vested in the year or in
respect of performance during the year.
Payments for loss of office audited
No payments for loss of office were made during the year under review.
Payments to past Directors audited
No payments were made to past Directors during the year under review.
LTIP awarded during the financial year audited
There were no LTIP awards between admission and 31 December 2021.
Statement of Directors’ interests audited
The interests of the Directors who served in the year and who held an interest in the ordinary shares of the Company are as follows:
Interests
Unvested Total of all scheme
Ordinary shares Ordinary shares and subject interests and
held at held at Subject to deferral/ to performance shareholdings as at
10 November 2021 31 December 2021 holding period conditions 31 December 2021
Executive Directors
Trevor Harvey 11,455,129 11,455,129 — — 11,455,129
George Letham 5,727,5 6 4 5,727,56 4 — — 5,727,5 64
NonExecutive Directors
Bob Ellis 2,863,782 2,863,782 — — 2,863,782
Terry Miller 2,325 2,325 — — 2,325
Nicola Bruce 4,651 4,651 — — 4,651
Martin Payne 9,302 9,302 — — 9,302
Edmund Lazarus — — — — —
Nicholas Armstrong — — — — —
Executive Directors’ share ownership guidelines unaudited
In accordance with the Remuneration Policy to be submitted for approval following admission, the shareholding requirements currently in place are
200% of base salary for the Executive Directors. Non-Executive Directors are not subject to a shareholding requirement. The table below shows the
actual Executive Director share ownership compared with the share ownership guidelines:
Beneficially owned Shareholding Current
shares as at requirement shareholding Shareholding
Director 31 December 2021 (% of salary)
(1)
(% of salary)
(1)
requirement met?
Trevor Harvey 11,455,129 200% 5,197% Yes
George Letham 5,727,5 6 4 200% 4,061% Yes
(1) The share price of £2.16 as at 31 December 2021 has been used for the purpose of calculating the current shareholding as a percentage of salary.
No changes in the above interests have occurred between 31 December 2021 and the date of this report.
71Annual Report 2021 Stelrad Group plc
Performance graph unaudited
The graph below shows the total shareholder return (“TSR”) performance of an investment of £100 in Stelrad Group plc’s shares from its listing on
the Main Market on 10 November 2021 (using the offer price of £2.15 per share) to the end of the period, compared with £100 invested in the
FTSE Small Cap index over the same period. The FTSE Small Cap index was chosen as a comparator because its constituents have a comparable
market capitalisation to that of the Group.
The table below illustrates the CEO’s single figure of total remuneration over the same period.
2021
CEO single figure £128k
Annual bonus pay-out (% of maximum) 100%
LTIP vesting (% of maximum) n/a
CEO pay ratio unaudited
The table below sets out the ratio between the CEO’s salary and total remuneration and that of the 25th percentile, median and 75th percentile of
our UK employees, for whom total remuneration has been calculated on the same basis.
Total remuneration ratio Method 25th percentile Median 75th percentile
2021 A 34 28 21
The salary and total remuneration for the individuals identified at the 25th percentile, median and 75th percentile for 2021 are set out below:
Period from 10 November 2021 to 31 December 2021
£’000 CEO 25th percentile Median 75th percentile
Basic salary 67 3.6 4.0 5.7
Total remuneration 128 3.8 4.6 6.2
The lower quartile, median and upper quartile employees were determined using calculation method A which involved calculating the actual full-time
equivalent remuneration for all UK employees. From this analysis, three employees were then identified as representing the 25th, 50th and 75th
percentiles of the UK employee population. The Group chose this method as it is considered to be the most accurate way of identifying the relevant
employees required by The Companies (Miscellaneous Reporting) Regulations 2018. No other adjustments were necessary, and no elements of
employee remuneration have been excluded from the pay ratio calculation.
As this is the first year of reporting the CEO pay ratio using the above methodology, there is no comparative data against which to compare the pay
ratios above. The Committee will consider future pay ratios in the context of historical ratios.
Relative importance of spend on pay unaudited
The table below shows the Group’s expenditure on employee pay compared to distributions to shareholders for the year ended 31 December 2021.
All figures provided are taken from the consolidated financial statements.
 2020 Percentage
’ £’000 change
Overall spend on pay including Executive Directors  41,353 (5.7%)
Distribution to shareholders  — n/a
£95
10/11/2021 24/11/2021 08/12/2021 22/12/2021 31/12/2021
£100
£105
Stelrad
FTSE Small Cap
Stelrad Group plc Annual Report 202172
GOVERNANCE REPORT
Directors’ remuneration report continued
Information on remuneration for the year ended  December  continued
Percentage change in CEO remuneration
This section is not applicable as the Company listed on 10 November 2021; as such, there is no prior year comparison that can be made.
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 two external appointments.
Implementation of Remuneration Policy in 
This section sets out information on how the Remuneration Policy will be implemented in 2022 if approved by shareholders at the first post-
admission Annual General Meeting, in 2022.
This Remuneration Policy formalises the Policy adopted on admission to the Main Market. If the Remuneration Policy set out on pages 63 to 68 is not
approved by shareholders, then the Committee will continue to operate the existing Policy as detailed on admission.
When implementing the Remuneration Policy, the Committee will take into account factors such as remuneration packages available at comparable
companies, the Group’s overall performance, internal relativities, individual performance and experience, achievement of corporate objectives and
general market and wider economic trends.
Summary of planned implementation of Remuneration Policy during 
Salary unaudited
The Executive Directors’ salaries for 2022 are set out below:
Salary
Percentage
Name 2021  change
Trevor Harvey £476,058  4%
George Letham £304,678  4%
The increase awarded to the Executive Directors is in line with the average increase awarded to the broader UK workforce.
Benefits and pension unaudited
There will be no changes to the Executive Directors’ benefits and pension entitlements in 2022 as compared with 2021. At admission, the Executive
Directors’ pension contributions were reduced to 9% of salary, in line with the wider UK workforce.
Annual bonus unaudited
The maximum bonus opportunity for the Executive Directors in 2022 will be 125% of salary (with a target bonus of 62.5% of salary) with a maximum
of 75% of the entitlement to be paid as cash and the remainder issued as awards in the DSBP. The performance measures will be:
• Group adjusted operating profit (70% of maximum);
• adjusted cash flow from operations conversion % (20% of maximum); and
• a strategic measure (10% of maximum).
The Committee considers that the detailed performance targets for the 2022 bonus are commercially sensitive and that disclosing precise targets in
advance would not be in shareholder interests. Actual targets, performance achieved and outturns will be disclosed in the 2022 Annual Report so that
shareholders can fully assess the basis for any pay-outs.
Malus and clawback provisions apply for a period of up to three years post-vesting.
Long Term Incentive Plan unaudited
Awards of 150% of base salary will be made to the Executive Directors in March or April 2022. The awards will vest three years from grant subject to
the achievement of the following performance conditions:
Weighting Threshold target Stretch target
Performance measure (% of award) (25% vesting) (100% vesting)
Adjusted EPS 50% 20.12p 23.73p
Relative TSR vs. constituents of the FTSE SmallCap Index (excluding investment trusts) 50% Median Upper quartile
The adjusted EPS target will be assessed on an undiluted basis. A two-year post-vesting holding period will apply to vested awards, during which
vested awards may not be sold save to cover tax liabilities. Malus and clawback provisions apply for a period of up to three years post-vesting.
73Annual Report 2021 Stelrad Group plc
Chair and NonExecutive Director fees unaudited
No changes will be made to the Chair and Non-Executive Director fees for 2022. A breakdown of the fee components for the Chair and
Non-Executive Directors in 2022 is as follows:
Role Fee (per annum)
Chair £120,000
Non-Executive Director base fee £50,000
Additional fees
Senior Independent Director fee £15,000
Chair of the Remuneration Committee £10,000
Member of the Remuneration Committee £5,000
Chair of the Audit & Risk Committee £10,000
Member of the Audit & Risk Committee £5,000
Chair of the Nomination Committee £7,50 0
Member of the Nomination Committee £3,750
On behalf of the Board
Nicola Bruce
Chair of the Remuneration Committee
14 March 2022
Stelrad Group plc Annual Report 202174
GOVERNANCE REPORT
Directors’ report
The Directors present their report and audited financial statements for
the Group for the year ended 31 December 2021. The Directors’ Report
forms part of the management report as required under the Disclosure
Guidance and Transparency Rules. The Strategic Report, which together
with the Directors’ Report forms the management report, can be found
on pages 1 to 46 of this Annual Report.
The Directors’ Report for the year ended 31 December 2021 comprises
pages 74 to 77 of this Annual Report, in addition to the following
information, which is provided in other appropriate sections of the Annual
Report and is incorporated by reference, in accordance with section
414C(11) of the Act, and The Companies (Miscellaneous Reporting)
Regulations 2018:
• The Corporate Governance Report is set out on page 47.
• Information relating to future business developments can be found
throughout the Strategic Report on pages 1 to 46.
• Information on how the Directors have had consideration for the
Company’s stakeholders can be found on pages 18 and 19 of the
Strategic Report.
• Information relating to risk management can be found on pages
40 to 44.
• The going concern and long-term viability statements can be found
on pages 45 and 46.
• The Group’s global greenhouse gas emissions during the year can
be found on page 27 of the ESG Report, which is located within the
Strategic Report.
• The Group is exposed to a number of financial instrument-related
risks; these are discussed in more detail in note 30 to the
consolidated financial statements.
• As required by Listing Rule 9.8.4R, details of the Group’s long-term
incentive schemes can be found in the Remuneration Report on
pages 60 to 73.
General information
Stelrad Group plc (the “Company”) was incorporated in England and
Wales on 8 October 2021 as a public company, limited by shares. The
Company is incorporated, domiciled and registered in England and
Wales, with its registered office situated at 69-75 Side, Newcastle upon
Tyne, Tyne and Wear, United Kingdom NE1 3JE.
On 10 November 2021, the entire issued share capital of the Company
was admitted to the premium listing segment 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 prospects, can be found in the Strategic Report
on pages 1 to 46. The principal subsidiaries operating within the Group
are shown in note 14 to the Company financial statements.
Profit and dividends
The Group profit for the year, after taxation, amounted to £14,660k
(2020: £8,699k). The Board is recommending a final dividend of 0.96
pence per share which, subject to shareholder approval, will be paid on
27 May 2022.
Articles of Association
The Articles set out the rules relating to the powers of the 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 Company Secretary, Computershare
Governance Services, UK, at Moor House, 120 London Wall,
London EC2Y 5ET.
Share capital
As at 31 December 2021, the Company has one class of ordinary share
with a nominal value of £1.00. The shares are listed for trading on
the Main Market of the London Stock Exchange, and at 31 December
2021, the Company had 127,352,555 shares in issue. The shares rank
pari passu in respect of voting and participation, and carry the right to
one vote at general meetings of the Company, which may be exercised
by members in person, by proxy or by corporate representatives
(forcorporations).
The ordinary shares are free from any restriction on transfer, subject to
compliance with applicable securities laws. However, the following lock-
up arrangements have been put in place for a period of time from the
date of admission on 10 November 2021:
• The Company has agreed that, subject to certain customary
exceptions, during the period of 180 days from the date of
admission, it will not, without the prior written consent of Investec,
issue, offer, sell or contract to sell, or otherwise transfer or dispose
of, directly or indirectly, or announce an offer of any ordinary shares
(or any interest therein or in respect thereof) or enter into any
transaction with the same economic effect as any of the foregoing.
• The Major Shareholder and certain Directors have agreed that,
subject to certain exceptions, during the period of 180 days in
respect of the Major Shareholder and 360 days in respect of certain
Directors, in each case from the date of admission, they will not,
without the prior written consent of Investec, offer, sell or contract
to sell, or otherwise transfer or dispose of, directly or indirectly, or
announce an offer of any ordinary shares (or any interest therein
in respect thereof) or enter into any transaction with the same
economic effect as any of the foregoing.
The Company successfully submitted an application to the High Court of
Justice of England and Wales (the “Court”) to reduce the value of each
ordinary share of the Company from £1.00 to £0.001; the reduction
will be credited to the retained earnings of the Company. Under the
same application the Court approved the removal of the share premium
account of the Company in full, with the reduction credited to the
retained earnings of the Company. The Court approved the application
on 25 January 2022.
75Annual Report 2021 Stelrad Group plc
Substantial shareholdings
As at 31 December 2021 the Company had received notification of the
following interests in voting rights pursuant to Chapter 5 of the DTR:
Shareholder Interest % of share capital
The Bregal Fund III LP 63,103,765 49.6%
Trevor Harvey 11,455,129 9.0%
Chelverton Asset Management 6,976,744 5.5%
George Letham 5,727,56 4 4.5%
Unicorn Asset Management 4,883,720 3.8%
Tellworth Investments 4,436,945 3.5%
Janus Henderson Investors 4,423,945 3.5%
Lombard Odier Asset Management 4,186,0 46 3.3%
Charles Stanley 3,9 57,14 8 3.1%
As at the date of this report, the Company has not been made aware of
any further changes to the above shareholdings.
Relationship agreement with controlling
shareholder
The Company has entered into a relationship agreement with the Major
Shareholder, The Bregal Fund III LP (the “Relationship Agreement”). The
principal purpose of the Relationship Agreement is to ensure that where,
following admission, the Major Shareholder, together with its associates,
holds, in aggregate, ordinary shares in the Company representing at
least 10% of the voting rights of 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 obligations on
the Major Shareholder will remain in full force and effect, for so long as
they, together with its associates, hold, in aggregate, ordinary shares
representing at least 10% of the voting rights of the ordinary shares in
issuance by the Company.
Under the Relationship Agreement, the Major Shareholder has
agreed that:
(i) transactions and arrangements between it (and/or any of its
associates) and the Company will be conducted at arm’s length and
on normal commercial terms;
(ii) neither it nor any of its associates shall take any action that would
have the effect of preventing the Company from complying with its
obligations under the Listing Rules; and
(iii) neither it nor any of its associates shall propose or procure the
proposal of a shareholder resolution which is intended or appears
to be intended to circumvent the proper application of the
Listing Rules.
For so long as the Major Shareholder (together with any of its
associates) holds, in aggregate, at least 10% but less than 20% of the
voting rights of the ordinary shares, the Major Shareholder shall be
entitled to appoint (and remove and reappoint) one Non-Executive
Representative Director to the Board, or if the Major Shareholder
(together with any of its associates) holds, in aggregate, 20% or
more of the voting rights of the ordinary shares, then the Major
Shareholder shall be entitled to appoint (and remove and reappoint)
two Non-Executive Representative Directors to the Board. The Major
Shareholder’s first appointed shareholder Directors are Edmund Lazarus
and Nicholas Armstrong.
For so long as the Major Shareholder (together with any of its
associates) holds 20% or more of the voting rights of 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 (together with any of its
associates) holds 10% or more of the voting rights of the ordinary
shares, the Major Shareholder is entitled to appoint an observer to
each of the Nomination Committee, Audit & Risk Committee and
Remuneration Committee. The Major Shareholder will not appoint an
observer to the Nomination Committee whilst a shareholder Director is
a member of such Committee.
Subject to applicable law and regulation, the Major Shareholder will have
the benefit of certain information rights, including for the purposes of its
accounting and other regulatoryrequirements.
The Relationship Agreement is governed by the laws of England and Wales.
The Board of Directors
Director biographies of all Directors for the year ended 31 December
2021 can be found on pages 48 and 49.
The appointment and removal of Directors are governed by the Articles,
the UK Corporate Governance Code 2018, the Companies Act 2006
and related legislation. All Non-Executive Director appointments can
be terminated by either the Company or by the individual upon three
months’ written notice. In accordance with the Articles, Directors can
be appointed or removed either by the Board or by the shareholders in
general meeting with immediate effect.
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 Report on page 70.
Details of the Executive Directors’ service agreements and Non-Executive
Directors’ letters of appointment are available in the Remuneration
Report on page 66.
The Group has a formal ongoing procedure for the disclosure, review
and authorisation of Directors’ conflicts of interest. All Directors are
required to make the Board aware of any 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 are reviewed
annually to determine whether they should remain authorised.
Stelrad Group plc Annual Report 202176
GOVERNANCE REPORT
Directors’ report continued
Directors’ indemnities
In relation to the Directors of the Company who are also Directors of
UK-based subsidiaries, the Group has granted an indemnity to one or
more of its Directors against liability in respect of proceedings brought
by third parties, subject to the conditions set out in the Companies Act
2006. Such qualifying third party indemnity provisions were in force
during the year ended 31 December 2021 and remain in 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
There are no agreements between the Group and its Directors or
employees providing for compensation for loss of office or employment
that occurs because of a takeover or change of control of the Group.
Details of the significant agreements to which the Company is party that
take effect, alter or terminate upon a change of control of the Company
following a takeover bid are set out below:
Share plans
The Company’s share plans contain specific provisions relating to change
of control. Normally, awards will vest pro rata in the event of a change of
control of the Company. The Remuneration Committee will determine
whether the performance criteria have been met at that time.
Bank agreement
The revolving credit facility agreement dated 2 November 2021 contains
change of control provisions such that in the event of the occurrence
of a change of control event, the banks shall have 30 business days to
exercise an individual right to cancel all undrawn commitments on the
facility and to require that all outstanding participations in utilisations are
repaid with accrued interest and any other relevant 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 Exchange, or if the
Major Shareholder, together with any of its associates, ceases to hold at
least 10% of the Company’s shares.
Employee engagement and equal opportunities
The Group is committed to involving its employees in the decisions that
affect them. Regular meetings take place between local management
and employees to allow a free flow of information and ideas. In addition,
where practicable, the Group seeks to keep employees informed
through regular newsletters.
The Group aims to build a culture where everyone feels valued as an
individual and feels supported and motivated to carry out their work to
the best of their abilities.
The Group believes in equal opportunities regardless of gender, ethnicity,
age, sexuality and, where practicable, disability. The Group is committed
to providing equal opportunities to current and potential employees
and to applying employment practices based on equal opportunities
for all employees. The Group gives full consideration to applications
for employment from disabled persons where disabled persons can
adequately fulfil the requirements of the job. Where existing employees
become disabled, it is the Group’s policy wherever practicable to provide
continuing employment under normal terms and conditions and provide
training, career development and promotion wherever appropriate.
Further details of employee engagement across the Group and equal
opportunities initiatives implemented by the Group can be found in
theESG Report on pages 20 to 35.
Research and development expenditure
Research and development costs of £1,047k (2020: £1,025k) have
been incurred in the year in relation to the design and development
ofnew products. All such costs are expensed as incurred.
Political donations and expenditure
It is the Group’s policy not to make political donations, and accordingly,
no political donations were made in the year (2020: £nil) and no
political expenditure was incurred during the year (2020: £nil).
The Group’s policy is that it does not make what are commonly regarded
as donations to any political party. However, the Companies Act 2006
defines political donations 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 community in policy review
or reform, which might not be thought of as political expenditure in the
usual sense, could be captured. Activities of this nature would not be
thought of as political donations in the ordinary sense of those words.
The resolution to be proposed at the 2022 AGM, authorising political
donations and expenditure, is to ensure that the Group does not commit
any technical breach of the Companies Act 2006.
At a general meeting of the Company held on 4 November 2021,
shareholders voted to allow the Company to incur political expenditure
up to a maximum aggregate amount of £100,000 in line with market
practice. That authority is due to expire at the Annual General Meeting
due to be held on 16 May 2022 and therefore the Company will seek to
renew the authority in line with the above considerations.
Important developments since  December 
There have been no material events or developments affecting the
Company or any of its operating subsidiaries since 31 December 2021.
Independent auditors
PricewaterhouseCoopers LLP acted as auditors during the year and
aresolution to reappoint PricewaterhouseCoopers LLP as auditors
willbeput to the members at the Annual General Meeting.
Fair balanced and understandable
In accordance with the principles of the Code, the Group has processes
in place to ensure that the content of the Annual Report and Accounts is
fair, balanced and understandable. The Directors consider, on the advice
of the Audit & Risk Committee, that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group’s
performance, position, business model and strategy.
Annual General Meeting “AGM”
The Company’s AGM will be held at the offices of Investec Bank plc:
30Gresham Street, London EC2V 7QP, on 16 May 2022 at 4pm.
Thenotice convening the AGM will be sent to shareholders separately.
Further information on arrangements for the AGM and voting instructions
will be set out fully in the Notice of AGM and Form of Proxy.
77Annual Report 2021 Stelrad Group plc
Statement of Directors’ responsibilities in respect
of the Annual Report
The Directors are responsible for preparing the Annual Report, the
Remuneration Report and Policy and the financial statements in
accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared
the consolidated financial statements in accordance with International
Financial Reporting Standards (IFRSs) as issued by the International
Accounting Standards Board (IASB) and the Company financial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 102 “The Financial Reporting Standard applicable in
the UK and Republic of Ireland”, and applicable law). Additionally, the
Financial Conduct Authority’s Disclosure Guidance and Transparency
Rules require the Directors to prepare the consolidated financial
statements in accordance with international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
Under Company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and Company and of the profit or loss
of the Group for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable
andprudent;
• state whether applicable international accounting standards in
conformity with the requirements of the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
have been followed for the consolidated financial statements and
United Kingdom Accounting Standards, comprising FRS 102 have
been followed for the Company financial statements, subject to
any material departures disclosed and explained in the financial
statements; and
• prepare the financial statements on a going concern basis unless it is
inappropriate to presume that the Group and Company will continue
in business.
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 responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and the Company’s
transactions and disclose, at any time and with reasonable accuracy, the
financial position of the Company and the Group and to enable them
to ensure that the financial statements and the Directors’ remuneration
report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information on the Company’s website.
Legislation in the UK governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Directors’ confirmations
We confirm that, to the best of our knowledge:
• the consolidated financial statements, which have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union and the Company
financial statements which have been prepared in accordance with
United Kingdom accounting standards, comprising FRS 102, give a
true and fair view of the assets, liabilities, financial position and profit
of the Group and the Company;
• the Directors’ Report includes a fair review of the development and
performance of the business and the position of the Group and
Company and the undertakings included in the consolidation taken
as a whole, together with a description of the principal risks and
uncertainties that they face;
• the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the necessary information for
shareholders to assess the Group’s and Company’s position,
performance, business model and strategy; and
• there is no relevant audit information (as defined by section 418(3)
of the Companies Act 2006) of which the Group’s and Company’s
auditors are unaware, and the Directors have taken all the steps they
ought to have taken to make themselves aware of any relevant audit
information and to establish that the Group’s and Company’s auditors
are aware ofthat information.
This responsibility statement was approved by the Board of Directors on
14 March 2022 and is signed on its behalf by:
George Letham
Chief Financial Officer
14 March 2022
Stelrad Group plc Annual Report 202178
FINANCIAL STATEMENTS
Report on the audit of the financial statements
Opinion
In our opinion:
• Stelrad Group plc’s consolidated 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 Company’s affairs as at 31 December 2021 and of the Group’s profit and the Group’s cash flows for the year
then ended;
• the consolidated financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
• the Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”,
andapplicable law); and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated and Company balance sheets as at
31 December 2021; the Consolidated income statement, the Consolidated statement of comprehensive income, the Consolidated statement of cash
flows and the Consolidated and Company statements of changes in equity for the year then ended; and the notes to the consolidated and Company
financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit & Risk Committee.
Separate opinion in relation to international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as
it applies in the European Union
As explained in note 3 to the financial statements, the Group, in addition to applying UK-adopted international accounting standards, has also applied
international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. In our opinion,
the consolidated financial statements have been properly prepared in accordance with international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
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 FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in note 10 of the financial statements, we have provided no non-audit services to the company or its controlled
undertakings in the period under audit.
Our audit approach
Context
As part of our audit we made enquiries of management to understand the process they have adopted to assess the extent of the potential impact of
climate change risk on the consolidated financial statements. Management consider that the impact of climate change does not currently give rise to
a material financial statement impact. We used our knowledge of the Group to evaluate management’s assessment. We discussed with management
the ways in which climate change disclosures should continue to evolve as the Group continues to develop its response to the impact of climate
change. We also considered the consistency of the disclosures in relation to climate change made in the other information within the Annual Report
with the financial statements and our knowledge from our audit.
Overview
Audit scope
• Significant components being the UK and Turkey, with the Continental division also being in full scope.
• This provides coverage of 92% of the Group’s revenue and 96% of Group’s EBITDA.
• All UK entities receive a statutory audit opinion.
• Analytical review performed over all out of scope divisions.
Key audit matters
• Completeness and accuracy of indirect rebates (Group)
Materiality
• Overall Group materiality: £1,000,000 based on 2.5% of EBITDA.
• Overall Company materiality: £1,375,000 (restricted to £400,000 for Group reporting purposes) based on 1% of total assets.
• Performance materiality: £750,000 (Group) and £1,031,000 (restricted to £300,000 for Group reporting purposes) (Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Independent auditors’ report to the members of Stelrad Group plc
79Annual Report 2021 Stelrad Group plc
Report on the audit of the financial statements continued
Our audit approach continued
Key audit matters
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 misstatement (whether or not due to fraud) identified by the auditors,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the results of 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 opinion on these matters.
This is not a complete list of all risks identified by our audit.
Going concern and considerations relating to COVID-19, which were key audit matters last year, are no longer included because of lower level of
uncertainty, the group delivering strong trading performance and COVID-19 has had minimal financial impact on the Group. Otherwise, the key audit
matters below are consistent with last year.
Key audit matter How our audit addressed the key audit matter
Completeness and accuracy of indirect rebates (Group)
The UK rebate arrangements include installer rebates in addition to
merchant rebates. Installer rebates is a complex area with a high degree
of estimation. This arises as the rebate is granted on indirect sales and
so the sales information is not readily available. As such, historical rates,
as well as management forecasts, are used in calculating the provision
for indirect rebates. This is reasonable given the relatively stable market
for radiators. Furthermore the claims for rebates can be made up to,
and over a year from the sales date. As we sign the statutory accounts
in March, the value of the rebates as at the year end can only ever be
estimated and this area of accounting is inherently judgemental. The
balance of this at year end is £15.5 million and the amount of rebates in
the income statement is £37.9 million
This is a highly judgemental area of the audit, given the nature of the
balance and the estimates that are involved in formulating the accrual
balance. To test the indirect rebates, we have:
• Performed a walkthrough to understand the process and the
calculations behind the model;
• Tested the performance and integrity of the model;
• Performed a sensitivity analysis on the model and a look back test on
the prior year accrual;
• Agreed the completeness of the sales in the model, by reconciling the
model to detailed sales listings;
• Tested a sample of the payments and agreed the percentage rebate
for a sample of contracts;
• Agreed the completeness of the claimed rebates in the model, by
reconciling a sample between detailed claims listings and the model;
• Tested the take up rates and poundage rates used throughout; and
• Obtained confirmations of the year end merchant stock held. No
issues were noted on any of the above procedures.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on 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 they operate.
The Group is based in the UK with the majority of the trading operations in the UK, Turkey and Continental (Belgium and the Netherlands). These
trading entities are in scope for audit of Group given the size of each operations and the trading operations in the UK and Turkey are deemed to be
significant components. Furthermore all UK entities receive a statutory audit.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, 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 evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – consolidated Financial statements – Company
Overall materiality
£1,000,000 £1,375,000 (restricted to £400,000 for Group
reporting purposes)
How we determined it
2.5% of EBITDA 1% of total assets
Rationale for benchmark applied
EBITDA is used by management and shareholders
in assessing performance of the group and is a
generally accepted auditing benchmark.
Total assets is applicable as entity does nottrade.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of materiality
allocated across components was £600,000 and £950,000. Certain components were audited to a local statutory audit materiality that was also less
than our overall Group materiality.
Stelrad Group plc Annual Report 202180
FINANCIAL STATEMENTS
Report on the audit of the financial statements continued
Our audit approach continued
Materiality continued
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and
extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance
materiality was 75% of overall materiality, amounting to £750,000 for the consolidated financial statements and £1,031,000 (restricted to £300,000
for Group reporting purposes) for the Company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk
and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above £50,000 (Group audit)
and £20,000 (Company audit) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of
accounting included:
• Obtaining management forecasts for the period to March 2023 and evaluating management’s downside scenarios, including a severe but plausible
scenario, and challenging their appropriateness and underlying assumptions;
• Evaluating the level of forecast liquidity and forecast compliance with the bank facility covenants
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the Company’s ability
to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The directors are responsible for the other information, which includes reporting based on the Task Force on Climate-related Financial Disclosures
(TCFD) recommendations. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an
audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or 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 information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have
been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the
year ended 31 December 2021 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Independent auditors’ report to the members of Stelrad Group plc
continued
81Annual Report 2021 Stelrad Group plc
Report on the audit of the financial statements continued
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate
governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other
information section of this report.
Based on the work undertaken as part of 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 obtained during the audit, and we have nothing material to add or draw
attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation
of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting
in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue to do so over a period of
at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and why the period is
appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its
liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications
orassumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only consisted
of making inquiries and considering the directors’ process supporting 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 environment obtained in the course of the audit.
In addition, based on the work undertaken as part of 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 obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information
necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit & Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Company’s compliance with the
Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ responsibilities in respect of the Annual Report, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The
directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend
to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and regulations related to
unethical and prohibited business practices and the wide variety of jurisdictions in which the Group operates, and we considered the extent to which
non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on
the financial statements such as the Companies Act 2006 and the Listing Rules.
Stelrad Group plc Annual Report 202182
FINANCIAL STATEMENTS
Report on the audit of the financial statements continued
Responsibilities for the financial statements and the audit continued
Auditors’ responsibilities for the audit of the financial statements continued
We evaluated 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 to increase revenue, and management bias in
accounting estimates. The group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit
procedures in response to such risks in their work. Audit procedures performed by the group engagement team and/or component auditors included:
• Discussions with management, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
• Review of minutes of meetings of the Board of Directors
• Evaluation of management’s controls designed to prevent and detect irregularities;
• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to the accounting
for indirect rebates
• Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws
and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However,
it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the
population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to
any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting
records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit & Risk Committee, we were appointed by the directors on 15 December 2021 to audit the financial
statements for the year ended 31 December 2021 and subsequent financial periods. This is therefore our first year of uninterrupted engagement.
Other matters
The financial statements for the year ended 31 December 2020, forming the corresponding figures of the financial statements for the year ended
31December 2021, are unaudited.
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the
ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF
Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report has been prepared
using the single electronic format specified in the ESEF RTS.
Jonathan Greenaway
Senior Statutory Auditor
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Newcastle upon Tyne
14 March 2022
Independent auditors’ report to the members of Stelrad Group plc
continued
83Annual Report 2021 Stelrad Group plc
Consolidated income statement
for the year ended 31 December 2021
2021
Unaudited
2020
Notes £’000 £’000
Continuing operations
Revenue 7 272,285 19 6 , 5 6 5
Cost of sales (19 2 , 2 7 9) (13 9, 3 7 2)
Gross profit 80,006 5 7,1 9 3
Selling and distribution expenses (3 5 , 47 8) (31,2 6 5)
Administrative expenses (excluding exceptional items) (11, 5 8 4) (11 , 74 1)
Exceptional items 7 (9, 5 8 9) —
Administrative expenses (2 1,17 3) (11 , 7 4 1)
Other operating income 8 3 ,20 4 5,3 5 6
Other operating expenses 9 — (19)
Operating profit 10 26, 559 19, 5 2 4
Finance income 13 141 68
Finance costs 14 (10 , 3 7 9) (1 0 , 4 0 5)
Profit before tax 16 , 3 21 9,1 8 7
Income tax expense 15 (1, 6 61) (4 8 8)
Profit for the year 14 , 6 6 0 8,69 9
Notes 2021
Unaudited
2020
Earnings per share
Basic 16 11. 5 1p 6.83 p
Diluted 16 11. 5 1p 6.83 p
Adjusted earnings per share
Basic 16 16 .9 2 p 4.4 4 p
Diluted 16 16 .9 2 p 4.4 4 p
Stelrad Group plc Annual Report 202184
FINANCIAL STATEMENTS
2021
Unaudited
2020
Notes £’000 £’000
Profit for the year 14 , 6 6 0 8,69 9
Other comprehensive income/(expense)
Other comprehensive income/(expense) that may be reclassified to profit or loss in subsequent periods:
Net gain on monetary items forming part of net investment in foreign operations and qualifying hedges
of net investments in foreign operations 5 ,1 9 2 1, 3 3 7
Income tax effect 15 (1, 2 35) (2 8 6)
Exchange differences on translation of foreign operations (2 6 , 0 7 2) (8 , 8 9 0)
Net other comprehensive expense that may be reclassified
to profit or loss in subsequent periods (2 2 ,11 5) (7, 8 3 9)
Other comprehensive expense not to be reclassified to profit or loss in subsequent periods:
Remeasurement losses on defined benefit plans 27 (141) (3 17)
Income tax effect 15 35 70
Net other comprehensive expense not to be reclassified
to profit or loss in subsequent periods (10 6) (247)
Other comprehensive expense for the year, net of tax (22,221) (8 , 0 8 6)
Total comprehensive (expense)/income for the year,
net of tax attributable to owners of the parent (7, 5 61) 613
Consolidated statement of comprehensive income
for the year ended 31 December 2021
85Annual Report 2021 Stelrad Group plc
2021
Unaudited
2020
Notes £’000 £’000
Assets
Non-current assets
Property, plant and equipment 18 53, 694 61, 0 2 4
Trade and other receivables 21 10 17
Deferred tax assets 15 6, 284 4,3 42
59,9 8 8 65, 38 3
Current assets
Inventories 20 56,7 81 3 0,9 8 6
Trade and other receivables 21 4 6 ,7 31 3 9, 0 24
Income tax receivable 10 4 70
Cash and cash equivalents 22 15, 5 6 3 2 0,0 83
119 ,17 9 9 0 ,16 3
Total assets 17 9 ,1 6 7 15 5 , 5 4 6
Equity and liabilities
Equity
Share capital 25 127,353 65
Share premium 25 13 , 3 9 1 19 8
Merger reserve (114 , 4 6 9) 94 0
Retained earnings 5 7, 8 1 4 43,26 0
Foreign currency reserve (5 7,17 7) (3 5 , 0 6 2)
Total equity attributable to owners of the parent 2 6 , 912 9, 4 0 1
Non-current liabilities
Interest-bearing loans and borrowings 19 62,8 65 85, 785
Deferred tax liabilities 15 12 6 —
Provisions 24 15 8 2 03
Net employee defined benefit liabilities 27 1, 728 2,529
64, 877 8 8 , 517
Current liabilities
Trade and other payables 23 83,8 83 53,65 8
Interest-bearing loans and borrowings 19 1, 79 4 3, 3 47
Income tax payable 1, 5 2 2 4 31
Provisions 24 17 9 19 2
8 7, 3 7 8 5 7, 6 2 8
Total liabilities 15 2 , 2 55 14 6 ,145
Total equity and liabilities 17 9 ,1 6 7 15 5 , 5 4 6
The financial statements on pages 83 to 115 were approved by the Board of Directors on 14 March 2022 and signed on its behalf by:
George Letham
Chief Financial Officer
Consolidated balance sheet
as at 31 December 2021 (Registered Number 13670010)
Stelrad Group plc Annual Report 202186
FINANCIAL STATEMENTS
Attributable to the owners of the parent
Issued share capital Share premium Merger reserve Retained earnings Foreign currency Total
£’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2020 65 19 8 94 0 34,808 (2 7, 2 2 3) 8,7 8 8
Profit for the year — — — 8,69 9 — 8,69 9
Other comprehensive expense for the year — — —
(247)
(7,839) (8 , 0 8 6)
Total comprehensive income/(expense) — — — 8,452 (7, 8 3 9) 613
At 31 December 2020 (Unaudited) 65 19 8 94 0 43, 26 0 (3 5 , 0 6 2) 9, 4 0 1
Profit for the year — — — 14 , 6 6 0 — 14, 6 6 0
Other comprehensive expense for the year — — — (10 6) (2 2 ,115) (22, 221)
Total comprehensive income/(expense) — — — 14 , 5 5 4 (2 2 ,115) (7, 5 6 1)
Shares issued on incorporation 50 — — — — 50
“C” share redemption (13) — — — — (13)
Noosa share reorganisation (5 0) 50 — — — —
Share for share exchange – old (2) (2 4 8) 250 — — —
Share for share exchange – new 11 5 , 6 5 9 — (115, 6 59) — — —
Shares issued 11 , 6 4 4 13 , 3 9 1 — — — 25,03 5
At 31 December 2021 127,353 13 , 3 9 1 (11 4 , 4 6 9) 5 7, 8 1 4 (5 7, 1 7 7) 2 6 , 912
Consolidated statement of changes in equity
for the year ended 31 December 2021
87Annual Report 2021 Stelrad Group plc
2021
Unaudited
2020
Notes £’000 £’000
Operating activities
Profit before tax 16 , 3 21 9 ,1 8 7
Adjustments to reconcile profit before tax to net cash flows:
– Depreciation of property, plant and equipment 18 7, 4 0 9 7, 9 2 1
– Gain on disposal of property, plant and equipment (2 13) (1 4 2)
– Finance income 13 (141) (6 8)
– Finance costs 14 10 , 3 7 9 10, 4 0 5
Working capital adjustments:
– Increase in trade and other receivables (17, 3 8 0) (6, 3 7 3)
– (Increase)/decrease in inventories (31, 69 5) 3 ,6 81
– Increase in trade and other payables 4 0, 291 3, 54 9
– Increase in provisions 15 8 8
– Movement in other financial assets and liabilities — (3 3)
– Decrease in other pension provisions (5 9) (3 9)
– Difference between pension charge and cash contributions (2 2) 5
25,04 8 2 8 ,1 0 1
Income tax paid (3 ,7 3 4) (1, 9 2 7)
Interest received 141 68
Net cash flows from operating activities 21, 4 55 2 6, 242
Investing activities
Proceeds from sale of property, plant and equipment 487 4 74
Purchase of property, plant and equipment 18 (8, 646) (8 , 6 4 0)
Net cash flows used in investing activities (8 ,15 9) (8 ,1 6 6)
Financing activities
Transaction costs related to refinancing (1,171) (15 3)
Proceeds from external borrowings 56, 500 —
Repayment of external borrowings (11 , 0 0 1) (6 , 999)
Repayment of shareholder loans (7 6 , 5 2 8) —
Settlement of deferred consideration (2 0 2) —
Payment of lease liabilities (1,6 6 6) (1 ,723)
Share capital issued 25,085 —
Share capital repaid – “C” shares (13) —
Interest paid (7 7 9) (6 8 4)
Net cash flows used in financing activities (9, 7 7 5) (9, 5 5 9)
Net increase in cash and cash equivalents 3 , 5 21 8 , 517
Net foreign exchange difference (8 , 0 41) (3 , 6 6 4)
Cash and cash equivalents at 1 January 22 20, 083 15, 2 3 0
Cash and cash equivalents at 31 December 22 15, 5 6 3 2 0,0 83
Consolidated statement of cash flows
for the year ended 31 December 2021
Stelrad Group plc Annual Report 202188
FINANCIAL STATEMENTS
1 Corporate information
The consolidated financial statements of Stelrad Group plc and its subsidiaries (collectively, the “Group”) for the year ended 31 December 2021
wereauthorised for issue by the Board of Directors on 14 March 2022.
Stelrad Group plc (the “Company”) was incorporated in England and Wales on 8 October 2021 as a public company, limited by shares. The Company
is incorporated, domiciled and registered in England and Wales, with its registered office situated at 69-75 Side, Newcastle upon Tyne, Tyne and Wear,
United Kingdom NE1 3JE.
The principal activity of the Group is the manufacture and distribution of radiators. The principal activity of the Company is that of a
holding company.
On 10 November 2021, the entire issued share capital of the Company was admitted to the premium listing segment of the Official List of the
Financial Conduct Authority and to trading on the London Stock Exchange’s Main Market for listed securities.
2 Group reorganisation
On 10 November 2021, the Company acquired the entire shareholding of Noosa Holdings Jersey Limited by way of a share for share exchange.
Alsoon 10 November 2021, Noosa Holdings Jersey Limited made a dividend in specie of its investment in Stelrad Radiator Group Limited leaving
theCompany with two direct subsidiaries. The insertion of the Company on top of the existing Noosa Holdings Jersey Limited group does not
constitute a business combination under IFRS 3 Business Combinations and instead has been accounted for as a common control transaction.
Under merger accounting principles, the assets and liabilities of the subsidiaries are consolidated at book value in the consolidated financial
statements. The consolidated reserves of the Group have been adjusted to reflect the statutory share capital of the Company with the difference
between the statutory share capital of the Company and that of Noosa Holdings Jersey Limited presented as the merger reserve.
These consolidated financial statements of the Group are the first set of financial statements for the newly formed Group and the prior period has
been presented as a continuation of the former Noosa Holdings Jersey Limited group on a consistent basis as if the Group reorganisation had taken
place at the start of the earliest period presented. The prior period comparatives are those of the former Noosa Holdings Jersey Limited group since
no substantive economic changes have occurred.
3 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with International Accounting Standards in conformity with
the requirements of the Companies Act 2006. In addition to complying with international accounting standards in conformity with the requirements
of the Companies Act 2006, the financial statements also comply with international financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union.
The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments, which have been
measured at fair value. The consolidated financial statements are presented in GB Pounds and all values are rounded to the nearest thousand
(£’000), except when otherwise indicated. The consolidated financial statements have been prepared on a going concern basis, the basis for
whichisoutlined below. Details of the going concern assessment can be found in the Strategic Report on page 46.
Prior year comparatives
The financial statements for the year ended 31 December 2020, forming the comparative figures of the financial statements for the year ended 31
December 2021, are referenced as unaudited. Prior to the reorganisation, the Group was not in existence in its current form, as outlined in note 2.
As Stelrad Group plc was not incorporated until October 2021, technically an audit of the comparatives in accordance with the Companies Act 2006
was not performed and hence no audit opinion was issued in respect of the consolidated financial statements of Stelrad Group plc for the year ended
31 December 2020. However, a statutory audit was performed and an audit opinion was issued on the consolidated financial statements of Noosa
Holdings Jersey Limited for the year ended 31 December 2020 and on the consolidated financial statements of Stelrad Radiator Group Limited for
the year ended 31 December 2020, which are publicly available. In addition, as part of the process of Admission to listing on the Official List and to
trading on the London Stock Exchange, an accountant’s report, undertaken by PricewaterhouseCoopers LLP, in accordance with the Standards for
Investment Reporting 2000 issued by the Auditing Practices Board in the United Kingdom, was issued on the historical information included in the
Prospectus. The accountant’s report, dated 5 November 2021, included an unqualified opinion on the historical information presented.
4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2021 and 31 December 2020.
Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.
Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive
income from the date the Group gains control until the date the Group ceases to control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s
accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of
theGroup are eliminated in full on consolidation.
Notes to the consolidated financial statements
for the year ended 31 December 2021
89Annual Report 2021 Stelrad Group plc
5 Summary of significant accounting policies
The accounting policies outlined below have been applied consistently, other than where new policies have been adopted.
a) Current versus non-current classification
The Group presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is current when it is:
• expected to be realised or intended to be sold or consumed in the normal operating cycle;
• expected to be realised within twelve months after the reporting period; or
• cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
• it is expected to be settled in the normal operating cycle;
• it is due to be settled within twelve months after the reporting period; or
• there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.
b) Fair value measurement
The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date. The fair values of financial instruments
measured at amortised cost are disclosed in note 30.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes
place either:
• in the principal market for the asset or liability; or
• in the absence of a principal market, in the most advantageous market for the asset or liability.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset
inits highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
• Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred
between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
c) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment
in which the entity operates (the “functional currency”). The consolidated financial statements are presented in GB Pounds (£), which is the
Company’s functional and the Group’s presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or
valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when
deferred in other comprehensive income/(expense) as qualifying net investment hedges or because the monetary asset or liability forms part of the
net investment in the foreign operation.
Foreign exchange gains are presented in other operating income within the income statement and foreign exchange losses are presented in other
operating expenses within the income statement.
Stelrad Group plc Annual Report 202190
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
5 Summary of significant accounting policies continued
c) Foreign currency translation continued
Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into
the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
• income and expenses for each income statement are translated at average exchange rates; and
• all resulting exchange differences are recognised in other comprehensive income/(expense).
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other
currency instruments designated as hedges of such investments, are taken to other comprehensive income/(expense).
d) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured,
regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account
contractually defined terms of payment and excluding taxes or duty. The Group has concluded that it is the principal in all of its revenue arrangements
since it is the primary obligor in all the revenue arrangements, has pricing latitude and is also exposed to inventory and credit risks.
In accordance with IFRS 15 Revenue from Contracts with Customers the Group follows a five-step process to determine whether to
recognise revenue:
1. Identifying the contract with a customer.
2. Identifying the performance obligations.
3. Determining the transaction price.
4. Allocating the transaction price to its performance obligations.
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is recognised at a point in time, when the Group satisfies performance obligations by transferring the promised goods or services to
itscustomers.
The specific recognition criteria described below must also be met before revenue is recognised.
Interest income
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (“EIR”).
Rebates
Rebates are paid to certain direct customers and end consumers of goods sold (end consumers being installers, contractors or housebuilders
whichinstall the Group’s products). Rebates represent either: an agreed percentage discount on the gross invoice value of each purchased product;
orless frequently an agreed discount based on annual sales volume incentives. Provisions for rebates to direct customers are based upon the terms
ofsales contracts and are recorded in the same period as the related gross sale as a deduction from revenue. Where rebates are volume related
theseare provided for when the associated targets are met or deemed likely to be met, with the expected outcome being reassessed at each
reporting date. Volume rebates result in variable revenue; in accordance with IFRS 15, provision for volume rebates is only made when it is highly
probable that a significant reversal will not occur. For indirect rebates paid to the end consumer, the Group estimates the provision for rebates based
on historical take-up rates and rebate values per product category to ensure it is highly probable that a significant reversal would not occur. Rebates
paid to direct customers are offset against trade receivables whereas indirect rebates, which are payable to the end consumer, are disclosed as other payables.
e) Taxation
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the
countries where the Group operates and generates taxable income.
Current income tax is recognised in income unless it relates to items recognised in other comprehensive income/(expense) or directly in equity, in
which casethe current income tax is recognised in other comprehensive income/(expense) or directly in equity respectively. Management periodically
evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
91Annual Report 2021 Stelrad Group plc
5 Summary of significant accounting policies continued
e) Taxation continued
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts
for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• when the deferred tax liability arises from the initial recognition of goodwill (taxable temporary differences only) or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• in respect of taxable temporary differences associated with investments in subsidiaries, when the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
• when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
• in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets are recognised only to the extent
that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each
reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax is recognised in income unless it relates to items recognised in other comprehensive income/(expense) or directly in equity, in which
case the deferred tax is recognised in other comprehensive income/(expense) or directly in equity respectively.
f) Property, plant and equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the
cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are
met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual
assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are
recognised in profit or loss as incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over
their estimated useful lives as follows:
Freehold buildings – 10 to 50 years
Leasehold buildings – period of lease
Plant and equipment – 3 to 10 years
Fixtures and fittings – 2 to 5 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. An asset’s carrying value is
written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Assets under construction are transferred to the appropriate category of property, plant and equipment upon completion of a project. Depreciation
commences upon transfer.
See note 5(m)(i) for the accounting policy related to right-of-use assets.
Stelrad Group plc Annual Report 202192
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
5 Summary of significant accounting policies continued
g) Financial instruments – initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
i) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss or at amortised cost, as appropriate. With
the exception of trade receivables which are recognised at transaction price, all financial assets are recognised initially at fair value plus, in the case
offinancial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace
(regular way trades) are recognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset.
Subsequent measurement
For the purposes of subsequent measurement, financial assets of the Group are classified in two categories:
• financial assets at fair value through profit or loss; and
• financial assets at amortised cost (debt instruments).
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair
value through profit or loss.
Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives are also
classified as held for trading unless they are designated as effective hedging instruments. The Group has not designated any financial assets at fair
value through profit or loss.
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:
• the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest (“EIR”) method and are subject to impairment. Gains
andlosses are recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost include trade receivables.
Derecognition
A financial asset is primarily derecognised (i.e. removed from the Group’s consolidated balance sheet) when the rights to receive cash flows from the
asset have expired, or the Group has transferred its rights to receive cash flows from the asset.
ii) Impairment of financial assets
The Group recognises an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs
are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects
to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of
collateral held or other credit enhancements that are integral to the contractual terms.
Trade receivables are the Group’s only financial asset for which ECLs need to be calculated; for these the Group applies the simplified approach
permitted under IFRS 9 for calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based
on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment.
93Annual Report 2021 Stelrad Group plc
5 Summary of significant accounting policies continued
g) Financial instruments – initial recognition and subsequent measurement continued
iii) Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables,
asappropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, financial guarantee contracts
andderivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9.
Gains or losses on liabilities held for trading are recognised in the income statement.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the
criteria in IFRS 9 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.
Loans and borrowings
This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The
EIR amortisation is included as finance costs in the income statement.
This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability
is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective
carrying amounts is recognised in the income statement.
h) Derivative financial instruments
Initial recognition and subsequent measurement
The Group uses derivative financial instruments, such as forward currency contracts and interest rate swaps, to hedge its foreign currency risks and
interest rate risks respectively. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is
entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss.
For the purpose of hedge accounting, hedges are classified as:
• Hedges of a net investment in a foreign operation.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply
hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument and the hedged item, the nature of the risk being hedged and how the Group
will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness
and how the hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness
requirements:
• There is “an economic relationship” between the hedged item and the hedging instrument.
• The effect of credit risk does not “dominate the value changes” that result from that economic relationship.
• The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges
andthe quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Stelrad Group plc Annual Report 202194
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
5 Summary of significant accounting policies continued
h) Derivative financial instruments continued
Hedges that meet all the qualifying criteria for hedge accounting are accounted for as described below:
Hedges of a net investment
Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are
accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are
recognised as other comprehensive income/(expense) while any gains or losses relating to the ineffective portion are recognised in the income
statement. Ondisposal of the foreign operation, the cumulative value of any such gains or losses recorded in equity is transferred to the income
statement.
The Group uses a loan as a hedge of its exposure to foreign currency risk.
i) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
• raw materials: purchase cost on a first in, first out basis; and
• finished goods and work in progress: cost of direct materials and labour and a proportion of manufacturing overheads based on the normal
operating capacity, but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs
necessary to make the sale.
j) Impairment of non-financial assets
The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual
impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an
asset’s or cash-generating unit’s (“CGU’s”) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual
asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying
amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market
transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s
CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of three years. For longer periods,
a long-term growth rate is calculated and applied to project future cash flows after the third year.
Impairment losses of continuing operations, including impairment on inventories, are recognised in the income statement in expense categories
consistent with the function of the impaired asset.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised
impairment losses no longer exist or have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A
previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable
amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the income statement.
k) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three
months or less.
For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above,
net of outstanding bank overdrafts.
l) Government grants
Government grants are recognised when there is reasonable assurance that the grant will be received and all attached conditions will be complied
with. When the grant relates to an expense item (as is the case with furlough income), it is recognised as income on a systematic basis over the
periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income
inequal amounts over the expected useful life of the related asset.
95Annual Report 2021 Stelrad Group plc
5 Summary of significant accounting policies continued
m) Leases
The Group assesses at contract inception whether a contract is, or contains, a lease – that is, if the contract conveys the right to control the use of
anidentified asset for a period of time in exchange for consideration.
Group as lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low value assets.
TheGroup recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e. the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The
cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term
and the estimated useful lives of the assets, as follows:
Leasehold buildings – period of lease
Plant and machinery – 3 to 10 years
Fixtures and fittings – 2 to 5 years
If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting policies in section (j) Impairment of non-financial assets.
ii) Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the
lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease
payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include
the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the
lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as
expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date because the
interest rate implicit in the lease is not readily determinable. The incremental borrowing rate is calculated based on the Group’s external borrowing
rate. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments
made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease
payments (e.g. changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the
assessment of an option to purchase the underlying asset.
The Group’s lease liabilities are included in the interest-bearing loans and borrowings (see note 19).
iii) Short-term leases and leases of low value assets
The Group applies the short-term lease recognition exemption to its short-term leases of plant and machinery (i.e. those leases that have a lease
term of twelve months or less from the commencement date and do not contain a purchase option). It also applies the lease of low value assets
recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases of low
value assets are recognised as expense on a straight-line basis over the lease term.
n) Provisions
General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a
separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the income statement net of
any reimbursement.
The effect of the time value of money is not material and therefore the provisions are not discounted.
No warranty provision is made for radiators based on the very low claims history. The business sells a small volume of boilers in Turkey and provision
for these is made on a £ per unit sold basis, driven by historical warranty claims data.
A provision is recognised in respect of an unused vacation pay liability due to certain employees in Turkey. The provision is calculated based on the
number of unused days and the salary rates applicable.
Stelrad Group plc Annual Report 202196
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
5 Summary of significant accounting policies continued
o) Pensions and other post-employment benefits
The Group has an obligation to provide lump sum termination payments to certain employees in Turkey; the scheme is accounted for under IAS 19.
The cost of providing benefits under the scheme is determined using the projected unit credit method.
Remeasurements, comprising actuarial gains and losses, are recognised immediately in the balance sheet with a corresponding debit or credit to
retained earnings through other comprehensive income/(expense) in the period in which they occur. Remeasurements are not reclassified to profit
or loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
• the date of the plan amendment or curtailment; and
• the date that the Group recognises restructuring-related costs.
Net interest is calculated by applying the discount rate to the defined benefit liability. The Group recognises the following changes in the defined benefit
obligation under “cost of sales”, “administration expenses” and “selling and distribution expenses” in the consolidated income statement (by function):
• Service costs comprising current service costs, past service costs, gains and losses on curtailments and non-routine settlements.
For the defined contribution schemes operated by the Group the amount charged to the income statement in respect of pension costs and other
post-retirement benefits is the contributions payable in exchange for services rendered in the period. Differences between contributions payable in
the period and contributions actually paid are shown as either accruals or prepayments in the balance sheet.
p) Exceptional items
Exceptional items are disclosed by virtue of their nature, size or incidence to allow a better understanding of the underlying trading performance
ofthe Group.
q) Research and development costs
Research and development costs are expensed as incurred.
r) Dividends
Final dividends are recorded in the financial statements in the period in which they are approved by the Company’s shareholders. Interim dividends
arerecorded in the period in which they are approved and paid.
s) New standards applied in the year
Several amendments and interpretations apply for the first time in 2021, but do not have an impact on the consolidated financial statements of
theGroup. These include:
• Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
t) New standards and interpretations not applied
The International Accounting Standards Board has issued the following standards and interpretations with an effective date after the date of these
financial statements:
Effective date
International Accounting Standards (IAS/IFRSs) (period beginning on or after)
IFRS 17 Insurance Contracts 1 January 2023
Classification of Liabilities as Current or Non-current – Amendments to IAS 1 1 January 2023
Definition of Accounting Estimates – Amendments to IAS 8 1 January 2023
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 1 January 2023
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendment to IAS 12 1 January 2023
Reference to the Conceptual Framework – Amendments to IFRS 3 1 January 2022
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 1 January 2022
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37 1 January 2022
IFRS 9 Financial Instruments – Fees in the “10%” Test for Derecognition of Financial Liabilities 1 January 2022
It is anticipated that adoption of these standards and interpretations will not have a material impact on the Group’s financial statements.
The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.
97Annual Report 2021 Stelrad Group plc
6 Significant accounting judgements, estimates and assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets
orliabilities affected in future periods.
Judgements
In the process of applying the Group’s accounting policies, management does not consider that it has made any judgements which would have a
significant effect on the amounts recognised in the consolidated financial statements.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, which have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based
its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and
assumptions about future developments, however, may change due to market changes or circumstances arising beyond the control of the Group.
Such changes are reflected in the assumptions when they occur.
Rebates
A proportion of rebates is paid to the end consumers of goods sold. Uncertainties exist over provisions made as, until claims are made by end
consumers, the Group cannot be certain which consumers have purchased which products. Due to this uncertainty it is therefore judgemental what
contractual rates, if any, will apply to goods sold.
Significant management judgement is required in order to assess the provision required at the balance sheet date. Management is able to utilise
market information and historical/current data and trends in order to make an appropriate provision.
A reasonably possible change in the estimates surrounding rebates would not result in a material impact to the financial statements.
7 Segmental information
IFRS 8 Operating Segments requires operating segments to be determined by the Group’s internal reporting to the Chief Operating Decision
Maker (“CODM”). The CODM has been determined to be the Chief Executive Officer and Chief Financial Officer, who receive information on the
Group’s revenue channels in key geographical regions based on the Group’s management and internal reporting structure. The CODM assesses the
performance of geographical segments based on a measure of revenue and adjusted operating profit.
During the year ended 31 December 2021, the Group, led by the CODM, amended the way that it reports segments. Previously, there was deemed to
be only one reportable segment, being the manufacture and distribution of radiators.
Adjusted operating profit is earnings before interest, tax, amortisation, exceptional items and foreign exchangedifferences.
Revenue by geographical market
2021
Unaudited
2020
£’000 £’000
UK & Ireland 130,405 89,430
Europe 118,063 90,566
Turkey & International 23,817 16,569
Total revenue 272,285 196,565
Adjusted operating profit by geographical market
2021
Unaudited
2020
£’000 £’000
UK & Ireland 21,589 8,618
Europe 12,929 9,821
Turkey & International 2,898 1,218
Central costs (4,247) (4,034)
Adjusted operating profit 33,169 15,623
Exceptional items (9,589) —
Foreign exchange differences 2,979 3,901
Operating profit 26,559 19,524
Stelrad Group plc Annual Report 202198
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
7 Segmental information continued
Non-current operating assets
2021
Unaudited
2020
£’000 £’000
UK 20,237 20,083
The Netherlands 23,606 26,841
Turkey 8,362 12,805
Other 1,489 1,295
Total 53,694 61,024
The exceptional items in the year ended 31 December 2021 are costs relating to professional advisers employed by the Group to explore the
potential sale of the Group and to subsequently execute the IPO. These costs are one-off in nature and disclosing these costs as exceptional allows
the true underlying performance of the Group to be more easily reviewed. There were no exceptional items in the year ended 31 December 2020.
The revenue information above is based on the locations of the customers. All revenue arises from the sale of goods.
One customer has revenues in excess of 10% of revenue (2020: one).
8 Other operating income
2021
Unaudited
2020
£’000 £’000
Net gain on disposal of property, plant and equipment 213 142
Foreign currency gains 2,575 3,306
Net gains on forward derivative contracts 404 595
Sundry other income 12 9
Government grant income — 1,304
3,204 5,356
9 Other operating expenses
2021
Unaudited
2020
£’000 £’000
Sundry other expenses — 19
— 19
99Annual Report 2021 Stelrad Group plc
10 Operating profit
Operating profit is stated after charging/(crediting):
2021
Unaudited
2020
£’000 £’000
Auditors’ remuneration:
– Audit of the Company and consolidated financial statements 79 29
– Audit of subsidiaries 193 150
272 179
– Non-audit services: UK – tax compliance 14 19
– Non-audit services: UK – tax advisory 30 —
– Non-audit services: overseas – tax compliance 10 19
– Non-audit services: services related to the IPO 523 —
577 38
Total auditors’ remuneration 849 217
Depreciation of owned assets 5,730 6,177
Depreciation of right-of-use assets 1,679 1,744
7,409 7,921
Profit on sale of property, plant and equipment (213) (142)
Other exchange gains (2,979) (3,901)
Research and development costs 1,047 1,025
11 Employee benefits expense
2021
Unaudited
2020
£’000 £’000
Wages and salaries 32,489 34,435
Social security costs 4,079 4,320
Other pension costs 2,411 2,598
38,979 41,353
The average monthly number of employees during the year was made up as follows:
2021
Unaudited
2020
Number Number
Direct 806 657
Indirect 316 382
Sales, service and administration 204 222
1,326 1,261
Stelrad Group plc Annual Report 2021100
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
12 Directors’ remuneration
The Group listed on the London Stock Exchange on 10 November 2021. Prior to admission it was a private company which operated a customary
private equity remuneration model and post-listing a “listed” Remuneration Policy and practice were implemented. The Remuneration Policy from
10November 2021 (and currently applicable) is fully described in the Remuneration Report on pages 60 to 73.
The figures in the table below represent a full twelve-month period to 31 December 2021 and are a mixture of two distinct ownership structures
andremuneration practices, which can be analysed further as follows:
2021
Unaudited
2020
£’000 £’000
Aggregate remuneration 1,911 2,098
The amounts in respect of the highest paid Director are as follows:
2021
Unaudited
2020
£’000 £’000
Aggregate remuneration 1,083 1,229
Aggregate remuneration is inclusive of basic salary, annual bonus (including any accrued bonuses), pension contributions and other taxable benefits.
No retirement benefits are accruing to Directors under a defined contribution scheme or a defined benefit scheme (2020: £nil). Further details on
Directors’ remuneration can be found in the Remuneration Report on pages 60 to 73.
13 Finance income
2021
Unaudited
2020
£’000 £’000
Interest on cash deposits 141 68
14 Finance costs
2021
Unaudited
2020
£’000 £’000
Interest on bank loans 370 449
Interest on ultimate shareholder loans 9,117 9,230
Amortisation of loan issue costs 178 80
Interest expense on defined benefit liabilities 260 263
Finance charges payable on lease liabilities 127 148
Other finance charges 327 235
10,379 10,405
15 Income tax expense
The major components of income tax expense are as follows:
2021
Unaudited
2020
£’000 £’000
Consolidated income statement
Current income tax:
Current income tax charge 4,179 1,711
Adjustments in respect of current income tax charge of previous year (68) (59)
Deferred tax:
Relating to origination and reversal of temporary differences (2,095) (853)
Relating to change in tax rates (355) (311)
Income tax expense reported in the income statement 1,661 488
101Annual Report 2021 Stelrad Group plc
15 Income tax expense continued
2021
Unaudited
2020
£’000 £’000
Consolidated statement of comprehensive income
Tax related to items recognised in other comprehensive income/(expense) during the year:
Deferred tax on actuarial loss (35) (70)
Current tax on monetary items forming part of net investment and on hedges of net investment 1,235 286
Income tax expensed to other comprehensive income/(expense) 1,200 216
Reconciliation of tax expense and the accounting profit at the tax rate in the United Kingdom of 19% (2020: 19%):
2021
Unaudited
2020
£’000 £’000
Profit before tax 16,321 9,187
Profit before tax multiplied by standard rate of corporation tax in the UK of 19% (2020: 19%): 3,101 1,746
Adjustments in respect of current income tax charge of previous year (68) (59)
Non-deductible expenses 2,715 1,640
Differences arising due to tax losses (3,052) (527)
Other timing differences (271) (428)
Benefit of overseas investment incentives (1,723) (1,974)
Effect of changes in overseas tax rates (102) (180)
Effect of different overseas tax rates 1,314 401
Effect of changes in UK deferred tax rate (253) (131)
Total tax expense reported in the income statement 1,661 488
Deferred tax
Deferred tax relates to the following:
Consolidated balance sheet Consolidated income statement
2021
Unaudited
2020 2021
Unaudited
2020
£’000 £’000 £’000 £’000
Capital allowances 579 530 (42) 1,336
Pension 414 526 134 67
Fixed asset fair value adjustments (491) (465) (41) (542)
Losses available for offsetting against future income 4,440 2,846 1,659 435
Other temporary differences 1,216 905 740 (134)
Deferred tax credit 2,450 1,162
Net deferred tax assets 6,158 4,342
Reflected in the balance sheet as:
Deferred tax assets
Continuing operations 6,284 4,342
Deferred tax liabilities
Continuing operations (126) —
Deferred tax assets, net 6,158 4,342
Stelrad Group plc Annual Report 2021102
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
15 Income tax expense continued
Reconciliation of deferred tax assets, net
2021
Unaudited
2020
£’000 £’000
Opening balance as at 1 January 4,342 3,292
Tax income recognised in income statement 2,450 1,162
Tax income recognised in other comprehensive income/(expense) 35 70
Exchange adjustment (669) (182)
Closing balance as at 31 December 6,158 4,342
The Group offsets tax assets and liabilities if it has a legally enforceable right to set them off and they are levied by the same tax authority. Deferred
tax assets in respect of losses of £581,000 (2020: £619,000) have been recognised in respect of one (2020: one) loss making subsidiary company;
these are recognised on the grounds of future projected performance.
Deferred tax asset recognition
During the year the Group has chosen to recognise previously unrecognised deferred tax assets in relation to tax losses. The newly recognised losses
are all post-April 2017 UK losses and the decision has been taken to recognise the losses in the year because the new capital structure of the Group
post-IPO means that tax deductible interest will be lower which, along with higher UK profitability, will lead to these losses being utilised over a much
shorter time frame.
The deferred tax assets have been analysed in detail at the year end and the recognition of assets, in particular those in respect of tax losses, has been
scrutinised in detail with modelling undertaken to ensure that they are likely to be utilised over a period of time where profitability can be estimated
with reasonable certainty.
Unrecognised deferred tax balances
2021
Unaudited
2020
£’000 £’000
Capital allowances 29 22
Losses available for offsetting against future income 1,904 3,930
1,933 3,952
The Group has tax losses which arose in the United Kingdom of £8,653,000 (2020: £20,684,000) that are available indefinitely for offsetting
against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been recognised in respect of these losses as
they arose prior to April 2017 and have arisen in subsidiaries that are not profit making and there are no other tax planning opportunities or other
evidence of recoverability in the near future.
Changes in the corporate income tax rate
The UK Government has announced its intention to increase the UK corporation tax rate to 25% by 1 April 2023. This rate change has now been
substantively enacted. When recognising deferred tax within the balance sheet, the Group has used a blended rate which represents the rate at which
deferred tax is expected to unwind.
16 Earnings per share
2021
Unaudited
2020
£’000 £’000
Net profit for the period attributable to owners of the parent 14,660 8,699
Exceptional items 9,589 —
Foreign exchange differences (2,979) (3,901)
Tax on exceptional items and foreign exchange differences 282 858
Adjusted net profit for the period attributable to owners of the parent 21,552 5,656
103Annual Report 2021 Stelrad Group plc
16 Earnings per share continued
2021
Unaudited
2020
Basic weighted average number of shares in issue 127,352,555 127,352,555
Diluted weighted average number of shares in issue 127,352,555 127,352,555
Earnings per share
Basic earnings per share (pence per share) 11.51 6.83
Diluted earnings per share (pence per share) 11.51 6.83
Adjusted earnings per share
Basic earnings per share (pence per share) 16.92 4.44
Diluted earnings per share (pence per share) 16.92 4.44
The number of shares in issue is as at IPO as this reflects the underlying number of shares. The 2020 comparatives have been adjusted to align with
the number of shares at IPO to allow for comparability.
17 Dividends
The Board is recommending a dividend of 0.96 pence per share (2020: nil), which, if approved, will mean a total dividend payment of £1,223,000.
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these
consolidated financial statements.
18 Property, plant and equipment
Freehold land Leasehold Assets under Plant and Fixtures and
and buildings buildings construction equipment fittings Total
£’000 £’000 £’000 £’000 £’000 £’000
Cost
At 1 January 2020 23,223 10,082 4,987 46,798 6,967 92,057
Additions 26 523 6,568 2,175 271 9,563
Transfers 971 — (8,016) 6,583 462 —
Disposals — — (16) (814) (466) (1,296)
Exchange adjustment (491) 574 (111) (1,781) (220) (2,029)
At 31 December 2020 (Unaudited) 23,729 11,179 3,412 52,961 7,014 98,295
Additions 138 546 6,379 1,724 863 9,650
Transfers 550 — (4,400) 3,521 329 —
Disposals — — (32) (163) (593) (788)
Exchange adjustment (2,589) (706) (591) (10,137) (694) (14,717)
At 31 December 2021 21,828 11,019 4,768 47,906 6,919 92,440
Accumulated depreciation and impairment
At 1 January 2020 8,162 920 — 16,977 4,595 30,654
Depreciation charge 859 1,14 6 — 4,887 1,029 7,921
Disposals — — — (545) (419) (964)
Exchange adjustment (13) 66 — (261) (132) (340)
At 31 December 2020 (Unaudited) 9,008 2,132 — 21,058 5,073 37, 271
Depreciation charge 850 1,151 — 4,688 720 7,409
Disposals — — — (90) (424) (514)
Exchange adjustment (556) (160) — (4,340) (364) (5,420)
At 31 December 2021 9,302 3,123 — 21,316 5,005 38,746
Net book value
At 31 December 2021 12,526 7,896 4,768 26,590 1,914 53,694
At 31 December 2020 (Unaudited) 14,721 9,047 3,412 31,903 1,941 61,024
At 1 January 2020 15,061 9,162 4,987 29,821 2,372 61,403
Stelrad Group plc Annual Report 2021104
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
18 Property, plant and equipment continued
The carrying value of right-of-use assets within property, plant and equipment, by line item, at the year end is:
2021
Unaudited
2020
£’000 £’000
Leasehold buildings 7,814 8,937
Plant and equipment 911 1,240
Fixtures and fittings 638 511
9,363 10,688
Right-of-use asset additions within property, plant and equipment, by line item, during the year are:
2021
Unaudited
2020
£’000 £’000
Leasehold buildings 543 407
Plant and equipment 79 357
Fixtures and fittings 382 159
1,004 923
Depreciation of right-of-use assets within property, plant and equipment, by line item, during the year is:
2021
Unaudited
2020
£’000 £’000
Leasehold buildings 1,127 1,141
Plant and equipment 348 295
Fixtures and fittings 204 308
1,679 1,744
Land and buildings with a carrying amount of £10,890,000 (2020: £3,879,000) are subject to a first charge to secure the Group’s bank loan.
No borrowing costs have been capitalised since the assets have not met the criteria for qualifying assets.
105Annual Report 2021 Stelrad Group plc
19 Financial liabilities
Financial liabilities – interest-bearing loans and borrowings
Effective interest rate 2021
Unaudited
2020
% Maturity £’000 £’000
Current interest-bearing loans and borrowings
Lease liabilities 1,794 1,660
ABL term loan facility Libor/Euribor + 2.25% 18 Dec 2022 — 561
Lombard facility Libor + 2.50% Jul 2024 — 1,187
Unamortised loan costs — (61)
1,794 3,347
Non-current interest-bearing loans and borrowings
Lease liabilities 7,524 8,955
Ultimate shareholder loans 15% 25 Sep 2033 — 67,411
Deferred consideration – shares — 202
ABL term loan facility Libor/Euribor + 2.25% 18 Dec 2022 — 3,853
ABL revolving credit facility Libor/Euribor + 1.50% 18 Dec 2022 — 1,798
Lombard facility Libor + 2.50% Jul 2024 — 3,626
Revolving credit facility SONIA + 2.25% 9 Nov 2026 56,500 —
Unamortised loan costs (1,159) (60)
62,865 85,785
Total interest-bearing loans and borrowings 64,659 89,132
The ultimate shareholder loans consist of two amounts: i) an amount funded by the ultimate controlling party of the Group, The Bregal Fund III LP;
and ii) an amount funded by certain managers of the Company. The loan notes issued by The Bregal Fund III LP were listed on the Channel Islands
Securities Exchange. The shareholder loans were repaid during the year ended 31 December 2021 as part of the Group reorganisation with the loan
notes issued by The Bregal Fund III LP delisted as part of this transaction.
On 10 November 2021, the Group refinanced its external debt as part of the IPO; consequently the Group had three external debt facilities during
the year:
i) a £32.9 million asset-based lending (“ABL”) facility with the Royal Bank of Scotland Invoice Finance, consisting of a £28.0 million revolving credit
facility and a £4.9 million term loan facility, which was repaid on 10 November 2021;
ii) a term loan facility with Lombard North Central PLC (“Lombard”), which was repaid on 10 November 2021; and
iii) an £80 million revolving credit facility (“RCF”) jointly financed by National Westminster Bank plc and Barclays PLC, which was first drawn
on 10November 2021.
The ABL facility was a cross-collateral agreement secured on specific assets of certain Group companies. Certain companies that are party to the
agreement were able to draw borrowings that were secured on assets elsewhere in the Group. As part of the facility the Group drew down the
following borrowings in the year:
• a term loan secured on the land and buildings and plant and machinery of certain Group companies; and
• a revolving credit facility secured on the inventory and receivables of certain Group companies.
The Lombard facility was secured on the plant and machinery of certain Group companies.
All of the security held under the ABL and Lombard facilities was released as part of the refinancing on 10 November 2021.
The £80 million revolving credit facility is secured on the assets of certain subsidiaries within the Group.
The shareholder loans and accrued interest balances were repaid on 10 November 2021 as part of the Group reorganisation. As a result the ultimate
shareholder loan balance, after including accrued interest, at 31 December 2021 is £nil (2020: £67,411,000). Prior to 10 November 2021 further
interest of £9,117,000 was accrued during 2021 (2020: £9,230,000 further interest was accrued).
The £202,000 deferred consideration, which arose in 2015 following the sale of a business, was repaid on 15 October 2021 (2020: £202,000
deferred consideration outstanding).
Stelrad Group plc Annual Report 2021106
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
20 Inventories
2021
Unaudited
2020
£’000 £’000
Raw materials – cost 18,647 10,756
Work in progress – cost 1,293 829
Finished goods – lower of cost and net realisable value 34,181 16,778
Other consumables 2,660 2,623
56,781 30,986
The cost of inventories recognised as an expense in the year was £192,279,000 (2020: £138,859,000). The provision for the impairment of stocks
decreased in the year giving rise to a credit of £127,000 (2020: credit of £28,000). At 31 December 2021 the provision for the impairment of stocks
was £1,534,000 (2020: £1,815,000).
21 Trade and other receivables
2021
Unaudited
2020
£’000 £’000
Current
Trade receivables 42,749 35,658
Other receivables 3,314 2,912
Prepayments 668 454
46,731 39,024
Non-current
Trade receivables 10 17
The table below sets out the movements in the allowance for expected credit losses of trade receivables:
2021
Unaudited
2020
£’000 £’000
At 1 January 130 105
Charge for the year 108 52
Utilised (23) —
Unused amounts reversed — (23)
Exchange adjustment (11) (4)
At 31 December 204 130
As at 31 December, the details of the provision matrix used to calculate provisions for trade receivables (with the ageing gross of impairment) are
as follows:
Total Current <30 days 30–90 days >90 days
£’000 £’000 £’000 £’000 £’000
2021
Gross carrying amount 42,963 38,014 1,464 2,645 840
Expected credit loss rate (%) — — 1 4 10
Expected credit loss 204 — 15 106 83
2020 (Unaudited)
Gross carrying amount 35,805 31,771 1,408 1,739 887
Expected credit loss rate (%) — — 1 3 7
Expected credit loss 130 — 14 53 63
107Annual Report 2021 Stelrad Group plc
22 Cash and cash equivalents
2021
Unaudited
2020
£’000 £’000
Cash at bank and on hand 15,563 20,083
23 Trade and other payables
2021
Unaudited
2020
£’000 £’000
Current
Trade payables 57,751 31,331
Other payables and accruals 22,198 16,844
Other taxes and social security 3,858 5,452
Interest payable 76 31
83,883 53,658
24 Provisions
Warranty Unused vacation Total
£’000 £’000 £’000
At 1 January 2020 70 425 495
Arising during the year 26 372 398
Utilised (34) (345) (379)
Unused amounts reversed — (10) (10)
Exchange adjustment (12) (97) (109)
At 31 December 2020 (Unaudited) 50 345 395
Arising during the year 30 397 427
Utilised (28) (223) (251)
Unused amounts reversed — (19) (19)
Exchange adjustment (17) (198) (215)
At 31 December 2021 35 302 337
Current 14 165 179
Non-current 21 137 158
Unused vacation
A provision is recognised in respect of an unused vacation pay liability due to certain employees in Turkey. The timing of the provision is dependent
on the rate at which employees take additional vacation.
Stelrad Group plc Annual Report 2021108
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
25 Share capital and reserves
During the year, the Company carried out a reorganisation of its share capital to facilitate a listing to the premium segment of the Official List of the
Financial Conduct Authority and to trade on the London Stock Exchange Main Market for listed securities. This is described below in the detail on
transactions in the year.
2021 2021
Unaudited
2020
Unaudited
2020
Number £ Number £
Authorised, called up and fully paid
Ordinary shares of £1 each 127,352,555 127,352,555 — —
Ordinary “A” shares of £0.01 each — — 200,000 2,000
Ordinary “B” shares of £1 each — — 50,000 50,000
Ordinary “C” shares of £1 each — — 13,000 13,000
127,352,555 65,000
The movements in the ordinary share capital during the year ended 31 December 2021 were as follows:
Shares Share capital
Number £
At 1 January 2021 (Unaudited) 263,000 65,000
Issued on incorporation of Stelrad Group plc 50,000 50,000
Redemption of ordinary “C” shares (13,000) (13,000)
Noosa Holdings Jersey Limited share reorganisation — (49,500)
Share for share exchange:
– Noosa Holdings Jersey Limited (250,000) (2,500)
– Stelrad Group plc 115,658,370 115,658,370
Shares issued 11,6 44,185 11,6 44,185
At 31 December 2021 127,352,555 127,352,555
Transactions in the year
On incorporation on 8 October 2021, Stelrad Group plc (the “Company”) issued 50,000 ordinary shares with a nominal value of £1 each for a total
cash consideration of £50,000. This was paid up in full on 10 November 2021.
On 15 October 2021, Noosa Holdings Jersey Limited redeemed its 13,000 ordinary “C” shares at par value.
On 10 November 2021, the following transactions arose:
• Noosa Holdings Jersey Limited redesignated its 200,000 ordinary “A” shares as 200,000 ordinary shares of £0.01 each.
• Noosa Holdings Jersey Limited split its 50,000 ordinary “B” shares as 50,000 ordinary shares of £0.01 each and 50,000 deferred redeemable shares
of £0.99 each. The 50,000 deferred redeemable shares of £0.99 each were immediately redeemed with the credit applied to share premium.
• The Company acquired 100% of the ordinary shares of Noosa Holdings Jersey Limited by way of a share for share exchange by issuing 115,658,370
ordinary shares of £1 each to the shareholders of Noosa Holdings Jersey Limited.
• The Company issued an additional 11,644,185 ordinary shares of £1 each at a value of £2.15 giving rise to a share premium of £13,391,000.
Subsequent to the year end, on 25 January 2022, a capital reduction application was approved by the courts, reducing the value of ordinary shares
in issue from £1 to £0.001. Under the same application the courts approved the reduction of the Company’s share premium account in full. The
reduction of share capital and share premium will be transferred to retained earnings.
109Annual Report 2021 Stelrad Group plc
26 Commitments and contingencies
Commitments
Amounts contracted for but not provided in the financial statements amounted to £1,389,000 (2020: £657,000) for the Group. All amounts relate
to property, plant and equipment.
Contingent liabilities
Termo Teknik Ticaret ve Sanayi A.S. has issued letters of guarantee and letters of credit to its steel suppliers amounting to $30,089,000
(2020:$6,814,000) and $40,518,000 (2020: $29,256,000) respectively. Termo Teknik Ticaret ve Sanayi A.S. has also issued letters of
guaranteedenominated in Turkish Lira totalling TL9,497,000 (2020: TL7,002,000).
The Group enters into various forward currency contracts to manage the risk of foreign currency exposures on certain purchases and sales.
Thetotalamount of unsettled forward contracts as at 31 December 2021 is £nil (2020: £nil).
The fair value of the unsettled forward contracts held at the balance sheet date, determined by reference to their market values, is a liability of £nil
(2020: £nil).
As part of the new £80 million revolving credit facility, entered into in November 2021, the Group is party to a cross-collateral agreement secured
onspecific assets of certain Group companies. No liability is expected to arise from the agreement.
Under an unlimited multilateral guarantee, the Company, in common with certain fellow subsidiary undertakings in the UK, has jointly and severally
guaranteed the obligations falling due under the Company’s net overdraft facilities. No liability is expected to arise from this arrangement.
27 Pensions and other post-employment plans
2021
Unaudited
2020
£’000 £’000
Net employee defined benefit liability
Turkish scheme 1,655 2,390
Other retirement obligations – non-IAS 19 73 139
1,728 2,529
Turkish scheme
In Turkey there is an obligation to provide lump sum termination payments to certain employees; this represents 30 days’ pay (subject to a cap
imposed by the Turkish Government) for each year of service. The IAS 19 valuation gives a liability of £1,655,000 (2020: £2,390,000). There are
no assets held in this plan (2020: nil). The expected contributions to the plan for the next reporting period to cover benefits paid are £158,000.
Theservice cost in the year was £211,000 (2020: £203,000).
UK scheme
The UK has one defined contribution pension scheme, following the transfer of all pension arrangements to a Master Trust in 2020.
The total employer contributions made in the year were £1,020,000 (2020: £1,158,000). There were outstanding contributions totalling £nil
(2020:£nil) due to the scheme at the balance sheet date.
Other overseas retirement obligations
The Group operates a number of defined contribution pension schemes in its overseas entities and also has certain other retirement obligations.
Thisliability at the year end mainly relates to pre-pension payments that are due to Belgian employees who have retired early of £39,000 (2020:
£79,000). The contributions to overseas pension schemes in the year and any movements in the provision for other retirement obligations are
reported as part of the employee benefits note and total £1,180,000 (2020: £1,237,000).
IAS 19 accounting – Turkish scheme only
Amounts recognised in the balance sheet
2021
Unaudited
2020
£’000 £’000
Defined benefit obligation 1,655 2,390
Net pension liability 1,655 2,390
Stelrad Group plc Annual Report 2021110
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
27 Pensions and other post-employment plans continued
Movement in defined benefit obligation
2021
Unaudited
2020
£’000 £’000
At 1 January 2,390 2,364
Current service cost 211 203
Interest cost 260 263
Actuarial losses 141 317
Benefits paid (233) (198)
Exchange differences (1,114) (559)
At 31 December 1,655 2,390
Amounts recognised in the income statement
2021
Unaudited
2020
£’000 £’000
Current service cost 211 203
Interest cost 260 263
At 31 December 471 466
Amounts recognised in other comprehensive income/(expense)
2021
Unaudited
2020
£’000 £’000
Experience adjustments – obligation (143) (132)
Changes in demographic assumptions – obligation 1 (1)
Changes in financial assumptions – obligation 1 (184)
At 31 December (141) (317)
Principal actuarial assumptions
2021
Unaudited
2020
Discount rate (per annum) 19.00% 13.00%
Future salary increases (per annum) 14.25% 8.50%
Quantitative sensitivity analysis
2021 2021
Discount rate (per annum) Future salary increases (per annum)
+1% -1% +1% -1%
£’000 £’000 £’000 £’000
(Decrease)/increase in defined benefit obligation – Turkish scheme (114) 130 134 (119)
The sensitivity analysis above has been determined based on a method that extrapolates the impact on the net defined benefit obligation as a result of
reasonable changes in key assumptions at the end of the reporting year.
111Annual Report 2021 Stelrad Group plc
28 Related party disclosures
Prior to admission to the London Stock Exchange on 10 November 2021, the ultimate controlling party was The Bregal Fund III LP.
The ultimate shareholder loans bore interest at 15% and consisted of two amounts: i) an amount funded by the ultimate controlling party
oftheGroup, The Bregal Fund III LP; and ii) an amount funded by certain managers of the Company.
The value of the loans at 31 December 2020 was £67,411,000, including accrued interest of £28,000 (The Bregal Fund III LP: £56,932,000;
managers: £10,479,000).
During 2021 interest was accrued totalling £9,117,000 (2020: £9,230,000) (The Bregal Fund III LP: £7,700,000 (2020: £7,795,000); managers:
£1,417,000 (2020: £1,435,000)).
The value of the loans at 31 December 2021 was £nil, due to repayment of the shareholder loans and all accrued interest totalling £76,528,000
(TheBregal Fund III LLP: £64,632,000; managers: £11,896,000) as part of the Group reorganisation on 10 November 2021.
The Group owed deferred consideration to shareholders related to the sale of a business of £nil (2020: £202,000 (The Bregal Fund III LP: £171,000;
managers: £31,000). The deferred consideration to shareholders was repaid on 15 October 2021.
Under the ownership agreement, before the Group reorganisation, the Group was charged a monitoring fee of £200,000 per annum by Bregal Capital
LLP, which was the management company of the ultimate controlling party of the Group, The Bregal Fund III LP. An amount of £nil (2020: £nil) was
accrued for this at the year end.
During the year the Group spent £9,000 (2020: £24,000) on purchases from Polypal Netherlands BV (whose ultimate controlling party is also
TheBregal Fund III LP); the balance outstanding at the year end was £nil (2020: £nil).
The key management personnel are considered to be the Executive Directors of the Group. The following table highlights the remuneration that is
recorded in the income statement in respect of these personnel, including Company social security costs:
2021
Unaudited
2020
£’000 £’000
Short-term employment benefits 2,175 2,388
29 Capital management
For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves attributable to the equity holders of
the parent. The primary objective of the Group’s capital management is to maximise the shareholder value. In order to achieve this overall objective,
the Group’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and
borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans
and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowings in the current year. The Group
manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.
Details of the issued capital and reserves are shown in note 25. Details of interest-bearing loans and borrowings are shown in note 19.
30 Financial instrument disclosures
a) Hedging activity and derivatives
Derivatives not designated as hedging instruments
The Group uses foreign exchange forward contracts to manage some of its transaction exposures. Where used, foreign exchange forward contracts
are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions,
generally from one to twelve months.
Hedge of net investments in foreign operations
Included in subsidiary loans at 31 December 2021 and at 31 December 2020 were Euro denominated borrowings which have been designated as a
hedge of the net investments in its overseas subsidiaries. This borrowing is being used to hedge the Group’s exposure to the Euro foreign exchange
risk on these investments.
Gains or losses on the retranslation of this borrowing are transferred to other comprehensive income/(expense) to offset any gains or losses on
translation ofthe net investments in the subsidiaries. There is no ineffectiveness in the years ended 31 December 2021 and 31 December 2020.
Stelrad Group plc Annual Report 2021112
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
30 Financial instrument disclosures continued
b) Fair value of financial instruments at amortised cost
Carrying amount Fair value
2021
Unaudited
2020 2021
Unaudited
2020
£’000 £’000 £’000 £’000
Financial liabilities
Lease liabilities 9,318 10,615 9,318 10,615
Ultimate shareholder loans — 6 7,411 — 6 7,411
Deferred consideration – shares — 202 — 202
ABL term loan facility — 4,414 — 4,414
ABL revolving credit facility — 1,798 — 1,798
Lombard facility — 4,813 — 4,813
Revolving credit facility 56,500 — 56,500 —
65,818 89,253 65,818 89,253
The external loan balances are stated gross of any issue costs.
The Directors consider that the carrying amount of the shareholder loans and deferred consideration is equal to their fair value.
The management assessed that the fair values of cash and cash equivalents, trade and other receivables, trade and other payables and other current
assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction
between willing parties.
The following methods and assumptions were used to estimate the fair values:
• The Group enters into derivative financial instruments with various counterparties, principally financial institutions. Derivatives valued using
valuation techniques with market observable inputs are interest rate swaps and foreign exchange forward contracts. The most frequently applied
valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including
the credit quality of counterparties, foreign exchange spot and forward rates, interest rate curves and forward rate curves of the underlying
commodity.
• Fair values of the Group’s interest-bearing loans and borrowings are determined by using the DCF method using a discount rate that reflects the
issuer’s borrowing rate as at the end of the reporting year. As the external debt is all at variable rate the fair values are deemed to be identical to the
carrying values. The rate at which interest is paid on the shareholder debt is deemed to be representative of that which would have been assigned if
the debt was issued as at the end of the reporting year.
• The financial liabilities which are not recognised at fair value but for which fair value is disclosed are deemed to be level 2 hierarchy measurements,
with the exception of shareholder debt which is deemed to be a level 3 valuation.
• There are not deemed to be any significant unobservable inputs to valuation.
c) Financial risk management objectives and policies
The Group’s principal financial liabilities, other than derivatives, comprise interest-bearing borrowings and trade and other payables. The main purpose
of these financial liabilities is to finance the Group’s operations.
The Group’s principal financial assets include trade and other receivables, and cash and cash equivalents that derive directly from its operations.
TheGroup also enters into derivative transactions. Due to timing there are no unsettled derivative contracts as at the end of the reporting year.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of these risks. All derivative
activities for risk management purposes are carried out by individuals that have the appropriate skills, experience and supervision. It is the Group’s policy
that no trading in derivatives for speculative purposes may be undertaken.
113Annual Report 2021 Stelrad Group plc
30 Financial instrument disclosures continued
c) Financial risk management objectives and policies continued
The Group has established a risk and financial management framework, the primary objectives of which are to protect the Group from events that
may hinder the achievement of financial performance objectives. These are summarised below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk
comprises three types of risk: interest rate risk, currency risk and commodity price risk. Financial instruments affected by market risk include interest-bearing
borrowings and derivative financial instruments.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Group’s exposure to the risk of changes in market interest rates relates primarily to long-term interest-bearing borrowings.
The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate borrowings. To manage this, where deemed
appropriate, the Group enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and
variablerate interest amounts calculated by reference to an agreed-upon notional principal amount.
At 31 December 2021 and 31 December 2020, no interest rate swaps are in place. Approximately 14% (2020: 88%) of the Group’s borrowings are
at a fixed rate of interest.
Interest rate risk – sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected.
The analysis does not include cash balances. With all other variables held constant the Group’s profit before tax would be impacted as follows:
Effect on profit
Increase/ before tax
Year ended 31 December 2021 decrease £’000
SONIA/Euribor +0.5% (79)
SONIA/Euribor -0.5% 16
Effect on profit
Increase/ before tax
Year ended 31 December 2020 (Unaudited) decrease £’000
Libor/Euribor +0.5% (96)
Libor/Euribor -0.5% 55
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange
rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue and
expenses are denominated in different currencies) and the Group’s net investments in foreign subsidiaries.
The Group manages its foreign currency risk by hedging transactions that are expected to occur within a maximum twelve-month period. There were
no foreign currency exchange contracts in place at 31 December 2021 or 31 December 2020.
The Group hedges its exposure to fluctuations on the translation into GBP of its foreign operations by holding net borrowings in foreign currencies,
including intercompany loans.
Foreign currency risk – sensitivity
The following tables demonstrate the sensitivity to a reasonably possible change in the Euro and USD exchange rates, with all other variables
held constant. The impact on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities including non-
designated foreign currency derivatives. The impact on the Group’s equity is due to the monetary items that form part of the net investment in
foreign operations. No sensitivity is performed against Turkish Lira on the basis that all Turkish Lira monetary assets and liabilities are held by Termo
Teknik Ticaret ve Sanayi A.S. whose functional currency is Turkish Lira. The Group’s exposure to foreign currency changes for all other currencies is
not material.
The movement in equity arises from changes in Euro denominated borrowings in the hedge of net investments in European operations.
Thesemovements will offset the translation of the European operations’ net assets into Sterling – this movement is not shown.
Stelrad Group plc Annual Report 2021114
FINANCIAL STATEMENTS
Notes to the consolidated financial statements continued
for the year ended 31 December 2021
30 Financial instrument disclosures continued
c) Financial risk management objectives and policies continued
Foreign currency risk – sensitivity continued
Effect on profit
Change in before tax
Euro rate
(1)
£’000
2021 +10% (915)
-10% 1,118
2020 (Unaudited) +10% (822)
-10% 1,004
Effect on profit
Change in before tax
USD rate
(1)
£’000
2021 +10% 2,371
-10% (2,898)
2020 (Unaudited) +10% 818
-10% (1,000)
(1) A + movement indicates GBP strengthening relative to the other currency.
Commodity price risk
The Group is affected by the price volatility of certain commodities. Its operating activities require a continuous supply of steel which poses a risk
due to the volatility of the price of the steel. The Group seeks to manage its exposure to commodity price risk by holding enough stock to negate
short-term price fluctuations and if necessary allow sufficient time to pass price changes through to customers.
Demand risk
The market for the Group’s goods is subject to movements in demand as the demand for new housing or upgrades to existing housing stock varies.
The Group manages these variations through careful forecasting and flexing of production volumes. Financing arrangements anticipate demand
changes and associated working capital movements.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with
banks and other financial institutions, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by each business unit. Overseas subsidiaries have credit insurance policies in place to minimise the risk of trade debts
going bad without recompense. UK subsidiaries have no credit insurance policy in place due to the cost of insurance not being justified by the low risk
of non-recoverability with a large proportion of receivables being due from the three major customers with strong credit ratings.
Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this
assessment.
Outstanding customer receivables are regularly monitored.
An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables
are grouped into homogeneous groups and assessed for impairment collectively. The calculation is based on actual incurred historical data. The
maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets.
The Group does not hold collateral as security. The Group evaluates the concentration of risk with respect to trade receivables as medium, as it has
several large customers in linked markets.
Note 21 discloses information about the credit risk exposure on the Group’s trade receivables using a provision matrix.
Deposits with banks and other financial institutions
Credit risk from balances with banks and other financial institutions is managed by the Group’s treasury team in accordance with the Group’s policy.
Investments of surplus funds are made only with approved counterparties. The Group’s maximum exposure to credit risk is the cash and cash
equivalents balance outlined in the balance sheet at 31 December 2021.
115Annual Report 2021 Stelrad Group plc
30 Financial instrument disclosures continued
Liquidity risk
The Group monitors its risk to a shortage of funds using monitoring requirements on a daily basis looking out over various time periods. The Group’s
objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans, bank revolver and finance leases. The
Group’s policy is that not more than 10% of borrowings should mature in the next twelve-month period.
Approximately 2.7% of the Group’s debt will mature in less than one year at 31 December 2021 (2020: 3.8%) based on the carrying value of borrowings
reflected in the financial statements. The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low.
Access to sources of funding is sufficiently available.
At 31 December 2021, the Group had available £23,500,000 (2020: £26,202,000) of undrawn committed borrowing facilities.
The table summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments. Interest-bearing loans
comprise interest and principal, with interest determined based on rates prevailing at the balance sheet date.
<1 year 1 to 5 years >5 years Total
Year ended 31 December 2021 £’000 £’000 £’000 £’000
Lease liabilities 1,900 5,581 2,173 9,654
Interest-bearing loans 1,567 62,549 — 64,116
Trade and other payables 80,025 — — 80,025
83,492 68,130 2,173 153,795
<1 year 1 to 5 years >5 years Total
Year ended 31 December 2020 (Unaudited) £’000 £’000 £’000 £’000
Lease liabilities 1,774 6,545 2,750 11,069
Ultimate shareholder loans — — 67,411 67,411
Deferred consideration — — 202 202
Interest-bearing loans 1,946 9,500 — 11,44 6
Trade and other payables 48,206 — — 48,206
51,926 16,045 70,363 138,334
The above tables do not include the interest cash flows for the ultimate shareholder loan notes. The amount shown in the tables includes the
principal amount plus accrued interest up to the balance sheet date.
Stelrad Group plc Annual Report 2021116
FINANCIAL STATEMENTS
2021
Notes £’000
Assets
Non-current assets
Investments 9 115,908
Amounts due from subsidiary undertakings 10 21,553
137,461
Current assets
Other receivables 11 98
Total assets 137,559
Equity and liabilities
Equity
Share capital 13 127,353
Share premium 13,391
Accumulated losses (4,135)
Total equity 136,609
Current liabilities
Other payables 12 950
Total liabilities 950
Total equity and liabilities 137, 559
As permitted by section 408 of the Companies Act 2006, the Company’s statement of profit or loss has not been included in these financial statements.
The Company incurred a loss for the period from 8 October 2021 to 31 December 2021 of £4,135,000.
The financial statements on pages 116 to 120 were approved by the Board of Directors on 14 March 2022 and signed on its behalf by:
George Letham
Chief Financial Officer
Company balance sheet
as at 31 December 2021
117Annual Report 2021 Stelrad Group plc
Attributable to the owners of the parent
Issued share capital Share premium Accumulated losses Total
£’000 £’000 £’000 £’000
At incorporation on 8 October 2021 50 — — 50
Loss for the period — — (4,135) (4,135)
Total comprehensive expense — — (4,135) (4,135)
Share for share exchange 115,659 — — 115,659
Shares issued 11,644 13,391 — 25,035
At 31 December 2021 127,353 13,391 (4,135) 136,609
Company statement of changes in equity
for the period ended 31 December 2021
Stelrad Group plc Annual Report 2021118
FINANCIAL STATEMENTS
1 Corporate information
Stelrad Group plc (the “Company”) was incorporated in England and Wales on 8 October 2021 as a public company, limited by shares. The Company
isincorporated, domiciled and registered in England and Wales, with its registered office situated at 69-75 Side, Newcastle upon Tyne, Tyne and Wear,
UnitedKingdom NE1 3JE.
The principal activity of the Company is that of a holding company.
On 10 November 2021, the entire issued share capital of the Company was admitted to the premium listing segment of the Official List of the
Financial Conduct Authority and to trading on the London Stock Exchange’s Main Market for listed securities.
2 Basis of preparation
The Company has presented a period from incorporation on 8 October 2021 to 31 December 2021. The financial statements have been prepared
on a going concern basis under the historical cost convention and in accordance with United Kingdom Generally Accepted Accounting Policy
(Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (“FRS 102”)) in conformity with
therequirements of theCompanies Act 2006.
The Company has taken advantage of the following disclosure exemptions permitted by FRS 102:
• the requirements of section 7 Statement of Cash Flows and section 3 Financial Statement Presentation, paragraph 3.17(d);
• the requirements of section 11 Financial Instruments, paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and
11.48(c); and
• the requirements of section 33 Related Party Disclosures, paragraph 33.7.
The Company financial statements are presented in GB Pounds and all values are rounded to the nearest thousand (£’000), except when otherwise indicated.
In preparing these financial statements on the going concern basis, the Directors have considered the Company’s current and future prospects and
its availability of cash resources and financing and the Group’s financial position. The Company is directly impacted by the Group’s going concern
position which is as follows:
The Group meets its day-to-day working capital requirements through bank loan facilities which are in place up to November 2026. At the year-end
date the Group had drawn down £56.5 million of an £80 million revolving credit facility. The remainder of the facility and significant cash balances of
£15.6 million were available to enable day-to-day working capital requirements to be met.
As part of its year-end review, management has performed a detailed going concern review, based on severe but plausible conditions, looking at the
Group’s liquidity and banking covenant compliance, and examining expected future performance. Based on the output of this going concern review,
management has concluded that the Group will be able to continue to operate within its existing facilities and as such the financial statements have
been prepared on a going concern basis.
Details of the Group’s going concern assessment can be found in the Strategic Report on page 46.
3 Summary of significant accounting policies
The accounting policies outlined below have been applied consistently, other than where new policies have been adopted.
a) Taxation
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the
countries where the Group operates and generates taxable income.
Current income tax is recognised in income unless it relates to items recognised in other comprehensive income/(expense) or directly in equity, in
which case the current income tax is recognised in other comprehensive income/(expense) or directly in equity respectively. Management periodically
evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.
b) Dividends
Final dividends are recorded in the financial statements in the period in which they are approved by the Company’s shareholders. Interim dividends are
recorded in the period in which they are approved and paid.
c) Investments
Investments are stated at cost less any provision for impairment.
d) Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three
months or less.
e) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Notes to the Company financial statements
for the period ended 31 December 2021
119Annual Report 2021 Stelrad Group plc
4 Summary of significant accounting judgements, estimates and assumptions
The following judgements have had the most significant effect on amounts recognised in the financial statements:
Investments
The Company assesses, at each reporting date, whether there is an indication that any investment may be impaired. If any indication exists, or when
annual impairment testing for an investment is required, the Company estimates the investment’s recoverable amount. In assessing an investment’s
recoverable amount, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time.
5 Employee benefit expense
The Company does not have any employees, other than Directors, and does not have any employee benefit expenses.
6 Directors’ remuneration
The Directors of the Company are also directors of fellow subsidiary undertakings. The Directors received remuneration which was paid by a fellow
subsidiary undertaking and not recharged to the Company. These emoluments are disclosed in the Group Directors’ remuneration note (note 12)
ofthe consolidated financial statements and the Directors’ Remuneration Report on pages 60 to 73.
7 Auditors’ remuneration
The Company has incurred audit fees of £8,000 for the current period which are borne by Stelrad Management Limited.
8 Dividends
The Board is recommending a dividend of 0.96 pence per share, which, if approved, will mean a total dividend payment of £1,223,000.
The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these
consolidated financial statements.
9 Investments
£’000
At 8 October 2021 —
Acquisition via share for share exchange 115,658
Acquisition of investment via dividend in specie 250
At 31 December 2021 115,908
On 10 November 2021, the Company issued ordinary shares in a share for share exchange with the shareholders of Noosa Holdings Jersey Limited.
Consequently the Company became the direct owner of 100% of the shares in Noosa Holdings Jersey Limited. Also on 10 November 2021,
NoosaHoldings Jersey Limited made a dividend in specie on its investment in Stelrad Radiator Group Limited to the Company.
As the Company is reporting under FRS 102, under section 615 of the Companies Act 2006, the Company opted to record its investment in the
shares acquired at an amount equal to the aggregate share capital only.
A list of the Company’s investments in subsidiary undertakings can be found in note 14.
10 Amounts due from subsidiary undertakings
2021
£’000
Amounts due from subsidiary undertakings 21,553
11 Other receivables
2021
£’000
Other receivables 98
12 Other payables
2021
£’000
Other payables 950
Stelrad Group plc Annual Report 2021120
FINANCIAL STATEMENTS
Notes to the Company financial statements continued
for the period ended 31 December 2021
13 Share capital and reserves
2021 2021
Number £
Authorised, called up and fully paid
Ordinary shares of £1 each 127,352,555 127,352,555
The movements in the ordinary share capital during the period ended 31 December 2021 were as follows:
Shares Share capital
Number £
At 8 October 2021 50,000 50,000
Share for share exchange 115,658,370 115,658,370
Shares issued 11,6 44,185 11,6 44,185
At 31 December 2021 127,352,555 127,352,555
For full details of share transactions during the period, see note 25 of the consolidated financial statements.
Subsequent to the period end, on 25 January 2022, a capital reduction application was approved by the courts, reducing the value of ordinary
shares in issue from £1 to £0.001. Under the same application the courts approved the reduction of the Company’s share premium account in full.
Thereduction of capital and share premium will be transferred to accumulated losses.
14 Subsidiary undertakings
The registered address and principal place of business of each subsidiary undertaking are shown in the footnotes below the table. The financial
performance and financial position of these undertakings are included in the consolidated financial statements.
Voting rights held
2021
Name of company Country of incorporation Holding % Nature of business
Stelrad Radiator Group Limited
(1)
United Kingdom Ordinary 100 Holding company
*Stelrad Radiator Holdings Limited
(1)
United Kingdom Ordinary 100 Holding company
*Stelrad Management Limited
(1)
United Kingdom Ordinary 100 Management services
*Stelrad Limited
(1)
United Kingdom Ordinary 100 Radiator manufacturer
*Caradon Polska Sp ZOO
(2)
Poland Ordinary 100 Radiator distributor
*Caradon Stelrad B.V.
(3)
The Netherlands Ordinary 100 Radiator manufacturer
*Henrad NV
(4)
Belgium Ordinary 100 Radiator distributor
*Termo Teknik Holdings Limited
(1)
United Kingdom Ordinary 100 Holding company
*Termo Teknik Ticaret ve Sanayi A.S.
(5)
Turkey Ordinary 100 Radiator manufacturer
*ISG Heating Equipment (Shanghai) Co, Ltd
(6)
China Ordinary 100 Radiator distributor
*Caradon Heating CZ SRO
(7)
Czech Republic Ordinary 100 Radiator distributor
*Hudevad Radiator Design A/S
(8)
Denmark Ordinary 100 Radiator distributor
Noosa Holdings Jersey Limited
(9)
Jersey Ordinary 100 Holding company
* Held by subsidiary companies.
(1) Registered office is 69–75 Side, Newcastle upon Tyne, Tyne and Wear NE1 3JE, United Kingdom.
(2) Registered office is Zakliki Z Mydlnik Street, no. 16, 30-198 Kraków, Poland.
(3) Registered office is Kathagen 30, 6361 HG, Nuth, the Netherlands.
(4) Registered office is Welvaartstraat (HRT) 14 Map box 6, 2200 Herentals, Belgium.
(5) Registered office is Eski Buyukdere Caddesi, Park Plaza Bina No: 14 Kat: 7, 34467 Sariyer, Istanbul, Turkey.
(6) Registered office is Room 809, No.8 Dongan Rd, Xuhui District, Shanghai, P.R. China 200032.
(7) Registered office is Ostrava-Slezská-Ostrava, Hradní 27/37, PSČ 710 00, Czech Republic.
(8) Registered office is Ambolten 37, Kolding 6000, Denmark.
(9) Registered office is 15 Esplanade, St Helier JE1 1RB, Jersey.
The dormant subsidiaries in the Group comprise: Woolamai Group UK Limited and Henrad (UK) Limited. Both are incorporated in the UK
(1)
and
100% of the ordinary shares are owned.
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
Website: www.stelradplc.com
Registered in England and Wales
Company number: 13670010
Company Secretary
Computershare Governance Services, UK
Moor House
120 London Wall
London
EC2Y 5ET
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
Tel: +44 (0) 370 703 6254
External independent auditors
PricewaterhouseCoopers LLP
Central Square South
Orchard Street
Newcastle upon Tyne
NE1 3AZ
Corporate broker
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
Legal adviser
Clifford Chance
10 Upper Bank Street
London
E14 5JJ
Financial PR adviser
Powerscourt
11 Tudor Street
London
EC4Y 0AH
Tel: +44 (0) 20 7250 1446
Media enquiries: stelrad@powerscourt-group.com
Principal bankers
National Westminster Bank plc
16 Northumberland Street
Newcastle upon Tyne
NE1 7EL
Barclays PLC
1 Churchill Place
London
E14 5HP
Shareholder information
CBP011506
Stelrad’s commitment to environmental issues is reflected
in this Annual Report, which has been printed on Creator
Silk, an FSC
®
certified material. This document was printed
by Opal X using its environmental print technology, 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.
121Annual Report 2021 Stelrad Group plc
Stelrad Group plc
69–75 Side
Newcastle upon Tyne
Tyne and Wear
NE1 3JE
Stelrad Group plc Annual Report 2021