Strong H1 performance, full year expectations increased

Six months ended 30 June 2025

¹Adjusted results for the Group have been presented before exceptional items and adjusting items (2025: net expense of £6.7m, 2024: net income of £3.7m) relative to statutory profit as explained in Alternative Performance Measures (APM) within note 4. Presenting these measures allows a consistent comparison with prior periods.

²EBITDA, adjusted EBITDA and net debt before leases are APMs, as explained in note 4. They are presented above under the statutory heading, being calculated with reference to statutory results without adjustment.

TRADING AND RESULTS

•     Revenue of £195.1m increased 20.4% relative to the prior period (2024: £162.1m) driven by strong volume growth and modest selling price progression

•     UK brick industry despatches to the end of May 2025 increased by 14% relative to the prior year

•     Recovering demand primarily driven by housebuilding while RM&I demand remains subdued

•     Forterra's weighting toward housing has driven outperformance relative to the wider brick market, although market share remains below 2022 levels

•     Strong improvement in adjusted EBITDA which is up 23.0% with adjusted PBT up 82.4% vs prior year

•     Strong operating cash flow performance delivered better than expected debt reduction, with net debt before leases of £69.4m (2024 year end: £84.9m) equating to 1.4 x adjusted EBITDA on a last 12 months (LTM) banking covenant basis

STRATEGY AND CAPITAL ALLOCATION

•     Strategic margin and cash flow accretive proposals to exit the non-core Formpave and Bison Bespoke businesses announced with necessary consultation processes underway. Bison flooring unaffected

•     Good progress with the commissioning of the new Wilnecote brick factory with the kiln now lit. Improving market demand enables Desford production uplift in H2

•     Commissioning of the brick slip production line at Accrington progressing well with focus now on product development with the initial range of 14 slips expected to be launched to market in H2

•     £170m revolving credit facility successfully extended to June 2028 on existing terms

•     Interim dividend of 1.9 pence per share (2024: 1.0 pence) reflecting improved trading environment and strong reduction in net debt

OUTLOOK

•     The Board is encouraged by the Group's H1 performance, with demand for most products ahead of both the prior year and the Board's previous expectations

•     With H2 adjusted EBITDA expected to be modestly ahead of the H1 figure of £29.9m, we now expect the Group's 2025 adjusted EBITDA to be ahead of our previous expectations. This is expected to translate to adjusted PBT being significantly ahead of previous expectations due to broadly fixed depreciation and amortisation and reducing finance expense

•     While we currently expect the present demand pattern to continue in the coming months, we remain cautious as to the fragility of the UK economy, and the impact it may have on the new housing market

•     Looking beyond the current financial year, the Board remains confident that our recent investments in new production capacity leave the Group well placed to benefit from recovery in our key markets

Neil Ash, Chief Executive Officer, commented:

"We saw a strong uplift in results in the period, supported by improved demand from the volume housebuilding sector, with despatches significantly ahead of the prior year. This result, coupled with our expectations for the second half, gives us confidence to modestly increase our adjusted EBITDA expectations for the full year.

"We continue to execute our strategy with good progress being made at Wilnecote, with the kiln now lit; at Accrington, with our initial range of brick slips expected to be launched shortly; and at Desford, with both kilns to operate simultaneously for the first time in H2. We are also currently consulting on our strategic proposals to exit our non-core businesses of Formpave and Bison Bespoke, both of which will be margin and cash flow accretive.

"Looking beyond the current financial year, the Board remains confident that its recent investments in new production capacity leave the Group well placed to benefit from the continuing recovery of our key markets."

A presentation for analysts will be held today, 29 July 2025, at 9.45am. A live video webcast of the presentation will be available on the Investors section of our website (https://forterraplc.co.uk/)

ABOUT FORTERRA PLC

Forterra is a leading UK manufacturer of essential clay and concrete building products, with a unique combination of strong market positions in clay bricks, concrete blocks and precast concrete flooring. Our heritage dates back many decades and the durability, longevity and inherent sustainability of our products is evident in the construction of buildings that last for generations; wherever you are in Britain, you won't be far from a building with a Forterra product within its fabric.

Our clay brick business combines our extensive secure mineral reserves with modern and efficient high-volume manufacturing processes to produce large quantities of extruded and soft mud bricks, primarily for the new build housing market. We are also the sole manufacturer of the iconic Fletton brick, sold under the London Brick brand, used in the original construction of nearly a quarter of England's housing stock and today used extensively by homeowners carrying out extension or improvement work. Within our concrete blocks business, we are one of the leading producers of aircrete and aggregate blocks, the former being sold under one of the sector's principal brands of Thermalite. Our precast concrete products are sold under the established Bison Precast brand, and are utilised in a wide spectrum of applications, from new build housing to commercial and infrastructure.

RESULTS FOR THE PERIOD

The Group delivered a strong performance in the first half of 2025 (the 'period') supported by improving demand from the volume housebuilding sector driving the delivery of an H1 result which is ahead of the Board's previous expectations.

Revenue in the period of £195.1m represents an increase of 20.4% on the prior period (2024: £162.1m). This increase reflects the improved market conditions with despatches of most of our products well ahead of the prior year comparatives which were partly impacted by poor weather. Adjusted EBITDA for the period was £29.9m, (2024: £24.3m) an increase of 23.0%. Group adjusted EBITDA margin of 15.3% compares to 15.0% in 2024.  Finance expenses reduced to £3.4m (2024: £4.9m) leading to adjusted PBT of £16.6m, an increase of 82.4% on the prior period comparative (2024: £9.1m).

The adjusted effective rate of corporation in the period was 26.1% (2024: 26.6%) which is in line with our expectations and closely aligned to the 25% headline rate of corporation tax. Adjusted profit before tax of £16.6m compares with a 2024 profit of £9.1m, an increase of 82.4%. Statutory profit before tax of £9.9m compares with a 2024 profit of £12.8m.

OUR MARKETS

After two challenging years, H1 2025 saw improved trading conditions driven by strong demand from the housebuilding sector, although repair, maintenance and improvement (RM&I) demand remains subdued. Department for Business and Trade figures show that domestic brick despatches increased 14% relative to the prior year in the five months to May 2025, yet still remain 27% below 2022 levels.

With the improving demand environment largely driven by volume housebuilding, we have benefited from our structural exposure to this segment of the market reversing a trend seen through 2023 and 2024 when we mechanically suffered a loss of market share due to our greater exposure to this sector. Whilst our brick market share has recovered, it remains below 2022 levels, in part a result of our disciplined approach to pricing. With cost effectiveness of particular importance to the house building sector, demand for our most cost effective extruded brick range has outstripped demand for both soft mud bricks along with our RM&I focused London Brick. With extruded, or wire cut bricks representing around two thirds of our production capacity and Government support for increased housebuilding focusing on the affordable end of the market, we are well positioned to meet future demand. 

Having commenced the year with significant brick inventories, our ability to supply bricks was not constrained during the period, although strong demand for other products including aircrete blocks and precast concrete floor beams has depleted our inventories, with despatches temporarily constrained by production whilst we increased output in these areas.

In the previous two years we have been unable to successfully implement our desired price increases. Improving market conditions have now enabled the delivery of modest price increases necessary to broadly offset cost inflation. Pricing in the brick market remains competitive and we have retained our disciplined approach in this regard. We have experienced a mix effect in our pricing from selling a greater proportion of cheaper extruded bricks. Beyond brick, the pricing environment has varied somewhat, with price increases higher in some products than others. For example, the market for aircrete blocks has experienced tight supply and demand dynamics, allowing for the implementation of higher price increases.

We continue to take encouragement from the Government's commitment to materially increase housebuilding and the likelihood that over time this will increase demand for our products. With the addition of our new Desford brick factory, along with the recommissioning of the Wilnecote factory, our brick manufacturing capacity will soon be 15% higher than it was during 2022, with this increase being the largest in the market. Both the wider UK brick industry and our own business were capacity constrained in the last cycle with the country importing approximately 570m bricks in 2022 when only 208,000 new home completions were registered. With the largest investment in new capacity we would expect our domestic market share to rise above 2022 levels as the industry becomes saturated again.

SUSTAINABILITY

We are continuing to drive forward our sustainability agenda making further progress on a number of fronts. Each of our organic investments provides a meaningful sustainability benefit with the Desford and Wilnecote brick factories both reducing carbon emissions by approximately 25% per brick relative to their predecessor factories. Our innovative brick slip production facility at Accrington offers real sustainability benefits in manufacturing brick slips with around a 75% reduction in energy consumption, raw material usage and embodied carbon relative to traditional bricks.

The opportunities associated with decarbonising cement and concrete production remain a key focus. We have  entered into a partnership to transform already calcined brick production waste from our unique London Brick manufacturing process into a cement substitute which we are already using in our own concrete products. In the second half we expect our usage of this material to increase with our partner making this unique product commercially available to other users. As custodian of over 90m tonnes of clay reserves, the opportunities to utilise our surplus clay reserves to create calcined clay which can be used as a lower carbon cement substitute are of great interest to us and we continue to explore this opportunity through engagement with a number of potential partners.  

In addition we continue to engage with a host of potential partners in our quest to decarbonise our brick business. These discussions centre upon alternative fuels in the form of hydrogen and also carbon capture and storage technologies, both of which will be vital in reaching our net zero ambitions. Alongside this, we continue to focus on our initiatives to reduce the levels of plastic packaging within our business.

STRATEGY AND CAPITAL ALLOCATION

Our strategy which is designed to deliver long-term earnings and cash flow growth is summarised as follows:

•     Strengthen the core: Investing in new capacity to deliver growth in sales volumes along with enhanced efficiency

•     Beyond the core: Expanding our product range beyond our traditional focus of mainstream residential construction focusing on new and evolving solutions such as brick slips

•     Sustainability: Making our business more sustainable in everything we do

•     Safety and engagement: Safety remains our number one priority and through prioritising employee engagement we will maximise the potential of our workforce

This, along with our capital allocation policy, which is centred on providing compelling returns for our shareholders, leaves the Group well placed to deliver long-term shareholder value.

The Group's capital allocation priorities are summarised as follows:

•     Strategic organic capital investment to deliver attractive returns

•     Attractive ordinary dividend policy

•     Bolt-on acquisitions as suitable opportunities arise in adjacent or complementary markets

•     Supplementary shareholder returns as appropriate

Whilst regrettable for our affected colleagues, the proposals to exit the two unprofitable non-core businesses, Formpave and Bison Bespoke precast are fully aligned with the Group's strategy and capital allocation priorities and will be both margin and cash flow accretive whilst facilitating greater management focus on the core business and the exciting growth opportunities offered by the 'Beyond the Core' arm of our strategy.

Continued strategic progress has been made during the period, with the Wilnecote brick factory now commissioning and the kiln now lit. The Wilnecote factory is designed to make a range of bricks aimed at the attractive commercial and specification market and will provide some diversification away from the cyclical new build housing market and the currently depressed RM&I market. The factory will also allow us to manufacture the famous Staffordshire blue bricks at a scale and efficiency not previously accessible to us. We expect to steadily ramp up production, initially recreating the old product range and then expanding the product range to provide a diverse range of bricks in a variety of colours and sizes. 

We have also made good progress with the commissioning of our brick slip production line at Accrington with the primary focus being on perfecting the manufacturing process as well as range design, where we expect to launch our initial range of 14 slips later this year. We have also made good progress with our new mechanically fixed slip system, 'Omnia', with the necessary product certifications due imminently. 

In light of the improved financial performance with reducing debt and leverage, the Board has declared an interim dividend of 1.9 pence per share (2024: 1.0 pence).

OUTLOOK

The Board is encouraged by the Group's H1 performance, with demand for most products ahead of both the prior year and the Board's previous expectations. With H2 adjusted EBITDA expected to be modestly ahead of the H1 figure of £29.9m we now expect the Group's 2025 adjusted EBITDA to be ahead of our previous expectations.  This is expected to translate to adjusted PBT being significantly ahead of previous expectations due to broadly fixed depreciation and amortisation and reducing finance expense. With a further reduction of both net debt and leverage in H2, year end leverage is expected to be a little above one times adjusted EBITDA.

While we currently expect the present demand pattern to continue in the coming months, we remain cautious as to the fragility of the UK economy and the impact it may have on the new housing market. Looking beyond the current financial year, the Board remains confident that our recent investments in new production capacity leave the Group well placed to benefit from recovery in our key markets.

BRICKS AND BLOCKS

¹Revenue is stated before inter-segment eliminations.

²Both EBITDA and adjusted EBITDA are APMs, as explained within note 4. EBITDA is presented above under the statutory heading, being calculated with reference to statutory results without adjustment.

³Overhead allocations are costs centrally incurred on behalf of both segments, including general administrative expenses.

Bricks and Blocks revenues in the period increased by 18.4% with this driven primarily by increased brick sales volumes. Aircrete blocks also saw strong volume growth although to some extent this was constrained by availability of inventory as we ramped up production through Q2. Despatches of aggregate blocks also increased but at more modest rates.

As outlined above, despite continued competitive market conditions, we have implemented necessary price increases across the product range to broadly offset cost inflation. Price increases have to some extent varied by product with aircrete block, where supply and demand dynamics are favourable, seeing the greatest level of increase. Comparisons of pricing with the prior period will be influenced by the slight price erosion that continued through 2024. As explained previously, brick prices increased by a cumulative c.50% in 2022 and then fell back slightly through 2023 and 2024.

Brick pricing in the period was also subject to a customer and product mix effect with increased demand for cheaper extruded bricks driven by our large housebuilding customers, with demand from the Repair, Maintenance and Improvement sector, which includes our London Brick range, remaining subdued. 

Segmental adjusted EBITDA in the period of £27.5m compares to £22.7m in 2024 with the 2025 H1 EBITDA margin of 17.8%, as stated after overhead allocations, ahead of the H1 2024 equivalent of 17.4% as the early benefits of greater operating efficiency begin to be seen with modest price increases offsetting cost inflation.

Our cost base remains consistent with our previous expectations with underlying low single digit cost inflation coupled with the increase in Employers National Insurance contributions. Energy prices remain stable with the Group accessing the full financial benefits of the 15 year solar power purchase agreement from 1 April 2025. We have taken advantage of this stability in securing good coverage of our gas requirements for the next three years and we have also recently extended our contractual arrangements, providing us the optionality to secure our gas requirements out to 2030 as market opportunities allow.

Given the improving demand seen during the period, we have increased production output where appropriate with production of aircrete blocks increased in two steps, such that both of our aircrete block factories are now operating to capacity. We will increase brick production in the second half by increasing output at our Desford factory where we will run both kilns simultaneously for the first time.

In line with our expectations, whilst our H1 results show the early benefits of our operating leverage, our cost base includes a degree of inefficiency in ramping up production, including the training of new members of staff. In addition to this, we will have some additional cost in 2025 as we postponed some non time-critical spend in 2023 and 2024. With current demand varying by market sector and product type, until demand improves across all products, including our RM&I focused London Brick range, there will continue to be constraints on our ability to benefit fully from our operating leverage.

H2 2025 will also see the resumption of production at our Wilnecote brick factory following its redevelopment into a highly flexible factory capable of producing a diverse range of bricks aimed at the attractive commercial and specification market. Commissioning is underway with the kiln now lit, and the first bricks are expected to be manufactured in the coming month.

 BESPOKE PRODUCTS

¹Revenue is stated before inter-segment eliminations.

²Both EBITDA and adjusted EBITDA are APMs, as explained within note 4. EBITDA is presented above under the statutory heading, being calculated with reference to statutory results without adjustment.

³Overhead allocations are costs centrally incurred on behalf of both segments, including general administrative expenses.

Our Bespoke Products segment currently comprises two businesses which have seen contrasting fortunes in the period. The largest component of this segment is our precast concrete flooring business with demand for its products driven almost exclusively by housebuilding, which has seen the same trend of encouraging demand recovery as seen in Bricks and Blocks. The smaller Bespoke Precast concrete business has struggled to make a profit in the period despite a 17.6% increase in revenue, with our proposal to exit this business outlined within this statement.

Segmental revenues in the period totalled £42.2m, an increase of £8.5m or 25.2% relative to 2024. The increase in demand for floor beams is reassuring, with these often purchased by groundworkers on behalf of the major housebuilders, and unlike bricks there is no history of stockpiling this product, suggesting that the improved brick demand we have experienced is supported by underlying building activity rather than restocking. 

Modest selling price increases were implemented during the period on a customer-by-customer basis. The cost base within this segment has remained broadly stable driven by variations in the cost of key inputs. Segmental adjusted EBITDA, after allocated group overheads, totalled £2.4m (2024: £1.6m). EBITDA margin prior to allocation of group overheads was 12.8% compared to 11.6% in 2024. We have disclosed previously that the method of allocation of overheads places an additional burden on this segment beyond that which would would be required if it was a stand-alone business.

Our proposal to exit the Bespoke Precast business within this segment does not impact the Bison flooring business and will have a negligible impact on segment profitability given its break even at best performance, however it will improve segmental EBITDA margins going forward.

ALTERNATIVE PERFORMANCE MEASURES

In order to provide the most transparent understanding of the Group's performance, the Group uses alternative performance measures (APMs) which are not defined or specified under IFRS and may not be comparable with similarly titled measures used by other companies. The Group believes that its APMs provide additional helpful information on how the trading performance of the business is reported externally and assessed internally by management and the Board.

Adjusted results for the Group have been presented before: i) exceptional items and ii) adjusting items.

EXCEPTIONAL ITEMS

Following the announcement and commencement of consultations on our strategic proposals to exit both our non-core Formpave block paving and the Bison Bespoke precast businesses, exceptional items in the period total £4.0m (2024: £2.8m) with the charge comprising £2.7m in respect of Formpave and £1.3m in respect of Bison Bespoke.  

Formpave manufactures and sells concrete block paving, with 2024 full year revenue of £5.9m, and is a small non-core part of the Group's bricks and blocks segment, contributing under 2% of group revenue. The business broke even in 2024 and is expected to be loss making in the current year. The factory now requires a significant level of capital investment to remain operational, hence our proposed exit.

Bison Bespoke precast which forms part of the Bespoke Products segment, generated revenue of £9.7m in 2024, accounting for under 3% of group revenues and 13.6% of Bespoke Products segmental revenue. This business has failed to exceed break even performance for a number of years and several attempts to improve upon this performance have not been successful. The freehold factory site is owned by the Group and holds significant land value, with options for disposal or subsequent use elsewhere within the Group presently under consideration. The Bison flooring business remains an important core operation and is unaffected by this proposal.

Exceptional costs comprise a non-cash impairment of tangible fixed assets, right-of-use assets and inventories totalling £3.5m, along with the recognition of a £0.5m provision for restructuring costs. In time we anticipate that we will be able to mitigate these costs. In addition, we expect to incur termination costs totalling £1.7m in the second half of the year, although as those impacted by these proposals had not been informed at the balance sheet date, this cost has not been provided in these interim financial statements and will be reported as an exceptional cost in H2.

The proposals to exit both non-core businesses are aligned to our long term strategy, demonstrating disciplined capital management, with each proposal being both cash flow and margin accretive, avoiding significant capex and releasing a valuable land asset, whilst at the same time enabling greater management focus on delivering our strategy of strengthening the core and seeking growth through expansion beyond the core.

ADJUSTING ITEMS

Realised and unrealised movements in forward energy purchases

In addition to exceptional items we have also identified further adjusting items, the separate disclosure of which presents our results in a manner that allows users of our financial statements to understand the underlying trading performance of the business, applying consistent treatments as used by management to monitor the performance of the Group.

As in the previous year, the Group recognises adjusting items in respect of both realised and open energy positions where due to the significant temporary fall in demand for our products seen in 2023 and the resulting cuts in production, committed energy purchased by the Group has or is expected to exceed consumption. Where forward energy contracts are expected to be utilised in full, we apply the own use exception within IFRS 9 Financial Instruments and these are not marked to market. However, where we have energy in excess of our anticipated needs secured under forward contracts, these contracts do not meet the own use exemption and as such are treated as derivatives and marked to market, resulting in gains and losses as market prices fluctuate.

In order to allow users of the accounts to understand this more operationally aligned method of reporting, any impact on the profit and loss as a result of this marked to market treatment, along with profits and losses on the sale of surplus energy, are shown as adjusting items. This is in line with internal reporting for the Group.

In the period, the Group realised a £0.6m gain in respect of surplus energy sold back to the market, which has been removed from the adjusted results. Alongside this, in presenting the adjusted results, the Group has removed the marked to market revaluation impact of energy derivatives in the period, with the adjusted results reflecting the cost of energy consumed at the forward purchased rate. This has resulted in a £4.8m benefit in the adjusted versus statutory results.

Accounting for carbon credits

The statutory results consider carbon credits as being utilised on a first in, first out basis. Under this method, the Group's free allocation of carbon credits is utilised before recognising any liability to purchase further credits, which has the effect of weighting the cost of compliance into the second half of the year rather than spreading the cost more evenly across the full year in line with production.

The Group's free allocation of carbon credits is based on expected emissions over the full compliance period, which is aligned to the Group's financial year. As such, we believe a more operationally aligned method for measurement, consistent with our management reporting, is to recognise the cost of carbon compliance over the full financial year using a weighted average basis, aligned proportionately with the production that drives our carbon emissions. Accordingly, this has been presented within the adjusted results for the period.

We believe this approach provides users of the interim accounts with a more representative presentation of underlying trading performance in the first half of the year. As at 30 June 2025, the impact of this is to decrease adjusted profit before tax by £1.5m (2024: £1.7m) relative to the statutory measure. This only affects the interim results and has no impact on the full year results. 

EARNINGS PER SHARE AND DIVIDEND

Adjusted earnings per share (EPS) in the period of 5.8 pence represents an increase of 81.3% relative to the 2024 equivalent EPS of 3.2 pence. EPS is calculated based on the average number of shares in issue during the period, adjusted for the shares held by the Employee Benefit Trust.

In light of the improved financial performance and reducing debt and leverage, the Board has declared an interim dividend of 1.9 pence per share (2024: 1.0 pence). Based upon its expectations of full year 2025 earnings, the Board has declared the interim dividend with the expectation of the total 2025 distribution being split approximately 1/3 interim, 2/3 final. The interim dividend will be paid on 10 October 2025 to shareholders on the register at 19 September 2025.

CASH FLOW AND WORKING CAPITAL

Adjusted operating cash flow in the first half of the year was an encouraging inflow of £30.0m (2024: 13.3m) driven by a strong EBITDA performance. This result again highlights the cash generating capabilities of the Group with disciplined working capital management and a strong trading performance counteracting the normal seasonal trend of an H1 increase in working capital. At 30 June 2025 finished goods inventories totalled £61.5m, compared to £66.6m at the end of 2024, as a result of demand driven destocking.    

Capital expenditure in the period totalled £7.3m, with £5.0m of this relating to our three ongoing strategic projects and the remainder being business as usual maintenance capex. During the period we spent £3.1m on the redevelopment of our Wilnecote factory and £0.9m on the brick slip facility at our Accrington plant, with the balance being attributable to Desford. This expenditure takes the total spend on Desford to £94.9m, Wilnecote to £31.7m and Accrington to £12.1m. In addition, borrowing costs totalling £1.4m (2024: £0.9m), comprising £1.0m (2024: £0.8m) and £0.4m (2024: £0.1m), related to the Wilnecote and Accrington projects respectively, were capitalised in the period with this amount excluded from the spend above.

We expect further capital expenditure totalling approximately £9.5m in the second half of the year bringing the full year total to around £17m with normal maintenance expenditure being H2 weighted in part driven by the timing of summer maintenance shut downs. 

Looking ahead, by the end of the year we expect our currently committed strategic capital spend to be complete aside from any outstanding retention and performance payments. We anticipate annual maintenance capital expenditure to be a maximum of £14m per annum although this is likely to vary significantly year on year, and in some years is likely to be significantly less than this sum. We continue to develop our pipeline of attractive organic strategic investment opportunities with market conditions and the Group's balance sheet being key factors in any future investment decisions. 

BORROWINGS AND FACILITIES

Closing net debt (excluding lease liabilities) was £69.4m (31 December 2024: £84.9m) with a further reduction in borrowing notwithstanding normal seasonal trends which normally drive an upward movement in H1. Leverage, as calculated in line with our banking covenants, was 1.4 times EBITDA (31 December 2024: 1.9 times) with improving market conditions, reduced capital spend and continued inventory reduction driving this reduction.   

The Group's credit facility comprises a committed revolving credit facility (RCF) of £170m which was successfully extended though the exercise of a 17 month extension option in the period now expiring in June 2028. At the period end a total of £85.0m was drawn on the facility (31 December 2024: £100.0m) leaving facility headroom of £85.0m.

Following the precautionary banking covenant relaxations agreed in early 2024, the Group's covenants have now returned to normal, being net debt/EBITDA (as measured before leases) of less than three times and interest cover of greater than four times, with these covenants measured twice annually. The business has traded within these covenants during the period and expects to continue to do so. In addition, the Group also benefits from an uncommitted overdraft facility of £10m.

Finance expense for the period totalled £3.4m (2024: £4.9m). Capitalised borrowing costs relating to the capital projects at Wilnecote and Accrington of £1.4m (2024: £0.9m) are excluded from this expense. The rate of interest payable on the Group's committed credit facility is determined by a margin grid that commences at SONIA plus 1.65% whilst leverage is under 0.5 times EBITDA, increasing to a margin of 2.5% should leverage exceed 2.5 times. During the first half, a margin over SONIA of 2.5% was payable falling to 2.25% on approval of the 2024 year end financial statements in March. With leverage under 1.5 times at 30 June 2025, the margin will reduce to 2.0% from the date of these financial statements.

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties facing the business have been appended to this interim statement and includes an update to each of the principal risks recently presented in the 2024 Annual Report and Accounts.

GOING CONCERN

At the balance sheet date, the Group's cash balance stood at £15.0m, with £85.0m borrowed against £170.0m of committed bank facilities, leaving undrawn facilities of £85.0m. The Group also benefits from an uncommitted overdraft facility of £10.0m. The Group meets its working capital requirements through these cash reserves and borrowings, and closely manages working capital to ensure sufficient daily liquidity, preparing financial forecasts and stress tests to ensure sufficient liquidity over the medium-term. The Group has operated within its banking covenants throughout the period, with funding secured through an RCF facility extending until June 2028. The facility is subject to covenant restrictions of net debt/EBITDA (as measured before leases) of less than three times and interest cover of greater than four times.

The Group continues to update internal forecasts 18 months ahead, reflecting current economic conditions, incorporating management experience, future expectations and sensitivity analysis. As at 30 June 2025, management are confident that the Group will remain resilient under all reasonably likely scenarios and will continue to have headroom in both its banking covenants and existing bank facilities. We have modelled a plausible downside scenario which sensitises volumes, increases in cost base and captures potential operational inefficiencies. Within this scenario product line sales volumes for 2025 remain between 3% and 27% below 2022, falling to between 11% and 38% below 2022 levels in 2026. Under this scenario there remains significant headroom against our covenants and available liquidity. Furthermore we have modelled a breach scenario to assess the fall in EBITDA required to breach the covenants within the credit facility in the period to 31 December 2026. Our assessment of the Group's going concern position benefits from the recent improvements in trading, coupled with reduced net debt and leverage, with the £140m programme of capital investment almost complete and reduced levels of capex in 2025, with limited capital commitments thereafter. Taking the above into consideration, the reduction in adjusted EBITDA necessary to trigger a breach in the Group's banking covenants is such that, adjusted EBITDA would need to fall significantly below 2024 levels prior to mitigations. Given current trading and our present market outlook, the probability of such a scenario is considered highly remote. Even if such a scenario was to occur, we have identified mitigations including reduced capital expenditure, dividend reductions and operational cost savings which we would implement should they be required.

Taking account of all reasonably possible changes in trading performance and the current financial position of the Group, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the going concern period to 31 December 2026. The Group therefore adopts the going concern basis in preparing these Condensed Consolidated Financial Statements.

FORWARD-LOOKING STATEMENTS

Certain statements in this half-yearly report are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to be correct. Because these statements contain risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking statements.

We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE INTERIM REPORT

We confirm to the best of our knowledge:

•     the Condensed Consolidated Financial Statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the UK;

•     the interim management report includes a fair review of the information required by:

a)   DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the Condensed Consolidated Financial Statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b)   DTR 4.2.8R of the Disclosure and Transparency Rules, being material related party transactions that have taken place in the first six months of the current financial year and any material changes in the related party transactions described in the annual report.

By order of the Board

28 July 2025