REG - Genuit Group PLC - Final Results
11/03/2025 07:15
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RNS Number : 0931A Genuit Group PLC 11 March 2025
Genuit Group plc
Audited results for the year ended 31 December 2024
Resilient performance with further margin improvement and strong cash
generation
Genuit Group plc ('Genuit', the 'Company' or the 'Group'), the UK's largest
provider of sustainable water, climate and ventilation solutions for the built
environment, today announces its audited results for the year ended 31
December 2024.
Financial Results FY 2024 FY 2023 Change
Revenue (£m) 561.3 586.5 (4.3%)
Alternative Performance Measures(1)
Underlying operating profit (£m) 92.2 94.1 (2.0%)
Underlying operating margin (%) 16.4 16.0 40 bps
Underlying profit before tax (£m) 79.3 80.5 (1.5%)
Underlying earnings per share (basic - pence) 24.6 25.2 (2.4%)
Underlying operating cash conversion (%) 99.3 87.7 1,160 bps
Leverage (times pro-forma EBITDA) 2 0.9 1.1 0.2
Statutory Measures
Operating profit (£m) 59.2 62.0 (4.5%)
Profit before tax (£m) 46.3 48.4 (4.3%)
(4.3%)
Earnings per share (basic - pence) 13.5 15.5 (12.9%)
Cash generated from operations (£m) 115.5 109.7 5.3%
Dividend per share (pence) 12.5 12.4 0.8%
(1) (Alternative performance measures (APMs) are used by the Group to assess
the underlying performance of the business. A definition of all the APMs is
set out in note 1 on page 21.)
(2) (Pro-forma EBITDA is reconciled in note 13 on page 33.)
Joe Vorih, Chief Executive Officer, said:
"2024 was another challenging year for the sector, with ongoing market
softness leading to reduced volumes across most segments. Against this
backdrop, I am pleased that the measures we have taken to gain market share
and drive productivity and efficiency, including through the deployment of the
Genuit Business System, have delivered a further improvement in margin and
strong cash generation. The acquisitions of Sky Garden and Omnie &
Timoleon have expanded our solution offering, and we have continued to develop
our acquisition pipeline.
"We saw some signs of market stabilisation in the second half of 2024 and
market volumes in the early part of this year have been in line with
management expectations. Our growth prospects remain strong, given the need
for investment in UK infrastructure and housing. As a result, we are
well-placed to take advantage of a market recovery when it comes, with strong
operational gearing and a robust balance sheet enabling us to continue
investing in Genuit's long-term success."
Financial Highlights
· Full year revenue of £561.3m decreased 4.3% year-on-year. Second
half revenue increased 0.5% on a like for like basis, following a 10.6%
decline in the first half, reflecting a stabilisation of market conditions.
· Full year underlying operating margin increased by 40 bps to
16.4%, driven by productivity gains through the Genuit Business System (GBS)
and purchasing savings, reflecting continued progress towards the medium-term
operating margin target of over 20%.
· Second half underlying operating margin was 80bps ahead of first
half and 10bps ahead of H2 2023, driving an 11% increase in underlying
operating profit versus the first half.
· Reported operating profit of £59.2m (2023: £62.0m) decreased
4.5% year-on-year.
· Focus on working capital improvement delivered strong underlying
operating cash generation of £91.6m, representing 99.3% cash conversion on a
post-capex basis and 107.6% cash conversion on a pre-capex basis.
· Net debt reduced to 0.9 times underlying pro-forma EBITDA at the
year-end (2023: 1.1 times), with de-leveraging resulting predominantly from
the strong operating cash generation.
· Underlying EPS decreased to 24.6p, due to lower reported
operating profit and the annualisation of the higher UK tax rate.
· The Board is proposing a total dividend per share of 12.5p (2023:
12.4p), in line with the Group's progressive dividend policy, reflecting the
strengthened balance sheet and the Board's confidence in medium-term
prospects.
Strategic and operational highlights:
Growth - Focusing on higher-growth, sustainability-driven markets, through organic growth and disciplined M&A opportunities.
· Climate Management Solutions (CMS) revenue of £161.6m reduced by
2.6% year-on-year on a reported basis (4.1% reduction on a like-for-like
basis), with underlying operating margin improved by 120 basis points to
14.9%.
§ Commercial market softness was partially offset by strong growth in
residential ventilation demand, including work to develop the Mechanical
Ventilation & Heat Recovery (MVHR) ventilation market, and promising Adey
performance in Q4.
§ Margin improvement reflected the impact of GBS projects, particularly in
Adey and Nuaire.
§ The integration of the acquired Omnie business with Nu-Heat underfloor
heating is proceeding well, with a focus on go-to-market strategy and
operational synergies.
· Water Management Solutions (WMS) revenue of £160.9m reduced by
5.6% year-on-year on a reported basis (7.5% reduction on a like-for-like
basis), at an underlying operating margin of 8.5%, down by 190 basis points.
§ Performance reflects challenging market conditions, including the impact of
project delays due to prolonged wet weather and low business confidence.
§ The adverse gearing associated with lower volumes impacted the operating
margin during the year and management will be accelerating implementation of
GBS initiatives in 2025, following successful deployment and improvement of
results in SBS and CMS.
§ The integration of the acquired Sky Garden business is proceeding well,
with a focus on growth and improving profitability through vertical solution
selling and increasing scale.
· Sustainable Building Solutions (SBS) revenue of £231.7m reduced
by 4.6% on a reported and like-for-like basis year-on-year, while underlying
operating margin improved 160 basis points to 23.5%.
§ Operating margin benefited from improvements in the Group's purchasing of
materials on an aggregated basis and GBS productivity enhancements.
§ Significant contract wins secured in Q4, associated with a competitor
exiting the UK market, are expected to deliver an increase in market share in
the first half of 2025.
Sustainability - Providing the lowest-carbon choice for our customers to maximise exposure to structural growth drivers.
· We achieved a 6.5% reduction in carbon emissions across our key
GHG categories (scopes 1, 2 (market-based) & 3: category 1 purchased goods
and services), supporting our customers who are increasingly focused on the
environmental impact of their supply chain.
· Recyclate polymer content of 52.0% in the year, reinforcing the
Group's position as a provider of solutions that cost-effectively enable
customers to de-carbonise the built environment and meet legislative
requirements.
Genuit Business System - Creating value through lean transformation and operational excellence.
· Group-wide deployment of the Genuit Business System generating
lean productivity and efficiency savings across the operational footprint and
in the back office, driven by strong colleague engagement.
· Polypipe Building Services used the GBS tool 'SMED' (Single
Minute Exchange of Dies) reducing changeover time by over 80%, avoiding
capital expenditure even considering projected growth, keeping delivery on
time and improving manufacturing productivity. This also will be a key
component for the site in its plan to improve stock turns by almost 25%
through this increased flexibility.
· Through the use of a kaizen event and the GBS Daily Management
tool, the production of Environmental Product Declarations (EPDs) (an emerging
critical tool in our regulatory landscape and a critical path to enable our
growth as a low-carbon supplier) has been increased by over 8 times.
· Over 80% of the Genuit Leadership Team have attended GBS
orientation programmes and 15% of total employees have participated in lean
kaizen events or training so far, with more planned in 2025.
People and Culture - Enabling growth through the capability, expertise and development of our employees.
· Ongoing rollout of the Genuit Leadership programme, bringing
expertise and unified culture to leaders across the Group, reinforcing the
Genuit Business System and unlocking business benefits.
· Continued focus on skills and career development at all levels
(attaining 'Gold' status in The 5% Club - with 18% of employees now on Earn
& Learn schemes). Investing in the workforce is key to managing attrition
and maximising operational leverage as volumes increase.
Outlook
· Building on signs of market stabilisation witnessed in H2'24,
trading for 2025 has started in line with management expectations.
· The Group is targeting, through productivity and balanced cost
and price management, to offset the previously disclosed £5m in-year impact
of the Autumn Budget on operating profit margin for the full year.
· Despite these near-term employment cost headwinds, the Group
expects to deliver the medium-term >20% target margin through productivity
gains from the Genuit Business System and operating leverage as volumes
increase.
· The Group is confident in the medium-term growth prospects for
the business, given its exposure to structural growth drivers including:
o the UK Government's focus on increasing housebuilding to address the
structural shortage of homes and on facilitating infrastructure projects that
contribute to economic growth;
o the need to innovate with low-labour and value-add solutions in order to
enable higher levels of construction activity, given labour shortages in the
industry;
o the need for increased levels of stormwater management and attenuation due
to the increased frequency and intensity of significant rainfall events,
coupled with the AMP8 water utility spending cycle which will focus spend on
preventing discharge associated with stormwater overflow; and
o the drive to de-carbonise the built environment and the associated
electrification and the improvement of air quality in both residential and
commercial buildings.
Enquiries:
Joe Vorih, Chief Executive Officer Tim Pullen, Chief Financial Officer
+44 (0) 1138 315315
Headland Consultancy:
Matt Denham Telephone: 020 3805
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4822
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Email: genuit@headlandconsultancy.com (mailto:genuit@headlandconsultancy.com)
Chloe Francklin
A copy of this report will be available on our website www.genuitgroup.com
(http://www.genuitgroup.com/) today from 0700hrs (BST).
A live webcast of the Final Results presentation, hosted by Joe Vorih, Chief
Executive Officer, and Tim Pullen, Chief Financial Officer, will be broadcast
at 0830 on Tuesday 11 March 2025. To access the live presentation on that
date, participants will be required to register in advance using the following
webcast link:
https://www.investis-live.com/genuit-group/67ac8425bd0e0d0014d87f46/marebf
(https://url.uk.m.mimecastprotect.com/s/7hkrCr82zu1Ml6Vu7fyT4ZcwK?domain=investis-live.com)
We recommend you register by 0815hrs (GMT). The webcast will be recorded, and
a replay will be available shortly after the webcast ends via the same link
above. A recording of the presentation and a copy of the slides will be
available following the event on the Company's website at Results,
(https://protect-eu.mimecast.com/s/FREECWLPMuyQR04ixpCR7?domain=genuitgroup.com)
Reports & Presentations - Genuit Group plc
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Notes to Editors:
About Genuit Group plc
Genuit Group plc is the UK's largest provider of sustainable water, climate
and ventilation products for the built environment. Genuit's solutions allow
customers to mitigate and adapt to the effects of climate change and meet
evolving sustainability regulations and targets.
The Group is divided into three Business Units, each of which addresses
specific challenges in the built
environment:
· Climate Management Solutions - Addressing the drivers for low
carbon heating and cooling, and clean and healthy air ventilation.
· Water Management Solutions - Driving climate adaptation and
resilience through integrated surface and drainage solutions.
· Sustainable Building Solutions - Providing a range of
construction solutions to reduce the carbon content of the built environment.
Across these Business Units, Genuit's brands are some of the most
well-established and innovative in the industry, including Polypipe, Nuaire
and Adey.
The Group primarily serves the UK and European building and construction
markets with a presence in Italy and the Netherlands and sells to specific
niches in the rest of the world
Chief Executive Officer Review
Our Results: Resilient performance in a challenging market
I am pleased with the progress we are making as a Group, despite another
challenging year for our sector. Continued focus on our Sustainable Solutions
for Growth strategy during 2024 has delivered a resilient performance, and I
would like to thank our Genuit Leadership Team and all of our c.3,200
colleagues for their continued hard work and dedication.
Our annual underlying profit margin improved from 16.0% to 16.4% despite a
market-driven decline in revenues of 4.3%. This performance is testament to
our ongoing Group-wide deployment of the Genuit Business System (GBS),
generating lean productivity and efficiency savings, alongside measures taken
to gain market share.
Following business simplification in 2023, the Group is more streamlined,
agile and better placed to manage market challenges, whilst also well-placed
to deliver profitable growth as volumes recover. The Genuit Business System
will enable us to continue driving margin expansion, with strong operational
gearing and at least 20% available capacity to increase production.
Underlying operating cash conversion was also strong at 99.3%, exceeding our
90% mid-term target, with net debt to underlying pro-forma EBITDA falling to
0.9 times, enabling us to continue investing in long-term growth.
In line with the Group's progressive dividend policy, we are pleased to be
able to propose an increase in our full-year dividend to 12.5p.
Our Customers: Ongoing market softness
2024 experienced reduced volumes across most segments, and the timing of the
eventual market recovery remains uncertain. Construction industry challenges
continued through 2024, with ongoing labour shortages, a construction
workforce some 250,000 below pre-Covid levels, and an ongoing high rate of
contractor insolvencies (particularly impacting our commercially focused
businesses). Housing starts in the UK decreased from 171,622 to 135,110, and
housing transactions of 1,093,410 remained at historically low levels, and
contributed to an RMI market 4.0% below prior year.
Despite this reduction in volume, there were signs of market stabilisation in
the second half, and competitive consolidation has led to share-gain
opportunities for the Group.
The Group is encouraged by the UK Government's commitment to significantly
increase the levels of new housebuilding to address the structural shortage of
homes, alongside improvements in the facilitation of infrastructure projects
that contribute to economic growth and to the decarbonisation of the built
environment. We believe that pressing ahead with this regulatory framework is
essential to reconcile the government's climate commitments with its desire to
address the structural housing shortage, as well as supporting construction as
a growth engine for the economy.
We are confident in our innovative labour-saving products and value-add
solutions, such as Polypipe Advantage, will help to enable the higher levels
of construction activity, needed, despite labour shortages.
Well publicised floods in the UK, Europe and UAE caused by prolonged, more
frequent and intense rainfall, require the upgrade of ageing infrastructure as
well as a new more holistic approach to water management. Our green
urbanisation strategy addresses both stormwater resilience along with
improving urban landscapes and increasing biodiversity.
The built environment accounts for over 40% of the UK's greenhouse gas (GHG)
emissions, and the carbon output of heating and cooling systems are the
largest contributors. Legislative drivers including the Future Homes Standard
continue to provide opportunities for growth for several of our product ranges
such as MVHR, and underfloor heating. Evolving regulations are increasing the
requirements for insulation, and with that the need for better ventilation and
clean, healthy, indoor air. At the same time, in our existing buildings, there
is a pressing need for better ventilation to solve damp and mould problems in
social housing, schools, and hospitals.
Genuit is focused on sustainability-driven growth; helping the built
environment respond to climate adaptation and mitigation challenges. The
economic and social imperative to increase levels of construction and
housebuilding in the UK continues to be strong and our portfolio of low
carbon, labour-saving, and energy efficient solutions play an important role
in supporting sustainable growth.
Our Strategy: Sustainable Solutions for Growth
Our Sustainable Solutions for Growth strategy is built around four key
pillars:
·
Growth - Focus on higher-growth, sustainability-driven markets, via organic growth and disciplined
M&A opportunities
· Sustainability - Providing the lowest-carbon choice for our
customers to maximise exposure to structural growth drivers
· Genuit Business System - Creating
value through lean transformation and operational excellence
· People and Culture - Enabling growth through the capability,
expertise and development of our employees
Through continued focus on these commitments in 2024, we have secured new
revenue opportunities, expanded our solution offering through acquisitions,
reduced our overall carbon impact, made strong progress in deploying the
Genuit Business System, and we have continued to invest in our people,
including the continuation of our Genuit Leadership Programme. All of which
has helped to strengthen our overall position going into 2025.
Growth
We remain focused on outperforming the broader construction market by
providing products and solutions to built environment markets with
sustainability-led growth drivers. These markets benefit from a range of
structural tailwinds, including the need to adapt to and mitigate climate
change, regulatory changes, ongoing labour shortages and shifting customer
preferences.
Despite the continued softness in the UK construction sector in 2024 and the
decline in volumes, we have secured new revenue opportunities across all three
Business Units, including through the launch of new product lines bolstered by
strategic acquisitions.
We also remain focused on products that address current commercial
construction challenges. For example, we have secured several projects with
Modern Methods of Construction (MMC) manufacturers of pods and volumetric
modules, which are attractive low labour solutions at a time where skilled
labour is scarce.
In August 2024, we welcomed new colleagues from two acquisitions, Sky Garden
and Omnie & Timoleon, both of which align with our M&A strategy.
Sky Garden was acquired for a cash consideration of £2.6m and is a leader in
green roof technologies, providing design, supply, installation and
maintenance services for green and bio-solar roofs, podium decks and green
walls. It complements Permavoid's geo-cellular roofing solutions business and
creates synergies with Keytec's water management installation business.
Omnie & Timoleon was acquired for a cash consideration of £2.7m. It is a
leader in underfloor heating (UFH) board technologies and provides full UFH
system design and supply services. It extends the Group's UFH offering within
CMS and is complementary to the existing Nu-Heat and Polypipe underfloor
heating solutions. Underfloor heating is expected to grow significantly as its
share of new-build homes increases under the transition to the Future Homes
Standard.
We are actively pursuing additional strategic acquisitions that add to our
organic growth potential and enhance shareholder returns.
Sustainability
Expectations for technological advancement in the built environment to solve
the urgent challenges facing our infrastructure, buildings, communities and
planet have never been greater.
Sustainability is at the heart of our business, and Genuit remains focused on
sustainability-driven growth; enabling the built environment to respond to
climate adaptation and mitigation challenges, whilst staying committed to
reducing our overall impact on the environment, driving carbon from our
business and the supply chain.
During 2024, we published our first Genuit Group Sustainability Report which
enhanced our sustainability disclosures and showcased our progress in
improving our performance across a wide range of sustainability topics.
We continue to lead the industry as the largest user of recycled polymers,
with over 52.0% of our total tonnage in the year and we have held the Green
Mark since 2019 with over 70% green revenues.
In 2024, the Science Based Targets initiative (SBTi) verified our long-term
carbon reduction targets, which amongst other commitments, will see us reduce
our scopes 1, 2 & 3 GHG emissions by 90% by 2050 compared to 2021.
We have accelerated our adoption of Environmental Product Declarations (EPDs)
with the support of our GBS processes and have bold targets for 2025 to
increase our EPD coverage across our businesses, to enable our customers to
make carbon-based choices.
Genuit Business System
The Genuit Business System (GBS) is enabling the Group to streamline
processes, share best practices and achieve benefits of scale whilst unlocking
the full potential of our business for our people. GBS is at the core of our
journey to achieving our medium-term >20% operating margin target through
creating a culture of continuous operational improvement and excellence - this
is at the heart of our value creation strategy.
The deployment of GBS has gained further momentum in 2024. We have continued
embedding GBS principles through kaizen events, alongside educating and
empowering our leaders to drive GBS, through four leader orientation sessions
held during the year. We have seen productivity improvements, financial
savings and space savings from this lean transformation work so far. A great
example has been at Polypipe Building Services, where the team used the GBS
tool 'SMED' (Single Minute Exchange of Dies) on one of its injection moulding
machines and reduced changeover time by more than 80%, giving an additional
10,000 hours of machine availability by reducing changeover time from 4 hours
to 46 minutes.
We completed over 20 kaizen events across all our businesses in 2024 and now
c.15% of Genuit employees have participated in lean kaizen events or training,
representing good progress but with significant benefits still to realise. The
positive momentum and the energy from our teams is pleasing to see and we are
confident this will continue to help, empower and inspire our people to make
positive change.
People and Culture
Involving our people in the rollout of GBS has complemented our overall
approach to creating an environment where people have a voice and feel
included.
In 2024, we ran our first Group-wide employee survey 'Your Voice', an
important new channel for employee listening where we can all take direct
action to learn from our people at all levels. We had a solid level of
participation and will move to an annual survey cycle alongside more frequent
pulse engagement surveys to enable us to continually listen, learn and act.
An 18-month culture programme culminated this year with the well-received
launch and rollout of our Trademark Behaviours. This has been a driver for
increased collaboration across businesses, and enabled our people to recognise
how they, and each other, contribute to our growth and deliver on our purpose
to create sustainable living.
We have continued strong investment into building careers in 2024; over half
of our Genuit Leadership Team (our top leaders across the Group) have now
participated in the Genuit Leadership Programme and across our workforce we
have seen over 100 internal promotions in 2024, 30% of which were female.
I am proud of our achievement of Gold member status of The 5% Club, one year
ahead of plan and with c.18% of our colleagues in recognised Earn & Learn
programmes across several levels and disciplines. Our Early Careers Programme
continues to evolve with the launch of a Graduate Programme in Q3 2024, and
further intake planned for 2025. We also started work with The 10,000 Interns
Foundation to drive diversity through our Early Careers activity.
We are continually working to create an environment where all employees can be
their authentic selves, and where they can respectfully ask questions and
learn from one another. As a Strategic Partner of the Construction Inclusion
Coalition (CIC), we are working to drive change and champion Diversity &
Inclusion (D&I) not only in our business, but across the broader industry.
Whilst we have more to do, we saw progress reflected through our overall
scores for inclusivity in the Your Voice survey, and an increase in engagement
in our dedicated D&I group 'Our Genuit' on Workplace.
Summary:
This year we have made solid progress towards our medium-term targets while
advancing our Sustainable Solutions for Growth strategy. We continued to
create a more lean, agile and streamlined business, and demonstrated continual
margins improvement.
With some signs of market stabilisation in the second half of 2024, the Group
is well positioned for market recovery. With a focus on mitigating the
National Insurance and National Minimum Wage increase through balanced price
and cost management, the Group continues to navigate the near-term headwinds
whilst making further strategic progress.
We are moving in the right direction, and the Group remains confident in the
medium-term growth prospects for the business, given its exposure to
structural growth drivers.
The Group delivered a resilient performance in 2024, continuing to improve
underlying operating margin despite ongoing subdued market conditions.
The team at Genuit have remained dedicated and supportive of the strategic
goals and together we all create sustainable living. The drive and the passion
of all my colleagues has been evident in 2024 and I thank them for all their
hard work.
Group Results
Revenue and profitability
Group revenue for the year ended 31 December 2024 was £561.3m (2023:
£586.5m), which was lower by 4.3% year-on-year, primarily due to an overall
volume reduction of 4.1% year-on-year. On a like-for-like basis, excluding the
impact of acquisitions, revenue was 5.3% lower than prior year. Market volumes
remained subdued due to ongoing weakness in newbuild, RMI and commercial
markets and lower business and consumer confidence surrounding the UK
Government Budget in October. UK revenue declined 3.8% and international
revenue decreased by 8.0%, representing 11.0% of revenue in the year (2023:
11.5%). Second-half revenue increased 2.5% year-on-year following a 10.6%
decline in the first half, reflecting a stabilisation of market conditions.
Underlying operating profit was £92.2m (2023: £94.1m), a decrease of 2.0%,
primarily due to the reduction in volumes. However, the Group increased
underlying operating margin by 40 basis points to 16.4% (2023: 16.0%),
demonstrating progress towards medium-term margin targets despite the
prevailing market softness. The primary contributors to the increase in margin
were procurement savings generated by improved centralised buying, and
productivity improvements generated by Genuit Business System improvement
projects.
Profit before tax was £46.3m (2023: £48.4m), a decrease of 4.3%. The Group
continued to invest in product development and innovation throughout the year.
In 2024, operating profit benefited from
£1.5m of HMRC approved Research and Development expenditure credit (2023:
£1.5m).
Underlying profit after tax was lower than the prior year at £61.1m (2023:
£62.6m). Underlying basic earnings per share was 24.6 pence (2023: 25.2
pence).
Including non-underlying items, profit after tax was £33.5m (2023: £38.5m),
and basic earnings per share was 13.5 pence (2023: 15.5 pence).
Revenue and operating profit and margin 2024 2023 Change
£m £m %
Revenue 561.3 586.5 (4.3)
Underlying operating profit 92.2 94.1 (2.0)
Underlying operating margin 16.4% 16.0% 40 bps
Revenue by geographic destination 2024 2023 Change
£m £m %
UK 499.3 519.1 (3.8)
Europe 32.9 33.4 (1.5)
Rest of World 29.1 34.0 (14.4)
Group 561.3 586.5 (4.3)
Revenue 2024 2023 Change LFL Change
£m £m % %
Climate Management Solutions 161.6 165.9 (2.6) (4.1)
Water Management Solutions 160.9 170.4 (5.6) (7.5)
Sustainable Building Solutions 231.7 242.8 (4.6) (4.6)
554.2 579.1 (4.3) (5.3)
Other* 7.1 7.4 (4.1) (4.1)
Total Group 561.3 586.5 (4.3) (5.3)
* Relates to sites which are not reported as part of the Group's strategic
Business Units.
Underlying operating profit 2024 ROS 2023 ROS Change
£m %* £m %* Bps
Climate Management Solutions 24.0 14.9 22.7 13.7 120
Water Management Solutions 13.6 8.5 17.7 10.4 (190)
Sustainable Building Solutions 54.4 23.5 53.1 21.9 160
92.0 16.6 93.5 16.1 50
Other** 0.2 2.8 0.6 8.1 (530)
Total Group 92.2 16.4 94.1 16.0 40
* Return on sales (ROS) is equivalent to underlying operating margin
(underlying operating profit/ revenue).
** Relates to sites which are not reported as part of the Group's strategic
Business Units.
Business Unit Review
Climate Management Solutions
The Climate Management Solutions (CMS) Business Unit is focused on addressing
the need for clean healthy air and low carbon heating and cooling.
Revenue of £161.6m (2023: £165.9m) in CMS decreased by 2.6% versus 2023
(4.1% on a like-for-like basis). The year finished strongly for Adey and
Nuaire residential sectors, however, not offsetting the headwinds within the
residential boiler market and commercial ventilation sector. The Business Unit
remained flat, (0.8%) like-for-like, in the second half of the year reflecting
the stabilisation of market conditions.
CMS reported an underlying operating margin of 14.9% in 2024, 120 basis points
higher than 2023, resulting from productivity improvements through the
deployment of the Genuit Business System. Integration of the Omnie &
Timoleon underfloor heating business (acquired August 2024) is proceeding well
with a focus on go-to-market strategy and operational synergies The Business
Unit remains well placed to capitalise on regulatory and structural drivers
related to renewable heating, energy efficiency and cleaner, healthier air.
Water Management Solutions
The Water Management Solutions (WMS) Business Unit is enabling the upgrade of
the stormwater and wastewater infrastructure to adapt to the increasingly
challenging impacts of climate change.
Revenue of £160.9m (2023: £170.4m) in WMS decreased by 5.6% versus 2023
(7.5% on a like-for-like basis). Revenue was adversely affected by project
delays, including the impact of prolonged wet weather and low business
confidence.
WMS reported an underlying operating margin of 8.5% during the year,
representing a 190-basis points decline versus prior year, impacted by lower
volumes. Management are accelerating a strong pipeline of GBS projects to
improve efficiency and profitability in 2025. Integration of the acquired Sky
Garden business is proceeding well, with focus a on growth and improving
profitability through vertical solution selling and increasing scale.
The WMS medium-term growth strategy is underpinned by focused commercial
activity and product solutions, and the Business Unit expects to benefit from
changes in water management, biodiversity legislation, more effective
rainwater collection and reuse, and attenuation of flooding and storm runoff
which is now more prevalent than ever.
Sustainable Building Solutions
The Sustainable Building Solutions (SBS) Business Unit provides its customers
with a range of market-leading products in plumbing and water supply, drainage
and other building accessories which reduce labour requirements to help
address shortages and reduce the carbon footprint of the built environment.
Trading in SBS was resilient in 2024 with revenue of £231.7m (2023:
£242.8m), 4.6% lower than prior year in line with subdued market volumes.
Despite volume challenges, underlying operating profit margin improved by 160
basis points, driven primarily by effective cost management, including
purchasing savings from aggregated buying and the impact of GBS projects on
productivity and efficiency.
The Business Unit is well placed to capitalise on structural trends in the
industry over the medium term, including the transitions to labour-efficient
solutions, use of offsite pre-fabrication and modular building, reductions in
carbon intensity and adherence to legislation such as the Future Homes
Standard.
Acquisitions
Sky Garden
On 5 August 2024, the Group acquired 100% of the voting rights and shares in
Sky Garden Limited for cash consideration of £2.6m, which included an amount
for net cash and working capital commitments on completion. Sky Garden is a
leader in green-roof technologies providing design, supply, installation and
maintenance services for green and bio-solar roofs, podium decks and green
walls.
No material intangible assets were identified. The goodwill arising on the
acquisition primarily represented the assembled workforce, technical
expertise, synergies with companies offering both supply and install services
and market share in markets Genuit currently does not operate in from the
acquisition. The goodwill is allocated entirely to the Infrastructure &
Landscape CGU.
Sky Garden contributed £3.3m of revenue and £0.1m loss of EBITDA to the
reported results of the Group over five months of trading.
Omnie & Timoleon
On 6 August 2024, the Group acquired the trade and assets of Ridgespear
Limited, including the Omnie & Timoleon brands and its Polish subsidiary
Timoleon Sp.z o.o for cash consideration of £2.7m. Omnie & Timoleon are
leaders in underfloor heating (UFH) board technologies and providers of full
UFH system design and supply services. Integration of the acquired operations
into the Group's Nu-Heat UFH business is underway.
No material intangible assets were identified. The goodwill arising on the
acquisition primarily represented the assembled workforce, technical expertise
and synergies with Group companies offering underfloor heating solutions .The
goodwill has been allocated to the Nu-Heat CGU.
Omnie & Timoleon contributed £2.5m of revenue and £0.6m loss of EBITDA
to the reported results of the Group over five months of trading.
Non-underlying items
Non-underlying items marginally increased to £33.0m (2023: £32.1m) before
tax. These included non-cash amortisation of £14.4m (2023: £14.8m) and
non-cash impairment charges of £12.4m (2023: £2.5m) reported in H1
financials, in respect of the Adey business which has encountered prolonged
delays to recovery in market conditions. In addition, the Group incurred one
off costs of £4.3m in respect of a dispute with a third party back-office
software supplier that was recognised in H1 and fully settled in the second
half of the year.
Non underlying items comprised:
2024 2023
£m £m
Amortisation of intangible assets 14.4 14.8
Impairment of goodwill 12.4 -
Impairment of intangible assets - 2.5
Restructuring costs 1.8 15.3
Employment matters (1.1) 2.0
Acquisition costs 1.1 2.2
Workday / CRM configuration (SaaS) 1.1 1.2
Software supplier dispute 4.3 -
Profit on disposal of property, plant and equipment (1.1) (4.7)
Product liability claim 0.1 (1.2)
Non-underlying items before taxation 33.0 32.1
Tax effect on non-underlying items (5.4) (8.0)
Non-underlying items after taxation 27.6 24.1
Exchange rates
The Group trades predominantly in Sterling but has some revenue and costs in
other currencies, mainly the US Dollar and the Euro, and takes appropriate
forward cover on these cash flows using forward currency derivative contracts
in accordance with its hedging policy.
Finance Costs
Underlying finance costs decreased to £12.9m (2023: £13.6m) primarily due to
a lower level of borrowings. Group net debt excluding lease liabilities
reduced from £128.0m as at 31 December 2023 to £102.9m as at 31 December
2024, with a corresponding reduction in debt to EBITDA leverage from 1.1x to
0.9x. Interest cover was 8.3x for the year (2023: 8.2x).
Interest was payable on the RCF at SONIA plus an interest rate margin ranging
from 0.90% to 2.75%. The interest rate margin at 31 December 2024 was 1.63%
(2023: 1.65%). During the year an interest rate hedging strategy was
implemented to provide greater certainty over interest costs and reduce the
risk of potential volatility.
Pensions
The Group does not have any defined benefit pension schemes and only has
defined contribution pension arrangements in place. Pension costs for the year
amounted to £6.3m (2023: £5.4m) reflecting the introduction of a salary
sacrifice scheme and increased up take enhancing our employee value
proposition.
Taxation
Underlying taxation
The underlying tax charge in 2024 was £18.2m (2023: £17.9m) representing an
effective tax rate of 23.0% (2023: 22.2%). This was below the composite UK
standard tax rate of 25.0% (2023: 23.5%).
Taxation on non-underlying items
The non-underlying taxation credit of £5.4m (2023: £8.0m) represents an
effective rate of 16.4% (2023: 24.8%).
Earnings per share
2024 2023
£m £m
Pence per share:
Basic 13.5 15.5
Underlying basic 24.6 25.2
Diluted 13.3 15.4
Underlying diluted 24.3 25.1
The Directors consider that the underlying basic earnings per share (EPS)
measure provides a better and more consistent indication of the Group's
underlying financial performance and more meaningful comparison with prior and
future periods to assess trends in our financial performance.
Underlying basic EPS decreased by 2.4% in 2024.
Dividend
The final dividend of 8.4 pence (2023: 8.3 pence) per share is being
recommended for payment on 4 June 2025 to shareholders on the register at the
close of business on 2 May 2025, in line with the Group's progressive dividend
policy. The ex-dividend date will be 1 May 2025. The full year dividend of
12.5p is marginally higher than the prior year 12.4p per share, reflecting the
strength of the balance sheet and the Board's confidence in the Group's
medium-term strategy.
The Group aims to pay a progressive dividend, based on dividend cover of 2.0x
or greater over the business cycle. The Directors intend that the Group will
pay the total annual dividend in two tranches, an interim dividend and a final
dividend, announced at the time of publication of the interim and preliminary
results.
Balance Sheet
The Group's balance sheet is summarised below:
2024 2023
£m £m
Property, plant and equipment 183.7 176.4
Right-of-use assets 27.0 22.9
Goodwill 451.5 454.1
Other intangible assets 128.7 142.7
Net working capital 27.3 28.3
Taxation (45.8) (44.7)
Other current and non-current assets and liabilities (0.2) 6.2
Net debt (loans and borrowings, and lease liabilities, net of cash and cash (129.2) (149.3)
equivalents)
Net assets 643.0 636.6
The net value of property, plant and equipment has increased by £7.3m
following the continued focus on investing in targeted capital expenditure
offset by the sale of two additional sites.
Cash flow and net debt
The Group's cash flow statement is summarised below:
2024 2023
£m £m
Operating cash flows before movement in net working capital 106.5 105.6
Add back non-underlying cash items 12.7 14.2
Underlying operating cash flows before movement in net working capital 119.2 119.8
Movement in net working capital 9.0 4.1
Net capital expenditure excluding non-underlying proceeds of sale (26.0) (33.8)
Settlement of lease liabilities (10.6) (7.6)
Underlying cash generated from operations after net capital expenditure 91.6 82.5
(excluding non-underlying proceeds of sale)
Income tax paid (10.4) (12.1)
Interest paid (11.4) (13.4)
Non-underlying proceeds of sale 4.9 6.9
Other non-underlying cash items (12.7) (14.2)
Settlement of deferred and contingent consideration (1.6) (1.6)
Acquisition of businesses (5.2) -
Dividends paid (30.8) (30.5)
Proceeds from exercise of share options net of purchase of own shares 0.8 0.3
Other (0.9) (0.7)
Movement in net debt - excluding IFRS 16 24.3 17.2
Movement in IFRS 16 (3.3) (0.3)
Movement in net debt - including IFRS 16 21.0 16.9
Delivery of strong cash generation remains core to the Group's strategy. The
Group's post-capex underlying operating cash conversion was 99.3% (2023:
87.7%) calculated as underlying operating cash flow (after payments for
capital expenditure excluding non-underlying proceeds of sale and lease
liabilities) divided by underlying operating profit. The Group's pre-capex
underlying operating cash conversion was 107.6% (2023: 103.4%) calculated as
underlying operating cash flow (before payments for capital expenditure
excluding non-underlying proceeds of sale and lease liabilities) divided by
underlying EBITDA.
A positive working capital movement in the year was achieved through lower
levels of inventory and improved creditor position, both achieved through
purchasing projects of aggregating spend with buying strategically and
improvements generated by GBS. In 2025 the Group will focus on continuing to
achieve over 90% operating cash flow conversion.
Net capital expenditure investment (excluding non-underlying proceeds from
sale) decreased to £26.0m (2023: £33.8m). The Group has continued to focus
on investing in targeted manufacturing facility development, capacity and key,
strategic and innovative projects.
Financing
Net debt of £129.2m (2023: £149.3m) comprised:
2024 2023
£m £m
Bank loans (146.5) (145.0)
Cash and cash equivalents 43.6 17.0
Net debt (excluding unamortised debt issue costs) (102.9) (128.0)
Unamortised debt issue costs 1.3 2.1
IFRS 16 (27.6) (23.4)
Net debt (129.2) (149.3)
Net debt (excluding unamortised deal issue costs): pro- forma EBITDA 0.9 1.1
The Group has a Sustainability-Linked Loan (SLL) committed through to August
2027 with one further uncommitted annual renewal through to August 2028. The
current facility limit is £350.0m with an additional uncommitted 'accordion'
facility of up to £50.0m, at 31 December 2024, £121.5m of the RCF was drawn
down. Additionally, in 2022 the Group entered a fixed rate £25.0m seven-year
private placement loan note until August 2029 with an uncommitted shelf
facility of an additional £125.0m.
The Group is subject to two financial covenants. At 31 December 2024, there
was significant headroom and facility interest cover and net debt to EBITDA
covenants were comfortably achieved:
Covenant
Covenant requirement Position at 31 December
2024
Interest cover >4.0:1 8.3:1
Leverage <3.0:1 0.9:1
Going Concern
The Group continues to meet its day-to-day working capital and other funding
requirements through a combination of long-term funding and cash deposits. The
Group's bank financing facilities consist of a £350.0m Sustainability-Linked
Loan with an uncommitted 'accordion' facility of up to £50.0m and a seven-
year private placement loan note of £25.0m with an uncommitted £125.0m shelf
facility. At 31 December 2024, liquidity headroom (cash and undrawn committed
banking facilities) was £272.1m (2023: £247.0m).
The Group's focus will continue to be on deleveraging, and its net debt to
EBITDA ratio stood at 0.9x pro-forma EBITDA at 31 December 2024 (2023: 1.1x).
This headroom means the Group is well- positioned with a strong balance sheet.
As a result, the Directors have satisfied themselves that the Group has
adequate financial resources to continue in operational existence for a period
of at least the next 21 months to 31 December 2026. Accordingly, they continue
to adopt the going concern basis in preparing the consolidated financial
statements.
Forward-Looking Statements
This report contains various forward-looking statements that reflect
management's current views with respect to future events and financial and
operational performance. These forward-looking statements involve known and
unknown risks, uncertainties, assumptions, estimates and other factors, which
may be beyond the Group's control, and which may cause actual results or
performance to differ materially from those expressed or implied from such
forward-looking statements. All statements (including forward-looking
statements) contained herein are made and reflect knowledge and information
available as of the date of preparation of this report and the Group disclaims
any obligation to update any forward-looking statements, whether as a result
of new information, future events or results or otherwise. There can be no
assurance that forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue reliance on
forward-looking statements due to the inherent uncertainty therein. Nothing in
this report should be construed as a profit forecast.
Directors' Responsibilities
Each of the Directors confirms that, to the best of their knowledge, the
consolidated financial statements, prepared in accordance UK-Adopted
International Accounting Standards, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Group and
undertakings included in the consolidation taken as a whole; and the Group
Results, Chief Executive Officer Review and Business Unit Review includes a
fair review of the development and performance of the business and the
position of the Group and undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and uncertainties
that they face.
Annual General Meeting
The Annual General Meeting is scheduled to be held on 19 May 2025. By order of
the Board:
Joe Vorih Tim Pullen
Chief Executive Officer Chief Financial Officer
Group Statement of Comprehensive Income For the year ended 31 December 2024
2024 2023
Notes Non- underlying Non- underlying
Underlying £m Total Underlying £m Total
£m £m £m £m
Revenue 2 561.3 - 561.3 586.5 - 586.5
Cost of sales (311.5) 1.0 (310.5) (338.7) (2.0) (340.7)
Gross profit 249.8 1.0 250.8 247.8 (2.0) 245.8
Selling and distribution costs
(75.2) - (75.2) (73.5) (1.0) (74.5)
Administration expenses (81.7) (7.2) (88.9) (79.4) (11.8) (91.2)
Amortisation of intangible assets
(0.7) (14.4) (15.1) (0.8) (14.8) (15.6)
Impairment of intangible assets - - - - (2.5) (2.5)
Impairment of goodwill - (12.4) (12.4) - - -
Operating profit 2 92.2 (33.0) 59.2 94.1 (32.1) 62.0
Finance costs 5 (12.9) - (12.9) (13.6) - (13.6)
Profit before tax 79.3 (33.0) 46.3 80.5 (32.1) 48.4
Income tax 6 (18.2) 5.4 (12.8) (17.9) 8.0 (9.9)
Profit for the year attributable to the owners of the parent company
61.1 (27.6) 33.5 62.6 (24.1) 38.5
Basic earnings per share (pence) 7
13.5 15.5
Diluted earnings per share (pence) 7 13.3 15.4
Dividend per share (pence) - interim 8 4.1 4.1
Dividend per share (pence) - final
8.4 8.3
12.5 12.4
Non-underlying items are presented separately and are detailed in note 4.
Group Statement of Comprehensive Income For the year ended 31 December 2024
2024 2023
£m £m
Profit for the year 33.5 38.5
Other comprehensive income:
Items which may be reclassified subsequently to the income statement:
Effective portion of changes in fair value of forward foreign currency (0.3) 0.1
derivatives
Effective portion of changes in fair value of interest rate derivatives 0.1 -
Exchange differences on translation of foreign operations (0.1) (0.1)
Other comprehensive income for the year net of tax (0.3) -
Total comprehensive income for the year 33.2 38.5
Group Balance Sheet At 31 December 2024
31 December
31 December 2023
Notes 2024 £m
£m
Non-current assets
Property, plant and equipment 9 183.7 176.4
Right-of-use assets 10 27.0 22.9
Intangible assets 11 580.2 596.8
Total non-current assets 790.9 796.1
Current assets
Inventories 73.5 69.2
Trade and other receivables 81.8 73.9
Income tax receivable 3.2 5.4
Cash and cash equivalents 13 43.6 17.0
Derivative financial instruments - 0.1
Assets held-for-sale - 17.1
Total current assets 202.1 182.7
Total assets 993.0 978.8
Current liabilities
Trade and other payables (128.2) (114.8)
Lease liabilities 10, 13 (7.4) (5.0)
Liabilities held-for-sale - (2.8)
Deferred and contingent consideration 12 - (8.2)
Total current liabilities (135.6) (130.8)
Non-current liabilities
Loans and borrowings 13 (145.2) (142.9)
Lease liabilities 10, 13 (20.2) (18.4)
Deferred income tax liabilities (49.0) (50.1)
Total non-current liabilities (214.4) (211.4)
Total liabilities (350.0) (342.2)
Net assets 643.0 636.6
Capital and reserves
Equity share capital 0.2 0.2
Share premium 93.6 93.6
Capital redemption reserve 1.1 1.1
Hedging reserve (0.1) 0.1
Foreign currency retranslation reserve (0.2) (0.1)
Other reserves 116.5 116.5
Retained earnings 431.9 425.2
Total equity 643.0 636.6
Group Statement of Changes in Equity For the year ended 31 December 2024
Equity share capital Capital redemption Foreign currency retranslation
£m Share premium reserve Hedging reserve reserve Other reserves Retained earnings Total equity
£m £m £m £m £m £m £m
At 31 December 2024
Opening balance 0.2 93.6 1.1 0.1 (0.1) 116.5 425.2 636.6
Profit for the year - - - - - - 33.5 33.5
Other comprehensive income
- - - (0.2) (0.1) - - (0.3)
Total comprehensive income for the year - - - (0.2) (0.1) - 33.5 33.2
Dividends paid - - - - - - (30.8) (30.8)
Share-based payments charge - - - - - - 2.9 2.9
Share-based payments settled - - - - - - 0.8 0.8
Share-based payments excess tax benefit - - - - - - 0.3 0.3
Closing balance 0.2 93.6 1.1 (0.1) (0.2) 116.5 431.9 643.0
At 31 December 2023
Opening balance 0.2 93.6 1.1 - - 116.5 415.7 627.1
Profit for the year - - - - - - 38.5 38.5
Other comprehensive income - - - 0.1 (0.1) - - -
Total comprehensive income for the year - - - 0.1 (0.1) - 38.5 38.5
Dividends paid - - - - - - (30.5) (30.5)
Share-based payments charge - - - - - - 2.1 2.1
Share-based payments settled - - - - - - 0.3 0.3
Share-based payments excess tax benefit - - - - - - (0.9) (0.9)
Closing balance 0.2 93.6 1.1 0.1 (0.1) 116.5 425.2 636.6
Group Cash flow Statement
For the year ended 31 December 2024
2024 2023
Notes £m £m
Operating activities
Cash generated from operations 14 115.5 109.7
Income tax paid (10.4) (12.1)
Net cash flows from operating activities 105.1 97.6
Investing activities
Settlement of deferred and contingent consideration 12 (1.6) (1.6)
Acquisition of businesses net of cash at acquisition 12 (5.2) -
Proceeds from disposal of assets held-for-sale 4.9 -
Proceeds from disposal of property, plant and equipment 0.7 7.6
Purchase of property, plant and equipment (25.6) (32.8)
Patent and development costs expenditure (1.1) (1.7)
Net cash flows from investing activities (27.9) (28.5)
Financing activities
Drawdown of bank loan 69.4 50.0
Repayment of bank loan (68.0) (100.9)
Interest paid (11.4) (13.4)
Dividends paid (30.8) (30.5)
Proceeds from exercise of share options 0.8 0.3
Settlement of lease liabilities (10.6) (7.6)
Net cash flows from financing activities (50.6) (102.1)
Net change in cash and cash equivalents 26.6 (33.0)
Cash and cash equivalents - opening balance 17.0 50.0
Cash and cash equivalents - closing balance 43.6 17.0
1. Basis of preparation
The preliminary results for the year ended 31 December 2024 have been prepared
in accordance with UK-Adopted International Accounting Standards (UK-Adopted
IAS). Whilst the financial information included in this preliminary
announcement has been computed in accordance with the recognition and
measurement requirements of IFRS, this announcement does not itself contain
sufficient information to comply with IFRS. The accounting policies adopted
have been consistently applied in all material aspects to all the periods
presented.
The financial information set out in this announcement does not constitute the
statutory accounts for the Group within the meaning of Section 435 of the
Companies Act 2006. The statutory accounts for the year ended 31 December 2023
have been filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2024 will be filed in due course. The auditor's
report on these accounts was not qualified or modified and did not contain any
statement under Sections 498(2) or (3) of the Companies Act 2006 or any
preceding legislation.
There were no accounting standards or interpretations that have become
effective in the current reporting period which had an impact on disclosures,
financial position, or performance.
The Directors have made enquiries into the adequacy of the Group's financial
resources, through a review of the Group's budget and medium-term financial
plan, including cash flow forecasts. The Group has modelled a range of
scenarios, with the base forecast being one in which, over the 24 months
ending 31 December 2026, sales volumes grow in line with or moderately above
external construction industry forecasts. In addition, the Directors have
considered several downside scenarios, including adjustments to the base
forecast, a period of significantly lower like-for-like sales, profitability
and cash flows. Consistent with our principal risks and uncertainties, these
downside scenarios included, but were not limited to, loss of production, loss
of a major customer, product failure, recession, increases in interest rates
and increases in raw material prices. Downside scenarios also included a
combination of these risks and reverse stress testing. The Directors have
considered the impact of climate-related matters on the going concern
assessment and they are not expected to have a significant impact on the
Group's going concern.
At 31 December 2024, the Group had available £228.6m of undrawn committed
borrowing facilities in respect of which all conditions precedent had been
met. These borrowing facilities are available until at least August 2027,
subject to covenant headroom. The Directors are satisfied that the Group has
sufficient liquidity and covenant headroom to withstand reasonable variances
to the base forecast, as well as the downside scenarios. In addition, the
Directors have noted the range of possible additional liquidity options
available to the Group, should they be required.
As a result, the Directors have satisfied themselves that the Group has
adequate financial resources to continue in operational existence for a period
of at least the next 21 months. Accordingly, they continue to adopt the going
concern basis in preparing the consolidated financial statements.
Four non-statutory measures have been used in preparing the consolidated
financial statements:
· Underlying profit and earnings measures exclude certain
non-underlying items (which are detailed in note 4) and, where relevant, the
tax effect of these items. The Directors consider that these measures provide
a better and more consistent indication of the Group's underlying financial
performance and more meaningful comparison with prior and future periods to
assess trends in the Group's financial performance.
· Underlying operating cash conversion is defined as cash generated
from operations, adjusted for non-underlying cash items, after movement in net
working capital and capital expenditure net of underlying proceeds from
disposals of property, plant and equipment divided by underlying operating
profit.
· Leverage is defined as net debt divided by pro-forma EBITDA (both
are reconciled in note 13). Net debt within the leverage calculation is
defined as loans and borrowings net of unamortised issue costs less cash and
cash equivalents, excluding the effects of IFRS 16.
· Pro-forma EBITDA is defined as pre-IFRS 16 underlying operating
profit before depreciation, amortisation and share-based payment charges, for
the 12 months preceding the balance sheet date, adjusted where relevant, to
include a full year of EBITDA from acquisitions made during those 12 months.
2. Segment information
From 1 January 2023, reporting segments have been aligned with the Group's
Sustainable Solutions for Growth strategy and reorganised into three segments
- Climate Management Solutions (CMS), Water Management Solutions (WMS) and
Sustainable Building Solutions (SBS). The reporting segments are organised
based on the nature of the end markets served. Inter-segment sales are on an
arm's length basis in a manner similar to transactions with third parties.
Climate Management Solutions Water Management Solutions Sustainable Building Solutions Other Total
Year ended 31 December 2024
£m £m £m £m £m
Segmental revenue 164.8 183.3 252.7 7.8 608.6
Inter segment revenue (3.2) (22.4) (21.0) (0.7) (47.3)
Revenue* 161.6 160.9 231.7 7.1 561.3
Underlying operating profit** 24.0 13.6 54.4 0.2 92.2
Non-underlying items - (24.9) (0.2) (1.7) - (26.8)
segmental
Non-underlying items - Group (6.2)
Segmental operating profit / (loss) (0.9) 13.4 52.7 0.2 59.2
Finance costs (12.9)
Profit before tax 46.3
Climate Management Solutions Water Management Solutions Sustainable Building Solutions Other Total
Year ended 31 December 2023 £m £m £m £m £m
Segmental revenue 169.2 193.9 268.0 8.4 639.5
Inter segment revenue (3.3) (23.5) (25.2) (1.0) (53.0)
Revenue* 165.9 170.4 242.8 7.4 586.5
Underlying operating profit ** 22.7 17.7 53.1 0.6 94.1
Non-underlying items - segmental (15.0) (11.3) (1.4) (0.3) (28.0)
Non-underlying items - Group (4.1)
Segmental operating profit 7.7 6.4 51.7 0.3 62.0
Finance costs (13.6)
Profit before tax 48.4
* The other revenue of £7.1m (2023: £7.4m) relates to Polypipe Italia SRL
which does not form part of the Group's reporting segments.
** Underlying operating profit is stated before non-underlying items as
defined in the Group Accounting Policies in the Annual Report and Accounts and
is the measure of segmental profit used by the Group's CODM. Details of the
non-underlying items of £33.0m (2023: £32.1m) are detailed in note 4.
Geographical analysis
Revenue by destination 2024 2023
£m £m
UK 499.3 519.1
Rest of Europe 32.9 33.4
Rest of World 29.1 34.0
Total - Group 561.3 586.5
3. Operating Profit
2024 2023
£m £m
Income statement charges
Depreciation of property, plant and equipment (owned) 19.2 20.3
Depreciation of right-of-use assets 7.1 5.6
Cost of inventories recognised as an expense 251.1 287.9
Research and development costs expensed 7.4 9.0
Income statement credits
Research and development expenditure credit 1.5 1.5
Profit on disposal of property, plant and equipment - 0.4
4. Non-underlying items
Non-underlying items comprised:
2024 2023
Gross Tax Net Gross Tax Net
£m £m £m £m £m £m
Cost of sales:
Inventory write down - - - 1.5 (0.3) 1.2
Restructuring costs - - - 0.4 (0.1) 0.3
Employment matters (1.1) 0.1 (1.0) 1.3 (0.2) 1.1
Product liability claim 0.1 - 0.1 (1.2) (0.1) (1.3)
Selling and distribution costs :
Restructuring costs - - - 1.0 (0.2) 0.8
Administration expenses
Restructuring costs 1.8 (0.5) 1.3 12.4 (2.3) 10.1
Acquisition costs - acquisition and other M&A
activity
1.1 - 1.1 2.2 (0.1) 2.1
IT configuration
(SaaS) 1.1 (0.3) 0.8 1.2 (0.3) 0.9
Employment matters - - - 0.7 (0.1) 0.6
Software supplier dispute 4.3 (1.1) 3.2 - - -
Profit on disposal of property
plant and equipment (1.1) - (1.1) (4.7) - (4.7)
Amortisation of intangible
assets 14.4 (3.6) 10.8 14.8 (3.7) 11.1
Impairment of intangible - - -
assets 2.5 (0.6) 1.9
Impairment of goodwill 12.4 - 12.4 - - -
Total non-underlying items 33.0 (5.4) 27.6 32.1 (8.0) 24.1
Restructuring costs incurred in both years are in relation to the
reorganisation of the Group, which was announced in 2022 and whilst plans were
finalised in 2023 the remaining activity was concluded during 2024, with a
cumulative cost over the restructuring period of £26.4m. This included the
sale of two properties which were classed as held-for-sale at 31 December 2023
and subsequently sold in 2024, which accounts for the profit on disposal.
Software as a Service (Saas) configuration relates to the design and
configuration of software projects that are significant and support the
Group's medium-term strategy.
Acquisition costs in the year ending 31 December 2024 relate to the two
acquisitions in the year as well as costs associated with other merger and
acquisition activity. In the year ended 31 December 2023 the amount
predominantly related to a £1.8m charge arising in connection with contingent
consideration treated as remuneration in respect of the acquisition of Plura,
which was paid in 2024.
At 31 December 2023 a £1.4m provision associated with employment matters,
relating to a one off regulatory claim, was recognised in non-underlying.
During 2024 the matter was resolved and the unutilised provision released.
The Group incurred a one-off cost of £4.3m in respect of a dispute with a
third party back-office software supplier that was settled in the year ending
31 December 2024.
Amortisation charged in both years relates to intangible assets arising on
business combinations. Impairment of goodwill of £12.4m relates to a 2021
acquisition (see note 11).
5. Finance costs
2024 2023
£m £m
Interest on bank loan 10.4 11.6
Debt issue cost amortisation 0.9 0.8
Unwind of discount on lease liabilities 1.6 1.2
12.9 13.6
6. Income tax
(a) Tax expense reported in the income statement
2024 2023
£m £m
Current income tax:
UK income tax 13.8 11.0
Overseas income tax 0.1 0.2
Current income tax 13.9 11.2
Adjustment in respect of prior years (0.3) (0.4)
Total current income tax 13.6 10.8
Deferred income tax:
Origination and reversal of timing differences (0.7) (1.9)
Effects of changes in income tax rates - 0.1
Deferred income tax (0.7) (1.8)
Adjustment in respect of prior years (0.1) 0.9
Total deferred income tax (0.8) (0.9)
Total tax expense reported in the income statement 12.8 9.9
Details of the non-underlying tax credit of £5.4m (2023: £8.0m) are set out
in note 4.
(b) Reconciliation of the total tax expense
A reconciliation between the tax expense and the product of accounting profit
multiplied by the UK standard rate of income tax for the years ended 31
December 2024 and 2023 is as follows:
2024 2023
£m £m
Accounting profit before tax 46.3 48.4
Accounting profit multiplied by the UK standard rate of income tax of 25.0%
(2023: 23.52%)
11.6 11.4
Expenses not deductible for income tax 2.6 1.6
Non-taxable income - (2.2)
Adjustment in respect of prior years (0.4) 0.5
Effects of patent box (1.1) (1.1)
Effects of changes in income tax rates - 0.1
Effects of deferred tax not recognised (0.8) -
Effects of super deduction - (0.1)
Effects of other tax rates/credits 0.9 (0.3)
Total tax expense reported in the income statement 12.8 9.9
The effective rate for the full year was 27.6% (2023: 20.5%). If the impact of
non-underlying items is excluded, the underlying income tax rate would be
23.0% (2023: 22.2%).
(c) Deferred income tax
The deferred income tax included in the Group balance sheet is as follows:
31 December 31 December
2024 2023
£m £m
Deferred income tax liabilities/(assets)
Short-term timing differences 29.9 31.4
Capital allowances in excess of depreciation 25.5 23.0
Share-based payments (2.5) (1.3)
Tax losses (3.9) (3.0)
49.0 50.1
The Group offsets tax assets and liabilities if, and only if, it has a legally
enforceable right to offset current income tax assets and current income tax
liabilities and the deferred income tax assets and deferred income tax
liabilities relate to income taxes levied by the same tax authority.
(d) Change in corporation tax rate
On 24 May 2021, legislation was passed which substantively enacted an increase
in UK corporation tax rate from 19% to 25% from April 2024. Deferred tax on
the balance sheet at 31 December 2024 was therefore measured at 25%.
(e) Unrecognised tax losses
No deferred income tax has been recognised on non-trading losses and other
timing differences of
£0.3m (2023: £3.4m) as the Directors do not consider that they will be
utilised in the foreseeable future.
7. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the
year attributable to the owners of the parent company by the weighted average
number of ordinary shares outstanding during the year. The diluted earnings
per share amounts are calculated by dividing profit for the year attributable
to the owners of the parent company by the weighted average number of ordinary
shares outstanding during the year plus the weighted average number of
potential ordinary shares that would be issued on the conversion of all the
dilutive share options into ordinary shares.
The calculation of basic and diluted earnings per share is based on the
following:
2024 2023
Weighted average number of ordinary shares for the purpose of basic earnings
per share
248,459,018 248,182,934
Effect of dilutive potential ordinary shares 2,480,464 1,024,432
Weighted average number of ordinary shares for the purpose of diluted earnings
per share
250,939,482 249,207,366
Underlying earnings per share is based on the result for the year after tax
excluding the impact of non-underlying items of £27.6m (2023: £24.1m). The
Directors consider that this measure provides a better and more consistent
indication of the Group's underlying financial performance and more meaningful
comparison with prior and future periods to assess trends in the Group's
financial performance. The underlying earnings per share is calculated as
follows:
2024 2023
Underlying profit for the year attributable to the owners of the parent
company (£m) 61.1 62.6
Underlying basic earnings per share (pence) 24.6 25.2
Underlying diluted earnings per share (pence) 24.3 25.1
8. Dividends per share
2024 2023
£m £m
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2023 of 8.3p per share (2022:
8.2p)
20.6 20.3
Interim dividend for the year ended 31 December 2024 of 4.1p per share (2023:
4.1p)
10.2 10.2
30.8 30.5
Proposed final dividend for the year ended 31 December 2024 of 8.4p per share
(2023: 8.3p)
20.9 20.6
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. Property, plant and equipment
Freehold land and buildings Plant and other equipment
£m £m Total
£m
Cost
At 1 January 2023 63.2 203.4 266.6
Additions 6.2 26.6 32.8
Disposals (4.6) (10.6) (15.2)
Transfer to assets held-for-sale (3.6) (0.3) (3.9)
Exchange adjustment - (0.1) (0.1)
At 31 December 2023 61.2 219.0 280.2
Additions 2.7 22.9 25.6
Acquisitions - 0.5 0.5
Disposals (0.2) (14.3) (14.5)
Transfer from assets held-for-sale - 6.5 6.5
Exchange adjustment - (0.3) (0.3)
At 31 December 2024 63.7 234.3 298.0
Depreciation
At 1 January 2023 10.8 85.9 96.7
Provided during the year 2.0 18.3 20.3
Disposals (2.6) (10.1) (12.7)
Transfer to assets held-for-sale (0.3) (0.4) (0.7)
Exchange adjustment - 0.2 0.2
At 31 December 2023 9.9 93.9 103.8
Provided during the year 1.8 17.4 19.2
Disposals (0.1) (13.1) (13.2)
Transfer from assets held-for-sale - 4.3 4.3
Exchange adjustment - 0.2 0.2
At 31 December 2024 11.6 102.7 114.3
Net book value
At 31 December 2024 52.1 131.6 183.7
At 31 December 2023 51.3 125.1 176.4
In 2024 as part of the Group simplification to reduce its operational
footprint it undertook the following:
- Sold the land and buildings of two of its operating warehouses, the
net gain on disposal has been recognised in non-underlying items (see note 4).
Included in freehold land and buildings is non-depreciable land of £16.2m
(2023: £16.2m).
Capital commitments
At 31 December 2024, the Group had commitments of £5.0m (2023: £7.1m)
relating to plant and equipment purchases.
10. Right-of-use assets and lease liabilities
Freehold Plant and Motor vehicles Lease liabilities
land and buildings other equipment Total
£m £m £m £m £m
At 1 January 2023 12.9 8.7 0.7 22.3 (23.1)
Additions 1.8 2.2 3.9 7.9 (7.9)
Disposals (1.2) (1.5) (0.6) (3.3) 1.2
Depreciation of right-of- use assets
(1.9) (2.5) (1.2) (5.6) -
Depreciation on disposal
of right-of-use assets - 1.2 0.4 1.6 -
Unwind of discount on - - - - (1.2)
lease liabilities
Settlement of lease - - - - 7.6
liabilities
At 31 December 2023 11.6 8.1 3.2 22.9 (23.4)
Additions 1.7 5.7 5.6 13.0 (13.0)
Disposals (3.8) (3.7) (0.6) (8.1) -
Depreciation of right-of-
use assets (2.0) (3.0) (2.1) (7.1) -
Depreciation on disposal
of right - of - use assets 2.8 3.0 0.4 6.2 -
Transfer from Assets held-for-sale
- 0.2 - 0.2 (0.2)
Exchange adjustment - (0.1) - (0.1) -
Unwind of discount on
lease liabilities - - - - (1.6)
Settlement of lease
liabilities - - - - 10.6
At 31 December 2024 10.3 10.2 6.5 27.0 (27.6)
11. Intangible assets
Goodwill Patents Brand names Customer relationships Licences Development Total
£m £m £m £m £m costs £m
£m
Cost
At 1 January 2023 467.4 40.0 66.5 114.3 0.8 4.3 693.3
Additions - 0.4 - - - 1.3 1.7
Disposals - - - - - (0.6) (0.6)
Transfer to assets held-for-sale (1.3) - - - - - (1.3)
At 31 December 466.1 40.4 66.5 114.3 0.8 5.0 693.1
2023
Additions 5.3 0.5 - - - 0.6 6.4
Transfer from Assets held-for-sale 4.5 - - - - - 4.5
At 31 December 475.9 40.9 66.5 114.3 0.8 5.6 704.0
2024
Amortisation and impairment losses
At 1 January 2023 12.0 18.8 24.3 22.3 0.4 0.4 78.2
Charge for the - 3.3 5.1 6.4 0.1 0.7 15.6
year
Impairment losses - 1.0 0.9 0.6 - - 2.5
At 31 December 12.0 23.1 30.3 29.3 0.5 1.1 96.3
2023
Charge for the year - 3.4 5.0 6.1 0.1 0.5 15.1
Impairment losses 12.4 - - - - - 12.4
At 31 December 24.4 26.5 35.3 35.4 0.6 1.6 123.8
2024
Net book value
At 31 December 451.5 14.4 31.2 78.9 0.2 4.0 580.2
2024
At 31 December 454.1 17.3 36.2 85.0 0.3 3.9 596.8
2023
Brand names and customer relationships which arise from business combinations
are amortised over their estimated useful lives of five to twenty years. There
are two existing brands that have a significant carrying value: Nuaire
(£1.5m) and Adey (£21.2m) with an estimated useful life of 10 and 11 years,
respectively. Customer relationships that have a significant carrying value
are Adey's relationships with key customers (£68.5m) with an estimated useful
life of between 11 and 20 years and Manthorpe's (£5.3m) with an estimated
useful life of 15 years.
Impairment testing of goodwill
Goodwill is not amortised but is subject to annual impairment testing.
Goodwill has been allocated for impairment testing purposes to a number of
cash-generating units (CGUs) which represent the lowest level in the Group at
which goodwill is monitored for internal management purposes.
The carrying amount of goodwill allocated to each of the CGUs is as follows:
31 December 31 December
2024 2023
CGU £m £m
Building Services & International 33.6 29.1
Infrastructure & Landscape 45.9 43.6
Residential Systems 169.6 169.6
Climate & Ventilation 93.7 93.7
Nu-Heat 20.3 17.3
Adey 83.1 95.5
Others 5.3 5.3
451.5 454.1
During the year the acquisition of Sky Garden has been allocated to the
Infrastructure & Landscape CGU and the goodwill on Genuit UFH has been
allocated to the Nu-Heat CGU. Polypipe Italia SRL was declassified as
held-for-sale during the year and has been reallocated back to the Building
Services & International CGU and the 2023 comparative has been restated.
Key assumptions used for value-in-use calculations:
The recoverable amounts of all CGUs are determined from value-in-use
calculations, being the net present value of future pre-tax cash flows,
discounted at a mid-year position, covering a five-year period. These pre-tax
cash flows are based on budgeted cash flows information for a period of one
year and Board approved management's forecast of growth between 4.0% to 31.2%
for years 2 to 5 (2023: 1.6% to 7.3%). Terminal growth rates between 2.0% to
2.4% (2023: 2.0% to 2.4%) have been applied beyond this, based on historical
macroeconomic performance and projections of the sector served by the CGUs.A
pre-tax discount rate of 13.8% (2023: 13.9%) has been applied in determining
the recoverable amounts of CGUs. The pre-tax discount rate is estimated based
on the Group's risk adjusted cost of capital.
When assessing for impairment of goodwill, management have considered the
impact of climate change and have not identified any material short-term
impacts from climate change that would impact the carrying value of goodwill.
Over the longer term, the risks and opportunities are more uncertain, and
management will continue to assess the quantitative impact of risks at each
balance sheet date.
Recoverable amounts and sensitivities:
The Group has applied sensitivities to assess whether any reasonably possible
changes in assumptions could cause an impairment that would be material to
these consolidated financial statements and is satisfied that there is
sufficient headroom against the carrying value of all CGU's other than the
Adey CGU so no further sensitivity analysis has been performed. Due to the
ongoing softness in the boiler filter and chemicals market and a delay to
recovery in sales volumes, related to a suppressed RMI market, there has been
a reduction in the value-in-use of the Adey CGU, which resulted in an
impairment charge of £12.4m being recognised in the first half of the year to
reflect that the discounted present value of future pre-tax cash flows did not
support the full carrying value of the asset. At 31 December 2024, the
estimated recoverable amount of the CGU exceeded its carrying value by £4.6m.
Detailed sensitivity analysis indicates that the following changes in each of
these key assumptions would result in a reduction in the recoverable amount
and an additional impairment charge being recognised:
• The pre-tax discount rate increasing to 14.1% from that used in the
value-in-use calculations of 13.8% would give rise to an impairment charge of
£0.3m.
• A reduction in the long-term growth rate to 1.9% from that used in the
value-in-use calculations of 2.4% would give rise to an impairment charge of
£1.1m.
• Average revenue growth rates declining by 1.1 percentage points from that
used in the value-in-use calculations would give rise to an impairment charge
of £16.3m.
• Gross margin efficiencies are not achieved by 2029 and margin declines by
1.9 percentage points from used in the value-in-use calculations would give
rise to an impairment charge of £12.5m.
Management has reviewed the forecasts associated with the CGU noting the
assumptions used, the sensitivity analysis performed and the ability of the
business to adapt to challenging economic environments in which they operate,
and is satisfied that no further impairments are necessary at 31 December
2024.
12. Acquisitions
Sky Garden
On 5 August 2024, the Group acquired 100% of the voting rights and shares of
Sky Garden Limited and Grey2Green Limited for a cash consideration of £2.6m,
which included an amount for net cash and working capital commitments on
completion. Sky Garden is a leader in green-roof technologies, providing
design, supply, installation and maintenance services for green and bio-solar
roofs, podium decks and green walls. The business will join WMS and extend the
Group's blue green roof offering. It complements Permavoid's geo-cellular
roofing solutions business and creates synergies with Keytec's water
management installation business.
Details of the acquisition were as follows:
Fair
Value
£m
Property, plant and equipment (Including right-of-use Assets) 0.7
Inventories 0.9
Trade and other receivables 1.8
Cash and cash equivalents 0.4
Trade and other payables (2.0)
Debt factoring (1.0)
Lease liabilities (0.5)
Net identifiable assets 0.3
Goodwill on acquisition 2.3
Total cash consideration 2.6
No material intangible assets have been identified. The goodwill arising on
the acquisition primarily represented the assembled workforce, technical
expertise, synergies with companies offering both supply and install services
and market share in markets Genuit currently does not operate in from the
acquisition.
Acquisition-related costs of £0.2m have been recognised in non-underlying
items.
Post-acquisition Sky Garden contributed £3.3m revenue and £0.1m underlying
operating loss which were included in the Group Income Statement. If Sky
Garden had been acquired on 1 January 2024, the Group's results for the twelve
months ended 31 December 2024 would have shown revenue of £562.7m and
underlying operating profit of £92.5m.
Omnie & Timoleon (Genuit UFH)
On 6 August 2024, the Group acquired the trade and assets from the group
operating the Omnie & Timoleon businesses for a cash consideration of
£2.7m. As part of the acquisition, the Group also acquired 100% of Timoleon
Sp.z o.o. The assets and liabilities of Timoleon Sp.z o.o. are included as
part of the table below. The trade and assets acquired met the definition of a
business under IFRS 3, and as such the acquisition has been accounted for as a
business combination. Omnie & Timoleon are leaders in underfloor heating
(UFH) board technologies and providers of full UFH system design and supply.
The businesses operate and manufacture in Exeter, Devon and Lomza, Poland. The
brands will complement and enhance the Group's UFH offering and will be part
of CMS. Omnie serves direct customers and the merchant channel whilst Timoleon
supplies OEM customers.
Details of the acquisition were as follows:
Fair
Value
£m
Property, plant and equipment 0.3
Inventories 0.2
Trade and other receivables 0.2
Trade and other payables (1.1)
Net identifiable liabilities (0.4)
Goodwill on acquisition 3.1
Total cash consideration 2.7
No material intangible assets have been identified. The goodwill arising on
the acquisition primarily represented the assembled workforce and technical
expertise and synergies with companies offering underfloor heating solutions.
The goodwill is allocated entirely to the Nu-Heat CGU.
Acquisition-related costs of £0.2m have been recognised in non-underlying
items.
Post-acquisition Genuit UFH contributed £2.5m revenue and £0.6m underlying
operating loss which were included in the Group Income Statement.
Acquisition-related deferred and contingent consideration comprised:
Year ended 31 Year ended 31
December 2024 December 2023
£m £m
Deferred consideration on Plura acquisition - 8.2
Acquisition-related cash flows comprised:
2024 2023
£m £m
Operating cash flows - settlement of acquisition costs
Sky Garden 0.3 -
Genuit UFH 0.1 -
Plura 6.5 -
Other 0.7 -
7.6 -
2024 2023
£m £m
Investing cash flows - settlement of deferred and contingent consideration
Keytec - 0.6
Plura 1.6 1.0
1.6 1.6
2024 2023
£m £m
Investing cash flows - acquisition of businesses net of cash at acquisition
Sky Garden 2.2 -
Genuit UFH 3.0 -
5.2 -
13. Financial liabilities
31 December 31 December
2024 2023
£m £m
Non-current loans and borrowings:
Bank loan - principal 121.5 120.0
- unamortised debt issue costs (1.3) (2.1)
Loan notes 25.0 25.0
Total non-current loans and borrowings 145.2 142.9
Cash at bank and in hand (43.6) (17.0)
Net debt (excluding lease liabilities) 101.6 125.9
31 December 31 December
2024 2023
£m £m
Other financial liabilities:
Trade and other payables 128.2 114.8
Lease liabilities 27.6 23.4
Deferred and contingent consideration - 8.2
155.8 146.4
On 10 August 2023, the Group renewed its banking facilities and entered a
Sustainability-Linked Loan revolving credit facility agreement for £350.0m
with a £50.0m uncommitted accordion facility expiring in August 2027 and a
separate agreement for private placement loan notes of £25.0m with an
uncommitted £125.0m shelf facility repayable in August 2029.
Interest is payable on the bank loan at SONIA plus an interest margin ranging
from 0.90% to 2.75% which is dependent on the Group's ESG targets and the
Group's leverage (net debt excluding lease liabilities as a multiple of
pro-forma EBITDA) and reduces as the Group's leverage reduces. The interest
margin at 31 December 2024 was 1.63% (2023: 1.65%). Pro-forma EBITDA for the
year was £112.7m (2023: £114.9m) and is defined as pre-IFRS 16 underlying
operating profit before depreciation, amortisation and share-based payment
charges, for the 12 months preceding the Balance Sheet date adjusted where
relevant to include a full year of EBITDA from acquisitions made during those
12 months.
2024 2023
£m £m
Pro-forma EBITDA (12 months preceding the Balance Sheet)
Underlying operating profit 92.2 94.1
Depreciation of property, plant and equipment 19.2 19.1
Amortisation of internally generated intangible assets 0.7 0.8
Unwind of discount on lease liabilities (1.6) (1.2)
Share-based payments charge 2.9 2.1
113.4 114.9
EBITDA from acquisitions
(0.7) -
112.7 114.9
At 31 December 2024, the Group had available, subject to covenant headroom,
£228.6m (2023:
£230.0m) of undrawn committed borrowing facilities in respect of which all
conditions precedent had been met.
The Group is subject to a number of covenants in relation to its bank loan
which, if breached, would result in the bank loan becoming immediately
repayable. These covenants specify certain maximum limits in terms of net
debt, excluding lease liabilities, as a multiple of pro-forma EBITDA and
interest cover. At 31 December 2024, the Group was not in breach of any bank
covenants. The covenant position was as follows:
Covenant requirement Position at 31 December
Covenant 2024
Interest cover (Underlying operating profit: Finance costs excluding >4.0:1 8.3:1
debt issue cost amortisation)
Leverage (Net debt excluding lease liabilities: pro-forma EBITDA) <3.0:1 0.9:1
14. Reconciliation of profit before tax to cash generated from
operations
2024 £m 2023 £m
Operating activities
Profit before tax 46.3 48.4
Finance costs 5 12.9 13.6
Operating profit 59.2 62.0
Non-cash items:
Profit on disposal of property, plant and equipment (underlying)
- (0.4)
Software supplier dispute (underlying) (0.9) -
Research and development expenditure credit (1.5) (1.5)
Employment matters (underlying) (0.5) -
Non-underlying items:
- amortisation of intangible assets arising on business combinations 4 14.4 14.8
- impairment of intangible assets arising on business combinations 4 - 2.5
- impairment of goodwill arising on business combinations 4 12.4 -
- provision for acquisition costs 4 1.1 2.2
- provision for restructuring costs 4 1.8 14.1
- Supplier software dispute 4 4.3 -
- provision for restructuring costs - accelerated depreciation of property, -
plant and equipment (non- underlying)
4 1.2
- IT configuration (SaaS) 4 1.1 1.2
- provision for product liability claim 4 0.1 (1.2)
- Employment matters 4 (1.1) 2.0
- Profit on disposal of assets held-for-sale 4 (1.1) (4.7)
Depreciation of property, plant and equipment 9 19.2 19.1
(underlying)
Depreciation of right-of-use assets 10 7.1 5.6
Amortisation of internally generated intangible assets 0.7 0.8
Share-based payments 2.9 2.1
Cash items:
- settlement of acquisition costs (7.6) (0.4)
- settlement of net product liability claim costs - (1.7)
- settlement of restructuring costs (2.2) (12.1)
- settlement of other exceptional costs (2.9) -
Operating cash flows before movement in working capital 106.5 105.6
Receivables (5.1) (6.9)
Payables 11.0 (9.9)
Inventories 3.1 20.9
Cash generated from operations 115.5 109.7
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