REG - Genuit Group PLC - Half-year Report
15/08/2023 07:00
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RNS Number : 2897J Genuit Group PLC 15 August 2023
Genuit Group plc
Interim condensed set of consolidated financial
statements for the six months ended 30 June 2023
Sustainable Solutions for Growth
Genuit Group plc
Interim results for the six months ended 30 June 2023
2023 operating profit at top-end of expectations
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 unaudited interim results for the six months
ended 30 June 2023.
Joe Vorih, Chief Executive Officer, said:
"Genuit has made good progress in the first half of the year. Ongoing
self-help measures, deployment of the Genuit Business System and continued
business simplification enabled improvements in the quality of operating
margin despite deteriorating market conditions.
The Group continues to make measurable progress towards our mid-term
commitments. Our sustainability plans, including our Science-Based Targets,
are progressing well and we continue to focus on being the lowest carbon
supplier of choice for our customers. Despite more challenging conditions
notably in the residential new build and RMI markets, we upgraded market
expectations in May and expect Group full year operating profit to be at the
top-end of current full year analyst expectations(1). Whilst the economic
situation remains challenging, we have good momentum moving into the second
half as we focus on improving efficiency, creating value and enabling growth."
Financial Results
Statutory Measures H1 2023 H1 2022 Change
Revenue (£m) 304.8 318.0 (4.2%)
Operating profit (£m) 36.4 35.7 2.0%
Profit before tax (£m) 29.7 32.9 (9.7%)
Earnings per share (basic - pence) 9.4 10.1 (6.9%)
Cash generated from operations (£m) 31.7 18.4 72.3%
Dividend per share (pence) 4.1 4.1 -
Alternative Performance Measures(2) H1 2023 H1 2022 Change
Underlying operating profit (£m) 47.0 47.4 (0.8%)
Underlying cash generated from operations (£m) 30.5 15.2 100.7%
Underlying operating margin (%) 15.4 14.9 50 bps
Underlying profit before tax (£m) 40.3 44.6 (9.6%)
Underlying earnings per share (basic - pence) 12.4 14.0 (11.4%)
Leverage (times pro forma EBITDA) 1.3 1.5
( )
(1) (Underlying operating profit (EBIT) consensus as compiled by Genuit Group
plc is £88m with a range of £85m - £89m.)
( 2 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 of the interim condensed consolidated financial statements
on page 14.)
Financial Highlights
· Revenue decrease of 4.2%, 5.0% lower on a like-for-like basis,
driven by a volume decline of 14.5% offset with successful new product
launches and balanced price and cost management.
· Underlying operating margin improvement of 50 basis points, with
sequential month-on-month improvement in margins from April onwards. This was
driven by efficiency and cost reduction actions, improved portfolio profit
mix, ongoing action on lower margin business and balanced pricing offsetting
inflationary headwinds.
· Sustainable Building Solutions' 10.7% revenue decrease driven by
lower market volumes yet, despite this, underlying operating margin rose 220
basis points through self-help measures.
· Water Management Solutions revenue declined by 4.0%,
outperforming the market and with self-help measures driving 180 basis point
underlying operating margin growth.
· Climate Management Solutions revenue grew by 8.9%, recovering
from last year's isolated cyber-incident and benefitting from stronger demand
for residential ventilation. To reduce the risk of a recurrence, the Group has
invested heavily in cyber defence and insurance for this business to bring it
up to Group standards. This step up in costs plus short term boiler market
weakness contributed to an operating margin that was 400 basis points below
last year, but this investment masked sequential underlying operating profit
margin improvement since the second half of last year and which management
expects to continue.
· Net debt reduced from 1.5 times to 1.3 times pro forma EBITDA in
line with expectations.
· The Group intends to pay an interim dividend of 4.1 pence per
share (2022: 4.1 pence per share).
ESG Highlights
· The Group is focused on serving the needs created by
sustainability-linked growth drivers:
o Increasing need for resilient drainage;
o Need for green urbanisation;
o Increased focus on clean healthy indoor air and ventilation; and
o A move towards a low, or zero carbon, built environment.
· The Group continues to make progress on operating sustainably, in
order to be the lowest carbon supplier of choice for the Group's customers:
o Recycled materials formed 48.4% of our polymer inputs (2022: 47.1%). We
remain the European leader in the sector for use of recyclate.
o The Group's carbon intensity on a rolling twelve-month basis is broadly in
line with the last year end, despite the impact of lower volumes.
o Sales of new products was £146.8m resulting in a Vitality Index of 24.1%,
on track to achieve the 25% 2025 target.
· The Group's commitment to employee development and social
mobility is reflected in its membership of The 5% Club:
o 3.2% of the Group's workforce were in accredited work and learning
programmes - largely in line with the figure reported in the Group's 2022
Annual Report.
· In April 2023, the Group's Science-Based Target's (SBTs) were
approved by the Science-Based Targets initiative, which dovetail with the
Group's existing 2025 targets adding further goals for 2027 as the next
milestone on the Group's pathway to reaching net-zero by 2050.
Outlook
· The Group's performance during the first half of the year has
been better than management's earlier expectations - driven by self-help
actions including organisational simplification, procurement benefits and the
initial roll-out of the Genuit Business System ("GBS").
· The market remains challenging, with macro expectations lower
than at the start of 2023 notably in the new residential and RM&I portions
of the market, while other areas of the construction economy are less
affected. An improvement in market conditions in the current year is unlikely
given the macroeconomic environment, though Genuit's proven resilience
provides scope for ongoing financial outperformance.
· Pent-up boiler and heating system demand is expected to be
released as the economic situation stabilises, providing scope for recovery of
demand within the climate management space. We remain confident that the
tailwind of increasing energy efficiency in heating and ventilation,
stormwater management and lower carbon building materials will benefit our
businesses.
· The benefits from self-help measures are building and give
management the confidence that, notwithstanding the uncertain market backdrop,
the Group expects to deliver a financial performance at the top-end of current
market expectations.
Enquiries:
Genuit Group plc
Joe Vorih, Chief Executive Officer
Paul James, Chief Financial Officer
+44 (0) 113 831 5315
Brunswick
Nina Coad
Tom Pigott
+44 (0) 20 7404 5959
A copy of this report will be available on our website www.genuitgroup.com
(http://www.Genuitgroup.com) today from 0700hrs (BST).
There will be a presentation for analysts and investors today at 0830hrs (BST)
at Brunswick Group's offices, 16 Lincoln's Inn Fields, London, WC2A 3ED.
Please contact Genuit@brunswickgroup.com (mailto:Genuit@brunswickgroup.com)
to confirm your attendance.
The presentation will also be available to listen into via webcast. Please
register for access to the webcast via the following link:
https://www.investis-live.com/genuit-group/64b920430120c60d00ff322a/hstr
(https://www.investis-live.com/genuit-group/64b920430120c60d00ff322a/hstr)
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.
The presentation is also available on the Reports, Results and Presentations
page on our website at https://www.genuitgroup.com/investors/
(https://www.genuitgroup.com/investors/)
Notes to Editors:
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, and among the ten largest manufacturers in Europe, of piping
systems for the residential, commercial, civils and infrastructure sectors by
revenue. It is also a leading designer and manufacturer of energy efficient
solutions in water-based heating systems in the UK. The Group operates from
twenty nine facilities in total and manufactures the UK's widest range of
solutions for heating, plumbing, drainage and ventilation. The Group primarily
targets 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.
The Group was established in 1980 and has been listed on the premium segment
of the London Stock Exchange since 2014.
Group Results
Revenue for the six months ended 30 June 2023 was 4.2% behind the prior year
at £304.8m (2022: £318.0m), driven by a volume decline of 14.5% that was
broadly in line with the market, offset by new product launches and balanced
price and cost management. The Group remained focused on its medium-term
drivers - a structural UK housing shortage, water and climate management
regulatory and environmental tailwinds, and indoor air quality.
The Group demonstrated a 220 basis points gross margin improvement versus 2022
H1. Underlying operating profit was £47.0m (2022: £47.4m), broadly in line
with the prior year and ahead of expectations, driven by the Group
successfully delivering on cost reduction targets of £3.7m and balanced
pricing management offsetting ongoing inflationary pressures. This represented
an underlying operating margin of 15.4% in the period, an improvement of 50
basis points on the prior year. Sequential month-on-month improvement in
margins from the second quarter are expected to come through more fully in the
second half of the year.
Underlying finance costs rose to £6.7m (2022: £2.8m), but were broadly in
line with expectations, due to significantly higher Standard Overnight Index
Average (SONIA) interest rates partially offset by lower RCF borrowings and a
component of the Group's borrowing derived from a Private Placement tranche of
£25m with interest cost fixed at 4.4%. The Group had, as ever, a keen focus
on cash management during H1 2023 to ensure RCF borrowings are as low as
possible to reduce interest impact.
Non-underlying operating costs of £10.6m (2022: £11.7m) were driven by
transformation costs, as the Group continued to implement its Sustainable
Solutions for Growth strategy, and amortisation of intangible assets arising
from acquisitions, offset by a gain on sale from disposal of a property.
The total tax charge was £6.4m (2022: £7.9m). The underlying tax charge of
£9.5m (2022: £9.8m) represents an effective underlying tax rate of 23.6%
(2022: 22.0%), the marginal increase driven by the increase in the statutory
tax rate from April 2023.
Underlying profit after tax was lower than the prior year at £30.8m (2022:
£34.8m) due to the increase in finance costs. Underlying basic earnings per
share was 12.4 pence (2022: 14.0 pence).
Including non-underlying items, profit after tax was £23.3m (2022: £25.0m),
and basic earnings per share was 9.4 pence (2022: 10.1 pence).
The Board recognises the importance of dividends to shareholders and has
declared an interim dividend of 4.1 pence per share. This dividend will be
paid on 27 September 2023 to shareholders on the register at the close of
business on 1 September 2023.
Business Review
Revenue (£m) H1 2023 H1 2022 Change % LFL Change %
Sustainable Building Solutions 127.5 142.8 (10.7) (10.7)
Water Management Solutions 88.1 91.8 (4.0) (7.0)
Climate Management Solutions 84.7 77.8 8.9 8.9
300.3 312.4 (3.9) (5.0)
Other* 4.5 5.6 (19.6) (19.6)
Total Group 304.8 318.0 (4.2) (5.0)
* relates to assets held for sale which are not reported as part of the
Group's Strategic business units.
Underlying operating profit (£m) H1 2023 ROS %* H1 2022 ROS %* Change
Sustainable Building Solutions 26.2 20.5 26.1 18.3 220 bps
Water Management Solutions 8.8 10.0 7.5 8.2 180 bps
Climate Management Solutions 11.4 13.5 13.6 17.5 (400) bps
46.4 15.5 47.2 15.1 40 bps
Other** 0.6 13.3 0.2 3.6 970 bps
Total Group 47.0 15.4 47.4 14.9 50 bps
* Return on sales (ROS) is equivalent to underlying operating margin
(underlying operating profit : revenue)
** relates to assets held for sale which are not reported as part of the
Group's Strategic business units.
Following the Group's announcement of its Sustainable Solutions for Growth
Strategy in November 2022 and moving to the new operating structure in January
2023, the Group has continued to focus on profitable growth and improving
operating margin despite challenging markets.
The Group has now deployed GBS via Lighthouse Projects at two sites and
management is now seeing improvements in customer service, efficiencies, and
inventory levels. GBS, coupled with the Group's existing self-help measures
and procurement savings, has enabled the Group to grow operating margin
despite seeing volume reductions.
The increased collaboration of the Group's teams following the transformation
of the business structure is enabling the Group to realise synergies and react
quicker to market changes ultimately ensuring that it is agile in
decision-making to protect or improve operating margin levels towards its
mid-term goals.
The Group has completed the closure of two UK facilities (Glasgow distribution
centre and the exit of the Kirk Sandall site) as it continues to review
operating footprint. The Group has also announced the closure of its site in
Birmingham and will continue to serve customers of these businesses from
alternative facilities.
Revenue, in the Strategic business units, for the six months ended 30 June
2023 was 3.9% lower than the prior year at £300.3m (2022: £312.4m). On a
like-for-like basis, excluding the impact of acquisitions, revenue was 5.0%
lower than prior year.
Sustainable Building Solutions
Trading in the Sustainable Building Solutions ("SBS") business unit performed
better than management's expectations, with revenue of £127.5m (2022:
£142.8m), 10.7% lower than prior year. Market volume decline in the UK
residential new build sector and planned exit of low margin business within
SBS was offset with continued balanced price management.
Despite volume challenges, underlying operating profit margin improved by 220
basis points, driven primarily by effective cost management. Management has
launched an operating footprint consolidation plan and has completed the sale
of the Glasgow distribution centre and exit of the Kirk Sandall site, both of
which have been integrated into the remaining Doncaster facilities.
The lean transformation is underway with deployment of GBS at Building
Products (Doncaster) in progress, alongside the completion of a significant
equipment refresh programme, which is demonstrating a substantial reduction in
past due orders with targeted efficiency and inventory benefits. The business
unit remains focused on its priorities of growing solutions sales, operational
and sales excellence and sustainability.
Water Management Solutions
Water Management Solutions ("WMS") revenue of £88.1m (2022: £91.8m) declined
by 4.0% versus 2022 (7.0% on a like-for-like basis). Trading activity for the
first six months was relatively strong considering the difficult UK economic
dynamics, particularly in residential, and WMS outperformed the market
overall. Underpinning this level of activity was the launch of new products to
the USA and expansion into further territories in the Middle East, exploiting
joint opportunities across the business unit and wider Group and an increased
focus on product family specification.
The business unit reported an underlying operating margin of 10.0% during the
period, 180 basis points improvement versus prior year, with cost and
efficiency initiatives offsetting general inflationary pressures and foreign
exchange impacts. Capital investment projects in the first half were focused
on site and product development to underpin future growth.
Climate Management Solutions
Revenue of £84.7m (2022: £77.8m) in Climate Management Solutions ("CMS")
improved by 8.9% versus 2022. Lost volume following the 2022 isolated
cyber-incident has been fully recovered and underlying revenue for CMS,
normalising for this event, showed growth of 1.2%. Whilst still having supply
constraints they are not as severe as in 2022, however, these are demanding
significant time and resource from the business.
Last year's shortages of supply in the boiler market have been overtaken by
reduced demand for new boiler and heating system installations, however,
revenue has remained broadly flat on 2022 H1 levels. The boiler market remains
subdued, but we expect improvement in time, releasing pent-up demand.
The CMS business unit reported an underlying operating margin of 13.5% during
the period, 400 basis points lower than H1 2022. The Group has invested
heavily in cyber defence and insurance for this business unit, contributing to
all the underlying operating margin deterioration. This does not reflect, that
since the second half of last year, the underlying operating profit margin has
been improving due to self-help measures and momentum in the Nuaire business.
Progress on cost reductions has not yet taken full effect but management
expect this to improve into the second half of the year.
Environmental, Social & Governance
The Science-Based Targets initiative ("SBTi") has approved Genuit Group's
near-term science-based emissions reduction target. The Group has also
committed to set long-term emissions reduction targets with the SBTi in line
with reaching net-zero by 2050. The Group continue to place innovation at the
heart of its business, ensuring it has the solutions for the emerging
challenges faced by the construction sector.
Financial Review
Finance Costs
Net underlying finance costs for the six months ended 30 June 2023 rose to
£6.7m (2022: £2.8m) due to significantly increased interest rates offset by
lower level of RCF borrowing through the first half of the year. Interest
was payable on the Group's RCF at the Standard Overnight Index Average (SONIA)
plus an interest rate margin ranging from 0.90% to 2.75% depending on
leverage. The interest rate margin at 30 June 2023 was 1.65% (30 June 2022:
1.40%).
Taxation
The Group's tax charge for the six months ended 30 June 2023 decreased to
£6.4m (2022: £7.9m). The underlying tax rate (underlying tax: underlying
profit before tax) has been provided at the estimated full year rate of 23.6%
(2022 full year: 15.6%).
Dividend
The Group's dividend policy is normally to pay a minimum of 40% of the annual
underlying profit after tax. The Directors intend that the Group will pay the
total annual dividend in two tranches, an interim dividend and a final
dividend, to be announced at the time of announcement of the interim and
preliminary results respectively with the interim dividend being approximately
one half of the prior year's final dividend.
Cash Flow and Net Debt
Cash generated from operations during the period amounted to an inflow of
£31.7m (2022: £18.4m inflow), as the Group continued to improve its working
capital cycle.
Capital expenditure increased to £12.5m (2022: £9.4m). The full year 2023 is
expected to be below £40m, with a primary focus on key, strategic and
innovative projects.
Net debt (including unamortised debt issue costs but excluding the effects of
IFRS 16 capitalisation) decreased to £154.6m at 30 June 2023 (30 June 2022
£167.9m, 31 December 2022: £143.1m). Leverage was in line with expectations
at 1.3 times pro forma EBITDA (30 June 22: 1.5 times pro forma EBITDA).
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 £50.0m and a seven-year
private placement loan note of £25.0m with an uncommitted shelf facility of
£125.0m. At 30 June 2023, liquidity headroom (cash and undrawn committed
banking facilities) was £217.9m (2022: £131.7m). The Group's focus will
continue to be on deleveraging and its net debt to EBITDA ratio stood at 1.3
times pro forma EBITDA at 30 June 2023 (30 June 2022: 1.5 times pro forma
EBITDA), increasing to 1.5 times pro forma EBITDA including the effects of
IFRS 16. This headroom means the Group is well-positioned with a strong
balance sheet.
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 18 months. Accordingly, they continue to adopt the going concern basis in
preparing the condensed set of consolidated financial statements.
Principal Risks and Uncertainties
The Board continually assesses and monitors the key risks of the business and
Genuit has developed a risk management framework to identify, report, and
manage its principal risks and uncertainties. The principal risks and
uncertainties that could have a material impact on the Group's performance and
prospects, and the mitigating activities which are aimed at reducing the
impact or likelihood of a major risk materialising, have not changed from
those which are set out in detail in the principal risks and uncertainties
section of the 2022 Annual Report and Accounts.
These principal risks and uncertainties include macro-economic and political
conditions; climate change; raw materials supply and pricing; information
systems disruption; reliance on key customers and recruitment and retention of
key personnel.
A copy of the 2022 Annual Report and Accounts is available on the Company's
website www.genuitgroup.com (http://www.Genuitgroup.com) .
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' Responsibility Statement
We confirm that to the best of our knowledge:
· The condensed set of consolidated financial statements has been
prepared in accordance with UK-adopted International Accounting Standard (IAS)
34, Interim Financial Reporting; and
· The Interim Management Report includes a fair review of the
information required by:
(a) DTR 4.2.7R of the Disclosure Guidance 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 set of consolidated
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
related party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any changes in
the related party transactions described in the last Annual Report and
Accounts that could do so.
This report was approved by the Board of Directors on 14 August 2023 and is
available on the Company's website www.genuitgroup.com
(http://www.Genuitgroup.com) .
The Directors of the Company are:
Kevin Boyd Chair
Joe Vorih Chief Executive Officer
Paul James Chief Financial Officer
Lisa Scenna Senior Independent Director
Mark Hammond Non-executive Director
Louise Brooke-Smith Non-executive Director
Shatish Dasani Non-executive Director
Bronagh Kennedy Non-executive Director
By order of the Board:
J M Vorih P A James
Chief Executive Officer Chief Financial Officer
Interim Group Income Statement
for the six months ended 30 June 2023 (unaudited)
Six months ended 30 June 2023 Six months ended 30 June 2022
Notes Underlying Non-underlying Total Underlying Non-underlying Total
£m £m £m £m £m £m
Revenue 3 304.8 - 304.8 318.0 - 318.0
Cost of sales (179.8) (0.5) (180.3) (194.4) - (194.4)
Gross profit 125.0 (0.5) 124.5 123.6 - 123.6
Selling and distribution costs (37.6) - (37.6) (42.7) - (42.7)
Administration expenses (40.2) (2.7) (42.9) (33.5) (4.2) (37.7)
Trading profit 47.2 (3.2) 44.0 47.4 (4.2) 43.2
Amortisation of intangible assets (0.2) (7.4) (7.6) - (7.5) (7.5)
Operating profit 3 47.0 (10.6) 36.4 47.4 (11.7) 35.7
Finance costs 3, 5 (6.7) - (6.7) (2.8) - (2.8)
Profit before tax 40.3 (10.6) 29.7 44.6 (11.7) 32.9
Income tax 6 (9.5) 3.1 (6.4) (9.8) 1.9 (7.9)
Profit for the period attributable to the owners of the parent company 30.8 (7.5) 23.3 34.8 (9.8) 25.0
Basic earnings per share (pence) 7 9.4 10.1
Diluted earnings per share (pence) 7 9.3 10.0
Dividend per share (pence) - interim 8
4.1 4.1
Non-underlying items are presented separately and are detailed in note 4.
Interim Group Statement of Comprehensive Income
for the six months ended 30 June 2023 (unaudited)
Six months ended 30 June 2023 Six months ended 30 June 2022
£m £m
Profit for the period attributable to the owners of the parent company 23.3 25.0
Other comprehensive income:
Items which may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations - 0.6
Effective portion of changes in fair value of forward foreign currency - 0.3
derivatives
Other comprehensive income for the period net of tax - 0.9
Total comprehensive income for the period attributable to the owners of the 23.3
parent company
25.9
Interim Group Balance Sheet
at 30 June 2023 (unaudited)
30 June 30 June 31 December
Notes 2023 2022 2022
£m £m £m
Non-current assets
Property, plant and equipment 9 170.3 152.2 169.9
Right-of-use assets 23.8 21.1 22.3
Intangible assets 10 607.8 639.0 615.1
Total non-current assets 801.9 812.3 807.3
Current assets
Inventories 81.1 97.4 89.9
Trade and other receivables 102.6 94.8 68.1
Income tax receivable 4.0 2.5 2.2
Cash and cash equivalents 11 27.9 49.7 50.0
Derivative financial instruments 12 - 0.2 -
Assets held-for-sale 11.2 - 10.7
Total current assets 226.8 244.6 220.9
Total assets 1,028.7 1,056.9 1,028.2
Current liabilities
Trade and other payables (126.9) (132.4) (124.2)
Lease liabilities 11, 12 (5.8) (5.4) (5.8)
Liabilities held-for-sale (2.8) - (2.6)
Total current liabilities (135.5) (137.8) (132.6)
Non-current liabilities
Loans and borrowings 11, 12 (182.5) (217.6) (193.1)
Lease liabilities 11, 12 (18.5) (16.5) (17.3)
Deferred and contingent consideration 10, 12 (8.8) (6.2) (8.0)
Other liabilities - (1.4) -
Deferred income tax liabilities (52.9) (53.2) (50.1)
Total non-current liabilities (262.7) (294.9) (268.5)
Total liabilities (398.2) (432.7) (401.1)
Net assets 630.5 624.2 627.1
Capital and reserves
Equity share capital 0.2 0.2 0.2
Share premium 93.6 93.6 93.6
Capital redemption reserve 1.1 1.1 1.1
Hedging reserve - 0.2 -
Foreign currency retranslation reserve - 0.6 -
Other reserves 116.5 116.5 116.5
Retained earnings 419.1 412.0 415.7
Total equity 630.5 624.2 627.1
Interim Group Statement of Changes in Equity
for the six months ended 30 June 2023 (unaudited)
Equity share capital Capital redemption reserve Foreign currency retranslation reserve
£m Share premium £m Hedging reserve £m Other reserves Retained earnings Total equity
£m £m £m £m £m
Six months ended 30 June 2023
Opening balance 0.2 93.6 1.1 - - 116.5 415.7 627.1
Profit for the period - - - - - - 23.3 23.3
Other comprehensive income - - - - - - - -
Total comprehensive income for the period - - - - - - 23.3 23.3
Dividends paid - - - - - - (20.4) (20.4)
Share-based payments charge - - - - - - 1.6 1.6
Share-based payments settled - - - - - - - -
Share-based payments excess tax benefit - - - - - - (1.1) (1.1)
Closing balance 0.2 93.6 1.1 - - 116.5 419.1 630.5
Six months ended 30 June 2022
Opening balance 0.2 93.6 1.1 (0.1) - 116.5 406.4 617.7
Profit for the period - - - - - - 25.0 25.0
Other comprehensive income - - - 0.3 0.6 - - 0.9
Total comprehensive income for the period - - - 0.3 0.6 - 25.0 25.9
Dividends paid - - - - - - (20.3) (20.3)
Share-based payments charge - - - - - - 1.6 1.6
Share-based payments settled - - - - - - 0.4 0.4
Share-based payments excess tax benefit - - - - - - (1.1) (1.1)
Closing balance 0.2 93.6 1.1 0.2 0.6 116.5 412.0 624.2
Interim Group Cashflow Statement for the six months ended 30 June 2023
Notes Six months ended 30 June 2023 Six months ended 30 June 2022 Year ended 31 December 2022
£m £m £m
Operating activities
Profit before tax 29.7 32.9 45.4
Finance costs 5 6.7 2.8 8.0
Operating profit 36.4 35.7 53.4
Non-cash items:
Profit on disposal of property, plant and equipment (0.2) (0.6) (0.7)
Research and development expenditure credit (0.8) (0.6) (1.2)
Warranty provision release - - (1.0)
Non-underlying items:
- amortisation of intangible assets arising on business 4, 10 7.4 7.5 15.2
combinations
- provision for acquisition costs 4 1.5 1.8 3.3
- provision for restructuring costs 4 5.5 1.2 9.3
- provision for product liability claim 4 0.3 - 1.0
- provision for cyber-incident related costs 4 - 1.2 1.2
- profit on disposal of property, plant and equipment 4 (4.1) - -
- impairment of goodwill arising on business combinations 4, 10 - - 12.0
- impairment of intangible assets arising on business combinations 4, 10 - - 2.8
Depreciation of property, plant and equipment 9 10.0 9.4 19.4
Depreciation of right-of-use assets 2.5 2.7 5.4
Amortisation of internally generated intangible assets 10 0.2 0.1 0.2
Share-based payments 1.6 1.6 2.9
Cash items:
- settlement of acquisition costs 10 - (0.7) (0.2)
- settlement of restructuring costs (4.5) (2.3) (8.2)
- settlement of product liability claim (1.0) - -
- settlement of cyber-incident related costs - (1.2) (1.2)
Operating cash flows before movement in working capital 54.8 55.8 113.6
Receivables (35.0) (17.2) 7.8
Payables 3.1 (3.9) (10.4)
Inventories 8.8 (16.3) (17.1)
Cash generated from operations 31.7 18.4 93.9
Income tax paid (5.2) (5.2) (7.0)
Net cash flows from operating activities 26.5 13.2 86.9
Investing activities
Settlement of deferred and contingent consideration 10 (0.6) (0.5) (0.5)
Acquisition of businesses net of cash at acquisition 10 - (2.6) (2.6)
Proceeds from disposal of property, plant and equipment 6.1 2.9 2.9
Purchase of property, plant and equipment (12.5) (9.4) (41.1)
Patent and development costs expenditure (0.3) (0.9) (2.7)
Net cash flows from investing activities (7.3) (10.5) (44.0)
Financing activities
Debt issue costs (0.1) - (3.1)
Drawdown of bank loan 30.0 30.0 266.2
Repayment of bank loan (41.0) (10.0) (268.3)
Interest paid (7.0) (2.2) (3.7)
Dividends paid (20.4) (20.3) (30.5)
Proceeds from exercise of share options - 0.4 0.4
Settlement of lease liabilities (2.8) (3.2) (6.2)
Net cash flows from financing activities (41.3) (5.3) (45.2)
Net change in cash and cash equivalents (22.1) (2.6) (2.3)
Cash and cash equivalents - opening balance 50.0 52.3 52.3
Cash and cash equivalents - closing balance 27.9 49.7 50.0
Notes to the Interim Group Financial Statements
for the six months ended 30 June 2023
1. Basis of preparation
Genuit Group plc is incorporated in the UK. The condensed set of consolidated
financial statements have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority and
UK-adopted IAS 34, Interim Financial Reporting.
The annual financial statements will be prepared under UK-adopted IAS
(UK-adopted IFRSs).
As required by the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority, the condensed set of consolidated financial statements have
been prepared applying the accounting policies and presentation that were
applied in the preparation of the Group's published consolidated financial
statements for the year ended 31 December 2022. These statements do not
include all the information required for full annual consolidated financial
statements and should be read in conjunction with the full Annual Report and
Accounts for the year ended 31 December 2022.
The comparative figures for the financial year ended 31 December 2022, where
reported, are not the Group's statutory accounts for that financial year.
Those accounts have been reported on by the Group's auditors and delivered to
the Registrar of Companies. The report of the auditors was (i) unqualified,
(ii) did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report, and (iii) did
not contain a statement under Section 498 (2) or (3) of the Companies Act
2006.
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 condensed set of consolidated financial statements are prepared on a going
concern basis. 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 18 months ending 31 December 2024, sales volumes grow in line with
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. The Directors have considered the impact of climate-related
matters on the going concern assessment and it is not expected to have a
significant impact on the Group's going concern.
At 30 June 2023, the Group had available £190.0m of undrawn committed
borrowing facilities in respect of which all conditions precedent had been
met. The Group's borrowing facilities were renewed on 10 August 2022 and
included an increase in the RCF facility to £350.0m available until at least
August 2027, subject to covenant headroom, and a seven-year private placement
loan note of £25.0m repayable August 2029. 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 18 months. Accordingly, they continue to adopt the going
concern basis in preparing the condensed set of consolidated financial
statements.
There have been no related party transactions in the period to 30 June 2023.
Four non-statutory measures have been used in preparing the condensed set of
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 cash generated from operations is defined as cash
generated from operations, adjusted for non-underlying cash items, after
movement in net working capital and capital expenditure net of all proceeds
from disposals of property, plant and equipment.
· Leverage is defined as net debt divided by pro forma EBITDA (both
are reconciled in note 11). 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. Financial risks, estimates, assumptions and judgements
The preparation of the condensed set of consolidated financial statements
requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from estimates.
In preparing the condensed set of consolidated financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements as at and for the year
ended 31 December 2022.
3. 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
- Sustainable Building Solutions, Water Management Solutions and Climate
Management Solutions. Adey, Nuaire, Domus, Nu-Heat and Surestop have been
reallocated from the Residential Systems segment into CMS, with the remainder
of Residential Systems moving into SBS. The Commercial and Infrastructure
segment is now reported as WMS without the commercial element of Nuaire which
is now reported in CMS. The reporting segments are organised based on the
nature of the end markets served. There are no significant judgements in
aggregating operating segments to arrive at the reporting segments.
Inter-segment sales are on an arm's length basis in a manner similar to
transactions with third parties. The prior year comparatives have been
restated to the three divisions.
Six months ended 30 June 2023 Six months ended 30 June 2022
Sustainable Water Climate Total Sustainable Water Climate Total
Building Management Management Building Solutions Management Management
Solutions Solutions Solutions Solutions Solutions
£m £m £m £m £m £m £m £m
Segmental revenue 141.9 98.7 86.7 327.3 160.1 100.3 79.8 340.2
Inter segment revenue (14.4) (10.6) (2.0) (27.0) (17.3) (8.5) (2.0) (27.8)
Revenue* 127.5 88.1 84.7 300.3 142.8 91.8 77.8 312.4
Underlying operating profit** 26.2 8.8 11.4 46.4 26.1 7.5 13.6 47.2
Underlying profit from assets held for sale - - - 0.6 - - - 0.2
Non-underlying items - segmental 0.8 (3.5) (7.9) (10.6) (1.8) (2.5) (7.4) (11.7)
Segmental operating profit 27.0 5.3 3.5 36.4 24.3 5.0 6.2 35.7
Finance costs (6.7) (2.8)
Profit before tax 29.7 32.9
* The remaining £4.5m (2022: £5.6m) of revenue relates to assets held for
sale which do 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 £10.6m (2022: £11.7m) are detailed in note 4.
Geographical analysis
Revenue by destination Six months ended 30 June 2023 Six months ended 30 June 2022
£m £m
UK 268.9 284.8
Rest of Europe 19.3 18.5
Rest of World 16.6 14.7
Total - Group 304.8 318.0
4. Non-underlying items
Non-underlying items comprised:
Six months ended 30 June 2023 Six months ended 30 June 2022
Gross Tax Net Gross Tax Net
£m £m £m £m £m £m
Cost of sales: 0.5 (0.1) 0.4 - - -
Inventory write down
Administration expenses: Acquisition costs - acquisition and other M&A 1.5 - 1.5 1.8 (0.1) 1.7
activity
Product liability claim 0.3 (0.1) 0.2 - - -
Restructuring costs 5.0 (1.2) 3.8 1.2 (0.2) 1.0
Profit on disposal of property plant and equipment (4.1) - (4.1) - - -
Isolated cyber-incident - - - 1.2 (0.2) 1.0
Amortisation of intangible assets 7.4 (1.7) 5.7 7.5 (1.4) 6.1
Total non-underlying items 10.6 (3.1) 7.5 11.7 (1.9) 9.8
In the six months ended 30 June 2023, non-underlying items included £1.5m
(2022: £1.8m) of acquisition costs in respect of an accrual, for the element
of the earn out accounted for as remuneration, associated with the Plura
acquisition.
Restructuring costs incurred in both periods are in relation to the
reorganisation of the Group. The Group continues to review its operating
footprint which resulted in the closure of two sites, this included the sale
of one property which accounts for the profit on disposal, reorganisation
costs in relation to the new operating structure of the segmental units (see
note 3) and costs incurred for consultancy fees for advisory support as part
of the initial deployment and design of the Genuit Business system.
Other non-underlying items in the six months ended 30 June 2023, comprised of
legal costs relating to a product liability claim associated with a historic
acquisition and a provision for inventory for items taken off the market that
do not sit within the Genuit product strategy.
Amortisation charged relates to intangible assets arising on business
combinations.
In the period ending 30 June 2022, non-underlying items included costs
associated with an isolated cyber-incident at one of the Group's businesses.
5. Finance costs
Six months ended 30 June 2023 Six months ended 30 June 2022
£m £m
Interest on bank loan 6.0 2.0
Debt issue cost amortisation 0.4 0.2
Unwind of discount on lease liabilities 0.3 0.4
Other finance costs - 0.2
6.7 2.8
6. Income tax
Tax has been provided on the profit before tax at the estimated effective rate
for the full year of 24.6% (2022 full year: 19.6%). Tax on underlying profit
before tax was 23.6% (2022 full year: 15.6%).
Six months ended 30 June 2023 Six months ended 30 June 2022
£m £m
Current income tax:
UK income tax 4.9 3.5
Overseas income tax 0.2 0.2
Current income tax 5.1 3.7
Adjustment in respect of prior years (0.4) 0.6
Total current income tax 4.7 4.3
Deferred income tax:
Origination and reversal of timing differences 0.3 0.2
Effects of changes in income tax rates 0.8 2.4
Deferred income tax 1.1 2.6
Adjustment in respect of prior years 0.6 1.0
Total deferred income tax 1.7 3.6
Total tax expense reported in the income statement 6.4 7.9
7. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the
period attributable to the owners of the parent company by the weighted
average number of ordinary shares outstanding during the period. The diluted
earnings per share amounts are calculated by dividing profit for the period
attributable to the owners of the parent company by the weighted average
number of ordinary shares outstanding during the period 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:
Six months ended 30 June 2023 Six months ended 30 June 2022
Weighted average number of ordinary shares for the purpose of basic earnings 248,158,835 247,928,506
per share
Effect of dilutive potential ordinary shares 3,458,687 3,101,184
Weighted average number of ordinary shares for the purpose of diluted earnings 251,617,522 251,029,690
per share
Underlying earnings per share is based on the result for the period after tax
excluding the impact of non-underlying items of £7.5m (2022: £9.8m). 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:
Six months ended 30 June 2023 Six months ended 30 June 2022
Underlying profit for the period attributable to the owners of the parent 30.8 34.8
company (£m)
Underlying basic earnings per share (pence) 12.4 14.0
Underlying diluted earnings per share (pence) 12.2 13.9
8. Dividends
The Directors have proposed an interim dividend for the current year of
£10.2m which equates to 4.1 pence per share.
9. Property, plant and equipment
Freehold Plant Total
land and and other £m
buildings equipment
£m £m
At 31 December 2022
Cost 63.2 203.4 266.6
Accumulated depreciation (10.8) (85.9) (96.7)
Net book value 52.4 117.5 169.9
At 1 January 2023 52.4 117.5 169.9
Additions 2.0 10.5 12.5
Disposals (1.9) (0.1) (2.0)
Depreciation charge (3.1) (6.9) (10.0)
Exchange adjustment - (0.1) (0.1)
At 30 June 2023 49.4 120.9 170.3
In June 2023 the Group sold the land and buildings of one of its operating
warehouses. The gain on sale has been recognised in non-underlying items see
(note 4).
10. Acquisitions
Acquisition-related deferred and contingent consideration comprised:
30 June 30 June 31 December
2023 2022 2022
£m £m £m
Deferred consideration on Keytec acquisition - 0.6 0.6
Deferred and contingent consideration on Plura acquisition 8.8 5.6 7.4
8.8 6.2 8.0
An amount of £1.4m has been recognised as a non-underlying expense in the
Group Income Statement in the six months ended 30 June 2023 in respect of the
Plura contingent consideration arrangement. This takes the total amount
recognised as a liability on the Group Balance Sheet at 30 June 2023 to
£8.8m. The aggregate final consideration is expected to be approximately
£11.9m. Contingent consideration was determined using the Directors'
assessment of the likelihood that financial targets will be achieved. There is
no material difference between the estimated cash consideration and the fair
value. The estimated cash consideration is derived from the budgets and
forecasts or Plura.
Acquisition-related cash flows comprised:
Six months ended 30 June 2023 Six months Year ended
£m ended 30 June 2022 31 December
£m 2022
£m
Operating cash flows - settlement of acquisition costs
Keytec - 0.1 0.1
Other 0.1 0.1 0.1
0.1 0.2 0.2
Six months ended 30 June 2023 Six months Year ended
£m ended 30 June 2022 31 December
£m 2022
£m
Investing cash flows - Settlement of deferred and contingent consideration 0.6 - -
Keytec
Permavoid - 0.5 0.5
0.6 0.5 0.5
Six months ended 30 June 2023 Six months Year ended
£m ended 30 June 2022 31 December
£m 2022
£m
Investing cash flows - acquisition of businesses net of
cash at acquisition
Keytec - 2.6 2.6
Keytec
On 31 March 2022, the Group acquired 100% of the voting rights and shares of
Keytec Geomembranes Holding Company Limited (Keytec), for an initial cash
consideration of £2.5m on a cash-free and debt-free basis plus a deferred
consideration of £0.6m, which was paid in early 2023. The total cash
consideration of £2.9m included a payment for net cash and working capital
commitments on completion of £0.4m. Keytec is a supplier and installer of
stormwater attenuation products, geomembranes and gas protection products.
No material intangible assets were identified. The goodwill arising on the
acquisition primarily represented the technical expertise of the Keytec staff,
synergies of companies offering both supply and install services and market
share. The goodwill was initially allocated entirely to the Commercial and
Infrastructure Systems, which is now the Water Management Solutions segment.
The carrying amount of goodwill and other intangible assets is as follows:
Goodwill Patents Brand Customer Licences Customer order book Development Total
£m £m names relationships £m £m costs £m
£m £m £m
Cost
At 1 January 2023 467.4 40.0 66.5 114.3 0.8 0.9 4.3 694.2
Additions - 0.3 - - - - 0.6 0.9
Disposals - - - - - - (0.6) (0.6)
At 30 June 2023 467.4 40.3 66.5 114.3 0.8 0.9 4.3 694.5
Amortisation and impairment losses
At 1 January 2022 12.0 18.8 24.3 22.3 0.4 0.9 0.4 79.1
Charge for the period - 1.7 2.6 3.1 - - 0.2 7.6
At 30 June 2023 12.0 20.5 26.9 25.4 0.4 0.9 0.6 86.7
Net book value
At 30 June 2023 455.4 19.8 39.6 88.9 0.4 - 3.7 607.8
At 31 December 2022 455.4 21.2 42.2 92.0 0.4 - 3.9 615.1
Impairment testing of goodwill
Goodwill is not amortised but is subject to annual impairment testing (at 31
December). 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
change in the Group's operating segments has not impacted the allocation of
goodwill to CGUs.
At 30 June 2023, an assessment was made to identify any indicators of
impairment of goodwill. Where there were indicators of impairment affecting a
CGU at 30 June 2023, impairment tests of the carrying amounts of goodwill were
performed by analysing the carrying amount allocated to each CGU against its
value-in-use. Value-in-use of a CGU is calculated as the net present value of
that CGU's discounted future pre-tax cash flows. The pre-tax cash flows are
based on forecast cash flow information for a period of one year, construction
industry forecasts of growth for the following year and growth of between
2.60% to 2.80% (2022: 2.60% to 2.80%) thereafter. A pre-tax discount rate of
12.9% (30 June 2022: 11.4%) was applied in determining the recoverable amounts
of CGUs. The pre-tax discount rate was estimated based on the Group's risk
adjusted cost of capital.
The Group applied sensitivities to assess whether any reasonably possible
changes in assumptions could cause an impairment that would be material to
these interim consolidated financial statements. The application of these
sensitivities did not cause an impairment of goodwill for any CGU tested, with
the exception of Adey. The carrying amount of goodwill in the Adey CGU of
£92.8m is sensitive to changes in the key assumptions. The detailed
sensitivity analysis indicates that the following changes in each of the key
assumptions would result in the headroom being eliminated and an impairment
recognised:
o Operating margins declining by 60 basis points per annum from that used in
the value-in-use calculation.
o The pre-tax discount rate increasing to 13.1% from that used in the
value-in-use calculation of 12.9%.
o A 23% increase in the overall capital expenditure forecast from that used
in the value-in-use calculation.
It should be noted that a deterioration in a combination of these key
assumptions could result in a larger reduction in assessed headroom.
11. Analysis of net debt
30 June 30 June 31 December 2022
2023 2022 £m
£m £m
Cash and cash equivalents 27.9 49.7 50.0
Current loans and borrowings
Lease liabilities 5.8 5.4 5.8
Non-current loans and borrowings
Bank loan - principal 160.0 218.0 170.9
- unamortised debt issue costs (2.5) (0.4) (2.8)
Private placement loan notes 25.0 - 25.0
Lease liabilities 18.5 16.5 17.3
201.0 234.1 210.4
Net debt 178.9 189.8 166.2
Net debt (excluding lease liabilities) 154.6 168.3 143.1
On 10 August 2022' 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. The Group
incurred debt issue costs of £3.1m, in respect of entering into both
agreements, which have been capitalised and are being amortised to the income
statement over the whole term of each facility, respectively.
Interest was 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 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 30 June 2023 was 1.65%
(2022: 1.40%). The Group's net debt for the leverage calculation at 30 June
2023 was £154.6m (2022: £167.9m) and 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 at 30 June 2023 was £121.4m (2022:
£115.7m) 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.
30 June 30 June 31 December
2023 2022 2022
£m £m £m
Pro forma EBITDA (12 months preceding the balance sheet)
Underlying operating profit 98.0 94.1 98.2
Depreciation of property, plant and equipment 20.3 18.5 19.4
Amortisation of internally generated intangible assets 0.3 0.2 0.2
Unwind of discount on lease liabilities (0.8) (0.8) (0.8)
Share-based payments charge 3.6 3.2 3.1
121.4 115.2 120.1
EBITDA from acquisitions - 0.5 0.2
121.4 115.7 120.3
At 30 June 2023, the Group had available, subject to covenant headroom,
£190.0m (2022: £82.0m) of undrawn committed borrowing facilities in respect
of which all conditions precedent had been met.
12. Other financial assets and liabilities
Fair values of financial assets and financial liabilities
The book value of trade and other receivables, trade and other payables, cash
balances, bank loan and other liabilities equates to fair value.
Carrying value Fair value
£m £m
Forward foreign currency derivatives - -
Interest-bearing loans and borrowings due after more than one year 182.5 182.5
Deferred and contingent consideration 8.8 8.8
Lease liabilities 24.3 24.3
Total at 30 June 2023 215.6 215.6
Forward foreign currency derivatives (0.2) (0.2)
Interest-bearing loans and borrowings due after more than one year 217.6 217.6
Deferred and contingent consideration 6.2 6.2
Lease liabilities 21.9 21.9
Total at 30 June 2022 245.5 245.5
Forward foreign currency derivatives - -
Interest-bearing loans and borrowings due after more than one year 193.1 193.1
Deferred and contingent consideration 8.0 8.0
Lease liabilities 23.1 23.1
Total at 31 December 2022 224.2 224.2
The fair values were determined as follows by reference to:
· Forward foreign currency derivatives: quoted exchange rates.
· Deferred and contingent consideration: Directors' assessment of
the likelihood that financial targets will be achieved (see note 10).
· Lease liabilities: present value of lease payments to be made
over the lease terms.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or
liabilities;
Level 2: other techniques for which all inputs which have a significant effect
on the recorded fair value are observable, either directly or indirectly; and
Level 3: techniques which use inputs which have a significant effect on the
recorded fair value that are not based on observable market data.
The fair values disclosed above, with the exception of deferred and contingent
consideration, which is categorised as Level 3, all relate to items
categorised as Level 2. Contingent consideration is dependent on EBITDA
performance during the earn out period, which was determined using the
Directors' assessment of the likelihood that financial targets will be
achieved, derived from available budgets and forecasts.
There have been no transfers in any direction between Levels 1, 2 or 3 in the
period.
INDEPENDENT REVIEW REPORT TO GENUIT GROUP PLC
Conclusion
We have been engaged by Genuit Group plc (the Company) to review the condensed
set of financial statements in the half-yearly financial report for the six
months ended 30 June 2023 which comprises the Interim Group Income Statement,
the Interim Group Statement of Comprehensive Income, the Interim Group Balance
Sheet, the Interim Group Statement of Changes in Equity, the Interim Group
Cashflow Statement and the related Notes to the Interim Group Financial
Statements 1 to 12. We have read the other information contained in the half
yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Leeds
14 August 2023
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