REG - Genuit Group PLC - Half-year Report
13/08/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240813:nRSM1586Aa&default-theme=true
RNS Number : 1586A Genuit Group PLC 13 August 2024
Genuit Group plc
Interim results for the six months ended 30 June 2024
Continued margin expansion and strategic progress in a subdued market
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 2024.
Financial Results H1 2024 H1 2023 Change
Revenue (£m) 272.4 304.8 (10.6%)
Alternative Performance Measures(1)
Underlying operating profit (£m) 43.6 47.0 (7.2%)
Underlying operating margin (%) 16.0 15.4 60 bps
Underlying profit before tax (£m) 37.6 40.3 (6.7%)
Underlying earnings per share (basic - pence) 11.2 12.4 (9.7%)
Underlying operating cash conversion (%) 85.8 45.3 4,050 bps
Statutory Measures
Operating profit (£m) 21.3 36.4 (41.5%)
Profit before tax (£m) 15.3 29.7 (48.5%)
Earnings per share (basic - pence) 3.4 9.4 (63.8%)
Cash generated from operations (£m) 46.8 31.7 47.6%
Dividend per share (pence) 4.1 4.1 -
Leverage (times pro-forma EBITDA) 1.1 1.3 -
(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 of the interim condensed consolidated financial statements
on pages 15 and 16.)
(2) (Company compiled consensus range for FY24 underlying operating profit is
between £92.1m and £96.0m)
Joe Vorih, Chief Executive Officer, said:
"Whilst the market remains subdued in 2024, the Group demonstrated continued
operating margin improvement in the first half over prior year, as the
benefits of our strategic actions continue. I'm particularly pleased at the
momentum building in the embedding of the Genuit Business System through our
businesses. I'm also delighted to welcome new colleagues from our two recent
acquisitions into the Group as we advance our Sustainable Solutions for Growth
strategy.
As we look forward into the second half, we currently anticipate these market
conditions to remain, offset by continued operational and strategic progress.
We continue to expect full year underlying operating profit to be within the
range of analyst forecasts.(2) The Genuit Group is exceptionally well
positioned to benefit from eventual market recovery, with business
simplification complete, at least 20% available capacity to ramp production
and improved operational gearing providing confidence in medium term targets."
Financial Highlights
· Underlying operating margin improvement of 60 basis points
year-on-year, despite a reduction in revenue of 10.6% year-on-year in a
subdued market, reflecting the completion of the business simplification
programme, a normalising cost inflation environment, disciplined cost
management and emerging operating efficiencies unlocked by the Genuit Business
System (GBS).
· Climate Management Solutions (CMS) underlying operating margin
rose 160 basis points to 15.1% (H1 2023: 13.5%), following the business
simplification actions and GBS improvements at Surestop, Adey and Nuaire.
Revenue decreased by 7.2% year-on-year as a result of lower market volumes and
continued softness in the boiler market affecting sales at Adey, partially
offset by growth in residential ventilation sales at Nuaire/Domus.
· Water Management Solutions (WMS) underlying operating margin was
in-line with H1 2023 at 10.0%, whilst revenue decreased by 11.4% year-on-year,
impacted by wet weather and delayed project starts. The closures of two sites
as part of the business simplification programme were completed in H1 2024,
supporting the future trajectory for operating margin improvement as volumes
increase.
· Sustainable Building Solutions (SBS) underlying operating margin
increased by 60 basis points to 21.1% (H1 2023: 20.5%), through business
simplification actions taken in the prior year, balanced cost and price
management and GBS operating efficiencies. This is against a background where
revenue decreased by 12.6% year-on-year, driven by lower market volumes.
· Strong underlying operating cash generation of £37.4m (85.8%
cash conversion).
· Net debt reduced from 1.3 times at 30 June 2023 to 1.1 times
pro-forma EBITDA at 30 June 2024 in line with expectations and providing
strategic optionality for further M&A.
· The Group intends to pay an interim dividend of 4.1 pence per
share (2023: 4.1 pence per share) demonstrating the Board's confidence in the
medium-term growth prospects of the Group.
Strategic and Operational Highlights
Growth - Focusing on higher-growth, sustainability-driven markets, via organic
growth and disciplined M&A opportunities.
· Completed the acquisition of Sky Garden in August 2024 for a cash
consideration of £2.5m. Sky Garden is a leader in green roof technologies,
with annual revenues of c.£7.0m. 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.
· Completed the acquisition of Omnie & Timoleon in August 2024
for a 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 generating annual revenues of c.£8.0m. It extends
the Group's UFH offering within CMS and is complementary to the existing
Nu-Heat and Polypipe UFH businesses.
· Sales of new products were £105.4m in the first half, resulting
in a Vitality Index of 19.0%. Recent new product launches include the
PolyPlumb Enhanced range of innovative push-fit plumbing and SubTerra CT
modular access chambers. The Group remains on track to achieve its 25%
vitality target through the cycle.
Strong progress was made on the Group's underfloor heating strategy with 15
commitments signed for new-build developments in the period. Underfloor
heating is expected to grow significantly as its share of new-build homes
increases under the transition to the Future Homes Standard.
· Several projects secured with Modern Methods of Construction
(MMC) manufacturers of pods and volumetric modules, for delivery in the second
half of the year. These low labour solutions are expected to be a growth
sector within commercial construction.
Sustainability - Continually improving the sustainability of our operation to
be the lowest-carbon choice for our customers.
· The Group's scopes 1 & 2 carbon intensity, on a rolling
twelve-month basis is 0.139 (tCO₂e per tonne of production) which is broadly
in line with the 2023 year-end, (FY 2023: 0.140) despite the impact of lower
volumes.
· Recycled materials formed 51.2% of our polymer inputs (2023:
48.4%) in the Group's strategic Business Units. We remain the European leader
in the sector for use of recyclate as part of our overall strategy to be a
leader in de-carbonising building materials.
Genuit Business System - Creating value through lean transformation and
operational excellence.
· Launched the Horncastle lean lighthouse with Value Stream Mapping
and Total Preventative Maintenance kaizen events during the second quarter of
2024.
· Nuaire Standard Work kaizen event held in May 2024 on the XBC
production line demonstrating targeted 30% increase in output and
productivity, creating capacity for future growth.
· Over 400 Genuit employees have participated in lean kaizen events
or training so far, empowering and inspiring our workforce as we progress on
our lean journey.
People and Culture - Creating value and enabling growth through the
capability, expertise and development of our employees.
· During the first half of 2024, the Group launched the Genuit
Trademark Behaviours - we work together, we take ownership, we find a better
way. These were developed by colleagues across the Group by identifying what
enables them to all be at their best and will underpin a common culture across
the Group.
· The Group expects to be awarded Gold Status by The 5% Club, with
10.8% of the Group's workforce in accredited work and learning programmes,
demonstrating the Group's commitment to employee development and social
mobility.
Outlook
· The market is expected to remain subdued during the second half
of 2024, with a backdrop of low volumes of new housebuilding, a softer
commercial construction sector and an RMI market that has been waiting for
interest rate reductions. Despite this, the Board expects underlying operating
profit to remain in the range of analyst forecasts.(2)
· The acquisitions of Sky Garden and Omnie & Timoleon will
increase H2 2024 revenue by £6-7m, without a material impact on adjusted
operating profit.
· Genuit remains well positioned for market recovery, with UK
Government policy and reducing interest rates expected to stimulate the
construction sector. The Group has improved operational gearing and has at
least 20% available capacity within the current operational footprint,
providing confidence in the achievement of medium-term profit targets as
volumes grow.
Enquiries:
Joe Vorih, Chief Executive Officer
Tim Pullen, Chief Financial Officer
+44 (0) 1138 315315
Headland Consultancy:
Andy Rivett-Carnac Telephone: 020 3805 4822
Matt Denham 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 Half Year Results presentation, hosted by Joe Vorih,
Chief Executive Officer, and Tim Pullen, Chief Financial Officer, will be
broadcast at 0830 on Tuesday 13 August 2024. 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/66aa28e6a23d3f13002aa3aa/hyres
(https://url.uk.m.mimecastprotect.com/s/dukWCROlEC0kOVjsPizu1ClPH?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
(https://protect-eu.mimecast.com/s/FREECWLPMuyQR04ixpCR7?domain=genuitgroup.com)
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 divisions, 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.
Group Results
Revenue for the six months ended 30 June 2024 was 10.6% lower than the prior
year at £272.4m (2023: £304.8m), driven by a volume decline of 10.5% that
was in line with a subdued market.
The Group demonstrated a 60 basis points gross margin improvement versus 2023
H1. Underlying operating profit was £43.6m (2023: £47.0m), driven by the
Group successfully delivering on business simplification actions and balanced
price management in a normalising cost inflation environment. As a result,
underlying operating margin of 16.0% in the period represented an improvement
of 60 basis points on the prior year.
Finance costs reduced slightly to £6.0m (2023: £6.7m), in line with
expectations. Whilst Standard Overnight Index Average (SONIA) interest rates
remain comparatively high, these were partially offset by lower RCF borrowings
as a result of working capital efficiencies.
The total tax charge was £6.9m (2023: £6.4m). The underlying tax charge of
£9.9m (2023: £9.5m) represents an effective underlying tax rate of 26.3%
(2023: 23.6%).
Underlying profit after tax was lower than the prior year at £27.7m (2023:
£30.8m). Underlying basic earnings per share was 11.2 pence (2023: 12.4
pence).
Including non-underlying items of £19.3m, profit after tax was £8.4m (2023:
£23.3m), and basic earnings per share was 3.4 pence (2023: 9.4 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 2 October 2024 to shareholders on the register at the close of
business on 30 August 2024.
Business Unit Review
Revenue (£m) H1 2024 H1 2023 Change %
Climate Management Solutions 78.6 84.7 (7.2)
Water Management Solutions 78.1 88.1 (11.4)
Sustainable Building Solutions 111.4 127.5 (12.6)
268.1 300.3 (10.7)
Other* 4.3 4.5 (4.4)
Total Group 272.4 304.8 (10.6)
* relates to assets held for sale which are not reported as part of the
Group's strategic Business Units.
Underlying operating profit (£m) H1 2024 ROS %* H1 2023 ROS %* Change
Climate Management Solutions 11.9 15.1 11.4 13.5 160 bps
Water Management Solutions 7.8 10.0 8.8 10.0 -
Sustainable Building Solutions 23.5 21.1 26.2 20.5 60 bps
43.2 16.1 46.4 15.5 60 bps
Other** 0.4 9.3 0.6 13.3 (400) bps
Total Group 43.6 16.0 47.0 15.4 60 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.
Revenue, in the strategic Business Units, for the six months ended 30 June
2024 was 10.7% lower than the prior year at £268.1m (2023: £300.3m). The
Group has continued to focus on profitable growth and improving operating
margin, despite challenging markets, towards its mid-term goals.
The Group has now deployed GBS via Lighthouse Projects within all Business
Units and improvements in customer service, efficiencies, and inventory levels
are gaining traction. GBS, existing self-help measures and procurement
savings, have enabled the Group to grow operating margin despite seeing volume
reductions in the first half of the year.
The Group has completed the closure of two UK manufacturing facilities
(Rochdale and Moreton) in the first half of 2024 and will continue to serve
customers of these businesses from alternative facilities. There has been no
reduction in manufacturing capacity as a result of these business
simplification actions.
Climate Management Solutions
Climate Management Solutions (CMS) addresses the drivers for low carbon
heating and cooling, and clean and healthy air ventilation.
CMS revenue of £78.6m (2023: £84.7m) was 7.2% lower than prior year. The
business reported an underlying operating margin of 15.1% for the period, an
improvement of 160 basis points over the prior year, driven primarily by the
impact of business simplification projects, along with emerging benefits from
deployment of the Genuit Business System.
The Nuaire / Domus ventilation business experienced continued growth in
residential market sales which partially offset some softness in commercial
markets. The Adey boiler filter and chemicals business continued to experience
a challenging market with a delay to recovery in volumes, related to a subdued
RMI market. Boiler sales in the first half of 2024 were c.25% down on prior
year with Adey volumes down in line with this. The Group has recognised an
impairment charge of £12.4m reflecting the delay in market recovery but
remains confident in the medium-term prospects of the Adey business. The
Nu-Heat underfloor heating business had a resilient performance in the context
of a weak new-build and RMI market.
Water Management Solutions
Water Management Solutions (WMS) is focused on driving climate adaptation and
resilience through integrated surface and drainage solutions.
WMS revenue of £78.1m (2023: £88.1m) was 11.4% lower than prior year,
impacted by a soft market and wet weather which has delayed the start of key
projects.
The Business Unit reported an underlying operating margin of 10.0% for the
period, in line with the prior year and highlighting improved operating
gearing in the context of volume softness. The closure of two sites as part of
the business simplification programme were completed in H1 2024, supporting
the future trajectory for operating margin improvement as volumes increase.
Sustainable Building Solutions
Sustainable Business Solutions (SBS) provides a range of construction
solutions to reduce the carbon content of the built environment.
Trading in SBS was impacted by lower market volumes versus prior year.
According to NHBC data, new housebuild starts were down by 46% in the six
months to June versus prior year, with completions down by 9%. The RMI market
also remained soft. SBS trading volumes were down by 11% implying moderate
market share gains. Revenue of £111.4m (2023: £127.5m), was 12.6% lower than
prior year.
Despite the market driven volume softness, underlying operating profit margin
improved by 60 basis points, driven primarily by the impact of business
simplification projects, along with emerging benefits from deployment of the
Genuit Business System.
Financial Review
Non-underlying costs
Non-underlying trading costs were £2.7m (2023: £3.2m) before tax. This is
net of the proceeds from sale of two properties in the period ending 30 June
2024 (30 June 2023: 1 property) resulting in £1.5m (2023: £4.1m) profit on
disposal. This partially offsets a non-cash provision of £4.0m which has been
recognised in respect of a dispute with a third party back-office software
supplier. Other non-underlying items increased to £19.6m (2023: £7.4m)
before tax. These included non-cash amortisation of £7.2m (2023: £7.4m) and
an impairment of goodwill of £12.4m (2023: £nil) relating to the Adey
business.
Finance Costs
Underlying finance costs reduced slightly to £6.0m (2023: £6.7m), which were
broadly in line with expectations, whilst Standard Overnight Index Average
(SONIA) interest rates remain high these were partially offset by lower RCF
borrowings. The Group continued to focus on cash management during H1 2024 to
ensure RCF borrowings are as low as possible to reduce interest impact and
allow optionality for funding growth.
Taxation
The Group's tax charge for the six months ended 30 June 2024 increased to
£6.9m (2023: £6.4m) which represents an effective tax rate of 45.1% (2023:
21.5%) impacted by the goodwill impairment charge being non-deductible. The
underlying tax rate (underlying tax: underlying profit before tax) has been
provided at the estimated full year rate of 24.5% (2023 full year: 20.6%).
Dividend
The Group intends to pay an interim dividend of 4.1 pence per share (2023: 4.1
pence per share). The Group aims to pay a progressive dividend, based on
dividend cover of 2.0x or greater over the business cycle.
Cash Flow and Net Debt
Delivery of strong cash generation remains core to the Group's strategy.
Underlying operating cash conversion of 85.8% (2023: 45.3%) calculated as
underlying operating cashflow (after payments for capital expenditure
excluding non-underlying proceeds of sale and lease liabilities) divided by
underlying operating profit. The Group remains committed to achieving a
conversion rate of 90.0% over the medium-term.
Capital expenditure decreased to £12.6m (2023: £12.8m). The full year 2024
is expected to be in the range of £30-£35m, 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 £122.5m at 30 June 2024 (30 June 2023
£154.6m, 31 December 2023: £125.9m). Leverage was in line with expectations
at 1.1 times pro-forma EBITDA (30 June 2023: 1.3 times pro-forma EBITDA). With
continued strong cash generation expected, the Group's balance sheet will be
further strengthened with leverage of c.1.0x expected at year end, providing
further opportunities to deploy capital for value accretive M&A.
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 2024, liquidity headroom (cash and undrawn committed
banking facilities) was £250.8m (2023: £217.9m). The Group continues to
deleverage and its net debt to EBITDA ratio stood at 1.1 times pro-forma
EBITDA at 30 June 2024 (30 June 2023: 1.3 times pro-forma EBITDA), increasing
to 1.4 times pro-forma EBITDA including the effects of IFRS 16. This headroom
means the Group is well-positioned to undertake strategic M&A.
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 2023 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 2023 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 13 August 2024 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
Tim Pullen Chief Financial Officer
Lisa Scenna Senior Independent 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 T N Pullen
Chief Executive Officer Chief Financial Officer
Interim Group Income Statement
for the six months ended 30 June 2024 (unaudited)
Six months ended 30 June 2024 Six months ended 30 June 2023
Notes Underlying Non-underlying Total Underlying Non-underlying Total
£m £m £m £m £m £m
272.4 - 272.4 304.8 - 304.8
Revenue 3
Cost of sales (150.5) 1.2 (149.3) (179.8) (0.5) (180.3)
Gross profit 121.9 1.2 123.1 125.0 (0.5) 124.5
Selling and distribution costs (36.7) - (36.7) (37.6) - (37.6)
Administration expenses (40.7) (3.9) (44.6) (40.2) (2.7) (42.9)
Trading profit 44.5 (2.7) 41.8 47.2 (3.2) 44.0
Amortisation of intangible assets (0.9) (7.2) (8.1) (0.2) (7.4) (7.6)
Impairment of goodwill - (12.4) (12.4) - - -
Operating profit 3 43.6 (22.3) 21.3 47.0 (10.6) 36.4
Finance costs 3, 5 (6.0) - (6.0) (6.7) - (6.7)
Profit before tax 37.6 (22.3) 15.3 40.3 (10.6) 29.7
Income tax 6 (9.9) 3.0 (6.9) (9.5) 3.1 (6.4)
Profit for the period attributable to the owners of the parent company 27.7 (19.3) 8.4 30.8 (7.5) 23.3
Basic earnings per share (pence) 7 3.4 9.4
Diluted earnings per share (pence) 7 3.4 9.3
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 2024 (unaudited)
Six months ended 30 June 2024 Six months ended 30 June 2023
£m £m
Profit for the period attributable to the owners of the parent company 8.4 23.3
Other comprehensive income:
Items which may be reclassified subsequently to the income statement:
Exchange differences on translation of foreign operations (0.1) -
Effective portion of changes in fair value of interest rate derivatives 0.2 -
Other comprehensive income for the period net of tax 0.1 -
Total comprehensive income for the period attributable to the owners of the 8.5 23.3
parent company
Interim Group Balance Sheet
at 30 June 2024 (unaudited)
30 June 30 June 31 December
Notes 2024 2023 2023
£m £m £m
Non-current assets
Property, plant and equipment 179.3 170.3 176.4
Right-of-use assets 27.2 23.8 22.9
Intangible assets 9 577.4 607.8 596.8
Total non-current assets 783.9 801.9 796.1
Current assets
Inventories 68.0 81.1 69.2
Trade and other receivables 83.7 102.6 73.9
Income tax receivable 2.3 4.0 5.4
Cash and cash equivalents 12 25.8 27.9 17.0
Derivative financial instruments 13 0.2 - 0.1
Assets held-for-sale 10 15.0 11.2 17.1
Total current assets 195.0 226.8 182.7
Total assets 978.9 1,028.7 978.8
Current liabilities
Trade and other payables (117.0) (126.9) (114.8)
Lease liabilities 12 (6.6) (5.8) (5.0)
Liabilities held-for-sale (4.0) (2.8) (2.8)
Provisions 11 (4.9) - -
Deferred and contingent consideration 9 - - (8.2)
Total current liabilities (132.5) (135.5) (130.8)
Non-current liabilities
Loans and borrowings 12, 13 (148.3) (182.5) (142.9)
Lease liabilities 12 (21.3) (18.5) (18.4)
Deferred and contingent consideration 9 - (8.8) -
Deferred income tax liabilities (49.7) (52.9) (50.1)
Total non-current liabilities (219.3) (262.7) (211.4)
Total liabilities (351.8) (398.2) (342.2)
Net assets 627.1 630.5 636.6
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 0.3 - 0.1
Foreign currency retranslation reserve (0.2) - (0.1)
Other reserves 116.5 116.5 116.5
Retained earnings 415.6 419.1 425.2
Total equity 627.1 630.5 636.6
Interim Group Statement of Changes in Equity
for the six months ended 30 June 2024 (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 2024
Opening balance 0.2 93.6 1.1 0.1 (0.1) 116.5 425.2 636.6
Profit for the period - - - - - - 8.4 8.4
Other comprehensive income - - - 0.2 (0.1) - - 0.1
Total comprehensive income for the period - - - 0.2 (0.1) - 8.4 8.5
Dividends paid - - - - - - (20.6) (20.6)
Share-based payments charge - - - - - - 1.6 1.6
Share-based payments settled - - - - - - 0.8 0.8
Share-based payments excess tax benefit - - - - - - 0.2 0.2
Closing balance 0.2 93.6 1.1 0.3 (0.2) 116.5 415.6 627.1
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
Interim Group Cashflow Statement
for the six months ended 30 June 2024 (unaudited)
Notes Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
£m £m £m
Operating activities
Cash generated from operations 14 46.8 31.7 109.7
Income tax paid (3.5) (5.2) (12.1)
Net cash flows from operating activities 43.3 26.5 97.6
Investing activities
Settlement of deferred and contingent consideration 9 (1.6) (0.6) (1.6)
Proceeds from disposal of property, plant and equipment 7.6
5.2 6.1
Purchase of property, plant and equipment (11.5) (12.5) (32.8)
Patent and development costs expenditure (1.1) (0.3) (1.7)
Net cash flows from investing activities (9.0) (7.3) (28.5)
Financing activities
Debt issue costs - (0.1) -
Drawdown of bank loan 40.0 30.0 50.0
Repayment of bank loan (35.0) (41.0) (100.9)
Interest paid (5.8) (7.0) (13.4)
Dividends paid (20.6) (20.4) (30.5)
Proceeds from exercise of share options 0.8 - 0.3
Settlement of lease liabilities (4.9) (2.8) (7.6)
Net cash flows from financing activities (25.5) (41.3) (102.1)
Net change in cash and cash equivalents 8.8 (22.1) (33.0)
Cash and cash equivalents - opening balance 17.0 50.0 50.0
Cash and cash equivalents - closing balance 25.8 27.9 17.0
Notes to the Interim Group Financial Statements
for the six months ended 30 June 2024
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 2023. 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 2023.
The interim condensed consolidated financial statements do not constitute
statutory financial statements as defined in section 435 of the Companies Act
2006. The financial information for the preceding year is based on the
statutory financial statements for the year ended 31 December 2023. Those
accounts, upon which the auditors issued an unqualified opinion have been
delivered to the Registrar of Companies. The report of the auditors did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying their report and 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 the base forecast in which, over the 18 months ending 31 December
2025, sales volumes grow in line with external construction industry
forecasts. 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 2024, the Group had available £225.0m 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 2026 (with two further uncommitted annual renewals to August 2028
possible), 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 significant related party transactions in the period to 30
June 2024.
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. This has been adjusted from underlying cash generated from operations
to be in line with the Annual Report and Accounts for 31 December
2023.Leverage is defined as net debt divided by pro-forma EBITDA (both are
reconciled in Note 12). 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 2023.
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
- Climate Management Solutions (CMS), Water Management Solutions (WMS) and
Sustainable Building Solutions (SBS). 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. Inter-segment sales are on an
arm's length basis in a manner similar to transactions with third parties.
Climate Water Sustainable
Management Management Building Other Total
Six months ended 30 June 2024 Solutions Solutions Solutions
£m £m £m £m £m
Segmental revenue 78.8 81.2 119.9 4.6 284.5
Inter segment revenue (0.2) (3.1) (8.5) (0.3) (12.1)
Revenue* 78.6 78.1 111.4 4.3 272.4
Underlying operating profit** 11.9 7.8 23.5 0.4 43.6
Non-underlying items - segmental (18.4) 0.7 0.1 - (17.6)
Non-underlying items - Group - - - (4.7) (4.7)
Segmental operating profit / (loss) (6.5) 8.5 23.6 (4.3) 21.3
Finance costs (6.0)
Profit before tax 15.3
* The other revenue of £4.3m (2023: £4.4m) 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 £22.3m (2023: £10.6m) are detailed in Note 4.
Climate Water Sustainable
Management Management Building Other Total
Six months ended 30 June 2023 Solutions Solutions Solutions
£m £m £m £m £m
Segmental revenue 85.1 90.5 139.1 4.9 319.6
Inter segment revenue (0.4) (2.3) (11.6) (0.5) (14.8)
Revenue* 84.7 88.1 127.5 4.4 304.8
Underlying operating profit** 11.4 8.8 26.2 0.6 47.0
Non-underlying items - segmental (7.2) (3.5) 0.8 - (9.9)
Non-underlying items - Group - - - (0.7) (0.7)
Segmental operating profit / (loss) 4.2 5.3 27.0 (0.1) 36.4
Finance costs (6.7)
Profit before tax 29.7
Geographical analysis
Revenue by destination Six months ended 30 June 2024 Six months ended 30 June 2023
£m £m
UK 241.5 268.9
Rest of Europe 17.0 19.3
Rest of World 13.9 16.6
Total - Group 272.4 304.8
4. Non-underlying items
Non-underlying items comprised:
Six months ended 30 June 2024 Six months ended 30 June 2023
Gross Tax Net Gross Tax Net
£m £m £m £m £m £m
Cost of sales: - - - 0.5 (0.1) 0.4
Inventory write down
Employment matters (1.2) 0.2 (1.0) - - -
Administration expenses: Acquisition costs 0.4 - 0.4 1.5 - 1.5
Product liability claim - (0.2) (0.2) 0.3 (0.1) 0.2
Restructuring costs 0.2 - 0.2 4.0 (1.0) 3.0
SaaS configuration 0.5 (0.1) 0.4 1.0 (0.2) 0.8
Profit on disposal of property plant and equipment (1.5) - (1.5) (4.1) - (4.1)
Software supplier dispute 4.3 (1.1) 3.2 - - -
Amortisation of intangible assets 7.2 (1.8) 5.4 7.4 (1.7) 5.7
Impairment of Goodwill 12.4 - 12.4 - - -
Total non-underlying items 22.3 (3.0) 19.3 10.6 (3.1) 7.5
Restructuring costs incurred in both periods are in relation to the
reorganisation of the Group. The Group has finished its review of its
operating footprint which resulted in the closure of four sites, this included
the sale of two properties in the period ending 30 June 2024 (30 June 2023: 1
property) which accounts for the profit on disposal. In the period ended 30
June 2023 reorganisation costs were 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.
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 the period ending 30 June 2024 the matter was resolved and the
unutilised provision released.
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.
A provision has been recognised in respect to a dispute with a supplier in
relation to software. The recognised provision reflects the Group's best
estimate of the most likely outcome.
In the six months ended 30 June 2023, non-underlying items included £1.5m
(2023: £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, £0.3m of legal costs relating to a product liability claim
associated with a historic acquisition and a provision for inventory of £0.5m
for items taken off the market that do not sit within the Genuit product
strategy.
Amortisation charged in both periods relates to intangible assets arising on
business combinations. Impairment of goodwill of £12.4m relates to a 2021
acquisition (see Note 9).
5. Finance costs
Six months ended 30 June 2024 Six months ended 30 June 2023
£m £m
Interest on bank loan 4.8 6.0
Debt issue cost amortisation 0.5 0.4
Unwind of discount on lease liabilities 0.7 0.3
6.0 6.7
6. Income tax
Tax has been provided on the profit before tax at the estimated effective rate
for the full year of 24.5% (2023 full year: 20.5%).
Six months ended 30 June 2024 Six months ended 30 June 2023
£m £m
Current income tax:
UK income tax 7.3 4.9
Overseas income tax 0.2 0.2
Current income tax 7.5 5.1
Adjustment in respect of prior years - (0.4)
Total current income tax 7.5 4.7
Deferred income tax:
Origination and reversal of timing differences (0.6) 0.3
Effects of changes in income tax rates - 0.8
Deferred income tax (0.6) 1.1
Adjustment in respect of prior years - 0.6
Total deferred income tax (0.6) 1.7
Total tax expense reported in the income statement 6.9 6.4
The Group's tax charge for the six months ended 30 June 2024 of £6.9m (2023:
£6.4m) represents an effective tax rate of 45.1% (2023: 21.5%). Tax on
underlying profit before tax was 26.3%.
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 2024 Six months ended 30 June 2023
Weighted average number of ordinary shares for the purpose of basic earnings 248,389,452 248,158,835
per share
Effect of dilutive potential ordinary shares 1,928,887 3,458,687
Weighted average number of ordinary shares for the purpose of diluted earnings 250,318,339 251,617,522
per share
Underlying earnings per share is based on the result for the period after tax
excluding the impact of non-underlying items of £19.3m (2023: £7.5m). 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 2024 Six months ended 30 June 2023
Underlying profit for the period attributable to the owners of the parent 27.7 30.8
company (£m)
Underlying basic earnings per share (pence) 11.2 12.4
Underlying diluted earnings per share (pence) 11.1 12.2
8. Dividends
The Directors have proposed an interim dividend for the current year of 4.1
pence per share which equates to £10.2m.
9. Acquisitions
Acquisition-related deferred and contingent consideration comprised:
30 June 30 June 31 December
2024 2023 2023
£m £m £m
Deferred and contingent consideration on Plura acquisition - 8.8 8.2
Acquisition-related cash flows comprised:
Six months ended 30 June 2024 Six months Year ended
£m ended 30 June 2023 31 December
£m 2023
£m
Operating cash flows - settlement of acquisition costs
Plura 6.5 - -
Other - 0.1 -
6.5 0.1 -
Six months ended 30 June 2024 Six months Year ended
£m ended 30 June 2023 31 December
£m 2023
£m
Investing cash flows - Settlement of deferred and contingent consideration - 0.6 0.6
Keytec
Plura 1.6 - 1.0
1.6 0.6 1.6
Sky Garden
On 5 August 2024, the Group acquired 100% of the voting rights and shares of
Sky Garden Limited for a cash consideration of £2.5m on a cash-free and
debt-free basis. The business will join the WMS Business Unit and will extend
the Group's blue green roof offering.
The Group is currently obtaining the information necessary to finalise the
fair value of the net assets acquired but it is expected to be equal to that
of the net book value, with any remaining consideration to be allocated to
goodwill in the Landscape and Infrastructure CGU.
Omnie & Timoleon
On 6 August 2024, the Group acquired the trade and assets of the Omnie &
Timoleon businesses for a cash consideration of £2.7m. The businesses will
join the CMS Business Unit and complement and enhance the Groups underfloor
heating offering.
The Group is currently obtaining the information necessary to finalise the
fair value of the assets acquired, and to identify any intangible assets on
acquisition.
The acquisitions have not impacted the financial effects for the interim
period ended 30 June 2024.
The carrying amount of goodwill and other intangible assets is as follows:
Goodwill Patents Brand Customer Licences Customer order Total
£m £m names relationships £m book Development £m
£m £m £m costs
£m
Cost
At 1 January 2024 466.1 40.4 66.5 114.3 0.8 0.9 5.0 694.0
Additions - 0.2 - - - - 0.9 1.1
At 30 June 2024 466.1 40.6 66.5 114.3 0.8 0.9 5.9 695.1
Amortisation and impairment losses
At 1 January 2024 12.0 23.1 30.3 29.3 0.5 0.9 1.1 97.2
Charge for the period 12.4 1.7 2.5 3.1 0.1 - 0.7 20.5
At 30 June 2024 24.4 24.8 32.8 32.4 0.6 0.9 1.8 117.7
Net book value
At 30 June 2024 441.7 15.8 33.7 81.9 0.2 - 4.1 577.4
At 31 December 2023 454.1 17.3 36.2 85.0 0.3 - 3.9 596.8
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
(£3.0m) and Adey (£22.2m) with an estimated useful life of five and 18 years
respectively. Customer relationships that have a significant carrying value
are Adey's relationships with key customers (£70.0m) with an estimated useful
life of between nine and 18 years and Manthorpe's (£5.6m) with an estimated
useful life of ten years.
Impairment testing of goodwill
Goodwill is not amortised but is subject to annual impairment testing (at 31
December) or when circumstances indicate that the carrying value may be
impaired. 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 key
assumptions used to determine the recoverable amount for the different CGU's
were disclosed in the annual consolidated financial statements for the year
ended 31 December 2023.
At 30 June 2024, an assessment was made to identify any indicators of
impairment of goodwill due to the subdued market and decreases in volume
across the construction and building materials industry. Indicators were only
identified with respect to the Adey CGU. The Group is satisfied that there is
sufficient headroom against the carrying value of the other CGU's and as such
that a reasonably possible change in assumption would not lead to any
indicators of impairment and no further sensitivity analysis has been
performed.
An Impairment test was performed by analysing the carrying amount of the
goodwill allocated to the Adey 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, growth of between 3.30% to 7.50%
in years 3 to 5 (2023: 3.20% to 6.50%) and long-term growth of 2.4% (2023:
2.4%). A pre-tax discount rate of 13.9% (30 June 2023: 12.9%) 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.
Due to the ongoing softness in the boiler filter and chemicals market and a
delay to recovery in volumes, related to a suppressed RMI market there has
been a reduction in the value in use of the Adey CGU. This has resulted in an
impairment charge of £12.4m in 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. As an impairment loss has been recognised in respect of
Adey in the current period, the recoverable amount is equal to its carrying
value at the year end and therefore any negative changes in key assumptions
would result in the recognition of an additional impairment loss.
Detailed sensitivity analysis indicates that the following changes in each of
these key assumptions would result in an additional impairment charge being
recognised:
• The pre-tax discount rate increasing to 14.2% from that used in the
value-in-use calculations of 13.9%. would give rise to an additional
impairment charge of £4.8m
• A reduction in the long-term growth rate to 2.0% from that used in the
value-in-use calculations of 2.4% would give rise to an additional impairment
charge of £4.4m.
• Average revenue growth rates declining by 0.5% points in years 1 and 2 and
1% in years 3-5 used in the value-in-use calculations would give rise to an
additional impairment charge of £7.0m.
• Gross margin efficiencies are not achieved by 2029 and margin declines by
3% points used in the value-in-use calculations would give rise to an
additional impairment charge of £15.9m.
10. Assets held-for-sale
The following major class of assets and liabilities that have been classified
as held-for-sale at the balance sheet date are as follows:
30 June 2024 30 June 2023 31 December 2023
Fair value
Fair value Fair value £m
£m £m
Property, plant and equipment 2.1 2.3 5.5
Right-of-use assets 1.1 0.1 0.3
Goodwill 4.5 3.2 4.5
Trade and other receivables 3.4 2.4 2.8
Inventories 3.9 3.2 4.0
Assets held-for-sale 15.0 11.2 17.1
30 June 2024 30 June 2023 31 December 2023
Fair value
Fair value Fair value £m
£m £m
Trade and other payables 2.9 2.7 2.6
Finance lease liabilities 1.1 0.1 0.2
Liabilities held-for-sale 4.0 2.8 2.8
In 2023 the Group announced its plan to exit two operational freehold
properties (one within the CMS segment and one within the WMS segment). During
the 6 months ended 30 June 2024 both properties sold for total proceeds of
£4.8m, exceeding the carrying value of the properties of £3.3m. The gain on
disposal has been recognised in non-underlying items (see Note 4).
During 2022 the Group announced its intention to dispose of Polypipe Italia
SRL following a strategic review and began marketing the company for sale and
presented the net assets as held-for-sale. In 2023 The Group held discussions
with several parties who had expressed interest in acquiring the business.
However, for various, and individually specific reasons, these discussions did
not lead to a transaction but the Group continued to proactively market the
company for sale. The Group are still in discussions with parties and remain
confident that a sale will be achieved in the next twelve months. The proceeds
of disposal are expected to exceed the carrying amount of the related net
assets and accordingly no impairment losses have been recognised on the
classification of Polypipe Italia SRL as held-for-sale.
11. Provisions
Software supplier dispute
£m
At 1 January 2024 -
Arising during the year 4.0
Reclassified from other creditors 0.9
At 30 June 2024 4.9
A provision has been recognised in respect to a dispute with a software
supplier. The recognised provision reflects the Group's best estimate of the
most likely outcome.
12. Analysis of net debt
30 June 30 June 31 December 2023
2024 2023 £m
£m £m
Cash and cash equivalents 25.8 27.9 17.0
Current loans and borrowings
Lease liabilities 6.6 5.8 5.0
Non-current loans and borrowings
Bank loan - principal 125.0 160.0 120.0
- unamortised debt issue costs (1.7) (2.5) (2.1)
Private placement loan notes 25.0 25.0 25.0
Lease liabilities 21.3 18.5 18.4
169.6 201.0 161.3
Net debt 150.4 178.9 149.3
Net debt (excluding lease liabilities) 122.5 154.6 125.9
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 2026 with two further uncommitted annual renewals to August 2028
possible, 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 30 June 2024 was 1.425% (2023: 1.65%). Pro-forma EBITDA at 30 June
2024 was £112.4m (2023: £121.4m) 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
2024 2023 2023
£m £m £m
Pro-forma EBITDA (12 months preceding the balance sheet)
Underlying operating profit 90.7 98.0 94.1
Depreciation of property, plant and equipment 20.1 20.3 19.1
Amortisation of internally generated intangible assets 1.1 0.3 0.8
Unwind of discount on lease liabilities (1.6) (0.8) (1.2)
Share-based payments charge 2.1 3.6 2.1
112.4 121.4 114.9
At 30 June 2024, the Group had available, subject to covenant headroom,
£225.0m (2023: £190.0m) of undrawn committed borrowing facilities in respect
of which all conditions precedent had been met.
13. 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
Interest-bearing loans and borrowings due after more than one year 148.3 148.3
Interest rate swap (0.2) (0.2)
Total at 30 June 2024 148.1 148.1
Interest-bearing loans and borrowings due after more than one year 182.5 182.5
Deferred and contingent consideration 8.8 8.8
Total at 30 June 2023 191.3 191.3
Interest-bearing loans and borrowings due after more than one year 193.1 193.1
Deferred and contingent consideration 8.0 8.0
Total at 31 December 2023 201.1 201.1
The fair values were determined as follows by reference to:
· Deferred and contingent consideration: Directors' assessment of
the likelihood that financial targets will be achieved.
· The fair value of the interest rate swaps was determined by
reference to market values.
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 was determined based upon the
agreed purchase price of the remaining 49% of shares on 8 December 2023.
There have been no transfers in any direction between Levels 1, 2 or 3 in the
period.
14. Reconciliation of profit before tax to cash generated from
operations
Notes Six months ended 30 June 2024 Six months ended 30 Year ended 31 December 2023
£m June 2023 £m
£m
Operating activities
Profit before tax 15.3 29.7 48.4
Finance costs 5 6.0 6.7 13.6
Operating profit 21.3 36.4 62.0
Non-cash items:
Profit on disposal of property, plant and equipment (0.1) (0.2) (0.4)
Research and development expenditure credit (0.9) (0.8) (1.5)
Non-underlying items:
- amortisation of intangible assets arising on business 4, 9 7.2 7.4 14.8
combinations
- impairment of goodwill arising on business 9 12.4 - -
combinations
- impairment of intangible assets arising on business 4, 9 - - 2.5
combinations
- provision for acquisition costs 4 0.4 1.5 2.2
- provision for restructuring costs 4 0.2 5.5 14.1
- provision for restructuring costs - accelerated depreciation of property, 4 - - 1.2
plant and equipment (non-underlying)
- provision for SaaS configuration 4 0.5 - 1.2
- provision for product liability claim 4 - 0.3 (1.2)
- provision for software supplier dispute 4 4.3
- provision for employment matters 4 (1.2) - 2.0
- gain on sale of property 4 (1.5) (4.1) (4.7)
Depreciation of property, plant and equipment (underlying) 7.7 10.0 19.1
Depreciation of right-of-use assets 3.1 2.5 5.6
Amortisation of internally generated intangible assets 9 0.9 0.2 0.8
Share-based payments 1.6 1.6 2.1
Cash items:
- settlement of restructuring costs (1.3) (4.5) (12.1)
- settlement of acquisition costs 9 (6.5) - (0.4)
- settlement of product liability claim (1.0) (1.0) (1.7)
Operating cash flows before movement in working capital 47.1 54.8 105.6
Receivables (9.7) (35.0) (6.9)
Payables 6.2 3.1 (9.9)
Inventories 3.2 8.8 20.9
Cash generated from operations 46.8 31.7 109.7
15. Events after the reporting period
On 5 August 2024 the Group acquired 100% of the share capital of Sky Garden
Limited and on 6 August 2024 acquired the trade and assets of Omnie &
Timoleon. Further information has been disclosed in Note 9.
INDEPENDENT REVIEW REPORT TO GENUIT GROUP PLC
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
June 2024 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
Notes 1 to 14. 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 2024 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 for 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
12 August 2024
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR QKBBKFBKDQFDRecent news on Genuit
See all newsREG - Genuit Group PLC - Block listing Interim Review
AnnouncementREG - Genuit Group PLC - Notice of AGM
AnnouncementREG - Genuit Group PLC - Director/PDMR Shareholding
AnnouncementREG - Genuit Group PLC - Director/PDMR Shareholding
AnnouncementREG - Genuit Group PLC - Final Results
Announcement