REG - SIG PLC - Results for the six months to 30 June 2024
06/08/2024 07:00
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RNS Number : 2627Z SIG PLC 06 August 2024
6 August 2024
SIG plc
Results for the six months to 30 June 2024
SIG plc ("SIG", "the Group" or "the Company") today announces its half year
results for the six months ended 30 June 2024 ("H1 2024" or "the period").
( ) H1 2024 H1 2023
Revenue £1,316.8m £1,423.4m
LFL(1) sales growth (6.8)% (0.2)%
Gross margin 24.7% 25.6%
Underlying(2) operating profit £11.7m £32.7m
Underlying(2) operating margin 0.9% 2.3%
Underlying(2) (loss)/profit before tax £(6.6)m £15.0m
Underlying(2) (loss)/earnings per share (0.8)p 0.6p
Net debt £476.6m £468.8m
Net debt (pre-IFRS 16) £178.6m £176.2m
Statutory results H1 2024 H1 2023
Revenue £1,316.8m £1,423.4m
Operating profit £7.1m £30.0m
(Loss)/profit before tax £(11.3)m £12.2m
Total (loss)/profit after tax £(14.2)m £4.7m
Basic (loss)/earnings per share (1.2)p 0.4p
Financial highlights
· Group revenue of £1,317m, representing a like-for-like(1) ("LFL")
revenue decline of 6.8% versus prior year, reflecting:
o Prolonged challenging trading conditions in our larger businesses, leading
to lower volumes
o Pricing also down, partly due to modest net input cost deflation
· Group underlying operating profit of £11.7m at an operating margin
of 0.9%, with effective cost actions mitigating in part the impact of lower
sales
· Disciplined cash management; net debt of £477m post‐IFRS 16 and
£179m pre‐IFRS 16, both only marginally up vs prior half year
Operational highlights
· LFL revenue performance reflects challenging conditions in UK
Interiors, France and Germany, while Poland and Ireland delivered growth
against a stronger local backdrop
· All businesses continue to perform well relative to their markets,
most notably in Germany and UK Roofing
· Operating margins impacted by the operational gearing effect of
reduced volumes and pricing year-on-year
· Further permanent cost restructuring actions taken in H1 2024 driving
reductions in central and operating company overheads, now totalling £15m in
annualised savings since H2 2023 (£6m year-over-year saving in H1 2024);
total underlying savings in operating costs in the period of £24m vs the
prior year, before inflation
· Continuing progress in all geographies in H1 in improving underlying
operational effectiveness and efficiency, and in execution of strategic
initiatives expected to drive improved performance over the medium-term
Outlook
· The Group's outlook for FY 2024 remains in line with the recent
update published on 24 June:
o FY 2024 underlying operating profit expected to be in the range of
£20m-£30m
o Increasing benefits from productivity and cost initiatives underpin
continued expectation of a slightly stronger second half
o The extent of this H2 improvement is subject to the evolution of demand
conditions, particularly given market uncertainties in France and Germany, and
recognising the sensitivity of operating profit to relatively small movements
in sales
· The Board remains confident in achieving the Group's operating
margin target of 5% in the medium-term
Commenting, Gavin Slark, Chief Executive Officer, said:
"Our results in the first half reflect the prolonged challenging market
conditions we are currently facing across most of our European businesses. In
light of these conditions, we took further actions to reduce our permanent
cost base in the half, which will benefit us in the future.
During the period, we also made further progress on our strategic initiatives
to improve our underlying operations and to position us to capture additional
growth when markets improve. This has included the launch of a new omnichannel
and e-commerce platform for our business in Germany, with France to follow,
both of which will enhance future profitability as well as customer experience
and convenience. Across all of our operations we are implementing a range of
initiatives under our 'GEMS' strategy, which will lead to a higher-value sales
mix and will support delivery of our 5% operating margin target. The
operational gearing in our business model applies equally strongly in
conditions of rising demand, and, accordingly, the Board believes the Group
remains well positioned to benefit from the market recovery when it occurs."
Notes
1. Like-for-like ("LFL") is defined as the growth/(decline) in sales per
working day in constant currency excluding any current and prior year
acquisitions and disposals. Sales are not adjusted for branch openings or
closures.
2. Underlying represents the results before Other items. Other items relate to
the amortisation of acquired intangibles, net restructuring costs, costs
related to acquisitions, cloud based ERP implementation costs and other
specific items. Other items have been disclosed separately in order to give an
indication of the underlying earnings of the Group.
A live presentation and Q&A session, hosted by Gavin Slark, CEO, and Ian
Ashton, CFO, will take place at 10.15am UK time today at the offices of FTI
Consulting. The presentation and Q&A session will be webcast live, and a
recording of both will be available after the event.
Please click the link below to join the webinar:
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(https://storm-virtual-uk.zoom.us/s/85286554999)
Webinar ID: 852 8655 4999
Or One tap mobile:
+442080806592,,85286554999# United Kingdom
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Or join by phone:
United Kingdom: +44 208 080 6592 or +44 330 088 5830 or +44 131 460 1196 or
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International numbers available: https://storm-virtual-uk.zoom.us/u/kcnQYmdLHQ
(https://storm-virtual-uk.zoom.us/u/kcnQYmdLHQ)
Enquiries +44 (0) 114 285 6300
SIG plc
Gavin Slark Chief Executive Officer
Ian Ashton Chief Financial Officer
Sarah Ogilvie Head of Investor Relations
FTI Consulting Richard Mountain +44 (0) 20 3727 1340
About
SIG plc is a leading pan-European supplier of specialist building products to
trade customers across the UK, France, Germany, Ireland, Benelux and Poland.
With leading market positions in specialist insulation, interiors and
exteriors products, as well as a growing position in construction accessories
and other specialisms, SIG facilitates one-stop access to an extensive product
range, provides expert technical advice and coordinates often complex delivery
requirements. For suppliers, SIG offers a channel through which products can
be brought to a highly fragmented market of smaller customers and sites that
are of insufficient scale to supply direct. SIG employs more than 7,000
employees across Europe and is listed on the London Stock Exchange (SHI). For
more information, please visit the Company's website, www.sigplc.com
(http://www.sigplc.com) .
Trading overview
Group LFL revenue was 7% down year‐on‐year in the period, with volumes and
pricing having a broadly equal effect.
Reported Group revenue was also 7% lower in the period, with a negligible
impact in aggregate from movements in exchange rates and working days.
1 January to 30 June 2024 LFL growth £m
Revenue
UK Interiors (14)% 250
UK Roofing (2)% 182
UK Specialist Markets (7)% 121
UK (9)% 553
France Interiors (7)% 105
France Roofing (11)% 215
Germany (3)% 220
Poland 3% 119
Benelux (12)% 54
Ireland 9% 50
EU (5)% 763
Group (7)% 1,317
Market conditions were challenging through H1 across our larger EU based
businesses (58% of revenue) and in the UK (42% of revenue). This included
prolonged weak demand in France, where product volumes to new build
construction projects were weaker in both residential and commercial. Demand
was also weak in Germany, including in commercial new build, the larger
element of our business in Germany.
In the UK, our Interiors business experienced lower volumes and weaker market
demand. Its LFL decline included a 3% reduction in sales from strategic branch
closures, a part of our restructuring initiatives that will help drive
profitability in the near and longer term. Increased price competition in
drylining has also been a factor. UK Roofing also experienced weaker revenue
but has continued to trade with good momentum relative to the market and is
benefiting from increasingly strong execution, allied with selective
investment in sales and marketing. Specialist Markets experienced weaker
demand for Performance Technology and Building Solutions while demand for
Construction Accessories has been somewhat more resilient.
Volumes and market conditions are stabilising in Poland and Ireland, both of
which are further through the cycle than our other markets. This, combined
with strong execution by our teams, means they have both reported positive
sales growth and more robust profitability. Our Benelux business continues its
gradual recovery in underlying performance after some years of
underperformance, although as elsewhere a very weak market backdrop held back
sales in the period.
All the businesses have made progress on driving operational improvements and
efficiencies, as well as stronger customer service, as detailed below under
Strategic Progress. We will continue to focus on cost discipline and on
ensuring that we have the appropriate level of cost and infrastructure across
the Group.
Strategic progress
During H1 2024 the Group has progressed actions to improve its operational
performance towards our medium-term target of a 5% operating profit margin.
While market conditions create a near-term headwind to margin progression, we
are taking actions in four strategic areas to improve the way we operate now,
to better position our business to win as markets recover and to take
advantage of long-term growth trends in the industry.
Grow
We are focused on delivering above-market growth in all of our businesses.
In H1 2024, our LFL growth rates in our largest operating companies continued
to show good performance relative to the market.
In the UK, our Roofing business continues to trade with good momentum against
the wider market, and is benefiting from investments made in the customer
service experience in our branches, sales, marketing and branch merchandising.
Growth rates in the Interiors business reflect the decline in market volumes,
with drylining most challenging. However, adjusting for the 3% revenue impact
from branch closures, data from our suppliers regarding overall market volumes
indicates that we have performed robustly relative to the market in Interiors
in the period.
In France, both businesses delivered a LFL performance that we believe was
ahead of the local market. In Germany, the LFL growth achieved was notably
stronger than the wider market and reflects the business's continued momentum
following turnaround actions, including reinvestment in sales and branch
employee engagement, over the last three years.
Execute
We are focused on strengthening our operational execution and margin across
our geographies.
During H1 2024 we took further restructuring actions, in addition to those
started in H2 2023, to reduce our permanent cost base to mitigate the impact
of lower volumes on profitability. These actions have included reducing the
number of roles in the business by approximately 250 year-over-year, with the
focus on reducing Group and operating company central overheads. Outside
formal restructuring initiatives, we have also reduced headcount, including in
branches, through the non-replacement of leavers. Some of the latter may be
temporary reductions, depending on when and to what extent volumes return, and
others will be permanent.
In H1 2024 we also decided to close a number of branches that were either
consistently underperforming or were in locations we can either service more
effectively from another branch or which have seen shifts in local market
growth dynamics. In total we closed seven branches in H1, with another three
in progress. These closures have been in the UK, France, and Germany.
These restructuring actions, together with those commenced in H2 2023, are
expected to generate £15m in annualised cost savings, with the majority of
these benefiting 2024. £10m of these annualised savings are as previously
announced, with a further £5m identified in H1 2024. Of the expected
year-over-year impact in FY 2024 of c£12m, around £6m benefited H1. The
one-off cost to deliver these £15m restructuring savings will be £12m-£13m,
with £6m cash spent to date, including c£3m in H1 2024, which followed a
similar amount in H2 2023.
Along with other initiatives, notably the rigorous management of normal
headcount churn as referenced above, operating costs dropped by £19m over the
prior year in the period. After adjusting for inflation of £7m and a small
amount of FX, underlying savings in operating costs were £24m in the period.
Modernise
We are acting to modernise our operations to increase efficiency and
productivity.
We have made good progress in H1 in expanding our customer-facing e-commerce
platforms. Germany completed the development of their new omnichannel sales
model and new e-commerce platform. A pilot site went live in April with good
initial usage and with customer feedback incorporated into the final
development. The full launch is on track for Q3 2024. In France a new
e-commerce site for France Interiors is also in development and being
progressed towards a targeted launch in Q1 2025. As in Germany, this platform
will also leverage our successful e-commerce experience in Poland.
Both platforms will allow us to provide a more seamless and convenient
customer experience, by allowing them to purchase from SIG through the channel
most convenient for them - anywhere, anytime. We expect both platforms, once
fully established, to increase revenue through greater share of wallet from
existing customers, and within that to also increase private label sales per
customer, with these sales typically being higher margin. There is also
greater cost efficiency to the SIG sales teams in serving customers through an
omnichannel model.
Specialise
We will accelerate growth in the more specialist and higher return businesses
within our portfolio.
In H1 2024 our UK Specialist Markets business has developed a number of
innovative new products in our performance materials manufacturing and
fabricating businesses. These new products target future market demand for
greater fire protection in high rise and other buildings, following changes
under the UK Building Safety Act. Our performance materials business launched
10 new products in the period and has a further pipeline of over 60 products
planned for launch in due course.
In UK Roofing, the business has continued sales development activities to
support our new solar product offering launched last year. This has been
rolled out nationwide, and our sales team are now able to sell solar products
alongside our core roofing ranges. We continue to develop customer support
materials and tools to help our roofing customers capture the growing demand
for solar as an adjacent but complementary market to our traditional flat and
pitched roofing business.
In France, our Roofing business has also continued with business development
activities across the branch network to support the launch of solar products,
for which we anticipate long-term growth in demand. In H1 this included a new
dedicated warehouse for solar product storage and a dedicated key account
sales team for solar products.
The French RE2020 regulation supports long-term demand for building products
that help building decarbonisation. In H1 2024, we added three new suppliers
of bio-based products as we continue to evolve our offering to be ready to
capture demand driven by this long-term trend when market conditions improve.
FINANCIAL REVIEW
Revenue
Group revenue of £1,316.8m (H1 2023: £1,423.4m) was 7% lower on a reported
basis, including negligible impact in aggregate from movements in exchange
rates and working days. LFL revenue was hence also 7% down year-on-year in the
period, with declines in pricing and volumes having a broadly equal effect.
Pricing was down in all markets, and volumes in the majority.
Profit
Underlying and statutory gross profit decreased 11.0% to £324.6m (H1 2023:
£364.8m) with a reduced gross profit margin of 24.7% (H1 2023: 25.6%). The
reduction in gross margin was due primarily to increased pricing pressure in
the current difficult demand environment.
The Group's underlying operating costs were down 5.8% to £312.9m (H1 2023:
£332.1m). The decrease was primarily due to operating cost initiatives,
including those from restructuring actions taken from H2 2023 onwards, and
partly due to lower volumes, with these two factors partially offset by the
impact of inflation on operating costs, with the biggest impact of the latter
being on wages and salaries.
As a result, Group underlying operating profit was £11.7m (H1 2023: £32.7m),
at an operating margin of 0.9% (H1 2023: 2.3%). Reported operating profit was
£7.1m (H1 2023: £30.0m) after Other items of £4.6m (H1 2023: £2.7m), which
are set out further below.
Segmental analysis
UK
Revenue Revenue LFL sales Underlying operating Underlying operating
H1 2024 restated(1) H1 2024 (loss)/profit profit
£m H1 2023 H1 2024 restated(1)
£m £m H1 2023
£m
UK Interiors 250.4 290.1 (14)% (1.2) 2.4
UK Roofing 182.1 184.1 (2)% 4.9 4.5
UK Specialist Markets 120.9 128.5 (7)% 2.3 5.7
UK 553.4 602.7 (9)% 6.0 12.6
1. The H1 2023 segmental information has been restated in order to present on
a consistent basis with the current period, see Note 1 for further details.
Following a change in the UK management structure announced in November 2023,
we now report three segments in the UK, with the Specialist Markets businesses
separated out from the Interiors and Roofing businesses under which they were
reported previously.
Reported revenue in UK Interiors, a specialist insulation and interiors
distribution business, decreased by 14% to £250.4m (H1 2023: £290.1m). LFL
revenue was down 14% year-on-year with the impact of a declining market and a
headwind from input price deflation. This included a 3% reduction in LFL sales
due to strategic branch closures, part of our restructuring initiatives to
improve profitability. The decline in revenue, together with pricing pressure,
partially offset by operating cost reductions, resulted in an operating loss
of £1.2m (H1 2023: £2.4m profit).
Reported revenue in UK Roofing, a specialist roofing merchant, decreased
slightly to £182.1m (H1 2023: £184.1m), with LFL revenue down 2%. This was
largely due to deflation in certain materials while volumes were broadly flat.
A small reduction in gross margin, offset by operating cost reductions,
resulted in operating profit of £4.9m (H1 2023: £4.5m).
Reported revenue in our UK Specialist Markets decreased by 6% to £120.9m (H1
2023: £128.5m). LFL revenue declined 7%, driven by a softer market, and by
input price deflation in steel, which is a bigger element of these businesses
than elsewhere in the Group. These factors, coupled with operating cost
inflation, resulted in a reduction in operating profit to £2.3m (H1 2023:
£5.7m).
France
Revenue Revenue LFL sales Underlying operating Underlying operating
H1 2024 H1 2023 H1 2024 profit profit
£m £m H1 2024 H1 2023
£m £m
France Interiors 105.1 116.4 (7)% 3.6 6.4
France Roofing 214.9 249.7 (11)% 4.9 12.1
France 320.0 366.1 (9)% 8.5 18.5
France Interiors, a structural insulation and interiors business trading as
LiTT, saw revenue decrease by 10% to £105.1m (H1 2023: £116.4m), and by 7%
on a LFL basis. This was driven by lower demand and volumes together with
input price deflation, as opposed to the price inflation seen in H1 2023. The
revenue decline, coupled with increased margin pressure, resulted in a £2.8m
decrease in operating profit to £3.6m (H1 2023: £6.4m).
Revenue in France Roofing, a specialist roofing business trading as
Larivière, decreased 14% to £214.9m (H1 2023: £249.7m), and by 11% on a LFL
basis. Demand and volumes were lower due to continued softening of the new
build market and input price deflation. The decrease in revenue and reduced
gross margin was partially offset by reduced operating costs, resulting in an
operating profit decrease of £7.2m to £4.9m (H1 2023: £12.1m).
Germany
Revenue Revenue LFL sales Underlying operating Underlying operating
H1 2024 H1 2023 H1 2024 profit profit
£m £m H1 2024 H1 2023
£m £m
Germany 219.9 234.8 (3)% 3.0 9.6
Revenue in wego/vti, our specialist interiors, flooring and insulation
distribution business in Germany, decreased by 6% to £219.9m (H1 2023:
£234.8m). LFL revenue was down 3% year-on-year, largely driven by deflation,
with broadly stable volumes. Gross margin also declined due to increased price
competition, resulting in lower operating profit of £3.0m (H1 2023: £9.6m).
Poland
Revenue Revenue LFL sales Underlying operating Underlying operating
H1 2024 H1 2023 H1 2024 profit profit
£m £m H1 2024 H1 2023
£m £m
Poland 118.7 110.2 3% 2.6 2.7
In our Polish business, a market leading distributor of insulation and
interiors products, revenue increased to £118.7m (H1 2023: £110.2m),
representing a 3% increase on a LFL basis. Residential building activity
improved year-on-year along with further improvements in our market position.
This was offset by operating cost inflation, resulted in a slightly lower
operating profit of £2.6m (H1 2023: £2.7m).
Benelux
Revenue Revenue LFL sales Underlying operating Underlying operating
H1 2024 H1 2023 H1 2024 (loss) (loss)
£m £m H1 2024 H1 2023
£m £m
Benelux 54.4 62.1 (12)% (2.4) (1.6)
Revenue from the Group's business in Benelux decreased by 12% to £54.4m (H1
2023: £62.1m) with LFL revenue also down 12%. This reflected continued market
decline, and alongside this gross margin has declined due to strong price
competition, only being partially offset by operating cost savings. The first
half performance resulted in an operating loss of £2.4m (H1 2023: £1.6m
loss).
Ireland
Revenue Revenue LFL sales Underlying operating Underlying operating
H1 2024 H1 2023 H1 2024 profit profit
£m £m H1 2024 H1 2023
£m £m
Ireland 50.4 47.5 9% 1.3 0.5
Our business in Ireland comprises a specialist distributor of interiors and
exteriors, and three separate specialist contracting businesses offering
office furnishing, industrial coatings and kitchen/bathroom fit out. Revenue
in total increased by 6% to £50.4m (H1 2023: £47.5m), and by 9% on a LFL
basis, as a result of commercial initiatives to improve market share combined
with a slightly healthier market backdrop than the prior year. Operating
profit improved as a result by £0.8m to £1.3m (H1 2023: £0.5m).
Reconciliation of underlying to statutory result
Other items, being items excluded from underlying results, during the period
amounted to £4.7m (H1 2023: £2.8m) on a pre-tax basis and are summarised in
the table below:
H1 2024
£m H1 2023
£m
Underlying (loss)/profit before tax (6.6) 15.0
Other items - impacting (loss)/profit before tax:
Amortisation of acquired intangibles (1.1) (1.6)
Net restructuring costs (2.8) -
Costs related to acquisitions (0.2) (1.4)
Cloud based ERP implementation costs (0.4) (1.3)
Onerous contract costs - (0.2)
Other specific items (0.1) 1.8
Non-underlying finance costs (0.1) (0.1)
Total Other items (4.7) (2.8)
Statutory (loss)/profit before tax (11.3) 12.2
Other items are disclosed separately in order to provide a better indication
of the underlying earnings of the Group.
Taxation
Tax for the six month period ended 30 June 2024 is determined based on
applying full year estimates of the annual effective tax rate for individual
jurisdictions to the underlying profit/loss before tax for the six month
period. This results in an effective "negative tax rate" of 47.0% on the
underlying loss before tax (30 June 2023: 53.3%; 31 December 2023: 74.7%; both
positive rates on underlying profits before tax). Tax losses cannot be
surrendered or utilised cross border, and the Group is therefore subject to
tax in some countries and not in others. Tax losses in the UK and Benelux
businesses are not currently recognised as deferred tax assets, which impacts
the overall and underlying effective tax rate. The relative proportions of
these losses compared to the total Group underlying (loss)/profit before tax
is higher for the six months to 30 June 2024 compared to prior periods, and
the Group has incurred an overall underlying loss before tax for the current
period, resulting in the abnormal effective tax rate.
Pensions
The Group operates a number of pension schemes, four of which provide defined
benefits based upon pensionable salary. The UK scheme has assets held in a
separate trustee administered fund, and three are overseas book reserve
schemes. The UK defined benefit pension scheme obligation is calculated on a
year to date basis, using the latest triennial valuation as at 31 December
2022 which was concluded at the end of March 2024.
The IAS 19 valuation conducted as at 31 December 2023 has been updated to
reflect current market conditions, and as a result an actuarial gain of £1.5m
has been recognised within the Condensed consolidated statement of
comprehensive income. The total net pension liability in relation to defined
benefit schemes at 30 June 2024 is £16.4m (30 June 2023: £21.0m; 31 December
2023: £20.3m), including an £8.9m deficit (30 June 2023: £13.5m; 31
December 2023: £12.7m) in the UK scheme. The movement in the period relates
principally to an actuarial gain of £1.5m together with the recognition of
the scheduled annual contribution into the UK scheme of £2.5m.
Financial position
Overall, the net assets of the Group decreased by £13.4m to £215.1m from
£228.5m at 31 December 2023, with a cash position at the period end of
£100.7m (30 June 2023: £106.3m; 31 December 2023: £132.2m) and net debt
(post-IFRS 16) of £476.6m (30 June 2023: £468.8m; 31 December 2023:
£458.0m). Net debt on a pre-IFRS 16 basis was £178.6m (30 June 2023:
£176.2m, 31 December 2023: £154.0m).
The movement in post‐IFRS 16 net debt is due mainly to the movement in cash
noted below. A reduction in net lease liabilities of £6.8m and a favourable
currency movement of £6.2m on bond debt improved the net debt position. The
movement in pre-IFRS net debt is not affected by the movement on leases.
Cash flow
H1 2024 H1 2023
£m £m
Underlying operating profit 11.7 32.7
Add back: Depreciation 39.1 37.8
Add back: Amortisation 0.8 1.2
Underlying EBITDA 51.6 71.7
Increase in working capital (8.0) (27.5)
Repayment of lease liabilities (33.6) (31.8)
Capital expenditure (7.9) (5.7)
Cash exceptional items (3.6) (2.8)
Other (2.0) 1.6
Operating cash flow (3.5) 5.5
Interest and financing (17.8) (17.1)
Tax (0.6) (8.7)
Free cash flow(1) (21.9) (20.3)
Payments related to previous acquisitions (6.6) (0.5)
Investment in financial assets - (1.0)
Repayment of debt (0.4) (0.4)
Total cash flow (28.9) (22.2)
Cash and cash equivalents at beginning of the period 132.2 130.1
Effect of foreign exchange rate changes (2.6) (1.6)
Cash and cash equivalents at end of the period 100.7 106.3
1. Free cash flow represents the cash available after supporting operations,
including capex and the repayment of lease liabilities, and before
acquisitions and any movements in funding.
During the period, the Group reported a free cash outflow of £21.9m (H1 2023:
£20.3m outflow). This was a result of the lower underlying operating profit
and higher capex being offset by continued discipline in working capital.
Capex during the period was £7.9m (H1 2023: £5.7m). "Other" included the add
back of non-cash P&L items, provision movements of £4.3m, and proceeds on
sale of property, plant and equipment of £1.2m.
The key factors driving the working capital result in the period were the
usual sales seasonality and lower volumes year-on-year.
Financing and funding
The Group's debt funding comprises €300m of 5.25% fixed rate secured notes
and an RCF of £90m. These mature and expire in November 2026 and May 2026
respectively. The secured notes are subject to incurrence-based covenants
only, and the RCF has a leverage maintenance covenant set at 4.75x which only
applies if the facility is over 40% drawn at a quarter end reporting date. The
RCF was undrawn at 30 June 2024 and remains undrawn. The Board is evaluating,
and will continue to evaluate, its options for the optimal refinancing of
these facilities ahead of their maturity dates.
The Group's liquidity position remained robust throughout H1 2024, and at the
end of the period stood at £191m, consisting of cash of £101m and the £90m
undrawn RCF noted above. On the basis of current forecasts the Group is
expected to remain in compliance with all banking covenants throughout the
going concern forecast period to 30 September 2025.
H1 2024 H1 2023
£m £m
Cash and cash equivalents at end of the period 100.7 106.3
Undrawn RCF at end of the period 90.0 90.0
Liquidity 190.7 196.3
Post-IFRS 16 net debt 476.6 468.8
Pre-IFRS 16 net debt 178.6 176.2
Post-IFRS 16 leverage 4.3x 3.2x
Pre-IFRS 16 leverage 5.8x 2.4x
Dividend
No interim dividend will be paid for 2024. However, continued successful
execution of the strategy will return the Group to sustainable, profitable
growth and cash generation, especially once construction markets start to
recover to more normal levels, supporting a range of capital allocation
priorities. The Board reiterates its commitment to reinstating a dividend,
appropriately covered by underlying earnings, once it is appropriate to do so.
Responsibility Statement
We confirm to the best of our knowledge that:
(a) the condensed interim set of financial statements has been prepared in
accordance with UK adopted IAS 34 "Interim Financial Reporting";
(b) the Interim Report includes a fair review of the information required by
DTR 4.2.7R (indication of important events during the first six months and
description of principal risks and uncertainties for the remaining six months
of the year); and
(c) the Interim Report includes a fair review of the information required by
DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board
Gavin Slark Ian Ashton
Director Director
05 August 2024 05 August 2024
Cautionary statement
This Interim Report is prepared for and addressed only to the Company's
Shareholders as a whole and to no other person. The Company, its Directors,
employees, agents or advisors do not accept or assume responsibility to any
other person to whom this Interim Report is shown or into whose hands it may
come and such responsibility or liability is expressly disclaimed.
This Interim Report contains forward-looking statements that are subject to
risk factors including the economic and business circumstances occurring from
time to time in countries and markets in which the Group operates and risk
factors associated with the building and construction sectors. By their
nature, forward-looking statements involve a number of risks, uncertainties
and assumptions because they relate to events and/or depend on circumstances
that may or may not occur in the future and could cause actual results and
outcomes to differ materially from those expressed in or implied by the
forward-looking statements. No assurance can be given that the forward-looking
statements in this Interim Report will be realised. Statements about the
Directors' expectations, beliefs, hopes, plans, intentions and strategies are
inherently subject to change and they are based on expectations and
assumptions as to future events, circumstances and other factors which are in
some cases outside the Group's control. Actual results could differ materially
from the Group's current expectations.
It is believed that the expectations set out in these forward-looking
statements are reasonable but they may be affected by a wide range of
variables which could cause actual results or trends to differ materially,
including but not limited to, market conditions, competitors and margin
management, commercial relationships, fluctuations in product pricing, changes
in foreign exchange and interest rates, government legislation, availability
of funding, working capital and cash management, IT infrastructure and cyber
security and availability and quality of key resources.
The Company's Shareholders are cautioned not to place undue reliance on the
forward-looking statements. This Interim Report has not been audited or
otherwise independently verified. The information contained in this Interim
Report has been prepared on the basis of the knowledge and information
available to Directors at the date of its preparation and the Company does not
undertake any obligation to update or revise this Interim Report during the
financial year ahead.
( )
Condensed Consolidated Income Statement
For the six months ended 30 June 2024 (unaudited)
Six months ended 30 June 2024 Six months ended 30 June 2023 Year ended 31 December 2023
Underlying(1) Other items(2) Total Underlying(1) Other items(2) Total Underlying(1) Other items(2) Total
Note £m £m £m £m £m £m £m £m £m
Revenue 2 1,316.8 - 1,316.8 1,423.4 - 1,423.4 2,761.2 - 2,761.2
Cost of sales (992.2) - (992.2) (1,058.6) - (1,058.6) (2,061.6) - (2,061.6)
Gross profit 324.6 - 324.6 364.8 - 364.8 699.6 - 699.6
Other operating expenses (309.4) (4.6) (314.0) (327.2) (3.8) (331.0) (640.6) (50.2) (690.8)
Impairment losses on financial assets (3.5) - (3.5) (4.9) 1.1 (3.8) (9.6) 1.1 (8.5)
Gain on disposal of property - - - - - - 3.7 - 3.7
Operating profit 2 11.7 (4.6) 7.1 32.7 (2.7) 30.0 53.1 (49.1) 4.0
Finance income 4 1.7 - 1.7 1.4 - 1.4 2.2 - 2.2
Finance costs 4 (20.0) (0.1) (20.1) (19.1) (0.1) (19.2) (37.9) (0.2) (38.1)
(Loss)/profit before tax (6.6) (4.7) (11.3) 15.0 (2.8) 12.2 17.4 (49.3) (31.9)
Income tax (expense)/credit 5 (3.1) 0.2 (2.9) (8.0) 0.5 (7.5) (13.0) 1.5 (11.5)
(Loss)/profit after tax (9.7) (4.5) (14.2) 7.0 (2.3) 4.7 4.4 (47.8) (43.4)
Attributable to:
Equity holders of the Company (9.7) (4.5) (14.2) 7.0 (2.3) 4.7 4.4 (47.8) (43.4)
(Loss)/earnings per share
Basic 6 (1.2)p 0.4p (3.8)p
Diluted 6 (1.2)p 0.4p (3.8)p
(1) Underlying represents the results before Other items.
(2) Other items have been disclosed separately in order to give an indication
of the underlying earnings of the Group. Further details are disclosed in Note
3.
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2024 (unaudited)
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
(Loss)/profit after tax (14.2) 4.7 (43.4)
Items that will not subsequently be reclassified to the Consolidated Income
Statement:
Remeasurement of defined benefit pension liability (Note 12) 1.5 0.1 1.1
Deferred tax movement associated with remeasurement of defined benefit pension - - (0.1)
liability
1.5 0.1 1.0
Items that may subsequently be reclassified to the Consolidated Income
Statement:
Exchange difference on retranslation of foreign currency goodwill and (1.1) (1.5) (1.1)
intangibles
Exchange difference on retranslation of foreign currency net investments (6.9) (6.3) (2.8)
(excluding goodwill and intangibles)
Exchange and fair value movements associated with borrowings and derivative 6.2 8.3 5.8
financial instruments
Gains and losses on cash flow hedges (0.8) (1.7) (1.1)
Transfer to profit and loss on cash flow hedges 0.6 (1.0) (1.5)
(2.0) (2.2) (0.7)
Other comprehensive (expense)/income (0.5) (2.1) 0.3
Total comprehensive (expense)/income (14.7) 2.6 (43.1)
Attributable to:
Equity holders of the Company (14.7) 2.6 (43.1)
Condensed Consolidated Balance Sheet
As at 30 June 2024 (unaudited)
30 June 30 June 31 December
2024 2023 2023
Note £m £m £m
Non-current assets
Property, plant and equipment 65.3 66.6 65.4
Right-of-use assets 256.5 277.1 263.1
Goodwill 130.1 133.3 131.2
Intangible assets 13.6 20.0 15.3
Lease receivables 2.0 2.7 2.2
Deferred tax assets 4.0 4.8 4.4
Non-current financial assets 10 0.2 0.2 0.2
471.7 504.7 481.8
Current assets
Inventories 269.0 290.4 259.1
Lease receivables 0.7 1.0 1.1
Trade and other receivables 440.9 488.1 389.1
Current tax assets 1.8 1.9 3.6
Current financial assets 10 - 1.3 -
Cash at bank and on hand 100.7 106.3 132.2
813.1 889.0 785.1
Total assets 1,284.8 1,393.7 1,266.9
Current liabilities
Trade and other payables 436.5 483.1 385.8
Lease liabilities 64.2 60.6 64.9
Interest-bearing loans and borrowings 0.8 0.8 0.8
Deferred consideration 1.8 0.2 1.8
Derivative financial instruments 10 1.2 1.0 1.0
Current tax liabilities 7.0 6.9 6.9
Provisions 7.6 7.3 7.9
519.1 559.9 469.1
Non-current liabilities
Lease liabilities 258.2 257.8 264.9
Interest-bearing loans and borrowings 253.7 257.7 260.0
Deferred consideration - 1.8 -
Derivative financial instruments 10 0.1 0.2 0.1
Other payables 2.8 3.1 3.0
Retirement benefit obligations 12 16.4 21.0 20.3
Provisions 19.4 19.1 21.0
550.6 560.7 569.3
Total liabilities 1,069.7 1,120.6 1,038.4
Net assets 215.1 273.1 228.5
Capital and reserves
Called up share capital 11 118.2 118.2 118.2
Treasury shares (8.9) (16.4) (11.6)
Capital redemption reserve 0.3 0.3 0.3
Share option reserve 6.2 11.3 7.6
Hedging and translation reserves 1.8 2.3 3.8
Cost of hedging reserve 0.1 0.1 0.1
Merger reserve 92.5 92.5 92.5
Retained profits 4.9 64.8 17.6
Attributable to equity holders of the Company 215.1 273.1 228.5
Total equity 215.1 273.1 228.5
( )
( )
Condensed Consolidated Cash Flow Statement
For the six months ended 30 June 2024 (unaudited)
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
Note £m £m £m
Net cash flow from operating activities
Cash generated from operating activities 8 33.6 42.2 128.4
Income tax paid (0.6) (8.7) (14.0)
Net cash generated from operating activities 33.0 33.5 114.4
Cash flows from investing activities
Finance income received 1.7 1.4 2.2
Purchase of property, plant and equipment and computer software (7.8) (5.7) (15.7)
Initial direct costs of right-of-use assets (0.1) - (0.1)
Proceeds from sale of property, plant and equipment 1.2 0.8 5.6
Settlement of amounts payable for previous purchases of businesses 7 (2.6) (0.5) (0.7)
Investment in financial assets - (1.0) -
Net cash used in investing activities (7.6) (5.0) (8.7)
Cash flows from financing activities
Finance costs paid (19.5) (18.5) (36.9)
Repayment of lease liabilities (33.6) (31.8) (63.6)
Repayment of borrowings (0.4) (0.4) (0.8)
Acquisition of treasury shares (0.8) - (1.7)
Net cash used in financing activities (54.3) (50.7) (103.0)
(Decrease)/increase in cash and cash equivalents in the period 9 (28.9) (22.2) 2.7
Cash and cash equivalents at beginning of the period 132.2 130.1 130.1
Effect of foreign exchange rate changes (2.6) (1.6) (0.6)
Cash and cash equivalents at end of the period 100.7 106.3 132.2
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2024 (unaudited)
Called up share capital Treasury shares reserve Capital redemption reserve Share option reserve Hedging and translation reserves Cost of hedging reserve Merger reserve Retained profits Total
For the six months ended 30 June 2024 £m £m £m £m £m £m £m £m £m
At 1 January 2024 118.2 (11.6) 0.3 7.6 3.8 0.1 92.5 17.6 228.5
Loss after tax - - - - - - - (14.2) (14.2)
Other comprehensive (expense)/income - - - - (2.0) - - 1.5 (0.5)
Total comprehensive expense - - - - (2.0) - - (12.7) (14.7)
Purchase of treasury shares - (0.8) - - - - - - (0.8)
Credit to share option reserve - - - 2.1 - - - - 2.1
Settlement of share options - 3.5 - (3.5) - - - - -
At 30 June 2024 118.2 (8.9) 0.3 6.2 1.8 0.1 92.5 4.9 215.1
Treasury shares reserve Capital redemption reserve Share option reserve Hedging and translation reserves Cost of hedging reserve Merger reserve Retained profits Total
Called up share capital
For the six months ended 30 June 2023 £m £m £m £m £m £m £m £m £m
At 1 January 2023 118.2 (16.4) 0.3 8.6 4.5 0.1 92.5 60.0 267.8
Profit after tax - - - - - - - 4.7 4.7
Other comprehensive (expense)/income - - - - (2.2) - - 0.1 (2.1)
Total comprehensive (expense)/income - - - - (2.2) - - 4.8 2.6
Credit to share option reserve - - - 2.7 - - - - 2.7
At 30 June 2023 118.2 (16.4) 0.3 11.3 2.3 0.1 92.5 64.8 273.1
Called up share capital Treasury shares reserve Capital redemption reserve Share option reserve Hedging and translation reserves Cost of hedging reserve Merger reserve Retained profits Total
For the year ended 31 December 2023 £m £m £m £m £m £m £m £m £m
At 1 January 2023 118.2 (16.4) 0.3 8.6 4.5 0.1 92.5 60.0 267.8
Loss after tax - - - - - - - (43.4) (43.4)
Other comprehensive (expense)/income - - - - (0.7) - - 1.0 0.3
Total comprehensive expense - - - - (0.7) - - (42.4) (43.1)
Purchase of treasury shares - (1.7) - - - - - - (1.7)
Credit to share option reserve - - - 5.5 - - - - 5.5
Settlement of share options - 6.5 - (6.5) - - - - -
At 31 December 2023 118.2 (11.6) 0.3 7.6 3.8 0.1 92.5 17.6 228.5
The share option reserve represents the cumulative equity-settled share option
charge under IFRS 2 "Share-based payment" less the value of any share options
that have been exercised.
The hedging and translation reserves represent movements in the Condensed
Consolidated Balance Sheet as a result of movements in exchange rates and
movements in the fair value of cash flow hedges which are reflected in equity
through other comprehensive income.
Notes to the Condensed Interim Financial Statements
1. Basis of preparation of Condensed Interim Financial Statements
The Condensed Interim Financial Statements were approved by the Board of
Directors on 5 August 2024.
The Group's Condensed Interim Financial Statements have been prepared in
accordance with UK adopted IAS 34 "Interim Financial Reporting" and the
accounting policies included in the Annual Report and Accounts for the year
ended 31 December 2023, which have been applied consistently throughout the
current and preceding periods.
The Condensed Interim Financial Statements do not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. The interim
results to 30 June 2024 and 30 June 2023 have been subject to an Interim
Review in accordance with ISRE 2410 by the Company's Auditor.
The financial information for the full preceding year is based on the audited
statutory accounts for the financial year ended 31 December 2023 prepared in
accordance with UK adopted international accounting standards. Those accounts
have been delivered to the Registrar of Companies. The Auditor's Report was
(i) unqualified, (ii) included no matters to which the auditor drew attention
by way of emphasis without modifying their report and (iii) did not contain
statements under Section 498(2) or Section 498(3) of the Companies Act 2006 in
relation to the financial statements.
The preparation of condensed interim 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 expense. Actual results may subsequently differ from those estimates. The
areas of critical accounting judgements and key sources of estimation
uncertainty set out on page 144 to 145 of the 2023 Annual Report and Accounts
are considered to continue and be consistently applied. In relation to the
impairment of goodwill and non-current assets, as a result of the prevailing
market conditions in 2024, the level of headroom for a number of cash
generating units has reduced compared to 31 December 2023. Due to the
reduction in revenue and operating profit noted in UK Interiors in the period,
the recoverable amount has been determined based on fair value less costs of
disposal as this is now higher than value in use, and on the basis of this
assessment no further impairment is required at 30 June 2024. The key
assumption used in the determination of fair value less costs of disposal is
the fair value of the right-of-use assets. This has been determined based on
third party external valuations of a number of properties, considering the
market rental value that could be obtained form subleasing the properties and
taking into account current market conditions together with the location and
condition of the properties.
Disclosure restatement - segmental reporting
Reported operating segments for the UK were changed during the second half of
2023 to align with changes in the UK leadership structure, as explained in the
2023 Annual Report and Accounts, and the segmental reporting disclosure for
the full year 2023 was updated to reflect the way in which information is
reported to the Chief Operating Decision Maker ("CODM"). The prior year
comparatives for 30 June 2023 have been restated to be consistent with the
2023 full year and the current period presentation.
The UK Exteriors and France Exteriors segments have also been renamed UK
Roofing and France Roofing respectively in the current period.
Going concern
The Directors have considered the Group's forecasts which support the view
that the Group will be able to continue to operate within its banking
facilities and comply with its banking covenants for the going concern period
to 30 September 2025. The Group has committed facilities in place to November
2026 (secured notes) and a revolving credit facility (RCF) until May 2026. The
secured notes are subject to incurrence based covenants only, and the RCF has
a leverage maintenance covenant which is only effective if the facility is
over 40% drawn (i.e. £36m) at a quarter end reporting date. The RCF was
undrawn as at 30 June 2024 and has remained undrawn subsequent to the period
end.
The Directors have considered the principal risks and uncertainties that could
potentially impact the Group's ability to fund its future activities and
adhere to its banking covenants, including:
· prolonged challenging trading conditions in our larger
businesses, leading to lower volumes;
· pricing pressure on sales and modest net input cost deflation;
and
· current economic and political uncertainties, potentially further
impacting market demand.
The forecasts on which the going concern assessment is based have been subject
to sensitivity analysis and stress testing to assess the impact of the above
risks and the Directors have also reviewed mitigating actions that could be
taken. The base forecasts have recently been downgraded from original budget
and medium-term plan expectations to reflect the continued softness in the
building and construction market and the downside cycle currently being
experienced. Under a further
plausible downside scenario, factoring in a further 1.5% reduction in revenue
and a resulting 17% reduction in underlying operating profit from the base
forecast for the period to 30 September 2025, the analysis shows that
sufficient cash would be available without triggering a covenant breach.
Reverse stress testing has also been performed, which shows that the Group
could withstand up to a 10% reduction in revenue from the base forecasts for
the period to 30 September 2025, before triggering a covenant breach if the
RCF was 40% drawn at a relevant quarter end (and assuming a £40m minimum cash
position is maintained across the Group to meet short term working capital
requirements). Further cash phasing mitigations would also be available to
avoid this situation, for example delaying capital expenditure projects or
changing the timing of payments to manage the cash low points in the monthly
working capital cycle.
The Directors have considered the impact of climate related matters on the
going concern assessment and this is not expected to have a significant impact
on the Group's going concern assessment to 30 September 2025.
On consideration of the above the Directors believe that the Group has
adequate resources to continue in operational existence for the forecast
period to 30 September 2025 and the Directors therefore consider it
appropriate to continue to adopt the going concern basis in preparing the 2024
Interim Financial Statements.
New standards, interpretations and amendments adopted by the Group
Several amendments apply for the first time in 2024 but do not have an impact
on the Interim Condensed Consolidated Financial Statements of the Group. The
Group has not early adopted any standard, interpretation or amendment that has
been issued but is not yet effective.
2. Revenue and segmental information
In accordance with IFRS 8 "Operating Segments", the Group identifies its
reportable operating segments based on the way in which financial information
is reviewed and business performance is assessed by the CODM. Reportable
operating segments are grouped on a geographical basis.
UK Interiors UK Roofing UK UK France Interiors France Roofing France Germany Benelux Ireland Poland Eliminations Total Group
Specialist Markets Total Total
Six months ended 30 June 2024 £m £m £m £m £m £m £m £m £m £m £m £m £m
Type of product
Interiors 250.4 - 86.9 337.3 105.1 - 105.1 219.9 54.4 29.5 118.7 - 864.9
Exteriors - 182.1 34.0 216.1 - 214.9 214.9 - - 20.9 - - 451.9
Inter-segment revenue 3.4 0.4 7.2 11.0 0.1 5.0 5.1 - - 0.1 - (16.2) -
Total underlying and statutory revenue 253.8 182.5 128.1 564.4 105.2 219.9 325.1 219.9 54.4 50.5 118.7 (16.2) 1,316.8
Nature of revenue
Goods for resale 253.8 182.5 128.1 564.4 105.2 219.9 325.1 219.9 54.4 47.2 118.7 (16.2) 1,313.5
(recognised at point in time)
Construction contracts - - - - - - - - - 3.3 - - 3.3
(recognised over time)
Total underlying and statutory revenue 253.8 182.5 128.1 564.4 105.2 219.9 325.1 219.9 54.4 50.5 118.7 (16.2) 1,316.8
Segment result before Other items (1.2) 4.9 2.3 6.0 3.6 4.9 8.5 3.0 (2.4) 1.3 2.6 - 19.0
Parent company costs (7.3)
Underlying operating profit 11.7
Other items (Note 3) (4.6)
Operating profit 7.1
Net finance costs before Other items (18.3)
Non-underlying finance costs (0.1)
Loss before tax (11.3)
Income tax expense (2.9)
Loss for the period (14.2)
UK Interiors UK Roofing UK UK France Interiors France Roofing France Germany Benelux Ireland Poland Eliminations Total Group
Specialist Markets Total Total
Six months ended 30 June 2023 (Restated)(1) £m £m £m £m £m £m £m £m £m £m £m £m
£m
Type of product
Interiors 290.1 - 91.5 381.6 116.4 - 116.4 234.8 62.1 30.5 110.2 - 935.6
Exteriors - 184.1 37.0 221.1 - 249.7 249.7 - - 17.0 - - 487.8
Inter-segment revenue 3.3 0.6 9.4 13.3 - 7.7 7.7 - - - - (21.0) -
Total underlying and statutory revenue 293.4 184.7 137.9 616.0 116.4 257.4 373.8 234.8 62.1 47.5 110.2 (21.0) 1,423.4
Nature of revenue
Goods for resale 293.4 184.7 137.9 616.0 116.4 257.4 373.8 234.8 62.1 44.9 110.2 (21.0) 1,420.8
(recognised at point in time)
Construction contracts - - - - - - - - - 2.6 - - 2.6
(recognised over time)
Total underlying and statutory revenue 293.4 184.7 616.0 116.4 257.4 373.8 234.8 62.1 47.5 110.2 (21.0) 1,423.4
137.9
Segment result before Other items 2.4 4.5 5.7 12.6 6.4 12.1 18.5 9.6 (1.6) 0.5 2.7 - 42.3
Parent company costs (9.6)
Underlying operating profit 32.7
Other items (Note 3) (2.7)
Operating profit 30.0
Net finance costs before Other items (17.7)
Non-underlying finance costs (0.1)
Profit before tax 12.2
Income tax expense (7.5)
Profit for the period 4.7
(1) The interim results to 30 June 2023 have been restated in order to present
on a consistent basis with the current period and the year ended 31 December
2023. See Note 1 for further details.
UK Interiors UK Roofing UK UK France Interiors France Roofing France Germany Benelux Ireland Poland Eliminations Total Group
Specialist Markets Total Total
2023 £m £m £m £m £m £m £m £m £m £m £m £m £m
Type of product
Interiors 556.5 - 173.9 730.4 218.9 - 218.9 462.1 116.9 54.5 237.9 - 1,820.7
Exteriors - 369.4 73.7 443.1 - 458.0 458.0 - - 39.4 - - 940.5
Inter-segment revenue 7.2 1.0 18.4 26.6 0.1 13.3 13.4 - - 0.2 - (40.2) -
Total underlying and statutory revenue 563.7 370.4 266.0 1,200.1 219.0 471.3 690.3 462.1 116.9 94.1 237.9 (40.2) 2,761.2
Nature of revenue
Goods for resale 563.7 370.4 266.0 1,200.1 219.0 471.3 690.3 462.1 116.9 88.5 237.9 (40.2) 2,755.6
(recognised at point in time)
Construction contracts - - - - - - - - - 5.6 - - 5.6
(recognised over time)
Total underlying and statutory revenue 563.7 370.4 1,200.1 219.0 471.3 690.3 462.1 116.9 94.1 237.9 (40.2) 2,761.2
266.0
Segment result before Other items (1.6) 10.6 10.3 19.3 10.4 19.3 29.7 15.6 (3.0) 1.4 7.1 - 70.1
Parent company costs (17.0)
Underlying operating profit 53.1
Other items (Note 3) (49.1)
Operating profit 4.0
Net finance costs before Other items (35.7)
Non-underlying finance costs (0.2)
Loss before tax (31.9)
Income tax expense (11.5)
Loss for the year (43.4)
3. Other items
(Loss)/profit after tax includes the following Other items which have been
disclosed in a separate column within the Condensed Consolidated Income
Statement in order to provide a better indication of the underlying earnings
of the Group:
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Amortisation of acquired intangibles (1.1) (1.6) (2.8)
Impairment charges - - (33.8)
Net restructuring costs (2.8) - (8.0)
Costs related to acquisitions (0.2) (1.4) (3.2)
Onerous contract costs - (0.2) (0.2)
Cloud based ERP implementation costs (0.4) (1.3) (2.2)
Other specific items(1 ) (0.1) 1.8 1.1
Impact on operating profit (4.6) (2.7) (49.1)
Non-underlying finance costs (0.1) (0.1) (0.2)
Impact on (loss)/profit before tax (4.7) (2.8) (49.3)
Income tax credit on Other items 0.2 0.5 1.5
Impact on (loss)/profit after tax (4.5) (2.3) (47.8)
(1) Other specific items in the current year relates to an investment property
which is no longer in use by the Group. Amounts in the previous periods to 30
June 2023 and 31 December 2023 related to the reversal of the provision for
lease receivables, the reversal of onerous lease provisions and impairment of
right-of-use assets in relation to a branch which was reopened, offset by
additional impairment of the investment property no longer in use by the
Group.
4. Finance income and finance costs
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Finance income
Interest on bank deposits 1.7 1.4 2.2
Total finance income 1.7 1.4 2.2
Finance costs
On bank loans, overdrafts and other associated items(1) 1.8 2.7 3.6
On senior secured notes(2) 6.9 6.9 14.1
On obligations under lease contracts 11.0 9.2 19.4
Net finance charge on defined benefit schemes 0.3 0.3 0.8
Total interest expense before Other items 20.0 19.1 37.9
Non-underlying finance costs 0.1 0.1 0.2
Total finance costs 20.1 19.2 38.1
Net finance costs 18.4 17.8 35.9
(1) Other associated items includes the amortisation of arrangement fees of
£0.1m (30 June 2023: £0.1m; 31 December 2023: £0.2m).
(2) Included within finance costs on the senior secured notes is the
amortisation of arrangement fees of £0.3m (30 June 2023: £0.3m; 31 December
2023: £0.5m).
5. Income tax
The income tax expense comprises:
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Total income tax expense for the period 2.9 7.5 11.5
Tax for the six month period ended 30 June 2024 is determined based on
applying full year estimates of the annual effective tax rate for individual
jurisdictions to the underlying (loss)/profit before tax for the six month
period. This results in an effective negative tax rate of 47.0% on the
underlying loss before tax (30 June 2023: 53.3%; 31 December 2023: 74.7%; both
positive rates on the underlying profits before tax).
Tax losses cannot be surrendered or utilised cross border, and the Group is
therefore subject to tax in some countries and not in others. Tax losses in
the UK and Benelux businesses are not currently recognised as deferred tax
assets, which impacts the overall and underlying effective tax rate. The
relative proportions of these losses compared to the total Group underlying
(loss)/profit before tax is higher for the six months to 30 June 2024 compared
to prior periods, and the Group has incurred an overall underlying loss before
tax for the current period, resulting in the negative underlying effective tax
rate.
6. (Loss)/earnings per share
The calculations of (loss)/earnings per share are based on the following
(losses)/profits and numbers of shares:
Basic and diluted
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
(Loss)/profit attributable to ordinary equity holders of the parent for basic (14.2) 4.7 (43.4)
and diluted earnings per share
Add back:
Other items (see Note 3) 4.5 2.3 47.8
(Loss)/profit attributable to ordinary equity holders of the parent for basic (9.7) 7.0 4.4
and diluted earnings per share before Other items
Weighted average number of shares
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
Number Number Number
For basic (loss)/earnings per share 1,157,919,923 1,147,679,200 1,148,348,913
Effect of dilution from share options - 42,844,844 -
Adjusted for the effect of dilution 1,157,919,923 1,190,524,044 1,148,348,913
Share options are considered antidilutive in the current period and for the
year ended 31 December 2023 as their conversion into ordinary shares would
decrease the loss per share. The calculation of diluted (loss)/earnings per
share does not assume conversion, exercise, or other issue of potential
ordinary shares that would have an antidilutive effect on (loss)/earnings per
share.
Earnings per share
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(Loss)/earnings per share
Basic (loss)/earnings per share (1.2)p 0.4p (3.8)p
Diluted (loss)/earnings per share (1.2)p 0.4p (3.8)p
(Loss)/earnings per share before Other items(1)
Basic and diluted (loss)/earnings per share before Other items (0.8)p 0.6p 0.4p
(1) (Loss)/earnings per share before Other items (also referred to as
underlying (loss)/earnings per share) has been disclosed in order to present
the underlying performance of the Group.
7. Acquisitions
There were no acquisitions during the six months to 30 June 2024 or in the
year ended 31 December 2023.
Deferred consideration
A reconciliation of the movement in deferred consideration is provided below:
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Liability at 1 January 1.8 2.5 2.5
Amounts paid relating to previous acquisitions (included within cash flow from - (0.5) (0.7)
investing activities)
Liability at the end of the period 1.8 2.0 1.8
Included in current liabilities 1.8 0.2 1.8
Included in non-current liabilities - 1.8 -
Total 1.8 2.0 1.8
Contingent consideration
A reconciliation of the movement in the fair value measurement of contingent
consideration is provided below:
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Liability at 1 January 3.1 3.0 3.0
Amounts paid relating to previous acquisitions (included within cash flow from (2.6) - -
investing activities)
Unrealised fair value changes recognised in profit or loss - - 0.1
Liability at the end of the period 0.5 3.0 3.1
Included in current liabilities (within other payables) 0.5 3.0 3.1
Total 0.5 3.0 3.1
Consideration dependent on vendors remaining within the business
Amounts which may be paid to vendors of recent acquisitions who are employed
by the Group and are contingent upon the vendors remaining within the business
are, as required by IFRS 3 'Business Combinations', treated as remuneration
and charged to the consolidated income statement as earned. A reconciliation
of the movement in amounts accrued is as follows:
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Liability at 1 January 4.0 1.2 1.2
New amounts accrued - 1.4 2.8
Amounts paid relating to previous acquisitions (included within cash flows (4.0) - -
from operating activities)
Liability at the end of the period - 2.6 4.0
Included in current liabilities (within other payables) - 2.6 4.0
Total - 2.6 4.0
8. Reconciliation of (loss)/profit before tax to cash generated from operating
activities
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
(Loss)/profit before tax (11.3) 12.2 (31.9)
Net finance costs 18.4 17.8 35.9
Depreciation of property, plant and equipment 6.3 6.5 12.7
Depreciation of right-of-use assets 32.8 31.3 63.9
Amortisation of computer software 0.8 1.2 2.4
Amortisation of acquired intangibles 1.1 1.6 2.8
Impairment of property, plant and equipment 0.4 0.2 4.4
Impairment of goodwill - - 2.6
Impairment of acquired intangibles and computer software - - 2.5
Impairment/(reversal of impairment) of right-of-use assets 0.7 (0.3) 26.2
Reversal of impairment of lease receivable - (1.1) (1.1)
Gain on lease transactions - (0.9) (1.1)
Gain on disposal of property, plant and equipment (0.6) (0.4) (4.3)
Share-based payments 2.1 2.7 5.5
Net foreign exchange differences (0.3) - -
Decrease in provisions (4.3) (2.5) (0.2)
Working capital movements (12.5) (26.1) 8.1
Cash generated from operating activities 33.6 42.2 128.4
Included within the cash generated from operating activities is a defined
benefit pension scheme employer's contribution of £2.5m (30 June 2023 and 31
December 2023: £2.5m).
9. Reconciliation of net cash flow to movements in net debt
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
(Decrease)/increase in cash and cash equivalents in the period (28.9) (22.2) 2.7
Cash flow from decrease in debt(1) 44.9 43.0 84.5
Increase in net debt resulting from cash flows 16.0 20.8 87.2
Non-cash movement in lease liabilities and lease receivables (41.4) (53.7) (105.8)
Other non-cash items(2) (0.5) (2.8) (3.3)
Exchange differences 7.3 10.9 7.9
Increase in net debt in the period (18.6) (24.8) (14.0)
Net debt at beginning of period (458.0) (444.0) (444.0)
Net debt at end of the period (476.6) (468.8) (458.0)
(1) Including interest element of lease payments.
(2) Other non-cash items include the fair value movement of debt recognised in
the period which does not give rise to a cash inflow or outflow.
Net debt is defined as follows:
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Non-current assets:
Lease receivables 2.0 2.7 2.2
Current assets:
Derivative financial instruments - 0.3 -
Lease receivables 0.7 1.0 1.1
Cash at bank and on hand 100.7 106.3 132.2
Other current financial assets - 1.0 -
Current liabilities:
Lease liabilities (64.2) (60.6) (64.9)
Interest bearing loans and borrowings (0.8) (0.8) (0.8)
Deferred consideration (1.8) (0.2) (1.8)
Derivative financial instruments (1.2) (1.0) (1.0)
Non-current liabilities:
Lease liabilities (258.2) (257.8) (264.9)
Interest-bearing loans and borrowings (253.7) (257.7) (260.0)
Deferred consideration - (1.8) -
Derivative financial instruments (0.1) (0.2) (0.1)
Net debt (476.6) (468.8) (458.0)
Of the cash at bank and on hand of £100.7m, £0.6m is required to be held to
cover bank guarantees issued to third parties and is therefore restricted for
use by the Group.
Analysis of movements in net debt:
At 31 December 2023 Cash flows Non-cash items(1) Exchange differences At 30 June 2024
£m £m £m £m £m
Cash at bank and on hand 132.2 (28.9) - (2.6) 100.7
Lease receivables 3.3 (0.7) 0.1 - 2.7
135.5 (29.6) 0.1 (2.6) 103.4
Liabilities arising from financing activities
Debts due within one year (3.6) 0.4 (0.6) - (3.8)
Debts due after one year (260.1) 6.7 (6.6) 6.2 (253.8)
Lease liabilities (329.8) 45.3 (41.6) 3.7 (322.4)
(593.5) 52.4 (48.8) 9.9 (580.0)
Net debt (458.0) 22.8 (48.7) 7.3 (476.6)
(1) Non-cash items include the fair value movement of debt recognised in the
year which does not give rise to a cash inflow or outflow, movements between
debts due within one year and after one year, interest charges accrued and
other non-cash movements in relation to lease liabilities and lease
receivables.
10. Financial instruments fair value disclosures
At the balance sheet date the Group held the following financial instruments
at fair value:
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Financial assets
Unquoted equity investment 0.2 0.2 0.2
Derivative financial instruments - 0.3 -
Other current financial assets - 1.0 -
0.2 1.5 0.2
Financial liabilities
Derivative financial instruments 1.3 1.2 1.1
Contingent consideration (included within other payables) 0.5 3.0 3.1
1.8 4.2 4.2
The derivative financial instruments above all have fair values which are
calculated by reference to observable inputs (i.e. classified as level 2 in
the fair value hierarchy). The fair values of these derivative financial
instruments, adjusted for credit risk, are calculated by discounting the
associated future cash flows to net present values using appropriate market
rates prevailing at the balance sheet date. The fair value of the contingent
consideration is measured using level 3 inputs and the discounting of forecast
future cash flows.
The carrying value of financial assets and liabilities that are recorded at
amortised cost in the accounts is approximately equal to their fair value.
11. Called up share capital
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Authorised
1,390,000,000 ordinary shares of 10p each (30 June and 31 December 2023: 139.0 139.0 139.0
1,390,000,000)
Allotted, called up and fully paid:
1,181,556,977 ordinary shares of 10p each (30 June and 31 December 2023: 118.2 118.2 118.2
1,181,556,977)
The Company has one class of ordinary share which carries no right to fixed
income. The Company did not allot any shares during the period (30 June 2023
and 31 December 2023: nil).
12. Retirement benefit schemes
Defined benefit schemes
The Group operates a number of pension schemes, four of which provide defined
benefits based upon pensionable salary. One of these schemes has assets held
in a separate trustee administered fund, and three are overseas book reserve
schemes. The UK defined benefit pension scheme obligation is calculated on a
year to date basis, using the latest triennial valuation as at 31 December
2022 which was concluded at the end of March 2024.
The IAS 19 valuation conducted as at 31 December 2023 has been updated to
reflect current market conditions, and as a result an actuarial gain of £1.5m
has been recognised within the Condensed Consolidated Statement of
Comprehensive Income. The total net pension liability in relation to defined
benefit schemes at 30 June 2024 is £16.4m (30 June 2023: £21.0m; 31 December
2023: £20.3m), including £8.9m deficit (30 June 2023: £13.5m; 31 December
2023: £12.7m) in the UK scheme. The movement in the period relates
principally to the actuarial gain of £1.5m together with the recognition of
the scheduled annual contribution in the UK of £2.5m.
13. Interim dividend
No interim dividend is declared for the period (30 June 2023 and 31 December
2023: nil). In accordance with IAS 10 "Events After the Balance Sheet Date",
dividends declared after the balance sheet date are not recognised as a
liability in the financial statements. There was no final dividend for the
year ended 31 December 2023.
14. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and have therefore not been
disclosed. In the period to 30 June 2024, the Group incurred expenses of
£0.2m (30 June 2023: £0.2m; 31 December 2023: £0.3m) on behalf of the SIG
plc Retirement Benefits Plan, the UK defined benefit pension scheme.
The Group has not identified any other related party transactions in the six
month period to 30 June 2024.
15. Principal risks and uncertainties
The Directors consider that the principal risks and uncertainties which could
have a material impact upon the Group's performance over the remaining six
months of the 2024 financial year remain consistent with those set out in the
Strategic Report on pages 60 to 63 of the Group's 2023 Annual Report and
Accounts, plus the addition of a further risk in relation to refinancing (see
below) . These risks and uncertainties include, but are not limited to:
(1) cyber security;
(2) health and safety;
(3) macroeconomic uncertainty;
(4) attract, recruit and retain our people;
(5) data quality and governance;
(6) environmental, social and governance;
(7) mergers and acquisitions;
(8) legal or regulatory compliance;
(9) modernisation;
(10) change management; and
(11) refinancing.
In relation to refinancing, the Group will look to refinance its current
facilities, being the £90m RCF due in May 2026 and €300m secured notes due
in November 2026, ahead of the maturity dates. Due to current lending market
conditions, as compared to those that pertained at the time of the last
refinancing, there is a high risk that new financing arrangements will lead to
increased costs of financing.
The primary risks affecting the Group's performance for the remaining six
months of the year are the risks arising from macro-economic uncertainty and
the prolonged challenging trading conditions in the markets in which the
Group's larger businesses operate. SIG's diverse market sectors are affected
by macroeconomic factors which limit visibility and therefore render the short
to medium-term outlook difficult to predict. The "Outlook" section of the
trading review details the current assessment of the markets in which the
Group operates.
16. Contingent liabilities
As at the balance sheet date, the Group had outstanding obligations under
customer guarantees, claims, standby letters of credit and discounted bills of
up to £12.6m (30 June 2023: £13.3m; 31 December 2023: £12.5m). Of this
amount, £5.9m (30 June 2023: £6.1m; 31 December 2023: £6.1m) relates to a
standby letter of credit issued by HSBC Bank plc in respect of the Group's
insurance arrangements.
As part of the disposal of Building Plastics in 2017 a guarantee was provided
to the landlord of the leasehold properties transferred with the business
covering rentals over the remaining term of the leases in the event that the
acquiring company enters into administration before the end of the lease term.
The maximum liability that could arise from this would be approximately £0.6m
based on the remaining future rent commitment at 30 June 2024. No provision
has been made in these financial statements as it is not considered likely
that any loss will be incurred in connection with this.
17. Seasonality
The Group's operations are not normally affected by significant seasonal
variations between the first and second halves of the calendar year. In 2023,
the period to 30 June accounted for 51.6% of the Group's underlying annual
revenue. The "Outlook" section of the trading review details the current
assessment of the expected second half performance for 2024.
Non-statutory information
The Group uses a variety of alternative performance measures, which are
non-IFRS, to describe the Group's performance. The Group considers these
performance measures to provide useful historical financial information to
help investors evaluate the underlying performance of the business.
Alternative performance measures are not a substitute for or superior to
statutory IFRS measures.
These measures, as shown below, are used to improve the comparability of
information between reporting periods and geographical units, and to adjust
for Other items. This also reflects how the business is managed and measured
on a day-to-day basis. Measures presented are aligned with the key performance
measures used in the business.
a) Net debt
Net debt is a key metric for the Group, and monitoring it is an important
element of treasury risk management for the Group. Net debt excluding the
impact of IFRS 16 is no longer relevant for financial covenant purposes but is
still monitored for comparative purposes.
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Reported net debt 476.6 468.8 458.0
Lease liabilities recognised in accordance with IFRS 16 (300.7) (296.3) (307.3)
Lease receivables recognised in accordance with IFRS 16 2.7 3.7 3.3
Net debt excluding impact of IFRS 16 178.6 176.2 154.0
b) Leverage
Leverage is one of the covenants applicable to the Revolving Credit Facility
and is used as a key performance metric for the Group. It is calculated as net
debt divided by the last twelve months underlying EBITDA.
Twelve months ended Twelve months ended
30 June 2024 30 June 2023
£m £m
Underlying operating profit 32.1 70.4
Add back:
Depreciation of right-of-use assets and property, plant and equipment 77.9 75.0
Amortisation of computer software 2.0 2.7
Underlying EBITDA 112.0 148.1
Reported net debt 476.6 468.8
Leverage 4.3x 3.2x
Leverage excluding the impact of IFRS 16 is as follows:
Twelve months ended Twelve months ended
30 June 2024 30 June 2023
£m £m
Underlying operating profit 32.1 70.4
Impact of IFRS 16 (17.1) (11.6)
Underlying operating profit excluding impact of IFRS 16 15.0 58.8
Add back:
Depreciation excluding impact of IFRS 16 13.6 13.0
Amortisation of computer software 2.0 2.7
Underlying EBITDA excluding the impact of IFRS 16 30.6 74.5
Net debt excluding the impact of IFRS 16 178.6 176.2
Leverage excluding the impact of IFRS 16 5.8x 2.4x
c) Operating margin
This is used to enhance understanding and comparability of the underlying
financial performance of the Group and is calculated as underlying operating
profit as a percentage of underlying revenue.
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Underlying revenue 1,316.8 1,423.4 2,761.2
Underlying operating profit 11.7 32.7 53.1
Operating margin 0.9% 2.3% 1.9%
d) Free cash flow
Free cash flow represents the cash available after supporting operations,
including capital expenditure and the repayment of lease liabilities, and
before acquisitions and any movements in funding. Operating cash flow
represents free cash flow before interest, financing, costs of refinancing and
tax. These measures are used to enhance understanding and comparability of the
cash generation of the Group.
Six months ended Six months ended Year ended
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Decrease in cash and cash equivalents in the period (28.9) (22.2) 2.7
Add back:
Amounts paid relating to previous acquisitions (included within cash flow from 2.6 0.5 0.7
investing activities)
Amounts paid relating to previous acquisitions (included within cash flow from 4.0 - -
operating activities)
Investment in financial assets - 1.0 -
Repayment of borrowings 0.4 0.4 0.8
Free cash flow (21.9) (20.3) 4.2
Add back:
Finance costs paid 19.5 18.5 36.9
Finance income received (1.7) (1.4) (2.2)
Tax paid 0.6 8.7 14.0
Operating cash flow (3.5) 5.5 52.9
e) Like-for-like sales
Like-for-like sales is calculated on a constant currency basis and represents
the growth in the Group's sales per working day excluding any acquisitions or
disposals completed or agreed in the current and prior year. Revenue is not
adjusted for branch openings and closures. This measure shows how the Group
has developed its revenue for comparable business relative to the prior
period. As such it is a key measure of the growth of the Group during the
year. Underlying revenue is revenue from continuing operations excluding
non-core businesses.
UK Interiors UK Roofing UK Specialist Markets UK France Interiors France Roofing France Germany Benelux Ireland Poland Total Group
Total Total
£m £m £m £m £m £m £m £m £m £m £m £m
Statutory and underlying revenue for the period to 30 June 2024 253.8 182.5 128.1 564.4 105.2 219.9 325.1 219.9 54.4 50.5 118.7 1,333.0
Less intersegment revenue (3.4) (0.4) (7.2) (11.0) (0.1) (5.0) (5.1) - - (0.1) - (16.2)
External revenue 250.4 182.1 120.9 553.4 105.1 214.9 320.0 219.9 54.4 50.4 118.7 1,316.8
Statutory and underlying revenue for the period to 30 June 2023 (Restated)(1) 293.4 184.7 137.9 616.0 116.4 257.4 373.8 234.8 62.1 47.5 110.2 1,444.4
Less intersegment revenue (3.3) (0.6) (9.4) (13.3) - (7.7) (7.7) - - - - (21.0)
External revenue 290.1 184.1 128.5 602.7 116.4 249.7 366.1 234.8 62.1 47.5 110.2 1,423.4
% change year on year:
Statutory and underlying revenue (13.7)% (1.1)% (5.9)% (8.2)% (9.7)% (13.9)% (12.6)% (6.3)% (12.4)% 6.1% 7.7% (7.5)%
Impact of currency - - - - 2.1% 1.9% 2.0% 2.2% 2.0% 2.4% (4.7)% 0.7%
Impact of working days (0.7)% (0.8)% (0.8)% (0.7)% 0.7% 1.4% 1.2% 0.6% (1.4)% 0.1% - -
Like-for-like sales (14.4)% (1.9)% (6.7)% (8.9)% (6.9)% (10.6)% (9.4)% (3.5)% (11.8)% 8.6% 3.0% (6.8)%
( )
(1) The interim results to 30 June 2023 have been restated in order to present
the segmental disclosure on a consistent basis with the current period and the
year ended 31 December 2023. See Note 1 for further details.
f) Other non-statutory measures
In addition to the alternative performance measures noted above, the Group
also uses underlying (loss)/earnings per share (as set out in Note 6) and
underlying net finance costs (as set out in Note 4).
INDEPENDENT REVIEW REPORT TO SIG 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 Condensed Consolidated Income Statement, the
Condensed Consolidated Statement of Comprehensive Income, the Condensed
Consolidated Balance Sheet, the Condensed Consolidated Cash Flow Statement,
the Condensed Consolidated Statement of Changes in Equity, and the related
explanatory notes 1 to 17. 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 will be
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
Birmingham
5 August 2024
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