TIDMGEN
RNS Number : 0902W
Genuit Group PLC
16 August 2022
Genuit Group plc
Interim condensed set of consolidated financial
statements for the six months ended 30 June 2022
Genuit Group plc
Interim results for the six months ended 30 June 2022
On track to meet full year expectations
Genuit Group plc ("Genuit", the "Company" or the "Group"), a
leading provider of sustainable water, climate and ventilation
products for the built environment , today announces its unaudited
interim results for the six months ended 30 June 2022.
Joe Vorih, Chief Executive Officer, said
"Genuit has performed well in the first half. Agile pricing
leadership offset inflationary pressures, and the effect of
selective business decisions helped to increase our margins. These,
with more focus on operational efficiency, overcame some limited
headwinds while delivering revenue growth over the prior year and
improving profitability throughout the second quarter.
We continue to invest in the business, achieving increased sales
from new and innovative products, and positioning us to deliver our
sustainability plans which now include our Science-Based Targets.
Our structural tailwinds are driven by regulation and the resulting
investment needed to mitigate and adapt to effects of climate
change. We remain focused on unlocking ways to accelerate growth
and expand operating margin. While mindful of the macroeconomic
pressures, we have good momentum as we enter the second half, and
the Group anticipates meeting full year expectations."
Financial Results
H1 2022 H1 2021 Change
Statutory measures
Revenue GBP318.0m GBP295.6m 7.6%
Operating profit GBP35.7m GBP36.3m (1.7)%
Profit before tax GBP32.9m GBP33.8m (2.7)%
Earnings per share (basic) 10.1p 7.9p 27.8%
Cash generated from operations GBP18.4m GBP23.6m (22.0)%
Dividend per share 4.1p 4.0p 2.5%
Alternative performance
measures
Underlying operating
profit (1) GBP47.4m GBP48.6m (2.5)%
Underlying cash generated
from operations(2) GBP15.2m GBP15.0m 1.3%
Underlying operating
margin (1) 14.9% 16.4% (150)bps
Underlying profit before
tax (1) GBP44.6m GBP46.5m (4.1)%
Underlying earnings per
share (basic) (1) 14.0p 15.8p (11.4)%
Leverage(3) (times pro
forma EBITDA(4) ) 1.5 1.5 -
Financial highlights
-- Revenue increase of 7.6% against strong prior year
comparatives, 5.7% higher on a like-for-like basis
-- Price leadership offset specific headwind events, a planned
prioritisation of higher margin business and a minor decline in
market-driven volume
-- Isolated cyber incident (fully mitigated) and Adey volumes
held back by nationwide boiler shortages - both impacted operating
profit
-- Pricing lag resolved with month-on-month improvement in Q2 EBIT margin
-- Further investment in delivering our sustainability goals,
Science-Based Targets finalised for validation
-- Net debt(3) of 1.5 times pro forma EBITDA(4) in line with expectations
-- RCF of GBP350m renewed as a Sustainability Linked Loan
("SLL") until 2026 with a GBP25m private placement until 2029
-- The Group intends to pay an interim dividend of 4.1pence, an increase of 2.5%
ESG highlights
-- The Group remains focused on delivering its 2025 ESG targets
-- Continued focus on serving the needs created by four key sustainability drivers:
o Increasing need for resilient drainage;
o Need for green urbanisation;
o Increased focus on clean healthy indoor air and ventilation;
and
o A move towards a low, or zero carbon, built environment.
-- As well as serving the needs of our sustainability-based
growth drivers, we continue our progress on operating
sustainably:
o Material consumed from recycled inputs at 47.1%, against a
target of 62% by 2025, with new multi-layer extrusion tooling due
to come on stream in the second half;
o Our carbon intensity is broadly in line with the last year
end;
o Increased sales of new products to a value of GBP161.0m
(FY2021: GBP120.0m) resulting in a Vitality Index of 26.2%, ahead
of our target of 25% by 2025; and
o 3.0% of our workforce were in accredited work and learning
programmes - broadly in line with reporting at the full year
results.
Additionally, the Group's Science-Based Targets ("SBTs") have
been finalised for validation by the Science-Based Targets
initiative ("SBTi"). SBTs are clearly defined pathways for
companies to reduce greenhouse gas ("GHG") emissions, which have
been validated by the SBTi.
Outlook
-- The Group has a balanced exposure underpinned by structural growth drivers
-- Despite the short term headwinds in the residential sector
(including ongoing boiler supply constraints), the long term
fundamentals in this market continue to be strong, driven by new
housebuilding and increased interest in energy efficiency
-- Robust price leadership actions and a greater focus on
operational efficiency and cost base structure are expected to
offset slightly weaker demand
-- Whilst mindful of the uncertain macroeconomic and
geopolitical environment, our order books remain strong and the
Board anticipates the Group will meet full year expectations.
(1) Underlying profit and earnings measures exclude certain
non-underlying items 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 our financial performance.
(2) Underlying cash generated from operations is defined as cash
generated from operations, adjusted for non-underlying cash items,
after movement in net working capital and capital expenditure net
of proceeds from disposals of property, plant and equipment.
(3) Leverage is defined as net debt divided by pro forma EBITDA.
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.
(4) Pro forma EBITDA is defined as 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.
(5) Carbon intensity is defined as tonnes of carbon per tonne of
output using the market-based method.
Capital Markets Event
We plan to hold a capital markets event in the Autumn. Further
information will be published in due course.
Enquiries:
Genuit
Joe Vorih, Chief Executive
Officer
Paul James, Chief Financial
Officer +44 (0) 1138 315380
Brunswick
Nina Coad
Tom Pigott +44 (0) 20 7404 5959
A copy of this report will be available on our website
www.genuitgroup.com today from 0700hrs (BST).
There will be a presentation for analysts and investors at
0830hrs (BST) on Tuesday 16 August 2022 at Brunswick Group's
offices, 16 Lincoln's Inn Fields, London, WC2A 3ED. Please contact
Genuit@brunswickgroup.com to confirm your attendance.
The presentation will also be available to listen into via
webcast. Please register for access to the webcast via the
following link :
https://www.investis-live.com/genuit-group/62ea7a4ab973541f0011b16c/dfghjk
We recommend you register by 0815hrs (BST).
The webcast will be recorded and a replay will be available
shortly after the webcast ends via the same link above.
The presentation is also available on the Reports, Results and
Presentations page on Genuit's website at
https://www.genuitgroup.com/investors/
Notes to Editors:
Genuit Group plc ("Genuit", the "Company" or the "Group"), a
leading provider of sustainable water and climate management
solutions for the built environment, is the largest manufacturer in
the UK, and among the ten largest manufacturers in Europe, of
piping systems for the residential, commercial, civils and
infrastructure sectors by revenue. It is also a leading designer
and manufacturer of energy efficient solutions in water-based
heating systems in the UK.
The Group operates from 30 facilities in total and manufactures
the UK's widest range of solutions for
heating, plumbing, drainage and ventilation. The Group primarily
targets the UK and European building and construction markets with
a presence in Italy and the Netherlands, and sells to specific
niches in the rest of the world.
Genuit Group plc changed its name from Polypipe Group plc on 6
April 2021. The Group was
established in 1980 and has been listed on the premium segment
of the London Stock Exchange since 2014.
Group Results
Revenue for the six months ended 30 June 2022 was 7.6% higher
than the prior year at GBP318.0m (2021: GBP295.6m). On a
like-for-like basis, excluding the impact of acquisitions, revenue
was 5.7% higher than prior year. The Group successfully implemented
further price increases in the period and delivered additional
operating efficiencies to mitigate the extent of the raw material
cost inflation. The Group remained focused on its medium-term
drivers - a structural UK housing shortage, the regulatory and
environmental drivers around water and climate management, and
indoor air quality.
Underlying operating profit was GBP47.4m (2021: GBP48.6m), a
reduction of 2.5% on the prior year, driven by the timing of the
price increase at the start of Q2 compensating for inflation
experienced in Q1 as well as management decisions in respect of
certain volume to drive the quality of the business. This
represented an underlying operating margin of 14.9% in the period,
a decline of 150 basis points on the prior year. The H1 performance
was impacted by the effects of an isolated cyber incident at one of
our businesses in Q2 which had a negative impact of some GBP4.4m
during the period. In addition, supply constraints, most noticeably
in respect of semiconductors and printed circuit boards in our Adey
business meant that we were unable to satisfy customer demand and
which had an impact of some GBP2.6m during the period. Without
these two issues, the Group would have reported underlying
operating profit of GBP54.4m and a margin of 16.5%. Sequential
month-on-month improvement in margins in the second quarter are
expected to come through more fully in the second half of the
year.
Underlying finance costs of GBP2.8m (2021: GBP2.1m) were broadly
in line with expectations driven by larger levels of drawdown of
the Revolving Credit Facility compared to prior year.
Non-underlying operating costs of GBP11.7m (2021: GBP12.3m)
consist of acquisition costs, some severance costs, the costs
associated with resolving a cyber incident and amortisation of
intangible assets arising from acquisitions.
The total tax charge for the period was GBP7.9m (2021:
GBP14.7m). The underlying tax charge of GBP9.8m (2021: GBP8.2m)
represents an effective underlying tax rate of 22.0% (2021:
17.6%).
Underlying profit after tax was lower than the prior year at
GBP34.8m (2021: GBP38.3m). Underlying basic earnings per share
decreased to 14.0 pence (2021: 15.8 pence).
Including non-underlying items, profit after tax increased to
GBP25.0m (2021: GBP19.1m). Basic earnings per share increased to
10.1 pence (2021: 7.9 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 28 September 2022 to shareholders on the
register at the close of business on 2 September 2022.
Business Review
Revenue 2022 2021 Change LFL
Change
-------------------------------
GBPm GBPm % %
------------------------------- ------ ------ ------- --------
Residential Systems 198.9 183.8 8.2 6.1
Commercial and Infrastructure
Systems 119.1 111.8 6.5 5.2
------------------------------- ------ ------ ------- --------
318.0 295.6 7.6 5.7
------------------------------- ------ ------ ------- --------
Underlying operating 2022 ROS 2021 ROS Change
profit
-------------------------------
GBPm % GBPm % %
------------------------------- ----- ----- ----- ----- -------
Residential Systems 37.3 18.8 35.8 19.5 4.2
Commercial and Infrastructure
Systems 10.1 8.5 12.8 11.4 (21.1)
47.4 14.9 48.6 16.4 (2.5)
------------------------------- ----- ----- ----- ----- -------
The Group led the industry in robust pricing moves and reduced
implementation time lags to mitigate the effects of input cost
inflation. Management has increased its commercial focus, walking
away from low margin sales and increasing the quality of the
Group's business. Inflation has been a considerable challenge as
well as supply constraints, most noticeably semiconductors and
printed circuit boards but there are signs that raw materials
inflation at least is starting to ease.
During the period we experienced an isolated cyber incident on
our Climate & Ventilation division that was ultimately
unsuccessful but resulted in temporary disruption to manufacturing
and sales in April and May. We implemented new, stronger protection
across the Group in the first half. Our order books remain strong,
and we anticipate that most of the lost volume will be made up in
the second half of the year.
The combined impacts on EBIT for both the cyber incident and
constraints on upstream boiler manufacturing was some GBP7m in the
period and we expect the portion attributable for the cyber
incident at least to be fully recoverable in the second half and
for there to be some mitigation of the effects of the shortfalls in
boiler manufacturing also in H2.
The acquisition of Keytec Geomembranes for GBP2.6m was made
during the period and has exceeded expectations, and its
integration into the Group is progressing well. This business
strengthens our water management systems installation
capabilities.
Revenue for the six months ended 30 June 2022 was 7.6% higher
than the prior year at GBP318.0m (2021: GBP295.6m). On a
like-for-like basis, excluding the impact of acquisitions, revenue
was 5.7% higher than prior year.
Revenue in Residential Systems was 8.2% ahead of prior year and
6.1% on a like-for-like basis. In Commercial and Infrastructure
Systems, revenue was 6.5% ahead of prior year and 5.2% on a
like-for-like basis. New product innovation remains strong. In
Residential Systems, we launched several new ranges in the first
half of the year, including Nuaire's DX Cooling modules designed to
work in conjunction with existing MVHR ventilation units to tackle
the challenges of overheating in apartments. Adey launched a number
of new products to expand their range of performance enhancing
heating system additives, including the new MCXS leak sealant
additive. In Commercial and Infrastructure Systems, our Civils and
Green Urbanisation business launched SciClone X, a new stormwater
treatment device for removing pollutants from surface water
runoff.
Residential Systems
Trading in the Residential Systems segment performed strongly,
with revenue of GBP198.9m (2021: GBP183.8m) 8.2% above prior year,
and 6.1% ahead on a like-for-like basis, driven by robust price
leadership in the market. The residential sector remains strong,
driven by the continued structural housing shortage and pent-up
demand with house prices remaining buoyant. Confidence remains in
the sector over the short to medium term. Overall, the CPA is
forecasting that 2022 housing activity will be 1% up on 2021.
Margin recovery continued through the first half of the year
reaching 18.8% for the half with robust sequential margin
improvement throughout the second quarter. Excluding the impacts of
upstream supply chain issues affecting Adey and the cyber incident,
divisional EBIT margin would have been some 19.7% for the
period.
Commercial and Infrastructure Systems
Revenue of GBP119.1m (2021: GBP111.8m) in Commercial and
Infrastructure Systems improved by 6.5% vs 2021 (5.2% on a
like-for-like basis). Sales in our ventilation business is driven
by increased focus on the importance of air quality in the
workplace when it was temporarily impacted by a cyber incident in
the second half of April that curtailed manufacturing and sales for
six weeks. The order book remains strong, and management
anticipates recovering most of this lost volume in the second half
of the year.
The division reported an underlying operating margin of 8.5%
during the period, which excluding the impact of the cyber
incident, would have been some 11.5% for the period. Our Water
Management solutions have performed well with the ongoing
requirement for new housing and our most recent acquisition in
Keytec has strengthened our ability to supply and install our
attenuation systems, which is also helping to bridge the onsite
skills shortage gap.
Environmental, Social & Governance
We remain committed to be carbon neutral by 2050, as we continue
our improvement trajectory beyond the targets we have set out for
2025. We continue to place innovation at the heart of our business,
ensuring we have the solutions for the emerging challenges faced by
the construction sector.
Our commitment to employee development and social mobility is
reflected in our membership of The 5% Club, our proportion of
qualifying colleagues at 3.0%. Our use of recycled material in the
first half was 47.1% of our total tonnage. By 2025, r ecycled
materials should represent 62% of our total polymer consumption and
we expect a new multi-layer extrusion tooling due to come on stream
in the second half. During the period, the Group began its
migration of its company car fleet to electric vehicles and plug-in
hybrid electric vehicles.
Financial Review
Finance Costs
Net underlying finance costs for the six months ended 30 June
2022 increased to GBP2.8m (2021: GBP2.1m) due to increased interest
rates on a higher level of borrowing through the first half of the
year. With effect from 4 January 2022, interest was payable on the
Group's RCF at the Standard Overnight Index Average (SONIA) plus an
interest rate margin ranging from 0.90% to 2.75% depending on
leverage. The interest rate margin at 30 June 2022 was 1.40% (30
June 2021: 1.65%).
Taxation
The Group's tax charge for the six months ended 30 June 2022
decreased to GBP7.9m (2021: GBP14.7m) as the prior year included an
adjustment in respect of changes in the income tax rate. The
underlying tax rate (underlying tax: underlying profit) has been
provided at the estimated full year rate of 22.0% (2021 full year:
17.6%), driven by a prior year adjustment in respect of a corporate
interest restriction in one of our group companies.
Dividend
Our dividend policy is normally to pay a minimum of 40% of the
Group's annual underlying profit after tax. The Directors intend
that the Group will pay the total annual dividend in two tranches,
an interim dividend and a final dividend, to be announced at the
time of announcement of the interim and preliminary results
respectively with the interim dividend being approximately one half
of the prior year's final dividend.
Cash Flow and Net Debt
Cash generated from operations during the period amounted to an
inflow of GBP18.4m (2021: GBP23.6m inflow). This result includes a
working capital outflow of GBP37.4m (2021: GBP31.1m). A first half
working capital outflow is a normal feature of the Group's annual
working capital cycle and arose due to rebate settlements and the
impact of raw material inflation on inventory valuation.
Capital expenditure decreased to GBP9.4m (2021: GBP15.1m) with
larger projects forecasted to be completed in the second half of
the year. The full year 2022 capital expenditure is expected to be
in the region of GBP40m, with a primary focus on key commercial and
innovation lead projects.
Net debt (including unamortised debt issue costs but excluding
the effects of IFRS 16 capitalisation) decreased to GBP167.9m at 30
June 2022 (2021: GBP169.6m). Leverage was in line with prior year
and expectations at 1.5 times pro forma EBITDA.
Going Concern
The Group continues to meet its day-to-day working capital and
other funding requirements through a combination of long-term
funding and cash deposits. The Group's bank financing facilities
were subsequently renewed on 10 August 2022 and consist of a
GBP350.0m RCF and a seven year committed GBP25.0m private
placement. At 30 June 2022, the Group's RCF was GBP300m of which
GBP82.0m was undrawn (2021: GBP102.0m) and the Group's liquidity
headroom (cash and undrawn committed banking facilities) was
GBP131.7m (2021: GBP129.6m). Our focus will continue to be on
deleveraging and our net debt to EBITDA ratio stood at 1.5 times
pro forma EBITDA at 30 June 2022 (2021: 1.5 times pro forma
EBITDA), increasing to 1.6 times pro forma EBITDA including the
effects of IFRS 16. This headroom means the Group is
well-positioned with a strong balance sheet .
The Directors have satisfied themselves that the Group has
adequate financial resources to continue in operational existence
for a period of at least the next 15 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 our 2021 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.
The Board is mindful of the global macro-economic uncertainty
from the ongoing tragic events in Ukraine. The impact of this
situation on the Group in the first half of the year has been
minimal and the Group is well positioned to mitigate any further
risk for the full year 2022.
A copy of the 2021 Annual Report and Accounts is available on
the Company's website 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 15 August
2022 and is available on the Company's website www.genuitgroup.com
.
The Directors of the Company are:
Ron Marsh Chairman
Joe Vorih Chief Executive Officer
Paul James Chief Financial Officer
Matt Pullen Chief Operating Officer
Mark Hammond Non-executive Director and Senior Independent Director
Louise Hardy Non-executive Director
Lisa Scenna Non-executive Director
Louise Brooke-Smith Non-executive Director
Kevin Boyd Non-executive Director
By order of the Board:
J M Vorih P A James
Chief Executive Officer Chief Financial Officer
INTERIM GROUP INCOME STATEMENT
for the six months ended 30 June 2022 (unaudited)
Notes Six months ended 30 Six months ended 30
June 2022 June 2021
------------------ ------ -------------------------------------- --------------------------------------
Underlying Non-Underlying Total Underlying Non-Underlying Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 3 318.0 - 318.0 295.6 - 295.6
Cost of sales (194.4) - (194.4) (173.6) (1.7) (175.3)
------------------ ------ ----------- --------------- -------- ----------- --------------- --------
Gross profit 123.6 - 123.6 122.0 (1.7) 120.3
Selling and
distribution
costs (42.7) - (42.7) (40.0) - (40.0)
Administration
expenses (33.5) (4.2) (37.7) (33.4) (4.0) (37.4)
------------------ ------ ----------- --------------- -------- ----------- --------------- --------
Trading
profit 47.4 (4.2) 43.2 48.6 (5.7) 42.9
Amortisation
of intangible
assets - (7.5) (7.5) - (6.6) (6.6)
------------------ ------ ----------- --------------- -------- ----------- --------------- --------
Operating
profit 3 47.4 (11.7) 35.7 48.6 (12.3) 36.3
3,
Finance costs 5 (2.8) - (2.8) (2.1) (0.4) (2.5)
------------------ ------ ----------- --------------- -------- ----------- --------------- --------
Profit before
tax 44.6 (11.7) 32.9 46.5 (12.7) 33.8
Income tax 6 (9.8) 1.9 (7.9) (8.2) (6.5) (14.7)
Profit for
the period
attributable
to the owners
of the parent
company 34.8 (9.8) 25.0 38.3 (19.2) 19.1
------------------ ------ ----------- --------------- -------- ----------- --------------- --------
Basic earnings
per share
(pence) 7 10.1 7.9
------------------ ------ ----------- --------------- -------- ----------- --------------- --------
Diluted earnings
per share
(pence) 7 10.0 7.8
------------------ ------ ----------- --------------- -------- ----------- --------------- --------
Dividend
per share
(pence) -
interim 8 4.1 4.0
------------------ ------ ----------- --------------- -------- ----------- --------------- --------
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 2022 (unaudited)
Six months Six months
ended 30 ended 30
June 2022 June 2021
GBPm GBPm
------------------------------------------------ ----------- -----------
Profit for the period attributable to the
owners of the parent company 25.0 19.1
------------------------------------------------ ----------- -----------
Other comprehensive income:
Items which may be reclassified subsequently
to the income statement:
Exchange differences on translation of foreign
operations 0.6 -
Effective portion of changes in fair value
of forward foreign currency derivatives 0.3 -
Other comprehensive income for the period
net of tax 0.9 -
------------------------------------------------ ----------- -----------
Total comprehensive income for the period
attributable to the owners of the parent
company 25.9 19.1
------------------------------------------------ ----------- -----------
INTERIM GROUP BALANCE SHEET
at 30 June 2022 (unaudited)
30 June 30 June 31 December
2022 2021 2021
Notes GBPm GBPm GBPm
-------------------------------- -------- --------- --------- ------------
Non-current assets
Property, plant and
equipment 152.2 145.1 151.7
Right-of-use assets 21.1 21.7 20.6
Intangible assets 9 639.0 644.4 642.8
-------------------------------- -------- --------- --------- ------------
Total non-current assets 812.3 811.2 815.1
-------------------------------- -------- --------- --------- ------------
Current assets
Inventories 97.4 64.4 80.8
Trade and other receivables 94.8 99.4 76.7
Income tax receivable 2.5 1.2 1.1
Cash and cash equivalents 10 49.7 27.6 52.3
Derivative financial
instruments 11 0.2 - -
-------------------------------- -------- --------- --------- ------------
Total current assets 244.6 192.6 210.9
-------------------------------- -------- --------- --------- ------------
Total assets 1,056.9 1,003.8 1,026.0
-------------------------------- -------- --------- --------- ------------
Current liabilities
Trade and other payables (132.4) (129.0) (135.5)
Lease liabilities 10,11 (5.4) (4.3) (4.5)
Deferred and contingent
consideration 9,11 - (0.9) (0.5)
Derivative financial
instruments 11 - (0.8) (0.1)
Total current liabilities (137.8) (135.0) (140.6)
-------------------------------- -------- --------- --------- ------------
Non-current liabilities
Loans and borrowings 10,11 (217.6) (197.2) (197.4)
Lease liabilities 10,11 (16.5) (17.5) (16.1)
Deferred and contingent
consideration 9,11 (6.2) (2.6) (4.3)
Other liabilities (1.4) (1.4) (1.4)
Deferred income tax
liabilities (53.2) (46.9) (48.5)
-------------------------------- -------- --------- --------- ------------
Total non-current liabilities (294.9) (265.6) (267.7)
-------------------------------- -------- --------- --------- ------------
Total liabilities (432.7) (400.6) (408.3)
-------------------------------- -------- --------- --------- ------------
Net assets 624.2 603.2 617.7
-------------------------------- -------- --------- --------- ------------
Capital and reserves
Equity share capital 0.2 0.2 0.2
Share premium 93.6 93.6 93.6
Capital redemption reserve 1.1 1.1 1.1
Hedging reserve 0.2 - (0.1)
Foreign currency retranslation
reserve 0.6 0.4 -
Other reserves 116.5 116.5 116.5
Retained earnings 412.0 391.4 406.4
-------------------------------- -------- --------- --------- ------------
Total equity 624.2 603.2 617.7
-------------------------------- -------- --------- --------- ------------
INTERIM GROUP STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2022 (unaudited)
Foreign
Equity Capital currency
share Share redemption Hedging retranslation Other Retained Total
capital premium reserve reserve reserve reserves earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ---------- ---------- ------------ ---------- --------------- ---------- ----------- ---------
Six months
ended
30 June 2022
Opening
balance 0.2 93.6 1.1 (0.1) - 116.5 406.4 617.7
--------------- ---------- ---------- ------------ ---------- --------------- ---------- ----------- ---------
Profit for the
period - - - - - - 25.0 25.0
Other
comprehensive
income - - - 0.3 0.6 - - 0.9
--------------- ---------- ---------- ------------ ---------- --------------- ---------- ----------- ---------
Total
comprehensive
income for
the period - - - 0.3 0.6 - 25.0 25.9
Dividends paid - - - - - - (20.3) (20.3)
Share-based
payments
charge - - - - - - 1.6 1.6
Share-based
payments
settled - - - - - - 0.4 0.4
Share-based
payments
excess tax
benefit - - - - - - (1.1) (1.1)
--------------- ---------- ---------- ------------ ---------- --------------- ---------- ----------- ---------
Closing
balance 0.2 93.6 1.1 0.2 0.6 116.5 412.0 624.2
--------------- ---------- ---------- ------------ ---------- --------------- ---------- ----------- ---------
Six months
ended
30 June 2021
Opening
balance 0.2 - 1.1 - 0.4 116.5 382.7 500.9
--------------- ---------- ---------- ------------ ---------- --------------- ---------- ----------- ---------
Profit for the
period - - - - - - 19.1 19.1
Total
comprehensive
income for
the period - - - - - - 19.1 19.1
Dividends paid - - - - - - (11.9) (11.9)
Issue of share
capital - 96.3 - - - - - 96.3
Transaction
costs
on issue of
share
capital - (2.7) - - - - - (2.7)
Share-based
payments
charge - - - - - - 1.0 1.0
Share-based
payments
settled - - - - - - 0.4 0.4
Share-based
payments
excess tax
benefit - - - - - - 0.1 0.1
--------------- ---------- ---------- ------------ ---------- --------------- ---------- ----------- ---------
Closing
balance 0.2 93.6 1.1 - 0.4 116.5 391.4 603.2
--------------- ---------- ---------- ------------ ---------- --------------- ---------- ----------- ---------
INTERIM GROUP CASH FLOW STATEMENT
for the six months ended 30 June 2022
Six months Six months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
Notes GBPm GBPm GBPm
-------------------------------------------------------- ------ ----------- ----------- -------------
Operating activities
Profit before tax 32.9 33.8 62.9
Finance costs 5 2.8 2.5 4.2
-------------------------------------------------------- ------ ----------- ----------- -------------
Operating profit 35.7 36.3 67.1
Non-cash items:
Profit on disposal of property,
plant and equipment (0.6) - (0.2)
Transaction costs on issue of share
capital - 0.1 0.1
Research and development expenditure
credit (0.6) - (2.0)
Non-underlying items:
- amortisation of intangible assets
arising on business combinations 4,9 7.5 6.6 14.2
- provision for acquisition costs 4 1.3 4.0 6.6
- unwind of inventory fair value
adjustment 4 - 1.7 3.7
- provision for restructuring costs 4 1.2 - 1.1
- provision for product liability
claim - - 2.6
- provision for cyber incident related
costs 4 1.2 - -
- provision for intellectual property
infringement legal costs 4 0.5 - -
Depreciation of property, plant
and equipment 9.4 9.3 18.4
Depreciation of right-of-use assets 2.7 2.1 4.4
Amortisation of internally generated
intangible assets 9 0.1 - 0.1
Share-based payments 1.6 1.0 2.2
Cash items:
- settlement of acquisition costs 9 (0.7) (6.4) (6.9)
- settlement of restructuring costs (1.8) - -
- settlement of cyber incident related - -
costs (1.2)
- settlement of intellectual property - -
infringement legal costs (0.5)
Operating cash flows before movement
in working capital 55.8 54.7 111.4
Receivables (17.2) (22.3) (0.9)
Payables (3.9) (8.5) (6.2)
Inventories (16.3) (0.3) (19.9)
-------------------------------------------------------- ------ ----------- ----------- -------------
Cash generated from operations 18.4 23.6 84.4
Income tax paid (5.2) (5.3) (9.5)
-------------------------------------------------------- ------ ----------- ----------- -------------
Net cash flows from operating activities 13.2 18.3 74.9
-------------------------------------------------------- ------ ----------- ----------- -------------
Investing activities
Settlement of deferred and contingent
consideration 9 (0.5) - -
Acquisition of businesses net of
cash at acquisition 9 (2.6) (236.2) (236.4)
Proceeds from disposal of property,
plant and equipment 1.5 0.1 0.5
Purchase of property, plant and
equipment (9.4) (15.1) (33.1)
Patent and development costs expenditure (0.9) - (1.5)
-------------------------------------------------------- ------ ----------- ----------- -------------
Net cash flows from investing activities (11.9) (251.2) (270.5)
-------------------------------------------------------- ------ ----------- ----------- -------------
Financing activities
Issue of share capital - 96.3 96.3
Transaction costs on issue of share
capital - (2.8) (2.8)
Drawdown of bank loan 30.0 148.0 148.0
Repayment of bank loan (10.0) (10.0) (10.0)
Interest paid (2.2) (1.2) (2.9)
Proceeds from sale and leaseback
of property, plant and equipment 1.4 - -
Dividends paid (20.3) (11.9) (21.7)
Proceeds from exercise of share
options 0.4 0.6 2.1
Settlement of lease liabilities (3.3) (2.5) (5.1)
-------------------------------------------------------- ------ ----------- ----------- -------------
Net cash flows from financing activities (4.0) 216.5 203.9
-------------------------------------------------------- ------ ----------- ----------- -------------
Net change in cash and cash equivalents (2.7) (16.4) 8.3
Cash and cash equivalents - opening
balance 52.3 44.1 44.1
Net foreign exchange difference 0.1 (0.1) (0.1)
-------------------------------------------------------- ------ ----------- ----------- -------------
Cash and cash equivalents - closing
balance 49.7 27.6 52.3
-------------------------------------------------------- ------ ----------- ----------- -------------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
1. Basis of preparation
Genuit Group plc (previously known as Polypipe 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 2021. 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 2021.
The comparative figures for the financial year ended 31 December
2021, where reported, are not the Group's statutory accounts for
that financial year. Those accounts have been reported on by the
Group's auditors and delivered to the Registrar of Companies. The
report of the auditors was (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by
way of emphasis without qualifying their report, and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006.
There were no accounting standards or interpretations that have
become effective in the current reporting period which had an
impact on disclosures, financial position or performance.
The condensed set of consolidated financial statements are
prepared on a going concern basis. The Directors have made
enquiries into the adequacy of the Group's financial resources,
through a review of the Group's budget and medium-term financial
plan, including cash flow forecasts. The Group has modelled a range
of scenarios with the base forecast being one in which, over the 15
months ending 30 September 2023, sales volumes grow in line with
external construction industry forecasts. In addition, the
Directors have considered several downside scenarios, including
adjustments to the base forecast, a period of significantly lower
like-for-like sales, profitability and cash flows. Consistent with
our Principal Risks and Uncertainties, these downside scenarios
included, but were not limited to, loss of production, loss of a
major customer, product failure, recession, increases in interest
rates and increases in raw material prices. Downside scenarios also
included a combination of these risks and reverse stress testing.
The Directors have considered the impact of climate-related matters
on the going concern assessment and it is not expected to have a
significant impact on the Group's going concern.
At 30 June 2022, the Group had available GBP82.0m of undrawn
committed borrowing facilities in respect of which all conditions
precedent had been met. The Group's borrowing facilities were
subsequently renewed on 10 August 2022 and included an increase in
the RCF facility to GBP350.0m available until at least August 2026,
subject to covenant headroom, and a seven-year private placement
loan note of GBP25.0m 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 15 months. Accordingly,
they continue to adopt the going concern basis in preparing the
condensed set of consolidated financial statements.
There have been no related party transactions in the period to
30 June 2022.
Four non-statutory measures have been used in preparing the
condensed set of consolidated financial statements:
-- Underlying profit and earnings measures exclude certain
non-underlying items (which are detailed in Note 4) and, where
relevant, the tax effect of these items. The Directors consider
that these measures provide a better and more consistent indication
of the Group's underlying financial performance and more meaningful
comparison with prior and future periods to assess trends in our
financial performance.
-- Underlying cash generated from operations is defined as cash
generated from operations, adjusted for non-underlying cash items,
after movement in net working capital and capital expenditure net
of proceeds from disposals of property, plant and equipment.
-- Leverage is defined as net debt divided by pro forma EBITDA
(both are reconciled in note 10). 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.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
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 2021.
3. Segment information
The Group has two reporting segments - Residential Systems and
Commercial and Infrastructure Systems. The reporting segments are
organised based on the nature of the end markets served. There are
no significant judgements in aggregating operating segments to
arrive at the reporting segments. Inter-segment sales are on an
arm's length basis in a manner similar to transactions with third
parties.
Six months ended 30 June Six months ended 30 June
2022 2021
-------------------------------------- ------------------------------ ------
Commercial Commercial
Residential & Infrastructure Residential & Infrastructure
Systems Systems Total Systems Systems Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ----------- ----------------- ------ ----------- ----------------- ------
Segmental revenue 202.5 124.9 327.4 186.7 116.4 303.1
Inter-segment
revenue (3.6) (5.8) (9.4) (2.9) (4.6) (7.5)
--------------------- ----------- ----------------- ------ ----------- ----------------- ------
Revenue 198.9 119.1 318.0 183.8 111.8 295.6
--------------------- ----------- ----------------- ------ ----------- ----------------- ------
Underlying operating
profit * 37.3 10.1 47.4 35.8 12.8 48.6
Non-underlying
items - segmental (7.0) (4.7) (11.7) (9.7) (2.6) (12.3)
--------------------- ----------- ----------------- ------ ----------- ----------------- ------
Segmental operating
profit 30.3 5.4 35.7 26.1 10.2 36.3
Non-underlying
items - finance
costs - (0.4)
Finance costs (2.8) (2.1)
--------------------- ----------- ----------------- ------ ----------- ----------------- ------
Profit before
tax 32.9 33.8
--------------------- ----------- ----------------- ------ ----------- ----------------- ------
* 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 GBP11.7m
(2021: GBP12.7m) are detailed in Note 4 .
Geographical analysis
Six months Six months
ended 30 ended 30
June 2022 June 2021
Revenue by destination GBPm GBPm
----------------------- ---------- ----------
UK 284.8 266.3
Rest of Europe 18.5 18.4
Rest of World 14.7 10.9
----------------------- ---------- ----------
Total - Group 318.0 295.6
----------------------- ---------- ----------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
4. Non-underlying items
Non-underlying items comprised:
Six months ended 30 Six months ended 30 June
June 2022 2021
----------------------- ----------------------------
Gross Tax Net Gross Tax Net
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------- ------ ------ -------- -------- --------
Cost of sales:
Unwind of inventory
fair value adjustment - - - 1.7 (0.3) 1.4
Administration expenses:
Acquisition costs
- acquisition and
other M&A activity 1.3 - 1.3 4.0 (0.2) 3.8
Administration expenses:
Isolated cyber incident
costs 1.2 (0.2) 1.0 - - -
Administration expenses:
Intellectual property
infringement legal
costs 0.5 (0.1) 0.4 - - -
Administration expenses:
Restructuring costs 1.2 (0.2) 1.0 - - -
Amortisation of
intangible assets 7.5 (1.4) 6.1 6.6 7.1 13.7
Finance costs: Unwind
of discount on contingent
consideration - - - 0.4 (0.1) 0.3
--------------------------- ------- ------ ------ -------- -------- --------
Total non-underlying
items 11.7 (1.9) 9.8 12.7 6.5 19.2
--------------------------- ------- ------ ------ -------- -------- --------
In the six months ended 30 June 2022 non-underlying items
included GBP1.3m of acquisition costs in respect of an accrual, for
the element of the earn out accounted for as remuneration,
associated with the Plura acquisition. Other non-underlying items
in the six months ended 30 June 2022 comprised of costs associated
with an isolated cyber incident at one of the Group's businesses,
legal costs relating to an intellectual property infringement claim
which was successfully defended and restructuring costs incurred
following a strategic review of the Group.
In the prior year, the unwind of the inventory fair value
adjustment relates to the fair value uplift of the inventory
acquired as part of the Adey acquisition that has subsequently been
sold and costs relating to the acquisitions of Adey, Nu-Heat and
Plura which includes an accrual for the earn out associated with
the Plura acquisition. The non-underlying tax charge in the six
months ended 30 June 2021 includes GBP8.5m in respect of restating
the deferred income tax liability on intangible assets as a result
of the change in the main UK corporation tax rate.
5. Finance costs
Six months Six months
ended 30 ended 30
June 2022 June 2021
GBPm GBPm
----------------------------------------------- ---------- ----------
Interest on bank loan 2.0 1.2
Debt issue cost amortisation 0.2 0.3
Unwind of discount on lease liabilities 0.4 0.3
Other finance costs 0.2 0.3
Unwind of discount on contingent consideration - 0.4
----------------------------------------------- ---------- ----------
2.8 2.5
----------------------------------------------- ---------- ----------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
6. Income tax
Tax has been provided on the profit before tax at the estimated
effective rate for the full year of 24.0% (2021 full year: 34.8%).
Tax on underlying profit before tax was 22.0% (2021 full year:
17.6%).
Six months Six months
ended 30 ended 30
June 2022 June 2021
GBPm GBPm
----------------------------------------------- ---------- ----------
Current income tax:
UK income tax 3.5 5.1
Overseas income tax 0.2 0.1
----------------------------------------------- ---------- ----------
Current income tax 3.7 5.2
Adjustment in respect of prior years 0.6 -
----------------------------------------------- ---------- ----------
Total current income tax 4.3 5.2
----------------------------------------------- ---------- ----------
Deferred income tax:
Origination and reversal of timing differences 0.2 (1.2)
Adjustment in respect of changes in income
tax rate 2.4 10.7
----------------------------------------------- ---------- ----------
Deferred income tax 2.6 9.5
Adjustment in respect of prior years 1.0 -
----------------------------------------------- ---------- ----------
Total deferred income tax 3.6 9.5
----------------------------------------------- ---------- ----------
Total tax expense reported in the income
statement 7.9 14.7
----------------------------------------------- ---------- ----------
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 Six months
ended 30 ended 30
June 2022 June 2021
----------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
for the purpose of basic earnings per share 247,928,506 242,745,684
Effect of dilutive potential ordinary shares 3,101,184 3,311,655
----------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
for the purpose of diluted earnings per share 251,029,690 246,057,339
----------------------------------------------- ----------- -----------
Underlying earnings per share is based on the result for the
period after tax excluding the impact of non-underlying items of
GBP9.8m (2021: GBP19.2m). 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 our financial
performance. The underlying earnings per share is calculated as
follows:
Six months Six months
ended 30 ended 30
June 2022 June 2021
---------------------------------------------- ---------- ----------
Underlying profit for the period attributable
to the owners of the parent company (GBPm) 34.8 38.3
---------------------------------------------- ---------- ----------
Underlying basic earnings per share (pence) 14.0 15.8
---------------------------------------------- ---------- ----------
Underlying diluted earnings per share (pence) 13.9 15.6
---------------------------------------------- ---------- ----------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
8. Dividends
The Directors have proposed an interim dividend for the current
year of GBP10.2m which equates to 4.1 pence per share.
9. Acquisitions
Acquisition-related deferred and contingent consideration
comprised:
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
--------------------------------------------- ------- ------- -----------
Deferred consideration on Keytec acquisition 0.6 - -
Contingent consideration on Plura
acquisition 5.6 2.6 4.3
Deferred and contingent consideration
on Permavoid acquisition - 0.9 0.5
--------------------------------------------- ------- ------- -----------
6.2 3.5 4.8
--------------------------------------------- ------- ------- -----------
Deferred and contingent consideration was determined using the
Directors' assessment of the likelihood that financial targets will
be achieved. There is no material difference between the estimated
cash consideration and the fair value. The estimated cash
consideration is derived from the budgets and forecasts for Plura
and Keytec.
Acquisition-related cash flows comprised:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
GBPm GBPm GBPm
---------------------------------- ---------- ---------- ------------
Operating cash flows - settlement
of acquisition costs
Nu-Heat - 0.6 0.6
Plura - 0.3 0.7
Adey 0.2 3.0 3.1
Permavoid - 2.5 2.5
Other - aborted acquisition costs 0.5 - -
---------------------------------- ---------- ---------- ------------
0.7 6.4 6.9
---------------------------------- ---------- ---------- ------------
Six months Six months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
GBPm GBPm GBPm
----------- ------------ ------------ --------------
Investing cash flows - settlement of deferred and
contingent consideration
-------------------------------------------------------
Permavoid 0.5 - -
----------- ------------ ------------ --------------
Six months Six months Year ended
ended 30 ended 30 December
June 2022 June 2021 31 2021
GBPm GBPm GBPm
------------------------------ ------------- ------------- ----------
Investing cash flows - acquisition of businesses net of
cash at acquisition
Keytec 2.6 - -
Nu-Heat - 25.8 25.8
Plura - 1.8 1.8
Adey - 208.4 208.6
Tree Ground Solutions - 0.2 0.2
------------------------------ ------------- ------------- ----------
2.6 236.2 236.4
------------------------------ ------------- ------------- ----------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
9. Acquisitions (continued)
Keytec
On 31 March 2022, the Group acquired 100% of the voting rights
and shares of Keytec Geomembranes Holding Company Limited (Keytec),
for an initial cash consideration of GBP2.5m on a cash free and
debt free basis plus a deferred consideration of GBP0.6m due no
later than 12 months from completion. The total cash consideration
of GBP2.9m included a payment for net cash and working capital
commitments on completion of GBP0.4m. Keytec is a supplier and
installer of stormwater attenuation products, geomembranes and gas
protection products.
Details of the acquisition, including fair value adjustments,
were as follows:
Fair
value
GBPm
------------------------------ ------
Property, plant and equipment 0.1
Inventories 0.1
Trade and other receivables 0.7
Cash and cash equivalents 0.3
Trade and other payables (0.5)
Income tax payable (0.1)
Net identifiable assets 0.6
Goodwill on acquisition 2.9
-------------------------------- ------
Total cash consideration 3.5
Less: deferred consideration (0.6)
-------------------------------- ------
Initial cash consideration 2.9
-------------------------------- ------
No material intangible assets have been identified. The goodwill
arising on the acquisition primarily represented the technical
expertise of the Keytec staff, synergies of companies offering both
supply and install services and market share. The goodwill is
allocated entirely to the Commercial and Infrastructure Systems
segment.
The fair value of trade and other receivables was GBP0.7m. The
gross amount of trade and other receivables was GBP0.7m and it is
expected that the full contractual amounts will be collected.
Post-acquisition, Keytec contributed GBP1.3m revenue and GBP0.2m
underlying operating profit which were included in the Group income
statement. If Keytec had been acquired on 1 January 2022, the
Group's results for the six months ended 30 June 2022 would have
shown revenue of GBP319.1m and underlying operating profit of
GBP47.6m.
Immaterial acquisition costs were incurred and are included in
non-underlying items in administration expenses.
Following the Keytec acquisition, the carrying amount of
goodwill and other intangible assets is as follows:
Brand Customer Customer Development
Goodwill Patents names relationships Licences order book costs Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------- ------ -------------- -------- ----------- ----------- -----
Cost
At 1 January 2022 467.7 39.5 66.5 114.3 0.8 0.9 2.0 691.7
Additions - 0.3 - - - - 0.6 0.9
Acquisition of
businesses 2.9 - - - - - - 2.9
At 30 June 2022 470.6 39.8 66.5 114.3 0.8 0.9 2.6 695.5
------------------ -------- ------- ------ -------------- -------- ----------- ----------- -----
Amortisation
and impairment
losses
At 1 January 2021 - 15.4 19.2 13.4 0.3 0.4 0.2 48.9
Charge for the
period - 1.6 2.6 3.1 - 0.2 0.1 7.6
------------------ -------- ------- ------ -------------- -------- ----------- ----------- -----
At 30 June 2022 - 17.0 21.8 16.5 0.3 0.6 0.3 56.5
------------------ -------- ------- ------ -------------- -------- ----------- ----------- -----
Net book value
At 30 June 2022 470.6 22.8 44.7 97.8 0.5 0.3 2.3 639.0
------------------ -------- ------- ------ -------------- -------- ----------- ----------- -----
At 31 December
2021 467.7 24.1 47.3 100.9 0.5 0.5 1.8 642.8
------------------ -------- ------- ------ -------------- -------- ----------- ----------- -----
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
9. Acquisitions (continued)
Impairment testing of goodwill
Goodwill is not amortised but is subject to annual impairment
testing (at 31 December). Goodwill has been allocated for
impairment testing purposes to a number of cash-generating units
(CGUs) which represent the lowest level in the Group at which
goodwill is monitored for internal management purposes.
At 30 June 2022 an assessment was made to identify any
indicators of impairment of goodwill as a result of the impacts of
upstream supply chain issues in certain end markets and the cyber
incident. Where required, impairment tests of the carrying amounts
of goodwill were performed by analysing the carrying amount
allocated to each CGU against its value-in-use. Value-in-use of a
CGU is calculated as the net present value of that CGU's discounted
future pre-tax cash flows. These pre-tax cash flows are based on
forecast cash flow information for a period of one year,
construction industry forecasts of growth for the following year
and growth of between 2.60% to 2.80% (2021: 2.68% to 2.80%)
thereafter. A pre-tax discount rate of 11.4% (2021: 10.0%) was
applied in determining the recoverable amounts of CGUs. The pre-tax
discount rate was estimated based on the Group's risk adjusted cost
of capital. The Group applied sensitivities to assess whether any
reasonably possible changes in assumptions could cause an
impairment that would be material to these consolidated financial
statements. The application of these sensitivities did not indicate
any impairment of goodwill was reasonably possible at 30 June
2022.
10. Analysis of net debt
30 June 30 June 31 December
2022 2021 2021
GBPm GBPm GBPm
---------------------------------------------- ------- ------- -----------
Cash and cash equivalents 49.7 27.6 52.3
---------------------------------------------- ------- ------- -----------
Current loans and borrowings
Lease liabilities 5.4 4.3 4.5
---------------------------------------------- ------- ------- -----------
Non-current loans and borrowings
Bank loan - principal 218.0 198.0 198.0
- unamortised debt issue costs (0.4) (0.8) (0.6)
Lease liabilities 16.5 17.5 16.1
---------------------------------------------- ------- ------- -----------
234.1 214.7 213.5
---------------------------------------------- ------- ------- -----------
Net debt 189.8 191.4 165.7
---------------------------------------------- ------- ------- -----------
On 19 November 2018, the Group entered into an Amendment and
Restatement Agreement with various lenders in respect of the
Group's previous revolving credit facility agreement dated 4 August
2015. The bank loan, which comprised a GBP300.0m revolving credit
facility and GBP50.0m uncommitted accordion facility, was secured
and would have matured in November 2023 (with two further
uncommitted annual renewals through to November 2025 possible). The
Group incurred GBP1.7m of debt issue costs in respect of entering
into the Amendment and Restatement Agreement dated 19 November 2018
which were capitalised and are being amortised to the income
statement over the term of the facility to November 2023.
Subsequently on 10th August 2022 the Group renewed its banking
facilities and entered into a Sustainability Linked Loan revolving
credit facility agreement for GBP350.0m with a GBP50.0m uncommitted
accordion facility expiring in August 2026 and a separate agreement
for private placement loan notes of GBP25.0m with an uncommitted
GBP125.0m shelf facility repayable August 2029. Any debt issue
costs in respect of entering into both agreements will be
capitalised and amortised to the income statement over the whole
term of each facility, respectively.
With effect from 4 January 2022, LIBOR was replaced by the
Standard Overnight Index Average (SONIA).
Interest was payable on the bank loan at SONIA plus an interest
margin ranging from 0.90% to 2.75% which is dependent on the
Group's leverage (net debt excluding lease liabilities as a
multiple of pro forma EBITDA) and reduces as the Group's leverage
reduces. The interest margin at 30 June 2022 was 1.40% (2021:
1.65%). The Group's net debt for the leverage calculation at 30
June 2022 was GBP167.9m (2021: GBP169.6m) and is defined as loans
and borrowings net of unamortised issue costs less cash and cash
equivalents, excluding the effects of IFRS 16. Pro forma EBITDA at
30 June 2022 was GBP115.7m (2021: GBP116.2m) and is defined as
pre-IFRS 16 underlying operating profit before depreciation,
amortisation and share-based payment charges, for the 12 months
preceding
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
10. Analysis of net debt (continued)
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 30 December
2022 2021 2021
GBPm GBPm GBPm
---------------------------------------- ------- ------- -----------
Pro forma EBITDA (12 months preceding
the balance sheet)
Underlying operating profit 94.1 80.3 95.3
Depreciation of property, plant
and equipment 18.5 17.7 18.4
Amortisation of internally generated
intangible assets 0.2 - 0.1
Unwind of discount on lease liabilities (0.8) (0.6) (0.7)
Share-based payments charge 3.2 2.2 2.5
------- ------- -----------
115.2 99.6 115.6
EBITDA from acquisitions 0.5 16.6 2.3
---------------------------------------- ------- ------- -----------
115.7 116.2 117.9
---------------------------------------- ------- ------- -----------
At 30 June 2022, the Group had available, subject to covenant
headroom, GBP82.0m (2021: GBP102.0m) of undrawn committed borrowing
facilities in respect of which all conditions precedent had been
met.
11. 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 Fair value
value GBPm
GBPm
--------------------------------------- --------- -----------
Forward foreign currency derivatives (0.2) (0.2)
Interest-bearing loans and borrowings
due after more than one year 217.6 217.6
Deferred and contingent consideration 6.2 6.2
Lease liabilities 21.9 21.9
--------------------------------------- --------- -----------
Total at 30 June 2022 245.5 245.5
--------------------------------------- --------- -----------
Forward foreign currency derivatives 0.8 0.8
Interest-bearing loans and borrowings
due after more than one year 197.2 197.2
Deferred and contingent consideration 3.5 3.5
Lease liabilities 21.8 21.8
--------------------------------------- --------- -----------
Total at 30 June 2021 223.3 223.3
--------------------------------------- --------- -----------
Forward foreign currency derivatives 0.1 0.1
Interest-bearing loans and borrowings
due after more than one year 197.4 197.4
Deferred and contingent consideration 4.8 4.8
Lease liabilities 20.6 20.6
--------------------------------------- --------- -----------
Total at 31 December 2021 222.9 222.9
--------------------------------------- --------- -----------
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2022
11. Other financial assets and liabilities (continued)
The fair values were determined as follows by reference to:
-- Forward foreign currency derivatives: quoted exchange rates.
-- Deferred and contingent consideration: Directors' assessment
of the likelihood that financial targets will be achieved (see Note
9).
-- Lease liabilities: present value of lease payments to be made over the lease terms.
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly; and
Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
The fair values disclosed above, with the exception of deferred
and contingent consideration, which is categorised as Level 3, all
relate to items categorised as Level 2.
There have been no transfers in any direction between Levels 1,
2 or 3 in the period.
INDEPENT 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 2022 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 Cash Flow
Statement and the related Notes 1 to 11. 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 2022 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" issued by the Financial Reporting Council. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern .
Responsibilities of the Directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Review of the Financial
Information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report
Use of our Report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Leeds
15 August 2022
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