TIDMSHI
RNS Number : 3796M
SIG PLC
21 September 2021
21 September 2021
SIG plc
Results for the 6 months to 30 June 2021
Return to Growth strategy gathers momentum
SIG plc ("SIG", "the Group" or "the Company") today announces
its half year results for the six months ended 30 June 2021 ("H1
2021" or "the period").
Highlights
-- Return to Growth strategy gathers momentum: UK profitable,
and France and Poland delivering record first halves
-- Group like-for-like H1 sales up 33% on prior year, and 1% up
on 2019. Group sales excluding the UK Distribution business up 8%
on 2019, with UK Distribution itself now back on track
-- Strong gross margin management: H1 gross margin of 25.9%, 100bps higher than H1 2020
-- Impact of material shortages and cost price inflation
successfully managed to date, with minimal impact in H1
-- GBP13.6m underlying operating profit in H1 (H1 2020: GBP42.9m
loss). Underlying profit before tax ("PBT") of GBP3.0m (H1 2020:
GBP53.8m loss)
-- Continued balance sheet strength provides confidence to
invest in growth strategy and to manage near term supply
challenges. Net debt in line with expectations after H1 seasonal
working capital increase, at GBP289.4m post IFRS 16 (H1 2020:
GBP341.8m; FY2020: GBP238.2m) and GBP57.5m pre IFRS16 (H1 2020:
GBP90.0m; FY2020: GBP4.1m)
-- Trading in July/August remained solid, strengthening the
Board's confidence in full year outlook despite caution over
ongoing impact of material shortages and cost price inflation
-- Continued profit improvement expected in H2 2021 and full
year underlying operating profit anticipated to be ahead of prior
expectations
Change
Underlying (1) operations H1 2021 H1 2020 vs 2020
------------ ------------ ---------
Revenue GBP1,108.2m GBP838.9m 32.1%
LFL(2) sales 33.0% (23.9)%
Gross margin 25.9% 24.9% 100bps
Underlying(1) operating
profit/(loss) GBP13.6m (GBP42.9m)
Underlying(1) profit/(loss)
before tax GBP3.0m (GBP53.8m)
Underlying(1) (loss) per
share (0.3)p (9.1)p 8.8p
Operating margin 1.2% (5.1)% 630bps
Net debt GBP289.4m GBP341.8m
Net debt (pre IFRS 16) GBP57.5m GBP90.0m
------------ ---------
Statutory results H1 2021 H1 2020
----------------------------- ------------ ------------ ---------
Revenue(3) GBP1,108.2m GBP840.1m
Operating profit/(loss)(3) GBP9.0m (GBP102.9)m
Loss before tax(3) (GBP1.6)m (GBP125.4)m
Basic loss per share(3) (0.7)p (9.1)p
Total loss after tax (4) (GBP8.1)m (GBP53.8)m
Dividend per share n/d n/d
----------------------------- ------------ ------------ ---------
1.Underlying represents the results before Other items. 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 4. H1 2020 underlying results have been restated
to include Building Solutions within underlying results consistent
with the current period.
2. 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. H1 2020 LFL sales differ from
previously reported due to the reclassification of Building
Solutions into underlying consistent with the current period.
3. Statutory results of continuing operations only in H1
2020.
4. Statutory results including both continuing and discontinued
operations in H1 2020.
Commenting, Steve Francis, Chief Executive Officer, said:
"I'm delighted with the progress of our Return to Growth
strategy: our customers, supplier partners and colleagues continue
to affirm that our focus on empowered and entrepreneurial local
teams, delivering exceptional service and expertise to our
customers, is a successful approach for building back our market
share and profitability.
"The strong revenue growth across our broad product offering,
together with disciplined margin management, has been key to
delivering an earlier and stronger profit than previously
anticipated.
"The achievements to date have only been possible because of our
teams' energy, resilience and commitment in the face of the
continually challenging circumstances, both with the effects of
Covid-19 and the more recent industry-wide supply challenges.
"Trading in July and August has continued to be solid and we
expect continued profit improvement through H2 2021, despite the
ongoing impact of material shortages and cost price inflation. As a
result, providing the disruption from these headwinds does not
worsen, we now anticipate full year underlying operating profit
will be ahead of our prior expectations.
"The momentum behind our Return to Growth strategy is
positioning the Group well, and we have growing confidence in our
ability to take advantage of both strong near--term demand and
healthy long--term fundamentals, including market tailwinds from
sustainability initiatives. The continued strength of our balance
sheet, along with the positive trading momentum, provides a strong
platform for sustainable, profitable growth and cash
generation."
Investor and Analyst presentation will be available on
www.sigplc.com from 7:15am on Tuesday 21 September. A live Q&A
session, hosted by Steve Francis, CEO and Ian Ashton, CFO, will
take place at 10:00am.
To join the Q&A session:
https://storm-virtual-uk.zoom.us/j/86538179499
Or join by phone:
Dial (for higher quality, dial a number based on your current
location):
US: +1 646 876 9923 or +1 669 900 6833 or +1 253 215 8782 or +1
301 715 8592 or +1 312 626 6799 or +1 346 248 7799 or +1 408 638
0968
United Kingdom: +44 208 080 6592 or +44 330 088 5830 or +44 131
460 1196 or +44 203 481 5237 or
+44 203 481 5240 or +44 203 901 7895 or +44 208 080 6591
Webinar ID: 865 3817 9499
International numbers available:
https://storm-virtual-uk.zoom.us/u/kbRZYfFScI
LEI: 213800VDC1BKJEZ8PV53
Enquiries
SIG plc +44 (0) 114 285 6300
Steve Francis Chief Executive Officer
Ian Ashton Chief Financial Officer
FTI Consulting +44 (0) 20 3727 1340
Richard Mountain
Peel Hunt LLP - Joint broker to SIG +44 (0) 20 7418 8900
Mike Bell / Charles Batten
Jefferies International Limited - Joint
broker to SIG +44 (0) 20 7029 8000
Ed Matthews / Will Soutar
About
SIG plc is a leading European supplier of specialist building
solutions to trade customers across the UK, France, Germany,
Ireland, Benelux and Poland. As a distributor of insulation and
interiors products and merchant of roofing and exteriors products,
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 approximately 6,500 employees across
Europe and is listed on the London Stock Exchange (SHI). For more
information, please visit the Company's website, www.sigplc.com
.
Strategic progress
The key pillars of our strategy are our people, our business
model and its focus on customer proximity and service, and our
supplier partnerships.
We have invested in our people:
-- Market-experienced MDs in place in all countries following
recent appointments in Germany and Benelux
-- Re-built the UK leadership team: 5 of 7 Directors new since
mid-2020 with an average of 27 years industry experience
-- UK Distribution: Added 86 commercial or branch leaders with
an average industry experience of 13 years; created and filled 32
new P&L responsible branch manager positions
-- Training programmes on product expertise ramped up in France and Poland
-- Strengthened our focus on Health & Safety as a foundation for operational excellence
We have implemented a consistent business model - the Seven
Pillars Return to Growth Strategy - in all country operations and
have streamlined central functions in line with our de-centralised
approach. Key to this are the following:
-- Re-connecting with customers - a stronger local branch-led
and entrepreneurial approach with more customer facing
resources
-- Strengthened supplier partnerships are in place underpinned
by investment in category expertise and local empowerment, which
has been crucial managing supply challenges this year
-- Growth investments include new branches in all operating
countries, upgraded ecommerce capabilities and highly selective
M&A
We continue to reinforce our "franchised" branch-led business
model by upgrading operational processes, systems and controls.
These are the foundations for further market share recapture and
profitable growth.
Our strong trading performance in the first half of 2021 is
testimony to the successful implementation of this strategy,
particularly within UK Distribution.
Now that we are profitable again our focus is on completing the
margin improvement programmes in the UK, Germany and Benelux, and
continuing to expand the growth driven margin in other operating
companies, and thereby moving the Group into stable and strong cash
generation as a platform for the next stage of our strategy.
Strong Balance Sheet
The Group's liquidity position has remained strong in H1 2021
with significant headroom of GBP199m at the end of June comprising
cash of GBP174m and GBP25m undrawn on the committed Revolving
Credit Facility. Net debt finished H1 2021 at GBP58m on a pre IFRS
16 basis, and GBP289m on a post IFRS 16 basis.
The cash outflow in H1 was largely as expected, driven by the
seasonal increase in working capital, which was more pronounced
than usual due to the strong trading. In addition, where possible
and appropriate we have built up modest increases in our inventory
holding levels, in light of likely ongoing supply challenges in the
coming months. We have continued to navigate these uncertainties
successfully to date. O ur strong balance sheet can accommodate
this short-term investment in inventory, and our strong liquidity
position continues to provide an appropriate buffer given the
prevailing macro-economic uncertainties.
Dividend
No interim dividend will be paid for 2021. However, continued
successful execution of the Return to Growth strategy will return
the Group to sustainable, profitable growth and cash generation,
supporting a range of capital allocation priorities. The Board
reiterates its medium-term commitment to return to a progressive
dividend policy, appropriately covered by underlying earnings.
The Group completed a share capital reduction in June by
cancelling its share premium account. This has created
distributable reserves to provide flexibility for dividend payments
in future.
People
The Board would like to thank all employees of SIG for their
continued commitment and resilience. Their efforts in 2020 and the
first half of this year have laid the foundation for the excellent
results in 2021 so far, and for the next phase of SIG's evolution
as we focus on building a stronger business with a high performing
workforce that is rewarded for making a positive difference. We are
committed to building a great company that can play a key role in
the construction supply chains across Europe for many years to
come.
Covid-19
The safety of our people, customers and suppliers continues to
be our primary concern. New safety protocols developed during the
pandemic continue to be adhered to across the Group, in line with
the government guidance across all jurisdictions in which it
operates.
Despite further lockdowns and restrictions from January onwards,
the business was able to trade broadly as normal, albeit within the
new operating norms and protocols. The Irish market continued to be
impacted by market restrictions until May 2021 but has been
operating largely as normal since then.
Trading overview
Like-for-like sales growth by market is summarised as
follows:
1 January to 2021
30 June 2021 2021 Jan-June
LFL Sales Growth vs 2020 vs 2019 GBP'm
UK Distribution 54% (19)% 239
UK Exteriors 58% 14% 199
UK 56% (7)% 439
---------------------- --------- --------- ----------
France Distribution 38% 8% 101
France Exteriors 34% 19% 206
Germany 11% 1% 194
Benelux 2% (10)% 47
Ireland 14% (21)% 37
Poland 22% 20% 84
EU 22% 7% 669
---------------------- --------- --------- ----------
Group 33% 1% 1,108
---------------------- --------- --------- ----------
As noted in the trading update on 14 July 2021, r evenues in H1
were strong with a return to profitability faster and more
significant than previously expected, with like-for-like ("LFL")
growth of 33% compared to the Covid-affected prior year and up 1%
against 2019.
This reflects the ongoing positive impact of the Group's Return
to Growth strategy, which is delivering improved organic sales
performance, and has been supported by continuing robust demand in
the repair, maintenance and improvement ("RMI") segments in the
majority of markets. Profitability improved throughout the period,
a result of the normal seasonality in the business and the
improving trading across the Group.
The UK Distribution turnaround, focused on delivering
distinctive expertise and superior local service, is ahead of plan
and shows continued momentum. We remain very encouraged by the
enthusiasm and energy with which our teams have embraced and driven
the new strategy. The business's sales were on a declining trend
throughout 2019 and most of 2020, and hence the 19% drop versus
2019 shown above. The monthly growth figures vs 2019 have turned
positive in early H2, in line with previous guidance. The UK
Exteriors business is trading very strongly, benefitting from the
strong demand environment, growing 14% over 2019.
The French businesses are continuing to perform strongly,
benefitting in particular from strong RMI demand in Exteriors, as
well as the strong foundations built in the business in recent
years. Germany's performance is improving, with good growth
throughout the half. We remain confident the Benelux performance
will pick up over coming months following the recent changes made
in its commercial leadership.
Ireland was affected by the significant Government restrictions
imposed on construction from January to May this year, and we have
seen a return to LFL sales growth over the summer.
Poland has achieved record levels of revenue in Q2 2021, and
this has continued into Q3, with increasing customer numbers and
strong product mix.
Outlook
We are anticipating a continued impact from material shortages,
which could be more significant than in H1, and which could persist
for an extended period. Driver shortages have also affected the
supply chain in recent weeks, notably in the UK.
Given these prevailing macro-economic uncertainties, we retain a
cautious view on market conditions for the remainder of the second
half at this stage. However, the strong results in H1, the solid
trading seen in July/August and continuing robust demand, together
with the effectiveness of our supply chain management and
commercial agility, gives the Board confidence for the full year
performance. Providing the disruption from material shortages and
haulage constraints does not worsen in coming months, full year
underlying operating profit is now anticipated to be ahead of prior
expectations.
FINANCIAL REVIEW
Revenue and gross margin
The Group saw a 33% increase in its LFL revenue over the first
half of the year, principally as a result of the Covid-19 impact on
2020, along with some impact from the passing on of input cost
inflation, with Group underlying revenue up to GBP1,108.2m (H1
2020: GBP838.9m). Underlying results exclude the results from the
businesses that are classified as non-core and Other items, in
order to provide a better understanding of the performance of the
Group on a continuing basis. When comparing 2021 performance with
2019, which was unaffected by Covid-19, revenues grew by 1%,
although this in itself is distorted by the declines in the UK
Distribution business seen from mid-2019 to late 2020. Excluding UK
Distribution, revenues grew by 8% compared with 2019. On a
statutory basis, Group revenue was GBP1,108.2m (H1 2020:
GBP840.1m).
Underlying gross profit increased 37.3% to GBP287.0m (H1 2020:
GBP209.1m) with a gross profit margin of 25.9% (H1 2020: 24.9%).
This improvement primarily reflects stronger performance in the UK
and France.
Operating costs and profit
The Group's underlying operating costs were GBP273.4m (H1 2020:
GBP252.0m). The increase was primarily due to an increase in
freight and other handling costs, driven by the substantially
higher sales, inflation on indirect costs, and employee incentives.
The Group's underlying operating profit was GBP13.6m (H1 2020:
GBP42.9m loss), and at a statutory level the Group's loss before
tax was GBP1.6m (H1 2020: GBP125.4m) after Other items of GBP4.6m
(H1 2020: GBP71.6m). The latter included GBP2.3m amortisation of
acquired intangibles and GBP2.2m costs relating to restructuring
activities.
Segmental analysis
UK
LFL sales
----------- ----------- --------------- -----------
Underlying Underlying
Underlying Underlying operating operating
revenue revenue profit/(loss) loss
H1 2021 H1 2020 H1 2021 H1 2020
GBPm GBPm H1 2021 GBPm GBPm
----------- ----------- ---------- --------------- -----------
UK Distribution 239.3 154.9 54% (5.4) (27.4)
UK Exteriors 199.2 125.3 58% 7.9 (8.6)
UK 438.5 280.2 56% 2.5 (36.0)
----------------- ----------- ----------- ---------- --------------- -----------
UK Distribution, a specialist insulation and interiors
distribution business, shows continued progress in regaining market
share, delivering underlying revenues of GBP239.3m (H1 2020:
GBP154.9m), a LFL increase of 54%. Despite supplier shortages and
material allocations, specifically around plasterboard, daily sales
show consistent progress. The improved trading volume drove a
substantially lower loss, with the business driving the additional
volumes through the existing capacity in the network. This resulted
in an underlying operating loss of GBP5.4m (H1 2020: GBP27.4m
loss).
UK Exteriors, a specialist roofing merchant, which also includes
our Building Solutions business, is trading extremely well,
benefitting from the strong demand environment, and this resulted
in underlying revenues of GBP199.2m (H1 2020: GBP125.3m), a LFL
increase of 58%. The increase in revenue, further benefitting from
an increased margin due to rebates and mitigation of input price
increases resulted in an underlying operating profit of GBP7.9m (H1
2020: GBP8.6m loss).
The lockdown during March and April 2020 severely impacted UK
trading. Despite the lockdowns, parts of our UK business did remain
open to service critical and emergency projects only, such as for
the NHS, energy and food sectors. After rapidly enhancing health
and safety protocols, the UK businesses were able to operate a
staged reopening through April and May, in conjunction with local
government guidelines.
France
LFL sales
----------- ----------- ----------- ---------------
Underlying Underlying
Underlying Underlying operating operating
revenue revenue profit profit/(loss)
H1 2021 H1 2020 H1 2021 H1 2020
GBPm GBPm H1 2021 GBPm GBPm
----------- ----------- ---------- ----------- ---------------
France Distribution 101.1 73.8 38% 6.2 1.3
France Exteriors 206.4 154.4 34% 10.8 1.6
France before
non-core 307.5 228.2 35% 17.0 2.9
----------- ----------- ---------- ----------- ---------------
Non-core businesses - 1.2 - - (0.2)
--------------------- ----------- ----------- ---------- ----------- ---------------
France 307.5 229.4 35% 17.0 2.7
--------------------- ----------- ----------- ---------- ----------- ---------------
France Distribution, trading as LiTT, a structural insulation
and interiors business, saw underlying revenue increase by 37.0% to
GBP101.1m (H1 2020: GBP73.8m), and by 38% on a LFL basis after
adjusting for foreign exchange movements and working days. The
first half of 2021 continued the revenue growth experienced in the
second half of 2020 as higher levels of trading activity positively
impacted revenue. The increase in revenue, coupled with an improved
margin as a result of increased supplier rebates, partially offset
by an increase in operating costs due to inflation and increased
trading levels, resulted in an operating profit of GBP6.2m (H1
2020: GBP1.3m).
Underlying revenue in France Exteriors, trading as Larivière, a
specialist roofing business, increased by 33.7% to GBP206.4m (H1
2020: GBP154.4m), and by 34% on a LFL basis after adjusting for
foreign exchange movements and working days. The strong demand in
the RMI market, witnessed in H2 2020 has continued into H1 2021.
The increase in revenue together with increased supplier rebates,
partially offset by inflationary cost increases as well as
increased costs to fulfil higher trading volumes, resulted in
underlying operating profit of GBP10.8m (H1 2020: GBP1.6m).
2020 trading activity suffered a temporary setback in France
following the short-term closure of all branches for three days in
mid-March. The businesses then commenced a staged reopening through
into April.
Germany
LFL sales
----------- ----------- ----------- -----------
Underlying Underlying
Underlying Underlying operating operating
revenue revenue profit loss
H1 2021 H1 2020 H1 2021 H1 2020
GBPm GBPm H1 2021 GBPm GBPm
----------- ----------- ---------- ----------- -----------
Germany 194.3 177.1 11% 2.6 (1.3)
--------- ----------- ----------- ---------- ----------- -----------
Germany, trading as WeGo/VTi, our specialist insulation and
interiors distribution business, increased revenue by 9.7% to
GBP194.3m (H1 2020: GBP177.1m) and by 11% on a LFL basis after
adjusting for foreign exchange movements and working days. The
improvement in H1 trading in Germany was helped by proactive stock
management that allowed the business to meet customer demand in an
environment of material shortages and increased lead times from
suppliers. The increased trading levels resulted in underlying
operating profit of GBP2.6m (H1 2020: GBP1.3m loss).
Germany was impacted by government measures due to Covid-19 in
2020, but to a lesser extent than in the UK, Ireland and France,
and trading continued from all sites throughout the period.
Benelux
LFL sales
----------- ----------- ----------- -----------
Underlying Underlying
Underlying Underlying operating operating
revenue revenue loss profit
H1 2021 H1 2020 H1 2021 H1 2020
GBPm GBPm H1 2021 GBPm GBPm
----------- ----------- ---------- ----------- -----------
Benelux 47.1 47.7 2% (0.0) 1.8
--------- ----------- ----------- ---------- ----------- -----------
Underlying revenue in the Benelux region fell by 1.3% to
GBP47.1m (H1 2020: GBP47.7m), although increased by 2% on a LFL
basis after adjusting for foreign exchange movements and working
days. Trading volumes were hampered by particularly intense
competitive pressure, combined with some regulatory changes in the
Netherlands. Operating profit decreased to GBPnil (H1 2020:
GBP1.8m), with a growth in the cost base necessary to address some
temporary operational challenges related to disruption associated
with the move to new premises.
Benelux was impacted by government measures due to Covid-19 in
2020, but to a lesser extent than in the UK, Ireland and France,
and trading continued from all sites throughout the period.
Ireland
LFL sales
----------- ----------- ----------- -----------
Underlying Underlying
Underlying Underlying operating operating
revenue revenue loss loss
H1 2021 H1 2020 H1 2021 H1 2020
GBPm GBPm H1 2021 GBPm GBPm
----------- ----------- ---------- ----------- -----------
Ireland 37.3 33.4 14% (0.2) (1.4)
--------- ----------- ----------- ---------- ----------- -----------
Ireland, a specialist distributor of interiors, insulation, and
construction accessories, continued to be impacted by Covid-19
related Government restrictions in the Republic of Ireland until
4(th) May. However, due to the greater impact of the Covid-19
pandemic in H1 2020, underlying revenue for the half increased
11.7% to GBP37.3m (H1 2020: GBP33.4m), and by 14% on a LFL basis
after adjusting for working days and foreign currency
movements.
This additional volume, combined with a favourable sales mix and
careful supply chain management in the face of material shortages
and extended lead times, contributed to a much lower underlying
operating loss of GBP0.2m (H1 2020: GBP1.4m loss).
Poland
LFL sales
----------- ----------- ----------- -----------
Underlying Underlying
Underlying Underlying operating operating
revenue revenue profit profit
H1 2021 H1 2020 H1 2021 H1 2020
GBPm GBPm H1 2021 GBPm GBPm
----------- ----------- ---------- ----------- -----------
Poland 83.5 72.3 22% 2.5 0.6
-------- ----------- ----------- ---------- ----------- -----------
Poland, a market leading distributor of insulation and
interiors, saw underlying revenue increase to GBP83.5m (H1 2020:
GBP72.3m), with LFL sales up 22%. Despite some negative market
indicators in Poland, revenue growth was strong, underpinned by an
increase in customer numbers and branch openings. The business
encountered extended lead times on some of its key products,
although this has not had a material impact on performance.
Underlying profit for the period was GBP2.5m (H1 2020: GBP0.6m),
driven by volume growth and partially offset by volume-related
increases in operating costs.
Reconciliation of underlying to statutory result
Other items, being items excluded from underlying results,
during the period amounted to GBP4.6m (H1 2020: GBP71.6m) on a
pre-tax basis and are summarised in the table below:
H1 2021 H1 2020
--------------------------------------------------
GBPm GBPm
-------------------------------------------------- -------- --------
Underlying profit/(loss) before tax 3.0 (53.8)
Other items - impacting profit/(loss) before
tax:
Amortisation of acquired intangibles (2.3) (2.8)
Impairment charges - (42.8)
Profit on agreed sale or closure of non-core
businesses and associated impairment charges - 1.4
Net operating losses attributable to businesses
identified as non-core - (0.2)
Net restructuring costs (2.2) (3.5)
Investment in omnichannel retailing - (4.1)
Costs related to acquisitions (0.3) -
Costs associated with refinancing - (6.9)
Non-underlying finance costs - (11.6)
Other specific items 0.2 (1.1)
================================================== ======== ========
Total Other items (4.6) (71.6)
================================================== ======== ========
Statutory loss before tax (1.6) (125.4)
-------------------------------------------------- -------- --------
Net restructuring costs of GBP2.2m (H1 2020: GBP3.5m) have been
incurred principally in connection with the restructuring of
corporate functions as part of the implementation of the Return to
Growth strategy and restructuring in Benelux.
Costs related to acquisitions relate to the acquisition of F30
Building Products during the period.
Taxation
The effective tax rate for the Group on the total loss before
tax of GBP1.6m (H1 2020: GBP125.4m) is 227% (H1 2020: nil%). As the
Group operates in several different countries, tax losses cannot be
surrendered, or utilised cross border and the Group therefore pays
tax in some countries and not in others. Tax losses are not
currently recognised in respect of the UK business, which also
impacts the overall effective tax rate. The combination of these
factors means that the effective tax rate is less meaningful as an
indicator or comparator for the Group.
In accordance with UK legislation, the Group publishes an annual
tax strategy, which is available on our website,
www.sigplc.com.
Pensions
The Group operates four (2020: four) defined benefit pension
schemes and a number of defined contribution pension schemes. The
largest defined benefit scheme is a UK scheme, which was closed to
future accrual in 2016. The total net pension liability in relation
to defined benefit schemes at 30 June 2021 was GBP17.2m (30 June
2020: GBP33.0m; 31 December 2020: GBP25.1m). The last triennial
actuarial valuation of the UK scheme as at 31 December 2019 was
concluded at the end of March 2021. This showed that the market
value of the scheme's assets had increased by 20% to GBP196m and
their actuarial value covered 102% of the benefits accrued to
members after allowing for expected future increases in pensionable
salaries. As part of the funding negotiations the Company agreed to
pay an additional contribution of GBP2.5m into the Plan in July
2021 to accelerate plans to achieve a secondary funding target.
Financial position
Overall, the net assets of the Group have decreased by 2.8% to
GBP297.8m from GBP306.3m at 31 December 2020 due principally to the
loss after tax for the period of GBP8.1m. The cash position at 30
June 2021 was GBP173.9m (H1 2020: GBP197.3m; 31 December 2020:
GBP235.3m) with net debt of GBP289.4m (H1 2020: GBP341.8m; 31
December 2020: GBP238.2m).
Group structure
The results for H1 2020 have been restated to include Building
Solutions within underlying results consistent with the current
period and the 2020 Annual Report and Accounts, as summarised in
the table below:
Underlying Underlying
revenue PBT
GBPm GBPm
----------- -----------
As reported at HY 2020 results 817.7 (53.7)
-------------------------------- ----------- -----------
Building Solutions 21.2 (0.1)
Restated at FY 2020 results 838.9 (53.8)
----------- -----------
Cash flow
H1 2021 H1 2020
------------------------------------------
GBPm GBPm
------------------------------------------ -------- --------
Total operating profit/(loss), excluding
gain on sale from Air Handling 9.0 (101.8)
Depreciation and non-cash items 38.9 79.8
(Increase)/decrease in working capital
and provisions (45.9) (6.5)
Interest and tax (15.8) (14.0)
Capital expenditure (12.0) (13.4)
Proceeds from sale of property, plant
and equipment 1.6 4.6
------------------------------------------ -------- --------
Free cash flow (24.2) (51.3)
Sale and purchase of businesses (2.3) 149.5
Payment of lease liabilities (29.2) (27.2)
Repayment of debt (0.3) (29.0)
Costs paid in relation to capital
raise - (1.3)
------------------------------------------ -------- --------
Change in cash and cash equivalents (56.0) 40.7
------------------------------------------ -------- --------
Cash and cash equivalents at beginning
of the year 235.3 145.1
Effect of foreign exchange rate changes (5.4) 11.5
------------------------------------------ -------- --------
Cash and cash equivalents at end of
the year 173.9 197.3
------------------------------------------ -------- --------
During the period, the Group reported a free cash outflow of
GBP24.2m (H1 2020: GBP51.3m) as a result of the operating profit in
the period offset by an increase in working capital, together with
payments in relation to interest, tax and capital expenditure.
Other movements in cash relate to GBP2.3m cash outflow in relation
to the purchase of businesses (H1 2020: GBP149.5m inflow from the
sale of businesses), GBP0.3m repayments of debt (H1 2020: GBP29.0m)
and GBP29.2m payment of lease liabilities (H1 2020: GBP27.2m).
Free cash flow represents the cash available after supporting
operations and maintaining capital assets, and before financing and
investing activities.
Financing and funding
The Group has significant available liquidity and on the basis
of current forecasts is expected to remain in compliance with all
banking covenants throughout the forecast period to 30 September
2022. On 1 March 2021, the Group agreed with its lending banks and
private placement noteholders to amend certain financial covenants
to better align the different tests and to provide additional
headroom on the interest cover covenant under stress test scenarios
from March 2022.
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 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
Steve Francis Ian Ashton
Director Director
20 September 2021 20 September 2021
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 2021 (unaudited)
Six months ended 30 June Six months ended 30 June Year ended 31 December
2021 2020 2020
Other
Other Underlying* items** Other
Underlying* items** Total Restated^ Restated^ Total Underlying* items** Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 2 1,108.2 - 1,108.2 838.9 1.2 840.1 1,872.7 1.8 1,874.5
Cost of sales (821.2) - (821.2) (629.8) (0.8) (630.6) (1,402.7) (1.3) (1,404.0)
------------------ ----- ------------ -------- -------- ------------ ---------- -------- ------------ -------- ----------
Gross profit 287.0 - 287.0 209.1 0.4 209.5 470.0 0.5 470.5
Other operating
expenses (273.4) (4.6) (278.0) (252.0) (60.4) (312.4) (523.3) (114.9) (638.2)
------------------ ----- ------------ -------- -------- ------------ ---------- -------- ------------ -------- ----------
Operating
profit/(loss) 3 13.6 (4.6) 9.0 (42.9) (60.0) (102.9) (53.3) (114.4) (167.7)
Finance income 0.4 - 0.4 0.3 - 0.3 0.7 - 0.7
Finance costs (11.0) - (11.0) (11.2) (11.6) (22.8) (23.7) (11.6) (35.3)
------------------ ----- ------------ -------- -------- ------------ ---------- -------- ------------ -------- ----------
Profit/(loss)
before tax 3.0 (4.6) (1.6) (53.8) (71.6) (125.4) (76.3) (126.0) (202.3)
Income tax
(expense)/credit 5 (6.8) 0.3 (6.5) - 0.8 0.8 (10.7) 4.1 (6.6)
------------------ ----- ------------ -------- -------- ------------ ---------- -------- ------------ -------- ----------
Loss after tax
from continuing
operations (3.8) (4.3) (8.1) (53.8) (70.8) (124.6) (87.0) (121.9) (208.9)
------------------ ----- ------------ -------- -------- ------------ ---------- -------- ------------ -------- ----------
Discontinued
operations
Profit after tax
from
discontinued
operations 9 - - - - 70.8 70.8 - 69.7 69.7
------------------ ----- ------------ -------- -------- ------------ ---------- -------- ------------ -------- ----------
Loss after tax
for the period (3.8) (4.3) (8.1) (53.8) - (53.8) (87.0) (52.2) (139.2)
------------------ ----- ------------ -------- -------- ------------ ---------- -------- ------------ -------- ----------
Attributable to:
Equity holders of
the Company (3.8) (4.3) (8.1) (53.8) - (53.8) (87.0) (52.2) (139.2)
Loss per share
From continuing
operations:
Basic 6 (0.7)p (21.1)p (24.0)p
Diluted 6 (0.7)p (21.1)p (24.0)p
Total:
Basic 6 (0.7)p (9.1)p (16.0)p
Diluted 6 (0.7)p (9.1)p (16.0)p
------------------ ----- ------------ -------- -------- ------------ ---------- -------- ------------ -------- ----------
* Underlying represents the results before Other items.
** Other items have been disclosed separately in order to give
an indication of the underlying earnings of the Group. Further
details can be found in Note 4.
^ The results for the period to 30 June 2020 have been restated
to include Building Solutions within underlying results consistent
with the current period. See Note 1 for further details.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2021 (unaudited)
Six months Six months Year ended
ended ended 31 December
30 June 2021 30 June 2020 2020
GBPm GBPm GBPm
Loss after tax (8.1) (53.8) (139.2)
Items that will not subsequently
be reclassified to the Consolidated
Income Statement:
Remeasurement of defined benefit
pension liability (Note 14) 5.2 (9.8) (1.7)
Deferred tax movement associated
with remeasurement of defined
benefit pension liability - - 0.3
Current tax movement associated
with remeasurement of defined
benefit pension liability - - 0.4
5.2 (9.8) (1.0)
Items that may subsequently be
reclassified to the Consolidated
Income Statement:
Exchange difference on retranslation
of foreign currency goodwill and
intangibles (2.5) 4.4 5.1
Exchange difference on retranslation
of foreign currency net investments
(excluding goodwill and intangibles) (10.1) 18.0 13.2
Exchange and fair value movements
associated with borrowings and
derivative financial instruments 5.7 (12.5) (11.0)
Tax credit on exchange and fair
value movements arising on borrowings
and derivative financial instruments - 2.4 -
Exchange differences reclassified
to the Consolidated Income Statement
in respect of the disposal of
foreign operations - (5.9) (5.9)
Gains and losses on cash flow
hedges 0.3 2.0 (0.5)
Transfer to profit and loss on
cash flow hedges (0.1) (1.6) (0.7)
---------------------------------------- -------------- -------------- -------------
(6.7) 6.8 0.2
---------------------------------------- -------------- -------------- -------------
Other comprehensive expense (1.5) (3.0) (0.8)
---------------------------------------- -------------- -------------- -------------
Total comprehensive expense (9.6) (56.8) (140.0)
---------------------------------------- -------------- -------------- -------------
Attributable to:
Equity holders of the Company (9.6) (56.8) (140.0)
(9.6) (56.8) (140.0)
---------------------------------------- -------------- -------------- -------------
Condensed Consolidated Balance Sheet
as at 30 June 2021 (unaudited)
30 June 31 December
30 June 2021 2020 2020
Note GBPm GBPm GBPm
Non-current assets
Property, plant and equipment 63.6 67.1 63.2
Right-of-use assets 226.1 257.6 229.6
Goodwill 128.5 131.3 128.8
Intangible assets 22.4 43.1 22.9
Lease receivables 3.2 4.0 3.6
Deferred tax assets 4.5 6.9 5.7
Derivative financial instruments 12 0.8 4.5 0.1
449.1 514.5 453.9
---------------------------------- ----- ------------- --------- -------------
Current assets
Inventories 221.4 185.3 170.3
Lease receivables 0.7 0.8 0.7
Trade and other receivables 382.4 293.6 294.4
Derivative financial instruments 12 0.2 0.7 -
Cash at bank and on hand 173.9 197.3 235.3
778.6 677.7 700.7
---------------------------------- ----- ------------- --------- -------------
Total assets 1,227.7 1,192.2 1,154.6
---------------------------------- ----- ------------- --------- -------------
Current liabilities
Trade and other payables 404.6 341.8 301.4
Lease liabilities 50.9 54.6 50.6
Private placement notes - 48.3 -
Deferred consideration 1.0 - 0.5
Other financial liabilities 0.4 0.5 0.5
Derivative financial instruments 12 - 0.1 0.5
Current tax liabilities 4.5 3.2 4.2
Provisions 10.4 8.1 10.5
471.8 456.6 368.2
---------------------------------- ----- ------------- --------- -------------
Non-current liabilities
Lease liabilities 206.7 224.5 211.6
Bank loans 68.2 67.2 67.7
Private placement notes 138.5 149.4 144.5
Derivative financial instruments 12 0.6 3.2 0.4
Other financial liabilities 0.9 1.3 1.2
Deferred consideration 1.0 - 0.4
Other payables 3.4 3.1 3.5
Retirement benefit obligations 14 17.2 33.0 25.1
Provisions 21.6 16.5 25.7
---------------------------------- ----- ------------- --------- -------------
458.1 498.2 480.1
---------------------------------- ----- ------------- --------- -------------
Total liabilities 929.9 954.8 848.3
---------------------------------- ----- ------------- --------- -------------
Net assets 297.8 237.4 306.3
---------------------------------- ----- ------------- --------- -------------
Capital and reserves
Called up share capital 13 118.2 59.2 118.2
Share premium account 13 - 447.3 447.7
Treasury shares reserve (0.2) - (0.2)
Capital redemption reserve 0.3 0.3 0.3
Share option reserve 3.1 1.8 2.0
Hedging and translation reserve 3.8 16.8 10.5
Cost of hedging reserve 0.2 0.5 0.2
Merger reserve 92.5 - 92.5
Retained losses 79.9 (288.5) (364.9)
---------------------------------- ----- ------------- --------- -------------
Attributable to equity holders
of the Company 297.8 237.4 306.3
---------------------------------- ----- ------------- --------- -------------
Total equity 297.8 237.4 306.3
---------------------------------- ----- ------------- --------- -------------
Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2021 (unaudited)
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
Note GBPm GBPm GBPm
Net cash flow from operating
activities
Cash generated from/(used
in) operating activities 10 2.0 (28.5) (43.0)
Income tax paid (5.5) (3.5) (9.7)
-------------------------------------- ----- ------------- ----------- -------------
Net cash used in operating
activities (3.5) (32.0) (52.7)
-------------------------------------- ----- ------------- ----------- -------------
Cash flows from investing
activities
Finance income received 0.4 0.3 0.7
Purchase of property, plant
and equipment and computer
software (12.0) (13.4) (20.8)
Proceeds from sale of property,
plant and equipment 1.6 4.6 5.6
Net cash flow arising on the
purchase of business 7 (2.3) - (0.8)
Net cash flow arising on the
sale of businesses 8 - 149.5 147.8
Net cash (used in)/generated
from investing activities (12.3) 141.0 132.5
-------------------------------------- ----- ------------- ----------- -------------
Cash flows from financing
activities
Finance costs paid (10.7) (10.8) (23.3)
Repayment of lease liabilities (29.2) (27.2) (54.8)
Repayment of loans/settlement
of derivative financial instruments (0.3) 1.0 (55.2)
Repayment of revolving credit
facility* - (30.0) (30.0)
Net proceeds from/(costs paid
in relation to) equity raise - (1.3) 151.9
Net cash used in financing
activities (40.2) (68.3) (11.4)
-------------------------------------- ----- ------------- ----------- -------------
(Decrease)/increase in cash
and cash equivalents in the
period 11 (56.0) 40.7 68.4
-------------------------------------- ----- ------------- ----------- -------------
Cash and cash equivalents
at beginning of the period 235.3 145.1 145.1
Effect of foreign exchange
rate changes (5.4) 11.5 21.8
-------------------------------------- ----- ------------- ----------- -------------
Cash and cash equivalents
at end of the period** 173.9 197.3 235.3
-------------------------------------- ----- ------------- ----------- -------------
* As part of the changes to the debt facility agreements in
2020, GBP70.0m drawn under the existing revolving credit facility
was converted into a GBP70.0m term facility, with no additional
repayment or drawdown made.
** Cash and cash equivalents comprise cash at bank and on hand
of GBP173.9m (30 June 2020: GBP197.3m; 31 December 2020: GBP235.3m)
less bank overdrafts of GBPnil (30 June and 31 December 2020:
GBPnil).
Condensed
Consolidated
Statement
of Changes in
Equity
for the six
months ended 30
June 2021
(unaudited)
Called Hedging
up Share Treasury Capital Share and Cost of Retained
share premium shares redemption option translation hedging Merger (losses)/
capital account reserve reserve reserve reserves reserve reserve profits Total
For the six
months ended 30
June 2021 Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
At 1 January 2021 118.2 447.7 (0.2) 0.3 2.0 10.5 0.2 92.5 (364.9) 306.3
Loss after tax - - - - - - - - (8.1) (8.1)
Other
comprehensive
(expense)/income - - - - - (6.7) - - 5.2 (1.5)
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
Total
comprehensive
expense - - - - - (6.7) - - (2.9) (9.6)
Credit to share
option reserve - - - - 1.1 - - - - 1.1
Capital reduction 13 - (447.7) - - - - - - 447.7 -
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
At 30 June 2021 118.2 - (0.2) 0.3 3.1 3.8 0.2 92.5 79.9 297.8
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
Called Hedging
up Share Treasury Capital Share and Cost of Retained
share premium shares redemption option translation hedging Merger (losses)/
capital account reserve reserve reserve reserves reserve reserve profits Total
------------------
For the six
months ended 30
June 2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
At 1 January 2020 59.2 447.3 - 0.3 1.8 10.2 0.3 - (224.9) 294.2
Loss after tax - - - - - - - - (53.8) (53.8)
Other
comprehensive
income/(expense) - - - - - 6.6 0.2 - (9.8) (3.0)
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
Total
comprehensive
income/(expense) - - - - - 6.6 0.2 - (63.6) (56.8)
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
At 30 June 2020 59.2 447.3 - 0.3 1.8 16.8 0.5 - (288.5) 237.4
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
Called Hedging
up Share Treasury Capital Share and Cost of Retained
share premium shares redemption option translation hedging Merger (losses)/
capital account reserve reserve reserve reserves reserve reserve profits Total
For the year
ended 31 December
2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 January 2020 59.2 447.3 - 0.3 1.8 10.2 0.3 - (224.9) 294.2
Loss after tax - - - - - - - - (139.2) (139.2)
Other
comprehensive
income/(expense) - - - - - 0.3 (0.1) - (1.0) (0.8)
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
Total
comprehensive
income/(expense) - - - - - 0.3 (0.1) - (140.2) (140.0)
Issue of share
capital 59.0 0.4 - - - - - 92.5 - 151.9
Transfer of
unallocated
treasury
shares - - (0.2) - - - - - 0.2 -
Credit to share
option reserve - - - - 0.2 - - - - 0.2
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
At 31 December
2020 118.2 447.7 (0.2) 0.3 2.0 10.5 0.2 92.5 (364.9) 306.3
------------------ ----- -------- -------- --------- ----------- -------- ------------ -------- -------- ---------- --------
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 reserve 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 taken directly to reserves.
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 20 September 2021.
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 2020, which have
been applied consistently throughout the current and preceding
periods. There are no changes to the reported operating segments
from those reported in the 2020 Annual Report and Accounts, but the
Germany and Benelux segments are no longer grouped together,
reflecting the current leadership structure and the way in which
information is reported and reviewed by the Chief Operating
Decision Maker (CODM).
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 2021 and 30 June 2020 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 2020 prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and international financial reporting standards adopted
pursuant to Regulation (EC) No. 1606/2002 as it applies in the
European Union. 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 150 to 152 of the 2020 Annual Report
and Accounts are considered to continue and be consistently
applied.
The comparatives for the six months ended 30 June 2020 have been
restated to include Building Solutions within underlying results
consistent with the current period and the year ended 31 December
2020.
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. The Directors have considered the following principal
risks and uncertainties that could potentially impact the Group's
ability to fund its future activities and adhere to its banking
covenants, including:
- A decline in market conditions resulting in lower than
forecast sales;
- Implementation of the new strategy taking longer than
anticipated to deliver forecast increases in revenue and
profit;
- Potential impact of material shortages on forecast sales;
- A further wave of the Covid-19 pandemic; and
- The terms of the Group's lending arrangements and whether
these could limit investment in growth opportunities.
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.
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 2022 and the Directors
therefore consider it appropriate to continue to adopt the going
concern basis in preparing this Interim Report.
New standards, interpretations and amendments adopted by the
Group
Several amendments apply for the first time in 2021 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.
Notes to the Condensed Interim Financial Statements
2. Revenue from contracts with customers
Set out below is the disaggregation of the Group's revenue from
contracts with customers:
UK UK Total France France Total Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Eliminations Group
Six months
ended 30 June
2021 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Type of
product
Interiors 239.3 - 239.3 101.1 - 101.1 194.3 47.1 20.9 79.5 - 682.2
Exteriors - 199.2 199.2 - 206.4 206.4 - - 16.4 - - 422.0
Heating,
ventilation
and air
conditioning - - - - - - - - - 4.0 - 4.0
Inter-segment
revenue^ 1.4 0.4 1.8 0.1 5.4 5.5 - - - - (7.3) -
---------------
Total
underlying
revenue 240.7 199.6 440.3 101.2 211.8 313.0 194.3 47.1 37.3 83.5 (7.3) 1,108.2
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Revenue
attributable
to businesses
identified
as non-core - - - - - - - - - - - -
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Total 240.7 199.6 440.3 101.2 211.8 313.0 194.3 47.1 37.3 83.5 (7.3) 1,108.2
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Nature of
revenue
Goods for
resale 240.7 199.6 440.3 101.2 211.8 313.0 194.3 47.1 35,3 83.5 (7.3) 1,106.2
Construction
contracts - - - - - - - - 2.0 - - 2.0
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Total 240.7 199.6 440.3 101.2 211.8 313.0 194.3 47.1 37.3 83.5 (7.3) 1,108.2
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Timing of
revenue
recognition
Goods
transferred
at
a point in
time 240.7 199.6 440.3 101.2 211.8 313.0 194.3 47.1 35.3 83.5 (7.3) 1,106.2
Goods and
services
transferred
over time - - - - - - - - 2.0 - - 2.0
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Total 240.7 199.6 440.3 101.2 211.8 313.0 194.3 47.1 37.3 83.5 (7.3) 1,108.2
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
^ Inter-segment revenue is charged at the prevailing market
rates.
Set out below is the disaggregation of the Group's revenue from
contracts with customers:
UK UK Total France France Total Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Eliminations Group
Six months
ended 30 June
2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- ------
Type of
product
Interiors 154.9 - 154.9 73.8 - 73.8 177.1 47.7 19.8 69.2 - 542.5
Exteriors - 125.3 125.3 - 154.4 154.4 - - 13.6 - - 293.3
Heating,
ventilation
and air
conditioning - - - - - - - - - 3.1 - 3.1
Inter-segment
revenue^ 1.0 1.0 2.0 0.7 3.1 3.8 - - - - (5.8) -
---------------
Total
underlying
revenue 155.9 126.3 282.2 74.5 157.5 232.0 177.1 47.7 33.4 72.3 (5.8) 838.9
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- ------
Revenue
attributable
to businesses
identified
as non-core - - - - 1.2 1.2 - - - - - 1.2
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- ------
Total 155.9 126.3 282.2 74.5 158.7 233.2 177.1 47.7 33.4 72.3 (5.8) 840.1
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- ------
Nature of
revenue
Goods for
resale 155.9 126.3 282.2 74.5 158.7 233.2 177.1 47.7 31.6 72.3 (5.8) 838.3
Construction
contracts - - - - - - - - 1.8 - - 1.8
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- ------
Total 155.9 126.3 282.2 74.5 158.7 233.2 177.1 47.7 33.4 72.3 (5.8) 840.1
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- ------
Timing of
revenue
recognition
Goods
transferred
at
a point in
time 155.9 126.3 282.2 74.5 158.7 233.2 177.1 47.7 31.6 72.3 (5.8) 838.3
Goods and
services
transferred
over time - - - - - - - - 1.8 - - 1.8
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- ------
Total 155.9 126.3 282.2 74.5 158.7 233.2 177.1 47.7 33.4 72.3 (5.8) 840.1
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- ------
^ Inter-segment revenue is charged at the prevailing market
rates.
Set out below is the disaggregation of the Group's revenue from
contracts with customers:
UK UK Total France France Total Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Eliminations Group
Year ended 31
December
2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Type of
product
Interiors 357.4 - 357.4 168.1 - 168.1 370.7 91.6 46.3 142.6 - 1,176.7
Exteriors - 310.1 310.1 - 344.8 344.8 - - 34.2 - - 689.1
Heating,
ventilation
and air
conditioning - - - - - - - - - 6.9 - 6.9
Inter-segment
revenue^ 1.5 0.5 2.0 0.9 7.6 8.5 0.1 0.1 0.1 - (10.8) -
---------------
Total
underlying
revenue 358.9 310.6 669.5 169.0 352.4 521.4 370.8 91.7 80.6 149.5 (10.8) 1,872.7
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Revenue
attributable
to businesses
identified
as non-core - - - - 1.8 1.8 - - - - - 1.8
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Total 358.9 310.6 669.5 169.0 354.2 523.2 370.8 91.7 80.6 149.5 (10.8) 1,874.5
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Nature of
revenue
Goods for
resale 358.9 310.6 669.5 169.0 354.2 523.2 370.8 91.7 75.2 149.5 (10.8) 1,869.1
Construction
contracts - - - - - - - - 5.4 - - 5.4
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Total 358.9 310.6 669.5 169.0 354.2 523.2 370.8 91.7 80.6 149.5 (10.8) 1,874.5
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Timing of
revenue
recognition
Goods
transferred
at
a point in
time 358.9 310.6 669.5 169.0 354.2 523.2 370.8 91.7 75.2 149.5 (10.8) 1,869.1
Goods and
services
transferred
over time - - - - - - - - 5.4 - - 5.4
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Total 358.9 310.6 669.5 169.0 354.2 523.2 370.8 91.7 80.6 149.5 (10.8) 1,874.5
--------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
^ Inter-segment revenue is charged at the prevailing market
rates.
Notes to the Condensed Interim Financial Statements
3. 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 Chief Operating Decision Maker (CODM). Reportable
operating segments are grouped on a geographical basis.
UK UK Total France France Total Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Eliminations Group
Six months
ended 30 June
2021 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Revenue
Underlying
revenue 239.3 199.2 438.5 101.1 206.4 307.5 194.3 47.1 37.3 83.5 - 1,108.2
Revenue
attributable
to businesses
identified
as non-core - - - - - - - - - - - -
Inter-segment
revenue^ 1.4 0.4 1.8 0.1 5.4 5.5 - - - - (7.3) -
Total revenue 240.7 199.6 440.3 101.2 211.8 313.0 194.3 47.1 37.3 83.5 (7.3) 1,108.2
---------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Result
Segment result
before
Other items (5.4) 7.9 2.5 6.2 10.8 17.0 2.6 - (0.2) 2.5 - 24.4
Amortisation of
acquired
intangibles (0.1) (2.0) (2.1) - (0.2) (0.2) - - - - - (2.3)
Acquisition
costs (0.3) - (0.3) - - - - - - - - (0.3)
Net
restructuring
costs (0.2) - (0.2) - - - (0.1) (0.4) - - - (0.7)
Segment
operating
(loss)/profit (6.0) 5.9 (0.1) 6.2 10.6 16.8 2.5 (0.4) (0.2) 2.5 - 21.1
---------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Parent Company
costs (10.8)
Parent Company
Other
items* (1.3)
Operating
profit 9.0
---------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Net finance
costs before
Other items (10.6)
Non-underlying
finance
costs -
---------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Loss before tax (1.6)
---------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Income tax
expense (6.5)
Loss for the
period (8.1)
---------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
^ Inter-segment revenue is charged at the prevailing market
rates.
* Parent company Other items include restructuring costs GBP1.5m
and other specific items GBP0.2m (credit). See Note 4 for further
details.
UK UK Total France France Total Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Eliminations Group
Six months
ended 30 June
2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Revenue
Underlying
revenue 154.9 125.3 280.2 73.8 154.4 228.2 177.1 47.7 33.4 72.3 - 838.9
Revenue
attributable
to businesses
identified
as non-core - - - - 1.2 1.2 - - - - - 1.2
Inter-segment
revenue^ 1.0 1.0 2.0 0.7 3.1 3.8 - - - - (5.8) -
Total revenue 155.9 126.3 282.2 74.5 158.7 233.2 177.1 47.7 33.4 72.3 (5.8) 840.1
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Result
Segment result
before
Other items (27.4) (8.6) (36.0) 1.3 1.6 2.9 (1.3) 1.8 (1.4) 0.6 - (33.4)
Amortisation of
acquired
intangibles (0.4) (2.2) (2.6) - (0.2) (0.2) - - - - - (2.8)
Impairment
charges (31.0) (11.8) (42.8) - - - - - - - - (42.8)
Net operating
losses
attributable
to businesses
identified as
non-core - - - - (0.2) (0.2) - - - - - (0.2)
Net
restructuring
costs (2.2) (0.8) (3.0) - (0.1) (0.1) - (0.4) - - - (3.5)
Other specific
items - - - - - - 0.2 - - - 0.2
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Segment
operating
(loss)/profit (61.0) (23.4) (84.4) 1.3 1.1 2.4 (1.1) 1.4 (1.4) 0.6 - (82.5)
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Parent Company
costs (9.5)
Parent Company
Other
items* (10.9)
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Operating loss (102.9)
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Net finance
costs before
Other items (10.9)
Non-underlying
finance
costs (11.6)
Loss before tax
and
discontinued
operations (125.4)
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Income tax
expense 0.8
Profit after
tax from
discontinued
operations 70.8
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Loss for the
period (53.8)
---------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
^ Inter-segment revenue is charged at the prevailing market
rates.
* Parent company Other items include investment in omnichannel
retailing GBP4.1m, costs associated with refinancing GBP6.9m and
other specific items GBP1.3m, offset by profits on sale or closure
of non-core businesses GBP1.4m. See Note 4 for further details.
UK UK Total France France Total Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Eliminations Group
Year ended 31
December
2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Revenue
Underlying
revenue 357.4 310.1 667.5 168.1 344.8 512.9 370.7 91.6 80.5 149.5 - 1,872.7
Revenue
attributable
to businesses
identified
as non-core - - - - 1.8 1.8 - - - - - 1.8
Inter-segment
revenue^ 1.5 0.5 2.0 0.9 7.6 8.5 0.1 0.1 0.1 - (10.8) -
Total revenue 358.9 310.6 669.5 169.0 354.2 523.2 370.8 91.7 80.6 149.5 (10.8) 1,874.5
---------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Result
Segment result
before
Other items (45.4) (7.4) (52.8) 7.1 8.3 15.4 0.4 2.5 0.8 2.0 - (31.7)
Amortisation of
acquired
intangibles (0.9) (4.3) (5.2) - (0.4) (0.4) - - - - - (5.6)
Impairment
charges (50.6) (11.8) (62.4) - - - - - - - - (62.4)
Acquisition
costs - (0.2) (0.2) - - - - - - - - (0.2)
Profits and
losses on
agreed sale or
closure
of non-core
businesses
and associated
impairment
charges (0.3) - (0.3) - (0.9) (0.9) - - - - - (1.2)
Net operating
losses
attributable
to businesses
identified as
non-core - - - - (0.3) (0.3) - - - - - (0.3)
Onerous
contract costs (1.0) - (1.0) - - - - - - - - (1.0)
Net
restructuring
costs (4.0) (1.7) (5.7) - (0.1) (0.1) (0.5) (0.4) - - - (6.7)
Other specific
items (0.1) - (0.1) - 0.1 0.1 0.2 - - - - 0.2
---------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Segment
operating
(loss)/profit (102.3) (25.4) (127.7) 7.1 6.7 13.8 0.1 2.1 0.8 2.0 - (108.9)
---------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Parent Company
costs (21.6)
Parent Company
Other
items* (37.2)
Operating loss (167.7)
---------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Net finance
costs before
Other items (23.0)
Non-underlying
finance
costs (11.6)
Loss before tax
and
discontinued
operations (202.3)
---------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Income tax
expense (6.6)
Profit from
discontinued
operations 69.7
---------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
Loss for the
year (139.2)
---------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- -------- ------- ------------- --------
^ Inter-segment revenue is charged at the prevailing market
rates.
* Parent company Other items include impairment charges
GBP13.7m, investment in omnichannel retailing GBP4.2m, costs
associated with refinancing GBP7.4m, onerous contract costs
GBP12.2m and other specific items GBP1.6m, offset by profit on
agreed sale or closure of non-core businesses of GBP1.9m. See Note
4 for further details.
UK UK Total France France Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Total
30 June 2021 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Balance sheet
Assets
Segment
assets 178.5 265.3 443.8 87.9 223.0 310.9 147.6 56.7 50.0 69.1 1,078.1
Unallocated
assets:
Property,
plant and
equipment 0.3
Derivative
financial
instruments 1.0
Cash and cash
equivalents 140.9
Other assets 7.4
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Consolidated
total assets 1,227.7
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Liabilities
Segment
liabilities 204.3 126.2 330.5 61.4 130.1 191.5 83.9 19.1 30.5 37.1 692.6
Unallocated
liabilities:
Private
placement
notes 138.5
Bank loans 68.2
Derivative
financial
instruments 0.6
Other
liabilities 30.0
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Consolidated
total
liabilities 929.9
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
UK UK Total France France Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Total
30 June 2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Balance sheet
Assets
Segment
assets 159.0 218.2 377.2 60.5 203.1 263.6 162.2 59.6 46.7 63.1 972.4
Unallocated
assets:
Right-of-use
assets 2.7
Property,
plant and
equipment 0.4
Derivative
financial
instruments 5.2
Cash and cash
equivalents 158.2
Deferred tax
assets 6.9
Other assets 46.4
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Consolidated
total assets 1,192.2
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Liabilities
Segment
liabilities 190.3 100.6 290.9 51.0 114.8 165.8 101.9 19.4 26.7 31.5 636.2
Unallocated
liabilities:
Private
placement
notes 67.2
Bank loans 197.7
Derivative
financial
instruments 3.3
Other
liabilities 50.4
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Consolidated
total
liabilities 954.8
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
UK UK Total France France Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Total
31 December
2020 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Balance sheet
Assets
Segment
assets 153.2 242.8 396.0 67.6 210.6 278.2 138.1 48.7 52.6 59.5 973.1
Unallocated
assets:
Right-of-use
assets 1.4
Property,
plant and
equipment 0.3
Derivative
financial
instruments 0.1
Cash and cash
equivalents 174.9
Other assets 4.8
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Consolidated
total assets 1,154.6
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Liabilities
Segment
liabilities 188.3 112.1 300.4 48.8 104.9 153.7 79.5 9.6 31.9 28.3 603.4
Unallocated
liabilities:
Private
placement
notes 144.5
Bank loans 67.7
Derivative
financial
instruments 0.9
Other
liabilities 31.8
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
Consolidated
total
liabilities 848.3
-------------- ------------- ---------- ------ ------------- ---------- ------- -------- -------- -------- ------- --------
4. Other items
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 Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
------------------------------------------ ----------- ----------- -------------
Amortisation of acquired intangibles (2.3) (2.8) (5.6)
Impairment charges - (42.8) (76.1)
Profits and losses on agreed sale
or closure of non-core businesses
and associated impairment charges
(Note 8) - 1.4 0.6
Net operating losses attributable
to businesses identified as non-core(1)
(Note 8) - (0.2) (0.3)
Net restructuring costs(2) (2.2) (3.5) (6.7)
Costs related to acquisitions
(Note 7) (0.3) - (0.2)
Investment in omnichannel retailing - (4.1) (4.2)
Costs associated with refinancing - (6.9) (7.4)
Onerous contract costs - - (13.2)
Other specific items(3) 0.2 (1.1) (1.3)
------------------------------------------ -----------
Impact on operating profit/(loss) (4.6) (60.0) (114.4)
Non-underlying finance costs(4) - (11.6) (11.6)
------------------------------------------ -----------
Impact on profit/(loss) before
tax (4.6) (71.6) (126.0)
Income tax credit on Other items 0.3 0.8 4.1
Impact on profit/(loss) after
tax (4.3) (70.8) (121.9)
------------------------------------------ ----------- ----------- -------------
(1) The comparative for 30 June 2020 for net operating losses
attributable to businesses identified as non-core is updated to
reflect Building Solutions within underlying results consistent
with the current period and 31 December 2020.
(2) Net restructuring costs include redundancy and related staff
costs of GBP1.0m (30 June 2020: GBP0.8m; 31 December 2020: 2.8m),
property closure costs, including impairment of non-current assets
due to restructuring of GBP1.1m (30 June 2020: GBP0.8m; 31 December
2020: GBP0.8m), GBPnil (30 June 2020: GBP1.7m; 31 December 2020:
GBP2.9m) in relation to restructuring consultancy costs, and other
costs of GBP0.1m (30 June 2020: GBP0.2m; 31 December 2020:
GBP0.2m). The costs in the current year have been incurred
principally in connection with the restructuring of corporate
functions as part of the implementation of the 'Return to Growth'
strategy and restructuring in Benelux.
(3) Other specific items comprise the following:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBPm GBPm GBPm
-------------------------------------- ----------- ----------- -------------
PwC investigation costs - (1.7) (1.8)
Gain in fair value of forward
currency option not hedged - 0.6 0.6
Costs in relation to the cyberattack
in France - - 0.1
GMP equalisation - - (0.4)
Other specific items 0.2 - 0.2
-------------------------------------- ----------- ----------- -------------
Total other specific items 0.2 (1.1) (1.3)
-------------------------------------- ----------- ----------- -------------
(4) Non-underlying finance costs in the prior period comprised
GBP11.3m loss on modification recognised in relation to the private
placement notes and GBP0.3m write-off of arrangement fees in
relation to the previous RCF which was extinguished.
5. Income tax
The income tax expense comprises:
Six months Six months Year ended
ended 30 ended 31 December
June 2021 30 June 2020 2020
GBPm GBPm GBPm
---------------------------------- ----------- -------------- -------------
Total income tax expense for the
period (6.5) 0.8 (6.6)
---------------------------------- ----------- -------------- -------------
Tax for the six month period ended 30 June 2021 on underlying
profits (before Other items) is charged at 226.7% (30 June 2020:
0.2%; 31 December 2020: 6.8%), representing the best estimate of
the average annual effective tax rate expected for the full year
being applied to the underlying pre-tax income of the six month
period to 30 June 2021.
As the Group operates in several different countries tax losses
cannot be surrendered or utilised cross border, and the Group
therefore is subject to tax in some countries and not in others.
Tax losses are not currently recognised in respect of the UK
business which impacts the overall effective tax rate. The
combination of these factors means that the effective tax rate is
less meaningful as an indicator or comparator for the Group.
The Group has previously disclosed the EU's investigation into
the UK controlled foreign company (CFC) rules which gave rise to
potential additional tax payable of up to GBP5m (before interest
and penalties), which was not provided for. HMRC has now completed
its review of the Group's tax arrangements for the periods in
question and confirmed that they complied with the requirements of
the UK CFC legislation and that it considers that the Group's
arrangements did not result in unlawful State Aid. Accordingly,
HMRC has accepted the Group's tax returns as submitted and there is
no longer a potential exposure or payment to be made.
6. Loss per share
The calculations of loss per share are based on the following
(losses)/profits and numbers of shares:
Basic and diluted
----------------------------------------------
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBPm GBPm GBPm
------------------------------------ ------------------ ----------- -------------
Loss attributable to ordinary
equity holders of the parent for
basic and diluted earnings per
share from continuing operations (8.1) (124.6) (208.9)
Profit attributable to ordinary
equity holders of the parent from
discontinued operations - 70.8 69.7
------------------------------------ ------------------ ----------- -------------
Loss attributable to ordinary
equity holders of the parent for
basic and diluted earnings per
share (8.1) (53.8) (139.2)
Basic and diluted before Other items
-----------------------------------------
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBPm GBPm GBPm
----------------------------------- ------------ ------------ -------------
Loss attributable to ordinary
equity holders of the parent for
basic and diluted earnings per
share from continuing operations (8.1) (124.6) (208.9)
Add back:
Other items (see Note 4) 4.3 70.8 121.9
----------------------------------- ------------ ------------ -------------
Loss attributable to ordinary
equity holders of the parent for
basic and diluted earnings per
share from continuing operations
before Other items (3.8) (53.8) (87.0)
----------------------------------- ------------ ------------ -------------
Weighted average number of shares
-------------------------------------------
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
Number Number Number
------------------------------------- -------------- ------------ -------------
For basic and diluted loss per
share 1,181,431,548 591,556,982 871,941,603
Effect of dilution from share
options - - -
------------------------------------- -------------- ------------ -------------
Adjusted for the effect of dilution 1,181,431,548 591,556,982 871,941,603
------------------------------------- -------------- ------------ -------------
Due to incurring a loss per share, share options are considered
antidilutive in the current and prior periods as their conversion
into ordinary shares would decrease the loss per share. The
calculation of diluted earnings/(loss) per share does not assume
conversion, exercise, or other issue of potential ordinary shares
that would have an antidilutive effect on earnings/(loss) per
share.
Loss per share
------------------------------------ ---------------------------------------
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
------------------------------------ ----------- ----------- -------------
Loss per share
From continuing operations:
Basic loss per share (0.7)p (21.1)p (24.0)p
Diluted loss per share* (0.7)p (21.1)p (24.0)p
Total:
Basic loss per share (0.7)p (9.1)p (16.0)p
Diluted loss per share* (0.7)p (9.1)p (16.0)p
Loss per share from continuing
operations before Other items^
Basic and diluted loss per share
from continuing operations before
Other items (0.3)p (9.1)p (10.0)p
------------------------------------ ----------- ----------- -------------
* The basic and total loss per share for the prior full year
ended 31 December 2020 has been restated from (23.9)p and (15.9)p
as originally reported to (24.0)p and (16.0)p respectively,
reflecting the antidilutive nature of the share options.
^ Loss per share before Other items (also referred to as
underlying loss per share) has been disclosed in order to present
the underlying performance of the Group.
7. Acquisitions
On 10 March 2021 the Group completed the acquisition of 100% of
the equity share capital of F30 Building Products Limited, a
non-listed UK business. Total consideration is GBP3.6m, comprising
GBP2.5m paid in cash on completion and GBP1.1m deferred and payable
in two equal instalments over the next two years. A further GBP0.8m
is also payable over the next twelve months dependent upon the
future performance of the business and dependent on the vendor
remaining within the business, which is treated as remuneration and
not included in consideration.
The provisional fair values of the identifiable assets and
liabilities of F30 Building Products Limited as at the date of
acquisition were:
Six months
ended 30
June 2021
GBPm
--------------------------------------------- -----------
Assets
Intangible assets (customer relationships) 1.8
Property, plant and equipment 0.1
Right-of-use assets 0.4
Cash and cash equivalents 0.2
Trade and other receivables 1.1
Inventories 0.2
--------------------------------------------- -----------
3.8
--------------------------------------------- -----------
Liabilities
Trade and other payables (1.3)
Provisions (0.1)
Current tax liability (0.1)
Deferred tax liability (0.4)
Lease liabilities (0.4)
--------------------------------------------- -----------
(2.3)
--------------------------------------------- -----------
Total identifiable net assets at fair value 1.5
Goodwill arising on acquisition 2.1
--------------------------------------------- -----------
Purchase consideration transferred 3.6
--------------------------------------------- -----------
The fair value of trade receivables amounts to GBP1.1m. The
gross amount of trade receivables is GBP1.1m.
The Group measures the acquired lease liabilities using the
present value of the remaining lease payments at the date of
acquisition. The right-of-use assets were measured at an amount
equal to the lease liabilities.
The goodwill of GBP2.1m comprises the value of expected
synergies arising from the acquisition, strategic fit with the UK
Distribution business and geographic location, in particular
developing sales in the construction accessories sector, and is
allocated entirely to the UK Distribution segment.
From the date of acquisition, F30 Building Products Limited
contributed GBP2.5m of revenue and GBP0.4m to underlying profit
before tax from continuing operations of the Group. If the
combination had taken place at the beginning of the year, revenue
from continuing operations for the Group for the six months ended
30 June 2021 would have been GBP1,109.2m and underlying profit
before tax from continuing operations for the Group would have been
GBP3.1m.
Transactions costs of GBP0.1m have been expensed and are
included in administrative expenses within Other items in the
Consolidated Income Statement and are part of operating cash flows
in the statement of cash flows. GBP0.2m is also included within
acquisition related costs in relation to contingent consideration
dependent upon the vendor remaining with the business.
Purchase consideration
Six months
ended 30
June 2021
GBPm
----------------------------------------------------- -----------
Cash paid on completion 2.5
Deferred consideration within one year 0.5
Deferred consideration due after more than one year 0.6
----------------------------------------------------- -----------
Total consideration 3.6
----------------------------------------------------- -----------
Analysis of cash flows on acquisition
Six months
ended 30
June 2021
GBPm
----------------------------------------------------------- -----------
Consideration paid (included in cash flows from investing
activities) (2.5)
Net cash acquired with the subsidiary (included in cash
flows from investing activities) 0.2
----------------------------------------------------------- -----------
Total net cash flow included in cash flows from investing
activities (2.3)
Transaction costs (included in cash flows from operating
activities) (0.1)
----------------------------------------------------------- -----------
Net cash flows on acquisition (2.4)
----------------------------------------------------------- -----------
Prior year acquisition
On 17 October 2020 the Group acquired 100% of the share capital
of S M Roofing Supplies Limited, a non-listed company based in the
UK, for an enterprise value of GBP1.9m on a debt free cash free
basis. Total consideration was GBP4.9m, including GBP3.2m for cash
within the business on completion. GBP4.0m was paid in cash on
completion and two further amounts totalling GBP0.9m are payable in
equal instalments in one and two years' time (not subject to
performance criteria and not conditional upon vendors remaining
within the business). Transaction costs of GBP0.2m were also
incurred. Further details relating to the acquisition were included
in Note 15 of the 2020 Annual Report and Accounts.
8. Divestments and exit of non-core businesses
There have been no business divestments or closures in the
current period and no amounts recognised in respect of profits and
losses on agreed sale or closure of non-core businesses (30 June
2020: gain of GBP1.4m, 31 December 2020: gain of GBP0.6m). These
are explained further below.
Prior year divestments
The Middle East business, which was in the process of being
closed, was sold on 22 January 2020 for AED1. A gain on sale of
GBP2.0m was recognised in 2020, in relation to the reclassification
to the Consolidated Income Statement of the cumulative exchange
differences on the retranslation of the net assets of the business
previously recognised in other comprehensive income in accordance
with IAS 21 "The effects of foreign exchange rates".
On 10 September 2020 the Group completed the sale of Maury NZ
SAS ('Maury'), the Group's high-end fabrication business in France
and part of the France Exteriors (Larivière) segment, for proceeds
of EUR25,000. An overall loss on sale of GBP0.9m was recognised
within Other items, including the reclassification of the
cumulative exchange differences on the retranslation of the net
assets from equity to the Consolidated Income Statement, in
accordance with IAS 21 "The effects of changes in foreign exchange
rates". Net assets at the date of disposal were GBP0.9m and costs
of less than GBP0.1m were incurred, resulting in the overall loss
on sale of GBP0.9m.
Costs of GBP0.2m were recognised during 2020 in relation to the
disposal of the Building Solutions business, which was previously
classified as held for sale at 31 December 2019 as a sale had been
agreed and was due to complete in the first half of 2020, which was
subsequently terminated in May 2020 (and the business is now
included within underlying operations). GBP0.3m costs were also
incurred and recognised within Other items in relation to the
Commercial Drainage business which was closed in 2019.
The sale of the Air Handling business also completed during
2020. Further details are provided in Note 9.
Contribution to revenue and operating loss
The only business classified as non-core in the prior year
(following the reclassification of Building Solutions to underlying
results) was Maury, which contributed GBP1.2m to revenue for the
six months ended 30 June 2020 (31 December 2020: GBP1.8m) and
GBP0.2m operating loss for the period (31 December 2020: GBP0.3m
loss).
Cash flows associated with divestments and exit of non-core
businesses
There is no net cash inflow in the six month period ended 30
June 2021 in respect of divestments and the exit of non-core
businesses. Amounts for the prior periods are as follows:
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBPm GBPm GBPm
------------------------------------- ------------ ----------- -------------
Cash consideration received for
divestments (net of costs to sell) - 191.9 190.4
Cash at date of disposal - (29.3) (29.4)
Disposal costs paid - (13.1) (13.2)
------------------------------------- ------------ ----------- -------------
Net cash inflow - 149.5 147.8
------------------------------------- ------------ ----------- -------------
9. Discontinued operations
(a) Description
The sale of the Air Handling business completed on 31 January
2020 in the prior year. In the financial statements for the year
ended 31 December 2020 and six months ended 30 June 2020, Air
Handling was classified as a discontinued operation as it
represented a major line of business of the Group. The information
included in the prior period financial statements was as
follows:
(b) Financial performance and cash flow information
Financial information relating to the discontinued operation for
the period to the date of disposal is set out below. There are no
amounts relating to discontinued operations in the current
period.
Six months Year ended
ended 30 31 December
June 2020 2020
GBPm GBPm
------------------------------------------------ ----------- -------------
Revenue 25.4 25.4
Cost of sales (15.0) (15.0)
------------------------------------------------ ----------- -------------
Gross profit 10.4 10.4
Other operating expenses (9.3) (9.3)
------------------------------------------------ ----------- -------------
Underlying operating profit 1.1 1.1
Finance costs (0.1) (0.1)
------------------------------------------------ ----------- -------------
Profit before tax from discontinued operations 1.0 1.0
Income tax (expense)/credit (0.5) (0.3)
------------------------------------------------ ----------- -------------
Profit before tax from discontinued operations 0.5 0.7
------------------------------------------------ ----------- -------------
Gain on sale of subsidiary after income tax
(see below) 70.3 69.0
------------------------------------------------ ----------- -------------
Profit after tax from discontinued operations 70.8 69.7
------------------------------------------------ ----------- -------------
The net cash flows incurred by Air Handling are as follows:
Six months Year ended
ended 30 31 December
June 2020 2020
GBPm GBPm
---------------------------------------------- ----------- -------------
Operating 1.1 1.1
Investing 150.3 147.6
Financing (0.1) -
---------------------------------------------- ----------- -------------
Net cash inflow 151.3 148.7
---------------------------------------------- ----------- -------------
Earnings per share:
Six months Year ended
ended 30 31 December
June 2020 2020
---------------------------------------------- ----------- -------------
Basic earnings per share from discontinued
operations 0.12p 8.0p
Diluted earnings per share from discontinued
operations 0.12p 8.0p
---------------------------------------------- ----------- -------------
(c) Gain on sale
Six months Year ended
ended 30 31 December
June 2020 2020
GBPm GBPm
----------------------------------------------------- ----------- -------------
Consideration received:
Cash 191.9 191.9
Adjustment to consideration - (2.2)
----------------------------------------------------- ----------- -------------
Final consideration 191.9 189.7
Carrying amount of net assets sold (120.3) (118.1)
----------------------------------------------------- ----------- -------------
Gain on sale before income tax and reclassification
of foreign currency translation reserve 71.6 71.6
Costs incurred in connection with the agreed
disposal of the Air Handling business (4.5) (4.3)
Reclassification of foreign currency translation
reserve 3.7 3.7
Income tax expense on gain (0.5) (2.0)
Gain on sale after income tax 70.3 69.0
----------------------------------------------------- ----------- -------------
10. Reconciliation of operating profit to cash generated from
operating activities
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBPm GBPm GBPm
-------------------------------------- ----------- ----------- -------------
Loss before tax from continuing
operations (1.6) (125.4) (202.3)
Profit before tax from discontinued
operations - 71.8 72.0
-------------------------------------- ----------- ----------- -------------
Loss before tax (1.6) (53.6) (130.3)
Depreciation 33.7 36.1 68.4
Net finance costs 10.6 22.5 34.6
Amortisation of computer software 1.9 2.4 5.4
Amortisation of acquired intangibles 2.3 2.8 5.6
Impairment of computer software - - 15.1
Impairment of property, plant
and equipment - - 3.5
Impairment of goodwill - 42.8 45.4
Impairment of acquired intangibles - - 1.9
Impairment of right-of-use asset 0.4 - 10.2
Profits and losses on agreed sale
or closure of non-core businesses
and associated impairment charges - (72.2) (71.6)
(Loss)/profit on sale of property,
plant and equipment (0.2) (0.5) 0.7
Gain on termination of lease - (0.3) -
Share-based payments 1.1 - 0.2
Gains on derivative financial
instruments (0.2) (1.8) (1.5)
Net foreign exchange differences (0.1) (0.2) 0.2
(Decrease)/increase in provisions (6.2) (1.1) 11.3
Working capital movements (39.7) (5.4) (42.1)
-------------------------------------- ----------- ----------- -------------
Cash generated from/(used in)
operating activities 2.0 (28.5) (43.0)
-------------------------------------- ----------- ----------- -------------
11. Reconciliation of net cash flow to movements in net debt
Six months Six months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
GBPm GBPm GBPm
--------------------------------------- ----------- ----------- -------------
(Decrease)/increase in cash and
cash equivalents in the period (56.0) 40.7 68.4
Cash flow from decrease in debt 40.9 93.0 183.0
--------------------------------------- ----------- ----------- -------------
(Increase)/decrease in net debt
resulting from cash flows (15.1) 133.7 251.4
Recognition of deferred consideration (1.1) - (0.9)
Non-cash items* (34.5) (18.6) (39.3)
Exchange differences (0.5) (1.5) 6.0
--------------------------------------- ----------- ----------- -------------
(Increase)/decrease in net debt
in the period (51.2) 113.6 217.2
Net debt at beginning of the period (238.2) (455.4) (455.4)
--------------------------------------- ----------- ----------- -------------
Net debt at end of the period (289.4) (341.8) (238.2)
--------------------------------------- ----------- ----------- -------------
* 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, the movement in cash restricted for use in relation to the
asset backed funding arrangement implemented in relation to the UK
defined benefit pension plan (2020 only) and non-cash movements in
relation to lease liabilities.
Net debt is defined as follows:
31 December
30 June 2021 30 June 2020 2020
GBPm GBPm GBPm
---------------------------------- ------------- ------------- ------------
Non-current assets:
Derivative financial instruments 0.8 4.5 0.1
Lease receivables 3.2 4.0 3.6
Current assets:
Derivative financial instruments 0.2 0.7 -
Lease receivables 0.7 0.8 0.7
Cash at bank and on hand 173.9 197.3 235.3
Current liabilities:
Lease liabilities (50.9) (54.6) (50.6)
Private placement notes - (48.3) -
Deferred consideration (1.0) - (0.5)
Other financial liabilities (0.4) (0.5) (0.5)
Derivative financial instruments - (0.1) (0.5)
Non-current liabilities:
Lease liabilities (206.7) (224.5) (211.6)
Bank loans (68.2) (67.2) (67.7)
Private placement notes (138.5) (149.4) (144.5)
Deferred consideration (1.0) - (0.4)
Derivative financial instruments (0.6) (3.2) (0.4)
Other financial liabilities (0.9) (1.3) (1.2)
---------------------------------- ------------- ------------- ------------
Net debt (289.4) (341.8) (238.2)
---------------------------------- ------------- ------------- ------------
12. Financial instruments fair value disclosures
At the balance sheet date, the Group held the following
financial instruments at fair value:
31 December
30 June 2021 30 June 2020 2020
GBPm GBPm GBPm
---------------------------------- ------------- ------------- ------------
Financial assets
Derivative financial instruments 1.0 5.2 0.1
---------------------------------- ------------- ------------- ------------
1.0 5.2 0.1
---------------------------------- ------------- ------------- ------------
Financial liabilities
Derivative financial instruments 0.6 3.3 0.9
---------------------------------- ------------- ------------- ------------
0.6 3.3 0.9
---------------------------------- ------------- ------------- ------------
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 also determined using the discounted
cash flow method.
The carrying value of financial assets and liabilities that are
recorded at amortised cost in the accounts is approximately equal
to their fair value.
13. Called up share capital
31 December
30 June 2021 30 June 2020 2020
GBPm GBPm GBPm
------------------------------------------ ------------- ------------- ------------
Authorised:
1,390,000,000 ordinary shares
of 10p each (30 June 2020: 800,000,000;
31 December 2020: 1,390,000,000) 139.0 80.0 139.0
------------------------------------------ ------------- ------------- ------------
Allotted, called up and fully
paid:
1,181,556,977 ordinary shares
of 10p each (30 June 2020: 591,556,982;
31 December 2020: 1,181,556,977) 118.2 59.2 118.2
------------------------------------------ ------------- ------------- ------------
On 10 July 2020 the Group completed an equity raise, with
589,999,995 new ordinary shares issued for gross proceeds of
GBP165m. 587,901,900 of the shares were issued using a cash box
structure, such that merger relief was available under the
Companies Act 2006, section 612. In this circumstance, no share
premium was recorded and the GBP105.6m excess of the net proceeds
over the nominal value of the share capital issue was recorded as a
merger reserve. The proceeds of this issue were used to partially
prepay private placement notes, to pay professional and lender fees
relating to the equity raise and debt restructuring and to provide
working capital flexibility. Consequently, the merger reserve
qualifies as distributable.
The other 2,098,095 of shares were issued directly to senior
management, not within the cash box structure, and the excess of
the proceeds over the nominal value of the share capital of GBP0.4m
was credited to the share premium account.
Professional fees of GBP13.1m incurred and directly related to
the equity raise were deducted from the merger reserve (as no share
premium recorded due to the use of the cash box structure as noted
above), resulting in a net increase to the merger reserve of
GBP92.5m.
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
2020: nil).
Capital reduction
On 24 June 2021 the Group completed the cancellation of its
share premium account, which was approved by shareholders at the
Annual General Meeting on 13 May 2021 and sanctioned by the High
Court of England and Wales on 16 June 2021. The capital reduction
results in the transfer of GBP447.7m from share premium account to
retained profits/(losses) and creates distributable reserves.
14. 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 2019
which was concluded at the end of March 2021.
The IAS 19 valuation conducted as at 31 December 2020 has been
updated to reflect current market conditions, and as a result an
actuarial gain of GBP5.2m 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
2021 is GBP17.2m (30 June 2020: GBP33.0m; 31 December 2020:
GBP25.1m). The movement in the period relates principally to the
actuarial gain of GBP5.2m together with the recognition of the
scheduled annual contribution of GBP2.5m.
15. Interim dividend
No interim dividend is declared for the period (30 June 2020 and
31 December 2020: 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
2020.
16. 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 2021, the Group incurred expenses of
GBP0.2m (30 June 2020: GBP0.4m; 31 December 2020: GBP0.5m) on
behalf of the SIG plc Retirement Benefits Plan, the UK defined
benefit pension scheme.
The Group has not identified any other material related party
transactions in the six month period to 30 June 2021.
17. 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 2021 financial
year remain consistent with those set out in the Strategic Report
on pages 30 to 35 of the Group's 2020 Annual Report and Accounts.
These risks and uncertainties include, but are not limited to:
(1) employee attraction, retention and engagement;
(2) health and safety;
(3) delivering business change;
(4) cyber security;
(5) data quality and governance;
(6) market downturn;
(7) systems failure;
(8) business growth;
(9) delivering the customer experience; and
(10) environmental, social and governance.
The primary risks affecting the Group's performance for the
remaining six months of the year are the risks of market downturn
and business growth, in particular the level of market demand in
the markets in which SIG operates, the potential impact of
materials shortages and the potential impact of a further wave of
the Covid-19 pandemic. 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 "Group outlook" section of the Trading Review details the
current assessment of the markets in which the Group operates.
18. Contingent liabilities
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 GBP13.8m (30 June 2020:
GBP13.4m; 31 December 2020: GBP14.1m). Of this amount, GBP5.0m (30
June 2020: GBP8.0m; 31 December 2020: GBP5.0m) 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 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
GBP1.2m. 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.
Commitments
At 30 June 2021 the Group is committed to licence costs in
relation to the SAP implementation project and other licence fees
of GBP10.7m (31 December 2020: GBP14.8m). GBP0.3m (31 December
2020: GBP0.3m) of this is expected to be capitalised as part of the
SAP implementation, GBP7.4m (31 December 2020: GBP11.4m) is
recognised as an onerous contract provision, with GBP3.3m (31
December 2020: GBP3.4m) remaining to be recognised in the income
statement over the period from when the projects go live to
2023.
19. Seasonality
The Group's operations are not normally affected by significant
seasonal variations between the first and second halves of the
calendar year. In 2020 the whole year performance was impacted by
the Covid-19 pandemic and in particular the temporary closure of
operations in the UK and Ireland in the first half of the year. In
2019, the period to 30 June accounted for 51% of the Group's
underlying annual revenue. The "Group outlook" section of the
Trading Review details the current assessment of the expected
second half performance for 2021.
20. Non-statutory information
The Group uses a variety of alternative performance measures,
which are non-IFRS, to assess the performance of its operations.
The Group considers these performance measures to provide useful
historical financial information to help investors evaluate the
underlying performance of the business.
These measures, as shown below, are used to improve the
comparability of information between reporting periods and
geographical units, to adjust for Other items or to adjust for
businesses identified as non-core to provide information on the
ongoing activities of the Group. This also reflects how the
business is managed and measured on a day-to-day basis. Non-core
businesses are those businesses that have been closed or disposed
of or where the Board has resolved to close or dispose of the
businesses by 30 June 2021.
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. In
addition, maximum net debt is one of the primary covenants
applicable to the Group's debt facilities. For the purpose of
covenant calculations, net debt is stated before the impact of IFRS
16. The different net debt definitions used are as follows:
31 December
30 June 2021 30 June 2020 2020
Note GBPm GBPm GBPm
---------------------------------------- ----- ------------- ------------- ------------
Reported net debt 11 289.4 341.8 238.2
Lease liabilities recognised in
accordance with IFRS 16 (234.6) (254.9) (237.0)
Lease receivables recognised in
accordance with IFRS 16 3.9 4.8 4.3
Other financial liabilities recognised
in accordance with IFRS 16 (1.2) (1.7) (1.4)
---------------------------------------- ----- ------------- ------------- ------------
Net debt excluding impact of IFRS
16 57.5 90.0 4.1
Loss on debt modification recognised
in accordance with IFRS 9 (8.9) (11.3) (10.1)
---------------------------------------- ----- ------------- ------------- ------------
Net debt on frozen GAAP basis 48.6 78.7 (6.0)
---------------------------------------- ----- ------------- ------------- ------------
Other covenant financial indebtedness 5.1 5.4 5.1
Foreign exchange adjustment 0.6 (1.9) (0.5)
---------------------------------------- ----- ------------- ------------- ------------
Covenant net debt 54.3 82.2 (1.4)
---------------------------------------- ----- ------------- ------------- ------------
b) 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 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.
UK UK Total France France Total Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- --------- ------- --------
Statutory
revenue for
the
period to 30
June 2021 239.3 199.2 438.5 101.1 206.4 307.5 194.3 47.1 37.3 83.5 1,108.2
Revenue
attributable
to non-core
businesses - - - - - - - - - - -
Underlying
revenue for
the
period to 30
June 2021 239.3 199.2 438.5 101.1 206.4 307.5 194.3 47.1 37.3 83.5 1,108.2
--------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- --------- ------- --------
Statutory
revenue for
the
period to 30
June 2020 154.9 125.3 280.2 73.8 155.6 229.4 177.1 47.7 33.4 72.3 840.1
Revenue
attributable
to non-core
businesses* - - - - (1.2) (1.2) - - - - (1.2)
Underlying
revenue for
the
period to 30
June 2020 154.9 125.3 280.2 73.8 154.4 228.2 177.1 47.7 33.4 72.3 838.9
--------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- --------- ------- --------
% change year
on year:
Underlying
revenue 54.5% 59.0% 56.5% 37.0% 33.7% 34.8% 9.7% (1.3)% 11.7% 15.5% 32.1%
Impact of
currency - - - 1.7% 1.6% 1.6% 1.4% 1.3% 1.3% 4.2% 1.2%
Impact of
acquisitions (1.7)% (2.0)% (1.8)% - - - - - - - (0.6)%
Impact of
working days 1.2% 1.2% 1.2% (1.1)% (1.1)% (1.1)% - 1.6% 0.9% 1.9% 0.3%
--------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- --------- ------- --------
Like-for-like
sales 54.0% 58.2% 55.9% 37.6% 34.2% 35.3% 11.1% 1.6% 13.9% 21.6% 33.0%
--------------- ------------- ---------- ------- ------------- ---------- ------- -------- -------- --------- ------- --------
* The results for the period to 30 June 2020 have been restated
to include Building Solutions within underlying results consistent
with the current period. See Note 1 for further details.
c) Operating margin
This is used to enhance understanding and comparability of the
underlying financial performance of the Group by period and
segment.
Parent
UK UK Total France France Total Company Total
Distribution Exteriors UK Distribution Exteriors France Germany Benelux Ireland Poland costs Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- --------- ------- -------- --------
Unaudited six
months ended
30 June 2021
Underlying
revenue (Note
3) 239.3 199.2 438.5 101.1 206.4 307.5 194.3 47.1 37.3 83.5 - 1,108.2
Underlying
operating
(loss)/
profit (Note
3) (5.4) 7.9 2.5 6.2 10.8 17.0 2.6 - (0.2) 2.5 (10.8) 13.6
Operating
margin (2.2)% 4.0% 0.6% 6.1% 5.2% 5.5% 1.3% - (0.5)% 3.0% n/a 1.2%
--------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- --------- ------- -------- --------
Unaudited six
months ended
30 June 2020*
Underlying
revenue (Note
3) 154.9 125.3 280.2 73.8 154.4 228.2 177.1 47.7 33.4 72.3 - 838.9
Underlying
operating
(loss)/profit
(Note 3) (27.4) (8.6) (36.0) 1.3 1.6 2.9 (1.3) 1.8 (1.4) 0.6 (9.5) (42.9)
Operating
margin (17.7)% (6.9)% (12.8)% 1.8% 1.0% 1.3% (0.7)% 3.8% (4.2)% 0.8% n/a (5.1)%
--------------- ------------- ---------- -------- ------------- ---------- ------- -------- -------- --------- ------- -------- --------
* The results for the period to 30 June 2020 have been restated
to include Building Solutions within underlying results consistent
with the current period. See Note 1 for further details.
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 2021 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 20. 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 2021 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 and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. 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
Financial Reporting 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".
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.
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 statement in the half-yearly financial report. Our
conclusion is 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 and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. 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
London
20 September 2021
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