SIG Regulatory News (SHI)

8 August 2023

 SIG plc

Results for the six months to 30 June 2023

SIG plc ("SIG", "the Group" or "the Company") today announces its half year results for the six months ended 30 June 2023 ("H1 2023" or "the period").

1. Like-for-like ("LFL") is defined as the growth/(decline) in sales per working day in constant currency excluding any current and prior year acquisitions and disposals. Sales are not adjusted for branch openings or closures.

2. Underlying represents the results before Other items. Other items relate to the amortisation of acquired intangibles, impairment charges, costs related to acquisitions, cloud computing configuration and customisation costs and other specific items.

Financial highlights

· Group revenue of £1,423m, representing flat like-for-like1 ("LFL") revenue versus prior year, reflecting volume declines offset by input price inflation:

o  Weaker trading conditions across all geographies

o  Inflation tailwinds moderated as expected

· Group underlying operating profit of £33m with operating margin of 2.3%

· Disciplined cash management; net debt of £468.8m post‐IFRS 16 and £176.2m pre‐IFRS 16

Operational highlights

· Resilient LFL revenue performance by our largest Operating Companies in challenging markets, with UK Interiors up 4% and France Exteriors up 2%

· Margins temporarily impacted by challenging market conditions and higher than normal operating cost inflation, but resilient in France at c5%, and Germany and UK Interiors improving margins year-over-year

· Continuing progress in all geographies in improving underlying operational performance in H1, with initiatives focusing on delivering an improved operating margin in near and medium term

· Strategic actions taken over last three years mean that the Group is in a strong position, operationally and financially, to navigate current markets

Outlook

· Market conditions expected to remain challenging across the Group's geographic end markets in the second half, alongside further moderation in price inflation

· Second half expected to see greater benefit from productivity initiatives, and the Group's full year underlying operating profit is expected to be in line with the Board's recently revised guidance

· Strong positive free cash flow expected in H2 as seasonal working capital unwinds and working capital discipline continues to deliver benefits

· Board remains confident in improving the Group's operating margin to 5% in the medium term

The Group will hold a Capital Markets presentation in London on 23 November 2023, including an update on strategy from CEO Gavin Slark, who joined the company in February 2023. Further details for investors and analysts will follow in due course.

Commenting, Gavin Slark, Chief Executive Officer, said:

"Our performance in the first half reflects the challenging market conditions we are currently facing, with the Group's LFL revenue growth flat year-on-year. Despite these conditions, I'm very pleased with the progress we are making on many fronts to improve the business, notably with the initiatives across our Operating Companies to improve our ability to drive higher levels of profitable growth when market conditions recover. In the first half these initiatives reflected a continuing focus on our people, our branches, and our productivity, creating a platform that will allow us to capture and maximise the significant opportunities I see for the medium term.

"Looking ahead, while we expect market conditions in the second half to remain difficult, we remain confident the business will grasp the opportunities it has to continue to improve its underlying operational performance. This will, in turn, deliver higher levels of profitability as we drive towards our medium-term margin target of 5%. The Group is financially and commercially well placed to drive meaningful shareholder value in the medium and long term."

A live presentation and Q&A session, hosted by Gavin Slark, CEO, and Ian Ashton, CFO, will take place at 10am UK time today at the offices of FTI Consulting. The presentation and Q&A session will be webcast live, and a recording of both will be available after the event.

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Enquiries

OPERATIONAL REVIEW

Strategic progress

We operate across six European geographies with a total branch network of c440 sites and over 7,000 people. During the first half of 2023, we have continued with a number of internal programmes across these geographies focused on improving our Group operating margin to 5% in the medium term. While market conditions have provided a near-term headwind to margin improvement, the initial effects of these initiatives have partially offset the negative impact in the period of demand weakness and operating cost inflation. We will continue to prioritise these initiatives in the second half and, as we manage through the economic cycle, we expect further benefits from the focus on branch performance, on efficiency and productivity, and on our high levels of employee engagement.

In the UK our Exteriors business has continued its programme of upgrading and refreshing its branches and retail counters, and launched new branch and employee recognition schemes in H1 to continue to support and drive performance. The business also continued to expand its solar category offering. In the UK Interiors business, we have been embedding new IT tools to support branch sales and margin, continuing initiatives to develop product mix into higher margin categories, and working to further improve employee engagement. The UK Interiors margin has continued to improve, increasing by 0.6% over H1 2022, despite the demand backdrop, and this reflects the progress made with initiatives such as these as well as the changes that have taken place over the last two years. We are confident that this business will continue to deliver further margin improvement over time, especially when demand normalises.

In France, Larivière, our specialist roofing business, has made good progress on product category expansion to support medium term margin improvement. In H1, Larivière expanded products in own-brand lines in slate and our Irondel range of products, and expanded its solar product offering. In LiTT, our French Interiors business, we have continued to focus on performance management across the branch network and sales execution along with employee engagement. Over the past two years we have upgraded the branch network across LiTT, including opening new branches and making some strategic branch relocations to capture growth in new areas. In the period we also focused on driving up sales and performance at these new and refreshed locations.

In Germany, we have continued to focus on branch performance and operational productivity metrics, as well as further developing our product mix in technical insulation and flooring. In our smaller Operating Companies (Ireland, Poland and Benelux) strategic development initiatives have included new higher margin category sourcing in Ireland, and in Poland the further development of operational productivity tools and a continued focus on maintaining very strong employee engagement. In Benelux our new Managing Director starts in October and we are confident he will build on recent early progress and reinvigorate that business.

Trading overview

Group LFL revenue was flat year‐on‐year in the period, with the continued positive tailwind from input price inflation being offset by lower volumes. The overall impact of inflation added an estimated 9% to Group revenue growth in the period. As expected, the year-on-year impact of price inflation moderated during H1 compared to the impact during 2022, as we annualise some of the significant prior year price increases.

Reported Group revenue was 5% higher in the period, including 3% from acquisitions, together with 2% in aggregate from movements in exchange rates and working days.

Market conditions were challenging through H1 across both our EU based businesses (58% of revenue) and in the UK (42% of revenue). This included a softening in demand in France in the last two months of the period, when product volumes to new-build construction projects were weaker in both residential and commercial. Despite that, we reported positive sales growth in both of our French businesses. Demand was also notably weaker in Germany in May and June, which was caused by softness in new-build markets. This has included commercial new-build, the majority of our end-market in Germany.

In the UK, our Interiors business experienced weaker market demand, most notably in residential new-build, but continued to improve its competitive position. The business also services the commercial and public building sectors, which were slightly less impacted than residential. UK Exteriors also experienced weaker volumes, but was also up against particularly strong comparators, notably in its Building Solutions business.

Volumes and market conditions were notably weaker in Poland and Ireland over the period as a whole, with both also coming up against especially strong prior year comparators. Our Benelux business continued the gradual recovery of market share lost over previous years.

Whilst we remain focused on ensuring the Group is positioned to capture the long-term growth opportunities across our markets, in the first half we have also ensured we are operating as efficiently as possible during the current period of market weakness. We will continue to focus on cost discipline and on ensuring that we have the appropriate level of cost and investment in place, in the right areas.

Outlook

As previously reported in our Trading Update on 5 July 2023, we expect weak and uncertain demand conditions throughout the rest of the year, along with a continued, but further moderating, revenue tailwind from input price inflation.

We continue to expect the second half to benefit from ongoing productivity initiatives and an expected profit of around £3m on one specific property move. The Group's full year underlying operating profit is therefore expected to be in line with the Board's recently revised guidance.

Across the remainder of the year and beyond, we will continue to progress the strategic and operational initiatives which underpin our ambition for the Group.

As a European market leader in the supply of specialist insulation, and with 80% of the Group's sales covering insulation and the wider building envelope, we are well‐positioned to benefit from long‐term structural growth drivers, notably sustainable construction and decarbonisation of buildings. We also remain confident in our ability to further grow our market positions, and to improve our profitability when market conditions recover. The Board remains confident in our growth path to 5% operating margin in the medium term.

FINANCIAL REVIEW

Revenue

Group revenue of £1,423m (H1 2022: £1,359m) was 5% higher on a reported basis, including 3% from acquisitions, 2% from movements on exchange rates and only a marginal impact from differences in numbers of working days. LFL revenue was flat year-on-year in the period, with the pass through of product price inflation being offset by volume declines in the majority of our key markets. We estimate the impact of inflation on revenue growth for the half year was approximately 9%, with this impact reducing during the period.

Profit

Underlying and statutory gross profit increased 2.6% to £364.8m (H1 2022: £355.7m) with a resilient gross profit margin of 25.6% (H1 2022: 26.2%). The slight reduction in gross margin was due partly to strong comparatives, especially in our UK Exteriors business, and also pricing pressure in the current difficult demand environment. We are confident the businesses are managing these dynamics effectively.

The Group's underlying operating costs were £332.1m (H1 2022: £313.2m). The increase was primarily due to the impact of inflation on operating costs, with the biggest impact being on wages and salaries, and property and energy costs. 

As a result, Group underlying operating profit was £32.7m (H1 2022: £42.5m), at an operating margin of 2.3% (H1 2022: 3.1%). Reported operating profit was £30.0m (H1 2022: £39.8m) after Other items of £2.7m (H1 2022: £2.7m), which are set out further below.

Segmental analysis

UK

Reported revenue in UK Interiors, a specialist insulation and interiors distribution business, increased by 15% to £381.6m (H1 2022: £331.9m). This included 10% from the acquisition of Miers in 2022, as well as a 1% impact from working days. LFL revenue grew 4% supported by a strengthened market position and from input price inflation. The higher revenue drove an operating profit of £6.6m for the half year (H1 2022: £3.8m) with the business benefiting from driving higher sales through the existing branch network capacity.

Reported revenue in UK Exteriors, a specialist roofing merchant, which also includes our Building Solutions business, declined by 1%, with LFL revenue down 2% to £221.1m (H1 2022: £224.0m). This was due mainly to reduced demand in the RMI market, though still benefiting from purchase price inflation. The decrease in revenue, together with a reduction in gross margin, partly due to high prior year comparators, and operating cost inflation, resulted in a reduction in operating profit to £6.0m (H1 2022: £11.1m).

France

France Interiors, a structural insulation and interiors business trading as LiTT, saw reported revenue increase by 5% to £116.4m (H1 2022: £111.2m), and by 1% on a LFL basis. This was driven by continued input price inflation pass through. Revenue growth was offset by increased margin pressure and higher operating costs and these resulted in a £1.0m decrease in operating profit to £6.4m (H1 2022: £7.4m).

Reported revenue in France Exteriors, a specialist roofing business trading as Larivière, increased 4% to £249.7m (H1 2022: £239.8m), and by 2% on a LFL basis. Revenue benefited from pass through of input price inflation, while demand and volumes were lower due to reduction in consumer spending following interest rate increases, as well as softening of the new build market. The increase in revenue was offset by a reduction in some supplier rebates due to lower volumes and increased operating costs due to inflation, resulting in an operating profit decrease of £3.2m to £12.1m (H1 2022: £15.3m). During H2 the Larivière business will move into a new leased headquarters in Angers, which will better support the needs of the business going forward. We have owned the existing office building in Angers for many years, and the sale of it will result in an expected profit on disposal in H2 of around £3m.

Germany

Reported revenue in WeGo/VTi, our specialist insulation and interiors distribution business in Germany, increased by 5% to £234.8m (H1 2022: £224.5m). This included a 1% impact from the acquisition of Thermodämm in 2022. LFL revenue was flat year-on-year, with pass through of input price inflation wholly offset by a decline in volumes, reflecting weaker market conditions, particularly in new build. Good margin management resulted in an improved operating profit of £9.6m (H1 2022: £8.3m).

Poland

In our Polish business, a market leading distributor of insulation and interiors, revenue decreased to £110.2m (H1 2022: £115.1m), representing a 9% decline on a LFL basis, due to weaker building activity overall and some modest input price deflation. This, together with operating cost inflation, resulted in an operating profit of £2.7m (H1 2022: £5.9m).

Benelux

Reported revenue from the Group's business in Benelux increased by 11% to £62.1m (H1 2022: £56.1m) with LFL revenue up 7%. Revenue benefited from increased volumes as the business recovered some market share from prior years' losses, while the turnaround of the business remains in progress as operational issues are tackled. Despite recent market share recovery, it continues to trade with lower market share than it had previously. The first half performance resulted in an operating loss of £1.6m (H1 2022: £1.7m loss).

Ireland

Our business in Ireland is a specialist distributor of interiors and exteriors, as well as a specialist contractor for office furnishing, industrial coatings and kitchen/bathroom fit out. Reported revenue decreased by 15% to £47.5m (H1 2022: £55.9m), and by 18% on a LFL basis as a result of softening demand in the Irish market, which was greater than we had anticipated. Operating profit reduced as a result by £2.5m to £0.5m (H1 2022: £3.0m), reflecting the lower revenue, combined with operating cost inflation.

Reconciliation of underlying to statutory result

Other items, being items excluded from underlying results, during the period amounted to £2.8m (H1 2022: £2.7m) on a pre-tax basis and are summarised in the table below:

Other items are disclosed separately in order to provide a better indication of the underlying earnings of the Group. Further details are provided in Note 4 of the Interim Financial Statements.

Taxation

Tax for the six month period ended 30 June 2023 is determined based on applying full year estimates of the annual effective tax rate for individual jurisdictions to the underlying profit before tax for the six month period. This results in a tax charge of 53.3% on underlying profit before tax (30 June 2022: 36.3%; 31 December 2022: 27.9%).

Tax losses cannot be surrendered or utilised cross border, and the Group is therefore subject to tax in some countries and not in others. Tax losses in the UK and Benelux businesses are not currently recognised as deferred tax assets, which impacts the overall effective tax rate. The relative proportions of these losses compared to the total Group underlying profit before tax is also higher for H1 2023 compared to prior periods, and the combination of these factors has led to the increase in the overall average effective tax rate in the current period.

Pensions

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.

The IAS 19 valuation conducted as at 31 December 2022 has been updated to reflect current market conditions, and as a result an actuarial gain of £0.1m 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 2023 is £21.0m (30 June 2022: £8.1m; 31 December 2022: £23.0m), including £13.5m deficit in the UK scheme. The movement in the period relates principally to the actuarial gain of £0.1m together with the scheduled annual contribution in the UK of £2.5m.

Financial position

Overall, the net assets of the Group increased by £5.3m to £273.1m from £267.8m at 31 December 2022, with a cash position at the period end of £106.3m (30 June 2022: £113.2m; 31 December 2022: £130.1m) and net debt (post-IFRS 16) of £468.8m (30 June 2022: £431.8m; 31 December 2022: £444.0m). Net debt on a pre-IFRS 16 basis was £176.2m (30 June 2022: £164.4m, 31 December 2022: £160.3m).

The movement in post‐IFRS 16 net debt is due mainly to the movement in cash noted below. An increase in net lease liabilities and receivables of £8.3m due to lease renewals and extensions mainly in the UK and Germany, is offset by a favourable currency movement of £8.2m on bond debt. The movement in pre-IFRS net debt is not affected by the movement on leases.

Cash flow

1. Free cash flow represents the cash available after supporting operations, including capex and the repayment of lease liabilities, and before acquisitions and any movements in funding.

During the period, the Group reported an improved free cash outflow of £20.3m (H1 2022: £31.4m outflow) on a year-on-year basis. This improvement was a result of the lower underlying operating profit in the period being more than offset by a lower seasonal movement in working capital, a result of continued discipline in working capital and cash management. Capex during the period was £5.7m (H1 2022: £6.9m). "Other" included the add back of non-cash P&L items and provision movements of £0.8m, and proceeds on sale of property, plant and equipment of £0.8m.

The key factors driving the working capital result in the period were the usual sales seasonality, lower volumes year-on-year and year-over-year inflation. 

Financing and funding

The Group's debt funding comprises €300m of 5.25% fixed rate senior secured notes and an RCF of £90m. These mature and expire in November 2026 and May 2026 respectively. The secured notes are subject to incurrence-based covenants only, and the RCF has a leverage maintenance covenant set at 4.75x which only applies if the facility is over 40% drawn at a quarter end reporting date. The RCF was undrawn at 30 June 2023.

The Group's liquidity position remained robust throughout H1 2023, and at the end of the period stood at £196m, consisting of cash of £106m and the £90m undrawn RCF noted above. On the basis of current forecasts the Group is expected to remain in compliance with all banking covenants throughout the forecast period to 30 September 2024.

Dividend

No interim dividend will be paid for 2023.  However, continued successful execution of the strategy, including sensible investment where appropriate, will return the Group to sustainable, profitable growth and cash generation, supporting a range of capital allocation priorities. The Board reiterates its commitment to reinstating a dividend, appropriately covered by underlying earnings, once it is appropriate to do so.

Responsibility Statement

We confirm to the best of our knowledge that:

(a) the condensed interim set of financial statements has been prepared in accordance with UK adopted IAS 34 "Interim Financial Reporting";

(b) the Interim Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the Interim Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board

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 2023 (unaudited)

1 Underlying represents the results before Other items.

2 Other items have been disclosed separately in order to give an indication of the underlying earnings of the Group. Further details are disclosed in Note 4.

3 Impairment losses on financial assets (trade receivables and lease receivables), as determined in accordance with IFRS 9 Financial Instruments, previously included in other operating expenses in the period ended 30 June 2022, are shown separately, and the prior year comparative for the period ended 30 June 2022 has been updated to present on a consistent basis.

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2023 (unaudited)

Condensed Consolidated Balance Sheet

As at 30 June 2023 (unaudited)

1  The Condensed Consolidated Balance Sheet at 31 December 2022 has been restated as a result of the finalisation of the acquisition accounting fair values, as explained in Note 1.

Condensed Consolidated Cash Flow Statement

For the six months ended 30 June 2023 (unaudited)

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2023 (unaudited)

The share option reserve represents the cumulative equity-settled share option charge under IFRS 2 "Share-based payment" less the value of any share options that have been exercised.

The hedging and translation reserves represent movements in the Condensed Consolidated Balance Sheet as a result of movements in exchange rates and movements in the fair value of cash flow hedges which are 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 7 August 2023.

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 2022, which have been applied consistently throughout the current and preceding periods.

The Condensed Interim Financial Statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The interim results to 30 June 2023 and 30 June 2022 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 2022 prepared in accordance with UK adopted international accounting standards. Those accounts have been delivered to the Registrar of Companies. The Auditor's Report was (i) unqualified, (ii) included no matters to which the auditor drew attention by way of emphasis without modifying their report and (iii) did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006 in relation to the financial statements.

The preparation of condensed interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may subsequently differ from those estimates. The areas of critical accounting judgements and key sources of estimation uncertainty set out on page 149 to 150 of the 2022 Annual Report and Accounts are considered to continue and be consistently applied.

Restatement of 2022 Consolidated Balance Sheet

The fair values of the identifiable assets and liabilities acquired in relation to the acquisition of Miers Construction Products Limited in 2022 have been finalised during the period. This resulted in a decrease in the current tax asset of £0.3m, an increase in the current tax liability of £0.3m and a corresponding increase in the goodwill recognised of £0.6m (see Note 8). This has been accounted for retrospectively and the Condensed Consolidated Balance Sheet at 31 December 2022 has been restated to reflect this. This had no impact on profit or loss, cash flows or net assets for the year ended or as at 31 December 2022. 

Going concern

The Directors have considered the Group's forecasts which support the view that the Group will be able to continue to operate within its banking facilities and comply with its banking covenants for the period to 30 September 2024. The Group has committed facilities in place to November 2026 (senior secured notes) and a revolving credit facility (RCF) until May 2026. The senior secured notes are subject to incurrence based covenants only, and the RCF has a leverage maintenance covenant which is only effective if the facility is over 40% drawn at a quarter end reporting date. The RCF was undrawn as at 30 June 2023.

The Directors have considered the principal risks and uncertainties that could potentially impact the Group's ability to fund its future activities and adhere to its banking covenants, including:

· High levels of inflation, and current economic and political uncertainties, potentially impacting market demand;

· Potentially recessionary conditions in the coming year; and

· Material shortages impacting our ability to meet demand and hence having an impact on forecast sales.

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. Under a scenario including a combination of the above, resulting in a 66% reduction in underlying operating profit from the base forecast for the going concern period, the analysis shows that sufficient cash would be available without triggering a covenant breach.

The Directors have considered the impact of climate related matters on the going concern assessment and this is not expected to have a significant impact on the Group's going concern assessment to 30 September 2024.

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 2024 and the Directors therefore consider it appropriate to continue to adopt the going concern basis in preparing the 2023 Condensed Interim Financial Statements.

New standards, interpretations and amendments adopted by the Group

Several amendments apply for the first time in 2023 but do not have an impact on the Condensed Interim Financial Statements of the Group. The Group has adopted the Amendments to IAS12 "International Tax Reform: Pillar Two Model Rules" issued in May 2023 and has applied the temporary mandatory exception from recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

2. Revenue from contracts with customers

The Group's revenue is analysed by type and nature as follows:

1 Inter-segment revenue is charged at the prevailing market rates.

1 Inter-segment revenue is charged at the prevailing market rates.

1 Inter-segment revenue is charged at the prevailing market rates.

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.