Interim Results
SIG PLC
3 September 2001
P R E S S R E L E A S E
3 September 2001
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2001
SIG plc, Europe's largest specialist distributor of Insulation and Related
Products, Ceilings and Partitioning and Roofing, reports record interim
results with sales and operating profits ahead in all three regions of the UK,
mainland Europe and the USA.
* Sales in the first half up 11% to £498m (2000: £447m).
* Operating profit before amortisation of goodwill up 13% to £26.2m (2000: £
23.3m).
* Profit before tax has increased 7% to £23m (2000: £21.6m).
* Earnings per share increased 7% to 13.3p (2000: 12.4p).
* Interim dividend up 9% to 3.7p (2000: 3.4p).
* David Williams to take over as Chief Executive from 1 January 2002 when
Bill Forrester, the present Chief Executive, retires.
* Today SIG also announces the acquisition of Capco Holdings Ltd, a
distributor of Insulation and Related Products, Ceilings and Partitioning
and Roofing, with 19 branches in the UK and Eire. Total consideration is £
26.7m.
Barrie Cottingham, Chairman of SIG, commenting on the results, said:
'Sales have increased in every country and we believe that we have further
strengthened our market position in each of our three core sectors of
Insulation and Related Products, Ceilings and Partitioning and Roofing.'
'Whilst we could not expect to avoid the effect of any further economic slow
down, we believe that the broad spread of our activities and our proven
ability to continue to gain market share justifies our confidence in the
future. We expect to make further progress in the second half year.'
Enquiries:
Bill Forrester, Chief Executive SIG plc today 020 7251 3801
David Williams, Deputy Chief Executive thereafter 0114 285 6300
Frank Prust, Finance Director
Faeth Finnemore/Gordon Simpson Finsbury 020 7251 3801
Further information is available from SIG's website www.sigplc.co.uk. A
webcast of the results presentation will be available from Tuesday 4 September
2001.
Print resolution images are available for download from
www.piranhaphotography.com/SIG
CHAIRMAN'S STATEMENT
INTERIM RESULTS 2001
In the first half of 2001 we have increased sales and profits in all three
regions in which we operate; the UK, mainland Europe and the USA. This
improvement is chiefly organic, with only a modest contribution coming from
recent acquisitions.
Overall our operating margin has been maintained, with increases in the UK and
USA. In Europe the margin was reduced very slightly due to difficult market
conditions in Poland and Germany.
Sales have increased in every country and we believe that we have further
strengthened our market position in each of our three core sectors of
Insulation and Related Products, Ceilings and Partitioning and Roofing.
These results underline the benefits of our broad geographic and market sector
spread, and the Group's ability to perform consistently well. The downturn in
Germany and Poland has been countered by particularly strong performances in
UK Roofing, and in Ceilings and Partitioning in the UK, France and the
Netherlands.
Results and Dividends
* Sales in the first half have increased by 11% to £498m (2000: £447m)
* Operating Profits before amortisation of goodwill for the period are 13%
higher at £26.2m (2000: £23.3m)
* Profit before Tax is 7% higher at £23.0m (2000: £21.6m)
* Earnings per share for the half year are 7.3% higher at 13.3p compared with
12.4p in 2000
* The Balance Sheet remains sound with gearing at 53% compared with 51% at
December 2000 and interest cover is strong at 12 times. Since 30 June 2001,
we have increased our facilities and our debt profile has been improved by
the raising of £85m of seven to ten year fixed rate finance via a US
Private Placement.
An interim dividend of 3.7p (2000: 3.4p) has been declared, an increase of 9%,
reflecting the Group's strong performance and the Board's confidence in the
future. The dividend is payable on 16 November 2001 to shareholders on the
register at 24 October 2001.
Review of Operations
UK
SALES grew strongly, up by a total of £30.2m to £302m, an increase of 11.1%
over the first half of 2000. This excellent sales performance, which was
largely organic, resulted in an improvement in OPERATING PROFITS of 13%.
Market demand grew modestly with price inflation at an average of 2% across
the range.
In INSULATION AND RELATED PRODUCTS, sales and operating profits increased in a
market where prices strengthened slightly, making a welcome turn-round from
the deflation of previous years. We also saw some benefit from increased
Government funding for insulation upgrading programmes in existing housing.
In the ROOFING DIVISION sales and profits grew substantially, with strong
organic growth supplemented by small bolt-on acquisitions. This division is
especially focused on repairs, maintenance and improvements (RM&I) work and we
gained share in a market where demand and prices slightly improved. The
programme of improvements to the branch network continued during the period
and we invested further in sales resources and improved management reporting
systems.
In CEILINGS & PARTITIONING we continued to make excellent progress with sales
and profits well ahead, and operating margins maintained. The market for
interior fit-out of new and existing commercial buildings was reasonably
strong and we have introduced new ranges of office partitioning products to
further strengthen our position, especially in the upper quality, higher
specification sector.
In the small but growing SAFETY PRODUCTS business, sales increased and we made
a substantial investment in the materials handling and logistics functions to
improve customer service and facilitate future growth.
EUROPE
SALES across our mainland European operations rose by 11% over prior year and
were increased in each country in both local currency and in sterling.
OPERATING PROFITS were up 2%, though overall the operating margin declined
slightly, influenced by results in Germany and Poland.
In FRANCE, our core INDUSTRIAL distribution business performed strongly,
increasing sales, margins and profits in a market where demand from specialist
industrial products improved over prior year. The CEILINGS AND PARTITIONING
division in France traded well, increasing sales and profits in market
conditions which remained positive, and we benefited from the continued
development of branches opened in 2000.
In GERMANY, where we are a major supplier to both the INSULATION and CEILINGS
AND PARTITIONING markets, we increased sales overall, but the operating profit
declined due to cost increases and a small reduction in the gross margin. Our
performance was in line with our expectations for the period. Demand from the
construction and building related markets was down compared with the first
half 2000, especially in new construction. Sales into the repairs and
maintenance market held up better and our specialist industrial insulation
operations have performed strongly. New opportunities in specific areas were
identified and two new, small branches were opened. Both traded above
expectations in the period.
In POLAND, the sharp decline in the new build market, especially in Warsaw
where we have our largest operations, caused a setback in the progress we had
made in 2000 and a small operating loss was incurred. Overall, sales were
slightly up and actions have already been taken on costs in the light of the
very disappointing trading conditions.
In HOLLAND, where we have a significant and growing share of the CEILINGS AND
PARTITIONING market, sales, margins and profits increased. We strengthened our
market position in positive trading conditions, benefiting from the addition
of two new branches.
USA
The industrial INSULATION operations increased sales in the period, despite
demand from the core petro-chemical plants in Texas, Louisiana and Alabama
being below expectations. The continued development of value added products
sales, and an improvement in the operating margin, created a substantial
increase in operating profits.
Acquisitions
We continued to strengthen our UK operations by the addition of three small
bolt-on acquisitions for a total consideration of £10.2m. Each of these was
carefully targeted to strengthen our coverage in specific areas. They
contributed sales of just over £4m in the first half of 2001.
Today we announced the acquisition of Capco Holdings Ltd (Capco) for a total
consideration of £26.7m. Capco is a specialist distributor with 19 branches in
the UK and Eire, with activities spanning our three core business sectors of
Insulation and Related Products, Ceilings and Partitioning and Roofing. This
acquisition is an excellent strategic fit with our existing operations and
offers sound potential for future earnings enhancement. It is a continuation
of our proven strategy of strengthening core activities and extending the
geographic spread of our businesses.
Euro
All our businesses in Eire and Mainland Europe are well advanced in preparing
systems to enable trading to be conducted in the Euro from the beginning of
2002.
Management
In June, we announced that David Williams will become Chief Executive at the
end of 2001 when Bill Forrester, the present Chief Executive, retires. We have
taken the opportunity to strengthen the executive membership of the Group
Board by appointing John Chivers, Managing Director of our Roofing Division.
We also announced that two new non-executive Directors, Nick Paul and Peter
Blackburn, have joined the Board. They replace Tim Kitson and Jim Potter, both
of whom retire in September 2001. I thank both Tim and Jim for their excellent
contribution to the Group during a period of rapid growth. I also take this
opportunity to welcome the new Directors to the Board.
Prospects
Conditions overall in our specific markets are not expected to change
significantly in the second half of 2001 compared with the first half.
Some further weakening of the construction sector in Germany and Poland is
anticipated. In all other areas of Europe, Eire, the UK and the USA we expect
demand and pricing to remain broadly stable. Whilst we could not expect to
avoid the effect of any further economic slow down, we believe that the broad
spread of our activities and our proven ability to continue to gain market
share justify our confidence in the future, and we expect to make further
progress in the second half year.
Summary Consolidated Profit and Loss Account
for the six months ended 30 June 2001
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
Note 2001 2001 2000 2000 2000 2000
£'000 £'000 £'000 £'000 £'000 £'000
Turnover 3 497,640 447,344 931,927
........................... ... ... ...
Operating profit 3 25,124 22,675 50,874
Net interest payable 2,099 1,122 2,703
........................... ... ... ...
Profit before taxation and
amortisation of goodwill 24,136 22,141 49,596
Amortisation of goodwill 1,111 588 1,425
........................... ...... ...... .........
Profit on ordinary
activities
before taxation 23,025 21,553 48,171
Tax on profit on ordinary 7,276 6,803 15,222
activities
........................... ... ... ...
Profit on ordinary
activities
after taxation 15,749 14,750 32,949
Minority interests (all 78 38 207
equity)
Equity dividends 4,387 3,996 12,036
........................... ... ... ...
Retained profit for the 11,284 10,716 20,706
year
........................... ... ... ...
Earnings per share
Basic earnings per share 4 13.3p 12.4p 27.7p
Fully diluted earnings per 4 13.1p 12.3p 27.4p
share
........................... ... ... ...
Earnings per share before
goodwill amortisation
Basic earnings per share 4 14.2p 12.9p 28.9p
Fully diluted earnings per 4 14.0p 12.8p 28.6p
share
........................... ... ... ...
Consolidated Statement of
Total Recognised Gains and Losses
for the six months ended 30 June 2001
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2001 2000 2000
£'000 £'000 £'000
Profit on ordinary activities after
taxation and minority interests 15,671 14,712 32,742
Currency translation differences on
foreign currency net investments (371) (486) 50
............................................ .......... ............ .........
Total recognised gains and losses for
the period 15,300 14,226 32,792
............................................ .......... ............ .........
Summary Consolidated Balance Sheet
as at 30 June 2001
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2001 2000 2000
£'000 £'000 £'000
Fixed assets
Intangible assets 42,897 24,288 36,116
Tangible assets 62,316 56,725 59,078
....................................... ............ ......... .........
105,213 81,013 95,194
....................................... ............ ......... .........
Current assets
Stocks 77,208 69,710 70,204
Debtors 201,647 188,870 172,957
Cash at bank 5,942 5,605 10,509
....................................... ............ ......... .........
284,797 264,185 253,670
Creditors due within one year (201,863) (184,094) (176,066)
....................................... ............ ......... .........
Net current assets 82,934 80,091 77,604
....................................... .......... ......... .........
Total assets less current liabilities 188,147 161,104 172,798
Creditors due after one year (30,285) (24,737) (25,299)
Provision for liabilities and charges (3,388) (3,632) (4,051)
....................................... ............ ......... .........
Net assets 154,474 132,735 143,448
....................................... ............ ......... .........
Capital and reserves (all equity) 154,474 132,735 143,448
....................................... ............ ......... .........
Summary Consolidated Cash Flow Statement
for the six months ended 30 June 2001
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2001 2000 2000
Note £'000 £'000 £'000
Net cash inflow from operating
activities 5 25,531 22,481 52,837
....................................... ............ ............ ..........
Returns on investments and
servicing of finance (2,099) (1,122) (2,703)
....................................... ............ ............ ...........
Taxation (6,202) (3,562) (10,707)
....................................... ............ ............ ...........
Capital expenditure (10,304) (8,819) (17,902)
....................................... ............ ............ ...........
Acquisitions (10,178) (13,896) (29,472)
....................................... ............ ............ ...........
Equity dividends paid (8,040) (7,306) (11,325)
....................................... ............ ............ ...........
Financing 6,081 1,026 1,123
....................................... ............ ............ ...........
Decrease in cash in the period 6 (5,211) (11,198) (18,149)
....................................... ............ ............ ...........
Notes to the Unaudited Interim Results
1. Basis of Preparation of Interim Financial Information
The accounts have been prepared in accordance with the accounting
policies included in the Annual Report for the year ended 31 December
2000, which have been applied consistently throughout the current and
preceding periods.
2. Publication of Non Statutory Accounts
The financial information included in this interim statement does not
constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. The interim results to 30 June 2001 and 2000 are
unaudited. The financial information for the full preceding year is based
on the statutory accounts for the financial year ended 31 December 2000.
Those accounts, upon which the auditors issued an unqualified opinion,
have been delivered to the Registrar of Companies.
3. Segmental Information
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
Geographical analysis 2001 2000 2000
£'000 £'000 £'000
Turnover
- UK 301,987 271,790 559,889
- Europe 156,769 141,226 300,959
- Rest of world 38,884 34,328 71,079
............ ............ ............
Total operations 497,640 447,344 931,927
............ ............ ............
Operating profit
- UK 21,897 19,410 41,000
- Europe 4,304 4,221 12,212
- Rest of world 1,460 924 2,069
- Parent Company (1,426) (1,292) (2,982)
- Amortisation of goodwill (1,111) (588) (1,425)
............ ............ .........
Total operations 25,124 22,675 50,874
............ ............ .........
Turnover and operating profit by destination is not materially different
from these amounts. Turnover and operating profit from acquisitions
during the period have not been reported separately due to their
immateriality to the Group results.
4. Earnings per Share
The calculations of earnings per share are based on the following profits
and numbers of shares:
Basic and diluted before
Basic and diluted goodwill amortisation
Unaudited Audited Unaudited Audited
Six months Year Six months Year
ended ended
ended 30 June 31 Dec ended 30 June 31 Dec
2001 2000 2000 2001 2000 2000
£'000 £'000 £'000 £'000 £'000 £'000
Profit after tax 15,749 14,750 32,949 15,749 14,750 32,949
Minority interests (78) (38) (207) (78) (38) (207)
Goodwill - - - 1,111 588 1,425
amortisation
...... ...... ...... ...... ...... ......
15,671 14,712 32,742 16,782 15,300 34,167
...... ...... ...... ...... ...... ......
Weighted average number of shares:
Unaudited Audited
Six months Year ended
ended 30 June 31 Dec
2001 2000 2000
Number Number Number
For basic earnings per share 118,257,428 118,218,818 118,224,134
Exercise of share options 1,522,544 1,426,025 1,289,382
............ ............ ............
For diluted earnings per 119,779,972 119,644,843 119,513,516
share
............ ............ ............
5. Reconciliation of Operating Profit to Net Cash Inflow from Operating
Activities
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2001 2000 2000
£'000 £'000 £'000
Operating profit 25,124 22,675 50,874
Depreciation and amortisation 7,995 6,229 13,529
Profit on sale of tangible fixed (6) (45) (329)
assets
Changes in working capital (7,582) (6,378) (11,237)
......... ......... .........
Net cash inflow from operating 25,531 22,481 52,837
activities
......... ......... .........
6. Reconciliation of Net Cash Flow to Movement in Net Debt
Unaudited Audited
Six months Year ended
ended 30 June 31 Dec
2001 2000 2000
£'000 £'000 £'000
Decrease in cash in the period (5,211) (11,198) (18,149)
Cash inflow from increase in debt (6,056) (981) (1,063)
............ ......... ............
Changes in net debt resulting from
cash flows (11,267) (12,179) (19,212)
Acquisitions (60) (879) (913)
Exchange differences 1,277 (1,046) (946)
............ ......... ............
Movement in net debt in the period (10,050) (14,104) (21,071)
Net debt at start of period (72,397) (51,326) (51,326)
............ ......... ............
Net debt at end of period (82,447) (65,430) (72,397)
............ ......... ............
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