Interim Results
SIG PLC
03 September 2003
PRESS RELEASE
3 September 2003
INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2003
SIG plc is the market leading specialist distributor of insulation, commercial
interiors and roofing products in Europe. It has 366 branches located in the UK,
Republic of Ireland, France, Germany, The Netherlands, Poland and the USA.
• Sales increased by 13.5% to £612m (2002: £539m) with an encouraging
like for like sales increase of 9.1%.
• UK and Republic of Ireland sales increased by 15.5% with particularly
strong performances in Insulation and Roofing (up 18% and 23%
respectively). In Commercial Interiors the level of sales was
maintained despite a decline in market demand.
• Sales in mainland Europe increased by 15% (in Sterling).
• Operating profit before goodwill amortisation increased by 9.3% to
£27.6m (2002: £25.3m) with a particularly strong performance in the UK and
Republic of Ireland where operating profits were up 10.5%.
• Profit before tax increased by 10.1% to £21.8m (2002: £19.8m).
Earnings per share increased by 7.1% to 12.1p (2002: 11.3p).
• Cash flow improved considerably following increased focus on working capital
management. Gearing down to 46% (63% at 31 December 2002) and interest
cover improved to 7.4 times (2002: 7.0 times).
• Interim dividend up 5.1% to 4.1p (2002: 3.9p).
Barrie Cottingham, Chairman, commented:
'The Group has made encouraging progress in the first half of 2003, having
achieved record sales and operating profits compared with the corresponding
period in prior years.
We anticipate that the mixed conditions encountered in the first half of 2003
will continue into the second half, however the Group is focused on
strengthening the business against the background of these conditions. Trading
since the end of June has been satisfactory and further progress is expected.'
Enquiries:
David Williams, Chief Executive SIG plc today 020 7020 4000
Gareth Davies, Finance Director thereafter 0114 285 6300
Faeth Birch / Gordon Simpson Finsbury 020 7251 3801
Full Interim Results information, including a webcast of the presentation, is
available on www.sigplc.co.uk/results
Introduction
The Group has made encouraging progress in the first half of 2003, having
achieved record sales and operating profits compared with the corresponding
period in prior years.
The leading position which the Group occupies in many of its areas of activity
has enabled growth to be achieved, against the background of flat or reduced
market demand in all sectors other than the UK structural insulation market.
The action taken in 2002 to reduce costs and improve efficiencies, combined with
the investments in new branches and additional sales staff in the first half of
that year, have had a positive effect during the period. There has also been a
contribution from the acquisitions made during 2002.
In line with SIG's stated objectives, increased emphasis and attention has been
placed on working capital management throughout the Group. As a result, cash
flow has improved considerably during the period, reducing gearing and further
strengthening the Group's balance sheet.
Results and Key Performance Ratios
For the six months to 30 June 2003 compared with the corresponding period in
2002:
• Sales were up 13.5%, an increase of £73m to £612m. Like for like
sales (i.e. eliminating the impact of acquisitions made since December 2001)
increased by 9.1%.
• Excluding the impact of foreign exchange, sales growth was 10.6% and
like for like sales growth was 6.2%.
• Operating profit before goodwill amortisation increased by 9.3% to
£27.6m (2002: £25.3m).
• Goodwill amortisation increased to £2.4m (2002: £2.1m) and interest
charges increased marginally to £3.4m (2002: £3.3m).
• Profit before tax was 10.1% higher at £21.8m (2002: £19.8m).
• Earnings per share were 7.1% higher at 12.1p (2002: 11.3p).
• Balance sheet gearing at 30 June 2003 was 46%. This compares with 74% at 30
June 2002 and 63% at 31 December 2002. Cash flow from trading was strong
at £56.0m (£28.1m in the first half of 2002). Interest cover was improved
further to 7.4 times (2002 30 June: 7.0 times).
Dividend
An interim dividend of 4.1p (2002: 3.9p) has been declared, an increase of 5.1%,
with dividend cover at 2.9 times. The dividend is payable on 21 November 2003
to shareholders on the register at 24 October 2003.
Review of Operations
UK and Republic of Ireland
Sales in the UK and Republic of Ireland increased by 15.5% to £397m (2002:
£344m) and like for like sales increased by 9.4%.
Operating profits improved by 10.5%. As indicated in the July Trading
Statement, the operating margin reduced slightly to 6.3% (2002: 6.6%), due to an
adverse movement in the sales mix, chiefly within Commercial Interiors.
Sales in the Insulation and Related Products division rose by 18% in the UK and
Republic of Ireland, almost entirely through like for like growth. Recent
changes to the building regulations continue to drive increased demand for
insulation. This factor, combined with modest price inflation, created good
market conditions. The smaller industrial insulation market declined slightly as
investment levels remained very low in petro-chemical and power generation
industries.
Sales in the Roofing division grew by 23% in total in the period, benefiting
from the 2002 acquisitions, with like for like sales increasing by 7%. Overall,
market demand was broadly flat with some mild price inflation.
In Commercial Interiors, overall sales in the UK and Republic of Ireland were
flat compared with the first half of 2002, despite the fact that market demand,
as anticipated, declined further. Sales in the period were boosted by two large
projects in Ireland and the Middle East.
New construction and refurbishment projects in the retail, health, education and
other public sectors held up reasonably well. Against this, demand for the
higher margin office interiors products declined further. Efforts to reposition
certain products, together with the introduction of new product ranges, all had
a positive impact on sales volume, albeit at margins presently below the
historical norm for this business.
In the Safety Products distribution business, SIG increased sales and margins
and reduced costs. New marketing initiatives, changes to the product range and
a re-focused sales operation all contributed to strengthening the business.
The Construction Specialities operations increased sales by 4% like for like,
and 67% in total following the acquisition in this sector in June 2002.
Mainland Europe
Sales in mainland Europe in the first half of the year increased by 15.3% (in
sterling) to £183m and operating profits increased by 16.9%. Sales in local
currencies grew by 5%.
In Germany, against a particularly weak performance in the first half of 2002,
sales in euros were up by 4%. This increase in sales and market share is against
the background of a further decline in general construction activity in Germany.
Operating profits were up in the period over first half 2002.
In France, sales grew by 9% in euros and operating profits were increased.
Whilst market conditions remained challenging, progress was made in Insulation,
Commercial Interiors and the fledgling Roofing operations. Investments have
been made to increase SIG's geographic reach by opening two new locations.
Within Insulation, progress has been made in extending the product range,
especially in the growing air handling market.
In The Netherlands, sales increased by 11% in euros, due to the increased impact
of the Insulation business acquired in March 2002. Market conditions in the main
Commercial Interiors business remain very difficult, and sales and operating
profits declined slightly.
Sales in SIG's small Polish business declined by 9% in local currency as market
conditions continued to be extremely difficult and, whilst this was partly
offset by an improvement in the gross margin, a small operating loss was
incurred.
USA
Demand in the main petro-chemical and related industrial markets in the USA
continued to be very sluggish and SIG's sales fell by 3% in US dollars and 13%
in sterling. Despite cost reductions, operating profit declined by £0.4m
compared with the first half of 2002.
Acquisitions
There have been two small acquisitions in the first half of the year, one in the
UK (Insulation) and one in France (Commercial Interiors). Total
consideration is £1.6m with annualised sales of approximately £4m.
In July SIG acquired a UK roofing business for a consideration of up to £0.9m in
cash, with annualised sales of c.£2m.
Prospects
SIG anticipates that the mixed conditions encountered in the first half of 2003
will continue into the second half.
General building activity is expected to remain broadly stable in the UK and
Republic of Ireland, and this should benefit Insulation in particular. There
are signs that the rate of decline in Commercial Interiors is slowing, but SIG
does not see a recovery in either volume or margins in this sector this year.
Overseas market conditions are expected to remain difficult and some further
weakening of demand in mainland Europe is anticipated.
The Group is focused on strengthening the business against the background of
these conditions. Trading since the end of June has been satisfactory and
further progress is expected.
Summary Consolidated Profit and Loss Account
for the six months ended 30 June 2003
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 June 30 June 31 December
2003 2003 2002 2002 2002 2002
Note £'000 £'000 £'000 £'000 £'000 £'000
Turnover 3 611,738 538,847 1,154,968
Operating profit 27,623 25,282 57,923
before amortisation
of goodwill
Amortisation of 2,398 2,132 4,524
goodwill
Operating profit 3 25,225 23,150 53,399
Net interest payable 3,426 3,348 7,051
Profit on ordinary 21,799 19,802 46,348
activities before
taxation
Tax on profit on 7,106 6,258 14,646
ordinary activities
Profit on ordinary 14,693 13,544 31,702
activities after
taxation
Minority interest 213 137 294
(all equity)
Equity dividends 4,932 4,682 13,917
Retained profit for 9,548 8,725 17,491
the period
Earnings per share
Basic earnings per 4 12.1p 11.3p 26.3p
share
Fully diluted 4 12.0p 11.1p 26.1p
earnings per share
Earnings per share
before goodwill
amortisation
Basic earnings per 4 14.1p 13.1p 30.1p
share
Fully diluted 4 14.0p 12.9p 29.9p
earnings per share
Consolidated Statement of Total Recognised Gains and Losses
for the six months ended 30 June 2003
Unaudited Unaudited Audited
Six months ended Six months ended Year
30 June 30 June ended
31 December
2003 2002 2002
£'000 £'000 £'000
Profit on ordinary activities after taxation and minority 14,480 13,407 31,408
interests
Gain/(loss) on foreign currency translation 809 (778) (1,101)
Tax credit arising on repayment of overseas intercompany - - 4,572
loans
Tax credit arising on foreign exchange losses 1,315 405 1,370
Total recognised gains and losses for the period 16,604 13,034 36,249
Prior period adjustment - (506) (506)
Total recognised gains and losses since last annual report 16,604 12,528 35,743
Reconciliation of Movement in Consolidated Shareholders' Funds
for the six months ended 30 June 2003
Unaudited Unaudited Audited
Six months ended Six months Year
30 June ended ended
30 June 31 December
2003 2002 2002
£'000 £'000 £'000
Profit on ordinary activities after taxation and minority 14,480 13,407 31,408
interests
Dividends (4,932) (4,682) (13,917)
9,548 8,725 17,491
New share capital issued 83 1,241 1,735
Gain/(loss) on foreign currency translation 809 (778) (1,101)
Tax credit arising on repayment of overseas intercompany loans - - 4,572
Tax credit arising on foreign exchange losses 1,315 405 1,370
Credit to L-TIP reserve 94 90 174
Adjustment to goodwill - - 4,835
Net addition to shareholders' funds 11,849 9,683 29,076
Opening shareholders' funds as previously stated 194,056 165,486 165,486
Prior period adjustment - (506) (506)
Opening shareholders' funds as restated 194,056 164,980 164,980
Closing shareholders' funds 205,905 174,663 194,056
Summary Consolidated Balance Sheet
as at 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
Fixed Assets
Intangible assets 79,103 78,748 80,693
Tangible assets 71,288 68,729 71,717
150,391 147,477 152,410
Current assets
Stocks 94,289 90,931 88,876
Debtors 255,522 236,263 221,974
Cash at bank and in hand 22,567 14,146 13,558
372,378 341,340 324,408
Creditors:
Amounts falling due within one year (202,929) (204,058) (172,242)
Net Current assets 169,449 137,282 152,166
Total assets less current liabilities 319,840 284,759 304,576
Creditors:
Amounts falling due after more than one year (109,565) (106,039) (105,920)
Provision for liabilities and charges (4,157) (3,920) (4,306)
Net assets 206,118 174,800 194,350
Shareholders' funds (all equity) 205,905 174,663 194,056
Minority interest 213 137 294
Total capital employed 206,118 174,800 194,350
Summary Consolidated Cash Flow Statement
for the six months ended 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 31 December
2003 2002 2002
Note £'000 £'000 £'000
Net cash inflow from operating activities 5 55,990 28,113 64,699
Returns on investments and servicing of finance (3,763) (3,473) (7,055)
Tax paid (3,487) (6,321) (14,323)
Capital expenditure (6,114) (9,704) (20,224)
Acquisitions (552) (4,809) (22,057)
Equity dividends paid (9,283) (8,696) (13,363)
Financing (10,118) 4,209 12,344
Increase/(decrease) in cash in the period 6 22,673 (681) 21
Notes to the Unaudited Interim Results
1. Basis of preparation of interim financial information
The interim financial information has been prepared in accordance with the
accounting policies included in the Annual Report for the year ended 31 December
2002, which have been applied consistently throughout the current and preceding
periods.
The interim financial information was approved by the Board of Directors on 3
September 2003.
2. Publication of non statutory accounts
The financial information included in this statement does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The interim results to 30 June 2003 and 2002 are neither audited nor reviewed.
The financial information for the full preceding year is based on the statutory
accounts for the financial year ended 31 December 2002. Those accounts, upon
which the auditors issued an unqualified opinion, have been delivered to the
Registrar of Companies. The auditors' report contained no statement under
Section 237(2) or 237(3) of the Companies Act 1985.
3. Segmental information
Unaudited Unaudited Audited
Six months ended Six months ended Year
30 June 30 June ended
31 December
Geographical analysis 2003 2002 2002
£'000 £'000 £'000
Turnover
- UK & Republic of Ireland 396,869 343,549 734,537
- Europe 183,107 158,832 349,821
- USA 31,762 36,466 70,610
Total operations 611,738 538,847 1,154,968
Operating Profit
- UK & Republic of Ireland 25,067 22,692 51,448
- Europe 3,384 2,896 7,718
- USA 528 941 1,501
- Parent company (1,356) (1,247) (2,744)
- Amortisation of goodwill (2,398) (2,132) (4,524)
Total operations 25,225 23,150 53,399
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
Basic and diluted Basic and diluted before
goodwill amortisation
Unaudited Audited Unaudited Audited
Six months ended Year Six months ended Year
30 June ended 30 June ended
31 December 31 December
2003 2002 2002 2003 2002 2002
£'000 £'000 £'000 £'000 £'000 £'000
Profit on ordinary 14,693 13,544 31,702 14,693 13,544 31,702
activities after
taxation
Minority interests (213) (137) (294) (213) (137) (294)
Goodwill amortisation - - - 2,398 2,132 4,524
14,480 13,407 31,408 16,878 15,539 35,932
Weighted average Unaudited Audited
number of shares Six months ended Year
30 June ended
31 December
2003 2002 2002
Number Number Number
For basic earnings 119,743,323 118,970,539 119,309,596
per share
Exercise of share 1,006,237 1,487,836 935,230
options
For diluted earnings 120,749,560 120,458,375 120,244,826
per share
Earnings per share before goodwill amortisation is presented in order to give an
indication of the underlying performance of the Group.
5. Reconciliation of operating profit to net cash inflow from operating activities
Unaudited Unaudited Audited
Six months ended Six months ended Year
30 June 30 June ended
31 December
2003 2002 2002
£'000 £'000 £'000
Operating profit 25,225 23,150 53,399
Depreciation and amortisation 10,828 9,989 20,552
Profit on sale of tangible fixed assets (193) (233) (451)
Changes in working capital 20,130 (4,793) (8,801)
Net cash inflow from operating activities 55,990 28,113 64,699
6. Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
Six months ended Six months ended Year
30 June 30 June ended
31 December
2003 2002 2002
£'000 £'000 £'000
Increase/(decrease) in cash in the period 22,673 (681) 21
Cash outflow/(inflow) from movement in debt 10,201 (2,968) (10,609)
Changes in net debt resulting from cash flows 32,874 (3,649) (10,588)
Acquisitions (21) (12,021) (151)
Exchange differences (4,345) (3,572) (3,313)
Movement in net debt in the period 28,508 (19,242) (14,052)
Net debt at start of the period (123,380) (109,328) (109,328)
Net debt at the end of the period (94,872) (128,570) (123,380)
This information is provided by RNS
The company news service from the London Stock Exchange
Tuesday, 14th May 2024
COMPANIES COVERED:
Latest directors dealings
- 6 hours ago Intercede Group
- 7 hours ago Serco Group
- 7 hours ago Shell
- 7 hours ago Serica Energy
- 8 hours ago Mortgage Advice Bureau (Holdings)