Interim Results
SIG PLC
14 September 2005
P R E S S R E L E A S E
14 September 2005
INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2005
SIG plc is the market leading specialist distributor of insulation, roofing and
commercial interiors products in Europe.
• Record first half sales and profits with significant growth over first
half of 2004.
• Sales and profits were increased in all main product streams
(insulation, roofing, commercial interiors, safety and specialist
construction products) and in each geographic area in which the Group
operates. Organic growth was supplemented by the strong performance of
businesses acquired during 2004 and the first half of 2005.
• Sales increased by 18.4% to £769m (2004: £649m). Like-for-like* sales
growth was £75m, an increase of 11.6%.
o UK and Republic of Ireland (67% of Group sales) sales increased
22.3% to £516.7m (2004: £422.6m).
o Mainland Europe (29% of Group sales) sales increased 9.4% on a
constant currency basis and 12.0% in Sterling to £221.1m (2004: £197.3m).
o In the USA (4% of Group sales) sales were up 8.2% in local
currency.
• Operating profit before amortisation of intangibles increased 29.5% to
£43.7m (2004: £33.8m).
o UK and Republic of Ireland up 31.2% to £37.7m (2004: £28.7m).
o Mainland Europe up 14.6% to £7.1m (2004: £6.2m).
o USA up by 89.3% to £1.4m (2004: £0.7m).
• Profit before tax and amortisation of intangibles was up 32.8% to £40.7m
(2004: £30.7m) and basic earnings per share before amortisation of
intangibles increased by 30.3% to 22.8p (2004: 17.5p).
• Dividend per share up 15.2% to 5.3p (2004: 4.6p).
• So far this year SIG has completed 11 deals for £62.1m; all complement
SIG's activities across existing businesses. Annualised sales from these
acquisitions are £75m.
*Like for like is defined as the business excluding the impact of acquisitions
made since 1 January 2004.
Figures have been prepared in accordance with IFRS.
Les Tench, Chairman, commented:
'The Group has produced excellent results in the first half of 2005, having
achieved substantial growth in sales and profits compared with the corresponding
period in 2004 in each of its three geographic reporting regions. Strong like
for like growth was supplemented by the good performance of businesses acquired
during 2004 and in the first six months of 2005.
Market conditions in the second half of 2005 are expected to be broadly similar
to the first half of the year, throughout each of the geographic areas in which
the Group operates.
Trading since the end of the June has continued to be strong and the Board is
confident that further substantial progress will be made in 2005.'
Enquiries:
David Williams, Chief Executive SIG plc today 020 7251 3801
Gareth Davies, Finance Director thereafter 0114 285 6300
Faeth Birch / Gordon Simpson Finsbury 020 7251 3801
Full Interim Results information is available on www.sigplc.co.uk. An interview
with David Williams, Chief Executive is now available on SIG's website and
www.cantos.com
CHAIRMAN'S STATEMENT
The Group has produced excellent results in the first half of 2005, having
achieved substantial growth in sales and profits compared with the corresponding
period in 2004 in each of its three geographic reporting regions - UK and
Republic of Ireland, Mainland Europe and USA.
Strong like for like growth was supplemented by the good performance of
businesses acquired during 2004 and in the first six months of 2005. The
measured expansion of the number of trading sites, and of the range of products
sold by the Group continued during the period.
The interim results have been prepared in accordance with International
Financial Reporting Standards (IFRS), which are expected to become fully
effective at 31 December 2005. Comparative information for the six months ended
30 June 2004 and the year ended 31 December 2004 has been restated on an IFRS
basis.
Results
For the six months to 30 June 2005, compared with the corresponding period in
2004:
Sales
• Group sales increased by £120m to £769m, up 18.4% over first half 2004
(£649m)
• Like for like sales growth, i.e. excluding the impact of acquisitions
completed after 1 January 2004, was £75m, an increase of 11.6%
• Currency exchange rates (chiefly Sterling against the US Dollar and the
Euro) were slightly more favourable overall than in the corresponding
period, adding £5m to Group sales. Excluding this small positive forex
impact, sales growth on a constant currency basis was £115m (up 17.6%)
• Sales growth was achieved in all countries in which the Group operates
on a constant currency basis, and in all principal market sectors and
product streams.
Profits
• Operating profit, before amortisation of intangibles, increased by
£10.0m, up 29.5% to £43.7m (2004: £33.8m)
• Profit before tax and amortisation of intangibles increased by £10.0m,
up 32.8% to £40.7m (2004: £30.7m)
• Interest charges reduced slightly to £3.0m (2004: £3.1m)
• Profit before tax increased by £8.7m, up 28.4% to £39.4m (2004: £30.7m)
• Basic earnings per share before amortisation of intangibles were 30.3%
higher at 22.8p (2004: 17.5p)
• Fully diluted earnings per share before amortisation of intangibles were
30.2% higher at 22.4p (2004: 17.2p)
Financial
• Balance sheet gearing was 58% at 30 June 2005, compared with 38% at 31
December 2004, (33% at 30 June 2004). This increase chiefly reflects the
cash outflow of £60.7m in respect of acquisitions completed in the period.
Underlying cash generation in the period continued to be strong.
• The Group has published its Preliminary Restatement of 2004 Financial
Information under IFRS on its website which can be accessed via
www.sigplc.co.uk. The table below sets out a summary of the effect on
profit before tax of the change from UK GAAP to IFRS for the six months
ended 30 June 2004 and 30 June 2005:
Unaudited Unaudited
Six months Six months
ended ended
30 June 30 June
2005 2004
£000's £000's
Profit before tax under UK GAAP 36,674 28,347
Goodwill amortisation 3,718 2,475
Intangibles amortisation (1,359) (24)
Defined benefit pension (4) (3)
Share based payments (76) (84)
Foreign exchange 394 -
Lease incentives 20 (61)
Restated profit before tax under IFRS 39,367 30,650
• Interest cover pre-amortisation continued to be very prudent, and
improved further to 14.5 times (2004: 10.9 times).
Dividend
Consistent with the Group's progressive dividend policy, an interim dividend of
5.3p per share has been declared, which is an increase of 15.2% (2004 interim
dividend: 4.6p). The interim dividend is covered 4.3 times by earnings
pre-amortisation (2004: 3.8 times).
In accordance with IFRS, the interim dividend has not been included as a
liability at 30 June 2005.
The dividend is payable on 25 November 2005, to shareholders on the register at
28 October 2005.
Trading Review
UK & Republic of Ireland (67% of Group sales)
Sales in the UK and Republic of Ireland increased by £94.1m to £516.7m,
representing growth of 22.3% (2004: £422.6m).
Operating profit pre-amortisation increased by £9.0m, up 31.2% to £37.7m (2004:
£28.7m).
The operating profit margin increased to 7.3% (2004: 6.8%).
Like for like performance was sales growth of 12.9% and operating profit growth
of 17.3%.
The principal contributing factors to this excellent performance are as follows:
• Strong activity levels in the construction and building industries,
especially in non-residential new build and larger refurbishment work,
giving rise to increased volumes of demand
• Continued recovery in the premium office sector, again leading to
increased sales volumes
• Selling prices across a wide range of products were higher in H1 2005
than the average price levels in the first half of 2004, due largely to the
impact of price increases implemented during the course of 2004. It should
be noted that price increases introduced in 2005 have been far less than in
2004, and have been partly offset by decreases in some products. Across the
breadth of products, 2005 pricing has been marginally helpful
• Strong growth in sales of new and additional products
• Further progress on a wide range of activities and measures as part of
SIG's internal continuous improvement programme
• Increased number of trading locations - up 25 to 282 at 30 June 2005 (31
December 2004: 257)
• Good contribution from the businesses acquired in 2004 and to date in
2005.
Sales and operating profits were increased on a like for like basis in all the
main business streams.
Commercial Interiors benefited from good levels of market demand, higher selling
prices, and the growing success of manufactured products launched in 2004.
SIG's Roofing sales showed good growth, despite continued sluggish demand in the
market.
Insulation again performed strongly, although as expected the benefits of the
2002 change in the Building Regulations have now levelled off. In recent months
prices have weakened in certain products, due to the impact of additional
manufacturing capacity coming on stream.
An announcement from the Government regarding the timetable for implementation
of the next change in Part L of the UK Building Regulations had been expected to
have been made mid 2005, with an anticipated implementation date in the early
part of 2006. This Regulation sets the minimum standards of energy efficiency in
(chiefly) new buildings of all types, and is expected to increase demand for
insulation materials over time. From past experience, it could take six months
before new, more stringent Regulations begin to affect market demand. The
Government have not yet made an announcement regarding the intended timetable
for implementation, and SIG is presently taking a cautious view and assuming
that it may not see any material impact on market demand for insulation products
derived from increased Regulations until 2007.
Mainland Europe (29% of Group sales)
Sales in the first half of 2005 increased by £23.8m to £221.1m, up 12.0% (2004:
£197.3m).
Operating profit pre-amortisation increased by £0.9m to £7.1m, up 14.6% (2004:
£6.2m).
The corresponding growth figures compared with prior year on a constant currency
basis are sales up 9.4% and operating profits up 13.0%. This is a very
encouraging performance in generally lacklustre market conditions.
The comprehensive price increases implemented in 2004 and referred to above in
the comments relating to the UK and Republic of Ireland, also benefited Mainland
Europe, though to a lesser extent. These 2004 increases affected only a
proportion of sales made in the first half of 2004, and therefore, like the UK,
these prior year price increases have had a positive impact on sales in the
first half of 2005.
• In Germany and Austria, sales and operating profit grew despite a fall
in market demand across all products, combined with some price deflation.
The like for like sales increase was 4% in Euros.
• In France, demand for both industrial insulation and commercial
interiors was reasonably good and sales (up 13% like for like in Euros) and
operating profit grew strongly.
• In Benelux, after two years of falling demand due to the depressed level
of both residential and non-residential construction activity, demand has
improved slightly in recent months. Sales increased by 7% like for like in
Euros, and operating profit improved substantially.
• In Poland, year on year comparisons of market demand are distorted by
the significant increase in the VAT rate on all building materials,
implemented on 1 May 2004. Many customers brought forward their purchases to
avoid the tax increase, thus artificially boosting H1 2004 sales at the
expense of H2 2004. As widely reported, market demand in H1 2005 was below
H1 2004. Against this background, like for like sales in local currency
increased by 17% and a small operating loss was reported, compared with a
small operating profit for the first half of 2004. This chiefly reflects
increased costs associated with SIG's continued planned investment in
Poland.
USA (4% of Group sales)
Against a background of steadily strengthening demand, the trend of improving
performance in 2004 has continued into 2005. On a like for like basis, sales
increased by 8% to $58.5m (2004: $54.0m) and operating profit increased by 94%
to $2.6m (2004: $1.3m). The equivalent growth figures in Sterling are sales up
5.6% to £31.3m (2004: £29.6m) and operating profit up 89% to £1.4m (2004:
£0.7m).
At the end of August 2005, the Group's operations in New Orleans, Baton Rouge
and Mobile have been affected by the devastating impact of Hurricane Katrina. In
the short term, trading will clearly be disrupted, and it is too early to assess
whether there may be any longer term impact on business in this region of the
US.
Price Inflation - Profit Impact
During 2004 SIG reported that as a result of exceptional and unprecedented
circumstances, the degree and extent of price increases implemented by
manufacturers created opportunities for the Group to make significant one-off
profits through buying gains. These exceptional profits amounted to
approximately £1m in the first half of 2004, and a further £2m in the second
half.
As expected, these conditions have not been repeated, and therefore there is no
exceptional profit gain within SIG's 2005 interim results.
Acquisitions
As part of SIG's ongoing strategy of seeking appropriate acquisitions in order
to supplement organic growth, so far this year SIG has completed 11 transactions
with combined annual sales of £75m. Total consideration, including acquired debt
is £62.1m.
Each of the acquired businesses operate in SIG's existing markets and are
complementary to SIG's existing activities.
Prospects
Market conditions in the second half of 2005 are expected to be broadly similar
to the first half of the year, throughout each of the geographic areas in which
the Group operates.
Against this background, the Group is focused on continued expansion and growth,
in order to create long term shareholder value. The strength of the balance
sheet and the sound finances will enable the Group to take advantage of future
opportunities that may arise.
Trading since the end of June has continued to be strong and this, together with
the positive impact of recent acquisitions gives the Board confidence that
further substantial progress will be made in 2005.
Consolidated Income Statement
for the six months ended 30 June 2005
Unaudited Unaudited Audited
Six months ended Six months ended Year ended 31
30 June 30 June December
2005 2005 2004 2004 2004 2004
Note £000's £000's £000's £000's £000's £000's
------------------------------------------------------------------------------------
Revenue 3 769,074 649,494 1,398,237
------------------------------------------------------------------------------------
Operating
profit before
amortisation
of intangibles 3 43,748 33,772 77,020
Amortisation
of intangibles 3 1,359 24 634
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Operating profit 42,389 33,748 76,386
Finance costs 2,965 2,882 5,683
Other finance charges 57 216 474
------------------------------------------------------------------------------------
Profit before tax 39,367 30,650 70,229
Income tax expense 12,712 9,288 21,425
------------------------------------------------------------------------------------
Profit after tax 26,655 21,362 48,804
------------------------------------------------------------------------------------
Attributable to:
Equity holders
of the Company 26,287 21,083 48,232
Minority interests 368 279 572
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Earnings per share
Basic earnings
per share 4 21.6p 17.5p 39.9p
Diluted
earnings per
share 4 21.3p 17.2p 39.3p
------------------------------------------------------------------------------------
Earnings per share
before amortisation
of intangibles
Basic earnings
per share 4 22.8p 17.5p 40.4p
Diluted
earnings per
share 4 22.4p 17.2p 39.9p
The results of the Group relate entirely to continuing operations.
Consolidated Statement of Recognised Income and Expense
for the six months ended 30 June 2005
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2005 2004 2004
Note £000's £000's £000's
------------------------------------------------------------------------------------
Profit after tax 26,655 21,362 48,804
Tax (debit)/credit on exchange
difference arising on foreign
currency borrowings (1,647) - 1,786
Exchange difference on
retranslation of foreign
currency goodwill (1,498) (1,674) 149
Exchange difference on
retranslation of overseas
net investments
(excluding goodwill) (4,868) (5,159) (619)
Exchange difference on
foreign currency
borrowings 4,871 3,999 (1,676)
Actuarial loss relating to
the pension schemes - (7) (8,741)
Deferred tax movement associated
with actuarial loss - - 2,537
Deferred tax on share
options 405 280 1,824
Transitional adjustment to
adopt IAS 32 and IAS 39 at
1 January 2005 6 (6,625) - -
------------------------------------------------------------------------------------
Total recognised income and
expense for the period 17,293 18,801 44,064
------------------------------------------------------------------------------------
Attributable to:
Equity holders of the Company 16,925 18,522 43,492
Minority interests 368 279 572
------------------------------------------------------------------------------------
17,293 18,801 44,064
------------------------------------------------------------------------------------
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2005
Hedging
Called up Share Capital Share and
share premium redemption Special option translation Retained Minority Total
capital account reserve reserve reserve reserve profits Total interests equity
£'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's
At 31 December
2004 - UK GAAP 12,139 16,793 347 22,113 554 (356) 169,941 221,531 572 222,103
IFRS adjustments
Reverse proposed
dividend - - - - - - 11,412 11,412 - 11,412
Deferred tax - - - - - (87) 14,358 14,271 - 14,271
Lease incentives - - - - - - (637) (637) - (637)
Retranslation of
goodwill - - - - - 4,427 - 4,427 - 4,427
Reversal of
amortisation
of goodwill - - - - - - 5,653 5,653 - 5,653
Amortisation
of intangibles - - - - - - (634) 634) - (634)
Deferred tax credit
associated with
amortisation
of intangibles - - - - - - 190 190 - 190
Adjustment to pension
asset valuation - - - - - - (70) (70) - (70)
Exchange reserve reset - - - - - (4,344) 4,344 - - -
Adjustment for IFRS 2
Share based payments - - - - 85 - (85) - - -
------------------------------------------------------------------------------------------------------------------------
At 31 December 2004
- IFRS 12,139 16,793 347 22,113 639 (360) 204,472 256,143 572 256,715
------------------------------------------------------------------------------------------------------------------------
Profit for the period - - - - - - 26,287 26,287 368 26,655
Dividend - - - - - - (11,412) (11,412) - (11,412)
New share capital
issued 9 187 - - - - - 196 - 196
Tax debit on exchange
difference arising on
foreign currency
borrowings - - - - - (1,647) - (1,647) - (1,647)
Exchange difference on
retranslation of foreign
currency goodwill - - - - - (1,498) - (1,498) - (1,498)
Exchange difference on
retranslation of
overseas net investments
(excluding goodwill) - - - - - (4,868) - (4,868) - (4,868)
Exchange difference on
foreign currency
borrowings - - - - - 4,871 - 4,871 - 4,871
Deferred tax on share
options - - - - - - 405 405 - 405
Credit to share option
reserve - - - - 327 - - 327 - 327
Payment to minority
interest shareholder - - - - - - - - (572) (572)
Recognition of minority
interest on acquisition - - - - - - - - 230 230
Transitional adjustment to
adopt IAS 32 and IAS 39 at
1 January 2005 - - - - - - (6,625) (6,625) - (6,625)
------------------------------------------------------------------------------------------------------------------------
At 30 June 2005
- IFRS 12,148 16,980 347 22,113 966 (3,502) 213,127 262,179 598 262,777
------------------------------------------------------------------------------------------------------------------------
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2004
Hedging
Called up Share Capital Share and
share premium redemption Special option translation Retained Minority Total
capital account reserve reserve reserve reserve profits Total interests equity
£'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's
At 1 January
2004 - UK GAAP 12,027 14,967 347 22,113 237 66 149,556 199,313 447 199,760
IFRS adjustments
Reverse proposed
dividend - - - - - - 9,983 9,983 - 9,983
Deferred tax - - - - - - 12,845 12,845 - 12,845
Lease incentives - - - - - - (510) (510) - (510)
Retranslation of
goodwill - - - - - 4,278 - 4,278 - 4,278
Exchange reserve reset - - - - - (4,344) 4,344 - - -
Adjustment to pension
asset valuation - - - - - - (57) (57) - (57)
Adjustment for IFRS 2
Share based payments - - - - (46) - 46 - - -
------------------------------------------------------------------------------------------------------------------------
At 1 January 2004
- IFRS 12,027 14,967 347 22,113 191 - 176,207 225,852 447 226,299
------------------------------------------------------------------------------------------------------------------------
Profit for the period - - - - - - 21,083 21,083 279 21,362
Dividend - - - - - - (9,983) (9,983) - (9,983)
New share capital issued 29 711 - - - - - 740 - 740
Exchange difference on
retranslation of foreign
currency goodwill - - - - - (1,674) - (1,674) - (1,674)
Exchange difference on
retranslation of overseas
net investments
(excluding goodwill) - - - - - (5,159) - (5,159) - (5,159)
Exchange difference on
foreign currency
borrowings - - - - - 3,999 - 3,999 - 3,999
Deferred tax on share
options - - - - - - 280 280 - 280
Credit to share option
reserve - - - - 177 - - 177 - 177
Actuarial loss on defined
benefit pension schemes - - - - - - (7) (7) - (7)
Payment to minority
interest shareholder - - - - - - - - (447) (447)
------------------------------------------------------------------------------------------------------------------------
At 30 June 2004
- IFRS 12,056 15,678 347 22,113 368 (2,834) 187,580 235,308 279 235,587
------------------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheet
as at 30 June 2005 Unaudited Unaudited Audited
30 June 30 June 31 December
2005 2004 2004
Restated
£000's £000's £000's
------------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 91,078 68,820 74,481
Goodwill 138,013 87,318 113,467
Intangible assets 38,355 4,049 14,714
Deferred tax assets 21,860 19,462 21,455
------------------------------------------------------------------------------------
289,306 179,649 224,117
------------------------------------------------------------------------------------
Current assets
Inventories 120,821 109,990 116,436
Trade receivables 307,540 245,824 243,766
Other receivables 22,516 18,222 19,996
Financial derivatives 1,069 - -
Cash and cash equivalents 22,975 30,877 19,467
------------------------------------------------------------------------------------
474,921 404,913 399,665
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total assets 764,227 584,562 623,782
------------------------------------------------------------------------------------
Current liabilities
Trade and other payables 250,358 193,754 189,233
Obligations under finance leases 918 2,050 1,391
Bank overdrafts and loans 67,742 13,311 13,211
Financial derivatives 158 - -
Current tax liabilities 22,056 11,623 13,995
Provisions 1,639 1,215 1,735
------------------------------------------------------------------------------------
342,871 221,953 219,565
------------------------------------------------------------------------------------
Non-current liabilities
Obligations under finance leases 799 679 564
Bank loans 68,897 91,589 95,613
Financial derivatives 30,289 - -
Loan notes 7,006 - 7,006
Deferred tax liabilities 14,456 5,154 6,615
Other payables 4,192 2,994 3,955
Retirement benefit obligations 24,707 20,502 25,035
Provisions 8,233 6,104 8,714
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158,579 127,022 147,502
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total liabilities 501,450 348,975 367,067
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Net assets 262,777 235,587 256,715
====================================================================================
Capital and reserves
Called up share capital 12,148 12,056 12,139
Share premium account 16,980 15,678 16,793
Capital redemption reserve 347 347 347
Special reserve 22,113 22,113 22,113
Share option reserve 966 368 639
Hedging and translation reserve (3,502) (2,834) (360)
Retained profits 213,127 187,580 204,472
------------------------------------------------------------------------------------
Attributable to equity
holders of the Company 262,179 235,308 256,143
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Minority interests 598 279 572
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Total equity 262,777 235,587 256,715
------------------------------------------------------------------------------------
Consolidated Statement of Cash Flows
for the six months ended 30 June 2005
Unaudited Unaudited Unaudited
30 June 30 June 31 December
2005 2004 2004
Restated
£000's £000's £000's
Net cash flow from operating activities
Operating profit before finance costs 42,389 33,748 76,386
- Adjustments for:
Depreciation and amortisation 10,646 8,299 18,454
Profit on sale of tangible
fixed assets (362) (208) (279)
Share based payments 327 177 448
Increase in working capital (5,810) (10,465) (17,587)
------------------------------------------------------------------------------------
Cash inflow from operating activities 47,190 31,551 77,422
Interest paid (4,768) (4,176) (8,472)
Interest received 1,803 1,085 2,319
Income tax paid (7,454) (6,025) (15,049)
------------------------------------------------------------------------------------
Net cash inflow from
operating activities 36,771 22,435 56,220
------------------------------------------------------------------------------------
Cash flows from investing activities
Purchase of property, plant
and equipment (14,236) (8,981) (22,627)
Proceeds from sale of property,
plant and equipment 1,033 679 1,549
Purchase of businesses (46,476) (8,659) (35,740)
------------------------------------------------------------------------------------
Net cash used in investing activities (59,679) (16,961) (56,818)
------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issue of ordinary
share capital 196 740 1,938
Capital element of finance lease
rental payments (702) (1,970) (3,317)
Repayment of loans (15,446) (18,990) (17,172)
New loans 53,641 474 -
Dividends paid to equity
holders of the Company (11,412) (10,005) (15,587)
Payments to minority shareholders (572) (447) (447)
------------------------------------------------------------------------------------
Net cash generated/(used) in
financing activities 25,705 (30,198) (34,585)
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Increase/(decrease) in cash
and cash equivalents in the period 2,797 (24,724) (35,183)
------------------------------------------------------------------------------------
Cash and cash equivalents at
beginning of period 16,501 51,356 51,356
------------------------------------------------------------------------------------
Effect of foreign exchange rate changes (491) (518) 328
------------------------------------------------------------------------------------
Cash and cash equivalents at
end of period 18,807 26,114 16,501
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Notes to the Interim Financial Information
1. Basis of preparation of interim financial information and accounting
policies
The interim financial information was approved by the Board of Directors on 14
September 2005. The financial information set out in the interim report is
unaudited.
The Group's interim financial information has been prepared in accordance with
International Financial Reporting Standards ('IFRS') in issue that are expected
to be endorsed by the European Union and are effective or available for adoption
at the Group's first IFRS annual reporting date, 31 December 2005. Comparative
information for the six months ended 30 June 2004 and the year ended 31 December
2004 has been restated under IFRS from the UK Financial Reporting Standard
('UK GAAP') values originally reported by the Group.
The financial information has been prepared under the historical cost convention
except that derivative financial instruments are stated at their fair value. The
interim financial information includes the accounts of the Company and all its
subsidiaries.
The IFRS that will be effective or available for adoption in the annual
financial statements for the year ended 31 December 2005 are subject to review
and amendment by the International Accounting Standards Board ('IASB') and
subsequent endorsements by the European Union and are subject to change.
In determining the Group's IFRS accounting policies the Board of Directors has
used its best endeavours in making assumptions about those IFRS expected to be
effective or available for adoption when the first IFRS annual financial
statements are prepared for the year ended 31 December 2005.
The Group has adopted all IFRS with the exception of IAS 34 'Interim Financial
Reporting' which is not mandatory for UK Groups. The Group has anticipated that
the amendment to IAS 19 'Actuarial Gains and Losses, Group Plans and Disclosure'
which has yet to be formally adopted for use in the European Union, will be so
adopted in time to be applicable to its first IFRS annual reporting date, 31
December 2005.
IFRS 1 permits those companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. The
Group has taken advantage of the following exemptions:
a) IFRS 3 'Business combinations' - the Group has elected not to apply IFRS
3 retrospectively to acquisitions that took place before 1 January 2004.
b) IAS 19 'Employee benefits' - in accordance with the amendment to IAS 19
which was issued on 16 December 2004, the Group has elected to recognise
actuarial gains and losses in full in the period in which they occur in the
Consolidated Statement of Recognised Income and Expense.
c) IFRS 2 'Share based payments' - the Group has elected to apply IFRS 2
only to those share based payment options that were granted after 7 November
2002 and remain unvested at 1 January 2005.
d) IAS 21 'The effects of changes in foreign exchange rates' - the Group
has elected to reset the Hedging and translation reserve to zero at 1 January
2004.
e) IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39
'Financial Instruments: Recognition and Measurement'- the Group has elected to
apply UK GAAP to its comparative financial statements (i.e. 1 January 2004 to 31
December 2004) and implement IAS 32 and IAS 39 at 1 January 2005. On 1 January
2005, in accordance with IAS 32 and IAS 39, all financial instruments were
recorded at their fair value. The difference between the fair value and book
value of all financial instruments at 1 January 2005 has been recorded in 2005
through the Consolidated Statement of Recognised Income and Expense.
The Group has today released an IFRS Restatement Document that contains the
following:
i. the restatement of 2004 comparative financial information
from UK GAAP to IFRS;
ii. a summary of significant accounting policies; and
iii. an unqualified independent auditors' report on the Restatement Document
This document can be found on the Company's website, www.sigplc.co.uk and is
also available in hard copy from the Company Secretary of SIG plc at the
registered office (tel. 0114 2856300).
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 2005 and 2004 are neither audited nor reviewed.
The financial information for the full preceding year is based on the UK GAAP
statutory accounts for the financial year ended 31 December 2004 as amended for
IFRS as set out in the Group's IFRS Restatement Document. Those 2004 UK GAAP
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
The Group is managed and organised in three geographies; UK & Republic of Ireland, Mainland Europe and the USA. These
geographies are the basis on which the Group reports its primary segment information.
Unaudited six months ended 30 June Unaudited six months ended 30 June Audited year ended 31 December
2005 2005 2005 2005 2004 2004 2004 2004 2004 2004 2004 2004
UK & Mainlnd USA Total UK & Mainlnd USA Total UK & Mainlnd USA Total
ROI Europe ROI Europe ROI Europe
£000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's
Revenue 516,705 221,075 31,294 769,074 422,558 197,304 29,632 649,494 907,054 433,595 57,588 1,398,237
------------------------------------------------------------------------------------------------------------
Segment
result 37,700 7,141 1,374 46,215 28,743 6,230 726 35,699 63,823 15,456 1,681 80,960
============================================================================================================
Parent
Company
costs (2,467) (1,927) (3,940)
-------- ------- --------
Operating
profit before
amortisation
of intangibles 43,748 33,772 77,020
-------- -------- --------
Intangible
asset
amortis'
ation (1,331) (28) - (1,359) (23) (1) - (24) (619) (15) - (634)
-------- ------- --------
Operating
profit 42,389 33,748 76,386
======== ======= ========
Finance
costs (3,022) (3,098) (6,157)
-------- ------- --------
Profit before
taxation 39,367 30,650 70,229
-------- ------- --------
Income tax
expense (12,712) (9,288) (21,425)
-------- ------- --------
Minority
interests (368) (279) (572)
-------- ------- --------
Retained
profit 26,287 21,083 48,232
======== ======= ========
Assets
Segment
assets 540,437 190,145 28,021 758,603 397,440 158,839 23,265 579,544 424,105 169,495 24,826 618,426
Unallocated
assets 5,624 5,018 5,356
-------- ------- --------
Total assets 764,227 584,562 623,782
======== ======= ========
Liabilities
Segment
liabilities247,741 78,439 5,352 331,532 181,192 54,506 4,137 239,835 190,587 57,332 4,350 252,269
Unallocated
liabilities 169,918 109,140 114,798
-------- ------- --------
Total
liabilities 501,450 348,975 367,067
======== ======= ========
Other segment
information
Net Capital
expenditure
on:
Property
plant &
equipment 10,949 2,084 170 13,203 6,598 1,481 223 8,302 15,395 5,284 399 21,078
Intangible
assets 24,821 179 - 25,000 4,053 20 - 4,073 15,138 210 - 15,348
Goodwill 25,899 175 - 26,074 5,504 514 - 6,018 29,543 801 - 30,344
Non cash
expenditure:
Deprec-
iation 6,688 2,342 257 9,287 5,889 2,062 324 8,275 12,295 4,899 626 17,820
Amortis-
ation
of
intan-
gibles 1,331 28 - 1,359 23 1 - 24 619 15 - 634
4. Earnings per share
The calculations of earnings per share are based on the following profits and numbers of shares:
Basic and diluted Basic and diluted before amortisation of intangibles
Unaudited Unaudited Audited Unaudited Unaudited Audited
Six Six months Year Six months Six Year
months ended 30 ended 30 ended 31 ended 30 months ended 30 ended 31
June June December June June December
2005 2004 2004 2005 2004 2004
£000's £000's £000's £000's £000's £000's
------------------------------------------------------------------------------------------------------------------------
Profit after
tax 26,655 21,362 48,804 26,655 21,362 48,804
Minority
interests (368) (279) (572) (368) (279) (572)
Amortisation
of intangibles - - - 1,359 24 634
------------------------------------------------------------------------------------------------------------------------
26,287 21,083 48,232 27,646 21,107 48,866
------------------------------------------------------------------------------------------------------------------------
Weighted average Unaudited Unaudited Audited
number of shares Six months Six Year
ended 30 months ended 30 ended 31
June June December
2005 2004 2004
Number Number Number
------------------------------------------------------------------------------------------------------------------------
For basic
earnings per
share 121,430,203 120,444,412 120,863,011
Exercise of
share options 2,207,254 2,126,258 1,747,068
------------------------------------------------------------------------------------------------------------------------
For diluted
earnings per
share 123,637,457 122,570,670 122,610,079
------------------------------------------------------------------------------------------------------------------------
Earnings per share before amortisation of intangibles is presented in order to give an indication of the underlying
performance of the Group.
5. Change in presentation
Pensions
In the prior year at 30 June 2004, two book reserved pension schemes operated in
Germany and France were reported within other provisions. In the accounts for
the year ended 31 December 2004, in accordance with FRS 17 (the standard in
force at that time), these were reclassified and included as part of the FRS 17
pension liability.
In order to show consistent presentation as at 30 June 2004, the provision for
liabilities and charges has been reduced by £1.141m to £7.319m and the pension
liability has been increased by £1.141m to £14.629m. This restatement has no
effect on net assets or the Consolidated Income Statement.
6. IAS 32 and IAS 39 Transitional adjustment
On 1 January 2005, in accordance with IAS 32 and IAS 39, all financial
instruments are recorded at their fair value. The difference between the fair
value and book value of all financial instruments at 1 January 2005 is an
additional liability of £6.625m, which has been recorded as a one-off movement
in reserves through the Consolidated Statement of Recognised Income and Expense.
Due to the inherent uncertainty over whether fair value movements associated
with adopting IAS 32 and IAS 39 will be taxable or not, the Group has not
recognised any deferred tax on this transitional adjustment.
7. Interim dividend
An interim dividend of 5.3p per share (2004:4.6p) has been declared.
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.
This information is provided by RNS
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