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SIG PLC Preliminary Results for the year ended 31 st December 2004 8 th March 2005.

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Presentation on theme: "SIG PLC Preliminary Results for the year ended 31 st December 2004 8 th March 2005."— Presentation transcript:

1 SIG PLC Preliminary Results for the year ended 31 st December th March 2005

2 Introduction Les Tench - Chairman

3 Copyright SIG plc : Growth and Progress Excellent year, growth in all sectors Strong like for like sales & profit growth Acquisition & investment activity increased, reinforcing market leadership Dividend increased by 12.9%

4 Financial Review Gareth Davies – Finance Director

5 Copyright SIG plc Key Financial Points Solid sales growth Margins increased Positive impact from product price inflation Excellent performance across all regions Significant investment for the future

6 Copyright SIG plc Summary Profit and Loss £m Change Turnover 1, , % Operating profit before goodwill % Goodwill amortisation (5.6) (4.8) Operating Profit % Interest (5.7) (6.4) Other Finance Charges (0.5) (0.7) Profit before tax % Interest cover11.6x8.2x

7 Copyright SIG plc Tax, Earnings and Dividends Tax rate at 32.6% (2003 : 32.6%) EPS up 26.2% to 36.1p (2003 : 28.6p) DPS up 12.9% to 14.0p (2003 : 12.4p) Dividend cover 2.6x (2003 : 2.3x)

8 Copyright SIG plc Balance Sheet £m Capex / Depreciation121% 71% Capital employed R.O.C.E.15.7% 15.2% Net debt Average Net Debt Gearing44% 38%

9 Copyright SIG plc Working Capital to Sales Working Capital/Sales* 12.2%13.2% Like for like sales increase (£97.2m) £11.9m Real working capital increase £5.6m Increase in working capital from 1 January to 31 December 2004 £17.5m * Working Capital to Sales is calculated using annualised sales and the period end working capital position

10 Copyright SIG plc Working Capital Stock days Debtor days 52 Bad & doubtful debt as a % of sales 0.8% Creditor days Working Capital is calculated to eliminate the effect of acquisitions

11 Copyright SIG plc Stock Movement £m Book value at start of year 93.0 Increased value of stock (c. 3%) 2.8 Effect of new branches – Acquisitions 6.8 Effect of new branches – Brownfield 1.6 Further investment – Average £32K per Site 12.2 Book value 31 December Total Increase 23.4m(25%)

12 Copyright SIG plc Average Working Capital Average working capital is calculated using the average working capital balances for the preceding 12 months Continued improvement in average working capital to sales ratio H1 03H2 03H1 04H2 04 Dec-04

13 Copyright SIG plc Cash flow £m Cash inflow from trading Change in working capital (17.5) 18.0 Cash inflow from operations Interest and tax (21.6) (18.2) Capex and dividends (36.7) (26.1) Operating cash inflow Acquisitions Exchange & shares (42.7) 1.6 (2.7) (3.8) Net (increase) / decrease in borrowings (22.0) 47.1 * Restated for FRS 17

14 Copyright SIG plc Pensions Update Triennial Valuations of UK schemes completed – Triennial valuation as at 1 January 2004 – Special additional cash contributions - £4.1m FRS17 was fully adopted in FRS17 pension liability increased by £2.1m to £17.0m

15 Copyright SIG plc IFRS Well advanced in the implementation process. Actions in progress – Development of policies. – Calculation of opening balance sheet. Key items to affect earnings – Apportionment of the fair value of options. – Any hedge ineffectiveness contained within our US $ loan note currency derivatives. – Intangible amortisation v goodwill amortisation.

16 Copyright SIG plc Financial Summary Record sales and profits. Pretax profits up by more than 27%. Continued focus on working capital management. Group in good shape for future growth.

17 Trading Review David Williams – Chief Executive

18 Copyright SIG plc Presentation Content Trading performance. Strategy, acquisitions and outlook. Questions and answers.

19 Copyright SIG plc Trading Highlights Sales and profits up in all 3 geographic regions – total and like for like. Operating margin up. Benefit of price inflation maximised. Strong underlying performance.

20 Copyright SIG plc Sales by Sector

21 Copyright SIG plc Sales by Region

22 Copyright SIG plc Sales Growth – SIG Total 10.2% 2004 over % 7.7% 9.0% % Growth (Actual Growth £129.7m)

23 Copyright SIG plc Sales Growth by Region Total 11.9% % Growth – Constant Currency 2004 over % Total 12.4% 10.5% Total 1.0% (Actual Growth £129.7m)

24 Copyright SIG plc Operating Profits – 2004 Results £3.0m# Exceptional Stock Gains Source of Growth 2004 / 2003 £2.6m Acquisitions (2003 and 2004) £8.3m # Normalised like for like # - SIG Estimate Total* £13.9m * - Operating profit growth, excluding goodwill

25 Copyright SIG plc Operating Margins * Including group costs, pre-goodwill

26 Copyright SIG plc Key Operating Ratios 2004 / 2003 Sales per Employee Op. Profit per Employee Op. Costs as % to Sales Gross Margin % to Sales

27 Copyright SIG plc Results Regional Performance

28 Copyright SIG plc USA 2004 Results - Sales $105.7m £57.6m $104.7m £63.7m Growth (All Like for Like) Local Currency + 1.0% Sterling – 9.6%

29 Copyright SIG plc USA 2004 Results – Operating Profit $3.1m £1.7m $1.5m £0.9m Local Currency % Sterling %

30 Copyright SIG plc USA – 2004 Results Market Indicators Demand Pricing Petrochem market difficult. Commercial market stronger. Sales and operating profits increased. Operating margin doubled. SIG Results £$ Sales Op. Profit Op. Margin Market share

31 Copyright SIG plc Mainland Europe 2004 Results - Sales £394.2m Growth Constant Currency Total +12.4% LFL +10.5% Sterling Total +10.0% LFL +8.2% £433.6m 568.8m 638.7m

32 Copyright SIG plc Mainland Europe 2004 Results – Operating Profit £11.0m Growth Constant Currency Total +43% LFL +43% Sterling Total +40% LFL +40% £15.5m 15.9m 22.8m

33 Copyright SIG plc Germany – 2004 Results Market Indicators Demand Pricing 5 new trading sites added Like for like sales increase of 6.1% Much improved performance due to internal efficiencies and margin gains SIG Results £ Sales +6.4% Op. Profit Op. Margin Market share

34 Copyright SIG plc France – 2004 Results Market Indicators Demand Pricing Sales ahead in all product groups 4 additional trading sites Like for like sales up 18.4% Strong like for like sales and profit growth SIG Results £ Sales +25.9% Op. Profit Op. Margin Market share

35 Copyright SIG plc Benelux – 2004 Results Market Indicators Demand Pricing Market conditions weak; sales strengthened into H2 Business restructuring during the year New commercial interiors branch opened in Belgium SIG Results £ Sales +11.0% Op. Profit Op. Margin Market share

36 Copyright SIG plc Poland – 2004 Results Market Indicators Demand Pricing Achieved first full year of profitable trading Construction activity increased Four new branches added SIG Results £PLN Sales +42.5% Op. Profit Op. Margin Market share

37 Copyright SIG plc UK & ROI 2004 Results - Sales £810.7m Growth Total +11.9% LFL +8.8% £907.1m

38 Copyright SIG plc UK & ROI 2004 Results – Operating Profit £54.2m Growth Total +18.2% LFL +14.1% £64.1m

39 Copyright SIG plc UK & ROI Insulation – 2004 Results Market Indicators Demand Pricing Demand increase greater than expected Increased use of thermal and acoustic insulation in residential and non-residential buildings Increased upgrading of insulation in existing homes assisted by grants and energy efficiency schemes SIG Results Total Sales LFL Sales Op. Profit Op. Margin Trading Sites +8

40 Copyright SIG plc UK & ROI Roofing – 2004 Results Market Indicators Demand Pricing Market penetration increased through adding new sites Product range expanded Programme of branch upgrading underway SIG Results Total Sales LFL Sales Op. Profit Op. Margin Trading Sites +17

41 Copyright SIG plc UK & ROI Commercial Interiors – 2004 Results Market Indicators Demand Pricing Non residential building market strong Some recovery in demand from premium office sector Strong internal performance – all key ratios improved SIG Results Total Sales LFL Sales Op. Profit Op. Margin Trading Sites +1

42 Copyright SIG plc UK Safety & Construction Products – 2004 Results Market Indicators Demand Pricing Product range expanding. Increased emphasis on civil engineering and major projects. SIG Results Total Sales LFL Sales Op. Profit Op. Margin Trading Sites +3

43 Copyright SIG plc Strategy & Outlook

44 Copyright SIG plc Strategy To develop and grow the Group as a leading supplier of specialist products to the construction and related markets, in order to achieve sustainable long term growth in shareholder value

45 Copyright SIG plc Growth Drivers Organic expansion within existing geographic regions Wider product range Market demand growth e.g. Regulation, environmental issues Acquisition pipeline

46 Copyright SIG plc Acquisitions – Part of Growth Strategy Aimed at meeting core objectives of: – Strengthening the Group – Enhancing shareholder value Will be focused on: – Specialist products mainly in construction industry – Within our existing geographic regions

47 Copyright SIG plc Acquisitions in completed in the year 4 Mainland Europe: 1Germany, 3 France (2 Com Ints, 1 Insulation) 9 UK: 2 Insulation, 4 Roofing, 3 Construction Products 33 additional trading sites retained (2 closed in France) Total Consideration £45.1m (including £2.3m contingent) Annualised sales c. £80m Integrating well

48 Copyright SIG plc Outlook - Markets UK & Republic of Ireland – demand in construction activity remaining strong Overseas – generally stable demand. USA improving, Germany – market remaining tough Price Inflation – some anticipated price inflation although less than in 2004

49 Copyright SIG plc Summary Good start to Acquisition opportunities and organic development plans in progress. Confident of further growth.

50 Copyright SIG plc Appendix

51 Copyright SIG plc Market Volume & Price Indicators UK & Republic of IrelandDemandPrice Insulation Roofing Commercial Interiors Safety & Construction Products Mainland Europe Germany France Netherlands Poland United States America

52 Copyright SIG plc Trading Site Changes June 2004 Net Organic Net Acquired Dec 2004 To 8 March UK & ROI Europe USA Total branches

53 Copyright SIG plc Market Position UK & ROIGERFRANETHPOLUSA Insulation 111 a 211 a,b Comm. Int c - Roofing a Industrial Insulation b Regionally c Insufficient data

54 Copyright SIG plc Market Sectors – Indicative Breakdown % of Group Total New Build % of Subgroup RMI % of Subgroup Housing 28% 42%58% Non-Housing, Building & Construction 56% 44% Industry (Non-Construction) 16% 39%61% Note: It is not possible to sharply define sales into the respective sectors, as many products are used for all types of work, in all types of construction

55 Copyright SIG plc EBITDA Growth Year Compound Annual Growth Rate of 11%


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