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SIG plc Interim Results 2004 Delivering the goods to construction and industry 8 September 2004.

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Presentation on theme: "SIG plc Interim Results 2004 Delivering the goods to construction and industry 8 September 2004."— Presentation transcript:

1 SIG plc Interim Results 2004 Delivering the goods to construction and industry 8 September 2004

2 Introduction Les Tench Chairman

3 Delivering the goods to construction and industry 3 SIG: Strength and Growth Excellent underlying sales & profit growth Strong market position further enhanced Acquisition opportunities being realised Sound financial position to support future growth

4 Financial Review Gareth Davies Finance Director

5 Delivering the goods to construction and industry 5 Key Financial Points Solid like for like sales increase Improvement in operating margin Ongoing working capital management

6 Delivering the goods to construction and industry 6 Summary Profit and Loss £m H H1 2003Change Turnover % Operating profit before goodwill 33.9 * % Goodwill amortisation (2.5) (2.4) Operating Profit 31.4 * % Interest (2.9) (3.5) Other Finance Charges (0.2) * (0.3) Profit before tax % Interest cover 10.2x* 6.8x * Restated for FRS 17

7 Delivering the goods to construction and industry 7 Tax, Earnings and Dividends Tax rate at 32.6% (2003 : 32.6%) EPS up 29% to 15.6p (2003 : 12.1p) DPS up 12.2% to 4.6p (2003 : 4.1p) Dividend cover 3.4x (2003 : 2.9x)

8 Delivering the goods to construction and industry 8 Balance Sheet £m June 2004 June 2003 Dec Capex / Depreciation 102% 73%71% Capital employed * Net debt Gearing 36% * 50%38% R.O.C.E. 15.3% * 13.0%14.9% * Restated for FRS 17

9 Delivering the goods to construction and industry 9 Working Capital to Sales June 2004 June 2003 Dec Working Capital/Sales* 13.4% 13.3%13.2% Increased sales volume £10.1m Real working capital increase £2.4m Increase in working capital from June 2003 to June 2004 £12.5m * Working Capital to Sales is calculated using annualised sales and the period end working capital position

10 Delivering the goods to construction and industry 10 Working Capital June 2004 June 2003 Stock days Debtor days Bad & doubtful debt as a % of sales 0.7% Creditor days Working Capital is calculated to eliminate the effect of acquisitions

11 Delivering the goods to construction and industry 11 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 03 H1 04

12 Delivering the goods to construction and industry 12 Cash flow £m June 2004 June 2003 Cash inflow from trading42.0 * 36.2 Change in working capital (10.4) 20.1 Cash inflow from operations31.6 * 56.3 Interest and tax (9.6) * (7.6) Capex and dividends (18.5) (15.4) Operating cash inflow Acquisitions, exchange & shares (3.9) (4.8) Net (increase) / decrease in borrowings (0.4) 28.5 * Restated for FRS 17

13 Delivering the goods to construction and industry 13 Pensions update Restatement of 30 June 2003 comparatives Balance sheet includes pension liability Reclassification of pension costs Valuation of main scheme completed Triennial valuation as at 1 January 2004 Additional contribution

14 Delivering the goods to construction and industry 14 IAS project Initial impact assessment complete Actions in progress Development of policies Calculation of opening balance sheet Collection of data from subsidiaries Next steps Further guidance and application notes to be issued by IFRIC We will continue to watch developments

15 Delivering the goods to construction and industry 15 Financial Summary Record first half sales and profits 30% PBT improvement Working capital management Group in good shape

16 Trading Review David Williams Chief Executive

17 Delivering the goods to construction and industry 17 Presentation Content Trading Highlights Performance Analysis Strategy and Outlook Questions and Answers

18 Delivering the goods to construction and industry 18 Trading Highlights Sales & Profits up in all three geographic regions Sales & Profits up in all business streams Excellent growth in sales & profits, through: Stronger market demand Firmer pricing Increased volumes Tight cost controls Improved margins

19 Delivering the goods to construction and industry 19 Sales by region % 03 FY 04 H1 Δ UK & ROI Europe USA £649m Sales up on a like for like basis in all geographic regions

20 Delivering the goods to construction and industry 20 Sales Growth by region, in constant currency

21 Delivering the goods to construction and industry 21 Sales by sector % 03 FY 04 H1 Δ Ins Roofing Comm. Int Others Premium Office Interiors 5.7% Industrial Insulation 15.5% Sales up in all sectors other than UK Industrial

22 Trading Review Performance Analysis

23 Delivering the goods to construction and industry 23 USA Results - Sales Growth Local currency Total+5.4% LFL+5.4% Sterling Total-6.7% LFL-6.7%

24 Delivering the goods to construction and industry 24 USA Results – Operating Profit Growth Local currency Total+55.2% LFL+55.2% Sterling Total+37.5% LFL+37.5%

25 Delivering the goods to construction and industry 25 USA Summary Market Indicators Demand Pricing Market Outlook SIG Results Sales Costs % to sales Op. Margin Op. Profit Sales and Profits up in improved market conditions Margin increased

26 Delivering the goods to construction and industry 26 Mainland Europe Results - Sales Growth Constant currency Total+11.0% LFL+9.8% Sterling Total+7.8% LFL+6.5%

27 Delivering the goods to construction and industry 27 Mainland Europe Results – Operating Profit Growth Constant currency Total+89.1% LFL+91.3% Sterling Total+84.1% LFL+86.3%

28 Delivering the goods to construction and industry 28 Mainland Europe Summary Market Indicators Demand Pricing Market Outlook SIG Results Sales Costs % to sales Op. Margin Op. Profit Sales up in each country Profits strongly ahead Margin increased Increased market coverage – 2 additional locations (after integration)

29 Delivering the goods to construction and industry 29 Germany Market Indicators Demand Pricing Much improved performance due to internal efficiencies and margin gains Outlook: Market demand stable and pricing firm SIG Results£ Sales Op. Profit Op. Margin Market share

30 Delivering the goods to construction and industry 30 France Market Indicators Demand Pricing Strong sales growth and profits up Sales up 24% in Euros Acquisition adding to market penetration Outlook: Market demand stable and pricing firm SIG Results£ Sales Op. Profit Op. Margin Market share

31 Delivering the goods to construction and industry 31 Netherlands Market Indicators Demand Pricing Sales up 7% in Euros despite depressed market Outlook: Market conditions expected to improve SIG Results£ Sales Op. Profit Op. Margin Market share

32 Delivering the goods to construction and industry 32 Poland Market Indicators Demand Pricing Sales up 66%, prices increased Traded profitably in period, against losses in prior years New branch added Outlook: Continued market growth SIG Results£PLN Sales Op. Profit Op. Margin Market share

33 Delivering the goods to construction and industry 33 UK & ROI Results - Sales Growth Sterling Total+6.5% LFL+5.9% Growth slightly higher at constant currency

34 Delivering the goods to construction and industry 34 UK & ROI Results – Operating Profit Growth Sterling Total+13.7% LFL+12.1% Growth slightly higher at constant currency

35 Delivering the goods to construction and industry 35 UK & ROI Summary Market Indicators Demand Pricing Market Outlook SIG Results Sales Costs % to sales Op. Margin Op. Profit Sales and Profits up in all business streams Margin increased Residential and non- residential building activity strong Increased market coverage – 4 additional locations (after integration)

36 Delivering the goods to construction and industry 36 UK & ROI Insulation Market Indicators Demand Pricing Further positive impact from building regulation changes industrial demand down Prices up, remaining firm Outlook: Short term volume growth rate likely to moderate Next regulatory boost in 2006 Longer term - rising energy costs expected to increase demand SIG Results£ Sales Op. Profit Op. Margin Market share

37 Delivering the goods to construction and industry 37 UK & ROI Roofing Market Indicators Demand Pricing Further expansion with 5 additional trading sites (after integration) Upgrading of existing branches underway Local authority housing renovation programmes strong Outlook: Market stable, further expansion planned SIG Results£ Sales Op. Profit Op. Margin Market share

38 Delivering the goods to construction and industry 38 UK & ROI Commercial Interiors Market Indicators Demand Pricing New build and refurb. strong in both Education and Health sectors Premium office improved sales and profits up, costs down Outlook: Market demand improving SIG Results£ Sales Op. Profit Op. Margin Market share

39 Delivering the goods to construction and industry 39 Operating Margins * Including group costs, pre-goodwill

40 Trading Review Strategy & Outlook

41 Delivering the goods to construction and industry 41 Acquisitions strategy Acquisitions will be chiefly: Focusing on The specialist construction products sector Our existing geographic markets Aligned with meeting core objectives of Strengthening the Group Enhancing shareholder value

42 Delivering the goods to construction and industry 42 Acquisitions Six acquisitions made during H SectorAcquiredStrategy UK: Insulation1 bolt-onGeographic in-fill UK: Roofing3 bolt-onGeographic in-fill UK: Const. Acc.1 bolt-onRange extension France: Comm. Int.1 bolt-onGeographic in-fill £12m total consideration (including £2m deferred) Annualised sales of £22m Integrating well

43 Delivering the goods to construction and industry 43 Acquisitions since 1 July 2004 UK insulation specialist distributor 7 branches High quality bolt-on with further scope for growth UK roofline specialist distributor 14 branches Geographic in-fill German commercial interiors specialist distributor 1 branch Range extension Year to date (8 Sept 04) c.£37m consideration (including £3m contingent) Annualised sales of c.£62m

44 Delivering the goods to construction and industry 44 Strategic Objectives Increased share in several main markets Overseas profits and margins increased Costs down as percentage of sales Gearing reduced in first half EPS up 29% Develop Market Share in all core operations Enhance Quality of earnings from overseas businesses Maintain tight cost control Strengthen Balance Sheet and reduce Gearing Improve Earnings Per Share 2004 Progress Report

45 Delivering the goods to construction and industry 45 Outlook UK and ROI Construction activity remaining firm in both housing and non-residential Overseas Markets stable and steadily improving Pricing remaining firm overall Acquisition activity stepped up significantly Pipeline increasing

46 Delivering the goods to construction and industry 46 Long term Outlook Increases in energy costs expected to reinforce the drive for energy efficiency SIG is ideally placed to benefit from this changing environment - Insulation offers a proven, low-cost, measure Further Building Regulation changes due in 06 Product pricing - expected upward trend due to manufacturers input cost pressures Branch network expansion targets raised

47 Delivering the goods to construction and industry 47 Summary Market demand and pricing have remained firm since 30 June Trading strong Further progress expected Strongly positioned for future growth

48 Questions and Answers

49 Appendix

50 Delivering the goods to construction and industry 50 Market volume & price indicators UK & Republic of IrelandVolumePrice Insulation Roofing Commercial Interiors Others Mainland Europe Germany France Netherlands Poland USA

51 Delivering the goods to construction and industry 51 Trading Site changes Dec Net organic Net acquired June 2004 To 8 Sept * UK & ROI Europe USA22 00 Total branches (+27) * Including organic and acquired

52 Delivering the goods to construction and industry 52 Market position Specialist Distribution UK & ROIGERFRANETHPOLUSA Insulation 111 a 211 a,b Comm. Int c3 c - Roofing a Industrial Insulation b Regionally c Insufficient data

53 Delivering the goods to construction and industry 53 Market sectors Indicative breakdown of SIG main business sectors, based on company estimates. % 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

54 Delivering the goods to construction and industry 54 EBITDA Growth CAGR over 5 years: 10.6% H1 04 Growth: 15.9%


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