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SIG plc Interim Results 2004

SIG plc Interim Results 2004. Delivering the goods to construction and industry. 8 September 2004. Introduction. Les Tench Chairman. SIG: Strength and Growth. Excellent underlying sales & profit growth Strong market position further enhanced Acquisition opportunities being realised

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SIG plc Interim Results 2004

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  1. SIG plcInterim Results 2004 Delivering the goodsto construction and industry 8 September 2004

  2. Introduction Les TenchChairman

  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 DaviesFinance Director

  5. Key Financial Points • Solid like for like sales increase • Improvement in operating margin • Ongoing working capital management

  6. Summary Profit and Loss * Restated for FRS 17

  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. Balance Sheet * Restated for FRS 17

  9. Working Capital to Sales * Working Capital to Sales is calculated using annualised sales and the period end working capital position

  10. Working Capital Working Capital is calculated to eliminate the effect of acquisitions

  11. Average Working Capital Continued improvement in average working capital to sales ratio H1 ‘03 H2 ‘03 H1 ‘04 * Average working capital is calculated using the average working capital balances for the preceding 12 months

  12. Cash flow * Restated for FRS 17

  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. 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. Financial Summary • Record first half sales and profits • 30% PBT improvement • Working capital management • Group in good shape

  16. Trading Review David WilliamsChief Executive

  17. Presentation Content • Trading Highlights • Performance Analysis • Strategy and Outlook • Questions and Answers

  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. Salesby region Sales up on a like for like basis in all geographic regions £649m

  20. Sales Growthby region, in constant currency

  21. Sales by sector Sales up in all sectors other than UK Industrial Premium Office Interiors 5.7% Industrial Insulation 15.5%

  22. Trading Review Performance Analysis

  23. USAResults - Sales

  24. USAResults – Operating Profit

  25. USASummary • Sales and Profits up in improved market conditions • Margin increased

  26. Mainland EuropeResults - Sales

  27. Mainland EuropeResults – Operating Profit

  28. Mainland EuropeSummary • Sales up in each country • Profits strongly ahead • Margin increased • Increased market coverage – 2 additional locations (after integration)

  29. Germany • Much improved performance due to internal efficiencies and margin gains • Outlook: Market demand stable and pricing firm

  30. France • Strong sales growth and profits up • Sales up 24% in Euros • Acquisition adding to market penetration • Outlook: Market demand stable and pricing firm

  31. Netherlands • Sales up 7% in Euros despite depressed market • Outlook: Market conditions expected to improve

  32. Poland • Sales up 66%, prices increased • Traded profitably in period, against losses in prior years • New branch added • Outlook: Continued market growth

  33. UK & ROI Results - Sales

  34. UK & ROI Results – Operating Profit

  35. UK & ROISummary • 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. UK & ROIInsulation • 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

  37. UK & ROIRoofing • 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

  38. UK & ROICommercial Interiors • New build and refurb. strong in both Education and Health sectors • Premium office improved • sales and profits up, costs down • Outlook: Market demand improving

  39. Operating Margins * Including group costs, pre-goodwill

  40. Trading Review Strategy & Outlook

  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. Acquisitions • Six acquisitions made during H1 2004 • £12m total consideration (including £2m deferred) • Annualised sales of £22m • Integrating well

  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. Strategic Objectives 2004 Progress Report • 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 Increased share in several main markets Overseas profits and margins increased Costs down as percentage of sales Gearing reducedin first half EPS up 29%

  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. 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. 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. Market volume & price indicators

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