sig plc preliminary results 2003 9 march 2004 delivering the goods to construction and industry
TRANSCRIPT
SIG plc Preliminary Results 2003 9 March 2004
Delivering the goods to construction and industry
2Delivering the goods to construction and industry
Overview
Solid performance in generally difficult markets
Record sales, profits and EPS
Significant improvements in cash generation and gearing
Dividend up by 6.9% Tenth successive year of dividend growth
Financial ReviewGareth Davies, Finance Director
4Delivering the goods to construction and industry
Summary Profit and Loss
Jan - Dec, £m 2003 2002 Change
Turnover 1,268.51,155.
0+9.8%
Operating profit before goodwill
63.4 57.9 +9.5%
Goodwill amortisation (4.8) (4.5)Operating Profit 58.6 53.4 +9.9%
Interest (6.5)(0.7)
(7.1)-Financial charges
Profit before tax 51.5 46.3 +11.1%
Interest cover (x) § 9.1 7.6§ Interest cover is pre-FRS 17
5Delivering the goods to construction and industry
Operating Profit
Jan - Dec, £m 2003 2002 Change
UK & ROI 54.2 51.4 +5.5%
Mainland Europe 11.0 7.7 +43.0%
USA 0.9 1.5 -39.6%
66.1 60.6 +9.1%
Parent (2.7) (2.7)
OP pre-goodwill 63.4(4.8)
57.9(4.5)
+9.5%
Goodwill
Operating Profit 58.6 53.4 +9.9%
6Delivering the goods to construction and industry
Earnings, Dividend and Tax
EPS up 8.7% to 28.6p
Tax rate at 32.6%
Final recommended dividend of 8.3pFull year 12.4p (up 6.9%)
Dividend cover 2.3x
7Delivering the goods to construction and industry
Balance Sheet
£m
Dec. 2003
Dec. 2002
Capex / Depreciation 71% 126%
Capital employed 199.8 177.5
Net debt 76.3 123.4
Average net debt 98.2 118.6
Gearing 38% 70%
R.O.C.E. 14.9% 12.9%
Comparable capital employed, gearing and ROCE have been restated to reflect FRS 17 retirement benefits
8Delivering the goods to construction and industry
Average Working Capital to Sales
% of SalesDec. 2003
Dec. 2002
Dec. 2001
Stocks 7.5% 7.7% 7.5%
Debtors 20.0% 19.2% 19.6%
Creditors (13.8%)(11.1%
)(12.2%
)
Average Working Capital / Sales
13.7% 15.1% 14.9%
(Decrease) / Increase in Working Capital
(£18.0m)
£8.8m£21.9
m
9Delivering the goods to construction and industry
Working Capital
December 2003
Dec.2003
Dec.2002
Stock days 36 37
Debtor days 52 55
Bad & doubtful debtas a % of sales
0.78% 0.71%
Creditor days 34 31
Working Capital is calculated to eliminate the effect of acquisitions
10Delivering the goods to construction and industry
Cash flow
£m
Dec. 2003
Dec. 2002
Cash inflow from trading 79.9 73.5
Change in working capital 18.0 (8.8)
Cash inflow from operations 97.9 64.7Interest and tax (18.2) (21.4)
79.7 43.3Capex and dividends (26.1) (33.6)
Operating cash inflow 53.6 9.7
Acquisitions, exchange & shares (6.5) (23.8)
Net reduction / (increase) 47.1 (14.1)
11Delivering the goods to construction and industry
Pensions update
FRS 17 adopted early Reduction of £0.2m in PBT (c/f SSAP24) Comparative Balance Sheet restated by
£16.9m Net pension liability £13.7m Triennial actuarial valuation ongoing
12Delivering the goods to construction and industry
IAS project
Detailed analysis complete
Project on track
Key effects: Small positive impact on P&L Minimal impact on B/S
13Delivering the goods to construction and industry
Financial Summary
Record sales and profits Sales up 9.8% PBT up over 11%
Improvements in our key ratios
Working capital reduced
Strong balance sheet
Trading ReviewDavid Williams, Chief Executive
15Delivering the goods to construction and industry
Trading Highlights
Sales increased in all three main business streams
Profits up in Insulation and Roofing
Profits down in Commercial Interiors
Sales and profits up in our two largest regions UK & ROI and Mainland Europe
Sales and profits down in USA
16Delivering the goods to construction and industry
Salesby region
UK & ROI63.9%
Europe31.1%
USA5.0%
%02 FY
03 FY Δ
UK & ROI 63.6 63.9 +0.3
Europe 30.3 31.1 +0.8
USA 6.1 5.0 -1.1
£1,269m
17Delivering the goods to construction and industry
Sales Growthby region
10.4%12.7%
-9.8%
9.8%
2.9%
-1.7%
6.9%9.7%
-10%
-5%
0%
5%
10%
15%
UK & ROI EUR USA GroupGro
wth
'03
/ '0
2
Sterling Constant Currency
18Delivering the goods to construction and industry
Sales by sector
Roofing20.7%
Others5.2%
Insulation50.5%
Commercial Interiors23.6%
%02 FY
03 FY Δ
Ins. 50.1 50.5 +0.4
Roofing 18.9 20.7 +1.8
Comm. Int. 25.2 23.6 -1.6
Others 5.8 5.2 -0.6
Premium Office Interiors
6.4%
Industrial Insulation17.7%
Trading ReviewRegional Detail
20Delivering the goods to construction and industry
USA
£70.6£63.7
£1.5£0.9
0
10
20
30
40
50
60
70
80
'02 '03
Sale
s -
£m
0
1
2
3
4
5
6
7
8
Op. P
rofit
- £
m
03FY /02FY Sales OP
Sterling -9.8%
-40%
Local Curr. -1.7%
-34%
-£6.9
Operating profit impact -£0.6m
21Delivering the goods to construction and industry
USA
Demand sluggish Costs reduced Second half trading showed some signs of
improvement
£ $Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share
22Delivering the goods to construction and industry
Mainland Europe
£349.8£394.2
£7.7£11.0
0
50
100
150
200
250
300
350
400
450
'02 '03
Sale
s -
£m
0
5
10
15
20
25
30
35
40
45
Op. P
rofit
- £
m
03FY /02FY Sales OP
Sterling +12.7%
+43%
Local Curr. +2.9% +29%
+£44.3
Like for like sales in Sterling up 11.5% Gross margin improved Operating margin up
Operating profit impact +£3.3m
23Delivering the goods to construction and industry
Germany
Sales up in local currency Gross and Operating margins improved Operating profit up
£ €Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share
24Delivering the goods to construction and industry
France
Continued growth - operating profit up Margin decline due to product mix Geographic expansion
£ €Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share
25Delivering the goods to construction and industry
The Netherlands
Market demand down Like for like sales down Commercial Interiors Insulation sales up
£ €Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share
26Delivering the goods to construction and industry
Poland
Second half sales strongly ahead Traded profitably in the second half New branch performing well
£ złMarket demand Sales Pricing Operating Loss Market Outlook Margin SIG Market Share
27Delivering the goods to construction and industry
UK & ROI
£734.5£810.7
£51.4 £54.2
0
100
200
300
400
500
600
700
800
900
'02 '03
Sale
s -
£m
0
10
20
30
40
50
60
70
80
90
Op. P
rofit
- £
m
03FY /02FY Sales OP
Total +10.4%
+5.4%
Like for Like sales up 6% Sales and Profits up in all sectors, other than
premium office
+£76.2
Operating profit impact +£2.8m
28Delivering the goods to construction and industry
UK & ROIInsulation
Regulation continued to increase demand New build and upgrading both strong Next energy efficiency regulations now
expected in 2005/6
Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share
29Delivering the goods to construction and industry
UK & ROIRoofing
Like for like sales up Acquisitions traded well, margins not yet up
to core business levels
Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share
30Delivering the goods to construction and industry
UK & ROICommercial Interiors
Premium office products Sales and Profits down significantly
Mainstream Commercial Interiors traded well Sales and Profits up
Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share
Without Prem. Off.
Trading ReviewStrategy & Outlook
32Delivering the goods to construction and industry
Acquisitions
Five acquisitions made during 2003
Sector Acquired
Strategy
UK: Insulation 2 bolt-on Geographic in-fill
UK: Roofing 1 bolt-on Geographic in-fill
France: Comm. Int. 1 bolt-on Geographic in-fill
France: Air handling
1 bolt-on Geographic in-fill
All acquisitions are trading
profitably and integrating well.
Process of targeting and evaluating opportunities for both greenfield and acquisitive expansion well advanced
33Delivering the goods to construction and industry
Strategic Objectives
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 significantly reduced
EPS up 8.7%
2003 Progress Report
34Delivering the goods to construction and industry
Focus for 2004
Maintain focus on strong cash flow
Increase investment in trading locations
Accelerate bolt-on acquisition programme
35Delivering the goods to construction and industry
Outlook
UK construction and building sector positive Insulation demand set to grow both short and
long term Commercial Interiors market decline levelling off
German building sector more stable
USA - more project work expected
Start to 2004 ‘on course’
SummaryBarrie Cottingham, Chairman
Questions and Answers
Appendix
39Delivering the goods to construction and industry
Trading Site changes
Dec. 2002
Net organic
Net acquired
Dec.2003
UK & ROI
223 0 3 226
Europe 123 -2 2 123
USA 24 -2 0 22
Total branches
370 -4 5 371
40Delivering the goods to construction and industry
Market position
UK & ROI GER FRA NETH POL USA
Insulation 1 1 1 a 2 1 1 a,b
Comm. Int. 1 3 2 1 3 c -
Roofing 1 - - - - -
a Industrial Insulationb Regionallyc Not clear – insufficient data
41Delivering the goods to construction and industry
Market volume & price indicatorsUK & Republic of Ireland Volum
ePrice
Insulation Roofing Commercial Interiors Others
Mainland Europe
Germany France Netherlands Poland
USA
42Delivering the goods to construction and industry
Market sectors
Indicative breakdown of SIG main business sectors, based on company estimates.
% of Group Total
New Build% of
Subgroup
RMI % of
Subgroup
Housing 27% 39% 61%
Non-housing Building &
Construction56% 57% 43%
Industry (non-construction) 17% 44% 56%
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