Final Results
SIG PLC
13 March 2008
P R E S S R E L E A S E
13 March 2008
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007
SIG plc is the leading specialist supplier of insulation, roofing, commercial
interiors and specialist construction products in Europe.
• SIG reports record results for 2007, with strong like for like sales
and operating profit growth in the UK and Ireland and Mainland Europe
• Record sales growth of 32.0%, taking total sales to £2,455.2m (2006:£1,859.8m).
Strong like for like+ sales growth of 10.9% in sterling
o UK and Ireland sales increased 21.5% to £1,523.8m (2006: £1,254.3m),
driven by buoyant non residential construction activity and continued
expansion by SIG - 39 new trading sites added, product range extended
o Mainland Europe sales increased 53.8% to £931.4m (2006: £605.5m),
driven by significant expansion in France, Germany, Poland, Benelux and
entry into two new countries - Czech Republic and Slovakia, with 122 trading
sites added in the year
o Sales and profits ahead in all four key business streams - of
Insulation, Roofing, Commercial Interiors and Specialist Construction
and Safety Products
• Total underlying* operating profit increased 31.3% to £159.4m (2006:
£121.4m)
o UK and Ireland underlying operating profit increased 21.4% to £121.3m
(2006: £99.9m), with underlying operating profit margin held at 8.0%
o Mainland Europe underlying operating profit increased 66.3% to £45.9m
(2006: £27.6m), with underlying operating profit margin increased to 4.9%
(2006:4.6%)
• Underlying profit before tax increased 29.5% to £140.1m (2006: £108.2m).
Profit before tax increased 21.0% to £124.3m (2006: £102.7m)
• Underlying basic earnings per share increased 22.0% to 74.8p (2006:
61.3p). Basic earnings per share increased 14.1% to 66.3p (2006: 58.1p)
• Dividend per share for the year increased 30.2% to 26.7p (2006: 20.5p),
reflecting the Board's confidence in the prospects of the business
• SIG also continues to achieve a record value and volume of acquisitions
as it seeks to supplement its strong organic expansion
o SIG acquired 27 companies for a consideration of £323m, including
assumed debt, which together contributed £217m of sales in 2007
o To date in 2008, SIG has completed 8 acquisitions for a consideration
of £32m, net of cash acquired, with combined annualised sales of c.£50m
Chairman's comments and prospects:
'The Group's sales are more heavily weighted towards non-residential
construction, both in the UK and Ireland and in Mainland Europe, and it is
believed that the substantial pipeline of work in progress of both public and
privately funded construction programmes will continue to provide the Group with
attractive opportunities in its four main product sectors.
In 2007, the Group expanded its operations and trading activities significantly
and these dynamics provide a strong platform coming into 2008. Trading in 2008
has begun well and the Board believes that the Group will continue its track
record of outperforming across its markets. The Board is confident of further
progress in 2008 and beyond.'
Full 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
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
+ Like for like sales excludes the impact of acquisitions completed after 1
January 2006
* Underlying is before the amortisation of acquired intangibles and hedge
ineffectiveness
All numbers stated above are on a continuing basis, i.e. excluding the USA
business sold in November 2006
CHAIRMAN'S STATEMENT
2007 was an excellent year for the Company, marked by strong organic growth and
an unprecedented level of acquisition activity. The Company increased the
breadth of its trading activities both geographically and by extending the range
of products and services to customers throughout the UK and Ireland and in
Mainland Europe.
Highlights of the year are
•record sales growth
•record profits and earnings per share
•strong like for like growth in both operating regions
•record increase in the number of trading sites
•record value and volume of acquisitions
•significant broadening of products and services sold to customers
Results
For the year ended 31 December 2007, compared with the corresponding period in
2006, excluding the figures for the USA business, which was sold in November
2006;
Sales
Total sales increased by £595.4m (32.0%) to £2,455.2m (2006: £1,859.8m).
Like for like* sales growth was 10.9% in Sterling.
Foreign exchange rate movements on a year-on-year basis had minimal impact,
together adding £11.4m to sales (and £0.5m to operating profits).
Profits
Total underlying** operating profit increased by £38.0m (31.3%) to £159.4m
(2006: £121.4m).
Underlying net finance costs increased by £6.1m to £19.3m (2006:£13.2m).
Underlying profit before tax increased by £31.9m (29.5%) to £140.1m (2006:
£108.2m).
Amortisation of acquired intangibles increased by £10.3m to £17.2m (2006:
£6.9m). A credit of £1.4m has arisen in relation to hedge ineffectiveness (2006:
£1.4m).
Profit before tax increased by £21.6m (21.0%) to £124.3m (2006: £102.7m).
Margins
The underlying operating profit margin was held at 8.0% in the UK and Ireland
and increased to 4.9% from 4.6% in 2006 in Mainland Europe. After increased
costs associated with acquisitions and business development, the Group
underlying operating profit margin was maintained at 6.5% (2006: 6.5%).
Earnings and Dividends
The underlying basic earnings per share increased by 13.5p (22.0%) to 74.8p
(2006: 61.3p).
Basic earnings per share increased by 8.2p (14.1%) to 66.3p (2006: 58.1p).
A final dividend of 18.7p is proposed, subject to shareholder approval which
would make a total dividend for the year of 26.7p, an increase of 30.2%,
demonstrating the Board's confidence in the prospects of the business.
Finances
Cash flow from trading strengthened further in 2007. Continued investment in
customer service through investment in stock, trading sites and delivery
capability, together with record acquisition spend, resulted in increased
borrowings at the year end, with gearing at 75% (2006: 65%).
During the year the Company placed 11.4m new ordinary shares at 1,320p each,
raising £147m after commissions and expenses. In addition, a further £100m of
committed facilities were obtained during the year with committed facilities
totalling £600m at the end of the year.
The Group has a sound financial position with prudent interest cover of 8.2x
(2006: 9.2x).
Acquisitions
The strategy of targeting acquisitions as a means of supplementing the ongoing
organic expansion of the Group continued to be successfully executed during
2007. A total of 27 companies were acquired, for a total consideration of £323m,
including assumed debt. The combined sales of those acquisitions on an
annualised basis is £440m, split £300m in Mainland Europe and £140m in the UK
and Ireland. During the calendar year 2007, £217m of sales from these 27
acquisitions impacted on the Group results.
So far in 2008 (to 13th March), 8 acquisitions have been completed, for a total
consideration net of cash acquired of £32m. Combined annualised sales is c.£50m,
split as follows:
- UK and Ireland - 7 deals, £46m annualised sales, 21 trading sites added in
Insulation, Commercial Interiors, Roofing and Specialist Construction and Safety
Products;
- Mainland Europe,- 1 deal, 1 trading site added, £4m annualised sales in
Commercial Interiors
Work is ongoing on the healthy pipeline of further opportunities.
Board
It was announced on 10 January 2008 that David Williams intends to retire as
Chief Executive on 30 June 2008, and will leave the Company on that date.
Following a comprehensive search conducted by external consultants for a
replacement, Chris Davies, who has been Managing Director of SIG Mainland Europe
since 2001, was appointed Deputy Chief Executive with effect from 10 January
2008 and will take over as Chief Executive on 1 July 2008.
During the hand-over period in the first six months of 2008, David is working
closely with Chris to ensure continuity and a smooth transition.
The search for a replacement for Chris as Managing Director of SIG Mainland
Europe is well underway.
I would like to take this opportunity to thank David for the valuable
contribution he has made to the Group over the past twenty four years,
particularly during his time as Chief Executive from January 2002. The excellent
position and strength of the Group today owes much to his leadership.
Employees
On behalf of the Board I wish to thank all our employees throughout the Group
for their efforts in enabling the Company to outperform market conditions and in
driving the continued successful expansion of the business.
Prospects
The Group's sales are more heavily weighted towards non-residential
construction, both in the UK and Ireland and in Mainland Europe, and it is
believed that the substantial pipeline of work in progress of both public and
privately funded construction programmes will continue to provide the Group with
attractive opportunities in its four main product sectors.
Insulation and related products is the Group's largest product sector and demand
is expected to continue to increase at a faster rate than overall construction
activity in the UK and Ireland and Mainland Europe, both across the new
construction and refurbishment markets. This will continue to be driven by a
range of factors including concern for the environment, rising energy costs, new
legislation seeking to limit energy consumption, new building regulations, and
grant schemes to improve energy efficiency in existing residential properties.
The Group is continuing to invest to ensure that it benefits from this expected
growth in demand going forward, and capitalises on its market leading position.
On a broader basis across the Group, a significant range of expansion
opportunities, both organic and acquisition, are being actively pursued. The
number of individual trading sites has increased substantially over recent years
throughout the operating regions, and this programme of expanding market
coverage is planned to continue.
In 2007, the Group expanded its operations and trading activities significantly
and these dynamics provide a strong platform coming into 2008. Trading in 2008
has begun well and the Board believes that the Group will continue its track
record of outperforming across its markets. The Board is confident of further
progress in 2008 and beyond.
Definitions
* - 'Like for like' is defined as the business excluding the impact of
acquisitions made since 1 January 2006.
** - 'Underlying' is before the amortisation of acquired intangibles and hedge
ineffectiveness.
Chief Executive's Review of Trading Performance
The Group had a very successful year in 2007, both in respect of the growth in
sales and profits from its core operations in its geographic regions, and in
terms of the expansion activities and new operations which were added during the
year.
The clear strategy of seeking expansion opportunities within the UK and Ireland
and Mainland Europe, in specialist products and markets related to the building,
construction and key industrial sectors, was aggressively pursued and continues
to fuel both geographic and product group development of the Group's activities.
Examples of this continued strategic expansion during 2007 are as follows:
• Acquired a total of 27 businesses, together adding annualised sales of
£440m, representing additional sales of over 20% on a full-year basis over
the 2006 sales revenue
• Increased the total number of trading sites within the Group by 161
during the year, to 779 at 31 December 2007 (618 at 31 December 2006)
• Acquired a trading site in Dubai and one in Spain, both as part of a UK
insulation acquisition
• Began trading in two additional countries - Czech Republic and Slovakia
(insulation and commercial interiors)
• Expanded the specialist door-set product range into all-metal
performance doors
• Acquired the leading specialist supplier of roofing materials in France
• Launched a successful range of innovative wall systems for the
healthcare market
Trading Highlights
All figures are excluding the USA business, which was sold in November 2006. The
term 'underlying' in relation to the operating profit and operating profit
margin is defined as being before the amortisation of acquired intangibles.
UK and Ireland (62% of total sales)
•Sales increased by £269.5m (21.5%) to £1,523.8m (2006: £1,254.3m)
•Like for like sales increased by £120.0m (9.8%)
•Underlying operating profit increased by £21.4m (21.4%) to £121.3m (2006:
£99.9m)
•The underlying operating profit margin was maintained at 8.0% (2006:
8.0%)
•39 trading sites were added in the year, taking the total at 31 December
2007 to 461 (31 December 2006: 422)
Overall construction and building activity grew in 2007 over 2006 in the UK, but
declined in Ireland, especially in new residential building. Whilst residential
new construction and RM&I weakened in the UK in the latter part of the year,
work on non-residential building projects was strong throughout the year.
Sales of insulation and related products in the UK and Ireland increased by
12.9% in total, 8.3% like for like, as overall demand increased, partly driven
by the new higher thermal performance standards required for new buildings in
the UK. In Ireland, reduced construction activity caused a reduction in demand
for all products, including insulation. Increased manufacturing capacity and
output of certain products created some oversupply, which reduced market prices
of a number of insulation products.
In the specific market for insulation upgrading of residential properties, where
the Group is both an insulation supplier and in some situations an installer of
insulation into the roof and walls of existing properties, which have little or
no insulation from when they were originally built, there was a reduction in
demand compared with previous years. As previously reported, this was due to a
timing gap in the flow of grant funds under the Government Energy Efficiency
Commitment. A new scheme, now called CERT (Carbon Emissions Reduction Target)
begins in April 2008 and is expected to generate higher levels of insulation
upgrading work over the next three years.
Demand for specialist high temperature insulation materials, which are used in a
wide range of industrial applications outside the building and construction
industry, including power plant, petrochemical and gas installations, metal
processing and other industries, increased during the year and the Company
performed strongly in this sector, where it is the clear market leader.
The number of trading sites increased by 4 to 75 at the end of December 2007.
The Commercial Interiors division had an excellent year, benefiting from strong
market demand, increases to the product range and several acquisitions. Sales
grew by 21.4% in total, 12.3% like for like including some modest price
inflation. Products were supplied to a wide range of new and refurbishment
projects in both the public and private non-residential building sectors. These
included hospitals, health centres, schools, universities, airports and other
transport related facilities, offices, retail developments, cinemas, hotels and
prisons.
In addition to marketing a wider selection of ceiling and washroom products,
all-metal high performance doorsets and floorcoverings were added to the range
to complement our offering to the non-residential sector. This ensures that SIG
maintains its position as a leading supplier by offering the most comprehensive
range available.
The number of trading sites increased by 10 to 55 at the end of December 2007.
Against the background of improved market demand and sales price inflation of
c.4% overall in the sector, the Roofing division traded strongly, with sales up
over 18.1% in total, 8.2% like for like, compared with 2006.
The Decent Homes programme, which had been quite slow in 2006, did pick up and
generated increased demand for product for the on-going work of re-roofing older
residential properties. Storm damage in various parts of the UK mid year also
increased the volume of repair and renovation work in the second half of 2007.
Significant sales growth was achieved in new products, particularly in relation
to the growing trend towards low maintenance roofline, rainwater and other
external building products, which are increasingly used in new construction as
well as in repair and maintenance.
The number of trading sites increased by 15 to 278 at the end of December 2007.
The Specialist Construction and Safety Products division had an excellent year
with total sales up by 66.1% in total, 14.8% like for like on 2006, driven by
strong underlying performance, continued expansion of the product range and the
impact of acquisitions. Continued robust market conditions in major construction
and infrastructure projects created good levels of demand. There was some
volatility in some product pricing, for example steel and chemicals, but pricing
overall increased year on year by c.3.5%.
The number of trading sites increased by 10 to 53 at the end of December 2007.
Mainland Europe (38% of total sales)
• Sales increased by £325.9m (53.8%) to £931.4m (2006: £605.5m)
• Like for like sales on a constant currency basis increased by 12.3%
• Underlying operating profit increased by £18.3m (66.3%) to £45.9m (2006:
£27.6m)
• Underlying operating profit margin increased to 4.9% (2006: 4.6%)
• Sales and operating profits increased on an underlying like for like
basis in each country, as well as on a total basis
• Significant expansion of geographic coverage, with a total of 122
trading sites added during the year, including 21 in two new countries for
SIG, Czech Republic and Slovakia, taking the total to 318 at 31 December
2007 (31 December 2006: 196).
In Germany and Austria (50% of sales in Mainland Europe) sales were increased
substantially, up 21.2% in local currency and 8.0% like for like in local
currency. Overall construction activity grew on a year on year basis. The rate
of growth compared with 2006 was skewed towards the first half year, due to the
exceptionally weak market activity in H1 2006 as a result of extreme adverse
weather conditions.
The core insulation and commercial interiors business made good progress, and
the roofing operations in Germany, which commenced with the acquisition of a
regional business with 12 trading sites in July 2006, was expanded during the
year to a total of 18 trading sites as at 31 December 2007.
The growth in demand for specialist high temperature insulation materials
increased, partly as a result of investment in Germany in power generation
facilities, and this part of our operations traded strongly. Price inflation
overall in Germany and Austria is estimated to have been c.3% in the year.
The number of trading sites increased by 6 to 82 at the end of December 2007 (31
December 2006: 76).
In France (29% of sales in Mainland Europe) the core insulation and commercial
interiors operations traded very strongly, contributing to total sales growth in
2007 of 104.4% in local currency, including the contribution from the large
specialist roofing supplies business (called Lariviere) which was acquired on 29
June 2007. This is the largest acquisition made by SIG and the retention of
customers and staff has been extremely high. The business has performed well
since joining the SIG Group, and is continuing the strategy of geographic
expansion throughout France. Since the date of acquisition, 6 trading sites have
been added, taking the total to 89 as at 13 March 2008.
Overall market demand was reasonably good in France and price inflation averaged
3% across the product range. Like for like sales were increased by 15.4% in
local currency.
The number of trading sites increased by 91 to 142 at the end of December 2007
(31 December 2006: 51).
In Poland and Central Europe (15% of sales in Mainland Europe), total sales
increased by 163%, including the substantial business acquired in Poland in
October 2006, and subsequent acquisitions in Poland, Slovakia and Czech Republic
during 2007.
Market demand for building products grew during the year, as reconstruction and
economic resurgence continues.
The core business in Poland, which chiefly sells insulation and commercial
interiors products, traded very strongly with sales up 35.6% like for like over
2006 in local currency. Prices were volatile throughout the year in some
products, with sales price inflation averaging c.5% overall.
The number of trading sites increased by 24 to 83 at the end of December 2007
(31 December 2006: 59).
Sales in Benelux (6% of total sales in Mainland Europe) grew strongly, up 38.3%
in total, 15.8% like for like, both in local currency. Consistent with SIG's
other Mainland European businesses, the core insulation and commercial interiors
operations performed strongly against the background of good market conditions.
Demand from both building and industry (insulation) increased and price
inflation is estimated to have been c.3.5% averaged across the product range
overall.
The number of trading sites increased by 1 to 11 at the end of December 2007 (31
December 2006: 10).
Acquisitions
A record 27 companies were acquired during 2007, for a total consideration
including assumed debt of £323m. Combined annualised sales of these acquired
businesses is £440m, of which £217m impacted on 2007.
The geographic split of the £440m annualised sales is £300m Mainland Europe,
£140m UK and Ireland. By market sector, the spread of businesses acquired was
very wide and added weight to each of our existing business streams, as shown by
the table below.
Looking at the acquisitions from a different perspective, they can be
categorised as either 'bolt-on', ie adding to an existing position in a product
range in any one country, or 'platform', where we are creating a new position in
a product group in a country for the first time, from which we would then plan
to expand our position and grow sales and profits going forward.
The 'platform' acquisitions in 2007 are as follows:
• Number one specialist distributor in France of roofing materials
• Leading UK supplier of non-residential flooring materials
• Insulation and commercial interiors supplier in Slovakia
• Insulation and commercial interiors supplier in Czech Republic
Our strategy is to add to each of these initial acquired positions both by
organic expansion of their product range and geographic coverage, and by making
further 'bolt-on' acquisitions to accelerate the rate and pace of expansion.
During the year we expanded the team of in-house professionals who work on the
acquisition search, selection and execution programme. At the end of December
2007 we have dedicated specialists located throughout Mainland Europe and in the
UK and Ireland.
The post-acquisition action plans are tailor-made for each acquisition and
involve Finance, HR, IT and Commercial Management. The integration process with
each of the 2007 acquisitions is progressing well.
2007 Acquisitions - Product Impact
UK and Ireland Mainland Europe
Insulation x x
Commercial Interiors x x
Roofing and External Elements x x
Specialist Construction and Safety Products x
Summary of Trading Performance
In 2007 the Group has expanded significantly; geographic coverage has increased
in both existing and new countries. The specialist product range has continued
to widen, and we have invested in inventories and customer service facilities to
maintain and develop our reputation for high quality products and a high quality
service.
The continued pursuit and application of the Group's clear Growth Strategy has
once again driven excellent increases in sales, profits and earnings per share.
We believe that 2007 marks another year of solid growth in shareholder value.
Consolidated Income Statement
for the year ended 31 December 2007
Before other Other Total Before other Other items* Total
items* items* items*
2007 2007 2007 2006 2006 2006
Note £m's £m's £m's £m's £m's £m's
-----------------------------------------------------------------------------------------------------------
Revenue
Existing operations 2,238.6 - 2,238.6 1,766.7 - 1,766.7
Acquisitions 216.6 - 216.6 93.1 - 93.1
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Continuing operations 2 2,455.2 - 2,455.2 1,859.8 - 1,859.8
Cost of sales (1,796.6) - (1,796.6) (1,352.5) - (1,352.5)
-----------------------------------------------------------------------------------------------------------
Gross profit 658.6 - 658.6 507.3 - 507.3
Other operating expenses (499.2) (17.2) (516.4) (385.9) (6.9) (392.8)
-----------------------------------------------------------------------------------------------------------
Operating profit
Existing operations 147.5 (17.2) 130.3 116.7 (6.9) 109.8
Acquisitions 11.9 - 11.9 4.7 - 4.7
-----------------------------------------------------------------------------------------------------------
Continuing operations 2 159.4 (17.2) 142.2 121.4 (6.9) 114.5
Finance income 9.2 1.4 10.6 6.0 1.4 7.4
Finance costs (28.5) - (28.5) (19.2) - (19.2)
-----------------------------------------------------------------------------------------------------------
Profit before tax 140.1 (15.8) 124.3 108.2 (5.5) 102.7
Income tax expense 41.9 (4.7) 37.2 32.5 (1.6) 30.9
-----------------------------------------------------------------------------------------------------------
Profit after tax from continuing
operations 98.2 (11.1) 87.1 75.7 (3.9) 71.8
-----------------------------------------------------------------------------------------------------------
Discontinued operation:
Profit on disposal of
discontinued operation - - - - 1.9 1.9
Profit before tax from
discontinued operation - - - 3.8 - 3.8
Income tax expense on
discontinued operation - - - (1.1) 0.1 (1.0)
-----------------------------------------------------------------------------------------------------------
- - - 2.7 2.0 4.7
-----------------------------------------------------------------------------------------------------------
Profit after tax 98.2 (11.1) 87.1 78.4 (1.9) 76.5
-----------------------------------------------------------------------------------------------------------
Attributable to:
Equity holders of the Company 97.3 (11.1) 86.2 77.7 (1.9) 75.8
Minority interests 0.9 - 0.9 0.7 - 0.7
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
Earnings per share
From continuing operations:
Basic earnings per share 3 74.8p (8.5p) 66.3p 61.3p (3.2p) 58.1p
Diluted earnings per share 3 74.2p (8.4p) 65.8p 60.6p (3.1p) 57.5p
-----------------------------------------------------------------------------------------------------------
From continuing and discontinued operations:
Basic earnings per share 3 74.8p (8.5p) 66.3p 63.4p (1.5p) 61.9p
Diluted earnings per share 3 74.2p (8.4p) 65.8p 62.8p (1.6p) 61.2p
-----------------------------------------------------------------------------------------------------------
* Other items relate to the amortisation of acquired intangibles, hedge ineffectiveness and the profit on disposal of
discontinued operation. Other items have been disclosed separately in order to give an indication of the underlying
earnings of the Group.
Consolidated Statement of Recognised Income and Expense
for the year ended 31 December 2007
2007 2006
£m's £m's
--------------------------------------------------------------------------------
Profit after tax 87.1 76.5
Exchange difference on retranslation of foreign
currency goodwill and intangibles 24.7 (0.9)
Exchange difference on retranslation of foreign
currency net investments (excluding goodwill and
intangibles) 18.8 (4.0)
Exchange and fair value movements associated
with (41.2) 3.7
borrowings and derivative financial instruments
Tax credit/(charge) on exchange difference
arising on borrowings and derivative financial
instruments 12.0 (1.1)
Gains and losses on cash flow hedges (5.2) 1.8
Transfer to profit and loss on cash flow hedges 2.1 1.2
Current and deferred tax on share options (0.8) 2.2
Actuarial gain on defined benefit pension schemes 6.2 3.3
schemes
Deferred tax movement associated with actuarial gain (2.0) (1.0)
--------------------------------------------------------------------------------
Total recognised income and expense for the year 101.7 81.7
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the Company 100.8 81.0
Minority interests 0.9 0.7
--------------------------------------------------------------------------------
101.7 81.7
--------------------------------------------------------------------------------
Consolidated Balance Sheet
as at 31 December 2007
2007 2006
Note £m's £m's
--------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 209.0 135.0
Goodwill 434.9 216.3
Intangible assets 152.8 81.9
Deferred tax assets 17.4 16.4
--------------------------------------------------------------------------------
814.1 449.6
--------------------------------------------------------------------------------
Current assets
Inventories 224.6 151.9
Trade receivables 414.4 310.4
Other receivables 25.4 20.5
Derivative financial instruments 0.5 1.7
Cash and cash equivalents 89.2 62.4
--------------------------------------------------------------------------------
754.1 546.9
--------------------------------------------------------------------------------
Total assets 1,568.2 996.5
--------------------------------------------------------------------------------
Current liabilities
Trade and other payables 366.1 260.6
Obligations under finance lease contracts 2.6 1.4
Bank overdrafts 1.9 3.3
Bank loans 150.8 50.8
Private placement notes 22.1 -
Loan notes 2.8 0.5
Derivative financial instruments 36.7 0.1
Current tax liabilities 17.4 21.4
Provisions 9.5 12.0
--------------------------------------------------------------------------------
609.9 350.1
--------------------------------------------------------------------------------
Non-current liabilities
Obligations under finance lease contracts 7.1 1.4
Bank loans 5.9 4.7
Private placement notes 251.8 193.0
Loan notes 1.4 -
Derivative financial instruments 35.5 37.7
Deferred tax liabilities 44.3 17.8
Other payables 2.8 1.3
Retirement benefit obligations 15.7 23.6
Provisions 18.9 14.2
--------------------------------------------------------------------------------
383.4 293.7
--------------------------------------------------------------------------------
Total liabilities 993.3 643.8
--------------------------------------------------------------------------------
Net assets 574.9 352.7
--------------------------------------------------------------------------------
Capital and reserves
Called up share capital 4 13.5 12.3
Share premium account 4 166.5 19.6
Capital redemption reserve 4 0.3 0.3
Special reserve 4 22.1 22.1
Share option reserve 4 2.7 1.8
Hedging and translation reserve 4 9.7 (4.6)
Retained profits 4 358.8 300.0
--------------------------------------------------------------------------------
Attributable to equity holders of the Company 573.6 351.5
--------------------------------------------------------------------------------
Minority interests 4 1.3 1.2
--------------------------------------------------------------------------------
Total equity 4 574.9 352.7
--------------------------------------------------------------------------------
Consolidated Cash Flow Statement
for the year ended 31 December 2007
2007 2006
Note £m's £m's
--------------------------------------------------------------------------------
Net cash flow from operating activities
Cash inflow from operating activities 5 160.3 132.4
Borrowing costs paid (19.3) (14.2)
Interest received 5.0 2.4
Income tax paid (39.8) (36.6)
--------------------------------------------------------------------------------
Net cash inflow from operating activities 106.2 84.0
--------------------------------------------------------------------------------
Cash flows from investing activities
Purchase of property, plant and equipment (60.5) (44.7)
Proceeds from sale of property, plant and 4.1 2.0
equipment
Purchase of businesses (226.8) (90.1)
Net proceeds from sale of discontinued operation - 25.3
--------------------------------------------------------------------------------
Net cash used in investing activities (283.2) (107.5)
--------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issue of ordinary share capital 148.1 1.9
Capital element of finance lease rental payments (2.5) (1.8)
Repayment of loans (12.6) (135.1)
New loans 98.6 211.6
Dividends paid to equity holders of the Company (28.4) (21.7)
Payments to minority shareholder (0.8) (0.7)
--------------------------------------------------------------------------------
Net cash generated in financing activities 202.4 54.2
--------------------------------------------------------------------------------
Increase in cash and cash equivalents in the year 6 25.4 30.7
--------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 59.1 28.9
Effect of foreign exchange rate changes 2.8 (0.5)
--------------------------------------------------------------------------------
Cash and cash equivalents at end of year 87.3 59.1
--------------------------------------------------------------------------------
1. Basis of preparation
The Group's financial information has been prepared in accordance with
International Financial Reporting Standards ('IFRS') issued for use in the
European Union and on a basis consistent with that adopted in the previous year.
The financial information has been prepared under the historical cost convention
except for derivative financial instruments that are stated at their fair value.
While the financial information included in this preliminary announcement has
been computed in accordance with the recognition and measurement criteria of
IFRS, this announcement does not itself contain sufficient information to comply
with IFRS. The Company will publish full IFRS compliant accounts in April 2008.
The preliminary announcement does not constitute the Company's statutory
accounts for the years ended 31 December 2007 or 31 December 2006 within the
meaning of Section 240 of the Companies Act 1985 but is derived from those
statutory accounts.
The Group's statutory accounts for the year ended 31 December 2006 have been
filed with the Registrar of Companies, and those for 2007 will be delivered
following the Company's Annual General Meeting. The auditors have reported on
the statutory accounts for 2007 and 2006, and their reports were unqualified and
did not contain statements under section 237 (2) or 237 (3) of the Companies Act
1985.
2. Revenue and segmental information
Revenue
An analysis of the Group's revenue is as follows:
2007 2006
£m's £m's
--------------------------------------------------------------------------------
Continuing operations - sale of goods 2,455.2 1,859.8
Discontinued operation - sale of goods - 65.2
--------------------------------------------------------------------------------
Total revenue 2,455.2 1,925.0
--------------------------------------------------------------------------------
Finance Income 10.6 7.4
Total Income 2,465.8 1,932.4
======= ========
Geographical Segments
As at 31 December 2007, the Group is managed and organised in two geographies: UK and Ireland and Mainland Europe. On
20 November 2006, the Group disposed of its operations in the USA. These geographies are the basis on which the Group
reports its primary segment information.
Segment information about these geographies is presented below:
2007 2007 2007 2007 2006 2006 2006 2006 2006
UK and Mainland Eliminations Total UK and Mainland Discontinued Eliminations Total
Ireland Europe Ireland Europe Operation
(USA)
£m's £m's £m's £m's £m's £m's £m's £m's £m's
------------------------------------------------------------------------------------------------------------------------
Revenue
External
sales 1,523.8 931.4 - 2,455.2 1,254.3 605.5 65.2 - 1,925.0
Inter-segment
sales* 0.3 - (0.3) - 0.1 - - (0.1) -
------------------------------------------------------------------------------------------------------------------------
Total revenue 1,524.1 931.4 (0.3) 2,455.2 1,254.4 605.5 65.2 (0.1) 1,925.0
------------------------------------------------------------------------------------------------------------------------
Result
Segment result
before
amortisation
of acquired
intangibles 121.3 45.9 - 167.2 99.9 27.6 3.8 - 131.3
Amortisation
of acquired
intangibles (12.0) (5.2) - (17.2) (6.5) (0.4) - - (6.9)
------------------------------------------------------------------------------------------------------------------------
Segment result 109.3 40.7 - 150.0 93.4 27.2 3.8 - 124.4
Parent Company costs (7.8) (6.1)
------------------------------------------------------------------------------------------------------------------------
Operating profit 142.2 118.3
Net finance costs - continuing operations (17.9) (11.8)
------------------------------------------------------------------------------------------------------------------------
Profit before tax 124.3 106.5
Profit on disposal of discontinued operation - 1.9
Income tax credit - on profit on disposal of
discontinued operation - 0.1
Income tax expense - continuing operations (37.2) (30.9)
Income tax expense - discontinued operation - (1.1)
Minority interests (0.9) (0.7)
------------------------------------------------------------------------------------------------------------------------
Retained profit 86.2 75.8
------------------------------------------------------------------------------------------------------------------------
Attributable to:
Continuing operations 86.2 71.1
Discontinued operation - 4.7
------------------------------------------------------------------------------------------------------------------------
86.2 75.8
------------------------------------------------------------------------------------------------------------------------
* Inter-segment sales are charged at the prevailing market rates.
Balance sheet
Assets
Segment
assets 902.7 662.3 - 1,565.0 718.4 266.5 - - 984.9
Unallocated assets 3.2 11.6
------------------------------------------------------------------------------------------------------------------------
Consolidated total assets 1,568.2 996.5
------------------------------------------------------------------------------------------------------------------------
Liabilities
Segment
liabilities 319.6 169.0 - 488.6 264.4 91.9 - - 356.3
Unallocated liabilities 504.7 287.5
------------------------------------------------------------------------------------------------------------------------
Consolidated total liabilities 993.3 643.8
------------------------------------------------------------------------------------------------------------------------
Other segment information
Capital expenditure on:
Property,
plant and
equipment 44.9 19.8 64.7 37.3 8.2 0.4 45.9
Intangible
assets 22.7 59.3 82.0 28.9 10.8 - 39.7
Goodwill 44.3 155.8 200.1 36.5 18.9 - 55.4
Non-cash expenditure:
Depreciation 21.4 8.9 30.3 18.3 5.5 0.3 24.1
Amortisation
of acquired
intangibles 12.0 5.2 17.2 6.5 0.4 - 6.9
------------------------------------------------------------------------------------------------------------------------
3. Earnings per share
The calculations of earnings per share are based on the following profits and numbers of shares:
Basic and diluted
-----------------------------------------------------------
2007 2006 2006 2006
Continuing Discontinued
operations and Continuing operations Total
total operations (USA)
£m's £m's £m's £m's
------------------------------------------------------------------------------------
Profit after tax 87.1 71.8 4.7 76.5
Minority interests (0.9) (0.7) - (0.7)
------------------------------------------------------------------------------------
86.2 71.1 4.7 75.8
------------------------------------------------------------------------------------
Basic and diluted before amortisation of acquired intangibles,
hedge ineffectiveness and profit on disposal of discontinued operation
--------------------------------------------------------------------------------
2007 2006 2006 2006
Continuing Discontinued
operations and Continuing operations Total
total operations (USA)
£m's £m's £m's £m's
------------------------------------------------------------------------------------
Profit after tax 87.1 71.8 4.7 76.5
Minority interests (0.9) (0.7) - (0.7)
Amortisation of acquired
intangibles 17.2 6.9 - 6.9
Hedge ineffectiveness (1.4) (1.4) - (1.4)
Tax relating to the
amortisation of acquired
intangibles and hedge
ineffectiveness (4.7) (1.6) - (1.6)
Profit after tax on disposal
of discontinued operation - - (2.0) (2.0)
------------------------------------------------------------------------------------
97.3 75.0 2.7 77.7
------------------------------------------------------------------------------------
Weighted average number of shares:
2007 2006
Number Number
------------------------------------------------------------------------------------
For basic earnings per share 130,090,267 122,560,171
Exercise of share options 982,011 1,287,923
------------------------------------------------------------------------------------
For diluted earnings per share 131,072,278 123,848,094
------------------------------------------------------------------------------------
2007 2006
Earnings per share
Basic earnings per share - continuing operations 66.3p 58.1p
Basic earnings per share - discontinued operation 0.0p 3.8p
Total basic earnings per share 66.3p 61.9p
Diluted earnings per share - continuing operations 65.8p 57.5p
Diluted earnings per share - discontinued operation 0.0p 3.8p
Total diluted earnings per share 65.8p 61.2p
------------------------------------------------------------------------------------
Earnings per share before amortisation of acquired intangibles, hedge ineffectiveness and profit on disposal of
discontinued operation
Basic earnings per share - continuing operations 74.8p 61.3p
Basic earnings per share - discontinued operation 0.0p 2.2p
Total basic earnings per share 74.8p 63.4p
Diluted earnings per share - continuing operations 74.2p 60.6p
Diluted earnings per share - discontinued operation 0.0p 2.1p
Total diluted earnings per share 74.2p 62.8p
------------------------------------------------------------------------------------
Earnings per share before amortisation of acquired intangibles, hedge ineffectiveness and profit on disposal
of discontinued operation is disclosed in order to present the underlying performance of the Group.
4. Consolidated statement of changes in equity
Called Share Capital Hedging and
up share premium redemption Special Share Option translation Retained Minority Total
capital account reserve reserve reserve reserve profits Total interests equity
£m's £m's £m's £m's £m's £m's £m's £m's £m's £m's
------------------------------------------------------------------------------------------------------------------------
At 31 December
2005 12.2 17.8 0.3 22.1 1.4 (2.3) 237.7 289.2 1.2 290.4
Profit after tax - - - - - - 75.8 75.8 0.7 76.5
Dividends - - - - - - (21.7) (21.7) - (21.7)
New share
capital issued 0.1 1.8 - - - - - 1.9 - 1.9
Exchange
difference on
retranslation
of foreign
currency
goodwill and
intangibles - - - - - (0.9) - (0.9) - (0.9)
Exchange
difference on
retranslation
of foreign
currency net
investments
(excluding
goodwill and
intangibles) - - - - - (4.0) - (4.0) - (4.0)
Exchange and
fair value
movements
associated
with
borrowings and
derivative
financial
instruments - - - - - 3.7 - 3.7 - 3.7
Tax charge on
exchange
difference
arising on
borrowings and
derivative
financial
instruments - - - - - (1.1) - (1.1) - (1.1)
Gains and
losses on
cashflow
hedges - - - - - - 1.8 1.8 - 1.8
Transfer to
profit and
loss on cash
flow hedges - - - - - - 1.2 1.2 - 1.2
Current and
deferred tax
on share
options - - - - - - 2.2 2.2 - 2.2
Actuarial gain
on defined
benefit
pension
schemes - - - - - - 3.3 3.3 - 3.3
Deferred tax
movement
associated
with actuarial
gain - - - - - - (1.0) (1.0) - (1.0)
Credit to
share option
reserve - - - - 1.1 - - 1.1 - 1.1
Exercise of
share options - - - - (0.7) - 0.7 - - -
Payment to
minority
interest
shareholder - - - - - - - - (0.7) (0.7)
------------------------------------------------------------------------------------------------------------------------
At 31 December
2006 12.3 19.6 0.3 22.1 1.8 (4.6) 300.0 351.5 1.2 352.7
------------------------------------------------------------------------------------------------------------------------
Profit after
tax - - - - - - 86.2 86.2 0.9 87.1
Dividends - - - - - - (28.4) (28.4) - (28.4)
New share
capital issued 1.2 146.9 - - - - - 148.1 - 148.1
Exchange
difference on
retranslation
of foreign
currency
goodwill and
intangibles - - - - - 24.7 - 24.7 - 24.7
Exchange
difference on
retranslation
of foreign
currency net
investments
(excluding
goodwill and
intangibles) - - - - - 18.8 - 18.8 - 18.8
Exchange and
fair value
movements
associated
with
borrowings and
derivative
financial
instruments - - - - - (41.2) - (41.2) - (41.2)
Tax credit on
exchange
difference
arising on
borrowings
and derivative
financial
instruments - - - - - 12.0 - 12.0 - 12.0
Gains and
losses on cash
flow hedges - - - - - - (5.2) (5.2) - (5.2)
Transfer to
profit and
loss on cash
flow hedges - - - - - - 2.1 2.1 - 2.1
Current and
deferred tax
on share
options - - - - - - (0.8) (0.8) - (0.8)
Actuarial gain
on defined
benefit
pension
schemes - - - - - - 6.2 6.2 - 6.2
Deferred tax
movement
associated
with actuarial
gain - - - - - - (2.0) (2.0) - (2.0)
Credit to
share option
reserve - - - - 1.6 - - 1.6 - 1.6
Exercise of
share options - - - - (0.7) - 0.7 - - -
Payment to
minority
interest
shareholder - - - - - - - - (0.8) (0.8)
------------------------------------------------------------------------------------------------------------------------
At 31 December
2007 13.5 166.5 0.3 22.1 2.7 9.7 358.8 573.6 1.3 574.9
------------------------------------------------------------------------------------------------------------------------
5. Reconciliation of operating profit to cash inflow from operating activities
2007 2006
£m's £m's
-------------------------------------------------------------------------------------
Operating profit from continuing operations 142.2 114.5
Operating profit from discontinued operation - 3.8
-------------------------------------------------------------------------------------
Operating profit 142.2 118.3
-------------------------------------------------------------------------------------
Depreciation charge 30.3 24.1
Amortisation of acquired intangibles 17.2 6.9
Profit on sale of property, plant and equipment (2.0) (0.6)
Share-based payments 1.6 1.1
Increase in inventories (8.2) (14.9)
Decrease / (increase) in receivables 0.1 (4.4)
(Decrease) / increase in payables (20.9) 1.9
-------------------------------------------------------------------------------------
Cash inflow from operating activities 160.3 132.4
-------------------------------------------------------------------------------------
6. Reconciliation of net cash flow to movements in net debt
2007 2006
£m's £m's
-------------------------------------------------------------------------------------
Increase in cash and cash equivalents in the year 25.4 30.7
Cash flow from increase in debt (87.7) (75.8)
-------------------------------------------------------------------------------------
Increase in net debt resulting from cash flows (62.3) (45.1)
Debt acquired with acquisitions* (94.0) (15.9)
Non-cash items+ (21.7) 5.9
Exchange differences (22.1) 1.0
-------------------------------------------------------------------------------------
Increase in net debt in the year (200.1) (54.1)
Net debt at beginning of year (228.8) (174.7)
-------------------------------------------------------------------------------------
Net debt at end of year (428.9) (228.8)
-------------------------------------------------------------------------------------
* including loan notes issued.
+ Non-cash items relate to the fair value movement of debt recognised in the
year which does not give rise to a cash inflow or outflow.
7. Final dividend
A final dividend of 18.7p per share (2006: 14.3p) has been proposed, taking the
full year dividend to 26.7p (2006: 20.5p).
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
Accounts.
8. Forward looking statements
This Preliminary Announcement of Results for the year ended 31 December 2007
contains certain forward looking statements with respect to the Group's
financial condition, its results, strategy, plans and objectives. The forward
looking statements contained in this document are not forecasts or guarantees of
future performance and are subject to risks, uncertainties and other factors.
Some of these factors are beyond the Group's control, are difficult to predict
and could cause actual results to differ materially from those expressed,
implied or forecast in the forward looking statements.
These factors include, but are not limited to, general economic conditions and
business conditions in the Group's markets, product availability and prices,
credit risk, the actions of competitors, interest and exchange rates and
legislative fiscal and regulatory developments.
All forward looking statements in this document are based on information known
to the Group as at 12 March 2008. The Group has no obligation publicly to update
or revise any forward looking statements, whether as a result of new
information, future events or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
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