Interim Results - Replacement

SIG PLC 3 September 2001 The issuer advises that the following replaces the interim results announcement released today at 07:00 under RNS number 3258J. The interim dividend is payable on 16 November 2001 to shareholders on the register at 26 October 2001 (not 24 October 2001 as previously advised). All other details remain unchanged. The full amended text appears below. P R E S S R E L E A S E 3 September 2001 INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2001 SIG plc, Europe's largest specialist distributor of Insulation and Related Products, Ceilings and Partitioning and Roofing, reports record interim results with sales and operating profits ahead in all three regions of the UK, mainland Europe and the USA. * Sales in the first half up 11% to £498m (2000: £447m). * Operating profit before amortisation of goodwill up 13% to £26.2m (2000: £ 23.3m). * Profit before tax has increased 7% to £23m (2000: £21.6m). * Earnings per share increased 7% to 13.3p (2000: 12.4p). * Interim dividend up 9% to 3.7p (2000: 3.4p). * David Williams to take over as Chief Executive from 1 January 2002 when Bill Forrester, the present Chief Executive, retires. * Today SIG also announces the acquisition of Capco Holdings Ltd, a distributor of Insulation and Related Products, Ceilings and Partitioning and Roofing, with 19 branches in the UK and Eire. Total consideration is £ 26.7m. Barrie Cottingham, Chairman of SIG, commenting on the results, said: 'Sales have increased in every country and we believe that we have further strengthened our market position in each of our three core sectors of Insulation and Related Products, Ceilings and Partitioning and Roofing.' 'Whilst we could not expect to avoid the effect of any further economic slow down, we believe that the broad spread of our activities and our proven ability to continue to gain market share justifies our confidence in the future. We expect to make further progress in the second half year.' Enquiries: Bill Forrester, Chief Executive SIG plc today 020 7251 3801 David Williams, Deputy Chief Executive thereafter 0114 285 6300 Frank Prust, Finance Director Faeth Finnemore/Gordon Simpson Finsbury 020 7251 3801 Further information is available from SIG's website www.sigplc.co.uk. A webcast of the results presentation will be available from Tuesday 4 September 2001. Print resolution images are available for download from www.piranhaphotography.com/SIG CHAIRMAN'S STATEMENT INTERIM RESULTS 2001 In the first half of 2001 we have increased sales and profits in all three regions in which we operate; the UK, mainland Europe and the USA. This improvement is chiefly organic, with only a modest contribution coming from recent acquisitions. Overall our operating margin has been maintained, with increases in the UK and USA. In Europe the margin was reduced very slightly due to difficult market conditions in Poland and Germany. Sales have increased in every country and we believe that we have further strengthened our market position in each of our three core sectors of Insulation and Related Products, Ceilings and Partitioning and Roofing. These results underline the benefits of our broad geographic and market sector spread, and the Group's ability to perform consistently well. The downturn in Germany and Poland has been countered by particularly strong performances in UK Roofing, and in Ceilings and Partitioning in the UK, France and the Netherlands. Results and Dividends * Sales in the first half have increased by 11% to £498m (2000: £447m) * Operating Profits before amortisation of goodwill for the period are 13% higher at £26.2m (2000: £23.3m) * Profit before Tax is 7% higher at £23.0m (2000: £21.6m) * Earnings per share for the half year are 7.3% higher at 13.3p compared with 12.4p in 2000 * The Balance Sheet remains sound with gearing at 53% compared with 51% at December 2000 and interest cover is strong at 12 times. Since 30 June 2001, we have increased our facilities and our debt profile has been improved by the raising of £85m of seven to ten year fixed rate finance via a US Private Placement. An interim dividend of 3.7p (2000: 3.4p) has been declared, an increase of 9%, reflecting the Group's strong performance and the Board's confidence in the future. The dividend is payable on 16 November 2001 to shareholders on the register at 26 October 2001. Review of Operations UK SALES grew strongly, up by a total of £30.2m to £302m, an increase of 11.1% over the first half of 2000. This excellent sales performance, which was largely organic, resulted in an improvement in OPERATING PROFITS of 13%. Market demand grew modestly with price inflation at an average of 2% across the range. In INSULATION AND RELATED PRODUCTS, sales and operating profits increased in a market where prices strengthened slightly, making a welcome turn-round from the deflation of previous years. We also saw some benefit from increased Government funding for insulation upgrading programmes in existing housing. In the ROOFING DIVISION sales and profits grew substantially, with strong organic growth supplemented by small bolt-on acquisitions. This division is especially focused on repairs, maintenance and improvements (RM&I) work and we gained share in a market where demand and prices slightly improved. The programme of improvements to the branch network continued during the period and we invested further in sales resources and improved management reporting systems. In CEILINGS & PARTITIONING we continued to make excellent progress with sales and profits well ahead, and operating margins maintained. The market for interior fit-out of new and existing commercial buildings was reasonably strong and we have introduced new ranges of office partitioning products to further strengthen our position, especially in the upper quality, higher specification sector. In the small but growing SAFETY PRODUCTS business, sales increased and we made a substantial investment in the materials handling and logistics functions to improve customer service and facilitate future growth. EUROPE SALES across our mainland European operations rose by 11% over prior year and were increased in each country in both local currency and in sterling. OPERATING PROFITS were up 2%, though overall the operating margin declined slightly, influenced by results in Germany and Poland. In FRANCE, our core INDUSTRIAL distribution business performed strongly, increasing sales, margins and profits in a market where demand from specialist industrial products improved over prior year. The CEILINGS AND PARTITIONING division in France traded well, increasing sales and profits in market conditions which remained positive, and we benefited from the continued development of branches opened in 2000. In GERMANY, where we are a major supplier to both the INSULATION and CEILINGS AND PARTITIONING markets, we increased sales overall, but the operating profit declined due to cost increases and a small reduction in the gross margin. Our performance was in line with our expectations for the period. Demand from the construction and building related markets was down compared with the first half 2000, especially in new construction. Sales into the repairs and maintenance market held up better and our specialist industrial insulation operations have performed strongly. New opportunities in specific areas were identified and two new, small branches were opened. Both traded above expectations in the period. In POLAND, the sharp decline in the new build market, especially in Warsaw where we have our largest operations, caused a setback in the progress we had made in 2000 and a small operating loss was incurred. Overall, sales were slightly up and actions have already been taken on costs in the light of the very disappointing trading conditions. In HOLLAND, where we have a significant and growing share of the CEILINGS AND PARTITIONING market, sales, margins and profits increased. We strengthened our market position in positive trading conditions, benefiting from the addition of two new branches. USA The industrial INSULATION operations increased sales in the period, despite demand from the core petro-chemical plants in Texas, Louisiana and Alabama being below expectations. The continued development of value added products sales, and an improvement in the operating margin, created a substantial increase in operating profits. Acquisitions We continued to strengthen our UK operations by the addition of three small bolt-on acquisitions for a total consideration of £10.2m. Each of these was carefully targeted to strengthen our coverage in specific areas. They contributed sales of just over £4m in the first half of 2001. Today we announced the acquisition of Capco Holdings Ltd (Capco) for a total consideration of £26.7m. Capco is a specialist distributor with 19 branches in the UK and Eire, with activities spanning our three core business sectors of Insulation and Related Products, Ceilings and Partitioning and Roofing. This acquisition is an excellent strategic fit with our existing operations and offers sound potential for future earnings enhancement. It is a continuation of our proven strategy of strengthening core activities and extending the geographic spread of our businesses. Euro All our businesses in Eire and Mainland Europe are well advanced in preparing systems to enable trading to be conducted in the Euro from the beginning of 2002. Management In June, we announced that David Williams will become Chief Executive at the end of 2001 when Bill Forrester, the present Chief Executive, retires. We have taken the opportunity to strengthen the executive membership of the Group Board by appointing John Chivers, Managing Director of our Roofing Division. We also announced that two new non-executive Directors, Nick Paul and Peter Blackburn, have joined the Board. They replace Tim Kitson and Jim Potter, both of whom retire in September 2001. I thank both Tim and Jim for their excellent contribution to the Group during a period of rapid growth. I also take this opportunity to welcome the new Directors to the Board. Prospects Conditions overall in our specific markets are not expected to change significantly in the second half of 2001 compared with the first half. Some further weakening of the construction sector in Germany and Poland is anticipated. In all other areas of Europe, Eire, the UK and the USA we expect demand and pricing to remain broadly stable. Whilst we could not expect to avoid the effect of any further economic slow down, we believe that the broad spread of our activities and our proven ability to continue to gain market share justify our confidence in the future, and we expect to make further progress in the second half year. Summary Consolidated Profit and Loss Account for the six months ended 30 June 2001 Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 Dec Note 2001 2001 2000 2000 2000 2000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 3 497,640 447,344 931,927 ........................... ... ... ... Operating profit 3 25,124 22,675 50,874 Net interest payable 2,099 1,122 2,703 ........................... ... ... ... Profit before taxation and amortisation of goodwill 24,136 22,141 49,596 Amortisation of goodwill 1,111 588 1,425 ........................... ...... ...... ......... Profit on ordinary activities before taxation 23,025 21,553 48,171 Tax on profit on ordinary 7,276 6,803 15,222 activities ........................... ... ... ... Profit on ordinary activities after taxation 15,749 14,750 32,949 Minority interests (all 78 38 207 equity) Equity dividends 4,387 3,996 12,036 ........................... ... ... ... Retained profit for the 11,284 10,716 20,706 year ........................... ... ... ... Earnings per share Basic earnings per share 4 13.3p 12.4p 27.7p Fully diluted earnings per 4 13.1p 12.3p 27.4p share ........................... ... ... ... Earnings per share before goodwill amortisation Basic earnings per share 4 14.2p 12.9p 28.9p Fully diluted earnings per 4 14.0p 12.8p 28.6p share ........................... ... ... ... Consolidated Statement of Total Recognised Gains and Losses for the six months ended 30 June 2001 Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2001 2000 2000 £'000 £'000 £'000 Profit on ordinary activities after taxation and minority interests 15,671 14,712 32,742 Currency translation differences on foreign currency net investments (371) (486) 50 ............................................ .......... ............ ......... Total recognised gains and losses for the period 15,300 14,226 32,792 ............................................ .......... ............ ......... Summary Consolidated Balance Sheet as at 30 June 2001 Unaudited Unaudited Audited 30 June 30 June 31 Dec 2001 2000 2000 £'000 £'000 £'000 Fixed assets Intangible assets 42,897 24,288 36,116 Tangible assets 62,316 56,725 59,078 ....................................... ............ ......... ......... 105,213 81,013 95,194 ....................................... ............ ......... ......... Current assets Stocks 77,208 69,710 70,204 Debtors 201,647 188,870 172,957 Cash at bank 5,942 5,605 10,509 ....................................... ............ ......... ......... 284,797 264,185 253,670 Creditors due within one year (201,863) (184,094) (176,066) ....................................... ............ ......... ......... Net current assets 82,934 80,091 77,604 ....................................... .......... ......... ......... Total assets less current liabilities 188,147 161,104 172,798 Creditors due after one year (30,285) (24,737) (25,299) Provision for liabilities and charges (3,388) (3,632) (4,051) ....................................... ............ ......... ......... Net assets 154,474 132,735 143,448 ....................................... ............ ......... ......... Capital and reserves (all equity) 154,474 132,735 143,448 ....................................... ............ ......... ......... Summary Consolidated Cash Flow Statement for the six months ended 30 June 2001 Unaudited Unaudited Audited 30 June 30 June 31 Dec 2001 2000 2000 Note £'000 £'000 £'000 Net cash inflow from operating activities 5 25,531 22,481 52,837 ....................................... ............ ............ .......... Returns on investments and servicing of finance (2,099) (1,122) (2,703) ....................................... ............ ............ ........... Taxation (6,202) (3,562) (10,707) ....................................... ............ ............ ........... Capital expenditure (10,304) (8,819) (17,902) ....................................... ............ ............ ........... Acquisitions (10,178) (13,896) (29,472) ....................................... ............ ............ ........... Equity dividends paid (8,040) (7,306) (11,325) ....................................... ............ ............ ........... Financing 6,081 1,026 1,123 ....................................... ............ ............ ........... Decrease in cash in the period 6 (5,211) (11,198) (18,149) ....................................... ............ ............ ........... Notes to the Unaudited Interim Results 1. Basis of Preparation of Interim Financial Information The accounts have been prepared in accordance with the accounting policies included in the Annual Report for the year ended 31 December 2000, which have been applied consistently throughout the current and preceding periods. 2. Publication of Non Statutory Accounts The financial information included in this interim statement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim results to 30 June 2001 and 2000 are unaudited. The financial information for the full preceding year is based on the statutory accounts for the financial year ended 31 December 2000. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. 3. Segmental Information Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 Dec Geographical analysis 2001 2000 2000 £'000 £'000 £'000 Turnover - UK 301,987 271,790 559,889 - Europe 156,769 141,226 300,959 - Rest of world 38,884 34,328 71,079 ............ ............ ............ Total operations 497,640 447,344 931,927 ............ ............ ............ Operating profit - UK 21,897 19,410 41,000 - Europe 4,304 4,221 12,212 - Rest of world 1,460 924 2,069 - Parent Company (1,426) (1,292) (2,982) - Amortisation of goodwill (1,111) (588) (1,425) ............ ............ ......... Total operations 25,124 22,675 50,874 ............ ............ ......... Turnover and operating profit by destination is not materially different from these amounts. Turnover and operating profit from acquisitions during the period have not been reported separately due to their immateriality to the Group results. 4. Earnings per Share The calculations of earnings per share are based on the following profits and numbers of shares: Basic and diluted before Basic and diluted goodwill amortisation Unaudited Audited Unaudited Audited Six months Year Six months Year ended ended ended 30 June 31 Dec ended 30 June 31 Dec 2001 2000 2000 2001 2000 2000 £'000 £'000 £'000 £'000 £'000 £'000 Profit after tax 15,749 14,750 32,949 15,749 14,750 32,949 Minority interests (78) (38) (207) (78) (38) (207) Goodwill - - - 1,111 588 1,425 amortisation ...... ...... ...... ...... ...... ...... 15,671 14,712 32,742 16,782 15,300 34,167 ...... ...... ...... ...... ...... ...... Weighted average number of shares: Unaudited Audited Six months Year ended ended 30 June 31 Dec 2001 2000 2000 Number Number Number For basic earnings per share 118,257,428 118,218,818 118,224,134 Exercise of share options 1,522,544 1,426,025 1,289,382 ............ ............ ............ For diluted earnings per 119,779,972 119,644,843 119,513,516 share ............ ............ ............ 5. Reconciliation of Operating Profit to Net Cash Inflow from Operating Activities Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2001 2000 2000 £'000 £'000 £'000 Operating profit 25,124 22,675 50,874 Depreciation and amortisation 7,995 6,229 13,529 Profit on sale of tangible fixed (6) (45) (329) assets Changes in working capital (7,582) (6,378) (11,237) ......... ......... ......... Net cash inflow from operating 25,531 22,481 52,837 activities ......... ......... ......... 6. Reconciliation of Net Cash Flow to Movement in Net Debt Unaudited Audited Six months Year ended ended 30 June 31 Dec 2001 2000 2000 £'000 £'000 £'000 Decrease in cash in the period (5,211) (11,198) (18,149) Cash inflow from increase in debt (6,056) (981) (1,063) ............ ......... ............ Changes in net debt resulting from cash flows (11,267) (12,179) (19,212) Acquisitions (60) (879) (913) Exchange differences 1,277 (1,046) (946) ............ ......... ............ Movement in net debt in the period (10,050) (14,104) (21,071) Net debt at start of period (72,397) (51,326) (51,326) ............ ......... ............ Net debt at end of period (82,447) (65,430) (72,397) ............ ......... ............

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