Interim Results

SIG PLC 14 September 2005 P R E S S R E L E A S E 14 September 2005 INTERIM RESULTS FOR SIX MONTHS ENDED 30 JUNE 2005 SIG plc is the market leading specialist distributor of insulation, roofing and commercial interiors products in Europe. • Record first half sales and profits with significant growth over first half of 2004. • Sales and profits were increased in all main product streams (insulation, roofing, commercial interiors, safety and specialist construction products) and in each geographic area in which the Group operates. Organic growth was supplemented by the strong performance of businesses acquired during 2004 and the first half of 2005. • Sales increased by 18.4% to £769m (2004: £649m). Like-for-like* sales growth was £75m, an increase of 11.6%. o UK and Republic of Ireland (67% of Group sales) sales increased 22.3% to £516.7m (2004: £422.6m). o Mainland Europe (29% of Group sales) sales increased 9.4% on a constant currency basis and 12.0% in Sterling to £221.1m (2004: £197.3m). o In the USA (4% of Group sales) sales were up 8.2% in local currency. • Operating profit before amortisation of intangibles increased 29.5% to £43.7m (2004: £33.8m). o UK and Republic of Ireland up 31.2% to £37.7m (2004: £28.7m). o Mainland Europe up 14.6% to £7.1m (2004: £6.2m). o USA up by 89.3% to £1.4m (2004: £0.7m). • Profit before tax and amortisation of intangibles was up 32.8% to £40.7m (2004: £30.7m) and basic earnings per share before amortisation of intangibles increased by 30.3% to 22.8p (2004: 17.5p). • Dividend per share up 15.2% to 5.3p (2004: 4.6p). • So far this year SIG has completed 11 deals for £62.1m; all complement SIG's activities across existing businesses. Annualised sales from these acquisitions are £75m. *Like for like is defined as the business excluding the impact of acquisitions made since 1 January 2004. Figures have been prepared in accordance with IFRS. Les Tench, Chairman, commented: 'The Group has produced excellent results in the first half of 2005, having achieved substantial growth in sales and profits compared with the corresponding period in 2004 in each of its three geographic reporting regions. Strong like for like growth was supplemented by the good performance of businesses acquired during 2004 and in the first six months of 2005. Market conditions in the second half of 2005 are expected to be broadly similar to the first half of the year, throughout each of the geographic areas in which the Group operates. Trading since the end of the June has continued to be strong and the Board is confident that further substantial progress will be made in 2005.' 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 Full Interim 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 CHAIRMAN'S STATEMENT The Group has produced excellent results in the first half of 2005, having achieved substantial growth in sales and profits compared with the corresponding period in 2004 in each of its three geographic reporting regions - UK and Republic of Ireland, Mainland Europe and USA. Strong like for like growth was supplemented by the good performance of businesses acquired during 2004 and in the first six months of 2005. The measured expansion of the number of trading sites, and of the range of products sold by the Group continued during the period. The interim results have been prepared in accordance with International Financial Reporting Standards (IFRS), which are expected to become fully effective at 31 December 2005. Comparative information for the six months ended 30 June 2004 and the year ended 31 December 2004 has been restated on an IFRS basis. Results For the six months to 30 June 2005, compared with the corresponding period in 2004: Sales • Group sales increased by £120m to £769m, up 18.4% over first half 2004 (£649m) • Like for like sales growth, i.e. excluding the impact of acquisitions completed after 1 January 2004, was £75m, an increase of 11.6% • Currency exchange rates (chiefly Sterling against the US Dollar and the Euro) were slightly more favourable overall than in the corresponding period, adding £5m to Group sales. Excluding this small positive forex impact, sales growth on a constant currency basis was £115m (up 17.6%) • Sales growth was achieved in all countries in which the Group operates on a constant currency basis, and in all principal market sectors and product streams. Profits • Operating profit, before amortisation of intangibles, increased by £10.0m, up 29.5% to £43.7m (2004: £33.8m) • Profit before tax and amortisation of intangibles increased by £10.0m, up 32.8% to £40.7m (2004: £30.7m) • Interest charges reduced slightly to £3.0m (2004: £3.1m) • Profit before tax increased by £8.7m, up 28.4% to £39.4m (2004: £30.7m) • Basic earnings per share before amortisation of intangibles were 30.3% higher at 22.8p (2004: 17.5p) • Fully diluted earnings per share before amortisation of intangibles were 30.2% higher at 22.4p (2004: 17.2p) Financial • Balance sheet gearing was 58% at 30 June 2005, compared with 38% at 31 December 2004, (33% at 30 June 2004). This increase chiefly reflects the cash outflow of £60.7m in respect of acquisitions completed in the period. Underlying cash generation in the period continued to be strong. • The Group has published its Preliminary Restatement of 2004 Financial Information under IFRS on its website which can be accessed via www.sigplc.co.uk. The table below sets out a summary of the effect on profit before tax of the change from UK GAAP to IFRS for the six months ended 30 June 2004 and 30 June 2005: Unaudited Unaudited Six months Six months ended ended 30 June 30 June 2005 2004 £000's £000's Profit before tax under UK GAAP 36,674 28,347 Goodwill amortisation 3,718 2,475 Intangibles amortisation (1,359) (24) Defined benefit pension (4) (3) Share based payments (76) (84) Foreign exchange 394 - Lease incentives 20 (61) Restated profit before tax under IFRS 39,367 30,650 • Interest cover pre-amortisation continued to be very prudent, and improved further to 14.5 times (2004: 10.9 times). Dividend Consistent with the Group's progressive dividend policy, an interim dividend of 5.3p per share has been declared, which is an increase of 15.2% (2004 interim dividend: 4.6p). The interim dividend is covered 4.3 times by earnings pre-amortisation (2004: 3.8 times). In accordance with IFRS, the interim dividend has not been included as a liability at 30 June 2005. The dividend is payable on 25 November 2005, to shareholders on the register at 28 October 2005. Trading Review UK & Republic of Ireland (67% of Group sales) Sales in the UK and Republic of Ireland increased by £94.1m to £516.7m, representing growth of 22.3% (2004: £422.6m). Operating profit pre-amortisation increased by £9.0m, up 31.2% to £37.7m (2004: £28.7m). The operating profit margin increased to 7.3% (2004: 6.8%). Like for like performance was sales growth of 12.9% and operating profit growth of 17.3%. The principal contributing factors to this excellent performance are as follows: • Strong activity levels in the construction and building industries, especially in non-residential new build and larger refurbishment work, giving rise to increased volumes of demand • Continued recovery in the premium office sector, again leading to increased sales volumes • Selling prices across a wide range of products were higher in H1 2005 than the average price levels in the first half of 2004, due largely to the impact of price increases implemented during the course of 2004. It should be noted that price increases introduced in 2005 have been far less than in 2004, and have been partly offset by decreases in some products. Across the breadth of products, 2005 pricing has been marginally helpful • Strong growth in sales of new and additional products • Further progress on a wide range of activities and measures as part of SIG's internal continuous improvement programme • Increased number of trading locations - up 25 to 282 at 30 June 2005 (31 December 2004: 257) • Good contribution from the businesses acquired in 2004 and to date in 2005. Sales and operating profits were increased on a like for like basis in all the main business streams. Commercial Interiors benefited from good levels of market demand, higher selling prices, and the growing success of manufactured products launched in 2004. SIG's Roofing sales showed good growth, despite continued sluggish demand in the market. Insulation again performed strongly, although as expected the benefits of the 2002 change in the Building Regulations have now levelled off. In recent months prices have weakened in certain products, due to the impact of additional manufacturing capacity coming on stream. An announcement from the Government regarding the timetable for implementation of the next change in Part L of the UK Building Regulations had been expected to have been made mid 2005, with an anticipated implementation date in the early part of 2006. This Regulation sets the minimum standards of energy efficiency in (chiefly) new buildings of all types, and is expected to increase demand for insulation materials over time. From past experience, it could take six months before new, more stringent Regulations begin to affect market demand. The Government have not yet made an announcement regarding the intended timetable for implementation, and SIG is presently taking a cautious view and assuming that it may not see any material impact on market demand for insulation products derived from increased Regulations until 2007. Mainland Europe (29% of Group sales) Sales in the first half of 2005 increased by £23.8m to £221.1m, up 12.0% (2004: £197.3m). Operating profit pre-amortisation increased by £0.9m to £7.1m, up 14.6% (2004: £6.2m). The corresponding growth figures compared with prior year on a constant currency basis are sales up 9.4% and operating profits up 13.0%. This is a very encouraging performance in generally lacklustre market conditions. The comprehensive price increases implemented in 2004 and referred to above in the comments relating to the UK and Republic of Ireland, also benefited Mainland Europe, though to a lesser extent. These 2004 increases affected only a proportion of sales made in the first half of 2004, and therefore, like the UK, these prior year price increases have had a positive impact on sales in the first half of 2005. • In Germany and Austria, sales and operating profit grew despite a fall in market demand across all products, combined with some price deflation. The like for like sales increase was 4% in Euros. • In France, demand for both industrial insulation and commercial interiors was reasonably good and sales (up 13% like for like in Euros) and operating profit grew strongly. • In Benelux, after two years of falling demand due to the depressed level of both residential and non-residential construction activity, demand has improved slightly in recent months. Sales increased by 7% like for like in Euros, and operating profit improved substantially. • In Poland, year on year comparisons of market demand are distorted by the significant increase in the VAT rate on all building materials, implemented on 1 May 2004. Many customers brought forward their purchases to avoid the tax increase, thus artificially boosting H1 2004 sales at the expense of H2 2004. As widely reported, market demand in H1 2005 was below H1 2004. Against this background, like for like sales in local currency increased by 17% and a small operating loss was reported, compared with a small operating profit for the first half of 2004. This chiefly reflects increased costs associated with SIG's continued planned investment in Poland. USA (4% of Group sales) Against a background of steadily strengthening demand, the trend of improving performance in 2004 has continued into 2005. On a like for like basis, sales increased by 8% to $58.5m (2004: $54.0m) and operating profit increased by 94% to $2.6m (2004: $1.3m). The equivalent growth figures in Sterling are sales up 5.6% to £31.3m (2004: £29.6m) and operating profit up 89% to £1.4m (2004: £0.7m). At the end of August 2005, the Group's operations in New Orleans, Baton Rouge and Mobile have been affected by the devastating impact of Hurricane Katrina. In the short term, trading will clearly be disrupted, and it is too early to assess whether there may be any longer term impact on business in this region of the US. Price Inflation - Profit Impact During 2004 SIG reported that as a result of exceptional and unprecedented circumstances, the degree and extent of price increases implemented by manufacturers created opportunities for the Group to make significant one-off profits through buying gains. These exceptional profits amounted to approximately £1m in the first half of 2004, and a further £2m in the second half. As expected, these conditions have not been repeated, and therefore there is no exceptional profit gain within SIG's 2005 interim results. Acquisitions As part of SIG's ongoing strategy of seeking appropriate acquisitions in order to supplement organic growth, so far this year SIG has completed 11 transactions with combined annual sales of £75m. Total consideration, including acquired debt is £62.1m. Each of the acquired businesses operate in SIG's existing markets and are complementary to SIG's existing activities. Prospects Market conditions in the second half of 2005 are expected to be broadly similar to the first half of the year, throughout each of the geographic areas in which the Group operates. Against this background, the Group is focused on continued expansion and growth, in order to create long term shareholder value. The strength of the balance sheet and the sound finances will enable the Group to take advantage of future opportunities that may arise. Trading since the end of June has continued to be strong and this, together with the positive impact of recent acquisitions gives the Board confidence that further substantial progress will be made in 2005. Consolidated Income Statement for the six months ended 30 June 2005 Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 30 June 30 June December 2005 2005 2004 2004 2004 2004 Note £000's £000's £000's £000's £000's £000's ------------------------------------------------------------------------------------ Revenue 3 769,074 649,494 1,398,237 ------------------------------------------------------------------------------------ Operating profit before amortisation of intangibles 3 43,748 33,772 77,020 Amortisation of intangibles 3 1,359 24 634 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ Operating profit 42,389 33,748 76,386 Finance costs 2,965 2,882 5,683 Other finance charges 57 216 474 ------------------------------------------------------------------------------------ Profit before tax 39,367 30,650 70,229 Income tax expense 12,712 9,288 21,425 ------------------------------------------------------------------------------------ Profit after tax 26,655 21,362 48,804 ------------------------------------------------------------------------------------ Attributable to: Equity holders of the Company 26,287 21,083 48,232 Minority interests 368 279 572 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ Earnings per share Basic earnings per share 4 21.6p 17.5p 39.9p Diluted earnings per share 4 21.3p 17.2p 39.3p ------------------------------------------------------------------------------------ Earnings per share before amortisation of intangibles Basic earnings per share 4 22.8p 17.5p 40.4p Diluted earnings per share 4 22.4p 17.2p 39.9p The results of the Group relate entirely to continuing operations. Consolidated Statement of Recognised Income and Expense for the six months ended 30 June 2005 Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 30 June 31 December 2005 2004 2004 Note £000's £000's £000's ------------------------------------------------------------------------------------ Profit after tax 26,655 21,362 48,804 Tax (debit)/credit on exchange difference arising on foreign currency borrowings (1,647) - 1,786 Exchange difference on retranslation of foreign currency goodwill (1,498) (1,674) 149 Exchange difference on retranslation of overseas net investments (excluding goodwill) (4,868) (5,159) (619) Exchange difference on foreign currency borrowings 4,871 3,999 (1,676) Actuarial loss relating to the pension schemes - (7) (8,741) Deferred tax movement associated with actuarial loss - - 2,537 Deferred tax on share options 405 280 1,824 Transitional adjustment to adopt IAS 32 and IAS 39 at 1 January 2005 6 (6,625) - - ------------------------------------------------------------------------------------ Total recognised income and expense for the period 17,293 18,801 44,064 ------------------------------------------------------------------------------------ Attributable to: Equity holders of the Company 16,925 18,522 43,492 Minority interests 368 279 572 ------------------------------------------------------------------------------------ 17,293 18,801 44,064 ------------------------------------------------------------------------------------ Consolidated Statement of Changes in Equity for the six months ended 30 June 2005 Hedging Called up Share Capital Share and share premium redemption Special option translation Retained Minority Total capital account reserve reserve reserve reserve profits Total interests equity £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's At 31 December 2004 - UK GAAP 12,139 16,793 347 22,113 554 (356) 169,941 221,531 572 222,103 IFRS adjustments Reverse proposed dividend - - - - - - 11,412 11,412 - 11,412 Deferred tax - - - - - (87) 14,358 14,271 - 14,271 Lease incentives - - - - - - (637) (637) - (637) Retranslation of goodwill - - - - - 4,427 - 4,427 - 4,427 Reversal of amortisation of goodwill - - - - - - 5,653 5,653 - 5,653 Amortisation of intangibles - - - - - - (634) 634) - (634) Deferred tax credit associated with amortisation of intangibles - - - - - - 190 190 - 190 Adjustment to pension asset valuation - - - - - - (70) (70) - (70) Exchange reserve reset - - - - - (4,344) 4,344 - - - Adjustment for IFRS 2 Share based payments - - - - 85 - (85) - - - ------------------------------------------------------------------------------------------------------------------------ At 31 December 2004 - IFRS 12,139 16,793 347 22,113 639 (360) 204,472 256,143 572 256,715 ------------------------------------------------------------------------------------------------------------------------ Profit for the period - - - - - - 26,287 26,287 368 26,655 Dividend - - - - - - (11,412) (11,412) - (11,412) New share capital issued 9 187 - - - - - 196 - 196 Tax debit on exchange difference arising on foreign currency borrowings - - - - - (1,647) - (1,647) - (1,647) Exchange difference on retranslation of foreign currency goodwill - - - - - (1,498) - (1,498) - (1,498) Exchange difference on retranslation of overseas net investments (excluding goodwill) - - - - - (4,868) - (4,868) - (4,868) Exchange difference on foreign currency borrowings - - - - - 4,871 - 4,871 - 4,871 Deferred tax on share options - - - - - - 405 405 - 405 Credit to share option reserve - - - - 327 - - 327 - 327 Payment to minority interest shareholder - - - - - - - - (572) (572) Recognition of minority interest on acquisition - - - - - - - - 230 230 Transitional adjustment to adopt IAS 32 and IAS 39 at 1 January 2005 - - - - - - (6,625) (6,625) - (6,625) ------------------------------------------------------------------------------------------------------------------------ At 30 June 2005 - IFRS 12,148 16,980 347 22,113 966 (3,502) 213,127 262,179 598 262,777 ------------------------------------------------------------------------------------------------------------------------ Consolidated Statement of Changes in Equity for the six months ended 30 June 2004 Hedging Called up Share Capital Share and share premium redemption Special option translation Retained Minority Total capital account reserve reserve reserve reserve profits Total interests equity £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's £'000's At 1 January 2004 - UK GAAP 12,027 14,967 347 22,113 237 66 149,556 199,313 447 199,760 IFRS adjustments Reverse proposed dividend - - - - - - 9,983 9,983 - 9,983 Deferred tax - - - - - - 12,845 12,845 - 12,845 Lease incentives - - - - - - (510) (510) - (510) Retranslation of goodwill - - - - - 4,278 - 4,278 - 4,278 Exchange reserve reset - - - - - (4,344) 4,344 - - - Adjustment to pension asset valuation - - - - - - (57) (57) - (57) Adjustment for IFRS 2 Share based payments - - - - (46) - 46 - - - ------------------------------------------------------------------------------------------------------------------------ At 1 January 2004 - IFRS 12,027 14,967 347 22,113 191 - 176,207 225,852 447 226,299 ------------------------------------------------------------------------------------------------------------------------ Profit for the period - - - - - - 21,083 21,083 279 21,362 Dividend - - - - - - (9,983) (9,983) - (9,983) New share capital issued 29 711 - - - - - 740 - 740 Exchange difference on retranslation of foreign currency goodwill - - - - - (1,674) - (1,674) - (1,674) Exchange difference on retranslation of overseas net investments (excluding goodwill) - - - - - (5,159) - (5,159) - (5,159) Exchange difference on foreign currency borrowings - - - - - 3,999 - 3,999 - 3,999 Deferred tax on share options - - - - - - 280 280 - 280 Credit to share option reserve - - - - 177 - - 177 - 177 Actuarial loss on defined benefit pension schemes - - - - - - (7) (7) - (7) Payment to minority interest shareholder - - - - - - - - (447) (447) ------------------------------------------------------------------------------------------------------------------------ At 30 June 2004 - IFRS 12,056 15,678 347 22,113 368 (2,834) 187,580 235,308 279 235,587 ------------------------------------------------------------------------------------------------------------------------ Consolidated Balance Sheet as at 30 June 2005 Unaudited Unaudited Audited 30 June 30 June 31 December 2005 2004 2004 Restated £000's £000's £000's ------------------------------------------------------------------------------------ Non-current assets Property, plant and equipment 91,078 68,820 74,481 Goodwill 138,013 87,318 113,467 Intangible assets 38,355 4,049 14,714 Deferred tax assets 21,860 19,462 21,455 ------------------------------------------------------------------------------------ 289,306 179,649 224,117 ------------------------------------------------------------------------------------ Current assets Inventories 120,821 109,990 116,436 Trade receivables 307,540 245,824 243,766 Other receivables 22,516 18,222 19,996 Financial derivatives 1,069 - - Cash and cash equivalents 22,975 30,877 19,467 ------------------------------------------------------------------------------------ 474,921 404,913 399,665 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ Total assets 764,227 584,562 623,782 ------------------------------------------------------------------------------------ Current liabilities Trade and other payables 250,358 193,754 189,233 Obligations under finance leases 918 2,050 1,391 Bank overdrafts and loans 67,742 13,311 13,211 Financial derivatives 158 - - Current tax liabilities 22,056 11,623 13,995 Provisions 1,639 1,215 1,735 ------------------------------------------------------------------------------------ 342,871 221,953 219,565 ------------------------------------------------------------------------------------ Non-current liabilities Obligations under finance leases 799 679 564 Bank loans 68,897 91,589 95,613 Financial derivatives 30,289 - - Loan notes 7,006 - 7,006 Deferred tax liabilities 14,456 5,154 6,615 Other payables 4,192 2,994 3,955 Retirement benefit obligations 24,707 20,502 25,035 Provisions 8,233 6,104 8,714 ------------------------------------------------------------------------------------ 158,579 127,022 147,502 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ Total liabilities 501,450 348,975 367,067 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ Net assets 262,777 235,587 256,715 ==================================================================================== Capital and reserves Called up share capital 12,148 12,056 12,139 Share premium account 16,980 15,678 16,793 Capital redemption reserve 347 347 347 Special reserve 22,113 22,113 22,113 Share option reserve 966 368 639 Hedging and translation reserve (3,502) (2,834) (360) Retained profits 213,127 187,580 204,472 ------------------------------------------------------------------------------------ Attributable to equity holders of the Company 262,179 235,308 256,143 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ Minority interests 598 279 572 ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ Total equity 262,777 235,587 256,715 ------------------------------------------------------------------------------------ Consolidated Statement of Cash Flows for the six months ended 30 June 2005 Unaudited Unaudited Unaudited 30 June 30 June 31 December 2005 2004 2004 Restated £000's £000's £000's Net cash flow from operating activities Operating profit before finance costs 42,389 33,748 76,386 - Adjustments for: Depreciation and amortisation 10,646 8,299 18,454 Profit on sale of tangible fixed assets (362) (208) (279) Share based payments 327 177 448 Increase in working capital (5,810) (10,465) (17,587) ------------------------------------------------------------------------------------ Cash inflow from operating activities 47,190 31,551 77,422 Interest paid (4,768) (4,176) (8,472) Interest received 1,803 1,085 2,319 Income tax paid (7,454) (6,025) (15,049) ------------------------------------------------------------------------------------ Net cash inflow from operating activities 36,771 22,435 56,220 ------------------------------------------------------------------------------------ Cash flows from investing activities Purchase of property, plant and equipment (14,236) (8,981) (22,627) Proceeds from sale of property, plant and equipment 1,033 679 1,549 Purchase of businesses (46,476) (8,659) (35,740) ------------------------------------------------------------------------------------ Net cash used in investing activities (59,679) (16,961) (56,818) ------------------------------------------------------------------------------------ Cash flows from financing activities Proceeds from issue of ordinary share capital 196 740 1,938 Capital element of finance lease rental payments (702) (1,970) (3,317) Repayment of loans (15,446) (18,990) (17,172) New loans 53,641 474 - Dividends paid to equity holders of the Company (11,412) (10,005) (15,587) Payments to minority shareholders (572) (447) (447) ------------------------------------------------------------------------------------ Net cash generated/(used) in financing activities 25,705 (30,198) (34,585) ------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------ Increase/(decrease) in cash and cash equivalents in the period 2,797 (24,724) (35,183) ------------------------------------------------------------------------------------ Cash and cash equivalents at beginning of period 16,501 51,356 51,356 ------------------------------------------------------------------------------------ Effect of foreign exchange rate changes (491) (518) 328 ------------------------------------------------------------------------------------ Cash and cash equivalents at end of period 18,807 26,114 16,501 ------------------------------------------------------------------------------------ Notes to the Interim Financial Information 1. Basis of preparation of interim financial information and accounting policies The interim financial information was approved by the Board of Directors on 14 September 2005. The financial information set out in the interim report is unaudited. The Group's interim financial information has been prepared in accordance with International Financial Reporting Standards ('IFRS') in issue that are expected to be endorsed by the European Union and are effective or available for adoption at the Group's first IFRS annual reporting date, 31 December 2005. Comparative information for the six months ended 30 June 2004 and the year ended 31 December 2004 has been restated under IFRS from the UK Financial Reporting Standard ('UK GAAP') values originally reported by the Group. The financial information has been prepared under the historical cost convention except that derivative financial instruments are stated at their fair value. The interim financial information includes the accounts of the Company and all its subsidiaries. The IFRS that will be effective or available for adoption in the annual financial statements for the year ended 31 December 2005 are subject to review and amendment by the International Accounting Standards Board ('IASB') and subsequent endorsements by the European Union and are subject to change. In determining the Group's IFRS accounting policies the Board of Directors has used its best endeavours in making assumptions about those IFRS expected to be effective or available for adoption when the first IFRS annual financial statements are prepared for the year ended 31 December 2005. The Group has adopted all IFRS with the exception of IAS 34 'Interim Financial Reporting' which is not mandatory for UK Groups. The Group has anticipated that the amendment to IAS 19 'Actuarial Gains and Losses, Group Plans and Disclosure' which has yet to be formally adopted for use in the European Union, will be so adopted in time to be applicable to its first IFRS annual reporting date, 31 December 2005. IFRS 1 permits those companies adopting IFRS for the first time to take certain exemptions from the full requirements of IFRS in the transition period. The Group has taken advantage of the following exemptions: a) IFRS 3 'Business combinations' - the Group has elected not to apply IFRS 3 retrospectively to acquisitions that took place before 1 January 2004. b) IAS 19 'Employee benefits' - in accordance with the amendment to IAS 19 which was issued on 16 December 2004, the Group has elected to recognise actuarial gains and losses in full in the period in which they occur in the Consolidated Statement of Recognised Income and Expense. c) IFRS 2 'Share based payments' - the Group has elected to apply IFRS 2 only to those share based payment options that were granted after 7 November 2002 and remain unvested at 1 January 2005. d) IAS 21 'The effects of changes in foreign exchange rates' - the Group has elected to reset the Hedging and translation reserve to zero at 1 January 2004. e) IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement'- the Group has elected to apply UK GAAP to its comparative financial statements (i.e. 1 January 2004 to 31 December 2004) and implement IAS 32 and IAS 39 at 1 January 2005. On 1 January 2005, in accordance with IAS 32 and IAS 39, all financial instruments were recorded at their fair value. The difference between the fair value and book value of all financial instruments at 1 January 2005 has been recorded in 2005 through the Consolidated Statement of Recognised Income and Expense. The Group has today released an IFRS Restatement Document that contains the following: i. the restatement of 2004 comparative financial information from UK GAAP to IFRS; ii. a summary of significant accounting policies; and iii. an unqualified independent auditors' report on the Restatement Document This document can be found on the Company's website, www.sigplc.co.uk and is also available in hard copy from the Company Secretary of SIG plc at the registered office (tel. 0114 2856300). 2. Publication of non statutory accounts The financial information included in this statement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim results to 30 June 2005 and 2004 are neither audited nor reviewed. The financial information for the full preceding year is based on the UK GAAP statutory accounts for the financial year ended 31 December 2004 as amended for IFRS as set out in the Group's IFRS Restatement Document. Those 2004 UK GAAP accounts, upon which the auditors issued an unqualified opinion have been delivered to the Registrar of Companies. The auditors' report contained no statement under Section 237(2) or 237(3) of the Companies Act 1985. 3. Segmental information The Group is managed and organised in three geographies; UK & Republic of Ireland, Mainland Europe and the USA. These geographies are the basis on which the Group reports its primary segment information. Unaudited six months ended 30 June Unaudited six months ended 30 June Audited year ended 31 December 2005 2005 2005 2005 2004 2004 2004 2004 2004 2004 2004 2004 UK & Mainlnd USA Total UK & Mainlnd USA Total UK & Mainlnd USA Total ROI Europe ROI Europe ROI Europe £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's Revenue 516,705 221,075 31,294 769,074 422,558 197,304 29,632 649,494 907,054 433,595 57,588 1,398,237 ------------------------------------------------------------------------------------------------------------ Segment result 37,700 7,141 1,374 46,215 28,743 6,230 726 35,699 63,823 15,456 1,681 80,960 ============================================================================================================ Parent Company costs (2,467) (1,927) (3,940) -------- ------- -------- Operating profit before amortisation of intangibles 43,748 33,772 77,020 -------- -------- -------- Intangible asset amortis' ation (1,331) (28) - (1,359) (23) (1) - (24) (619) (15) - (634) -------- ------- -------- Operating profit 42,389 33,748 76,386 ======== ======= ======== Finance costs (3,022) (3,098) (6,157) -------- ------- -------- Profit before taxation 39,367 30,650 70,229 -------- ------- -------- Income tax expense (12,712) (9,288) (21,425) -------- ------- -------- Minority interests (368) (279) (572) -------- ------- -------- Retained profit 26,287 21,083 48,232 ======== ======= ======== Assets Segment assets 540,437 190,145 28,021 758,603 397,440 158,839 23,265 579,544 424,105 169,495 24,826 618,426 Unallocated assets 5,624 5,018 5,356 -------- ------- -------- Total assets 764,227 584,562 623,782 ======== ======= ======== Liabilities Segment liabilities247,741 78,439 5,352 331,532 181,192 54,506 4,137 239,835 190,587 57,332 4,350 252,269 Unallocated liabilities 169,918 109,140 114,798 -------- ------- -------- Total liabilities 501,450 348,975 367,067 ======== ======= ======== Other segment information Net Capital expenditure on: Property plant & equipment 10,949 2,084 170 13,203 6,598 1,481 223 8,302 15,395 5,284 399 21,078 Intangible assets 24,821 179 - 25,000 4,053 20 - 4,073 15,138 210 - 15,348 Goodwill 25,899 175 - 26,074 5,504 514 - 6,018 29,543 801 - 30,344 Non cash expenditure: Deprec- iation 6,688 2,342 257 9,287 5,889 2,062 324 8,275 12,295 4,899 626 17,820 Amortis- ation of intan- gibles 1,331 28 - 1,359 23 1 - 24 619 15 - 634 4. Earnings per share The calculations of earnings per share are based on the following profits and numbers of shares: Basic and diluted Basic and diluted before amortisation of intangibles Unaudited Unaudited Audited Unaudited Unaudited Audited Six Six months Year Six months Six Year months ended 30 ended 30 ended 31 ended 30 months ended 30 ended 31 June June December June June December 2005 2004 2004 2005 2004 2004 £000's £000's £000's £000's £000's £000's ------------------------------------------------------------------------------------------------------------------------ Profit after tax 26,655 21,362 48,804 26,655 21,362 48,804 Minority interests (368) (279) (572) (368) (279) (572) Amortisation of intangibles - - - 1,359 24 634 ------------------------------------------------------------------------------------------------------------------------ 26,287 21,083 48,232 27,646 21,107 48,866 ------------------------------------------------------------------------------------------------------------------------ Weighted average Unaudited Unaudited Audited number of shares Six months Six Year ended 30 months ended 30 ended 31 June June December 2005 2004 2004 Number Number Number ------------------------------------------------------------------------------------------------------------------------ For basic earnings per share 121,430,203 120,444,412 120,863,011 Exercise of share options 2,207,254 2,126,258 1,747,068 ------------------------------------------------------------------------------------------------------------------------ For diluted earnings per share 123,637,457 122,570,670 122,610,079 ------------------------------------------------------------------------------------------------------------------------ Earnings per share before amortisation of intangibles is presented in order to give an indication of the underlying performance of the Group. 5. Change in presentation Pensions In the prior year at 30 June 2004, two book reserved pension schemes operated in Germany and France were reported within other provisions. In the accounts for the year ended 31 December 2004, in accordance with FRS 17 (the standard in force at that time), these were reclassified and included as part of the FRS 17 pension liability. In order to show consistent presentation as at 30 June 2004, the provision for liabilities and charges has been reduced by £1.141m to £7.319m and the pension liability has been increased by £1.141m to £14.629m. This restatement has no effect on net assets or the Consolidated Income Statement. 6. IAS 32 and IAS 39 Transitional adjustment On 1 January 2005, in accordance with IAS 32 and IAS 39, all financial instruments are recorded at their fair value. The difference between the fair value and book value of all financial instruments at 1 January 2005 is an additional liability of £6.625m, which has been recorded as a one-off movement in reserves through the Consolidated Statement of Recognised Income and Expense. Due to the inherent uncertainty over whether fair value movements associated with adopting IAS 32 and IAS 39 will be taxable or not, the Group has not recognised any deferred tax on this transitional adjustment. 7. Interim dividend An interim dividend of 5.3p per share (2004:4.6p) has been declared. 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 financial statements. This information is provided by RNS The company news service from the London Stock Exchange

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