Interim Results
SIG PLC
13 September 2007
P R E S S R E L E A S E
13 September 2007
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
SIG plc is the leading specialist supplier of insulation, roofing, commercial
interiors and specialist construction products.
• SIG reports record results for the first half of 2007, with growth
achieved in all business streams and all countries in which it has trading
operations
• All numbers stated below are on a continuing basis, ie. excluding the
USA business sold in November 2006
• Sales increased 29.2% to £1,099m (2006: £851m), exceeding £1bn for the
first time in the first half of any year. Like for like+ sales growth was
12.5%
- UK and Ireland sales increased 19.4% to £722.5m (2006: £605.1m)
- Mainland Europe sales increased 53.4% to £376.6m (2006: £245.5m)
• Underlying* operating profit increased 30.6% to £70.0m (2006: £53.6m)
- UK and Ireland underlying operating profit increased 19.0% to £57.1m
(2006: £48.0m)
- Mainland Europe underlying operating profit increased 92.3% to £16.4m
(2006: £8.5m)
• Underlying profit before tax increased 31.0% to £62.1m (2006: £47.4m).
Profit before tax increased 23.3% to £56.2m (2006: £45.6m)
• Underlying basic earnings per share increased 29.9% to 34.3p (2006:
26.4p). Basic earnings per share increased 22.0% to 31.0p (2006: 25.4p)
• Interim dividend per share increased 29% to 8.0p (2006: 6.2p)
• SIG also reports record acquisition activity - 22 acquisitions, for
total consideration of £312m so far this year
- Acquisitions have added 136 trading sites and aggregate annualised
sales (on an historic basis) of £424m, split £289m in Mainland Europe and
£135m in the UK and Ireland
+ 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
Les Tench, Chairman, commented:
'The Group has achieved excellent progress in the first six months, with strong
like for like increases in all countries and business streams and a step-change
in the breadth of the Group's activities with a total of 146 branches added so
far in 2007. The interim dividend is being increased by 29%, an indication of
our confidence in the future prospects for SIG.'
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,and Gareth Davies, Finance Director is now
available on SIG's website and www.cantos.com
The first six months of 2007 have been marked by a very strong trading
performance and by further significant expansion of the Group's activities.
Growth was achieved in all business streams, and in all countries in which SIG
has trading operations and sales exceeded £1bn for the first time in the first
half of any year.
Results
The figures given below are on a continuing basis, ie. excluding the
contribution from the USA business, which was sold in November 2006.
For the first six months to 30 June 2007, compared with the corresponding period
in 2006:
Sales
• Total sales were £1,099m, up £248m (29.2%) on the first half of 2006
(£851m).
• Like for like sales growth, ie. excluding the impact of acquisitions
completed after 1 January 2006, was £106m (12.5%).
• Foreign exchange rate movements compared to the first half of 2006 were
negligible, reducing sales by approximately £8m. On a constant currency
basis sales growth was 30.1% in total and 13.3% on a like for like basis.
• Like for like sales growth was achieved in all countries in which the
Group has trading operations and in all business streams.
Profits
• Underlying* operating profit was £70.0m, an increase of £16.4m (30.6%)
over the £53.6m reported in the first half of 2006.
• Underlying net finance costs increased by £1.7m to £7.9m (2006: £6.2m)
reflecting the increased acquisition spend.
• Underlying profit before tax was £62.1m, an increase of £14.7m (31.0%)
over the £47.4m in the first half of 2006.
• Amortisation of acquired intangibles increased by £3.1m to £6.1m
(2006: £3.0m).
A credit of £0.2m has arisen in relation to hedge ineffectiveness
(2006: £1.2m).
• Profit before tax increased by £10.6m (23.3%) to £56.2m (2006: £45.6m).
Earnings per Share
• Underlying basic earnings per share increased by 7.9p to 34.3p
(2006: 26.4p), an increase of 29.9%.
• Basic earnings per share increased by 5.6p to 31.0p (2006: 25.4p), an
increase of 22.0%.
Financial
• Balance sheet gearing was 67% at 30 June 2007, compared with 65% at both
30 June and 31 December 2006.
• Underlying interest cover at 30 June 2007 was a healthy 8.8 times (30 June
2006: 8.6 times).
Dividend
An interim dividend of 8.0p per share has been declared, a significant increase
(29%) on the 6.2p per share interim dividend for the first half of 2006.
This reflects the continued growth in earnings per share and the Board's
confidence going forward.
The dividend is covered 3.9 times and is payable on 27 November 2007, to
shareholders on the register on 26 October 2007.
Trading Sites
During the first six months of the year the Group increased the number of
trading sites by 126 to 744 (31 December 2006: 618), driven mainly by
acquisition activity.
Trading Review
UK and Ireland (66% of Group sales)
Total sales in the UK and Ireland increased by £117.4m to £722.5m, up 19.4% on
H1 2006 (£605.1m).
Like for like sales increased by 9.7%.
Underlying operating profit increased by £9.1m to £57.1m, up 19.0% on H1 2006 (£48.0m).
These strong results were achieved against the background of modest market
growth in overall non-residential construction activity and flat residential
building work in the UK, whilst in Ireland building activity began to decline
from April onwards.
Demand for insulation materials grew with the first signs coming through of the
new higher standards required to be built into all new construction, driven by
the 2006 revision to Part L of the Building Regulations. Within the domestic
upgrading insulation market, as anticipated, demand was reduced as phase two of
the Energy Efficiency Commitment (EEC2) grant scheme winds down and prior to the
next scheme beginning early in 2008. The new grant scheme is called CERT, which
stands for Carbon Emission Reduction Targets, and is expected to generate a
higher volume of insulation upgrading than its predecessor over the period 2008
to 2010.
The growth in non-residential construction activity in the UK created increased
demand for both commercial interiors and specialist construction products. Like
for like sales were strongly ahead in the period. Whilst commercial new
construction is the largest sector within non-residential, the ongoing public
expenditure programmes aimed at building new schools and hospitals continued to
generate sales across all of SIG's product groups.
After two years of reduced demand there was some modest increase in roofing
activity in the first half. This increased demand, coupled with the ongoing
expansion of our number of trading sites and product range, created a good level
of sales growth.
Average price inflation in the UK and Ireland was around 2.5%.
The number of trading sites increased from 422 in the UK and Ireland at 31
December 2006, to 440 at 30 June 2007.
Mainland Europe (34% of Group sales)
Total sales in Mainland Europe increased by £131.1m to £376.6m, up 53.4% on H1
2006 (£245.5m).
Underlying operating profits almost doubled to £16.4m, up 92.3% on H1 2006
(£8.5m). The net operating margin increased to 4.3% (H1 2006: 3.5%) driven by
the operational gearing benefit of additional sales and tight cost control.
Exchange rate movements had a mildly adverse impact on the reported results due
to the weakening of the Euro and Polish Zloty against Sterling compared with H1
2006, reducing sales by £6.8m and operating profits by £0.3m. For clarification,
the Group is not materially affected by exchange rate movements in respect of
its trading activities, as the vast majority of the goods sold by SIG are either
bought or produced in the same currency as that applied to the sale.
On a like for like constant currency basis, sales growth was 21.7% and operating
profit growth 64.2%.
These excellent results from our operations in Mainland Europe were achieved
against the background of generally more helpful market conditions with product
demand increased over prior year, coupled with modest price inflation (estimated
overall at 2.8% over the prior year). These results represent an increase of
more than two times sales and almost five times operating profit over the four
years since H1 2003.
In Germany and Austria, overall construction activity was much stronger than in
H1 2006, partly due to the sharply contrasting climatic conditions - an
extremely mild start to 2007 compared to a very severe and prolonged winter in
Q1 2006, enabling building work to continue largely unaffected by freezing
temperatures and snow this year. Against this helpful background, total sales
grew by 46.8% and by 18.3% on a like for like basis in Euros. The net operating
margin increased and operating profits more than doubled.
It should be borne in mind that a combination of exceptional factors created a
surge in demand for building materials in the final calendar quarter of 2006 in
Germany, which meant that the second half results were very much stronger than
anticipated and skewed the H1 / H2 split sharply towards H2. This means that the
year on year comparators for H2 2007 are more demanding than in the first half.
Total sales in France grew by 25.4% in Euros and by 19.9% on a like for like
basis. Demand for insulation and commercial interiors products was strong and we
continued to make good progress in developing both the product range and our
geographic coverage. The net operating margin increased and operating profits
were substantially up on H1 2006.
In Poland, the revival of construction activity which was reported in 2006
continued strongly into 2007. Like Germany and Austria, this year the
unseasonably mild start to 2007 enabled building sites to continue working.
Total sales increased almost threefold compared with first half prior year. Like
for like sales in local currency grew by 72.1%. The net operating margin was
increased and the small operating profit reported in the first half of 2006 was
substantially increased. This excellent performance marks a new milestone in the
development and growth of the Group's business in Poland.
In Benelux, again in more favourable market conditions, we made strong progress
in both insulation and commercial interiors, with total sales up 28.4% in Euros,
13.9% on a like for like basis. The net operating margin was increased and the
operating profit almost doubled.
Largely as a result of the acquisition programme in both 2006 and so far in
2007, the number of trading sites in Mainland Europe has increased significantly
during the past year, with a total of 304 locations at the current period end
compared with 141 at 30 June 2006 and 196 at 31 December 2006.
Acquisitions
In addition to the record trading performance in the first half of 2007, it has
also been one of record acquisition activity. In the period 1 January 2007 to 30
June 2007, 14 acquisitions were completed, together adding 116 trading sites and
aggregate annualised sales of £309m on an historic basis. Total consideration,
including assumed debt and performance-related contingent consideration amounted
to £259m. Of the £309m annualised sales, £274m is in Mainland Europe and £35m in
the UK and Ireland.
Since 30 June 2007 we have completed 8 further acquisitions, together adding 20
trading sites and aggregate annualised sales of £115m. Total consideration for
these 8 most recent acquisitions is £53m, including assumed debt and
performance-related contingent consideration.
To summarise, the total number of acquisitions completed since 1 January 2007 is
22, together adding 136 trading sites, with annualised sales of £424m, split
£289m Mainland Europe and £135m in the UK and Ireland.
Each of the acquired businesses fits the profile of SIG as suppliers of
specialist materials to the building and construction trades with emphasis on
supplying professional companies and trades people rather than the retail
consumer.
Most of the businesses acquired to date are directly complementary to our
existing countries and existing business streams, ie. 'bolt-on'. Others
represent a new platform for future growth. Key examples of new 'platform'
acquisitions in 2007 are:
i) In June 2007, SIG acquired Lariviere, the leading specialist roofing
materials distributor in France, with 83 trading sites and annualised sales
of £229m. Performance has been in line with expectations since acquisition,
and the expansion programme is progressing with 2 additional trading sites
added so far.
ii) SIG made its first entry into Central Europe through the acquisition of a
supplier of insulation and commercial interiors products with 16 trading
sites in Slovakia and Czech Republic. Construction activity in these
countries is expected to grow at a higher rate going forward than Western
and Southern Europe, creating attractive new opportunities for the Group.
In August an additional acquisition added 7 more trading sites in the Czech
Republic, trading in both insulation and commercial interiors products.
iii) In September 2007, SIG acquired one of the largest suppliers to the
specialist professional contract flooring market in the UK, with 5 trading
sites and annualised sales of £70m. This business adds a new dimension to
the existing SIG Commercial Interiors operations in the UK.
The integration of all of these acquisitions is progressing well.
Two loss-making businesses were acquired in the second half of 2006, one in the
UK and one in Poland. The specialist roofline products business in the UK has
been significantly restructured and is close to achieving profitability. The
Polish acquisition has performed extremely well since acquisition, raising
margins and turnover substantially and is now profitable on a monthly basis.
Investments
The Group continues to invest in future growth via suitable acquisitions and in
the infrastructure of existing businesses to improve customer service and
internal efficiencies. These investments include increased capacity within our
UK insulation operations in order to maintain our market leading position
against the background of anticipated future increases in demand both in the new
build and residential upgrading sectors.
Presently we are upgrading and replacing a number of computer systems in use
throughout different parts of the Group, to improve service and aid
efficiencies. This programme is being introduced at a measured pace and is
progressing well.
Board
As previously announced, the Board has been further strengthened by the
appointment in February 2007 of Chris Davies to the Group Board. Chris joined
SIG in 1994 and has held a number of management positions in the UK and in
Mainland Europe. He is Managing Director of SIG in Mainland Europe and has led
the expansion and growth in this key region over the last 6 years.
Share Capital Issue
On 24 May 2007, SIG announced a placing of new ordinary shares with
institutional and other investors to raise gross proceeds of £150m (the
'Placing'). The Company placed 11,363,637 new ordinary shares at 1320p each,
raising £147m after commissions and expenses. The Placing proceeds have been
used to fund the acquisition of Lariviere and the increased acquisition spend.
They also provide SIG with financial flexibility to take advantage of
acquisition opportunities as they arise and ensuring that SIG continues to drive
its organic growth through ongoing investment in its businesses.
Prospects
Demand from the key building and construction industries has been good in the
first half of 2007 throughout the Group's operating regions and we do not
foresee any significant change in market conditions in the remainder of 2007.
Against the background of the recent uncertainties in the financial markets, it
is not presently known whether these events may spill over into the wider
economy, possibly affecting building and construction activity. There are no
signs of this at present.
Trading since the end of June has been in line with expectations and the Board
is confident that further progress will be made.
* Underlying is before the amortisation of acquired intangibles and hedge
ineffectiveness
Consolidated Income Statement
for the six months ended 30 June 2007
Unaudited six months ended Unaudited six months ended Audited year ended
-------------------------- ---------------------------- -------------------
30 June 2007 30 June 2006 31 December 2006
-------------------------- ---------------------------- -------------------
Before other Other Total Before other Other Total Before other Other Total
items* items* items* items* items* items*
Note £000's £000's £000's £000's £000's £000's £000's £000's £000's
---------------------------------------------------------------------------------------------------------------------
Revenue 2 1,099,131 - 1,099,131 850,587 - 850,587 1,859,832 - 1,859,832
Operating
profit 2 69,974 (6,072) 63,902 53,597 (2,969) 50,628 121,401 (6,942) 114,459
Finance
income 4,132 186 4,318 2,775 1,170 3,945 6,056 1,357 7,413
Finance
costs (12,056) - (12,056) (9,019) - (9,019) (19,200) - (19,200)
----------------------------------------------------------------------------------------------------------------------
Profit
before tax 62,050 (5,886) 56,164 47,353 (1,799) 45,554 108,257 (5,585) 102,672
Income tax
expense 3 (18,615) 1,766 (16,849) (14,715) 540 (14,175) (32,515) 1,676 (30,839)
----------------------------------------------------------------------------------------------------------------------
Profit
after
tax from
continuing
operations 43,435 (4,120) 39,315 32,638 (1,259) 31,379 75,742 (3,909) 71,833
----------------------------------------------------------------------------------------------------------------------
Discontinued
operation:
Profit before
tax from
discontinued
operation - - - 2,305 - 2,305 3,774 - 3,774
Profit on
disposal of
discontinued
operation - - - - - - - 1,947 1,947
Income tax
expense on
discontinued
operation - - - (659) - (659) (1,124) 92 (1,032)
----------------------------------------------------------------------------------------------------------------------
- - - 1,646 - 1,646 2,650 2,039 4,689
----------------------------------------------------------------------------------------------------------------------
Profit after tax 43,435 (4,120) 39,315 34,284 (1,259) 33,025 78,392 (1,870) 76,522
---------------------------------------------------------------------------------------------------------------------
Attributable to:
Equity holders
of the Company 42,879 (4,120) 38,759 33,914 (1,259) 32,655 77,719 (1,870) 75,849
Minority
interests 556 - 556 370 - 370 673 - 673
---------------------------------------------------------------------------------------------------------------------
Earnings
per share
From
continuing
operations:
Basic
earnings
per share 4 34.3p (3.3p) 31.0p 26.4p (1.0p) 25.4p 61.3p (3.2p) 58.1p
Diluted
earnings
per share 4 33.9p (3.2p) 30.7p 26.0p (1.0p) 25.0p 60.6p (3.1p) 57.5p
---------------------------------------------------------------------------------------------------------------------
From
continuing
and
discontinued
operations:
Basic
earnings
per share 4 34.3p (3.3p) 31.0p 27.8p (1.0p) 26.8p 63.4p (1.5p) 61.9p
Diluted
earnings
per share 4 33.9p (3.2p) 30.7p 27.4p (1.1p) 26.3p 62.8p (1.6p) 61.2p
---------------------------------------------------------------------------------------------------------------------
* Other items relate to the amortisation of acquired intangibles, hedge
ineffectiveness and for the year ended 31 December 2006, 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 six months ended 30 June 2007
Unaudited Unaudited Audited
six months six months year
ended 30 ended 30 ended 31
June 2007 June 2006 December 2006
£000's £000's £000's
------------------------------------------------------------------------------------------
Profit after tax 39,315 33,025 76,522
Exchange difference on retranslation of
foreign currency goodwill and intangibles 71 10 (918)
Exchange difference on retranslation of
foreign currency net investments (excluding
goodwill and intangibles) 1,240 320 (3,980)
Exchange and fair value movements associated
with borrowings and derivative financial
instruments (9,967) (1,056) 6,712
Tax charge on exchange difference arising on
borrowings and derivative financial
instruments 382 333 (1,078)
Current and deferred tax on share options 1,371 558 2,214
Actuarial gain on defined benefit pension
schemes - - 3,292
Deferred tax movement associated with
actuarial gain - - (966)
------------------------------------------------------------------------------------------
Total recognised income and expense for the period 32,412 33,190 81,798
------------------------------------------------------------------------------------------
Attributable to:
Equity holders of the Company 31,856 32,820 81,125
Minority interests 556 370 673
------------------------------------------------------------------------------------------
32,412 33,190 81,798
------------------------------------------------------------------------------------------
Consolidated Balance Sheet
as at 30 June 2007
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
Note £000's £000's £000's
-----------------------------------------------------------------------------------------
Non-current assets
Property, plant and equipment 178,540 108,947 134,943
Goodwill 404,202 174,465 216,257
Intangible assets 117,158 51,558 81,925
Deferred tax assets 17,147 20,495 16,435
-----------------------------------------------------------------------------------------
717,047 355,465 449,560
-----------------------------------------------------------------------------------------
Current assets
Inventories 211,379 145,012 151,791
Trade receivables 442,513 327,943 310,418
Other receivables 31,660 28,388 20,527
Derivative financial instruments 3,110 1,163 1,668
Cash and cash equivalents 111,006 39,579 62,447
-----------------------------------------------------------------------------------------
799,668 542,085 546,851
-----------------------------------------------------------------------------------------
Total assets 1,516,715 897,550 996,411
-----------------------------------------------------------------------------------------
Current liabilities
Trade and other payables 426,404 268,287 260,601
Obligations under finance leases and hire
purchase agreements 4,882 770 1,391
Bank overdrafts 3,024 1,516 3,302
Bank loans 120,053 132,107 50,845
Loan notes 2,974 5,244 483
Derivative financial instruments 633 601 61
Current tax liabilities 27,550 22,918 21,366
Provisions 9,344 6,478 12,019
-----------------------------------------------------------------------------------------
594,864 437,921 350,068
-----------------------------------------------------------------------------------------
Non-current liabilities
Obligations under finance leases and hire
purchase agreements 2,424 859 1,448
Bank loans 4,635 506 4,703
Loan notes - 263 -
Private placement notes 268,826 66,081 193,043
Derivative financial instruments 51,583 32,415 37,659
Deferred tax liabilities 34,415 7,576 17,764
Other payables 1,581 2,327 1,267
Retirement benefit obligations 24,622 27,676 23,633
Provisions 18,354 12,301 14,164
-----------------------------------------------------------------------------------------
406,440 150,004 293,681
-----------------------------------------------------------------------------------------
Total liabilities 1,001,304 587,925 643,749
-----------------------------------------------------------------------------------------
Net assets 515,411 309,625 352,662
-----------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 9 13,467 12,226 12,310
Share premium account 165,698 18,269 19,636
Capital redemption reserve 347 347 347
Special reserve 22,113 22,113 22,113
Share option reserve 1,991 1,825 1,786
Hedging and translation reserve (4,223) (3,375) (4,570)
Retained profits 314,309 257,377 299,887
-----------------------------------------------------------------------------------------
Attributable to equity holders of the Company 513,702 308,782 351,509
-----------------------------------------------------------------------------------------
Minority interests 1,709 843 1,153
-----------------------------------------------------------------------------------------
Total equity 515,411 309,625 352,662
-----------------------------------------------------------------------------------------
Consolidated Cash Flow Statement
for the six months ended 30 June 2007
Unaudited Unaudited Audited
30 June 30 June 31 December
2007 2006 2006
Note £000's £000's £000's
-------------------------------------------------------------------------------------
Net cash flow from operating activities
Cash inflow from operating activities 6 63,496 43,617 132,355
Borrowing costs paid (4,342) (7,287) (14,206)
Interest received 2,101 1,084 2,433
Income tax paid (13,243) (18,049) (36,615)
-------------------------------------------------------------------------------------
Net cash inflow from operating activities 48,012 19,365 83,967
-------------------------------------------------------------------------------------
Cash flows from investing activities
Purchase of property, plant and
equipment (27,298) (16,312) (44,682)
Proceeds from sale of property, plant
and equipment 2,428 802 2,009
Purchase of businesses 8 (175,468) (14,937) (90,061)
Net proceeds from sale of discontinued
operation - - 25,327
-------------------------------------------------------------------------------------
Net cash used in investing activities (200,338) (30,447) (107,407)
-------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from issue of ordinary share capital 147,219 423 1,874
Capital element of finance lease rental payments (818) (414) (1,723)
Repayment of loans (19,200) (2,268) (135,112)
New loans 91,551 37,162 211,562
Dividends paid to equity holders of the
Company (17,604) (14,051) (21,719)
Payments to minority shareholder - (726) (719)
-------------------------------------------------------------------------------------
Net cash generated from financing activities 201,148 20,126 54,163
-------------------------------------------------------------------------------------
Increase in cash and cash equivalents in 7 48,822 9,044 30,723
the period
-------------------------------------------------------------------------------------
Cash and cash equivalents at beginning
of period 59,145 28,909 28,909
Effect of foreign exchange rate changes 15 110 (487)
-------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 107,982 38,063 59,145
-------------------------------------------------------------------------------------
Notes to the Interim Financial Information
1 Basis of preparation of interim financial information
The interim financial information was approved by the Board of Directors on 12
September 2007. 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') as adopted for use in the
European Union and in accordance with the accounting policies included in the
Annual Report for the year ended 31 December 2006, which have been applied
consistently throughout the current and preceding periods.
The interim financial information does not constitute statutory accounts within
the meaning of Section 240 of the Companies Act 1985. The interim results to 30
June 2007 and 2006 are neither audited nor reviewed. The financial information
for the full preceding year is based on the statutory accounts for the financial
year ended 31 December 2006. Those 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.
2 Segmental information
As at 30 June 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:
Unaudited six months Unaudited six months Audited year ended
ended 30 June 2007 ended 30 June 2006 31 December 2006
--------------------- --------------------- ---------------------
UK and Mainland Total UK and Mainland Discon- UK and Mainland Discon-
Ireland Europe Ireland Europe tinued Total Ireland Europe tinued Total
operation operation
(USA) (USA)
£000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's
-----------------------------------------------------------------------------------------------------------------------
Revenue 722,496 376,635 1,099,131 605,133 245,454 38,400 888,987 1,254,376 605,456 65,228 1,925,060
Result
Segment
result
before
amortisation
of acquired
intangibles 57,149 16,383 73,532 48,041 8,521 2,295 58,857 99,919 27,577 3,758 131,254
Amortisation
of acquired
intangibles (5,597) (475) (6,072) (2,891) (78) - (2,969) (6,470) (472) - (6,942)
------------------------------------------------------------------------------------------------------------------------
Segment result 51,552 15,908 67,460 45,150 8,443 2,295 55,888 93,449 27,105 3,758 124,312
Parent Company costs (3,558) (2,965) (6,095)
------------------------------------------------------------------------------------------------------------------------
Operating profit 63,902 52,923 118,217
Net finance costs
- continuing operations (7,738) (5,074) (11,787)
Net finance costs
- discontinued
operation - 10 16
-----------------------------------------------------------------------------------------------------------------------
Profit before tax 56,164 47,859 106,446
Profit on disposal of
discontinued operation - - 1,947
Income tax credit - on
profit on disposal of
discontinued operation - - 92
Income tax expense -
continuing operations (16,849) (14,175) (30,839)
Income tax expense -
discontinued operation - (659) (1,124)
Minority interests (556) (370) (673)
------------------------------------------------------------------------------------------------------------------------
Retained profit 38,759 32,655 75,849
------------------------------------------------------------------------------------------------------------------------
Attributable to:
Continuing
operations 38,759 31,009 71,160
Discontinued
operation - 1,646 4,689
-----------------------------------------------------------------------------------------------------------------------
38,759 32,655 75,849
-----------------------------------------------------------------------------------------------------------------------
Balance Sheet
Assets
Segment
assets 825,032 612,832 1,437,864 670,118 191,563 31,186 892,867 718,293 266,490 - 984,783
Unallocated
assets 78,851 4,683 11,628
-----------------------------------------------------------------------------------------------------------------------
Consolidated
total assets 1,516,715 897,550 996,411
-----------------------------------------------------------------------------------------------------------------------
Liabilities
Segment
liabilities 342,274 198,371 540,645 280,099 68,800 6,128 355,027 264,338 91,886 - 356,224
Unallocated
liabilities 460,659 232,898 287,525
-----------------------------------------------------------------------------------------------------------------------
Consolidated
total liabilities 1,001,304 587,925 643,749
-----------------------------------------------------------------------------------------------------------------------
Other segment
information
Capital expenditure on:
Property,
plant and
equipment 21,516 6,414 27,930 13,266 3,239 248 16,753 37,289 8,121 391 45,801
Intangible
assets 10,186 31,119 41,305 4,727 548 - 5,275 28,835 10,793 - 39,628
Goodwill 16,926 170,948 187,874 9,541 239 - 9,780 36,470 18,891 - 55,361
Non-cash
expenditure:
Depreciation 10,204 3,316 13,520 8,044 2,447 195 10,686 18,217 5,540 346 24,103
Amortisation of
acquired
intangibles 5,597 475 6,072 2,891 78 - 2,969 6,470 472 - 6,942
-----------------------------------------------------------------------------------------------------------------------
3 Income tax expense
The income tax expense comprises:
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
£000's £000's £000's
--------------------------------------------------------------------------------------------
UK taxation 10,703 10,161 21,894
Overseas taxation 6,146 4,673 9,977
--------------------------------------------------------------------------------------------
Total income tax expense for the period 16,849 14,834 31,871
--------------------------------------------------------------------------------------------
Attributable to:
Continuing operations 16,849 14,175 30,839
Discontinued operation - 659 1,032
--------------------------------------------------------------------------------------------
16,849 14,834 31,871
--------------------------------------------------------------------------------------------
4. Earnings per share
The calculations of earnings per share are based on the following profits and numbers of shares:
Basic and diluted
-----------------------------------------------------------------------------------------------------------------------
Unaudited six months Unaudited six months Audited year ended
ended 30 June 2007 ended 30 June 2006 31 December 2006
-----------------------------------------------------------------------------------------------------------------------
Discontinued Discontinued Discontinued
Continuing operation Total Continuing operation Total Continuing operation Total
operations (USA) operations (USA) operations (USA)
£000's £000's £000's £000's £000's £000's £000's £000's £000's
-----------------------------------------------------------------------------------------------------------------------
Profit
after tax 39,315 - 39,315 31,379 1,646 33,025 71,833 4,689 76,522
Minority
interests (556) - (556) (370) - (370) (673) - (673)
-----------------------------------------------------------------------------------------------------------------------
38,759 - 38,759 31,009 1,646 32,655 71,160 4,689 75,849
-----------------------------------------------------------------------------------------------------------------------
Basic and diluted before amortisation of acquired intangibles,
hedge ineffectiveness and profit on disposal of discontinued operation
----------------------------------------------------------------------------------------------------------------------
Unaudited six months Unaudited six months Audited year ended
ended 30 June 2007 ended 30 June 2006 31 December 2006
-----------------------------------------------------------------------------------------------------------------------
Discontinued Discontinued Discontinued
Continuing operation Total Continuing operation Total Continuing operation Total
operations (USA) operations operations (USA)
£000's £000's £000's £000's £000's £000's £000's £000's £000's
-----------------------------------------------------------------------------------------------------------------------
Profit
after tax 39,315 - 39,315 31,379 1,646 33,025 71,833 4,689 76,522
Minority
interests (556) - (556) (370) - (370) (673) - (673)
Amortisation
of acquired
intangibles 6,072 - 6,072 2,969 - 2,969 6,942 - 6,942
Hedge
ineffect-
iveness (186) - (186) (1,170) - (1,170) (1,357) - (1,357)
Tax relating
to the
amortisation
of acquired
intangibles
and hedge
ineffect-
iveness (1,766) - (1,766) (540) - (540) (1,676) - (1,676)
Profit
after tax
on disposal of
discontinued
operation - - - - - - - (2,039) (2,039)
-----------------------------------------------------------------------------------------------------------------------
42,879 - 42,879 32,268 1,646 33,914 75,069 2,650 77,719
-----------------------------------------------------------------------------------------------------------------------
Weighted average number of shares:
Unaudited Unaudited Audited
six months six months year ended
ended 30 ended 30 31 December
June 2007 June 2006 2006
Number Number Number
--------------------------------------------------------------------------------------------------------------
For basic earnings per share 125,093,655 122,040,935 122,560,171
Exercise of share options 1,262,718 1,926,741 1,287,923
--------------------------------------------------------------------------------------------------------------
For diluted earnings per share 126,356,373 123,967,676 123,848,094
--------------------------------------------------------------------------------------------------------------
Unaudited Unaudited Audited
six months six months year ended
ended 30 ended 30 31 December
June 2007 June 2006 2006
--------------------------------------------------------------------------------------------------------------
Earnings per share
Basic earnings per share - continuing operations 31.0p 25.4p 58.1p
Basic earnings per share - discontinued operation - 1.3p 3.8p
Total basic earnings per share 31.0p 26.8p 61.9p
---------------------------------------------------------------------------------------------------------------
Diluted earnings per share - continuing operations 30.7p 25.0p 57.5p
Diluted earnings per share - discontinued operation - 1.3p 3.8p
Total diluted earnings per share 30.7p 26.3p 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 34.3p 26.4p 61.3p
Basic earnings per share - discontinued operation - 1.3p 2.2p
Total basic earnings per share 34.3p 27.8p 63.4p
---------------------------------------------------------------------------------------------------------------
Diluted earnings per share - continuing operations 33.9p 26.0p 60.6p
Diluted earnings per share - discontinued operation - 1.3p 2.1p
Total diluted earnings per share 33.9p 27.4p 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.
5 Consolidated statement of changes in equity
Unaudited six Unaudited six Audited
months ended months ended year ended
30 June 2007 30 June 2006 31 December 2006
£000's £000's £000's
------------------------------------------------------------------------------------------------
Profit for the period attributable to
equity holders of the Company 38,759 32,655 75,849
Dividends (17,604) (14,051) (21,719)
New share capital issued 147,219 423 1,874
Exchange difference on
retranslation of foreign
currency goodwill and
intangibles 71 10 (918)
Exchange difference on retranslation of
foreign currency net investments
(excluding goodwill and intangibles) 1,240 320 (3,980)
Exchange and fair value movements
associated with borrowings and derivative
financial instruments (9,967) (1,056) 6,712
Tax charge on exchange 382 333 (1,078)
difference arising on
borrowings and derivative
financial instruments
Current and deferred tax on
share options 1,371 558 2,214
Actuarial gain on defined benefit pension schemes - - 3,292
Deferred tax movement associated with
actuarial gain - - (966)
Credit to share option reserve 722 450 1,089
------------------------------------------------------------------------------------------------
Net addition to shareholders' funds 162,193 19,642 62,369
------------------------------------------------------------------------------------------------
Opening shareholders' funds 351,509 289,140 289,140
------------------------------------------------------------------------------------------------
Closing shareholders' funds 513,702 308,782 351,509
Amounts attributable to 1,709 843 1,153
minority interests
------------------------------------------------------------------------------------------------
Total equity 515,411 309,625 352,662
------------------------------------------------------------------------------------------------
6 Reconciliation of operating profit to cash inflow from operating activities
Unaudited six Unaudited six Audited
months ended months ended year ended
30 June 2007 30 June 2006 31 December 2006
£000's £000's £000's
------------------------------------------------------------------------------------------------
Operating profit 63,902 52,923 118,217
Depreciation charge 13,520 10,686 24,103
Amortisation of acquired intangibles 6,072 2,969 6,942
Profit on sale of property, plant and (1,422) (286) (630)
equipment
Share-based payments 722 450 1,089
Increase in working capital (19,298) (23,125) (17,366)
------------------------------------------------------------------------------------------------
Cash inflow from operating activities 63,496 43,617 132,355
------------------------------------------------------------------------------------------------
7 Reconciliation of net cash flow to movements in net debt
Unaudited six Unaudited six Audited
months ended months ended year ended
30 June 2007 30 June 2006 31 December 2006
£000's £000's £000's
----------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents in the period 48,822 9,044 30,723
Cash outflow from movement in debt (72,165) (34,480) (75,846)
----------------------------------------------------------------------------------------------------
Increase in net debt resulting from cash flows (23,343) (25,436) (45,123)
Debt acquired with acquisitions (83,802) (263) (15,920)
Loan notes settling contingent consideration (1,116) - -
on prior period acquisitions
Non-cash items (7,569) 1,223 5,911
Exchange differences (268) (421) 1,035
----------------------------------------------------------------------------------------------------
Increase in net debt in the period (116,098) (24,897) (54,097)
Net debt at beginning of period (228,820) (174,723) (174,723)
----------------------------------------------------------------------------------------------------
Net debt at end of period (344,918) (199,620) (228,820)
----------------------------------------------------------------------------------------------------
8 Reconciliation of acquisition expenditure
Unaudited six Unaudited six Audited
months ended months ended year ended
30 June 2007 30 June 2006 31 December 2006
£000's £000's £000's
-------------------------------------------------------------------------------------------------------
Total consideration for acquisitions made in the period
Cash consideration 168,689 20,059 101,728
Contingent consideration 2,505 750 4,587
Deferred consideration (loan notes) 1,375 263 483
-------------------------------------------------------------------------------------------------------
Total consideration 172,569 21,072 106,798
-------------------------------------------------------------------------------------------------------
Total consideration for acquisitions made in the period
including assumed debt and net of cash and
cash equivalents acquired
Total consideration (as above) 172,569 21,072 106,798
Overdraft / (cash) acquired 4,238 (5,316) (13,054)
Debt acquired 82,427 - 15,437
-------------------------------------------------------------------------------------------------------
Total consideration (including assumed debt) 259,234 15,756 109,181
-------------------------------------------------------------------------------------------------------
Acquisition cash flows during the period
Cash paid for acquisitions made in the period 168,689 20,059 101,728
Overdraft / (cash) acquired 4,238 (5,316) (13,054)
Cash paid in relation to prior period acquisitions 2,541 194 1,387
-------------------------------------------------------------------------------------------------------
175,468 14,937 90,061
-------------------------------------------------------------------------------------------------------
9 Called up share capital
Unaudited six Unaudited six Audited
months ended months ended year ended
30 June 2007 30 June 2006 31 December 2006
£000's £000's £000's
-------------------------------------------------------------------------------------------------------
Authorised:
190,000,000 ordinary shares of 10p each
(30 June 2006 : 190,000,000 ;
31 December 2006 : 190,000,000) 19,000 19,000 19,000
-------------------------------------------------------------------------------------------------------
Allotted, called up and fully paid:
134,667,294 ordinary shares of 10p each (30 June
2006 : 122,264,587 ; 31 December 2006 : 123,104,025) 13,467 12,226 12,310
-------------------------------------------------------------------------------------------------------
On 24 May 2007, SIG announced a placing of new ordinary shares with
institutional and other investors to raise gross proceeds of £150m (the
'Placing'). The Company placed 11,363,637 new ordinary shares at 1320p each,
raising £147m after commissions and expenses. The Placing proceeds have been
used to fund the acquisition of Lariviere and the increased acquisition spend.
They also provide SIG with financial flexibility to take advantage of
acquisition opportunities as they arise and ensuring that SIG continues to drive
its organic growth through ongoing investment in its businesses.
Total cash consideration received by the Company (including the Placing) for
shares allotted during the period, net of commissions and expenses, amounted to
£147.2m (30 June 2006 : £0.4m; 31 December 2006 : £1.9m).
10 Interim dividend
An interim dividend of 8.0p per share (2006: 6.2p) 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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