SIG PLC Preliminary Results for the year ended 31 st December 2004 8 th March 2005.

SIG PLCPreliminary Resultsfor the year ended 31st December 2004

8th March 2005

IntroductionLes Tench - Chairman

Copyright SIG plc 2005 3

2004 : Growth and Progress

Excellent year, growth in all sectors

Strong like for like sales & profit growth

Acquisition & investment activity

increased, reinforcing market leadership

Dividend increased by 12.9%

Financial ReviewGareth Davies – Finance Director


Key Financial Points

Solid sales growth

Margins increased

Positive impact from product price inflation

Excellent performance across all regions

Significant investment for the future


Summary Profit and Loss

£m 2004 2003 ChangeTurnover 1,398.2 1,268.5 +10.2%Operating profit before goodwill 77.3 63.4 +21.9%

Goodwill amortisation (5.6) (4.8)

Operating Profit 71.7 58.6 +22.2%Interest (5.7) (6.4)

Other Finance Charges (0.5) (0.7)

Profit before tax 65.5 51.5 +27.2%

Interest cover 11.6x 8.2x


Tax, Earnings and Dividends

Tax rate at 32.6% (2003 : 32.6%)

EPS up 26.2% to 36.1p (2003 : 28.6p)

DPS up 12.9% to 14.0p (2003 : 12.4p)

Dividend cover 2.6x (2003 : 2.3x)


Balance Sheet

£m 2004 2003

Capex / Depreciation 121% 71%

Capital employed 222.1 199.8

R.O.C.E. 15.7% 15.2%

Net debt 98.3 76.3

Average Net Debt 83.8 98.2

Gearing 44% 38%


Working Capital to Sales

2004 2003

Working Capital/Sales* 12.2% 13.2%

Like for like sales increase (£97.2m)

£11.9m

Real working capital increase £5.6m

Increase in working capital from1 January to 31 December 2004

£17.5m

* Working Capital to Sales is calculated using annualised sales and the period end working capital position


Working Capital

2004 2003Stock days 40 36

Debtor days 52 52

Bad & doubtful debtas a % of sales

0.8% 0.8%

Creditor days 39 33Working Capital is calculated to eliminate the effect of acquisitions


Stock Movement

£m

Book value at start of year 93.0

Increased value of stock (c. 3%) 2.8

Effect of new branches – Acquisitions 6.8

Effect of new branches – Brownfield 1.6

Further investment – Average £32K per Site 12.2

Book value 31 December 2004 116.4

Total Increase 23.4m(25%

)


Average Working Capital

12.0%

12.5%

13.0%

13.5%

14.0%

14.5%

15.0%

Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04

Wo

rkin

g C

ap

ital

to S

ale

s R

ati

o

Average working capital is calculated using the average working capital balances for the preceding 12 months

Continued improvement in average working capital to

sales ratio

H1 ‘03 H2 ‘03

H1 ‘04 H2 ‘04

Dec-04


Cash flow

£m 2004 2003Cash inflow from trading 94.9 79.9

Change in working capital (17.5) 18.0Cash inflow from operations 77.4 97.9

Interest and tax (21.6) (18.2)55.8 79.7

Capex and dividends (36.7) (26.1)Operating cash inflow 19.1 53.6

AcquisitionsExchange & shares

(42.7)1.6

(2.7)(3.8)

Net (increase) / decrease in borrowings

(22.0) 47.1

* Restated for FRS 17


Pensions Update

Triennial Valuations of UK schemes completed

– Triennial valuation as at 1 January 2004– Special additional cash contributions - £4.1m

FRS17 was fully adopted in 2003.

FRS17 pension liability increased by £2.1m to £17.0m


IFRS

Well advanced in the implementation process.

Actions in progress– Development of policies.– Calculation of opening balance sheet.

Key items to affect earnings– Apportionment of the fair value of options.– Any hedge ineffectiveness contained within our

US $ loan note currency derivatives.– Intangible amortisation v goodwill amortisation.


Financial Summary

Record sales and profits.

Pretax profits up by more than 27%.

Continued focus on working capital management.

Group in good shape for future growth.

Trading ReviewDavid Williams – Chief Executive


Presentation Content

Trading performance.

Strategy, acquisitions and outlook.

Questions and answers.


Trading Highlights

Sales and profits up in all 3 geographic regions – total and like for like.

Operating margin up.

Benefit of price inflation maximised.

Strong underlying performance.


Sales by Sector

Roofing 20.4%(03 - 20.7%)

Insulation 49.7%(03 - 50.5%)

Others 5.2%(03 - 5.2%)

Commercial Interiors24.7% (03 - 23.6%)


Sales by Region

USA 4.1%(03 - 5.0%)

Europe 31.0%(03 - 31.1%)

UK & ROI 64.9%(03 - 63.9%)


Sales Growth – SIG Total

Constant Currency

Like for Like£ Like for LikeConstant

Currency Total£ Total

10.2%

2004 over 200311.6%

7.7%9.0%

% Growth

(Actual Growth £129.7m)


Sales Growth by Region

USAMainland EuropeUK & ROI

Acquired

Like for Like

Total 11.9%% Growth – Constant Currency

2004 over 2003

9.0%

Total 12.4%

10.5%

Total 1.0%

(Actual Growth £129.7m)


Operating Profits – 2004 Results

£3.0m# Exceptional Stock Gains

Source of Growth 2004 / 2003

£2.6m Acquisitions (2003 and 2004)

£8.3m# ‘Normalised’ like for like

# - SIG Estimate

Total*

£13.9m

* - Operating profit growth, excluding goodwill


Operating Margins

2.9%

7.1%

5.0%

1.4%

2.8%

5.5%

3.6%

6.7%

0% 2% 4% 6% 8%

Group *

USA

EUR

UK & ROI

2004 2003

* Including group costs, pre-goodwill


Key Operating Ratios

2004 / 2003

Sales per Employee

Op. Profit per Employee

Op. Costs as % to Sales

Gross Margin % to Sales


2004 ResultsRegional Performance


USA 2004 Results - Sales

20042003

$105.7m

£57.6m

$104.7m

£63.7m

Growth (All Like for Like)

Local Currency + 1.0%

Sterling – 9.6%


USA 2004 Results – Operating Profit

20042003

$3.1m

£1.7m

$1.5m

£0.9m Local Currency + 107.1%

Sterling + 85.5%


USA – 2004 Results

Market Indicators

Demand Pricing

Petrochem market difficult. Commercial market stronger. Sales and operating profits increased. Operating margin doubled.

SIG Results £ $Sales Op. Profit Op. Margin Market share


Mainland Europe 2004 Results - Sales

20042003

£394.2m

Growth

Constant Currency

Total +12.4%LFL +10.5%

Sterling

Total +10.0%LFL +8.2%

£433.6m

€568.8m

€638.7m


Mainland Europe 2004 Results – Operating Profit

20042003

£11.0m

Growth

Constant Currency

Total +43%LFL +43%

Sterling

Total +40%LFL +40%

£15.5m

€15.9m

€22.8m


Germany – 2004 Results

Market Indicators

Demand Pricing

5 new trading sites added Like for like sales increase of 6.1% Much improved performance due to internal efficiencies

and margin gains

SIG Results £ €Sales +6.4%

Op. Profit Op. Margin Market share


France – 2004 Results

Market Indicators

Demand Pricing

Sales ahead in all product groups 4 additional trading sites Like for like sales up 18.4% Strong like for like sales and profit growth

SIG Results £ €

Sales +25.9%



Benelux – 2004 Results

Market Indicators

Demand Pricing

Market conditions weak; sales strengthened into H2 Business restructuring during the year New commercial interiors branch opened in Belgium

SIG Results £ €

Sales +11.0%



Poland – 2004 Results

Market Indicators

Demand Pricing

Achieved first full year of profitable trading Construction activity increased Four new branches added

SIG Results £ PLN

Sales +42.5%



UK & ROI 2004 Results - Sales

20042003

£810.7m

Growth

Total +11.9%

LFL +8.8%

£907.1m


UK & ROI 2004 Results – Operating Profit

20042003

£54.2mGrowth

Total +18.2%

LFL +14.1%

£64.1m


UK & ROI Insulation – 2004 Results

Market Indicators

Demand Pricing

Demand increase greater than expected Increased use of thermal and acoustic insulation in residential

and non-residential buildings Increased upgrading of insulation in existing homes assisted by

grants and energy efficiency schemes

SIG Results

Total Sales LFL Sales Op. Profit Op. Margin Trading Sites +8


UK & ROI Roofing – 2004 Results

Market Indicators

Demand Pricing

Market penetration increased through adding new sites Product range expanded Programme of branch upgrading underway

SIG Results



UK & ROI Commercial Interiors – 2004 Results

Market Indicators

Demand Pricing

Non residential building market strong Some recovery in demand from premium office sector Strong internal performance – all key ratios improved

SIG Results



UK Safety & Construction Products – 2004 Results

Market Indicators

Demand Pricing

Product range expanding. Increased emphasis on civil engineering and

major projects.

SIG Results



Strategy & Outlook


Strategy

“To develop and grow the Group as a

leading supplier of specialist

products to the construction and

related markets, in order to achieve

sustainable long term growth in

shareholder value”


Growth Drivers

Organic expansion within existing geographic regions

Wider product range

Market demand growth e.g. Regulation, environmental issues

Acquisition pipeline


Acquisitions – Part of Growth Strategy

Aimed at meeting core objectives of:

– Strengthening the Group

– Enhancing shareholder value

Will be focused on:

– Specialist products mainly in construction

industry

– Within our existing geographic regions


Acquisitions in 2004

13 completed in the year

4 Mainland Europe: 1Germany, 3 France (2 Com Ints, 1

Insulation)

9 UK: 2 Insulation, 4 Roofing, 3 Construction Products

33 additional trading sites retained (2 closed in France)

Total Consideration £45.1m (including £2.3m

contingent)

Annualised sales c. £80m

Integrating well


Outlook - Markets

UK & Republic of Ireland– demand in construction activity remaining

strong

Overseas– generally stable demand. USA improving,

Germany – market remaining tough

Price Inflation– some anticipated price inflation although

less than in 2004


Summary

Good start to 2005.

Acquisition opportunities and organic development plans in progress.

Confident of further growth.


Appendix


Market Volume & Price IndicatorsUK & Republic of Ireland Deman

dPrice

Insulation

Roofing

Commercial Interiors

Safety & Construction Products

Mainland Europe

Germany

France

Netherlands

Poland

United States America


Trading Site Changes

June

2004

Net Organic

Net Acquired

Dec 2004

To 8 March

UK & ROI 229 6 26 259 +7

Europe 125 3 7 133 0

USA 22 0 0 22 0

Total branches

376 9 33 412 419


Market Position

UK & ROI GER FRA NETH POL USA

Insulation 1 1 1 a 2 1 1 a,b

Comm. Int.

1 3 2 1 3 c -

Roofing 1 - - - - -

a Industrial Insulation b Regionally c Insufficient data


Market Sectors – Indicative Breakdown

% of Group Total

New Build% of

Subgroup

RMI % of

Subgroup

Housing 28% 42% 58%

Non-Housing, Building &

Construction56% 56% 44%

Industry(Non-Construction)

16% 39% 61%

Note: It is not possible to sharply define sales into the respective sectors, as many products are used for all types of work, in all types of construction


EBITDA Growth

0

10

20

30

40

50

60

70

80

90

100

'99 '00 '01 '02 '03 '04

EBIT

DA

/ £

m 56.4

64.4

73.4 73.980.3

95.1

5 Year Compound Annual Growth Rate of 11%

SIG PLC Preliminary Results for the year ended 31 st December 2004 8 th March 2005.

Documents

copyright sig plc

sales slide

sales growth sig total

future slide

sector slide

capital position slide

sig plc preliminary

sig estimate total