Sig Plc · LSE:SHI
Sig — H1 2008 Earnings Presentation
55 slides from Sig's earnings presentation, Aug 21, 2008
Slide 1: SIG plc Interim Results 2008
SIG plc Interim Results 2008 for the six months to 30 June 2008 21 August 2008 Copyright SIG plc 2008 1
Slide 2: Introduction
Introduction Les Tench Chairman Copyright SIG plc 2008 2
Slide 3: Key points
Key points Solid performance in challenging environment Proven and experienced management team Active focus on cost control £127m spend on acquisitions in H1 – will be materially lower in H2 Group in good shape to maintain further progress Copyright SIG plc 2008 3
Slide 4: Financial Review
Financial Review Gareth Davies Finance Director Copyright SIG plc 2008 4
Slide 5: 2008 Performance Drivers
2008 Performance Drivers Non-residential and industrial market demand positive; reduced demand in residential, particularly UK and Ireland Good like for like increases Further investment in customer service Strong acquisition impact Cost-cutting programmes well advanced Copyright SIG plc 2
Slide 6: Financial Highlights
Financial Highlights Substantial sales and operating profit growth – Sales up in total 35.9% to £1,494m (2007: £1,099m) – Underlying operating profit up 20.0% to £84.0m (2007: £70.0m) Like for like sales growth of 9.3% (2.5% c.c.) A record number of acquisitions completed in any half year peri
Slide 7: Summary Income Statement
Summary Income Statement £m H1 H1 Change 2008 2007 £m % Revenue 1,493.7 1,099.1 +394.6 +35.9% Underlying operating profit before Group costs 88.6 73.5 +15.1 +20.5% Group costs (4.6) (3.5) Underlying operating profit 84.0 70.0 +14.0 +20.0% Finance costs (15.7) (8.0) Underlying profit before tax 68.3
Slide 8: Analysis of Revenue Growth
Analysis of Revenue Growth £1,493.7m % £m £1,099.1m Price 2.9% 30.8 Volume (0.4%) (4.2) Like for like 2.5% 26.6 Acquisitions 26.1% 266.0 Currency 7.3% 102.0 35.9% 394.6 H1 2007 H1 2008 Copyright SIG plc 2008 8
Slide 9: Tax, Earnings and Dividends
Tax, Earnings and Dividends Underlying tax rate at 29.0% (FY 2007: 30.0%) Underlying EPS up 4.4% to 35.8p (2007: 34.3p) Interim DPS up 3.8% to 8.3p (2007: 8.0p) Dividend cover 3.5x (2007: 3.9x) * Dividend cover – Fully adjusted basic EPS divided by interim dividend Copyright SIG plc 2008 9
Slide 10: Balance Sheet
Balance Sheet June June Dec £m 2008 2007 2007 Capex / Depreciation 1.66 1.89 1.77 Net working capital* 377.9 239.8 273.9 Net debt 640.2 344.9 428.9 Gearing 105% 67% 75% * Excludes defined benefit pension liability and contingent consideration Copyright SIG plc 2008 10
Slide 11: Working Capital
Working Capital June June 2008 2007 Working Capital / Sales 12.2% 10.5% Stock days 46 40 Debtor days 55 55 Bad & doubtful debt as a % of sales 0.5% 0.7% Creditor days 48 50 Working Capital to sales is calculated using annualised acquisition sales and using the period end working capital position inc
Slide 12: Factors affecting stock
Factors affecting stock Higher stock days in the larger recent acquisitions than group average 31 trading sites opened in H1 2008, £5m stock, low sales New group slate purchasing platform, £6m stock Copyright SIG plc 2008 12
Slide 13: Cash flow
Cash flow £m H1 2008 H1 2007 Cash inflow from trading 103 83 Change in working capital (63) (20) Cash inflow from operations 40 63 Interest, tax and pension (38) (15) Maintenance capex (19) (14) Free cash flow available for investment (17) 35 Acquisitions (123) (260) Proceeds from equity issue - 147
Slide 14: Trading cash conversion (i)
Trading cash conversion (i) £m HY 2008 HY 2007 FY 2007 Cash flow from operations* 40 63 165 Underlying operating profit 84 70 159 Trading cash conversion 48% 90% 104% * - cash flow from operations before pension movement Copyright SIG plc 2008 14
Slide 15: Trading cash conversion (ii)
Trading cash conversion (ii) H1 trading cash conversion 48% £36m below historic norm of 90% Predominantly stock increases in new investments Striving for 100% cash conversion in FY Targets, plans and measurement processes in place Copyright SIG plc 2008 15
Slide 16: Financial Summary
Financial Summary Solid first half trading performance 10% underlying PBT improvement Further investment in growth opportunities Strong ongoing focus on cash flow and cost saving initiatives Copyright SIG plc 2008 16
Slide 17: Trading Review
Trading Review Chris Davies Chief Executive Copyright SIG plc 2008 17
Slide 18: Presentation Content
Presentation Content Trading Performance – SIG in Total – UK & Ireland – Mainland Europe Acquisitions Outlook Questions and Answers Copyright SIG plc 2008 18
Slide 19: Trading Performance – SIG in Total
Trading Performance – SIG in Total Copyright SIG plc 2008 19
Slide 20: Total Sales Growth (i)
Total Sales Growth (i) H1 2008 v H1 2007 - Actual Growth £394.6m +35.9% +26.6% +9.3% +2.5% Total £ Total Constant Like for Like £ Like for Like Currency Constant Currency Copyright SIG plc 2008 20
Slide 21: Total Sales Growth (ii)
Total Sales Growth (ii) H1 2008 v H1 2007 - Actual Growth £394.6m Like for Like £100.9m 2007 Acquisitions 26% Incremental Impact £240.5m 13% 61% 2008 Acquisitions £53.2m Copyright SIG plc 2008 21
Slide 22: Total Sales Growth (iii)
Total Sales Growth (iii) Actual like for like growth £100.9m 6.8% +2.9% -0.4% Volume Price Currency SIG estimates Copyright SIG plc 2008 22
Slide 23: Sales Growth – Regional Analysis
Sales Growth – Regional Analysis Sales Growth H1 2008 v H1 2007 Total +46.5% Total +16.2% LFL +2.0% LFL +3.4% UK & Ireland (Constant Currency) Mainland Europe (Constant Currency) Copyright SIG plc 2008 23
Slide 24: Regional Performance – Sales (i)
Regional Performance – Sales (i) Total Sales H1 2008 £1,493.7m, H1 2007 £1,099.1m Mainland Europe 43.1% £644.3m (H1 2007: 34.3%) UK & Ireland 56.9% £849.4m (H1 2007: 65.7%) Copyright SIG plc 2008 24
Slide 25: Sales Sector Split – H1 2008
Sales Sector Split – H1 2008 Specialist Construction Products 10.9% (2007: 11.5%) Insulation and Building Environments 35.1% (2007: 40.9%) Interiors 26.0% (2007: 25.6%) Exteriors 28.0% (2007: 22.0%) Copyright SIG plc 2008 25
Slide 26: Total Operating Profit Growth (i)
Total Operating Profit Growth (i) Total Growth 2008 H1 v 2007 H1 £14.0m +20.0% +14.1% -3.0% -7.1% Total £ Total (Constant Like for Like (£) Like for Like Currency) (Constant Currency) All reference to operating profit is on an underlying basis, i.e. excluding amortisation of acquired intangibles and
Slide 27: Total Operating Profit Growth (ii)
Total Operating Profit Growth (ii) Total Growth H1 2008 v H1 2007 £14.0m Like for Like Acquisitions £16.1m -£2.1m Copyright SIG plc 2008 27
Slide 28: Operating Profit – Regional Performance
Operating Profit – Regional Performance Growth H1 2008 v H1 2007 Total +52.0% Total +4.2% LFL +6.4% Mainland Europe (Constant Currency) LFL (8.5)% UK & Ireland (Constant Currency) Copyright SIG plc 2008 28
Slide 29: Net Operating Profit Margins
Net Operating Profit Margins H1 2008 v H1 2007 7.9% 2007 6.4% 2007 4.5% 2008 7.0% 5.6% 2008 2008 4.3% 2007 UK & Ireland Mainland Europe Group “Group” is stated after Group costs Copyright SIG plc 2008 29
Slide 30: Trading Performance – UK & Ireland
Trading Performance – UK & Ireland Copyright SIG plc 2008 30
Slide 31: UK & Ireland – Sales Growth
UK & Ireland – Sales Growth 2008 H1 Actual Total Growth £126.9m Like for Like £23.4m (18.4%) 2007 Acquisitions Incremental in 2008 £67.0m (52.8%) 2008 Acquisitions £36.5m (28.8%) Copyright SIG plc 2008 31
Slide 32: UK & Ireland – Market Sector Performance
UK & Ireland – Market Sector Performance H1 2008 v H1 2007 Sales Operating Trading Profit Sites* Insulation & Building + 12 to 87 Environments Exteriors + 14 to 292 Interiors + 4 to 59 Specialist Construction + 10 to 63 Products * - compared to 1 January 2008 Copyright SIG plc 2008 32
Slide 33: Insulation & Building Environments
Insulation & Building Environments Reduced demand in residential sector partly mitigated by increased insulation thicknesses (Regulation) Non-residential and Industrial segments held up well Strong growth in retrofit insulation demand (CERT) Copyright SIG plc 2008 33
Slide 34: Exteriors
Exteriors Sales of traditional pitched & flat roof products fairly stable in H1 Demand for Roofline (uPVC-type) products down Extension of product range continuing Copyright SIG plc 2008 34
Slide 35: Interiors
Interiors Strong H1 sales & profit performance, in total & LFL Continued good levels of non-residential project work Both distribution and manufacturing operations performed well Copyright SIG plc 2008 35
Slide 36: Specialist Construction Products
Specialist Construction Products Year on year sales growth +23.5%, driven mainly by 2007 acquisitions Major projects and accounts resilient, though demand down in segments closest to residential building Widening of range continuing Copyright SIG plc 2008 36
Slide 37: Trading performance - Mainland Europe
Trading performance - Mainland Europe Copyright SIG plc 2008 37
Slide 38: Mainland Europe H1 2008 – Key Points Summary
Mainland Europe H1 2008 – Key Points Summary Market conditions generally stable Some weakness in Germany & France residential sectors Good results v. testing comparators Continued to build network in Poland & Central Europe New European MD in post 1 July 2008 Copyright SIG plc 2008 38
Slide 39: Mainland Europe – Sales Growth
Mainland Europe – Sales Growth 2007 H1 Actual Total Growth £267.7m 2008 Acquisitions £16.7m (6.2%) Like for Like 2007 Acquisitions £77.6m (29.0%) Incremental in 2008 £173.4m (64.8%) Copyright SIG plc 2008 39
Slide 40: SIG Mainland Europe Sales by Region H1 2008
SIG Mainland Europe Sales by Region H1 2008 Germany & Austria France 40.4% 37.8% H1 2007: 55.5% H1 2007: 20.6% Benelux Poland & Central Europe 6.3% 15.5% H1 2007: 7.3% H1 2007: 16.6% Copyright SIG plc 2008 40
Slide 41: Performance H1 2008 – Germany & Austria in Euros
Performance H1 2008 – Germany & Austria in Euros +6.3% +7.0% +6 to 88 Sales Operating Profit Trading Sites* LFL sales +1.0% Exceptional H1 comparators Roofing sales down, Insulation & Interiors sales up Operating margin maintained * Compared to 1 January 2008 Copyright SIG plc 2008 41
Slide 42: Performance H1 2008 – France in Euros
Performance H1 2008 – France - in Euros +168.6% +193.6% +19 to 161 Sales Operating Profit Trading Sites* Benefit from Larivière acquired 29 June 2007 Strong performance in core operations LFL sales +8.8% Operating margin improved * Compared to 1 January 2008 Copyright SIG plc 2008 42
Slide 43: Performance H1 2008 – Poland in PLN
Performance H1 2008 – Poland – in PLN +8.0% Operating Profit +5 to 71 Sales -32.9% Trading Sites* Tough comparators v. H1 2007 LFL sales + 1.7% Operating profits down Excellent medium term prospects * Compared to 1 January 2008 Copyright SIG plc 2008 43
Slide 44: Performance H1 2008 – Central Europe
Performance H1 2008 – Central Europe SIG now completed a year of trading in Central Europe Insulation and Interiors operations in Czech Republic, Slovakia and Hungary 28 trading sites Building regional HQ in Prague Small profit in H1 2008 Excellent medium term prospects Copyright SIG plc
Slide 45: Performance H1 2008 – Benelux in Euros
Performance H1 2008 – Benelux – in Euros +25.1% +38.3% No change – 11 sites Sales Operating Profit Trading Sites* Core markets solid LFL sales +10.7% Operating margin improved * Compared to 1 January 2008 Copyright SIG plc 2008 45
Slide 46: Acquisitions
Acquisitions Copyright SIG plc 2008 46
Slide 47: 2008 Acquisitions – to 20 August 2008
2008 Acquisitions – to 20 August 2008 24 in total, all profitable £185m historic annualised sales, 2008 H1 impact £53m Total consideration including assumed debt £127m 61 trading sites added Integration going well Copyright SIG plc 2008 47
Slide 48: Outlook
Outlook Copyright SIG plc 2008 48
Slide 49: Short Term Outlook
Short Term Outlook External forecasts for residential continuing to be revised downwards, particularly in UK & Ireland Non-residential and industrial process sectors in all SIG countries remain positive SIG trading since half year solid Market developments under close scrutiny Active cost
Slide 50: Long Term Outlook
Long Term Outlook Bright future prospects Insulation demand driven by regulation and energy pricing Extensive organic and acquisition growth opportunities New countries Extension of products/services Copyright SIG plc 2008 50
Slide 51: Focus, Specialisation and Service
Focus, Specialisation and Service Copyright SIG plc 2008 51
Slide 52: Appendices
Appendices Copyright SIG plc 2008 52
Slide 53: Market Sectors – Indicative Breakdown
Market Sectors – Indicative Breakdown % of New Build RMI Group % of % of Total Subgroup Subgroup Non-Residential Construction 53% 57% 43% Residential 37% 46% 54% Industry – Non-Construction 10% 56% 44% Note: SIG estimates Copyright SIG plc 2008 53
Slide 54: 2008 Acquisitions – Regions & Markets
2008 Acquisitions – Regions & Markets Total Annualised Sales £185m £m Sales per annum UK & Ireland Mainland Europe Insulation & Building 34 49 Environments Exteriors 45 11 Interiors 22 8 Specialist Construction 16 - Products TOTAL 117 68 Copyright SIG plc 2008 54
Slide 55: Continued Growth in Underlying Earnings Per Share
Continued Growth in Underlying Earnings Per Share Half Year ended 30 June 5 Year Compound Growth +20.5% 34.3p 35.8p 26.4p 22.3p 17.5p +24.1% +18.4% +29.9% +4.4% +27.4% 2004 2005 2006 2007 2008 Copyright SIG plc 2008 55