Slide 1: Full year 2019 results and new growth strategy
Strictly Private & Confidential Full year 2019 results and new growth strategy Proposed equity raise of £150m May 2020
Slide 2: Presenters
Presenters Steve Francis Kath Kearney-Croft Andrew Allner Group Chief Executive Group Chief Financial Chairman Officer Officer (Interim) 2
Slide 3: Chairman's Comments – FY2019 and COVID-19
Chairman’s Comments – FY2019 and COVID-19 • 2019 results, albeit in line with guidance in January Trading Update, very disappointing • Full year underlying profit before tax(1) of £41.9m (2018 £74.5m) • Strategy was poorly executed, resulting in an accelerating decline in sales and adverse impact on
Slide 4: Chairman's Comments – Decisive Board Actions
Chairman’s Comments – Decisive Board Actions • The Board has taken decisive action to address 2019 performance • New leadership team in place: • CEO, CFO and MDs of UK and German businesses • New strategy that reprioritises strong customer-centric values and a commitment to proximity, expertise and
Slide 5: FY19 Results Overview
FY19 Results Overview
Slide 6: FY19 Summary
FY19 Summary • Underlying PBT, including businesses held for sale and pre IFRS 16, of £41.9m (2018: £74.5m) consistent with previous guidance • Underlying revenue decline of 9.0%, impacted by market share losses in the UK and Germany due to poor execution of transformation initiatives which the Boar
Slide 7: FY19 Key Financials
FY19 Key Financials Continuing Operations 2019 2019 2018 Change • LFL sales down 7.6%, driven by specific challenges in (post IFRS 16) (pre IFRS16) (pre IFRS16) UK and Germany in particular Revenue £2,084.7m £2,084.7m £2,290.4m (9)% • 60bps gross margin improvement LFL sales % (7.6)% (7.6)% (2.1)% n
Slide 8: FY19 Geographical Performance
FY19 Geographical Performance Revenue Op Profit ROS % Revenue(£m) 2019 PY var. (£m) PY var. (%) PY var. (£m) 2019 Decline in UK and UK* 822 (180) -18% (23.3) 1.6% Germany Germany 382 (22) -5% (4.0) 0.9% UK & Germany 1,204 (202) -14% (27.3) 1.4% France 527 7 1% (3.0) 3.6% Poland 156 (1) 0% 0.9 2.5% S
Slide 9: Base Profit for 2020 – Impact of Disposals
Base Profit for 2020 – Impact of Disposals £41.9m Underlying PBT (including businesses held for sale), pre IFRS 16 £19.1m £20.6m £41.9m £2.2m Underlying PBT, £5.0m pre IFRS 16 £20.6m £15.6m £15.6m Underlying PBT, 2019 Air Handling Building Solutions 2019 IFRS 16 2019 post IFRS 16 underlying PBT (Ass
Slide 10: Balance Sheet Flattered by Working Capital Movement
Balance Sheet Flattered by Working Capital Movement £40m £15m £8m £22m £77m £32m £189m £163m £35m £21m 2018 Cash inflow Working Other (1) Capex Financing/ Dividends Additional Reduction in 2019 Net Debt from trading Capital Tax paid restricted cash debt factoring Net Debt Note: Financial information
Slide 11: Unwind of Working Capital in Q1 2020
Unwind of Working Capital in Q1 2020 Capital Structure(£m) 31st Dec-19 31st Mar-20 Gross Cash 137 165 £10m £4m Gross Debt (300) (270) Net Cash / (Debt) (163) (105) £79m o/w Drawn down RCF (100) (70) £9m £163m o/w Private Placement (176) (176) Notes o/w Other Indebtedness (24) (24) £3m • RCF matures
Slide 12: Current Trading
Current Trading(1) • Trading in the first two months in the UK and Germany saw a continuation of the challenging trends seen in the last quarter of 2019, whilst trading activity in the rest of Europe was relatively stable • Revenue for the first two months of the year was £296.0m, a like-for-like de
Slide 13: Strong Market Positions in a Critical Industry with Growth Potential
Strong Market Positions in a Critical Industry with Growth Potential
Slide 14: SIG's New Growth Strategy & Recapitalisation
SIG’s New Growth Strategy & Recapitalisation Strong market position in a critical industry with growth potential Previous strategies have eroded USPs in UK & German businesses Decisive management change & new approach: back to basics New customer-centric strategy that reprioritises sales COVID-19: S
Slide 15: We Play an Important Role in a Critical Industry
We Play an Important Role in a Critical Industry SIG retains a leadership and balancing role in the construction industry • We understand and serve the needs of a very broad range of customers • We protect and develop the brands and products of our major suppliers to deliver better solutions Our net
Slide 16: Investment to Differentiate – a Modernised Operating Model
Investment to Differentiate – a Modernised Operating Model • We have invested in infrastructure and implemented tools to differentiate our business, including: • Opening Valor Park near Heathrow, our 135,000 sq ft distribution facility • Installed new Warehouse Management System (WMS) into National
Slide 17: Long Term Structural Growth Drivers
Long Term Structural Growth Drivers Impact of COVID-19 on the construction sector has been widespread, but the Board believes a number of structural growth drivers remain Fiscal stimulus • Construction potentially a prime direct area of fiscal stimulus for UK and EU Governments' post COVID-19 • Post
Slide 18: Previous Strategies have Eroded USPs in UK & German Businesses
Previous Strategies have Eroded USPs in UK & German Businesses
Slide 19: History and Previous Strategies
History and Previous Strategies 1957-2008 2009-2013 2014-2016 2017-2019 Growing Adjusting to Functionalisation/ Federation of Retail-isation Austerity Centralisation Local Branches • Strongcustomer-centric • 2009 equity raising • Continued focus on debt • Divestment of non-core values: Proximity, •
Slide 20: Management Actions led to a Loss in Market Share
Management Actions led to a Loss in Market Share Actions of previous management leading to underperformance: SIGD revenue performance versus competitors 2015-2019 900 1 Centralisation of commercial functions with insufficient support systems 800 Minster -287 700 600 SIGD 2 Undermining of branch mana
Slide 21: Self-Harm Most Evident in the UK and Germany since 2H19
Self-Harm Most Evident in the UK and Germany since 2H19 Historical Drivers of Self-Harm: Monthly Revenues by Country (Quarterly Average) 130 Indexed to March 2018 = 100 • Sales restructure 120 110 • Inventory / Procurement 100 centralisation 100 92 90 92 • Branch rationalisation 80 75 • Price increa
Slide 22: UK Business has Historically held Strong Positions
UK Business has Historically held Strong Positions Strong Revenues & Stable EBIT Margins Our UK&I business has historically been a market leader: 1,400 8% 7% 1,300 6% EBIT Margin (%) Revenue (£m) 1,200 5% Revenue • Experienced and 1,100 4% EBIT % knowledgeable work force 1,000 3% 2010-18 EBIT % 2% 9
Slide 23: We have a Profitable European Business
We have a Profitable European Business Stable Revenues & EBIT Margins over the Long Term Geared up to take advantage of market recovery post COVID-19: 1,800 8% 1,600 7% 1,400 6% EBIT Margin (%) • Revenue (£m) Strong positions in our end 1,200 5% 1,000 Revenue markets 4% 800 EBIT % 3% 600 2010-18 EBI
Slide 24: Return to Profitable Growth and Regain Market Share
Return to Profitable Growth and Regain Market Share
Slide 25: New Strategic Focus
New Strategic Focus 2020- 1957-2008 2009-2013 2017-2019 Growing 2014-2016 Growth through Adjusting to Functionalisation/ Federation of Retail-isation “Local B2B Local Branches Austerity Centralisation Franchise-style” • Strongcustomer-centric values: • 2009 equity raising • Continued focus on debt &
Slide 26: Return to Profitable Growth – Our Purpose and Vision
Return to Profitable Growth – Our Purpose and Vision Our purpose Enable modern, sustainable & safe living and working environments in the communities in which we operate Our vision To be the leading B2B distributor of specialist construction products in our key markets Our culture Our culture is und
Slide 27: What is Changing?
What is Changing? Was Is / Will be Clarity on “core” businesses & USPs • Disposal candidate? • Clear definitions and (traditional) USPs Culture & Behaviours • Command & control • Enable, Empower & Guide Prioritisation between Growth & Cost • Cost • Growth with controls, acquisitive • (UK/ Germany):
Slide 28: Return to Profitable Growth – Back to Basics
Return to Profitable Growth – Back to Basics Aim to Recapture Market Leadership by reinforcing Proximity, Expertise, Service 1 2 3 4 5 6 7 Strengthen sales-led Gain market share culture by Generate through enhanced Local P&Ls within a accelerating economies of customer Leaner, smarter “franchise-sty
Slide 29: Our Growth Plan
Our Growth Plan Structurally our markets have positive drivers of recovery and growth in the medium term and our franchises and market positions remain strong Revitalise Germany and Enable growth and energise continue to grow our other sales and market share strong EU businesses recovery efforts 29
Slide 30: UK Market Share Recapture Plan
UK Market Share Recapture Plan 1 Merge UK Businesses 2 Enable Growth 3 Energise Sales efforts Right-size Structure & Organisation Remove Blockages to Growth Reconnect with Customers • Merge SIGD & SIGE into single UK division • Enhance service including OTIF (On time In Full) & • Leadership & entrep
Slide 31: The Group's Medium Term Vision
The Group’s Medium Term Vision In the medium term, the Group is targeting the following key financial metrics: Target an operating margin of approximately 5% within the Group’s operating companies, and a Margin Group operating margin of approximately 3%, trending towards approximately 5% in the long
Slide 32: Decisive Management Change and New Approach: Back to Basics
Decisive Management Change and New Approach: Back to Basics
Slide 33: New leadership focus – First 60 days
New leadership focus – First 60 days 1 2 3 Change & Clear & Complete No Surprises! Stronger Upgrade Leadership/ Assessment of What Went Governance & Financial Management Wrong Management 4 5 Re-connect with Colleagues, Ensure Strong Financing in Customers Place & Suppliers 33
Slide 34: Strengthened Executive Team to Deliver the Strategy
Strengthened Executive Team to Deliver the Strategy Steve Francis Kath Kearney-Croft Ian Ashton Philip Johns Julien Monteiro Ronald Hoozemans CEO CFO (Interim) CFO (Elect) Managing Director, UK MD, France MD, Benelux CEO of Patisserie Valerie, Tulip Group Finance Director of Vitec Formerly Group CFO
Slide 35: Two Strong New Business Units created
Two Strong New Business Units created NEW: Combined UK unit, NEW: Combined Germany/ Benelux £822m strong combined team under unit £485m, leadership of Philip Johns strong combined leadership Distribution £534m, Exteriors £288m, Benelux £103m, contracting contracting stable Germany £382m, contracting
Slide 36: COVID-19: Strong Management Response and Robust Trading/Liquidity Preservation
COVID-19: Strong Management Response and Robust Trading /Liquidity Preservation
Slide 37: Swift Action Taken to Mitigate COVID-19 Impact
Swift Action Taken to Mitigate COVID-19 Impact Comprehensive actions taken to reduce cost and manage liquidity in response to the COVID-19 crisis and the subsequent country lock downs Employees • >2,000 UK employees furloughed and majority of UK and Ireland trading sites temporarily closed • Tempora
Slide 38: Impacts of COVID-19 have Varied by Geography
Impacts of COVID-19 have Varied by Geography Effect of COVID-19 on SIG Trading Activity 140% 120% 100% 100% 88% 80% 60% 53% 40% France Germany Poland Benelux UK & Ireland 20% 0% 21-Jan 28-Jan 04-Feb 11-Feb 18-Feb 25-Feb 03-Mar 10-Mar 17-Mar 24-Mar 31-Mar 07-Apr 14-Apr 21-Apr 28-Apr 05-May 12-May 19-
Slide 39: Financing Strategy – Recapitalisation Process Underway
Financing Strategy – Recapitalisation Process Underway
Slide 40: Status of Financing Discussions
Status of Financing Discussions • Strengthening the Group’s capital structure for the long term: • Intention to raise c.£150m in new equity in the coming weeks • CD&R has conditionally agreed to invest up to £85m as part of the total equity raise • The equity offer will be structured in two, inter c
Slide 41: Outlook and Summary
Outlook and Summary
Slide 42: Summary
Summary Strong market position in a critical industry with growth potential Strong management in place to drive the business forward New approach: back to basics New customer-centric strategy that reprioritises sales Recapitalisation process underway 42
Slide 43: Appendix I: Supporting schedules
Appendix I: Supporting schedules
Slide 44: Ongoing portfolio management
Ongoing portfolio management SIG Group £2,085m Specialist Distribution Roofing Merchanting £1,455m £630m UK France Germany Ireland Poland Benelux France SIGE £534m £185m £382m £95m £156m £103m £288m £342m SIG Distribution LiTT WeGo / VTi SIG Ireland SIG Polska SIG Benelux Larivière SIG Exteriors Not
Slide 45: Underlying financials by segment
Underlying financials by segment Operating Specialist Distribution Revenue Change LFL Gross margin Change Change ROS Change profit UK Distribution £534m (21.4)% (21.1)% 26.2% +150bps £5.8m (74.7)% 1.1% (230)bps France - LiTT £185m 5.2% 7.1% 27.5% +0bps £10.8m 25.9% 5.9% +160bps Germany £382m (5.4)%
Slide 46: 2019 Other items
2019 Other items PBT Cash £m impact impact Underlying profit before tax pre IFRS 16 £20.6m - IFRS 16 impact £(5.0)m - Underlying profit before tax post IFRS 16 £15.6m - Amortisation of acquired intangibles £(6.2)m - Impairment charges £(90.9)m - Disposals/exits £2.1m £8.4m Net restructuring costs £(
Slide 47: IFRS 16 impacts on cash flow
IFRS 16 impacts on cash flow 2019 Impact of 2019 £m (pre IFRS16) IFRS16 (post IFRS16) Opening net debt (189.4) (300.4) (489.8) Cash inflow from trading 39.8 52.3 92.1 Decrease in working capital 76.9 11.7 88.6 Debt factoring (14.7) - (14.7) Net cash flow from operating activities 102.0 64.0 166.0 In
Slide 48: Impact of divestments and closure of non-core businesses
Impact of divestments and closure of non-core businesses 2019 2018 Underlying revenue Underlying PBT Underlying revenue Underlying PBT Underlying Group as reported at 2018 FY results £2,482.5m £38.2m £2,683.2m £75.3m Businesses identified as non-core in 2019 H1: WeGo Floortec £(14.5)m £(0.8)m £(23.2
Slide 49: Number of trading sites
Number of trading sites 31 Dec Closed/ Disposed/ 31 Dec Opened Transferred 2018 merged Held for sale 2019 UK Distribution 65 - (9) (12) - 44 France - LiTT 38 - - - - 38 Germany 56 - (3) - (2) 51 Ireland & Other 10 - (1) - - 9 Poland 45 - (2) - - 43 Benelux 14 1 - - - 15 Specialist Distribution 228 1
Slide 50: Appendix II: Business Overview
Appendix II: Business Overview
Slide 51: UK Distribution
UK Distribution Underlying financials Business and key competitors £m 2017 2018 2019 18v17 19v18 • Principally specialist distribution of insulation/interiors Revenue 717.3 680.1 534.3 (5.2)% (21.4)% • A Leading position within UK LFL sales (2.1)% (5.2)% (21.1)% n/a n/a • Key competitors: Gross prof
Slide 52: UK Exteriors
UK Exteriors Underlying financials Business and key competitors £m 2017 2018 2019 18v17 19v18 • Principally roofing merchanting Revenue 344.2 321.9 288.2 (6.5)% (10.5)% • A UK leader with a strong position in a fragmented market LFL sales (3.5)% (6.5)% (10.1)% n/a n/a • Key competitors: Gross profit
Slide 53: Ireland & Other
Ireland & Other Underlying financials Business and key competitors £m 2017 2018 2019 18v17 19v18 • Principally specialist distribution of interiors, insulation and construction accessories Revenue 98.3 99.9 94.9 1.6% (5.0)% LFL sales 7.8% 0.3% (3.3)% • Strong positions in Interiors, Insulation and C
Slide 54: France - Litt
France - Litt Underlying financials Business and key competitors £m 2017 2018 2019 18v17 19v18 • Specialist distribution of insulation/interiors Revenue 159.9 175.4 184.5 9.7% 5.2% • Strong positions in Ceilings and Structural LFL sales (45.3)% 8.1% 7.1% n/a n/a insulation/interiors Gross profit 40.
Slide 55: France - Larivière
France - Larivière Underlying financials Business and key competitors £m 2017 2018 2019 18v17 19v18 • Roofing merchanting Revenue 347.3 344.7 342.2 (0.7)% (0.7)% • A market leader in specialist roofing LFL sales 3.4% (1.1)% 1.1% n/a n/a • Key competitors: Gross profit 81.7 80.4 80.0 (1.6)% (0.5)% -
Slide 56: Germany
Germany Underlying financials Business and key competitors £m 2017 2018 2019 18v17 19v18 • Specialist distribution of insulation/interiors • Strong positions in dry lining/ceilings; technical insulation; Revenue 404.8 403.4 381.5 (0.3)% (5.4)% and structural insulation LFL sales (1.5)% (1.6)% (2.5)%
Slide 57: Poland
Poland Underlying financials Business and key competitors £m 2017 2018 2019 18v17 19v18 • Principally specialist distribution of insulation/interiors Revenue 142.8 156.6 156.1 9.7% (0.3)% • Strong positions in structural insulation/interiors and LFL sales 13.3% 8.9% 2.1% n/a n/a technical insulation
Slide 58: Benelux
Benelux Underlying financials Business and key competitors £m 2017 2018 2019 18v17 19v18 • Specialist distribution of insulation/interiors Revenue 101.7 108.4 103.0 6.6% (5.0)% • Strong positions in technical insulation) and interiors LFL sales (4.3)% 5.3% (3.3)% n/a n/a • Key competitors: Gross pro
Slide 59: Definition of terms
Definition of terms Excludes businesses divested or closed, or which the Board has resolved to divest or close Underlying operations before 28 May 2020. Sales per working day in constant currency, excluding acquisitions and disposals. Sales are not Like-for-like (LFL) adjusted for branch openings or
Slide 60: Disclaimer
Disclaimer THIS DOCUMENT, ITS CONTENTS AND ANY INFORMATION PROVIDED OR COMMUNICATED DURING ANY PRESENTATION OR DELIVERY OF THIS DOCUMENT ARE CONFIDENTIAL AND ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OF AMERICA
Slide 61: Disclaimer (Continued)
Disclaimer (Continued) In giving this presentation, none of the Company or the Joint Bookrunners or their respective advisers, representatives, affiliates, directors, officers, employees or agents undertake any obligation to amend, correct or to provide the recipient with access to any additional in
Slide 62: Disclaimer (Continued)
Disclaimer (Continued) The securities referred to herein have not been and will not be registered under the applicable securities laws of Australia, Canada, New Zealand, the Republic of South Africa or Japan and may not be offered or sold within Australia, Canada, New Zealand, the Republic of South