Sig Plc · LSE:SHI
Sig — H1 2011 Earnings Presentation
37 slides from Sig's earnings presentation, Aug 25, 2011
Slide 1: SIG plc Interim Results for the six months ended 30 June 2011
SIG plc | Interim Results for the six months ended 30 June 2011 25 August 2011
Slide 2: Highlights
Highlights Sales up 10%, driven by strong outperformance in Mainland Europe Realising operational gearing – 64% increase in underlying PBT to £35.4m Maintained gross margins in competitive markets Upgrading the portfolio through divestment of non-core businesses Resuming dividends with interim payme
Slide 3: Financial Review
Financial Review Gareth Davies | Finance Director
Slide 4: Summary Income Statement
Summary Income Statement Continuing operations £m H1 2011 H1 2010** Increase Revenue 1,343.7 1,218.8 10.2% Gross profit 340.7 310.1 Gross margin 25.4% 25.4% Underlying operating profit 43.5 28.9 50.5% Underlying net finance costs (8.1) (7.3) Underlying profit before tax 35.4 21.6 63.9% Other items*
Slide 5: Divested businesses
Divested businesses £m H1 2011 H1 2010 FY 2010 Revenue 55.4 63.1 122.6 Gross profit 18.7 21.2 46.3 Gross margin 33.8% 33.6% 37.8% Underlying operating profit / (loss) 0.3 (3.1) (1.7) The results from divested operations relate to the UK based Interiors Manufacturing, Safety & Workwear and Scaffoldin
Slide 6: Analysis of Revenue Performance H1 2010 v H1 2011
Analysis of Revenue Performance H1 2010 v H1 2011 Continuing operations 77.3 11.3 % £m 1,343.7 36.3 Price 3.0 36.3 1,218.8 Volume 6.3 77.3 Like for like 9.3 113.6 Currency 0.9 11.3 H1 2010 Price Volume Currency H1 2011 Total 10.2 124.9 Revenue Revenue £m 6
Slide 7: Gross margin maintained in competitive markets
Gross margin maintained in competitive markets H1 2011 H1 2010 Change Mainland Europe 24.8% 24.8% - UK & Ireland 26.1% 26.2% (0.1%) Group 25.4% 25.4% - Gross margin broadly unchanged since mid-2009 despite difficult trading conditions Remain committed to improving margins over time 7
Slide 8: Operational gearing benefits realised
Operational gearing benefits realised Operating margin* Operating profit* Growth H1 2011 H1 2010 H1 2011 Mainland Europe £24.2m 70.4% 3.2% 2.2% UK & Ireland £23.1m 28.3% 3.9% 3.2% Group** £43.5m 50.5% 3.2% 2.4% Significant improvement in operating margin Benefits of operational gearing being realise
Slide 9: Underlying PBT bridge – Continuing businesses
Underlying PBT bridge – Continuing businesses H1 2010 v H1 2011 £m Further £1.8m cost Cost inflation 6.7 savings in divested Investment in growth 4.8 businesses Reduced bad debt charge (1.4) 1.4 (5.0) (10.1) (0.8) 28.8 0.3 (0.4) 35.4 (0.4) 21.6 H1 2010 Currency Reduced Reduced Incremental Cost Varia
Slide 10: Cash flow
Cash flow £m H1 2011 H1 2010 Cash inflow from trading 60 43 Increase in working capital (30) (11) Cash inflow from operations 30 32 Interest and tax (12) (14) Net capex (8) (5) Free cash flow available for investment 10 13 Settlement of amounts payable for purchase of businesses (1) (2) Proceeds fro
Slide 11: Working Capital
Working Capital H1 2011 H1 2010 Stock days* 42 46 Debtor days* 51 53 Bad & doubtful debt as a % of sales* 0.5% 0.7% Creditor days* 48 50 Working capital / sales* 8.9% 10.1% * Calculated on a like for like constant currency basis (i.e. excluding businesses divested in H1 2011 but including Interiors
Slide 12: 12 month rolling cash conversion ahead of 100% target
12 month rolling cash conversion ahead of 100% target 12 months to 12 months to £m FY 2010 30 June 2011 30 June 2010 Cash inflow from operations* 96.4 103.0 98.8 Underlying operating profit* 94.1 71.7 76.1 Trading cash conversion 102% 144% 130% * Including businesses divested in 2011. 12
Slide 13: Good financial performance, resumption of dividends
Good financial performance Resumption of dividends Good financial performance in first half Board has decided to resume dividend payments, reflecting: Improved business performance and more stable markets Further strengthened balance sheet and refinanced facilities Confidence in the Group’s medium t
Slide 14: Trading and Outlook
Trading and Outlook Chris Davies | Chief Executive
Slide 15: The changing shape of the Group
The changing shape of the Group 62% 44% % of Group revenue UK 41% Ireland 3% France 23% 56% Germany & 21% Austria 38% Benelux 6% Poland & 6% Central Europe 2007 2008 2009 2010 H1 2011 Mainland Europe UK & Ireland 15
Slide 16: Group sales driven by strong performance in Mainland Europe
Group sales driven by strong performance in Mainland Europe 2011 H1 Constant Growth Revenues Currency Mainland Europe £752.2m 15.5% 13.9% UK & Ireland* £591.5m 4.2% 4.1% Group* £1,343.7m 10.2% 9.3% Significant outperformance of our markets in Europe Growth in Q2 broadly halved compared to Q1 due to
Slide 17: Mainland Europe performance
Mainland Europe performance Revenues Revenue Constant Trading H1 2011 Growth Currency sites** France £309.1m 18.1% 16.5% +2 (183) Germany and Austria £286.7m 14.2% 12.6% +4 (86) Benelux* £78.5m 8.1% 6.6% NC (28) Poland & Central Europe £77.9m 18.6% 16.2% -10 (83) Total £752.2m 15.5% 13.9% -4 (380) S
Slide 18: Trading highlights H1 2011 Mainland Europe
Trading highlights H1 2011 Mainland Europe France Good recovery in residential market Germany Non-residential markets Continuing improvement in residential sector remain challenging Non-residential market slowly recovering Non-residential RMI market stronger than new-build Benelux Market conditions
Slide 19: Trading highlights H1 2011 UK and Ireland
Trading highlights H1 2011 UK and Ireland United Kingdom Non-residential market broadly flat - modest recovery in South East offset by slight decline elsewhere Ireland No real impact yet from Govt austerity Continuing difficult measures on public sector non-res, but macroeconomic backdrop expected t
Slide 20: Significant outperformance of our markets
Significant outperformance of our markets 20% 15% 10% 5% 0% -5% UK UK Ireland Germany & France Benelux Poland & Insulation & Exteriors Austria Central Interiors Europe * Source: company estimates. Market growth SIG growth 20
Slide 21: Good progress on our key strategic initiatives
Good progress on our key strategic initiatives In March we outlined three key strategic initiatives to improve business performance… 1. Improve operational efficiency 2. Upgrade the portfolio 3. Growing the business …on which we are making good progress… 21
Slide 22: Improving operational efficiency
Improving operational efficiency Planned £110m total cumulative savings 2008-2011 £5.5m relates to divested businesses no longer available Group has a continuous focus on improving operational efficiency Targeting further optimisation of our branch network over time Larger multi specialist sites sup
Slide 23: Upgrading the portfolio
Upgrading the portfolio Portfolio review To determine strategic priorities for growth and investment, considering: Market attractiveness including exposure to res/non-res Performance and synergies with the rest of the Group Strategic position in the market Conclusions Strong core portfolio of distri
Slide 24: Organic growth initiatives
Organic growth initiatives New site openings H1 2011 8 in Mainland Europe 1 in UK Strengthened European sales teams Future branch roll-out programme, 20-25 sites per annum subject to opportunity and economic backdrop Builder’s Express in the UK Mainland Europe 24
Slide 25: Growing the business: Renewables and Energy Management
Growing the business and exploiting Group synergies Renewables and Energy Management Significant growth opportunities in renewables and energy management SIG well positioned in this market based on core skills and heritage in insulation distribution and installation SIG Energy Management is being po
Slide 26: Growing the business: Solar PV
Growing the business and exploiting Group synergies Solar PV £45m privately financed funding package for Solar PV secured by SIG/ICE Energy, targeted at social housing First £20m contract signed and on-site H2 2011, further deals in pipeline Non-funded projects also secured for private housing marke
Slide 27: Recent trading and outlook
Recent trading and outlook Continue to expect growth to moderate in H2 2011 - stronger comparators and weaker economic backdrop, impact of UK Govt cuts In July year on year percentage sales growth was in the high single digits for Mainland Europe and slightly positive in the UK & Ireland Remain mind
Slide 28: Summary
Summary Realising operational gearing benefits – sales up 10%, PBT up 64% Maintained gross margins in competitive markets Mainland Europe largest part of the Group and grown strongly Delivering on our key strategic initiatives – efficiency, portfolio, growth Resuming dividends with an interim paymen
Slide 29: Questions
Questions 25 August 2010
Slide 30: Appendices
Appendices SIG DELIVERIN INSULATION INTERIORS ROOFING CONSTRUCTION ww.sigplc.co.
Slide 31: Strong Balance Sheet
Strong Balance Sheet £m H1 2011^ H1 2010 FY 2010 Net Capex 7.7 5.2 12.0 Depreciation 16.2 18.3 36.0 Capex / Depreciation 0.48x 0.28x 0.33x Net working capital* 255.4 250.6 240.1 Net debt (162.8) (226.6) (185.0) Net debt / EBITDA ratio** 1.3x 1.9x 1.6x Interest cover** 6.7x 5.4x 5.8x Net debt reduced
Slide 32: Incremental cost savings reconciliation
Incremental cost savings reconciliation £m £m Incremental cost savings 10.0 H1 savings - continuing operations 1.4 H1 savings - divested businesses (non underlying) 1.8 Savings not available - divested businesses 5.5 Expected H2 benefit remaining 1.3 32
Slide 33: Other items
Other items £m H1 2011 H1 2010 Amortisation of acquired intangibles 12.3 14.2 Impairment charges 20.9 - Net loss on sale of businesses 1.2 - Operating (profit) / loss attributable to (0.3) 3.1 businesses divested in 2011 Restructuring costs - 0.2 Losses on derivative financial instruments 1.9 6.3 To
Slide 34: Markets supplied by SIG
Markets supplied by SIG New Build RMI Industry (non-construction) 10% 36% 64% Residential 41% 48% 52% Non-residential 49% 53% 47% H1 2011 Source: Company estimates. RMI: Repairs, Maintenance and Improvement 34
Slide 35: SIG Sales Sector Split H1 2011
SIG Sales Sector Split H1 2011 Specialist Construction Products (H1 2010: 7%) 6% Insulation and Building Environments (H1 2010: 41%) Interiors 22% 40% (H1 2010: 21%) 32% Exteriors (H1 2010: 31%) 35
Slide 36: Operating Cost Movement H1 2010 v H1 2011
Operating Cost Movement H1 2010 v H1 2011 1.8 (1.4) 3.0 3.7 0.5 2.5 5.0 2.3 (1.4) 297.2 281.2 2010 Currency Incremental Variable Fuel inflation Staff cost Other cost Employees New Bad debt 2011 £m Operating impact Cost cost Inflation inflation branches charge Operating costs Savings - movement (c.2.
Slide 37: Trading sites movement
Trading sites movement 31 Dec Closed/ 30 June Opened Disposed 2010 merged 2011 UK & Ireland 364 (5) 1 (11) 349 France 181 - 2 - 183 Germany & Austria 82 - 4 - 86 Benelux* 28 (1) 1 - 28 Poland 63 (3) - - 60 Central Europe 30 (8) 1 - 23 Mainland Europe 384 (12) 8 - 380 Group Total 748 (17) 9 (11) 729