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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sig Plc | LSE:SHI | London | Ordinary Share | GB0008025412 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.05 | -0.18% | 27.55 | 27.50 | 27.75 | 27.85 | 27.50 | 27.75 | 397,417 | 16:35:02 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Roofing & Siding-wholesale | 2.74B | 15.5M | 0.0134 | 20.52 | 317.66M |
From Apr 2019 to Apr 2024
TIDMSHI
RNS Number : 3384N
SIG PLC
08 August 2017
8 August 2017
SIG plc: Half Year results for the six months ended 30 June 2017
Business stabilised; leverage down
SIG plc ("SIG") is a leading distributor of specialist building products in Europe, with strong positions in its core markets of insulation & energy management, interior fit out and roofing.
Hot Features
Premium
Constant currency
Continuing operations(1) H1 2017 H1 2016 Change change
--------------------------------- ------------ ------------ --------- ------------------
Revenue GBP1,375.4m GBP1,266.4m 8.6% 3.2%
Underlying(2) operating profit GBP45.7m GBP54.5m (16.1)% (20.4)%
Underlying(2) profit before tax GBP38.3m GBP47.9m (20.0)% (24.3)%
Underlying(2) profit before tax
excl. property profits GBP30.1m GBP45.4m (33.7)% (38.1)%
Underlying(2) basic earnings
per share 4.7p 6.1p (23.0)% -
Cash inflow from trading GBP41.3m GBP59.9m (31.1)% -
ROCE (post-tax) 8.4% 12.9% (450)bps -
Dividend per share 1.25p 1.83p (31.7)% -
--------------------------------- ------------ ------------ --------- ------------------
30 Jun 2017 31 Dec 2016 Change
--------------------------------- ------------ ------------ --------- ------------------
Net debt GBP166.5m GBP259.9m (35.9)% -
Leverage (net debt / EBITDA) 1.6x 2.1x (0.5)x -
--------------------------------- ------------ ------------ --------- ------------------
Alternative performance measures are used as a guide to underlying performance, with calculations found in the notes.
1 Continuing operations excludes businesses sold or closed in 2017 or currently under review. Revenue and LFLs differ from the July trading statement due to the exclusion of Building Plastics and Middle East.
2 Underlying results are stated before the amortisation of acquired intangibles, impairment charges, losses on agreed sale or closure of non-core businesses and associated impairment charges, net operating losses attributable to businesses identified as non-core, net restructuring costs, acquisition expenses and contingent consideration, the defined benefit pension scheme curtailment loss, other one-off items, unwinding of provision discounting, fair value gains and losses on derivative financial instruments, the taxation effect of Other items and the effect of changes in taxation rates.
3 Like-for-like (LFL) is defined as sales per day in constant currency excluding acquisitions and disposals.
Highlights
-- Revenue(1) +8.6% and LFL(3) sales +2.8%; Mainland Europe +4.3% and UK & Ireland +1.3% -- Underlying PBT, excluding property profits, of GBP30.1m, in line with guidance -- Underlying PBT of GBP38.3m including underlying property profits -- Statutory loss before tax of GBP10.7m after GBP49.0m of non-underlying items -- Strong focus on cash resulted in a GBP93.4m reduction in net debt and leverage down to 1.6x -- Disposed of UK Building Plastics business since period end for up to GBP20.3m -- Review of Group strategy underway; intend to report progress in Q4 2017 -- Interim dividend of 1.25p per share in line with rebased cover ratio -- Expectations unchanged for the full year Statutory results H1 2017 H1 2016 ---------------------------- ------------ ------------ Revenue GBP1,439.2m GBP1,375.2m ---------------------------- ------------ ------------ Operating (loss) / profit GBP(2.2)m GBP46.0m ---------------------------- ------------ ------------ (Loss) / profit before tax GBP(10.7)m GBP38.4m ---------------------------- ------------ ------------ Basic (loss) / earnings per share (2.7)p 4.8p ---------------------------- ------------ ------------
Commenting, Meinie Oldersma, Chief Executive, said:
"In the first half of 2017 the business delivered underlying PBT in line with guidance. Although lower than the first half of last year, as previously indicated, it represents an increase on H2 2016, providing some evidence that business performance has stabilised. However, there remains considerable work to be done to improve returns over the medium term.
"Following management actions taken in the first half to strengthen the Group's balance sheet we have made good initial progress on our key short-term priority to reduce leverage, which has decreased to 1.6x (net debt to EBITDA). We will continue to focus on leverage reduction in order to deliver our targeted range of 1.0 - 1.5x during 2018.
"Following my appointment as CEO, I commissioned a comprehensive review of the Group's strategy, use of capital and cost base. The initial phase confirms that the business has real opportunity to improve profits and returns over the medium term, but also highlights the execution challenges in delivering these upsides. We intend to report progress from this review in Q4 2017.
"In terms of outlook the key risk is the challenging environment created by macro uncertainty in the UK, although this may partly be mitigated by continuing improvement in confidence in Mainland European markets. However, we continue to expect the business to show a stronger second half (excluding H1 property profits) and our expectations for the full year are unchanged."
Analyst presentation (8.30am today)
A briefing to analysts will take place today at 8.30am at FTI Consulting, 200 Aldersgate, Aldersgate Street, London, EC1A 4HD. A live webcast of the presentation will be on www.sigplc.com, a replay of which will also be available later in the day.
Enquiries SIG plc Meinie Oldersma, Chief Executive Officer +44 (0) 20 3204 5402 Nick Maddock, Chief Financial Officer +44 (0) 20 3204 5402 FTI Consulting Richard Mountain/Nick Hasell +44 (0) 20 3727 1340
Business performance stabilised
The Group delivered an underlying PBT, excluding property profits, of GBP30.1m in H1 2017 (H1 2016: GBP45.4m), an increase of 19.0% compared to H2 2016 (GBP25.3m), demonstrating that the renewed focus on the customer, together with a reduction in the scale of change initiatives and improving market conditions in Mainland Europe, have started to deliver an improved operational performance. The second half of this year is expected to see a step up in profitability, excluding first half property profits.
On a statutory basis the Group made a loss before tax of GBP10.7m in H1 2017 (H1 2016: profit of GBP38.4m) after GBP49.0m of non-underlying items.
Property profits
As part of its measures to reduce leverage, the Group sold and leased back three properties in the first half of 2017 for a total net cash consideration of GBP24.0m on which it realised an underlying profit of GBP8.2m and a non-underlying profit of GBP5.5m. Including these underlying property profits, SIG's H1 2017 underlying PBT was GBP38.3m (H1 2016: GBP47.9m).
SIGD returns to profitability
While still remaining competitive, pressures in the UK specialist insulation and interiors sector moderated somewhat during H1 2017 as the market continued to adapt to an environment of ongoing higher supplier price inflation.
This improvement in market conditions, along with the actions taken by the SIG management team to refocus on its customers and improve its service proposition, meant SIGD LFL revenues grew by 1.6% in the first half, and by 4.6% in the second quarter as the Group sought to recover or otherwise mitigate cost price inflation. Gross margin improved by 160bps from the second half of last year to 24.5% in H1 2017.
As a result, and from being in a position where SIGD made a small loss of GBP0.5m in the second half of last year, the business returned to profitability in H1 2017 with a continuing operating profit of GBP6.3m in H1 2017 (H1 2016: GBP17.4m) on revenue of GBP399.6m (H1 2016: GBP389.7m). The business is projecting continued profitability in the second half, subject to any impact from macro uncertainty in the UK and ongoing supplier price inflation.
Continuing challenges in Offsite Construction
Following the closure of Metechno, the Group's Offsite Construction business now consists of RoofSpace, which makes room-in-roofs for residential buildings, and Building Systems, which produces modular housing units.
RoofSpace continues to perform well and reported an underlying profitable first half performance. Although Building Systems made progress in terms of production levels, significant operational challenges remain and SIG is keeping the performance of this business under review.
On a continuing operations basis (i.e. excluding Metechno) revenue in Offsite Construction decreased by 2.9% to GBP13.2m in H1 2017 (H1 2016: GBP13.6m) and the business made an operating loss of GBP2.0m (H1 2016: GBP1.8m).
Leverage down
Following an increase in leverage to 2.1x as at 31 December 2016, based on net debt of GBP259.9m, management made leverage reduction a key short-term priority for the Group and took a number of actions to strengthen the balance sheet including asset disposals, debt factoring and a tighter control over cash, short-term working capital management and capex.
The Group's balance sheet has responded quickly to these actions, which, together with a GBP41.3m cash inflow from operations, resulted in a GBP93.4m reduction in net debt to GBP166.5m as at 30 June 2017, as detailed in the table below.
GBPm H1 2017 H2 2016 H1 2016 ------------------------------------- -------- -------- -------- Opening net debt (259.9) (232.8) (235.9) ------------------------------------- -------- -------- -------- Cash inflow from trading 41.3 39.0 59.9 ------------------------------------- -------- -------- -------- Decrease / (increase) in working capital 12.5 (23.4) 0.3 ------------------------------------- -------- -------- -------- Interest and tax (13.7) (12.6) (9.5) ------------------------------------- -------- -------- -------- Net maintenance capex (8.7) (11.0) (12.6) ------------------------------------- -------- -------- -------- Free cash flow 31.4 (8.0) 38.1 ------------------------------------- -------- -------- -------- Investment capex (0.1) (5.2) (5.2) ------------------------------------- -------- -------- -------- Dividends* - (10.8) (17.2) ------------------------------------- -------- -------- -------- Debt factoring 42.5 - - ------------------------------------- -------- -------- -------- Sale of property and assets 24.0 10.7 22.9 ------------------------------------- -------- -------- -------- Acquisitions including contingent consideration (6.8) (3.8) (25.8) ------------------------------------- -------- -------- -------- Exchange, fair value and other 2.4 (10.0) (9.7) ------------------------------------- -------- -------- -------- Decrease / (increase) in borrowings 93.4 (27.1) 3.1 ------------------------------------- -------- -------- -------- Closing net debt (166.5) (259.9) (232.8) ------------------------------------- -------- -------- -------- Leverage 1.6x 2.1x 1.6x ------------------------------------- -------- -------- --------
* 2015 final dividend was paid in May 2016 and the 2016 final dividend was paid in July 2017.
This improved net debt position, which reflected more substantial and earlier one-off actions than initially expected, enabled leverage to decline from 2.1x at 31 December 2016 to 1.6x as at 30 June 2017 (30 June 2016: 1.6x). SIG anticipates that leverage will remain broadly unchanged at the 2017 year end and continues to target a further reduction in leverage next year as it aims to return to a 1.0 - 1.5x range during 2018.
Ongoing review of strategy
SIG is currently conducting a comprehensive review of its strategy, use of capital and cost base. The aim of the review is to assess the potential profits and returns achievable by the Group over the medium term and to identify the key strategic levers that will drive a step change in performance.
The Group intends to report on progress from this review in Q4 2017. In the meantime SIG is targeting shorter term quick wins to benefit profitability in 2018, including some portfolio reshaping and ongoing reductions in headcount.
Changes to portfolio
As previously announced, during the period to 30 June 2017 SIG disposed of Carpet & Flooring, Drywall Qatar, WeGo Austria and closed Metechno. All of these businesses were exited for strategic reasons as they were either unprofitable or sub-scale in their respective markets, or a combination of both.
Since 30 June 2017, and subsequent to the Group's July trading update, SIG has agreed to sell its UK Building Plastics business, which is part of SIG Exteriors, to GAP Plastics Ltd, for up to GBP20.3m, comprising an initial cash payment of GBP18.0m plus up to GBP2.3m contingent consideration payable in July 2019. SIG believes that there were limited opportunities for it to grow this business profitably in a market dominated by vertically integrated players.
In addition SIG has also decided to review its operations in the Middle East, potentially including a divestment, as it assesses the scale of ongoing growth opportunities in what is a relatively volatile market. The revenues and profit of this business have therefore been treated as non-underlying.
A reconciliation of H1 2017 underlying to statutory revenue as a result of these portfolio changes is set out below, with the impact on 2016 comparatives also detailed later in this statement.
H1 2017
GBPm Revenue
------------------- ---------
Underlying 1,375.4
------------------- ---------
Building Plastics 29.0
------------------- ---------
Middle East 13.2
------------------- ---------
Carpet & Flooring 11.6
------------------- ---------
WeGo Austria 7.5
------------------- ---------
Metechno 1.3
------------------- ---------
Drywall Qatar 1.2
------------------- ---------
Statutory 1,439.2
------------------- ---------
Non-underlying items
Non-underlying items during the period, on a pre-tax basis, amounted to GBP49.0m (H1 2016: GBP9.5m) and were:
-- Losses on sale, closure or review of businesses and associated impairment charges of GBP30.4m (H1 2016: nil) and H1 2017 operating losses of GBP5.2m (H1 2016: GBP0.2m) relating to Carpet & Flooring, Drywall Qatar, WeGo Austria, Metechno, Building Plastics and Middle East;
-- Amortisation of acquired intangibles and contingent payments of GBP5.2m (H1 2016: GBP8.5m);
-- Impairment of GBP6.8m of the carrying value of the UK ERP system, Kerridge K8 (H1 2016: nil);
-- Net restructuring charges of GBP3.4m (H1 2016: GBP2.4m), an impairment of GBP2.3m (H1 2016: nil) on the fixed assets in Building Systems, and other one-off items of GBP1.2m (H1 2016: GBP1.2m); offset by
-- Non-underlying profit on the disposal of property of GBP5.5m (H1 2016: GBP2.8m).
Outlook
The Group's outlook is unchanged from that stated in its July post-close trading update. The Board continues to expect the business to show a stronger second half this year (excluding first half property profits), with expectations for the full year unchanged. The key risk remains the challenging environment created by macro uncertainty in the UK, although this may partially be mitigated by continuing improvement in confidence in Mainland European markets.
The Group intends to report progress on its review of Group strategy in Q4 2017, along with a further update on second half trading.
Dividend
In 2016 the Group rebased its dividend, paying 3.66p per share in total for the year. At that time SIG stated its policy was to pay dividends in line with 2 - 3x earnings cover, with a third of the total dividend paid at the interim stage.
Consistent with this policy, SIG is declaring an interim dividend for 2017 of 1.25p (H1 2016: 1.83p). The interim dividend will be paid on 3 November 2017 to shareholders on the register at close of business on 6 October 2017. The ex-dividend date is 5 October 2017.
Financial performance
Revenue and gross margin
On a statutory basis Group revenue was up 4.7% to GBP1,439.2m (H1 2016: GBP1,375.2m), with revenue in the UK & Ireland of GBP715.5m (H1 2016: GBP738.9m) and GBP723.7m in Mainland Europe (H1 2016: GBP636.3m).
On a continuing operations basis, Group revenue increased 8.6% to GBP1,375.4m (H1 2016: GBP1,266.4m), benefiting from foreign exchange translation (+5.4%), acquisitions (+0.5%) offset by working days (-0.1%). As a result LFL sales were ahead by 2.8%, which is different from the figure reported in SIG's July trading update as it excludes the results from UK Building Plastics and the Middle East.
In the UK & Ireland, revenue from continuing operations increased 2.5% to GBP659.2m (H1 2016: GBP642.9m), benefiting from acquisitions (+0.6%) and currency (+0.6%). LFL sales increased 1.3%. In Mainland Europe revenue from continuing operations increased 14.9% to GBP716.2m (H1 2016: GBP623.5m), benefiting from foreign exchange translation (+10.3%), acquisitions (+0.4%) and offset by working days (-0.1%). Sales on a LFL basis were up 4.3%.
Although the Group's underlying gross margin declined by 40bps to 26.8% compared to a strong performance in H1 2016 (27.2%), it increased by 60bps compared to H2 2016 (26.2%). In the UK & Ireland underlying gross margin declined by 100bps to 26.0% (H1 2016: 27.0%), and Mainland Europe was flat at 27.5% (H1 2016: 27.5%). On a statutory basis the Group's gross margin was 26.4% (H1 2016: 27.0%).
Operating costs and profit
On a continuing operations basis SIG's operating cost base increased by GBP32.2m to GBP322.5m in H1 2017 (H1 2016: GBP290.3m) due to a currency impact of GBP16.1m, additional costs from acquisitions of GBP2.7m, and other net cost increases of GBP13.4m.
The combination of lower gross margin and higher operating costs meant that the Group's underlying operating profit declined 16.1% to GBP45.7m (H1 2016: GBP54.5m) with underlying operating margin declining 100bps to 3.3% (H1 2016: 4.3%).
In the UK & Ireland, underlying operating profit fell 21.7% to GBP27.5m (H1 2016: GBP35.1m) and underlying operating margin declined by 130bps to 4.2% (H1 2016: 5.5%). In Mainland Europe, underlying operating profit increased slightly, by 2.1% to GBP24.0m (H1 2016: GBP23.5m), with underlying operating margin decreasing 40bps to 3.4% (H1 2016: 3.8%).
SIG's underlying net finance costs increased by GBP0.8m to GBP7.4m (H1 2016: GBP6.6m), mainly due to higher borrowings which, together with the decline in operating profit, resulted in underlying profit before tax decreasing 20.0% to GBP38.3m (H1 2016: GBP47.9m). Excluding underlying property profits the decline was 33.7% to GBP30.1m (H1 2016: GBP45.4m). On a statutory basis the Group made a loss before tax of GBP10.7m (H1 2016: profit of GBP38.4m) after non-underlying items of GBP49.0m (H1 2016: GBP9.5m).
Underlying basic earnings per share from continuing operations declined 23.0% to 4.7p (H1 2016: 6.1p). On a statutory basis the Group made a basic loss per share of 2.7p (H1 2016: earnings per share of 4.8p).
Return on Capital Employed
Post-tax Return on Capital Employed ("ROCE") is one of the Group's primary performance metrics and is calculated on a rolling 12 month basis as underlying operating profit less tax, divided by average net assets plus average
net debt. As at 30 June 2017 SIG's ROCE was 8.4% (30 June 2016: 12.9%).
UK & Ireland
Revenue
Continuing operations (GBPm) Change LFL change Gross margin Change
SIG Distribution 399.6 2.5% 1.6% 24.5% (180)bps
SIG Exteriors 200.4 0.4% 0.3% 29.3% (20)bps
Ireland 46.0 15.3% 4.6% 25.8% (10)bps
Offsite Construction 13.2 (2.9)% (2.9)% 22.0% 890bps
UK & Ireland* 659.2 2.5% 1.3% 26.0% (100)bps
----------------------- -------- ------- ----------- ------------- ---------
*The 'other' segment has been removed as it principally related to SIG's activities in the Middle East, which are now under review. SIG Spain, which was also part of 'other' and had revenue of GBP0.9m in H1 2017 (H1 2016: GBP0.7m), is now reported in SIG Distribution.
Revenue in SIG Distribution ("SIGD"), the Group's market leading specialist UK insulation and interiors distribution business, was up 2.5% to GBP399.6m (H1 2016: GBP389.7m) and by 1.6% on a LFL basis, as the highly competitive market conditions experienced in the second half of last year eased somewhat and the business improved its customer focus.
Although underlying market demand for insulation and interior products in the UK remains relatively soft, the Group has so far been able either to mitigate or recover cost price inflation, with gross margin improving by 160bps from the second half of last year to 24.5%. This was identified as a key risk to the business at the beginning of the year.
Revenue in SIG Exteriors ("SIGE"), the market leading and only national specialist UK roofing business, was marginally up, by 0.4%, at GBP200.4m (H1 2016: GBP199.7m) and by 0.3% on a LFL basis. Trading conditions in the UK Repairs, Maintenance and Improvement ("RMI") sector, to which the business has a relatively high degree of exposure, remain weak, and were not helped by the recent UK General Election, which injected a further degree of uncertainty into the marketplace. The challenging conditions in the UK RMI market are expected to continue into the second half of the year.
In Ireland SIG grew revenue by 15.3%, benefiting from foreign exchange movements, and by 4.6% on a LFL basis as the business benefited from favourable market conditions. These conditions are anticipated to continue in the second half and in addition the Group is expected to benefit from a number of larger projects to supply interior products.
Continuing revenue in Offsite Construction decreased slightly by 2.9% to GBP13.2m with an operating loss of GBP2.0m due to continuing production issues in its modular housing business. The Group is keeping the performance of this business under review.
Mainland Europe
Revenue Gross
Continuing operations (GBPm) Change LFL change margin Change
France 324.3 13.8% 5.0% 27.6% (30)bps
Germany 201.4 11.5% 1.8% 26.6% 10bps
Poland 63.6 23.0% 9.6% 20.0% (30)bps
Benelux 51.4 5.1% (4.8)% 25.8% 60bps
Air Handling 75.5 31.8% 12.0% 36.8% -
Mainland Europe 716.2 14.9% 4.3% 27.5% -
----------------------- -------- ------- ----------- -------- --------
Continuing revenue in Mainland Europe increased by 14.9% to GBP716.2m (H1 2016: GBP623.5m), having significantly benefited from foreign exchange translation.
LFL revenues benefited from improving market conditions as the first half of 2017 progressed, increasing by 7.5% in Q2 2017 compared to an increase of 1.3% in the first quarter.
Revenue in France, where SIG operates three businesses (Larivière, its market leading specialist roofing business; LiTT, its leading structural insulation and interior business; and Ouest Isol / Ouest Ventil, which is a leading supplier of technical insulation and air handling products), increased by 13.8% to GBP324.3m (H1 2016: GBP285.0m), having benefited from foreign exchange. On a LFL basis sales were up by 5.0% and gross margin declined slightly, by 30bps to 27.6%.
As anticipated, the improving market conditions in France, which have been present in the construction market since the end of 2016, particularly in the residential sector, have begun to benefit SIG this year as many of the products the Group distributes are used in the later stages of the building cycle. This improving sales trend was particularly prevalent in the second quarter, when the Group recorded LFL sales growth of 8.5%, following 1.5% growth in Q1 2017.
SIG operates two businesses in Germany: WeGo, a leading insulation and interiors business; and vti, which is the largest supplier of technical insulation in the country.
Continuing revenue in Germany grew by 11.5% to GBP201.4m (H1 2016: GBP180.6m) as it benefited from movements in foreign exchange. LFL sales in the first half also recorded their first increase, by 1.8% as the Group sought to improve its performance and reposition the business towards the higher growth segments of the German market, such as the residential market. Similar to France, LFL sales growth accelerated in the second quarter in Germany, with an increase of 5.9% compared to a decline of 1.9% in Q1 2017.
In Poland SIG grew revenues by 23.0% to GBP63.6m and LFL sales by 9.6%. Following a subdued performance last year due to political and economic uncertainty, construction markets stabilised in the first quarter of 2017 and then improved significantly in Q2, leading to a 15.9% increase in SIG's LFL sales growth for April to June.
In the Benelux while revenue was up 5.1%, this growth was foreign exchange related and LFL sales decreased by 4.8%. Following a recovery in construction markets during 2016 the market became tougher in 2017, with increased price competition for interior products and the demand for technical insulation particularly weak. Gross margin improved however, by 60bps to 25.8%
Revenue in Air Handling, which is the largest pure-play specialist air handling distributor in Europe, grew by 31.8% as it benefited from good LFL growth of 12.0%, acquisitions and foreign exchange movements. The air handling market continues to grow at a faster rate than the wider construction sector due to strong demand drivers including higher energy efficiency and air quality standards.
Restatement of 2016 comparatives
The 2016 revenue and profits of businesses that have been divested, closed or are under review, and which are therefore now being treated as non-underlying, are set out in the table below in order to derive comparatives for the continuing business:
GBPm H1 2016 H2 2016 FY 2016
---------------- -------------------------------- -------------------------------- --------------------------------
Continuing Continuing Continuing
Underlying PBT revenue Underlying PBT revenue Underlying PBT revenue
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Group as
reported at
2016 HY
results 47.7 1,375.2 Not applicable
---------------- --------------- --------------- ------------------------------------------------------------------
Drywall Qatar* 0.7 (4.1) 2.1 (3.8) 2.8 (7.9)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Carpet &
Flooring* 1.2 (46.4) 1.8 (51.1) 3.0 (97.5)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Group as
reported at
2016 FY
results 49.6 1,324.7 27.9 1,415.1 77.5 2,739.8
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Metechno** 0.1 (0.7) - (2.6) 0.1 (3.3)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
WeGo Austria** (0.2) (12.8) (0.4) (14.8) (0.6) (27.6)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Building
Plastics*** (1.1) (30.4) (1.8) (32.6) (2.9) (63.0) ---------------- --------------- --------------- --------------- --------------- --------------- --------------- Middle East*** (0.5) (14.4) (0.4) (16.0) (0.9) (30.4) ---------------- --------------- --------------- --------------- --------------- --------------- --------------- Restated at 2017 HY results 47.9 1,266.4 25.3 1,349.1 73.2 2,615.5 ---------------- --------------- --------------- --------------- --------------- --------------- ---------------
* First announced at SIG's 2016 Full Year results on 14 March 2017.
** First announced in SIG's AGM trading update on 11 May 2017.
*** First announced in this statement.
Responsibility Statement
We confirm to the best of our knowledge that:
(a) the condensed interim set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union;
(b) the Interim Report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) the Interim Report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board
Meinie Oldersma Nick Maddock Director Director 7 August 2017 7 August 2017
Cautionary Statement
This Interim Report has been prepared in accordance with the requirements of English Company Law and the liabilities of the Directors in connection with this Interim Report shall be subject to the limitations and restrictions provided by such law.
This Interim Report is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its Directors, employees, agents or advisors do not accept or assume responsibility to any other person to whom this Interim Report is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.
Certain information included in this Interim Report is forward looking and involves risk and uncertainties that could cause the actual results to differ materially from those expressed or implied by forward looking statements. It is believed that the expectations set out in these forward looking statements are reasonable but they may be affected by a wide range of variables which could cause future outcomes to differ from those foreseen in forward looking statements, including but not limited to, market conditions, competitors and margin management, commercial relationships, government legislation, availability of funding, working capital and cash management, IT infrastructure and cybersecurity and availability and quality of key resources. All statements in this Interim Report are based upon information known to the Company at the date of this report. The Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.
Condensed Consolidated Income Statement
for the six months ended 30 June 2017
Unaudited six months ended Unaudited six months ended Audited year ended 31 December
30 June 2017 30 June 2016 2016
Before Before Before
Other Other Other Other Other Other
items* items* Total items* items* Total items* items* Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 2 1,375.4 63.8 1,439.2 1,266.4 108.8 1,375.2 2,615.5 229.7 2,845.2
Cost of sales (1,007.2) (52.3) (1,059.5) (921.6) (82.2) (1,003.8) (1,917.5) (176.1) (2,093.6)
----------------- ----- ---------- ------- ---------- -------- ------- ---------- ---------- -------- ----------
Gross profit 368.2 11.5 379.7 344.8 26.6 371.4 698.0 53.6 751.6
Other operating
expenses (322.5) (59.4) (381.9) (290.3) (35.1) (325.4) (611.0) (231.6) (842.6)
----------------- ----- ---------- ------- ---------- -------- ------- ---------- ---------- -------- ----------
Operating
profit/(loss) 2 45.7 (47.9) (2.2) 54.5 (8.5) 46.0 87.0 (178.0) (91.0)
Finance income 0.2 0.1 0.3 0.7 - 0.7 1.2 0.5 1.7
Finance costs (7.6) (1.2) (8.8) (7.3) (1.0) (8.3) (15.0) (2.0) (17.0)
----------------- ----- ---------- ------- ---------- -------- ------- ---------- ---------- -------- ----------
Profit/(loss)
before tax 38.3 (49.0) (10.7) 47.9 (9.5) 38.4 73.2 (179.5) (106.3)
Income tax
expense 4 (10.3) 5.2 (5.1) (11.4) 1.4 (10.0) (18.8) 6.5 (12.3)
----------------- ----- ---------- ------- ---------- -------- ------- ---------- ---------- -------- ----------
Profit/(loss)
after tax 28.0 (43.8) (15.8) 36.5 (8.1) 28.4 54.4 (173.0) (118.6)
----------------- ----- ---------- ------- ---------- -------- ------- ---------- ---------- -------- ----------
Attributable to:
Equity holders
of the Company 27.6 (43.8) (16.2) 36.3 (8.1) 28.2 53.9 (173.0) (119.1)
Non-controlling
interests 0.4 - 0.4 0.2 - 0.2 0.5 - 0.5
----------------- ----- ---------- ------- ---------- -------- ------- ---------- ---------- -------- ----------
Earnings per
share
Basic and
diluted
earnings/(loss)
per share 5 4.7p (7.4)p (2.7)p 6.1p (1.3)p 4.8p 9.1p (29.2)p (20.1)p
----------------- ----- ---------- ------- ---------- -------- ------- ---------- ---------- -------- ----------
* Other items relate to the amortisation of acquired intangibles, impairment charges, profits and losses
on agreed sale or closure of non-core businesses and associated impairment charges, net operating losses
attributable to businesses identified as non-core, net restructuring costs, acquisition expenses and contingent
consideration, the defined benefit pension scheme curtailment loss, other one-off items, unwinding of provision
discounting, fair value gains and losses on derivative financial instruments, the taxation effect of Other
items and the effect of changes in taxation rates. Other items have been disclosed separately in order to
give an indication of the underlying earnings of the Group. Further details can be found in Note 3.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2017
Unaudited
six months Unaudited Audited
ended six months year ended
30 June ended 31 December
2017 30 June 2016 2016
GBPm GBPm GBPm
(Loss)/profit after tax (15.8) 28.4 (118.6)
Items that will not subsequently
be reclassified to the Consolidated
Income Statement:
Remeasurement of defined benefit
pension liability 2.4 (22.6) (12.5)
Deferred tax movement associated
with remeasurement of defined benefit
pension liability (0.4) 4.1 2.3
Effect of change in rate on deferred
tax (0.4) - (0.5)
---------------------------------------- ------------ -------------- -------------
1.6 (18.5) (10.7)
Items that may subsequently be
reclassified to the Consolidated
Income Statement:
Exchange difference on retranslation
of foreign currency goodwill and
intangibles 3.7 27.0 33.6
Exchange difference on retranslation
of foreign currency net investments
(excluding goodwill and intangibles) 8.0 28.1 35.7
Exchange and fair value movements
associated with borrowings and
derivative financial instruments (6.7) (15.8) (25.3)
Tax credit on exchange and fair
value movements arising on borrowings
and derivative financial instruments 1.8 3.1 6.3
Gains and losses on cash flow hedges 0.8 (1.1) (3.8)
Transfer to profit and loss on
cash flow hedges 1.1 1.2 2.3
---------------------------------------- ------------ -------------- -------------
8.7 42.5 48.8
---------------------------------------- ------------ -------------- -------------
Other comprehensive income 10.3 24.0 38.1
---------------------------------------- ------------ -------------- -------------
Total comprehensive (expense)/income (5.5) 52.4 (80.5)
---------------------------------------- ------------ -------------- -------------
Attributable to:
Equity holders of the Company (5.9) 52.2 (81.0)
Non-controlling interests 0.4 0.2 0.5
---------------------------------------- ------------ -------------- -------------
(5.5) 52.4 (80.5)
---------------------------------------- ------------ -------------- -------------
Condensed Consolidated Balance Sheet
as at 30 June 2017
Unaudited Unaudited Audited
30 June 30 June 2016 31 December 2016
2017 restated
Note GBPm GBPm GBPm
Non-current assets
Property, plant and equipment 110.2 136.9 127.3
Goodwill 321.9 468.7 352.7
Intangible assets 65.8 91.7 76.9
Deferred tax assets 14.6 22.7 16.4
Derivative financial instruments 9 1.2 2.5 4.4
513.7 722.5 577.7
---------------------------------- ----- ---------- -------------- ------------------
Current assets
Inventories 258.7 263.3 250.6
Trade and other receivables 548.3 573.4 516.1
Current tax assets 5.3 2.4 3.2
Derivative financial instruments 9 0.2 48.6 0.1
Deferred consideration 9 - 1.5 0.7
Other financial assets 9 1.6 - 1.1
Cash and cash equivalents 177.3 210.2 127.6
Assets classified as held
for sale 6 18.9 - 15.6
---------------------------------- ----- ---------- -------------- ------------------
1,010.3 1,099.4 915.0
---------------------------------- ----- ---------- -------------- ------------------
Total assets 1,524.0 1,821.9 1,492.7
---------------------------------- ----- ---------- -------------- ------------------
Current liabilities
Trade and other payables 562.5 517.1 440.6
Obligations under finance
lease contracts 3.2 2.4 3.1
Bank overdrafts 6.0 62.4 3.5
Bank loans 123.9 132.8 171.6
Private placement notes - 173.9 -
Loan notes and deferred
consideration 9 - 6.8 2.7
Derivative financial instruments 9 - 1.4 0.2
Current tax liabilities 7.5 11.6 8.4
Provisions 14.3 12.5 14.5
Liabilities directly associated
with assets classified as
held for sale - - 15.6
---------------------------------- ----- ---------- -------------- ------------------
717.4 920.9 660.2
---------------------------------- ----- ---------- -------------- ------------------
Non-current liabilities
Obligations under finance
lease contracts 7.9 7.7 8.1
Bank loans 0.6 0.3 0.3
Private placement notes 203.5 105.6 200.7
Derivative financial instruments 9 1.7 2.3 3.6
Deferred tax liabilities 14.3 19.1 15.2
Other payables 3.9 5.1 5.5
Retirement benefit obligations 11 32.9 46.6 37.1
Provisions 18.4 29.8 22.4
---------------------------------- ----- ---------- -------------- ------------------
283.2 216.5 292.9
---------------------------------- ----- ---------- -------------- ------------------
Total liabilities 1,000.6 1,137.4 953.1
---------------------------------- ----- ---------- -------------- ------------------
Net assets 523.4 684.5 539.6
---------------------------------- ----- ---------- -------------- ------------------
Capital and reserves
Called up share capital 10 59.1 59.1 59.1
Share premium account 447.3 447.3 447.3
Capital redemption reserve 0.3 0.3 0.3
Share option reserve 1.1 1.6 1.1
Hedging and translation
reserve 14.7 - 7.9
(Accumulated losses) / retained
profits (0.3) 175.4 23.1
---------------------------------- ----- ---------- -------------- ------------------
Attributable to equity holders
of the Company 522.2 683.7 538.8
---------------------------------- ----- ---------- -------------- ------------------
Non-controlling interests 1.2 0.8 0.8
---------------------------------- ----- ---------- -------------- ------------------
Total equity 523.4 684.5 539.6
---------------------------------- ----- ---------- -------------- ------------------
Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2017
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 2017 30 June 2016 2016
Note GBPm GBPm GBPm
Net cash flow from operating
activities
Cash generated from operating
activities 7 96.3 60.2 75.8
Income tax paid (7.3) (3.3) (9.6)
-------------------------------------- ----- -------------- -------------- -------------
Net cash generated from operating
activities 89.0 56.9 66.2
-------------------------------------- ----- -------------- -------------- -------------
Cash flows from investing
activities
Finance income received 0.2 0.6 1.2
Purchase of property, plant
and equipment and computer
software (12.3) (19.6) (37.5)
Proceeds from sale of property,
plant and equipment 28.7 25.1 39.5
Settlement of amounts payable
for purchase of businesses (6.8) (18.2) (25.3)
Net cash flow arising on the
sale of businesses 6 1.2 - -
Net cash generated from/(used
in) investing activities 11.0 (12.1) (22.1)
-------------------------------------- ----- -------------- -------------- -------------
Cash flows from financing
activities
Finance costs paid (6.6) (6.8) (13.7)
Capital element of finance
lease rental payments (1.7) (1.5) (2.6)
Issue of share capital 10 - - -
Repayment of loans/settlement
of derivative financial instruments (48.5) (0.2) (139.5)
New loans/settlement of derivative
financial instruments 0.7 32.7 166.1
Dividends paid to equity holders
of the Company 12 - (17.2) (28.0)
Dividends paid to non-controlling
interest - (0.3) (0.6)
Net cash (used in)/generated
from financing activities (56.1) 6.7 (18.3)
-------------------------------------- ----- -------------- -------------- -------------
Increase in cash and cash
equivalents in the period 8 43.9 51.5 25.8
-------------------------------------- ----- -------------- -------------- -------------
Cash and cash equivalents
at beginning of the period 124.1 86.7 86.7
Effect of foreign exchange
rate changes 3.3 9.6 11.6
-------------------------------------- ----- -------------- -------------- -------------
Cash and cash equivalents
at end of the period 171.3 147.8 124.1
-------------------------------------- ----- -------------- -------------- -------------
Condensed
Consolidated
Statement
of Changes in
Equity
For the
unaudited six Called Hedging (Accumulated
months up Share Capital Share and losses)
ended 30 June share premium redemption option translation / retained Non-controlling Total
2017 capital account reserve reserve reserve profits Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 31 December
2016 59.1 447.3 0.3 1.1 7.9 23.1 538.8 0.8 539.6
(Loss)/profit
after tax - - - - - (16.2) (16.2) 0.4 (15.8)
Other
comprehensive
income - - - - 6.8 3.5 10.3 - 10.3
Total
comprehensive
income/(expense) - - - - 6.8 (12.7) (5.9) 0.4 (5.5)
Credit to share
option reserve - - - - - - - - -
Exercise of share
options - - - - - - - - -
Current and
deferred tax on
share
options - - - - - 0.1 0.1 - 0.1
Dividends
recognised as
distributions
to equity
holders of the
Company
(Note 12) - - - - - (10.8) (10.8) - (10.8)
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
At 30 June 2017 59.1 447.3 0.3 1.1 14.7 (0.3) 522.2 1.2 523.4
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
For the
unaudited six Called Hedging (Accumulated
months up Share Capital Share and losses)
ended 30 June share premium redemption option translation / retained Non-controlling Total
2016 capital account reserve reserve reserve profits Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
At 31 December
2015 59.1 447.3 0.3 1.4 (42.4) 183.0 648.7 0.9 649.6
Profit after tax - - - - - 28.2 28.2 0.2 28.4
Other
comprehensive
income/(expense) - - - - 42.4 (18.4) 24.0 - 24.0
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
Total
comprehensive
income/(expense) - - - - 42.4 9.8 52.2 0.2 52.4
Credit to share
option reserve - - - 0.2 - - 0.2 - 0.2
Exercise of share
options - - - - - - - - -
Current and
deferred tax on
share
options - - - - - (0.2) (0.2) - (0.2)
Dividend paid to
non-controlling
interest - - - - - - - (0.3) (0.3)
Dividends paid to
equity holders
of the Company - - - - - (17.2) (17.2) - (17.2)
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
At 30 June 2016 59.1 447.3 0.3 1.6 - 175.4 683.7 0.8 684.5
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
Called Hedging (Accumulated
For the audited up Share Capital Share and losses)
year ended 31 share premium redemption option translation / retained Non-controlling Total
December 2016 capital account reserve reserve reserve profits Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
At 31 December
2015 59.1 447.3 0.3 1.4 (42.4) 183.0 648.7 0.9 649.6
(Loss)/profit
after tax - - - - - (119.1) (119.1) 0.5 (118.6)
Other
comprehensive
income/(expense) - - - - 50.3 (12.2) 38.1 - 38.1
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
Total
comprehensive
income/(expense) - - - - 50.3 (131.3) (81.0) 0.5 (80.5)
Share capital
issued in the
year - - - - - - - - -
Debit to share
option reserve - - - (0.3) - - (0.3) - (0.3)
Exercise of share
options - - - - - - - - -
Deferred tax on
share options - - - - - (0.6) (0.6) - (0.6)
Dividends paid to
non-controlling
interest - - - - - - - (0.6) (0.6)
Dividends paid to
equity holders
of the Company - - - - - (28.0) (28.0) - (28.0)
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
At 31 December
2016 59.1 447.3 0.3 1.1 7.9 23.1 538.8 0.8 539.6
------------------ -------- -------- ----------- -------- ------------ ------------- -------- ---------------- --------
The share option reserve represents the cumulative equity-settled share option charge under IFRS 2 "Share-Based Payments" less the value of any share options that have been exercised.
The hedging and translation reserve represents movements in the Condensed Consolidated Balance Sheet as a result of movements in exchange rates which are taken directly to reserves.
Notes to the Condensed Interim Financial Statements
1. Basis of preparation of Condensed Interim Financial Statements
The Condensed Interim Financial Statements were approved by the Board of Directors on 7 August 2017.
The Condensed Interim Financial Statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The interim results to 30 June 2017 and 30 June 2016 have been subject to an Interim Review in accordance with ISRE 2410 by the Company's Auditor. The financial information for the full preceding year is based on the audited statutory accounts for the financial year ended 31 December 2016 prepared in accordance with IFRS as adopted by the European Union. Those accounts, upon which the Auditor issued an unqualified opinion, have been delivered to the Registrar of Companies. The Auditor's Report did not draw attention to any matters by way of emphasis and contained no statement under Section 498(2) or Section 498(3) of the Companies Act 2006.
The Group's Condensed Interim Financial Statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union and the accounting policies included in the Annual Report and Accounts for the year ended 31 December 2016, which have been applied consistently throughout the current and preceding periods with the exception of new standards adopted in the current period (see below) and the following additional policy with regard to trade receivables, adopted following the Group's decision to enter into certain factoring arrangements during the period to 30 June 2017:
-- Trade receivables that are factored out to banks and other financial institutions without recourse to the Group are derecognised at the point of factoring as the risks and rewards of the receivables have been fully transferred. In assessing whether the receivables qualify for derecognition the Group has considered the receivables and receivable insurance contracts as two separate units of account. Therefore the insurance is not included as part of the derecognition assessment on the basis that the insurance is not similar to the receivables; and
-- The Group has elected to recognise cash inflows from the sale of factored receivables as an operating cashflow.
The areas of critical accounting judgments and key sources of estimation uncertainty set out on page 99 of the 2016 Annual Report and Accounts are considered to continue and be consistently applied.
Increased market and macroeconomic uncertainty and challenging market conditions during the year ended 31 December 2016 led to the lowering of expectations in the future profitability of the Larivière CGU. This resulted in a goodwill impairment charge of GBP100.4m being recognised, reducing the carrying value of the CGU after the impairment charge to GBP97.5m as at 31 December 2016. As at 30 June 2017, the Group has tested goodwill and the related intangible assets and property, plant and equipment associated with the Larivière CGU, noting the low level of headroom. The current forecasts provide headroom of c.EUR3m (30 June 2016: c.EUR2m; 31 December 2016: EURnil). The carrying value of the CGU at 30 June 2017 is c.GBP97m. The Board has actively reviewed the forecast associated with Larivière, considering the assumptions used and, in a challenging economic environment, its continued outperformance of the markets in which it operates, and is satisfied that no impairment is necessary. If a 5% reduction in revenue were to arise from the forecast used in the impairment review of Larivière, with no mitigating actions undertaken, there would be an impairment of c.GBP36m.
All results are from continuing operations under International Accounting Standards as the businesses identified as non-core in 2016 and 2017 did not meet the disclosure criteria of being discontinued operations as they did not individually or in aggregate represent a separate major line of business or geographical area of operation. In order to give an indication of the underlying earnings of the Group, the results of these businesses have been included within Other items in the Condensed Consolidated Income Statement. The comparatives for the period ending 30 June 2016 have been re-analysed to present net operating losses of GBP0.2m attributable to businesses identified as non-core in the second half of 2016 or the first half of 2017 within Other items. The comparatives for the year ended 31 December 2016 have also been re-analysed to present net operating profits of GBP4.3m attributable to businesses identified as non-core in the first half of 2017 within Other items.
In March 2016, the IFRS Interpretations Committee issued an agenda decision which clarified the circumstances in which certain Balance Sheet items can be offset in accordance with IAS 32 "Financial Instruments: Presentation". It was determined that where a Group does not expect to settle subsidiaries' bank balances on a net basis, these balances cannot be offset. In response to this, the Group has reviewed its cash pooling arrangements which has resulted in changes to the amounts that can be offset. Comparative information for the period ended 30 June 2016 has been restated. The impact of this change as at 30 June 2016 is to increase both cash and cash equivalents and bank overdrafts in the Consolidated Balance Sheet by GBP57.2m. In addition, the Group has also reviewed the presentation of its supplier rebates receivable, in particular supplier rebates where there is no right to offset against trade payable balances. As a result comparative information for the period ended 30 June 2016 has been restated. The impact of this change is an increase in respect of both prepayments and accrued income and trade payables of GBP44.6m. There was no overall impact on net debt or net assets from either restatement.
Going Concern
The Directors have considered the Group's forecasts which support the view that the Group will be able to continue to operate within its banking facilities and comply with its banking covenants. Through its various business activities the Group is exposed to a number of risks and uncertainties (see Note 14), which could affect the Group's ability to meet these forecasts and hence its ability to meet its banking covenants. The Directors have considered the challenging trading conditions, the current competitive environment and markets in which the Group's businesses operate and associated credit risks, together with the available ongoing committed finance facilities and the potential actions that can be taken, should revenues be worse than expected, to protect operating profits and cash flows. After making enquiries, the Directors have formed a judgment that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the going concern basis has been adopted in preparing this Interim Report.
Notes to the Condensed Interim Financial Statements
1. Basis of preparation of Condensed Interim Financial Statements
Changes in accounting policy
Adoption of new and revised accounting standards
Since the 2016 Annual Report and Accounts were published no significant new standards and interpretations have been issued. The Group will perform its analysis to assess the impact on operations and results of transition to IFRS 15 "Revenue for Contracts with Customers" and IFRS 16 "Leases" in the second half of 2017.
The following new and revised standards became effective during 2017:
-- Disclosure Initiative (Amendments to IAS 7 "Statement of Cash Flows") - effective for accounting periods beginning on or after 1 January 2017
-- Amendments to IAS 12 "Income Taxes" - Recognition of Deferred Tax Assets for Unrealised Losses - effective for accounting periods beginning on or after 1 January 2017
-- Annual Improvements - 2014 to 2016 cycle - effective for accounting periods beginning on or after 1 January 2017
The adoption of these standards has not had a material impact on the financial statements of the Group.
Notes to the Condensed Interim Financial Statements
2. Segmental information
(a) Segmental results
In accordance with IFRS 8 "Operating Segments", the Group identifies its reportable segments as those
upon which the Group Board regularly bases its opinion and assesses performance. The Group has deemed
it appropriate to aggregate its operating segments into two reported segments: UK & Ireland, and Mainland
Europe. The constituent operating segments have been aggregated as they have similar: products and services;
production processes; types of customer; methods of distribution; regulatory environments; and economic
characteristics. There has been no change in the basis of measurement of segment profit or loss in the
period.
Unaudited six months ended Unaudited six months ended Audited year ended 31 December
30 June 2017 30 June 2016 2016
UK & Mainland UK & Mainland UK & Mainland
Ireland Europe Eliminations Total Ireland Europe Eliminations Total Ireland Europe Eliminations Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
Continuing sales 659.2 716.2 - 1,375.4 642.9 623.5 - 1,266.4 1,295.4 1,320.1 - 2,615.5
Sales
attributable to
businesses
identified
as non-core 56.3 7.5 - 63.8 96.0 12.8 - 108.8 202.1 27.6 - 229.7
Inter-segment
sales* 1.6 6.3 (7.9) - 1.6 7.3 (8.9) - 3.3 13.9 (17.2) -
----------------- -------- --------- ------------- -------- -------- --------- ------------- -------- -------- --------- ------------- --------
Total revenue 717.1 730.0 (7.9) 1,439.2 740.5 643.6 (8.9) 1,375.2 1,500.8 1,361.6 (17.2) 2,845.2
----------------- -------- --------- ------------- -------- -------- --------- ------------- -------- -------- --------- ------------- --------
Result
Segment result
before
Other items 27.5 24.0 - 51.5 35.1 23.5 - 58.6 49.5 48.3 - 97.8
Amortisation of
acquired
intangibles (3.6) (1.1) - (4.7) (4.0) (1.1) - (5.1) (8.0) (2.3) - (10.3)
Impairment
charges (9.1) - - (9.1) - - - - - (110.6) (110.6)
Profits and
losses on
agreed sale or
closure
of non-core
businesses
and associated
impairment
charges (29.5) (0.9) - (30.4) - - - - (40.1) - - (40.1)
Net operating
losses
attributable to
businesses
identified as
non-core (5.0) (0.2) - (5.2) (0.4) 0.2 - (0.2) (2.1) 0.6 - (1.5)
Net
restructuring
costs (2.8) (0.6) - (3.4) (0.8) (1.6) - (2.4) (10.6) (2.7) - (13.3)
Acquisition
expenses
and contingent
consideration (0.5) - - (0.5) (3.5) 0.1 - (3.4) 4.7 (0.1) - 4.6
Defined benefit
pension
scheme
curtailment
loss - - - - (0.9) - - (0.9) (0.9) - - (0.9)
Other one-off
items
(Note 3) 5.4 - - 5.4 3.5 - - 3.5 (6.0) 0.1 - (5.9)
Segment
operating
(loss)/profit (17.6) 21.2 - 3.6 29.0 21.1 - 50.1 (13.5) (66.7) - (80.2)
Parent Company
costs (5.8) (4.1) (10.8)
----------------- -------- --------- ------------- -------- -------- --------- ------------- -------- -------- --------- ------------- --------
Operating
(loss)/profit (2.2) 46.0 (91.0)
Net finance
costs before
Other items (7.4) (6.6) (13.8)
Net fair value
losses
on derivative
financial
instruments (0.8) (0.9) (1.9)
Unwinding of
provision
discounting (0.3) (0.1) 0.4
----------------- -------- --------- ------------- -------- -------- --------- ------------- -------- -------- --------- ------------- --------
(Loss)/profit
before
tax (10.7) 38.4 (106.3)
Income tax
expense (5.1) (10.0) (12.3)
Non-controlling
interests (0.4) (0.2) (0.5)
----------------- -------- --------- ------------- -------- -------- --------- ------------- -------- -------- --------- ------------- --------
(Loss)/profit
for the
period (16.2) 28.2 (119.1)
----------------- -------- --------- ------------- -------- -------- --------- ------------- -------- -------- --------- ------------- --------
* Inter-segment sales are charged at the
prevailing market rates.
Notes to the Condensed Interim Financial Statements
2. Segmental information
(a) Segmental results
Unaudited six months ended Unaudited six months ended Audited year ended 31
Balance Sheet 30 June 2017 30 June 2016 December 2016
UK & Mainland UK & Mainland UK & Mainland
Ireland Europe Total Ireland Europe Total Ireland Europe Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Assets
Segment assets
(restated) 753.5 743.0 1,496.5 801.1 856.2 1,657.3 783.9 682.4 1,466.3
Unallocated assets:
Property, plant and
equipment 0.8 1.1 0.9
Derivative financial
instruments 1.4 51.1 4.5
Deferred
consideration - 1.5 0.7
Cash and cash
equivalents 14.2 104.8 14.5
Deferred tax assets 6.8 2.1 2.3
Other assets 4.3 4.0 3.5
Consolidated total
assets 1,524.0 1,821.9 1,492.7
--------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
Liabilities
Segment liabilities
(restated) 359.1 286.7 645.8 426.3 296.9 723.2 342.8 231.7 574.5
Unallocated
liabilities:
Private placement
notes - 279.5 200.7
Bank loans 318.7 122.1 158.8
Derivative financial
instruments 1.7 3.7 3.8
Other liabilities 34.4 8.9 15.3
--------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
Consolidated total
liabilities 1,000.6 1,137.4 953.1
--------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
Other segment
information
Capital expenditure
on:
Property, plant and
equipment 6.2 4.9 11.1 11.4 5.9 17.3 21.7 12.0 33.7
Computer software 1.6 0.8 2.4 2.1 0.6 2.7 4.8 1.4 6.2
Goodwill and
intangible
assets (excluding
computer
software) - - - 9.6 2.7 12.3 11.2 7.3 18.5
Non-cash
expenditure:
Depreciation 5.5 5.8 11.3 7.7 5.4 13.1 14.4 11.6 26.0
Impairment of
property,
plant and equipment
and
computer software 9.1 - 9.1 - - - 12.0 - 12.0
Amortisation of
acquired
intangibles and
computer
software 5.1 1.7 6.8 5.4 1.4 6.8 10.9 2.9 13.8
Impairment of
goodwill
and intangibles
(excluding
computer software) 21.4 - 21.4 - - - 22.0 110.6 132.6
--------------------- -------- --------- -------- -------- --------- -------- -------- --------- --------
Notes to the Condensed Interim Financial Statements
2. Segmental information
(b) Revenue by product group
The Group focuses its activities into three product sectors: Insulation
and Energy Management; Exteriors; and Interiors.
The following table provides an analysis of Group sales by type of
product:
Unaudited Audited year
Unaudited six six months ended 31
months ended ended 30 June December
30 June 2017 2016 2016
GBPm GBPm GBPm
Insulation and Energy Management 518.4 496.8 978.8
Exteriors 438.5 387.1 813.7
Interiors 418.5 382.5 823.0
------------------------------------------ -------------- --------------- -------------
Total continuing 1,375.4 1,266.4 2,615.5
------------------------------------------ -------------- --------------- -------------
Attributable to businesses identified
as non-core 63.8 108.8 229.7
Total 1,439.2 1,375.2 2,845.2
------------------------------------------ -------------- --------------- -------------
(c) Geographic information
The Group's revenue from external customers and its non-current assets
(including property, plant and equipment, goodwill and intangible
assets but excluding deferred tax, deferred consideration and derivative
financial instruments) by geographical location are as follows:
Unaudited six Unaudited six Audited year
months ended 30 months ended 30 ended
June 2017 June 2016 31 December 2016
---------------------- ---------------------- ----------------------
Non-current Non-current Non-current
Revenue assets Revenue assets Revenue assets
Country GBPm GBPm GBPm GBPm GBPm GBPm
United Kingdom 613.2 259.0 603.0 326.9 1,209.9 310.2
Ireland 46.0 2.7 39.9 2.4 85.5 2.7
France 324.3 127.6 285.0 220.0 589.2 124.6
Germany 201.4 21.1 180.6 21.6 385.6 21.7
Poland 63.6 7.0 51.7 16.3 115.1 6.9
Benelux* 126.9 46.1 106.2 47.3 230.2 53.4
Total continuing 1,375.4 463.5 1,266.4 634.5 2,615.5 519.5
------------------------ -------- ------------ -------- ------------ -------- ------------
Attributable to
businesses identified
as non-core 63.8 34.4 108.8 62.8 229.7 37.4
------------------------ -------- ------------ -------- ------------ -------- ------------
Total 1,439.2 497.9 1,375.2 697.3 2,845.2 556.9
------------------------ -------- ------------ -------- ------------ -------- ------------
* Includes SIG Air Handling
There is no material difference between the basis of preparation of
the information reported above and the Accounting Policies adopted
by the Group.
3. Other items
(Loss)/profit after tax includes the following Other items which have
been disclosed in a separate column within the Condensed Consolidated
Income Statement in order to provide a better indication of the underlying
earnings of the Group:
Unaudited Audited year
Unaudited six six months ended
months ended ended 30 June 31 December
30 June 2017 2016 2016
GBPm GBPm GBPm
Amortisation of acquired intangibles (4.7) (5.1) (10.3)
Impairment charges (9.1) - (110.6)
Profits and losses on agreed
sale or closure of non-core
businesses and associated impairment
charges (30.4) - (40.1)
Net operating losses attributable
to businesses identified as
non-core (5.2) (0.2) (1.5)
Net restructuring costs^ (3.4) (2.4) (13.3)
Acquisition expenses and contingent
consideration (0.5) (3.4) 4.6
Defined benefit pension scheme
curtailment loss - (0.9) (0.9)
Other one-off items* 5.4 3.5 (5.9)
Impact on operating (loss)/profit (47.9) (8.5) (178.0)
Net fair value losses on derivative
financial instruments (0.8) (0.9) (1.9)
Unwinding of provision discounting (0.3) (0.1) 0.4
--------------------------------------- -------------- --------------- -------------
Impact on (loss)/profit before
tax (49.0) (9.5) (179.5)
Income tax credit on Other items 5.2 1.4 5.9
Effect of change in rate on
deferred tax - - 0.2
Other tax adjustments in respect
of previous years - - 0.4
--------------------------------------- -------------- --------------- -------------
Impact on (loss)/profit after
tax (43.8) (8.1) (173.0)
--------------------------------------- -------------- --------------- -------------
^ Included within net restructuring costs are consultancy costs of GBP1.7m (30 June 2016: GBP0.7m; 31 December 2016: GBP6.7m), property closure costs of GBP0.4m (30 June 2016: GBP1.2m; 31 December 2016: GBP4.4m) and redundancy costs of GBP1.3m (30 June 2016: GBP0.3m; 31 December 2016: GBP1.7m). There were no rebranding costs in the current period (30 June 2016: GBP0.2m; 31 December 2016: GBP0.5m).
Notes to the Condensed Interim Financial Statements
3. Other items
*Other one-off items are split as follows:
Unaudited six months ended 30 Unaudited six months ended 30 Audited year ended
June 2017 June 2016 31 December 2016
GBPm GBPm GBPm
Profit on sale of property 5.5 2.8 2.8
Other one-off (debits)/credits (0.1) - 0.4
Impairment charge and other
costs following the cessation
of the UK eCommerce project - - (9.7)
Net charge arising as a result
of movements in provisions
associated with businesses
disposed
of in previous years - 0.4 (0.5)
Fair value gains on fuel
hedging contracts - 0.3 0.4
Reassessment of the provision
associated with the closure
in 2015 of the Group's
operations
in the Kingdom of Saudi
Arabia - - 0.7
------------------------------- ------------------------------- ------------------------------- -------------------
Total Other one-off items 5.4 3.5 (5.9)
------------------------------- ------------------------------- ------------------------------- -------------------
4. Income tax
The income tax expense comprises:
Unaudited six months ended 30 Unaudited six months ended 30 Audited year ended
June 2017 June 2016 31 December 2016
GBPm GBPm GBPm
-------------------
UK taxation (0.8) 4.8 1.7
Overseas taxation 5.9 5.2 10.6
------------------------------- ------------------------------- ------------------------------- -------------------
Total income tax expense for
the period 5.1 10.0 12.3
------------------------------- ------------------------------- ------------------------------- -------------------
Tax for the six month period ended 30 June 2017 on underlying profits (i.e. before Other items)
is charged at 26.9% (30 June 2016: 23.8%; 31 December 2016: 25.7%), representing the best
estimate of the average annual effective tax rate expected for the full year being applied
to the underlying pre-tax income of the six month period to 30 June 2017.
The UK's main rate of corporation tax reduced to 19% from 1 April 2017 and will be further
reduced to 17% from 1 April 2020. These rate changes were taken into account when calculating
the deferred tax provision for the year ended 31 December 2016.
Notes to the Condensed Interim Financial Statements
5. Earnings per share
The calculations of earnings per share are based on the following
profits and numbers of shares:
Basic and diluted
----------------------------------------------
Unaudited Audited year
Unaudited six six months ended 31
months ended ended 30 June December
30 June 2017 2016 2016
GBPm GBPm GBPm
(Loss)/profit after tax (15.8) 28.4 (118.6)
Non-controlling interests (0.4) (0.2) (0.5)
--------------------------------------- -------------- --------------- -------------
(16.2) 28.2 (119.1)
--------------------------------------- -------------- --------------- -------------
Basic and diluted before Other items
----------------------------------------------
Unaudited Audited year
Unaudited six six months ended 31
months ended ended 30 June December
30 June 2017 2016 2016
GBPm GBPm GBPm
(Loss)/profit after tax (15.8) 28.4 (118.6)
Non-controlling interests (0.4) (0.2) (0.5)
Other items:
Amortisation of acquired intangibles 4.7 5.1 10.3
Impairment charges 9.1 - 110.6
Profits and losses on agreed
sale or closure of non-core
businesses and associated impairment
charges 30.4 - 40.1
Net operating losses attributable
to businesses identified as
non-core 5.2 0.2 1.5
Net restructuring costs 3.4 2.4 13.3
Acquisition expenses and contingent
consideration 0.5 3.4 (4.6)
Defined benefit pension scheme
curtailment loss - 0.9 0.9
Other one-off items (Note 3) (5.4) (3.5) 5.9
Net fair value losses on derivative
financial instruments 0.8 0.9 1.9
Unwinding of provision discounting 0.3 0.1 (0.4)
Income tax credit relating to
Other items (5.2) (1.4) (5.9)
Effect of change in rate on
deferred tax - - (0.2)
Other tax adjustments in respect
of previous years - - (0.4)
--------------------------------------- -------------- --------------- -------------
27.6 36.3 53.9
--------------------------------------- -------------- --------------- -------------
Weighted average number of shares
----------------------------------------------
Unaudited Audited year
Unaudited six six months ended 31
months ended ended 30 June December
30 June 2017 2016 2016
Number Number Number
--------------------------------------- -------------- --------------- -------------
For basic and diluted (loss)/earnings
per share 591,466,749 591,349,505 591,365,906
--------------------------------------- -------------- --------------- -------------
Earnings per share
----------------------------------------------
Unaudited Audited year
Unaudited six six months ended 31
months ended ended 30 June December
30 June 2017 2016 2016
-------------- --------------- -------------
Basic and diluted (loss)/earnings
per share (2.7)p 4.8p (20.1)p
--------------------------------------- -------------- --------------- -------------
Earnings per share before Other items^
----------------------------------------------
Unaudited Audited year
Unaudited six six months ended 31
months ended ended 30 June December
30 June 2017 2016 2016
Basic and diluted earnings per
share 4.7p 6.1p 9.1p
^ Earnings per share before Other items has been disclosed in order
to present the underlying performance of the Group.
Notes to the Condensed Interim Financial Statements
6. Divestments and exit of non-core businesses
Divested businesses
The Group has divested of the following businesses during the period to 30 June 2017:
Carpet & Flooring
As disclosed in the 2016 Annual Report and Accounts, at 31 December 2016 the Group Board had resolved to dispose of its UK specialist flooring distribution operation, Carpet & Flooring, and because a loss was anticipated the net assets of the business were impaired to reflect the estimated net proceeds of GBP6.9m. The disposal was completed on 28 February 2017. The Group has recognised a further GBP10.4m of costs relating to the sale in the period ended 30 June 2017, resulting in a loss on disposal within Other items in the Condensed Consolidated Income Statement of GBP3.5m.
Drywall Qatar
As disclosed in the 2016 Annual Report and Accounts, at 31 December 2016 the Group Board had resolved to exit the Drywall Qatar business, and because a loss was anticipated the fixed assets of the business were impaired. The disposal was completed on 27 March 2017, and, in accordance with IAS 21 "The Effects of Changes in Foreign Exchange Rates" the cumulative exchange differences on the retranslation of the net assets and goodwill and intangibles of the business (a credit of GBP0.8m) were reclassified to the Condensed Consolidated Income Statement. The Group has recognised a further GBP1.7m of costs relating to the sale in the period ended 30 June 2017, resulting in a net loss on disposal within Other items in the Condensed Consolidated Income Statement of GBP0.9m.
WeGo Austria
In May and June 2017 the Group sold certain trade and assets of WeGo Systembaustoffe Austria GmbH for consideration of GBP1.7m, resulting in a loss on disposal within Other items in the Condensed Consolidated Income Statement of GBP0.9m.
The net assets at the date of disposal of the three businesses were as follows:
At date of disposal At 30 June 2016 At 31 December 2016
GBPm GBPm GBPm
-------------------- ---------------- --------------------
Investments and intangible assets - 2.7 -
Property, plant and equipment 1.1 3.2 1.2
Cash 6.7 9.3 -
Inventories 1.8 20.3 11.1
Trade and other receivables 12.8 21.5 13.2
Trade and other payables (8.4) (21.4) (18.6)
Provisions - (0.5) -
Deferred tax asset - 0.5 -
-------------------- ---------------- --------------------
Net assets 14.0 35.6 6.9
-------------------- ---------------- --------------------
Other costs 0.7
Loss on disposal (6.1)
Sale proceeds 8.6
--------------------
These businesses contributed GBP2.4m of loss* on GBP20.3m of revenue to the Group in the six months ended 30 June 2017, GBP1.7m of loss on GBP63.3m of revenue in the six months ended 30 June 2016 and GBP5.2m of loss on GBP133.0m of revenue for the year ended 31 December 2016, with the results for the current and prior periods now disclosed within Other items in the Condensed Consolidated Income Statement.
* Profit or loss throughout this note refers to operating profit/(loss) before Other items.
Other non-core businesses
The Group has also commenced or resolved to commence the exit of the following businesses during the period to 30 June 2017:
On 27 March 2017 the Directors of Metechno Limited, a subsidiary of the Group, commenced the orderly wind down of Metechno Limited. The assets of the business and associated goodwill have been impaired to reflect the recoverable amount indicated by the period end impairment review process, resulting in a total loss on wind down of GBP4.5m included in Other items in the Condensed Consolidated Income Statement.
In addition, on 2 August 2017 SIG decided to review its business in the Middle East as it assesses the scale of ongoing growth opportunities in what is a relatively volatile market. Net assets are considered to be at recoverable value and there is no exceptional profit/loss arising that needs to be recognised in the six months to 30 June 2017.
These two non-core businesses contributed GBP3.8m of loss on GBP14.5m of revenue to the Group in the six months ended 30 June 2017, GBP0.4m of profit on GBP15.1m of revenue in the six months ended 30 June 2016 and GBP0.8m of profit on GBP33.7m of revenue for the year ended 31 December 2016, with the results for the current and prior periods now disclosed within Other items in the Condensed Consolidated Income Statement.
Notes to the Condensed Interim Financial Statements
6. Divestments and exit of non-core businesses
Divestment of SIG Building Plastics (after the balance sheet date)
On 12 July 2017 the Group Board resolved to dispose of its UK building plastics distribution business, part of the UK Exteriors division, and the sale was completed on 3 August 2017. The assets and liabilities sold were as follows:
At 30 June 2017
--------------------------------------
Impairment Original
Recoverable and asset carrying At 30 June At 31 December
value write down value 2016 2016
GBPm GBPm GBPm GBPm GBPm
------------ ------------ ---------- ----------- ---------------
Goodwill 12.9 (20.4) 33.3 33.3 33.3
Property, plant
and equipment 0.5 - 0.5 1.1 1.0
Inventories 4.7 - 4.7 4.5 4.4
Trade and other
receivables 0.8 - 0.8 0.9 0.5
------------ ------------ ---------- ----------- ---------------
Total assets 18.9 (20.4) 39.3 39.8 39.2
------------ ------------ ---------- ----------- ---------------
Trade and other
payables - - - - -
------------ ------------ ---------- ----------- ---------------
Total liabilities - - - - -
------------ ------------ ---------- ----------- ---------------
Net assets 18.9 (20.4) 39.3 39.8 39.2
------------ ------------ ---------- ----------- ---------------
The associated goodwill has been impaired by GBP20.4m to reflect the recoverable amount indicated by the consideration received in respect of the sale, and the assets and liabilities presented as held for sale within the Consolidated Balance Sheet. This business contributed GBP1.0m of profit on GBP29.0m of revenue to the Group in the six months ended 30 June 2017, GBP1.1m of profit on GBP30.4m of revenue in the six months ended 30 June 2016 and GBP2.9m of profit on GBP63.0m of revenue for the year ended 31 December 2016 and the results for the current and prior periods have been disclosed within Other items in the Condensed Consolidated Income Statement.
As part of the disposal of SIG Building Plastics a guarantee has been provided to the landlord of the leasehold properties transferred with the business covering rentals over the remaining term of the leases in the event that the acquiring company enters into administration before the end of the lease term. The maximum liability that could arise from this would be approximately GBP7.4m. No provision has been made in these financial statements as it is not considered likely that any loss will be incurred in connection with this.
Cash flows associated with divestments and exit of non-core businesses
The net cash inflow in the six months ended 30 June 2017 in respect of divestments and the exit of non-core businesses is as follows:
GBPm
------
Cash consideration received
for divestments (net of cost
to sell) 8.6
Cash at date of disposal (6.7)
Disposal costs paid (0.7)
------
Net cash inflow 1.2
------
The losses arising on the agreed sale or closure of non-core businesses and associated impairment charges, along with their results for the current and prior periods have been disclosed within Other items in the Condensed Consolidated Income Statement in order to present the underlying earnings of the Group.
Notes to the Condensed Interim Financial Statements
7. Reconciliation of operating (loss)/profit to cash generated from
operating activities
Unaudited Audited year
Unaudited six six months ended 31
months ended ended 30 June December
30 June 2017 2016 2016
GBPm GBPm GBPm
Operating (loss)/profit (2.2) 46.0 (91.0)
Depreciation 11.3 13.1 26.0
Amortisation of computer software 2.1 1.7 3.5
Amortisation of acquired intangibles 4.7 5.1 10.3
Impairment of computer software 6.8 - 7.9
Impairment of property, plant
and equipment 2.3 - 0.3
Goodwill and intangible impairment
charges - - 110.6
Profits and losses on agreed
sale or closure of non-core
businesses and associated impairment
charges 30.4 - 40.1
Profit on sale of property,
plant and equipment (14.1) (6.2) (8.5)
Share-based payments - 0.2 (0.3)
Working capital movements 55.0 0.3 (23.1)
Cash generated from operating
activities 96.3 60.2 75.8
--------------------------------------- -------------- --------------- -------------
Included in cash generated from operating activities is a special
contribution to the defined benefit pension scheme of GBP2.5m (30
June 2016: GBP2.5m; 31 December 2016: GBP2.5m).
Of the total profit on sale of property, plant and equipment, GBP5.5m
(30 June 2016: GBP2.8m; 31 December 2016: GBP2.8m) has been included
within Other items of the Condensed Consolidated Income Statement
(see Note 3).
Included within working capital movements are payments of GBP0.7m
(30 June 2016: GBP0.7m; 31 December 2016: GBP6.1m) in settlement of
contingent consideration dependent upon the vendors remaining with
the business.
Notes to the Condensed Interim Financial Statements
8. Reconciliation of net cash flow to movements in net debt
Unaudited Audited year
Unaudited six six months ended 31
months ended ended 30 June December
30 June 2017 2016 2016
GBPm GBPm GBPm
--------------------------------------- -------------- --------------- -------------
Increase in cash and cash equivalents
in the period 43.9 51.5 25.8
Cash flow from decrease/(increase)
in debt 52.6 (31.2) (19.5)
--------------------------------------- -------------- --------------- -------------
Decrease in net debt resulting
from cash flows 96.5 20.3 6.3
Debt added on acquisition - (1.1) (1.6)
Recognition of loan notes and
deferred consideration - (6.5) (2.7)
Non-cash items* (0.1) 4.0 (14.4)
Exchange differences (3.0) (13.6) (11.6)
--------------------------------------- -------------- --------------- -------------
Decrease/(increase) in net debt
in the period 93.4 3.1 (24.0)
Net debt at beginning of the
period (259.9) (235.9) (235.9)
--------------------------------------- -------------- --------------- -------------
Net debt at end of the period (166.5) (232.8) (259.9)
--------------------------------------- -------------- --------------- -------------
* Non-cash items includes the fair value movement of debt recognised
in the period which does not give rise to a cash inflow or outflow.
Net debt is defined as follows:
Audited
Unaudited Unaudited 31 December
30 June 2017 30 June 2016 2016
GBPm GBPm GBPm
--------------------------------------- -------------- --------------- -------------
Non-current assets:
Derivative financial instruments 1.2 2.5 4.4
Current assets:
Derivative financial instruments 0.2 48.6 0.1
Deferred consideration - 1.5 0.7
Other financial assets 1.6 - 1.1
Cash and cash equivalents (restated) 177.3 210.2 127.6
Current liabilities:
Obligations under finance lease
contracts (3.2) (2.4) (3.1)
Bank overdrafts (restated) (6.0) (62.4) (3.5)
Bank loans (123.9) (132.8) (171.6)
Private placement notes - (173.9) -
Loan notes and deferred consideration - (6.8) (2.7)
Derivative financial instruments - (1.4) (0.2)
Non-current liabilities:
Obligations under finance lease
contracts (7.9) (7.7) (8.1)
Bank loans (0.6) (0.3) (0.3)
Private placement notes (203.5) (105.6) (200.7)
Derivative financial instruments (1.7) (2.3) (3.6)
Net debt (166.5) (232.8) (259.9)
--------------------------------------- -------------- --------------- -------------
9. Financial instruments fair value disclosures
At the balance sheet date the Group held the following financial instruments
at fair value:
Unaudited Unaudited Audited
30 June 2017 30 June 2016 31 December
2016
GBPm GBPm GBPm
--------------------------------------- -------------- -------------- -------------
Financial assets
Other financial assets 1.6 - 1.1
Deferred consideration - 1.5 0.7
Derivative financial instruments 1.4 51.1 4.5
3.0 52.6 6.3
--------------------------------------- -------------- -------------- -------------
Financial liabilities
Derivative financial instruments 1.7 3.7 3.8
Loan notes and deferred consideration - 6.8 2.7
Contingent consideration 7.3 14.8 9.7
--------------------------------------- -------------- -------------- -------------
9.0 25.3 16.2
--------------------------------------- -------------- -------------- -------------
Notes to the Condensed Interim Financial Statements
9. Financial instruments fair value disclosures
The derivative financial instruments above all have fair values which are calculated by reference to observable inputs (i.e. classified as level 2 in the fair value hierarchy). The fair values of these derivative financial instruments, adjusted for credit risk, are calculated by discounting the associated future cash flows to net present values using appropriate market rates prevailing at the balance sheet date.
The contingent consideration is calculated based on management's forecasts for the business over the earn-out period (i.e. classified as level 3 in the fair value hierarchy). The fair value of contingent consideration is calculated by discounting the associated future cash flows to net present values using appropriate market rates prevailing at the balance sheet date.
The carrying value of financial assets and liabilities that are recorded at amortised cost in the accounts is approximately equal to their fair value.
10. Called up share capital
Audited
Unaudited Unaudited 31 December
30 June 2017 30 June 2016 2016
GBPm GBPm GBPm
Authorised:
800,000,000 ordinary shares
of 10p each (30 June 2016: 800,000,000;
31 December 2016: 800,000,000) 80.0 80.0 80.0
Allotted, called up and fully
paid:
591,475,263 ordinary shares
of 10p each (30 June 2016: 591,353,014;
31 December 2016: 591,460,301) 59.1 59.1 59.1
------------------------------------------ -------------- -------------- -------------
The Company allotted 14,962 shares during the period (30 June 2016:
5,866; 31 December 2016: 113,153).
11. Retirement benefit schemes
Defined benefit schemes
The Group operates a number of pension schemes, six of which provide defined benefits based upon pensionable salary. One of these schemes has assets held in a separate trustee administered fund, and five are overseas book reserve schemes. The UK defined benefit pension scheme obligation is calculated on a year to date basis, using the latest triennial valuation as at 31 December 2013.
The IAS 19 valuation conducted as at 31 December 2016 has been updated to reflect current market conditions, and as a result an actuarial gain of GBP2.4m and an associated deferred tax debit of GBP0.4m have been recognised within the Condensed Consolidated Statement of Comprehensive Income.
12. Interim dividend
An interim dividend of 1.25p per share has been declared for the period (30 June 2016: 1.83p). 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.
The final dividend for the year ended 31 December 2016 of 1.83p per share has been recognised as a distribution to equity holders in the period.
Following the recent impairments and losses associated with the closure of non-core businesses, the Group has accumulated losses as at 30 June 2017 of GBP0.3m (30 June 2016: retained profits GBP175.4m; 31 December 2016: retained profits GBP23.1m). The Company has retained profits of GBP189.8m (30 June 2016: GBP195.3m; 31 December 2016: GBP191.2m) and therefore this has not impacted the Company's ability to distribute dividends.
13. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and have therefore not been disclosed.
SIG has a shareholding of less than 0.1% in a German purchasing co-operative. Net purchases from this co-operative (on commercial terms) totalled GBP138m in the period to 30 June 2017 (30 June 2016: GBP133m; 31 December 2016: GBP284m). At the balance sheet date net trade payables in respect of the co-operative amounted to GBP14m (30 June 2016: GBP17m; 31 December 2016: GBP12m).
In the period to 30 June 2017, SIG incurred expenses of GBP0.2m (30 June 2016: GBP0.2m; 31 December 2016: GBP0.3m) on behalf of the SIG plc Retirement Benefits Plan, the UK defined benefit pension scheme.
The Group has not identified any other related party transactions in the six month period to 30 June 2017.
Notes to the Condensed Interim Financial Statements
14. Risks and uncertainties
The Directors consider that the principal risks and uncertainties which could have a material impact upon the Group's performance over the remaining six months of the 2017 financial year remain consistent with those set out in the Strategic Report on pages 16 to 19 of the Group's 2016 Annual Report and Accounts. These risks and uncertainties include, but are not limited to:
(1) market conditions; (2) competitors and margin management; (3) commercial relationships; (4) government legislation; (5) availability of funding; (6) working capital and cash management; (7) IT infrastructure and cybersecurity; and (8) availability and quality of key resources (personnel).
The primary risk affecting the Group for the remaining six months of the year continues to be the level of market demand in the markets in which SIG operates. SIG's diverse market sectors are affected by macroeconomic factors which limit visibility and therefore render the short to medium-term outlook difficult to predict. As SIG continues with its strategic change programme there is an increase in focus on the risk of the availability and quality of key resources (personnel). SIG continues to ensure that the strategic and budget review process identifies and manages all key resource requirements, whilst senior management succession planning mitigates the risk of knowledge loss associated with restructuring.
The result of the UK referendum to leave the European Union in June 2016, and the subsequent triggering of Article 50 on 29 March 2017, has created a period of significant uncertainty which may continue to affect future market conditions and the competitive landscape, the impact of which could adversely affect financial performance. The Board consider it too early to determine the precise effect that the decision to leave may have, however it acknowledges that the market conditions risk and competitor and margin management risk have increased since the referendum. The Directors will continue to closely monitor market conditions and will react accordingly. The "Group outlook" section of the Trading Review details the current assessment of the markets in which the Group operates.
15. Seasonality
The Group's operations are not normally affected by significant seasonal variations between the first and second halves of the calendar year. In 2016, the period to 30 June accounted for 48% of the Group's annual revenue (2015: 48%). In terms of outlook the key risk is the challenging environment created by macro uncertainty in the UK, although this may partly be mitigated by continuing improvement in confidence in Mainland European markets. However, the business continues to expect a stronger second half profit performance (excluding H1 property profits) as detailed in the "Group outlook" section of the Trading Review.
16. Post balance sheet events
On 3 August 2017 the Group completed the sale of its UK Building Plastics business for up to GBP20.3m. Associated goodwill has been impaired at 30 June 2017 to reflect the recoverable amount and the assets and liabilities are presented as held for sale within the Consolidated Balance Sheet. See Note 6 for further details. The Group is currently conducting a review of its strategy, use of capital and cost base and is undergoing a consultation exercise regarding potential headcount reductions.
17. Non-statutory information
The Group uses a variety of alternative performance measures, which are non-IFRS, to assess the performance of its operations.
The Group considers these performance measures to provide useful historical financial information to help investors evaluate the underlying performance of the business.
a) Leverage covenant - rolling 12 months
Unaudited
twelve Audited
Unaudited months year
twelve months ended ended
ended 30 30 June 31 December
June 2017 2016* 2016*
Note GBPm GBPm GBPm
-------------------------------------------------------- ----- --------------- ----------- ---------------
Operating (loss)/profit (139.2) 78.3 (91.0)
Depreciation 7 24.2 25.0 26.0
Amortisation of computer software 7 3.9 3.3 3.5
Amortisation of acquired intangibles 7 9.9 10.9 10.3
Impairment charges 3 119.7 - 110.6
Profits and losses on agreed sale or
closure of non-core businesses and associated
impairment charges 3 70.5 - 40.1
Net operating losses attributable to
businesses identified as non-core 3 6.5 - 5.8
Depreciation attributable to businesses
identified as non-core (0.7) - (0.5)
Net restructuring costs 3 14.3 7.3 13.3
Acquisition expenses and contingent consideration 3 (7.5) 14.6 (4.6)
Defined benefit pension scheme curtailment
loss 3 - 0.9 0.9
Other one-off items 3 4.0 (4.3) 5.9
Annualised EBITDA impact of acquisitions - 2.5 0.3
Covenant EBITDA 105.6 138.5 120.6
-------------------------------------------------------- ----- --------------- ----------- ---------------
* The 2016 covenant calculations have not been restated to reflect
the decision in 2017 to exit the non-core businesses of Metechno,
WeGo Austria and Building Plastics, along with the review of the Middle
East business.
Notes to the Condensed Interim Financial
Statements
17. Non-statutory information
a) Leverage covenant - rolling 12 months
30 June 30 June 31 December
2017 2016 2016
Note GBPm GBPm GBPm
-------------------------------------------------------- ----- --------------- ----------- ---------------
Reported net debt 8 166.5 232.8 259.9
Other covenant financial indebtedness 3.8 2.9 3.5
Foreign exchange adjustment* (1.3) (11.2) (6.4)
Covenant net debt 169.0 224.5 257.0
-------------------------------------------------------- ----- --------------- ----------- ---------------
* For the purpose of covenant calculations, leverage is calculated
using net debt translated at average rather than period end rates.
30 June 30 June 31 December
2017 2016 2016
Leverage (covenant net debt to covenant
EBITDA - maximum 3.0x) 1.6x 1.6x 2.1x
-------------------------------------------------------- ----- --------------- ----------- ---------------
b) Post-tax Return on Capital Employed
("ROCE") - rolling 12 months
Unaudited
Unaudited twelve Audited
twelve months months year ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
Note GBPm GBPm GBPm
-------------------------------------------------------- ----- --------------- ----------- ---------------
Operating (loss)/profit (139.2) 78.3 (91.0)
Income tax expense 4 (7.4) (16.6) (12.3)
-------------------------------------------------------- ----- --------------- ----------- ---------------
Operating (loss)/profit after tax (146.6) 61.7 (103.3)
-------------------------------------------------------- ----- --------------- ----------- ---------------
Unaudited
Unaudited twelve Audited
twelve months months year ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
Note GBPm GBPm GBPm
-------------------------------------------------------- ----- --------------- ----------- ---------------
Operating (loss)/profit (139.2) 78.3 (91.0)
Amortisation of acquired intangibles 7 9.9 10.9 10.3
Impairment charges 7 119.7 - 110.6
Profits and losses on agreed sale or
closure of non-core businesses and associated
impairment charges 3 70.5 - 40.1
Net operating losses attributable to
businesses identified as non-core 3 6.5 - 1.5
Net restructuring costs 3 14.3 7.3 13.3
Acquisition expenses and contingent
consideration 3 (7.5) 14.6 (4.6)
Defined benefit pension scheme curtailment
loss 3 - 0.9 0.9
Other one-off items 3 4.0 (4.3) 5.9
-------------------------------------------------------- ----- --------------- ----------- ---------------
Underlying operating profit 78.2 107.7 87.0
Income tax expense (7.4) (16.6) (12.3)
Tax credit associated with Other items (9.7) (3.6) (6.5)
-------------------------------------------------------- ----- --------------- ----------- ---------------
Underlying operating profit after tax 61.1 87.5 68.2
-------------------------------------------------------- ----- --------------- ----------- ---------------
Notes to the Condensed
Interim Financial
Statements
17. Non-statutory
information (Continued)
b) Post-tax Return on Capital Employed ("ROCE") - rolling
12 months (Continued)
Unaudited twelve months Unaudited twelve months Audited year ended 31
ended 30 June 2017 ended 30 June 2016 December 2016
Note GBPm GBPm GBPm
-------------------------- ----- ------------------------- -------------------------- --------------------------
Opening reported net
assets 684.5 628.2 649.6
Opening reported net debt 8 232.8 195.4 235.9
-------------------------- ----- ------------------------- -------------------------- --------------------------
Opening capital employed 917.3 823.6 885.5
Computer software
impairment charges* (14.7) (14.7) (14.7)
Goodwill and intangible
impairment charges* (110.6) (110.6) (110.6)
Profits and losses on
agreed sale or closure
of non-core businesses
and associated
impairment
charges* (70.5) (70.5) (70.5)
-------------------------- ----- ------------------------- -------------------------- --------------------------
Adjusted opening capital
employed 721.5 627.8 689.7
-------------------------- ----- ------------------------- -------------------------- --------------------------
Year end reported net
assets 539.6 649.6 n/a
Year end reported net
debt 8 259.9 235.9 n/a
-------------------------- ----- ------------------------- -------------------------- --------------------------
Year end capital employed 799.5 885.5 n/a
Computer software
impairment charges* 7 (6.8) (14.7) n/a
Goodwill and intangible
impairment charges* 3 - (110.6) n/a
Profits and losses on
agreed sale or closure
of non-core businesses
and associated
impairment
charges* 3 (30.4) (70.5) n/a
-------------------------- ----- ------------------------- -------------------------- --------------------------
Adjusted year end capital
employed 762.3 689.7 n/a
-------------------------- ----- ------------------------- -------------------------- --------------------------
Closing reported net
assets 523.4 684.5 539.6
Closing reported net debt 8 166.5 232.8 259.9
Closing capital employed 689.9 917.3 799.5
Computer software
impairment charges* - (14.7) (6.8)
Goodwill and intangible
impairment charges* - (110.6) -
Profits and losses on
agreed sale or closure
of non-core businesses
and associated
impairment
charges* - (70.5) (30.4)
-------------------------- ----- ------------------------- -------------------------- --------------------------
Adjusted closing capital
employed 689.9 721.5 762.3
Average capital employed 802.2 875.5 842.5
-------------------------- ----- ------------------------- -------------------------- --------------------------
Adjusted average capital
employed* 724.6 679.7 726.0
-------------------------- ----- ------------------------- -------------------------- --------------------------
* Capital employed has been adjusted to take into account the normalised impact of the goodwill
and intangible impairment charges, the profits and losses on agreed sale or closure of non-core
businesses and associated impairment charges and computer software impairment charges.
Unaudited twelve months Unaudited twelve months Audited year ended 31
ended 30 June 2017 ended 30 June 2016 December 2016
Unadjusted ROCE
(operating profit after
tax to average capital
employed) (18.3)% 7.0% (12.3)%
-------------------------- ----- ------------------------- -------------------------- --------------------------
ROCE (underlying
operating profit after
tax to adjusted average
capital employed) 8.4% 12.9% 9.4%
-------------------------- ----- ------------------------- -------------------------- --------------------------
Notes to the Condensed Interim Financial
Statements
17. Non-statutory information
(c) Underlying profit before tax excluding
property profits
Unaudited Unaudited Audited
six months six months year ended
ended 30 ended 30 31 December
June 2017 June 2016 2016
Note GBPm GBPm GBPm
------------------------------------------------ ----- ------------ ------------ -------------
(Loss)/profit before tax (10.7) 38.4 (106.3)
Amortisation of acquired intangibles 3 4.7 5.1 10.3
Impairment charges 3 9.1 - 110.6
Profits and losses on agreed sale or
closure of non-core businesses and associated
impairment charges 3 30.4 - 40.1
Net operating losses attributable to
businesses identified as non-core 3 5.2 0.2 1.5
Net restructuring costs 3 3.4 2.4 13.3
Acquisition expenses and contingent
consideration 3 0.5 3.4 (4.6)
Defined benefit pension scheme curtailment
loss 3 - 0.9 0.9
Other one-off items 3 (5.4) (3.5) 5.9
Net fair value losses on derivative
financial instruments 3 0.8 0.9 1.9
Unwinding of provision discounting 3 0.3 0.1 (0.4)
------------------------------------------------ ----- ------------ ------------ -------------
Underlying profit before tax 38.3 47.9 73.2
Underlying property profits (8.2) (2.5) (2.5)
------------------------------------------------ ----- ------------ ------------ -------------
Underlying profit before tax excluding
property profits 30.1 45.4 70.7
------------------------------------------------ ----- ------------ ------------ -------------
(d) Working capital to
sales ratio
Unaudited twelve months Unaudited twelve months Audited year ended 31
ended 30 June 2017 ended 30 June 2016 December 2016
GBPm GBPm GBPm
--------------------------- ----- -------------------------- -------------------------- --------------------------
Current:
Inventories 258.7 263.3 250.6
Trade and other
receivables 548.3 573.4 516.1
Trade and other payables (562.5) (517.1) (440.6)
Provisions (14.3) (12.5) (14.5)
Non-current:
Other payables (3.9) (5.1) (5.5)
Provisions (18.4) (29.8) (22.4)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Reported working capital 207.9 272.2 283.7
--------------------------- ----- -------------------------- -------------------------- --------------------------
Working capital for
non-core businesses (14.0) (42.3) (29.0)
Foreign exchange
adjustment* (3.1) 6.2 1.7
--------------------------- ----- -------------------------- -------------------------- --------------------------
Adjusted working capital 190.8 236.1 256.4
--------------------------- ----- -------------------------- -------------------------- --------------------------
* Working capital is
translated at average
rather than period end
rates.
Unaudited twelve months Unaudited twelve months Audited year ended 31
ended 30 June 2017 ended 30 June 2016 December 2016
Note GBPm GBPm GBPm
--------------------------- ----- -------------------------- -------------------------- --------------------------
Reported revenue 2 2,909.2 2,698.0 2,845.2
Sales attributable to
businesses identified as
non-core (184.7) (222.5) (229.7)
Pre-acquisition revenue of
the current year
acquisitions from the
beginning of the period
to the acquisition dates - 58.1 4.9
Foreign exchange
adjustment 6.1 183.2 70.9
--------------------------- ----- -------------------------- -------------------------- --------------------------
Adjusted revenue 2,730.6 2,716.8 2,691.3
--------------------------- ----- -------------------------- -------------------------- --------------------------
Unaudited twelve months Unaudited twelve months Audited year ended 31
ended 30 June 2017 ended 30 June 2016 December 2016
--------------------------- ----- -------------------------- -------------------------- --------------------------
Reported working capital
to reported revenue 7.1% 10.1% 10.0%
--------------------------- ----- -------------------------- -------------------------- --------------------------
Like-for-like working
capital to sales ratio
(adjusted working capital
to adjusted revenue) 7.0% 8.7% 9.5%
--------------------------- ----- -------------------------- -------------------------- --------------------------
Notes to the Condensed
Interim Financial
Statements
17. Non-statutory
information
e) Net capital
expenditure
Net maintenance capital Unaudited six months Unaudited six months Audited year ended 31
expenditure ended 30 June 2017 ended 30 June 2016 December 2016
Note GBPm GBPm GBPm
--------------------------- ----- -------------------------- -------------------------- --------------------------
Depreciation 7 (11.3) (13.1) (26.0)
Amortisation of computer
software 7 (2.1) (1.7) (3.5)
Proceeds from sale of
property, plant and
equipment 28.7 25.1 39.5
Less:
One-off sale of property,
plant and equipment (24.0) (22.9) (33.6)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Net maintenance capital
expenditure (8.7) (12.6) (23.6)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Investment capital Unaudited six months Unaudited six months Audited year ended 31
expenditure ended 30 June 2017 ended 30 June 2016 December 2016
GBPm GBPm GBPm
--------------------------- ----- -------------------------- -------------------------- --------------------------
Property, plant and
equipment additions (11.1) (17.3) (33.7)
Computer software
additions (2.4) (2.7) (6.2)
Proceeds from sale of
property, plant and
equipment 28.7 25.1 39.5
Less:
Net maintenance capital
expenditure 8.7 12.6 23.6
One-off sale of property,
plant and equipment (24.0) (22.9) (33.6)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Investment capital
expenditure (0.1) (5.2) (10.4)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Where capital expenditure is equal to or less than depreciation (including amortisation of
computer software), all such capital expenditure is assumed to be maintenance capital expenditure.
To the extent that net capital expenditure exceeds depreciation, the balance is considered
to be investment capital expenditure.
f) Cash inflow from
trading
Unaudited six months Unaudited six months Audited year ended 31
ended 30 June 2017 ended 30 June 2016 December 2016
Note GBPm GBPm GBPm
--------------------------- ----- -------------------------- -------------------------- --------------------------
Cash generated from
operating activities 96.3 60.2 75.8
Add back:
Working capital movements 7 (55.0) (0.3) 23.1
Cash inflow from trading 41.3 59.9 98.9
--------------------------- ----- -------------------------- -------------------------- --------------------------
Notes to the Condensed Interim Financial Statements
17. Non-statutory information
g) Like-for-like sales
Like-for-like sales is calculated on a constant currency basis, and represents the growth
in the Group's sales per day excluding any acquisitions or disposals completed or agreed in
the current and prior year. Sales are not adjusted for organic branch openings and closures.
SIG SIG Offsite UK & SIG Air Mainland
Distribution Exteriors Construction Other* UK Ireland Ireland France Germany Poland Benelux Handling Europe Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------- ---------- ------------- ------- ------- ----------- -------- ---------- ---------- ----------- ----------- ----------- ---------- --------
Total revenue
for period to
30 June 2017 399.6 229.4 14.5 26.0 669.5 46.0 715.5 324.3 208.9 63.6 51.4 75.5 723.7 1,439.2
Revenue
attributable
to non-core
businesses - (29.0) (1.3) (26.0) (56.3) - (56.3) - (7.5) - - - (7.5) (63.8)
--------------- ------------- ---------- ------------- ------- ------- ----------- -------- ---------- ---------- ----------- ----------- ----------- ---------- --------
Continuing
revenue for
period to 30
June 2017 399.6 200.4 13.2 - 613.2 46.0 659.2 324.3 201.4 63.6 51.4 75.5 716.2 1,375.4
Total revenue
for period to
30 June 2016 389.7 230.1 14.3 64.9 699.0 39.9 738.9 285.0 193.4 51.7 48.9 57.3 636.3 1,375.2
Revenue
attributable
to non-core
businesses - (30.4) (0.7) (64.9) (96.0) - (96.0) - (12.8) - - - (12.8) (108.8)
--------------- ------------- ---------- ------------- ------- ------- ----------- -------- ---------- ---------- ----------- ----------- ----------- ---------- --------
Continuing
revenue for
period to 30
June 2016 389.7 199.7 13.6 - 603.0 39.9 642.9 285.0 180.6 51.7 48.9 57.3 623.5 1,266.4
% change year
on year:
Continuing
revenue 2.5% 0.4% (2.9)% n/a 1.7% 15.3% 2.5% 13.8% 11.5% 23.0% 5.1% 31.8% 14.9% 8.6%
Impact of
currency - - - n/a - (10.3)% (0.6)% (9.9)% (9.7)% (13.4)% (9.1)% (11.5)% (10.3)% (5.4)%
Impact of
acquisitions (0.9)% (0.1)% - n/a (0.6)% (0.4)% (0.6)% 0.5% - - - (7.4)% (0.4)% (0.5)%
Impact of
working days - - - n/a - - - 0.6% - - (0.8)% (0.9)% 0.1% 0.1%
--------------- ------------- ---------- ------------- ------- ------- ----------- -------- ---------- ---------- ----------- ----------- ----------- ---------- --------
Like-for-like
sales 1.6% 0.3% (2.9)% n/a 1.1% 4.6% 1.3% 5.0% 1.8% 9.6% (4.8)% 12.0% 4.3% 2.8%
--------------- ------------- ---------- ------------- ------- ------- ----------- -------- ---------- ---------- ----------- ----------- ----------- ---------- --------
* Other represents revenue from Carpet & Flooring, Middle East and Drywall Qatar (Note 6).
Notes to the Condensed Interim Financial Statements
17. Non-statutory information
h) Gross margin
Gross margin is the ratio of gross profit to revenue.
SIG SIG Offsite UK & SIG Air Mainland
Distribution Exteriors Construction Other* UK Ireland Ireland France Germany Poland Benelux Handling Europe Group
% % % % % % % % % % % % % %
-------- ---------
Statutory
gross
margin
for the
period
ended 30
June 2017 24.5% 29.7% 1.4% 12.2% 25.3% 25.8% 25.4% 27.6% 26.4% 20.0% 25.8% 36.8% 27.4% 26.4%
Impact of
non-core
businesses - (0.4)% 20.6% (12.2)% 0.7% - 0.6% - 0.2% - - - 0.1% 0.4%
-------- ---------
Underlying
gross
margin for
the period
ended 30
June 2017 24.5% 29.3% 22.0% n/a 26.0% 25.8% 26.0% 27.6% 26.6% 20.0% 25.8% 36.8% 27.5% 26.8%
-------- ---------
Statutory
gross
margin
for the
period
ended 30
June 2016 26.3% 29.9% 13.9% 21.0% 26.7% 25.9% 26.7% 27.9% 26.2% 20.3% 25.2% 36.8% 27.4% 27.0%
Impact of
non-core
businesses - (0.4)% (0.8)% (21.0)% 0.4% - 0.3% - 0.3% - - - 0.1% 0.2%
-------- ---------
Underlying
gross
margin for
the period
ended 30
June 2016 26.3% 29.5% 13.1% n/a 27.1% 25.9% 27.0% 27.9% 26.5% 20.3% 25.2% 36.8% 27.5% 27.2%
-------- ---------
* Other represents gross margin from Carpet & Flooring, Middle East and Drywall Qatar (Note 6).
INDEPENT REVIEW REPORT TO SIG PLC
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Cash Flow Statement and related Notes 1 to 17. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
7 August 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKODNCBKDNFK
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August 08, 2017 02:00 ET (06:00 GMT)
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