24th Jun 2005 07:01
SIG PLC24 June 2005 TRADING STATEMENT ACQUISITION OF LS GROUP LIMITED 24 JUNE 2005 SIG plc, the leading supplier of insulation, roofing and commercial interiorsproducts, issues the following statement regarding its acquisition of LS GroupLimited, together with its regular trading update for the 6 months to 30 June2005 in advance of the interim results which will be announced on 14 September2005. • Acquisition of commercial interiors manufacturer LS Group Limited for an initial consideration of £45.3m • SIG trading performance for the half year ahead of expectations with profit before tax and amortisation of goodwill expected to be more than 30% higher than the prior year comparable period Acquisition SIG has acquired the privately owned LS Group Limited (LS), as an expansion ofits existing commercial interiors activities in the UK. LS is the UK's leading producer of high-performance purpose-made interior doorsets, chiefly for non residential buildings, including offices, hotels,hospitals, schools and public buildings. It operates from three sites,Barnstaple, Langley Mill and Sheffield, and employs 560 people. In the year ended 2 April 2005, LS achieved sales of £37m, operating profitbefore interest and goodwill of £5.5m, profit before tax of £3.7m and had netassets of £15.3m at that date. SIG is paying £45.3m (in cash out of existingresources) including assumed borrowings, for 93.5% of the ordinary sharecapital. Existing LS management are retaining the remaining 6.5% of the equity,which will be purchased at a later date, at a price subject to a minimum of£1.7m and a maximum of £5.2m, dependent upon future profit performance. David Williams, Chief Executive of SIG plc commented "LS provides an importantextension to our existing commercial interiors product range. It concentrates onthe growth market of specialist door sets, especially where fire, acoustic andhigh security performance requirements exist. LS makes an excellent strategic fit, and there is a high level of commonalitywith our existing activities, including customers, projects and productionprocesses. SIG has been a successful producer of specialist doors for over 10years and the acquisition of LS takes SIG firmly into the top of the firstdivision, and strengthens our position and our product range in the growingnon-residential construction sector. We look forward to working with theexisting management to ensure the continued successful development of thebusiness." Trading Update Continued like for like sales growth together with the added impact of recentacquisitions will enable the Group to report a particularly strong tradingperformance, ahead of expectations for the first half of 2005. Profit before taxand amortisation of goodwill is expected to be in excess of 30% higher than the£30.8 million reported for the first half of 2004. Note: All of the financial figures for 2004 and 2005 are on a UK GAAP basis. Theinterim results will be prepared under IFRS and will be released on 14 September2005. An analysis of the key impacts of IFRS was included on page 27 of the SIGplc Statutory Accounts for the year ended 31 December 2004. Sales for the half year are expected to exceed £760m, representing an increaseof approximately £111m (17%) on the £649m reported for the first 6 months of2004. Like for like sales growth, i.e. after eliminating the impact of acquisitionsmade since 1 January 2004, is approximately 10%. Whilst there has been somemodest price inflation, as anticipated, the impact on profits has been far lessmarked than in 2004. The impact of foreign currency exchange rate movements onprofits compared with the first half of 2004 is minimal. The operating profit margin has increased in all three geographic reportingregions in the first 6 months of 2005, compared with the corresponding period in2004. UK and Republic of Ireland (c. 65% of Group sales) Sales in our largest geographic region have increased by approximately 20% inthe first 6 months of 2005, to in excess of £510m (2004: £423m). The like for like sales increase is approximately 10%. Against the background of strong levels of activity and demand from theconstruction and building industries, like for like sales grew in all businessstreams. Within the overall mix of market demand, new build activity levels inthe non-residential sectors have been particularly good and this has benefitedthe Group during the period. Government spending on health and education hasboosted demand. Insulation, roofing, commercial interiors and safety and construction productsall made good progress compared with prior year. Mainland Europe (c. 30% of Group sales) Sales overall in Mainland Europe are up by approximately 10% in Sterling, and byin excess of 6% on a like for like constant currency basis. Despite weak demand in Germany, sales increased, including the impact of the newbranches opened in the second half of 2004. In France sales grew strongly in generally good market conditions, whilst inPoland our sales continued to grow despite weaker market demand than the sameprior year period. In Benelux, market conditions improved slightly compared with 2004, and saleshave increased. USA (c. 5% of Group sales) Against the background of some improvement in market demand, sales are ahead ofthe prior year on a like for like constant currency basis, and in Sterling. Theexcellent progress made in 2004 throughout the US operations has continued into2005. Acquisitions Including the acquisition of LS announced today, so far this year we havecompleted 9 acquisitions, with combined annualised sales of £72m. Total combined consideration including debt acquired to date for these 9acquisitions is £60.3m. Outlook The trading performance in the second half of 2004 was exceptionally strong andwas boosted by acquisitions made in that year, and by the unseasonably strongtrading in November and December. For these reasons, year on year comparatorsbecome far more demanding in the second half year than in the first half. Conditions in the main markets in which the Group operates are not expected tobe materially different in the second half of the year compared with the firstsix months. On this basis, and taking into consideration the anticipated impact from therecently completed acquisitions, the Board is confident that further progresswill be made. Results for the full year are expected to be in excess of thecurrent market consensus expectations for 2005. Analyst Conference Call There will be an Analyst conference call at 8.15 am today. The dial in number is020 7162 0091 and the password is SIG. Enquiries:David Williams Chief Executive SIG plc 0114 285 6300Gareth Davies Finance Director SIG plc 0114 285 6300Faeth Birch / Gordon Simpson Finsbury 020 7251 3801 An interview with David Williams, Chief Executive, will be available today invideo, audio and transcript at www.sigplc.co.uk and on www.cantos.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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