13th Mar 2008 07:01
SIG PLC13 March 2008 P R E S S R E L E A S E 13 March 2008 PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 SIG plc is the leading specialist supplier of insulation, roofing, commercialinteriors and specialist construction products in Europe. • SIG reports record results for 2007, with strong like for like sales and operating profit growth in the UK and Ireland and Mainland Europe • Record sales growth of 32.0%, taking total sales to £2,455.2m (2006:£1,859.8m). Strong like for like+ sales growth of 10.9% in sterling o UK and Ireland sales increased 21.5% to £1,523.8m (2006: £1,254.3m), driven by buoyant non residential construction activity and continued expansion by SIG - 39 new trading sites added, product range extended o Mainland Europe sales increased 53.8% to £931.4m (2006: £605.5m), driven by significant expansion in France, Germany, Poland, Benelux and entry into two new countries - Czech Republic and Slovakia, with 122 trading sites added in the year o Sales and profits ahead in all four key business streams - of Insulation, Roofing, Commercial Interiors and Specialist Construction and Safety Products • Total underlying* operating profit increased 31.3% to £159.4m (2006: £121.4m) o UK and Ireland underlying operating profit increased 21.4% to £121.3m (2006: £99.9m), with underlying operating profit margin held at 8.0% o Mainland Europe underlying operating profit increased 66.3% to £45.9m (2006: £27.6m), with underlying operating profit margin increased to 4.9% (2006:4.6%) • Underlying profit before tax increased 29.5% to £140.1m (2006: £108.2m). Profit before tax increased 21.0% to £124.3m (2006: £102.7m) • Underlying basic earnings per share increased 22.0% to 74.8p (2006: 61.3p). Basic earnings per share increased 14.1% to 66.3p (2006: 58.1p) • Dividend per share for the year increased 30.2% to 26.7p (2006: 20.5p), reflecting the Board's confidence in the prospects of the business • SIG also continues to achieve a record value and volume of acquisitions as it seeks to supplement its strong organic expansion o SIG acquired 27 companies for a consideration of £323m, including assumed debt, which together contributed £217m of sales in 2007 o To date in 2008, SIG has completed 8 acquisitions for a consideration of £32m, net of cash acquired, with combined annualised sales of c.£50m Chairman's comments and prospects: "The Group's sales are more heavily weighted towards non-residentialconstruction, both in the UK and Ireland and in Mainland Europe, and it isbelieved that the substantial pipeline of work in progress of both public andprivately funded construction programmes will continue to provide the Group withattractive opportunities in its four main product sectors. In 2007, the Group expanded its operations and trading activities significantlyand these dynamics provide a strong platform coming into 2008. Trading in 2008has begun well and the Board believes that the Group will continue its trackrecord of outperforming across its markets. The Board is confident of furtherprogress in 2008 and beyond." Full results information is available on www.sigplc.co.uk. An interview withDavid Williams, Chief Executive, is now available on SIG's website andwww.cantos.com Enquiries: David Williams, Chief Executive SIG plc today 020 7251 3801Gareth Davies, Finance Director thereafter 0114 285 6300Faeth Birch/Gordon Simpson Finsbury 020 7251 3801 + Like for like sales excludes the impact of acquisitions completed after 1January 2006 * Underlying is before the amortisation of acquired intangibles and hedgeineffectiveness All numbers stated above are on a continuing basis, i.e. excluding the USAbusiness sold in November 2006 CHAIRMAN'S STATEMENT 2007 was an excellent year for the Company, marked by strong organic growth andan unprecedented level of acquisition activity. The Company increased thebreadth of its trading activities both geographically and by extending the rangeof products and services to customers throughout the UK and Ireland and inMainland Europe. Highlights of the year are •record sales growth •record profits and earnings per share •strong like for like growth in both operating regions •record increase in the number of trading sites •record value and volume of acquisitions •significant broadening of products and services sold to customers Results For the year ended 31 December 2007, compared with the corresponding period in2006, excluding the figures for the USA business, which was sold in November2006; Sales Total sales increased by £595.4m (32.0%) to £2,455.2m (2006: £1,859.8m). Like for like* sales growth was 10.9% in Sterling. Foreign exchange rate movements on a year-on-year basis had minimal impact,together adding £11.4m to sales (and £0.5m to operating profits). Profits Total underlying** operating profit increased by £38.0m (31.3%) to £159.4m(2006: £121.4m). Underlying net finance costs increased by £6.1m to £19.3m (2006:£13.2m). Underlying profit before tax increased by £31.9m (29.5%) to £140.1m (2006:£108.2m). Amortisation of acquired intangibles increased by £10.3m to £17.2m (2006:£6.9m). A credit of £1.4m has arisen in relation to hedge ineffectiveness (2006:£1.4m). Profit before tax increased by £21.6m (21.0%) to £124.3m (2006: £102.7m). Margins The underlying operating profit margin was held at 8.0% in the UK and Irelandand increased to 4.9% from 4.6% in 2006 in Mainland Europe. After increasedcosts associated with acquisitions and business development, the Groupunderlying operating profit margin was maintained at 6.5% (2006: 6.5%). Earnings and Dividends The underlying basic earnings per share increased by 13.5p (22.0%) to 74.8p(2006: 61.3p). Basic earnings per share increased by 8.2p (14.1%) to 66.3p (2006: 58.1p). A final dividend of 18.7p is proposed, subject to shareholder approval whichwould make a total dividend for the year of 26.7p, an increase of 30.2%,demonstrating the Board's confidence in the prospects of the business. Finances Cash flow from trading strengthened further in 2007. Continued investment incustomer service through investment in stock, trading sites and deliverycapability, together with record acquisition spend, resulted in increasedborrowings at the year end, with gearing at 75% (2006: 65%). During the year the Company placed 11.4m new ordinary shares at 1,320p each,raising £147m after commissions and expenses. In addition, a further £100m ofcommitted facilities were obtained during the year with committed facilitiestotalling £600m at the end of the year. The Group has a sound financial position with prudent interest cover of 8.2x(2006: 9.2x). Acquisitions The strategy of targeting acquisitions as a means of supplementing the ongoingorganic expansion of the Group continued to be successfully executed during2007. A total of 27 companies were acquired, for a total consideration of £323m,including assumed debt. The combined sales of those acquisitions on anannualised basis is £440m, split £300m in Mainland Europe and £140m in the UKand Ireland. During the calendar year 2007, £217m of sales from these 27acquisitions impacted on the Group results. So far in 2008 (to 13th March), 8 acquisitions have been completed, for a totalconsideration net of cash acquired of £32m. Combined annualised sales is c.£50m,split as follows: - UK and Ireland - 7 deals, £46m annualised sales, 21 trading sites added in Insulation, Commercial Interiors, Roofing and Specialist Construction and Safety Products; - Mainland Europe,- 1 deal, 1 trading site added, £4m annualised sales in Commercial Interiors Work is ongoing on the healthy pipeline of further opportunities. Board It was announced on 10 January 2008 that David Williams intends to retire asChief Executive on 30 June 2008, and will leave the Company on that date. Following a comprehensive search conducted by external consultants for areplacement, Chris Davies, who has been Managing Director of SIG Mainland Europesince 2001, was appointed Deputy Chief Executive with effect from 10 January2008 and will take over as Chief Executive on 1 July 2008. During the hand-over period in the first six months of 2008, David is workingclosely with Chris to ensure continuity and a smooth transition. The search for a replacement for Chris as Managing Director of SIG MainlandEurope is well underway. I would like to take this opportunity to thank David for the valuablecontribution he has made to the Group over the past twenty four years,particularly during his time as Chief Executive from January 2002. The excellentposition and strength of the Group today owes much to his leadership. Employees On behalf of the Board I wish to thank all our employees throughout the Groupfor their efforts in enabling the Company to outperform market conditions and indriving the continued successful expansion of the business. Prospects The Group's sales are more heavily weighted towards non-residentialconstruction, both in the UK and Ireland and in Mainland Europe, and it isbelieved that the substantial pipeline of work in progress of both public andprivately funded construction programmes will continue to provide the Group withattractive opportunities in its four main product sectors. Insulation and related products is the Group's largest product sector and demandis expected to continue to increase at a faster rate than overall constructionactivity in the UK and Ireland and Mainland Europe, both across the newconstruction and refurbishment markets. This will continue to be driven by arange of factors including concern for the environment, rising energy costs, newlegislation seeking to limit energy consumption, new building regulations, andgrant schemes to improve energy efficiency in existing residential properties.The Group is continuing to invest to ensure that it benefits from this expectedgrowth in demand going forward, and capitalises on its market leading position. On a broader basis across the Group, a significant range of expansionopportunities, both organic and acquisition, are being actively pursued. Thenumber of individual trading sites has increased substantially over recent yearsthroughout the operating regions, and this programme of expanding marketcoverage is planned to continue. In 2007, the Group expanded its operations and trading activities significantlyand these dynamics provide a strong platform coming into 2008. Trading in 2008has begun well and the Board believes that the Group will continue its trackrecord of outperforming across its markets. The Board is confident of furtherprogress in 2008 and beyond. Definitions * - 'Like for like' is defined as the business excluding the impact ofacquisitions made since 1 January 2006. ** - 'Underlying' is before the amortisation of acquired intangibles and hedgeineffectiveness. Chief Executive's Review of Trading Performance The Group had a very successful year in 2007, both in respect of the growth insales and profits from its core operations in its geographic regions, and interms of the expansion activities and new operations which were added during theyear. The clear strategy of seeking expansion opportunities within the UK and Irelandand Mainland Europe, in specialist products and markets related to the building,construction and key industrial sectors, was aggressively pursued and continuesto fuel both geographic and product group development of the Group's activities. Examples of this continued strategic expansion during 2007 are as follows: • Acquired a total of 27 businesses, together adding annualised sales of £440m, representing additional sales of over 20% on a full-year basis over the 2006 sales revenue • Increased the total number of trading sites within the Group by 161 during the year, to 779 at 31 December 2007 (618 at 31 December 2006) • Acquired a trading site in Dubai and one in Spain, both as part of a UK insulation acquisition • Began trading in two additional countries - Czech Republic and Slovakia (insulation and commercial interiors) • Expanded the specialist door-set product range into all-metal performance doors • Acquired the leading specialist supplier of roofing materials in France • Launched a successful range of innovative wall systems for the healthcare market Trading Highlights All figures are excluding the USA business, which was sold in November 2006. Theterm "underlying" in relation to the operating profit and operating profitmargin is defined as being before the amortisation of acquired intangibles. UK and Ireland (62% of total sales) •Sales increased by £269.5m (21.5%) to £1,523.8m (2006: £1,254.3m) •Like for like sales increased by £120.0m (9.8%) •Underlying operating profit increased by £21.4m (21.4%) to £121.3m (2006: £99.9m) •The underlying operating profit margin was maintained at 8.0% (2006: 8.0%) €39 trading sites were added in the year, taking the total at 31 December 2007 to 461 (31 December 2006: 422) Overall construction and building activity grew in 2007 over 2006 in the UK, butdeclined in Ireland, especially in new residential building. Whilst residentialnew construction and RM&I weakened in the UK in the latter part of the year,work on non-residential building projects was strong throughout the year. Sales of insulation and related products in the UK and Ireland increased by12.9% in total, 8.3% like for like, as overall demand increased, partly drivenby the new higher thermal performance standards required for new buildings inthe UK. In Ireland, reduced construction activity caused a reduction in demandfor all products, including insulation. Increased manufacturing capacity andoutput of certain products created some oversupply, which reduced market pricesof a number of insulation products. In the specific market for insulation upgrading of residential properties, wherethe Group is both an insulation supplier and in some situations an installer ofinsulation into the roof and walls of existing properties, which have little orno insulation from when they were originally built, there was a reduction indemand compared with previous years. As previously reported, this was due to atiming gap in the flow of grant funds under the Government Energy EfficiencyCommitment. A new scheme, now called CERT (Carbon Emissions Reduction Target)begins in April 2008 and is expected to generate higher levels of insulationupgrading work over the next three years. Demand for specialist high temperature insulation materials, which are used in awide range of industrial applications outside the building and constructionindustry, including power plant, petrochemical and gas installations, metalprocessing and other industries, increased during the year and the Companyperformed strongly in this sector, where it is the clear market leader. The number of trading sites increased by 4 to 75 at the end of December 2007. The Commercial Interiors division had an excellent year, benefiting from strongmarket demand, increases to the product range and several acquisitions. Salesgrew by 21.4% in total, 12.3% like for like including some modest priceinflation. Products were supplied to a wide range of new and refurbishmentprojects in both the public and private non-residential building sectors. Theseincluded hospitals, health centres, schools, universities, airports and othertransport related facilities, offices, retail developments, cinemas, hotels andprisons. In addition to marketing a wider selection of ceiling and washroom products,all-metal high performance doorsets and floorcoverings were added to the rangeto complement our offering to the non-residential sector. This ensures that SIGmaintains its position as a leading supplier by offering the most comprehensiverange available. The number of trading sites increased by 10 to 55 at the end of December 2007. Against the background of improved market demand and sales price inflation ofc.4% overall in the sector, the Roofing division traded strongly, with sales upover 18.1% in total, 8.2% like for like, compared with 2006. The Decent Homes programme, which had been quite slow in 2006, did pick up andgenerated increased demand for product for the on-going work of re-roofing olderresidential properties. Storm damage in various parts of the UK mid year alsoincreased the volume of repair and renovation work in the second half of 2007. Significant sales growth was achieved in new products, particularly in relationto the growing trend towards low maintenance roofline, rainwater and otherexternal building products, which are increasingly used in new construction aswell as in repair and maintenance. The number of trading sites increased by 15 to 278 at the end of December 2007. The Specialist Construction and Safety Products division had an excellent yearwith total sales up by 66.1% in total, 14.8% like for like on 2006, driven bystrong underlying performance, continued expansion of the product range and theimpact of acquisitions. Continued robust market conditions in major constructionand infrastructure projects created good levels of demand. There was somevolatility in some product pricing, for example steel and chemicals, but pricingoverall increased year on year by c.3.5%. The number of trading sites increased by 10 to 53 at the end of December 2007. Mainland Europe (38% of total sales) • Sales increased by £325.9m (53.8%) to £931.4m (2006: £605.5m) • Like for like sales on a constant currency basis increased by 12.3% • Underlying operating profit increased by £18.3m (66.3%) to £45.9m (2006: £27.6m) • Underlying operating profit margin increased to 4.9% (2006: 4.6%) • Sales and operating profits increased on an underlying like for like basis in each country, as well as on a total basis • Significant expansion of geographic coverage, with a total of 122 trading sites added during the year, including 21 in two new countries for SIG, Czech Republic and Slovakia, taking the total to 318 at 31 December 2007 (31 December 2006: 196). In Germany and Austria (50% of sales in Mainland Europe) sales were increasedsubstantially, up 21.2% in local currency and 8.0% like for like in localcurrency. Overall construction activity grew on a year on year basis. The rateof growth compared with 2006 was skewed towards the first half year, due to theexceptionally weak market activity in H1 2006 as a result of extreme adverseweather conditions. The core insulation and commercial interiors business made good progress, andthe roofing operations in Germany, which commenced with the acquisition of aregional business with 12 trading sites in July 2006, was expanded during theyear to a total of 18 trading sites as at 31 December 2007. The growth in demand for specialist high temperature insulation materialsincreased, partly as a result of investment in Germany in power generationfacilities, and this part of our operations traded strongly. Price inflationoverall in Germany and Austria is estimated to have been c.3% in the year. The number of trading sites increased by 6 to 82 at the end of December 2007 (31December 2006: 76). In France (29% of sales in Mainland Europe) the core insulation and commercialinteriors operations traded very strongly, contributing to total sales growth in2007 of 104.4% in local currency, including the contribution from the largespecialist roofing supplies business (called Lariviere) which was acquired on 29June 2007. This is the largest acquisition made by SIG and the retention ofcustomers and staff has been extremely high. The business has performed wellsince joining the SIG Group, and is continuing the strategy of geographicexpansion throughout France. Since the date of acquisition, 6 trading sites havebeen added, taking the total to 89 as at 13 March 2008. Overall market demand was reasonably good in France and price inflation averaged3% across the product range. Like for like sales were increased by 15.4% inlocal currency. The number of trading sites increased by 91 to 142 at the end of December 2007(31 December 2006: 51). In Poland and Central Europe (15% of sales in Mainland Europe), total salesincreased by 163%, including the substantial business acquired in Poland inOctober 2006, and subsequent acquisitions in Poland, Slovakia and Czech Republicduring 2007. Market demand for building products grew during the year, as reconstruction andeconomic resurgence continues. The core business in Poland, which chiefly sells insulation and commercialinteriors products, traded very strongly with sales up 35.6% like for like over2006 in local currency. Prices were volatile throughout the year in someproducts, with sales price inflation averaging c.5% overall. The number of trading sites increased by 24 to 83 at the end of December 2007(31 December 2006: 59). Sales in Benelux (6% of total sales in Mainland Europe) grew strongly, up 38.3%in total, 15.8% like for like, both in local currency. Consistent with SIG'sother Mainland European businesses, the core insulation and commercial interiorsoperations performed strongly against the background of good market conditions.Demand from both building and industry (insulation) increased and priceinflation is estimated to have been c.3.5% averaged across the product rangeoverall. The number of trading sites increased by 1 to 11 at the end of December 2007 (31December 2006: 10). Acquisitions A record 27 companies were acquired during 2007, for a total considerationincluding assumed debt of £323m. Combined annualised sales of these acquiredbusinesses is £440m, of which £217m impacted on 2007. The geographic split of the £440m annualised sales is £300m Mainland Europe,£140m UK and Ireland. By market sector, the spread of businesses acquired wasvery wide and added weight to each of our existing business streams, as shown bythe table below. Looking at the acquisitions from a different perspective, they can becategorised as either 'bolt-on', ie adding to an existing position in a productrange in any one country, or 'platform', where we are creating a new position ina product group in a country for the first time, from which we would then planto expand our position and grow sales and profits going forward. The 'platform' acquisitions in 2007 are as follows: • Number one specialist distributor in France of roofing materials • Leading UK supplier of non-residential flooring materials • Insulation and commercial interiors supplier in Slovakia • Insulation and commercial interiors supplier in Czech Republic Our strategy is to add to each of these initial acquired positions both byorganic expansion of their product range and geographic coverage, and by makingfurther 'bolt-on' acquisitions to accelerate the rate and pace of expansion. During the year we expanded the team of in-house professionals who work on theacquisition search, selection and execution programme. At the end of December2007 we have dedicated specialists located throughout Mainland Europe and in theUK and Ireland. The post-acquisition action plans are tailor-made for each acquisition andinvolve Finance, HR, IT and Commercial Management. The integration process witheach of the 2007 acquisitions is progressing well. 2007 Acquisitions - Product Impact UK and Ireland Mainland EuropeInsulation x xCommercial Interiors x xRoofing and External Elements x xSpecialist Construction and Safety Products x Summary of Trading Performance In 2007 the Group has expanded significantly; geographic coverage has increasedin both existing and new countries. The specialist product range has continuedto widen, and we have invested in inventories and customer service facilities tomaintain and develop our reputation for high quality products and a high qualityservice. The continued pursuit and application of the Group's clear Growth Strategy hasonce again driven excellent increases in sales, profits and earnings per share.We believe that 2007 marks another year of solid growth in shareholder value. Consolidated Income Statementfor the year ended 31 December 2007 Before other Other Total Before other Other items* Total items* items* items* 2007 2007 2007 2006 2006 2006 Note £m's £m's £m's £m's £m's £m's-----------------------------------------------------------------------------------------------------------RevenueExisting operations 2,238.6 - 2,238.6 1,766.7 - 1,766.7Acquisitions 216.6 - 216.6 93.1 - 93.1-----------------------------------------------------------------------------------------------------------Continuing operations 2 2,455.2 - 2,455.2 1,859.8 - 1,859.8Cost of sales (1,796.6) - (1,796.6) (1,352.5) - (1,352.5)----------------------------------------------------------------------------------------------------------- Gross profit 658.6 - 658.6 507.3 - 507.3 Other operating expenses (499.2) (17.2) (516.4) (385.9) (6.9) (392.8)----------------------------------------------------------------------------------------------------------- Operating profitExisting operations 147.5 (17.2) 130.3 116.7 (6.9) 109.8Acquisitions 11.9 - 11.9 4.7 - 4.7----------------------------------------------------------------------------------------------------------- Continuing operations 2 159.4 (17.2) 142.2 121.4 (6.9) 114.5Finance income 9.2 1.4 10.6 6.0 1.4 7.4Finance costs (28.5) - (28.5) (19.2) - (19.2) -----------------------------------------------------------------------------------------------------------Profit before tax 140.1 (15.8) 124.3 108.2 (5.5) 102.7Income tax expense 41.9 (4.7) 37.2 32.5 (1.6) 30.9----------------------------------------------------------------------------------------------------------- Profit after tax from continuingoperations 98.2 (11.1) 87.1 75.7 (3.9) 71.8----------------------------------------------------------------------------------------------------------- Discontinued operation:Profit on disposal ofdiscontinued operation - - - - 1.9 1.9Profit before tax fromdiscontinued operation - - - 3.8 - 3.8Income tax expense ondiscontinued operation - - - (1.1) 0.1 (1.0)----------------------------------------------------------------------------------------------------------- - - - 2.7 2.0 4.7----------------------------------------------------------------------------------------------------------- Profit after tax 98.2 (11.1) 87.1 78.4 (1.9) 76.5----------------------------------------------------------------------------------------------------------- Attributable to:Equity holders of the Company 97.3 (11.1) 86.2 77.7 (1.9) 75.8Minority interests 0.9 - 0.9 0.7 - 0.7---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Earnings per shareFrom continuing operations:Basic earnings per share 3 74.8p (8.5p) 66.3p 61.3p (3.2p) 58.1pDiluted earnings per share 3 74.2p (8.4p) 65.8p 60.6p (3.1p) 57.5p----------------------------------------------------------------------------------------------------------- From continuing and discontinued operations:Basic earnings per share 3 74.8p (8.5p) 66.3p 63.4p (1.5p) 61.9pDiluted earnings per share 3 74.2p (8.4p) 65.8p 62.8p (1.6p) 61.2p----------------------------------------------------------------------------------------------------------- * Other items relate to the amortisation of acquired intangibles, hedge ineffectiveness and the profit on disposal ofdiscontinued operation. Other items have been disclosed separately in order to give an indication of the underlying earnings of the Group. Consolidated Statement of Recognised Income and Expensefor the year ended 31 December 2007 2007 2006 £m's £m's-------------------------------------------------------------------------------- Profit after tax 87.1 76.5 Exchange difference on retranslation of foreigncurrency goodwill and intangibles 24.7 (0.9) Exchange difference on retranslation of foreigncurrency net investments (excluding goodwill and intangibles) 18.8 (4.0) Exchange and fair value movements associatedwith (41.2) 3.7borrowings and derivative financial instruments Tax credit/(charge) on exchange differencearising on borrowings and derivative financial instruments 12.0 (1.1) Gains and losses on cash flow hedges (5.2) 1.8 Transfer to profit and loss on cash flow hedges 2.1 1.2 Current and deferred tax on share options (0.8) 2.2 Actuarial gain on defined benefit pension schemes 6.2 3.3schemes Deferred tax movement associated with actuarial gain (2.0) (1.0) --------------------------------------------------------------------------------Total recognised income and expense for the year 101.7 81.7-------------------------------------------------------------------------------- Attributable to: Equity holders of the Company 100.8 81.0Minority interests 0.9 0.7-------------------------------------------------------------------------------- 101.7 81.7-------------------------------------------------------------------------------- Consolidated Balance Sheetas at 31 December 2007 2007 2006 Note £m's £m's--------------------------------------------------------------------------------Non-current assetsProperty, plant and equipment 209.0 135.0Goodwill 434.9 216.3Intangible assets 152.8 81.9Deferred tax assets 17.4 16.4-------------------------------------------------------------------------------- 814.1 449.6-------------------------------------------------------------------------------- Current assetsInventories 224.6 151.9Trade receivables 414.4 310.4Other receivables 25.4 20.5Derivative financial instruments 0.5 1.7Cash and cash equivalents 89.2 62.4-------------------------------------------------------------------------------- 754.1 546.9-------------------------------------------------------------------------------- Total assets 1,568.2 996.5-------------------------------------------------------------------------------- Current liabilitiesTrade and other payables 366.1 260.6Obligations under finance lease contracts 2.6 1.4Bank overdrafts 1.9 3.3Bank loans 150.8 50.8Private placement notes 22.1 -Loan notes 2.8 0.5Derivative financial instruments 36.7 0.1Current tax liabilities 17.4 21.4Provisions 9.5 12.0-------------------------------------------------------------------------------- 609.9 350.1-------------------------------------------------------------------------------- Non-current liabilitiesObligations under finance lease contracts 7.1 1.4Bank loans 5.9 4.7Private placement notes 251.8 193.0Loan notes 1.4 -Derivative financial instruments 35.5 37.7Deferred tax liabilities 44.3 17.8Other payables 2.8 1.3Retirement benefit obligations 15.7 23.6Provisions 18.9 14.2-------------------------------------------------------------------------------- 383.4 293.7-------------------------------------------------------------------------------- Total liabilities 993.3 643.8-------------------------------------------------------------------------------- Net assets 574.9 352.7-------------------------------------------------------------------------------- Capital and reservesCalled up share capital 4 13.5 12.3Share premium account 4 166.5 19.6Capital redemption reserve 4 0.3 0.3Special reserve 4 22.1 22.1Share option reserve 4 2.7 1.8Hedging and translation reserve 4 9.7 (4.6)Retained profits 4 358.8 300.0--------------------------------------------------------------------------------Attributable to equity holders of the Company 573.6 351.5-------------------------------------------------------------------------------- Minority interests 4 1.3 1.2-------------------------------------------------------------------------------- Total equity 4 574.9 352.7-------------------------------------------------------------------------------- Consolidated Cash Flow Statementfor the year ended 31 December 2007 2007 2006 Note £m's £m's--------------------------------------------------------------------------------Net cash flow from operating activitiesCash inflow from operating activities 5 160.3 132.4 Borrowing costs paid (19.3) (14.2)Interest received 5.0 2.4Income tax paid (39.8) (36.6)--------------------------------------------------------------------------------Net cash inflow from operating activities 106.2 84.0-------------------------------------------------------------------------------- Cash flows from investing activitiesPurchase of property, plant and equipment (60.5) (44.7)Proceeds from sale of property, plant and 4.1 2.0equipmentPurchase of businesses (226.8) (90.1)Net proceeds from sale of discontinued operation - 25.3--------------------------------------------------------------------------------Net cash used in investing activities (283.2) (107.5)-------------------------------------------------------------------------------- Cash flows from financing activitiesProceeds from issue of ordinary share capital 148.1 1.9Capital element of finance lease rental payments (2.5) (1.8)Repayment of loans (12.6) (135.1)New loans 98.6 211.6Dividends paid to equity holders of the Company (28.4) (21.7)Payments to minority shareholder (0.8) (0.7)--------------------------------------------------------------------------------Net cash generated in financing activities 202.4 54.2-------------------------------------------------------------------------------- Increase in cash and cash equivalents in the year 6 25.4 30.7-------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 59.1 28.9Effect of foreign exchange rate changes 2.8 (0.5)--------------------------------------------------------------------------------Cash and cash equivalents at end of year 87.3 59.1-------------------------------------------------------------------------------- 1. Basis of preparation The Group's financial information has been prepared in accordance withInternational Financial Reporting Standards ("IFRS") issued for use in theEuropean Union and on a basis consistent with that adopted in the previous year. The financial information has been prepared under the historical cost conventionexcept for derivative financial instruments that are stated at their fair value. While the financial information included in this preliminary announcement hasbeen computed in accordance with the recognition and measurement criteria ofIFRS, this announcement does not itself contain sufficient information to complywith IFRS. The Company will publish full IFRS compliant accounts in April 2008. The preliminary announcement does not constitute the Company's statutoryaccounts for the years ended 31 December 2007 or 31 December 2006 within themeaning of Section 240 of the Companies Act 1985 but is derived from thosestatutory accounts. The Group's statutory accounts for the year ended 31 December 2006 have beenfiled with the Registrar of Companies, and those for 2007 will be deliveredfollowing the Company's Annual General Meeting. The auditors have reported onthe statutory accounts for 2007 and 2006, and their reports were unqualified anddid not contain statements under section 237 (2) or 237 (3) of the Companies Act1985. 2. Revenue and segmental information RevenueAn analysis of the Group's revenue is as follows: 2007 2006 £m's £m's--------------------------------------------------------------------------------Continuing operations - sale of goods 2,455.2 1,859.8Discontinued operation - sale of goods - 65.2 --------------------------------------------------------------------------------Total revenue 2,455.2 1,925.0--------------------------------------------------------------------------------Finance Income 10.6 7.4Total Income 2,465.8 1,932.4 ======= ======== Geographical SegmentsAs at 31 December 2007, the Group is managed and organised in two geographies: UK and Ireland and Mainland Europe. On 20 November 2006, the Group disposed of its operations in the USA. These geographies are the basis on which the Group reports its primary segment information. Segment information about these geographies is presented below: 2007 2007 2007 2007 2006 2006 2006 2006 2006 UK and Mainland Eliminations Total UK and Mainland Discontinued Eliminations Total Ireland Europe Ireland Europe Operation (USA) £m's £m's £m's £m's £m's £m's £m's £m's £m's------------------------------------------------------------------------------------------------------------------------RevenueExternal sales 1,523.8 931.4 - 2,455.2 1,254.3 605.5 65.2 - 1,925.0Inter-segmentsales* 0.3 - (0.3) - 0.1 - - (0.1) ------------------------------------------------------------------------------------------------------------------------- Total revenue 1,524.1 931.4 (0.3) 2,455.2 1,254.4 605.5 65.2 (0.1) 1,925.0------------------------------------------------------------------------------------------------------------------------ ResultSegment resultbeforeamortisationof acquiredintangibles 121.3 45.9 - 167.2 99.9 27.6 3.8 - 131.3Amortisationof acquiredintangibles (12.0) (5.2) - (17.2) (6.5) (0.4) - - (6.9)------------------------------------------------------------------------------------------------------------------------Segment result 109.3 40.7 - 150.0 93.4 27.2 3.8 - 124.4 Parent Company costs (7.8) (6.1)------------------------------------------------------------------------------------------------------------------------ Operating profit 142.2 118.3 Net finance costs - continuing operations (17.9) (11.8)------------------------------------------------------------------------------------------------------------------------ Profit before tax 124.3 106.5 Profit on disposal of discontinued operation - 1.9Income tax credit - on profit on disposal of discontinued operation - 0.1Income tax expense - continuing operations (37.2) (30.9)Income tax expense - discontinued operation - (1.1)Minority interests (0.9) (0.7) ------------------------------------------------------------------------------------------------------------------------Retained profit 86.2 75.8------------------------------------------------------------------------------------------------------------------------ Attributable to:Continuing operations 86.2 71.1Discontinued operation - 4.7------------------------------------------------------------------------------------------------------------------------ 86.2 75.8------------------------------------------------------------------------------------------------------------------------ * Inter-segment sales are charged at the prevailing market rates. Balance sheetAssets Segment assets 902.7 662.3 - 1,565.0 718.4 266.5 - - 984.9Unallocated assets 3.2 11.6------------------------------------------------------------------------------------------------------------------------Consolidated total assets 1,568.2 996.5------------------------------------------------------------------------------------------------------------------------ LiabilitiesSegment liabilities 319.6 169.0 - 488.6 264.4 91.9 - - 356.3Unallocated liabilities 504.7 287.5------------------------------------------------------------------------------------------------------------------------Consolidated total liabilities 993.3 643.8------------------------------------------------------------------------------------------------------------------------ Other segment informationCapital expenditure on:Property,plant andequipment 44.9 19.8 64.7 37.3 8.2 0.4 45.9Intangibleassets 22.7 59.3 82.0 28.9 10.8 - 39.7Goodwill 44.3 155.8 200.1 36.5 18.9 - 55.4 Non-cash expenditure:Depreciation 21.4 8.9 30.3 18.3 5.5 0.3 24.1Amortisationof acquiredintangibles 12.0 5.2 17.2 6.5 0.4 - 6.9------------------------------------------------------------------------------------------------------------------------ 3. Earnings per shareThe calculations of earnings per share are based on the following profits and numbers of shares: Basic and diluted ----------------------------------------------------------- 2007 2006 2006 2006 Continuing Discontinued operations and Continuing operations Total total operations (USA) £m's £m's £m's £m's------------------------------------------------------------------------------------Profit after tax 87.1 71.8 4.7 76.5Minority interests (0.9) (0.7) - (0.7)------------------------------------------------------------------------------------ 86.2 71.1 4.7 75.8------------------------------------------------------------------------------------ Basic and diluted before amortisation of acquired intangibles, hedge ineffectiveness and profit on disposal of discontinued operation -------------------------------------------------------------------------------- 2007 2006 2006 2006 Continuing Discontinued operations and Continuing operations Total total operations (USA) £m's £m's £m's £m's------------------------------------------------------------------------------------ Profit after tax 87.1 71.8 4.7 76.5Minority interests (0.9) (0.7) - (0.7)Amortisation of acquired intangibles 17.2 6.9 - 6.9Hedge ineffectiveness (1.4) (1.4) - (1.4)Tax relating to theamortisation of acquiredintangibles and hedgeineffectiveness (4.7) (1.6) - (1.6)Profit after tax on disposal of discontinued operation - - (2.0) (2.0) ------------------------------------------------------------------------------------ 97.3 75.0 2.7 77.7------------------------------------------------------------------------------------ Weighted average number of shares: 2007 2006 Number Number------------------------------------------------------------------------------------For basic earnings per share 130,090,267 122,560,171Exercise of share options 982,011 1,287,923------------------------------------------------------------------------------------ For diluted earnings per share 131,072,278 123,848,094------------------------------------------------------------------------------------ 2007 2006Earnings per share Basic earnings per share - continuing operations 66.3p 58.1pBasic earnings per share - discontinued operation 0.0p 3.8pTotal basic earnings per share 66.3p 61.9p Diluted earnings per share - continuing operations 65.8p 57.5pDiluted earnings per share - discontinued operation 0.0p 3.8pTotal diluted earnings per share 65.8p 61.2p------------------------------------------------------------------------------------ Earnings per share before amortisation of acquired intangibles, hedge ineffectiveness and profit on disposal of discontinued operation Basic earnings per share - continuing operations 74.8p 61.3pBasic earnings per share - discontinued operation 0.0p 2.2pTotal basic earnings per share 74.8p 63.4p Diluted earnings per share - continuing operations 74.2p 60.6pDiluted earnings per share - discontinued operation 0.0p 2.1pTotal diluted earnings per share 74.2p 62.8p------------------------------------------------------------------------------------ Earnings per share before amortisation of acquired intangibles, hedge ineffectiveness and profit on disposalof discontinued operation is disclosed in order to present the underlying performance of the Group. 4. Consolidated statement of changes in equity Called Share Capital Hedging and up share premium redemption Special Share Option translation Retained Minority Total capital account reserve reserve reserve reserve profits Total interests equity £m's £m's £m's £m's £m's £m's £m's £m's £m's £m's------------------------------------------------------------------------------------------------------------------------At 31 December2005 12.2 17.8 0.3 22.1 1.4 (2.3) 237.7 289.2 1.2 290.4Profit after tax - - - - - - 75.8 75.8 0.7 76.5Dividends - - - - - - (21.7) (21.7) - (21.7)New share capital issued 0.1 1.8 - - - - - 1.9 - 1.9Exchangedifference onretranslationof foreigncurrencygoodwill andintangibles - - - - - (0.9) - (0.9) - (0.9)Exchangedifference onretranslationof foreigncurrency netinvestments(excludinggoodwill andintangibles) - - - - - (4.0) - (4.0) - (4.0)Exchange andfair valuemovementsassociatedwithborrowings andderivativefinancialinstruments - - - - - 3.7 - 3.7 - 3.7Tax charge onexchangedifferencearising onborrowings andderivativefinancialinstruments - - - - - (1.1) - (1.1) - (1.1)Gains andlosses oncashflowhedges - - - - - - 1.8 1.8 - 1.8Transfer toprofit andloss on cashflow hedges - - - - - - 1.2 1.2 - 1.2Current anddeferred taxon shareoptions - - - - - - 2.2 2.2 - 2.2Actuarial gainon definedbenefitpensionschemes - - - - - - 3.3 3.3 - 3.3Deferred taxmovementassociatedwith actuarialgain - - - - - - (1.0) (1.0) - (1.0)Credit toshare option reserve - - - - 1.1 - - 1.1 - 1.1Exercise ofshare options - - - - (0.7) - 0.7 - - -Payment tominorityinterestshareholder - - - - - - - - (0.7) (0.7)------------------------------------------------------------------------------------------------------------------------At 31 December2006 12.3 19.6 0.3 22.1 1.8 (4.6) 300.0 351.5 1.2 352.7------------------------------------------------------------------------------------------------------------------------ Profit aftertax - - - - - - 86.2 86.2 0.9 87.1Dividends - - - - - - (28.4) (28.4) - (28.4)New sharecapital issued 1.2 146.9 - - - - - 148.1 - 148.1Exchangedifference onretranslationof foreigncurrencygoodwill andintangibles - - - - - 24.7 - 24.7 - 24.7Exchange difference onretranslationof foreigncurrency netinvestments(excludinggoodwill andintangibles) - - - - - 18.8 - 18.8 - 18.8Exchange andfair valuemovementsassociatedwithborrowings andderivativefinancialinstruments - - - - - (41.2) - (41.2) - (41.2)Tax credit onexchangedifferencearising onborrowingsand derivativefinancialinstruments - - - - - 12.0 - 12.0 - 12.0Gains andlosses on cashflow hedges - - - - - - (5.2) (5.2) - (5.2)Transfer toprofit andloss on cashflow hedges - - - - - - 2.1 2.1 - 2.1Current anddeferred taxon shareoptions - - - - - - (0.8) (0.8) - (0.8)Actuarial gainon definedbenefitpensionschemes - - - - - - 6.2 6.2 - 6.2Deferred taxmovementassociatedwith actuarialgain - - - - - - (2.0) (2.0) - (2.0)Credit toshare optionreserve - - - - 1.6 - - 1.6 - 1.6Exercise ofshare options - - - - (0.7) - 0.7 - - -Payment tominorityinterestshareholder - - - - - - - - (0.8) (0.8)------------------------------------------------------------------------------------------------------------------------At 31 December2007 13.5 166.5 0.3 22.1 2.7 9.7 358.8 573.6 1.3 574.9------------------------------------------------------------------------------------------------------------------------ 5. Reconciliation of operating profit to cash inflow from operating activities 2007 2006 £m's £m's-------------------------------------------------------------------------------------Operating profit from continuing operations 142.2 114.5Operating profit from discontinued operation - 3.8-------------------------------------------------------------------------------------Operating profit 142.2 118.3-------------------------------------------------------------------------------------Depreciation charge 30.3 24.1Amortisation of acquired intangibles 17.2 6.9Profit on sale of property, plant and equipment (2.0) (0.6)Share-based payments 1.6 1.1Increase in inventories (8.2) (14.9)Decrease / (increase) in receivables 0.1 (4.4)(Decrease) / increase in payables (20.9) 1.9-------------------------------------------------------------------------------------Cash inflow from operating activities 160.3 132.4------------------------------------------------------------------------------------- 6. Reconciliation of net cash flow to movements in net debt 2007 2006 £m's £m's-------------------------------------------------------------------------------------Increase in cash and cash equivalents in the year 25.4 30.7Cash flow from increase in debt (87.7) (75.8)-------------------------------------------------------------------------------------Increase in net debt resulting from cash flows (62.3) (45.1)Debt acquired with acquisitions* (94.0) (15.9)Non-cash items+ (21.7) 5.9Exchange differences (22.1) 1.0------------------------------------------------------------------------------------- Increase in net debt in the year (200.1) (54.1)Net debt at beginning of year (228.8) (174.7)------------------------------------------------------------------------------------- Net debt at end of year (428.9) (228.8)------------------------------------------------------------------------------------- * including loan notes issued.+ Non-cash items relate to the fair value movement of debt recognised in theyear which does not give rise to a cash inflow or outflow. 7. Final dividend A final dividend of 18.7p per share (2006: 14.3p) has been proposed, taking thefull year dividend to 26.7p (2006: 20.5p). In accordance with IAS 10 "Events after the balance sheet date", dividendsdeclared after the balance sheet date are not recognised as a liability in theAccounts. 8. Forward looking statements This Preliminary Announcement of Results for the year ended 31 December 2007contains certain forward looking statements with respect to the Group'sfinancial condition, its results, strategy, plans and objectives. The forwardlooking statements contained in this document are not forecasts or guarantees offuture performance and are subject to risks, uncertainties and other factors.Some of these factors are beyond the Group's control, are difficult to predictand could cause actual results to differ materially from those expressed,implied or forecast in the forward looking statements. These factors include, but are not limited to, general economic conditions andbusiness conditions in the Group's markets, product availability and prices,credit risk, the actions of competitors, interest and exchange rates andlegislative fiscal and regulatory developments. All forward looking statements in this document are based on information knownto the Group as at 12 March 2008. The Group has no obligation publicly to updateor revise any forward looking statements, whether as a result of newinformation, future events or otherwise. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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