13th Sep 2007 07:01
SIG PLC13 September 2007 P R E S S R E L E A S E 13 September 2007 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 SIG plc is the leading specialist supplier of insulation, roofing, commercialinteriors and specialist construction products. • SIG reports record results for the first half of 2007, with growth achieved in all business streams and all countries in which it has trading operations • All numbers stated below are on a continuing basis, ie. excluding the USA business sold in November 2006 • Sales increased 29.2% to £1,099m (2006: £851m), exceeding £1bn for the first time in the first half of any year. Like for like+ sales growth was 12.5% - UK and Ireland sales increased 19.4% to £722.5m (2006: £605.1m) - Mainland Europe sales increased 53.4% to £376.6m (2006: £245.5m) • Underlying* operating profit increased 30.6% to £70.0m (2006: £53.6m) - UK and Ireland underlying operating profit increased 19.0% to £57.1m (2006: £48.0m) - Mainland Europe underlying operating profit increased 92.3% to £16.4m (2006: £8.5m) • Underlying profit before tax increased 31.0% to £62.1m (2006: £47.4m). Profit before tax increased 23.3% to £56.2m (2006: £45.6m) • Underlying basic earnings per share increased 29.9% to 34.3p (2006: 26.4p). Basic earnings per share increased 22.0% to 31.0p (2006: 25.4p) • Interim dividend per share increased 29% to 8.0p (2006: 6.2p) • SIG also reports record acquisition activity - 22 acquisitions, for total consideration of £312m so far this year - Acquisitions have added 136 trading sites and aggregate annualised sales (on an historic basis) of £424m, split £289m in Mainland Europe and £135m in the UK and Ireland + Like for like sales excludes the impact of acquisitions completed after 1 January 2006 * Underlying is before the amortisation of acquired intangibles and hedge ineffectiveness Les Tench, Chairman, commented: "The Group has achieved excellent progress in the first six months, with stronglike for like increases in all countries and business streams and a step-changein the breadth of the Group's activities with a total of 146 branches added sofar in 2007. The interim dividend is being increased by 29%, an indication ofour confidence in the future prospects for SIG." 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 Full Interim Results information is available on www.sigplc.co.uk. An interviewwith David Williams, Chief Executive,and Gareth Davies, Finance Director is nowavailable on SIG's website and www.cantos.com The first six months of 2007 have been marked by a very strong tradingperformance and by further significant expansion of the Group's activities. Growth was achieved in all business streams, and in all countries in which SIGhas trading operations and sales exceeded £1bn for the first time in the firsthalf of any year. Results The figures given below are on a continuing basis, ie. excluding thecontribution from the USA business, which was sold in November 2006. For the first six months to 30 June 2007, compared with the corresponding periodin 2006: Sales • Total sales were £1,099m, up £248m (29.2%) on the first half of 2006 (£851m). • Like for like sales growth, ie. excluding the impact of acquisitions completed after 1 January 2006, was £106m (12.5%). • Foreign exchange rate movements compared to the first half of 2006 were negligible, reducing sales by approximately £8m. On a constant currency basis sales growth was 30.1% in total and 13.3% on a like for like basis. • Like for like sales growth was achieved in all countries in which the Group has trading operations and in all business streams. Profits • Underlying* operating profit was £70.0m, an increase of £16.4m (30.6%) over the £53.6m reported in the first half of 2006. • Underlying net finance costs increased by £1.7m to £7.9m (2006: £6.2m) reflecting the increased acquisition spend. • Underlying profit before tax was £62.1m, an increase of £14.7m (31.0%) over the £47.4m in the first half of 2006. • Amortisation of acquired intangibles increased by £3.1m to £6.1m (2006: £3.0m). A credit of £0.2m has arisen in relation to hedge ineffectiveness (2006: £1.2m). • Profit before tax increased by £10.6m (23.3%) to £56.2m (2006: £45.6m). Earnings per Share • Underlying basic earnings per share increased by 7.9p to 34.3p (2006: 26.4p), an increase of 29.9%. • Basic earnings per share increased by 5.6p to 31.0p (2006: 25.4p), an increase of 22.0%. Financial • Balance sheet gearing was 67% at 30 June 2007, compared with 65% at both 30 June and 31 December 2006. • Underlying interest cover at 30 June 2007 was a healthy 8.8 times (30 June 2006: 8.6 times). Dividend An interim dividend of 8.0p per share has been declared, a significant increase(29%) on the 6.2p per share interim dividend for the first half of 2006. This reflects the continued growth in earnings per share and the Board'sconfidence going forward. The dividend is covered 3.9 times and is payable on 27 November 2007, toshareholders on the register on 26 October 2007. Trading Sites During the first six months of the year the Group increased the number oftrading sites by 126 to 744 (31 December 2006: 618), driven mainly byacquisition activity. Trading Review UK and Ireland (66% of Group sales) Total sales in the UK and Ireland increased by £117.4m to £722.5m, up 19.4% onH1 2006 (£605.1m). Like for like sales increased by 9.7%. Underlying operating profit increased by £9.1m to £57.1m, up 19.0% on H1 2006 (£48.0m). These strong results were achieved against the background of modest marketgrowth in overall non-residential construction activity and flat residentialbuilding work in the UK, whilst in Ireland building activity began to declinefrom April onwards. Demand for insulation materials grew with the first signs coming through of thenew higher standards required to be built into all new construction, driven bythe 2006 revision to Part L of the Building Regulations. Within the domesticupgrading insulation market, as anticipated, demand was reduced as phase two ofthe Energy Efficiency Commitment (EEC2) grant scheme winds down and prior to thenext scheme beginning early in 2008. The new grant scheme is called CERT, whichstands for Carbon Emission Reduction Targets, and is expected to generate ahigher volume of insulation upgrading than its predecessor over the period 2008to 2010. The growth in non-residential construction activity in the UK created increaseddemand for both commercial interiors and specialist construction products. Likefor like sales were strongly ahead in the period. Whilst commercial newconstruction is the largest sector within non-residential, the ongoing publicexpenditure programmes aimed at building new schools and hospitals continued togenerate sales across all of SIG's product groups. After two years of reduced demand there was some modest increase in roofingactivity in the first half. This increased demand, coupled with the ongoingexpansion of our number of trading sites and product range, created a good levelof sales growth. Average price inflation in the UK and Ireland was around 2.5%. The number of trading sites increased from 422 in the UK and Ireland at 31December 2006, to 440 at 30 June 2007. Mainland Europe (34% of Group sales) Total sales in Mainland Europe increased by £131.1m to £376.6m, up 53.4% on H12006 (£245.5m). Underlying operating profits almost doubled to £16.4m, up 92.3% on H1 2006(£8.5m). The net operating margin increased to 4.3% (H1 2006: 3.5%) driven bythe operational gearing benefit of additional sales and tight cost control. Exchange rate movements had a mildly adverse impact on the reported results dueto the weakening of the Euro and Polish Zloty against Sterling compared with H12006, reducing sales by £6.8m and operating profits by £0.3m. For clarification,the Group is not materially affected by exchange rate movements in respect ofits trading activities, as the vast majority of the goods sold by SIG are eitherbought or produced in the same currency as that applied to the sale. On a like for like constant currency basis, sales growth was 21.7% and operatingprofit growth 64.2%. These excellent results from our operations in Mainland Europe were achievedagainst the background of generally more helpful market conditions with productdemand increased over prior year, coupled with modest price inflation (estimatedoverall at 2.8% over the prior year). These results represent an increase ofmore than two times sales and almost five times operating profit over the fouryears since H1 2003. In Germany and Austria, overall construction activity was much stronger than inH1 2006, partly due to the sharply contrasting climatic conditions - anextremely mild start to 2007 compared to a very severe and prolonged winter inQ1 2006, enabling building work to continue largely unaffected by freezingtemperatures and snow this year. Against this helpful background, total salesgrew by 46.8% and by 18.3% on a like for like basis in Euros. The net operatingmargin increased and operating profits more than doubled. It should be borne in mind that a combination of exceptional factors created asurge in demand for building materials in the final calendar quarter of 2006 inGermany, which meant that the second half results were very much stronger thananticipated and skewed the H1 / H2 split sharply towards H2. This means that theyear on year comparators for H2 2007 are more demanding than in the first half. Total sales in France grew by 25.4% in Euros and by 19.9% on a like for likebasis. Demand for insulation and commercial interiors products was strong and wecontinued to make good progress in developing both the product range and ourgeographic coverage. The net operating margin increased and operating profitswere substantially up on H1 2006. In Poland, the revival of construction activity which was reported in 2006continued strongly into 2007. Like Germany and Austria, this year theunseasonably mild start to 2007 enabled building sites to continue working.Total sales increased almost threefold compared with first half prior year. Likefor like sales in local currency grew by 72.1%. The net operating margin wasincreased and the small operating profit reported in the first half of 2006 wassubstantially increased. This excellent performance marks a new milestone in thedevelopment and growth of the Group's business in Poland. In Benelux, again in more favourable market conditions, we made strong progressin both insulation and commercial interiors, with total sales up 28.4% in Euros,13.9% on a like for like basis. The net operating margin was increased and theoperating profit almost doubled. Largely as a result of the acquisition programme in both 2006 and so far in2007, the number of trading sites in Mainland Europe has increased significantlyduring the past year, with a total of 304 locations at the current period endcompared with 141 at 30 June 2006 and 196 at 31 December 2006. Acquisitions In addition to the record trading performance in the first half of 2007, it hasalso been one of record acquisition activity. In the period 1 January 2007 to 30June 2007, 14 acquisitions were completed, together adding 116 trading sites andaggregate annualised sales of £309m on an historic basis. Total consideration,including assumed debt and performance-related contingent consideration amountedto £259m. Of the £309m annualised sales, £274m is in Mainland Europe and £35m inthe UK and Ireland. Since 30 June 2007 we have completed 8 further acquisitions, together adding 20trading sites and aggregate annualised sales of £115m. Total consideration forthese 8 most recent acquisitions is £53m, including assumed debt andperformance-related contingent consideration. To summarise, the total number of acquisitions completed since 1 January 2007 is22, together adding 136 trading sites, with annualised sales of £424m, split£289m Mainland Europe and £135m in the UK and Ireland. Each of the acquired businesses fits the profile of SIG as suppliers ofspecialist materials to the building and construction trades with emphasis onsupplying professional companies and trades people rather than the retailconsumer. Most of the businesses acquired to date are directly complementary to ourexisting countries and existing business streams, ie. "bolt-on". Othersrepresent a new platform for future growth. Key examples of new "platform"acquisitions in 2007 are: i) In June 2007, SIG acquired Lariviere, the leading specialist roofing materials distributor in France, with 83 trading sites and annualised sales of £229m. Performance has been in line with expectations since acquisition, and the expansion programme is progressing with 2 additional trading sites added so far. ii) SIG made its first entry into Central Europe through the acquisition of a supplier of insulation and commercial interiors products with 16 trading sites in Slovakia and Czech Republic. Construction activity in these countries is expected to grow at a higher rate going forward than Western and Southern Europe, creating attractive new opportunities for the Group. In August an additional acquisition added 7 more trading sites in the Czech Republic, trading in both insulation and commercial interiors products. iii) In September 2007, SIG acquired one of the largest suppliers to the specialist professional contract flooring market in the UK, with 5 trading sites and annualised sales of £70m. This business adds a new dimension to the existing SIG Commercial Interiors operations in the UK. The integration of all of these acquisitions is progressing well. Two loss-making businesses were acquired in the second half of 2006, one in theUK and one in Poland. The specialist roofline products business in the UK hasbeen significantly restructured and is close to achieving profitability. ThePolish acquisition has performed extremely well since acquisition, raisingmargins and turnover substantially and is now profitable on a monthly basis. Investments The Group continues to invest in future growth via suitable acquisitions and inthe infrastructure of existing businesses to improve customer service andinternal efficiencies. These investments include increased capacity within ourUK insulation operations in order to maintain our market leading positionagainst the background of anticipated future increases in demand both in the newbuild and residential upgrading sectors. Presently we are upgrading and replacing a number of computer systems in usethroughout different parts of the Group, to improve service and aidefficiencies. This programme is being introduced at a measured pace and isprogressing well. Board As previously announced, the Board has been further strengthened by theappointment in February 2007 of Chris Davies to the Group Board. Chris joinedSIG in 1994 and has held a number of management positions in the UK and inMainland Europe. He is Managing Director of SIG in Mainland Europe and has ledthe expansion and growth in this key region over the last 6 years. Share Capital Issue On 24 May 2007, SIG announced a placing of new ordinary shares withinstitutional and other investors to raise gross proceeds of £150m (the"Placing"). The Company placed 11,363,637 new ordinary shares at 1320p each,raising £147m after commissions and expenses. The Placing proceeds have beenused to fund the acquisition of Lariviere and the increased acquisition spend.They also provide SIG with financial flexibility to take advantage ofacquisition opportunities as they arise and ensuring that SIG continues to driveits organic growth through ongoing investment in its businesses. Prospects Demand from the key building and construction industries has been good in thefirst half of 2007 throughout the Group's operating regions and we do notforesee any significant change in market conditions in the remainder of 2007. Against the background of the recent uncertainties in the financial markets, itis not presently known whether these events may spill over into the widereconomy, possibly affecting building and construction activity. There are nosigns of this at present. Trading since the end of June has been in line with expectations and the Boardis confident that further progress will be made. * Underlying is before the amortisation of acquired intangibles and hedge ineffectiveness Consolidated Income Statementfor the six months ended 30 June 2007 Unaudited six months ended Unaudited six months ended Audited year ended -------------------------- ---------------------------- ------------------- 30 June 2007 30 June 2006 31 December 2006 -------------------------- ---------------------------- ------------------- Before other Other Total Before other Other Total Before other Other Total items* items* items* items* items* items* Note £000's £000's £000's £000's £000's £000's £000's £000's £000's---------------------------------------------------------------------------------------------------------------------Revenue 2 1,099,131 - 1,099,131 850,587 - 850,587 1,859,832 - 1,859,832Operating profit 2 69,974 (6,072) 63,902 53,597 (2,969) 50,628 121,401 (6,942) 114,459Finance income 4,132 186 4,318 2,775 1,170 3,945 6,056 1,357 7,413Finance costs (12,056) - (12,056) (9,019) - (9,019) (19,200) - (19,200)----------------------------------------------------------------------------------------------------------------------Profit before tax 62,050 (5,886) 56,164 47,353 (1,799) 45,554 108,257 (5,585) 102,672Income tax expense 3 (18,615) 1,766 (16,849) (14,715) 540 (14,175) (32,515) 1,676 (30,839)----------------------------------------------------------------------------------------------------------------------Profit after tax from continuing operations 43,435 (4,120) 39,315 32,638 (1,259) 31,379 75,742 (3,909) 71,833----------------------------------------------------------------------------------------------------------------------Discontinued operation: Profit beforetax from discontinued operation - - - 2,305 - 2,305 3,774 - 3,774Profit on disposal of discontinued operation - - - - - - - 1,947 1,947Income tax expense on discontinued operation - - - (659) - (659) (1,124) 92 (1,032)---------------------------------------------------------------------------------------------------------------------- - - - 1,646 - 1,646 2,650 2,039 4,689----------------------------------------------------------------------------------------------------------------------Profit after tax 43,435 (4,120) 39,315 34,284 (1,259) 33,025 78,392 (1,870) 76,522---------------------------------------------------------------------------------------------------------------------Attributable to:Equity holders of the Company 42,879 (4,120) 38,759 33,914 (1,259) 32,655 77,719 (1,870) 75,849Minority interests 556 - 556 370 - 370 673 - 673---------------------------------------------------------------------------------------------------------------------Earnings per shareFrom continuingoperations:Basic earnings per share 4 34.3p (3.3p) 31.0p 26.4p (1.0p) 25.4p 61.3p (3.2p) 58.1pDiluted earnings per share 4 33.9p (3.2p) 30.7p 26.0p (1.0p) 25.0p 60.6p (3.1p) 57.5p---------------------------------------------------------------------------------------------------------------------From continuing and discontinued operations:Basic earningsper share 4 34.3p (3.3p) 31.0p 27.8p (1.0p) 26.8p 63.4p (1.5p) 61.9pDiluted earnings per share 4 33.9p (3.2p) 30.7p 27.4p (1.1p) 26.3p 62.8p (1.6p) 61.2p--------------------------------------------------------------------------------------------------------------------- * Other items relate to the amortisation of acquired intangibles, hedge ineffectiveness and for the year ended 31 December 2006, the profit on disposal of discontinued 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 six months ended 30 June 2007 Unaudited Unaudited Audited six months six months year ended 30 ended 30 ended 31 June 2007 June 2006 December 2006 £000's £000's £000's------------------------------------------------------------------------------------------Profit after tax 39,315 33,025 76,522Exchange difference on retranslation of foreign currency goodwill and intangibles 71 10 (918)Exchange difference on retranslation of foreign currency net investments (excludinggoodwill and intangibles) 1,240 320 (3,980)Exchange and fair value movements associated with borrowings and derivative financialinstruments (9,967) (1,056) 6,712Tax charge on exchange difference arising on borrowings and derivative financialinstruments 382 333 (1,078)Current and deferred tax on share options 1,371 558 2,214Actuarial gain on defined benefit pension schemes - - 3,292Deferred tax movement associated with actuarial gain - - (966)------------------------------------------------------------------------------------------Total recognised income and expense for the period 32,412 33,190 81,798------------------------------------------------------------------------------------------Attributable to:Equity holders of the Company 31,856 32,820 81,125Minority interests 556 370 673------------------------------------------------------------------------------------------ 32,412 33,190 81,798------------------------------------------------------------------------------------------ Consolidated Balance Sheetas at 30 June 2007 Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 Note £000's £000's £000's-----------------------------------------------------------------------------------------Non-current assetsProperty, plant and equipment 178,540 108,947 134,943Goodwill 404,202 174,465 216,257Intangible assets 117,158 51,558 81,925Deferred tax assets 17,147 20,495 16,435----------------------------------------------------------------------------------------- 717,047 355,465 449,560-----------------------------------------------------------------------------------------Current assetsInventories 211,379 145,012 151,791Trade receivables 442,513 327,943 310,418Other receivables 31,660 28,388 20,527Derivative financial instruments 3,110 1,163 1,668Cash and cash equivalents 111,006 39,579 62,447----------------------------------------------------------------------------------------- 799,668 542,085 546,851-----------------------------------------------------------------------------------------Total assets 1,516,715 897,550 996,411-----------------------------------------------------------------------------------------Current liabilitiesTrade and other payables 426,404 268,287 260,601Obligations under finance leases and hire purchase agreements 4,882 770 1,391Bank overdrafts 3,024 1,516 3,302Bank loans 120,053 132,107 50,845Loan notes 2,974 5,244 483Derivative financial instruments 633 601 61Current tax liabilities 27,550 22,918 21,366Provisions 9,344 6,478 12,019----------------------------------------------------------------------------------------- 594,864 437,921 350,068-----------------------------------------------------------------------------------------Non-current liabilitiesObligations under finance leases and hire purchase agreements 2,424 859 1,448Bank loans 4,635 506 4,703Loan notes - 263 -Private placement notes 268,826 66,081 193,043Derivative financial instruments 51,583 32,415 37,659Deferred tax liabilities 34,415 7,576 17,764Other payables 1,581 2,327 1,267Retirement benefit obligations 24,622 27,676 23,633Provisions 18,354 12,301 14,164----------------------------------------------------------------------------------------- 406,440 150,004 293,681-----------------------------------------------------------------------------------------Total liabilities 1,001,304 587,925 643,749-----------------------------------------------------------------------------------------Net assets 515,411 309,625 352,662-----------------------------------------------------------------------------------------Capital and reservesCalled up share capital 9 13,467 12,226 12,310Share premium account 165,698 18,269 19,636Capital redemption reserve 347 347 347Special reserve 22,113 22,113 22,113Share option reserve 1,991 1,825 1,786Hedging and translation reserve (4,223) (3,375) (4,570)Retained profits 314,309 257,377 299,887-----------------------------------------------------------------------------------------Attributable to equity holders of the Company 513,702 308,782 351,509-----------------------------------------------------------------------------------------Minority interests 1,709 843 1,153-----------------------------------------------------------------------------------------Total equity 515,411 309,625 352,662----------------------------------------------------------------------------------------- Consolidated Cash Flow Statementfor the six months ended 30 June 2007 Unaudited Unaudited Audited 30 June 30 June 31 December 2007 2006 2006 Note £000's £000's £000's-------------------------------------------------------------------------------------Net cash flow from operating activitiesCash inflow from operating activities 6 63,496 43,617 132,355Borrowing costs paid (4,342) (7,287) (14,206)Interest received 2,101 1,084 2,433Income tax paid (13,243) (18,049) (36,615)-------------------------------------------------------------------------------------Net cash inflow from operating activities 48,012 19,365 83,967------------------------------------------------------------------------------------- Cash flows from investing activitiesPurchase of property, plant and equipment (27,298) (16,312) (44,682)Proceeds from sale of property, plant and equipment 2,428 802 2,009Purchase of businesses 8 (175,468) (14,937) (90,061)Net proceeds from sale of discontinued operation - - 25,327-------------------------------------------------------------------------------------Net cash used in investing activities (200,338) (30,447) (107,407)------------------------------------------------------------------------------------- Cash flows from financing activitiesProceeds from issue of ordinary share capital 147,219 423 1,874Capital element of finance lease rental payments (818) (414) (1,723)Repayment of loans (19,200) (2,268) (135,112)New loans 91,551 37,162 211,562Dividends paid to equity holders of the Company (17,604) (14,051) (21,719)Payments to minority shareholder - (726) (719)-------------------------------------------------------------------------------------Net cash generated from financing activities 201,148 20,126 54,163-------------------------------------------------------------------------------------Increase in cash and cash equivalents in 7 48,822 9,044 30,723the period------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of period 59,145 28,909 28,909Effect of foreign exchange rate changes 15 110 (487)-------------------------------------------------------------------------------------Cash and cash equivalents at end of period 107,982 38,063 59,145------------------------------------------------------------------------------------- Notes to the Interim Financial Information 1 Basis of preparation of interim financial information The interim financial information was approved by the Board of Directors on 12September 2007. The financial information set out in the Interim Report isunaudited. The Group's interim financial information has been prepared in accordance withInternational Financial Reporting Standards ("IFRS") as adopted for use in theEuropean Union and in accordance with the accounting policies included in the Annual Report for the year ended 31 December 2006, which have been applied consistently throughout the current and preceding periods. The interim financial information does not constitute statutory accounts withinthe meaning of Section 240 of the Companies Act 1985. The interim results to 30June 2007 and 2006 are neither audited nor reviewed. The financial informationfor the full preceding year is based on the statutory accounts for the financialyear ended 31 December 2006. Those accounts, upon which the auditors issued anunqualified opinion, have been delivered to the Registrar of Companies. Theauditors' report contained no statement under Section 237(2) or 237(3) of theCompanies Act 1985. 2 Segmental information As at 30 June 2007, the Group is managed and organised in two geographies: UKand Ireland and Mainland Europe. On 20 November 2006, the Group disposed of itsoperations 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: Unaudited six months Unaudited six months Audited year ended ended 30 June 2007 ended 30 June 2006 31 December 2006 --------------------- --------------------- --------------------- UK and Mainland Total UK and Mainland Discon- UK and Mainland Discon- Ireland Europe Ireland Europe tinued Total Ireland Europe tinued Total operation operation (USA) (USA) £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's £000's-----------------------------------------------------------------------------------------------------------------------Revenue 722,496 376,635 1,099,131 605,133 245,454 38,400 888,987 1,254,376 605,456 65,228 1,925,060ResultSegment result before amortisation of acquiredintangibles 57,149 16,383 73,532 48,041 8,521 2,295 58,857 99,919 27,577 3,758 131,254Amortisation of acquired intangibles (5,597) (475) (6,072) (2,891) (78) - (2,969) (6,470) (472) - (6,942)------------------------------------------------------------------------------------------------------------------------Segment result 51,552 15,908 67,460 45,150 8,443 2,295 55,888 93,449 27,105 3,758 124,312 Parent Company costs (3,558) (2,965) (6,095)------------------------------------------------------------------------------------------------------------------------Operating profit 63,902 52,923 118,217Net finance costs - continuing operations (7,738) (5,074) (11,787)Net finance costs - discontinued operation - 10 16-----------------------------------------------------------------------------------------------------------------------Profit before tax 56,164 47,859 106,446Profit on disposal of discontinued operation - - 1,947Income tax credit - on profit on disposal ofdiscontinued operation - - 92Income tax expense - continuing operations (16,849) (14,175) (30,839)Income tax expense - discontinued operation - (659) (1,124)Minority interests (556) (370) (673)------------------------------------------------------------------------------------------------------------------------Retained profit 38,759 32,655 75,849------------------------------------------------------------------------------------------------------------------------Attributable to:Continuing operations 38,759 31,009 71,160Discontinued operation - 1,646 4,689----------------------------------------------------------------------------------------------------------------------- 38,759 32,655 75,849-----------------------------------------------------------------------------------------------------------------------Balance SheetAssetsSegment assets 825,032 612,832 1,437,864 670,118 191,563 31,186 892,867 718,293 266,490 - 984,783Unallocated assets 78,851 4,683 11,628-----------------------------------------------------------------------------------------------------------------------Consolidated total assets 1,516,715 897,550 996,411-----------------------------------------------------------------------------------------------------------------------LiabilitiesSegment liabilities 342,274 198,371 540,645 280,099 68,800 6,128 355,027 264,338 91,886 - 356,224Unallocated liabilities 460,659 232,898 287,525-----------------------------------------------------------------------------------------------------------------------Consolidated total liabilities 1,001,304 587,925 643,749-----------------------------------------------------------------------------------------------------------------------Other segmentinformationCapital expenditure on:Property, plant and equipment 21,516 6,414 27,930 13,266 3,239 248 16,753 37,289 8,121 391 45,801Intangible assets 10,186 31,119 41,305 4,727 548 - 5,275 28,835 10,793 - 39,628Goodwill 16,926 170,948 187,874 9,541 239 - 9,780 36,470 18,891 - 55,361Non-cash expenditure:Depreciation 10,204 3,316 13,520 8,044 2,447 195 10,686 18,217 5,540 346 24,103Amortisation of acquired intangibles 5,597 475 6,072 2,891 78 - 2,969 6,470 472 - 6,942----------------------------------------------------------------------------------------------------------------------- 3 Income tax expense The income tax expense comprises: Unaudited Unaudited Audited six months six months year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £000's £000's £000's--------------------------------------------------------------------------------------------UK taxation 10,703 10,161 21,894Overseas taxation 6,146 4,673 9,977--------------------------------------------------------------------------------------------Total income tax expense for the period 16,849 14,834 31,871--------------------------------------------------------------------------------------------Attributable to:Continuing operations 16,849 14,175 30,839Discontinued operation - 659 1,032-------------------------------------------------------------------------------------------- 16,849 14,834 31,871-------------------------------------------------------------------------------------------- 4. Earnings per share The calculations of earnings per share are based on the following profits and numbers of shares: Basic and diluted----------------------------------------------------------------------------------------------------------------------- Unaudited six months Unaudited six months Audited year ended ended 30 June 2007 ended 30 June 2006 31 December 2006 ----------------------------------------------------------------------------------------------------------------------- Discontinued Discontinued Discontinued Continuing operation Total Continuing operation Total Continuing operation Total operations (USA) operations (USA) operations (USA) £000's £000's £000's £000's £000's £000's £000's £000's £000's----------------------------------------------------------------------------------------------------------------------- Profit after tax 39,315 - 39,315 31,379 1,646 33,025 71,833 4,689 76,522Minority interests (556) - (556) (370) - (370) (673) - (673)----------------------------------------------------------------------------------------------------------------------- 38,759 - 38,759 31,009 1,646 32,655 71,160 4,689 75,849----------------------------------------------------------------------------------------------------------------------- Basic and diluted before amortisation of acquired intangibles, hedge ineffectiveness and profit on disposal of discontinued operation---------------------------------------------------------------------------------------------------------------------- Unaudited six months Unaudited six months Audited year ended ended 30 June 2007 ended 30 June 2006 31 December 2006 ----------------------------------------------------------------------------------------------------------------------- Discontinued Discontinued Discontinued Continuing operation Total Continuing operation Total Continuing operation Total operations (USA) operations operations (USA) £000's £000's £000's £000's £000's £000's £000's £000's £000's----------------------------------------------------------------------------------------------------------------------- Profit after tax 39,315 - 39,315 31,379 1,646 33,025 71,833 4,689 76,522Minority interests (556) - (556) (370) - (370) (673) - (673)Amortisation of acquiredintangibles 6,072 - 6,072 2,969 - 2,969 6,942 - 6,942Hedge ineffect-iveness (186) - (186) (1,170) - (1,170) (1,357) - (1,357)Tax relating to the amortisation of acquired intangibles and hedge ineffect-iveness (1,766) - (1,766) (540) - (540) (1,676) - (1,676)Profit after tax on disposal ofdiscontinuedoperation - - - - - - - (2,039) (2,039)----------------------------------------------------------------------------------------------------------------------- 42,879 - 42,879 32,268 1,646 33,914 75,069 2,650 77,719----------------------------------------------------------------------------------------------------------------------- Weighted average number of shares: Unaudited Unaudited Audited six months six months year ended ended 30 ended 30 31 December June 2007 June 2006 2006 Number Number Number--------------------------------------------------------------------------------------------------------------For basic earnings per share 125,093,655 122,040,935 122,560,171Exercise of share options 1,262,718 1,926,741 1,287,923--------------------------------------------------------------------------------------------------------------For diluted earnings per share 126,356,373 123,967,676 123,848,094-------------------------------------------------------------------------------------------------------------- Unaudited Unaudited Audited six months six months year ended ended 30 ended 30 31 December June 2007 June 2006 2006--------------------------------------------------------------------------------------------------------------Earnings per shareBasic earnings per share - continuing operations 31.0p 25.4p 58.1pBasic earnings per share - discontinued operation - 1.3p 3.8pTotal basic earnings per share 31.0p 26.8p 61.9p---------------------------------------------------------------------------------------------------------------Diluted earnings per share - continuing operations 30.7p 25.0p 57.5pDiluted earnings per share - discontinued operation - 1.3p 3.8pTotal diluted earnings per share 30.7p 26.3p 61.2p---------------------------------------------------------------------------------------------------------------Earnings per share before amortisation of acquired intangibles, hedge ineffectiveness and profit on disposal of discontinued operationBasic earnings per share - continuing operations 34.3p 26.4p 61.3pBasic earnings per share - discontinued operation - 1.3p 2.2pTotal basic earnings per share 34.3p 27.8p 63.4p---------------------------------------------------------------------------------------------------------------Diluted earnings per share - continuing operations 33.9p 26.0p 60.6pDiluted earnings per share - discontinued operation - 1.3p 2.1pTotal diluted earnings per share 33.9p 27.4p 62.8p--------------------------------------------------------------------------------------------------------------- Earnings per share before amortisation of acquired intangibles, hedgeineffectiveness and profit on disposal of discontinued operation is disclosedin order to present the underlying performance of the Group. 5 Consolidated statement of changes in equity Unaudited six Unaudited six Audited months ended months ended year ended 30 June 2007 30 June 2006 31 December 2006 £000's £000's £000's------------------------------------------------------------------------------------------------Profit for the period attributable to equity holders of the Company 38,759 32,655 75,849Dividends (17,604) (14,051) (21,719)New share capital issued 147,219 423 1,874Exchange difference on retranslation of foreigncurrency goodwill andintangibles 71 10 (918)Exchange difference on retranslation of foreign currency net investments(excluding goodwill and intangibles) 1,240 320 (3,980)Exchange and fair value movements associated with borrowings and derivativefinancial instruments (9,967) (1,056) 6,712Tax charge on exchange 382 333 (1,078)difference arising onborrowings and derivativefinancial instrumentsCurrent and deferred tax on share options 1,371 558 2,214Actuarial gain on defined benefit pension schemes - - 3,292Deferred tax movement associated with actuarial gain - - (966)Credit to share option reserve 722 450 1,089------------------------------------------------------------------------------------------------Net addition to shareholders' funds 162,193 19,642 62,369------------------------------------------------------------------------------------------------Opening shareholders' funds 351,509 289,140 289,140------------------------------------------------------------------------------------------------Closing shareholders' funds 513,702 308,782 351,509Amounts attributable to 1,709 843 1,153minority interests------------------------------------------------------------------------------------------------Total equity 515,411 309,625 352,662------------------------------------------------------------------------------------------------ 6 Reconciliation of operating profit to cash inflow from operating activities Unaudited six Unaudited six Audited months ended months ended year ended 30 June 2007 30 June 2006 31 December 2006 £000's £000's £000's------------------------------------------------------------------------------------------------Operating profit 63,902 52,923 118,217Depreciation charge 13,520 10,686 24,103Amortisation of acquired intangibles 6,072 2,969 6,942Profit on sale of property, plant and (1,422) (286) (630)equipmentShare-based payments 722 450 1,089Increase in working capital (19,298) (23,125) (17,366)------------------------------------------------------------------------------------------------Cash inflow from operating activities 63,496 43,617 132,355------------------------------------------------------------------------------------------------ 7 Reconciliation of net cash flow to movements in net debt Unaudited six Unaudited six Audited months ended months ended year ended 30 June 2007 30 June 2006 31 December 2006 £000's £000's £000's----------------------------------------------------------------------------------------------------Increase in cash and cash equivalents in the period 48,822 9,044 30,723Cash outflow from movement in debt (72,165) (34,480) (75,846)----------------------------------------------------------------------------------------------------Increase in net debt resulting from cash flows (23,343) (25,436) (45,123)Debt acquired with acquisitions (83,802) (263) (15,920)Loan notes settling contingent consideration (1,116) - -on prior period acquisitionsNon-cash items (7,569) 1,223 5,911Exchange differences (268) (421) 1,035----------------------------------------------------------------------------------------------------Increase in net debt in the period (116,098) (24,897) (54,097)Net debt at beginning of period (228,820) (174,723) (174,723)----------------------------------------------------------------------------------------------------Net debt at end of period (344,918) (199,620) (228,820)---------------------------------------------------------------------------------------------------- 8 Reconciliation of acquisition expenditure Unaudited six Unaudited six Audited months ended months ended year ended 30 June 2007 30 June 2006 31 December 2006 £000's £000's £000's------------------------------------------------------------------------------------------------------- Total consideration for acquisitions made in the periodCash consideration 168,689 20,059 101,728Contingent consideration 2,505 750 4,587Deferred consideration (loan notes) 1,375 263 483-------------------------------------------------------------------------------------------------------Total consideration 172,569 21,072 106,798-------------------------------------------------------------------------------------------------------Total consideration for acquisitions made in the periodincluding assumed debt and net of cash and cash equivalents acquiredTotal consideration (as above) 172,569 21,072 106,798Overdraft / (cash) acquired 4,238 (5,316) (13,054)Debt acquired 82,427 - 15,437-------------------------------------------------------------------------------------------------------Total consideration (including assumed debt) 259,234 15,756 109,181------------------------------------------------------------------------------------------------------- Acquisition cash flows during the periodCash paid for acquisitions made in the period 168,689 20,059 101,728Overdraft / (cash) acquired 4,238 (5,316) (13,054)Cash paid in relation to prior period acquisitions 2,541 194 1,387------------------------------------------------------------------------------------------------------- 175,468 14,937 90,061------------------------------------------------------------------------------------------------------- 9 Called up share capital Unaudited six Unaudited six Audited months ended months ended year ended 30 June 2007 30 June 2006 31 December 2006 £000's £000's £000's-------------------------------------------------------------------------------------------------------Authorised:190,000,000 ordinary shares of 10p each (30 June 2006 : 190,000,000 ; 31 December 2006 : 190,000,000) 19,000 19,000 19,000-------------------------------------------------------------------------------------------------------Allotted, called up and fully paid:134,667,294 ordinary shares of 10p each (30 June 2006 : 122,264,587 ; 31 December 2006 : 123,104,025) 13,467 12,226 12,310------------------------------------------------------------------------------------------------------- On 24 May 2007, SIG announced a placing of new ordinary shares withinstitutional and other investors to raise gross proceeds of £150m (the"Placing"). The Company placed 11,363,637 new ordinary shares at 1320p each,raising £147m after commissions and expenses. The Placing proceeds have beenused to fund the acquisition of Lariviere and the increased acquisition spend.They also provide SIG with financial flexibility to take advantage ofacquisition opportunities as they arise and ensuring that SIG continues to driveits organic growth through ongoing investment in its businesses. Total cash consideration received by the Company (including the Placing) forshares allotted during the period, net of commissions and expenses, amounted to£147.2m (30 June 2006 : £0.4m; 31 December 2006 : £1.9m). 10 Interim dividend An interim dividend of 8.0p per share (2006: 6.2p) has been declared.In accordance with IAS 10 "Events after the balance sheet date", dividendsdeclared after the balance sheet date are not recognised as a liabilityin the financial statements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SIG