Sig Plc · LSE:SHI

Sig — FY2008 Earnings Presentation

52 slides from Sig's earnings presentation, Mar 18, 2009

  1. Slide 1: SIG plc Annual Results Presentation

    SIG plc Annual Results Presentation for the year ended 31 December 2008 18 March 2009 Copyright SIG plc 2009 1

  2. Slide 2: This presentation, which has been prepared by SIG plc (the "Company"), comprises the written

     This presentation, which has been prepared by SIG plc (the "Company"), comprises the written materials/slides for a presentation concerning the preliminary results of the Company for the financial year ended 31 December 2008 and the proposed Placing and Open Offer and Firm Placing by the Company,

  3. Slide 3: Introduction

    Introduction Les Tench Chairman Copyright SIG plc 2009 3

  4. Slide 4: Agenda

    Agenda  Overview  Financial Review  Trading Review  Management actions  Outlook  Equity Issue Copyright SIG plc 2009 4

  5. Slide 5: Overview

    Overview  2008 underlying results in line with expectations  Economic uncertainty significantly increased in recent months  Comprehensive package of measures implemented and to be implemented to reduce net costs by aggregate expected £47m and conserve cash  Range of refinancing options considere

  6. Slide 6: Financial Review

    Financial Review Gareth Davies Finance Director Copyright SIG plc 2009 6

  7. Slide 7: Summary Income Statement

    Summary Income Statement Change £m 2008 2007 £m % Revenue 3,053.6 2,455.2 598.4 24.4% Underlying Operating Profit 169.8 159.4 10.4 6.5% Underlying Finance Costs (32.5) (19.3) (13.2) Underlying Profit Before Tax 137.3 140.1 (2.8) (2.0)% Restructuring Costs (22.2) - (22.2) Impairment Charges (14.2) -

  8. Slide 8: Analysis of Revenue Growth

    Analysis of Revenue Growth 3,200 % £m 3,000 226.4 Price 2.0% 49.1 2,800 Volume (2.8%) (66.3) 2,600 389.2 Like for like (0.8%) (17.2) 3,054 49.1 (66.3) Acquisition 15.9% 389.2 2,400 Currency 9.3% 226.4 2,200 2,455 24.4% 598.4 2,000 2007 Price Volume Acquisition Currency 2008 8

  9. Slide 9: Summary Balance Sheet

    Summary Balance Sheet £m H1 2008 FY 2008 FY 2007 Net Capex 31.9 52.9 53.6 Depreciation 19.2 42.6 30.3 Net Capex/depreciation ratio 1.66x 1.24x 1.77x Net working capital 377.9 370.7 276.9 Net debt 640.2 697.1 428.9 Net debt / EBITDA ratio 2.71x 3.07x 2.04x  Focus on working capital (emphasis in H2)

  10. Slide 10: Summary Cash Flow

    Summary Cash Flow £m FY 2008 FY 2007 Cash inflow from trading 189.4 189.3 Change in working capital (33.4) (29.0) Cash inflow from operations 156.0 160.3 Interest and tax (63.4) (54.1) Maintenance capital expenditure (42.6) (30.3) Free cash flow available for investment 50.0 75.9 Investment capital

  11. Slide 11: Working Capital and Cash Conversion

    Working Capital and Cash Conversion Working Capital Cash Conversion £m FY 2008 FY 2007 £m H1 2008 FY 2008 FY 2007 Stock days* 39 41 Cash flow from operations* 40.0 164.4 163.9 Debtor days* 43 47 Underlying operating profit 84.0 169.8 159.4 Bad & doubtful debt as a % of Trading cash conversion 48% 97

  12. Slide 12: Current Debt Facilities

    Current Debt Facilities*  Current UK committed debt facilities of £794m – £79m of facilities maturing in 2009  Covenants – 3.5x Net debt / EBITDA vs Dec 08 position of 3.07x – 3.0x EBITA interest cover vs Dec 08 position of 5.2x  Average cost of current debt is c.5.5% Facilities Profile 2008 2009

  13. Slide 13: 2008 Acquisitions – Regions & Markets

    2008 Acquisitions – Regions & Markets Total Annualised Sales £190m £m Sales per annum UK & Ireland Mainland Europe Insulation & Building Environments 33.6 54.9 Exteriors 44.5 10.4 Interiors 21.1 10.3 Specialist Construction Products 15.2 - TOTAL 114.4 75.6  £127.7m spend in H1 (including £7.3m cont

  14. Slide 14: Trading Review and Market Outlook

    Trading Review and Market Outlook Chris Davies Chief Executive Copyright SIG plc 2009 14

  15. Slide 15: Content

    Content  Trading Review  Cost cutting and cash conservation measures  Outlook  Equity Issue Copyright SIG plc 2009 15

  16. Slide 16: Total Sales Growth

    Total Sales Growth 2008 v 2007 - Actual Growth £598.4m + 24.4% + 15.1% + 6.5% - 0.8% Total £ Total Constant Like for Like £ Like for Like Currency Constant Currency Copyright SIG plc 2009 16

  17. Slide 17: Sales – Regional Analysis

    Sales – Regional Analysis £245.3m Sales Growth 2008 v 2007 in constant currency £372.0m Total +26.3% £126.7m Total 8.3% LFL +4.2% LFL -3.4% UK & Ireland (Constant Currency) Mainland Europe (Constant Currency) Copyright SIG plc 2009 17

  18. Slide 18: Regional Performance – Sales

    Regional Performance – Sales Total Sales 2008 £3,053.6m, 2007 £2,455.2m Mainland Europe 45.3% £1,384.2m (2007: 37.9%) UK & Ireland 54.7% £1,669.4m (2007: 62.1%) Copyright SIG plc 2009 18

  19. Slide 19: Total Operating Profit (i)

    Total Operating Profit *(i) Total Growth 2008 v 2007 £10.4m +6.5% -0.2% -8.2% -13.5% Total £ Total (Constant Like for Like (£) Like for Like Currency) (Constant Currency) * Underlying operating profit - “Underlying” is defined as meaning before the amortisation of acquired intangibles, impairment ch

  20. Slide 20: Total Operating Profit (ii)

    Total Operating Profit *(ii) Total Growth 2008 v 2007 £10.4m Like for Like Acquisitions -£12.1m £22.5m * Underlying Copyright SIG plc 2009 20

  21. Slide 21: Operating Profit – Regional Performance

    Operating Profit * – Regional Performance 2008 compared to 2007 (% movement) Like for Like Total % % (19.1) (8.9) UK & Ireland (constant currency) Mainland Europe (constant currency) 10.8 26.2 * Underlying Copyright SIG plc 2009 21

  22. Slide 22: Trading Performance – UK & Ireland

    Trading Performance – UK & Ireland Copyright SIG plc 2009 22

  23. Slide 23: UK & Ireland 2008 – Key Points Summary

    UK & Ireland 2008 – Key Points Summary  Impact on construction sector of turmoil in financial markets  UK construction activity weakened v. 2007, residential new build and discretionary RMI most affected  UK non-residential more resilient, especially publicly-funded sector  Miller Pattison tradi

  24. Slide 24: UK & Ireland – Sales Growth

    UK & Ireland – Sales Growth 2008 Actual Growth £145.6m Like for Like £-32.2m 2008 Acquisitions 2007 Acquisitions £93.2m Incremental in 2008 £84.6m Copyright SIG plc 2009 24

  25. Slide 25: UK & Ireland – Operating Profit

    UK & Ireland – Operating Profit* 2008 Actual Reduction £10.1m 2008 Acquisitions £10.4m 2007 Acquisitions Incremental in 2008 £1.4m Like for Like £-21.9m * Underlying Copyright SIG plc 2009 25

  26. Slide 26: UK & Ireland – Market Sector Performance 2008 v 2007

    UK & Ireland – Market Sector Performance 2008 v 2007 Sales Operating Trading Profit Sites* Insulation & Building + 8 to 83 Environments Exteriors - 25 to 253 Interiors - 6 to 49 Specialist Construction - 5 to 48 Products * - compared to 1 January 2008 Copyright SIG plc 2009 26

  27. Slide 27: Trading performance - Mainland Europe

    Trading performance - Mainland Europe Copyright SIG plc 2009 27

  28. Slide 28: Mainland Europe 2008 – Key Points Summary

    Mainland Europe 2008 – Key Points Summary  Macroeconomic problems impacting more slowly than in UK & Ireland  Market conditions generally stable  Some weakening of residential sector  Like for Like sales growth in constant currency in every region of operation, in total and in each half year Cop

  29. Slide 29: Sales Growth Mainland Europe (i)

    Sales Growth Mainland Europe (i) 2008 v 2007, Total Growth £452.8m +48.6% Growth % Sterling Constant Currency 1384.2 Total 48.6% 26.3% Like for Like 23.0% 4.2% 931.4 2007 2008 £m Actual £m Actual Copyright SIG plc 2009 29

  30. Slide 30: Sales Growth Mainland Europe (ii)

    Sales Growth Mainland Europe (ii) 2008 v 2007, Actual Growth £452.8m £62.4m £211.9m £178.5m 2008 Incremental Sales in Like for Like Acquisitions 2008 from 2007 Acquisitions Copyright SIG plc 2009 30

  31. Slide 31: SIG Mainland Europe

    SIG Mainland Europe Sales by Region 2008 Germany & Austria France 41.2% 35.0% 2007: 49.7% 2007: 29.0% Benelux* Poland & Central Europe 8.7% 15.1% 2007: 6.2% 2007: 15.1% * Including ATC Copyright SIG plc 2009 31

  32. Slide 32: Performance 2008 – Germany & Austria in Euros

    Performance 2008 – Germany & Austria in Euros +5.8% +20.3% +7 to 89 Sales Operating Profit Trading Sites*  LFL sales +1.4%  Roofing sales down, Insulation & Interiors sales up  Operating margin increased to 5.4% (2007: 4.8%) * Compared to 1 January 2008 Copyright SIG plc 2009 32

  33. Slide 33: Performance 2008 – France in Euros

    Performance 2008 – France - in Euros +53.8% +27.3% +22 to 164 Sales Operating Profit Trading Sites*  Strong performance in core operations  LFL sales +11.0% * Compared to 1 January 2008 Copyright SIG plc 2009 33

  34. Slide 34: Performance 2008 – Benelux in Euros

    Performance 2008 – Benelux – in Euros +17.3% +46.8% +1 to 12 sites Sales Operating Profit Trading Sites*  Core markets solid  LFL sales +9.4%  Operating margin improved to 5.7% (2007: 4.5%) * Compared to 1 January 2008 Copyright SIG plc 2009 34

  35. Slide 35: Performance 2008 – Poland and Central Europe

    Performance 2008 – Poland and Central Europe in local currency +27.8% +2.5% + 14 to 97 Sales Operating Profit Trading Sites*  LFL sales + 3.9%  Operating margin down to 3.4% (2007: 4.3%) * Compared to 1 January 2008 Copyright SIG plc 2009 35

  36. Slide 36: Management actions

    Management actions Copyright SIG plc 2009 36

  37. Slide 37: Management Actions — Annualised Gross Cost Savings of £44m Implemented

    Management Actions — Annualised Gross Cost Savings of £44m Implemented Previously Announced Achieved savings  Focus on cash conservation Staff £27m  Realignment of resources to anticipated trading levels Trading sites £7m – Cost saving initiatives concentrated mainly on UK and Others £8m Ireland –

  38. Slide 38: Ongoing Management Actions

    Ongoing Management Actions  Cost base continues to be adjusted – Appropriate for current outlook – Further £12m of hard net cost savings being implemented in Q1 2009 (annualised £15m) – 2009 Net cost savings now expected at £47m  Additional contingency plans in place should trading conditions dete

  39. Slide 39: Market Outlook

    Market Outlook Copyright SIG plc 2009 39

  40. Slide 40: UK and Ireland — Market outlook

    UK and Ireland — Market outlook  2009 will be a very challenging year  Meaningful analysis of early year trends difficult  Financial crisis impacting private sector new build and Repairs, Maintenance and Improvement  Ireland will remain very challenging  Ongoing beneficial impact of building re

  41. Slide 41: Mainland Europe — Market Outlook

    Mainland Europe — Market Outlook  Severe winter conditions experienced in early 2009  Excluding effects of the extreme weather – Underlying activity/demand levels are in line with management expectations in most operations – Exceptions are France and Germany roofing where 2009 start up has been sl

  42. Slide 42: Mainland Europe — Market Outlook (cont’d)

    Mainland Europe — Market Outlook (cont’d)  Economies responding differently to economic crisis  Management expects market decline to be less severe than in UK and Ireland  Ongoing support of building regulations for insulation usage  Substantial Government stimulus packages targeting SIG’s end m

  43. Slide 43: Equity Issue

    Equity Issue Chris Davies (CEO) Copyright SIG plc 2009 43

  44. Slide 44: Rationale and Benefits for Equity Issue

    Rationale and Benefits for Equity Issue Rationale Benefits  End market deterioration has  Appropriate capital structure for reduced headroom under existing the business in uncertain times debt covenants – Reduce overall indebtedness and  Adverse FX movements negatively increase headroom within ex

  45. Slide 45: Summary

    Summary Chris Davies (CEO) Copyright SIG plc 2009 45

  46. Slide 46: Summary

    Summary  Economic uncertainty significantly increased in recent months  Spread of countries and markets provides some resilience  Comprehensive package of measures implemented to reduce costs and conserve cash – Measures reducing costs by approximately net £35m already implemented – Additional Q1

  47. Slide 47: Q&A

    Q&A Les Tench (Chairman) Copyright SIG plc 2009 47

  48. Slide 48: Appendix

    Appendix Copyright SIG plc 2009 48

  49. Slide 49: Transaction Details

    Transaction Details Equity Issue Timetable Proceeds raised £341.3m gross Announcement of annual results and equity issue 18 March 2009 £325m net Placing and open offer Placing price 75p per share acceptances 8 April 2009 Discount 28.6% Firm placing amount £181.3m EGM to approve equity issue 9 April

  50. Slide 50: Total Sales Growth (ii)

    Total Sales Growth (ii) 2008 v 2007 - Actual Growth £598.4m 24.5% Like for Like £146.3m 2007 Acquisitions Incremental Impact in 2008 £296.5m 49.5% 2008 Acquisitions £155.6m 26.0% Copyright SIG plc 2009 50

  51. Slide 51: Debt Maturity Profile

    Debt Maturity Profile Committed Debt Facilities Maturity (£m) (£m) 900 Total committed facilities Debt maturities 450 800 400 700 350 600 300 500 250 400 200 300 134 150 100 200 100 50 50 53 100 29 28 50 0 0 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Dec-11 Copyright SIG plc 2009 51

  52. Slide 52: UK & Ireland – Sector Performance 2008 v 2007

    UK & Ireland – Sector Performance 2008 v 2007 Insulation – Sales +9.2%, LFL +2.6%  Miller Pattison strong growth - CERT  UK Building Regulations (2006) Part ‘L’ continuing to add volume Interiors – Sales +21.1%, LFL +2.3%  Commercial sector slipping in H2  Public sector projects growing steadily

SIG — FY2008 Earnings Presentation on 6ix