SIG Regulatory News (SHI)

13 Sep 2006 07:00

SIG PLC13 September 2006 P R E S S R E L E A S E 13 September 2006 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2006 SIG plc is the market leading specialist supplier of insulation, roofing andcommercial interiors products in Europe. • SIG reports strong sales and profits across all regions. • Sales increased by 15.6% to £889m (2005: £769m). Like for like sales growth (i.e. excluding the impact of acquisitions made in 2005 and 2006) was 6.7%. o UK and Ireland sales increased 17.1% to £605.1m (2005: £516.7m). o Mainland Europe sales increased 11.0% to £245.5m (2005: £221.1m). o USA sales increased 22.7% to £38.4m (2005: £31.3m). • Underlying* operating profit increased 27.8% to £55.9m (2005: £43.8m). o UK and Ireland underlying operating profit increased 27.4% to £48.0m (2005: £37.7m). o Mainland Europe underlying operating profit increased 19.3% to £8.5m (2005: £7.1m). o USA underlying operating profit increased by 67.0% to £2.3m (2005: £1.4m). • Underlying profit before tax was up 22.7% to £49.7m (2005: £40.5m) and underlying basic earnings per share increased by 24.7% to 27.8p (2005: 22.3p). • Profit before tax was up 21.6% to £47.9m (2005: £39.4m) and basic earnings per share increased by 24.1% to 26.8p (2005: 21.6p). • Interim dividend per share has been increased 17% to 6.2p (2005: 5.3p). • So far in 2006, SIG has completed twelve acquisitions, with combined annual sales of c.£115m, for a total consideration of £49m. * Where reference is made to "underlying" this should be taken as meaning before the amortisation of acquired intangibles, goodwill impairment and hedge ineffectiveness. Les Tench, Chairman, commented: "The first six months of 2006 has been a period of continued expansion and solidgrowth throughout the Group. Strong like for like increases in sales andoperating profit across all the geographic regions in which the Group tradeswere supplemented by the positive impact of businesses acquired in 2005 andduring the period. We are focused on achieving sustainable long term growth through a programme ofinvestments in existing businesses, and the acquisition of carefully targetedcomplementary businesses. The company continues to strengthen its position inits key markets, and is well positioned to benefit from future opportunities.Trading since the end of June has been in line with expectations, and the Boardis confident that further progress will be made in 2006." Enquiries: David Williams, Chief Executive SIG plc today 020 7251 3801Gareth Davies, Finance Director thereafter 0114 285 6300Gordon Simpson/Kirsty Flockhart Finsbury 020 7251 3801 Full Interim Results information is available on www.sigplc.co.uk. An interviewwith David Williams, Chief Executive is now available on SIG's website andwww.cantos.com Chairman's Statement The first six months of 2006 has been a period of continued expansion and solidgrowth throughout the Group. Strong like for like increases in sales and operating profit across all thegeographic regions in which the Group trades were supplemented by the positiveimpact of businesses acquired in 2005 and during the period. Results For the six months to 30 June 2006, compared with the corresponding period in2005: Sales • Total sales were £889m, up £120m (15.6%) over the first half of 2005 (£769m). • Like for like sales growth, i.e. excluding the impact of acquisitions completed after 1 January 2005, was £51m, an increase of 6.7%. • Foreign currency exchange rate movements compared to 2005 were minimal, adding less than £5m to Group sales. Sales growth on a constant currency basis was 15.0%. • Like for like sales growth was achieved in all countries in which the Group has trading operations, and in all principal business streams. Profits • Underlying* operating profit was £55.9m, an increase of £12.1m (27.8%) over the £43.8m in the first half of 2005. • Underlying* profit before tax increased by £9.2m (22.7%) to £49.7m (2005: £40.5m). • Net finance charges before hedge ineffectiveness were £6.2m (up from £3.3m for the first half of 2005) reflecting the expenditure on acquisitions and increased Euro interest rates since June 2005. • Profit before tax increased by £8.5m, up 21.6% to £47.9m (2005: £39.4m). * Where reference is made to "underlying" this should be taken as meaning before the amortisation of acquired intangibles, goodwill impairment and hedge ineffectiveness. Earnings per Share • Underlying basic earnings per share were 27.8p, up 5.5p (24.7%) on the 22.3p in the first half of 2005. • Basic earnings per share increased by 5.2p to 26.8p (2005: 21.6p), an increase of 24.1%. Financial • Balance sheet gearing was 65% at 30 June 2006, compared to 60% at 31 December 2005. • Interest cover continues to be healthy at 9 times (30 June 2005: 13 times). Dividend An interim dividend of 6.2p per share has been declared, an increase of 17.0% onthe 5.3p interim dividend paid for the first half of 2005. This dividend is covered 4.3 times. The dividend is payable on 27 November 2006, to shareholders on the register at27 October 2006. Trading Review UK & Ireland (68% of Group sales) Total sales in the UK and Ireland increased by £88m to £605.1m, up 17.1% on H12005 (£516.7m). Sales growth on a like for like basis was 4.8%. Operating profit increased by £10.3m to £48.0m, up 27.4% on 2005 (£37.7m) andthe net operating margin increased to 7.9% (2005: 7.3%). This strong performance was achieved against the background of the followingmarket conditions: Overall construction activity, which is the main external factor influencing theGroup, is estimated to have been very slightly up on the first half of 2005.This small increase came from non-residential new build and renovationprogrammes, where SIG is particularly strong. Within the non-residential sector,commercial office construction grew. Public sector construction, which isheavily influenced by the long term government commitment to rebuild and replaceschools and hospitals throughout the UK, is believed to have been flat comparedwith prior year. The release of new work of this type so far in 2006 has been ata lower level than industry expectations. In the residential building sector, new construction activity continued atsimilar levels to 2005, and the market for upgrading and renovation of existinghomes remained sluggish. Market demand for thermal insulation materials was similar to prior year, andaverage prices declined due to oversupply in the market arising from increasedmanufacturing capacity. After three years of very strong growth in demand, themarket for upgrading of insulation in existing dwellings began to level offduring the first half of 2006. Demand is heavily driven by grants and subsidiesboth from government agencies and from the energy producers, and whilst the longterm prospects are very good, in the short term certain key schemes arebeginning to wind down. Demand for roofing materials continued to be adversely affected by reducedactivity in the housing RM&I market, and by the reduced number of "conventional"semi-detached and detached homes under construction. The range of commercial interiors and specialist construction products sold bySIG are more commonly sold to non-residential rather than residentialconstruction sites, and therefore demand has been slightly stronger in the firstsix months of 2006. Against this background of mixed market conditions, results in the first half of2006 benefited from a range of internal growth and development initiatives, asoutlined below. Businesses acquired in 2005 and so far in 2006 have integrated well into theGroup, and together, contributed strongly to the growth achieved. The range of products sold has been further expanded, and certain products newlyintroduced as a result of recent acquisitions have been migrated into existingcore operations. Largely as a result of the acquisition programme, the number of trading sites inthe UK and Ireland increased by 38 to 375 at 30 June 2006 (31 December 2005:337). This expansion increases the customer base, and improves the Group'scapability to meet customer service demands. Actions taken as part of our ongoing continuous improvement programme, and thepositive impact of higher margin businesses acquired in 2005 enabled the grossand net operating margins to be increased in the period, compared with the firstsix months of 2005. Mainland Europe (28% of Group sales) Sales in the first half of 2006 increased by £24.4m to £245.5m, up 11.0% on H12005 (£221.1m). Operating profit increased by £1.4m to £8.5m (2005: £7.1m), an increase of19.3%. Management actions and initiatives increased the net operating margin to 3.5%(2005: 3.2%). Exchange rate movements compared to prior year had a very small positive impacton the results, adding £2.7m to sales and less than £100k to operating profit.On a constant currency basis, sales growth was 9.8%, and operating profit growth18.3%. On a like for like constant currency basis, sales growth was 7.6% and operatingprofit growth 13.7%. These are very encouraging growth figures, and are believedto represent progress at a significantly greater rate than market demand. In Germany and Austria sales grew by 8.8% in Euros. After a slow start to 2006,construction activity strengthened in more recent months. Operating profitdeclined slightly due to a reduction in the gross margin, as a result of changesin the product mix together with generally weaker prices in the market. In France, sales in Euros increased by 5.9%, and operating profits weresubstantially increased, with market demand strong and pricing positive. In Benelux, the good progress reported in 2005 continued in 2006, with sales inEuros up 26.7% and operating profit strongly ahead of prior year. Construction activity in Poland increased, and sales were up by 16.6% in localcurrency. In comparison with a small operating loss reported in the first halfof 2005, a small operating profit was achieved in the first half of 2006. The total number of trading sites in Mainland Europe increased by 2 to 141 at 30June 2006, compared with 139 at 31 December 2005. Again, this represents furthergrowth and market penetration by SIG. USA (4% of Group sales) Against the background of strong market conditions, sales increased by £7.1m to£38.4m, (2005: £31.3m), an increase of 22.7%, entirely on a like for like basis. Operating profit rose by £0.9m to £2.3m (2005: £1.4m), an increase of 67.0%. Results in Dollars on a like for like basis are sales growth of 18.4%, andoperating profit up 61.2%. Whilst sales in the first three months were positively affected by some one-offreconstruction work in the Southern States arising from the hurricane damage topetrochemical and other industrial processing facilities in that area, theunderlying improvement in market demand was reflected in strong growth in thesecond quarter. Market Price Inflation After a period of strong price inflation in 2004 and 2005, the overall impact ofprice increases in 2006 has been around 2%. This is in line with internalexpectations, and is close to the long range average price inflation in theproducts and markets served by SIG. This average figure takes into account the price deflation on a year on yearbasis of a number of products, most notably certain insulation materials in theUK. Acquisitions SIG has had another successful period of acquiring businesses in related andcomplementary markets in order to broaden the Group's activities, strengthen thecore businesses, and increase the range of growth opportunities for the future. So far in 2006, we have completed twelve acquisitions, with combined annualsales of c.£115m. Total consideration for these acquired businesses is £49m,including assumed debt. These are broadly spread across the markets served by SIG, and comprise seven inroofing and related building plastics, (one in Germany, six in the UK), three ininsulation (one in France, two in the UK) and one in both specialistconstruction products and commercial interiors (both UK). In June 2006, we acquired a UK distributor of roofline and building plasticsthat is loss making. With 27 trading sites this acquisition significantlyextends our market coverage in this product sector and we are confident thatthis business will be returned to profitability. As indicated in the TradingStatement released on 11 July 2006, it is anticipated that restructuring costswill be taken over the remainder of 2006 in connection with this acquisition.These are not expected to exceed £1m. Prospects Market conditions in the key countries and product sectors which are importantto SIG are not expected to change significantly during the remainder of 2006. We are focused on achieving sustainable long term growth through a programme ofinvestments in existing businesses, and the acquisition of carefully targetedcomplementary businesses. The company continues to strengthen its position inits key markets, and is well positioned to benefit from future opportunities. The acquisitions made in 2005 impacted chiefly on the second half year, and forthis reason the year on year comparators for the six month period beginning 1July are more demanding than those for the first six months. Trading since the end of June has been in line with expectations, and the Boardis confident that further progress will be made in 2006. Consolidated Income Statementfor the six months ended 30 June 2006 Unaudited six months ended 30 June 2006 Unaudited six months ended 30 June 2005 ------------------------------------------ ------------------------------------------- Before Amortisation of Total Before Amortisation of Total amortisation of acquired amortisation of acquired acquired intangibles, acquired intangibles, intangibles, goodwill intangibles, goodwill goodwill impairment and goodwill impairment and impairment and hedge impairment and hedge hedge ineffectiveness* hedge ineffectiveness* ineffectiveness* ineffectiveness* Continuing Note £000's £000's £000's £000's £000's £000'sOperations ------------------ ---- ---------- ---------- --------- ---------- ---------- ---------Revenue 2 888,987 - 888,987 769,074 - 769,074 Operating profit 2 55,892 (2,969) 52,923 43,748 (1,359) 42,389Finance income 2,785 1,170 3,955 3,385 250 3,635Finance costs (9,019) - (9,019) (6,657) - (6,657)------------------ ---- ---------- ---------- --------- ---------- ---------- ---------Profit before tax 49,658 (1,799) 47,859 40,476 (1,109) 39,367Income tax expense 3 (15,374) 540 (14,834) (13,045) 333 (12,712)------------------ ---- ---------- ---------- --------- ---------- ---------- ---------Profit after tax 34,284 (1,259) 33,025 27,431 (776) 26,655------------------ ---- ---------- ---------- --------- ---------- ---------- ---------Attributable to:Equity holders of the Company 33,914 (1,259) 32,655 27,063 (776) 26,287Minority interests 370 - 370 368 - 368------------------ ---- ---------- ---------- --------- ---------- ---------- ---------Earnings per shareBasic earningsper share 4 27.8p (1.0p) 26.8p 22.3p (0.7p) 21.6pDiluted earnings per share 4 27.4p (1.1p) 26.3p 21.9p (0.6p) 21.3p------------------ ---- ---------- ---------- --------- ---------- ---------- --------- Audited year ended 31 December 2005 -------------------------------------------------- Before Amortisation of Total amortisation of acquired acquired intangibles, intangibles, goodwill goodwill impairment and impairment and hedge hedge ineffectiveness* ineffectiveness* Continuing Operations Note £000's £000's £000's------------------ ---- ---------- ---------- ----------Revenue 2 1,639,332 - 1,639,332 Operating profit 2 102,103 (9,342) 92,761Finance income 6,691 1,880 8,571Finance costs (14,521) - (14,521)------------------ ---- ---------- ---------- ----------Profit before tax 94,273 (7,462) 86,811Income tax expense 3 (29,211) 542 (28,669)------------------ ---- ---------- ---------- ----------Profit after tax 65,062 (6,920) 58,142------------------ ---- ---------- ---------- ----------Attributable to:Equity holdersof the Company 64,106 (6,920) 57,186Minority interests 956 - 956------------------ ---- ---------- ---------- ----------Earnings per shareBasic earnings per share 4 52.7p (5.7p) 47.0pDiluted earnings pershare 4 51.9p (5.6p) 46.3p------------------ ---- ---------- ---------- ---------- * Amortisation of acquired intangibles, goodwill impairment and hedge ineffectiveness 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 2006 Unaudited six Unaudited six Audited year months ended months ended ended 30 June 2006 30 June 2005 31 December Restated 2005 £000's £000's £000's----------------------------------- --------- --------- --------- Profit after tax 33,025 26,655 58,142Exchange difference on retranslation of foreign currency goodwill and intangibles 10 (1,498) (725)Exchange difference on retranslation of foreign currency net investments (excluding goodwill and intangibles) 320 (4,868) (1,669) Exchange difference on foreign currency borrowings (1,756) 4,871 1,111Tax credit/(charge) on exchange difference arising on foreign currency borrowings 333 (1,647) (639)Deferred tax credit on share options 558 405 596Fair value movement on interest rate swaps 700 - -Actuarial loss on definedbenefit pension schemes - - (1,885)Deferred tax movement associated with actuarial loss - - 563Transitional adjustment to adopt IAS 32 and IAS 39 at 1 January 2005 - (6,625) (6,625)Recognition of deferred tax assets on certain transitional adjustments at 1 January 2005 - 3,869 3,869----------------------------------- --------- --------- ---------Total recognised income andexpense for the period 33,190 21,162 52,738----------------------------------- --------- --------- --------- Attributable to:Equity holders of the Company 32,820 20,794 51,782Minority interests 370 368 956----------------------------------- --------- --------- --------- 33,190 21,162 52,738----------------------------------- --------- --------- --------- In the second half of 2005, in light of further guidance from the UK taxauthorities regarding the tax treatment of IFRS transitional adjustments relatingto derivative financial instruments and foreign currency exchange differences, adeferred tax asset of £3.869m was booked as at 1 January 2005. As a result theConsolidated Statement of Recognised Income and Expense has been restated for theperiod ended 30 June 2005. This adjustment was already reflected in the resultsreported for the year ended 31 December 2005 and therefore no restatement isnecessary in respect of that period. Further details of this restatement areprovided in Note 9. Consolidated Balance Sheetas at 30 June 2006 Unaudited Unaudited Audited 30 June 30 June 31 December 2006 2005 2005 Restated £000's £000's £000's--------------------------- --------- -------- ---------Non-current assetsProperty, plant and equipment 108,947 91,078 102,093Goodwill 174,465 138,013 164,675Intangible assets 51,558 38,355 49,252Deferred tax assets 20,495 25,729 21,085--------------------------- --------- -------- --------- 355,465 293,175 337,105--------------------------- --------- -------- --------- Current assetsInventories 145,012 118,021 128,101Trade receivables 327,943 307,540 281,053Other receivables 28,388 22,516 21,745Derivative financial instruments 1,163 1,069 -Cash and cash equivalents 39,579 22,975 32,120--------------------------- --------- -------- --------- 542,085 472,121 463,019--------------------------- --------- -------- ---------Total assets 897,550 765,296 800,124--------------------------- --------- -------- --------- Current liabilitiesTrade and other payables 272,327 250,358 224,859Obligations under finance leases and hirepurchase agreements 770 918 756Bank overdrafts 1,516 4,168 3,211Bank loans 132,107 63,574 95,148Derivative financial instruments 601 158 -Loan notes 5,244 - 2,253Current tax liabilities 22,918 22,056 25,483Provisions 2,438 1,639 2,252--------------------------- --------- -------- --------- 437,921 342,871 353,962--------------------------- --------- -------- --------- Non-current liabilitiesObligations under finance leases and hirepurchase agreements 859 799 838Bank loans 506 874 521Derivative financial instruments 32,415 30,289 28,376Loan notes 66,344 75,029 75,740Deferred tax liabilities 7,576 14,456 7,507Other payables 2,327 4,192 2,159Retirement benefit obligations 27,676 24,707 26,987Provisions 12,301 8,233 13,695--------------------------- --------- -------- --------- 150,004 158,579 155,823--------------------------- --------- -------- --------- Total liabilities 587,925 501,450 509,785--------------------------- --------- -------- --------- Net assets 309,625 263,846 290,339--------------------------- --------- -------- --------- Capital and reservesCalled up share capital 12,226 12,148 12,189Share premium account 18,269 16,980 17,883Capital redemption reserve 347 347 347Special reserve 22,113 22,113 22,113Share option reserve 1,825 966 1,375Hedging and translation reserve (3,375) (3,502) (2,282)Retained profits 257,377 214,196 237,515--------------------------- --------- -------- ---------Attributable to equity holders of theCompany 308,782 263,248 289,140--------------------------- --------- -------- ---------Minority interests 843 598 1,199--------------------------- --------- -------- ---------Total equity 309,625 263,846 290,339--------------------------- --------- -------- --------- Consolidated Cash Flow Statementfor the six months ended 30 June 2006 Unaudited Unaudited Audited 30 June 30 June 31 December 2006 2005 2005 Note £000's £000's £000's------------------------------------ ---- --------- -------- ---------Net cash flow from operatingactivitiesCash inflow from operating activities 6 43,617 47,190 113,581Borrowing costs paid (7,287) (4,768) (11,511)Interest received 1,084 1,803 3,518Income tax paid (18,049) (7,454) (21,850)------------------------------------ ---- --------- -------- ---------Net cash inflow from operating activities 19,365 36,771 83,738------------------------------------ ---- --------- -------- --------- Cash flows from investingactivitiesPurchase of property, plant and equipment (16,312) (14,236) (33,576)Proceeds from sale of property, plantand equipment 802 1,033 2,098Purchase of businesses (14,937) (46,476) (83,482)------------------------------------ ---- --------- -------- ---------Net cash used in investing activities (30,447) (59,679) (114,960)------------------------------------ ---- --------- -------- --------- Cash flows from financing activitiesProceeds from issue of ordinary sharecapital 423 196 1,140Capital element of finance leaserental payments (414) (702) (1,306)Repayment of loans (2,268) (15,446) (22,020)New loans 37,162 53,641 84,511Dividends paid to equity holders ofthe Company (14,051) (11,412) (17,861)Payments to minority shareholder (726) (572) (572)------------------------------------ ---- --------- -------- ---------Net cash generated from financingactivities 20,126 25,705 43,892------------------------------------ ---- --------- -------- --------- Increase in cash and cash equivalentsin the period 7 9,044 2,797 12,670------------------------------------ ---- --------- -------- --------- Cash and cash equivalents atbeginning of period 28,909 16,501 16,501Effect of foreign exchange rate 110 (491) (262)changes ------------------------------------ ---- --------- -------- ---------Cash and cash equivalents at end of period 38,063 18,807 28,909------------------------------------ ---- --------- -------- --------- 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 2006. 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 theAnnual Report for the year ended 31 December 2005, which have been appliedconsistently 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 2006 and 2005 are neither audited nor reviewed. The financial informationfor the full preceding year is based on the statutory accounts for thefinancial year ended 31 December 2005. Those accounts, upon which the auditorsissued an unqualified opinion, have been delivered to the Registrar ofCompanies. The auditors' report contained no statement under Section 237(2) or237(3) of the Companies Act 1985. 2 Segmental information The Group is managed and organised in three geographies: UK & Ireland, MainlandEurope and the USA. These geographies are the basis on which the Group reportsits primary segment information. Segment information about these geographies ispresented below: Unaudited six months ended Unaudited six months ended 30 June 2006 30 June 2005 ------------------------------------ -------------------------------------- UK & Mainland USA Total UK & Mainland USA Total Ireland Europe Ireland Europe Restated Restated Restated Restated £000's £000's £000's £000's £000's £000's £000's £000's------------------------------------ --------- --------- -------- --------- --------- --------- --------- ---------Revenue 605,133 245,454 38,400 888,987 516,705 221,075 31,294 769,074 ResultSegment result before amortisationof acquired intangibles and goodwillimpairment loss 48,041 8,521 2,295 58,857 37,700 7,141 1,374 46,215Amortisation of acquired intangibles (2,891) (78) - (2,969) (1,331) (28) - (1,359)Goodwill impairment loss - - - - - - - ------------------------------------- --------- --------- -------- --------- --------- --------- --------- ---------Segment result 45,150 8,443 2,295 55,888 36,369 7,113 1,374 44,856Parent Company costs (2,965) (2,467)------------------------------------ --------- --------- -------- --------- --------- --------- --------- ---------Operating profit 52,923 42,389Net finance costs (5,064) (3,022)------------------------------------ --------- --------- -------- --------- --------- --------- --------- ---------Profit before tax 47,859 39,367Income tax expense (14,834) (12,712)Minority interests (370) (368)------------------------------------ --------- --------- -------- --------- --------- --------- --------- ---------Retained profit 32,655 26,287------------------------------------ --------- --------- -------- --------- --------- --------- --------- --------- Balance sheetAssetsSegment assets 670,118 191,563 31,186 892,867 537,637 190,145 28,021 755,803Unallocated assets 4,683 9,493------------------------------------ --------- --------- -------- --------- --------- --------- --------- ---------Consolidated total assets 897,550 765,296------------------------------------ --------- --------- -------- --------- --------- --------- --------- --------- LiabilitiesSegment liabilities 280,099 68,800 6,128 355,027 247,741 78,439 5,352 331,532Unallocated liabilities 232,898 169,918------------------------------------ --------- --------- -------- --------- --------- --------- --------- ---------Consolidated total liabilities 587,925 501,450------------------------------------ --------- --------- -------- --------- --------- --------- --------- --------- Other segment informationCapital expenditure on:Property, plant and equipment 12,825 3,239 248 16,312 11,124 2,892 220 14,236Intangible assets 4,727 548 - 5,275 24,821 179 - 25,000Goodwill 9,541 239 - 9,780 25,899 175 - 26,074 Non-cash expenditure:Depreciation 8,044 2,447 195 10,686 6,688 2,342 257 9,287Amortisation of acquired intangibles 2,891 78 - 2,969 1,331 28 - 1,359Goodwill impairment loss - - - - - - - ------------------------------------- --------- --------- -------- --------- --------- --------- --------- --------- Audited year ended 31 December 2005 -------------------------------------------------- UK & Mainland USA Total Ireland Europe £000's £000's £000's £000's------------------------------------ --------- --------- --------- --------- Revenue 1,098,055 473,393 67,884 1,639,332 ResultSegment result before amortisation of acquired intangibles andgoodwill impairment loss 84,359 19,612 3,008 106,979Amortisation of acquired intangibles (3,630) (58) - (3,688)Goodwill impairment loss (5,654) - - (5,654)------------------------------------ --------- --------- --------- --------- Segment result 75,075 19,554 3,008 97,637Parent Company costs (4,876)------------------------------------ --------- --------- --------- --------- Operating profit 92,761Net finance costs (5,950)------------------------------------ --------- --------- --------- --------- Profit before tax 86,811Income tax expense (28,669)Minority interests (956)------------------------------------ --------- --------- --------- --------- Retained profit 57,186------------------------------------ --------- --------- --------- --------- Balance sheet AssetsSegment assets 587,710 179,100 31,535 798,345Unallocated assets 1,779------------------------------------ --------- --------- --------- --------- Consolidated total assets 800,124------------------------------------ --------- --------- --------- --------- LiabilitiesSegment liabilities 238,255 54,200 6,327 298,782Unallocated liabilities 211,003------------------------------------ --------- --------- --------- --------- Consolidated total liabilities 509,785------------------------------------ --------- --------- --------- --------- Other segment informationCapital expenditure on:Property, plant and equipment 24,802 8,448 326 33,576Intangible assets 37,543 689 - 38,232Goodwill 56,107 1,474 - 57,581 Non-cash expenditure:Depreciation 16,537 4,781 501 21,819Amortisation of acquired intangibles 3,630 58 - 3,688Goodwill impairment loss 5,654 - - 5,654------------------------------------ --------- --------- --------- --------- 3 Income tax expense The income tax expense comprises: Unaudited six Unaudited six Audited year months ended months ended ended 30 June 30 June 31 December 2006 2005 2005 £000's £000's £000's---------------------------------------- -------- -------- --------UK taxation 10,161 8,224 20,032Overseas taxation 4,673 4,488 8,637---------------------------------------- -------- -------- --------Total income tax expense for the period 14,834 12,712 28,669---------------------------------------- -------- -------- -------- 4 Earnings per share The calculations of earnings per share are based on the following profits and numbers of shares: Basic and diluted Basic and diluted before amortisation of acquired intangibles, goodwill impairment and hedge ineffectiveness -------------------------------------- --------------------------------------------- Unaudited six Unaudited Audited Unaudited six Unaudited six Audited year months ended six months year ended months ended months ended ended ended 30 June 30 June 31 December 30 June 30 June 31 December 2006 2005 2005 2006 2005 2005 £000's £000's £000's £000's £000's £000's------------------------- --------- --------- --------- --------- --------- ---------Profit after tax 33,025 26,655 58,142 33,025 26,655 58,142Minority interests (370) (368) (956) (370) (368) (956)Amortisation of acquiredintangibles - - - 2,969 1,359 3,688Goodwill impairment loss - - - - - 5,654Hedge ineffectiveness - - - (1,170) (250) (1,880)Tax relating to theamortisation of acquiredintangibles and hedgeineffectiveness - - - (540) (333) (542)------------------------- --------- --------- --------- --------- --------- --------- 32,655 26,287 57,186 33,914 27,063 64,106------------------------- --------- --------- --------- --------- --------- --------- Weighted average number of shares: Unaudited six Unaudited six Audited year months ended months ended ended 30 June 30 June 31 December 2006 2005 2005 Number Number Number------------------------------- ------------ ------------ ------------For basic earnings per share 122,040,935 121,430,203 121,625,474Exercise of share options 1,926,741 2,207,254 1,970,146------------------------------- ------------ ------------ ------------For diluted earnings per share 123,967,676 123,637,457 123,595,620------------------------------- ------------ ------------ ------------ Unaudited six Unaudited six Audited year months ended months ended ended 30 June 30 June 31 December 2006 2005 2005------------------------------- ------------ ------------ ------------Earnings per share- Basic earnings per share 26.8p 21.6p 47.0p- Diluted earnings per share 26.3p 21.3p 46.3p------------------------------- ------------ ------------ ------------- Basic earnings per share 27.8p 22.3p 52.7p- Diluted earnings per share 27.4p 21.9p 51.9p------------------------------- ------------ ------------ ------------ Earnings per share before amortisation of acquired intangibles, goodwillimpairment and hedge ineffectiveness is presented in order to give anindication of 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 30 June 31 December 2006 2005 2005 Restated £000's £000's £000's------------------------------------- ---------- --------- --------- Profit for the period 32,655 26,287 57,186Dividends (14,051) (11,412) (17,861)New share capital issued 423 196 1,140Exchange difference on retranslationof foreign currency goodwill andintangibles 10 (1,498) (725)Exchange difference on retranslationof overseas net investments (excludinggoodwill and intangibles) 320 (4,868) (1,669)Exchange difference on foreigncurrency borrowings (1,756) 4,871 1,111Tax credit/(charge) on exchangedifference arising on foreigncurrency borrowings 333 (1,647) (639)Deferred tax credit on share options 558 405 596Fair value movement in interest rate swaps 700 - -Credit to share option reserve 450 327 736Actuarial loss on defined benefitpension schemes - - (1,885)Deferred tax movement associatedwith actuarial loss - - 563Transitional adjustment to adopt IAS 32 and IAS 39 at 1 January 2005 - (6,625) (6,625)Recognition of deferred tax assets oncertain transitional adjustments at1 January 2005 - 3,869 3,869------------------------------------- ---------- --------- ---------Net addition to shareholders' funds 19,642 9,905 35,797------------------------------------- ---------- --------- ---------Opening shareholders' funds 289,140 253,343 253,343------------------------------------- ---------- --------- ---------Closing shareholders' funds 308,782 263,248 289,140Amounts attributable to minorityinterests 843 598 1,199------------------------------------- ---------- --------- ---------Total equity 309,625 263,846 290,339------------------------------------- ---------- --------- --------- 6 Reconciliation of operating profit to cash inflow from operating activities Unaudited six Unaudited six Audited months ended months ended year ended 30 June 30 June 31 December 2006 2005 2005 £000's £000's £000's-------------------------------------- ---------- --------- ---------Operating profit 52,923 42,389 92,761Depreciation charge 10,686 9,287 21,819Amortisation of acquired intangibles 2,969 1,359 3,688Goodwill impairment loss - - 5,654Profit on sale of property,plant and equipment (286) (362) (572)Share-based payments 450 327 736Increase in working capital (23,125) (5,810) (10,505)-------------------------------------- ---------- --------- ---------Cash inflow from operating activities 43,617 47,190 113,581-------------------------------------- ---------- --------- --------- 7 Reconciliation of net cash flow to movements in net debt Unaudited six Unaudited six Audited year months ended months ended ended 30 June 30 June 31 December 2006 2005 2005 £000's £000's £000's---------------------------------------- --------- -------- ---------Increase in cash and cash equivalents in the period 9,044 2,797 12,670Cash outflow from movement in debt (34,480) (37,493) (61,185)---------------------------------------- --------- -------- ---------Increase in net debt resulting fromcash flows (25,436) (34,696) (48,515)Debt acquired with acquisitions (263) (14,953) (21,270)Non-cash items 1,223 427 (1,242)IFRS transitional adjustment - (6,625) (6,625)Exchange differences (421) 2,400 1,247---------------------------------------- --------- -------- --------- Increase in net debt in the period (24,897) (53,447) (76,405)Net debt at beginning of period (174,723) (98,318) (98,318)---------------------------------------- --------- -------- ---------Net debt at end of period (199,620) (151,765) (174,723)---------------------------------------- --------- -------- --------- 8 Interim dividend An interim dividend of 6.2p per share (2005: 5.3p) 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 liability in thefinancial statements. 9 IFRS adjustment On 9 March 2006, SIG plc published its "Final Restatement of 2004 FinancialInformation" document, which can be found on SIG's website: www.sigplc.co.uk.Two additional transitional adjustments were made in this restatement documentfrom those made in the "Preliminary Restatement of 2004 Financial Information"document issued 14 September 2005. Although these additional adjustments werereflected in the numbers reported for the year ended 31 December 2005, they werenot included in those reported for the period ended 30 June 2005. The additional adjustments were as follows: a) A deferred tax asset of £3.869m was booked as at 1 January 2005 and 30 June2005 in relation to tax on certain transitional adjustments made on derivativefinancial instruments and foreign currency exchange differences; and b) Inventory was reduced by £2.800m as at 1 January 2004, 31 December 2004 and30 June 2005 to take into account early settlement discounts in the valuation ofinventory. The combined impact of the above adjustments is to increase net assets at 30June 2005 by £1.069m. As a result, the Consolidated Balance Sheet, ConsolidatedStatement of Recognised Income and Expense and the related notes have beenrestated as at 30 June 2005 to reflect these adjustments. Neither of theadditional adjustments had any impact on the Consolidated Income Statement. The impact of the adjustments at 30 June 2005 is as follows: 30 June 2005 as previously IFRS 30 June 2005 reported adjustment as restated £000's £000's £000's-------------------- --------- --------- ---------Deferred tax assets 21,860 3,869 25,729Inventories 120,821 (2,800) 118,021Net assets 262,777 1,069 263,846-------------------- --------- --------- --------- This information is provided by RNS The company news service from the London Stock Exchange