TIDMSHI
RNS Number : 1600M
SIG PLC
10 January 2023
10 January 2023
SIG plc: 2022 Full Year Trading Update
SIG plc ("SIG", or "the Group"), a leading supplier of
specialist insulation and building products across Europe, today
issues a trading update for the year ended 31 December 2022
("FY22").
Highlights
-- FY22 results reflect the continuing successful delivery of
the Return to Growth strategy and the resilience of the Group's
diversified business model
-- Full year like-for-like(1) ("LFL") sales growth of 17%, with revenues of GBP2.74bn
-- Substantial increase in underlying operating profit (2) ;
expected to be at cGBP80m, in line with market expectations, up
from GBP41m in 2021
-- Positive free cash flow (3) for the year
-- New CEO Gavin Slark (formerly CEO of Grafton Group plc) will
join the Group on 1 Februar y 2023
Summary
The Return to Growth Strategy, initiated in 2020, continued to
deliver significant progress in the year, with strong growth in
revenue and profitability, underpinned by continued improvement in
operational performance and superior customer service. As
anticipated, market demand softened in most geographies in H2, but
we continued to benefit from solid execution of our commercial
strategy, strengthening our positions in the markets in which we
operate. Input price inflation eased in H2, as expected, but
remained a strong tailwind to year-on-year revenue growth.
As a result of the above, and subject to audit, the Board
expects to report FY22 revenues of cGBP2,743m , together with a
substantial improvement in underlying operating profit to cGBP80m,
up from the GBP41.4m reported in 2021.
This performance was achieved despite a one-off loss of cGBP5m
in H2 resulting from the administration of Avonside, a major UK
roofing contractor and one of the Group's largest customers. Whilst
disappointing, the Group believes that this situation arose from
company-specific factors. Customer bad debt metrics more broadly
remain in line with management's expectations.
The improved operating performance and profitability, allied
with good working capital management, means that the Group expects
to report positive free cash flow for the year of cGBP12m, and
year-end gross cash balances of GBP131m (2021: GBP145m). The
movement in cash balances in the year reflects previously reported
cash outflows on M&A, as well as the positive free cash flow.
The Group's revolving credit facility ("RCF") was increased in
November 2022 from GBP50m to GBP90m and remained undrawn as at 31
December 2022.
The Group expects to report net debt as at 31 December 2022 of
cGBP440m on a post IFRS 16 basis (2021: GBP365m), and cGBP159m on a
pre IFRS 16 basis (2021: GBP129m). The movement in post IFRS 16 net
debt is due mainly to increase in lease liabilities of cGBP45m,
driven by timing of lease renewals and investments in new branches,
and a currency movement of cGBP17m on bond debt. Leverage continued
to come down towards the Group's medium-term targets, and finished
the year at 2.8x and 1.8x on post and pre IFRS 16 bases
respectively. The Group's pre IFRS 16 debt consists almost wholly
of a EUR 300m bond at a fixed rate of 5.25%. The bond, and the
currently undrawn RCF, both mature in 2026.
Trading performance
The Group continues to benefit from a balanced geographic spread
of country revenues, with 58% of revenues derived from the EU in
FY22, and 42% from the UK.
FY22 LFL revenues grew 17% compared to prior year. Reported
Group revenues were 20% higher in the year, including c4% from
acquisitions, slightly offset by c1% adverse currency
movements.
Group revenue growth rates across most geographies moderated in
H2 compared to H1 primarily due to the impact of lower rates of
input cost inflation, following the annualisation of significant
rises in H2 21, and some broadly based softening in market demand.
Pass through of input cost inflation added to the top line in all
geographies. We estimate the impact on revenue for the full year to
be around 17-18%.
LFL sales
growth
2022 vs 2021 H1 H2 FY FY 2022 sales
GBPm
UK Interiors 24% 22% 23% 701
UK Exteriors 13% 1% 7% 446
UK 19% 12% 15% 1,147
------------------ ---- ---- ---- --------------
France Interiors 13% 12% 12% 218
France Exteriors 18% 11% 15% 465
Germany 17% 15% 16% 458
Poland 44% 16% 28% 231
Benelux 20% 31% 25% 116
Ireland 55% 2% 24% 108
------------------ ---- ---- ---- --------------
EU 23% 14% 18% 1,596
------------------ ---- ---- ---- --------------
Group 21% 13% 17% 2,743
------------------ ---- ---- ---- --------------
In the UK Interiors business, the strategic and operational
changes made since mid-2020 continue to drive the business's return
towards its previous market position and performance. In UK
Exteriors, volumes were down, more notably in H2, in line with
weaker market conditions and against particularly strong 2021
comparators. Recent UK acquisitions, including Miers Construction
Products acquired in July 2022, are performing well.
In the EU, FY growth of 18% reflected solid trading across all
our businesses, including some incremental market share gains, and
H2 growth remained robust at 14%. Performance remains strong in our
French businesses. Our German business is benefiting from the new,
experienced leadership put in place in the second half of 2021.
Benelux's performance is improving, with progress to date on the
top line. Poland's growth normalised in H2 after the exceptional
growth seen in H1, and sales in Ireland reflected some weaker
market conditions in H2.
CEO Transition
As previously announced, Gavin Slark will join as Group CEO on 1
February 2023. Gavin joins SIG with a long track record of success
in the pan-European construction distribution industry, including
most recently as CEO of Grafton Group plc for 11 years. Steve
Francis steps down as CEO following the Group's successful
turnaround and return to profitability.
Steve Francis, CEO, commented:
"SIG's performance in 2022 demonstrated the resilience,
flexibility and diversity of its pan-European business. Thanks to
strong employee and customer engagement, the Group has continued to
drive strong profit growth, even as market conditions became
increasingly challenging as the year progressed. SIG now has strong
foundations for the future , and the Group remains well-positioned
to benefit from the need for governments and end-customers to
increase the sustainability and energy efficiency of buildings over
time. Gavin and I are now completing a very smooth leadership
handover, and I am confident that Gavin and the team will build on
the progress made in the last three years."
FY 22 Results date, and Outlook
We will publish our full FY22 results on 8 March 2023, and will
hold a presentation and conference call for analysts and investors
at 10.00am (GMT) on that date. We will provide a more detailed
outlook on 2023 at that time.
The numbers in this update remain subject to final close
procedures and to audit.
1. Like-for-like is defined as sales per working day in constant
currency, excluding completed acquisitions and disposals
2. Underlying represents the results before Other items. Other
items relate to the amortisation of acquired intangibles,
impairment charges, profits and losses on agreed sale or closure of
non-core businesses and associated impairment charges, net
operating profits and losses attributable to businesses identified
as non-core, net restructuring costs, and other non-underlying
profits or losses.
3. Free cash flow is defined as all cash flows excluding M&A
transactions, dividend payments, and financing transactions.
Contacts
SIG plc +44 (0) 114 285 6300
Ian Ashton Chief Financial Officer
Sarah Ogilvie Head of Investor Relations
FTI Consulting +44 (0) 20 3727 1340
Richard Mountain
Peel Hunt LLP - Joint broker to SIG +44 (0) 20 7418 8900
Mike Bell / Charles Batten
Investec Bank plc - Joint broker
to SIG +44 (0) 20 7597 5970
Bruce Garrow / David Anderson
LEI: 213800VDC1BKJEZ8PV53
Cautionary Statement
This document contains certain forward-looking statements
concerning the Group's business, financial condition, results of
operations and certain Group's plans, objectives, assumptions,
projections, expectations or beliefs with respect to these items.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'will', 'would',
'should', 'expects', 'believes', 'intends', 'plans', 'potential',
'targets', 'goal', 'forecasts' or 'estimates' or similar
expressions or negatives thereof.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the Group's actual
financial condition, performance and results to differ materially
from the plans, goals, objectives and expectations set out in the
forward-looking statements included in this document.
All written or verbal forward-looking statements, made in this
document or made subsequently, which are attributable to the Group
or any persons acting on its behalf are expressly qualified in
their entirety by the factors referred to above. Accordingly,
readers are cautioned not to place undue reliance on
forward-looking statements. No assurance can be given that the
forward-looking statements in this document will be realised;
actual events or results may differ materially as a result of risks
and uncertainties facing the Group. Subject to compliance with
applicable law and regulation, the Group does not intend to update
the forward-looking statements in this document to reflect events
or circumstances after the date of this document and does not
undertake any obligation to do so.
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END
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January 10, 2023 02:00 ET (07:00 GMT)
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