TIDMSHI
RNS Number : 1535L
SIG PLC
11 January 2021
11 January 2021
SIG plc: 2020 Full Year Trading Update
SIG plc ("SIG", or "the Group") is a leading supplier of
specialist building solutions to trade customers across Europe,
with strong positions in its core markets as a market leading
supplier of insulation and interiors solutions to the construction
industry, and a specialist merchant of roofing materials for small
to medium sized construction businesses. The Group today issues a
trading update for the year ended 31 December 2020 ("FY20").
Summary
Revenues in the second half of the year ("H2") showed a solid
recovery, ahead of the Board's previous expectations, with progress
throughout the half resulting in like-for-like ("LFL")(1) revenues
for the fourth quarter up 4% compared to prior year. This reflects
the initial impact of the Group's Return to Growth strategy, which
is starting to deliver progress in terms of improved organic sales
performance, and has been supported by robust demand in repair,
maintenance and improvement ("RMI") segments in certain markets,
notably UK and France.
As a result, the Board expects to report FY20 revenues from
underlying operations(2) of cGBP1,870m, subject to audit. This
includes revenues of GBP52m in the Building Solutions business,
whose trading results were previously included in "non-core" but
will now be reported as part of underlying operations following the
Board's decision to retain and develop this business.
Subject to audit, the Group will report an underlying(3)
operating loss in the range of GBP57-61m for the full year, which
is at the better end of the range of previous expectations.
Profitability continued to improve throughout the second half after
the underlying operating loss of GBP43m in H1. Finance costs for
the full year are expected to be cGBP22m.
The Group finished the year with net debt of GBP5m on a pre IFRS
16 basis, and with gross cash balances of GBP233m. Reported net
debt on an IFRS 16 basis is expected to be cGBP240m. As previously
communicated, the Group discontinued the year-end creditor
management that had been practised in prior years.
Trading performance
FY20 LFL revenues declined 13% vs prior year. Reported Group
revenues from underlying operations were 12.7% lower in the year,
including a 0.6% favourable currency movement.
LFL sales growth H1 Q3 Q4 H2 FY FY sales
2020
GBPm
SIG Distribution (48)% (25)% (3)% (15)% (33)% 357
SIG Exteriors (28)% 1% 11% 6% (11)% 257
Building Solutions (26)% 0% 7% 3% (11)% 52
UK (40)% (14)% 2% (7%) (25)% 666
--------------------- ------ ------ ------ ------ ------ ---------
France Distribution (21)% (3)% 4% 1% (10)% 168
France Exteriors (11)% 5% 19% 12% 0% 344
Germany (9)% (4)% 2% (1)% (5)% 371
Benelux (12)% (13)% (16)% (14)% (13)% 92
Poland (0)% (8)% (2)% (5)% (3)% 149
Ireland (31)% (10)% 5% (3)% (17)% 80
--------------------- ------ ------ ------ ------ ------ ---------
EU (12)% (3)% 5% 1% (6)% 1,204
--------------------- ------ ------ ------ ------ ------ ---------
Group (24)% (8)% 4% (2)% (13)% 1,870
--------------------- ------ ------ ------ ------ ------ ---------
H2 LFL sales declined 2% vs prior year, after an H1 that was
severely affected by Covid-19 from mid-March, notably in the UK,
France and Ireland, and that prior to that point was declining at
c11% over prior year. The Group was able to trade safely throughout
the year, working closely and flexibly with employees, customers
and suppliers to adapt to new Covid-19 norms, and with minimal
negative impact on revenues in H2. As of today, all our operations
remain open, notwithstanding the latest government
restrictions.
The branch and customer-centric restructuring in the UK is
progressing to plan. The UK Exteriors business had a strong second
half, partly due to strong RMI demand growth. In UK Distribution
the new organisation structure was fully in place by the end of
November, and the business started to reverse its decline over the
prior year in the last weeks of 2020. As previously advised,
regaining market share in the UK Distribution business will take
time, but the early signs are reassuring, and the plan is on
track.
Performance in the EU was solid in the half, with a good
increase in Q4 growth. France performed particularly well, partly
as a result of RMI demand in the exteriors business, with Germany
showing clear early signs of improvement.
Outlook
Whilst the evolving Covid-19 backdrop will continue to create
uncertainty in the short term, the fundamentals of the Group's
markets remain sound and the strong recovery in demand across
territories and sectors through the second half was
encouraging.
Providing there is no material disruption to either our business
or end markets as a result of the pandemic, the Board expects the
near term benefits of the actions taken in 2020 to deliver organic
revenue growth in 2021, including market share gains. The benefits
of this will become increasingly evident as the year progresses and
should enable us to return to underlying operating profitability
during the second half.
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. LFL sales
in H1 differ very slightly from those announced on 24 September
2020 following (i) the reclassification of Building Solutions
revenues into underlying operations, and (ii) a refinement of the
methodology used. At Group level, the net impact of these
adjustments is de minimis at -0.2%.
2. Underlying operations excludes businesses divested or closed,
or which the Board has resolved to divest or close.
3. 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.
Contacts
SIG plc +44 (0) 114 285 6300
Steve Francis Chief Executive Officer
Ian Ashton Chief Financial Officer
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
Jefferies International Limited - Joint
broker to SIG +44 (0) 20 7029 8000
Ed Matthews / Will Soutar
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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