REG - SIG PLC - Half Yearly Report <Origin Href="QuoteRef">SHI.L</Origin> - Part 2
29/10/2014 12:01
- Part 2: For the preceding part double click ID:nRSL8413Oa
0.3
Exercise of share options - - - (0.1) - 0.1 - - -
Current and deferred tax on share options - - - - - 0.1 0.1 - 0.1
Adjustments arising from changes in non-controlling interest - - - - - 0.8 0.8 (0.8) -
Dividend paid to non-controlling interest - - - - - - - (0.3) (0.3)
Dividends paid to equity holders of the Company - - - - - (18.6) (18.6) - (18.6)
At 31 December 2013 59.1 447.2 0.3 1.1 12.6 172.2 692.5 0.6 693.1
The share option reserve represents the cumulative share option charge under
IFRS 2 less the value of any share options that have been
exercised.
The hedging and translation reserve represents movements in the Condensed
Consolidated Balance Sheet as a result of movements in exchange
rates which are taken directly to reserves.
Notes to the Condensed Interim Financial Statements
1. Basis of preparation of Condensed Interim Financial Statements
The Condensed Interim Financial Statements were approved by the Board of
Directors on 11 August 2014.
The Condensed Interim Financial Statements do not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. The interim
results to 30 June 2014 and 30 June 2013 have been subject to an Interim
Review in accordance with ISRE 2410 by the Company's Auditor. The financial
information for the full preceding year is based on the audited statutory
accounts for the financial year ended 31 December 2013 prepared in accordance
with IFRS as adopted by the European Union. Those accounts, upon which the
Auditor issued an unqualified opinion, have been delivered to the Registrar of
Companies. The Auditor's Report did not draw attention to any matters by way
of emphasis and contained no statement under Section 498(2) or Section 498(3)
of the Companies Act 2006.
The Group's Condensed Interim Financial Statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting" as adopted by the
European Union and the accounting policies included in the Annual Report and
Accounts for the year ended 31 December 2013, which have been applied
consistently throughout the current and preceding periods with the exception
of new standards adopted in the current period (see below).
The areas of critical accounting judgement and key sources of estimation
uncertainty set out on page 93 of the 2013 Annual Report and Accounts are
considered to continue and be consistently applied.
All results are from continuing operations under International Accounting
Standards as the businesses disposed of in 2014 did not meet the disclosure
criteria of IFRS 5 "Non-current Assets Held for Sale and Discontinued
Operations" as they did not represent a separate major line of business or
geographical area of operation. In order to give an indication of the
underlying earnings of the Group the results of these businesses have been
included in the middle column of the Condensed Consolidated Income Statement
entitled "Other items". The prior period comparatives have been re-analysed to
present the results of the businesses divested in 2014 within "Other items".
Going Concern
The Directors have considered the Group's forecasts which support the view
that the Group should be able to continue to operate within its banking
facilities and comply with its banking covenants. Through its various
business activities the Group is exposed to a number of risks and
uncertainties (see Note 15), which could affect the Group's ability to meet
these forecasts and hence its ability to meet its banking covenants. The
Directors have considered the challenging trading conditions, the current
competitive environment and markets in which the Group's businesses operate
and associated credit risks, together with the available ongoing committed
finance facilities or the reasonable expectation of the renewal of facilities
and the potential actions that can be taken, should revenues be worse than
expected, to protect operating profits and cash flows. After making enquiries,
the Directors have formed a judgement that there is a reasonable expectation
that the Group has adequate resources to continue in operational existence for
the foreseeable future. For this reason, the going concern basis has been
adopted in preparing this Interim Report.
Changes in accounting policy
Adoption of new and revised accounting standards
Since the 2013 Annual Report and Accounts was published, IFRS 15 "Revenue From
Contracts With Customers" and IFRS 9 "Financial Instruments" were issued. No
other significant new standards and interpretations have been issued. Beyond
the information above, it is not practicable to provide a reasonable estimate
of the effect of these standards until a detailed review has been completed.
The following new and revised standards became effective during 2014:
· IAS 27 (amended) "Separate Financial Statements";
· IAS 36 (amended) "Impairment of Assets";
· IAS 39 (amended) "Financial Instruments - Recognition and Measurement";
and
· IFRIC Interpretation 21 "Levies".
The adoption of these standards has not had a material impact on the financial
statements of the Group.
2. Segmental information
(a) Segmental results
In accordance with IFRS 8
"Operating Segments", the Group
identifies its reportable segments
as those upon which the Group
Board regularly bases its opinion
and assesses performance. The
Group has deemed it appropriate to
aggregate its operating segments
into two reported segments: UK and
Ireland, and Mainland Europe. The
constituent operating segments
have been aggregated as they have
similar products and services;
production processes; types of
customer; methods of distribution;
regulatory environments; and
economic characteristics. There
has been no change in the basis of
measurement of segment profit or
loss in the period.
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended 31 December 2013
UK and Ireland Mainland Europe Eliminations Total UK and Ireland Mainland Europe Eliminations Total UK and Ireland Mainland Europe Eliminations Total
£m £m £m £m £m £m £m £m £m £m £m £m
Revenue
Continuing sales 650.4 636.5 - 1,286.9 570.9 637.4 - 1,208.3 1,217.8 1,339.4 - 2,557.2
Sales attributable to businesses 8.7 12.9 - 21.6 14.3 54.8 - 69.1 25.2 137.4 - 162.6
divested in 2014
Inter-segment sales* 1.0 5.7 (6.7) - 0.8 4.5 (5.3) - 1.6 9.6 (11.2) -
Total revenue 660.1 655.1 (6.7) 1,308.5 586.0 696.7 (5.3) 1,277.4 1,244.6 1,486.4 (11.2) 2,719.8
Result
Segment result before Other items 24.3 27.5 - 51.8 19.8 22.9 - 42.7 51.6 59.0 - 110.6
Amortisation of acquired (4.3) (5.1) - (9.4) (5.0) (5.2) - (10.2) (9.9) (10.7) - (20.6)
intangibles
Restructuring costs (1.4) - - (1.4) (1.9) (3.7) - (5.6) (12.0) (6.0) - (18.0)
Other one-off items (5.4) - - (5.4) (0.2) - - (0.2) (0.5) (0.2) - (0.7)
Profits and losses on sale of (11.2) 6.2 - (5.0) - - - - - (42.8) - (42.8)
businesses and associated
impairment charges
Operating losses attributable to (2.2) (2.0) - (4.2) (1.2) (2.2) - (3.4) (3.1) - - (3.1)
businesses divested in 2014
Goodwill impairment charge (3.3) - - (3.3) - - - - (2.0) - - (2.0)
Segment operating profit/(loss) (3.5) 26.6 - 23.1 11.5 11.8 - 23.3 24.1 (0.7) - 23.4
Parent Company costs (4.0) (3.1) (8.0)
Operating profit 19.1 20.2 15.4
Net finance costs (6.3) (5.9) (11.3)
Net fair value losses on (1.0) (1.1) (1.9)
derivative financial instruments
Share of loss of associate - (0.1) (0.1)
Profit before tax 11.8 13.1 2.1
Income tax credit/(expense) 5.8 (2.8) (16.4)
Non-controlling interests 0.7 (0.4) (0.7)
Profit/(loss) for the period 18.3 9.9 (15.0)
* Inter-segment sales are charged
at the prevailing market rates.
Balance Sheet Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended 31 December 2013
UK and Ireland Mainland Europe Eliminations Total UK and Ireland Mainland Europe Eliminations Total UK and Ireland Mainland Europe Eliminations Total
£m £m £m £m £m £m £m £m £m £m £m £m
Assets
Segment assets 679.3 703.4 - 1,382.7 663.0 798.2 - 1,461.2 639.6 691.0 - 1,330.6
Unallocated assets:
Derivative financial instruments 23.1 51.4 29.7
Cash and cash equivalents 10.2 11.2 33.3
Other assets 1.3 3.0 0.9
Consolidated total assets 1,417.3 1,526.8 1,394.5
Liabilities
Segment liabilities 295.3 194.6 - 489.9 283.0 217.4 - 500.4 262.8 174.7 - 437.5
Unallocated liabilities:
Private placement notes 244.7 267.5 252.5
Derivative financial instruments 0.5 10.6 2.1
Other liabilities 12.1 14.1 9.3
Consolidated total liabilities 747.2 792.6 701.4
Other segment information
Capital expenditure on:
Property, plant and equipment 6.5 7.5 - 14.0 9.5 4.2 - 13.7 19.5 13.4 - 32.9
Computer software 4.5 0.3 - 4.8 0.4 0.4 - 0.8 9.6 0.4 - 10.0
Goodwill and intangible assets (excluding computer software) 4.7 - - 4.7 10.0 - - 10.0 14.5 - - 14.5
Non-cash expenditure:
Depreciation 5.5 4.9 - 10.4 5.2 5.7 - 10.9 8.5 13.3 - 21.8
Impairment of property, plant and equipment and computer software 6.1 - - 6.1 - - - - 0.2 11.5 - 11.7
Amortisation of acquired intangibles and computer software 5.1 5.6 - 10.7 5.1 6.0 - 11.1 10.2 12.3 - 22.5
Impairment of goodwill and intangibles (excluding computer software) 3.3 - - 3.3 - - - - 2.0 21.5 - 23.5
(b) Revenue by product group
The Group focuses its activities into three product sectors: Insulation and Energy Management; Exteriors; and Interiors. The following table provides an analysis of Group sales by type of product:
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended 31 December 2013
£m £m £m
Insulation and Energy Management 595.1 570.6 1,198.6
Exteriors 381.8 341.7 754.9
Interiors 310.0 296.0 603.7
Total continuing 1,286.9 1,208.3 2,557.2
Attributable to businesses divested in 2014 21.6 69.1 162.6
Total 1,308.5 1,277.4 2,719.8
(c) Geographic information
The Group's revenue from external customers and its non-current assets (including property, plant and equipment, goodwill and intangible assets but excluding deferred tax and derivative financial instruments) by geographical location are as follows:
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended31 December 2013
Revenue Non-current assets Revenue Non-current assets Revenue Non-current assets
Country £m £m £m £m £m £m
United Kingdom 616.1 300.2 539.9 284.6 1,152.3 311.8
Ireland 34.3 0.8 31.0 0.9 65.5 0.9
France 300.8 212.2 302.2 235.9 622.4 223.9
Germany and Austria 205.1 16.3 203.6 23.5 437.5 16.5
Poland 53.3 17.2 54.8 15.3 124.7 18.4
Benelux* 77.3 29.9 76.8 43.2 154.8 30.5
Total continuing 1,286.9 576.6 1,208.3 603.4 2,557.2 602.0
Attributable to UK business divested in 2014 8.7 - 14.3 34.3 25.2 0.5
Attributable to German business divested in 2014 12.9 - 54.8 - 137.4 -
Total 1,308.5 576.6 1,277.4 637.7 2,719.8 602.5
* Includes international air handling business (headquartered in The Netherlands). There is no material difference between the basis of preparation of the information reported above and the Accounting Policies adopted by the Group (Note 1).
3. Other items
"Other items" have been disclosed in a separate column within the Condensed Consolidated Income Statement in order to provide a better indication of the underlying earnings of the Group. Included within "Other items" are the following:
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended31 December 2013
£m £m £m
Amortisation of acquired intangibles (9.4) (10.2) (20.6)
Profits and losses on sale of businesses and associated impairment charges (Note 7) (5.0) - (42.8)
Operating losses attributable to businesses divested in 2014 (4.2) (3.4) (3.1)
Restructuring costs^ (1.4) (5.6) (18.0)
Other one-off items* (5.4) (0.2) (0.7)
Goodwill impairment charge (3.3) - (2.0)
Impact on operating profit (28.7) (19.4) (87.2)
Net fair value losses on derivative financial instruments (1.0) (1.1) (1.9)
Impact on profit before tax (29.7) (20.5) (89.1)
Income tax credit on Other items 3.1 7.3 10.6
One-off recognition of deferred tax assets (Note 4) 14.6 - -
Impact on profit after tax (12.0) (13.2) (78.5)
^ Included within restructuring costs are redundancy costs of £0.7m (30 June
2013: £0.8m; 31 December 2013: £7.6m), property closure costs of £ nil (30
June 2013: £1.4m; 31 December 2013: £5.8m), rebranding costs of £0.6m (30 June
2013: £0.6m; 31 December 2013: £3.7m), asset write down costs of £ nil (30
June 2013: £ nil; 31 December 2013: £0.2m) and other restructuring costs of
£0.1m (30 June 2013: £2.8m; 31 December 2013: £0.7m).
* Other one-off items include acquisition expenses (see Note 6), the
impairment of a freehold property of £6.1m (following the sale of part of the
property in the period) and profit on sale of properties of £0.5m.
4. Income tax
The income tax (credit)/expense comprises:
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended 31 December 2013
£m £m £m
UK taxation (12.4) (0.4) 2.9
Overseas taxation 6.6 3.2 13.5
Total income tax (credit)/expense for the period (5.8) 2.8 16.4
Tax for the six month period ended 30 June 2014 on underlying profits (i.e. before "Other items") is charged at 28.7% (30 June
2013: 30.1%; 31 December 2013: 29.6%), representing the best estimate of the average annual effective tax rate expected for the
full year being applied to the underlying pre-tax income of the six month period to 30 June 2014. On 2 July 2013 the Finance Act
2013 passed through the House of Commons and hence became substantively enacted, which confirmed the proposed reductions in the
UK corporation tax rate by 2% to 21% with effect from 1 April 2014 and by a further 1% to 20% with effect from 1 April 2015.
These rate reductions have been reflected in the calculation of the Group's deferred tax. During the period the Group
has recognised deferred tax assets of £14.6m (net) relating to c.£69m (gross) of previously unrecognised excess non-trading
losses incurred in 2008 associated with the derivative financial instruments and included within "Other items" in the Condensed
Consolidated Income Statement. In prior periods these non-trading losses were not recognised on the grounds of uncertainty,
reflecting their nature. Following utilisation in the current and prior periods the Directors now feel that the remaining amount
is recoverable and therefore the asset has been recognised in full in the period.
5. Earnings per share
The calculations of earnings per share are based on the following profits and numbers of shares:
Profit/(loss) after tax
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended 31 December 2013
£m £m £m
Profit/(loss) after tax 17.6 10.3 (14.3)
Non-controlling interests 0.7 (0.4) (0.7)
18.3 9.9 (15.0)
Profit/(loss) after tax before Other items
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended 31 December 2013
£m £m £m
Profit/(loss) after tax 17.6 10.3 (14.3)
Non-controlling interests 0.7 (0.4) (0.7)
Other items:
Amortisation of acquired intangibles 9.4 10.2 20.6
Profits and losses on sale of businesses and associated impairment charges (Note 7) 5.0 - 42.8
Operating losses attributable to businesses divested in 2014 4.2 3.4 3.1
Restructuring costs 1.4 5.6 18.0
Other one-off items 5.4 0.2 0.7
Goodwill impairment charge 3.3 - 2.0
Net fair value losses on derivative financial instruments 1.0 1.1 1.9
One-off recognition of deferred tax assets (Note 4) (14.6) - -
Tax relating to Other items (3.1) (7.3) (10.6)
30.3 23.1 63.5
Weighted average number of shares
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended 31 December 2013
Number Number Number*
For basic earnings per share 591,100,447 590,860,343 590,881,190
Exercise of share options 154,065 276,532 154,065
For diluted earnings per share 591,254,512 591,136,875 591,035,255
* For earnings per share after Other items for the year ended 31 December
2013, due to the fact that the Group recorded a loss after tax any share
options would be anti-dilutive. Therefore the impact of the exercise of share
options has been removed from the weighted average number of shares when
calculating earnings per share after Other items for the year ended 31
December 2013.
Earnings per share
Unaudited six months ended 30 June 2014 Unaudited six months ended 30 June 2013 Audited year ended 31 December 2013
Total basic earnings/(loss) per share 3.1p 1.7p (2.5p)
Total diluted earnings/(loss) per share 3.1p 1.7p (2.5p)
Earnings per share before Other items^
Total basic earnings per share 5.1p 3.9p 10.7p
Total diluted earnings per share 5.1p 3.9p 10.7p
^ Earnings per share before Other items has been disclosed in order to present the underlying performance of the Group.
6. Acquisitions
During the period SIG acquired the following companies:
Acquisition name % of share capital held Acquisition date Country of incorporation Principal activities
Trimform Products Limited 100% 20 January 2014 United Kingdom Manufacturer and distributor of roofing materials and associated products
IBSL Group Limited 100% 13 March 2014 United Kingdom Fabricator and distributor of technical insulation products
Coxbench IP Limited 100% 30 May 2014 United Kingdom Manufacturer and distributor of insulation materials
The fair value of the net assets of these businesses at acquisition (in
aggregation) were as follows:
£m
Property, plant and equipment 0.6
Inventories 0.8
Trade and other receivables 1.1
Cash (less debt) 1.3
Trade and other payables (1.2)
Corporation tax (0.2)
Finance leases (0.1)
Net assets acquired 2.3
Intangible assets - customer relationships 2.6
Intangible assets - non-compete clauses 0.1
Deferred tax liability on acquired intangible assets (0.5)
Goodwill 2.0
Total consideration (represented by cash) 6.5
Total consideration including assumed cash:
Cash (per above) 6.5
Cash acquired (1.3)
Settlement of amounts payable for purchase of businesses 5.2
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