REG - SIG PLC - SIG plc Half Year Results <Origin Href="QuoteRef">SHI.L</Origin> - Part 2
08/08/2017 07:07
- Part 2: For the preceding part double click ID:nRSH3384Na
10.3
Total comprehensive income/(expense) - - - - 6.8 (12.7) (5.9) 0.4 (5.5)
Credit to share option reserve - - - - - - - - -
Exercise of share options - - - - - - - - -
Current and deferred tax on share options - - - - - 0.1 0.1 - 0.1
Dividends recognised as distributions to equity holders of the Company (Note 12) - - - - - (10.8) (10.8) - (10.8)
At 30 June 2017 59.1 447.3 0.3 1.1 14.7 (0.3) 522.2 1.2 523.4
For the unaudited six months ended 30 June 2016 Called up share capital Share premium account Capital redemption reserve Share option reserve Hedging and translation reserve (Accumulated losses) / retained profits Total Non-controlling interests Total equity
£m £m £m £m £m £m £m £m £m
At 31 December 2015 59.1 447.3 0.3 1.4 (42.4) 183.0 648.7 0.9 649.6
Profit after tax - - - - - 28.2 28.2 0.2 28.4
Other comprehensive income/(expense) - - - - 42.4 (18.4) 24.0 - 24.0
Total comprehensive income/(expense) - - - - 42.4 9.8 52.2 0.2 52.4
Credit to share option reserve - - - 0.2 - - 0.2 - 0.2
Exercise of share options - - - - - - - - -
Current and deferred tax on share options - - - - - (0.2) (0.2) - (0.2)
Dividend paid to non-controlling interest - - - - - - - (0.3) (0.3)
Dividends paid to equity holders of the Company - - - - - (17.2) (17.2) - (17.2)
At 30 June 2016 59.1 447.3 0.3 1.6 - 175.4 683.7 0.8 684.5
For the audited year ended 31 December 2016 Called up share capital Share premium account Capital redemption reserve Share option reserve Hedging and translation reserve (Accumulated losses) / retained profits Total Non-controlling interests Total equity
£m £m £m £m £m £m £m £m £m
At 31 December 2015 59.1 447.3 0.3 1.4 (42.4) 183.0 648.7 0.9 649.6
(Loss)/profit after tax - - - - - (119.1) (119.1) 0.5 (118.6)
Other comprehensive income/(expense) - - - - 50.3 (12.2) 38.1 - 38.1
Total comprehensive income/(expense) - - - - 50.3 (131.3) (81.0) 0.5 (80.5)
Share capital issued in the year - - - - - - - - -
Debit to share option reserve - - - (0.3) - - (0.3) - (0.3)
Exercise of share options - - - - - - - - -
Deferred tax on share options - - - - - (0.6) (0.6) - (0.6)
Dividends paid to non-controlling interest - - - - - - - (0.6) (0.6)
Dividends paid to equity holders of the Company - - - - - (28.0) (28.0) - (28.0)
At 31 December 2016 59.1 447.3 0.3 1.1 7.9 23.1 538.8 0.8 539.6
The share option reserve represents the cumulative equity-settled share option charge under IFRS 2 "Share-Based Payments"
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 7 August 2017.
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 2017 and 30 June 2016 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 2016 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 2016, which have been applied consistently throughout the current and preceding periods with the
exception of new standards adopted in the current period (see below) and the following additional policy with regard to
trade receivables, adopted following the Group's decision to enter into certain factoring arrangements during the period to
30 June 2017:
· Trade receivables that are factored out to banks and other financial institutions without recourse to the Group are
derecognised at the point of factoring as the risks and rewards of the receivables have been fully transferred. In
assessing whether the receivables qualify for derecognition the Group has considered the receivables and receivable
insurance contracts as two separate units of account. Therefore the insurance is not included as part of the derecognition
assessment on the basis that the insurance is not similar to the receivables; and
· The Group has elected to recognise cash inflows from the sale of factored receivables as an operating cashflow.
The areas of critical accounting judgments and key sources of estimation uncertainty set out on page 99 of the 2016 Annual
Report and Accounts are considered to continue and be consistently applied.
Increased market and macroeconomic uncertainty and challenging market conditions during the year ended 31 December 2016 led
to the lowering of expectations in the future profitability of the Larivière CGU. This resulted in a goodwill impairment
charge of £100.4m being recognised, reducing the carrying value of the CGU after the impairment charge to £97.5m as at 31
December 2016. As at 30 June 2017, the Group has tested goodwill and the related intangible assets and property, plant and
equipment associated with the Larivière CGU, noting the low level of headroom. The current forecasts provide headroom of
c.E3m (30 June 2016: c.E2m; 31 December 2016: Enil). The carrying value of the CGU at 30 June 2017 is c.£97m. The Board has
actively reviewed the forecast associated with Larivière, considering the assumptions used and, in a challenging economic
environment, its continued outperformance of the markets in which it operates, and is satisfied that no impairment is
necessary. If a 5% reduction in revenue were to arise from the forecast used in the impairment review of Larivière, with no
mitigating actions undertaken, there would be an impairment of c.£36m.
All results are from continuing operations under International Accounting Standards as the businesses identified as
non-core in 2016 and 2017 did not meet the disclosure criteria of being discontinued operations as they did not
individually or in aggregate 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 within Other
items in the Condensed Consolidated Income Statement. The comparatives for the period ending 30 June 2016 have been
re-analysed to present net operating losses of £0.2m attributable to businesses identified as non-core in the second half
of 2016 or the first half of 2017 within Other items. The comparatives for the year ended 31 December 2016 have also been
re-analysed to present net operating profits of £4.3m attributable to businesses identified as non-core in the first half
of 2017 within Other items.
In March 2016, the IFRS Interpretations Committee issued an agenda decision which clarified the circumstances in which
certain Balance Sheet items can be offset in accordance with IAS 32 "Financial Instruments: Presentation". It was
determined that where a Group does not expect to settle subsidiaries' bank balances on a net basis, these balances cannot
be offset. In response to this, the Group has reviewed its cash pooling arrangements which has resulted in changes to the
amounts that can be offset. Comparative information for the period ended 30 June 2016 has been restated. The impact of this
change as at 30 June 2016 is to increase both cash and cash equivalents and bank overdrafts in the Consolidated Balance
Sheet by £57.2m. In addition, the Group has also reviewed the presentation of its supplier rebates receivable, in
particular supplier rebates where there is no right to offset against trade payable balances. As a result comparative
information for the period ended 30 June 2016 has been restated. The impact of this change is an increase in respect of
both prepayments and accrued income and trade payables of £44.6m. There was no overall impact on net debt or net assets
from either restatement.
Going Concern
The Directors have considered the Group's forecasts which support the view that the Group will 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 14), 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 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 judgment 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.
Notes to the Condensed Interim Financial Statements
1. Basis of preparation of Condensed Interim Financial Statements
Changes in accounting policy
Adoption of new and revised accounting standards
Since the 2016 Annual Report and Accounts were published no significant new standards and interpretations have been issued.
The Group will perform its analysis to assess the impact on operations and results of transition to IFRS 15 "Revenue for
Contracts with Customers" and IFRS 16 "Leases" in the second half of 2017.
The following new and revised standards became effective during 2017:
· Disclosure Initiative (Amendments to IAS 7 "Statement of Cash Flows") - effective for accounting periods beginning
on or after 1 January 2017
· Amendments to IAS 12 "Income Taxes" - Recognition of Deferred Tax Assets for Unrealised Losses - effective for
accounting periods beginning on or after 1 January 2017
· Annual Improvements - 2014 to 2016 cycle - effective for accounting periods beginning on or after 1 January 2017
The adoption of these standards has not had a material impact on the financial statements of the Group.
Notes to the Condensed Interim
Financial Statements
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 &
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 2017 Unaudited six months ended 30 June 2016 Audited year ended 31 December 2016
UK & Ireland Mainland Europe Eliminations Total UK & Ireland Mainland Europe Eliminations Total UK & Ireland Mainland Europe Eliminations Total
£m £m £m £m £m £m £m £m £m £m £m £m
Revenue
Continuing sales 659.2 716.2 - 1,375.4 642.9 623.5 - 1,266.4 1,295.4 1,320.1 - 2,615.5
Sales attributable to businesses 56.3 7.5 - 63.8 96.0 12.8 - 108.8 202.1 27.6 - 229.7
identified as non-core
Inter-segment sales* 1.6 6.3 (7.9) - 1.6 7.3 (8.9) - 3.3 13.9 (17.2) -
Total revenue 717.1 730.0 (7.9) 1,439.2 740.5 643.6 (8.9) 1,375.2 1,500.8 1,361.6 (17.2) 2,845.2
Result
Segment result before Other items 27.5 24.0 - 51.5 35.1 23.5 - 58.6 49.5 48.3 - 97.8
Amortisation of acquired (3.6) (1.1) - (4.7) (4.0) (1.1) - (5.1) (8.0) (2.3) - (10.3)
intangibles
Impairment charges (9.1) - - (9.1) - - - - - (110.6) (110.6)
Profits and losses on agreed sale (29.5) (0.9) - (30.4) - - - - (40.1) - - (40.1)
or closure of non-core businesses
and associated impairment charges
Net operating losses attributable (5.0) (0.2) - (5.2) (0.4) 0.2 - (0.2) (2.1) 0.6 - (1.5)
to businesses identified as non
-core
Net restructuring costs (2.8) (0.6) - (3.4) (0.8) (1.6) - (2.4) (10.6) (2.7) - (13.3)
Acquisition expenses and (0.5) - - (0.5) (3.5) 0.1 - (3.4) 4.7 (0.1) - 4.6
contingent consideration
Defined benefit pension scheme - - - - (0.9) - - (0.9) (0.9) - - (0.9)
curtailment loss
Other one-off items (Note 3) 5.4 - - 5.4 3.5 - - 3.5 (6.0) 0.1 - (5.9)
Segment operating (loss)/profit (17.6) 21.2 - 3.6 29.0 21.1 - 50.1 (13.5) (66.7) - (80.2)
Parent Company costs (5.8) (4.1) (10.8)
Operating (loss)/profit (2.2) 46.0 (91.0)
Net finance costs before Other (7.4) (6.6) (13.8)
items
Net fair value losses on (0.8) (0.9) (1.9)
derivative financial instruments
Unwinding of provision discounting (0.3) (0.1) 0.4
(Loss)/profit before tax (10.7) 38.4 (106.3)
Income tax expense (5.1) (10.0) (12.3)
Non-controlling interests (0.4) (0.2) (0.5)
(Loss)/profit for the period (16.2) 28.2 (119.1)
* Inter-segment sales are charged
at the prevailing market rates.
Notes to the Condensed Interim Financial Statements
2. Segmental information
(a) Segmental results
Balance Sheet Unaudited six months ended 30 June 2017 Unaudited six months ended 30 June 2016 Audited year ended 31 December 2016
UK & Ireland Mainland Europe Total UK & Ireland Mainland Europe Total UK & Ireland Mainland Europe Total
£m £m £m £m £m £m £m £m £m
Assets
Segment assets (restated) 753.5 743.0 1,496.5 801.1 856.2 1,657.3 783.9 682.4 1,466.3
Unallocated assets:
Property, plant and equipment 0.8 1.1 0.9
Derivative financial instruments 1.4 51.1 4.5
Deferred consideration - 1.5 0.7
Cash and cash equivalents 14.2 104.8 14.5
Deferred tax assets 6.8 2.1 2.3
Other assets 4.3 4.0 3.5
Consolidated total assets 1,524.0 1,821.9 1,492.7
Liabilities
Segment liabilities (restated) 359.1 286.7 645.8 426.3 296.9 723.2 342.8 231.7 574.5
Unallocated liabilities:
Private placement notes - 279.5 200.7
Bank loans 318.7 122.1 158.8
Derivative financial instruments 1.7 3.7 3.8
Other liabilities 34.4 8.9 15.3
Consolidated total liabilities 1,000.6 1,137.4 953.1
Other segment information
Capital expenditure on:
Property, plant and equipment 6.2 4.9 11.1 11.4 5.9 17.3 21.7 12.0 33.7
Computer software 1.6 0.8 2.4 2.1 0.6 2.7 4.8 1.4 6.2
Goodwill and intangible assets (excluding computer software) - - - 9.6 2.7 12.3 11.2 7.3 18.5
Non-cash expenditure:
Depreciation 5.5 5.8 11.3 7.7 5.4 13.1 14.4 11.6 26.0
Impairment of property, plant and equipment and computer software 9.1 - 9.1 - - - 12.0 - 12.0
Amortisation of acquired intangibles and computer software 5.1 1.7 6.8 5.4 1.4 6.8 10.9 2.9 13.8
Impairment of goodwill and intangibles (excluding computer software) 21.4 - 21.4 - - - 22.0 110.6 132.6
Notes to the Condensed Interim Financial Statements
2. Segmental information
(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 2017 Unaudited six months ended 30 June 2016 Audited year ended 31 December 2016
£m £m £m
Insulation and Energy Management 518.4 496.8 978.8
Exteriors 438.5 387.1 813.7
Interiors 418.5 382.5 823.0
Total continuing 1,375.4 1,266.4 2,615.5
Attributable to businesses identified as non-core 63.8 108.8 229.7
Total 1,439.2 1,375.2 2,845.2
(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, deferred consideration and derivative financial instruments) by geographical location are as follows:
Unaudited six months ended 30 June 2017 Unaudited six months ended 30 June 2016 Audited year ended31 December 2016
Revenue Non-current assets Revenue Non-current assets Revenue Non-current assets
Country £m £m £m £m £m £m
United Kingdom 613.2 259.0 603.0 326.9 1,209.9 310.2
Ireland 46.0 2.7 39.9 2.4 85.5 2.7
France 324.3 127.6 285.0 220.0 589.2 124.6
Germany 201.4 21.1 180.6 21.6 385.6 21.7
Poland 63.6 7.0 51.7 16.3 115.1 6.9
Benelux* 126.9 46.1 106.2 47.3 230.2 53.4
Total continuing 1,375.4 463.5 1,266.4 634.5 2,615.5 519.5
Attributable to businesses identified as non-core 63.8 34.4 108.8 62.8 229.7 37.4
Total 1,439.2 497.9 1,375.2 697.3 2,845.2 556.9
* Includes SIG Air Handling There is no material difference between the basis of preparation of the information reported above and the Accounting Policies adopted by the Group.
3. Other items
(Loss)/profit after tax includes the following Other items which 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:
Unaudited six months ended 30 June 2017 Unaudited six months ended 30 June 2016 Audited year ended31 December 2016
£m £m £m
Amortisation of acquired intangibles (4.7) (5.1) (10.3)
Impairment charges (9.1) - (110.6)
Profits and losses on agreed sale or closure of non-core businesses and associated impairment charges (30.4) - (40.1)
Net operating losses attributable to businesses identified as non-core (5.2) (0.2) (1.5)
Net restructuring costs^ (3.4) (2.4) (13.3)
Acquisition expenses and contingent consideration (0.5) (3.4) 4.6
Defined benefit pension scheme curtailment loss - (0.9) (0.9)
Other one-off items* 5.4 3.5 (5.9)
Impact on operating (loss)/profit (47.9) (8.5) (178.0)
Net fair value losses on derivative financial instruments (0.8) (0.9) (1.9)
Unwinding of provision discounting (0.3) (0.1) 0.4
Impact on (loss)/profit before tax (49.0) (9.5) (179.5)
Income tax credit on Other items 5.2 1.4 5.9
Effect of change in rate on deferred tax - - 0.2
Other tax adjustments in respect of previous years - - 0.4
Impact on (loss)/profit after tax (43.8) (8.1) (173.0)
^ Included within net restructuring costs are consultancy costs of £1.7m (30 June 2016: £0.7m; 31 December 2016: £6.7m),
property closure costs of £0.4m (30 June 2016: £1.2m; 31 December 2016: £4.4m) and redundancy costs of £1.3m (30 June 2016:
£0.3m; 31 December 2016: £1.7m). There were no rebranding costs in the current period (30 June 2016: £0.2m; 31 December
2016: £0.5m).
Notes to the Condensed Interim Financial Statements
3. Other items
*Other one-off items are split as follows:
Unaudited six months ended 30 June 2017 Unaudited six months ended 30 June 2016 Audited year ended31 December 2016
£m £m £m
Profit on sale of property 5.5 2.8 2.8
Other one-off (debits)/credits (0.1) - 0.4
Impairment charge and other costs following the cessation of the UK eCommerce project - - (9.7)
Net charge arising as a result of movements in provisions associated with businesses disposed of in previous years - 0.4 (0.5)
Fair value gains on fuel hedging contracts - 0.3 0.4
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