SIG plc Preliminary Results 2003 9 March 2004

Delivering the goods to construction and industry

2Delivering the goods to construction and industry

Overview

Solid performance in generally difficult markets

Record sales, profits and EPS

Significant improvements in cash generation and gearing

Dividend up by 6.9% Tenth successive year of dividend growth

Financial ReviewGareth Davies, Finance Director

4Delivering the goods to construction and industry

Summary Profit and Loss

Jan - Dec, £m 2003 2002 Change

Turnover 1,268.51,155.

0+9.8%

Operating profit before goodwill

63.4 57.9 +9.5%

Goodwill amortisation (4.8) (4.5)Operating Profit 58.6 53.4 +9.9%

Interest (6.5)(0.7)

(7.1)-Financial charges

Profit before tax 51.5 46.3 +11.1%

Interest cover (x) § 9.1 7.6§ Interest cover is pre-FRS 17

5Delivering the goods to construction and industry

Operating Profit

Jan - Dec, £m 2003 2002 Change

UK & ROI 54.2 51.4 +5.5%

Mainland Europe 11.0 7.7 +43.0%

USA 0.9 1.5 -39.6%

66.1 60.6 +9.1%

Parent (2.7) (2.7)

OP pre-goodwill 63.4(4.8)

57.9(4.5)

+9.5%

Goodwill

Operating Profit 58.6 53.4 +9.9%

6Delivering the goods to construction and industry

Earnings, Dividend and Tax

EPS up 8.7% to 28.6p

Tax rate at 32.6%

Final recommended dividend of 8.3pFull year 12.4p (up 6.9%)

Dividend cover 2.3x

7Delivering the goods to construction and industry

Balance Sheet

£m

Dec. 2003

Dec. 2002

Capex / Depreciation 71% 126%

Capital employed 199.8 177.5

Net debt 76.3 123.4

Average net debt 98.2 118.6

Gearing 38% 70%

R.O.C.E. 14.9% 12.9%

Comparable capital employed, gearing and ROCE have been restated to reflect FRS 17 retirement benefits

8Delivering the goods to construction and industry

Average Working Capital to Sales

% of SalesDec. 2003

Dec. 2002

Dec. 2001

Stocks 7.5% 7.7% 7.5%

Debtors 20.0% 19.2% 19.6%

Creditors (13.8%)(11.1%

)(12.2%

)

Average Working Capital / Sales

13.7% 15.1% 14.9%

(Decrease) / Increase in Working Capital

(£18.0m)

£8.8m£21.9

m

9Delivering the goods to construction and industry

Working Capital

December 2003

Dec.2003

Dec.2002

Stock days 36 37

Debtor days 52 55

Bad & doubtful debtas a % of sales

0.78% 0.71%

Creditor days 34 31

Working Capital is calculated to eliminate the effect of acquisitions

10Delivering the goods to construction and industry

Cash flow

£m

Dec. 2003

Dec. 2002

Cash inflow from trading 79.9 73.5

Change in working capital 18.0 (8.8)

Cash inflow from operations 97.9 64.7Interest and tax (18.2) (21.4)

79.7 43.3Capex and dividends (26.1) (33.6)

Operating cash inflow 53.6 9.7

Acquisitions, exchange & shares (6.5) (23.8)

Net reduction / (increase) 47.1 (14.1)

11Delivering the goods to construction and industry

Pensions update

FRS 17 adopted early Reduction of £0.2m in PBT (c/f SSAP24) Comparative Balance Sheet restated by

£16.9m Net pension liability £13.7m Triennial actuarial valuation ongoing

12Delivering the goods to construction and industry

IAS project

Detailed analysis complete

Project on track

Key effects: Small positive impact on P&L Minimal impact on B/S

13Delivering the goods to construction and industry

Financial Summary

Record sales and profits Sales up 9.8% PBT up over 11%

Improvements in our key ratios

Working capital reduced

Strong balance sheet

Trading ReviewDavid Williams, Chief Executive

15Delivering the goods to construction and industry

Trading Highlights

Sales increased in all three main business streams

Profits up in Insulation and Roofing

Profits down in Commercial Interiors

Sales and profits up in our two largest regions UK & ROI and Mainland Europe

Sales and profits down in USA

16Delivering the goods to construction and industry

Salesby region

UK & ROI63.9%

Europe31.1%

USA5.0%

%02 FY

03 FY Δ

UK & ROI 63.6 63.9 +0.3

Europe 30.3 31.1 +0.8

USA 6.1 5.0 -1.1

£1,269m

17Delivering the goods to construction and industry

Sales Growthby region

10.4%12.7%

-9.8%

9.8%

2.9%

-1.7%

6.9%9.7%

-10%

-5%

0%

5%

10%

15%

UK & ROI EUR USA GroupGro

wth

'03

/ '0

2

Sterling Constant Currency

18Delivering the goods to construction and industry

Sales by sector

Roofing20.7%

Others5.2%

Insulation50.5%

Commercial Interiors23.6%

%02 FY

03 FY Δ

Ins. 50.1 50.5 +0.4

Roofing 18.9 20.7 +1.8

Comm. Int. 25.2 23.6 -1.6

Others 5.8 5.2 -0.6

Premium Office Interiors

6.4%

Industrial Insulation17.7%

Trading ReviewRegional Detail

20Delivering the goods to construction and industry

USA

£70.6£63.7

£1.5£0.9

0

10

20

30

40

50

60

70

80

'02 '03

Sale

s -

£m

0

1

2

3

4

5

6

7

8

Op. P

rofit

- £

m

03FY /02FY Sales OP

Sterling -9.8%

-40%

Local Curr. -1.7%

-34%

-£6.9

Operating profit impact -£0.6m

21Delivering the goods to construction and industry

USA

Demand sluggish Costs reduced Second half trading showed some signs of

improvement

£ $Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share

22Delivering the goods to construction and industry

Mainland Europe

£349.8£394.2

£7.7£11.0

0

50

100

150

200

250

300

350

400

450

'02 '03

Sale

s -

£m

0

5

10

15

20

25

30

35

40

45

Op. P

rofit

- £

m

03FY /02FY Sales OP

Sterling +12.7%

+43%

Local Curr. +2.9% +29%

+£44.3

Like for like sales in Sterling up 11.5% Gross margin improved Operating margin up

Operating profit impact +£3.3m

23Delivering the goods to construction and industry

Germany

Sales up in local currency Gross and Operating margins improved Operating profit up

£ €Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share

24Delivering the goods to construction and industry

France

Continued growth - operating profit up Margin decline due to product mix Geographic expansion

£ €Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share

25Delivering the goods to construction and industry

The Netherlands

Market demand down Like for like sales down Commercial Interiors Insulation sales up

£ €Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share

26Delivering the goods to construction and industry

Poland

Second half sales strongly ahead Traded profitably in the second half New branch performing well

£ złMarket demand Sales Pricing Operating Loss Market Outlook Margin SIG Market Share

27Delivering the goods to construction and industry

UK & ROI

£734.5£810.7

£51.4 £54.2

0

100

200

300

400

500

600

700

800

900

'02 '03

Sale

s -

£m

0

10

20

30

40

50

60

70

80

90

Op. P

rofit

- £

m

03FY /02FY Sales OP

Total +10.4%

+5.4%

Like for Like sales up 6% Sales and Profits up in all sectors, other than

premium office

+£76.2

Operating profit impact +£2.8m

28Delivering the goods to construction and industry

UK & ROIInsulation

Regulation continued to increase demand New build and upgrading both strong Next energy efficiency regulations now

expected in 2005/6

Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share

29Delivering the goods to construction and industry

UK & ROIRoofing

Like for like sales up Acquisitions traded well, margins not yet up

to core business levels

Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share

30Delivering the goods to construction and industry

UK & ROICommercial Interiors

Premium office products Sales and Profits down significantly

Mainstream Commercial Interiors traded well Sales and Profits up

Market demand Sales Pricing Operating Profit Market Outlook Margin SIG Market Share

Without Prem. Off.

Trading ReviewStrategy & Outlook

32Delivering the goods to construction and industry

Acquisitions

Five acquisitions made during 2003

Sector Acquired

Strategy

UK: Insulation 2 bolt-on Geographic in-fill

UK: Roofing 1 bolt-on Geographic in-fill

France: Comm. Int. 1 bolt-on Geographic in-fill

France: Air handling

1 bolt-on Geographic in-fill

All acquisitions are trading

profitably and integrating well.

Process of targeting and evaluating opportunities for both greenfield and acquisitive expansion well advanced

33Delivering the goods to construction and industry

Strategic Objectives

Develop Market Share in all core operations

Enhance Quality of Earnings from overseas businesses

Maintain tight cost control

Strengthen Balance Sheet and reduce Gearing

Improve Earnings Per Share

Increased share in several main markets

Overseas profits and margins increased

Costs down as percentage of sales

Gearing significantly reduced

EPS up 8.7%

2003 Progress Report

34Delivering the goods to construction and industry

Focus for 2004

Maintain focus on strong cash flow

Increase investment in trading locations

Accelerate bolt-on acquisition programme

35Delivering the goods to construction and industry

Outlook

UK construction and building sector positive Insulation demand set to grow both short and

long term Commercial Interiors market decline levelling off

German building sector more stable

USA - more project work expected

Start to 2004 ‘on course’

SummaryBarrie Cottingham, Chairman

Questions and Answers

Appendix

39Delivering the goods to construction and industry

Trading Site changes

Dec. 2002

Net organic

Net acquired

Dec.2003

UK & ROI

223 0 3 226

Europe 123 -2 2 123

USA 24 -2 0 22

Total branches

370 -4 5 371

40Delivering the goods to construction and industry

Market position

UK & ROI GER FRA NETH POL USA

Insulation 1 1 1 a 2 1 1 a,b

Comm. Int. 1 3 2 1 3 c -

Roofing 1 - - - - -

a Industrial Insulationb Regionallyc Not clear – insufficient data

41Delivering the goods to construction and industry

Market volume & price indicatorsUK & Republic of Ireland Volum

ePrice

Insulation Roofing Commercial Interiors Others

Mainland Europe

Germany France Netherlands Poland

USA

42Delivering the goods to construction and industry

Market sectors

Indicative breakdown of SIG main business sectors, based on company estimates.

% of Group Total

New Build% of

Subgroup

RMI % of

Subgroup

Housing 27% 39% 61%

Non-housing Building &

Construction56% 57% 43%

Industry (non-construction) 17% 44% 56%

Note: It is not possible to sharply define sales into the respective sectors, as many products are used for all types of work, in all types of construction