SIG plc : Half Yearly Report

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SIG plc

15 August 2013

Half year results for the six months ended 30 June 2013

SIG plc ("SIG") is a leading distributor of specialist building products in Europe, with strong positions in its core markets of insulation & energy management, interior fit out and roofing.

Continuing operations*	H1 2013	H1 2012
Revenue	£1,277.4m	£1,280.6m
Underlying** operating profit	£36.2m	£41.7m
Underlying** profit before tax	£30.2m	£35.5m
Underlying** basic earnings per share	3.5p	4.2p
Interim dividend per share	1.15p	1.0p
Return on capital employed (post-tax)	7.9%	7.8%
Net debt as at 30 June	£141.7m	£129.9m

Financial Highlights

·     H1 performance affected by extended winter and weak market conditions

·     Sales flat in Sterling, down 3.5% on a like-for-like basis***

·     Gross margin for continuing operations up 20bps to 26.2%

·     Post-tax return on capital employed up 10bps to 7.9%

·     Interim dividend increased by 15% to 1.15p per share

·     Statutory profit before tax of £13.1m

Operating Highlights

·     Prompt action taken to reduce cost base - further savings of £3.9m

·     Continued market outperformance of 2.8%

·     Improving May and June sales trend continued into July

·     Strategic initiatives progressing well - benefits expected from 2014

·     Outlook and expectations for the year unchanged

* Continuing operations excludes the results of Central Europe, which was divested in 2012.

** Underlying is before the amortisation of acquired intangibles, restructuring costs, other one-off items, profit and loss on the sale of businesses, trading profits and losses associated with disposed businesses, fair value gains and losses on derivative financial instruments and the defined benefit pension scheme curtailment gain.

*** Like-for-like is defined as sales per day on a constant currency basis excluding acquisitions and disposals.

Statutory

Total operations	H1 2013	H1 2012
Revenue	£1,277.4m	£1,292.6m
Operating profit	£20.2m	£32.3m
Profit before tax	£13.1m	£25.2m
Profit after tax	£10.3m	£17.3m
Earnings per share	1.7p	2.9p

Commenting, Stuart Mitchell, Chief Executive, said:

"The Group's first half performance was adversely affected by the extended winter and weak market conditions.  In response we have taken prompt action to reduce fixed and discretionary costs. Trading improved in May and June as the weather reverted to seasonal norms and July was consistent with this trend.

"Good progress is being made on our key strategic initiatives, with benefits expected from next year.  By working together more as a Group we believe we have a significant opportunity to improve SIG's operating performance in the medium term and position the business for longer term growth.

"Our outlook remains unchanged from that indicated in our trading update in July. While there are signs that market conditions are starting to improve in the UK, construction activity in Mainland Europe remains weak.  With the improving sales trend and the Group's prompt action to reduce costs, we continue to expect to make further progress in 2013 consistent with our previous expectations, assuming normal weather conditions in H2."

Enquiries

SIG plc

Stuart Mitchell, Chief Executive                                  + 44 (0) 114 285 6300

Doug Robertson, Group Finance Director

Simon Bielecki, Head of Investor Relations                + 44 (0) 7515 794359

FTI Consulting

Richard Mountain/Nick Hasell                                      + 44 (0) 20 7269 7291

Analyst presentation

A briefing to analysts will take place at 9.00am on Thursday 15 August 2013 at FTI Consulting, Holborn Gate, 26 Southampton Buildings, London, WC2A 1PB.A webcast will be available on the investor relations section ofwww.sigplc.comand will also be available for replay later on in the day.

Summary

The Group's first half performance was affected by the extended winter weather across Europe and weak market conditions. As a result, sales from continuing operations were flat in Sterling, at £1,277.4m (H1 2012: £1,280.6m), but down by 3.5% on a like-for-like basis, with the Group experiencing slight product price deflation of 0.3% and a volume decline of 3.2%.

While sales in Mainland Europe benefited from the strengthening Euro, revenues in continuing operations fell slightly, by 0.7% to £692.2m in Sterling (H1 2012: £696.9m), with like-for-like sales down 4.5%.

The Group continued to perform relatively well compared to a weak construction market in France, with sales up 0.6%, though down by 4.5% on a like-for-like basis.  First half revenues in Germany and Austria were particularly affected by the poor weather, which continued through to mid-April, and slightly weaker than anticipated market conditions, and were down by 2.8% in Sterling and 4.9% on a like-for-like basis. 

Although, as anticipated, sales in SIG Energy Management more than halved due to the ending of CERT and the slow start-up of Green Deal, revenues in the UK and Ireland increased slightly, by 0.3%, but were down 2.2% on a like-for-like basis.  Excluding SIG Energy Management like-for-like sales in the Group's UK distribution business were up by 0.9%.

The Group's focus on the quality of its sales again delivered an improvement in gross margin, which increased by 20bps to 26.2% (H1 2012: 26.0%).  SIG has also continued to keep tight control of its overheads, with core operating costs only increasing by £0.8m in H1. 

Underlying operating profit fell by 13.2% to £36.2m (H1 2012: £41.7m).   Underlying net finance costs, which included £0.5m of additional cost relating to IAS 19, were broadly flat at £5.9m (H1 2012: £6.0m), which after the £0.1m share of loss of associate (H1 2012: £0.2m) produced underlying profit before tax of £30.2m (H1 2012: £35.5m), down by 14.9%.  Underlying basic earnings per share from continuing operations fell by 16.7% to 3.5p (H1 2012: 4.2p).

Non-underlying items before taxation during the period totalled £17.1m (H1 2012: £10.3m) and included amortisation of acquired intangibles of £10.2m (H1 2012: £10.9m), net fair value losses on derivative financial instruments of £1.1m (H1 2012: £0.9m), restructuring costs of £5.6m (H1 2012: £2.0m) and other one-off items of £0.2m (H1 2012: £0.1m).

On a statutory basis profit before tax was £13.1m compared to £25.2m in H1 2012.  Basic earnings per share was 1.7p (H1 2012: 2.9p).

Net debt at 30 June 2013 was £141.7m, an increase of £11.8m compared to a year ago.  Excluding £16.5m of acquisition expenditure during the last twelve months, of which £11.2m was in H1 2013, and adverse movements in foreign exchange, net debt would have been c.£9m lower than at 30 June 2012.  As anticipated, net capital expenditure increased by 5.7% to £12.9m (H1 2012: £12.2m), and was £1.1m higher than depreciation of £11.8m.

Return on Capital Employed

Post-tax Return on Capital Employed ("ROCE") is a key metric for the Group and is calculated on a rolling 12 month basis as underlying operating profit less tax, divided by average net assets plus average net debt.  In H1 2013 ROCE increased by 10bps to 7.9% (H1 2012: 7.8%).  SIG's medium-term target remains for the Group's ROCE to exceed its WACC by 300bps. 

Strategic initiatives

SIG is making good progress on its key strategic initiatives to improve business performance, with the key theme being working more closely together as a Group, and has established workstreams focused on the following areas:

·         Procurement, which historically has been decentralised within SIG.  The Group  is now improving co-ordination based on six international product categories;

·         Branch network, where SIG is adopting a two-phase approach, firstly by further optimising the current network and secondly by considering more structural change;

·         Commercial vehicles, where the Group believes there are opportunities to improve fleet utilisation, harmonise vehicle specifications and negotiate pan-European purchasing terms; and

·         eCommerce, by adopting a more consistent approach, developing common platforms and providing customers with more choice in the way they transact with SIG.

SIG believes that these strategic initiatives provide a significant opportunity to improve its operating performance and position the business for longer term growth, although this will require some investment and cultural change within the Group, and execution is key.

These initiatives reinforce SIG's confidence in achieving its ROCE target of WACC plus 300bps, with financial benefits expected to flow from 2014 onwards.  Further details on costs and benefits will be provided at the Group's Capital Markets Day in November this year.

Further efficiency savings

As previously announced the Group is benefiting from £7.0m of efficiency savings in 2013.  Given prevailing market conditions SIG has continued to keep its cost base under review and has identified £3.9m of further savings in H1 2013 (as summarised below).  Additional measures are also anticipated in H2 2013 with details to be provided in due course.  

	Exceptional charge	Annualised savings	H1 2013 benefit	H2 2013 benefit	Incremental in 2014
Previously announced	£16.6m (in 2012)	£10m (£3m in 2012)	£3.5m	£3.5m	-
New H1 2013 measures	£5.6m	£3.9m	£0.5m	£1.6m	£1.8m

Market outperformance

SIG estimates that the overall market declined by c.6.3% in H1 2013, weighted according to the sectors in which it operates.  As the Group's sales fell by 3.5% on a like-for-like basis this corresponds to a market outperformance of c.2.8%. 

Infill acquisitions

Consistent with its infill acquisition strategy, the Group purchased four businesses in the period.  SIG also increased its shareholding in ICE Energy from 25% to 51%.  The combined total consideration for acquisitions made in the period was £11.2m. 

The largest acquisition in the period was SK Sales, a specialist Heating, Ventilation and Air Conditioning ("HVAC") distribution business which trades from 16 locations across the UK and complements the Group's existing strong presence in the European HVAC market through its Air Trade Centre business.   The other three acquisitions were roofing businesses, all of which are based in the UK.

Dividend

SIG is declaring an interim dividend of 1.15p per ordinary share, an increase of 15% compared to last year's interim dividend of 1.0p per ordinary share.  This increase reflects the strength of the Group's Balance Sheet and the Board's commitment to a progressive dividend policy, while maintaining a dividend cover of 2-3x on an underlying basis over the medium term. 

The interim dividend will be paid on 7 November 2013 to shareholders on the register at close of business on 11 October 2013.  The ex-dividend date is 9 October 2013.

Trading Review

Mainland Europe (54% of Group sales)

·      Sales from continuing operations reduced by 0.7% to £692.2m (H1 2012: £696.9m)

·      Gross margin improved by 70bps to 26.3% (H1 2012: 25.6%)

·      Underlying operating profit reduced by 8.8% to £20.7m (H1 2012: £22.7m)

·      Statutory operating profit of £11.8m (H1 2012: £16.1m)

	H1 2013 sales	Change	Change in like-for-like sales	Change in gross margin
France	£302.2m	0.6%	-4.5%	+40bps
Germany & Austria	£258.4m	-2.8%	-4.9%	+100bps
Benelux*	£76.8m	0.7%	-4.4%	+80bps
Poland	£54.8m	0.7%	-2.3%	-20bps

* includes international air handling business, headquartered in The Netherlands. 

In H1 2013 SIG opened 5 new trading sites in Mainland Europe, of which 3 were in France, 1 was in Poland and 1 in the Group's air handling business in Turkey.   Net of the 2 sites that were closed, the total number of trading sites increased by 3 to 368 over the six months to 30 June 2013.

France

The French construction market remained weak in the first half of the year with both residential and non-residential sectors in decline.  Demand was also significantly impacted by the adverse weather in the first four months of the year. 

As a result like-for-like sales in France fell by 4.5% in the first half.  However, SIG continued to outperform the market, which it estimates declined by 8.1%.  Despite the weak market conditions the Group increased its gross margin in France by 40bps. 

SIG believes its continuing strong market outperformance in France is due to the increasing maturity of new branches opened over recent years, a shift in the market towards specialists in part due to tighter building regulations and the strength of its local management team. 

Germany and Austria

Underlying market conditions overall were slightly weaker than anticipated in the first half. As in France, the German market was affected by the poor weather, which continued until mid-April and, along with more intensive competition, particularly impacted the Group's roofing business.

Consequently SIG's like-for-like sales in Germany and Austria fell by 4.9% in the first half.  However, the Group continued to outperform the market, which it estimates declined by 6.2%, and improved gross margin, which was up by 100bps.  

The residential market in Germany continued to benefit from good levels of new build activity and remains stronger than the non-residential sector, which remains relatively weak due to the combination of a stagnant commercial sector and lower public sector demand. 

Benelux

SIG outperformed the market in the Benelux region, where trading conditions remained difficult, with the Group's like-for-like sales declining by 4.4% compared to a 5.6% estimated fall in the market. Gross margin increased by 80bps as the Group's product mix in this region reverted to a more normal blend compared to H1 2012, when SIG won a number of orders for large projects which carried a lower gross margin. 

Poland

SIG estimates that the market in Poland was down by 9.4% in the first half, having been affected by the lack of credit as banks and insurers have been less willing to support some customers.  This also led to increasing pressure on margin as some competitors chased volume.  Against this backdrop, the Group's like-for-like salesreduced by 2.3% and gross margin was down 20bps.  SIG continues to believe that its longer-term prospects in Poland remain positive.

UK & Ireland (46% of Group sales)

·      Sales up by 0.3% to £585.2m (H1 2012: £583.7m)

·      Gross margin down by 40bps to 26.0% (H1 2012: 26.4%)

·      Underlying operating profit down 18.1% to £18.6m (H1 2012: £22.7m)

·      Statutory operating profit of £11.5m (H1 2012: £19.9m)

During the first half of the year the Group closed 2 sites and acquired 18 branches, of which 16 were in SK Sales, increasing the total number of sites in the UK & Ireland by 16 to 332 over the six months to 30 June 2013.

As anticipated, SIG's first half performance was impacted by a significant decline in its Energy Management business, where sales more than halved due to the ending of CERT and the slow start-up of Green Deal.  This also affected the Group's gross margin in the UK & Ireland, which declined by 40bps.

As a result, and even though the Group's revenues in the UK were up slightly, by 0.2% to £554.2m, they decreased by 2.3% on a like-for-like basis.  This compares to an estimated market decline of 5.4% in the first half in the UK.  Excluding SIG Energy Management, like-for-like sales in the Group's UK distribution business were up 0.9%. 

Although the UK construction market as a whole declined during the first half, there were signs towards the end of the period that conditions were starting to improve, driven by increased activity in the residential sector and the Government's Help-to-Buy scheme.  However, the non-residential sector remained relatively weak due to a lack of demand in both the public and commercial sectors. 

While market conditions in Ireland remain challenging, the rate of decline in the Group's sales has slowed significantly, with like-for-like sales in Ireland only down by 0.4% in H1.   Having benefited from the strengthening Euro, sales in Sterling were up by 2.0% to £31.0m.  Gross margin in Ireland was down 40bps.

Group outlook

SIG's outlook remains unchanged from that indicated in its trading update in July.  While there are signs that market conditions are starting to improve in the UK, construction activity in Mainland Europe remains weak. 

With the improving sales trend and the Group's prompt action to reduce costs, SIG continues to expect to make further progress in 2013 consistent with its previous expectations, assuming normal weather conditions in the second half.

Cautionary Statement

This Interim Report has been prepared in accordance with the requirements of English Company Law and the liabilities of the Directors in connection with this Interim Report shall be subject to the limitations and restrictions provided by such law.

This Interim Report is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its Directors, employees, agents or advisors do not accept or assume responsibility to any other person to whom this Interim Report is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.

Certain information included in this Interim Report is forward looking and involves risk and uncertainties that could cause the actual results to differ materially from those expressed or implied by forward looking statements. It is believed that the expectations set out in these forward looking statements are reasonable but they may be affected by a wide range of variables which could cause future outcomes to differ from those foreseen in forward looking statements, including but not limited to, the level of market demand in SIG's operating markets, competitors and margin management, commercial relationships, government legislation, debt, working capital/credit management, IT infrastructure and resilience and availability of key resources.  All statements in this Interim Report are based upon information known to the Company at the date of this report. The Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise.

Responsibility Statement

We confirm to the best of our knowledge that:

(a) the condensed interim set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union;

(b) the Interim Report includes a fair review of the information required by the Financial Conduct Authority Disclosure and Transparency Rules ("DTR") 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the Interim Report includes a fair review of the information required by DTR4.2.8R (disclosure of related parties' transactions and changes therein).

By order of the Board

Stuart Mitchell Doug Robertson

Director                                                             Director

14 August 2013                                                 14 August 2013

Condensed Consolidated Income Statement
for the six months ended 30 June 2013
		Unaudited six months ended 30 June 2013				Unaudited six months ended 30 June 2012				Audited year ended 31 December 2012
		Before other items*	Other items*	Total		Before other items*	Other items*	Total		Before other items*	Other items*	Total
	Note	£m	£m	£m		£m	£m	£m		£m	£m	£m
Revenue	2	1,277.4	-	1,277.4		1,280.6	12.0	1,292.6		2,608.6	26.9	2,635.5
Cost of sales		(943.2)	-	(943.2)		(947.8)	(9.7)	(957.5)		(1,927.4)	(21.8)	(1,949.2)
Gross profit		334.2	-	334.2		332.8	2.3	335.1		681.2	5.1	686.3
Other operating expenses		(298.0)	(16.0)	(314.0)		(291.1)	(11.7)	(302.8)		(584.7)	(43.7)	(628.4)
Operating profit	2	36.2	(16.0)	20.2		41.7	(9.4)	32.3		96.5	(38.6)	57.9
Finance income		0.8	-	0.8		0.5	0.2	0.7		1.5	0.4	1.9
Finance costs		(6.7)	(1.1)	(7.8)		(6.5)	(1.1)	(7.6)		(13.6)	(2.2)	(15.8)
Profit before tax and share of loss of associate		30.3	(17.1)	13.2		35.7	(10.3)	25.4		84.4	(40.4)	44.0
Share of loss of associate	12	(0.1)	-	(0.1)		(0.2)	-	(0.2)		(0.3)	-	(0.3)
Profit before tax		30.2	(17.1)	13.1		35.5	(10.3)	25.2		84.1	(40.4)	43.7
Income tax expense	4	(9.1)	6.3	(2.8)		(10.9)	3.0	(7.9)		(26.2)	9.1	(17.1)
Profit after tax		21.1	(10.8)	10.3		24.6	(7.3)	17.3		57.9	(31.3)	26.6
Attributable to:
Equity holders of the Company		20.7	(10.8)	9.9		24.6	(7.3)	17.3		57.6	(31.3)	26.3
Non-controlling interests		0.4	-	0.4		-	-	-		0.3	-	0.3
Earnings per share
Basic earnings per share	5	3.5p	(1.8p)	1.7p		4.2p	(1.3p)	2.9p		9.7p	(5.2p)	4.5p
Diluted earnings per share	5	3.5p	(1.8p)	1.7p		4.2p	(1.3p)	2.9p		9.7p	(5.2p)	4.5p
* "Other items" relate to the amortisation of acquired intangibles, restructuring costs, other one-off items, profit and loss arising on the sale of businesses, trading profits and losses associated with disposed businesses, fair value gains and losses on derivative financial instruments, the defined benefit pension scheme curtailment gain, the taxation effect of "Other items" and the effect of changes in taxation rates. "Other items" have been disclosed separately in order to give an indication of the underlying earnings of the Group. Further details can be found in Note 3.

Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2013
	Unaudited six months ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	£m	£m	£m
Profit after tax	10.3	17.3	26.6
Other comprehensive income/(expense)
Exchange difference on retranslation of foreign currency goodwill and intangibles	13.1	(8.8)	(6.2)
Exchange difference on retranslation of foreign currency net investments (excluding goodwill and intangibles)	12.7	(8.3)	(5.2)
Exchange and fair value movements associated with borrowings and derivative financial instruments	(6.0)	5.4	4.0
Tax credit/(charge) on exchange difference arising on borrowings and derivative financial instruments	1.4	(1.4)	(1.0)
Gains and losses on cash flow hedges	0.3	(0.5)	(2.7)
Transfer to profit and loss on cash flow hedges	1.1	1.1	2.2
Actuarial gain/(loss) on defined benefit pension schemes*	6.7	(2.6)	(0.2)
Deferred tax movement associated with actuarial gain/(loss)*	(1.6)	0.6	0.2
Effect of change in rate on deferred tax*	-	(0.1)	(0.8)
Other comprehensive income/(expense)	27.7	(14.6)	(9.7)
Total comprehensive income	38.0	2.7	16.9
Attributable to:
Equity holders of the Company	37.6	2.7	16.6
Non-controlling interests	0.4	-	0.3
	38.0	2.7	16.9
* These items will not be reclassified subsequently to the Consolidated Income Statement.

Condensed Consolidated Balance Sheet
as at 30 June 2013
		Unaudited 30 June 2013	Unaudited 30 June 2012	Audited 31 December 2012
	Note	£m	£m	£m
Non-current assets
Property, plant and equipment		141.6	141.4	134.2
Interest in associate	12	-	1.3	0.8
Goodwill		446.0	424.9	428.7
Intangible assets		50.1	52.4	54.4
Deferred tax assets		27.8	32.0	29.0
Derivative financial instruments		43.8	51.0	37.4
		709.3	703.0	684.5
Current assets
Inventories		245.7	234.6	224.0
Trade and other receivables		464.8	439.1	373.3
Derivative financial instruments		7.6	-	6.2
Associate loan and deferred consideration		0.3	-	2.7
Cash and cash equivalents		99.1	104.0	128.1
		817.5	777.7	734.3
Total assets		1,526.8	1,480.7	1,418.8
Current liabilities
Trade and other payables		410.3	387.0	333.0
Obligations under finance lease contracts		2.4	1.9	2.2
Bank overdrafts		6.3	3.1	4.1
Bank loans		0.8	2.4	1.3
Private placement notes		85.7	-	81.8
Derivative financial instruments		7.4	0.6	5.8
Current tax liabilities		2.0	4.4	4.4
Provisions		7.8	14.3	9.3
		522.7	413.7	441.9
Non-current liabilities
Obligations under finance lease contracts		4.8	5.4	5.4
Bank loans		0.1	0.2	0.1
Private placement notes		181.8	261.7	174.2
Derivative financial instruments		3.2	9.6	4.8
Deferred tax liabilities		17.1	17.9	17.3
Other payables		10.4	7.8	3.0
Retirement benefit obligations	11	26.4	36.1	34.4
Provisions		26.1	27.1	28.9
		269.9	365.8	268.1
Total liabilities		792.6	779.5	710.0
Net assets		734.2	701.2	708.8
Capital and reserves
Called up share capital	10	59.1	59.1	59.1
Share premium account		447.0	447.0	447.0
Capital redemption reserve		0.3	0.3	0.3
Share option reserve		1.1	1.2	0.9
Hedging and translation reserve		24.0	(1.9)	2.8
Retained profits		202.3	194.7	197.7
Attributable to equity holders of the Company		733.8	700.4	707.8
Non-controlling interests		0.4	0.8	1.0
Total equity		734.2	701.2	708.8

Condensed Consolidated Cash Flow Statement
for the six months ended 30 June 2013
		Unaudited six months ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	Note	£m	£m	£m
Net cash flow from operating activities
Cash generated from operating activities	7	15.2	22.4	88.7
Finance costs paid		(5.6)	(6.4)	(13.3)
Finance income received		0.7	0.7	1.5
Income tax paid		(6.7)	(10.3)	(19.4)
Net cash generated from operating activities		3.6	6.4	57.5
Cash flows from investing activities
Purchase of property, plant and equipment and computer software		(14.3)	(12.9)	(29.7)
Proceeds from sale of property, plant and equipment		1.6	1.8	4.1
Net proceeds from sale of business		-	-	1.2
Settlement of amounts payable for purchase of businesses	6	(9.4)	(7.4)	(12.7)
Net cash used in investing activities		(22.1)	(18.5)	(37.1)
Cash flows from financing activities
Capital element of finance lease rental payments		(1.1)	(1.0)	(2.1)
Repayment of loans/settlement of derivative financial instruments		(2.8)	1.8	(1.2)
Dividends paid to equity holders of the Company		(11.8)	(8.9)	(14.8)
Dividend payments to non-controlling interests		(0.2)	(0.2)	(0.3)
Net cash used in financing activities		(15.9)	(8.3)	(18.4)
(Decrease)/increase in cash and cash equivalents in the period	8	(34.4)	(20.4)	2.0
Cash and cash equivalents at beginning of period		124.0	122.9	122.9
Effect of foreign exchange rate changes		3.2	(1.6)	(0.9)
Cash and cash equivalents at end of period		92.8	100.9	124.0

Condensed Consolidated Statement of Changes in Equity
For the unaudited six months ended 30 June 2013	Called up share capital	Share premium account	Capital redemption reserve	Share option reserve	Hedging and translation reserve	Retained profits	Total	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 December 2012	59.1	447.0	0.3	0.9	2.8	197.7	707.8	1.0	708.8
Profit after tax	-	-	-	-	-	9.9	9.9	0.4	10.3
Other comprehensive income/(expense)	-	-	-	-	21.2	6.5	27.7	-	27.7
Total comprehensive income/(expense)	-	-	-	-	21.2	16.4	37.6	0.4	38.0
Credit to share option reserve	-	-	-	0.2	-	-	0.2	-	0.2
Recognition of non-controlling interest	-	-	-	-	-	-	-	(0.8)	(0.8)
Dividend payments to non-controlling interests	-	-	-	-	-	-	-	(0.2)	(0.2)
Dividends paid to equity holders of the Company	-	-	-	-	-	(11.8)	(11.8)	-	(11.8)
At 30 June 2013	59.1	447.0	0.3	1.1	24.0	202.3	733.8	0.4	734.2

For the unaudited six months ended 30 June 2012	Called up share capital	Share premium account	Capital redemption reserve	Share option reserve	Hedging and translation reserve	Retained profits	Total	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 December 2011	59.1	447.0	0.3	1.2	11.2	187.7	706.5	1.0	707.5
Profit after tax	-	-	-	-	-	17.3	17.3	-	17.3
Other comprehensive income/(expense)	-	-	-	-	(13.1)	(1.5)	(14.6)	-	(14.6)
Total comprehensive income/(expense)	-	-	-	-	(13.1)	15.8	2.7	-	2.7
Credit to share option reserve	-	-	-	0.1	-	-	0.1	-	0.1
Exercise of share options	-	-	-	(0.1)	-	0.1	-	-	-
Dividend payments to non-controlling interests	-	-	-	-	-	-	-	(0.2)	(0.2)
Dividends paid to equity holders of the Company	-	-	-	-	-	(8.9)	(8.9)	-	(8.9)
At 30 June 2012	59.1	447.0	0.3	1.2	(1.9)	194.7	700.4	0.8	701.2

For the audited year ended 31 December 2012	Called up share capital	Share premium account	Capital redemption reserve	Share option reserve	Hedging and translation reserve	Retained profits	Total	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 31 December 2011	59.1	447.0	0.3	1.2	11.2	187.7	706.5	1.0	707.5
Profit after tax	-	-	-	-	-	26.3	26.3	0.3	26.6
Other comprehensive income/(expense)	-	-	-	-	(8.4)	(1.3)	(9.7)	-	(9.7)
Total comprehensive income/(expense)	-	-	-	-	(8.4)	25.0	16.6	0.3	16.9
Debit to share option reserve	-	-	-	(0.3)	-	-	(0.3)	-	(0.3)
Current and deferred tax on share options	-	-	-	-	-	(0.2)	(0.2)	-	(0.2)
Dividend payments to non-controlling interests	-	-	-	-	-	-	-	(0.3)	(0.3)
Dividends paid to equity holders of the Company	-	-	-	-	-	(14.8)	(14.8)	-	(14.8)
At 31 December 2012	59.1	447.0	0.3	0.9	2.8	197.7	707.8	1.0	708.8

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 14 August 2013.

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 2013 and 30 June 2012 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 2012 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 for the year ended 31 December 2012, which have been applied consistently throughout the current and preceding periods with the exception of new standards adopted in the current period (see below).

All results are from continuing operations under International Accounting Standards as the business disposed of in 2012 did not meet the disclosure criteria of IFRS 5 "Non-current Assets Held for Sale and Discontinued Operations" as it 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 this business have been included in the middle column of the Condensed Consolidated Income Statement entitled "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 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 2012 Annual Report and Accounts was published no significant new standards and interpretations have been issued. The following new and revised standards became effective during 2013:

·      IFRS 10 "Consolidated financial statements";

·      IFRS 11 "Joint arrangements";

·      IFRS 12 "Disclosure of interests in other entities";

·      IFRS 13 "Fair value measurement"; and

·      IAS 19 (revised) "Employee benefits".

The adoption of these standards has not had a material impact on the financial statements of the Group other than changes to disclosure.  The disclosure changes that impact the condensed interim financial statements include:

(a)  Calculating and treating interest costs on the defined benefit pension scheme on a net basis.  This has caused both finance income and finance expense to be reduced by £3m in the periods to June 2013 and June 2012, and by £6m in the year ended 2013; and

(b)  Additional disclosure of fair values of financial instruments as set out in Note 9.

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 segmental profit or loss in the period.

Unaudited six months ended 30 June 2013

Unaudited six months ended 30 June 2012

Audited year ended 31 December 2012

UK and Ireland

Mainland Europe

Eliminations

Total

UK and Ireland

Mainland Europe

Eliminations

Total

UK and Ireland

Mainland Europe

Eliminations

Total

£m

£m

2. Segmental information (Continued)
(a) Segmental results (Continued)
Balance Sheet	Unaudited six months ended 30 June 2013					Unaudited six months ended 30 June 2012					Audited year ended 31 December 2012
	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	663.0	798.2	-	1,461.2		631.7	769.9	-	1,401.6		612.1	711.9	-	1,324.0
Unallocated assets:
Derivative financial instruments				51.4					51.0					43.6
Cash and cash equivalents				11.2					24.8					46.1
Associate loan				-					-					2.4
Other unallocated assets				3.0					3.3					2.7
Consolidated total assets				1,526.8					1,480.7					1,418.8
Liabilities
Segment liabilities	283.0	217.4	-	500.4		286.5	213.7	-	500.2		264.0	167.4	-	431.4
Unallocated liabilities:
Private placement notes				267.5					261.7					256.0
Derivative financial instruments				10.6					10.2					10.6
Other unallocated liabilities				14.1					7.4					12.0
Consolidated total liabilities				792.6					779.5					710.0
Other segment information
Capital expenditure on:
Property, plant and equipment and computer software	9.9	4.6	-	14.5		8.2	5.8	-	14.0		18.3	14.0	-	32.3
Goodwill and intangibles	10.0	-	-	10.0		-	2.9	-	2.9		0.2	6.2	-	6.4
Non-cash expenditure:
Depreciation (including amortisation of computer software)	5.3	6.5	-	11.8		5.8	6.2	-	12.0		11.2	12.4	-	23.6
Impairment of property, plant and equipment	-	-	-	-		-	-	-	-		1.0	-	-	1.0
Amortisation of acquired intangibles	5.0	5.2	-	10.2		6.2	4.7	-	10.9		12.3	9.7	-	22.0

2. Segmental information (Continued)
(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 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
				£m	£m	£m
Insulation and Energy Management				591.3	590.7	1,197.6
Exteriors				390.1	399.3	823.7
Interiors				296.0	290.6	587.3
Total continuing				1,277.4	1,280.6	2,608.6
Attributable to business divested in 2012				-	12.0	26.9
Total				1,277.4	1,292.6	2,635.5

(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 2013			Unaudited six months ended 30 June 2012			Audited year ended 31 December 2012
	Revenue	Non-current assets		Revenue	Non-current assets		Revenue	Non-current assets
Country	£m	£m		£m	£m		£m	£m
United Kingdom	554.2	286.7		553.3	281.0		1,120.6	276.3
Ireland	31.0	0.9		30.4	0.9		63.5	0.9
France	302.2	235.9		300.4	225.3		590.6	228.3
Germany and Austria	258.4	55.7		265.8	53.1		568.6	54.4
Poland	54.8	15.3		54.4	15.9		117.2	16.1
Benelux*	76.8	43.2		76.3	42.1		148.1	42.1
Total continuing	1,277.4	637.7		1,280.6	618.3		2,608.6	618.1
Attributable to business divested in 2012	-	-		12.0	1.7		26.9	-
Total	1,277.4	637.7		1,292.6	620.0		2,635.5	618.1
* Includes international air conditioning and 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 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	£m	£m	£m
Amortisation of acquired intangibles	(10.2)	(10.9)	(22.0)
Net loss arising from sale of business in 2012	-	-	(4.6)
Operating loss attributable to business divested in 2012	-	(0.8)	(1.2)
Restructuring costs	(5.6)	(2.0)	(16.6)
Other one-off items	(0.2)	(0.1)	1.4
Defined benefit pension scheme curtailment gain	-	4.4	4.4
Impact on operating profit	(16.0)	(9.4)	(38.6)
Net fair value losses on derivative financial instruments	(1.1)	(0.9)	(1.8)
Impact on profit before tax	(17.1)	(10.3)	(40.4)
Income tax credit	6.3	3.0	9.1
Impact on profit after tax	(10.8)	(7.3)	(31.3)

4. Income tax
The income tax expense comprises:
	Unaudited six months ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	£m	£m	£m
UK taxation	(0.4)	3.4	3.9
Overseas taxation	3.2	4.5	13.2
Total income tax expense for the period	2.8	7.9	17.1
Tax for the six month period ended 30 June 2013 on underlying profits (i.e. before "Other items") is charged at 30.1% (30 June 2012: 30.7%; 31 December 2012: 31.2%), 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 2013. On 2 July 2013, Finance Act 2013 (FA 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. As FA 2013 was not substantively enacted at the interim balance sheet date of 30 June 2013 these rate reductions have not been reflected in the calculation of the Group's deferred tax, which has been calculated using the corporation tax rate on that date of 23%. The effects of the change in tax rate, which are not material, will be reflected in the full year accounts to 31 December 2013.

5. Earnings per share
The calculations of earnings per share are based on the following profits and numbers of shares:
	Basic and diluted
	Unaudited six months  ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	£m	£m	£m
Profit after tax	10.3	17.3	26.6
Non-controlling interests	(0.4)	-	(0.3)
	9.9	17.3	26.3
	Basic and diluted before other items
	Unaudited six months  ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	£m	£m	£m
Profit after tax	10.3	17.3	26.6
Non-controlling interests	(0.4)	-	(0.3)
Amortisation of acquired intangibles	10.2	10.9	22.0
Net loss arising from sale of business in 2012	-	-	4.6
Operating loss attributable to business divested in 2012	-	0.8	1.2
Restructuring costs	5.6	2.0	16.6
Other one-off items	0.2	0.1	(1.4)
Defined benefit pension scheme curtailment gain	-	(4.4)	(4.4)
Net fair value losses on derivative financial instruments	1.1	0.9	1.8
Tax relating to other items	(6.3)	(3.0)	(9.1)
	20.7	24.6	57.6
Weighted average number of shares:
	Unaudited six months  ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	Number	Number	Number
For basic earnings per share	590,860,343	590,832,604	590,835,039
Exercise of share options	276,532	4,737,279	-
For diluted earnings per share	591,136,875	595,569,883	590,835,039

5. Earnings per share (Continued)

	Unaudited six months  ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
Earnings per share
Total basic earnings per share	1.7p	2.9p	4.5p
Total diluted earnings per share	1.7p	2.9p	4.5p
Earnings per share before other items*
Total basic earnings per share	3.5p	4.2p	9.7p
Total diluted earnings per share	3.5p	4.2p	9.7p
* 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
United Roofing Products Limited		100%	28 February 2013	United Kingdom	Distribution of roofing materials and associated products
Ice Energy Technologies Limited*		51%	5 March 2013	United Kingdom	Design and distribution of renewable energy systems
SK (Sales) Limited		100%	30 April 2013	United Kingdom	Distribution of air conditioning and air handling products
* The Group increased its shareholding in Ice Energy Technologies Limited ("Ice") from 25% to 51% on 5 March 2013 via a debt for equity exchange, at which point the company became a subsidiary undertaking of the Group (see Note 12).
The Group also acquired the trade and certain assets and liabilities of the following businesses:
Acquisition name			Acquisition date	Country of operation	Principal activities
KC Roofing Supplies			30 April 2013	United Kingdom	Distribution of roofing materials and associated products
Harris Slate and Stone (UK) Limited			30 April 2013	United Kingdom	Distribution of roofing materials and associated products
The net assets of these businesses at acquisition (in aggregation) were as follows:
					£m
	Property, plant and equipment				2.3
	Inventories				2.6
	Trade and other receivables				9.6
	Net cash acquired				3.0
	Trade and other payables				(11.7)
	Finance leases				(0.3)
	Fair value adjustments				(0.4)
	Net assets acquired				5.1
	Intangible assets - customer relationships				4.6
	Intangible assets - non-compete clauses				0.6
	Deferred tax liability on acquired intangible assets				(1.2)
	Goodwill				4.8
	Debt for equity exchange in respect of Ice				(1.5)
	Total cash consideration				12.4
	Total consideration including assumed cash:
	Cash (per above)				12.4
	Net cash acquired				(3.0)
	Settlement of amounts payable for purchase of businesses				9.4
	Debt for equity exchange in respect of Ice				1.5
	Finance leases (per above)				0.3
	Total consideration (including assumed cash and debt)				11.2
6. Acquisitions (Continued)
In accordance with IFRS 3, acquisition expenses of £0.5m in relation to the above acquisitions have been recognised within "Other items" in the Condensed Consolidated Income Statement. In addition, it is currently expected that, dependent upon future profits, a further £3.5m will be paid to the vendors of recent acquisitions who are employed by the Group. As required by IFRS 3 (2008), this will be treated as remuneration and will be charged to the income statement as paid. The related accrual of potential consideration in the period to 30 June 2013 is £0.2m (30 June 2012: £nil; 31 December 2012: £0.1m). Added to the £0.5m acquisition expenses this has led to a charge within "Other items" in the Condensed Consolidated Income Statement of £0.7m in respect of acquisitions. The Directors have made a provisional assessment of the fair value of the net assets acquired. Any further adjustments arising will be accounted for within the hindsight period. These fair value adjustments relate primarily to: (a)   a review of the carrying value of all non-current assets to ensure that they accurately reflect their market value; and (b)   an alignment of valuation and provisioning methodologies to those adopted by the Group. Included within goodwill are staff acquired as part of the business and strategic acquisition synergies which are specifically excluded in the identification of intangible assets on acquisition in accordance with the relevant accounting standards. Goodwill arising is not deductible for tax purposes. Post-acquisition revenue and operating profit for the period ended 30 June 2013 for all 2013 acquisitions amounted to £12.5m and £0.8m respectively. Post Balance Sheet events On 22 July 2013, the Group acquired 100% of the issued share capital of Roofcare Northern Limited, a distributor of roofing materials and associated products in the United Kingdom. The initial consideration for the acquisition made after the balance sheet date was £1.2m and the value of the net assets acquired was £1.1m. Due to the proximity to the period end, further financial information has not been provided. This will be included in the Group's Annual Report and Accounts.

7. Reconciliation of operating profit to cash generated from operating activities
	Unaudited six months  ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	£m	£m	£m
Operating profit	20.2	32.3	57.9
Depreciation (including amortisation of computer software)	11.8	12.0	23.6
Impairment of property, plant and equipment	-	-	1.0
Amortisation of acquired intangibles	10.2	10.9	22.0
Profit on sale of property, plant and equipment	(0.6)	(0.4)	(1.1)
Net loss arising from sale of business in 2012	-	-	4.6
Share-based payments	0.2	0.1	(0.2)
Increase in working capital	(26.6)	(32.5)	(19.1)
Cash generated from operating activities	15.2	22.4	88.7
Included in cash generated from operating activities is a special contribution to the defined benefit pension scheme of £3.0m (30 June 2012: £7.0m; 31 December 2012: £7.0m) and cash paid on current and previous years restructuring costs of £10.5m (30 June 2012: £4.8m; 31 December 2012: £12.7m).

8. Reconciliation of net cash flow to movements in net debt
	Unaudited six months  ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	£m	£m	£m
(Decrease)/increase in cash and cash equivalents in the period	(34.4)	(20.4)	2.0
Cash flow from decrease in debt	2.6	3.4	6.2
(Increase)/decrease in net debt resulting from cash flows	(31.8)	(17.0)	8.2
Non-cash items*	(1.2)	(1.0)	(0.8)
Exchange differences	(3.4)	4.0	3.2
(Increase)/decrease in net debt in the period	(36.4)	(14.0)	10.6
Net debt at beginning of period	(105.3)	(115.9)	(115.9)
Net debt at end of period	(141.7)	(129.9)	(105.3)
* Non-cash items includes the fair value movement of debt recognised in the period which does not give rise to a cash inflow or outflow. Net debt is defined as the net of cash and cash equivalents, bank overdrafts, financial derivatives, associate loans and deferred consideration, private placement notes, bank loans and obligations under finance lease contracts.

9. Financial instruments fair value disclosures
At the balance sheet date the Group held the following financial instruments at fair value:
	Unaudited six months  ended 30 June 2013	Unaudited six months ended 30 June 2012	Audited year ended 31 December 2012
	£m	£m	£m
Financial assets
Derivative financial instruments	51.4	51.0	43.6
	51.4	51.0	43.6
Financial liabilities
Derivative financial instruments	10.6	10.2	10.6
	10.6	10.2	10.6
The derivative financial instruments above all have fair values which are calculated by reference to observable inputs (i.e. classified as level 2 in the fair value hierarchy).  They are valued using the discounted cashflow technique with an appropriate adjustment for counterparty credit risk.  The valuations incorporate the following inputs: ·          interest rates and yield curves observable at commonly quoted intervals; ·          commonly quoted spot and forward foreign exchange rates; and ·          observable credit spreads. The carrying value of financial assets and liabilities recorded at amortised cost in the financial statements are approximately equal to their fair value.

10. Called up share capital

11. Retirement benefit schemes

Defined benefit schemes

The Group operates a number of pension schemes, five of which provide defined benefits based upon pensionable salary. One of these schemes has assets held in a separate trustee administered fund, and four are overseas book reserve schemes. The UK defined benefit pension scheme obligation is calculated on a year to date basis, using the latest triennial valuation as at 31 December 2010.

The IAS 19 valuation conducted as at 31 December 2012 has been updated to reflect current market conditions, and as a result an actuarial gain of £6.7m and associated deferred tax charge of £1.6m has been recognised within the Condensed Consolidated Statement of Comprehensive Income.

12. Interest in associate

On 5 March 2013 the Group purchased an additional 26% shareholding in its associate, Ice Energy Technologies Limited ("Ice") for a consideration of £1.5m (non-cash), taking its total shareholding to 51%. Following this transaction Ice became a subsidiary of the Group.

In the period to 5 March 2013 there were no material transactions between Ice and SIG companies.

The Group's share of loss after tax arising from its interest in Ice for the period ending 5 March 2013 was £0.1m (30 June 2012: £0.2m; 31 December 2012: £0.7m, of which £0.4m was included within "Other items"), which has been recognised on the face of the Condensed Consolidated Income Statement. In accordance with IFRS 3, the 25% holding in Ice is deemed to have been disposed of and reacquired on the same day, and as a result a profit on disposal of £0.2m has been recognised within "Other items" in the Condensed Consolidated Income Statement.

13. Interim dividend

An interim dividend of 1.15p per share has been declared for the period (30 June 2012: 1.0p). In accordance with IAS 10 "Events After the Balance Sheet Date", dividends declared after the balance sheet date are not recognised as a liability in the financial statements.

The final dividend for the year ended 31 December 2012 of 2.0p per share has been recognised as a distribution to equity holders in the period.

Notes to the Condensed Interim Financial Statements (Continued)

14. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and have therefore not been disclosed.

Other than the relationship disclosed in Note 12, the Group has not identified any other material related party transactions in the six month period to 30 June 2013.

15. Risks and uncertainties

The principal risks and uncertainties which could have a material impact upon the Group's performance over the remaining six months of the 2013 financial year have not changed significantly from those set out on pages 30 to 33 of the Business Review included in the Group's 2012 Annual Report and Accounts. These risks and uncertainties include, but are not limited to:

(1)   market conditions;                                                                                                                                                                  

(2)   competitors and margin management;                   

(3)   commercial relationships;       

(4)   government legislation;          

(5)   debt;                       

(6)   working capital/credit management;      

(7)   IT infrastructure and resilience; and                                                                                                                                      

(8)   availability of key resources. 

The primary risk affecting the Group for the remaining six months of the year is the level of market demand in the markets in which SIG operates. SIG's diverse market sectors are affected by macroeconomic factors which limit visibility and therefore render the short to medium-term outlook difficult to predict. The "Outlook" section of the Trading Review details the current assessment of the markets in which the Group operates.

16. Seasonality

The Group's operations are not normally affected by significant seasonal variations between the first and second halves of the calendar year, however, given the extended winter and weak market conditions in the first half of 2013, the Group expects to see an improvement in profitability in the second half of the year.

Independent review report to SIG plc

We have been engaged by the Company to review the condensed set of financial statements in the half?yearly financial report for the six months ended 30 June 2013 which comprises the Condensed Consolidated Income Statement, the Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Condensed Consolidated Statement of Changes in Equity, the Condensed Consolidated Cash Flow Statement and related notes 1 to 16. We have read the other information contained in the half?yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half?yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half?yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half?yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half?yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half?yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP
Chartered Accountants and Statutory Auditor

Leeds, United Kingdom

14 August 2013

This information is provided by RNS

The company news service from the London Stock Exchange

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