SIG plc

SIG plc

Hillsborough Works, Langsett Road
Sheffield
S6 2LW
United Kingdom
Telephone: +44 114 285 6300
Fax: +44 114 285 6385
Web site: http://www.sigplc.co.uk

Public Company
Incorporated: 1956 as Sheffield Insulations Limited
Employees: 7,000
Sales: £1.39 billion ($2.4 billion) (2004)
Stock Exchanges: London
Ticker Symbol: SIG
NAIC: 423330 Roofing, Siding, and Insulation Material Merchant Wholesalers; 423310 Lumber, Plywood, Millwork, and Wood Panel Merchant Wholesalers; 423390 Other Construction Material Merchant Whole salers; 423710 Hardware Merchant Wholesalers; 423720 Plumbing and Heating Equipment and Supplies (Hydronics) Merchant Wholesalers; 423730 Warm Air Heating and Air-Conditioning Equipment and Supplies Merchant Wholesalers

SIG plc is one of the world's leading wholesale suppliers of insulation, roofing, and commercial interior products, active in the United Kingdom, Ireland, France, Germany, Benelux, the United States, and Poland. The company operates more than 400 distribution centers. The company's Insulation operations cover the three primary areas of thermal barriers, sound insulation, and smoke and fire barriers; under Roofing, the company carries a full range of roofing materials and accessory products; the company's Commercial Interiors division includes ceilings and wall systems, partitions and other office furnishings, and lighting and storage systems, as well as fully integrated interior packages. SIG has grown strongly during the early 2000s, in part due to an aggressive acquisition program, and in part because of tightening emissions and building code rules and legislation. The company holds leading positions in many of its markets, including the United Kingdom and Germany, as well as several states in the United States. Founded in 1956 as Sheffield Insulations Limited, SIG is listed on the London Stock Exchange. The company posted revenues of nearly £1.4 billion in 2004. The founding Adsetts family remain significant shareholders in the company.

Insulation Origins in the 1950s

The Adsetts family's background had little to do with building products. Instead, the family, led by Ernest Adsetts, operated a small ice cream family business in Sheffield in the 1950s. That business, however, had already led the family into the distribution sector, notably through the development of a string of sweet shops in the Sheffield area.

Ernest Adsetts's son William Norman Adsetts, born in 1931, did not immediately join his father in business after finishing school. Instead, in 1955, the younger Adsetts went to work for Fibreglass Ltd., a subsidiary of Pilkingtons, then pioneering the use of fiberglass as an insulation material. Norman Adsetts recognized the potential for the new material, especially for the creation of a business serving as a middleman between manufacturers and building contractors. Adsetts convinced his father to launch a new business, the wholesale distribution company Sheffield Insulations Limited, in 1956.

Norman Adsetts joined his father in business only in 1966. The company remained quite small, and focused on the local market. This began to change after Norman Adsetts became the company's managing director in 1970. Adsetts now placed the company on the growth track. By 1985, the year in which Norman Adsetts became company chairman, Sheffield's sales had topped £59 million.

Sheffield continued to grow strongly through the end of that decade, with sales topping £100 million and a network of 30 store branches by 1988. The oil crisis of the 1970s had provided a major boost to the group's growth, as the construction market sought out new insulation materials in order to increase buildings' fuel efficiency. The company's growth also was stimulated by tightening anti-pollution and safety regulations. One such piece of legislation, passed by Parliament in 1989, increased the required insulation levels by some 40 percent.

Sheffield sought to take further advantage of the expanding market for insulation and fireproofing materials by expanding into other regions in the United Kingdom, and also by diversifying its product offerings. In order to fuel this expansion, the company went public in 1989, listing on the London Stock Exchange. At that time, the company changed its name, to Sheffield Insulations Group (SIG). The Adsetts family nonetheless maintained control of the company, with more than 55 percent of its stock.

The listing enabled SIG to begin targeting acquisitions. In 1990, for example, the company acquired Ceilings Distributions (Leeds), a company specialized in the wholesale distribution of ceiling and wall systems, as well as partitions and related office furnishings. The acquisition enabled SIG to expand beyond its core insulation business for the first time.

Nonetheless, the start of the 1990s marked a low point for the company, as the collapse of the U.K. building sector, coupled with the slide into a global recession, sent the company into the red. In response, SIG brought in a new managing director, Bill Forrester, who guided the company back to profitability by 1993. In that year, also, Forrester led the company into a new and larger acquisition, of WMS, an architectural ironmonger company. The WMS acquisition led the company into manufacturing, with WMS's production of fittings and parts for doors. The purchase more than doubled SIG's size in a deal worth nearly £53 million in cash and stock. As a result of the acquisition, the Adsetts family's shareholding in SIG was reduced to just 20 percent. WMS formed the basis for the creation of the group's SIG Architectural Products division.

International Growth in the 1990s

SIG continued to rebuild its sales into the middle of the decade, nearing turnover of £120 million by 1995. The company also made a major new expansion effort, this time through the acquisition of chief U.K. rival Freeman, then the United Kingdom's second largest insulation distributor, for £18 million, in 1994. The Freeman acquisition also proved significant in that it brought the company its first international operations, a shareholding in Isokauf, in Germany.

SIG's foothold in Germany led it to expand its sales to nearby Poland in 1995. In that year, also, the company's U.K. position was boosted with the purchase of Komfort Systems, which produced ceilings and partitions. The company added roofing materials and systems as well, buying up Asphaltic in 1996. That purchase, completed in July 1997, added more than 50 store branches, for a purchase price of £25 million. Norman Adsetts retired in that year, taking on the honorary position of life president. The company also formally adopted the name of SIG plc, in 1995.

In Germany, meanwhile, the company bought the second largest insulation distributor, WKT, as well as full control of Isokauf. SIG also reinforced its entry into Poland with the opening of its first branch in that country. By the end of 1996, the company's market share in the United Kingdom had risen to 30 percent, while its position in Germany had already topped 10 percent of the total market.

SIG exited production, selling off its architectural products division in a management buyout in 1997. The company also faced a takeover attempt from its own management team, which sought to take the company private in a leveraged buyout; the company's shareholders rejected the effort, however. The following year, the company faced a fresh takeover attempt, this time from outside of the company. Those talks, too, came to nothing and were abandoned in 2000.

In the meantime, SIG continued its expansion effort, buying up U.K. building products distribution group Roskel for nearly £25 million in 1997. The signing of the Kyoto Agreement that year, which sought to reduce global greenhouse gas emissions, signaled a new era of growth in SIG's core markets. In order to take advantage of the expected rise in demand for insulation, roofing, and related building materials, SIG entered the United States, buying Distribution International and Branton Industries, both located on the Gulf Coast and specialized in providing materials to the oil and gas industry. In 1998, the group added to its dominance of the U.K. market with the purchase of Colemans Roofing.

Leading Insulation Group in the New Century

SIG entered the Benelux market in 2000, buying The Netherlands' Nouwens Group. The following year, the company added a presence in the Republic of Ireland, buying Capco Holdings for £27 million. The company also added to its U.K. operations, buying up Woods Insulation.

By then, SIG's transformation into a major internationally operating building products distribution group was well underway, as the company's sales neared £1 billion—nearly double its sales from just two years earlier.

David Williams took over as group CEO at the beginning of 2002. The company was once again facing a downturn in the construction industry as the economy softened at the beginning of the new century. Nonetheless, SIG remained on the lookout for new expansion opportunities. In 2002, for example, the company acquired AM Proos and Clydesdale Roofing, based in the United Kingdom.

Company Perspectives:

Company Strategy

SIG is a supplier of specialist materials to the building and construction industry and focuses its activities into three main business areas of Insulation, Commercial Interiors and Roofing. These business areas have individual growth drivers and each requires specialist infrastructure, skills and know-how. These requirements have enabled SIG to build businesses that are able to differentiate themselves from mainstream competitors by offering superior service, wide product range and expert advice. Developing within these market sectors is the strategic objective of the Group, using organic expansion and carefully targeted acquisitions. The ultimate objective of this strategy is to develop long term shareholder value in partnership with our suppliers, employees and the environment.

New legislation, in the European Union and elsewhere, gave SIG reason for continued optimism, with the toughening of energy efficiency and safety requirements. By 2004, also, the construction sector had begun to expand again. SIG announced its interest in carrying out new acquisitions, earmarking as much as £100 million for new purchases. In the meantime, the company continued its organic growth, extending its operations in Belgium and Austria from its bases in The Netherlands and Germany.

SIG completed a new major acquisition in the United Kingdom in 2004, buying up Orion Trent Insulation. At the same time, the company continued seeking out smaller, bolt-on acquisitions in order to build up its network of distribution branches in the United Kingdom and elsewhere. By early 2005, SIG had added another 42 branches, expanding its total network to 412 worldwide. SIG appeared to be insulated for further growth into the new century.

Principal Subsidiaries

SIG Trading Limited; Miller Pattison Limited; SIG Building Products Limited (ROI); Insulation Distributors Limited; WeGo Dämmstoffe GmbH & Co. Holding OHG (Germany); Société de l'Ouest des Produits Isolants S.A. (Ouest Isol) (France); SIG Nederland B.V.; WKT Polska Sp. z.o.o. (Poland); SIG–Southwest, Inc. (U.S.A.); BWI Group, Inc. (U.S.A.).

Principal Competitors

Hunter Douglas N.V.; Lapeyre Group; Grafton Group PLC; American Builders and Contractors Supply Company Inc.; ZEDACH AG; Pacific Supply; Baustoffimportkontor GmbH; Ditas A/S; Solar Holding A/S; bauMax AG; Esha Nederland B.V.

Key Dates:

1956:

Ernest Adsetts follows son Norman Adsetts's advice and forms a business distributing insulation products to the building sector in Sheffield, founding Sheffield Insulations Limited.

1966:

Norman Adsetts joins his father's business.

1970:

Norman Adsetts becomes the company managing director.

1985:

Norman Adsetts becomes company chairman.

1988:

The company goes public on the London Stock Exchange as Sheffield Insulations Group (SIG).

1990:

The company acquires CDL, a supplier of ceiling products in the United Kingdom.

1993:

The company acquires the WMS Group, forming the Architectural Products division.

1994:

The company acquires the Freeman Group, which also provides entry into Germany through a stake in Isokauf.

1995:

The company changes its name to SIG plc; Komfort Systems in the United Kingdom is acquired.

1996:

The company acquires WKT, in Germany, and full control of Isokauf.

1997:

The company enters the United States through the purchases of Distribution International and Branton Industries along the Gulf Coast.

1998:

The company acquires Coleman Roofing in the United Kingdom.

2000:

The company enters Benelux with the purchase of the Nouwens Group.

2001:

The company acquires Capco Holdings in Ireland.

2004:

The company expands into Belgium and Austria; Orion Trent in the United Kingdom is acquired.

2005:

The branch network expands to 412 as turnover nears £1.4 billion.

Further Reading

Brough, Andy, and Tim Steer, "Roof Insulation Firm Has Lofty Ambitions," Sunday Times, August 1, 2004, p. 10.

Cole, Robert, "SIG," The Times, January 14, 2005, p. 61.

Goff, Sharlene, "SIG Insulated Against Downturn," Financial Times, March 10, 2004, p. 24.

Jameson, Angela, "Investors Balk at SIG's Poor Outlook," The Times, September 3, 2002, p. 26.

"Sales Keep SIG Group Dancing on the Ceiling," Birmingham Post, September 9, 2004, p. 23.

"SIG Back on Acquisitions Trail," Birmingham Post, September 4, 2003, p. 25.

"SIG Swoops to Clean Up," Daily Telegraph, March 10, 2005.

Smy, Lucy, "Insulation Demand Fuels SIG," Financial Times, March 9, 2005, p. 22.

—M. L. Cohen