## A pivotal year:
## accelerating to
## the next level
### Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 11X_SRXpart1X_toXBusinessXModel_v122.indd 1 11/03/2022 09:2411/03/2022 09:24
## Accelerating to
## the next level
### Revenue
## A pivotal year for SIG…
## £2,291.4m
2020: £1,874.5m
### Return to winning ways Net zero commitments set
### Like-for-like (“LFL”) sales growth*

| • Group back to underlying profitability with | • Net zero carbon by 2035: to be achieved by |
| --- | --- |
| underlying operating profit of £41.4m vs | migrating our fleet to electric and low-carbon |
| £53.1m loss in 2020, driven by market share | fuels and moving to greener energy suppliers. |

## 24%
gains and margin discipline in challenging
• Zero SIG waste to landfill by 2025: through
2020: 13% decline
supply markets.
reuse, recycling and reduction.
• Strategy developing ahead of expectations,
• SIG announced as a Zero Carbon Business
### Gross margin*
reinforcing the value of SIG’s core model.
champion with CO 2 nstruct Zero.
• Strength of the franchise enables our ability
## to manage supply chain disruption and pass 26.3%
### through inflation. EU strength shows
2020: 25.1%
• EU sales represent c60% of the Group, with
• Leadership team further strengthened.
2021 LFL sales up 17% vs 2020 and 11%
• €300m bond issue in November 2021 further
### vs 2019. Underlying operating profit/(loss)*
increases financial stability and flexibility.
• Particularly strong growth in France Exteriors
and Poland, LFL sales up 22% and 29%
## £41.4m
### Accelerating sales growth and respectively vs 2019.
2020 (restated): loss of £53.1m
### consistent margin progression
• Group LFL sales up 24%, and 8% on
### UK turnaround faster than
### Statutory loss before tax
non-Covid-19 affected 2019; H2 2021
### forecast
LFL sales 15% above 2019.
• UK Exteriors LFL sales grew 21% vs 2019,
## • H2 2021 gross margin of 26.6%, 70bps up (£15.9m)
returning to an operating margin of >5%.
on H1 2021 and 120bps up on H2 2020.
• 38% LFL sales growth and 2.5% gross 2020 (restated): loss of £194.6m
• Underlying operating profit margin of 1.8%;
margin increase vs 2020 brought UK
rose consistently throughout 2021.
Interiors back to profit in H2 2021.
### Net debt (post-IFRS 16)
• Decentralised operating model and branch
### Relationships and reputation P&L accountability re-established;
## £365.0m
experienced industry hires and return of
### regained
expertise drove improved product mix, 2020: £238.2m
• Supplier partnerships helped secure scarce
pricing and terms.
inventory; availability and superior service
### was reflected in a favourable customer Lost time injury frequency rate
### Net Promoter Score of 40. (“LTIFR”) – 12m rolling basis*
### Acceleration of our strategy
• Empowered branches with flexibility and
• Confidence in achieving 3% operating
tools to trade – rising people engagement
margin for 2023, which enables meaningful
## 11.8
and growth go hand in hand.
cash generation.
2020: 12.7
• UK Interiors “Distributor of the year” in the
• Clear path towards 5% operating margin in
supply category (Builders Merchants Journal
the medium-term.
### (“BMJ”) awards); Larivière (France) “2021 Greenhouse gas (“GHG”)
• Further investment in expertise, network,
### Best Specialist Distributor” (Geste D’Or). emissions per £m of revenue*
digitalisation and modern fleet.
• SIG appointments made to key industry
• “Born Green” – well positioned to capitalise
association roles.
## on the industry shift to sustainable 23.0 metric tonnes
construction, backed by the progress on our
2020: 25.4 metric tonnes
own carbon emissions – Scope 1 and 2
GHG emissions c17% lower than 2019.
*Refer to pages 28 to 29 for definition
1X_SRXpart1X_toXBusinessXModel_v122.indd 21X_SRXpart1X_toXBusinessXModel_v122.indd 2 11/03/2022 09:2411/03/2022 09:24
Strategic report Governance Financials
Strategic report
## …in an eventful year …and in an important
2 Sustainability timeline
## for our world… year for the construction 4 Our investment case
5 Chairman’s statement
## industry
8 At a glance
8 Where we are
10 What we do
• The Covid-19 pandemic, unpredictable • Demand and supply imbalances were the
12 Market review
lockdowns, workplace relocation and most immediate impact – manufacturers
14 Sustainability life cycle
constraints on travel and workforce adjusted capacity, logistics networks were
16 Our business model
movement triggered broad supply and disrupted and workforce migration was
18 Chief Executive Officer’s review
demand shocks alongside significant constrained. Supply chains were caught
28 Key performance indicators
inflation in commodity prices. out by the initial 2020 lockdowns, then by
30 Environmental, social and governance
under-estimating the strength and length
• COP26 was significant, not just for 53 Non-financial information statement
of the rebound through 2021, resulting in
formalising governments’ net zero carbon 54 Risk
unusually high materials inflation and 60 Financial review
commitments, but effectively signalling the
“allocation” of limited supply.
end of coal-fired energy through the phasing
out of fossil fuel subsidies. • The diversion of spend from leisure to Governance
68 Chairman’s introduction
renovation outlasted initial expectations.
• Covid-19 induced remote working, combined
70 Board of Directors
This added to a longer-term structural
with growing recognition of the climate
72 Corporate governance report
demand shift to replace or retrofit out-of-date
emergency, shifted attitudes away from 72 Board Leadership and
or non-compliant buildings – imperative
carbon-intensive ways of doing business, Company Purpose
since it is estimated that >35% of European
and accelerated the shift to digitalisation and 84 Division of Responsibilities
emissions relate to buildings and
ecommerce. 88 Composition, Succession
construction. and Evaluation
• The after-effects of 2020-21 are likely to be
96 Audit, Risk and Internal Control
• Recognising this long-term demand shift,
felt for years to come, potentially impacting
112 Directors’ Remuneration Report
suppliers have announced significant new
inflation and interest rates, disrupting politics 128 Directors’ Responsibilities Statement
capacity plans in insulation and plasterboard,
and industry structures, and changing
implying the largest capacity changes in
attitudes to energy cost and conservation.
Financials
a decade.
129 Consolidated income statement
See pages 12 to 13 for more details

| • With the increasing focus on sustainable | 130 Consolidated statement of |  |
| --- | --- | --- |
| construction, a growing number of SIG’s |  | comprehensive income |
| large suppliers and customers launched or | 131 Consolidated balance sheet |  |

132 Consolidated statement of changes
brought forward net zero carbon ambitions.
in equity
This will bring growing scrutiny to the carbon
133 Consolidated cash flow statement
intensity of products and supply chains, and
134 Statement of significant accounting
accelerate product innovation from new
policies
technologies and new players e.g. in
147 Critical accounting judgements and key
non-traditional insulation materials. sources of estimation uncertainty
149 Notes to the consolidated financial
• Digitalisation in construction continues to lag
statements
other industries. However, labour shortages
200 Non-statutory information
increase the importance of offsite
202 Independent auditor’s report
construction and robotics. Adoption of
213 Five-year summary
Building Information Modelling (“BIM”)
214 Company balance sheet

| continues to grow, attention to lifecycle | 215 Company statement of changes in equity |  |
| --- | --- | --- |
| carbon footprint adds significant product | 216 Company statement of significant |  |
| data complexity, and customers’ desire for |  | accounting policies |
| multichannel distribution is increasing. | 219 Notes to the Company financial |  |

statements
See pages 12 to 13 for more details 227 Group companies 2021
231 Company information
01SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 11X_SRXpart1X_toXBusinessXModel_v122.indd 1 11/03/2022 09:2411/03/2022 09:24
Sustainability timeline
## Born Green
Over seven decades, SIG has been a leading
### Sustainability and energy
force for higher standards and greater focus
### efficiency have been central
on the environment – our “Born Green”
### to SIG for over 60 years. heritage is never more relevant than today
and in the decade ahead.
SIG was founded by Ernest Adsetts in the
Likewise, the commercial success factors
1950s and was born as a specialist insulation
throughout our history – deep supplier
marketing and distribution business. Energy
partnerships, specialist expertise,
conservation is in our DNA, from taking
empowered local teams, value-creating
fibreglass into domestic housing insulation in
M&A – remain fundamental to how we 2007 – SIG began collecting and
the 1950s, 60s and 70s, through to our current
will win in the future. reporting on carbon consumption and
product range which is meeting the ever
disclosed environmental stewardship as
evolving needs of energy efficiency.
one of its core principles. In the 2007
annual report, our first environmental
report included environmental objectives
established at relevant levels within the
organisation, along with adetailed
1990: entered the UK Interiors market policy statement.
1994: entered the mainland European
market with an acquisition in France
1973–1979 – SIG led the UK construction
1996: entered the German
industry’s response to the energy crisis,
and Polish markets
entering the new arena of energy
conservation. The Group seized the 1997: entered the UK roofing
### 2002–2008

| opportunity presented by this and the | and Irish markets |  |
| --- | --- | --- |
| Government’s “Save it” campaign. |  | Rapid growth and |
|  | 2000: entered the Dutch market | diversification |

1981 – Sir Norman Adsetts joined, and
The business tripled in size to
subsequently became Chairman of, the
revenue of £3bn, with over
Association for the Conservation of
£0.5bn invested in acquisitions
Energy which proved to have great
### success in increasing the awareness 1982–2001
of the need to save energy.
Flotation and international
expansion
During this period, the
Group grew from £30m
to £1bn revenue
### 1957–1981
“Born Green” growing
2007: entered the French
federation of local branches
Exteriorsmarket
CEO, Sir Norman Adsetts,
focused on developing “New
technologies for insulation”
1987 – In the year coined the “Energy
efficiency year” by the Secretary of State
for Energy, Sir Norman was made an OBE
for his services to energy conservation.
1990s – Continual focus on energy
conservation drove higher insulation
standards and robust demand.
The Group benefitted from the UK
government’s allocation of finance for
the Home Energy Efficiency Scheme.
02 SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 21X_SRXpart1X_toXBusinessXModel_v122.indd 2 11/03/2022 09:2411/03/2022 09:24
Strategic report Governance Financials
### 2020–present day
Return to Growth strategy
based on time-honoured but
modernised SIG formula
2021 brings market share
recovery, rapid profit
turnaround and renewed focus
### 2015–2019
on sustainable construction
Change of strategic direction
The Group’s strategy was
focused on debt reduction with
a retail-like emphasis on
managing costs and inventory
2021 – Sustainability commitments
### 2009–2014 launched (refer to page 30):
Restructuring and
• Net zero carbon by 2035 at the latest
constrained investment
• Zero SIG waste to landfill by 2025
Major restructuring undertaken

| in 2009 alongside an equity |  | • Partner with manufacturers and |
| --- | --- | --- |
| raise with a focus on cash |  | customers to reduce carbon |
| generation, debt reduction | 2015-2019 – Divergence from |  |

• Health & Safety leader
and non-coredivestments our traditional models in certain markets
• Employer of choice
and subsequent restructurings distracted
from our sustainability focus.
2010 – Introduction of the UK Carbon
Reduction Commitment Energy Efficiency
Scheme (“CRC”).
2012 – SIG finished in the top 2% of
the published CRC league tables, for
reducing its carbon emissions 2011/2012.
03SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 31X_SRXpart1X_toXBusinessXModel_v122.indd 3 11/03/2022 09:2411/03/2022 09:24
Our investment case
## Diversified growth potential with
## a tried and tested business model
### Our purpose: to enable modern, sustainable
### andsafe living and working environments
### in thecommunities in which we operate.
### Resilient, diversified and high potential franchise Proven business model
### in sustainable construction
• For 25 years a leading pan-European specialist provider of • The seven pillar model of decentralised, entrepreneurial branch-
selected interiors and exteriors solutions to the construction based teams, delivering superior service through deep supplier
industry, competitively advantaged through scale and expertise. partnerships, specialist expertise and logistics excellence, has
underpinned SIG’s success since our foundation.
• “Born Green” in 1957 with decades of experience as a leading
force in energy efficient construction, well placed to benefit from • Tried and tested playbook in SIG’s core categories is also
sustainability tailwinds and market growth in energy efficient applicable to adjacent specialist building materials markets
solutions, backed up by SIG’s own commitments to be net zero with similar characteristics.
carbon by 2035 at the latest.
• Long-run track record of profitable growth, scale-up and
• Rare multi-national platform, highly diversified by product, expansion into new categories and geographies.
geography, customer base and end-user mix, with leading
positions in relatively fragmented market segments.
### New leadership team building a strong track Clear path towards 5% operating margin and
### record opportunities to accelerate
• Experienced and motivated management team with strong track • Supportive structural market growth drivers: energy efficiency
records inside and outside SIG. categories likely to outpace construction.
• Backed by a supportive shareholder base, with a successful • Step-change potential from portfolio businesses at different
maiden bond issue in November 2021 providing additional stages in their path towards operating margins of 5%.
financial stability and flexibility.
• Relentless focus on operational excellence underpinned by
• Strategy execution ahead of expectations, delivering above capital-light investment and digitalisation.
market growth and consistent operating margin uplift since its
• Fast-approaching cash generation with an increasing number
launch in mid-2020.
of attractive acquisition opportunities to accelerate growth.
• Performance momentum into 2022.
04 SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 41X_SRXpart1X_toXBusinessXModel_v122.indd 4 11/03/2022 09:2411/03/2022 09:24
Chairman's statement

Strategic report

Governance

Financials

# A strong Return to Growth

![img-0.jpeg](img-0.jpeg)

The Board is delighted with the progress that has been made under the Return to Growth strategy and is confident of further progress in 2022 to the benefit of all stakeholders.

**Dear Shareholder,**

2021 was a pivotal year for SIG, with the Return to Growth strategy gathering momentum and the Group returning to underlying profitability. Our customers, supplier partners and colleagues continue to affirm that our focus on empowered and entrepreneurial local teams, offering exceptional service and expertise to our customers, is a successful approach for building back our market share and profitability.

The Group finished well ahead of the expectations set at the beginning of the year. Strong execution of the strategy across the business, combined with a generally favourable market backdrop, enabled the Group to deliver a very encouraging set of results, and to put solid foundations in place for sustainable future growth.

The Executive Leadership Team now consists of operating company leaders who all have deep industry experience, and this is complemented by strong central support from functional leaders. I am very confident there is a strong and balanced leadership team in place to take the business further on its growth journey.

The Board is pleased with the progress that has been made and is confident that the business will continue to deliver value for all stakeholders as we move into the next phase of the strategy.

"2021 saw a step change in the Group's performance, driven by major strategic initiatives initiated at the outset of the Return to Growth strategy"

Revenue

**£2,291.4m**

2020: £1,874.5m

Underlying profit/(loss) before tax

**£19.3m**

2020 (restated): (£76.1m)

![img-1.jpeg](img-1.jpeg)

SIG Annual Report and Accounts 2021

05

1X\_SRXpart1X\_toXBusinessXModel\_v122.indd 5

11/03/2022 09:24
## Chairman's statement

### Strategic progress

Throughout the year, the Group has made excellent progress in implementing a consistent business model in all operating companies and has ensured central functions remain streamlined in line with our decentralised approach. The business has continued to make great strides in re-connecting with customers, driving a stronger, local branch-led approach and restoring an entrepreneurial and customer facing culture, particularly across front-line teams. In addition, efforts to strengthen supplier partnerships and investment in local category expertise has been crucial in mitigating and managing the supply chain issues the industry experienced throughout the year.

Greater focus on investment for growth, including opening new branches in several operating countries, upgraded ecommerce capabilities and highly selective acquisitions, coupled with enhanced operational processes, systems and controls, has strengthened the foundations for further market share recapture and profitable growth.

As a result, the Group is back to profitability earlier than expected on an underlying basis, reporting an underlying profit before tax of £19.3m. Notably, the UK business is once again profitable, and France and Poland have delivered record years. Group like-for-like sales were up 24% on the prior year, and 8% up on 2019. The Board is increasingly confident that the Group will reach 3% operating margin in 2023, trending to 5% in the medium-term.

We were delighted to complete a successful refinancing in November 2021, which included the Group's first public bond issue, specifically €300m of 5.25% fixed rate secured notes. This transaction enabled us to refinance our existing facilities well ahead of their maturity dates and on more attractive terms. Together with a new Revolving Credit Facility ("RCF"), the notes further improve the Group's financial flexibility by extending the maturity profile of the Group's borrowings and increasing its available liquidity.

**Details of the strategy and a strategic update can be found in the Chief Executive Officer's review on pages 18 to 27.**

### LFL sales

**24%**

2020: (13%)

### Underlying operating margin

**1.8%**

2020: (2.8%)

06 SIG Annual Report and Accounts 2021

### Sustainability

During the year, a newly defined set of sustainability commitments were developed and approved at Board level. Our principles are clear: we need to do the right thing for all stakeholders and focus on where SIG can make a positive difference both within our own operations and in the industry as a whole. We intend to focus on five fundamental areas: Health & Safety, net zero carbon, zero SIG waste to landfill, the reduction in carbon and waste across our supply chain and becoming an employer of choice in the building materials distribution industry. The Board considers these initiatives to be particularly important for the long-term development and success of the Group.

**Further information can be found on pages 30 to 52.**

### Governance and Board

The Group supports and sets high standards in corporate governance, and this requires a strong and effective Board. After the many changes to Board membership in 2020 and very early 2021, as set out in last year's report, we have had a year of greater stability, and I believe the Board is operating effectively. This is supported by the conclusions from our external Board evaluation exercise conducted in Autumn 2021. The relationship with Clayton, Dubiler & Rice ("CD&R") also continues to work well and we benefit greatly from their input.

Despite the ongoing challenges that this year has presented and the restrictions on physically meeting on a regular basis, the Board continued its commitment to support the Executive Leadership Team in the ongoing execution of the Return to Growth strategy.

During the year, nominated Board members also continued to fulfil the Board Employee Engagement programme, hosting focus groups with employees from across the Group in order to gain greater understanding of challenges and further insights into key areas of focus. The programme continues to be a valuable engagement tool benefitting both employees and the Board.

The Board currently comprises ten Directors, including two women, one man from a non-white ethnic background, and two male CD&R nominated Directors. This places us significantly below our aspiration to achieve at least the Hampton-Alexander target of 33% women and this is something we will address in our Board succession planning going forward.

**Further information can be found on pages 68 to 128.**

### People and culture

People are integral to the delivery of our Return to Growth strategy and sustainability commitments.

The Board would like to thank all employees for their continued commitment, resilience and hard work throughout the year. Teams have responded flexibly to changing Covid-19 circumstances and macro industry challenges, always with a clear commitment to serving customers. Throughout the pandemic, the highest priority for the business has been to ensure the safety and wellbeing of our people.

In line with our commitment to reconnect with employees and provide greater opportunity for communication and engagement across the Group, a second annual employee engagement survey was conducted, and the Board was delighted to see improvements across many focus areas. In addition, the introduction of a Group-wide communications platform has provided greater visibility between operating countries, across all levels in the Group, and increased peer to peer engagement.

We remain focused on ensuring SIG is a fair, inclusive and supportive working environment for our people, and also for our customers, suppliers, business partners and the communities in which we work. We are pleased that 81% of the respondents to our recent employee survey answered positively when asked if they feel that employees are treated with respect regardless of their age, gender, and cultural background. However, we accept there is more we can do in this area and are reviewing our approach for 2022 and beyond.

As the business focuses on strengthening the foundations for growth, renewed emphasis is being placed on the recruitment and development of high-quality talent, measuring and managing performance and ensuring robust succession planning is in place to ensure we have the right talent at all levels to continue to deliver our strategy.

**Further information can be found on pages 40 to 47.**

### Group performance

2021 LFL sales over 2020 were heavily distorted by the impact of the pandemic during H1 2020, finishing up 24%. LFL sales were up 8% on 2019, a more meaningful comparator. From the Spring onwards, the construction industry was severely affected by well publicised shortages of certain materials. This constrained our ability to fully meet customer demand, however, the impact of input cost inflation, which we were largely able

1X\_SRXpart1X\_toXBusinessXModel\_v122.indd 6

11/03/2022 09:24
to pass on to customers, provided a strong tailwind to the reported level of growth in H2.

We reported an underlying operating profit of £41.4m and underlying profit after tax of £3.7m. This led to an increase in underlying earnings per share from (10.0p) in 2020 to 0.3p. Statutory loss after tax was £28.3m, with a statutory loss per share of 2.4p.

As part of the Return to Growth strategy, the Group always planned to revisit the financing arrangements put in place in mid-2020. As noted previously, we were delighted to be able to conclude a successful refinancing in November 2021, which provides the Group increased flexibility as we execute the strategy.

No dividend is proposed for 2021. The next key step for the business is to continue to increase operating margin and, with that, also return to sustainable cash generation. I am confident that we are now very well placed to do both.

### Outlook

The Group continued to respond well to exceptional circumstances over the last year. With no direct exposure to Russia or Ukraine, we are currently not seeing any significant impact on our business arising from the current conflict in Ukraine, but we will continue to closely monitor that rapidly evolving situation. Our deepest sympathies go out to the people of Ukraine, and we are working on ways on how best we can provide financial and practical support to those affected.

As regards SIG and our outlook, the Return to Growth strategy continues to gain momentum, the organisation has further strengthened, and we are seeing the results coming through. SIG retains strong positions in its core markets, and, notwithstanding the evolving geopolitical uncertainties, the fundamentals of the markets in which we operate remain robust. The Board is delighted with the progress that has been made under the Return to Growth strategy and is confident of further progress in 2022 to the benefit of all stakeholders.

The Board is grateful for the ongoing support of shareholders and employees and remains committed to leading the Group towards its goals in delivering the strategy.

**Andrew Allner**
Chairman
10 March 2022

Strategic report

Governance

Financials

## Our strategy

### Sustainable construction

To enable modern, sustainable and safe living and working environments in the communities in which we operate

Responsible actions

Winning branches

Superior service

Specialist expertise

Valuable partnerships

Highest productivity

Focused growth

### Sustainable market leadership

- Grow our leadership positions and market share
- Operating margin of 3%, trending towards 5% in the medium-term
- Cash generation to reinvest in growth and support progressive dividend policy

See pages 18 to 27 for more details

## Our sustainability commitments

Net zero carbon by 2035

Zero SIG waste to landfill by 2025

Partner with manufacturers and customers to reduce carbon

Health & Safety leader

Employer of choice

See page 30 to 52 for more details

SIG Annual Report and Accounts 2021

07

1X_SRXpart1X_toXBusinessXModel_v122.indd 7

11/03/2022 09:24
At a glance
## Where we are
## Business overview markets
### SIG is a leading supplier of
### Market position
### specialist insulation and
• In France, UK Exteriors and Poland we
### sustainable building products have strong market positions, healthy
margins and gained share in 2021.
### and solutions to business
• In Ireland we have a strong business
### customers across Europe.
which rebounded well from further
Covid-19 restrictions imposed in H1 2021.
In our chosen interiors and exteriors markets

| we are twice the size of the next largest | • UK Interiors is recovering from a |
| --- | --- |
| European player and the largest partner | period of share loss and profit decline, |
| for many of our suppliers. | posting 38% full-year LFL growth and |

returning to profitability in H2 2021.
We have a long history in categories and
• Germany and Benelux have new and
segments that help to drive industry
highly experienced management and
sustainability trends, with >50% of Group
are poised for profitable growth.
sales exposed to tightening energy
efficiency regulation.
### Sustainable market leadership
We aspire to sustainable market
leadership in all our country markets:
• #1 or 2 market position;
• gaining share in priority categories;
• strong brand reputation and trust;
• leading net promoter scores;
• influencing the sector’s sustainability
agenda and fostering innovation; and
• operating margins at, or trending
towards, 5%.
### Sites Revenue
## 432 £2,291.4m
### Employees Underlying operating profit
## >6,800 £41.4m
08 SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 81X_SRXpart1X_toXBusinessXModel_v122.indd 8 11/03/2022 09:2411/03/2022 09:24
Strategic report

Governance

Financials

# 2021

|   | Trading sites | Employees | Market position | Share gain | Revenue £m | Underlying operating margin %  |
| --- | --- | --- | --- | --- | --- | --- |
|  **United Kingdom**  |   |   |   |   |   |   |
|  Insulation and interiors | 168 | 2,865 | +2 | ↑ | 507 | (0.5)  |
|  Leading national roofing specialist |  |  | +1 | ↑ | 422 | 5.9  |
|  **France**  |   |   |   |   |   |   |
|  LiTT Insulation and interiors | 144 | 1,286 | +2 | ↑ | 195 | 5.7  |
|  Larivière Exteriors Roofing and Accessories |  |  | +1 | ↑ | 406 | 4.3  |
|  Germany | 51 | 1,302 | Top 3 | ↔ | 393 | 0.9  |
|  Poland | 45 | 864 | +1 | ↑ | 187 | 3.4  |
|  Rep of Ireland & NI | 9 | 312 | Top 3 | ↑ | 88 | 3.2  |
|  Benelux | 15 | 219 | Top 3 | ↓ | 92 | (5.3)  |

SIG Annual Report and Accounts 2021

09

1X_SRXpart1X_toXBusinessXModel_v122.indd 9

11/03/2022 09:24
At a glance
## What we do
### We play a critical role in the construction industry,
### providing local expertise alongside the highest levels
### of customer service.
## Our USPs
SIG has decades of “specialist to specialist” expertise
from deep partnerships with suppliers, in-house
technical teams and specialist fabrication capabilities.
Our people’s product and market knowledge is our
### Expertise competitive advantage.
We help tackle the complexities of building standards
and sustainability objectives across energy efficiency
standards, fire protection and acoustic performance.
SIG has a strong heritage of quality and reliability.
91% of customers agree that “SIG is a brand I trust”.
Our people go the extra mile to get our customers
### the right product in the right place at the right time. Service
We help our valued partners deliver on their
promises, protect their brands and increase
their productivity.
SIG has established leading positions and an extensive
branch network across its core markets. Our integrated
networks and multichannel approach allow us greater
### Proximity proximity to our customers to meet their needs. We
offer market-leading brands on an international scale
alongside a local focus on providing effective solutions.
10 SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 101X_SRXpart1X_toXBusinessXModel_v122.indd 10 11/03/2022 09:2411/03/2022 09:24
Strategic report Governance Financials
## Interiors
### Revenue split Key brands Key products
Structural Technical Ceiling tiles and
## 62% insulation insulation grids
### Key suppliers
Construction Partition walls Dry lining
accessories and and doorsets
### Revenue (£m) fixings
## 1,426.1
Floor coverings
## Exteriors
### Revenue split Key brands Key products
Tiles, slates and Batten for Single-ply flat
membranes pitched roofs roof systems
## 38%
### Key suppliers
Industrial roofing Cladding systems Room-in-roof
panel systems
### Revenue (£m)
## 865.3
PV panels
11SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 111X_SRXpart1X_toXBusinessXModel_v122.indd 11 11/03/2022 09:2411/03/2022 09:24
Market review
## Our market environment
### 2021 was an eventful year for
## our world and an important Sustainable construction
### year for the construction
### industry, pointing to a decade
### of accelerating change ahead.
• Structural trends support robust
underlying growth.
• Energy efficiency and sustainability focus
create commercial opportunities for SIG,
while in parallel we reduce our own
carbon footprint.
• Digitalisation for SIG is a route to productivity
enhancement and growth while our focus on
• COP26 saw governments firm up their • Industry-wide, c30% of construction
specialist markets offers some protection
commitments to net zero carbon by materials are wasted. This is being tackled
against pure-play “digital” models.

| 2050 (UK, France, Netherlands, Ireland) | by growth in offsite manufacturing (more |
| --- | --- |
| and 2045 (Germany) and, with an | energy and material efficient) and new |
| estimated >35% of European GHG | technologies to recycle and convert waste |
| emissions linked to construction, our | to useable products. |

industry is centre-stage.
• In 2021, a growing number of our large

| • Fiscal stimulus to support new build and | manufacturers and customers (e.g. |
| --- | --- |
| renovation includes the European Green | house-builders, master contractors) adopted |
| Deal with a budget of c€1 trillion, while | or strengthened their own net zero carbon |
| the UK’s “Build back better” programme | commitments and waste and circularity |
| has an added sustainability focus; | goals. These ambitions will shape the |
| across our markets a range of grants, | solutions and materials they make and |
| loans and subsidies are being deployed | buy in the future, as well as framing their |
| to drive demand. | expectations of distributors as partners |

in this journey.
• Building standards are being revised

| upwards e.g. in December 2021 the EU | • The increasing need and investment |
| --- | --- |
| Commission proposed mandatory | to enhance energy efficiency across |
| energy efficiency upgrades to at least | construction drives greater demand for |
| E by 2030. | SIG’s core products (such as insulation and |

roofing), raises the importance of distributor
expertise in energy and carbon efficiency,
and reinforces the imperative of reducing
emissions from our own operations.

| Industry focus on sustainable | 1 | Increase exposure to green trends |
| --- | --- | --- |
| construction creates five | 2 | Partner with suppliers to accelerate |
| opportunities for SIG to |  | uptake of low-carbon products |
| capture commercial benefit | 3 | Reframe the strategic conversation |
| and reduce carbon footprint |  | with large accounts |
| along the value chain | 4 | Facilitate growth in the circular |

economy
5 Provide value-added services
12 SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 121X_SRXpart1X_toXBusinessXModel_v122.indd 12 11/03/2022 09:2411/03/2022 09:24
Strategic report Governance Financials
## Demand/supply shock Structural RMI demand Digitalisation

| • Throughout 2020 and 2021, Covid-19 | • Renovation of existing housing stock is key | • Digital adoption in construction lags some |
| --- | --- | --- |
| created a level of disruption in the | to reaching governments’ net zero goals: | other industries, but the direction is clear and |
| construction industry, and it will be some | 70% of EU homes need to be renovated and | accelerating, driven by sustainability trends, |
| time before this is fully resolved. | the EU renovation rate needs to double. | pandemic disruption, and inflation. |
| • Huge demand uncertainty at the time of | • The shift to home-working that accelerated | • In building materials distribution, specialist |
| thefirst wave of national lockdowns led | in the pandemic has increased consumer | trade customers increasingly demand easy |
| totemporary supply shutdown, with | intent for home renovation, and the diversion | to use digital services to research, plan, |
| construction labour constraints exacerbated | of spend from leisure to renovation outlasted | order and manage their accounts. But these |
| by material shortages as manufacturers | initial expectations. | capabilities are complementary to telephone, |
| reduced capacity and logistics networks |  | email and in-branch i.e. multi-channel rather |

• Rises in gas prices shine a spotlight on the
were disrupted. A renovation, maintenance than online pure-play.
cost (and energy efficiency) of both
and improvement (“RMI”) spike followed the
residential and commercial heating. • Growing attention to lifecycle carbon
initial demand shock, with home-working
footprint adds significant product data
• Energy efficiency tailwinds support long-term
driving reconsideration of DIY and renovation
complexity (e.g. Environmental Product
structural growth in RMI, albeit in an
priorities, adding to long-term sustainability
Declarations for a standard plasterboard
uncertain near-term macroeconomic
driven growth tailwinds.
have five impact measures across five
environment.
• In 2021, global economic and supply chain stages with hundreds of subsidiary data
• With c50% of sales in RMI, and concentration
factors contributed to a combination of points). Helping customers understand
in energy efficiency categories expected to
shortages in some products (with thermal insulation performance, embodied
grow ahead of overall construction activity,
manufacturers resorting to an “allocation” carbon and other environmental factors
SIG is well placed.
of limited supply between customers and requires data integration across multiple
distributors) and high and volatile inflation, suppliers and specialist category expertise.
particularly in steel and wood.
• Labour shortages and high energy
• Manufacturers have pushed ahead with prices increase the importance of offsite
capacity increases, confirming confidence construction and robotics (which also cuts
in the robustness of medium-term demand. waste significantly vs traditional methods).
• Growing technologies such as BIM, 3D
printing and robotics will have applications
throughout the value chain from design, to
construction, to maintenance, through to
renovation and end of life; however common
standards remain elusive.
13SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 131X_SRXpart1X_toXBusinessXModel_v122.indd 13 11/03/2022 09:2411/03/2022 09:24
Sustainability life cycle
## The transition to more
## sustainable construction
### In SIG’s categories, sustainability is
### multi-dimensional– itisnotas simple
### as green vs non-green products.
To truly understand sustainability As one of the largest European
over the life-cycle of a product specialist distributors in our markets,
requires considering, and SIG has several roles to play in
sometimes trading-off: partnership withcustomers and
## suppliers, including: Construction
• the carbon intensity of raw
material sourcing and extraction; • raising awareness of energy
Industry-wide, c30% of construction
efficiency and carbon regulations;
• energy use (and electricity source) materials are wasted
during manufacturing; • scaling up new lower-carbon
• Growth in offsite manufacturing – more
solutions;
• road miles and vehicle fuel type energy and material efficient.
at each stage of logistics; • helping customers optimise
• New technologies recycle and convert
across cost, insulation
• energy expended during waste into useable products.
performance and embodied
installation;
carbon;
• waste (product and packaging)
• coordinating complex logistics to
generated across manufacturing,
reduce on-site cost and waste;
distribution and construction sites;
• providing ancillary services such
• in-use performance e.g. thermal
as data, technical advice
insulation, acoustic insulation and
and support;
fire safety; and how these
properties sustain over time; • backhauling waste from
customers to supplier; and
• end-of-life impact of dismantling,
reuse, recycling or disposal; • reducing emissions from our
own operations.
• …and the difficulty multiplies
when taking into account not just
GHG emissions, but also water
consumption, hazardous
chemicals, biodiversity impact
and modern slavery risk.
14 SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 141X_SRXpart1X_toXBusinessXModel_v122.indd 14 11/03/2022 09:2411/03/2022 09:24
Strategic report Governance Financials
## Raw materials
## and manufacturing
Significant variation across
material type
• Raw material extraction and
manufacturing is often 80%
of lifecycle emissions.
• Extruded polystyrene insulation has
5x the embodied carbon of mineral
wool or fibreglass…
• ...while hempcrete or dense pack
cellulose naturally sequester carbon.
• Bio-sourced materials are currently
only 1-2% of the insulation market.
## Logistics
Fuel is the biggest factor in emissions from logistics
• Transport emissions depend on road miles, capacity
utilisation and fuel type.
• HGVs are behind cars and forklifts in electric technology.
## Building lifetime
Trade-offs between in-use energy conservation and embodied carbon
• Extruded polystyrene insulation, for example, has 5x the embodied carbon of
hemp-based but 25% better thermal insulation.
• Net carbon impact depends on application and building lifetime.
15SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 151X_SRXpart1X_toXBusinessXModel_v122.indd 15 11/03/2022 09:2411/03/2022 09:24
Our business model
## SIG’s pivotal role in sustainable
## construction creates value for
## all our stakeholders
## SIG is a leading supplier of specialist insulation and sustainable building
## products and solutions, differentiated through expertise, service and proximity
### Valued by future generations
• Minimising carbon in SIG’s own operations
• Partnering with suppliers and customers to reduce carbon across the supply chain
• Facilitating the circular economy
### Valued by manufacturers Valued by long-term Valued by customers
### • Access to a fragmented customer base Shareholders • One stop access to wide range of
• Sustainable advantage established and new products
• Energy efficient path for small orders
• Path to attractive returns • Helping customers trade-off cost,
• Scale-up of new low-carbon solutions
performance and carbon footprint
• Provision of technical advice • Unique platform for growth
• Breaking bulk, bespoke fabrication
and support
• Coordinating complex logistics,
to reduce on-site cost and waste
Developers
Contractors
Manufacturers
End user
Specialist installers
Independent
merchants
### Valued by colleagues and our communities
• Safe and sustainable working environments
• Pride in SIG’s purpose, values and standards
• Job creation and active community contribution
16 SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 161X_SRXpart1X_toXBusinessXModel_v122.indd 16 11/03/2022 09:2411/03/2022 09:24
Strategic report Governance Financials
## SIG’s pivotal role in sustainable
## construction creates value for
## all our stakeholders
## Our specialist expertise supports customers and suppliers
## totake tangible steps towards more sustainable construction
### SIG
### Easy-kit Bio-sourced
### Technical
### solar panels insulation
### Services

| Larivière has been a market leader in | Drawing on 60 years of experience, SIG | Traditional insulation, such as stone and |  |
| --- | --- | --- | --- |
| the supply of solar panels for a decade, | Technical Services in the UK offers the | glass-wools are very high consumers of |  |
| with supply mainly to larger companies | construction industry a selection of | CO | 2 . Therefore our team in France are |
| and key accounts. Our easy-kit solar | energy saving insulation products and | raising awareness and accessibility of |  |
| panel solution, with accessible and | guidance on building regulation | alternative bio-sourced solutions such |  |
| straightforward installation, allows | compliance. Through its own in-house | as wood, linen, hemp and straw-wool. |  |
| our roofing customers, of all sizes, | energy assessors, a complete and |  |  |
| to offer solar panel installation as part | integrated service ensures unbiased |  |  |
| of their portfolio. | access to thousands of market leading |  |  |

insulation products and solutions.
17SIG Annual Report and Accounts 2021
1X_SRXpart1X_toXBusinessXModel_v122.indd 171X_SRXpart1X_toXBusinessXModel_v122.indd 17 11/03/2022 09:2511/03/2022 09:25