Annual Report and
Accounts 2023
SIG is a leading pan-European supplier
of specialist insulation and sustainable
building products and solutions.
We connect over 75,000 customers
across Europe with thousands of
products for better buildings.
Partner
of choice
for specialist
contractors
Across our network of pan-European
local branches, we strive to be our
customers’ first choice for specialist
products. With a deep product
range, expert knowledge and
fabrication services, we help our
customers get the products they
need to deliver better, more
sustainable buildings.
For more details on how we help our customers
please see the following case studies:
c440
Branches
across six
geographies
Construction
accessories for
UK national
infrastructure
projects
Flooring
innovation for
decarbonisation
in Germany
Omnichannel for
lower carbon
products in
Poland
page 13 page 15 page 31
75k+
Customers
7,000+
Employees
1,200
Delivery
fleet
58%
EU sales
42%
UK sales
To find out more
please go to
sigplc.com
Highlights
What’s inside
Strategic report
1 Highlights
2 At a glance
4 Our strategic framework
6 Chairman’s statement
9 Investment case
10 Chief Executive Officer’s review
14 Market review
16 Strategy in action
18 Business model
20 Sustainability review
48 Key performance indicators
50 Financial review
58 Risks and risk management
Governance
64 Chairman’s introduction to Governance
66 Board leadership and
company purpose
76 Division of responsibilities
81 Composition, succession
and evaluation
82 Nominations Committee report
86 Audit & Risk Committee report
94 Risk management and internal control
96 Directors’ remuneration report
122 Directors’ report
127 Directors’ responsibilities statement
Financials
129 Consolidated income statement
130 Consolidated statement
ofcomprehensiveincome
131 Consolidated balance sheet
132 Consolidated statement
of changes in equity
133 Consolidated cash flow statement
134 Accounting policies
144 Critical accounting judgements and key
sources of estimation uncertainty
146 Notes to the consolidated financial
statements
183 Non-statutory information
186 Independent auditor’s report
194 Five-year summary
195 Company balance sheet
196 Company statement of changes
in equity
197 Company accountingpolicies
200 Notes to the Company financial
statements
204 Group companies 2023
207 Company information
* Refer to pages 48 to 49 for definitions.
Revenue
£2,761.2m
2022: £2,744.5m
Underlying operating
profit margin*
1.9%
2022: 2.9%
Statutory (loss)/profit
before tax
£(31.9)m
2022: £ 27.5m
Lost time injury frequency
rate (‘LTIFR’)*
8.4
2022: 11.1
Like-for-like (“LFL”)
sales growth/(decline)*
(2)%
2022: 17%
Underlying operating profit*
£53.1m
2022: £80.2m
Net debt
£458.0m
2022: £444.0m
Greenhouse gas (‘GHG’)
per£m of revenue*
17.1 metric tonnes
2022: 17.5 metric tonnes
1SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Pan-European
specialist
SIG operates across six European
geographies. Our portfolio of
businesses includes established
local-market specialist distribution
brands in some of our markets,
including France and Germany,
whilst we trade under the SIG
brand in others.
Across the Group, we hold market leading positions
in interiors and exteriors product categories, with a
growing position in construction accessories and
products.
In each category we offer a deep range of products
needed for the construction and renovation of
commercial and residential buildings and, increasingly,
infrastructure.
At a glance
Germany
£462m
Poland
£238m
Benelux
£117m
Ireland
£94m
UK
£1,174m
2023 Revenue by region
France
£677m
2 SIG Annual Report and Accounts 2023
Key products Key brands
Interiors
Structural insulation
Partition walls
and doorsets
Technical insulation
Floor coverings
Ceiling tiles and
grids
Drylining
Exteriors
Tiles, slates
and membranes
Flat roofing
Solar and PV
products
Batten for pitched
roofs
Cladding systems Industrial roofing
Construction products
Construction
accessories
Metal fabrication
3SIG Annual Report and Accounts 2023
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Contents
Sharpening our focus for profitable
and sustainable growth
Our strategic framework
Our long-term objectives
Our vision
To be the best provider of specialist construction
and insulation products in Europe.
Partner of choice
for specialist contractors
− Customer-focused
− Local market
business model
− Winning branches, superior
service, specialist expertise,
on-time delivery
SEE OUR ‘PARTNER
OF CHOICE IN ACTION’
CASE-STUDIES ON
PAGES 13, 15 AND 31
SEE MORE DETAILS
IN SUSTAINABILITY
REVIEW SECTION
ON PAGES 20 TO 47
1
3
2
Improving our operating
performance
− Medium-term 5% operating
margin target
− Focus in four key areas
− Unlocking meaningful
value creation
Growing sustainably
as a responsible business
− Five long-term commitments
− Committed to people
and planet
− Governance, ethics
and fairness
SEE HOW WE PERFORMED
IN 2023 ON PAGES 16, 17, 48
AND 49
4 SIG Annual Report and Accounts 2023
Our medium-term strategic actions
5%
Group operating
margin target
1
2
3
4
Grow
Deliver above-
market growth
− Leading market positions
− Grow market share
− Product mix weighted to structural
decarbonisation tailwinds
Execute
Strengthen
execution and
margin across
geographies
Modernise
Greater
productivity
through
modernisation
Specialise
Accelerate
in specialist,
higher return
businesses
− Performance management and
operational excellence
− Product mix
− Capturing opportunities for margin
growth across the portfolio
− Driving organisational efficiency
− Enhancing customer experience
− Cost efficiency and discipline
− Grow existing business positions
within portfolio
− Depth of specialisation and expertise
− Higher margin, above Group average
5SIG Annual Report and Accounts 2023
Strategic report
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Contents
Driving operational
performance and
business improvement
Dear Shareholder
During the year the Group made good
progress against our strategic ambitions,
albeit in the face of challenging market
headwinds that prevail across the
European construction sector.
While volumes were down year-on-
year, driven by weaker market demand,
SIG continued to trade well relative to
the market. This shows the very solid
progress we are making in strengthening
our underlying business.
Over the last three years, the business
has generated stronger levels of
engagement amongst employees and
delivered higher levels of customer
service. These are metrics that typically
come under pressure in a more
challenging market environment,
yet in 2023 we have maintained our
progress in both.
Our business model provides a route
to market for leading suppliers and
manufacturers and their products, across
a fragmented local customer base. You
can read more about our business model
and the value we bring to our suppliers
and customers on page 18.
We play a central role in the building
and construction supply chain and will
continue to do so as the industry and
end-users work towards the need to lower
the carbon emissions and embodied
carbon in buildings.
As one of the leading providers of
specialist insulation in our European
end-markets, and with around 80% of
our revenue derived from insulation and
products that support the wider building
envelope, SIG is helping bring to market
products that address decarbonisation of
the built environment.
Our local market business model
remains at the centre of our strategy.
We are focused on being our
customers’ partner of choice at
each branch in every country in
which we operate.
Andrew Allner
Chairman
Chairman’s statement
6 SIG Annual Report and Accounts 2023
Strategic progress
In February 2023, the Board welcomed
new Group CEO, Gavin Slark, in a
smooth transition from outgoing
CEO Steve Francis.
Gavin brings great depth of experience
in building materials distribution across
Europe. He has spent extensive time
travelling across the business this
year, getting to know our people and
operations, meeting, listening, and
learning through discussions with
colleagues and business partners
across all our countries of operation.
At a Capital Markets event in London
in November, Gavin and members of
the Executive Leadership Team (‘ELT’)
provided an update on the next steps
in our journey towards our strategic
objective of significantly improving our
operating performance, cash generation,
and value creation for shareholders.
Our core local market business model
remains at the centre of our strategy.
This means that we are focused on being
the partner of choice for our customers
at each branch across every country in
which we operate.
Our people remain at the heart of our
strategy because it is engaged people
who deliver that superior customer
service, and who create and run winning
branches that cater to local customer
needs. This in turn helps us deliver above-
market performance.
Good execution on improving our
operating performance is critical as we
push towards our medium-term operating
profit margin target of 5%. We are further
sharpening our focus on operational
excellence, including initiatives to drive
margin improvement through product mix
and category initiatives, as well as branch
performance management.
At our Capital Markets event we also
highlighted the opportunity we have
to accelerate in higher-value specialist
business, which include our new UK
Specialist Markets operating segment,
as well as other specialist, higher value
segments in which we operate across
our geographies.
Finally, the progressive modernisation
of our operations also holds an
opportunity for the Group to increase
overall profitability and efficiency, and to
accelerate growth through expanding
e-commerce offerings to greater numbers
of customers.
Rather than a top-down one-size-fits-
all approach to technology roll-out, the
Board continues to believe that the right
approach is incremental adoption of
technologies by country. This allows for
those deployed to be the most relevant
to the strategic development and
geographic need of each country.
You will find further detail on our strategic
growth framework, and the key actions
we are taking, later in this report.
Sustainability
As a Group, we are committed to growing
sustainably, and the Board believes that
sustainable growth goes beyond strong
financial performance. We recognise
our impact and our role in protecting
the environment and reducing carbon
emissions, and in the positive impact we
can have on our employees, customers,
suppliers, and communities, while helping
to drive profitable economic growth.
In 2023 we continued to make good
progress against our ambition to achieve
our five long-term ESG commitments,
including reaching net zero carbon by
2035 and delivering zero waste to landfill
by 2025. Further details can be found on
pages 20 to 47.
This year the Board was pleased to
see the implementation of our new
employee-facing health and safety
strategy: ‘Everyone Safe, Every Day’.
This strategy sits behind our long-term
goal of being a leader in health and safety
in our sector. As we continue our journey,
the Board is pleased to see that the
implementation of this strategy is already
producing results, and further details can
be found on pages 32 to 33.
Group performance
The 2023 like-for-like revenue decline of
2% reflects weaker levels of end-market
demand and lower year-on-year price
inflation, the latter of which had provided
a very meaningful tailwind to reported
revenue growth in 2022. Despite the
decline in market volumes, good trading
momentum in our end markets partially
offset some of this.
We reported an underlying operating
profit of £53m (2022: £80m), and an
underlying profit before tax of £17m
(2022: £52m). The Group generated a
statutory loss before tax of £31.9m
(2022: £27.5m profit).
As a result of the lower revenue and
operating profit, the Group delivered
modest free cash flow of £4m for the year.
Year-end net debt was £458m (2022:
£444m) on a post IFRS 16 basis, and
£154m (2022: £160m) on a pre-IFRS 16
basis. The increase in post IFRS 16 net
debt was largely due to additional lease
liabilities following lease renewals, with
market driven inflation combined with
some investments in new branches.
No dividend is proposed for 2023. We
will continue to focus on free cash flow
generation and delivering progress toward
our leverage target, which has slowed in
the current weaker market. The Board
remains committed to returning to paying
a dividend when we sensibly can, as part
of our wider capital allocation policy.
Governance and Board
We believe that good corporate
governance comes from an effective
Board that provides strong leadership to
the Group and engages well with both
management and stakeholders.
Following Gavin’s appointment, Steve
Francis stepped down as Chief Executive
Officer and as a Director, as reported in
last year’s annual report and accounts.
The Board thanks Steve for his valuable
contribution in turning around the
business to focus back on the needs
of our local customers and markets.
7SIG Annual Report and Accounts 2023
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In September 2023, existing Non-
Executive Director Kath Durrant assumed
the role of Senior Independent Director
(“SID”), succeeding Alan Lovell in this role.
We thank Alan for his contributions as
SID. He remains a valued Non-Executive
Director. I look forward to working closely
with Kath in her new capacity as SID. She
also remains Chair of the Remuneration
Committee.
At the 2023 AGM, our major shareholder
CD&R changed one of its Non-Executive
Director appointees, with Christian
Rochat stepping down from the Board
and Diego Straziota joining as a Non-
Executive Director. We thank Christian for
his valuable contributions to the Board,
and welcome Diego to the Board. Diego
is well known to the Group, having served
as CD&R’s observer to the Audit & Risk
Committee since July 2020.
The Board firmly believes it is important
for Directors to engage directly with
employees to gain first-hand insight into
their challenges and views. During the
year, I am pleased to report that our
nominated Board member Simon King
continued to deliver our Board Workforce
Engagement programme, meeting face-
to-face with a broad cross-section of
employees. You can read more about this
on page 75.
During the year, one of the areas of focus
for the Board was on development and
succession planning for the ELT and
senior management, to ensure that the
Group has a diverse pipeline of future
leaders.
Our progress on succession planning
was demonstrated through several
appointments during the year of existing
SIG employees to the ELT. Further
information on talent and succession
planning can be found in the Nominations
Committee Report on page 82.
The Board continues to perform
effectively. Details of our 2023 internal
review of the Board and its Committees’
performance and effectiveness can be
found in the Corporate Governance
Report from page 64.
People and culture
Our people remain our key strength
as a business, and their commitment,
dedication and hard work has continued
to underpin our performance.
The Board remains cognisant of the
pressures the current economic climate,
and especially the increases in the cost of
living, place on our people. As a Group,
we will continue to work hard to provide
support to our employees through these
challenging times.
In 2023, we made good progress with
our people strategy and in ensuring that
our colleagues feel safe, valued, and
proud to work for us. Across the Group,
we invested in career development and
further learning opportunities, and in
building an inclusive and positive culture.
Employee engagement is a core part
of building the solid foundations that
any business needs to perform well.
Chairman’s statement / continued
Our annual survey allows us to directly
engage with employees and gain
valuable insights, shaping people-centric
strategies and policies at the Board level.
The Board was pleased to see continued
progress in a number of areas and that
we are either close to, at, or higher than
benchmark levels on engagement in
most areas across the Group. You can
read more about our commitment to our
People on pages 34 to 35.
Outlook
Over the last three years SIG has become
a stronger Group, and more valued by our
customers and other key stakeholders,
including our employees. This, together
with the new strategic focus that Gavin
and his team have set out in November
2023, puts SIG in a strong position to take
advantage of markets as they recover,
and to increase the value that the Group
creates over the medium and long-term.
I would like to extend my thanks to all of
our employees and other stakeholders for
their continued support.
I, along with the rest of the Board, very
much look forward to working with Gavin
and the leadership team to build on the
strong foundations now in place, and to
delivering on our expectations for the
year ahead.
Andrew Allner
Chairman
4 March 2024
8 SIG Annual Report and Accounts 2023
Meaningful value
creation opportunity
Investment case
Diversified by geography
and end-markets
− Pan-European presence across six
geographies
− Revenue evenly balanced across
commercial, residential, RMI and
new-build end markets
− Leading market positions with scope
for further share growth
Product mix weighted to
structural growth tailwinds
− 80% of revenue from products
supporting energy efficiency of building
envelope
− Weighted to long-term decarbonisation
tailwinds
Margin-accretive portfolio
opportunities
− Accelerate growth in higher-value
specialist businesses
− M&A
Specialist
focused
− Market-leading construction product
range depth, across a fragmented
customer base
− Supporting a range of specialist
contractors, with expertise in
distribution, manufacturing and
fabrication
Improving operating
performance
− 5% operating margin target offers
material upside on c£2.8bn revenue base
− Driving meaningful growth in cash
generation
− Opens up wider value creation
opportunities
Successful and experienced
leadership team
− Well regarded management with
a strong track record
− Track record of value creation, financial
discipline and strategic execution
9SIG Annual Report and Accounts 2023
Strategic report
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Strengthening
performance for
value creation
Overview
We delivered a robust set of results in
2023, given the backdrop of challenging
market conditions across the European
building and construction sector. The
results were achieved thanks to the great
efforts of all our people, especially their
relentless focus on our customers, and
the execution of a number of key actions
to improve our operational performance
and the value we can create for our
stakeholders.
In my first year as CEO, I have been
impressed by the opportunities that exist
within SIG’s portfolio for strengthening our
operating performance and accelerating
our specialist businesses, and for
delivering more profitable growth
over the medium-term.
2023 Results
Our 2023 results demonstrate the
Group’s ability to manage the impact of
increasingly challenging market conditions
across the year, with a resilient trading
performance.
Group revenue of £2,761.2m in 2023
(2022: £2,744.5m) reflected a like-for-
like (“LFL”) revenue decline of 2% (2022:
increase of 17%), driven by lower volumes,
due to weaker market demand, and lower
year-on-year price inflation. This modest
decline compares to more significant
declines in industry construction output
growth rates in many of our markets, and
as such we are confident that the Group
has performed well relative to the market.
Group underlying operating profit of
£53.1m (2022: £80.2m) and underlying
operating margin of 1.9% (2022: 2.9%)
reflects the impact of the lower revenues
through our branch network and assets,
in which the majority of costs are fixed.
On a statutory basis, the Group generated
a statutory loss before tax of £31.9m
(2022: £27.5m profit).
During 2023 we took action to reduce
operating costs in a number of areas,
which I address in more detail below.
Alongside these cost actions, our
continued focus on effective cash and
working capital management led to
modest free cash generation of £4m
(2022: £11m).
In my first year as CEO, I have been
impressed by the opportunities
that exist within SIG’s portfolio
for strengthening our operating
performance and accelerating our
specialist businesses, and for
delivering more profitable growth
over the medium-term.
Gavin Slark
Chief Executive Officer
Chief Executive Officer’s review
10 SIG Annual Report and Accounts 2023
Our customer engagement score in
2023 also reflects further incremental
progress in strengthening our customer
service, with an NPS score of +50 (2022:
+46). Our 2023 results also reflect good
progress in making our operations safer
and more sustainable, with further details
set out later in this report and across our
Strategic report.
Market dynamics
During 2023 our LFL revenue growth
rates across most geographies reduced
in H2, compared to H1, due to the
declining impact of input cost inflation. As
expected, year-over-year volume declines
moderated in H2, reflecting weaker
comparators in H2 2022. However,
absolute volumes softened through the
year due to continued weakening in
market demand, reflecting conditions
across the European building and
construction sector.
Across our end markets, the conditions
impacting our sales volumes can be
summarised as follows:
− A higher interest rate environment in
2023, and its consequent impacts
on construction-sector demand,
led to lower demand for building
products, with residential construction
projects showing the greatest decline.
Forexample, in our two largest markets,
new build residential activity levels
declined in the range of mid to high
teens, according to Euroconstruct’s
December 2023 estimates.
− Within residential construction, new
build project demand was typically
lower than RMI project demand, but
demand in both was weaker than the
prior year.
− Commercial project demand was also
lower year-on-year, although at a lower
level of decline to residential.
− Parts of the infrastructure and public
sector construction market were less
severely impacted than residential
and commercial.
Poland varied slightly to other
geographies in terms of market
conditions. We reported positive sales
growth in H2, with economic and
construction sector conditions improving
slightly in H2 and with the lapping of prior
year comparators.
As set out in further detail in the ‘Our
Market’ section of this Strategic report
the Group’s trading environment includes
the impact of near-term economic trends
and long-term structural growth drivers.
While our results were impacted in 2023
by short-term economic trends, we also
continue to see evidence of the long-term
demand drivers for growth in our sector
and in SIG’s portfolio of businesses, with
further detail in the section referenced
above.
Operating performance
In the UK Interiors business, the strategic
and operational changes made since
mid-2020 continue to enable the
business to return towards its previous
market position, reflected in a robust
performance against the market in FY23.
In UK Exteriors, the performance was also
strong relative to the market, driven by
renewed commercial focus and execution
under the new structure.
As announced at our Capital Markets
event on 23 November 2023, we are
now reporting the UK Specialist Markets
business as a separate reporting unit, in
line with the new management structure
in place. The Specialist Markets business
experienced continuing good demand
for its high specification and innovative
building solutions, but revenue was
affected by weaker demand in the
agricultural and commercial warehousing
and residential new build segments, and
by lower year-over-year input pricing
on steel.
Capital Markets Event November 2023
On 23 November 2023, Gavin Slark and
members of the Executive Leadership
Team (‘ELT’) held a capital markets event
for SIG’s debt and equity investors and
analysts in central London.
The management team provided an
update on the next steps in the Group’s
journey towards our strategic objective
of significantly improving our operating
performance, cash generation, and value
creation for shareholders. The event
included presentations on some of our
smaller, specialist businesses, as well as
our larger operating companies.
Marcin Szczygiel, Managing Director SIG
Poland, presents at the Capital Markets Event
11SIG Annual Report and Accounts 2023
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Governance Financials
Contents
In France, market conditions affected
demand, in our specialist roofing Exteriors
business (Larivière) in H2 in particular, but
both businesses continued to execute
very effectively on their strategic plans.
Larivière, has successfully expanded
product categories in the year including
private label slate, its Irondel range and
its solar product offering. In LiTT, our
Interiors business, we have strengthened
our market position in insulation and
focused on driving up sales and
performance at new and refreshed
branch locations.
The German business continued its
robust recovery of the last two years,
performing well in what was a very
challenging market. During 2023 we have
expanded our product mix in specialist
flooring and technical insulation with a
continued focus on branch performance
and operational productivity overall,
boosted by modernisation innitiatives.
Poland’s growth rebounded in the second
half, with increased volumes as well as the
impact of some softer H2 comparators.
Benelux has had new management in
place since October 2023 to address and
improve performance. Ireland’s results
reflect a tough market environment in
2023 in the sectors in which we operate.
We are confident in our ability to
manage through this current phase
of the industry cycle and to ensure
that we are more than ready to take
advantage of the significant long-
term opportunities for the Group as
markets recover.
Chief Executive Officer’s review / continued
Strategic Review
In November 2023 a number of our
Executive Leadership Team and I
presented an update on the Group’s
vision, long-term priorities and strategic
growth opportunities at a Capital Markets
event in London.
Our vision is to be the best in the market
at what we do. To achieve that, we need
to have great service, the right products,
and excellent logistics, and to be the
‘best’ in the eyes of our customers.
Since 2020 we have been bringing back
a focus on our customers to the centre
of our strategy, which recognises that
excellent customer service and support
is key to driving sales growth and market
share growth. I am very clear that we
have scope to further strengthen this
going forward. In November we outlined
that being a ‘partner of choice’ to our
customer remains one of our three long-
term objectives.
Our second long-term objective is to
improve our operating performance.
We have outlined four key pillars to drive
our operating performance over the
medium-term to reach our target 5%
operating profit margin, and within this
have set medium-term target operating
margins for each of our geographies.
These targets are a key threshold for
unlocking meaningful value creation for
shareholders, specifically through higher
cash generation.
Our third long-term commitment is to
grow sustainably, and further detail
on these actions can be found in our
Sustainability review on pages 20 to 47.
Our Strategy in action on pages 16 and
17 sets out our strategic progress in more
detail. Key areas of strategic progress in
2023 can be summarised as follows:
Grow
Despite the market contraction and lower
volumes seen in 2023, we kept our focus
on readying our business for the medium-
term sales growth opportunities ahead
of us, and to gain business with our
customers by winning on service.
By way of illustration, the UK Exteriors
business delivered strong sales growth
in 2023 relative to the market conditions.
The business has invested consistently
across the last two years in reinvigorating
its branches, in-store merchandising and
in structured programmes to boost the
sales and customer service skills of our
teams. This is yielding good results, and
there are similar initiatives being executed
across the Group, tailored to reflect local
market dynamics.
Execute
During the latter part of 2023 we executed
a number of restructuring and productivity
initiatives that will benefit the business in
2024 and beyond.
These include a streamlining of central
costs, and a review of operating company
cost structures, most notably in the
UK, Germany and Ireland. As well as
generating permanent cost reductions
of around £10m on an annualised basis,
these initiatives will facilitate improved
operational agility and execution.
Modernise
The Group made further progress on
modernisation of our operations in 2023.
We are expanding our customer-facing
e-commerce platforms, with development
work in Germany and France, where
we are leveraging our successful
e-commerce experience in Poland.
In Germany we launched a new fast-
collection service utilising technology
which allows quicker collections for
customers at greater efficiency for us,
12 SIG Annual Report and Accounts 2023
Supplying construction
products to the UK’s
Hinkley Point energy project
In the UK, our Specialist Markets business
continues to focus on major national infrastructure
projects, where we supply a range of technical
products for waterproofing, groundwork
engineering, reinforcement & formwork,
masonry and site setup and protection.
We are proud to supply the Hinkley Point energy
infrastructure project, where we are supplying
materials to support the groundworks including
waterproofing, membranes, geotextiles and a
range of other construction products.
and 90% of branch customer collections
are now signed for digitally. In addition,
we delivered continued technology-
enabled delivery improvements in France
and Ireland during the year.
Specialise
As outlined previously, the creation of
Specialist Markets as a standalone
reporting unit in the UK will allow us to
better focus on and accelerate the growth
and higher margin opportunities that exist
in these specialist businesses that have
previously been less of a focus in the
Group’s strategy.
The UK Specialist Markets team had
a successful year in growing our
relationships with and sales to some of
the UK’s largest infrastructure investment
projects, such as the HS2 rail line (stage
1) and the Hinkley Point nuclear power
station development. In addition, the
business has seen resilient demand for
our innovative steel structure offerings
in solar canopies and bespoke, high
performance insulation fabrication
services.
In France Exteriors, 2023 was a year
of good progress in expanding our
solar product offering, in particular
in introducing new highly innovative
lightweight solar panels into our
product range.
Sustainability
As a responsible business, SIG is
committed to growing sustainably and we
have five long-term commitments to guide
us in this journey.
In 2023, we achieved a further 3%
reduction in net zero carbon emissions,
through ongoing progress on fleet
transition and energy mix, and with lower
year-on-year volumes. We have also
completed our first Scope 3 emissions
impact assessment.
Reducing our waste and diverting it from
landfill is also a key focus area, and waste
diverted from landfill in 2023 improved
to 94% (2022: 92%), with our total waste
volume 16% lower.
Our safety performance has improved
in 2023, with a good reduction in
our Lost Time Injury Frequency Rate
(‘LTIFR’) to 8.4 from 11.1 in 2022, with
solid improvements in France and the
UK in particular. We have achieved
an encouraging increase in ‘near-
miss’ hazard reporting (66%) in 2023,
demonstrating a more open reporting
culture and better opportunity to prevent
hazards from becoming incidents. This
has been supported by a new ‘Everyone
Safe, Every Day’ safety strategy across
the Group, along with aligned safety
objectives and KPIs.
Outlook
Looking ahead, the Group expects
continued softness in market conditions
in 2024.
However, during this period of market
weakness we will continue to strengthen
our execution and organisation such that
we deliver higher margin growth and
performance for the medium-term. We
remain confident in our ability to manage
through this current phase of the industry
cycle and to ensure that we are more than
ready to take advantage of the significant
long-term opportunities for the Group as
markets recover.
Gavin Slark
Chief Executive Officer
4 March 2024
Partner of
choice for
specialist
contractors
13SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Key market growth drivers
SIG’s key markets benefit from long-term growth
drivers, including the increasing demand for
sustainable construction, regulatory changes and
project complexity.
Market review
Project scale and complexity
Drivers
Commercial and public building
renovation projects require large volumes
of products across complex sites and
dynamic construction schedules. These
projects utilise a wide range of products
and systems and specialist contractors.
Our contractor customers value a
partner that can supply the products
they need, where and when they need it,
and understand the demands of these
projects. This means great service and
product knowledge, on-time delivery,
and easy-to-use digital and omnichannel
services to research, plan, order, track
and manage their orders and accounts.
How we are responding
Our depth of product range, focus on
specialist contractors and ongoing
investment in customer service and
omnichannel and digital tools means
we are well positioned to support the
needs of complex and specialist projects
and coordinating dynamic delivery
requirements.
We are also using technology to improve
the operational effectiveness of fleet and
delivery and moving to an omnichannel
model in more countries to provide
seamless access to our products and
greater sales efficiencies.
Construction industry growth
Drivers
The long-term outlook for the construction
industry remains one of growth driven
by macroeconomic factors including
population growth, economic activity
and GDP. Construction-specific demand
drivers also include governments’ long-
term need to tackle housing shortages
and their support for sustainability
measures and infrastructure upgrades.
Demand for repair, maintenance and
improvement (‘RMI’), which accounts
for more than 50% of total European
construction production, is also linked
to economic growth. Around 85% of
buildings in the EU are over 20 years old,
driving long- term renovation demand.
How we are responding
SIG benefits from a broad geographic
footprint. 58% of revenues are from
outside UK with diversified exposure
across industry end-markets, helping to
mitigate volatility in market conditions.
SIG’s pan-European sales have a broadly
balanced split between new build
projects and RMI projects, while around
55% of our customers’ end-projects are
residential and 45% are commercial,
including infrastructure.
Sustainable construction
Drivers
The building and construction sector
accounts for around 37% of global energy
and process-related carbon emissions.
To meet global carbon reduction targets,
European governments continue to
implement legislation, incentives and
standards to lower the carbon emissions
from new and existing buildings and to
lower embodied carbon.
These regulations include changes
to building codes to require greater
thermal efficiency and insulation,
more energy efficient heating, funding
for decarbonisation of public sector
buildings, incentivising ‘zero carbon’
buildings and use of solar and other
lower-carbon building products and
technologies.
How we are responding
Around 80% of SIG’s revenue is
generated from the sale of insulation and
products related to the building envelope.
We are market leading specialists in
insulation across Europe, and hold Top-3
market positions in the same across our
geographies. We supply a breadth of
products and systems that improve the
thermal efficiency of buildings and meet
the demands of increasing regulation.
14 SIG Annual Report and Accounts 2023
Partner
of choice
for specialist
contractors
Revenue from insulation and
building envelope products
80%
Flooring innovation in
Germany supporting
building decarbonisation
In Germany, our Wego Vti business includes an
industry leading specialism in flooring, and is a
partner to flooring contractors across the country.
We offer products for complete flooring systems across a range
of commercial buildings and multi-dwelling residential buildings,
including raised access floors, underfloor heating systems and
different types of screed. We also provide technical expertise and
manage on-site logistics for our customer’s construction projects.
We are also helping to bring to market new and innovative flooring
products that provide greater thermal insulation to buildings to
reduce carbon emissions and which lower embodied carbon
compared to conventional products.
We have pioneered an innovative lower-carbon lightweight mortar
service. By recycling expanded polystyrene (EPS) offcuts and using
this within a lightweight mortar mix, we deliver this directly to our
customers’ construction sites using our unique Thermoblower
trucks in a time-efficient on-site service.
This enables our customers to meet legislative requirements for
more thermally-efficient buildings and installs a state of the art
screed floor.
Revenue mix
54%
new build
projects
46%
RMI projects
55%
residential
45%
commercial
including
infrastructure
15SIG Annual Report and Accounts 2023
Strategic report
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Contents
Improving our
operating performance
Strategy in action
We are committed to improving our operating performance and
are targeting a 5% operating margin target for the Group in the
medium-term. Strategic actions in four key areas will allow us to
achieve this.
WhatHowProgress
1 2
Grow
Deliver above-market
growth
Execute
Strengthen execution and
margin across geographies
Modernise
Greater productivity through
modernisation
Specialise
Accelerate in specialist, higher
return businesses
Our ambition is to deliver revenue growth
ahead of the market by achieving sales
volumes that are above the market rate of
growth.
With Top 3 positions across our geographies,
and ‘Number 1’ positions in a number of
product categories, our ambition is to be the
leader across our markets.
We aim to grow our market share by delivering
the best service and being the best specialist
distributor and partner of choice for our
customer.
We are committed to improving our execution
and our operating platform to deliver more
profitable growth.
Increasing our focus on operational
excellence offers further potential for margin
accretion in each of our geographies.
We believe that having motivated people,
winning branches and efficient operations are
key to performance.
We aim to grow our market share by delivering
the best service and being the best specialist
distributor and partner of choice for our
customer.
Across our operating companies we are
pursuing the progressive modernisation
of our operations.
This includes improving our systems and
operational processes through the use of
technologies for greater efficiency.
It also includes modernisation to drive
improvements in customer experience and
in the way that we sell to and service our
customers.
The Group’s portfolio of businesses includes
some attractive positions in highly specialist
areas of the building products industry.
These businesses generate a higher average
return than the present Group average.
By increasing our strategic focus to accelerate
growth in these businesses, we aim to
increase the contribution of these businesses
within the Group overall.
− Continuous improvement approach to
customer service
− Branch network growth, investment and
refurbishment
− Sales team skills, training and development
− Performance management focus
− Cost discipline
− Product mix – selling more higher margin products
within existing categories, and increasing private label
− Improving performance in UK Interiors and Benelux
− Process, system and organisational efficiency
− Technology enhancing customer experience and
supporting sales and product mix
− Additional management and sales focus to support
business growth and grow market positions
− Investment in inventory and product ranges in
specialist areas to support growth
− £2,761.2m reported revenue, up 1% on FY22. LFL
revenue down 2%
− Sales training programmes in operating companies
− Group customer NPS of +50, an increase of +4
on FY22
− £15.8m capex invested including branch
refurbishment
− Restructuring actions in UK, Ireland, Germany and
Group centre generating permanent cost reductions
of around £10m on an annualised basis
− New management appointed in Benelux in
October 2023
− Increased focus on higher margin product mix and
own-label product growth
− Development of e-commerce capabilities in France
and Germany during FY23, ready for launch from
2024 onwards
− Implementation of new software and digital tools to
support better pricing processes within UK Interiors
− Launch of new fast-collection digital tool in
Germany, driving an increase in more efficient
customer pick-ups
− UK reorganisation to report Specialist Markets as
separate operating unit, increasing strategic focus
on the opportunities for growth within this business
− Good initial customer response to new lightweight
solar product category in France Exteriors
− Expansion of lower-carbon flooring service
in Germany
16 SIG Annual Report and Accounts 2023
3 4
Grow
Deliver above-market
growth
Execute
Strengthen execution and
margin across geographies
Modernise
Greater productivity through
modernisation
Specialise
Accelerate in specialist, higher
return businesses
Our ambition is to deliver revenue growth
ahead of the market by achieving sales
volumes that are above the market rate of
growth.
With Top 3 positions across our geographies,
and ‘Number 1’ positions in a number of
product categories, our ambition is to be the
leader across our markets.
We aim to grow our market share by delivering
the best service and being the best specialist
distributor and partner of choice for our
customer.
We are committed to improving our execution
and our operating platform to deliver more
profitable growth.
Increasing our focus on operational
excellence offers further potential for margin
accretion in each of our geographies.
We believe that having motivated people,
winning branches and efficient operations are
key to performance.
We aim to grow our market share by delivering
the best service and being the best specialist
distributor and partner of choice for our
customer.
Across our operating companies we are
pursuing the progressive modernisation
of our operations.
This includes improving our systems and
operational processes through the use of
technologies for greater efficiency.
It also includes modernisation to drive
improvements in customer experience and
in the way that we sell to and service our
customers.
The Group’s portfolio of businesses includes
some attractive positions in highly specialist
areas of the building products industry.
These businesses generate a higher average
return than the present Group average.
By increasing our strategic focus to accelerate
growth in these businesses, we aim to
increase the contribution of these businesses
within the Group overall.
− Continuous improvement approach to
customer service
− Branch network growth, investment and
refurbishment
− Sales team skills, training and development
− Performance management focus
− Cost discipline
− Product mix – selling more higher margin products
within existing categories, and increasing private label
− Improving performance in UK Interiors and Benelux
− Process, system and organisational efficiency
− Technology enhancing customer experience and
supporting sales and product mix
− Additional management and sales focus to support
business growth and grow market positions
− Investment in inventory and product ranges in
specialist areas to support growth
− £2,761.2m reported revenue, up 1% on FY22. LFL
revenue down 2%
− Sales training programmes in operating companies
− Group customer NPS of +50, an increase of +4
on FY22
− £15.8m capex invested including branch
refurbishment
− Restructuring actions in UK, Ireland, Germany and
Group centre generating permanent cost reductions
of around £10m on an annualised basis
− New management appointed in Benelux in
October 2023
− Increased focus on higher margin product mix and
own-label product growth
− Development of e-commerce capabilities in France
and Germany during FY23, ready for launch from
2024 onwards
− Implementation of new software and digital tools to
support better pricing processes within UK Interiors
− Launch of new fast-collection digital tool in
Germany, driving an increase in more efficient
customer pick-ups
− UK reorganisation to report Specialist Markets as
separate operating unit, increasing strategic focus
on the opportunities for growth within this business
− Good initial customer response to new lightweight
solar product category in France Exteriors
− Expansion of lower-carbon flooring service
in Germany
17SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Customer-focused, local market
business model
Business model
Our business model is underpinned by the depth and breadth
of our resources, which allow us to execute our strategy.
Our resources and stakeholder relationships are key to our
success and we invest in them throughout the year.
Inputs
Colleagues
7,000+
Employees
Engaged, committed and
knowledgeable colleagues working
across our local branches, delivering
superior service and expertise and
leading our businesses.
Customers
75,000+
Customers
A fragmented customer base of
more than 75,000 customers across
local markets, including specialist
contractors and installers, developers
and independent merchants.
Branch network and
delivery fleet
c440
Branches across
six geographies
We supply our products through
around 440 branches in local markets
across six European geographies
and a delivery fleet of around 1,200
vehicles to customer and project sites.
Products
Working with leading product
suppliers we supply a deep range of
specialist construction products and
systems across interiors, exteriors and
construction accessory categories.
Leading pan-European
supplier of specialist
insulation and building
products and brands.
Connecting
suppliers...
– INSULATION AND
INTERIORS
– CONSTRUCTION
ACCESSORIES
– ROOFING AND
EXTERIORS
ADDING VALUE
Access to highly
fragmented
customer
market
Route to market
support
Facilitating
supplier
market share
and growth
18 SIG Annual Report and Accounts 2023
Helping specialist
contractors get the
products they need to
deliver better buildings.
…with
customers
– SPECIALIST
CONTRACTORS
– DEVELOPERS
– SPECIALIST
INSTALLERS
– INDEPENDENT
MERCHANTS
ADDING VALUE
One-stop
access to
product range
Specialist
knowledge and
support
Coordinating
dynamic
delivery
requirements
Credit and
payment terms
Creating value for our stakeholders
Colleagues
348
apprentices
− Career development, training
and apprenticeships
− Providing jobs in an inclusive and
safe working environment
Customers
+50
customer NPS
− One-stop access to deep
product range
− Coordinating dynamic delivery
requirements
− Supporting large complex projects
− Credit and payment terms
− Specialist knowledge and support
Suppliers
Leading
international
and national
supplier
brands
− Access to highly fragmented
customer and project market
− Facilitating supplier market growth
− Route to market support
Communities & Environment
3%
reduction in
net zero
carbon
emissions
− Committed to creating jobs in
local communities
− Reducing carbon and waste and
supporting building industry
decarbonisation
Investors
5%
medium-term
operating
margin target
− Meaningful value creation
opportunity for shareholders
19SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
What does Sustainability
mean to SIG?
Sustainability review
SIG is committed to growing
sustainably as a responsible
business. Our five long-term
sustainability commitments guide
our actions on sustainability
and social responsibility, in the
most important areas of impact
that we have as an organisation.
Stable eNPS
+14
Waste not going
to landfill
94%
Reduction in waste
going to landfill
2%
Scope 3 emissions
1
st
year of
calculation
Net Zero
Carbon
by 2035
Zero SIG
waste to landfill
by 2025
Employer
of choice
Health
and Safety
leader
Partnering to
reduce supply
chain carbon
and waste
Our five
sustainability
commitments
How we meet the UN Sustainable
Development Goals
We have identified the impacts we have as an organisation
and our sustainability commitments are aligned with the
United Nations’ Sustainable Development Goals. These are
a global roadmap for achieving a more sustainable future
for all countries.
Reduction in LTIFR
24%
Reduction in Net Zero
carbon emissions
3%
20 SIG Annual Report and Accounts 2023
Commitment Measure 2023 2022
Net zero carbon by 2035
Net zero carbon emissions –
covering Scope 1, 2 and business
travel (metric tonnes)
42,015 43,328
Zero SIG waste to landfill
by 2025
% total waste not going
to landfill
94% 92%
Partnering across the supply chain
to reduce carbon and waste
Scope 3 emissions
(metric tonnes)
1,852,356 n/a
Health and safety leader
in building materials distribution
Lost Time Injury Frequency Rate
(LTIFR)
8.4 11.1
Employer of choice in building
materials distribution
Employee engagement (eNPS)
+14 +14
At SIG we understand our impact and
our role in building a sustainable long-
term business for our stakeholders,
and in supporting the broader need to
decarbonise the built environment to meet
the climate targets set by governments
across our end-markets. We introduced
our sustainability commitments in 2021,
and our journey towards these goals has
continued this year.
In 2023, we have taken an important
step forward in understanding our Scope
3 emissions. For the first time, we have
been able to start to quantify our Scope
3 impact, giving us the data we need to
understand our impact, analyse trends, and
to identify the type of partnerships required
to achieve sustainable reductions over time.
In addition to reporting updates
and progress on our commitments,
we recognise the importance of
recommendations from the Task Force
on Climate-related Disclosures, and
our in-depth climate-related risks and
opportunities can be found on pages
36 to 45.
Our responsibilities to our colleagues,
our customers and supplier partners,
and the communities in which we operate
are of vital importance to us. We have
committed to being both a health and
safety leader and an employer of choice
in building materials distribution. The
safety and wellbeing of our colleagues
is our priority.
We want our colleagues to be proud to
work for SIG and feel engaged in our
purpose and vision. We are building
an inclusive culture where everyone is
respected for who they are, and we value
and promote diversity in all its forms
throughout the business. You can read
about our progress in our Health and
Safety and People sections of this report
on pages 32 to 35.
Our local market business model goes
hand-in-hand with robust standards,
ethics and risk management. We
are proud to be a strongly governed,
transparent and fair business. Our
Governance report on pages 64 to 127,
details the governance frameworks
in place within the Group.
SEE PAGES 28 TO 29
SEE PAGES 22 TO 27
SEE PAGES 30 TO 31
SEE PAGES 32 TO 33
SEE PAGES 34 TO 35
21SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Sustainability review / continued
2023 progress
We are committed to providing full and
accurate data for our carbon footprint.
Our emission accounting period runs from
1 October 2022 to 30 September 2023
to provide the appropriate reporting and
auditing time for the process and data.
The Greenhouse Gas (GHG) information
for the period October 2022 to September
2023 has been verified, to a limited level
of assurance, by Accenture (third-party
specialist auditors) in accordance with
ISO14064-3.
Our carbon footprint includes emissions
for which we are directly responsible,
such as vehicle and heating fuel (Scope
1) and emissions by third parties from
the generation of electricity that we then
use (Scope 2). In previous years we have
disclosed some indirect upstream and
downstream emissions (Scope 3) over
which the business has limited control,
including third-party air, rail transportation
and deliveries as well as third-party
transportation. This year we completed
a study to quantify our total Scope 3
emissions, which has enhanced our
understanding of our impact and how
we can work with our partners to reduce
these over time. For full details, see our
Scope 3 journey on page 24.
Our carbon footprint includes all
emission sources as required under the
Companies Act 2006 (Strategic report
and Directors’ report) 2013 Regulations
All carbon emissions and targets have
been calculated using the GHG Protocol
Corporate Accounting & Reporting
Standard’s application of documented
emission factors. Emission factors from
the UK Government’s GHG Conversion
Factors for Company Reporting 2023,
provided by DEFRA, along with factors
from the IEA list for 2023 have been used
to calculate our GHG disclosures. The
data relating to CO
2
emissions has been
collected from all the Group’s material
operations.
Our net zero emissions, which include
Scope 1 and 2 emissions plus business
travel, have decreased 3% from 2022 and
12% from our baseline of 2021.
Net zero carbon
by 2035
Our commitment
Net zero carbon in
SIG’s operations
by 2035, covering
Scope 1, Scope 2
and business travel
emissions.
2023 progress
Net zero carbon
emissions¹
3%
2023: 42,015
2022: 43,328
Fleet mix by greener
fuel type²
2%
2023: 26%
2022: 24%
1. Reduction against total Scope 1, 2 and business
travel emissions by 2035 (using 2021 as a base
year) and offsetting any residual emissions.
2. Percentage electric/hybrid vehicles in own fleet
comprising 36% company cars, 35% FLTs/
Moffets and 1% HGVs.
This year’s net zero reduction is primarily
due to the full year benefit of renewable
electricity contracts in Germany and the
UK. During 2023, Ireland has transitioned
to a renewable electricity contract and
is currently generating electricity from
on-site solar panels, however as a smaller
business this does not have the same
impact on the Group figures as Germany
or the UK. It does mean however that
60% of our electricity consumption in
2023 came from specifically requested
renewable electricity contracts.
Our Fleet
Emissions from our own fleet continue
to constitute a significant portion of our
total emissions (73%). Our secondary
goal of having 100% electric, hydrogen
or lower-carbon alternative commercial
vehicles by 2035 reflects this, although
it does rely on technological advances
and infrastructure support, especially for
HGVs. These advances and support will
vary geographically.
Emissions from our fleet have remained
stable compared to 2022, despite our
2% increase in electric or hybrid total
plant and road fleet. The main reason has
been an overall increase in the number
of company cars, plus the focus in 2023
on the replacement of some petrol/
diesel plant vehicles, such as Moffetts (an
onboard forklift, attached to the trailer,
which connects and disconnects when
required for deliveries), which typically are
not used for lengthy periods of time, and
hence do not have a significant impact on
fleet emission reductions.
We are diversifying with a small number
of commercial vehicles powered by
alternative technologies. This includes
biofuels (HVO, Bio diesel) and gases
(hydrogen, bio-gas, CNG) and trialling
the performance and effectiveness of
the new technologies and fuel and the
energy supply infrastructure involved. In
the meantime, we are making incremental
progress with the like-for-like replacement
of older diesel commercial vehicles to
newer more carbon efficient ones.
22 SIG Annual Report and Accounts 2023
To share the outcomes, successes,
and challenges regarding the transition
of our fleet to alternative technologies,
in 2023 we established a Group-wide
fleet forum which meets on a regular
basis. Commercial vehicle suppliers
have been invited to the forum to discuss
their strategies and outlook regarding
alternative fuels. The general outlook
for HGV future fuels is currently based
around electric for shorter journeys,
with hydrogen for longer trips.
The forum and our expert guests have
highlighted challenges in progressing
the infrastructures in our geographies for
electric charging and hydrogen, especially
related to grid capability, reliability and
availability, which are essential for the
steady roll-out of these fuel types.
As our fleet generates 95% of our Scope
1 emissions, it is our primary focus in our
net zero carbon reduction plans.
Testing alternative fuel technologies
Road fleet emissions constitute around 80% of our Scope
1 and 2 emissions for the Group, making an investment in
lower-carbon solutions a priority for us.
The team in France is currently exploring a range of
alternative fuel technologies including bio-compressed
natural gas (bioCNG), and electric vehicles.
We are the first building materials provider in France to
trial two fully electric trucks. This will help to evaluate the
transport efficiency and practical considerations of moving
to an electric fleet within France’s current infrastructure.
In another first, back in January 2023, our Wego team in
Germany became the first building materials distributor in
the country to trial a hydrogen-powered HGV truck. We
are working in partnership with Hylane to trial the Hyundai
Xcient in Berlin, a city that now has one of the largest
hydrogen filling stations in Europe.
Our net zero commitment is reliant on
technological advances and infrastructure
support, especially for HGVs. However,
decarbonisation trajectories for the
transport sector continue to remain
unclear. This uncertainty has impacted
our net zero interim milestone projections
to a c20% decrease by 2025 and
c40% reduction by 2030. We expect
further progress from 2030 onwards as
electrification, hydrogen and alternative
fuel technologies and infrastructure
become more widespread and
commercially available.
23SIG Annual Report and Accounts 2023
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Governance Financials
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Net zero carbon by 2035 / continued
Sustainability review / continued
Our Scope 3 Journey
The GHG Protocol provides the most
widely recognised accounting standards
for greenhouse gas emissions and it
categorises GHG emissions into three
‘scopes’. Scope 3 includes all indirect
emissions that occur in the upstream and
downstream activities of an organisation.
The GHG Protocol’s Corporate Value
Chain (Scope 3) Standard identifies
15 categories, including purchased
goods and services, business travel,
employee commuting, waste disposal,
use of sold products, up and downstream
transportation and distribution,
investments and leased assets
and franchises.
During 2023 we commissioned a study
of our Scope 3 emissions and impact
utilising the GHG Protocol spend based
method. The results were in line with
our industry, with Scope 3 accounting
for 97.7% of our total emissions (Scope
1, 2 and 3). The largest contributor to
our Scope 3 emissions by far, at 86%, is
emissions associated with our purchased
goods and services, which represent
emissions along the whole supply chain
– from mining raw materials, processing
of materials, manufacturing of the goods
and their transportation to our branches.
The study has given us initial baseline
data and an important starting point
for developing an engagement plan for
our Scope 3 emissions. In 2024, we will
identify our largest purchased product
supplier areas in order to engage with
the relevant supply chain partners on
sustainably reducing their and our
emissions over time.
2024 Focus
− Dual materiality assessment to shape/
amend current sustainability strategy,
supporting preparation for CSRD.
− Roll-out of photovoltaic panels at
selected locations.
− Continuing to make our branch network
energy efficient through training,
awareness, engagement and regular
review.
− Further investigation and research into
Science Based Targets initiative (SBTi)
and application (or alternative) within our
countries.
Our other interim milestones
2025
c20%
Carbon reduction forecasted
from baseline
2030
c40%
Carbon reduction estimated
from baseline
2032
100%
of electricity to be generated by
renewable or low-carbon sources
2035
100%
of whole fleet with lower-carbon
engines (where infrastructure and
technology allows)
24 SIG Annual Report and Accounts 2023
Scope 3 category breakdown
Purchased goods
and services
Emissions from the
production of goods and
services purchased or
acquired by SIG
End of life treatment
of sold products
Emissions from the disposal
and treatment of goods sold
by SIG, at the end of their life
Use of sold
products
Emissions from the
use of goods and
services sold by SIG
Other
All other scope 3 categories as
defined by the GHG Protocol
3.8%
3.3%
6.7%
86.2%
Our first scope 3 study in 2023 provides us with an important baseline to develop
engagement plans. As a distributor, emissions generated from the production of
the goods and services that we purchase represent 86% of our scope 3 footprint.
This and our other scope 3 category emissions are highlighted in the chart below.
25SIG Annual Report and Accounts 2023
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Governance Financials
Contents
Carbon tables
Sustainability review / continued
CO
2
emissions – Scope 1 – Direct
Metric tonnes
2023
Group
Metric tonnes
2022
Group
Metric tonnes
2021
Group
Metric tonnes
2023
UK
Metric tonnes
2023
Europe
Road vehicle fuel emissions
1
34,600 34,119 35,002 15,722 18,878
Plant vehicle fuel emissions
2
3,795 4,328 4,759 1,511 2,284
Natural gas
3
1,580 1,571 2,642 822 758
Coal/coke for heating
4
12 101 79 0 12
Heating fuels (kerosene and LPG)
5
447 410 479 169 278
Total 40,434 40,529 42,961 18,224 22,210
CO
2
emissions – Scope 2 – Indirect
Metric tonnes
2023
Group
Metric tonnes
2022
Group
Metric tonnes
2021
Group
Metric tonnes
2023
UK
Metric tonnes
2023
Europe
Electricity
6
– location-based 4,536 4,454 4,944 2,524 2,012
Electricity
6
– market-based
7
1,296 2,535 4,944 74 1,222
kWh
2023
Group
kWh
2022
Group
kWh
2021
Group
kWh
2023
UK
kWh
2023
Europe
Electricity consumption 20,831,348 20,475,964 22,795,687 12,067,425 8,763,923
Metric tonnes
2023
Group
Metric tonnes
2022
Group
Metric tonnes
2021
Group
Metric tonnes
2023
UK
Metric tonnes
2023
Europe
Total Scope 1 and 2 emissions – location-based 44,970 44,983 47,9 0 5 20,748 24,222
Total Scope 1 and 2 emissions – market-based 41,730 43,064 47,9 0 5 18,299 23,431
Our net zero carbon emissions in 2023 as reported on page 21 comprise 41,730 metric tonnes (Total Scope 1 and 2 emissions –
market-based) and 285 metric tonnes of business travel that is included within ‘CO
²
emissions – Scope 3 – Other indirect’.
Net zero carbon by 2035 / continued
Data source and collection methods
1. Fuel cards and direct purchase records in litres converted according to DEFRA.
2. Direct purchase records in litres converted according to DEFRA guidelines.
3. Consumption in kWh converted according to DEFRA guidelines.
4. Purchases in tonnes converted according to DEFRA guidelines.
5. Purchases in litres converted according to DEFRA guidelines.
6. Consumption in kWh converted according to International Energy Agency (‘IEA’) guidelines.
7. Market-based approach reflects emissions from electricity that we have purposefully chosen as opposed to using UK averages for
electricity emissions. In our case this relates to renewable electricity contracts that we have purchased in the UK and Germany.
26 SIG Annual Report and Accounts 2023
CO
2
emissions – Scope 3 – Other indirect
Metric tonnes
2023
Group
Metric tonnes
2022
Group
Metric tonnes
2021
Group
Metric tonnes
2023
UK
Metric tonnes
2023
Europe
Third-party provided transport
8
5,616 5,061 4,866 360 5,256
Total CO
2
emissions (excluding ‘new’ scope 3)
8
Metric tonnes
2023
Group
Metric tonnes
2022
Group
Metric tonnes
2021
Group
Metric tonnes
2023
UK
Metric tonnes
2023
Europe
Total Scope 1, 2 and 3 emissions – location-based 50,586 50,044 52,771 21,107 29,479
Total Scope 1, 2 and 3 emissions – market-based 47,346 48,125 52,771 18,658 28,688
Total energy (MWh)
10
215,996 211,197 215,481 89,565 126,431
Emissions per £m of revenue
Metric tonnes
2023
Group
Metric tonnes
2022
Group
Metric tonnes
2021
Group
Metric tonnes
2023
UK
Metric tonnes
2023
Europe
Scope 1 14.6 14.8 18.7 15.2 14.2
Scope 2 – location-based 1.6 1.6 2.2 2.1 1.2
Scope 2 – market-based 0.5 0.9 2.2 0.1 0.8
Scope 1 and 2 – location-based 16.2 16.4 20.9 17.3 15.4
Scope 1 and 2 – market-based 15.1 15.7 20.9 15.3 15.0
Scope 3 2.0 1.8 2.1 0.3 3.4
Scope 1, 2 and 3 – location-based 18.3 18.2 23.0 17.6 18.8
Scope 1, 2 and 3 – market-based 17.1 17. 5 23.0 15.6 18.4
Data source and collection methods
8. Distance travelled converted according to DEFRA guidelines.
9. Total CO
²
emissions (excluding ‘new’ Scope 3) refers to the total of Scope 1, Scope 2 and third-party provided transport.
It does not include those Scope 3 emissions that have been identified for the first time (see page 25).
Conversion factor
10. UK Government GHG Conversion Factors for Company Reporting 2022 according to DEFRA guidelines.
27SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Sustainability review / continued
1. European Commission, Directorate-General
for Environment, Poland, 2025 EU waste
recycling targets – State of play, Publications
Office of the European Union, 2023,
https://data.europa.eu/doi/10.2779/348402.
2023 progress
Total waste not
going to landfill
2%
2023: 94%
2022: 92%
Hazardous waste
(metric tonnes)
70%
2023: 57 metric tonnes
2022: 192 metric tonnes
SIG is committed to reducing the waste
we generate and aim to have zero
SIG waste going to landfill by 2025.
Our primary responsibility is the SIG
waste that we directly control, including
monitoring and validating third-party
waste contracts for our sites. This will be
achieved by waste segregation, reuse of
packaging and paperless processes.
However, the nature of our role as a
distributor in the middle of the supply
chain, handling logistics between
customers and suppliers, means we
are already coordinating complex
logistics and supplying products across
a fragmented customer market, with
efficient on-site delivery. Together
this helps reduce on-site waste in
construction. We are also well placed to
support a circular economy by recycling
and repurposing materials to reduce
waste and raw materials extraction.
2023 progress
A total of 12,076 metric tonnes of waste
was reported throughout 2023. In 2023
94% of total SIG waste was diverted
from landfill, an improvement from 92%
in 2022, or over 507 metric tonnes less
waste going to landfill.
Our waste data is based on reporting
from our waste management companies
who report whether our waste has been
incinerated, recycled or sent to landfill. We
are in the process of consolidating waste
management providers in some countries,
with an aim to make efficiencies in
our data collection processes and to
provide further access to recycling and
incineration facilities.
Two of our operating companies have
100% waste diverted from landfill.
Benelux have an 8% increase, joining
Germany at 100%. Ireland improved by
5%, while the UK also reduced waste to
landfill by 2%.
In Poland, there are specific industry-
wide challenges in the infrastructure
and availability of recycling and waste
to energy plants.
Our commitment
Zero SIG waste
to landfill by 2025.
Zero SIG waste
to landfill by 2025
12,01957
14,268192
13,862186
Non-hazardous
waste
Hazardous
waste
232221
Waste type by volume (metric tonnes)
The European Commission has issued an
early warning report on the progress of
Poland, highlighting a strong reliance on
waste landfilling
1
. We are currently seeking
alternatives, as Poland constitutes 5%
of our total waste, however these issues
currently present a challenge to our
progress in achieving zero waste to
landfill.
The legislative environment regarding
waste is fluid, but we do expect to see
regulations governing the reduction of
landfill waste in all our key geographies in
the coming years. We continue to expect
to achieve 100% zero waste to landfill in
most of our businesses, in line with our
commitment.
11,381
13,258
12,138
695
1,202
1,910
232221
86%
92%
94%
Waste not going
to landfill
Total waste
to landfill
% waste diverted
from landfill
Total waste not going to landfill
(metric tonnes)
28 SIG Annual Report and Accounts 2023
In order to support our teams across
the Group, we have established a
waste working group comprised of our
business’s sustainability experts and
led by the Group Health, Safety and
Environment (HSE) team.
The working group has been instrumental
in reducing our hazardous waste to a
minimum by promoting and sharing
methods on stock rotation and supplier
disposal and reuse. This has been
instrumental in our reduction of
hazardous waste.
In 2023 our hazardous waste, which is
typically difficult to recycle or incinerate,
has fallen by 70%, compared with 2022.
Hazardous waste was 0.5% (57 metric
tonnes) of total waste in 2023 and 1.3%
(192 metric tonnes) in 2022. This is very
good progress and must be sustained if
we are to reach our commitment in 2025.
Most of our waste is non-hazardous
and diversion from landfill relies on
increasing awareness and education
among our colleagues of good waste
management regimes, recycling and
branch housekeeping. We have increased
training and communication in 2023,
including our ‘Dark Corner Clear Out’
campaign.
Dark corners refer to areas at our
branches where items that are no longer
needed are stored, and can often be
forgotten about and left on site. This
campaign encouraged our sites to seek
out their dark corners and dispose of the
waste appropriately.
Our focus continues into 2024, with the
emphasis on exploring our categories
of waste that are difficult to divert from
landfill. In addition, we will continue with
our efforts to consolidate or change
waste management providers in certain
geographies to ensure efficient data
collection and to provide further access
to recycling/incineration facilities
(where available).
Shining the light on our dark corners
We are committed to sending zero SIG waste to landfill by
2025. Clearing out forgotten rubbish and managing our
on-site waste appropriately is crucial to help us meet this
sustainability commitment and make our workplaces safer
and healthier for all.
This year, we launched the ‘Dark Corner’ clean out, a Group-
wide initiative to dispose of or repurpose forgotten items that
were no longer needed in our branches and offices.
Much of this rubbish left in these dark corners was
unnecessarily being stored for much longer than needed.
Through the drive and commitment of our teams, this
initiative was successfully rolled out across our branches.
It has not only resulted in unwanted items being effectively
disposed of or recycled but also helped our workplaces to
be used more efficiently and safely.
29SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Sustainability review / continued
2023 progress
Scope 3 data reported
1
st
year of
calculation
Our commitment
To partner with
manufacturers
and customers
to reduce carbon
and waste across
the supply chain.
Partnering across the supply chain
to reduce carbon and waste
As a specialist distributor of products
crucial for improving building energy
efficiency, SIG plays a central role in the
industry supply chain.
We provide our customers with product
choices, ensure transparent product
data, and offer expertise on regulatory
compliance as they make these choices.
We focus on finding and promoting more
sustainable products from both new and
existing suppliers.
In 2023, we’ve been taking steps towards
better understanding and ultimately
improving the wider carbon and waste
footprint of our supply chain.
We have also been working to bring
together more partners to reduce our
carbon and waste across the Group.
Here are some examples of how we
are working across our supply chain to
achieve this.
2023 activities
In 2023 we commissioned our first Scope
3 data assessment, and further details
are set out on pages 24 to 25. We have
continued to engage with our supply
chain partners and industry stakeholders
around supply chain carbon and waste
in 2023.
In the UK we are working with suppliers
to develop our product carbon database
to ensure customers can make informed
decisions on the products they choose
through EPDs (Environment Product
Declaration) on our SIG Assured system.
We have discussed our UK suppliers’
decarbonisation measures for our main
product lines with them and are working
with suppliers to bring more lower carbon
and carbon reducing products to market
over time.
Understanding our suppliers’ goals helps
us to incorporate these into our plans for
reducing indirect emissions.
For example, in our own Speedline brand
metal products, we’re developing lower
carbon alternatives to our usual range, as
an eco-friendly solution, working together
with our partners to achieve this.
In the UK we have expanded our solar
solutions and product offering across
all roofing types and introduced solar
canopies to our customers.
In Poland we are expanding sales of
energy-efficient products to support
EU regulations to drive zero-emission
buildings. Our e-commerce store
highlights around 500 eco-friendly
items, and we are advocating for energy
efficiency in conversations with suppliers,
often guiding them toward their first
sustainable steps.
We have joined industry climate initiatives
including the ‘Pact for Climate’ with
Kraków city council and developing
zero emissions plan with their advisory
team. We are also partnering with the
Polish Green Building Council as they
help prepare the construction sector
for a circular economy amidst resource
scarcity and upcoming rules.
In France we have partnered with a
national service provider to establish
waste collection at our client sites, in
line with the French REP (Responsabilité
Élargie du Producteur) regulation for
accessible waste collection points
nationwide.
We are proud to have signed the RFAR
(Relations Fournisseurs et Achats
Responsables) Charter. This outlines
principles that companies agree to follow
in their interactions with suppliers for
positive ethical, environmental, and social
purchasing strategies.
We are committed to responsible
purchasing through the Charter’s
10 initiatives aimed at making the
procurement function a true business
partner for both companies and the
public sector.
30 SIG Annual Report and Accounts 2023
In our Exteriors business in France, we have
partnered with CAPEB (Confederation of
Crafts and Small Building Enterprises).
CAPEB aims to help craft building
businesses in construction with designing
and promoting technical solutions for
building envelopes to support building
energy efficiency.
In Germany, customers can return unused
EPS insulation materials to our branches
or to construction sites. These materials
are recycled by our teams by shredding
and refining them and the recycled
product is then repackaged and resold
as insulation material.
Partner
of choice
for specialist
contractors
Using e-commerce to support adoption
of lower-carbon products
In Poland we continue to work with our suppliers to increase
the range of lower carbon and eco-friendly products that we
can bring to our customers. We are leveraging our leading
e-commerce platform in Poland to make choosing ‘lower
carbon’ an easier choice.
Our platform allows us to share our products ‘EPD’ data
digitally with our customers, and our website filters and
spotlights help lead customers to lower-carbon substitutes
for existing products. With EU regulations steering the
construction of more zero-emission buildings over time,
we believe our e-commerce platform is a valuable tool to
support the industry journey towards decarbonisation.
With our Thermoblower product and
service, this recycled material can also
be blended with other substances for
flooring materials and delivered straight to
construction sites. This process creates a
new product from the waste material in a
more circular process. Further information
on our Thermoblower service and flooring
expertise in our German business can be
found on page 15.
In Ireland we have partnered with one of
our largest suppliers and an environmental
partner to bring plasterboard off-cuts
and waste back from our branches to the
supplier for recycling. This partnership has
decreased our landfill waste and improved
recycling in the construction supply chain.
Additionally, our HHI home improvements
business joined forces with a waste
contractor to collect old window frames
from customer renovation projects at
no cost. After removing the glass, our
partner breaks down the frames for use
in construction. This initiative further
reduces our landfill waste and promotes
recycling in construction.
31SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Sustainability review / continued
Employees feel safe
at work
92%
2022: 92%
2023 progress
LTIFR
24%
2023: 8.4
2022: 11.1
Our commitment
Being a health
and safety leader in
building materials
distribution.
Health and safety
We believe that a safe, healthy workplace
is the cornerstone of a sustainable,
profitable business. Our aim is to build
a culture where health and safety are an
inherent part of our business activities;
where we strive to ensure that everyone
associated with our businesses goes
home safe and well.
Our employees support this, with health
and safety ranking as one of the top
priorities for our colleagues.
Governance and structure
The ultimate responsibility for health and
safety rests with the Board, Group CEO
and Executive Leadership Team. This
responsibility is cascaded through the
organisation via our operating company
Managing Directors and their leadership
teams.
Each operating company has a health
and safety team, supported by a central
team of experts and the Group Health,
Safety and Environment Director. At a
Group level, the Health and Safety Policy
sets the direction for our businesses, who
manage and monitor their own objectives,
plans and activities in accordance with
this policy.
The health and safety leadership team
also meet on a quarterly basis. This team
comprises the health and safety leaders in
each operating company and our central
Group experts, and is led by our Group
Health, Safety and Environment Director.
Updates on progress and initiatives are
discussed with the aim of sharing best
practice and knowledge across the Group.
Regular comprehensive reporting from
the businesses to the Board and the
Executive Leadership Team also details
progress on strategy, KPIs, key initiatives
and significant incident detail.
2023 progress
Our health and safety highlights for
2023 include:
− Introduction of our new ‘Everyone Safe,
Every Day’ strategy, objectives and KPIs
− Our engagement survey shows that
92% of our employees feel safe at work.
− We have reduced our Lost Time Injury
Frequency Rate (‘LTIFR’) to 8.4 from
11.1 in 2022.
− Our ‘near miss’ hazard reporting
has increased by 66%, a positive
improvement demonstrating a more
open reporting culture and allowing us
the opportunity to prevent hazards
from becoming incidents.
8.4
11.1
11.8
12.7
23222120
LTIFR history
8 .4
We are pleased to have achieved a 24%
decrease in our LTIFR, with a reduction
to 8.4 from 11.1 in 2022. Our employee
LTIFR (excluding temporary and agency
staff) also reduced to 7.5 in 2023,
from 8.8 in 2022. There were strong
performances in France and UK, with
France in particular decreasing from
15.8 to 8.9 in 2023.
Correspondingly, we are pleased to report
that our incident severity rate has reduced
by 33% to 22.3 in 2023 (2022: 33.2). This
is a good reduction giving us reassurance
that we are managing those risks which
could lead to serious and potentially
fatal injuries.
32 SIG Annual Report and Accounts 2023
We have established HSE forums
throughout our businesses so our
colleagues can feel informed, included
and involved in HSE decisions. We are
also rolling out our enhanced incident
reporting tool, with the use of QR codes
in every branch, so our stakeholders can
more easily report safety issues, hazards
and near misses.
In terms of workplaces, systems and
processes, we have developed and
implemented a set of Group-wide HSE
Principles based around our key hazards
and risks. During 2023, we assessed
each of our businesses against these
principles, providing a baseline for
continuous improvement. Results of these
assessments have been reviewed by our
leadership teams, with improvement plans
created for both individual business and
common themes.
The progress against our strategy is
monitored on a regular basis by our
executive leadership team and the Board.
2024 Focus
We will continue our strategy, with:
− The creation of materials for our leaders,
designed to support the introduction of
regular leadership walks, inspections
and conversations
− Undertaking a full training needs
analysis of our HSE professionals
− The creation and implementation of a
standard HSE induction specification
− Further promotion of near miss, hazards
and safety observation reporting
In addition, the ‘Total Recordable Incident Rate’ (using OSHA definitions) fell from 2.5
in 2022 to 1.9 in 2023, whilst our “Total Incident Rate” remained stable. Our TIR rate
includes all incidents – first aid, hazards, near misses, environmental and property
damage, and we believe this stability indicates our colleagues’ increasing readiness
to report all types of incidents and support prevention of accidents.
This open reporting culture also led to a 66% improvement in ‘near miss’ hazard
reporting. While our near miss numbers are not yet at industry average, we are pleased
with this progress and continue to work to encourage all our employees, contractors
and stakeholders to report near misses, and unsafe situations and behaviours.
All of the performance data above covers 100% of the Group’s operations.
We firmly believe that active, visible leadership, employee engagement, and systems
and processes that are continually challenged and improved, will drive us towards
achieving excellence in our workplaces and culture.
Our strategy released in summer 2023 is based on three goals, designed to achieve
our vision to provide safe, healthy working environments and cultures, where health
and safety is integral to our business activities and all our people actively engage in
our drive to excellence.
Leadership
All our leaders visibly
lead by example in
health, safety and
environment (HSE).
This includes displaying
behaviour and actions
that demonstrate
interest, ownership,
responsibility and care
for HSE and responding
positively to concerns,
issues or suggestions.
Employee
engagement
All our people are
actively engaged
in our drive to HSE
excellence. Everyone
feels informed,
included and involved
in HSE decisions
and we all actively
contribute by sharing
ideas, suggestions,
near misses and
observations.
Workplaces,
systems,
processes
We have safe and
healthy working
environments for all
stakeholders. We
continuously strive
to improve our best
practices, supported
by intuitive systems and
easy to use processes/
standards.
To drive our progress, we have established for each goal a set of activities and
KPIs. In 2023, we have set HSE Leadership and Accountabilities for all levels of the
organisation, so that everyone clearly understands their role and provided training
on these.
Everyone safe, every day
‘Everyone safe, every day’ is our Group health and safety programme and strategy.
The programme operates across our geographies and has been translated into our key languages.
33SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Sustainability review / continued
Engagement index
71%
2022: 73%
2023 progress
Employee engagement
(eNPS)
+14
F Y22: +14
Our commitment
To be an employer of
choice in the building
materials distribution
industry.
Our people
SIG is a people-centric business. This
commitment runs through everything
we do. We aim to ensure that all of
our people feel supported, valued and
engaged in their work at SIG.
In 2023, we’ve continued with our strong
focus on our people. We’ve invested in
career development and further learning
opportunities, charitable engagement
in the community, and in our culture to
continue championing diversity across
the Group.
Our goal is for SIG to continue to be a
great place to work, where our employees
feel safe, respected, and appreciated.
We’re dedicated to making sure everyone
thrives in our inclusive workplace.
We’re proud that our commitment to
being an employer of choice has been
validated by external recognitions and
accreditations during 2023. Our German
business has been recognised with a
‘Top Company Award’ from Kununu, a
German Employer rating agency, while
our colleagues in Poland earned the SIG
‘Great Place to Work 2023’ recognition.
In addition, we have been independently
certified as a ‘Top Employer’ in France in
January 2024.
Employee Engagement
& Wellbeing
Our latest annual employee engagement
survey conducted across September
and October 2023 has shown we
are maintaining a consistent level
of engagement, with an employee
commitment score (eNPS) in 2023
Gender diversity (male/female split)¹
2023 2022
Male
%
Female
%
Male
%
Female
%
Total employees 78 22 78 22
Board members 80 20 80 20
Executive Leadership team 79 21 77 23
Senior managers² 77 23 79 21
Senior managers
3
73 27 70 30
1. Headcount as at 31 December 2023.
2. Data is per s.414C(8) of the Companies Act and includes subsidiary directors – population of 26 employees.
3. Data as per provision 23 of the UK Corporate Governance Code – population of 109 employees.
of +14 (2022: +14). This reflects SIG as a
positive, supportive and engaging place
to work, and the stable result is positive
in the context of more challenging trading
conditions in 2023 compared to 2022.
At SIG, we’re committed to fostering a fair,
positive and inclusive work environment
for all. As a Group we are pleased to
confirm that in 2023 we have had no
significant controversies related to
employee wages or working conditions.
Diversity, Equality and
Inclusion (DEI)
Our vision is clear: we want to develop
a culture that’s fair and inclusive.
We firmly believe in the importance
of diversity and inclusion.
We want everyone in our organisation
to feel valued and included but also to
create an environment reflecting the
communities in which we operate.
Our DEI Forum meets quarterly to
develop and promote initiatives which
encourage diversity, equality and inclusion
in the workplace and support the
communication and delivery of local and
Group initiatives, including importantly the
impact of these activities in the business
as measured through the annual DEI index.
This has been supported with increased
internal communication and employee
engagement activities to support a
workplace where our employees feel
safe, valued, empowered and proud
to work for SIG.
34 SIG Annual Report and Accounts 2023
In terms of gender diversity, 21% of our
positions at ELT level are held by females,
while females comprise 22% of our overall
workforce. We were delighted to have
appointed Kath Durrant as our new Senior
Independent Director this year, and you
can find more details about this in our
Governance Report.
Our latest gender pay gap report can be
found on our website.
Talent, Succession &
Development
The skills and capabilities of our leaders
and our colleagues are key enablers
in our ability to deliver on our strategy.
During 2023 we have further developed
our talent and leadership programs to
support this.
For senior leaders, we’ve implemented
Individual Leadership Development
Plans which act as roadmaps for their
continuous growth, skills, and knowledge
as leaders. Additionally, in each region
we reviewed the organisational capability
and skills required to deliver our business
goals and each region now has robust
action plans for these in place.
In February 2023, our Group CEO, Gavin
Slark, joined SIG and this transition was
well-managed through a comprehensive
succession plan overseen by the
Nominations Committee.
We’re also expanding our Learning and
Development offerings across the entire
Group. We’ve invested over 25,000
hours on themes such as Effective
Communication, Management and
Leadership skills and Health and Safety,
ensuring that our team members have
access to valuable learning opportunities.
Each year, our employees complete an
annual performance and development
review. This includes a review of their
core skills, professional development
objectives, and opportunities for career
progression.
Apprenticeships, Community
& Charity
We’re dedicated to providing career
opportunities across the local
communities in which we operate and
are making a positive impact, with our
successful apprenticeship programs
supporting our 348 apprentices across
the Group. Our program creates
opportunities for individuals from all
backgrounds and provides training in
multiple roles including warehouse,
branch, HR, and IT roles.
Throughout the year, our local
businesses choose and support various
charities through fundraising efforts.
In 2023, we organised a wide range
of events and initiatives. In the UK,
for example, in partnership with our
suppliers we raised in excess of £100k,
which we divided equally between our
own Rainy Day Charity and with Cancer
Research UK. In total, we raised £386k
for charities across the Group, an
achievement of which we are all proud.
When it comes to our recruitment
efforts, we’re dedicated to seeking out
the best talent from our local areas.
We believe we play an important part in
supporting local economies by providing
employment opportunities to those in
our communities.
SIG Talent Club in France
SIG is committed to attracting and developing the best
talent and to creating employment opportunities in our local
communities. In France we held our second annual Talent
Club event in October for our 85 apprentices across the
country to spend the day together to learn and develop skills.
The programme included using games and collaborative
projects to build relationships and team skills, and meeting
with regional directors and HR leaders. It also included a
‘fresh ideas’ session to share and brainstorm new ideas
and different perspectives to find ways to tackle common
business challenges.
71
73
71
232221
Engagement Index %
71
73
75
232221
Response rate %
14
14
3
232221
eNPS
35SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Sustainability review / continued
Task Force on Climate-related
Financial Disclosures
Climate-related disclosures
In 2021, the Financial Conduct Authority
introduced the mandatory Task Force
on Climate-related Financial Disclosures
(TCFD). The TCFD recommendations
are supported by 11 disclosures that
require the Group to provide detailed
information on how we are assessing our
climate-related risks and opportunities
and what we are doing to mitigate the
risks of climate change, and also provide
transparency about how the risks and
opportunities are governed.
We have addressed how we have
complied with these recommendations
on page 46.
Governance
The Board recognises the impact and
complexity of climate change and the
need for immediate and meaningful
action. Alongside this, the Board also
recognises that the Group has a long and
rich heritage in delivering energy efficient
solutions to customers and that there are
significant opportunities for the Group
from climate-related matters and the drive
for sustainable construction. Its role in the
year has been to ensure that the Group’s
approach to such risks and opportunities
is balanced, measured and appropriate
for our business.
In 2021, the Board approved the five
sustainability commitments discussed
on page 21. In the current year, the focus
of the Board and senior management in
relation to climate-related matters has
been as follows:
− understanding our progress against our
climate-related commitments, including:
− reviewing the interim targets towards
our carbon reduction and waste
reduction commitments;
− understanding the improvements
made in carbon reporting to facilitate
better control and management of our
carbon emissions and waste;
− reviewing and challenging operating
company net zero transition plans
towards 2035;
− authorising the roll-out of a
comprehensive communications
strategy to ensure that the sustainability
commitments are understood at all
levels of the organisation, including
approving a new sustainability policy;
− focusing on our commercial agenda
with respect to sustainability including:
− understanding the impact of
regulation on our business;
− defining a framework for categorising
product sustainability;
− accelerating the growth of new
sustainable products and solutions;
and piloting new models for
working with innovative early stage
manufacturers;
− reviewing the climate-related risks
identified in the Group and ensuring
that there are appropriate mitigations
in place; and
− understanding how our carbon and
waste reduction plans, plus the
opportunities we see from climate-
related matters, have been embedded
in the Group’s budgets and medium-
term plans.
In 2023, the Board requested an analysis
of our Scope 3 carbon emissions to be
prepared, to inform early discussion on
how we might approach the reduction of
these over the long-term. This has been
completed. See page 24 for Our Scope 3
Journey.
In 2023, we further formalised and
enhanced the reporting that the Board
and senior management see in respect to
the progress we are making against our
commitments and the opportunities we
have identified. This has been completed
and is being performed on at least a
quarterly basis.
36 SIG Annual Report and Accounts 2023
Governance
and management
structure of
climate-related
matters
The governance of climate-
related matters, amongst
our broader sustainability
commitments, is as follows:
Board
Responsible for the establishment and oversight of the Group’s
purpose, strategy, and behaviours, including the associated climate-related
risks and opportunities
Employees
Responsible for adhering to the Group’s strategy on a day-to-day basis, including
ways to manage climate-related risks and opportunities
Audit & Risk
Committee
Responsible for
oversight and
assessment of the
TCFD disclosures
CEO/CFO
Responsible for
proposing and
delivering the Group’s
strategy, including
the management of
climate-related risks
and opportunities
Remuneration
Committee
Responsible for
setting relevant
climate-related
incentives for the
Board and senior
management
Sustainability
committee
Providing thought
leadership and advice
to the CEO/CFO on
climate-related risks
and opportunities
Executive
Leadership Team
(ELT)
Responsible for
delivery of the Group
strategy alongside
management of
operational issues,
including climate-
related risks and
opportunities
Operating
company MDs
Responsible for the
operating company
delivery of the Group’s
strategy, including
management of
climate-related risks
and opportunities
37SIG Annual Report and Accounts 2023
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Sustainability review / continued
Task Force on Climate-Related Financial Disclosures / continued
The Board continues to ensure that
there is appropriate climate-related
expertise within the business and in 2023
has continued to build on this level of
knowledge and understanding.
The Board is assisted in its duties by
the Audit & Risk Committee and the
Remuneration Committee. The Audit &
Risk Committee has the responsibility
to ensure that the Group’s TCFD
reporting is appropriate, transparent and
representative of the position of the Group
in this area. In 2023 the Remuneration
Committee decided that there would
be an ESG objective included within the
personal objectives in the bonus scheme
for certain senior management.
The CEO is ultimately responsible for
delivering the strategy of the Group,
including management of climate-related
risks and opportunities. He is supported
by senior management who have the
responsibility to deliver this strategy on
a day-to-day basis and to ensure that
climate-related matters are appropriately
cascaded through the business.
This includes:
1. Sustainability committee – this
committee includes the CEO, CFO,
Chief People Officer (responsible for
Social), Group Health, Safety and
Environment Director (responsible for
operational sustainability), Company
Secretary (responsible for Governance),
senior representatives from the
operating companies and sustainability
subject matter experts. This committee,
whilst not a Board Committee, has
been instrumental in driving our
sustainability commitments forward
and providing thought leadership and
advice on all areas of climate change
risks and opportunities in the Group.
This committee meets monthly.
2. Operating company MDs – each
MD is responsible for embedding
the Group’s strategy into their
operating company. This includes
both understanding and mitigating the
climate-related risks noted in the Group
whilst also harnessing the opportunities
that climate-related matters bring.
Each MD is supported by sustainability
specialists who are driving operating
company specific plans to meet the
challenging commitments we have set
ourselves, both in terms of our path
towards net zero, and also ensuring
that we continue our tradition of
bringing energy efficient solutions to
the market.
3. ELT – The ELT is responsible for the
operational delivery of the Group’s
strategy. They form a key role in
developing the approach, focus
and day-to-day management of
climate-related matters alongside
ensuring that the performance against
our commitments is monitored
appropriately and in line with the overall
strategy. The ELT meets regularly.
Strategy
Climate-related risks and opportunities
can include risks and opportunities
from physical events, such as extreme
weather events, or risks and opportunities
because of a transition to a low-carbon
economy.
Acute physical risks
The Group does not consider acute
physical risks such as drought, flooding,
wildfires and hurricanes to be material
strategic risks given that the Group, along
with the majority of its key suppliers and
customers, operates in the UK, Ireland,
France, Germany, the Netherlands,
Belgium and Poland. Flood risk could be
a consideration but based on an external
review of our branch network, only a small
number of our branches have a high flood
risk attached to them, leading to minimal
risk for the Group’s strategy.
Further analysis on the potential impact
of physical risks on our supply chain
confirmed that the risk to the Group was
not material due to:
− the Group’s ability to pivot to new
suppliers and supply routes should a
significant physical event occur;
− the location of our key suppliers in areas
of Europe that are less exposed to
acute physical risks; and
− the mitigation strategies of our key
suppliers to physical risks, which
include:
− ensuring physical risks are built into
forecasts and risk modelling when
considering new expansions or sites;
− implementation of risk prevention
policies that minimise the impact of
significant events should they arise.
This includes a special focus on
sites with high exposures to natural
disasters and business continuity
plans; and
− diversified manufacturing sites which
allow supply to be maintained from
areas of the world not impacting by a
particular physical event.
Transition risks and chronic
physical risks
In terms of transition and chronic physical
risks, the Group considers short-, medium-
and long-term horizons to be as follows:
short-term is within the next 3 years
(in line with our viability review period);
medium-term is 4-10 years; and long-term
is over 10 years. The table below sets
out the main climate-related transition
and chronic physical risks that the Group
faces alongside proposed mitigating
strategies and the impact on the
Group’s strategy.
Opportunities
The need for greater energy efficiency and
decarbonisation in the built environment
presents a significant number of
opportunities for the Group which
are already built into our strategy. Our
category mix is well positioned to support
this, with both insulation and roofing
critical to building energy performance as
well as solar products and lower-carbon
building products.
For the purpose of this disclosure, we
class sustainable products as those
which minimise embodied and upfront
carbon generation (low carbon products),
conserve energy through their lifetime
performance in a building or generate /
store energy to reduce reliance on
fossil fuels.
38 SIG Annual Report and Accounts 2023
Our commercial priorities and opportunities
centre around:
1. Responding to regulations in the
energy performance of buildings
and the need for enhanced
building materials product
sustainability – the resulting growth
in the retrofit market and in energy
efficient categories such as insulation,
timberframe, photovoltaic and heat
pumps, as examples, will support
demand for our core categories
including insulation, roofing, timber
and plasterboard. It will also support
demand for the data-driven technical
advice on the carbon performance
of specific products across multiple
suppliers.
2. Accelerating the growth of new
sustainable products and solutions
a. Insulation – new lower-carbon
insulation products have been
introduced such as wood fibre
insulation and sheep’s wool insulation.
b. Sustainable roofing solutions – we
are expanding and promoting our
sustainable roofing solutions including
lightweight synthetic roof tiles, natural
slate tiles, green/brown roofs and
single ply membranes.
c. Solar panel market innovation – driven
by legislation in new builds and rising
energy costs, the market for solar
panels will increase significantly. We are
building capability to ensure we have
complete solutions for pitched roofs,
flat roofs, industrial buildings
and rainscreens.
d. Small scale drylining options –
supporting emerging suppliers in
low-carbon plasterboard solutions and
natural alternatives to steel for stud and
track walls.
3. Partnering with early-stage
innovators to develop new
products and solutions – we
are partnering with our network
and customer bases to bring new
sustainable products to market. These
climate-related opportunities need to
be further quantified to evaluate the
positive financial impact on SIG.
Impact on financial planning and
financial statements
In 2024, we will be conducting a double
materiality assessment, which will
incorporate financial risk impacts for a
range of ESG topics. The results should
give us further data on the quantification
of material climate-related financial risks.
We recognise the largest financial impact
from our carbon-related risks is the cost
involved with removing fossil fuels from
our fleet. The strategy for transitioning
the fleet to a lower-carbon basis is to
replace aged vehicles with lower-carbon
alternatives as and when the leases
naturally renew, and when and where
possible, and to focus on a short- to
medium-term transition to lower-carbon
fuels which can be used in our existing
fleet. There are currently no plans to
accelerate the transition of the fleet to
lower-carbon alternatives over and above
the natural lease cycle.
This is because:
− the cost to break the leases and
accelerate the renewal of the fleet with
lower-carbon options is prohibitive;
− there is also little to no availability for
low-carbon HGVs, at least in the
near term;
− the national charging networks are
currently insufficient to support our
charging needs – national infrastructure
plans are required to make the option
financially viable;
− many of our branches do not have the
power capacity currently to support
charging requirements or hydrogen
provision;
− the currently available electric HGV
range does not support our delivery
structure – it is most suitable for long
routes with no stops which is not
common in our business; and
− vehicle solutions are still in development
– OEMs are currently uncertain on
whether electric, hydrogen, battery or
hybrids will be the favoured long-term
solution
− There are some challenges remaining
with HVO type fuels, these include
concerns expressed by some
stakeholders regarding the provenance
and environmental impacts associated
with HVO, and potential issues
regarding the financing, supply
and cost of HVO.
We expect to be able to meet our net
zero carbon goals by 2035, although
it does rely on technological advances
and infrastructure support, therefore
there is currently no need to accelerate
the replacement of the fleet to meet our
commitments.
The costs of pursuing this strategy over
the short-term have been factored into our
budgets and medium-term plans by each
operating company. Over this period,
these costs largely relate to the transition
of our car and forklift fleet to lower-carbon
alternatives and the gradual transition to
alternative lower-carbon fuels.
Given the uncertainty regarding the
adoption of optimum future technologies,
it is not possible to quantify the financial
impact it may have on the Group long-
term. However, given the opportunities
we see for the business in relation to the
response to climate change, we do not
consider there to be a material risk to the
long-term financial health of the Group.
The financial impact of climate-related
matters is further discussed on pages
55 to 56 as part of our viability and going
concern statements as well as in Note
11 of the financial statements which
details our considerations in respect of
impairment reviews. These statements
conclude that there is not considered to
be a significant risk of climate change
causing a significant downturn in cash
flows across the Group.
39SIG Annual Report and Accounts 2023
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Sustainability review / continued
Task Force on Climate-Related Financial Disclosures / continued
Risk Description Mitigation
Impact on strategy, future
revenues and costs
Specific climate-related risks
Removal of fossil
fuels from our
fleet (S/M/L)
Vehicle emissions remain the single
largest contributor to our carbon
emissions. There is a significant degree
of uncertainty regarding the optimum
future technology for our heavy-duty
fleet and there is therefore risk regarding
what and when any investment in new
technologies should be made.
Pages 22 to 23 set out our progress and
future plans for decarbonising our fleet.
Whilst the most cost-effective route
for decarbonising heavy-duty vehicles
remains the biggest uncertainty, we
are starting to trial the use of alternative
fuels, i.e. bio-gas, hydrogen and HVO,
and will continue to work with our fleet
partners and manufacturers to assess
the most viable long-term alternatives.
High
It is likely that SIG will,
in time, need to invest
in a low-carbon fleet.
Given current pricing,
this may have the
potential for significant
investment and cost.
Waste
management (S)
There is an increased likelihood of
greater regulatory pressure to ensure
that, in addition to the management
of SIG’s ‘own waste’, companies will
become liable for product waste,
particularly with regards to ‘end of life’
and ‘embedded carbon’ obligations. Any
such requirement in the near term would
present significant challenges in terms of
reverse logistics processes and costs.
Our commitment to zero SIG waste
to landfill by 2025 is driving several
waste initiatives in the Group. Whilst
this commitment is currently our focus,
in 2024 we will expand our thinking
to include non-SIG waste and ensure
that we are well placed to support the
circular economy by recycling and
repurposing materials to reduce waste
and raw materials extraction.
Medium
Greater regulatory
pressure may increase
SIG costs by the
funding of waste
take back schemes
or increased waste
related taxes / levies.
Product carbon
data (S/M/L)
There is a risk that we either lack
or do not have access to the
appropriate degree of detailed product
or manufacturers’ data to satisfy
customers’ needs with regards to their
own internal ESG requirements or
sustainability drivers.
Product data quality remains a focus
area for our operating companies,
who continue to monitor, assess
and upgrade their product data
requirements, capabilities, and
governance considering ongoing
changes in business needs and
regulation.
Medium
Failure to provide
required carbon data
to customers could
potentially result in
loss of revenue.
Energy efficiency
(property
portfolio) (S/M)
There is a risk that the age and
construct of our branch estate impacts
our ability to drive enhanced energy
efficiency across our property portfolio.
This has the potential to create
reputational impacts and potential
wellbeing issues for the employees in
the branches.
We expect that all new branches
procured or leased will have sustainable,
low-carbon features included where
commercially viable. For the existing
estate, branches are being upgraded
in a controlled manner, where needed,
with LED lighting being used to replace
traditional lighting and other energy
initiatives e.g. solar strategies.
Medium
Failure to drive
enhanced energy
efficiency in our
property portfolio
potentially could
increase operational
costs via higher
energy bills and
increased employee
turnover.
In terms of transition and chronic physical risks, the Group considers short, medium and long-term horizons to be as follows:
short-term is within the next 3 years (in line with our viability review period); medium-term is 4-10 years; and long-term is over
10 years. The table below sets out the main climate-related transition and chronic physical risks that the Group faces alongside
proposed mitigating strategies and the impact on the Group’s strategy.
40 SIG Annual Report and Accounts 2023
Risk Description Mitigation
Impact on strategy, future
revenues and costs
Chronic physical
risks (M/L)
Chronic physical risks are longer-term
shifts in climate patterns. Frequent
summer heatwaves restrict or impact
summer construction periods whilst
higher winter precipitation and more
intense storm events affect outdoor
winter construction. This may have an
impact on how construction projects are
scheduled, planned and executed.
The relatively long-term nature of
this risk will allow the Group time to
formulate a sustainable response to the
changing weather patterns, alongside
its suppliers and customers.
Medium
This risk is long term
so difficult to predict
in terms of impacts on
costs and revenues.
Use of carbon
offsets (L)
SIG has set net zero carbon targets
and may use carbon offset schemes to
balance harder-to-reduce emissions.
There is a risk that sufficient ‘quality’
and economically viable offset schemes
may not be available to meaningfully
mitigate any carbon target shortfalls.
We are committed to achieving our
carbon targets and will identify and
prioritise the key enablers to reducing
our carbon emissions. We expect that
offsets would only ever be utilised as
a last resort. Our intention is not to
operate an internal market for carbon
credits as we believe the primary focus
should be on reducing emissions.
Medium
There is a potential
reputational risk that
SIG may not be able
to mitigate any carbon
target shortfalls. This
may cause reduced
revenues, dependent
on customer / societal
norms in 2035.
Energy market
volatility (S/M)
Conflict between long-term
decarbonisation targets and a desire
to manage uncertainties presented by
unpredictable energy markets results
in governments delaying or failing to
make the necessary infrastructure
investments to support the transition
to a green economy. This impacts the
industry’s ability to deliver its carbon
reduction plans.
While recognising the impacts of
government policy and regulation on our
decarbonisation strategies, we continue
to assess our planned contribution
to reducing carbon emissions on the
basis of the impact on SIG and our
shareholders and customers. We
remain committed to their execution
and the realisation of their benefits.
Medium
The failure of
governments to
make infrastructure
investments could
impact our ability to
deliver carbon plans
and cause reduced
revenues dependent
on customer / investor
norms in 2035.
Grid electrification
capacity (S/M/L)
According to the World Economic
Forum, the electrification of cars is
likely to increase the total electricity
demand upwards by 10-20% globally.
There is a risk that local power grids
and transmission network capacity
and infrastructures are unable to
accommodate the increased volume of
required charge points or the capacity
of local transmission networks to
handle increased peak loads to support
recharging.
While we continue to seek opportunities
to utilise alternative technologies
to reduce our carbon footprint,
we recognise that the capacity of
local infrastructures to support the
introduction of these technologies may
impact the speed or scope with which
these initiatives are introduced.
We continue to work with key partners
and stakeholders to ensure that any
constraints are identified, risk assessed
and, where possible, mitigated prior to
the implementation of new technologies
and any additional costs are considered
as part of our investment appraisal
processes.
High
Local adaptation of
commercial property
to provide electric
charging facilities
is likely to result in
increased rents and
higher operational
costs for SIG.
41SIG Annual Report and Accounts 2023
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Sustainability review / continued
Task Force on Climate-Related Financial Disclosures / continued
Scenario analysis
The Group has looked at two climate change scenarios to assess the potential consequences from each scenario as well as the
likely directional impact they will have on the Group’s risks and opportunities. We will continue to review this assessment and work
to enhance our reporting on the resilience of our strategy to these scenarios. The Group’s long term strategic objectives integrates
the delivery of our sustainability ambitions, of which the decarbonisation of our own operations is the most material in the short to
medium term. We continue to evaluate the risks to achieving our objectives in the context of two climate change scenarios whereby
global warming is limited to an increase of either 1.8°C or 3.3°C by the end of 2050.
Scenario Effective action but implementation delayed
(transition scenario)
Late action: The implementation of policy to drive the
transition is delayed until 2031 and is then more sudden
and disorderly. Some government and societal commitment
to ongoing enhancements and improvements to achieve
targets and forecasts implemented. Global warming is limited
to 1.8°C by the end of the scenario (2050) relative to pre-
industrial levels.
The more compressed nature of the reduction in emissions
results in material short-term macroeconomic disruption.
Significant growth opportunities for SIG in terms of likely
increased demand for transitional technologies and products
to support lower-carbon construction and building upgrades.
Ineffective action (physical scenario)
No action: No policies introduced beyond those
already implemented. The absence of transitional
policies leads to a growing concentration of
greenhouse gas emissions in the atmosphere and,
as a result, global temperature levels continue to
increase by 3.3°C relative to pre-industrial levels by
the end of the scenario (2050).
This leads to chronic changes in precipitation,
ecosystems and sea levels leading to permanent
changes in living and working conditions, and
impacts on buildings and infrastructure. UK and
global GDP growth is permanently lower and
macroeconomic uncertainty increases.
Possible impact and consequences
Policy and
regulatory
There will be significant government support for green
infrastructure investments. Mandatory product information
will be needed to support this investment.
Carbon taxes help to drive the transition to sustainable
energy, penalising the use of fossil fuels whilst encouraging
investments in energy efficient infrastructure.
Failure to meet national and global carbon targets is likely to
result in more regulatory interventions resulting in some short-
term scarcity in supply chains.
Government policy supports and subsidises investment in
lower-carbon intensity fleets.
No additional effective policy action on
climate change.
Economy
and market
Possibility of a climate-related recession in the early 2030s
but that long-term growth continues.
New technological developments needed whether driven by
infrastructure investment or not, which drive development of
non-fossil fuel energy sources and transport networks.
<5% of homes become uninsurable for climate risks.
Banks offer green mortgages and financing products for
green renovations.
Economic growth in steady decline and driven by
high levels of economic uncertainty.
UK and global growth are permanently lower.
c10% of homes become uninsurable for climate
risks prompting overall lower investment in affected
property.
Infrastructure investments are critical, driven by the
need to develop climate resilient defences.
42 SIG Annual Report and Accounts 2023
Technology Offsite manufacturing is used due to its lower embodied carbon.
Newly built structures will need to be significantly redesigned,
with buildings simultaneously needing to consume less
materials in the build yet be structurally stronger.
Increased investment in digital capabilities to facilitate the
modelling of the build to disclose carbon content.
Products heavily reliant on fossil fuels no longer wanted,
leading to product innovation, rising deconstruction and
higher supply chain costs.
Offsite manufacturing boosted as onsite work
impacted by weather extremes.
Increased focus on resilience of buildings to
climate change.
Urgent pressure to decarbonise the construction
industry results in new products which may make
existing product obsolete or see new disruptors
entering the market, challenging long-standing
relationships and arrangements.
Physical
and climate
Higher incidence rate of acute physical weather events
with some impact on chronic events such as increased
precipitation and heatwaves.
Global warming relative to pre-industrial times
reaches 3.3°C by 2050. Accelerating and
widespread climate change manifests itself in
irreversible consequences that will push ecosystems
beyond tipping points.
Frequent summer heatwaves, higher winter
precipitation and more intense storm events will
materially affect construction activities.
Extensive flooding with a mean sea level increase
in the UK. UK, Netherlands and Northern Germany
particularly exposed to flooding. Supply chains
significantly disrupted in the worst-hit regions.
Key Climate Risks and Resilience
Strategies
Our climate related risks and mitigation
are detailed on pages 40 to 41 with
the impact of the scenarios on our
climate related risks on page 42 and
43. Here we highlight the material risks
based on scenario modelling and any
additional impacts or resilience strategies
considered.
− Removal of fossil fuels from our fleet
– In both scenarios the climate related
likelihood and impacts increase (see
page 40). In terms of resilience, our
net zero plans and current mitigation
detailed on page 22 are viable
strategies assuming the transition can
be factored over a reasonable period.
If the transition period was shortened
further, for example by government
regulation, there may be a negative
impact on operational and financial
performance due to a lack of the
availability and viability of alternative low
carbon transport solutions.
− Waste Management – In both scenarios,
the likelihood of this risk increases. Our
current mitigation on page 40 shows
that we are highly resilient to this risk
based on our current waste to landfill
commitment and activities.
− Product Data – In these scenarios the
requirement for accurate product data,
particularly with regards to potential
energy or carbon saving efficiencies,
will increase. The mitigation on page
40 outlines our current (and future)
resilience to this increased risk.
− Chronic Physical Risks – In the
ineffective action scenario, the likelihood
and impact of this risk increases as
accelerating and widespread climate
change events occur. The long-term
nature of this risk, however, will give
us time to adjust (with customers,
suppliers and other stakeholders in the
construction value chain) to adopting
sustainable working practices, materials
and ways of constructing the built
environment to ensure a manageable
impact and increased resilience to
the risk.
− Energy Efficiency (property portfolio)
– In the ineffective action scenario,
the likelihood and impact of this risk
increases. In addition to our current
mitigation on page 40, we envisage a
broader need for us to work with our
partners and suppliers to develop new
materials, technologies and products to
increase building innovation, resilience
and adaptation to further mitigate
against future acute climate events,
and in doing so increase potential
commercial opportunities and sources
of revenue.
− Opportunities – these are discussed on
page 38 and 39. In both scenarios there
are impact and likelihood increases,
with a demand for our sustainable
products. Our expectation over the
medium term is that for the 1.5°C
scenario, our customers will increasingly
move away from non-sustainable
products, as end users demand for
sustainability and adaptation in the built
environment increases, whilst in the
longer term, for the 3°C scenario, more
sustainable products will become the
mainstream option in as governments
are forced to legislate in response to
worsening economic, societal and
meteorological impacts of climate
change. Whilst we have not quantified
this, it may have positive or negative
impacts on our business.
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Sustainability review / continued
Task Force on Climate-Related Financial Disclosures / continued
Increased likelihood of climate-
related risk or opportunity
occurring/increased impact
on the climate-related risk
or opportunity.
Neutral likelihood of climate-
related risk or opportunity
occurring/neutral impact
on the climate-related risk
or opportunity.
Reduced likelihood of climate-
related risk or opportunity
occurring/reduced impact
on the climate-related risk
or opportunity.
Risk trend
Effective action but implementation delayed
(transition scenario)
Ineffective action
(physical scenario)
Relative likelihood Relative impact Relative likelihood Relative impact
Impact of scenario analysis on climate-related risks
Removal of fossil fuels from our fleet
Waste management
Product carbon data
Energy efficiency (property portfolio)
Chronic physical risks
Use of carbon offsets
Energy market volatility
Grid electrification capacity
Impact of scenario analysis on climate-related opportunities
Responding to regulations in the energy performance of
buildings and the need for enhanced building materials
product sustainability
Accelerating the growth of new sustainable products
and solutions
Partnering with early-stage innovators to develop new
products and solutions
Risk
The process of identifying and assessing
the climate-related risks noted on pages
38 to 39 follows our overall approach to
risk management set out on pages 58
to 63 in that we focus on our strategic
objectives and combine a top-down
strategic Group-level view with a bottom-
up operational view of the risks at
operating company level. To assess our
risks, we consider the likely financial,
reputational, regulatory and operational
impacts that could have a material
financial impact and the probability that
each risk may materialise. A granular
and specific climate change risk review
is also performed with members of
the sustainability committee and other
stakeholders. The outputs from these risk
review exercises have been combined
to consolidate our view of our principal
climate-related risks and will continue
to be reviewed by the Board, Executive
Leadership Team and sustainability
committee throughout the annual
risk cycle.
The management of climate-related
risks follows the Group’s overall risk
management principles as set out on
page 59 and encompasses five key areas:
the Role of the Board, Responsibility
and accountability, Transparency
and openness, Culture of continuous
improvement and Applicability.
Whilst the Board recognises that in order
to achieve its strategic objectives, it must
accept and manage a certain degree of
risk, it has a low appetite for risks that
have significant negative consequences.
It aims to ensure that the Group either
avoids those activities that may result
in climate-related risks accelerating or
eliminates the risks through applied and
focused mitigation efforts.
44 SIG Annual Report and Accounts 2023
Metrics and targets
The Group sets out its Scope 1, 2 and 3 emissions on pages 26 to 27; these have been verified by Accenture to ISO 14064-3 to a
limited level of assurance. Pages 20 to 35 also set out the additional metrics that we use to monitor the progress of our sustainability
commitments, from a climate-related perspective. These include current fleet mix by fuel type, % waste diverted from landfill and
details on the type of waste we have i.e. hazardous and non-hazardous.
TCFD compliance
Thematic recommendations Recommended disclosures Where reference can be found in the report
Governance – Disclose the
organisation’s governance
around climate-related risks and
opportunities.
Describe the Board’s oversight of climate-
related risks and opportunities.
Pages 36 to 39
Describe management’s role in assessing
and managing climate-related risks and
opportunities.
Pages 36 to 39
Strategy – Disclose the actual and
potential impacts of climate-related
risks and opportunities on the
organisation’s businesses, strategy,
and financial planning where such
information is material.
Describe the climate-related risks and
opportunities the organisation has identified
over the short-, medium-, and long-term.
Risks – pages 40 to 41
Opportunities – page 38 to 39
Describe the impact of climate-related risks
and opportunities on the organisation’s
businesses, strategy, and financial planning.
Risks – pages 40 to 41
Opportunities – pages 38 to 39
Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario.
Pages 42 to 43. Our review has concentrated
on identifying the likely consequences and
directional impact of two scenarios on the
Group’s climate-related risks and opportunities.
Risk – Disclose how the
organisation identifies, assesses,
and manages climate-related risks.
Describe the organisation’s processes for
identifying and assessing climate-related
risks.
Page 38 to 39
Describe the organisation’s processes for
managing climate-related risks.
Page 38 to 39
Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into the organisation’s
overall risk management.
Page 38 to 39
Metrics and targets – Disclose the
metrics and targets used to assess
and manage relevant climate-
related risks and opportunities
where such information is material.
Disclose the metrics used by the organisation
to assess climate-related risks and
opportunities in line with its strategy
and risk management process.
Sustainability commitments and metrics on
page 20 to 21.
GHG emissions on pages 26 to 27.
Disclose Scope 1, Scope 2, and if
appropriate, Scope 3 GHG emissions,
and the related risks.
Disclosed on pages 26 to 27. We report Scope
1, Scope 2, and business travel and third-party
logistics Scope 3 emissions. As discussed
on page 24, we have reported our Scope 3
emissions for the first time and will continue
to further develop our emissions engagement
going forward.
Describe the targets used by the organisation to
manage climate-related risks and opportunities
and performance against targets.
The interim targets towards our net zero carbon
commitment is disclosed on page 24.
45SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Sustainability review / continued
SIG continues to integrate ESG responsibility across the Group, and we are committed to socially responsible business practices for
our shareholders, employees, customers and suppliers.
This section constitutes SIG Plc’s Non-Financial Information Statement and is produced to comply with Sections 414A and 414B of
the Companies Act 2006.
In compliance with the Non-Financial Reporting Directive, the table below summarises the requirements and where relevant
information can be found within the Annual Report and Accounts.
Further information on our sustainability policies and corporate responsibility can be found on our website (www.sigplc.com).
Reporting Requirements Relevant Policy / Code Section within Annual Report
Climate-Related Financial
Disclosures
Sustainability Policy TCFD (pages 36 to 45)
Environmental Matters Sustainability Policy Sustainability (pages 20 to 35)
Employees Code of Conduct People Commitment (pages 34 to 35)
Health and Safety Policy Gender Diversity (page 34 to 35])
Health & Wellbeing Policy Board Diversity (page 34 to 35)
Anti-Bribery & Corruption Policy People Principal Risks (page 60 to 63)
Whistleblowing Policy Employee engagement (page 34)
Modern Slavery Policy Talent and succession (page 35)
Human Rights Code of Conduct People Commitment (page 34 to 35)
Modern Slavery Policy Stakeholder Engagement (page 72 and 73)
Ethical Trading and Human Rights policy
Social Code of Conduct People Commitment (page 34 to 35)
Stakeholder Engagement (page 72 and 73)
Governance (pages 64 to 127)
Anti-bribery Anti-Bribery & Corruption Policy People Commitment (page 34 to 35)
Whistleblowing Policy Governance (pages 64 to 127)
Principal Risks Risk Management (pages 58 to 63)
Principal Risks (pages 58 to 63)
Business Model Business Model and Strategy (pages 16 to 19)
Non-financial Key
Performance Indicators
Key Performance Indicators (pages 48 to 49)
The Section 172 Statement is set out on pages 72 to 75 of the Corporate governance report (providing information on how the
Directors have performed their duty to promote the success of the Company) and is incorporated by reference into the
Strategic report.
Non-Financial and Sustainability
information statement
46 SIG Annual Report and Accounts 2023
SIG Code of Conduct
Our Code of Conduct sets out our ethical
standards and expected behaviours from
all employees of the Group. The Code
provides guidance on how to manage
certain situations and where to go for
advice. It outlines our obligations across
a number of Group and local business
policies, including anti-bribery, corruption,
ethical trading, and human rights, and
together these help protect our business
from legal, financial, and reputational
risk. A confidential and independent
whistleblowing hotline service is available
to all employees so that they can raise
any concerns anonymously about how
the Group conducts its business.
Diversity, Equality and
Inclusion policy
The policy outlines our commitments and
approach across the Group in relation
to DEI. We are committed to developing
a working environment that is fair and
inclusive so employees can feel safe,
valued and proud to work for SIG.
Ethical Trading and Human
Rights policy
SIG promotes human rights through a
number of areas including its employment
policies and practices, supply chain, and
the responsible use of its products and
services. Our Ethical Trading and Human
Rights policy covers the main issues that
may be encountered in our supply chain,
in particular in relation to product sourcing
and sets out the standards of integrity
that we work to including:
− safe and fair working conditions for
colleagues;
− responsible management of social and
environmental issues within the Group;
and
− standards in the international
supply chain.
Anti-Bribery and Corruption policy
The Group is committed to sound
and fair business practices, and has a
zero-tolerance position on bribery and
corruption. The Group’s Anti-bribery and
Corruption policy sets out the ethical
standards required to ensure compliance
with legal obligations within the countries
in which we operate.
Anti-bribery and corruption training is
provided to all colleagues. Our policy
ensures we limit our exposure to bribery
and corruption, and any associated
reputational impact, by:
− setting out a clear position on anti-
bribery and corruption;
− training all employees to identify and
avoid the use of bribery by themselves
and others;
− encouraging employees to be vigilant
and to report any suspicion of bribery,
and providing effective channels for this;
− rigorously investigating any alleged
bribery and supporting authorities in
any prosecution; and
− taking firm and vigorous action against
anyone involved in bribery or corruption.
Modern Slavery Act 2015
The Group has published its Group
Modern Slavery statement in respect
of the year ended 31 December 2022
on our website (www.sigplc.com) in line
with Home Office guidance. The Group
continues to work with its supply chain
to ensure there is a zero-tolerance policy
on slavery. The 2023 statement will be
published on our website in compliance
with the required deadline.
Payment practices
SIG Trading Limited publishes
information about payment practices
and reporting as required by the
Reporting on Payment Practices
and Performance Regulations
2017 in the UK. This is published
on a Government website:
check-payment-practices.service.gov.uk.
This report is published every six months
as per the requirements and the most
recent information was submitted in
January 2024 for the six months
to 31 December 2023.
Group Sustainability policy
The Group Sustainability policy sets out
our commitments to sustainability and
the actions we are taking to support this,
further details of which is set out in this
report. Our sustainability commitments
will be achieved through the following
principles:
− integrate sustainability considerations
into all our business decisions;
− comply with (at a minimum) all
applicable legislation, regulations,
and codes of practice;
− ensure all operations minimise resource
consumption and operate in
a sustainable way;
− support employee awareness of, and
commitment and improvement to, our
sustainability policy;
− identify and promote products which
support carbon and circular economy
goals;
− promote customer and supplier
awareness of our sustainability policy,
and sustainable management practices;
and
− review, report and strive for continual
improvements to our annual
sustainability performance.
ALL THESE POLICIES ARE AVAILABLE
ON OUR WEBSITE (WWW.SIGPLC.COM)
Sustainability principles
47SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
How we performed
Key performance indicators
Non-financial KPIs
Lost time injury
frequency rate
GHG emissions per
£m of revenue
(metric tonnes)
Net Promoter Score
(NPS)
Employee engagement
result
(eNPS)
Definition
The ratio of any injury to an employee (including a
contractor) resulting in any lost time per 1,000,000
hours worked – on a 12-month rolling basis.
2023 performance
A strong downward trend with a further 24% reduction
in our rate in 2023. This trend has been driven by
strong performances in France and the UK.
Definition
Metric tonnes of GHG emissions per £m of revenue.
2023 performance
A progressive reduction from 2022 driven by
increased renewable energy contract usage driving a
3% reduction in net zero carbon emissions. Emissions
continue to reduce due to a gradual migration of our
fleet towards lower carbon alternatives alongside the
move towards greener energy contracts.
Definition
NPS is a customer experience metric based on their
likelihood to recommend SIG. It is calculated by
subtracting the percentage of customers who answer
the question with a 6 or lower from the percentage of
customers who answer with a 9 or 10. This is externally
monitored by a third-party company. Our Group NPS
is the average of NPS in each operating company.
2023 performance
2023 sees further progress on our strengthening
scores with particularly strong improvement in UK
Interiors of 21 points year on year. Benelux did not
complete a new NPS in 2023, and the Group score
includes the 2022 Benelux NPS in the calculation.
Definition
eNPS is an employee experience metric based on
their likelihood to recommend SIG as an employer.
2023 performance
A solid performance, maintaining a consistent level of
engagement year on year, despite challenging market
conditions and restructuring initiatives in some areas
in H2 2023. Improvements were seen in Germany
overall and in employee perception around Health
and Safety across our operating companies.
Link to strategy
Link to risks
− Health and safety
− Attract, recruit and retain our people
− Environmental, social and governance
Link to remuneration
Health and safety measures in annual
bonus scheme.
Link to strategy
Link to risks
− Environmental, social and governance
− Legal or regulatory compliance
Link to remuneration
An objective to improve carbon emissions
is included in the personal objectives of
certain senior management from 2023
onwards.
Link to strategy
Link to risks
− Digitalisation
− Macroeconomic uncertainty
− Change management
Link to remuneration
Customer engagement progress forms
part of the personal objectives of senior
management.
Link to strategy
Link to risks
− Health and safety
− Attract, recruit and retain our people
− Environmental, social and governance
Link to remuneration
Employee engagement progress forms
part of the personal objectives of senior
management.
2 3
3
1 2
1 2 3
8.4
17.1
+50
+14
8.4
23
11.1
22
11.8
21
17.1
23
17.5
22
23.0
21
+50
23
+46
22
+40
21
+14
23
+14
22
+3
21
48 SIG Annual Report and Accounts 2023
Financial KPIs
Like-for-like sales
(%)
Operating margin
(%)
Gross margin
(%)
Average trade working
capital to sales ratio
(%)
Definition
The growth or decline in sales per day (in constant
currency) excluding any current and prior year
acquisitions. Sales not adjusted for branch openings
or closures. See page 184 for the calculation.
2023 performance
Challenging market conditions led to lower sales
volumes, partially offset by the benefit of some
ongoing year-over-year input cost inflation. Relative
to the market, a robust trading result supported by
continued strong execution.
Definition
The ratio of underlying operating profit divided by
underlying revenue. Underlying operating profit represents
operating profit from continuing operations excluding
amounts from non-core businesses and Other items.
See page 184 for the calculation.
2023 performance
Operating margin decline driven by lower sales volumes
in weaker markets, leading to a 34% decline in underlying
operating profit, including a 2% increase in underlying
operating costs driven primarily by market-driven wage
and salary inflation.
Definition
The calculation of underlying gross profit divided by
underlying revenue. Underlying revenue and gross profit
represents amounts from continuing operations excluding
amounts from non-core businesses and Other items, as
shown on the Consolidated income statement.
2023 performance
The slight reduction in gross margin was due partly to
strong comparatives, especially in our UK Exteriors
business, and also pricing pressure in the current demand
environment. The businesses continue to manage these
dynamics effectively.
Definition
The average closing trade working capital balance of each
calendar month of the year, divided by underlying revenue.
Trade working capital includes net stock, net trade
receivables, gross trade creditors and supplier rebates due.
2023 performance
A solid performance which highlights continuing balance
sheet discipline against a backdrop of challenging market
conditions.
Link to strategy
Link to risks
− Macroeconomic uncertainty
− Attract, recruit and retain
our people
− Change management
Link to remuneration
Profit measures in annual bonus scheme.
Link to strategy
Link to risks
− Macroeconomic uncertainty
− Attract, recruit and retain our people
− Digitalisation
− Change management
Link to remuneration
Profit measures in annual bonus scheme.
Link to strategy
Link to risks
− Macroeconomic uncertainty
− Data quality and governance
− Digitalisation
− Change management
Link to remuneration
Profit measures in annual bonus scheme.
Link to strategy
Link to risks
− Macroeconomic uncertainty
− Change management
Link to remuneration
Included in operating company annual
bonus schemes.
1 2
2
2
2
(2%)
1.9
%
25.3%
14.3%
(2)
23
17
22
24
21
1.9
23
2.9
22
1.8
21
25.3
23
25.9
22
26.3
21
14.3
23
14.6
22
13.8
21
Partner of choice
for specialist
contractors
Improve our
operating
performance
Growing sustainably
as a responsible
business
1 2 3
Our long-term strategic objectives
49SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Financial discipline through
challenging markets
The Group managed effectively the
impact of increasingly challenging market
conditions during 2023. We maintained
robust liquidity, and executed productivity
and restructuring initiatives that will reduce
costs and improve operational agility.
Revenue
Group revenue of £2,761.2m (2022:
£2,744.5m) was 1% higher on a reported
basis, including 1% from acquisitions, 1%
from movements on exchange rates and
a marginal impact from differences in the
number of working days. LFL revenue
was down 2% year-on-year. Within this
figure, volumes declined in the majority
of our markets. We estimate the positive
impact of the pass through of input cost
inflation on revenue growth for the year
was approximately 5%, with this impact
reducing significantly over the course of
the year as prior year increases annualised.
Operating costs and profit
Gross profit decreased 1.6% to £699.6m
(2022: £711.0m) with a gross profit margin
of 25.3% (2022: 25.9%). The reduction
in gross margin was due partly to strong
comparatives, especially in our UK
Exteriors business, and also greater than
normal pricing pressure, reflective
of the challenging demand environment.
The businesses continue to manage
these dynamics effectively.
The Group’s underlying operating costs
increased by 2.5% to £646.5m (2022:
£630.8m). The increase was primarily
due to inflation, with the biggest impact
being on wages and salaries, followed
by property and energy costs. These
headwinds were partially offset by ongoing
productivity initiatives, and the initial
impact of restructuring actions taken in
the second half. Year- over- year operating
costs were also affected by a lower charge
for bad debts as a result of one unusually
high charge incurred during 2022 of £5m,
as reported at the time, and a £3.7m
profit in 2023 from the sale of the French
Exteriors head office building in Angers.
As a result, the Group’s underlying
operating profit decreased to £53.1m (2022:
£80.2m), at an operating margin of 1.9%
(2022: 2.9%). Reported operating profit was
£4.0m (2022: £56.2m) after Other items
of £49.1m (2022: £24.0m). Other items
includes a £33.8m impairment in the UK
Interiors business, with a further breakdown
of Other items set out later in this report.
The Group has managed effectively
the challenging market conditions
of 2023, maintaining robust liquidity
and executing productivity and
restructuring initiatives that will reduce
costs and improve operational agility.
Ian Ashton
Chief Financial Officer
Financial review
Revenue
£2,761.2m
2022: £2,744.5m
Gross margin
25.3%
2022: 25.9%
Underlying operating profit*
£53.1m
2022: £80.2m
Net debt
£458.0m
2022: £444.0m
50 SIG Annual Report and Accounts 2023
Segmental analysis
UK
Revenue
2023
£m
Revenue
restated
2022
£m
LFL sales
vs 2022
Underlying
operating
(loss)/profit
2023
£m
Underlying
operating
profit
restated
1
2022
£m
UK Interiors 556.5 561.5 (1)% (1.6) 7.9
UK Exteriors 369.4 363.1 1% 10.6 9.9
UK Specialist Markets 247.6 223.2 (6)% 10.3 14.9
UK 1,173.5 1,147.8 (1)% 19.3 32.7
1. The 2022 segmental information has been restated in order to present on a consistent basis with the current year, see the Accounting policies for further details.
Following a change in the UK management structure announced in November 2023, we now report three segments in the UK, with the
Specialist Markets businesses separated out from the Interiors and Exteriors businesses under which they were reported previously.
Reported revenue in UK Interiors, a specialist insulation and interiors distribution business, decreased slightly to £556.5m (2022:
£561.5m). LFL revenue was down 1% year-on-year with the impact of a declining market being offset by a further strengthening in
market position and the pass through of some continued year-over-year input price inflation. The flat revenue, together with operating
cost inflation, resulted in an operating loss of £1.6m (2022: £7.9m profit).
Reported revenue in UK Exteriors, a specialist roofing merchant, increased by 2% to £369.4m (2022: £363.1m), with LFL revenue
up 1%. This was due to benefits from purchase price inflation partially offsetting reduced demand, notably in the new build market.
A reduction in gross margin, partly due to high prior year comparators, combined with operating cost inflation, resulted in operating
profit of £10.6m (2022: £9.9m). The year-on-year improvement was partly due to the impact in 2022 of the administration of a large
customer, Avonside, as reported last year.
Reported revenue in our UK Specialist Markets increased by 11% to £247.6m (2022: £223.2m). This included a 16% impact from the
acquisition of Miers Construction Products Limited in July 2022. LFL revenue declined 6%, driven by a softer market, and by input
price deflation in steel, which are a bigger element of these businesses than elsewhere in the Group. These factors, coupled with
operating cost inflation, resulted in a reduction in operating profit to £10.3m (2022: £14.9m).
France
Revenue
2023
£m
Revenue
2022
£m
LFL sales
vs 2022
Underlying
operating
profit
2023
£m
Underlying
operating
profit
2022
£m
France Interiors 218.9 218.4 (1)% 10.4 12.2
France Exteriors 458.0 465.6 (3)% 19.3 23.6
France 676.9 684.0 (2)% 29.7 35.8
France Interiors, our structural insulation and interiors business trading as LiTT, saw reported revenue remain in line with the prior
year at £218.9m (2022: £218.4m), and 1% down on a LFL basis. This was driven by lower demand and volumes, offset by continued
input price inflation pass through. Flat revenue and operating cost inflation resulted in a £1.8m decrease in operating profit to £10.4m
(2022: £12.2m).
Reported revenue in France Exteriors, our specialist roofing business trading as Larivière, decreased 2% to £458.0m (2022:
£465.6m), and by 3% on a LFL basis. Demand and volumes were lower due to reduction in consumer spending following interest
rate increases, as well as softening of the new build market and a reduction in the benefit from pass through of input price inflation.
The decrease in revenue together with increased operating costs due to inflation, resulting in an operating profit decrease to £19.3m
(2022: £23.6m). During the year, the Larivière business moved into a new leased headquarters in Angers to better support the needs
of the business going forward. We had owned the previous office building in Angers for many years, and the sale of it resulted in a
profit on disposal in H2 of £3.7m.
51SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Germany
Revenue
2023
£m
Revenue
2022
£m
LFL sales
vs 2022
Underlying
operating
profit
2023
£m
Underlying
operating
profit
2022
£m
Germany 462.1 457. 8 (1)% 15.6 16.8
Reported revenue in Wego/Vti, our specialist insulation and interiors distribution business in Germany, increased by 1% to £462.1m
(2022: £457.8m). This included a 1% year over year impact from the acquisition of Thermodämm in 2022. LFL revenue decreased by
1%, with pass through of input price inflation offset by a decline in volumes, reflecting weaker market conditions, particularly in new
build. Good gross margin management was offset by operating cost inflation, resulting in reduced operating profit of £15.6m
(2022: £16.8m).
Poland
Revenue
2023
£m
Revenue
2022
£m
LFL sales
vs 2022
Underlying
operating
profit
2023
£m
Underlying
operating
profit
2022
£m
Poland 237.9 230.7 (2)% 7.1 10.6
In our Polish business, a market-leading distributor of insulation and interiors, revenue increased to £237.9m (2022: £230.7m),
although LFL sales decreased by 2%. Weaker demand in the market was partially offset by further improvements made in our
market position. Together with operating cost inflation, this resulted in a reduction in operating profit to £7.1m (2022: £10.6m).
Benelux
Revenue
2023
£m
Revenue
2022
£m
LFL sales
vs 2022
Underlying
operating
(loss)
2023
£m
Underlying
operating
(loss)
2022
£m
Benelux 116.9 115.9 0% (3.0) (3.0)
Reported revenue from the Group’s business in Benelux increased by 1% to £116.9m (2022: £115.9m) with LFL revenue flat year-on-
year. Revenue benefited from the business recovering some market share after prior years’ losses. The turnaround of the business
continues with ongoing progress in tackling operational issues, and a new Managing Director joined the business in Q4 to carry
this forward. Despite the initial recovery referenced above, the business continues to trade with lower market share than it had
historically. Margin pressure and operating cost inflation offset the improved trading and turnaround actions, resulting in an operating
loss of £3.0m (2022: £3.0m loss).
Ireland
Revenue
2023
£m
Revenue
2022
£m
LFL sales
vs 2022
Underlying
operating
profit
2023
£m
Underlying
operating
profit
2022
£m
Ireland 93.9 108.3 (15)% 1.4 6.0
Our business in Ireland is a specialist distributor of interiors and exteriors, and also includes specialist contracting businesses
for office furnishing, industrial coatings and kitchen/bathroom fit out. Its reported revenue decreased by 13% to £93.9m (2022:
£108.3m), and by 15% on a LFL basis. This was a result of softening demand in our segments of the Irish market, along with some
strong prior year comparatives, notably in H1. Operating profit reduced as a result by £4.6m to £1.4m (2022: £6.0m), reflecting the
lower revenue as well as operating cost inflation.
Financial review / continued
52 SIG Annual Report and Accounts 2023
Reconciliation of underlying to statutory result
Other items, being items excluded from underlying results, amounted to £49.3m for the year (2022: £24.1m) on a pre-tax basis and
are summarised in the table below:
2023
£m
2022
£m
Underlying profit before tax 17.4 51.6
Other items – impacting profit before tax:
Amortisation of acquired intangibles (2.8) (4.7)
Impairment charges (33.8) (15.8)
Cloud based ERP implementation costs (2.2) (2.7)
Costs associated with acquisitions (3.2) (2.5)
Net restructuring costs (8.0) (0.4)
Onerous contract costs (0.2) 1.2
Costs associated with refinancing — (0.4)
Other specific items 1.1 1.3
Non underlying finance costs (0.2) (0.1)
Total Other items (49.3) (24.1)
Statutory (loss)/profit before tax (31.9) 27. 5
Other items are disclosed separately in order to provide a better indication of the underlying earnings of the Group. Further details of
other items are as follows:
− Impairment charge of £33.8m relates to the impairment of goodwill and other non-current assets in UK Interiors. This non cash
charge is related to the splitting out of the more profitable UK Specialist Markets businesses from UK Interiors and Exteriors, which
has reduced the reported margin of the latter two and notably Interiors. It also reflects the weaker markets at present and hence a
delay in the anticipated improvements in profitability in the UK Interiors business.
− Cloud based ERP implementation costs relate to project configuration and customisation costs associated with strategic cloud
computing arrangements, which are expensed, rather than being capitalised as intangible assets.
− Costs associated with acquisitions relate principally to the acquisition of Miers Construction Products Limited in the UK in 2022,
including earnout consideration being accrued over the performance period.
− Net restructuring costs in the year comprise £6.7m redundancy costs and £2.4m branch closure costs, including £1.6m
impairment of right-of-use assets, tangible fixed assets and software, offset by £1.1m gain on the sublease and termination of
property leases previously impaired, all related to restructuring across the Group.
− ‘Other specific items’ – a credit of £1.1m in aggregate – include reversal of provision for lease receivables, the reversal of an
onerous lease provision and an impairment of right-of-use asset in relation to a branch which has been reopened, offset by
additional impairment of an investment property which is no longer in use by the Group.
Taxation
The effective tax rate for the Group on the total loss before tax of £31.9m (2022: profit £27.5m) is negative 36.1% (2022: 43.6%).
The effective tax rate on underlying profit before tax, excluding the impact of Other items, is 74.7% (2022: 27.9%).
Tax losses cannot be surrendered or utilised cross border, and the Group is therefore subject to tax in some countries and not in
others. Tax losses in the UK and Benelux businesses are not currently recognised as deferred tax assets, which impacts the overall
and underlying effective tax rate. The relative proportions of these losses compared to the total Group underlying profit before tax
are also higher for 2023 compared to prior periods, and the combination of these factors has led to the increase in the underlying
effective tax rate in the year.
In accordance with UK legislation, the Group publishes an annual tax strategy, which is available on our website (www.sigplc.com).
53SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Pensions
The Group operates a number of pension schemes, four of which provide defined benefits based upon pensionable salary. One of
these schemes, in the UK, has assets held in a separate trustee administered fund, and three are overseas book reserve schemes.
The largest defined benefit pension scheme is the UK scheme, which was closed to further accrual in 2016.
The Group’s total pension charge for the year, including amounts charged to interest after Other items, was £8.9m (2022: £7.4m),
of which a charge of £1.4m (2022: £0.2m) related to defined benefit pension schemes and £7.5m (2022: £7.2m) related to defined
contribution schemes.
The total net liability in relation to defined benefit pension schemes at 31 December 2023 was £20.3m (2022: £23.0m). The current
triennial actuarial valuation of the UK scheme as at 31 December 2022 is in progress and will conclude during March 2024. The
scheme remains well funded.
Financial position
Overall, the net assets of the Group decreased by £39.3m to £228.5m (2022: £267.8m), with a gross cash position at year end of
£132.2 (2022: £130.1m) and net debt (post-IFRS 16) of £458.0m (2022: £444.0m). Net debt on a pre-IFRS 16 basis was £154.0m
(2022: £160.3m).
The movement in post-IFRS 16 net debt includes the movement in cash noted below. An increase in net lease liabilities of £20.1m
due to lease renewals and extensions, mainly in the UK and Germany, was partially offset by a favourable currency movement of
£5.8m on bond debt. The movement in pre-IFRS 16 net debt is not affected by the movement on leases.
Cash flow
2023
£m
2022
£m
Underlying operating profit 53.1 80.2
Add back: Depreciation 76.6 73.2
Add back: Amortisation 2.4 3.2
Underlying EBITDA 132 .1 156.6
Decrease/(increase) in working capital 2.8 (14.4)
Repayment of lease liabilities (63.6) (60.1)
Capital expenditure (15.8) (14.5)
Cash exceptional items (6.4) (14.7)
Other 3.8 1.9
Operating cash flow
1
52.9 54.8
Interest and financing (34.7) (28.8)
Refinancing cash costs — (1.1)
Tax (14.0) (14.3)
Free cash flow
1
4.2 10.6
Acquisitions and investments (0.7) (27.5)
Repayment of debt (0.8) (1.4)
Total cash flow 2.7 (18.3)
Cash and cash equivalents at beginning of the year
2
130.1 145.1
Effect of foreign exchange rate changes (0.6) 3.3
Cash and cash equivalents at end of the year
2
132.2 130.1
1. Free cash flow is defined as all cash flows excluding M&A transactions, dividend payments, and financing transactions. Operating cash flow represents free cash flow
before interest and financing, costs of refinancing and tax.
2. Cash and cash equivalents at 31 December 2023 comprise cash at bank and on hand of £132.2m (2022: £130.1m) less bank overdrafts of £nil (2022: £nil).
During the period, the Group delivered £52.9m of operating cash flow, which represents a 100% conversion of the underlying
operating profit to operating cash. Despite the lower profit in the year this operating cash flow was very similar to the 2022 number,
helped by a positive movement on working capital. The key factor driving the working capital in the period was the lower levels
of trading year-on-year, allied by strong management of the key working capital drivers. The Group reported a free cash inflow of
£4.2m (2022: £10.6m inflow). This slight decline versus the prior year was driven by the higher interest charge, driven by the increase
in lease liabilities noted above along with higher interest rates embedded in renewed leases. Capex during the period was £15.8m
(2022: £14.5m). Cash exceptional items are those that are related to ‘Other items’ in the Consolidated income statement, and include
Financial review / continued
54 SIG Annual Report and Accounts 2023
restructuring costs and Benelux ERP implementation. ‘Other’ in the cash flow includes payments to the Employee Benefit Trust
to fund share plans of £1.7m (2022: £4.0m), add back of non-cash P&L items and provision movements, and proceeds on sale of
property, plant and equipment.
Financing and funding
The Group’s debt funding comprises €300m of 5.25% fixed rate secured notes and an RCF of £90m. These mature and expire in
November 2026 and May 2026 respectively. The secured notes are subject to incurrence-based covenants only, and the RCF has a
leverage maintenance covenant set at 4.75x which only applies if the facility is over 40% drawn at a quarter end reporting date. The
RCF was undrawn at 31 December 2023.
The Group’s liquidity position remained robust throughout 2023, and at the end of the period stood at £222m, consisting of cash of
£132m and the £90m undrawn RCF noted above. On the basis of current forecasts the Group is expected to remain in compliance
with all banking covenants throughout the forecast period to 31 March 2025.
2023
£m
2022
£m
Cash and cash equivalents at end of the year 132.2 130.1
Undrawn RCF at end of the year 90.0 90.0
Liquidity 222.2 220.1
Post-IFRS 16 net debt 458.0 444.0
Pre-IFRS 16 net debt 154.0 160.3
Post-IFRS 16 leverage 3.5x 2.8x
Pre-IFRS 16 leverage 2.8x 1.8x
Going concern
The Group closely monitors its funding position throughout the year, including monitoring compliance with covenants and available
facilities to ensure it has sufficient headroom to fund operations.
The Group’s financing facilities comprise a €300m fixed rate bond (secured notes), due November 2026, and £90m Revolving Credit
Facility (‘RCF’) agreement which expires in May 2026. One of the trading businesses also has a £2.1m bank loan repayable over the
period to June 2026. The only financial covenant within these facilities is a leverage maintenance covenant within the RCF, which
is only effective if the facility is over 40% drawn (i.e. £36m) at a quarter end reporting date. The RCF was undrawn at 31 December
2023 and has remained undrawn subsequent to the year end.
The Group has significant available liquidity and on the basis of current forecasts is expected to remain in compliance with all
banking covenants throughout the forecast period to 31 March 2025 (‘the going concern period’).
The Directors have considered the Group’s forecasts which support the view that the Group will be able to continue to operate within its
banking facilities and comply with its banking covenants. The Directors have considered the following principal risks and uncertainties
that could potentially impact the Group’s ability to fund its future activities and adhere to its banking covenants, including:
− worsening market conditions and further reductions in demand;
− high levels of product inflation, and current economic and political uncertainties, potentially impacting market demand; and
− potentially recessionary conditions in the coming year.
The forecasts on which the going concern assessment is based have been subject to sensitivity analysis and stress testing to
assess the impact of the above risks and the Directors have also reviewed mitigating actions that could be taken. Under a severe
but plausible downside scenario, factoring in a 6% reduction in volume, a reduction in gross margin and a resulting 55% reduction in
underlying operating profit from the base forecast for the 12 months to 31 March 2025, the analysis shows that sufficient cash would
be available without triggering a covenant breach, as the RCF is not expected to be drawn at a relevant quarter end. Reverse stress
testing has also been performed, which shows that the Group could withstand up to a 22% reduction in revenue for the 12 months
to 31 March 2025, or up to 15% for the nine months to the forecast liquidity low point of 30 September 2024, before triggering a
covenant breach if the RCF was 40% drawn at a relevant quarter end. Further cash phasing mitigations would also be available to
avoid this situation.
The Directors have considered the impact of climate-related matters and this is not expected to have a significant impact on the
Group’s going concern assessment.
On consideration of the above, the Directors believe that the Group has adequate resources to continue in operational existence
for the forecast period to 31 March 2025 and the Directors therefore consider it appropriate to adopt the going concern basis in
preparing the 2023 Consolidated financial statements.
55SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Viability statement
In accordance with Provision 31 of
the Corporate Governance Code, the
Directors have undertaken an assessment
of the viability of the Group.
In making this assessment, the Directors
confirm that they have performed a
robust assessment of the principal risks
facing the Group, including those that
would threaten its business model, future
performance, solvency or liquidity. Details
of the risk identification and management
process as well as a description of the
principal risks and uncertainties facing the
Group are included in this Strategic report
on pages 58 to 63. The Directors believe
the Group is well placed to manage these
risks successfully.
The Board has determined that a three-
year period to 31 December 2026 is the
most appropriate period of assessment.
Whilst the Board has no reason to believe
the Group will not remain viable over
a longer period, three years has been
chosen as this aligns with the Group’s
medium-term planning process and
is considered the period over which it
has reasonable visibility of the market
and industry characteristics to be able
to develop reasonable forecasting
assumptions and perform a realistic
viability assessment.
The assessment process and key
assumptions
In making the Viability statement, the
Directors are required to consider the
Group’s ability to meet its liabilities as they
fall due, taking into account the Group’s
current position and principal risks.
Financial review / continued
The Group has a strong liquidity position
at 31 December 2023 despite the weaker
than expected trading performance
during the year and given the availability of
the £90m RCF. The Group has committed
facilities in place until 2026, comprising
€300m fixed rate secured notes and the
£90m RCF. The secured notes are subject
to incurrence-based covenants only, and
the RCF has a leverage maintenance
covenant set at 4.75x which only applies
if the facility is over 40% drawn at a
quarter end reporting date. The RCF
was undrawn at 31 December 2023.
As part of the Group’s financial and
strategic planning process, the Group
has prepared financial forecasts for the
three years to 31 December 2026. The
process included a detailed review of
the forecasts, led by the Chief Executive
Officer and Chief Financial Officer, with
input from operational and functional
management, and these forecasts were
approved by the Board.
In order to assess the resilience of the Group to threats posed by the principal risks
in severe but plausible scenarios, the Group’s financial forecasts were subjected to
thorough multi-variant stress and sensitivity analysis together with an assessment
of potential mitigating actions. This multi-variant stress and sensitivity analysis
included scenarios arising from combinations of the following:
Scenario
Link to principal risks and
uncertainties
The implications of a challenging economic environment,
in particular the potential impacts of continued
inflationary pressures and softening of the construction
market, have been modelled by assuming a severe but
plausible reduction in revenue and gross margins in each
of the next three years.
− Macroeconomic
uncertainty
− Change management
The impact of the competitive environment within which
the Group’s businesses operate and the interaction
with the Group’s gross margin have been modelled by
assuming a severe but plausible reduction in revenue
and gross margins during the three-year period.
− Macroeconomic
uncertainty
− Change management
− Environmental, social
and governance
The resulting impact on key metrics
was considered with particular focus on
solvency measures including liquidity
headroom and financial covenants
where relevant.
Under each of the scenarios considered,
the forecasts indicate adequate headroom
during the three-year period. Under a
scenario including a combination of the
above, factoring in a 6% reduction in
volume, a reduction in gross margin and
a resulting 58% reduction in underlying
operating profit from base forecasts in
2024, 42% in 2025 and 36% in 2026, the
analysis shows that sufficient cash would
be available without the need to draw on
the RCF at a relevant quarter end and
therefore no covenant tests would apply.
Reverse stress testing has also been
performed to analyse the level of revenue,
operating profit and cash reductions
over and above the scenario considered
above that could be experienced before
the RCF becomes at least £36m drawn
56 SIG Annual Report and Accounts 2023
and there is a potential breach in the
leverage covenant in the period under
review. The analysis shows that the Group
could withstand a reduction in volume
of between 15% to 20% in each of the
three years before triggering a covenant
breach if the RCF was 40% drawn at a
relevant quarter end. This is dependent
on the quarter end, with September being
the Group’s liquidity low point based on
phasing of purchases and sales. Further
cash phasing mitigations would also be
available to avoid this situation.
The Group’s secured notes and RCF
mature in November 2026 and May 2026
respectively. After consideration of actual
and budgeted trading performance and
discussions with advisers, the Group
has a full expectation of a refinancing in
advance of the relevant dates.
The Directors have considered the
potential impact of climate change on
the viability assessment. At the current
time, no legislation has been passed that
will impact the key assumptions used in
the forecasts and there are no overriding
changes to key assumptions relating to
climate change built into the forecasts.
The costs of implementing the Group’s
strategy of replacing the current fleet with
lower carbon alternatives as and when
leases naturally renew, and depending
on technology available at the time, are
factored into the Group’s forecasts. There
is not considered to be a significant risk
of climate change causing a significant
downturn in cash flows across the Group
over the viability assessment period
and therefore no specific sensitivities
relating to climate change are considered
necessary over and above the scenarios
considered above.
After conducting their viability review, and
taking into account the Group’s current
position and principal risks, the Directors
confirm that they have a reasonable
expectation that the Group will be able
to continue in operation and meet its
liabilities as they fall due over the three-
year period of their assessment to
31 December 2026.
Cautionary statement
This Strategic report has been prepared
to provide the Company’s shareholders
with a fair review of the business of the
Group and a description of the principal
risks and uncertainties facing it. It may not
be relied upon by anyone, including the
Company’s shareholders, for any other
purpose.
This Strategic report and other sections
of this report contain forward-looking
statements that are subject to risk
factors including the economic and
business circumstances occurring from
time to time in countries and markets
in which the Group operates and risk
factors associated with the building and
construction sectors. By their nature,
forward-looking statements involve
a number of risks, uncertainties and
assumptions because they relate to
events and/or depend on circumstances
that may or may not occur in the future
and could cause actual results and
outcomes to differ materially from those
expressed in or implied by the forward-
looking statements.
No assurance can be given that
the forward-looking statements in
this Strategic report will be realised.
Statements about the Directors’
expectations, beliefs, hopes, plans,
intentions and strategies are inherently
subject to change and they are based
on expectations and assumptions as to
future events, circumstances and other
factors which are in some cases outside
the Group’s control. Actual results could
differ materially from the Group’s current
expectations. 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 actual
results or trends to differ materially,
including but not limited to, changes in
risks associated with the level of market
demand, fluctuations in product pricing
and changes in foreign exchange and
interest rates. The forward-looking
statements should be read in particular in
the context of the specific risk factors for
the Group identified on pages 58 to 63 of
this Strategic report.
The Company’s shareholders are
cautioned not to place undue reliance
on the forward-looking statements. This
Strategic report has not been audited
or otherwise independently verified. The
information contained in this Strategic
report has been prepared on the basis of
the knowledge and information available
to Directors at the date of its preparation
and the Company does not undertake
any obligation to update or revise this
Strategic report during the financial
year ahead.
The Strategic report (comprising up to
and including page 63) was approved by
the Board of Directors on 4 March 2024
and signed on the Board’s behalf by:
Gavin Slark
Chief Executive Officer
Ian Ashton
Chief Financial Officer
4 March 2024
57SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Our approach
to risk management
Risks and risk management
Risk management plays an integral part
in SIG’s planning, decision-making and
management processes.
All employees have a responsibility to
ensure they understand their relevant
risks, that appropriate controls are
in place and that they are operating
effectively to manage these risks. The
Board maintains overall responsibility for
ensuring risk management and internal
control systems are robust.
The Board, supported by the Audit &
Risk Committee, sets the strategy for the
Group and ensures risks are effectively
identified and managed through the
implementation of the risk management
and control frameworks. The Group
employs a three lines model to provide
a simple and effective way to enhance
risk and control management processes
and ensure roles and responsibilities are
clear. The Board maintains oversight to
ensure risk management and control
activities carried out by the three lines are
proportionate to the perceived degree of
risk and its own risk appetite across the
Group. An outline of the three lines model
is detailed below.
Our approach to risk
management
The ability to effectively manage risks
and uncertainties is at the heart of
every successful organisation and
how we identify and respond to risks
and uncertainty will influence business
outcomes and contribute to the quality
of our decisions.
To identify our risks, we focus on our
strategic objectives and consider what
might stop us achieving our plan within
our strategic planning period. The
approach combines a top-down strategic
Group-level view and a bottom-up
operational view of the risks at operating
company level. Meetings are held with
our operating company leadership
teams to identify the risks within their
operations. These are consolidated and,
in conjunction with a series of discussions
held with the Executive Leadership Team
and Non-Executive Directors, provide
the inputs to identify and validate our
principal risks.
To assess our risks, we consider the likely
financial, reputational, regulatory, and
operational impacts and the probability
that each risk may materialise. This helps
us to assess the nature and extent of
internal control we need to implement to
manage the risk to an acceptable level.
For each of the principal risks, we have
considered whether the risk is increasing,
decreasing or remains unchanged. We
have also given an indication of those
elements of our strategic plan which
may be impacted should any of the risks
materialise.
To ensure we effectively monitor our
risks, the principal risks are reviewed by
the Board, the Audit & Risk Committee
and the Executive Leadership Team
regularly during the year. Changes to the
principal risks and mitigation activities are
considered as part of this review.
Risk appetite
The Board recognises that, in order to
achieve its strategic objectives, it must
accept and manage a certain degree
of risk. On at least an annual basis it
considers the nature and level of risk it is
prepared to accept to deliver the strategy.
Risk appetite is assessed against a
suite of risk categories directly relevant
to the Group, supported by high-level
statements which set out the Board’s
expectations with regards to the accepted
level of risk appetite for each category
of risk.
We continue to have a higher appetite
for those risks that present the greatest
opportunities for commercial reward
and take a balanced approach to such
opportunities in terms of assessing
potentially higher levels of risk and return.
We do, however, have a very low
tolerance for risks that have significant
negative consequences, particularly when
they could adversely impact health and
safety, legal compliance, our values and
culture, or our reputation. We aim to either
avoid those activities that may result in
these risks materialising or eliminate these
risks with our mitigation efforts.
Principal risks
The Board regularly monitors the Group
risk register, which includes the ten
principal risks to the Group set out in this
report. These risks, if they materialise,
could have a significant impact on the
Group’s ability to meet its strategic
objectives. The assessed net risk scores
(likelihood and impact of the risk occurring
after taking account of mitigating controls)
are outlined in the following matrix and
details of the risks and current mitigations
are included in the table on the
following pages.
Our strategic pillars
As set out on pages 4 and 5, our strategic
framework focusses on three long-term
objectives, and four actions over the
medium-term to improve our operating
performance. The risk matrix that follows
also identifies how each risk relates to
each of our three long-term strategic
objectives:
− Partner of choice for specialist
contractors
− Improve our operating performance
− Growing sustainably as a responsible
business
58 SIG Annual Report and Accounts 2023
Principal risks
Risk management principles
The three lines model
1
Cyber security
2
Health and safety
3
Macroeconomic uncertainty
4
Attract, recruit and retain
our people
5
Data quality and governance
6
Environmental, social and
governance (ESG)
7
Mergers and acquisitions
8
Legal or regulatory compliance
9
Digitalisation
10
Change management
LIKELIHOOD LIKELY
POSSIBLE
CRITICALMODERATE IMPACT
3
9
10
Operational management:
Operational management is responsible
for identifying and assessing risks on
an ongoing basis, and for implementing
and maintaining appropriate controls
aligned to the organisation’s policies
and procedures.
Risk management, internal
controls and compliance
functions:
Our compliance, risk management and
internal controls functions support the
business in ensuring effective implementation
of, and compliance with, policies and
procedures across the business.
Independent assurance:
Our internal audit function provides
independent assurance to ensure that
controls are implemented and are
operating efficiently and effectively
across the organisation.
2
Second line
3
Third line
1
First line
Our approach to risk
management is supported
by the following key risk
management principles:
1. Role of the Board:
The Board is responsible for ensuring
there are adequate procedures to
manage risk, overseeing the internal
control framework, and determining
the nature and extent of the principal
risks the Group is willing to take in
order to achieve its long-term strategic
objectives. The Audit & Risk Committee
has responsibility for reviewing the
overall risk management policy and
ensuring its effective implementation
on an annual basis.
2. Responsibility and accountability:
A fundamental premise of our approach
is that each operating company owns
its risks and works in collaboration
with the Group Risk and Internal Audit
function to ensure it performs regular risk
identification, assessment, mitigation,
monitoring and reporting processes.
3. Transparency and openness:
Risk management activities and processes
are subject to regular review in order
to provide reasonable assurance of the
effectiveness of local risk management
arrangements and to consider the status
of mitigations or additional controls
required.
4. Culture of continuous
improvement:
We are committed to ensuring that we
regularly review our risk management
processes and ensure that they remain
relevant and support our businesses in
making risk informed decisions.
5. Applicability:
Our approach to risk management
is applicable to all entities across
the Group. Risks incurred through
contractual relationships that directly
impact the Group’s risk profile are
monitored, as determined by
the Board.
4 5
6 7 8
21
59SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Risks and risk management / continued
Principal risks
and uncertainties
Risk Description Mitigation
1. Cyber security
Internal or external cyber-
attacks could result in system
disruption or sensitive data
being compromised
In the context of widespread dependency
on increasingly complex digital systems,
growing cyber threats are outpacing
societies’ ability to effectively prevent
and manage them. These risks are also
exacerbated by an increasing willingness
of nation states to engage in asymmetric
cyber warfare to achieve geopolitical aims
and the relative ease with which new artificial
intelligence (AI) and machine learning (ML)
technologies can be utlised for adversarial
purposes. For example Generative AI is
making cyberattacks more sophisticated
through more believable social engineering,
automated phishing attacks and adaptive
malware.
There is a risk that we lack the capabilities
to effectively prevent, monitor, respond to,
or recover from, suspected cyber-attacks on
our IT infrastructure. Such attacks may result
in a loss of data or disruption to IT services
which may have a significant impact on
our ability to operate and comply with data
protection and privacy laws (e.g. GDPR),
and may have a detrimental effect on our
reputation.
Cyber security continues to receive Board and Executive
Leadership Team focus with an emphasis on ensuring
that appropriate technologies are deployed across IT
infrastructure to manage cyber threats.
Regular and independent reviews are performed to
assess the nature of potential cyber threats, security
processes and initiatives. They also ensure that we
implement appropriate tools and processes to better
identify and remediate new and emerging cyber risks and
vulnerabilities.
Cyber-incident response protocols are in place to support
our ability to effectively respond to and recover from
a cyber threat or incident and ongoing cyber training
campaigns and initiatives ensure employees are alert
to the nature and consequences of cyber-attacks.
Cyber policies are regularly reviewed and updated to
ensure they reflect the nature of risks and threats and, for
example, during 2023 we have published policies regarding
the opportunities and risks regarding the use of new AI and
ML technologies.
Risk
movement:
Link to strategic
objectives:
2
2. Health and safety
Danger of incident or
accident, resulting in injury
or loss of life to employees,
customers, or the general
public
Risk
movement:
Link to strategic
objectives:
3
There is a risk that poor organisational
arrangements or behavioural culture with
regards to health and safety causes harm
to individuals and may result in enforcement
action, penalties, reputational damage, or
adverse press coverage.
The Group Health, Safety and Environment Director is a
member of the Executive Leadership Team and provides
strategic leadership for all health, safety and environmental
matters. Local health and safety managers in each of our
businesses provide local leadership and support, monitor
and report our performance and key metrics,
and implement actions and initiatives. A new Group-wide
‘Everyone Safe, Every Day’ health and safety strategy,
objectives and KPIs were introduced in 2023.
A compliance standards framework is in place to ensure
the adequacy of local health and safety standards and
arrangements, with assurance provided through a
programme of compliance audits performed by suitably
trained and experienced health and safety professionals.
60 SIG Annual Report and Accounts 2023
Risk Description Mitigation
3. Macroeconomic uncertainty
Macroeconomic volatility may
impact the Group’s ability to
accurately forecast and to
meet internal and external
expectations
Risk
movement:
Link to strategic
objectives:
2
Geo-political and macroeconomic events
can lead to a decline in general economic
activity and, or including, a decline in
construction industry activity.
Conflicts in Ukraine and the Middle-East,
political and governmental change, will all
contribute to economic turbulence and
volatility which can impact our business.
While headline inflation is broadly expected
to fall throughout 2024, inflation remains
uncertain and impacts tighter monetary
policy, deflationary pressures, higher interest
rates, higher costs of living and doing-
business across our end markets.
This volatility has the potential to impact
customer demand, and create financial and
operational pressure, while adding costs to
our operations and making planning and
forecasting more difficult.
We continue to assess inflationary and other supply chain
pressures and impacts on product pricing and will continue
to work with our suppliers to identify opportunities to
improve supply chain resilience.
The Group’s geographical diversity across Europe, serving
customers across residential, commercial, industrial and
infrastructural sectors, combined with our broad portfolio
of categories, product offerings and specialisms, all serve
to reduce the impact of changes in a specific territory
or market. Industry-based KPIs, monitored monthly at
a Group and operating company level, help to ensure
that warnings and indicators of risks and opportunities
are identified early, and appropriate mitigation strategies
implemented.
4. Attract, recruit and retain our people
Failure to attract and retain
people with the right skills,
drive and capability to
reshape and grow the
business
Risk
movement:
Link to strategic
objectives:
1 2
SIG’s ability to deliver its objectives and to
compete effectively is, in part, dependent on
its ability to recruit and retain colleagues with
the necessary skills, experience and ability
to deliver expected performance levels.
A combination of structural labour
and vocational skills shortages in the
construction sector, exacerbated by
increased employee concerns regarding the
significant wage inflation pressure resulting
from an increased cost of living, has the
potential to negatively impact SIG’s ability to
attract, recruit and retain staff across the full
spectrum of disciplines.
We continue to invest in learning and development
programmes to ensure both vocational and technical
training needs are met whilst retaining an agile workforce.
Our apprenticeships and training academies help develop
the near and long-term skills of our employees.
We regularly review our organisational structures and
accountabilities, and ensure our structures optimise
employee motivation and engagement. Employee
engagement is monitored through an annual survey and a
Workforce Engagement programme run by the Board.
Ongoing enhancements to pay and conditions, including
market benchmarking, broadening variable remuneration
elements and retention and succession planning also helps
to mitigate this risk.
Our businesses have also introduced programmes to
support employee health and wellbeing. This includes
training for all employees on keeping themselves and
their colleagues safe and well.
Partner of choice
for specialist
contractors
Improve our
operating
performance
Growing sustainably
as a responsible
business
1 2 3
Our long-term strategic objectives
61SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Risks and risk management / continued
Principal risks and uncertainties / continued
Risk Description Mitigation
5. Data quality and governance
Poor data quality could
impact our financial
management, fact-based
decision-making, business
efficiency, and credibility
with customers
Risk
movement:
Link to strategic
objectives:
1 2
There is a risk that we lack the necessary
quality of systems and processes to ensure
sufficient granularity, completeness, and
accuracy of vendor, product and pricing
master data. This has the potential to impact
our ability to deliver a digital customer
experience, provide enhanced product and
customer analytics or insight and comply
with both existing and new regulatory
requirements.
Product and customer data quality remains a focus area
for our operating companies, who continue to monitor,
assess and upgrade their product data requirements,
capabilities and governance considering ongoing changes
in business needs and regulation. We also continue to
maintain and upgrade our ERP systems where relevant to
ensure these systems support the required data quality
and governance required.
6. Environmental, social and governance (ESG)
Reputational impacts from
poor environmental, social
and governance arrangements
and performance
Risk
movement:
Link to strategic
objectives:
3
Public and commercial consciousness,
driven in part by ongoing regulatory
pressures, continues to evolve on a
wide range of environmental, social and
governance issues, including climate
change, employee wellbeing and how an
organisation contributes to society.
While SIG has a long and rich heritage in
helping the construction industry deliver
energy efficient solutions and products, risks
remain in terms of how we deliver our
ESG agenda.
This is particularly the case in how we ensure
we achieve our stated aims with regards to
climate change and decarbonisation. These
risks include the cost and complexity of
compliance, the challenges presented by
the decarbonisation of our vehicle fleet and
estate and how we engage with the wider
industry to reduce product and supply-chain
carbon impacts.
As outlined on page 32, our ESG commitments include a
focus on health and safety leadership, reaching net zero
carbon, sending zero SIG waste to landfill, partnering to
reduce carbon and waste across the supply chain, and
becoming an employer of choice in our industry.
These commitments will be supported by verified data
to ensure that progress in achieving these aims and
ambitions is monitored and subject to appropriate rigour.
To do this, we have enhanced our sustainability reporting
and budgeting processes (particularly in relation to
carbon emissions and waste) to ensure that we are able to
effectively track both the progress and financial impacts of
commitments.
In terms of employee wellbeing, each of our businesses
has introduced programmes and initiatives to support
employees, underpinned by a Group-wide employee
health and wellbeing policy and training for all employees
to understand their responsibilities to keep themselves and
their colleagues safe and well.
7. Mergers and acquisitions
Inability to sucessfully
execute, integrate and
leverage merger and
acquisition opportunities
Risk
movement:
Link to strategic
objectives:
1 2
Where necessary, we may from time to time
acquire new businesses. Such decisions
are based on detailed plans that assess the
value creation opportunity for the Group. By
their nature, there is an inherent risk that we
fail to manage the execution and integration
risks which may result in delays or additional
costs and impact the future value and
revenues generated.
We have appropriate M&A resource across the
organisation supported, and utilise external advisors where
necessary for the effective identification and prioritisation
of acquisition opportunities.
Resource is also available in the organisation to ensure that
transactions are subject to the necessary pre and post-
acquisition and integration activities and processes.
Clear accountability and authority limits for the initiation
and approval of M&A activity are defined in the Group
Delegation of Authority.
62 SIG Annual Report and Accounts 2023
Risk Description Mitigation
8. Legal or regulatory compliance
Failing to comply with, or
breaching, legal or regulatory
requirements
Risk
movement:
Link to strategic
objectives:
3
The Group’s operations are subject to an
increasing and evolving range of regulatory
and other requirements in the markets in
which it operates. A major corporate failure
resulting from a non-compliance with
legislative, regulatory or other requirements
would impact our brand and reputation,
could expose us to significant operational
disruption or result in enforcement action
or penalties.
Our Group General Counsel is a member of the Executive
Leadership Team and is supported by appropriately skilled
in-house legal and company secretarial resource at Group
and operating company level, with further support provided
by an approved panel of external lawyers and advisors.
Policies and procedures are in place to ensure compliance
with legal and regulatory frameworks, including health and
safety, environmental, ethical, fraud, data protection and
product safety.
The Group’s internal controls function ensures that
appropriate and effective controls are in place against
material financial misstatement, errors, omissions or fraud.
Our Code of Conduct is available on our website and forms
part of our employee induction programme. E-learning
tools are also deployed across the organisation to ensure
employees are aware of, and understand, their obligations.
A whistleblowing hotline, managed and facilitated by an
independent third party, is in place throughout the Group.
All calls are followed up and investigated fully with all
findings reported to the Board.
9. Modernisation
Failure to deliver the digital
capabilities necessary
to support improved efficiency
and productivity or to remain
competitive in the marketplace
Risk
movement:
Link to strategic
objectives:
1 2
Increased technological innovation and
change has accelerated the increasing role
digitalisation will have in the construction
materials supply chain. We continue to
seek opportunities to ensure we can deliver
digital solutions to enable a more efficient,
integrated, and frictionless experience for
our colleagues, customers and suppliers.
This risk may be exacerbated by legacy
systems and technologies which are heavily
customised, require significant system
maintenance to prevent outages and lack
the functionality to allow their integration into
a more modern digital infrastructure.
We continue to evaluate new technologies and make
investments in the digital workplace to ensure that we
maintain a competitive digital proposition.
Across our markets each operating company is
responsible for ensuring that it has an appropriate
technology roadmap to identify how it implements the
necessary technologies and ways of working to ensure that
it can maximise digital opportunities in terms of enhancing
the customer experience and optimising transactional,
fulfilment or process efficiencies.
During 2023, we invested in new ERP technologies in our
Benelux businesses and started the necessary planning
for a number of ERP replacement or enhancement
programmes across our operating companies.
10. Change management
Inability to change and grow
the organisation as planned in
order to meet growth targets
Risk
movement:
Link to strategic
objectives:
2
The Group is committed to improving its
operating performance with a strategy, key
actions and progress on these as set out on
pages 16 and 17.
This will inevitably require changes to
organisational structures, roles, and ways
of working, while we continue to modernise
existing and implement new IT systems.
There is a risk that these initiatives, allied to
the impacts of challenging market conditions
for our business and employees, results in
‘change fatigue’ and either future changes
are not implemented as planned, or the
benefits are not realised.
Operating companies continue to manage change
portfolios through programme management governance
committees. Increased monitoring has been implemented,
particularly regarding progress against growth initiatives, in
line with our strategy.
Monitoring of business growth metrics and early warning
indicators or trends continues as part of business reviews
at both the management and Board level.
Our ongoing employee engagement surveys continue to
facilitate the early identification of change impact in terms
of our employees, and action plans are implemented and
monitored accordingly.
Partner of choice
for specialist
contractors
Improve our
operating
performance
Growing sustainably
as a responsible
business
1 2 3
Our long-term strategic objectives
63SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Dear shareholder
On behalf of the Board, I am pleased
to present the Group’s Corporate
Governance report for the financial year
ended 31 December 2023.
As outlined in my Chairman’s statement
on pages 6 to 8, despite challenging
market conditions, I am pleased with
the progress we have made to improve
the business, notably with the initiatives
across our operating companies to
improve our ability to drive higher levels of
profitable growth when market conditions
recover. On behalf of the Board, I would
like to thank all of our employees for their
hard work and achievements during
the year.
Board focus in 2023
The Board’s focus during the year has
been on continuing to ensure that the
Group is set up for long-term sustainable
success, while navigating challenging
market conditions in the shorter-term.
The Board spent time during the year
considering market developments and
mitigating actions, technology issues
and modernisation, health and safety,
sustainability, M&A and financial, legal
and compliance matters material to the
Group. Further information on the Board
activities during the year can be found
on page 68.
Board composition
In February 2023, we were delighted to
welcome Gavin Slark to the Board as
Chief Executive Officer. Gavin brings
significant in-depth knowledge and
years of experience in the construction
products distribution sector with a proven
track record of delivering shareholder
value in publicly listed companies. Upon
appointment, Gavin embarked on a
comprehensive induction programme
to the Group, details of which can be
found in the Nominations Committee
Report on page 84. In November 2023,
Gavin hosted a Capital Markets event for
institutional investors and analysts to set
out the Board’s strategic focus for SIG
and an overview of our business priorities
and financial targets. Further details of the
Capital Markets event can be found in the
Strategic report on page 11.
Following Gavin’s appointment, Steve
Francis stepped down as Chief Executive
Officer and as a Director. The year also
saw Christian Rochat step down as a Non-
Executive Director. On behalf of the Board,
I would like to thank Steve and Christian
for their contributions to SIG since each of
them joined in 2020. Diego Straziota was
proposed as CD&R’s nominated Non-
Executive Director, replacing Christian
Rochat, and his appointment was
approved by shareholders at the 2023
Annual General Meeting. We were pleased
to welcome Diego to the Board. He was
well known to the Group, having served
as CD&R’s observer to SIG’s Audit & Risk
Committee since July 2020.
We remain focused
on ensuring the
Group is set up
for long-term
sustainable success,
while navigating
challenging
market conditions.
Andrew Allner
Chairman
Chairman’s introduction
to Governance
Corporate governance report
64 SIG Annual Report and Accounts 2023
In September 2023, we announced that
Kath Durrant, Non-Executive Director,
would assume the role of Senior
Independent Director (‘SID’). Kath was
appointed as a Non-Executive Director
in January 2021 and is Chair of the
Remuneration Committee. Kath is highly
familiar with our business and brings
considerable leadership experience to her
role as SID. Upon Kath’s appointment,
Alan Lovell stepped down from the role
as SID and remains as a Non-Executive
Director.
Board performance review
This year the Board undertook an
annual internal review of its own and
its Committees’ performance and
effectiveness. I am pleased to report
that the 2023 review concluded that the
Board, its Committees and individual
Directors were performing effectively.
Further details of the Board performance
review, together with progress against
the outcomes from the 2022 Board
performance review, can be found
on page 81.
CD&R
CD&R holds c29% of the shares in SIG,
a stake that it took up in 2020 largely as
part of the equity fundraising. CD&R has
two Directors appointed to the Board,
currently being Bruno Deschamps and
Diego Straziota. CD&R has the right to
appoint one member to the Remuneration
Committee and Nominations Committee
(currently Bruno Deschamps) and to
appoint an observer to the Audit & Risk
Committee (currently Diego Straziota).
Further details of the relationship with
CD&R can be found on page 76. The
recent Board performance review
demonstrated that the other Directors
recognise and value the contribution
made to the Group by Bruno and Diego;
and that their contributions are not limited
to representing the interests of CD&R’s
funds which are invested in SIG. They
each bring a wealth of sector experience
and wider knowledge that enhances
the discussions at Board meetings
and contributes to the making of better
decisions.
UK Corporate Governance
Code 2018
The Board is aware that the Code
provides for a Remuneration Committee
to consist solely of independent Directors
and that Bruno Deschamps is deemed
to be non-independent by virtue of his
relationship with CD&R. To that extent, the
Company is therefore not compliant with
this provision of the Code. The Board’s
opinion is that Bruno’s contribution to the
Remuneration Committee benefits the
Committee and shareholders as a whole
and that, were Bruno not a member of
the Committee, the Board would need to
consider how to replace the contribution
that he makes.
Diversity and Inclusion
The Board comprises ten Directors of
whom two are women, with one-third
of the independent Non-Executive
Directors being women. The Board
includes one Director from an ethnic
minority background. The Board is
aware of the importance of making
progress on diversity in general and in
particular on gender diversity on the
Board. I am pleased to report that the
Board is compliant with the Listing Rules
requirement for one of the senior Board
positions to be held by a woman, having
appointed Kath Durrant as SID during
the year. Further details on diversity and
inclusion can be found in the Nominations
Committee report on page 84.
Sustainability Commitments
Progress we have made towards fulfilling
our sustainability commitments is
contained in the Strategic report set out
at pages 20 to 47.
Annual General Meeting
The AGM will be held on 2 May 2024
at SIG West London, Mathisen Way,
Poyle, Slough, SL3 0HF. If you are
unable to attend in person and you
have any questions, please email them
to cosec@sigplc.com in advance of the
meeting. We will ensure the answers
to your questions are provided at
the meeting. Further details of the
arrangements for the AGM will be sent to
shareholders shortly. I warmly extend the
invitation to all shareholders to join us in
person at theAGM.
Andrew Allner
Chairman
4 March 2024
Compliance with the UK Corporate
Governance Code 2018
Our Governance sections, set out over the following
pages, explain how the Group has applied the
principles and complied with the provisions of the
Code
1
during the financial year ended 31 December
2023. During 2023 we were fully compliant with
the Code with the exception of Provision 32, which
requires the Board to establish a Remuneration
Committee of independent non-executive
directors. Bruno Deschamps was a member of the
Remuneration Committee and, as a nominated
Director of CD&R, he was not considered to be
independent under Provision 10. Notwithstanding
this, the Board considered Bruno to be a valuable
member of the Committee.
1. The UK Corporate Governance Code 2018 (the ‘Code’)
can be accessed at www.frc.org.uk.
1
Board leadership and Company purpose 66
2
Division of responsibilities
76
3
Composition, succession and evaluation
81
Nominations Committee report
82
4
Audit, risk and internal control
Audit & Risk Committee report
Risk management and internal control
86
94
5
Remuneration
Directors’ remuneration report 96
65SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
1 2 3 4 5
Board leadership and
Company purpose
R N A R N I A R N I
Our Board of Directors
Corporate governance report / continued
Andrew Allner Gavin Slark Ian Ashton Kath Durrant Alan Lovell
Non-Executive
Chairman
1
Appointed as Non-Executive
Chairman on 1 November
2017.
Chief Executive Officer
Appointed as an Executive
Director and Chief Executive
Officer on 1 February 2023.
Chief Financial Officer
Appointed as an Executive
Director and Chief Financial
Officer on 1 July 2020.
Senior Independent
Director
Appointed as an Independent
Non-Executive Director and
Chair of the Remuneration
Committee on 1 January
2021. Kath was appointed as
Senior Independent Director
in September 2023.
Non-Executive
Director
Appointed as an Independent
Non-Executive Director
on 1 August 2018.
Career and experience
Andrew has significant listed
company board experience
as Chairman and as a
Non-Executive Director. He
was previously Chairman
at Eco Buildings Group plc,
The Go-Ahead Group plc
and Marshalls plc, and a
Non-Executive Director at
Northgate plc, AZ Electronic
Materials SA and CSR plc.
Andrew has held executive
roles as Group Finance
Director of RHM plc and
CEO of Enodis plc. He has
also held senior executive
positions with Dalgety plc,
Amersham International plc
and Guinness plc. He has
significant experience in
managing and navigating
challenging situations.
Career and experience
Gavin was previously Chief
Executive Officer at Grafton
Group plc, the international
building materials distributor
and DIY retailer, for 11 years
from 2011. He also served as
Group CEO at BSS Group
plc, a leading UK distributor
to specialist trades, including
the plumbing, heating and
construction sectors. Gavin
has significant experience in
senior leadership positions
within the pan-European
construction distribution
sector and a demonstrated
history of enhancing
shareholder value in publicly
listed companies.
Career and experience
Prior to joining SIG, Ian
was Chief Financial Officer
at Low & Bonar plc until
its acquisition by the
Freudenberg group. Before
that, he was Chief Financial
Officer of Labviva LLC,
a US-based technology
company. Ian spent a
significant portion of his
career at Smith & Nephew
plc, where he held various
senior finance positions
in the UK, USA and Asia.
Ian is a qualified chartered
accountant and began his
career at Ernst & Young LLP.
Ian brings extensive UK and
international financial and
accounting expertise to the
Board and to his role as Chief
Financial Officer.
Career and experience
Kath has held senior roles
at GlaxoSmithKline plc and
AstraZeneca plc, she was
previously the Group Human
Resources Director of Rolls
Royce plc and Ferguson plc
and Chief Human Resources
Officer of CRH plc. She has
served as a Non-Executive
Director and Chair of the
Remuneration Committee of
Renishaw plc and of Calisen
plc. Kath has extensive
experience in leadership
positions across a range
of businesses and a strong
track record of chairing the
remuneration committees of
publicly listed companies.
Career and experience
Alan has many years of
leadership experience having
served as Chief Executive
Officer at six companies:
Tamar Energy Limited,
Infinis plc, Jarvis plc, Dunlop
Slazenger Group Ltd, Costain
Group plc and Conder Group
plc. He previously served
as Chairman at Interserve
Group Limited, Safestyle UK
plc, Sepura plc, Flowgroup
plc, Progressive Energy Ltd
and the Consumer Council
for Water.
Key strengths
Substantial board,
leadership, strategy,
international and general
management, corporate
transaction, governance and
accounting expertise.
Key strengths
Significant in-depth
knowledge and years of
experience in the distribution
sector, shaping strategy and
culture, product knowledge,
leadership and management.
Key strengths
Broad global experience in a
series of financial leadership
roles. A strong track record
in corporate transactions,
driving change, accounting/
finance and stakeholder
engagement with significant
international experience.
Key strengths
Strong leadership and human
resources experience across
a range of businesses,
transformation and change
management, construction
industry and international
experience.
Key strengths
Significant listed company
Board experience.
Accounting and finance,
corporate transactions
and extensive construction
industry and turnaround
experience in the UK
and Europe.
External roles
Chairman of Shepherd
Building Group Limited.
External roles
None.
External roles
None.
External roles
Non-Executive Director and
Remuneration Committee
Chair at Vesuvius plc and
Non-Executive Director at
Essentra plc.
External roles
Chair of the Environment
Agency.
Steve Francis stepped down as Chief Executive Officer and as a Director on 1 February 2023.
Christian Rochat stood down as a Non-Executive Director and member of the Nominations
Committee on 4 May 2023.
1. Independent on appointment.
66 SIG Annual Report and Accounts 2023
A RR NN A R N I A R N II
A
Audit & Risk
Committee
Committee key
R
Remuneration
Committee
N
Nominations
Committee
Chair of
Committee
I
Independent
Director
Bruno Deschamps Shatish Dasani Gillian Kent Simon King Diego Straziota
Non-Executive
Director
Appointed as a
Non-Executive Director
on 10 July 2020.
Non-Executive
Director
Appointed as an Independent
Non-Executive Director
and Chair of the Audit & Risk
Committee on 1 February
2021.
Non-Executive
Director
Appointed as an Independent
Non-Executive Director on
1 July 2019.
Non-Executive
Director
Appointed as an Independent
Non-Executive Director on
1 July 2020. Simon is the
Designated Non-Executive
Director for Workforce
Engagement.
Non-Executive
Director
Appointed as a
Non-Executive Director
on 4 May 2023.
Career and experience
Bruno is an Operating
Advisor to CD&R LLP and
the Chairman and CEO of
Entrepreneurs Partners LLP.
He is a former Chairman of
Diversey (USA) and Kloeckner
Pentaplast (Germany). He has
served as Managing Partner
of 3i Plc Group, Operating
Partner of CD&R where he
played a pivotal role in the
firm’s investments in Brakes,
as Chairman, and CEO in
Culligan, Rexel and VWR.
Bruno was president and
COO of Ecolab Inc (USA),
and President and CEO of
Henkel Ecolab, Teroson
Gmbh, VP Henkel Industrial
Adhesives (Germany), and
Chairman and CEO of SAIM
(France). Bruno is a Knight
of the Legion d’Honneur
(France).
Career and experience
Shatish has over 25 years
of experience in senior
public company finance
roles across various
sectors, including building
materials, advanced
electronics, engineering,
general industrial, business
services, construction,
and infrastructure. He also
has extensive international
experience including as
a regional CFO in South
America. He was previously
Chief Financial Officer
at Forterra plc and TT
Electronics plc and also
served as an alternative
Non-Executive Director for
Camelot Group plc and as a
Public Member at Network
Rail plc.
Career and experience
Gillian has had an extensive
career in software, internet,
digital media and mobile
technology businesses
and formerly had a broad
executive career including
being Chief Executive of real
estate Propertyfinder.com
until its acquisition by Zoopla,
and 15 years with Microsoft,
including three years as
Managing Director of MSN
UK. Gillian was previously a
Non-Executive Director of
NAHL Group plc, Pendragon
PLC and of Dignity plc.
Gillian brings a wealth of
knowledge to the Board in
digital, customer, brand and
marketing.
Career and experience
Simon most recently
served as a Non-Executive
Director for Headlam
Group plc. Simon has
extensive experience in the
construction sector having
served on the Travis Perkins
Executive Board and as CEO
of Wickes. Prior to that, he
worked at Walmart as the
Chief Operating Officer of
Asda and served as CEO at
Savola Group Middle East.
He has previously held CEO
positions for Tesco in Turkey
and South Korea, where
he led the joint venture with
Samsung. Before his role at
Tesco South Korea, Simon
served as Chief Commercial
Officer for Tesco in central
Europe.
Career and experience
Diego is a Managing Director
at CD&R LLP. He holds a
directorship in Wolseley, a
CD&R portfolio company.
Diego joined CD&R in
2017 and has played an
instrumental role in CD&R’s
investments in Westbury
Street Holdings, Wolseley,
UDG and the subsequent
separation of UDG from
Inizio and Sharp. Diego
actively participates in the
assessment of investment
opportunities within the
industrial and business
services sectors. Prior to
joining CD&R, he worked in
the private equity division of
Blackstone.
Key strengths
Deep industrial knowledge,
corporate transactions,
and extensive experience
in driving and overseeing
improved company
performance.
Key strengths
Strategy development and
execution, performance
improvement, financial
management, corporate
finance, mergers and
acquisitions. Sector
experience of building
materials, advanced
electronics, general
industrial, business services
and infrastructure.
Key strengths
Strong commercial
acumen, strategic, change
management, stakeholder
engagement, customer
and digital/technology
experience, brand and
marketing across a broad
range of businesses.
Key strengths
Over 35 years’ experience
leading international
teams, building products
distribution experience,
change management, retail
and distribution, marketing,
technology/digital and
stakeholder engagement
experience, particularly in
the workforce.
Key strengths
Diego possesses a wealth of
sector-specific knowledge
and has a track record in
strategy development and
corporate transactions.
His expertise extends to
driving and overseeing
improvements in company
performance.
External roles
Directorships in the following
CD&R portfolio companies:
Kalle Gmbh, OCS Group and
Wolseley, of which he is also
Chairman.
External roles
Senior Independent Director
and Chair of the Audit &
Risk Committee of Renew
Holdings plc and a Non-
Executive Director and Audit
& Risk Committee Chair at
each of Speedy Hire plc and
Genuit Group plc. Trustee
and Chair of UNICEF UK.
External roles
Non-Executive Director and
Remuneration Committee
Chair at Mothercare plc and
Marlowe plc. Non-Executive
Director and Chair of Risk at
THG plc and Non-Executive
Director at Ascential plc.
External roles
Non-Executive Chairman at
Troy (UK) Limited. Non-
Executive Director at James
Donaldson Group Ltd and
Chairman at Smoking
Lobster Restaurants (Isle
of Wight).
External roles
Holds a Directorship in
Wolseley, a CD&R portfolio
company.
67SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Board activities in 2023
Strategy and Financing
Stakeholder Groups
− Regular updates and reviews throughout
the year to monitor the Group’s financing
position, medium-term plan and business
plan.
− Consideration and oversight of potential
M&A opportunities to ensure they
advance the Group’s strategy and
are earnings enhancing.
− Board day with the Executive Leadership
Team (‘ELT’) to discuss strategy and
initiatives across the Group.
− Regular business reviews of each of the
operating companies.
− Received regular updates on the measures
being taken to mitigate any increase in
bad credit risk as a result of economic
downturn.
Link to strategic objectives
SHAREHOLDERS
AND INVESTORS
PEOPLE
CUSTOMERS
SUPPLIERS COMMUNITIES AND
ENVIRONMENT
1 2 3
Corporate reporting and performance monitoring
Stakeholder Groups
− Approved the 2024 budget and the
three-year financial projections.
− Periodic review of the Group’s ability to
trade as a going concern and viability.
− Approved the 2022 full-year and 2023
interim results, and ensured work was on
schedule for the production of the 2023
full-year Annual Report and Accounts.
− Approved the release of Stock Exchange
announcements in line with the Disclosure
Guidance and Transparency Rules, UK
Market Abuse Regulation and other
requirements.
− Received regular investor relations reports
as well as regular updates from brokers
on market conditions and equity investor
sentiment.
Link to strategic objectives
SHAREHOLDERS
AND INVESTORS
PEOPLE
2
Stakeholder engagement
Stakeholder Groups
− Considered the interests of the Group’s
key stakeholders.
− Group-wide customer surveys undertaken
and results reported to the Board.
− Fourth annual employee engagement
survey undertaken, with feedback
reviewed to ensure any material concerns
were identified and suitably addressed.
− Received regular updates on culture,
key hires, employee engagement and
organisational effectiveness.
− Reviewed feedback from the Chairman,
Committee Chairs, Executive Directors
and brokers following meetings with
shareholders.
− Branch visits in Germany where the Board
met with local branch teams.
− Reviewed feedback from the Board
Workforce Engagement sessions
conducted by the Designated Non-
Executive for Workforce Engagement
during the year.
Link to strategic objectives
SHAREHOLDERS
AND INVESTORS
PEOPLE
CUSTOMERS
SUPPLIERS COMMUNITIES AND
ENVIRONMENT
1 3
Corporate governance report / continued
1 2 3 4 5
Board leadership and
Company purpose
68 SIG Annual Report and Accounts 2023
Leadership and Governance
Stakeholder Groups
− Reviewed and, where appropriate,
approved updated Terms of Reference
for each of the Committees and the
Board, Directors’ conflicts of interest and
compliance with the Code.
− Conducted an annual internal Board
performance review, identified areas for
improvement and recommended actions.
− Held the 2023 AGM as a physical
meeting. Shareholders had the
opportunity to pre-submit questions and
to ask questions during the meeting.
− Updated the skills matrix to map the
skillset of the Board to ensure it aligns
with that required to execute strategy
and meet future challenges.
− Attended an externally facilitated Board
training session on artificial intelligence.
− Reviewed the report of the Group Health,
Safety and Environment Director as the first
item of business on the agenda for Board
meetings.
− Received regular reports and presentations
during the year relating to risk management
and internal controls.
− Reviewed the reporting of the Group
against the TCFD pillars and recommended
disclosures.
− Received regular updates on regulatory
matters at Board meetings.
− Annual review, update and approval of key
Group-wide policies.
− Approval of the Group’s 2023 Modern
Slavery Statement, which can be found at
www.sigplc.com.
− Reviewed the use of artificial intelligence
tools across the operating companies.
CUSTOMERS
Link to strategic objectives
SHAREHOLDERS
AND INVESTORS
PEOPLE
COMMUNITIES AND
ENVIRONMENT
1 3
Risk management and internal control
Stakeholder Groups
− Received regular reports on risk
management and internal controls
from the Audit & Risk Committee and
Chief Financial Officer.
− Approved the Group risk register, risk
appetite and principal risks.
− Received regular reports from the Group
Director of Audit and Risk.
− Reviewed progress on the five
sustainability commitments published by
the Group in March 2022 and received
updates on sustainability activities and
initiatives.
− Ongoing review of SIG’s internal controls
framework.
Link to strategic objectives
SHAREHOLDERS
AND INVESTORS
PEOPLE
CUSTOMERS
SUPPLIERS COMMUNITIES AND
ENVIRONMENT
1 2 3
Partner of choice
for specialist
contractors
Improve our
operating
performance
Growing sustainably
as a responsible
business
1 2 3
Our long-term strategic objectives
69SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Corporate governance report / continued
Board branch visits
Branch visits are invaluable for the Board, enabling the Directors to meet members of staff and local management to gain a
better insight into not only the culture of the working environment, but to also understand the operations of the branches and any
opportunities or issues they face.
In November 2023, as part of the Board’s annual meeting schedule, Board members spent three days in Germany. The Board was
delighted to visit two Wego branches, being the branches in Oberhausen and Dortmund. The visits provided the Directors with
a firsthand insight into the local operations at each branch and an opportunity to engage directly with the branch teams.
Oberhausen
and Dortmund
branch visits
The Board was delighted to visit
the Oberhausen and Dortmund
branches in November 2023. The
branches offer a wide range of interior
products from brand manufacturers
and our own Wego brand, including
drywall, floor systems, components,
technical insulation, facade, insulating
materials, fire protection and tools.
The Board met with each branch team
and received a presentation on their
sales performance and logistics.
Time was spent to understand the
product offering, current operations
and issues impacting logistics. The
Board went on a guided tour of
each branch, looking at a range of
products, vehicle fleet and logistics.
Following the branch tours Board
members were invited to engage
directly with the branch managers
through a question and answer
session, enabling the Directors to gain
further insight into sales, customer
satisfaction, health and safety and the
key challenges and opportunities at
each branch.
The Board found the branchvisits
extremely valuable and met afterwards
to discuss their feedback.
Board/ELT
strategy day
In November, as part of the
Board’s annual meeting schedule,
the Directors met with the ELT for
a half-day session and received
presentations from the Managing
Directors of the operating
companies. The presentations
covered areas such as innovation,
modernisation and key commercial
initiatives. The content of
the presentations included
omnichannel, digitalisation,
artificial intelligence and pricing
strategies.
Following the presentations, the
Board shared their reflections
on the content that had been
presented. The Directors agreed
that the presentations were of
high quality. This was the third
successive year in which a
dedicated session for the Board
with the ELT had been held and
the Board was unanimous that the
event provides significant value for
the Directors.
Board
activities
in action
1 2 3 4 5
Board leadership and
Company purpose
Board activities in 2023 / continued
70 SIG Annual Report and Accounts 2023
Board attendance during 2023
The following table shows the attendance of Directors at meetings of the Board and meetings of the Audit & Risk, Remuneration and
Nominations Committees during the year ended 31 December 2023:
Scheduled Board
(8 meetings)
A
Scheduled Audit & Risk
(4 meetings)
R
Scheduled Remuneration
(5 meetings)
1
N
Scheduled Nominations
(4 meetings)
Andrew Allner
2
N/A
Gavin Slark
3
N/A N/A N/A
Ian Ashton
4
N/A N/A N/A
Shatish Dasani
Bruno Deschamps
5
N/A
Kath Durrant
Diego Straziota
6
N/A N/A N/A
Gillian Kent
Simon King
Alan Lovell
Christian Rochat
7
N/A N/A
Steve Francis
8
N/A N/A N/A
1. There were five scheduled Remuneration Committee meetings and three additional meetings, which were convened in connection with measures in response to the
high cost of living during the year and to approve remuneration arrangements regarding leavers.
2. The Chairman attended all four Audit & Risk Committee meetings.
3. Gavin Slark attended all four Audit & Risk Committee meetings and those sections of the Remuneration and Nominations Committee meetings to which he was invited
by the Chairs of each Committee.
4. Ian Ashton attended all four Audit & Risk Committee meetings and those sections of the Remuneration Committee meetings to which he was invited by the Chair of
the Committee.
5. Bruno Deschamps became a member of the Nominations Committee on 4 May 2023 and attended all meetings following his appointment.
6. Diego Straziota was appointed as a Non-Executive Director on 4 May 2023 and attended all Board meetings following his appointment. Diego attended all four Audit &
Risk Committee meetings in his role as CD&R observer on this Committee.
7. Christian Rochat stood down as a Non-Executive Director and Nominations Committee member on 4 May 2023, when he did not stand for re-election at the AGM.
He was unable to attend one Board meeting and Nominations Committee meeting due to an engagement which he was unable to reschedule.
8. Steve Francis stepped down as Group CEO and as a Director on 1 February 2023.
The table shows meetings that each
Director attended as a member rather
than as an invitee. Where ‘N/A’ appears
the Director is not a member of the
Committee although may have attended
the meeting; please see the footnotes
to the table. Directors do not participate
in meetings when matters relating to
them are discussed. The Chairman
holds meetings with the Non-Executive
Directors without the Executive Directors
present and in 2023 several such
meetings were held. The SID meets
with the independent Non-Executive
Directors without the Chairman present,
in particular when the performance of
the Chairman is being considered. All
Directors attended the 2023 AGM.
How we manage conflicts
of interest
Each Director has a duty under the
Companies Act 2006 (‘CA 2006’) to
avoid any situation where they have, or
can have, a direct or indirect interest that
conflicts, or possibly may conflict, with
the Company’s interests. Provision 7 of
the Code also requires the Board to take
action to identify and manage conflicts
of interest, including those resulting from
significant shareholdings and to ensure
that the influence of third parties does
not compromise or override independent
judgement. This duty is in addition to the
obligation that they owe to the Company
to disclose to the Board any transaction
or arrangement under consideration by
the Company in which they have, or can
have, a direct or indirect interest. Directors
of public companies may authorise
conflicts and potential conflicts, where
appropriate, if a company’s Articles of
Association permit and shareholders have
approved appropriate amendments.
Procedures have been put in place for
the disclosure by Directors of any such
conflicts and also for the consideration
and authorisation of any conflicts by the
Board. These procedures allow for the
imposition of limits or conditions by the
Board when authorising any conflict, if
they think this is appropriate.
These procedures have been applied
during the year and are included as a
regular item for consideration by the
Board at each of its meetings. In addition
the Chairman meets regularly with the
independent Non-Executive Directors to
ensure the interests of all shareholders
are considered. The Board believes
that the procedures established to deal
with conflicts of interest are operating
effectively and they are periodically
reviewed to ensure they are fully
compliant with the Code.
All Directors are required to complete
and disclose a gifts and hospitality form
confirming the offering or receipt of any
gifts or hospitality offered or provided as a
result of their directorship of the Company
in accordance with the Group’s Gifts and
Hospitality policy. The Board is aware of
the other commitments of the Directors
and is satisfied that these do not conflict
with their duties as Directors of the
Company and that the influence of third
parties does not compromise or override
their independent judgement.
71SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Engagement with
our stakeholders
Corporate governance report / continued
1 2 3 4 5
Board leadership and
Company purpose
Shareholders
and Investors
People Customers Suppliers Communities
and Environment
Why it is important we engage Why it is important we engage Why it is important we engage Why it is important we engage Why it is important we engage
Under Section 172 of the CA 2006
Directors have a duty to act in good faith
to promote the success of the Group for
the benefit of the Company’s members
as a whole. Shareholders’ views are
important as part of the Board decision-
making process and we welcome
discussions with them.
SIG is a people business: engagement by
the Group with its stakeholders is through
its people. Accordingly, engagement by
the Group with its workforce underpins
SIG’s success. SIG’s growth and
sustainability depends on having the right
company culture, supported by suitable
behaviours and with a clear purpose.
Understanding the needs and
requirements of our customers is hugely
important and the Group seeks to use
this knowledge to partner effectively with
our customers. Customer service is vital
to maintaining and growing revenues and
profits, and we use engagement with our
customers to develop and strengthen
our sales capacity and productivity to
improve our service and continually
develop and refresh our product offering.
SIG enjoys a pivotal position in industry
supply chains: we connect suppliers and
customers in ways which they would
be unlikely to achieve without SIG’s
presence. We are a principal route to
market for many of our suppliers and we
seek to add value for our suppliers by
operating as their supply chain partner
of choice. We engage with our suppliers
to understand their businesses and to
identify ways in which we can work
with them strategically.
SIG has a long-standing environmental
heritage. The Directors appreciate that
environmental matters are important to
all stakeholder groups who are calling
on companies to do more on key
sustainability topics and to be more
transparent about their efforts. SIG seeks
to operate sustainably for the benefit of
communities and the environment.
The Directors recognise that close
relationships with the communities in
which SIG businesses operate help to foster
the long-term success of the business.
How we engage across the Group
− Publication of annual and interim reports.
− Corporate website with a dedicated investors
section.
− Results presentations and post-results
engagement with major shareholders and
lenders.
− Investor roadshows, face-to-face meetings
and addressing regular investor and analyst
enquires.
− Regulatory Stock Exchange announcements.
How we engage across the Group
− Annual all-employee engagement survey.
− Individual performance reviews.
− Regular communications to employees on
Workplace relating to company news and
recognising achievements.
− Employee share incentive scheme.
− Training and development.
− Apprenticeships.
− Diversity, equality and inclusion forum.
How we engage across the Group
− Annual Group-wide customer engagement
survey.
− Management at local level of customer
relationships.
− Listening to customer feedback to understand
the needs of our customers.
− Improving digitally to better communicate and
facilitate customer requests and requirements.
− Ensuring appropriate stock levels and product
ranges at branches to facilitate customer needs.
How we engage across the Group
− Our code of conduct and policies on the
prevention of anti-bribery and corruption and
modern slavery.
− Ensuring branches are close to suppliers.
− Membership of national trade and industry
associations such as in the UK the Construction
Products Association.
− Collaborating regularly with suppliers to ensure
a supply of sustainable products for our
customers.
How we engage across the Group
− Monthly Sustainability Committee meetings,
chaired by the Group Health, Safety and
Environment Director which include the CEO
and CFO together with senior representatives
from all operating companies and function
experts from Group.
− Waste and Fleet forums to facilitate the Group’s
waste and carbon reduction commitments.
− SIG in the UK is a partner of the Supply
Chain Sustainability School, which provides
resources to help the UK business to lead the
conversation on sustainable business practices
both internally and within its supply chain.
How we engage at Board level
− CEO and CFO meetings with shareholders and
lenders as part of investor roadshows and ad-
hoc meetings as appropriate.
− Meetings between shareholders and Directors,
including the Chairman and Chairs of Board
Committees.
− Meeting shareholders at the Annual General
Meeting.
− Reviewing the voting results of shareholders
who voted at the 2023 AGM.
How we engage at Board level
− The Designated Non-Executive Director for
Workforce Engagement meets regularly with
employees across the operating companies.
− Regular health and safety reports are presented
to the Board.
− Feedback is reviewed from the annual employee
engagement survey.
− Annual review and approval of all-employee
policies and training.
− Further details on Board level engagement with
employees and how the Board monitors culture
can be found on page 74.
How we engage at Board level
− Reviewed the actions proposed to be taken
by management in light of the findings of the
annual Group-wide customer engagement
survey.
− Monitored engagement between management
and customers where the latter had sought
more information about the Group’s ESG
agenda, including in particular the sustainability
of the products sold by the Group and the steps
being taken by the Group to reduce its carbon
footprint.
− The Board continued to focus on the steps
being taken by management in progressing
the digitalisation and modernisation of the
Group in response to customer requests and to
anticipate future demands.
How we engage at Board level
− Members of the ELT meet with our suppliers in
their local geographies.
− Reports to the Board made by the CEO
regarding relationships with major suppliers.
How we engage at Board level
− Regular updates from monthly Sustainability
Committee meetings to understand key
sustainability initiatives across the Group
and progress to achieve the sustainability
commitments.
− Overseeing, considering and reviewing the
Group’s Environmental, Social and Governance
Strategy and sustainability commitments.
72 SIG Annual Report and Accounts 2023
Shareholders
and Investors
People Customers Suppliers Communities
and Environment
Why it is important we engage Why it is important we engage Why it is important we engage Why it is important we engage Why it is important we engage
Under Section 172 of the CA 2006
Directors have a duty to act in good faith
to promote the success of the Group for
the benefit of the Company’s members
as a whole. Shareholders’ views are
important as part of the Board decision-
making process and we welcome
discussions with them.
SIG is a people business: engagement by
the Group with its stakeholders is through
its people. Accordingly, engagement by
the Group with its workforce underpins
SIG’s success. SIG’s growth and
sustainability depends on having the right
company culture, supported by suitable
behaviours and with a clear purpose.
Understanding the needs and
requirements of our customers is hugely
important and the Group seeks to use
this knowledge to partner effectively with
our customers. Customer service is vital
to maintaining and growing revenues and
profits, and we use engagement with our
customers to develop and strengthen
our sales capacity and productivity to
improve our service and continually
develop and refresh our product offering.
SIG enjoys a pivotal position in industry
supply chains: we connect suppliers and
customers in ways which they would
be unlikely to achieve without SIG’s
presence. We are a principal route to
market for many of our suppliers and we
seek to add value for our suppliers by
operating as their supply chain partner
of choice. We engage with our suppliers
to understand their businesses and to
identify ways in which we can work
with them strategically.
SIG has a long-standing environmental
heritage. The Directors appreciate that
environmental matters are important to
all stakeholder groups who are calling
on companies to do more on key
sustainability topics and to be more
transparent about their efforts. SIG seeks
to operate sustainably for the benefit of
communities and the environment.
The Directors recognise that close
relationships with the communities in
which SIG businesses operate help to foster
the long-term success of the business.
How we engage across the Group
− Publication of annual and interim reports.
− Corporate website with a dedicated investors
section.
− Results presentations and post-results
engagement with major shareholders and
lenders.
− Investor roadshows, face-to-face meetings
and addressing regular investor and analyst
enquires.
− Regulatory Stock Exchange announcements.
How we engage across the Group
− Annual all-employee engagement survey.
− Individual performance reviews.
− Regular communications to employees on
Workplace relating to company news and
recognising achievements.
− Employee share incentive scheme.
− Training and development.
− Apprenticeships.
− Diversity, equality and inclusion forum.
How we engage across the Group
− Annual Group-wide customer engagement
survey.
− Management at local level of customer
relationships.
− Listening to customer feedback to understand
the needs of our customers.
− Improving digitally to better communicate and
facilitate customer requests and requirements.
− Ensuring appropriate stock levels and product
ranges at branches to facilitate customer needs.
How we engage across the Group
− Our code of conduct and policies on the
prevention of anti-bribery and corruption and
modern slavery.
− Ensuring branches are close to suppliers.
− Membership of national trade and industry
associations such as in the UK the Construction
Products Association.
− Collaborating regularly with suppliers to ensure
a supply of sustainable products for our
customers.
How we engage across the Group
− Monthly Sustainability Committee meetings,
chaired by the Group Health, Safety and
Environment Director which include the CEO
and CFO together with senior representatives
from all operating companies and function
experts from Group.
− Waste and Fleet forums to facilitate the Group’s
waste and carbon reduction commitments.
− SIG in the UK is a partner of the Supply
Chain Sustainability School, which provides
resources to help the UK business to lead the
conversation on sustainable business practices
both internally and within its supply chain.
How we engage at Board level
− CEO and CFO meetings with shareholders and
lenders as part of investor roadshows and ad-
hoc meetings as appropriate.
− Meetings between shareholders and Directors,
including the Chairman and Chairs of Board
Committees.
− Meeting shareholders at the Annual General
Meeting.
− Reviewing the voting results of shareholders
who voted at the 2023 AGM.
How we engage at Board level
− The Designated Non-Executive Director for
Workforce Engagement meets regularly with
employees across the operating companies.
− Regular health and safety reports are presented
to the Board.
− Feedback is reviewed from the annual employee
engagement survey.
− Annual review and approval of all-employee
policies and training.
− Further details on Board level engagement with
employees and how the Board monitors culture
can be found on page 74.
How we engage at Board level
− Reviewed the actions proposed to be taken
by management in light of the findings of the
annual Group-wide customer engagement
survey.
− Monitored engagement between management
and customers where the latter had sought
more information about the Group’s ESG
agenda, including in particular the sustainability
of the products sold by the Group and the steps
being taken by the Group to reduce its carbon
footprint.
− The Board continued to focus on the steps
being taken by management in progressing
the digitalisation and modernisation of the
Group in response to customer requests and to
anticipate future demands.
How we engage at Board level
− Members of the ELT meet with our suppliers in
their local geographies.
− Reports to the Board made by the CEO
regarding relationships with major suppliers.
How we engage at Board level
− Regular updates from monthly Sustainability
Committee meetings to understand key
sustainability initiatives across the Group
and progress to achieve the sustainability
commitments.
− Overseeing, considering and reviewing the
Group’s Environmental, Social and Governance
Strategy and sustainability commitments.
How the Board considered
stakeholders during the year
Capital Markets Event
In November 2023, we hosted a Capital
Markets event (‘CME’) to provide greater
detail on the Group’s key strategic drivers
and the path to achieving our medium-
term 5% EBIT margin target. At the
CME, we set out the Group’s updated
vision, purpose, objectives and the four
pillar strategy by which we propose to
achieve this target. We also set out the
margin targets for each of the operating
companies and how these would deliver
the Group target. Finally, we reported
that the UK business would be separated
into three constituent elements for
external reporting: Interiors; Exteriors
andSpecialist Markets.
Ahead of the CME, we carefully
considered the proposals that would be
set out at the CME. The Board supported
the updated strategic framework,
as the reduction from seven to four
strategic pillars was clearer for investors,
customers, suppliers and employees
to understand. The Board discussed
the merits of the separation of the UK
business for external reporting and
concluded that the revised structure
would provide greater transparency for
investors and other stakeholders as
well as providing an enhanced focus on
delivery of the strategic goals of those
businesses.
The Board discussed the margin targets
for the operating companies, the Group
target and the advantages of providing
investors with greater transparency
by publicly stating the targets for each
operating company. The Directors
concluded that delivery of the Group
margin target remained important to
investors and that clearly articulating the
targets for individual operating companies
would provide clarity as to how the Group
target would be delivered. Publicly stating
the targets would also provide employees
with clarity on the strategic direction of
their own operating company as well as
the other operating companies across
the Group.
Directors’ Section 172 statement
SIG seeks to foster flexible and
constructive relationships with its key
stakeholder groups and recognises that
the vitality of its strategy is enriched by
stakeholder views and feedback.
The Directors consider that they have
performed their fiduciary duty, as
stipulated under Section 172 of the
CA 2006 in good faith to promote the
success of the Group for the benefit of its
members as a whole. They have taken into
consideration, amongst other matters:
− the likely long-term consequences of
their decisions;
− the interests of the Group’s employees;
− the need to foster relationships with
suppliers, customers and others;
− the desirability of the Group
maintaining a reputation for high
standards of business conduct; and
− the need to act fairly between
members of the Company.
FOR FURTHER INFORMATION ON THE CME
SEE PAGES 11 TO 12.
73SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Branch visits
Branch visits are invaluable to
the Board, enabling the Directors
to meet members of staff and
local management and gain
a better insight into not only
culture and purpose in the
working environment, but to also
understand the functions of the
branches and any restrictions or
opportunities they face. In addition
to individual visits to branches by
Directors, the whole Board visited
the Oberhausen and Dortmund
branches in Germany during the
year. Further, the Designated Non-
Executive Director for Workforce
Engagement carried out a number
of branch visits during the year,
details of which can be found below.
Health and Safety
The Board is regularly updated
at each of its meetings on health
and safety matters and on new or
ongoing investigations and their
outcomes. The Board is committed
to ensuring high standards of health
and safety are maintained across
the Group.
Employee policies
The Board and its Committees reviewed and approved key employee policies
during the year to ensure they appropriately capture and reflect the Group’s
values and culture. These include the Group’s Code of Conduct, Health and
Safety, Whistleblowing, Anti-Bribery and Corruption, Diversity, Equality and
Inclusion, GDPR, and Gifts and Hospitality policies. All employees, including
the Board, and contractors are required to complete online training on each of
these policies. Completion of this training is tracked, and reminders issued when
required, to ensure that training is completed. As new policies are developed,
appropriate training is provided to all employees.
Employee
engagement survey
The ‘Our SIG, Your Voice’
employee engagement survey
was launched during the year to
ensure that every employee’s voice
is heard to maintain an inclusive,
supportive working environment
for our people. This year’s survey
highlighted certain areas as key
strengths including job satisfaction,
commitment to the team and
organisation, health and safety
and quality of line management.
Responses also identified areas
that need further improvement,
such as workloads, wellbeing and
culture. The Board will continue
to monitor progress against
these areas.
Whistleblowing
Board members receive regular
updates on whistleblowing, which
include details of whistleblowing
reports received via the external
whistleblowing service.
How the Board
monitors culture
The Board ultimately has responsibility
for ensuring that workforce policies and
practices are in line with the Group’s
purpose and values and support the
desired culture throughout the Group.
The Group’s culture and values are
defined by the Board and the ELT and
throughout the year the Board has
monitored Company culture. The right
culture is key to future success and whilst
SIG’s culture varies between countries,
the goal is to create a winning, vibrant
and modern culture which combines
discipline, clear expectations and effective
processes with entrepreneurial spirit.
Having regular interactions with
employees helps support how the Board
monitors culture. During the year, the
Board monitored culture through a
range of interactions, including:
Engagement with
our people
Corporate governance report / continued
1 2 3 4 5
Board leadership and
Company purpose
74 SIG Annual Report and Accounts 2023
Board
activities
in action
Workforce engagement
What had gone well
A common theme was the confidence in our decentralised
business culture and the progress it had supported. It
was clear that it gave colleagues the flexibility and trust to
respond to local market conditions ensuring they remained
agile, and customer focused. It was uplifting to learn about
our growing solar business in France, Germany’s strategy
to achieve similar omnichannel efficiencies as their Polish
colleagues and the positive feedback on the enhanced
employee wellbeing initiatives introduced in the UK.
Where can we improve
Whether it’s thinking about how to attract more young
people into our sector, exploring ways to build on the
success of local training initiatives, or encouraging the right
level of investment in our people and workplaces, it was
great to hear the enthusiasm from colleagues on ways we
can improve. ESG was once again a major topic, specifically
how we can support our five Group-wide sustainability
commitments and drive sustainable construction through
partnership working.
As the Designated Non-Executive
Director responsible for workforce
engagement, I am privileged to
meet with employees representing
all levels, functions, and regions to
understand their insights and views.
This annual programme, along with
our employee engagement survey,
helps guide Board-level decision-
making processes.
Each year, I rotate my visits across
our businesses and in 2023 I met
with colleagues in France, Germany
and the UK in small group sessions.
Simon King
Designated Non-Executive Director
for Workforce Engagement
75SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Corporate governance report / continued
Division of
responsibilities
How our Board
is structured
To ensure the Board performs effectively, there is
a clear division of responsibilities between the
leadership of the Board, its Committees and the ELT.
1 2 3 4 5
Relationship with CD&R
SIG’s relationship with CD&R is governed
by the Relationship Agreement entered
into in 2020. Under the Relationship
Agreement, CD&R has the right to
appoint two non-independent Non-
Executive Directors. The CD&R appointed
Non-Executive Directors are Bruno
Deschamps and Diego Straziota. Bruno is
a member of the Nominations Committee
and the Remuneration Committee. Diego
attends Audit & Risk Committee meetings
as an observer.
The Relationship Agreement provides
for the CD&R Non-Executive Directors
to have a monthly meeting with the CEO
and management. This is fulfilled through
operational review meetings involving the
Chairman, CEO, CFO, Group General
Counsel & Company Secretary and,
by invitation, one of the independent
Non-Executive Directors. Meetings are
structured as two sections: either with
two operating companies or with one
operating company and a second session
dealing with a separate business matter.
All papers for operational review meetings
are made available to the full Board. A
debrief on the matters discussed at each
meeting is provided by the CD&R Non-
Executive Directors at the subsequent
Board meeting.
In 2023, the meetings focused on each
operating company, with the exception of
Benelux, due to the change in Managing
Director in October. A review with
Benelux was conducted in early 2024.
Bruno and Diego’s industry experience
and knowledge is of significant value
to the operating companies. Under the
Relationship Agreement, any actual or
potential conflict between the interests
of CD&R and/or either of the CD&R
Non-Executive Directors and SIG must
be declared, and the relevant CD&R
Non-Executive Director may be prevented
from voting on any such matter. At each
Board meeting all Directors are required
to declare any new conflicts of interest.
The Board is satisfied that no conflicts of
interest have arisen during the year. The
Board greatly appreciates the contribution
made during 2023 by Bruno and Diego,
and CD&R more generally, and believes
it significantly benefits all of SIG’s
shareholders and stakeholders.
The Board
The role of the Board is to promote the long-term sustainable success of the
Group, generating value for shareholders and contributing to wider society. More
information on the Board’s responsibilities can be found in the Schedule
of Matters Reserved for the Board and the Board’s terms of reference, available
on our website.
Executive Leadership Team
The ELT addresses operational issues and is responsible for implementing Group
strategy and policies, day-to-day management and monitoring performance.
MEMBERS ARE THOSE INDIVIDUALS LISTED ON PAGES 78 TO 79.
Shareholders
Our shareholders are the ultimate owners of the Company and play an important
role in the governance structure.
MORE INFORMATION ON OUR ENGAGEMENT WITH SHAREHOLDERS CAN BE FOUND ON PAGE 72.
Committees of the Board
Audit & Risk
Committee
Monitors the integrity of
financial reporting and
the performance of the
external Auditor and
reviews the effectiveness
of the Group’s systems
of internal control and
related compliance
activities.
READ MORE
ON PAGES 86 TO 93.
Nominations
Committee
Regularly reviews the
structure, size and
composition of the
Board and oversees the
development of a diverse
pipeline for orderly
succession to the Board
and senior management
positions. Working with
HR, takes an active role
in setting and working
towards diversity
objectives and strategies
for the Group.
READ MORE
ON PAGES 82 TO 85.
Remuneration
Committee
Agrees with the Board
the framework or broad
policy of remuneration for
the Chairman, Executive
Directors and senior
executives, and sets their
remuneration. Reviews
remuneration policies
across the Group,
ensuring the alignment of
workforce remuneration
and incentives with the
Group’s culture and
strategy.
READ MORE
ON PAGES 96 TO 121.
76 SIG Annual Report and Accounts 2023
Board roles and
responsibilities
Chairman
− Leads the Board, responsible for
its overall effectiveness in directing
the Group.
− Chairing Board and Nominations
Committee meetings and setting
agendas for those meetings.
− Shapes the culture in the Boardroom,
ensuring that all Directors contribute
effectively, and leads Board succession
planning.
− Ensuring an appropriate balance is
maintained between the interests of
shareholders and other stakeholders.
− Promoting high standards of corporate
governance.
− Ensuring all Directors receive a
substantive induction on joining
the Board.
Chief Executive Officer
− Ensures effective leadership and day to
day running of the Company.
− Responsible for proposing, delivering
and implementing the strategy
approved by the Board.
− Leads the ELT and oversees key
functions.
− Regularly reviews the organisational
structure including development and
succession planning.
− Responsible for setting an example
to the Group’s workforce, for
communicating to them the
expectations in respect of the Group’s
culture and for ensuring that operational
policies and practices drive appropriate
behaviour.
− Ensures the Chairman and Board
are advised and updated regarding
key matters.
Non-Executive Directors
− Provide constructive challenge to the
Executive Directors.
− Provide strategic guidance to the
Company.
− Offer specialist advice.
− Scrutinise and hold to account the
performance of the Executive Directors
against agreed performance objectives.
Designated Non-Executive Director
for Workforce Engagement
− Oversees the Board’s engagement with
the Group’s workforce.
− Gathers views of employees through a
variety of formal and informal channels
and identifies any areas of concern.
− Strengthens the link between the Board
and employees.
Non-Executive Directors
Executive Directors Group General Counsel
& Company Secretary
Senior Independent Director
− Acting as a sounding board for the
Chairman.
− Available for approach by shareholders,
where communications through the
Chairman or Executive Directors may
not be appropriate.
− Attends sufficient meetings with major
shareholders to obtain a balanced
understanding of the issues and
concerns of such shareholders.
− Leads the evaluation of the Chairman’s
performance at least once a year,
meeting with the Non-Executive
Directors, without the Chairman being
present.
− Leads the succession process for
the Chairman.
Chief Financial Officer
− Leadership, direction and management
of Group Finance, including tax and
treasury matters.
− Oversight of, and guidance to, the
operating companies’ Finance teams.
− Establishing and maintaining adequate
internal controls and ensuring the
integrity of all internal and external
financial reporting.
− Oversees the production of the
Group’s annual budget for approval
by the Board.
− Develops long-term financial plans.
− Investor Relations.
− Independent advisor to the Board and
Chief Legal officer to the Group.
− Keeping the Board up to date on
all relevant legal and governance
requirements.
− Supports the Chairman and Committee
Chairs to set meeting agendas and
ensure Directors receive accurate,
timely and clear information.
− Ensures Board procedures and best
practice governance arrangements
are followed, and decisions are
implemented.
77SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Our Executive
Leadership Team
as at 4 March 2024
Alfons Horn
Managing Director Germany
Alfons re-joined SIG in 2021 and
has over 25 years’ experience in the
distribution and building materials
industry. From 1998 to 2016, he held
various positions with SIG Germany,
including Managing Director and
Chairman of the management
board. Alfons has held several
senior executive and advisory roles
within the industry, he served as
Regional President for BMI Monier
and Managing Director for Contract
Company Holding GmbH.
Julie Armstrong
Chief People Officer
Julie joined SIG as Chief People
Officer in 2021 and has over 20
years’ experience both in and
outside of HR roles. Prior to joining
SIG, Julie was CPO at Calisen
Group. Prior to this, Julie held the
position of Group HR Director
at Thomas Cook and served as
Customer Services Director at
Manchester Airports Group.
David Hope
Managing Director UK
Construction Accessories &
Specialist Markets
David re-joined SIG in 2020. He has
over 25 years of industry expertise
and held various roles at SIG from
2007 to 2017. He was appointed
Managing Director UK Construction
Accessories and Specialist Markets
in 2022 and joined the ELT in 2023.
David has previously served as
Managing Director UK & Ireland
Packaging at Antalis and Managing
Director of Springvale EPS Insulation,
a business division of CRH plc.
Julien Monteiro
Managing Director France
Julien joined SIG in 2018 as
Managing Director France. Prior
to joining SIG, Julien served as
Managing Director France at
Brammer Group and held senior
positions at Nacco Materials
Group. Julien has over 15 years
of international experience in the
specialist industrial distribution
industry.
Richard Burnley
Managing Director UK
Interiors
Richard re-joined SIG in 2020 and
joined the ELT in 2023. He brings
over 20 years’ experience in the
building materials and construction
industry, with prior roles including
Managing Director, GB and Ireland
at Kingspan Insulation. He has also
previously attained President and
Board status with the Construction
Products Association, Sustainable
Energy Association, and Insulation
Manufacturing Association.
Chris Lodge
Managing Director
UK Exteriors
Chris joined SIG through an
acquisition in 2005 and has held
several finance roles including, most
recently, UK Finance Director. In
2023, he was appointed Managing
Director UK Exteriors and joined
the ELT. Chris has over 26 years of
experience in specialist merchanting
with prior roles held at SIG Roofline
& Building Products and Omnico
Plastics Limited.
Gavin Slark
Chief Executive
Officer
See Gavin’s biography on
page 66.
Ian Ashton
Chief Financial
Officer
See Ian’s biography on
page 66.
Corporate governance report / continued
Division of
responsibilities
1 2 3 4 5
78 SIG Annual Report and Accounts 2023
Marcin Szczygiel
Managing Director Poland
Marcin joined SIG in 1999 as
Managing Director of SIG Poland.
With over 25 years of experience
in the specialist construction
distribution industry, Marcin was
previously Managing Director
at Sitaco. Prior to this, he held
several positions at Saint Gobain
Isover before becoming Sales and
Marketing Director for Isover Poland.
Kevin Windle
Managing Director Ireland
Kevin joined SIG in 2014 as Finance
Director Ireland and became
Managing Director Ireland in 2019.
Prior to joining SIG, Kevin was the
EMEA Finance Director for Glanbia
Performance Nutrition and held
the position of Finance Director for
Grafton Merchanting Ireland. Kevin
has over 22 years of experience in
finance and leadership roles within
the building merchanting industry.
Sarah Ogilvie
Head of Investor Relations &
Communications
Sarah joined SIG in 2022 and
became a member of the ELT
in 2023. She oversees investor
relations and internal and external
communications. Sarah has over
20 years’ experience in corporate
affairs and investor relations, with
prior roles at Intertek Group plc,
Accys Technologies plc and Good
Energy plc. She began her career in
corporate law and corporate affairs
in the telecommunications sector.
Bert de Ru
Managing Director Benelux
Bert joined SIG in 2023 as Managing
Director Benelux and as a member
of the ELT. Bert has a strong
background in the building materials
and pitched and flat roofing markets,
having gained experience at
renowned international companies,
including BMI Monier and Icopal
over the last 13 years.
Julie Westcott
Group Health, Safety and
Environment Director
Julie joined SIG in 2022 as Group
Health, Safety and Environment
Director and oversees Group-wide
activity related to health, safety,
security and the environment. Julie
has over 20 years of experience
in the logistics and manufacturing
sectors. She previously held senior
roles at DS Smith plc and JELD-
WEN and as HR & Safety Manager
at RPC Group plc.
Andrew Watkins
Group General Counsel &
Company Secretary
Andrew joined SIG in 2019. He
has 25 years’ experience as legal
counsel across public and private
companies. Prior to joining SIG,
Andrew was General Counsel
at Hyve Group plc and General
Counsel & Company Secretary at
Ebiquity plc. Andrew spent the first
half of his career working in law
firms, including Trowers & Hamlins
LLP where he was a Partner.
79SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Managing time commitments
The Board is satisfied that there is
no compromise to the independence
of Directors who have other external
appointments. Each of the Non-Executive
Directors brings their own senior level
of experience and expertise, and the
balance between non-executive and
executive representation encourages
healthy independent challenge.
Prior to appointment, Directors are
required to disclose other directorships.
The Nominations Committee reviews
the commitments of Directors upon
appointment, any proposal for
reappointment and following a change
in roles, to ensure that each of the
Directors has sufficient time to fulfil their
responsibilities. Directors must not take
on additional external appointments
without the approval of the Board. During
2023, approval was given for Shatish
Dasani to take on the role of non-
executive director and Audit Committee
chair of Genuit Group plc.
Board support
The Directors have full access to the
Company Secretary, whose responsibility
is to ensure that Board policies and
procedures are followed, including
minuting of any unresolved concerns that
any Director may have in connection with
the Group. During the year there were
no such unresolved issues.
Directors wishing to take independent
legal advice in the furtherance of their
duties may do so at the Group’s expense.
On resignation, if a Non-Executive
Director had any concerns, the Chairman
would invite them to provide a written
statement to the Board. The appointment
and removal of the Company Secretary
is a matter reserved for the Board. The
Board and its Committees are provided
with sufficient resources to undertake
their duties. Appropriate training is
available to all Directors on appointment
and on an ongoing basis as required.
The Group operates a paperless
meeting system for the Board and its
Committees, which supports our online
drive across the Group and impact on
the environment. Board and Committee
papers are accessible to Directors
through an electronic portal as well
as information such as analyst and
shareholding reports and financial results.
There is a ‘Reading Room’ within the
portal where Directors can view other
relevant Company information. The Group
General Counsel & Company Secretary
attends all Board meetings and is at hand
to answer questions or offer independent
advice or expertise to Directors.
Election and re-election
of Directors
All Directors are subject to election at
the AGM following their appointment
and to re-election every three years. In
accordance with the Code, all Directors
seek election or re-election at the AGM
each year.
The Board believes the success of the
Group will be achieved by the success
of the strategy outlined at the CME
(see page 12). The 2024 notice of AGM
includes the skills and experience that
each Director has, and a statement as to
why their contribution is and continues
to be important to the Group’s long-term
sustainable success.
It is the view of the Board that each of the
Non-Executive Directors standing for re-
election brings considerable management
experience and an independent
perspective to Board discussions and is
considered independent of management.
Each of the independent Non-Executive
Directors standing for re-election is
considered free from any relationship or
circumstance that could affect, or appear
to affect, the exercise of their independent
judgement.
The Chairman intends to confirm at
the AGM that, as evidenced by the
2023 Board performance review, the
performance of each individual continues
to be effective, and each Director acts
with integrity, leads by example, promotes
the desired culture and demonstrates
commitment to the role.
The terms of the Directors’ service
contracts are disclosed in the Directors’
remuneration report on page 120.
Full details of Directors’ remuneration,
interests in the share capital of the
Company and share options held are
set out on page 116. Directors’ service
contracts and the letters of appointment
of the Non-Executive Directors are
available for inspection at the Company’s
registered office and will be available at
the 2024 AGM.
Training and induction
The Chairman reviews with the Board
its training and development needs.
In 2023, the Directors attended an
externally facilitated training session on
artificial intelligence. All Directors receive
induction training on their Directors’
duties, the responsibilities of a premium
listed issuer, and the obligations of a
company admitted to the premium listing
segment of the Official List of the FCA.
The Board receives regular presentations
from advisors and management on a
range of topical issues, such as from the
Group’s financial advisors in relation to the
macroeconomic and industry backdrop
and sector dynamics that SIG faces.
On appointment, Directors receive an
induction to the Group. This involves
meetings with each Board member, ELT
members, external advisors (such as
brokers, auditors and financial advisors),
visits to branches, and access to key
corporate materials. The programme
ensures that they are well briefed on
current Board topic areas, the Group’s
strategy, purpose and structure,
stakeholder engagement activities,
operations, finance and the industry.
Corporate governance report / continued
Board
arrangements
Division of
responsibilities
1 2 3 4 5
80 SIG Annual Report and Accounts 2023
Board performance review
The Board undertakes an annual review of its own and its Committees’ performance. In 2021 we undertook an external evaluation
and the exercise in 2022 and 2023 was conducted on an internal basis.
The recommendations from the 2022 performance review are set out below together with a summary of the progress that was made
to satisfy the recommendations during the year.
2022 Recommendations Action taken during 2023
Ensuring a smooth transition
from Steve Francis to Gavin
Slark as Group CEO and a
successful onboarding of
Gavin Slark through 2023
The handover from Steve to Gavin proceeded smoothly. Since becoming CEO, Gavin has
immersed himself in the business visiting all of the operating companies on multiple occasions.
Gavin successfully held an Executive Leadership Group conference in April, meeting many senior
leaders across the Group. In November Gavin set out the future strategic direction for SIG to
investors at the Capital Markets event.
Ensuring an appropriate
balance between longer-term
vision and responding to
shorter-term volatility
The Board, including through its Committees, undertook several deep-dive reviews of longer-
term and strategic thinking. These included detailed reviews of succession planning for ELT
roles and for roles that report to ELT members. The Board also oversaw the development of
the Group’s DEI strategy, which has a core focus on the development of diverse talent. Detailed
analysis of the UK turnaround and branch matters, such as category and mix management, is
generally focused through operational review meetings.
The Board also maintained a focus on shorter-term matters, notably the increasingly challenging
trading conditions which developed in the second half of the year. The Board ensured that the
executive management was tasked with initiatives such as productivity improvements that would
deliver cost-savings in the year under review.
A focus on technology issues
and modernisation
The Board has reviewed the use of artificial intelligence tools across the operating companies
and will continue to assess the needs of and opportunities for the Group arising from artificial
intelligence during 2024.
The Board received a report from an external partner concerning the delivery in the last two
years of modernisation steps in areas such as warehouse and transport management.
Greater engagement with
stakeholders beyond
shareholders and
debt providers
In October an external consultant presented a session to the Board on artificial intelligence.
In addition, the Board conducted offsite meetings with branch staff and members of the German
management team. Further engagement with stakeholders will be kept under review in 2024.
Process and outcomes of the
2023 Board and Committee
Performance Review
During the year, the Board approved
a questionnaire to be completed by all
Directors with certain questions requiring,
in addition, open text comment answers.
The questionnaire focused on several
key topics aligned to the Code, including
Board leadership and culture; Group
purpose and strategy; and Board and ELT
composition and succession, including
diversity, equality and inclusion. There
were subsets of the questionnaire specific
to each of the Audit & Risk Committee,
the Remuneration Committee and the
Nominations Committee.
The 2023 Board and Committee
performance review was led by the
Chairman and the Group General
Counsel & Company Secretary and the
responses to the questionnaire were
discussed with the Chairs of each of
the Committees regarding the sections
of the questionnaire specific to those
Committees. As part of the review, the
Chairman met with the Non-Executive
Directors individually to discuss the
feedback on their performance, and the
SID met with the Chairman to discuss his
performance.
The Board priorities for 2024 include:
− Maintain the Group’s focus on short-
term financial performance, within the
context of prevailing market conditions,
alongside continuing focus on long term
value creation.
Composition, succession
and evaluation
1 2 3 4 5
− Continue the turnaround in the UK
Interiors business.
− Review of, and ongoing visibility over,
the strategic and operational plans of
each operating company to achieve
their medium-term margin targets.
− Continued progress on the modernisation
and digitalisation of the business.
− Further development of talent and
culture across the organisation.
Further information on the objectives
set by each Committee for 2024 can be
found in their reports.
81SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Andrew Allner
1
(Chairman)
Alan Lovell
Bruno Deschamps
2
Gillian Kent
Kath Durrant
Shatish Dasani
Simon King
Christian Rochat
3
1. Independent on appointment.
2. Bruno Deschamps was appointed to the
Committee on 4 May 2023.
3. Christian Rochat stood down as a Non-Executive
Director and Nominations Committee member on
4 May 2023.
Committee members
Nominations
Committee report
On behalf of the Nominations Committee
(‘the Committee’), I am pleased
to present its report for the year ended
31 December 2023. The report describes
how the Committee has carried out its
responsibilities during the year.
Committee purpose and aims
To lead the process for Board
appointments, ensure plans are in place
for orderly succession to both Board
and senior management positions, and
oversee the development of a diverse
talent pipeline for succession.
The Committee aims to maintain the
appropriate balance of skills, knowledge,
experience, diversity and independence
of the Board and its Committees to
ensure their continued effectiveness.
Role and responsibilities
− To review the structure, size and
composition (including the skills,
knowledge, experience and diversity)
required of the Board compared to its
current position and in the light of future
challenges affecting the business.
− To make recommendations to the
Board regarding any changes, to
ensure that plans are in place for the
orderly succession and development of
Directors and other senior executives,
and to oversee the development of a
diverse pipeline for succession.
− Working with the Chief People Officer,
to take an active role in setting and
meeting diversity objectives and
strategies for the Group as a whole.
Meetings and membership
During the year, the Committee met on
four occasions. The quorum for meetings
is three members, the majority of whom
must be Independent Non-Executive
Directors. Members of the Committee are
not involved in matters affecting their
own position.
The Committee comprises the Chairman
and six Non-Executive Directors of whom
five are Independent Non-Executive
Directors. No Executive Directors are
appointed to the Committee; however,
they may attend by invitation if the matters
to be discussed require their participation.
Attendance at meetings is set out on
page 71.
Highlights from the year
− Gavin Slark completed a successful
onboarding and induction programme
to the Group as CEO.
− Diego Straziota joined the Board as
a CD&R nominated Non-Executive
Director.
− Considered and recommended to the
Board the appointment of Kath Durrant
as Senior Independent Director (‘SID’).
− Reviewed succession planning
and talent development for senior
management.
− Reviewed the status of diversity and
inclusion across the Group.
Andrew Allner
Corporate governance report / continued
Composition, succession
and evaluation
1 2 3 4 5
82 SIG Annual Report and Accounts 2023
1. The Board were asked to score themselves from 0 (no/little experience) to 3 (detailed knowledge/experience)
to give a score out of 30 for each topic.
The Committee in 2023
Board composition and
succession planning
The Board comprises ten Directors: the
Chairman of the Board, two Executive
Directors, and seven Non-Executive
Directors, of whom five are independent
Non-Executive Directors.
During the year, and in accordance
with its usual practice, the Committee
reviewed the wider composition and
balance of the Board. The review
considered the membership of the
Committees of the Board, the balance
on the Board between Executive and
Non-Executive Directors, the tenure of
the Directors, diversity on the Board
and the independence of the Non-
Executive Directors. The Non-Executive
Directors, other than Bruno Deschamps
and Diego Straziota who are CD&R
representatives on the Board, are
considered independent as at the date
of this report. On appointment to the
Board, the Chairman was considered
independent in accordance with the
terms of the Code.
The Committee will continue to keep
under review the skills and experience of
the Board, covering both Executive and
Non-Executive positions, ensuring plans
are in place for orderly succession, to
ensure the Group continues to compete
effectively in the markets in which it
operates. For more information on the
biographical details for each Director
see pages 66 to 67.
Non-Executive Directors are initially
appointed for a three-year term and their
reappointment for a further term is a
matter for approval by the Committee.
In making recommendations for the
annual re-election of the Chairman and
Non-Executive Directors, the Committee
considers the skills, knowledge,
experience, independence and the time
commitments of each Director to ensure
that they have sufficient time to fulfil
their responsibilities to the Group. All
Directors will accordingly be put forward
for re-election at the 2024 AGM. Details
of the reasons each Director continues
to contribute to the success of the Group
are contained in the Notice of AGM.
The information above is as at 4 March 2024
and obtained directly from each Director.
Board composition
%
20
20
60
Independent
Non-Executive
Directors
Non
independent
Executive
Directors
Board gender balance
%
20
80
Male
Female
Board tenure
%
30
70
0-4 years
4+ years
Ethnic diversity
%
10
90
White British/
other White
Asian/Asian
British
Strategy/M&A
Construction or distribution sector experience
Technology/digital
Health & Safety
Sustainability/ESG
Financial expertise
Listed company/corporate governance
International
Risk management
Summary of Directors’ skills
1
As at 4 March 2024
27
26
18
22
19
24
28
27
23
83SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Nominations Committee report / continued
Chief Executive Officer
induction
In February 2023, Gavin Slark joined
the Group as Chief Executive Officer.
Upon appointment, Gavin embarked on
a comprehensive induction programme.
The outgoing Chief Executive Officer,
Steve Francis, was supportive and
played a key role in the handover process
to Gavin. During Gavin’s induction
programme he met with all members of
the Board and all members of the ELT.
To gain greater insight into the business,
Gavin was able to visit the majority of
operating companies before the 2022
financial year investor roadshow began.
In addition to the usual periodic business
review meetings during the year, he
visited all of the operating companies on
multiple occasions. Since his appointment
Gavin has immersed himself in the
business, engaging with employees and
other key stakeholders through results
presentations, branch visits, investor
roadshows and the Capital Markets event
held in November 2023.
The Committee is delighted with the
smooth transition of CEO. Further details
on the induction process for Board
members can be found on page 80.
Senior Independent Director
appointment
In September 2023, we announced that
Kath Durrant, Non-Executive Director,
had been appointed as SID. Kath joined
the Board in January 2021 and is Chair
of the Remuneration Committee. Upon
Kath’s appointment, Alan Lovell ceased
responsibilities as SID and remains as a
valued Non-Executive Director. The Board
is very grateful for Alan’s contribution as
SID during his tenure since 2018 and the
support he provided as SID to the Board
as a whole as well as to the Chairman
specifically, notably during highly
challenging times in 2020.
The Committee carefully considered
Kath’s appointment as SID taking
into account the current duration of
her appointment as a Non-Executive
Director and leadership capabilities.
The Committee was confident that Kath
demonstrated strong potential to take on
the position of SID. Kath has extensive
experience in leadership positions and is
highly familiar with the business.
The Committee was delighted at Kath’s
decision to accept the role. Further details
of Kath’s role and responsibilities as
SID can be found at www.sigplc.com.
We are pleased to report that following
Kath’s appointment as SID, we are
compliant with the Listing Rules
requirement for one of the senior Board
positions to be held by a woman.
Notwithstanding this, we recognise that
female representation on the Board
needs improvement and the Committee
continues to make a commitment to
increase female representation at
this level.
Group Executive Leadership
Team changes
During the year we were pleased to
welcome the following existing SIG
employees to the ELT: Chris Lodge
(Managing Director UK Exteriors),
David Hope (Managing Director UK
Construction Accessories & Specialist
Markets), Richard Burnley (Managing
Director UK Interiors) and Sarah
Ogilvie (Head of Investor Relations &
Communications). These appointments
will strengthen the ELT and reflect
progress that has been made with the
Group’s succession planning processes
and development.
In October 2023, Bert de Ru joined SIG
as Managing Director Benelux and as
a member of the ELT. Bert has a deep
understanding of the building materials
industry and we are delighted that he has
joined SIG. Biographical details of ELT
members can be found on pages 78
to 79.
Talent and succession planning
During 2023, the Committee considered
succession planning for both the ELT and
the European Leadership Group (‘ELG’).
The Committee has visibility of a range of
employees who have been identified as
potential succession candidates for such
roles in the short, medium and long-term.
The Committee reviews the development
programmes for these individuals to
ensure there is a diverse pipeline of future
leaders. The appointments of existing SIG
employees to the ELT during the year are
examples of succession planning
in action.
All ELT members completed an executive
development review in 2022, consisting
of a psychometric and critical thinking
assessment, role and career-based
interview and 360-degree feedback. Each
ELT member was provided with detailed
feedback and a personal development
plan. The Committee has reviewed during
2023 the progress of these plans for the
operating company Managing Directors.
Development reviews have begun for the
ELG population and will continue
during 2024.
The Committee is committed to
proactively identifying and developing
leadership from within the Group whilst
ensuring that we attract applications
from high calibre external candidates. To
achieve this we will continue to invest in
leadership and executive development
to ensure a diverse balance of future
successors for key roles within the Group.
Diversity and Inclusion
The Board acknowledges the importance
of diversity in its broadest sense in
the Boardroom as a driver of Board
effectiveness. The Board recognises
that gender, ethnic, social and cultural
diversity of boards are significant aspects
of diversity and acknowledges the role
that women and those of different ethnic,
social and cultural backgrounds with
the right skills, experience, cognitive
and personal strengths can play in
contributing to diversity of perspective in
the Boardroom. The Board also aspires
to achieve diversity levels for each of its
Committees at least consistent with the
diversity achieved for the Board itself.
The policy on Board diversity, which
complements the Group’s wider diversity
policies and our strategic vision, was
reviewed and updated by the Board
during the year following amendments
made to the Listing Rules on the reporting
of Board diversity and is available on the
Group’s website.
Gender diversity is a significant aspect
of diversity. The Board acknowledges
that, as at 31 December 2023, whilst
it met two out of the three Listing Rule
diversity targets, its composition did not
yet meet the Listing Rules requirement of
a minimum female representation of 40%.
The Board comprises ten Directors, of
whom two are women.
Corporate governance report / continued
Composition, succession
and evaluation
1 2 3 4 5
84 SIG Annual Report and Accounts 2023
Committee performance review
An internal performance review of the Committee was conducted for 2023 and further details can be found on page 81. The
recommendations from the Committee’s 2022 performance review are set out below together with a summary of the progress
that was made to satisfy the recommendations during the year:
2022 Recommendations Action taken during 2023
Board composition and
Non-Executive Director
succession planning
The Committee reviewed the composition of the Board and kept under review the succession
planning needs of the Non-Executive Directors. In September 2023, the Committee considered
and recommended to the Board the appointment of Kath Durrant as SID. Further work will continue
throughout 2024 and beyond to enhance diversity at Board level.
ELT succession planning This year saw a number of new members join the ELT. Existing employees Chris Lodge, David
Hope, Richard Burnley and Sarah Ogilvie joined the ELT during the year. The appointments not only
strengthen the ELT but also show our progress in development and succession planning.
Wider Company
succession planning
The Committee keeps under review the development needs and leadership capabilities of talent
below ELT level. A review took place during the year of a range of employees who have been
identified as potential succession candidates for senior management roles in the short, medium and
long-term.
The priorities that the Committee has established for 2024 include:
− Succession planning for Board membership.
− ELT succession planning.
− Identification and preparation of diverse talent pipelines.
Of the six independent Non-Executive
Directors, one-third are women. CD&R
has the right to appoint two Directors,
under the Relationship Agreement, and
CD&R’s two appointees to the Board
are both male. On a statistical level, this
makes meeting higher thresholds of
gender diversity more challenging whilst
maintaining what the Board considers
to be an appropriate and effective size.
With the appointment of Kath Durrant as
SID we have achieved the Listing Rules
requirement of having at least one senior
Board position held by a female. We
also meet the Parker Review and Listing
Rules target of ensuring at least one
Board member is from an ethnic minority
background.
As at 31 December 2023, representation
of women within the ELT was 21%, and
within the ELT and their direct reports
was 27%. The Committee recognises that
female representation at Board level and
at our most senior levels can be improved
and that further steps are required to
increase diversity in its wider sense as
well. The Board and senior leadership’s
gender identity and ethnicity data
presented in accordance with Listing Rule
9.8.6R (10) can be found on page 123.
The Committee receives regular
information on diversity from across the
Group except from those countries where
the law does not permit such information
to be gathered. The Group continues to
ensure where possible that recruitment for
any new roles has a short-list of diverse
candidates.
In 2022, SIG established a Group-wide
diversity, equality and inclusion (‘DEI’)
forum, including representation from
each operating company and employees
across the business. A Group DEI
framework was established to direct
and guide activities across the business,
while allowing each operating company
flexibility to ensure alignment to local
culture. The programme aims to enhance
DEI awareness across SIG and ultimately
to improve the representation of under-
represented groups in SIG.
In 2023, a monthly spotlight series
was launched to draw attention to
DEI initiatives across the operating
companies. SIG Poland joined the group
of signatories of the Diversity Charter to
promote diversity and equality policies
and enforce the active prevention of
discrimination in the workplace.
SIG France developed a DEI Charter
which was launched via a webinar to
over 1,000 employees, accompanied
by a short film showcasing the power of
diversity within the business, featuring
testimonials from a number of SIG
employees, including the Managing
Director of SIG France and HR Director. In
the UK the DEI forum worked on training
and guidance to help hiring managers
ensure candidates are considered fairly
on their individual merits. Throughout the
year, a series of posts were shared with
employees on Workplace in support of
World Mental Health Day, International
Women’s Day, International Men’s Day,
World Menopause Day, Pride Month
and Zero Discrimination Day. Further
information on our Group-wide DEI
activities during the year can be found on
page 34.
Review of Committee terms
of reference
During the year the Board reviewed the
terms of reference of the Committee and
made a number of non-material updates
to them. These can be found on the
Group’s website at www.sigplc.com.
85SIG Annual Report and Accounts 2023
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Governance Financials
Contents
Shatish Dasani (Chair)
Alan Lovell
Gillian Kent
Kath Durrant
Simon King
Committee members
Audit & Risk
Committee report
On behalf of the Audit & Risk Committee
(‘the Committee’), I am pleased to
present its report for the year ended
31 December 2023. The report describes
how the Committee has carried out its
responsibilities during the year.
Committee purpose and aims
To provide effective oversight and
governance over the financial integrity of
the Group’s financial reporting (including
climate-related financial disclosures)
so as to ensure that the interests of the
Company’s shareholders and other
key stakeholders are considered and
protected.
To make recommendations on the
reporting, control, risk management and
compliance aspects of the Directors’
and Group’s responsibilities, providing
independent monitoring, guidance and
challenge to senior management in
these areas.
The Committee’s aims are to ensure high
standards of corporate and regulatory
reporting; an appropriate control
environment; a robust risk management
framework; and effective compliance
monitoring. The Committee believes
that excellence in these areas enhances
effectiveness and reduces the risks of the
Group to an acceptable level.
Role and responsibilities
− Monitoring and reviewing the Group’s
accounting principles, practices and
policies, including the integrity of
the Group’s consolidated financial
statements, compliance with legal and
regulatory requirements and financial
reporting standards, including climate-
related financial disclosures.
− Overseeing the adequacy and
effectiveness of the internal control
environment.
− Monitoring and reviewing the
effectiveness of the Group’s Internal
Audit function.
− Overseeing the relationship with the
Group’s external Auditor, initiating
and conducting the tender process
and making recommendations to
the Board on their remuneration for
audit and non-audit services, terms of
engagement, independence, objectivity
and effectiveness of the external audit
process.
− Advising the Board on whether the
Annual Report and Accounts, taken
as a whole, is fair, balanced and
understandable.
− Developing and implementing a formal
policy on non-audit services.
− Reviewing external financial reporting
and associated announcements,
including significant financial reporting
judgements contained in them.
− Monitoring and reviewing the
effectiveness of the risk management
procedures in place and the steps being
taken to mitigate the Group’s risks.
− Ensuring the Group’s compliance with
the audit-related provisions of the Code.
Meetings and membership
The Committee meets regularly
throughout the year, with four meetings
being held during 2023. Key matters
considered at meetings of the Committee
are set out below.
The Board considers that each member
of the Committee was independent
throughout the year, and remains so,
and there are no circumstances which
are likely to impair their independence
according to the factors set out in the
Code or otherwise. The knowledge and
experience of the Committee members
means that the Committee is competent
in the sector in which the Group operates.
All Committee members have a wide
range of business experience and
expertise such that the Committee can
fulfil its responsibilities. Shatish Dasani,
as Chair of the Committee, is a chartered
accountant and has recent and relevant
financial experience for the purposes of
the Code. For more information on the
skills and experience of each Committee
member see pages 66 to 67.
Shatish Dasani
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Audit, Risk and
Internal Control
86 SIG Annual Report and Accounts 2023
Highlights from the year
− Review of cyber risk and mitigation
measures
− Finance organisation review
− Review of the 2022 fraud risk
assessment
− Review of the 2022 Annual Report and
Accounts
− Risk update and Annual Report
disclosure
− Review of half-year results
announcement
− Post investment reviews
− Risk assessment of the quality and
change control processes regarding
fabrication activities
− UK Corporate Governance Code
consultation
At every meeting the Committee
considers:
− Report of the CFO
− Report of the external Auditor
− Report of the Group Director of Audit
and Risk
− Minutes and actions from previous
meetings
The Committee also considered during
the year:
− Internal controls
− Senior Accounting Officer annual
review
− Annual external Auditor evaluation
− Report on Tax and Treasury matters
− Review of non-audit services from the
external Auditor
− Risk appetite and Group risk register
− Deep-dive risk reviews on people risk
and emerging risk
− Committee performance review and
2024 actions
− Review of the effectiveness of the
Internal Audit function
− Review of the Committee terms of
reference
− Customer credit risk
− ESG reporting and assurance
− Rationalisation of the Group
corporate structure
Attendance by individual members of the
Committee is disclosed in the table on
page 71. The Committee Chair regularly
invites senior management to attend
meetings of the Committee to discuss
or present specific items; the CFO,
Ian Ashton, and the CEO, Gavin Slark,
attended all of the meetings in 2023. In
addition, the Chairman of the Board also
attended all Committee meetings. The
external Auditor, the Group Director of
Audit and Risk and the Group Financial
Controller attended all meetings of the
Committee and have direct access to the
Committee Chair.
The Committee meets regularly with
the external Auditor and the Group
Director of Audit and Risk without the
Executive Directors being present and
the Committee Chair also meets with
the external Auditor, the CFO, the Group
Financial Controller and the Group
Director of Audit and Risk in advance of
Committee meetings.
In accordance with the Relationship
Agreement with CD&R, Diego Straziota,
an observer nominated by CD&R,
attended all Committee meetings held
this year. As an observer, Diego is entitled
to attend meetings but cannot affect the
decision-making of the Committee. As
noted elsewhere in this document, Diego
was also appointed a Non-Executive
Director of the Board during 2023, having
been the Committee observer since 2020.
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Internal Control
The Committee in 2023
Significant financial judgements
The Committee considered a number of significant accounting matters during the year, related to areas requiring management to
exercise particular judgement or a high degree of estimation. These matters were discussed and reviewed with management and
the external Auditor and the Committee challenged judgements and sought clarification where necessary. The matters and how they
were addressed by the Committee are set out below:
Key financial reporting and significant financial judgements considered
in relation to the financial statements How the issue was addressed by the Committee
Carrying value
of goodwill and
intangible assets
The carrying value of goodwill and intangible
assets is reviewed at the mid-year point
and at year-end. The Group estimates a
recoverable amount for each individual cash-
generating unit (‘CGU’) based on forecast
revenues, operating margins and discount
rate risk adjusted where appropriate.
For Benelux the recoverable amount is
determined based on fair value less costs of
disposal as this is higher than value in use.
The results of the 2023 impairment review have been reviewed.
This indicated that the carrying value of the goodwill and
other assets associated with the UK Interiors CGU was not
supportable, following the split out of the UK Specialist Markets
CGU combined with the downturn in performance in the
current year and associated reduction in future forecast cash
flows, and an impairment of £33.8m has been recognised.
For the Benelux CGU the Committee has considered the
assessment of recoverable amount based on fair value less
costs of disposal, with the value of the right-of-use assets
supported by an independent third party valuation of a
number of properties. The Committee has considered the
appropriateness of the assumptions and sensitivity analysis
performed.
Segmental
reporting
The Group presents analysis of trading
performance and financial position by
operating segment based on the way in
which information is reported to the Chief
Operating Decision Maker (“CODM”). For
SIG the CODM is considered to be the
Executive Leadership Team.
Following a change to the reporting structures in the UK, there
are now considered to be three operating segments in the UK,
being UK Interiors, UK Exteriors and UK Specialist Markets.
The Group’s operating segments are considered to be the
businesses as represented by each of the Managing Directors
on the ELT. The Committee reviewed the rationale for the
change and was satisfied that it was appropriate.
Recognition and
measurement of
supplier rebate
income
Procedures and controls are in place to
ensure that the reporting, reviewing and
accounting for supplier rebate income is
properly managed and that supplier rebates
are recognised appropriately in
the Consolidated financial statements.
The Committee considered the adequacy of work performed
in the year to gain assurance that procedures and controls in
place were effective.
Disclosure of
Other items
The Group presents income statement items
in the middle column of the Consolidated
income statement, entitled Other items,
when they are significant in size and
nature, and either do not form part of the
trading activities of the Group or where
their separate presentation enhances
understanding of the financial performance
of the Group.
The Committee carefully considered the judgements made
in the separate disclosure of Other items. In particular, the
Committee sought to ensure that the treatment followed
consistent principles and that reporting in the Consolidated
financial statements is suitably clear and understandable.
Going concern
basis and viability
statement
The Group is required to assess if it has
access to sufficient resources to continue
as a going concern and assess the period of
viability.
The Committee considered the review of going concern
and longer-term viability performed by management and
reviewed the financial statement disclosures. On the basis
of the financing the Group has in place and the Group’s
latest financial forecasts, the Committee is satisfied with the
conclusions over going concern and longer-term viability.
Further detail on the going concern assessment prepared by
the Group is included on page 55.
88 SIG Annual Report and Accounts 2023
Oversight of risk management
and internal controls
The Committee reviews and examines
the effectiveness of the Group’s internal
controls and risk management systems
and advises the Board in the exercise of
its responsibility for maintaining sound
risk management and internal control
systems. The Board has approved a set
of policies, procedures and frameworks
for effective internal control and risk
management.
These procedures are subject to regular
review and provide an ongoing process
for identifying, evaluating, and managing
the significant risks faced by the Group.
Such a system is designed to manage,
rather than eliminate, the risk of failure
to achieve business objectives and can
provide only reasonable and not absolute
assurance against material misstatements
or loss.
Risk management
The Committee supports the Board in
its oversight of ensuring the integrity of
the Group’s financial reporting, internal
controls, risk management processes and
the relationship with the external Auditor.
On an annual basis the Committee
oversees the review of the Group’s key
strategic risks and uncertainties. In
performing this review, the Committee
seeks the opinions, and takes into
consideration the inputs, of a broad range
of SIG stakeholders. This included the
consideration of the outputs of individual
strategic risk assessments, performed
at each of our operating companies,
the insight and views of the ELT and the
outputs of one-to-one meetings held
between the Group Director of Audit and
Risk and individual Board members and
senior management.
These risks are also subject to review on
a periodic basis whereby the Committee
considers the impacts of any changes
to SIG’s risk profile arising from updates
from the Group Director of Audit and
Risk on key issues in relation to the
Group’s risk management systems and
processes, the outputs of deep-dive risk
reviews, updates to individual operating
companies’ strategic risk registers and
issues identified through other assurance
activities completed across the Group
during the year.
Risk management roles and
responsibilities:
The Committee
− Responsible for reviewing and
examining the effectiveness of the
risk management systems, processes
and internal controls implemented by
management.
− Reviews and recommends the annual
strategic risk reporting process to
the Board for approval. On a periodic
basis, it reviews the status of key risks
and uncertainties, the effectiveness of
internal controls or other mitigations
implemented and trends and issues
arising from key risk indicators.
Executive Leadership Team
− Each ELT member is responsible for, at
least bi-annually, reviewing the status of
strategic risks and uncertainties relevant
to their area of responsibility.
Operating Company Managing
Directors
− Responsible for ensuring their operating
company has an appropriate and
proportionate risk management
process which captures, assesses and
prioritises business risks and identifies
appropriate mitigation strategies. This
process is reviewed and, if necessary,
updated, on a regular basis or when
changes in business activities or
external events are likely to have a
reasonable impact on the operating
company’s risk profile. Each operating
company’s Managing Director is also
responsible for formally approving and
signing-off their operating company’s
strategic risk report.
Group Director of Audit and Risk
− Provides advice and, where requested,
support to Group and operating
companies’ management to ensure
their completion of risk management
activities.
− Regularly reviews the output of
operating companies’ and Group
functions’ risk management activities
and processes in order to provide
reasonable assurance to the Committee
that appropriate internal controls have
been implemented to mitigate the
likelihood of risks materialising and
minimising potential impacts arising.
− Works collaboratively with the
Committee, ELT and operating
company Managing Directors to
prepare an annual review of strategic
risks and uncertainties to ensure that
the nature and treatment of critical risks
and uncertainties (relative to both the
Group and each operating company’s
strategic plans) are appropriately
articulated, and that appropriate
mitigations are implemented where
necessary.
Internal controls
SIG has adopted an assurance framework
which provides a structured means
to support the ongoing process of
identification, evaluation and management
of significant risks faced by the Group.
The aim of the framework is to ensure
that a single easily explainable framework
exists for all aspects of control (financial
and non-financial), with individual
elements clearly defined and understood
and a clear linkage throughout the
framework from a branch to Board level.
The framework is the basis on which the
Group Controls team’s annual plan
is built.
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Some major activities performed as part
of the annual controls plan for 2023 were:
− Operating company controls reviews;
− IT general controls review;
− Segregation of duties reviews;
− France controls enhancement;
− Benelux controls framework
assessment;
− Key controls framework assessment;
and
− Monitoring actions and supporting
owners with remediation activities with
regular reporting to the Committee.
The Committee has responsibility for
reviewing the adequacy and effectiveness
of the Group’s internal control systems.
Reports on the findings of the Group
Controls team and Internal Audit’s
reviews, investigations and management
agreed actions are provided at every
meeting. The Committee receives regular
reports on progress and any issues
arising.
Oversight of Internal Audit
The Group Internal Audit function
provides independent assurance to
senior management and the Board on the
adequacy and effectiveness of SIG’s risk
management and controls framework.
Internal audit forms an independent and
objective assessment as to whether
risks have been adequately identified,
adequate internal controls are in place
to manage those risks, and whether the
controls are working effectively.
The Committee reviewed the remit,
organisation, and resources of the
function, together with the internal audit
plan. The internal audit plan was regularly
reviewed during the year to ensure it
remained aligned to the key risks of
the business and that the function was
appropriately resourced.
Group Internal Audit undertakes
independent and objective assessments
to determine whether risks had been
adequately identified, adequate internal
controls are in place to manage those
risks, and those controls are working
effectively. External resources continue
to provide co-sourced support, when
necessary, to Group Internal Audit to
cover specialist areas.
Audit reports were presented to the
Committee with areas of weakness
resulting in action plans being developed
and follow-up reports required to ensure
that actions had been completed
appropriately. The results of all audits
have been presented to the Committee
during the year, and follow-up audit
checks undertaken to establish
that actions have been completed
appropriately.
Examples of internal audit reports issued
during the year include:
− UK vehicle management
− SIG UK Exteriors supply chain and
inventory processes
− Penlaw post-acquisition review
− SIG Ireland cash management and
customer rebates
− SIG UK IT business continuity
management capabilities
Consistent with previous years, the
Committee agreed the process for the
evaluation of the performance of the
Group Internal Audit function which
involved the circulation of a questionnaire
tailored for several participating
stakeholder groups. The questionnaire
was sent to the Committee, Executive
Directors, Managing Directors and
Finance Directors of the operating
companies and the external Auditor.
Members of the Internal Audit team were
also asked to complete a questionnaire by
way of self-assessment.
The areas of focus for the Group Internal
Audit Function for 2023 are set out below
together with a summary of how these
were addressed during the year:
1. Continued focus on the timeliness
of managements response and
implementation of agreed actions.
Actions arising from work performed
by each of the Internal Audit and
Internal Controls teams are now
tracked via an IT platform, with
updates provided through the
CFO’s reports.
2. Further develop the team
induction process to ensure all
team members are familiar with
all business operations across
the Group, including activities
conducted only by certain
operating companies.
Whilst there were no new team
members recruited during the period,
all Audit Managers have supported
and been involved in operational
audits outside of their individual
core territories.
3. Review potential for greater use of
data analytics in internal auditing.
There has been selected investment
in the greater use of data analytics,
for example customer segmentation
analysis made use of the capabilities of
an external provider to review customer
demographic and spend data.
The evaluation for 2023 found that the
Group Internal Audit function adds value,
maintains its independence, provides a
broad range of assurance and is effective
overall.
90 SIG Annual Report and Accounts 2023
The areas of focus for 2024 were agreed
by the Committee and include:
− Greater visibility of the preparation
process in determining the annual audit
plan and discussion at Audit & Risk
Committee meetings.
− Assess the quantity of audits to be
conducted during the year and maintain
focus on ensuring audits have the right
level of resource and are completed
within the agreed timeframe.
− Explore the use of data analytics
to provide insight on the control
environment and look at how to
streamline the control framework across
the operating companies.
− Recruit additional European language
skills into the Internal Audit Function to
ensure efficiency of audits.
Oversight of external Auditor
The Committee is responsible for
maintaining the relationship with the
external Auditor on behalf of the Board.
The Committee ensures that the external
Auditor has full access to Company
employees and records. Ernst & Young
LLP were appointed as the Group’s
external Auditor in July 2018 following a
tender. Shareholders formally approved
their reappointment at the Annual
General Meeting in May 2023. There is
no intention to conduct any retendering
exercise currently, but this will be
reviewed annually, taking into account
the performance and effectiveness of the
Auditor, as assessed by the Committee.
The Committee makes recommendations
to the Board in relation to the
appointment, reappointment and removal
of the external Auditor. The Committee
approves the external Auditor’s terms
of engagement and remuneration and
reviews the scope of the audit plan.
The Committee monitors the rotation of
the lead audit partner every five years
in accordance with the FRC’s Ethical
Standard. At the conclusion of the audit
of the 2022 financial statements, the
lead audit partner stood down having
completed the maximum term of office.
The new lead partner, Mr Adrian Roberts,
was recommended by the Committee
and went through appropriate induction
into the Group including site visits
and attendance as an observer at key
meetings for the 2022 audit process. Mr
Roberts completes his first year as lead
partner with the 2023 accounts.
How the Committee assessed the
Audit quality and effectiveness
During the year the Committee
continually reviewed the external Auditor’s
effectiveness, through monitoring its
progress against the agreed audit
plan, taking into consideration UK
professional and regulatory requirements.
In September, the external Auditor
provided the Committee with their plan
for undertaking the year-end audit which
highlighted the proposed approach and
scope of the audit and identified key areas
of audit risk, including the audit approach
for these areas.
The Committee reviewed and, where
appropriate, challenged the basis for
the audit plan before agreeing the
proposed approach and scope of the
external audit. EY prepared a report of
their audit findings at year end, which
they presented to the Committee. The
findings were reviewed and discussed in
detail by the Committee. The Committee
assessed the quality of the audit planning,
delivery and execution and the quality of
knowledge and service of the audit team.
The Committee assessed the auditor’s
approach to providing auditor services
and concluded that the audit team was
providing the required quality in relation to
the provision of their services.
External Auditor performance
evaluation
For the year ended 31 December 2022,
the Group assessed the external Auditor’s
performance using a questionnaire sent to
key finance and non-finance stakeholders
across the Group, a commentary-based
survey of Committee members and a
review of other published information on
audit quality.
The questionnaire was sent to the
Finance Directors of all in-scope operating
companies together with all key members
of the Group finance team and others
who had involvement with the Auditor,
including Tax and Treasury, Company
Secretariat, HR, Risk and Internal Audit.
The questionnaire covered a range of
topics including the audit firm itself, the
partner role and involvement, the audit
team, audit planning and execution, fees,
communication and governance and
independence, with respondents asked
to rate the Auditor on a scale of 1 to 5
and to provide any additional comments
alongside their ratings.
Overall the ratings are slightly higher
than the ratings for the year ended 31
December 2021 across all areas. The
most notable increases are seen in the
areas of audit planning, audit execution
and communications, which are key
areas contributing to the overall efficiency
and effectiveness of the audit process.
The increases are due to higher ratings
at Group and across all operating
companies, with the exception of
Germany where the ratings in these areas
are consistent with or slightly lower than
the prior year.
Results from the feedback process
have been shared with the external
Auditor and a number of actions taken to
address matters raised. The Committee,
having reviewed the performance and
effectiveness of the external Auditor, was
satisfied with the independence, review
and challenge, objectivity, expertise,
resources and general effectiveness of
Ernst & Young LLP and that the Group is
subject to a rigorous audit process.
External Auditor independence
assessment
The Committee monitors the need for the
external Auditor to have an appropriate
degree of independence and objectivity.
The Committee invites challenge by the
external Auditor, giving due consideration
to points raised and making changes to
the financial statements in response and
where appropriate.
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The external Auditor reports to the
Committee each year on the actions
taken to comply with professional and
regulatory requirements and best practice
designed to ensure its independence,
including the rotation of key members
of the external audit team. Ernst &
Young LLP has formally confirmed its
independence to the Committee in
respect of the period covered by these
consolidated financial statements.
Policy on non-audit services
The Group has a policy with regard to the
provision of audit and non-audit services
by the external Auditor, which operated
throughout 2023. The policy is based
on the principle that the external Auditor
should undertake non-audit services only
where they are the most appropriate and
cost-effective provider of the service,
and where the provision of non-audit
services does not impair, and could not
reasonably be perceived to impair, the
external Auditor’s independence and
objectivity. It categorises such services
as auditor-permitted services, auditor-
excluded services and auditor-authorised
services. A number of services as defined
by the Committee, require prior approval
before the external Auditors are engaged
in connection with such service.
The fees permissible for non-audit
services should not exceed 70% of
the average audit fees paid to the
Group’s external Auditor in the last
three consecutive financial years. The
policy was reviewed during 2023 and is
reviewed annually. It defines the types
of services falling under each category
and sets out the criteria to be met and
the internal approvals required prior
to the commencement of any auditor-
authorised services. In all cases, any
instruction must be pre-approved by the
CFO and the Committee Chair before the
external Auditor is engaged. The external
Auditor cannot be engaged to perform
any assignment where the output is
then subject to their review as external
Auditor. The Committee regularly reviews
an analysis of all services provided by
the external Auditor. The policy and the
external Auditor’s fees are reviewed and
set annually by the Committee and are
approved by the Board.
The total fees payable by the Group to its
external Auditor for non-audit services in
2023 were £0.2m, primarily the interim
review (2022: £0.2m). The total fees
payable to the external Auditor for audit
services in respect of the same period
were £2.5m (2022: £2.7m). Current year
costs include £nil in relation to the 2022
audit (2022: £0.1m in relation to the
2021 audit).
The ratio of audit to non-audit fees
was 12:1 in respect of the audit for the
current year. Details of each non-audit
service and reasons for using the Group’s
external Auditor are provided in Note 3 to
the Consolidated financial statements on
page 149.
A full breakdown of external Auditor fees
is disclosed in Note 3 to the Consolidated
financial statements on page 149.
Resolution to reappoint external
Auditor
The Committee recommends, and the
Board agrees, that a resolution for the
reappointment of Ernst & Young LLP
as Auditor of the Company for a further
year will be proposed at the 2024 Annual
General Meeting.
Fair, balanced and
understandable
The Board had the opportunity to review
early drafts of the Annual Report and
Accounts and provided input. Following
this, the Committee has reviewed the
contents of this year’s Annual Report and
Accounts and advised the Board that, in
its view, the Annual Report and Accounts,
taken as a whole, is fair, balanced
and understandable and provides
the necessary information to enable
shareholders to assess the position and
performance, strategy and business
model of the Group.
In reaching this conclusion the Committee
has considered the following:
− the preparation of the Annual Report
is a collaborative process between
the Finance, Investor Relations,
Legal, Company Secretariat, Human
Resources and Communications
functions within the Group, ensuring the
appropriate professional input to each
section. External guidance and advice
is sought where appropriate;
− the coordination and project
management is undertaken by a
central team to ensure consistency and
completeness of the document;
− an extensive review process is
undertaken, both internally and using
external advisors;
− a report is prepared internally to assess
the Annual Report and how it addresses
the fair, balanced and understandable
assertion; and
− a final draft is reviewed by the Committee
members prior to consideration by
the Board.
92 SIG Annual Report and Accounts 2023
Terms of reference
During the year the Board reviewed the terms of reference of the Committee and made a number of non-material updates to them.
These can be found on the Group’s website at www.sigplc.com.
Committee performance review
An internal performance review of the Committee was conducted for 2023 and further details can be found on page 81. The
recommendations from the Committee’s 2022 performance review are set out below together with a summary of the progress that
was made to satisfy the recommendations during the year:
2022 Recommendations Action taken during 2023
Review of Finance function across all
operating companies
The Committee reviewed a number of changes within the Finance function across
the Group, notably in senior appointments within operating companies. 2023 saw the
appointment of a new Finance Director to the French business. In early 2024 a new,
permanent, Finance Director was recruited to replace the interim Finance Director who had
supported the Benelux business through 2023.
Continuing the development of
internal controls
Regular updates were received on internal controls throughout the year. Work proceeded
in 2023 to embed responsibility for the controls environment within the operating
companies, with Group taking an oversight role. The Committee was supportive of
operating companies taking appropriate responsibility for their own controls environments.
Ensuring there is a close focus on risk The Committee spent considerable time during the year focusing on risk. Fraud and ESG
risk assessments were carried out by the Internal Audit function and the results of each
were reported to the Committee. A risk review on each of cyber security and fabrication
activities also took place during the year. In addition the Committee carried out its annual
review of the Group risk register and framework, risk appetite and emerging risks.
Continuing to ensure ESG reporting
is robust and accurate
In August 2023, the Committee reviewed the relevance and impact of upcoming ESG
legislation and regulation. The Committee considered the reporting obligations, key risks
and resource to support compliance. The Committee also reviewed the climate-related
disclosures in the annual report as at 31 December 2023 and concluded that the reporting
was robust and accurate.
The priorities that the Committee has established for 2024 include:
− Continue to exercise oversight of the effectiveness of Finance functions across the Group.
− Maintain focus on overseeing the completion of management agreed actions (‘MAAs’) from audits.
− Continue the monitoring of risk topics and the reviewing of measures being taken to mitigate risks.
Shatish Dasani
Chair of the Audit & Risk Committee
4 March 2024
93SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Risk management and
internal control
Corporate governance report / continued
The Board has ultimate responsibility for
establishing procedures to manage risk,
oversee the internal control framework
and determine the nature and extent of
the principal risks the Group is willing
to take in order to achieve its long-term
strategic objectives. The Board delegates
responsibility to the Audit & Risk
Committee to consider the adequacy of
the risk management and internal control
framework, to agree the risk-based
internal audit programme and to ensure
the risk management and internal control
structure and frameworks are robust.
The ELT has responsibility for ensuring
that risk management is embedded
into all processes and for ensuring that
risk profile is in line with the approved
risk appetite. Local controls managers
support process owners to develop
controls and to ensure appropriate
control design effectiveness is in place.
Group Internal Audit is then responsible
for ensuring appropriate operational
effectiveness of controls and assurance
is provided through a cyclical programme
of control effectiveness reviews. Internal
Audit also provides regular assurance
regarding the quality of the risk
management processes, developing a
risk-based internal audit programme and
providing independent assurance to the
Board and the Audit & Risk Committee
that the controls in place are designed
appropriately and operating effectively.
The Group Internal Audit function
comprises an in-house team supported
by external resources, where necessary,
to assist in providing assurance on
specialist areas. The Audit & Risk
Committee on behalf of the Board
regularly reviews the need for the
Group Internal Audit function and
its effectiveness in providing regular
assurance.
Information on the activities of the Audit
& Risk Committee during the year can be
found on pages 86 to 93.
1 2 3 4 5
Audit, Risk and
Internal Control
Key elements of ongoing
process for risk management
and internal control
The Group Internal Audit function
periodically reviews local risk
management arrangements in order to
provide reasonable assurance to both
the Audit & Risk Committee and the
Board that appropriate internal controls
have been implemented to mitigate
the likelihood of risks materialising and
effectively minimising potential impacts
arising. In addition, on at least an annual
basis, the Group Director of Audit and
Risk meets with the operating company
leadership teams to perform a detailed
review of their key strategic risks and
uncertainties, which is used as an input to
the annual Group strategic risk review.
The key elements of the existing systems
for risk management and internal control,
in accordance with the FRC’s Guidance
on Risk Management and Internal Control
and Related Financial and Business
Reporting (September 2014), are
as follows:
Risk management
− The documented Group risk
management framework, approved
by the Audit & Risk Committee,
provides an overview of the agreed
risk management processes within the
Group and gives practical guidance
to operating companies and individual
functions on the management of risk.
− In accordance with the Group risk
management framework, the Group
Director of Audit and Risk works with
the operating companies and central
function leadership teams to ensure
appropriate local risk registers are
maintained.
− The Board maintains an overall Group
risk register, the content of which is
reviewed and assessed at least twice a
year by the Board and includes regular
input from the Audit & Risk Committee.
A review of the Group’s principal risks
and how it manages or mitigates them
is presented in the Strategic report on
pages 58 to 63.
− The Group risk register has been
reviewed and updated and contains
the principal risks faced by the Group,
assessing the potential risk having
taken into account likelihood, impact
and the current controls to mitigate an
identified risk and any further actions
required to bring the risk to within risk
appetite. Once identified, emerging
risks are assessed by identifying and
mapping out the core elements of the
risk, identifying owners for each element
in the operating companies, holding
workshops with risk owners to assess
the level of risk, identifying potential
mitigating actions that reduce the
impact of the risk and seeking external
guidance if required. Potential emerging
risks are monitored and assessed
regularly during the year by the Audit &
Risk Committee for their relevance and
significance.
The Audit & Risk Committee regularly
assesses the Group’s emerging and
principal risks and considers that its
assessment is robust. The Audit & Risk
Committee reports to the Board following
its assessments. A consolidated Group
strategic risk report was prepared for
review by the ELT and was recommended
to the Board for approval in early 2024.
Internal control
The Group assurance framework is the
basis on which the Group Controls and
Internal Audit teams base their annual
plan. The controls plan for 2023 was
defined, communicated and agreed with
operating companies, and the teams
made progress on the delivery of the
plan. The teams support the creation and
maintenance of a robust financial control
environment, and they raise controls
awareness across SIG by providing
operating company and Group functions
with practical and hands-on support and
advice. Group Internal Audit proposed
and delivered a rolling audit plan for 2023
across the Group, together with a branch
audit programme. Regular updates were
provided through the year.
94 SIG Annual Report and Accounts 2023
Key control activities include:
− operating company controls reviews: in
order to continue to build up controls
documentation across core financial
processes within the operating
companies, the 2023 plan contained
a number of controls reviews. The
objective of controls reviews is to
support the operating companies in
enhancing their control environments
and to build the Risk and Control
Matrices (‘RACMs’) and process map
documentation;
− entity-level control and Group function
reviews: reviews were performed
over Group functions to identify and
document process-level and entity-level
controls. These reviews were completed
in the year and no significant gaps in
expected controls were identified;
− IT General Controls (‘ITGC’): the Group
Controls team have continued to
work with each operating company
to identify, document and build out
the ITGC environment. The team
then continued to support operating
company IT teams in remediating
any control weaknesses identified.
This support will continue until fully
remediated;
− Key Control Framework (‘KCF’)
submissions: on a quarterly basis
operating companies are required to
self-certify against 32 areas covering
financial controls, entity-level controls,
operational controls and ITGC. The
Group Controls team performs a review
of the responses received to ensure
consistency of responses compared to
other sources of assurance, as well as
to identify significant issues or control
weaknesses;
− action remediation and tracking: the
Group Controls team document and
monitor progress on all remediation
actions arising from controls work.
Monthly updates are obtained from
operating companies, which are
analysed, investigated and reported
to the ELT and the Audit & Risk
Committee;
− the Group Delegation of Authority
policy was refreshed and approved by
the Board in September 2023 and it
was communicated to the operating
companies and Group functions during
the year;
− training and guidance: to raise the
awareness of controls across the
business, the Group Controls team
delivered a series of training modules
and guidance covering control topics
relevant to operating companies
and Group;
− UK Corporate Reform update: the
Group Controls team has considered
the Government’s decision not to press
ahead with the legislation in this area
together with the FRC’s decision to only
make limited changes to the Corporate
Governance Code to be introduced
from January 2025. The SIG controls
programme since 2021 has been built
to ensure readiness for any potential
future legislative developments. These
activities, which focus on formalising,
documenting, remediating and
evidencing controls as well as training
stakeholders, remain valid given the
current regulatory requirements. The
Government’s decision provides greater
flexibility than would have been the
case and the team continues to assess
the controls programme to ensure it
remains suitable for the Group.
− as part of the sanctions policy adopted
in 2022, Internal Audit regularly screens
the top 20 product suppliers for
each operating company and other
strategic suppliers, and no compliance
exceptions were noted;
− to help assess and prioritise
investments in IT infrastructure,
applications and services, the Internal
Audit team continues to review and
assess IT capabilities based on an
industry standard process assessment
methodology.
Financial reporting
− In addition to the general internal
controls and risk management
processes described on pages 58 to
63, the Group also has specific systems
and controls to govern the financial
reporting process and preparation of
the Annual Report and Accounts.
− These systems include clear policies
and the procedures for ensuring that the
Group’s financial reporting processes
and the preparation of its financial
statements comply with all relevant
reporting requirements.
− Group accounting policies are
comprehensively detailed in the Group
accounting policy manual, which all
businesses are required to comply with
in the preparation of their results.
− Financial reporting control requirements
are set out in relevant RACMs, which
have been reviewed and updated during
the current year.
Annual assessment of the
effectiveness of systems of risk
management and internal control
systems
The Board assessed the effectiveness of
the Group’s system of risk management
and internal controls. This assessment
covered all controls including operational,
compliance and risk management
procedures, as well as financial controls.
The Board considers that the information
that it receives is sufficient to enable it to
review the effectiveness of the Group’s
risk management and internal controls in
accordance with the FRC’s guidance. The
Board considers that the framework of
controls in place is effective and enables
risk to be assessed and managed. The
Board also considers its risk management
and internal control processes provide it
with the assurance that all the necessary
resources are in place for the Group
to meet its objectives and to measure
performance against them for 2023 and
up to and including the date of this report.
95SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Directors’
remuneration report
1 2 3 4 5
Remuneration
Kath Durrant (Chair)
Andrew Allner
Shatish Dasani
Bruno Deschamps
Gillian Kent
Simon King
Alan Lovell
Committee members
Dear Shareholder,
On behalf of the Remuneration
Committee, I am pleased to present the
Directors’ remuneration report for 2023.
As in previous years, the Annual report on
remuneration and this annual statement
are subject to an advisory vote at the
2024 AGM.
The Committee was appreciative of the
high level of shareholder approval at the
2023 AGM for both the 2022 Director’s
remuneration report, which received
92.7% of votes in favour of the resolution,
and the amended Remuneration Policy,
which received 96.9% of votes in favour
of the resolution.
Role and responsibilities
To provide effective governance over
the integrity of the Group’s remuneration
arrangements for executive and senior
management aligned to the interests of
the Company’s shareholders.
The Committee’s key responsibilities
are to assist the Board in discharging
its responsibilities for:
− Reviewing the broad remuneration
policy for the senior management;
− Recommending and monitoring the
level and structure of remuneration
for senior management;
− Governing all share plans; and
− Reviewing any major changes in
employee remuneration and benefit
structures throughout the Group.
Remuneration Policy
The Committee considers that the current
Policy continues to appropriately support
our remuneration principles, which are
designed to:
− Attract and retain the best talent;
− Encourage behaviours that support
delivery of the Group’s strategy
and business objectives, which are
developed in the long-term interests
of the Company and its shareholders;
− Incentivise employees to deliver our
business goals together by rewarding
individual and team contribution and
performance; and
− Ensure that a significant percentage
of the overall remuneration package
of the Executive Directors and
senior management remains at risk,
dependent on performance, and that
their pay and benefits adequately take
account of reward versus risk.
The suitability of the Policy is monitored
by the Committee to ensure that it meets
these principles.
Performance in 2023
Market conditions in 2023 were
challenging across all our geographies
throughout the year, with demand
softening as the year progressed. As a
result, we saw weaker year over year
volumes, and this was combined with
a moderation in input price inflation as
expected. Despite this, we continued to
benefit from execution of our commercial
strategy, retaining a strong focus on
customer service across our branch
network, and ensuring we maintained
strong momentum in our markets.
Overall, the Group delivered robust
trading results against the challenging
market backdrop, reporting an underlying
operating profit of £53.1m. However, this
was below the expectations we had at
the beginning of the year, which had not
anticipated the extent of the demand
softness that the industry across Europe
experienced during the year. This is
reflected in the lower than target bonus
payments for the Executive Directors
and Executive Leadership Team.
Cash flow continued to receive much
attention during 2023, with capex and
working capital tightly managed across
the Group. We incentivise the business on
efficient and sustainable working capital
management and as a result, the lower
than expected sales and profit during the
year was offset, in the majority of cases,
by reductions in trade working capital.
Kath Durrant
Corporate governance report / continued
1
Chair’s statement 96
2
Directors’ remuneration
policy
105
3
Annual report on
remuneration
112
96 SIG Annual Report and Accounts 2023
Net debt continued to be closely
managed during the year, and, as always,
appropriate care and diligence has been
exercised in potential M&A activity. In
the event no deals were closed during
2023. Capital and operating spend has
been directed towards modernisation
of the business through branch
upgrades and digitising core commercial
processes. As we continue to navigate
challenging market conditions into 2024,
management’s focus on the balance
sheet will continue to be important.
Leverage has increased, primarily due
to the reduction in profitability explained
above, with the expected inflation-driven
growth in our lease liabilities another
but lesser factor. Further details on our
trading and financial results are set out in
the CEO’s review on pages 10 to 13.
Management across the Group continue
to make good progress against the Group
and operating company level sustainability
plans. For 2023, all members of the
Executive Leadership Team had robust
and stretching ESG targets set as part
of their strategic objectives, which make
up 20% of the annual bonus measures.
To take one example of progress made,
GHG emissions per £m of revenue
decreased to 17.1 metric tonnes from
17.5 metric tonnes in 2022.
Despite the market challenges facing our
industry, our colleagues have continued
to show great commitment and resilience
during 2023, demonstrating the value of
the work we’ve undertaken to strengthen
performance across our branch network
over the last two or three years. As a
result, we have continued to deliver
robust results on customer and employee
engagement, with Customer NPS on
an upwards trajectory at +50 compared
to +46 in 2022 and employee NPS
maintaining its 2022 achievement of
+14, which was an 11-point improvement
on 2021.
Lost time injury frequency rate (LTIFR) has
significantly reduced to 8.4, from 11.1 in
2022, as a result of a focus on our new
strategy and the associated activities
during the year. Further work is still
required and is reflected in the individual
objectives of senior managers across
the business.
Turning to the individual performance
of the CEO and CFO, clear objectives
were set at the start of the year and
agreed with the Committee. The Group’s
performance management system
supported the Committee’s consideration
of personal performance. More detail can
be found on pages 113 and 114.
Corporate governance and
remuneration
The Committee sets high standards in
corporate governance, and during the
year the Committee:
− Approved 2022 annual bonus outcomes
for the Executive Directors and
Executive Leadership Team, taking into
consideration business performance,
stakeholder interests, Health and Safety
performance, and achievement against
individual strategic objectives;
− Approved the grant of Restricted Share
Awards to 63 individuals, including the
Executive Directors, under the terms of
the SIG plc 2020 Restricted Share Plan;
− Approved the vesting of the December
2020 Restricted Share Award and
approved in principle the March 2021
award vesting, giving consideration
to the underpinning factors and the
windfall gain test;
− Engaged with employees on executive
remuneration, receiving feedback
via listening sessions hosted by the
workforce engagement designated
director and the employee engagement
survey;
− Received data, information and analysis
on all employee terms and conditions
of employment across the Group
and used this information in making
executive remuneration decisions;
− Reviewed the effectiveness of the
advice received from Korn Ferry
in supporting the Committee. The
Committee is satisfied with the high-
quality support and advice it receives
from Korn Ferry;
− Approved funding for the independently
managed Employee Benefit Trust
(“EBT”) to buy shares in the market; and
− Formally reviewed an analysis of the
underpin and windfall tests that apply to
the outstanding Restricted Share Plan
(‘RSP’) awards.
An internal evaluation of the Committee
was conducted for 2023 and further
details can be found on page 121.
Remuneration decisions
Following careful consideration, there
were no matters that the Committee felt
warranted the exercise of its discretion
during the year.
Group performance
Metric 2023 2022
Revenue £2,761.2m £2,744.5m
Like-for-like sales (decline)/growth (2%) 17%
Gross margin 25.3% 25.9%
Underlying operating profit £53.1m £80.2m
Average trade working capital to sales ratio 14.3% 14.6%
Underlying operating margin 1.9% 2.9%
97SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
1 2 3 4 5
Remuneration
Change of CEO
Remuneration received in 2023 by Steve
Francis, who stepped down from his
role as CEO and from the Board on
1 February 2023, were aligned to the
details disclosed in the 2022 Directors’
Remuneration Report and can also be
found on page 112.
Gavin Slark was appointed CEO on
1 February 2023 and his remuneration
package was finalised in accordance with
the disclosure made in last year’s report.
In summary, his base salary for 2023
was set at £675,000, whilst his benefits
are aligned with policy, including a car
allowance of £23,000 per annum and
pension allowances set in line with the
workforce rate at 5% of salary. Gavin also
received an annual bonus opportunity
of up to 150% of base salary and was
granted a Restricted Share Award at
125% of base salary, which both align to
the Remuneration Policy. Further details
can be found on pages 112 to 115.
Salary increases
Throughout our businesses we have
implemented an annual salary review. The
Committee determined a salary increase
for the CEO and CFO of 3% for 2024,
which is below the UK workforce average
increase of 3.75%. The Committee also
determined that the Chairman’s fee would
rise by 3%. Annual salary reviews in our
France, Germany, Poland and Ireland
companies take place between January
and April, with average increases ranging
from 2.5% and 6%. The annual salary
reviews in our Benelux operation are
subject to a collective labour agreement.
Annual bonus outcomes
for 2023
In reviewing the overall remuneration
outcomes, the Committee ensured
they were reflective of the business
performance and the experience of
our stakeholders. The Committee was
comfortable that the bonuses were
appropriate in this context, and we
determined that the CEO and CFO
should be awarded 22.5% and 21.0%
of maximum respectively. In addition,
as Steve Francis was treated as a
good leaver for the purposes of the
annual bonus plan, a bonus of 22.1%
of maximum was awarded, pro-rated
for time served during 2023, payable
in March 2024 partly in cash and partly
deferred in shares in line with Policy.
Annual bonus design for 2024
Financial measures will continue to
represent 80% of the overall opportunity
with the remainder reflecting strategic
objectives. Underlying operating profit
will continue as the measure of profit
representing a 60% weighting, with
cash based measures having a 20%
weighting. Half of the cash weighting will
be on average Group working capital,
whilst leverage is being replaced with
Group free cash flow. The change is to
provide a more comprehensive way to
focus management on the generation of
cash from operations. The new free cash
flow metric will apply to Group function
colleagues, including the Executive
Directors. An ESG measure will again be
included in individual strategic objectives
for the Executive Directors and Executive
Leadership Team.
RSP awards
Under the terms of the 2020 Restricted
Share Plan, awards granted in December
2020 vested on 1 December 2023, whilst
awards granted in March 2021 will vest
on 29 March 2024. Prior to vesting, the
Committee considered the underpinning
factors and assessed whether a windfall
gain may have been created and
concluded that neither the underpinning
factors nor the windfall gain test gave rise
to scaling back of any award.
The Committee intends to make awards
in 2024 of 125% of salary to the CEO and
100% of salary to the CFO, subject to a
similar underpin.
Focus for the year ahead
The priorities that the Committee has
established for 2024 include:
− Monitoring the impact of the execution
of the Group’s new four-pillar business
strategy and ensuring that incentive
arrangements and targets remain
appropriate to support that in a volatile
economic environment;
− Monitoring ESG-based incentives;
− Operating the annual bonus plans and
RSP, and assessing performance against
the corresponding targets/underpins.
A regular formal review of underpin and
windfall tests will take place;
− Ensuring talent is appropriately
incentivised and that SIG remains
enable to attract the right capabilities to
meet the differing needs of its different
businesses; and
− Reviewing updates received from
the Chief People Officer in relation to
developments in employee reward,
incentive, and benefit structures.
Conclusion
Despite challenging market conditions, in
2024 we expect our senior management
to build momentum around our business
strategy designed to reach our medium-
term target of a 5% operating profit
margin, with the focus firmly on growing
the business, strengthening execution
and margin across all geographies,
modernising the business and accelerating
our specialist, high return businesses.
Looking forward, the Committee remains
focused on supporting the Group to
achieve its strategic objectives and
continuing to operate with rigor and
transparency.
I hope you find this report clear and
useful in explaining our approach to
remuneration. If you have any questions
on the policy or the report, please contact
me through the Group General Counsel &
Company Secretary.
Kath Durrant
Chair of the Remuneration Committee
4 March 2024
Directors’ remuneration report / continued
Corporate governance report / continued
98 SIG Annual Report and Accounts 2023
How do our incentive performance
measures align to our vision and strategy?
In November 2023, we communicated the next steps in our business strategy, which is aimed on improving the
Group’s medium-term financial performance to achieve our 5% margin, enhancing value for shareholders and all
other stakeholders. As set out in our remuneration policy, the RSP operates a general underpin on business
performance, allowing the Committee to review holistically the overall performance of the Group, individual
performance, and wider Group considerations. In addition, we continually consider the performance measures
we use for the annual bonus incentives to ensure they support the delivery of our strategy.
Our vision
To be the best provider of specialist construction and insulation products in Europe.
Our strategic pillars
Our key performance indicators
Grow
Continue
above-market
growth
Execute
Strengthen
execution and
margin across
all geographies
Modernise
Greater
productivity
through
modernisation
Specialise
Accelerate in
specialist,
higher return
businesses
1 2 3 4
Annual bonus
Measures Link to strategy Link to KPls
Underlying operating
profit
Focus on growth in sales and returns
Key measure of organic growth
Linked to shareholder value
Free cash flow
Working capital
Focus on operational efficiency
Focus on sustainable investment
Linked to shareholder value
Strategic objectives
Strategic objectives and targets for the bonus are commercially sensitive and will
be disclosed retrospectively
Health and safety
override
All colleagues, customers and suppliers should be able to work in a safely managed
environment across every part of the Group. The Committee looks for evidence of a
positive health and safety culture including visible leadership, sufficient resources,
effective reporting and follow-up, employee feedback, and improvements in metrics
RSP
Measures Link to strategy Link to KPls
General underpin
Focus on long-term sustainable performance, including our ESG strategy
and sustainability commitments
Allows overall performance of the Group, individual performance, and wider Group
considerations, such as the level of employee and customer engagement, to be taken
into account
Shareholding guidelines
Linked to shareholder value
Like-for-like
sales
Gross
margin
Operating
margin
Average
trade working
capital to
sales ratio
LTIFR NPS eNPSGHG emissions
per £m of
revenue
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99SIG Annual Report and Accounts 2023
The Code requires the Committee to determine the policy and practices for Executive Directors in line with a number of factors set
out in Provision 40. The following table sets out how the remuneration policy aligns with the Code.
Provision 40 element How the remuneration policy aligns
Clarity – remuneration
arrangements should be
transparent and promote
effective engagement with
shareholders and the workforce.
The annual bonus plan performance conditions are based on the core KPIs of the strategy and
therefore there is a clear link to all stakeholders between their delivery and reward provided to
management. Similar KPIs also flow logically in the wider workforce incentive schemes.
Remuneration Committee members engage with the workforce on a wide range of topics.
Simplicity – remuneration
structures should avoid
complexity and their rationale
and operation should be easy
to understand.
Annual bonus plan performance conditions are based on the Group’s KPIs.
Reward is aligned with the delivery of the key markers of successful implementation of strategy.
Restricted shares are a simple mechanism and avoid the setting of long-term performance
conditions which tend to inherently make remuneration more complex.
Risk – remuneration
arrangements should ensure
reputational and other risks
from excessive rewards, and
behavioural risks that can arise
from target-based incentive
plans, are identified and
mitigated.
The remuneration policy includes:
− setting defined limits on the maximum awards which can be earned;
− requiring the deferral of a substantial proportion of the incentives in shares for a material period
of time;
− aligning the performance conditions with the strategy of the Group;
− ensuring a focus on long-term sustainable performance through the RSP; and
− ensuring there is sufficient flexibility to adjust payments through malus and clawback and an
overriding discretion to depart from formulaic outcomes.
These elements mitigate against the risk of target-based incentives by:
− limiting the maximum value that can be earned;
− deferring the value in shares for the long-term, which helps ensure that the performance
earning the award was sustainable and thereby discourages short-term behaviours;
− aligning any reward to the agreed strategy of the Group;
− supporting a focus on the sustainability of the performance over the longer-term through the
use of an RSP;
− reducing the awards or cancelling them if the behaviours giving rise to the awards are
inappropriate or the criteria on which the award was based do not reflect the underlying
performance of the Group.
Predictability – the range of
possible values of rewards to
individual directors and any
other limits or discretions should
be identified and explained at
the time of approving the policy.
The remuneration policy sets out clearly the range of values, limits and discretions in respect of
the remuneration of management.
The RSP increases the predictability of the rewards received by management.
Proportionality – the link
between individual awards,
the delivery of strategy and
the long-term performance
of the Group should be clear.
Outcomes should not reward
poor performance.
The remuneration policy sets out clearly the range of values and discretions in respect of the
remuneration of management. In a competitive market for quality leaders the Group pays
sufficiently to attract, incentivise and retain.
The primary value of an RSP discounted vs. a traditional LTIP is in share price appreciation over
time and is therefore aligned with the development of a sustainable business and shareholder value.
Alignment to culture –
incentive schemes should drive
behaviours consistent with Group
purpose, values and strategy.
The annual bonus plan drives behaviours consistent with SIG’s strategy and this flows logically
through the KPIs of the wider workforce incentive schemes.
The RSP drives behaviours consistent with the Group’s long-term objectives, purpose and values.
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100 SIG Annual Report and Accounts 2023
Engagement with shareholders
We have received views from key
stakeholders on remuneration and the
application of the policy, and we are
grateful for their feedback.
Key elements of remuneration
The Committee reviews all key elements
of remuneration across the Group
annually. The levels and types of
remuneration vary across the Group
depending on the employee’s level of
seniority, country of operation and role.
The Group operates a broad range of
benefits including an all-employee Share
Incentive Plan (‘SIP’) in the UK.
It is important to highlight that the
Committee is not looking for a
homogeneous approach across the
Group. However, when conducting its
review, it pays particular attention to:
− Whether the element of remuneration is
consistent with the Group remuneration
principles (see above);
− If there are differences, they are
objectively justifiable; and
− If the approach seems fair and equitable
in the context of other employees.
Wider workforce considerations
and remuneration
The Committee considers the wider
workforce when making pay decisions
and it reviews employee policies and
practices to ensure reward and incentives
are aligned with SIG’s strategy, vision
and culture.
In addition to the Executive Directors,
its remit extends to senior management
teams operating across all countries
within the Group, and the annual bonus
plan and share incentive plans align
with those of the Executive Directors,
creating a shared strategic focus. The
Committee believes that it is important
to be transparent with how decisions on
reward are made and this section seeks
to provide context to our Director pay
by providing information on whether our
approach to executive remuneration is
consistent with the wider workforce.
Delivery of our strategy depends on
attracting and retaining an engaged
workforce that has the right skills
and behaviours to make a valuable
contribution to our business. The Board
is focused on employee engagement and
the Remuneration Committee specifically
is committed to ensuring that appropriate
engagement takes place with employees
to explain how executive remuneration
aligns with SIG’s approach to wider
Group pay. The Committee undertook a
review of workforce terms and conditions,
and engaged directly with employees
through listening sessions hosted by
the designated workforce engagement
director to solicit employee views and
sentiment, including discussions focused
on executive remuneration and corporate
governance, led by the Group Head of
Reward. Additionally, a review of the
Group-wide employee engagement
survey was undertaken by the Board
to ensure that employee sentiment was
understood and considered as part of
their decision-making.
Remuneration principles
Our remuneration principles are
designed to support and reinforce our
culture and behaviours. They provide a
best practice framework for the design,
implementation and operation of Group
and local reward policies and practices
that apply across the Group.
Alignment and fairness
In action
− Clear and appropriate governance
structures are in place for decision
making at all levels.
− Remuneration programmes and
processes are run fairly, with integrity
and are supported with clear
communication to individuals.
− Pay arrangements are fair and
equitable across the Group.
Rewarding contribution and
performance
In action
− Bonus plans are designed for the
Executive Directors and all other
colleagues to incentivise sustainable
profitable growth and cash generation.
− Incentive plans reward the delivery
of our business strategy, targets
are appropriately stretching, and
objectives are focused on value
creation.
− Performance measures are reviewed
regularly, personal and strategic
objectives are accurately assessed,
and targets are set relative to strategic
priorities.
− Health and safety is a feature of all
management and executive plans.
Transparency and participation
In action
− There is a focus on effectively
communicating remuneration
decisions through stakeholder
engagement.
− Incentive and benefits plans are clear,
simple and understood by participants
to maximise engagement.
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A summary of the employee remuneration structure and how it compares to the remuneration of the Executive Directors is below:
Pay element Employees Executive Directors
Salary We conduct an annual pay review for all employees.
In setting the budget, many factors are considered,
such as market rates, economic context, business
performance and affordability.
In 2023, the average UK employee base salary
increase was 5.9%. 75% of employees received a
minimum increase of 6%.
Salary increases are considered in the context of the
wider workforce review and performance of the Group.
A salary increase of 5% was awarded to the CFO in
2023. The CEO’s salary was set on appointment at
£675,000.
Pensions and
benefits
We offer market-aligned benefits packages reflecting
normal practice in each country in which we operate.
Where appropriate, we offer benefit choices to our
employees.
Pension contributions are no higher than those provided
to UK employees.
Benefits are aligned to the senior leadership team in the
country of operation.
Bonus plan Over 92% of our workforce participate in a cash
bonus scheme. The level and performance targets
differ depending on the role and country of operation.
CEO annual bonus of up to 150% of base salary, CFO
annual bonus of up to 125% of base salary.
One-third of the total amount payable in shares, and the
remaining two-thirds payable in cash.
RSP 61 senior leaders participated in the RSP in 2023,
with a range of annual awards between 20% to 80%
of salary. A holding period does not apply below the
Executive Director level.
Maximum annual award of 125% of salary; three-year
vesting period with underpin on vesting; and a two-year
holding period.
Award of 125% of salary was made to the CEO, and an
award of 100% of salary was made to the CFO in 2023.
SIP All UK employees are invited to participate in the SIP. Executive Directors are invited to participate in the SIP.
In summary, the Committee is satisfied that the Group’s remuneration approach is consistent with our remuneration principles.
Further, in the Committee’s opinion the approach to executive remuneration aligns consistently with the wider Group pay policy.
Summary of the application of the remuneration policy
We have set out below how the remuneration policy operated in 2023. The full remuneration policy is detailed in the 2022 Annual
Report and Accounts.
The Group’s policy is to provide remuneration packages that fairly reward the Executive Directors for the contribution they make to
the business and that are appropriately competitive to attract, retain and motivate Executive Directors and senior managers of the
right calibre. A significant proportion of remuneration takes the form of variable pay, which is linked to the achievement of specific
and stretching targets that align with the creation of shareholder value and the Group’s strategic goals.
In order to avoid any conflict of interest, remuneration is managed through well-defined processes ensuring no individual is involved
in the decision-making process related to their own remuneration. In particular, Executive Director remuneration is set and approved
by the Committee. The Committee also uses external advisors and evaluates this annually to ensure that advice is independent,
appropriate and cost-effective.
Element and link to strategy How we implemented the policy in 2023 How we will implement the policy in 2024
Base salary
Provides a base level of remuneration to support
recruitment and retention of Executive Directors with
the necessary experience and expertise to deliver the
Group’s strategy.
Executive Director salaries for
2023 were as follows:
− CEO – £675,000
− CFO – £411,646
The general UK employee base
salary increase was 5.9%. 75% of
employees received a minimum
increase of 6%.
Executive Director salaries for 2024
will increase by 3% to:
− CEO – £695,250
− CFO – £424,000
The general employee base salary
increase in the UK will be 3.75%.
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102 SIG Annual Report and Accounts 2023
Element and link to strategy How we implemented the policy in 2023 How we will implement the policy in 2024
Pension
Provides a fair level of pension provision for all employees.
The Executive Directors received
a pension allowance of 5% of
salary. This is 2.5% of salary
below the workforce rate and
what is permissible under
the policy.
No change.
Benefits
Provides a market standard level of benefits.
The benefits received were
as follows:
− Car allowance
− Private medical insurance
− Group income protection
− Group life assurance
No change.
Annual bonus
The annual bonus plan provides a significant incentive to
the Executive Directors linked to achievement in delivering
goals that are closely aligned with the Group’s strategy
and the creation of value for shareholders.
Bonus operation for 2023:
− one-third of any bonus earned is deferred in shares; and
− all shares deferred for three years.
Maximum opportunity in 2023
was as follows:
− CEO – 150% of base salary
− CFO – 125% of base salary
Any bonus is subject to a health
and safety override, where the
Committee will review the health
and safety performance of the
Group for the year in question.
See page 113 for bonus
outcomes for 2023.
No change.
The health and safety override will
continue to operate in 2024.
The performance measures for
2024 are underlying operating profit
(60%), average Group working
capital divided by annual sales (10%),
free cash flow (10%) and strategic
objectives (20%).
The targets for the bonus are
commercially sensitive as they are
primarily related to Group’s budgeted
future profit and debt levels, and
therefore their disclosure in advance
is not in the interests of the Group or
shareholders.
The Committee will, however, provide
full retrospective disclosure to enable
shareholders to judge the level of
award against the targets set.
RSP
Awards are designed to incentivise the Executive
Directors over the longer-term to successfully implement
the Group’s strategy.
RSP operation:
− maximum annual award up to 125% of salary based on
the market value at the date of grant;
− awards vest at the end of a three-year period subject to:
− continued employment to the date of vesting;
− the satisfaction of an underpin (whereby the Committee
can adjust vesting for business, individual and wider
Group performance). Further details of the underpin test
are included in the remuneration policy section; and
− a two-year holding period will apply following the three-
year vesting period.
RSP awards granted in 2023
were as follows:
− CEO – 125% of base salary
− CFO – 100% of base salary
The Committee regularly
reviews Group and individual
performance against the
underpin and considers whether
a windfall was felt to be made for
all outstanding awards each year.
No change.
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Element and link to strategy How we implemented the policy in 2023 How we will implement the policy in 2024
Share ownership requirements
The Group has an established principle of requiring
Executive Directors to build up and maintain a beneficial
holding of shares in the Company. It is expected that
this should be achieved within five years of the relevant
Executive Director’s appointment. Adherence to these
guidelines is a condition of continued participation in
the share incentive arrangements. Executive Directors
will be required to retain 100% of the post-tax amount
of vested shares from the Company incentive plans
untiltheminimum shareholding requirement is met
and maintained.
Share ownership requirements:
− CEO – 300% of base salary
− CFO – 300% of base salary
This applies for two years
post-cessation, or the actual
shareholding on cessation
if lower.
No change.
Chairman and Non-Executive Directors’ fees
Provides a level of fees to support recruitment and
retention of a Chair and Non-Executive Directors with
the necessary experience to advise and assist with
establishing and monitoring the Group’s strategic
objectives.
Fees for 2023 were increased
by 4%, which was reflective of
the cost of living challenges and
below the general workforce
increase for the UK.
Fees for 2023 were as follows:
− Chairman – £233,763
− Non-Executive Directors fee –
£65,236
− Senior Independent Director –
£10,000
− Designated Non-Executive
Director for Workforce
Engagement – £10,000
− Remuneration Committee Chair
– £12,000
− Audit & Risk Committee Chair
– £12,000
Fees for 2024 were reviewed in
December 2023 and it was agreed
that the fees be increased by 3%,
which is below the general workforce
increase for the UK.
− Chairman – £240,776
− Non-Executive Directors fee –
£67,19 3
− Senior Independent Director –
£10,000
− Designated Non-Executive Director
for Workforce Engagement –
£10,000
− Remuneration Committee Chair –
£12,000
− Audit & Risk Committee Chair –
£12,000
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104 SIG Annual Report and Accounts 2023
This section summarises the Company’s remuneration policy for Executive and Non-Executive Directors, which was approved by
shareholders at the Annual General Meeting on 4 May 2023. The remuneration policy is intended to operate for up to three years.
The full remuneration policy can be found in the 2022 Annual Reports and Accounts.
Directors’ remuneration policy table
Element and link to strategy Operation Maximum
Performance conditions and
recovery provisions
Salary
Provides a base level of
remuneration to support
recruitment of Executive
Directors with the necessary
experience and expertise to
deliver the Group’s strategy.
An Executive Director’s basic salary is set on
appointment and reviewed annually or when
there is a change in position or responsibility.
When determining an appropriate level of
salary, the Committee considers:
− pay increases for other employees;
− remuneration practices within the Group;
− any change in scope, role and
responsibilities;
− the general performance of the Group and
each individual;
− the experience of the relevant Director; and
− the economic environment.
Individuals who are recruited or promoted
to the Board may, on occasion, have their
salaries set below the targeted policy level
until they become established in their role.
In such cases subsequent increases in
salary may be higher than the general rises
for employees until the target positioning is
achieved.
The Committee ensures
that maximum salary levels
are positioned in line with
companies of a similar size or
sector to SIG and validated
against an appropriate
comparator group, so that
they are competitive against
the market.
The Committee reviews the
comparators each year and
will add or remove companies
from the groups as it
considers appropriate.
In general, salary increases
for Executive Directors will be
in line with the increase for
employees. However, larger
increases may be offered if
there is a material change in
the size and responsibilities
of the role (which covers
significant changes in Group
size and/or complexity).
A broad assessment of individual and business
performance is used as part of the salary review.
No recovery provisions apply.
Pension
Provides a fair level of
pension provision for all
employees.
The Group provides a pension contribution
allowance that is fair, competitive and in line
with corporate governance best practice.
Pension contributions will be a non-
consolidated allowance and will not
impact any incentive calculations.
The maximum value of
the pension contribution
allowance for Executive
Directors will be aligned to
that available to the majority
of the UK workforce.
No performance or recovery provisions apply.
Benefits
Provides a market standard
level of benefits.
Benefits include market standard benefits.
The Committee recognises the need to
maintain suitable flexibility in the benefits
provided to ensure it is able to support its
objective of attracting and retaining talent.
Additional benefits which are available to
other employees (including any all-employee
plans) on broadly similar terms may therefore
be offered, such as relocation allowances on
recruitment.
The maximum is the cost
of providing the relevant
benefits and in the case of all-
employee plans, in line with
HMRC approved limits.
No performance or recovery provisions
applicable.
Directors’ remuneration policy
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Element and link to strategy Operation Maximum
Performance conditions and
recovery provisions
Annual bonus plan
The annual bonus plan
provides a significant
incentive to the Executive
Directors linked to
achievement in delivering
goals that are closely aligned
with the Group’s strategy
and the creation of value
for shareholders.
In particular, the annual
bonus plan supports the
Group’s objectives, allowing
the setting of targets for the
year based on the Group’s
strategic objectives at that
time, meaning that a wider
range of performance
metrics can be used that are
relevant and achievable.
The Committee will determine the maximum
annual participation in the annual bonus plan
for each year, which will not exceed 150%
of salary.
Details of the performance conditions, targets
and their level of satisfaction for the year
being reported on will be set out in the
Annual report on remuneration.
In extreme circumstances as determined by
the Committee, targets may be established
for periods of less than a full year, for
example six months. At the end of the period,
targets will be reviewed and adjusted for the
remainder of the year.
The Committee can determine that part of the
bonus earned under the annual bonus plan is
provided as an award of deferred shares.
One-third of any bonus earned is deferred
in shares.
The Committee may determine that a greater
portion or in some cases the entire bonus be
paid in deferred shares. The main terms of
these deferred share awards are:
− minimum deferral period of three years; and
− the participant’s continued employment at
the end of the deferral period unless he/she
is a good leaver.
The Committee may award dividend
equivalents on deferred bonus awards to
the extent that these vest.
Each year, the Committee
will determine the maximum
annual participation in the
annual bonus plan, which will
not exceed 150% of salary.
Percentage of bonus
maximum earned for levels
of performance:
− threshold up to 25%
− target 50%
− maximum 100%
The annual bonus plan is based on a mix of
financial and strategic/operational conditions.
Measures will normally be set across
one financial year and shall be measured
accordingly. The financial measures will
account for no less than 50% of the bonus
opportunity.
The Committee retains discretion in exceptional
circumstances to change performance
measures and targets and the weightings
attached to performance measures part-
way through a performance year if there
is a significant and material event which
causes the Committee to believe the original
measures, weightings and targets are no longer
appropriate.
Discretion may also be exercised where the
Committee believes that the bonus outcome is
not a fair and accurate reflection of business,
individual and wider Group performance.
The exercise of this discretion may result in a
downward or upward movement in the bonus
earned resulting from the application of the
performance measures.
Any adjustments or discretion applied by
the Committee will be fully disclosed in the
following year’s Directors’ remuneration report.
The financial targets used for the annual bonus
are commercially sensitive, and disclosing
these in advance would not be in shareholder
interests. Actual targets, performance
achieved, and awards made will be published in
the Directors’ remuneration report at the end of
the performance periods, so shareholders can
fully assess the basis for any payouts under the
annual bonus. The annual bonus plan contains
malus and clawback provisions.
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106 SIG Annual Report and Accounts 2023
Element and link to strategy Operation Maximum
Performance conditions and
recovery provisions
RSP
Awards are designed to
incentivise the Executive
Directors over the longer-
term to successfully
implement the Group’s
strategy.
Awards are granted annually to Executive
Directors in the form of conditional awards or
options.
Awards vest at the end of a three-year period
subject to:
− the Executive Director’s continued
employment at the date of vesting; and
− the satisfaction of an underpin as
determined by the Committee whereby the
Committee can adjust vesting for business,
individual and wider Group performance.
A two-year holding period will apply following
the three-year vesting period for all awards
granted to the Executive Directors.
Upon vesting, sufficient shares may be
sold to pay tax on the shares.
The Committee may award dividend
equivalents on RSP awards to the extent
that these vest.
Maximum value of 125% of
salary per annum based on
the market value at the date of
grant in accordance with the
rules of the RSP.
There are no performance
conditions on grant, however
the Committee will consider
prior year business and
personal performance to
determine whether the level
of grant remains appropriate.
No specific performance conditions are
required for the vesting of RSP awards but
there will be an underpin as the Committee
will have the discretion to adjust vesting taking
into account business, individual and wider
Company performance.
The Committee will take into account the
following factors (amongst others) when
determining whether to exercise its discretion
to adjust the number of shares vesting:
− whether threshold performance levels
have been achieved for the performance
conditions for the annual bonus plan for each
of the three years covered by the vesting
period;
− whether there have been any sanctions or
fines issued by a regulatory body;
− participant responsibility may be allocated
collectively or individually;
− whether there has been material damage to
the Group’s reputation;
− the potential for windfall gains;
− whether there has been sufficient progress
against the sustainability plan approved by
the Board; and
− the level of employee and customer
engagement over the period.
Awards are subject to clawback and
malus provisions.
Shareholding requirement
The Committee has in place strong shareholding requirements of 300% of base salary that encourage Executive Directors to build
up their holdings over a five-year period. Adherence to these guidelines is a condition of continued participation in the share incentive
arrangements.
Executive Directors are required to retain 100% of the post-tax amount of vested shares from the Company incentive plans until the
minimum shareholding requirement is met and maintained. There is a post-cessation shareholding requirement aligned to the full in-
employment requirement (or the executive’s actual shareholding on cessation if lower) for two years following cessation
of employment.
Non-Executive Directors’ remuneration policy table
Chair & Non-Executive
Director fees Operation Maximum
Performance conditions and
recovery provisions
Provides a level of fees to
support recruitment and
retention of a Chair and Non-
Executive Directors with the
necessary experience to advise
and assist with establishing
and monitoring the Group’s
strategic objectives.
The Board is responsible for setting the remuneration
of the Non-Executive Directors, whilst the Committee is
responsible for setting the Chair’s fees.
Non-Executive Directors are paid an annual basic fee
and additional fees for chairing of committees. The
Group retains flexibility to pay fees for membership of
committees. The Chair does not receive any additional
fees for membership of committees.
Additional fees may be paid by the Group to the
Chair and Non-Executive Directors for additional time
commitments or roles outside the normal scope of their
appointments.
Fees are reviewed annually based on equivalent roles
in the comparator group used to review salaries paid to
the Executive Directors.
Non-Executive Directors and the Chair do not
participate in any variable remuneration or benefits
arrangements.
The fees for Non-Executive
Directors and the Chair are
broadly set at a competitive
level against the comparator
group.
In general, the level of fee
increase for the Non-Executive
Directors and the Chair will
be set taking account of any
change in responsibility and will
take into account the general
rise in salaries across the UK
workforce.
The Group will pay reasonable
expenses incurred by the Non-
Executive Directors and Chair
and may settle any tax incurred
in relation to these.
No performance or recovery
provisions applicable.
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Discretion within the Directors’ remuneration policy
The Committee has discretion in several areas of the amended remuneration policy, including discretion to adjust the formulaic
outcome of the incentive plans, if, in the opinion of the Committee, is not consistent with the overall, or underlying, performance of
the Group and the operating companies.
Additionally, Committee discretion can be applied in implementing the post-employment shareholding requirement including in cases
of significant financial hardship, material ill-health and conflict of interest.
Malus and clawback
Malus and clawback may apply to all or part of a participant’s payment under the bonus plan or RSP awards and may be effected,
among other means, by requiring the transfer of shares, payment of cash or reduction of awards or bonuses.
The circumstances in which malus and clawback could apply are as follows:
− discovery of a material misstatement resulting in an adjustment in the audited accounts of the Group or any Group company;
− the assessment of any vesting condition or any other condition under the plan was based on error, or inaccurate or misleading
information;
− the discovery that any information used to determine the award was based on error, or inaccurate or misleading information;
− action or conduct of a participant which amounts to fraud or gross misconduct;
− events or the behaviour of a participant have led to the censure of a Group company by a regulatory authority, or have had a
significant detrimental impact on the reputation of any Group company provided that the Board is satisfied that the relevant
participant was responsible for the censure or reputational damage and that the censure, or reputational damage is attributable to
the participant;
− material failure of risk management; or
− corporate failure.
Annual bonus (cash) Annual bonus (deferred shares) RSP awards
Malus Up to the date of the cash
payment.
To the end of the three-year
vesting period.
To the end of the three-year vesting period.
Clawback Two years post the date of
any cash payment.
n/a Two years following the end of the vesting period. The total malus and
clawback period may be extended where there is an ongoing internal or
regulatory investigation.
Loss of office policy
When considering compensation for loss of office, the Committee will always seek to minimise the cost to the Group whilst applying
the following philosophy:
Remuneration
element Treatment on cessation of employment
General The Committee will honour Executive Directors’ contractual entitlements. Service contracts do not contain liquidated damages clauses.
If a contract is to be terminated, the Committee will determine such mitigation as it considers fair and reasonable in each case. There
are no contractual arrangements that would guarantee a pension with limited or no abatement on severance or early retirement. There
is no agreement between the Group and its Directors or employees providing for compensation for loss of office or employment that
occurs because of a takeover bid. The Committee reserves the right to make additional payments where such payments are made in
good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or by way of settlement
or compromise of any claim arising in connection with the termination of an Executive Director’s office or employment.
Salary, benefits
and pension
These will be paid over the notice period. The Group has discretion to make a lump sum payment in lieu.
Annual bonus plan Good leaver reason Other reason Discretion
Cash Performance conditions will
be measured at the bonus
measurement date. Bonus
will normally be pro-rated for
the period worked during the
financial year.
No bonus payable for the year
of cessation.
The Committee has discretion to determine:
− that an Executive Director is a good leaver. It is the Committee’s
intention to only use this discretion in circumstances where there
is an appropriate business case which will be explained in full to
shareholders; and
− whether to pro-rate the bonus to time. The Committee’s normal
policy is that it will pro-rate bonus for time. It is the Committee’s
intention to use discretion to not pro-rate in circumstances where
there is an appropriate business case which will be explained in full to
shareholders.
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Corporate governance report / continued
108 SIG Annual Report and Accounts 2023
Annual bonus plan Good leaver reason Other reason Discretion
Deferred share
awards
All subsisting deferred share
awards will vest.
Lapse of any unvested
deferred share awards.
The Committee has discretion to:
− determine that an Executive Director is a good leaver. It is the
Committee’s intention to only use this discretion in circumstances
where there is an appropriate business case which will be explained
in full to shareholders;
− vest deferred shares at the end of the original deferral period or at
the date of cessation. The Committee will make this determination
depending on the type of good leaver reason resulting in the
cessation; and
− determine whether to pro-rate the maximum number of shares
to the time from the date of grant to the date of cessation. The
Committee’s normal policy is that it will not pro-rate awards for time.
The Committee will determine whether or not to pro-rate based on
the circumstances of the Executive Director’s departure.
RSP Good leaver reason Other reason Discretion
For the year of
cessation
The award will normally be
pro-rated for the period
worked during the financial
year.
No award for year of
cessation.
The Committee has discretion to determine:
− that an Executive Director is a good leaver. It is the Committee’s
intention to only use this discretion in circumstances where there
is an appropriate business case which will be explained in full to
shareholders;
− whether to pro-rate the award to time. The Committee’s normal
policy is that it will pro-rate for time. It is the Committee’s intention
to use discretion to not pro-rate in circumstances where there
is an appropriate business case which will be explained in full to
shareholders; and
− whether the award will vest on the date of cessation or the
original vesting date. The Committee will make its determination
based amongst other factors on the reason for the cessation of
employment.
Subsisting awards Awards will be pro-rated to
time and will vest on their
original vesting dates and
remain subject to the holding
period.
Unvested awards will be
forfeited on cessation of
employment.
Vested awards will remain
subject to the holding period.
The Committee has discretion to determine:
− that an Executive Director is a good leaver. It is the Committee’s
intention to only use this discretion in circumstances where there
is an appropriate business case which will be explained in full to
shareholders;
− whether to pro-rate the award to the date of cessation. The
Committee’s normal policy is that it will pro-rate. The Committee will
determine whether to pro-rate based on the circumstances of the
Executive Director’s departure;
− whether the awards vest on the date of cessation or the original
vesting date. The Committee will make its determination based
amongst other factors on the reason for the cessation of
employment; and
− whether the holding period for awards applies in part or in full. The
Committee will make its determination based amongst other factors
on the reason for the cessation of employment.
Other contractual
obligations
There are no other contractual provisions other than those set out above agreed prior to 27 June 2021.
The following definition of leavers will apply to all the above incentive plans. A ‘good leaver’ is defined as cessation in the following
circumstances:
− death;
− ill-health;
− injury or disability;
− retirement with agreement of the employing Group company;
− employing company ceasing to be a Group company;
− transfer of employment to a company which is not a Group company; and
− at the discretion of the Committee (as described above).
Cessation of employment in circumstances other than those set out above is cessation for other reasons.
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Recruitment and promotion policy
The Company’s principle is that the remuneration of any new recruit will be assessed in line with the same principles as for the
Executive Directors, as set out in the remuneration policy table. The Committee is mindful that it wishes to avoid paying more than
it considers necessary to secure a preferred candidate with the appropriate calibre and experience needed for the role. In setting
the remuneration for new recruits, the Committee will have regard to guidelines and shareholder sentiment regarding one-off or
enhanced short-term or long-term incentive payments, as well as giving consideration for the appropriateness of any performance
measures associated with an award. The Group’s policy when setting remuneration for the appointment of new Directors is
summarised in the table below:
Salary,
benefits and
pension
Salary, benefits and pension will be set in line with the policy for existing Executive Directors. Maximum pension
contribution will be aligned to that of the majority of employees.
Annual bonus Maximum annual participation will be set in line with the Group’s policy for existing Executive Directors and will
not exceed 150% of salary.
Restricted
shares
Maximum annual participation will be set in line with the Group’s policy for existing Executive Directors and will
not exceed 125% of salary for restricted shares.
Maximum
variable
The maximum variable remuneration which may be granted is the sum of the annual bonus and restricted shares
award (excluding the value of any buyouts) which is 275% of salary.
‘Buy out’ of
incentives
forfeited on
cessation of
employment
Where the Committee determines that the individual circumstances of recruitment justifies the provision of
a buyout, the equivalent value of any incentives that will be forfeited on cessation of an Executive Director’s
previous employment will be calculated taking into account the following:
− the proportion of the performance period completed on the date of the Executive Director’s cessation of
employment;
− the performance conditions attached to the vesting of these incentives and the likelihood of them being
satisfied; and
− any other terms and condition having a material effect on their value (‘lapsed value’).
The Committee may then grant up to the same value as the lapsed value, where possible, under the Group’s
incentive plans. To the extent that it is not possible or practical to provide the buyout within the terms of the
Group’s existing incentive plans, a bespoke arrangement would be used.
Relocation
policies
In instances where the new Executive Director is required to relocate or spend significant time away from
their normal residence, the Group may provide one-off compensation to reflect the cost of relocation for the
Executive Director. The level of the relocation package will be assessed on a case-by-case basis but will take
into consideration any cost of living differences/housing allowance and schooling and will not exceed a period
of two years from recruitment.
Where an existing employee is promoted to the Board, the remuneration policy set out above would apply from the date of promotion
but there would be no retrospective application of the remuneration policy in relation to subsisting incentive awards or remuneration
arrangements. Accordingly, prevailing elements of the remuneration package for an existing employee would be honoured and form
part of the ongoing remuneration of the person concerned. These would be disclosed to shareholders in the remuneration report for
the relevant financial year.
The Group’s policy when setting fees for the appointment of a new Chair or Non-Executive Directors is to apply the policy which
applies to the current Chair or Non-Executive Directors.
Where an interim CEO or deputy CEO are appointed but without being a Director of the Company, the remuneration policy set out
above will apply from appointment but there will be no retrospective application of the remuneration policy, therefore any existing
remuneration arrangements, subsisting incentive awards and notice period are permitted to continue for up to the earlier of 12
months from appointment or the next date of award/review date. A stepping-up allowance may be paid for the duration of their
appointment.
1 2 3 4 5
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Directors’ remuneration policy / continued
Corporate governance report / continued
110 SIG Annual Report and Accounts 2023
Consideration of employment conditions elsewhere in the Group
Each year, prior to reviewing the remuneration of the Executive Directors and the members of the Executive Leadership Team, the
Committee considers a report prepared by the Chief People Officer detailing base pay and share schemes practice across the
Group. The report provides an overview of how employee pay compares to the market and any material changes during the year
and includes detailed analysis of basic pay and variable pay changes within the UK.
While the Group does not directly consult with employees as part of the process of reviewing Executive Director pay and formulating
the remuneration policy, the Group does receive an update and feedback from the broader employee population on an annual basis
using an engagement survey, which collates information relating to remuneration, and consults a representative sample of employees
on executive remuneration as part of the workforce engagement agenda. The Group does not use remuneration comparison
measurements.
The Group aims to provide a remuneration package for all employees that is market competitive and operates the same core
structure as for the Executive Directors. The Group operates employee share and variable pay plans, with pension provisions
provided for all Executive Directors and employees. In addition, any salary increases for Executive Directors are expected to be
generally in line with those for UK-based employees. The Committee annually publishes information relating to wider workforce
considerations as part of the Directors’ remuneration report.
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Annual report on remuneration
112 SIG Annual Report and Accounts 2023
113SIG Annual Report and Accounts 2023
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Chief Executive Officer
Bonusable objectives Measures Outcome
Strategy Progress on our path to deliver a 5%
group margin.
Strategy reviewed, plans and progress discussed with the Board.
Communication of initial review and strategy presented at the
successful Capital Markets Day held in November.
Operational
excellence
Drive modernisation journey through
digitisation/technology throughout
the Group.
Initial review of all OpCo modernisation plans undertaken with solid
OpCos plans evidenced in place, aligned to budgets and business
outcomes, adjusted as appropriate in line with amended forecasts
throughout the year.
Corporate
development
Improved M&A processes and investor
relationships.
Improvements to M&A process and adjudication approach
undertaken as with significant work undertaken on improving
investor relationships, as evidenced in part by movements in
share register.
Talent
management
Ensure SIG has in place the right level of
leadership, engaged talent and robust
succession planning.
Talent and Organisation capability reviews completed across the
Group with follow up plans in place. Where required, leadership
changes implemented and development opportunities identified.
Group engagement score 71%.
ESG Improved processes and performance for a
reduction in carbon emissions and Health
& Safety.
Group LTIFR numbers reduced YOY to 8.4. Reduction in carbon
emissions by 3% YOY.
The Committee evaluated the performance of the CEO against the above outcomes and awarded a bonus of 17.5% out of the 20%
available for these strategic objectives.
Chief Financial Officer
Bonusable objectives Measures Outcome
Business
performance
Support CEO transition; cash performance;
focus on cost efficiency in a challenging
market environment.
Strong focus on cash generation and working capital, which
resulted in a second year of positive free cash flow despite lower
profits. Key focus on cost savings across the business. Managed
well the evolving profit forecasts and expectations, driven by
challenging construction market backdrop.
People Continue to strengthen finance function. Further strong progress on finance employee engagement scores,
achieved through a variety of activities. Strengthened finance
talent in key roles across the business and provided development
opportunities for high performers.
Corporate
development
& investor
relations
Further development of share register; hold
capital markets event.
The first capital markets event for many years successfully
delivered. Positive changes evidenced in share register. Positive
engagement with both equity and debt investors.
Audit and
control
Continued improvement in audit process
and results; manage credit risk.
Strong delivery on external audit again, including first year with a
new EY audit partner. Credit risks managed and communicated
effectively. Meaningful progress on several internal initiatives
involving tax, treasury and corporate structure.
ESG Deliver roadmap for delivery of emissions
targets.
Provided positive input, challenge and leadership on all ESG
matters; ensured appropriate rigour in reporting and in thinking on
trade-offs involved.
The Committee evaluated the performance of the CFO against the above outcomes and awarded a bonus of 16.0% out of the 20%
available for these strategic objectives.
Steve Francis
In line with the Policy, the Committee evaluated the performance of Steve Francis in January 2023 against the objective of
transitioning his role to the CEO. The Committee concluded that this objective had been met in full, but scaled back the amount of
bonus to reflect internal relativities with other Executive Directors and rewarded an achievement of 17.1% out of the 20% available for
strategic objectives. A total bonus of £15,895 was awarded, pro-rated for time served as CEO in 2023.
1 2 3 4 5
Remuneration
Annual report on remuneration / continued
Corporate governance report / continued
114 SIG Annual Report and Accounts 2023
The Committee considered the overall stakeholder experience (in particular employees and shareholders) in the year and was
satisfied that the formulaic outcome from the bonus for all individuals was appropriate.
Restricted share plan awards vesting in December 2023 and March 2024
Awards granted under the RSP on 1 December 2020 have vested and 29 March 2021 are due to vest shortly after the date of
publication of this document.
As part of its final assessment of the underpin, the following factors have been considered:
− whether threshold performance levels have been achieved for the performance conditions for the Bonus Plan for each of the three
years covered by the vesting period for the RSP award;
− whether there have been any sanctions or fines issued by a Regulatory Body; (in which case participant responsibility may be
allocated collectively or individually);
− whether there has been material damage to the reputation of the Company; (in which case participant responsibility may be
allocated collectively or individually);
− the level of employee and customer engagement over the period; and
− in all cases subject to the Committee’s holistic assessment at vesting based on business performance, individual performance or
wider Company considerations.
In relation to the operation of the underpins, the Remuneration Committee’s intention is not to reduce the value of the awards unless
there are clear and specific failures to achieve the underpins. The failure to achieve the threshold performance measure in any one
year is not, in itself a reason to reduce the value of the award.
The Committee is comfortable the requirements under the underpin have been met and the awards will vest in full.
2023 restricted share plan awards
Gavin Slark and Ian Ashton were granted RSP awards of 125% and 100% of salary, respectively on 10 March 2023. No consideration
was paid for the grant of the awards which are structured as nil-cost options. The number of ordinary shares over which RSP awards
were granted was based on an ordinary share price of 39.95 pence per share, based on the closing share price of 8 March 2023.
The normal vesting date of the awards will be 10 March 2026, being the third anniversary of the award date. The awards will ordinarily
vest after three years subject to continued service and a discretionary underpin that allows the Remuneration Committee to make
adjustments to the level of vesting if it believes due to business performance, individual performance or wider Group considerations
that the vesting should be adjusted. This will include consideration of all relevant factors, including any windfall gains. Once vested,
the awards will normally be exercisable until the day before the tenth anniversary of the award date. The awards are subject to a
two-year holding period commencing on vesting.
Executive Director Date of grant
% of award for
minimum
performance
Shares subject
to award
Face value at
date of award
Gavin Slark 10 March 2023 100 2,112,015 £843,750
Ian Ashton 10 March 2023 100 1,030,403 £411,646
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Directors’ interests in SIG shares (audited)
The interests of the Directors in office during the year ended 31 December 2023, and their families, in the ordinary shares of the
Company at the dates below were as follows:
Shares held Nil-cost options held
Owned
outright or
vested
Vested but
subject to
holding period
Vested but
not exercised
Unvested
subject to
vesting
and holding
period
Unvested and
subject to
deferral
Shareholding
required
(% basic
salary)
1
Current
shareholding
as a % of
basic salary
2
Requirement
met
2
Gavin Slark
3
890,000 — — 2,112,015 — 300 99% No
Steve Francis
4
864,454 — — 5, 3 07,4 49 — 300 228% N/A
Ian Ashton
5
166,666 660,436 — 3,992,231 — 300 239% No
Andrew Allner 288,384 — — — — — — —
Kath Durrant 10 0,774 — — — — — — —
Gillian Kent Nil — — — — — — —
Alan Lovell 330,000 — — — — — — —
Bruno Deschamps Nil — — — — — — —
Simon King 166,666 — — — — — — —
Christian Rochat Nil — — — — — — —
Shatish Dasani 250,000 — — — — — — —
Diego Straziota
6
Nil — — — — — — —
1. This relates to the in-employment shareholding requirement. Executive Directors are expected to achieve target shareholdings within five years of appointment. In the
event of cessation, Executive Directors are expected to hold the lower of this shareholding requirement and their actual holding on cessation.
2. Gavin Slark and Ian Ashton’s holdings are based on SIG share price of 33.4p as at 31 December 2023. The post-tax value of the RSP awards granted in March 2021,
March 2022 and March 2023 have been included in the current shareholding figure. The % shareholding will fluctuate due to share price movements at each year-end.
3. Gavin Slark was appointed as CEO on 1 February 2023.
4. Steve Francis was appointed as CEO on 25 February 2020 and stood down on 1 February 2023. His shareholdings are shown as at the date he stepped down based
on the share price of 34.95p as at 31 January 2023. He is required to maintain a shareholding during the two years post cessation of 3,093,323 shares. After stepping
down, 1,729,315 shares vested on 1 December 2023 which he subsequently exercised, retaining his post tax balance of shares.
5. Ian Ashton was appointed as CFO on 1 July 2020.
6. Diego Straziota was appointed to the Board on 4 May 2023.
There have been no changes to shareholdings between 1 January 2024 and the date of this report.
Ian Ashton exercised 1,250,000 share options during the year such that the pre-tax gain on exercise was £359,063 (2022: nil).
1 2 3 4 5
Remuneration
Annual report on remuneration / continued
Corporate governance report / continued
116 SIG Annual Report and Accounts 2023
Total Shareholder Return (“TSR”)
The graph below shows the Group’s TSR performance (share price plus dividends paid) compared with the performance of the FTSE
All Share Industrial Support Services Index over the ten-year period to 31 December 2023. This index has been selected because
the Group believes that the constituent companies comprising the FTSE All Share Industrial Support Services Index are the most
appropriate for this comparison as they are affected by similar commercial and economic factors to SIG.
Ten Year Company TSR Performance v FTSE All Share Industrial Support Services
SIG FTSE All Share Industrial Support Services
250
200
150
100
50
0
20222013 2014 2015 2016 2017 2018 2019 2020 2021 2023
194.8
19.2
Rebased TSR from 31 December 2013
CEO pay in the last ten years
The table below shows how pay for the CEO role has changed in the last ten years.
Year 2014 2015 2016 2016 2017 2017 2018 2019 2020 2020 2021 2022 2023 2023
Incumbent
Stuart
Mitchell
Stuart
Mitchell
1
Stuart
Mitchell
2
Mel
Ewell
3
Mel
Ewell
Meinie
Oldersma
4
Meinie
Oldersma
Meinie
Oldersma
Meinie
Oldersma
5
Steve
Francis
6
Steve
Francis
Steve
Francis
Steve
Francis
7
Gavin
Slark
8
Single figure of
remuneration
£’000
968 765 581 100 150 794 669 688 258 850 1,315 1,435 876 874
% of max annual
bonus earned
57 0 n/a n/a n/a 70 0 0 0 57 87 96.5 22.1 22.5
% of max LTIP
awards vesting
n/a 19.5 n/a n/a n/a n/a n/a 0 n/a n/a n/a n/a 100 n/a
1. Stuart Mitchell took the decision to waive his entitlement to the 2015 annual bonus.
2. Stuart Mitchell stepped down as CEO with effect from 11 November 2016, and his remuneration relates to the period served. He did not receive a bonus for 2016, and
his outstanding LTIP awards lapsed.
3. Mel Ewell was appointed as Interim CEO with effect from 11 November 2016 and stepped down on 31 March 2017. He continued as an Executive Director until
20 April 2017, and his remuneration relates to the period served as CEO. Mel Ewell did not participate in any Group incentive schemes.
4. Meinie Oldersma was appointed CEO on 3 April 2017. The 2017 figure pertains to the period 3 April 2017 to 31 December 2017.
5. Meinie Oldersma stepped down as CEO with effect from 24 February 2020, and his remuneration relates to the period served. He did not receive a bonus for 2020,
and his outstanding LTIP awards lapsed.
6. Steve Francis was appointed CEO on 25 February 2020. The 2020 figure pertains to the period 25 February 2020 to 31 December 2020. His single figure reflects the
temporary 20% salary reduction between 1 April 2020 and 30 June 2020 as a result of the Covid-19 pandemic as well as the one-off bonus arrangement received for 2020.
7. Steve Francis stepped down from his role as CEO on 1 February 2023, and his remuneration relates to the period he served. As per his settlement agreement, he
received a pro-rata bonus for 2023 and his outstanding RSP awards were also pro-rated.
8. Gavin Slark was appointed CEO on 1 February 2023. The 2023 figure pertains to the period 1 February to 31 December 2023.
117SIG Annual Report and Accounts 2023
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Percentage change in Directors’ remuneration
The Executive Directors are the only employees of SIG plc. The table below shows the annual percentage change in salary/fees,
benefits and bonus between 2023 vs. 2022 and 2022 vs. 2021 of the Directors of the Group compared to the average for all other
UK-based employees. The year-on-year analysis prior to this is not presented as the comparatives were not meaningful. Over time,
the percentage over five years will be disclosed.
% change 2023 v 2022 % change 2022 v 2021
Salary/fees Benefits Bonus Salary/fees Benefits Bonus
Gavin Slark (CEO) — — — — — —
Steve Francis (CEO)
1
(92) (92) (98) 3 0.8 14.2
Ian Ashton (CFO) 5 2 (77) 3 0.6 12.4
Andrew Allner (Chairman) 4 — — 3 — —
Shatish Dasani 3 — — 11.8 — —
Bruno Deschamps 4 — — 3 — —
Kath Durrant
2
7 — — 3 — —
Gillian Kent 4 — — 3 — —
Simon King 3 — — 19.4 — —
Alan Lovell
3
(0.25) — — 3 — —
Christian Rochat
4
(64) — — 3 — —
Diego Straziota — — — — — —
Average % increase for employees 6.7 0 (41.1) 5.6 (5.6) (18.3)
1. Steve Francis stood down as CEO on 1 February 2023. The reduced % change reflects that only one month of salary is reported for 2023.
2. From 25 September 2023, Kath Durrant was paid an additional fee as Senior Independent Director.
3. Alan Lovell stood down as Senior Independent Director on 25 September 2023. The % change reflects the removal of the additional fee from this date.
4. Christian Rochat stood down as Non-Executive Director on 4 May 2023. The reduced % change reflects his 2023 fees to his leave date.
CEO pay ratio
Financial year Method used
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
2023 Option B (Gender Pay Data) 66:1 49:1 39:1
2022 Option B (Gender Pay Data) 46:1 42:1 27:1
2021 Option B (Gender Pay Data) 53:1 45:1 31:1
2020 Option B (Gender Pay data) 44:1 38:1 31:1
2019 Option B (Gender Pay data) 32:1 28:1 20:1
For 2023, the Company has used Option B given the availability of data, in order that a direct comparison can be shown against last
year. Gender Pay for 2023 has been calculated in line with the guidance and details of the data used in the analysis can be found in
the Gender Pay Gap Report which will be published on our website (www.sigplc.com) in late March 2024.
In determining the quartile figures, one UK employee with the relevant hourly rate was chosen for each quartile and the single total
remuneration figure was calculated for them to compare to the CEO.
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Annual report on remuneration / continued
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118 SIG Annual Report and Accounts 2023
The Group feels that using Gender Pay Data ensures that these individuals are reasonably representative of pay levels at the 25th,
50th and 75th percentile as the single total remuneration figure for these individuals is similar to other employees with a similar
annual salary.
2023 2022
CEO 25th 50th 75th CEO 25th 50th 75th
Basic salary 665,795 23,387 32,812 40,090 564,543 24,046 32,960 41,227
Benefits 18,433 0 0 0 24,644 131 90 1,001
Pension 33,290 1,754 2,574 3,145 28,227 1,891 805 1,074
Bonus plan 224,359 1,200 0 1,876 817,176 5,251 100 10,500
LTIP 809,263 0 0 0 0 0 0 0
Total pay 1,751,140 26,341 35,386 45,111 1,434,590 31,319 33,955 53,802
Aggregate CEO pay for 2023 has been calculated for the period 1 January 2023 to 31 December 2023 based on the single total
figure of remuneration table for S Francis and G Slark.
The following elements have been used to calculate the single total figure of remuneration for the employee at each quartile; base
salary, bonus, employer pension contribution, car/car allowance, private medical insurance, Group income protection, and employer
share incentive plan contribution. No pay elements were omitted or adjusted to calculate CEO pay. Non-guaranteed overtime was
omitted for employees due to its variable nature.
The increase in the CEO pay ratio for 2023 is largely driven by the change of CEO and the vesting of the first two awards under SIG
plc’s 2020 Restricted Share Plan for the former CEO. We expect the CEO pay ratio to show less movement in future years.
The Committee continues to be committed to ensuring that CEO pay is commensurate with performance. For 2022 and 2023, the
CEO was paid a bonus in line with the scheme and treatment for all participants.
To ensure pay is managed appropriately at all levels in the organisation, we regularly review our salaries against those of similar roles
in both the wider market and our sector. We also undertake additional pay analysis, such as gender pay reporting, to ensure we can
identify, and, if appropriate, address any pay issues that arise. The ratio is driven by the differences in the structure of the pay of our
CEO, which is made up of a higher proportion of variable pay, versus that of our wider workforce colleagues. What is important from
our perspective is that this ratio is influenced only by the differences in structure, and not by divergence in fixed pay between the
CEO and wider workforce.
Relative importance of the spend on pay
The table below shows the percentage change in total employee pay expenditure and shareholder distribution (i.e. dividends and
share buybacks) from the financial year ended 31 December 2022 to the financial year ended 31 December 2023.
2023
£m
2022
£m % Change
Distribution to shareholders — — —
Employee remuneration
1
342.4 331.7 3.2%
1. Continuing operations employee remuneration.
The Company has declared that no final dividend would be paid for 2023 and no interim dividend was paid in 2023 (2022: nil).
119SIG Annual Report and Accounts 2023
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Remuneration
Annual report on remuneration / continued
Service contracts and letters of appointments
The Committee’s policy for setting notice periods is that normally they will be a maximum of 12 months. The Non-Executive
Directors of the Company do not have service contracts. The Non-Executive Directors are appointed by letters of appointment.
Each independent Non-Executive Director’s term of office runs for a three-year period.
The details of the service contracts in place during 2023 are as follows:
Executive Directors
Name Date of contract Company notice Executive notice
Guaranteed payments on
change of control or cessation
Gavin Slark 1 February 2023 12 months 12 months None
Steve Francis
1
25 February 2020 6 months 6 months None
Ian Ashton 1 July 2020 6 months 6 months None
1. Steve Francis stood down as CEO on 1 February 2023.
Terms of appointment of the Non-Executive Directors
Name Date of appointment Date of most recent term Date of expiry
Alan Lovell 1 August 2018 13 May 2021 12 May 2024
1
Andrew Allner 1 November 2017 1 November 2023 31 October 2026
Bruno Deschamps 10 July 2020 10 July 2023 9 July 2026
Christian Rochat
2
10 July 2020 10 July 2020 N/A
Gillian Kent 1 July 2019 12 May 2022 11 May 2025
Kath Durrant 1 January 2021 1 January 2024 31 December 2026
Shatish Dasani 1 February 2021 1 February 2024 31 January 2027
Simon King 1 July 2020 1 July 2023 30 June 2026
Diego Straziota
3
4 May 2023 4 May 2023 3 May 2026
1. This term of office was renewed for a further three years following the year-end date.
2. Christian Rochat stood down as Non-Executive Director at the 2023 AGM.
3. Diego Straziota was appointed on 4 May 2023.
Advisors to the Remuneration Committee
External
To ensure that the Group’s remuneration practices are in line with best practice, the Committee appointed independent external
remuneration advisors, Korn Ferry, through a competitive tender process in 2021. Korn Ferry confirms that it has no connection with
the Company or its individual directors.
The Committee sought advice from Korn Ferry in relation to various matters including emerging market practices in executive and
wider workforce incentive design and peer group analysis.
Korn Ferry is a member of the Remuneration Consultants Group and adheres to its Code of Conduct in its dealings with the
Committee. The Committee has reviewed, and is satisfied that, the advice received during 2023 was independent and robust.
The fees for the advice provided by Korn Ferry in 2023 were £90,250 (2022: £114,611) and were based on the time spent during
the year.
Corporate governance report / continued
120 SIG Annual Report and Accounts 2023
Internal
The Committee also sought internal support from the CEO, CFO, Chief People Officer, Group Head of Reward, and the Company
Secretary, at Committee meetings to address specific question and matters on the performance and remuneration of the senior
management team. This excluded any matter concerning their own remuneration. The Company Secretary acts as secretary to the
Committee.
Voting outcomes
The following table shows the results of the advisory vote on the 2022 Directors’ remuneration report and the remuneration policy at
the AGM held on 4 May 2023.
Resolution
Votes cast
‘for’ %
Votes cast
‘against’ %
Votes
‘withheld’
To approve the annual statement by the Chair of the
Remuneration Committee and the Directors’ remuneration
report for the year ended 31 December 2022 885,105,448 92.7 69,655,331 7. 3 5,826,470
To approve the remuneration policy 925,096,437 96.9 29,655,028 3.1 5,835,784
Review of Committee terms of reference
Revised terms of reference were adopted in December 2020. During 2023 the Committee has reviewed the appropriateness of
these terms and made a number of reasonably minor amendments. The latest version can be found on the Group’s website at
www.sigplc.com.
Committee performance review
An internal performance review of the Committee was conducted for 2023 and further details can be found on page 81. The
recommendations from the Committee’s 2022 performance review are set out below together with a summary of the progress
that was made to satisfy the recommendations during the year:
2022 Recommendations Action taken during 2023
Ensuring that incentive arrangements and
targets remain appropriate in a high-
inflation and recessionary environment
The Committee reviewed the incentive arrangements in place across the Group to
ensure they are driving the right performance and behaviours and delivering value
on investment. A number of recommendations were put forward to be actioned by
management in 2024.
Wider workforce remuneration The Committee received data, information and analysis on all employment terms and
conditions and remuneration arrangements across the Group. In addition, the Committee
reviewed SIG UK’s pay approach for its lowest paid employees and supported the
business’ commitment to pay all employees above the National Living Wage rate.
ESG-based incentives The Committee reviewed and approved the ESG measures included in individual
strategic objectives for the Executive Directors and Executive Leadership Team.
A review of the development of ESG-based incentives will be undertaken in 2024.
Kath Durrant
Chair of the Remuneration Committee
4 March 2024
121SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Directors’ report
Corporate governance report / continued
The Directors present their report and consolidated financial statements of the Group for the year ended 31 December 2023.
In accordance with the Companies Act 2006 (‘CA 2006’) other information required to be included in this Directors’ report are
included in the Strategic Report on pages 1 to 63. The Corporate Governance Report is deemed to be incorporated into this
Directors’ report by reference and can be found on pages 64 to 121. Further disclosure requirements contained in the CA 2006,
Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Part 3 of the
Companies (Miscellaneous Reporting) Regulations 2018, the Listing Rules and the Disclosure Guidance and Transparency Rules
(‘DTRs’) of the Financial Conduct Authority, which are not located in this Directors’ report can be found:
Disclosure Page reference
Acquisitions and disposals 158-160
Going concern statement 55
Directors’ biographies 66-67
Directors’ interests 116
Employee policies and the employment of disabled persons 47
Details on employee share schemes and long-term incentive schemes 153
Future developments in the business 1-63
Research and development activities 14-19
Disclosure of Greenhouse (GHG) gas emissions 48
Environmental, social and governance (ESG) matters 20-47
Engagement with employees, suppliers, customers and others 72-75
Principal risks and uncertainties 58-63
Financial risk management and financial instruments 164-168
Post-balance sheet events 182
Corporate Governance Statement including internal control and risk management statements 64-65; 94-95
Statement of Directors’ Responsibilities 127
Shareholder information 207
Subsidiary undertakings 204-206
Viability statement 56
Substantial shareholdings
The Company had received notification of the following shareholdings in its issued share capital pursuant to the DTRs as at
31 December 2023 and 22 February 2024.
Shareholder
Interests disclosed to
the Company
as at 31 December 2023 %
Interests disclosed to
the Company
as at 22 February 2024 %
CD&R Sunshine S. a. r. l. 342,220,120 28.96% 342,220,120 28.96%
IKO Enterprises Limited 174,918,803 14.8% 174,918,803 14.8%
Aberforth Partners LLP 116,611,521 9.87% 116,611,521 9.87%
BlackRock Investment Management 88,6 57, 870 7.50% 87,6 9 9, 281 7.42%
AzValor Asset Management 81,9 97,27 7 6.94% 84,882,919 7.18%
122 SIG Annual Report and Accounts 2023
Whistleblowing
The Group has in place a Whistleblowing policy under which employees may, in confidence, raise concerns about possible
wrongdoing in financial reporting or other matters. A copy of this policy is available on the Group’s website (www.sigplc.com).
The Group also has a confidential hotline in place, which is available to all Group employees and provides a facility for them to bring
matters to management’s attention on a confidential basis. The hotline is provided by an independent third-party. During 2023, these
systems were operational throughout the Group.
A full investigation is carried out on all matters raised and where a whistleblowing report has been prepared, an update is provided to
the Board as part of the Group General Counsel & Company Secretary’s report. The Group General Counsel & Company Secretary
also reports to the Board concerning ongoing investigations and conclusions reached. During 2023, Group employees used this
system to raise concerns about a number of separate issues, all of which were appropriately responded to.
Statement of the Directors on the disclosure of information to the Auditor
The Directors who held office at the date of approval of the Directors’ report confirm that:
− so far as they are each aware, there is no relevant audit information of which the Company’s Auditor is unaware; and
− each Director has taken all steps that they ought to have taken as a Director to make themselves aware of any relevant audit
information and to establish that the Company’s Auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the CA 2006.
On the recommendation of the Audit & Risk Committee (see page 92), in accordance with Section 489 of the CA 2006, resolutions
are to be proposed at the AGM for the reappointment of Ernst & Young LLP as Auditor of the Company and to authorise the Audit &
Risk Committee to agree its remuneration. The remuneration of the Auditor for the year ended 31 December 2023 is fully disclosed in
Note 3 to the Consolidated financial statements on page 149.
Powers of Directors
The Directors are responsible for the management of the business of the Company and may exercise all powers of the Company
subject to the provisions of the Company’s articles and of the CA 2006. A copy of the articles is available at www.sigplc.com.
Employees
The Group is committed to investing in, and rewarding, its workforce and accordingly it continues to develop and improve upon local
recognition programmes, which recognise outstanding work, efforts and achievements that are aligned with Group behaviours. The
Group provides regular training opportunities for its employees and also operates a share incentive plan for UK employees.
It is important that each employee understands the Group’s strategies, policies and procedures. Regular communication with
employees takes place through Workplace and employees are invited to attend results presentations held by the CEO and CFO.
Employee views are sought through the annual employee engagement survey. Further information on employee engagement
activities can be found on pages 72 to 75.
Numerical Diversity Data as at 31 December 2023
Our gender identity and ethnicity data in accordance with Listing Rule 9.8.6R(10) in the format set out in LR 9 Annex 2.1 at the year-
end is set out below. All Board members and ELT members were asked to complete a standardised diversity disclosure form on a
confidential and voluntary basis, self-reporting to questions aligned to the data required by, and definitions set out in, the Listing Rules.
Gender identity
Number of
Board
members
Percentage of
the Board
Number of
senior
positions on
the Board
(CEO, CFO, SID
and Chairman)
Number in
executive
management
(ELT )
Percentage of
executive
management
(ELT )
Men 8 80% 3 11 79%
Women 2 20% 1 3 21%
Not specified/prefer not to say — — — — —
123SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Ethnic background
Number of
Board
members
Percentage of
the Board
Number
of senior
positions on
the Board
(CEO, CFO, SID
and Chairman)
Number in
executive
management
(ELT )
Percentage of
executive
management
(ELT )
White British or other White (including minority-white groups) 9 90% 4 14 100%
Mixed/Multiple Ethnic Groups — — — — —
Asian/Asian British 1 10% — — —
Black/African/Caribbean/Black British — — — — —
Other ethnic group, including Arab — — — — —
Not specified/prefer not to say — — — — —==---- —-
Directors’ report / continued
Corporate governance report / continued
Publication of Annual Report
and notice of AGM
Shareholders are to note that the SIG plc
2023 Annual Report together with the
notice convening the 2024 AGM will
be published on the Group’s website
(www.sigplc.com). If shareholders
have elected to receive shareholder
correspondence in hard copy, then the
Annual Report and notice convening
the AGM will be distributed to them.
Political donations
It is the Group’s policy not to make
political donations and no political
donations were made during the year
(2022: £nil). Details of the Group’s policies
in relation to corporate governance are
disclosed on page 47.
Group results and dividends
The Consolidated income statement
for the year ended 31 December 2023
is shown on page 128. The movement
in Group reserves during the year is
shown on page 131 in the Consolidated
statement of changes in equity.
Segmental information is set out in Note 1
to the Consolidated financial statements
on pages 146 to 148.
The Board has taken the decision not to
declare a final dividend for the year ended
31 December 2023 (2022: nil). No interim
dividend was paid in 2023 (2022: nil).
Therefore, the total dividend paid in 2023
was nil (2022: nil).
Related party transactions
Except as disclosed in Note 30 to the
Consolidated financial statements on
page 182, and except for Directors’
service contracts and the Relationship
Agreement with CD&R, the Company
did not have any material transactions or
transactions of an unusual nature with,
and did not make loans to, related parties
in the periods in which any Director is or
was materially interested.
Summary of key terms of the
CD&R Relationship Agreement
The Company entered into a Relationship
Agreement with CD&R on 29 May 2020,
which will remain effective as long as
CD&R is entitled to exercise 10% or more
of the votes able to be cast on matters
at general meetings of the Company.
The Relationship Agreement regulates
the Company’s relationship with CD&R.
It includes agreement by CD&R that
it shall (and ensure that its associates
shall), among other things, conduct all
transactions with the Group at arm’s
length and on normal commercial terms,
not take actions that would have the
effect of preventing the Group from
carrying on its business independently
and not take any action that would
prevent the Group from complying with
its obligations under the Listing Rules and
other applicable laws and regulations.
More details on the content of the
Relationship Agreement can be found
in the prospectus dated 19 June 2020,
which is available on the Group’s website
(www.sigplc.com). As far as the Group
is aware the undertakings included in
the Relationship Agreement have been
complied with during the period
under review.
Further details on the CD&R relationship
in practice can be found on page 76.
Directors’ and officers’ liability
insurance and indemnities
The Company purchases liability insurance
cover for Directors and officers of the
Company and its subsidiaries, which gives
appropriate cover for any legal action
brought against them. The Company has
also provided an indemnity, which was
in force during the financial year for its
Directors to the extent permitted by the
law in respect of liabilities incurred as a
result of their office. The indemnity would
not provide any coverage to the extent
that a Director is proven to have acted
fraudulently or dishonestly.
No claims or qualifying indemnity
provisions and no qualifying pension
scheme indemnity provisions have been
made either during the year or by the date
of approval of this Directors’ report.
Share capital
The Company has a single class of share
capital, which is divided into ordinary
shares of 10p each. At 31 December
2023, the Company had a called-up
share capital of £118,155,697.70 divided
into ordinary shares of 10p each (2022:
£118,155,697.70).
During the year ended 31 December
2023, options over 2,979,315 ordinary
shares vested under the Company’s share
option schemes. No new ordinary shares
were allotted to satisfy the vesting of
these options and no new ordinary shares
have been allotted under these schemes
since the end of the financial year to the
date of this report. Details of outstanding
options under the Group’s employee and
executive schemes are set out in Note 9
on page 153, which also contains details
of options granted over unissued share
capital.
124 SIG Annual Report and Accounts 2023
Rights attaching to shares
The rights attaching to the ordinary
shares are defined in the Company’s
Articles of Association. The Articles of
Association may be changed by special
resolution of the Company. A shareholder
whose name appears on the Company’s
Register of Members can choose whether
their shares are evidenced by share
certificates (e.g. in certificated form) or
held in electronic (e.g. uncertificated)
form in CREST (the electronic settlement
system in the UK).
Subject to any restrictions below,
shareholders may attend any general
meetings of the Company and, on a
show of hands, every shareholder (or
their representative) who is present
at a general meeting has one vote on
each resolution and, on a poll, every
shareholder (or their representative) who
is present has one vote on each resolution
for every ordinary share of which they are
the registered shareholder.
A resolution put to the vote of a general
meeting is decided on a show of hands
unless before or on the declaration of
the result of a vote on a show of hands,
a poll is demanded by the Chairman
of the meeting, or by at least five
shareholders (or their representatives)
present in person and having the right
to vote, or by any shareholders (or their
representatives) present in person having
at least 10% of the total voting rights of all
shareholders, or by any shareholders (or
their representatives) present in person
holding ordinary shares in which an
aggregate sum has been paid up of at
least one-tenth of the total sum paid up
on all ordinary shares.
Shareholders can declare final dividends
by passing an ordinary resolution, but the
amount of such dividends cannot exceed
the amount recommended by the Board.
The Board can pay interim dividends on
any class of shares of the amounts and
on the dates and for the periods they
decide provided the distributable profits
of the Company justify such payment.
The Board may, if authorised by an
ordinary resolution of the shareholders,
offer any shareholder the right to elect to
receive new ordinary shares, which will be
credited as fully paid, instead of their
cash dividend.
Any dividend that has not been claimed
for 12 years after it became due for
payment will be forfeited and will then
belong to the Company unless the
Directors decide otherwise.
If the Company is wound up, the liquidator
can, with the sanction of an extraordinary
resolution passed by the shareholders,
divide among the shareholders all or any
part of the assets of the Company and
they can value any assets and determine
how the division shall be carried out
as between the members or different
classes of members. The liquidator can
also transfer the whole or any part of the
assets to trustees upon any trusts for the
benefit of the members. No shareholders
can be compelled to accept any asset
which would give them a liability.
Under the Company’s share incentive
scheme (the ‘SIP’), the SIP trustee
holds shares on behalf of employee
participants. In accordance with the SIP
trust deed and rules, the SIP trustee must
act in accordance with any directions
given by a SIP participant in respect of
their SIP shares. In the absence of any
such directions from a SIP participant the
SIP trustee will not take any action
in respect of SIP shares.
Under the SIG employee benefit trust (the
‘EBT’), the EBT trustee holds shares to be
used for the settlement of awards granted
under the Company’s incentive plans. The
EBT trustee has, under the trust deed
establishing the EBT, waived all rights to
vote in respect of any shares held in the
EBT, except any shares participants own
beneficially, in respect of which it will invite
participants to direct how the trustee
shall act in relation to the shares held on
their behalf. The number of shares held
in the EBT on 22 February 2024 was
26,421,500. The EBT trustee also waives
any dividends on shares held in the EBT.
Further information relating to the
change of control provisions under the
Group’s incentive plans appears within
the remuneration policy available on the
Group’s website www.sigplc.com.
Voting at general meetings
Any form of proxy sent by the Company
to shareholders in relation to any general
meeting must be delivered to the
Company, whether in written or electronic
form, no less than 48 hours before the
time appointed for holding the meeting or
adjourned meeting at which the person
named in the appointment proposes
to vote.
The Board may determine that the
shareholder is not entitled to exercise any
right conferred by being a shareholder
if they or any person with an interest in
shares has been sent a notice under
Section 793 of the CA 2006 (which
confers upon public companies the power
to require information with respect to
interests in their voting shares) and they or
any interested person failed to supply the
Company with the information requested
within 14 days after delivery of that notice.
The Board may also decide that no
dividend is payable in respect of those
default shares and that no transfer of any
default shares shall be registered.
These restrictions end seven days after
receipt by the Company of a notice of
an approved transfer of the shares or all
the information required by the relevant
Section 793 Notice, whichever is the
earlier.
Transfer of shares
The Board may refuse to register a
transfer of a certificated share that is
not fully paid, provided that the refusal
does not prevent dealings in shares in
the Company from taking place on an
open and proper basis. The Board may
also refuse to register a transfer of a
certificated share unless: (i) the instrument
of transfer is lodged, duly stamped (if
necessary), at the registered office of the
Company or any other place decided by
the Board accompanied by a certificate
for the share to which it relates and
such other evidence as the Board may
reasonably require to show the right of
the transferor to make the transfer; (ii) is
in respect of only one class of shares;
and (iii) is in favour of not more than four
transferees.
Transfer of uncertificated shares must be
carried out using CREST and the Board
can refuse to register a transfer of an
uncertificated share in accordance with
the regulations governing the operation
of CREST.
125SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Directors’ report / continued
Corporate governance report / continued
Variation of rights
If at any time the capital of the Company
is divided into different classes of shares,
the special rights attaching to any class
may be varied or revoked either:
i. with the written consent of the holders
of at least 75% in nominal value of the
issued shares of the class; or
ii. with the sanction of an extraordinary
resolution passed at a separate
general meeting of the holders of the
shares of the class.
The Company can issue new shares and
attach any rights to them. If there is no
restriction by special rights attaching to
existing shares, rights attaching to new
shares can take priority over the rights of
existing shares, or the new shares and the
existing shares are deemed to be varied
(unless the rights expressly allow it) by a
reduction of paid up capital, or if another
share of that same class is issued and
ranks in priority for payment of dividend,
or in respect of capital or more favourable
voting rights.
Election and re-election
of Directors
The Company may, by ordinary resolution,
of which special notice has been given in
accordance with the CA 2006, remove
any Director before the expiration of their
period of office. The office of a Director
shall be vacated if:
i. they cease to be a Director by virtue
of any provision of law or are removed
pursuant to the Company’s Articles of
Association or they become prohibited
by law from being a Director;
ii. they become bankrupt or compound
with their creditors generally;
iii. they become of unsound mind or a
patient for any purpose of any statute
relating to mental health and the Board
resolves that their office is vacated;
iv. they resign;
v. they fail to attend Board meetings
for six consecutive months without
leave of absence from the Board and
the Board resolves that the office is
vacated;
vi. their appointment terminates in
accordance with the provisions of the
Company’s Articles;
vii. they are dismissed from executive
office;
viii. they are convicted of an indictable
offence and the Directors resolve that
it is undesirable in the interests of
the Company that they remain as a
Director; or
ix. the conduct of the Director is the
subject of an investigation and the
Directors resolve that it is undesirable
in the interests of the Company that
they remain a Director.
The Board may, from time to time, appoint
one or more Directors as Managing
Director or to fulfil any other executive
function within the Company for such
term, remuneration and other conditions
of appointment as it may determine, and it
may revoke such appointment (subject to
the provisions of the CA 2006).
Agreements with employees
and significant agreements
(contracts of significance)
There are no agreements between the
Company and its Directors or employees
providing for compensation for loss of
office or employment (whether through
resignation, purported redundancy or
otherwise) that occurs because of a
takeover bid.
The Company’s borrowing arrangements
are terminable upon a change of control
of the Company.
Fixed assets
In the opinion of the Directors, there
is no material difference between the
book value and the current open market
value of the Group’s interests in land and
buildings.
CREST
The Company’s ordinary shares are in
CREST, the settlement system for stocks
and shares.
2024 Interim Report
Current regulations permit the Company
not to send hard copies of its Interim
Reports to shareholders and therefore
the Company intends to publish its
Interim Report on its website at
www.sigplc.com.
Authority to purchase own
ordinary shares
Shareholders’ authority for the purchase
by the Company of 118,155,698 of its
own shares existed at the end of the year.
The Company has made no purchases
of its own ordinary shares pursuant to
this authority. The Company will seek to
renew this.
Cautionary statement
The cautionary statement can be found
on page 57 of the Strategic report.
Approval of the Directors’
report
The Directors’ report set out on pages
122 to 126 was approved by the Board of
Directors on 4 March 2024 and signed on
its behalf by:
Andrew Watkins
Group General Counsel &
Company Secretary
4 March 2024
126 SIG Annual Report and Accounts 2023
Directors’ Responsibilities
Statement
The Directors are responsible for
preparing the Annual Report and the
Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to
prepare Financial Statements for each
financial year. Under that law the Directors
are required to prepare the Group
Financial Statements, in accordance with
UK adopted international accounting
standards. The Directors have elected to
prepare the Parent Company Financial
Statements in accordance with United
Kingdom Accounting Standards,
including Financial Reporting Standard
101, ‘Reduced Disclosure Framework’
(United Kingdom Generally Accepted
Accounting Practice) as applied in
accordance with the provisions of the
Companies Act 2006. Under company
law the Directors must not approve the
Financial Statements unless they are
satisfied that they give a true and fair view
of the assets, liabilities, financial position
and profit or loss of the Company for
that period.
In preparing the Parent Company
Financial Statements, the Directors are
required to:
− select suitable accounting policies and
then apply them consistently;
− make judgements and accounting
estimates that are reasonable and
prudent;
− state whether applicable UK Accounting
Standards have been followed,
subject to any material departures
disclosed and explained in the Financial
Statements; and
− prepare the Financial Statements on
the going concern basis unless it is
inappropriate to presume that the
Company will continue in business.
In preparing the Group Financial
Statements, International Accounting
Standard 1 requires that Directors:
− Properly select and apply accounting
policies;
− Present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information;
− Provide additional disclosures
when compliance with the specific
requirements in IFRS are insufficient to
enable users to understand the impact
of particular transactions, other events
and conditions on the entity’s financial
position and financial performance; and
− Make an assessment of the Company’s
ability to continue as a going concern.
The Directors are responsible for keeping
adequate accounting records that
are sufficient to show and explain the
Company’s transactions and disclose
with reasonable accuracy, at any time,
the financial position of the Group at
that time and enable them to ensure that
the Financial Statements comply with
the Companies Act 2006. They are also
responsible for safeguarding the assets
of the Company and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for
the maintenance and integrity of the
corporate and financial information
included on the Company’s website.
Legislation in the United Kingdom
governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our
knowledge:
− The Financial Statements, prepared in
accordance with the relevant financial
reporting framework, give a true
and fair view of the assets, liabilities,
financial position and profit or loss of
the Company and the undertakings
included in the consolidation taken
as a whole; and
− The Strategic report includes a
fair review of the development and
performance of the business and
the position of the Company, and
the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face.
This responsibility statement was approved
by the Board of Directors on 4 March
2024 and is signed on its behalf by:
Gavin Slark
Chief Executive Officer
4 March 2024
Ian Ashton
Chief Financial Officer
4 March 2024
127SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
129 Consolidated income statement
130 Consolidated statement of comprehensive income
131 Consolidated balance sheet
132 Consolidated statement of changes in equity
133 Consolidated cash flow statement
134 Accounting policies
144 Critical accounting judgements and key sources
of estimation uncertainty
146 Notes to the consolidated financial statements
183 Non-statutory information
186 Independent auditor’s report
194 Five-year summary
195 Company balance sheet
196 Company statement of changes in equity
197 Company accounting policies
199 Company critical accounting judgements and key
sources of estimation uncertainty
200 Notes to the Company financial statements
204 Group companies 2022
207 Company information
Financial statements
128 SIG Annual Report and Accounts 2023
Note
| Underlying | Other items | Total | Underlying | Other items | Total | ||
| 2023 | 2023 | 2023 | 2022 | 2022 | 2022 | ||
| £m | £m | £m | £m | £m | £m | ||
Revenue | 1 | ||||||
Cost of sales | ( | ( | ( | ( | |||
Gross profit | |||||||
Other operating expenses | 2 | ( | ( | ( | ( | ( | ( |
| Impairment (losses)/gains on financial | |||||||
assets | 2 | ( | ( | ( | ( | ( | |
Gain on disposal of property | 2 | ||||||
Operating profit | 3 | ( | ( | ||||
Finance income | 5 | ||||||
Finance costs | 5 | ( | ( | ( | ( | ( | ( |
Profit/(loss) before tax | ( | ( | ( | ||||
Income tax (expense)/credit | 6 | ( | ( | ( | ( | ||
Profit/(loss) after tax | ( | ( | ( | ||||
| Attributable to: | |||||||
Equity holders of the Company | ( | ( | ( | ||||
| (Loss)/earnings per share | |||||||
Basic | 8 | ( | |||||
Diluted | 8 | ( |
1
2
1
2
1. Underlying represents the results before Other items. See the Accounting policies for further details.
2. Other items have been disclosed separately in order to give an indication of the underlying earnings of the Group. Other items are defined in the Accounting policies and
further details are disclosed in Note 2.
All results are from continuing operations.
The accompanying Accounting policies and Notes to the consolidated financial statements are an integral part of this Consolidated
income statement.
Consolidated income statement
for the year ended 31 December 2023
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| 2023 | 2022 | ||
| Note | £m | £m | |
(Loss)/profit after tax for the year | ( | ||
| Items that will not subsequently be reclassified to the Consolidated income statement: | |||
Remeasurement of defined benefit pension liability | 28 | ( | |
Deferred tax movement associated with remeasurement of defined benefit pension liability | 22 | ( | ( |
( | |||
| Items that may subsequently be reclassified to the Consolidated income statement: | |||
Exchange difference on retranslation of foreign currency goodwill and intangibles | ( | ||
Exchange difference on retranslation of foreign currency net investments (excluding goodwill and intangibles) | ( | ||
| Exchange and fair value movements associated with borrowings and derivative financial | |||
instruments | ( | ||
Losses and gains on cash flow hedges | ( | ||
Transfer to profit and loss on cash flow hedges | ( | ||
( | |||
Other comprehensive income/(expense) | ( | ||
Total comprehensive (expense)/income | ( | ||
| Attributable to: | |||
Equity holders of the Company | ( |
The accompanying Accounting policies and Notes to the consolidated financial statements are an integral part of this Consolidated
statement of comprehensive income.
Consolidated statement of comprehensive income
for the year ended 31 December 2023
130 SIG Annual Report and Accounts 2023
Consolidated balance sheet
as at 31 December 2023
| 2022 | |||
| 2023 | Restated | ||
| Note | £m | £m | |
| Non-current assets | |||
Property, plant and equipment | 10 | ||
Right-of-use assets | 23 | ||
Goodwill | 11 | ||
Intangible assets | 12 | ||
Lease receivables | 23 | ||
Deferred tax assets | 22 | ||
Non-current financial assets | 18 | ||
| Current assets | |||
Inventories | 14 | ||
Lease receivables | 23 | ||
Trade and other receivables | 15 | ||
Current tax assets | 15 | ||
Current financial assets | 18 | ||
Cash at bank and on hand | 18 | ||
Total assets | |||
| Current liabilities | |||
Trade and other payables | 16 | ||
Lease liabilities | 16 | ||
Interest-bearing loans and borrowings | 17 | ||
Deferred consideration | 16 | ||
Derivative financial instruments | 16 | ||
Current tax liabilities | 16 | ||
Provisions | 21 | ||
| Non-current liabilities | |||
Lease liabilities | 23 | ||
Interest-bearing loans and borrowings | 17 | ||
Deferred consideration | 18 | ||
Derivative financial instruments | 18 | ||
Other payables | |||
Retirement benefit obligations | 28 | ||
Provisions | 21 | ||
Total liabilities | |||
Net assets | |||
| Capital and reserves | |||
Called up share capital | 24 | ||
Treasury shares reserve | 24 | ( | ( |
Capital redemption reserve | |||
Share option reserve | |||
Hedging and translation reserves | |||
Cost of hedging reserve | |||
Merger reserve | |||
Retained profits | |||
Attributable to equity holders of the Company | |||
Total equity |
The 2022 Consolidated balance sheet has been restated as a
result of the finalisation of the acquisition fair values, as explained
in the Accounting policies and Note 13. The accompanying
Accounting policies and Notes to the consolidated financial
statements are an integral part of this Consolidated balance sheet.
The Consolidated financial statements were approved by the
Board of Directors on 4 March 2024 and signed on its behalf by:
Gavin Slark Ian Ashton
Director Director
Registered in England: 00998314
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Consolidated statement of changes in equity
for the year ended 31 December 2023
| Hedging | |||||||||
| Called up | Treasury | Capital | Share | and | Cost of | Retained | |||
| share | shares | redemption | option | translation | hedging | Merger | profits/ | ||
| capital | reserve | reserve | reserve | reserves | reserve | reserve | (losses) | Total | |
| £m | £m | £m | £m | £m | £m | £m | £m | £m | |
At 1 January 2022 | ( | ||||||||
Profit after tax | |||||||||
| Other comprehensive income/ | |||||||||
(expense) | ( | ( | |||||||
Total comprehensive income | |||||||||
Purchase of treasury shares | ( | ( | |||||||
Credit to share option reserve | |||||||||
Settlement of share options | ( | ( | |||||||
At 31 December 2022 | ( | ||||||||
Loss after tax | ( | ( | |||||||
| Other comprehensive | |||||||||
(expense)/income | ( | ||||||||
Total comprehensive expense | ( | ( | ( | ||||||
Purchase of treasury shares | ( | ( | |||||||
Credit to share option reserve | |||||||||
Settlement of share options | ( | ||||||||
At 31 December 2023 | ( |
The share option reserve represents the cumulative equity-settled share option charge under IFRS 2 “Share-based payment” less
the value of any share options that have been exercised.
The hedging and translation reserves represents movements in the Consolidated balance sheet as a result of movements in
exchange rates and movements in the fair value of cash flow hedges which are reflected in equity through Other comprehensive
income as detailed in the Accounting policies.
Treasury shares relate to shares purchased by the SIG Employee Benefit Trust (“EBT”) to satisfy awards made under the Group’s
share plans which are not vested and beneficially owned by employees.
The merger reserve represents the premium on ordinary shares issued in a previous year through the use of a cash box structure.
The accompanying Accounting policies and Notes to the consolidated financial statements are an integral part of this Consolidated
statement of changes in equity.
132 SIG Annual Report and Accounts 2023
Consolidated cash flow statement
for the year ended 31 December 2023
| 2023 | 2022 | ||
| Note | £m | £m | |
| Net cash flow from operating activities | |||
Cash generated from operating activities | 25 | ||
Income tax paid | ( | ( | |
Net cash generated from operating activities | |||
| Cash flows from investing activities | |||
Finance income received | |||
Purchase of property, plant and equipment and computer software | ( | ( | |
Initial direct costs of right-of-use assets | ( | ( | |
Proceeds from sale of property, plant and equipment | |||
Net cash flow on the purchase of businesses | 13 | ( | |
Settlement of amounts payable for previous purchases of businesses | 13 | ( | ( |
Investment in financial assets | ( | ||
Net cash flow from investing activities | ( | ( | |
| Cash flows from financing activities | |||
Finance costs paid | ( | ( | |
Repayment of lease liabilities | ( | ( | |
Repayment of borrowings | ( | ( | |
Acquisition of treasury shares | ( | ( | |
Net cash flow from financing activities | ( | ( | |
Increase/(decrease) in cash and cash equivalents in the year | 26 | ( | |
| Cash and cash equivalents at beginning of the year | 27 | ||
Effect of foreign exchange rate changes | 27 | ( | |
| Cash and cash equivalents at end of the year | 27 |
1
1
1. Cash and cash equivalents comprise cash at bank and on hand of £132 .2 m (2022: £1 30. 1 m) less bank overdrafts of £nil (2022: £nil).
The accompanying Accounting policies and Notes to the consolidated financial statements are an integral part of this Consolidated cash
flow statement.
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Notes to the consolidated financial statements
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
148 SIG Annual Report and Accounts 2023
4. Staff costs
Particulars of employees (including Directors) are shown below:
2023
£m
2022
£m
Employee costs during the year amounted to:
Wages and salaries 275.7 268.5
Social security costs 52.1 49.7
IFRS 2 share-based payment expense 5.1 4.4
Pension costs (Note 28) 8.1 7.7
Redundancy costs 1.4 1.4
Total staff costs 342.4 331.7
In addition to the above, redundancy and related staff costs of £6.7m (2022: £0.1m) have been included within Other items (Note 2),
including £0.4m (2022: £nil) share-based payment expense.
Of the pension costs noted above, a charge of £0.6m (2022: £0.5m) relates to defined benefit schemes and a charge of £7.5m (2022:
£7.2m) relates to defined contribution schemes. See Note 28 for more details.
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4. Staff costs continued
The average monthly number of persons employed by the Group during the year was as follows:
2023
Number
2022
Restated
1
Number
Distribution and operations 3,409 3,362
Sales and marketing 2,958 2,931
Management and administration 843 850
Total 7,210 7,14 3
1. The 2022 analysis of average employee numbers has been restated to present on a consistent basis with the current year, as explained in the Accounting Policies.
Directors’ emoluments
Details of the individual Directors’ emoluments are given in the Directors’ Remuneration Report on page 112.
The employee costs shown above include the following emoluments in respect of Directors of the Company:
2023
£m
2022
£m
Directors’ remuneration (excluding IFRS 2 share-based payment expense but including social security costs) 2.4 3.4
Total 2.4 3.4
Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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13. Acquisitions
The Group has not made any business acquisitions during the year.
Acquisitions in 2022
On 14 July 2022 the Group acquired Thermodämm GmbH to enlarge its market share in the German screed flooring business and
the acquisition was allocated to the Germany segment. On 22 July 2022 the Group acquired Miers Construction Products Limited
to enlarge the UK Interiors business in terms of product range and geographic location, and the acquisition was allocated to the
UK Interiors segment. The Miers business is now allocated to the UK Specialist Markets segment following the change in reported
operating segments during the year (see Note 1).
Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
158 SIG Annual Report and Accounts 2023
The fair values of the identifiable assets and liabilities of the acquisitions at the date of acquisition have been finalised during the
current year. This resulted in a decrease in the current tax asset of £0.3m, an increase in the current tax liability of £0.3m and a
corresponding increase in the goodwill recognised of £0.6m in relation to the Miers acquisition. This has been recognised as a
restatement of the 2022 Consolidated balance sheet and the final balances on acquisition are as follows:
2022
Miers
Restated
£m
Thermodämm
£m
Total
Restated
£m
Assets
Intangible assets (customer relationships) 12.0 1.7 13.7
Property, plant and equipment 0.8 0.2 1.0
Right-of-use assets 2.7 0.6 3.3
Cash and cash equivalents 4.1 0.2 4.3
Trade and other receivables 13.0 0.3 13.3
Inventories 7.3 0.6 7.9
39.9 3.6 43.5
Liabilities
Trade and other payables (12.2) (0.6) (12.8)
Provisions (1.1) — (1.1)
Current tax liability (0.3) — (0.3)
Deferred tax liability (3.0) (0.7) (3.7)
Bank loan (3.2) — (3.2)
Lease liability (2.7) (0.7) (3.4)
(22.5) (2.0) (24.5)
Total identifiable net assets at fair value 17.4 1.6 19.0
Goodwill arising on acquisition (Note 11) 13.8 2.0 15.8
Purchase consideration transferred 31.2 3.6 34.8
The fair value of trade receivables amounted to £12.1m for Miers and £0.3m for Thermodämm. The gross amount of trade
receivables was £12.5m for Miers and £0.3m for Thermodämm. The Group measured the acquired lease liabilities using the present
value of the remaining lease payments at the date of acquisition. The right-of-use assets were measured at an amount equal to the
lease liability.
The goodwill of £13.8m relating to Miers comprised the value of expected synergies arising from the acquisition, strategic fit with the
UK Interiors business and geographic location, in particular the developing sales in the construction accessories sector. The goodwill
of £2.0m relating to Thermodämm comprised the value of the strategic fit within the German branch landscape and expected
synergies arising from the acquisition.
From the date of acquisition, Miers contributed £27.6m of revenue and £0.2m to underlying profit before tax of the Group for the
year ended 31 December 2022, and Thermodämm contributed £2.7m of revenue and £0.1m to underlying profit before tax. If
the acquisitions had taken place at the beginning of the prior year, revenue for the Group would have been £2,783.0m and profit
before tax for the Group would have been £30.5m. Acquisition-related costs of £0.8m for Miers and £0.1m for Thermodämm were
recognised within Other items in the Consolidated income statement in 2022.
Purchase consideration
2022
Miers
£m
Thermodämm
£m
Total
£m
Cash paid on completion 26.9 3.4 30.3
Deferred consideration due within one year — 0.2 0.2
Deferred consideration due after more than one year 1.8 — 1.8
Contingent consideration due after more than one year 2.5 — 2.5
Total consideration 31.2 3.6 34.8
The contingent consideration in relation to Miers is payable dependent on the performance of the business based on adjusted
EBITDA exceeding an EBITDA threshold, as defined in the sale and purchase agreement, for the financial year to 31 December 2023,
subject to a maximum of £2.6m. The range of contingent consideration payable is therefore £nil to £2.6m, with £2.5m recognised
at the date of acquisition on the basis of forecasts and fair value calculation. This has been increased to the maximum £2.6m at 31
December 2023 based on actual results for the year, with the £0.1m increase recognised in profit or loss (within Other items), and the
liability included within other payables due within one year on the Consolidated balance sheet. The fair value is measured using Level
3 inputs and is sensitive to changes in one or more observable inputs.
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13. Acquisitions continued
A further amount of up to £4.0m is also payable in relation to Miers in 2024, which is dependent on the performance of the business
for the financial year to 31 December 2023 and dependent on the vendors remaining within the business. This is therefore treated
as remuneration and is being charged to the Consolidated income statement as earned. £1.2m was recognised and included within
other payables at 31 December 2022, with a further £2.8m recognised in 2023 and the total liability of £4.0m included in other
payables due within one year at 31 December 2023.
Analysis of cash flows on acquisition
2022
Miers
£m
Thermodämm
£m
Total
£m
Consideration paid (included in cash flows from investing activities) (26.9) (3.4) (30.3)
Net cash acquired with the subsidiary (included in cash flows from investing activities) 4.1 0.2 4.3
Total net cash flow included in cash flows from investing activities (22.8) (3.2) (26.0)
Transaction costs (included in cash flow from operating activities) (0.8) (0.1) (0.9)
Net cash flow on acquisition (23.6) (3.3) (26.9)
Deferred consideration
A reconciliation of the movement in deferred consideration is provided below:
2023
£m
2022
£m
Liability at 1 January 2.5 1.8
Liability arising on acquisitions in the year — 2.0
Amounts paid relating to previous acquisitions (included within cash flow from investing activities) (0.7) (1.3)
Liability at 31 December 1.8 2.5
Included in current liabilities 1.8 0.7
Included in non-current liabilities — 1.8
Total 1.8 2.5
Contingent consideration
A reconciliation of the movement in the fair value measurement of contingent consideration is provided below:
2023
£m
2022
£m
Liability at 1 January 3.0 0.5
Liability arising on acquisitions in the year — 2.5
Unrealised fair value changes recognised in profit or loss 0.1 —
Liability at 31 December 3.1 3.0
Included in current liabilities (within accruals and other payables) 3.1 0.5
Included in non-current liabilities (within other payables) — 2.5
Total 3.1 3.0
Consideration dependent on vendors remaining within the business
Amounts which may be paid to vendors of recent acquisitions who are employed by the Group and are contingent upon the vendors
remaining within the business are, as required by IFRS 3 “Business Combinations”, treated as remuneration and charged to the
Consolidated income statement as earned. A reconciliation of the movement in amounts accrued is as follows:
2023
£m
2022
£m
Liability at 1 January 1.2 0.6
New amounts accrued 2.8 1.4
Amounts paid (included within cash flow from operating activities) — (0.8)
Liability at 31 December 4.0 1.2
Included in current liabilities (within accruals and other payables) 4.0 —
Included in non-current liabilities (within other payables) — 1.2
Total 4.0 1.2
Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
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30. 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.
In 2023, SIG incurred expenses of £0.3m (2022: £0.2m) on behalf of the SIG plc Retirement Benefits Plan, the UK defined benefit
pension scheme.
Notes to the consolidated financial statements / continued
for the year ended 31 December 2023
182 SIG Annual Report and Accounts 2023
Non-statutory information
The Group uses a number of alternative performance measures, which are non-IFRS, to describe the Group’s performance. The
Group considers these performance measures to provide useful historical financial information to help investors evaluate the
underlying performance of the business. Alternative performance measures are not a substitute for or superior to statutory IFRS
measures.
These measures, as shown below, are used to improve the comparability of information between reporting periods and geographical
units and to adjust for Other items (as explained in further detail within the Accounting policies). This also reflects how the business
is managed and measured on a day-to-day basis. Measures presented are aligned with the key performance measures used in the
business and as included in the Strategic report.
a) Net debt
Net debt is a key metric for the Group, and monitoring it is an important element of treasury risk management for the Group. Net
debt excluding the impact of IFRS 16 is no longer relevant for financial covenant purposes but is still monitored for comparative
purposes.
Note
2023
£m
2022
£m
Reported net debt 27 458.0 444.0
Lease liabilities recognised in accordance with IFRS 16 (307.3) (285.0)
Lease receivables recognised in accordance with IFRS 16 3.3 1.3
Net debt excluding the impact of IFRS 16 154.0 160.3
b) Leverage
Leverage is one of the covenants applicable to the RCF and is used as a key performance measure for the Group. It is calculated as
net debt divided by the last twelve months underlying EBITDA.
2023
£m
2022
£m
Underlying operating profit 53.1 80.2
Add back:
Depreciation of right-of-use assets and property, plant and equipment 76.6 73.2
Amortisation of computer software 2.4 3.2
Underlying EBITDA 132.1 156.6
Reported net debt 458.0 444.0
Leverage 3.5x 2.8x
Leverage excluding the impact of IFRS 16 is calculated as follows:
2023
£m
2022
£m
Underlying operating profit 53.1 80.2
Impact of IFRS 16 (13.5) (8.6)
Underlying operating profit excluding impact of IFRS 16 39.6 71.6
Add back:
Depreciation excluding impact of IFRS 16 13.0 12.2
Amortisation of computer software 2.4 3.2
Underlying EBITDA excluding the impact of IFRS 16 55.0 87.0
Net debt excluding the impact of IFRS 16 154.0 160.3
Leverage excluding the impact of IFRS 16 2.8x 1.8x
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c) Like-for-like sales
Like-for-like sales is calculated on a constant currency basis, and represents the growth in the Group’s sales per day excluding
any acquisitions or disposals completed or agreed in the current and prior year. Revenue is not adjusted for branch openings and
closures. This measure shows how the Group has developed its revenue for comparable business relative to the prior period. As
such it is a key measure of the growth of the Group during the year. Underlying revenue is revenue from continuing operations
excluding non-core businesses.
UK
Interiors
£m
UK
Exteriors
£m
UK
Specialist
Markets
£m
Total UK
£m
France
Interiors
£m
France
Exteriors
£m
Total
France
£m
Germany
£m
Benelux
£m
Ireland
£m
Poland
£m
Total
Group
£m
Statutory and
underlying
revenue 2023 563.7 370.4 266.0 1,200.1 219.0 471.3 690.3 462.1 116.9 94.1 237.9 2,801.4
Less: inter-segment
revenue (7.2) (1.0) (18.4) (26.6) (0.1) (13.3) (13.4) — — (0.2) — (40.2)
External revenue 556.5 369.4 247.6 1,173.5 218.9 458.0 676.9 462 .1 116.9 93.9 237.9 2,761.2
Statutory and
underlying
revenue 2022 566.7 363.8 239.2 1,169.7 218.5 475.3 693.8 457.9 115.9 108.3 230.8 2,776.4
Less: inter-segment
revenue (5.2) (0.7) (16.0) (21.9) (0.1) (9.7) (9.8) (0.1) — — (0.1) (31.9)
External revenue 561.5 363.1 223.2 1,147.8 218.4 465.6 684.0 457.8 115.9 108.3 230.7 2,744.5
% change year
on year:
Underlying revenue (0.9)% 1.7% 10.9% 2.2% 0.2% (1.6)% (1.0)% 0.9% 0.9% (13.3)% 3.1% 0.6%
Impact of currency — — — — (1.6)% (1.6)% (1.6)% (1.6)% (1.6)% (1.4)% (5.1)% (1.2)%
Impact of acquisitions — — (16.4)% (3.0)% — — — (1.0)% — — — (1.4)%
Impact of
working days (0.4)% (0.4)% (0.4)% (0.4)% 0.4% 0.4% 0.4% 0.4% 0.4% — — —
Like-for-like sales (1.3)% 1.3% (5.9)% (1.2)% (1.0)% (2.8)% (2.2)% (1.3)% (0.3)% (14.7)% (2.0)% (2.0)%
d) Operating margin
This is used to enhance understanding and comparability of the underlying financial performance of the Group and is calculated as
underlying operating profit as a percentage of underlying revenue.
2023
£m
2022
£m
Underlying revenue 2,761.2 2,744.5
Underlying operating profit 53.1 80.2
Operating margin 1.9% 2.9%
Non-statutory information / continued
184 SIG Annual Report and Accounts 2023
e) Free cash flow
Free cash flow is defined as all cash flows excluding M&A transactions, dividend payments and financing transactions. Operating
cash flow represents free cash flow before interest and financing, costs of refinancing and tax. These measures are used to enhance
understanding and comparability of the cash generation of the Group.
2023
£m
2022
£m
Increase/(decrease) in cash and cash equivalents in the year 2.7 (18.3)
Add back:
Net cash flow on the purchase of businesses — 26.0
Settlement of amounts payable for previous purchases of businesses 0.7 1.3
Investment in financial assets — 0.2
Repayment of borrowings 0.8 1.4
Free cash flow 4.2 10.6
Add back:
Finance costs paid 36.9 30.1
Finance income received (2.2) (1.3)
Other refinancing cash costs
1
— 1.1
Tax paid 14.0 14.3
Operating cash flow 52.9 54.8
1. Includes costs accrued in the prior year and paid in the current year.
f) Other non-statutory measures
In addition to the alternative performance measures noted above, the Group also uses underlying EPS (as set out in Note 8),
underlying net finance costs (as set out in Note 5) and average trade working capital to sales ratio. Average trade working capital
to sales ratio is calculated as the average trade working capital each month end (net inventory, gross trade creditors, net trade
receivables and supplier rebates receivable) divided by underlying revenue.
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Independent auditor’s report
to the members of SIG plc
Opinion
In our opinion:
− SIG plc’s Group financial statements and parent company financial statements (the “financial statements”) give a true and fair view
of the state of the SIG plc (the “parent company”) and its subsidiaries’ (together “the Group”) affairs as at 31 December 2023 and
of the Group’s loss for the year then ended;
− the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
− the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
− the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of SIG plc (the ‘“parent company”) and its subsidiaries (the “Group”) for the year ended
31 December 2023 which comprise:
Group Parent company
Consolidated income statement for the year ended 31 December 2023 Company balance sheet as at 31 December 2023
Consolidated statement of comprehensive income for the year ended 31 December 2023 Statement of changes in equity for the year ended
31 December 2023
Consolidated balance sheet as at 31 December 2023 Related notes 1 to 15 to the financial statements
including material accounting policy information
Consolidated statement of changes in equity for the year ended 31 December 2023
Consolidated statement of cash flows for the year ended 31 December 2023
Related notes 1 to 32 to the financial statements, including material accounting
policy information
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and
UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the
parent company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced
Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our
report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company and we
remain independent of the Group and the parent company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and parent
company’s ability to continue to adopt the going concern basis of accounting included:
− Confirming our understanding of management’s going concern assessment which included the preparation of the base case cash
forecast and the reasonable worst-case scenario covering the going concern period until 31 March 2025. We also engaged with
management early to ensure all key risk factors were considered in their assessment;
− Obtaining management’s going concern assessment, including the cash forecast for the going concern period through to 31
March 2025 and testing this for arithmetical accuracy. Management modelled a downside scenario in its cash forecasts in order to
incorporate unexpected changes to the forecasted liquidity of the Group;
− Checking the consistency of information used in management’s assessment with the budget and medium-term plan approved by
the Board and information obtained from other areas of the audit;
− Confirming there had been no changes to the existing Secured Notes and Revolving Credit Facility (“RCF”) to verify the nature of
facilities, repayment terms, covenants, and other conditions.
− Assessing the continued availability of the facilities to the Group through the going concern period and ensuring completeness of
covenants identified by management;
− Challenging the appropriateness of the key assumptions in management’s forecasts, including revenue growth and operating
margin percentage, by comparing these to year-to-date performance and industry benchmarks;
186 SIG Annual Report and Accounts 2023
− Challenging management’s consideration of a reasonable worst-case scenario, evaluating whether the impact of a prolonged
downturn in trading had been appropriately included and whether climate risk may materially impact the going concern assessment;
− Considering management’s reverse stress test in order to identify and understand what factors and how severe a downside scenario
would have to be to result in the Group utilising all liquidity or breaching a financial covenant during the going concern period;
− Assessing the plausibility of management’s downside scenarios, including the reverse stress test, by comparing to third-party data,
including industry and broker reports, for indicators of contradictory evidence, including market growth expectations and broker
consensus on expected outturn of the Group and performance of the industry;
− Considering the amount and timing of mitigating factors under the Group’s control that could preserve cash if required; and
− Reviewing the Group’s going concern disclosures included in the annual report in order to assess whether they were appropriate
and in conformity with the reporting standards.
Key Observations
− At 31 December 2023 the Group has committed facilities of €300m Secured Notes and a £90m RCF to November 2026 and May
2026, respectively. The RCF was undrawn at 31 December 2023. Covenants are only effective if 40% (£36m) is drawn at a relevant
quarter end. This could restrict the amount available to drawdown on the RCF to less than £36m in management’s reasonable
worst-case scenario in order to prevent a covenant breach at a relevant quarter end. The Group had a cash balance of £132.2m at
31 December 2023.
− The results from both management’s evaluation and our independent sensitivity analysis and reverse stress testing indicate that a
scenario whereby a decline in performance is severe enough to cause a liquidity issue and covenant breach is considered remote.
− Our consideration of other evidence, including industry and broker reports, did not contradict the assumptions in management’s
forecasts. Additionally, we did not identify events or conditions in the period to 31 March 2025 that may cast doubt on the Group’s
ability to continue as a going concern.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and parent company’s ability to continue as a going concern for a
period to 31 March 2025.
In relation to the Group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s ability to continue as a going concern.
Overview of our audit approach
Audit scope − We performed an audit of the complete financial information of five components and audit procedures on specific
balances for a further five components.
− The components where we performed full or specific audit procedures accounted for 96% of Group underlying
operating profit, 88% of underlying profit before tax (on an absolute basis), 96% of revenue and 89% of total assets.
Key audit matters − Impairment of goodwill, intangible assets, property, plant and equipment (“PPE”) and Right-of-use assets (“ROUA”)
− Misstatement of supplier rebate income and the associated receivable
Materiality − Overall Group materiality of £2.8m which represents 5% of Group underlying operating profit.
An overview of the scope of the parent company and Group audits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope
for each company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. We
take into account size, risk profile, the organisation of the Group and the effectiveness of Group-wide controls, any changes in the
business environment, the potential impact of climate change and other factors such as recent Internal audit results when assessing
the level of work to be performed at each company.
In assessing the risk of material misstatement to the Group financial statements, and to ensure we had adequate quantitative
coverage of significant accounts in the financial statements, we selected ten components covering entities within the United
Kingdom (including the parent company), France, Germany, Poland, Ireland, and the Netherlands, which represent the principal
business units within the Group.
Of the ten components selected, we performed an audit of the complete financial information of five components (“full scope
components”) which were selected based on their size or risk characteristics. For the remaining five components (“specific scope
components”), we performed audit procedures on specific accounts within that component that we considered had the potential for
the greatest impact on the significant accounts in the financial statements either because of the size of these accounts or their
risk profile.
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The reporting components where we performed audit procedures accounted for 96% (2022: 92%) of the Group’s underlying
operating profit, being the measure used to calculate materiality, 88% (2022: 99%) of the Group’s underlying profit before tax (on
an absolute basis), 96% (2022: 91%) of the Group’s revenue and 89% (2022: 89%) of the Group’s total assets. For the current year,
the full scope components contributed 58% (2022: 56%) of the Group’s underlying operating profit, 70% (2022: 48%) of the Group’s
underlying profit before tax (on an absolute basis), 71% (2022: 71%) of the Group’s revenue and 71% (2022: 69%) of the Group’s total
assets. The specific scope component contributed 38% (2022: 36%) of the Group’s underlying operating profit, 17% (2022: 51%)
of the Group’s underlying profit before tax (on an absolute basis), 25% (2022: 20%) of the Group’s revenue and 19% (2022: 20%)
of the Group’s total assets. The audit scope of these components may not have included testing of all significant accounts of the
component but will have contributed to the coverage of significant accounts tested for the Group. Other items were in scope for all
component teams. We also instructed one location to perform specified procedures over certain aspects of revenue, receivables,
and cash.
Of the remaining components that together represent 4% of the Group’s underlying operating profit, none are individually greater
than 4% (in terms of profit or loss) of the Group’s underlying operating profit. For these components, we performed other procedures,
including analytical review, review of internal audit reports, testing of consolidation journals and intercompany eliminations and
foreign currency translation recalculations to respond to any potential risks of material misstatement to the Group financial
statements.
Changes from the prior year
In the current year we increased the scope for SIG Netherlands from specified procedures to Specific Scope due to the trading
performance and relative contribution of the business to the Group’s underlying operating profit. We also added Miers Construction
Products Ltd (“Miers”) as Specific Scope for the current year; Miers was newly acquired in July 2022 and was not in-scope for the
prior year audit.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each
of the components by us, as the primary audit engagement team, or by component auditors from other EY global network firms
operating under our instruction. Of the five full scope components, audit procedures were performed on three of these directly by
the primary audit team and two by component audit teams. For the five specific scope components, where the work was performed
by component auditors (the case in four of the specific scope components), we determined the appropriate level of involvement to
enable us to determine that sufficient audit evidence had been obtained as a basis for our opinion on the Group as a whole.
The Group audit team continued to follow a programme of planned visits that has been designed to ensure that the Senior
Statutory Auditor visits all full scope locations and other key locations. During the current year’s audit cycle, visits were undertaken
by the primary audit team to the component teams in France (two occasions), Germany, Poland, and the Netherlands, with the
Senior statutory auditor visiting France, Germany and Poland and other senior members of the team visiting all locations. These
visits involved discussing the audit approach with the component team and any issues arising from their work, meeting with local
management, attending planning and closing meetings, and reviewing relevant audit working papers on risk areas. The primary
team interacted regularly with the component teams where appropriate during various stages of the audit, reviewed relevant working
papers and were responsible for the scope and direction of the audit process. At critical periods of the audit, we increased the use
of online collaboration tools to facilitate team meetings, information sharing and the evaluation, review and oversight of component
teams. We requested more detailed deliverables from component teams, and we utilised fully the interactive capability of EY Canvas,
our global audit workflow tool, to review remotely the relevant underlying work performed. The Senior Statutory Auditor is responsible
for the UK component teams; for the UK components, communication has been maintained throughout the audit covering the same
areas described above applicable to all non-UK component teams. This, together with the additional procedures performed at
Group level, gave us appropriate evidence for our opinion on the Group financial statements.
Climate change
There remains increased interest from stakeholders as to how climate change will impact the Group. The Group and parent company
have determined that the most significant future impacts from climate change on its operations will be the removal of fossil fuels
from the Group’s fleet of vehicles. These are explained on pages 36 to 46 in the required Task Force for Climate related Financial
Disclosures and Non-Financial and Sustainability information statement on pages 60 to 63 in the principal risks and uncertainties.
They have also explained their climate commitments in their Sustainability review on pages 20 to 47 including ‘Net zero carbon by
2035. All of these disclosures form part of the “Other information,” rather than the audited financial statements. Our procedures
on these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our
responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any
consequential material impact on its financial statements.
The Group has explained in the Basis of preparation section of the Accounting policies how they have assessed the impact of climate
change on the carrying value of non-current assets and the impact on forecasts used in the impairment review and the assessments
of going concern and longer-term viability. Management concluded these considerations did not have a material impact on the
Group in the current year or over the next three years.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition, and their climate commitments. As part of this evaluation, we
performed our own risk assessment, supported by our climate change internal specialists, to determine the risks of material
misstatement in the financial statements from climate change which needed to be considered in our audit.
188 SIG Annual Report and Accounts 2023
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability and
associated disclosures. Where considerations of climate change were relevant to our assessment of going concern, these are
described above.
Based on our work, while we have not identified the impact of climate change on the financial statements to be a standalone key
audit matter, we have considered the impact on the ‘Impairment of goodwill, intangible assets, property, plant and equipment, and
right-of-use assets’ key audit matter. Details of the impact, our procedures and findings are included in our explanation of key audit
matters below.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit
of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
Risk Our response to the risk
Key observations communicated to
the Audit & Risk Committee
Impairment of goodwill,
intangible assets, property,
plant and equipment
(“PPE”), and right-of-use
assets (“ROUA”)
Refer to accounting policies
(pages 135 and 144 to 145);
and Note 11 of the
Consolidated financial
statements (pages 155 to 158)
The Group balance sheet
includes goodwill, intangible
assets, PPE, and ROUA
totalling £475.0m (2022
restated: £492.3m).
In accordance with the
requirements of IAS 36
Impairment of Assets,
management test goodwill
balances annually for
impairment. This assessment
includes intangible assets,
PPE, and ROUA.
Impairment tests are
performed where indicators of
impairment exist. Impairment
tests can include significant
areas of estimation uncertainty
and judgement over the future
performance of the business,
for example forecast future
trading results and cashflows
and specific assumptions
such as discount rates and
long-term growth rates.
Changes to assumptions or
adverse performance could
have a significant impact on
the available headroom and
any impairment that may
be required.
Value-in-use (“VIU”) Model
We understood the methodology behind, and tested, the discounted
cash-flow model used by management to perform the impairment test for
each of the relevant cash-generating units (“CGUs”) per the requirements
of IAS 36 Impairment of Assets.
We assessed the change in operating segments effective 1 November
2023, increasing the number of UK operating segments from two to three,
and the number of UK CGUs from four to five. We corroborated this
appropriately reflected the change in management reporting to the Chief
Operating Decision Maker in accordance with the criteria in IFRS 8
Operating Segments.
We tested the clerical accuracy of the model and challenged lease
renewal assumptions and forecasting risk adjustments through
understanding the rationale for their inclusion and reviewing
management’s calculations.
We identified and walked through key controls in the impairment process
identified by management, including the budgeting process.
Key Assumptions in the VIU Model
We evaluated the key underlying assumptions within the VIU calculation
including the forecasts, discount rates, and long-term growth rates.
We evaluated the impact of independent market forecasts, global
conflicts, and climate risk on the assumptions.
We challenged the underlying forecasts in management’s 2024 budgets
and 2025-2026 medium-term plan. Our challenge focused on the growth
assumptions, specifically comparing to industry forecasts, and considered
the historical accuracy of management’s budgets. We performed
sensitivity analysis to understand the most sensitive assumptions in the
underlying forecasts.
We benchmarked the discount rates and long-term growth rates applied,
using our internal valuation experts. We considered if management’s
assumptions are within an acceptable range based on comparative
market data.
We applied sensitivities to the long-term growth rates used in the model
by benchmarking to alternative sources of evidence, we noted
management’s rates were comparable.
As part of our stand back analysis, we compared the VIU of each CGU as
per the model computed by management to our independently assessed
range of possible outcomes.
An impairment charge of
£33.8m against the UK Interiors
CGU goodwill, ROUA, and PPE
has been appropriately
recorded. Reasonably plausible
downside scenarios could result
in further impairment for the UK
Interiors CGU and impairment
charges for the UK Exteriors
and Building Solutions CGUs.
The sensitivity disclosures for
these CGUs are appropriate.
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Risk Our response to the risk
Key observations communicated to
the Audit & Risk Committee
Benelux
Management performed
an analysis of the higher of
the CGU’s VIU and the fair
value less costs to dispose
(“FVLCD”) of the assets of the
CGU, engaging an external
property valuation specialist to
assist in valuing the right-of-
use assets held.
In this assessment, the FVLCD
of the leases was higher than
the VIU. There is judgement in
assessing the recoverable
amount of leases based on
the tenure of the lease and the
ability to sublet, and related
terms thereof, for vacant
properties.
Benelux Assessment
Management obtained an independent external valuation report for the
ROUA held by the CGU which supported their assessment that the net
book value was recoverable. We engaged an internal specialist to
corroborate the qualifications and methodology of management’s
specialist was appropriate to make this assessment.
We also assessed that the contracts held by management included
contractual rights to sublet the properties and any relevant costs to
dispose were appropriately incorporated in the fair value.
With input from our internal specialists, for a sample of leases, we
assessed the achievability of the time frame in which a sublet might be
secured and the validity of the related contractual conditions attached to
a sublet on which management’s valuation basis was met. We did this in
comparison to prevailing market factors.
Disclosures
We assessed the disclosures against the requirements of IAS 36
Impairment of Assets, in particular the requirement to disclose further
sensitivities for CGUs where a reasonably possible change in a key
assumption would cause an impairment.
We also assessed the disclosure within the key judgements and
estimation uncertainty section of the financial statements.
The primary audit team performed audit procedures over this risk area
covering 100% of the risk amount.
The carrying value of the
Benelux ROUA and PPE, as
evaluated based on the FVLCD
of those assets, is appropriate.
Misstatement of supplier
rebate income and
associated receivable
Refer to accounting policies
(pages 137 and page 145);
and Notes 15 and 16 of the
Consolidated financial
statements (page 161 to 162)
In 2023, income from Supplier
Rebates totalled £369.3m
(2022: £349.5m) with a
receivable balance as at
31 December 2023 of
£106.9m (2022: £125.9m).
The terms of agreements with
suppliers can be complex and
varied. Judgement and
estimation uncertainty is
present in relation to supplier
rebates, in particular where
amounts receivable are tiered
based on volumes purchased
or where volumes are
estimated, for example where
arrangements span the year
end. There is opportunity
through management override
of controls or error to either
overstate or understate the
balance of supplier rebates
recognised.
We focused our audit procedures on the areas where management apply
judgement and estimation, where the processing is either manual or more
complex, and where the value is high. In particular, where amounts
receivable are tiered based on volumes purchased or where volumes are
estimated, for example where arrangements span the year end.
We performed walkthroughs to understand the key processes used to
record supplier rebate transactions and identified key controls.
We performed analytical reviews to understand unusual movements in
income statement and balance sheet accounts period on period, including
ageing analysis.
We selected a sample of suppliers in order to obtain independent
confirmations to confirm key terms, income recognised and the year-end
receivable.
Using the confirmations received, we reconciled income recognised in the
period and the receivable recorded at the year end.
Where third party vendor confirmations could not be obtained for the
sample, we:
− Obtained and reviewed the agreement signed by both parties.
− Validated the purchase volumes used in the calculation of income
through sample testing to supporting documentation.
− Recalculated the year-end rebate receivable and income recognised in
the year based on the validated volumes and the terms of the signed
agreement.
Using data extracted from the accounting system, we tested the
appropriateness of a sample of journal entries and other adjustments to
supplier rebate accounts in the balance sheet and income statement.
We performed a stand back analysis to ensure the untested population
was not material by bringing additional items into scope of our testing or
performing analytical procedures.
We reviewed the appropriateness of the critical accounting judgements
and key sources of estimation uncertainty disclosed in respect of supplier
rebate amounts recorded in the income statement and balance sheet.
We performed the above audit procedures over this risk area at ten full
and specific scope locations, which covered 99% of the risk amount
associated to supplier rebate income, and 99% of the risk amount
associated to supplier rebates receivable.
The income recognised in the
year and the balance sheet
position at year end are
appropriately recorded.
We reviewed the disclosures
included within the financial
statements and consider them
appropriate.
190 SIG Annual Report and Accounts 2023
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the
audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our
audit procedures.
We determined materiality for the Group to be £2.8m (2022: £3.5m), which is 5.0% (2022: 4.4%) of underlying operating profit. We
believe that underlying operating profit provides us with the most relevant performance measures to the stakeholders of the Group
and is therefore an appropriate basis for materiality.
We determined materiality for the parent company to be £3.5m (2022: £3.5m), which is 1.0% (2022: 1.0%) of shareholders equity,
being £338.2m, however we have capped the materiality for our audit testing at the materiality of the Group.
During the course of our audit, we reassessed initial materiality calculated at £3.0m, and revised this to £2.8m as a result of the
actual trading performance of the Group.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement
was that performance materiality was 50% (2022: 50%) of our planning materiality, namely £1.4m (2022: £1.75m). We have set
performance materiality at this percentage due to our assessment of the control environment, the level of misstatements in the prior
year, and the outcome of our risk assessment.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is
undertaken based on a percentage of total performance materiality. The performance materiality set for each component is based
on the relative scale and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that
component. In the current year, the range of performance materiality allocated to components was £0.3m to £0.8m (2022: £0.4m
to £0.8m).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.
We agreed with the Audit and Risk Committee that we would report to them all uncorrected audit differences in excess of £0.14m
(2022: £0.175m), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of
other relevant qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual report set out on pages 1 to 127, including the Strategic
Report and the Governance reports (Corporate Governance Report, Nominations Committee Report, Directors’ Report, Audit
and Risk Committee Report, Directors’ Remuneration Report, and Directors’ Responsibilities Statement), other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual
report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
this report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to
a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is
a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
− the information given in the strategic report and the directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
− the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
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Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course of
the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
− adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
− the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
− certain disclosures of directors’ remuneration specified by law are not made; or
− we have not received all the information and explanations we require for our audit
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group and parent company’s compliance with the provisions of the UK Corporate Governance
Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
− Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 55;
− Directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is
appropriate set out on page 55;
− Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its
liabilities set out on page 55;
− Directors’ statement on fair, balanced and understandable set out on page 92;
− Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 94 to 95;
− The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out
on page 95; and;
− The section describing the work of the Audit and Risk Committee set out on pages 86 to 93.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 127, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and parent company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery
or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below.
192 SIG Annual Report and Accounts 2023
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the
Group and management.
− We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the
most significant, which are directly relevant to specific assertions in the financial statements, are those that relate to the reporting
framework (UK adopted international accounting standards, the Companies Act 2006 and the UK Corporate Governance Code)
and the relevant tax compliance regulations in the jurisdictions in which the Group operates. In addition, we concluded that there
are certain significant laws and regulations which may have an effect on the determination of the amounts and disclosures in the
financial statements being the Listing Rules of the UK Listing Authority, and those laws and regulations relating to health and safety
and employee matters.
− We understood how SIG plc is complying with those frameworks by making enquiries of management, internal audit, those
responsible for legal and compliance procedures, and the Company Secretary. We corroborated our enquiries through our review
of minutes of meetings of the Board of Directors, Remuneration Committee, Nominations Committee, and the Audit and Risk
Committee (which we also observed in attendance). We also considered the results of our audit procedures across the Group.
− We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by
meeting with management from various parts of the business to understand where it considered there was a susceptibility to fraud.
We also considered performance targets and their propensity to influence efforts made by management to manage earnings. We
considered the programmes and controls that the Group has established to address risks identified, or that otherwise prevent,
deter and detect fraud; and how senior management monitors those programmes and controls. Where the risk was considered
to be higher, we performed audit procedures to address each identified fraud risk. These procedures included testing manual
journals and were designed to provide reasonable assurance that the financial statements were free from fraud and error.
− Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our
procedures involved inquiries of Group management, those charged with governance and legal counsel, as well as journal entry
testing, with a focus on manual consolidation journals and journals indicating significant or unusual transactions based on our
understanding of the business. Through our testing we challenged the assumptions and judgements made by management in
respect of unusual or significant one-off transactions in the year and significant accounting estimates as referred to in the key audit
matters section above. At a component level, our full and specific scope component audit team’s procedures included inquiries of
component management, journal entry testing, and focused testing, including in respect of the key audit matter of supplier rebate
income and the associated receivable. We also leveraged our data analytics platform in performing our work on the order to cash
processes to assist in identifying higher risk transactions for testing. In addition, we completed procedures to conclude on the
compliance of the disclosures in the Annual Report and Accounts with the requirements of the relevant accounting standards, UK
legislation and the UK Corporate Governance Code.
− Specific inquiries were made with the component teams to confirm the details of any instances of non-compliance with laws
and regulations. This was reported via interoffice audit deliverables based on the procedures detailed in the previous paragraph.
Additionally, the Group audit team communicates any instances of non-compliance with laws and regulations to component teams
through regular interactions throughout the audit cycle. There were no instances of non-compliance with laws and regulations that
we concluded would have a material impact on the Group consolidated financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters we are required to address
− Following the recommendation from the Audit and Risk Committee we were appointed by the company on 4 July 2018 to audit the
financial statements for the year ending 31 December 2018 and subsequent financial periods.
− The period of total uninterrupted engagement including previous renewals and reappointments is six years, covering the years
ending 31 December 2018 to 31 December 2023.
− The audit opinion is consistent with the additional report to the Audit and Risk Committee.
Use of our report
This report is made solely to the Group’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Group’s members those matters we are required to state to them
in an auditor’s 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 Group and the Group’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Adrian Roberts
(Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Birmingham
4 March 2024
Notes:
1. The maintenance and integrity of the SIG plc web site is the responsibility of the directors; the work carried out by the auditors
does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may
have occurred to the financial statements since they were initially presented on the web site.
2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation
in other jurisdictions.
193SIG Annual Report and Accounts 2023
Contents
Strategic report
Governance Financials
Contents
Five-year summary
Statutory basis
Total
2019
£m
Total
2020
£m
Total
2021
£m
Total
2022
£m
Total
2023
£m
Revenue 2,160.6 1,874.5 2,291.4 2,744.5 2,761.2
Operating (loss)/profit (87.9) (160.0) 14.0 56.2 4.0
Finance income 0.5 0.7 0.7 1.3 2.2
Finance costs (25.3) (35.3) (30.6) (30.0) (38.1)
(Loss)/profit before tax (112.7) (194.6) (15.9) 27.5 (31.9)
(Loss)/profit after tax (124.1) (201.2) (28.3) 15.5 (43.4)
(Loss)/earnings per share (p) (21.0) (23.1) (2.4) 1.3 (3.8)
Total dividend per share (p) 1.25 — — — —
Underlying basis
1
Underlying
2019
£m
Underlying
2020
£m
Underlying
2021
£m
Underlying
2022
£m
Underlying
2023
£m
Revenue 2,143.0 1,872.7 2,291.4 2,744.5 2,761.2
Operating profit/(loss) 42.5 (53.1) 41.4 80.2 53.1
Finance income 0.5 0.7 0.7 1.3 2.2
Finance costs (25.3) (23.7) (22.8) (29.9) (37.9)
Profit/(loss) before tax 17.7 (76.1) 19.3 51.6 17.4
Profit/(loss) after tax 1.4 (86.8) 3.7 37.2 4.4
Earnings/(loss) per share 0.2 (10.0) 0.3 3.2 0.4
1. Underlying represents the results before Other items. See Accounting policies for further details.
194 SIG Annual Report and Accounts 2023
Company balance sheet
as at 31 December 2023
Note
2023
£m
2022
£m
Fixed assets
Investments 5 163.7 267.6
Tangible fixed assets 6 0.5 0.6
Intangible assets 7 0.1 0.3
164.3 268.5
Current assets
Debtors – due within one year 8 503.7 580.8
Debtors – due after more than one year 8 80.5 —
Cash at bank and in hand 79.7 91.1
663.9 671.9
Current liabilities
Creditors: amounts falling due within one year 9 230.1 245.8
Provisions: amounts falling due within one year 11 — 0.9
230.1 246.7
Net current assets 433.8 425.2
Total assets less current liabilities 598.1 693.7
Creditors: amounts falling due after one year 10 258.8 264.1
Net assets 339.3 429.6
Capital and reserves
Called up share capital 13 118. 2 118.2
Treasury shares reserve 13 (11.6) (16.4)
Merger reserve 13 104.0 104.0
Capital redemption reserve 13 0.3 0.3
Share option reserve 13 7.6 8.6
Exchange reserve 13 (0.2) (0.2)
Cash flow hedging reserve 13 (1.2) 1.4
Cost of hedging reserve 13 0.1 0.1
Retained profits 13 122.1 213.6
Shareholders’ funds 339.3 429.6
The accompanying Accounting policies and Notes to the Company financial statements are an integral part of this Company
balance sheet.
As permitted by Section 408 of the Companies Act 2006 the Company has elected not to present its own Company income
statement for the year. SIG plc reported a loss after tax for the financial year ended 31 December 2023 of £91.5m (2022: £48.9m profit).
The Company financial statements were approved by the Board of Directors on 4 March 2024 and signed on its behalf by:
Gavin Slark Ian Ashton
Director Director
Registered in England: 00998314
195SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Company statement of changes in equity
for the year ended 31 December 2023
Called up
share
capital
£m
Treasury
shares
reserve
£m
Merger
reserve
£m
Capital
redemption
reserve
£m
Share
option
reserve
£m
Exchange
reserve
£m
Cash flow
hedging
reserve
£m
Cost of
hedging
reserve
£m
Retained
profits/
(losses)
£m
Total
Equity
£m
At 1 January 2022 118.2 (12.5) 104.0 0.3 4.4 (0.2) (0.3) 0.1 164.7 378.7
Profit after tax — — — — — — — — 48.9 48.9
Other comprehensive income — — — — — — 1.7 — — 1.7
Total comprehensive income — — — — — — 1.7 — 48.9 50.6
Purchase of treasury shares — (4.0) — — — — — — — (4.0)
Credit to share option reserve — — — — 4.4 — — — — 4.4
Settlement of share options — 0.1 — — (0.2) — — — — (0.1)
At 31 December 2022 118.2 (16.4) 104.0 0.3 8.6 (0.2) 1.4 0.1 213.6 429.6
Loss after tax — — — — — — — — (91.5) (91.5)
Other comprehensive expense — — — — — — (2.6) — — (2.6)
Total comprehensive expense — — — — — — (2.6) — (91.5) (94.1)
Purchase of treasury shares — (1.7) — — — — — — — (1.7)
Credit to share option reserve — — — — 5.5 — — — — 5.5
Settlement of share options — 6.5 — — (6.5) — — — — —
At 31 December 2023 118. 2 (11.6) 104.0 0.3 7.6 (0.2) (1.2) 0.1 122 .1 339.3
The accompanying Accounting policies and Notes to the Company financial statements are an integral part of this Company
statement of changes in equity.
196 SIG Annual Report and Accounts 2023
Company accounting policies
for the year ended 31 December 2023
Basis of accounting
The separate financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared
under the historical cost convention except for derivative financial instruments which are stated at their fair value.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or
liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement
date. Fair value for measurement purposes in these financial statements is determined on such a basis, except for share-
based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IFRS 16, and
measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use
in IAS 36. Categorisation of fair value is set out in the Consolidated financial statements on pages 140 to 142.
The Company financial statements have been prepared in accordance with Financial Reporting Standard 101, “Reduced Disclosure
Framework” (FRS 101) and the Companies Act 2006 as applicable to companies using FRS 101. FRS 101 sets out a reduced
disclosure framework for a qualifying entity that would otherwise apply the recognition, measurement and disclosure requirements
of UK adopted international accounting standards in conformity with the requirements of the Companies Act 2006. The Company
is a qualifying entity for the purposes of FRS 101.
Going concern
The Company closely monitors its funding position throughout the year, including monitoring compliance with covenants and
available facilities to ensure it has sufficient headroom to fund operations.
The Company’s financing facilities comprise a €300m fixed rate bond (secured notes), due November 2026, and £90m Revolving
Credit Facility (“RCF”) which expires in May 2026. The only financial covenant within these facilities is a leverage maintenance
covenant within the RCF which is only effective if the facility is over 40% drawn (i.e. £36m) at a quarter end reporting date. The RCF
was undrawn at 31 December 2023 and has remained undrawn subsequent to the year end.
The Company has significant available liquidity and on the basis of current forecasts is expected to remain in compliance with all
banking covenants throughout the forecast period to 31 March 2025 (“the going concern period”).
The Company has no trading operations and therefore its ability to continue as a going concern is dependent on the trading of
its subsidiaries and the forecasts for the Group as a whole. The Directors have considered the Group’s forecasts which support
the view that the Group and Company will be able to continue to operate within its banking facilities and comply with its banking
covenants. The Directors have considered the following principal risks and uncertainties that could potentially impact the Group
and Company’s ability to fund its future activities and adhere to its banking covenants, including:
− worsening market conditions and further reductions in demand;
− high levels of product inflation, and current economic and political uncertainties, potentially impacting market demand; and
− potentially recessionary conditions in the coming year.
The forecasts on which the going concern assessment is based have been subject to sensitivity analysis and stress testing to assess
the impact of the above risks and the Directors have also reviewed mitigating actions that could be taken. Details are set out in the
Group going concern assessment on page 134.
The Directors have considered the impact of climate-related matters, but the impact on the Company is not considered to create any
material uncertainties related to events or conditions that could cast significant doubt upon the Company’s ability to continue as a
going concern.
On consideration of the above, the Directors believe that the Company has adequate resources to continue in operational existence
for the forecast period to 31 March 2025 and the Directors therefore consider it appropriate to adopt the going concern basis in
preparing the 2023 Company financial statements.
New standards, interpretations and amendments adopted
A number of amendments and interpretations apply for the first time in 2023, but do not have an impact on the financial statements
of the Company. The Company has not early adopted any standards, interpretations or amendments that have been issued but are
not yet effective.
197SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Company accounting policies / continued
for the year ended 31 December 2023
Exemptions applied in accordance with FRS 101
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial statements, in
accordance with FRS 101:
− the requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 “Share-based Payment”
− the requirements of IFRS 7 “Financial Instruments: Disclosures”
− the requirements of paragraphs 91 to 99 of IFRS 13 ”Fair Value Measurement”
− the requirement in paragraph 38 of IAS 1 “Presentation of Financial Statements” to present comparative information in respect of:
(i) paragraph 79(a)(iv) of IAS 1 and
(ii) paragraph 73(e) of IAS 16 “Property, Plant and Equipment”
− the requirements of paragraphs 10(d), 10(f), 16, 38A to 38D, 40A to 40B, 111, and 134 to 136 of IAS 1 “Presentation of Financial
Statements”
− the requirements of IAS 7 “Statement of Cash Flows”
− the requirements of paragraphs 30 and 31 of IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”
− the requirements of paragraph 17 of IAS 24 “Related Party Disclosures”
− the requirements in IAS 24 “Related Party Disclosures” to disclose related party transactions entered into between two or more
members of a group
− the requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 “Impairment of Assets”.
Share-based payments
The accounting policy for share-based payments is consistent with that of the Group as detailed on page 138.
Derivative financial instruments
The accounting policy for derivative financial instruments is consistent with that of the Group as detailed on page 142.
Financial assets and liabilities
The accounting policy for financial assets and liabilities is consistent with that of the Group as detailed on pages 140 and 141.
The Company has assessed on a forward looking basis the expected credit losses associated with amounts owed by subsidiary
undertakings.
The impairment methodology applied depends on the ability to repay amounts repayable on demand and whether there has been
any significant change in credit risk.
Investments
Fixed asset investments in subsidiaries are shown at cost less provision for impairment.
Tangible fixed assets
The accounting policy for tangible fixed assets is consistent with that of the Group as detailed on page 139.
Intangible assets
The accounting policy for tangible fixed assets is consistent with that of the Group as detailed on page 138.
Foreign currency
The accounting policy for foreign currency is consistent with that of the Group as detailed on page 136.
Taxation
The accounting policy for taxation is consistent with that of the Group as detailed on pages 137 and 138.
Dividends
Dividends proposed by the Board of Directors that have not been paid by the end of the year are not recognised in the Accounts
until they have been approved by the Shareholders at the Annual General Meeting.
198 SIG Annual Report and Accounts 2023
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described above, the Directors are required to make judgements
(other than those involving estimates) that have a significant impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The following are the critical judgements that the Directors have made in the process of applying the Company’s accounting policies
and that have had a significant effect on the amounts recognised in the financial statements. The judgements involving estimations
are dealt with separately below.
Recognition of deferred tax assets
Deferred tax assets are recognised for unused tax attributes to the extent that it is probable that taxable profit will be available
against which the attributes can be utilised, after consideration of available taxable temporary differences. The Company has £9.9m
(2022: £10.6m) of potential deferred tax assets relating to cumulative UK tax losses and other deductible timing differences which
are currently unrecognised as there is not considered to be sufficient convincing evidence at 31 December 2023 that sufficient future
taxable profits will be available to allow the utilisation of the deductible temporary differences, in particular given the cumulative
historic and current year tax loss position in the UK. This required significant management judgement to determine the likely timing
and level of future taxable profits and whether sufficient, convincing evidence was available at 31 December 2023 to recognise the
previously unrecognised deferred tax assets. If the Company were able to recognise all unrecognised deferred tax assets, profit and
equity would have increased by £9.9m. Further details are disclosed in Note 12.
The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying value of the assets
and liabilities recognised by the Company within the next financial year are detailed below.
Impairment of fixed asset investments
Determining whether the Company’s investments are impaired requires an estimation of the investments’ value in use. The key
estimates made in the value in use calculation in relation to trading subsidiaries are those regarding discount rates, sales growth
rates, gross margin and long term operating profit growth. The Directors estimate discount rates using pre-tax rates that reflect
current market assessments of the time value of money for the Group.
The Company performs investment impairment reviews by forecasting cash flows based upon the following year’s budget as a base,
taking into account current economic conditions. The carrying amount of investments in subsidiaries at the balance sheet date was
£163.7m (2022: £267.6m). Of the £163.7m net book value at 31 December 2023, £159.8m (2022: £263.7m) relates to the Company’s
investment in SIG Trading Limited, the largest UK trading subsidiary, and therefore assumptions regarding sales, gross margin and
operating profit growth of this subsidiary are considered to be the key areas of estimation in the impairment review process.
At 31December 2023 the carrying value was not supported by the future operating cash flows and an impairment of £103.9m
has been recognised.
Whilst the Directors consider the assumptions used in the impairment review to be realistic, if actual results are different from
expectations then it is possible that the value of the investment included on the Company balance sheet could become impaired
further. Further details on the assumptions used in the forecast future cash flows of this subsidiary are provided in Note 11 of the
Consolidated financial statements. A 2.0% reduction in revenue in each year, before considering any mitigations, would lead to
further impairment of £41.7m.
Impairment of amounts owed by subsidiary undertakings
At 31 December 2023 the Company has recognised amounts owed by subsidiary undertakings of £581.9m (2022: £574.6m).
The Company recognises an allowance for expected credit losses (“ECLs”) in relation to amounts owed by subsidiary undertakings
based on the ability to repay amounts repayable on demand and whether there has been any significant change in credit risk.
An ECL provision of £83.8m has been recognised at 31 December 2023 (2022: £74.0m) based on estimates regarding the future
cash flows from subsidiaries and taking account of the time value of money. Changes in the economic environment or circumstances
specific to individual subsidiaries could have an impact on recoverability of amounts included on the Company balance sheet at
31 December 2023 and level of ECL provision required in the future.
199SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Notes to the Company financial statements
for the year ended 31 December 2023
1. Loss for the year
As permitted by Section 408 of the Companies Act 2006 the Company has elected not to present its own Company income statement
for the year. SIG plc reported a loss after tax for the financial year ended 31 December 2023 of £91.5m (2022: £48.9m profit).
The Auditor’s remuneration for audit and audit-related services to the Company was £1.1m (2022: £1.1m).
2. Share-based payments
The Company had three share-based payment schemes in existence during the year ended 31 December 2023 (2022: four). The
Company recognised a total credit to equity of £1.8m (2022: £2.0m) in the year relating to share-based payment transactions. Details
of each of the share-based payment schemes can be found in Note 9 to the Consolidated financial statements.
3. Dividends
No interim dividend was paid during 2023 (2022: £nil) and the Directors are not proposing a final dividend for the year ended
31 December 2023 (2022: no dividend). Total dividends paid during the year was £nil (2022: £nil). No dividends have been paid
between 31 December 2023 and the date of signing the Company financial statements.
See Note 13 for further details on distributable reserves.
4. Staff costs
Particulars of employees (including Directors and employees recharged to the Company from a UK subsidiary) are shown below:
2023
£m
2022
£m
Employee costs during the year amounted to:
Wages and salaries 7. 2 7.8
Social security costs 1.2 1.3
IFRS 2 share-based payment expense 1.8 2.0
Pension costs 0.3 0.3
Total 10.5 11.4
The average monthly number of persons that these costs relate to is as follows:
2023
Number
2022
Number
Management and administration 57 63
5. Fixed asset investments
Fixed asset investments comprise investments in subsidiary undertakings, as follows:
2023
£m
2022
£m
Cost
At 1 January 650.9 650.9
Additions — —
At 31 December 650.9 650.9
Accumulated impairment charges
At 1 January 383.3 383.3
Impairment charge 103.9 —
At 31 December 487.2 383.3
Net book value
At 31 December 163.7 267.6
At 1 January 267.6 267.6
Details of the Company’s subsidiaries are shown on pages 204 to 205.
Of the £163.7m (2022: £267.6m) investment net book value, £159.8m (2022: £263.7m) relates to SIG Trading Limited, the largest UK
trading subsidiary. At 31 December 2023 the carrying value was not supported by the future operating cash flows and an impairment
of £103.9m impairment has been recognised.
Further details on the assumptions used in the forecast future cash flows of this subsidiary are provided in Note 11 of the
Consolidated financial statements. A 2.0% reduction in revenue in each year, before considering any mitigations, would lead to
further impairment of £41.7m.
200 SIG Annual Report and Accounts 2023
6. Tangible fixed assets
The movement in the year was as follows:
Freehold land
and buildings
£m
Leasehold
improvements
£m
Plant and
machinery
£m
Total
£m
Cost
At 1 January 2022 0.1 0.4 0.6 1.1
Additions — 0.3 0.1 0.4
Disposals — (0.1) — (0.1)
At 31 December 2022 and 2023 0.1 0.6 0.7 1.4
Depreciation
At 1 January 2022 0.1 0.1 0.6 0.8
Charge for the year — 0.1 — 0.1
Disposals — (0.1) — (0.1)
At 31 December 2022 0.1 0.1 0.6 0.8
Charge for the year — 0.1 — 0.1
At 31 December 2023 0.1 0.2 0.6 0.9
Net book value
At 31 December 2023 — 0.4 0.1 0.5
At 31 December 2022 — 0.5 0.1 0.6
7. Intangible fixed assets
The movement in the year was as follows:
Computer
software
£m
Total
£m
Cost
At 1 January 2022 1.5 1.5
Disposals (0.5) (0.5)
At 31 December 2022 1.0 1.0
Disposals (0.1) (0.1)
At 31 December 2023 0.9 0.9
Depreciation
At 1 January 2022 0.9 0.9
Charge for the year 0.2 0.2
Disposals (0.4) (0.4)
At 31 December 2022 0.7 0.7
Charge for the year 0.2 0.2
Disposals (0.1) (0.1)
At 31 December 2023 0.8 0.8
Net book value
At 31 December 2023 0.1 0.1
At 31 December 2022 0.3 0.3
201SIG Annual Report and Accounts 2023
Strategic report
Governance Financials
Contents
Notes to the Company financial statements / continued
for the year ended 31 December 2023
8. Debtors
2023
£m
2022
£m
Amounts owed by subsidiary undertakings 501.4 574.6
Derivative financial instruments — 1.6
Prepayments 2.3 4.6
Debtors – due within one year 503.7 580.8
Amounts owed by subsidiary undertakings 80.5 —
Debtors – due after more than one year 80.5 —
Total 584.2 580.8
The Group recognises an allowance for ECLs in relation to amounts owed by subsidiary undertakings based on the ability to repay
amounts repayable on demand and whether there has been any significant change in credit risk. An ECL provision of £83.8m (2022:
£74.0m) has been recognised at 31 December 2023 based on estimates regarding the future cash flows from subsidiaries and taking
account of the time value of money.
Amounts owed by subsidiary undertakings are measured at amortised cost and bear interest at rates between 0% and 8.0%. The
amounts owed by subsidiary undertakings due after more than one year bear interest at 8.1% and are repayable at the end of 2025.
9. Creditors: amounts falling due within one year
2023
£m
2022
£m
Amounts owed to subsidiary undertakings 219.7 235.5
Derivative financial instruments 1.0 —
Accruals and deferred income 9.4 10.3
Total 230.1 245.8
Amounts owed to subsidiary undertakings are measured at amortised cost, are unsecured and bear interest at rates between 0%
and 7.25%.
10. Creditors: amounts falling due after one year
2023
£m
2022
£m
Secured notes 258.7 264.0
Derivative financial instruments 0.1 0.1
Total 258.8 264.1
Secured notes
The €300m secured notes are repayable on 30 November 2026. The notes are guaranteed by certain subsidiaries of the Group
and are secured by a first priority floating charge over the assets of the Company and the relevant UK subsidiaries and by a security
interest over the shares, material bank accounts and intercompany receivables of the non-UK guarantor subsidiaries. The notes are
recognised at amortised cost, net of arrangement fees, of which £1.5m is unamortised at 31 December 2023 (2022: £2.0m).
The contractual repayment profile of the secured notes is shown below:
2023 2022
£m
Fixed interest
rate
% £m
Fixed interest
rate
%
Total gross amount repayable in 2026 260.2 5.25% 266.0 5.25%
Unamortised fees (1.5) (2.0)
258.7 5.25% 264.0 5.25%
11. Provisions
Onerous
contracts
£m
Total
£m
At 1 January 2023 0.9 0.9
Utilised (1.1) (1.1)
New provisions 0.2 0.2
At 31 December 2023 — —
202 SIG Annual Report and Accounts 2023
2023
£m
2022
£m
Amounts falling due within one year — 0.9
Total — 0.9
The onerous contract provision related to licence fee commitments where no future economic benefit was expected to be obtained,
principally in relation to the SAP S/4HANA implementation following the change in scope of the project in previous years. The licence
fee contract is now ended and there is no remaining provision at 31 December 2023.
12. Deferred tax
Deferred tax has not been recognised on trading losses and other deductible temporary differences of £39.4m (2022: £42.4m) on
the basis that the realisation of their future economic benefit is uncertain. The unrecognised potential deferred tax asset in relation to
this is £9.9m (2022: £10.6m). At the balance sheet date, there are no aggregate temporary differences associated with investments in
subsidiaries for which deferred tax liabilities have not been recognised.
13. Capital and Reserves
a) Called up share capital
2023
£m
2022
£m
Authorised:
1,390,000,000 ordinary shares of 10p each (2022: 1,390,000,000) 139.0 139.0
Allotted, called up and fully paid:
1,181,556,977 ordinary shares of 10p each (2022: 1,181,556,977) 118.2 118.2
During 2023 the Company allotted no shares (2022: no shares) from the exercise of share options.
b) Treasury shares
Treasury shares relate to shares purchased by the EBT to satisfy awards made under the Group’s share plans which are not vested
and beneficially owned by employees. 5,901,425 (2022: 9,360,742) shares were purchased during the year at a weighted average
cost of 28.9p (2022: 42.7p) per share, and 13,357,702 (2022: 297,920) shares were issued relating to the settlement of share awards.
A total of 26,421,500 own shares are outstanding at 31 December 2023 (2022: 33,877,777).
c) Reserves
Details of all movements in reserves are shown in the Company statement of changes in equity.
The share option reserve represents the cumulative equity-settled share option charge under IFRS 2 “Share-based Payment” less
the value of any share options that have been exercised.
The cash flow hedging and cost of hedging reserves represents movements in the Consolidated balance sheet as a result of
movements in the fair value of cash flow hedges which are taken directly to reserves as detailed in the Accounting policies.
The merger reserve principally represents the premium on ordinary shares issued during a prior year through the use of a cash box
structure.
The Company maintains its positive distributable reserves position and continues to review the Group structure to optimise reserves.
At 31 December 2023 the Company had distributable reserves of £145.6m (2022: £247.3m).
14. Guarantees and contingent liabilities
a) Guarantees
At 31 December 2023 the Company had provided guarantees of £nil (2022: £nil) on behalf of its subsidiary undertakings.
b) Contingent liabilities
As at the balance sheet date, the Company had outstanding obligations under a standby letter of credit of up to £6.1m (2022: £5.2m).
This standby letter of credit, issued by HSBC Bank plc, is in respect of the Group’s insurance arrangements.
15. Related party transactions
Remuneration of key management personnel
The total remuneration of the Directors of the Group Board, who the Group considered to be its key management personnel, is
provided in Note 4 of the Consolidated financial statements. In addition, the Company recognised a share-based payment charge
under IFRS 2 of £1.8m (2022: £2.0m) with a credit to the share option reserve of £1.8m (2022: £2.0m).
203SIG Annual Report and Accounts 2023
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Governance Financials
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Other information
204 SIG Annual Report and Accounts 2023
205SIG Annual Report and Accounts 2023
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206 SIG Annual Report and Accounts 2023
Company information
Group General Counsel &
Company Secretary
Andrew Watkins
Registered number
Registered in England 00998314
Corporate and Registered office
Tel: +44 (0) 114 285 6300
Email: info@sigplc.com
Company website
www.sigplc.com
Listing details
Market Reference Sector
SHI.L Support Services
Registrars and transfer office
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZY
Auditor
Ernst & Young LLP
1 More London Place
London SE1 2AF
Solicitors
Allen & Overy LLP
One Bishops Square
London E1 6AD
Principal bankers
National Westminster Bank plc
250 Bishopsgate
London EC2M 4AA
Barclays Bank plc
Level 25
1 Churchill Place
London E14 5HP
BNP Paribas
London Branch
10 Harewood Avenue
London NW1 6AA
Lloyds Bank plc
1 Lovell Park Road
Leeds LS2 8DA
HSBC UK Bank plc
4th Floor City Point
Leeds LS1 2HL
Joint stockbrokers
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
Investec Bank plc
30 Gresham Street
London EC2V 7QP
Financial public relations
FTI Consulting LLP
200 Aldersgate
Aldersgate Street
London EC1A 4HD
Financial advisors
Lazard & Co Limited
50 Stratton Street
London W1J 8LL
Shareholder enquiries
Our share register is managed by
Computershare, who can be contacted
by telephone on:
24-hour helpline* 0370 707 1293
Overseas callers* +44 370 707 1293
Text phone 0370 702 0005
* Operator assistance available between
08:30 and 17:30 UK time each business day.
Email: Access the Computershare
website www-uk.computershare.com/
Investor and click on ‘Contact Us’, from
where you can email Computershare.
Post: Computershare, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY,
United Kingdom.
Shareholder analysis at 31 December 2023
Size of shareholding
Number of
shareholders %
Number of
ordinary shares %
0 – 999 546 34.43% 211,516 0.02%
1,000 – 4,999 539 33.98% 1, 227,0 34 0.10%
5,000 – 9,999 152 9.58% 1,018,107 0.09%
10,000 – 99,999 177 11.16% 6,274,861 0.53%
100,000 – 249,999 46 2.90% 7,813,454 0.66%
250,000 – 499,999 26 1.64% 9,259,790 0.78%
500,000 – 999,999 27 1.70% 19,085,928 1.62%
1,000,000+ 73 4.60% 1,136,666,287 96.20%
Total 1,586 100% 1,181,556,977 100.00%
Financial calendar
Annual
General Meeting
Thursday
2 May 2024
Interim
results 2024
Tuesday
6 August 2024
Full-year
results 2024
March 2025
Annual Report
and Accounts
2024 posted to
shareholders
March 2025
207SIG Annual Report and Accounts 2023
Contents
Strategic report
Governance Financials
Contents
208 SIG Annual Report and Accounts 2023
Designed and produced by Instinctif Partners www.creative.instinctif.com
Website and electronic
communications
Shareholders receive notification of
the availability of the results to view
or download on the Group’s website
www.sigplc.com, unless they have elected
to receive a printed version of the results.
We encourage our shareholders to
accept all shareholder communications
and documents electronically instead of
receiving paper copies by post as this
helps to reduce the environmental impact
by saving on paper and also reduces
distribution costs.
If you sign up to electronic communications,
instead of receiving paper copies of
the annual financial results, notices
of shareholder meetings and other
shareholder documents through the
post, you will receive an email to let you
know this information is on our website.
If you would like to sign up to receive
all future shareholder communications
electronically, please register through
our registrars Computershare at
www.investorcentre.co.uk/ecomms.
Registered office
Adsetts House
16 Europa View
Sheffield Business Park
Sheffield S9 1XH
T: +44 (0) 114 285 6300
E: info@sigplc.com
www.sigplc.com
Registered number:
00998314
Registered in England
SIG plc Annual Report and Accounts 2023