ANNUAL REPORT AND ACCOUNTS 2012

SIG PLC IS A LEADING SPECIALIST DISTRIBUTOR OF INSULATION AND ENERGY MANAGEMENT, EXTERIORS AND INTERIORS PRODUCTS FOR THE EUROPEAN CONSTRUCTION AND RELATED MARKETS

SHAREHOLDER VALUE BUILT ON FIVE STRATEGIC PILLARS

Outstanding customer service	Sales outperformance	Gross margin enhancement
• Technical expertise of employees Availability and range of specialist stock Speed, reliability and mode of delivery • Improved customer communications	• Focus on core markets • Legislative change • Increased cross-selling Expanding branch network/new formats • UK national initiatives • Increasing residential exposure • Bolt-on acquisitions	• Price management programmes $\triangleright$ Control of mix • Use of better IT systems • Improved procurement
More: page 10	More: page 20	More: page 24

KEY PERFORMANCE INDICATORS

Like for like' constant currency sales growth $%$		%	Underlying ^o gross margin		Underlying ^o operating margin
$0.0\%$		26.1%		3.7%
(0.3) 2010		2010	25.4	2010	3.1
2011	7.1	2011	25.7	2011	3.6
2012	0.0	2012	26.1	2012	3.7

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Corporate governance

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Maintain focus on cash conversion and working capital
Target annual return on sales improvement in all businesses
Target annual ROCE improvement

More: page 34

%
8.5%
2010	8.6
2011	8.1
2012	8.5

%
8.6%
2010	5.6
2011		7.9

2012	8.6

-

REVIEW OF THE YEAR

IFC Overview
02 Our products 03 "
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04 Exteriors
05 Interiors
06 Chairman's statement
08 Business review

CORPORATE GOVERNANCE

38	\$
48	Board of Directors
49	\$
49	Financial calendar
49
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54 Corporate governance report 60 Report of the audit committee
62 Directors' remuneration report
75 Directors' responsibilities statement

GROUP ACCOUNTS

77	Consolidated income statement
78	Consolidated statement of comprehensive income
79	Consolidated balance sheet
80	\$ =*
81	Consolidated statement .
82	: accounting policies
87	Critical accounting judgements
88	Notes to the accounts
	118 Independent Auditor's report
	119 &
	COMPANY ACCOUNTS
	121 \$

122

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- 127 Independent Auditor's report

PRINCIPAL TRADING INFORMATION

128 Principal addresses
129 Principal trading subsidiaries

We have an online report

For additional features and supporting content go to

OUR PRODUCTS

OVERVIEW

SIG IS A LEADING DISTRIBUTOR OF SPECIALIST BUILDING PRODUCTS IN EUROPE. THE GROUP HAS A PRODUCT AND SERVICE OFFERING OF SIGNIFICANT SCALE WITH STRONG POSITIONS IN ITS THREE CORE PRODUCT AREAS OF INSULATION AND ENERGY MANAGEMENT, EXTERIORS AND INTERIORS.

INSULATION AND ENERGY MANAGEMENT

THERMAL, FIRE PROTECTION, RENEWABLES AND ENERGY EFFICIENCY, CONSTRUCTION ACCESSORIES

SIG is the largest supplier of insulation and related products in Europe. The Group is the market
%,!"? !; ?# and is the leader in industrial insulation in France. 45.9%

EXTERIORS

PITCHED AND FLAT ROOFING PRODUCTS AND SYSTEMS, PLASTIC BUILDING PRODUCTS, CLADDING

SIG is the largest specialist supplier of exterior ?:

%,"? leading independent supplier in France. It is also

% OF CONTINUING GROUP REVENUE

INTERIORS

DRY LINING, CEILINGS, DOORSETS, PARTITION WALLS, WASHROOMS, FLOOR COVERINGS

SIG is a leading supplier of all products required

(? in Europe.

INSULATION AND ENERGY MANAGEMENT

SIG IS THE LARGEST SUPPLIER OF INSULATION AND RELATED PRODUCTS IN EUROPE. THE GROUP IS THE MARKET LEADER IN THE UK, IRELAND, GERMANY AND POLAND AND IS THE LEADER IN INDUSTRIAL INSULATION IN FRANCE.

Demand for insulation is expected to outperform overall construction markets stringent Government regulation targeted at reducing greenhouse gas !

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CONTINUING REVENUE

!"!#\$% 45.9%

of Group revenue

NUMBER OF TRADING SITES

211 27* ??:
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OUR PRODUCTS CONTINUED

EXTERIORS

SIG IS THE LARGEST SPECIALIST SUPPLIER OF EXTERIOR ROOFING PRODUCTS IN THE UK AND IRELAND AND A LEADING INDEPENDENT SUPPLIER IN FRANCE. THE GROUP IS ALSO A KEY REGIONAL SUPPLIER IN GERMANY AND POLAND.

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market a degree of resilience during economic downturns.
New products to help reduce exterior maintenance costs : !

* the displacement of other
!? important demand drivers for SIG.

CONTINUING REVENUE

31.6% of Group revenue

NUMBER OF TRADING SITES

339

PRODUCTS

INTERIORS

SIG IS A LEADING SUPPLIER OF ALL PRODUCTS REQUIRED FOR THE INTERIOR FIT OUT OF ALL TYPES OF NON-RESIDENTIAL BUILDINGS IN EUROPE, SUCH AS OFFICES, HOSPITALS, SCHOOLS, HOTELS AND SHOPS.

As well as general

! SIG's interiors products are

:? acoustic regulations and improving standards of ?:

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that the generalists cannot.

CONTINUING REVENUE

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NUMBER OF TRADING SITES

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CHAIRMAN'S STATEMENT

PROGRESS IN CHALLENGING MARKETS

LESLIE VAN DE WALLE CHAIRMAN

HIGHLIGHTS

The Group increased its post-tax ROCE by 70bps to 8.6%
40bps improvement in underlying gross margin
Underlying operating margin improved by 10bps to 3.7%
Underlying profi t before tax at £84.1m was broadly similar to prior year
The Board has proposed a fi nal dividend of 2.0p per ordinary share

SUMMARY OF 2012

Against the background of a challenging macroeconomic environment and declining construction markets, the Group delivered a resilient performance in 2012, maintaining sales in constant currency and, for the fi rst time since 2008, creating shareholder value by delivering a return on capital employed ahead of its weighted average cost of capital.

Although revenues from continuing operations fell by 4% due to exchange rate movements, the impact on profi ts was mitigated by a 40bps improvement in gross margin and a continued tight control on the Group's underlying cost base, with operating cost infl ation (net of cost savings) of 0.2% in 2012. As a result the underlying operating margin improved by 10bps to 3.7% and underlying profi t before tax at £84.1m was broadly similar to prior year (£84.5m).

With non-underlying charges before tax totalling £40.4m (2011: £77.0m), the Group recorded a total profi t before tax of £43.7m (2011: £7.5m). Statutory profi t after tax was £26.6m (2011: £0.0m). SIG continued to reduce net debt to £105.3m, with leverage (net debt/underlying EBITDA) maintained at 0.9x and interest cover increasing to 8.2x.

Importantly, the Group increased its post-tax return on capital employed by 70bps to 8.6%, meeting its key objective of exceeding its weighted average cost of capital in 2012, which was 8.2%.

CONTINUING OPERATIONS*	2012	2011
Revenue	£2,608.6m	£2,713.5m
Underlying^ operating profi t	£96.5m	£98.4m
Underlying^ profi t before tax	£84.1m	£84.5m
Underlying^ basic earnings per share	9.7p	9.9p
Dividend per share	3.0p	2.25p
Return on capital employed (post-tax)	8.6%	7.9%
Net debt as at 31 December	£105.3m	£115.9m

TOTAL OPERATIONS	2012	2011
Revenue	£2,635.5m	£2,808.4m
Operating profi t	£57.9m	£25.6m
Profi t before tax	£43.7m	£7.5m
Profi t/(loss) after tax	£26.6m	(£0.0m)
Basic earnings/(loss) per share	4.5p	(0.0p)

* Continuing operations excludes the results of businesses divested in 2012 (Central Europe) and 2011.

^ Underlying is stated before the amortisation of acquired intangibles, impairment charges, restructuring costs, other one-off items, profi t and loss arising on the sale of businesses, trading profi ts and losses associated with disposed businesses, fair value gains and losses on derivative fi nancial instruments and the defi ned benefi t pension scheme curtailment gain, together with the associated taxation effect and the effect of changes in taxation rates.

Importantly, the Group increased its post-tax return on capital employed by 70bps to 8.6%, meeting its key objective of exceeding its weighted average cost of capital in 2012, which was 8.2%.

STRATEGY

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BOARD

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On behalf of the Board I would like to thank Chris for his major contribution ;
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CORPORATE GOVERNANCE

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ensuring that SIG maintains the highest standards of corporate governance to which we aspire. The Corporate Governance Report and Directors' Remuneration Report detail how these principles are applied within SIG.

EMPLOYEES

On behalf of the Board and shareholders I would like to thank our

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efforts which have enabled the Group to continue to progress despite the challenging macroeconomic environment.

DIVIDENDS

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OUTLOOK

The Group expects construction markets to remain challenging in 2013 and is therefore focused on making further progress through market ?? !

LESLIE VAN DE WALLE Chairman 6 March 2013

Corporate governance

BUSINESS REVIEW

LEADING POSITIONS IN OUR CORE MARKETS

STUART MITCHELL CHIEF EXECUTIVE DOUG ROBERTSON FINANCE DIRECTOR

INTRODUCTION

SIG is a leading distributor of specialist building products in Europe. The ;
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SIG'S MARKET SECTORS AND BRANCHES

2012 2011	Number of branches	" ) Management	Exteriors	Interiors
United ,	308 318
Ireland	12 12
; and Austria	84 86
France	198 189
Poland	53 60
Benelux*	26 27
Central Europe^	0 23
Total	681 715

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GLOSSARY OF TERMS

Underlying

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The Group's strategy is to develop and grow in its three core markets by combining the reputational strengths of its local brands - --

STRATEGY

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KEY OBJECTIVES

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DEVELOPMENT OF OUR PEOPLE

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Corporate governance

BUSINESS REVIEW CONTINUED

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GOVERNMENT LEGISLATION TARGETED AT REDUCING GREENHOUSE GASES IS A KEY DEMAND DRIVER FOR INSULATION USAGE ACROSS EUROPE. THE ENERGY PERFORMANCE OF BUILDINGS DIRECTIVE (2003) RECOGNISES THAT A LARGE PROPORTION OF ALL ENERGY CONSUMED RELATES TO BUILDINGS AND REQUIRES COUNTRIES IN THE EUROPEAN UNION TO TIGHTEN THEIR BUILDING REGULATIONS IN ORDER TO IMPROVE ENERGY EFFICIENCY AND REDUCE CARBON EMISSIONS.

In the UK Part L of the Building Regulations (Conservation of fuel and power) sets the standard for insulation usage and energy
- !"# speaking each iteration tends to tighten insulation standards by 15–20%.

In France and Germany there are similar legislative drivers as in the UK called Réglementation Thermique and Energy Saving Ordinance ("EnEV") respectively, which stipulate the minimum energy performance of new buildings.

As a specialist in insulation and energy management, SIG is able to advise its customers on the latest increasingly complex changes to building regulations. In many cases the Group's technical staff will study the architect's plans on behalf of the customer, ensuring that they have the right product for the job at the most cost-effective price.

\$ &\$' '*+/ - and large stock holding allows the Group to deliver outstanding customer service.

OUR PRODUCTS

EXTERIORS

INSULATION AND ENERGY MANAGEMENT

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BUSINESS REVIEW CONTINUED %>-,)

SIG has increased its proportion of sales derived from the ?"!: ;":! This gives the Group a more balanced exposure to its residential and non-residential markets.

PERCENTAGE OF CONTINUING REVENUE BY MARKET

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Corporate governance Accounts Review of the year

WHERE WE OPERATE

UK AND IRELAND

£1,172m 45% of group revenue on a continuing basis

United Kingdom	£1,108m
Ireland	£64m

MAINLAND EUROPE

£1,437m

55% of group revenue on a continuing basis

France	£591m
Germany and Austria	£569m
Poland	£117m
Benelux*	£160m

* Includes international air conditioning and air handling business (headquartered in The Netherlands).

DEMAND DRIVERS

The main driver of demand for SIG's products in the new build residential and non-residential markets is construction activity, which in turn is largely determined by economic growth. Conversely, demand for construction products in the RMI market tends to be more constant and in some markets can even be counter-cyclical to the macroeconomy.

Although current economic conditions are subdued, SIG believes that the medium to long term drivers for its products remain strong given that the current relatively low levels of residential and private non-residential building activity do not appear sustainable when compared to demographic growth trends. Given the Group's strong market position in the majority of the countries in which it operates, SIG believes that it is well positioned to benefit from any upturn in demand over the medium term.

In addition to macroeconomic conditions:

Insulation and Energy Management

The need for reducing energy consumption and related costs, particularly given recent higher energy prices.
Increasingly stringent government regulation across Europe aimed at lowering energy usage and reducing greenhouse gas emissions.

Exteriors Interiors

The replacement of old/damaged roofs gives rise to an ongoing RMI requirement, providing a core product demand.
Demand for new products to reduce building exterior maintenance costs.
Growth of specialist distribution as the main supply route in the market.
Increasingly stringent fire and acoustic regulations, which as well as driving demand also benefits the larger specialist suppliers who can provide the necessary technical expertise.
Increased demand for integrated solutions.
Demand for higher standards of internal fit outs.

BUSINESS REVIEW CONTINUED ,)#)&>-?\$)"?_"\$-

The Group's strategy is focused on =' has a number of performance metrics, in order to track the Group's performance in each of these pillars (being outstanding customer service, sales outperformance, gross margin

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Like for like constant currency sales growth

Like for like constant currency sales growth -JZ > in the Group's total sales (in constant currency) excluding any current and prior year acquisitions or disposals. Sales are not adjusted for branch openings and closures.

Underlying gross margin is the ratio of

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Underlying operating margin

Underlying gross margin

Underlying operating margin is the to underlying sales.

3.7%

Working capital to sales

= ratio of working capital (including provisions but excluding pension scheme obligations) to annualised sales (after adjusting for any acquisitions and disposals in the current and prior year) on a constant currency basis.

8.5%

Return on capital employed

Return on capital employed ("ROCE") less taxation divided by average net assets plus average net debt.

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Weighted average cost of capital

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2012 objective	2012 performance	2013 objective
; < ! ; aims to outperform the market and take market 1€ ?? ?! ; /3/! in 2012 as the Group also looked to establish an appropriate balance between sales and gross margin. The Group also intended to take a consistent but :? ? ; < : 1	" ; = like for like sales. Sales from continuing operations 21 1. 4 1/1 SIG estimates that overall its markets declined 117/1 ; < continuing operations were up 0.1% in constant . of 2.5% for the Group. This level of market * and coupled with the Group's gross margin improvement represents an excellent performance.	The Group overall expects its markets to decline at a rate similar to that noted in 2012. !"; targeting to outperform its markets. SIG will continue to seek an appropriate balance between * ?? ! and is targeting a level of market outperformance similar to that recorded in 2012.
The Group's objective for 2012 was to continue ; <??1`* ?! it was acknowledged that in order to achieve this ~ ! ; : sales volume.	The Group overall delivered a gross margin 7 ! strong performance given the market share gain 216/4 1 While 10bps of the 40bps gross margin mechanical effect of changes in weighting ; ! the remaining 30bps was attributable to ! ! 1	The Group is once again targeting further improvement in gross margin in 2013. While there are a number of initiatives to continue ! of declining markets management does not expect to improve the Group's gross margin 3: 1
The Group's objective for 2012 was to continue the incremental improvements noted over margin in excess of that achieved in 2011.	; = ? ?! Group's gross margin and operating cost base was essential in order to improve the Group's operating margin. The Group achieved a gross margin improvement of 40bps and maintained ! = 2 : 4 to 0.2% in 2012. A combination of gross margin enhancement and tight operating cost control enabled the Group to increase its operating 1	The Group is expecting its markets overall to decline in 2013 at a similar rate to that experienced in 2012. ! ; incremental improvement in operating margins similar to that recorded in 2012 through further gross margin improvement and continued control of operating costs. ; ~? ";< ! ; from operational gearing as sales increase.
In 2011 the Group recorded a working capital to {1/! low for SIG. Following the continued investment in ! * change in some of the Group's countries of ! * ; could achieve this level of working capital to sales 1 ! ; <~ for 2012 was to record a working capital to sales ratio of no more than 9%.	The Group recorded a working capital to sales {16/! * ; < stated objective. This performance allowed the Group to achieve a cash conversion (excluding 4/ 5/ period. Again this is above the Group's stated objective of achieving a medium term cash conversion ratio of greater than 100%.	As the Group's restructuring provisions reduce 21 1 4! pressure to the Group's working capital to sales 1 ! ; increase in the Group's working capital to sales 3! exceed 9%.
The difference between ROCE and weighted 2‡^ \$\$ˆ4 * ? \$ : ? ? ?1"€\$) . ^ \$\$ : ~ \$ < . ? 1 ; <~ was to achieve a ROCE in excess of the Group's ^ \$\$! ? ? ? ? 1	Through a combination of increased operating : 2 ?? ?4 ! ; €\$){15/!0 and 40bps above its WACC.	_ ! ! ; targeting a further improvement in ROCE in 2013 ! ? ?! ; a ROCE which is equivalent to WACC +300bps.

Corporate governance

BUSINESS REVIEW CONTINUED CHIEF EXECUTIVE'S REVIEW

OUTPERFORMING OUR MARKETS

STUART MITCHELL CHIEF EXECUTIVE

HIGHLIGHTS

The Group overall outperformed
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TRADING REVIEW

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leader in France for industrial insulation.

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41

GERMANY AND AUSTRIA

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volume at the expense of margin.

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competition and weaker demand in the regions in which the Group has its strongest presence. In response SIG has implemented a series of cost ? *
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BENELUX

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POLAND

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wider construction market following the 2012 European Football Championships. ;?? 1 ;
Poland and following the agreed divestment of its Central European business will focus its regional resources on further strengthening its position in this market.

8 "

2 .
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41

BUSINESS REVIEW CONTINUED CHIEF EXECUTIVE'S REVIEW CONTINUED

/-; /- - -

OVER RECENT YEARS SIG HAS CONSISTENTLY OUTPERFORMED THE WIDER MARKET BY 2–3% PER ANNUM. A KEY ELEMENT OF DELIVERING THIS SALES OUTPERFORMANCE HAS BEEN THE EXPANSION OF THE GROUP'S BRANCH NETWORK, EITHER VIA NEW SITE OPENINGS OR INFILL ACQUISITIONS.

' ?!- !?- -\
]?? Germany and one in Poland.

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investment, with £140m of sales in 2012 being derived from new branches opened between 2008 and 2012.

\$!' ^?? / _? a total consideration of £7m. All of these acquisitions are within SIG's core areas of expertise and easily integrate into its / -' ^- `z{_ ^ '*- ?-

New branch openings (2008 to 2012 openings) contributed approximately 1.3% of the Group's market outperformance in 2012, with the remaining outperformance of 1.2% being achieved from the Group's existing branch network.

TRADING REVIEW CONTINUED

UNITED KINGDOM

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OUTLOOK

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STUART MITCHELL DOUG ROBERTSON Chief Executive Finance Director 6 March 2013 6 March 2013

BUSINESS REVIEW CONTINUED FINANCIAL REVIEW

IMPROVING FINANCIAL RETURNS

DOUG ROBERTSON FINANCE DIRECTOR

HIGHLIGHTS

\$)? 0 {15/ compared to a WACC of 8.2%
%

= 2

4*1/ in 2012
- :
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10bps at 3.7%
- % ? ? was 112%
- Strong balance sheet maintained – 31 December 2012 leverage position at 0.9x

REVENUE

	2012	2011	Movement
2 4 Continuing sales* 2 4	2,635.5 2,608.6	!{{17 !0316	251/4 231'/4
	Group	%,‰ Ireland	Mainland Europe
' sales growth^	21/4	21/4	1.6%

* Continuing sales in 2012 and 2011 represents total sales less sales attributable to businesses divested in both 2012 and 2011.

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117/1 This equates to a market outperformance of 2.5% for the Group.

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GROSS MARGIN

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7 ?610/ to 26.1%. Gross margin pressures are expected to remain in the short to
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2010 2011 2012 3.7% 3.7 3.6 3.1 j- - %

- - -

OPERATING COSTS AND MARGIN

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testament to the Group's strong credit control procedures. Despite this ?? !
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The Group has continued to review its operating cost base in 2012 and has
:

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OPERATING PROFIT

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FINANCE COSTS

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reduction in average net debt in the period. Details of the reduction in net
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Further details of SIG's interest rate policies are provided in the Interest Rate Risk section on pages 35 and 36.

PROFIT BEFORE TAX

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:

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|73102}|01641

BUSINESS REVIEW CONTINUED FINANCIAL REVIEW CONTINUED

/-;

| ?? -]--

IMPROVING THE QUALITY OF SALES HAS BEEN A KEY AREA OF FOCUS FOR SIG AND THE GROUP HAS MADE GOOD PROGRESS ON GROSS MARGIN OVER RECENT YEARS, PARTICULARLY GIVEN CURRENT MARKET CONDITIONS.

Following a 30bps improvement in 2011, gross margin increased again in 2012, this time by 40bps. There were a number of different factors that contributed to this improvement. A small element (10bps) was simply due to the mechanical effect of changes in weighting between the various businesses in the portfolio. The remaining gross margin improvement of 30bps was attributable to proactive initiatives such as price management, sales policy, control of product mix, and procurement.

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OTHER ITEMS

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|12}|71541 Accounting Policies section on page 83 and Note 14 to the Accounts on page 100 provide details of what is included within intangible assets and over what periods the assets are amortised;
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TAXATION

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SHAREHOLDERS' FUNDS

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Exchange differences on assets and liabilities after tax	2{174
; =*	2164
Movements attributable to share options	2164
Effect of change in tax rates on deferred tax	21{4
_ . ? \$	271{4
Increase in Shareholders' funds	1.3

CASH FLOW AND FINANCIAL POSITION

The Group has continued to reduce its level of net debt in 2012 through strong operating cash generation. The following table explains the
";<

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	2012	2011
\$= Interest and tax Maintenance capital expenditure	88.7 (!' '(%	96.1 2614 26164
&? =* Investment capital expenditure Acquisition investment (including deferred 4 Proceeds from sales of businesses	33.9 ,% \$( 1.2	55.6 – 251{4 30.6
( Foreign exchange gains . ? \$ € ? 2? 4	+( 3.2 !,& +\$	214 1.1 27174 251'4
Movement in net debt Opening net debt	10.6 !!)#	69.1 2{614
?	!+)(	261'4

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assumed to be maintenance capital expenditure. To the extent that net capital expenditure exceeds
!

BUSINESS REVIEW CONTINUED FINANCIAL REVIEW CONTINUED

Strategic pillar: Operational effi ciency

IMPROVING OPERATIONAL EFFICIENCY IS A VITAL SELF-HELP MEASURE TO PROTECT PROFITS IN THE CURRENT CHALLENGING MARKET CONDITIONS.

SIG has a strong focus on cost control and is continuously looking for improvements in working practices and other associated opportunities to reduce costs.

Two particular areas where the Group has spent time and effort to deliver operational effi ciencies are transport & warehousing and in the effectiveness of its Sales function. For example, by implementing more effi cient working practices in 2012 the Group saved £1.4m in SIG Distribution, its UK insulation and interiors business, reducing headcount by nearly 100 and the delivery fl eet by 62 vehicles.

At the same time, the Group is also targeting further structural opportunities to reduce cost, and has identifi ed £10m of additional effi ciencies from its branch network across Europe. £3m of these savings have been delivered in 2012, with a further £7m incremental to 2013.

As a result of the Group's continued focus on cost control, operating cost infl ation (net of cost savings) was only 0.2% in 2012.

CASH FLOW AND FINANCIAL POSITION CONTINUED

WORKING CAPITAL

Included within "Cash generated from operating activities" is an increase in working capital of £19.1m (2011: £17.6m), which relates primarily to a decrease in trade payables of £19.1m. Included within this working capital increase however is a £7.0m (2011: £2.4m) special pension contribution and also a £12.7m cash outfl ow representing the cash costs associated with the Group's cost saving and restructuring programme (2011: £12.4m). Excluding these payments, working capital actually decreased in 2012 by £0.6m (2011: increase of £2.8m);
The key working capital measures are set out below on a constant currency basis (continuing operations):

	2012	2011
Inventory days	42	41
Trade receivable days	41	42
Trade payable days	34	35

As can be seen above, the continued focus on working capital management in 2012 resulted in only a small increase in the overall level of working capital in the Group. As a result, the Group's working capital to sales ratio (on a constant currency basis for continuing operations) at 31 December 2012 was 8.5% (2011: 8.1%), in line with the Group's objective of no more than 9.0%.

Following the small working capital outfl ow, the Group's cash fl ow from operating activities amounted to £88.7m (2011: £96.1m). This represents a trading cash conversion ratio of 92% (2011: 98%). Trading cash conversion is defi ned as cash fl ow from operating activities divided by underlying operating profi t and is a key measure that will continue to be a matter of high focus in 2013. However, on an underlying basis, i.e. excluding cash payments on previously expensed restructuring costs of £12.7m (2011: £12.4m) and one-off pension contributions of £7.0m (2011: £2.4m), cash conversion in 2012 was 112% (2011: 113%), above the Group's medium term objective of 100%.

FIXED ASSETS

Given the relatively low level of capital expenditure in the period 1 January 2009 to 31 December 2011, the level of net capital expenditure increased in the year to £28.2m (2011: £15.5m). It is anticipated that the level of capital expenditure will remain above the level of depreciation in 2013 refl ecting the Group's continuing investment in the business.

OTHER

The Group's reported net debt position at 31 December 2012 reduced by £3.2m (2011: reduced by £1.1m) as a result of foreign exchange rate movements. Further details can be found on page 27. In 2012, Group net debt increased as a result of adverse fair value movements primarily associated with the Group's private placement derivative fi nancial instruments by £2.3m (2011: £6.8m).

FOREIGN CURRENCY TRANSLATION

Overseas earnings streams are translated at the average rate of exchange for the year while balance sheets are translated using closing rates. The table below sets out the principal exchange rates used:

		Average rate	Movement		Closing rate	Movement
	2012	2011	%	2012	2011	%
Euro	1.23	1.15	7%	1.23	1.19	3%
Polish Zloty	5.15	4.77	8%	5.03	5.34	(6%)

On an average rate basis, Sterling strengthened against both the Euro and Polish Zloty. On a closing rate basis, Sterling strengthened against the Euro but weakened against Polish Zloty.

As a result, the movement in exchange rates compared to 2011 had a detrimental effect on the translation of total overseas earnings streams and assets, but a benefi cial impact on translation of the Group's Euro denominated debt and Polish Zloty denominated cash. The impact of exchange rate movements on the translation of the Group's overseas earning streams, net assets and net debt can be summarised as follows:

	Impact of currency movements in 2012
Continuing sales Underlying operating profi t Underlying PBT Consolidated net assets	(£107.8m) (£4.0m) (£3.8m) (£8.4m)	(4.0%) (4.1%) (4.5%) (1.2%)
Net debt	(£3.2m)	(3.0%)

As can be seen above, fl uctuations in exchange rates give rise to translation differences on overseas earnings streams when translated into Sterling. Further details of SIG's foreign exchange policies are detailed in the Foreign Currency Risk section on page 36.

PENSION SCHEMES

In total, the Group operates fi ve (2011: fi ve) defi ned benefi t pension schemes, the largest defi ned benefi t pension scheme is a funded scheme held in the UK. The remaining four defi ned benefi t pension schemes are unfunded book reserve schemes held in the Group's Mainland European businesses. Together the UK defi ned benefi t scheme and the four book reserve schemes are referred to as "defi ned benefi t pension schemes".

In addition to the defi ned benefi t pension schemes, the Group also operates a number of defi ned contribution pension schemes.

In 2012 the Group, in conjunction with the Trustee Board, fi nalised the triennial valuation of the main UK defi ned benefi t pension scheme as at 31 December 2010.

The IAS 19 actuarial valuation at 31 December 2012 incorporates the valuation assumptions used in the 31 December 2010 triennial valuation. Following the fi nalisation of the triennial valuation, a special contribution of £7.0m was paid in 2012 to the UK defi ned benefi t pension scheme and a further £3.0m special contribution was made in January 2013.

BUSINESS REVIEW CONTINUED FINANCIAL REVIEW CONTINUED

PENSION SCHEMES CONTINUED

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SIG are set out in Note 30c to the Accounts on pages 115 to 117.

ACQUISITIONS

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DIVESTMENTS

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! 5 December 2012 the Group sold its Central European businesses. The sale of the Slovakian part of the business remains subject to competition ?!* ? ? 1"

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CAPITAL STRUCTURE

The Group manages its capital structure to ensure that entities in the Group will be able to continue as going concerns while maximising the return

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The main measure used to assess the appropriateness of the Group's

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that the Group's capital structure is aligned to the Group's debt covenants. The Group's long term target is to manage its leverage within the range of 1.0x–1.5x. The Group's leverage position has remained at 0.9x at 3_ ?21
3_ ?41"

! is envisaged that the Group's leverage ratio will be below the lower end of the target range noted above.

SHAREHOLDER RETURN

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in the period.

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24
: performance. The Group's TSR performance has been detailed in the Directors' Remuneration Report on page 71.

OUTLOOK

The Directors' view of the outlook and prospects for the Group are set out in the Chairman's Statement on page 7.

RESOURCES

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! performance is managed on a continuous basis and a formal appraisal 1?!

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Trading sites

SIG has an extensive network of trading sites as shown in the table on page 8. These are an important resource and an important feature of the SIG

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market surrounding each trading site to be serviced on an immediate 1-
30

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the closure of these trading sites has not affected the Group's service

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Group has made in its trading site network.

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! the time and cost penalties of shipping products over large distances.

Competitive position

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interiors. A position of market leadership has been achieved in a number of countries and markets. Operations in the other countries and market
1";
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maintaining a competitive advantage.

Brand strength

SIG operates under a wide range of trading names in the markets and countries in which it has trading sites.

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! ? and strong customer service.

SIG believes that the strength and market awareness of its brands are important assets of the Group.

Inventory

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substantial damage and costs. A fundamental feature of SIG's position in *

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Fleet delivery capability

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management of this resource on a local basis is an important feature !=

BUSINESS REVIEW CONTINUED #"?\$"#-'",-?_%?\$)-"?")

THE GROUP HAS A SERIES OF REVIEW PROCESSES IN PLACE (INCLUDING ANNUAL STRATEGIC REVIEWS, BUDGET REVIEWS AND ROLLING FORECAST REVIEWS) WHICH ENSURE THAT ALL KEY RESOURCE REQUIREMENTS ARE IDENTIFIED AND MANAGED.

PRINCIPAL RISKS AND UNCERTAINTIES

;? -?1 : ? *
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: !
1 ? * the consideration of the objectives and targets of the Group's strategic !

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environment are implemented.

Further information on our risk management procedures is included in the Corporate Governance section on pages 58 and 59.

There are a number of potential risks and uncertainties which could have a material impact on SIG's long term performance. The risk
:
!

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RISK IDENTIFICATION, MONITORING AND REPORTING FRAMEWORK

BUSINESS UNIT

are responsible for the
:
! and reporting of local risks
Maintenance of local risk registers
Implementation of risk mitigation plans

RISK WORKING GROUP

Conducts continual review of risks and risk controls
Concludes on treatment of risks
Reviews and reports on risk to the Audit Committee and Board

INDEPENDENT ASSURANCE

Internal audit
External audit
"
Committee and Board

AUDIT COMMITTEE

\$ ? .? management and internal control framework
Receives and reviews Group \$
Receives and reviews reports from the Risk Working Group
Receives and reviews reports from independent assurance providers

BOARD

Sets strategic objectives
Approves risk governance structure and agrees risk appetite
Receives and reviews Group Risk Register
Receives and reviews Audit Committee reports on risk governance and internal controls

PRINCIPAL RISKS

	`	~
~	SIG operates in a number of countries across >) * ~? ";< ! civil engineering industries. These industries are ; expenditure. "; and therefore demand from these industries.	; ! ? ! 1)? : ; * to changing market conditions. The Group operates in a number of different countries and
	; 2 ;? _ 4! ! 2 ? 4 : ? ?* ";< 1	market sectors. This differentiation provides an element of 1 ; -?< * ; < geographies and markets which remain core to the Group and which have strong long term growth prospects.
	)?' ) . SIG's operations.	The Group Board has considered a number of alternative )?' on SIG. The Group also believes that the Eurozone crisis is not as acute as it was twelve months ago but continues to monitor !* ! 1
		While the potential impact on overall global consumer demand ! ; < Mainland European operations are based in the Northern ) 2 11&? ; ?4* more robust economies and therefore the risk associated with ) ( ) on SIG is reduced to some extent.
	SIG has a mix of both direct specialist competition and some overlap with more general suppliers (such as general builders' 4 of operation.	~ "; and inexpensive in relation to their mass and the cost of transport. "; ( *1
	Challenging trading conditions further increase competition which in turn increases margin ; 1	! ( "; "; ?1
		The Group operates in a number of different countries and market sectors and has a strong trading presence in the ~? ? 1 balanced portfolio provides an element of protection against 1
		? * ! ; implement initiatives designed to improve the Group's ! including enhanced sales support and training.
		€ ; 2 7641" ! ; costs as a percentage of sales and/or improve gross margins. The Group has a number of ongoing pricing and purchasing initiatives designed to improve gross margin and tight control of operating costs is a permanent feature of management practice.

} Increase in risk Decrease in risk No change

Corporate governance

BUSINESS REVIEW CONTINUED #"?\$"#-'",-?_%?\$)-"?")\$?"?%)_

PRINCIPAL RISKS

	`	~
]	Failure to negotiate competitive terms of * the needs of our customers could harm the Group's business.	" 1" ! }
	Customer or supplier consolidation and/or * ?1	/ ; ' 1 ; ! 1" ! ( 1 *
		: 1
		; ' 1\$ 1
=	SIG operates in a number of countries across ) ! * *? ! ! ! ! 1\$ these laws and regulations could impact on SIG's ! 1 ! : ( (\$ (-? ?'1	The Group has continued to add to its resources dedicated 1 ; laws and regulations across its markets to ensure that minimised. During the course of 2012 a number of initiatives were undertaken to respond to new or updated laws and regulations. These include the continual review (? ( across the Group. # ! ! . ? * *
		to changing legislative requirements.
		; : * bodies and trade associations.
b ?	Group net debt at 31 December 2012 amounted 6131 ; } 24 ? ' 24 ? ? ?' 234? ?? ?' 274 ' 264 1	; * ; < ? ??1& ; < > on pages 34 to 36. Given the continued reduction in the ; < ?! 1

} Increase in risk Decrease in risk No change

PRINCIPAL RISKS

	`	~
ƒ	& : ? ; < ! ? ? ; < . 1 \$ )?' : 1	\$= part of the annual budget process. All targets are reviewed 1 The Group has well established and stringent authorisation capital expenditure and working capital requirements. ; ( ! 2 4! ~ customer relationships.
[\	"; ! ? ?: 1€ ";< ( ( 1 " =1 )# %,_ ? 1	) " " in place for all major data centres. ; " ! together with external support service providers to " 1 !? ? ? ! 1 ; protection of commercial and sensitive data. & " ~ ! conjunction with internal project management teams. )# ? %, 2013 and 2014.
Z=?	% ? ? 21 1 ! 4* "; : 1 &? ? ! to attract and retain strong management and ! adverse effect upon the Group's business.	The Group has a series of review processes in place 2 ! 4 .? ? : ?1 " ! ; ! 1 " ! succession planning is performed with an annual review of current and future management requirements. The Group also performs regional talent management programmes and management development initiatives which are * ? ? ; -?1

} Increase in risk Decrease in risk No change

BUSINESS REVIEW CONTINUED TREASURY RISK MANAGEMENT

Strategic pillar:

Focus on fi nancial returns

THE GROUP HAS A CLEAR FOCUS ON IMPROVING RETURNS AND HAS SET DEMANDING TARGETS FOR RETURN ON CAPITAL EMPLOYED.

In 2011 the Group's post-tax ROCE was 7.9%, just below its weighted average cost of capital.

SIG's target for 2012 was for ROCE to exceed WACC, thereby returning the Group to economic profi tability.

This was achieved despite challenging market conditions and declining volumes in the construction market, with SIG's ROCE increasing by 70bps to 8.6%, above the Group's WACC of 8.2%.

The Group's medium term target is for ROCE to exceed WACC by 300bps.

TREASURY RISK MANAGEMENT

TREASURY RISK – INTRODUCTION

SIG enters into derivative fi nancial instruments (principally foreign currency and interest rate swaps) to hedge certain currency risks arising from SIG's operations and to hedge interest expenses arising from SIG's sources of fi nance. SIG's fi nancial instruments, other than derivatives, comprise borrowings, cash and liquid resources and various items such as trade receivables and trade payables that arise directly from its operations.

SIG's Finance and Treasury Policies set out the Company's approach to managing treasury risk. These policies are approved by the Group Board on a regular basis. It is Company policy that no trading in fi nancial instruments or speculative transactions be undertaken.

While it is Company policy that no speculative transactions be undertaken, hedge relationships which are deemed imperfect, or where exceptional gains and losses arise, are included within "Other items" in the middle column of the Consolidated Income Statement. Hedge ineffectiveness resulted in a credit to the Consolidated Income Statement of £0.4m in 2012 (2011: debit of £0.3m).

SIG fi nances its operations through a mixture of retained profi ts, shareholders' equity, bank funding, private placement and other borrowings. SIG uses derivative fi nancial instruments in order to manage SIG's exposure to exchange rate and interest rate fl uctuations. A small proportion of SIG's assets are funded using fi xed rate fi nance lease contracts.

The Group's fi nancial liabilities (including derivative fi nancial assets but excluding trade receivables and payables) at 31 December 2012 amounted to £236.1m (2011: £242.8m). After taking into account positive cash held on deposit of £128.1m (2011: £126.9m) and an associate loan and deferred consideration of £2.7m (2011: £nil), the Group's net debt amounted to £105.3m (2011: £115.9m). The Group's net debt is made up of the following categories:

	2012 £m	2011 £m
Finance lease contracts	7.6	7.3
Bank overdrafts	4.1	4.0
Bank loans	1.4	3.1
Private placement notes	256.0	265.2
Deferred consideration payable	–	5.4
Derivative fi nancial instruments	10.6	10.5
Total	279.7	295.5
Derivative fi nancial instruments (assets)	(43.6)	(52.7)
Net total	236.1	242.8
Associate loan and deferred consideration	(2.7)	–
Cash on deposit	(128.1)	(126.9)
Net debt	105.3	115.9

The Group's gross fi nancial liabilities can be further analysed as follows:

	2012 £m	2012 %	2011 £m	2011 %
Gross fi nancial liabilities with a maturity profi le of greater than fi ve years	25.5	11%	24.4	10%
Gross fi nancial liabilities held on an unsecured basis	226.4	96%	230.5	95%

Details of derivative fi nancial instruments are shown in Note 20 to the Accounts on pages 104 to 107.

Treasury risk management incorporates liquidity risk, interest rate risk, foreign currency risk, counterparty credit risk and debt covenants. These specifi c risks, and the Group's management of them, are detailed overleaf.

LIQUIDITY RISK AND DEBT FACILITIES

Liquidity risk is the risk that SIG is unable to meet its financial obligations as they fall due. In the longer term, a substantial reduction in operating performance and cash generation may result in the Group being unable to service its debt, which would have a material adverse effect on the Group's business.

In order to mitigate the risk of not being able to meet its financial obligations, SIG seeks a balance between certainty of funding and a flexible, cost-effective borrowing structure, using a mixture of sources of funding in order to reduce the risk of being over reliant upon any one provider. The key sources of finance are private placement note investors, being mainly US-based pension funds, and principal bank debt. The most recent private placement transaction which completed on 1 November 2006 increased the certainty of the Group's debt funding by providing a committed seven, ten and twelve year facility.

More recently, in order to further secure longevity and certainty of funding, the Group refinanced its bank debt facilities. On 14 March 2011, the Group signed a new £250m four year bank facility. At 31 December 2012 this facility was undrawn and therefore represents the committed funding headroom for the Group. This £250m bank debt facility provides sufficient funding headroom and liquidity to support the Group's medium term strategic plans.

	Facility amount £m	Amount drawn £m	Amount undrawn £m	Date of expiry
Private placement
loan notes	81.6	81.6		– November 2013
Bank debt	250.0	–	250.0	March 2015
Private placement
loan notes	130.6	130.6		– November 2016
Private placement
loan notes	20.0	20.0		– November 2018
	482.2	232.2	250.0

As can be seen in the table opposite, the Group has £81.6m (€100m) of fully drawn debt facilities which expire in November 2013. It is currently envisaged that these facilities will be repaid using the Group's positive cash, with any shortfall being met by drawing upon the Group's £250m bank facility which is currently undrawn.

INTEREST RATE RISK

The Company's interest costs in respect of its borrowings will increase in the event of rising interest rates. To reduce this risk the Company has a policy of aiming to fix between 60% and 85% of its average net debt by entering into appropriate derivative financial instruments.

	2012	2011
Net debt at fixed rates of interest	£146.9m	£166.2m
% of net debt	140%	143%
% of gross debt	62%	68%

At 31 December 2012, 140% (31 December 2011: 143%) of the Group's net debt is at fixed rates of interest. While the level of fixed rate debt at 140% is above the Group's stated policy range, this has arisen as the Group's level of net debt has continued to reduce. However, although the Group's net debt has reduced, the Group's gross debt (i.e. debt excluding cash deposits) has remained relatively constant. Accordingly, the interest exposure on the Group's gross debt remains hedged. At 31 December 2012, 62% of the Group's gross debt was at fixed rates of interest. As a result, despite the proportion of net debt at fixed rates of interest being above the Group's stated policy range, given that the current interest rate derivative contracts that the Group hold are at attractive rates of interest and hedge specific gross interest payable exposures, it has been deemed appropriate not to cancel any existing interest rate fixes at this stage. Given that the Group is currently above its stated policy range, no further interest rate fixes have been entered into during the year. In addition, an interest rate swap, fixing £20m of debt, matured during the year and was not replaced.

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TREASURY RISK MANAGEMENT CONTINUED

INTEREST RATE RISK CONTINUED

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FOREIGN CURRENCY RISK

INCOME STATEMENT

SIG has a number of overseas businesses whose revenues and costs are denominated in the currencies of the countries in which the operations are 16{/";<26/4? ? * ? ? ?? ! ??)?#
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IMPACT OF FOREIGN CURRENCY MOVEMENTS IN 2012

The overall impact of foreign exchange rate movements on the Group's Consolidated Income Statement and Consolidated Balance Sheet is disclosed on page 27 of this Business Review.

COUNTERPARTY CREDIT RISK

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DEBT COVENANTS AT 31 DECEMBER 2012

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Leverage covenant	Q	Year (! b ? 2012	ended 31 December 2011
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FCC covenant	Q	Year (! b ? 2012	ended 31 December 2011
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Corporate governance

Performance graph

The graph below shows the Company's TSR performance (share price plus dividends paid) compared with the performance of the FTSE All Share Support Services Index over the five year period to 31 December 2012. This index has been selected because the Company believes that the constituent companies comprising the FTSE All Share Support Services Index are the most appropriate for this comparison as they are affected by similar commercial and economic factors to SIG.

Shareholder vote

The following table shows the results of the advisory vote on the 2011 Remuneration Report at the 18 May 2012 AGM. As noted in the Policy Report, It is the Remuneration Committee's policy to consult with major Shareholders prior to any major changes to its executive remuneration structure.

For	Against	Abstentions
371,357,587 (86.76%)	39,869,639 (9.31%)	16,835,889 (3.93%)

The Committee consulted with its major Shareholders on proposed remuneration policy in February 2012 and February 2013. I am pleased to confirm that there was majority support for each proposal.

External advisors

Kepler acted as the independent remuneration advisor to the Committee during the year. Kepler attends Committee meetings and provides advice on remuneration for executives, analysis on all elements of the remuneration policy and regular market and best practice updates. Kepler reports directly to the Committee Chairman and complies with the Code of Conduct for Remuneration Consultants (which can be found at www.remunerationconsultantsgroup.com). Kepler provides no other services to the Company. Kepler's fees for the year were £50,715.

Deloitte LLP, Auditor to the Group, when requested, examine outcomes for the LTIP and DABS at the end of the respective performance periods. They did not receive any fees for this service in 2012.

DIRECTORS' REMUNERATION REPORT CONTINUED INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

IMPLEMENTATION REPORT CONTINUED

DIRECTORS' INTERESTS IN THE SHARES OF SIG PLC (AUDITED)

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| J. C. Nicholls | 5++' | {+6+ | 76!{6 | – | {! | 63!{6 |

Corporate governance

Performance graph

Shareholder vote

For	Against	Abstentions
371,357,587 (86.76%)	39,869,639 (9.31%)	16,835,889 (3.93%)

The Committee consulted with its major Shareholders on proposed remuneration policy in February 2012 and February 2013. I am pleased to confirm that there was majority support for each proposal.

External advisors

Deloitte LLP, Auditor to the Group, when requested, examine outcomes for the LTIP and DABS at the end of the respective performance periods. They did not receive any fees for this service in 2012.

DIRECTORS' REMUNERATION REPORT CONTINUED INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

IMPLEMENTATION REPORT CONTINUED

DIRECTORS' INTERESTS IN THE SHARES OF SIG PLC (AUDITED)

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| Name | 31
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| C. V. Geoghegan | +0+' | {+6+ | 76!{6 | 2,000 | 5! | 63!{6 |
| J. C. Nicholls | 5++' | {+6+ | 76!{6 | – | {! | 63!{6 |

Corporate governance

Performance graph

Shareholder vote

For	Against	Abstentions
371,357,587 (86.76%)	39,869,639 (9.31%)	16,835,889 (3.93%)

The Committee consulted with its major Shareholders on proposed remuneration policy in February 2012 and February 2013. I am pleased to confirm that there was majority support for each proposal.

External advisors

Deloitte LLP, Auditor to the Group, when requested, examine outcomes for the LTIP and DABS at the end of the respective performance periods. They did not receive any fees for this service in 2012.

DIRECTORS' REMUNERATION REPORT CONTINUED INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

IMPLEMENTATION REPORT CONTINUED

DIRECTORS' INTERESTS IN THE SHARES OF SIG PLC (AUDITED)

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| Name | 31
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| C. V. Geoghegan | +0+' | {+6+ | 76!{6 | 2,000 | 5! | 63!{6 |
| J. C. Nicholls | 5++' | {+6+ | 76!{6 | – | {! | 63!{6 |

Corporate governance

Performance graph

Shareholder vote

For	Against	Abstentions
371,357,587 (86.76%)	39,869,639 (9.31%)	16,835,889 (3.93%)

The Committee consulted with its major Shareholders on proposed remuneration policy in February 2012 and February 2013. I am pleased to confirm that there was majority support for each proposal.

External advisors

Deloitte LLP, Auditor to the Group, when requested, examine outcomes for the LTIP and DABS at the end of the respective performance periods. They did not receive any fees for this service in 2012.

DIRECTORS' REMUNERATION REPORT CONTINUED INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

IMPLEMENTATION REPORT CONTINUED

DIRECTORS' INTERESTS IN THE SHARES OF SIG PLC (AUDITED)

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| Name | 31
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| C. V. Geoghegan | +0+' | {+6+ | 76!{6 | 2,000 | 5! | 63!{6 |
| J. C. Nicholls | 5++' | {+6+ | 76!{6 | – | {! | 63!{6 |

Corporate governance

Performance graph

Shareholder vote

For	Against	Abstentions
371,357,587 (86.76%)	39,869,639 (9.31%)	16,835,889 (3.93%)

The Committee consulted with its major Shareholders on proposed remuneration policy in February 2012 and February 2013. I am pleased to confirm that there was majority support for each proposal.

External advisors

Deloitte LLP, Auditor to the Group, when requested, examine outcomes for the LTIP and DABS at the end of the respective performance periods. They did not receive any fees for this service in 2012.

DIRECTORS' REMUNERATION REPORT CONTINUED INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

IMPLEMENTATION REPORT CONTINUED

DIRECTORS' INTERESTS IN THE SHARES OF SIG PLC (AUDITED)

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OTHER MATTERS

GOING CONCERN BASIS

In determining whether the Group's 2012 Accounts can be prepared on a ?!
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uncertainties relating to its business activities. These are set out in the Chairman's Statement and Business Review on pages 6 to 37 and in the Notes to the Group Accounts.

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performance and mitigate the possible adverse impact of a deteriorating
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CAUTIONARY STATEMENT

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STUART MITCHELL DOUG ROBERTSON Chief Executive Finance Director 6 March 2013 6 March 2013

Corporate governance

CORPORATE RESPONSIBILITY REPORT

SIG continues to progressively integrate Corporate Responsibility across the Group. It believes that the inclusion of broader social and environmental issues into its decision making will support the Group in achieving its business goals as well as helping grow Shareholder value.

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a constituent of the FTSE4Good Index Series. Created by the global index company FTSE Group, FTSE4Good is an equity index series that is designed to facilitate investment in companies that meet globally recognised corporate responsibility standards. Companies in the FTSE4Good Index Series have met stringent social and environmental criteria, and are positioned to capitalise :

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SIG is a member of Business in the Community in the UK and has worked with that organisation to develop its approach and practices.

The CR Committee was set up in 2009 and provides the SIG Board with a

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the Company's short and long term value arising from such matters. The Board receives a report on CR issues at each of its Board meetings and reviews the Group's CR strategy. CR issues also form part of the overall internal control process and are covered in the training of Directors.

As a founder member of the Association for the Conservation of Energy, SIG is active in promoting and encouraging the raising of mandatory standards for thermal insulation.

SIG has in place a Group-wide Ethics Policy, which sets out a number of fundamental principles that all Group companies are required to follow. In addition we have in place Group-wide Anti-Bribery & Corruption, Ethical Trading and Human Rights policies. These policies underpin our CR programme and support our business integrity, and are reviewed regularly. During 2012 an online training tool was developed with Eversheds LLP to further support our Competition Law Policy. The online training has been successfully trialled and will continue to be rolled out in local languages in 2013 to all senior management through to branch managers and external salespeople.

The CR Committee maintains a rolling three year CR plan, which continues to inform the objectives and target actions of the Group and drives continual improvement of its CR performance. The objectives provide valuable key performance indicators for the Group to focus its CR efforts and work to continually improve the Group's index ratings.

The Group's CR credentials are an important part of its commercial aspirations. In 2012 these credentials continued to provide access to tender ?~

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BUSINESS PRINCIPLES AND CODE OF ETHICS

SIG has a clear and unequivocal approach to business integrity and ethics which underlies the Group's core values of openness, collaboration, mutual !
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The Group's Ethics Policy, which has been issued to all employees, sets out the standards and behaviours that all SIG employees are expected to meet throughout the Group's operations. The policy makes clear a number of fundamental principles which all Group companies are required to follow. The policy can be viewed on the Company's website at www.sigplc.com.

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SIG's policy is to operate within applicable laws;
discrimination or harassment of any kind will not be tolerated;
SIG aims to be a responsible partner within its local communities;
the legal and moral rights of others will be taken into account in all of SIG's business transactions;
we will maintain a safe and healthy environment for people to work in;
we will be proactive in managing our responsibilities to the environment;
we will not knowingly make misrepresentations;
as a matter of policy we do not make political donations;
no bribes can be given or received;
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employees are encouraged to report any suspected wrongdoings.

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ANTI-BRIBERY & CORRUPTION POLICY

SIG plc has a number of fundamental principles and values, which it believes are the foundation of sound and fair business practice and as such are important to uphold.

! wherever and in whatever form that it may be encountered. The Group's Anti-Bribery & Corruption Policy supports our Ethics Policy and clearly states the standards and principles required to ensure conformance to legal requirements within the countries in which SIG and its subsidiary companies operate. During 2012 we have continued to develop our Anti-Bribery & Corruption Policy training; we worked with Transparency International to create a comprehensive online training resource. This will continue to be rolled out Group-wide during 2013 to all senior management through to branch managers and external salespeople.

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setting out a clear Anti-Bribery & Corruption Policy;
training all employees so that they can recognise and avoid the use of bribery by themselves and others;
encouraging its employees to be vigilant and to report any suspicion of bribery, providing them with suitable channels of communication and ensuring sensitive information is treated appropriately;
rigorously investigating instances of alleged bribery and assisting the police and other appropriate authorities in any resultant prosecution; and
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ENVIRONMENT

ENVIRONMENTAL MANAGEMENT

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The Group Chief Executive is the Board Director responsible for the environmental performance of the Group and is signatory to the HS&E Policy statement, which is displayed at each location in the local language.

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Aspects and Impacts Register and Corporate Risk Assessment. The Register was reviewed in 2012 through each business' Management Review process to provide a qualitative measure of performance at a local level.

The Group's performance against its KPIs (legal compliance and environmental complaints) since the introduction of the Management System is a measure of *

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fuel, energy and water consumption and reduce waste. These remain the key aims and the Group's objectives and targets designed to meet these aims were devolved through the Low Carbon Strategy to each business in 2012. The progress that we have made in this area is covered in this report.

SIG is also pleased to report its performance on management and governance, risk assessment and accounting for climate change and now water through the Carbon Disclosure Project.

CARBON MANAGEMENT

The Group Chief Executive is responsible for the environmental performance of the Group and as such he is signatory to the Low Carbon Policy Statement which supports the Group's CR Policy.

The aims of the policy are to reduce the Company's impact on the global environment and, in particular, climate change through reducing energy and fuel consumption and minimising water consumption and waste.

CORPORATE RESPONSIBILITY REPORT CONTINUED

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ENVIRONMENT CONTINUED

CARBON MANAGEMENT CONTINUED

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The UK Government operates a mandatory carbon reporting programme designed to inspire businesses to reduce their emissions. A key element of the programme is the publication of the performance league table. SIG is proud to :

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Company's achievement in reducing its carbon emissions and a demonstration of SIG's commitment to reducing its emissions year on year.

The appointment of a Group Health, Safety and Environment Manager in September 2011 strengthened the Group's ability to co-ordinate and drive forward the Low Carbon Strategy in 2012. The strategy is reviewed and updated through the Low Carbon Committee and forms the basis of the Company's objective for continual improvement in this area with Group objectives setting local business objectives across all of the Group.

To achieve these objectives SIG has Environmental Champions based in each region to support the policy, drive forward objectives and communicate best practice. The Group-wide 'Low Carbon Business' awareness campaign, which commenced in 2011 with the launch of the Low Carbon Business Update and in-country Management Review meetings, continued in 2012 to be the cornerstone for communication through the business.

ROAD RISK POLICY

its employees across the Group and that its vehicles and drivers represent the Company while they are on the road. It also recognises the potential impact that driving has on the local and global environment.

The UK business, in partnership with its insurers and brokers, has focussed on vehicle

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to take the risks associated with the use of vehicles into account during management decision making processes;
to reduce the frequency and severity of accidents that occur during driving activities;
to reduce the adverse impact that driving and vehicles have on the local and global environment; and
for SIG drivers to be acknowledged by customers, employees and the public as being socially and environmentally responsible in their approach to driving.

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TRANSPORT

Vehicle fuel consumption forms a major part of the Group's carbon footprint and continues to be a key focus of the Group's Low Carbon Business strategy. An absolute reduction in fuel consumption and the associated emissions were again a key objective for the Group in 2012. Taking into account expected growth of the business and the diminishing effect of the City Initiative and branch
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This has been achieved largely through the reduction of out of area deliveries, improved vehicle routing, trunking and backloads, which have reduced delivery miles and enabled vehicle consolidation. Fuel usage consumption reports and :

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Further project work within the business will continue in 2013, including the introduction of a Telematics system which will focus on vehicle idling and improving driver behaviour through accurate consumption and mileage measurement and

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The SIG Driver of the Year Award Scheme launched in 2011 in partnership with the Group's stakeholders was a further success in 2012 and was nominated for an Industry Award. Interest continues to grow. In 2013 drivers *

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CO EMISSIONS – SCOPE 1 – DIRECT

Source	_ :	Data source and calculation methods	tonnes (Group) 2012	tonnes (Group) 2011	tonnes (Group) 2010
Road vehicle fuel	Emission from road vehicle fuel consumption Fuel cards and direct purchase records in	litres converted according to DEFRA guidelines	72,223	03!6	06!'
Plant vehicle fuel	Emission from non-road vehicles and plant consumption (LPG and gas oil)	Direct purchase records in litres converted according to DEFRA guidelines	5,369	5,204	5,252
Natural gas	Directly purchased gas fed into sites through national distribution networks	^ converted according to DEFRA guidelines	2,999	3!35	3,420
Coal/coke	Directly purchased coal/coke used for heating purposes	Actual or estimated purchases in tonnes converted according to DEFRA guidelines	70	0'	5
Heating fuels	Directly purchased kerosene and LPG used for heating purposes	Actual or estimated purchases in litres converted according to DEFRA guidelines	943	410	301
Total			81,604	{!{	{7!35

CO_\$&&\$z&&{z@_\$`_{

			Metric	Metric	Metric
			tonnes	tonnes	tonnes
			(Group)	(Group)	(Group)
Source	_ :	Data source and calculation methods	2012	2011	2010
Electricity	Directly purchased electricity supplied through national grid systems	^ converted according to DEFRA guidelines	14,346	7!{66	5!{3{

CO EMISSIONS – SCOPE 3 – OTHER INDIRECT

			Metric	Metric	Metric
			tonnes	tonnes	tonnes
			(Group)	(Group)	(Group)
Source	_ :	Data source and calculation methods	2012	2011	2010
Business travel	Third-party provided transport (air and rail) taken on behalf of the business	Actual or estimated distance travelled converted according to DEFRA guidelines	349	449	3{

	Metric	Metric	Metric
	tonnes	tonnes	tonnes
	(Group)	(Group)	(Group)
	2012	2011	2010
Emission per £m of revenue (Scope 1, 2 and 3)	36.9	35.9	40.3

\$2 emissions has been collected from all of the Group's operations.

\$2 emission data relating to the Central Europe business which was disposed of in 2012.

CORPORATE RESPONSIBILITY REPORT CONTINUED

A programme of expansion within the Group which saw the opening of a number of new branches and some small acquisitions, was offset by the diminishing programme of branch consolidation, with the -{ /& /
.

ENVIRONMENT CONTINUED

ENERGY

Energy consumption continues to be a major KPI for the Group's Low \$?- #1"*

3/? ?? ?1-
317/* 1
| of revenue remains the same as prior year.

A programme of expansion within the Group, which saw the opening of a number of new branches and some small acquisitions, was offset by the diminishing programme of branch consolidation, with the Low Carbon
:

: 1

A package of energy reduction actions has been carried out across the Group, including energy audits, communication and switch-off campaigns. In the UK, by way of example, we completed a capital investment project of £300,000 with a

30
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:

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The awareness campaign continues through Group-wide and in-country Low Carbon bulletins, manager information packs and regional meetings with in-country Environmental Champions.

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-1 ? * revisited in 2013 to help maintain impetus and identify further opportunities.

-
3

3/ against the base year. It is expected that this will be achieved through further implementation of the awareness campaign, revisiting the energy audit process, the continuation of the capital projects programme and the implementation of an IT Power Management Programme.

CARBON (CO2) EMISSIONS

SIG recognises the importance of providing accurate data through simple processes and has continued to improve the quality of data captured by working with local data champions, reviewing the data gathering processes and sharing best practice. The Company will invest in resource in 2013 to help deliver on the objective to provide a Group-wide footprint which could
: 1

The programme of meter reads and the installation of Automatically Read >
2->4:
.
in the UK. The AMR installation programme will continue into 2013 in partnership with the energy supply company.

\$2 equivalent emissions by scope in accordance with the "Greenhouse Gas Protocol". Conversion Factors have been taken from the DEFRA/DECC's GHG Conversion Factors for Company Reporting (latest version May 2012). These include Scope 1 emissions for which businesses are directly responsible, Scope 2 emissions which are indirect emissions from the generation

of supplied electricity and Scope 3 emissions over which the businesses has limited control. Reporting of Scope 3 emissions is limited to third-party provided air and rail transportation, waste management and water consumption.

Recorded Scope 1, Scope 2 and Scope 3 emissions are included in the data reported on page 41.

:? *

17/

317/1

/
;? <

1/ !31/
1 :
| revenue in 2012 as a result of the movement in exchange rates in 2012.

WATER CONSUMPTION

Consumption in the Group is largely restricted to welfare use with water used for
;

6/
1 However, SIG recognises that potable water is a precious resource and has water

-
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:

1

73?{/

Scope 1 and 2 of the Group's carbon footprint. The 2011 consumption was based largely on estimates and extrapolation, and has been restated in 2012. "^
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.

:
more accurate data and better estimates, rather than an increase in consumption.

WASTE MANAGEMENT

SIG's key objective is to minimise the amount of waste generated from its

*

:
;? ?1> ?*

:
waste carriers base their data on estimates and average weights. In order to ensure that the data is as accurate as it can be SIG has worked with the waste carriers and recycling companies to provide our best estimate.

.
*

:? ? ? ? 153/
Group's reported waste is generated in the UK. The business has partnered with a new waste management contractor, which has carried out a programme of compliance assessments and training at each branch to maximise waste recycling and recovery opportunities and to provide accurate measurement.

1^

to minimise the business' direct impact on the environment. Arrangements are also in place in many locations to provide for mixed recycling bins where segregation is carried out by the waste contractor.

Through continued targeted actions to increase recycling and recovery at

*

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5/
1

WATER CONSUMPTION

		Litres '000 (Group)*
Resource	_ :	2012	2011
^ ?\$	Third-party provided water supply from national network for processes and welfare	108,201	{6!77

* Actual or estimated consumption.

WASTE MANAGEMENT

HAZARDOUS WASTE

			Absolute tonnes (Group)^
	_ :	2012	2011	2010
':	`'?* :	21	{	1
Recycled	`'?* ? ?:	279	339	05
Incinerated	`'?*	72	11	5
Total		372	30{	0

		Absolute tonnes (Group)^
	2012	2011	2010
`'?*	0.14	0.14	10

NON-HAZARDOUS WASTE

		Absolute tonnes (Group)^
	_ :	2012	2011	2010
': Incinerated	?('?* : ?('?*	8,743 –	9,231 31	!070 {7
Total		8,743	'!5	10,931

OTHER WASTE DIVERTED FROM LANDFILL

			Absolute tonnes (Group)^
	_ :	2012	2011	2010
^)))2^ !) ?) ?). 4	_ ? ?:	3	5	{
Glass	_ ? ?:	3	3{	32
^	_ ? ?:	2,058	!30	1,552
Metal	_ ? ?:	1,234	!6{	1,023
Plasterboard	_ ? ?:	390	7{	5{{
Paper/cardboard	_ ? ?:	1,165	932	2,014
Plastic	_ ? ?:	762	914	!75
€	_ ? ?:	8,250	0!35	3,305
Total		13,865	12,205	!{

	Absolute tonnes (Group)^
	2012	2011	2010
?('? ?*	8.7	01'	{13

^ Volume per annum converted to tonnes.

The above data is based on a combination of actual and estimated data. It excludes waste relating to the Central Europe business, which was disposed of in 2012.

CORPORATE RESPONSIBILITY REPORT CONTINUED

Through continued targeted actions to increase recycling and / ?- ! ?:!:

ENVIRONMENT CONTINUED

HEALTH AND SAFETY

WASTE MANAGEMENT CONTINUED

SIG continues to work in partnership with manufacturers to operate waste take-back recycling schemes for customers to assist them with their #? ? 1
!#y\$**=
* Carpet and Flooring achieved a Silver Award from the scheme operators in recognition of the commitment and support for the scheme in 2012.

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4 Regulations and is a member of the Valpak compliance scheme. The UK operations were successfully audited by the UK Environment Agency in 2012, demonstrating full compliance with the Regulations.

*

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( !? opened packaging, return schemes for pallets and bearers, actively taking part in recycling and reclamation schemes, carrying out pre-treatment activities at branch level and setting objectives for waste minimisation.

Further strategies were introduced in 2012 and continue into 2013 to reduce waste paper and consumables through the introduction of integrated printer/copier/fax machines and the reduction of individual printers.

Longer term plans include the introduction of paperless order and delivery records which is planned to commence in 2013.

SIG UK's Health, Safety and Environmental (HS&E) Management system

:

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1 ? ? 5*? * 1-*

system, the integrated HS&E Management system forms the basis of the approach to HS&E matters across the Group.

The Group Chief Executive is the Board Director responsible for the health and safety performance of the Group and is signatory to the HS&E Policy statement, which is displayed at each location in the local language.

The Group Health, Safety and Environment Manager is a dedicated resource to communicate and support the implementation of common HS&E principles across the Group. A dedicated HS&E Co-ordinator is appointed in each of the 1"
%,!"? !#&? !.:

`) personnel are employed to provide advice and support to the business. In all other regions and countries external consultants are employed.

The key principles for the Group require common written procedures, local

`)
across all businesses using competent personnel with inspection reports detailing any issues and target actions.

. ? ! 1

:
1

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`-{!* have taken a proactive approach to health and safety through the provision of HS&E competent persons, provision and reviewing of risk assessments, provision of training, instruction and support to managers and the workforce and carrying out branch inspections and audits.

ACCIDENTS AND INCIDENTS

UK AND IRELAND

	Rate per 1,000 employees
	2012	2011	2010
Major injury	2.7	2.5	3.1
Injury resulting in over three absence days from work	11.2	1{	12.3
"__€	14.1	15.4	15.5
Average UK and Ireland headcount	5,261	5!	5!77
Lost work day rate – number of work days per 100 employees	29.6	34.0	71{

GROUP

	Rate per 1,000 employees
	2012	2011	2010
Major injury	2.2	2.1	2.2
Injury resulting in over three absence days from work	17.1	51	15.2
"__€2 . 48	17.9	{13	017
Average Group headcount	10,228	11,105	!6{

8
(%, **

%, ?"__1 Alongside these activities in 2012, the Company commenced an accident reduction campaign which includes a greater element of reactive health and safety measures. The aim of the "A New Focus on Accidents" campaign is to reduce the ? .

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}

Further developing the internet-based online accident reporting system

1
=* and speed of information to the HSIA and enabled the business to broaden the scope of central accident recording and analysis. The process has ? *( (

:
1 This programme supported the key objective for 2012 to develop a Group-wide communication process for accident information.
- A fresh focus has been provided to internal accident investigation with a renewal of Accident Investigation Training to HS&E advisors through the Company's own trainer and in partnership with the Company's insurers.
- In support of the campaign Accident Review Panels have been convened within each business chaired by the Managing Director with support from senior management and HS&E and HR personnel. These panels meet regularly with the purpose of the meetings being to review the accidents that have occurred in the business, to ensure that they have been investigated and recorded properly, fully and in a timely manner and that
:

accident recurring.
- - ? `

`?-
* ? across the business in 2012, designed to communicate the campaign and raise awareness of accidents and preventative actions.
Training for Managers was a key objective for 2012 with local arrangements implemented within the business. An SIG Modular training programme for managers will be developed in 2013 to help coordinate and supplement these programmes.
:

*

(? inspection process has been developed and trialled and will be implemented across the Group. These inspections will be carried out by senior management, line management and branch employees.

The post of Health and Safety Insurance Administrator, created in 2011 is instrumental to the campaign, providing a focal point for communication and a quality check on the accident investigation and reporting process.

Accident statistics in the form of a dashboard and supporting information on the Group's serious accidents and incidents is included in the monthly Board report which is reviewed and discussed by the Board at its meetings.

The accident statistics for UK and Ireland and for the Group are set out on page 44.

The data indicates that there has been a slight decrease in the accident
"__
the UK and Ireland and for the Group as a whole. There continued to be a reduction in lost work days per 100 employees in the UK.

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*

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performance in 2011 was recognised with the award of the RoSPA Silver Award at a ceremony at the Hilton Hotel in Birmingham. An application has been made for a 2012 award.

To complement the work of the Accident Review Panels in the UK a Driver Risk Management Report has been devised and will be rolled out across the UK businesses in 2013. The purpose is to review the pool of drivers against set criteria including at fault accidents, driving endorsements and the driver's online assessment to provide a quantitative assessment. This will be used to identify targeted actions including in-vehicle assessment and retraining.

COMMUNITY

The Group endeavours to contribute to the communities in which it operates, particularly those neighbouring its sites. SIG is a member of Business in the Community in the UK and has worked with that organisation to help to develop its approach and practices. This is mainly achieved through charitable donations and other initiatives that help the community.

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The Human Resources Director has responsibility for community issues within the Group and reports to the Chief Executive who is responsible for community issues at Board level.

CHARITABLE DONATIONS

_

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|7!2}|76!41 It is the Group's policy not to make political donations and no political *
2}|41

The Group has in place an initiative to provide matched donations in respect of monies raised by the Group's employees for charitable causes. SIG employees can apply for a matched donation (up to a maximum of £500 or local equivalent).

The Group's focus of support is for charities and community projects that enhance SIG's engagement in the communities in which it operates, assist in managing the sustainability of the local environment or educate young people and assist disadvantaged groups. In addition the Group's policy encompasses other charities, e.g. cancer, heart and medical research charities that employees particularly wish to support.

A Charities Committee approves applications and ensures that they are in line with SIG's Charitable Donations Policy.

SIG employees have been involved in many activities and events to raise funds for the charities of their choice in 2012, including participation in local
! ? *! ? ! !?= ! sales, moustache and beard growing, head shaving and more. The UK intranet, which is available at each UK location, has a dedicated forum for employees to highlight their fundraising efforts and receive support from their colleagues. The scheme was advertised using a poster campaign to enable colleagues across the Company to have access to matched funding.

The Group matched donations from employee applications in 2012 to various
~
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& !> ! ^ ?? >-?- !' \$? < ! Macmillan Cancer Support, local cancer charities, hospices, care homes, Children in Need and local community scout clubs and rugby and football teams for children and adults.

CORPORATE RESPONSIBILITY REPORT CONTINUED

&\$'\$ - ?&? - ~!? !

CHARITABLE DONATIONS CONTINUED

In addition to matched funding, in 2012 the Group's operating companies chose charities and/or community projects to support others.

The Group has in place a Payroll Giving Scheme, which is available to all UK employees. Employees are free to choose any charity of their choice. Donations of £19,000 were made through the scheme in 2012.

SIG has been awarded a Payroll Giving Quality Mark Silver Award in the UK for commitment to good causes and the local community.

Employees also undertake personal fundraising endeavours for a wide range of charities.

EMPLOYEES

The commitment, drive, professionalism and dedication of all SIG's employees are the key to the success of SIG meeting the demands of its customers, suppliers and Shareholders. Throughout SIG, regardless of country or sector, we believe our people are recognised as the best in their
: 1

! is managed on an ongoing basis and a formal appraisal programme is in place. Training, coaching and the opportunity for personal career advancement within the Company are important features of how SIG seeks to recruit, retain and develop skilled staff.

SIG is committed to ensuring that all employees and management know what is expected of them in their roles and that they receive the necessary training and development to be highly competent in what they do. An integrated

is core to our people development strategy.

Personal Development Review forms ("PDRs") were introduced in the UK in 2010 for senior managers and were rolled out to all employees across the ;? 1
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businesses as a common tool to identify high potential individuals as well as ? 1"3* *

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Development activities are organised generally on a business-by-business or country-by-country basis depending on local priorities. However, the Group continues to invest in its Executive Development Programme run in ~
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! not least in the development of cross-company working at a senior level. Cohorts are increasingly attended by a variety of nationalities whose learning ? :

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;? ! making us a stronger and more connected organisation.

SIG holds an annual Senior Management Conference every February in order to review the year gone by, set the priorities for the year ahead and communicate long term vision. In 2012 a three day workshop and seminar was hosted in the Netherlands for the top 40 Senior Management in SIG plc. The event provided a platform to discuss and understand the strategic thinking for the next few years and to support and enhance Group-wide working practices and communications. Subsequent to the event dedicated working parties were established to assess and report on key strategic areas

that SIG can focus on to strengthen its collaborative working, employee engagement, customer offering and foster a culture of innovation.

A dedicated Regional Directors' development programme for the UK SIG Distribution business was developed by our in-house trainers with support from : `%
1 bolstered by our Executive Coaching and Mentoring programme as this was used as one of the modules to support our Regional Directors' development.

%,:
**
%,:-?*

%,:-?! ?-?! Sales and Central Services Management undertook a three day training event in Purbeck, Dorset. Two training sessions were held and were divided up into regional attendance. Management theory as well as communication, strategy and team working workshops were undertaken indoors as well as outdoors to ensure that theoretical learning could be applied and explained in a variety of situations and then transferred back into working life.

The Group's highly successful and popular English language training courses were run again over the summer with twice the number of attendees as 2011. The courses help to support Group-wide working practices and proactively develop colleagues wishing to build on their language capabilities.

;? < : \$
: attendees from all parts of the Group were introduced to colleagues in the business. The courses were delivered by Listen & Learn and are planned to be run again in 2013.

SIG's Executive Coaching and Mentoring Programme was successfully established in 2011, and it has continued to be developed throughout the Group in 2012. The programme is aimed at continuing the development of senior talent and reinforcing the values and behaviours that underpin our activities. Having successfully launched the New Manager of the Year Award in 2009 and the Emerging Manager of the Year Award in 2010 it was recognised that the two awards should run biennially to continually seek out new and future management talent across the Group.

The second Emerging Manager of the Year Award took place in 2012. The award is aimed at identifying, encouraging and supporting people who demonstrate clear management potential. Nominees were put forward from the businesses and 14 successful candidates took part in a two day assessment
^ !; ?1 ?:

";> Conference where the overall winner was announced. All nominees' careers, as well as those who attended the Emerging Manager of the Year Award event, will be monitored through the talent management process in each country.

The Group continues to recruit and invest in commercial trainee and

.
1? future management cadres have a mix of backgrounds and experience that is relevant to our customer base which helps us engage with our customers 1;

:

35 ? * the business. As part of the graduate programme each cohort is tasked with : ?~
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Finalists for the Emerging Manager of the Year Award 2012 at the two-day assessment
^ !; ?1

In 2011 a student summer placement scheme was formalised and launched in the UK. The summer placement scheme was developed further in 2012 as we partnered with the "Rate my placement" website which gave us greater access to people seeking placement schemes as well as a dedicated feedback mechanism
1^
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1 Each person was set dedicated project work that would help add value to the business or department in which they were placed. The year-long placement
` : : ?~
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31

2012 saw the launch of the SIG UK Apprenticeship programme in September. The apprenticeship programme enables us to attract talented individuals via a *

.:
* work experience. The programme has been positively received in the UK businesses with some apprentices placed by the end of 2012 and many more

31^
a strong talent pipeline through this popular and important programme.

SIG relies on the expertise and commitment of its employees whose knowledge and experience differentiate it in the market place. Competency-based training plans were launched within the SIG Distribution businesses in the UK in 2011 and continued to be rolled out throughout the rest of the UK businesses in 2012 to support the structured development of employees. The competency framework has allowed us to improve the training we offer our employees to ensure that it is up-to-date and relevant to their roles.

The Group's policy is to provide equal opportunities to all existing and prospective employees. SIG recognises that its reputation is dependent on the quality, effectiveness and skill base of its employees and is committed to ? .

: discrimination on the grounds of race, religion, gender, disability, sexual orientation, age, nationality or ethnic origin.

The work of this work group feeds into a three year rolling action plan which is incorporated into the Group-wide CR plans.

Employment opportunities are available to disabled persons in accordance with their abilities and aptitudes on equal terms with other employees.

%,:

!_

If an employee becomes disabled during employment the Group makes every effort to enable them to continue employment, by making reasonable adjustments in the workplace and with retraining for alternative work where necessary.

SIG recognises the importance of good communication with its employees. To support this we have a Group-wide newsletter "SIG Communiqué" as * : *

up-to-date and informed. The newsletters focus on communicating our
!
:? sales activities, success stories and teamwork around the businesses. Feedback from the 2011 UK employee survey was incorporated into each business' strategy for 2012 to address issues raised and ensure continual improvement. A Group-wide employee survey is planned for 2013. Directors in operating businesses tended to focus on local roadshows and presentations to communicate to a wider audience rather than management conferences.

The UK intranet is being moved to a content management system "

\$
:
up-to-date, relevant and engaging information to the business, for the business. 2013 will see the launch of an improved, refreshed and more informative intranet in the UK. The platform and support will be made available to other countries and trading areas of SIG to host updated intranets
=*

;? 1

Employees are encouraged to become Shareholders in the Company. The Group introduced a Share Incentive Plan ("SIP") in November 2005 in place of the Save As You Earn Scheme. The Company gives one matching share for each share purchased by the employee up to a maximum of four matching
1-3_
* ? {7 under the Company's SIP.

The Group operates a number of employee pension schemes across its businesses. In the UK it operates a group personal pension scheme which
1 ;? <%, : :

* ? 01&?%,
(
!";< staging date is 1 June 2013 and, to comply with the legislation, SIG has chosen a pension scheme with People's Pensions, B&CE.

The HR Director has responsibility for HR issues within the Group and reports to the Chief Executive, who is responsible for HR issues at Board level.

BOARD OF DIRECTORS

LESLIE VAN DE WALLE HEC

NON-EXECUTIVE CHAIRMAN

' y ^ 2 654 ?()
_

?()
Chairman on 1 February 2011. He is also Chairman of the Nominations Committee. He is Non-Executive Chairman
^
?()
_
\$ plc, DCC plc and La Seda de Barcelona S.A. Formerly Chief )
: ? !)
y #? Global Retail, a division of Royal Dutch Shell plc and a Non-Executive Director of Aegis Group plc and Aviva plc. Formerly held a number of senior management positions with Cadbury Schweppes plc and United Biscuits Limited.

CHRIS GEOGHEGAN BA (HONS), FRAES

NON-EXECUTIVE DIRECTOR

\$?; 2 6{4 ?()
Director on 1 July 2009. He is the Senior Independent Director and Chairman of the Remuneration Committee. He is currently Chairman of E2V Technologies plc and a Non-Executive Director of Volex plc and Kier Group plc. #

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: ? BAE Systems plc with responsibility for all European joint ventures and UK defence electronics assets. He is a Fellow of the Royal Aeronautical Society and a past President of the Society of British Aerospace Companies.

STUART MITCHELL BSC (HONS)

CHIEF EXECUTIVE

Stuart Mitchell (age 52) joined SIG on 1 December 2012 as Chief Executive Designate, was appointed as Director of the Company on 10 December 2012 and became Chief Executive on 1 March 2013. Most recently he was Chief )
^`?*
5 2012. He was previously Managing Director of the Taiwan
-

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{7? become Managing Director of Sainsbury's Supermarkets in 2003. He is a Non-Executive Director of Enactus UK (formerly SIFE – Students in Free Enterprise UK).

DOUG ROBERTSON BA, FCA

FINANCE DIRECTOR

Doug Robertson (age 59) joined the Group in

November 2011 and was appointed Finance Director on 1 December 2011. He was previously Finance Director % ?0
& _

` ;? '

01 From 1994 to 2000 he held a variety of Divisional & _
*
^ !! became Managing Director of Tesa Group, Chubb's hotel security division.

JANET ASHDOWN BSC (HONS)

NON-EXECUTIVE DIRECTOR

Janet Ashdown (age 53) became a Non-Executive Director on 11 July 2011. She was, until the end of 2012, Chief )
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marketing and import business. She previously worked for -# 111? ??{
! ?? of posts in the UK, continental Europe and the US ranging from manufacturing to supply and trading to retail marketing. Her last role in BP was as Head of BP's Fuels Marketing & Distribution business in the UK. Janet holds a degree in Energy Management.

MEL EWELL BSC (HONS)

NON-EXECUTIVE DIRECTOR

Mel Ewell (age 54) became a Non-Executive Director on 1 August 2011. He is currently Chief Executive and an Executive Director of Amey Plc, one of the UK's leading infrastructure services providers. He previously held a number of senior management positions for TNT International, Xerox and ADI Group.

BOARD COMMITTEES

AUDIT COMMITTEE

Mr. J. C. Nicholls – Chairman Ms. J. E. Ashdown Mr. M. Ewell Mr. C. V. Geoghegan

NOMINATIONS COMMITTEE

1'1y ^ \$? Ms. J. E. Ashdown Mr. M. Ewell Mr. C. V. Geoghegan Mr. S. R. Mitchell Mr. J. C. Nicholls

REMUNERATION COMMITTEE

Mr. C. V. Geoghegan – Chairman Ms. J. E. Ashdown Mr. M. Ewell Mr. J. C. Nicholls

JONATHAN NICHOLLS BA, ACA, FCT

NON-EXECUTIVE DIRECTOR

Jonathan Nicholls (age 55) became a Non-Executive Director 5? ?\$
- Committee. He is a Non-Executive Director of DS Smith plc and Great Portland Estates plc. Most recently he was ;? &_
> that he was Group Finance Director of Hanson plc.

Accounts Review of the year

Corporate governance

PRESIDENT

??-

-)!>-

SECRETARY Richard Monro FCIS

REGISTERED NUMBER

Registered in England {37

REGISTERED OFFICE

`?^? Langsett Road : 5'^ United Kingdom

}7{653 &}7{6537

)}¦ 1

CORPORATE OFFICE

Signet House 0)? y * : §` United Kingdom }7{653

&}7{6537

REGISTRARS AND TRANSFER OFFICE

COMPUTERSHARE INVESTOR SERVICES PLC The Pavilions Bridgwater Road -
-3{-)

AUDITOR

DELOITTE LLP 1 City Square Leeds LS1 2AL

SOLICITORS

PINSENT MASONS 1 Park Row Leeds LS1 5AB

PRINCIPAL BANKERS

THE ROYAL BANK OF SCOTLAND PLC Corporate Banking 3rd Floor ^
Leeds LS1 4HR

BARCLAYS BANK PLC #- 1 Park Row ' '6^%

LLOYDS TSB BANK PLC 2nd Floor, Lisbon House 5^

Leeds LS1 4LT

HSBC BANK PLC Unit 4, Europa Court : - #? : §)

www.uk.computershare.com/investor and click on "Contact Us", from where you can email

}Computershare, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, United Kingdom.

)}-

Computershare.

JOINT STOCKBROKERS

COMPANY WEBSITE www.sigplc.com LISTING DETAILS Market UK Listed Reference SHI.L Sector Support Services

ORIEL SECURITIES LIMITED 150 Cheapside ')\$y5)

PANMURE GORDON (UK) LIMITED ? *\$ London EC4M 9AF

FINANCIAL PUBLIC RELATIONS

FTI CONSULTING LIMITED Holborn Gate 5 - '^\$-#-

FINANCIAL CALENDAR

Annual General Meeting To be held on 23 May 2013

Interim Results 2013 Announcement 15 August 2013

Full Year Results 2013 Announcement March 2014

Annual Report and Accounts 2013 Posted to Shareholders April 2014

SHAREHOLDERS' ENQUIRIES

\$ ?? !*
}

24 hour helpline* 0870 707 1293

+44 870 707 1148

Text phone

0870 702 0005

* {13013 each business day.

SHAREHOLDER ANALYSIS AT 31 DECEMBER 2012

'	Number of Shareholders	/	Number of ordinary shares	/
0 – 999	919	31{	3'{!53	10
1,000 – 4,999	!06	3{13{	!3'{!'06	0.41
5,000 – 9,999	259	9.25	!035!	0.29
10,000 – 99,999	3{	10	'!0{!{{{	155
100,000 – 249,999	07	157	!000!''	1.99
250,000 – 499,999	49	106	0!'!{{	2.91
500,000 – 999,999	24	1{6	0!57!577	2.92
1,000,000+	03	15	63!0!60{	{'106
Total	2,801	100.00	590,837,435	100.00

STATUTORY INFORMATION

PRINCIPAL ACTIVITY AND BUSINESS REVIEW

The principal activity of the Group is the supply of specialist products to the construction and related markets in the UK, Ireland and Mainland Europe. The main products supplied are Insulation and Energy Management, Exteriors and Interiors.

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1 : risk management objectives, policies and key performance indicators of the \$

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As at the date of this report, there have been no important events affecting the business of the Company, or any of its subsidiaries, which have occurred

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Details of the Group's policies in relation to employees (including disabled employees) and information on charitable and political donations are
\$
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Details of the Group's policies in relation to corporate governance are disclosed on pages 54 to 59.

CAUTIONARY STATEMENT

The purpose of the Annual Report is to provide information to the members of the Company, as a body, and no-one else. The Company, its Directors, employees, agents and advisers do not accept or assume responsibility to any other person to whom this document is shown or into whose hands it may come and any such responsibility or liability is expressly disdained. The Annual Report contains certain forward-looking statements with respect to the
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the date of preparation of this Annual Report and the Company undertakes no obligation to update these forward-looking statements. Nothing in this -
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GROUP RESULTS AND DIVIDENDS

The Consolidated Income Statement for the year ended 31 December 2012 * 001
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POST BALANCE SHEET EVENTS

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acquisitions made after the balance sheet date was £4.0m, and net assets acquired were c.£0.2m.

DIRECTORS

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Mr. S. R. Mitchell	Chief Executive (appointed 1 March 2013) (previously Chief Executive Designate, appointed 10 December 2012)
	Mr. D. G. Robertson Group Finance Director
Ms. J. E. Ashdown	Independent Non-Executive Director
Mr. M. Ewell	Independent Non-Executive Director
	Mr. C. V. Geoghegan Senior Independent Non-Executive Director
Mr. J. C. Nicholls	Independent Non-Executive Director

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There is no maximum number of Directors but there shall at no time be less than two. Directors may be appointed by the Company by ordinary resolution or by the Board. A Director appointed by the Board shall hold :

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for re-appointment by the Shareholders. The Board may from time to time ?? _
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Executive function within the Company for such term, remuneration and other conditions of appointment as they may determine and may revoke such appointment (subject to the provisions of the Companies Acts).

ELECTION AND RE-ELECTION OF DIRECTORS

All Directors are subject to election at the Annual General Meeting immediately following their appointment and to re-election every three years pursuant to the Company's Articles of Association. However, pursuant to the UK Corporate Governance Code, it is intended that all Directors will be subject to re-election annually.

The Company may, by ordinary resolution, of which special notice has been given in accordance with the Companies Acts, remove any Director before
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* or is removed pursuant to the Company's Articles of Association or he/she becomes prohibited by law from being a Director; (ii) he/she becomes

bankrupt or compounds with his/her creditors generally; (iii) he/she becomes of unsound mind or a patient for any purpose of any statute relating to mental

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24 + resigns; (v) he/she fails to attend Board meetings for six consecutive months without leave of absence from the Board and the Board resolves that his/her :
24+

provisions of the Company's Articles; (vii) he/she is dismissed from Executive : 24 +

_
resolve that it is undesirable in the interests of the Company that he/she remains 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 he/she remains a Director.

In accordance with the UK Corporate Governance Code, all Directors will seek election or re-election at the forthcoming Annual General Meeting. Mr Mitchell will seek election, having been appointed to the Board since the last Annual General Meeting.

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 the Board's discussions and is considered to be independent of management and free from any relationship or circumstance that could affect, or appear to affect, the exercise of their independent judgement.

It is the view of the Board that each of the Executive Directors standing for election or re-election brings considerable management experience to the Board's discussions.

Full details of Directors' remuneration, interests in the share capital of the \$ 5
07
Directors' Remuneration Report.

RELATED PARTY TRANSACTIONS

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0 for Directors' service contracts, 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.

DIRECTORS' AND OFFICERS' LIABILITY INSURANCE AND INDEMNITIES

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extent permitted by the law in respect of liabilities incurred as a result of their : 1
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Director is proved 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 time of approval of this Statutory Information Report.

FINANCIAL INSTRUMENTS

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ACQUISITIONS AND DISPOSALS

Details of acquisitions and disposals during the year are covered in Notes 15
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SHARE CAPITAL

The Company has a single class of share capital which is divided into ordinary shares of 10p each. At 31 December 2012, the Company had a called up 6!{30!736? 2}6!{!3341

During the year ended 31 December 2012, options were exercised pursuant \$ <

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of this Report. Details of outstanding options under the Group's Employee )

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RIGHTS ATTACHING TO SHARES

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Subject to any restrictions below, Shareholders may attend any general meeting of the Company and, on a show of hands, every Shareholder (or his representative) who is present at a general meeting has one vote on each resolution and, on a poll, every Shareholder (or his 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
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4 present in person and having the right to vote, or by any Shareholders (or their

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.

STATUTORY INFORMATION CONTINUED

RIGHTS ATTACHING TO SHARES CONTINUED

: but the amount of the 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
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1 ? 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 which has not been claimed for twelve 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 he 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 *

: of the members. No Shareholders can be compelled to accept any asset which would give them a liability.

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 form
!

holding the meeting or adjourned meeting at which the person named in the appointment proposes to vote.

No Shareholder is, unless the Board decides otherwise, entitled to attend or vote either personally or by proxy at a general meeting or to exercise any other right conferred by being a Shareholder if he or any person with

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* ? to require information with respect to interests in their voting shares) and he 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

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TRANSFER OF SHARES

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* 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

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the Company or any other place decided by the Board accompanied by a
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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.

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with the regulations governing the operation of CREST.

The Board may decide to suspend the registration of transfers, for up to 30 days a year, by closing the register of Shareholders. The Board cannot

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* gaining consent from CREST. There are no other limitations on the holding of ordinary shares in the Company.

VARIATION OF RIGHTS

If at any time the capital of the Company is divided into different classes of ? !

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06/ 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.

AGREEMENTS WITH EMPLOYEES AND SIGNIFICANT AGREEMENTS

There are no agreements between the Company and its Directors or
: ? (whether through resignation, purported redundancy or otherwise) that occurs because of a takeover bid.

The Company's banking arrangements are terminable upon a change of control of the Company. Certain other indebtedness becomes repayable if a change of control leads to a downgrade in the credit rating 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.

2013 INTERIM REPORT

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electronic communications for all Notices, documents and information to be sent to Shareholders, in accordance with Shareholder preference. This would enable the Company to use website communication with Shareholders as the default position. The Company has at this time not made any decision as to whether to move to electronic communication as the default position. Shareholders will therefore for the time being continue to receive paper copies of all Company communications. Current regulations do, however, permit the Company not to have to send copies of its Interim Reports to Shareholders and therefore Interim Reports will no longer be sent to Shareholders. The Interim Report will be published on the Company's website at www.sigplc.com.

ACQUISITION BY THE COMPANY OF ITS OWN SHARES

\$ 6!{!3 of its own shares existed at the end of the year. The Company has made no purchases of its own shares pursuant to this authority. The Company will seek to renew this authority at the 2013 Annual General Meeting.

SUBSTANTIAL SHAREHOLDINGS

At the date of approval of the Annual Report and Accounts 2012, the \$
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Shareholder	Number of ordinary shares of 10p each	/ issued voting share capital
Aviva plc	52,412,239	{1{0
",€) '	7!06!53	010
Schroders plc	'!'5!{0	610
Investec Asset Management	'!0{!{5	5.03
Ameriprise Financial Inc.	{!'63!3	4.90
Blackrock Inc.	{!065!0	71{0
Tameside MBC	0!'5!'3	3.03
Norges Bank	0!05!5	3.01

PAYMENT TO SUPPLIERS

The Company is a signatory to the UK Prompt payment code, which is sponsored by the UK Department for Business Innovation and Skills, and operates and abides ? : !* ? *
~? ?1- 31 December 2012 the Company had no trade creditors, as it does not trade in its own right. The Group's average number of days outstanding for continuing operations on a like for like constant currency basis as at 31 December 2012
*372}3641

STATEMENT OF THE DIRECTORS ON THE DISCLOSURE OF INFORMATION TO THE AUDITOR

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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 he/she ought to have taken as a Director to make himself/herself aware of any relevant audit information and to establish that the Company's Auditor is aware of that information.

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GOING CONCERN

After making enquiries the Directors have formed a judgement, at the time of approving the Accounts, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going
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Business Review.

AUDITOR

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at the Annual General Meeting for the re-appointment of Deloitte LLP as -
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1 The remuneration of the Auditor for the year ended 31 December 2012 is fully disclosed in Note 4 to the Consolidated Financial Statements on page 91.

ANNUAL GENERAL MEETING

The Notice convening the Annual General Meeting, which is to be held at -`
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! : 56-_ Thursday 23 May 2013, together with explanatory notes on the resolutions to be proposed and full details of the deadlines for exercising voting rights, is contained in a circular which will be circulated to all Shareholders at least 20 working days before such meeting along with this Annual Report and Accounts. This document will also be available on the SIG plc website. All Shareholders are invited to the Company's AGM, at which they will have the opportunity to put questions to the Board.

Signed on behalf of the Board

Richard Monro Company Secretary 5>?3

CORPORATE GOVERNANCE REPORT

DEAR SHAREHOLDER

SIG is committed to business integrity, high ethical values and professionalism in all of its activities. At SIG, we believe that good governance comes from an effective Board which provides strong leadership to the Company and engages well with both management and stakeholders. As an essential part of this commitment the Group supports the highest standards in corporate governance.

COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE

The Board considers that throughout the year under review the Company has complied with the governance rules and best practice provisions applying to UK listed companies as contained in the UK Corporate Governance Code ("the Code") of June 2010 as issued by the Financial Reporting Council ("FRC"). The Board has also
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The Code can be accessed at www.frc.org.uk/corporate/ukcgcode.cfm.

BOARD EVALUATION

The Board is required, under the Code, to undertake a formal and rigorous annual evaluation of its own performance and that of its Committees and _
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60 of this Corporate Governance Report.

BOARD DIVERSITY

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";< objectives. Differences in background, skills, experience and other qualities as well as gender will be considered in determining the optimum composition of the Board and the aim will be to balance them appropriately. All SIG Board appointments are made on merit, with due regard to diversity.

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including, but not limited to those described above, in order to complement the range and balance of skills, knowledge and experience on the Board.

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set percentage representation targets for Board and Executive Committee membership as all appointments will be based on a spectrum of factors, including experience, skills and diversity (including gender). Currently the SIG Board comprises seven Directors, one of whom is female.

GOVERNANCE WITHIN SIG

As Chairman, I take responsibility for ensuring that good governance is operated at SIG in order that we can maintain the highest standards of corporate governance to which we continually aspire. The Board is accountable to the Company's Shareholders for good governance and this Report, the Directors'
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out in the Code applied within SIG.

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Leslie Van de Walle Chairman 5>?3

THE BOARD

As at 31 December 2012, the Board was made up of eight members comprising the Chairman, three Executive Directors and four Non-Executive _
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Mr. S. R. Mitchell joined SIG on 1 December 2012 as Chief Executive Designate and was appointed a Director on 10 December 2012. Mr. C. J. Davies stepped down as Chief Executive and as a Director \$ {& ??31>?111>
Chief Executive on 1 March 2013.

At 31 December 2012, SIG has one female Board member equating /?_
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The Non-Executive Directors are considered by the Board to be independent of management and free of any relationship which could materially interfere with the exercise of their independent judgement. -
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independence of those Directors who have other appointments in outside entities. The Board considers that each of the Non-Executive Directors brings their own senior level of experience and expertise and that the balance between Non-Executive and Executive representation encourages healthy independent challenge to the Executive Directors and senior management.

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:? expertise and knowledge and their wide-ranging experience and backgrounds ensure that they can debate matters constructively in relation to both the development of strategy and performance against objectives set out by the Board. Biographical details of each of the Directors, which illustrate their ? !? 7{1

The Company's policy relating to the terms of appointment and remuneration of both the Executive and Non-Executive Directors is detailed in the _
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551

The division of responsibilities between the Chairman and Chief Executive is clearly established, has been agreed by the Board and is reviewed by the Company Secretary on a regular basis. The Board approves any necessary
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1 \$? leads the Board and sets its agenda, ensuring that all Directors, particularly the Non-Executive Directors, are able to make an effective contribution. He ensures that there is a constructive relationship between the Executive and Non-Executive Directors. The Chief Executive has responsibility for all operational matters which include the implementation of the Group strategy and policies approved by the Board.

The Chairman at the time of his appointment met and continues to meet the independence criteria set out in the Code.

The Senior Independent Director is currently Mr. C. V. Geoghegan.

Under the Articles of Association all Directors are subject to election at the Annual General Meeting ("AGM") immediately following their appointment and to re-election every three years. However in accordance with the Code, all Directors will seek election or re-election at the Company's AGM each year. Mr. S. R. Mitchell will be seeking election having been appointed to the Board since the last AGM. To enable Shareholders to make an informed decision, the 2013 Notice of Annual General Meeting includes biographical details and a statement as to why the Company believes that Directors ? (
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performance of each individual continues to be effective and demonstrates commitment to the role.

The terms of the Directors' service contracts are disclosed in the

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Directors' service contracts and the letters of appointment of the Non-Executive Directors are available for inspection at the Company's
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-;>* to take place on 23 May 2013.

BOARD PROCEDURES

The Board meets regularly during the year, as well as on an ad hoc basis as required by time-critical business needs. The Board met formally on nine occasions during the year and individual attendance at those and the Board \$

651- supplied with information in a form and of a quality appropriate to enable them to discharge their duties. Board and Committee papers are sent out seven days before meetings take place.

The Directors are provided with opportunities for training to ensure that they are kept up-to-date on relevant new legislation and regulation changes, corporate governance developments and changing commercial risks. There is an agreed schedule of matters reserved to the Board for collective decision (which can be viewed on the Company's website at www.sigplc.com).

MATTERS RESERVED TO THE BOARD FOR COLLECTIVE DECISION

These matters include:

determining the strategy and control of the Group;
amendments to the structure and capital of the Company and Group;
:
oversight of the Group's internal controls;
:
Board membership and appointments;
acquisitions and disposals above a prescribed level; and
corporate governance matters and approval of Group policies and risk management strategies.

CORPORATE GOVERNANCE REPORT CONTINUED

BOARD PROCEDURES CONTINUED

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! including the Nominations, Audit and Remuneration Committees. The Board will \$

: ? ?1&? example, during the year, Board Committees were established to approve bank documentation and the preliminary and interim results announcements.

To enable the Board to perform its duties effectively all Directors have full access to all relevant information and to the services of the Company Secretary whose responsibility it is for ensuring that Board procedures are followed. The appointment and removal of the Company Secretary is a matter reserved for the Board. There is an agreed procedure whereby Directors wishing to take independent legal advice in the furtherance of their duties may do so at the Company's expense. The Company Secretary is responsible for ensuring that Board procedures are followed including the formal minuting of any unresolved concerns that any Director may have in connection with the operation of the Company. During the year there were no such unresolved issues. Further, on resignation, if a Non-Executive Director had any such concerns, the Chairman would invite him to provide a written statement for circulation to the Board.

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duties. Appropriate training is available to all Directors on appointment and on an ongoing basis as required.

The Terms of Reference for each of the Board Committees are available on request from the Company Secretary or on the SIG website (www.sigplc.com).

DIRECTORS' CONFLICTS OF INTERESTS

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avoid a situation where they have, or can have, a direct or indirect interest =
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Procedures have been put in place for the disclosure by Directors of any such =

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1 These procedures have been applied during the year and are now included as a regular item for consideration by the Board at its meetings.

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

The following table shows the attendance of Directors at meetings of the Board, Audit, Remuneration and Nominations Committees during the year 3_ ?}

	Audit Committee Meetings eligible to attend	Remuneration Committee Meetings eligible to attend	Nominations Committee Meetings eligible to attend
J. E. Ashdown
C. J. Davies	N/A	N/A
M. Ewell			N/A
C. V. Geoghegan
S. R. Mitchell	N/A	N/A	N/A
J. C. Nicholls
D. G. Robertson	N/A	N/A	N/A
L. Van de Walle	N/A	N/A

Meeting attended Absent Chairman

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meeting. Directors do not participate in meetings when matters relating to them are discussed.

The Chairman also holds meetings with the Non-Executive Directors without the Executive Directors present. The Senior Independent Director also meets with the other Independent Non-Executive Directors without the Chairman present.

The Board arranges to hold at least two Board meetings each year at Group business locations both in the UK and Mainland Europe to help all Board members gain a deeper understanding of the business. This also provides Senior Managers from across the Group the opportunity to present to the Board as well as to meet the Directors on more informal occasions. Board members also attend Divisional and Group management conferences whenever possible.

BOARD EFFECTIVENESS

The effectiveness of the Board and its Committees is vital to the success of the Company and, during the year, the Board continued its ongoing evaluation process to assess its performance and that of its three principal Committees.

In December 2011, as part of this programme, the Board commissioned Equity Communications Limited, an independent third party, to prepare a tailored Board Evaluation process. This was facilitated by way of questionnaire process with the emphasis, in addition to the evaluation of the performance of the Board and its Committees, being targeted at identifying the future needs of the Board, including Board structure, succession planning, induction programmes and the Board's approach to risk and strategy. Each Director completed their questionnaire and these were then evaluated by the independent facilitator who then prepared a report for the Chairman. The Chairman and the facilitator presented the results of the evaluation to the Board, which discussed the results of the evaluation in detail at its March 2012 meeting. The discussions then focused on how

1 -?*
:

was a worthwhile exercise and that the Directors had participated in an open and frank basis. In December 2012 by way of follow up to the evaluation process completed in 2012 an effectiveness survey of the Board and its Committees (Audit, Remuneration and Nominations) was undertaken. The survey was internally facilitated and carried out by questionnaire. Each Director (including the Chairman) was asked to place a score against a variety of questions and to make additional comments where appropriate. The survey also sought to identify the extent to which the issues raised in the previous evaluation process had been addressed. A summary report collating and analysing the responses has been produced and was presented to the Board meeting held on 1 March 2013 at which it was debated. A number of action points were agreed.

The Chairman regularly reviews and agrees with each Director their training needs and development needs. During the year a number of the Directors attended training courses and seminars on subjects and topics including those that the Chairman
: ? *
*
* and effectiveness of the Director. Further training is programmed for 2013.

The Non-Executive Directors, chaired by the Senior Independent Director, meet once a year without the Chairman present to assess his performance, taking into account the views of the Executive Directors.

RELATIONS WITH SHAREHOLDERS

The Company recognises the importance of communicating with its Shareholders, including its employee Shareholders, to ensure that its strategy and performance is understood. This is achieved principally through the Annual Report and the Annual General Meeting. The Group's annual and interim results, as well as all announcements issued to the London Stock Exchange, are published on the Company's website. The Company issues regular trading updates to the market and these, together with copies of the presentations made to analysts, can also be found on the Company's website. In addition, a range of other corporate information is available to investors on the Company's website (www.sigplc.com).

The Chief Executive, Finance Director and Head of Investor Relations are primarily responsible for direct investor relations. The Board is kept informed of investors' views through distribution and regular discussion of analysts' and ? ?<? :
1" feedback from major Shareholders is reported to the Board by the Chairman and the Finance Director and discussed at its meetings. Formal presentations are made to institutional Shareholders following the announcement of the Company's annual and interim results. Contact is also maintained, where appropriate, with Shareholders to discuss overall remuneration plans and policies. The Chairman and the Senior Independent Director are available to discuss governance and strategy with major Shareholders if requested
: ? ?? .? ? 1^
to correspondence received from Shareholders on a wide range of issues and also participate in a number of surveys and questionnaires submitted by a variety of investor research bodies. Although the other Non-Executive Directors are not at present asked to meet the Company's Shareholders, they regularly attend presentations of the annual and interim results.

The Board recognises that the Annual General Meeting is the principal forum for dialogue with private Shareholders and all Shareholders are invited to attend. All Directors attend the Annual General Meeting and are available to answer any questions that Shareholders may wish to raise. The Notice of Meeting is sent to Shareholders at least 20 working days before the meeting. The Company provides a facility for Shareholders to vote electronically and the Form of Proxy provides Shareholders with the option of withholding their vote on a resolution if they so wish. Shareholders vote on a show of hands, unless a poll is validly called and after each such vote the number of Proxy votes received for or against the resolution together with the number of abstentions is announced. The Company Secretary ensures that votes are properly received and recorded. Details of the Proxies lodged on all resolutions are published on the Company's website immediately after the Annual General Meeting (www.sigplc.com).

THE REMUNERATION COMMITTEE

The Remuneration Committee operates under written Terms of Reference, which are consistent with current best practice. The Committee comprises only independent Non-Executive Directors. The Chairman of the Committee attends the Annual General Meeting to respond to any Shareholder questions that might be raised on the Committee's activities. The Committee's Report 5
071

NOMINATIONS COMMITTEE

The Nominations Committee operates under written Terms of Reference, which are consistent with current best practice. Its principal duty is the

-
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and Non-Executive vacancies on the Board. Members of the Committee are not involved in matters affecting their own positions. The Nominations Committee comprises the Chairman, Chief Executive and the independent Non-Executive Directors. The meetings of the Committee are chaired by the Non-Executive Chairman. The Committee meets as appropriate but at least ?1_

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1-.?? members, at least two of whom shall be independent Non-Executive Directors.

CORPORATE GOVERNANCE REPORT CONTINUED

NOMINATIONS COMMITTEE CONTINUED

! ! ? Board and makes recommendations concerning the re-appointment of any ?()
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(in recognising the impact of the Davies Report) ensured that skills, experience, potential and overall balance of the Board, as well as diversity, including gender, were fully considered in relation to the Board appointments made during the year. The Committee retains external search and selection consultants as appropriate. The Committee also advises the Board on succession planning for Executive Board appointments although the Board itself is responsible for succession generally.

In general terms, when considering candidates for appointment as Directors of the Company, the Nominations Committee, in conjunction with the Board drafts a
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has been agreed with the Board, the Committee would then work with an appropriate external search and selection agency to identify candidates of the appropriate calibre and with whom an initial candidate shortlist could be agreed. The agency is required to present for consideration by the Committee a list of potential candidates comprising, inter alia, candidates of both genders and of diverse backgrounds. The drawing up of this list is entirely consistent between external and internal candidates. Shortlisted candidates would then be invited to interview with members of the Committee and, if recommended by the Committee, would be invited to meet the entire Board before any decision is taken relating to the appointment. This process was followed in identifying Mr. S. R. Mitchell as a candidate for appointment as Group Chief Executive.

Following the appointment of a new Director, the Chairman in conjunction with the Company Secretary is responsible for ensuring that a full, formal and tailored induction to the Company is given. Such an induction programme was operated for Mr. Mitchell.

The proposed activities for the Committee in 2013 will be to continue to monitor and assess the Board's composition and diversity, longer term succession planning and potential further recruitment of Non-Executive Directors.

AUDIT COMMITTEE

The Audit Committee operates under written Terms of Reference, which are consistent with current best practice. The Committee comprises only independent Non-Executive Directors. The Chairman of the Committee attends the Annual General Meeting to respond to any Shareholder questions that might be raised on the Committee's activities.

The Group does not have a dedicated internal audit function. The Board ? *

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RISK MANAGEMENT AND INTERNAL CONTROL

The Board has ultimate responsibility for the Group's system of internal control and for reviewing its effectiveness. It is the role of management to implement the Board's policies on risk and control through the design and operation of appropriate internal control systems. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and can therefore only provide reasonable and not absolute assurance against material misstatement or loss.

The Audit Committee monitors and reviews the effectiveness of the Group's internal control systems, accounting policies and practices, standards of risk management and risk management procedures and compliance controls.

The key elements of the existing systems of internal control, which accord *

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OPEN CULTURE

The Board considers that the Group operates a risk-aware culture with

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ONGOING PROCESS FOR RISK IDENTIFICATION, EVALUATION AND MANAGEMENT

During 2012 the Board conducted a review of the effectiveness of the Group's system of internal control. This review covered all controls including operational, ? ? !* :1 ? *

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the Group Board maintains an overall corporate risk register, the content of which is determined by regular discussions between senior management, Group Board and the Audit Committee. This is also formally reviewed twice yearly by the Audit Committee and discussed with the Board. The risk register contains :

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likelihood at both a gross level (before consideration of mitigating controls) and net level (after consideration of mitigating controls). This provides the Board with the opportunity to review the level of risk that the business is prepared to accept. The register also contains the assurance provided over current key mitigating ?1^

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monitored closely until fully implemented. This is summarised in the Business Review on pages 30 to 33;
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		a comprehensive system of financial reporting. An annual budget for each operating company is prepared in detail and approved by the Chief Executive. The Board approves the overall Group's budget and plans. Monthly actual results are reported against budget and prior year and the forecast for the year is revised where necessary. Any significant changes and adverse variances are questioned by the Board and remedial action is taken where appropriate. There is weekly cash and treasury reporting to the Finance Director and periodic reporting to the Board on the Group's tax and treasury position;
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		provision to management and the Board of relevant, accurate and timely information including relevant key performance indicators, based on reliable management information systems which are continually being improved and updated;
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		monthly reports to the Board from the Chief Executive and Finance Director;
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		regular business unit management Board meetings (periodically attended by the Chief Executive or Finance Director), Executive Board meetings and Company Board; meetings at which existing, new and evolving operational, financial and other risks are discussed, and appropriate actions to manage these risks are agreed and followed up;
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		discussion of any significant issues or control weaknesses identified and, if considered necessary, their inclusion in reports to the Executive Board and Company Board;
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	2012		2011
		operating units, both trading sites and central functions, complete comprehensive Control Self Assessment ("CSA") Questionnaires every six months. These questionnaires require managers to respond to questions about procedures and controls in the unit for which they have responsibility. These are analysed by local and Group Management and all potential risks or control failure issues which are raised by the CSA process are classed in terms of escalation levels with any significant Group level issues being reported to the Audit Committee; and
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	2012		2011
		a structured and approved programme of internal audit visits with the implementation of recommendations made being monitored as part of a continuous programme of improvement.

Annual assessment of the effectiveness of systems of internal control

The Board and Audit Committee requested, received and reviewed reports from senior management, its advisers, the outsourced internal audit function and our external auditor in order to assist the Board with their annual assessment of the effectiveness of the Group's systems of internal controls. Through the ongoing processes outlined above, areas for improvement in internal controls are continuously identified and action plans are devised. Progress towards completion of actions is regularly monitored by

management and the Board. The Board considers that none of the areas of improvement identified constitute a significant failing or weakness. The Board considers that the information that it receives is sufficient to enable it to review the effectiveness of the Group's internal controls in accordance with the internal control guidance for Directors on the Code issued by the Turnbull Review Group.

Financial reporting

In addition to the general internal controls and risk management processes described above, the Group also has specific internal controls and risk management systems to govern the financial reporting process and preparation of the annual financial statements. These systems include clear policies and procedures for ensuring that the Group's financial reporting processes and the preparation of its consolidated accounts comply with all relevant regulatory reporting requirements. These are comprehensively detailed in the Group Finance Manual, which is used by the businesses in the preparation of their results. Financial control requirements are also set out in the Group Finance Manual.

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 Company's website. The Company also has in place a confidential hotline which is available to all of the Group's 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 2012 these systems were operational throughout the Group. A full investigation is carried out on all matters raised and a report is prepared for feedback to the complainant. The Company Secretary is required to report to the Audit Committee biannually on the integrity of these procedures, the state of ongoing investigations and conclusions reached. During 2012 Group employees used this system to raise concerns about a number of separate issues, all of which were appropriately responded to.

The risk framework, as outlined above, gives reasonable assurance that the structure of controls in operation is appropriate to the Group's situation and that there is an acceptable level of risk throughout the business.

The Board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the Group and that this has been in place for the year under review and up to the date of approval of the Annual Report and Accounts.

Richard Monro Company Secretary 6 March 2013

REPORT OF THE AUDIT COMMITTEE

PURPOSE AND AIM

The purpose of the Audit Committee ("the Committee") is to make recommendations on the reporting, control, risk management and compliance aspects of the Directors' and the Group's responsibilities, providing independent monitoring, guidance and challenge to Executive management in these areas.

Through this process its aim is to ensure high standards of corporate and regulatory reporting, controls, risk management and compliance. The Committee believes that excellence in these areas enhances the effectiveness and reduces the risks of the business.

MEMBERSHIP

Throughout 2012, the Committee comprised the independent Non-Executive Directors of the Company. The Board considers that each member of the \$

\$ 1 Chairman of the Committee is Mr. J. C. Nicholls. He is a Chartered Accountant *

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1 The Company Secretary acts as Secretary to the Committee.

Members of the Committee undertake ongoing training as required.

RESPONSIBILITIES

The Committee operates under Terms of Reference which can be found on the Company's website and which are available on application to the \$

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monitoring the integrity of the Company's Accounts including its Annual Report and Accounts and Interim Report;
reviewing the consistency of accounting policies, including any changes;
reviewing the effectiveness of the Company's internal control and risk management systems;
reviewing the Company's arrangements for its employees to raise ?!: ! *?:? or other matters;
monitoring and reviewing the effectiveness of the Company's outsourced internal audit function;
reviewing the annual audit plan and receiving the Auditor's Reports and the Company's response;
reviewing the effectiveness of the Company's external Auditor;
considering and making recommendations to the Board in relation to the appointment, re-appointment and removal of the Company's external Auditor;
overseeing the relationship with the external Auditor, including (but not limited to) approving its remuneration, assessing annually its independence and objectivity, taking into account relevant professional and regulatory requirements and the relationship with the Auditor as a whole, including the provision of any non-audit services; and
reporting to the Board and identifying any matters on which the Committee considers that action or improvement is needed and making recommendations as to the steps to be taken.

The Chairman of the Committee attends the Annual General Meeting to respond to any Shareholder questions that might be raised on the Committee's activities.

The Committee has in its Terms of Reference the power to engage outside advisors and to obtain its own independent external advice at the Company's expense, should it deem it necessary. During 2012 no member of the Committee nor the Committee collectively, found it necessary to obtain such separate advice beyond the advice that is directly provided to the Committee by the external Auditor, Deloitte LLP or from Ernst & Young LLP who operate the Group's outsourced internal audit function.

As part of corporate governance the Committee reviews its own performance annually and considers where improvements can be made. The Committee reviewed its own performance in July 2012 and the results of this review were reported to the Board.

MEETINGS

The Committee meets regularly throughout the year with four planned meetings

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Committee without the Chairman of the Board and the Executive Directors being present on three occasions in 2012 and in March 2013 before the signing off of the 2012 Annual Report and Accounts.

Ernst & Young LLP, which provides an outsourced internal audit function for the Group, are invited to meetings to present their reports and attended on two occasions in 2012. The Committee also meets with Ernst & Young LLP without the Executive Directors present and did so on two occasions in 2012. In addition the Committee Chairman meets regularly with Ernst & Young LLP outside of the formal meetings.

WORK OF THE COMMITTEE

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reviewing and making a recommendation concerning the re-appointment of the external Auditor.

The Chairman of the Committee reports to the subsequent meeting of the Board on the key issues covered by the Committee, identifying any matters on which it considers that action or improvement is needed and makes recommendations on the steps to be taken. In addition all Board members receive copies of the minutes of each meeting.

INTERNAL AUDIT

The Internal Audit function provides independent assurance to Senior Management and the Board on the adequacy and effectiveness of SIG's risk management framework. Internal Audit forms an independent and objective

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EXTERNAL AUDITOR

The Board is aware of the need to maintain an appropriate degree of independence and objectivity on the part of the Group's external Auditor. The external Auditor reports to the Committee on the actions taken to comply with both professional and regulatory requirements and with best practice designed to ensure its independence.

The Group has an agreed policy with regard to the provision of audit and non-audit services by the external Auditor, which was operated during 2012. The policy is based on the principles that they 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, or is not perceived to impair, the external Auditor's independence and objectivity. It categorises such services between Auditor-permitted services, Auditor-excluded services and Auditor-authorised services. The policy, which can be viewed on the \$ <*
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each category and sets out the criteria to be met and the internal approvals required prior to the commencement of any Auditor-authorised services. 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 is reviewed annually by the Committee and is approved by the Board.

The total sum invoiced to the Group by its external Auditor for non-audit services ? *|1!

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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 1_

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In August 2012, the Committee undertook its annual review of the effectiveness of the external auditors. A questionnaire was sent to the Finance Directors of each of the Group's operating companies, which provided the Committee with an overall view across the Group. From this questionnaire

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Having reviewed and expressed satisfaction with the level of fees, independence, objectivity, expertise, resources and general effectiveness of Deloitte LLP, the Committee did not consider it necessary to conduct a tender process for the appointment of the Company's Auditor although the Committee will continue to keep this under review. The Committee recommends (and the Board agrees) that a resolution for the re-appointment of Deloitte LLP as Auditor of the Company will be proposed at the forthcoming Annual General Meeting.

As a result of its work during the year, the Audit Committee has concluded that it has acted in accordance with its Terms of Reference and has ensured the independence and objectivity of the external Auditor.

Jonathan Nicholls Chairman of the Audit Committee 5>?3

DIRECTORS' REMUNERATION REPORT INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

DEAR SHAREHOLDER

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KEY ACTIVITIES

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package of the new Chief Executive, Stuart Mitchell, both of which we have ensured are in line with best practice.

A NEW REPORT STRUCTURE

During 2012 the Department for Business, Innovation & Skills ("BIS") issued two consultation documents on reporting of directors' pay.

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a Policy Report in which we set out the components of reward, how these are linked to the business strategy and the level of reward opportunities for Executive Directors; and
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A resolution to approve this Remuneration Report will be put to Shareholders at this year's Annual General Meeting and we hope to receive your support.

Chris Geoghegan Chairman of the Remuneration Committee 5>?3

INTRODUCTION

This report, prepared by the Remuneration Committee on behalf of the Board, sets out the policy and disclosures on remuneration for the Executive and Non-Executive Directors of the Board. It takes full account of the UK Corporate Governance Code ("the Code") and the latest ABI/NAPF guidelines, and has ? ? *

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THE REMUNERATION COMMITTEE

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to determine the remuneration policy for Executive Directors and such other members of the Executive Management as it is designated to consider;
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- to ensure that failure is not rewarded and that steps are always taken to mitigate loss on termination, within contractual obligations;
- to review remuneration trends across the Group; and
- to approve the terms of and recommend grants under the Group's incentive plans.

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Both the constitution and operation of the Remuneration Committee comply with the principles incorporated in the UK Corporate Governance Code.

The Committee reviews its own performance annually and considers where improvements can be made as appropriate.

KEY ACTIVITIES OF THE COMMITTEE IN 2012

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annual review of Executive Director salaries;
determining performance outcomes for the annual bonus and long term incentives in respect of 2011 performance;
calibration of 2012 LTIP awards for the Executive Directors;
review of the Non-Executive Chairman's fees;
review of the 2011 Directors' Remuneration Report;
preparation for the 2012 AGM; and
review of remuneration policy for 2013.

In addition, the Committee undertook the following:

consultation with major Shareholders on remuneration policy;
approving appointment terms for Mr. S. R. Mitchell;
approving retirement arrangements for Mr. C. J. Davies; and
1;1^1_ Mr. M. J. Chivers.

POLICY REPORT

POLICY ON REMUNERATION OF EXECUTIVE DIRECTORS

The Company'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. The policy is designed to align the _
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The remuneration policy for Executive Directors is summarised in the table below.

Fixed remuneration
Element	Purpose and link	Operation and process	<	Performance metrics
Base salary	To attract and retain talent in the labour market in which the executive is employed.	Reviewed on an annual basis (with effect from January) after a review of the individual's performance and experience, with reference to published remuneration information from 3?' 2 : 4 and companies operating in a similar sector. The Committee also takes account of the annual salary review for the rest of the Group.	Base salary increases will be applied in line with the outcome of the review. Any increases shall have due regard to those applied to the wider employee population of the Group.	Individual and Company performance are considerations in setting base salary.
- :	: appropriately competitive within the relevant labour market.	- : ! 1- : are reviewed annually and their value is not pensionable.	Not applicable.	Not applicable.
Pension	To provide retirement : competitive within the relevant labour market.	_ : - : 5* : 1 _ : - : scheme is not open to new entrants.	Maximum pension after 40 years' pensionable service equivalent to two thirds of : 1	Not applicable.
		New joiners will participate in the Company's _ : \$ receive a cash equivalent.	"; ? 6/ base salary.
Variable remuneration
Annual Performance Bonus ("APB")	Provides an incentive to achieve annual performance targets, which are set at the : in line with the Company's strategy.	The APB is reviewed annually prior to the : opportunity, performance measures and weightings are appropriate and continue to support the Company's strategy.	The maximum APB is / ?81 Executives are required to defer one third of their annual performance bonus into SIG shares by way of the 2011 Deferred Share Bonus Plan for a period of three years, subject to clawback.	Measures are based on : performance.
Deferred Annual Bonus Scheme ("DABS")	Ensures that annual results :? ?( sustained performance. No awards have been made under this scheme since 2009.	Under the DABS, participants including Executive Directors are invited to defer up to 6/ ?2 income tax and National Insurance) into SIG shares, which must be retained for three years.	Participants are eligible to receive up to a maximum of one additional free matching share for every share purchased.	Matching shares are based on performance against EPS targets over a three year retention period.
Long Term Incentive Plan ("LTIP")	Rewards and retains executives, aligning them with Shareholders' longer term interests.	Directors and other designated senior managers are granted nil-cost share options which vest if three year performance targets are achieved. Vested awards under the LTIP are exercisable between three and seven years from the date of grant.	' / of base salary for Executive Directors.	Awards vest based on performance against : performance.

* In exceptional circumstances only, the Committee may make awards above the stated opportunity in the policy if it considers this to be in the best interests of Shareholders.

risk-taking. The Remuneration Committee has the discretion to consider the Company's performance on environmental, social and governance issues when determining the overall reward for the Executive Directors.

Corporate governance

EMPLOYEE SHARE SCHEMES

The Executive Directors are also eligible to participate in the Company's Share Incentive Plan ("SIP"), which commenced in November 2005 and is open to all UK employees of the Group. The SIP is an HMRC approved arrangement which entitles all employees to purchase shares and receive matching shares in a potentially tax-advantageous manner. The Company gives one matching share for each share purchased by the employee up to a maximum of four matching shares per month.

SHARE OWNERSHIP GUIDELINES

To ensure alignment between Executive Director interests and those of Shareholders the Company has established the principle of requiring Executive _
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RECRUITMENT POLICY

The Committee's policy is to set pay for new executives within the existing remuneration policy in order to provide internal consistency. The Committee aims to ensure that the Company pays no more than is necessary to hire individuals of an appropriate calibre.

SERVICE CONTRACTS AND EXIT PAYMENTS

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Provision	_
Duration	Continuous term to retirement age.
Notice periods	Rolling twelve months' notice period in writing by either party.
Exit payments	Any compensation payable will be determined in accordance with the terms of the service contract and should not exceed _? ?<?? ?! : ? : 1
	If the Company terminates employment without giving notice or making a payment in lieu, any damages to which the Executive may be entitled is to be calculated in accordance with common law principles, including those relating to mitigation of loss and accelerated receipt.
	There are no agreements between the Company and its Directors or employees providing for additional compensation for : 2 ! 4 of a takeover.
	Awards under the Annual Performance Bonus, LTIP and DABS are not contractual and are summarised separately in the next section.
Non-compete clause	Applies during the contract and for up to a period of twelve months after leaving, subject to any period served by way of gardening leave.

TREATMENT OF VARIABLE PAY AWARDS ON TERMINATION OF EMPLOYMENT

Awards under the LTIP are not contractual and are treated in line with the applicable scheme rules. Discretion may also be applied by the Committee depending on the precise reasons for termination.

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Reason for leaving	Timing of vesting	= ƒ
Retirement, injury, disability, etc.	End of performance period.	Performance against targets will be assessed at the end of the performance period in the normal way and a pro-rata vesting calculated based on length of time as a participant of the scheme.
Death	Immediately.	As per resignation and retirement, except the Committee will assess performance against targets up to the date of death.
Change of control	Immediately.	Performance against targets will be assessed by the Committee on change of control and pro-rata vesting calculated based on length of time as a participant until the change of control.
All other reasons	Awards lapse.

DIRECTORS' REMUNERATION REPORT CONTINUED INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

POLICY REPORT CONTINUED

RELATIVE IMPORTANCE OF SPEND ON PAY

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CONSIDERATION OF SHAREHOLDER VIEWS

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REMUNERATION OF OTHER EMPLOYEES

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Senior managers participate in an annual bonus scheme which has similar performance targets to those of the Executive Directors. A limited number of senior
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Prior to the annual pay review, the Committee receives a report from the Group HR Director setting out the proposed level of increase for overall employee pay. The Committee takes this into consideration when determining the remuneration for the Executive Directors. The Group HR Director also updates the Committee on employee views on pay and conditions.

EXECUTIVE DIRECTOR TOTAL REMUNERATION SCENARIOS BASED ON PERFORMANCE

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TOTAL REMUNERATION OF EXECUTIVE DIRECTORS IN 2012

					Long Term
				Annual	Incentive
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	and fees	- : 2	Pension3	respect of 20124	ending in 2012	Total
	£000	£000	£000	£000	£000	£000
C. J. Davies1	549	19	5	'5	–	1,024
D. G. Robertson	315	19	70	57	–	545
S. R. Mitchell5	75	1	0	–	N/A	54

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IMPLEMENTATION REPORT

EXECUTIVE DIRECTOR SALARIES

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2012 Annual base Name salary	2013 Annual base	Increase
C. J. Davies 67{!{5 D. G. Robertson £315,000	£548,861 £324,450	/ 3/
S. R. Mitchell £550,000	£550,000	/

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participate in the 2012 Annual Performance Bonus. As noted above and stated in the policy table, one third of the total bonus outcome for 2012 is deferred into SIG shares for three years, subject to clawback. No discretion was applied by the Committee to the Annual Performance Bonus outcome calculation.

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For 2013, the maximum opportunity, measures and weightings will remain unchanged.

LONG-TERM INCENTIVE PLAN

The Awards made in 2009 were subject to the underlying EPS for the year ended 31 December 2011 which required an underlying EPS of 10p to be achieved for any of the Award to vest. The underlying EPS for 2011 was 9.4p resulting in all of the Awards lapsing.

Awards made in 2010 and 2011 were subject to three year cumulative underlying EPS for the periods ending 31 December 2012 and 31 December 2013 respectively. No shares vest for cumulative EPS less than or equal to 30p over the period, with full vesting for cumulative EPS of 40p or higher, and vesting on

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Name	2012 LTIP *?2/ of salary)	Face value of Award	Percentage that will vest on threshold performance
C. J. Davies	/	£548,861	/
D. G. Robertson	/	£315,000	/
S. R. Mitchell	/	Nil	N/A

Following a review of performance measures which, in line with its policy, included a consultation with SIG's major Shareholders, the Committee concluded that the
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In advance of each LTIP cycle, the Committee will continue to review the appropriateness of the performance measures and corresponding targets. No change *

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DEFERRED ANNUAL BONUS SCHEME

No Awards under DABS have been made since 2009. The Committee does not intend to grant Awards under this plan in 2013.

Deloitte LLP, in its capacity as Auditor, is requested to examine outcomes for the LTIP and DABS before any Awards vest. Any outstanding awards under both

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DEFINED BENEFIT PENSION SCHEME

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DIRECTORS' REMUNERATION REPORT CONTINUED INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

IMPLEMENTATION REPORT CONTINUED

SERVICE CONTRACTS

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	Date of contract
C. J. Davies	{++'
D. G. Robertson	10/10/2011
S. R. Mitchell	10/12/2012

REMUNERATION PACKAGE OF MR. S. R. MITCHELL

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Salary £550,000 p.a.
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RETIREMENT ARRANGEMENTS OF MR. C. J. DAVIES

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date. His outstanding incentive awards will be adjusted in line with best practice for a good leaver, i.e. pro-rated to his termination date and vesting at the end of the normal vesting period, subject to performance. For 2013, he will be entitled to an annual bonus, pro-rated for time worked before going on gardening leave and determined by the Remuneration Committee. In addition the Company has offered to provide limited support from a Non-Executive search agency.

NON-EXECUTIVE DIRECTORS

The Non-Executive Directors, including the Chairman, do not have service contracts. The Company's policy is that Non-Executive Directors are appointed :

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Directors' appointments are reviewed at the end of each three year term. Non-Executive Directors will normally be expected to serve two three year terms, although the Board may invite them to serve for an additional period.

The Executive Directors are responsible for recommending to the Board the fees of Non-Executive Directors. The fees are calculated by reference to current market levels and takes account of the time commitment and the responsibilities of the Non-Executive Directors. The Chairman and Non-Executive Directors' fees are reviewed in May each year with any increase being payable from 1 June. Following this year's review, the Board agreed to increase the ??()
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NON-EXECUTIVE DIRECTOR FEES

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	€ date of appointment	Date of letter of engagement	Basic fee £	Senior Independent Director fee £	Chairman of Remuneration/ Audit Committee fee £	Total current annual fees £
'1y ^	01/10/2010	15/09/2010	5!	–	–	5!
J. E. Ashdown	+0+	0+0+	76!{6	–	–	76!{6
M. Ewell	+{+	0+0+	76!{6	–	–	76!{6
C. V. Geoghegan	+0+'	{+6+	76!{6	2,000	5!	63!{6
J. C. Nicholls	5++'	{+6+	76!{6	–	{!	63!{6

Corporate governance

Performance graph

Shareholder vote

For	Against	Abstentions
371,357,587 (86.76%)	39,869,639 (9.31%)	16,835,889 (3.93%)

The Committee consulted with its major Shareholders on proposed remuneration policy in February 2012 and February 2013. I am pleased to confirm that there was majority support for each proposal.

External advisors

Deloitte LLP, Auditor to the Group, when requested, examine outcomes for the LTIP and DABS at the end of the respective performance periods. They did not receive any fees for this service in 2012.

DIRECTORS' REMUNERATION REPORT CONTINUED INCLUDING THE STATEMENT OF REMUNERATION POLICY \z`\_\_`__"!_{_#_`!

IMPLEMENTATION REPORT CONTINUED

DIRECTORS' INTERESTS IN THE SHARES OF SIG PLC (AUDITED)

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Name	31 December 2012	1 January 2012 or date of appointment
J. E. Ashdown	21,700	!0
C. J. Davies	162,597*	5!{73*
M. Ewell	8,600	–
C. V. Geoghegan	40,000	40,000
J. C. Nicholls	14,220	14,220
S. R. Mitchell (appointed 10 December 2012)	–	–
D. G. Robertson	60,000	30,000
'1y ^	30,000	30,000

* Includes shares purchased under the SIG plc SIP.

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DIRECTORS' EMOLUMENTS (AUDITED)

	Salary and fees £000	Annual performance related bonus £000	- : £000	2012 Total emoluments £000	2011 Total emoluments £000
Chairman
'1y ^ 24	155	–	–	155	30
'1€1 2? 3"?4	–	–	–	–	12
Executive
C. J. Davies (ii)	549	'5	19	864	!56
D. G. Robertson (ii), (iii)	315	57	55	545	95
S. R. Mitchell (iv)	75	–	{	54	Nil
M. J. Chivers (retired 31 December 2011)	–	–	–	–	560
;1^1_ 2? 3? ?4	–	–	–	–	!75
Non-Executive
J. E. Ashdown (appointed 11 July 2011)	45	–	–	45	20
M. Ewell (appointed 1 August 2011)	45	–	–	45	19
C. V. Geoghegan	53	–	–	53	53
J. C. Nicholls	53	–	–	53	53
y1>??2? 5>?4	–	–	–	–	11
Total	!5	75	93	1,814	3!5{

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(iv) Mr. S. R. Mitchell commenced his employment with the Company on 1 December 2012 at a base salary of £550,000 per annum prior to his appointment as a Director on _ ?1>?111>

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There were no sums paid to third parties for Directors' services. There were no expense allowances payable to any Directors.

Corporate governance

DIRECTORS' PENSIONS (AUDITED)

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							Transfer
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						Contributions	(decrease)/
	Increase in	Transfer value	Accrued	Transfer	Transfer	made by	increase after
Increase	accrued	of increase in	:	value at	value at	Executive to	deducting
in accrued	:	:	31 December	31 December	1 January	the scheme	Executive
:	=	= 8	2012	2012	2012	in the year	contributions
£000	£000	£000	£000	£000	£000	£000	£000
C. J. Davies 15	{	245	151	3,860	3!6{0	41	232

* After deducting Executive contributions.

The transfer values disclosed above do not represent a sum paid or payable to the individual Director, but instead represent a potential liability of the pension scheme.

NOTES

1. Pension accruals shown are the amounts which would be paid annually from normal retirement age based on service to the end of the year.
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IMPLEMENTATION REPORT continued

Directors' share options (audited)

Ms. J. E. Ashdown, Mr. M. Ewell, Mr. C. V. Geoghegan, Mr. J. C. Nicholls and Mr. L. Van de Walle, as Non-Executive Directors, did not hold and have not been granted any share options during the year.

The share options for the other Directors who held office at any time during the year ended 31 December 2012 are set out below:

				Number of shares				Market price at date of			Exercise dates
Date on which scheme interest was awarded	Market price when scheme interest was awarded	At 1 January 2012	Granted	Exercised	Lapsed	At 31 December 2012	Exercise price per 10p share	Vesting	Exercise	Earliest vesting date	Date exercised	Date on which option expires
Long Term Incentive Plan
C. J. Davies 16/09/2009 07/06/2010 27/04/2011 26/04/2012 D. G. Robertson 26/04/2012	138.2p 110.0p 140.6p 105.3p 105.3p	173,248 463,772 379,000 – –	– – – 521,235 299,145	– – – – –	(173,248) – – – –	– 463,772 379,000 521,235 299,145	0.0p 0.0p 0.0p 0.0p 0.0p	– – – – –		– 16/09/2012 – 07/06/2013 – 27/04/2014 – 26/04/2015 – 26/04/2015		– 15/09/2019 – 06/06/2020 – 26/04/2021 – 25/04/2022 – 25/04/2022
Deferred Share Bonus Plan
C. J. Davies 30/03/2012	117.95p	–	144,425	–	–	144,425	0.0p	–		– 30/03/2015		– 29/03/2022
D. G. Robertson 30/03/2012	117.95p	–	8,673	–	–	8,673	0.0p	–		– 30/03/2015		– 29/03/2022
Total		1,016,020	973,478		– (173,248)	1,816,250

Mr. S. R. Mitchell, who was appointed a Director on 10 December 2012, has not been granted and does not hold any share options.

No price has been paid for any awards of share options which were unexpired at any time in the financial year.

The market price of the shares at 31 December 2012 was 121p and the range during 2012 was 82.3p to 123.5p.

The aggregate of the total theoretical gains on options exercised by the Directors during 2012 amounted to £nil (2011: £nil). This is calculated by reference to the difference between the closing mid-market price of the shares on the date of exercise and the exercise price of the options, disregarding whether such shares were sold or retained on exercise and is stated before tax.

A resolution to approve this report will be proposed at the Annual General Meeting.

The Board of SIG plc has approved this Directors' Remuneration Report.

On behalf of the Board

Chris Geoghegan Chairman of the Remuneration Committee 6 March 2013

DIRECTORS' RESPONSIBILITIES STATEMENT

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Stuart Mitchell Doug Robertson Director Director 5>?3 5>?3

Corporate governance

GROUP ACCOUNTS PREPARED IN ACCORDANCE WITH IFRS

GROUP ACCOUNTS

77 CONSOLIDATED INCOME STATEMENT
78 CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
79 CONSOLIDATED BALANCE SHEET
80 CONSOLIDATED CASH FLOW STATEMENT
81 CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY 82 STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES 87 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
88 NOTES TO THE ACCOUNTS
118 INDEPENDENT AUDITOR'S REPORT
119 FIVE YEAR SUMMARY

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012

	Note	Before other items* 2012 £m	Other items* 2012 £m	Total 2012 £m	Before other items* 2011 £m	Other items* 2011 £m	Total 2011 £m
Revenue Cost of sales	1 2	2,608.6 (1,927.4)	26.9 (21.8)	2,635.5 (1,949.2)	2,713.5 (2,016.4)	94.9 (65.4)	2,808.4 (2,081.8)
Other operating expenses	2	681.2 (584.7)	5.1 (43.7)	686.3 (628.4)	697.1 (598.7)	29.5 (102.3)	726.6 (701.0)
< Finance income Finance costs	4 3 3	96.5 7.5 (19.6)	(38.6) 0.4 (2.2)	57.9 7.9 (21.8)	98.4 7.4 (21.2)	(72.8) – (4.2)	25.6 7.4 (25.4)
_ ? ] Share of loss of associate	11	84.4 (0.3)	(40.4) –	44.0 (0.3)	84.6 (0.1)	(77.0) –	7.6 (0.1)
_ ? Income tax expense	6	84.1 (26.2)	(40.4) 9.1	43.7 (17.1)	84.5 (25.7)	(77.0) 18.2	7.5 (7.5)
_ ƒ		57.9	(31.3)	26.6	58.8	(58.8)	(0.0)
Z?? ; Equity holders of the Company Non-controlling interests		57.6 0.3	(31.3) –	26.3 0.3	58.5 0.3	(58.8) –	(0.3) 0.3
Earnings per share Basic earnings/(loss) per share Diluted earnings/(loss) per share	8 8	9.7p 9.7p	(5.2p) (5.2p)	4.5p 4.5p	9.9p 9.9p	(9.9p) (9.9p)	(0.0p) (0.0p)

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	Note	2012 £m	2011 £m
Profit/(loss) after tax		26.6	(0.0)
Other comprehensive (expense)/income 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 Tax charge on exchange and fair value movements arising on borrowings and derivative financial instruments Gains and losses on cash flow hedges Transfer to profit and loss on cash flow hedges Actuarial loss on defined benefit pension schemes Deferred tax movement associated with actuarial loss	30c 30c	(6.2) (5.2) 4.0 (1.0) (2.7) 2.2 (0.2) 0.2	(9.6) (14.7) 3.6 (0.9) (5.2) 3.9 (21.8) 5.4
Effect of change in rate on deferred tax*	24	(0.8)	(0.3)
Other comprehensive expense		(9.7)	(39.6)
Total comprehensive income/(expense)		16.9	(39.6)
Attributable to: Equity holders of the Company Non-controlling interests		16.6 0.3	(39.9) 0.3
		16.9	(39.6)

* These items will not be reclassified subsequently to the Consolidated Income Statement.

The accompanying Statement of Significant Accounting Policies and Notes to the Accounts are an integral part of this Consolidated Statement of Comprehensive Income.

CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2012

Note ` x	£m	£m


Property, plant and equipment 10 Interest in associate 11	134.2 0.8	142.7 1.5
;* 13	428.7	431.4
Intangible assets 14	54.4	62.7
Deferred tax assets 24	29.0	35.7
_ ? : 20	37.4	52.7
	684.5	726.7
Current assets
" 16	224.0	223.4
17	373.3	392.2
_ ? : 17	6.2	–
Associate loan and deferred consideration 17	2.7	–
\$ .	128.1	126.9
	734.3	742.5
Total assets	1,418.8	1,469.2
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Trade and other payables 18	333.0	342.3
€ ?: 18	2.2	1.8
- 18	4.1	4.0
Bank loans 18	1.3	2.9
# 18	81.8	–
_ ? : 18	5.8	–
Deferred consideration 18	–	5.4
Current tax liabilities 18	4.4	7.7
# 18	9.3	14.6
	441.9	378.7
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€ ?: 19	5.4	5.5
Bank loans 19	0.1	0.2
# 19	174.2	265.2
_ ? : 19	4.8	10.5
Deferred tax liabilities 19	17.3	20.8
Other payables 19	3.0	5.0
: 19	34.4	44.5
# 19	28.9	31.3
\ ?	268.1 710.0	383.0 761.7
Net assets	708.8	707.5

= Called up share capital 26	59.1	59.1
Share premium account	447.0	447.0
\$	0.3	0.3
	0.9	1.2
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:	197.7	187.7
Z?? Q ] ]	707.8	706.5
` x	1.0	1.0
\ Q	708.8	707.5

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CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2012

	Note	2012 £m	2011 £m
` ] † =
\$	27	88.7	96.1
Finance costs paid		(13.3)	(16.2)
&		1.5	1.4
Income tax paid		(19.4)	(10.2)
?		57.5	71.1
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Purchase of property, plant and equipment		(29.7)	(16.4)
Proceeds from sale of property, plant and equipment		4.1	2.6
Net proceeds from sale of businesses	12	1.2	30.6
Settlement of amounts payable for purchase of businesses	15	(12.7)	(1.4)
? 2 4+		(37.1)	15.4
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\$ :		(2.1)	(1.5)
+ ? :		(1.2)	(81.6)
_ . ? \$	7	(14.8)	(4.4)
_ (		(0.3)	(0.1)
? :		(18.4)	(87.6)
[ ƒ ] ?] Q= ]	28	2.0	(1.1)
\$ .	29	122.9	127.0
Effect of foreign exchange rate changes	29	(0.9)	(3.0)
] ?] Q= ]	29	124.0	122.9

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2012

	Called up share capital £m	Share premium account £m	Capital redemption £m	Share option £m	Hedging and translation £m	Retained : £m	Total £m	Non controlling interests £m	Total equity £m
At 31 December 2010	59.1	447.0	0.3	1.0	32.8	209.3	749.5	1.9	751.4
Loss after tax	–	–	–	–	–	(0.3)	(0.3)	0.3	(0.0)
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Exchange difference on retranslation of foreign
*	–	–	–	–	(9.6)	–	(9.6)	–	(9.6)
Exchange difference on retranslation of foreign 2 *
and intangibles)	–	–	–	–	(14.7)	–	(14.7)	–	(14.7)
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* ??* ? :	–	–	–	–	3.6	–	3.6	–	3.6
* ? :	–	–	–	–	(0.9)	–	(0.9)	–	(0.9)
; =*	–	–	–	–	–	(5.2)	(5.2)	–	(5.2)
: =*	–	–	–	–	–	3.9	3.9	–	3.9
: : 8	–	–	–	–	–	(21.8)	(21.8)	–	(21.8)
_ ?? * ?8	–	–	–	–	–	5.4	5.4	–	5.4
Effect of change in rate on deferred tax*	–	–	–	–	–	(0.3)	(0.3)	–	(0.3)
2 4+	–	–	–	–	(21.6)	(18.3)	(39.9)	0.3	(39.6)
\$	–	–	–	0.2	–	–	0.2	–	0.2
Purchase of non-controlling interest shareholdings	–	–	–	–	–	1.1	1.1	(1.1)	–
_ (	–	–	–	–	–	–	–	(0.1)	(0.1)
_ . ? \$	–	–	–	–	–	(4.4)	(4.4)	–	(4.4)
At 31 December 2011	59.1	447.0	0.3	1.2	11.2	187.7	706.5	1.0	707.5
#?:	–	–	–	–	–	26.3	26.3	0.3	26.6
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Exchange difference on retranslation of foreign
*	–	–	–	–	(6.2)	–	(6.2)	–	(6.2)
Exchange difference on retranslation of foreign
2 * and intangibles)	–	–	–	–	(5.2)	–	(5.2)	–	(5.2)
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* ? :	–	–	–	–	4.0	–	4.0	–	4.0

* ? :	–	–	–	–	(1.0)	–	(1.0)	–	(1.0)
; =*	–	–	–	–	–	(2.7)	(2.7)	–	(2.7)
: =* : : 8	– –	– –	– –	– –	– –	2.2 (0.2)	2.2 (0.2)	– –	2.2 (0.2)
_ ?? * ?8	–	–	–	–	–	0.2	0.2	–	0.2
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2012 ANALYSIS

	GBP		EUR		j/b		PLN		Total
	Ÿ!++?	x!++?	Ÿ!++?	x!++?	Ÿ!++?	x!++?	Ÿ!++?	x!++?	Ÿ!++?	x!++?
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
#?:	(0.1)	0.1(i)	(0.1)	0.1(iii)	–	–	0.1	(0.1)(v)	(0.1)	0.1
Other equity	5.1	(5.3)(ii)	0.3	(0.3)(iv)	(5.6)	5.8(ii)	–	–	(0.2)	0.2
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	Amortisation period
Customer relationships	Life of the relationship
Non-compete contracts	Life of the contract
Specific customer contracts	Life of the contract
Order books	Life of the order book
Computer software	Useful life of the software

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Sale of goods	2,635.5	2,808.4
Total revenue	2,635.5	2,808.4
Finance income	7.9	7.4
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SEGMENTAL INFORMATION

(A) SEGMENTAL RESULTS

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	j… [ £m	~ Europe £m	Eliminations £m	Total £m	UK and Ireland £m	Mainland Europe £m	Eliminations £m	Total £m
Revenue Continuing sales	1,171.9	1,436.7	–	2,608.6	1,201.0	1,512.5	–	2,713.5
and 2011 Inter-segment sales*	– 0.8	26.9 8.2	– (9.0)	26.9 –	63.6 0.6	31.3 5.5	– (6.1)	94.9 –
Total revenue	1,172.7	1,471.8	(9.0)	2,635.5	1,265.2	1,549.3	(6.1)	2,808.4
Result / ? <]	48.4	56.2	–	104.6	49.6	56.3	–	105.9
Amortisation of acquired intangibles and impairment charges Restructuring costs Other one-off items	(12.3) (8.6) 0.7	(9.7) (8.0) 0.7	– – –	(22.0) (16.6) 1.4	(15.1) (11.0) –	(20.5) (1.0) –	– – –	(35.6) (12.0) –
Net loss on sale of businesses and associated impairment charges € 24+ :	– –	(4.6) (1.2)	– –	(4.6) (1.2)	(22.7) 0.3	– (2.8)	– –	(22.7) (2.5)
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/ Parent Company costs	32.6	33.4	–	66.0 (8.1)	1.1	32.0	–	33.1 (7.5)
< ? : ?				57.9 (12.1)				25.6 (13.8)
: Share of loss of associate				(1.8) (0.3)				(4.2) (0.1)
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> ] Assets Segment assets	612.1	711.9	–	1,324.0	631.8	731.4	–	1,363.2
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	j… [ £m	~ Europe £m	Eliminations £m	Total £m	UK and Ireland £m	Mainland Europe £m	Eliminations £m	Total £m
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Segment liabilities % }	264.0	167.4	–	431.4	297.6	179.9	–	477.5
# _ ? : Other liabilities				256.0 10.6 12.0				265.2 10.5 8.5
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Other segment information Capital expenditure on: Property, plant and equipment ;* Non-cash expenditure: Depreciation Impairment of property, plant and equipment	18.3 0.2 11.2 1.0	14.0 6.2 12.4 –	– – – –	32.3 6.4 23.6 1.0	9.3 – 15.4 0.3	8.8 – 14.0 –	– – – –	18.1 – 29.4 0.3
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(B) REVENUE BY PRODUCT GROUP

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Insulation and Energy Management Exteriors Interiors	1,197.6 823.7 587.3	1,233.8 888.6 591.1
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(C) GEOGRAPHIC INFORMATION

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United Kingdom	1,108.4	276.3	1,123.7	285.3
Ireland	63.5	0.9	77.3	1.0
France	590.6	228.3	605.2	237.2
Germany and Austria	568.6	54.4	616.6	56.5
Poland	117.2	16.1	134.3	16.1
Benelux*	160.3	42.1	156.4	40.7
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	2,635.5	618.1	2,744.8	638.3
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	Before Other items £m	Other items £m	Total £m	Before Other items £m	Other items £m	Total £m
Cost of sales	1,927.4	21.8	1,949.2	2,016.4	65.4	2,081.8
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Social security costs	50.3	51.8
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– losses not recognised	0.6	1.4	2.0	26.7
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Net loss arising on the sale of businesses	4.6	–	–	22.7	4.6	20.3
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Restructuring costs	16.6	1.2	7.2	12.0	2.5	20.8
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{[_ \$ ` = ? '++'	average Options	]	Options	Weighted exercise price (p)
At 1 January Granted during the year Exercised during the year Lapsed during the year	3,149,341 1,689,804 (5,707) (577,862)	0.0 0.0 0.0 0.0	2,211,325 1,106,021 – (168,005)	0.0 0.0 0.0 0.0
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Risk free rate	4.5%	4.5%	716/	716/
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	Freehold £m	Short leasehold £m	Plant and machinery £m	Total £m
Cost
At 1 January 2011	90.3	37.9	235.7	363.9
Exchange difference	(2.2)	(0.9)	(5.0)	(8.1)
Additions	0.6	1.3	16.2	18.1
Disposals	(3.0)	(0.8)	(35.7)	(39.5)
At 31 December 2011	85.7	37.5	211.2	334.4
Exchange difference	(1.4)	(0.4)	(2.1)	(3.9)
Additions	1.2	2.8	28.3	32.3
Added on acquisition	0.1	–	1.2	1.3
Transferred to intangible assets (Note 14)	–	–	(18.5)	(18.5)
Disposals	(2.8)	(1.3)	(21.3)	(25.4)
Z (! b ? '+!'	82.8	38.6	198.8	320.2
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Charge for the year	1.7	2.7	25.0	29.4
Impairment charges	2.1	0.5	8.8	11.4
Exchange difference	(0.8)	(0.6)	(4.0)	(5.4)
Disposals	(0.2)	(0.6)	(23.2)	(24.0)
At 31 December 2011	19.6	19.0	153.1	191.7
Charge for the year	0.8	3.0	19.8	23.6
Impairment charges	0.7	0.2	0.1	1.0
Exchange difference	(0.5)	(0.3)	(1.5)	(2.3)
Added on acquisition	0.1	–	0.8	0.9
Transferred to intangible assets (Note 14)	–	–	(7.7)	(7.7)
Disposals	(1.0)	(0.9)	(19.3)	(21.2)
Z (! b ? '+!'	19.7	21.0	145.3	186.0
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11. INTEREST IN ASSOCIATE

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	£m	£m
Property, plant and equipment	1.2	1.6
Cash (less debt)	0.5	3.7
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	8.0	6.2
Trade and other payables	(5.5)	(6.0)
Net assets	6.4	7.4
Loss on disposal	(4.6)
Consideration less expenses	1.8
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Deferred consideration	0.3
Total consideration in respect of the sale	2.0
Less expenses	(0.2)
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Cash (less debt) disposed of	(0.5)
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Cost At 1 January 2011 Exchange difference Disposals	561.0 (9.3) (32.1)
At 31 December 2011	519.6
Exchange difference Acquisitions Disposals	(6.2) 2.9 (19.0)
Z (! b ? '+!'	497.3
Z At 1 January 2011 Impairment losses for the year Disposals Exchange difference	113.9 7.0 (32.1) (0.6)
At 31 December 2011	88.2
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Z (! b ? '+!'	68.6
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	2012	2011
	£m	£m
UK Distribution	106.0	106.0
UK Exteriors	80.8	80.8
'?"	160.5	165.2
Benelux	20.9	20.9
; ?:	18.5	19.0
Total	386.7	391.9
Other CGUs	42.0	39.5
\	428.7	431.4

14. INTANGIBLE ASSETS

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	£m	£m	£m	£m	£m	£m
Cost
At 1 January 2011	208.0	12.6	10.9	0.1	–	231.6
Disposals	(24.7)	(12.6)	–	(0.1)	–	(37.4)
Exchange difference	(1.1)	–	–	–	–	(1.1)
At 31 December 2011	182.2	–	10.9	–	–	193.1
Acquisitions	3.1	–	0.4	–	–	3.5
Disposals	(9.4)	–	(0.8)	–	–	(10.2)
Transferred in from property, plant and equipment (Note 10)	–	–	–	–	18.5	18.5
Exchange difference	(1.2)	–	–	–	–	(1.2)
Z (! b ? '+!'	174.7	–	10.5	–	18.5	203.7
Amortisation
At 1 January 2011	116.4	12.6	10.3	0.1	–	139.4
Charge for the year	24.0	–	0.6	–	–	24.6
Impairment losses for the year	4.0	–	–	–	–	4.0
Disposals	(24.7)	(12.6)	–	(0.1)	–	(37.4)
Exchange difference	(0.2)	–	–	–	–	(0.2)
At 31 December 2011	119.5	–	10.9	–	–	130.4
Charge for the year	22.0	–	–	–	–	22.0
Disposals	(9.4)	–	(0.8)	–	–	(10.2)
Transferred in from property, plant and equipment (Note 10)	–	–	–	–	7.7	7.7
Exchange difference	(0.6)	–	–	–	–	(0.6)
Z (! b ? '+!'	131.5	–	10.1	–	7.7	149.3
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Monteis Materiaux	/	10 October 2012	France	Distribution of structural insulation and dry lining products
Electrotech S.A.	/	6?	Belgium	Distribution of air conditioning and air handling products

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Property, plant and equipment " Net cash acquired Trade and other payables &? ~	0.4 1.8 1.2 1.9 (1.4) (0.1)
Net assets acquired	3.8
Intangible assets – customer relationships Intangible assets – non-compete clauses Deferred tax liability on acquired intangible assets ;*	3.1 0.4 (1.0) 2.9
\ ]	9.2
} \$2 4 Net cash acquired	9.2 (1.9)
\ ]	7.3
Settlement of deferred consideration in respect of prior period acquisitions	5.4
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16. INVENTORIES

	2012	2011
	£m	£m
*	3.3	3.4
Work in progress	0.3	0.3
Finished goods and goods for resale	220.4	219.7
	224.0	223.4

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	£m	£m
	352.9	366.6
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€	4.4	7.9
Prepayments and accrued income	15.2	14.6
\ ] =?	373.3	392.2
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	£m	£m
Neither past due nor renegotiated	211.1	242.9
Renegotiated	0.4	–
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1–30 days	89.1	77.4
31–60 days	26.3	24.0
61–90 days	7.2	2.8
91–120 days	1.8	1.5
121–180 days	1.3	1.3
180+ days	1.4	0.7
	127.1	107.7
\ =? ]] = ]? ?	338.6	350.6

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Utilised	9.1	10.1
Disposals	1.8	0.4
Added on acquisition	(0.8)	–
Charged to the Consolidated Income Statement	(8.7)	(8.1)
Exchange differences	0.4	1.0
Z (! b ?	(29.3)	(31.1)

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	2012 £m	2011 £m
Trade payables	204.7	212.8
Bills of exchange payable	13.6	11.8
VAT	14.6	19.0
Social security and payroll taxes	14.4	15.0
Accruals and deferred income	85.7	83.7
\ ] ?	333.0	342.3
€ ?: ? 2? 64	2.2	1.8
-	4.1	4.0
Bank loans	1.3	2.9
#	81.8	–
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Deferred consideration	–	5.4
Current tax liabilities	4.4	7.7
#?2? 34	9.3	14.6
?	441.9	378.7

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19. NON-CURRENT LIABILITIES

	2012	2011
	£m	£m
€ ?: ? 2? 64}
† ? * *	2.7	1.9
† ? ** :	2.1	3.1
† ?:	0.6	0.5
Bank loans	0.1	0.2
#	174.2	265.2
_ ? :	4.8	10.5
Deferred tax liabilities (Note 24)	17.3	20.8
Other payables	3.0	5.0
: 2? 34	34.4	44.5
#?2? 34	28.9	31.3
` x ?	268.1	383.0

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Total	0.1	0.2

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				Fixed
		interest		interest
		rate		rate
	£m	%	£m	/
Repayable in 2013*	81.8	5.0%	85.3	61/
Repayable in 2016	149.5	5.8%	155.5	61{/
Repayable in 2018	24.7	4.7%	24.4	71{/
Total	256.0	5.5%	265.2	616/

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Cash at bank (including cash deposits repayable on demand)	128.1	126.9
Associate loan and deferred consideration	2.7	–
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Total	174.4	179.6

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#	Sterling	143.7	37.1	106.6	4.1%	4.8	–	143.7
#	Euro	79.3	46.9	32.4	4.7%	0.8	–	79.3
€ ???*	Euro	5.4	5.1	0.3	4.6%	1.4	2.0	3.4
Finance lease contracts	Euro	6.8	–	6.8	5.8%	4.2	6.8	–
€ ???*	PLN	0.1	0.1	–	`ƒZ \|`ƒZ	0.1	–
Finance lease contracts	PLN	0.8	–	0.8	7.3%	3.9	0.8	–
Total		236.1	89.2	146.9			9.7	226.4

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#	Sterling	139.5	14.4	125.1	713/	4.9	–	139.5
#	Euro	83.5	50.3	33.2	716/	1.8	–	83.5
€ ???*	Euro	11.8	11.2	0.6	61/	1.6	4.3	7.5
Finance lease contracts	Euro	6.9	–	6.9	51/	3.2	6.9	–
€ ???*	PLN	0.3	0.3	–	N/A	N/A	0.3	–
Finance lease contracts	PLN	0.4	–	0.4	017/	5.0	0.4	–
€ ???*	HUF	0.4	0.4	–	N/A	N/A	0.4	–
Total		242.8	76.6	166.2			12.3	230.5

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&? +24 ? : ? ? \$ "	0.6	(1.1)
&? 24+ ? ? \$ "	(0.6)	1.1
` ? \$ "	(0.4)	0.3
* =*	2.2	3.9
\ == ] [ /	1.8	4.2

NOTES TO THE ACCOUNTS CONTINUED

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	2012	2011
	£m	£m
In one year or less	89.0	14.1
"? ? ? *	2.8	85.6
"? * ? ? :	118.8	118.7
"? :	25.5	24.4
Total	236.1	242.8

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	2012	2011
	£m	£m
) * ? ? :		250.0
Total	250.0	250.0

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2012 ANALYSIS

	Maturity analysis
	Balance
	£m	< 1 year £m	1–2 years £m	2–5 years £m	> 5 years £m	Total £m

?
Trade and other payables	333.0	333.0	–	–	–	333.0
€ ?:	2.2	2.4	–	–	–	2.4
-	4.1	4.1	–	–	–	4.1
Bank loans	1.3	1.3	–	–	–	1.3
#	81.8	85.3	–	–	–	85.3
_ ? : ? 9	5.8	39.9	–	–	–	39.9
Total	428.2	466.0	–	–	–	466.0
` x ?
€ ?:	5.4	0.5	2.9	2.1	0.7	6.2
Bank loans	0.1	–	0.1	0.1	–	0.2
#	174.2	9.9	9.9	165.6	21.1	206.5
_ ? :	4.8	1.2	1.1	3.4	0.7	6.4
Total	184.5	11.6	14.0	171.2	22.5	219.3
\ ?	612.7	477.6	14.0	171.2	22.5	685.3
Other
_ ? :	(43.6)	(11.2)	(6.9)	(26.4)	(0.7)	(45.2)
Associate loan and deferred consideration	(2.7)	(2.7)	–	–	–	(2.7)
\$ .	(128.1)	(128.1)	–	–	–	(128.1)
_ ? : ? 9	–	(28.3)	–	–	–	(28.3)
Total	(174.4)	(170.3)	(6.9)	(26.4)	(0.7)	(204.3)
	438.3	307.3	7.1	144.8	21.8	481.0

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		Maturity analysis
	Balance
		< 1 year	1–2 years	2–5 years	> 5 years	Total
	£m	£m	£m	£m	£m	£m
?
Trade and other payables	342.3	342.3	–	–	–	342.3
€ ?:	1.8	2.0	–	–	–	2.0
-	4.0	4.0	–	–	–	4.0
Bank loans	2.9	3.0	–	–	–	3.0
Deferred consideration	5.4	5.4	–	–	–	5.4
Total	356.4	356.7	–	–	–	356.7
` x ?
€ ?:	5.5	0.7	2.3	3.2	0.6	6.8
Bank loans	0.2	–	0.1	0.1	–	0.2
#	265.2	14.5	96.2	181.1	22.1	313.9
_ ? : ? 9	10.5	2.4	35.7	2.5	1.3	41.9
Total	281.4	17.6	134.3	186.9	24.0	362.8
\ ?	637.8	374.3	134.3	186.9	24.0	719.5
Other
_ ? :	(52.7)	(6.6)	(11.5)	(35.7)	(1.3)	(55.1)
\$ .	(126.9)	(126.9)	–	–	–	(126.9)
_ ? : ? 9	–	(1.6)	(28.3)	–	–	(29.9)
Total	(179.6)	(135.1)	(39.8)	(35.7)	(1.3)	(211.9)
	458.2	239.2	94.5	151.2	22.7	507.6

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2012 ANALYSIS

	GBP		EUR		j/b		PLN		Total
	Ÿ!++?	x!++?	Ÿ!++?	x!++?	Ÿ!++?	x!++?	Ÿ!++?	x!++?	Ÿ!++?	x!++?
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
#?:	(0.1)	0.1(i)	(0.1)	0.1(iii)	–	–	0.1	(0.1)(v)	(0.1)	0.1
Other equity	5.1	(5.3)(ii)	0.3	(0.3)(iv)	(5.6)	5.8(ii)	–	–	(0.2)	0.2
\ /] ] } Q	5.0	(5.2)	0.2	(0.2)	(5.6)	5.8	0.1	(0.1)	(0.3)	0.3

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2011 ANALYSIS

	GBP		EUR		USD		PLN		Total
	+100bp	-100bp	+100bp	-100bp	+100bp	-100bp	+100bp	-100bp	+100bp	-100bp
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
#?:	(0.2)	0.2(i)	(0.1)	0.1(iii)	–	–	–	–	(0.3)	0.3
Other equity	6.2	(6.6)(ii)	0.6	(0.6)24	(7.5)	7.9(ii)	–	–	(0.7)	0.7
\ /] ] } Q	6.0	(6.4)	0.5	(0.5)	(7.5)	7.9	–	–	(1.0)	1.0

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	EUR		j/b		PLN		CZK		Total
	+10%	-10%	+10%	-10%	+10%	-10%	+10%	-10%	+10%	-10%
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Z ? ] [ / \$
#?:	0.4	(0.5)(i)	–	–(v)	–	–(v)	–	–	0.4	(0.5)
Other equity	1.4	(0.9)(iii)	(2.6)	3.1(ii)	(1.4)	1.7(ii)	–	–	(2.6)	3.9
\ /] ] } Q	1.8	(1.4)	(2.6)	3.1	(1.4)	1.7	–	–	(2.2)	3.4
\ ? "
#?:	(3.5)	2.4(iii)	–	–	–	–(vi)	–	–(vi)	(3.5)	2.4
Other equity	(29.7)	39.0(iv)	(2.6)	2.5(ii)	(3.6)	4.4(iv)	–	–	(35.9)	45.9
\ /] ] } Q	(33.2)	41.4	(2.6)	2.5	(3.6)	4.4	–	–	(39.4)	48.3
2011 ANALYSIS
	EUR		USD		PLN		\$",		Total

	«/ £m	(/	«/	(/	«/	(/	«/	(/	«/	(/
		£m	£m	£m	£m	£m	£m	£m	£m	£m
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#?:	0.4	(0.5)(i)	–	–24	–	–24	–	–24	0.4	(0.5)
Other equity	1.9	(1.6)(ii)	(3.0)	3.7(ii)	(1.2)	1.4(ii)	(0.3)	0.4(ii)	(2.6)	3.9
\ /] ] } Q	2.3	(2.1)	(3.0)	3.7	(1.2)	1.4	(0.3)	0.4	(2.2)	3.4
\ ? "
#?:	(3.3)	2.5(iii)	–	–	(0.1)	0.124	0.1	(0.3)24	(3.3)	2.3
Other equity	(30.2)	39.224	(3.0)	3.7(ii)	(3.3)	4.124	(0.4)	1.224	(36.9)	48.2
\ /] ] } Q	(33.5)	41.7	(3.0)	3.7	(3.4)	4.2	(0.3)	0.9	(40.2)	50.5

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	Onerous leases £m	{ ] £m	Contingent £m	Other amounts £m	Total £m
At 1 January 2012	22.9	16.5	0.2	6.3	45.9
%	(2.1)	(0.9)	–	(0.7)	(3.7)
Utilised	(8.0)	(1.6)	–	(0.6)	(10.2)
? *	4.3	0.2	0.1	0.8	5.4
Transferred from accruals	1.8	0.2	–	0.1	2.1
Disposed	(0.4)	–	–	(0.7)	(1.1)
Exchange difference	(0.1)	–	–	(0.1)	(0.2)
Z (! b ? '+!'	18.4	14.4	0.3	5.1	38.2

	2012 £m	2011 £m
Included in current liabilities Included in non-current liabilities	9.3 28.9	14.6 31.3
Total	38.2	45.9

ONEROUS LEASES

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Deferred tax assets	29.0	35.7
Deferred tax liabilities	(17.3)	(20.8)
`	11.7	14.9

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Z (! b ? '+!'	(9.9)	4.4	10.7	8.3	0.8	(2.6)	11.7
Change of rate	–	–	–	(0.8)	–	–	(0.8)
*	–	–	(1.1)	1.5	–	(0.4)	–
Exchange difference	–	0.1	–	–	–	0.1	0.2
Added on acquisition	(1.0)	–	–	–	–	–	(1.0)
Credit/(charge) to equity	–	–	–	0.2	–	(0.2)	–
Credit/(charge) to income	5.1	(3.2)	(0.4)	(2.3)	0.3	(1.1)	(1.6)
At 31 December 2011	(14.0)	7.5	12.2	9.7	0.5	(1.0)	14.9
Change of rate	–	–	–	(0.3)	–	–	(0.3)
Exchange difference	–	0.1	(0.3)	–	(0.1)	0.1	(0.2)
Credit to equity	–	–	–	5.4	–	–	5.4
Credit/(charge) to income	7.8	3.1	(1.1)	(0.8)	(0.6)	(0.6)	7.8
At 31 December 2010	(21.8)	4.3	13.6	5.4	1.2	(0.5)	2.2
	£m	£m	£m	£m	£m	£m	£m
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	2012 £m	2011 £m	2012 £m	2011 £m
: ? } †* † ? ?* : † ?:	2.4 5.5 0.7	2.0 6.0 0.6	2.2 4.8 0.6	1.8 5.0 0.5
	8.6	8.6	7.6	7.3
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			Number of shares				Exercise dates
Scheme and date of grant	At 31 December 2011	Granted	Exercised	Lapsed	At (! b ? 2012	Option price per 10p share	Date from * may be exercised	Date on * expires
b Z > /]
19/04/2005	5,184	–	(2,389)	(2,795)	–	0.0p	16/04/2008	18/04/2015
16/09/2009	34,730	–	–	(34,730)	–	0.0p	16/09/2012	15/09/2019
{ \ [ = _
19/04/2005	5,707	–	(5,707)	–	–	0.0p	19/04/2008	18/04/2012
15/09/2009	577,862	–	–	(577,862)	–	0.0p	15/09/2012	14/09/2019
07/06/2010	1,459,751	–	–	–	1,459,751	0.0p	07/06/2013	06/06/2020
27/04/2011	1,106,021	–	–	–	1,106,021	0.0p	27/04/2014	26/04/2021
26/04/2012	–	1,504,136	–	–	1,504,136	0.0p	26/04/2015	25/04/2022
03/10/2012	–	185,668	–	–	185,668	0.0p	03/10/2015	02/10/2022
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11/04/2003	41,159	–	–	(26,289)	14,870	169.7p	11/04/2006	10/04/2013
/= /]
20/10/2010	514,273	–	–	(39,036)	475,237	95.0p	01/12/2013	30/06/2015
Total	3,744,687	1,689,804	(8,096)	(680,712)	4,745,683

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	2012 £m	2011 £m
€ :	57.9	25.6
Depreciation (Note 10)	23.6	29.4
Impairment of property, plant and equipment (Note 10)	1.0	0.3
" * %," ??>	–	21.1
Net loss arising on the sale of businesses (Note 12)	4.6	1.6
Amortisation of acquired intangibles (Note 14)	22.0	24.6
;*	–	11.0
#?: ! .	(1.1)	(0.1)
Share-based payments	(0.2)	0.2
^ }
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_ ? +2? 4	4.0	(33.7)
(Decrease)/increase in payables	(19.1)	25.9
] =	88.7	96.1

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NOTES TO THE ACCOUNTS CONTINUED

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	2012 £m	2011 £m
"? +2 ? 4 .	2.0	(1.1)
\$=*? ? 8	6.2	81.3
_ ? ? ?=*	8.2	80.2
Non-cash items^	0.8	(12.2)
Exchange difference	3.2	1.1
Decrease in net debt in the year	10.6	69.1
Net debt at 1 January	(115.9)	(185.0)
` ? (! b ?	(105.3)	(115.9)

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	At 31 December 2011 £m	Cash =* £m	Non-cash items^ £m	Exchange (! b difference £m	At ? 2012 £m
\$ . - & † ? : Associate loan and deferred consideration	126.9 (4.0)	2.2 (0.2)	– –	(1.0) 0.1	128.1 (4.1)
	122.9	2.0	–	(0.9)	124.0
_ * Debts due after one year Finance lease contracts	52.7 – (8.3) (275.9) (7.3)	– 1.2 5.4 – (0.4)	(9.1) 1.5 (87.8) 94.6 –	– – 1.8 2.2 0.1	43.6 2.7 (88.9) (179.1) (7.6)
` ?	(115.9)	8.2	(0.8)	3.2	(105.3)

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(A) CAPITAL COMMITMENTS
	2012 £m	2011 £m
\$	9.8	1.5

(B) LEASE COMMITMENTS

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	2012	2011
	£m	£m
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†*	45.1	48.4
† ? ?* :	123.9	136.4
† ?:	85.4	86.2
	254.4	271.0

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	36.2	31.6

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Pension liability before taxation Related deferred tax asset	(34.4) 8.3	(44.5) 9.7
	2012 £m	2011 £m

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	£m	£m
Pension liability at 1 January	(44.5)	(25.2)
\$	(2.1)	(2.2)
Curtailment gain	4.4	–
Contributions	8.5	4.9
? :	(0.5)	(0.4)
Actuarial loss	(0.2)	(21.8)
Exchange difference	–	0.2
_ ? (!b ?	(34.4)	(44.5)

NOTES TO THE ACCOUNTS CONTINUED

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	2012	2011	2010
	%	/	/
Rate of increase in salaries	2.5	3.5	3.9
:	2.5	3.5	3.9
Rate of increase of LPI pensions in payment	2.9	3.0	3.4
Discount rate	4.5	4.7	5.4
"=	2.9	3.0	3.4

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	2012 %	2012 £m	2011 /	2011 £m	2010 /	2010 £m	2009 /	2009 £m	2008 /	2008 £m
Equities Bonds Other	7.3 4.2 6.4	57.8 44.6 14.8	7.0 4.1 5.7	50.3 40.4 9.5	7.2 5.0 5.2	55.0 37.0 6.2	7.5 5.3 N/A	50.7 36.7 –	6.4 5.2 N/A	40.3 34.3 –
# scheme liabilities		117.2 (151.6)		100.2 (144.7)		98.2 (123.4)		87.4 (111.4)		74.6 (93.7)
_ : Related deferred tax asset		(34.4) 8.3		(44.5) 9.7		(25.2) 5.4		(24.0) 5.3		(19.1) 3.9
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Finance income – expected return on pension scheme assets Finance costs – interest on pension scheme liabilities	6.0 (6.5)	6.0 (6.4)
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Actual return less expected return on assets	6.4	(4.4)
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FIVE YEAR SUMMARY

				Continuing operations^
	2008	2009	2010	2011	2012
	£m	£m	£m	£m	£m
	3,032.7	2,723.1	2,668.0	2,713.5	2,608.6
% ?8 :	169.8	80.9	76.1	98.4	96.5
€ : +24	107.0	(32.5)	(54.6)	25.6	57.9
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#?: +24	6.8	(45.1)	(76.8)	(0.0)	26.6
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Earnings/(loss) per share	3.8p	(9.7p)	(13.0p)	(0.0p)	4.5p
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121 COMPANY BALANCE SHEET
122 STATEMENT OF SIGNIFICANT
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127 INDEPENDENT AUDITOR'S REPORT

COMPANY BALANCE SHEET AS AT 31 DECEMBER 2012

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Note	£m	£m

" 5	451.9	451.9
Interest in associate 6	1.6	1.6
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Current assets
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Debtors – due after more than one year 8	669.1	746.1
Associate loan 8	2.4	–
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	847.1	843.1
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\ ?	1,103.0	1,070.7
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Principal addresses

SIG plc CORPORATE OFFICE

Signet House 17 Europa View Sheffield Business Park Sheffield S9 1XH

REGISTERED OFFICE Hillsborough Works Langsett Road Sheffield S6 2LW

REGISTERED NUMBER

Registered in England 998314

UNITED KINGDOM

SIG TRADING LIMITED, CURRENTLY TRADING AS:

SIG INSULATIONS Hillsborough Works Langsett Road Sheffield S6 2LW

SIG ROOFING SUPPLIES Harding Way St Ives Cambridge PE27 3YJ

CARPET AND FLOORING Arrow Valley Claybrook Drive Redditch

B98 0FY

SPECIALIST CONSTRUCTION PRODUCTS Hillsborough Works Langsett Road Sheffield S6 2LW

CPD DISTRIBUTION

Hillsborough Works Langsett Road Sheffield S6 2LW

A STEADMAN & SON Warnell Welton

Carlisle Cumbria CA5 7HH

SIG ENERGY MANAGEMENT Limited Unit 6 Park Square

Thorncliffe Park Chapeltown Sheffield S35 2PH

IRELAND

SIG BUILDING PRODUCTS LIMITED

42 O'Casey Avenue Parkwest Industrial Estate Nangor Road Dublin 12 Ireland

INSULATION DISTRIBUTIONS LIMITED

42 O'Casey Avenue Parkwest Industrial Estate Nangor Road Dublin 12 Ireland

MAINLAND EUROPE

WEGO SYSTEMBAUSTOFFE GMBH

Maybachstrasse 14 D-63456 Hanau-Steinheim Germany

OUEST ISOL SAS Zone Industrielle de la Rangle 27460 Alizay France

MELLE DACHBAUSTOFFE

GMBH An der unteren Söse 36 37520 Osterode Germany

LITT DIFFUSION SAS 8–16 Rue Paul Vaillant Couturier 92240 Malakoff France

SIG SP. Z O.O. ul. Kamienskiego 51 30-644 Krakow Poland

LARIVIÈRE SAS 36 bis rue Delaâge 49004 Angers Cédex 01 France

SIG NEDERLAND B.V.

Bedrijfsweg 15 5061 JX Oisterwijk The Netherlands

AIR TRADE CENTRE INTERNATIONAL B.V.

Eerste Tochtweg 11 2913 LN Nieuwerlerl ad/Ijssel The Netherlands

PRINCIPAL TRADING SUBSIDIARIES

The Company's principal trading subsidiaries, all of which are wholly owned, are currently as follows:
	Insulation and Energy Management	Exteriors	Interiors
United Kingdom SIG Trading Limited SIG Energy Management Limited
Ireland SIG Building Products Limited Insulation Distributors Limited
Germany WeGo Systembaustoffe GmbH Melle Dachbaustoffe GmbH
France Société de l'Ouest des Produits Isolants SAS LITT Diffusion SAS Larivière SAS
Benelux SIG Nederland B.V. SIG Melderste Plafonneerartikelen N.V. Air Trade Centre Belgium N.V.
Poland SIG Sp. z o.o.

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SIG PLC — Annual Report 2012

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ANNUAL REPORT AND ACCOUNTS 2012

SIG PLC IS A LEADING SPECIALIST DISTRIBUTOR OF INSULATION AND ENERGY MANAGEMENT, EXTERIORS AND INTERIORS PRODUCTS FOR THE EUROPEAN CONSTRUCTION AND RELATED MARKETS

SHAREHOLDER VALUE BUILT ON FIVE STRATEGIC PILLARS

KEY PERFORMANCE INDICATORS

Operational --

-

REVIEW OF THE YEAR

CORPORATE GOVERNANCE

GROUP ACCOUNTS

PRINCIPAL TRADING INFORMATION

We have an online report

OUR PRODUCTS

OVERVIEW

INSULATION AND ENERGY MANAGEMENT

EXTERIORS

INTERIORS

INSULATION AND ENERGY MANAGEMENT

CONTINUING REVENUE

!"!#\$% 45.9%

NUMBER OF TRADING SITES

OUR PRODUCTS CONTINUED

EXTERIORS

CONTINUING REVENUE

PRODUCTS

INTERIORS

CONTINUING REVENUE

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CHAIRMAN'S STATEMENT

PROGRESS IN CHALLENGING MARKETS

LESLIE VAN DE WALLE CHAIRMAN

HIGHLIGHTS

SUMMARY OF 2012

Importantly, the Group increased its post-tax return on capital employed by 70bps to 8.6%, meeting its key objective of exceeding its weighted average cost of capital in 2012, which was 8.2%.

STRATEGY

BOARD

CORPORATE GOVERNANCE

EMPLOYEES

DIVIDENDS

OUTLOOK

BUSINESS REVIEW

LEADING POSITIONS IN OUR CORE MARKETS

STUART MITCHELL CHIEF EXECUTIVE DOUG ROBERTSON FINANCE DIRECTOR

INTRODUCTION

SIG'S MARKET SECTORS AND BRANCHES

GLOSSARY OF TERMS

The Group's strategy is to develop and grow in its three core markets by combining the reputational strengths of its local brands - --

STRATEGY

KEY OBJECTIVES

DEVELOPMENT OF OUR PEOPLE

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BUSINESS REVIEW CONTINUED

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OUR PRODUCTS

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INSULATION AND ENERGY MANAGEMENT

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SIG'S ROLE IN THE SUPPLY CHAIN

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WHERE WE OPERATE

UK AND IRELAND

MAINLAND EUROPE

DEMAND DRIVERS

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Insulation and Energy Management

Exteriors Interiors

BUSINESS REVIEW CONTINUED ,)#)&>-?\$)"?_"\$-

Like for like constant currency sales growth

SIG PLC Annual Report 2012

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