Although 2016 was a disappointing year for SIG, significant potential remains. While we have been pursuing the right strategic direction, implementation has proved challenging.
A new management team is therefore refocusing the business on its customers and sales growth, which has traditionally been one of the Group's core strengths.
With these changes already bringing tangible benefits to SIG, we look forward to a more stable performance in 2017.
Our strategy is to grow in our three core markets of Insulation and Energy Management, Exteriors, and Interiors by combining the reputational strengths of SIG's local brands with the scale efficiencies and know-how of a multinational group.
Furthermore, by working together more as a Group, and by leveraging its scale and presence in the marketplace, our aim is to make our whole greater than the sum of the parts.
However, while enacting this strategy, we recognise the need to balance business change with the day-to-day operations of the Group, and ensure that we remain focused on our customers.
Leverage reduction is also a key priority as we look to return to our 1.0 – 1.5x target range over the medium term.
Governance and Board
As Chairman I am responsible for ensuring good corporate governance and that we continually aspire to meet the highest standards possible at SIG. We continue to meet all of the disclosure requirements and continue to closely monitor developments, adopting best practice in corporate governance. Further details can be found in the Corporate Governance Report.
Doug Robertson retired from the Board as Group Finance Director with effect from 31 January 2017, and was succeeded by Nick Maddock with effect from 1 February 2017.
Stuart Mitchell stepped down from the Board as Chief Executive by mutual agreement on 11 November 2016. Mel Ewell, a Non-Executive Director, was appointed as Interim Chief Executive from 11 November 2016 on a full-time basis whilst the Board conducted an external search for a new Chief Executive. This search has now concluded, and I am pleased to report that Meinie Oldersma has agreed to join SIG as Group Chief Executive from April. Meinie has over 30 years of distribution experience and will bring his considerable and relevant experience and a strong customer focus to SIG. He has lived and worked in a number of locations throughout Europe and has driven successful transformations of complexity and scale in a variety of organisations. He has a track record of driving sales, as well as turning around and growing businesses. Together with the appointment of Nick Maddock as Chief Financial Officer, this completes the recruitment of the executive team to take the business forward.
Ian Duncan was appointed as a Non-Executive Director with effect from 1 January 2017. Jonathan Nicholls will retire from the Board on 31 March 2017 as a Non-Executive Director and Chair of the Audit Committee. Ian will succeed Jonathan as Chair of the Audit Committee.
On behalf of the Board, I would like to welcome Meinie, Nick and Ian, and I would like to thank Stuart, Jonathan and Doug for their contribution, commitment and service to SIG and wish them well for the future.
As part of the Board succession plan, the Nominations Committee has reviewed the positions of Chris Geoghegan and Janet Ashdown. Having noted their significant experience, the Committee concluded that they be invited to serve for a further term of office until the May 2018 AGM.
On behalf of the Board and Shareholders I would like to thank our employees for their hard work, commitment and dedication to the business during the year.
The Board has proposed that the final dividend be rebased to 1.83p per ordinary share reflecting the Group's lower level of profitability, but still in line with its dividend policy of 2 – 3x earnings cover.
Taken together with the interim dividend of 1.83p per ordinary share, this provides a total dividend of 3.66p per ordinary share for the year (2015: 4.60p).
Leslie Van de Walle