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SIG to sell loss-making modular business to Urban Splash for £1
FTSE 250 building products distributor SIG has agreed to sell its loss-making modular offsite construction business, Building Systems, to residential housing developer Urban Splash for £1.
SIG said the divestment is part of the ongoing management of its portfolio and is in line with the strategy set out by the new management team last November. Following the closure of bathroom pods and utility cupboards manufacturer Metechno in 2017 and the closing of the divestment announced on Wednesday, RoofSpace, a panelised room-in-roof manufacturer serving the UK new build residential market, will be the company's only remaining offsite construction business.
In the year to the end of December 2016, Building Systems reported sales of £9.2m and made a pre-tax loss of £5.7m.
SIG will incur cash costs of £4.9m over the period to 31 March 2020, which will be funded from its existing resources. It also expects to incur an associated exceptional charge in 2017 of around £7.9m relating to the divestment.
The company has also sold GRM, a small manufacturer of phenolic pipe insulation serving UK industrial and HVAC markets, to a subsidiary of Kingspan for an undisclosed sum.
SIG said it had not assumed any net contribution from these businesses in 2017 so overall expectations for underlying group profitability for 2017 and beyond remain unchanged.
At 0925 GMT, the shares were down 2.4% to 143.70p.