Trading Update

Monday 12 January 2004 SIG plc, the leading supplier of insulation, roofing and interior products, issues the following trading update in advance of the preliminary results for the twelve months to 31 December 2003 which will be announced on Tuesday 9 March 2004.

Key Points

• The Group has made encouraging progress in 2003 and expects to report profits ahead of both 2002 and market expectations at both operating and pre-tax levels.

• Record sales achieved in excess of £1,260m, an increase of 9% on prior year.

• All businesses and countries traded profitably with the exception of our small Polish business.

• Improvements in the management of working capital and the strong operational cash flow enabled gearing to be reduced substantially compared with prior year.

UK and Republic of Ireland (c.65% of Group Sales)

Total sales in our largest geographic region increased by approximately 10% over 2002 and operating profits were increased. Sales increased in all business streams other than Interiors, where a small reduction occurred. Insulation sales continued to benefit from the upswing in market demand driven by the recently revised Building Regulations. In Roofing, increased geographic coverage and new product introductions enabled market share to be gained. Sales were also increased over prior year in the Safety Products and the Construction Specialities divisions.

Mainland Europe (c.30% of Group Sales)

Sales in mainland Europe were up approximately 2% in local currency, and over 10% in sterling. Increased sales were achieved in France, Benelux and Poland in local currency. In Germany, sales were held in local currency despite reduced market demand and the loss of sales in 2003 resulting from the closure of six loss making branches at the end of 2002. Operating profits have increased in mainland Europe both in local currencies and in sterling.

USA (c.5% of Group Sales)

The small reduction in sales in local currency (c.2%) was compounded by the weakened dollar and the sales decline in sterling was approximately 10% compared with 2002. Whilst costs have been cut, the reduced volume caused by weak demand in the petro-chem industries resulted in a decline in operating profit in both dollars and sterling.

Acquisitions

During the year, the Group completed five small acquisitions. Each has fitted well into the existing operations and is performing in line with expectations.

Outlook

Overall conditions in the core building and construction markets in the UK and Republic of Ireland are expected to remain broadly positive. Whilst demand in the premium interiors sector is not expected to improve in the near term, further benefit is anticipated from the increasing impact of both thermal and acoustic Building Regulations. The Group continues to view the Roofing market in the UK positively.

Conditions overall in mainland Europe are expected to remain broadly similar to 2003, with the possibility of some improvement in Poland.

In the USA, some improvement in demand from the core industrial and petro-chem markets is expected.

Against the background of these mixed conditions, the Group is focused on continued expansion and growth. The strength of the balance sheet will enable the Group to take advantage of new opportunities that may arise. Investments are planned during 2004 to increase the number of trading sites and to increase significantly the capacity in several existing locations. Whilst this expansion is expected to have only a modest impact on profits in 2004, it will further strengthen our ability to meet customer requirements and continue the growth of the Company going forward.