Slide 1: Polypipe Group plc Full Year Results 2019
Polypipe Group plc Full Year Results 2019 17 March 2020
Slide 2: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 MARKET CONTEXT 4 BUSINESS REVIEW 5 STRATEGY 6 SUMMARY & OUTLOOK
Slide 3: Highlights
Highlights ▪ Continued to deliver on Group strategy ▪ Revenue 3.3% higher in an uncertain environment ▪ Further progress on underlying operating margin - 30bps higher ▪ Underlying basic earnings per share 4.2% higher ▪ Alderburgh acquired in October 2019 and performing in line with expectations ▪ Im
Slide 4: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 MARKET CONTEXT 4 BUSINESS REVIEW 5 STRATEGY 6 SUMMARY & OUTLOOK
Slide 5: Financial highlights
Financial highlights ▪ Revenue growth of 3.3% despite challenging trading conditions ▪ Underlying operating profit and underlying profit before tax both 5.5% higher ▪ Underlying operating margin up 30 basis points to 17.4% ▪ Underlying basic earnings per share 4.2% higher ▪ Underlying operational ca
Slide 6: Revenue and underlying operating profit bridge
Revenue and underlying operating profit bridge Revenue (£m) ++12.0 -0.1 -18.6 +21.1 - ▪ Price increase achieved circa 3% 447.6 ▪ Currency effect negligible with 433.2 445.1 433.2 426.5 426.5 90% UK revenues ▪ Organic volume drop through 2018 Selling price Currency Organic Acquisitions IFRS16 2019 lo
Slide 7: 2019 underlying results summary – continuing operations
2019 underlying results summary – continuing operations £m 2019 2018 Change Change Revenue 447.6 433.2 14.4 3.3% Cost of sales (255.2) (251.8) (3.4) 1.4% Gross profit 192.4 181.4 11.0 6.1% Gross margin 43.0% 41.9% +110bps - Selling, distribution and administration costs (114.3) (107.4) (6.9) 6.4% Un
Slide 8: 2019 statutory results
2019 statutory results £m 2019 2018 Underlying profit after tax 58.9 56.6 Non-underlying items: - Amortisation of intangible assets (7.5) (5.9) - Acquisition costs (2.4) (2.0) - Contingent consideration on acquisitions (0.8) (0.3) - Unamortised debt issue costs written off - (0.6) - Loss on disposal
Slide 9: Balance sheet summary
Balance sheet summary 2019 Alderburgh 2019 Change £m As reported acquisition (excl. acquisition) 2018 (excl. acquisition) Non-current assets ▪ property, plant and equipment 125.8 5.9 119.9 118.4 1.5 ▪ Right of use assets 14.8 0.1 14.7 - 14.7 ▪ goodwill 345.6 2.6 343.0 343.0 - ▪ other intangible asse
Slide 10: Net working capital
Net working capital 2019 Alderburgh 2019 Change £m As reported acquisition (excl. acquisition) 2018 (excl. acquisition) Inventories 59.7 1.0 58.7 58.1 0.6 Trade and other receivables 40.8 3.2 37.6 37.4 0.2 Trade and other payables (97.5) (3.3) (94.2) (99.6) 5.4 Net working capital 3.0 0.9 2.1 (4.1)
Slide 11: Cash flows
Cash flows £m 2019 2018 Change EBITDA (before non-underlying items) 95.5 89.6 5.9 Capital expenditure (22.3) (24.1) 1.8 Proceeds from disposals of property, plant and equipment 4.3 0.9 3.4 Movement in net working capital (5.9) 3.8 (9.7) Share-based payments 1.2 1.0 0.2 Operating cash flows after cap
Slide 12: Consistently strong cash conversion
Consistently strong cash conversion ▪ Cash conversion* typically over 90% ▪ 2017 temporarily impacted by the need to stock build after pre-price increase pull- forward demand at the end of 2016 102% 97% 96% 93% 79% * Operating cash flows after capital expenditure as a percentage of underlying operat
Slide 13: Banking facilities
Banking facilities Headroom at 31 December 2019: Drawn as at 31 £m December 2019 Facility Headroom Bank loan 199.0 300.0 101.0 Cash and cash equivalents (47.7) - 47.7 Net debt excluding unamortised debt issue costs 151.3 148.7 Unamortised debt issue costs (1.3) Net debt including unamortised debt is
Slide 14: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 MARKET CONTEXT 4 BUSINESS REVIEW 5 STRATEGY 6 SUMMARY & OUTLOOK
Slide 15: Demand Drivers
Demand Drivers Dec-2019 LTM demand drivers 5% 5% ▪ 90% revenue derived from UK market 5% 10% 27% ▪ Balanced exposure to different segments of UK Construction market 20% ▪ Gives resilience through the cycle UK Int'l UK 90% 90% 38% Revenue % split UK RMI UK New Build UK Commercial UK Infra Europe RoW
Slide 16: UK Construction Market – Residential New Build
UK Construction Market – Residential New Build New House Build %Y/Y Value Change 20 ▪ Market 15 10 - Market value estimated 3.1% higher in 2019 5 - Private starts down 8% in 2019 v completions 0 2% higher -5 2017 2018 2019e Private Housing New Build Public Housing New Build Total Housing New Build S
Slide 17: UK Construction Market – Residential RMI
UK Construction Market – Residential RMI Private Housing RMI %Y/Y Value Change 8 ▪ Market 6 - Private housing RMI 3% down in 2019 4 2 - Public housing RMI flat in 2019 following declines in prior years 0 -2 2017 2018 2019e -4 Public Housing RMI %Y/Y Value Change 0.5 0 -0.5 -1 -1.5 -2 -2.5 -3 -3.5 -4
Slide 18: UK Construction Market – Commercial and Infrastructure
UK Construction Market – Commercial and Infrastructure Commercial Construction % Y/Y Value Change ▪ Market 8 6 - Commercial market 5% lower in 2019 4 - Positive for hotels, warehousing, 2 - Negative for offices, retail 0 -2 -4 - Roads infrastructure market 2% lower in 2019 -6 - Smart motorway upgrad
Slide 19: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 MARKET CONTEXT 4 BUSINESS REVIEW 5 STRATEGY 6 SUMMARY & OUTLOOK
Slide 20: 2019 saw Further Progress on our Sustainability Journey
2019 saw Further Progress on our Sustainability Journey ▪ 10% reduction in CO2 tonnes equivalent emissions in 2019 ▪ 3% reduction in all accident frequency rate ▪ 7th consecutive RoSPA Gold Medal Award for exceptional performance ▪ Project started to set comprehensive sustainability targets for the
Slide 21: Operating segment review – Residential Systems
Operating segment review – Residential Systems 2019 demand drivers 2019 2018 % Growth UK Commercial UK Infra Europe RoW Public 3% 1% Revenue £260.3m £245.3m +6.1% 1% 5% UK Commercial Underlying operating profit £53.4m £46.3m +15.3% Private 4% Underlying operating margin 20.5% 18.9% UK RMI ▪ 6.1% rev
Slide 22: Residential 2019 Product Launches Continue to Drive Growth
Residential 2019 Product Launches Continue to Drive Growth POLYPIPE © 2020 | 22
Slide 23: Polypipe Offsite Solutions
Polypipe Offsite Solutions ▪ Team established to work with growing modular construction sector, engaging with key players ▪ Farmer Report, housing shortages, labour supply issues, all driving mid term growth in MMC ▪ Able to design value-added solutions, with access to market leading portfolio from
Slide 24: Operating segment review – Commercial and Infrastructure Systems
Operating segment review – Commercial and Infrastructure Systems 2019 demand drivers 2019 2018 % Growth UK RMI RoW 7% Revenue £187.3m £187.9m (0.3%) 12% UK New Build 29% Underlying operating profit £24.7m £27.7m (10.8%) Europe Underlying operating margin 13.2% 14.7% 8% ▪ Revenue 0.3% lower than prio
Slide 25: C&I Product and Value-Added Service Launches Continue to Drive Growth
C&I Product and Value-Added Service Launches Continue to Drive Growth Polypipe Building Services offer pre-fabricated solutions for pressure and drainage systems Alderburgh has brought an installation capability to the Group Permavoid product addressing the needs of urban greening POLYPIPE © 2020 |
Slide 26: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 MARKET CONTEXT 4 BUSINESS REVIEW 5 STRATEGY 6 SUMMARY & OUTLOOK
Slide 27: Strategy Update
Strategy Update Two Target Growth Segments Sustainable Water Management Solutions Sustainable Climate Management Solutions • Plumbing, Soil & Waste. Sewer solutions • Low energy heat recovery and ventilation (MVHR) • Stormwater - Integrated roof to river solutions • Low carbon heat distribution, inc
Slide 28: Sustainable Growth drivers
Sustainable Growth drivers People Innovation Decarbonisation Culture Digital Finance Organisation Recycling M&A POLYPIPE © 2020 | 28
Slide 29: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 MARKET CONTEXT 4 BUSINESS REVIEW 5 STRATEGY 6 SUMMARY & OUTLOOK
Slide 30: Coronavirus – our response
Coronavirus – our response The health, safety and wellbeing of our people and customers has always been and continues to be at the forefront of everything we do. To that end, the actions we are taking include the following: ▪ Implementing business continuity plans to mitigate the specific risks asso
Slide 31: Coronavirus – our response
Coronavirus – our response There are certain features of Polypipe’s business model that give it resilience including: ▪ We have 19 sites in the Group, 15 of which are in the UK, 11 of which are manufacturing sites, giving us a degree of flexibility in production, and flexibility of locations for key
Slide 32: Summary
Summary ▪ Further progress in challenging markets ▪ Revenue is 3.3% higher than prior year with strong contribution from acquisitions ▪ Margin improvement of 30 basis points to 17.4% ▪ Strengthened sustainability credentials ▪ Continue to closely monitor Coronavirus situation and take appropriate ac
Slide 33: Appendix
Appendix © Polypipe
Slide 34: IFRS 16 (Leases)
IFRS 16 (Leases) ▪ Immaterial impact on reporting and covenants IFRS 16 – balance sheet impact 31 December 2019 IFRS 16 31 December 2019 £m Pre IFRS 16 adjustments As reported Total assets 675.8 14.8 690.6 Total liabilities (314.4) (14.8) (329.2) Net assets 361.4 - 361.4 IFRS 16 – profit and loss im
Slide 35: Questions & Answers
Questions & Answers © Polypipe
Slide 36: Disclaimer
Disclaimer The information contained in this presentation has not been independently verified and this presentation contains various forward-looking statements that reflect management’s current views with respect to future events and financial and operational performance. The words “growing”, “scope