Slide 1: Polypipe Group PLC Full Year Results
Polypipe Group PLC Full Year Results Year ended 31 December 2017
Slide 2: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 STRATEGY 5 SUMMARY & OUTLOOK
Slide 3: Introduction
Introduction ▪ Record performance in 2017 in line with management expectations ▪ Group revenue 6.3% higher, driven by strong UK performance 8.1% higher ▪ Margins robust despite continued cost inflation ▪ Disposal of Polypipe France expected to be complete H1 2018 ▪ Decisive action taken to close Dub
Slide 4: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 STRATEGY 5 SUMMARY & OUTLOOK
Slide 5: Financial highlights
Financial highlights ▪ Polypipe France treated as discontinued due to announced disposal process ▪ Revenue 6.3% higher at £411.7m ▪ Underlying operating profit 6.0% higher at £72.6m ▪ Underlying operating margin robust at 17.6% despite continued input cost inflation ▪ Underlying basic earnings per s
Slide 6: 2017 underlying results summary – continuing operations
2017 underlying results summary – continuing operations Year ended 31 Year ended 31 £m December 2017 December 2016 Change Change Revenue 411.7 387.2 24.5 6.3% Cost of sales (236.0) (219.1) (16.9) Gross profit 175.7 168.1 7.6 4.5% Gross margin 42.7% 43.4% Selling & distribution costs (68.7) (64.4) (4
Slide 7: Revenue and underlying operating profit bridge
Revenue and underlying operating profit bridge Revenue (£m) +0.2 +14.6 +1.9 +7.8 411.5 411.5 411.7 401.8 403.7 387.2 387.2 2016 Selling price Currency Organic growth Middle East Investment FX 2017 Underlying operating profit (£m) +3.2 +0.8 - +14.6(1.0) +1.1 (15.6) 68.5 72.6 2016 Selling price net of
Slide 8: 2017 proforma results including Polypipe France
2017 proforma results including Polypipe France 31 December 31 December 31 December 31 December 31 December 31 December 2017 2017 2017 2016 2016 2016 £m (unless stated) As reported France inc France As reported France inc France Revenue 411.7 58.4 470.1 387.2 49.7 436.9 Underlying operating profit 7
Slide 9: 2017 statutory results
2017 statutory results £m 31 December 2017 31 December 2016 Underlying profit after tax 53.9 49.2 Non-underlying items: - Middle East closure and other projects (4.6) (0.6) - Amortisation of intangible assets (5.5) (6.8) Tax effect of non-underlying items 1.2 1.6 Profit/(loss) from discontinued oper
Slide 10: Balance sheet summary
Balance sheet summary 31 December 31 December 2017 2017 Including 31 December £m As reported Polypipe France Polypipe France 2016 Change Non-current assets ▪ property, plant & equipment 98.6 6.3 104.9 101.0 3.9 ▪ goodwill 319.7 - 319.7 329.3 (9.6) ▪ other intangible assets 36.8 - 36.8 42.3 (5.5) Net
Slide 11: Net working capital
Net working capital 31 December 31 December 2017 Change (based 2017 Polypipe Including 31 December on including £m As reported France Polypipe France 2016 held-for-sale) Inventories 53.5 7.7 61.2 52.2 9.0 Trade and other receivables 34.5 9.0 43.5 40.1 3.4 Trade and other payables (87.6) (9.5) (97.1)
Slide 12: Cash flows
Cash flows £m 31 December 2017 31 December 2016 Change EBITDA (before non-underlying items) 1 90.2 85.7 4.5 Capital expenditure, net of disposals of property, plant & equipment (23.2) (18.7) (4.5) Profit on disposal of property, plant & equipment (0.1) - (0.1) Movement in net working capital (10.0)
Slide 13: Banking facilities
Banking facilities Headroom at 31 December 2017: Drawn as at 31 £m December 2017 Facility Headroom Bank loan 185.0 290.0 105.0 Cash and cash equivalents (35.7) - 35.7 Net debt excluding unamortised debt issue costs 149.3 140.7 Unamortised debt issue costs (0.9) Net debt 148.4 Position at 31 December
Slide 14: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 STRATEGY 5 SUMMARY & OUTLOOK
Slide 15: Balanced portfolio across UK construction market
Balanced portfolio across UK construction market 2017 Demand drivers RoW Europe 7% 4% UK RMI UK Infrastructure 26% 6% UK Commercial - Public 12% UK 89% UK Commercial - Private 12% UK New Build 33% Revenue from continuing operations (ie. excluding Polypipe France) POLYPIPE © 2018 | 15
Slide 16: Strong performance in UK
Strong performance in UK £m 500 400.0 100 +8.1% 400 350.0 365.7 338.3 300 200 50.0 -15.0% 31.9 +11.2% 27.1 100 17 18.9 0 UK Europe ME & Row 2016 2017 Revenue from continuing operations (ie. excluding Polypipe France) POLYPIPE © 2018 | 16
Slide 17: Operating segment review – Residential Systems
Operating segment review – Residential Systems Residential Systems 2017 2016 % Growth Segmental revenue £228.8m £207.6m Inter segment revenue (£5.3m) (£4.9m) 2017 Geographic revenue split Revenue £223.5m £202.7m 10.3% Europe 3% Underlying operating profit £44.3m £39.1m 13.3% Underlying operating mar
Slide 18: Operating segment review – Commercial & Infrastructure Systems
Operating segment review – Commercial & Infrastructure Systems Commercial and Infrastructure Systems 2017 2016 % Growth Segmental revenue £196.0m £190.6m Inter segment revenue (£7.8m) (£6.1m) 2017 Geographic revenue split Revenue £188.2m £184.5m 2.0% Underlying operating profit £28.3m £29.4m (3.7)%
Slide 19: Polypipe France disposal
Polypipe France disposal ▪ Commodity market, outside our core strategic product areas ▪ Fragmented supply base ▪ Geographic disadvantage to serve the key market of Ile de France ▪ Low margin business ▪ Disposal proceeds of €16.5m, represents excellent shareholder value ▪ Anticipate completion in H1
Slide 20: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 STRATEGY 5 SUMMARY & OUTLOOK
Slide 21: Strategy to date: Water Management Solutions
Strategy to date Accelerated by Selective Our Strategic Objectives: Acquisitions ▪ Benefit from market recovery and Utilising Multi Channels leveraging brand position Substitution of Legacy Materials Water Management Solutions ▪ Continued product development for Carbon Efficient Solutions sustainabl
Slide 22: Substitution of legacy materials by plastic piping – rationale still strong
Substitution of legacy materials by plastic piping – rationale still strong Copper Steel radiators Cast iron Clay Concrete GRP Above ground drainage Below ground piping systems Plumbing and heating supply Underfloor heating (by value 2015) (by value 2014) (by value 2015) (by vol 2016) Cast iron / Br
Slide 23: Tailwinds from the UK Water & Climate legislation still strong
Tailwinds from the UK Water & Climate legislation still strong A number of new key environmental rules to be implemented in both the short- and long-term in the UK 0 5 10 15 20 25 30 35 40 45 2007: 2010: 2012: 2040: European Union floods directive Floods and water management New build standards for
Slide 24: Continued growth in products developed to exploit these drivers
Continued growth in products developed to exploit these drivers Growth of ‘development products’ to 44% share of Group net turnover in 2017 These ‘development products’ cover: ∎ Material substitution ∎ Water management solutions ∎ Carbon efficient solutions Sales contribution of key growth product a
Slide 25: Geographic reach – historically strong but weaker last year
Geographic reach – historically strong but weaker last year Middle East and Rest Of World revenue1 Middle East manufacturing difficult ∎ Qatar trade embargo ∎ Project credit issues constraining demand ∎ Still represents a strong opportunity for the Group 32 ∎ Machines to be brought back to UK and pu
Slide 26: For your diaries: Capital Markets Day
For your diaries Capital Markets Day 3pm Wednesday 9 May 2018 Numis Offices London POLYPIPE © 2018 | 26
Slide 27: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 STRATEGY 5 SUMMARY & OUTLOOK 27
Slide 28: Summary & outlook
Summary & outlook ▪ Record performance in 2017 in line with management expectations ▪ Good outlook for UK new housebuild; more difficult UK RMI ▪ Commercial and infrastructure show good pipeline orders, but delays evident in short term ▪ Decisive action taken in Middle East and France ▪ Core strateg
Slide 29: Questions & Answers
Questions & Answers © Polypipe
Slide 30: 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