Genuit Group Plc · LSE:GEN

Genuit — Polypipe Group — Investor Day (May 2018)

67 slides from Genuit's investor day presentation, May 9, 2018

1. Slide 1: Polypipe Group PLC Strategy Update

   Polypipe Group PLC Strategy Update 9th May 2018

2. Slide 2: Agenda

   Agenda 1 WELCOME 2 STRATEGY 3 BUSINESS REVIEW 4 FINANCIALS

3. Slide 3: Welcome

   Welcome SUGGESTED TIMING 15:00 Welcome & introductions 15:05 Vision, strategy & new priorities MARTIN PAYNE GLEN SABIN PAUL JAMES 15:50 Our businesses today Chief Executive Officer Chief Operating Officer Chief Financial Officer Member of Nomination Appointed to the board on 2 Appointed as Chief Fin

4. Slide 4: Who we are

   Who we are Residential Commercial & Infrastructure POLYPIPE © 2018 | 4

5. Slide 5: Who we are

   Who we are  Diversified sector exposure across UK construction 2017 Demand Europe RoW 7%  Track record of growth ahead of the market drivers UK Infrastructure 4% UK RMI 26% 6%  Consistent profitable growth and industry leading UK margins Commercial - Public 12% UK sales growth ahead of the market

6. Slide 6: Agenda

   Agenda 1 WELCOME 2 STRATEGY 3 BUSINESS REVIEW 4 FINANCIALS

7. Slide 7: Vision

   Vision  To be the leading provider of sustainable and resilient water and climate management solutions for the built environment  We will do this by:  Building a world class sustainable business  Developing cost efficient solutions to substitute legacy materials  Leveraging our core UK competen

8. Slide 8: Extending our solutions offer

   Extending our solutions offer  Sustainable Water Management Solutions  Inside:  plumbing, water quality, drainage, soil & waste  Optimised  Outside (“roof to river” solutions): solutions  rainwater retention, drainage, sewer,  Heating, treatment, stormwater attenuation, Blue- cooling & Green

9. Slide 9: Building a world class sustainable business

   Building a world class sustainable business Our NPD People Health & Safety ENVIRONMENTAL Processes PEOPLE SUSTAINABLE Ethics BUSINESS Materials & Recycling Customers Governance Shareholders & Stakeholders ECONOMIC POLYPIPE © 2018 | 9

10. Slide 10: Recycling Video

    Recycling Video: 2:55 Click to start video POLYPIPE © 2018 | 10

11. Slide 11: Structural drivers for water and climate management solutions

    Structural drivers for water and climate management solutions  Population growth  Urbanisation  “Concretisation” of landscapes  Desire to live in greener environments  Climate change  Extreme weather events; Flood alleviation  Pollution; Air quality  Capacity constraints of existing infrastr

12. Slide 12: The multiple impacts of concretisation

    The multiple impacts of “concretisation” Rate of water dispersion Natural Environment Built Environment  Water runs off almost instantaneously from impervious surfaces vol vol Propensity for flash flooding Quality of water released time time Run-off carries relatively Fast-flowing run-off carries 

13. Slide 13: Revised strategy

    Revised strategy Leading Provider Fill gaps to provide “One Of Sustainable Solutions Stop Shop” solutions (not just plastic) Customer-focused Complete Offer Water and Climate solutions ahead of legislation (e.g., Management Solutions Management Solutions Roof to River) Sustainable Climate Geographic

14. Slide 14: Strategic priorities

    Strategic priorities Strategic theme Current priorities New strategic priorities Legacy material Strong driver: penetration against Continue to exploit substitution copper, clay, concrete, etc. Legislative tailwinds Strong drivers: SuDs; carbon Continue to exploit  Water management solutions reduct

15. Slide 15: Substitution of legacy materials by plastic piping

     Substitution 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)

16. Slide 16: Opportunity for further penetration of Polypipe's traditional core offer

     Substitution Opportunity for further penetration of Polypipe’s traditional core offer Sources of penetration of Polypipe’s traditional core UK market for piping systems offer: Total plastic  Further plastics substitution of legacy materials (above ground, below ground, plumbing and heating)  Mar

17. Slide 17: Opportunity for further gain in market share

     Substitution Opportunity for further gain in market share Sources of penetration of Polypipe’s traditional core UK market for plastic piping systems* offer: Polypipe 26%  Further plastics substitution of legacy materials (vs. 23% in 2010)  Market share gain versus competition Wavin This approach

18. Slide 18: Significant regulatory tailwinds from the UK Water & Climate roadmaps

     Tailwinds Significant regulatory tailwinds from the UK Water & Climate roadmaps 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 2015 - 2040 2040 Water Floods and water Water resources Water resources ma

19. Slide 19: Why water management solutions?

     Water Why water management solutions? Storm Frank hit Northern UK …  Pic: Glennridding, Cumbria  30 Dec-15 … just three weeks after Storm Desmond … … and two weeks after Storm Eva POLYPIPE © 2018 | 21

20. Slide 20: Why climate management solutions?

     Climate Why climate management solutions? In response to the Paris Agreement, the UK Committee on Climate Change reiterated its commitment to deliver on existing UK commitments to reduce greenhouse gas emissions by 80% by 2050 (vs. 1990 baseline)  The government has also stated its intention to g

21. Slide 21: Continued growth in products developed to exploit these drivers

     Substitution Continued growth in products developed to  Water  Climate 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 - Climate management solutions Sales

22. Slide 22: Ongoing innovation

     Innovative & smart Engineering solutions Ongoing innovation Launched products to exploit legislative tailwinds and regulation - Polystorm - Ridgistorm XL - Large dia. continuous corrugator - Pushfit plumbing - Underfloor heating (UFH) - Air Filtration - BioCote antimicrobial Other innovation: - In

23. Slide 23: Our evolution to date: from discrete products to complete solutions

     Innovative & Our evolution to date: from discrete products to smart Engineering solutions complete engineered & smart solutions Production of pipe & fittings serves as a foundation for the development of the Group’s solutions  Our evolution timeline, Smart e.g., data management, from 80s to today

24. Slide 24: New strategic priorities – focus for M&A

     Complete offer New strategic priorities – focus for M&A  Plastic is our primary objective  Continue with legacy material substitution  Limited UK consolidation opportunity  Need to provide the “full” offer to our customers, as a “one stop shop”  Some elements where plastic may not be the best

25. Slide 25: Strong track record for M&A and integration

    Strong track record for M&A and integration Both Big… : Polypipe’s approach to integration:  2007 (£40m): Acquisition of Terrain commercial  Retention of the existing focused sales teams drainage business  No imposition of corporate regulations  2015 (£145m): Acquisition of Nuaire ventilation 

26. Slide 26: Geographic reach – acceleration of targeted development

     Geographic reach Geographic reach – acceleration of targeted development Not just the UK  We will continue to develop our exports – our solutions respond to challenges that are global in nature; look to leverage our skills, technical knowledge and IP across a wider market  Imperial versus metric

27. Slide 27: Summary

    Summary Current strategy works – it’s a case of evolution, not revolution  Elements of current strategy working well and will continue to do so – there is plenty more to go for - Legacy material substitution - Legislative tailwinds  Some elements need a different approach - Development of export m

28. Slide 28: Agenda

    Agenda 1 WELCOME 2 STRATEGY 3 BUSINESS REVIEW 4 FINANCIALS

29. Slide 29: Revised strategy

    Revised strategy Leading Provider Fill gaps to provide “One Of Sustainable Solutions Stop Shop” solutions (not just plastic) Customer-focused Complete Offer Water and Climate solutions ahead of legislation (e.g., Management Solutions Management Solutions Roof to River) Sustainable Climate Geographic

30. Slide 30: Polypipe's well invested manufacturing base

    Polypipe’s well invested manufacturing base 17 POLYPIPE © 2018 | 32

31. Slide 31: Well invested manufacturing base: injection moulding hall in Doncaster

     Leadership  Innovation  Sustainability Well invested manufacturing base: one of our injection moulding halls in Doncaster POLYPIPE © 2018 | 33

32. Slide 32: 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 Revenue from continuing operations (ie. excluding Polypipe France) 33% POLYPIPE © 2018 | 34

33. Slide 33: Long-standing relationship with specifiers and support services to contractors

    Long-standing relationship with specifiers and support services to contractors Focus on creating pull-through demand for its systems from end-users through multiple channels Distribution Installer/Specifier Clients/End users Builders or Plumbers One-off Installers (Plumbers, merchants Ground workers

34. Slide 34: Broadest product range meeting UK market standards

    Residential Broadest product range meeting UK market standards  Excellent UK distribution base  Extensive external selling operation  Strong specification with in the Private and Social Housing sector  The popular choice for the local Builders, Plumbers, Heating Trades and DIY  Superb offering

35. Slide 35: Operating segment review – Residential Systems

    Residential Operating segment review – Residential Systems Change in number of households vs. housing completions in England Residential Systems 2017 2016 % Growth 300,000 250,000 Revenue £223.5m £202.7m 10.3% 200,000 Pent-up Underlying operating profit £44.3m £39.1m 13.3% demand 150,000 Underlying

36. Slide 36: Product innovation: Super Soil

     Leadership Residential  Innovation Product innovation: “Super Soil”  Sustainability Core product area under price pressure requiring differentiation to retain value 1 1. Move from existing solid wall pipes to 3 layer pipes with recycled material in core – 2018 material saving £350k 2. Create new

37. Slide 37: Product innovation: Traps development

     Leadership Residential  Innovation  Sustainability Product innovation: Traps development 1. Re-launch of waste traps including patented 1 3 Fit-Rite technology and quality improvements 2. BioCote anti-microbial technology added to all traps – first to market with this technology 3. Re-design and

38. Slide 38: Product innovation: Waste pipe & fittings

     Leadership Residential  Innovation  Sustainability Product innovation: Waste pipe & fittings Differentiation also required in waste pipes and 1 1 fittings segment 1. Move to 3-layer pipe technology and introduce BioCote anti-bacterial additive to existing - material saving of £575k in 2018 2. Re

39. Slide 39: Log-cabin development in Scotland with Polypipe underfloor heating

     Climate  Sustainability  Complete offer A prestigious log-cabin development in Scotland with Polypipe’s underfloor heating solution installed throughout; chosen for its low-energy heating and sustainability credentials POLYPIPE © 2018 | 41

40. Slide 40: Automation strategy

     Leadership Residential  Innovation  Sustainability Automation strategy 1 Current Assembly Method 3 AMRC membership 2 Future Assembly Method The sensory dexterity of the ABB Yumi robot enables it to make paper aeroplanes, as well as work alongside people POLYPIPE © 2018 | 42

41. Slide 41: Automation video

    Automation video: 2:11 Click to start video POLYPIPE © 2018 | 43

42. Slide 42: Operating segment review – Commercial & Infrastructure Systems

    Commercial & Infrastructure Operating segment review – Commercial & Infrastructure Systems Commercial Output (£m) 40000 35000 Commercial and Infrastructure Systems 2017 2016 % Growth 30000 25000 Revenue £188.2m £184.5m 2.0% 20000 15000 Underlying operating profit £28.3m £29.4m (3.7)% 10000 5000 Unde

43. Slide 43: Broadest product range meeting UK market standards

    Commercial & Infrastructure Broadest product range meeting UK market standards  Market leader for above ground drainage in building services Commercial  M&E product portfolio includes water supply systems, rainwater harvesting and underfloor heating  Nuaire ventilation portfolio provides an enhan

44. Slide 44: So why all the drama about air quality?

     Climate Commercial & Infrastructure  Leadership  Tailwinds So why all the drama about air quality? Indoor Air Pollution and Health. Indoor Air Quality (IAQ) refers to the air quality within and around buildings and structures, especially as it relates to the health and comfort of building occupa

45. Slide 45: Air Pollution Video

    Air Pollution Video: 3:52 Click to start video POLYPIPE © 2018 | 49

46. Slide 46: So why all the drama about air quality?

     Climate Commercial & Infrastructure  Leadership So why all the drama about air quality?  Tailwinds Source: ONS, Construction Products Association. 2012 constant Source: H&V news Awards 2018, Grosvenor House Hotel, 19 April 2018 POLYPIPE © 2018 | 52

47. Slide 47: Project Cresco – Material substitution focus

    Commercial & Infrastructure  Substitution Project Cresco – Material substitution focus  Innovation  Leadership versus cast iron Strategic Intent:  Capitalise on the growing opportunity for polyethylene (PE) in the gravity drainage sector  To remove a third party supplier from the chain Investme

48. Slide 48: Beyond Cresco

     Complete offer Commercial & Infrastructure  Innovation  Substitution Beyond Cresco The “Digital Drainage Stack” Concept – offsite construction - Terrain now are well established in the supply of fabricated stacks Growing demand for fabricated drainage stacks 25000 20000 (Number of stacks) 15000

49. Slide 49: The Digital Drainage Stack Concept

     Complete offer Commercial & Infrastructure  Innovation The “Digital Drainage Stack” Concept  Substitution Headline Project Vision  Transition from Traditional Supply to a Site Optimised Service - Manufactured Drainage Stacks or Pre-Configured Stack packs - Facilitated by automated manufacturing

50. Slide 50: Broadest product range meeting UK market standards

    Commercial & Infrastructure Broadest product range meeting UK market standards  Market leader in UK core civils products Civils & Infrastructure  Strategic focus on Water Management  Focused resource including: - Technical design support - Technical sales / specification team - Specialist fabrica

51. Slide 51: New continuous corrugator at Horncastle

     Water  Substitution  Leadership Our recent investment in a new continuous corrugator at Horncastle that will enable these large dia. pipes to compete against concrete pipes POLYPIPE © 2018 | 57

52. Slide 52: UK – 750mm & 900mm Addressable Market

     Water Commercial & Infrastructure  Substitution UK – 750mm & 900mm Addressable Market  Leadership UK 750mm & 900mm pipe UK 100-600mm sewer & drain addressable market 2016 addressable market 2016 Traditional Traditional Materials Materials Other 38% JFC 61% 3% 2% Marley 3% Asset 2016: 2016: 11% W

53. Slide 53: Large pipes for stormwater attenuation at Houghton Regis

     Water  Engineering  Tailwinds Large pipes engineered and installed for stormwater attenuation at a residential development scheme at Houghton Regis, UK POLYPIPE © 2018 | 59

54. Slide 54: Residential attenuation development in Kidderminster

     Water  Engineering  Complete offer A recent residential attenuation development in Kidderminster, where offsite prefabrication, and delivering to site just-in- time became crucial to limit the disruption to residents and ensure safety on site POLYPIPE © 2018 | 60

55. Slide 55: Hydrodynamic separator installed inside large dia. chamber

     Water Commercial & Infrastructure  Substitution  Engineering Hydrodynamic separator installed inside one of our large dia. chambers POLYPIPE © 2018 | 61

56. Slide 56: Agenda

    Agenda 1 WELCOME 2 STRATEGY 3 BUSINESS REVIEW 4 FINANCIALS

57. Slide 57: Eighth consecutive year of progress – Revenue

    Eighth consecutive year of progress Revenue (£m) POLYPIPE © 2018 | 63

58. Slide 58: Eighth consecutive year of progress – EBIT

    Eighth consecutive year of progress EBIT 90 80 72.6 68.5 70 60 53.4 50 45.7 38.4 40 34 (£m) 17% 18% 18% 30 25.1 15% 16% 20.2 22.2 15% 18.3 20 11% 9% 10% 10 8% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Underlying EBIT EBIT: Net Sales POLYPIPE © 2018 | 64

59. Slide 59: UK sales growth consistently ahead of the market

    UK sales growth consistently ahead of the market Index of sales growth compared to UK construction output (Index 2011 = 100) POLYPIPE © 2018 | 65

60. Slide 60: Strong cash generation

    Strong cash generation  5-year average 90% cash 80.0 conversion 70.0  Capex ahead of 60.0 depreciation 50.0 - capex over 5 years = £92m; depreciation over 40.0 5 years = £70m (£m) - To underpin continued 30.0 market outperformance 20.0  No defined benefit pension 10.0 scheme 0.0 2013 2014 2015 20

61. Slide 61: Allocating capital

    Allocating capital PRODUCT ORGANIC DEVELOPMENT & M&A DIVIDEND GROWTH INNOVATION Growing share Sustained Sustained 2.5 of Revenue from Provide complete capex higher than times dividend cover, Development project solutions for depreciation in 9.9% YoY increase Products – customers medium-term in 2017

62. Slide 62: First impressions

    First impressions Financials Managerial reputation Strategy intuitively makes Customer focus sense Passion at all levels Real and impressive Recycling story Premium placed on innovation experience POLYPIPE © 2018 | 68

63. Slide 63: © Polypipe

    © Polypipe

64. Slide 64: Investment case & Summary

    Investment case & Summary One of Europe’s largest and most innovative manufacturers of plastic piping and energy efficient ventilation systems for the residential, commercial, civils and infrastructure sectors. 1. UK market leadership with balanced exposure to all sectors of the UK construction mark

65. Slide 65: Questions & Answers

    Questions & Answers © Polypipe

66. Slide 66: 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

67. Slide 67: POLYPIPE © 2018 | 73

    POLYPIPE © 2018 | 73

Polypipe Group — Investor Day (May 2018) on 6ix