Slide 1: Interim Results Presentation | Six Months to 30 June 2017
INTERIM RESULTS PRESENTATION | SIX MONTHS TO 30 JUNE 2017
Slide 2: 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
Slide 3: Presenting Today
PRESENTING TODAY Wayne Sheppard Kevin Sims CEO CFO 3
Slide 4: Agenda
AGENDA Overview Financial review Operating review Outlook Q&A Wayne Sheppard Kevin Sims Wayne Sheppard Wayne Sheppard 4
Slide 5: Overview
OVERVIEW Financial Overview – six months ended 30 June 2017 Group revenue Adjusted Net debt to ROCE at 19% after Continued strong Interim dividend up 9% to EBITDA up 7% EBITDA at 1.4x £46m of cumulative CX underlying cash of 2.6p per share £228m to £60m after £17m of on major projects – generation (
Slide 6: Agenda
AGENDA Highlights & Overview Financial review Operating review Outlook Q&A Wayne Sheppard Kevin Sims Wayne Sheppard Wayne Sheppard 6
Slide 7: Financial Highlights Six Months Ended 30 June 2017
FINANCIAL HIGHLIGHTS SIX MONTHS ENDED 30 JUNE 2017 Revenue £228m 9% (c6.4% CC) Adjusted EBITDA1 £60m 7% (c6.4% CC) EBITDA margin % 26% ◀ ROCE2 19% 1%pt Cash conversion3 41% 15%pt Net Debt to EBITDA 1.4 ◀ Interim dividend 2.6p 8% Note (1) Adjusted EBITDA is earnings before interest, taxation, depreci
Slide 8: P&L Reconciliations Six Months Ended 30 June 2017
P&L RECONCILIATIONS SIX MONTHS ENDED 30 JUNE 2017 Adjusted EBITDA to Statutory profit (£m) Adjusted EBITDA (£m) to Adjusted EPS Adjusted EBITDA 1H 2017 60 Adjusted EBITDA 1H 2017 60 Exceptional items1 (4) Depreciation (10) Interest – cash2 (3) Amortisation (3) Interest – non-cash (1) Fair value depr
Slide 9: Revenue & EBITDA Bridges
REVENUE & EBITDA BRIDGES Revenue bridge (in £m) Adj EBITDA bridge (in £m) +£18.3m (9%) +£4.1m (7%) 4.7 3.4 228.3 10.5 (0.3) 210.0 3.8 (0.1) 0.5 (0.1) 59.7 FX 55.6 UK Clay 1H 2016 US 1H 2017 UK Concrete 1H 2016 1H 2017 FX PLC US UK US $ average exchange rate used in 2017 is 1.26 (2016: 1.35) 9
Slide 10: Highly Cash Generative
HIGHLY CASH GENERATIVE Six months ended 30 June (£m) 2017 2016 Change % change • Working capital reflects I.T. issues at a major customer Adj. EBITDA 60 56 +4 8% delaying payment until July and higher sales y-o-y Share-based payments 1 1 - • Cash conversion 52% if adjusted for delayed payment Capex
Slide 11: Financial Management
FINANCIAL MANAGEMENT New debt Refinanced in New £250m RCF facility blended interest rate No fixed debt Comfortably within March 2017 Revolving Credit 150 bps at leverage <1.75x repayments and covenants (interest cover (5 year term) Facility includes accordion 4.0x and debt leverage 3.0x (125bps at <
Slide 12: Agenda
AGENDA Highlights & Overview Financial review Operating review Outlook Q&A Wayne Sheppard Kevin Sims Wayne Sheppard Wayne Sheppard 12
Slide 13: Operating Segment Review - UK
OPERATING SEGMENT REVIEW - UK 1H 2017 1H 2016 % Growth Revenue £186m £172m 8% Adjusted EBITDA1 £57m £53m 7% Adjusted EBITDA margin1 30.6% 30.8% Clay brick performance Housebuilding Stocks Soft mud Low single digit Energy costs Good Overall UK continues to reduced with capacity price increases by inc
Slide 14: Major Project: New Brick Factory – Ibstock Leicestershire
MAJOR PROJECT New brick factory – Ibstock Leicestershire £54m Addition of Capex 100m project soft mud brick High volume capacity factory with Scheduled to (13% of current expansion begin total Ibstock potential commissioning brick capacity, in 4Q 2017 5% UK capacity) Process Anticipate flexibility t
Slide 15: Major Project: SL8 Concrete Roof Tile Line – Leighton Buzzard
MAJOR PROJECT SL8 concrete roof tile line – Leighton Buzzard £8m Capex project now in production Manufactures Aesthetically large format superior to Single shift ‘metric tiles’ competing revenue c£7m p.a. products Forticrete New products becomes full Enhances reduce build range roofing Group costs f
Slide 16: Major Project: New Brick Kiln – Lodge Lane
MAJOR PROJECT New brick kiln – Lodge Lane (Cannock in Staffordshire) £8m Capex improvement Lodge Lane Niche product project factory range with Scheduled to manufactures distinct visual begin ‘blue bricks’ aesthetics commissioning in Q4 2017 Replacement Maintains kiln reduces Ibstock’s leading costs
Slide 17: Operating Segment Review - US
OPERATING SEGMENT REVIEW - US 1H 2017 1H 2016 % Growth ($) Revenue $53m (£42m) $54m (£38m) (1%) Adjusted EBITDA $6m (£5m) $6m (£4m) (2%) Adjusted EBITDA margin 11.5% 11.6% Mid single digit Modest price Energy costs Performance reflects BIA volume decline increases higher year-on- reduced brick deman
Slide 18: Agenda
AGENDA Highlights & Overview Financial review Operating review Outlook Q&A Wayne Sheppard Kevin Sims Wayne Sheppard Wayne Sheppard 18
Slide 19: UK Fundamentals Remain in Place
UK FUNDAMENTALS REMAIN IN PLACE UK Housing Dynamics Strong demand for new housing 266 273 264 230 226 265 261 Continued shortage of new housing from long term 206 181 176 181 136 130 140 165 164 underbuilding 130 135 Mortgage availability remains good Government committed to increasing housing suppl
Slide 20: US Market Backdrop More Mixed
US MARKET BACKDROP MORE MIXED US Market Dynamics Stable overall outlook for housing starts in Glen-Gery’s key markets (Starts 000’s) 390 399 400 405 331 344 260 211 217 • N-E residential starts down 11% in 2016, impacting 2017 brick demand. M-W and M-A up in 2016, but forecast flat in 2017. • Single
Slide 21: Summary and Outlook
SUMMARY AND OUTLOOK Expectations for UK Concrete Long term UK Clay - good benefiting from new another year of fundamentals activity levels have roof tile capacity progress are supporting UK continued into the and a strong housing maintained housing remain second half of 2017 market (subject to polit
Slide 22: Agenda
AGENDA Highlights & Overview Financial review Operating review Outlook Q&A Wayne Sheppard Kevin Sims Wayne Sheppard Wayne Sheppard 22
Slide 23: Appendix | Additional Financial Information
APPENDIX | ADDITIONAL FINANCIAL INFORMATION
Slide 24: Income Statement Six Months Ended 30 June 2017
INCOME STATEMENT SIX MONTHS ENDED 30 JUNE 2017 Income statement Six months ended Six months ended 30 June 2017 30 June 2016 £m £m Revenue 228 210 Operating profit pre-exceptional 47 43 Add exceptional items1 2 - Operating profit 49 43 Net finance costs2 (10) (5) Adjusted Profit before tax 39 38 Adju
Slide 25: Balance Sheet as at 30 June 2017
BALANCE SHEET AS AT 30 JUNE 2017 Balance Sheet 30 June 2017 31 Dec 2016 30 June 2016 £m £m £m Assets PP&E 393 392 371 Intangible 120 123 125 Non-current assets 513 515 496 Inventories 90 89 94 Trade receivables 77 52 68 Other 4 3 - Current assets 171 144 162 Total assets 684 659 658 Payables (83) (8
Slide 26: Introduction to the Group
IBSTOCK INTRODUCTION TO THE GROUP
Slide 27: Key Investment Highlights
KEY INVESTMENT HIGHLIGHTS Market Structural Industry High barriers Strong Multiple Long-standing Outstanding leadership demand structure to entry customer growth management financial positions growth service ethic options performance Three UK brick Vertically Strong household High quality, broad Add
Slide 28: A Leading Provider of Clay and Concrete Building Products
A LEADING PROVIDER OF CLAY AND CONCRETE BUILDING PRODUCTS UK US Revenue (FY 16) % of Group £254m £52m £38m £91m 58% 12% 9% 21% Market leader in A leading clay Market UK #1 in clay bricks UK #1 in fencing cast stone and brick manufacturer position1 and lintels innovative roof in Northeast and tiles M
Slide 29: A Leading Provider of Clay and Concrete Building Products
A LEADING PROVIDER OF CLAY AND CONCRETE BUILDING PRODUCTS End market Sales channel A whole house product range & more Group revenue by UK (FY 16)1 end market (FY 16) Infrastructure Others 2% New build 3% Other Merchants housing Factors new build 45% 55% 23% 17% RMI 26% Housebuilders direct 29% Key s
Slide 30: Well Positioned in Structurally Attractive Markets
WELL POSITIONED IN STRUCTURALLY ATTRACTIVE MARKETS UK Brick Market Ibstock Forterra Wienerberger Other 2.6 Imports (billions of bricks) UK brick capacity (billions) 2.1 2.0 0.25 0.1 0.9 0.8 0.9 2007 2016 2018 MAT May 2017 '98 - '07 Avg. Import volumes Imports have higher Availability is partly a Exi
Slide 31: Well Positioned in Structurally Attractive Markets
WELL POSITIONED IN STRUCTURALLY ATTRACTIVE MARKETS High barriers to entry – Vertically integrated clay business Multiple growth options model with significant local footprint Product range and geographic Customer UK Clay reserves coverage relationships Capacity expansion Expand existing New c100m 13