Breedon Group Plc · LSE:BREE
Breedon — H1 2015 Earnings Presentation
29 slides from Breedon's earnings presentation, Jul 23, 2015
Slide 1: Half-Year Results 23 July 2015
HALF-YEAR RESULTS 23 JULY 2015
Slide 2: H1 2015: Introduction
H1 2015: INTRODUCTION Results overview Peter Tom Financial review Rob Wood Operational review & outlook Simon Vivian Tim Hall Alan Mackenzie Q&A BREEDON AGGREGATES 2
Slide 3: H1 2015 Results Overview
H1 2015 RESULTS OVERVIEW Peter Tom CBE Executive Chairman BREEDON AGGREGATES 3
Slide 4: Good Growth, Strong Market
H1 2015: GOOD GROWTH, STRONG MARKET Strong trading performance Underlying business well ahead of prior year Underlying EBITDA margin up to 17.0% Huntsmans and former Barr business performing well Step-up in capital investment on track Mineral reserves & resources replenished Several acquisition oppo
Slide 5: Breedon's 'Golden Rules'
H1 2015: BREEDON’S ‘GOLDEN RULES’ Stay local g Easy to do business with at every site Stay Nimble g Maximise opportunities in our markets & develop new ones Devolve responsibility g Allow decision-making by regional teams Squeeze our assets g Maximise return from every tonne of material Eliminate If
Slide 6: H1 2015 Results Overview
H1 2015 RESULTS OVERVIEW Rob Wood Group Finance Director BREEDON AGGREGATES 6
Slide 7: Financial Highlights
H1 2015: FINANCIAL HIGHLIGHTS Revenue Underlying EBITDA Underlying EBITDA margin £160.5m £27.3m 17.0% H1 2014: £125.2m +28% H1 2014: £17.8m +54% H1 2014: 14.2% +2.8ppt Acquisitions EBITDA* Underlying basic EPS Net debt £3.2m 1.29p £58.3m H1 2014: 0.73p +77% Dec-2014: £66.3m -£8.0m *Additional £ mill
Slide 8: Income Statement
H1 2015: INCOME STATEMENT H1 2014 H1 2015 Variance £ million £ million % Revenue 125.2 160.5 +28% Underlying EBITDA* 17.8 27.3 +54% Depletion & depreciation (7.4) (8.7) Underlying operating profit* 10.4 18.6 +78% Share of associate and joint venture 0.7 0.3 Interest (1.7) (1.5) Non-underlying items*
Slide 9: Divisional Performance
H1 2015: DIVISIONAL PERFORMANCE Revenue £ million EBITDA £ million H1 2014 H1 2015 H1 2014 H1 2015 84.1 16.9 76.4 13.4 64.8 60.4 10.6 9.4 (2.2) (3.0) England Scotland England Scotland HO BREEDON AGGREGATES 9
Slide 10: Product Volumes
H1 2015: PRODUCT VOLUMES Aggregates million t Asphalt million t Concrete million m3 H1 2014 H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 0.4 0.9 4.5 3.6 0.7 0.3 BREEDON AGGREGATES 10
Slide 11: Net Debt Movement
H1 2015: NET DEBT MOVEMENT £ million Inflow Outflow (66.3) (58.3) 0 (10) (20) (30) (40) (50) (60) (70) Opening debt EBITDA Non-underlying/ Working Interest Tax Dividend Purchase of Disposals Acquisitions Equity Closing debt other capital property plant and investments and equipment BREEDON AGGREGATE
Slide 12: H1 2015 Results Overview
H1 2015 RESULTS OVERVIEW Simon Vivian Group Chief Executive BREEDON AGGREGATES 12
Slide 13: Market Background
H1 2015: MARKET BACKGROUND Generally strengthening economic environment Some contract delays ahead of General Election CPA reports strong demand & improving prices in first 4 months Q1 MPA volumes significantly ahead: • aggregates +11%, asphalt +14%, concrete +8% Healthy growth in housing, commercia
Slide 14: Maintaining Momentum
H1 2015: MAINTAINING MOMENTUM Accident frequency rate remained flat; but severity rate continued to fall Exceptional performances from both England and Scotland Good balance between organic & acquisition-led growth Overall acquisitions ahead of expectations Volumes ahead in all product categories Ab
Slide 15: Breedon Aggregates England
BREEDON AGGREGATES ENGLAND Revenue 15 9 23 quarries asphalt plants ready-mixed concrete and mortar plants 52% of Group revenue EBITDA 1 2 concrete regional contract block plant surfacing operations 56% of Group EBITDA BREEDON AGGREGATES 15
Slide 16: England Summary Financials
H1 2015: ENGLAND SUMMARY FINANCIALS H1 2014 H1 2015 Volumes million £ million Variance Revenue 64.8 84.1 30% +13% EBITDA 10.6 16.9 59% Aggregates EBITDA margin 16.4% 20.1% 3.7ppt • Strong demand +33% • EBITDA excluding acquisitions Asphalt significantly ahead of prior year +26% • Huntsmans performin
Slide 17: England Achievements
H1 2015: ENGLAND ACHIEVEMENTS Continued focus on Visible Felt Leadership and driving zero harm Strong demand from all product & market sectors Pricing & margins strong Cavenham asphalt plant re-commissioned Wivenhoe asphalt plant refocused on collect & machine markets Dense concrete block plant open
Slide 18: England Outlook & Priorities
H1 2015: ENGLAND OUTLOOK & PRIORITIES Continuing focus on safety improvements All product sectors expected to be busy Construction of T-Beam plant at Huntsmans Major upgrade to primary crusher at Cloud Hill Installation of new hot storage system at Leaton New sand and gravel quarry at Earls Barton,
Slide 19: Breedon Aggregates Scotland
BREEDON AGGREGATES SCOTLAND Revenue 38 17 36 quarries asphalt plants ready-mixed concrete and mortar plants 48% of Group revenue EBITDA 2 5 1 concrete regional contract traffic management block plants surfacing operations services company 44% of Group EBITDA BREEDON AGGREGATES HALF-YEAR RESULTS 23 J
Slide 20: Scotland Summary Financials
H1 2015: SCOTLAND SUMMARY FINANCIALS H1 2014 H1 2015 Volumes million £ million Variance Revenue 60.4 76.4 26% +46% EBITDA 9.4 13.4 43% Aggregates EBITDA margin 15.5% 17.5% 2.0ppt • Flat demand +18% • EBITDA excluding acquisitions ahead of Asphalt prior year +42% • Former Barr business performing ahe
Slide 21: Scotland Achievements
H1 2015: SCOTLAND ACHIEVEMENTS Safety & housekeeping improvements - especially at former Barr business Market relatively flat overall: busier in north & west, slower in Aberdeen Prices & margins strong Former Barr business ahead of expectations New crushing train for high PSV production in south-wes
Slide 22: Scotland Outlook & Priorities
H1 2015: SCOTLAND OUTLOOK & PRIORITIES Continuing focus on employee behaviour & safety systems New mobile washing plant to boost sand & gravel production Erect & commission Daviot asphalt plant Implement high PSV & commercial strategy: new Commercial Director Contract opportunities: • AWPR • Forth C
Slide 23: Group Outlook
H1 2015: GROUP OUTLOOK Market outlook remains positive CPA forecasts 5.5% growth in construction output in 2015 & 4% in 2016 MPA forecasts continuing strong volumes: • aggregates +4-6%, asphalt +3-5%, concrete +3-5% Budget has confirmed Government’s commitment to infrastructure • Particularly on roa
Slide 24: Appendices
APPENDICES MPA volumes Our business model BREEDON AGGREGATES 24
Slide 25: MPA Crushed Rock Volumes – MAT
MPA CRUSHED ROCK VOLUMES – MAT 110 105 100 95 million tonnes 90 (34)% 85 80 75 10% 70 65 60 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 BREEDON AGGREGATES 25
Slide 26: MPA Sand & Gravel Volumes – MAT
MPA SAND & GRAVEL VOLUMES – MAT 65 60 55 million tonnes (37)% 50 45 6% 40 35 30 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 BREEDON AGGREGATES 26
Slide 27: MPA Asphalt Volumes – MAT
MPA ASPHALT VOLUMES – MAT 28 26 24 (27)% million tonnes 22 20 14% (9)% 18 16 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 BREEDON AGGREGATES 27
Slide 28: MPA Concrete Volumes – MAT
MPA CONCRETE VOLUMES – MAT 24 22 20 million cubic metres 18 (42)% 16 14% 14 12 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 BREEDON AGGREGATES 28
Slide 29: Our Business Model (2014)
OUR BUSINESS MODEL (2014) Securing mineral supplies Quarrying Processing of materials Marketing and distribution Other services Restoration key internal use 35% Bitumen external use Breedon's contract We buy in bitumen to mix with our surfacing operations aggregates to external input produce asphalt