Breedon Group Plc · LSE:BREE
Breedon — Investor Presentation (May 2020)
26 slides from Breedon's investor presentation, May 2020
Slide 1: Breedon Group Investor Presentation May 2020
BREEDON GROUP INVESTOR PRESENTATION May 2020
Slide 2: Agenda
Agenda Overview of the Group [slides 3-7] 2019 highlights [slides 8-10] Breedon’s sustainable growth strategy [slides 11-18] Acquisition of CEMEX UK assets [slide 19] COVID-19 update [slide 20] Summary [slide 21] Appendices [slides 22-26] 2 INVESTOR PRESENTATION • MAY 2020
Slide 3: Overview of the Group
Overview of the Group 3 INVESTOR PRESENTATION • MAY 2020
Slide 4: A leading construction materials group
A leading construction materials group • Largest independent construction materials business in Great Britain − Growing position on Island of Ireland • Broad reach with a national footprint − More than 3,000 employees across c.280 facilities − Two cement plants; national network of quarries, ready-m
Slide 5: History
History Company created and listed on UK Alternative Investment Market to pursue ‘buy 2008 and build’ strategy in UK heavyside construction materials market First acquisition: former Ennstone UK business, establishing platform for growth 2010 organically and via value-enhancing acquisitions 2011-15
Slide 6: Vertically integrated model with nationwide reach
Vertically integrated model with nationwide reach CORE OUTPUTS Network of c80 AGGREGATES 2 CEMENT c.280 locations quarries plants across GB and Ireland ADDED-VALUE PRODUCTS AND SERVICES Substantial proportion of core outputs converted by Vertically c170 READY-MIXED 40 ASPHALT Breedon into integrated
Slide 7: Reporting as three divisions
Reporting as three divisions Cement GB GREAT BRITAIN 19% 61% Nationwide network of quarries and downstream operations GROUP REVENUE Contracting services and highway maintenance businesses (minor road Ireland surfacing and major infrastructure contracts) 20% £929.6m 2019 IRELAND Trading under W
Slide 8: 2019 highlights
2019 highlights 8 INVESTOR PRESENTATION • MAY 2020
Slide 9: 2019 highlights
2019 highlights Revenue Underlying EBIT* Underlying EBIT margin* £929.6m +8% £116.6m +13% 12.5% +0.5ppt FY 2018: £862.7m FY 2018: £103.5m FY 2018: 12.0% Profit before taxation Underlying basic EPS* Net debt at 31 Dec 2019 £94.6m +18% 5.0p +8% £290.3m FY 2018: £79.9m FY 2018: 4.70p Dec 2018: £310.7m
Slide 10: 2019 highlights
2019 highlights Excellent performance in challenging conditions Improved results from all three Divisions Strong cash flow reduced post IFRS 16 closing Leverage to 1.6x Integration of Lagan largely completed Acquisition of Roadway strengthened our position in North Wales Capital Concrete
Slide 11: Breedon's sustainable growth strategy
Breedon’s sustainable growth strategy 11 INVESTOR PRESENTATION • MAY 2020
Slide 12: Sustainable growth strategy
Sustainable growth strategy There are six pillars to our strategy, which together constitute the essential elements of Breedon’s investment case 12 INVESTOR PRESENTATION • MAY 2020
Slide 13: A clear purpose and the right culture
A clear purpose and the right culture Breedon is an inherently local business with a wide range of stakeholders The Group seeks to benefit all these groups, from the communities in Breedon’s Purpose which it operates and the customers it serves through to its To make a material employees, suppli
Slide 14: Robust governance
Robust governance Board membership has been significantly refreshed over the last 12 months ‒ Non-executive Chairman appointed in 2019 ‒ Greater diversity, with broader range of experience We seek to adhere to best practice corporate governance ‒ Fully compliant with the QCA code Pat Ward Rob Wo
Slide 15: Commitment to sustainability and social responsibility
Commitment to sustainability and social responsibility Playing an important role in the economic development of the UK and Ireland, GCCA Sustainability Charter Breedon works continuously to reduce the impact of its operations on people and the Pillars and Reporting environment The Group became a
Slide 16: Long-term growth markets
Long-term growth markets Breedon is exposed to long-term growth areas of the GB and Irish construction markets (e.g. infrastructure, housing, industrial) Following a prolonged period of underinvestment, infrastructure development is a priority in both GB and Ireland The UK Government’s March 2
Slide 17: Conservative financial management
Conservative financial management Strong asset-backed balance sheet CLEAR CAPITAL ALLOCATION PRIORITIES Highly cash-generative Cash generation and strong balance sheet allow significant organic investment in our business and continued pursuit of acquisitions to accelerate our strategic develop
Slide 18: A growing and well-utilised asset base and significant self-help opportunities
A growing and well-utilised asset base and significant self-help opportunities BREEDON’S SELF-HELP LEVERS c900mt Consents for new quarries rarely granted, COMMERCIAL OPERATIONS reserves • Differentiated local business model • Improving equipment effectiveness creating significant barrier to entry
Slide 19: Acquisition of CEMEX UK assets
Acquisition of CEMEX UK assets Acquisition of certain UK assets and operations from CEMEX agreed in January 2020, for total consideration of £178m Quality assets underpinned by c170 million tonnes of mineral reserves and resources Around 650 talented and experienced employees Infills six key
Slide 20: COVID-19 update (as at 1 May 2020)
COVID-19 update (as at 1 May 2020) Priority remains the safety and wellbeing of colleagues, subcontractors, customers and communities Trading broadly in line with expectations in Q1; production progressively suspended from late March; gradual reopening of sites from late April in response to cus
Slide 21: Summary: a leading construction materials group
Summary: a leading construction materials group Strong competitive positions in markets with favourable long-term dynamics Clear strategy and resilient, sustainable business model Highly cash-generative with opportunities for value-enhancing investment Good growth opportunities in both GB an
Slide 22: Appendices
Appendices 22 INVESTOR PRESENTATION • MAY 2020
Slide 23: Our track record: financial KPIs
Our track record: financial KPIs Revenue (£m) Underlying EBIT margin (%) Underlying basic EPS (pence) 930 13.1 5.08 863 4.70 4.14 652 12.5 3.49 12.3 455 2.68 11.9 12.0 319 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Leverage (times) Return on invested capital (%) Free
Slide 24: Our track record: non-financial KPIs
Our track record: non-financial KPIs Employee LTIFR Employee TIFR (per million hours worked) (per million hours worked) 2.72 20.54 17.17 15.64 1.87 1.81 14.28 1.41 1.05 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Reserves and resources life Emissions intensity (years) (tCO2e/£ revenue (kg)) 59
Slide 25: Our track record: balanced growth
Our track record: balanced growth Underlying EBIT components 2015 – 2019 (£m) 2015 2016 2017 2018 2019 Prior year Underlying EBIT Organic Acquisitions 25 INVESTOR PRESENTATION • MAY 2020
Slide 26: Our track record: capital allocation
Our track record: capital allocation 2015 – 2019 (£m) 2015 2019 opening Net closing net debt EBITDA capex Acquisitions Equity Interest Tax IFRS 16 Other net debt Inflows Outflows 26 INVESTOR PRESENTATION • MAY 2020