Slide 1: Full Year Results Presentation, Year ended 31 December 2017
Forterra plc Full Year Results Presentation Year ended 31 December 2017 14 March 2018
Slide 2: Disclaimer
Disclaimer This document has been prepared by Forterra plc (the “Company”) solely for use at a presentation in connection with the Company’s Results Announcement in respect of the financial year ended 31 December 2017 (the “Presentation”). For the purposes of this notice, “Presentation” shall mean a
Slide 3: Forterra at a glance
Forterra at a glance Revenue by segment (%) 25% 48% 27% Leading UK producer of Focus on bricks and blocks with complementary range of Bricks manufactured masonry products bespoke clay & concrete Blocks products Bespoke Products Revenue by end use (%) 7% 33% 60% Sole manufacturer of iconic Fletton br
Slide 4: Highlights
Highlights • Revenue increase of 10.4% (excluding benefit of Bison acquisition) due to strong demand in the new build residential market leading to double digit increase in brick and aggregate block volumes • EBITDA increase of £6.0m due to higher volumes and prices, which mitigated higher input cos
Slide 5: Financial review
Financial review [f° FORTERRA,.
Slide 6: Financial highlights
Financial highlights £m (pro-forma basis) 2017 2016 Change Revenue 331.0 294.5 12.4% PBT before exceptionals 61.1 53.1 15.1% EPS before exceptionals (pence) 24.5p 21.0p 16.7% Operating cash flow before exceptionals 90.2 69.8 29.2% Net debt 60.8 92.3 (34.1)% Total dividend (pence per share) 9.5p 5.8p
Slide 7: Summary Profit & Loss
Summary Profit & Loss £m (pro-forma basis – before exceptionals) 2017 2016 Change Revenue 331.0 294.5 12.4% EBITDA 75.4 69.4 8.6% EBITDA margin (%) 22.8% 23.6% Depreciation and Amortisation (10.9) (10.4) Operating profit 64.5 59.0 9.3% Finance expense (3.4) (5.9) Profit before tax 61.1 53.1 15.1% Ef
Slide 8: Group Cash Flow
Group Cash Flow 100 4.2 90.2 (10.8) 90 10.6 (12.6) 80 75.4 70 (13.8) 60 (20.0) £m 50 40 (1.5) 31.5 30 20 10 0 EBITDA before Working Non-cash Operating Capital Tax & Interest Dividends Acquisition of Other items Reduction in exceptionals capital items cash flow expenditure paid Bison net debt before
Slide 9: Net Debt and Facilities
Net Debt and Facilities 180 2.5 2.2 160 140 2 Net Debt : EBITDA (x) 120 Net Debt (£m) 1.3 1.5 100 80 0.8 1 60 40 0.5 20 155.0 92.3 60.8 0 0 IPO (April 2016) 31-Dec-16 31-Dec-17 Net Debt Net Debt : EBITDA • Net debt reduced to £60.8m due to strong cash flow, giving a gearing ratio of 0.8 times • Sinc
Slide 10: Financial summary
Financial summary • Pleased with progress in the year, with double-digit increase in revenue and PBT • Strong cash generation with operating cash conversion of 123% and double digit free cash flow yield • Robust balance sheet, with net debt:EBITDA at 0.8 times with scope for further investment in th
Slide 11: Business review
FORTERRA ;. Business review 11
Slide 12: Structural upward momentum of the UK housing market
Structural upward momentum of the UK housing market underpinned by favourable market drivers UK housing completions remain well below historic levels Cumulative -41 -14 -19 -34 5 47 124 170 264 360 486 585 694 774 846 913 deficit 270 109 72 80 67 99 126 28 39 Units ('000s) 94 96 180 42 76 46 212 193
Slide 13: Bricks and Blocks
Bricks and Blocks £m 2017 2016 % Change Revenue 249.5 221.3 12.7% EBITDA (pro-forma) 69.1 62.7 10.2% EBITDA margin % (pro-forma) 27.7% 28.3% • Revenue increase driven by strong demand from new build residential market, leading to double digit increase in brick and aggregate block volumes • Price inc
Slide 14: Favourable dynamics within the UK brick market
Favourable dynamics within the UK brick market UK brick supply and demand dynamics Favourable supply/demand 2.5 dynamic Bricks (billion) 2.0 • 2017 saw demand increase ahead of 1.5 production levels, leading to an increase 1.0 in the level of 2012 2013 2014 2015 2016 2017 imports within the UK produ
Slide 15: Options to expand an efficient manufacturing base in bricks
Options to expand an efficient manufacturing base in bricks Current footprint of efficient operations Capacity strategy 9 brick facilities Debottlenecking Average 2017 capacity per facility in GB Measham 19m bricks capacity p.a. – COMPLETED 2016 52m bricks p.a. 43m bricks p.a. Claughton 5m bricks ca
Slide 16: Bespoke Products
Bespoke Products £m 2017 2016 % Change Revenue 83.6 74.8 11.8% EBITDA (pro-forma) 6.3 6.7 (6.0)% EBITDA margin % (pro-forma) 7.5% 9.0% • Underlying revenue growth of 4.0% after excluding benefit of Bison acquisition • Reduction in EBITDA due to cost pressures faced by the precast business which were
Slide 17: Bison acquisition
Bison acquisition Forterra strengthened its position in precast concrete manufacturing with the acquisition of Bison • Completed in September 2017 • One of the most recognised names in precast concrete • Acquisition saw 180 Bison staff join forces and share expertise with the 230 staff at Forterra’s
Slide 18: Bison integration
Bison integration • Integration progressing to plan • Swadlincote facility already making a positive contribution to operating profit • Wider business leveraging the Bison brand following rebranding • Aim to have the Swadlincote site running at c.80% capacity utilisation by the summer of 2018 18
Slide 19: Delivery against our strategic priorities in 2017
Delivery against our strategic priorities in 2017 Strategic Priority Achievements Manufacturing Continuous improvement programme delivering efficiency benefits Excellence Debottlenecking activities completed at Claughton and Desford Progressing options for large scale brick capacity investments Prof
Slide 20: Outlook
= Ine FORTERRA,. Outlook 20
Slide 21: Outlook
Outlook • Following strong performance in 2017, the current year has started well with brick and block volumes for the first two months ahead of the comparable period in 2017 • Whilst the housing maintenance and improvement market remains subdued, we continue to see good activity levels from the new
Slide 22: Q&A
= Ine FORTERRA,. Q&A 22
Slide 23: Appendices
Appendices [ie FoRTERRA,. 23
Slide 24: Investment case
Investment case Pure Growth Resilience Efficiency UK focus Ability to flex Cash generation Further growth from Iconic Efficient core brick High return / production capacity to enabling investment cross-selling Fletton brick manufacturing –low risk capex meet market demand 1. 2. 3. 4. 5. 6. 7. 100% i
Slide 25: Cross-selling
We serve the UK building construction markets across all distribution channels End-market exposure Key Strong and long-standing Residential New build Infrastructure products Channels/customers RMI Residential Commercial customer relationship Bricks • House builders Extruded bricks • Builders’ mercha
Slide 26: The sole producer of the iconic Fletton brick
The sole producer of the iconic Fletton brick Competitive advantage secured by unique Product line benefits from strong pricing Significant heritage - produced since 1877 manufacturing process 200 189 • Strategic and sole access to Fletton-specific 180 clay reserve Indexed to 100 160 140 140 • Londo
Slide 27: Market view: Blocks
Market view: Blocks Aircrete blocks Aggregate blocks • Cost effective solution for wall, floor and below-ground constructions • Quick, easy, cost-effective build solution for both inner-leaf and facing Description • Up to 80% recycled content requirements of walls • Lightweight features enabled acce
Slide 28: Market view: Precast products
Market view: Precast products Hollowcore Flooring Beam & Block Flooring Other precast • Flooring solution used across the Description • UK’s first system (Jetfloor) to use • Stairs and landings (complimentary to residential sector, typically in multi-unit expanded polystyrene blocks combined dwellin
Slide 29: Pro-forma adjustments
Pro-forma adjustments £m 2017 2016 Operating profit (statutory basis) 64.5 51.3 Exceptional items - 8.9 Operating profit before exceptionals 64.5 60.2 Additional costs in 2017 as a plc - (1.2) Operational profit before exceptionals (pro-forma basis) 64.5 59.0 Finance charge before exceptionals (for
Slide 30: Trade Working Capital
Trade Working Capital Total working capital Trade working capital breakdown 80 £8.1m £19.1m £m 31 Dec 2017 31 Dec 2016 Inventory days 67 83 60 Debtor days* 40 39 £36.3m £39.0m *Count back basis 40 20 £33.0m £31.6m 0 £(30.0)m £(26.3)m -20 -40 £(25.2)m £(31.2)m -60 -80 Dec-17 Dec-16 Trade payables Acc
Slide 31: Summary Balance sheet
Summary Balance sheet £m 2017 2016 Intangible assets 15.8 13.7 Property, plant and equipment 165.2 147.2 Deferred tax asset - 0.4 Total non-current assets 181.0 161.3 Current assets Inventories 36.3 39.0 Trade and other receivables 33.0 31.6 Cash and cash equivalents 29.0 56.2 Total current assets 9
Slide 32: Summary Cash Flow
Summary Cash Flow £m 2017 2016 EBITDA before exceptionals 75.4 69.4 Change in working capital 10.6 (1.0) Other movements 4.2 1.4 Operating cash flow before exceptionals 90.2 69.8 Exceptional items - (13.6) Tax and Interest (12.6) (18.7) Capital expenditure - maintenance (7.6) (7.4) - expansion (3.2)