Breedon Group PLC · LSE:BREE
Breedon — Breedon Aggregates — FY2015 Earnings Presentation
41 slides from Breedon's earnings presentation, Mar 9, 2016
Slide 1: Full-Year 2015 Results
FULL-YEAR 2015 RESULTS 9 March 2016 BREEDON AGGREGATES 1
Slide 2: 2015: Full-Year Results Agenda
2015: FULL-YEAR RESULTS Introduction Peter Tom CBE, Executive Chairman Financial review Rob Wood, Group Finance Director Group overview Pat Ward, Group Chief Executive England review Tim Hall, Breedon Aggregates England Scotland review Alan Mackenzie, Breedon Aggregates Scotland Update on Hope & out
Slide 3: Introduction
2015: INTRODUCTION Peter Tom CBE Executive Chairman BREEDON AGGREGATES 3
Slide 4: Delivering on our Strategy
2015: DELIVERING ON OUR STRATEGY Record results from both businesses Underlying EBIT margin significantly improved Major investment in capital projects Our largest-ever contract finalised in Scotland Performance of acquisitions ahead of expectations Transformational acquisition announced Outlook enc
Slide 5: Breedon's 'Golden Rules'
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 a
Slide 6: Financial Review
2015: FINANCIAL REVIEW Rob Wood Group Finance Director BREEDON AGGREGATES 6
Slide 7: Financial Highlights
2015: FINANCIAL HIGHLIGHTS Revenue Underlying EBIT Underlying EBIT margin £318.5m £37.8m 11.9% 2014: £269.7m +18% 2014: £24.3m +56% 2014: 9.0% +2.9ppt Acquisitions EBIT* Underlying basic EPS Net cash/(debt) £3.8m 2.68p £10.3m 2014: 1.64p +63% 2014: (£66.3m) +£76.6m *Additional £3.8 million from 2014
Slide 8: Income Statement
2015: INCOME STATEMENT 2014 2015 Variance £ million £ million % Revenue 269.7 318.5 +18% Underlying EBITDA* 38.5 54.9 +43% Depletion & depreciation (15.4) (17.8) Underlying operating profit* 23.1 37.1 +60% Share of associate and joint venture 1.2 0.7 Underlying EBIT* 24.3 37.8 +56% Interest (3.3) (2
Slide 9: Divisional Performance
2015: DIVISIONAL PERFORMANCE Revenue (2014) £ million Revenue (2015) £ million +18% +18% +18% 2014 2015 Variance Underlying EBIT £ million £ million % England 16.0 27.0 +68% Scotland 11.5 16.1 +39% Head Office (4.4) (6.0) Share of associate and joint venture 1.2 0.7 Underlying EBIT 24.3 37.8 +56% BR
Slide 10: Product Volumes
2015: PRODUCT VOLUMES Aggregates Asphalt Concrete million tonnes million tonnes million m3 +14% +18% +13% BREEDON AGGREGATES 10
Slide 11: Net Cash/(Debt) Movement
2015: NET CASH/(DEBT) MOVEMENT £ million Inflow Outflow 10.3 0 (66.3) Opening EBITDA Non- Working Interest Tax Dividend Capital Disposals Acquisitions Equity Closing debt underlying/ capital received expenditure and issued cash other investment BREEDON AGGREGATES 11
Slide 12: Group Overview
2015: GROUP OVERVIEW Pat Ward Group Chief Executive BREEDON AGGREGATES 12
Slide 13: Market Generally Positive
2015: MARKET GENERALLY POSITIVE Growth continued, albeit at more modest rate than 2014 GDP ahead 2.2% Average inflation near zero Employment highest since records began Construction output up 3.4%* MPA volumes up; 4.8% aggregates, 6.5% asphalt & 4.2% concrete Growth driven by infrastructure work * O
Slide 14: Continuing Strong Progress
2015: CONTINUING STRONG PROGRESS Good finish to the year Healthy market conditions in England • Buoyant demand from all sectors More challenging market in Scotland • Impacted by project delays and spending cuts Acquisitions exceeded expectations Cost base benefited from lower hydrocarbon costs £20+
Slide 15: England Review
2015: ENGLAND REVIEW Tim Hall Chief Executive – Breedon Aggregates England BREEDON AGGREGATES 15
Slide 16: Breedon Aggregates England
BREEDON AGGREGATES ENGLAND Revenue 535 14 9 employees quarries asphalt plants 54% of Group revenue Underlying EBIT 22 1 2 ready-mixed concrete concrete regional contract and mortar plants products plant surfacing operations 63% of Group underlying EBIT BREEDON AGGREGATES 16
Slide 17: England Summary
2015: ENGLAND SUMMARY 2014 2015 Volumes £ million £ million Variance Revenue 145.0 170.9 18% +2% EBITDA 23.7 35.8 51% Aggregates EBIT 16.0 27.0 68% EBIT margin 11.1% 15.8% 4.7ppt +22% LTIFR rate reduced by 50+% Asphalt Buoyant demand in all sectors, aided by open weather window Stable pricing on asp
Slide 18: Major Contracts Supplied: England
2015: MAJOR CONTRACTS SUPPLIED ENGLAND Jaguar Land Rover Solihull 27,000 tonnes of asphalt Gaydon 20,000 tonnes of asphalt i54 22,000 tonnes of aggregates East Midlands Airport – DHL Extension 16,000 tonnes of aggregates, 5,000 m3 of concrete A1/M1 resurfacing 8,000 tonnes of asphalt Dualling of A45
Slide 19: England Outlook & Priorities
2015: ENGLAND OUTLOOK & PRIORITIES Continue drive towards ‘Zero Harm’ – a safe business is a profitable business Retain and motivate our people Continue drive to be lowest-cost producer Obtain planning consent for extension to Clearwell quarry Maintain organic development – Tewkesbury concrete plant
Slide 20: Scotland Review
2015: SCOTLAND REVIEW Alan Mackenzie Chief Executive – Breedon Aggregates Scotland BREEDON AGGREGATES 20
Slide 21: Breedon Aggregates Scotland
BREEDON AGGREGATES SCOTLAND Revenue 716 38 17 employees quarries asphalt plants 46% of Group revenue EBIT 36 2 6 1 ready-mixed concrete regional contract traffic concrete products plants surfacing management and mortar plants operations services company 37% of Group underlying EBITEBITDA0 BREEDON AG
Slide 22: Scotland Summary
2015: SCOTLAND SUMMARY 2014 2015 Volumes £ million £ million Variance Revenue 124.7 147.6 18% +32% EBITDA 19.2 25.1 31% Aggregates EBIT 11.6 16.1 39% EBIT margin 9.3% 10.9% 1.6ppt +12% Record-breaking year Volumes up in all product groups Asphalt EBIT growth through acquisition & margin enhancement
Slide 23: Major Contracts Supplied: Scotland
2015: MAJOR CONTRACTS SUPPLIED SCOTLAND Aberdeen Western Peripheral Route 21,500m3 of concrete South West Interconnector - Clawfin 142,000 tonnes of aggregates Loch Buidhe Power Station 75,000 tonnes of aggregates, 17,000t of asphalt £1.7m of contracting A95 Aberlour £2.2m of contracting, 8,200t of
Slide 24: Scotland Outlook & Priorities
2015: SCOTLAND OUTLOOK & PRIORITIES Continue drive towards ‘Zero Harm’ – a safe business is a profitable business General local authority & trunk road market remaining subdued Plan for, and deliver, major AWPR & A9 contracts Further investment to drive profit enhancement through increased capacity a
Slide 25: Update on Hope & Outlook
UPDATE ON HOPE & OUTLOOK Pat Ward Group Chief Executive BREEDON AGGREGATES 25
Slide 26: Update on Hope
UPDATE ON HOPE CMA’s 40-day consultation period commenced on 12 February Integration pre-planning well underway Planned name change to ‘Breedon’ to reflect our broadening portfolio of products • Hope name to be maintained for cementitious products For management purposes the enlarged group will comp
Slide 27: Compelling Strategic Rationale
COMPELLING STRATEGIC RATIONALE Strengthened market position Combines the UK’s two leading independent construction materials companies Market consolidation Further consolidates the smaller end of the heavyside building materials industry, in line with our strategy Improved product mix Provides e
Slide 28: Group Profile Post-Acquisition
GROUP PROFILE POST-ACQUISITION 1 Includes co-located concrete sites and sites presently mothballed 2 Includes sites currently under construction 3 For the 12 months ended 30 June 2015 (unaudited) * Pro forma sales that the Group would have reported for the 12 months ended 30 June 2015 (unaudited ).
Slide 29: Group Outlook for 2016
GROUP OUTLOOK FOR 2016 Continuing favourable outlook for construction • Output forecast +3.6% in 2016 and 4.1% in 2017 Further growth in key product volumes • MPA forecasts 1-4% increases Continuing economic benefits of low oil price Further organic investment Several major infrastructure projects n
Slide 30: Q&A
2015: Q&A Q&A BREEDON AGGREGATES 30
Slide 31: Appendices
2015: APPENDICES Market outlook, MPA volumes & other information BREEDON AGGREGATES 31
Slide 32: Market Outlook
MARKET OUTLOOK BREEDON AGGREGATES 32
Slide 33: MPA Aggregates Volumes – MAT
MPA AGGREGATES VOLUMES – MAT BREEDON AGGREGATES 33
Slide 34: MPA Asphalt Volumes – MAT
MPA ASPHALT VOLUMES – MAT BREEDON AGGREGATES 34
Slide 35: MPA Ready Mix Concrete Volumes – MAT
MPA READY MIX CONCRETE VOLUMES – MAT BREEDON AGGREGATES 35
Slide 36: Breedon's Regional Presence
2015: BREEDON’S REGIONAL PRESENCE BREEDON AGGREGATES 36
Slide 37: Breedon's Track Record (1 of 2)
2015: BREEDON’S TRACK RECORD (1 OF 2) BREEDON AGGREGATES 37
Slide 38: Breedon's Track Record (2 of 2)
2015: BREEDON’S TRACK RECORD (2 OF 2) BREEDON AGGREGATES 38
Slide 39: Breedon's Operating Model
2015: BREEDON’S OPERATING MODEL BREEDON AGGREGATES 39
Slide 40: Breedon's Market Share
2015: BREEDON’S MARKET SHARE BREEDON AGGREGATES 40
Slide 41: Forward-looking statements disclaimer
This presentation may contain statements related to our and our subsidiaries' future business and financial performance, and future events or developments involving Breedon Aggregates that are not purely historical and which may constitute forward-looking statements. These statements may be identifi