Slide 1: Polypipe Group plc Interim Results
Polypipe Group plc Interim Results 6 months to 30 June 2016 1
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: Agenda
Agenda Highlights David Hall Presentation Team David Hall Martin Payne Chief Executive Officer Chief Financial Officer 3
Slide 4: Introduction
Introduction Record result with revenue up 31%, underlying EPS up 48% Following a strong start demand from all segments of our core UK market have remained robust Positive progress in all of our growth initiatives Nuaire performing well – some early success in specification of Nuaire systems
Slide 5: Agenda
Agenda Highlights Financial Review David Hall Martin Payne 5
Slide 6: Financial Highlights
Financial Highlights Revenue 31% higher at £223.3m UK revenue 8.1% ahead excluding acquisitions Underlying operating profit 47% higher at £37.7m 180bps improvement in underlying operating margin to a record 16.9% Underlying earnings per share 48% higher at 13.6 pence per share Cash gener
Slide 7: 2016 H1 underlying results summary
2016 H1 underlying results summary £m H1 2016 H1 2015 change % change Revenue 223.3 170.4 52.9 31% Cost of sales (129.8) (102.3) Gross profit 93.5 68.1 25.4 37% Gross profit margin 41.9% 40.0% Selling & distribution costs (34.3) (26.1) Administrative expenses (21.5) (16.3) Underlying operating profi
Slide 8: Taxation
Taxation Tax rate £m Gross Tax % Underlying profit before tax and related tax 33.7 6.6 19.6 Non-underlying items (3.8) (0.7) 18.4 Profit before tax and related tax 29.9 5.9 19.7 8
Slide 9: Group revenue and underlying operating profit bridge (£m)
Group revenue and underlying operating profit bridge (£m) Revenue +13.6 +3.0 +36.3 223.3 170.4 H1 2015 Acquisitions Organic Middle East Investment FX H1 2016 Underlying operating profit +5.3 (0.8) +0.1 +7.4 37.7 25.7 H1 2015 Acquisitions Organic Middle East Investment FX H1 2016 9
Slide 10: Balance sheet summary
Balance sheet summary Change 30 June 30 June 30 December £m 2016 2015 Total Organic Acquisition 2015 Non Current Assets – property, plant & equipment 99.9 90.9 9.0 4.6 4.4 98.1 – goodwill 329.3 239.5 89.8 - 89.8 329.3 – other intangible assets 45.3 - 45.3 - 45.3 49.1 Net Working Capital 14.1 10.8 3.
Slide 11: Net working capital
Net working capital 30 June 30 June 31 December £m 2016 2015 change 2015 Inventories 51.0 39.5 11.5 47.5 Trade & Other receivables 51.9 31.8 20.1 30.5 Trade & Other payables (88.8) (60.5) (28.3) (80.3) Net operating working capital 14.1 10.8 3.3 (2.3) Net operating working capital to revenue 6.3% 6.
Slide 12: Cashflow
Cashflow year to £m H1 2016 H1 2015 change 31 December 2015 EBITDA 45.8 32.9 12.9 67.5 Less profit on sale of fixed assets (0.1) - (0.1) (0.2) Working capital (15.2) (15.1) (0.1) 5.3 Cash generated from operations 30.5 17.8 12.7 72.6 Capital expenditure (8.4) (9.3) 0.9 (19.3) Operating cashflow afte
Slide 13: Banking facilities
Banking facilities Headroom at 30 June 2016: £m At 30 June 2016 Facility Headroom Bank loan 223.0 300.0 77.0 Unamortised debt issue costs (1.4) - Loans and borrowings 221.6 77.0 Cash and cash equivalents (30.3) 30.3 Net debt 191.3 107.3 Covenants: Covenant Position at 30 Position at 31 requirement J
Slide 14: Proven resilience through cycle
Proven resilience through cycle 2007-2015 Free cash flow (pre interest) Strong cash generation through cycle 19.3m 8.2m 15.1m Lowest free cash flow pre 21.1m interest of £25m in 2008, 7.8m 10.5m after £16m of capex 15.9m 15.8m 9.5m Enough to cover current financing costs and dividends 53.4m 24
Slide 15: 2016 Guidance Summary
2016 Guidance Summary Capital expenditure £20m Net debt on track to be 2 times EBITDA by year end Dividend policy maintained 15
Slide 16: Agenda
Agenda Highlights Financial Review Business Review David Hall Martin Payne David Hall 16
Slide 17: Operating segment review - Residential
Operating segment review - Residential Residential H1 2016 H1 2015 % Growth Revenue £105.4m £90.2m up 16.9% Underlying operating profit £21.5m £15.4m up 39.6% Underlying operating profit margin 20.4% 17.1% 5% organic growth includes pull forward stocking offset by carry over polymer deflation pass
Slide 18: Operating segment review – C&I UK
Operating segment review – C&I UK Commercial & Infrastructure - UK H1 2016 H1 2015 % Growth Revenue £92.7m £59.1m up 56.9% Underlying operating profit £15.2m £9.4m up 61.7% Underlying operating profit margin 16.4% 15.9% Organic growth of 13.5% impacted by carry over of polymer pass through Good
Slide 19: Operating segment review – C&I Mainland Europe
Operating segment review – C&I Mainland Europe Commercial & Infrastructure – Mainland Europe H1 2016 H1 2015 % Growth Revenue £31.5m £26.5m up 18.9% Underlying operating profit £1.0m £0.9m up 11.1% Underlying operating profit margin 3.2% 3.4% Revenue up 10.2% in local currency despite continuing w
Slide 20: Polypipe has a balanced portfolio across all construction markets
Polypipe has a balanced portfolio across all construction markets UK Infrastructure 8.4% UK Commercial - UK RMI Public 25.3% 10.4% UK Commercial - Commercial UK Private and Residential 10.8% infrastructure 48.6% 51.4% European Markets UK New Build 15.1% 23.3% Rest of the World 6.7% LTM to June 20161
Slide 21: Long-term fundamental drivers remain robust
Long-term fundamental drivers remain robust Residential Change in number of households vs. housing Housing Transactions, long-term trend New Housing v s Housing RM&I 250,000 180 completions in England Current level is below the historic troughs 160 Output/Completions (2013=100) Housing Completions 2
Slide 22: Summary & outlook
Summary & outlook Record results – EPS growth of 48% above first half 2015 Acquisitions bedded in and contributing as planned Order intake has remained robust to date Balanced business model across all sectors of construction Highly cash generative – on track to meet gearing target Conti
Slide 23: Questions & Answers
Questions & Answers © Polypipe 23
Slide 24: Appendix
Appendix © Polypipe 24
Slide 25: Housing transactions
Housing transactions Quarterly UK Housing Transactions, last ten years 500,000 Housing transactions may prove 450,000 400,000 more resilient than in the past 350,000 because the current level of 300,000 250,000 transactions remains historically low 200,000 150,000 100,000 50,000 In the two previ
Slide 26: Residential new build
Residential new build Pent-up demand remains, as new 250,000 Change in number of households vs. housing completions in England completions have failed to grow as fast as the number of new households in recent 200,000 years Unfulfilled increase in 150,000 demand Housebuilders had good order books
Slide 27: RM&I
RM&I Spending on RM&I remains relatively New Housing v s Housing RM&I 180 unaffected by shifts in market sentiment 160 Output/Completions (2013=100) Housing Completions 140 Housing RM&I Output The UK housing stock is comparatively old 120 100 on average, requiring ongoing repair and 80 maintenan
Slide 28: Infrastructure
Infrastructure Recent political commentary suggests that public spending on infrastructure projects may be allowed to rise to act as a stimulus to the UK economy The latest CPA forecast anticipates rises in infrastructure spending in Roads, Water & Sewerage and Electricity, in particular Highw
Slide 29: Commercial
Commercial Project outlook for the current year Forward looking project bank was 3000 more robust in May-16 (pre- 2500 2530 +42% Referendum) than at the same point a 2000 1783 year earlier 1500 1000 Forecast activity level for 2016 and 500 rate of starts were above the historic 0 May-15 May-16 n
Slide 30: Recent public commentary remains positive
Recent public commentary remains positive 30
Slide 31: Recent public commentary remains positive
Recent public commentary remains positive 31
Slide 32: Recent public commentary remains positive
Recent public commentary remains positive 32
Slide 33: Government initiatives remain supportive
Government initiatives remain supportive A non-exhaustive list of Government initiatives over recent years, to encourage construction activity • NewBuy Mortgage Indemnity • £1.475bn capital investment to fund 100 new free schools, academies and further education colleges • Increase in the Get Britai
Slide 34: Proven resilience through cycle
Proven resilience through cycle 400 120 353 350 327 22 115 298 289 287 300 17 300 4 270 283 13 54 110 11 253 11 12 57 73 12 61 250 7 68 105 81 61 63 66 200 100 150 100 95 277 253 221 208 210 226 100 197 195 90 180 50 85 0 80 2007 2008 2009 2010 2011 2012 2013 2014 2015 UK sales Continental Europe sa