Slide 1: Forterra plc Interim Results Presentation
plc Forterra plc Interim Results Presentation Half Year ended 30 June 2016 1
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 Half Year Results Announcement in respect of the six months ended 30 June 2016. For the purposes of this notice, the presentation (the “Presentation”) shall me
Slide 3: Today's agenda and presenters
Today’s agenda and presenters Introduction Stephen Harrison Financial review Shatish Dasani Business review Stephen Harrison Current trading & outlook Stephen Harrison Stephen Harrison Shatish Dasani Chief Executive Officer Q&A Chief Financial Officer Stephen Harrison & Shatish Dasani 3
Slide 4: Forterra at a glance
Forterra at a glance Leading UK producer Focus on bricks and blocks with Sole manufacturer of iconic Balanced exposure to of manufactured complementary range of bespoke Fletton bricks sold under the new build and RM&I UK masonry products clay & concrete products the London Brick brand residential ma
Slide 5: Highlights
Highlights - Business established as a PLC following Initial Public Offering in April 2016 - Double digit increase in direct brick sales to housebuilders with good levels of activity through the Spring, more than offset by reduced sales to merchants due to continued destocking - EBITDA ahead of expe
Slide 6: Investment case
Investment case Pure UK focus Growth Resilience Efficiency Room for volume Further growth from Substantial exposure Efficient core brick High return / Iconic Fletton brick growth in core bricks cross-selling to stable RM&I manufacturing low risk capex 1 2 3 4 5 6 7 100% in UK Clear runway 95% of sal
Slide 7: Financial review
Financial review Financial review Shatish Dasani 7
Slide 8: Financial highlights (pro-forma basis)
Financial highlights (pro-forma basis) £m 2016 H1 2015 H1 Change 2015 FY Revenue 146.0 150.8 (3.2)% 290.2 EBITDA before exceptionals 39.5 40.1 (1.5)% 67.5 EBITDA margin % 27.1% 26.6% +50bps 23.3% PBT before exceptionals 31.6 32.2 (1.9)% 52.3 EPS before exceptionals (pence) 12.5 12.7 (1.6)% 20.6 Oper
Slide 9: Pro-forma adjustments
Pro-forma adjustments £m 2016 H1 2015 H1 2015 FY EBITDA before exceptionals 39.5 41.8 70.5 Additional costs in 2016 as a stand-alone PLC - (1.7) (3.0) EBITDA before exceptionals (pro-forma basis) 39.5 40.1 67.5 Depreciation & amortisation (4.9) (4.8) (9.4) Operating profit before exceptionals (p
Slide 10: H1 EBITDA bridge
H1 EBITDA bridge (1.8) 40 1.3 39 (1.0) 0.9 38 37 £m 36 35 40.1 40.1 39.5 39.5 34 33 32 31 30 2015 Sales Sales price & Energy Distribution & 2016 H1 EBITDA volumes mix costs other costs H1 EBITDA - Sales volumes slightly down due - Selling price increase achieved in - Good control of fixed costs and
Slide 11: H1 cash flow
H1 cash flow 50 45 4.9 0.2 (7.7) 40 35 (4.4) £m 30 (8.4) 25 (1.9) 20 (11.0) 34.6 32.0 15 10 5 6.3 0 Operating profit Depreciation & Non-cash Working Operating Investing Interest Tax Exceptional Net before amortisation items capital cash flow before activities paid paid items cash flow exceptionals e
Slide 12: Balance sheet and net debt
Balance sheet and net debt £m 30 June 2016 31 Dec' 2015 Intangible assets 13.1 13.3 - Net debt at 30 June 2016 lower than Property, plant and equipment 147.2 149.5 anticipated due to: Deferred tax asset 1.6 1.8 - good working capital performance Total non-current assets 161.9 164.6 - timing of IPO o
Slide 13: Trade working capital
Trade working capital H1 2016 trade working capital breakdown Inventory 140 Total Trade & other receivables working 120 capital Accrued & other payables 31 19 Trade payables rade working capital (£m) 100 80 44 June 2016 December 2015 60 41 40 Inventory days 93 92 20 41 29 Debtor days 35 42 0 Trade (
Slide 14: Financial summary
Financial summary - EBITDA performance ahead of expectations at time of IPO, with an increase in margin - Actions taken to manage cash cost base and operate efficiently whilst fulfilling market demand - Strong cash generation, with operating cash conversion of 79% in H1 - Robust balance sheet, with
Slide 15: Business review
Business review Business review Stephen Harrison 15
Slide 16: Bricks and blocks review
Bricks and blocks review £m 2016 H1 2015 H1 % Change 2015 FY Revenue 108.7 113.1 (3.9)% 218.0 EBITDA before exceptionals (pro-forma) 35.7 36.8 (3.0)% 61.7 EBITDA margin % 32.8% 32.5% +30bps 28.3% - Double-digit increase - Sales of aircrete blocks - Number of options - EBITDA margin up by in brick sa
Slide 17: Bricks and blocks – Measham plant expansion
Bricks and blocks – Measham plant expansion - 22% capacity increase completed in early 2016 through de-bottlenecking of Clay & Clay Quarried & Stockpiled Recycled Material Prepared Clay Stored in Bays dryers and kiln Raw Material Proportioned - Investment represents good value - Box Feeders [x3] Met
Slide 18: Bespoke products review
Bespoke products review £m 2016 H1 2015 H1 % Change 2015 FY Revenue 38.1 38.5 (1.0)% 73.7 EBITDA before exceptionals (pro-forma) 3.8 3.3 15.2% 5.8 EBITDA margin % 10.0% 8.6% +140bps 7.9% - Majority of value driven - New supply agreement - Secured orders in H1 for by sales of precast secured with lea
Slide 19: Forterra: delivery against our priorities
Forterra: delivery against our priorities Progress in 2016 H1 • Completed Measham expansion • Manufacturing facility optimisation programmes • 1st phase to reintroduce 4th kiln at King’s Dyke completed Manufacturing • Process technology investment • New employee Health and Safety engagement programm
Slide 20: Current trading & outlook
Current trading & outlook Current trading & outlook Stephen Harrison 20
Slide 21: Current trading & outlook
Current trading & outlook - Trading in July and August overall has been in line with - Prudent action taken in response to short-term economic management expectations, with brick volumes in both uncertainty to optimise production efficiency and proactively months ahead of the corresponding period fo
Slide 22: Q&A
Q&A Q&A Stephen Harrison & Shatish Dasani 22
Slide 23: Appendices
Appendices Ide FORTERRA,.
Slide 24: Broadest manufactured masonry product range on offer in the UK
Broadest manufactured Broadest masonry manufactured product masonry range product range on offer in on offer in the UK the UK Manufactured masonry products Bricks Concrete blocks 2014 UK revenue Clay Stone (£m) (a) Extruded Soft mud Fletton Special Aircrete Aggregate blocks wall 268 ✔ ✔ ✔ ✔ ✔ ✔ 6 30
Slide 25: Complementary range of manufactured masonry and bespoke building products
We Weoffer offeraacomplementary complementaryrange rangeof ofmanufactured manufactured masonry masonry and bespoke building and bespoke building products products Forterra product range Bricks •Soft mud Engineered precast flooring •Extruded •Stairs & landings •Fletton Roofing and flue systems •Red B
Slide 26: We serve the UK building construction markets across all distribution channels
30 Years WeWserve thethe e serve UKUK building construction building markets construction markets across all across all distribution channels distribution channels End-market exposure Key Channels / Residential Strong and long-standing Products customers Residential RMI Newbuild Commercial customer
Slide 27: Efficient manufacturing base, driving cost leadership and competitiveness
Efficient Efficient manufacturing manufacturing base, driving cost leadership and base, competitiveness driving cost leadership and competitiveness Network of scale manufacturing facilities across strategic locations 9 brick facilities Focus on Measham 1.4x larger Forterra’s • State-of-the-art large
Slide 28: Incremental brick capacity from de-bottlenecking projects
Incremental brickbrick Incremental capacity capacity from de-bottlenecking from de-bottlenecking projects projects Status ✔ Completed Potential incremental capacity Measham Desford Claughton Accrington expansion gas supply upgrade dryer replacement kiln buffer extension Selected examples • Completed
Slide 29: Bricks – GB domestic competitive landscape
Bricks – GB domestic competitive landscape Estimated production capacity of GB domestic market dynamics four major GB brick manufacturers(a) Fletton Michelmersh c.7% 4% • Long term consolidation of market participants Forterra • Disciplined GB market: top 3 manufacturers Wienerberger 24% 29% account
Slide 30: The sole producer of the iconic London Brick
The sole producer of the iconic London Brick Competitive advantage secured by Forterra’s most profitable product line benefits from strong pricing premium unique manufacturing process ✔Approximately 60-80% - pricing premium • Strategic and sole access to London Brick- compared to price paid by speci
Slide 31: Blocks – aircrete and aggregate markets
Blocks – aircrete and aggregate markets Aircrete Aggregate • Quick, easy, cost effective build solution for both inner-leaf and facing Description requirements of walls • Cost-effective solution for wall, floor and below-ground constructions • High content of locally-sourced recycled / sustainable m
Slide 32: Bespoke products
Bespoke products Chimney and roofing Structural external Precast concrete Permeable block paving solutions wall insulation • Engineered structural flooring • Patented, sustainable urban • Chimney and roofing products: • Patented structural external wall and stair solutions drainage systems fire-back
Slide 33: Focus on engineered flooring
Focus Focus on on engineered engineered flooring flooring Beam & Block Hollowcore UK market size c.£170m / c.15 million linear metres c.£175m / c.3.5 million m 2 (£ / quantity) Estimated % attributable to c.85% c.50% UK housing end markets 20,000 6,000 Linear metres ('000s) 16,000 4,500 m2 ('000s) 1
Slide 34: P&L pre-exceptionals
P&L pre-exceptionals £m 2016 H1 2015 H1 2015 FY Revenue 146.0 150.8 290.2 Cost of Sales (81.8) (83.4) (167.7) Gross Profit 64.2 67.4 122.5 Distribution Costs (20.9) (22.4) (45.3) Administrative expenses (9.5) (8.7) (16.6) Other operating income 0.8 0.7 0.5 Operating Profit 34.6 37.0 61.1 Add back: d
Slide 35: D&A and exceptional items
D&A and exceptional items £m 2016 H1 2015 H1 2015 FY EBITDA before exceptionals 39.5 41.8 70.5 Depreciation (4.7) (4.6) (9.1) Amortisation (0.2) (0.2) (0.3) Exceptional items (10.3) (1.5) (11.6) Operating profit 24.3 35.5 49.5 Net financial expenses (11.3) (11.2) (27.3) Income tax expenses (4.2) (3.
Slide 36: Summary cash flow statement
Summary cash flow statement £m 2016 H1 2015 H1 EBITDA before exceptionals 39.5 41.8 Working capital (7.7) (13.4) Non-cash movements 0.2 0.3 Cash generated from trading operations 32.0 28.7 Exceptional costs (11.0) (1.4) Cash generated from operations 21.0 27.3 Interest paid (8.4) (10.6) Tax paid (1.
Slide 37: General enquiries, Investor enquiries, Media enquiries
General enquiries Investor enquiries Media enquiries Forterra plc Investor contact: FTI Consulting 5 Grange Park Court Shatish Dasani Tel: 020 3727 1340 Roman Way Chief Financial Officer fti_forterra@fticonsulting.com Northampton Tel: 01604 707600 NN4 5EA investors@forterra.co.uk Tel: 01604 707600 e