Slide 1: 2020 Interim Results
2020 INTERIM RESULTS 6 August 2020 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 Overview Joe Hudson Financial Review Chris McLeish Operational Review Joe Hudson Summary Joe Hudson Q&A 3
Slide 4: Overview
OVERVIEW • Health and safety our number one priority • Decisive actions taken to manage the business during challenging trading conditions • Strong focus on costs, cash flow and liquidity, free cash flow positive in Q2 • Continue to execute our strategy and take actions to ensure we emerge as a lean
Slide 5: Financial Review
At the heart of building Ibstock ie FINANCIAL REVIEW
Slide 6: Financial Headlines
FINANCIAL HEADLINES PROFITABILITY IMPACTED BY LOWER SALES VOLUMES Half year to 30 June 2020 H1 2020 H1 2019 Change Revenue £131m £203m (36%) Adjusted EBITDA £10m £59m (84%) Depreciation & amortisation (£18m) (£16m) (10%) Non underlying items (£41m) (£1m) (Loss)/ profit before interest and tax (£49m)
Slide 7: Revenue Analysis
REVENUE ANALYSIS REVENUE IMPROVED SEQUENTIALLY DURING Q2 • Sharp reduction in volumes from late March Q1 % Q2 % H1 % impacted Q1 revenues Total Revenue £85m (10%) £46m (58%) £131m (36%) • Volumes in April heavily impacted by COVID-19 100% with clay and concrete down 90% and 70% respectively 75% • Se
Slide 8: Clay
CLAY GRADUAL RECOVERY IN NEW BUILD ACTIVITY Half year to 30 June (£m) H1 2020 H1 2019 % Change Total Revenue 87 151 (43%) Adjusted EBITDA 8 51 (85%) Margin 9% 34% • Revenue reflects lower sales volumes partly offset by modest price benefit • Volumes recovered from -90% YoY in April to -40% in June •
Slide 9: Concrete
CONCRETE RESILIENT PERFORMANCE Half year to 30 June (£m) H1 2020 H1 2019 % Change Total Revenue 44 52 (15%) Adjusted EBITDA 6 11 (48%) Margin 12% 20% • Revenues 15% lower due to lower sales volumes • RMI and infrastructure activity continued during lockdown, albeit at lower levels • £7m benefit from
Slide 10: Non Underlying Items
NON UNDERLYING ITEMS ONE-OFF COSTS ASSOCIATED WITH COVID-19 AND GROUP’S RESPONSE • Charge of £13m in respect of energy positions • Energy usage will fall well below expectations at start of the year • Drives non-underlying charge for surplus positions of Half year to 30 June (£m) H1 2020 £7m • Addit
Slide 11: Balance Sheet
BALANCE SHEET ACTIONS TO PROTECT BALANCE SHEET • Entered 2020 with a strong balance sheet • Strong working capital management • Free cash flow positive in Q2 • Net debt at 30 June of £103m • Leverage at 1.6x net debt to Adjusted EBITDA • Total liquidity of over £110m • Renegotiated RCF covenants to
Slide 12: Resilient Cash Flow Performance
RESILIENT CASH FLOW • Free cash flow positive during Q2 PERFORMANCE • Close management of working capital in Q2 offset WORKING CAPITAL MANAGEMENT seasonal outflow in Q1 REDUCED FCF IMPACT IN H1 • Tax paid reflects deferral of HMRC payments • Lower capex reflects reduced maintenance spend; Half year
Slide 13: Operational Review
OPERATIONAL REVIEW 13
Slide 14: Safe Return to Work
SAFE RETURN TO WORK HEALTH AND SAFETY TOP PRIORITY • Colleague safety remains our top priority as we implement a phased re-start of production • Majority of sites now safely re-opened • “Safe Start” induction sessions held at all sites • Revised working protocols in place; • Social distancing • Onsi
Slide 15: Brick Market Dynamics
BRICK MARKET DYNAMICS BALANCING SUPPLY AND DEMAND UK Brick Market Volumes • Rolling 12 month total market volumes at 1,200 c.2bn bricks 1,000 800 600 • Industry production significantly reduced 400 during lockdown 200 - YTD May 2019 YTD May 2020 • Lower inventory levels at 30 June due to Domestic Im
Slide 16: Clay Division – Operational Review
CLAY DIVISION – OPERATIONAL REVIEW WELL POSITIONED FOR RECOVERY • Recent investments mean the division was well placed entering the COVID-19 pandemic • Significant impact from COVID-19, brick volumes down c.90% during April • Swift management action taken to reduce costs, furlough colleagues and pro
Slide 17: Concrete Division – Operational Review
CONCRETE DIVISION – OPERATIONAL REVIEW RESILIENT FIRST HALF PERFORMANCE • Resilient first half performance, reflecting greater exposure to • Good momentum in merchant channel during May essential infrastructure and RMI markets and June • Shipments of fencing and rail products continued during • Sale
Slide 18: Restructuring
Proposed Site Closures RESTRUCTURING Clay sites Concrete sites CREATING A LEANER AND MORE FLEXIBLE OPERATING FOOTPRINT • Recent investments, including Eclipse and our enhancement projects, have expanded capacity and increased flexibility • Full review of all aspects of our operational footprint to r
Slide 19: Strategy on Track
STRATEGY ON TRACK MARKET LEADER WITH BROAD PRODUCT RANGE AND NATIONAL FOOTPRINT Sustain • Operational excellence initiatives continue to drive improvements in underlying performance • Manufacturing reliability and health and safety metrics improved YTD • Enhancement projects on track Innovate • Look
Slide 20: Further Progress on Sustainability
FURTHER PROGRESS ON SUSTAINABILITY • Increasing importance of sustainability and security of supply to customers • Latest sustainability report published, demonstrating sector leadership • Good progress with our sustainability targets, 6.5% reduction in carbon in 2019 • Increased our ambitions aroun
Slide 21: Supporting Communities Through the Pandemic
SUPPORTING COMMUNITIES THROUGH THE PANDEMIC • With >30 sites across the UK, Ibstock is a key employer in many local communities • Strongly committed to our community agenda despite the challenges of COVID-19 • Many sites donated surplus PPE to NHS facilities across the country • We continue to suppo
Slide 22: Positive Fundamentals
POSITIVE FUNDAMENTALS • Government commitment to new house building; • Clear support for re-start of construction activity in early May • Summer statement “A Plan for Jobs” supportive of role of construction sector in UK economic recovery • Stamp duty holiday on purchases below £500k • Planning syst
Slide 23: Summary and Outlook
SUMMARY AND OUTLOOK • Health and safety of our colleagues remains our top priority • Continue to progress our strategic initiatives and get closer to our customers • Actions taken to strengthen the business: • Reducing costs • Protecting the balance sheet • Leaner and more flexible operating footpri
Slide 24: Q&A
Q&A 24
Slide 25: Key investment highlights
Key investment highlights Experienced Market Strong Strong Structural Industry High barriers Multiple growth senior leadership customer financial demand growth structure to entry options management positions service ethic performance team Strong household Vertically integrated High quality, broad Ad
Slide 26: Leading manufacturers of….
Leading manufacturers of…. 26
Slide 27: A leading provider of clay and concrete building products
A leading provider of clay and concrete building products End market Sales channel Others Infrastructure 5% Other 1% new build Factors 7% 22% Merchants 46% RMI New build 32% housing 60% Housebuilders direct 27% RMI exposure Key supplier to the Complementary Cross-selling Innovative Opportunity to ad
Slide 28: Disciplined capital allocation
Disciplined capital allocation Deliver major Return surplus Maintain and Sustainable and organic growth capital to enhance our progressive projects and invest shareholders when existing assets ordinary dividend selectively in appropriate inorganic growth STRONG BALANCE SHEET Net debt to Adjusted EBI
Slide 29: Summary balance sheet
Summary balance sheet Half year ended 30 June (£m) H1 2020 H1 2019 Assets PP&E 375 378 Right of Use assets 28 33 Intangible 99 96 Non-current assets 502 507 Inventories 70 67 Trade and other receivables 51 64 Current assets 121 131 Total assets 623 638 Trade and other payables (68) (84) Lease liabil
Slide 30: Summary cash flow
Summary cash flow Half year ended 30 June (£m) H1 2020 H1 2019 Adjusted EBITDA 10 59 Working capital (1) (20) Net interest (1) (1) Tax (3) (7) Post-employee benefits (1) (1) Net cash flow from operating activities 4 30 Total capex (15) (19) Surplus asset disposals - 1 Net cash flow from investing ac
Slide 31: Adjusted P&L reconciliation 2020
Adjusted P&L reconciliation 2020 Fair Value Deferred tax Fair value energy Half year ended 30 June (£m) Adjusted Adjustments Exceptionals rate change contracts Interest Reported Revenue 131 - - - - 131 Costs (121) - (35) - (6) - (162) Other - - - - - - EBITDA 10 - (35) - (6) - (31) D&A (13) (5) - -
Slide 32: Adjusted P&L reconciliation 2019
Adjusted P&L reconciliation 2019 Fair Value Half year ended 30 June (£m) Adjusted Adjustments Exceptionals Other Reported Revenue 203 - - - 203 Costs (144) - (1) - (145) Other - - - - - EBITDA 59 - (1) - 58 D&A (12) (4) - - (16) EBIT 47 (4) (1) - 42 Finance (1) - - (1) Tax (9) 1 - - (8) PAT 37 (3) (