Breedon Group PLC · LSE:BREE
Breedon — Breedon Aggregates — H1 2014 Earnings Presentation
36 slides from Breedon's earnings presentation, Jul 17, 2014
Slide 1: Breedon Aggregates Half-year 2014 results
Breedon Aggregates Half-year 2014 results 17 July 2014 Kemnay block plant
Slide 2: Agenda
2014 H1 - Agenda Results overview Peter Tom Financial review Rob Wood Operational review & group outlook Simon Vivian Q&A 2
Slide 3: Results overview
Results overview Peter Tom CBE Chairman 3
Slide 4: Six months of growth and investment
2014 H1 - Six months of growth and investment Improved trading Continuing improvements in site management Organic investment generating strong operational improvements Reserves enhanced with further extensions Bolt-on acquisition of Huntsmans completed BEAR NE 4G long-term contract secured Refinanci
Slide 5: Breedon's 'Golden Rules'
2014 H1 - Breedon’s ‘Golden Rules’ 1. Stay local Easy to do business with at every site 2. Stay nimble Keep ahead of our markets & develop new ones 3. Devolve responsibility and decision-making to regional teams 4. Squeeze our assets Maximise return from every tonne of rock 5. Eliminate underperform
Slide 6: Financial highlights
2014 H1 - Financial highlights Revenue Underlying EBITDA £125.2m (+25%) £17.8m (+37%) Underlying EBITDA margin Acquisitions EBITDA* 14.2%(+1.3 ppt) £3.0m Underlying basic EPS Net debt 0.73p (+33%) £63.0m (+£8.6m vs. Dec-13) * £0.3 million from 2014 acquisition and additional £2.7 million from 2013 a
Slide 7: Financial review
Financial review Rob Wood Group Finance Director 7
Slide 8: Income statement
2014 H1 - Income statement 2014 2013 Variance £000 £000 % Revenue 125,235 100,205 25% EBITDA 17,757 12,973 37% Depletion & Depreciation (7,317) (6,329) (16%) Underlying operating profit 10,440 6,644 57% Associate 701 535 31% Interest (1,708) (1,837) 7% Exceptional (355) (976) 64% PBT 9,078 4,366 108
Slide 9: Divisional overview
2014 H1 - Divisional overview Revenue £000 EBITDA £000 2013 2014 2013 2014 64,792 60,443 10,623 50,821 9,382 49,384 7,166 7,317 (1,510) (2,248) England Scotland HO England Scotland 9
Slide 10: Volumes
2014 H1 - Volumes Aggregates t000 Asphalt t000 Concrete m3000 2013 2014 2013 2014 2013 2014 3,582 715 326 616 283 2,737 10
Slide 11: Cash flow/net debt
H1 2014 - Cash flow/net debt Opening Non- Working £000 debt EBITDA underlying capital Interest Tax Dividend Capex Disposals Acquisitions Equity Closing debt (35,000) (54,414) (41,000) (62,974) (47,000) (53,000) (59,000) (65,000) 11
Slide 12: Refinancing
2014 H1 - Refinancing New debt facility put in place post-period-end 4-bank club - Barclays, HSBC, RBS & Santander Key terms £100m RCF 4 year tenor Margins lower than old facility Flexible ‘general corporate purposes’ Includes additional £50m accordion option New club, lower cost, greater flexibilit
Slide 13: Operational review
Operational review Simon Vivian Group Chief Executive 13
Slide 14: Market background
2014 H1 - Market background Economic recovery gathering momentum GDP growth 3.1% pa, construction output up 5.4% year on year, unemployment and inflation falling Housing market particularly strong Q1 MPA volumes significantly ahead - aggregates and asphalt 15-18% and concrete 5% Market conditions in
Slide 15: Breedon maintaining momentum
2014 H1 - Breedon maintaining momentum Year on year results strongly ahead in six months to June 2014 Good performance from former AI & Marshalls businesses Huntsmans acquired in June Capacity increased - new quarries and concrete plants acquired or opened Continuing reduction in accident frequency
Slide 16: Breedon Aggregates England
Breedon Aggregates England i54 Technology Park in Staffordshire, site of new Jaguar Land Rover plant
Slide 17: England overview
2014 H1 - England overview EBITDA excluding Revenue acquisitions comfortably £64.8m (+27%) ahead of prior year Further margin Underlying EBITDA improvements £10.6m (+48%) Acquisitions trading in line with expectations Volumes Significant operational Aggregates +40% Asphalt +17% efficiency improvemen
Slide 18: England achievements
2014 H1 - England achievements New concrete plants at Cannock and Clearwell Acquisition of West Deeping quarry Upgrade of Norton Bottoms quarry Further synergies at Clearwell quarry Asphalt hot storage and night working at Leaton Planning extension for Kettleby quarry Further recruitment of owner-dr
Slide 19: Huntsmans: the perfect bolt-on
2014 H1 - Huntsmans: the perfect bolt-on Expands our presence in Gloucestershire and into Worcestershire Strong local business in buoyant, growing markets Well run, with good margins Excellent, high-quality reserves with potential for extension Two well-positioned concrete plants Complementary range
Slide 20: England outlook & priorities
2014 H1 - England outlook & priorities Continue progress to zero accidents Maintain and improve prices Drive up service levels Continue investment in operating efficiencies Complete Clearwell and Cannock planning Pursue organic growth opportunities in concrete and asphalt Integrate Huntsmans, delive
Slide 21: Breedon Aggregates Scotland
Breedon Aggregates Scotland Tom’s Forest quarry
Slide 22: Scotland overview
2014 H1 - Scotland overview EBITDA margins continue to Revenue grow £60.4m (+22%) 2013 AI acquisition trading in line with expectations - Underlying EBITDA major challenge running as separate business £9.4m (+28%) Efficiency gains in all products Volumes Aggregates +17% Asphalt +15% BEAR NE 4G contr
Slide 23: Scotland achievements
2014 H1 - Scotland achievements Improvements in Health & Safety - only one LTI year to date Strong Q1 on back of Transport Scotland spending Improved pricing in more challenging market areas Strong performance from Contracting division MCT recycling train delivering added value from waste stock Crai
Slide 24: BEAR wins NE 4G road maintenance contract
2014 H1 - BEAR wins NE 4G road maintenance contract BEAR has held contract since 2001 New contract for 6-8 years Covers 613 miles of trunk roads Complements NW 4G contract, held by BEAR since 2012 Breedon a major beneficiary 37.5% associate earnings contribution Sole supplier of aggregates, asphalt
Slide 25: AWPR: a major opportunity
2014 H1 - AWPR: a major opportunity Connect Roads confirmed as preferred bidder for £745m Aberdeen Western Peripheral Route (AWPR) Commences early 2015 for completion 2018 46km of new dual carriageway 12km of dual carriageway upgrade 40km of new side roads 30km of access tracks 72 new bridges Breedo
Slide 26: Scotland outlook & priorities
2014 H1 - Scotland outlook & priorities Continue progress to zero accidents Referendum creating uncertainty, but no significant long term impact expected on our business Excellent potential from BEAR’s NE 4G contract Major A9 dualling contract still to be awarded Complete integration of former AI un
Slide 27: Group outlook
BREEDO AGGREGATES Group outlook
Slide 28: Group outlook
2014 H1 - Group outlook Economy recovering - GDP only 0.6% below pre-recession level Unemployment continuing to fall MPA forecasts 5-6% growth in full-year volumes across all materials Highways Agency spending on road construction to double between 2015 and 2020 - £200m “pothole” fund in current yea
Slide 29: Appendices
Appendices MPA volumes Aggregates production per capita Aggregates market history 29
Slide 30: MPA crushed rock volumes – moving annual trend
MPA crushed rock volumes – moving annual trend million tonnes Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Crushed Rock MAT Actual 30
Slide 31: MPA sand & gravel volumes – moving annual trend
MPA sand & gravel volumes – moving annual trend million tonnes Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Sand & Gravel MAT Actual 31
Slide 32: MPA asphalt volumes – moving annual trend
million tonnes Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Asphalt MAT Actual Dec-10 MPA asphalt volumes – moving annual trend Dec-11 Dec-12 Dec-13 32
Slide 33: MPA readymixed volumes – moving annual trend
MPA readymixed volumes – moving annual trend million cubic metres Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Readymixed Concrete MAT Actual 33
Slide 34: Aggregates production per capita (2012, tonnes)
Aggregates production per capita (2012, tonnes) (Source: UEPG) 34
Slide 35: Aggregates market history (million tonnes)
Aggregates market history (million tonnes) (Source: DCLG, MPA) 35
Slide 36: 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