Slide 1: Polypipe Group plc Interim Results 2020
Polypipe Group plc Interim Results 2020 15 September 2020
Slide 2: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 BUSINESS REVIEW 4 SUMMARY & OUTLOOK
Slide 3: Introduction
Introduction Our COVID-19 response has protected the wellbeing of our people, business and stakeholders Management made maximum efforts to preserve liquidity Actions included furloughing 60% of staff and reducing Board remuneration by 20% Operations continued throughout the crisis whilst ens
Slide 4: COVID-19 actions
COVID-19 actions Actions September update Health & safety measures - Social distancing - Ongoing; maintaining 2 metre distance even at normal capacity - PPE mandatory - Ongoing - Deep cleansing - Ongoing - Layout changes, including renting additional assembly space - Ongoing; some impact on producti
Slide 5: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 BUSINESS REVIEW 4 SUMMARY & OUTLOOK
Slide 6: Financial highlights
Financial highlights Immediate steps were taken to strengthen the balance sheet to weather the crisis including a newly negotiated £50m COVID-19 facility, deferral of some covenant testing and a successful £120m equity raise Resilient performance with a recovery so far stronger than expected, wi
Slide 7: Revenue and underlying operating profit bridge
Revenue and underlying operating profit bridge Revenue (£m) ++5.2 - -61.4 Price increase netting off cost inflation 223.3 228.2 447.6 223.3 Currency effect negligible +6.5 with significant UK revenues 166.8 173.6 COVID-19 impact drop H1 2019 Selling price Currency COVID-19 Acquisitions H1 2020
Slide 8: Underlying results summary
Underlying results summary £m H1 2020 H1 2019 Change % Change Revenue 173.6 223.3 (49.7) (22.3)% Cost of sales (110.3) (127.9) 17.6 13.8% Gross profit 63.3 95.4 (32.1) (33.6)% Gross margin 36.5% 42.7% (620)bps n/a Selling, distribution and administration costs (52.8) (56.1) 3.3 5.9% Underlying opera
Slide 9: Statutory results
Statutory results £m H1 2020 H1 2019 31 December 2019 Underlying profit after tax 5.5 29.3 58.9 Non-underlying items: - Amortisation of intangible assets (4.0) (3.7) (7.5) - Acquisition costs and contingent consideration (0.3) (0.5) (3.2) Tax effect of non-underlying items 0.2 0.6 1.4 Profit for the
Slide 10: Balance sheet summary
Balance sheet summary Alderburgh H1 2020 Change £m H1 2020 acquisition (excl. acquisition) H1 2019 (excl. acquisition) Non-current assets property, plant and equipment 126.9 5.9 121.0 119.0 2.0 right-of-use assets 13.5 - 13.5 12.7 0.8 goodwill 345.6 2.6 343.0 343.0 - other intangible assets
Slide 11: Net working capital
Net working capital H1 2020 Alderburgh H1 2020 Change £m As reported acquisition (excl. acquisition) H1 2019 (excl. acquisition) Inventories 55.8 1.0 54.8 61.9 (7.1) Trade and other receivables 60.2 2.9 57.3 57.7 (0.4) Trade and other payables (78.1) (2.4) (75.7) (95.4) 19.7 Net working capital 37.9
Slide 12: Cash flows
Cash flows £m H1 2020 H1 2019 Change 31 December 2019 EBITDA (before non-underlying items) 20.2 49.2 (29.0) 95.5 Capital expenditure, net of disposals of property, plant and equipment (8.3) (8.7) 0.4 (18.0) Movement in net working capital (35.2) (27.8) (7.4) (5.9) Share-based payments 0.6 0.8 (0.2)
Slide 13: Banking facilities
Banking facilities Headroom at H1 2020: £m Drawn as at H1 2020 Facility Headroom Bank loan 174.8 300.0 125.2 COVID-19 facility¹ - 50.0 50.0 CCFF² 99.5 99.5 - Cash and cash equivalents (201.7) - 201.7 Net debt excluding unamortised debt issue costs 72.6 449.5 376.9 Unamortised debt issue costs (1.4)
Slide 14: Technical guidance for full year 2020
Technical guidance for full year 2020 Immediate capital expenditure circa £20m - £25m Financing costs circa £7m Effective tax rate circa 17% Restructuring costs £1.5m Savings from redundancies £3m on an annualised basis POLYPIPE © 2020 | 14
Slide 15: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 BUSINESS REVIEW 4 SUMMARY & OUTLOOK
Slide 16: Demand drivers
Demand drivers LTM to June 2020 demand drivers 90% revenue derived from UK market UK Infrastructure UK Commercial - Public 4% Balanced exposure to different segments 9% UK RMI of UK Construction market 27% Provides resilience through the cycle UK Commercial - Private 12% UK 90.0% European Mark
Slide 17: UK Construction Market – Residential
UK Construction Market – Residential New Housebuild 000s units 250 New housebuild 196 206 200 190 181 - New housebuilding in 2020 forecast to be 33% down vs 2019. 150 132 - Government intervention helping: 100 74 - Stamp duty 50 - Extension of Help to Buy scheme to March 2021 0 2018 2019 2020 Star
Slide 18: UK Construction Market – Commercial and Infrastructure
UK Construction Market – Commercial and Infrastructure Commercial Sector Output Trends Market - Expectation of further decline in commercial sector in 2020 of 28.5%. In near term, projects continue to be completed, with large contractors addressing productivity challenges - Roads infrastructure ma
Slide 19: Operating segment review – Residential Systems
Operating segment review – Residential Systems Residential Systems H1 2020 H1 2019 % Growth LTM to June 2020 demand drivers Revenue £92.8m £129.0m (28.1)% UK Infrastructure 1% UK Commercial - Underlying operating profit £7.4m £26.6m (72.2)% Public 5% UK Commercial - Underlying operating margin 8.0%
Slide 20: Operating segment review – Commercial and Infrastructure Systems
Operating segment review – Commercial and Infrastructure Systems Commercial and Infrastructure Systems H1 2020 H1 2019 % Growth LTM to June 2020 demand drivers Revenue £80.8m £94.3m (14.3)% Underlying operating profit £3.1m £12.7m (75.6)% UK Infrastructure UK RMI 9% 7% Underlying operating margin 3.
Slide 21: Strategy reminder
Strategy reminder Growth will be ahead of the UK construction market over the cycle by: 1. Focusing on higher growth parts of the market driven by sustainable and environmental factors such as: a. Flood resilience, storm water management b. Green urbanisation c. Drive for low / zero carbon constru
Slide 22: Strategy reminder and future opportunities
Strategy reminder and future opportunities More exposure to infrastructure given Government investment over next 3-5 years, including HS2 Space ventilation and air quality more attractive in a post COVID-19 world Drive for low carbon heat source for residential low rise newbuild and implicit c
Slide 23: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 BUSINESS REVIEW 4 SUMMARY & OUTLOOK
Slide 24: Summary
Summary Prompt action by management ensured the safety of our staff and strength of the balance sheet Trading since the end of the first half has continued to recover with July and August revenue some 6% and 3% below 2019 levels respectively, tracking well-ahead of the operating scenario set out
Slide 25: Q&A
Q&A To ask a question, please use the below conference line: United Kingdom (Local): 020 3936 2999 All other locations: +44 20 3936 2999 Access Code: 832401 To register a question, press *1 on phone keypad. To remove the question, press *2 POLYPIPE © 2020| 25
Slide 26: 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