Breedon Group PLC · LSE:BREE
Breedon — Investor Presentation (November 2020)
30 slides from Breedon's investor presentation, November 2020
Slide 1: Breedon Group Investor Presentation November 2020
BREEDON GROUP INVESTOR PRESENTATION November 2020
Slide 2: Agenda
Agenda Overview of the Group [slides 3-7] 2019 highlights [slides 8-10] H1 2020 highlights [slides 11-13] Trading update [slides 14-15] Breedon’s sustainable growth strategy [slides 16-23] Acquisition of CEMEX UK assets [slide 24] Summary [slide 25] Appendices [slides 26-30] 2 INVEST
Slide 3: Overview of the Group
Overview of the Group 3 INVESTOR PRESENTATION • November 2020
Slide 4: A leading construction materials group
A leading construction materials group • Largest independent construction materials business in Great Britain − Growing position on Island of Ireland • Broad reach with a national footprint − Over 3,500 employees across more than 350 facilities, including former CEMEX UK assets currently trading as
Slide 5: History
History Company created and listed on UK Alternative Investment Market to pursue ‘buy 2008 and build’ strategy in UK heavyside construction materials market First acquisition: former Ennstone UK business, establishing platform for growth 2010 organically and via value-enhancing acquisitions 2011-15
Slide 6: Vertically integrated model with nationwide reach
Vertically integrated model with nationwide reach CORE OUTPUTS Network of 100+ AGGREGATES 2 CEMENT 350+ locations quarries plants across GB and Ireland ADDED-VALUE PRODUCTS AND SERVICES Substantial proportion of core outputs converted by Vertically 200+ READY-MIXED 50+ Breedon into integrated model
Slide 7: Reporting as three divisions
Reporting as three divisions Cement 19% GREAT BRITAIN Nationwide network of quarries and downstream operations GROUP REVENUE Contracting services and highway maintenance businesses (minor road Ireland £929.6m surfacing and major infrastructure contracts) 20% GB 2019 61% IRELAND Trading under W
Slide 8: 2019 highlights
2019 highlights 8 INVESTOR PRESENTATION • November 2020
Slide 9: 2019 highlights
2019 highlights Excellent performance in challenging conditions Improved results from all three Divisions Strong cash flow reduced post IFRS 16 closing Leverage to 1.6x Integration of Lagan largely completed Acquisition of Roadway strengthened our position in North Wales Capital Concrete
Slide 10: 2019 highlights
2019 highlights Revenue Underlying EBIT* Underlying EBIT margin* £929.6m +8% £116.6m +13% 12.5% +0.5ppt FY 2018: £862.7m FY 2018: £103.5m FY 2018: 12.0% Profit before taxation Underlying basic EPS* Net debt at 31 Dec 2019 £94.6m +18% 5.0p +8% £290.3m FY 2018: £79.9m FY 2018: 4.70p Dec 2018: £310.7m
Slide 11: H1 2020 highlights
H1 2020 highlights 11 INVESTOR PRESENTATION • November 2020
Slide 12: H1 2020 highlights
H1 2020 highlights Encouraging performance in first 12 weeks of the year COVID-19 lockdown at end of March prompted immediate fall in demand and managed shutdown of most operations Early and decisive action taken to keep colleagues safe and preserve liquidity Site reopenings commenced in ear
Slide 13: H1 2020 highlights
H1 2020 highlights Revenue Underlying EBIT* Underlying EBIT margin* £335.3m -25% £(0.6)m -101% (0.2)% -11.3ppt H1 2019: £447.4m H1 2019: £49.5m H1 2019: 11.1% Loss before taxation Underlying basic EPS* Net debt £(10.1)m -126% (0.65)p -132% £253.6m H1 2019: profit of £39.5m H1 2019: 2.03p H1 2019: £3
Slide 14: Trading update
Trading update 14 INVESTOR PRESENTATION • November 2020
Slide 15: Trading update (18 November 2020)
Trading update (18 November 2020) Trading performance The improving trends reported in our most recent trading update in September continued into the fourth quarter, with Group revenues in both September and October ahead of the same period in the prior year, on a like-for-like basis. As a result, t
Slide 16: Breedon's sustainable growth strategy
Breedon’s sustainable growth strategy 16 INVESTOR PRESENTATION • November 2020
Slide 17: Sustainable growth strategy
Sustainable growth strategy There are six pillars to our strategy, which together constitute the essential elements of Breedon’s investment case 17 INVESTOR PRESENTATION • November 2020
Slide 18: A clear purpose and the right culture
A clear purpose and the right culture Breedon is an inherently local business with a wide range of stakeholders The Group seeks to benefit all these groups, from the communities in Breedon’s Purpose which it operates and the customers it serves through to its To make a material employees, suppli
Slide 19: Robust governance
Robust governance Board membership has been significantly refreshed over the last 12 months ‒ Non-executive Chairman appointed in 2019 ‒ Greater diversity, with broader range of experience ‒ Pat Ward has informed the Board of his intention to retire during 2021, and following a comprehensive revie
Slide 20: Commitment to sustainability and social responsibility
Commitment to sustainability and social responsibility Playing an important role in the economic development of the UK and Ireland, Breedon GCCA Sustainability Charter works continuously to reduce the impact of its operations on people and the Pillars and Reporting environment The Group became a
Slide 21: Long-term growth markets
Long-term growth markets Breedon is exposed to long-term growth areas of the GB and Irish construction markets (e.g. infrastructure, housing, industrial) Following a prolonged period of underinvestment, infrastructure development is a priority in both GB and Ireland The UK Government’s March 2
Slide 22: Conservative financial management
Conservative financial management Strong asset-backed balance sheet CLEAR CAPITAL ALLOCATION PRIORITIES Highly cash-generative Cash generation and strong balance sheet allow significant organic investment in our business and continued pursuit of acquisitions to accelerate our strategic develop
Slide 23: A growing and well-utilised asset base and significant self-help opportunities
A growing and well-utilised asset base and significant self-help opportunities C1bn BREEDON’S SELF-HELP LEVERS tonnes Consents for new quarries rarely granted, COMMERCIAL OPERATIONS reserves creating significant barrier to entry • Differentiated local business model • Improving equipment effective
Slide 24: Acquisition of CEMEX UK assets
Acquisition of CEMEX UK assets Acquisition of certain UK assets and operations from CEMEX completed in July 2020, for total consideration of £178m Quality assets underpinned by c170 million tonnes of mineral reserves and resources Around 650 talented and experienced employees Infills six key
Slide 25: Summary: a leading construction materials group
Summary: a leading construction materials group Strong competitive positions in markets with favourable long-term dynamics Clear strategy and resilient, sustainable business model Highly cash-generative with opportunities for value-enhancing investment Good growth opportunities in both GB an
Slide 26: Appendices
Appendices 26 INVESTOR PRESENTATION • November 2020
Slide 27: Our track record: financial KPIs
Our track record: financial KPIs Revenue (£m) Underlying EBIT margin (%) Underlying basic EPS (pence) 930 13.1 5.08 863 4.70 4.14 652 12.5 3.49 12.3 455 2.68 11.9 12.0 319 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Leverage (times) Return on invested capital (%) Free
Slide 28: Our track record: non-financial KPIs
Our track record: non-financial KPIs Employee LTIFR Employee TIFR (per million hours worked) (per million hours worked) 2.72 20.54 17.17 15.64 1.87 1.81 14.28 1.41 1.05 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Reserves and resources life Emissions intensity (years) (tCO2e/£ revenue (kg)) 59
Slide 29: Our track record: balanced growth
Our track record: balanced growth Underlying EBIT components 2015 – 2019 (£m) 2015 2016 2017 2018 2019 Prior year Underlying EBIT Organic Acquisitions 29 INVESTOR PRESENTATION • November 2020
Slide 30: Our track record: capital allocation
Our track record: capital allocation 2015 – 2019 (£m) 2015 2019 opening Net closing net debt EBITDA capex Acquisitions Equity Interest Tax IFRS 16 Other net debt Inflows Outflows 30 INVESTOR PRESENTATION • November 2020
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