Slide 1: Forterra plc Results Presentation
plc Forterra plc Results Presentation Year ended 31st December 2016
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 Results Announcement in respect of the year ended 31 Dec 2016. For the purposes of this notice, the presentation (the “Presentation”) shall mean and include th
Slide 3: Forterra at a glance
Forterra at a glance Leading UK producer Focus on bricks and blocks Sole manufacturer of iconic Balanced exposure to of manufactured with complementary range of Fletton bricks sold under the the new build and RM&I UK masonry products bespoke clay & concrete products London Brick brand residential ma
Slide 4: Highlights
Highlights • Revenue increase of 1.5% due to increased brick, aggregate block and precast concrete volumes arising from strong sales to housebuilders offset partially by merchant destocking earlier in the year • EBITDA increased to £70.6m due to higher revenue and tight control of cost base and over
Slide 5: Financial review
Financial review Financial review 5
Slide 6: Financial highlights
Financial highlights £m (pro-forma basis) 2016 2015 Change Revenue 294.5 290.2 1.5% EBITDA before exceptionals 70.6 67.5 4.6% EBITDA margin % 24.0% 23.3% +70bps PBT before exceptionals 54.3 52.3 3.8% EPS before exceptionals (pence) 21.5 20.6 4.4% Operating cashflow before exceptionals 69.8 53.8 29.7
Slide 7: Pro-forma adjustments
We Efficient servemanufacturing the UK buildingbase, Pro-forma adjustments construction markets drivingall across cost distribution leadershipchannels and competitiveness £m 2016 2015 EBITDA before exceptionals 70.6 70.5 Additional costs in 2016 as a stand-alone PLC - (3.0) EBITDA before excepti
Slide 8: EBITDA bridge
EBITDA bridge 70.6 71 0.4 0.6 70 2.1 69 68 67.5 67 £m 66 65 64 63 62 61 2015 Sales volumes, Energy Distribution & 2016 EBITDA price & mix costs other costs EBITDA • Sales volumes of bricks, aggregate blocks and precast products up on last year, driven by increased sales to house builders. Partially
Slide 9: Cash flow
ashCash flowflow 10.4 0.2 (1.0) 75 (8.8) 65 (12.4) 55 (6.3) 45 £m (4.0) (13.6) 35 25 60.2 69.8 15 5 70.7 24.7 - 5 Operating Depreciation & Non-cash Working Operating Investing Interest Tax Dividend Exceptional Net profit before Amortisation items capital cash flow activities Paid Paid paid items cas
Slide 10: Balance sheet and net debt
Balance sheet and net debt £m 31 Dec 2016 31 Dec 2015 Intangible assets 13.7 13.3 Property, plant and equipment 147.2 149.5 Deferred tax asset 0.4 1.8 Total non-current assets 161.3 164.6 • Significant reduction in net debt from Current assets £155.0m at IPO to £92.3m due to Inventories 39.0 40.9 st
Slide 11: Trade working capital
Trade working capital 140 Total Trade working capital breakdown 120 working capital Inventory 100 £16m £19m Trade & other receivables Total working capital (£m) 80 Accruals & other payables 60 39 41 Trade payables 40 20 32 29 £m Dec 2016 Dec 2015 0 Inventory days* 83 92 (29) (26) Debtor days* 39 42
Slide 12: Financial summary
Financial summary • Strong progress demonstrated in the year, with an increase in revenue and EBITDA • Solid cash generation, with operating cash conversion of over 100% and double digit free cashflow yield • Robust balance sheet, with reduction in net debt: EBITDA ahead of target • Board to follow
Slide 13: Business review
Business review Business review 13
Slide 14: Bricks and blocks review
Bricks and blocks review £m 2016 2015 % Change Revenue 221.3 218.0 1.5% EBITDA before exceptionals (pro-forma) 63.6 61.7 3.1% EBITDA margin % (pro-forma) 28.7% 28.3% +40bps • EBITDA increased by £1.9m on like-for-like basis with 40bps improvement in margin due to higher sales, lower energy and fixed
Slide 15: Bricks and blocks – Strategy implementation
Bricks and blocks – Strategy implementation • Measham expansion successfully completed in January 2016 resulting in 22% capacity increase • Dedicated new product development team established and product range expanded with number of new brick types added • Number of initiatives being progressed to s
Slide 16: Bespoke products review
Bespoke products review £m 2016 2015 % Change Revenue 74.8 73.7 1.5% EBITDA before exceptionals (pro-forma) 7.0 5.8 20.7% EBITDA margin % (pro-forma) 9.4% 7.9% +150bps • Underlying revenue (excluding Structherm) grew by 4.7% with an improvement in margin due mainly to strong performance of engineere
Slide 17: Forterra: delivery against our priorities
Forterra: delivery against our priorities Priorities Actions Embed > Implement facility optimisation programmes manufacturing > Invest in modern process technology excellence > Continual focus on Health and Safety and Sustainability Align capacity > Respond to market conditions and utilisation > Fle
Slide 18: Current trading & outlook
Current trading & outlook • 2017 has started well, building on the momentum from H2 2016. Brick volumes in first two months ahead of last year • Continued strong activity levels from major housebuilders and positive indications from these customers for at least the first half • As anticipated, price
Slide 19: Questions
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Slide 20: Appendices
A di ppendices Ine FORTERRA;.
Slide 21: 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 to a more stable growth in core bricks cross-selling manufacturing low risk capex RM&I market 1 2 3 4 5 6 7 100% in UK Clear run
Slide 22: Complementary range of manufactured masonry and bespoke building products
We offer We offer aa complementary complementary range range of of manufactured manufactured masonry masonry We Weoffer and a complementary offer buildingrange a complementary bespoke ofrange products manufactured of manufactured masonry and masonry bespoke building and bespoke products building pro
Slide 23: Cross-selling
WeW We e serve serve serve the the UKthe UK UK building building building construction construction construction markets across all markets markets distribution across across all all channels distribution distribution channels channels End-market exposure Key Channels / Residential Strong and long-s
Slide 24: Efficient manufacturing base, driving cost leadership and competitiveness
Efficient manufacturing base, driving cost leadership and Efficient We serve manufacturing the UK building competitiveness Efficient manufacturing base, base, construction markets driving across driving all cost cost distribution leadership leadership channels and competitiveness and competitiveness
Slide 25: Incremental brick capacity from de-bottlenecking projects
Efficient We Iservemanufacturing Incremental the UK brick ncremental building capacity base, construction brick capacity frommarkets de-bottlenecking driving across all cost distribution leadership from de-bottlenecking channels and competitiveness projects projects Status ✔ Completed ✔ Commenced ✔
Slide 26: Forterra: delivery against our priorities
Forterra: delivery against our priorities Priorities Actions Progress in 2016 > Implement facility • Completed Measham Bricks expansion project to optimise plant capacity by 22% optimisation programmes Embed • Cement usage reduction of up to 20% in Hollowcore flooring via new casting > Invest in mod
Slide 27: P&L pre-exceptionals
We Efficient servemanufacturing the UK buildingbase, P&L pre-exceptionals construction markets drivingall across cost distribution leadership channels and competitiveness £m 2016 2015 Revenue 294.5 290.2 Cost of Sales (171.2) (167.7) Gross Profit 123.3 122.5 Distribution Costs (43.2) (44.4) Administ
Slide 28: D&A and exceptional items
We Efficient servemanufacturing the UK buildingbase, D&A and exceptional items construction markets drivingall across cost distribution leadership channels and competitiveness £m 2016 2015 EBITDA before exceptionals 70.6 70.5 Depreciation (10.1) (9.1) Amortisation (0.3) (0.3) Exceptional items (8.9)
Slide 29: Summary cash flow statement
We Efficient servemanufacturing the UK buildingbase, Summary cash flow statement construction markets drivingall across cost distribution leadership channels and competitiveness £m 2016 2015 EBITDA before exceptionals 70.6 70.5 Working capital (1.0) (18.5) Non-cash movements 0.2 1.8 Cash generated f
Slide 30: General, investor and 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