Breedon Group PLC · LSE:BREE
Breedon — FY2018 Earnings Presentation
28 slides from Breedon's earnings presentation, Mar 6, 2019
Slide 1: 2018 Full-Year Results
2018 FULL-YEAR RESULTS 6 March 2019 1
Slide 2: 2018 Full-Year Results Agenda
2018 FULL-YEAR RESULTS Introduction Peter Tom CBE Executive Chairman Financial review Rob Wood Group Finance Director Group & operational review Pat Ward Group Chief Executive Q&A 2
Slide 3: Peter Tom CBE, Executive Chairman
2018 FULL-YEAR RESULTS PETER TOM CBE Executive Chairman BREEDON GROUP 3
Slide 4: 2018: Expanding Horizons
2018: EXPANDING HORIZONS • Strong performance in difficult trading conditions • Improved revenue and earnings underpinned by acquisitions • Strong cashflow resulting in reduction in leverage • Transformative acquisition of Lagan • Asset swap with Tarmac completed • Continued significant capital inve
Slide 5: Rob Wood, Group Finance Director
2018 FULL-YEAR RESULTS ROB WOOD Group Finance Director BREEDON GROUP 5
Slide 6: New Operating Segments
2018 NEW OPERATING SEGMENTS Great Britain Comprising the trade previously reported in Breedon Northern and Breedon Southern, together with the building products businesses acquired with Lagan Ireland Comprising the construction materials and contracting services businesses on the Island of Ireland w
Slide 7: Financial Highlights
2018 FINANCIAL HIGHLIGHTS Revenue Underlying EBIT* Underlying EBIT margin* £862.7m £103.5m 12.0% 2017: £652.4m +32% 2017: £80.4m +29% 2017: 12.3% Profit before taxation Underlying basic EPS* Net debt £79.9m 4.70p £310.7m 2017: £71.2m +12% 2017: 4.14p +14% 2017: £109.8m *Underlying results are stated
Slide 8: Income Statement
2018 INCOME STATEMENT 2017 2018 £ million £ million Variance Revenue 652.4 862.7 +32% Underlying EBITDA 117.0 154.4 +32% Depletion & depreciation (39.3) (52.6) Underlying operating profit 77.7 101.8 +31% Share of associate and joint ventures 2.7 1.7 Underlying EBIT 80.4 103.5 +29% Interest (6.4) (11
Slide 9: Segmental Performance
2018 SEGMENTAL PERFORMANCE 2017 2018 2017 2018 Underlying Underlying Underlying Underlying EBIT EBIT EBIT EBIT £ million £ million Variance margin margin Variance Great Britain 64.5 61.4 -5% 11.2% 10.1% -1.1ppt Ireland – 20.9 – – 13.4% – Cement 25.8 31.4 +22% 18.2% 17.8% -0.4ppt Central administrati
Slide 10: Product Volumes
2018 PRODUCT VOLUMES BREEDON Aggregates Asphalt Concrete Cement million tonnes million tonnes million mé% million tonnes 19.4 2.8 3.3 3.2 2.0 2017 2018 2017 2018 2017 2018 2017 2018 2% 90% 3% 122% * 0 “9/0 0) Great Britain [I ireland Cement NOTE: In accordance with the Cement Market Data Order 2016,
Slide 11: Net Debt Movement
2018 NET DEBT MOVEMENT BREEDON £ MILLION ie) (109.8) (310.7) Opening debt EBITDA Non- Working Interest Tax Dividend Capital Disposals Acquisitions Equity FX Closing debt underlying/ capital expenditure and issued other investment [i intow J outtiow uw
Slide 12: Return on Invested Capital
RETURN ON INVESTED CAPITAL 12
Slide 13: Pat Ward, Group Chief Executive
2018 FULL-YEAR RESULTS PAT WARD Group Chief Executive BREEDON GROUP 13
Slide 14: Market Background: Great Britain
2018 MARKET BACKGROUND Great Britain • UK GDP up 1.4% • Construction output broadly flat • Aggregates volumes ahead 2.1% • Asphalt volumes ahead 0.7% • Readymix volumes down 1.6% • As always, significant regional variations Sources: ONS, CPA, MPA (members). 14
Slide 15: Market Background: Ireland
2018 MARKET BACKGROUND Northern Ireland • NI economic activity ahead 2.1% in first nine months • Construction output up 2.3% in first nine months • Driven primarily by housing and infrastructure Republic of Ireland • RoI GDP forecast to have grown by 7.8% • Construction output estimated to have grow
Slide 16: 2018: Strong Performance, Expanded Horizons
2018: STRONG PERFORMANCE, EXPANDED HORIZONS • Better-than-expected performance in difficult trading conditions • Improved revenue and earnings, underpinned by acquisitions • Solid progress by all three segments • Strong cashflow enabled reduction in post-Lagan net debt and leverage • Disappointing L
Slide 17: Business Reviews: Great Britain
2018 BUSINESS REVIEWS Great Britain • Lost ground recovered following severe impact of Q1 weather • Impacted by rising input costs • Significant investments at Dowlow, Raisby and Port Dundas • New reserves secured at Norton Bottoms, North Cave and Raisby • North Drumboy quarry opened to service Glas
Slide 18: Business Reviews: Ireland and Cement
2018 BUSINESS REVIEWS Ireland • Strong performance despite poor Q1 weather and no Assembly in NI • Significant improvement in RoI market conditions as year progressed • 65% increase in Irish Government maintenance tenders • Growing opportunity to ship aggregates from Whitemountain quarries to GB • E
Slide 19: 2019 Group Outlook
2019 GROUP OUTLOOK • 2019 will be challenging in the UK pending the outcome of Brexit • We are focused on improving our safety performance • The medium-term outlook for UK infrastructure and housing remains encouraging, including HS2 benefits beginning to flow in 2019 • Entry into Ireland has divers
Slide 20: Q&A
y ON BREEDON Q&A BREEDON GROUP 20
Slide 21: Appendices
APPENDICES BREEDON GROUP 21
Slide 22: Business Model
BUSINESS MODEL UNDERPINNED CORE ADDED VALUE PRODUCTS BY CORE ASSETS OUTPUTS AND SERVICES nearly 900mt Reererin reserves Asphalt and resources Ready-mixed concrete Contracting services Other products FZ BREEDON LONG-TERM GROWTH MARKETS Infrastructure Housing Commercial Other The long-term success of
Slide 23: Key Performance Indicators
KEY PERFORMANCE INDICATORS 23
Slide 24: Track Record
TRACK RECORD BREEDON UNDERLYING EBIT COMPONENTS 2014 - 2018 (£m) 120.0 100.0 80.0 400 4 20.0 = 2: 0.0 a... 283) 2014 2015 2016 2017 2018 [Bl Prior year Underlying EBIT J Organic ff) Acauisitions 24
Slide 25: MPA Aggregates Volumes: MAT
MPA AGGREGATES VOLUMES: MAT 170 150 million tonnes 130 110 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 25
Slide 26: MPA Asphalt Volumes: MAT
MPA ASPHALT VOLUMES: MAT 27 25 million tonnes 23 21 19 17 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 26
Slide 27: MPA RMX Volumes: MAT
MPA RMX VOLUMES: MAT 24 22 million cubic metres 20 18 16 14 12 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 27
Slide 28: Disclaimer
The information contained in this presentation document (the “presentation”, which term includes any information provided verbally in connection with this presentation document) does not constitute an offer or solicitation to hold, sell or invest in any security and should not be considered as inves