Slide 1: Forterra plc Results Presentation Half Year Ended 30 June 2020
FORTERRA PLC RESULTS PRESENTATION HALF YEAR ENDED 30 JUNE 2020 10 SEPTEMBER 2020 Keeping Britain Building
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 financial period ended 30 June 2020 (the “Presentation”). For the purposes of this notice, “Presentation” shall mean and
Slide 3: Agenda
AGENDA 1. Key points 2. Financial review 3. Business review 4. Outlook 5. Q&A Stephen Harrison Ben Guyatt Chief Executive Officer Chief Financial Officer Keeping Britain Building 3
Slide 4: Key Points
KEY POINTS • The health, safety and wellbeing of our employees remains our primary concern • Decisive actions were taken throughout the pandemic to protect employees and preserve cash whilst continuing to serve customers • Actions to right-size cost base completed; reducing fixed costs by £10.4m and
Slide 5: Financial Review
FINANCIAL REVIEW Keeping Britain Building
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS • Revenue fell by 37% relative to the prior period due to the impact of COVID-19 • EBITDA before exceptional items decreased by £34.3m to £8.2m • Result before tax and exceptional items decreased by £35.0m from a profit of £32.7m to a loss of £2.3m • Exceptional items total £21.
Slide 7: Key Financials
KEY FINANCIALS Six months ended 30 June Six months ended 30 June 2020 2019 Before £m (unless stated) Statutory Exceptional items exceptional items Statutory* Variance Revenue 122.4 - 122.4 193.6 (36.8)% EBITDA (12.4) 20.6 8.2 42.5 (80.7)% Operating (loss)/profit (21.4) 20.6 (0.8) 33.9 (Loss)/Profit
Slide 8: COVID Impact – Monthly Revenue
COVID IMPACT – MONTHLY REVENUE Impact of COVID crisis - monthly comparison ➔ Beyond period end 40,000 120% 35,000 100% % of equivalent prior year 30,000 80% Revenue (£000) 25,000 20,000 60% 15,000 40% 10,000 20% 5,000 - 0% Jan Feb Mar Apr May Jun Jul Aug 2019 2020 % • During the heart of the lockdow
Slide 9: Segmental Results: Bricks and Blocks
SEGMENTAL RESULTS: BRICKS AND BLOCKS Six months ended Six months ended 30 June 2020 30 June 2019 Before exceptional £m Statutory Exceptional items items Statutory Revenue 90.5 - 90.5 143.9 EBITDA 3.4 7.7 11.1 41.6 EBITDA margin 3.8% - 12.3% 28.9% Like-for-like • Trading started the year broadly in l
Slide 10: Segmental Results: Bespoke Products
SEGMENTAL RESULTS: BESPOKE PRODUCTS Six months ended Six months ended 30 June 2020 30 June 2019 Before exceptional £m Statutory Exceptional items items Statutory Revenue 33.0 - 33.0 50.9 EBITDA (15.4) 12.5 (2.9) 0.9 EBITDA margin (46.7)% - (8.8)% 1.8% Like-for-like • Revenue decrease of 35% as a res
Slide 11: Cost Savings / Exceptional Items
COST SAVINGS / EXCEPTIONAL ITEMS Profit and loss charge Cash outflows H2 2020 H2 2020 £m H2 2019 H1 2020 (est.) H2 2019 H1 2020 (est.) Restructuring costs 3.6 4.4 - - 0.6 7.4 Aborted transaction costs 0.7 - - 0.7 - - Refinancing costs - 0.4 2.9 - - 3.1 Impairment charges - 16.2 - 4.3 21.0 2.9 0.7 0.
Slide 12: Working Capital
WORKING CAPITAL Accrued & other payables Trade payables Trade and other receivables Inventory • Working capital trend is seasonal with significant outflow in H1 (and in particular Q1) £16m £54m £29m 120 • Strategy to match production to sales avoiding inventory growth in H2 • Customer payment patter
Slide 13: Cash Flow
CASH FLOW 2020 2019 • Operating cash flow was significantly impacted by the effects of the pandemic with a net cash outflow from operations of £4.2m compared to an inflow of £m HY 2020 HY 2019 £27.6m in 2019 EBITDA 8.2 42.5 • During the lockdown the Group was able to protect its cash reserves and Ch
Slide 14: Net Debt and Facilities
NET DEBT AND FACILITIES Net debt £m AUG 2020 HY 2020 FY 2019 Cash and cash equivalents 22.3 81.9 26.6 Loans and borrowings (40.4) (150.5) (69.8) Net debt excluding leases 18.1 68.6 43.2 Lease liabilities (11.0) (11.7) (14.1) Net debt 29.1 80.3 57.3 Net debt / EBITDA (x) 0.4 1.6 0.6 • Net debt to EBI
Slide 15: Business Review
BUSINESS REVIEW Keeping Britain Building
Slide 16: Long Term Brick Market Fundamentals Remain Supportive
LONG TERM BRICK MARKET FUNDAMENTALS REMAIN SUPPORTIVE Short term Long term Housing completions vs. Government target UK Government supportive to demand 300,000 - Help to Buy in place to 2023 250,000 - SDLT holiday in place to March 2021 200,000 - Increase in PRS and mixed tenure housing 150,000 Supp
Slide 17: Housing Market
HOUSING MARKET Evidence suggests the housing market has exited lockdown strongly “Following the reopening of the “The housing market has housing market on 13 May continued to experience “Sales rates have shown housing market activity is at “House prices recover remarkably high levels of strong recov
Slide 18: Brick Market
BRICK MARKET Brick deliveries and inventory (domestic) 1200 1000 800 £000 600 400 200 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3
Slide 19: Forterra Sales Volumes
FORTERRA SALES VOLUMES Forterra Brick sales volumes Forterra Floor beam sales volumes 120% 120% Lockdown commenced Lockdown commenced 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 4 week rolling average 4 week rolling average Jan Feb Mar Apr May Jun Jul Aug Sep Jan Feb Mar Apr May Jun Jul Aug Sep
Slide 20: New Desford Facility
NEW DESFORD FACILITY Summary • Project expected to generate attractive returns over the medium term and position the Group to benefit from the long-term growth in the housing market Progress update • New factory building structurally complete • £20.7m spent to date • c.15% IRR over 20 years Revised
Slide 21: Sustainability
SUSTAINABILITY • Our Forterra sustainability update has been published today • Focussing on developments across 3 key themes: • A further update with challenging new targets will be published in our 2020 annual report Keeping Britain Building 21
Slide 22: Outlook
OUTLOOK Keeping Britain Building
Slide 23: Outlook
OUTLOOK • Confident in long term recovery of core markets • Trading since lockdown has exceeded Management expectations • Current recovery in housing market supported by welcome Government intervention • The industry has made great steps in learning to operate in an environment where COVID-19 is pre
Slide 24: Q&A
Q&A Keeping Britain Building
Slide 25: Appendices
Appendices Keeping Britain Building
Slide 26: At a Glance
AT A GLANCE Revenue by segment (%) (2019) 27% 48% 25% Leading UK producer of Focus on bricks and blocks with manufactured masonry complementary range of bespoke clay & Bricks products concrete products Blocks Bespoke Revenue by end use (%) (2019) 10% 27% 63% Sole manufacturer of iconic Fletton Preca
Slide 27: Investment Case
INVESTMENT CASE UK FOCUS RESILIENCE STRATEGY LEADERSHIP Flexible production Iconic Fletton Brick Growth Efficiency capacity 1. 2. 3. 4. 5. 6. 100% in UK Sole Operational Well-equipped to An efficient Leadership manufacturer agility deliver long-term manufacturing Consolidated team competitive growth
Slide 28: Summary Profit & Loss
SUMMARY PROFIT & LOSS £m HY 2020 HY 2019 FY 2019 Revenue 122.4 193.6 380.0 EBITDA - Bricks and Blocks 11.1 41.6 80.4 - Bespoke Products (2.9) 0.9 2.3 - Total 8.2 42.5 82.7 EBITDA margin (%) 6.7% 22.0% 21.8% Depreciation and amortisation (9.0) (8.6) (17.7) Operating (loss) / profit (before exceptiona
Slide 29: Summary Balance Sheet
SUMMARY BALANCE SHEET £m Jun 2020 Dec 2019 Intangible assets 11.3 18.2 Property, plant and equipment 182.7 182.6 Right-of-use assets 11.2 13.7 Total non-current assets 205.2 214.5 Current assets Inventories 44.2 47.8 Trade and other receivables 38.5 40.4 Cash and cash equivalents 81.9 26.6 Income ta
Slide 30: Forterra contact details
Forterra 5 Grange Park Court Roman Way Northampton NN4 5EA 01604 707600 30