Slide 1: Sustainable water and climate management solutions for the built environment
Sustainable water and climate management Polypipe Group plc solutions for the built environment Interim Results, August 2019
Slide 2: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 SUMMARY & OUTLOOK
Slide 3: Introduction
Introduction ▪ Strong first half performance ▪ Revenue 6.2% higher with strong contribution from recent acquisitions ▪ Residential Systems revenue 8.4% higher, with Manthorpe performing well ▪ Commercial & Infrastructure revenue 3.4% higher despite challenging UK market conditions ▪ 30 basis point i
Slide 4: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 SUMMARY & OUTLOOK
Slide 5: Financial highlights
Financial highlights ▪ Group revenue 6.2% higher, 1.0% on a like for like basis ▪ Underlying operating profit 8.3% higher at £39.3m ▪ Underlying earnings per share 8.9% higher at 14.7 pence ▪ Cash generated from operations at £21.7m, reflecting normal first half working capital increase ▪ Net debt o
Slide 6: Underlying results summary
Underlying results summary £m H1 2019 H1 2018* % Change Revenue 223.3 210.2 6.2% Cost of sales (127.9) (121.4) Gross profit 95.4 88.8 7.4% Gross margin 42.7% 42.2% Selling & distribution costs (35.9) (34.3) Administrative expenses (20.2) (18.2) Underlying operating profit 39.3 36.3 8.3% Operating ma
Slide 7: Revenue and underlying operating profit bridge
Revenue and underlying operating profit bridge - “good operational savings and strong acquisition margins” Revenue (£m) nil +0.3 223.3 (4.4) +11.0 +6.2 210.2 352.9 H1 2018 Selling price Currency Organic Acquisition IFRS 16 H1 2019 Underlying operating profit (£m) +0.1 nil +0.2 (0.9) +3.6 39.3 36.3 H
Slide 8: Balance sheet summary
Balance sheet summary £m H1 2019 H1 2018 Change 31 December 2018 Non-current assets ▪ property, plant & equipment 119.0 101.3 17.7 118.4 ▪ right-of-use assets 12.7 - 12.7 - ▪ goodwill 343.0 319.7 23.3 343.0 ▪ other intangible assets 55.2 34.0 21.2 58.9 Net assets classified as held-for-sale - 0.7 (0
Slide 9: Net working capital
Net working capital £m H1 2019 H1 2018 Change 31 December 2018 Inventories 61.9 52.7 9.2 58.1 Trade and other receivables 57.7 54.8 2.9 37.4 Trade and other payables (95.4) (87.3) (8.1) (99.6) Net working capital 24.2 20.2 4.0 (4.1) ▪ First half working capital increase part of normal working capita
Slide 10: Cash flows
Cash flows 31 December £m H1 2019 H1 2018 Change 2018 EBITDA (before non-underlying items) 1 49.4 44.5 4.9 89.9 Capital expenditure, net of disposals of property, plant & equipment (8.7) (10.7) 2.0 (23.2) Profit on disposal of property, plant & equipment (0.2) (0.2) - (0.3) Movement in net working c
Slide 11: Statutory results
Statutory results £m H1 2019 H1 2018 31 December 2018 Underlying profit after tax 29.3 26.9 56.6 Non-underlying items: - Contingent consideration (0.5) - (2.3) - Amortisation of intangible assets (3.7) (2.8) (5.9) - Unamortised debt issue costs written off - - (0.6) - Middle East closure and other c
Slide 12: Banking facilities
Banking facilities Headroom at H1 2019: £m Drawn as at H1 2019 Facility Headroom Bank loan 223.0 300.0 77.0 Cash and cash equivalents (43.0) - 43.0 Net debt excluding unamortised debt issue costs 180.0 120.0 Unamortised debt issue costs (1.5) Net debt 178.5 Lease liabilities 12.7 Financial liabiliti
Slide 13: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 SUMMARY & OUTLOOK
Slide 14: Demand drivers
Demand drivers June-2019 LTM demand drivers RoW ▪ 90% revenue derived from UK market Europe 5% 5% ▪ Balanced exposure to different segments UK Infrastructure UK RMI of UK Construction market 5% 26% ▪ Gives resilience through the cycle ▪ Historic trends: UK - Growth in new build – Manthorpe acquisiti
Slide 15: UK Construction Market – Residential
UK Construction Market – Residential New housebuild TotalNew Total Housing, % change housebuild % on yr-1 on y-1 change ▪ Market 14.0% 12.0% - New house build market now forecast to be 0.6% 10.0% lower in 2019 8.0% 6.0% 4.0% - RMI (housing) market now forecast to be 1.5% 2.0% lower in 2019 0.0% -2.0
Slide 16: UK Construction Market – Commercial and Infrastructure
UK Construction Market – Commercial and Infrastructure Commercial Commercial, % change on yr-1 ▪ Market 10.0% 8.0% - Commercial market now forecast to be 6.9% 6.0% 4.0% lower in 2019 2.0% - Positive for hotels, warehousing, high rise resi 0.0% -2.0% 2017 2018 2019 2020 2021 - Negative for offices, r
Slide 17: Operating segment review – Residential Systems
Operating segment review – Residential Systems Residential Systems H1 2019 H1 2018 % Growth Segmental revenue £131.6m £121.3m LTM to June 2019 demand drivers Inter segment revenue (£2.6m) (£2.3m) Europe LTM June 2019 UK 3% Revenue £129.0m £119.0m 8.4% Infrastructure 1% UK Commercial Underlying opera
Slide 18: Operating segment review – Commercial and Infrastructure Systems
Operating segment review – Commercial and Infrastructure Systems Commercial and Infrastructure Systems H1 2019 H1 2018 % Growth Segmental revenue £99.3m £95.0m LTM to JuneLTM 2019 demand June 2019 drivers Inter segment revenue (£5.0m) (£3.8m) Rest of World UK Commercial 7% - Private Revenue £94.3m £
Slide 19: Acquisitions Update
Acquisitions Update Manthorpe Permavoid Manthorpe Permavoid ▪ Integration continues to go to plan ▪ Integration complete ▪ Commercial and cost synergies beginning to ▪ Project quote logs healthy although not immune to materialise current UK project delays ▪ Winner of Housebuilder product award 2019
Slide 20: M&A Update
M&A Update Reminder: Two-track M&A strategy ▪ Bolt-on M&A to gap fill UK product offer and provide “one-stop-shop” to customers - Leveraging relationship with customer - Adding to our product / technology IP - Primarily plastic; but consider other materials - Pipeline encouraging ▪ Wider geographies
Slide 21: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL REVIEW 3 BUSINESS REVIEW 4 SUMMARY & OUTLOOK
Slide 22: Summary and Outlook
Summary and Outlook ▪ Strong first half performance ▪ Revenue 6.2% higher with strong contribution from recent acquisitions ▪ Medium-term fundamentals in our markets remain strong ▪ Mindful of continued political and economic uncertainty ▪ Self-help cost reduction initiatives implemented ▪ Encouragi
Slide 23: Appendix
APPENDIX © Polypipe
Slide 24: IFRS 16 (Leases)
IFRS 16 (Leases) ▪ Immaterial impact on reporting and covenants IFRS 16 – balance sheet impact 30 June 2019 IFRS 16 30 June 2019 £m Pre IFRS 16 adjustments As reported Total assets 679.8 12.7 692.5 Total liabilities (337.2) (12.7) (349.9) Net assets 342.6 - 342.6 IFRS 16 – profit and loss impact 30
Slide 25: Cautionary Statement
Cautionary Statement This presentation is intended to focus on matters which are relevant to the interests of shareholders in the Company. The purpose of the presentation is to assist shareholders in assessing the strategies adopted and performance delivered by the Company and the potential for thos