Genuit Group Plc · LSE:GEN
Genuit — FY2020 Earnings Presentation
33 slides from Genuit's earnings presentation, Mar 1, 2021
Slide 1: Polypipe Group Plc 2020 Full Year Results Presentation
Polypipe Group Plc 2020 Full Year Results Presentation
Slide 2: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 STRATEGY 4 MARKET UPDATE & OUTLOOK 5 SUMMARY
Slide 3: Well positioned for the future
Well positioned for the future ❑ Robust response to 2020 challenging and volatile trading conditions ❑ Continued outperformance of construction market ❑ Recovery evident in H2 volumes and margins ❑ Clear strategy focused on sustainable growth drivers and financial headroom allows us to be proactive
Slide 4: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 STRATEGY 4 MARKET UPDATE & OUTLOOK 5 SUMMARY
Slide 5: Financial highlights
Financial highlights ❑ Full year revenue decline of 10.9% reflecting unprecedented trading environment in Q2 and strong recovery, with second half in line with prior year ❑ Tight cost control; Operational cash focus ❑ Underlying operating profit severely impacted by reduced volumes in H1 and Covid-1
Slide 6: 2020 underlying results summary
2020 underlying results summary £m 2020 2019 Change Change Revenue 398.6 447.6 (49.0) (10.9)% ❑ Revenue decline of 10.9% Cost of sales (242.5) (255.2) 12.7 5.0% overall with the decline Gross profit 156.1 192.4 (36.3) (18.9)% happening in H1 down 22.3% Gross margin 39.2% 43.0% (380)bps - for the hal
Slide 7: Revenue and underlying operating profit bridge
Revenue and underlying operating profit bridge Revenue (£m) +0.1 +11.2 -69.8 ❑ Price increase netting off cost inflation 454.6 +9.5 447.6 447.6 ❑ Currency effect negligible 389 389.1 398.6 with 90% UK revenue 2019 Selling price Currency Organic Acquisitions 2020 ❑ Organic volume drop through high at
Slide 8: Quarterly performance through the crisis
Quarterly performance through the crisis 2020 2019 ❑ Revenue tracks the impact of Covid- 19 with a two-thirds loss of volume in April 2020 ❑ High drop through on volume losses resulted in a Q2 quarterly operating margin loss of over 15% ❑ Strong recovery in Q3 with an element of pent-up demand ❑ Rec
Slide 9: Operating segment review – Residential Systems
Operating segment review – Residential Systems 2020 demand drivers Residential 2020 2019 % Change UK Infrastructure 1% UK Commercial - Public Revenue - £m 223.9 260.3 (14.0)% 5% UK Commercial - Private UK RMI Underlying operating profit - £m 29.8 53.4 (44.2)% 3% 40% Europe Underlying operating margi
Slide 10: Operating segment review – Commercial and Infrastructure Systems
Operating segment review – Commercial and Infrastructure Systems 2020 demand drivers Commercial & Infrastructure 2020 2019 % Change Revenue - £m 174.7 187.3 (6.7)% UK RMI UK Infrastructure 3% 11% Underlying operating profit - £m 12.4 24.7 (49.8)% UK New Build Underlying operating margin 7.1% 13.2% 2
Slide 11: 2020 statutory results
2020 statutory results £m 2020 2019 ❑ Amortisation of intangibles Underlying profit after tax 29.4 58.9 includes the full year effect of the acquisition of Alderburgh in Non-underlying items: October 2019 - Amortisation of intangible assets (7.8) (7.5) ❑ Contingent consideration driven - Acquisition
Slide 12: Cash flows
Cash flows £m 2020 2019 Change ❑ Continued investment in fixed EBITDA (before non-underlying items) 60.9 95.5 (34.6) assets, accelerated in H2 after Net capital expenditure (24.5) (18.0) (6.5) Movement in net working capital 1.5 (5.9) 7.4 suspension in early phases of Share-based payments 1.4 1.2 0.
Slide 13: Net working capital
Net working capital £m 2020 2019 Change Inventories 52.6 59.7 (7.1) ❑ Inventories lower than 2019 after accelerated recovery in Q4 Trade and other receivables 61.6 40.8 20.8 ❑ Trade debtors higher than 2019 because of trading Trade and other payables (112.2) (97.5) (14.7) right up to and beyond Chri
Slide 14: Banking facilities
Banking facilities Headroom at 31 December 2020: Drawn as at 31 December ❑ Committed Covid-19 facility of £50m available in £m 2020 Facility Headroom addition to the £300m facility Bank loan 60.0 300.0 240.0 ❑ No covenant breaches at any time in the year Cash and cash equivalents (44.1) - 44.1 ❑ Net
Slide 15: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 STRATEGY 4 MARKET UPDATE & OUTLOOK 5 SUMMARY
Slide 16: Strategy unchanged – aligned to structural growth drivers
Strategy unchanged – aligned to structural growth drivers Leading positions in structural Environmental, Regulatory & Legacy-led growth – Increasing our geographic growth markets Sustainability-led growth – material substitution reach continued investment around four key drivers ❑ Strong brands - hi
Slide 17: Investment in innovation core to organic growth – Residential
Investment in innovation core to organic growth – Residential POLYPIPE © 2021 17
Slide 18: Investment in innovation core to organic growth – Commercial & Infrastructure
Investment in innovation core to organic growth – Commercial & Infrastructure POLYPIPE © 2021 | 18
Slide 19: Inorganic growth – clear acquisition objectives
Inorganic growth – clear acquisition objectives P Growth driven by environmental and regulatory tailwinds, expected to deliver above-market growth P Investing in a portfolio of market leading brands P Seeking opportunities consistent with our ESG objectives, and businesses that operate sustainably P
Slide 20: M&A update - Adey
M&A update - Adey ❑ Enterprise value of £210m, representing adjusted EBITDA multiple of 11.8x ❑ Funded via £96m equity raise and the balance with debt ❑ Strong support from shareholders ❑ Market leading position in protection products for water based heating systems ❑ Sector set to deliver significa
Slide 21: M&A update – Nu-Heat
M&A update – Nu-Heat ❑ Enterprise value of £27m, representing an adjusted EBITDA multiple of 8.4x* ❑ Market leading position in underfloor heating and renewables packages ❑ Direct sales model additive to Polypipe’s existing merchant channel activity ❑ Managed alongside Nuaire to develop low energy h
Slide 22: M&A update - Plura
M&A update - Plura ❑ Polypipe invested £1.25m to take 51% stake in Plura, with an option to acquire remaining 49% in 2024, based on 6x EBITDA multiple ❑ Brings technology and commercial capability to allow entry to rail and communications sectors with product ranges centred around chambers, and plat
Slide 23: 2020 Indicative pro forma sector mix impact of recent acquisitions
2020 Indicative pro forma sector mix impact of recent acquisitions Before After 5% 5% 9% 8% 25% UK RMI 31% UK RMI UK New Build 12% UK New Build 13% UK 89% Rest of the World UK 89% Rest of the World European Markets European Markets UK Commercial - Private 7% UK Commercial - Private 7% UK Commercial
Slide 24: ESG update – Winning Sustainably
ESG update – Winning Sustainably Themes Carbon The Circular Innovation Developing our Employee Diversity & Reduction Economy Workforce Engagement Inclusion 2025 Target LFL reduction of Recycled materials A Vitality Index of We will sign up to The At least a 5% Y/Y Gender pay at 66% in carbon should
Slide 25: Rebranding Polypipe Group Plc as Genuit Group Plc
Rebranding Polypipe Group Plc as Genuit Group Plc Continued progression of the Group ❑ We have evolved significantly since Nuaire acquisition in August 2015 ❑ We have a broadened portfolio beyond our historical core of plastic piping systems ❑ The Group name no longer accurately reflects the extent
Slide 26: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 STRATEGY 4 MARKET UPDATE & OUTLOOK 5 SUMMARY
Slide 27: UK Construction Market – Residential New Build
UK Construction Market – Residential New Build New House Build %Y/Y Value Change 2018 2019 2020e 2021f 2022f 20 Market 10 ❑ Total market value down 20% in 0 2020 -10 -20 ❑ Public housing saw most extreme decline -30 Private Housing New Build Public Housing New Build Total Housing New Build ❑ Decline
Slide 28: UK Construction Market – Residential RMI
UK Construction Market – Residential RMI Private Housing RMI %Y/Y Value Change Private Housing RMI Market 15 10 ❑ Private RMI down 11.5% despite some 5 resilience during first lockdown, especially 0 in exterior home improvement products -5 -10 2018 2019 2020e 2021f 2022f ❑ 2021 Private RMI slightly
Slide 29: UK Construction Market – Commercial and Infrastructure
UK Construction Market – Commercial and Infrastructure Commercial Construction % Y/Y Value Change 10 Market 5 ❑ Commercial market continued to decline, down 0 18.6% in the year. The two largest subsectors, -5 offices and retail, both suffered -10 -15 ❑ Clearly both of those subsectors face some -20
Slide 30: Outlook
Outlook ❑ Our markets continue to recover ❑ Recent extensions to stimulus programmes give us confidence in new housebuilding. There is continued improvement in RMI, commercial and infrastructure markets ❑ Our medium term demand drivers are stronger than ever – a continued structural UK housing short
Slide 31: Agenda
Agenda 1 INTRODUCTION 2 FINANCIAL SUMMARY 3 STRATEGY 4 MARKET UPDATE & OUTLOOK 5 SUMMARY
Slide 32: Well positioned for the future
Well positioned for the future ❑ Robust response to 2020 challenging and volatile trading conditions ❑ Continued outperformance of our construction markets ❑ Recovery evident in H2 volumes and margins ❑ Clear strategy focused on sustainable growth drivers and financial headroom allows us to be proac
Slide 33: Q&A
Q&A To ask a question, please use the below conference line: United Kingdom (Local): 020 3936 2999 All other locations: +44 203 936 2999 Access Code: 443672 To register a question, press *1 on phone keypad. To remove the question, press *2 POLYPIPE © 2021 | 33