Slide 1: Preliminary Results for the year ended 31 December 2021
2021 Preliminary Results for the 10 March 2022 year ended 31 December 2021
Slide 2: Highlights
HIGHLIGHTS Record constant currency revenue and operating profit • +10% revenue and +29% operating profit OCC growth vs 2020 • +4% revenue and +3% operating profit OCC growth vs 2019 • Successful management of supply chain headwinds and input cost inflation ESG strategy developed • Commitment to net
Slide 3: Our Purpose and Strategy
OUR PURPOSE AND STRATEGY WHY? WHERE? HOW? ORGANIC GROWTH WHAT? • Autonomous operating model 1 MACRO DRIVERS • Agility/proximity to market Creating • Increasing population • Urbanisation • Premium on talent • Innovation • Climate change sustainable • Increasing health and safety regulations PORTFOLIO
Slide 4: Three Imperatives
THREE IMPERATIVES SEVEN FOCUS AREAS PROTECTING THE WORLD ESG FOCUS AREAS: UN SDGs • Supporting our customers through our 1. Greenhouse gas sustainable infrastructure products and emissions and energy services efficiency • Minimising our environmental impact as we 2. Sustainable products deliver our
Slide 5: Our Commitment to Net Zero
OUR COMMITMENT TO NET ZERO Background Net Zero Scope 1 and 2 emissions by 2040 • Committed to SBTi in 2021 • Scope 1 & 2 CO2 emissions >50% gas for galvanizing >20% electricity (Scope 2) >15% HGVs, forklift trucks etc. >5% domestic heating Costed plan • Details the key actions and assumptions from 2
Slide 6: Sustainable Products
SUSTAINABLE PRODUCTS VALUE2SOCIETY Methodology • Assess economic value to society of our products and services THE SIX CAPITALS • Evaluates a specific product’s impact on Six Capitals • Credible, external sources of data • Three key products for pilot study 1. Supply chain • Considers 17 impact indi
Slide 7: Talent to Deliver Growth
TALENT TO DELIVER GROWTH PAUL SIMMONS HANNAH NICHOLS ANDREW PARK JOEL WHITEHOUSE DENISE BEACHY DAVID GEORGE HOOMAN JAVVI CEO CFO CPO Corporate Group President Group President Group President Development Joined from Halma in Joined in 2019 from Joined in June 2021 US based, joined US based, joined UK
Slide 8: Results Summary
RESULTS SUMMARY • SUMMARY 2021 2020 Reported +/- OCC* +/- Revenue (£m) 705.0 660.5 +7% +10% Operating profit (£m) 86.0 69.9 +23% +29% Operating margin (%) 12.2 10.6 +160bps +190bps Profit before tax (£m) 79.9 62.6 +28% Earnings per share (p) 77.9 63.2 +23% Dividend (p) 31.0 26.7 +16% *Organic consta
Slide 9: At a Glance
2021 AT A GLANCE By division 23% 28% 40% OPERATING REVENUE 46% PROFIT £705.0m £86.0m 31% 32% By end market geography By plant location 10% 19% 38% OPERATING REVENUE PROFIT £705.0m 36% 54% £86.0m 43% 2021 PRELIMINARY PRELIMINARYRESULTS RESULTS 9
Slide 10: Galvanizing
GALVANIZING OCC Operating 2021 OCC 2021 2020 change £m Revenue Profit Revenue £m change Revenue (£m) 198.3 185.9 +11% 2020 185.9 35.8 UK 69.6 + 17% Operating profit (£m) 39.5 35.8 +18% F/X (6.8) (2.2) US 72.2 + 3% Operating margin 19.9% 19.3% Organic 19.2 5.9 France 56.5 +15% 2021 198.3 39.5 2021 19
Slide 11: Sustainability Benefits of Hot-Dip Galvanizing
SUSTAINABILITY BENEFITS OF HOT-DIP GALVANIZING Hot-dip galvanizing is a proven steel corrosion protection solution which optimises the service life of steel structures • Saves on maintenance costs • Avoids the premature replacement of steel products • Reduces the life cycle carbon footprint compared
Slide 12: Utilities
UTILITIES OCC Operating 2021 OCC 2021 2020 change £m Revenue Profit Revenue £m change Revenue (£m) 223.7 211.2 +12% 2020 211.2 20.9 UK 77.1 + 20% Operating profit (£m) 26.8 20.9 +38% F/X (10.6) (1.5) US 101.3 + 6% Engineered Operating margin 12.0% 9.9% Organic 23.1 7.4 Supports (UK/India) 45.3 +10%
Slide 13: Utilities Case Study
UTILITIES CASE STUDY FIRE RESISTANT ELECTRICAL DISTRIBUTION POLES FRP utility poles have significant benefits • Durable and low maintenance: do not rust or rot, can be engineered to withstand high winds • Safe: high dielectric strength improving worker safety • Lightweight: cheaper to transport and
Slide 14: Roads & Security
ROADS & SECURITY OCC Operating 2021 OCC 2021 2020 change £m Revenue Profit Revenue £m change Revenue (£m) 283.0 263.4 +8% 2020 263.4 13.2 UK 122.5 + 8% Operating profit (£m) 19.7 13.2 +43% F/X (4.6) (0.3) US 56.1 + 6% Operating margin 7.0% 5.0% M&A 2.7 1.2 International 46.2 -7% Organic 21.5 5.6 Sec
Slide 15: UK Roads
UK ROADS FUNDING SOURCES Road Investment Strategy 2021 UK ROADS REVENUE • RIS2: committed funds to improve strategic road network RIS2: Smart motorway (2020-25) 9% RIS2: Other schemes 21% • Hill & Smith opportunity comes from two spend areas: Local and devolved authority • Capital maintenance: 32% i
Slide 16: Cash Generation and Financial Position
CASH GENERATION AND FINANCIAL POSITION Group continues to be highly cash generative £m 2021 2020 • Underlying operating cash flow £67.1m Underlying operating profit 86.0 69.9 Depreciation and amortisation 32.6 33.7 • 78% cash conversion; 97% excluding strategic investments in rental assets Underlyin
Slide 17: How We View Portfolio Management
HOW WE VIEW PORTFOLIO MANAGEMENT M&A LANDSCAPE TARGET GENERATION M&A PIPELINE Niche application Structure Sensing Process/ • Direct approaches monitoring • MDs & GPs Highway gantry • Corporate Development Work zone barrier • Trade shows • Paid research Work zone ITS • In process Pre-qualified Connec
Slide 18: Acquisition Heat Map
ACQUISITION HEAT MAP 2021 PRELIMINARY RESULTS 18
Slide 19: Outlook
OUTLOOK Short term • We expect to make good progress in 2022, despite the ongoing headwinds and geopolitical uncertainties which we continue to actively manage • No operations in Eastern Europe or material trading relationships Medium to long term • Positive outlook supported by strong long term gro
Slide 20: Appendices
APPENDICES ’ IN ZINN aK hii eel ST some
Slide 21: Financial Guidelines
FINANCIAL GUIDELINES >3% ORGANIC REVENUE GROWTH 12%-15% OPERATING MARGIN >17% RETURN ON INVESTED CAPITAL >90% UNDERLYING CASH CONVERSION 1.5 - 2x NET DEBT TO EBITDA 2021 PRELIMINARY RESULTS 21
Slide 22: Capital Allocation and Dividends
CAPITAL ALLOCATION AND DIVIDENDS Effective deployment of capital to support growth ambitions 2021 ROIC improved to 16.8% Organic Growth Acquisitions Progressive Dividend • Focus on higher return, • Aligned with our purpose • Focus on maintaining higher growth markets sustainable and • Focus on quali
Slide 23: Modelling Guidance
2022 MODELLING GUIDANCE Working capital Interest1 Maintained at c.18% c.£7.5m annualised sales Capex H1/H2 weighting Total c.£40-45m Profit modestly H2 weighted • Maintenance c.£17m • Growth investments c.£26m Effective tax rate2 Translation impact of c.23% FX rate movements +/- FY FY 1 cent move in
Slide 24: Segment Analysis
SEGMENT ANALYSIS £m 2021 Organic M&A FX 2020 Galvanizing Revenue 198.3 19.2 - (6.8) 185.9 Underlying operating profit 39.5 5.9 - (2.2) 35.8 Margin 19.9% 19.3% Utilities Revenue 223.7 23.1 - (10.6) 211.2 Underlying operating profit 26.8 7.4 - (1.5) 20.9 Margin 12.0% 9.9% Roads & Security Revenue 283.
Slide 25: Operating Margin
OPERATING MARGIN Strong recovery in Group operating margins in 2021 Further progress expected in 2022 Margin 2021 2020 Target % % range % Galvanizing 19.9 19.3 19-22 Utilities 12.0 9.9 8-11 Roads & Security 7.0 5.0 9-13 Group 12.2 10.6 12-15 2021 PRELIMINARY RESULTS 25
Slide 26: Return on Invested Capital
RETURN ON INVESTED CAPITAL ROIC is defined as underlying operating profit for Divisional (%) 2021 2020 the last 12 months, divided by average invested capital. Galvanizing 20.9 17.4 Invested capital is defined as the sum of intangible Utilities 27.4 19.3 assets, property, plant and equipment, right-
Slide 27: Non-Underlying Items
NON-UNDERLYING ITEMS £m 2021 2020 Business reorganisation costs (4.5) - Costs relating to acquisitions and disposals (2.0) (0.3) Amortisation of acquisition intangibles (6.1) (6.1) Impairment of goodwill/other assets (16.0) (20.3) Loss on disposal of subsidiary (0.4) - Past service pension expense -
Slide 28: Debt Facilities
DEBT FACILITIES AVAILABILITY AND USAGE Principal debt facilities have medium to long £m Net debt Facility maturities Committed 125.2 327.6 • Revolving credit facility in place until On demand 0.2 13.4 December 2023; expect to refinance in 2022 • Senior notes: $70m unsecured notes mature Cash (18.8)
Slide 29: Why did we acquire Prolectric?
Off-grid solar solutions Why did we acquire Prolectric? • A clear fit with our purpose • Backed by strong macro drivers (increasing population, urbanisation, climate change) and market drivers (decarbonisation, infrastructure safety, enabling technology) • Strong historical profit growth, clear and
Slide 30: Disclaimer
DISCLAIMER Cautionary statement This presentation contains forward looking statements which are made in good faith based on the information available at the time of its publication. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a number