Slide 1: Results Presentation Half year ended 30 June 2018
Forterra plc Results Presentation Half year ended 30 June 2018 30 July 2018
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 2018 (the “Presentation”). For the purposes of this notice, “Presentation” shall mean and
Slide 3: Forterra at a glance
Forterra at a glance Revenue by segment (%) 27% 47% 26% Leading UK producer of Focus on bricks and blocks with complementary range of Bricks manufactured masonry products bespoke clay & concrete Blocks products Bespoke Products Revenue by end use (%) 7% 33% 60% Sole manufacturer of iconic Fletton br
Slide 4: Highlights
Highlights • Increase in sales of 10.6% due to the Bison acquisition in H2 2017, higher aircrete block volumes and price increases applied to offset cost inflation • Profit before tax ahead of prior year by 2.9% due to a good performance from Bricks & Blocks and a lower finance cost • Precast concre
Slide 5: Financial review
Financial review [5s rorterRA,.
Slide 6: Financial highlights
Financial highlights £m HY 2018 HY 2017 Change (%) FY 2017 Revenue 180.0 162.7 10.6% 331.0 PBT before exceptionals 32.3 31.4 2.9% 61.1 EPS before exceptionals (pence) 13.0p 12.6p 3.2% 24.5p Operating cash flow 24.0 31.8 (24.5)% 90.2 Net debt 51.9 69.4 60.8 Interim / total dividend (pence per share)
Slide 7: Summary Profit & Loss
Summary Profit & Loss £m (before exceptionals) HY 2018 HY 2017 FY 2017 Revenue 180.0 162.7 331.0 EBITDA - Bricks and Blocks 38.5 35.7 69.1 - Bespoke Products 0.7 3.0 6.3 - Total 39.2 38.7 75.4 EBITDA margin (%) 21.8% 23.8% 22.8% Depreciation and Amortisation (5.7) (5.1) (10.9) Operating profit 33.5
Slide 8: Group Cash Flow
Group Cash Flow 60 50 40 (18.0) £m 30 2.8 (6.0) 20 39.2 (6.9) 24.0 10 (2.2) 8.9 0 EBITDA before Working capital Non cash items Operating cash Capital Tax & Interest Share purchases Reduction in net exceptionals flow expendture paid debt • Working capital increased as anticipated due mainly to higher
Slide 9: Net Debt and Facilities
Net Debt and Facilities 180 2.5 2.2 160 Net Debt : EBITDA (x) 140 2 Net Debt (£m) 120 1.3 1.5 100 80 0.8 1 60 0.7 40 0.5 20 155.0 92.3 60.8 51.9 0 0 IPO (April 2016) 31-Dec-16 31-Dec-17 30-Jun-18 Net Debt Net Debt : EBITDA (LTM) • Net debt reduced by over £100m since IPO after Bison acquisition, cap
Slide 10: Business review
Business review [5s rorterRA,. 10
Slide 11: UK domestic brick deliveries and production
UK domestic brick deliveries and production May 2017 was an abnormally strong month and therefore less relevant as a comparator Source: ONS • Production and deliveries have continued to increase since the introduction of Help to Monthly average 12m to May 2018 2017 Change Buy in 2013 Production (m)
Slide 12: RMI Market: Planning applications of less than £100k
RMI Market: Planning applications of less than £100k 90000 80000 70000 Number of applications 60000 50000 40000 30000 20000 10000 0 Jul 15 Jul 16 Jul 17 Jun 15 Nov 15 Jun 16 Jun 17 Apr 15 May 15 Mar 17 Apr 17 May 17 Jan 15 Aug 15 Dec 15 Apr 16 May 16 Aug 16 Nov 16 Dec 16 Aug 17 Nov 17 Dec 17 Apr 18
Slide 13: Bricks and Blocks
Bricks and Blocks £m HY 2018 HY 2017 FY 2017 Revenue 132.4 123.7 249.5 EBITDA 38.5 35.7 69.1 EBITDA margin % 29.1% 28.9% 27.7% • Revenue up by 7.0% compared with H1 17. Activity levels were affected in Q1 by severe weather, and there was a catch-up from April onwards although this was tempered by th
Slide 14: Brick and Block Project updates
Brick and Block Project updates Hams Hall • The project to convert the Hams Hall, Birmingham aircrete facility to use conditioned (wet) Pulverised Fuel Ash (PFA) as well as dry PFA was successfully completed in July 2018 at a capital cost of £2.2m • The Group has entered into a long term contract to
Slide 15: Desford – Planned expansion summary
Desford – Planned expansion summary Capacity – 2018 vs proposed ▪ Capacity expansion at Million bricks 2018 Proposed Swillington and Clockhouse remain future options Desford 85 180 Other brick sites 505 505 Total 590 685 Swillington Increase 16.1% Howley Park Desford range Desford currently produces
Slide 16: Desford - Project benefits
Desford - Project benefits Customers • Flexibility to continue serving customers • Ability to meet demand as the market grows and support the Government’s ------------ commitment to housebuilding • Existing product range strongly established and widely used Manufacturing excellence • Replaces existi
Slide 17: Desford - Expected capex and timing
Desford - Expected capex and timing Project cost profile Project timing – key dates Enabling and planning 2018 Planning consent 2018 - 2019 Infrastructure development 2019 Plant installation 2020 - 2021 Plant commissioning 2021 Full production commences 2022 17
Slide 18: Bespoke Products
Bespoke Products £m HY 2018 HY 2017 FY 2017 Revenue 48.5 40.0 83.6 EBITDA 0.7 3.0 6.3 EBITDA margin % 1.4% 7.5% 7.5% • Increase in revenue for Bespoke Products of 21.3% compared with last half year was due to price increases and the inclusion of the Bison Swadlincote facility acquired in September 2
Slide 19: Bison Precast short term market factors
Bison Precast short term market factors • Adverse weather conditions across Q1 (particularly March 2018) left construction sites behind schedule. Construction delays continued into Q2 November 2017 budget pledged 300,000 new homes p.a. by the mid 2020’s • Product is manufactured to customer schedule
Slide 20: Bison Precast Strategy
Bison Precast Strategy The strategy of acquiring precast capacity remains supported by a number of factors: • Projected continued growth in new housing • Expected greater proportion of multi-occupancy residential as private rental sector and social housing volumes grow, increasing the longer term de
Slide 21: Outlook
Outlook Ie rorTerRA,. 21
Slide 22: Outlook
Outlook • The Group delivered a solid performance in the first half, supported by a good result from the Brick and Block product lines • Continued levels of activity from the new build single unit residential market lead us to anticipate a Brick and Block performance in line with our expectations fo
Slide 23: Q&A
Q&A ? 23
Slide 24: Appendices
Appendices Ite ForTERRA,. 24
Slide 25: Investment case
Investment case Pure Growth Resilience Efficiency UK focus Ability to flex Cash generation Further growth from Iconic Efficient core brick High return / production capacity to enabling investment cross-selling Fletton brick manufacturing – low risk capex meet market demand 1. 2. 3. 4. 5. 6. 7. 100%
Slide 26: Cross-selling
We serve the UK building construction markets across all distribution channels End-market exposure Key Strong and long-standing Residential New build Infrastructure products Channels/customers RMI Residential Commercial customer relationship Bricks • House builders Extruded bricks • Builders’ mercha
Slide 27: The sole producer of the iconic Fletton brick
The sole producer of the iconic Fletton brick Competitive advantage secured by unique Product line benefits from strong pricing Significant heritage - produced since 1877 manufacturing process 200 189 • Strategic and sole access to Fletton-specific 180 clay reserve Indexed to 100 160 140 140 • Londo
Slide 28: Market view: Blocks
Market view: Blocks Aircrete blocks Aggregate blocks • Cost effective solution for wall, floor and below-ground constructions • Quick, easy, cost-effective build solution for both inner-leaf and facing Description • Up to 80% recycled content requirements of walls • Lightweight features enabled acce
Slide 29: Market view: Precast products
Market view: Precast products Hollowcore Flooring Beam & Block Flooring Other precast • Flooring solution used across the • UK’s first system (Jetfloor) to use Description residential sector, typically in multi-unit • Stairs and landings (complimentary to expanded polystyrene blocks combined hollwco
Slide 30: Trade Working Capital
Trade Working Capital Jun-18 Dec-17 Trade working capital breakdown 100 £23.9m £8.1m £m 30 Jun 2018 31 Dec 2017 Inventory days 60 67 80 Debtor days* 40 40 36.7 *Count back basis 60 36.3 Trade working capital (£m) 40 56.9 20 33.0 0 (30.0) (20) (37.2) (40) (31.2) (32.5) (60) (80) Note: Excludes divide
Slide 31: Summary Balance sheet
Summary Balance sheet £m Jun 2018 Jun 2017 Dec 2017 Intangible assets 16.7 13.9 15.8 Property, plant and equipment 164.4 144.5 165.2 Deferred tax asset - 0.1 - Total non-current assets 181.1 158.5 181.0 Current assets Inventories 36.7 37.2 36.3 Trade and other receivables 56.9 46.0 33.0 Cash and cas
Slide 32: Summary Cash Flow
Summary Cash Flow £m 2018 H1 2017 H1 2017 FY EBITDA before exceptionals 39.2 38.7 75.4 Change in working capital (18.0) (8.1) 10.6 Other movements 2.8 1.2 4.2 Operating cash flow 24.0 31.8 90.2 Tax and Interest (6.9) (5.7) (12.6) Capital expenditure - maintenance (3.5) (2.3) (7.6) - strategic (2.5)