Slide 1: 2020 Full Year Results Presentation
2020 FULL YEAR RESULTS PRESENTATION 10 March 2021
Slide 2: Agenda
Agenda Overview Joe Hudson Financial review Chris McLeish Operational review Joe Hudson Strategy and growth Joe Hudson Outlook and key messages Joe Hudson Q&A 2
Slide 3: Overview
Overview Resilient operational performance and continued strategic progress create the platform for growth ► Health and safety of all our people has remained our key priority ► Steady and sustained recovery of demand patterns, with sales in Q4 reaching 90% of prior year levels ► Decisive actions to
Slide 4: Financial Review
Financial Review 4
Slide 5: Financial summary
Financial summary Profitability impacted by lower volumes; strong cash flow performance delivered material reduction in net debt Year ended 31 December 2020 2019 Change Revenue £316m £409m (23%) Adjusted EBITDA £52m £122m (57%) Depreciation & amortisation (£36m) (£35m) Exceptional costs (£36m) (£3m)
Slide 6: Revenue analysis
Revenue analysis Revenue improved sequentially from Q2 Revenue as percentage of 2019 comparative period H2 recovered to 90% of PY vs 36% down in H1 ► Sharp reduction in volumes from late March 100% ► Volumes in April heavily impacted by COVID-19 with clay and concrete down 90% and 75% 70% respective
Slide 7: Clay
Clay Steady, sustained recovery in volumes from 90% YoY reduction in April 2020 Year ended 31 December (£m) 2020 2019 % Change Total Revenue 213 300 (29%) Adjusted EBITDA 44 107 (59%) Margin 21% 36% ► Revenue decreased by 29% year on year, with the builders’ merchant channel more resilient, particul
Slide 8: Concrete
Concrete Performance driven by more resilient RMI trends Year ended 31 December (£m) 2020 2019 % Change Total Revenue 103 109 (5%) Adjusted EBITDA 15 22 (31%) Margin 15% 20% ► Revenues 5% lower as sales volumes were impacted by the effects COVID ► Strong structural demand within RMI end markets, as
Slide 9: Exceptional items
Exceptional items One-off costs, primarily associated with COVID-19 and Group’s response Year ended 31 December (£m) 2020 ► Severance costs of £9m associated with restructuring of the Group’s operations Restructuring severance costs (£9m) Loss on 2020 surplus energy positions (£5m) ► Charge of £5m i
Slide 10: Strong cash flow performance
Strong cash flow performance Cash conversion increased to 96% with excellent working capital management Year ended 31 December (£m) 2020 2019 Change % Change Adjusted EBITDA 52 122 (70) (57%) ► Excellent management of working capital, with Δ in net working capital 17 (24) 41 inventories reducing by
Slide 11: Net debt improvement of £34m in H2
Net debt improvement of £34m in H2 Business de-levered strongly through second half Closing net debt reduced by £34m from £103m at HY ► H2 net debt reduced by £34m as trading improved through the second half ► Strong cost management and working capital management, primarily through inventory reducti
Slide 12: 2021 guidance
2021 guidance Sales volumes ► Clay 2021 sales volumes assumed to be 85% of 2019, in line with CPA Private Housing Starts ► Concrete LFL volumes in 2021 assumed modestly below 2019 levels Cash ► Sustaining capital expenditure £20-£22 million (including £4m spend on capital enhancement projects) ► Mod
Slide 13: Operational Review
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Slide 14: COVID-19 response
COVID-19 response Decisive steps to protect our people in the face of unprecedented challenges ► Acted swiftly in the face of initial threat ► Comprehensive set of steps to safeguard all employees allowed us to operate effectively from re-start in May ► Dedication and commitment of our people enable
Slide 15: Year of strategic progress
Year of strategic progress Despite challenges, we have delivered progress in a number of key areas Sustain Innovate Grow Sustain Innovate Grow ► Health & safety: new dynamic risk ► Product innovation: Novel Nexus XI façade ► Delivered capital enhancement at 3 key clay assessment drove material impro
Slide 16: New build housing market
New build housing market Robust end-market demand with completions building through second half '000 Private Housing Starts 180 158 160 144 148 140 123 120 79 98 ► 2020 saw a sharp reduction in both housing starts 69 76 100 64 (down 32%) and completions (down 22%), 80 52 reflecting impact of pandemi
Slide 17: Inventory and production
Inventory and production Brick industry outputs managed against recovery in customer demand; inventories reduced by around 25% over the course of 2020 '000 600 120% ► Domestic clay brick production in 2020 of around 1.4 billion - around 30% below 2019 500 100% 400 80% ► Closing 2020 industry invento
Slide 18: Manufacturing footprint and cost base
Manufacturing footprint and cost base Creating a leaner and more flexible operating footprint ► During 2020, we undertook a fundamental restructuring of operations in order to reduce the fixed cost base and enhance the resilience of our business: Closed 2 brick factories Mothballed Atlas clay brick
Slide 19: Mid-term market drivers
Mid-term market drivers We are well placed to capitalise upon mid-term market trends Household formations ► Market fundamentals remain supportive, underpinned by the UK housing deficit, Government policy and low interest rates ► “Working from home proposition” has brought a new positive emphasis on
Slide 20: Strategy and Growth
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Slide 21: Building from a strengthened platform
Building from a strengthened platform Investing for growth from our strong platform to meet the challenges of tomorrow Our Business Today Strategy In 3 Pillars Investment Levers Future Trends Investment driven growth through Sustainability two areas of focus: Sustain At the heart of building GROW DI
Slide 22: Our business today
Our business today We have a strong, advantaged base business today The Group has a well invested, profitable platform from which to grow: 1. Leadership position in growth markets ► No.1 UK brick manufacturer by production capacity ► No.1 UK Brickwork Specials and Masonry Fabrication Company by prod
Slide 23: Investment levers: Grow
Investment levers: Grow Strong balance sheet and cash generation gives us firepower to grow our business We deploy investment capital to optimise our existing business (capacity, efficiency, sustainability) ► Existing markets expected to display strong structural growth trends over long-term ► Our a
Slide 24: Investment levers: Diversify
Investment levers: Diversify Strong balance sheet and cash generation gives us firepower to grow our business We deploy investment capital to diversify our revenue base: Focused on the UK built environment ► Investment in adjacent product categories with clear synergies ► Technology investments - us
Slide 25: Future trends
Future trends Our industry will be transformed by two mega trends Sustainability Industrialisation All investments will increasingly be defined by their Construction methods will change radically over social and environmental impact. the next 10 years, transforming conventional industry supply chain
Slide 26: Summary and Outlook
Summary and Outlook 26
Slide 27: Summary and outlook
Summary and outlook ► Resilient operational performance against unprecedented backdrop of COVID-19 ► Strong year of strategic progress, with clear view of priorities ahead ► Trading in initial weeks of 2021 slightly ahead of run rates achieved in Q4 2020 ► Board comfortable with current market conse
Slide 28: Q&A
Q&A 28
Slide 29: Appendices
Appendices 29
Slide 30: 3 strategic pillars
3 strategic pillars We operate our business focused on three key strategic pillars Sustain ► Health and safety in all that we do ► Focus on Operational excellence Sustain to drive continuous improvement in underlying performance Innovate ► Sustainability and social impact ► Product innovation to und
Slide 31: Brick market dynamics
Brick market dynamics Balancing supply and demand Brick Consumption (billions of bricks) Brick Production and Stock (billions of bricks) Domestic Despatches Imports Production Stock 0.4 0.5 0.3 0.3 0.2 0.3 0.3 0.1 0.1 0.1 0.1 0.1 2.0 2.1 2.0 2.0 2.0 1.9 1.9 1.8 1.8 1.8 1.8 1.6 1.6 1.6 1.7 1.7 1.6 1.
Slide 32: Leading manufacturers of building products
Leading manufacturers of… Our core products Walling Facing bricks Special bricks 200 Years of experience Walling stone Special walling stone Architectural masonry Cast stone Facade systems 37 Retaining walls Lintels, sills and arches Roof tiles Ibstock Concrete Roofing Chimneys Manufacturing sites O
Slide 33: Key investment highlights
Key investment highlights High quality, broad Market Strong product range and leadership #1 in UK bricks customer strong customer positions service ethic relationships Strong household Additional capacity, Structural formations with Multiple growth product innovation demand supportive UK options and
Slide 34: A leading provider of clay and concrete building products
A leading provider of clay and concrete building products RMI Factors Other 33% 18% 2% New build Merchants End housing Sales 51% market 58% channel Other new build 6% Housebuilders Infrastructure direct 2% 29% Opportunity to RMI exposure Key supplier to the Complementary Cross-selling Innovative add
Slide 35: Adjusted income statement reconciliation 2020
Adjusted income statement reconciliation 2020 Fair Value Deferred tax Year ended 31 December 2020 Adjusted Exceptionals Other Reported Adjustment rate change Revenue £316m - - - - £316m Costs (£264m) - (£36m) - - (£300m) EBITDA £52m - (£36m) - - £16m D&A (£26m) (£10m) - - - (£36m) EBIT £26m (£10m) (
Slide 36: Adjusted income statement reconciliation 2019
Adjusted income statement reconciliation 2019 Fair Value Year ended 31 December 2019 Adjusted Exceptionals Other Reported Adjustment Revenue £409m - - - £409m Costs (£287m) - (£3m) - (£290m) EBITDA £122m - (£3m) - £119m D&A (£26m) (£9m) - - (£35m) EBIT £96m (£9m) (£3m) - £84m Finance (£3m) - - £1m (
Slide 37: Balance sheet
Balance sheet Year ended 31 December 2020 2019 PP&E £371m £386m Right of Use assets £27m £30m Intangible £95m £103m Non-current assets £493m £519m Inventories £64m £84m Trade and other receivables £59m £58m Assets held for sale £1m £1m Current assets £124m £143m Total assets £617m £662m Payables (£8
Slide 38: Cash flow
Cash flow Year ended 31 December 2020 2019 Adjusted EBITDA £52m £122m Working capital £17m (£24m) Net interest (£4m) (£3m) Tax (£6m) (£13m) Post-employee benefits (£2m) (£1m) Exceptional items (£10m) (£1m) Other (£2m) (£4m) Net cash flow from operating activities £45m £76m Total capex (£24m) (£39m)