Slide 1: Results Presentation Year ended 31 December 2018
Forterra plc Results Presentation Year ended 31 December 2018 12 March 2019
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 31 December 2018 (the “Presentation”). For the purposes of this notice, “Presentation” shall mean
Slide 3: Forterra at a glance
Forterra at a glance Revenue by segment (%) (2018) 27% 48% 25% 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 (%) (2018) 6% 29% 65% Sole manufacturer of ico
Slide 4: Highlights
Highlights • Good underlying growth in revenue reflecting the sustained strength of the new build residential market • EBITDA up £3.4m to £78.8m due to a strong performance in Bricks and Blocks driven by an increase in volumes and prices, partly offset by higher operating costs • Sustained improveme
Slide 5: Financial review
Financial review [5s rorterRA,.
Slide 6: Financial highlights
Financial highlights £m FY 2018 FY 2017 Change (%) Revenue 367.5 331.0 11.0% PBT before exceptionals 64.8 61.1 6.1% EPS before exceptionals (pence) 26.5p 24.5p 8.2% Operating cash flow 79.8 90.2 (11.5)% Net debt 38.8 60.8 36.2% Total dividend (pence per share) 10.5p 9.5p 10.5% 6
Slide 7: Summary Profit & Loss
Summary Profit & Loss £m (before exceptionals) FY 2018 FY 2017 Revenue 367.5 331.0 EBITDA - Bricks and Blocks 75.8 69.1 - Bespoke Products 3.0 6.3 - Total 78.8 75.4 EBITDA margin (%) 21.4% 22.8% Depreciation and Amortisation (11.7) (10.9) Operating profit 67.1 64.5 Finance expense (2.3) (3.4) Profit
Slide 8: Implementation of IFRS 16 (Leases)
Implementation of IFRS 16 (Leases) The Group has assessed the impact of IFRS 16 on its consolidated financial statements and has estimated that the total transition adjustment at 1 January 2019 will be as follows: • Recognition of a right of use asset and lease liability, both in the region of £14-1
Slide 9: Group Cash Flow
Group Cash Flow 90 80 2.7 (1.7) 70 (18.6) 60 (14.0) 50 £m 40 78.8 79.8 (19.3) 30 (6.1) 20 0.2 10 22.0 0 EBITDA Working Non-cash Operating Capital Tax & Interest Dividends Shares Other items Reduction in capital items cash flow expenditure paid acquired by net debt EBT • Strong operating cash flow wi
Slide 10: Net Debt, Facilities and Capital allocation
Net Debt, Facilities and Capital allocation 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 0.5 40 0.5 20 155.0 92.3 60.8 38.8 0 0 IPO (April 2016) 31-Dec-16 31-Dec-17 31-Dec-18 Net Debt Net Debt : EBITDA (LTM) • Since the IPO, the business has generated over £1
Slide 11: Business review
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Slide 12: New housing completions vs. requirement
New housing completions vs. requirement 300,000 250,000 200,000 150,000 100,000 50,000 0 2012 2013 2014 2015 2016 2017 2018E 2019F 2020P New housing completions Consensus requirement less conversions Source: MHCLG, CPA Forecast Winter 2018/19 Note: CPA Forecast states Great Britain completions data
Slide 13: RMI Market: Planning applications of less than £100k
RMI Market: Planning applications of less than £100k 250,000 200,000 Number of applications 150,000 100,000 50,000 - Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Source: Barbour ABI • Planning applications of up to £100k are a useful proxy for the e
Slide 14: Brick market dynamics
Brick market dynamics 3,000 3,000 2,500 2,500 2,000 2,000 Bricks (m) 1,500 1,500 1,000 1,000 500 500 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Deliveries (including imports) Imports 2018 Domestic Production Inventory Source
Slide 15: Brick price growth
Brick price growth House price growth vs. Brick price growth (Indexed 2000 = 100) 300 264 250 223 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Forterra brick prices (Indexed) House prices (Indexed) - Nationwide index Source: Company
Slide 16: Bricks and Blocks
Bricks and Blocks £m FY 2018 FY 2017 Change Revenue 269.4 249.5 8.0% EBITDA 75.8 69.1 9.7% EBITDA margin % 28.1% 27.7% • Revenue increased by 8.0% as a result of the benefits of higher volumes and prices • Brick volumes were modestly ahead in 2018 following the strong growth achieved in 2017 due to
Slide 17: Desford expansion project update
Desford expansion project update Desford • In May 2018 the Board approved a project to build a new extruded brick factory at Desford with a capacity of 180 million bricks per annum at a capital cost of £95 million • Preparation work for this project prior to receiving planning consent is well-advanc
Slide 18: Other project updates
Other project updates Aircrete raw materials • 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 contract to purcha
Slide 19: Clay reserves
Clay reserves Reserves Position • The group has in excess of 50 million tonnes of clay reserves across 12 quarries in the UK, 8 of which are located within approximately one mile of the Group’s manufacturing sites • At the current production rates this is estimated to be the equivalent to over 30 ye
Slide 20: Bespoke Products
Bespoke Products £m FY 2018 FY 2017 Change Revenue 100.3 83.6 20.0% EBITDA 3.0 6.3 (52.4)% EBITDA margin % 3.0% 7.5% • Overall revenue grew by 20% to £100.3m mainly due to the acquisition of the Bison Swadlincote site in September 2017 • EBITDA fell by £3.3m to £3.0m as the integration of the new pr
Slide 21: Swadlincote (Bison) productivity
Swadlincote (Bison) productivity 9.0 8.0 7.0 6.0 Beds per day 5.0 4.0 3.0 2.0 1.0 0.0 Jul-18 Jun-18 Apr-18 May-18 Nov-18 Jan-18 Feb-18 Mar-18 Jan-19 Aug-18 Sep-18 Dec-18 Oct-18 Beds per day 3 month average Source: Company information Note: A bed in this context is the casting surface of the manufact
Slide 22: Summary and Outlook
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Slide 23: Summary and Outlook
Summary and Outlook • 2018 was a year of good progress for the Group, with a strong performance from the Bricks and Blocks businesses and the integration of Bison gaining traction following a slow start. We also approved a £95m investment to build a new brick manufacturing facility that will increas
Slide 24: Q&A
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Slide 25: Appendices
Appendices Ite ForTERRA,. 25
Slide 26: Investment case
Investment case UK focus Resilience Strategy Leadership Iconic Flexible production Growth Efficiency Fletton brick capacity 1. 2. 3. 4. 5. 6. 100% in UK Sole manufacturer Operational agility Well-equipped to An efficient deliver long-term manufacturing Consolidated growth through base is at the comp
Slide 27: 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 28: 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 200 180 193 • Strategic and sole access to Fletton-specific Indexed to 100 clay reserve 160 140 155 • Londo
Slide 29: 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 30: 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 • Stairs and landings (complimentary to Description residential sector, typically in multi-unit expanded polystyrene blocks combined hollwco
Slide 31: Trade working capital
Trade working capital Dec-18 Dec-17 Trade working capital breakdown 100 £m 31 Dec 2018 31 Dec 2017 £(1)m £2m Inventory days 60 67 80 Debtor days 41 40 60 37 36 40 Trade working capital (£m) 20 38 33 0 (20) (37) (37) (40) (30) (60) (39) (80) Inventory Trade and other receivables Accrued & other payab
Slide 32: Summary Balance sheet
Summary Balance sheet £m Dec 2018 Dec 2017 Intangible assets 17.3 15.8 Property, plant and equipment 170.5 165.2 Total non-current assets 187.8 181.0 Current assets Inventories 37.4 36.3 Trade and other receivables 37.9 33.0 Cash and cash equivalents 26.0 29.0 Total current assets 101.3 98.3 Total a
Slide 33: Summary Cash Flow
Summary Cash Flow £m 2018 FY 2017 FY EBITDA 78.8 75.4 Change in working capital 2.7 10.6 Other movements (1.7) 4.2 Operating cash flow 79.8 90.2 Tax and Interest (14.0) (12.6) Capital expenditure - maintenance (8.5) (7.6) - strategic (10.1) (3.2) Acquisition of Bison - (20.0) Dividends (19.3) (13.8)