PRELIMINARY RESULTS PRESENTATION | YEAR ENDED 31 DECEMBER 2016 - PowerPoint PPT Presentation

PRELIMINARY RESULTS PRESENTATION | YEAR ENDED 31 DECEMBER 2016

DISCLAIMER The information contained in this presentation has not been independently verified and this presentation contains various forward- looking statements that reflect management’s current views with respect to future events and financial and operational performance. The words “growing”, “scope”, “platform”, “future”, “expected”, “estimated”, “accelerating”, “expanding”, “continuing”, “potential” and “sustainable” and similar expressions or variations on such expressions identify certain of these forward-looking statements. Others can be identified from the context in which the statements are made. These forward-looking statements involve known and unknown risks, uncertainties, assumptions, estimates and other factors, which may be beyond Ibstock plc’s (the “Group’s”) control and which may cause actual results or performance to differ materially from those expressed or implied from such forward-looking statements. All statements (including forward-looking statements) contained herein are made and reflect knowledge and information available as of the date of preparation of this presentation and the Group disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements due to the inherent uncertainty therein. Nothing in this document should be construed as a profit forecast. 2

PRESENTING TODAY Wayne Sheppard Kevin Sims CEO CFO Over 20 years’ experience Managed though Deep industry knowledge each at Ibstock multiple cycles 3

AGENDA Highlights & Overview Financial review Operating review Outlook Q&A Wayne Sheppard Kevin Sims Wayne Sheppard Wayne Sheppard 4

HIGHLIGHTS 2016 Robust performance whilst investing for future growth Invested for growth Improved Derisked the balance Reduced financing at Leicester and profitability despite sheet by closing UK costs from 2017 by Leighton Buzzard with geopolitical events and Defined Benefit pension refinancing debt main earnings benefits UK supply chain scheme arrangements to come destocking 5

OVERVIEW 2016 Financial Overview – year ended 31 December 2016 Group revenue Net debt to Adjusted Continued strong ROCE at 19% after Final dividend of up 5% to EBITDA up 4% EBITDA improved cash generation of £44m of capex on 5.3p per share £435m to £112m to 1.2x after 88% EBITDA before major projects – with (FY 2016 7.7p per £59m of capex major projects share ) returns to come Operational Overview Good activity Another year of progress UK Concrete Major capital projects: UK Clay volumes slightly levels from the in US although unusually mild ahead y-o-y despite products • Roof tile plant delivered in UK new build winter weather skewed distributor/merchant performed well Q4 housing sector results towards the first half destocking • Brick plant on schedule 6

AGENDA Highlights & Overview Financial review Operating review Outlook Q&A Wayne Sheppard Kevin Sims Wayne Sheppard Wayne Sheppard 7

FINANCIAL HIGHLIGHTS YEAR ENDED 31 DECEMBER 2016 Revenue £435m ▲ 5% Adjusted EBITDA 1 £112m ▲ 4% EBITDA margin % 26% ◀ ROCE 2 19% 1%pt Cash conversion 3 88% ▲ 2%pt Net Debt to EBITDA 1.2 0.2x Final dividend 5.3 ▲ 20% Note (1) Adjusted EBITDA is earnings before interest, taxation, depreciation and amortisation after adjusting for exceptional items (2) ROCE is adjusted EBITA as a proportion of net debt plus equity (3) Cash conversion is the ratio of adjusted EBITDA after movement in working capital less maintenance capex to adjusted EBITDA 8

P&L RECONCILIATIONS YEAR ENDED 31 DECEMBER 2016 Adjusted EBITDA (£m) to Adjusted EPS Statutory profit to Adjusted EBITDA (£m) Statutory profit 2016 90 Adjusted EBITDA 2016 112 Exceptional items 1 (28) Depreciation (20) Interest 3 Amortisation (6) Taxation 21 Fair value depreciation & amortisation 9 Depreciation 20 Cash interest charge (5) Amortisation 6 Taxation 2 (17) Adjusted EBITDA 2016 112 Adjusted Earnings 2016 73 UK operating segment 103 Shares in issue 406.3m US operating segment 13 Adjusted EPS 2016 18.1p PLC costs (4) Note (1) Exceptional items relate to the non-cash pension curtailment gain (2) Taxation reflects fair value and non cash interest adjustments in the calculation of adjusted earnings 9

REVENUE & EBITDA BRIDGES Revenue bridge (in £m) EBITDA bridge (in £m) +£21.9m (5%) +£4.6m (4%) 1.5 (3.4) 10.8 .8 434.7 .7 3.2 111.6 .6 3.3 3.2 7.6 412.8 .8 0.3 107.0 .0 2015 UK Clay Concrete US FX 2016 UK 2015 US FX PLC 2016 UK US $ average exchange rate used in 2016 is 1.35 (2015: 1.53) Incremental PLC costs relate to full year 2016 v two months in 2015 10

HIGHLY CASH GENERATIVE • Disciplined inventory control reflected in working Year ended 31 December (£m) 2016 2015 Change % change capital Adj. EBITDA 112 107 +5 4% • Higher than average routine capex spend in 2016 Share-based payments 2 - +2 Capex (excl major projects) (15) (9) (6) • Cash tax in 2016 reduced by 2015 exceptional costs Δ in net working capital (1) (6) +5 Full Year Guidance 2017 Adj. EBITDA – capex – Δ in NWC 98 92 +6 6% • Major projects c£23m including new project Cash conversion (%) 1 88 86 - (Lodge Lane kiln) Major project capex 2 (44) (6) (38) Cash from operating and investment • Other capital expenditure spend c£13m 54 86 (32) (38%) activities 3 • Depreciation & Amortisation c£27m Net interest 4 (5) (6) +1 • Cash interest charge c£4m Tax (7) (9) +2 Post-employment benefits 5 (4) (2) (2) • Income statement effective tax rate c22% Adj. free cash flow 38 69 (31) (44%) • Post employment benefits c£7m Note (1) Cash conversion is the ratio of adjusted EBITDA after movements in working capital less maintenance capex to adjusted EBITDA (2) Capex on major projects excludes expenditure in the year of £4m which was included in the equivalent 2015 disclosure (3) Cashflow from operating and investing activities is defined as EBITDA adjusted for changes in working capital less cash flows from capex (4) Estimated on an indicative basis for 2015 (5) Cash costs above P&L costs 11

FINANCIAL MANAGEMENT New debt Facilities Amount (£m) Margin Range p.a. No debt Comfortably within RCF facility blended Refinancing Term facility 0 n/a repayments and covenants (interest interest rate from March Revolving facility 250 1.00% - 2.25%. includes cover 4.0x and debt 2017 150 bps whilst T otal facilities 250 accordion facility leverage 3.0x EBITDA) (5 year term) leverage <1.75x of £50m Pension scheme Complex accounting US £9m of Deficit UK scheme IAS Scheme closed Consultation took consequences - non-cash recovery plan post retirement 19R deficit of to future place with active continues income statement credit obligations £29m. Gross accrual from 1 st members in 2H of £30m recorded in 2016 recognised (£7m p.a.) liabilities of February 2017 2016 statutory financials. £698m 12

AGENDA Highlights & Overview Financial review Operating review Outlook Q&A Wayne Sheppard Kevin Sims Wayne Sheppard Wayne Sheppard 13

OPERATING SEGMENT REVIEW - UK 2016 2015 % Growth Revenue £344m £336m 2% Adjusted EBITDA £103m £99m 4% Adjusted EBITDA margin 29.8% 29.4% Strong Clay brick performance Energy costs performance reduced in from concrete Overall UK Volumes slightly Price increases in 2016 although Continued products with margins higher y-o-y all channels, overall Rigid stock expected to be growth in increases in despite price neutral due maintained discipline less favourable in sales to sales and merchant to change in maintained 2017 housebuilders profitability destocking channel mix 14

MAJOR PROJECT July 2016 February 2017 New brick factory, Ibstock Leicestershire Addition of £54m 100m Capex soft mud brick High volume project capacity factory with ( 13% of current expansion Scheduled to be total Ibstock potential commissioned brick capacity, 2H 2017 5% UK capacity) Process flexibility to Margin manufacture enhancing Most modern existing and efficient product range Benefits from brick plant in and develop 2018 UK new products 15

MAJOR PROJECT New concrete roof tile line – Leighton Buzzard £8m Capex project Manufactures New products large format reduce build New line now ‘metric tiles’ costs for users commissioned with commercial launch 1H 2017 Anticipated Forticrete incremental Aesthetically becomes full 2017 EBITDA superior to range c£1m competing supplier to products new housing Full benefits in sector 2018 16

MAJOR PROJECT New brick kiln – Lodge Lane (Cannock in Staffordshire) £8m Capex improvement Lodge Lane Niche product factory project range with manufactures distinct visual Scheduled to ‘blue bricks’ aesthetics commission Q4 2017 Replacement Maintains kiln reduces Ibstock’s leading ROCE costs and position as a enhancing increases full range returns capacity supplier. No commencing allowing disruption to 2018 displacement of volumes in Ibstock imports 2017 17