2018 In Interim Results Half Year Results Six Months Ended 30 June 2015 8 8 Aug ugust t 2018 2018 Derek Muir Der Gr Group Chie Chief Ex Executive Mark ark Peg egler Gr Group Fin Finance Di Director Derek Muir Group Chief Executive Mark Pegler Group Finance Director Hill & Smith Holdings PLC
Key messages Di Disappointing fi first t ha half lf − UK below expectations − International businesses performing well, particularly US − Organically revenues similar to prior year (at constant currency) − Operating margin impacted by commodity price volatility Acti ctive Por ortf tfoli lio Management − Four acquisitions completed − New build US galvanizing plant committed − Investment in temporary safety barrier rental fleet Mar arket fu fundamentals s rem emain en encouraging Proposed interim dividend 10.0p, up 6% 2 HILS: HY18
Underly lyin ing Tr Tradin ing Resu sult lts FX impact: H1 H1 H1 FY Revenue -£6.7m 2018 2018 +/- 2017 2017 Operating Profit -£1.5m Constant currency growth Revenue (£m) (£m) 295.4 291.8 +1% 585.1 +4% Constant currency decline Ope Operatin ing pr profi ofit * * (£m) (£m) 34.6 38.8 -11% 81.3 7% Input cost volatility Ope Operatin ing mar margin in * * (%) (%) 11.7 13.3 -160bps 13.9 impacting margin PBT * * (£m) (£m) 33.0 37.4 -12% 78.5 EPS EPS * * (p) (p) 32.8 .8 36.2 -9% 75.9 Tax 22% (2017: 24%) Maintaining progressive Di Dividend (p) (p) 10.0 .0 9.4 +6% 30.0 dividend policy * All references to profit measures in this presentation refer to underlying profits, which exclude certain non-underlying items as detailed in the Appendices on page 25 3 HILS: HY18
Utili tilitie ies H1 H1 H1 Organic Operating 2018 2018 2017 Change £m Revenue Profit 2017 107.1 7.6 Revenue (£m (£m) 113.0 107.1 +4% F/X (3.6) (0.4) Operatin Ope ing pr profi ofit (£m (£m) 7.3 7.6 -3% M&A 5.6 0.3 Operatin Ope ing mar margin in 6.5% 7.1% -60bps Organic 3.9 (0.2) 2018 113.0 7.3 UK UK Q1 weather impacted; Q2 stronger Mixed performance: steel markets below par; housing & plastic pipe sound 2018 Revenue Improved order books £113.0m Up 4% organically US UK down 7% £57m US US up 33% £33m Strong growth in Composites Group, prior year acquisitions integrated Utility business performing well, record order book Pipes (US/India) up 5% £23m Revenue by end Pipe Su geography Supp pports Growing commercial construction market in USA 45% United Kingdom North America New product introduction expanding customer reach in International market Rest of Europe 49% Rest of the World 2% 4% 4 HILS: HY18
Roads H1 H1 H1 Organic Operating 2018 2018 2017 Change £m Revenue Profit Revenue (£m (£m) 87.2 93.8 -11% 2017 93.8 10.2 F/X (0.8) (0.1) Operatin Ope ing pr profi ofit (£m (£m) 8.5 10.2 -21% M&A 4.7 0.5 Operatin Ope ing mar margin in 9.7% 10.9% -120bps Organic (10.5) (2.1) UK K 58% 58% of f revenue (20 2017: 68 68%) 2018 87.2 8.5 Some delays to Smart motorway programme Utilisation of temporary safety barrier steadily improving 2018 Revenue Demand for VMS deferred £87.2m Down 11% organically Investment in additional 62km of steel & concrete barrier to meet demand Permanent barrier, bridge parapets & lighting column outlook stronger UK down 23% £50m International up 15% £37m Internatio ional l 42% 42% of f revenue (20 2017: 32 32%) Scandinavia & France performing well Revenue by end geography Strong temporary safety barrier sales in Australasia 10% USA New nationwide distributor agreement to supply Zoneguard safety barrier 55% 29% Acquisition of WAPCO expands scale & range of road safety products into key geographies 6% 5 HILS: HY18
Galv lvaniz izin ing H1 H1 H1 Organic Operating 2018 2018 2017 Change £m Revenue Profit Revenue (£m (£m) 95.2 90.9 +7% 2017 90.9 21.0 Ope Operatin ing pr profi ofit (£m (£m) 18.8 21.0 -6% F/X (2.3) (1.0) Organic 6.6 (1.2) Ope Operatin ing mar margin in 19.7% 23.1% -340bps 2018 95.2 18.8 Ov Overall ll − Profitability & margin measured against record PY comparatives − Impacted by further zinc cost increases and UK performance UK: K: 98k k ton onnes 7% $/tonne − Q1 weather impacted, recovery in Q2 but below par − Strategic focus on smaller jobbing work Fr Fran ance: 67k k ton onnes 1% − Mildly improving economic backdrop but lack of structural activity − Zinc increases difficult to pass through supply chain USA: A: 86k k ton onnes 12% − Infrastructure investment and wider economy strong − Growth in OEM and Bridge/Highway sectors − Day to day volumes remain strong 6 HILS: HY18
Free cash flo flow and net t debt H1 H1 H1 FY £m 2018 2018 2017 2017 Worki orking capital ou outflo tflow £22.3m .3m Underlying Operating Profit 34 34.6 38.8 81.3 − H1 outflow reflective of seasonal trading Depreciation and amortisation 9.9 9. 9.6 19.2 patterns/organic growth Unde nderly lyin ing EB EBITD TDA 44 44.5 48.4 100.5 − Inventory +£7.2m Other non-cash items (1.0 1.0) 1.1 1.8 − c. £4m inventory build supporting H2 order books Working capital (22 22.3) (16.6) (19.1) − Zinc price c. £2m Capital expenditure (net) (8.5 8.5) (7.4) (19.5) − Debtor days 61 (December 2017: 61) Unde nderly lyin ing ope peratin ting cas ash flow low 12 12.7 25.5 63.7 Cap Capex 1.1 ti times dep deprecia iatio ion/amor ortis isatio ion Restructuring spend (0.9 0.9) (2.4) (2.2) − 2018 guidance c. £35m (1.7 times), previously c. £25m Provisions/Pension (1.2 1.2) (1.2) (2.8) Interest paid (net) (1.6 1.6) (1.3) (2.8) Acq Acquisitions inclu nclude WAPC APCO at t £30.9m .9m Tax paid (7.9 7.9) (9.0) (16.7) Statu tutory y free cash flow low 1. 1.1 11.6 39.2 Ne Net deb debt : : EBI EBITDA 1.4 ti times (Dec 20 2017 17: 1. 1.0 0 times) Dividends (7.4 7.4) (6.7) (20.7) Acquisitions/disposals (33 33.3) (2.7) (6.4) Share issues/other (net) (0. 0.7) (1.6) (2.4) £m H1 2018 Dec 2017 H1 2017 Net cas Net ash flow low (40 40.3) 0.6 9.7 Net debt 141.2 99.0 109.1 Note: ote: F/ F/X impa mpact (1. 1.9) 2.3 3.3 7 HILS: HY18
Highways England: Road Investment Strategy (‘RIS’) Temporary Safety Barrier Crash Cushions Permanent Safety Barrier Variable Message Signs ROTTM Sign £m Majo Ma jor r improvement schemes 4,000 Scheme 2017/18 Pla Plan 2018/19 Pla Plan Note tese Profile of investment £15.2bn 3,500 M1 junctions 16-19 Current Complete Source: Highways England Strategic Business Plan 17 December 2014 Y5 M6 junctions 16-19 Current Current Dec 18 completee Y4 3,000 A14 Cambridge to Huntingdon Current Current Y3 M1 junctions 23-25 Current Current Oct 18 completee Y2 Y1 M4 junctions 3-12 Q3 18 Started Aug 18 now J8-12e 2,500 M6 junctions 2-4 Q1 18 Started Apr 18e M6 junctions 13-15 Q1 18 Started July 18 3mth delaye 2,000 M23 junctions 8-10 Q2 18 Started Jun 18 2mth delaye M27 junctions 4-11 Q3 18 Q3 18 Jan 19 3mth delaye 1,500 Long Term SR 2013 M62 junctions 10-12 Q3 18 Q3 18 Aug 18e M6 J21a-26 New Q1 19 B/fwde 1,000 M56 J6-8 New Q1 19 Medium Term SR 2013 M3 J9-14 New 2019/20 500 Source: Highways England Delivery Plan 2018-2019 SR 2010 62km (£10.6m) investment in Zoneguard RIS2: Potential investment £30bn 0 Mar 151 5/ 2016/17 2017/18 2018/19 2019/20 2020/21 and Rebloc Barrier for 2019 projects (2021-25) RIS 1 RIS 2 Source: Construction News 13 December 2017 8 HILS: HY18
UK K In Infr frastructure Offshore wi wind nd - landin ing pl platforms CP6 P6 – 20 2019 19 to to 20 2024 24 exp xpected sp spend £4 £47b 7bn Biog iogas anae aerobic ic di digestio ion HS2 constructio HS tion now now H2 H2 19 19 Ener Energy from om Was aste Com omposit ite pl platform ext xtensio ions Hi Hinkle kley Poin int - nuc nucle lear Ne New de depot ots for or ne new w rolli lling stoc ock Securit ity y upg upgrade on n electrif ific icatio ion EN ENER ERGY RAIL RAIL SE SECURITY AM AMP6 Inc ncreased de demand for or HV HVM pr prod oducts AMP6 dr drinkin ing water tan tanks pr proje ojects - Roy oyal wedd ddin ing Floo lood alle llevia iatio ion - Presid ident t Trump vis isit it Water treatm tment pl plan ant se security ty Inc ncreased sit site se securit ity - gov overnment bui build ldin ings - bor border se securit ity - da data centr tres - outdoor events ts - oil il & & gas as ter terminals ls - air irports 9 HILS: HY18
Galv lvaniz izin ing - USA Brid ridge re repl placements in n Pue Puerto Ri Rico co fol ollowing Hur Hurrica cane Mar Maria HV HVM ba ballisti tic c pr prod oduct cts Inv nvestment in n ene nergy/chemical pl plants OEM and nd ind ndustrial mar markets Committe ted to o gree reenfield de development of of a ne new pl plant (op operational mi mid 2019) 10 HILS: HY18
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