2019 In Interim Results 7 7 Aug ugust t 2019 2019 Der Derek Muir Gr Group Ch Chie ief Ex Executiv ive Mark ark El Else In Interim Gr Group Fin Finance Di Director Delivering intelligent protection solutions Stock Code HILS Hill & Smith Holdings PLC
Key messages A goo ood fi first t ha half lf − Strong performance from UK and US operations − Smaller international businesses more challenging − Organic growth in revenue (+3%) and operating profit (+5%) Con Continued por portfolio de development − ATG acquired in February − Investment in expansion of temporary road safety barrier fleet − New US Galvanizing facility under construction − Debt facilities expanded Well ll pos posit itioned for or fur further gr growth th 2 HILS: HY19
Underly lyin ing Tr Tradin ing Resu sult lts FX impact: H1 H1 H1 FY Revenue +£5.2m 2019 2019 +/- 2018 2018 Operating Profit +£1.0m Constant currency Revenue (£m) (£m) 339.5 ↑ 15% 295.4 637.9 growth 13% Constant currency Ope Operatin ing pr profi ofit * * (£m) (£m) 40.2 34.6 ↑ 16% 80.1 growth 13% Ope Operatin ing mar margin in * * (%) (%) 11.8 11.7 ↑ 10bps 12.6 PBT * * (£m) (£m) 36.9 33.0 ↑ 12% 76.3 Benefitting from lower tax EPS * EPS * (p) (p) 37.5 .5 ↑ 14% 32.8 .8 77.8 rate Maintaining progressive Di Dividend (p) (p) 10.6 .6 10.0 .0 ↑ 6% 31.8 dividend policy * All references to profit measures in this presentation refer to underlying profits, which exclude certain non-underlying items as detailed on page 22 3 HILS: HY19
Roads H1 H1 H1 Organic Operating 2019 2019 2018 Change £m Revenue profit 2018 87.2 8.5 Revenue (£m (£m) 114.7 .7 87.2 +7% F/X (0.2) - Ope Operating pr profi ofit (£m (£m) 10.3 .3 8.5 -1% M&A 21.7 1.9 Ope Operatin ing mar margin in 9.0% 9.7% -70bps Organic 6.0 (0.1) UK UK 2019 114.7 10.3 Road Investment Strategy (“RIS1”) Increasing utilisation of temporary barrier 2019 Revenue Fleet expanded; +41km in H1, +20km committed H2 £114.7m Up 7% organically Lower demand for permanent products in H1; H2 outlook more encouraging Hostile Vehicle Mitigation UK +7% £60m Good demand for growing product range ATG acquisition provides platform for further expansion USA +54% £28m USA International -8% £27m Federal and state investment programmes driving activity Revenue by end New product development to meet market requirements geography 25% Oth Other International France ahead of prior year 47% Scandinavia challenging; project delays and aggressive competition 25% Lower demand in Australia against strong comparatives 3% 4 HILS: HY19
Utili tilitie ies H1 H1 H1 Organic Operating 2019 2019 2018 Change £m Revenue profit 2018 113.0 7.3 Revenue (£m (£m) 126.5 .5 113.0 +3% F/X 3.0 0.2 Ope Operating pr profi ofit (£m (£m) 9.6 .6 7.3 +17% M&A 7.3 0.8 Ope Operatin ing mar margin in 7.6% 6.5% +110bps Organic 3.2 1.3 2019 126.5 9.6 UK UK Overall mixed; cautious investment environment 2019 Revenue Building products and industrial flooring ahead y-o-y £126.5m Up 3% organically Non-core drainage pipe operation divested early August UK +1% £58m USA USA +14% £46m Further organic growth in both Composites and Utility transmission Pipes (US/India) -8% £22m Prior year acquisitions trading well Good order backlogs for H2 Revenue by end geography Pipe Su Supp pports 51% United Kingdom US business benefitting from robust commercial construction North America Rest of Europe India encouraging; new products gaining traction 45% Rest of the World Overall improvement in profitability and margin 2% 2% 5 HILS: HY19
Galv lvaniz izin ing H1 H1 H1 Organic Operating 2019 2019 2018 Change £m Revenue Profit Revenue (£m (£m) 98.3 .3 95.2 +1% 2018 95.2 18.8 Ope Operatin ing pr profi ofit (£m (£m) 20.3 18.8 +4% F/X 2.4 0.8 Organic 0.7 0.7 Operating mar Ope margin 20.7% .7% 19.7% +100bps 2019 98.3 20.3 UK: K: 97k ton onnes 1% 1% Q2 demand affected by slowing UK construction activity Strategic focus on higher return work $/tonne Improvement in profitability and margins LME ZINC PRICE (USD) 4,000 3,750 USA: A: 81k ton onnes 6% 6% 3,500 3,250 Higher selling prices offsetting volume reduction 3,000 Profitability similar to prior year - 17% 2,750 New York plant on track for completion end 2019 2,500 2,250 Fr Fran ance: 64k ton onnes 4% 4% 2,000 1,750 Q1 impacted by political factors; better Q2 H1 18 P&L H1 19 P&L 1,500 Market still highly competitive 1,250 Selling price increases supporting profitability 1,000 Indicative P&L cost based on 6-month bath stock 6 HILS: HY19
Free cash flo flow and net t debt H1 H1 H1 FY £m 2019 2019 2018 2018 Workin orking g capit ital l ou outf tflo low £21.8m Underlying Operating Profit 40.2 40 34.6 80.1 − Reflects seasonality of trading Depreciation and amortisation 15 15.3 9.9 19.5 − Lead indicators ahead of prior year H1 Unde nderly lyin ing EB EBITD TDA 55 55.5 44.5 99.6 Other non-cash items 0.3 0. (1.0) 0.4 Cap Capex 2.2 ti times dep deprecia iatio ion/amor ortis isatio ion Working capital (21 21.8) (22.3) (6.3) − Strategic investment in temporary barrier fleet £8.7m Capital expenditure (net) (22 22.5) (8.5) (31.6) − H2 investment in new galvanizing plant (£7m) and Unde nderly lyin ing ope peratin ting cas ash flow low 11 11.5 12.7 62.1 further barrier (£3m) Restructuring spend (1.0 1.0) (0.9) (1.7) − FY19 guidance c. £45m Provisions/Pension (1. 1.2) (1.2) (2.5) Interest paid (net) (2.8 2.8) (1.6) (3.9) Ne Net deb debt : : EBI EBITDA 1.6 ti times (Dec 20 2018 18: 1. 1.3 3 times) Tax paid (6.0 6.0) (7.9) (13.3) ( ex excluding IFRS 16 imp mpact) Statu tutory y free cash flow low 0. 0.5 1.1 40.7 − Facilities extended and increased Dividends (7.9 7.9) (7.4) (23.6) Acquisitions/disposals (24 24.6) (33.3) (47.6) New leases (4.3 4.3) - - £m H1 2019 Dec 2018 H1 2018 Share issues/other (net) 0.4 0. (0.7) (2.2) Net debt 203.1 * 132.9 141.2 Net Net cas ash flow low (35 35.9) (40.3) (32.7) * Including lease liability of £33.6m Note: ote: F/ F/X impa mpact (0. 0.2) (1.9) (1.2) 7 HILS: HY19
New appoin intments Ala Alan Gid iddins Han annah Nic ichols An Andrew Bea eaney Chairman Gro roup CFO MD MD, Road Roads & Secu curity Gro roup 1 Oct ctober r 2019 16 Septe tember 2019 1 Au Augu gust t 2019 Following a thorough selection Hannah joins the Board after 14 years A new senior management role process, Alan will become Chairman with BT Group plc, most recently as leading strategic development across of the Board from 1 October 2019. He CFO, Asia, Middle East & Africa for BT our range of businesses in the roads will succeed Jock Lennox, who retires Global Services, where she led a 70- and security markets, through both on that date. Alan joined the Group in strong globally and culturally diverse organic growth and acquisition. October 2017 as SID and has recently finance team, providing services to over Andrew joins us after 18 years with retired from his role as Managing 800 multinational and domestic Interserve, most recently as the Partner and head of Private Equity at customers across 46 countries. Managing Director of Interserve 3i Group plc. Engineering Construction, based in Abu Dhabi. 8 HILS: HY19
Group str tructure ROADS & SECURITY UTILITIES GALVANIZING UK USA RoW UK USA PIPES UK USA FRANCE ROADS SECURITY 9 HILS: HY19
Key growth opport rtunit itie ies - USA GA GALVANIZIN ING – V& V&S Gr Growt wth in n infr frastructure spe pend Prod oduct sub ubstit itutio ion fr from om pain paint (e.g. trailer chassis) Inc ncreased foo ootp tprin int – Ne New York ork site inc ncreases capacit ity Ac Acquis isit itio ion op oppo portunit itie ies Focu ocus on on cus ustomer ser ervic ice to o gai ain ma market sha hare ROADS – Hill ill & Sm Smit ith Inc. Inc. FAS AST T Ac Act Ag Agein eing US S infr frastructure Platfor orm for or ne new pr prod oducts Str Stron ong pr prod oduct de develo lopment pr prog ogramme UTIL UTILITIES – Cr Creativ ive Com Composites Gr Group Mar Market expected to o gr grow w 8-10% % p.a. p.a. thr throu ough pr prod oduct awareness Prod oduct sub ubstit itutio ion / / ligh ghtweig ight / / cor orros osio ion resi esistant Ne New app appli licatio ions in n OE OEM ma markets De Desig ign & & Su Supply ly pr proje ojects Sp Specia ialis ists in n fabr abric icated stru tructural l systems Uti tili lity po poles & & cros oss-arms 10 HILS: HY19
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