2019 Preliminary Results 4 March 2020 Derek Muir Chief Executive Officer Hannah Nichols Chief Financial Officer Delivering intelligent protection solutions Stock Code HILS
Key messages FY19 Results 4 March 2020 Resu esults ts in in li line wit ith Bo Board exp xpectati tions 9% revenue growth; 8% operating profit growth Strong performance from UK and US operations Challenges in Scandinavia; action taken to restructure Conti Co tinued port portfolio de development Three acquisitions strengthen our Roads & Security portfolio Investment in expansion of temporary road safety barrier fleet New US Galvanizing facility now operational Debt facilities expanded and extended Wel ell pos posit itioned for or furt urther gr growth 2
Results summary FY19 Results 4 March 2020 FX FX imp mpact: - Revenue +ve ve £6 £6.7m 2019 2019 +/- 2018 - Ope peratin ing pr prof ofit it +ve ve £1 £1.4m Revenue (£m (£m) 694.7 +9% 637.9 Constant currency growth +8% Ope Operatin ing pr profi ofit (£m (£m) 86.3 +8% 80.1 Constant currency growth +6% Ope Operatin ing mar margin in (%) (%) 12.4 -20bps 12.6 Challenges in Scandinavia IFRS 16 increases interest Profi ofit be befor ore tax (£m (£m) 79.4 +4% 76.3 expense Ear arnin ings per per sha hare (p) (p) 80.7 +4% 77.8 Tax rate neutral at 19.5% Progressive dividend policy Di Divid idend (p) (p) 33.6 +6% 31.8 maintained – 17th successive year 3
2019 at a glance FY19 Results 4 March 2020 Revenue by y seg egment: £694.7m Operating Profit it by segment: £ £86.3m ROADS GALVANIZING ROADS 26% 28% 35% GALVANIZING 48% UTILITIES UTILITIES 26% 37% A A well ell bala balanced bus busin iness: pr products, ma markets an and geog eographie ies Revenue by end market geography: £ £694.7m Operating Profit it by pla lant lo locatio ion: £ £86.3m USA UK UK 38% 41% 39% USA 57% Europe 18% RoW 21% 4
Roads FY19 Results 4 March 2020 Ope peratin ing Organic £m £m Revenue Profi ofit 2019 2019 2018 Growth 2018 2018 208.5 20 8.5 24 24.2 Revenue (£m) 246.3 24 6.3 208.5 1% F/X (0.3) - Operating profit (£m) 22.3 22 .3 24.2 -21% M&A 35.4 3.1 Operating margin 9.1% 9.1% 11.6% -250bps Organic 2.7 (5.0) UK K Road oads 2019 2019 246.3 24 6.3 22.3 22 High level of demand for temporary road safety rental barrier (under RIS 1) 20 2019 19 Revenue c .£15m fleet expansion: 72km of steel and 10km of concrete barrier £246 £246.3m Up p 1% 1% organic ically lly Lower demand for permanent road products Bolt on acquisition of Signpost Solutions (acquired December for £6.4m) UK up up 2% £1 £133 33m Short term uncertainty on timing of RIS2 scheme commencements USA up 5% up 5% £5 £54m UK K Sec Security International down 2% dow 2% £59m £5 Strong UK and international demand Acquisitions (ATG & Parking Facilities) strengthen product portfolio Revenu enue by end d ge geograp aphy USA 22% Strong demand benefiting from wider distribution network & product range United Kingdom Continued product development to meet market requirements North America Other International Rest Of Europe 48% 25% Rest of the World Challenges in Scandinavia: action taken to restructure the business France ahead of prior year 5% Australian demand lower against strong comparatives 5
Utilities FY19 Results 4 March 2020 Organic Ope peratin ing £m £m Revenue Profi ofit 2019 2019 2018 Growth 2018 2018 239.0 23 9.0 18 18.3 Revenue (£m) 25 251.3 1.3 239.0 1% F/X 4.5 0.5 Operating profit (£m) 22 22.2 .2 18.3 9% M&A 6.2 1.7 Operating margin 8.8% 8.8% 7.7% +110bps Organic 1.6 1.7 UK UK 2019 2019 25 251.3 1.3 22.2 22 Overall mixed performance; cautious investment environment 2019 20 19 Revenue Improved performance in security access cover operation £251.3m £251 Up p 1% % organically lly Non-core drainage pipe business divested in August US US UK dow down 3% 3% £1 £110 10m Strong organic growth in both composites and utility transmission US up 10 up 10% £96m £9 Key growth drivers: upgrade of ageing US infrastructure and increasing Pipes (US/India) dow down 6% 6% £4 £45m acceptance of composite systems for infrastructure projects Strong order book as we enter 2020 Re Reven venue e by by end nd geog eograph phy Pip ipe Sup Supports Lower demand for engineered pipe supports in US power sector 52% Growth in US profits due to operational efficiencies and robust commercial United Kingdom North America construction market Rest of Europe India: solid performance, new products gaining traction 42% Rest of the World 3% 3% 6
Galvanizing FY19 Results 4 March 2020 Ope peratin ing Organic £m £m Revenue Profi ofit 2019 2019 2018 Growth 2018 2018 19 190.4 0.4 37 37.6 Revenue (£m) 19 197.1 7.1 190.4 2% F/X 2.5 0.9 Operating profit (£m) 41 41.8 .8 37.6 9% Organic 4.2 3.3 Operating margin 21.2% 21 .2% 19.7% +150bps 2019 2019 19 197.1 7.1 41.8 41 Overal all Good organic profit growth 20 2019 19 Revenue Improvement in operating margins driven by increase in average selling prices, £197 £197.1m Up p 2% % organically lly lower zinc input costs and plant efficiencies UK: K: 18 189k 9k ton onnes s 2% 2% UK up up 3% 3% £62m £6 Successful focus on higher margin work from smaller customers US up 1% up 1% £8 £80m Profits and margins ahead of prior year France up 3% up 3% £55m £5 USA: A: 16 165k 5k tonnes s 3% 3% Infrastructure investment and wider economy strong Re Reven venue e by by end nd geog eograph phy Profit growth driven by average selling price and plant efficiency 41% New York plant construction completed and operational January 2020 Fr France: : 12 129k 9k ton onnes s 3% 3% United Kingdom Volumes recovered strongly in H2 USA France Market remains competitive, however average selling prices maintained 28% 31% supporting margins 7
Free cash flow and net debt FY19 Results 4 March 2020 £m 2019 2019 2018 Underlying Operating Profit 86.3 86 80.1 Work orking capi apital ou outflow £1 £12.9 2.9m Depreciation and amortisation 31.3 31 19.5 Working capital to annualised sales 17.4% (2018: 17%) Underlying EBITDA 11 117.6 7.6 99.6 Outflow largely due to timing of key supplier payments Other non-cash items 1. 1.1 0.4 Cap apex 2.3 2.3 tim imes de depreciation/amortisa sation Working capital (12 12.9) (6.3) Gross spend of £48m broadly in line with guidance Capital expenditure (net) (46 46.8) (31.6) Strategic investment in UK temporary barrier fleet Underlying operating cash flow 59.0 59 62.1 (£15.2m) and New York galvanizing plant (£8.6m) 2020 guidance: c. £30m Restructuring spend (net) 2.5 2. (1.7) Provisions/Pension (3.8 3.8) (2.5) Und nderlying cas ash con onversi sion 67 67% Interest paid (inc. £0.9m IFRS 16) (6.8 6.8) (3.9) 95% excluding £23.8m of strategic capex Tax paid (14 14.4) (13.3) 10 year average 82% Free cash flow 36 36.5 40.7 Net de debt: EBI EBITDA 1.6 1.6 tim imes s (Dec 20 2018 18: 1. 1.3 3 times) Dividends (25 25.1) (23.6) Debt facilities expanded and extended Acquisitions/disposals (50 50.9) (47.6) Net debt of £215.3m includes £40.0m IFRS16 impact Lease movements under IFRS16 (11 11.1) - St Strong cas ash flo flow and and bala balance she sheet cr create capa apacity for or Share issues/other (net) 1. 1.3 (0.1) investment in in in hig higher return mar arkets Revolving Net cash flow (49 49.3) (30.6) Credit Facility FX impact 2. 2.9 (3.3) Adoption of IFRS 16 (36 36.0) - Net debt 21 215.3 5.3 132.9 8
Financial targets FY19 Results 4 March 2020 3% - 5% Or Organic ic revenue gr growt wth 12% - 15% Operatin ing ma margin ins 17% - 20% Return on on invested capit ital l (inc inc. IFR FRS S 16 16) 90 90% und underly lyin ing g cash con onversio ion Cash Ne Net deb debt: : EBIT EBITDA 1.5 – 2 ti times 9
2019 Financial target performance FY19 Results 4 March 2020 Organic revenue gr growth Ope perating mar argin Reported revenue Organic revenue growth Target growth range EBIT Operating margin Target margin range Und nderlying cas ash con onversi sion * Return on on in invested capi apital 120% 22.0% 100% 20.0% 80% 18.0% 60% 16.0% 40% 14.0% 20% 12.0% 10.0% 0% 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 *excluding strategic capex Cash conversion Target Group ROIC Group target range 10
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