Breedon Group Plc · LSE:BREE
Breedon — Investor Day (November 2021)
38 slides from Breedon's investor day presentation, Nov 24, 2021
Slide 1: Delivering the Next Chapter of Growth
DELIVERING THE NEXT CHAPTER OF GROWTH 24 NOVEMBER 2021
Slide 2: Agenda
AGENDA Our Growth Strategy Operating Sustainably Our Financial Framework Closing Remarks Q&A 2 Breedon Capital Markets Event • November 2021
Slide 3: Forward Looking Statement
Forward Looking Statement The information contained in this presentation document (the “presentation”, which term includes any information provided verbally in connection with this presentation document) does not constitute an offer or solicitation to hold, sell or invest in any security and should
Slide 4: Today's presenters
Today’s presenters Presenting Rob Wood James Brotherton Donna Hunt Chief Executive Chief Financial Head of Officer Officer Sustainability In attendance Amit Bhatia Mike Pearce James Haluch Jude Lagan Non-Executive Managing Director Managing Director Managing Director Chairman GB Materials GB Surfaci
Slide 5: Our Growth Strategy
OUR GROWTH STRATEGY ROB WOOD, CHIEF EXECUTIVE OFFICER 5 Breedon Capital Markets Event • November 2021
Slide 6: Breedon Today
Breedon Today A leading vertically-integrated construction materials group Revenue Value Add Cement >350 sites Ireland Aggregates Asphalt GB Surfacing Cement Ready mix concrete c.1bn tonnes Cement GB Ireland 3,500 £ £ £ £ £ £ colleagues EBIT 6 Breedon Capital Markets Event • November 2021
Slide 7: A Decade of Delivering Growth
A Decade of Delivering Growth M&A activity complemented by organic growth Aggregate Industries’ Scottish operations Hope Lagan CEMEX Breedon UK assets Holdings 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* £169m Revenue CAGR at 22% £1,200m £6m EBIT CAGR at 35% £129m * 2021 revenue and EBIT
Slide 8: Asset Backed Model
Asset Backed Model Significant barriers to entry c.1bn 350 tonnes sites Reserves and resources Tonnes (bn) 1.0 2 200+ plants plants Ready-Mixed Cement Concrete 0.5 100+ 50+ Aggregates quarries plants Asphalt 0.0 2015 2016 2017 2018 2019 2020 8 Breedon Capital Markets Event • November 2021
Slide 9: National Reach
National Reach More than 350 sites across two platforms 2020 2017 2013 2010 9 Breedon Capital Markets Event • November 2021
Slide 10: Supplying Long-Term Growth Markets
Supplying Long-Term Growth Markets Broad Government support for construction in the UK and Ireland IRELAND UK National Infrastructure and National Development Plan Construction Pipeline Investment package of Nearly €165bn 2021-2030 £650bn investment roadmap to 2030 Source: UK Government HM Treasury
Slide 11: Underpinned by Our People
Underpinned by Our People 3,500 motivated and passionate colleagues 3,500 colleagues 84% feel their work contributes to Breedon’s success Source: Breedon employee engagement survey 2021 11 Breedon Capital Markets Event • November 2021
Slide 12: We Are Breedon
We Are Breedon What makes us different Entrepreneurial Vertically People Culture Integrated Paramount Local Financial Trusted Focus Framework Owner 12 Breedon Capital Markets Event • November 2021
Slide 13: Making a Material Difference
Making a Material Difference Our purpose, values and vision PURPOSE VALUES STRATEGY VISION To Be A Leading Vertically-Integrated International Construction Materials Group 13 Breedon Capital Markets Event • November 2021
Slide 14: Delivering the Next Chapter Sustainably
Delivering the Next Chapter Sustainably Our strategy is evolving Optimise Sustain Financial Framework Expand Creating Sustainable Value for All of Our Stakeholders Over the Long-Term 14 Breedon Capital Markets Event • November 2021
Slide 15: Third Platform Acquisition Criteria
Third Platform Acquisition Criteria Replicating the Breedon model Focused on markets that offer the following characteristics: Benign local Long-term growth Reliable planning Robust legal cultures with minimal prospects regimes systems political risk 15 Breedon Capital Markets Event • November 2021
Slide 16: A Clear and Sustainable Growth Strategy
A Clear and Sustainable Growth Strategy PURPOSE VALUES STRATEGY VISION 16 Breedon Capital Markets Event • November 2021
Slide 17: Operating Sustainably
OPERATING SUSTAINABLY DONNA HUNT, HEAD OF SUSTAINABILITY 17 Breedon Capital Markets Event • November 2021
Slide 18: We Have a History of Positive Action
We Have a History of Positive Action Sustainability has always been important to Breedon 18 Breedon Capital Markets Event • November 2021
Slide 19: Materiality Assessment Informed Our Approach
Materiality Assessment Informed Our Approach Focusing on four key themes Energy & carbon Climate change and energy PLANET Circular economy Sustainable Employee materials health & safety Community relations Environment Importance to stakeholders and nature Biodiversity Ethical business practice Clima
Slide 20: Our Purpose is to Make a Material Difference
Our Purpose is to Make a Material Difference By focusing on the Planet, People and Places PLANET PEOPLE PLACES Make a material difference to the environment Make a material difference to society Make a material difference to the built environment Carbon reduction Products and services that deliver h
Slide 21: We Have Committed to New Targets and KPIs
We Have Committed to New Targets and KPIs Driving improvements towards achieving our aims 2050 roadmap Pillar PLANET PEOPLE PLACES Make a material difference to the environment Make a material difference to society Make a material difference to the built environment Initial progress Decade to delive
Slide 22: Roadmap to 2030
We Have Committed to New Targets and KPIs Driving improvements towards achieving our aims Pillar PLANET PEOPLE PLACES Make a material difference to the environment Make a material difference to society Make a material difference to the built environment Target 2030 50% of our concrete and asphalt sa
Slide 23: We are Committed to…
We are Committed to… Industry collaboration and transparent reporting Working across the industry to achieve best practice standards of sustainability Increasing transparency and enhancing our disclosures and reporting 23 Breedon Capital Markets Event • November 2021
Slide 24: We Are Embedding a Culture of Sustainability
We Are Embedding a Culture of Sustainability Sustainability has always We have formalised our We have set targets to We will report on our been important to Breedon sustainability framework align our focus and drive performance transparently improvements We are well positioned to achieve additional
Slide 25: Our Financial Framework
OUR FINANCIAL FRAMEWORK JAMES BROTHERTON, CHIEF FINANCIAL OFFICER 25 Breedon Capital Markets Event • November 2021
Slide 26: Ten Years of Growth
Ten Years of Growth Delivered through targeted M&A and operational excellence Organic growth enhanced by acquisitions 1200 Revenue (£m) 1000 800 600 1,200 400 863 930 929 652 200 455 225 270 318 169 173 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* Sustained focus on incremental improvem
Slide 27: Ten Years of Cash Generation
Ten Years of Cash Generation Delivering free cashflow within a disciplined financial framework FCF conversion Converting our profits to cash 90% 91% 94% 77% 62% 54% 64% 150 56% 13.6% 50% 15% 11.2% 39% 10.2% 9.9% 8.8% 8.8% FCF (£m) 100 10% ROIC (%) 7.0% 4.8% 140 50 3.3% 100 5% 90 5.5% 18 50 64 63 7 1
Slide 28: Financing Breedon's Future
Financing Breedon’s Future We have diversified our sources of finance and extended our maturity profile Debt finance positioned to support future growth RCF USPP31 600 Accordion USPP33 500 USPP28 USPP36 Available 400 liquidity £358m 300 2021 Refinancing £350 million unsecured RCF 200 £250 million US
Slide 29: Connecting Strategy to Capital Allocation
Connecting Strategy to Capital Allocation Financial framework provides strategic flexibility Financial Framework Balance growth with Responsible leverage returns and profitability and strong balance sheet Capital Allocation Considerations Linked to End Market Investment strategy and Demand and consi
Slide 30: Our Capital Allocation Model
Our Capital Allocation Model Investment as a differentiator Maximise value Investment Strategic Excess through capital opportunities objectives Capital deployment ORGANIC Reserves and Resources Profitable Growth Dividends Business Investment Disciplined Cash capital deployment Conversion Bolt-on Acq
Slide 31: Investment Growth Opportunities
Investment Growth Opportunities Where and why we invest capital Reserves and Bolt-on • Develop downstream e.g. • Securing our future Resources Acquisitions Surfacing • Latent value incumbency • In-fill geographical locations • Blend of large and small e.g. Cemex sites bring optionality • UK and Irel
Slide 32: Mansfield Asphalt Plant
Mansfield Asphalt Plant Deploying capital based on strong strategic rationale and return profile Increase Increased capacity recycling, reduced in attractive environmental local market impact Dual fuel, lower Utilise local running costs Breedon quarry outputs Enhanced health & safety Organic growth
Slide 33: Managing a Dynamic Cost Environment
Managing a Dynamic Cost Environment Layered hedging policy delivers visibility and certainty Mitigation Strategy Energy Fully hedged for 2021-2022 in both UK and Ireland with layers extending to 2023 Carbon Sufficient allowances to cover 2021 and 2022 for UK & EU ETS Layered forward purchases into 2
Slide 34: Historic Pricing Experience
Historic Pricing Experience Inputs at historic cost; sold at market rate Reserves and resources Aggregates prices outpace inflation over time c.1bn Tonnes Chart Title 170 160 Aggregates 150 Pricing* 140 130 UK CPI Index 120 110 100 90 2015 2016 2017 2018 2019 2020 2008 2009 2010 2011 2012 2013 2014
Slide 35: A Financial Framework to Underpin Our Growth
A Financial Framework to Underpin Our Growth Financial metrics aligned to our strategy Growth Profitability Cash Flow Financial Returns Dividend Discipline Revenue EBIT Margin FCF Generation Leverage ROIC Payout Ratio Outperform 12% - 15% >50% 1x - 2x >10% 40% Our Markets FCF Conversion 3 – 5 years
Slide 36: Closing Remarks
CLOSING REMARKS BREEDON CAPITAL MARKETS EVENT 36 Breedon Capital Markets Event • November 2021
Slide 37: A Decade of Achievement
A Decade of Achievement Optimise Sustain Financial Framework Expand An Ambition to Outperform. A Strategy to Deliver Growth Sustainably. 37 Breedon Capital Markets Event • November 2021
Slide 38: Q&A
Q&A BREEDON CAPITAL MARKETS EVENT 38 Breedon Capital Markets Event • November 2021