AIM presentation. 1. Anglo Industrial Minerals (AIM). Robbie Robertson. Chief
Executive Officer. 16 June 2004 ...
Anglo Industrial Minerals (AIM) Robbie Robertson Chief Executive Officer 16 June 2004
1
AIM presentation
Agenda Overview of AIM Tarmac & Strategy
Financials
Tarmac Iberia
Tarmac Czech Republic
2
Tarmac Northern
AIM presentation
Overview of AIM Key messages • Drive further value from the UK cash “engine” • Exciting growth in Europe • Test market in China/India
3
AIM presentation
Overview of AIM • Wholly-owned • Strong free cash flow generation • Stable earnings and cash flows • Utilises extractive industry core competence • Sterling/Euro/Dollar denominated • Geographical diversification • Access to further potential growth areas • Strong reserve base
4
AIM presentation
Overview of AIM AIM EBITDA growth $m
600
C
500
23 R G A
%
400 300 200 100 0 2000
2001
2002
5
2003
AIM presentation
Overview of AIM Management structure Chief Executive Officer Robbie Robertson
Finance
Technical
Procurement Marketing Graham Greenhalgh
Angela Walker Tony Davies Peter Whittle
France / Belgium
Central Europe
Copebrás
Keith Jackson David Cather
UK
Spain
Clive James Cipriano Gomez Alain Hecquet Ian Pughsley Terry Last Tim Hall Bob Boyd Mike Saunders
6
Nelson Pereira
HR
Strategy
Middle East / Far East Robert Taylor Stuart Jones
AIM presentation
Overview of AIM Anglo EBITDA
Anglo employees
$4.8bn
193,000
12%
6% Industrial Minerals
Copebrás (73%)
UK
Tarmac (100%)
Spain 7
France / Belgium
Central Europe
Middle East / Far East AIM presentation
Overview of AIM 2003 AIM EBITDA
AIM employees
$557m
11,888
77%
70%
18%
8% 1%
14%
9%
Tarmac UK
Tarmac Europe
Middle/Far East
Copebras
3%
CAGR EBITDA growth of 23% since 2000 8
AIM presentation
Key messages
• Drive further value from the UK cash “engine” • Exciting growth in Europe • Test market in China/India
9
AIM presentation
Tarmac UK
2003 EBITDA $424m (77% total) Employees 8,310 10
AIM presentation
Tarmac UK Construction - £93 billion market Tarmac’s spread of business*
Housing 16%
Housing 20% R&M 37%
R&M 47%
Commercial 16%
Commercial 15%
Industrial 4% Other public 9%
Industrial 5%
Infrastructure 8%
Other public 9%
Infrastructure 14% *2003 sales by value of UK asphalt, ready-mix, mortar and concrete products
Source: DTI
Tarmac has a broad exposure to the construction market 11
AIM presentation
Tarmac UK Construction materials - £6 billion market By volume
By value Other aggregates 25%
Asphalt 10%
Asphalt 17%
Concrete 17%
Other aggregates 60%
Mortar & Screed 2% Concrete Products 11%
Concrete 23%
Concrete Products 31%
Mortar & Screed 4%
Total 2003 aggregates market inc recycled : 267mt
12
AIM presentation
Tarmac UK Industry consolidation – top 5 market shares %
100 90 80 70 60 50 40 30 20 10 0 1980 Aggregates
2003 Asphalt 13
Ready-mix AIM presentation
Tarmac UK Our market shares Product
Market share
Position
Aggregates
23%
#1
Asphalt
31%
#1
Ready-mix
24%
#2
Concrete blocks
23%
#1
Concrete flooring
15%
#2
Lime
34%
#1
Mortar
20%
#1
Cement
2%
#4
Source: Tarmac estimates
The UK’s number one in heavy building materials 14
AIM presentation
Tarmac UK Aggregates price and volume trends 290
130
280 120 270 260
mt
110
250 100 240 90
230 220
80 210 70
200 00 Total aggregates
01
02 Retail Price Index
03 Aggregates Price*
*Tarmac crushed rock aggregates price index (excludes Aggs Levy)
Real price increases achieved 15
AIM presentation
Tarmac UK Tarmac growth drivers • Demand • Margin – service differentiation – cost reduction
• Projects/acquisitions • Innovation
16
AIM presentation
Tarmac UK Tarmac value drivers • Proximity to the customer • Network of plants • Strong position in local market • Customer service • Low cost of production • Vertical integration • Strong reserve base
17
AIM presentation
Tarmac UK KEY
Aggregates Concrete Asphalt Concrete Products
18
AIM presentation
Tarmac UK Crushed rock
Aggregates
Added value products
Services
Sand & gravel Recycled Asphalt Cement & lime Concrete products Mortar Ready-mixed concrete
Contracting
Adding value to aggregates 19
AIM presentation
Tarmac UK Barriers to entry
Contribution margin %
50
Cement & Lime Aggregates
40
Concrete Products Asphalt
30 20
Ready-mix & Mortar Contracting
10 0
Low
Barrier to entry
High
Size of bubble = 2003 Tarmac UK contribution
20
AIM presentation
Tarmac UK Our sources of competitive advantage • Best quality and most widely spread assets • Market leader • Strong brand & reputation • Large reserve base (over 2 billion tonnes) • High quality people • Empowered local management • Purchasing power • SHE excellence
Tarmac has a strong competitive position 21
AIM presentation
Tarmac UK Strategy • Increase value from existing business – Customer First – Cost reduction – People development – Innovation
• Growth areas – Recycling – Concrete products – South of England
Focus on increasing cash flow and returns 22
AIM presentation
Tarmac Products David Cather Technical Director
23
AIM presentation
Crushed rock
Aggregates
Added value products
Services
Sand & gravel Recycled Asphalt Cement & lime Concrete products Mortar Ready-mixed concrete
Contracting
Adding value to aggregates 24
AIM presentation
Aggregates
25
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Aggregates
26
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Aggregates
27
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Aggregates
28
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Aggregates
29
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Added value
30
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Added value
31
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Added value
32
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Added value
33
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Added value
34
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Added value
35
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Added value
36
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Added value
37
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Services
38
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Services
39
AIM presentation
Key messages
• Drive further value from the UK cash “engine” • Exciting growth in Europe • Test market in China/India
40
AIM presentation
Tarmac Europe
2003 EBITDA $80m (14% total) Employees 2,178 41
AIM presentation
Tarmac Europe GDP & construction output as a % GDP in Eastern Europe
Ebn 500
% 11.4
450
11.2
400
11.0
350
10.8
300
10.6
250
10.4
200
10.2
150 100
10.0
50
9.8
0
9.6 2000
2001
2002 GDP
2003
2004
2005
2006
Construction output as a % GDP
Source: Euroconstruct
Growth markets 42
AIM presentation
Tarmac Europe Fragmented aggregates markets Size
400mt
700mt
420mt
53mt
70mt
269mt
100% 80%
28
56
60%
58
82
77
85
Top 5
40% 20% 0%
Others
72
44
France
42
18
15
Germany
Spain
23 Czech Rep.
Poland
UK
Significant consolidation opportunity 43
AIM presentation
Tarmac Europe • France – market leader in concrete blocks • Germany – leading local positions in aggregates • Spain – leader in aggregates & ready-mix in Madrid, leading ready-mix supplier in Alicante • Poland – a leading supplier of aggregates. No 1 in concrete paving • Czech Republic – no. 1 aggregates supplier
Tarmac is well placed to be a consolidator 44
AIM presentation
Tarmac Europe The attractions of Europe • Growth in underlying markets – New EU entrants - infrastructure spend and economic growth – Spain - tourism/immigration led growth
• Consolidation potential • Diversify from UK
45
AIM presentation
Tarmac Europe Strategy • Choose countries where Tarmac’s operating model can be applied cost effectively • Growth principally by acquisition – Aggregates at core – Supported where appropriate by downstream products
• Tarmac value added comes from – Synergies from bolt-ons – Leveraging core UK competences to improve business
• Target specific synergistic opportunities
Europe will be the key driver of growth in Tarmac 46
AIM presentation
Key messages
• Drive further value from the UK cash “engine” • Growth in Europe • Test market in China/India
47
AIM presentation
Rest of the World
2003 EBITDA $53m (9% total) Employees 1,400 48
AIM presentation
Rest of the World Tarmac Middle East • Operations comprise – 49% JV with local trading house operating aggregates & asphalt business serving Al Ain, Dubai and Abu Dhabi – Wholly owned asphalt business in Oman
• Politically stable • Demand driven by oil price • Substantial investment in non-oil industries • Tarmac SHE focus and higher quality products giving competitive advantage • Opportunity to further develop business
Focus on quick payback 49
AIM presentation
Rest of the World Tarmac Far East/India • Seedcorn investments in Shanghai and Mumbai • Markets with huge growth potential • Test whether Tarmac operating model can compete effectively and can be scaled up quickly
Cautious approach to test the Tarmac model 50
AIM presentation
Rest of the World Copebrás •
Brazilian producer of phosphate fertilisers and STPP*
•
2003 EBITDA of $47m (up by 63% since 2000)
•
Goiás project at Catalão plant completed in February 2003 at a cost of $128m, $19m under budget – Doubled capacity – Added $16m to operating profit in 2003
•
Catalão plant has cost advantage over imports
•
Located in highest growth region
•
Further projects to expand Catalão plant
•
Explore other opportunities to grow business
*Sodium Tripolyphosphate 51
AIM presentation
Financial Review Keith Jackson Finance Director
52
AIM presentation
Financial Review Key financials • Sales up 48% since 2000 to $3.3 billion • EBIT up 118% since 2000 to $325 million • EBITDA up 87% since 2000 to $557 million • EBITDA return up to 17% • Cost savings of $126 million • $355 million on bolt-on acquisitions • £110 million Buxton cement plant project • $128 million Goiás expansion project
A 3 year growth record 53
AIM presentation
Financial Review AIM EBIT growth $m
600
C
500
30 R G A
%
400 300 200 100 0 2000
2001
2002
54
2003
AIM presentation
Financial Review AIM EBITDA growth $m
600
C
500
23 R G A
%
400 300 200 100 0 2000
2001
2002
55
2003
AIM presentation
Financial Review Comparison with competitors – EBIT growth 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20%
Tarmac
Hanson
AI
RMC
CAGR 2000-2003
Competitor information source Morgan Stanley
56
AIM presentation
Financial Review AIM segment split 2003 $m Sales
EBITDA
EBITDA margin
2,610
424
16.2%
Spain
168
26
15.2%
C Europe
121
24
14.7%
France
167
30
18.0%
63
6
9.5%
189
47
24.9%
3,318
557
16.8%
Tarmac UK
Middle/Far East Copebrás Total
57
AIM presentation
Financial Review AIM currency split
2003 EBITDA
Real 8%
Other 3%
Euro 11% $ 1%
£ 77%
89% EBITDA in hard currencies 58
AIM presentation
Financial Review AIM EBIT variance analysis $m
500 450 400 350 300 250 200 150 100 50
59
20 03
th er O
n In fla ti o
Co st s
l Vo
Ex ch
Pr ic e
20 00
0
AIM presentation
Financial Review AIM cost reduction $m
2001
2002
2003
Total
Operating efficiency
15
14
29
Procurement
11
12
23
Restructuring/synergies
60
8
6
74
Total
60
34
32
126
60
AIM presentation
Financial Review AIM cash flow $ million
2002
2003
Operating profit
277
325
Depreciation/depletion
145
179
Goodwill amortisation
46
53
EBITDA
468
557
Working capital
39
17
SIB capex
(109)
(125)
Project/expansionary capex
(254)
(191)
Acquisitions/disposals
(148)
(32)*
(4)
226
Total
*Excludes deferred consideration on acquisitions
61
AIM presentation
Financial Review AIM cash returns 2003 Average capital employed $m Tarmac Copebrás AIM
EBITDA EBITDA return $m
3,122
510
16.3%
147
47
32.1%
3,269
557
17.0%
Target Tarmac returns up to Copebrás level 62
AIM presentation
Financial Review Tarmac growth drivers • Demand • Margin – service differentiation – cost reduction
• Projects/acquisitions • Innovation
63
AIM presentation
Financial Review Tarmac UK split of business Contribution $m
Share of total
Contribution margin
Aggregates
169
39%
29%
Asphalt
65
15%
16%
Ready-mix & mortar
57
13%
11%
Concrete products
49
11%
16%
Cement & lime
32
7%
41%
Contracting
9
2%
2%
Other
55
13%
15%
Total
436
100%
16%
Product
64
AIM presentation
Financial Review UK market outlook – demand drivers (in real terms) % Tarmac volume Sector
2004F Aggregates
Housing
Asphalt
Ready-mix
Concrete Products
4.5%
14%
5%
17%
42%
(4.7)%
13%
6%
19%
18%
Industrial
0.0%
6%
1%
9%
5%
Infrastructure
1.0%
17%
19%
14%
12%
Other public
12.0%
9%
6%
11%
8%
R&M
1.1%
40%
64%
30%
15%
Total
1.5%
100%
100%
100%
100%
Commercial
Source: Construction Products Association (“CPA”) and Tarmac
The key to Tarmac’s growth in the UK 65
AIM presentation
Financial Review UK market outlook – investment in strategic roads £bn
3.0 2.5 2.0 1.5 1.0 0.5
Actual
Plan
1 10 /1
0 09 /1
9 08 /0
8 07 /0
7 06 /0
6 05 /0
5 04 /0
03 /0 4
02 /0 3
01 /0 2
00 /0 1
0.0
Current estimate Source: DTI and CPA
66
AIM presentation
Financial Review European market outlook %
Construction growth
12 10 8 6 4 2 0 -2
France
Germany
2004
Spain
2005
Czech Republic 2006
Poland
Source: Euroconstruct and CEOE
67
AIM presentation
Financial Review Impact of IFRS • Elimination of goodwill amortisation • Lower P&L pension charge • Proportional consolidation of JVs
68
AIM presentation
Financial Review Summary • Strong cash generation – EBITDA $557m • Increasing returns • Cost reduction • Value adding projects/acquisitions
Continuing cash generation : continuing growth 69
AIM presentation
70
AIM presentation
Key messages
• Drive further value from the UK cash “engine” • Exciting growth in Europe • Test market in China/India
71
AIM presentation
Tarmac Iberia Cipriano Gomez
72
AIM presentation
Index 1. SPAIN – AN OPPORTUNITY –
Key figures
–
Business driving forces
2. TARMAC IBERIA –
Description of activities
–
Key figures
–
Market shares: aggregates and ready mix concrete
3. SECTOR STRUCTURE –
Aggregates and ready-mixed concrete markets
–
Supply consolidation processes. Causes of same.
–
Integration of aggregates/cement with ready mix concrete. Reflections. 73
AIM presentation
Index (Cont.) 4. MAVIKE CASE STUDY (MAVIKE ACQUISITION) 5. STRATEGY
2004-2005. Consolidation • Central Region • Mediterranean Region • Functional Strategies
2006 onwards. Product Diversification and Regional Expansion • Product diversification • Geographical expansion
74
AIM presentation
1. Spain – An Opportunity Key Figures SPAIN - KEY FIGURES 1999
2000
2001
2002
2003
2004*
2005*
2006*
GDP Evolution
4.2%
4.2%
2.8%
2.0%
2.4%
2.8%
3.0%
3.0%
Construction Evolution
8.4%
6.7%
7.7%
6.0%
3.6%
3.0%
3.0%
3.0%
-0.1%
-0.1%
0.0%
Public Deficit Evolution (% of GDP) Population Evolution '000
40,202
-
40,500 41,117
40,838 42,717
* Forecast. Source: CEOE.
Construction growing in line with GDP 75
AIM presentation
1. Spain – An Opportunity Business Driving Forces
Immigration: Houses and infrastructure demand (ie. in Madrid and on the Mediterranean Coast)
Market consolidation opportunity
Second market in Europe
Environmental restrictions growing
76
AIM presentation
2. Tarmac Iberia - operations 10 Aggregate Sites & 45 Ready-mixed concrete plants in Spain La Coruña La Coruña Santiago de Compostela
Lugo
Madrid & Guadalajara: • 8 quarries and S&G pits • 16 rmc plants
Gijón Oviedo
Asturias
Santander
Vizcaya San Sebastian Bilbao Guipúzcoa Alava
Cantabria
Lugo
Pontevedra
Vigo
Pamplona
Vitoria León
Pontevedra
León
Navarra
Orense Orense
Logroño La Rioja
Burgos
Palencia
Girona
Huesca Huesca
Burgos
Lleida
Gerona
Palencia Zamora Zamora
Salamanca & Valladolid • 1 S&G pit • 3 rmc plants
Barcelona Barcelona
Zaragoza
Soria
Valladolid
Soria
Lleida
Zaragoza
Barcelona
Valladolid Valladolid Segovia
Salamanca
Tarragona Tarragona Tarragona
Segovia
Guadalajara Guadalajara
Salamanca Salamanca Ávila
Ávila
Catalonia • 5 rmc plants
Madrid Madrid
Teruel
Guadalajara
Madrid
Teruel
Castellón de la Plana
Cuenca Cáceres
Toledo
Castellón de la Plana
Toledo
Cuenca Valencia
Cáceres
Valencia Valencia Ciudad Real
Badajoz
Albacete
Ciudad Real
Badajoz
Albacete Alicante Alicante Alicante
Córdoba
Murcia Murcia
Jaén Córdoba Huelva
Murcia Jaén
Cartagena
Sevilla Sevilla
Huelva
Valencia & Alicante • 1 quarry • 14 rmc plants
Granada Almería
Granada Málaga
Almería
Málaga Cádiz Cádiz
Murcia & Albacete • 7 rmc plants
Ceuta Melilla
77
AIM presentation
2. Tarmac Iberia – Key Figures
€ 000´s
Actual
Actual
Actual
Actual
Actual
1999
2000
2001
2002
2003
Aggregate Sales - m illion tonnes
3.1
3.7
4.5
4.7
7.2
Ready Mix Concrete Sales - m illion m 3
0.9
1.1
1.2
1.4
2.4
44,989
59,214
78,228
95,174
148,221
EBITDA
5,583
7,799
13,793
17,798
22,581
EBIT
3,910
6,032
11,761
14,601
17,214
40,838
47,874
48,007
118,268
115,038
9.0%
7.8%
23.9%
22.6%
15.2%
Turnover
Capital Em ployed CASH FLOW RETURN ( e xc lu d in g Wo rk in g C a p it a l)
78
AIM presentation
2. Tarmac Iberia – Market Shares MARKET SHARES IN OUR MAIN MARKETS AGGREGATES:
Madrid
11% Market Leader
Alicante 17% Market Leader
READY MIX CONCRETE:
Madrid
9%
Market Leader
Alicante 17% Market Leader
Leading positions in key markets 79
AIM presentation
3. Sector Structure Aggregates & Ready-Mixed Concrete Markets AG GREG ATES M ARKET SPAIN – m illion tonnes TOP TEN COMPANIES * - m illion tonnes TARM AC IBERIA – m illion tonnes TOP TEN COMPANIES - %
1999 319.6 63.0
2000 355.8 66.0
2001 376.9 73.0
2002 399.6 81.0
2003 419.9 88.0
3.1 19.7
3.7 18.5
4.5 19.4
4.7 20.3
7.2 21.0
•
SPAIN:
PROCESS OF GROW ING CONSOLIDATION, PARTICULARLY IN M ARKETS W HERE TARM AC IBERIA OPERATES
•
TARM AC IBERIA:
LEADER IN M ADRID AND ALIC ANTE FUTURE ACQUISITIONS IN CATALONIA
* Tarm ac Iberia included
80
AIM presentation
3. Sector Structure Aggregates & Ready-Mixed Concrete Markets READY MIX CONCRETE MARKET 2002
2003
SPAIN – million m3
76.0
81.0
TOP TEN COMPANIES * - million m3
30.0
31.0
1.4
2.4
39.5
38.3
TARMAC IBERIA – million m3 TOP TEN COMPANIES - % •
SPAIN:
STRONG PRESENCE OF CEMENT GROUPS AND MULTINATIONAL COMPANIES (CRH, HANSON, etc)
•
TARMAC IBERIA:
LEADER IN MADRID AND ALICANTE FUTURE GROWTH AND ACQUISITIONS IN CATALONIA
* Tarmac Iberia included
81
AIM presentation
3. Sector Structure Supply Consolidation Process AGGREGATES:
Consolidation and growing presence of cement groups and multinational companies (CRH, Hanson, etc)
Shortage of reserves as a consequence of growing environmental restrictions
Considerable sector consolidation in Madrid and Barcelona
READY MIX CONCRETE:
Consolidation and growing presence of cement groups and multinational companies (CRH, Hanson, etc)
Increasing consolidation 82
AIM presentation
3. Sector Structure Integration of Aggregates & Cement with ReadyMixed Concrete
Importance of raw material: - Cement - Aggregates
But growing importance of aggregates (environmental restrictions)
Presence and involvement in the process of - Cement Groups - Other multinational and heavy building material groups
Tarmac Iberia has taken part in this process and continues studying market possibilities
83
AIM presentation
4. Mavike Case Study Acquisition of Mavike La Coruña
La Coruña Santiago de Compostela
Lugo
Gijón Oviedo
Asturias
Santander
Vizcaya
Lugo
•
Acquired in October 2002 for —59 million
•
Access to high growth Alicante coast
•
Synergies with existing Madrid ready-mix business
Guipúzcoa Alava
Pontevedra
Pamplona
Vitoria
León
Pontevedra Vigo
San Sebastian
Bilbao
Cantabria
León
Navarra
Orense
Logroño
Burgos
Orense
Girona
Huesca
La Rioja
Palencia
Huesca
Burgos
Lleida
Gerona
Palencia
Zamora Zamora
Barcelona Barcelona
Zaragoza
Soria Valladolid
Soria
Lleida
Zaragoza
Barcelona
Valladolid Valladolid Segovia
Salamanca
Tarragona
Tarragona Tarragona
Segovia
Guadalajara Guadalajara
Salamanca Salamanca Ávila
Ávila
Madrid Madrid
Teruel
Guadalajara
Madrid
Teruel
Castellón de la Plana Menorca
Cuenca Castellón de la Plana
Cáceres
Toledo
Toledo
Cuenca
Mallorca Palma de Mallorca Valencia
Cáceres
Ibiza
Valencia Valencia Ciudad Real
Badajoz
•
Cost savings from overhead reduction
•
Better cement purchasing power
•
The Mediterranean Region expansion is unfinished …….
Albacete
Ciudad Real
Badajoz
Cabrera
Formentera
Albacete Albacete
Alicante Alicante Alicante
Córdoba
Murcia Murcia
Jaén
Murcia Córdoba
Jaén Cartagena
Sevilla
Huelva
Sevilla
Huelva
Granada Almería
Granada
Málaga
Almería Málaga
Cádiz
Cádiz
Ceuta Melilla
Mavike operations Tarmac Iberia operations 84
AIM presentation
5. Strategy
2004-2005 Consolidation • Central Region: Reinforce our mineral reserves base • Mediterranean Region: Acquisition of mineral reserves in Valencia and Barcelona Increase our ready-mix concrete business size in Valencia and Barcelona • Functional Strategies: Marketing: Customer satisfaction policy implementation Cost savings: Procurement, best practices Human resources Safety, health and environment
2006 onwards Product Diversification and Regional Expansion • Product diversification: Recycling, concrete products, etc • Geographical expansion: Other Mediterranean areas (Almería, Castellón, etc) 85
AIM presentation
Tarmac Czech Republic Vladimir Herman
86
AIM presentation
Overview of the Czech Republic
• Heart of the Continental Europe • Attractive growth post-EU entry
24.2%
34%
Population 10.2 million
87
AIM presentation
Overview of the Czech Republic 5%
4%
3% EU GDP growth Czech GDP growth 2%
1%
0% 1999
2000
2001
2002
2003
2004 F
2005 F
Strong GDP growth 88
AIM presentation
Overview of the Czech Republic Czech Republic is one of the richest eastern European countries
(GDP per Capita)
Slovenia Czech Republic Hungary Slovakia Croatia Estonia Poland Lithuania Latvia
Source: EIU estimates for 2003
Russia $0
$3,000
$6,000
$9,000
89
$12,000
$15,000
AIM presentation
Czech Construction Turnover $m 12,000
4% per
an
rm di u m t e e m m u n
growth
10,000
8,000
Public
6,000
Commerical
Housing
4,000
2,000 Source: Czech Ministry of Industry and Trade 0 1998
1999
2000
2001
2002
2003
2004 E 2005 E 2006 E
The new Ireland? 90
AIM presentation
Tarmac CZ units
Sand and Gravel Hardstone
• lot of units • small distances, capacities 91
AIM presentation
Tarmac CZ Market Shares 13,3 % Aggregates 2003
12% 51,7% 8% 5% 3% 4% 3% Tarmac
Strabag (Austrian)
Heidelberg
Holcim
Asamer (Austrian)
Hanson
92
Basalt AG (German) Other
AIM presentation
Tarmac Czech Republic – Overview •
Tarmac is the largest aggregates producer in the Czech Republic
•
Tarmac is the leading aggregates producer in northwestern Bohemia
•
Tarmac Severokamen produced 4m tonnes of aggregates in 2003 – 2.7 million tonnes of hardstone – 1.3 million tonnes of sand and gravel
•
Tarmac CZ will produce 6.1m tonnes aggregates (minimum) in 2004 – 4.9 million tonnes of hardstone – 1.2 million tonnes of sand and gravel
•
Tarmac has 30 individual operations spread out across northwestern Bohemia – 24 hardstone quarries – 6 sand and gravel operations
93
AIM presentation
Tarmac CZ Financial Performance
7000
18.0% 16.0%
6000
14.0% 5000
$ 000s
12.0% 4000
10.0%
3000
8.0%
EBITDA EBITDA ROCE
6.0% 2000 4.0% 1000
2.0%
0
0.0% 2000
2001
2002
94
2003
AIM presentation
The acquisition of Bilfinger Berger
Tarmac Severokamen
Bilfinger Berger Assets Acquired in 2003 Sand and Gravel Hardstone
95
AIM presentation
The acquisition of Bilfinger Berger
30
350
25
300 250
20
200
15
150
10
100
5
50
0
0 1998
1999
TSK Sales/e'ee BB Production/e'ee
2000
2001
2002
TSK Production/e'ee TSK Employees
No. of Empl
Kt/head
Sales and production productivity
2003 BB Sales/e'ee BB Employees
Target to improve BB productivity up to Tarmac level 96
AIM presentation
Tarmac Czech Republic – Strategy
Focus on further expansion in aggregates 97
AIM presentation
Summary •
Substantial growth expected post EU entry – Economic growth – Infrastructure investment funded by EU
•
Bilfinger Berger was a specific acquisition target – Extends geographic coverage – Scope for improved productivity
•
Further growth by acquisition
98
AIM presentation
99
AIM presentation
Key messages
• Drive further value from the UK cash “engine” • Exciting growth in Europe • Test market in China/India
100
AIM presentation
Tarmac Northern Terry Last
101
AIM presentation
Office Locations
Tarmac Northern
Inverness
Office Sub-office Bellshill
Belfast
Birtley
Lingerfield
102
AIM presentation
Profit Growth £m
45 +12.6
40
+31.4 +9.4
35
34.0
30 25
-9.7 -15.5
20 15 10 5
5.8
103
20 03
th er O
n In fl a tio
C os ts
lu m e Vo
Pr ic e
20 00
0
AIM presentation
Steps to Success 1. Analysis Assets :
Strengths – good people, reserves Weaknesses – lack of teamwork Opportunities – rationalisation & investment Threats – smaller competitors
Customers:
Spend – infrastructure needed Relationships – Tarmac reputation Wants – cheapest price? Needs – service & reliability
104
AIM presentation
Steps to Success 2. Rationalise assets and restructure management • For the benefit of: – Employees – “those that remained” – Customers – our assets close to markets – HSE – clearly defined responsibilities – Planners – well respected contacts – Suppliers – deals honoured – Neighbours – liaison enhanced
105
AIM presentation
Steps to Success 3. Communicate; Forge new culture; Motivate a. Employees – Visible felt leadership – Team briefs – Liberation & empowerment – Appreciation – Fund good ideas – Involve families
106
AIM presentation
Steps to Success 3. Communicate; Forge new culture; Motivate b. Customers – Key Account Management – Partnerships – E-business
c. 3rd parties – HSE – safest in sector – Planners – all sides win – Suppliers – lowest possible cost base – Neighbours – good housekeeping gains support
107
AIM presentation
Sustainable development & summary Robbie Robertson
108
AIM presentation
Sustainable development • Eradication of all Lost Time Injuries by 2005 • Elimination of all new cases of occupational illness by 2010 • Significant player in recycling of construction & demolition waste and secondary aggregates (slag & ggbs) – Slag & ggbs contribution of nearly £9m in 2003 (loss in 2000) – Free of Aggregates Levy – Potential for increased substitution
• Major material flows via rail and marine • Considerable engagement with local communities • Active stewardship of landholdings
Tarmac’s license to operate 109
AIM presentation
Sustainable development Tarmac safety performance 4.0
Employee and contractor LTIFR 3.57
3.5
LTIFR = lost time injuriesx200,000 No. hours worked
3.0 2.31
2.5 2.0
1.39
1.5
0.88
1.0
0.69
0.5 0 0.0 2000
2001
2002
2003
110
2004 ytd
Target 2005 AIM presentation
Sustainable development Comparison with competitors 5
4
2003 LTIFR
Tarmac
3
2
1
0 Quarries & asphalt
Contracting
Ready-mix 111
Manufacturing AIM presentation
Summary Key messages • Drive further value from the UK cash “engine” – Customer First – Cost reduction – Bolt-ons in certain areas
• Exciting growth in Europe – Market growth in new EU entrants and Spain – Acquisitions
• Test market in China/India
112
AIM presentation
113
AIM presentation
