Anglo Industrial Minerals (AIM) Robbie Robertson ... - Anglo American

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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

AIM presentation

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 ƒ

2004-2005. Consolidation • Central Region • Mediterranean Region • Functional Strategies

ƒ

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 ƒ

Immigration: Houses and infrastructure demand (ie. in Madrid and on the Mediterranean Coast)

ƒ

Market consolidation opportunity

ƒ

Second market in Europe

ƒ

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: ƒ

Madrid

11% Market Leader

ƒ

Alicante 17% Market Leader

READY MIX CONCRETE: ƒ

Madrid

9%

Market Leader

ƒ

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: ƒ

Consolidation and growing presence of cement groups and multinational companies (CRH, Hanson, etc)

ƒ

Shortage of reserves as a consequence of growing environmental restrictions

ƒ

Considerable sector consolidation in Madrid and Barcelona

READY MIX CONCRETE: ƒ

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 ƒ

Importance of raw material: - Cement - Aggregates

ƒ

But growing importance of aggregates (environmental restrictions)

ƒ

Presence and involvement in the process of - Cement Groups - Other multinational and heavy building material groups

ƒ

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 ƒ

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

ƒ

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