Robbie Robertson Chief Executive Officer/media/Files/A/...Robbie Robertson. UK Spain France /...

AIM presentation1

Anglo Industrial Minerals (AIM)

Robbie RobertsonChief Executive Officer

16 June 2004

AIM presentation2

AgendaAgenda

Overview of AIM

Tarmac & Strategy

Financials

TarmacIberia

Tarmac CzechRepublic

TarmacNorthern

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Overview of AIMOverview of AIM

Key messages

• Drive further value from the UK cash “engine”

• Exciting growth in Europe

• Test market in China/India

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• 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

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AIM EBITDA growth

0

100

200

300

400

500

600

2000 2001 2002 2003

$m

CAGR 23%

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Management structure

Chief Executive OfficerRobbie Robertson

UK Spain France / Central Copebrás Belgium Europe

Clive JamesTerry LastTim HallBob BoydMike Saunders

Cipriano Gomez Alain Hecquet Ian Pughsley Nelson Pereira

Finance Technical Procurement Marketing HR StrategyKeith Jackson Peter WhittleDavid Cather Angela WalkerGraham

GreenhalghTony Davies

Middle East/ Far EastRobert TaylorStuart Jones

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6%12%

Copebrás Tarmac(73%) (100%)

IndustrialMinerals

Anglo EBITDA$4.8bn

Anglo employees193,000

UK Spain France / Central Middle East /Belgium Europe Far East

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2003

18%

3%9%

70%

14%1%8%

77%

AIM EBITDA$557m

AIM employees11,888

Tarmac UK Tarmac EuropeMiddle/Far East Copebras

CAGR EBITDA growth of 23% since 2000

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Key messagesKey messages




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Tarmac UK

2003 EBITDA $424m (77% total)

Employees 8,310

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Tarmac UKTarmac UK

Construction - £93 billion market

Commercial16%

Industrial4%

Infrastructure8%Other public

9%

R&M47%

Housing16% Housing

20%

Commercial15%

Industrial5%

Infrastructure14%

Other public9%

R&M37%

Tarmac’s spread of business*

*2003 sales by value of UK asphalt, ready-mix, mortar and concrete products

Source: DTI

Tarmac has a broad exposure to the construction market

AIM presentation12

Tarmac UKTarmac UK

Construction materials - £6 billion market

Asphalt10%

Concrete17%

Mortar & Screed

2%

Concrete Products

11%

Other aggregates

60%

By volume

Total 2003 aggregates market inc recycled : 267mt

Asphalt17%

Concrete23%

Mortar & Screed

4%

Concrete Products

31%

Other aggregates

25%

By value

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Tarmac UKTarmac UK

Industry consolidation – top 5 market shares

0102030405060708090

100

1980 2003Aggregates Asphalt Ready-mix

%

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Tarmac UKTarmac UK

Our market shares

#42%Cement

#120%Mortar

#134%Lime

#215%Concrete flooring

#123%Concrete blocks

#224%Ready-mix

#131%Asphalt

#123%Aggregates

PositionMarket shareProduct

Source: Tarmac estimates

The UK’s number one in heavy building materials

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Tarmac UKTarmac UK

Aggregates price and volume trends

200

210

220

230

240

250

260

270

280

290

00 01 02 0370

80

90

100

110

120

130

Total aggregates Retail Price Index Aggregates Price**Tarmac crushed rock aggregates price index (excludes Aggs Levy)

mt

Real price increases achieved

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Tarmac UKTarmac UK

Tarmac growth drivers

• Demand

• Margin– service differentiation

– cost reduction

• Projects/acquisitions

• Innovation

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Tarmac UKTarmac 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

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KEYAggregatesConcreteAsphaltConcrete Products

Tarmac UKTarmac UK

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Tarmac UKTarmac UK

Added value products

Crushed rock

Sand & gravel

RecycledAggregates

AsphaltCement & limeConcrete productsMortarReady-mixed concrete

Services Contracting

Adding value to aggregates

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Tarmac UKTarmac UK

Barriers to entry

0

10

20

30

40

50 Cement &LimeAggregates

ConcreteProductsAsphalt

Ready-mix& MortarContracting

Barrier to entry

Con

trib

utio

n m

argi

n %

Low High

Size of bubble = 2003 Tarmac UK contribution

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Tarmac UKTarmac 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

AIM presentation22

Tarmac UKTarmac 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

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Tarmac Products

David CatherTechnical Director

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Added value products

Crushed rock

Sand & gravel

RecycledAggregates

AsphaltCement & limeConcrete productsMortarReady-mixed concrete

Services Contracting

Adding value to aggregates

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AggregatesAggregates

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Added valueAdded value

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ServicesServices

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ServicesServices

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Tarmac Europe


Employees 2,178

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Tarmac EuropeTarmac Europe

0

50

100

150

200

250

300

350

400

450

500

2000 2001 2002 2003 2004 2005 20069.6

9.8

10.0

10.2

10.4

10.6

10.8

11.0

11.2

11.4

GDP Construction output as a % GDPSource: Euroconstruct

GDP & construction output as a % GDP in Eastern EuropeEbn %

Growth markets

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Fragmented aggregates markets

44

56

18

82

15

85

42

58

23

77

72

28

0%

20%

40%

60%

80%

100%

France Germany Spain CzechRep.

Poland UK

Others

Top 5

Significant consolidation opportunity

Size 400mt 700mt 420mt 53mt 70mt 269mt

AIM presentation44


Tarmac is well placed to be a consolidator

• 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

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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

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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

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• Growth in Europe


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Rest of the World


Employees 1,400

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Rest of the WorldRest 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

AIM presentation50


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

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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

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Financial Review

Keith JacksonFinance Director

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Financial ReviewFinancial 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

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AIM EBIT growth$m

CAGR 30%

0

100

200

300

400

500

600

2000 2001 2002 2003

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AIM EBITDA growth

0

100

200

300

400

500

600

2000 2001 2002 2003

$m

CAGR 23%

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Comparison with competitors – EBIT growth

-20%-15%-10%-5%0%5%

10%15%20%25%30%

Tarmac Hanson AI RMC

CAGR 2000-2003

Competitor information source Morgan Stanley

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AIM segment split

18.0%30167France

14.7%24121C Europe

Tarmac

24.9%47189Copebrás

2003 $m

16.8%5573,318Total

9.5%663Middle/Far East

15.2%26168Spain

16.2%4242,610UK

EBITDA marginEBITDASales

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AIM currency split2003 EBITDA

£77%

$1%

Euro11%

Real8%

Other3%

89% EBITDA in hard currencies

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AIM EBIT variance analysis

050

100150200250300350400450500

2000

Price

Exch

Vol

CostsInf

lation

Other

2003

$m

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AIM cost reduction

126

74

23

29

Total

323460Total

6860Restructuring/synergies

1211Procurement

1415Operating efficiency

200320022001$m

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AIM cash flow

(191)(254)Project/expansionary capex

5346Goodwill amortisation

20032002$ million

(4)

(148)

(109)

39

468

145

277

179Depreciation/depletion

226Total

(32)*Acquisitions/disposals

(125)SIB capex

17Working capital

557EBITDA

325Operating profit

*Excludes deferred consideration on acquisitions

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AIM cash returns

2003

17.0%5573,269AIM

32.1%47147Copebrás

16.3%5103,122Tarmac

EBITDA returnEBITDA $m

Average capital employed $m

Target Tarmac returns up to Copebrás level

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Tarmac growth drivers

• Demand

• Margin– service differentiation

– cost reduction

• Projects/acquisitions

• Innovation

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Tarmac UK split of business

16%11%49Concrete products

16%

15%

2%

41%

11%

16%

29%

Contribution margin

13%55Other

100%

2%

7%

13%

15%

39%

Share of total

436Total

9Contracting

32Cement & lime

57Ready-mix & mortar

65Asphalt

169Aggregates

Contribution$m

Product

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UK market outlook – demand drivers (in real terms)

100%

15%

8%

12%

5%

18%

42%

Concrete Products

100%

30%

11%

14%

9%

19%

17%

Ready-mix

% Tarmac volume

100%

64%

6%

19%

1%

6%

5%

Asphalt

100%

40%

9%

17%

6%

13%

14%

Aggregates

1.5%Total

1.1%R&M

12.0%Other public

1.0%Infrastructure

0.0%Industrial

(4.7)%Commercial

4.5%Housing

2004FSector

Source: Construction Products Association (“CPA”) and Tarmac

The key to Tarmac’s growth in the UK

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UK market outlook – investment in strategic roads

0.0

0.5

1.0

1.5

2.0

2.5

3.0

00/01

01/02

02/03

03/04

04/05

05/06

06/07

07/08

08/09

09/10

10/11

Actual Plan Current estimate

£bn

Source: DTI and CPA

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European market outlook

-2

0

2

4

6

8

10

12

France Germany Spain CzechRepublic

Poland

2004 2005 2006

Construction growth%

Source: Euroconstruct and CEOE

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Impact of IFRS

• Elimination of goodwill amortisation

• Lower P&L pension charge

• Proportional consolidation of JVs

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Summary

• Strong cash generation – EBITDA $557m

• Increasing returns

• Cost reduction

• Value adding projects/acquisitions

Continuing cash generation : continuing growth

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Tarmac Iberia

Cipriano Gomez

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IndexIndex

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.

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Index (Cont.)Index (Cont.)

4. MAVIKE CASE STUDY (MAVIKE ACQUISITION)

5. STRATEGY2004-2005. Consolidation• Central Region• Mediterranean Region• Functional Strategies

2006 onwards. Product Diversification and Regional Expansion• Product diversification• Geographical expansion

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1. Spain – An Opportunity 1. Spain – An Opportunity

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%

Public Deficit Evolution (% of GDP) - - -0.1% -0.1% 0.0%

Population Evolution '000 40,202 40,500 41,117 40,838 42,717

* Forecast. Source: CEOE.

Key Figures

Construction growing in line with GDP

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1. Spain – An Opportunity 1. Spain – An Opportunity

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

Market consolidation opportunity

Second market in Europe

Environmental restrictions growing

Business Driving Forces

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2. Tarmac Iberia - operations2. Tarmac Iberia - operations

10 Aggregate Sites & 45 Ready-mixed concreteplants in Spain

León

Valladolid

Palencia

Bilbao

Santander

Burgos

Lugo

La Coruña

Pontevedra

Zamora

Orense

OviedoGijón

Vigo

SoriaZaragoza Lleida

Huesca

Pamplona

San Sebastian

Vitoria

Gerona

Barcelona

Logroño

Madrid

Valencia

Castellón de la Plana

Teruel

Cuenca

Toledo

Ávila

Segovia

Guadalajara

Salamanca

Cáceres

Almería

Cádiz

Huelva

Badajoz

Sevilla

Málaga

Granada

Ciudad Real Albacete

Murcia

Alicante

JaénCórdobaCartagena

Tarragona

Ceuta

Melilla

Santiago deCompostela

Huesca

Teruel

Zaragoza

Lleida

Barcelona

Tarragona

Girona

Guadalajara

Toledo Cuenca

AlbaceteCiudad Real

Cáceres

Badajoz

La Coruña

Lugo

Pontevedra

Orense

Guipúzcoa

Vizcaya

Alava

Castellónde la Plana

Alicante

Valencia

Palencia

Soria

Salamanca

Ávila

Segovia

León

Zamora

Valladolid

Burgos

Huelva Sevilla

AlmeríaGranada

Málaga

Cádiz

JaénCórdoba

CantabriaAsturias

Navarra

La Rioja

Madrid

Murcia

Alicante

Murcia

Valencia

Albacete

Barcelona

Tarragona

Madrid

Valladolid

GuadalajaraSalamanca

Madrid & Guadalajara:• 8 quarries and S&G pits• 16 rmc plants

Catalonia• 5 rmc plants

Valencia & Alicante• 1 quarry• 14 rmc plants

Murcia & Albacete• 7 rmc plants

Salamanca & Valladolid

• 1 S&G pit• 3 rmc plants

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2. Tarmac Iberia – Key Figures2. Tarmac Iberia – Key Figures

Actual Actual Actual Actual Actual

€ 000´s 1999 2000 2001 2002 2003

Aggregate Sales - million tonnes 3.1 3.7 4.5 4.7 7.2Ready Mix Concrete Sales - million m3 0.9 1.1 1.2 1.4 2.4

Turnover 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

Capital Employed 40,838 47,874 48,007 118,268 115,038

CASH FLOW RETURN (e xc luding Wo rking C a pita l) 9.0% 7.8% 23.9% 22.6% 15.2%

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2. Tarmac Iberia – Market Shares

MARKET SHARES IN OUR MAIN MARKETS

AGGREGATES:

Madrid 11% Market LeaderAlicante 17% Market Leader

READY MIX CONCRETE:Madrid 9% Market LeaderAlicante 17% Market Leader

2. Tarmac Iberia – Market Shares

Leading positions in key markets

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3. Sector Structure 3. Sector Structure

Aggregates & Ready-Mixed Concrete Markets

AGGREGATES MARKET 1999 2000 2001 2002 2003SPAIN – million tonnes 319.6 355.8 376.9 399.6 419.9TOP TEN COMPANIES * - million tonnes

63.0 66.0 73.0 81.0 88.0

TARMAC IBERIA – million tonnes 3.1 3.7 4.5 4.7 7.2TOP TEN COMPANIES - % 19.7 18.5 19.4 20.3 21.0

• SPAIN: PROCESS OF GROWING CONSOLIDATION, PARTICULARLY IN MARKETS WHERE TARMAC IBERIA OPERATES

• TARMAC IBERIA: LEADER IN MADRID AND ALICANTE FUTURE ACQUISITIONS IN CATALONIA * Tarmac Iberia included

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3. Sector Structure 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 TARMAC IBERIA – million m3 1.4 2.4 TOP TEN COMPANIES - % 39.5 38.3

• SPAIN: STRONG PRESENCE OF CEMENT GROUPS AND MULTI-NATIONAL COMPANIES (CRH, HANSON, etc)

• TARMAC IBERIA: LEADER IN MADRID AND ALICANTE FUTURE GROWTH AND ACQUISITIONS IN CATALONIA * Tarmac Iberia included

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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 restrictionsConsiderable sector consolidation in Madrid and Barcelona

READY MIX CONCRETE:Consolidation and growing presence of cement groups and multinational companies (CRH, Hanson, etc)

3. Sector Structure

Increasing consolidation

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3. Sector Structure3. Sector Structure

Integration of Aggregates & Cement with Ready-Mixed 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

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4. Mavike Case Study 4. Mavike Case Study

Acquisition of Mavike

León

Valladolid

Palencia

Bilbao

Santander

Burgos

Lugo

La Coruña

Pontevedra

Zamora

Orense

OviedoGijón

Vigo

Soria

ZaragozaLleida

Huesca

Pamplona

San Sebastian

Vitoria

Gerona

Barcelona

Logroño

Madrid

Valencia

Castellón de la Plana

Teruel

Cuenca

Toledo

Ávila

Segovia

Guadalajara

Salamanca

Cáceres

Almería

Cádiz

Huelva

Badajoz

Sevilla

Málaga

Granada

Ciudad Real Albacete

Murcia

Alicante

JaénCórdoba

Cartagena

Tarragona

Ceuta

Melilla

Palma de Mallorca

Santiago deCompostela

Huesca

Teruel

Zaragoza

Lleida

Barcelona

Tarragona

Girona

Guadalajara

Toledo Cuenca

AlbaceteCiudad Real

Cáceres

Badajoz

La Coruña

Lugo

Pontevedra

Orense

Guipúzcoa

Vizcaya

Alava

Castellónde la Plana

Alicante

Valencia

Palencia

Soria

Salamanca

Ávila

Segovia

León

Zamora

Valladolid

Burgos

Menorca

Ibiza

Formentera

Mallorca

Cabrera

Huelva Sevilla

AlmeríaGranada

Málaga

Cádiz

JaénCórdoba

CantabriaAsturias

Navarra

La Rioja

Madrid

Murcia

Alicante

Murcia

Valencia

Albacete

Barcelona

Tarragona

Madrid

Valladolid

GuadalajaraSalamanca

Tarmac Iberia operationsMavike operations

• Acquired in October 2002 for —59 million

• Access to high growthAlicante coast

• Synergies with existing Madrid ready-mix business

• Cost savings from overhead reduction

• Better cement purchasing power

• The Mediterranean Region expansion is unfinished …….

AIM presentation85

2004-2005 Consolidation• Central Region:

Reinforce our mineral reserves base• Mediterranean Region:

Acquisition of mineral reserves in Valencia and BarcelonaIncrease our ready-mix concrete business size in Valencia and Barcelona

• Functional Strategies:Marketing: Customer satisfaction policy implementationCost savings: Procurement, best practicesHuman resourcesSafety, health and environment

2006 onwards Product Diversification and Regional Expansion• Product diversification:

Recycling, concrete products, etc• Geographical expansion:

Other Mediterranean areas (Almería, Castellón, etc)

5. Strategy5. Strategy

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Tarmac Czech Republic

Vladimir Herman

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Overview of the Czech RepublicOverview of the Czech Republic

24.2%

• Heart of the Continental Europe

• Attractive growth post-EU entry

34%

Population 10.2 million

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0%

1%

2%

3%

4%

5%

1999 2000 2001 2002 2003 2004 F 2005 F

EU GDP growthCzech GDP growth

Strong GDP growth

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Czech Republic is one of the richest eastern European countries (GDP per Capita)

$0 $3,000 $6,000 $9,000 $12,000 $15,000

Russia

Latvia

Lithuania

Poland

Estonia

Croatia

Slovakia

Hungary

Czech Republic

Slovenia

Source:

EIU estimates for 2003

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Czech Construction TurnoverCzech Construction Turnover

0

2,000

4,000

6,000

8,000

10,000

12,000

1998 1999 2000 2001 2002 2003 2004 E 2005 E 2006 E

PublicCommerical Housing

Source:Czech Ministryof Industry and Trade

4% per annum medium term growth$m

The new Ireland?

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Tarmac CZ unitsTarmac CZ units

Sand and Gravel

Hardstone

• lot of units

• small distances, capacities

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Tarmac

Heidelberg

Asamer (Austrian)

Strabag (Austrian)

Holcim

Hanson

Basalt AG (German)

Other

13,3 %

12%

8%

5%3%4%3%

51,7%

Aggregates 2003

Tarmac CZ Market SharesTarmac CZ Market Shares

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Tarmac Czech Republic – OverviewTarmac 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

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Tarmac CZ Financial PerformanceTarmac CZ Financial Performance

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003

$ 00

0s

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

EBITDAEBITDA ROCE

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The acquisition of Bilfinger BergerThe acquisition of Bilfinger Berger

Sand and Gravel

Hardstone

Tarmac Severokamen

Bilfinger Berger Assets Acquired in 2003

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The acquisition of Bilfinger BergerThe acquisition of Bilfinger Berger

Sales and production productivity

0

5

10

15

20

25

30

1998 1999 2000 2001 2002 2003

Kt/h

ead

0

50

100

150

200

250

300

350

No.

of E

mpl

TSK Sales/e'ee TSK Production/e'ee BB Sales/e'eeBB Production/e'ee TSK Employees BB Employees

Target to improve BB productivity up to Tarmac level

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Tarmac Czech Republic – StrategyTarmac Czech Republic – Strategy

Focus on further expansion in aggregates

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SummarySummary

• 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

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Tarmac Northern

Terry Last

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Office LocationsOffice Locations

Tarmac NorthernOfficeSub-office

Lingerfield

Birtley

Inverness

BellshillBelfast

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Profit GrowthProfit Growth

0

510

15

2025

30

3540

45

2000

Price

Volume

Costs

Inflat

ion

Other

2003

£m

5.8

+31.4

-9.7-15.5

+12.6

+9.4 34.0

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Steps to SuccessSteps to Success

1. Analysis

Assets : Strengths – good people, reservesWeaknesses – lack of teamworkOpportunities – rationalisation & investmentThreats – smaller competitors

Customers: Spend – infrastructure neededRelationships – Tarmac reputationWants – cheapest price?Needs – service & reliability

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• 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

2. Rationalise assets and restructure management

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3. Communicate; Forge new culture; Motivate

a. Employees– Visible felt leadership– Team briefs– Liberation & empowerment– Appreciation– Fund good ideas– Involve families

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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

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Sustainable development & summary

Robbie Robertson

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Sustainable developmentSustainable 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

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Tarmac safety performance

3.57

2.31

1.39

0.880.69

00.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2000 2001 2002 2003 2004 ytd Target2005

Employee and contractor LTIFR

LTIFR = lost time injuriesx200,000No. hours worked

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Comparison with competitors

0

1

2

3

4

5

Quarries &asphalt

Contracting Ready-mix Manufacturing

Tarmac

2003 LTIFR

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SummarySummary

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


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