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Polypipe Group plc Continued growth and strategic progress

Polypipe Group plc (LON:PLP), a leading provider of sustainable water and climate management solutions for the built environment, today announces its audited results for the year ended 31 December 2018.

Financial Results

2018

2017

Change

Statutory measures

Revenue

£433.2m

£411.7m

+5.2%

Operating profit

£65.8m

£62.5m

+5.3%

Profit before tax

£58.2m

£55.6m

+4.7%

Earnings per share (basic)

24.5p

22.7p

+7.9%

Cash generated from operations

£90.0m

£80.4m

+11.9%

Dividend per share

11.6p

11.1p

+4.5%

Alternative performance measures

Underlying operating profit1

£74.0m

£72.6m

+1.9%

Underlying operating margin1

17.1%

17.6%

-50bps

Underlying profit before tax1

£67.1m

£65.7m

+2.1%

Underlying earnings per share (basic)1

28.4p

27.2p

+4.4%

Leverage (times pro forma EBITDA2)

1.7

1.6

0.1

Financial Highlights

· Revenue growth of 5.2% despite mixed market conditions demonstrating strength of diversified business model

· Underlying operating profit 1.9% higher and underlying profit before tax 2.1% higher

· Resilient margin at 17.1%

· Underlying basic earnings per share 4.4% higher

· Robust balance sheet and continued strong operational cash generation. Group pro forma leverage of 1.7x (2017: 1.6x) despite £42.5m invested in acquisitions, net of disposals

· Proposed final dividend of 7.9p, bringing the total for the year to 11.6p, 4.5% ahead of last year

Operational Highlights

· UK revenue growth ahead of industry benchmark at 5.9% relative to Construction Products Association winter forecast decline of 0.2% for 2018

· Residential Systems revenue 9.8% higher and 8.5% higher on a like-for-like basis with strong growth in housebuilding sector

· Commercial and Infrastructure revenues declined 0.2% for the year but a strong second half performance of 6.7% growth (of which 5.3% was on a like-for-like basis), benefitted from successful product launches and new road projects gaining momentum

· Price increases successfully passed through to mitigate cost inflation

· Second half acquisitions – Permavoid and Manthorpe – performing in line with our expectations and integration progressing well

· France disposal completed in March 2018

· Alternative manufacturing strategy delivered in the Middle East

· Recycled plastic represents an improved 40.2% of the Group’s overall plastic usage (2017: 34.0%)

Outlook

· Polypipe has made significant strategic progress in 2018 together with a continued focus on organic growth ahead of market and strong cash generation

· The fundamentals of our markets remain robust with a continued structural housing shortage in the UK, Help-to-Buy extended to 2023, historically low interest rates and good mortgage availability underpinning new housebuilding activity. RMI and commercial and infrastructure markets have been and will continue to remain challenging

· Whilst we remain vigilant to the impacts of uncertainty on our markets, our balanced portfolio positions the Group well, and we look forward to another year of progress in 2019

Martin Payne, Chief Executive Officer, said:

“We are delighted to report another record performance, despite a backdrop of challenging market conditions. Our second half of the year was strong, and we completed two significant acquisitions as part of our strategy to broaden our market offering. Both Manthorpe and Permavoid are performing in line with expectations and we look forward to further progress. We continue to see strong cash generation, and the long-term growth drivers of legacy material substitution and legislative tailwinds, together with our strong balance sheet, position us well for the future.”

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