Good morning. Thank you for joining us, and welcome to Forterra's 2026 half year results presentation.

I'm Neil Ash, and I'm joined today by Ben Guyatt, our CFO. After many years with the business, this will be the last time Ben takes the opportunity to present a set of results before leaving the company later this year.

Despite a challenging market backdrop, I'm pleased to report we've delivered a resilient set of results, and I'd like to thank the entire Forterra team for their hard work in achieving this. I'm not going to use this slide to talk about the high-level numbers.

Ben will do that in detail later. I'd like to talk through what we've been focusing on despite a tough market.

First, commercial excellence. By selecting the right customers and working with those who can offer growth, we've managed to outperform the wider brick market.

Pleasingly, we also delivered inflationary price increases. We've taken a long, hard look at our cost base, and through more streamlined ways of working, we've removed around £2 million of back office and commercial costs whilst keeping service and delivery to our customers at the right levels.

Operationally, we've continued to make good progress. Desford's output continues to increase, commissioning at Wilnecote is progressing, and we're also getting a great response from our Omnia range of brick slips, with the first projects now underway and a strong pipeline being built.

Our Sustainable Operational Excellence program continues to add real value. The fact we're improving our margin as a percentage of sales in a market like this demonstrates that our actions and strategy are delivering.

Finally, we've maintained a tight grip on cash management, keeping leverage below 1.5 times. I'll now pass over to Ben, who will walk you through the numbers in a bit more detail.

Thanks, Neil. Morning, everyone.

It's good to see you all again, and I'm pleased to be here this morning presenting a resilient set of 2026 half year results delivered against a backdrop of challenging market conditions. Like-for-like revenue was £169 million, a fall of 9% against the prior year comparative, with this primarily a function of lower sales volumes.

We delivered a credible adjusted EBITDA of £27 million, only £2.9 million less than the £29.9 million comparative that was achieved last year under very different trading conditions. We've increased our adjusted EBITDA margin by 70 basis points to 16%, with this achieved through the closure of our non-core businesses, which had previously been a drag on margins.

Adjusted PBT falls by 12.7% to £14.5 million, although the benefit of the ongoing share buyback helps mitigate the impact on adjusted EPS, which is only 12.1% down at 5.1 pence per share. Net debt has increased to £74.5 million, remaining below 1.5 times leverage in line with our capital allocation priorities.

Applying our mechanical dividend policy, which targets approximately two times dividend coverage, we are today declaring an interim dividend of 1.7 pence, fractionally below the prior year figure of 1.9 pence. Moving on to look at our Bricks and Blocks segment in more detail, like-for-like revenue here fell by 8%.

We continue to benefit from our capacity bias toward extruded brick, with this allowing us to outperform the wider brick market. Domestic dispatches, as reported by the Department for Business and Trade, fell by 8% in the first five months of the year.

Bricks remained our most resilient product, with block dispatches falling by a greater amount. We implemented a low single-digit brick price increase, recovering underlying cost inflation.

This is an important milestone after several years of being unable to obtain meaningful brick price increases. Pricing in blocks was more challenging, however, although in the case of aircrete, we did deliver significant price increases in the previous year.

In the face of a significant increase in fuel and transport costs, we have remained agile and have implemented further price increases and surcharges to ensure we maintain our margins. The conflict in the Middle East also led to a significant increase in energy prices.

However, starting with the year with over 80% of our full year '26 gas demand fixed at competitive prices, our proven strategy of forward purchasing energy has insulated us from what would have been a significant cost increase. During the period, we implemented the necessary actions to ensure our production output remained aligned to current market demand, implementing modest production reductions in both London Brick and aircrete block.

Whilst this reduces our cost base, as production also reduces, these cash savings won't drop through to the bottom line, but are essential in maintaining disciplined management of working capital and cash flow. With our performance also benefiting from our continued focus on operational excellence and efficiency, we delivered a segmental adjusted EBITDA of £25.7 million compared to £27.5 million last year, with the EBITDA margin increasing by 70 basis points as we exited the unprofitable Formpave block paving business.

Even with underlying margins broadly flat, this is a credible achievement given the volume decline that we have faced. Moving on to look at bespoke products, following the closure of the Bison bespoke precast operation during the prior year, this segment now solely comprises our Bison precast concrete flooring business, a leading supplier of beam and block insulated ground floor flooring systems for single family homes, and hollowcore flooring used for the construction of upper floors in multi-family or commercial construction applications.

Again, driven by lower sales volumes, we see like-for-like revenue falling by 14% to £31 million. The pricing environment in this business was competitive, but we did implement surcharge price increases in order to recover the significant increase in transport costs that we faced during the period.

Segmental EBITDA in the period before the allocation of central overheads was £4 million compared to £5.4 million last year. Allocated central costs are primarily fixed in their nature and unfortunately don't automatically flex with volume.

Although, as Neil has mentioned, we have recently restructured our central and management functions, saving around £2 million per annum. Moving on to look at working capital, our working capital is historically seasonal in its nature, with a higher balance to be expected in June relative to December, consistent with what we're seeing here.

Total working capital increased by £20 million in the first half of the year to £66 million. Outside of normal seasonal movements, changes to accounting standards in respect of the recognition of electronic banking receipts have added £4.5 million to our working capital, with these customer receipts now only recognized as cash on the first day of July.

We are working with our customers to address this going forward. Weak demand has led to £3 million of inventory growth in the first half, following a further £3 million in the second half of last year.

Our recent modest production adjustments are designed to address this by keeping production aligned to current demand. Moving on to look at our cash flow, our cash flow performance in the period reflects the market conditions we presently face along with the impacts of seasonality.

Adjusted operating cash flow in the period was £8.5 million, which compares to £30 million in the prior period, although the prior period performance was atypical and benefited from an inventory reduction driven by particularly strong half one sales. Half one '26 performance is closer to that seen in 2024.

We are confident of a stronger operating cash performance in H2, driven by the seasonality of our working capital movements. Our capital expenditure in the period was £4.1 million, and we expect a full year total capital outflow of around £10 million as we carefully control our maintenance spend in the current market conditions alongside completing our strategic projects.

Following the announcement of the share buyback in March, we returned £8.5 million to shareholders in the first half and will complete the £20 million buyback in the second half. The IFRS amendments I referred to earlier increase our net debt by £4.5 million, and with other being mainly lease repayments, we end the period with net debt before leases of £74.5 million, which is an increase on 19 of an increase of £19 million on the year-end figure.

As I've just explained, we ended the period with net debt excluding leases of £74.5 million. This equates to leverage of just under 1.5 times on a pre-IFRS 16 banking covenant basis, which is in line with our capital allocation target of keeping leverage under or around 1.5 times.

I'm delighted to say that we've recently extended our £170 million revolving credit facility. The facility now extends until July 2030, with the option for a further one-year extension, which is subject to lender consent.

This facility affords us significant optionality and flexibility looking forward. I'm grateful for the support shown by our lender group and the confidence that they have shown in our business.

The facility was renewed with an unchanged group of lenders and allows the company to benefit from a small reduction in an interest rate whilst also moving from a secured to an unsecured facility. In addition, the group continues to benefit from a £10 million overdraft facility.

Our current expectation is for both net debt and leverage at the year end to remain at similar levels to that seen in June. This next slide summarizes the more technical aspects of our guidance in a single place.

Importantly, given the current situation in the Middle East, with gas prices now back to the highest levels since the conflict began, we're well positioned with around 80% of our expected year to end usage secured at pre-conflict pricing. We also have good coverage beyond this, with around 20 80 with around 80% of our gas coverage for 2027 already secured, again, at competitive pre-conflict pricing.

We then have decreasing layered positions in place out to 2030. Reassuringly, our solar PPA provides us with price certainty over the bulk of our electricity consumption for the next 14 years, out to 2040.

When we announced the closure of the Bison bespoke precast facility last year, we did say that it was located on a relatively valuable piece of land. We still expect to generate around £7 million of property disposal proceeds in the second half of 2026, although this is obviously transaction dependent.

Any exceptional profit on disposal will be excluded from our adjusting results. We still expect depreciation to be in the region of £21 million, with financing costs of around £6 million and our effective tax rate remaining at around 26%.

I won't read out the rest of the content on this slide, as you can digest these details in your own time. I'll now hand back to Neil, who will discuss the market development in more detail along with our strategic progress.

Thank you, Ben. As I mentioned earlier, we continue to make great progress on our two strategic priorities.

First, strengthening the core. This is all about making sure we are the best business we can be.

Our Sustainable Operational Excellence program is becoming embedded across our plants, with continuous improvement and the sharing of best practice driving higher levels of efficiency. Alongside this, our commercial excellence program is supporting stronger returns.

We've refined our route to market to better reflect customer needs whilst maintaining price discipline and resilient margins. Operationally, Desford continues to increase its output, and since September of last year, has been operating with both kilns in production.

We've also made excellent progress with our beyond the core initiatives, including calcined clay and the launch of our Omnia brick system, both of which I'll come back to later in the presentation. We believe our focused product portfolio provides a significant competitive advantage.

Whilst brick remains our largest product category, our block and Bison businesses play an important role in the value we create for customers. The breadth of our offering enables us to provide more integrated solutions, strengthen customer relationships, and create cross commercial synergies across the business.

More recently, those synergies have also allowed us to streamline our commercial organization, improving efficiency whilst continuing to support our customers effectively. If we move to the market update now, we've included two charts, which, in our view, summarize the key challenge facing the market.

Higher interest rates and a significant reduction in mortgage product availability continue to weigh on both our customers and the wider housebuilding sector. The chart on the left shows mortgage approvals falling sharply in May as interest rates increased.

Consumer confidence also remains weak. As a result, the RMI market continues to be subdued, with many extensions projects typically funded through additional borrowing secured against existing mortgages.

One additional point of data not shown on the slide is the NHBC housing starts, excluding flats and apartments. These are 9% down versus last year.

It is, however, encouraging to see the new Prime Minister maintaining a strong focus on the UK's housing shortage. Looking back, the last time the UK consistently built more than 300,000 homes a year was in the late 1960s, when just under half of all new homes were delivered by councils.

This does suggest there may be merits in the argument that increasing council housebuilding needs to be part of the long-term solution. We feel these homes will favor extruded bricks, lending itself to our product strengths.

Domestic brick volumes are 8% down versus last year. Against this backdrop, Forterra has again outperformed the market.

Imported brick volumes have remained broadly stable at around 20% of the market, and we estimate that more than half of these imports are for architecturally specified products for one-off projects. It's also worth remembering that one of the other manufacturers in the UK optimizes its European production footprint rather than supplying exclusively from UK factories.

Today, we're operating at about 60% of our installed capacity. As I said earlier, Desford is ramping up towards full production, while Claughton remains mothballed.

Overall, UK brick capacity is now estimated at just over 2 billion bricks. The blue line on the chart is probably the most relevant, as it shows the brick demand generated by 2022 housing volumes.

As you can see, this sits well above the current UK brick manufacturing capacity. Finally, it's worth remembering that no other UK manufacturer has increased its brick capacity to the same extent as Forterra.

Importantly, all that additional capacity is extruded brick, the part of the market that continues to grow share. If we move to brick slips now, we continue to make great progress in this exciting part of our business and remain confident in the long-term growth opportunity.

Our Omnia system allows us to offer architects and specifiers a fully accredited facade system, supplying not only brick slips, but also the supporting rails. This is particularly important as the largest end markets are high-rise residential, student accommodation, and commercial buildings, where complete system certification is essential.

To complement our range of extruded brick slips manufactured at Accrington, we've also invested £2 million in a dedicated brick slip cutting facility adjacent to our Measham soft mud factory. This will allow us to offer customers both extruded and soft mud brick slips, significantly broadening our product offering whilst minimizing transport costs and improving operational efficiency.

We've received excellent feedback from the first projects we've supplied, and continue to build a strong pipeline of future opportunities. We also see opportunities to accelerate our growth through selective bolt-on acquisitions, supporting our strategy of growing beyond the core and building a leading position in this attractive market.

As previously mentioned, we continue to evaluate a potential investment in our aircrete business. This investment would strengthen our market position, improve our long-term competitiveness, and enhance future profitability.

We also intend to offset a significant proportion of the capital investment by maximizing the value of existing property assets. No final decision has been made, and any development would also be subject to planning approval.

We also continue to make good progress with our calcined clay project. Having successfully commercialized the use of London Brick waste as a calcined clay substitute, we have engaged with a number of potential partners and are now moving forward with one preferred partner to explore the scope for a potential joint venture.

Sustainability remains firmly focused on meeting the needs of our customers. As a result, we're moving away from reporting high-level carbon reduction targets, and more towards the amount of carbon emission per square meter, reflecting the way our housebuilding customers increasingly assess embodied carbon at home level.

Delivering decarbonization over the longer term will depend on technologies such as carbon capture and hydrogen. We continue to work with a range of partners to develop a credible roadmap.

In the meantime, we remain focused on the actions within our control. Through product innovation, we continue to reduce the amount of clay and concrete required in our products, and we believe there remains further opportunity to optimize size and geometry without compromising performance.

If we move to the outlook now, we expect market demand in the second half to be broadly consistent with the first, and as a result, continue to expect full year performance to be in line with market consensus. We remain committed to capital discipline and expect to complete our £20 million share buyback during the second half of this year.

In the meantime, we continue to focus on the things within our control, strengthening the core of our business whilst growing beyond the core. You will have also seen that we announced Lisa Oxnard, who will join Forterra as our new CFO.

Ben will leave the business at the end of October. We are still waiting for Lisa's actual start date, which will be no later than January of next year.

As a board, we remain confident that our investments in new production capacity, combined with our clear strategic direction, leave Forterra exceptionally well positioned to benefit from the market's long-term structural growth drivers and the recovery in demand. We'll now move to the question and answer session.

As usual, please remember to state your name and institution for the recording. Thank you.

Aynsley?

Thanks. Aynsley Lammin from Investec.

Just two for me, please. Maybe on the kind of pricing front, just a bit more color if you could elaborate, is it competitive market, or the competitors kind of also raising prices is supported to continue to cover costs for the rest of the year?

Then secondly, just on the cost savings, obviously took, I think, say £2 million out. If the market stayed kind of flat into next year, is there more scope to take more costs out, or are you kind of where you're at and you need to be in terms of flat demand maybe even for next year?

I'll maybe pick up on the pricing, Ben, and you cover cost savings? Look, I think the really positive thing this year at the beginning of the year is we landed an inflationary price increase.

Before the backdrop of the Middle East and the rise in inflation, and I think that was something that we've always tried to drive through systematically for certainly the last three years I've been in the organization and beyond that. It's pleasing to see that kind of rational behavior has played out and we've managed to deliver that price increase at the beginning of the year.

Now, fast forward to the situation we face with rising transport costs, energy as a backdrop, although Ben's mentioned, well, we are well hedged. We've driven through either surcharges in the case of our concrete businesses or a further increase from the middle of the year with brick.

We expect those to have to remain in place for as long as the crisis continues. Looking at the fact we delayed these increases to make sure customers didn't query invoices, we will have to probably run them on an extra few months even if the crisis and fuel prices went to normal level.

As a result, I kind of today imagine at the end of the year, when we announce a price increase for inflation impact into next year, we'll be rounding all those surcharges and already announced increase into our annual increase and see what we announce in the beginning of 2027. Ben, do you want to pick up cost savings?

I guess you can look at cost savings in two ways. There is continuous improvement in the business, the operational efficiency that we talk about, taking cost out of everything we do, making our factories more efficient, and that will always continue.

That's kind of within our DNA. There's also the market-related cost reductions, the brutal decision of taking heads out of the business.

The business is already pretty lean. We're not a fat business.

We never have been. We've had a long, hard look at our cost base this year, and we've found £2 million of annualized savings.

We'll get about half of that benefit this year. There isn't a great deal more to go.

Obviously, if the market stays like this, we'll obviously have to keep the cost base under review, but I wouldn't be expecting further kind of headcount reduction savings, but we will obviously always try to make our business as efficient as possible.

Thanks, Aynsley. Next one?

Gentleman at the...

Hi. Rob Chantry, Berenberg.

Thanks for the presentation. Sort of two questions for me.

Firstly, I guess, could you just comment a bit more on, I guess, the exit of the two divisions at the end of last year, only that I guess the flooring business remains in bespoke products. How strategically do you see that going forward?

Do you see it as kind of a core part of the business, you look to kind of ultimately grow and kind of add things on in time, or is that also under review? Then secondly, there was a slide mentioning a bit more detail on I guess investment in the aircrete business.

Just cognizant that I guess in the first half just gone, you reported I guess, kind of more difficult time for blocks. Can you just talk a bit more about the rationale for investing in that business, the kind of scale and the scope and exactly what you would be investing in?

Thanks.

I'll cover both of those, Ben, and then you want to just maybe drop in on the aircrete if you want to add anything? Yeah.

We announced last year we would exit two non-core areas of our business. One was Formpave, which was a very, very small block paving business that had struggled to make profitability for a number of years.

We tried to turn it around. We tried to see if there was an opportunity, but the capex required to kind of invest in that business made it the right decision to exit the business there.

Then, within Bison, we had Bison Bespoke, and we had Bison Flooring. The bespoke side of things, again, struggled to see a pathway for profitability, what's remaining now is the Bison Flooring business.

That is a key part of our overall product offering that we bring to customers. If you think about the illustration we show and draw of a home or maybe a mid-rise set of apartment blocks, you can see our flooring solutions really play into the same customer type for brick and aircrete.

Therefore, we view that as part of our offering. Some of those synergies we've managed to change into cost savings.

When we look at how we go to market, we've managed to say, 'Well, look, what's the point of having two people from Forterra go in to visit the same housebuilder? If we pull that together, we can sell more system solutions and give a better offering.'

We view Bison Flooring very much as a strategic part of Forterra's offering. Aircrete, look, aircrete is a product that we have a great position in.

We have a very, very strong market-leading brand, I believe, in Thermalite. Our factories are very, very close to end of life.

We've got to take the decision whether or not we invest further in our oldest factory, which is Hams Hall, or whether we take the opportunity to relocate that factory on another site within the Forterra network. Now, Hams Hall does, as we've mentioned, sit on a very valuable piece of land.

As a result, we're thinking to move it to a factory where we already have space, which will be next to Measham brick, which is very close to Hams Hall. That will allow us to sell the land for around about £25 million.

We're looking in an investment in the new facility at around about £60 to £65 million, but we've not finished dotting the i's and crossing the t's on that. That's the overall plan.

Now, if you were sitting with a housebuilder, they may say they're increasing their reach into timber frame. We've done a lot of modeling on the capacity that's been installed around timber frame.

Bear in mind, 50% of our sales also go into the merchant channel, which often ends up in RMI. We believe this product does have a future, but if we don't invest and reinforce our competitive positioning, we will find ourselves struggling to compete in the market.

That's why we're taking that as a strategic question. There is a question on timing and capital allocation, but we're not going to come to that yet until probably in the full year results when we come back on that and we should have made some more progress around decisions or not on aircrete.

No, no planning has been applied for at this stage. We're just looking at the project on paper.

Stephen?

Hi. Stephen Rawlinson from Applied Value.

Just two from me. Could you just talk a little bit, gives us more color on what's going on in Flettons?

Because obviously RMI is down quite a lot in London, and new build in London in particular. I always scene Flettons as one of the higher-margin products in the portfolio, and therefore actually crucial to profitability.

Is there any chance if you just sort of gives a bit more color on that? Secondly, you've always been pretty reasonably good and bought energy forward.

Ben's face always lights up whenever he talks about longer-term energy pricing and forward buying. Would it be the intention to continue to do that when Ben departs, and some thoughts in around that if you don't mind, please?

Sure. Shall I take the LBC Fletton question

and

you do energy hedging? You're absolutely right.

I would describe London Brick is one of our kind of jewel in the crown brands within our business, and you're right to say it's a large driver of profitability. As we've said, we've seen that market pretty depressed, so much so that due to our stock position, we've decided to adjust some capacity at the beginning of this year, and we've now got that equilibrium between sales and stock.

We've got great position in the merchants. One of the questions we were always asking ourselves is, are we winning or losing share?

You can't really get very much transparency on the LBC or the Fletton market. Through using GfK data on sales out from a merchant's point of view, we can see that we've actually maintained market share and we're not losing share.

That's an important piece of insight for us. It remains a key focus.

We got a very strong merchant team out there pushing that. In a market like I mentioned earlier with housing extensions being funded by additional borrowing in many cases, that market remains subdued.

I think the trigger for that is getting some consumer confidence back in the market. Apparently, we do have disposable income in our pockets in our bank accounts to spend.

I read a statistic on that recently. The money is there, it's just the confidence to dig it out of the bank and start to spend it.

Ben, do you want to cover energy?

Obviously future energy policy will be something for the board, but I'm sure that, you're right, we've done pretty well over the years of forward buying energy. The only times that really went wrong was the combination of COVID followed by Ukraine, when the crisis in Ukraine hit, we were buying gas at relatively high prices because we worried they'd go even higher.

If you buy far enough ahead at pretty low prices, then it's a fairly low risk strategy in my book. I'll leave with pretty good hedging in place.

As I said earlier, we're about 80% covered for next year. We've got layered positions down to kind of 2030.

We've recently just extended our energy procurement contract to 2031, and I was actually talking with our energy advisors yesterday about purchasing some energy for '30 and '31. Obviously, that's gone up a little bit with the current volatility in the Gulf, but beyond that, I think there is still value.

I'm sure the board will look at it, but from my perspective, I don't think there's a real reason to change that policy.

Clyde?

Thank you. Clyde Lewis at Peel Hunt.

Think I've got four for maybe I think quite quick. Probably one for Ben to kick off, the cash receipts issue that you've flagged for the first half, does that unwind by the end of the year in terms of that £4.5 million that you've flagged?

Second one was probably for you, Neil, on stocks in the channel. Obviously we see the industry numbers, but be interested to hear your view as to level of stocks you think the merchants are currently carrying.

You talked about pricing generally for your business, but be interesting to hear your take on import pricing as to where things have moved on that front given, again, the higher logistic costs they'll be seeing. Then the last one was on the Future Homes Standard.

You just touched on timber frame, but I suppose in the sort of wider take of where do you think the outcome from the Future Homes Standard, clearly there is still some moving parts without the software, but do you think that's good news, bad news for your business and sort of I suppose where, which parts?

Ben, do you want to kick things off with cash then?

The £4.5 million from a change in accounting standards, that's around kind of the timing of receipts at the period end. We are working with our customer base to educate them of the importance of actually paying on time and basically so that we can book that as cash.

Ultimately, as with any business, kind of look, there's always a game going on. Everyone's trying to manage their own working capital.

It will depend on the exact date of customer payments at the end of the year as to whether that's a one-off or a recurring difference.

Moving on to the stocks in the channel, I think, on the merchant side of things, given their current ownership and a lot of it being kind of PE-backed, cash is a really, really strong focus for them. I think they're managing their stocks very, very closely.

You can see that when you get to half years and you get some order variations, and then it kind of goes again once they've got through their half years. I would say a lot of them know that their products are available on next-day delivery that they want, they're managing their stock accordingly and cash as a result of that.

Price impacts on imports, look, you could say that the bricks coming from Europe are coming further, therefore they've had the biggest impact on fuel, which I think was the point you're mentioning, but they've not woken up to that, it would seem. That part of the market remains quite challenging, I would say, in terms of price.

It's very, very competitive. We need to be very, very careful to make sure that, say half a billion bricks and 250 million coming into merchants, that doesn't set the price for the soft mud market.

Because we're not massively exposed to soft mud in merchants, we've managed to kind of deal with that at arm's length. Our soft mud sales are more of a I would say simplified offering of soft mud versus the competition that predominantly goes into the housebuilders, and that housebuilder market, although they're using slightly less soft muds, we still managed to keep our price and our positioning there.

We're watching from the outside and not deciding to roll our sleeves up and get involved in that kind of fight with some of the import prices coming in. Future Homes, look, it's something we watch carefully, and I think, if you look at sustainability of what that means to customers and what that means to homeowners going forward, and if we are going to see ourselves in a position where you see more and more social housing, I think some of the lightweight solutions that are offered from a sustainability point of view don't always lend themselves to longevity of the home.

If you looked at a composite panel on the outside of a house or render on the outside of a house or, goodness forbid a composite brick slip, all those products in terms of longevity do not match up to the longevity that brick can bring. I think when you're looking at social environments with social homes, brick really has a very, very strong position there.

I think there will be some innovative housebuilders for some types of homes who embrace that new way of building, and there will be some who remain the more traditional side of things. I think when you're looking at cost models and total ownership through the cycle, and whereas you're not selling that home to you and I in the market and we're responsible for maintenance, I think when you're doing that to housing associations and councils, I think they're looking much more closely on longevity.

I think that's the defense that we've got against some of the new ways of building which are coming in from that point of view. It's something we're watching closely, but we're not overconcerned about it at the moment.

Thanks. Alastair?

Alastair Stewart, Progressive Equity Research. A couple of questions on council housing.

You obviously mentioned extruded bricks were ideal for that and other affordable tenures. Which other products do you think will particularly suit denser council house buildings?

That's the first question. Second one is based on who specifies.

The PM's preferred route, at least so far, is it should be local authorities driving it. Since there are quite a few that haven't built in years, they're going to need a lot of help from existing housing authorities.

Do you feel you need to talk to new people in new councils to get the message across, to advise them?

Right, let me pick those up. Other products, I think it comes back to what I was saying to Clyde earlier.

It's suddenly the kind of the way you look on the return of an investment of a council home versus a home you just buy as an individual is quite different. I think, longevity is really that message there, and robustness.

It's kind of when someone decides to put their washing line or whatever it may be on the side of a house and screws up against it, how do these things work when you've got maybe a fiber cement board behind it, which suddenly starts to get moisture penetration? I think the robustness and the longevity of the products are the types of things that will win.

We're perfectly placed for that with Bison Flooring, with aircrete, with aggregate block, and also with the brick side of our business, of course. Now, on the question of who specifies, it's a good one, and I think one of the things where I can work with my competitors on certain subjects is in the Brick Development Association.

We're really collectively starting to think about how we work as an association. I think, this is my view, a lot of the work that the BDA have done so far is about the beauty of brick.

I think what we really need to focus on are the messages I said, that robustness, that longevity, think about mortgage, even if you're buying a home made out of brick, you're going to have 30-year plus mortgages, you need to be able to remortgage afterwards. Getting stronger on that messaging to decision-makers, and I dare say local authorities, if they're flagged as one of those key decision-makers, will be on our list of people to focus and target on with a bit more emphasis, Alastair.

Christen, I think you've raised your hand and then you put it down again,

but...

Go on, you're there now, you may as well.

Ben Vowles, RBC. Just on the relationship between extruded and soft muds, can you give a bit of color there?

Have you seen customers switching over? Is it anything structural or purely just a cyclical factor?

Second point on volumes. Assuming they remain stable into next year, are you happy with your current production output levels where they are?

I'll pick these up. On the soft mud, there's a couple of things.

Soft mud bricks cost more to manufacture than extruded bricks. There are more moving parts in the process.

There's greater energy usage. There's greater repair costs.

A soft mud brick may cost 20 to 30% more than an extruded brick to make. As kind of our customers, some of them are facing increasing margin squeezes, obviously they're looking at ways to save costs.

Looking at an extruded brick over a soft mud brick would be one way they might want to achieve that. Beyond that, soft mud historically is more prevalent in the southeast of England, so that's where naturally kind of the soft mud market is strongest.

If you look at the various kind of regional data at the moment, affordability is most squeezed in the southeast, and that's limiting demand in the southeast, and therefore kind of outside of the southeast in the Midlands and further north, the market is stronger. I think it's a combination of both of those factors.

I'm not sure you can accurately kind of break it down into the individual ones, but those two factors are both leading us kind of to selling more extruded brick at the moment, and that's shown in the market data. As Neil said, look, we don't know what they're going to do exactly on housing yet, but it's pretty sure whatever their housing policies are going to be focused towards social and affordable housing.

Again, the most cost-competitive brick is obviously going to be well positioned for that. In terms of output into next year, look, we're constantly tweaking our output to make sure that we don't build significant inventory.

Look, we've seen there's a small inventory build in the first half. We've taken actions to reduce production of aircrete and London Brick to make sure that inventories remained aligned to sales.

On the other hand, we're still ramping up Desford, that's making extruded bricks, and if you look at our inventories, we've got very low levels of extruded brick, but higher levels of London and soft mud. I think, broadly, production is where it needs to be, but the whole point is this business and the management team will be agile, and if the market demand improves, they'll have to increase production, and if the market demand kind of doesn't improve, then I think we're in a pretty good place.

It's kind of managed constantly. So...

I think what kind of was challenging in 2023 was we were building stock in some of the factories at the same time as starting Desford and making sure Desford could work, we kind of probably ended up with too much inventory at the end of the year. If we did have to cut production, we can be very, very quick because it would mainly be in extruded brick, and that would involve taking a shift off or two shifts off in Desford and just running back with one kiln again.

Now, we don't foresee that as being the need going forward. I think CPA numbers came out yesterday with a forecast for 2027 on starts going up 7% overall.

I was slightly cheerful to read that on the train on the way to London last night, but they have been wrong before. It is difficult to forecast, but I think we can remain very agile, our reaction speed to be able to take two shifts off is much faster than it would be say mothballing a factory, which goes through a longer process.

Hopefully we don't have to do that, but that's what our reaction would be.

Thank you. Christen Hjorth from Deutsche Bank.

A couple of questions. Just the first one, obviously very strong performance in bricks in terms of volumes particularly versus the market, but quite a wide variance I think in volumes in some of the other product categories.

Could you just sort of give a bit of color in terms of the moving parts there? Second one, this maybe too early, but sounds like you've made some progress on calcined clay, any sort of more color on the potential scale of the opportunity?

Ben, do you want to do volumes of other products?

As we've said, bricks is our most resilient product, obviously even in the market, but also we've outperformed that market. Beyond that, you've got aggregate blocks, aircrete blocks, and flooring.

Aircrete blocks, on a year-by-year volume basis, has probably shown the weakest performance, but that's probably as much a function of what was happening in 2024 and early 2025 than what's actually happening right now in 2026. So '24 and '25, our competitors had some pretty major production issues, allowing us to significantly increase our market share in '24, which fed through into early '25.

Those production issues have now been normalized for quite a while, but on a year-on-year comparative, we're still seeing the back end of that. Similarly within flooring, that is a more competitive market.

It probably isn't quite the same oligopoly as you've got in bricks. There probably is a little bit more fluctuation of market share.

There's obviously a lot less data in that market as well, it's harder to know exactly what's going on. It's probably a function of kind of a less structured market in flooring and some unwind of the previous dynamics in aircrete, rather than anything specifically happening in aircrete right now.

Thanks, and given I've got the mic, I might just say a few words to Ben on behalf of the analyst community. Clearly it's been a whirlwind 10 years from the heady days of Help to Buy and two UK brick IPOs.

You of course had already been at Forterra, I think for 10 years or at least the predecessor organizations. It didn't take long for you to step up to CFO, and you've been a steady hand through the aftermath of Brexit, COVID, Russia-Ukraine, inflation spikes, and a Middle East war as well.

A lot's happened. Despite the macro challenges, Forterra has taken major strategic steps forward, including successfully building the largest brick plant in Europe at Desford.

I think on behalf of everyone in the analyst community, just want to say thank you for all your help over the years and good luck with your next challenge.

Thanks, Christen. Thanks, everyone.

It's been great to work with you all. Didn't expect that.

The calcined clay, actually, yeah. You were preparing yourself for your speech, I love that.

Calcined clay, look, this is going beyond just taking some LBC waste, which only has a certain amount available because we don't plan to make too much waste, but we found a good use for it. This is about taking virgin clay from the ground and working with someone to turn that into a cement substitute material.

We've been doing a lot of extensive discussions talking to major cement players and some of the innovative in the marketplace, learning from what's happening in Europe as well and the rest of the world as well as the UK. Where we've got to is kind of having kissed a lot of frogs along the way so to speak, we think we found someone which has the right synergies to work with.

They've got a good understanding of the go-to-market elements of calcined clay, which I think will be something which we don't have in our DNA as Forterra. As a result, we're going to start progressing conversations with that one individual entity to see how and what a JV could look like, starting with a set of heads of terms, and we'll keep you informed as the process progresses, really.

Thank you.

Just one more at this end. I should have put my glasses on, because I can't actually see everyone.

See close up and not far away, can I?

Thank you. Harry Goad from Rothschild & Co.

I think just a follow-up on that. I suppose with the calcined clay, would the idea be a dual-branded kind of bagged cement-type business, or as a calcined clay-type business?

Or maybe we're not at that stage yet, but just intrigued to know what maybe the vision would be around that, whether it would be selling as a raw input to another manufacturer unnamed as Forterra maybe, or branded as Forterra. Then secondly, just coming back on the aircrete investment, I think obviously you said it would be around £60-65 million.

Would that be expanding, I suppose, the capacity, or is that a replacement cost of the existing facility and its current scale? I think you said you've got £25 million of land, which maybe leaves about £40 million of cost.

I think would that be covered within the maintenance capex sort of annually spread over a couple of years, or is that something that would fall into kind of the expansion bucket, I suppose that's linked to the other one? Would the new factory have a margin uplift?

I suppose just more general color on the returns, I suppose, of that.

Ben, do you want to pick up aircrete, and I'll just talk through a little bit on calcined clay route to market? Without giving away too much in terms of who we've been speaking to, you've kind of got two options.

One is you go with someone, the cement players, and almost take an approach to dilute cement at source, and then that goes to the rest of the big cement users in the market. Or you could choose to take a different decision and sell to the ready-mix companies, the kind of individual players out there who have got their own formulation consultancies to help them optimize costs.

Very, very often, the optimization of how much you can use and how much you can blend in, if you work with one player, they will generally try and force through their full solution, whilst some of them are very happy to buy from different companies, 'I'll get my admixture from here, I'll get my cement from here, I'll get my SCM from here, and I'll take the value engineering for myself.' We're working through that, and we've come to a conclusion.

I don't want to go too much further with it, because it starts to kind of give clear indications as the route we would probably end up taking. That's the two questions you've kind of got to work through on the project.

Aircrete, Ben?

I guess just to add to that, obviously having used to work for a cement manufacturer, look, 90% of the cement sold in the UK is bulk plus that. We're talking about a bulk product for kind of in construction.

We're not necessarily talking about bags in B&Q or whatever, at least initially. The bulk is by far the most important thing.

Looking at aircrete, yeah, we've got this potential investment. We've got two aircrete factories at the moment, and as Neil said, the one at Hams Hall is getting close to end of life.

The £65 million is roughly the cost of a new factory. As you say, basically we've got the valuable land that we could sell to reduce that to a net spend of somewhere in the region of £40, it might be a little bit higher, we're still working on it.

In terms of capital allocation, in terms of capex spend, we have previously guided to £15 million a year of maintenance capex, but as you'll see this year, we're going to spend a lot less than that. This year, we're going to spend probably £10 million of total capex, of which probably about £3 will be kind of strategic, and then the remaining £7 is maintenance.

We're able to flex that. In reality, the factory would probably get built over a two, two-and-a-half-year period, you'd have to split that outlay over the few years.

I think it's probably ambitious to assume that it will be done entirely within the £15 million maintenance allowance. There will be some extra spend on top of that, but that's what Neil said earlier, the board are going to have to look at sort of the timing of that project relative to the other capital allocation priorities.

That's obviously I think something they'll probably give you more color on next year.

Any other questions? Stephen, just quick.

Stephen Rawlinson, Goodbody. Another one, please.

On slips, could you just help us out a little bit as to the way that market is panning out? Because obviously you've spoken positively about progress to date.

Is it a market where you're selling into factors who are building wall sections, are you building wall sections yourself? Do you see that as an opportunity for added value?

Where does it lie in terms also you're selling a system here, and therefore the actual risk that you're taking is selling a system rather than selling just plain brick is a little bit different. Could you just sort of explore that a little bit with us?

Obviously I recognize the constraints of a results meeting on this particular topic, but nonetheless, you've spoken positively about it, you've made the investment, just sort of how do you see the market playing out as an opportunity to sell products, an opportunity to sell systems, and how that might work, please? Yeah.

Kind of

when it comes to slips, we're seeing lots of different opportunities in the market. There are tiny things from accent walls sold through merchant customers, but the thing we're more interested in is we've got what we call the Omnia system.

When you're going kind of into more higher-rise buildings, you can't easily use glue to fix those slips, it needs to go on a rail-in system. Therefore, we have not only the brick and the rail-in system with an external accreditation for its performance in use if installed as per our manufacturer recommendations.

From an insurance point of view, we are guaranteeing the performance of our system correctly installed in the right applications, rather than guaranteeing the installation of the element. Most of the projects we're supplying at the moment are being installed on-site one slip at a time, but we are thinking and reflecting about how do we go into more panelized solutions, because no one wants to be 14 floors up putting one slip in at a time with the cost of labor over time, we feel that's an opportunity to grow and develop.

That's the kind of the Omnia system side of things, but we also have an interesting group of customers, which are the EWI-type companies, they're the external wall insulation manufacturers, improving the thermal efficiency of existing housing stock, existing buildings where they want brick on the outside of those, and they don't need to be grooved with a rail system, but they could be thin slips to use for those applications. We're also working through from that point of view.

I think your question on the warranties and insurance around it, we're quite clear on that, we're taking good legal advice. It's something which I was quite exposed to in my previous career, so that's helped, and we've got some good strategic people who help in make sure we've got all the bases covered from that point of view.

It's a growing market. It's growing, we estimate about 5% year-on-year.

When you get some of these projects out of the gateway, the market is only going to get bigger. We're coming from nothing, entering a market that is in its infancy, and we just see opportunity to grow and develop, really.

It's quite exciting. Great.

I think we're all done for questions. Thanks for those questions and your support as always.

Thank you very much.

Thanks, everyone.