Melrose Industries Plc · LSE:MRO
Melrose Industries — H1 2011 Earnings Presentation
32 slides from Melrose Industries's earnings presentation, August 2011
Slide 1: Half Year Results Announcement
August 2011 Strictly private and confidential Half Year Results Announcement Six months to 30 June 2011
Slide 2: Contents
Contents Sections 1 Highlights 2 Summary financial results 3 Summary of operating divisions 4 Energy 5 Lifting 6 Other Industrial 7 Conclusion 8 Questions 9 Appendices 2
Slide 3: Highlights
| Highlights
Slide 4: Highlights – acquisition margins achieved, more to come
Highlights – acquisition margins achieved, more to come Robust 9% revenue growth and strong order intake up 18% on last year Headline1 profit before tax up 32% on last year Interim dividend 4.6p (2010: 4.0p), up 15% Exceeded original FKI acquisition target of 15% headline1 operating margin
Slide 5: Highlights – strong revenue and headline operating margin growth
Highlights – strong revenue and headline operating margin growth 1 Key highlights – continuing Group 1 Revenue (£m) Headline operating margin (%) Revenue increased by 9% in H1 2011 compared to twelve months ago +9% overall 555.9 15.4% Exceeded the FKI acquisition target of 535.9 15% headline1 op
Slide 6: Summary financial results
| Summary financial results
Slide 7: Consolidated Income Statement
Consolidated Income Statement Income Statement – statutory format 1 Restated 6 months ended 6 months ended 30 June 2010 30 June 2011 (£m) (£m) Revenue 509.9 555.9 Cost of sales (356.2) (391.5) 2 Net operating expenses – Headline (83.4) (78.7) – Exceptional items and intangible asset amortisation (16
Slide 8: Headline profit before tax £74.9 million, up 32%
Headline profit before tax £74.9 million, up 32% 1 Income Statement – headline1 results six months ended 30 June 2011 for continuing operations 1 2 Headline results Other Total (£m) (£m) (£m) Revenue 555.9 - 555.9 Operating profit/(loss) 85.7 (11.8) 73.9 Net finance costs (10.8) - (10.8) Profit/(los
Slide 9: Headline earnings per share (EPS); best half year measure up 28%
1 Headline earnings per share (EPS); best half year measure up 28% The Dynacast sale, return of capital and share consolidation complicate EPS at the half year Dynacast is shown in discontinued results but return of capital and share consolidation had not happened Full Group headline1 EPS (conti
Slide 10: Revenue, headline operating profit and leverage all improve
Revenue, headline1 operating profit and leverage2 all improve Summary performance – half yearly trends Revenue (£m) Headline1 operating profit (£m) Leverage2 and net debt +9% +22% overall 555.9 overall 85.7 535.9 1.61x +4% 1.25x 77.7 1.18x +10% 509.9 +5% 70.3 +11% 331.1 287.4 286.8 13.8% 14.5% 15.4%
Slide 11: Comparison with twelve months ago – strong growth
Comparison with twelve months ago – strong growth 2 Summary performance – comparison with twelve months ago (H1 2011 v H1 2010 ) 1 Headline operating profit Revenue (£m) (£m) 555.9 85.7 Revenue up 9% on H1 2010 509.9 +9% 70.3 1.6 percentage points improvement in headline1 operating margin on +22
Slide 12: Comparison with six months ago – further growth
Comparison with six months ago – further growth 2 Summary performance – comparison with six months ago (H1 2011 v H2 2010 ) 1 Headline operating profit Revenue (£m) (£m) Continuing revenue growth, 4% up compared to H2 2010 85.7 555.9 535.9 77.7 +4% +10% Headline1 operating margin improvement of
Slide 13: Working capital efficiencies sustained; leverage lower
1 Working capital efficiencies sustained; leverage lower 1 Increase in capital investment in six months to June 2011 (£m) Net working capital days Net debt (£m) and leverage 461 leverage 19.9 1.3x Net capital expenditure 15.9 90 days 331 Depreciation3 287 Capital investment 59 days as a multiple of
Slide 14: Investment to drive growth
Investment to drive growth Melrose capital investment in six months to 30 June 2011 (£m) Overall capital investment for continuing 1.0x 1.9x 1.6x Group in the first six months is 1.5x 9.3 depreciation Further investment to come, including in Energy 4.8 5.0 3.9 4.0 3.2 Capital expenditure Depreci
Slide 15: Pensions being managed - Group
Pensions being managed - Group Pension, post retirement, life and medical benefits Annual 30 June 2011 cash payments Asset Liabilities Deficit Status (£m) (£m) (£m) (£m) FKI UK defined benefit plan Closed in Feb 2011 18.5 558 (630) (72) McKechnie UK defined benefit plan Closed 4.6 147 (142) 5 FKI US
Slide 16: Taxation – sustainable 26% headline rate
Taxation – sustainable 26% headline rate 1 Tax rates Full year 2 2 H1 2010 2010 H1 2011 1 Headline tax rate on continuing operations 29% 28% 26% 1 Headline cash tax rate on continuing operations 19% 19% 4% The forecast full year headline1 tax rate on continuing operations is 26%, unchanged from th
Slide 17: Summary of operating divisions
Summary of operating divisions Energy Lifting Other Industrial
Slide 18: Strong end markets
Strong end markets Other Energy Lifting Industrial Turbogenerators, Truth, Harris, Weber Bridon, Crosby, Acco Marelli, Switchgear Knapp, MPC 6 months to 30 June 2011 Revenue (£m) 215.8 237.9 102.2 1 Headline operating profit (£m) 41.7 40.0 11.8 1 Headline operating margin 19.3% 16.8% 11.5% 1 Percent
Slide 19: Energy
| Energy
Slide 20: Energy — highlights
Energy — highlights Energy – headline1 results Full year H1 H2 H1 Last 6 month Year over year (£m) 2010 2010 2010 2011 trend trend Revenue 427.5 204.2 223.3 215.8 (3%) 6% 1 2 Headline EBITDA 81.7 37.9 43.8 45.7 4% 21% 1 2 Headline EBITDA margin 19.1% 18.6% 19.6% 21.2% +1.6pps +2.6pps 1 Headline oper
Slide 21: Lifting
| Lifting
Slide 22: Lifting — highlights
Lifting — highlights 1 Lifting – headline results Full year H1 H2 H1 Last 6 month Year over year (£m) 2010 2010 2010 2011 trend trend Revenue 422.7 212.2 210.5 237.9 13% 12% 1 2 Headline EBITDA 76.1 39.6 36.5 44.8 23% 13% 1 Headline EBITDA² margin 18.0% 18.7% 17.3% 18.8% +1.5pps +0.1pps 1 Headline o
Slide 23: Other Industrial
| Other Industrial
Slide 24: Other Industrial — highlights
Other Industrial — highlights 1 Other Industrial – headline results Full year H1 H2 H1 Last 6 month Year over year (£m) 20102 20102 20102 2011 trend trend Revenue 195.6 93.5 102.1 102.2 0% 9% 1 3 Headline EBITDA 29.1 14.9 14.2 15.0 6% 1% 1 3 Headline EBITDA margin 14.9% 15.9% 13.9% 14.7% +0.8pps -1.
Slide 25: Conclusion
| Conclusion
Slide 26: Conclusion
Conclusion Robust 9% revenue growth and strong order intake up 18% on last year Headline1 profit before tax up 32% on last year Interim dividend 4.6p (2010: 4.0p), up 15% Exceeded original FKI acquisition target of 15% headline1 operating margin Over 50% of turnover to Oil & Gas, Energy or
Slide 27: Questions
| Questions
Slide 28: Appendices
| Appendices
Slide 29: Balance Sheet and related currency effect
Balance Sheet and related currency effect Appendix 1 Balance Sheet Dec 2010 June 2011 FX movement (£m) (£m) (£m) Fixed assets, intangible assets and goodwill 1,435.3 1,143.3 3.3 Net working capital 115.9 145.3 1.3 Pension and retirement benefits (119.6) (93.4) 0.1 Provisions (118.7) (93.8) 0.6 Defer
Slide 30: Exchange rates
Exchange rates Appendix 2 Exchange rates 2010 (6 months) 2010 (12 months) 2011 (6 months) US Dollar Euro US Dollar Euro US Dollar Euro Average rates 1.53 1.15 1.55 1.17 1.62 1.15 Closing rates 1.49 1.22 1.56 1.16 1.61 1.11 30
Slide 31: FKI investment performance
FKI investment performance Appendix 3 Remaining invested capital in FKI (£m) FKI acquisition price 970.4 Cash generated (after all costs including tax): - from trading (270.9) - from acquisitions and disposals (57.4) Remaining invested capital in FKI 642.1 1 12 month EBITDA of remaining FKI business
Slide 32: Discontinued operations
Discontinued operations Appendix 4 Income Statement – discontinued operations 6 months ended 30 June 2011 (£m) Revenue 156.3 Operating costs (131.5) 1 Headline operating profit 24.8 Exceptional items (including intangible asset amortisation) (13.9) Net finance income 0.4 Profit before tax 11.3 Tax c