Slide 1: Filtrona plc Full Year 2012 Results
Filtrona plc Investor Presentation Full Year 2012 Results 21 February 2013
Slide 2: Agenda
Agenda 1. Operational Review - Colin Day 2. Financial Review - Matthew Gregory 3. Vision 2015 Update & 2013 Outlook - Colin Day 2
Slide 3: Operational Review
Operational Review Colin Day, Chief Executive 3
Slide 4: FY 2012: summary
FY 2012: summary Strong revenue growth across all principal operating divisions Supported by increased gross and operating margins Continued improvement in tax rate and net working capital ratio Full year dividend per share increased by 19% to 12.5p Successful completion of three value-add
Slide 5: Revenue growth across principal divisions
Revenue growth1 across principal divisions Protection & Finishing Revenue 49% Op Margin 70bps Op Profit 44% GROUP Coated & Security • Porous Technologies Revenue 19% Revenue 26% Revenue 12% Op Margin 150bps Gross Margin 10bps Op Margin 20bps Op Profit 9% Op Margin 30bps Op Profit 13% Op Profit 28% F
Slide 6: Protection & Finishing Products
Protection & Finishing Products Vision 2015 Broad-based growth across 240 25% business activities Further range development 200 20% and improved marketing effectiveness 160 15% Benefit from new sites 120 Moss: China, Austria, Switzerland & 10% Slovakia 80 Alliance Express: Jacksonville, US
Slide 7: Porous Technologies
Porous Technologies Vision 2015 Growth led by healthcare Supported by printer systems, H&PC 100 30% and writing instruments 90 25% Successful completion of two 80 value-adding acquisitions 70 20% Lymtech → entry into porous 60 speciality wiping materials 50 15% Jae Yong strengthens Asian p
Slide 8: Coated & Security Products
Coated & Security Products Vision 2015 Broad-based growth across the division 100 20% Strong performance in tear tape, driven by wrapped food & tobacco 80 16% categories Labels growth driven by tobacco 60 12% segment Excellent progress on Blue Badge contract & supply of accreditation 40 8% s
Slide 9: Filter Products
Filter Products Vision 2015 Underlying volumes > FY 2011 Strong value component driven by 240 14% increase in special filters 200 12% Significant new business wins 10% Help underpin 2013-14 performance 160 8% Successful launches, 120 development initiatives and 6% service offerings 80 4%
Slide 10: Key operational developments
Key operational developments Protection & Finishing Products Coated & Security Products New sites opened in China, Slovakia, Austria, Investment in latest generation holographic Switzerland and US embossing system Porous Technologies Filter Products Investment in state-of-the-art Scanning Electron C
Slide 11: Key commercial developments
Key commercial developments Protection & Finishing Products Coated & Security Products Duraco text Range extension in hardware and speciality tapes “No label” look solution for Dr Organics & accreditation for London 2012 Games Porous Technologies Filter Products Fibre wick technology for use in road
Slide 12: Our new organisational structure
Our new organisational structure Vision 2015 FROM THIS … … TO THIS Protection & Finishing Products Component & Protection Solutions Moss Component Distribution Skiffy – Europe, Middle East & Africa Alliance – Americas Richco – Asia Reid Pipe Protection Technologies - MSI MSI Oilf
Slide 13: Financial Review
Financial Review Matthew Gregory, Group Finance Director 13
Slide 14: Income statement - summary
Income statement - summary FY 12 FY 11 Growth £m £m Actual Constant FX FX Revenue 663.4 540.7 +23% +26% Like-for-like1 +11% Gross margin 35.9% 35.7% +20bps +10bps Operating profit2 105.3 84.5 +25% +28% Operating margin 15.9% 15.6% +30bps +30bps Profit before tax2 95.8 76.2 +26% +29% Adjusted earning
Slide 15: Revenue growth – volume / mix / price
Revenue growth – volume / mix / price % Volume / mix +9 Price +2 Like-for-like +11 Acquisitions +15 Constant FX growth +26 Exchange (3) Reported growth +23 High quality revenue growth, driven by volume 15
Slide 16: Revenue growth – by division
Revenue growth – by division FY 12 Growth £m Constant FX Protection & Finishing Products 237.7 +48.6% LFL1 growth +10% Porous Technologies 85.8 +11.8% LFL1 growth +6% Coated & Security Products 85.3 +18.6% LFL1 growth +10% Filter Products 233.6 +16.9% LFL1 growth +17% Other2 23.4 -2.4% Eliminations
Slide 17: Gross margin
Gross margin1 36.0% 35.8% 35.9% 35.1% +10 bps GM improvement Higher volume → operational 34.0% gearing Further cost improvement / 32.3% efficiency initiatives % 32.0% 31.6% Productivity gains from ongoing upgrade of machinery 30.0% BUT … Negative mix impact from 28.0% higher growth in Filt
Slide 18: Operating profit – key movements
Operating profit1 – key movements 9.4 105.3 12.9 84.5 (2.1) 12.5 (11.9) £m Pricing > higher raw material & other input costs 1Adjusted to exclude intangible amortisation and exceptional operating items 18
Slide 19: Operating profit by division
Operating profit1 by division Adjusted1 operating profit FY 12 Growth Margin £m Constant FX Protection & Finishing Products 53.1 +44% 22.3% Porous Technologies 20.7 +13% 24.1% Coated & Security Products 14.9 +9% 17.5% Filter Products 28.9 +23% 12.4% Other2 1.6 -7% 6.8% Central Services (13.9) Group
Slide 20: Income statement – continued
Income statement – continued FY 12 Growth £m Actual Constant FX FX Operating profit1 105.3 +25% +28% Net finance charge (9.5) Impact of M&A spend & higher Profit before tax1 95.8 +26% +29% net pension expense Taxation (28.2) - Underlying tax rate 29.4% Tax rate down 100bps Net income1,2 67.6 +28% +3
Slide 21: Exceptional operating items
Exceptional operating items FY 12 £m Acquisition fees in respect of Lymtech, Jae Yong & 1.2 Securit Acquisition integration & restructuring costs 8.8 Other 0.6 Total exceptional operating items 10.6 21
Slide 22: Cash flow
Cash flow1 25.0 (7.8) (43.2) “Underlying” capex = c. £31m 105.3 2011 c/f & integration = c. £12m capex 79.3 (17.6) £m (8.9) (8.4) 44.4 87% “underlying” cash conversion 1 Adjusted to exclude intangible amortisation and exceptional operating items 22
Slide 23: Working capital
Working capital Working capital / revenue1 (WCR) FY11 12.9% FY12 11.8% 11.0% 11.5% 12.0% 12.5% 13.0% Equalisation of payables & receivables 1 Constant FX, based on last 12 month revenue 23
Slide 24: Net debt reconciliation
Net debt reconciliation £m As at 1 January 2012 145 As at 31 December 2012 164 Change in net debt 19 Of which: Free cash flow (44) Acquisitions 35 Dividends 23 Other (inc.FX) 5 19 Strong FCF offset by acquisition spend & higher dividends NOTE: Negative numbers denote a cash inflow, positive numbers
Slide 25: Dividend
Dividend 14.0 +19% 12.5 12.0 10.5 10.0 9.0 7.8 7.8 8.0 Pence 6.0 4.0 2.0 0.0 FY08 FY09 FY10 FY11 FY12 Dividend cover1 of 2.5x 1 Adjusted to exclude intangible amortisation and exceptional operating items 25
Slide 26: Vision 2015 Update & 2013 Outlook
Vision 2015 Update & 2013 Outlook Colin Day, Chief Executive 26
Slide 27: Vision 2015 – how are we doing so far?
Vision 2015 – how are we doing so far? Progressive dividend FY 2012: +19% ≥100% profit conversion to cash FY 2012: 75% Volume leverage to drive GM expansion FY 2012: +10bps1 c. 50% conversion to OM FY 2012: +30bps1 LFL revenue growth: ≥ mid single-digit CAGR FY 2012: +11% Delivering balanced profita
Slide 28: Vision 2015 – what we said, what we've achieved
Vision 2015 – how are we doing so far? What we said … … what we’ve achieved Identify new product opportunities Successful new business wins supported by innovation in all divisions Continued range expansion and improved marketing effectiveness Focus on faster growing markets / Further site
Slide 29: Areas of further opportunity
Areas of further opportunity Focus area Opportunity Gross margin “War on waste” Net working capital Inventory management M&A Faster integration Go to market Category focus Greater salesforce efficiency Treasury / tax Even more rigour Talent management Enhanced mobility Mo
Slide 30: "Horizontality" in India
“Horizontality” in India Vision 2015 BEFORE … … AFTER Ad hoc approach New purpose-built, stand-alone facility Successful JV in Filter Products Capacity to accommodate Separate tear tape slitting manufacturing, warehousing facility in C&SP and commercial infrastructure for three divisions
Slide 31: 2013 outlook
2013 outlook Well positioned for continued balanced growth Positive momentum maintained into early 2013 Focus on successful integration of recent acquisitions Continued strong cash flow FY 2013 capex of c. £50m Further improvement in net working capital % ratio FY 2013 tax rate c.100 b
Slide 32: Appendices
Appendices 32
Slide 33: Income statement – reported basis
Income statement – reported basis FY 12 Growth £m Actual Constant FX FX Adjusted operating profit 105.3 +25% +28% Intangible amortisation (8.3) Exceptional operating items (10.6) Reported operating profit 86.4 +19% +23% Net finance charge (9.5) Profit before tax 76.9 +20% +24% Taxation (23.4) - Unde
Slide 34: Exchange rates
Exchange rates Year ended 31 December 2012 Average Closing US $/£ 1.59 1.63 Euro €/£ 1.23 1.23 Impact of a one cent change per annum Op. Profit US $/£ £0.3m Euro €/£ £0.2m Year ended 31 December 2011 Average Closing US $/£ 1.60 1.55 Euro €/£ 1.15 1.20 34
Slide 35: Disclaimer
Disclaimer IMPORTANT LEGAL NOTICE THIS DOCUMENT IS STRICTLY CONFIDENTIAL TO THE RECIPIENT AND HAS BEEN SUBMITTED TO YOU SOLELY FOR YOUR INFORMATION. THE RECIPIENT MAY NOT REPRODUCE OR REDISTRIBUTE ANY PART OF THIS DOCUMENT TO ANY PERSON IN ANY FORM. THIS DOCUMENT AND THE PRESENTATION TO WHICH IT REL
Slide 36: Filtrona plc Full Year 2012 Results
Filtrona plc Investor Presentation Full Year 2012 Results 21 February 2013