Slide 1: Melrose Industries PLC Full Year Results
Buy Improve Sell Strictly private and confidential Melrose Industries PLC Full Year Results Twelve months to 31 December 2013 March 2014
Slide 2: Contents
Contents Sections 1 Highlights 2 Summary financial results 3 Summary of operating divisions 4 Elster 5 FKI 6 Questions 7 Appendices Buy Improve Sell 2
Slide 3: Highlights
Buy Improve Sell Highlights 3
Slide 4: Highlights in 2013
1 Highlights in 2013 Group2 revenue down 3%, headline3 operating profit up 20% (Elster +37%, FKI -6%) Elster2 acquisition continuing to outperform expectations ‒ Headline3 operating profit of £194.2 million, up by over one third on last year ‒ Second half rate of growth similar to first half, de
Slide 5: Summary financial results: Income performance
Buy Improve Sell Summary financial results Income performance 5
Slide 6: Income Statement
Income Statement 2013 headline¹ growth2 Group £m 2013 Growth3 Elster Growth3 FKI Growth 2013 statutory format Revenue 1,732.8 -3% 1,116.3 -3% 616.5 -4% Continuing operations £m Headline¹ Other Total Headline¹ operating profit 274.9 +20% 194.2 +37% 107.2 -6% Revenue 1,732.8 - 1,732.8 Headline¹ operat
Slide 7: Revenue growth
Revenue growth 2013 headline¹ growth2 Group £m 2013 Growth3 Elster Growth3 FKI Growth Revenue growth2 – by division3 year on year Revenue Revenue 1,732.8 1,732.8 -3% -3% 1,116.3 1,116.3 -3% -3% 616.5 616.5 -4% -4% Headline¹ operating profit 274.9 +20% 194.2 +37% 107.2 -6% Headline¹ operating margin
Slide 8: Headline operating margin
Headline operating margin 1 2013 headline¹ growth2 Group Headline1 operating margin £m 2013 Growth3 Elster Growth3 FKI Growth Revenue 1,732.8 -3% 1,116.3 -3% 616.5 -4% 15.9% 17.4% 17.4% Headline¹ operating profit 274.9 +20% 194.2 +37% 107.2 -6% Headline¹ operating margin % % 15.9% 15.9% +3.1ppts +3.
Slide 9: Foreign exchange impact
Foreign exchange impact 2013 headline¹ growth2 Group £m 2013 Growth3 Elster Growth3 FKI Growth 10 cents strengthening impact on the Group Revenue 1,732.8 -3% 1,116.3 -3% 616.5 -4% Headline¹ operating Headline¹ operating profit profit 274.9 274.9 +20% 194.2 194.2 +37% 107.2 107.2 -6% Headline1 operat
Slide 10: Order intake
Order intake 2013 headline¹ growth2 Group £m 2013 Growth3 Elster Growth3 FKI Growth Order intake growth2 – year on year3 5 Revenue 1,732.8 -3% 1,116.3 -3% 616.5 -4% Headline¹ operating profit 274.9 +20% 194.2 +37% 107.2 -6% Headline¹ operating margin % 15.9% +3.1ppts 17.4% +5.0ppts 17.4% -0.3ppts -3
Slide 11: Summary financial results: Cash performance
Buy Improve Sell Summary financial results Cash performance 11
Slide 12: Profit conversion to cash and investment
Profit conversion to cash and investment Cash generated from trading (after all costs including tax) 2013 headline¹ profit conversion to cash Group Elster £m 2013 Elster FKI 95% 94% 93% 126% Headline¹ operating profit 274.9 194.2 107.2 Depreciation2 40.7 26.6 13.4 Group Gas Electricity Water Working
Slide 13: Summary financial results: Balance Sheet
Buy Improve Sell Summary financial results Balance Sheet 13
Slide 14: Balance Sheet – leverage, pensions, working capital
Balance Sheet – leverage , pensions, working capital 3 2013 Balance Sheet position 31 Dec 31 Dec £m 2013 2012 Leverage3 Fixed assets, intangible assets and goodwill 2,853.2 3,367.6 0.4x 2.3x Net Net working capital working capital 126.9 126.9 217.0 217.0 Pensions and Pensions andretirement retiremen
Slide 15: Summary of operating divisions
Buy Improve Sell Summary of operating divisions Elster FKI 15
Slide 16: Elster
64% of Melrose1 Elster 62% of Elster1 “Best-in-class products and solutions for 40% of Melrose1 Gas measurement, regulation and the safe control and application of gases” www.elster.com/en/gas 22% of Elster1 “Meeting the expanding needs of utilities Electricity by providing advanced metering product
Slide 17: Elster – headline results
Gas Electricity Water Elster Elster – headline¹ results Elster5 Gas Electricity Water Full year Full year Full year Full year £m 2013 Growth3 4 2013 Growth3 4 2013 Growth3 4 2013 Growth3 4 Revenue 1,116.3 -3% 688.9 +4% 247.5 -8% 179.9 -16% Headline¹ EBITDA² 220.8 +29% 167.8 +10% 28.2 +18% 27.5 +116%
Slide 18: FKI
36% of Melrose1 FKI 57% of FKI1 “World number one independent 21% of Melrose1 supplier of turbogenerators” www.brush.eu 43% of FKI1 “Global technology leaders in the 15% of Melrose1 manufacture of wire and wire rope” www.bridon.com 18 1. Based on 2013 revenue for all continuing businesses
Slide 19: FKI – headline results
FKI FKI – headline¹ results FKI Brush Bridon Full year Full year Full year £m 2013 Growth3 2013 Growth3 2013 Growth3 Revenue 616.5 -4% 350.1 -6% 266.4 -2% Headline¹ EBITDA² 120.6 -3% 79.0 -5% 41.6 flat Headline¹ EBITDA² margin % 19.6% +0.2ppts 22.6% +0.3ppts 15.6% +0.3ppts Headline¹ operating profit
Slide 20: Questions
Buy Improve Sell Questions 20
Slide 21: Appendices
Buy Improve Sell Appendices 21
Slide 22: Balance Sheet – pensions and retirement benefits
Balance Sheet – pensions and retirement benefits 2013 Balance Sheet position 31 Dec 31 Dec DB pension plans – by region £m 2013 2012 31 Dec 2013 Fixed assets, intangible assets and goodwill 2,853.2 3,367.6 £m Assets Liabilities Deficit UK 862 (975) (113) Net working capital 126.9 217.0 Europe 1 (90)
Slide 23: Exchange rates
Exchange rates 2013 2012 US Dollar Euro US Dollar Euro 12 month average rates 1.56 1.18 1.59 1.23 Closing rates 1.66 1.20 1.62 1.23 On-going sensitivity of profit to translation and unhedged transaction exchange risk Increase in headline1 £m operating profit For every 10 cent strengthening of the US
Slide 24: Discontinued businesses
Discontinued businesses Disposed businesses Proceeds Revenue EBITDA¹ Segment Business (£m) multiple multiple Sold to Date Lifting Crosby / Acco 632 2.5x 10.0x KKR Nov 2013 Energy Marelli 177 1.5x 9.6x Carlyle Group Aug 2013 Other Industrial Truth / Harris 141 1.1x 7.0x Tyman PLC / Avis Industrial Co