Slide 1: Investor Presentation: Full Year 2014 Results
INVESTOR PRESENTATION Full Year 2014 Results 20 FEBRUARY 2015
Slide 2: Agenda
AGENDA 1. Operational Review - Colin Day 2. Financial Review - Matthew Gregory 3. Drive for 2020 Update & 2015 Outlook - Colin Day © 2013 ESSENTRA PLC 2
Slide 3: Operational Review
OPERATIONAL REVIEW Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 4: FY 2014: Summary
FY 2014: SUMMARY • Strong revenue growth, with accelerating momentum in Q4 • Cost reduction, efficiency initiatives & synergy savings → operating margin uplift • Further improvements in net working capital ratio, finance costs and tax rate • Full year dividend per share increased by 19% to 18.3p • A
Slide 5: Strong Revenue & Profit Growth
STRONG REVENUE & PROFIT GROWTH Revenue (£m) Adjusted Operating Profit** (£m) P&SS C&PS 145.0 £216m £244m LFL: +5% LFL: +8% 140.0 +16% Group: £866m* +14% 135.0 LFL: +9% PT £90m LFL: -5% 130.0 Filter Products Extrusion £292m £26m LFL: +16% LFL: +9% 125.0 Notes: FY13 FY14 Growth at constant exchange ra
Slide 6: Accelerating Momentum in Q4
ACCELERATING MOMENTUM IN Q4 20 15 Revenue growth1 (%) 10 5 0 C&PS PT P&SS FP Extrusion Group -5 -10 9m Q4 1 At constant exchange rates, adjusted for the acquisitions of Contego Healthcare Limited and Dakota Packaging Limited (from 30 April), Mesan Kilit A.S. and Kelvindale Products Pty Ltd (from 30
Slide 7: Component & Protection Solutions
COMPONENT & PROTECTION SOLUTIONS • Balanced growth in both Components and Pipe Protection – Range consolidation benefits in Components – New business wins and product roll out in PPT • Benefit from new site openings – Thailand, Romania and Mexico – New distribution centres in Louisville, US and Chan
Slide 8: Porous Technologies
POROUS TECHNOLOGIES • Growth led by household & personal care … – Significant business wins in air care with multinational customers • … supported by cleanroom wipes and healthcare – New applications in critical care environments – Ongoing success in globalising the product range Investment in speci
Slide 9: Packaging & Securing Solutions
PACKAGING & SECURING SOLUTIONS • Packaging led by healthcare and consumer … • … supported by successful product launches … – Innovative carton and leaflet offers in healthcare – New label and tape solutions (eg, Re:Close™) • … partially offset by weakness in tobacco tear tape sales • Strong performa
Slide 10: Filter Products
FILTER PRODUCTS • Underlying volumes > FY 2013 • Successful product roll out & development initiatives – Unique dispersible plugwrap material and innovative multi-segment filter variant – 11% increase in joint development activity – 9 new patent & trademark filings • Growth in Scientific Services, p
Slide 11: Acquisition of Abric Seals
ACQUISITION OF ABRIC SEALS Versus our … Abric delivers scorecard … PLACE: • Adds significant scale in Asia region (non-filters) ‒ Accounts for c. 40% Abric Seals revenue ‒ Low-cost manufacturing facilities in Thailand and Malaysia PRODUCT & • Complementary product fits with “Essential MARKETS: Compo
Slide 12: Acquisition of Specialty Plastics
ACQUISITION OF SPECIALTY PLASTICS Versus our … Specialty Plastics delivers scorecard … PLACE: • Boosts Essentra’s presence in Australia for the Distribution SBU • Adds a distribution facility on the west coast • Limited customer and geographic overlap PRODUCT & • Complementary components offering MA
Slide 13: Financial Review
FINANCIAL REVIEW Matthew Gregory Group Finance Director © 2013 ESSENTRA PLC
Slide 14: Income Statement - Summary
INCOME STATEMENT - SUMMARY FY 14 FY 13 Growth £m £m Actual Constant FX FX Revenue 865.7 798.1 +8% +14% Like-for-like1 +9% Gross margin 33.6% 34.9% -130bps -140bps Operating profit2 142.5 130.4 +9% +16% Operating margin 16.5% 16.3% +20bps +30bps Profit before tax2 133.4 119.8 +11% +19% Adjusted earni
Slide 15: Revenue Growth – Volume / Mix / Price
REVENUE GROWTH – VOLUME / MIX / PRICE % Volume / mix +7 Price +2 Like-for-like +9 Acquisitions +5 Constant FX growth +14 Exchange -6 Reported growth +8 High quality revenue growth, driven by volume © 2013 ESSENTRA PLC 15
Slide 16: Revenue Growth – By Division
REVENUE GROWTH – BY DIVISION FY 14 FY growth FY growth Q4 growth £m Constant LFL1 LFL1 FX Component & Protection Solutions 243.6 +15% +8% +9% Porous Technologies 89.8 -6% -5% +4% Packaging & Securing Solutions 216.3 +22% +5% +12% Filter Products 291.5 +16% +16% +11% Extrusion 25.7 +9% +9% +2% Elimin
Slide 17: Gross Margin – Key Movements
GROSS MARGIN1 – KEY MOVEMENTS 70bps (40bps) (80bps) 35.0% (90bps) 33.6% 1 At constant exchange rates © 2013 ESSENTRA PLC 17
Slide 18: Operating Profit – Key Movements
OPERATING PROFIT1 – KEY MOVEMENTS 13.2 (0.7) 142.5 130.4 (7.7) 7.2 £m (13.9) 14.0 Successful recovery of higher input costs © 2013 ESSENTRA PLC 18 1Adjusted to exclude intangible amortisation and exceptional operating items
Slide 19: Operating Profit by Division
1 OPERATING PROFIT BY DIVISION Adjusted1 operating profit FY 14 Growth Margin £m Constant FX Component & Protection Solutions 58.9 +18.2% 24.2% Porous Technologies 15.8 -29.3% 17.6% Packaging & Securing Solutions 38.3 +30.0% 17.7% Filter Products 43.9 +18.7% 15.1% Extrusion 1.6 +11.0% 6.2% Central S
Slide 20: Income Statement – Continued
INCOME STATEMENT – CONTINUED FY 14 Growth £m Actual Constant FX FX Operating profit1 142.5 +9% +16% Benefit from Net finance charge (9.1) (14)% (14)% refinancing bank facilities Profit before tax1 133.4 +11% +19% Tax rate down Taxation (33.3) 250bps Underlying tax rate 24.9% Net income1 100.1 +15% +
Slide 21: Treasury & Tax
TREASURY & TAX Treasury Tax • Successful refinancing of main bank facilities on 1 July 2014 35 % • Key features: − £390m facility 31.0 30.4 30 29.4 − £ and € − 5-year tenure 27.4 24.9 • More competitive terms 25 − Larger facility, but lower fees − Lower margin offset by fee amortisation 20 • Facilit
Slide 22: Exceptional Operating Items
EXCEPTIONAL OPERATING ITEMS FY 14 £m Acquisition fees 7.1 Acquisition integration & restructuring costs 9.3 Other (0.2) Total exceptional operating items 16.2 © 2013 ESSENTRA PLC 22
Slide 23: Cash Flow
1 CASH FLOW 11.3%* working cap. / revenue ratio 23.0 (25.4) FY 2013: 11.4%*, constant FX FY 2010: 14.2%, constant FX 142.5 (33.1) 107.0 (20.5) (8.5) (2.5) 75.5 75% operating cash conversion 1 Adjusted to exclude intangible amortisation and exceptional operating items © 2013 ESSENTRA PLC 23 * Exclude
Slide 24: Net Debt Reconciliation
NET DEBT RECONCILIATION £m As at 1 January 2014 217 FX 4 As at 31 December 2014 62 Change in net debt after FX (159) Of which: Free cash flow (76) Acquisitions 30 Proceeds from share placing (168) Dividends 38 Exceptionals 7 Net cash flow from employee trust shares 8 Other (inc. rounding) 2 (159) NO
Slide 25: Dividend
DIVIDEND 20.0 +19% 18.3 16.0 15.4 12.5 12.0 10.5 Pence 9.0 8.0 4.0 0.0 FY10 FY11 FY12 FY13 FY14 Progressive dividend 1 Adjusted to exclude intangible amortisation and exceptional operating items © 2013 ESSENTRA PLC 25
Slide 26: 2014 Pro Forma for New Organisational Structure
2014 PRO FORMA FOR NEW ORGANISATIONAL STRUCTURE SBU Distrib’n H&PC Filter Spec. Elims. Central TOTAL Packaging Products Tech. services Revenue (£m) 246.9 166.4 291.5 162.1 (1.2) - 865.7 Operating profit (£m) 57.6 30.1 39.0 29.8 - (14.0) 142.5 Operating margin 23.3% 18.1% 13.4% 18.4% - - 16.5% Region
Slide 27: Drive for 2020 Update & 2015 Outlook
DRIVE FOR 2020 UPDATE & 2015 OUTLOOK Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 28: Vision 2015 – Our Progress in 2014
VISION 2015 – OUR PROGRESS IN 2014 Progressive dividend - FY 2014: +19% ≥100% profit conversion to cash - FY 2014: 75% Volume leverage to drive GM expansion c. 50% conversion to OM - FY 2014: +30bps2 LFL revenue growth: ≥ mid single-digit CAGR - FY 2014: +9%1 Delivering balanced profitable growth 1
Slide 29: Our Organisational Structure
OUR ORGANISATIONAL STRUCTURE Product development, product marketing, marketing, Europe Americas Asia Revenue: £439m Revenue: £260m Revenue: £167m business model definition, global revenue Distribution Revenue: £247m Health & Personal Care Packaging Revenue: £166m Filter Products Revenue: £291m Speci
Slide 30: Drive for 2020 – Priorities & Objectives
DRIVE FOR 2020 – PRIORITIES & OBJECTIVES OUR STRATEGIC PRIORITIES OUR FINANCIAL OBJECTIVES INTEGRATION Like-for-like revenue of at least mid- Operate a global, integrated Essentra group single digit % generating synergy across all regions, – Consistent outperformance of our functions and business a
Slide 31: 2015: Summary
2015: SUMMARY • Continued balanced, profitable organic growth – Benefit from new organisational structure, to maximise Group-wide opportunities – Further new business wins and product innovation – Improved performance in Porous Technologies – Anticipated effect of the lower oil price • Pipe Protecti
Slide 32: Appendices
APPENDICES © 2013 ESSENTRA PLC
Slide 33: Income Statement – Reported Basis
INCOME STATEMENT – REPORTED BASIS FY 14 Growth Actual Constant £m FX FX Adjusted operating profit 142.5 +9% +16% Intangible amortisation (17.5) Exceptional operating items (16.2) Reported operating profit 108.8 +12% +21% Net finance charge (9.1) Profit before tax 99.7 +15% +25% Taxation (27.9) - Und
Slide 34: Exchange Rates
EXCHANGE RATES Year ended 31 December 2014 Average Closing US $/£ 1.65 1.56 Euro €/£ 1.24 1.28 Impact of a one cent change per annum Op. Profit (£m) US $/£ 0.3 Euro €/£ 0.2 Year ended 31 December 2013 Average Closing US $/£ 1.57 1.66 Euro €/£ 1.18 1.20 © 2013 ESSENTRA PLC 34
Slide 35: Revenue by Destination – FY 2014
REVENUE BY DESTINATION – FY 2014 19% Europe 51% Americas Asia 30% © 2013 ESSENTRA PLC 35
Slide 36: 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 37: Investor Presentation: Full Year 2014 Results
INVESTOR PRESENTATION Full Year 2014 Results 20 FEBRUARY 2015