Slide 1: A challenging year, but decisive actions taken for longer-term growth
A challenging year, but decisive actions taken for longer-term growth Synthomer plc | 2023 full year results Tuesday 12 March 2024 Synthomer plc 2023 full year results 1
Slide 2: Important notice
Important notice This presentation is being provided to you in good faith and solely contained therein have been obtained from sources believed to profit forecast or estimate for any period. Recipients of these for your information purposes, speaking as of the date hereof, be reliable, but that ther
Slide 3: Agenda
AGENDA 01 Overview – Michael Willome 02 Financial review – Lily Liu 03 Strategic progress – Michael Willome 04 Outlook and summary – Michael Willome 05 Q&A Synthomer plc 2023 full year results 3
Slide 4: A challenging year, but decisive action taken
A challenging year, but decisive action taken Financial performance significantly affected …but we responded with decisive actions to by challenging end-market conditions… protect and strengthen our financial platform • Prolonged period of lower demand and destocking – • Net debt halved in year volu
Slide 5: Focused on delivering our speciality strategy
Focused on delivering our speciality strategy Strategic progress continued, despite the …with more to come in 2024 and beyond difficult market backdrop… • 55% revenues now from specialties (and higher • Highly-disciplined investments to support strategy proportion of EBITDA) • Further strategic dive
Slide 6: Agenda
AGENDA 01 Overview – Michael Willome 02 Financial review – Lily Liu 03 Strategic progress – Michael Willome 04 Outlook and summary – Michael Willome 05 Q&A Synthomer plc 2023 full year results 6
Slide 7: Group financial summary
Group financial summary • Revenue (15.6)% to £1,970.9m Underlying Continuing operations – Group volume (9.9)%, impacted by subdued end-market demand and Restated % change increased global competition in some base chemicals £m FY 23 FY 22 % change CC – Volume decline slowed in H2 relative to H1 Reven
Slide 8: Coatings & Construction Solutions (CCS)
Coatings & Construction Solutions (CCS) • FY trading Underlying – Revenues (19.0)%, principally driven by lower volumes % change £m FY 23 FY 22 % change CC – Good margin performance as raw material costs decreased, reflecting significant speciality weighting within division Revenue 815.5 996.1 (18.1
Slide 9: Adhesive Solutions (AS)
Adhesive Solutions (AS) • FY trading Underlying Including adhesive resins acquisition since 1 April 2022 – Revenues +1.0% to £581.7m (2022: £572.9m) reflects 12 months of % change adhesive resins acquisition vs 9 months in 2022 £m FY 23 FY 22 % change CC – LFL volumes (10.6)% due to lower demand amp
Slide 10: Health & Protection and Performance Materials (HPPM)
Health & Protection and Performance Materials (HPPM) • FY trading Underlying Continuing operations* – Revenues and pricing reflect 13.5% reduction in volumes – oversupply % change in medical gloves post-pandemic and global competition £m FY 23 FY 22 % change CC – EBITDA (61.3)% at £31.0m vs 2022, re
Slide 11: Net debt and cash flow
Net debt and cash flow Net debt halved through exceptional cash conversion, equity issue, divestment proceeds • Cost control Free cash flow and net debt – £18m of cost savings delivered in FY 23 £m FY 23 FY 22 – Targeting £30-40m in cost savings annually from new procurement programme Opening net de
Slide 12: Balance sheet and liquidity
Balance sheet and liquidity Prudent covenant relaxation and strong liquidity – space for further deleveraging over time • RCF/UKEF covenant extended Net debt pre-and post-rights issue (£m) – For prudence, covenant relaxation extended in March 2024 December December – Current Net debt:EBITDA covenant
Slide 13: Agenda
AGENDA 01 Stronger foundations – Michael Willome 02 Financial review – Lily Liu 03 Strategic progress – Michael Willome 04 Outlook and summary – Michael Willome 05 Q&A Synthomer plc 2023 full year results 13
Slide 14: Synthomer's focus, strengthen, grow strategy
Synthomer’s focus, strengthen, grow strategy Becoming a more focused, more resilient, higher quality business Synthomer is a speciality solutions platform for Coatings & Construction, Adhesives and Health & Protection market segments 01 02 03 04 05 Organic growth in Rigorous and Operational and Diff
Slide 15: Strategic direction
Strategic direction Increasing our specialisation, global position and efficiency Synthomer 2022 Synthomer 2023 Future Synthomer Portfolio Increasing % revenue base Base Speciality Base Speciality Base Speciality speciality vs. speciality weighting ~50% ~50% ~45% ~55% ~30% ~70% Geography More balanc
Slide 16: Coatings & Construction Solutions
Coatings & Construction Solutions Already demonstrating the resilience and growth potential that comes from a true focus on customer needs Our strategic opportunity Strategic priorities: Leading EU positions with solutions to enhance energy • Further alignment with strategic end markets efficiency,
Slide 17: Adhesive Solutions
Adhesive Solutions Despite challenges, we are building on our strengths to fulfil our potential as reliability improves and markets recover Our strategic opportunity Strategic priorities: Leading positions in EMEA and the Americas across all • Improving manufacturing/logistics performance and capaci
Slide 18: Health & Protection and Performance Materials
Health & Protection and Performance Materials NBR volumes have begun to recover; continuing to drive value creation from Performance Materials portfolio Our strategic opportunity Strategic priorities: Market leader in £3bn NBR market – cyclical but also • Strengthening overall cost competitiveness h
Slide 19: Business excellence
Business excellence Further progress made in key Group-wide initiatives underpinning future growth SHE excellence Procurement Synthomer Excellence (SynEx) • Centrally-managed ‘lean’ capability being built since Oct 2022 • 8 black / 41 green belts today • Target to double population by 2025 • Strong
Slide 20: Agenda
AGENDA 01 Overview – Michael Willome 02 Financial review – Lily Liu 03 Strategic progress – Michael Willome 04 Outlook and summary – Michael Willome 05 Q&A Synthomer plc 2023 full year results 20
Slide 21: Outlook
Outlook Current trading 2024 outlook • Trading since the start of 2024 has • Expect some earnings progress and modestly positive Free Cash Flow, even been cautiously encouraging, absent macroeconomic improvement supported by short-term restocking by customers + AS divisional performance improvement
Slide 22: Increasing operating leverage as end markets recover
Increasing operating leverage as end markets recover Earnings power more than double current levels in the medium term 2023 EBITDA (£m) £100m+ improvement potential from end-market recovery + Further earnings growth from strategic delivery CCS 100 • Strategy outlined in October 2022 to increase CCS
Slide 23: Summary
Summary • Very challenging period for Synthomer – but it has validated our strategy to become more focused, more specialised and more global • Successfully delivered significant actions to protect and strengthen financial platform; further deleveraging through divestment programme and EBITDA growth
Slide 24: Agenda
AGENDA 01 Overview – Michael Willome 02 Financial review – Lily Liu 03 Strategic progress – Michael Willome 04 Outlook and summary – Michael Willome 05 Q&A Synthomer plc 2023 full year results 24
Slide 25: Appendices
APPENDICES 01 Special items 02 Foreign exchange and pensions Synthomer plc 2023 full year results 25
Slide 26: FY 2023 special items
Appendix 1 FY 2023 special items Continuing operations £m FY 23 FY 22 • Amortisation of acquired intangibles increased reflecting adhesive resins acquisition Amortisation of acquired intangibles (49.3) (44.8) • Restructuring and site closure costs comprise £3.3m in relation to integration of acquire
Slide 27: Foreign exchange and pensions
Appendix 2 Foreign exchange and pensions FX translation exposure – EBITDA impact Pensions FY 23 translation • Net consolidated pension liability reduced by £8.7m to £64.7m at 31 December Currency Movement sensitivity 2023, primarily driven by cash contributions and revised mortality assumptions in t