Spirax Group plc. · LSE:SPX
Spirax — Spirax-Sarco Engineering — FY2015 Earnings Presentation
27 slides from Spirax's earnings presentation, February 2016
Slide 1: 2015 Results
2015 Results for year ended 31st December 2015 Bill Whiteley – Chairman Nick Anderson – Chief Executive David Meredith – Finance Director
Slide 2: Agenda
Agenda 2015 Highlights 2015 Financial Review Operations and Outlook Appendices 2015 Results Year ended 31st December 2015 2
Slide 3: 2015 Highlights
2015 Highlights Constant 2015 2014 Change currency Revenue £667.2m £678.3m -2% +2% Operating profit* £152.4m £153.0m 0% +4% Margin* 22.8% 22.5% +30 bps +40 bps Pre-tax profit* £151.1m £151.1m 0% +4% Tax rate 29.8% 29.9% EPS* 142.6p 140.4p +2% +6% DPS 69.0p 64.5p +7% +7% Special dividend - 120.0p - -
Slide 4: 2015 Financial Review
Agenda David Meredith 2015 Financial Review 2015 Results Year ended 31st December 2015 4
Slide 5: Segment revenue changes
Segment revenue changes At constant currency £m +1% -4% +1% +13% -4% 18.0 2015 Sales (£m) EMEA 219.4 13.0 Asia Pac 171.8 Americas 123.4 8.0 WM 152.6 Total 667.2 3.0 Organic sales -2.0 EMEA Asia Pac Americas Watson-Marlow FX versus 2014 -7.0 Steam Spec 0% -£24m WM +9% -12.0 Group +2% Rates of change
Slide 6: Segment operating profit changes
Segment operating profit changes At constant currency £m +11% -7% 0% +10% -4% 5.0 2015 Profit (£m) EMEA 42.7 3.0 Asia Pac 44.7 Americas 27.1 1.0 WM 48.0 Corp Exp (10.0) Total 152.4 -1.0 EMEA Asia Pac Americas Watson-Marlow FX -3.0 2015 Margins EMEA 19.5% -5.0 Asia Pac 26.0% Americas 22.0% -7.0 Based
Slide 7: Profit bridge
Profit bridge 2014 to 2015 £m • Further FX 155 translation headwind of 153.0 152.4 150 £6.3m • Disposal of M&M -£0.4m. 145 Acquisitions +£1.1m. Similar (6.3) (0.4) (3.6) 0.0 4.6 3.2 1.1 0.8 140 net full year effect in 2016 • Reduced profit in 135 Asia Pacific • Good gains in 130 EMEA and Watson-Marl
Slide 8: Record operating margin of 22.8%
Record operating margin of 22.8% 25.0% 25.0% 20.0% 20.0% 15.0% 15.0% 24.9% 23.9% 23.3% 22.4% 21.3% 20.6% 21.0% 21.0% 20.6% 19.9% 19.5% 19.3% 10.0% 10.0% 18.6% 17.1% 17.1% 17.1% 17.0% 15.8% 15.3% 5.0% 15.0% 5.0% 0.0% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 H2 Year 2015 Results Year
Slide 9: Robust cash flow
Robust cash flow Pounds (£) million 2015 2014 • Strong cash Adjusted operating profit* 152.4 153.0 generation – Depreciation and share schemes 25.5 25.1 95% cash Working capital (1.6) (14.5) conversion Capital expenditure (including capitalised R&D) (30.8) (31.4) • Small working Adjusted cash from o
Slide 10: Dividend growth
Dividend growth 190.0 120p • …. • Core dividend up 170.0 7% to 69.0p 100p 150.0 • 9.9% pa increase over last five and 130.0 Pence per share 11.2% over last 110.0 ten years 90.0 • 48 year dividend record, 10.9% pa 25p +7% 70.0 +9% +11% increase +14% +8% 50.0 +19% +11% +8% 48.2p +11% +13% 30.0 10.0 20
Slide 11: Underlying margin factors
Underlying margin factors Effects on underlying margins* 2015 2016 Currency movements Operating leverage Sales pricing (vs. inflation) Material prices Manufacturing strategies Business and product mix Business development investment * The arrows as shown are qualitative and indicate direction only.
Slide 12: Operations and Outlook
Agenda Nick Anderson Operations and Outlook 2015 Results Year ended 31st December 2015 12
Slide 13: Annual IP growth rates by quarter 2012-2016
Annual IP growth rates by quarter 2012-2016 Actual Projected 5.0% Developed (OECD) Feb 16 Emerging (Non-OECD) Feb 16 Global Feb 16 Developed (OECD) Jun 15 Emerging (Non-OECD) Jun 15 Global Jun 15 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% Source: CHR Economics – June 15 & Feb 16 -2.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 14: Europe, Middle East & Africa (EMEA)
Europe, Middle East & Africa (EMEA) 31st Dec 31st Dec Organic Constant Change 2014 Exchange Organic Disposal 2015 currency Sales* £236.2m (£19.7m) £4.9m (£2.0m) £219.4m +2% +1% -7% Op profit* £45.9m (£7.4m) £4.6m (£0.4m) £42.7m +12% +11% -7% Margin* 19.4% 19.5% +170 bps +170 bps +10 bps * See Append
Slide 15: Asia Pacific
Asia Pacific 31st Dec 31st Dec Organic Constant Change 2014 Exchange Organic Acquisitions 2015 currency Sales* £177.7m £2.0m (£7.9m) - £171.8m -4% -4% -3% Op profit* £46.4m £1.9m (£3.6m) - £44.7m -7% -7% -4% Margin* 26.1% 26.0% -90 bps -90 bps - 10 bps * See Appendix IV for definition of profit meas
Slide 16: Americas
Americas 31st Dec 31st Dec Organic Constant Change 2014 Exchange Organic Acquisitions 2015 currency Sales* £126.2m (£4.1m) £1.3m - £123.4m +1% +1% -2% Op profit* £28.0m (£0.9m) £0.0m - £27.1m 0% 0% -3% Margin* 22.2% 22.0% -20 bps -20 bps -20 bps * See Appendix IV for definition of profit measures. O
Slide 17: Watson-Marlow
Watson-Marlow 31st Dec 31st Dec Organic Constant Change 2014 Exchange Organic Acquisitions 2015 currency Sales* £138.2m (£2.7m) £11.6m £5.5m £152.6m +9% +13% +10% Op profit* £43.5m £0.2m) £3.1m £1.2m £48.0m +7% +10% +10% Margin* 31.5% 31.4% -40 bps -80 bps -10 bps * See Appendix IV for definition of
Slide 18: Implementing our strategy for growth
Implementing our strategy for growth Notable progress in 2015 • Stepped up training and development; new Spirax Sarco Academy • Implementing enhanced Customer Value Propositions • Increased sector focus: Food & Bev., Healthcare, Chemical, OEMs • Growth of Controls & Thermal Energy Management product
Slide 19: Implementing our strategy for growth by sectorising our sales force
Implementing our strategy for growth by… sectorising our sales force Spirax Sarco helps Spanish brewery, Compañía Cervecera de Canaris, improve beer quality, increase productivity and lower costs • Problem: wort boiling evaporation rate of 7% per hour • Requirement: wort boiling evaporation rate und
Slide 20: Implementing our strategy for growth by expanding along the fluid path
Implementing our strategy for growth by… expanding along the fluid path AsepticSU™ single use technology from Watson-Marlow eliminates need for cleaning validation and simplifies traceability at Cancer Research, UK • Problem: avoiding batch contamination required time consuming and costly processes
Slide 21: Summary
Summary • Organic sales up 2%; Operating profit up 4% • Currency headwind of 4% on sales and profit • Operating margin increased to 22.8% • Robust cash generation, 95% cash conversion • Dividend increased 7% • Implementing strategy for growth • Confident of progress in 2016, provided no material det
Slide 22: Spirax-Sarco Engineering plc 2015 results
Spirax-Sarco Engineering plc 2015 results 31st December • Outperforming our markets • Generating consistent growth • Creating shareholder value 2015 Results Year ended 31st December 2015 22
Slide 23: Appendices
Spirax-Sarco Engineering plc Appendices
Slide 24: Appendix I - Return on capital employed
Appendix I - Return on capital employed Pounds (£) million 2015 2014 Working Capital Inventories 92.5 98.0 Trade receivables 152.1 155.7 Prepayments, other current assets 35.3 28.8 Trade, other payables & current tax (105.4) (112.9) Total working capital 174.5 169.6 Property, plant & equipment 169.9
Slide 25: Appendix II - Cash conversion
Appendix II - Cash conversion Pounds (£) million 2015 2014 Adjusted cash generated from operations 145.5 132.2 Adjusted Operating Profit* 152.4 153.0 Cash conversion 95% 86% * See Appendix IV for definition of profit measures. 2015 Results Year ended 31st December 2015 25
Slide 26: Appendix III - Currencies
Appendix III - Currencies Average exchange rates • Given the profile 2014 2015 % 2016* % of currency Spirax weighted index 100.0 103.8 -4% 100.8 3% movements in 2015, each 1% Bank of England index 87.1 91.4 -5% 87.9 4% movement in the Spirax currency US$ 1.65 1.53 8% 1.40 9% weighted index Euro 1.24
Slide 27: Appendix IV - 2015 note on profit measures
Appendix IV - 2015 note on profit measures The Group uses adjusted figures as key performance measures in addition to those reported under adopted IFRS. The Group’s management believes these measures provide valuable additional information for users of the financial statements in understanding the G
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