Melrose Industries Plc · LSE:MRO
Melrose Industries — FY2012 Earnings Presentation
32 slides from Melrose Industries's earnings presentation, March 2013
Slide 1: Melrose Industries PLC Full Year Results Announcement
Buy Improve Sell Strictly private and confidential Melrose Industries PLC Full Year Results Announcement Twelve months to 31 December 2012 March 2013
Slide 2: Contents
Contents Sections 1 Highlights 2 Summary financial results 3 Summary of operating divisions 4 Elster 5 Energy 6 Lifting 7 Other Industrial 8 Questions 9 Appendices Buy Improve Sell 2
Slide 3: Highlights
Buy Improve Sell Highlights 3
Slide 4: Highlights in 2012
Highlights in 2012 Melrose has created £2 billion of shareholder value since inception in 2003 Acquisition of Elster on 23 August 2012 for an enterprise value of £1.8 billion Post acquisition plan for Elster well underway and approximately one year ahead of schedule Headline1 results ‒ Exist
Slide 5: Summary financial results: Income performance
Buy Improve Sell Summary financial results Income performance 5
Slide 6: Income Statement
Income Statement 2012 headline¹ growth Existing Proforma £m 2012 Melrose Growth2 Elster Growth2 3 2012 statutory format Revenue 1,551.4 1,140.3 +7% 411.1 -2% Continuing operations £m Headline¹ Other Total Order intake 1,491.9 1,085.5 -4% 406.4 +3% Revenue 1,551.4 - 1,551.4 Book to bill % 96% 95% 99%
Slide 7: Revenue growth
Revenue growth 2012 headline¹ growth Revenue growth – year on year2 Existing Proforma £m 2012 Melrose Growth2 Elster Growth2 3 Existing Melrose Revenue Revenue 1,551.4 1,551.4 1,140.3 1,140.3 +7% 411.1 411.1 -2% Order intake 1,491.9 1,085.5 -4% 406.4 +3% Book to bill % 96% 95% 99% +7% +8% +8% -5% He
Slide 8: Order intake
Order intake 2012 headline¹ growth Order intake growth – year on year2 Existing Proforma £m 2012 Melrose Growth2 Elster Growth2 3 Existing Melrose Revenue 1,551.4 1,140.3 +7% 411.1 -2% -4% -12% +4% -4% Order intake Order intake 1,491.9 1,491.9 1,085.5 1,085.5 -4% -4% 406.4 406.4 +3% +3% Book to bill
Slide 9: Headline operating margin
Headline operating margin 1 2012 headline¹ growth Headline1 operating margin Existing Proforma £m 2012 Melrose Growth2 Elster Growth2 3 Existing Melrose Revenue 1,551.4 1,140.3 +7% 411.1 -2% Order intake 1,491.9 1,085.5 -4% 406.4 +3% 16.3% 19.2% 18.2% 13.2% Book to bill % 96% 95% 99% Group Energy Li
Slide 10: Headline earnings per share (EPS)
Headline earnings per share (EPS) 1 2012 headline¹ growth Existing Proforma £m 2012 Melrose Growth2 Elster Growth2 3 Headline1 diluted EPS Continuing and discontinued operations Revenue 1,551.4 1,140.3 +7% 411.1 -2% 16.3p -1% 16.4p Order intake 1,491.9 1,085.5 -4% 406.4 +3% Book to bill % 96% 95% 99
Slide 11: Melrose Group by division
Melrose Group by division Energy Lifting Other Industrial Elster Central Total Brush, Marelli Acco, Bridon, Crosby Harris, Truth Gas, Electricity, Water costs (adjusted for central costs) 2012 actual results (Four month period) £m Revenue 486.8 524.4 129.1 411.1 - 1,551.4 Headline¹ operating profit
Slide 12: Summary financial results: Cash performance
Buy Improve Sell Summary financial results Cash performance 12
Slide 13: Profit conversion to cash and investment
Profit conversion to cash and investment Cash generated from trading (after all costs including tax) 2012 headline¹ profit conversion to cash Last 12 Existing £m months Melrose Elster Existing Melrose Headline¹ operating profit 243.1 185.3 57.8 86% 94% 80% 85% Depreciation2 30.5 21.4 9.1 Working cap
Slide 14: Summary financial results: Balance Sheet
Buy Improve Sell Summary financial results Balance Sheet 14
Slide 15: Balance Sheet – working capital, tax, leverage
Balance Sheet – working capital, tax, leverage 3 2012 Balance Sheet position 31 Dec 31 Dec £m 2012 2011 Working capital Fixed assets, intangible assets and goodwill 3,338 1,121 9.6% Net Net working capital working capital 219 219 145 Working capital as a Pensions and retirement benefits (261) (118)
Slide 16: Balance Sheet – pensions and retirement benefits
Balance Sheet – pensions and retirement benefits 2012 Balance Sheet position 31 Dec 31 Dec DB pension plans – by region £m 2012 2011 Annual cash 31 Dec 2012 Fixed assets, intangible assets and goodwill 3,338 1,121 (£m) payments Assets Liabilities Deficit UK 25.1 809 (920) (111) Net working capital 2
Slide 17: Summary of operating divisions
Buy Improve Sell Summary of operating divisions Elster Energy Lifting Other Industrial 17
Slide 18: Elster
Elster Elster 50% of Melrose1 57% of Elster1 “Best-in-class products and solutions for 29% of Melrose1 Gas measurement, regulation and the safe control and application of gases” www.elster.com/en/gas 24% of Elster1 “Meeting the expanding needs of utilities Electricity by providing advanced metering
Slide 19: Elster division
Gas Electricity Water Elster division Elster – headline¹ results Elster5 Gas Electricity Water Four months Proforma Four months Proforma Four months Proforma Four months Proforma £m (Sep – Dec 2012) Growth3 4 (Sep – Dec 2012) Growth3 4 (Sep – Dec 2012) Growth3 4 (Sep – Dec 2012) Growth3 4 Revenue 41
Slide 20: Elster – central cost savings
Gas Electricity Water Elster – central cost savings Annualised Elster cost savings achieved in 2012 Central costs as a percentage of revenue £23m 2011 2.1% £17m 2012 0.7% £6m 2013 Protected 0.2% Central IT R&D Total Highlights Central costs1 reduced in 2012 by £17 million (68%) from £25 million to
Slide 21: Elster – post acquisition actions to date
Elster Elster – post acquisition actions to date Gas Water New management team in place covering Gas operations Announced closure of meter manufacturing in Ocala, Florida, worldwide. Changed operating structure to a leading site completion date Q3 2013 basis (Mainz, Osnabruck, Stara Tura, Nebras
Slide 22: Energy
Energy Energy division 21% of Melrose1 75% of Energy “World number one independent 16% of Melrose1 supplier of turbogenerators” www.brush.eu 25% of Energy “Global manufacturer of electrical rotating machines, always a step 5% of Melrose1 ahead” www.marellimotori.com 22 1. Based on 1 Jan 2012 – 31 De
Slide 23: Energy division
Energy division Energy – headline¹ results Full year Second half Revenue by end market 2012 v 2012 v (full year 2012) £m FY 2012 20113 HY2 2012 20113 Revenue 486.8 +8% 253.1 +6% 1 Energy 72% 4 Order intake 438.2 -12% 216.6 -20% 3 2 Oil & Gas 9% 3 Industrials 11% Book to bill % 90% 86% 4 Other 8% 2 H
Slide 24: Lifting
Lifting Lifting division 23% of Melrose1 51% of Lifting “Global technology leaders in the 12% of Melrose1 manufacture of wire and wire rope” www.bridon.com 45% of Lifting “World leading manufacturer of lifting 10% of Melrose1 products” www.thecrosbygroup.com 4% of Lifting “Industry leader in materia
Slide 25: Lifting division
Lifting division Lifting – headline¹ results Full year Second half Revenue by end market 2012 v 2012 v (full year 2012) £m FY 2012 20113 HY2 2012 20113 Revenue 524.4 +8% 258.1 +6% 1 Energy 5% 5 1 2 Oil & Gas 35% Order intake 520.5 +4% 235.0 -10% 3 Mining 14% Book to bill % 99% 91% 4 Industrials 38%
Slide 26: Other Industrial
Other Industrial Other Industrial division 6% of Melrose1 65% of Other Industrial “Industry leader in the design and 4% of Melrose1 manufacture of quality operating hardware” www.truth.com 35% of Other Industrial “World class leader in the manufacturing of ferrous processing 2% of Melrose1 equipment
Slide 27: Other Industrial division
Other Industrial division Other Industrial – headline¹ results Full year Second half Revenue by end market 2012 v 2012 v (full year 2012) FY 2012 £m 20113 HY2 2012 20113 Revenue 129.1 -5% 64.5 -10% 3 1 Hardware 62% Order intake 126.8 -4% 59.8 -8% 2 Scrap processing 34% Book to bill % 98% 93% 3 Other
Slide 28: Questions
Buy Improve Sell Questions 28
Slide 29: Appendices
Buy Improve Sell Appendices 29
Slide 30: New 5 year bank facility to 2017
New 5 year bank facility to 2017 15 banks (* new to Group) Term and revolving credit facility - £1.5bn Cost of debt Barclays Total Commerzbank* currently at 2.7%1 HSBC JPMorgan Euros Lloyds TSB 20% Sterling Royal Bank of Canada 30% Royal Bank of Scotland £1.5bn Fixed (79%) Bayern LB* 5 years at 2.9%
Slide 31: Exchange rates
Exchange rates 2012 2011 US Dollar Euro US Dollar Euro 12 month average rates 1.59 1.23 1.60 1.15 4 month average rates (Sep – Dec) 1.61 1.24 n/a n/a Closing rates 1.62 1.23 1.55 1.20 On-going sensitivity of profit to translation and unhedged transaction exchange risk Increase in headline1 £m operat
Slide 32: Balance Sheet - provisions
Balance Sheet - provisions 2012 Balance Sheet position 31 Dec 31 Dec £m 2012 2011 Fixed assets, intangible assets and goodwill 3,338 1,121 Net working capital 219 145 Pensions and retirement benefits (261) (118) Provisions (254) (121) Deferred tax and current tax (307) (75) Other 5 (14) Net debt (99