Slide 1: 2005 Interim Results
2005 INTERIM RESULTS
Slide 2: Highlights
Highlights 1 • Sales + 8% 2 • Headline Operating Profit + 22 % 3 • Headline Profit Before Tax + 31% 3 • Headline EPS + 12 % • ROCE Improved + 51 % • Dividend 2.35p/share + 4% • Acquisitions: 10 completed • Outsourcing sales grows to 20% 1 Continuing operations 2 Pre impairment of goodwill, amortisat
Slide 3: Interim Results
Interim Results H1 2005 H1 2004 Change £m £m % Total Revenue 230.7 231.4 - Revenue 1 229.3 211.5 + 8 EBITDA 53.5 48.6 + 10 Headline Operating Profit 2 33.1 27.1 + 22 3 Headline Profit before Tax 29.2 22.3 + 31 1 Profit before Tax 27.3 24.7 + 11 Tax (7.3) (5.6) Profit after tax 20.0 19.1 + 5 Free cas
Slide 4: Reconciliation of UK GAAP to IFRS
Reconciliation of UK GAAP to IFRS £m 2005 2004 2005 2004 2005 2004 OP OP % PBT PBT % EPS EPS % UK GAAP 28.6 22.4 28 25.1 12.6 99 5.4 3.2 69 Amortisation of goodwill 4.4 4.2 4.4 4.2 1.4 1.4 Restructuring costs (exceptional) - - - 5.4 - 1.4 UK GAAP headline1 33.0 26.6 24 29.5 22.2 33 6.8 6.0 13 IFRS a
Slide 5: Profit Bridge
Profit Bridge £m Operating Profit1 H1 2004 27.1 Selling Prices 2.0 Sales Volume 4.2 Salary/Wage Inflation (2.8) Energy Costs (1.0) Pension Costs (0.4) CoatAlloy® start up (0.2) Acquisitions 1.1 Electroplating Reduced Losses 2.9 Operating Profit 2005 at constant exchange rates 32.9 Currency Translati
Slide 6: Sales and Operating Profit - By Region
Sales and Operating Profit - By Region H1 2004 H1 2005 Europe inc. UK North America Rest of World £m £m £m £m £m Revenue 154.8 Heat Treatment 165.2 111.6 53.6 - 30.5 Testing 37.0 18.8 15.4 2.8 16.0 Hot Isostatic Pressing 16.8 7.3 9.5 - 10.2 Surface Engineering 10.3 9.4 0.9 - 211.5 229.3 147.1 79.4 2
Slide 7: Sales By Market
Sales By Market H1 2005 FY 2004 % % Sector Automotive - Cars & Light Truck 23 24 - Heavy Truck & Bus 5 5 Aerospace/Defence 18 17 Construction, Agricultural, Railways & Marine 15 15 Tooling 11 11 Oil & Gas 6 6 Power Generation 6 5 Consumer Products 3 4 Health Science, Environmental & Food 6 5 Electro
Slide 8: Summary Cash Flow and Financial Ratios
Summary Cash Flow and Financial Ratios H1 2005 H1 2004 £m £m EBITDA 53.5 48.6 Working Capital Movement (13.4) (3.3) CAPEX (18.5) (16.1) Interest (4.8) (4.9) Tax (2.6) 0.1 Free Cash Flow 14.2 24.4 1 Net Debt/EBITDA 0.9x 1.3x Interest Cover 2 8.5x 5.6x Gearing 23% 32% Free Cash Flow 3 6% 11% Capex/Dep
Slide 9: Balance Sheet
Balance Sheet H1 2005 H1 2004 £m £m Goodwill and other intangible assets 152.0 139.4 Tangible Fixed Assets 415.1 448.4 Investments 8.7 0.8 Trading Working Capital 66.3 59.1 Other Net Current Assets (126.3) (111.2) 515.8 536.5 Shareholders’ Funds 416.7 406.7 Minority Interests 1.1 0.9 Net Borrowings
Slide 10: IFRS – Balance Sheet Differences
IFRS – Balance Sheet Differences Changes to Equity £m Goodwill amortisation 4.2 Dividend recognition 7.2 Pension scheme deficits (19.5) Deferred tax (9.5) Non-current assets held for sale (0.5) Leases (0.4) (18.5) 10
Slide 11: Heat Treatment
Heat Treatment H1 Revenue (₤m) 300 • Sales growing 250 200 177.5 156.6 165.2 155.8 154.8 • Margin slightly ahead 150 100 50 • NA, France improving 0 2001 2002 2003 2004 2005 • Energy costs (NA/UK) H1 Operating Profit* (₤m) 40 35.5 35 • People unit costs high (NA) 30 25 21.1 19.8 19.7 20 17.4 15 • Ch
Slide 12: Testing
Testing H1 Revenue (₤m) 40 37.0 35 29.7 30.5 • Accelerating growth 30 26.4 26.2 25 20 15 • Strong margins 10 5 0 • Pipeline of bolt-on acquisitions 2001 2002 2003 2004 2005 H1 Operating Profit* (₤m) • Leveraging know how 7 6.5 6 5.6 5.4 5.3 5 4.6 4 3 2 1 0 2001 2002 2003 2004 2005 * 2001, 2002 and 2
Slide 13: Hot Isostatic Pressing
Hot Isostatic Pressing H1 Revenue (₤m) 18 16.6 16.8 16.0 16 15.0 13.5 14 • Volume continues growth 12 10 8 • Operational gearing strong 6 4 2 • ROCE approaching 0 2001 2002 2003 2004 2005 acceptable level H1 Operating Profit* (₤m) • Capacity coming on stream 5 5 4.3 4.2 4 3.5 4 3 2.5 3 2 1.6 2 1 1 0
Slide 14: Surface Engineering
Surface Engineering H1 Revenue (₤ m) 12 10.2 10.3 10 9.0 9.3 8.8 • CoatAlloy® going commercial 8 6 • Sherardizing roll out/scale up 4 2 0 2001 2002 2003 2004 2005 • Thermal spray expanding • Anodising softens H1 Operating Profit* (₤ m) 4 3 2.2 1.9 2 1.6 1.6 1.6 1 0 2001 2002 2003 2004 2005 * 2001, 2
Slide 15: Current Trading and Outlook
Current Trading and Outlook • H2 continuing H1 trend (holidays in H2) • on plan • Recent acquisitions expected to contribute • Outsourcing initiatives continue to be developed • Recovery of higher energy costs improving • New investments in processes starting to contribute • Continue bolting on acqu
Slide 16: Strategy
Strategy • Consistently deliver an attractive ROCE • Accelerate growth of Testing • Expand profitably into developing economies • Increase strategic partnerships as % of sales • Continue roll out and development of technology • Development of people 16
Slide 17: Highlights
Highlights 1 • Sales + 8% 2 • Headline Operating Profit + 22 % 3 • Headline Profit Before Tax + 31% 3 • Headline EPS + 12 % • ROCE Improved + 51 % • Dividend 2.35p/share + 4% • Acquisitions: 10 completed • Outsourcing sales grows to 20% 1 Continuing operations 2 Pre impairment of goodwill, amortisat
Slide 18: 2005 Interim Results Appendix
2005 Interim Results Appendix
Slide 19: Operational Locations
Operational Locations Heat HIP Testing Surface IonBond TOTAL Treatment Engineering PVD USA 43 4 7 1 10 65 UK 19 3 27 3 2 54 France 31 1 1 7 40 Germany 16 1 1 3 21 Sweden 9 1 5 3 1 19 Canada 2 8 2 12 Netherlands 5 2 1 8 Italy 4 2 2 8 Czech Republic 6 1 1 8 Poland 5 5 Finland 4 1 5 Switzerland 2 3 5 U
Slide 20: Analysis Of Organic/Acquisition Growth
Analysis Of Organic/Acquisition Growth HT Testing HIP Surface Electro- PVD Head Total £m £m £m Engineering plating £m Office £m £m £m £m Revenue 2004 154.8 30.5 16.0 10.2 12.7 7.2 - 231.4 Organic 7.6 3.3 1.0 0.4 - - - 12.3 Acquisition 2.8 2.8 - - - - - 5.6 Disposal (0.5) - - (0.4) (11.3) (7.2) - (19
Slide 21: Impact Of Exchange Rates
Impact Of Exchange Rates 1 Revenue Operating Profit £m £m H1 2005 As Reported 229.3 33.1 H1 2005 Using 2004 Rates 228.5 32.9 Impact + 0.8 + 0.2 1 Pre impairment of goodwill, amortisation of acquired intangibles and restructuring costs and interest and tax on associates 21
Slide 22: Acquisitions, Capital Expenditure & Depreciation
Acquisitions, Capital Expenditure & Depreciation £ million 104 Acquisitions Capital Expenditure Depreciation 63 54 46 44 40 43 38 34 19 20 16 10 10 3 Capex/Dep 2001 2002 2003 2004 H1 2005 1.6x 1.3x 0.8x 0.8x 0.9x 22
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