Bodycote Plc · LSE:BOY

Bodycote — H1 2006 Earnings Presentation

22 slides from Bodycote's earnings presentation, 2006

  1. Slide 1: 2006 Interim Results

    Bodycote 2006 INTERIM RESULTS

  2. Slide 2: Highlights

    Highlights • Revenue +22% 1 • Headline Operating Profit +23% • Headline EPS +25% 1 • ROCE +1.3 percentage points • Testing Sales Growth +82% • Outsourcing 20% of sales • Dividend +6% • Improved Long Term Funding 1 pre impairment of goodwill, amortisation of acquired intangibles, and interest and tax

  3. Slide 3: Interim Results

    Interim Results H1 2006 H1 2005 Change £m £m % Sales 279.3 229.3 +22 1 EBITDA 63.2 53.5 +18 1 Headline Operating Profit 40.6 33.1 +23 Headline Profit before Tax 2 35.1 29.2 +20 Profit before Tax 34.8 27.3 +28 Tax 2.7 (7.3) Profit after tax 37.5 20.0 +88 Free cashflow 17.5 14.3 +22 3 Headline EPS 8.4

  4. Slide 4: Profit Bridge

    Profit Bridge £m HT HIP TESTING HQ Group Headline Operating Profit 1 2005 23.5 4.2 6.5 (1.1) 33.1 Selling Prices 4.5 0.7 0.7 5.9 Sales Volume 3.1 1.4 0.5 5.0 Salary/Wage Inflation (1.4) (0.3) (0.6) (0.2) (2.5) Energy Costs (1.9) (0.1) (0.1) (2.1) Maintenance (0.3) - - (0.3) Transport/Industrial Gase

  5. Slide 5: Sales and Operating Profit - By Region

    Sales and Operating Profit - By Region 2005 2006 Europe Americas Rest of World £m £m £m £m £m Revenue 175.5 Heat Treatment 192.2 130.4 61.8 - 16.8 Hot Isostatic Pressing 19.7 8.5 11.2 - 37.0 Testing 67.4 33.6 28.8 5.0 229.3 279.3 172.5 101.8 5.0 1.4 Electroplating - - - - 230.7 279.3 172.5 101.8 5.0

  6. Slide 6: Sales By Market

    Sales By Market 2006 FY 2005 % % Sector Automotive - Cars & Light Truck 20 21 - Heavy Truck & Bus 5 6 Aerospace/Defence 20 19 Construction, Agricultural, Railways & Marine 16 16 Tooling 8 9 Oil & Gas 7 7 Power Generation 6 5 Consumer Products 3 3 Health Science & Environmental 7 7 Electronics & Tele

  7. Slide 7: Summary Cash Flow and Financial Ratios

    Summary Cash Flow and Financial Ratios H1 2006 H1 2005 £m £m EBITDA 1 63.2 53.5 Non-cash Movements 0.1 (0.7) Working Capital Movement (12.4) (12.6) CAPEX (25.3) (18.5) Interest (4.9) (4.8) Tax (3.2) (2.6) Free Cash Flow 17.5 14.3 Net Debt/EBITDA 2 1.2x 1.0x Interest Cover 1 9.2x 10.3x Gearing 31% 23

  8. Slide 8: Balance Sheet

    Balance Sheet H1 2006 H1 2005 £m £m Goodwill 188.9 148.6 Tangible and Intangible Fixed Assets 459.3 418.5 Investments 9.6 8.7 Trading Working Capital 90.1 70.7 Other Assets and Liabilities (138.9) (130.7) 608.0 515.8 Shareholders’ Funds 463.0 416.7 Minority Interests 1.8 1.1 Net Borrowings 143.2 98.

  9. Slide 9: Reduction in Overall Funding Costs

    Reduction in Overall Funding Costs • New 7 year, 125m committed loan facility • Expensive and inflexible $80m USPP to be repaid early • One-off cost in 2006 of £3m with benefit of £4.5m over 3 years 9 2006 Interim Results

  10. Slide 10: Strategy Implementation

    Strategy Implementation • Testing grown to 28% of Group sales • Expanding in developing geographies – Wuxi in production H2 – ISTAS acquisition (60%) – Singapore greenfield – Middle East • Outsourcing sales grow by £8m • Technology transfer progressing • Focused on ROCE improvement 10 2006 Interim R

  11. Slide 11: Heat Treatment

    Heat Treatment Revenue (_m) • Margins continue to improve 350 • Automotive stable 280 210 192.2 • Aerospace/oil & gas/power 165.6 165.1 165.0 175.5 generation continued growth 140 70 • Outsourcing 0 –LPC Livonia 2002 2003 2004 2005 2006 • Technology roll-out Operating Profit 1, 2 (_m) –Kolsterising

  12. Slide 12: Hot Isostatic Pressing

    Hot Isostatic Pressing Revenue (_m) 25 19.7 20 • 17% organic growth 16.0 16.8 15.0 15 13.5 10 • Excellent operational gearing 5 • Additional capacity being added 0 2002 2003 2004 2005 2006 – Princeton – Haag Operating Profit 1 (_m) – Camas 7 6.0 6 • 2006 ROCE target 19% 5 4.2 4 3.5 – Expect 15% over

  13. Slide 13: Testing

    Testing • Execution of growth strategy – Geographic Revenue (_m) – Food 80 – Measurement Solutions 70 67.4 60 • Margins vs. ROCE 50 – Margins have a wide range – ROCE is our focus 40 37.0 29.7 30.5 30 26.2 • Organic growth 20 – Remains strong 10 0 2002 2003 2004 2005 2006 • Outsourcing wins – Dubai

  14. Slide 14: Current Trading and Prospects

    Current Trading and Prospects • Sales continue H1 trend • Integrate acquisitions • Energy cost increases being managed • Aerospace, power generation and oil & gas markets continue to grow. Automotive remains volatile • Expansion into developing markets • Operational flexibility/KPI management 14 200

  15. Slide 15: Appendix

    2006 Interim Results Appendix

  16. Slide 16: Operational Locations

    Operational Locations Heat Treatment HIP Testing IonBond TOTAL USA 41 4 11 12 68 UK 20 3 33 2 58 France 32 1 - 7 40 Germany 17 1 1 4 23 Sweden 11 1 10 1 23 Canada 2 - 16 2 20 Czech Republic 6 - 1 2 9 Netherlands 5 - 2 1 8 Italy 4 - 2 2 8 Finland 6 - 2 - 8 Switzerland 2 - - 4 6 Poland 6 - - - 6 Denma

  17. Slide 17: Analysis Of Organic/Acquisition Growth

    Analysis Of Organic/Acquisition Growth HT HIP Testing PVD/Electroplating Head Office Total £m £m £m £m £m £m Sales 2005 175.5 16.8 37.0 1.4 230.7 Organic 9.5 2.4 3.8 - 15.7 Acquisition 3.9 - 23.5 - 27.4 Disposal - - - (1.4) (1.4) Currency 3.3 0.5 3.1 - 6.9 2006 192.2 19.7 67.4 - 279.3 Operating Prof

  18. Slide 18: Impact Of Exchange Rates

    Impact Of Exchange Rates Sales Operating Profit 1 £m £m 2006 As Reported 279.3 40.6 2006 Using 2005 Rates 272.4 39.8 Impact 6.9 0.8 1 Pre impairment of goodwill, amortisation of acquired intangibles and interest and tax on associates 4 2006 Interim Results

  19. Slide 19: Acquisitions, Capital Expenditure & Depreciation

    Acquisitions, Capital Expenditure & Depreciation £ million Acquisitions Capital Expenditure 54 Depreciation 51 46 44 44 43 41 38 34 32 25 23 10 10 3 2002 2003 2004 2005 H1 2006 Capex/Dep 1.3x 0.8x 0.8x 1.1x 1.1x 5 2006 Interim Results

  20. Slide 20: Financial Highlights

    Financial Highlights Sales Operating Profit* 279.3 40.6 225.3 228.1 231.4 230.7 33.1 26.8 27.1 22.8 £'m £'m 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Operating Profit (Excl. Sales (excluding Electroplating Electroplating and PVD)1 and PVD) 279.3 229.3 40.6 206.7 208.4 211.5 33.1 27.5 29.5 24

  21. Slide 21: Financial Highlights

    Financial Highlights 1 EBITDA Group Profit Before Tax2 63.2 35.1 53.5 47.4 48.6 29.2 45.2 21.3 22.3 £'m 17.7 £'m 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2 Dividend Per Share* Headline Earnings Per Share 2.50 8.4 2.35 6.7 6.0 2.25 Pence 5.4 5.0 Pence 2.10 2.10 2002 2003 2004 2005 2006 2002

  22. Slide 22: Slide 22

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