Slide 1: Melrose Industries PLC Half Year Results
Buy Improve Sell Strictly private and confidential Melrose Industries PLC Half Year Results Six months to 30 June 2014 August 2014
Slide 2: Contents
Contents Sections 1 Highlights 2 Summary financial results 3 Summary of operating divisions 4 Elster 5 FKI 6 Questions 7 Appendix Buy Improve Sell 2
Slide 3: Highlights
Buy Improve Sell Highlights 3
Slide 4: Highlights in 2014 – at constant currency
Highlights in 2014 – at constant currency 1 Headline2 profit before tax up 10% and headline2 diluted earnings per share3 of 7.3p up 11% Elster businesses continue to perform strongly ‒ Headline2 operating profit up 10% and headline2 operating margin up 2.9 percentage points to 18.9% ‒ Enhanced m
Slide 5: Summary financial results: Income performance
Buy Improve Sell Summary financial results Income performance 5
Slide 6: Income Statement
Income Statement H1 2014 headline¹ growth2 Group £m H1 2014 Growth Elster Growth FKI Growth H1 2014 statutory format Revenue 780.9 -5% 493.6 -7% 287.3 -3% Headline¹ operating profit 128.5 +4% 93.1 +10% 47.7 -9% Continuing operations £m Headline¹ Other Total Headline¹ operating margin % 16.5% +1.3ppt
Slide 7: Revenue growth
Revenue growth H1 2014 headline¹ growth2 Group £m H1 2014 Growth Elster Growth FKI Growth Revenue growth2 – by division compared to H1 2013 Revenue Revenue 780.9 780.9 -5% -5% 493.6 493.6 -7% -7% 287.3 287.3 -3% -3% Headline¹ operating profit 128.5 +4% 93.1 +10% 47.7 -9% Headline¹ operating margin %
Slide 8: Headline operating margin
Headline operating margin 1 H1 2014 headline¹ growth2 Group £m H1 2014 Growth Elster Growth FKI Growth Headline1 operating margin Revenue 780.9 -5% 493.6 -7% 287.3 -3% Headline¹ operating profit 128.5 +4% 93.1 +10% 47.7 -9% Headline¹ operating Headline¹ operatingmargin margin% % 16.5% 16.5% +1.3ppts
Slide 9: Foreign exchange impact on interim results
Foreign exchange impact on interim results H1 2014 headline¹ growth2 Group £m H1 2014 Growth Elster Growth FKI Growth Currency impact on the Group results year on year Revenue 780.9 -5% 493.6 -7% 287.3 -3% Headline¹ operating Headline¹ operating profit profit 128.5 +4% 93.1 93.1 +10% 47.7 47.7 -9% H
Slide 10: Foreign exchange sensitivities ongoing
Foreign exchange sensitivities ongoing H1 2014 headline¹ growth2 Group £m H1 2014 Growth Elster Growth FKI Growth Translation impact on the full year profit of a 10 cent strengthening of US$ or Euro Revenue 780.9 -5% 493.6 -7% 287.3 -3% Headline¹ operating Headline¹ operating profit profit 128.5 +4%
Slide 11: Order intake
Order intake H1 2014 headline¹ growth2 Group £m H1 2014 Growth Elster Growth FKI Growth Order intake growth2 – year on year4 Revenue 780.9 -5% 493.6 -7% 287.3 -3% Headline¹ operating profit 128.5 +4% 93.1 +10% 47.7 -9% Headline¹ operating margin % 16.5% +1.3ppts 18.9% +2.9ppts 16.6% -1.2ppts +3% +1%
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) H1 2014 headline¹ profit conversion to cash Group Elster £m H1 2014 Elster FKI 90% 89% 118% 99% Headline¹ operating profit 128.5 93.1 47.7 Depreciation2 19.7 12.4 6.9 Group Gas Electricity Water Work
Slide 14: Summary financial results: Balance Sheet
Buy Improve Sell Summary financial results Balance Sheet 14
Slide 15: Balance Sheet – leverage, pensions, working capital
Balance Sheet – leverage , pensions, working capital 3 June 2014 Balance Sheet position 30 Jun 31 Dec £m 2014 2013 Leverage3 June 2014 Fixed assets, intangible assets and goodwill 2,743.0 2,853.2 Net Net working capital working capital 152.0 152.0 126.9 126.9 2.4x Pensions and Pensions andretirement
Slide 16: Summary of operating divisions
Buy Improve Sell Summary of operating divisions Elster Revenue by end market FKI 81% Energy Oil & Gas 6 5 and Mining 4 3 1 Energy 70% 2 2 Oil & Gas 8% 3 Mining 3% 1 4 Industrials 6% 5 Water 10% 6 Other 3% 16
Slide 17: Elster
63% of Melrose1 Elster 66% of Elster1 “Best-in-class products and solutions for 42% of Melrose1 Gas measurement, regulation and the safe control and application of gases” www.elster.com/en/gas 18% of Elster1 “Meeting the expanding needs of utilities Electricity by providing advanced metering product
Slide 18: Elster – headline results
Gas Electricity Water Elster Elster – headline¹ results Elster4 Gas Electricity Water £m H1 2014 Growth3 H1 2014 Growth3 H1 2014 Growth3 H1 2014 Growth3 Revenue 493.6 -7% 325.5 -1% 87.1 -17% 81.0 -15% Headline¹ EBITDA² 105.5 +9% 84.2 +7% 7.0 -9% 15.4 +29% Headline¹ EBITDA² margin % 21.4% +3.0ppts 25
Slide 19: FKI
37% of Melrose1 FKI 57% of FKI1 “World number one independent 21% of Melrose1 supplier of turbogenerators” www.brush.eu 43% of FKI1 “Global technology leaders in the 16% of Melrose1 manufacture of wire and wire rope” www.bridon.com 19 1. Based on H1 2014 revenue for all continuing businesses
Slide 20: FKI – headline results
FKI FKI – headline¹ results FKI Brush Bridon £m H1 2014 Growth3 H1 2014 Growth3 H1 2014 Growth3 Revenue 287.3 -3% 164.5 Flat 122.8 -6% Headline¹ EBITDA² 54.6 -7% 37.3 Flat 17.3 -20% Headline¹ EBITDA² margin % 19.0% -1.0ppts 22.7% Flat 14.1% -2.5ppts Headline¹ operating profit 47.7 -9% 34.2 -1% 13.5
Slide 21: Questions
Buy Improve Sell Questions 21
Slide 22: Appendix
Appendix Buy Imp 7 rove elrose Sell 22
Slide 23: Balance Sheet – pensions and retirement benefits
Balance Sheet – pensions and retirement benefits June 2014 Balance Sheet position 30 Jun 31 Dec DB pension plans – by region £m 2014 2013 30 Jun 2014 Fixed assets, intangible assets and goodwill 2,743.0 2,853.2 £m Assets Liabilities Deficit UK 896 (1,021) (125) Net working capital 152.0 126.9 Europe