Melrose Industries Plc · LSE:MRO
Melrose Industries — H1 2010 Earnings Presentation
26 slides from Melrose Industries's earnings presentation, August 2010
Slide 1: Half Year Results Announcement
August 2010 Strictly private and confidential Half Year Results Announcement Six months to 30 June 2010
Slide 2: Contents
Contents Sections 1 Highlights 2 Summary financial results 3 Summary of operating divisions 4 Energy 5 Lifting 6 Dynacast 7 Other Industrial 8 Questions 9 Appendices 2
Slide 3: Highlights
) Highlights
Slide 4: Highlights
Highlights Executive summary Strong results from all divisions Interim dividend of 4.0p (2009: 2.9p) an increase of 38% on last year Further improvement in revenue and margin coming through − Strong Dynacast recovery − Energy outlook is good, small US aftermarket business acquired − Lifting performe
Slide 5: Summary financial results
) Summary financial results
Slide 6: Significantly improved profit from continuing operations
Significantly improved profit from continuing operations Income Statement – statutory format Restated¹ 6 months ended 6 months ended 30 June 2009 30 June 2010 (£m) (£m) Revenue 684.7 675.7 Cost of sales (520.6) (482.2) Net operating expenses – Headline² (94.3) (101.6) – Exceptional items and intangi
Slide 7: Headline earnings per share of 11.3p
Headline earnings per share of 11.3p 1 Income Statement – headline¹ results six months ended 30 June 2010 Headline¹ results Other² Total (£m) (£m) (£m) Revenue 675.7 - 675.7 Operating profit/(loss) 91.9 (17.7) 74.2 Net finance costs (13.8) - (13.8) Profit/(loss) before tax 78.1 (17.7) 60.4 Tax (21.9
Slide 8: Continued improvement in margin, EPS and leverage
Continued improvement in margin, EPS and leverage 5 Summary performance – half yearly trend Headline¹ operating profit 5 Revenue (£m) Headline¹ EPS (p) Leverage (£m) 91.9 80.7 79.9 740.2 69.8 684.7 675.7 2.65x 613.8 11.3 2.13x 9.1 1.76x 1.61x 7.9 7.5 10.9% 10.2% 13.0% 13.6% 2 2 3 2 H2 08 H1 09 H2 09
Slide 9: Comparison with twelve months ago: EPS up 51%
Comparison with twelve months ago: EPS up 51% Summary performance – comparison with twelve months ago (H1 2010 v H1 2009) Headline¹ operating profit Revenue down 1% on twelve months ago Revenue (£m) Headline¹ EPS (p) (1% at constant currency) (£m) - Energy down 12% (12%) 91.9 - Lifting down 8% (8%)
Slide 10: Comparison with six months ago: EPS up 24%
Comparison with six months ago: EPS up 24% Summary performance – comparison with six months ago (H1 2010 v H2 2009) Headline¹ operating profit Revenue up 10% on six months ago Revenue (£m) Headline¹ EPS (p) (7% at constant currency) (£m) - Energy up 9% (10%) 91.9 11.3 - Lifting up 12% (7%) 675.7 79.
Slide 11: Further cash generation and reduction in leverage
Further cash generation and reduction in leverage 1 Headline² operating cash flow Headline² operating profit Net working capital (£m) conversion to cash % (constant currency) Net debt (£m) and leverage¹ (post capex) (£m) (post capex) and as a % of revenue 150% 117% 252 1 Jul 08 31 Dec 09 30 Jun 10 5
Slide 12: All divisions producing strong cash flows
All divisions producing strong cash flows Operating cash flow (post capex)¹ in 2010 (£m) All divisions show strong cash generation 120% 126% 108% 104% (post capex)¹ larger than profit 40.6 43.6 Longer term Melrose average cash 33.8 34.7 generation significantly above profit at 19.6 21.2 129% 13.5 14
Slide 13: Summary of operating divisions
Summary of operating divisions − Energy − Lifting − Dynacast − Other Industrial
Slide 14: Operating divisions
Operating divisions Other Energy Lifting Dynacast Industrial Turbogenerators, Truth, Harris, Weber Marelli, Switchgear, Bridon, Crosby, Acco Dynacast Knapp, Madico, MPC, Transformers Traction, Logistex UK 6 months to 30 June 2010 Revenue (£m) 204.2 212.2 139.4 119.9 Headline¹ operating profit (£m) 3
Slide 15: Energy — highlights
Energy — highlights Energy – headline¹ results Full year H1 H2 H1 Last six month Year over year (£m) 2009 2009 2009 2010 trend trend Revenue 418.3 231.6 186.7 204.2 9% (12%) Headline¹ EBITDA² 68.5 34.6 33.9 37.9 12% 10% Headline¹ EBITDA² margin 16.4% 14.9% 18.2% 18.6% +0.4pps +3.7pps Headline¹ opera
Slide 16: Lifting — highlights
Lifting — highlights Lifting – headline¹ results Full year H1 H2 H1 Last six month Year over year (£m) 2009 2009 2009 2010 trend trend Revenue 419.0 230.2 188.8 212.2 12% (8%) Headline¹ EBITDA² 71.7 36.6 35.1 39.6 13% 8% Headline¹ EBITDA² margin 17.1% 15.9% 18.6% 18.7% +0.1pps +2.8pps Headline¹ oper
Slide 17: Dynacast — highlights
Dynacast — highlights Dynacast – headline¹ results Full year H1 H2 H1 Last six month Year over year (£m) 2009 2009 2009 2010 trend trend Revenue 208.7 95.7 113.0 139.4 23% 46% Headline¹ EBITDA² 30.1 13.5 16.6 23.7 43% 76% Headline¹ EBITDA² margin 14.4% 14.1% 14.7% 17.0% +2.3pps +2.9pps Headline¹ ope
Slide 18: Other Industrial — highlights
Other Industrial — highlights Other Industrial – headline¹ results Full year H1³ H2 H1 Last six month Year over year (£m) 2009 2009 2009 2010 trend trend Revenue 252.5 127.2 125.3 119.9 (4%) (6%) Headline¹ EBITDA² 28.0 9.7 18.3 17.2 (6%) 77% Headline¹ EBITDA² margin 11.1% 7.6% 14.6% 14.3% -0.3pps +6
Slide 19: Questions
! Questions
Slide 20: Appendices
| Appendices
Slide 21: Balance Sheet
Financial results Appendix 1 Balance Sheet Dec 2009 June 2010 FX movement (£m) (£m) (£m) Fixed assets, intangible assets and goodwill 1,436.6 1,446.3 22.0 Net working capital 114.3 111.8 0.5 Pension and retirement benefits (169.1) (191.3) (1.1) Provisions (144.2) (134.7) (2.6) Deferred tax and curre
Slide 22: Exchange rates
Financial results Appendix 2 Exchange rates 2009 (12 months) 2010 (6 months) US Dollar Euro US Dollar Euro Average rates 1.57 1.12 1.53 1.15 Closing rates 1.62 1.13 1.49 1.22 22
Slide 23: Leverage and credit bank facility
Financial results Appendix 3 Leverage¹ Net debt to headline² EBITDA³ Jul 2008 Dec 2008 Jun 2009 Dec 2009 Jun 2010 Net debt to headline² EBITDA³ 2.70x 2.65x 2.13x 1.76x 1.61x Credit bank facility Available Repaid (at current £750 million committed loan facility to date exchange rates) Drawn Undrawn R
Slide 24: Remaining invested capital in FKI
Financial results Appendix 4 Remaining invested capital in FKI (£m) FKI acquisition price 970.4 Cash generated (after all costs including tax): - from trading (242.6) - from disposals (48.6) Remaining invested capital in FKI 679.2 12 month EBITDA¹ of remaining FKI businesses 177.4 Multiple of EBITDA
Slide 25: Pension and US retiree life and medical plans
Financial results Appendix 5 Pension and US retiree life and medical plans 31 December 2009 30 June 2010 Assets Liabilities Deficit Assets Liabilities Deficit (£m) (£m) (£m) (£m) (£m) (£m) FKI UK defined benefit pension plans 525.8 (641.6) (115.8) 524.6 (666.2) (141.6) Bridon Group Senior Executive
Slide 26: Movement in net debt
Financial results Appendix 6 Movement in net debt Last 6 months Last 24 months 2009 (£m) (since FKI) (£m) Opening net (debt) /cash (321.7) 22.3 Acquired net debt - (471.7) Net cash flow of acquisitions (7.8) (19.0) Net cash flow from disposals (0.1) 48.5 Cash generation from trading (after tax) 51.7