Slide 1: Filtrona plc Full Year 2011 Results
Filtrona plc Investor Presentation Full Year 2011 Results 22nd February 2012
Slide 2: Agenda
Agenda 1. Operational Review - Colin Day 2. Financial Review - Steve Crummett 3. Acquisition Update - Matthew Gregory 4. Vision 2015 Update & 2012 Outlook - Colin Day 2
Slide 3: Operational Review
Operational Review Colin Day, Chief Executive 3
Slide 4: FY 2011: summary
FY 2011: summary Strong revenue growth across all divisions Supported by increased gross and operating margins Excellent cash flow generation Full year dividend per share increased by 17% to 10.5p Positive organisational changes implemented to underpin Vision 2015 objectives Successful c
Slide 5: Revenue and profit growth across divisions
Revenue and profit growth across divisions Protection & Finishing Revenue 28% Op Margin 90bps Op Profit 33% GROUP • Coated & Security • Porous Technologies Revenue 7% Revenue 11% Revenue 6% Op Margin 10bps Gross Margin 80bps Op Margin unchanged Op Profit 6% Op Margin 40bps Op Profit 6% Op Profit 14%
Slide 6: H1 and H2 2011 performance
H1 and H2 2011 performance +90bps +8% +8% +60bps +50bps +30bps LFL revenue Gross Operating growth margin margin H1 H2 Consistent delivery through the year Notes: At constant exchange rates LFL = like-for-like, at constant FX, adjusted for acquisitions and disposals Operating margin is adjusted to ex
Slide 7: Protection & Finishing Products
Protection & Finishing Products Vision 2015 180 30% Range developments and 160 improved marketing 25% effectiveness 140 120 20% Benefit from warehouse expansion and new sites 100 15% 80 Geographic footprint strengthened through Richco 60 10% acquisition 40 20 5% E-commerce strategy successfu
Slide 8: Porous Technologies
Porous Technologies Vision 2015 90 25% Excellent growth in printer 80 systems, supported by healthcare 20% Inventory de-stocking in writing 70 instruments and H&PC 60 Strong commercial success 15% 50 Introduction of new technologies 40 Commercial launch of products using 10% porous plastic
Slide 9: Coated & Security Products
Coated & Security Products Vision 2015 120 18% Broad-based growth across the 16% division 100 Strong performance from wide-width 14% message tapes and a new opening solution in US food 80 12% Labels growth driven by tobacco 10% segment, and includes BP Labels 60 acquisition (re-branded to Payn
Slide 10: Filter Products
Filter Products Vision 2015 250 14% Underlying volumes up +2% 12% Successful launches, 200 development initiatives and 10% service offerings Premium filter variants, eg capsules 150 8% New launches and further extension of packaging services in 6% RYO segment 100 Better-positioned to serve
Slide 11: Key operational developments
Key operational developments Protection & Finishing Products Coated & Security Products Alliance Express opened in Albany, US Investment in machinery and capability for the next generation Blue Badge in the UK Porous Technologies Filter Products Transfer of production capacity and equipment for Inve
Slide 12: Key commercial developments
Key commercial developments Protection & Finishing Products Coated & Security Products New range of MSI thread protectors, and launch of Promotional tape solution for Nestle, Mexico Stera Tape products in the US Porous Technologies Filter Products Porous plastic pipette tip filters, helping to reduc
Slide 13: Financial Review
Financial Review Steve Crummett, Group Finance Director 13
Slide 14: Income statement - summary
Income statement - summary FY 11 FY 10 Growth £m £m Actual Constant FX FX Revenue 540.7 489.6 +10% +11% Like-for-like1 +8% Gross margin 35.7% 34.9% +80bps +80 bps Operating profit2 84.5 75.0 +13% +14% Operating margin 15.6% 15.3% +30bps +40bps Profit before tax2 76.2 64.6 +18% +19% Adjusted earnings
Slide 15: Revenue growth – volume / mix / price
Revenue growth – volume / mix / price % Volume / mix +6 Price +2 Like-for-like +8 Acquisitions +3 Constant FX growth +11 Exchange (1) Reported growth +10 High quality revenue growth, driven by volume 15
Slide 16: Revenue growth – by division
Revenue growth – by division FY 11 Growth £m Constant FX Protection & Finishing Products 163.0 +27.5% LFL1 growth +16.4% Porous Technologies 77.9 +5.6% Coated & Security Products 98.2 +6.5% LFL1 growth +5.5% Filter Products 208.0 +4.2% Eliminations (6.4) Group 540.7 +11.1% LFL1 growth +8.0% Group –
Slide 17: Gross margin
Gross margin1 36.0% 35.7% 34.9% +80 bps GM improvement Mix effect benefit from higher 34.0% growth in higher GM divisions % Pricing offsets raw material 32.2% 32.2% increases 32.1% 32.0% Operational leverage impact from higher volume Cost efficiencies 30.0% FY07 FY08 FY09 FY10 FY11 Strateg
Slide 18: Operating profit – key movements
Operating profit1 – key movements •1.6 6.7 84.5 1.8 75.0 (0.8) 10.5 (8.7) £m Pricing more than recovering higher raw material costs 1Adjusted to exclude intangible amortisation and exceptional operating items 18
Slide 19: Divisional summary
Divisional summary Revenue Adjusted1 operating profit FY 11 Growth FY 11 Growth Margin £m Constant £m Constant Constant FX FX FX Protection & Finishing 163.0 +27.5% 37.8 +32.6% 23.2% Products Porous Technologies 77.9 +5.6% 18.4 +5.7% 23.6% Coated & Security Products 98.2 +6.5% 15.4 +5.5% 15.7% Filte
Slide 20: Income statement – continued
Income statement – continued FY 11 Growth £m Actual Constant FX FX Operating profit1 84.5 +13% +14% Net finance charge (8.3) -20% -20% Strong operating cash flow, lower fee Profit before tax1 76.2 +18% +19% amortisation & higher pension credit Taxation (23.2) +16% +17% - Underlying tax rate 30.4%
Slide 21: Exceptional operating items
Exceptional operating items FY 11 £m Acquisition fees in respect of Reid and Richco 2.8 Acquisition integration costs 2.4 Other 3.0 Total exceptional operating items 8.2 21
Slide 22: Cash flow
Cash flow1 •1.6 7.9 (26.8) 27.1 92.7 (21.6) •4.5 84.5 £m (9.1) (8.3) •0.6 53.7 Operating cash flow up 24%: 110% conversion ratio 1 Adjusted to exclude intangible amortisation and exceptional operating items 22
Slide 23: Net debt reconciliation
Net debt reconciliation 1.6 1.1 144.9 89.0 90.8 (53.7) 4.5 £m 19.1 (2.4) 1.0 Net debt / EBITDA: 1.4x 1 Receipt of deferred consideration on Globalpack (£2.6m) less taxes paid (£0.2m) 2 Acquisition of Reid Supply in September 2011 and Richco in December 2011 (net) 3 Other includes exceptional operati
Slide 24: Working capital
Working capital Working capital / revenue1 (WCR) Key metrics 70 67 44 44 40 FY10 14.2% 33 FY11 13.1% Inventory Debtor Creditor days2 days3 days2 12.5% 13.0% 13.5% 14.0% 14.5% FY10 FY11 Working capital / revenue1 ratio of 13.1%, down by 110 bps Notes: 1 Constant FX, based on last 12 month revenue 2 N
Slide 25: Dividend
Dividend +17% 10.5 10.0 9.0 8.0 7.6 7.8 7.8 6.0 Pence 4.0 2.0 0.0 FY07 FY08 FY09 FY10 FY11 Dividend growth in line with profit growth 25
Slide 26: Acquisition Update
Acquisition Update Matthew Gregory, Corporate Development Director 26
Slide 27: The role of M&A
The role of M&A PEOPLE Introduce new expertise PRODUCT & MARKETS to talent pool Expand range Accelerate entry into new markets and PLACE segments Reinforce & Bring new strengthen existing technologies positions Enter into new geographies Complements balanced organic growth strategy 27
Slide 28: Our approach
Our approach White space expansion Further penetration of existing markets Complementary products, IP or technologies Divisional Expand into new markets with existing technologies Bolt-on / infill Could add a new leg to the business … … but MUST have compelling strategic rationale Group
Slide 29: Acquisition of Securit World Ltd
Acquisition of Securit World Ltd About Securit Revenue by channel A UK distributor of desktop personal ID card systems Supplies printers, software and associated 37% Direct Sales accessories Serves a wide range of end-markets, Distribution including Trade Distribution, Education, 63% Governmen
Slide 30: Acquisition of Securit World Ltd
Acquisition of Securit World Ltd Vs our scorecard … … Securit delivers PLACE: Re-enforces position in the UK Adds export business PRODUCT & Accelerates development in MARKETS: adjacent segments (eg, Access Control, Membership) PEOPLE: Highly successful track record Strong understanding of
Slide 31: Reid Supply
Reid Supply Versus our scorecard … … Reid delivers PLACE: Strengthens position in the US PRODUCT & MARKETS: Adds > 50,000 products, particularly in the hardware product range PEOPLE: Strong management team with good understanding of e-commerce RATIONALE: EPS accretive in year 1 ROIC > WACC
Slide 32: Richco, Inc.
Richco, Inc. Versus our scorecard … … Richco delivers PLACE: Expands geographic footprint in Europe and Asia 70% revenue outside US Adds manufacturing in China PRODUCT & MARKETS: Expands range in plastic fasteners and cable management Broader access to electronics, OEM, medical and other m
Slide 33: Vision 2015 Update & 2012 Outlook
Vision 2015 Update & 2012 Outlook Colin Day, Chief Executive 33
Slide 34: Vision 2015 – how are we doing so far?
Vision 2015 – how are we doing so far? Progressive dividend 2011: +17% >100% profit conversion to cash 2011: 110% Volume leverage to drive GM expansion 2011: +80bps 50% conversion to OM 2011: +40bps LFL revenue growth: mid single-digit CAGR 2011: +8% Delivering balanced profitable growth 34
Slide 35: Vision 2015 – how are we doing so far?
Vision 2015 – how are we doing so far? What we said … … what we’ve achieved Identify key geographic & white space Organic growth and M&A in new geographies opportunities (eg, Richco) Focus on faster growing markets / economies Investment in Far East and European markets Invest in improving
Slide 36: 2012 outlook
2012 outlook Well positioned for continued balanced growth Positive momentum maintained into early 2012 Focus on successful integration of recent acquisitions Continued strong cash flow FY 2012 capex of mid-£30m Further improvement in net working capital % ratio FY 2012 tax rate c.100
Slide 37: Appendices
Appendices 37
Slide 38: Income statement – reported basis
Income statement – reported basis FY 11 Growth £m Actual Constant FX FX Adjusted operating profit 84.5 +13% +14% Intangible amortisation (3.7) Exceptional operating items (8.2) Reported operating profit 72.6 +1% +2% Net finance charge (8.3) Profit before tax 64.3 +4% +6% Taxation (21.9) - Underlying
Slide 39: Disclaimer
Disclaimer IMPORTANT LEGAL NOTICE THIS DOCUMENT IS STRICTLY CONFIDENTIAL TO THE RECIPIENT AND HAS BEEN SUBMITTED TO YOU SOLELY FOR YOUR INFORMATION. THE RECIPIENT MAY NOT REPRODUCE OR REDISTRIBUTE ANY PART OF THIS DOCUMENT TO ANY PERSON IN ANY FORM. THIS DOCUMENT AND THE PRESENTATION TO WHICH IT REL
Slide 40: Filtrona plc Full Year 2011 Results
Filtrona plc Investor Presentation Full Year 2011 Results 22nd February 2012