Slide 1: Investor Presentation: Half Year 2014 Results
INVESTOR PRESENTATION Half Year 2014 Results 31 JULY 2014
Slide 2: Agenda
AGENDA 1. Operational Review - Colin Day 2. Financial Review - Matthew Gregory 3. 2014 Outlook - Colin Day © 2013 ESSENTRA PLC 2
Slide 3: Operational Review
OPERATIONAL REVIEW Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 4: HY 2014: Highlights
HY 2014: HIGHLIGHTS • Strong revenue growth, with accelerating momentum in Q2 … • More sizeable business wins • Successful commercialisation of new product initiatives • … supported by further cost reduction and efficiency programmes • Acquisition integration, synergy delivery and organisational tra
Slide 5: Strong Revenue & Profit Growth
STRONG REVENUE & PROFIT GROWTH Revenue (£m) Adjusted Operating Profit (£m) P&SS C&PS 70.0 £109m £124m LFL: -1% LFL: +8% +14% 65.0 Group: £431m* +20% 60.0 LFL: +9% PT £44m LFL: -7% 55.0 Filter Products Extrusion £142m £13m LFL: +22% LFL: +11% 50.0 HY13 HY14 Notes: Growth at constant exchange rates, u
Slide 6: Accelerating Momentum in Q2
ACCELERATING MOMENTUM IN Q2 24 Q1 18 Revenue growth1 (%) 12 6 0 Q1 Q2 -6 -12 C&PS PT P&SS FP Other Group 1 At constant exchange rates, and adjusted for the acquisitions of Contego Healthcare Limited and Dakota Packaging © 2013 ESSENTRA PLC 6 Limited (from 30 April), Mesan Kilit A.S. and Kelvindale P
Slide 7: Winning More Business with Larger Customers
WINNING MORE BUSINESS WITH LARGER CUSTOMERS 38% % Group revenue by customer – HY 2014 20% 30% % growth – HY 2014 22% 9% LFL Revenue Closing order book Top 5 Top 10 Top 20 Fewer, bigger, better … © 2013 ESSENTRA PLC 7
Slide 8: Component & Protection Solutions
COMPONENT & PROTECTION SOLUTIONS • More encouraging market backdrop in both Components and PPT • Improved marketing effectiveness and range consolidation opportunities behind Essentra branding • Further site roll-out – Thailand, Romania and Mexico – New distribution centres in Louisville, US and New
Slide 9: Porous Technologies
POROUS TECHNOLOGIES • Growth led by H&PC … – New business wins in air care with multinational customers • … supported by cleanroom wipes and healthcare – Success in globalising the product range – Further growth in wound care and porous plastics Investment in new nib development line at Richmond, US
Slide 10: Packaging & Securing Solutions
PACKAGING & SECURING SOLUTIONS • Packaging led by leaflets in healthcare … • … supported by new business wins and successful product launches … – eg, AquaSense™ labels and Re:Close tape – Value-added healthcare packaging, incorporating security technologies • … offset by weakness in tobacco tear tap
Slide 11: Filter Products
FILTER PRODUCTS • Underlying volumes > HY 2013 • Successful commercialisation of major recent contract wins • Ongoing launches & development initiatives – Innovative multi-segment filter variant and unique dispersible plugwrap material – Further increase in joint development activity with multinatio
Slide 12: Extrusion
EXTRUSION • Strong revenue growth, particularly in Q2 • Growth in construction sector boosting demand for core applications – Esp. for scanning and greenhouse profiles • Successful commercialisation of recent business wins • Significant improvement in order book and encouraging prospects Investment
Slide 13: Financial Review
FINANCIAL REVIEW Matthew Gregory Group Finance Director © 2013 ESSENTRA PLC
Slide 14: Income Statement - Summary
INCOME STATEMENT - SUMMARY HY 14 HY 13 Growth £m £m Actual Constant FX FX Revenue 431.1 384.6 +12% +20% Like-for-like1 +9% Gross margin 34.0% 35.9% -190bps -230bps Operating profit2 69.0 65.2 +6% +14% Operating margin 16.0% 17.0% -100bps -80bps Profit before tax2 64.2 60.3 +6% +16% Adjusted earnings
Slide 15: Revenue Growth – Volume / Mix / Price
REVENUE GROWTH – VOLUME / MIX / PRICE % Volume / mix +7 Price +2 Like-for-like +9 Acquisitions +11 Constant FX growth +20 Exchange -8 Reported growth +12 High quality revenue growth, driven by volume © 2013 ESSENTRA PLC 15
Slide 16: Revenue Growth – By Division
REVENUE GROWTH – BY DIVISION HY 14 HY growth HY growth Q2 growth £m Constant LFL LFL FX Component & Protection Solutions 123.8 +13.7% +8% +9% Porous Technologies 44.4 -8.7% -7% -3% Packaging & Securing Solutions 108.6 +47.0% -1% +2% Filter Products 141.7 +22.1% +22% +21% Extrusion 13.0 +10.5% +11% +
Slide 17: Gross Margin – Key Movements
GROSS MARGIN1 – KEY MOVEMENTS 90bps (100)bps 36.3% (110)bps (110)bps 34.0% 1 At constant exchange rates © 2013 ESSENTRA PLC 17
Slide 18: Operating Profit – Key Movements
1 OPERATING PROFIT – KEY MOVEMENTS 6.3 73.5 (4.5) 69.0 6.6 65.2 (4.9) £m (8.2) 8.5 Successful recovery of higher input costs 1Adjusted to exclude intangible amortisation and exceptional operating items © 2013 ESSENTRA PLC 18
Slide 19: Operating Profit by Division
1 OPERATING PROFIT BY DIVISION Adjusted1 operating profit HY 14 Growth Margin £m Constant FX Component & Protection Solutions 32.5 +21% 26.3% Porous Technologies 6.7 -45% 15.1% Packaging & Securing Solutions 18.3 +40% 16.9% Includes £4.5m Filter Products 19.8 +23% 14.0% closure cost for Italy site E
Slide 20: Income Statement – Continued
INCOME STATEMENT – CONTINUED HY 14 Growth £m Actual Constant FX FX Operating profit1 69.0 +6% +14% Net finance charge (4.8) (2)% (4)% Reducing finance cost Profit before tax1 64.2 +6% +16% Taxation (16.3) Tax rate down - Underlying tax rate 25.4% 200bps Net income1 47.9 +9% +20% Adjusted earnings1 4
Slide 21: Cash Flow
1 CASH FLOW 16.1 (37.2) 13.9% working cap. / revenue ratio (HY 2013: 14.6%, constant FX) 69.0 50% operating cash conversion (HY 2013: 46%) (13.6) 34.3 (10.3) (4.7) (0.3) 19.0 Continued strong cash generation 1Adjusted to exclude intangible amortisation and exceptional operating items © 2013 ESSENTRA
Slide 22: Net Debt Reconciliation
NET DEBT RECONCILIATION £m As at 1 January 2014 217 FX (5) As at 30 June 2014 224 Change in net debt after FX 12 Of which: Free cash flow (19) Acquisitions 3 Dividends 25 Other 3 12 NOTE: Net debt / EBITDA ratio of 1.4x © 2013 ESSENTRA PLC 22 Negative numbers denote a cash inflow, positive numbers a
Slide 23: Dividend
DIVIDEND +19% 6.0 5.7 5.0 4.8 4.0 3.9 Pence 3.3 3.0 3.0 2.0 1.0 0.0 HY10 HY11 HY12 HY13 HY14 Progressive dividend © 2013 ESSENTRA PLC 23
Slide 24: Bank Facilities
BANK FACILITIES • Successful refinancing of main bank facilities on 1 July 2014 • Key features: − £390m facility − £ and € − 5-year tenure • More competitive terms − Larger facility, but lower fees − Lower margin offset by fee amortisation • Facilities are in addition to US$160m USPP loan notes • £7
Slide 25: 2014 Outlook
2014 OUTLOOK Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 26: Regionalisation – Progress to Date
REGIONALISATION – PROGRESS TO DATE HY 2014 revenue by region* • Transition ahead of expectations £83m – Regional structure up and running – All businesses integrated into new SBUs, Europe excepting Filter Products (Q4) £221m Americas – Vast majority of roles successfully filled Asia £127m • Incremen
Slide 27: 2014: Summary
2014: SUMMARY • Accelerating revenue and profit momentum into H2 – Return to growth in Porous Technologies post destocking – Improved performance in tobacco packaging – Continued leverage of new business wins – Savings benefit from: • Cost reduction and efficiency initiatives • Filters site closure
Slide 28: Appendices
APPENDICES © 2013 ESSENTRA PLC
Slide 29: Income Statement – Reported Basis
INCOME STATEMENT – REPORTED BASIS HY 14 Growth Actual Constant £m FX FX Adjusted operating profit 69.0 +6% +14% Intangible amortisation (8.7) Exceptional operating items (6.3) Reported operating profit 54.0 +7% +18% Net finance charge (4.8) Profit before tax 49.2 +8% +21% Taxation (13.4) - Underlyin
Slide 30: Exceptional Operating Items
EXCEPTIONAL OPERATING ITEMS HY 14 £m Acquisition fees 0.2 Acquisition integration & restructuring costs 6.1 Total exceptional operating items 6.3 © 2013 ESSENTRA PLC 30
Slide 31: Exchange Rates
EXCHANGE RATES Six months ending 30 June 2014 Average Closing US $/£ 1.67 1.71 Euro €/£ 1.22 1.25 Impact of a one cent change per annum Op. Profit (£m) US $/£ 0.3 Euro €/£ 0.2 Six months ending 30 June 2013 Average Closing US $/£ 1.55 1.52 Euro €/£ 1.18 1.17 © 2013 ESSENTRA PLC 31
Slide 32: 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 33: Investor Presentation: Half Year 2014 Results
INVESTOR PRESENTATION Half Year 2014 Results 31 JULY 2014