Slide 1: 2011 Half Year Financial Results
2011 Half Year Financial Results 27th July 2011
Slide 2: Agenda
Agenda Introduction Tim Stevenson 2011 half year financial results Kevin Dangerfield Divisional reviews Mark Robertshaw Progress against 3 year plan and outlook Mark Robertshaw 2
Slide 3: 2011 Half Year Financial Results
2011 Half Year Financial Results Kevin Dangerfield 3
Slide 4: Strong performance in H1 2011 – PBTA increased by 66.3%
Strong performance in H1 2011 – PBTA increased by 66.3% HY11 HY10 % Change from HY10 As reported Revenue £560.0m £501.1m +11.8% EBITA before restructuring and one-off items £71.7m £50.3m +42.5% EBITA margin % before restructuring and one-off items 12.8% 10.0% EBITA after restructuring and one-off it
Slide 5: Net restructuring costs, finance costs and tax
Net restructuring costs, finance costs and tax HY11 HY10 £m £m Revenue 560.0 501.1 EBITA before restructuring and one-off items * 71.7 50.3 Net restructuring and one-off items* (0.2) (2.3) EBITA after restructuring and one-off items * 71.5 48.0 Amortisation of intangible assets (4.1) (3.9) Operating
Slide 6: Net restructuring and one-off costs only £0.2 million
Net restructuring and one-off costs only £0.2 million HY11 HY10 £m £m Restructuring and one-off items - restructuring costs (4.6) (2.4) - profit on disposal of property 1.2 0.1 - UK pension credit 3.2 0.0 (0.2) (2.3) 6
Slide 7: Strong margin progression – now 100 basis points above pre downturn levels
Strong margin progression – now 100 basis points above pre downturn levels 7
Slide 8: Positive year-on-year pricing again
Positive year-on-year pricing again 8
Slide 9: Net Debt:EBITDA ratio now below 1.5 times
Net Debt:EBITDA ratio now below 1.5 times HY11 HY10 £m £m Third party working capital to Cash from trading 87.4 66.8 sales ratio maintained as top Change in working capital (39.8) (9.6) line grows strongly: H1 2011 Change in provisions (2.7) 0.0 of 21.4% vs H1 2010 of 21.3% Cash flow from operatio
Slide 10: A very good set of results
A very good set of results Strong revenue and margin growth Net Debt:EBITDA ratio continues to improve Significant dividend increase Substantial progress on our 3 year targets: PBTA, margins and Operating ROCE 10
Slide 11: Divisional Reviews
Divisional Reviews Mark Robertshaw 11
Slide 12: Strong improvements in profit and margin for Ceramics and Engineered Materials
Strong improvements made in profit and margin for both Ceramics and Engineered Materials £m Revenue EBITA Profit Margins % HY11 HY10 HY11 HY10 HY11 HY10 Technical Ceramics 145.0 124.4 21.4 15.8 14.8% 12.7% Thermal Ceramics 198.7 170.2 23.3 15.5 11.7% 9.1% Ceramics 343.7 294.6 44.7 31.3 13.0% 10.6% A
Slide 13: Ceramics revenue up c.17% year-on-year
Ceramics revenue up c.17% year-on-year 2011 Highlights Technical Ceramics revenue up over 16% year-on-year (21% constant currency) Good contributions from all regions Continuing HDD ramp contributed positively to the year-on-year growth Strong performance in aerospace and industrial equipmen
Slide 14: Technical Ceramics: positive momentum in all regions
Technical Ceramics: positive momentum in all regions with revenues now surpassing pre downturn levels Emerging markets includes: China, India, Latin America, Russia, Turkey and Middle East All at 2011 H1 Exchange rates Rest of World includes: Japan, Korea, Australia, South Africa 14
Slide 15: Thermal Ceramics: emerging market revenues particularly strong
Thermal Ceramics: emerging market revenues particularly strong, up 27% vs H1 2010 Emerging markets includes: China, India, Latin America, Russia, Turkey and Middle East All at 2011 H1 Exchange rates Rest of World includes: Japan, Korea, Australia, South Africa 15
Slide 16: Ceramics: profit up c.43% year-on-year
Ceramics: profit up c.43% year-on-year with good operational leverage 2011 Highlights Technical Ceramics EBITA up 35% vs H1 2010 and EBITA margin improved to 14.8% Profit drop through of 27% on additional revenue Benefits of new business programmes Positive pricing Thermal Ceramics EBITA i
Slide 17: Engineered Materials: year-on-year revenue increased c.5%
Engineered Materials: year-on-year revenue increased c.5%; c.12% ex NP Aerospace 2011 Highlights AM&T revenue up c.12% vs H1 2010 (14% at constant currency): Strong growth once more in China Successful growth into newer clean energy end-markets Recovering developed world markets, particularl
Slide 18: AM&T: c.50% growth in emerging market revenue
AM&T: c.50% year-on-year growth in emerging market revenue Emerging markets includes: China, India, Latin America, Russia, Turkey and Middle East All at 2011 H1 Exchange rates Rest of World includes: Japan, Korea, Australia, South Africa 18
Slide 19: Engineered Materials: EBITA up 37% vs H1 2010
Engineered Materials: EBITA up 37% vs H1 2010 and divisional margins improved from 10.4% to 13.6% 2011 Highlights AM&T profitability significantly increased EBITA up 84%; £9.7m to £17.8m vs H1 2010 EBITA margin much improved to 12.9% (2010 H1: 7.8%) Positive mix shift and pricing plus the be
Slide 20: Progress against the 3 year goals
Progress against the 3 year goals Mark Robertshaw 20
Slide 21: Financial ambitions by 2013
Financial ambitions by 2013 Double Group underlying PBT* from £75.7 million to c.£150 million Mid-teen underlying operating profit margins Improve Operating ROCE from c.25% in 2010 to c.35% by 2013 *Underlying PBT is defined as operating profit before amortisation, less net financing costs 21
Slide 22: Our ambition is to double underlying PBT by 2013
Our ambition is to double underlying PBT by 2013 c.£150 million Selective use of value accretive M&A Growth in new markets/products eg. clean energy, HDD Recovery and organic growth in traditional £75.7 million businesses Cost benefits of low cost manufacturing and divisional Rapid growth streamlini
Slide 23: Healthy recovery and growth in Western world
Healthy recovery and growth in Western world, particularly in North America US up 11.6% versus H1 2010 £m and now ahead of pre downturn levels despite reduced body 339.9 armour 322.9 289.6 269.5 Europe up 11.4% versus H1 2010 but still below 2008 Recovery and growth in traditional businesses s
Slide 24: Rapid growth in emerging markets: 16.5% CAGR
Rapid growth in emerging markets: business almost trebled between 2003 and 2010 – 16.5% CAGR All at H1 2011 actual rates 24
Slide 25: Rapid growth in emerging market revenue up 35% in H1 2011
Rapid growth in emerging market: revenue up 35% in H1 2011 – more than double CAGR of the past 7 years China – £34.1m to £42.4m, up 24%, driven by strong sales in to 118.3 clean energy (wind and solar), combined with good growth in traditional industrial markets 87.4 India – £14.0m to £20.3m, up
Slide 26: Growth in new markets and products eg. clean energy, HDD
Growth in new markets and products eg. clean energy, HDD Sales of our piezo ceramic components to the Hard Disk Drive market increased to £5.2m in H1 2011 vs £1.2m in H1 2010 Group revenue from clean energy increased to £17.9m in H1 2011 vs £5.5m in H1 2010 AM&T High Temperature products and Ceram
Slide 27: Benefits from Divisional streamlining being delivered
Benefits from Divisional streamlining being delivered Benefits On track to deliver £5m of benefits in 2011 rising towards the top of our expected £6m to £8m of benefits in 2012 MTC Growth Future opportunities for Technical products in Asia and Latin America are being identified, alongside products t
Slide 28: Cost benefits from low cost manufacturing continue
Cost benefits from low cost manufacturing continue to be delivered Example: AM&T Headcount in AM&T Mexican operations increased more than 10% over past year as more work from USA relocated Operations moved from higher cost sites in UK and Germany to low cost Hungary Italian site further down-s
Slide 29: Financial ambitions by 2013
Financial ambitions by 2013 Double Group underlying PBT* from £75.7 million to c.£150 million Mid-teen underlying operating profit margins Improve Operating ROCE from c.25% in 2010 to c.35% by 2013 *Underlying PBT is defined as operating profit before amortisation, less net financing costs 29
Slide 30: Significant progress towards mid-teen operating profit margin goal
Significant progress made in H1 towards our mid- teen operating profit margin goal Show 2009 and 2010 as full years rather than H1 and H2 30
Slide 31: Financial ambitions by 2013
Financial ambitions by 2013 Double Group underlying PBT* from £75.7 million to c.£150 million Mid-teen underlying operating profit margins Improve Operating ROCE from c.25% in 2010 to c.35% by 2013 *Underlying PBT is defined as operating profit before amortisation, less net financing costs 31
Slide 32: Good progress on ROCE
Good progress on ROCE LTM EBITA up 23% from £101.5m to £125.0m Operating Capital only increased 10% in delivering this profit growth Well on track to achieve the 35% ROCE target within the 3 year timeframe 32
Slide 33: Summary and Outlook
Summary and Outlook Mark Robertshaw
Slide 34: Summary
Summary Good year-on-year progress in H1 2011 with top line growth across all main geographies and markets very strong performance in emerging markets with revenue up 35% year- on-year tangible and encouraging successes in new products continued recovery and growth in Western world, particul
Slide 35: 2011 Half Year Financial Results
2011 Half Year Financial Results 27th July 2011
Slide 36: Appendix
Appendix M MorganCrucible EL The Acvatoed Macerisle Group
Slide 37: Strong margin progression
Strong margin progression 37
Slide 38: Total employment costs % maintained below 30% target
Total employment costs % maintained below our 30% target level 38
Slide 39: MMS: revenue up 19% at constant currency
MMS: revenue up 19% at constant currency Emerging markets includes: China, India, Latin America, Russia, Turkey and Middle East All at 2011 H1 Exchange rates Rest of World includes: Japan, Korea, Australia, South Africa 39
Slide 40: Group revenue by end-market: Half Year 2011
Group revenue by end-market: Half Year 2011 Western w orld is North America and Europe 40
Slide 41: Improved Operating ROCE
Improved Operating ROCE All £ million 2011 2010 At reported rates Half Year Year End LTM EBITA 125.0 101.5 Operating Capital Land & Building - NBV 106.1 108.8 Plant & Equipment - NBV 154.5 160.4 Third Party Working Capital 179.2 130.7 439.8 399.9 Return on Operating Capital Employed 28.4% 25.4% 41
Slide 42: Net Finance Charge
Net Finance Charge HY11 HY10 £m £m Bank interest charge 11.3 12.9 Bank interest income (0.3) (0.6) Interest expense on unwinding of discount on deferred consideration 0.2 0.7 Gain on foreign exchange derivatives in respect of financial 0.0 (2.0) indebtedness IAS19 - Interest cost on liability 13.6 1
Slide 43: Underlying EPS
Underlying EPS HY11 HY10 £m £m Basic earnings 35.6 19.4 Amortisation 4.1 3.9 Underlying earnings 39.7 23.3 Weighted average number of shares in the period 272.0m 268.7m Underlying earnings per share 14.6p 8.7p 43
Slide 44: Pensions - IAS 19 Income Statement Charges
Pensions - IAS 19 ‘Income Statement’ Charges HY11 HY10 Actual Actual Approx £m £m Service Charge (within Operating costs) 1.7 2.1 Net Finance Charge 0.6 1.1 2.3 3.2 44
Slide 45: 2011 Half Year Financial Results
2011 Half Year Financial Results 27th July 2011