Slide 1: Investor Presentation: Full Year 2017 Results
INVESTOR PRESENTATION Full Year 2017 Results 02 MARCH 2018
Slide 2: Agenda
AGENDA 1. FY 2017 Overview - Paul Forman 2. Financial Review – FY 2017 - Stefan Schellinger 3. Summary & FY 2018 Outlook - Paul Forman 4. Q&A © 2013 ESSENTRA PLC 2
Slide 3: FY 2017 Overview
FY 2017 OVERVIEW Paul Forman Chief Executive © 2013 ESSENTRA PLC
Slide 4: FY 2017: Summary
FY 2017: SUMMARY • FY 2017 reflects an improved revenue trend in H2 versus H1, as previously communicated – Revenue decrease of 2% on a like-for-like basis – Adjusted operating profit down 27% (at constant FX) to £85m – Basic adjusted EPS lower by 30% (at constant FX) to 22.1p • A continued strong r
Slide 5: Component Solutions
COMPONENT SOLUTIONS FY 2017 REVENUE: £343.1M, LFL +8.0%. OM -70BPS • Broad-based geographic result in Components – Return to growth in the UK and US • Increase in core general protection range of caps and plugs – Supported by growth in access hardware and consumer electronics components in Asia • Re
Slide 6: Health & Personal Care Packaging
HEALTH & PERSONAL CARE PACKAGING FY 2017 REVENUE: £409.5M, LFL -8.5%. OM -630BPS • Focus and remedial action has stabilised key performance and service metrics – Customers recognise demonstrable improvement, and in quality of commercial dialogue … – … and we are seen as a strategic supplier • Puerto
Slide 7: Filter Products
FILTER PRODUCTS FY 2017 REVENUE: £277.5M, LFL -3.4%. OM -140BPS • Return to growth in H2, driven by positive mix effect • Continued product innovation, to address industry trends – Joint development initiatives for capsule products – Rebound in China boosted by recently-launched smaller diameter fil
Slide 8: Financial Review – FY 2017
FINANCIAL REVIEW – FY 2017 Stefan Schellinger Group Finance Director © 2013 ESSENTRA PLC
Slide 9: Income Statement – Summary
INCOME STATEMENT – SUMMARY1 FY 17 FY 16 Growth £m £m Actual Constant FX FX CS +8% H&PCP -9% Revenue 1,027.3 998.5 +2.9% -2.3% Filter Prod. -3% Like-for-like -2.0% H1: -4%, H2: 0% Operating profit2 84.6 108.7 -22.2% -26.8% H&PCP Operating margin 8.2% 10.9% -270bps -280bps Profit before tax2 74.2 96.2
Slide 10: Revenue by Division
REVENUE BY DIVISION FY 17 FY growth £m Constant FX Health & Personal Care Packaging 409.5 -9.0% Rate of decline stabilised, notwithstanding Newport and Puerto Rico impact in H2 Like-for-like1 407.3 -8.5% Component Solutions 343.1 +8.0% Significant yoy recovery in PPT, tho’ moderating in H2 Broad-bas
Slide 11: Operating Profit by Division
1 OPERATING PROFIT BY DIVISION FY 17 Growth Margin Margin £m Constant FY 17 FY 16 FX Volume, Tapes mix, Health & Personal Care 7.2 -80.2% 1.8% 8.1% Newport and Puerto Packaging Rico Component Solutions ex- 56.1 -5.2% 17.8% 19.4% Continued investment PPT in Components, Extrusion PPT 2.6 n/m 9.0% (20.
Slide 12: Health & Personal Care Packaging: Normalised Revenue & Operating Profit
HEALTH & PERSONAL CARE PACKAGING NORMALISED REVENUE & OPERATING PROFIT1 Revenue (£m) Growth Operating % operating profit1 (£m) margin H&PCP – 409.5 -9.0% 7.2 1.8% reported Bristol disposal (2.2) 0.4 Newport (12.3) 4.6 cartons closure Puerto Rico 2.5 1.5 hurricane2 H&PCP - 397.5 -6.6% 13.7 3.4% norma
Slide 13: Income Statement – Continued
INCOME STATEMENT – CONTINUED FY 17 Growth £m Actual Constant FX FX Operating profit1 84.6 -22.2% -26.8% Net finance charge (10.4) -16.8% -16.9% Lower average net debt Profit before tax1 74.2 -22.9% -28.0% Taxation (14.9) Tax rate - Underlying tax rate 20.0% maintained Net income1 59.2 -23.0% -28.8%
Slide 14: Exceptional Items
EXCEPTIONAL ITEMS £m (Gains) / losses & transaction costs from business acquisitions and disposals - Discontinued operations (Porous Technologies) (132.4) - Continuing operations 1.6 Closure of Newport cartons facility 35.4 Costs of strategic review - Reorganisation inc. senior management 5.3 restru
Slide 15: Cash Flow – Continuing Operations
CASH FLOW – CONTINUING OPERATIONS Operating Cash Conversion = 95% (FY 2016 = 94%) £m 1 1 1 1 Adjusted to exclude amortisation of acquired intangible assets and exceptional operating items 2 Being Depreciation of £36.3m less Share Option Expense / Other Movements of £2.0m 15
Slide 16: Net Debt Reconciliation
NET DEBT RECONCILIATION £m As at 1 January 2017 379.3 FX 0.5 As at 31 December 2017 210.6 Change in net debt after FX 168.2 Of which: Free cash flow – total Group (48.8) Gross proceeds Disposals (210.8) from Porous Technologies Acquisitions 15.4 divestment Dividends 54.1 Transaction costs for Porous
Slide 17: Re-financing
RE-FINANCING • Entire credit facilities successfully refinanced in November 2017 – Existing revolving credit facility (“RCF”) replaced with a £375m, 5-year multi-currency RCF from a strong international bank group – US$75m USPP notes successfully placed • Spread over 7, 10 and 12-year maturities • O
Slide 18: Dividend
DIVIDEND 24.0 20.7 20.7 20.7 20.0 18.3 16.0 15.4 Pence 12.0 8.0 4.0 0.0 FY13 FY14 FY15 FY16 FY17 FY 2017 dividend held unchanged 18
Slide 19: Summary & FY 2018 Outlook
SUMMARY & FY 2018 OUTLOOK Paul Forman Chief Executive © 2013 ESSENTRA PLC
Slide 20: Stability: Our Six Principles
STABILITY GROWTH STRATEGY STABILITY OUR SIX PRINCIPLES 20
Slide 21: Stability: Summary
STABILITY: SUMMARY In FY 2017, we have: • Stabilised our revenue trends in all three global divisions • Stabilised our finances – Generated strong cash flow, with a material improvement in net working capital – Re-financed our entire debt facilities over longer maturities at attractive rates • Stabi
Slide 22: We Are Stabilising: Our Revenue Trends
WE ARE STABILISING … OUR REVENUE1 TRENDS Group2 Component Solutions HY16 H216 HY17 H217 10% 0% 8% -2% 6% -4% 4% -6% 2% -8% 0% -10% -2% -4% -12% HY16 H216 HY17 H217 Filter Products H&PC Packaging HY16 H216 HY17 H217 HY16 H216 HY17 H217 5% 0% 0% -2% -4% -5% -6% -10% -8% -15% -10% -20% -12% -25% -14% 1
Slide 23: We Have Stabilised: Our Delivery
WE HAVE STABILISED … OUR DELIVERY (ON TIME IN FULL) Components Filter Products 95.0% 100.0% 95.6% 95.2% 90.6% 94.8% 90.3% 90.4% 95.0% 89.8% 92.7% 90.0% 90.0% 85.0% 85.0% 80.0% 80.0% FY16 H117 H217 FY17 FY16 H117 H217 FY17 H&PCP – Americas H&PCP – Europe & Asia 100.0% 100.0% 96.3% 96.6% 96.4% 94.3% 9
Slide 24: We Have Stabilised: Our Quality
WE HAVE STABILISED … OUR QUALITY (INCIDENT RATE) Components Filters (complaints per billion rods) 120 120 100 100 100 100 80 75 75 75 80 60 56 58 60 60 40 40 20 20 0 0 FY16 H117 H217 FY17 FY16 H117 H217 FY17 H&PCP – Americas H&PCP – Europe & Asia 120 120 100 100 100 100 82 80 71 80 74 65 60 60 49 60
Slide 25: We Have Stabilised: Our People
WE HAVE STABILISED … OUR PEOPLE OUR STRENGTHS SENIOR LEADERSHIP ARE MAKING THE Group employee engagement score RIGHT DECISIONS 70% 69% WE’RE FOCUSED ON CUSTOMERS & 69% RESPOND TO THEIR PROBLEMS 68% 68% 87% BELIEVE WE’RE COMMITTED TO EMPLOYEE SAFETY 67% 66% 66% WHERE WE CAN DO BETTER 65% 65% IDENTIFY
Slide 26: We Have Stabilised: Our People
WE HAVE STABILISED … OUR PEOPLE Paul Forman Chief Executive DIVISIONAL MANAGEMENT Scott Fawcett Iain Percival Kamal Taneja Tim Wilson MD - MD - Packaging MD - Filters President - Components Previously: Previously: Specialist Previously: Rexam, Toyota Amcor, Ingersoll Components Electro- Motor Rand P
Slide 27: We Have Stabilised: Our HSE Performance
WE HAVE STABILISED … OUR HSE PERFORMANCE Lost time injury incidents Days lost from injury incidents 75 2000 74 1800 73 1600 1400 72 1200 71 1000 70 800 69 600 68 400 67 200 66 0 2015 2016 2017 2015 2016 2017 Improving HSE culture remains a key focus area 27
Slide 28: Our Customers – H&PCP
WE HAVE STABILISED… OUR CUSTOMERS – H&PCP H&PCP Voice of Customer survey – 2017 vs 2016 Customer needs Performance Comments / actions Quality • Greater consistency of product quality – progress is encouraging - Product meets the specification Reliability • Notable improvement in OTIF – although grea
Slide 29: Our Customers – Components
WE HAVE STABILISED … OUR CUSTOMERS - COMPONENTS Change in Net Promoter Score – 2016 – 17 vs Q4 2017 UK EMEA US Americas Asia Pac Total UK EMEA US Americas Asia Pac Total A good improvement across geographic regions and in key markets 29
Slide 30: Our Customers – Filter Products
WE HAVE STABILISED … OUR CUSTOMERS – FILTER PRODUCTS • Attractive global and regional Filter Products Revenue - China pipeline wins – Leveraging “know-how” on innovative filter projects £m – Addressing shortfalls in in-house capacity and helping to eliminate complexity for global customers – Providi
Slide 31: We Are Stabilising: Our IT Systems
WE ARE STABILISING … OUR IT SYSTEMS • Investment in upgrading and reconfiguring internal infrastructure across all divisions and sites • Focus on reducing – and ultimately eliminating – the number of unplanned outages caused by systems failure • Upgrade and scaling or core networks and data communic
Slide 32: Strategy
STRATEGY GROWTH STRATESY STABILITY OUR SIX PRINCIPLES 32
Slide 33: Strategy - Components
STRATEGY - COMPONENTS What we said What are doing Refocus the business on clear proposition • Reinforcing strength in core product ranges delivering the “brilliant basics” - Eg, general protection caps and plugs, cable management, access hardware • Investing to improve “hassle free” experience • Ref
Slide 34: Strategy - Packaging
STRATEGY - PACKAGING What we said What we are doing Continue to enhance quality of dialogue • Undertaken further Voice of Customer survey to better cater with customers, as a strategic supplier to their requirements, and started to implement findings of product and service solutions • Through enhanc
Slide 35: Strategy - Filters
STRATEGY - FILTERS What we said What we are doing Upgrade internal innovation capability, to • Helping our customers commercialise several new become a more commercially vs products in the market, such as tube capsules, “capsules operationally-led business in tow” and twin filters • Working with key
Slide 36: Growth
GROWTH GROWTH STRATEGY STABILITY OUR SIX PRINCIPLES 36
Slide 37: Growth – Developing the Necessary Capabilities
GROWTH – DEVELOPING THE NECESSARY CAPABILITIES Gaps to be What we’ve done filled Operations • Improved our processes and best practice sharing, and are developing improved strategies and approaches across divisions under a new Group Operations Director • Effectively used PMI expertise to facilitate
Slide 38: Micro Plastics – Platform for Growth
MICRO PLASTICS – PLATFORM FOR GROWTH • Consistent with our strategic objective in Components of identifying value-adding acquisition growth opportunities • A leading manufacturer and distributor of nylon fasteners and other plastic components – Offers a complementary range of products • Adds further
Slide 39: 2018 Considerations / Outlook
2018 CONSIDERATIONS / OUTLOOK • Further broad-based growth and sustained margin in Components – Continued focus on building a consistent and “hassle free” proposition – Measured investment to support strategic development – Successful integration of Micro Plastics • Improving yoy revenue and margin
Slide 40: Q&A
Q&A © 2013 ESSENTRA PLC
Slide 41: Appendices
APPENDICES © 2013 ESSENTRA PLC
Slide 42: Income Statement – Reported Basis
INCOME STATEMENT – REPORTED BASIS1 FY 17 Growth Actual Constant £m FX FX Adjusted operating profit 84.6 -22.2% -26.8% Intangible amortisation (22.9) -24.2% -27.2% Exceptional operating items (56.2) -56.3% -56.8% Reported operating profit 5.5 n/m n/m Net finance charge (10.4) Loss before tax (4.9) n/
Slide 43: Exchange Rates
EXCHANGE RATES Twelve months ended 31 December 2017 Average Closing US $/£ 1.30 1.35 Euro €/£ 1.14 1.13 Impact of a one cent change Op.Profit (£m) US $/£ 0.3 Euro €/£ 0.3 Twelve months ended 31 December 2016 Average Average Closing US $/£ 1.36 1.24 Euro €/£ 1.23 1.17 43
Slide 44: Divisional Restatement
DIVISIONAL RESTATEMENT £m Components Packaging Filters Specialist Elims / Total Components Central Services FY 2017 Revenue 241.8 350.5 277.5 163.6 (6.1) 1,027.3 Adjusted 53.6 (1.8) 34.8 14.1 (15.8) 84.92 operating profit1 Adjusted 22.2% n/m 12.5% 8.6% n/a 8.2% operating margin1 1 Adjusted to exclud
Slide 45: 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 46: Investor Presentation: Full Year 2017 Results
INVESTOR PRESENTATION Full Year 2017 Results 02 MARCH 2018