Slide 1: 2021 Full Year Results – 18 March 2022
2021 Full Year Results – 18 March 2022
Slide 2: Agenda
1 2021 Group summary and highlights 2 Financial performance 3 Components divisional performance 4 Filters and Packaging divisional performance 5 ESG 6 2022 outlook and reprise 2
Slide 3: 2021 Group summary and highlights
Clear strategic direction announced, Filters and Packaging strategic reviews are progressing in line with expectations Strong FY performance • Revenue growth +8.4% LFL and adjusted operating profit +46.5% 1. • Operating margin of 8.7% returns to 2019 levels 1 • Accelerated growth in all three divisi
Slide 4: Lily Liu – Chief Financial Officer
LILY LIU – CHIEF FINANCIAL OFFICER
Slide 5: Key financial metrics
Revenue Adjusted operating profit2 Adjusted operating margin2 Adjusted basic EPS2 £960m £84m 8.7% 18.2p +12.6% +46.5% +200bps +54.6% Net debt to EBITDA3 Cash conversion Full year dividend ROIC 1.5x 77% 6.0p 9.1% 1 Constant currency basis 2 Presented after removing non-controlling interest and adjust
Slide 6: FY 2021 financial results
FY 2021 FY 2020 Growth (Restated)2 £m £m Actual FX Constant FX Revenue 959.7 896.5 7.0% 12.6% Operating profit1 83.9 62.3 34.7% 46.5% Operating margin1 8.7% 6.9% 180bps 200bps Profit before tax1 67.4 46.6 44.6% 60.7% Earnings1 54.8 35.9 52.6% 70.6% Adjusted basic earnings per 18.2p 13.2p 37.9% 54.6%
Slide 7: Group revenue by division and like-for-like
FY 2021 FY growth vs. FY 2019 £m Constant FX Constant FX Components 301.7 +24.7% +13.8% Components like-for-like1 +21.7% +9.1% Packaging 362.4 +3.8% 6.9% Packaging like-for-like2 (3.6)% (8.2)% Filters3 295.6 +12.9% +6.7% Group 959.7 12.6% 4.9% Group – like-for-like4 8.4% 1.4% 1 Adjusted for the acqu
Slide 8: Operating profit and margin by division
FY 2021 Growth Constant FX Margin £m Constant FY 2021 FY 2020 FY 2019 FX Components2 56.9 31.2% 18.9% 17.9% 21.4% Packaging3 15.4 17.6% 4.2% 3.8% 4.3% Filters 28.2 20.3% 9.5% 9.0% 12.0% Central Services (16.6) Group 83.9 46.5% 8.7% 6.7% 8.6% 1 Adjusted to exclude intangible amortisation on acquired
Slide 9: Adjusted income statement
FY 2021 Growth2 £m Actual FX Constant FX Operating profit1 83.9 34.7% 46.5% Net finance charge (16.5) Profit before tax1 67.4 44.6% 60.7% Taxation1 (11.2) Effective tax rate 16.6% Net income1 56.2 49.1% 65.9% Non-controlling interests 1.4 Earnings1 54.8 52.6% 70.6% EPS – basic1 18.2 37.9% 54.6% EPS
Slide 10: Cash flow and net debt
Supporting growth and mitigating supply chain disruption particularly in H2 2 4 1 1 1 1 Adjusted to exclude intangible amortisation and adjusting items 2 Being depreciation and amortisation of £39.2m, right-of-use asset depreciation of £12.0m and Share Option Expense / Other Movements of £0.6m 3 Pre
Slide 11: Net debt bridge
£m As at 1 January 2021 210.4 FX 3.0 As at 31 December 2021 234.7 Change in net debt after FX 21.3 Of which: Dividends to non-controlling interests 1.5 Free cash flow (36.7) Cash outflow in respect of adjusting items 16.9 Acquisitions – net cash paid 14.6 Capital contributions from non-controlling i
Slide 12: Components Divisional Update
COMPONENTS DIVISIONAL UPDATE Scott Fawcett -Components Managing Director
Slide 13: Components divisional performance
Navigating significant supply chain disruption coupled with the ramp up of demand and accelerated recovery Pricing action taken throughout the year to address inflationary cost pressures Digital journey continues with the roll out of our new web platform across Asia Revenue and operating margin as r
Slide 14: Components 2022 priorities
Delivering organic growth Digital customer experience Class-leading sustainability with sustainable margins • Category management to • Investing in digital and • Sourcing alternative and new focus on high growth global enhancing our omni-channel sources of sustainable categories offering materials •
Slide 15: Developing our M&A pipeline and Hengzhu update
Developing our M&A pipeline Update on Hengzhu acquisition • Large and growing (£8-10bn) end market but • Progress to date in line with expectations highly fragmented • Commercial synergies are being delivered • Essentra has a leading position with a 4% market share • Financial performance in line wi
Slide 16: Filters Divisional Update
WANCLONCIINICT ANN D) FILTERS DIVISIONAL UPDATE Paul Forman-—Chief Executive
Slide 17: Packaging divisional performance
Trading impacted by lower prescription and elective surgery volumes Signs of market recovery and pricing actions resulted in an encouraging Q4 revenue LFL +2.1% Strong order book at the start of 2022 Efficiencies gained from closing two manufacturing sites Revenue and operating margin as reported. L
Slide 18: Filters divisional performance
Game changers continue to lead revenue growth, with accelerated growth seen in Q4 of c.20% • Growing volumes of outsourcing contract business wins, annualised +£50m • Volume ramp up from our China JV in H2 • Increased interest in our range of proprietary ECO and Tobacco Heating Product (THP) product
Slide 19: Environment, Social, Governance
Environment Social Governance • Reduced normalised GHG • Our people remain at the heart of • Established an ESG committee, in emissions by 8.2%. Normalised our journey addition to our Board Sustainability figures are now 19.9% below 2019 Committee • We continue to communicate and baseline engage wit
Slide 20: Outlook
Slide 21: 2022 outlook
Strong start to the year across all three divisions with LFL Strong order books in all three divisions sales and orders significantly ahead of last year supports outlook: • Components – continued market share gains Continue to manage supply chain and inflationary from enhanced digital customer exper
Slide 22: Summary of FY performance
Clear strategic direction announced, Filters and Packaging strategic reviews are progressing in line with expectations Strong FY performance • Revenue growth +8.4% LFL and adjusted operating profit +46.5% 1. • Operating margin of 8.7% returns to 2019 levels 1 • Accelerated growth in all three divisi
Slide 23: Appendix
2021 Full Year Results – 18 March 2022
Slide 24: Appendix
2021 Full Year Results – 18 March 2022
Slide 25: Change in accounting policy for SaaS costs
• The Company has changed its accounting policy related to the capitalisation of certain software costs • Adopted this change in accounting policy following the IFRS Interpretation Committee’s agenda decision (published April 2021) • Change relates to the capitalisation of costs of configuring or cu
Slide 26: Restatement of 2020 income statement
• A change in accounting policy following the IFRS Interpretation Committee’s agenda decision (April 2021) • Relates to the capitalisation of costs of configuring or customising application software under ‘Software as a Service’ (‘SaaS’) arrangements (As previously Impact of (Restated) reported) res
Slide 27: Restatement of balance sheet and cash flows
(As previously Impact of (Restated) reported) restatement Property, Plant and Equipment 263.0 (0.5) 262.5 Intangible Assets 518.8 (16.4) 502.4 Deferred Tax Assets 16.8 3.8 20.6 Other assets and liabilities (167.5) - (167.5) Net Assets 631.1 (13.1) 618.0 Retained Earnings 313.9 (13.1) 300.8 Other equ
Slide 28: Adjusted to reported operating profit
FY 2021 Growth £m Actual FX Constant FX Adjusted operating profit 83.9 34.7% 46.5% Intangible amortisation (22.4) Adjusting items (11.8) Reported operating profit 49.7 328.5% 515.9% Net finance charge (16.5) Profit before tax 33.2 Taxation credit (4.9) Effective tax rate 16.6% Net income 28.3 EPS -
Slide 29: Adjusting items
£m Transaction costs relating to acquisitions and disposals of businesses (3.4) Acquisition integration and restructuring costs 0.6 Major software as a service (“SaaS”) development 11.8 Other1 2.8 Total charge from adjusting items 11.8 1 Other adjusting items relate to professional, advisory and res
Slide 30: Foreign exchange rates
Year ended 31 December 2021 Average Closing US$/£ 1.38 1.35 Euro €/£ 1.16 1.19 Impact on FY2021 of a one cent increase in rate Adjusted Op. profit movement (£m) US$/£ (0.2) Euro €/£ (0.3) Year ended 31 December 2020 Average Closing US$/£ 1.29 1.37 Euro €/£ 1.13 1.12 30
Slide 31: ROIC
12.0 ROIC 9.2 9.2 9.1 8.0 6.8 % 4.0 0.0 FY 18 FY 19 FY 20 FY 21 2018 and 2019 have been adjusted to remove impact of businesses disposed during 2019 (Pipe Protection Technologies, Extrusion, Specialty Tapes and Card Solutions) Prior years have also been restated for the adoption of IFRIC agenda deci
Slide 32: Long-term sustainability targets
Long-term Targets Scope 1&2 GHG • GHG emissions neutral by 2040 emissions (normalised) • 25% reduction by 2025 (vs. 2019 baseline) (Group) # sites at zero waste to • All sites at zero waste to landfill by 2030 (and preferably landfill sooner) (Group) Total waste volume (normalised) • 20% reduction b
Slide 33: Disclaimer
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Slide 34: 2021 Full Year Results – 18 March 2022
2021 Full Year Results – 18 March 2022