Melrose Industries PLC · LSE:MRO
Melrose Industries — H1 2007 Earnings Presentation
32 slides from Melrose Industries's earnings presentation, Jun 30, 2007
Slide 1: Interim Results Announcement
Interim Results Announcement Six months to 30th June 2007
Slide 2: Contents
Contents Introduction Melrose PLC summary financial performance Disposals and Return of capital Divisional performance - Dynacast - Other businesses 2
Slide 3: Introduction
| Introduction
Slide 4: Introduction
Introduction Aerospace sold for $850m (£428m) – Cash profit of over $500m (including net cash generated during ownership) £220m (82.3p per share) returned to shareholders (c.50% of market cap) – Shareholders have received payments (incl. dividends) totalling 95% of the original subscribed capital Fu
Slide 5: Introduction
Introduction Existing businesses trading to plan – Dynacast - Growth by acquisition underway - Good performance – MVC - Improved results – MPC and remaining part of PSM - On plan 5
Slide 6: Melrose PLC summary financial performance
Melrose PLC summary financial performance
Slide 7: Financial results: Income statement – Statutory format
Financial results Income statement – Statutory format Six months ended 30th June 2007 6 months ended 6 months ended 30 June 2007 (£’m) 30 June 2006 (£’m) Revenue 172.9 161.4 Cost of sales (141.3) (134.1) Gross profit 31.6 27.3 Total net operating expenses (20.3) (25.5) Operating profit 11.3 1.8 Head
Slide 8: Financial results: Income statement – Continuing Group
Financial results Income statement – Continuing Group Six months ended 30th June 2007 Headline results¹ Other² Total £’m £’m £’m Sales 172.9 - 172.9 Operating profit 11.4 (0.1) 11.3 Net finance income 0.7 - 0.7 Profit before tax 12.1 (0.1) 12.0 Tax (3.1) 0.8 (2.3) Profit after tax 9.0 0.7 9.7 EPS 3.
Slide 9: Half year comparative performance – by division
Half year comparative performance – by division 2007 H1 v 2006 H1 – headline results¹ 2007 H1 2006 H1 £’m £’m Sales EBIT¹ ROS%¹ Sales EBIT¹ ROS%¹ Dynacast 117.6 13.8 11.7% 107.3 11.1 10.3% MVC 29.5 (0.2) (0.7%) 26.5 (0.7) (2.6%) MPC 21.2 1.3 6.1% 23.9 1.0 4.2% PSM² (Canning Brett and Prelok) 4.6 0.3
Slide 10: Financial results: Cash Flow
Financial results Cash Flow Six months ended 30th June 2007 £’m Headline operating profit1 11.4 Depreciation and computer software amortisation 5.3 Working capital movement (7.9) Capital expenditure (4.8) Cash generated from disposals – businesses (net of costs) 447.8 Restructuring costs paid and ot
Slide 11: Pensions
Pensions Agreed positions with trustees and Pension Regulator (formal clearance achieved) - Upfront cash payment of £20m - A further £18.3m in total to be paid in quarterly instalments over 3 years Deficit reduced to c£28.0m from £55.4m at Dec 2006 (£18.3m on McKechnie UK defined benefit plan) On cu
Slide 12: Financial results: Tax and Debt
Financial results Tax c26% headline underlying profit and loss charge in 2007 for continuing group c5% cash tax rate for continuing group, still significantly below P & L rate but will get closer No tax due on the OEM and PSM disposal Debt Bank facilities largely repaid on disposal - £11m term debt
Slide 13: Financial results: Exchange and Commodity risk
Financial results Exchange and Commodity risk c85% of sales in the continuing group are denominated in a foreign currency (62% in US$ or Euro). Protect against transaction currency risk (cash cost) but not translational currency risk (non cash cost). £0.5m translation exchange loss in the period ver
Slide 14: Disposals and Return of Capital
Disposals and Return of Capital
Slide 15: Disposals and Return of capital
Disposals and Return of capital Disposals May 2007 McKechnie Aerospace sold for $850m (£428m) - Exit multiple of c12 x 2006 Ebitda - c2.5 x investment (including net cash generated during ownership) - IRR of c65% - Cash profit of over $500m (including net cash generated during ownership) In May 2007
Slide 16: Summary of operating divisions
Summary of operating divisions
Slide 17: Dynacast
| Dynacast
Slide 18: Dynacast
Dynacast Proprietary Die-Casting process Sales by Sector Sales by Geography 15% 22% 8% 41% 45% 12% 33% 24% Automotive Electronics Europe Healthcare Hardware North America Far East Other Products Connectors Telecommunications Automotive Consumer Computing Industrial products 18
Slide 19: Dynacast: Trading results
Dynacast Trading results Six months ended 30th June 2007 2007 H1 Headline Results¹ 2006 H1 Headline Results¹ Sales EBIT¹ ROS¹ Sales EBIT¹ ² ROS¹ £’m £’m % £’m £’m % North America 38.7 3.5 9.0% 39.3 2.4 6.1% Europe 53.6 7.3 13.6% 45.4 6.0 13.2% Far East 25.3 3.0 11.9% 22.6 2.7 11.9% Total 117.6 13.8
Slide 20: Dynacast: Performance trends
Dynacast Trading results Performance trends – headline results¹ 2007 2006 2006 Actual H1 H2 H1 Year on Year growth £’m £’m £’m (2007 H1 v 2006 H1) % Sales 117.6 114.4 107.3 10% EBIT¹ 13.8 14.0 11.1 24% Return on sales¹ % 11.7% 12.2% 10.3% +1.4 percentage points H1 = Six months January to June H2 = S
Slide 21: Dynacast
Dynacast Benefiting this year from removal of c£2.5m (H1) zinc under recovery due to lag effect in H1 2006 No significant restructuring planned this year Focus on further improving operations Investment in China continues Good progress on acquisitions – First one completed 21
Slide 22: Other Businesses
| Other Businesses
Slide 23: MVC
) mvc
Slide 24: MVC
MVC Locations Key customers (Six months to 30th June 2007) Rank Company Percentage Cum. Percentage Staples 1 Ford 16% 16% Troy 2 Toyota 16% 32% 3 General Motors 13% 45% Nicholasville 4 Hayes 12% 57% Newberry 5 Chrysler 8% 65% 6 Other 35% 100% Products Source McKechnie management analysis 24
Slide 25: MVC: Six months ended 30th June 2007
MVC Six months ended 30th June 2007 2007 H1 Headline Results¹ 2006 H1 Headline Results¹ Sales EBIT¹ ROS¹ Sales EBIT¹ ROS¹ £’m £’m % £’m £’m % Newberry 10.9 1.5 13.8% 10.0 1.6 16.0% Nicholasville 22.0 0.6 2.7% 18.9 (0.2) (1.1%) MT&E (Tooling) 0.9 0.0 - 0.6 (0.1) - Head Office (4.3) (2.3) - (3.0) (2.0
Slide 26: MVC: Trading results
MVC Trading results Performance trends in Melrose ownership – headline results¹ 2007 2006 2006 Actual H1 H2 H1 Year on Year growth £’m £’m £’m (2007 H1 v 2006 H1) % Sales 29.5 21.5 26.5 11.3% EBIT¹ (0.2) (1.6) (0.7) 71.4% Return on sales¹ % (0.7%) (7.4%) (2.6%) +1.9 percentage points H1 = Six months
Slide 27: MPC
' MPC
Slide 28: MPC
MPC Locations Sales by sector 8% 4% 6% 4% 15% 63% Pickering Stamford Bridge A utomotive Food/Beverage/Healthcare Electronics DIY Construction Other 2 year Key customers share price performance Products Automotive Consumer Ford PAG Diageo Intier Honda Scotco Toyota Makita Manufacturing Europe Decoma
Slide 29: MPC: Six months ended 30th June 2007
MPC Six months ended 30th June 2007 2007 H1 Headline Results¹ 2006 H1 Headline Results¹ Sales EBIT¹ ROS¹ Sales EBIT¹ ROS¹ £’m £’m % £’m £’m % Stamford Bridge 7.7 0.7 9.1% 12.0 0.8 6.7% Pickering 13.5 0.6 4.4% 11.9 0.2 1.7% Total 21.2 1.3 6.1% 23.9 1.0 4.2% ¹ Before exceptional costs, exceptional inc
Slide 30: PSM
| PSM
Slide 31: PSM (Prelok and Canning Brett)
PSM (Prelok and Canning Brett) Six months ended 30th June 2007 2007 H1 Headline Results¹ 2006 H1 Headline Results¹ Sales EBIT¹ ROS¹ Sales EBIT¹ ROS¹ £’m £’m % £’m £’m % Prelok 3.6 0.2 5.6% 2.7 0.2 7.4% Canning Brett 1.0 0.1 10.0% 1.0 0.1 10.0% Total 4.6 0.3 6.5% 3.7 0.3 8.1% ¹ Before exceptional cos
Slide 32: Questions
| Questions