Slide 1: Investor Presentation: Full Year 2013 Results
INVESTOR PRESENTATION Full Year 2013 Results 20 FEBRUARY 2014
Slide 2: Agenda
AGENDA 1. Operational Review - Colin Day 2. Financial Review - Matthew Gregory 3. Vision 2015 Update & 2014 Outlook - Colin Day © 2013 ESSENTRA PLC 2
Slide 3: Operational Review
OPERATIONAL REVIEW Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 4: FY 2013: Summary
FY 2013: SUMMARY • Revenue growth across all operating divisions • Operational initiatives & synergy savings → operating margin uplift • Further improvements in net working capital ratio and tax rate • Full year dividend per share increased by 23% to 15.4p • Successful completion of four value-addin
Slide 5: Revenue Growth Across All Divisions
REVENUE GROWTH ACROSS ALL DIVISIONS Component & Porous Protection Technologies Revenue 6% Revenue 14% LFL 5% LFL 6% GROUP Revenue 20% LFL 9% Packaging & Filter Securing Products Revenue 59% Revenue 17% LFL 4% Extrusion Revenue 2% Notes: At constant exchange rates © 2013 ESSENTRA PLC 5 Operating prof
Slide 6: Component & Protection Solutions
COMPONENT & PROTECTION SOLUTIONS £m 240 30% • Balanced revenue growth in Components and PPT 200 25% • Improved marketing effectiveness and continued range development – Additional 5,000 products introduced 160 20% – First consolidated catalogues launched • Benefit from new site openings: 120 15% – M
Slide 7: Porous Technologies
POROUS TECHNOLOGIES £m • Growth led by writing instruments 100 24% and printer systems £m 90 – Strong growth in nibs and ink reservoirs 20% 80 – Continued growth with a large global OEM 70 16% • Supported by H&PC 60 – Business wins in air care with 50 12% multinational customers 40 • Successful new
Slide 8: Packaging & Securing Solutions
PACKAGING & SECURING SOLUTIONS £m • Packaging led by promotional 25% solutions in wrapped food and 180 growth in tobacco 160 20% • Sales from Blue Badge contract 140 and ID products offset by certain non-core Security activities 120 15% • Strong, broad-based growth in 100 Speciality Tapes 80 • Succe
Slide 9: Filter Products
FILTER PRODUCTS • Underlying volumes > FY 2012 £m – Strong growth esp. in Asia (61% 280 16% FY13 volumes) • Successful product launches & 240 14% development initiatives 12% – Significant contract wins 200 – Distinctive shaped and reduced 10% tow filter variants (eg, Groove 160 Core, BiTech™) 8% – F
Slide 10: Key Operational Developments
KEY OPERATIONAL DEVELOPMENTS Component & Protection Solutions Packaging & Securing Solutions Investment in new purpose-built Components Investment in hot melt coating and distribution centre converting equipment Porous Technologies Filter Products Investment in sterile alcohol bottling Continued inv
Slide 11: Key Commercial Developments
KEY COMMERCIAL DEVELOPMENTS Component & Protection Solutions Packaging & Securing Solutions Integrated catalogues launched in Europe, Innovative new solutions under the “Packaging North America and Asia Resolved” commercial positioning Porous Technologies Filter Products Launch of dual technology, p
Slide 12: Key Organisational Developments
KEY ORGANISATIONAL DEVELOPMENTS • Appointed dedicated General Managers in India, China and Latin America • Adopted a more co-ordinated approach in faster-growing opportunity markets - New, standalone “One Essentra” facility opened in Bangalore • Started the transition to a more “matrix” organisation
Slide 13: Financial Review
FINANCIAL REVIEW Matthew Gregory Group Finance Director © 2013 ESSENTRA PLC
Slide 14: Income Statement - Summary
INCOME STATEMENT - SUMMARY FY 13 FY 12* Growth £m £m Actual Constant FX FX Revenue 798.1 663.4 +20% +20% Like-for-like1 +9% Gross margin 34.9% 35.9% -100bps -120bps Operating profit2 130.4 104.5 +25% +23% Operating margin 16.3% 15.8% +50bps +40bps Profit before tax2 119.8 93.8 +28% +26% Adjusted ear
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 - Reported growth +20 High quality revenue growth, driven by volume © 2013 ESSENTRA PLC 15
Slide 16: Revenue Growth – By Division
REVENUE GROWTH – BY DIVISION FY 13 Growth £m Constant FX Component & Protection Solutions 223.7 +6% LFL1 growth +5% Porous Technologies 100.0 +14% LFL1 growth +6% Packaging & Securing Solutions 181.8 +59% LFL1 growth +4% Filter Products 269.9 +17% LFL1 growth +17% Extrusion 24.8 +2% Eliminations (2.
Slide 17: Gross Margin
1 GROSS MARGIN Continued operational improvements +70bps • Higher volume leading to 38 operational gearing • Further cost improvement 35.9 36.1 36 / efficiency initiatives 35.0 34.9 • Productivity gains from ongoing upgrade of 34 machinery % 32.4 Mix impact from higher -60bps 32 growth in Filters Li
Slide 18: Operating Profit – Key Movements
OPERATING PROFIT – KEY MOVEMENTS 1 14.6 130.4 8.4 104.5 1.3 (14.5) 16.1 £m FY 2012* Currency Raw material Pricing Acquisitions Volume & mix FY 2013 translation & other input costs Pricing offsets higher raw material & other input costs 1Adjusted to exclude intangible amortisation and exceptional ope
Slide 19: Operating Profit by Division
1 OPERATING PROFIT BY DIVISION Adjusted1 operating profit FY 13 Growth Margin £m Constant FX Component & Protection Solutions 52.6 +12% 23.5% Porous Technologies 23.5 +12% 23.5% Packaging & Securing Solutions 30.2 +39% 16.6% Filter Products 40.1 +41% 14.9% Extrusion 1.5 -10% 6.0% Central Services (1
Slide 20: Income Statement – Continued
INCOME STATEMENT – CONTINUED FY 13 Growth £m Actual Constant FX FX Operating profit1 130.4 +25% +23% Net finance charge (10.6) (1)% (1)% Profit before tax1 119.8 +28% +26% Tax rate down Underlying tax rate 27.4% 200bps Net income1 86.9 +31% +29% Adjusted earnings1 86.7 Impact of share EPS - adjusted
Slide 21: Exceptional Operating Items
EXCEPTIONAL OPERATING ITEMS FY 13 £m Acquisition fees 4.7 Acquisition integration & restructuring costs 12.6 Other 1.9 Total exceptional operating items 19.2 © 2013 ESSENTRA PLC 21
Slide 22: Cash Flow
1 CASH FLOW 160 25.8 (5.3) (43.7) Operating cash conversion = 82% (2012: 75%) 140 130.4 120 £m 107.2 (17.5) 100 (9.4) (6.1) 80 74.2 60 Continued strong cash generation © 2013 ESSENTRA PLC 22 1 Adjusted to exclude intangible amortisation and exceptional operating items
Slide 23: Working Capital
WORKING CAPITAL Working capital / revenue1 (WCR) FY12 11.1% FY13 LFL 10.3% FY13 10.7% 10.0% 11.0% 12.0% Improved WCR ratio, notwithstanding acquisition impact 1 Constant exchange rates, based on last 12 month revenue © 2013 ESSENTRA PLC 23
Slide 24: Net Debt Reconciliation
NET DEBT RECONCILIATION £m As at 1 January 2013 164 FX (1) As at 31 December 2013 217 Change in net debt after FX 54 Of which: Free cash flow (74) Acquisitions (net of share placing) 66 Dividends 31 Exceptionals 17 Net cashflow from employee trust shares 12 Other 2 54 NOTE: Net debt / EBITDA ratio o
Slide 25: Dividend
DIVIDEND +23% 16.0 15.4 14.0 12.5 12.0 10.5 10.0 9.0 7.8 Pence 8.0 6.0 4.0 2.0 0.0 FY09 FY10 FY11 FY12 FY13 Progressive dividend 1 Adjusted to exclude intangible amortisation and exceptional operating items © 2013 ESSENTRA PLC 25
Slide 26: 2014 Outlook
2014 OUTLOOK • Well-positioned to deliver further balanced, profitable growth – Potential FX impact – H2 > H1 owing to: • Headwind in Porous Technologies • Possible closure costs in Filter Products • At least 100bps improvement in the tax rate vs FY 2013 • Further strong free cash flow generation –
Slide 27: Vision 2015 Update & 2014 Outlook
VISION 2015 UPDATE & 2014 OUTLOOK Colin Day Chief Executive © 2013 ESSENTRA PLC
Slide 28: Vision 2015 – Our Progress in 2013
VISION 2015 – OUR PROGRESS IN 2013 Progressive dividend - FY 2013: +23% ≥100% profit conversion to cash - FY 2013: 82% Volume leverage to drive GM expansion - FY 2013: -120bps1 c. 50% conversion to OM - FY 2013: +40bps1 LFL revenue growth: ≥ mid single-digit CAGR - FY 2013: +9% Delivering balanced p
Slide 29: Vision 2015 – Our Progress to Date
VISION 2015 – OUR PROGRESS TO DATE Market cap. (£m) FTSE # 2,500 158 2,000 191 222 1,500 1,000 274 299 500 0 Dec-05 Dec-10 Dec-11 Dec-12 Dec-13 Dec-05 Dec-10 Dec-11 Dec-12 Dec-13 Four-fold increase in market cap. since end-2010 © 2013 ESSENTRA PLC 29
Slide 30: Vision 2015 – Our Progress to Date
VISION 2015 – OUR PROGRESS TO DATE 24% 20% 16% 12% 8% 4% 0% LFL Revenue Operating Profit EPS Growth DPS Growth NWC Growth 2005-2010 2010-2013 * Net working capital ratio is as at 31 December 2010 and 31 December 2013 © 2013 ESSENTRA PLC 30
Slide 31: Regionalisation: 2014
REGIONALISATION: 2014 Europe Americas Asia Revenue*: 45% Revenue*: 30% Revenue*: 25% People: c.3,200 People c.1,300 People c.1,200 Specialist Technologies Revenue: 77% People: c.4,300 Distribution Revenue: 23% People: c.1,400 A growth enabler, to enhance focus, scale & operational efficiency * Reven
Slide 32: Our Next Key Milestone: £1bn Revenue
OUR NEXT KEY MILESTONE: £1BN REVENUE 1,000 950 900 850 800 750 700 650 600 550 500 2013 LFL 2013 M&A FX Further M&A/ **£1bn** Annualised "Stretch" Chart for illustration only, based on the following assumptions: Organic - Mid single-digit LFL revenue growth of 5% - Estimated FY 2014 FX impact, based
Slide 33: 2014: Summary
2014: SUMMARY • Well positioned for continued balanced, profitable growth – Improving economic backdrop – Pipeline of new project wins – Ongoing initiatives to drive further margin expansion • Focus on successful integration of recent acquisitions and further pipeline development • Continued strong
Slide 34: Beyond Vision 2015 …?
BEYOND VISION 2015 …? … to be unveiled end-2014 © 2013 ESSENTRA PLC 34
Slide 35: Appendices
APPENDICES © 2013 ESSENTRA PLC
Slide 36: Income Statement – Reported Basis
INCOME STATEMENT – REPORTED BASIS FY 13 Growth Actual Constant £m FX FX Adjusted operating profit 130.4 +25% +23% Intangible amortisation (14.2) Exceptional operating items (19.2) Reported operating profit 97.0 +13% +12% Net finance charge (10.6) Profit before tax 86.4 +15% +14% Taxation (26.1) - Un
Slide 37: Exchange Rates
EXCHANGE RATES Year ended 31 December 2013 Average Closing US $/£ 1.57 1.66 Euro €/£ 1.18 1.20 Impact of a one cent change per annum Op. Profit (£m) US $/£ 0.4 Euro €/£ 0.2 Year ended 31 December 2012 Average Closing US $/£ 1.59 1.63 Euro €/£ 1.23 1.23 © 2013 ESSENTRA PLC 37
Slide 38: Revenue by Destination – FY 2013
REVENUE BY DESTINATION – FY 2013 24% 46% Europe Americas Asia 30% © 2013 ESSENTRA PLC 38
Slide 39: 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 40: Investor Presentation: Full Year 2013 Results
INVESTOR PRESENTATION Full Year 2013 Results 20 FEBRUARY 2014