Slide 1: 2022 Half Year Results – 17 August 2022
2022 Half Year Results – 17 August 2022
Slide 2: Agenda
1 HY 2022 highlights 2 Strategic review update 3 Financial performance 4 Divisional updates 5 ESG update 6 Outlook 2
Slide 3: HY 2022 highlights
Sale of Packaging to Mayr-Melnhof Group announced in June for £312m, 12.4x implied EBITDA multiple The Filters strategic review continues to progress, and an update is expected by the end of Q3 Strong performance across the continuing group. Components and Filters delivered double digit revenue grow
Slide 4: Paul Forman, Chief Executive Officer
PAUL FORMAN CHIEF EXECUTIVE OFFICER
Slide 5: Sale of Packaging and Filters strategic review update
Sale of Packaging to Mayr-Melnhof Group Filters strategic review update • The sale of Packaging is the first step in repositioning Essentra as • The outcome of the review will mark the a global leading manufacturer and distributor of components second major step in realising the strategic goal of be
Slide 6: Jack Clarke, Chief Financial Officer
JACK CLARKE CHIEF FINANCIAL OFFICER
Slide 7: Key financial metrics
Revenue Adjusted operating profit Adjusted operating margin Adjusted basic EPS £340.8m £35.3m 10.4% 5.3p +14.0% LFL +43.8% +190bps H1 2021: 5.2p2 Group Net debt to EBITDA Cash conversion Interim dividend ROIC (last 12 months basis) 1 1.9x 45% 2.3p 16.4% All values are presented on a constant currenc
Slide 8: Income statement summary
HY 2022 HY 2021 Growth (restated)2 £m £m Actual FX Constant FX Revenue 340.8 287.9 18.4% 17.0% Operating profit1 35.3 24.6 43.5% 43.8% Operating margin1 10.4% 8.5% 190bps 190bps Profit before tax1 23.4 18.1 29.3% 26.9% Earnings1 16.0 15.8 1.3% Adjusted basic earnings per 5.3p 5.2p 1.9% share1 1 Pres
Slide 9: Continuing Operations – like-for-like revenue
HY 2022 HY growth £m Constant FX Components1 175.9 +18.6% Filters 164.9 +15.4% Continuing Operations 340.8 +17.0% Continuing Operations – like-for-like1 +14.0% Discontinued Operations: Packaging 205.6 +9.5% 1 Components 18.6% growth includes Hengzhu acquisition. On a like-for-like basis, excluding H
Slide 10: Adjusted operating profit by division
HY 2022 Growth Constant FX Margin £m Constant FX HY 2022 HY 2021 Components 35.9 33.7% 20.4% 18.1% Filters 15.1 27.2% 9.2% 8.3% Central Services (15.7) 10.9% Continuing Operations 35.3 43.8% 10.4% 8.5% Discontinued Operations2: Packaging 3.9 -59.4% 1.9% 5.1% 1 Adjusted to exclude intangible amortisa
Slide 11: Adjusting items
Continuing Discontinued Transaction costs relating to acquisition and disposal of businesses - 12.0 Loss on disposal due to goodwill impairment of packaging business - 181.6 Major software as a service (“SaaS”) development 6.2 - Other1 13.1 - Total charge from adjusting items 19.3 193.6 1 Other adju
Slide 12: Operating profit to EPS
HY 2022 Growth £m Actual FX Constant FX Operating profit1 35.3 43.5% 43.8% Net finance charge (11.9) Profit before tax1 23.4 29.3% 26.9% Taxation1 (6.2) Effective tax rate2 26.5% Profit for the period from continuing operations 17.2 4.2% 2.2% Non-controlling interests (1.2) Earnings1 16.0 1.3% EPS –
Slide 13: Cash flow and working capital
• Predominately due to higher inventory and receivables levels • Driven by enhanced trading volumes combined with a build-up of inventory to protect service levels • NWC ratio of 15.3%, compared with 14.8% on a continuing basis for 2021 1 2 4 1 3 1 1 On a continuing operations basis, adjusted to exc
Slide 14: Net debt movement
£m As of 1 January 2022 234.7 As of 30 June 2022 309.9 Total Change in Net Debt 75.2 Movement in FX 27.4 Change in net debt after FX, of which: 47.8 Free cash flow (9.3) Discontinued operations cash flow 12.8 Cash outflow in respect of adjusting items 31.1 Loan revaluations & Private Placement facil
Slide 15: Dividend
• Dividend resumed in FY20 with a final dividend of 3.3p per share, funded from free cash flow • The Board has since adopted a progressive dividend policy, guided by the objective of maintaining a robust balance sheet to pursue strategic opportunities • In line with this policy, an interim dividend
Slide 16: ROIC
ROIC % 16.4 13.7 14.5 9.4 FY 19 FY 20 FY 21 LTM 22 Prior years have been adjusted to present the business on a continuing operations basis, and restated for the adoption of IFRIC agenda decision on cloud-based software arrangements 16
Slide 17: Divisional updates
Slide 18: Components: 18.6% revenue growth in H1
18.6% revenue growth in H1 (12.7% LFL) with 20.4% margin Regular review of price across H1 to mitigate cost inflation Service metrics including NPS and OTIF are improving following the impact of COVID, as we have invested in inventory Revenue and operating margin as reported. LFL growth at constant
Slide 19: Filters: 15.4% growth in H1
15.4% growth in H1, supported by ‘game changers’ • Further success with contract business wins, including new BCP volume which grew 19% compared to HY21 • China JV volumes continue to grow reaching profitability in P6 Revenue and Operating Margin as reported. Growth at constant currency. • Interest
Slide 20: Environment, Social, Governance
Environment Social Governance • Normalised GHG emissions are now • Our people remain at the heart of our • Welcomed Jack Clarke as a new 21% below 2019 baseline journey director, and CFO, to the Board • 20% increase in renewable energy • Health and safety remains a key • Embedded changes in the Boar
Slide 21: Outlook
OUTLOOK PAUL FORMAN CHIEF EXECUTIVE OFFICER
Slide 22: Outlook
Strong H1 performance. LFL revenue growth of 14.0% and Outlook margin expansion from 8.5% to 10.4% • The Group remains well positioned with organic and inorganic growth opportunities, strong order Sale of Packaging announced and expected to complete in books and a robust balance sheet Q4 2022 • Comp
Slide 23: 2022 Half Year Results – Appendix
2022 Half Year Results – 17 August 2022
Slide 24: 2022 Half Year Results – Appendix
2022 Half Year Results – 17 August 2022
Slide 25: Adjusted to reported operating profit
HY2022 Growth £m Actual FX Constant FX Adjusted operating profit 35.3 43.5% 43.8% Intangible amortisation (5.0) Adjusting items (19.3) Reported operating profit 11.0 (37.5%) (37.2%) Net finance charge (11.9) Loss before tax (0.9) Taxation charge (3.7) Net loss on continuing (4.6) Loss from discontin
Slide 26: Packaging discontinued operations results
HY2022 HY2021 £m £m Revenue 205.6 187.0 Adjusted operating profit 6.7 11.3 Intangible amortisation (6.6) (6.9) Adjusting items (193.6) 3.0 Reported operating (loss) / profit (193.5) 7.4 Net finance charge (0.3) (0.5) (Loss) / profit before tax (193.8) 6.9 Taxation 11.0 (1.7) Net (loss) / profit (182
Slide 27: Foreign exchange rates
Six months ended 30 June 2022 Average Closing US$/£ 1.29 1.21 Euro €/£ 1.18 1.16 Impact on HY2022 of a one cent increase in rate Adjusted Op. profit movement (£m) US$/£ 0.1 Euro €/£ 0.2 Six months ended 30 June 2021 Average Closing US$/£ 1.39 1.38 Euro €/£ 1.15 1.17 27
Slide 28: ESG long-term 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 29: Disclaimer
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