2008 PRELIMINARY RESULTS Introduction Stephen Harris CEO - PowerPoint PPT Presentation

2008 PRELIMINARY RESULTS

Introduction • Stephen Harris – CEO • David Landless – Group FD • John Hubbard – former CEO 2008 Preliminary results 2 1 2008 Preliminary results

Introduction • Stephen Harris – CEO • David Landless – Group FD • John Hubbard – former CEO North America: 43 Western Europe: 115 Emerging Market: 35 2008 Preliminary results 3 2 2008 Preliminary results

Introduction • Stephen Harris – CEO • David Landless – Group FD • John Hubbard – former CEO North America: 43 Western Europe: 115 Emerging Market: 35 2008 Preliminary results 4 3 2008 Preliminary results

Highlights 2008 Preliminary results 5 4 2008 Preliminary results 1 Pre exceptional items and interest and tax on associates.

Statutory Results 2008 Preliminary results 6 5 2008 Preliminary results

Headline Results 2008 Preliminary results 1 Earnings before exceptionals, interest, tax, depreciation, amortisation, impairment and shared-based payments. 2 Pre exceptional items and interest and tax on associates. 7 3 Pre exceptional items and tax on associates. 6 2008 Preliminary results 4 Pre exceptional items.

Profit Reconciliation – Continuing Operations 2008 Preliminary results 8 7 2008 Preliminary results 1 Pre exceptional items and tax on associates.

Profit Bridge – Thermal Processing (£m) 90.0 85.0 -3.7 +8.7 80.0 -15.1 75.0 +6.5 70.0 +5.3 -0.8 65.0 60.0 55.0 50.0 45.0 40.0 35.0 71.2 70.3 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Headline OP Price increases Volume growth Input costs Greenfield Acquisitions exchange Headline OP Foreign 2007 2008 2008 Preliminary results 9 8 2008 Preliminary results Headline Operating Profit is stated pre exceptional items and interest and tax on associates.

Revenue and Operating Profit - By Region 2008 Preliminary results 10 9 2008 Preliminary results 1 Pre exceptional items and interest and tax on associates.

YoY Change in Revenue 2008 Preliminary results 11 10 2008 Preliminary results

Headline Operating Margins 2008 Preliminary results 12 11 2008 Preliminary results 1 Pre exceptional and interest and tax on associates .

Revenue By Market – Continuing Operations 2008 Preliminary results 13 12 2008 Preliminary results

Finance Charge 2008 Preliminary results 14 13 2008 Preliminary results

Year End Cash and Debt at Various Exchange Rates 2008 Preliminary results 15 14 2008 Preliminary results

Treasury • Balance Sheet Hedging will be relaxed • £225m RCF matures in August 2010 but could refinance in 2009 • Significant margin increase and fees expected for any refinancing • � 125m RCF matures July 2013 2008 Preliminary results 16 15 2008 Preliminary results

Taxation 2008 Preliminary results • 2009 anticipated tax rate on Headline Profit Before Tax 1 25.0% 17 16 2008 Preliminary results 1 Pre exceptional items and tax on associates.

Financial Information • Shares in issue – 2008 average 310.9m 2009 187.5m • FX rates 2008 average Year H1 H2 USD 1.87 1.98 1.75 EUR 1.26 1.29 1.23 2009 current * USD 1.44 EUR 1.13 2008 Preliminary results 18 17 2008 Preliminary results ‘*Closing rate 24 February 2009.

Pension Deficits 2008 Preliminary results 19 18 2008 Preliminary results

Summary Cash Flow 2008 Preliminary results 20 1 Earnings before exceptionals, interest, tax, depreciation, amortisation, impairment and shared-based payments. 19 2008 Preliminary results 2 Earnings before interest, tax, depreciation, amortisation, impairment and shared based payment.

Financial Ratios 2008 Preliminary results 21 1 Earnings before interest, tax, depreciation, amortisation, impairment and shared-based payments. 20 2008 Preliminary results 2 Pre exceptional items and interest and tax on associates.

Heat Treatment Revenue (£m) 600 499.9 500 421.7 375.0 400 349.2 328.7 300 200 100 0 2004 2005 2006 2007 2008 % Operating Profit - Margins £m 70 25 61.6 60.0 60 20 50.3 50 44.8 38.8 15 40 30 10 20 5 10 0 0 2008 Preliminary results 2004 2005 2006 2007 2008 22 21 2008 Preliminary results

Hot Isostatic Pressing Revenue (£m) 60 51.9 50 43.5 38.9 40 35.2 32.1 30 20 10 0 2004 2005 2006 2007 2008 % Operating Profit - Margins £m 18 15.4 15.3 50 16 14 12.8 40 12 9.5 10 30 7.1 8 20 6 4 10 2 0 0 2004 2005 2006 2007 2008 2008 Preliminary results 23 22 2008 Preliminary results

Restructuring • Match cost base with reduced demand • Position business for recovery post recession • Removing unprofitable and low value added parts of the network • 31 facilities being closed or consolidated • Headcount is being reduced by at least 10% • Annualised cost saving £18m 2008 Preliminary results 24 23 2008 Preliminary results

Restructuring 2008 Preliminary results 25 24 2008 Preliminary results

Major Strategic Actions in 2008 • Value of Testing Realised • Balance sheet strengthened • Restructuring underway • Selective acquisitions 2008 Preliminary results 26 25 2008 Preliminary results

Outlook • Following the sale of the Testing activities Bodycote is a focused business with a strong balance sheet. While automotive markets have softened, demand from aerospace, power generation and oil & gas markets remain steady. • Despite the uncertain economic environment, we remain confident in the medium and long term prospects for the Group. 2008 Preliminary results 27 26 2008 Preliminary results

2008 PRELIMINARY RESULTS

Continuing Operations Financial Highlights Revenue Headline Operating Profit 1 CAGR 11% CAGR 13% 600 551.8 80 71.2 70.3 465.2 500 70 413.9 58.4 384.4 60 400 360.8 51.5 £m £m 50 43.1 300 40 30 200 20 100 10 0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Target: TP: 40% Target: Mid to high single digit % People costs as a percentage of revenue 3 Organic revenue growth 2 44 7.6 43.0 8 6.9 43 7 42.5 43 42.2 6 5.3 5 4.4 42 % 41.6 % 4 42 41.2 3 41 2 41 0.5 1 0 40 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2008 Preliminary results 29 1 Pre exceptional items and interest and tax on associates. 27 2008 Preliminary results 2 to 3 see definitions Appendix page 33.

Key Performance Indicators non financial Target: >80% Target: >80% Utilisation HIP 7 Utilisation Heat Treatment 6 73 76 72.0 74.0 72 71.0 71.0 74 73.0 71 72.0 70.0 72 71.0 70 69 70 % 68 % 68 67.0 67 66.0 66 66 65 64 64 63 62 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Target: All facilities Target: Zero ISO 14001 compliant facilities 8 Accident frequency 9 140 137 4 3.1 135 2.8 131 3 2.5 130 2.4 3 125 2.0 2 120 2 115 1 110 105 1 100 0 2007 2008 2004 2005 2006 2007 2008 2008 Preliminary results 30 28 2008 Preliminary results 6 to 9 see definitions Appendix page 33.

Acquisitions, Capital Expenditure & Depreciation 2008 Preliminary results 31 29 2008 Preliminary results 5 see definitions Appendix page 33.

Analysis Of Organic/Acquisition Growth 2008 Preliminary results 32 1 Includes annualised sales/operating profit from closed sites. 30 2008 Preliminary results 2 Pre exceptional items and interest and tax on associates.

Impact Of Exchange Rates 2008 Preliminary results 33 31 2008 Preliminary results 1 Pre exceptional items and interest and tax on associates.

Emerging Markets Emerging markets as a % of Thermal Processing sales 10.0% 9.3% 10.0% 3.6% 5.0% 2.2% 1.8% 0.0% 2004 2005 2006 2007 2008 2008 Preliminary results 34 32 2008 Preliminary results

Key performance indicators definitions 1. Headline operating profit as a percentage of average capital employed. Capital employed includes tangibles and intangibles assets including all previously amortised/impaired goodwill and all non interests bearing assets and liabilities. Headline operating profit is stated pre exceptional items and interest and tax on associates. 2. Headline operating profit as percentage of revenue from continuing operations. Headline operating profit is stated pre exceptional items and interest and tax on associates. 3. Year on year increase in revenue, at constant currencies from continuing operations excluding revenue from acquisitions made within the prior twelve months. 4. The salary and benefit costs of all employees as a percentage of revenue from continuing operations. 5. Net capital expenditure divided by depreciation. 6. Actual revenues expressed as a percentage of theoretical maximum revenue assuming that heat treatment facilities operate 24 hours per day, 365 days per year. 7. The number of facilities holding registrations for ISO 14001. 8. Accident frequency - the number of accidents x 200,000 (approximating 100 man years), divided by the 2008 Preliminary results total hours worked. 35 33 2008 Preliminary results