Capital Markets Event 25 th October 2011
Agenda 16.40 Welcome Mark Rollins 16.45 Q3 IMS Simon Nicholls 17.00 Scene Setting Mark Rollins 17.15 Commercial Aerospace Markets Peter Woolfrey 17.35 Aerostructures Division Overview Jerry Goodwin 17.55 Senior Aerospace AMT Mark Riffle 18.15 Senior Aerospace Mexico Aldo Rodriguez 18.35 Senior Aerospace Jet Products Damon Evans 18.55 Summary Mark Rollins 19.00 Drinks 19.15 Dinner 21.00 Evening Close Please ask questions at the end of each session Capital Markets Event 25 th October 2011 Page 1
Q3 IMS (Simon Nicholls) Capital Markets Event 25 th October 2011
Q3 Interim Management Statement Performance Q3 healthy and in line with expectations. Net debt below June level of £63m. Replacement £60m RCF (2016) in place. Undrawn today. Aerospace Boeing/Airbus deliveries healthy but flat. Orders up 100%. B737 Max announced – following A320NEO earlier in year. B787 & 747-8 delivered. Build rates now ramping up. Military still OK. Regional and business jets weak. Flexonics N.America trucks strong. European/Brazil cars weaker. German industrial healthy. N.America coal-fire: still waiting. Encouraging recent order in-take. Board Martin Clark intends to retire at next AGM (April 2012). External recruitment on-going. Outlook Macroeconomic uncertainty but Senior still performing well. Large commercial strong and visible. 2011 expected in line. Further progress in 2012 and beyond. Capital Markets Event 25 th October 2011 Page 2
Scene Setting (Mark Rollins) Capital Markets Event 25 th October 2011
Purpose of the Event To provide a better understanding of: What makes Senior tick; The commercial aerospace market; Senior’s Aerostructures products, capabilities and facilities; The nature of Senior’s future opportunities in these areas; and The management Senior has to deliver on such opportunities. Capital Markets Event 25 th October 2011 Page 3
What is Senior International manufacturing Group with 27 operations in 11 countries Market-leading engineering solutions provider for OEMs in the worldwide aerospace, defence, land vehicle and energy markets Operates through two reporting (three management) Divisions: Aerospace (Fluid Systems & Aerostructures) & Flexonics “Tell it as it is” philosophy throughout the organisation Culture of empowerment of autonomous, but collaborative, operations operating within a well-defined control framework People, operational excellence and customer relationships are all key Consistent focus on cash generation and operating in a safe manner Capital Markets Event 25 th October 2011 Page 4
Group Structure Attending this evening Capital Markets Event 25 th October 2011 Page 5
H1 2011 Group Performance H1 2011 H1 2010 Change Revenue £287.7m £315.6m +10% Adjusted Operating Profit £43.0m £37.7m +14% Adjusted Operating Margin 13.6% 13.1% - Revenue Operating Profit Headcount (5,307) 23% 31% 28% 41% 36% 45% 32% 28% 35% Aerospace – Structures Aerospace – Fluid Systems Flexonics Capital Markets Event 25 th October 2011 Page 6
Group Markets (H1 2011) Other Industrial 4% Petrochemical 4% Heating, Ventilation & Solar 5% 24% Large Commercial Aircraft Power & Energy 6% 40% Flexonics 60% Aerospace Truck 8% Passenger Vehicles 13% 18% Military/Defence Aerospace 8% Regional & Business Jets Other Aerospace Division 8% 2% Space & Non Military Helicopter Capital Markets Event 25 th October 2011 Page 7
Aerospace Markets (H1 2011) Other Non Aerospace 10% Structures Division Space & Non Military Helicopter 1% Regional Jets 3% Large Commercial Aircraft 56% Business Jets 5% Fluid Systems Division Other Non Aerospace 16% Military/ Defence Military/ Defence Aerospace 25% Aerospace 36% Space & Non Military Helicopter 4% Regional Jets 7% Business Jets 14% Large Commercial Aircraft 23% Capital Markets Event 25 th October 2011 Page 8
An Encouraging Outlook Build rates increasing quickly – but can the supply chain keep up? Average Monthly Aircraft Deliveries 60 120 1.5 3.5 +41% 7.3 55 9.9 50 100 45 42.0 40 80 33.4 35 30 60 2.0 10.0 25 6.2 8.0 20 40 15 31.3 37.0 10 20 5 0 0 2010 2010 2011 2012 2013 2013 737 777 787 747-8 A320 A330 A380 Combined (RHS) Source: Boeing & Airbus Opportunity for Senior to increase ship-set values – performance key Capital Markets Event 25 th October 2011 Page 9
Commercial Aerospace Air traffic has doubled every 15 years Markets 20 year annual traffic growth 5% (Peter Woolfrey) Capital Markets Event 25 th October 2011
Commercial Aerospace Peter Woolfrey, Head of Business Development, Senior Plc A 31 year veteran of Aerospace and Defence having worked for Dowty Group, Smiths Aerospace and GE Aviation before taking up current role with Senior Plc in 2009. A graduate engineer by training, received an MBA from Bath University and has amassed extensive experience in working with many of the major Aerospace OEMs over the years. Capital Markets Event 25 th October 2011 Page 10
Commercial Aerospace Why is it attractive? • YoY global growth (5%) over long timeframe • Resilience to market disruptions Global Annual Traffic (RPKs-trillions) • Excellent forward order visibility 9 e.g. 7 - 8 year backlog 8 7 6 Air traffic has • Long term contracts 5 doubled 20 year every 15 4 annual traffic years 3 • High entry barriers growth 5% 2 1 0 • Significant aftermarket $$$ 0 4 8 2 6 0 4 8 2 6 0 4 8 2 6 0 7 7 7 8 8 9 9 9 0 0 1 1 1 2 2 3 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 Capital Markets Event 25 th October 2011 Page 11
Commercial Aerospace Market sector $95 bn market in 2011 Rotorcraft 4% Bizjets 17% New Entrants Boeing ARJ 21 (China) 36% Regional MRJ 100 (Japan) 7% New Entrants Superjet 100 Bombardier C series (Canada) Comac 919 (China) Airbus 36% 72% held by Airbus and Boeing Capital Markets Event 25 th October 2011 Page 12
Commercial Aerospace Growth drivers 10 8 + Economic (GDP) growth driven by 6 % YoY growth emerging economies 4 2 + Yield increase (cost reduction) 0 7 7 8 8 9 9 0 0 1 1 -2 / / / / / / 1 1 1 1 + Deregulation: Asia, Latin America, Africa 1 3 1 3 1 3 / / / / Q Q Q Q Q Q 1 3 1 3 Q Q Q Q -4 + Tourism development -6 Global GDP Aircraft seats + Rise of “middle classes” in emerging 20 markets YoY % seat capacity 15 + Hubs and second city pairs 10 5 Challenges include ……….. 0 - Network constraints (airports) 7 7 8 8 9 9 0 0 1 1 / / / / / / 1 1 1 1 1 3 1 3 1 3 -5 / / / / 1 3 1 3 Q Q Q Q Q Q Q Q Q Q - High speed rail (substitution) -10 - Oil price (airline profitability) US EU Emerging - Asset funding (aircraft purchases) Capital Markets Event 25 th October 2011 Page 13
Commercial Aerospace Major platforms - top 8 by sector Air transport >100 seats Regional Bizjets Platform Price Annual Platform Price Annual Platform Price Annual $m’s values $m’s values $m’s values A320 48 19.4 G500/550 54 1.89 ERJ 190/195 34 1.83 B737 45 17.3 Falcon 7X 50 1.43 ERJ 170/175 30 0.99 Dash 8 18 0.92 G400/450 40 1.27 B777 160 12.1 CRJ 700/900 26 0.90 C600 33 0.89 A330 125 10.0 ATR 42/72 16 0.83 Falcon 900 44 0.88 A380 260 4.8 CRJ 1000 29 0.30 Global 5000 47 0.80 B767 170 1.8 ARJ 21 22 - Falcon 2000 33 0.77 B747-8 240 1.5 MRJ 31 - C300 26 0.70 787 124 1.2 TOTAL* $6bn TOTAL* $10bn TOTAL* $67bn % of Senior sales 5% % of Senior sales 24% % of Senior sales 3% Capital Markets Event *Based upon Teal forecast for 2011 25 th October 2011 Red = Platforms where Senior does not have content
Commercial Aerospace A320 NeO, B737 MAX % fuel cost of operating costs 40 35 Fuel cost 30 = 1/3 of 25 operating 20 costs 15 (average) 10 5 • Single aisle fuel costs equate typically to 0 1/3 of airline direct operating costs (DOC) Traditional carriers Low cost operators 20000 18000 • New Geared Turbo Fan (PW) and Leap X 20 year forecast 16000 (CFM) engines save 15% of DOC demand by aircraft 14000 size 12000 10000 • Operating benefits driving significant 8000 demand 6000 4000 2000 • Senior positioning to increase content 0 Single aisle Small twin Large twin Very large around engine, ducting and nacelle aisle aisle aircraft % unit 71% 17% 7% 5% • Entry into service schedule for 2016 % value 43% 28% 15% 14% Capital Markets Event 25 th October 2011 Page 15
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