Buy Improve Sell Strictly private and confidential Melrose Industries PLC Full Year Results Twelve months to 31 December 2014 March 2015
Contents Sections 1 Highlights 2 Summary financial results 3 Summary of operating divisions 4 Brush 5 Elster 6 Questions 7 Appendix Buy Improve 2 Sell
Buy Improve Sell Highlights 3
1 in 2014 Highlights Headline 2 profit before tax of £213 million, up 21% (11% at actual currency) and headline 2 proforma earnings per share 3 of 15.3p Elster profits up by two thirds (circa £80 million) in the two full years of ownership Elster now delivering revenue and order intake growth, up +9% and +6% respectively in the second half of 2014 All three Elster divisions achieved profit growth in 2014 (Gas +13%, Electricity +23% and Water +11%) Brush (revenue -3% and profit -7%) suffering from a tough OEM generator end market In November 2014 Bridon sold for £365 million, doubling shareholders’ original investment Return of Capital of £200 million (18.7p per share) to be paid on 16 March 2015 alongside a 13 for 14 share consolidation IFRS profit after tax 4 of £87 million (2013: £102 million) Net debt at 31 December 2014 of £501 million, equal to 1.8x EBITDA 5 . Adjusting for the Return of Capital in March 2015, proforma leverage equal to 2.5x EBITDA 5 Final proposed dividend of 5.3p per share (2013: 5.0p). Full year dividend increased by 5% to 8.1p per share (2013: 7.75p) In common with many companies that trade internationally the movement in exchange rates in 2014 has caused a headwind to profits of around 8%. For ease of comparison, unless stated otherwise, the year on year variances in this announcement are stated using constant rates. Continuing businesses only and at constant currency unless otherwise stated 1. Before exceptional costs, exceptional income and intangible asset amortisation Buy 2. Calculated using the diluted number of shares in issue following the Return of Capital and the related share consolidation Improve 3. 4 Sell After exceptional costs, exceptional income and intangible asset amortisation 4. Headline 2 operating profit before depreciation and amortisation 5.
Buy Improve Sell Summary financial results Income performance 5
Income Statement FY 2014 headline ¹ growth 2 Group £m FY 2014 Growth Elster Growth Brush Growth FY 2014 statutory format Revenue 1,377.5 flat 1,050.2 +1% 327.3 -3% Continuing operations £m Headline¹ Other Total Headline¹ operating profit 246.0 +11% 205.5 +14% 65.4 -7% Revenue 1,377.5 - 1,377.5 Headline¹ operating margin % 17.9% +1.7ppts 19.6% +2.3ppts 20.0% -0.8ppts Operating profit 246.0 (83.6) 162.4 Headline¹ profit before tax 212.5 +21% Operating margin % 17.9% n/a 11.8% Headline¹ tax (57.4) +24% Profit before tax 212.5 (83.6) 128.9 Headline¹ profit after tax 155.1 +20% Tax (charge)/credit (57.4) 15.6 (41.8) Profit after tax 155.1 (68.0) 87.1 Headline 1 diluted EPS 3 (no. of shares at year end) 14.2p Profit from discontinued operations - 107.6 107.6 Proforma diluted EPS 4 (no. of shares post RoC) 15.3p Profit for the year 155.1 39.6 194.7 Order intake 1,294.2 +1% 1,017.9 +3% 276.3 -8% Book to bill % 94% 97% 84% FY 2014 other non-headline¹ items Continuing operations £m Operating Tax Total Intangible asset amortisation (54.7) 15.9 (38.8) Highlights Restructuring costs (30.6) 4.8 (25.8) Acquisition and disposal costs (3.7) - (3.7) Group revenue flat, headline 1 operating profit up 11% Exceptional tax - (3.9) (3.9) Headline 1 operating margin up 1.7ppts Exceptional income 5.4 (1.2) 4.2 Headline 1 diluted EPS 3 of 14.2p being 15.3p on a proforma 4 basis post the Return of Total other non-headline¹ items (83.6) 15.6 (68.0) Capital Group order intake up 1% Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Continuing businesses only and at constant currency 2. Improve Calculated using the number of shares in issue at 31 December 2014 6 3. Sell Calculated using the number of shares in issue following the Return of Capital and the related share consolidation 4.
Revenue growth FY 2014 headline ¹ growth 2 Group Revenue growth 2 – by division £m FY 2014 Growth Elster Growth Brush Growth compared to 12 months ago Revenue Revenue 1,377.5 1,377.5 flat flat 1,050.2 1,050.2 +1% +1% 327.3 327.3 -3% -3% Headline¹ operating profit 246.0 +11% 205.5 +14% 65.4 -7% Headline¹ operating margin % 17.9% +1.7ppts 19.6% +2.3ppts 20.0% -0.8ppts Headline¹ profit before tax 212.5 +21% flat +1% -3% Headline¹ tax (57.4) +24% Group Elster Brush Headline¹ profit after tax 155.1 +20% Headline 1 diluted EPS 3 (no. of shares at year end) 14.2p Proforma diluted EPS 4 (no. of shares post RoC) 15.3p Order intake 1,294.2 +1% 1,017.9 +3% 276.3 -8% Book to bill % 94% 97% 84% Revenue growth 2 – Elster compared to 12 months ago Highlights +1% +6% -4% -12% Group revenue flat at constant currency but up 5% in the second half Elster Gas revenue grew by 6% Elster Gas Electricity Water Group Water revenue decline impacted by the previous market closures (final year effect) Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Continuing businesses only and at constant currency 2. Improve Calculated using the number of shares in issue at 31 December 2014 7 3. Sell Calculated using the number of shares in issue following the Return of Capital and the related share consolidation 4.
Order intake FY 2014 headline ¹ growth 2 Group £m FY 2014 Growth Elster Growth Brush Growth Order intake growth 2 compared to 12 months ago Revenue 1,377.5 flat 1,050.2 +1% 327.3 -3% Headline¹ operating profit 246.0 +11% 205.5 +14% 65.4 -7% Headline¹ operating margin % 17.9% +1.7ppts 19.6% +2.3ppts 20.0% -0.8ppts Headline¹ profit before tax 212.5 +21% +3% +1% -8% Headline¹ tax (57.4) +24% Group Elster Brush Headline¹ profit after tax 155.1 +20% Headline 1 diluted EPS 3 (no. of shares at year end) 14.2p Proforma diluted EPS 4 (no. of shares post RoC) 15.3p Order intake 1,294.2 1,294.2 +1% +1% 1,017.9 1,017.9 +3% +3% 276.3 276.3 -8% Order intake -8% Book to bill % 94% 97% 84% Months of revenue in order book Highlights 3.8 3.4 5.3 Group order intake up 1% on last year driven by a good performance in Elster months months months Group Elster Brush Elster order intake up 3% year on year Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Continuing businesses only and at constant currency 2. Improve Calculated using the number of shares in issue at 31 December 2014 8 3. Sell Calculated using the number of shares in issue following the Return of Capital and the related share consolidation 4.
Revenue and order intake – half year trends FY 2014 headline ¹ growth 2 Group Revenue growth 2 – half year trends £m FY 2014 Growth Elster Growth Brush Growth compared to 12 months ago Revenue Revenue 1,377.5 1,377.5 flat flat 1,050.2 1,050.2 +1% +1% 327.3 327.3 -3% -3% Headline¹ operating profit 246.0 +11% 205.5 +14% 65.4 -7% HY1 HY2 Headline¹ operating margin % 17.9% +1.7ppts 19.6% +2.3ppts 20.0% -0.8ppts Elster -7% +9% Headline¹ profit before tax 212.5 +21% Headline¹ tax (57.4) +24% Brush flat -6% Headline¹ profit after tax 155.1 +20% Group -5% +5% Headline 1 diluted EPS 3 (no. of shares at year end) 14.2p Proforma diluted EPS 4 (no. of shares post RoC) 15.3p Order intake 1,294.2 1,294.2 +1% +1% 1,017.9 1,017.9 +3% +3% 276.3 276.3 -8% Order intake -8% Book to bill % 94% 97% 84% Order intake growth 2 – half year trends compared to 12 months ago HY1 HY2 Highlights Elster +1% +6% Elster revenue and order intake trend improved markedly in the second half, up 9% and 6% respectively Brush -1% -17% Brush order intake down 17% in the second half in a tough OEM generator market Group +1% flat Expecting a higher weighting of profits to the second half of the year in 2015 given the current order profile Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Continuing businesses only and at constant currency 2. Improve Calculated using the number of shares in issue at 31 December 2014 9 3. Sell Calculated using the number of shares in issue following the Return of Capital and the related share consolidation 4.
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