Melrose PLC Full Year Results Announcement Twelve months to 31 - PowerPoint PPT Presentation

Buy Improve Sell Strictly private and confidential Melrose PLC Full Year Results Announcement Twelve months to 31 December 2011 March 2012

Contents Sections 1 Highlights 2 Summary financial results 3 Investment case 4 Summary of operating divisions 5 Energy 6 Lifting 7 Other Industrial 8 Questions 9 Appendices Buy Improve 2 Sell

Buy Improve Sell Highlights 3

Highlights in 2011  Businesses performing strongly ‒ Sales, orders, profits and margins are all up ‒ Investment phase well underway ‒ Raw material cost increases recovered  More to go for in all businesses  Since flotation in 2003 c.£1.5 billion of shareholder value created  Dynacast sold and proceeds returned to shareholders  New five year £600 million bank refinancing  Final dividend of 8.4p (20% increase)  Seeing more acquisition opportunities but will be selective Buy Improve 4 Sell

Buy Improve Sell Summary financial results 5

Buy Improve Sell Summary financial results Income performance 6

Income Statement  significant growth in all areas 2011 headline ¹ growth 2011 statutory format Reported 2011 2010 ² growth Continuing operations Headline ¹ Other Total Revenue ( £ m) - 1,153.9 1,153.9 Revenue ( £ m) 1,153.9 1,035.4 +11% Operating profit/(loss) ( £ m) 180.8 (63.8) 117.0 Order intake (£m) 1,212.6 991.2 +22% Operating margin 15.7% n/a 10.1% Headline ¹ operating profit ( £ m) 180.8 147.0 +23% Profit/(loss) before tax ( £ m) 161.2 (63.8) 97.4 Headline ¹ operating margin 15.7% 14.2% +1.5ppts Tax ( £ m) (41.4) 58.8 17.4 Headline ¹ profit before tax ( £ m) 161.2 121.7 +32% Profit/(loss) after tax ( £ m) (5.0) 114.8 119.8 Profit from discontinued Headline ¹ tax ( £ m) (41.4) (34.5) operations ( £ m) - 171.7 171.7 Headline ¹ profit after tax ( £ m) 119.8 87.2 +37% Profit for the year ( £ m) 119.8 166.7 286.5 Headline ¹ weighted average diluted EPS – full Group ³ 28.8p +20% 24.1p 2011 other non-headline ¹ items Proforma 4 headline ¹ diluted EPS – continuing Group 28.4p 20.9p +36% Continuing operations Operating Tax Total Highlights Intangible asset amortisation ( £ m) (23.7) - (23.7)  Significant growth achieved in all areas Increase in legal provision ( £ m) (21.0) - (21.0)  Profit growth up to three times faster than revenue Restructuring costs ( £ m) (15.9) - (15.9)  Exceptional costs £5.0 million net of tax Acquisition and disposal costs ( £ m) (3.2) - (3.2) Tax relief on exceptional items ( £ m) - 20.7 20.7 Exceptional tax credit ( £ m) - 38.1 38.1 Total other non-headline ¹ costs ( £ m) (63.8) 58.8 (5.0) Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Restated to include the results of Dynacast, Brush Traction, Logistex UK, Madico and Weber Knapp within discontinued operations Improve 2. 7 Sell Calculated using results of continuing and discontinued operations 3. Calculated using continuing operations only and current number of shares 4.

Revenue growth accelerating Group revenue growth – year on year 2011 summary performance Reported 2011 growth +14% Revenue (£m) Revenue ( £ m) 1,153.9 1,153.9 +11% +11% +9% Order intake (£m) 1,212.6 +22% Headline ¹ operating profit ( £ m) 180.8 +23% Headline ¹ operating margin 15.7% +1.5ppts Headline ¹ profit before tax ( £ m) 161.2 +32% Headline ¹ tax ( £ m) (41.4) First half Second half Headline ¹ profit after tax ( £ m) 119.8 +37% 2011 2011 Headline ¹ weighted average diluted EPS – full Group ² 28.8p +20% Proforma ³ headline ¹ diluted EPS – continuing Group 28.4p +36% Revenue (HY2 11) v previous peak (HY2 08) Highlights  Pace of revenue growth is increasing +1% +4% -3% +3% ‒ First half up 9% ‒ Second half up 14% Group Energy Lifting Other Industrial  Each division trading at similar level to previous peak sales (HY2 2008) Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Calculated using results of continuing and discontinued operations Improve 2. 8 Sell Calculated using continuing operations only and current number of shares 3.

Strong order intake signalling confidence for the future Order intake growth – year on year 2011 summary performance Reported 2011 growth +37% Revenue ( £ m) 1,153.9 +11% Order intake (£m) 1,212.6 +22% Order intake (£m) 1,212.6 +22% +22% +21% Headline ¹ operating profit ( £ m) 180.8 +23% Headline ¹ operating margin 15.7% +1.5ppts Headline ¹ profit before tax ( £ m) 161.2 +32% -1% Headline ¹ tax ( £ m) (41.4) Headline ¹ profit after tax ( £ m) 119.8 +37% Group Energy Lifting Other Industrial Headline ¹ weighted average diluted EPS – full Group ² 28.8p +20% Proforma ³ headline ¹ diluted EPS – continuing Group 28.4p +36% Months of revenue in order book Highlights  Orders coming in faster than revenue growth 4.3 7.9 2.1 1.7  months months months months Book to bill ratio 1.05x  Order book equal to more than four months of revenue Group Energy Lifting Other Industrial Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Calculated using results of continuing and discontinued operations Improve 2. 9 Sell Calculated using continuing operations only and current number of shares 3.

Headline ¹ operating margin continues to grow 2011 summary performance Headline ¹ operating margin Reported 2011 growth 15.9% 15.5% Revenue ( £ m) 1,153.9 +11% 14.2% Order intake (£m) 1,212.6 +22% Headline ¹ operating profit ( £ m) 180.8 +23% Headline ¹ operating margin Headline ¹ operating margin 15.7% 15.7% +1.5ppts +1.5ppts 10.0% Headline ¹ profit before tax ( £ m) 161.2 +32% Headline ¹ tax ( £ m) (41.4) Headline ¹ profit after tax ( £ m) 119.8 4 +37% FKI acquisition Full year First half Second half 2010 2011 2011 (Jul 08) Headline ¹ weighted average diluted EPS – full Group ² 28.8p +20% Proforma ³ headline ¹ diluted EPS – continuing Group 28.4p +36% Growth in operating margin since FKI (cumulative) Highlights  Continued improvement in headline operating margin +2.3ppts +4.2ppts +5.5ppts +5.9ppts ‒ +3.2ppts +1.3ppts +0.4ppts First half 15.5% ‒ Second half 15.9% First 2010 First half Second half 18 months 2011 2011  Cumulative 5.9 percentage point improvement since FKI acquisition (on similar revenue base) Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Calculated using results of continuing and discontinued operations Improve 2. 10 Sell Calculated using continuing operations only and current number of shares 3. Per last FKI results before Melrose acquisition, March 2008 (continuing operations) 4.

Headline ¹ earnings per share (EPS) at record levels 2011 summary performance 2011 headline ¹ diluted EPS growth Reported 2011 growth +36% Revenue ( £ m) 1,153.9 +11% Order intake (£m) 1,212.6 +22% +20% Headline ¹ operating profit ( £ m) 180.8 +23% Headline ¹ operating margin 15.7% +1.5ppts Headline ¹ profit before tax ( £ m) 161.2 +32% Headline ¹ tax ( £ m) (41.4) Headline ¹ profit after tax ( £ m) 119.8 +37% ³ ² Full Group Continuing Group Headline ¹ weighted average diluted EPS – full Group ² (weighted) Headline ¹ weighted average diluted EPS – full Group² (p) 28.8p +20% (proforma) 28.8 +20% Proforma ³ headline ¹ diluted EPS – continuing Group Proforma³ headline ¹ diluted EPS – continuing Group (p) 28.4 +36% 28.4p +36% 2011 headline ¹ diluted EPS Highlights  Full Group EPS (including Dynacast) up 20%  28.8p 28.4p Continuing Group EPS (excluding Dynacast) up 36%  New pension accounting rules (IAS 19) will add c.£6 million (EPS = c.1p) Full Group² Continuing Group³ to the pension charge in the Income Statement in 2013 and beyond (weighted) (proforma) Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Calculated using results of continuing and discontinued operations Improve 2. 11 Sell Calculated using continuing operations only and current number of shares 3.

Buy Improve Sell Summary financial results Cash performance 12

Profit conversion to cash strong, working capital efficient Cash generated from trading (after all costs including tax) 2011 headline ¹ EBITDA ³ conversion to cash (pre capex) Last 12 months (£m) 102% Headline ¹ operating profit 180.8 Depreciation ² 23.1 74% Working capital movement (23.3) Headline ¹ operating cash flow (pre capex) 180.6 Headline¹ EBITDA ³ conversion to cash (pre capex) % 89% Net capital expenditure (38.9) Net interest and net tax paid (38.9) First half Second half Defined benefit pension contributions (24.9) Other (including discontinued operations) (23.4) Cash generated from trading (after all costs including tax) 54.5 Highlights  Cash generation strong, and getting stronger in the second half 110% ‒ First half conversion 74% ‒ Second half conversion 102% Total profit conversion to cash since start of Melrose  Working capital efficiencies remain intact despite business growth Before exceptional costs, exceptional income and intangible asset amortisation 1. Buy Includes computer software amortisation Improve 2. 13 Sell Operating profit before depreciation and amortisation 3.