2008 INTERIM RESULTS

Transkript

1 28 INTERIM RESULTS

2 Highlights Revenue 383m +21% Organic Revenue Growth 18m +6% Headline Operating Profit 1 53m +9% ROCE % +8bps 14 Greenfield Sites 32m Invested in Acquisitions Testing disposal progressing well Interim results 1 Pre exceptional items and interest and tax on associates.

3 Interim Results H1 28 H1 27 Change m m % Revenue EBITDA Headline Operating Profit Operating Profit Headline Profit Before Tax Headline EPS 4 1.8p 1.3p +5 Dividend/Share 2.95p 2.75p Interim results 1 Pre exceptional items, interest, tax, depreciation, amortisation and share-based payments. 2 Pre exceptional items and interest and tax on associates. 3 Pre exceptional items and tax on associates. 4 Pre exceptional items.

4 ( m) Profit Bridge Thermal Processing Headline OP 28 Foreign exchange Acquisitions Greenfield & closed sites NADCAP Accreditation Input prices Volume growth Price increases Headline OP 27 Headline Operating Profit is stated pre exceptional items and interest and tax on associates Interim results

5 ( m) Headline OP 28 Foreign exchange Infrastructure Acquisitions Greenfield & closed sites Headline Operating Profit is stated pre exceptional items and interest and tax on associates. Profit Bridge - Testing Input prices Volume growth Price increases Headline OP Interim results

6 Revenue and Operating Profit - By Region H1 27 H1 28 Western Europe North America Emerging Markets m Revenue m m m m 21.8 Heat Treatment Hot Isostatic Pressing Thermal Processing MEM* HSE** Testing Head Office Group Headline Operating Profit Heat Treatment Hot Isostatic Pressing Thermal Processing MEM* HSE** Testing (3.7) Head Office (4.8) 48.2 Group Interim results 1 Pre exceptional items and interest and tax on associates. * MEM: Materials Testing / Engineering Technology / Measurement Technology. ** HSE: Health Sciences and Environmental.

7 YoY Change in Revenue TOTAL Organic Western Europe Organic North America Organic Emerging Markets Organic % % % % % % % % Heat Treatment Hot Isostatic Pressing Thermal Processing Testing MEM (4) Testing HSE Testing (2) GROUP Interim results

8 Headline Operating Margins Headline Operating Margins 1 TOTAL% Western Europe% North America% Emerging Markets % Heat Treatment Hot Isostatic Pressing Thermal Processing Testing MEM Testing HSE Testing GROUP Interim results 1 Pre exceptional items and interest and tax on associates.

9 Revenue By Market - Group H1 28 H1 27 YoY Change Sector % % in Revenue % Aerospace/Defence Automotive - Cars & Light Truck Heavy Truck & Bus Civil Engineering, Agricultural, Railways & Marine Oil & Gas Tooling Medical/Health Science & Environmental Consumer Products Power Generation Electronics & Telecoms Miscellaneous Interim results

10 Revenue By Market Thermal Processing H1 28 H1 27 YoY Change Sector % % in Revenue % Aerospace/Defence Automotive - Cars & Light Truck Heavy Truck & Bus Civil Engineering, Agricultural, Railways & Marine Tooling Oil & Gas Power Generation Consumer Products Electronics & Telecoms Medical/Health Science & Environmental Miscellaneous Interim results

11 Profit Reconciliation H1 28 H1 27 Change m m % Headline Profit Before Taxation Amortisation of acquired intangibles (1.) (.8) Share of associates' interest and tax (.1) - Impairment of goodwill - (1.8) Change to pension scheme rules Bid response costs - (2.1) Disposal costs - Testing SBU (.6) - Profit Before Taxation Taxation (11.) (9.5) Profit After Taxation Interim results 1 Pre exceptional items and tax on associates.

12 Summary Cash Flow and Financial Ratios H1 28 H1 27 m m EBITDA Working capital movement (17.3) (16.5) Net capital expenditure (36.6) (33.9) Other (.5) - Operating Cash Flow Interest (6.7) (5.) Tax (8.9) (1.3) Free Cash Flow Net debt/ebitda 2 1.6x 1.2x Interest cover 3 9.3x 1.7x Gearing 46% 34% Free cash flow 4% 3% Capex/depreciation 1.2x 1.3x Interim results 1 Pre exceptional items, interest, tax, depreciation, amortisation and shared-based payments. 2 EBITDA based on rolling 12 months basis. 3 Pre exceptional items, interest, tax and share of results of associates.

13 Balance Sheet H1 28 H1 27 m m Goodwill Tangible and intangible fixed assets Interests in associates Trading working capital Other net assets (162.9) (122.4) Net assets before borrowings Shareholders' funds Minority interests Net borrowings Equity and borrowings Interim results

14 Heat Treatment H1 Revenue ( m) Revenue + 22% Operating margin 15% Utilisation 75% 1 5 Some cost pressures Outsourcing continues growth m H1 Operating Profit - Margins % 3 25 Technology roll-out progressing Emerging market presence growing but impact of start-up costs Interim results

15 Hot Isostatic Pressing H1 Revenue ( m) Revenue + 23% Operating margin 31% ROCE > 2% Utilisation 73% Additional capacity, temporary margin impact m H1 Operating Profit - Margins % 5 4 New applications Interim results

16 Testing MEM H1 Revenue ( m) Revenue + 17% Operating margin 13% Organic growth 7% Emerging market presence m H1 Operating Profit - Margins % Integrating acquisitions Interim results

17 Testing HSE H1 Revenue ( m) Revenue +15% Operating margin a significant improvement Lab rationalisation in Canada and UK m H1 Operating Profit - Margins % 4 2 Focus on client oriented Information Systems Interim results

18 Delivering the Strategy Realise value of Testing Enhance performance of existing Thermal Processing network Improve cash generation Continue outsourcing initiatives Selective acquisitions Interim results

19 Testing Division Value Realisation Strategic Review Completed Q1 Divestiture Decision Announced Completed April 3 Information Memorandum Issued Completed June First Round Bids Received Completed June Debt Staple agreed Completed July Management Presentations Completed July Final Bids Due August Sale Agreed Early Autumn Final Completion Late Autumn Interim results

20 Enhance Performance of Thermal Processing Greenfields move to profit Under performers (fix, sell or close) Recover energy cost increases Advanced training of local leaders Interim results

21 Improve Cash Generation Margin improvement Working Capital D.S.O. Capex back to 1.x in Interim results

22 Continue Outsourcing Initiatives Reduces carbon footprint Cost of materials Increases utilisation of assets Reduces cyclicality Improves visibility Organic growth driver Interim results

23 Selective Acquisitions Niche technologies Developing economies Market consolidation Interim results

24 Current Trading and Prospects July in line with our expectations Aerospace, power generation, oil & gas continue to grow Automotive gaining share Energy costs continue to be recovered Outsourcing initiatives continue to deliver growth Markets are uncertain but we expect continued progress in H Interim results

25 28 INTERIM RESULTS

26 28 INTERIM RESULTS Appendix

27 Financial Highlights H1 Revenue 1 Headline Operating Profit CAGR 13% CAGR 18% m m m Headline Profit Before Tax 3 Headline Earnings Per Share 4 CAGR 17% Pence CAGR 16% Interim results Dividend Per Share Including discontinued operations. Dividend per share Series2 2 Pre exceptional items and interest and tax on associates. 3 Pre exceptional items and tax on associates. 4 Pre exceptional items and tax settlements in respect of prior year.

28 Financial Key Performance Indicators H1 Target: Mid teens%.% 8.7% ROCE 1 EBITDA 2 1.5% 11.1% 11.9% m CAGR 14% Organic revenue growth 3 People costs as a percentage of revenue 4 Target: Mid to high single digit% Target: TP: 4% Testing: 5% 8% 7% 6% 6% 5% Interim results % Thermal Processing Testing 1 to 4 see definitions Appendix page 36.

29 Non Financial Key Performance Indicators H1 Utilisation Heat Treatment 6 Target: >8% Target: >8% Utilisation HIP % 66% 72% 74% 75% % 62% 7% 75% 73% ISO 141/1725 compliant facilities 7 Accident frequency 8 Target: All facilities Target: Zero Interim results to 8 see definitions Appendix page 36.

30 Acquisitions, Capital Expenditure & Depreciation Ac quisitions 51 Net Capital Expenditure Depreciation 37 3 m Capex/Dep..8x 1.1x 1.1x 1.3x 1.2x Interim results 5 see definitions Appendix page 36.

31 Analysis Of Organic/Acquisition Growth Testing Head Revenue HT m HIP m MEM m HSE m Office m Total m Organic Acquisition Currency Headline Operating Profit (3.7) 48.2 Organic (1.1).3 (1.9).9 (1.1) (2.9) Acquisition Currency (4.8) 52.5 % on sales % 3.9% 12.6% 8.8% 13.7% % 35.2% 16.4% 6.1% 15.2% Interim results 1 Pre exceptional items and interest and tax on associates.

32 Impact Of Exchange Rates Headline Profit Revenue before tax 1 m m H1-28 As Reported H1-28 Using H1-27 Rates Impact Interim results 1 Pre exceptional items and interest and tax on associates.

33 Taxation H1 28 H1 27 FY 27 m m m Headline Profit before tax Tax on associates (.1) - - Exceptional items & amortisation (1.6) (.6) (12.5) Profit after exceptional items Current year tax charge Tax effect of exceptional items - (.6) (.7) Total tax charge Pre exceptional effective tax rate 23.7% 23.4% 19.% Post exceptional effective tax rate 24.6% 22.3% 21.5% Interim results 1 Pre exceptional items and tax on associates.

34 Revenue By Market Testing H1 28 H1 27 YoY Change Sector % % in Revenue % Medical/Health Science & Environmental Civil Engineering, Agricultural, Railways & Marine Aerospace/Defence Oil & Gas Consumer Products Automotive - Cars & Light Truck Heavy Truck & Bus Power Generation Electronics & Telecoms Miscellaneous Tooling Interim results

35 35 Emerging Markets Interim results H1-28 Emerging Markets as a % of Business Unit revenue Thermal Processing Testing

36 Worldwide Operational Locations North America: 45 Thermal Processing 37 Testing Western Europe: 114 Thermal Processing 63 Testing Emerging Markets: 36 Thermal Processing 2 Testing Interim results

37 End Market Demand Gas Turbine Orders Boeing & Airbus Deliveries NAFTA Europe Middle East/Africa Latin America Asia Oil & Gas Industry Capex ($bn) Boeing Airbus Commercial Vehicle Production ( Units) 18 6, $ b n , 4, 3, 2, 1, F 29F 21F 211F 37 Upstream Downstream Chemicals Interim results North America Total Eastern Europe Western Europe Asia / Pacific Source: Lehman Brothers Equity Research Q2 28

38 Light Vehicle assembly ( Units) North America Western Europe 25, 25, 2, 2, 15, 15, 1, 1, 5, 5, Eastern Europe Asia Pacific 25, 25, 2, 2, 15, 15, 1, 1, 5, 5, Interim results Source: Lehman Brothers Equity Research - Q2 28

39 Key performance indicators definitions 1. Headline operating profit as a percentage of average capital employed. Capital employed includes tangible and intangible assets including all previously amortised/impaired goodwill and all non interest bearing assets and liabilities. Headline operating profit is stated pre exceptional items and interest and tax on associates. 2. Pre exceptional items, interest, tax, depreciation, amortisation and shared-based payments. 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 141 or ISO Accident frequency - the number of accidents x 2, (approximating 1 man years), divided by the total hours worked Interim results

40