Preliminary Results for year ended 30 November 2015

Transcription

1 Preliminary Results for year ended 30 November 2015

2 Good progress against a challenging market backdrop 5 year planning process completed, underpins 2016 expectations Clear long term strategy being implemented Reorganised Group structure with new leadership team European civil engineering market stabilised Decision made to impair Saudi JV Continued investment to support growth Increased dividend reflects Board s confidence 1

3 Profit ( ) Progressing in line with our growth curve Benefits of strategic changes starting to come through Ambition we have Potential we see Current perception

4 Financial Highlights 3

5 Financial summary Year ended 30 November Headline y-o-y Constant currency y-o-y Revenue (3.6)% +2.4% EBITA % +9.7% Operating margin 8.3% 7.7% +60bps +60bps PBTA before JV % +14.1% PBTA including JV % +12.2% NRI costs ROCE 12.0% 11.4% +60bps EPS (adjusted) 5.61p 5.46p +2.7% Dividend 2.78p 2.70p +3.0% Profit growth in most businesses Profit drivers: Polymer pricing Market share gains Sales mix Profit drags: JV losses (impairment) Lokeren Civil Engineering Profit impact of FX broadly neutral Increased dividend reflects confidence in future prospects 4

6 Underlying revenue growth (+2.4%) (24.1) +3.8% 14.6 (2.3) (4.4) (5.9)% Civil 1.4 CTT (4.0) Others 0.3 (1.1)% +0.4% B&I +5% CE -1% CTT +8% I&T +3% S&L +3% FY 14 Translation FX Constant FX Volume Mix/Price RM Passthrough Trading FX FY 15 5

7 Underlying profit growth (+12%) Lokeren 25.2 (1.5) % drop through (1.9) (2.6) (1.3) 26.6 JV (0.6)m FY 14 Translation FX Constant FX Volume Trading FX RM Passthrough Operational inefficiencies Inflation Other FY 15 6

8 Business unit results Year ended 30 November Revenue Profit Operating Margin 2014 % YoY CER % YoY CER B&I % % 13.6% 12.8% Civil Eng (0.7)% (16.2)% 3.6% 4.3% CTT % % 10.6% 10.7% I&T % % 14.7% 11.4% S&L % % 3.1% 2.5% Central - - (5.9) (5.1) TOTAL % % 8.3% 7.7% Interest (4.4) (5.4) JV (1.8) (1.1) PBTA % 7

9 Non-recurring costs China start-up JV impairment - Equity Loan Reorganisation Pension - MUBI Data cleanse Texiplast site clean-up Acquisition costs Start-up of new factory in Changzhou,China: o o Costs as forecast Saleable product now in production JV impairment: o o o Depressed market conditions Surplus capacity Actions will be taken Modest reorganisation costs De-risking UK pension scheme 8

10 Free cash flow Investing to support growth Operating profit Depreciation / amortisation Non-cash pension charges EBITDA Working capital movements (6.3) (6.5) Other Operating cash inflow Capital expenditure (33.7) (20.2) Interest paid (4.7) (5.1) Non-recurring items (1.9) (3.3) Pension payments (4.5) (4.0) Tax paid (7.5) (7.7) Free cash flow (10.6) 1.1 TWC/Sales broadly unchanged (24% vs 23%) Capex spend comprised: FY15 FY14 H&S Replacement Capability Capacity R&D Non-recurring costs principally relate to China start-up 9

11 Net cash flow Free cash flow (10.6) 1.1 Loan to JV Dividends (9.0) (8.8) Purchase of NCI (Yarns) - (1.4) Dividend to NCI (Carpet) (1.0) - Proceeds from share issues FX Movement in net debt (14.1) (1.2) Net debt brought forward (88.0) (86.8) Net debt carried forward (102.1) (88.0) Broadly in line with forecast Shareholder loan impaired ( 5m) Available debt facilities: LCY RCF (July 2019) 165m 116 PP (Sept 2016) 45m 32 Rmb loans (June 2020) Rmb 150m Accordion (July 2019) 30m 21 Core funding

12 FX Guidance Rates Dec 14 Spot FY15 Ave Bud FY16 Jan 16 Spot Euro USD CZK RMB Estimated Impact on Profit for FY16 Euro (1.0) (1.6) (0.5) USD CZK (0.3) (0.3) - RMB (0.8) (0.9) 1.3 Market expectations based on December 2014 US dollar has strengthened but Euro is weaker Impact on FY16 forecasts: o FY15 average ( 0.8)m o Current spot 1.3m FXR sensitivities: 1C 120K $ 1C 100K 11

13 Operational Review 12

14 Strategic Approach Embed a One L&B organisational change and culture 5 business units managed by a single over-arching Group strategy Defend and nurture our existing business and pursue sustainable, profitable growth Improve routes to market, customer intimacy and commercial execution Leverage new global functional structure to drive efficiencies Diversify and extend global reach supported by active M&A Differentiated technology, focusing on higher margin products Active portfolio management 13

15 Building & Industrial Growing through innovation 2015 Actual 2016 Focus 22% of Group profits Profits up 8% Margins improved to 13.6% Continuing to invest to enhance sales and manufacturing capability particularly in USA and China 2015 Profit drivers Strong demand for roofing products particularly in USA Industrial product sales boosted following good progress in filtration market Local conversion and push to sell more agro in USA Further RD&I to broaden product and technology offering New private label sales initiatives and partnerships with a broad base of roofing and waterproofing OEMs 14

16 Civil Engineering Transforming a problem child 2015 Actual 2016 Focus 8% of Group profits Profits down 16% Margins of 3.6% 2015 Profit drivers Difficult but stable market conditions Slight pickup in sales volumes in H2 but remaining cautious New management now in place and delivering Improving channel management and differentiated pricing Increasing focus on higher margin specification product sales and new Macro Fibres Margin slicing transactional sales Inefficiencies in Lokeren plant masking real underlying margin improvement Operational and supply chain efficiencies Resolution of Bonar Natpet issues, engaging with partner 15

17 Coated Technical Textiles Leveraging operational improvements 2015 Actual 2016 Focus 33% of Group profits Profits up 4% Margins of 10.6% 2015 Profit Drivers Strong demand and share gains in trailer market Container sales continue to be impacted by weak sales to Russia (oil related) Current reliance on Middle East within Tensile Architecture markets New leadership installed, more aligned to Group functions Product mix shift to higher margin segments Penetrating North America and Asian markets Exploring opportunities for further geographic expansion and product applications 16

18 Interior & Transportation Globalising the market leader 2015 Actual 2016 Focus 34% of Group profits New Colback plant in Changzhou, China: Profits up 29% o now producing saleable product o sourcing point for European and Margins up to 14.7% US sales o local market remains supportive 2015 Profit drivers Revenue constraints due to capacity sell out Margins assisted by lower raw material pricing (H1) Satisfactory progress in China Progressing RD&I initiatives o Resilient flooring o Automotive Capitalise on enhanced production capability to capture demand and grow sales 17

19 Sport & Leisure Improving returns 2015 Actual 2016 Focus 3% of Group profits Profits up 20% Margins remain low but improved Realising full potential from asset relocation 2015 Profit drivers Buoyant market with limited capacity Market share gains from good products and customer service Improving pricing, albeit pricing power is challenged Ongoing innovation, new and existing products Relocation of assets to Abu Dhabi with two lines now fully operational 18

20 Outlook 19

21 Strategic focus clear Continue to execute strategy and 5 year plan New management team in place 4 out of 5 global business units delivering margin improvements consistent with plan Benefits of One L&B coming through Additional commercial and operational self-help to come Bonar Natpet being resolved in conjunction with partner Further progress in challenging market conditions expected 20

22 Appendices 21

23 Group KPIs Medium-term objectives ROCE 12% + Operating Margin 10% + Net Debt / EBITDA c. 2.0x Dividend Progressive 22

24 One L&B Global Functions One Low and Bonar 5 business units managed by a single over-arching Group Strategy One L&B to drive cost and operational synergies Coated Technical Textiles Civil Engineering Building & Industrial Sports & Leisure Interiors & Transport S&OP to drive working capital savings Business optimisation and scalability New management team and structure Strategy, RD&I, Sales and Marketing Operations, HS&E and Quality S&OP, Logistics and Warehousing Finance More effective organisational design Talent management 4 out of 5 business divisions clear road map to sustainable double digit margins and sales growth Other Functions 23

25 Earnings per share YoY % PBTA % Tax (7.6) (7.0) +8.6% PAT % NCI (0.5) (0.3) +66.7% Earnings % NCI relates to 40% minority stake in Yihua Bonar Number of shares: - basic % - diluted % Dilution relates to share options EPS - basic 5.61p 5.46p +2.7% - diluted 5.51p 5.37p +2.6% 24

26 Tax rate 2015 % 2014 % Prior year Mix Underlying rate Innovation box (0.8) (1.4) Effective rate Prior year adjustments (0.3) 1.8 Reported rate Mix impact driven: o More USA profits o Higher UK costs o Higher JV losses Expected 2016 rate to be c. 28% 25

27 Balance sheet Property, plant and equipment Trade working capital Prepayments and accruals (11.7) (13.3) Operating capital employed Other working capital (4.8) 0.7 Intangible assets Pension deficit (4.7) (10.8) Net debt (102.1) (88.0) Other (19.7) (19.6) Net assets Actuarial gain on pension schemes of 2.2m Available facilities of 233m (c. 164m) Comfortably inside covenants: Net debt / EBITDA 2.2 (< 3.0) Interest Cover 7.5 (> 3.0) 26

28 DB Pension Schemes IAS 19 UK Overseas Total Liabilities (172.9) (19.8) (192.7) Assets Net surplus / (deficit) 5.2 (9.9) (4.7) Movement in year: Actuarial gain / (loss) Net interest 0.1 (0.3) (0.2) Current service cost - (0.3) (0.3) Contributions Administration costs (0.8) - (0.8) Past service cost FX Net change Based on 2014 valuation of the UK scheme, the Company agreed to contribute 3.8m per year for seven years UK scheme surplus driven by outperformance of assets against expected returns Composition of UK scheme assets: Equities 19% DGF 41% LDI funds 21% Property 11% Cash 8% Net overseas deficit: US 3.0m; Germany 6.7m; Others 0.2m Six schemes; all closed except one German and one Belgian scheme 27

29 Return on capital employed FY 15 FY 14 YoY % Net assets % Net debt % Capital employed % EBITDA % Target is 12% plus Old metric based on operating capital employed excluding goodwill on acquisitions (FY 14: 15.7%) ROCE 12.0% 11.4% +60bps 28