Interim Results Presentation. 28 August 2017

Size: px

Start display at page:

Download "Interim Results Presentation. 28 August 2017"

Raymond Reeves
5 years ago
Views:

1 Interim Results Presentation 28 August 2017

2 Forward Looking Statements The information in this presentation has not been independently verified and does not purport to be comprehensive. One51 is not undertaking any obligation to provide any additional information or to update this presentation or to correct any inaccuracies that become apparent. This presentation is neither a prospectus nor an offer nor an invitation to apply for securities. The information contained in this presentation is for background purposes only and is subject to material updating, completion, revision, amendment and verification. This presentation does not constitute or form a part of any offer for sale or solicitation of any offer to buy or subscribe for any securities. Any prospective investor must make its own investigation and assessments and consult with its own adviser concerning any evaluation of the Company and its prospects. No representation or warranty, express or implied, is or will be given by One51, its subsidiaries, its shareholders or their respective directors, officers, employees or advisers as to the accuracy or completeness of this presentation and, so far as permitted by law, no responsibility or liability is accepted for the accuracy or sufficiency of this presentation. In particular, without limitation, no representation or warranty is given as to the achievement or reasonableness of any projection, estimate, target or forecast in this presentation, which it should be noted is provided for illustrative purposes only. This presentation contains forward-looking statements which reflect management s current views and estimates. These forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. Management undertake no responsibility to revise any such forward looking statements to reflect any changes in management s expectations or any change in circumstances, events or the Group s plans and strategy. Accordingly, no reliance can be placed on the figures contained in such forward looking statements. 2

Canada and China from 14 production facilities across 3 primary business categories

3 Group Overview Rigid Plastics Plastics consists of two sub-divisions IPL and OPG. Plastics supplies products to a broad range of customers in Ireland, the UK, USA, Canada and China from 14 production facilities across 3 primary business categories Agricultural and Automotive Products Packaging Bulk, Environmental and Industrial Products 3

Geographic Footprint One51 Plastics has significant international reach with sophisticated R&D capabilities 14 manufacturing facilities 2 R&D facilities in Ireland and

4 Geographic Footprint One51 Plastics has significant international reach with sophisticated R&D capabilities 14 manufacturing facilities 2 R&D facilities in Ireland and Canada c. 1.8 million square feet of manufacturing space 270 machines Agricultural & Automotive Products Packaging Bulk, Environmental & Industrial Products R&D Centre 4

5 H Financial Highlights % growth in Revenue to 225.8m (2016: 170.6m) 31.1% increase in EBITDA to 32.4m (2016: 24.7m) 32.6% growth in EBIT to 20.1m (2016: 15.2m) Profit before tax, exceptional items and share of associate profits increased to 14.8m (2016: 10.9m) 2 Profit for the period of 6.2m (2016: 8.9m) 29.7% increase in Adjusted diluted EPS to 7.24c (2016: 5.58c) EBITDA interest cover of 5.94x (2016: 5.89x) Total Assets of 634.2m (31 December 2016: 507.6m) Total Equity (excluding IPL Put liability) of 197.0m (31 December 2016: 190.9m) Net Debt of 261.6m (31 December 2016: 152.5m) The financial highlights should be read in conjunction with the Interim Report published on 28 August June 2016 amounts have been restated to exclude the effect of discontinued operations. 3 Certain tables and numbers in this presentation may not add or compute precisely due to rounding. 5

6 H Business Alignment Highlights The successful integration of Encore Industries into the IPL North America business since acquisition in November The acquisition of 100% of the share capital of Macro Plastics Inc. on 9 June 2017 through IPL. Macro is one of the largest manufacturers of rigid bulk bins worldwide and is a market leader in providing rigid plastic bulk packaging solutions to the agricultural and automotive sectors. The disposal of ClearCircle s Specialist Environmental Services ( SES ) Divisions in Ireland and the UK. Initial cash consideration of c. 40m received from the sale of both divisions. The disposals complete One51 s exit from the specialist environmental services sector as the Group focuses on the continued development of its global plastics business. One51 continues to own a residual investment in a small UK metals recycling company. 6

7 H Operational Highlights The North America market has contributed significant organic growth driven by continued increased demand in both the Retail and Bulk and Environmental divisions. Further significant development capital investment programmes underway in our North American operations providing the Group with enhanced ability and capacity to serve an expanding business and customer base. The OPG business has continued to grow organically in the UK in H on a constant currency basis. OPG s Ireland and China business has been negatively impacted by reduced demand from its largest customer following the merger of that customer with another industry participant. Renegotiated and extended IPL Canadian syndicated loan facility to finance the acquisition of Macro and to provide further bank facilities to the IPL Group with a revised expiry date of July

8 One51 Plastics Evolution Target to double Plastics EBITDA in the medium term through a combination of organic growth and acquisitions Rebranding 2013 Acquisition of IPL 2015 International plastics manufacturer of significant size and scale OPG Acquisitions of IPL and Straight 43% Selected acquisitions (Encore & Macro) IPL 100% Total EBITDA c. 16m Rebranded to OnePlastics Group 57% Total EBITDA c. 48m Organic growth Plastics Packaging Market Overview Rigid plastic packaging market valued US$171bn is the fastest growing segment within Plastic packaging Total EBITDA c. 75m+ All US$ $250bn $200bn $150bn $100bn $50bn $0bn c.$171bn $64.3bn $46.6bn $39.3bn $20.4bn % CAGR 5.8% 27% c.$171bn 37% 29% Food Beverage Non-food Industrial/other c.$226bn $98.3bn $57.2bn $45.1bn $25.8bn Rest of the world North America Europe Asia 2020 Global packaging market est. to be worth US$800bn. Rigid packaging valued at c. US$171bn¹. Global rigid plastic packaging forecast to grow at 5.8% CAGR over the next 5 years, faster than average global GDP of 3.4%¹ Growth is being driven by its comparatively lower cost, lighter weight and flexibility over traditional packaging materials Rigid plastic has a wide application in food and beverage sector which is seen as less susceptible to macro-economic influences as other industries 1. Source: Smithers Pira, The Future of Global Rigid Plastic Packaging to Market sizing excludes Environmental Containers which represents a c. US$1bn market in North America (per EY) and a substantial market in the UK & Ireland (being One51 s core markets in Environmental) 8

One51 Plastics Overview One51 Plastics supplies products to a broad range of customers in Ireland, UK, North America and China Agricultural & Automotive Products (Macro) Packaging (IPL Retail,

UK, Ireland and China Key Customers Food producers Local Authorities Growth Drivers Sustainability Substitution effect Regu

9 One51 Plastics Overview One51 Plastics supplies products to a broad range of customers in Ireland, UK, North America and China Agricultural & Automotive Products (Macro) Packaging (IPL Retail, OPG Cork & China) Bulk, Environmental & Industrial Products (IPL B&E & OPG UK) Products Market Position #1 Globally Niche player in North America, UK and Ireland Niche player in North America, UK, Ireland and China Key Customers Food producers Local Authorities Growth Drivers Sustainability Substitution effect Regulation Substitution effect (e.g. glass/metals to plastics) R&D / innovation Sustainability Replacement cycle Regulation Urbanisation Defensive Characteristics High barriers to entry Food industry counter cyclical Diversity of customer base High barriers to entry 9

10 One51 Plastics Growth Strategy Clear growth strategy based on a combination of organic growth and targeted M&A Favourable Market Backdrop Fragmented market place Substitution effect Increasing product innovation Regulation Growing rigid plastics demand Clear Strategy Organic Growth Investment in manufacturing facilities Focused capital investment projects in USA & Canada Deliver manufacturing efficiencies Continued investment in R&D Leverage synergies & cross selling opportunities between IPL & OPG Future Market Focus M&A Focus on higher growth niche segments of the market European & North American geographic focus Synergy potential Target EBITDA > 10m and margin of 13% - 15% Target ROCE 10% - 15% Significant acquisition pipeline developed Continue to focus on existing segments which exhibit significant growth Leverage existing capabilities for entry into new segments Expand product range driven by customer/market demand relying on in-house R&D facilities Continue to review market opportunities to add new plastics manufacturing technologies and product types 10

Significant Operational Capabilities Leading design and innovation capabilities driven by sophisticated R&D IPL Centre of Excellence in Canada OPG Innovation

material margin in a volatile polymer market Use of recycled polymers Pass through agreements in place with customers Continuous investment in state-of-the-art

11 Significant Operational Capabilities Leading design and innovation capabilities driven by sophisticated R&D IPL Centre of Excellence in Canada OPG Innovation Centre of Excellence in Ireland Significant number of patents and pending patents Operational excellence M&A and Organic Growth Opportunities Ability to manage material margin in a volatile polymer market Use of recycled polymers Pass through agreements in place with customers Continuous investment in state-of-the-art injection moulding production cells Well invested facilities and scalable infrastructurediversified customer base Developed a state of the art food grade manufacturing facility in Cork Attractive Significant development Financial capital Profile expenditure in North America Long standing customer relationships Blue chip customer base Embedded relationships allow One51 to grow with customers Low customer concentration with the top 10 customers representing c.27% of 2016 revenue 11

12 Plastics Key Strategic Priorities Focus on existing Market Segments. Enter new market segments leveraging existing capabilities. Expand product range leveraging R&D capability. New technology and product types. New geographic regions. Continual enhancement of operational capabilities. Maximise cross selling opportunities between IPL and OPG. 12

13 Financials 13

14 Income Statement m H H FY 2016 Revenue Operating profit (before exceptional items) Non-recurring items (0.2) (0.3) (2.2) Depreciation & Amortisation EBITDA EBITDA margin (%) 14.3% 14.5% 13.9% EBIT Exceptional / non-recurring items (3.1) (3.0) 0.7 Share of profit of associate (Altas) Discontinued operations (2.9) (0.1) (4.3) Finance costs (5.5) (4.6) (8.9) Income tax expense (2.9) (2.0) (3.5) Profit for period / year Adjusted EPS (Diluted) 7.24c 5.58c 11.04c Revenue (excluding discontinued operations) increased by 32.4% on the comparative period to 225.8m, driven principally by strong organic growth in IPL Inc. and the impact of the Encore and Macro acquisitions. EBITDA (excluding discontinued operations) increased by 31.1% to 32.4m (H1 2016: 24.7m), with IPL s contribution being 23.6m. Exceptional and non-recurring items and share of profit of associate resulted in a charge of 2.6m in the period (H1 2016: credit of 0.4m). Included in this is 2.3m of costs associated with the acquisition of Macro Plastics. Finance costs increased from the comparative period by 0.9m to 5.5m, primarily as a result of the drawdown of bank borrowings for the purposes of acquiring Encore and, to a lesser extent, Macro. The income tax charge for the period was 2.9m (H1 2016: 2.0m). Adjusted diluted Earnings per share is 29.7% higher than H1 2016, reflecting the improvement in EBITDA. 14

15 Divisional Analysis Revenue m H H FY 2016 IPL OnePlastics Group Macro 6.4 N/A N/A Other Total EBITDA m H H FY 2016 IPL OnePlastics Group Macro 2.0 N/A N/A Other (0.6) (0.7) (0.3) Total OnePlastics performance in the period was impacted by the merger of a significant OPG Ireland electronics customer and adverse movements in the pound sterling exchange rate. On a constant currency basis its UK division grew EBITDA organically. IPL had a strong performance with the North American market contributing organic EBITDA growth of 4.5m, driven by continued increased demand in the Bulk & Environmental and Retail divisions. Encore contributed 3.5m of EBITDA in the period. Macro Plastics was acquired on 9 June 2017, and its performance since that date, which was in line with expectations, has been included in the Group s reported numbers. Other includes the results of the Ampthill Metals business and the Group s Head Office costs. 1 Numbers exclude the impact of businesses classified as discontinued operations in all years 15

16 Balance Sheet m 30 June December June 2016 Goodwill & Intangibles Tangible Assets Financial and Other Assets Non-Current Assets Current Assets Total Assets Creditors: within 1yr (118.1) (100.8) (112.8) Creditors: more than 1yr (319.1) (216.0) (189.1) Total Equity (Before Put Liability) Put Liability (83.4) (72.2) (39.6) Total Equity (After Put Liability) Net Debt Net Debt: EBITDA (Annualised)* N/A The increase in Tangible assets from 31 December 2016 is due primarily to additions arising on the acquisition of Macro Plastics of 42.5m and Capex additions of 24.7m related to strategic investment projects to support increased demand and organic growth particularly in the US and Canada. Working capital balances at 30 June 2017 were 69.9m (31 Dec 2016: 27.7m; 30 June 2016: 38.8m). The increase during 2017 arose primarily due to the acquisition of Macro Plastics and a build up in inventory in IPL as a result of two large contracts and strong organic growth. Net debt at 30 June 2017 was 261.6m (31 Dec 2016: 152.5m). The increase has been caused primarily by the drawdown of borrowings to fund the acquisition of Macro Plastics in the period. Total Equity has decreased by 4.2% since year end 2016 to 113.6m (31 Dec 2016: 118.6m) driven primarily by the profit for the period offset by unfavourable currency translation movements and an increase in the Put Liability in respect of the IPL minority shareholding. *The June 2017 amount reflects 12 months EBITDA from 1 July 2016 to 30 June 2017 excluding discontinued operations and Macro Plastics, adjusted for a full year 2017 estimated EBITDA for Macro Plastics of USD$19 million translated at 1:USD

17 Cash Flow m H H FY 2016 Net cash inflow from operating activities before tax and working capital movement Working capital movement (37.8) (11.0) 9.9 Net cash (outflow)/inflow from operating activities (before tax) (6.6) Maintenance capital expenditure (2.0) (5.0) (10.2) Finance costs paid (net) (4.8) (4.7) (9.2) Income tax paid (0.3) (2.3) (4.4) Free cash flow (13.7) Development capital expenditure (19.2) (12.2) (21.5) Free cash flow after development capital expenditure Acquisitions and disposals (inc. net debt/cash acquired) Other including effect of movements in exchange rates (32.9) (11.8) 15.4 (73.5) (9.2) (39.9) (2.7) (5.5) (7.7) Movement in net debt in the period/year (109.1) (26.5) (32.2) Net cash inflows from operations (before tax) decreased by 19.0m (H1 2016) during the period driven by higher working capital levels only partially offset by stronger EBITDA. Significant working capital outflows arose during the period compared with H primarily due to a build up in IPL as a result of two large contracts ( 11.6m) and its strong growth ( 8.7m). Finance costs increased from H by 0.1m to 4.8m, the increase due to the overall net debt increase arising from the Encore acquisition in November Significant growth capex projects continue to be undertaken to meet the organic growth and customer led demand. Acquisitions in the period include the costs of acquiring Macro Plastics of 112.5m and proceeds on the disposal of the Specialist Environmental Services division of 38.3m. Other primarily comprises of exchange rate movement impact ( /CAD$) and ( /STG ). 17

18 Strategy 18

19 Strategy Clear strategy based on the development and growth of core Plastics divisions through organic initiatives and acquisitions. Strategic objectives will be achieved through - Focused development capital expenditure projects to broaden product range - Leveraging maximum cross-sell and cost synergy opportunities from acquired businesses and across international locations - Complimentary strategic acquisitions Have recommenced exploring a possible IPO or stock market listing for the Group in the next 12 to 18 months (subject to market conditions). 19

20 Thank you 20

IPL Plastics plc AGM May 2018

IPL Plastics plc AGM May 2018 IPL Plastics plc AGM 2018 17 May 2018 Disclaimer The information in this Presentation has not been independently verified and does not purport to contain all of the information that may be required to