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 evaluate an investment in the Group and/or its financial position. Any prospective investors must make their own investigation, analysis and assessments and consult with their own adviser concerning the data referred to herein and any evaluation of the Group and its prospects. IPL Plastics is not undertaking any obligation to provide any additional information or to update this Presentation or to correct any inaccuracies that become apparent. The information contained in this Presentation is for background purposes only and is subject to material updating, completion, revision, amendment and verification. No representation or warranty, express or implied, is or will be given by IPL Plastics, its subsidiaries, its shareholders or their respective directors, officers, employees or advisers as to the accuracy or completeness of this Presentation. To the extent permitted by law, no liability whatsoever is accepted by IPL Plastics, its subsidiaries, its shareholders or their respective directors, officers, employees or advisers or any other person for any loss howsoever arising, whether directly or indirectly, from any use of this Presentation or such information or opinions contained herein or otherwise arising in connection herewith. 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 and no representation or warranty is given as to the completeness or accuracy of the forward looking statements contained in this Presentation. The Group is under no obligation to update or keep current the information contained in this Presentation, to correct any inaccuracies which may become apparent, or to publicly announce the result of any revision to the statements made herein and any opinions expressed in the Presentation or in any related materials are subject to change without notice. 2
Group Overview Effective 1 January 2018 Leading sustainable packaging solutions provider Manufacturer of specialty packaging products used primarily in the food and consumer, agricultural, logistics and environmental end-markets Consumer Packaging Solutions Large Format Packaging and Environmental Solutions Returnable Packaging Solutions 3
2017 Highlights The disposal of ClearCircle s Specialist Environmental Services ( SES ) Divisions in Ireland and the UK, with cash consideration of c. 40m received from the sale of both divisions The acquisition of 100% of the share capital of Macro Plastics Inc. on 9 June 2017 through IPL Inc. The North American market contributed significant organic growth driven by continued increased demand in both the Consumer Packaging and Large Format Packaging and Environmental Solutions divisions. Significant development capital investment programmes continue in the Group s North American operations providing it with enhanced ability and capacity to serve an expanding business. A number of these projects began to contribute to EBITDA in 2017. The hurricanes in the US in Quarter 3 2017 drove reduced capacity in both the resin and freight markets resulting in significant cost increases in Quarter 4 2017, trends which have continued into Quarter 1 2018. Overall results for 2017 in line with expectations. 4
Key Strategic Milestones At its EGM in December 2017, the Group took the initial steps to facilitate a possible liquidity event when shareholders gave the board authority to enable the company to proceed with an IPO and Listing in 2018 should market and other conditions permit. Authority was also received from shareholders to change the name of the company to IPL Plastics plc, which became effective on 7 December 2017. In addition, the shareholders approved a reorganization of the existing IPL Inc. shareholding structure by agreeing to an exchange of the current minority shareholders equity interests in IPL Inc. for shares in IPL Plastics plc. On 28 February 2018, the reorganization of the IPL Inc. shareholding structure was effected in line with the approval provided by shareholders at the December 2017 EGM, resulting in the issuance of 47,238,242 shares and the elimination of the Put Liability (i.e. the 33.3% of IPL Inc. not owned by the Group), which amounted to 119.8m at year end 2017. On 17 April 2018, the Group entered into a new 400m, multi-currency banking facility, with a five year term with a syndicate of Irish and Canadian banks to replace the previous two principal bank facilities that had been provided by separate Irish and Canadian banking syndicates. 5
IPL Plastics History 2005 2006 2011 2014 2015 2016 2017 2018 1939 One51 established as a diversified investment company 1985 Acquisition of establishing the Plastics Division of One51 2010 2011 Acquisition of a key supplier of environmental containers in the U.K., and rebranding of its plastics business as Adoption of an action plan to transform One51 from an investment company to an operations focused business One51 acquires a 67% majority equity interest in, with 22% 11% as minority shareholders 2015 Disposal of One51 s Irish metal recycling business 2016 Refocus of operations on Rigid Plastic with the disposal of environmental services business One51 changes its name to 2017 CDPQ and FSTQ exchange their minority equity interest into shares of the parent, effectively consolidating the company Global refinancing of all credit facilities under parent company IPO of IPL on the Montreal Stock Exchange IPL is founded as a small manufacturer of household items IPL is taken private by Novacap & Acquisition of Plastic Enterprises Co., expanding CPS capacity (Lee s Summit Plant) Acquisition of expanding its LF&E capacity Acquisition of a leading manufacturer in returnable packaging solutions Well established business with over 75 years of innovation and leadership 6
Our Global Footprint North America 74% Europe & Asia 26% CANADA 2 UNITED STATES IRELAND CHINA MEXICO U.K. 14 Manufacturing Facilities Consumer Packaging Solutions Large Format Packaging & Environmental Solutions Returnable Packaging Solutions 7 Corporate & Sales Offices Worldwide Office 4 R&D Facilities in Canada, U.S. and Ireland R&D Centre 1.7 Million Square Feet of Manufacturing and Storage Space 320 Machines Injection Molding: 304 IML Capable: 68 Blow Molding: 4 Thermoforming: 12 Well invested manufacturing facilities across North America, Ireland, the U.K. and China 1. Legacy Ampthill Metal, metal recycling business 2. Represents percentage of 2017 total revenue; pro forma figures including the full 12-month of the Macro acquisition. 7
IPL at a Glance Consumer Packaging Solutions Large Format Packaging & Environmental Solutions Returnable Packaging Solutions PRODUCTS Tamper-evident Packaging Film Seal Packaging Food Material Handling Industrial MARKET LEADERSHIP Custom Packaging Lids and Overcaps #1 Supplier of IML packages in North America Organic Recycling #1 Environmental carts producer in Canada and U.K General Waste #3 Plastic pails producer in North America Agricultural Automotive #1 Bulk plastic container producer in North America GROWING END-MARKET Food and beverage Dairy Consumer products Food industry Waste management services Construction products Agriculture Logistics Automotive Portable flooring 8
With a Strong Sustainability Focus Recycling: All our products are 100% recyclable Ongoing effort to maximize the recycled materials content of our products One of our plants has already transitioned to >75% recycled content in its products Design: R&D efforts to develop innovative, lighter products minimizing raw material inputs Ongoing trials with polymers containing colorants to improve recyclability of CPS packaging All our products are 100% recyclable Collection: Take-back service for used Environmental and RPS containers to insure resin gets recycled and reintroduced in the circular economy Initiative in place to achieve zero landfill status at all production facilities by 2022 Production: 2016-2020 capital program leading to energy input savings of up to 25%, in addition to reduced cycle times and raw materials input Initiative in place to install an environmental management system at all our production facilities by 2020 (vs. 50% currently) Nearly all of our products are made from Easy to Recycle polypropylene or polyethylene Consumption, Use, Reuse, Repair: Global leader in returnable / re-usable packaging solutions to replace incumbent wood, cardboard and foam products with shorter lifespan Significant offering of serviceable products / spare parts in the LF&E and RPS segments to maximize product life Distribution: Constant focus to produce lighter and / or stackable products to minimize carbon footprint during transport Production and development planning taking customer s location into account to minimize product travel time 50% (and growing) of our products positively contribute to the circular economy IPL is continuously working with its consumers & suppliers to help build a circular economy for plastic products 9
Reporting Structure up to 31 December 2017 IPL Plastics Group IPL OPG Macro IPL OPG Returnable Packaging Solutions Consumer Packaging Large Format Packaging and Environmental Solutions Consumer Packaging Large Format Packaging and Environmental Solutions 10
Updated Reporting Structure Effective 1 January 2018 Have Also Changed Reporting Currency to US$ effective 1 January 2018 Management have made a number of organisational changes, effective 1 January 2018 which underpin the Group s strategy of focused growth and development through organic and acquisition led initiatives and to support the efforts to achieve synergies and leverage expertise across our three primary market facing activities. IPL Plastics Group Returnable Packaging Solutions Consumer Packaging Large Format Packaging and Environmental Solutions North America North America Europe North America Europe 11
Summary Financial Information 12
2017 Trading Highlights 36.2% growth in Revenue² to 474.4m (2016: 348.2m) 46.0% increase in EBITDA² to 70.9m (2016: 48.5m) 47.3% growth in EBIT² to 41.6m (2016: 28.3m) Profit before exceptional and non-recurring items and share of equity-accounted investees profits increased to 19.6m (2016: 17.9m) Profit for the period of 17.6m (2016: 16.1m) 8.8% increase in Adjusted diluted EPS to 12.01c (2016: 11.04c) EBITDA interest cover of 5.2x (2016: 6.2x) Total Assets of 621.9m (31 December 2016: 511.4m) Total Equity (excluding IPL Put Liability) of 202.5m (31 December 2016: 190.9m) Net Debt of 233.0m (31 December 2016: 152.5m) 1 The financial highlights should be read in conjunction with the 2017 Annual Report & Accounts. 2 Amounts for Revenue, EBITDA and EBIT for the year ended 31 December 2017 and prior years throughout this document exclude amounts related to discontinued operations. 3 Certain tables and numbers in this presentation may not add or compute precisely due to rounding. 13
Income Statement m 2015 2016 2017 Revenue 251.4 348.2 474.4 Operating profit before exceptional items 17.9 30.4 38.4 Non-recurring items 1.7 (2.2) 3.3 Depreciation & Amortisation 11.7 20.3 29.2 EBITDA 31.3 48.5 70.9 EBITDA margin (%) 12.5% 13.9% 14.9% EBIT 19.6 28.3 41.6 Exceptional/non-recurring items (4.4) 0.7 (9.8) Share of profit of equity-accounted investee 24.3 3.9 1.8 Discontinued operations (12.8) (4.3) (3.2) Finance costs (5.7) (8.9) (13.8) Income tax expense (2.7) (3.5) (7.2) Non-recurring income tax credit - - 8.1 Profit for year 18.4 16.1 17.6 Adjusted EPS (Diluted) 6.98c 11.04c 12.01c 14
Divisional analysis Revenue m 2015 2016 2017 % Change 2017 v 2016 IPL Inc. 86.6 204.3 293.8 43.8% OnePlastics Group 145.2 126.9 114.1 (10.1%) Macro N/A N/A 47.5 N/A Other 19.6 17.0 19.0 11.8% Total 251.4 348.2 474.4 36.2% EBITDA m 2015 2016 2017 % Change 2017 v 2016 IPL Inc. 12.6 31.6 45.9 45.3% OnePlastics Group 20.5 17.2 13.1 (23.8%) Macro N/A N/A 12.6 N/A Other (1.8) (0.3) (0.7) (133.3%) Total 31.3 48.5 70.9 46.0% 15
Balance Sheet m 2015 2016 (Restated) 2017 Goodwill & Intangible Assets 140.7 140.1 206.9 Tangible Assets 161.9 160.8 214.6 Financial and Other Assets 14.3 22.2 24.6 Non-Current Assets 316.9 323.1 446.1 Current Assets 126.2 188.3 175.8 Total Assets 443.1 511.4 621.9 Creditors: within 1yr (92.9) (101.9) (130.4) Creditors: more than 1yr (165.2) (218.6) (289.0) Total Equity (Before Put Liability) 184.9 190.9 202.5 IPL Put Liability 32.4 72.2 119.8 Total Equity (After Put Liability) 152.6 118.6 82.7 Net Debt 120.3 152.5 233.0 Net Debt/EBITDA* 3.3x 2.5x 3.0x *Calculated by reference to EBITDA as reported in each year, adjusted in 2016 and 2017 to reflect the pro forma EBITDA of acquisitions made in each respective year. 16
Cash Flow m 2015 2016 2017 Net cash inflow from operating activities (before tax and working capital movement) 33.9 50.8 63.1 Working Capital movement 2.5 9.9 (13.7) Maintenance capital expenditure (9.5) (10.2) (5.6) Finance costs paid (net) (5.8) (9.2) (13.4) Income tax paid (2.7) (4.4) (1.6) Free cash flow 18.4 36.9 28.8 Development capital expenditure (14.3) (21.5) (37.9) Free cash flow after development capital expenditure 4.1 15.4 (9.1) Disposals 3.7 3.4 40.6 Share redemption proceeds from equity-accounted investee (net of costs) 51.2 - - Acquisitions (inc. related costs) (177.9) (22.2) (124.2) Distributions received 2.3 3.2 6.8 Net cash/(debt) acquired on purchase of subsidiary 0.6 (21.1) (10.4) Other including effect of movements in exchange rates 3.1 (10.9) 15.8 Movement in net debt in the year (112.9) (32.2) (80.5) 17
Strategy & Outlook 18
Strategy Strong Platform With Clear Growth Avenues Leverage Platform to Drive Organic Growth in Target End Markets and Grow Into Adjacent Markets Realize Value From Significant Recent Capital Investments Continue to Focus On Operational Excellence To Drive Margin Expansion And Increased FCF Generation Continue To Grow Through Strategic Acquisitions With a Well Capitalized Balance Sheet to Support Growth Corporate Vision Become a leading global manufacturer in the specialty rigid plastics industry Be recognized for our Unified best-in-class customer experience Disciplined capital allocation balancing market needs and return thresholds R&D efforts focused on low risk rapid payback projects Value added product offering based on long-term market needs Leverage increasing scale to achieve long-term raw material cost savings 19
Outlook The Group continues to experience strong demand for its products and its operations are underpinned by favourable market dynamics, particularly in North America. Group results in the second half of 2017 were adversely impacted by increased resin and transport costs following the impact of significant hurricanes recorded in the US. Results were also impacted by a decline in the value of the US dollar and the Canadian dollar versus the Euro. The trading performance at the start of 2018 continues to be impacted by these factors. Notwithstanding, we expect the results for FY18 to be in line with market expectations assuming no further exceptional movements in currency or input costs. The Group s overall 2018 results should start to see the full year impact of some of the new capital expenditure programmes commissioned in the latter half of 2017, together with a full year s contribution from Macro. It is now proposed, subject to the approval of shareholders, that a new Canadian company, IPL Plastics Inc. be introduced as the holding company of the IPL Plastics Group by a scheme of arrangement in anticipation of a potential initial public offering by IPL Plastics Inc. of its common shares. Shareholder approval of the scheme is sought at today s EGM. 20
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