Ben Stocks -Chief Executive Chris Tyler -Finance...
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1 Ben Stocks - Chief Executive Chris Tyler - Finance Director
Transcript of Ben Stocks -Chief Executive Chris Tyler -Finance...
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Ben Stocks - Chief ExecutiveChris Tyler - Finance Director
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SummaryConsistent strategy delivering results
Consistent strategy
Niche positionsin growing, regulated markets
New product development and intellectual property
2014-2019
Six months ended 31 May 2019
8% CAGRin revenue
£67mcash from operations
£42minvested
14%CAGRin EPS
21% revenue growth
36% EPSgrowth to 12.9p
£2.8minvested
46% return on operating capital employed
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Specialist filtrationand environmental technology
Specialist filters are used to protect costly or complex downstream systems
Attractive business characteristics
Niche positions:Long life cycles
Bespoke
Consumable products
Robust demand drivers:Secular trends
Regulation/legislation
Maintenance schedules
Barriers to entry:Specialist design skills
Engineering skills
Patent protection
Quality accreditation
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Consistent strategic and operational objectives
Long-term growth from developing specialist filtration and environmental technology businesses both organically and by acquisition
Capacity in place for
further growth
A focus on regulated markets with long-term growth prospectsFour key markets
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Concerted new product development2
Geographic expansion to support key markets3
Generate cash to invest in:Organic growthAcquisitionsDividends
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A focus on regulated markets with long-term growth prospects
Regulation Market growthMarkets
FAA, CAA, EASAand other specific accreditations
Growth in pax revenue miles 2018 - 2037 (Source: Boeing 2018)
4.7%p.a.
Aerospace
International nuclear standards: NQA1, ASME, etc
Long term growth in nuclear power generation capacity(Source: IAEA)
3-4%p.a.
Industrial
Approved methods: EPA, SEPA, EU water directives
Growth in water analysis consumables(Source: company estimate)
5-6%p.a.
Laboratory
ISO and customer accreditations; extensive qualification requirements
Growth in primary aluminium usage to 2021 (Source: CRU 2018)
3.6%p.a.
Metal Melt Quality
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4Main marketsand operating companies – new divisions
Business division Principal marketsApproximate share of Group sales
Metal Melt Quality 30%
Global aluminiumUS foundry Super alloys
SELEE Corp
Laboratory 30%EnvironmentalBioscienceChromatography
Seal Analytical (Rohasys)Porvair Sciences(JG Finneran)
Aerospace& Industrial 40%
AerospaceGeneral industrialEnergy
Porvair Filtration Group
Main operating companies
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Niche positions
Fuel systems
Coolant systems
Hydraulics
Growth drivers
New build
Maintenance
New airframes and engines
Retrofit programmes
Recent new productsInerting, hydraulics, lube oil, anti-icingAirbus 320 / 350 / 220
Boeing 787 retrofit
Airbus NEO
Rolls Royce Ultrafan
Competitive advantageInstalled base
Design engineering Range of media
Design protection
Aerospace
Strong market positions and new product development
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Niche positions
Hot gas and gasification
Pulse jet systems
Nuclear remediationPolymer production
Microelectronics
Growth drivers
Gasification build rates
Maintenance schedules
Nuclear clean-upEnergy efficiency and security
Recent new productsGasification spares 2nd generationNuclear: Rolls Royce
IMO ballast water
Competitive advantageInstalled base
Range of mediaDesign engineering
Design protection
Industrial
Strong market positions and new product development
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Niche positions
Analysis of inorganic chemicals in water
Sample preparation
Chromatography consumables
Growth drivers
Regulated water testing
Analytical science:
• Detection limits
• Falling costs per test
• Automation
Recent new products
Seal: AA500
Minilab samplers
Sample prep ranges
New Vyon
Competitive advantage
Installed base
Instrument design protection
Porous plastics IP and related patents
Laboratory
Strong market positions and new product development
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Niche positions
Aluminium cast house filtration
Gray and ductile iron filtration
Super alloys
Growth drivers
Aluminium consumption
US auto and light truck production Increased use of high grade and exotic alloys
Expansion in China
Recent new productsSelee CSX™ / CSW™
Selee IC™ Selee SA™
Range extensions
Competitive advantagePatent protection
Metallurgical expertiseUS / China manufacturing
Metal Melt Quality
Strong market positions and new product development
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Geographic expansion in key markets: 1
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£42 million invested in the last five years
Americas7 sites
2019 update:
J G Finneran plant expansionIndustrial capacity expansionMMQ productivity improvements
Revenue
51% 12%UK
13%Europe
UK and Europe5 sites
2019 update:
Aerospace capacity investmentBioscience media expansion
Revenue
23%
2019 update:
Further investment in Xiaogan
Asia2 sites
Revenue
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Strong performancefor the six months ended 31 May 2019
21%to £72.0m
Revenue
6%Laboratory
Revenue
4%Metal Melt Quality
Revenue
38%to £8.0m
Operating profit
41%to £7.4m
Profit before tax
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48%Aerospace & Industrial
Revenue
36%to 12.9p
Adjusted basic EPS
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Adjusted income statementfor the six months ended 31 May 2019
2018£000
2019£000
Revenue 72,039 59,685
Operating profit 8,018 5,807
Interest (390) (346)
Profit before tax 7,628 5,461
Tax (1,742) (1,146)
Profit for the period 5,886 4,315
Adjusted EPS (basic) 12.9p 9.5p
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Adjustments to the profit for the periodfor the six month ended 31 May 2019 1
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2018£000
2019£000
2018£000
2019£000
Adjusted profit for the period 5,886 4,315
Amortisation of acquired intangibles (269) (163)
Other acquisition related expenses 14 (54)
Adjustments to profit before tax (255) (217)
Tax exceptional item - 778
Adjustments to tax - 778
Profit for the period 5,631 4,876
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Cash flowfor the six months ended 31 May 2019
2018£000
2019£000
Operating cash flow before working capital movements 8,891 6,738 Working capital movement (7,461) (5,878)Interest (152) (120)Tax (1,549) (1,030)Capital expenditure (net of disposals) (2,174) (1,656)Net cash from operations (2,445) (1,946)Acquisitions (591) (5,294)Proceeds from issue of shares - 102Purchase of Employee Benefit Trust shares (271) (207)Exchange movements (70) (283)Net cash at 1 December 6,625 9,786Net cash at 31 May 3,248 2,158
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Divisional ReviewResults and progress – six months ended 31 May 2019
Good first half in:
• Aerospace
• US Industrial
Microelectronics affected by global trade disturbances
Larger orders in FY19 will not be regular
48% revenue growth
2019£m
2018£m
Revenue 32.1 21.7
Operating profit 4.2 2.5
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Good first half in Porvair Sciences
Global trade affecting sales to China by Seal Analytical
AA500 launched leading to stronger H2 order book
6% revenue growth
2019£m
2018£m
Revenue 20.1 19.0
Operating profit 3.0 3.0
China sales up 33% and reduced losses
Good operating efficiencies and improved margins in US
4% revenue growth
2019£m
2018£m
Revenue 19.8 19.0
Operating profit 1.6 1.2
Aerospace & Industrial Laboratory Metal Melt Quality
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Consistent progress and development opportunities1
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Aerospace & Industrial• Incremental development progammes
• e.g. 4th generation inerting• Nuclear HEPA• Gasification spares
Current projects
Laboratory• Seal:
• AA500 to the installed base• Minilab ST bolt-ons
• PSL:• New Vyon: installed base/ life sciences• Molecular coatings and applications
Metal Melt Quality• China domestic volume and input cost reduction• 3D manufacture for aerospace and IGT• Productivity investments
£67 million of operating cash generated over five years
£42m invested in capex and acquisitions over five years
Rev
enue
£m
Revenue
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7080
90
100110
120
130
2012 2013 2014 2015 2016 2017 2018
Full year
Penc
e pe
r sha
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Adjusted EPS
579
1113151719212325
2012 2013 2014 2015 2016 2017 2018
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Summaryand outlook
Results
Revenue growth21%
PBT growth to £7.4m41%
EPS growth to 12.9p36%
Outlook
Order books for H2 2019HEALTHY
Balance sheetSTRONG
Clear organic growth targetsORGANIC
OutlookPOSITIVE
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Ben Stocks - Chief ExecutiveChris Tyler - Finance Director
