RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2015

19 February 2016

ESSENTRA PLC

("Essentra" or "the Company")

A leading global provider of essential components and solutions 

RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2015

FY 2015: SOLID PROGRESS DESPITE OIL & GAS CHALLENGE

        REVENUE EXCEEDS £1BN FOR THE FIRST TIME

FY 2016: CONTINUED DELIVERY OF BALANCED, PROFITABLE GROWTH

FY 2015 highlights:

·     Revenue ahead 27% at constant FX to £1.1bn.

·     Like-for-like¹ ("LFL") revenue +5% ex-Pipe Protection Technologies ("PPT"): total Group +1%.

·     Adjusted operating profit² up 20% (at constant FX) to £172m.

·     LFL^{1, 2} operating margin +70bps ex-PPT, total Group LFL margin +10bps.

·     Significant site rationalisation across the Group, particularly in Health & Personal Care Packaging.

·     Adjusted EPS² ahead 13% (at constant FX) to 47.6p.

·     Tax rate on adjusted profit reduced by 210bps to 22.8%.

·     Net debt of £374m (FY 2014: £62m), with cash flow generation offset by the acquisition of Clondalkin Specialist Packaging Division ("SPD") and higher dividends.

·     13% increase in the full year dividend to 20.7p per share.

Results at a glance:

¹ Excludes the impact of acquisitions, disposals and foreign exchange (see page 2)

² Before intangible amortisation and exceptional operating items

³ Net income is defined as profit after tax

Commenting on today's results, Colin Day, Chief Executive, said:

"Essentra made a solid start to our Drive for 2020 strategy notwithstanding the challenging environment in the Oil & Gas industry, with like-for-like revenue growth of 5% and the adjusted operating margin up 70 basis points excluding the impact of Pipe Protection Technologies.

We also made encouraging progress with the integration of the Clondalkin Specialist Packaging Division and, having closed (or being in the process of closing) some nine of the 24 sites acquired, we are on track to deliver our US$24m cost synergy target - being a 50% upward revision from our ingoing expectation.  Over and above the acquisition rationalisation, we consolidated a further five facilities across the Group, to better leverage our footprint and generate additional opportunities for efficiency savings.       

In an environment where economic growth is by no means well-established or uniform - notably in the Oil & Gas industry - we are nonetheless confident of delivering balanced profitable growth in 2016, due to our international footprint and diverse range of products and end-markets."

The term "constant FX" describes the performance of the business on a comparable basis, after adjusting for the impact of foreign exchange.

The term "like-for-like" ("LFL") describes the performance of the business on a comparable basis, adjusting for the impact of acquisitions, disposals and foreign exchange.  The FY 2015 LFL results are adjusted for Clondalkin Specialist Packaging Division ("Clondalkin SPD", acquired on 30 January 2015), excluding certain non-material activities of a distribution nature which have been fully integrated and managed therein.  The impact of the major operating subsidiaries of Abric Berhad ("Abric Seals", acquired on 16 December 2014) is not excluded from the LFL results from 1 March 2015 (Europe and US) and 1 April 2015 (Asia), as it is no longer separately identifiable having been fully integrated into the Components business.  The impact of Specialty Plastics (acquired on 27 February 2015) is not excluded from the LFL results, as it is not separately identifiable having been fully integrated into the Components business upon completion of the acquisition.

The term "adjusted" excludes the impact of intangible amortisation and exceptional operating items, less any associated tax relief.  In FY 2015, intangible amortisation was £31.7m (FY 2014: £17.5m, and there was an exceptional pre-tax charge of £39.1m (FY 2014: £16.2m), mainly relating to the integration and restructuring costs arising from the afore-mentioned acquisitions and other site footprint consolidation.

FY 2015 revenue increased 26.9% (+27.3% at constant FX) to £1,098.1m, with LFL growth of 4.6% (excluding Pipe Protection Technologies ("PPT")) being supported by continued investment in both existing and new geographical markets, business wins and continued product innovation.  Including PPT, total Group LFL growth was 0.7%.

On an adjusted basis, operating profit was ahead 20.4% (+20.3% at constant FX) at £171.5m.  Excluding Clondalkin SPD, the adjusted operating margin was up 10bps (at both actual and constant FX) at 16.6%: ex-PPT, the uplift was higher, at 80bps (+70bps at constant FX).  The integration of Clondalkin proceeded rapidly, with the proposed rationalisation of nine sites already either closed or in the process of being transitioned to Essentra facilities, and encouraging progress being made on procurement savings.

Including intangible amortisation of £31.7m, and an exceptional pre-tax charge of £39.1m mainly relating to integration and restructuring costs arising from recent acquisitions and from other site footprint consolidation, operating profit as reported was £100.7m, -7.4% versus FY 2014 (-7.8% at constant FX).

Net finance expense was above the prior year at £10.3m (FY 2014: £9.1m), due to a higher net debt position following the acquisition of Clondalkin SPD.  The effective tax rate on profit before tax (before exceptional operating items) reduced to 22.8% (FY 2014: 24.9%).

On an adjusted basis, net income of £124.4m was up 24.3% (+23.4% at constant FX) and earnings per share growth was 13.6% (+12.6% at constant FX) to 47.6p.  On a reported basis, net income was £68.7m, a decrease of 4.3% (-5.6% at constant FX), with earnings per share lower by 12.7% versus FY 2014 at 26.2p (-13.9% at constant FX).

Summary growth in revenue by division

The following review is given at constant exchange rates and on an adjusted basis, unless otherwise stated.

Distribution

Revenue increased 11.4% to £268.6m.  On a LFL basis, growth was 10.0% and was driven by new business wins, the roll out of distribution sites and range expansion.

In Components, the result reflected continued improvement in the trading environment in much of Continental Europe during the year, with an improved second half performance in the UK as anticipated.  The Asia region delivered strong, broad-based growth and continued to benefit from the opening of a regional distribution centre in Singapore in 2014, with cable management and movement control products serving the Electronics industry in south east Asia performing particularly well.  Trading in the Americas was more challenging, although an underlying improvement in execution in the second half helped to mitigate a weakening market environment, notably in the Oil & Gas, Agricultural and Construction segments.  Complementing the core standard components business, encouraging progress was made in expanding custom injection moulding activities during the year, with incremental revenue opportunities generated in a number of end-markets - in particular in the Automotive sector.

New catalogues were launched in all three geographic regions, with the European and Asian versions featuring approximately 7,000 new products predominantly in springs and magnets.  The hardware range performed particularly strongly, benefiting from investment in dedicated specialist sales resources and larger project wins in the Transport and Cabinet Manufacturing sectors.  Further to the rapid rebranding of Abric Seals to Essentra, some 300 security seals were additionally included in the core catalogues and - with greater focus on targeted end-markets - there have been some encouraging early business wins, notably in the Airlines sector.

The successful site roll-out programme continued in 2015 with market entry into South Korea and Dubai - in both cases co-locating with existing Essentra facilities.  To support the expansion, dedicated local websites and catalogues were introduced in each of these markets: in the former, some 7,000 cable management samples are now available for same-day delivery to customers in our targeted Electronics sector, while the latter's product offer is particularly focused on pipe and flange components.

The result in Speciality Tapes was supported by an increase in the print finishing and industrial categories.  Finger Lift tape continued to perform well, benefiting from the installation of high-speed aqueous coating equipment at the Chicago, US site which has broadened the range of adhesives and performance characteristics of the product offering: in conjunction with the business' hot melt capability, this advance has helped to generate further commercial opportunities.  Custom gaskets and sealing solutions also increased, with investment in die-cutting equipment underpinning further business wins with a major multinational white goods customer.  From a geographical perspective, the result reflected a continued good performance from the Express footprint in North America. 

Operating profit grew 6.8% to £60.3m equating to a 90bps decline in the margin to 22.4%, largely due to the short-term dilutive impact of acquisitions. In addition, further benefits from the consolidation of the Components' site footprint, together with raw material and operating efficiency savings were offset by increased marketing spend in the first half of the year.

On 27 February 2015, the Company completed the acquisition of Specialty Plastics.  Based in Perth, Australia, Specialty Plastics is a leading distributor of an extensive range of protective plastic products for a wide variety of attractive growth end-markets.  Having fully integrated Specialty Plastics with the existing business in Sydney and introduced some 13,000 products onto the combined ".au" website, the Components Strategic Business Unit ("SBU") is even better-positioned to serve both domestic and export customers with a rapid supply of essential components, in particular in the Construction, Specialist Transport and Oil & Gas industries.

During the year, two new, purpose-built facilities were opened in Leduc, Canada and in Sydney.  In both cases, the new sites provide the necessary space to accommodate a rapidly expanding product range in two strategically important markets, underscore the ongoing commitment to providing customers with even greater product choice and availability, combined with the best possible delivery and service proposition.

Health & Personal Care Packaging

Revenue increased 140.6% to £394.4m.  Adjusting for the acquisition of Clondalkin SPD with effect from 30 January 2015, like-for-like growth was 2.3%: having been broadly flat at the half year stage, this FY 2015 outturn reflected an acceleration in the like-for-like performance in H2, to 4.6%.

A strong result in the underlying health and personal care packaging business was boosted by new business wins, combined with the ongoing roll-out of the Company's Key Account Management strategy to its global customer base.  This was partially offset by tobacco tear tape, where market conditions remain challenging owing to the ongoing trend of removing value-added features.

2015 was another positive year for packaging innovation and the further commercialisation of recently launched products.  In the healthcare sector, these included serialised cartons to help customers ensure they are well-placed to meet the rapidly evolving legislative requirements in respect of tracking, tracing and authenticating their products throughout the supply chain.  In addition, to provide further layers of protection in the fight against counterfeit pharmaceutical and healthcare products, the SBU continued to leverage its brand protection capabilities through the launch of fibre-tear labels, which cause irreversible damage to a product carton upon removal, allowing consumers easily to identify if packaging has been interfered with and thus providing a crucial tamper evidence function. 

In consumer packaging, the AquaSense™ label launched in 2014 was further commercialised, with very good success also being achieved with the broader range of "freshness" labels, particularly in the tobacco sector for both cigarettes and roll your own products. 

Operating profit increased 70.9% to £52.2m.  The 540bps decline in the margin was largely due to the significantly dilutive initial impact of the Clondalkin SPD business (being less than 10% on acquisition), together with the mix effect of the decline in value-added tear tape in the tobacco industry. 

Having successfully completed the Clondalkin SPD transaction for US$455m in January, action was taken to rapidly integrate the acquired activities into Essentra's underlying business.  As a result, the Company is on track to deliver the targeted cost synergies of US$24m on an annualised basis from 2016.  In addition, during the acquisition process, certain lines of business were identified which were not consistent with Essentra's return and profitability metrics and value-creation objectives: in this respect, progress is already being made to address such less attractive activities to underpin the margin expansion already entailed by the synergy target.  Accordingly, the integration of Clondalkin SPD to date is in line with expectations, with the operating margin up by over 250bps and returns progressing towards the Company's previously-communicated acquisition objectives.  

In healthcare, the resulting expansion in international presence - combined with the breadth of range and capabilities which the combined businesses can collectively offer - has already elevated the dialogue with multinational customers and expanded the potential commercial opportunities.  At the same time, the increased scale of the SBU catalysed a review of tendering and onboarding processes, such that the revised procedures now better reflect the requirements of a global leading player with a more complex operational footprint.  Meanwhile, in personal care and beauty - where Clondalkin SPD materially expanded Essentra's market presence - the benefit of a more comprehensive product offering behind a reinvigorated go to market campaign has been evident.  As such, while revenue opportunities are typically slower to realise in health and personal care packaging than in other end-markets in which Essentra operates - not least owing to regulatory considerations and customer quality standards - a positive start has been made since completion.  Meanwhile, in consumer packaging, there have been new business wins which have arguably benefited from the enlarged Essentra Group capabilities, not least a sizeable contract with a well-known foodservice brand. 

Key to the delivery of the targeted synergy savings from the Clondalkin SPD acquisition is the consolidation of the combined site footprint.  Further to the completion of the transaction, the facilities in Portland and Evansville, US were closed, with business transferred to Moorestown and Charlotte respectively.  Meanwhile, in Ireland, the activities at Swiftbrook and Cherry Orchard were folded into Essentra's existing Dublin healthcare site, while the consumer packaging operations at Leeuwarden in the Netherlands are in the process of being absorbed by the Denekamp site.  However, it is the UK which has presented the greatest operational complexity, where some four sites have been - or are in the process of being - shut.  The business from these facilities has been / is being transitioned to a new, state-of-the-art operation in Newport, adjacent to the existing site which was officially opened at the end of 2014.  The investment in this second location will entail a six-fold increase in Essentra's existing footprint and see Newport become a centre of excellence for labels and foil production, with additional capability for cartons manufacturing. 

Subsequently, on 16 October 2015, the Company announced that it had signed an agreement to acquire the pharmaceutical packaging assets of Kamsri Printing & Packaging Pvt. Ltd. ("Kamsri").  Based in Bangalore, Kamsri is a leading manufacturer of premium packaging solutions for the pharmaceutical and healthcare end-markets in India.  Indeed, with a highly complementary product range, Kamsri provides Essentra with an entry point into these attractive industries in India, thereby reinforcing the SBU's global packaging capabilities and enhancing the opportunities for customers.  As anticipated, the acquisition completed shortly after year-end, with the assets already being transferred to Essentra's dedicated pharmaceutical-capable manufacturing facility, also in Bangalore.

To help underpin future revenue growth opportunities and generate further efficiency savings, a number of operational initiatives were completed in 2015. To support the launch of serialised cartons, additional equipment and technology was installed which not only operates to the required degree of complexity entailed in printing unique data, but also captures the huge volume of resulting information in an appropriately robust manner to ensure regulatory compliance.  The SBU also added to its digital capability, to allow the printing of smaller runs in a more cost effective and expeditious manner: with the new printer able to accommodate sophisticated tactile finishes and varnish effects, the SBU is now even better placed to provide our customers with a rapid and flexible service.  In addition, six further cartons and leaflet presses were installed, which have not only increased capacity but also improved both manufacturing efficiency and product quality.

Filter Products

Revenue increased 3.0% to £302.6m.  Underlying volumes were ahead of the prior year, with a particularly good result in both special and non-standard diameter filters (eg, Slims).

In FY 2015, Asia accounted for 61% volumes (FY 2014: 60%).  While China and India were both more challenging (owing to short-term inventory destocking and substantial tax increases respectively), the Indonesian and Dubai JV businesses delivered particularly strong underlying growth.  In addition, the Thai facility supported the successful commercialisation of a bespoke innovative special filter under a long-term agreement with a multinational customer, although this did not fully compensate for the impact of a sizeable contract in Europe which is starting to mature.  

Building on the SBU's track record of successful innovation, a number of new products and development initiatives were launched during the year.  Among these was the Super Slim Corinthian, a filter which provides a distinctive flute definition to give a unique consumer experience and - as a multi-segment filter - can be combined with carbon, flavour, coloured acetate tow or a recess, to offer numerous possibilities for visualisation and brand differentiation.  The SBU also supported customers with bespoke solutions tailored to their specific needs; these included innovative tube and dual / triple segment filters, more environmentally-friendly roll your own products and the introduction of demi- and micro-slim filters to further leverage Essentra's know-how in the fast-growing "non-standard diameter" segment.  As a result, joint development activity increased 8% versus FY 2014.

The Scientific Services unit continued to perform well, further building on its extensive experience and expanded range of accredited testing methods.  In 2015, a new facility dedicated exclusively to the testing of e-cigarettes was added to the existing analytical laboratory services, to ensure the delivery of high quality analysis which remains at the forefront of industry trends and regulatory requirements in this growing segment.  In addition, a new contract for the testing of ignition propensity was secured, and the SBU's three-year contract with the UK government for the testing of all cigarette brands was also successfully renewed.

In order to ensure a flexible and competitive geographic footprint, and with customers continuing to shift their production from western to eastern Europe and Asia, the SBU took the decision to transfer its filter manufacturing, product development and innovation activities based in Jarrow, UK to the facility in Hungary, and as a consequence the Bedesway site was closed at the end of the year.

In 2015, the SBU also maintained its track record of investment in modern, high-speed combining equipment to underpin the objective of improving capability and capacity - notably in Hungary and Thailand - to ensure the business remains optimally positioned to meet the exacting requirements of an international customer base.

Operating profit rose 43.2% to £55.4m, equating to a 510bps improvement in the margin to 18.3%.  This uplift was driven by a further improvement in productivity and efficiency initiatives, together with a full year benefit of savings from the closure of the site in Italy in 2014.  The margin was further boosted by a favourable product mix and raw material procurement savings, although the certainty of maintaining either or both of these positive factors cannot be assured. 

Specialist Technologies

Revenue decreased 18.0% to £135.5m, driven predominantly by the impact of weakness in the Oil & Gas industry on the Pipe Protection Technologies ("PPT") business. Excluding PPT, revenue was ahead 1.7% to £118.4m.

In Porous Technologies, the result was supported by new contract awards, the commercialisation of recent product innovation and geographic expansion.  The increase in healthcare benefited from further developments in advanced wound care, as well as strong growth in cosmetic foam and products using porous plastics.  Further distribution channel and range expansion and line extensions boosted speciality wipes, while household benefited from further development and scaling up of both reed and porous plastic air care wicks.  In writing instruments, the performance was underpinned by continued portfolio expansion in nibs to both current and new customers.  The result in printer systems reflected an accelerating decline in the market, where conditions are increasingly challenging and in light of which a strategic review of Essentra's Porous Technologies' footprint has been initiated.

In 2015, the business continued its track record of converting its intellectual property into commercial success.  This included new contract wins for infused antimicrobial advanced wound care foam and the development of new insecticide and innovative air freshener wick opportunities.  Further progress was made with filtration components in Europe, the US and India, in both the automotive and residential water sectors.  At the same time, the patented reservoir technology which was initially developed in 2014 to support the Essentra Group's commercialisation of a range of smokeless nicotine devices was further refined for even better performance.   

Like-for-like revenue in PPT declined 64.9% to £17.1m owing to developments in the Oil & Gas sector, with a significant decline in the North American rig count driving a consequent reduction in drilling activity and demand from the pipe mills.  Notwithstanding this challenging environment, the MaxX® range of American Petroleum Institute-compliant, premium thread and API standard thread protectors performed well, benefiting from being specified by certain large customers as their product of choice.  In addition, the business expanded and reinforced its geographic footprint outside the US, successfully leveraging the Essentra Group's international network in Australasia, the Middle East and South America. 

Further new contract wins, combined with more encouraging market conditions, drove a strong result in Extrusion, with particular success in more complex, technical extruded components.  These included plastic profiles used in the purification of drinking and processed water in both municipal and industrial installations; extruded finishing parts used in the furniture sector, such as plinths and edge bands, where additional business was won with a major multinational retailer during the year; and in construction across a range of internal and external applications.

Operating profit decreased 36.1% to £19.8m and the margin declined by 410bps.  An improvement in Extrusion - which benefited from more benign raw material costs and continued efficiency programmes - was offset by the impact of the decline in revenue in the higher margin PPT and Porous Technologies' printer systems businesses, notwithstanding rapid cost and headcount reduction.

During the year, a number of operational initiatives were successfully completed. 

In Porous Technologies, writing instrument nib production was transferred from Korea to a state-of-the-art manufacturing facility in Indonesia which - together with investment in additional high-speed ink reservoir capacity in both India and China - will allow the business to serve its global customer base even better with a full technology platform, as well as reduce the cost base.  In addition, to support future growth in the attractive healthcare sector, a further pregnancy test wick line was added at the Ningbo, China facility to meet rising demand for these essential diagnostic components. 

In Extrusion, innovative, high-speed equipment was installed to allow the manufacture of significantly larger profiles than before, as well as a second line for the production of high quality profiles incorporating foil application.  As a result of these investments, the business is even better-positioned to exploit new commercial opportunities, particularly in the construction and retail sectors. 

PPT introduced a number of new technologies, robotics and process automation to help ensure even greater consistency in product quality while reducing cost and improving labour savings.  In addition, an infrastructure build-out and total refurbishment of the former injection moulding activities into a centre to accommodate an expanded CNC threading plant was completed at the Houston, US headquarters, such that Essentra PPT is now one of the few thread protector manufacturers globally to offer customers two separate facilities for product moulding and high-speed product threading capabilities.  These advances help to ensure that the business is optimally positioned for a recovery in the Oil & Gas industry.

Separately, the afore-mentioned new, 23,000 sq. ft. Components facility in Leduc additionally accommodates the PPT range, providing the necessary space to continue the rapid expansion of its product offering to the strategically important Canadian Oil & Gas sector.

Summary growth in revenue by Region (by destination)

The following review is given at constant exchange rates and on an adjusted basis, unless otherwise stated.

Europe

Revenue increased 31.4% to £547.7m, with LFL growth of 6.3% (+6.5% ex-PPT).

Underlying growth was driven by a strong performance in the Industrial, Furniture and Health & Personal Care categories, supported by Tobacco and Food & Drink.  Metal hardware delivered a strong result in both existing and export Industrial markets, with range extensions and early success in custom injection moulding also contributing.  Enhanced project conversion, new business wins and cross-selling opportunities for extruded plastics boosted the result in the Furniture segment, while innovative labels and tapes contributed to the increase in FMCG sectors.   

In Health & Personal Care, there was good growth in speciality wipes, advanced wound care and noise protection porous components, as well as in the core packaging portfolio which was supported by new product launches - including authentication solutions - which are well-placed to meet evolving regulatory requirements. 

The performance of the Clondalkin SPD business was in line with expectations, with efforts already underway to address less profitable activities.  Substantial progress was made in rationalising the site footprint, with seven sites already - or in the process of being - closed.  Over and above this acquisition integration activity, an additional four facilities were shut during the year and transitioned to existing Essentra operations in the region.

Americas

Revenue increased 35.5% to £371.6m: LFL revenue was down -9.2% (+2.6% growth excluding PPT).

The result in the Americas was driven by the afore-mentioned developments in the Oil & Gas sector, and the consequent impact on the PPT business.  However, consistent with its positive longer-term view of the industry, the Company continued to invest in opportunities for future growth, including new technologies, robotics and process automation to help ensure even greater consistency in product quality while reducing cost and improving labour savings, as well as a new purpose-built distribution centre in Alberta.  Notwithstanding the rapid consolidation of the Abric Seals range into the Components offering, trading was also more challenging in the broader Industrial segment, although an underlying improvement in execution in the second half helped to mitigate a weakening market environment.

Underlying growth in Health & Personal Care was driven by portfolio and distribution channel expansion in speciality wipes and success in advanced wound care, while an increase in the Household segment was boosted by the further successful commercialisation of recent business wins in both air care and writing instruments for products using porous plastics.  New packaging projects supported the performance in the Food & Drink category, with development activity and the roll-out of the Company's e-cigarette offering continuing in Tobacco.

The integration of Clondalkin SPD proceeded rapidly during the year, with some encouraging new business wins and the closure of two manufacturing facilities. 

Asia

Revenue increased 4.2% to £178.8m, with LFL growth of 2.8%.

Growth in Asia came across the majority of categories, with particularly good progress in the Industrial category in India.  The result in Tobacco was supported by flavoured and non-standard diameter filters, combined with joint development activity with key multinational customers and strong growth in Dubai: this was partially offset by the impact of temporary inventory destocking in China and material tax increases in India.  The Healthcare segment was boosted by growth in medical devices, while Household benefited from the transfer of writing instrument nib activity from South Korea to a new facility in Indonesia - the full benefits of which will be realised in 2016 - although weakness in printer systems reflected an accelerating decline in market conditions.

Total revenue was boosted by the rapid integration of the Specialty Plastics and Abric Seals businesses, both of which have performed well and benefited from some encouraging new business wins.

Foreign exchange rates.  Movements in exchange rates relative to sterling affect actual results as reported.  The constant exchange rate basis adjusts the comparative to exclude such movements, to show the underlying performance of the Company.  The principal exchange rates for Essentra in FY 2015 were:

Re-translating at FY 2015 average exchange rates decreases the prior year revenue by £2.9m and increases adjusted operating profit by £0.1m respectively.

Net finance expense.  Net finance expense of £10.3m was higher than the prior year (FY 2014: £9.1m), and is broken down as follows:

Positive numbers represent net finance expense, negative numbers reflect net finance income

Tax.  The effective tax rate on profit before tax (before exceptional operating items) was 22.8% (FY 2014: 24.9%).  A significant driver of the movement is a reduction in the Group's weighted average applicable tax rate from changes in the underlying geographical balance of profits and corporate tax rates in those territories.

Net working capital.  Net working capital is defined as Inventories plus Trade & Other Receivables less Trade & Other Payables, adjusted to exclude Deferred Consideration Receivable / Payable, Interest Accruals, Capital Payables and Other Normalising Items ("Adjustments").

Net working capital of £137.2m was £35.8m higher than the 31 December 2014 level of £101.4m as a result of acquisitions and growth in the business. 

Cash flow.  Operating cash flow was lower at £98.6m (FY 2014: £107.0m).  Free cash flow of £68.4m compared to £75.5m in FY 2014.

Net debt.  Net debt at the end of the period was £373.9m, a £311.8m increase from 1 January 2015, with cash flow generation offset by the acquisition of Clondalkin SPD and higher dividends.

The Company's financial ratios remain strong.  The ratio of net debt to EBITDA as at 31 December 2015 was 1.8x (31 December 2014: 0.4x) and interest cover was 17.7x (31 December 2014: 15.5x).

Balance sheet.  At the end of 2015, the Company had shareholders' funds of £609.5m (2014: £592.8m), an increase of 2.8%.  Net debt was £373.9m (2014: £62.1m) and total capital employed in the business was £989.1m (2014: £659.9m).

This finances non-current assets of £1,009.7m (2014: £671.9m), of which £288.8m (2014: £230.5m) is tangible fixed assets, the remainder being intangible assets, deferred tax assets, retirement benefit assets and long-term receivables.  The Company has net working capital of £137.2m (2014: £101.4m), current provisions of £8.0m (2014: £4.2m) and long-term liabilities other than borrowings of £120.5m (2014: £83.4m).

Pensions.  As at 31 December 2015, the Company's IAS 19 pension liability was £0.8m (FY 2014: £1.7m) and the associated deferred tax asset was £1.9m (FY 2014: £2.9m). The pension asset has been calculated after updating the asset values and certain assumptions as at 31 December 2015.

Dividends.  The Board of Directors recommends a final dividend of 14.4 pence per share (2014: 12.6 pence), an increase of 14.3%.  This takes the FY 2015 dividend to 20.7 pence per share (+13.1% versus FY 2014).  Subject to approval at the Company's Annual General Meeting ("AGM") on 20 April 2016, the final dividend will be paid on 3 May 2016 to equity holders on the share register on 18 March 2016: the ex-dividend date will be 17 March 2016.  Essentra operates a Dividend Re-Investment Programme ("DRIP"), details of which are available from the Company's Registrars, Computershare Investor Services PLC: the last date for electing to join the DRIP is 11 April 2016.

Treasury policy and controls.  Essentra has a centralised treasury function to control external borrowings and manage exchange rate risk.  Treasury policies are approved by the Board and cover the nature of the exposure to be hedged, the types of financial investments that may be employed and the criteria for borrowing cash.  The Company uses derivatives only to manage foreign currency and interest rate risk arising from underlying business activities.  No transactions of a speculative nature are undertaken.  Treasury activities are subject to independent reviews by the Group Assurance department.  Underlying policy assumptions and activities are reviewed by the Treasury Committee.

Controls over exposure changes and transaction authenticity are in place, and dealing is restricted to those banks with the relevant combination of geographical presence and suitable credit rating.  Essentra monitors the credit ratings of its counterparties and credit exposure to each counterparty.

Foreign exchange risk.  The majority of Essentra's net assets are in currencies other than sterling.  The Company's normal policy is to limit the translation exposure and the resulting impact on shareholders' funds by borrowing in those currencies in which the Company has significant net assets.  As at 31 December 2015, Essentra's US dollar-denominated assets were approximately 78% hedged by its US dollar-denominated borrowings, and its euro-denominated assets were approximately 58% hedged by its euro-denominated borrowings.

The majority of Essentra's transactions are carried out in the functional currencies of its operations, and so transaction exposure is limited.  However, where they do occur, the Company's policy is to hedge the exposures as soon as they are committed using forward foreign exchange contracts.

In an environment where economic growth is by no means well-established or uniform - notably in the Oil & Gas industry - Essentra is nonetheless confident of continuing our track record of balanced profitable growth in 2016, due to the Company's international footprint and diverse range of products and end-markets.

Essentra's Drive for 2020 strategy seeks to maximise shareholder value through the delivery of balanced profitable growth in both its existing and future opportunity markets and technologies.  The strategy also calls for strong conversion of profit into cash and a progressive dividend policy.  The Company looks to complement this balanced organic growth with value-adding acquisitions.

Enquiries

Presentation

1.   A copy of these results is available on www.essentraplc.com

2.   A live audiocast of today's presentation of these results to investors and analysts will start at 08:30 (UK time) on www.essentraplc.com/webcasts.aspx.  The audiocast can also be accessed using the following details.

A recording of the audiocast will be made available on the website later in the day.  A replay will additionally be available as follows:

Cautionary forward looking statement

These results contain forward-looking statements based on current expectations and assumptions.  Various known and unknown risks, uncertainties and other factors may cause actual results to differ from future results or developments expressed or implied from the forward-looking statements.  Each forward-looking statement speaks only as of the date of this document.  The Company accepts no obligation to revise or update these forward-looking statements publicly or adjust them to future events or developments, whether as a result of new information, future events or otherwise, except to the extent legally required.

Notes to Editors

Essentra plc is a FTSE 250 company and a leading global provider of essential components and solutions.  Essentra focuses on the light manufacture and distribution of high volume, essential components which serve customers in a wide variety of end-markets and geographies.

Effective from 1 January 2016, Essentra has implemented a new organisational structure, comprising the three strategic business units below.  FY 2015 results under the new structure are shown in Note 16.

Component Solutions

The Components business is a global market leading manufacturer and distributor of plastic injection moulded, vinyl dip moulded and metal items.  Operating units in 29 countries serve a very broad industrial base of customers with a rapid supply of products for a variety of applications in industries such as equipment manufacturing, automotive, fabrication, electronics and construction.

The Pipe Protection Technologies business specialises in the manufacture of high performance innovative products from commodity resins to engineering-grade thermoplastics and polymer alloys for use in a range of end-markets.  Locations in four countries, combined with a wide distributor network, serve customers around the world.

Essentra Extrusion is a leading custom profile extruder located in the Netherlands which offers a complete design and production service.  One of the first companies to extrude plastics in 1956, Essentra is now one of Europe's most advanced suppliers of co-extrusion and tri-extrusion to all branches of industry.

The Security business has access to a wide portfolio of products and services, including printers, software and consumables from leading manufacturers.

Health & Personal Care Packaging

A leading global provider of packaging and authentication solutions to a diversified blue-chip customer base in the pharmaceutical, health & personal care, consumer and specialist packaging sectors.  The business focuses on delivering value-adding innovation, quality and service through the provision of a wide range of printed products and solutions, including cartons, tapes, leaflets, foils, labels and authentication solutions.

The Speciality Tapes business has expertise in coating multiple adhesive systems in numerous technologies.  With close to 3,000 adhesive products available for same-day shipping, Essentra's products can meet all high performance needs, from foam, magnetic, finger lift and acrylic high bond tapes to hook and loop and non-skid foam.

Filtration Products

Essentra Filter Products is the only global independent cigarette filter supplier.  The nine worldwide locations, including a dedicated Technology Centre supported by three regional development facilities, provide a flexible infrastructure strategically positioned to serve the tobacco industry.  The business supplies a wide range of value-adding high quality innovative filters, packaging solutions to the roll your own segment and analytical laboratory services for ingredient measurement to the industry.

Essentra Porous Technologies is a leading developer and manufacturer of custom fluid handling components, engineered from a portfolio of technologies that includes bonded and non-woven fibre, polyurethane foam and porous plastics.  Representing innovations used in healthcare, consumer and industrial applications, its enabling components are found in a wide range of products from medical diagnostics tests to advanced wound care pads, inkjet printer cartridges, writing instruments, clean room wipes and air fresheners.

Headquartered in the United Kingdom, Essentra's global network extends to 33 countries and includes c. 9,000 employees, 54 principal manufacturing facilities, 64 sales & distribution operations and 5 research & development centres. For further information, please visit www.essentraplc.com.