Results For The Half Year Ended 30 June 2020

ESSENTRA PLC
(the "Company")

A leading global provider of essential components and solutions

 

RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2020

Resilient performance through HY with improving revenue and order trends across all three global divisions in Q2

Summary:

 

·    Trading trends in all three divisions improving through Q2

Ø COVID-19 pandemic (the "pandemic") had a significant impact on underlying markets in which Components operates, but revenue and order intake trend improved through Q2

Ø Resilient performance in Packaging division with new business secured during HY 2020 and the division delivered growth in May and June

Ø Filters division made strong progress on game changers with commencement of new outsourcing contracts in Q2 helping to return division to growth in June

 

·    High level of engagement and resilience in the Essentra Family has helped maintain operational performance and support our customers throughout HY 2020

·    All 71 manufacturing and warehouse facilities are fully operational

·    Strong underlying liquidity (cash on hand plus undrawn available facilities less JV partner share of cash) position maintained throughout HY 2020 (and improved since the pandemic began)

·    HY 2020 results displayed a resilient performance, notwithstanding the impacts of the pandemic

Ø Revenue decline of 11.7%, to £448.4m (at constant FX)

§ -8.5%, on a like-for-like¹ (LFL) basis; pandemic impact predominantly felt in Q2

§ Improving trading trends seen as Q2 progressed - with the month of June being only -0.5% on a LFL basis

Ø Adjusted² operating profit down 40% (at constant FX) to £29.0m. Portfolio simplification successfully completed in HY 2019 accounted for £6.0m of the £19.3m decline, with the remaining decline mainly driven by volume gearing effect

Ø Reported operating profit of £15.6m versus £60.1m in HY 2019 (prior half year figures included gains of £19.5m made on business disposals)

Ø Adjusted² basic EPS lower by 49% (at constant FX) at 6.2p (HY 2019: 12.0p)

Ø Reported basic EPS of 2.3p compares to 11.6p in HY 2019

·    Net debt of £297.0m (FY 2019: £284.4m), with net debt / EBITDA at 2.5x (on a covenant³ basis net debt / EBITDA ratio is 2.3x)

 

¹ Excludes the impact of acquisitions, disposals and foreign exchange

² Before amortisation of acquired intangible assets and exceptional and other adjusting items

³ Calculated as: Net Debt excluding IFRS 16 plus JV partner share of cash / EBITDA excluding IFRS 16 adjusted to include FY impact of acquired businesses

 

Results at a glance:

	HY 2020	HY 2019	% change Actual FX	% change Constant FX
Revenue	£448m	£507m	-11	-12
Adjusted1 operating profit	£29m	£48m	-40	-40
Adjusted1 pre-tax profit	£21m	£41m	-48	-48
Adjusted1 net income2	£17m	£33m	-48	-48
Adjusted1 basic earnings per share	6.2p	12.0p	-48	-49
Dividend per share	-	6.3p	n/a	n/a
Net debt (including lease liabilities)	£297m	£242m	+23	n/a
Net debt (excluding lease liabilities)	£238m	£193m	+23	n/a
Net debt to EBITDA	2.5x	1.6x	n/a	n/a
Free cash flow3	£12m	£23m	n/a	n/a
Reported operating profit	£16m	£60m	-74	-73
Reported pre-tax profit	£8m	£53m	-85	-85
Reported net income2	£7m	£32m	-78	-77
Reported basic earnings per share	2.3p	11.6p	-80	-79

¹ Before amortisation of acquired intangible assets and exceptional and other adjusting items

² Net income is defined as profit after tax, before minority interests
³ A reconciliation of free cash flow is set out in the Financial Review

Statutory to Adjusted Reconciliation:

30 June 2020	Reported	Acquisitions and disposals	Amortisation of acquired intangible assets	Exceptional and other adjusting items	Tax on adjustments	Foreign Exchange	LFL / Adjusted
Revenue	£448m	£(16)m	-	-	-	-	£432m
Operating profit	£16m	-	£11m	£2m	-	-	£29m
Pre-tax profit	£8m	-	£11m	£2m	-	-	£21m
Net income	£7m	-	£11m	£2m	£(3)m	-	£17m

 

30 June 2019	Reported	Acquisitions and disposals	Amortisation of acquired intangible assets	Exceptional and other adjusting items	Tax on adjustments	Foreign Exchange	LFL / Adjusted 1
Revenue	£507m	£(35)m	-	-	-	£1m	£473m
Operating profit	£60m	-	£11m	£(23)m	-	-	£48m
Pre-tax profit	£53m	-	£11m	£(23)m	-	-	£41m
Net income	£32m	-	£11m	£(23)m	£13m	£0m	£33m

 

1 - 2019 Adjusted figures are presented at constant FX rates

Commenting on today's results, Paul Forman, Chief Executive, said:

"The first half of 2020 really has been an unprecedented period and I am very proud of how the Company has responded during these challenging times. From the onset of the pandemic, we focused our energies on our initial three main priorities - employee physical and emotional wellbeing, continued high levels of customer support, and cash conservation. Indeed, with the advent of our newer fourth priority - building for our future - we are now focusing on ensuring that we are best placed to successfully emerge from the pandemic.

I would like to whole-heartedly thank all of our employees, whose dedication and resilience have been outstanding. Our people really have gone above and beyond in order to ensure that the world-class level of service that our customers are used to is maintained, despite the challenging circumstances presented by the pandemic.

The strength of our three distinct business models has been clearly demonstrated in this half year. Whilst customer demand in Components was impacted by the crisis, the breadth of our portfolio, global footprint and flexible manufacturing have all helped to reduce its impact. In both Packaging and Filters, underlying customer demand has remained robust and despite some supply chain disruption, both divisions delivered growth towards the end of the half year.

I am pleased that we have delivered a resilient overall revenue and margin performance, backed up by robust cash generation and an improved liquidity position. Despite the immediate challenges posed by this pandemic, we have continued to pursue strategic initiatives that will drive medium to long term growth.

The fundamentals of our Company remain sound, and I am fully confident that the we will emerge from this unprecedented situation as an even better and stronger organisation."

 

Heading into H2 2020, the macro economic environment continues to remain uncertain. However, while our Components division is more exposed to industrial segments with a certain degree of cyclicality, much of our Group serves end-markets which are non-cyclical in nature.

We have delivered a resilient financial performance in the first half of the financial year, despite the pandemic. Although the timing and profile of recovery remains uncertain - and barring a major second wave to the pandemic - based on recent trading and internal forecasts, our current expectation for  the year to 31 December 2020 is that the resilient performance seen to date will continue with revenue and adjusted operating profit within current range of analyst expectations.

On a divisional basis, the outlook for H2 suggests that; Components will see a continuation in the improvement on LFL trends, Filters will see a continued trend of year-on-year growth driven in part by outsourcing contract volumes, and in Packaging - due to some recent softness seen in certain end markets owing to a supply chain adjustment resulting from a reduction in prescriptions and surgeries through lockdown periods - Q3 should be broadly flat with a return to growth anticipated for Q4​.

The HY 2020 interim dividend is cancelled. However, the Company's strong operating cash flow position, coupled with the Board's recognition of the importance of dividends to all shareholders, means that the Board will keep under review the possibility of a resumption of dividends for FY 2020.

The Company has a dedicated COVID-19 section within its corporate website, where regular updates are being posted (please see https://www.essentraplc.com/about-us/covid-19-approach/groupwide-approach).

Alternative Performance Measures

Constant foreign exchange rates.  Movements in exchange rates relative to sterling affect actual results as reported. The constant exchange rate basis ("constant FX") adjusts the comparative to exclude such movements, to show the underlying performance of the Company.  The principal exchange rates for Essentra in HY 2020 were:

	-------- Average --------		-------- Closing --------
	HY 2020	HY 2019	HY 2020	HY 2019
US$:£	1.27	1.29	1.23	1.27
€:£	1.14	1.14	1.10	1.12

Re-translating at HY 2020 average exchange rates increases the prior year revenue and adjusted operating profit by £1.1m and £0.0m respectively.

Like-for-like ("LFL").  The term "like-for-like" describes the performance of the continuing business on a comparable basis, adjusting for the impact of acquisitions, disposals and foreign exchange.  The HY 2020 LFL results are adjusted for the acquisition of the Innovative Components business on 26 June 2019, the acquisition of Nekicesa Packaging on 6 September 2019, the divestment of the Pipe Protection Technologies business on 14 January 2019, the divestment of the Extrusion business on 11 June 2019, the divestment of the Speciality Tapes business on 28 June 2019 and finally the divestment of the Card Solutions business on 23 July 2019.

Adjusted basis.  The term "adjusted" excludes the impact of amortisation of acquired intangible assets and exceptional and other adjusting items, less any associated tax impact.  In HY 2020, amortisation of acquired intangible assets was £10.9m (HY 2019: £11.1m), and there was an exceptional pre-tax charge of £2.5m (HY 2019: credit of £22.9m).  This exceptional net charge mainly relates to external professional costs associated with certain corporate development activities which are still in progress, integration costs for recent acquisitions, professional fees and £0.2m of external advisory and consultancy costs in relation to the review of the compliance of certain group companies' export activities with US laws, as previously disclosed in the 2019 Annual Accounts. This is offset by a £1.4m release of excess provision held for potential penalties in relation to this activity as the Company does not anticipate any significant enforcement action. Further details on exceptional and other adjusting items are shown in note 3 to the condensed consolidated interim financial statements.

Constant FX, LFL and adjusted measures are provided to reflect the underlying financial performance of Essentra. For further details on the performance metrics used by Essentra, please refer to pages 16 to 19 of the 2019 Annual Report.

Adjusted operating cash flow. Adjusted operating cash flow is presented to exclude the impact of tax, exceptional and other adjusting items, interest and other non-cash items in operating profit. Net capital expenditure is included in this measure as management regards investment in operational assets as integral to the underlying cash generation capability of the Company.

 

 

Operating Review

The HY 2020 result for the Group was resilient. Whilst Q1 trading was largely unaffected by the pandemic, as expected the impact was more profound in Q2, however trading trends have been improving through the course of Q2.

HY 2020 revenue decreased 11.5% (-11.7% at constant exchange) to £448.4m. On a LFL basis, revenue decreased 8.5%. The pandemic had a significant impact on the underlying markets in which Components operates, but the revenue and order intake trend improved through Q2. There was a resilient performance in Packaging, with new business secured during the half year and the division delivered growth in May and June. The Filters division made strong progress on game changers with the commencement of new outsourcing contracts in Q2 helping to return the division to growth in June.

On an adjusted basis, operating profit was down 40.0% (-40.0% at constant FX) at £29.0m. The 300bps drop in the margin (300bps at constant FX) to 6.5% was largely driven by the disposal of various businesses in HY 2019 (£6.0m of the £19.3m decline), volume gearing effect from the revenue decline, which was exacerbated by temporary manufacturing inefficiencies caused by pandemic related issues, as well as the HY 2019 period including a one-time benefit (in Packaging) of £1.7m from the release of provisions.

Including amortisation of acquired intangible assets of £10.9m and an exceptional pre-tax charge of £2.5m, operating profit as reported was £15.6m (HY 2019: £60.1m); HY 2019 included gains of £19.5m made on business disposals.

Net finance expense was above the prior year at £7.7m (HY 2019: £7.0m), this was partly driven by a proactive draw down made from our RCF as a counter measure to the pandemic impact, resulting in a higher interest charge.  The effective tax rate on underlying profit before tax (before exceptional and other adjusting items) was 19.2% (HY 2019: 20.0%). This reduced tax rate is driven by a change in the geographical split of profits across the Company.

On an adjusted basis, net income of £17.2m was down 48.0% (48.4% at constant FX) and adjusted basic earnings per share decreased by 48.3% (48.5% at constant FX) to 6.2p. On a total reported basis, net income of £7.0m and earnings per share of 2.3p compared to £32.2m and 11.6p respectively in HY 2019.

Adjusted operating cash flow was 39.6% lower than the previous year at £22.1m (HY 2019: £36.6m), this equated to an operating cash conversion of 76% in the half year. Adjusted free cash flow of £11.5m compared to £22.6m in HY 2019. The decline in both adjusted operating cash flow and adjusted free cash flow was mainly due to aforementioned lower level of profitability in the Group. Additionally, cash flow was also impacted by a relatively consistent level of capex spend in both current and prior periods (current year planned capex savings will crystallise in H2).

As announced on 16 July 2020, a Deferred Prosecution Agreement was entered into with the US Department of Justice and a fine of $666,543.88 paid to settle certain sanctions violations by the Filters business in Dubai. As previously advised, the Company has made a voluntary disclosure to the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), with regards to certain other historical transactions by the Filters business dating as far back as 2015. The Company has co-operated extensively with OFAC and does not anticipate any significant enforcement action being taken by OFAC. The Company continues to embed its enhanced sanctions compliance programme.

 

Business Review

Summary growth in revenue by Division

% growth	LFL	Acquisitions / Disposals	Foreign Exchange	Total Reported
Components	-12.8	+2.6	-0.2	-10.4
Packaging	-3.0	+6.9	+0.9	+4.8
Filters	-11.2	-	-0.4	-11.6
Specialist Components	-	-100.0	-	-100.0
Total	-8.5	-3.2	+0.2	-11.5

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

Components

	HY 2020 £m	% growth Actual FX	% growth Constant FX
Revenue	129.7	-10.4	-10.2
Operating profit*	23.9	-27.1	-26.4
Operating margin*	18.4%	-430bps	-410bps

*  Adjusted basis

Revenue for the HY decreased 10.2% to £129.7m.  Adjusting for the acquisition of Innovative Components on 26 June 2019, like-for-like revenue was -12.8%. Within the Group, Components is the division which is more exposed to industrial cyclicality. Hence, with the pandemic taking hold towards the end of March, to fully understand LFL performance for the HY, Q1 and Q2 should be considered separately, as performance varied significantly between these two periods.

LFL revenue was 5% down in Q1. This was reflective of the pandemic causing disruption in China earlier than in rest of the world (though the underlying Chinese business was back on track by the end of the quarter), a soft end-market backdrop in the US and wider spread disruption from the pandemic beginning to be felt towards the end of the quarter. Europe was only marginally down on prior period, as wider spread impact from the pandemic late in Q1 was offset by more robust trading earlier in the year.

LFL revenue in Q2 was down 20%. The start of Q2 saw an accelerated slowdown in customer demand, with LFL revenue -24% on prior year in April. May and June showed an improvement from the April low. During this period, Asia fared considerably better than Europe and Americas, as the epicentre for the pandemic shifted from East to West.

Consistent with the commitment to providing customers with a "hassle-free" experience, along with reliable and timely delivery, further commercial and operational initiatives were progressed during the period.  Key among these was the continued roll out of a new digital platform, a critical tool in upgrading the division's online presence. The new digital platform was launched in ten countries in 2019, and the roll out has continued in 2020 with a further eight countries going live. The platform provides greater ease of navigation for customers, a better ability to compare products, and improved visibility in search engines such as Google. Since the outbreak of the pandemic, we are seeing increased levels of online customer activity, driven by new customer engagement, accelerating the 'shift to digital'. Indeed, albeit small, in the month of June a new record was set for revenue generated online. Moreover, this platform has given the division the stage on which to promote an expanding range of products that have both been organically introduced and added from acquisitions. The first stages of cross sell functionality have gone live on the website, and further developments are in progress including the use of AI. In order to complement this increased functionality in our website, the division has carried out an extensive 'cross selling' training programme for sales staff, to drive even better knowledge and expertise of the division's full product portfolio.

Having suffered some logistical delays due to the pandemic, the German warehouse project is on course to open at the end of Q3 2020. This will not only further improve service levels through the division's supply chain in Europe, but will also provide a key mitigation against a hard Brexit.

Adjusted operating profit decreased by 26.4% to £23.9m, equating to a margin of 18.4% (HY 2019: 22.5%). This 410bps dilution reflected the aforementioned volume impact of a softer macro environment along with the dilutive impact of the acquired business (Innovative Components), partially being offset by continued successful pricing management and cost control actions.

Packaging

	HY 2020 £m	% growth Actual FX	% growth Constant FX
Revenue	185.3	+4.8	+3.9
Operating profit*	4.9	-38.0	-38.7
Operating margin*	2.6%	-190bps	-180bps

*  Adjusted basis

Revenue increased 3.9% to £185.3m.  Excluding the acquisition of Nekicesa Packaging on 6 September 2019, LFL revenue decline was -3.0%. As with Components, performance in Q1 and Q2 was quite varied, though underlying demand has remained robust throughout the half year.

LFL performance in Q1 was -5.2%. This was reflective of a tough prior year comparative - Q1 2019 was bolstered by short term customer demand on the back of the new regulatory requirements as prescribed by the Falsified Medicines Directive, which took effect in Europe in early 2019. Additionally, growth was somewhat hindered by specific customer supply chain issues impacting Americas growth rates in Q1 2020.

LFL performance in Q2 was -0.9%. Early in the quarter, the division was impacted by some pandemic induced supply chain performance issues and facility closures. However, the facility closures were rectified from May and the division delivered positive revenue growth in May and June.

During the pandemic, the combination of maintained high levels of service, along with a clear key account management structure, has meant that dialogue with customers has continued to be further strengthened and deepened, with the division collaborating with its customers to help meet a range of needs and objectives during these unprecedented times. The division has been awarded more than $5m (annualised) of new business as a result of its focus on supporting customers.

During the period, there was further investment in machine upgrades and value-added service capabilities to underpin the ongoing improvement in both commercial and operational effectiveness.  This incremental investment included complex literature folding equipment in response to increasing demand trends, as well as capex spent in order to facilitate a newly won contract to supply the full suite of packaging for a COVID-19 anti-viral medicine. As industry trends (such as patient adherence and serialisation) and legislative requirements continue to evolve, the division is well placed to respond to customer needs that require even greater agility and value-added solutions from their packaging suppliers.   

Adjusted operating profit decreased 38.7% to £4.9m, equating to a margin of 2.6% (180 bps decline).  This was largely driven by the volume gearing effect from the revenue decline, which was exacerbated by temporary manufacturing inefficiencies caused by pandemic related issues. Additionally, prior period had a one-time benefit of £1.7m from the release of provisions.

Filters

	HY 2020 £m	% growth Actual FX	% growth Constant FX
Revenue	133.4	-11.6	-11.2
Operating profit*	10.8	-34.1	-34.9
Operating margin*	8.1%	-280bps	-300bps

*  Adjusted basis

Total Filters divisional revenue was 11.2% down on the prior year period, of which the core Filters business (division excluding Tear Tapes) was down by 10.4%. This performance was broadly in line with revised expectations, given two short term factors; namely, the impact from government enforced facility closures in India and Paraguay (which have been fully operational since 4 May 2020), and the continued effect on prior period comparatives due to business disruption in the Middle East following the sanction compliance issues announced in our year end 2019 results.

Additionally, softer trading was also seen in China, due to our lack of local manufacturing presence. This further underlines the importance of the creation of the JV in China - which will give the division that local manufacturing presence, and thus provide a great platform to capture the market opportunities available in China.

In relation to the division's other game changers, the first of our significant outsourcing contracts was secured late last year; and this was supplemented by a second outsourcing award from another multinational company in February 2020. Both contracts are now operational, and invoicing has begun from June. We continue to build our pipeline of next generation products (NGP) opportunities - three patent applications were made for new products during HY 2020. Although a relatively small contributor to divisional revenue and operating profit, the division continued to work with various multinationals and independents to advance their respective potential - or next phase - Heat Not Burn offers. As an innovation leader, the division is well placed to play a leading role in developing biodegradable filters. The division has projects ongoing in collaboration with customers and suppliers and this could create a number of opportunities in the medium to long-term.

During the period the division has continued to develop its cross-functional key account management structure, which will help to create a more in-depth understanding of customer needs, develop relevant value propositions and identify mutually beneficial strategic initiatives. This combined with the division's world class service and quality metrics having been maintained, despite any disruptions that have been caused by the pandemic, has further strengthened and deepened customer relationships.

Adjusted operating profit decreased 34.9% to £10.8m, equating to an operating margin of 8.1% (decline of 300 bps). This was largely driven by the volume gearing effect from the revenue decline, which was exacerbated by temporary manufacturing inefficiencies caused by pandemic related issues.

 

 

Financial Review

Net finance expense.  Net finance expense of £7.7m was £0.7m above the prior year period, and is broken down as follows:

£m	HY 2020	HY 2019
Net interest charged on net debt	5.7	5.3
Amortisation of bank fees	0.4	0.4
IAS 19 pension finance charge	0.3	0.3
Interest on leases	1.0	1.0
Net other finance expense	0.3	-
Total net finance expense	7.7	7.0

Tax.  The effective tax rate on underlying profit before tax (before exceptional and other adjusting items and amortisation of acquired intangible assets) was 19.2% (HY 2019: 20.0%). This reduced tax rate is driven by a change in the geographical split of profits across the Company.

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 and Capital Payables ("Adjustments").

£m	HY 2020	HY 2019
Inventories	125.4	117.7
Trade & other receivables	177.6	192.9
Trade & other payables	(180.4)	(197.5)
Adjustments	5.3	7.5
Net working capital	127.9	120.6

The increase in net working capital was largely due to higher inventory levels, driven mainly by Filters, caused by deliberate contingency builds (given the pandemic backdrop) and also in preparation for the commencement of the division's two outsourcing 'gamechanger' contracts towards the end of the half year. Additionally, there was a noteworthy movement in trade and other payables, which was driven by a conscious effort by the Company to be an ethical and supportive customer to our suppliers by paying invoices early, in order to share some of the burden being felt by our suppliers during these unprecedented times.

Cash flow.  Adjusted operating cash flow is presented to exclude the impact of tax, exceptional and other adjusting items, interest and other non-cash items in operating profit.  Net capital expenditure is included in this measure as management regards investment in operational assets as integral to the underlying cash generation capability of the Company.

Adjusted operating cash flow was 39.6% lower than the previous year at £22.1m (HY 2019: £36.6m), this equated to an operating cash conversion of 76% in the half year (HY 2019: 76%). Adjusted free cash flow of £11.5m compared to £22.6m in HY 2019. The decline in both adjusted operating cash flow and adjusted free cash flow was mainly due to aforementioned lower level of profitability in the Group. Additionally, cash flow was also impacted by a relatively consistent level of capex spend in both current and prior periods (post pandemic planned capex savings will crystallise in H2). Capex spend in the period was mainly driven by the German warehouse project in Components, the Group Business Process Redesign (BPR) project, as well as the aforementioned investments in new machinery for Packaging.

In HY 2020, there was a £87.2m net increase in cash and cash equivalents to £160.2m (HY 2019: increase of £118.4m to £185.1m).

£m	HY 2020	HY 2019
Operating profit - adjusted	29.0	48.3
Depreciation and amortisation of non-acquired intangible assets	19.8	18.0
Right-of-use asset depreciation    Share option expense / other movements	6.2 (0.5)	5.2 3.0
Change in working capital	(10.0)	(14.9)
Net capital expenditure (excluding exceptional PP&E disposal proceeds)	(22.4)	(23.0)
Operating cash flow - adjusted	22.1	36.6
Tax*	(4.3)	(7.4)
Cash outflow in respect of exceptional and other adjusting items	(2.2)	(15.5)
Pension obligations	(0.3)	(0.4)
Add back: net capital expenditure (excluding exceptional PP&E disposal proceeds)	22.4	23.0
Net cash inflow from operating activities	37.7	36.3
Operating cash flow - adjusted	22.1	36.6
Tax*	(4.3)	(7.4)
Net interest paid	(6.0)	(6.2)
Pension obligations	(0.3)	(0.4)
Free cash flow - adjusted	11.5	22.6
Net increase in cash & cash equivalents	87.2	118.4

* Tax paid excludes the exceptional tax paid on business disposals.  This is included within the cash outflow in respect of exceptional and other adjusting items

Net debt.  Net debt at the end of the period was £297.0m, a £12.6m increase from 1 January 2020 (after applying IFRS 16), primarily due to foreign exchange.  Additionally, it should be noted that an increase in lease liability movements (driven by a new lease for the aforementioned Components Germany warehouse project along with a recently extended lease on our Components Turkey facility) broadly nets off the free cash inflow generated from operating activities.

 

 

£m	HY 2020
Net debt as at 1 January 2020	284.4
Free cash flow	(11.5)
Cash outflow in respect of exceptional and other adjusting items (net of exceptional PP&E disposal proceeds)*	2.2
Foreign exchange	12.5
Disposals**	(0.0)
Acquisitions	(0.2)
Shares issued in JV	(2.9)
Lease liability movements	12.5
Employee trust shares	(0.1)
Other	0.1
Net debt as at 30 June 2020	297.0

* Includes exceptional tax paid on business disposals

** Excludes £5.0m cash received from the settlement of the promissory note as this already excluded part of net debt

 

The Company's financial ratios remain healthy.  The ratio of net debt to EBITDA as at 30 June 2020 was 2.5x (31 December 2019: 2.0x) and interest cover was 4.8x (31 December 2019: 6.6x). 

Pensions.  As at 30 June 2020, the Company's IAS 19 net pension liability was £24.6m (FY 2019: £17.4m), as a result of a change in discount rate partially offset by an increase in asset valuations.  The net liability has been calculated after updating the asset values and certain liability assumptions as at 30 June 2020.

Dividends. Earlier in the year, in light of the unprecedented uncertainty due to the pandemic, the Company announced that the Board had concluded that all reasonable steps should be taken to conserve cash and, accordingly, decided to cancel the 2019 final dividend. The Board has since considered the overall dividend payment for this financial year and, taking into consideration the interests of all stakeholders, concluded that it remains prudent for there not to be a resumption of dividend payments at this stage, hence the HY 2020 interim dividend is cancelled. However, recognising the importance of dividends to all shareholders, Board will keep under review the possibility of a resumption of dividends for FY 2020.

Board changes.  As reported in the FY 2019 results announcement, Lorraine Trainer stepped down as a Non-Executive Director and Chair of the Remuneration Committee, following the Company's 2020 Annual General Meeting on 21 May 2020. Lorraine has been replaced as Chair of the Remuneration Committee by Nicki Demby, who has been with the Company since 1 June 2019.

Treasury policy and controls.  Essentra has a centralised treasury function to manage funding, liquidity and exposure to interest rate and foreign exchange risk.  Treasury policies are approved by the Board and cover the nature of the exposure to be hedged, the types of derivatives that may be employed and the criteria for investing and borrowing cash.  Essentra uses derivatives only to manage currency and interest rate risk arising from the underlying business activities. No transactions of a speculative nature are undertaken. Underlying policy assumptions and activities are reviewed by the Treasury Committee.

Controls over exposure changes and transaction authenticity are in place, and dealings are restricted to those banks with the relevant combination of geographical presence, expertise and suitable credit rating.

Foreign exchange risk.  The majority of Essentra's net assets are in currencies other than sterling.  The Company's normal policy is to reduce the translation exposure and the resulting impact on shareholders' funds through measures such as borrowing in those currencies in which the Group has significant net assets.  As at 30 June 2020, Essentra's US dollar-denominated assets were approximately 31% hedged by its US dollar-denominated borrowings, while its euro-denominated assets were approximately 33% hedged by its euro-denominated borrowings.

The majority of Essentra's transactions are carried out in the functional currencies of its operations, and therefore transaction exposure is limited. However, where such exposure does occur, Essentra uses forward foreign currency contracts to hedge its exposure to movements in exchange rates on its highly probable forecast foreign currency sales and purchases over a period of up to 18 months.

Management of principal risks.  The Board considers risk assessment, identification of mitigating actions and internal controls to be fundamental to achieving Essentra's strategic objectives. Our principal risks are detailed later in this document.

Now that the European Union (Withdrawal Agreement) Act has come into force, the Company's focus has shifted to preparing the business for the end of the transition period in December 2020. As previously noted, the Company has already put in place various actions to mitigate the impact of Brexit, including alternative supply routings, changing supply networks and implementing stock builds to minimise supply chain disruption. Our focus continues to be on detailed planning, supporting any affected staff and ensuring appropriate customs processes and documentation are in place. Overall, we do not foresee any material impact to the Company.

 In 2019 the Company embarked on a business process redesign project, supported by implementation of a new ERP system. This project supports the strategic growth agenda of the divisions, along with improving process efficiencies and business controls. The focus in 2019 was on scoping and process design for the Components division, as well as finance and procurement functions. In 2020, project activity has been focused on system design, development and deployment - Finance and Procurement processes have recently 'gone live' for main headquarters' entities. The planned roll-out to the first Components locations has been delayed due to pandemic-induced travel restrictions, with the first Components site now expected to 'go live' in Q1 2021.

Over the cycle, the tangible benefits of the BPR programme are estimated to offset the cost.  With streamlined processes and modern technology, the Company expects to become a much more agile and nimble business, which will not only deliver better service to customers but also allow the better attraction and retention of high-quality talent.

 

 

 

 

Enquiries

 

Essentra plc Aamir Mohiuddin, Investor Relations Director Lucy Yank, Group Communications Director Tel: +44 (0)1908 359100

Tulchan Communications LLP Martin Robinson Sophia Martin-Pavlou Olivia Peters Tel: +44 (0)20 7353 4200

 

 

 

Presentation

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

The Half Year Results presentation to analysts and investors will start at 08:30 (UK time), and will be held virtually.

 

There are two options for participating in the event:

 

 

1)   View and listen in to a webcast of the presentation, which can be accessed at https://www.essentraplc.com/en/investors/company-information/webcasts-and-presentations

Please note that this option will not allow you to ask any questions - it will be listen only mode.

 

2)   If you wish to ask a question, or are unable to listen to the audio via the webcast, please dial in to the audio conference call using the details below:

 

 

Dial-in number:	+44 (0)20 7192 8338 (UK / international participants) +1 646 741 3167 (US participants)
Toll-free number:	0800 279 6619 (UK participants) +1 877 870 9135 (US participants)
Event Plus Passcode:	3193976

 

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

 

 

Replay number:	+44 (0)333 300 9785 (UK / international participants)     +1 917 677 7532 (US participants)
Toll-free number:	0808 238 0667 (UK participants)      +1 866 331 1332 (US participants)
Replay access code:	3193976
Replay available:	For 7 days

 

 

 

Notes to Editors

 

About Essentra plc

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

Headquartered in the United Kingdom, Essentra's global network extends to 34 countries and includes 7,552 employees, 50 principal manufacturing facilities, 34 sales & distribution operations and 4 research & development centres. For further information, please visit www.essentraplc.com.

 

Essentra Components

Essentra Components is a global market leading manufacturer and distributor of plastic injection moulded, vinyl dip moulded and metal items.  Operating in 29 countries worldwide, 14 manufacturing facilities and 29 logistics centres serve more than 84,000 customers with a rapid supply of low cost but essential products for a variety of applications in industries such as equipment manufacturing, automotive, fabrication, electronics and construction. The division also includes the Reid Supply business, which provides a wide range of branded hardware supplies to a broad base of industrial customers, largely located in the US Mid-West.

 

Essentra Packaging

Essentra Packaging is one of only two multicontinental suppliers of a full secondary packaging range to the health and personal care sectors, with 24 facilities across four geographic regions.  The division's innovative products include cartons, leaflets, self-adhesive labels and printed foils used in blister packs, which help customers to meet the rapidly-changing requirements of these end-markets and can also be combined with Essentra's authentication solutions to help the fight against counterfeiting.

 

Essentra Filters

Essentra Filters is the only global independent cigarette filter supplier.  The seven worldwide locations, plus a dedicated Technology Centre supported by three regional development facilities, provide a flexible infrastructure strategically positioned to serve the tobacco sector.  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's offering also includes Heat Not Burn and e-cigarette solutions to the rapidly evolving market for Next Generation Products. The division now also includes the Tear Tapes business, which is globally recognised as the leading manufacturer and supplier of pressure-sensitive tear tapes, that are largely used in the tobacco, food and drink and specialist packaging sectors.

 

 

Risk Report

Our risk management activities aim to improve performance, encourage innovation and support the achievement of our strategic objectives. In doing this we take a balanced approach that puts risk management at the core of the senior management agenda, which is where we believe it should be.

Our risk management framework continues to evolve in line with best practice to ensure that it supports the Company's ongoing growth and strategic objectives. A robust, but flexible, approach to the management of risk is fundamental to the continued success of the Company. There is a risk management framework for identifying and managing risk within defined appetite levels, in relation to both operations and strategy. The framework has been designed to provide the Group Risk Committee ("GRC") and the Board with a clear line of sight over Principal, Key and Emerging Risks and enables them to manage risks within the Company.

COVID-19 

The COVID-19 pandemic has become a worldwide crisis, and at the date of this report the situation is still evolving. As a result of COVID-19 the Company's risk landscape has changed. We have considered the impact of COVID-19 on our Principal  and Emerging Risks and we have reviewed our risk profile and appetite. Where needed we have identified additional mitigating actions as part of continued focus on risk management.

The significant increase in employees working at home has increased our Cyber Security risk. We have an ongoing communication and awareness programme to remind all users of the associated risks and have issued advice on secure home working best practices. We have also introduced stronger authentication for remote access services to reflect changing IT Security threats.

Increasingly, especially given recent COVID-19 related events, the mental and emotional health and wellbeing of our employees is becoming a focus. Staff are being asked to work in different ways, with different teams, often remotely, and this creates a new and different set of challenges which employees need to respond to. A comprehensive wellbeing support programme was launched to support people to work remotely as well as manage the personal impact of COVID-19.

We have experienced multi-site disruption given our global footprint. COVID-19 also brought the challenge of a disruptive supply chain across a number of our sites. We have been successful in securing alternative sources of supply for key raw materials and supply guarantees. These actions have mitigated this risk.

Principal Risks

Our Risk Management approach in relation to COVID-19 has been to consider the completeness and appropriateness of our Principal Risks. As part of our approach we have considered the impact on each of our Principal Risks and our risk appetite. Where necessary we have identified suitable mitigating actions.

A number of our risks have been amplified as a result of COVID-19. Additionally, one new Principal Risk has been added to acknowledge the impact cyclical industrial downturns may have on our Components Division. The table below sets out movements in our Principal Risks.

 

 

 

Principal Risk	Movement from 2019	Description
PR1 Failure to Achieve Acceptable Returns from the Packaging Division   (Managing Director, Packaging)	No change	There is a risk that the Packaging turnaround fails to deliver new business wins, expected cost savings, or takes longer or costs more to implement than expected resulting in failure to achieve Packaging strategic and/or financial objectives.   There has been no change in the risk profile; during COVID-19, the Packaging Division has shown relatively high resilience demonstrating the defensive nature of the pharmaceutical end markets served.
PR 2 Tobacco Industry Dynamics   (Managing Director, Filters)	No change	This is a risk in relation to failure to deliver on one or more game changers and failure to increase our innovation capability in 2020 to grow the filters business, which is declining at the moment due to increasing health awareness and legislation against the use of tobacco and derived products. This risk includes potential litigation related to adverse impacts of tobacco use on health.   There has been no change to the overall assessment of this risk. It is considered too early to conclude on the impact COVID-19 has had on this risk. There will be ongoing monitoring and continued assessment of any changes.
PR 3 Delivery of Strategic Projects   (Strategy and Commercial Director)	Up	There is a risk that failure to deliver key projects effectively and efficiently (including the current Business Process Redesign project) could result in increased project costs and impede our ability to execute our strategic plans.   This risk has heightened as a result of COVID-19; there is an increased likelihood of delays in project delivery due to COVID-19 restrictions and added complexity in project co-ordination due to remote working and travel restrictions.   Mitigating actions include continued close monitoring of project costs and no such escalation is currently envisaged.
PR 4 Regulatory Governance   (Company Secretary and General Counsel)	No change	There is a risk that failure to comply with governance regulation including in respect of anti-trust, anti-bribery, sanctions and data privacy results in significant fines, costs and reputational damage. No change to the overall assessment of probability or impact.   COVID-19 has potentially increased the future risk in relation to data privacy given the additional collection of personal data. Changes in supply chains and remote working environments potentially increase compliance and control risks. We have not seen a significant change in other regulatory risks.   Mitigating actions include ongoing review and continuous improvement of our compliance activities.
PR 5 Cyber-Attack   (Chief Information Officer)	Up	There is a risk that a significant cyber-attack penetrates IT systems resulting in regulatory breaches and fines, suspension of production, reputational damage, loss of customer and employee information and loss of stakeholder confidence.   The risk has been heightened, primarily due to a significant increase in remote working as part of COVID-19 crisis management. The Group is mitigating these additional risks through consistent deployment of our security controls to devices away from the office, maintaining software updates and the introduction of stronger authentication for remote access services.
PR 6 Macro-economic and Trade Deal Uncertainty (including Brexit)   (Group Operations Director)	No change	This is a risk in relation to the business not being effective in managing the uncertainty surrounding the terms of the UK's exit from the EU or anticipating or assessing broader economic or market events and developments including a general move towards protectionism. Failure to plan for any potentially negative impacts, or to capture any opportunities that may be presented, could lead to cash pressures for customers and suppliers. We may also experience fluctuations in inflation, increased supply chain risks (e.g. solvency, people and materials) and reduced revenue and pressure on margins.   There has been no change to the risk profile. Post COVID-19, there could be a trend to reverse globalisation. Essentra is responding by securing alternative and/or local sources of supply facing this change. This has been built into the response to the Principal Risk "Business Continuity Planning and Management".
PR 7 Business Continuity Planning and Management   (Group Operations Director)	Up	This is a risk in relation to a lack of robust business continuity planning and management activity, including operational resilience (e.g. natural catastrophe and fire) and single point supply chain failure topics, given Essentra's complex, interlinked global operational and supply chain footprint. This risk has been broadened to account for multi-site disruption risks as has been the case with COVID-19 given our global footprint.   COVID-19 has heightened this risk and brought the challenge of a disruptive supply chain. Mitigation efforts include ensuring alternative sources of supply for key raw materials and supply guarantee are in place. We continue to review and update our business continuity processes.
PR 8 Environmental, Social Governance (ESG)   (Group Operations Director)	Up	There is a risk that failure to meet stakeholder expectations on increasing environmental and/or social governance obligations could lead to reputational risk for the Group. This includes risks arising from changing investor attitudes, impacting our ability to secure funding from investors, social attitudes towards the health and environmental impact of our products which may impact on our ability to market them, along with ability to attract and retain talent, given increasing employee focus on sustainability related topics.   The Group is underway on its journey relating to ESG topics, including sustainability. The short-term Principal Risk is that the Group is not being comprehensive in its approach, and not covering material ESG topics for the Group.   In the medium-term, we expect that ESG will be integrated into other risks and opportunities across the business including sustainability, social and governance topics relating to those risks and opportunities.   This risk has heightened. COVID-19 has imposed additional shareholder and public expectations on environmental and social governance obligations on the Company. This risk has also been broadened to reflect increased stakeholder expectations in relation to ESG.   Mitigation efforts include a continued focus on the fulfillment of environmental and social obligations during COVID-19, particularly protecting employee wellbeing and supporting customers playing a role in the frontline responding to the crisis.   Recently, the Group has conducted its initial sustainability materiality matrix exercise, to ensure comprehensive coverage of material issues and opportunities for the business.
PR 9 Internal Processes and Control   (Chief Financial Officer)	Up	A failure to document and embed key processes, including standard operating procedures, will increase operational risk including the risk of loss resulting from inadequate or failed internal processes   This risk has heightened; primarily due to the change in the work environment such as remote working, and the focus of attention and efforts on crisis management.   Monitoring controls and processes continue to be performed to prevent and detect inappropriate and unethical behaviour. This includes fraud, deliberate financial misstatement and improper accounting practices. Mitigation efforts being undertaken include enhanced balance sheet reviews undertaken by Group Finance, and continued communications to teams regarding the  importance of controls.
PR 10 Safety, Health & Wellbeing (Renamed)   (Group Operations Director)	Up	The 2019 Principal Risk titled 'Safety (including Regulatory)' has been redefined and renamed to 'Safety, Health & Wellbeing'. There is a risk of inadequate health and safety processes and practices, employee or visitor injury or fatality, and/or non-compliance with regulation(s) resulting in prosecution.   This risk has heightened given the increased health risks due to COVID-19 and the need for new approaches to working, including social distancing. Increasingly, especially given recent COVID-19 related events, the mental and emotional health and wellbeing of our employees is becoming a focus. Staff are being asked to work in different ways, with different teams, often remotely, and this creates a new and different set of challenges which employees need to respond to. We continue to manage this proactively including undertaking emotional wellbeing counselling sessions to support employees and providing personal protection equipment (PPE) to all our workforce to maintain their safety.
PR 11 Talent to Deliver our Future   (Group HR Director)	No change	The 2019 Principal Risk titled 'Talent to Deliver Our Future' has been redefined to capture the broader set of needs in relation to our workforce.   This is a risk in relation to a failure to attract and retain the required management, leadership and technical skills necessary to evolve our business, develop the culture and meet future customer needs. The talent market is changing and is less favourable towards the manufacturing sector. Our ability to attract candidates may become easier in the short-term, but in evolving areas such as digital, IT development and data analytics, it will continue to be a challenge as the market for certain skills becomes more competitive. This may mean the ability to retain key talent with specific skills will become an issue as the market settles post COVID.   The impact of COVID-19 will reshape business needs and we must continue to invest in our talent to meet our future needs.   Key mitigation actions include a more refined people strategy that will underpin the approach to enhance the employee experience and drive the changes needed.   A full talent mapping and succession planning process will continue in 2020.   Communication with employees, and potential employees, is seen as critical.  Increased communication and engagement will strengthen and enhance the Company's profile and perception of the Company as an employer of choice. People risk mitigation plans are in place throughout the Group.
PR 12 Exposure to the Cyclical Industrial Market - Components Division (NEW)   (Managing Director, Components)	NEW	This is a new Principal Risk for 2020 in light of the global economic impact presented by COVID-19. There is a risk that changes to the Components division cost base and business model do not happen quickly enough or are not robust enough to minimise the impact on operating margins as a result of cyclical downturns in global industrial production. The proposed impact and probability assessments are 'Critical' and 'Unlikely'.   The key mitigating actions being taken include optimising the Division's fixed cost base such that it is a lower proportion of the operating costs. Additionally, focus is being given to diversifying the market sectors that we sell to; both within the industrial sector and also beyond it.

 

 

 

 

 

Emerging Risks

The Emerging Risks we identified in 2019 continue to apply with geopolitical change and technology disruptors being amplified as a result of COVID-19.

The Group's risks are continually reviewed and reassessed through a bottom up and top down process as well as input from external sources with escalation and reporting to the Board. The process fully considers all relevant internal and external factors and captures those risks which are current but have not yet fully crystallised, as well as those which are expected to crystallise in future periods.

The Emerging Risks remain broadly unchanged to those set out in the 2019 Annual Report and Accounts. An additional Emerging Risk in relation to the changing structure of the debt market  has been identified. Further detail is set out in the table below:

 

Risk (Owner)	Risk Description
ER1 Climate change (Group Operations Director)	The risk that Essentra fails to anticipate the impact of climate change including the consequential increase in frequency and severity of natural disasters. The Group needs to consider the impact of climate change on its global operations through forward-looking consideration of business continuity risks in vulnerable locations. These considerations need to be built into our M&A strategy.
ER2 Geopolitical (Group Operations Director)	As a global company, Essentra will need to adapt to geopolitical changes that impact on patterns of trade and the movement of labour and capital. A trend towards protectionism, regionalism and a rebalancing from West to East creates risks and opportunities that Essentra will need to manage and exploit.
ER3 Regulatory change (Company Secretary and General Counsel)	Essentra is a global company that must comply with regulatory requirements in many countries. Regulation is increasing worldwide and may potentially impact our products, operations, workforce and relationships with suppliers, customers and stakeholders. We must be alert to longer term regulatory developments including those related to single use plastics and tobacco-related and tobacco-alternative products.
ER4 Technology disruptors (Chief Information Officer)	The risk that Essentra does not manage its response to evolving technologies effectively. This may include losing competitive advantage as rivals deploy advanced manufacturing technologies, artificial intelligence and robotics to strengthen product development, marketing, production, distribution and support functions.
ER5 Evolving conditions of the  Debt Market (NEW) (Chief Financial Officer)	The debt market is evolving, and the lending condition and appetite can be impacted by key events, we have recently observed the effect from the COVID pandemic. Essentra continues to have strong liquidity and we will stay alert to the change of investors' appetite and respond optimally to it and maintain our profile in the debt market.

 

Further detail on these risks and how they are managed is available in the 2019 Annual Report and Accounts.

 

 

 

Condensed consolidated income statement
			Six months	Six months	Year
			ended	ended	ended
		Note	30 Jun 2020	30 Jun 2019	31 Dec 2019
			£m	£m	£m
	Revenue	2	448.4	506.6	974.1
	Operating profit before intangible amortisation and exceptional and other adjusting items		29.0	48.3	87.5
	Amortisation of acquired intangible assets		(10.9)	(11.1)	(22.9)
	Exceptional and other adjusting items	3	(2.5)	22.9	15.4
	Operating profit		15.6	60.1	80.0
	Finance income		0.7	0.6	2.1
	Finance expense		(8.4)	(7.6)	(16.6)
	Profit before tax		7.9	53.1	65.5
	Income tax expense		(0.9)	(20.9)	(24.3)
	Profit for the period		7.0	32.2	41.2
	Attributable to:
	Equity holders of Essentra plc		6.1	30.5	38.4
	Non-controlling interests		0.9	1.7	2.8
	Profit for the period		7.0	32.2	41.2
	Earnings per share attributable to equity holders of Essentra plc:
	Basic	4	2.3p	11.6p	14.7p
	Diluted	4	2.3p	11.5p	14.5p

 

Condensed consolidated statement of comprehensive income
			Six months	Six months	Year
			ended	ended	ended
			30 Jun 2020	30 Jun 2019	31 Dec 2019
			£m	£m	£m
	Profit for the period		7.0	32.2	41.2
	Other comprehensive income:
	Items that will not be reclassified to profit or loss:
	Remeasurement of defined benefit pension schemes		(4.9)	(3.2)	(4.9)
	Deferred tax credit on remeasurement of defined benefit pension schemes		1.1	0.7	1.0
			(3.8)	(2.5)	(3.9)
	Items that may be reclassified subsequently to profit or loss:
	Effective portion of changes in fair value of cash flow hedges:
	Net change in fair value of cash flow hedges transferred to the income statement		(0.8)	0.1	0.8
	Effective portion of changes in fair value of cash flow hedges		0.3	(0.4)	(0.6)
	Foreign exchange translation differences:
	Attributable to equity holders of Essentra plc:
	Arising on translation of foreign operations		32.0	(13.7)	(42.9)
	Arising on effective net investment hedges		(9.8)	(0.8)	7.5
	Income tax (expense)/credit		(1.6)	(0.1)	1.6
	Attributable to non-controlling interests		0.1	-	(0.6)
			20.2	(14.9)	(34.2)
	Other comprehensive income for the period, net of tax		16.4	(17.4)	(38.1)
	Total comprehensive income for the period		23.4	14.8	3.1
	Attributable to:
	Equity holders of Essentra plc		22.4	13.1	0.9
	Non-controlling interests		1.0	1.7	2.2
			23.4	14.8	3.1

 

Condensed consolidated balance sheet
		Note	30 Jun 2020	30 Jun 2019	31 Dec 2019
			£m	£m	£m
	Assets
	Property, plant and equipment	5	279.2	267.5	276.0
	Lease right-of-use asset	6	51.4	41.4	43.4
	Intangible assets	7	505.7	493.2	486.3
	Long-term receivables		5.9	6.7	5.6
	Deferred tax assets		13.1	13.1	13.6
	Retirement benefit assets	8	18.8	17.0	16.9
	Total non-current assets		874.1	838.9	841.8
	Inventories		125.4	117.7	113.1
	Income tax receivable		9.2	2.3	7.0
	Trade and other receivables		177.6	192.9	166.9
	Derivative assets	13	0.4	0.1	0.8
	Cash and cash equivalents	9	160.2	185.1	70.4
	Other financial assets		-	5.0	6.2
	Total current assets		472.8	503.1	364.4
	Total assets		1,346.9	1,342.0	1,206.2
	Equity
	Issued share capital		66.0	66.0	66.0
	Merger relief reserve		298.1	298.1	298.1
	Capital redemption reserve		0.1	0.1	0.1
	Other reserve		(132.8)	(132.8)	(132.8)
	Cash flow hedging reserve		(0.2)	(0.2)	0.3
	Translation reserve		9.6	8.2	(11.0)
	Retained earnings		314.0	320.6	312.4
	Attributable to equity holders of Essentra plc		554.8	560.0	533.1
	Non-controlling interests		11.6	8.0	7.7
	Total equity		566.4	568.0	540.8
	Liabilities
	Interest bearing loans and borrowings	9	398.1	319.9	249.0
	Lease liabilities	9	47.1	38.3	39.3
	Retirement benefit obligations	8	43.4	34.5	34.3
	Provisions		6.4	6.9	6.0
	Other financial liabilities		4.4	4.5	3.4
	Deferred tax liabilities		45.7	43.0	45.3
	Total non-current liabilities		545.1	447.1	377.3
	Interest bearing loans and borrowings	9	-	63.0	60.7
	Lease liabilities	9	12.0	10.9	11.4
	Derivative liabilities	13	0.8	0.4	0.3
	Income tax payable		40.7	50.6	37.9
	Trade and other payables		180.4	197.5	174.5
	Provisions		1.5	4.5	3.3
	Total current liabilities		235.4	326.9	288.1
	Total liabilities		780.5	774.0	665.4
	Total equity and liabilities		1,346.9	1,342.0	1,206.2