Interim Results Presentation 28 August 2017 Forward Looking - - PowerPoint PPT Presentation

Interim Results Presentation

28 August 2017

The information in this presentation has not been independently verified and does not purport to be

• comprehensive. One51 is not undertaking any obligation to provide any additional information or to update

this presentation or to correct any inaccuracies that become apparent. This presentation is neither a prospectus nor an offer nor an invitation to apply for securities. The information contained in this presentation is for background purposes only and is subject to material updating, completion, revision, amendment and verification. This presentation does not constitute or form a part of any offer for sale or solicitation of any offer to buy or subscribe for any securities. Any prospective investor must make its own investigation and assessments and consult with its own adviser concerning any evaluation of the Company and its prospects. No representation or warranty, express or implied, is or will be given by One51, its subsidiaries, its shareholders or their respective directors, officers, employees or advisers as to the accuracy or completeness of this presentation and, so far as permitted by law, no responsibility or liability is accepted for the accuracy or sufficiency of this presentation. In particular, without limitation, no representation or warranty is given as to the achievement or reasonableness of any projection, estimate, target or forecast in this presentation, which it should be noted is provided for illustrative purposes only. This presentation contains forward-looking statements which reflect management’s current views and

• estimates. These forward looking statements involve certain risks and uncertainties that could cause actual

results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments. Management undertake no responsibility to revise any such forward looking statements to reflect any changes in management’s expectations or any change in circumstances, events or the Group’s plans and strategy. Accordingly, no reliance can be placed on the figures contained in such forward looking statements.

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Forward Looking Statements

Group Overview

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

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Geographic Footprint

One51 Plastics has significant international reach with sophisticated R&D capabilities

• 14 manufacturing facilities
• 2 R&D facilities in Ireland and Canada
• c. 1.8 million square feet of manufacturing space
• 270 machines

Agricultural & Automotive Products Packaging Bulk, Environmental & Industrial Products R&D Centre

• 32.4% growth in Revenue to €225.8m (2016: €170.6m)
• 31.1% increase in EBITDA to €32.4m (2016: €24.7m)
• 32.6% growth in EBIT to €20.1m (2016: €15.2m)
• Profit before tax, exceptional items and share of associate profits increased to €14.8m

(2016: €10.9m)

• Profit for the period of €6.2m (2016: €8.9m)
• 29.7% increase in Adjusted diluted EPS to 7.24c (2016: 5.58c)
• EBITDA interest cover of 5.94x (2016: 5.89x)
• Total Assets of €634.2m (31 December 2016: €507.6m)
• Total Equity (excluding IPL Put liability) of €197.0m (31 December 2016: €190.9m)
• Net Debt of €261.6m (31 December 2016: €152.5m)

H1 2017 Financial Highlights

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1 The financial highlights should be read in conjunction with the Interim Report published on 28 August 2017. 2June 2016 amounts have been restated to exclude the effect of discontinued operations. 3 Certain tables and numbers in this presentation may not add or compute precisely due to rounding.

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2 2 2 2

• The successful integration of Encore Industries into the IPL North

America business since acquisition in November 2016.

• The acquisition of 100% of the share capital of Macro Plastics Inc. on

9 June 2017 through IPL. Macro is one of the largest manufacturers of rigid bulk bins worldwide and is a market leader in providing rigid plastic bulk packaging solutions to the agricultural and automotive sectors.

• The disposal of ClearCircle’s Specialist Environmental Services

(“SES”) Divisions in Ireland and the UK.

− Initial cash consideration of c. €40m received from the sale of both divisions. − The disposals complete One51’s exit from the specialist environmental services sector as the Group focuses on the continued development of its global plastics

• business. One51 continues to own a residual investment in a small UK metals

recycling company.

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H1 2017 Business Alignment Highlights

• The North America market has contributed significant organic growth

driven by continued increased demand in both the Retail and Bulk and Environmental divisions.

• Further significant development capital investment programmes

underway in our North American operations providing the Group with enhanced ability and capacity to serve an expanding business and customer base.

• The OPG business has continued to grow organically in the UK in H1

2016 on a constant currency basis. OPG’s Ireland and China business has been negatively impacted by reduced demand from its largest customer following the merger of that customer with another industry participant.

• Renegotiated and extended IPL Canadian syndicated loan facility to

finance the acquisition of Macro and to provide further bank facilities to the IPL Group with a revised expiry date of July 2021.

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H1 2017 Operational Highlights

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One51 Plastics Evolution

Target to double Plastics EBITDA in the medium term through a combination of organic growth and acquisitions

Rebranding 2013 Acquisition of IPL 2015 International plastics manufacturer of significant size and scale 2017 +

100% Total EBITDA c.€16m 57% 43% Total EBITDA c. €48m Total EBITDA c. €75m+ OPG IPL

• Acquisitions
• f IPL and

Straight

• Rebranded to

OnePlastics Group

• Selected

acquisitions (Encore & Macro)

• Organic

growth

Plastics Packaging Market Overview

Rigid plastic packaging market valued US$171bn is the fastest growing segment within Plastic packaging

• Global packaging market est. to be worth US$800bn. Rigid

packaging valued at c. US$171bn¹.

• Global rigid plastic packaging forecast to grow at 5.8% CAGR
• ver the next 5 years, faster than average global GDP of 3.4%¹
• Growth is being driven by its comparatively lower cost,

lighter weight and flexibility over traditional packaging materials

• Rigid plastic has a wide application in food and beverage sector

which is seen as less susceptible to macro-economic influences as other industries

Food Beverage Non-food Industrial/other $25.8bn $45.1bn $57.2bn $98.3bn $0bn $50bn $100bn $150bn $200bn $250bn 2015 c.$171bn CAGR 5.8% Rest of the world North America Europe Asia 2020 c.$171bn

27% 7% 29% 37%

c.$226bn $20.4bn $39.3bn $46.6bn $64.3bn

Source: Smithers Pira, The Future of Global Rigid Plastic Packaging to 2020. Market sizing excludes Environmental Containers which represents a c. US$1bn market in North America (per EY) and a substantial market in the UK & Ireland (being One51’s core markets in Environmental) 1.

All US$

Agricultural & Automotive Products (Macro) Packaging (IPL Retail, OPG Cork & China) Bulk, Environmental & Industrial Products (IPL B&E & OPG UK) Products Market Position

• #1 Globally
• Niche player in North

America, UK and Ireland

• Niche player in North

America, UK, Ireland and China Key Customers Growth Drivers

• Sustainability
• Substitution effect
• Regulation
• Substitution effect (e.g.

glass/metals to plastics)

• R&D / innovation
• Sustainability
• Replacement cycle
• Regulation
• Urbanisation

Defensive Characteristics

• High barriers to entry
• Food industry counter

cyclical

• Diversity of customer

base

• High barriers to entry

One51 Plastics Overview

One51 Plastics supplies products to a broad range of customers in Ireland, UK, North America and China 9

Food producers Local Authorities

One51 Plastics Growth Strategy

Clear growth strategy based on a combination of organic growth and targeted M&A

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• Favourable Market Backdrop

Fragmented market place Growing rigid plastics demand Substitution effect Increasing product innovation Regulation

Clear Strategy

Organic Growth

• Investment in manufacturing facilities
• Focused capital investment projects in USA & Canada
• Deliver manufacturing efficiencies
• Continued investment in R&D
• Leverage synergies & cross selling opportunities

between IPL & OPG M&A

• Focus on higher growth niche segments of the

market

• European & North American geographic focus
• Synergy potential
• Target EBITDA > €10m and margin of 13% - 15%
• Target ROCE 10% - 15%
• Significant acquisition pipeline developed

Future Market Focus

Continue to focus on existing segments which exhibit significant growth Leverage existing capabilities for entry into new segments Expand product range driven by customer/market demand relying on in-house R&D facilities Continue to review market

• pportunities to add new

plastics manufacturing technologies and product types

Significant Operational Capabilities

11 M&A and Organic Growth Opportunities Diversified customerbase Attractive Financial Profile Leading design and innovation capabilities driven by sophisticatedR&D Operationalexcellence Well invested facilities and scalableinfrastructure Blue chip customerbase

• IPL Centre of Excellence in Canada
• OPG Innovation Centre of Excellence in Ireland
• Significant number of patents and pending patents
• Ability to manage material margin in a volatile polymer

market

• Use of recycled polymers
• Pass through agreements in place with customers
• Continuous investment in state-of-the-art injection

moulding production cells

• Developed a state of the art food grade manufacturing

facility in Cork

• Significant development capital expenditure in North

America

• Long standing customer relationships
• Embedded relationships allow One51 to grow with

customers

• Low customer concentration with the top 10 customers

representing c.27% of 2016 revenue

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

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Plastics – Key Strategic Priorities

Financials

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Income Statement

€’m H1 2017 H1 2016 FY 2016

Revenue 225.8 170.6 348.2 Operating profit (before exceptional items) 20.3 15.5 30.4 Non-recurring items (0.2) (0.3) (2.2) Depreciation & Amortisation 12.3 9.6 20.3 EBITDA 32.4 24.7 48.5 EBITDA margin (%) 14.3% 14.5% 13.9% EBIT 20.1 15.2 28.2 Exceptional / non-recurring items (3.1) (3.0) 0.7 Share of profit of associate (Altas) 0.5 3.4 3.9 Discontinued operations (2.9) (0.1) (4.3) Finance costs (5.5) (4.6) (8.9) Income tax expense (2.9) (2.0) (3.5) Profit for period / year 6.2 8.9 16.1 Adjusted EPS (Diluted) 7.24c 5.58c 11.04c

• Revenue (excluding discontinued
• perations) increased by 32.4% on the

comparative period to €225.8m, driven principally by strong organic growth in IPL

• Inc. and the impact of the Encore and

Macro acquisitions.

• EBITDA (excluding discontinued
• perations) increased by 31.1% to €32.4m

(H1 2016: €24.7m), with IPL’s contribution being €23.6m.

• Exceptional and non-recurring items and

share of profit of associate resulted in a charge of €2.6m in the period (H1 2016: credit of €0.4m). Included in this is €2.3m

• f costs associated with the acquisition of

Macro Plastics.

• Finance costs increased from the

comparative period by €0.9m to €5.5m, primarily as a result of the drawdown of bank borrowings for the purposes of acquiring Encore and, to a lesser extent, Macro.

• The income tax charge for the period was

€2.9m (H1 2016: €2.0m).

• Adjusted diluted Earnings per share is

29.7% higher than H1 2016, reflecting the improvement in EBITDA.

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Divisional Analysis

Revenue €’m H1 2017 H1 2016 FY 2016

IPL 148.2 94.6 204.3 OnePlastics Group 61.3 67.4 126.9 Macro 6.4 N/A N/A Other 9.9 8.6 17.0 Total 225.8 170.6 348.2

• OnePlastics performance in the period

was impacted by the merger of a significant OPG Ireland electronics customer and adverse movements in the pound sterling exchange rate. On a constant currency basis its UK division grew EBITDA organically.

• IPL had a strong performance with the

North American market contributing

• rganic EBITDA growth of €4.5m,

driven by continued increased demand in the Bulk & Environmental and Retail

• divisions. Encore contributed €3.5m of

EBITDA in the period.

• Macro Plastics was acquired on 9 June

2017, and its performance since that date, which was in line with expectations, has been included in the Group’s reported numbers.

• Other includes the results of the

Ampthill Metals business and the Group’s Head Office costs.

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EBITDA €’m H1 2017 H1 2016 FY 2016

IPL 23.6 15.6 31.6 OnePlastics Group 7.4 9.8 17.2 Macro 2.0 N/A N/A Other (0.6) (0.7) (0.3) Total 32.4 24.7 48.5

1 Numbers exclude the impact of businesses classified as discontinued operations in all years

Balance Sheet

€’m 30 June 2017

31 December

2016 30 June 2016

Goodwill & Intangibles 211.0 137.4 142.6 Tangible Assets 207.9 159.7 171.6 Financial and Other Assets 27.0 22.2 16.2 Non-Current Assets 445.9 319.3 330.4 Current Assets 188.3 188.3 155.8 Total Assets 634.2 507.6 486.2 Creditors: within 1yr (118.1) (100.8) (112.8) Creditors: more than 1yr (319.1) (216.0) (189.1) Total Equity (Before Put Liability) 197.0 190.9 184.3 Put Liability (83.4) (72.2) (39.6) Total Equity (After Put Liability) 113.6 118.6 144.7 Net Debt 261.6 152.5 146.8 Net Debt: EBITDA (Annualised)* 3.7 3.1 N/A

• The increase in Tangible assets from 31

December 2016 is due primarily to additions arising on the acquisition of Macro Plastics of €42.5m and Capex additions of €24.7m related to strategic investment projects to support increased demand and organic growth particularly in the US and Canada.

• Working capital balances at 30 June 2017

were €69.9m (31 Dec 2016: €27.7m; 30 June 2016: €38.8m). The increase during 2017 arose primarily due to the acquisition

• f Macro Plastics and a build up in

inventory in IPL as a result of two large contracts and strong organic growth.

• Net debt at 30 June 2017 was €261.6m

(31 Dec 2016: €152.5m). The increase has been caused primarily by the drawdown of borrowings to fund the acquisition of Macro Plastics in the period.

• Total Equity has decreased by 4.2% since

year end 2016 to €113.6m (31 Dec 2016: €118.6m) driven primarily by the profit for the period offset by unfavourable currency translation movements and an increase in the Put Liability in respect of the IPL minority shareholding.

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*The June 2017 amount reflects 12 months EBITDA from 1 July 2016 to 30 June 2017 excluding discontinued operations and Macro Plastics, adjusted for a full year 2017 estimated EBITDA for Macro Plastics of USD$19 million translated at €1:USD€1.10

Cash Flow

€’m H1 2017 H1 2016 FY 2016

Net cash inflow from operating activities before tax and working capital movement 31.2 23.4 50.8 Working capital movement (37.8) (11.0) 9.9 Net cash (outflow)/inflow from operating activities (before tax) (6.6) 12.4 60.7 Maintenance capital expenditure (2.0) (5.0) (10.2) Finance costs paid (net) (4.8) (4.7) (9.2) Income tax paid (0.3) (2.3) (4.4) Free cash flow (13.7) 0.4 36.9 Development capital expenditure (19.2) (12.2) (21.5) Free cash flow after development capital expenditure (32.9) (11.8) 15.4 Acquisitions and disposals (inc. net debt/cash acquired) (73.5) (9.2) (39.9) Other – including effect of movements in exchange rates (2.7) (5.5) (7.7) Movement in net debt in the period/year (109.1) (26.5) (32.2)

• Net cash inflows from operations (before

tax) decreased by €19.0m (H1 2016) during the period driven by higher working capital levels only partially offset by stronger EBITDA.

• Significant working capital outflows arose

during the period compared with H1 2016 primarily due to a build up in IPL as a result of two large contracts (€11.6m) and its strong growth (€8.7m).

• Finance costs increased from H1 2016 by

€0.1m to €4.8m, the increase due to the

• verall net debt increase arising from the

Encore acquisition in November 2016.

• Significant growth capex projects continue

to be undertaken to meet the organic growth and customer led demand.

• Acquisitions in the period include the costs
• f acquiring Macro Plastics of €112.5m

and proceeds on the disposal of the Specialist Environmental Services division

• f €38.3m.
• Other primarily comprises of exchange

rate movement impact (€/CAD$) and (€/STG£).

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Strategy

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• Clear strategy based on the development and growth of core Plastics

divisions through organic initiatives and acquisitions.

• Strategic objectives will be achieved through
• Focused development capital expenditure projects to broaden product range
• Leveraging maximum cross-sell and cost synergy opportunities from acquired

businesses and across international locations

• Complimentary strategic acquisitions
• Have recommenced exploring a possible IPO or stock market listing

for the Group in the next 12 to 18 months (subject to market conditions).

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Strategy

Thank you

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