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Preliminary Results Year Ended 31 March 2004
Preliminary Results - 2003/04Preliminary Results - 2003/04
Laying the foundations for Growth & Laying the foundations for Growth & Change…Change…
HighlightsHighlights
20042004£m£m
20032003£m£m
Sales*Sales* 68.668.6 74.174.1
Operating Profit*Operating Profit* 3.23.2 4.54.5
Profit Before Tax*Profit Before Tax* 1.61.6 2.9 2.9
Cash inflow from operating activitiesCash inflow from operating activities 5.55.5 4.24.2
Net Debt – pre pref redemptionNet Debt – pre pref redemption 19.119.1 19.719.7
Net Debt – post pref redemptionNet Debt – post pref redemption 24.724.7 19.719.7
* Continuing operations, before goodwill amortisation and exceptional items
Key Issues – AerospaceKey Issues – Aerospace
Record Eclipse contract secured (USD 380m)Record Eclipse contract secured (USD 380m)
New business from MTU, Snecma & GoodrichNew business from MTU, Snecma & Goodrich
Improved competitiveness now bearing fruitImproved competitiveness now bearing fruit
Unprecedented current quote activityUnprecedented current quote activity
Low cost sourcing plans gaining momentumLow cost sourcing plans gaining momentum
Targeting further significant opportunitiesTargeting further significant opportunities
Key Issues – AerospaceKey Issues – AerospaceRecord Eclipse contract secured…Record Eclipse contract secured…
Positive leading indicators of cyclical recovery now apparent (calendar 2004 should be low point)
Airline profitability improving (Q4 2003)
Airbus relatively bullish
Overall, improved customer/industry sentiment (particularly Biz jets)
BUT; volatility & price pressure expected to remain a feature in 2004/05; AND
Caution over potential impact of oil price rise?
Aerospace - Market OutlookAerospace - Market OutlookGeneralGeneral
Key Issues – Precision AutomotiveKey Issues – Precision Automotive
Continuing strong demand, as Continuing strong demand, as projected. Sales up 14% in 2003/04projected. Sales up 14% in 2003/04
S&W penetration increasing; S&W penetration increasing; capacity expansion proceeding to capacity expansion proceeding to plan. Automatic balancing cell plan. Automatic balancing cell commissionedcommissioned
Low costs sourcing integration plans Low costs sourcing integration plans well progressed. Discussions with well progressed. Discussions with potential partners on-goingpotential partners on-going
Major new customer secured Major new customer secured (Bosch), & targeting Hitachi(Bosch), & targeting Hitachi
Positive outlook for continuing strong Positive outlook for continuing strong growth…growth…
Key Issues – Precision AutomotiveKey Issues – Precision Automotive
0
2
4
6
8
10
12
14
16
18
20
Ms
2000 2002 2004 2006 2008
Europe Americas Japan Asia Heavy (global)
• Strong growth in turbocharger penetration expected to continue, driven by tightening fuel emission regulations
Patchy glass demand in 2003/04 Patchy glass demand in 2003/04 (OEM consolidation activity)(OEM consolidation activity)
Patent applications in preparation Patent applications in preparation for new, higher performance for new, higher performance products, following successful products, following successful trialstrials
Strategic relationship with major Strategic relationship with major customer continues to developcustomer continues to develop
Key Issues – Precision IndustrialKey Issues – Precision Industrial
Reason for the Equity FundingReason for the Equity Funding
1. Attractive growth opportunities in Precision Automotive
2. Execution of Low Cost Sourcing strategy
3. Funding Eclipse
4. Constraint of existing debt levels – customer perceptions
Equity Funding - UpdateEquity Funding - Update
UsesUses £m£m UpdateUpdate
Precision Auto capacity growthPrecision Auto capacity growth 5.05.0 Investment on-going (£1.9m in Investment on-going (£1.9m in 2003/04)2003/04)
Low Cost Sourcing investmentLow Cost Sourcing investment 5.05.0 JV discussions & Indian JV discussions & Indian Greenfield feasibility study in Greenfield feasibility study in progressprogress
Eclipse investment fundingEclipse investment funding 4.04.0 Pre production activity running Pre production activity running wellwell
Less: expensesLess: expenses (0.6)(0.6)
TotalTotal 13.413.4
Summary Summary
Results in line with expectationsResults in line with expectations
Major strategic contracts secured. More in cross-hairsMajor strategic contracts secured. More in cross-hairs
Low cost strategy moving forward. Significant opportunities Low cost strategy moving forward. Significant opportunities visible (outsourcing & new programmes)visible (outsourcing & new programmes)
Cost base further reduced in 2003/04Cost base further reduced in 2003/04
Civil aerospace demand showing faltering steps towards Civil aerospace demand showing faltering steps towards recovery. Oil prices may have dampening effectrecovery. Oil prices may have dampening effect
Precision Automotive following strong growth curvePrecision Automotive following strong growth curve
Board strengthened Board strengthened
Funding successfully closed. Investment plans taking shapeFunding successfully closed. Investment plans taking shape
Preliminary Results Year Ended 31 March 2004
HighlightsHighlights
20042004£m£m
20032003£m£m
Sales*Sales* 68.668.6 74.174.1
Operating Profit*Operating Profit* 3.23.2 4.54.5
Profit Before Tax*Profit Before Tax* 1.61.6 2.9 2.9
Cash inflow from operating activitiesCash inflow from operating activities 5.55.5 4.24.2
Net Debt – pre pref redemptionNet Debt – pre pref redemption 19.119.1 19.719.7
Net Debt – post pref redemptionNet Debt – post pref redemption 24.724.7 19.719.7
* Continuing operations, before goodwill amortisation and exceptional items
Sales AnalysisSales Analysis
20042004£m£m
20032003£m£m
AerospaceAerospace 45.445.4 51.951.9
Precision EngineeringPrecision Engineering 23.223.2 22.222.2
TotalTotal 68.668.6 74.174.1
Profit & Loss AccountProfit & Loss Account
20042004£m£m
20032003£m£m
Profit Before Tax*Profit Before Tax* 1.61.6 2.92.9
TaxTax (0.5)(0.5) (0.5)(0.5)
Profit After Tax*Profit After Tax* 1.11.1 2.42.4
Preference DividendPreference Dividend (0.2)(0.2) (0.4)(0.4)
Earnings*Earnings* 0.90.9 2.02.0
Earnings per Share*Earnings per Share* 0.8p0.8p 1.7p1.7p
* Continuing operations, before goodwill amortisation and exceptional items
Operating Free Cash FlowOperating Free Cash Flow
20042004£m£m
20032003£m£m
EBITDAEBITDA 6.96.9 8.38.3
ExceptionalsExceptionals (3.2)(3.2) (0.6)(0.6)
ProvisionsProvisions 0.50.5 (4.9)(4.9)
Working CapitalWorking Capital 1.31.3 1.31.3
OtherOther -- 0.10.1
Cash Flow from OperationsCash Flow from Operations 5.55.5 4.24.2
Cap-ex Cap-ex (2.6)(2.6) (4.0)(4.0)
DisposalsDisposals 0.10.1 4.14.1
TaxTax (0.4)(0.4) 0.30.3
Operating Free Cash FlowOperating Free Cash Flow 2.62.6 4.64.6
Capital ExpenditureCapital Expenditure
20042004£m£m
20032003£m£m
Capital ExpenditureCapital Expenditure 2.62.6 4.04.0
DepreciationDepreciation 3.73.7 4.04.0
As a % of DepreciationAs a % of Depreciation 69%69% 97%97%
Capital ExpenditureCapital Expenditure
20042004£m£m
20032003£m£m
Precision AutomotivePrecision Automotive 1.91.9 1.41.4
AerospaceAerospace 0.70.7 2.62.6
TotalTotal 2.62.6 4.04.0
Change in Net DebtChange in Net Debt
20042004£m£m
20032003£m£m
Operating Free Cash FlowOperating Free Cash Flow 2.62.6 4.64.6
Debt ServiceDebt Service (1.4)(1.4) (1.5)(1.5)
Preferred Equity ServicePreferred Equity Service (0.4)(0.4) (0.4)(0.4)
FX translationFX translation (0.1)(0.1) --
Change in Underlying Net DebtChange in Underlying Net Debt 0.70.7 2.72.7
Preference Shares RedeemedPreference Shares Redeemed (5.6)(5.6) (0.1)(0.1)
Change in Net DebtChange in Net Debt (5.0)(5.0) 2.62.6
Shareholders’ Funds & Net DebtShareholders’ Funds & Net Debt
20042004
£m£m
EquityEquityIssueIssue£m£m
ProProFormaForma
£m£m
20032003
£m£m
Net DebtNet Debt 24.724.7 (13.4)(13.4) 11.311.3 19.719.7
Shareholders’ FundsShareholders’ Funds
OrdinaryOrdinary 11.211.2 13.413.4 24.624.6 15.815.8
PreferencePreference -- -- -- 5.65.6
Total EquityTotal Equity 11.211.2 13.413.4 24.624.6 21.421.4
Net Debt/EquityNet Debt/Equity 220%220% 46%46% 92%92%
Equity Subscription & Rights IssueEquity Subscription & Rights Issue
Successful closure 14 May 2004Successful closure 14 May 2004 Acceptances for 88.5%Acceptances for 88.5% Rump placed at 2p premiumRump placed at 2p premium 4 new Institutional holders4 new Institutional holders Positive aerospace marketing stimulus – already bringing Positive aerospace marketing stimulus – already bringing
business development benefitsbusiness development benefits
SummarySummary
Aggressive cost base management continuesAggressive cost base management continues Continuing tight cash controlContinuing tight cash control Shareholder value management (“VBM”) driving Shareholder value management (“VBM”) driving
increased asset efficiencyincreased asset efficiency Strategic benefits from substantial deleveragingStrategic benefits from substantial deleveraging Increased liquidityIncreased liquidity Pump now primed for growth…Pump now primed for growth…
Preliminary Results - 2003/04Preliminary Results - 2003/04
Laying the foundations for Growth & Laying the foundations for Growth & Change…Change…
Preliminary Results Year Ended 31 March 2004