ESSENTRA PLC Accelerating our potential as a pure-play Components business
Annual Report
- Accounts 2022
We are Essentra
Our vision
To be the world's leading responsible hassle-free supplier of essential industrial components
I am excited to be leading Essentra into 2023, the only global Components business to combine the expertise and flexibility of a manufacturer with the broad range and customer centricity of a distributor."
SCOTT FAWCETT
Chief Executive
Essentra at a glance
Global footprint balancing customer service with operational scale
Hub Warehouse
Manufacturing
Local Sales Centre
13 | 24 | 33 | c.3,000 | 80m | 1bn | 1.8m |
manufacturing | distribution | sales and service | employees | parts produced | parts in stock | order lines per |
sites | centres | locations | worldwide | per week | year |
STRATEGIC REPORT DIRECTORS' REPORT FINANCIAL STATEMENTS
Strategic Report
Essentra at a glance | 1 |
Chair's statement | 4 |
Our strategic journey | 6 |
Our business model | 8 |
Investment case | 9 |
Chief Executive's review | 10 |
The Components business journey | 14 |
Market trends | 15 |
Components Operational review | 16 |
Key performance indicators | 20 |
Environment, social and governance | 22 |
Non-financial key performance indicators | 36 |
Stakeholder engagement | 38 |
Task Force on Climate-Related Financial Disclosures | 40 |
Financial review | 47 |
Alternative Performance Measures | 50 |
Risk management report | 52 |
Group Executive Committee | 66 |
Directors' Report | 68 |
Chair's Corporate Governance statement | 69 |
Board of Directors | 70 |
Corporate Governance report | 72 |
Sustainability Committee report | 88 |
Nomination Committee report | 91 |
Chair of the Audit and Risk Committee's letter | 95 |
Audit and Risk Committee report | 98 |
Chair of the Remuneration Committee's letter | 105 |
Remuneration at a glance | 110 |
Annual Report on Remuneration | 111 |
The Directors' Remuneration Policy report | 122 |
Other statutory information | 126 |
Statement of Directors' responsibilities | 132 |
in respect of the Financial Statements | |
Independent Assurance Statements to Essentra plc | 133 |
Financial Statements | |
Consolidated Income Statement | 138 |
Consolidated Statement of Comprehensive Income | 139 |
Consolidated Balance Sheet | 140 |
Consolidated Statement of Changes in Equity | 141 |
Consolidated Statement of Cash Flows | 142 |
Critical Accounting Judgements and Estimates | 150 |
Notes to the Consolidated Financial Statements | 152 |
Essentra plc Company Balance Sheet | 184 |
Essentra plc Company Statement of Changes | 185 |
in Equity | |
Essentra plc Company Notes | 186 |
Independent auditors' report to the members | 193 |
of Essentra plc |
1 ESSENTRA PLC ANNUAL REPORT 2022
ESSENTRA AT A GLANCE CONTINUED
STRATEGIC REPORT DIRECTORS' REPORT FINANCIAL STATEMENTS
Financial highlights
Revenue | Components adjusted | ||||||
£337.9m | operating profit | ||||||
£63.7m | |||||||
(2021*: £301.7m) | (2021: £56.9m) | ||||||
Components adjusted | Reported operating | ||||||
operating margin | (loss)/ profit | ||||||
18.9% | (£11.3m) | ||||||
(2021: 18.9%) | (2021*: £7.7m) | ||||||
Adjusted basic | Reported loss per | ||||||
earnings per share | share | ||||||
1.9p | (10.3)p | ||||||
(2021*: 3.7p) | (2021*: (1.6)p) | ||||||
Dividend per share | Adjusted operating | ||||||
cash conversion | |||||||
3.3p | 80% | ||||||
(2021: 6.0p) | (2021*: 67%) | ||||||
Net funding surplus/ | Net funding surplus/ | ||||||
(debt) ratio | (debt) | ||||||
2.3x¹ | £113.8m1 |
- Prior year has been re-presented to show the Group on a continuing basis only
Adjusted measures
Adjusted results exclude certain items because, if included, these items could distort the understanding of Essentra's performance for the year and the comparability between periods. In management's view, such alternative performance measures (APMs) reflect the underlying performance of the business and provide a more meaningful comparison of how the business is managed and measured on a periodic basis. Our APMs and KPIs are aligned to our strategy and business segments, and are used to measure the performance of the Company and form the basis of the performance measures for remuneration. See page 20 for KPIs and page 50 for APMs.
Cautionary forward-looking statement
This Annual Report contains 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 any future results or developments expressed or implied by the forward-looking statement.
Each forward-looking statement speaks only as of the date of this Annual Report. The Company accepts no obligation to revise or publicly update these forward- looking statements 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.
Operational highlights
- Realisation of strategic goal to become a pure-play Components business operating from 1 January 2023
- Sale of the Filters business to a wholly owned subsidiary of Centaury Management Limited for an enterprise value of approximately £262.1m including initial cash consideration of £200m1
- Sale of the Packaging business to Mayr- Melnhof Group, a leading producer of carton board and folding cartons based in Austria, for a cash consideration of £312m1
- Strong balance sheet supporting organic growth and driving a bolt-on M&A strategy
- Value enhancing acquisition of Wixroyd Holdings Limited, a leading UK supplier of industrial parts for the automation sector, for an initial consideration of £29.5m2. Integration plans are on track
- Continued improvement in customer satisfaction and service levels through ongoing focus on enhancing hassle-free proposition
- Continued progress in all areas of ESG and a refreshed strategy to better align with a Components-focused business
- Successful pricing and proactive cost management actions
(2021: 1.7x net debt) | (2021: (£234.7m) net debt) |
1 Before £150m shareholder return announced 2 February 2023
The numbers presented in this Strategic Report reflect the continuing operations of the Company unless otherwise stated.
- On a cash-free,debt-free basis subject to customary adjustments
- £27.9m, net of cash acquired
2 ESSENTRA PLC ANNUAL REPORT 2022
ESSENTRA AT A GLANCE CONTINUEDSTRATEGIC REPORT DIRECTORS' REPORT FINANCIAL STATEMENTS
A resilient and diversified business | ||
Revenue by region | Revenue by channel | Revenue by offer type |
Asia | Custom | |||
14% | Distributors | 8% | ||
21% | ||||
Europe | Standard | |||
Americas | and Rest | Configured | 64% | |
of World | End users | |||
35% | 51% | 28% | ||
79% |
Revenue by customer segment
SME consumers | ||
7% | SME | |
consumers | ||
Larger | Sales | 31% |
consumer | ||
manufacturers | Industrial | |
21% | Larger | |
manufacturers | ||
72% | consumer | |
manufacturers | ||
2% |
Customers
Industrial manufacturers
67%
3 ESSENTRA PLC ANNUAL REPORT 2022
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Essentra plc published this content on 17 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 April 2023 17:47:04 UTC.
