Annual Report 2015 ESSENTRA ANNUAL REPORT 2015
Total Page:16
File Type:pdf, Size:1020Kb
Annual Report 2015 ESSENTRA ANNUAL REPORT 2015 Keep up-to-date at www.essentraplc.com 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 Report. The Company accepts no obligations to revise or update publicly 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. ANNUAL REPORT 2015 | WWW.ESSENTRAPLC.COM Contents Strategic Report Financial Statements Essentra at a Glance 2 Consolidated Income Statement 84 What We Do 4 Consolidated Statement of Comprehensive Income 85 Chief Executive’s Review 6 Consolidated Balance Sheet 86 Strategy and Progress 10 Consolidated Statement of Financial Review 13 Changes in Equity 87 Operational Review 15 Consolidated Statement Regional Review 28 of Cash Flows 88 Management of Principal Risks 30 Accounting Policies 89 Corporate Responsibility 36 Critical Accounting Judgements and Estimates 96 Notes 97 Directors’ Report Essentra plc Company Balance Sheet 128 Group Management Committee 42 Essentra plc Company Statement of Changes in Equity 129 Board of Directors 44 Accounting Policies 130 Chairman of the Board’s Letter 46 Notes 132 Corporate Governance Framework 47 Independent Auditor’s Report to Corporate Governance Report 48 the Members of Essentra plc Only 138 Audit Committee Chairman’s Letter 55 Advisers and Investor Information 143 Report of the Audit Committee 56 Remuneration Committee Chairman’s Letter 60 Remuneration Policy Report 62 Annual Report on Remuneration 67 Other Statutory Information 79 Statement of Directors’ Responsibilities 83 1 ANNUAL REPORT 2015 | WWW.ESSENTRAPLC.COM STRATEGIC REPORT | ESSENTRA AT A GLANCE ESSENTRA AT A GLANCE Distribution Health & Personal Care Packaging The Components business is a global A leading global provider of packaging market-leading manufacturer and and authentication solutions to a distributor of plastic injection moulded, diversified blue-chip customer base in vinyl dip moulded and metal items. the pharmaceutical, health & personal Operating units in 29 countries serve a care, consumer and specialist packaging very broad industrial base of customers sectors. The business focuses on delivering with a rapid supply of products for a value-adding innovation, quality and variety of applications in industries such service through the provision of a wide as equipment manufacturing, automotive, range of printed products and solutions, fabrication, electronics and construction. including cartons, tapes, leaflets, foils, labels and authentication technologies. The Speciality Tapes business has expertise in coating multiple adhesive 2015 highlights systems in numerous technologies. With > Growth led by healthcare and close to 3,000 adhesive products available consumer packaging, boosted by for same-day shipping, Essentra’s products tobacco labels can meet all high-performance needs, > Successful development of innovative from foam, magnetic, fingerlift and acrylic new packaging and authentication high bond tapes to hook and loop and solutions non-skid foam. > Rapid integration of Clondalkin The Security business has access Specialist Packaging Division, to to a wide portfolio of products and support targeted US$24m cost services, including printers, software and synergy savings consumables from leading manufacturers. > Agreement to acquire the pharmaceutical assets of Kamsri 2015 highlights Printing & Packaging Pvt. Ltd. in India > Growth led by Components in Europe and Asia > Investment in second, state-of-the-art manufacturing facility in Newport, > Further extension of product range UK, to support future revenue growth in springs and magnets opportunities and operating effiencies > Benefit from geographical expansion and site openings > Incremental revenue opportunities in custom injection moulding > Acquisition of Specialty Plastics in Australia > Rapid integration of Abric Seals in Malaysia and Kelvindale in Australia Revenue Revenue 2015: £268.6m 2014: £244.0m +10.1% 2015: £394.4m 2014: £169.3m +133.0% Operating profit1 Operating profit1 2015: £60.3m 2014: £56.9m +6.0% 2015: £52.2m 2014: £30.8m +69.5% Further details Further details Page 15 Page 18 2 STRATEGIC REPORT | ESSENTRA AT A GLANCE ANNUAL REPORT 2015 | WWW.ESSENTRAPLC.COM Filter Specialist Products Technologies The only global independent cigarette A leading provider of specialised solutions filter supplier. The nine worldwide locations, to an international customer base in a including a dedicated Technology Centre diverse range of industries, including oil supported by three regional development and gas, construction, point of sale, health facilities, provide a flexible infrastructure & personal care and consumer goods. strategically positioned to serve the tobacco industry. The business supplies Essentra Porous Technologies is a leading a wide range of value-adding high-quality developer and manufacturer of innovative innovative filters, packaging solutions to custom fluid-handling components used the roll your own segment, fully-functional in a variety of end-markets, engineered and packaged smokeless products and from a portfolio of technologies that analytical laboratory services for ingredient includes bonded and non-woven fibre, measurement to the industry. polyurethane foam and porous plastics. 2015 highlights The Pipe Protection Technologies business > Growth driven by successful new specialises in the manufacture of products and additional services high-performance innovative products from commodity resins to engineering- > Continued increase in revenue from grade thermoplastics and polymer innovative special filters and ongoing alloys for use in a range of industries. intellectual property development > Growth in Scientific Services, boosted One of Europe’s most advanced suppliers by additional e-cigarette testing of co-extrusion and tri-extrusion to all capability and UK government branches of industry, Essentra Extrusion contract win is a leading custom profile extruder located in the Netherlands, which offers > Further production and quality a complete design and production service. efficiencies from investment in high-speed, flexible combining 2015 highlights equipment > Significant impact on Pipe Protection > Reconfiguration of site footprint, Technologies, owing to challenges in to better serve customers and drive the oil & gas sector further opportunities and efficiencies > Strong growth in Extrusion, driven by new business wins and more encouraging market conditions > Increase in Porous Technologies led by healthcare, and supported by speciality wipes and household > Continued investment in technological improvements and geographical expansion Revenue Revenue 2015: £302.6m 2014: £291.5m +3.8% 2015: £135.5m 2014: £162.1m -16.4% Operating profit1 Operating profit1 2015: £55.4m 2014: £39.0m +42.1% 2015: £19.8m 2014: £29.8m -33.6% Further details Further details 1 Excluding intangible amortisation and Page 21 Page 24 exceptional operating items 3 ANNUAL REPORT 2015 | WWW.ESSENTRAPLC.COM STRATEGIC REPORT | WHAT WE DO WHAT WE DO Our business model Clear portfolio management Essentra operates at a Company, We have a clear model for managing Talent management a Strategic Business Unit (“SBU”) our portfolio of business activities Essentra’s employees are a vital resource and a regional level. The Company in the pursuit of operational excellence is responsible for managing the Strategic framework and the provision of quality products overall portfolio of business activities, Essentra’s business and financial objectives and service. The skills and experience of to create sustainable long-term are defined in its Drive for 2020 strategy, Essentra’s employees drive the innovation value for shareholders. Essentra which calls for balanced, profitable organic which enables the Company to provide has established processes and growth complemented by value-creating added value to its customers, enhance practices in place to ensure effective acquisitions. Each of the businesses is supply chain logistics with its suppliers and efficient management across responsible for contributing to Essentra’s and reduce the environmental impact all of the categories which the overall strategic priorities, to ensure the of its operations. The Company regularly Company serves. Company’s ongoing success and, hence, reviews its organisational structure to the creation of sustainable long-term ensure that the business has the necessary shareholder value. personnel to deliver its strategic priorities. Risk management Legal requirements and compliance Effective management of risk and Essentra is committed to ensuring that opportunity is essential to the protection all of its activities are conducted in of Essentra’s reputation and the accordance with all applicable legal and achievement of sustainable shareholder regulatory requirements and the highest value. The Board of Directors is responsible standards of ethical business conduct. The for determining the risk attitude of the Company’s Code of Business Ethics policy Company and for communicating to aims to guide stakeholders, including the organisation what constitutes employees, on