REG - Essentra plc - Results for the Full Year Ended 31 December 2024
19/03/2025 07:15
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RNS Number : 2033B Essentra plc 19 March 2025
ESSENTRA PLC
("Essentra", the "Group" or the "Company")
RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2024
FY24 performance in line with previous guidance and market expectations
Results at a glance
( ) 2024 2023 Change Constant FX Change Actual FX
£m £m
Revenue 302.4 316.3 +0.3% (4.4)%
Adjusted(1) operating profit 40.1 43.2 +2.3% (7.2)%
Adjusted(1) operating margin 13.3% 13.7% +30bps (40)bps
Adjusted(1) pre-tax profit 31.2 40.7 (15.9)% (23.3)%
Adjusted(1) basic earnings per share 8.5p 10.6p (11.9)% (19.8)%
Adjusted(1) net cash flow from operating activities 36.4 48.2 - (24.5)%
Reported operating profit 14.6 10.9 - +33.9%
Reported pre-tax profit 5.7 8.4 - (32.1)%
Reported net profit 11.6 5.8 - +100%
Reported basic earnings per share 4.0p 2.0p - +100%
Dividend per share 2.8p 3.6p - (22.2)%
Reported net cash inflow from operating activities(2) 25.7 33.3 - (22.8)%
Free cash flow(2) 22.5 37.3 - (39.7)%
Net debt excluding lease liabilities(4) 68.2 31.6 - -
Net debt excluding lease liabilities to adjusted EBITDA(3,4) 1.3x 0.5x - -
Numbers reported on a continuing operations basis
Highlights
* Revenue of £302.4m (2023: £316.3m), 0.3% growth on a constant currency
basis, 2.7% decline on a like-for-like(5) ("LFL") basis
* Gross margin expansion to 45.3% (2023: 44.8%). All three geographic regions
have delivered gross margin improvement
* Adjusted(1) operating profit £40.1m (2023: £43.2m), representing operating
margins of 13.3% (2023: 13.7%) and 30bps margin accretion on a constant
currency basis
* Adjusted(1) net cash inflow from operating activities of £36.4m; conversion
of 90.8%
* Net debt of £68.2m excluding IFRS16 lease liabilities (2023: £31.6m),
representing leverage of 1.3x adjusted EBITDA(3) in line with <1.5x
guidance
Operational performance
* Essentra's disciplined approach to cost control and procurement activities,
whilst retaining flexibility within operations to align with demand, is
driving efficiencies and helping to mitigate the effect of volume decline
* EMEA LFL revenue decline of 4.2%, with softening market conditions through the
second half, in line with external indicators
* Americas reported 3.9% LFL revenue decline; the pace of decline eased from Q2
onwards, benefiting from stability across distributor end-market channels
* APAC reported 7.0% LFL revenue growth, supported by an improvement in the
export market to the rest of Asia, reflecting the growth of access hardware
sales and new customer projects
Outlook
* The Board's expectations for FY2025 remains unchanged
* Management remains focused on delivering operational efficiencies, enhancing
its "hassle-free" customer proposition and continues to selectively invest in
growth initiatives
* The Group is taking a cautious view on the timing of any material improvement
in end-market conditions, and expect market recovery to vary by region.
* Essentra remains well-positioned to deliver strong strategic progress, and to
benefit from strong operating leverage, as markets improve
Commenting today, Scott Fawcett, Chief Executive, said:
"Essentra navigated challenging market conditions in 2024, yet remained
focused on the elements within the Group's control. We delivered adjusted
operating profit growth of 2.3% on a constant currency basis, maintained
strong gross margins in excess of 45% and produced excellent operational
cashflow in excess of 90%, all of which were in-line with the revised guidance
provided in Q3 2024.
Despite volume reductions, each of our regions reported improved gross margin
performances, realising operational efficiencies. Our agile approach to
operations across our global footprint has supported the mitigation of volume
decline and protected profitability in the short term, whilst providing
optionality to respond to macroeconomic changes, ensuring we remain
well-positioned to take advantage of market recoveries when they occur.
Customer satisfaction remains strong, as reflected in the annual Net Promotor
Score ("NPS") survey, improving by three points to 43. Each region showed an
improvement year-on-year reflecting the strengthening of our service
proposition. The strength of our customer relationships means we are
strategically placed to deliver further operational performance improvements
as end-market conditions recover. Our people remain core to what we do, and we
are pleased to have achieved an industry leading employee engagement score of
85% in 2024.
We are taking a cautious view on the timing of any material improvement in
end-market conditions, and expect market recovery to vary by region. At this
early stage in the year, results for FY2025 are anticipated to be in line with
the Board's expectations. The business continues to maintain a balanced
approach to cost control and is driving further operational efficiencies,
whilst also investing appropriately in value-enhancing growth initiatives and
assessing bolt-on growth opportunities that will support long-term value
creation. Essentra's strong market positions, differentiated business model,
and right-sized cost base ensure the Group is well-positioned to benefit from
significant levels of operating leverage when markets recover."
( )
Enquiries
Essentra plc FTI Consulting
Rowan Baker, Chief Financial Officer Richard Mountain
Claire Goodman, Head of Investor Relations Ariadna Peretz
Emma Reid, Company Secretary FTI_essentra@fticonsulting.com (mailto:FTI_essentra@fticonsulting.com)
Tel: +44 (0)1908 359100 Tel: +44 (0)20 3727 1340
(1 On a continuing operations basis, before amortisation of acquired
intangible assets and adjusting items. Further details can be found in Note 3
of the Condensed Consolidated Financial Statements.)
(2 A reconciliation of free cash flow and net cash inflow from operating
activities is set out in the Financial Review section.)
(3 Adjusted EBITDA is defined as operating profit before depreciation (and
other amounts written off property, plant and equipment), share option
expense, amortisation of acquired intangible assets and adjusting items.) (Net
debt to adjusted EBITDA including lease liabilities is 1.6x (2023: 1.0x).)
(4 Presented on a last twelve months basis excluding lease liabilities.)
(£97.1m when including lease liabilities (2023: £62.5m))
(5 On a constant currency basis, excluding the acquisition of BMP TAPPI,
completed October 2023.)
Presentation
A copy of these results is available on www.essentraplc.com
(http://www.essentraplc.com/)
There will be a presentation to analysts and investors starting at 08:30am
(UK time, registration from 08:00am) on Wednesday 19 March 2025 at the
offices of at Deutsche Numis, 45 Gresham St, London EC2V 7BF.
There are two options for participating in the event:
1. To attend in person, please e-mail your details
to investorrelations@essentra.com (mailto:investorrelations@essentra.com)
2. To join the live webcast of the presentation, please pre-register
at http://www.essentraplc.com/en/investors/company-information/webcasts-and-presentations
(http://www.essentraplc.com/en/investors/company-information/webcasts-and-presentations)
A recording of the webcast will be made available on the Company's website
later in the day.
Notes to Editors
About Essentra plc
Essentra plc is a leading global provider of essential components and
solutions, focusing on the manufacture and distribution of plastic injection
moulded, vinyl dip moulded and metal items.
Headquartered in the United Kingdom, Essentra's global network extends to 28
countries worldwide and includes c.3,000 employees, 14 manufacturing
facilities, 26 distribution centres and 37 sales & service centres serving
c.64,000 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, medical and renewable energy. For
further information, please visit www.essentraplc.com
(http://www.essentraplc.com)
LEI: 5493007MOZNA03BVNE96
Cautionary forward-looking statement
These results contain 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 future results or developments
expressed or implied from the forward-looking statements. Each forward-looking
statement speaks only as of the date of this document. The Company accepts no
obligation to revise or update these forward-looking statements publicly 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.
CEO Review
The Group delivered revenues for the full year of £302.4m, representing
growth of 0.3% on a constant currency basis. LFL sales reduced by 2.7%
year-on-year, reflecting mixed end-market conditions, including a softening in
EMEA in the latter part of the year, offset by a positive contribution to
revenue of 3.0% from the acquisition of BMP s.r.l ("BMP TAPPI"). Foreign
exchange impacted Group revenue by 4.7%, with reported Group revenue 4.4%
below the prior year.
After initial momentum through H1, EMEA (including Turkey) saw a softening in
trading conditions through the second half, with performance remaining closely
correlated to manufacturing PMI metrics across the region, particularly in
West Europe. Encouragingly, the Americas region saw conditions stabilise
throughout the year, supported by distributor volume trends. Whilst
year-on-year volumes have declined, the pace of decline eased through the
second half. The APAC region delivered a steady improvement in performance
throughout 2024, with year-on-year growth. The China export business,
including access hardware products, continues to drive commercial business
wins in faster growing end-markets across the rest of Asia and the Middle
East.
The Group experienced reduced levels of input price inflation, including for
raw materials. Combined with proactive procurement activities, this led to
more focused customer price increases with the overall pricing benefit for the
Group at a low level compared to previous high inflationary periods.
All three regions delivered margin expansion, despite operating within a
challenging market backdrop. The Group reported full year gross margin of
45.3% (2023: 44.8%) supported by increased regional management focus towards
driving manufacturing efficiencies, successfully controlling the cost base in
line with production volumes at operational facilities, further supported by
procurement activities. Essentra's global manufacturing and distribution
footprint provides the flexibility to respond to changing demands where
appropriate, and the Group remains well-positioned with sufficient capacity to
benefit from increased operating leverage when volume growth returns to
normalised levels.
Across the business, there is a balanced approach to cost management, and
selective investment in organic growth opportunities. The Group achieved
adjusted operating profits of £40.1m (2023: £43.2m) with adjusted operating
margins of 13.3% (2023: 13.7%). Central corporate costs remain well-managed,
and below the initial run-rate guidance, totalling £10.9m (2023: £11.6m).
The balance sheet remains strong and is supported by excellent adjusted
operating cash flow of £36.4m equating to conversion of 90.8%, ahead of the
guidance of 85%. Adjusted EBITDA to net debt leverage of 1.3x excluding IFRS
16 lease liabilities is within the previously guided medium-term target range
of <1.5x, and Essentra remains well-positioned to support future organic
growth opportunities and drive further value-enhancing investment with
disciplined bolt-on M&A.
Strategic progress and medium-term targets
Essentra made good strategic progress during the year, despite the challenging
market backdrop, and continues to focus on enhancing technology, service,
expert advice and product offer, whilst developing its people and entering new
markets and geographies. A number of strategic opportunities are currently
being pursued, including growing the access hardware business in each region
by targeting growth markets such as energy transition and automation. Future
growth and efficiencies continue to be supported by embedding enabling
technology as seen through the deployment of the Microsoft Dynamics ERP
platform to a further eight sites during the year, in addition to investing in
a new connected planning platform to enhance our service proposition in each
region.
Inorganic growth is a key element of the Group's strategy, whilst also
maintaining capital allocation discipline. The Group has successfully
delivered revenue and cost synergies from its recent acquisitions of BMP TAPPI
in 2023 and Wixroyd in 2022, predominantly through cross-selling to our
existing customers against a backdrop of softer trading conditions.
Essentra is well-positioned, with a unique business model in a highly
fragmented market combining manufacturing and distribution, enabling breadth
and depth of product offering alongside a "hassle-free" customer offering. The
business is diversified, and generates high gross margins through the cycle,
with the scope to expand through scale and operational effectiveness.
Historically, the business has generated strong returns and cash conversion,
and is able to further compound earnings through value enhancing M&A. The
M&A pipeline remains active and Management continues to assess a number of
opportunities, whilst maintaining a disciplined approach to allocating capital
for growth.
The Group's global footprint extends to 28 countries worldwide with c.3,000
employees, providing optionality. Geographic presence has expanded through
acquisition, enhancing end-market opportunities and increasing global
flexibility. Management continues to optimise operations and review the
Group's global footprint.
The medium-term ambition of the business, as set out at the November 2022
capital markets event is supported by:
* A clear strategy to drive market share gains, supported by our leading market
positions in a highly fragmented market
* Margin expansion from scale, operating efficiencies, and pricing initiatives
* A highly cash generative business model with continued focus on working
capital management and a strong balance sheet
* A clear capital framework to drive further shareholder returns.
Providing a "hassle-free" customer experience. The Group is committed to
delivering a "hassle-free" customer proposition and our Customer Satisfaction
KPIs continue to show good progress. The Group is extremely pleased that the
focus on improving the service to its customers is reflected in the 2024 Net
Promoter Score ("NPS") which increased by three points to 43 (2023: 40). All
three regions saw an improvement in NPS. Closely linked to customer
satisfaction, employee engagement remains above benchmark levels and improved
to 85% (2023: 82%). On Time In Full ("OTIF") metric remained broadly stable at
81.7% (2023: 82.2%). EMEA saw small periods of disruption throughout the year
as the new ERP system was deployed before returning to normalised levels, the
Americas materially improved towards the Group average following its focus on
improvements to operations including inventory availability, and APAC retained
OTIF in excess of 95%.
Ordinary dividend. The Board of Directors is recommending a final ordinary
dividend of 1.55p per share, resulting in a total dividend for FY of 2.8p
(2023: 2.4p final; 3.6p total). The full year dividend maintains dividend
cover in the order of three times adjusted earnings, in line with guidance.
The final dividend will be paid on 3 July 2025 to shareholders on the share
register at the record date, being 16 May 2025. The ex-dividend date will be
15 May 2025. Essentra operates a Dividend Re-Investment Programme ("DRIP"),
details of which are available from the Company's Registrars, Computershare
Investor Services PLC. The final date for DRIP elections will be 13 June 2025.
Share buyback programme. The share buyback programme announced in February
2023, following the completion of the disposals of the Filters and Packaging
businesses remains in progress. The pace of deployment is dependent on the
Group's capital allocation opportunities and priorities, and in particular the
availability of earnings accretive M&A. It is anticipated that the buyback
programme will extend beyond the current financial year.
Since the launch of the programme to 31 December 2024, a total of 16,387,728
shares have been purchased, at an average purchase price of 176.4 pence per
share, totalling £28.9m. Of the shares purchased, 4,198,821 were transferred
into treasury, and 12,188,907 have subsequently been cancelled, which
represented 4.0% of the issued share capital of the Company (excluding
treasury shares) when the programme commenced.
People. As previously announced, Rowan Baker was appointed to the Board as
Chief Financial Officer with effect from 5 November 2024 to succeed Jack
Clarke, who stepped down from the Board on 31 December 2024.
Furthermore, during 2024, the Group Executive Committee ("GEC") was
strengthened to support agility within the busines and drive regional
accountability. Chris Brooks joined the Company as Managing Director for the
Americas region, and Richard Sederman was promoted internally to Managing
Director for the APAC region, with the two appointments complementing the
strength and experience of the existing European leadership team. Chris brings
to Essentra a strong background in the global industrial sector, whilst
Richard has played an active role in Essentra's M&A strategy, including
living and working in Asia when leading the integration of a previous
acquisition. These GEC roles are key positions within the Group's structure
that will help to develop the service proposition, execute regional strategy
and assist in the identification and strengthening of relationships within the
acquisition pipeline. By operating on a regional basis, whilst embedding the
values of being one team, the Group is well-positioned to respond to changes
within the external demand environment.
Outlook. At this early stage in the year, results for FY 2025 are anticipated
to be in line with the Board's expectations. The Group is taking a cautious
view on the timing of any material improvement in end-market conditions in
2025 and anticipates that market recovery will vary by region. Whilst regional
gross margins are expected to remain robust, the Group anticipates that the
Americas and APAC proportion of Group revenue will increase due to their
near-term growth outlooks, therefore having a dilutive impact on overall Group
operating margin performance.
The business continues to maintain a balanced approach to cost control and is
driving further operational efficiencies, whilst also investing appropriately
in value-enhancing growth initiatives and assessing bolt-on growth
opportunities that will support long-term value creation. Essentra's strong
market positions, differentiated business model, and right-sized cost base
ensure the Group is well-positioned to benefit from significant levels of
operating leverage when markets return to normalised levels.
Regional Review
EMEA
2024 % growth % growth
£m Constant FX Actual FX
Revenue 163.3 1.5 (4.4)
Gross profit 84.0 1.5 (4.0)
Gross margin 51.4% 0bps 20bps
Revenue for the year increased 1.5% on a constant currency basis to £163.3m,
compared to the prior year. The region benefitted from the October 2023
acquisition of BMP TAPPI which contributed 5.7% to growth year-on-year, with
the LFL business reporting an underlying 4.2% decline compared to the prior
year.
As previously reported, trading conditions through the year were mixed, and
remained closely correlated to the manufacturing purchasing manager index
("PMI"). Performance in H1 was broadly stable compared to 2023, reporting 0.1%
LFL constant currency decline year-on-year. In H2 market conditions softened,
reflective of wider industrial trends and indicators, reporting a 8.7% LFL
constant currency decline.
The region continued to deliver strong gross margins of 51.4% (2023: 51.2%),
adjusting capacity at regional manufacturing and distribution facilities to
meet changes in demand, whilst placing a greater level of focus on internal
manufacturing efficiencies and procurement savings to protect profitability.
End-markets particularly across Germany and France saw trading conditions
weaken through H2. Performance into the latter part of the year was adversely
impacted by the appreciation of the Turkish Lira, which led to more
challenging trading conditions in Turkey, and pricing competitiveness for our
customers' end-customer base when exporting into Europe. The markets with less
exposure to industrial cycles, including energy, data centres and telecoms,
remained resilient.
BMP TAPPI, acquired in October 2023, performed in line with expectations. Over
1,000 standard products from an extensive range of protective caps and plugs
were launched into the Essentra range in H1 and additional inventory in the
two EMEA distribution hubs is driving local commercial activities. The sales
opportunity pipeline is building gradually, demonstrating commercial
synergies, with cross-sell success across specialist vehicles and construction
and agriculture end-markets.
Customer satisfaction remains strong as reflected in the annual NPS. The EMEA
2024 NPS improved by three points to 43 with progress seen across the region,
reflecting the strengthening of our service proposition, enhanced complaint
resolution and Essentra's broad range of products. Our people remain core to
what we do, and we are pleased to have achieved an industry-leading employee
engagement score of 83 in the 2024 Employee Survey (2023: 77).
The ERP programme was deployed in two tranches through 2024, first across
Eastern Europe in January 2024, and then across Germany, Austria and Benelux
in December 2024, and is now in operation at both our distribution hubs. With
each deployment, the business builds efficiencies and improvements, and is
therefore well-positioned to progress the programme of deployment in 2025.
c.£9.0m Software as a Service ("SaaS") cost has been recognised as an
adjusting item in 2024, in line with guidance, related to ERP deployment.
AMERICAS
2024 % growth % growth
£m Constant FX Actual FX
Revenue 98.8 (3.9) (7.0)
Gross profit 38.0 (2.9) (5.7)
Gross margin 38.5% 40bps 60bps
Revenue for the year was £98.8m, a reduction of 3.9% on a constant currency
basis compared to the prior year. Whilst the region reported year-on-year
revenue decline, the wider customer industrial environment stabilised as the
year progressed and distributor volumes normalised. H1 revenues declined 6.9%
on a constant currency basis compared to 2023, with year-on-year performance
recovering to a 0.5% decline in H2.
Gross margins expanded year-on-year to 38.5% (2023: 37.9%), as the region
implemented a selective approach to sales price increases as rates of
inflation slowed marginally from the prior year. To protect margins during the
year, management's focus was on realignment of the cost base in line with
demand, whilst delivering operational efficiencies and procurement
initiatives, including raw materials. The region continues to improve
manufacturing efficiencies and has sustained its rolling three-year process of
updating and upgrading its injection moulding processing to electric. Whilst
these machine replacement projects continue to deliver improvements in
manufacturing productivity and reduction of waste, the upgrade also supports
wider sustainability goals in reducing emissions.
Whilst overall the Americas region saw constrained demand across end-markets,
the sectors that saw a more positive market backdrop in the year included
industrial equipment, metal fabrication, pneumatics and industrial
electronics. Through 2024, the commercial teams focused on increasing the
opportunity pipeline and levels of customer activity with a focus on new
customer acquisition, including more targeted customer and industry marketing
campaigns. This resulted in the region regaining some customers lost during
the post-COVID period, with sustained customer service and improvement in
inventory holdings of faster moving, high-demand components. This was further
reflected in the annual customer satisfaction survey, which reported a 2024
NPS improvement of three points to 49 in 2024 (2023: 46). Given the soft
economic environment, it was encouraging to see employee engagement increase
to 78 (2023: 77).
APAC
2024 % growth % growth
£m Constant FX Actual FX
Revenue 40.3 7.0 2.5
Gross profit 15.1 12.2 7.9
Gross margin 37.5% 170bps 190bps
Revenue for the year improved by 7.0% on a constant currency basis to £40.3m,
with sequential improvements throughout the year, quarter on quarter. H1
performance reported 1.8% growth on a constant currency basis compared to the
prior year, improving to 12.1% growth in H2.
As seen in previous years, the performance in the APAC region continues to be
driven by the market dynamics in China (c.71% of APAC revenue; c.9% of Group
revenue), which has seen soft domestic market demand sustained. Whilst the
wider electronics market across the region has been subdued through 2024, the
business has been able to drive growth through responding with increased focus
on a number of larger projects linked to faster-growing sectors, including
telecommunications in India and Saudi Arabia, and more recently power storage
and power delivery for electric vehicles. Further momentum has been built
within the China export market to the rest of the APAC region, supported by a
pipeline of commercial opportunities, including the access hardware product
range which has supported additional growth through H2, with strong growth in
the Middle East, South East Asia and Australia.
To ensure the region is well-placed to take advantage of future growth
opportunities, the business took the decision in 2024 to relocate the regional
office headquarters in Singapore to the existing office in Malaysia to drive
further commercial effectiveness and enable the region to invest resources
closer to end-customers in South East Asia.
Gross margins of 37.5% improved by 170bps on a constant currency basis. A low
inflation environment, particularly in China, increased focus towards driving
cost efficiencies in the year. The region successfully controlled the cost
base, driving manufacturing efficiencies, whilst recognising the benefits of
operating leverage from top line growth.
The region continues to invest in its operational capabilities. Dip moulding
manufacturing capabilities have expanded, with new machine capital investment
in Ningbo, China, helping to secure and enhance the product range and attract
new commercial opportunities to the region. New machinery has also been added
to Rayong, Thailand, to support the broadening of the product mix, enabling
cost savings through insourcing, and to develop growth opportunities in South
East Asia. The region's focus on the ability to in-source manufacturing for
key projects, specifically within the renewable energy sector, has enabled new
business wins with new internal capability.
Customer satisfaction scores in the annual NPS survey (China) saw a six point
improvement to 57 (2023: 51). Investment in the standard product offer group
and low levels of supply chain disruption have improved stock availability and
reduced order fulfilment lead times to end-customers.
Sustainability progress
Following approval of Essentra's emissions reduction targets, including
Essentra's target to reach net-zero by 2050, by the Science Based Targets
initiative ("SBTi") in February 2024, the Group published its first Climate
Transition Plan in May 2024, outlining its emissions reduction targets, goals
and focus areas for implementation of its climate strategy. The plan
received 97.6% approval from shareholders at the 2024 AGM. The Group is
pleased with its continued significant progress in sustainability to date, and
is committed to regular reporting on progress in this area.
Essentra has been making good progress in decarbonising its global footprint,
focusing on renewable energy tariffs and energy saving initiatives across the
manufacturing footprint. Emissions intensity for scope one and two has seen a
decrease of 14% compared to FY 2023 and 50% since our 2019 baseline. Renewable
electricity is 57% of total electricity usage, an increase of 13% compared to
FY 2023.
An additional six sites across Essentra's global footprint have achieved zero
waste to landfill in 2024 bringing the total to 20 sites (FY 2023: 14 sites).
The percentage of materials from sustainable sources across our manufactured
polymer ranges reduced marginally to 18.4% (2023: 20.7%), which is partly due
to adding BMP TAPPI products into the Essentra range as well as increased
demand across the standard range for specific products which have not yet
transitioned to recycled or bio-based polymers.
The Centre of Excellence continues to drive the development of new and more
sustainable products. During 2024, 46 trials were completed across a variety
of recycled materials and bioplastics. Essentra continues to innovate and
develop relationships with its customers to identify new commercial
opportunities. In 2024, the Group recognised a number of new commercial
business wins based on sustainability criteria across all three regions,
including customers from HVAC, industrial trucks and general industrial
end-markets.
Financial Review
Constant currency, like-for-like, 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 Note 21 of the
Condensed Consolidated Financial Statements.
Constant foreign exchange rates. The constant exchange rate basis adjusts the
comparative to exclude the effect of currency movements, to show the
underlying performance of the Company. The principal exchange rates for
Essentra were:
-------- Average -------- -------- Closing --------
2024 2023 2024 2023
US$:£ 1.28 1.25 1.25 1.27
€:£ 1.18 1.15 1.21 1.15
Re-translating at 2024 average exchange rates decreases the prior year revenue
by £14.9m, reduces prior year gross profit by £6.5m and reduces prior year
operating profit by £4.1m.
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 2024 LFL results are
adjusted for the acquisition of BMP TAPPI on 26 October 2023.
Discontinued operations. Discontinued operations recognised a £1.0m post-tax
loss (2023: £0.4m post-tax loss), as reported in the Condensed Consolidated
Income Statement. Refer to Note 17 in the Condensed Consolidated Financial
Statements for further information.
Adjusted basis. The term "adjusted" excludes the impact of amortisation of
acquired intangible assets and adjusting items, less any associated tax
impact. In 2024, amortisation of acquired intangible assets was £11.5m (2023:
£11.3m), and there was a pre-tax charge for adjusting items of £14.0m (2023:
£21.0m). In line with previous guidance, current year adjusting items include
£9.6m major software as a service ("SaaS") development expenditure; and
£1.8m relating to legacy pension scheme costs. Other adjusting items include
£1.0m relating to acquisitions, £1.5m of restructuring activities, £1.6m
relating to historic indemnity claims and a net credit of £1.5m relating to
an investment property. Further details on adjusting items are shown in Note 3
to the Condensed Consolidated Financial Statements.
Adjusted operating cash flow. Adjusted operating cash flow is net cash flow
from operating activities, excluding income tax paid, contributions to legacy
pension schemes and cash flows relating to adjusting items, less net capital
expenditure. It is a measure of the underlying cash generation of the
business. Net capital expenditure is included in this measure as Management
regard investment in operational assets (tangible and intangible) as integral
to the underlying cash generation capability of the Company.
Net finance expense. Net finance expense increased to £8.9m (2023: £2.5m) as
a result of lower levels of finance income year-on-year. The start of 2023 saw
an increase in finance income on the receipt of proceeds following the
disposal of businesses in 2022, prior to the return of shareholder funds via a
special dividend in April 2023. Finance expense in the period improved to
£12.5m (2023: £13.5m).
Tax. The effective tax rate on underlying profit before tax (before adjusting
items and amortisation of acquired intangible assets) was 11.5% (2023: 23.6%).
The reduction in effective tax rate was a result of accounting for previously
unrecognised deferred tax assets which resulted in the effective tax rate for
2024 below the previously guided forecast range. The medium-term guidance
range remains unchanged (between 24% and 26%) and remains closely aligned to
the tax rates applied in the majority of jurisdictions in which the Group
operates.
Adjusted operating cash flow from continuing operations. Adjusted operating
cash flow from continuing operations of £36.4m equating to an operating cash
conversion of 90.8% (2023: 111.6%). Free cash flow was £22.5m (2023:
£37.3m).
2024 2023
£m £m
Adjusted operating profit 40.1 43.2
Depreciation and amortisation of non-acquired intangible assets 11.6 14.0
Right-of-use asset depreciation 6.3 5.9
Share option expense / other movements 1.1 0.9
Change in working capital (9.9) (2.6)
Net capital expenditure (12.8) (13.2)
Adjusted operating cash flow from continuing operations 36.4 48.2
Tax(1) (5.8) (4.5)
Cash outflow in respect of adjusting items(1,2) (17.7) (23.6)
Add back: net capital expenditure 12.8 13.2
Net cash inflow from operating activities(3) 25.7 33.3
Adjusted operating cash flow from continuing operations 36.4 48.2
Tax(1) (5.8) (4.5)
Net interest paid (8.1) (6.4)
Free cash flow 22.5 37.3
(1 Tax paid excludes the tax paid/received in relation to adjusting items.
This is included within the cash outflow in respect of adjusting items.)
(2 Pension contribution of £1.8m in 2024 for legacy pension schemes has been
included within cash outflow in respect of adjusting items (2023: £3.7m).)
(3 Statutory cash flows from operating activities can be found in the
Condensed Consolidated Financial Statements.)
Net debt. Net debt at the end of the period was £68.2m compared to a net debt
of £31.6m at 31 December 2023 (excluding lease liabilities of £28.9m). The
overall increase in net debt was driven by the anticipated one-off completion
accounts payment associated with the sale of the Filters business in the
period, paid in H1, totalling £24.8m. This was partly offset by the receipt
of the first of two £10m tranches of deferred consideration.
The Group's financial ratios remain within the 0.5x - 1.5x target range. Net
debt to adjusted EBITDA pre-IFRS16 lease liabilities was 1.3x (net debt to
adjusted EBITDA including IFRS16 lease liabilities: 1.6x).
2024
£m
Net debt as at 1 January 2024 31.6
Free cash flow (22.5)
Cash outflow from discontinued businesses including disposal costs 14.8
Cash outflow in respect of adjusting items 17.7
Ordinary dividend to equity holders 10.5
Share buyback 4.9
Acquisitions less cash acquired 4.1
Principal lease payments 5.5
Movement in loan hedging derivatives and pre-paid facility fees (1.4)
Foreign exchange 3.0
Net debt as at 31 December 2024 68.2
Banking and refinancing facilities. One of the main sources of funding for the
Company is a Revolving Credit Facility ("RCF") provided by a group of five
highly rated banks totalling £200.0m. As at 31 December 2024, £26.1m was
drawn on this facility.
As previously disclosed at the half year results, in July 2024 the Company
agreed to extend the facility for a further five years maturing in July 2029.
By evaluating options and refinancing the RCF ahead of the original maturity
date, the Company has been able to maintain the existing covenants and secure
favourable pricing terms. The extended maturity date provides the Company with
a longer-term financing solution and offers greater stability as well as
reducing the need for frequent refinancing activities, providing greater
liquidity to support our operational and strategic growth initiatives. The new
facility is based on the same terms and size and is provided by a group of
five banks, including four from the original RCF facility.
The Company retains $102.5m of long dated US Private Placement debt ("USPP")
at an average coupon rate of 3.8%.
Type Amount Interest Rate Maturity
RCF £200.00m Floating July 2029
USPP $32.80m 3.62% July 2028
USPP $34.85m 3.91% July 2031
USPP $34.85m 4.00% July 2033
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. The Company intends to use
derivatives to manage foreign currency and interest rate risk arising from
underlying business activities. Whilst some transactions may be of a more
speculative nature, they are in place with a view to manage exchange rate risk
only. 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. 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 derivatives to
hedge its exposure to movements in the exchange rates on its highly probable
forecast foreign currency sales and purchases over a period of up to 18
months.
2024 Full Year Risk Disclosure
The Company has established a risk and internal control framework designed to
manage the delivery of its strategic objectives. The objectives of this
framework are to:
· identify the Company's Principal and Emerging Risks and
appropriate mitigating actions
· formulate the risk appetite and ensure that our business profile
and plans are consistent with it
· develop plans to bring any exposures that are outside agreed
appetite in line with it
· ensure that growth plans are properly supported by an effective
risk management process
· help management teams to improve the control and co-ordination of
risk-taking across the Company.
The risk framework, along with the Company's Principal and Emerging risks,
will be described in detail in the "Risk Management Report" section of the
Company's Annual Report and Accounts for the year ended 31 December 2024,
available on 31 March 2025 on the Company website: www.essentraplc.com
(http://www.essentraplc.com)
Condensed Consolidated Financial Statements
Condensed Consolidated Income Statement
For the year ended 31 December 2024
Note 2024 2023
£m
£m
Revenue 2 302.4 316.3
Gross profit 2 137.1 141.8
Operating profit 2 14.6 10.9
Finance income 4 3.6 11.0
Finance expense 4 (12.5) (13.5)
Profit before tax 5.7 8.4
Income tax credit/ (expense) 5.9 (2.6)
Profit for the year from continuing operations 11.6 5.8
Loss from discontinued operations 17 (1.0) (0.4)
Profit for the year 10.6 5.4
Attributable to:
Equity holders of Essentra plc 10.6 5.4
Profit for the year 10.6 5.4
Earnings per share attributable to equity holders of Essentra plc:
Basic 5 3.7p 1.8p
Diluted 5 3.7p 1.8p
Earnings per share from continuing operations attributable to equity holders
of Essentra plc:
Basic 5 4.0p 2.0p
Diluted 5 4.0p 2.0p
Adjusted profit measure: continuing operations Note 2024 2023
£m
£m
Operating profit 14.6 10.9
Amortisation of acquired intangible assets 2 11.5 11.3
Adjusting items2 3 14.0 21.0
Adjusted operating profit1 40.1 43.2
Notes:
1. See note 21 for further details of the adjusted profit measure.
2. Adjusting items includes a credit on reversal of impairment of
non-current assets of £1.8m (2023: £7.1m impairment).
Condensed Consolidated Statement of Comprehensive Income
For the year ended 31 December 2024
Note 2024 2023
£m
£m
Profit for the year 10.6 5.4
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss in subsequent periods:
Remeasurement of defined benefit pension schemes 12 8.0 (1.3)
Deferred tax on remeasurement of defined benefit pension schemes (2.1) 0.3
5.9 (1.0)
Items that may be reclassified to profit or loss in subsequent periods:
Effective portion of changes in fair value of cash flow hedges:
Net change in fair value of cash flow hedges transferred to the income (0.5) 2.4
statement
Effective portion of changes in fair value of cash flow hedges 0.7 (1.8)
Foreign exchange translation differences:
Attributable to equity holders of Essentra plc:
Arising on translation of foreign operations (7.1) (19.4)
Arising on effective net investment hedges 0.1 0.7
Net income tax (expense)/credit (0.1) 0.6
(6.9) (17.5)
Total other comprehensive expense for the year, net of tax (1.0) (18.5)
Total comprehensive income/(expense) for the year 9.6 (13.1)
Attributable to:
Equity holders of Essentra plc 9.6 (13.1)
Total comprehensive income/(expense) for the year 9.6 (13.1)
Attributable to:
Continuing operations 10.6 (12.7)
Discontinued operations (1.0) (0.4)
Total comprehensive income/(expense) for the year 9.6 (13.1)
Condensed Consolidated Balance Sheet
At 31 December 2024
Note 31 December 31 December
2024 2023
£m £m
Assets
Property, plant and equipment 6 68.6 68.1
Lease right-of-use asset 8 24.2 27.9
Investment properties 6 - 3.3
Intangible assets 7 205.0 215.0
Long-term receivables 0.5 10.1
Derivative assets 5.8 4.2
Deferred tax assets 14.0 12.2
Retirement benefit assets 12 10.6 7.9
Total non-current assets 328.7 348.7
Inventories 9 67.9 64.7
Income tax receivable 2.4 1.4
Trade and other receivables 10 56.2 61.5
Cash and cash equivalents 15 33.7 59.7
Total current assets 160.2 187.3
Assets held for sale 19 5.1 -
Total assets 494.0 536.0
Equity
Issued share capital 14 72.6 73.3
Capital redemption reserve 14 3.1 2.4
Other reserve (132.8) (132.8)
Cash flow hedging reserve - (0.2)
Translation reserve (77.6) (70.5)
Retained earnings 405.5 401.0
Attributable to equity holders of Essentra plc 270.8 273.2
Total equity 270.8 273.2
Liabilities
Interest bearing loans and borrowings 13, 15 106.7 95.5
Lease liabilities 13 21.2 23.8
Retirement benefit obligations 12 12.6 17.5
Provisions - 0.2
Deferred tax liabilities 10.2 12.4
Total non-current liabilities 150.7 149.4
Interest bearing loans and borrowings 13, 15 1.0 -
Lease liabilities 13, 15 7.7 7.1
Income tax payable 7.6 12.0
Trade and other payables 11, 13 51.7 60.7
Other financial liabilities 13 0.8 28.0
Provisions 3.7 5.6
Total current liabilities 72.5 113.4
Total liabilities 223.2 262.8
Total equity and liabilities 494.0 536.0
Condensed Consolidated Statement of Changes in Equity
For the year ended 31 December 2024
2024
Note Issued Merger Capital Other Cash flow Translation Retained Total
capital
reserve
redemption
reserve
hedging and
reserve
earnings
equity
reserve
cost of hedging
£m £m
£m
reserves £m £m £m
£m
£m
At 1 January 2024 73.3 - 2.4 (132.8) (0.2) (70.5) 401.0 273.2
Profit for the year - - - - - - 10.6 10.6
Other comprehensive income/(expense) - - - - 0.2 (7.1) 5.9 (1.0)
Total comprehensive income/(expense) for the year - - - - 0.2 (7.1) 16.5 9.6
Share option expense - - - - - - 1.1 1.1
Tax relating to share-based incentives - - - - - - (0.2) (0.2)
Net impact of hyperinflation1 - - - - - - 2.5 2.5
Purchase of own shares - - - - - - (4.9) (4.9)
Cancellation of shares (0.7) - 0.7 - - - - -
Dividends paid 18 - - - - - - (10.5) (10.5)
At 31 December 2024 72.6 - 3.1 (132.8) - (77.6) 405.5 270.8
2023
Note Issued Merger Capital Other Cash flow Translation Retained Total
capital
reserve
redemption
reserve
hedging and
reserve
earnings
equity
reserve
cost of hedging
£m £m
£m
reserves £m £m £m
£m
£m
At 1 January 2023 75.6 385.2 0.1 (132.8) (0.8) (52.4) 129.2 404.1
Profit for the year - - - - - - 5.4 5.4
Other comprehensive (expense)/income - - - - 0.6 (18.1) (1.0) (18.5)
Total comprehensive (expense)/income for the year - - - - 0.6 (18.1) 4.4 (13.1)
Share option expense - - - - - - 1.4 1.4
Tax relating to share-based incentives - - - - - - (0.3) (0.3)
Net impact of hyperinflation1 - - - - - - 1.4 1.4
Purchase of own shares - - - - - - (24.0) (24.0)
Cancellation of shares (2.3) - 2.3 - - - - -
Reduction of capital - (385.2) - - - - 385.2 -
Dividends paid 18 - - - - - - (96.3) (96.3)
At 31 December 2023 73.3 - 2.4 (132.8) (0.2) (70.5) 401.0 273.2
Notes:
1. The net impact on retained earnings as a result of the index-based
adjustments in Turkey under IAS 29 Financial Reporting in Hyperinflationary
Economies.
Condensed Consolidated Statement of Cash Flows
For the year ended 31 December 2024
Note 2024 2023
£m £m
Operating activities
Profit/(loss) for the year from:
Continuing operations 11.6 5.8
Discontinued operations (1.0) (0.4)
Profit for the year 10.6 5.4
Adjustments for:
Income tax credit (6.1) (1.1)
Net finance expense 4 8.9 2.5
Intangible amortisation 2, 7 13.5 14.2
Adjusting items 3 15.8 13.9
Loss on business disposals 17 1.2 3.7
Depreciation of property, plant and equipment 6 9.6 11.1
Lease right-of-use asset depreciation 8 6.3 5.9
(Reversal of impairment)/impairment of fixed assets 6 (1.8) 7.1
Share option expense 1.1 1.4
Hedging activities and other movements - (0.5)
Increase in inventories (5.8) (3.1)
Decrease in trade and other receivables 3.3 10.0
Decrease in trade and other payables (7.4) (10.1)
Cash outflow in respect of adjusting items 3, 21 (18.4) (23.6)
Movement in provisions - (2.8)
Cash generated from operations 30.8 34.0
Income tax paid (5.1) (4.5)
Net cash inflow from operating activities 25.7 29.5
Investing activities
Interest received 0.5 3.5
Acquisition of property, plant and equipment (11.9) (12.4)
Payments for intangible assets (0.9) (0.8)
Acquisition of businesses net of cash acquired1 16 (4.1) (33.3)
Net cash outflow from cost of business disposals2 (14.8) (17.8)
Net cash outflow from investing activities (31.2) (60.8)
Financing activities
Interest paid (8.6) (9.9)
Dividends paid to equity holders 18 (10.5) (96.3)
Arrangement fee paid for financing activities (1.2) -
Repayment of short-term loans - (208.0)
Repayments of long-term loans (56.3) (46.9)
Proceeds from short-term loans 1.0 -
Proceeds from long-term loans 67.6 61.8
Lease liability principal repayments (5.5) (5.4)
Purchase of own shares (4.9) (24.0)
Net cash outflow from financing activities (18.4) (328.7)
Net decrease in cash and cash equivalents (23.9) (360.0)
Net cash and cash equivalents at the beginning of the year 59.7 421.4
Net decrease in cash and cash equivalents (23.9) (360.0)
Net effect of currency translation on cash and cash equivalents (2.1) (1.7)
Net cash and cash equivalents at the end of the year 15 33.7 59.7
Notes:
1. In 2023 acquisition of businesses is net of cash acquired of
£5.3m. See note 16.
2. In 2024 net cash outflow from cost of business disposals includes
£24.8m on the settlement of deferred consideration payable on the Filters
business and £10.0m received for the settlement of deferred consideration
receivable.
Notes to the Condensed Consolidated Financial Statements
1. Basis of preparation
The financial information set out in this document does not constitute
statutory accounts for Essentra plc for the year ended 31 December 2024 but is
extracted from the 2024 Annual Report.
The Annual Report for 2024 will be delivered to the Registrar of Companies in
due course. The auditors' report on those accounts are unqualified and neither
drew attention to any matters by way of emphasis nor contained a statement
under either section 498(2) of Companies Act 2006 (accounting records or
returns inadequate or accounts not agreeing with records and returns), or
section 483(2) on 498(3) of Companies Act 2006 (failure to obtain necessary
information and explanations).
The Group's condensed consolidated financial statements for the year ended 31
December 2024 have been prepared in accordance with UK-adopted International
Accounting Standards and comply with the requirements of the Companies Act
2006.
These condensed consolidated financial statements are prepared under the
historical cost convention unless otherwise stated. The preparation of
financial statements that conform with adopted IFRS requires the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Although these estimates
are based on management's best knowledge of the amount, event or actions,
actual results may ultimately differ from those estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and future periods if relevant. For the purposes of these
financial statements "Essentra" or "the Group" means Essentra plc (the
"Company") and its subsidiaries.
The principal accounting policies used in the preparation of the condensed
consolidated financial statements for the year ended 31 December 2024 are
detailed below. These policies, except those set out below under the heading
'Changes in accounting policies' adopted during the year, have been
consistently applied to all periods presented.
In preparing the condensed consolidated financial statements, management have
taken into account the potential effects of climate changes, including medium-
to longer-term transitional risks resulting from the relative uncertainty
created by the global shift towards a more sustainable, net-zero economy,
which include regulatory, geopolitical and social pressures that may impact
the operations of the business in future. Management have considered the
potential effects of climate related changes in its assessment of going
concern, and longer term viability of the business, in preparing the Group's
future cash flow forecasts underpinning impairment testing, and in its
assessment of the residual values of property, plant and equipment. Management
have determined that, other than the expected capital expenditure due to the
future spend on machine replacement and efficiency upgrades factored into the
Group's cash flow forecasts, there is no material impact on these financial
statements.
Going concern
The Directors have prepared the condensed consolidated financial statements
for the year ended 31 December 2024 on a going concern basis. In adopting the
going concern basis, the Directors have considered the Group's balance sheet
position, forecast earnings and cash flows for a period of at least 15 months
from the date of approval of these condensed consolidated financial
statements.
At 31 December 2024, the Group's external financing arrangements amounted to
£282.0m, comprising United States Private Placement Loan Notes (USPP) of
US$102.5m (with a range of expiry dates from July 2028 to July 2033) and a
multi-currency revolving credit facility (RCF) of £200.0m (expiring in July
2029).
£26.1m (2023: £15.2m) was drawn under the RCF as at 31 December 2024 with
the available undrawn balance amounting to £173.9m (2023: £184.8m). The
facility is subject to two covenants, which are tested semi-annually: net debt
to EBITDA (leverage) and EBITA to net finance charges. Despite the significant
economic and operational challenges in the recent years, the Group has not
sought to change either of the two covenants. The Directors believe that the
Group is well placed to manage its business risks and, after making enquiries
including a review of forecasts and predictions, taking account of reasonably
possible changes in trading performances and considering the existing
borrowing facilities, including the available liquidity, have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for at least the next 15 months following the date of approval of
the financial statements, and no breaches of covenants are expected.
As part of the going concern assessment, the Board has considered a downside
scenario that includes severe, but reasonably plausible changes in
macro-economic conditions. The results of this scenario show that there is
sufficient liquidity in the business for a period of at least 15 months from
the date of approval of these financial statements, and does not indicate any
covenant breach during the test period. The downside scenario assumes a period
of prolonged revenue decline in 2025, and subsequently delays in market
recovery to 2026. The downside scenario also assumes a market environment in
which the business cannot win market share, and incorporates the transition
risks associated with a "middle of the road scenario" without the inclusion of
any opportunities from the climate change quantitative analysis. These
opportunities include reduced energy costs through the implementation of
renewable energy and increased revenue from sales of components into renewable
energy sectors.
The financial impact of the severe but plausible downside scenario in 2025 and
2026 is a reduction in adjusted operating profits by 13.5% and 11.6%,
respectively, compared to the Group strategic plan.
The overall level of liquidity (defined as available undrawn borrowing
facility plus cash and cash equivalent) at 31 December 2024 was £207.6m.
Adjusting for share repurchases of £31.1m under the remainder of the buyback
programme of £60.0m, this still leaves overall liquidity at £176.5m. Capital
expenditure, sales and general overhead, and working capital will continue to
be managed closely to ensure sufficient liquidity.
The scenarios do not indicate a material uncertainty which may cast
significant doubt over the Company's and Group's ability to continue as a
going concern. The Directors have a reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future, and accordingly, have adopted the going concern basis in
preparing the condensed consolidated financial statements. This disclosure has
been prepared in accordance with the Financial Reporting Council's UK
Corporate Governance Code.
Changes in accounting policies
New pronouncements
The Group adopted the following new pronouncements during 2024, which did not
have a material impact on the Group's financial statements:
· Amendment to IFRS 16 - Leases on sale and leaseback;
· Amendment to IAS 1 - Classification of Liabilities as Current or
Non-current and Non-current liabilities with covenants;
· Amendment to IAS 7 and IFRS 7 - Supplier finance;
The following standards and amendments, with an effective date on or after 1
January 2025, have been published that are not mandatory for 31 December 2024
reporting periods and have not been early adopted by the Group where the
option exists. These amendments are not expected to have a material impact on
the entity in the current or future periods and on foreseeable future
transactions.
· Amendments to IAS 21 - Lack of Exchangeability;
· Amendments to the Classification and Measurement of Financial
Instruments - Amendments to IFRS 9 and IFRS 7;
· IFRS 18 - Presentation and Disclosure in Financial Statements;
· IFRS 19 - Subsidiaries without Public Accountability Disclosures.
Impact of Pillar two rules
The Organisation for Economic Cooperation and Development ("OECD") Global
Anti-Base Erosion Model Rules (Pillar Two rules) were initially introduced by
the OECD in December 2021 and adopted by the UK in Finance Act (no. 2) Act
2023. The rules came into effected for the Essentra Group in relation to the
year ended 31 December 2024 and require the Group to pay a minimum level of
tax across each of the territories in which it operates.
The Group has undertaken a detailed review of the enacted legislation and
applied this to the results for the year. The result of this review is that no
top up taxes are expected to be payable under Pillar Two in any jurisdiction
in respect of the year ended 31 December 2024 as the Group is already paying
more than the minimum level of tax required in each territory.
Whilst it is not expected that any top up taxes under Pillar Two will be
required in future years, the Group will continue to monitor this.
Change in definition of adjusted earnings per share
Adjusted earnings per share is provided to reflect the underlying performance
of the Group and excludes both adjusting items and the tax expense associated
with those items. This definition has been amended to also exclude the
effect of material movements in the Group's derecognition and recognition of
deferred tax assets on tax losses where they are not driven by the underlying
performance of the business. The prior year comparative has not been
restated as the impact is not material. Had this been applied for the year
ended 31 December 2023, adjusted earnings per share for that year would have
been 11.3p (see note 5).
2. Segment analysis
The Group has determined its operating segments based upon the information
reported to the Board of Directors (Board), which is the Group's Chief
Operating Decision Maker. Segment information is reported on a geographical
basis consistent with the basis upon which the Group manages its operations,
allocates resources, and assesses performance. Central corporate costs include
executive and non-executive management, investor relations, corporate
development, corporate reward, governance, risk and assurance, group finance,
tax, treasury and related information technology costs.
Central corporate costs exclude certain costs that are regarded as
attributable to the operating segments.
2024
EMEA AMERICAS APAC Unallocated Continuing Discontinued Total
operations
£m £m £m items1
operations3 £m
£m
£m £m
Income statement information
External revenue 163.3 98.8 40.3 - 302.4 - 302.4
Gross profit 84.0 38.0 15.1 - 137.1 - 137.1
Adjusted operating profit/(loss) before corporate costs 50.7 17.3 4.8 (21.8) 51.0 - 51.0
Central corporate costs2 (10.9) (10.9) - (10.9)
Adjusted operating profit/(loss) 50.7 17.3 4.8 (32.7) 40.1 - 40.1
Amortisation of acquired intangible assets (5.1) (4.7) (1.7) - (11.5) - (11.5)
Adjusting items (1.4) (1.0) (0.9) (10.7) (14.0) - (14.0)
Operating profit/(loss) 44.2 11.6 2.2 (43.4) 14.6 - 14.6
Balance sheet information
Segment assets 101.8 72.4 30.0 18.3 222.5 - 222.5
Intangible assets 143.1 49.5 7.8 4.6 205.0 - 205.0
Unallocated items 4 66.5 66.5 - 66.5
Total assets 244.9 121.9 37.8 89.4 494.0 - 494.0
Segment liabilities 35.4 24.8 10.0 14.9 85.1 - 85.1
Unallocated items 4 138.1 138.1 - 138.1
Total liabilities 35.4 24.8 10.0 153.0 223.2 - 223.2
Other segment information
Capital expenditure (cash spend) 5.1 3.7 1.6 2.4 12.8 - 12.8
Depreciation of plant, property and equipment 4.1 2.3 1.7 1.5 9.6 - 9.6
Average number of employees 1,206 702 928 204 3,040 - 3,040
2023
EMEA AMERICAS APAC Unallocated Continuing Discontinued Total
items1
operations
operations3
£m £m £m
£m
£m £m £m
Income statement information
External revenue 170.8 106.2 39.3 - 316.3 - 316.3
Gross profit 87.5 40.3 14.0 - 141.8 - 141.8
Adjusted operating profit/(loss) before corporate costs 53.9 19.5 3.5 (22.1) 54.8 (0.4) 54.4
Central corporate costs2 (11.6) (11.6) - (11.6)
Adjusted operating profit/(loss) 53.9 19.5 3.5 (33.7) 43.2 (0.4) 42.8
Amortisation of acquired intangible assets (4.0) (5.5) (1.8) - (11.3) - (11.3)
Adjusting items 0.8 (1.5) (3.4) (16.9) (21.0) - (21.0)
Operating profit/(loss) 50.7 12.5 (1.7) (50.6) 10.9 (0.4) 10.5
Balance sheet information
Segment assets 110.8 70.2 25.8 28.8 235.6 - 235.6
Intangible assets 147.0 53.3 9.0 5.7 215.0 - 215.0
Unallocated items 4 85.4 85.4 - 85.4
Total assets 257.8 123.5 34.8 119.9 536.0 - 536.0
Segment liabilities 44.2 27.9 7.7 45.6 125.4 - 125.4
Unallocated items 4 137.4 137.4 - 137.4
Total liabilities 44.2 27.9 7.7 183.0 262.8 - 262.8
Other segment information
Capital expenditure (cash spend) 3.7 6.3 1.7 1.5 13.2 - 13.2
Depreciation of plant, property and equipment 4.3 2.8 1.9 2.1 11.1 - 11.1
Average number of employees 1,180 727 950 194 3,051 - 3,051
Notes:
1. Unallocated items include operating expenses related to the regions
that are managed at a total trading level rather than by individual segment.
Assets, liabilities and employees also managed at a total trading level are
presented within Unallocated items. Segment assets of £18.3m (2023: £28.8m)
include investment property of £5.1m (2023: £3.3m) which in 2024 was
transferred to assets held-for-sale.
2. Central corporate costs include executive and non-executive
management, investor relations, corporate development, governance, risk and
assurance, group finance, tax, treasury, and related information technology
costs.
3. Operating loss from discontinued operations (see note 17) excludes
the loss on disposal of £1.2m (2023: £3.7m).
4. The unallocated assets relate to income and deferred tax assets,
retirement benefit assets, derivatives, other financial assets and cash and
cash equivalents. The unallocated liabilities relate to interest bearing loans
and borrowings, retirement benefit obligations, derivatives, deferred tax
liabilities and income tax payable.
Intersegment transactions are carried out on an arm's-length basis.
On a continuing basis, no customer accounted for more than 10% of revenue in
either 2024 or 2023. Non-current assets in the UK (the Company's country of
domicile) totalled £74.4m (2023: £93.6m), with the other significant
location being the USA with £95.2m (2023: £106.2m). Total Group net finance
expense of £8.9m (2023: £2.5m) and total Group income tax credit of £6.1m
(2023: £1.1m) cannot be meaningfully allocated by segment. The Group revenue
does not include any variable consideration which is constrained.
% of Total Continuing External Revenue 2024 2023
Revenue by channel
End users 71% 78%
Distributors 29% 22%
Revenue by offer type
Standard 69% 63%
Configured 21% 31%
Custom 10% 6%
Revenue by customer segment
Industrial manufacturers 69% 71%
Large consumer manufacturers 19% 20%
SME consumers 12% 9%
Revenue by geographical location
External revenue presented in the table below, on a continuing basis, by
location of the Group operation where the sales originated.
2024 2023
£m £m
UK (country of domicile) 28.0 30.2
US 88.1 94.6
China 28.6 26.9
Turkey 26.3 23.6
Germany 18.8 22.4
Italy 19.4 14.8
France 13.0 15.1
The Netherlands 12.3 13.8
Spain 11.3 12.3
Poland 10.3 10.9
Rest of World 46.3 51.7
Total continuing Group 302.4 316.3
3. Adjusting items from continuing operations
Adjusting items are separately presented from other items by virtue of their
nature, size and/or incidence. They are identified separately in order for the
reader to obtain a clearer understanding of the underlying results of the
ongoing Group's operations, by excluding items which, in management's view, do
not form part of the Group's underlying operating results, such as gains,
losses or costs arising from business acquisition and disposal activities,
significant restructuring and closure costs, and costs of major Software as a
Service projects, items which are non-recurring or one-off in nature (such as
the costs of fundamental strategic review and reorganisation), one-off
impairments of non-current assets and charges relating to the Group's legacy
defined benefit pension schemes, and the related tax effect.
2024 2023
£m £m
Costs relating to restructuring following disposals of businesses1 1.5 1.3
Gains and transaction costs relating to acquisitions of businesses2 - (1.0)
Acquisition integration and restructuring costs3 1.0 -
Customisation and configuration costs of significant Software as a Service 9.6 10.8
("SaaS") arrangements4
Defined benefit pension scheme charges5 1.8 1.8
(Reversal of impairment)/impairment of non-current assets6 (1.8) 7.1
Other7 1.9 1.0
Adjusting items before tax 14.0 21.0
Tax (6.8) (4.3)
Adjusting items after tax 7.2 16.7
2024 2023
£m £m
Reconciliation of cash flows from adjusting items:
Adjusting items 14.0 21.0
Non-cash expenses/credits in adjusting items (1.3) (5.9)
Pension contribution adjustment - 1.9
Utilisation of prior year end acquired accruals and provisions 5.7 6.6
Cash outflow from adjusting items before tax 18.4 23.6
Tax received on adjusting items (0.7) -
Cash outflow from adjusting items 17.7 23.6
Notes:
1. Costs of £1.5m (2023: £1.3m), in relation to major restructuring
activities to "right size" the continuing operations of the business following
the disposal of the Filters and Packaging businesses.
2. In 2023, a credit of £1.0m relating to acquisitions, of which
£0.6m relates to the acquisition of BMP TAPPI in October 2023, and £1.6m
relates to the acquisition of Wixroyd Group, acquired in December 2022.
3. Relating to integration costs of £1.0m following the acquisition
of Wixroyd Group and the acquisition of BMP TAPPI (2023: £nil).
4. Costs of significant SaaS arrangements which, in the view of
management, represents investment in upgrading the Group's technological
capability, were expensed as adjusting items in accordance with the Group's
accounting policies. In 2024 costs of £9.6m (2023: £10.8m) were attributable
to major SaaS projects and relate primarily to the costs of implementing a new
cloud-based enterprise resource planning (ERP) system within the Group.
5. Costs of £1.8m (2023: £1.8m) were incurred in relation to defined
benefit pension scheme charges which, following the outcome of the strategic
review in 2022, no longer pertain to the continuing operations of the Group.
6. Includes a credit of £1.8m (2023: £3.7m expense) for the reversal
of impairment (2023: impairment) of investment property and a £nil (2023:
£3.4m) impairment loss in relation to non-current assets held within the APAC
segment.
7. In 2024 costs include an increase in a provision relating to
historic indemnity claim of £1.6m (2023: £0.8m) and provisions relating to
investment property activities of £0.3m. In 2023 costs of £0.2m for
professional fees relating to the capital reduction completed during 2023.
4. Net finance expense from continuing operations
Note 2024 2023
£m £m
Finance income
Bank deposits 0.5 3.5
Other finance income1 2.8 7.0
Net interest on pension scheme assets 12 0.3 0.5
Total finance income 3.6 11.0
Finance expense
Interest on loans and overdrafts (6.4) (6.0)
Amortisation of bank facility fees (0.2) -
Other finance expense2 (2.6) (4.9)
Net interest on pension scheme liabilities 12 (0.7) (0.8)
Interest on leases 8 (2.6) (1.8)
Total finance expense (12.5) (13.5)
Net finance expense (8.9) (2.5)
Notes:
1. Included within Other finance income is £0.5m (2023: £nil)
relating to gains on derivative financial instruments, £0.8m (2023: £5.7m)
relating to exchange gains on cash, borrowings and leases and £1.5m (2023:
£1.3m) relating to monetary gains on Hyperinflationary economies.
2. Included within Other finance expense is £nil (2023: £2.3m)
relating to loss on derivative financial instruments, and £2.6m (2023:
£2.6m) relating to exchange losses on cash, borrowings and leases.
5. Earnings per share
Note 2024 2023
£m £m
Earnings from continuing operations
Profit attributable to equity holders of the Company 11.6 5.8
Adjustments:
Amortisation of acquired intangible assets 2 11.5 11.3
Tax on amortisation of acquired intangible assets (2.7) (2.7)
Adjusting items 3 14.0 21.0
Tax on adjusting items 3 (6.8) (4.3)
Adjusted earnings attributable to equity holders of the Company1 27.6 31.1
Adjustment for recognition/(derecognition) of deferred tax asset on tax (3.3) n/a
losses2
Total for calculation of adjusted earnings per share2 24.3 31.1
Earnings from discontinued operations
Earnings attributable to equity holders of Essentra plc (1.0) (0.4)
Notes:
1. Adjusted earnings per share from continuing operations is provided
to reflect the underlying performance of the Group.
2. Following a change in the definition of adjusted earnings per
share, this reflects the derecognition and recognition of deferred tax assets
on tax losses where there is a change in probability that the related tax
benefits will be realised. The prior year comparative has not been restated
as the impact is not material.
2024 2023
Weighted average number of shares
Basic weighted average number of ordinary shares outstanding (million)1 287.3 294.6
Dilutive effect of employee share option plans (million) 2.4 2.4
Diluted weighted average number of ordinary shares (million) 289.7 297.0
Earnings per share from continuing operations (pence)
Basic earnings per share from continuing operations 4.0p 2.0p
Adjustment 4.5p 8.6p
Basic adjusted earnings per share from continuing operations 8.5p 10.6p
Diluted earnings per share from continuing operations 4.0p 2.0p
Adjustment 4.4p 8.5p
Diluted adjusted earnings per share from continuing operations 8.4p 10.5p
Earnings per share from discontinued operations (pence)
Basic earnings per share (0.3)p (0.2)p
Diluted earnings per share (0.3)p (0.2)p
Total Earnings per share attributable to equity holders of the Company (pence)
Basic earnings per share 3.7p 1.8p
Diluted earnings per share 3.7p 1.8p
Notes:
1. The basic weighted average number of ordinary shares in issue
excludes shares held in treasury and shares held by the employee benefit
trust.
6. Investment Properties, Property, plant and equipment
2024 2024
Note Total Land and Plant and Fixtures, fittings Total
Investment properties4
buildings
machinery
and equipment
Property,
plant and equipment
£m £m £m £m
£m
Cost
Beginning of year 7.0 39.0 118.1 68.5 225.6
Additions - 0.5 7.6 3.8 11.9
Disposals - (1.2) (6.6) (2.7) (10.5)
Transferred to assets held-for-sale 19 (7.0) - - - -
Currency translation2 - (0.2) (2.1) (0.8) (3.1)
End of year - 38.1 117.0 68.8 223.9
Accumulated depreciation and impairment
Beginning of year 3.7 16.4 84.5 56.6 157.5
Charge in year - 1.3 5.7 2.6 9.6
Disposals - (1.2) (6.6) (2.7) (10.5)
Transferred to assets held for sale 19 (1.9) - - - -
Reversal of impairment in year,4 (1.8) - - - -
Currency translation2 - 0.1 (1.1) (0.3) (1.3)
End of year - 16.6 82.5 56.2 155.3
Net book value at end of year1 - 21.5 34.5 12.6 68.6
2023 2023
Note Total Land and Plant and Fixtures, fittings Total
Investment properties4
buildings
machinery
and equipment
Property,
plant and equipment
£m £m £m £m
£m
Cost
Beginning of year 7.0 37.7 125.6 72.0 235.3
Acquisitions5 16 - - 4.2 - 4.2
Additions - 1.3 7.0 4.1 12.4
Disposals - (0.1) (14.1) (7.4) (21.6)
Currency translation2 - 0.1 (4.6) (0.2) (4.7)
End of year 7.0 39.0 118.1 68.5 225.6
Accumulated depreciation and impairment
Beginning of year - 14.2 95.7 60.2 170.1
Charge in year - 1.6 5.6 3.9 11.1
Disposals - (0.1) (14.1) (7.3) (21.5)
Impairment3,4 3.7 - 0.9 - 0.9
Currency translation2 - 0.7 (3.6) (0.2) (3.1)
End of year 3.7 16.4 84.5 56.6 157.5
Net book value at end of year1 3.3 22.6 33.6 11.9 68.1
Notes:
1. Included within land and buildings, plant and machinery and
fixtures, fittings and equipment are assets in the course of construction of
£3.6m (2023: £2.3m) which were not depreciated during the year.
2. Currency translation movement for the year includes an increase of
£0.7m (2023: £1.8m) in respect of adjustments for hyperinflation.
3. In 2023 Property, plant and equipment with a net book value of
£2.9m was impaired by £0.9m to a recoverable amount of £nil, which
represented fair value less cost to sell. £0.9m of this impairment has been
charged to adjusting items (see note 3).
4. The fair value of the investment property was £5.1m (2023: £3.3m)
and as consequence, a credit of £1.8m (2023: reduction of £3.7m) has been
recorded as a reversal of impairment (2023: impairment) to adjusting items
(see note 3). The asset has been transferred to assets held-for-sale.
5. Acquisitions in 2023 include £4.0m relating to the acquisition of
BMP TAPPI, and £0.2m final purchase price allocation adjustment relating to
the acquisition of Wixroyd Group.
Contractual commitments to purchase property, plant and equipment amounted to
£0.4m at 31 December 2024 (2023: £0.3m).
Investment property valuation
The property has a market value of £5.1m (2023: £3.3m) and is valued based
on a level 3 of fair value hierarchy. Due to a change in use in the year, the
valuation was based on the fair value less costs to sell using updated market
data and has been transferred to assets held-for-sale. In 2023 the valuation
was performed by an independent valuer holding a recognised and relevant
professional qualification with recent experience in the location and category
of the investment property. The valuation took into account the contractual
terms of the current tenant, who has occupation until 2027 with an option to
extend until 2032 with an estimated amount for typical market rent based on a
5 year term. The valuation applies a market yield of 7% until 2027 and 10%
beyond 2027. The valuation takes into account, among other factors,
marketability, demand, energy performance, rating assessment, size, location
and condition.
No amounts were received in respect of rental income during the year (2023:
£nil).
7. Intangible assets
2024
Goodwill Customer Other intangible assets1,2 Total
£m Relationships5 £m £m
£m
Cost
Beginning of year 148.6 169.3 24.6 342.5
Additions - - 0.9 0.9
Currency translation6 2.9 2.2 0.2 5.3
End of year 151.5 171.5 25.7 348.7
Accumulated amortisation and impairment
Beginning of year 4.2 107.4 15.9 127.5
Charge in year3 - 10.9 2.6 13.5
Currency translation6 - 2.5 0.2 2.7
End of year 4.2 120.8 18.7 143.7
Net book value at end of year 147.3 50.7 7.0 205.0
2023
Goodwill Customer Other intangible assets1,2 Total
£m Relationships5 £m £m
£m
Cost
Beginning of year 140.1 159.3 24.8 324.2
Acquisitions7 (note 16) 14.5 16.9 0.8 32.2
Additions - - 0.8 0.8
Disposals - - (1.0) (1.0)
Currency translation6 (6.0) (6.9) (0.8) (13.7)
End of year 148.6 169.3 24.6 342.5
Accumulated amortisation and impairment
Beginning of year 4.5 99.1 14.0 117.6
Charge in year3 - 10.7 3.5 14.2
Impairment4 - 2.2 - 2.2
Disposals - - (1.0) (1.0)
Currency translation6 (0.3) (4.6) (0.6) (5.5)
End of year 4.2 107.4 15.9 127.5
Net book value at end of year 144.4 61.9 8.7 215.0
Notes:
1. Other intangible assets principally comprise trade names acquired
with Reid Supply, developed technology acquired with Richco, order backlog,
software development and e-Commerce development costs.
2. Included within other intangible assets at 31 December 2024, are
assets in the course of construction of £0.1m (2023: £0.8m) which were not
amortised during the year.
3. Amortisation charged on other intangible assets (which includes
e-Commerce development and software development costs not acquired through a
business combination), is included within operating profit before amortisation
of acquired intangibles and adjusting items. Amortisation charged on customer
relationships acquired in a business combination is excluded from the Group's
adjusted operating profit measure. Included within the amortisation charge for
the year is £13.5m (2023: £14.2m) relating to continuing operations.
4. In 2023 the impairment charge of £2.2m relates to the Hengzhu CGU.
5. The weighted average remaining useful lives of customer
relationships and other intangible assets at the end of the year were 8.0
years and 3.4 years (2023: 8.5 years and 3.9 years), respectively.
6. Currency translation movement for the year includes an increase of
£3.9m (2023: £1.1m) in respect of adjustments for hyperinflation.
7. Acquisitions include goodwill of £15.0m and customer relationships
and other intangibles of £17.7m relating to the acquisition of BMP TAPPI,
less an adjustment of £0.5m relating to the finalisation of the purchase
price allocation relating to the acquisition of Wixroyd Group in 2022 (see
note 16).
8. Included within other intangible cost is £17.3m (2023: £16.4m)
that was internally generated with an accumulated amortisation of £12.3m
(2023: £10.2m). Internally generated additions amounted to £0.9m (2023:
£0.8m) and amortisation £2.0m (2023: £2.9m).
Essentra tests intangible assets annually for impairment, or more frequently
if there are indications of impairment. A discounted cash flow analysis is
computed to compare the discounted estimated future operating cash flows to
the net carrying value of the goodwill and other intangible and tangible
assets for each cash generating unit or group of cash generating units as
appropriate. Following an impairment assessment of the carrying value of
goodwill held by the Group's operations performed by management at 31 December
2024, no impairment of goodwill was required to be recognised on the Group's
continuing operations. The three geographical segments: EMEA, AMERICAS and
APAC, represented by groups of CGUs (the manufacturing and distribution
sites), are considered to represent the lowest level within the Group at which
goodwill is monitored for internal management purposes.
Goodwill is allocated to groups of cash generating units, being the operating
segments, as follows:
Goodwill 2024 2023
£m £m
EMEA 111.3 109.3
AMERICAS 36.0 35.1
147.3 144.4
Customer relationships and other intangible assets are allocated to the
businesses to which they relate, as follows:
Business 2024 2023
(re-presented)
£m £m
Businesses of former Moss and Skiffy 5.9 7.2
Businesses of former Richco 5.5 9.0
Business of former Mesan(1) 2.7 3.3
Business of former Abric 3.1 4.3
Business of former Micro Plastics, Inc 2.9 3.2
Industrial Supply - 0.3
Innovative Components 4.9 5.5
Hengzhu 4.1 4.8
Wixroyd 7.0 7.9
BMP TAPPI 15.1 17.4
e-Commerce development costs 4.5 4.9
Components Sweden 1.4 1.9
Software and development costs 0.6 0.9
57.7 70.6
Notes:
1. The comparative has been re-presented to include intangible assets
recognised due to hyperinflation within businesses for former Mesan. There is
no impact to the financial result for the prior year or presentation of the
primary statements.
The cash generating units ("CGUs") are primarily the manufacturing and
distribution sites, at which impairment of intangible assets (excluding
goodwill) and property, plant and equipment would be performed.
As well as reviewing goodwill for impairment in 2024, the adverse economic
outlook impacting the business was also an indicator of impairment at certain
CGUs and therefore an impairment review was performed for the year to 31
December 2024. There was an impairment trigger at the Hengzhu CGU within APAC
and therefore a review was performed.
The impairment tests for goodwill and intangible assets (and in the case of
Hengzhu, other non-current assets) are based first on the Board approved
business plan (the "Plan"). The recoverable amount of each CGU (and groups of
CGUs) was determined by performing a value-in-use calculation taking into
account the wider market conditions and revenue growth projections within the
industry the CGUs operate in. The cash flow projections are over five years
based on the approved annual budget for the first year and subsequent years
based on management forecasts and with reference to economic data. The key
assumptions in the cash flow projections for the Plan are set out below.
Region Average annual Terminal Improvement in Pre-tax
average operating
discount rate
revenue growth growth rate
rate over five-year
profit over
from 2028 onwards
five-year period
Forecast period
Groups of cash-generating-units:
EMEA 3.9% 2.9% 160 bps 15.4%
AMERICAS 3.2% 2.3% 180 bps 13.3%
APAC 4.6% 2.1% 210 bps 14.2%
Cash-generating-unit assumptions:
Hengzhu (individual CGU) 5.4% 2.1% 260 bps 14.4%
Operating margin is primarily based upon the historical levels achieved,
adjusted by targets set for revenue expansion and cost control and reduction
within the Plan period. The values assigned to these assumptions represent
management's assessment of market conditions and scope for cost and
profitability improvement, taking into account realisable synergies resulting
from integration activities. The estimated cash flows are discounted using a
pre-tax discount rate based upon Essentra's estimated pre-tax weighted average
cost of capital by operating segment.
The associated impact on the impairment assessment, in relation to EMEA,
AMERICAS geographical segments and the Hengzhu CGU is as follows:
Impairment/(headroom) after applying sensitivities impacting: Group CGUs Group CGUs Hengzhu CGU
EMEA
AMERICAS (Headroom)
Impairment
(Headroom) /Impairment
£m
£m
£m
50 bps increase in pre-tax discount rate (33.5) (0.1) 0.3
100 bps reduction in terminal growth rate (30.6) 0.7 0.3
100 bps reduction in each year's growth rate (23.2) (1.2) 0.8
100 bps reduction in operating profit margin in the terminal year (35.2) 1.0 0.9
8. Lease right-of-use asset
2024
Land and Plant and Fixtures, fittings Total
buildings
machinery
and equipment
£m
£m £m £m
Cost
Beginning of year 48.8 3.2 0.1 52.1
Additions 0.4 1.1 - 1.5
Extensions and surrenders 2.8 0.2 - 3.0
Terminations (2.7) (1.0) - (3.7)
Currency translation (1.7) - - (1.7)
End of year 47.6 3.5 0.1 51.2
Accumulated depreciation and impairment
Beginning of year 22.5 1.6 0.1 24.2
Charge in year 5.1 1.2 - 6.3
Terminations (2.7) (1.0) - (3.7)
Currency translation1 0.2 - - 0.2
End of year 25.1 1.8 0.1 27.0
Net book value at end of year 22.5 1.7 - 24.2
2023
(re-presented)
Land and Plant and Fixtures, fittings Total
buildings
machinery
and equipment
£m
£m £m £m
Cost
Beginning of year 40.3 2.9 0.2 43.4
Additions3 9.4 1.8 - 11.2
Extensions and surrenders3 2.9 - - 2.9
Terminations (2.2) (1.6) (0.1) (3.9)
Currency translation (1.6) 0.1 - (1.5)
End of year 48.8 3.2 0.1 52.1
Accumulated depreciation and impairment
Beginning of year 20.4 1.9 0.1 22.4
Charge in year 4.9 0.9 0.1 5.9
Impairment2 - 0.3 - 0.3
Terminations (2.2) (1.6) (0.1) (3.9)
Currency translation1 (0.6) 0.1 - (0.5)
End of year 22.5 1.6 0.1 24.2
Net book value at end of year 26.3 1.6 - 27.9
Notes:
1. Currency translation as at 31 December 2024 includes net book value
movement of £0.1m increase (2023: £0.2m decrease) in respect of adjustments
for hyperinflation.
2. During the year ended 31 December 2023, an impairment of £0.3m was
recognised in adjusting items (refer to note 3). The assets were written down
to their recoverable amount.
3. The comparative has been re-presented to segregate lease
right-of-use assets additions from additions, extensions and surrenders as
previously presented. There is no impact to the financial result for the prior
year or presentation of the primary statements.
The income statement includes the following amounts relating to leases:
On continuing operations Notes 2024 2023
£m £m
Lease right-of-use asset depreciation 6.3 5.9
Interest expense (included in finance costs)1 4 2.6 1.8
Exchange losses (included in finance costs) 4 1.8 2.2
Expense relating to short-term leases (included in cost of goods sold and - -
administrative expenses)2
Expense relating to leases of low-value assets that not shown above as 0.1 0.1
short-term leases (included in operating expenses)
10.8 10.0
Notes:
1. For the year ended 31 December 2024, the weighted average lessee's
incremental borrowing rate applied to lease liabilities was 9.0% (2023: 8.6%).
2. The short-term leases expense for the year ending 31 December 2025
is not expected to be materially different to the expense disclosed above.
The total cash outflow for leases and analysis of movements in lease
liabilities are included in note 15.
9. Inventories
2024 2023
£m £m
Raw materials and consumables 7.7 7.7
Work-in-progress 4.2 6.0
Finished goods and goods held for resale 56.0 51.0
Total1 67.9 64.7
Notes:
1. Inventories with a total value of £nil (2023: £nil) were written
down in the year.
10. Trade and other receivables
2024 2023
£m £m
Trade receivables1 37.6 43.5
Other receivables2 14.3 14.7
Prepayments and accrued income 4.3 3.3
Total 56.2 61.5
Notes:
1. Includes impairment charge on trade receivables of £0.6m (2023:
£0.4m).
2. Other receivables include £9.6m (2023: £9.7m) of consideration
for an earnout receivable (following the disposal of the Filters business in
2022).
11. Trade and other payables
2024 2023
£m £m
Trade payables 25.6 23.8
Other tax and social security contributions 6.9 5.4
Other payables 3.5 3.4
Accruals 15.7 28.1
Total 51.7 60.7
12. Employee benefits
Post-employment benefits
The Group operates a number of defined benefit and defined contribution
pension schemes around the world, the latter covering many of its employees.
The Group also has a number of other post-employment obligations in certain
countries, some of which are required under local law.
The defined benefit plans are administered by boards of trustees and the
assets are held independently from Essentra. The boards of trustees comprise
member nominated trustees, employer nominated trustees and independent
advisory trustees. The articles of the plans prohibit a majority on the boards
to be established by either the member or employer nominated trustees.
Pension costs of the defined benefit schemes are assessed in accordance with
the advice of independent professionally qualified actuaries. Full triennial
actuarial valuations were carried out on the principal European defined
benefit schemes as at 5 April 2024 and annual actuarial valuations are
performed on the principal US defined benefit schemes. The assets and
liabilities of the defined benefit schemes have been updated to the balance
sheet date from the most recently completed actuarial valuations taking
account of the investment returns achieved by the schemes and the level of
contributions.
In June 2023, the UK High Court (Virgin Media Limited v NTL Pension Trustees
II Limited) ruled that certain historical amendments for contracted out
defined benefit schemes were invalid if they were not accompanied by the
correct actuarial confirmation. The judgment is subject to appeal which has
since been rejected in 2024. The Trustee and Group are monitoring this case
and are considering if there are any implications for the UK Pension Fund, as
this case develops.
The principal European defined benefit schemes entitle remaining members to a
pension calculated on 1.25% or 2% of their capped final pensionable pay
multiplied by the number of pensionable years of service. Some members have
historical entitlements to accrual rates of 1.67%-1.9% and 3% for certain
tranches of their service. The principal US defined benefit schemes entitle
certain former participating employees to annuity benefits equal to 50% of
final average pensionable salary, reduced for years of service less than 30,
and other participating employees to annuity benefits equal to $49 per month
for each year of service.
The amounts included in the condensed consolidated financial statements on a
total group basis (including discontinued operations) are as follows:
2024 2023
£m £m
Amounts expensed against operating profit
Defined contribution schemes 2.5 2.7
Defined benefit schemes - current service cost 1.8 1.8
Other post-employment obligations 0.1 0.1
Total operating expense 4.4 4.6
Amounts included as finance (income)/expense
Net interest on defined benefit scheme assets1 (0.3) (0.5)
Net interest on defined benefit scheme liabilities2 0.7 0.8
Net finance expense 0.4 0.3
Amounts recognised in the condensed consolidated statement of comprehensive
income
Return on defined benefit scheme assets excluding amounts in net finance 10.7 (2.3)
income
Impact of changes in assumptions and experience to the present value of (18.7) 3.6
defined benefit scheme liabilities
Remeasurement (gains)/losses of defined benefit schemes (8.0) 1.3
Notes:
1. Net interest income on defined benefit scheme assets on a
continuing basis (note 4) was £0.3m (2023: £0.5m).
2. Net interest expense on defined benefit scheme liabilities on a
continuing basis (note 4) was £0.7m (2023: £0.8m).
During the year, the Group incurred service cost expenses totalling £1.8m
(2023: £1.8m) which, in management's judgement, are not considered to be part
of the Group's ongoing operations. As such, these expenses have been
classified as adjusting items and have been presented separately (see note 3).
During 2015, the principal defined benefit pension schemes in the UK and the
US were closed to future accrual. Following the closure of the Group's
principal defined benefit pension schemes to future accruals, the schemes are
funded by the Group's subsidiaries and employees are not required to make any
further contribution. The funding of these schemes is based on separate
actuarial valuations for funding purposes for which the assumptions may differ
from those used in the valuation for IAS 19 Employee Benefits purposes.
In April 2022, the Company, Essentra Components Limited and Essentra Pension
Trustees Limited (the trustee of the UK Essentra Pension Plan) entered into a
flexible apportionment agreement ("FAA") subject to UK legislation such that
Essentra Packaging and Security Limited (a former participating employer and
Group subsidiary disposed of as part of the Packaging business), and Essentra
Filter Products Limited and Essentra Pte Limited (both former participating
employers and Group subsidiaries disposed of as part of the Filters business)
transferred all defined benefit pension liabilities to Essentra Components
Limited, a continuing participating employer of the UK Essentra Pension Plan.
In consideration for the trustee entering into the FAA, it was agreed that
Essentra Components Limited pay the following amounts into the Essentra
section of the UK Essentra Pension Plan: (i) £0.7m (this was paid during
2022); (ii) £1.3m payable upon completion of the divestiture of the Packaging
business in the year of disposal which was paid in 2023, make further cash
payments of £0.6m in each of the six years after the year of divestiture; and
(iii) £1.3m payable upon completion of the divestiture of the Filters
business in the year of disposal which was paid in 2023, and make further
payments of £0.6m in each of the six years after the year of divestiture
unless the scheme is already fully funded.
The Group's contributions to its defined benefit pension schemes are
determined in consultation with trustees, taking into consideration actuarial
advice, investment conditions and other local conditions and practices. The
outcome of these consultations can impact the timing of future cash flows.
Contributions payable by the Group to its defined benefit pension schemes
during the year to 31 December 2024 amounted to £1.8m (2023: £nil) to its US
schemes and £nil (2023: £3.8m) in respect of the Group's European schemes.
In 2025, the Group expects to make defined benefit contributions of $2.4m to
its US schemes and £nil in respect of the Group's European schemes.
During the year, the Group's total contributions to defined contribution
schemes amounted to £2.5m (2023: £2.7m). Contributions on continuing
operations of £1.9m (2023: £2.7m) were paid in 2024. A similar amount is
expected to be payable during the ending 31 December 2025.
The principal assumptions used by the independent qualified actuaries for the
purposes of IAS 19 are as follows:
2024 2023
Europe US Europe US
Increase in pensions1
at RPI capped at 5% 3.0% n/a 2.9% n/a
at CPI capped at 5% 2.8% n/a 2.6% n/a
at CPI minimum 3%, capped at 5% 3.5% n/a 3.4% n/a
at CPI capped at 2.5% 2.0% n/a 2.0% n/a
Discount rate 5.5% 5.5% 4.6% 4.8%
Inflation rate - RPI 3.1% n/a 3.0% n/a
Inflation rate - CPI 2.8% n/a 2.6% n/a
Notes:
1. For service prior to April 2010, pension at retirement is linked to
salary at retirement. For service after April 2010, pension is linked to
salary at April 2010 with annual increases capped at 3%.
2. Due to the timescale covered, the assumptions applied may not be
borne out in practice.
The life expectancy assumptions (in number of years) used to estimate defined
benefit pension obligations at the year-end are as follows:
2024 2023
Europe US Europe US
Male retiring today at age 65 21.9 20.7 22.4 20.7
Female retiring today at age 65 23.3 22.7 24.8 22.6
Male retiring in 20 years at age 65 23.5 22.2 23.7 22.2
Female retiring in 20 years at age 65 24.4 24.1 26.2 24.1
The allocation of assets between different classes of investment is reviewed
regularly and is a key factor in the trustees' investment policies. The
allocation of assets is arrived at taking into consideration current market
conditions and trends, the size of potential returns relative to investment
risk and the extent to which asset realisation needs to match liability
maturity. There are risks underlying these considerations. If asset returns
fall below the returns required for scheme assets to match the present value
of scheme liabilities, a scheme deficit results. Persistent deficits represent
an obligation the Group has to settle through increased cash contributions. If
asset maturities are not properly matched with liability maturities, there is
also the risk that the Group could be required to make unplanned short-term
cash contributions to resolve resulting liquidity issues. Scheme assets are
invested by the trustees in asset classes and markets that are considered to
be reasonably liquid, so through this matching liquidity risk is considered to
be sufficiently mitigated.
Movement in fair value of post-employment obligations recognised during the
year
2024 2023
Defined benefit pension schemes Defined benefit pension schemes
Assets Liabilities Other1 Total Assets Liabilities Other1 Total
£m £m £m £m £m £m £m £m
Beginning of year 197.5 (206.8) (0.3) (9.6) 198.3 (208.7) (0.2) (10.6)
Current service cost and administrative expense2 (1.8) - (0.1) (1.9) (1.8) - (0.1) (1.9)
Employer contributions 1.8 0.1 - 1.9 3.7 0.1 - 3.8
Return on plan assets excluding amounts in net finance income4 (10.7) - - (10.7) 2.3 - - 2.3
Actuarial gains/(losses) arising from change in financial assumptions - 6.5 - 6.5 - (3.9) - (3.9)
Actuarial gains arising from change in demographic assumptions - 12.9 - 12.9 - 0.6 - 0.6
Actuarial losses arising from experience adjustment - (0.7) - (0.7) - (0.3) - (0.3)
Finance income/(expense) 8.9 (9.2) (0.1) (0.4) 9.3 (9.6) - (0.3)
Benefits paid (11.8) 11.8 - - (11.4) 11.4 - -
Currency translation 0.8 (0.8) - - (2.9) 3.8 - 0.9
Business combinations3 - - - - - (0.2) - (0.2)
End of year 184.7 (186.2) (0.5) (2.0) 197.5 (206.8) (0.3) (9.6)
Defined benefit schemes - net retirement benefit obligations (1.5) (9.3)
Notes:
1. Included within the other category above are other post-employment
obligations outside of Europe and the US which are required under local law.
2. During the year, the Group incurred administrative expenses
totalling £1.8m (2023: £1.8m) which, in management's judgement, are not
considered to be part of the Group's ongoing operations. As such, these
expenses have been classified as adjusting items and have been presented
separately (see note 3).
3. In 2023 £0.2m pension obligation relates to BMP TAPPI acquisition.
4. Return on plan assets excluding amounts in net finance income
includes losses of £12.1m (2023: £0.9m) loss on UK plan assets and gains of
£1.4m (2023: £3.2m) on US plan assets.
Sensitivity
For the significant assumptions used in determining defined benefit costs and
liabilities, the following sensitivity analysis gives the estimate of the
impact on the measurement of the scheme liabilities.
(Increase)/decrease in schemes net liabilities as at 31 December 2024
Europe US Total
£m £m £m
3.0% decrease in the discount rate (57.1) (26.0) (83.1)
0.5% decrease in the discount rate (7.3) (2.5) (9.8)
3.0% increase in the rate of inflation (16.8) n/a (16.8)
1.0% increase in the rate of inflation (6.4) n/a (6.4)
1 year increase in life expectancy (5.0) (2.1) (7.1)
1 year decrease in life expectancy 4.1 2.1 6.2
3.0% increase in the discount rate 32.3 15.9 48.2
0.5% increase in the discount rate 6.7 3.0 9.7
3.0% decrease in the rate of inflation 14.9 n/a 14.9
1.0% decrease in the rate of inflation 5.7 n/a 5.7
13. Financial risk management
Total financial assets and liabilities
The table below sets out Essentra's accounting categories and fair value for
each class of financial asset and liability.
2024 2023
Fair Amortised cost Total carrying value Fair Amortised cost Total
value
value
£m £m
£m carrying value
£m £m
£m
Trade and other receivables2 - 42.3 42.3 - 48.5 48.5
Cash and cash equivalents - 33.7 33.7 - 59.7 59.7
Interest bearing loans and borrowings3 - (107.7) (107.7) - (95.5) (95.5)
Lease liabilities - (28.9) (28.9) - (30.9) (30.9)
Trade and other payables - (44.8) (44.8) - (55.3) (55.3)
Level 2 of fair value hierarchy 5.8 - 5.8 4.2 - 4.2
Derivative assets4
Level 3 of fair value hierarchy 10.1 - 10.2 19.0 - 19.0
Other financial assets5
Other current financial liabilities6 (0.8) - (0.8) (28.0) - (28.0)
Total Group 15.1 (105.4) (90.3) (4.8) (73.5) (78.3)
Notes:
1. Financial assets and liabilities held at amortised cost mostly have
short terms to maturity. For this reason, their carrying amounts at the
reporting date approximate the fair values.
2. Total trade and other receivables carried at £56.2m (2023:
£61.5m) include prepayments of £4.3m (2023: £3.3m) which are not financial
assets and are therefore excluded from the above analysis and £9.6m (2023:
£9.7m) included within level 3 of fair value hierarchy other financial
assets.
3. Included within interest bearing loans and borrowings are $103m
(2023: $103m) US Private Placement Loan Notes. The Loan Notes are held at
amortised cost with a carrying value of £81.7m (2023: £80.3m). The Group
estimates that the total fair value of the Loan Notes at 31 December 2024 is
£68.2m (2023: £70.0m). Unsecured bank loans amounting to £26.1m (2023:
£15.2m), included within interest bearing loans and borrowings, incur
interest at floating rates and as a result their carrying amounts also
approximate their fair values at the reporting date.
4. Fair values of forward foreign exchange contracts and cross
currency interest rate swaps have been calculated at year end forward exchange
rates compared to contracted rates using observable market data from third
party financial institutions.
5. Other financial assets of £10.1m includes 9.6m (2023: £19.0m)
relating to a deferred contingent consideration on the disposal of the Filters
business.
6. In 2023 other current financial liabilities of £23.0m which
represents management's best estimate at the time of the expected settlement
payable by the Group through the respective completion accounts mechanisms
linked to the Filters business disposals. In 2024 this was settled for £24.8m
resulting in a £1.8m (2023: £10.2mm) profit and loss on business disposal
(see note 17). Other current financial liabilities also include deferred
contingent consideration of £0.7m (2023: £5.0m) in respect of acquisitions.
14. Issued share capital
2024 2023
£m £m
Issued, authorised and fully paid ordinary shares of 25p (2023: 25p) each:
Beginning of year 73.3 75.6
Cancellation of shares of 2,965,414 (2023: 9,223,493) shares of 25p each: (0.7) (2.3)
End of year 72.6 73.3
Number of ordinary shares in issue
Beginning of year 293,367,215 302,590,708
Cancellation of shares (2,965,414) (9,223,493)
End of year 290,401,801 293,367,215
Purchase and cancellation of own shares
During the year, 3,022,914 (2023: 13,364,814) 25p ordinary shares ("shares")
were purchased by the Company for total cash consideration of £4.9m (2023:
£24.0m) at a weighted average price of 162.8 pence per share (2023: 179.5
pence per share), of which 2,965,414 (2023: 9,223,493) shares with an
aggregate nominal value of £0.7m (2023: £2.3m) were cancelled, and £0.7m
(2023: £2.3m) transferred from issued share capital to the capital redemption
reserve.
At 31 December 2024, the Company held 3,627,057 (2023: 5,039,265) of its own
shares with a nominal value of £0.9m (2023: £1.3m) in treasury. This
represents 1.2% (2023: 1.7%) of the number of ordinary shares in issue.
Capital reduction
The capital reduction, comprising the merger reserve, was approved by
shareholders at a General Meeting held on 14 November 2023. In connection with
the capitalisation of the merger reserve, resolutions authorising the
Directors to allot one new B ordinary share (the "Capital Reduction Share"),
and to subsequently cancel the Capital Reduction Share were passed at the
General Meeting. On 4 December 2023, the amount of £385,219,535 standing to
the credit of the merger reserve of the Company was capitalised and applied in
paying up in full at par one Capital Reduction Share with a nominal value of
£385,219,535. On 14 December 2023, Essentra announced that the capital
reduction had become effective following the confirmation by the Court
approval on 5 December 2023 and the registration of the Court order with the
Registrar of Companies on 7 December 2023.
15. Analysis of net debt
1 January Cash flow Business Business Lease Exchange Non-cash 31 December
2024
disposals
additions
2024
£m
acquisitions
movements movements1,2,3,4
£m £m
£m
£m
£m £m £m
Cash at bank and in hand 59.7 (5.0) (14.8) (4.1) - (2.1) - 33.7
Cash and cash equivalents in the statement of cash flows 59.7 (5.0) (14.8) (4.1) - (2.1) - 33.7
Derivative financial instruments hedging private placement loans4 4.2 - - - - 1.6 - 5.8
Debt due within one year - (1.0) - - - - - (1.0)
Debt due after one year (95.5) (11.3) - - - (0.9) 1.0 (106.7)
Lease liabilities due within one year3 (7.1) 8.1 - - (0.6) - (8.1) (7.7)
Lease liabilities due after one year3 (23.8) - - - (3.8) 0.9 5.5 (21.2)
Debt from financing activities (122.2) (4.2) - - (4.4) 1.6 (1.6) (130.8)
Net debt (62.5) (9.2) (14.8) (4.1) (4.4) (0.5) (1.6) (97.1)
1 January Cash flow Business Business Lease Exchange Non-cash 31 December
2023
disposals
additions
2023
£m
acquisitions
movements movements1,2,3, 4
£m £m
£m
£m
£m £m £m
Cash at bank and in hand 421.4 (308.9) (17.8) (33.3) - (1.7) - 59.7
Cash and cash equivalents in the statement of cash flows 421.4 (308.9) (17.8) (33.3) - (1.7) - 59.7
Derivative financial instruments hedging private placement loans4 8.3 (0.3) - - - (3.8) - 4.2
Debt due within one year (208.0) 208.0 - - - - - -
Debt due after one year (85.0) (14.9) - - - 4.4 - (95.5)
Lease liabilities due within one year3 (4.9) 7.2 - - (2.0) - (7.4) (7.1)
Lease liabilities due after one year3 (18.0) - - - (12.0) 0.6 5.6 (23.8)
Debt from financing activities (307.6) 200.0 - - (14.0) 1.2 (1.8) (122.2)
Net funding surplus/(debt) 113.8 (108.9) (17.8) (33.3) (14.0) (0.5) (1.8) (62.5)
Notes:
1. The non-cash movements in debt due after one year represents the
addition of prepaid facility fees of £1.2m (2023: £nil) and amortisation
prepaid facility fees of £0.2m (2023: £nil).
2. The net non-cash movements in lease liabilities represents interest
on leases of £2.6m (2023: £1.8m).
3. During the year, £5.5m (2023: £5.6m) of lease liabilities moved
from due after one year to due within one year.
4. Included within non-cash movements for derivative financial
instruments hedging private placement loans is an inflow of £0.7m (2023:
£2.3m outflow) relating to the fair value movements on cross currency
interest rate swaps.
The net cash outflow relating to lease liabilities for low value, short term
and variable lease payments was £0.1m (2023: £0.1m).
16. Acquisitions
Acquisition of BMP s.r.l ("BMP TAPPI")
On 26 October 2023, Essentra acquired 100% of the equity interests of BMP
TAPPI, a global provider of essential components and solutions, to strengthen
the Essentra's product portfolio, unlock further cross-selling opportunities,
and to enhance the Group's manufacturing footprint in Europe. The Group
acquired BMP TAPPI for an initial cash consideration of €39.5m (£34.3m), up
to €3.5m (£3.0m) deferred contingent consideration, and €0.7m (£0.6m)
adjustment for net working capital and financial position. The deferred
contingent consideration is conditional on achieving certain performance
criteria over a two-year period commencing 1 January 2023. At 31 December 2024
deferred consideration payable amounted to £0.6m (2023: £3.6m).
Acquisition of Wixroyd Group
On 1 December 2022, Essentra acquired 100% of the equity interests of Wixroyd
Holdings Limited (the "Wixroyd Group"), a leading UK supplier of industrial
parts for the engineering sector for an initial consideration of £31.4m. The
consideration payable for the Wixroyd Group comprised an initial cash
consideration of £31.4m and up to £7.0m deferred contingent consideration.
The deferred earn-out consideration was conditional on achieving certain
performance criteria for the 12 month period commencing 1 January 2023.
On finalisation of the trading performance over 2023, a reduction in the fair
value of deferred contingent consideration payable was recognised resulting in
a credit of £0.1m (2023: £2.2m) being recognised in the income statement for
the year. A payment of £0.1m in relation to the deferred contingent
consideration was made during the year. As a result, the deferred
consideration recognised for Wixroyd in 31 December 2024 was £nil (2023:
£0.2m).
Acquisition of Micro Plastics
On 12 December 2017, Essentra acquired 100% of the share capital of Micro
Plastics, Inc. The transaction was settled with cash consideration of £19.7m
and deferred consideration of £3.7m, of which £nil (2023: £1.2m) remains
payable to the vendor.
17. Loss on discontinued operations
Disposal of Packaging and Filters businesses
On 1 October 2022, the Group completed its sale of ESNT Packaging &
Securing Solutions Limited and Essentra Packaging US Inc and their respective
subsidiary companies (together the 'Packaging business'). On 3 December 2022,
the Group also completed the sale of Essentra Filter Holdings Limited and its
respective subsidiary companies (the 'Filters business'). Financial
information relating to these discontinued operations is set out below. On 28
September 2022, the Group also completed the sale of its Packaging business in
India for cash consideration of £1.1m.
Income statement analysis of discontinued operations
Total discontinued operations 2024 2023
£m £m
Revenue - -
Gross profit - -
Operating loss1 - (0.4)
Finance income - -
Finance expense - -
Loss before tax on discontinued activities - (0.4)
Loss before tax on disposal2 (1.2) (3.7)
Total loss before tax on discontinued operations (1.2) (4.1)
Income tax credit 0.2 3.7
Total loss for the year from discontinued operations (1.0) (0.4)
Notes:
1. In the prior year ended 31 December 2023 the operating loss from
discontinued operations includes gross income of £5.5m and costs of £5.9m.
2. For the year ended 31 December 2024, the loss on disposal of discontinued
operations includes a charge of £1.2m (2023: £3.7m) based upon the Group's
latest estimate of amounts due to the respective purchasers of the Packaging
and Filters businesses.
The results from discontinued operations are attributable entirely to the
equity holders of Essentra plc. The earnings per share of discontinued
operations are disclosed in note 5.
Cash flows of discontinued operations
2024 2023
£m £m
Net cash outflow from operating activities - (3.8)
18. Dividends
Per share Total
2024 2023 2024 2023
p p £m £m
2023 interim: paid 27 October 2023 1.2 3.5
2023 proposed final: paid 5 July 20241 2.4 6.9
2024 interim: paid 25 October 2024 1.25 3.6
2024 proposed final: payable 3 July 20252 1.55 4.4
Notes:
1. The 2023 final dividend paid on 5 July 2024 amounted to £6.9m, and
therefore this figure has been re-presented.
2. Subject to approval at the Annual General Meeting on 21 May 2025,
the proposed final dividend for the year ended 31 December 2024 will be paid
on 3 July 2025 to shareholders on the register of the Company on 16 May 2025.
The ordinary shares will be quoted ex-dividend on 15 May 2025.
19. Assets held for sale
During the year investment property with a net book value of £5.1m were
transferred to assets held-for-sale. The property is currently being
actively marketed for sale and is expected to be sold within the next
financial year.
20. Related parties
During the year, the Company paid £48,953 (2023: £47,937) and granted 4,897
(2023: 6,364) SAYE share options to the wife of Scott Fawcett, CEO of Essentra
plc, in respect of her employment by the Group. Scott's wife was employed by
the Group prior to his appointment as a director of Essentra plc on 1 January
2023.
21. Adjusted performance measures
The Group presents alternative performance measures, including adjusted
operating profit, adjusted operating profit/(loss), adjusted profit before
income tax, adjusted net income, adjusted operating profit from continuing
operations, adjusted operating cash flow from continuing operations, cash
outflow on adjusting items recognised in the year, cash outflow from adjusting
items, free cash flow, net debt, and adjusted earnings per share which are
not defined or specified in accordance with UK adopted International Financial
Reporting Standards. These non-GAAP measures enable management to reflect the
underlying performance of the continuing operations of the Group and provide
investors with a more meaningful comparison of how the business is managed and
measured on a periodic basis.
The adjusted performance measures presented below cannot be derived directly
from the Group's condensed consolidated financial statements, and therefore a
reconciliation of the adjusted performance measure to the most directly
comparable reported measure in accordance with UK adopted International
Financial Reporting Standards has been provided.
Reconciliation to the Group's adjusted profit measures
Continuing operations 2024 2023
£m £m
Operating profit Reported statutory measure 14.6 10.9
Amortisation of acquired intangible assets 11.5 11.3
Adjusting items Note 3 14.0 21.0
Adjusted operating profit Adjusted performance measure 40.1 43.2
Finance income Note 4 3.6 11.0
Finance expenses Note 4 (12.5) (13.5)
Adjusted profit before income tax Adjusted performance measure 31.2 40.7
Tax on adjusted profit (3.6) (9.6)
Adjusted net income Adjusted performance measure 27.6 31.1
Adjustment for recognition/(derecognition) of deferred tax losses(1) (3.3) n/a
Total for calculation of adjusted earnings per share(1) Note 5 24.3 31.1
Notes:
1. The definition of adjusted earnings per share has been amended to
exclude the effect of material movements in the Group's derecognition and
recognition of deferred tax assets on tax losses onto the balance sheet where
they are not driven by the underlying performance of the business. The prior
year comparative has not been restated as the impact was not material.
Reconciliation of reported statutory measures to the Group's segment analysis
2024
EMEA AMERICAS APAC Unallocated operating expenses Central corporate costs Continuing operations Discontinued operations Total
£m £m £m £m £m £m £m £m
Operating profit/(loss) Reported statutory measure 44.2 11.6 2.2 (32.5) (10.9) 14.6 - 14.6
Amortisation of acquired intangible assets 5.1 4.7 1.7 - - 11.5 - 11.5
Adjusting items Note 3 1.4 1.0 0.9 10.7 - 14.0 - 14.0
Adjusted operating profit/(loss) Adjusted performance measure 50.7 17.3 4.8 (21.8) (10.9) 40.1 - 40.1
2023
EMEA AMERICAS APAC Unallocated operating expenses Central corporate costs Continuing operations Discontinued operations Total
£m £m £m £m £m £m £m £m
Operating profit/(loss) Reported statutory measure 50.7 12.5 (1.7) (39.0) (11.6) 10.9 (0.4) 10.5
Amortisation of acquired intangible assets 4.0 5.5 1.8 - - 11.3 - 11.3
Adjusting items Note 3 (0.8) 1.5 3.4 16.9 - 21.0 - 21.0
Adjusted operating profit/(loss) Adjusted performance measure 53.9 19.5 3.5 (22.1) (11.6) 43.2 (0.4) 42.8
Net debt
Net debt is defined as cash and cash equivalents (including short-term liquid
investments) and derivatives against hedging placement loans, net of lease
liabilities and interest bearing loans and borrowings. It is a measure that
provides additional information on the Group's financial position.
2024 2023
£m £m
Cash and cash equivalents Reported statutory measure 33.7 59.7
Debt liabilities (107.7) (95.5)
Lease liabilities Note 13 (28.9) (30.9)
Derivative financial instruments hedging placement loans 5.8 4.2
Net debt Adjusted performance measure (97.1) (62.5)
Reconciliation to the Group's adjusted operating cash flow measure
Adjusted operating cash flow from continuing operations is presented to
exclude the impact of tax, adjusting items, interest and other items not
impacting operating profit. Net capital expenditure is included in this
measure as management regards investment in operational assets (tangible and
intangible) as integral to the underlying cash generation capability of the
Group, except amounts relating to adjusting items.
2024 2023
£m £m
Net cash inflow from operating activities Reported statutory measure 25.7 29.5
Net cash outflow from discontinued operations Note 17 - 3.8
Operating net cash inflow from continuing activities 25.7 33.3
Cash outflow from adjusting items Note 3 17.7 23.6
Net tax paid on continuing operations3 5.8 4.5
Net capex expenditure on continuing operations Note 2 (12.8) (13.2)
Adjusted operating cash flow from continuing operations Adjusted performance measure 36.4 48.2
2024 2023
£m £m
Adjusting operating profit from continuing operations Adjusted performance measure 40.1 43.2
Depreciation of property, plant and equipment 9.6 11.1
Lease right-of-use asset depreciation 6.3 5.9
Amortisation of non-acquired intangible assets 2.0 2.9
Share option expense 1.1 1.4
Other non-cash items1 - (0.5)
Working capital movements (9.9) (2.6)
Net capital expenditure (12.8) (13.2)
Adjusted operating cash flow from continuing operations Adjusted performance measure 36.4 48.2
Net tax paid on continuing operations3 (5.8) (4.5)
Interest received 0.5 3.5
Interest paid (8.6) (9.9)
Free cash flow Adjusted performance measure 22.5 37.3
Reconciliation of cash flows from adjusting items:
Adjusting items Note 3 14.0 21.0
Net non-cash expenses/credits in adjusting items2 Note 3 (1.3) (5.9)
Tax Note 3 (0.7) -
Cash outflow on pension contributions Note 3 - 1.9
Cash outflow on adjusting items recognised in the year 12.0 17.0
Utilisation of prior year end acquired accruals and provisions Note 3 5.7 6.6
Cash outflow from adjusting items Adjusted performance measure 17.7 23.6
Notes:
1. Other non-cash items comprise outflows and inflows from hedging
activities and other movements £nil (2023: £0.5m outflow).
2. Net non-cash expenses/credits in adjusting items includes a £1.8m
credit on reversal of impairment of investment property (2023: £3.7m
impairment expense), £nil (2023: £3.4m) impairment of non-current assets
following impairment review less £3.2m (2023: less £1.3m) other non-cash
movements in adjusting items.
3. In 2024 tax paid excludes the tax received in relation to adjusting
items of £0.7m. This is included within the cash outflow in respect of
adjusting items.
22. Cautionary forward-looking statements
This 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 from the forward-looking statements. Each
forward-looking statement speaks only as of the date of this document. The
Company accepts no obligation to publicly revise or 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.
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